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                THE

          c..
ECONOMICS OF INDUSTRY

                 llV




  i\IAR~\ ~~,EY        ~L'.RSHALL.




         THIRD EDITION.




            l[onbon:
     MACMILI.A0: Ai-rD CO.
             'ISSs
~RINTl':U   II'"   c.   1. CLIIV. M.I\        .t   sus,
      AT    THt~    1..·l«;,..ti:RSITY pftgs;o,.
                      PREFACE.

THiS book was underlaken at the reqaest of a meeting of
Cambridge University Extension lecturers, and is designed
to meet a want which they h~.... ~ fdt.
     It is an a.ttempt to construct on the lines laid down in
:\1ill's F,,/dira' E,:oJlo1nY a theory of Yalue, \Vages and
l'rofits, which shall include the chief reslll:s of the work f'f
the present generation of Economists. -The Dl.1in outlines
of this theory have been tested during many years in
lectures at Cambridge, ,:md more r~ccn\.ly at BristoL
     An in(luiry into the subject,; of Banking, Foreign Trade
and Taxation is deferred to a companion volume on the
" Economics of Trade and FinJ.nce."
     The authors wish to ackncwieage their obligations to
Mr H. Sidg'l"ick, ~lr H. S. Fox\\Tll and the Re\'. \V. 'Moore
Ede for suggestion:; and aid in preparing the book for the
press.
    PREFACE TO THE SECO:-iD EDITION.

     THE nresent yolmne contains an outli:le (If the th'-':f!fY oi
Vulue, \\',\f.;(;~ and Pru5~s. Th~;:.; tbe(ny, r~<; it ,\'<'c, 1I:f.. j~y
EnQ"\ish EC',)1W'l';"t.:; of the last t,,'lJcr~tll);I, lilade ".!0 gr('"lt
pn~tt;ilsi('~l'i to fifl:llity : ~nd by .1 1l,!t1lf:d re:;tctiul: : ~h:ir \York
has been ::'eYt.'relv .nticisvl. Dut (In t!,,; wholt' th,,' ! ,rng~t:<:;."
of illquiry h:15 tI.:-nded tv \'inclicatl~ it, :lnd to ~:\OW t!Ut WillIe
nl0::-t of i~ i:::. ,"cry inLornpld'~·. there.' h but l~trlt~ m ih-!
cardlll exr,(j~i~l,m 0:- it st\;;n ~y John S-U:1.:-t :I!:il. whi(h
is not~ W!J"T1 rro;)\.'fly ;ntcrpe:lU, true JS t:'lr <l'i it ~('e-;.
      1t sc'.:ms hfl\\"c.,,(,:- nC':t':';J.ry to !;U a gq'JJ '.'.";1), :-'~':t:-t
from )ii!l \\ith rL~(rd to (l]~e ill·l,urt::n:: ~i\!(·:-ti()'l. lk
 neWT \Hi;-;':,:rj out fully tbe ;-;f'l-,li( ;~ll'-)',S (),- i~;" 1',\\ n pinci:lk-<"
to the IJn,Lkm fJf Pi_-il.ri~)l-'ti'_,,,: hi, Ll.~t t;tC;:rac.,'e on \he
Ilue:.t:cn in Li:; fl.:':;I'W of TLo,'I:tc1n, kft part o( It
a\Towc(lly in an Uil:--~t i~factory st;.lte; he ,{[;l \-<;! ir:..de{;d son Ie
hint~ a~ to the Jir,,-c:\on in which a ~olution \\":1::> to be
 looked leI'. l)llt he Ghl not pn:L:nu to wmk it au: him:>elt:
 In thi" \'Olti1Ct~ ~n :'.l~e:npt lei m3.de to :,uI,'l'\Y th(· :-.oLtir);;,
 .;nd to sl:l"Y that thtr,_: is ;1 unity utldcriy:ng all the ,;ificrcnt
 par!:; r.f thG theory of price", wages :l!Jd pro!1ts" The re-
 u~uner.J.tiO\l of e\'t:ry kind of work, the; ill'-ere~t 0n (';-'!pi~,d.
 anJ t,h·: IJf]ces of commorlitics, arc detenni[1(:d in thl ]01 g-          J




 run by (Qmpetir;(,n ac(orJin..,; to what i5 f::nd~,11l"n~81h ,!1~
 same 1.-1.',\', 'fhi:> bw oi Normal 'VaJue hft..; rn;;l'V \:en :t:t.';' \\1'
 det:d, alld take" lIlany ciifferent forms. BJt in ::\t..-\- ft nn i-:
 exhibit:; y:t1t:e a:-; ddtTlIIineu L .., certain Icbtil)ll~ liT ',!'.:·;ILll1(~
 and "-upp!:;; an/~ Co:>t of l'r·oductil.:l a5 t:l:':;n~ the chid-
 piau- <llr.()l ,,; 111<' c:H.i:--C;'; Lh., _ _ rh,':ernm:c. supy::i), 'U1t' ~ccolld
 Rook L-:g-i:"" wi:il :1 ;.:er,l:~ll ,;tat{.:rnt:nt of lhi:-; law as ::ptJiied
 t\) c::oIllmoditic.'i,     This is follOwed by a disCllS'ii0n ·Jf ~Olll~
 pe('uij,:tri[idi that arc found in the la\\-"!i of supply 01 unskilled
vi                         PREFACE.
labour, of skilled labour and of business power. The ground
is thus cleared for the inquiry how Normal demand and
supply determine first the share of the joint produce of
capital and industry which g0t:5 as interest to capital, and
secondly how the share that goes to industry is di\"ided
amung it.:; Jifferent ranks. The yolumc ends with a. dis·
cu~sion of the way in which the )lonnal action of economic
forc('~ is hindered, or even overridden, but never destroyed
by f{iction, by comhination or by those passing events
which exercise a re~tless influence on :-'1arkt.:t values.
     By an oyersigbt no formal Jc.finition of the term jrt(
competition has been giH~n in the text j and as, the book
being stereot\"ped, there i;; some difficulty in introducing
it at the pro'per phcc, it may be given here. A man
competes freely when he 1S pursuing :1 course, which
without entering into any combirlation with others, he has
ddilJcr •. ldy seit:ctt·(\ .:15 that which is likely to 1e of the
great(:~t material adlrantJ.ge to himself and his famil~..       He
is not supposed to be selfish: in fact the ?-;onnal supply of
all gradt~s of indu~try, except pcrhdVs the lowest~ rlepcnds
on the Hn ... e!ft~h ~acri(lcc by parents l)f tht'ir own pleasures
for the ut'netit of their r·hildrcn. But he is supposed to be
con,,'Jlting his O\V!l flIateri,'d advantage ,mtI that of his
family to the compar:Hin.: neglect of the welflrc of vthers.
Jf (;very one always found his :::reat,,-'sl h3.ppine~s in trying to
do that which was Lest for olhers, the \\'urlJ wotl!d kt\ e no
theory of Normal values as it is described in this yolume:
!:lome" sIlch Communism as that whic:b prevailed ~mong: the
c.lrly Christians wouhl be the basi:; 01 economic theory.
But in this world 1 a.s it is, thl': cbid o.:li'l't principle in
busint::-.s is the dt.'sirc of each man to promote the material
lnterl':-.ts of himself and his bmilv. Norm.11 re"lIlts in
Economics are therer(.:ore th(l~e wh:~h WQuld be brought
ahout in the long run by thiCi actin.~ principle, if it had time
to overcomc-as it necess.:lrily would in suffici:'nt time-
custom, incrtncs':i, ignorance, and all the ot her jassi.,c
elements which make up ewnomic friction. It has been
urged that as custom j" otlt'll Blore pO\wrful than C()mp~;ti"
tion it ought n,)t to he spoken of slightingly as a mere
friLt~0n. .D~it thi~ i" entirely to lIli:;appn::lwnd the meaning
of the term friction. A !":inion is not Ilt:ccs.c;arily a smaU
                         PREFACE.                            vii
thing, but it is a passive resistance; and an active force,
however smaH it is, acting on a material that is not perfedlr
rigid, will in the long run OYdCOm~ any alflount of friction.
Human nature is neve! absolutely rigid; and custom never
holds its own in opposition to a strong active t::conomic
force working for ID;my gent:ratiOlls persisrently in the same
direction.
      Normal results are those which competition would bri.ng
about in the long rim. The periods to which they rdate
must he sufficiently long to give time for the actlYe forces of
competition to overcome the pasc;in:: resisw'nccs of i30orance,
prejudice, cU::.tom, etc. They must be sufficil:ntly long to
en:lole U'i to neglect temvorary fluctu:itions ·of suppiy and
dennnd, the infhlen,:e of good or bad harvests, etc., and to
regard these alternatil1g changes in opposite dircnions as
nC!ltralizinti one another. We must he able to see stanrLng
up in clear outline tht!' broa.u effects of the constant actiun
of th~ foret's of competition.
      It mu~t huwever be admirted that there are se,,"eral
difficulties in the way (of do precise definitiun of the period
of time to which normal results apl-'ly, a great deal must
be left to the judgment in (:;,1('h casco In particubr i: is
impo.ssible to hy down ~~neral rules :is to the tim~' that
must he allowed fl)[ the spreading (If knowkJge with rt'gard
to nt:w invcntivns, and to changes In the markets for goods
and for iabour. Ewry one h3.s a tendency to seek the most
adyantag~oll" occupatiou for himst:lf ,UlU for hi::; children,
and this active tendency witt in the long run OH:rcome the
l"J..ssive re')istant:e of ignorance. But ignoranct: may act
as a df<\.g for 3. 10tlg time, and the advantages of different
occupations m;Ly vary T:1.pidly. One of the most important
of the unwrltkn chapters of Economics is that on the time
that ebps...::.i between economic cau-;{'!j and their eftl:cts in
consequence of the slowness with which knowledge diffuses
itself:
      The -first chapttrs were printed at a time when it
was Ilroposed to giye the volum\! a more eklllcntary
character th:tI1 was llltlmate:\, found advisable; and th\!
diificultit's ,\ hich surround the'deflllition of economic terms
were ignof('d as far as po!:lsible j but in this cdltion some
further discussiou is given of the definitions of wealth and
viii                        PREFACE.
capital. There is however no really satisfactory meaning to
be given to these terms without departing too much from
precedent.
    In particular the account which ordi.nary Engli<;h usage
compels us to give of capital when lo(,ked at from the point
of VIeW of the individual is not well suiteJ for scientific
pUrpOSes. Not only is it indefinite:! in many way~; but
it compels us to say that if a buat builder 11a') rent~d hi::;
C:lrrl:lge frum a carri[lg~ builder who mC:lnwhile h::':.5 renterl
a boat from him, the unital of eJch would be liitninishcd if
tach "..·cr~ to buy the lh~ngs that he had been hirin;,;.
     We are thus brought to a frint:c of r:il!),dti<.:s which
it would be out of place to discuss in a :rt'at;.~·,~ "'Llch as thl'
present. They are not mucly ycrb;ll; bu~ yt:t tIllY arc
of such a n:Hure that We C:ln pass uy them. For it will
be found that none of our rea~onings Gcpenti on our bein~
able to give an exact list of the things which \YC reprd
as capital.
     The notion of providin; enjoyment for th'e future rather
than fe., the present is that ,... hich lmderliC's ~Il the uses
of the tetm CapiLli: ~md the lln-'perty of prO\'iding for
the futu:-e :-,dmits of a:i degrees ~·,nd S!.lf::;c~t:; no pr,xist
dividing Ilne. 'fht! dir('ct!tlll in which we "1::.>;11: to look [or
                                         ue:
3. solut~on vI' the tliftlcult\- SCl'nlS to 3. d,b~:':cl.ti()n of all
 kind~ of wl':lith accun.l{n:; to the extent to which tbty
 poss(Ss th:,s IJroperty,
    frcncb writer::. have alw,ys used the word C:1pital in
a bro;ld sen~e, ::>1.'T!lctimes a~ practically 5~'r:onymous with
WC:llth. SUIUl' Germ;]ll \\Tite:s h:ll-e also dl:""\('loped a hint
of ~L SJ.y',5 as h' the dn-i:"i0rl of c"pit'd into productive
capital at;ll Cal'iLd f0f cons\l:tlption. Hu~ tLl·ir sugb('stion~,
though n!..lt without v~luc, do not seem to go tu the root
of the m.:ltt~r.
    It may be mc-ntione(l that the Ilhra<;e Net Income i~ u_,cd
in sC\Tr:11 sensc'" in different parts uf the h00k. '" Xet"
in t,.:tch case me.:tns that which remains after making the
deductions described in the context.
                              CONTENTS.


                                    BOOK L

                LA:-!D, LABOUR A:-!D CAPITAL


                     CHArTER I. IXTRODcCTORY.
    I     The work of Political Economy or Economics. [§§ '2, 3 The
        rdation of scienct! to practice. The methods of moral or ~CM;;ial
        sc;cnces.] § 4 Definition of t:)e \eIT!lS ECrJ",mJi.:5, § f. ;VMitn,
        .l.lfaferi:111Va,,'{·i, Pc'n.'n,l/ G( ~\-,~n·ma!tria.: It'i(::t~', § 6 rr"du£-
        I.n [§ 7 \\o.:aiL!J, fllnbcr con;,idercdJ                           . pro 1-7


             CHAPTER II. AGE"TS OF PRODUCTION.
§   I 'L11\'~   wark, §"! Is aid . . ] bv much;l:'~ry, § 3 And c,,·ttrols ~.1t'lrC'~
        forces. § 4 :;"!an'~ eft~rlf'ocy d('pends on his phy::.icd \'i~(~l\r;
        § 5 On hi..:; kn0wkdge n.:l-l mental abilJi_y, S G A:ld hi" mur::\!
        characto.:r                                                     pp. S-Il


                          ClIAPTER 111.          CAPIT.\L.

I [ Cn/Jital, § Z ThOUgll !'taxed it ~ spent. § 3 .. \\nat is Sl'c-n 31ld
    v.h:J.t is not seen." L::bour rcquiro::s sU,'port amI aiJ from capital.
    § ~ Trade cannot be befiE:llteJ l,y des'ru:ti,Jn 0: g:oods; § .~ ('I'
    hin<irancf;; to fr.::e productiQ[1, ~ () R~mu1lc'ra(ory ,.". Iru",,' C;/ ,;:oJ'.
    Auxiliary <-aj'lital. § 7 Circuiaiin,f; and Fixtd C.1pitai: "'p" ·a. ':aI
    aNi ...\'(m-.rpuialiud Calit;)/. § ~ Pel"Ollal Capital.         pp. 1 ~ -zo
x                                  CONTEl\fS.

          CIlAI'TER IV.        LAW      or   D1~[L"ISIIII'G RETUR~.

§    1    An, iBustration. § 'I The Retmn dut' to a Dose of Capit3.1.
          § 3 Lnw of Diminishm,:; R~turn. g of The influf"flCe of improve.
          ments in production. L§ 5 A~iculture in a·newcollntry.] § 6 Pro-
          duce (.[mines                                         pp. '21-26


    CHAPTER V.           GROWTH OF           POPULATIO~.          )IALTH(;S.
                                    POOR LAWS.
§ 1 The multiplication t:l.ble. § '2 Recklessness of hackward race!'.
    Standard of C(ml/url. § 3 Law 0/pOf!datkm. § of. !\.1aithus' Essay.
    § s Qualifications of his doctrine. ~ 6, 7 State aid and voluntary
    aid in poor-relief                                   . pp. '1:7-35

                 CHAPTER VI. GROWTH OF CAPIT.\L.
§    I    The power to save.    § 3 The will to save. § 3 Sa\'ings from rent,
          wages and profits. S 4- The growth of capital depends partly on the
          rate of profits, § 5 And must ultimately be s.low •   • pp. J6-p


           CIIArTER VII. ORGA!i'IZATIOX OF INDUSTRY.
§    I    Lnd\.'11izcrl tribes. The Agricultural statt'. § ~ Gn.-ek!!, Romans,
          :lId Gennan race!;. § 3 Mediaeval (;'iH~.         § ... Transition to
          modern times. § 5 Circulation of capital                  pp. 4,~ --.f'l


                CHAPTER VIII.            D1VISIO~,     OF LABOUR.

§     I   Diyision of bbour increases skiB, § 'l Economizes skin, § 3 Aml
          machinery. §.of. Production on a. Iar::;c scale. §!'i Subsidiary
          industTi...·s. § 6 Localisation of ir.d<lslI)·. § i Advantages of a
          large factory. § 8 Modern ch Ing~s in manufacture. § 9 Indirect
          rewlts of division of labour. § IO TIll ia';L' .'fDi-::i..ficn (/ Labour
          or int.T(a.;iI:g Relurn. § JI Application to Agriculture. § u
          The PeaslU'lt Propric:or                                     pp. 49-59

                    CHAPTER IX.           TEXl'RE      or   LA);"D.
    § • Early knures.      §~ 1.   3 :Modcrn tenures                  pp.~.
                                   CONTENTS.



                                    BOOK II.

                              NORMAL VALUE.

             CHAPTER 1. DEFIXITIOXS.               LAW OF DEMA.'1D.

§   I       Competition only one ui the causes which .dete-rmine value, but in
            this 5econd Bouk a.1l otb::rs are to be ncgl.::;:ted. (§ 1 The term
            Nurmal.] § 3 Definition oi Afarkcf, § .. r'alu~ in CJ~. Val~ i7f
            ./::xchan6"f, .Pria, § 5 BUYd, Sdi~,.. § 6 Rcbtion bctv.reen utility
            and value, Finall4ti!ity. § 7 La'lL' of Demand            pp. 65-j I


                       CHAPTER II. LAW OF SUPPLY.
§       T   Introductory. § 'l Cost of prodllditm. E.ipmsfs of jrodudicn.
            § 3 Relation bel ween Expeoses. of production and supp~Y. firstly
            hy men working on their own account, § 4 ::;ecvndly by men work-
            ing under an t:mployer. § 5 IAw 0/ /I/o""ml SUj¥/y. § 6 It
            .assumes flee cClIlpt:lition. ~ 7 uw   I?/ A"VTmal Vail#!. §§ 8, 9
             Expen;,es of production include lru.ura.nce against Risk. [s 10
             " Cost of R!!PIOduction."]                              pp. 7'2-80



                             CHAPTER Ill. RENT.
§   1       Illustration. § '! La.!} 0/ Rmt. § 3 Special case in v.·hich there
             is land on the margin of cuan·ation. § + The effe..;ts on rent of
             increased demand, of free importation, and of improvements in
             production. [§ 5 Relit of mines.]                   • pp.8J-8i



             CHAPTER IY.        REXT IX RELATION TO YALUE.

§   t       Me:tning of the phrase: "Rent does not enter into Expenses of
            production." uw of XormJ.l value of a commodity, diffe.rent
            portiC'ns of which }"we different Expenses of production. [§ '1
            Ground-rent of factories.]                          pp. 88---90
xii                                    CONTE~TS.


        CHAPTER V. INFLt:EXCE OF DDfAXD                            O~      VALUE.
§   I    A change w~,ich affects: tbe Expe!',~es of procuction (,f r_il cummodi.
         lies in ~ike proportion, does Dot :;lter Yalues, § 1. But an increase of
         demand alters values. § 3 Consequent addition to Law of ~ormal
         value                                                         pp. 91-93


                                CHAPTER VI. DISTR/IlUTIOX.
§ I I-::<pemes of production can be diviobl g-e::erally into \Vages anu
     i'rofits. Hebtion between Cost and Expen~cs of rroduction.
    § 'J The 1t~_~6~()·alld./n:/it,-·Fu!U{. § 3 E:1.lnin6 s 0: J..lar,agement
     to be da~~ed with other ca:-r:ings. The EJrnings-al1,l-l"lkrut Fund.
     (§ + Ambi!o!uo'Js u~c of tbt: term .. Co~t 0f l;rcxluction." § 5 'There
     is no sep:trate cbs!> of C()O~:llnErs. § 6 l'urtl,er c-xaminatiun of th.e
     term: "the real nct ar:.nt.i.al income of the country."] pp. 94-(00


         CHAPTER VII.                :)UrPLY OF UNSKILLED LABOGR.
§   I                 =tl.d .A:mtina! wa§:a. Tim~ war:es :m,l Ta:k 'U'o,S/u. The
         -"..'ea! ,:t'(tt;t'!
          bmi;y <l>i a unit, § ': The ~t1PI-,ly of efficient labour as dcpend'mt
          on w'.gt:s. § 3 l';~t A,,",,:anta.;CJ of an occup;ttion • pr. 101-103


           CHAPTER VIII. SUPPLY OF SKILLED LABOUR.
§        The Law' of Xorm:d snrr1y al'~iies. to skilled labour in ~ome
         rt';'P{'':~~, § '2 Bllt Ilut in all. § 3 ~]j::'s fC,:lr g-raclt:s of labour.
         § -4 Kd [!,-.!\':!.nt:>ges further examined. §.' Difllclllties which keep
         down !i:-: sup?ly of i:lh,l!r ill a (r;>,:.\t-. § 6 S?c,jaiiscd skill
         decn::a..sin,; in importance fd.-~ti"e;y to ~0n·speciJ.lised :lbility.
         § 7 Apprenticeships. Investment of c3J>ital in education hy Go\·ern·
         meDt                                                         .   pp. 104-113


              CHAPTER IX. SUPPLY OF BVSINESS POWER.
§   I The w,,!k of !:usine~s m:ni:l£,C'mer::t i~ increas;ng in difficulty.          §   'J
         Tram;,;;{%:.:o L'f bus;n'?s< POWt':- from one occupalion to :'lnolhcr. § 3
         Supply J.Jiu,;tcd I.> .h~l!l:mti in the case of oll.,ine::.<:; pOWer.1"- in the
         case of ~kilicd bLour                                        • pp.   1I.~-1l3
                                     CONTE~TS.                                     xiii

                            CHAPTER X. INTEREST.

§   i       Interest depends firstly 0n the amount of the Earnings-a.nd-interest~
             Fund j § "l Seconllly on th'! dell1~lnJ of inC:l1str~' (or the mel of
             capita\. § 3 The connexion L~tw<:"n the ute of illterest .and the
             amuunt of capitJ.l demanded. § -4- LI1UJ l'/ uo'!J',:md 1M' capital.
             §.5 Supp0.o.ition that the amount of capital is fix\'(1. § 6 S::p}'osi-
             tion that the growt.l,t of capir:lJ is completely controlled by the
             rate of interest. § 7 Ltrzu oj Snjp.? of capikll, Law of Ihf ~V(Jr1llal
             rau of iltt(r(st. § 8 The Normal rate in ET1g1and~ § 9 And
             in new countries. § 10 Ten'lency of the rate of interest to
             diminish.                                               . pp. 1r9-1'27



                              CHAPTER XI. WAGES.

§       I   Competition (or the aid of a trade. § 'l !\onnn.l wa,;:-es of Ull..<;killed
            labolil. § 3 Law 'i A'vrmal ~{jagcs of ~killcd labour. § 4 A lise
            of Time-wages,' if Task-wages are unaltered, Joes not lower profits.
            [§ 5 \rages equal the Discounted Value: or .Net Rdlfm of labour.]
                                                                     pp. 1-28- 1 34


               CHAPTER XII. EARNINGS OF MANAGEMENT.

§ [ Trading with borrowed capital. Tra'/t Risks. PirsonaI Risks.
    § :3 Earllings of ~b.Ilf.gcment in pri"atc p"TtTlcrsli.ips and Joint
    Stock CQmpan~f's. §;$ Profits on equal c:lrit~ls in different tra.de~.
    § ... l'lofit" on un~qllai capitals. § 5 Excepti':)Ilal case". § 6 Law
    {If N,'nml Earltt'ugs of Ma1tagcm~nt. ~ 1 They includ~ much
    "Rent" of rare natural abiEties. § 8 Tendency of prufits: [0
             climini&h.                                               . pp. 135-145


CHAPTER XUI.                    RELATION OF NORMAL TO MARKET
                                     YALUE.

~ I         Sllmrn:lry of the theory of ~orma1 value. f§ 'J In na~ure changes
             re-a.ct on one ar.otlll!r.1 § 3 The theolY of ~onnal niue a neces·
            sary i.n.trodllcti()Q to that of ~fa.rket \Calu;:    . pp. 1..6---1--19
                                    CONTENTS.



                                     BOOK Ill.

                               MARKET VALVE.

CHAPTER I.                CHANGES IN THE PURCHASING POWER
                               OF MOSEY,
§   1       Influence on prices exerted by changes in the supply of the precious
             metals; § 1 And by the modern system of credit. § 3 Commercial
             fluctuations; Cri,cs. [§ 4 Cornmercial deprc~5ion gives rise to the
             false notiun that there has been gClleral O~·er.production. § SHow
             a f3JI of pnccs injures traders, § 6 And thus makt:s the evils of
             cOIJImcrc:al depression appear greater tban they are.] pp. l:-.o-ln


                 CHAPTER II.          MARKET FLl'C1TATIONS.

§       1   Introduclory. § 1 Market t1uct,1atioJls due to uncertainties of
            supply. §.3 The hig~l!ng and hlrg::tinin>:of the m;l,ket. §.of. Fluc·
            tuations due t() cJunges in Ikm:'_nd. § ,'i Fluctu.J.l(,mS ;ue gr<>:J.t in
            trades which use mu..::h Fixec! \" ll-,itai, § 6 And ,n trades which
            m.ake Fixe,] capital. § 'i Com::l"·ditie5 whicb hH-e JC'int t!"pen~s
            of production. § 8 Market FluctUJ.tiuns in prices cause, and are
            not c:llIsed by, !1uchlatiol1$ in wag.:s, r~ CJ Although a change of
            };"ornlal Expenses of pmduction i~ the cause (If:l change of Sormal
            value.} .                                                . pp. 158-,67


            CHAPTER Ill. INFLUENCE OF CUSTOM. LOCAL
                VARLlTlO:-lS 01' Pl{]CES AND WAGES.

§       1    La;r'j qf Lo,a/ Va,-iation of t-.'onnal prices. § '1 The value of
             land.     § 3 )[oycments of plices in town and country. '§ .. Local
             \'3ria.tions gTeat~r in Timc-.nges than in Ta~k-wages. [§ 5 How
             such variatlOns !'hC'lllJ he nlea~l:ri!U. § 6 Tl:e influence of the
             competition of .iv \1 pnxhict'fS in neutral markets.} § 7 \\'ages of
             wowen. ~ R Local ;'arialioIlS of profits.. § 9 Retail prices .
                                                                  . pp. 16S-179
                                    CONTENTS.                                    xv

             CHAPTER IV. MOXOPOLlES. COMBINATIONS.
§   I    Complete and pattial monopolies. How monopoly price is deter-
         mined. § 2 A tro.de combination often ail]"ls at a partial monopoly.
         Difficulty of ,;ecllring the adhesion of those already in the market.
         § 3 Difficulty of excluding competitior. from a distance. § ..
         Markets under the control of :l ft:w dealers. § 5 Conditions of the
         success of Po combination. § 6 Combinations arnoo.g emplo:rers to
         lower wages •                                          • pp. 180-186


                        CHAPTER V. TRADES UNIONS.
§   I   Trades unions an outcome of the Anglo·Saxon spirit. § 2 Town
        gilds and Craft gilds. § 3 The mcchankul inventions of last
         ct:ntury brought about the modem wages question. The early
         history of Trades unions. §.of. Their obj..:cts. § 5 Their organil.a.
         tion. § 6 Trades union congye!>ses. Trades Councils. § 'i The
         hold that unions have on the h(!sl workmen. § 8 Cost of strikes.
        § 9 Union rules: Apprenticeships; § 10 A minimum wage; piece-
         work; § 11 The ll·ngth of the day's \\vIi;,. § 1:1 The :lltlirect
         influence of unions. § 13 Picketing: Rattening: the u~e of
         ma.::hincry                                          • pp. IS1-19S


C!HPTER VI.                  INFLCEXCE OF TRADES V;>;IO!'S ON
                                        WAGES.

§ I The labomf:T's di.s:l(hanlage in bargaininv for wages. §§ 7, 3 It is
                                                                  ~;
    r.ot i!r.pC'5~!b!e for unions to oVain a general rise of wag... but thi~
    will not be puma.nent if the chauge dim1!li~hes the \\'a.ge~-a~ld.
    profits. Fund. l§ -4 "The Wages-Fund theory,"] • pp. J99-205


CHAPTER VII.                  IXFLIiENCE OF TRADES tlNIO);S ON
                              WAGES (CONTINUED).
§§      I,    ~ The rdations between different groups of workmen as~oci:lt(d
             in the .;.arne pro.::ess of production, compareri with thdr relations to
             their ·!!Upluyer.o , § 3 Conditions under which a union can obtain a
             rise of w:-.ges in a 'ling-Ie trade. § ... The relation o~ tb c moral to
             lhe ecol}.o:-uic e!~mt::"lts of the probl~1ll            • pp. 'Z06-:!l~
xvi                           CONTENTS.

  CHAPTER VIII.           ARBITRATW:-." AXU           co:-."cr!.r.nro~.

§ I BQards of ConciliatiQn and. Couru of ArbitratiGn. § ~ 11.e ;..:eot'TJl
    principle on which thq shoJ.kl act. § 3 .51iding _><I,:..','J. § .. InLii·
    reet benefits of Conciliation                       . pp.214-21]



                  CHAPTER       rx.    COOPERATlOX.

§ I The ultimate aims of       C~'Jperalion.  § 2 lIldlhlrial Po:ru)ershir.
      § 3 CQ>.opcrative workshcp-;. § + In wnat tnd~;; t1t~y me m<J~t
      lit..ely to succeed. § ~ Thdr wOJIk in taking ~U:.H{':t~ract.:;. § 6
      Co.op("rative credit associations. § 7 Co-opcrati\T ~tor~.,. § 8 The
      principles on which they:,.,,-. b::sed. § 9 The adv,:tntage,; which
      they have in C0mpetiJ:g: with shop:;. § 10 The probable future
      of L.>te retail trade. ~ [I The Co-operative Whol~alc society.
      The Federation of Co-operators                         pp. 2 (8-2)8




     .. *" ~ A few UiSl_ussinr.s are inchded in square brac.kets
to Sh0W that they sholJld be omiut:d by beginners in the
first time or reading. \\\""Jrds used in a technical sense are
printed ·with capital initial letters.
                                     BOOK I.

                   L\XD, LABOUR,               A~D        CAPITAL.


                                   CHAPTER J.

                                   I~TRorllCT0R\'.



     § r. "ROl·S~F.AU has 50.:')' ')[uch philosophy is want,'a for
~he   ('.)rrt.'ct ob<;('J"vJti'Jll of tl~i:1g" \\hidl arc beiorc our (YE:S.'
:\!"Id st: ~h Me the eve!lts and CU .. t0m.'. . ':\ cry (by .:;ociallife.
                                                    ..If
HaLt ha,~ so i,uuiliarizeJ u'> with them that WI.! fa.il to obsf::T\'c
them. uil10ss something- striki,,:; and c:(cq.Jtional forces them
un (lur nnt;ce.
      '" I.e:   lL':'   t;tkc t by way of illu3tration , a mJU in the humble
w~·,:1,s "_,( life--a vdh;,c carpenter, for instancC-;1I1d            o:)ser:e
th',' \'ar~l'I:S :-,cT\'iccs he renden tu socicl\', and recci\;cs
                                                                from it;
',I t: sh,t!l llOt f;ul to lle struck with the c'nonu(JlIs dlspr0pun~on
o('\Wl',:l them.
     "'1 :lis man employs tis day's l<i.bour in planin~ b')ards. and
I;]:!ktn:; l:tbks 3nd chc'sts L'l dra\\'cr~, \Vh~H dues he- :-cccivc
{fC"ll ;'Kiely in ,,"~.:cl.:;;<..:c f')f L):' \\'ork?
     -, l:,ht 0f all, on ~l'll:ll;:;- :q) in tl:c J'~"rnir:;, he ar05cs hinl-
self; bel: 1-,(' h:l,~hlln~['lil1lade l"II'e of hi,; ciothi:1,;. In order
~Q pL:~:tt hi,; \;:"'P('~".I th;-.; "lUtl\\I~::, sirnpil' .)..0, it :~, Jon cn,xmous
<~mO\~n~ I)f J.l:)Our. and :n"jiY i:l,.:(;lliou~ ':l\'~'[1t,",ns, l~,\j~t '"he
iJcc:     'l(l~()~ -~J. Ameri~.Ul'; 11ll!~t:, 'tn.: ~:''-hl eJCl'(1 (,ltk I'. j llciJor.s
i'l,r~      b';';; ~Iln:en 1\ 001 :,;1(1 I~:J.-', BraL:h,ms IIH..!n; :.nd all
th['~c ";Itc:rials l:'iU:it ha\'( tKCl .tr,lnsportcd to \',lfit)U5 to\\:15
\\hcrc they have bt;;cn worked up, spun, woven, dyed. etc.
       Of.
2                                     BOD K I.            CHAP. J. § z.
        He semh Lis Su,l tn sellc-,ot ;}!ld the silnple teachil'g which
       to
;5 ~;ven thul', i" i:!';L.:if d,: .... 10 the 'o\'lli k (,1' rnallY thollQnd I:linds.
     "if ~le m;r!crt.lh's a jOl!l"lH':Y. he t;nds lhat. !ll (,rriel" tt' "ave
hil!"."      '''1d C'-'.:cr:i,)r, nt:lcr \,wn lu\'t' rcl!,!.()It.'d ~tnd kvelled
lip ~lk' s.                   :d;!~t1 up v;cl]ey:=-.          hewed duwn          Ulo\Jnta:n_~,    united
the L       11~K'        ,A rncrs. :mo bru\1gLt the powcr of sU..'ap.l into subv
lcd;on r() ;l\l::l.'~ W:tl~15.
.  ,. It is i:lq'd~"llJ~!: !:l)t        to be s~ruck wi~h thc measHrdc'>5 di_~­
p:'op()r~i()~l      whit h exists be: we<:n the <:'njr,yr:wnh which tb"
11);;;, deri'.c ..; 1"1"0:-:: su:::ietY. <lna Wh,1t he UHllJ [·1)1:1':1 by his own
un,\--.",:e,[ l'-"tr~jOIl'j. th¢ so·j,d l~~cd':HlEili th(ll mllst be
Vt:ly 1I':-4i.-':;i0US <l:-,(; H;ry powerful. Slnce it kJ.ds to tlll~ "lllg-ular
n.;~\:l:. ~hat ('.~C;, 1l1:\l:. eVL'n he whose ;ot is cast in the lll!I~)blesc
cur,d:!i'J:l, ohta,n:; th;;l;:!S eY('ry d,"!)' \\ hicl! hI.: could not him;;elf
pm(:vce in m;on~ ;'.~C5.
     "The stujy (,f that mcchani~m is the uLhiness of Political
ECOllOll\·;I"~;
    1n ot\~('t worei-;, wc' m:w ',:1',' th:-lt Politictl F,.m"il\\" exanjncs
the ProJt!~{illr:, 111(' 1~)uti;)\) a.nn the. COD,tlng,;;u;, '!~Health.
It ~ tur til\.: LJUSC", whIch ddermillc ·:I"e~. ))l"utlts, and
rem: it iJl"ui~"l's ~far ~:'e5'"; Cll.l;;'("; a~"c tl".A i,;"nndbnge-
abl\~ fla~l\ra! ::1\\",>, ;"ld l;Qw far t;,(·1' cm he 1l1(l,LiieJ hy h~:!llan
       La~;, hut 111l' ;·.,)st. it Ira, .• s the (I.,:me"\j()n that there
('(f(~n,
!S hCtWClil the.: chanUer dr' thL' \~,)rkm:ln ar,u ti-:( ch;:uacter of
his We)r\.: . •, ,,\<; ::l :)1an th:ni-dh, ,,'j i5 h::' as tile work is, so
is th(: "\\t)lker; <t'i t11\' wi!rk"r j:,;, so is tbe' \\r)rk.
        The nation usc'! to be oiled '"th('                               l~ody   Polil:r."       So long
<IS 11"5 fihra~"c \\',1." III (ommon ti'~~. nh'n tl~(I~\ ~h: of tlw i:ltciests
(If th~ \':ho;~ nation whC',\1 :hcy used till: \\ ('Hl .; l"nlJ~jcal": and
then ,. Polit:c.11 EC\'!"'lIlllY" ~l·i· ... ed wd: eL1ou;,.;l: as ,\ n:..}'lc for the
::iCll:n,!~,  H\il lh.>\\" "politic:;,: i';krc-o<5 ~"'~;;;,r.i.:J~' n~,';m the in-
teres;,,; ",f ('n\',' ~()IliC part or pans of th; ridtil'lI j so that it
seC:ll,S     bt'st       tc'   diup the        \1,l!T](' ,.        Lconomy~" and to speak
                                                              Puj,(,cal
simply (,t Economic Science. or                          l>ur.: shonly. Economics.
        Tb~ ~r(',,(            1)\   \"Ol11ll;~'   ~ cdJed '1"1,,' E:t~r lr~:.;c" "f Industry
bC',:J.1I5C it t 1 ,:1.\:'; ofth~' aHal;":; ot" proJu"('[s, both employers and
\vorkmcn ri,i. d'Sc~];,slon 1)[ DJ.nlo.m:c• forci;;ll tr;lde :l:ld finance
is deferrni In thl: n;mpa~ioT! '" ,:.:.1',(.
   ~:.     Econo.nir~ is a '"";('P'"C hC;·~'l'5r it col~rangcs,
and r'.~:lsons aoO\;t on(' p;~r,";7~".!:'1f r!,l::'~ d~Cl"'. Mc:e:lv: urings
    toget!l('r      1.   grc;t; number (,I              ':~"1':s           and    find~ tl~,)~    they are
special D~C:> ut" ,.,omc gt·,"'at CIlP"urmlty which exists i;) nature.
It des('rib~':, t1115 l nlfunllit~· III a mllj11e and definile statement,
FLaw.

                          I    llist,iat's Harm(iltw$          J/ p"ijtical Economy.
                         INTRODUCTORY.                                 3
            A Law o! Science states that a (('r!:tin result will be pro.
              G.uceJ whenever a         C(,HClin   set of causcs       arl~   l']"(-'Ocnt .
        r SciC"\,:e tran's tile connt:xi()n Lct\\, ~'('n diii'.'rent 1.3\1 s. otten
~h,.'\\·jn,:::- th;,: ;;0111"-' of thl..'Jl1 arc cxplalllcd by, or ('orltalllcd in
01111-;-';.      It rl'~5(ln'i frfJln these L:H\ o. :Jjlplying- them to new
(a""-"" \l( ,':.;r, 1d I:,dly increasing dllilLulty. ;md lino" out :h.: L ,mchl-
sioll~ 1" which. they p,.}int.                It then inquires hnw f:::.r 111\:5('
'~'):1{;U.,:(.I~S •  u.n:;j::'[I'Ht with obscr\'ation. so 1.-.; to \'ai(y its
                  .irE"
W(,1k.      If nrcc~sar:-) it gOC5 back to i~s ori~i:l:11 L:l.\\:', 'and
c()rre~·t;:., or mucific" or adds to them, 50 as to nuke them
repri.'5cnt ;\d.lUre more tndy. '] blls gLldua!1r science b",(Qmes
able to pre-din future events with Hlcn::-\:-ln.{ CODfidcn;::c and
aCCllra~'\' J,
     ~jll: iLl", i~ all t:l;lt a science can d,,; it c,:nnot c' ~im to be a
;tl:,k- in llle, or to lay <\o\\-n rules for tht· pi3.cticai conduct of
atj'airs. '1';:,t;;", lhe ~:tsk of \\-klt in oid time_,; u~ed LJ be caUed
an .. \1!. .-\n ;\rt c,-,n"j(LerS C'Jmc impon,ult practic;tl tad, and
dircc; ~ men in their efforts to obtain it. First it inql:ires .:.:cne~
raliv ,:ltO tl:t... vitriot!:. r:omhtions uf the case. Tht!'1 l;:kin:.:: one
oi ~h('r:l- ;'It ;1 time ;~ s('cb Oll! the scienc-e wno:,c spcl'Ial bu.;.ir:css
it is to :In,,I'.-c:' ljuestin!l:=; rd,itin~ to thi., par~icuiar (:.hS of con-
0:'\"1).." and demands of this science an :lnsw('r to a question
whirh bc;u<; cirectly un II:e end in view, lLwing cul!ectcd !-.;ch
anSI'- ers fr,,;', Illan;. "'"'icnn·s. Art Pl!ts them to;ethcl ; and says,
Sirl(:c \I-e <1:\' wld bv the :;c:cllces that such and sllch (':{e\~ts
will follvw f~ i\1ll such- anJ :,tlch camc~. therefore it is 1 ...".;t ,()
ptltSlle such ~nd such ;l (OUTse: this COUTse \\ 111. all things
being considered, lead u;-, up to, OT near to, our de,,;rcd end, so
as to cac:se as 111l:dl ~ootl and as litlle e\il as pos:;ibk.
    Thus the ra:lway c:ngineer is a man who de\'(lte~ hiTTI5>elf
tt) t11t: Art     (>f m,lkiL":- rJ.i[wavs: and when it is (:C'ridcu that:l
raitw·l.Y is to be mad ...' from -(Jne town to ;l1~(\thcr, he r,llbult5
Geology and othc-r science:; and obtains their answers ~o certain
definite questions before he decic:!cs which TOUle to adopt.

      J It is \ln~'xUtnate that the word Law is U5('G in lhi" !>en",·, and aho
in the ;-,eme of:l cnmman" by authority. Thc law which ~lW<lI-;~ in the
 IW!i';~Hin= m,,,,-" . •H':d ":lY.~. A 15 a cause of B, i~ nUl 0: (1)(" s:unc
.;i1arol<..:kr a~ .l L.1W y,hic'h sVeaks ill the Imperative m(',od, and sars
·'Do 1/:,', A ..-oj·jrh:1t."
    t  l),;g:;llld_~ ~h(ldd omit <1ll pa;;sages c(JUlainec in sep,nrc brackcts.
    3  Scit"ncc, when oc.:atning 1l!2IV Laws, is said to ht! l!l{hl,ti\t~; when
fC':tsonmg fc)m ~I~cm <11l,j finding- how the\' ~,l c Cl>nni:C~\ r. with O:1C an,
other, it is ~:t.id to I.e De,itlClil'c; its ~hjrd ta~k, lh:::it uf \'erifil'at:on. ha.<; iust
~ell d.::~r:lbed. There        h",
                             heen :t c"ntrover~r;1" to Wh~l ~<:r Fcon0ln;cs
IS an I nJuctJve or a Deductive Science. It is hoth: it" Im::H '1,-':lS Cun-
tinua1J¥ suggest new Decuctions; its Deductions continually ~LO'::;t.:,;t new
InductIOns.
                                                                                  1-2
                       nOOK J.         CHAP. I. \ 3-5·
    B:.lt tb e st~ltesman or the financit'T who decides that these
two t{\\\-:-:s are tl; be conoe:::tcd by a raib\'ay is a man of Art in a
vet b,"l).1dfr S':nse of tlot: tC;-;j~. For he bas to Ct1 nsidcr 1I0t OJ'.]),
"'hat it wilt u"t tf) Hlake ,he railway t.:.;.:t :.dso wi;.1[ nct~ protit it
will (.1 ing i:"" and pcrh'lps wh:t! will be its iLd:r('ct i"'olitical,
social aot! mur,I! effects. I \L dc·;ng th;::> he has to make many
inq,.. :r;e·. cf Economi,":;: j,)r tlli,~ .:::clcnee examines th,~ i.lwS th..lt
dt.:term::l\.' the ;"';1"0\\ til l ... t ~radl.! Ln ~arucuLlr cha:-!l".c!s, al1(~ those
~h~\.t (ktcrmine the C\·;ot (if m:,kmg ,\nd \\orkin~ the railway.
      L:onomi(s then cannot uy i:se!f he a g-,liae in the pr:tctical
.,flairs of lil~: hut it an~weJ''' :1 llt;muer of difficnlt qllc.:;tions
whi, !l ;w:st ~(: ;o.~kec (Jf Il b,' th{; ';'_;lte~m.n. lhc i!13.n ofbl1:-;iness,
and th philac:.rhr',)rist. E~:on()mic> i::. ~r) he CL1S",cd with the
).J{)l"1: "r SC'cial S~'ienccs: bCG,u~e it d.:a~s onl\" il1cidcntaJl\" with
jna!'!inl~IH' th:n;". lIS maic purpo,;c is to ~·:,-,k- for (he moral and
~oc;:t! L:tW5 b': which Illt'n's C\)!,dl.lCt i~ j!"~'-'I !'li~.t:'d in the c\"erv
dav wmk of th,;jr lin's: thl' motl\-~'S wLich ClHse tllem to seck
one tr:ldc ,m0 \l:-nl!'Jatiult 1<1thCl" th,ln ant ther. alld which govern
their bch'lvitJl.lr 11' <)tiJ<':rs \\:lh \\h('I-:1 ~L(:ir trade brin:.:;s them
Into COl'tact. b:onornics i!:·.-cs:ig,\i'> tbe ,all~(,S which ,lctcr~
mint" the \York of a man's da:lv !lie. lh .... ln3nnr::r in which he
spends his income, :m(: the i'ltl~encc which his work exerts on
his rhar:Klcr.
    ~   3.   SClcial f-cicrlces      ba\.~    l11.1.dc s!Qwer pr"glCSS than
ph) sic;1l sci(::1ces"     Ont' rC;1::;()1l of   thj~ j"   th:Jt men have only
rcrcn~h- b\·~T:.a     ,0 app,: to sucial ~cit:r.<:(:s tlh"-'0 mcthoiis of
d;"\5si!i'~rtt;;1;1, and that s\ ,:tr01;1tic ~tl\(h' ('.f e.lch class of
tl'dths, wh:c.:h h.":(" been .,.;) st:r'ce~S(ll; lit ibc phy_~ical sciences,
But ovw .hlt m<:11 IlJ.\"c se! tllLnlsekc:; In stt:d)' each sep.1rate
group cf sochl f,1CtS by lbClf, these ~cil::~(es too are beginning
tv ac.';a:lcc "t(,.t(ill\""
       In any ;-)i' :0:): of lbe physi!:.1.1 scicrcc5 we m;'lY read how
men f"ile\I \.J !ll~lkC' ;-;1pid i':-og-n'~'> ~r' \or.g: as they pf'rsistcd in
the \'din a:'{'~np~ Iv dl"(i)\-":~ S('tne ~jll;rle e'plan<.llion of :1.11
the \'.ll"i,n.:,') I~_,t:lr:ll PI1(:Jl(.mflCa. The (\1~Ciel1ts used tn he crm~
timi Illy 5t<ld:;i.~ ncw tlwori(",~ fl,r the cxpl.l;)atl(1n u( till' univcrse,
\\hi'-'\ s"\':'(T,.~n~ :lgCi had t,) List ;-,W:1:;. .\0, :imt: went on,
f'.l':L ll:Il":",t :Llt they mu.st :'_';",ratc the s:l:dy of inorganic life
fro/;: :1,;1: ·,f o~·;;a':Ir:, the :=;ttj(~y oi chcm;,lry frClm that of
mcch..lIHL'::-, <-Inc ~~l ('11. And \\,]-.cn mC-'l had tkF begun to
<:>DCC/)!.:·;ltc thc~:- ;:t:c!,'iun U;l (lEt: p;tn'c:\!j~r cla'5 of natllr:tl
ph..:!;'):):"; .1 ;" :1 lil11<\ to) tracc b\ cafl;bl ;!ilU ~tt',«_h \\'(ll'k tll1;ir
L~w_,. tL·. \- n'.tJc S,);j;: pi'O,"r{"~5.         l)f COtlt:oC ~::C\' "e!dom
(lb~,·ine,t ;c's'~il-:; Lllat \',,'r~' ~ (.m;l!etclv truc.      1;L:[ -~he lleW
n':;uli:; \y,'rc :liwrn." ,'~';J,-,'! 'i,e 1:-,iI1l -I:.m tho<:,-' \~::i;_::~ lh(:v
displacd, "iC) that ""dch g-(nl'~J.tiDn :,Urlu: from a more aU\".--..I:-
t,l;;.t.:Cllb l)ll;ii; '011 than its predcce';~(lrs; and thus by grauual
                            INTRODU::TORY.                                       5
steps man has obtained a commano over n:lturc similar to th,l.t
which fancy used to attribute to the .- ii! Y or the magician.
     At the S;imc l:me it is true that il". the i\1or.ll Sci~nCl'5, even
more than the physical, a man who C ..... !.lli1CS h:mse!f entirely to
Dne narfiJW hran·:h of j'lquiry is not like ... tQ m,lkc bood pro;jre::;s
in. it. The l'cOllomist shoilld know sOn1('itill;.," of the histor\,' of
manner,; and CUSt0lnS auti laws, and of th·. pr:nciplcs of m,·n'tal,
nwrai, le~~d and political sd~Ilce. He m' 5: :J.\"oid the ..:rror of
reganiil~~: "the prc5t"'nt experience of mani.:illd as of universal
~';lliuity, mi-.,~:tki1l6 te"lJ1orary ur 10(::<.11 phases (.( hlJJl).l.l1 chara::ter
f8r h1J:llall rnt~lre itself, hJ.\"ln;; no f:lith i. the wonderful
pi;.lLiilty l.,f the human mind: deeming it il:1;W,;.;,jl>h: in spite of
the <,trl-}ng~"t cviden(:c' that the earth Cdn prodUf" hUln<ln b~'ings
(Jf a ,l:f:-(IT:1t t\-pe from that 'which is Lmlli.n:.               him iii their
OW:1 age a;,ld 'cn~n p.2rh:1ps in his, own countr. The only
S(;Cllrit\ ;;'~:\~nst this n.d.rru\\ nes:> is a llbcral mcntall \llti\3.tion.
A person is nut likel:; to D{; 3. good ec,'n0r:Ji_~t who) is I.'·[hin'j els('.
Soc!:!l phenomena ;:Jcting and re:lctin;; on on,~ :J.1l!) 'lcr. tlh:Y
c;:mnot rig:.!]:: br understOtKl. ap.nt; but this by no mea: '; pr0ve~
tllJ.: ttlC mater!al awl industrial phenomena of society :)rc not
th('rn~d\'es susccptil'!e vf useful gcncr,lJi3atiuth, bur 011                  th.u
thesc :';l'nt'r:tli:;'lti')!l5 must ncces;arily be H:iati\"e to.1 ,!\'en
form ofci\i:i,;d~ion :I1lU a givC"1l sta;,.:c'of .;;;ocial ;.dvanCellll')t 1,11
     '1'10-.1.'; the ('conolpi~t lllllst p:lUSt· s()]netimcs t,) con~ider the
connc_,i(,n hcrwccn th;-~t element of weli.ben!; with which h ... is
chit;:ly COl:c'-'rneu, And the other elc:l1cnb; for it is n:lly I
thIS means ti'.at hl: can ;lscertain the real Si::,:ntiicancc 0[ {lis ow;
r('~ult.';, and can k<11"l1 in what direction it is most important to
extenu his inquiries.]
     § 4. 'f 1m, acco·Jr.t of Economic science may be summed ilp
in the (o11')win;.: dd;nttiJns:
            'rbo~e poniorls of human condlKt l\;lic-h are directed
                 toward,;; the acquirement of material wealth. ;>,nd those
                 Londit~ulb of human wdI-being '\ hich directly depcnd
                 0'1 matcri:tl ,\H'a~th, are called Economic.
            Tha Science of Economics cnllecb, e,\,illlmeS, arranges
                 and r(:;15!lJIS about the facts "hieh are connected with
                 the. t'cono:nic .1ubits a~d ~()~ditlOn5 of well-bt:!ing in
                 yano:.lS countnes at vanous times.
     S5, ~lhc subject-lllJ.ttcr of Econl)!nics is'.\'calth. Butthere
is some difficulty in ascertainin; the meaning of this word.
      \Y.:alth must b.~ di.,\lnguished from wcll~heinh'
         H tlungs which are useful or pleasurable are elements of
          bcing, wildbl'r they nre material things or human iaculties
         apacities for enjoyment.                          '

                       I   Mill, On Cl,lmlt, pp_ Sf- 83_
6                            llOO K!.           C HAP. I. § 6.
     But though some of trc,;e hllman qualities should not be
inc1uderl ll:1,lc>r 1he term wealth; yet this tcon should not be
confined :'J thu<;c thinh"c \\ hich «lil he bou;;ht ~nd sold in
t~lC ll1arkt't.         For m CS~101dting the wealth of a country every
tinc would include tl,~ r'.l;"Jrkct-yalue of the pOller of work
po:;s('s'>cd Ly rt c,ut·!-orst:: or a sla\-c. And it se,'m,; unreason-
ablf" tv exdude th:1t of a free man simply because he cannot
be ~old. :tnt! so has no market-price.
      l;ul w<': w;lnt :'-('.lle term wh:ch wilt fitly d:scribc such things
as arc caIMb!e uf being ('.\.dunged and of hasing their value
dcfinltdv mC<lsu.-ed: and. we iilld such a term In .• Material
\\"eJ.lth.;)
          WealU. then may be s:l.id to consist of ~[aterial wealth
              and ycrsonal or non-material wt.:alth.
          Matei:ial Wealth consis:s of the material sources of
             enjoyment which arc capable of beillg appropriatt!d
              ;·tlU therefort! c.t being c:~ch,1nged.
      Thus ,t induct",.; n()l or: 1,1' cOlllm(lciitics (or thin~s the posses-
sion of ',. hich ,::.\11 f:in" c:nJu~ment directly", bllt also machll1ery
and ot\er thing~ \~hich drc made or appmpri.ncd in order to
aid n! ,n in pr<IJUCI[];; cornmoditit:. s.
          "Personal" or "non·material wealth" consists of those
             htlman energies fac111ti~s ar.d h:-thits, physical mental
             and mor:::ti, wh:ch (Lrertjy co)nlrilJllt~· fo ll1:.tking men
              wdu5tri;\Hy ('fnc;. ~lt, :lnd which ,lwrc[or..: incn::as,~ their
             power of pwc;llcin;,; m:ltl:'rial we.lith.
      Thus m:mu:tl skill, intcll:'.' l'nL~) and houe~ty m.ay be included
in the pt.'fsonai wt'alth flf a l.):ll~try.
          All other human flCllltics and (lu!;t!l'S which it is an
              advaruage t(1 h<":\"E." and all other SOt1rCC5 of enjoyment,
              ~lfe dements In the WL'i~ \)t::n:; of a man, but are not
              incluJt!u u'.cl('" th'.' ~('rJl1 we:t1tlt.
      Thus ~hc pvWC:- Ilf api-,r~'ci.Hin;.::: a:'.d deri\ ing ple.1sure from
lm:':>lC is an dC'!iJl'nt of \\"cll·being, hut it is not called wr:alth;
l)<.'caust:: g'"' :1<'1'. IL: S ;)'.':1 :..::i I:g it docs 110t n;:!.kl~ n1l:';,'" w<lrk efti cit.'I1t
in the pr()(.:l!t.:iull (!I llliltedal w~.1.:th.
      ~ 6.     The lCl'ln i'm(i'.JCtin.! h,lS b",'n l::>r:il bv Economists
in nnCl)' SCll'-l''', J.ml h,l:" C,L1Sl'd :n'xh misl:nd("".standin~. It
se<.:ms be~t tila[ i'r,·ctucttYC \\'h(':. u:'t:d SImply as a 1'::' hnical
 term should :ne-lll proGuct1\'C of wt:3.!th.
           Llh".lr i.; Productive \\'ho:n it p:-oduccs we:llth, whether
              Pcr:sotl:d or :\lateri:t!'
      But whencver there is a!1}' room for doubt, mention \\.
 made of the p:lrtlCllbr ].;i:ld of thing: whirh is produ.:ed.
it may be sai,;' that bbour :s ,,(,t".:.ductil·c of welith,"
anticip;lte the use of terms which will SlJon be dcti"eJ, lip)
 ti\'c of c~l-'it:t1:' or "productiYe of wage-capital," etc.                               :
                                 l!\:TRODUCf()RY.                                        7
    Pr,,,}t,cti\ e b,bo!lf cannot gCllC'raily ~-'\:' di\-iJed off by ::t dearly
uefin,~rJ ;,nL· !r~,m L'nT,r1lducti\-c, .\ ninist(>T of reli:/:0n 15 often
cl:>se.l ~:-; an C""?'-0du':~i\-·.:: Llwl:1Lr, Lut If b~ c\.l'rting n-:oral
11ltlll~1'C'.- i-:c m:c\-J3 LlD()\Jrl'r~ lJiOle ~(li).:::r, Lone"" ;l;ld uhcic-nt,
llc 1l> 50 f<lf pr<lductin! nf p(;Ts(")al \' l'cl.;th. :\:;~dn, ",:nee some
rcuf.';.tiu:l j_~ nCc,-j311~' for the- hl~lE-~t eflici~':lr;.\' of lJbour, It is
qui(t' p\j<:<;:b:c i '"J.[ ., llHI'>lci:1Il nl.l~' ' ndir.::ctly incrcas(.: til..: wealth
of a l1:1t10'-:. :t!'.d lx' I:ldin:-ctir Jlp)dw:t: .'c.
    Tlie W!Jd l'r,)duc,in:: is 0f!l-1l aPt.';i! d not only to labour, but
~bu  ,0 c;,n-;'l:npt:(.n. This j", [net' d somc\\,h;)t ir:lccur:He. for
it islaboLlr that ]lroJ\!,~es; Clnd consumption can ha'."(; roo further
cLlim t .. ' be; I~ Im::,J'lctin.: th~u tIlat it sup;,,):-t', the iah{Jl:r which
is prod.-nL'r'c.
      [§ -;. \\'uil,h rll.ly be !coked at frum two different points of
view--th;l.l Of tll(, j:diYidtLa~ an,-: :il:U of the ;,atlOn. For the
indil"id'Ll:, 111.,\ .1 L1 \\'L~hh i:" Ll,db 1'<':' ,,:1]\" a:l the matenal
th:,l. ~ \\ !I:cil. :l:"C <lew"llly in Ill" p'JSO'<cSSiL'D,' b'Jt :dl ri:;hts to
n;,L\cria! thi--:,_" "yi.;dl .-~rc Tl:co~:niseJ hy Go\"c:-nme:'.t OrCtl5tom.
T]-.':~ j •. ;;', l'lC<.C:' s:.l':h things a_~ rivhto (If \\'<1\", p,H~'nt Ti~hb,
llI0Ii:,;,1::-,-,:" l~O\L'nur:l'nt ~ecuriti(':>, sh;t~""S in V.lblj,.: .-,w1 prl\-a1e
tr:1d;"I~ CUln!lal:it'';"        t)n tho ,.tk:r nalld a~J l:cbt3 th,H he owes
1Ia',e to be ~,;~,:r,l(:'t'd fr"m the ~LHn t'lt,ll 01 Lis POs~l.·s~i"r,'",,,u
that L-; \\ :,l;',h             Lc a n":;a~i\-e qlEIlTi'r, l-ll~ l',.'rscillal
                          1;::1:,'
we~i'.:: lT1t:IIlUt':' l::~ r'lu'l((es and h:,l)its at iJ::dustrv.lil,. busi:1CSS
rCr,"':l~:('f" hi,. l-.:;1",,'"1~d;;.: of other'O) and g-(,I!'-~r.j·:ly cvery(b::l~~
t:).tt en;I~)1-:~ !llill :.) UO ..i :;oou traJe 0, to l>btai:l lluten"l ~d­
\'anLl2,e" 10 ,LD\- 01.:1<'1" wa';.
     ':<i,:nll:ti \\-c,dtL lnc1u:k" the w('::..lth of the indj\'illual m~m·
ber:> vi" the: !1.1:r'~·       L;:lt in btimating: it, allY deGl- dlle from
one !1lr-n·,t-.e;- o( rill' It.,tic\) L1 ::Illoth,-r ma\' be r)J1)lllcd .t;t0 s'cther.
On the \,·ther iJa!:lj ,1<':«'1:nt must 11<: t:lk'en 1)( the il,!e;--n~ll and
(''\ter:),ll POll!!(l!   :"~',:L:l.tion uf li:c fl::1!ion, in SI' far as this
atYeds ::n, frc'.ltuIII ,tnd ~~:~~ur,ty t,f itoi i;-,Ju:·tr;'. Aud, though
.t Ulu-st be (':'lil("~~o:J lh'-ere is som,~ d.)ub: 0;:' the sul;it,,:t. it
<>ee!ns ~,wc.: "n l1rt' ,\I,de ~a CPUI;! .:1 al~ the n:itl:r.:Jl ~{,::(lltrl:es
of 111('   C"~:;,!r~, ~~i,_h.1."'    Iii.:; It:,;-hw,.ys ,1:)vn:eJ by it::-   n\l'r~   ,lnd
scas, and       :_l!l~ a~S,'\I',ta.',~ 1Il   production that is I.kri\"l.cL from a
f;l.\oura\)~c {linl'I;'_~. prr,\'irieu. it has not :drcaclx b(:~'n u.'ck(Jneu
fur 11l til: ~-:t;ue 01 the 1.-.nO.                              '
     All \\'(";_ilth j:-; 1~';l'I'l':, til:!t is. it 11:15 the power or 5_lti~t\"in"
~0m..:: dC''>in', Hut ::l:n-,"~. howev\!r n~~(ul they 1ll,\V he. have n~
\"all:" j,' c;-:-hJ.lJc,s if t::"y (,1Ii ue OD1<lin<::u with.;)~t c:f,n;: i:l as
jar~,-' lr.Ullt::H'S :t.~ till \. are (h.'sired" 'lhc'(: has L'~l.'n much
JiSnt5"1O:' :'5 to \\-h~:h-""' thl.'Y must nu~ b~ e",(]udl-d on trois
~;r(llllHi (I',~m the l:~t of tl!ings 'which cOIlstitllte w,a:lh; but the
question s\'cms ~o be vf l!u moment for th..-. purpo!:i\!S eitber of
sCience or IJractlC\!.]
                            CHAPTER II.

                       AGEXTS OF rRODUCTION.


    § I. :;"1.'\'\ when rrodllcin~ wealth acts upon the things which
N flture supplies. The. giit~ of ~ ;cttlre ~o man arc fir.;(1), materials
such as iro>], stnne, wo()d, t·~c., and secQndly, force,:; such as the
pOwer (If the \\Jnd. an,: t:l(.' he<1: of the sun, the SOllrce whence
.di 0111\:r ]>0\\('T5 are deri·:ed.
     Ali that man's h;w,ds ('.l.Tl do is to) move t~lin~<;:. A ctrpentcr
f"r i:-:stance takes :,ome pLlnb, curs them lip ;Jl,d fits them
:,.)~ethe( in the form of;). b,)x; he n,)es not in t]I(' ~t:-ict SC~15C of
the word r:1:1.kc. or create; he only arr::ln;;c~. ,. H If\.' examine
an\' ,:asc of wh;>.[ is r::tiled the action of man or Batllr.: we shall
!ln~!" lhat it C,)r;si"b m'~rel:: in "p'JUin;:!" thi:t;=:::. into fi~ places
(or heing acte,i 11pU'1 by theIr mter:lal forc'~'s and by those
rc:~iding in otho?r n:ltural l)iJj'·Cl5 .•. man ("Inly mm'es One
thir.g to or fror.J. another. lle lllO\'eS a sc('rl into the '~round;
and the n'ltural forces of YC.;-f'tatillll prwiuc(' iI"', ~wces";on a
root, :1.. ~:t~l,l, J"aves, flowers a!:d frutr. He 1:1(1\,("5 ;1 spark to
fuel and \( i~:r«e5) ,H1d by the (()",~e .:;enerZltec: in ("ot.lbu<.tion it
co",ks tli<: f(,'.!,~, melts or softens the iron, o'tl\"Crh ill(' beer or
stlg-ar die ma:t or canc juicc:, ",bit::h he has l)l'('\'iotls;~' Inm'cd to
the spot. He has no oths-r me .... ns of acting" 'Jp()n matter than
bv n1m-i:lg iL "\lotlon or res:ctance te' o-,otion :ere the only
th.inc5 whl.~h his mllscl(s J.re CO;lqrllctt'u fI.H 1,"
     S:nce then nroJucti.)n doc:.; not mC:ln ueation hut onl ... re-
arran:;cm<:,nt it 'is a mi~Llke to suppose, as some ha'."(' (bnc:that
the wl'rk of those ,vho carr~ or Sell ~oods cannot ~)C J'rudurti ...·e.
The carpt:ntt'T who make,> a box, t'lk('" (1..'rt,)in Ln;;.rd~, from
an ::lrr<1n;;enlcot in which ther \\'er\~ ('If lit:!(, usc, and pute. them
together in an arrangement in which the," arc of ~c.ltcr usc.

     1   Mill, Principks of Political Ecollo",)', "Hook   J,   chap.   I,   §   2.
                       AGSNTS OF PRODliCTIO:\.                                    9
So the carrier or the trader takes the box from the m.:lnu-
facl'JfY \\here it is made, and where it is of little use, and
delivers it to tbe purchaser. it is tn.:c th \~ the carrier ,md. the
tra,l(;r in<lke no pcrma!1'~nt change in tIle ((lrm of tbe 1:0'>:; hut
th<1t (kes llC:t prc\ent ther,) fronl b,-':,,~ I':-rJ.luci-,"C, for the: as
",!ell as thl' c:tpC:1,cr con:rihu:e ~u r,',H:cf the mate) ial which
is pl,)ndc'\ by n.lture more ustful to marl.
      § :!. .\5 ci';i:is,ltion advances the relative importance of
mental to mamul ;'ihour Cklt,gc3. Every year mental labour
becomes m'Jfi.! 11l1pC,nant, .. 0,1 manual l.J.bOlir ks'> Important.
 \\"iih ewrv fn:~h lO\'cntion 01 macbinen wf'rk is translcrrl?d
fr(.m the !1;u:,clc~, or ,,-jt:ll force. t:l n;t~ural forct:. LYcn with the
 ;mv'rfc:d m8.chi!~cry \I"C now haye, ant: p'Jund nf coal will raise
 a h:mdrc(l p:)IJnd~ twelve tbou5;1nd fed hl~h; ann. the daily work
 of .1 man C,t;m,>t e_',eecd this c\'cn if \\"e l:l:C'l-:C ll;m a mere
  ;-lIrkil"" nl2dli: .... ar.. i ohtain imtC'.ld (jf a rr!,H _~ Lie SCI much
 puliin,::tar,d p\l~hin~, anJ hewin~ and hamm'.:i':';. \Vith an
 ordinary tll!e, the \I"ter rush!ng in and (Jut 0f ::t r,~:-;c:'voir of
 a milc in ;,rta, eyer, if th:-ce-iourth" cf ;ts furc,.; Wel(' was Led
 thHI'.;.S-h in.p('rf~'ct;"ns of macli;~lcr\'. 'Hl;!:d do ,~s much work in
a d;l\'   "_~ "':,-' 1.,t:"'C:':~   of a bUi\liJ.-:d tlloUSa;1'1Ir:.:'n.
    f3.         l'i;c a~tllts ofprocJl~C\.ion are then ~;ttun:'~ (arns, ami
. . . 1<1\1·5 fore>:'; lr"m's force b':::I:";- ~l:l~\,::·:t;ly lllLJ<,t eflicit.:nt
when it is so appii":Ll. as to cUIl,h_,ljjll<i l~lrect natlire's forces,
rather ~hall to cpuutl"r::II:'t them. 1\1l~.he WLdrh of a conntr),
depends ·.:)1oa the m::nI~cr 1!1 \·... :licll r:atu!·':·.~ j'Ulla:cs :md m:m's
force ,_",IJr;": !(J;;dh~'l' 11: the pr(;(!L:ct:on 01 WC.J.;:;l.
      T.l t us llrst rC':".,;-(1 tbt.: w(';{hh 0:- a cOl:n:r:~n so far as it
,iej:'_':JJ., on till: iilJ'.'r<1~;ty (If ll:\tllre. This C0!1~15:0' {"'.{)t only in
h'f gifb uf f"nih; land and rIch mines, Lut a]o,o in a connn;cnt
.ltr::m;;cnl<'nt (Jf IWf gifts. Before the inn~n~i(jll c·f railways, a
di,,:.ict (l"H,l.i Jj"t hel\e a pl'Osperuus t~.I(~e L,nlc:;s it kl.d easy
11-"0]);; (If (omlll'J:-,:c"tio:l uv,i';er or 1, -;'l:;\,        1;-0:1 mines are
of LU!l'.paratin::J:; little \'aiu·<.;' If there i'~ nn coal ~l('ar them.
En~ial1<l·::. prc:,;cl:t pOjitio:J In the world io. in a g-n·;tt measure
dut.: to til: 1",1(.t tll::t she lll't orJ\' has co;}l minc5 ~GHl iron mines
bet aL;\) h(:) (0:11 ane. 1ron ll~ine;; are ne;~r t(lguhcl.                         .
      I n \il~~ cOllrse of f.(:ncLI~ions man w,->tL" on ~he face of
Il.lll;rL', a:H! improves her ;:;ii~':i. or wast{:s them,            ThL' p<!ticm
ilJdustry of the Dutch ha,; turned their barren s~u,ds into fertIle
mC'<ldows; while the wasteful carde.:;:,m~s'i uf the slane-owning
cI}tton-pL:l11tcrs of S(;"thern America has turned :,on;e of the
ri,"ht'~t di .. tricts ,lftl:c world intf) a wilderness.
      § +. T'.,rning: ncxtto the efricit'ncy of m;].n':: l:,l){)ur in pro-
r1U('ti,lll, ',I'e n~,\y cl:l'iS!fy the COl1uitill1lS on which It depends as
(i) hIS physical strength and ent:rgy~ (ii) his lu-w\vleJge and
mental ability, and (iii) his moral character.
                       .uocn::"            CHAP. II. §§ 5, 6,
    r i:·~t!y, wi~h re:;ard to Ir. tn',; physical ~cl"t'ngth and energy.
,VhL:C lLlan is aitering \bo::: '-'L-':1..' of na'_ILrC', n~tlLre i5 cn'r chang-
ing :be q:!:1:ity of m.ll1. ,\ n1..'d!'h~ in\-i;or:wn:; c:inntc i" 0:-:'(,
01 ',h',~ m"~l ;lllp()!"om ot' t;l..! sifts t:,:1l P.:ttur'-.: hestf)ws, Ex-
hUn:.: :.~'r C'\l'fvates man; ,~J1d in troj)ll._ll v.nnt!":' __ s makes
him k;1d a r~<l(ly ear tv tl'C S;J::;('~tl,)J1 !ll:tt IU' "!1~ui·,! ll\e in
iJl~l1e,,~ O:i ::h; fruits tlut n.ttiHC shc\\('fs d".\!~ l.p')Il him.
In m:,,,y pi",:cs e\-':-Il in ~he tl:Jl)pt'ra~e i."ncs \\;.r;~ :::; almost
cn!~r,.;1y ~llSl-l('iH-1,:rl d:lI':ng the f."~\t!".·me hC;l~~ (,f !'l,'1lnlCL Ar.d
in ~o;nt' J',(f!.~ ,)1' :\mcr:ca me'n :lIe i~.,t ',;nl:,- j'r:-,n,.- to take a
L'J1I~1.1;: dUl il''''; .' ,he hca!cd t('rm,-' uut <Ire al~() I-'r~'\-I.'ll~cd irom
duing: such w()rk a~ tluT of carp('n~ers in ,he ~Ipen ;ur during
tho;! c>.;(r"2I;:,- :.,~vcfity of wtnt,'ro   En:-;[and is f'Htllnatc in h:n'ir:g
a di:lIJ.~c in \\'hich meTl C:l!\ WOtk Wit!l vi::;our o·,!t ()f .l·)ors
almost ;l:i the Y('.lr round; .Inel \\-hich, by thus f,btc:-ing ener-
~CllC .--:nli s:eaJr ha~its uf labOl;I', Lontri~uks much to her
gre,Hlles;>,
      roc ph::~ical pr,\\',,;r an.-] (':,Ctg-y of m:l:l i_-> of course partly
deIJl::l(len~ :':f'OIl i"hi~)"itcd f3,c-'-Iu;ditic~.    Blll m');";c!":1 S':':::!1~'e
sllL'.'.:, tJ..lt ,he llur:lctcr Of.1 r ,,:e :';.1y be ,"::j"::l~ly :n,-,,:Ltl, d Ly
Cit.J.llt;(·S in iL~ hahits of li~';l~g. il: dl':~' in ck Ll1L:w'is, in b,'.use-
~-oll:n,   etc. '1'bw; the     ph;~icd           \Oigu . !r d a ract.: Jejil:nJs P,lIUy ull
Its w~'.li;h, '[, :ll!11 th.\~ l',Llh, to lW:1;~ f:":\~'no
    it ll:\'~~ :J~' l<lncmlY'rcd that thci.'1\-~:-.l~e ct'iir:lcllc\' of iahour
in a COL:l,try l:~-;k';h;:; flo): I,n!)" (,I) tl'" I tf:: :('11(;; of t\;l' l_1L.0:Jrer
in lh'~ p:'lm'~      (,1' :;[~'. hut ,-\)_,)       .)]1   :h ... L'.ll~j;;('r flf YE'.I:-S dlirin,!!
which h,:;::      r.~lllly d:ic(~', i             > 'Jct" ... r cn:ll.:t-,;   rc-:;anl'io mat,'nal
wca~th      th.1t ::t lll::tll she,'lid   OJ..    :-k with mC'j-!ra~c energy up to the
ag'~ (Jf si:~:yo tn..ln tint h.:: ~L             )uiJ 0\ u\'.\.r~ himself:.o as to be-
come all l,ld man at ftJ,t\".
    ~ 5. ;..,' ;:xt with r('b<\~d to kl1(1wl{'(!ge and nWlltal a::'ility.
   It k, a:n':ldy bec:l f' n:~uk~'d tlLlt the !ikill and intd;,:.;ence
wh:d, are I"P(;ui!'cd fo:' cvT'1i1.:trtdi:i.":: and dirc( :ing t\,<: iot.'c-,; of
n.1.::::t' .1rt:' ;:r'I\\·;;I:'; in ;';lpor:3i1:" I"d,_~;\dy to the bn!te <.;trcngth
by \ ili·~;\ !t:~,':', ::sr-d rJ.':c_, ~·n':'i---:.:1t \\ith nJ.tun'. [n,:ted a
tl10wu.;n b(':~,';al erlt:c::1tI.-n, u,.::-tlH'r ,\::h a spe<:l:1i tr,l,;,:n~.; [,)r
sonH~ rartlcul.u CIIl'i':dYIl1("'ot, : s If( (",'.tn,:1?; m')fC ne~'es~;Il:' Ie ,he
worK",; m311 C\Cry YClr, "[hLfI.';;; !'tarc(:~y <Illy work wl, •.,:h dOL:s
no: nee'! ::;Cl:1e l1lCllt;il ('!!,)l'~, En'l) ill a,.:.nculture m:lchmery is
bchg- ictr,)l!t:·_r:d, llle mana';Cmc):lot willeh requires much ~kill
anu il.tciligl'L'cco
     A m:lI1 (:,H';; wnrk thZ!.t docs IHi· rlc,xl skilJ all the better if
he knq·.\,s t;~",c lhi!.l1 is ac~!; l!:Y "'l((,ired lor !Jim EJucati(\n
makes him l;:',:ck to l1mh;r:,~ar.d wh,--:(:ver (':rectl,n<; l'lay be
given tL> him: II his m;"_':lin·:~~- gC:j ont of onkr, ' r Int:'! plan of
hIS work m:scarr:es in :;J~r "ther \~a)'. he C.ln set things
to r,c;ht at once and L1Uj prC\ em much losso In tllis and
                 AGE:-ITS OF PRODllCTIOl-:.                            II

other wa.ys, ~\"er)' increase in the intetligence of the work-
man diminishes the amount of supcn·ision. requirt..:u from the
cmp!,)yer and his foremen. And as civil:s.:nion advances,
further pro;re~s becomes more and more dependent upon
the di!r'":~ion of education among the \m:-king classes.
       TiJi,; education may be classed a~ gCJler,rl and I,-elmil'al.
As .\till sa) 5, !;the aim of all il;tel:ectual Iralllm;; for the
t:l:ts;; of the prof,lC', should be to cultivate common sense, to
qualiIy them for formir.;:; a sound pr..J.ctical judgment of th~
circumstances bv \\-hich the . . are ::;llrroundcd. \nli\l.e\-er in the
intellectual dcp;rtment can be s<lperaddcd to this is chiefly
orcamcnral; while tll!s is the indi,;pensable groundwork on
wbich education must rest. An educ::ttion directed to Gltruse
gO(.<.1 sen,;e :11110n:; the people, \\'i~h such kn()\\·k··.~,~e as would
lj\l:l.lifv them to jud;.;C' of the tendencies or their act~(Jns, would
be C"crl:lin, cven w.ttWllt any di"cct incuka:'lonl to raise up a
public ('pinion hy which intcmpr.rancc and improndcllcc of eyery
kmd would be hdd discrcditabk."
       GC:ler,1; cducuior, slwuld then aim at causing a !nan to form
an i!lt{;lli.~l'nt Opi'lion with regarJ to the ordinary matters ofhfe,
and to L..; full of resources for meeting new emerget~cies.
       Tedll:.ical education should aim at en:1bling him to under~
stand the processes and the machinery (:of the sprcial work in
which he is (:n:;a;.;cJ. It ~hOllld help bim to llnder~tanJ tbe
r,'a"on of e'."crythm;; that gocs on in hi:; trade, alld thus en:1.ble
h,m to .1.l:clH:1modale himsclf tu ncw m:lchinery or new nludes of
productiun. And it should train him !Il tbe usc (If his ~.rq;ers.
Tit:" tcchnir.al education should be I,cg-un at scho()l~ but a
:,;reat deal of the education that i!; "anted in many trades can
ul1l~ be got ill workshops.
       ~ 6.     :\'c,t with regard to moral ch:tracter.
        Upri;?;htn<.Css and mutual confidence arc n{'ccssary condi-
tion:. !~,r the g-ro\\'th of wealLh. "\\"hc-fC\"(?f there is a great store
of wealth. ,here must be a people livin~ to a. considerable degree
unGer mural restraint, and possessed 01 a more or less accur3te
C0JC [,f lLlty; and a land clotted with bur~ting st3.ck-yards~
lil'ipped out into "cll-tilled fielcls, anti noisy with the hum of
lO'.llllS and thE" clang of h:lmmers, is l:vidence that there is at
hand no small portion of the st~ out of which martyrs and
j'cr'::l.."5 al·e formed. Thougu tine names may not b~ giv~n to
the qualihcations of a busy people, sUle<.1 in wany crafts and
tr:1dts, producrng articles cheaply anll well j it is patience and
,:;obncty, faithfulness and honesty that have bain~d for them
eminence 1,"


              1 Macdonei~   SUTflf)I 0/ Ill/ilial Ec,,,wnlY_
12

     Th~ clL~ncter        0f a na~i(Jl\ depends. chidI), on th.at of the
mothers of    tl~c     n<1ti0n- -un their filr.me~s and t,;enrlencs.- and
::.inccrity. !t is in childho')d, and at home, th:1t the wOl'kmao
un:st karn to be tn:thfnl anc trusty. c1r::mly anr} C.J.fcful, ('ncr·
~dic anJ th()IOUg-h. to re\"ercfl':e otileJ., and Hi n~.sp(":t himstll:
     Fi:1al!\", lllclustn' canl~t): att.lin fult frt','don1 <lnd efficicllc"
                                                                     jn,,;,
unless, ;l.~: \t iii. sa];, it j:. protected -7 Ihi: GOVl.:r'Jmcnt and
the Govcr!l:nent.
     \Ve han: now seen how land and labo!1T al(: two of the
requisites of production, the third requisite is C3.pit3.l.
                                           CHAPTER Ill.

                                              CAPITAL.

         §    L        1:-;, a savage state man thinks o!'.ly uf        ~:tti-;fying jlis
iITlll1cdi;ut: walll:; ; in a civilii:e<i slate he dc-votes rntlch lah0ur to
:'rcpa~l1lg t:le ro;,d3, bllilJing:i, \I)L,h. l)"l:1t'_ rials, etc. whkh m,IY
'IJe (If SCI vice to him in the fllture He abs1.ams fy"m ,,'_d';lIJg
;mn'k,li:l.lC l'n;l.ymcnt from th·: wh,)!c pfrillucc oi hi5 hhC'llr, and
,)el"n:r- "nme lXlrt of it to pruJuciL;";- tlllll,g-o, whIch \\dJ .J.,o,'>I.,1 hi!":.
:n h.:) fJl'JrC work. Thc5t..' rcquisit~" of proc!ucLO!l afe caUed
·,·~IPt;:,1.
                  Capital is       th;lt   part of wealth which is devoted to oh-
                t:linm:.; further wealth.
          Rrb"ucicJ f'ir<.:ly from the p01nt uf view of tk: individu,11 it
13       th_tt part of hi:-: w(,:J.lth which is destined tl) be us~ d as a
~ou,'('('         of   i:1COn1C.
         \\-e s~y "destined'~ or d('\'[)to:-d, bec;:;t.:sc          ;i is not always
p05,iblc In: tell \\bethcr a thing i., \.-;]pital or 11')!, without kno~'­
 'n:; h"w tht' ("'-ner ::l:end~ t,) usc I:. Tb\l~ ,,;1::; .. rc C :pllai if
 11 c:, :lrc' h' be s:Yt:,n t·:> a ,_.-,r".-horsl', !n:t nut :! th,':> ar' '" tot"
''';-!\'(:1 roo, "1 r;-"<.:::()·-,t:. .\--:'1::1. r:1anr tbon',,;'. ;{~(, t:"eJ :i0me(im(:~
il ,;·  1;: ;:l(;"~, ~\t~n.:fl'!"e as L:1~1lt.d; 'i(,:!~~l:nics for pleasure. ,111(1.
l:lc :1 .. :(' nl,t ClS capttaL .\ 1, rench fLl.S:I!'!'::' ..:a:t is used <1!>
 ':,[,.[:1. 'I, t:-te tield, [JUt not 01-'; c:qJll,ll wJn:a :1 clrrics h1m .. nd
his f,.lIt.l:, for a ja~lnt 0:1 a hotldJ.Y. Again, it is not always
,-kar ,0 wbat (':\tt:r.;::l. r]rJctc-r's house and his carria;,:e should
ue rc;.:-arried :lS c:J.jlitai n:ql1in'd for hi~ h:sn:o.:-"s.
        To f;uuiiiJ.r:::-c ullrsch <...., wjth !r,.~ '-',))leep: i":l. let tic: uJt;.'>i(jer
         j.

 .\'h~t is dOllC' witll tho:- (,!ri:a~ ilH(-;!Clt in ;1:1Y {:f th;:, ur.mc11(,~ of
utl"irl(;.'>s which comp"~:~ ,:lC jJl"oJ'J\.'tin.' i;.JlI~try of :1 {,nllntry .
.. \ m;.n~,f,l''-h!rCr, f<,! (-,\.;unpk, h:,~ ();~e r,l~·t of his c.l.pit:::tl ii-j tllv
!u;Jr; ,,( bliildin;;:::, tittco "lid tirstin('J for c;l1r;,in,:':- Oil his l):J.nLh
(If m;L:luf.J.ctUl-t'. .t\noth<.';- p<lrt he has in tb:: furm of rr:acr,1:llcry.
                       BOOK L           ClIAI'. HI. §§         2,   3.
A third     cons;s~.:;,   if he be:l "pinner, of fa"- cottun, fl.w, or wool;
if a weaYt.:r, of flaxen.           \\·(.()lh~n, silk vf (;ottml, thread; and. the
likE',   ac,-·,-,rlj!~.~ tf)   the n:ltur(' of th'~ mJ.-i'li~lcture. Fond :Uld
d('lti:il'~ I-(\[ :~:s .)pnat:\ (."3, it is .,at the I"\!q C'lm uf ti ,,' p:-eseDt
;:lge t}'_H h~ s(.L:!ld directly provll:e ; ;tJ~d fo.:w c.lpit:ih-ts, ex,:ept
t1iC pl'lJduccrs of f(l()(i or d(l!hil'~, h:1ve :l;ly }.l:.n:lOl1 \\Clrth
1lh.:llti0l!if!; fJf their capita! in thi.; <;h.q)C'.         Jl:stC.:l<l 01 rhi_s each
capit3list h<1~ IllO!1t:'y, 'Ihiel; )'. !)J.y~ to 11:0 ,,\(o:-kll(,0tJ1e, ::Jllci so
(':\;11):( S ~~l'_-f~' (,-' Silpply :~_'~J'l.~c1y\.:",: he h.ts :1):;,,) lir.i31:ed :..,-I)ods
in L·" wareh,,>' ,-'5. 1_'Y the s"le uf \Ihichhe oll!ains mort: m(lney,
if) C'!.;':'.' lD rhe S::l:r~.:: :jjT:m:r. as ,\<:ll as to H:pklJlsh his ~t()ck
of iJ);'.rc:rial,-, to kc( p ),IS buildings and lllarhil1Lr~· in repair!
a:l~l ~d repJ..\ce tht:m ,', :1C'1l worn out.             His money :..:1J finished
~(lods, h,lWCyer, :ne not \'hoily capital, f':"r he does l"'J'. \\ ilolly
d(:\-Q[c thl.':m to the<,c pllrpr)sc;,: he ~'mpJoys a part of li:c (,'le,
:clld of the proc<.:t:ds of tilt' (-,ther. ir: ::;upplyir.g his personal
con<;lImption ;tnd that of hi" famiiy. '_'! in hinng grooms and
'I:alct5, Dr u~.lin~;lining hllntl:rs and ho\1li'l~, or in tdl\cating his
<.hildrel1,o; in p<1yin[,; tax(:s, or in Cli:l!-lly. \\'nat then i,; his
capital? P!'l'c:i"l'ly tlLlt part of his p05sl':>:.iuIlS. \\ ;lateV'.~r it be,
which is to ,_ul:stitu(t' !:!~ fL;i\d f()r carr) l:lg on fresh pruJu<. (ions 1.
      Luxurie:i and (Jth,'r things which an: not inknued to be used
productlvel!", ;l.rc thus n: ..2:ardcd a~ prl\,lte (-api:,d If they are in
the h;111rlS of a ~;.ldt'r \~ ho de,i\-e~ an m(omc from selling them
or hiring them (lut, U<l~ nut jf thl.'Y are in the lland~ of a pri\':1tc
ccnstllner.
      But scconJly, capital ma~· h,~ regarded from a national point
 uf'\:iew 3.;; that part of a na\10n-.c; \\,(·.1lt11 which is destIned to be
cmployed productin:ty. III estimatin~ it W(: han~ not to inquire
 wlwthcr goods arc in the hands (,t a tralkr or conSUInt..:r, we
 has..: not 1'1 inquire how mu..:h comm.'nrl 0\ 02r c1.pit~11 each per-
son h:l.5 ;It ill::> dispo')a! in thl! shdpe of money or of any of the
 ~ubstitut('s for mOll(;: ; '>_'XCl'pt indecJ when it becoliles nect..:ssary
 to take ;).c\;(",mt of ~nc comrncrci;::l relations with other countries).
 \Ve h.l.Yc '3impl~' to consider what part of til,> J1'l1ion',; ,\(!~lth,
 matenal anti personal, is de5tinetl. to be used in lkoducing
furtht'r wealth; th(! ~um t'lt:1l of this wealth constltutcs the
n.1t,oll,tl cl.piT.al.
    According to ordinary thou,l.;h not uni\Trsal English usage
the lands and \vakr~powcr o( a (ountry are not counted in the
capital of Ihc country. bcca'Jse they have not been m;}de by
man; lt i:; howcver doubtful whether it is hest to continue to
exclude them.
   §:. Capital is for tbe mo:;t part the result of bbour and
3bstinencc j it is san'd. Bw it is also used.
                       1 Mill, PriIlClj!U, Bk. I. Ch. h·. § t.
                                           C\l'ITAL                                      15
       11 is true that some wealth is hoarded; and that wh:lc
hL ');:'::- hoarded it is not 'u('jl~,..:. u,;-( d ; btlt h():1rdi:-,:; 11as :;IHi'~ out of
l·.l~l :, n 1:1 t.::\'iiizcci c.)ul",trics.      :\11 Erlt(i~hll~,·;l). when he ~:t,,-es
   lP':;ll, ir:tt'lltlS eith(T i0 l:~e it 11·1'.15,... h, ur to lend;1 ')i,l tobe u:;(';d
i)~' 01b_.:-"; anll cap:,,)~ wh..:-n it is !15l.'d i" a';'-h)"t ;i!',i-'L:"S spent:
'I,:~ i~:3 ,,() ~p<..'nt ;.\s.\(} Uc' rep:-,)duccd: it i, Sp~l:t j':,,,J~ci\Tly.
       '\';e ma;; tind:l g"uu instanL'~ (If that F~Jl;uct'\-C' e\pcwticul-e
  \ ;,:_,'li I" rl"~lly s,L-i!!.'; in the (,;1.[:.,:r cf ti,e ;!tcat Dlll~c               or
l.:lldiZc·,':atcr, In. h;s tim'~ L;::,l'sh i:ld:hi.ries Il"['re ~,ll~! ,I ;"llnpcrcu
:);." tJ'~· C1.(I·'-:ilO\l~ UJ_t of (.1.:-ry;ng -;;OOth hun: ,11,1..' p;lr;. of the
 -:,::nt'-y tll :t:lO:hu. ;\onc of th..: roads k:tding :n'_o ':'bncheskr
,',L're p:l~"J.b:e by cms. C03.!:', cor!"!: doth and ether thin;;!:5
\\'\:!C c;!iTi·~d on horses' 001C;';'5 in sumllH'r. BUT_ iD \\Inter, when
,)1\: r,)::h~j W,tC u:.td, :\hUl:hc<;tcr W.LS iil.:",;!. 1).-:k;lgucr("J town.
'1 he Ju"-c C:1)f1cc-i\"cd the l!ari;l:'; pr"jc:<:L uf lll~:ki!l~ can_lIs to
  , mnl'd the m;ll;ufaO::·Jrc';.of ~I.\nch(stcr with th,' ,'o:J.i di3tricts
. .'.1 ~ll'? i)!]C Lam:. a:l·.-:l \I'ith tile !>t:.l at Lil-"r}, .:.'Oi ull ll~:' ucher.
i Ie (:evoted ail his \\-,~ajll: Jnd t:ncq;ics t(~ the wL~rk. [Ie- lived
:n Ihl:: plainc"_t L"ianI"';t:1" 11.1(1 10,1;; con5td~J.:ilJn.;; "i~h Brindle..-
- h;,; " T'gllll"<.:r in rUU.C:~l ;0._: In:ts; !llld dcri\-cd f:-nm the ex,_iteTPcnt
  J( ]', i~ e!O!dprlsc a kl.:cr.cr l·lcJ.~u("t: than he would han.' ';'_"_cl;ncd
(("(·Ill ~jlcnd!ng his wCcdth in bxury.                     He bcquea:h(',:: Y~.:>t
",-t:',;th tu his rJt'.'i,~cndanb, but in the arll'f !><lying it he b~\\"e
l ·n;lJo;·l7:.Cr,t 1.0 \ :\:,t llumb.:r" of \\",-,~kjng: men.       His clTJJ.ls are a
'(,Ui"~C (Ii the pl'\)~p('r;:y of his cOiJll,ry, ;ltJd ;Jffl)rd permanent
  :i~'!l':-li:C,:~ lu   tl:,)u·,a:l(!.>.
      Clpltai d('votcd to ma!;:irl.:'; things tll;,t are to be consumed
   ~pr()ducti\d~- ,J!les indeC'J &n"t;llll labuiJrers durin; ,he pro·
      ,', Lul it does nut P[()JtlC~: d frc~h slippl~- of cap::,l: which
    11 in it~ run~ 5~lpport and :ts!>;.,.t 1<d)0ur. A nU:1 wh0 en:pllJ) 5
_I("'Jple in making be<..; or ill layin,; O\,t orn,1lTIcr:tal ;;ounds.
 ,!-t,lln3 them \\-hile L!tn' "re ;]t wurk, :.;.no.i the.1 [hie, !'jCdH:i uf
-':ppOlt CUll~l'!) t(1 :1n \:J)I{ On the other har:d a man \l"i!o invests
',~lpit.ll in a ((1:11 min(' w)t or:y benellts bh.1nr~r,. dl1~'ing: tbe
 'tll<;", b'.;~ prepa;'cs a S~iJn; of cUctI which m<ly ~~J.i·) h,! usuj as
 .:lpitai:   hi';   .~'\pcl\di'llrt;       hao:. the after tflect of   :r.cr,,·.\5ir:~   the
  llH-":.mt 01 :\!0SI.' thm,;" wlw h enIicr suppurt or .L;;si~t labrJur.
     § 3- And now \\'L' ma~- 1J.l\lse to cun::iidt;r e.L-tiat's c;stinr!ion
:,;t\\"('en thv;:'c d'-eets of an action '<i'/Ui.--/! I:':' S<'II! .IDd those
. ";'-,d~ aYI' Itvt ,~(Ol. "-1H':1 a spe:llGthrifr ;<;; w:1st;ng his sllb~
-1.1nCC it is e"",y cnouc(h fur hi~ neighbours cO sec hO',I- he :;:ives
':mploymrnt to ,'ooks ;"J.nd \",IlCt3 and hors-.:-.i<,JC~~':\"3. Hut
'.I"ht'r. a m.1.:) san's hIs m"IlC\' a!,d iny('sts it. !:,:n- in: ae-w ca!'"l
,It T:1ill'.-.1Y, It i" not so ea~:\- to !'('L' that his -Wt~d::\ ·,'!l<plcys
nan-ic5 :u:d (,ther )Io;-:uncn i"1 th~~ ?res~·Jlt. ,\;:d ,,;H go on
.1(-(crding- elOp10ymrnt t.) other bhu:m'[s in {I:b(-[ ;-;cn·~ratlOns.
TLough his wealth is ~pcnt, it is not spent bytItiIlbdf: ~o that
                                BOOK I.               CHAP. II!. §S 3, 4.
his nei;,;hboliTS do root see t!i:tt ;t is spent at all. A,le! though
the (uttirC efl.;ct of his ~pendia;.;: wJiI be to in',rc:lse :he means
of emj)l"yin~ LlbouIcr". tl.ese efl ,(:t:. ~i(! ntot seen: but tiwy may
be fore~c·~n ..• J n the drpartI!H:!H of C( onUlly. an "r:t, " habit, an
ir:_~~itl::~(JI~. :l. bw, g-i,'t',,, birth I:·.'~ nnly t') ::tn d(..; t bl!: to a
serle':> \,( clfc(t':'. (II these ct'f",ct,; '.he i;:'~l or.ly i~ i;nmcdi,:te; it
mamf{'",[~ i'..;df:ii:nultan('()l;~~·.· \\'~d, its C'tt:"e; it /:' ji,'I;.                The
o:h·,[" U:,fd:(; ia ::'U'fl'ssion--,';!ln' .:1',' f:,.J! J',,-':: it i~ \\i:li tor us
if Ill .... y ai'c/"r,';"'"" l:etwel'il a '~t)(\J ;lnd a ;)~-1.t1 t'cc'n~'llliS[ !his
COll"jtuL';i zhp. wh"lc d:ffen !'~(': II>.: ~,ne tab'5 :l.c,'uunt unlyof
the ,<'i.ri!!,' ctfee:: lite oth~'r lakes a/~\:our:t {!f th'~ l :f,ccf::; which
ar(: seen .ind ol.l,O ofrn()se wl~:ch i, i~ n~cc"~:,ry ',,1 '-""NC. Xow
,hi; ,1it1"cTL'ncl' i'~ (,110,;n:)(I<:'. f'",r i~ fn·Ljt.:cl1:1y jl:'lp:)'~ns !bat wh~n
the' IInD1ro:!:ol.t'.' cf:t=ct is favol:r:11l!t;-, tL<..' ll::illlaj.~: '-(}:1~~'Clt1~nCLS are
f:t:ai an,J c00rersdy.               i~Of'r,l:1C" "'urrou:;d", ma"klr.d in its
cr;ldlc; ~h'-':1 it,; actions aT c dcturili'lC'd In' thci:- iir~t (OGse·
Q{,e'ln'5. Ii).;- (,~d~ (n(,~ \\ hiul ,.~ ;1.-, lir~~ .,~a;c it Cdl sec. It is
(li ... :: :.;r:!(lL:ally til,it it .t',l'"lh :11 t,lke ;l,·,,',~.;Jnt <Jf the ctb..:r5, It
hdS to le.:!"n tbi:- le:,5(':' fn'll1 tW() \'cr\, (ii!Ycrcnt maslcls-·c:'pe-
r:CIIt:o.;      ;1nd    f,.:-c<:.i:.~IH.       J->:),CI'II-;:'::C le.lC:ll'-; '_'r''-'_'-;lu~dlr   but bru-
tally.        It nu:":c<; 1:'; aC'_l~,.l:lIt,-·d \Iith ;\:! ,:ll' C(:"('Cl~ (If:1O ac.titm
I)\,     C;\I;5:!1'~ us tl) (('el them" a:-_d \\"~' ~;tnnot hil to iini;,h bv

~~~i~'~~~~:~!~h;~ ~;~:I~"~\~ t~~~)~ll:ll~i~l,~ \~.~ I~~~~~'::: :~'~I:t:,I;--~\/,~::r~:~~'~~ m~~~
gentle 011,' -J :ne'-ll1 F,·ro.:_~i;h'", F.,:- :!':., p'irpo~l J ",,1,:11 examine
the- Vrflc,,, of \'3,i(>u_~ (,~o;: !~ll.(·' ph"'r;omena \;:," !'; 'in~ in
c!)~~)',:!lI!1 t~) carli 0t:1'"', [1.·,,:,0.:              \1.tJ:C;l .1!"C Stxn     and til\1~'~ w!:ich
an~ .n;'~ ~"r:-::;      Tbe~~ .lr'_'. <t~ I:.l,t:.:l ;CC.:i on to ~hu\-. many
import,_l" cnn-.;c411("llC'·<; ',f !,\<"n"~ :/.'::O'"! \\"hich arc !10t seen, but
\',hi.:h !ll;!\' tc rorc::,'~cr, L:: I~L' ;,i,\ uf ..:co):"'mic principles_
     ( ' •. l: { .. dle mo~,t il!l;lOri 1;',: (li ,j;.;se princir,e:, h:l'i been
cxplt:,>;;cd (,\- :-;,lyi:,::.:- .. h;i\L,trr                limited by C,tp:LIP." nut
                                                               i:i
whcll So           st;l.~~',i )~ i.':> f,j'.~n rni:-i!l:ldc;-:~rtlud.It n1C:ln.,; ll!;,t : -
                La~''-lt!r rC'lu:r,:-~, .".:Ptk:-t :. ~:d ,l.;c! frdtn .c.ltJic.d,          The
                   t:·~ri1,1.'h! lolr J;oi~',:;r :.,:J. (~,.<n,:'- CJ.~-,no: In tht: ton,,; run
           be II l."('."'I-l~ 1)\" am' .:t: ;r:c :h:lt d0es nut lead to an
           inn·.-,hL' (,t ihc Stlpp!:- o( (,[pitai in it.
    [[f th.,~ e!iidc;;cy 4.,( LllJo";' ''\"l'!"c:n be dCluh;cd by a r.1:J.girian's
w,lILJ~ W;l;!~ tk' p.:;'!C:-I<I: (,<IIl'.:,l u: th" country '\~re u:H:!u;:ged

       1 T:h,      '~r.tcnCe "h':'h!r~- ;._ liw:ll'_! l'Y{:::;'it;..i'· i~ the lilA of .'.fill'~
fl)llr   <.                   1"jl' __ ~lll":'" 1;'Vllt '_.IJ,:t:tL"
              !\\l"l.IB\\.:!i\:d ~                                   IE..:!" "\rlll;lI"' jln.,itior.
f"'~prl'S~"~       ""'()j:.l'l' ....                               I, l' '~L.'l"; f0T e',n,ITlo..... li-
                                       !c' .,: :I.e ~:l;:,'~ 'Iii~.; i~.,
;i"(,_ ""ii; _";"-:1: :,,;.       Lei!'_. :.:. <, .. 1-, '[;' ,'.' al~ 11~1;': 1:;.;;, :,,':":::\"
                                        ',,1
.k:~') "i~ J~    .,,':". '-,I; for!                   ';,:l::'     :'('r,t b~:::'::-:l':·!'c)':.::fon;.
h;n,!, n~ i~ ~hU '11.'.       ',,.::).        ,,, ~ ',' 'I I rr'l;-,',;lci'):l ,..; ,'J ~, ~imilar
eITl',:; i: i~" Ct;'it.'i b th'_ r·_'.~ull '... ~.,tl'il!;:;:.' !'LI'; :''',,1 his :_:~ IJ propo-
sition "C:tl'ilnl i~ Ct.:::~l.r!'cJ" h:l\'<,; ;;.lr<.:l.'!Y !"CCl\ C\i,iJ.ined.
                                       C.\l'ITAL.                                17
~here  wonlJ be a :;reat iT1l1l)cdinte Tis,.:: in the real ",.12"(',0 flfla.bour,
,hat i:, ill t;\'~ lIt'CI.':.S;\flt:.>, "::()lIlr\)rt~ and. }uxurll:''i whi,;h each
!:tbo!!n:r (:(,u)(! purCh:l5'~ h:' hIS "";;,~:es. The .qon'S ('.f c:::tpital
.llrcaJ~· i:-, cxi~tencl? \\Uldcl 1)(: d:qnbu~cJ aU'~I".-, lhe h:l('Un'TS
more raj)iJJy th:l.!l ther wQulr] (lthef\\"isc hl\;; lK"t:n; and the
!!lcrcasul ~f11cit:l\cy of wurk WOilld speedi!)' rqJlt-ni£h the di.
minhhu! 5lGlt'S. The bet i'i tll'lt incrca::;c ill ~lJc c(licic:1C}, of
bb01.1T ,,".)\11(\ rc;,1ly \c;)': tt) ;j,n incrca;;;c: j" ,he supply e,f clpltal.
The ()\l'r~t:-;linl'd ijl:l"'jlr~tati' n of the P!'U~I(-~iliun ~lnJtistry i~
limited I)',   "~':l-"~.d .   h:lS   ".Ui~ld   m;'tny crmr-;'.J
       S.t. Let us now )~,.,~~ ;It some conclusio!b which follow from
 :hi5 Pf('PU:>i110I1. Fir .. >]:,
       Th,c (j,:<! l:ctio!l of till:lgS is not ;:;nr)(l [Dr !r:ld('.
       Foe In<.t!lcr-, it ij not ~00t1 fur (r,;d~ \.) h;\\-~' Jr(;<;ses made of
 material \\hich wears atH qUl,_k:y. For if pcopk did il("t ~pend
 their Inean,; on bU)'IIl;; n~w ctr~~sses, they would "lhn(i tiWLl on
...:-ivi:-.:; Clllp:oYlllent to la')Qur in some othe:" 1'."1:--. The drL'':i~-
1n.1.h::I!1;,( tr,t(:e \\ I!i lJc <IS nlUch bencfitcd by til(,lr orG~'r:ng neW
 ires-.c"_> f')i" the pOP!" as hy their ord('[iI'.,', 1,1'W (~n;c,:>,:s fur thc:l't-
 -.;ehe:> t.) the S:1I11C amount. Hut]t is trUl: that if thlr·~ were:l
sud,i('ll fallin;.: liff in the <kmand for dresses, dn:_,,~!,):\b:r'i \~(luld
'>ufrer thrOl:~h l)ci,,:.-: cOlllpdleJ to ~c(k it new ()cdljuti..:,n. This
 ~)rin;.;:; l:S III t!h; '1'Jcstiu!1 whcthc-r i~ i.:; ri~ht to llI .... ke work for
tho,",c \\ :10 ,Ire out oi l'mployment.
       ft may be ,-':;ht, If thl.! ~u"pen'ji()n of work is kmporary, to
;'clie\"c tiF>:'C \\"110 [Ire in di;"rcfos by m:lkl1lg- work for them;
IJCC:lu:;(' t!;l:i method (II relief due.> nut injure the:r sC;I-;-e,;pen.
 ff howc\-..:r the di~tr,;s5 ill a uadc i:~ not merely temporary) it
is not tnlc kindness ~o dis~U:Hlc people tn,l:l k;l.\ ing it. A
great mi<'ukc was lIlade )JY those \\'ho tried to L(,b~lT up the
trade l\:- h"1nJ-\\·;:-,~\"il1;:;. ,"Ifkr it hat! b,_en Ilr(J','cd that the hand-
loom !T,U.,t in t;jP~ lr,n:; rlill gin:" place to the po\\Cr-]('01I1. Tho!;e
who (!,);,:(i (Iut puor reJid to supplemc:lt the m:scl',1 11]C wnges cf
the h.l.lHl-w'~<'n·r" w()uld ha\'e done better by hc1pil,g them to
earn tilt.;;r Ii. 1I1:; in another 1\:ly.
       Btl( \\-hde i: is not f:.)od for tr:1dc to !'pcnd moncy on
dre:o~ O~tf;J:l,lti()\Is1y, or to ch:tn~(' the fashioJ::i rapIdly. it is
true tll."1t Ih"sc \\bu dres.;. well .iud, if nut to litC \\l':litli, yet to
thc \\":ll-!_Jl'j'lg uf the nation_ A sl'r\-"i-:c i.':i d'JIlc to SQC'(~y by
eV,,;I~' on:: \\ 110 pru\-ide:; the mt:ans (It' r~'!~r;cJ pk.J'SUIT wi~hout
unneCCSS:l;') e'Ll-'endittlh'. \\'hen a m:l.fl uu}';.; a good picture he
deyo!c~ 1\"cJ.;~h to on\! of ils best ends; and a reall)' artistic dress
cduc:ltc::; ta~le just a_~ a I--'ic.urc d')c~_ A til'!c may come ",,-her
it \\"::1 1.'(; thuu;,.;b: ahsu:'J. for a "'oman to display her wealth by

    1 These haye clJi .. Jly appeared in V:lriOU_'i form'> of whJt has been
calle,l the" \r.lb""" fund theory," !:iee Hook III, chap, \-'t.
     !It.
                                                                            •
18                     nOOK 1.          CH.Ar. 111. § 5-7.
(,;l;Tyin~  about a ~reat quantit!, of c:\\l('ns~\'c materi;}/<; and
ual>ruidcry; ju::a as 3. p.liuEr \\ hu aJ.·.'\'rtiscd the twice he had
!-laid ior tht: lxtints on his pic lure wad,1 Le :huu~tt n!lt',.'ll".
     It ma\' Le noticed that sume ac:auaiLtancc Kith luxuries
seems to 'lH~ .:l llC(C"iSdry cordi,io:"! of progrc.ss. "bny nations
!><n"c bC'~n "TUUS(:J from 3. :.:~tc of !'lug6'i~h ;1path~' Ly a desire
t·) 0~tajn hr<:l~n lu:wries, WhiCh h~ nu(~:: llicl'l exnt th"-'Ins~lvcs.
Lu C!\cr:-' il,cr~'a!'(' in the con~Jmp~;()" of 111X\:lie5. UT,kss it
leads to in:2reaSl'd cue!";..:y in the IJrocllclilln of \;":Jllh, dinilni'ihcs
savin;; and s.") chc·::ks the aCClllllui:tti.lll of WL';d~h.
   §~. The fund:lffiCJll:11lrllth, that \1,(; l:'lllpioymcnt of labour
c:mllut in gen·:ral ue i~lCrCl.:>~{i by any ;t.rdicl,,! dcncl: that docs
nut incn:,!se :lIe ~t:ppJ}' of clpita!, ::-hc\\ 5 us that:-
       It i~ nut ill :he 10::;; run ~ood fur trad.:: tu r)f(.:'-ent ~",)(J(is
          from cominr; freely into the cmlntry so J.S to (::"J'>~
          an a!11hclal demand for some kinds of hum..: produc-
             tior,s.
      Jh.stiClt t..:!ls a story of the Glnd!cmakcrs, who pr·tition the
authoritil's to pa-,s a Jaw ordering the ~hUltin:..; up \}f a;l wir,.jow5
and openin;~::.-~ ;':'y which tl)c h~ht of th ... ~lJn can C0111e in. This,
th,'~" S.l:'. wiil creat'.:: such J. demand fu~' .ll"tinC!.ll1igilt thut tllcit
mar.l:(;;LtUrCs \\ ill 1>e g) 2:1t!y ctlcourac:ul: Leing prnspr'"ous
they will be able to pur·::lusc the .C;('(Jd~ nude !J.y other trades,
so that thL' p:an will bcncf:t trade gCi1cl'.dly, Doubtless f;'Jvcrn-
ment couid thus ~iH' el"i,l(,ymerlt t~ many :ndustri<.:5! the
diecls wh1ch ';~'O'r' .','al \\-,Jl .. d be l)(ni:flciai. Hut the u:,ule-
mab:r-> did nutf,;n-j,·t! tlLlt tl;.~ capi·:-t! which came into their
inJc:-.tt-y II:\I-:,t b~ 5u:...trac:'-c! (roll1 ~,Itl!'· ot11l"(" industl'Y, S:lY,
th.'-t of gr.mlng c,~rn, m \'.n~dl it W;1-,; ,..:!~·jn;:; good Cmpll'\"ll;cnt
to la!Juur; and tll..l.t the ~l)rn f;TOW~'''~ would have V'lt':il",o.;ed
hz-·m Ocher tradc, just <\0; m:Jd; as the cand:emal:cTs ,,",}uli!. Go.
\"er"lTI~'nt wlJdd llot then inc; C;l~C th-:: l'nl).,:"ym(·llt 01 bbullT; hut
would \)niy G11:<;~' it to be: cmp!l)) ~d ;:1 i,1 o':l.lt:in.~ ca:udh.s that
W~Tl' :",ot \I;":.ntl'd i!'.-tL:ld ot' t..c.!-jl \Ih:c!r ":,t:; ,,-a;!tf:J.
      J: l,ti,lt \\TOle this ::;t(jrv Ll,' thc ill')truuion of th(~ Frclch
Gov<.::-aJlvnt, who "ften impr)_ ,.J I,('.I ..·Y d,lt!CS on l1ullufaCl'Jred
com:r.oditics in I),der to gi', t.: .l pr'.-l!1i!:t'1 tu (;'l!l~L'stic m"l\ufac-
lU:'(')~, :u-.d t~)cn piumui 'l;·,·l'"·~(-,-.·v;            '1\ the '·nn:lti'.iH:C of
t:1_tI dllP.',.~('~ ," tlK: Il,d C;,:iC,i i::t0 l-\'-t(~l("l'. T];cr uili not
see th~t lhc c:q)j,;t! illH:"tl'd:" ." h ir;,;l.<ri'_'5 ,vas not ,1n addi.
tl(lil to that II !:ir'h ".\!~t,.'::i ;;. ; hc c;,';,~r:-', they did not sec that
i~ h:1(t ht'cn :ll"tili :i~lh· d:', \\':1 i:-1.o tile::,(" in(:1I5trics :it the ex-
pense of otlH"I~. \':c s1::til ;)':ll that lIlany ufthe most imponanl
praCI1Lti ".)Ilt:;u::'l-)ns cr LconOl:lics arc contained in th! sta,c-
ment:
         F.t..'~lI!J.tion<;   which prcycnt men from dllin~~ wba~"ver
             they arc I.      ~"t qU:1.1Llied to do caOnot
                                                   bcnl!lit t:te <.o"ntry
                                 CAPITAL
               as a whole) whether they are made by GO\'ernmenh,
               by Professions or by Trades~!]niolls.
        § 6. Labour requires :i1lpport and aid from capitaL It
i,; com'cnil'nt to have scp;.trJ.tc name:"} for that wmion of capital
which ~upports, ane! that portion which ttids hbour.
            Remuneratory Ca,llital or Wage· Capital consists of the
              f.)od, cl(Jdn·~. s"clt.~ ..., etc. ,.... hieh support bbour.
            Auxiliary Capita.l i> tint wh:.:h :\ids labour. It consists
               of turJl~, milchmes, factvril's and 'Jlher buildinbs that
               ;U(: used for trade purposes, raillvay::>, cJ.r1ais, roads"
               ~bips, etc.; also raw :rr..1.ccriab.
        A vcrr raold com-ersion of Remune;'atory into Auxilia:-y
Clpital may temporarily inJttr<~ labourers.
        SUP:JO::>c for in!)tance that a great amouilt of labour and
opita! is divened from .1griculturc to m!lking raihl'ays or steam
t!n~int:'s.      The corn which would have I'~d f<-Inn :abourcrs while
:;rowing corn, now feed,; sume of the same labourers who
ll.tve kft their farms, and gone to work on milways or in
n;,.... chine shop:;,     At the cnd of the ye;tr there v;iil be more
I',ulw;tys or stearn eng-incs in existence than wou)d otherwise
h.ne !icen, but Jess corn: ,Hid in ('or:sequence labf)urers may for
the time have J. scanty supply ot food. Hut thi!> :njury will be
ol~!y temporary.
        At the time of the I<Rai!w:lY mania'! cap~t:'cl "-<15 sunk in
r.1.ilway;:, on such a gig.l.ntic selic that there was !)~" enough jeit
(c,r carrying on the g-encral hll:>in("s~ of the Country, and t1u:-
l~ail\\"ay fJ<lr,ic of 115.-1--7 caused much ~ufft.:riilg. Yet in thc
long ru:l r .1ilw:tys ta\'c conferred grcat bo;'w..:tlts rln the wurkillg
classes of En;;l.md by i1i("reasin~ thJ.t g-enerai wealth of the
country on which Ihl'ir w,l;-:es ,iejJcnd. The amOUl'_t that b nnw
 ;;ubtrac:ed in a \"C'.lr from the C:lPlt,ll of the coun:ry jor building
l~l\\' ra:Jways is ~li);ht in cOnJlJan .        .:ou tv the add;.:~ll: whid.. the
Llilways make 10 the Remunl.'ratory clp.tal of thc ('.'.wtry,
        ~ 7. This d151inctlCm betwetn Remuneratory aLd Auxiliary
 C~pitar is cioselr connected with one that must be made
 between Clr(Ula:ill~ and Fi)..cd Capi!:ll.
             "Caplt.1l \',hich (ulfils the whole of its office. in the
                proJuction in ":hieh it is engaged, by a singh.: U:j~", is
                calkd Circulating Ca.pital!'
             "Cdpital \\-hich exists in any durable shape and the
                return to which is ::tlrc;ltl O\"C]" a period of (:xrespond-
                ing: dur:ltion, is (<like'. Fixed Capital l .:"
         These terms have ':).)mCt:m('s b~('"n U5C'i.l a5 thot.:::::h thev werc
 convertible with Remuneratory and Auxiliary cavi:.ll respec-
 tively. lht the cottagl: which a farm laboun:r has rent frcc is

                          1   MIll, 'Book   I.   chap.   VI.
20                  BOOK      r. CHAP. III. § 8.
Remuneratory Capital. but not Circulating. Ag.:lin raw materials
are Circll!atin;; capital, but not }{cmuneratory.
    \Vc slu.U pre"t:ntly seC the importance of the distinction
betwC'en Fix~d and Circulating- Capital. \\'e shall also see the
imw)n:mcc of a tbird distinction (or \Ihich thc::;e names are
sometimc5 used. but 1M \\hich other names seem to bercql!ircd.
       \Vhen~"cr capitai h8.S been designed for use in vne trade
         ther..: is some difficulty i:l dlYCrting i~ to another; if
         this di:YicilJty i<; ~rcat the capital is Specialised, if not
          great, the capivu    j"   Non-specialised. I,
     XO clearly u<!t1ncd line C<in be drawn between thc"c two kinds
of cclpital. L..j0urers' (Clod ;mrl dothin::::-, nnny kinds of tools,
and such materi;l!::' as wood and mClals are ::\"on-spccialised. for
they GIn 1e employcu in .l BlUllber of different ways. Again,
many kinds of offH.:es and (ommerci:1.1 buildings and workmen l s
d\\'c[lin:;s in t.owns are Xon·spe<.idliseci. But agncultural im-
proYt:lIlcnis, including farm ia!)ourcr.:;' cottages, cannot often be
used except for then orig-in.l1 purposes. ~o also railroads,
docks, ironwu,-b;, and again printing and Tcal-ling machines may
be co,lsiuere-d ;!s Spcc'l,tli..,.'d cap:ul };ut It ii ufkn dilficult to
decide ,'.. h~'cher :.uch m:lCh:(Jl'ry sh(.,~ld be called Specialised, or
~on.spccialis.ed: a betm'y hl:<:d up with a steam engine and
"o\·cr-he::u.l ;,.:car." em sC'lrcel~' b" c11kd Spo..!<:.ialised c3.pita~
bec:lU5(' it m:ly 'Jl' almost (.quaJly n.L'pt.:d to many branches of
the textile: tr,lde:., and of Ihe; F:,.:hler Il!(·tal and 'mod trades.
      ~ $. .\:most ail l'(:rsoll.tl Wealth is (If may b(: J.>ersonal
Cwma1. .\~ A,bm Sn,idl ~,l\'" :-"TilC acquisition of all useful
aL:\itics~ by tIll' m;unten,lllce uf the ;l.((tuirer durin:; his education,
~tu.ly qr :'pprcn<:c·:ship, always COSh a rca! c"jJcnse, which is a
capl;a! fi:-..ul <wd rC:1IF<:d, .15 it W('I"C. in hb person, Those
t.1.icn::=;, .h the:- make a p.lrt uf hi:. {urtl:ne, so do they likewise
of tlut of the ~uciety II) ,,-hidl he bdungs, The improved
de'\krit)' of a workman mar b~ con~iderE'd in the same li~ht as
a lll;~chin(' or instrument \,f lr;'lue "hich fJ.cilnates and abridges
lallllllr, and which. th0U;;h it CO~ts a certain t:xpcl1Se, repays that
expense ,,",ith a profit.!>

     : Cvmpare ]evolls' Theory c>/I'"litual Economy, pp. 13'l-lJ4'
                             CHAPTER IV.

                      LAW OF DDfINISHING         RE.TUR~.


      § J. \VE haye seen that the requisite:; of production may be
<,1r1sscd as land, labour and capital. \\'c ha\'e now to seek for
'he Law of fc.:rtilityof land, the Law of the increase of popu-
'ati0rl, a.nd the Law of the growth 0f capital The latter two
 l.aw" d('pt'nd on the first, which goes b)' the name of the Law
(If Dir:linl~,hin~ Return.
      \\".:: l~':ty explain th~ meaning: of this namf' hr an ilbstr.1:ticn.
\\-c Sh.lll pr:.:sc.:ntly see that the Law fiDes not apply t.) ~;l new
,.:rlul1trtCS i:l which. though tbe 1.1111'1 is fertile. the PC>puL1tion is
,crY!'!;IJ,r.;.e.   Hlll let lE <;l!ppnsc th;Jt in a cen,liL dl'>trict tltcre
:1.rc (WenlY :tgriLultural hlbourcrs to thl.:' sqllart' mile, ,'ltd tlut in
,he ",',lS011S in which they grow wh(';)t they raise :!Ooo quarters,
\\ hich is at thl' rate of 100 quarters rcr mrtn. If now the popu.
J.ttio:l if'.cr(:as~;5 ~o that there a.re tL,:,t:: agrlclJltural b.bot!rtrs to
"he :''l'l.lr<.: nriie, there \\ ill o( c'Y~r.5e at' a:) incre.1se in the produn'
LtiseJ hut not :l proportion:ti incrc:t:oe. Perh;lps the prL,ducc
        j

Jluy rlow be ::600 qllar(er~:, so then the amount due til the bbour
 uf till..' additional teE lab:Hlrer<, is 600 quarters, , .... hi\..11 is :l.t the
l:l.:e of 60 quarters per Ulan, :'\0W let there be a f~:11LcJ'
 i!1(n':1.~e in the population, till there arc thirty-five a::;-ricultuFd
lab(,'!rcr5 to the sql1"Uo..! mile: thnc will again IJe an increas<.: ill
th·.' total p::odun: raisl'ci, hdt again not a proportional increase.
 }-crhaps tile pr:!duce nul' :-:ow be 2b5i) quart<!rs, so that the
  ItllOUI!~ due to the laboltr of the last tl\'e l"bourers is ::!50
 ']u:lr~er::o. whirh i~ at the L\le f)f 50 quarters per ma'l.
      Th:l.t Incrcase in the an1Jlmt of corn raised \\'hich j.:; due to
the lal)~ur of each addition.Ii l.lbolJrer may be called the Kcturn
 (LIC to his bboM; ::<nd we may then 3ay, that in th:" ,as{' the'
:-:rratl< I.he 1lI.1n',bcr of rrwn cmpl\lyl'd on the bnd, the It~5 i::.
the Ret .:m which weuld bo;: due to the labour of an aJdi·
 t:onal mall, This result illustrates the meaning of the Law of
 IJiminisr,ing Return.
      § 2. But so far no account has been taken of the fact th.lt
                    nOOK I.        CHAP. IV. § 3, 4.
tlh'   culti,·ation of land rcquin:s the farmer's capital as weil as
tite labOUI<2'r'S toil. It is indt:",d best to look at the matter from
the point of view of the farmer; for :;ince he gcncral1~' ad\'2nCeS
the wages of the labourer, the produce Inay be reg-arded as due
to hi~ capital-to his Allxiliary capital in the krm of implements.
seen, cattle, etc. and to the Remuneratory capital with which he
pars his bbourcn' wages.
    The prtvious illU:5tration represented the famler as sending
additional labourers into the farm, and then noticin~ the
lncrc;'tSC of produce due to their lab()ur, or the J{cft.rn to
their lahour. \\"e may now suppose th,lt he increa~es by
.succcssi,oe doses 1 the capital he applies to the land, and then
lIotices the increase duc to each su("c.:ssi\'e dose, or as ,\C m:1y
~:ty tM RduF)l due to carlt Do,'':''. Suppose, for in~tancej that by
expelH.lin:; in one way or anNhcr four tiv)cs of £1 each, on
an acre of land he CdO rJ:se from it 20 busheb of wheat,
which is ;\t the nte of live bu~hels for each dose of capital,
If he applies a fifth dose of Ir to the acre, whether in the
form of extra manure or extra plOl!6hing or Wh.lt not, the
produce of course will be incre<1.:ied, but not br :I'~ mllCh as
5 bu~hek Probahl~' he ll],lX now ott am 24- bushels from each
acr"" tiu! return duc tn t\je ,Jth dose of capital being 4 bushels.
If II ..' ap~li('i. a sixth dose ot caplt::tl, and with the cxper.diture
of £6 obtains -.:.i bl:",hd~ an :h~I", the retUrn dlle to the sIxth
dose will be 3 bU5hds. awl this perhaps woulci not rcmUll~rate
him. for the outlay. If so, he will not apply- mute than [,; to the
:tCtl!.
   § J. Thus, as tile experic'nce of every English farmer tells
us, when land is already well cultivated the application of
additional doses of c:tpital will cause a kss than proportIonate
increase in the retun. i or, a~ we may say, they will obta;n a
l)imlni."hlng- Return.
    W~ m,lY then state the Law               of Diminishing Return
\11\15 :
         An increase in the amount of capit.).l Illf. to speak more
            generally, in the amount of cffflr!} applied in the culti-
            vation of land caliseS ill g-encraJ a less than proportion-
            ate increase in the pro(:lIco;:: raised~.
     But th15 L:\w is sl1bjc(·t to two conditions, onC relating to
the prugr{'ss of the arts of agri.-:-ultun·, and the other to tbt:
~pe(:I;l! cir(;um"tanc(~s of a :l(:V; CDuntry in \\llich but \"('ry littk
Llpital is applied to land. ,,\: r!!,ly c00"idcr these sepa{a~ely,

     1 This term W:l~ applied by J;!m'.'s ~lil1 to denote t>'lu:)l amounts of
lapital :;.r.-r1icd to land.                                    .
     ~ The st:J.tcment t}]at after a c.-rt::Lin number of {hl"e~ have been ap·
i,lied to any gi\'en piece of land, the return due to each additional do'S~
                     LA\\" uF      DI~I1:'ISHl:\G l<'LT])R~"                                     23
      ~
    4. Firstly, with regard to progress in the arts of ag-rio:lture.
New methods of cultivation are from. t\!r.e to time dlscuvered,

will lie; less Ih.-m th'Jse due to the precet\ing doses, m:JY be il;u."tratcd
I,y   r:.C;WI.'-~.




       I k! lhe line Dr: be divj(kr\ into ego,;:ll P:lrt<:, the (iiYisi()n~ r~·pn:ser.ting
equ:1.1 ,1·:.;'~:; of c<li,ital, .HHl Jet tlh.:m be (""led tJ.-l, AI" Be. etc" (,,,ell
\,'.!(',~,~,,,~:\,; ,iC'~l' g-.\(5" f('!:Jril \\l,ic'h may l.e, r,.-p~l"d~:;:,-l hy~, rt.'c!:\llgle
::It ng'\t allg!: ..... to Ox, :1.:,,\::os th:ck <lS lhe carn:;;;'PI1 b;l; di'.:,;"n or Ux.
       TLtn:( t;re ~'J.C:~ (L'~l':. rt'prt~("~lk': l'Y ()E, h:ne hec~ :>:'IJ;:cd, the
n'~l!rr:'. ;'.1"0;' ~>'W1i l'r ,i·", 1i,.;"r<: (l1'(lE.    T11e UW o( DU"';;;i,hing Re·
'".1.-;1 c~.-.~,., 'Il;,!. ,1ft,:: a ("t'::~,1l1 nUlll~:L'r DfthL'~(; do",c:> ha\"e UL'I.>\) ;\pplicd,
11 .' G" r'->i',(J:l';:;;~ r.:,:t:lnglfs :ne "n,lrkr.
        1;.;( :::'': l.J.W of V!m!l:!i~h;n;: RuurT) does not st"-le l11at t!~is dimi-
    1'.,'llI \\iJi in c','ery c:t,l' ("on)r!lt'r.r'~ [!: once; the retbrns to tht.: ;;rst ft;'w
,I )';('5 :r.'lY be sm..l!!, nnd the n.:~\\rn~ to the btC'"r d0S{',; J1)~:- ;,:! largl'r.
      t:1l.:1'arc in fib' 1. . \11 th:lt theo LrM sLtte" i~ th~t ~h! a great
:1!'mber of o.o,e;; hJS(; ken ~!'(lt:,j, the rdurn mu.:;t din,im.;h.




      iJ   ----------~"?
                                               o
     \Yc m:l)' mak~ the ti~,_ isions in Ox as ST'l~,n "s we ple:tsc, 50 toot the
l{'cbngi.\.'~ h..:com,,· y, hat may be called thick "traigM Im~-s .
    .nlt~ tClpS of tl1:'~e _~tMighl ji:1e5 will j'.e on cu,,'cs, the sh?pes Q{
"bch :Ire repre:OC:ll:cI\ In Ii,::s. ,~ :md -4- Fig. 3 rcpr.::~('nts the lncre;>.se
,,( j;:'odu,ce of bnd, :hc retuIT. frern ,,,hich always dil1lil,i~h~5: and tig.
+ It!at vi bnd the ·c!1.,rn from which fir>t incr...-a:;es and then oimiuishcs.
 24                   BuOK 1.         CfI.~P.    IV.   ~   5, G.
  llew rotations of crop;;., n(;w methods of dl-ain',l~g hnd Sci.ence
  gi\'cs insl: tlction III the fel'ding and urct.'ciI;6" of ca!rk. and
  in the \appliGl.!ion of different tnanures to t:;ftcrent kinds of
  land. ~!;lchincry is b..;ing- im'cnted which Lghkl!c, the work
  of a~t'lcllltl\rc-wl.'edul'~. m0'\'i!\~ and re.l.ping m.l{::hi71ej; steam
  ploughs, stf':lm threshmg and ChJ.lT-clIwng m,J.chille~. :'I.1e3n-
  while, the education a!1d energy oj the i:nmer and labourer are
  illCreasin,S. The knowleu:;e of new irl\'c!:~:(llb and mc:thods
  I'> dll1i.:';(:J. by a,!;,icuttttr:11 '::!lOWS and br1Tler~' nc\\s:)apcrs.
         :\g;J.in, Il'hen a C')'Tr'.try beLomcs ,'cry thickly pe<)plcd it has
igre<lt L.citil.ies for organising a SUPP!y of fDUO fror:1 .1.broad,
'and the cmig-ration of ito; pc;,,'plc t<J other countries. TilliS the
  pr<J;r,'ss (Jf civi.\to;.;Hion, wh\le it presses un. the reSO\lrces of lano,
  l'nbrge.:i tlHJ3e reS(l~Jrc('s.
         [§ 5. ,scc(lnd!y, with regard to the specia! cir·:utn'itances of a
  nt'w Ct,IJ'1try. 'J"h...: LlW of Di m;nishillg geturn h:ts beetl d;~puted
  hy Mr ClrC,,:. \\no is at th(: hc.\d of ,\. set of En)r,mn::oh C,tnmg
  them"c1n':> til(! Amenc:m sch[)(,t. ?I[r Carq"s :trgllmt~nts ;I~ainst
  the Law ~~r~.h'.lr to b~ founded on a misc,):--,cep,inn oi its real
  nat:.ITC; and the pr,lct!(al C0n,;li,;iuns fpr \\h\ch te contends
  lla';e not much ;1;"l}J;l\_,lti.m to a Licnst I:;; pl'ol'kd cOlmtr:- Sl.Id'1 as
  Enribnd is, Hl;t }I:r ll1..:: \\/lting-s of tlw ~\J'lUIC:ln ::t( houl aTC
  in many ways Sl1"~;6,':;~i\-c, (tnd their opinions h;wc attmcted
  much ar:l.'lItiun Ull the continent of Eurl'~)l', ~o llJ:lt it may be
  wei! to :'"ly sOn1cth;n;:,; ab(,ut thetll l\l"r~,
         TheSe cronOll1ists argue Iktt It:, t,ny shews that lhe best
  lands {ire nut [:1,;:;,; '"hich ;tlC cliti\·;!tcd tr~t, bllt that tbe order
 of sett!'_'ldcnt of nc\v Ctltmlr;'.-~ is th ..· p;,S~3::e from poarer to
 richer smt. The (.IU5C$ of ti:is arc V;l:'\";b. :o.r')l\ntilill di."lricts
 h;l\'e ,-O!l)ctimes bern '>c]«(h-d 0:1 acco:mt or Ih(' mcans of
 deft:,l<.,'~ wh:ch tl1<"\' Ont-r ?!;'::lilbt (,llu:.,ics; bll~ m(lfC oflen the
 steep an<! )\.'If.drail;;r,g rno,int.lin )i(!u; W'~l"C chosen bcc;wse the
 I?w deh londs, tH1til they are dr.:l.im:d, arc infl..sto.:d by m,d;).riO\\s
 levers,
         In f:tct, if land is vfry rich. full of luxuriant undergrowth
 <)r m<1r~hy, it i" not possible to cu!ti,at·· it at all with only a
 "mal! cxp{'ndittlrc ,,1' Cl.pit,t\ ;\l11t lal),'l!f, l;ut "h':n tbe c::rowth
 of V'jl\l}ati(lll anu til(' ;1chance Df cl\'l!:sa':"n gi',c the m~',lr:5 of
 orin,<:lI6' s',lch land ,mul'r tlle pl"l~;;h, the n:tll:-Jl which it gn'cs
 wilt abund.1,ntly repay the i--':>ins t:l.lt han' h,"'11 spt.:nt on it.
 Th,~ t~~ks cf dra,lling tn.,!! ~h: bnd" .1.nd fr\'c\O:,.'; them :'rorn
 r:lalari:" ;l1.d of making- ;-(.",\s :u:u ra'!\\"<l)s, ;u • J,0l '::J.sily
                                                                     .:
 performed \\hell the pO[Jcht: 'n is thin .}nri SC8.td.:r.:d, And
 .-\lllcriC:lll writers kit',! done .c::"r.c\ ~,-'n'!ce in insisting on the fait
 tll..J.t up to a <:ert:lll1 po:nt. tIl'-:: .:':lL':nl"t the numl)er~ If! ~ country
 ,he g-reatcr will be the Po',\{'r llf of;,:anlzing 1<\:)1);:1' ;->.:1d COlpital,
and the greater therefore will be the return from bnd.                   It mJ.y
             LAW OF DD!IXISHING RETUR".                                           25
 he conceded to them that until this point is. rC'aciwd, land may
  be sJ,;c' to yield an Increasmg, not a Diminlshing Return; and
  th:lt perhaps more than half of the richest land in the globe is
 vet . mculti\ ~Heo.
 ", rut this fact is not ir:C(lnsistent with the L:'J.w of Dim:nishing
  Re:'n~ whi<:h merely assert" that the returr. tn capitoll ;ipplied
 to L,.d diminishes, prcl\ :.::cd that there is alrc~dy a dense and
  ra?id!y inuca"in~ l'Jpulation. and comparatively little improvc-
 WeT' 1:1 the art,; df cuhiv;ltiol:.1
        S C'. \Ve mar next consider th~ Law '.If increase of mineral'
  produce. The L l \ \ ' of Dllu:nishhlg Return is sJ.id to apply to
  minc~al as well as to ag-nculturul produce.               This i<; not strictly
  ~n:(": at \ca<;t there is a flINbmc:nt;>l ditfer('nc~· b~twecn the two
 '-:1~'::~.     The l"ichne~5 of culti,"at('d bnds ~s Jikr~lv [0 increase;
 so tr:'tt if the demand fur produce were :0 n main. ~t:ttlonary,
 it ro"ld be satisfied ",ith con~inw1!1:' d;n;il;i~hm.;- c::'t'rt. But
 every mine is being: impov...:rishcd i)y being: w'lrkcO. I\nd ,,;hen
 tbe riche"t mineral slrala h,we ,ill beell t.!1~,:(lV(~rcJ. tlte diffi.
 culty of sati::if~'ing the dem,,;1d for mineral produce must .in-
 cro,t', even if the dU:13nd ,:;ho1J.!d rer'lain s~;ltiorn.ry. Im-
 pn',.,'ments in. the arts of minin~ may ({. tar..! the op~ration of
 tbi~ La\\". but CafJ110t entiJ(:h" prevent it.
        .\r.otLt r difference bctmx:n ;J.~ri":ll1turc a~'d minin~ is this.·
  It i~ :Illpo;;sibl ... t.) raise br any amOt;nt of hbollr h'n limes the
 "r\~::"l[y pr(lduc...: frCl"n J. wdl·(ulti\"ated g"n\cn if! 0no..: )·ear,
 1;1.;t 1,1(' ploduec raised ;n .1 year fJ (Jill a mirj(~ mrght be increJ.seu
 '.cnfl'ld without incrc;1sir:g morc than tc:,(o:d the labour t.:n~~
 pi,.,) j~d on it; [JI"ovi'\"d th:lt there were a sufficient supply of
 minln~ pia·,lt <1:1d -..kl:ul mincr,:;. Iht in fact the difficulties
 .1nci d.1ngcrs of minin'.! det!:!r those wi~o h;t·;e n,.t been .:t'-,:u'>-
 t,111";('d to~ them from d~ildho()d. A r<l{j;d increa~c in the supply
 "r (nal Cln only be (;bt~in(d hy p.1yin;.;: high wa~e5 t,) new men
 for \.!i1sk1iful w~)rl:: . Al=~.ill, the l·'.:u:hlnu-y, ~haft,.; and galleries
 l~',,;f m . r~'q:lirl'(: fr,r ()jl('nll1~· up m'\\· ~eallb C:l.rmot b,: prn\·;dcd
             .:
 \I ~;"''\'i~ 5011Je lkby,       It j,:; (nl"Jng '" Illesc CCltheS th:n <1. 5tJ(..!c!cn
 ;';r::rc.l~c in the demand for uJa\ (Cfl'('S its pri(c tlf) '''~ry high.
 Th~:,c CJ.U"C:S \\"(1uIJ ac:~ e,"en if tiler,' \\"('1 ~ ·\:i l:lllimitcd ::upply
 ,.[ ~-:('~Hl mines n.>ady tu lJl~ ('rened ; tll'~;: <Ire indei'('I~,), . 'I~t (If the
 !.;~". IJ j)iminj"l;ing Return.              The gradl!al exhau,>tir n of 0ur
 ,u"l minl'5 Ita.., vcrv link to do ,,·i,h th~ sudden rise in the
 :ll·i·.:~' of (.03.( in 13;~;. This ns-:: was uw·cd by a S'..!dl:t'll in-
 '.:La~f': o[ demand; as is shewn bl" the fans that it attr,lctcd a
 ;;u·ge amount of Capil;)) and laliour to the coal mining trade,
 ma the ('msequCi)t inc,t;:1se In the supply oJf coal forced down
\,:ircc; Le10w tLel!"" oj,j !.? .. ,.l.
       l~ut tb<Jugh tk L.lwof Diminishing Rtt~!rn docs not apply
: 1 miaeraJ prodl.!("c in the same way as It UO(;S to a:;ricultural, yet
                           .BOO~{         L       CIL\P, iV, § 7.
the E-xn;1l1sti(JO of the !l~ilH'r,1.l s~r<1t3 of the earth'5 surface may
ll~t:m;!~cly exert a. moo;t SCTl<:Jl15 influcnce on the history of the
w('rid,
       \\'h~!l 5tca:11 pOI,'cr becornc~ {!,pcnsive. sc;ence will doubt-
les-; iC'arh U5 to stlb~t:tl:u: (c:r it the fon:~,:; of the air and
'.\';ltt!r, in the wind and \I.L':(':O;, in tides anti waterfalls, ,~c arc
:,uppli'_'d with f,)rc{'s m:lny thm:sand limes a.:i glt.',lt as can ever
~)l.' rdillir..:d by tlH~ ,yh,yk popu1.lt~on r,[ the g:tlhl'. At pn,:scf'lt
('):,: is prl.'ferred to the<;e ~:)\lrce:, of P()v:cr, bt'ClUse coal em
e .. .,! I:, ::,,~, Gnrird whcr'c':'~r It is ,n,n!('d and aay qu,ll1tity of
~tl'i11·!.   p{jwer r.lIl be ubuin(:(l whencI'cr it i,; W~lnh.::J; but the
ftlrce~       (If l'\,ltUl'e Glnnot. :\Ie:l.ns IIi:! h()wcv('r p:'uhably be
,~i""'.l'.-cred of tnl1smitt:ng- t1,c pOlyC'r tr.at is ~lIppli('d by l'alUTl'
frum phu,; to pbcc, so th;lt it r:l:ly be ;lpplicd ,dl~'r(:\'Cr it is
wan!c,L ~nd of stor:ng up ~ks furce :n r'~~t'r\'(l\rs '>0 ·,Ii:.t it may
he ll::.cd whenever it 15 wanted j ar.cl then w,~ sh~\11 be abil.:
almost to d:C)('r:Sl~ with the lhC f'f "tx:1m },,)\\'('r. nl:~ t~ierc
Stems to :.'e no Pl'Os.i1'_':'t nf obtairJ;il;.!' :lay imponaflt ch~ap
suiJqi:C!tc for coal a.s a J:1(';\nS of prodw:1Dg W.1.lI:lth. ,\nc; 11
i:; q~!t(' Fo~siblc that in the ci):(~(r !' 'ni\\n~ of thl: earrh's sur-
fa(t; the j!;,)\'.th of f'':lpu;aIJ(\;) win '.,;i';l:1~\<:l~ be restrained by
th·,; Ilt'e~: O! \\'al O1lh, mure than 1)), tll,; nec,! of food
      But the ~t< ll)e::.t :1pplication of the L;l\v llf Dirninishing
R'2tllrn is to ~!'a(,C. .[\n inr:r,~a>.:cd appliC;::,lon of capital :l.nd
1;'1:)0\\1' \,~ll inol',<bC 10 "c-me ex .. Lt our ~:,pf.'ly of cn:ry other
:J('c('::.o,;1I;' 111.~t It C:1nnot mcr".I"e 2t :til the space :'l~Torded
by ,"Jl)e acrc: of b"rvund, nor the s,:r:.li;.:k <lnd fresh <Lir that
is its natu:al cndulVrncllt The eYij~ of (!\'t.'rrrowding may be
k:,~er,ed      hv ',Jetter     ll~   \lna;,.;c:   ~,r:d   bi'ttei mcan;; oi   tran,~;Jort.
llllt   th('~' st~J   l.'>:ist; :'\!1U an! :l. ,:ri;e\'{JC5 h;i!'1ranr-e to tkit ;;rdwth
ofnum'c>e:> :.nd I ;j.;<.,ur I\·h:~.h wu',tld (\~b'11Il.'e be brought about
by the incrc'<1'>C of wealth ;\nd :"i10\~,~".J;.;":' London ,In-i other
very brc:~ town:~ attr.l.':t great numbers of the hcalthi~~t and
I1W:ot Y;(orc,lls of th..:- country popul.,tic1n. They (:;1.;0 good \\"a~cs;
l:-t·:';r ci1:1Jrc'l :,;ct ;1.bmubnt fo, rl :lrJ,r c!oth~n;;; but they 5".ddom
h 1.\'(' sl.lfi:{ ient hOtlSeT0(lITI, sorcdy ('vcr any pLty that is r<;ally
ne3hhy and jU)ou<;, anri !'lever perll:ctiy fresh air. So thc) ;.:row
up physic;1l'y inferior to their pJ.rcnts: and theirchildT(~l, 1ll1um
3.rc in!cr:Ol to them, The th :Id gCnt.'r;ttion of Londonns .in; with
but [0::1\' excptio:1S we:l.k('l' al~d le..,s he<'.hl:y than the al'(fag:e of
Eng;ishmen; a:,:d yet tilfir <ln~(';:':'.)r:; are the very pick cf the
race. Wh05C o!i'~pnr:.g wouhl ur.dc: f::....ourable circumst:l.nces
haH done much to raise the average quality of Englishmen.
                             CHAPTER V.
       GR0WTH OF        POPVLATJO~.        MALTHUS.        POOR-LAWS.

      § J. THE Law of Diminishing Return tells u,; that when
pflpul,ltion has p~ached i Certain _density. ,"..n additi<Jnal amount
,-,f 1.11wur and C:l.pi~:\l \\il111I)t raise a plop0rtior.atc:y ,!leNsed
_~lJPph: of [Dod.        The ,'jlcration of this Law is cdaycd IJ)" thl'
pr",~-reS5 of the arts of agricultt:re and manufactne, and by
bl'ill,c;inc: f!"c::,h hnd tinder rultiYJ.tion. It is po<;sibl~ th,lt when
eH: \\L-.olc wedd is well cultn-ated. it may afford ~1!PpOTt for five
or ('I.cn ten times as many people as there Jre ant'S in the
,.-"rth's s'lrf:l.I:e. But a limit to the growth of popub:ion must
h<.: re.l(ilcd .1t bst.
      The sll1'face of the globe, including sea Clnd l:\nd, is about
(.<')O,<Y.xJ.ooo,orJO,ooo square yards. If We Sllppose that ('ach
y:ud ailows standing moJt1 for four per~on~, t!li,; calcu.Luion                     ~
~.H'S rGom fllr 2.4ou,QI.)(),G()(',ooo,ooo person....    :'; . .:xt, l<lokm.; at
net' r;l:e (,f incH'ase of the poputatlOn o( Engl:lOd ar.:i \\'a!es, we
(lad ;h:1t it.doubled bCl\\"~('n the years 180! and 185~, At this
r,He of increase popubti(lfl would in
        IW years            multiply itscif by                                 4
     ;:'()O                    .,                                            16
                                     "                                      2;6
     JOO ,.                    "      "                     (ro:;q., say)   1000
    1000                       "      "                              1,<XlO,OOO
                               "      "                    J ,oo:>,ooo,o:xJO,cx>o
   _i',00     ,.               "
                              ""      "         {,OOO,OOO,OOO.OClO,C<>O,()(X).
    These £:lets shew that 500ner or later the ~rowtil of popuJa-
':00 must rcctiye a check; but they do not shew tlilt it need Pt!
d;e·~ke(l at present. The qu('stion whether there is .0;;:<.11         a need
:3 a t~i~~(ult onc, and we SI1,lll b~ (I.:cupihl daring the            greater
?:'.rt 0: the present chapter i:l consiJcring it.
    ~:" In savage countries people marry verY early, and tho:
gl"mHh of population would be vcry raped, if'it were not re~
                        I!00r< I.          CHAP. V. § 3.4-
stf.l:.r<>.:.l t.Jy :n(;lr,t;, iJe anJ ".U, hy- pcstikncf:> and by famine.
\Vhel\ Illt.:11 h:JXt lL'ft the ~.l\·Dgt ~\.nt: a::ln. 11\c ullna sl'ttlL:d
:-::ovcrn:l:t;r,t, t!:t:y vcry of',l'll retain ;hl' habits of impnwidence
uf the S:l\·a~:'. In (,let tl1':r :.tlmost alw3.ys du, un!e"~ they ate
\·cl~!cl.ted, and h3.n' s.)me son df ambiti'Jn for tllem~,:':n~s and
;h,,'ir clljldn~t\. J\ot oi',ly the Chinese and other A.:;i.J.ti-: races.
i) .. : the a~ricultural I.lboUfl.'fS in lreland and c\'cn in some
i"lit..> .Jf EI1).',Llr'.d nurry recklessly withoat any thOl;~ht of the
I :~\r~ow. FCJr indeed (I.lelr Llt;lr~' is a matter n~ithcr of hope
;1<): of fear to :h.:-n; they h:H'c Jit:Jc l",pe of bettl.'ring their
. (,,,dlti,':l, :lnd there IS s-.:::nccly a lower 1c\"c: to \d,ich they
I'.)n (.1:1. As a rl's:llt so m<1n\ childre:t :lre 110rn tlt.1.t the
 rt,>'->urcl'.'i (jf ~ll<;! I:n";uh WI!I not '~'l:tfice to flollri5h and cd:lcate
 ti'un: and thml.;h 111" Europe :\t It:a~t infant:ciJe is rare, and
 t.:~,,:Jrt:"n uo not oftC'n dll' (,f actu:ll stJ.rY3.tipn, yet iLe r.lt'-! of
 It,,,,;ality amon;{ the children of the \'(:1')' prJOr :.:; turible.
 !n~lltn(lC;lt food and cI(;~hlt'5' neglect, din, [0111 :lir and
 infl.:( riJus di,,<.:<lses hdrrv off V;1st numbers ot the children of
tile poor~'r labourer.:; tn" to\~ n anli country to an c:lrly g-r:n·e.
 S\(iikd ~r'.iz;cn~ arc in C\ tT:t:1<..iti0n"j st:J~C. \\"e n::ly hope
 IIL;U berore long they \~i!l not m~l!·ry without that s,'n,,(' ('If n:-
 ~p"[l<;::liJitr with rc;ard to Ih.:: cr\u(";1tr0n of their ciliinrcll which
 (I,\! lllJd,.l!t: cl.ls~'~'<; kl.:J nuw. TIi~~ C!i:l!l,:;e m .. y lie de.::cribed by
 ~"yln~-: lll"l ;LI.:)r St;uld;nd of (onu'clt h ri-:.in..o;,         f'm"-
         \\   b~n :1:1)' LL1S~ r;f t:lC: P JiJ~:1.1tlOn has cO:.1b(d               such
              h~1.bit> ufforcth'Jll':ht.lS to be 11llwili;l);':- t~ nl.1rr::      ·,,·jlh.
              O'lt   tlv expect \t,l,n o( LJ(,lnf~ able to e",io\· ~ (~,-l:Jin
              t-:ivcn a:nnClnt of lilt; lleC(~S;lI'i~'_;;, (>l:l1fort~., ,):1(', luxl;ries
              of life, then. tlm amG!I!l'. is c;_tll-tl the StJ.ndard of
              Comfort f,u      t11:1t   eLls .:; of   ~h,C"   popuiation.
     Thesi-! nccC'''~::Hic,:., , oillfuns ••1nd. lI:\.,:rics are f(Or a man's
,;h(\(:l"co ,l5 wen :1:; fll!" hlnlscif; imb:r\ l:!'~ chief of them is a
;,;uud P;I~-_~ic;:d, 111'':::l1t.l.1, 3:~d wdra] cd'S.t;I(,n for his children,
Lo.:O:IOI~li,: pi f)grL'S~ (:t:p\,:1d.:; mIlCh 0;1 cl!ang-es if! the SLmJard
01- t:,)l:,'",rt of the p<.:opk, ,.L11U Lill'i"Cf'JI"I: on (llC '>trt'lIgth ('If
Ihl'ir 1;:01)11\- .lfi,,,:,clJons
    i:), rio tbere lw :1. ri~c In the ir.comes of an\' cb:;~ of the
j,u'i,le, 'I\' ll;_:y c-"pert an ;1'clTo.I.';~ in tbe nnmbl'r"of m,'1rria,~es
dr·J t.irtLs among tll~5 c!;j;'';          [t i, in f.H __ t ,\-dl !~:-1"\I'n that
11I,lr:-;a;(', ,lrc nlOIC iklJlll>nt 3.tllnr.:~ ;111 dJ."~e5 of the pf'ople in a
p-.:rilJd cr" comtl1~'r(i;tl pr(>~p<.:n{r tb-m in one of dcprcs5icm j and
;11(' SLlthtics puh:lshed hy the l\.(',~i~trar-G('ncr:tl during the
\.l.:;t th:ny ycar~ pnJ\-c th:1t there hJxe bC('J1 as a rll!~ more
m.uriages in the y~ar;:; III I' hic:h bread has been che.1fl, than in
tl,(i".' (ll which It kl~ IJ"'t.:n (1c;,r.
      It m.:y howcn·r h;"lpp,:rl ril:lt a rise in the inr;()n1cs of ar.y
dass i:; a(;comp.lr.:':!J by <l n,;.! ir. their Standard. of Comfurt j
                 GROWTH OF              POPULATIO~.

,·.-h:ch pre ....:-:1ts :tny increase ill the ilumber of birth:; anlong
them.         But a n::;,; in tIll: Standard of Cumfort J..rlli:-,5 ,nth
       i:;1prm-c\\ m\~J.ns 01 carin'_~ for and stlpponln~ inf:l.1lt life,
.: 1 tll.lt '-}~lt of every l:um.lr~u LhilJrt;1l th~t ar'~ born, a larger
l.u:nb,~r ;,:row up to be t"ftic.iellt workers in the next g~~neration if
:!;c StanJ"ml of COm!l)rt i.-; high than if it is low. \Ve see then
:: . .1t the Law of PopuJation i:- that;-
            .\ rise in the J.' t'fa,::-c income of any clac;s of the people
           C;L'J5CS eltber a  rj~,-, in theil Sta:Hbrd uf Clllll{(Jrt, or an
           ino.:rea:ie In the number of manla~lS .lnd hirths ia that
           class. A rise in the ~t,H1d,HJ of LUll dun is ;llmost sure
               ttl increase the peru:ntar;e of chtldn:n wl:u grow up.
               Then.(o!e a rjs~ in aV(;fd.l;c incutne :dl~lOst ";\\-:1)S in~
               u('ases, alln a fall aillll'5l <11W<1):> d:mtnisi.(.!s tile ratl!
               of gro\\-th of pO)JldatlOll,
       .\s a rapid growth of popul.uion has G.lmost always followc(l
'-':1 a ri~c 01 W"1~C5, Econotl\i~ts from the time of Locki: have
,l55iume1 that the wage,; of unskilled b1y)ur IlJ.\"~ Il<.:n"r bccn
':lllch more than s,jfficir;nt to cnabie tlkm to conl:!l::',' the
~pCCI(,~.       But .-\Ill),} Smi:h's S;'g-,h'lty n'm:trkd tltat it is q'Jite
j)o~siIJle for t]H:: b\)()urir:;; cIa'-:;e" to ch:1n;;I..' t'lClf ddmition of
r!('cc"~~"rics       :::.hoes arc lH.'cessarirs in EI1~hnd, 'IOt ill St.:othnd.
 \\'b,,',den ])1'(';\11 W~b a ncrt:s":uy iol En::..;hnd bc·torc the ft'ign of
 ! {v;"J Y \"11.; after that the \\-orkin,~ cl:J~st's :1:{' a ;,:re<ll dC<lJ (.t
n c"Lr~;)d; but a.:;ain at the ('nd of the 'icn:lltcctith century
 ,\ he,l:en iJredd bec~mc a neCL"S,;;"ry. At the llr,-","ent time the
,l,finition "ali"s touc.h from one country to an()lhcr, and evea
 :r J~n one P,1rt of the S:lnle cOl:r'.try to another.
       .>";'. .\l:tlthus published hi'; JalllOU5 Essay on P,)pul;ltion in
 I ~')'" Pt.'rbaps nll othr-r book bai Deell so much disc:u"sed
1)\ persr)n3 who have nenr re.ul it ,tS tillS Essa~ has.                 It may
 i)(' "I,ll"lh while therefore to say s')!llcthl!i,": llLr<.! dDout it and the
drC1ll1"tancc., under which it \,',(S written,
       ,,-\t the: end of the bst and during- tht' ('Oldy years of the
 :lrC~('tlt century, the Engli;-.h poor-law acted in ~u::h a way as
       tOSlcr the ;2'rnw:h of popui,lti,m UP",\",u-cl indecd in point of
 ":U,ldity, In:t uow!lw<nd ill P01l1t of qllaiilY,           It put ,\ premium
 (111 (arly :end rcckkss m,lrn.r;;;L>~. at the S;imc tim':' li:;:t it dis-
   '}ur<lg-Ld not tmly evcry k:nd 01 tbrift and (<lI-ethOllght, h:t also
  d! otfln~tl; and 111.1nlin('~~ cf Ch,H,lctVr. ,; l:!l,\er it tiie Lr:gli~11
!,'c::l,:;ant had.l leg;l! n:,.;ht to O'uP[J')''- in the sil1pt' of .l pOf)r-ratc,
  I' .ied out tel hl!Jl "h~"n It:" iLl;;!"'; were juu:";CII insufticient.
'~hiki:-cn Glllcd I\lr WI 5c1:",dcn;,,1 (,n hi" P.lrt, t~)e rate \\~b doled
  "-,:! to him in proportion to their nUlUl)':l",            A lablllln'r coulrl
~:"t by ckLrring nnrria:::;-e earn a 1ittlc: portiun to start with, or
"l L'.b' ~uch a course would lL'\'~' rnluircd ('xtren1(! se:t-dt'oial;
;-1; \\ ~H:e unmarried and childlcss, rhe payment of ,lli~ service
 30                          nOOK I.   CHAP. V. § 4. 5.
 was       depr('_~~("d  to the sum jl1st slif1tCH;,nt fN his ahsolute ncces-
 51(.;'.     l,lk..:;~ sLwc or like :\ horse, he had tis food r.cady the
 SJ.)l1~·    at ['\"_"Y :Im~, anu work as he: mi~ht, was unahle to reserve
 a          fur his needs!."
     5:1..11'('
        Th~   consequcnc(:s of the-e misuken arrangements We're
 sh'.:\\illg thcl1l.,dvo in widt'~"'pread miser)"; aod :\L1lthllS, a.
 kir.d-h~'artcJ       cL.:rf;-yman, set him-;clf 10 work to inquire whether
 afc..:r all it      \\.15  ri~ht thus to promote the inr:r('ase III the
   qu;:u:~:ty ot dw population without caring for tht; 4l!.,liiY.            The
. conc:u5ton .It \\·hich he arrivcJ i~ this :--The- 11.,tural propensities
 ·,.1f HUll \,1I: ca:lse p;)~lliation to incrca"e a.> f..lst or fa~tcr than
;the m(:ans of supporti!l"; tLern; th~refon.: the dJi>rts of the
 'l.·sishtnr amj uf the mor:.dis~ should be Jirr-cted towards im-
:prm'in:; the ch;mlCtCr of the pe0pl..-:; and low,W.l3 discouraging
'J-athl'r than c:;coura~ing- a rapid io(re.lsl: of n.umbers.
~      l\cc:ordl:1,..;I;t he ur.:;cd "moral sclf.n::straint>' as a ,. Preventive
   Chct:t.:.": to the '~"ccs."ive gro\':lb of pupulatll)n. But \\'hat he has
   said on th:" subiect h,13 been mnch JlIi-.;underSt0od. It has
   be("n th0'.l:.:,ht that he Wb:1Cd to impf)se ~rc,\:: hard::.hips on the
   pOOL B..!t i:1 he: <. he a;:l.ln and agairJ explained to) inquirer::.
   that h~ \,.. i~hl'd to put r.o m'Jrt: n.:st:·,lint on the ll),ln-:;"\~<: ot the
   pOOl' th.w such <I" e\ cry prudenl l.)'!l"l·nt in the middle cbsses
   would \\'I"h to place on that of his cili!Jrcn. He ad\'ise~ delay
   i:1 m:-:rria..:l', and he ar~lIeS th:1t, \\j[ho:Jt stron:::; and ].1.sting
   ;~:ta.:l,mcn's, ~hc marr~<.!d 5tatc i.,; ~er:c,a~ir more productive of
   lui~l r ~ t::,111 of lnpp:nc~s, and that fo'Jr the formatIon of such
   alt.1.d!mcJ\t~, tillle llhl::.t be gi\"(!n to tind out kindred disposi-
 tiQn~ 1.':

        :\0\\' it seems e:lSr ,n obj.:'ct to .\Lrlrhus, that the WOild has
 gone aio:1~ ycry well for lh{,usanci.-; e}f years wilhnut men's
 truubl!ll;!: lhcmsd,'cs :1 :Jo~:t hi" Prl'n!nti\'~ Checks to population;
 and that tb'~rcft1re the \\ orld may be expected to go f),) well for
 l;l:"!~l)' mo:--e tlwtls,md years. ('n'n if mf;11 p::l.y n:) altcnt:on to
 .i\la:~hu5. Till" Clbicctiq!\ he ,1!llicil)'!!,('.: Jnt! met 'uy onc of the
 most {'fu..,h:ng ;m~'.n·r.:., !Il:l.t p,l!icll: ~;;ld h~j,d-w()rkin,:;' science has
 (''','cr t~,\'cn tl) the r<.'"ck:,·ss .J.:"so.:nions c·( Its ;\d\"cr:,;J.ric~, He
 examilH":u C,Ill' alter alloth'_'r lL(~ \'itr;C1l5 c0iJntri~5 of the world
 in ancient, meJI:e\.J.I and ITlC-dll'n tin)!·s. He [{Jun,l th;ct in
 s.:mlc pl.I"':cs I'rC\'enti ..,c Chesb had bt:l:ll actually in operation
 fur Hl.l.ny centuries; {ilat in SOIl1'.! p;~rts of Swit7l'rhnJ, for
 inst::l.nl'C. ::lr:,!.1.! lIumbers (If the r)('puiatioll rem.tin unmarried.
 lIe found tL_lt in II1dD\' O!hl:f c",mtrics the hand of lllan had
 habitually r('s(uincd pIJpU;'I!in;l by infanticide and war; and
 that In t:"l'ry coc.ntry w~;(h had been inlw.bikJ for many
 centlirleS, <lad in which m<Hl had n0~ controlled population by
                                        ~L\LTlI        us.                                         3!
li'c';c Tnt'au,» the sterr.. hand of n::.tllr<' hatl kct'lt                  it down by        wh~.t
;:'; called Positive CLeeks. th,;t lS, by \r:mt and {Imine,. hy
  'l.(.d.nt mort;;lit):, and hy tLn iblr~ dis.:.~-c and pc::.tik0ce. So
    'ta' it IS nr" :t. fact that th~ \\ At:! h~." glme (In vt.:ry well
J,:th,~rto: and :\l,t!~hus :t.r;ucJ t],at tbe facui!ies of thow:;h! and
;'(lrc~b0t:ght we(e besto\\cJ upon men to enable them to make
,ilt world ,,;0 on better.
        [f Ie llsed the (.'xpression that popuhtion tenus to incre.:l.:':c
  ·\(~·.'lllwely la:l. 6~'omdncal pr(':;rc';sion, and ILl! llll('.cr Lt\OUT-
 ,I'> cir..:umst.}l1(cS it \\;t.' found to dOl.:'}i.' in 2; yc,trS, while
.~,._J 01<), incrcas<-'d in <H".till;:e:ical lJrop, ,r:i(,n, ar:c. th<~c there-
:-0,'> p"puiatiun must inctlase f,:_"tcr th,-\l~ f"',id. Thc cXI're~,,:on
':L:',·hi.l<:tic;l.l" is slovt:!':ll arld r.o ~me dcf';'lds it '-,OW, L't.:l he
    .tc:n(!...:u to express what is stated in tl:t! Law of LJunll:i,,;ling
 !~"':'urn; viz. that if labuUL"COlllilll1cd to incrn"c <l( it g-rcar rate
;'(If a l"ng tim'~', the prLlLincc whidl it could obtain from land

\\'ou!d r;[}t go 'm 'nu('asing ~lt t:1C S.unc fdie.)
       ~.:;.    ),Ialthus' ~l3.temcn~~ wl~h rc::.::ard to th:: rniscn- th:lt h;lS
~'\is;cd in p~t a:;:L;S h.l\c belil contirmed by mo're /'cL't'nt
  ,istnri;l:l:i: I)ut th( pr;,et.c,!l \.:;nJ)(!ll"JOn~ Ih,:: IE' l~',l:c";("'~ f:- u ;;:
  ht:':l :lfe lwm.: 11\·,_,!.: to b'~ l!lSPU:cJ, Fer h~ en,,:,: r':r.r J'~,,~,,_ce
'he jll"-,,,,:ti(lIlS .lLld -i,~,~O\'l';-:c,; \<, jlid, \\'CTt:        J'!';' alJ.i;'ll t,j l,v :ll:lde
 '.hen 1:,--   WI')\..,     lIe   CQu\.\ l'Vt       lorC';;:C hl;';, the ;:::-~0\'.i:l of S:e~m_
'rat':'i..; \\'I,ulrl (,:'I-'1.!(' LI'l,~:Llnj. on liJ<! one hand to import fond
,'rom \-\l~jntri('5 ,-,hcre thlt'<.; \\-'-1'5 a scanty P'.lPULllOll; ;l,_d on
  :1(' f\tL~'j" to sen,: 0llt LeI' ~'lqJl\ls !1(}j)ldJ.'l,.,T1 to ':ulti..-;,tc 11('1"/
  0··..,. ;"! t tn ~l'r('::.d tl~c t:·;ct' .... :.- J.lllt ;;..:r,iu:> vt' the Ell;;l!~~1 j~~ c.:JI:.::
   '.'"T \h'..' c;,r:h
       TI1;.:<...· (::1> lA' 1.0 d')llt)t ,:l:tt thIS ~':'\tcn~:'n of the L1,~!;';1
,.le,' :·.l5 bc(~n ;1 he'll It: :Il th{: \\,\)rH, A chn:k tf) (1-,,-, ,:..;ru\\,[h
 ,1 'l,,;'~:hti,m w(;::Jd (:n ,::-l':ll h;lJ'ln ;f it afjcn,~d o;d)' 1:1.' mor'..'
,;ll~I':,;..:,.·rlt r;1(C", and P:L:llUd<lriy lb.e It,urc 'nt('!L.::.c It (::~,-.~e5
 'f ti:'         c."~', ~   Ther!: docs indc(;d 'liJpL':U some d.lIl;.i:cr (}1 th~s
   "!!. F'Ir imtanC',", if th", lower c:asses (,f Ln:-:-lis!llnt:n multIply
          I.<pi(;ly tiW.·l ti\OSC which ar:.:: nlOr.l!l~· ; nd p\;y<cally
~'_;~~'rjGr,   not ,)!!); wI;l tl:r~ population of E:l~!J.t;-,d d ,«("j,)r.I:C,
:_·~H :\b0 that P,lrt of the po:)U i ttion cf .:-\\nc:ica "l.nd .-\"~~:..lli.,
\,hi,h rlcsccmh {:-vlTI En;.~JHj;:lell \.;::- 1. k:,s in·dl::~..:!_: th;m
.1 r,'.b( rwisc \\'O'.:;,t h',::.   A.,<l':',;f Er.~~li~lll;lcn l'll:~t:i;:Y less
   ))iti:, than the L'hi:h':;C·. rh . .; ~1':r;lL:ss r;K\:: ,lilt overrun pr·r-
.i(1]·,' (0,' Ihe c,lrth tho.:. vtuCI"o'I"C would have.' been peopled hy

L:L1:~L d'~Gl'r.
       I, 1!l,,:>\.·iJ,~' rClllcmj;r'n" .. ; t!::,t the ~rowlh of pl!p:tlation dep~nd5
.~..--.~('n ti!.? n::mL{'r of th, ..,~, v;h:; arc bonl, unt 0: ti!c number of
  ,,,,,~(' \\-h~) ..::~"W Hp t) lLl.,:,!;'jiY: tlut inf.':mt r'LJrrality is the
   1\',::-:-.] ((In.,02qu-:nu.: of il!lpr~J\'id(!nt mar;-l:l.:.:-es. and th:1t the
  , ,lractcr d the populativn of a cQun,ry will be lowered if
 32                       L(H~r.::   I.   CHAP. \-. § 6.
 people marry        Coi\rlyon ill5ufficient m(!ans, and h.1VC fal;lilics
 so hr~('     tit;.lt, though tr.l')' can jus.t r(':J.r them. they cannot
 prcp-:.:r1y ,-:1.1<; f,)r tltelf phy<.ic.d. mllr:!l alld men[,J education.
     The b<:"t practical :t.n~\I'," t:..> ';lC q'Jc;t:on which we han:
 set our.,>ch·~·s to rl;" ';c;s in tillS ch3.p~~r ,;(:Cr!IS to b,.,. :-
          J u:.t as :J. m;.n who has b'.lr;-uwc:d IlH)nC~' i~ bound to pay
             j;: L>,td.;. ,,-]:11 interest, so a man is bound to git'e his
             cllildrt'!l :lll Cd'JC:tlill:) bdter and more thorough than
             he lIas himse]{ rco.:<:'n:J.
     \rhen P:"'0jJ!C are i~l a !J1)~ilion to d,~ this they confer a
 benefit 0:1 th~ State by lOarrym:-.;. Thi:i pr.lctical principle
 Ull'a~UrC.i -:quit;l.bly ,he same llle.tSLrc- of pub;ic duty to rich ane;
 to) poor.     Its g.:llciai aCJl'tion \\'()!Jlll c,n:~'; the spc;nr~ ci
 l\1.:tl:hu~:anisml whi.-:h C,,:-its a g::'OIn on:r eco:H:lnic :;pcculdtion.
 to dl'<lppe,n, or at any Lite t() be nn lo[";;:!cr Grcaclc~l: and
 would rj~l Ut; of the cOllljJc:i,k'll fur fo<)d whICh seems to dog
 the heel" "f    p"P),:; l'i$,
      § (,.    It;,:11 be con\T~licn.t here to p:tUSC in our disCllssion
  f'lfthe L:lW5 of i:1G':<i5C of the thru' r('ql~:~it(':; I't' pn..J:..lctl·JIl and
  to 11\:lkc a short <L;:-t.:::-sion 0:1 :h,~ (i_ICS~iO!l w!l:ch :\ialthus
  rais\'~l ;:\5 to th' pfC'r"r :1dm:nhlf<I:''':l u;' the l\.l(lJ-Jaw.
       ~\t prc"'~llt th..: lIl:ll1:lgement of 1)1<; r.ltc_~ tlldt arc kv;cd for
  the rli:cf ()1 ',he p'»)\ i~ t:l1trusleJ ',) Cu;:r,jians ()i tilc Poor.
,These eual" .!i::tr:_", with the :tid oi p.m~ .;IYic:,ti~, decide \\'I1:It aid
. from I_he ntc:> Ie> tl' he gl\'c;~ 1:1 c,teh C;l~('. This relief i" ('ilher
: Indu;}!', th.1.t j., \\ ::l',in the J')iJrs of the Parish workl:n:.1st:, or
'Oul.kn, .-\" H"~'lat \\·,,'Jhl ~J.), th'::' (~- b of Incour fdief all'
  •. seen "; those c,r Ull:dour rdicf :11" (,(ten "l:dt ~e.;:n."
       Indo"r l'('hd :~ Ul.p(,plll:u; J[ r. ';l'1l1!)ks i:nprbonmcnt, and
  secn;~ W0 b.l:·(} a (,ttl' for lhw;c ~'d:o:;!_ piH '--'fry is not tbe r("sult c:-
  POSltwc vice, \Ybcn:l man ~()es m~{; :hc \\orki18us~, hi,. humL
  IS gencnliy broken up, so that he C.U1:.·.1t easily llz,xc it anu
  :otart in rfc afr::,,,,h,
       It seems tb:refJrc:1t first <'ibht ;m!ch ikttcr to J;I\-e Outdoor
  relief to thu~c who are not h')j)·l(':.<.iy I:Hil'ln. Ou:door relic!
  may he ch:d O:It ),~' :t!ly lutk ',:,li'i:i,l'_::" 1)1 the liMn Gl" hi~
  famlly. and p,'rh;\i',; i))" some a5si~t.ln':,- :'j'(,,;, re\.ltjt_in!> or oth(';
  frit!llds. l!e !"Id.l:' alon;,;- in 111--:; old flL,:de and with his OWIl
  fmn.tllre: tLe cost of n:r"\'ill~ him 111 his IJOlll~ ii thus.
  ~~vcn \l'hile it lasb, Ie",,,, th,1n the cost of Ind0dJ" J't.';ief; and.
  as soon as h' I:' :1':ai;-, ab:c t·) C.ll"n (unsuleuJk wag-cs, tilL
  Outdodr r lief '::111 be s··_lppt'd. Thus in ;~s immediate resu)~
  Outdoor n..:i,f is !e::.:; !)~:rdC1\",o;llC tu the l'.ltc-p.!Y(,I, as well a
  more .1b'Teeabk· tv tho';e wbn l'l'cl'in' it, lh:in Jllol'>Of r,';id is.
       Dut ChItdoor r..::llef k<,,~;~ t') ~re~1t el':ls. If ;.:i\"cn in aid of
  wage::., it is likely,;;,; e\p,:r:l:lCt' 1'.1'; shew;l. to cause wa:..!(·-; to Of
  ~() lvW tlLl~ bbourers cw'not live witlwut s:lpport from thl.
                                POOR L\WS.                                 33
f,ltcS.       And ~in(e lilj~ it has h('~". g"!?neraIJr agreed th::tt Out-
(toOT       rell..:f should nut be gi\'cn to I;:k,urers ,.... ho are in full
,'~ alth llnk,;s to enabl·_' t:lclll to tide o\"er ~'Jmc passin:; emergency.
~;ut cn:n wilh tl:i,:; )e'str:Clion, Ou~Joor retid is often the booty
   ;" Ih...: idl~'l the! uio;"ip.1.~;:,d, the CLIfty and the hypocritical; fOf
 ;:e C;'cardian5. and Rt::\uin:; onicers employed by thein, have
   -)t the tinte requirol {(lr ill\·cstigatin~ propl:rly the m..;rits of
,-,I:h LaSr; and :hcy h:1\"e nl)t 35 yet cntcrt!d into systematic
   "i.,-,ncc w:,h pr;\"atc ubtributors of cllMity. Thtl5 whiie th("
'il)a~~'- poor suff...'; "reat b.udships, those who arc di"hc;ocst often
  ,'ceil'l.! Outdt}or relief at tht: S"Ul1(' time th.lt their wants ::tre
 ·'u:,dJ:ltly ;lruvidcG for by priratc cha:-ity. And on the \\hole,-,
_\. h.b lwcn fll"nd that whcH_ '.-er Outucor n;iic( lJas b",'n given ~
·'..:c:y. a I ir:;e part of tk": p0puhtion has bc,:,:ulllc llile, thrifllcss,
.inc! l,ase, in "hoft ,. paupCli~cJ."
       Y..:( 1'l,U,-]..1w Cu;,rtii2.05 arc under a great temptation tn
    ,-.e C,l:t!oor l"t:licf. Dccmse it;; cdi results ~re di5tant, while the
,,'\pcn~c and t!lC lJardships of lndour relief arc preser;t. It ha$
 ;l:,:relo,c been tnollE:;ht ri.",ht   to (,ff~r   an inducemem to Guardians
',. appi)" "the \\'Olkhouse tC'itl'; thilt is, to dTet" 0:11y Jndoo,'
,.did 111 ordinary C.1':;.(:", so that the inabIlit}' <.if Lhe DppLc<U1tS to
 j)ro''-lue (or thcIllse!'.-<-:s Illi~ht be tcstt.:tl i'Y thl'~r wlljingness to
 -'ibm:t to the r<;,~tr,lil'.S ()t the \\'orkh0!1Se. .-\n Act was passed
  'n :'IIr G'Jschen's mvtion i:) ,Sio, by which the c).pensc ( ) f the
\\'()l"~hOl.:-t'S lbum:;houl the whok of Landon was i;L)rnC by a
 ·'!ctfOp,):t;,l.n r;',le   Each body of Guardians now kno;\s th<!t the
   i',ole 0: the O<l~do-)r relief, but only a small portiotl of the
Jndo,_)!' J"l.'lid wllich they ;rant, must com..: from titt.' pockets of
ille r.lk-p.1Y":-S by whom tlH:Y are elected. TillS Au, ,vhile it
;'l.lri,~ t;u,: nch districts of Lonl!on to cnntnbute their dnc
,jl"r<! to the support of the poor, dilllillislltd the pauperism
-.,f Lll1:u;:m, "lid. till tll(,1l 11aJ (ontinually in,::rc·:tsed. It is
',o be hoped lh.1t the principle of this Act will be npplied
:hrulI;_:bl,ut Ell;;lanct; ttnd that the {"'\pCl:~e of ,\orJ...houses
will Le throwJl upon coullties, or other Jar~c ar(',\s, whiJe
each dist6·~t !"':,I},S the t?xpen':ie of its o\\-n Outdcor rdief.
      'YhctL~-r thi.'. I;; dane (1r not, it shou:-J be a. rule that when a
p.~:1n appl:es fur Outdoor relief) the burden of pro\'ill~ that he
d~~C)''-l'S it l;cs wi:h him.       1£ should be as::.umed th,H he docs
n·.lt liesl'iTC it unleS5 he can s\;ew c;thu', tlut though he
di,l not ino.lrry Tl:t'kk~sly, it h:lll never been possible for hill'
:0 sa\'~; ,-,r tint he h~d made some effurt to provillo.: agaiilst
:he d.ty of mi5i,)[tuJ1e by ~ub3criuin;; to a 1,(OVllknt s'-,c\C:tyor
by savin; i:1 sornc otLer \';a)'l.
      TheE are ind(ecJ some who thi:lk th3t everY chanrre in the
poor-law should aim at !hc uitim.lte abolition             ot   Outd~or relief.
        1   See:'1r George Bartlctt on Thrift as a tat cf outd/JOr rdlf.

                                                                       3
 34                         nOOK I,            CliM'. \', § 7,
 But the deserving puor fcel, and (1u,:::ht to feel, great anguish
 when they ~'.re forced into the workllOtlSC. \\'hcn a nun h<ls. not
 undertaken the r·~spu:-,;;iLilitics of ll1.arial::c without a fair chance
  of bt.ing able to pru·:id;;: fOf hi:; l.hi!dn:ll, when be has led a
  hard-work:ng unselfi:-,il life ,lOd bas saved to dw utmo,>t of his
  power, hut i;.!,> b~l:'n w~ighcJ. dowH by accurnulat(·tl mioolurtunes;
  c\'(:ry h;lrdsHtp. that is in:po,;cu on hie, lH:':.!d;.:s;:,iy, i:i an
  unjlL::;:iti.,I~\~ n lel:y. Ir is tr.J(: th.H th~ ahu<;c"ol Untdoor relief
. arc at p;'e'>cnt so gn.'at that it sh(-ul(j Lt: ;l~)UlijheJ if tlH')' could
'not lot; (Iimi;w~hed. Uut It has w;t bL'('n prm,,;u !hat it is
  impossillit: to sq':lr,lIe the ,;<..:,,;crvin:; fr~)m tbe Imdc,;crviilg- poor.
         §;. It 13 inueed sC.lrcc<:,· too n·,tlch tn say that (he means
  by which alOIlt! the task /..:ud!d be accompll.',illCd han: not ret
  been fairly tried. It seems clear that }l:lid ofricials h,\\"e not the
  time relillired fur det.:cting- the falschood~ of the unworthy.
  Still kss have they time. e .... en if thc-y had the other qualitie::.
  rcq'Jircd for ~et(\n:; to the bottom of th·.:' sad tale which is
  t:llwiilingly and shnr,kin;,;)y to!J by those who have n.)oly strug-
  gled a:.;.,iJ:st mi:;fortull('. '" If t\;e pt··t~r are if) be raised to a
  pr.::nnancmly better condition, they Jnust be dealt with as
  indi\iJuab ;mll by indl"'irluals; for th:,:; hundreds of workers
  are n('c<:s5.lry; and this llIultitude uf ]:dpers is to be found
  all~o~l.;st \"():Ulltt{TS~\\·~lOS<.; <lid~ as Wl' :t~langt.' thing'>:l.t present,
  is to a. great uknt hst. Ih~' probkm t!) bc ~ohed,then'fnrc,is
  how to co[!ect OUT .... olunt ... crs into a hari110niolts \\hole~the
 action of c.1ch being- (1"(;(', )ct S),stClll.1lizCcL; and holY thus
  to admint,.;:er r<..'!~d thr<iU;.:.iI the unito:d a,,;cacy of corporate
  bocilcs and pri.ate ~nrll\"idLlJl..,.: how, in Llf:t, to s~curc all the
  pCf5unai j:l:('r("ol!r~C and fl:'~ndIjnes~, ;dl ~he r<...tl sympathy,
  all llie: ;;r;l(iol,.~1I"·S5 of indidJuJ.l c:ffl~rt, \\ "hout losJIlg the
  ad\'antiltit.' of h:l\'inti relief mtcd by.l central commi:.ec, and
  ac..:u,dIJl:.{ to uelinlle pritlClplcs 1."
         Th::::n~ arc in Enghnd a br;;c and. incrns;n;{ number of
  pcojJic who :I!'e- r~ady tu tab:: F.1Jt In the work; who ha\'c the
  leisu,·,.', tile: 1lh:;Ill.~, the eUl.i,:ati(,n .,:Hl ti:c will requircd fur it ;
  "on nil sid, 50 \\C bcar d pcupie willi!Jg to :;ivt their tlllH', if only
  they could Lc ::me of noin,:.:- gO()l:. They are dissatlsiled, ther
  50::'!", with u!::.:r:ct \·i"itill~. ,\hi(h uc~J.tes:,o much discontent and
  POHT::>, and <1c,(,s :;u littk j ts:i,::; ;;000; they \"'":lnt to know of
  SOr.lt: way in \\"hi(h their eI)'on m..l)" fit ill "jth lllore organiz.ed
  wllrk .... \\·itb. our nl!UlItccL'. hum,; d.titns Ulust and :,i oulJ com';
  fir"t; and it is pn:cisdy th;hC \\"iI,)sc hor:)c c\;;'1J)'> arc i..!cepcsI,
  and \\"ho~c i.l11~i\ Iii. . . j.; the! 1"!,'l.Jl,~:,t, ',dlO 1"I\C :ile 1l10::.t prCClOl:S
  intl .... ~ncc i:l :h'_' h ...lll:'(S· ,i ll](' pOOt. Dut If .. he \\"01'1.: I::' to be v.all!"
  abi.'.'J 'we m~ht fi:..l :-t)Jlit.'" ,·... t.' to Lind to;.::-ethc.:r bruken ~craps 0:'
  timc, and thus gt\'e it CC'ntlilultr ia ~pit(' oi dl.iH:;es <l.l,d breaks:
             • lI{)"US of tlu LQlJdtJll It'or, by 1,li,,5 Octavil HiU, p. 113-
                             POOR LAWS.                                    35
      It scems then that the case of c\"cry apIJ:icant (or relief should
he decided on by a committee, who may be the Poor-law
Gu:>rdi:tns, or a Volunteer Committee ani:lg in harmony with
them j and who should recei\'e three reports. The first should
he from a p3id officer, who should make it his study to learn
all the guiles of the dishonest, and who, before reporting on
th..:: G1Sc', shouid han.' asked as a matter of business and
without 1"(,5'2r"e all questions necessary for hi"i purpose. The
second .c.hould be a result of the ol"g-::1niZ.1tion uf the various
charitabh: societies iil the neighbourhood. aUll should enable
the Committe.:: to know for certain what aid the al'plicant is
alrratiy rcccivillg-. The third should come from a "01unteer
\'lsitor who ha:; hone into tbe :1.p;)ljc;in~·s history, and has
dra\\'n fZ1rth by sympathy whatel'cr gnod there \\"30'; in him.
      'I lie Committee n;lght find that [he case ~hould he referred
to SOllle pri\'ate ch:mtable society; or tholt n'li.;:( could be
gil'cn ia %Il1C better form than a money grant. In many places
there are S'l r;):'l.l:y ch.uilies that, if they \':ere properly org<l-
niled, Outdnor rdief wouid be rendered almost if not quite
unncccssan', But if the Committee decided that the C~5e of
the ap?iica;lt w:is not met by any existing c1w.ri:y; that he had
lleen pru(iLl1t, sclfdenying nnli industrious; and tk~t he ought
to n:cei\·c Outdoor rdief; then such reli("f mi~ht be given
with,)tlt klr th3.t it \l'l)uld tend to p:J.!Jperise the people. Very
tluk Ot;td(or nc,licf would be ~iyen unct(; such :1. system; but
Jes<.'lying pC'oplc woulJ not be forced into a workhouse, as they
-:)flen are now. in consequence of their case b,::in~ nll."ulHlerstood 1,
 \li~." OctJ,\'i:l HiU has done much to shew the need and tlw
fe.1sibility of some such plan as this for dilllinishing the evils of
pauperism, and has also thrown mut:h Jig-bt on the problC'1ll of
pre, ~,tUing p:J.upt:rism by improving the h(,mes of the poor. She
Sl1g~t'st::; dlC foHowing rules for thosewhowoukl share in this work:
      "It ;.., b(:~t to enforce fulfilment of aU such duties as pay-
ment of rent. de.
      o. It is f~l: better to gi\·e work than {"ithcr money or goous.
      Ii It is most helpful of all to strengthen by sympathy and

(ounsel the cncr,:;C'tic effvrt which sn.il1 be..u fruit in time to corne.
      O'lt is essential to remember that each man ha." hi" (1\\,[\ view
of his life. and must be free to fUlfil it; t11:1: in lI1an\' "';tV; he is
 t f:u better jl!dgc of it than \\'C, as he h::ls 11';cll throu;.;:' ';)nd felt
what wc ha\'c only seen. Our work iii rather to hring him tl)
the puint of cOl1siderin;, and to thl! spirit of judging nghtly,
than to c(lnsidc'r or jud;.:t: for him.
     ," 'I he poor of LmHlon {.IS of ;tlllarge towns) need the develop-
ment of every power \\ohich can open to them noble sources of joy."
      1 POj lions of such a system a.re in work a.t Boston, :lnd :'Il
.ElLcrfdJ.
                           CHAPTER VI.

                         GRQ\\'TH OF CAPITAL.


      § I. 'VE have di<:cussccl the Laws of increase o( two
  clements of production. VIZ. the Law of Increase of production
  from land, and the Law of the Inlr'.:-ase of bbpur. The next
  step is to examiae the Law of incrc:a<:e uf the third element 01
  production, t}Jat which supports and ;t.ids labour. viz. capltJ.1.
      The growth of cap:t:ll ct'pc:cds upoa the .p{'~·cr and the ':iJill
: to save.
      The power of sa.... ing depends on the amotlnt ()f weal~h out
  of wbich s:w:r.g can be made. ~ Some cnuntric'O'. which h:1\"e a
  large pop:i:aticm and produce a' grcat amOullt of wealth. han!
  very little pOIv(:r of ~aving-. The "'hole contincilt of Asia, for
  instance, has k"s power of s<I\"in;;- than Engt1.nd has. The
  total produce indeed (If its inJu~try i~ larg-er than that of
  England; but the numher of people among whum this is
  divided is :;0 grt:at til.lt they arc c(Jmj)clkJ to con.5ume almost
  the whf)!~ of it III sllpponillC: life.
      As j\IiH says, "the fund fmm which saving can be made is
 !thc surplus of the produce: of labour ;Jftcr supplying the ncces-
  snrin of life t\) all ccncc:rno;:d in the pru:l;Jction (mcludi.ng those
  employed in re!)bcii1~ the matcrial3 aod keeping the Fixed
  Capital in repJ.ir;; mur~ tlian thi~ surplus cannot be saved under
  any circll:nq;mce,,; ;l" r,l!ll:h as this~ ti:rw;:-h it nC\"cr i" sa\'cd,
  always might be. This surpl:..:s is the fund from wlJich the
  enjoY11l':nts as di"tin,::;u"hheJ from the neC-'~s:Hics of the pro-
  ducers are providcrt; It is th~ fUi1d from which all are suhsisted
  'wh,) are not themselves engaged ill production; and from which
  all additions are made to capital. It is the real 1\<:t Produce
  of the country.~·
      Since the requisites ofpr0duction arc land, labour,and capital,
   the conditions on which the total produce of industry depends
                      GROWTH OF' CAPITAL                                        37
m?\· thererore be classed as, firstly, fcrtilit~· of the soil, richness
<.)1" 'nll:lej, abundance of wJ.terC:01...:fSeS, and an in\'igcrJ.ting:
<iim,l!~: secondly, the number and the a\"(~r.q;e ~fticjcncy (·f th~
wori~:r.;; popubtlon; this etficiency dercndin~ on moral a'i \\t"Jt
as memai :lIld physical qualities: tlurdk, the ;"lbLlnJance of the
IllcJ.ns which the industry of the P:l.st has ac.-:umulatct'i J.nd qvcd
to help the industry of tht': presen.t; that lS, the aut:nJ:J.Ilce of
r{);ld:. ane! f.lil!TJJ.t1.::I, of canals ,.l.nd dOC:":5. of £acf'1ric:'. :tnd ware-
hou"'~:i. of engines and m~chir:es, of raw material, df Jo.)d and
"I" (',-.:hing; in shun, the ,-dreadyaccumulated capit::l\ of the

r .i.'.I( n
       '1 :l" (0tal produce of industry would be jusl as much increased
by In ,ldnitiun to (he qu.:wtity as by a proportionate impw\'\:'ment
i;1 c~.c q'!.1~ity of labour. But it is otll\~rwi':ie with the nd produce
'If ill'.i,ury j (or in order to iind ie, \Ve nl'.lSt deduct the :Je,'('s-;aries
"t- til ~ lau'Jurcrs from the total produ(('; 50 tha,t it would llOt be
i1ear!~- as much inn('ased by an audlti(Jn to th!' l1u.lnllty as bya
prvj1Ortionate improvement in the quality of laboLlr. Thc!"'efore
t~,C. power tlLlt a. COlliltry h;1~ of a;clImulatlng capit;ll is chIefly
(!,,;pl'n,~('nt 0n the elhcicncy of its labour.        ThIS C'fiicieacy, in so
f.<r as it depends uron the qualities of the inc!> l(:'~<Ll \\'orke~,
ha:. a~read'l' been di~(",!ssed.         But the efflcicnc\' d industry
depenJs .J.l~o on its organization; ,:"Ind the next· ch.lp:cn will
"hew how or;;:mization mak~s the most of the resourcc" of a
(OU:1!ry by bringin~ ].tDOUI' and capital into those eml-';()' ments
 in 1\ hkh lhey ",11 be most scn·icc~b!~.
       ~ 2.     ~ ext as to the will to save .
     . ;fhe streng-tit of the desire of accumulation depends on
 mOr.J.l and social condition!'! \\bich "arywidely in differeut times
.\.ld count! ic~.
        I.,)   The Intellect. The inclination to save arises from the
 hqJc Gf ootaining some fUl:.lre advantage, and this future ;Jd-
 \';U\::,;;e, if it is tv afford mutivc for action, must be realised.
 Chll,Jr"n and nations in an t:arly state 0f civilis<ltion are almost
 .r'(',If'.lbic of realising a dist.mt ad\-".l[lta~e; th...; future is e("jip~l'd
 :,\. t.-,(, present.     For instance. sumc of the remnants r1( the
  i:1Jian tribes in ::\orlh America, tho\l6h ill possession ,}f most
 ia:i;c' hnd. suffer great want mere;..- from their apathy as re-
 ;':.lrll;:; tht; future. lhey arc indl:~trious wh·, n t:1C n:\"ard to
 liwir tail is immed:ate; but they will nut 'it't :m~thing aside
 ,',iT !:,c future.     They II-ill not C\'en do ~uch work as fl:ncing
 lheir h::-ld:=. wllich offer" b"rcal and speedy, thollgh not quite im·
 ml~di;ltr: advant3.~cs.       Hut when the child or the r~C"c grow~
 III, tr) maturity, it J.:arn:; to nert itself for the :.ake of the fulun',
 :t~ ,n:l;tO; for the sake of the prescnt.
        A;~;,in !he poor nen in highly ci,,-iliscd countril's rtfC C:1re-
 l,:~~ as 10 the future. They are too illten~ on satisfying tilelC
                     BOOK I. ClIAP. VI. \              2,   3·
il:m~eui:1k I~ceds          to h:.yc time or i!lClir!:ttion for f(\~·ethought. And
 eVltl th05<': who .lre t.Hr.ing high wages seidom think of putting
 by. ;jn:e~.~ they are to some C:>':ll'r:t cducn:t'd.
           '" l·j(- Symr:tt:~;·':3. \y~ saw in the last ch:'l,Ptcr one of
 the w:l)'s If. -,;ll1ch d~OilOmi( pr')gr(,S5 depends rn Llmlly :li[. .' Ctl on .
 .-\;)d b~n; :t 'llU:'~ he noticed liiat af1:"~<:ti()n fl.'rf)~her3 is Oll~ of the
 chief motJ\ l'S, jf not the rhi,;-f l'lOtive) uf the nccl'mui:ltion of
 capit<d. Th':>fl' i~ probably rn0rf! wt:<llth saved for t::c sake of
 others than for the future enjoyment of those who S:lse it. If
 people \n r.~ _swayed entire\ by scJf~intern':, they w,:,uld in\'cst
 in annu 'tics for their own Jtves in"tcnd of lea\ ing a pr<-,d:ololl fur
 tneir f.lln,lies. Lavish ('xprndituf<: t:t'll(,j"lly inllJ,-":J.[('S ~ selfish
 dispOC,lllU:l that cares above ;dl thit'l.-gs for ~:.:s l'wn en_io> ment:'i.
  Those who are anxious tor thr \\en-IJ(':I1~ of ('1 hers. arc more iike:1y
  to s:n'e, than to ~pclld alt their incoJ1lt-~. .\b.Jin the pr{'\";1.h·,-:.ce
 of intt·mper..1tc ~j.1L,its in <1 countrr di!nllli.,llt's both the n:.!luber
  "f dd)"" In . be \~'l't;k and the number of ye:lfS in his liie during
  whi..:h :11l iJ!cMl-winner is f.'<lrniI1g filii wag-es. TemptT,mce
  IlICJ"l':bcS <1 1ll;11l'."-i pown, anJ ge;wraHy inerc.lst-'s his \\ ill to
  ~a..-e fllr the ben·..'tit of his chi!dn"n, and aha to brir.g them
  up well! ;l1lrl in . . . c~t Personal c1pitill III thcl11,
     e)          The hope of ri~jn:; in the lI"orid. If prople fe,,1 that
. they .Ire b<llmu down for <'\'cr hy a ~\lrt of caste n:gn\ation tu
"I)oe stdtion in life. they \\"il: n,lt S:1ye in nrder to bettt.'r their
. pu;;it:(ll\; (:I<'\" "ill. n:t:ur,tliy h;\\"~ El~ic moti\c to be fru;;::cl. "It
  i'> tix.jty LHi".r l:)3.n inequai1t)" of fu:tur.c "Lich is to be tirl'aued;
  Ivr \t here\          there i:5 motion th':.'re is lite."'
           d. \Y:,dher the strell~':h of ~h~ u:)sdfish affections be great
  or siLa:I, th(; induc.:ments tu ~:i'"C \\ill be pow(rful ifg-.catsocial
  adLlIltrtb"CS arc to be out,line,j by the i>l~"c:.<,>,oll of wealth.
   Til'" i!1lddlc cbs:>c.; are much under the inIlu'.l~cc (If thi3 con·
   '-;:tle[".1:i(Jn J;;J pJ.rt1r for t));5 re~tS(ln til,'y 5:1\'~ mOTC than other
   ciass':",. O:l t:;c o~hcr lwr.n, the lo\"e of (~: .,ph:-" hindcr~ s;l\·in;;.
   o\.cclIlll\\I...ltlon (,f wl:alth is ,.;e:)cla)ly ra[J:d in (,amln('S which are
lad'·,tncing ir0m po\"(~rtyto riche:., bec:'u~c habits of thrift, which
   ;Ir.: fOrilW\{ wh:n people are pOOT, r(Ill:,;': W;ll"l1 they become rich.
     r!u-, r.:lr~i,I\('ny \\j,i<..::h our !:It];'_fS Ie.unt dUring the pressure
 fClU~d by tit.: gr~at war, is doubtk:is one t:f the chief causes of
    t.oe cllurnwus (..:[()\\"lh 0f carital during the prl"Sc!lt generation.
          (,:. I·ol~til.:d :tnJ COIlH11f'TCj,1/ scc:uritr.
          A In;'lll who S:I\'C~, hop('s that he :lOr1 his family may tnior
    in sc("ur·jt~· the fruits Df his ,:;~(;·ing. This requircs, firsliy, lhat
    Gov~rnm':ilt Shl'lIld protl.'ct h" propcrty from foud and vio~
   lencc; ::>cco:ldlv, ~;I:\t Ii he or t": ... !·c "h(!Dl he leaves he-llinu him
    are ull\\"ilh:)~ c;r ull"b:c to cmpj,w \:.e (.lpilal in UI,;:>i.ncss ,hcm~
    ~el"es, the) ml'5t be able to Iced it l'~;t to o~hers and to Jive in
    quid on the iutercst of it_ One cause of :hc r;).pid accumulation
                                                                                           39
of ~arit:\l in modem ;imc:s is the fact that as $oon ;<5 a m.\:1 has
~avc"";' a icw put\1;ds, he can buy a sha:-C' in a railway"r other
P;d);l~ comf' iny \~'nidl wit; yidd hi:n a :;m:dl but "afe i;lcmne,
withou~ hIS trouhlmg hi:m.c1f furtb('J" ab(\i~t It.               S.n-ing b::nks,
frien,:;;y ,lJId bUIlding soc;el('s c'~lllc(t ;J.·d st<..lr~ 1I!' the saxings
of tP",;,~ \1 In can only ;.J\:t by Ycry sllnU sums at a time. COIU-
mo.:!: ,.1 ~\;,-:;ri~y ,Uld !nbitj (If u.n:itknct' :"Ire a f';-~'\;'Ict Of
(IY:.I:-~~i(,'1, and gww with it.           l'ola:cti ::-:ecu:;:y mU'it l,e paid;
(or; b:lt the i:1.\(.'-; Ilil;r:h o;,onle (;a\CI:mmCH1', len" ia mO.le"- nd
1:\ corn;lUl":j~\· !~l:::tal'y !;(:n ICP. :t:-.: a dC:lf pri :e -hr this s(~u.:rJty
a::d ;ILt'".-n ,;:r d:lllin:~h !h~ (;;)U;I:~!I;S' !J:nn'r -.Jf " . >:uillu;a:illg_
l-'i ,.:d. (.t:>ltd;. as wd~ as indt:stry, requires to L~ IJ;-vCl~ed t:r
tile' (~lHCi!Jmcnt anJ/"~'JJl lb.! GO\·I.:r1l1:H.:I,L
        ~). The c'\i)\?ns,~ of ll,'_:n~ men fJr sk,:Ld w<>rk i" de!Ll';'f'd
by tl<!r r:H("nl'~; ;'l.l:d it j;; cbi('11y IInwn iHJlIl \\":1;:;c::>; that is,
{'·'..lln the- lih,UJll~ th:lt is e.u-ned by blK'ur '" hl't~LlT lllJ.nl!a\ or
m~·ll1al. ThIS ('xpcn~e i_~ an outby uf ('lpiLtl j,.st as much as
tll:\l which is ;nn,hcd in fcc(lll1g and u['<:ai~ill~:a a ~\Hln:~ cart
bel!";:.:::. \\'c l:J;(J sa~ then, that IL!gC~ ,t;-e a rhicf source (If the
;" l~m'll;)t;(On ~;t Pcrwnal c<\},i~a.l. T:,c '~J...:{:,: of m;u:,.,d LtlJou!"
]'.11-(; n·'t ],ithcr'u C'Jlltrib:.;,. ':1 vcry much         tl>   the ik.:umul-:ti'.m of
:-.r._tc-J';.d          th<J,: _ :J: there ar~" '>,,!!I(' ~lgl'$ (,f a mlJl'l:mcnl
                 >:~\plt:d;
lil ~h.I' Ii!:", diuI'. A fat' more imp.Jr:",:a s"u:-cc u[ ac,:u;m:i:ulon
I" ;11'': '\,i;.:t:-, lIf \[1\: prof'.'ssional d,v;.".,-s.
        i:l :':n.;l.ii,J at tbe prt.:sl:nt t.me the d.ief sO:lrce i'" prdjit on
C.1P:UI. ;;om~ L(UI:or,u,,:_~ have spL.k~n a-j thoti:..:h ,til others.
!"'~',-.;'>t I'Jl: n{':.'.lcc~c,1 iii c.)mparis'-'i1 \\-Hh it; 1 'ut l(.'.I~ly it i~ on:y
      ., ,'"",'.' CC'ill,!n<.';:. ,11",.1 on;\" for a sr.nr~ tim'.' tln: :11...: ::J,cu.nnul~l·
t;,,:: m_llie fr<)m prol-its !I,Ls'bcfn at all c()r.~llic~·.djlc.
     j):::. n;..; Ih<:' ,::r·.<l~er PJ.rt ot tile \\'vrld'" :li-.lory '.h~ r('nt (,f lanrI
L-    ~)~(':l th'_: t'\\:"f S.Ollrl.(' of sa\-ll16:,   A ':-!\..\(,,; (: _:lll:i sa\'(~d from
        III £:':'-':"'" ~ I,C""", an,! ill the rest o( tl,': I\""rld pwl)3.Lly
t:l~,L' :~ s::"\\"C'll i:-olll it th::lu fr'--'lll. pr(,fl:s ('!l Clp;U:.          There ,Lrc
. \i (1 C1U.:>lS, (,f the :,.:-rc.1.:,:, ;:llf'c, :4:1ce ('I' tht: sa.';::;.:, from r,-r;! in
·,':-,,_r ",~1l1:I,':S. Firstly, the ir.(omc that i" 0.'~l:'.•_,i [:C'lll lawl
I' -. _,y glt:.lt rd~.t;\'clr to the income tll,lt is dt:ri\""~i (:-,-:0
c,lpin:.            Ser:onrily. wh~le the gr,_ater part of the 1;1I~,1 in
.i »;,;i.md j<; O\\"!lCU by .l compardli\'ely s:n:1!l nmnbn (If men,
•. e Lmd on tb~ cuntin('nt and in new cOL:ntri~s is {Ih'idcd
,1'::C.;:~; a n'ry l:trg-~ number of the popnl.nion.                      :'\('1\\' ;lch land-
(J".\',:C\:;, <1,(:, !l{)t a ",n'LIg: cLss ; it S('~lllS l" be r:ellai~1 that 011 tlh~
,t\ ',.;-:;e thcy S.Ul' ll"~_;; lL,I;) those whl) d~ri\"c an equa!                      .C01l1~
frolli tr:1.d,'. B,:t pe,h,'\.ilt proprietors a:-~ a s.l':illg da~~. Ill;
 :':I,..::hlld j),)or 11)'-:\ sa\'l' r:-luch ks~ in proportion to :hrir iacomc'
,-L.I'I :'j(~h ml'll dd; 1Jut in countries in "hicu pli1:>ant plOpw:tor:.
a[H'lI~,d, th(·il' S,tY:'l~> are \-cry Lu':-!e.
      Fur thL man. \..-ho labours          ",\,j~h   his hands there is no sayings.
                            Dul)K I.          ,_   ti:~P.   \ I.   ~'3.   4.
   L.ank oI;vho'>e attnctions can be compared 'with the land. "Give
  b man S2CWC ro,;se~~ion of a bleak rock, and h~ \.. ill turn it
  jllto a g3n;~':1 .... rhe "l':.lgi(' d prop,rty ,urns sand into gold I."
  The pu;,o;:t proprietor c.J.n g-in' !C\ (ry hour C'f ;abour, everr
  penn~' ut capiLli: that he has t~ spare.:o hi::. land, and be sure of
  h;ivin.,:- !;'C frult~ of hi;; excrt:rm ::mli self denial cver bcforchim.
  He 10\ ~'~ hi-; Lind, and takes pridt, in it, his choice:>, amusement
  I,'ll <1. hoiid ly ;5 to walk rOl1nd it :u~d rcjoic~ in it~,              "\Vith the
  wag:t> Jd~)(;t1rcr til(' case is rliffe!"cnt. If he would put any portion
  of his \\ <t:~('s to a rcpn)Guuin: usc. he mll~t !>cel;;: Ol!t some
 .borrol\'cr. ar.d the amount he has to h:nd b("iOl~ ~i~l~l:!, this bor-
  row'?,' 1l1'.l~t bc the s.:tvin~s-hank. wh:ch will ;E:"d t!l( mone)' out,
  he knn',\'s J~ot wheo. hf: kn(.\,\,; 'j(.~ \'.ill"c. ]h!s I'; it Y<-'f\' culd-
  :); •. cd,·d :t(:";l;:' ('n,ni' lr"d \\ i'\ :1, , <lp:,::"a~i(in of ear",;!;::;s' to the
  :and ~y the propr;·.tlJ[' 'h,:')",' .:'. \\!!:) \\, "k~ ..,\'cr it all,j i;n-:s upon
  It, who ice)..; tlut i~ is all hi,~, ::":lLl 0-;':111 b;:; llis c:hildrCf!'s after
  him. !\l'i;h..:r tl~c imagln~ltion nor the afi'.:c:ions ar~ addressed
  very 1")W('1 :tll1~' by the S<.\Viflg-,,·hal:k. Th'~re is, ue5iC\cs, some
  ~leJay in'o:~'~d ir. a deposit, wh[,-~h, how('ver slight. defeats T:"lany
  a good r('solut:un ;ll1d brings m:my a luif-consccratL-d sixpence
  fo the grocl'ry or the bar-:oom 3."
         The abo-('nc0 of J)L'::tsai:t pr(lpriL'tors is tllUS a loss to
  Eng-bl;d in many \\"1;'':;; tnlt {t '\:l'l"L' l!-.;c!e.,s to repine at it.
  \1C'd('rn machinery nnd modern method,,; of dg!'iculture gi,'c, a~
  we ~l;;\': ~e('.;l ~r·':dt adv(l.nt.1:;c to Luge farm~ i;1 competition
  wit;l ",u JI t:nffiS. In rn:!d.t,:: g;trd::nia;;, indeed, and ;;eoera!iy
 w11('11 e.lch pl.l.:1t rcquirC''5 S~'p,lr.lt(' ,:,HC. the pe:t::an: proprk-t(Jr
  may Inid his o\\'n ; but nllt in the gel1e~;d wo!'k f'( the farm. An
  btell:.;C';:t m:l! .. \\ ho owns a little bn(l, can aim;)st always ~(,t a
 hrgu j:1CLlme by selling his hl~d ahd l~.,ing the price of it in
 farmin<!, or SOl1l': o:hcr trade. tb:m Ih' (:1.n by culti\';lting it hi01-
 5e!f~.      T!lC qlnL: spirit of crmmerclai ~'nterprise \I hich rallses
 c1pit,tl to aCCllJllubtc in En;.;-Ltnd hc,~er l~l.l.n ~a any other Euro-
  pean cO'lt",try has prc\"C'flteu her fm:1l. h~:\'in:; a race of peasant
 propr:'. tors .
      . \il   hi;;to;~'   s}-;cws ho.len'r that tl1:'! hope of pllcf":hasing a
 "l11ai: piece' of land or a CO::::lg-C and garden. on which he may
 retire, In hiS nld age, is on<:: of tjl'~ sti''-'Il~c"t ;"du(enwn:'> th:1t a
 worktng- n~:1!l can h:l\'c t;. lead an j:~~lt~-5:riou:-i) h'!J)pcratr~ :md
 frugal !;fe. Yet the Lngi;:;il workin& :nan i,; practically deharred
          ,\r:l.t:r \"0J..:ng.
      rur c\'idrnce of the intc!li';<_>l1c,: of the peasant proprietor in some
      t
rexccptl0n:t.liy 1.1\'.\tH(>;j ,:i~trich, and n!si.\ of the:: \':1~t l'.\pita\ t!lett he in-
.r.. c~ts in the!   <lhl. ill,.] iile 1:,'[\\'." r:r 'p," h,; l':J.i~es fn.m it. ,~ec ~lill, Uk. II.
:'c:-a. vi. anti \'Ii. :l.1:J L1if:e 1.'-:0];1.', Lrnd .S)',.!,m! 'f J':'lri,}::, CtJllnI!":~S.
,       3 \V:-,lker, 'i he lrag<'s·I,}I...·J'tlo!Z, ch. XVIII.
        4 See TI...' Agrim!tural lA.'eA'Jut 1'./ 18;+, by Clifford.
                     GRO\YTH OF CWJTAL.                                    41
 from  t~i:; hope by the uncertainty ann t\;{' ht:;t\71cga1     expenses,
 \~bich ht' must incur in making: such a pUlch,\se; for         tllese ex-
 pc;l!,:CS :'Ire milch greater in propor:i'"ln IVI" a small piece of land
 than hr a hrge one. A reform of England's l'lnd-Ia\\s w0uld
 much incrc.1.se her accumulation buth of ?-.laterial and Per5(1f'lal
 Capl~aL
      ~ 4.        We m:ly next inquire how far the accumulation of
 c;-.pi~'ll      GcpC"nds upon th::! rate of pro!ih, anJ the ra~e of
   ,:It'~r'-''it which tile uwner of capital c.m uota:1l by knding it
  to ·,Ilhcrsl.
         A high ratc of interest no douht at'funls a the!":ll reward
  cf ab'O~,l!1cnrc) and stimulates the savin~ of all who arc amLitiOlls
  .A earning social position bv their WE':lhh. .-\;1111, ,i a mall is in
. (j(Oubt \\Iw~her to san' in order to mab~ provi"io(l for j,imscl.f or
   his (,11UlI:;, the expect:ition (!f a high rate of lIltUest nny induce
  hiel to S;lxe; because the hi ..;hcr the rate of Interest, tl.e larger
  :::1' ,i,ll)~;n! of future eojoym·:-or whicl~ can be obtain·;u by sacri~
   liei) •...; a gin~n ,lmount of prc"cnt enjoyment.
         l)~:t the history of the fKist and the ubstT\'ation of the pr,~sent
  sh~~\': th:lt it is a man's ('m[JcramC~l!, m:lch more tl1-111 the ,'ate
  Ill' !I:te,est to be g-ot for hI'; sa\'!n~~, which dctcrmir'.ci whether
  he. makes proYision for h>, old ::ll;c <lnd k'r :IIS family, or not.
  Mwt of those wht) make s;.:ch a prc\'ision woald do 'it) cqua)Jr
  whct~ler the rate of intcle~t wen: low nr hi;..:h. And \\ hen" man
  lw'5 ("ICe detcrminr.:.J to pr,)\'id<..~ a certain annual :ncPI1Ie. he will
  ri:u: ;\nI he h,l;; to 5:1.VC n~"rL' If thr. rate of i:ltcre~t is low than
  if it :5 hi~;h. Suppose. {tJ~ in:;::mce. tb.t a mom wi -,he'> to provide
  an inC'Jmc of! 400 a yea:' {lLl ~dlich he m,lY I'('tir':; from btl~ine<;s,
  vI' to i:l':lln: 1":-00 a year fur hi.", w;{e and children after his death.
   If the (urrcllt rJ.tc of inl{'JTst j" 5 per ,:,'nt .. he need only put by
  £8,OCXJ or insure his life {'fl' [X,f'><)Q; but if it is 4 per cent., he
  must 5,n'c £!o.ooo, or il:snrc his life (or £10,000.
         Apin, a hlgh Lett! of interest is a great inducem;.'nt to
  rctin:.: C:lrly fl'llll hv.,incs5. :lnd live on the lutcrcst of what has
  :11rc;;dv beer:. ~\ccumulatcd. Sir losiah Chiltl incked s:tid two
  ccllt ..!rlt's aRO, "wc '<:e that ;cner,lllyall merchants;) in countries
  I1l ,\ hich the r,ltc of intcn:s.t j:. high "wilel the:, have ~otten
  :.;rC'<1t wc,lith, le;~\'e tradn'g-·' ;tnd knd on: their muncy ~t interest,
  "the gain !hereof bein~ :''' easy, ccrt..Iin and great; \\ hercas in
  utiler L{)Ur.tncs \\here inte!'est i~ al a l,)wer r;tt·:;, til;:'), cOlltinue
  lIl(:cchants from generation u) ,:cneration, and enrich thcmsd\'es
  and the -'ta~('''' It is more tnIt.: now than it "'as then, that manv
  men. retire irom bu!>int's,; when they arc yet almost in the prime
  of hfe, and when their knowledge uf men and things might

   1 The relation between interest ;1nd profits is explained in ]~ook n.
 Much of thiS section is taken from Sarg:mt's Rccen' Political Ecvnom),.
                         DOOK 1.         CIL\.r. Vi. §).
    enable them to cUrJ,d·.l,:'. thCIT busincss more cfficiemly than
  ,eye:-. TIl\:s a fall in the Tate of interest would in some ways
\ :'promote the V"'Oductlon and tho.: ~,-:-:t11nulation of,realth.
  .      But it ,,"v'.dd dimin:5h thc }(};_"'r of S3.':int:" from a giv~n
    amount of C:.lp:t,t/, bcca~s(' the lar.l!er tl~c incorne a man derives
    from hi..; b:"\S:I'('5$ tht: IJ.r-.;er arc the mcar.-.; he h:l5 of saving.
    AI:=;o it wouid promt,tc the cmi,::r:1!ioll of capitaL As a rule
    however, a f:lll in the r:tlc of im('rt.',~t is its, if the result of a
    gr,:at "lccllmuiation of C1pital ; and th·.: jnc'Jlll'~ derin'd from a
    larhe amount oi C.~~it,l! ~H a low rate of lnt('rc~t gcnt:raUy gives
  a bIT .t •. r total prnn.:r Df s:L .... jno; th;tll the income derived from a
   small amount of (J.pital at a high r,lte of intcl·l'~t.
        On t!l:~ Wlhllc it lil;t~· be CO:lc!uclec1 tJ;.H a faU in the ute of
   ;r.~err;st in a C')llfltr)" is liKl'::_ to .:.:l\cck the g-ro\\'lh of capital in
 : "ome ways and trJ prolllot(; it in ptll( rs: hut tlVI th~ latter
  {'[f.~.;:~.s ;"11''': on a smaller '-ca~C than the (ormer, so that a LLll in
  the r;:t(r; c-f intcrc;r \\i!; IlilHi:li.,l~ lil,:" ~':(umu!a(ion (,f ':':iJpital to
  some c:den:. th"ll,;h o(t .. t~ (ltlly to.l. sm:lll {'xlcn(.
         S 5. \\'c Shell! preSl"lli;: s<.'<.! ;!lat :l ttll in the rate of interest
  i.s to l,~ expc<.;crl in th!..' Cli_,t,l\"l~ if [1",t in the im!ncdia!c future of
  the \\"01 jJ S hhlory, in co.m.,cl!\:"," c:e d thr· ()pcr,\~io:l of the law of
  D:llli:1:~hi..n:; Rcturn; and thi", \\illu;timatdy check the accumu-
  hlion v( c:l:H::d, Ih( tl.e pr,)~~r('ss d ir,Yentl"m is cOlltinual1y
  lindii":;'; protltabic employment for capital in new ways, Rail·
  W;l~'S,  f.l'.:tcncs .Ind m.lc:l::1cry a:)s(n!) C\"JY year large amuunts:
  U   c'lpit.t1, \\ l:ich arc tllrned LO ~';-l'.)l: :lccount and rcturn a profit
  to thvir O'U(!fS; so tll<lt there i:c; ll,) rtJ.son for fcaring ~m)'
  great dlcck, in thc \mmcr~i.ltc present, to the grclwlh of clpit.l1.
  AntI:n (01,_:t \I·hi!c tbe l\()p,lllt~;":1 uf EngLmd h in,::'.a.;il;~ at the
  rate:" (If about 1'3 per l"l'nt. [1'"'1' :.:l:1\;m. the capiIdl of En;..;:l.l.nd 13
  illcre.bing fit an a'Tr~;:::c Llte of abou( j Jl'..'f cent, per :1.nn'lln l ,
        1t lla5 alre3dy been pointed out tha~ the operati(,ll of tht!' Law
  or   Diminishing R..:turn ma), b~ prc\'cnted Irf!lll. b·. <.:oming vf
  \'er)' g:rC'J'1.t importance as rc;.lrd.:; :\~~ri(ultun\ prd\"ld{'d the
  i:t("1'e:(3~ of p(opeLt~ion Le ck.:ked in ti1\1<"'; Lut th:'lt el.!:",\ it
  pop:11,ulun did not increase ;1t all, {h~ mCI'('!ap""e I)f (C'llt:ll:CS
  would uring with it lhe exha.u:,tion of the mineral riches of the
  earth.

      1 The total M.ltcriat wt::llth of England increased from about
  £G,IO.J.OO(),ooo in D(}.~. ,,) ~lJOLlt £8,500,000,000 in ISiS; i. c, at
  the Cl:l' of '£"l.l-o.ooo,ooo a yUH, (:Sec ~lr Giffen in the 7"lm~
  .i Ih, ~.',Jt;Jll1<J' S';dC','j' ftJf )'l:uch, 18,8.)
                              CHAPTER VII.

                       ORGA)olJZATIO~       OF IND1:STRY.


     §   THJ:. last chapter fini<;hed the disctlS3ion of the three
         I.
Tef]uis:~C5of th~ prodllction d wcalth,·- natural agents~ labour
and Lipital. Belore proceeding to examine the mDdern method:;
of ptOJ.C1ct;,'Jn and e"c\unge, It will be well to See                     il,"\",\"   thC5C
methode:: han' ::radual!~' grown up.
    In ~a\'a~e lIfe there is no ,-,vict:'. Sa'·:1.~e tribes are made
up of a number of persons all doing" the saUle work. Everyone
is 3"; a l~:Je warnor, hllnter. h~ll~rmiln. tool-rllakcr ;md b1ll1Jer.
E\'ery one [It'oyidcs for all his own w::mts: and, except for
["Irposes of defence, mi~ht almost :1.5 ,,""ll liv(' apart from the
rl:St.
     But even am;)ng s;l\'agcs men "hew special aptitudes for
partir:ubr ki;Hl~ of w('rk. One l:l.ln, for in-,tallc(', is skilled in
maki'L_~ bows; ,LH1 o[h~(s offer him lr. exch:tn~c [or a bo\\ more
[(wd. (,r othcr,th~n~s. l:):111 he ('(mId get for himself ill the same
time a':i he Cll) make .:t !)o'.\": ~o he ~ett!~:: do\\'n to bow making.
In   ~his W:ly ,here ~l":,.]·.aHy aris.e.:; that div!<:ion of Jabo\lr which
                  :1 iil'in.; IYh,)le. Ar:d ;~l the e:l.~lic.~t times we 6ntl
m:lKt-.:. S(}CI'~~\-
this much division: that the d:s~;::re(;:lb!e work is done by
women and sl.l\'cs, ;".c1 the n:;rcc\\hle work by thcir lords and
master, .
    .. The first great arln'lnce be~-oml this 5t::l.t(" consists in the
doml'~ti.-::ation (If t\,c more useful nnltlFll.:; i gh'tng- ri'Se to the
Pastq;,l\ or noma(l st'-ltC, in which mankind do not liyc on the
prrdu.:c (,f 1ll1!1tin;::-. b\1t on milk and its product". and OIl the
a:1t',~:d ;nCj<__ .l~t:   off.,y ks and hcn15,       1-hi" cond:t!nn is not              eniy
:'1'.01"(; r!,·sir.1ble i" itself. blit more cI);)ducive t(l fuwrc pT0g-res::.;
and a much In'J!'e lumid('rable amO'.mt of wc~Llth I>, accumulated
tmdl.~ i~.         In t~li~ ,,~a\,.' ira;(j_L-ditics of we::J.lth hJ.vr.; their origin;
~wd ~~::c<)~Ir;);l'd by their ~l'cur::r ;)gainst pre5C'i1t w;.nt, men
bq~;n tl) turn their <\t!enti()n to d,):r,estic rcanufactures':'
     Ttle next trans:tion was         ~()   the   .-\~ricuhural   sta!e,   ~\J1d       in this
4-1                   BOOK l.          CHAP. \'j!. \       z.
the O\mcr... ;lip of rulti\"ate,J land formed :t sc;id ba.,is on wbich
socit.'~.~' cllllki ;)0.; built up.        SllrHCtimes ,til the Lmd W:}5 owned
by tilt:' sO'-tj"d~:n; lJLJ~ more fr~qilcntly 'he la!"h.! r<!Ul:J.1 village
belon,::::d 1·) th(; w!1(,; I:ii;a-:;:e in l:""uno!l.
      The Y:LJO::-c- Commu"itlcs,:ls they are c<l~kd) i:vcd a settled
monotor.(y:~ Iltc.          In till.'; s[a~t! we rind (iiffcrcllccs uf employ_
menlS; b~;t there is ac; yet nothing th:1.1 :.:a'l prop('rly be called
organi~,lt~()n.        In some Cl.ses indeed a \1 hole Yill:J.:.;c del"oled
:t::ielf to one ocnq)::ttion, as to ~lllith':; lI"urk. or _~Ill'unakill;;.
13.lt J:lOre cO!ll!ll,)I1h' c:lch viilaRc \\",15 sdf-':.l1fficillg; tl\:.)t is, it
\lruJuced for itstlf almQ':>t c\"e\'Ylhill~ that it .unsumed, a:1d had
~carc<.~ly an)' tr.1dc wl~h H':; nCJ;..;hbours.           It 0ft.:n Il.lppfcned that
<.:ach tr:ld ... b'::Clme Jwr..::Jitary in a famil~·. For il:'>ta~KcJ ectch
vlil;,;;.:; h:,d its own b:acl:smith, who \I'as the s,m of the last
hbck';rllitl:, ;Jnd w{j{J~c son i':,),Jid be the next black.~mlth. ::\'ll!11
had scarcdy any frc~Jom 1:1 the Ch81':C of their occupations.
      Th~ r>.;cd CUSt01ll5 winch (10,;3 (vntrolled men's iin:,'s have
been (",pecally pOIYcrful in lllc £a~t. I:11ndia th·-: dil~)at(:: has
("llsed. :.J. limp ha bit of bouy and mind , \, hi,;h ha'i mack people
submit to tIll' ruk 01 Jcsp<nic kings, :lnu more d'C'""potic c..:.stQ:11.
~o t~Tant h,l'i cI-'.'r ;1t[(rilptcLi~ or (,,'en wi"hcd, to control o'l:ry
;Ictio!l nf Iti":> s.dljen",· lin:::;, nut Oricnt.:d Cl.L.:i!l)nl dccide;; the
Laste or Polk 1:, SU';ldy W Wili..:h :1. nun bdol1ciS; It prel'cnts
him (rum h.l\-~n~ an} ::'0(1:1.1 mtcrC('Urse with member:> of any
nther (:,\:t(': it (IrJa~ :l1l' nl",t tritlin.; drt.l.ib of hi5 actIon in
:11" \',urk. III hi:; ,'1IlH!:"e;'i('I,'. 3.nd at hi~ meals.           Custom ,lhio
rcguh:..:s \h,> ,·::'tgL' of ,';,ch kind of sen ice, and the price of
C\-'(':\ c0;;,rnojlj\' Wilh an 1ll11cxible rule.
      \\"hcrc th~r,~'i5 ;L mon,.poiy of anything.:l fixed cl1-.tom 3.5 to
its price ll1ay indeed d,) 11)0)1"(' ,;()oa lh.ln hum. If a \'jHa:;:-e is
))')!lr;d (~J',I n by em torn :,) :'i:..y i-ti P;L)~;".;b5 of on(' particubr
b!ad':o.n:~l];, it b ut::,t that cu~t,)lH ::.hl)uld :tl:so n::f:,1Ulate the pr:ce
at Wlli,_ll h,: sells th,:m : ["r otill'l'w:,>c he mic;:ht $ornet:mt:s take
;J.(h·<1n1'l,;,,' l)f the ll"'ce;:;:iili','~ r{ hi" neigh~J"urs, and charge an
e,\.';J'b:7,lIlt j-lr:~T; a!:d anyhowthcl-c would be a g:cat W'btc of
time in 1:I,-:.:,\:n::: :\l1,J har~<im1n~ !)'~twl'\,;n ;Jim an,\ th,.:m.
      S::. 'lile Illdu ... n nl sys:~'n' of the cities of Greece and
Rome \\-<\s 0<l::'l'd un sl<t\'l-ry. T),l'}, took it :t,~ ;in axiom that
ll.ltt:rC had on:.lll1,_,j :.ta\-cry j : hal \\: ~hllut ~l;l.I'es the Il'orld
could 11<., r'r\,.;rt.'-;.,;: r:o 011e \\,O:l:tl 1;:t1"C t;illC for ..:~:'tun" no one
coulJ (L,<ll.lt:-:-l: th·~· duties (.f a ';:lizen, ThC')' dc:ihc!'.lldr ::J.c~
cepted ,he bdil'f tll;).t tll'.::rc \\-ere multituu":5 of men whom
nat UTe 11:11 c.m":,~n::rI at th'ir b:~t!1 to weary toil for the benefit
of oth'~rs, and t:':,lt it \Ll:> a I':a:;cr lIt no lHLH-:1ent wLr:tht..r tho~e
mr.:n 1:1 ell i~J>\:;l~\t, (I- lnscd ;l'.'~S ur no~. The g<:':l~;\; t~lIlpcr uf
the :\thcm.lns Ll:d<ccJ kd tb+:ll1 tu treat their Sl;t\'es with
kindness and Hen :oympathy.                But history shews that every
             ORGANIZATION OF INDUSTRY.                                45
civilisation which is based on slavery, though it may have
a. precocious growlh, is yet rotten at tile COre and speedily
decays' for when a ra.;c lias lived for several generations
amo~oJ" 'the excitements of civilised life, Lut scaming work and
dL'spi~ng tho;;c who work, it has become heartless and frivvlous,
and therefore weak.
      The Teutonic races that peopled Western Europe seemed
at one time to be in danger 01 being ruined, not indeed by
s!a\"ery, but by a system of serfd<.lnl (hat was not very milch
better. But they had alwJ.ys a ren::renct! for m:m :lS man, and
tbis reverence wa:=; prom1~cd by the Christian religion, and
fostered by the pop~lar (:haracter of the mcdi:'evai church.
They !lid not deliberately treat it as a rn:\tkr of indifference
whether those who did hard work for them liH'd debased lives.
ThC'y never bot thoroughly to dc!>pisc the worker (or his work;
so they han: not become fl";\'010(l5, apathetic or selfish; and
their cl\·ilisation seems likely to ('mime.
      The rigid cu!>toms "hieh" have v. cighed down the East in a!l
a;cs. seem to ha\·c pressed sevcrdy, but much less sC\'crely,
on Qur An~l()-Saxon forefathers. Thcr lived in an imigoratin;;
C\imat·~, and were too energetic to endure 11-,I:ch tyranny cilLer
from m.m or from custom. liut ignorance is a tyrant to whose
swaj- cven energy submits. And ,,·hile oudorefathers wtre wholly
i;::-nol"ant, the only line of acnon that they cou~d strike O'.1t for
th':::l1Iselves was that of piUa;tng and plundering their neigh.
 bour~. Thi,; way vi li\·in;; atfon'!ed a gaud de:li of excitement,
hut very JiH!e comfuf[. Crotit;;lJly knowledge nnd a taste for
comfo~t ~rew up with the growth of towns~ where men lc3.mt to
caTC .... ery little for plundcTing others, and to dislike . . . ery much
being plundered thcll1sch-es. In the towns men defended them-
"thes a~ainst oppress:on, and learnt the art:; of civilis:ttion.
While the country was ra .... a.~cd by the war::; and the rol.,OCries
of barons, 1\ bile th~ country Jolk were gcneraUy serf;, the towns
wcre the h(lmes of order, of patient work, of intelligent and
peaceful enterprise.
      S 3· The town~ grew rapidly: and as their variolls forms ("If
skilled industrf made thdr appearance, there was Division 01
boour. A man would make only thin;.:" of one kind, or per-
haps only parts of tiling':> DC one kind. His work wo~ld directly
or ir,d!rcc.tly do some service to a gre:!.t number of 11is fello\V~
cltiz~IlS; and the thin;;s which he con!>umed would be produced
by the combined work of hi~ nelghuours.
     This rna)" be expressed shortly by <;a.ying that the industry
of !h~ towns had bt.'come highly organized. A body is said to
be highiy organized when e.lch ]1..1(t has its own work to per-
form, when by perConning this work it contributes to the weH-
Lein.; of the whole, so that any stopping of this work injures
                      nOOK I. CHAP. ViI. § 4.
    th(' '.\ hrole; while, on the other hand, each pan depc",ds for it!
    ()wr. wLll-bejn~ Oil the cfticient w0rking of tht: other parts.
           .:)0 !0:1;;: .IS the towns were stfug:;ling a~.lin.,t 3dversity, "II
    the "iCZ:-1l5 ,,-orkcd together with public spirit and enterprise to
   5CCt!rt:: ~;\cir common wdfaft!; uut when a to\IT! had LilY achieved
   It" freeUUlI', ;L!l~l begun to prosper, the olJest famitit!s L,f traders
    began tv !:\Slst on their own prinl('g:~'5 as the Dilly proper full
    cit1z'~ns. ~:!d ~ ulcmbcrs (If ... he Tuwn~_~.iJd.         The pm:jlegcs
. ottn:s C:!J v,C't(' alta,:kco by y0\:nger Iradt associatiuns, called
    t::.:r,d:-:giids, 'rhieh \"H.:C krmed by dwse II ho worked at the
   variou;; CLlftS. This struggle between the handicraftsmen and
   th~ [ca(ling' merchants continued for several gCllt'rations: but
   tlil~e \\<1S on the silk :1f the yOUJl~l'r <":l1d more ,-igorous bodies.
   1]} one to\\"n :lit(-r an(l\kT the l'r.llt-gi:lis, leaguing: to:;ctherJ
   overthrew .hC' Town-g-ild and. obtai:'lt:d m.lsttry (,f the lUll 11.
 !        The Cr,~ft-gi:ds did ;oor!. in verr many way,,; till'), helped .to.
 . or<!anizc :nJu::.tT),: th(:y took care that each man unJcrstood his
   t:°::ldc ;:'I~d did. scaml wurk; they :ook .ottl Interest in the r:lOral
   r:'mci..Jct of the worker, ,)ll.'.~ thl:Y :'t.:u:reu IJim and his fal.nilx
   from wan:. But after a time til .. ir ,uJc;;; as to the 'I'iJ.V in which
   work sh()~:Ic1 b·! clrried on became opprc~,>in~. so as "to pre . . . ent
   .1 Hun ("1m t"l..::in~ his etpltal or Lthuur into w\utelc!"" trade he
   iil::."'d; t!:f>Y h,ndered th(.; free clrcul3.llon of capital arid labour.
   ,\n.:i in the course of time tLefC ';.l!1le a re3.ctioll. \\'!lcn the
    Cil\!., h;)d ceased to (!o more r;0od than harm, their power
   he;;an [0 diminish. 't:ld ;)t bs~ 1.h:.::. I. h: it al:.o;ether. Tite free.
   dam (Jf c:reul-lrion a;;.cn incrc3sca t:ntil lh.::re remained few
   oost:1cies to a m::m'3 t.arning his In ing as he Eked,
          l\lcam,"hilc the bank:; ,\·c:·c gru\,ing- up. In the middle
   ages the uSlIrcrs or money"ll'll,lers h,ul knt chiefly to nccessi-
 tou'> pcrS(,j)S :1.t hi~h ra'e':i "r int(;re'>t. There was not indeed
 much opcllin;.:- for the pr()ht.1ble ir,.\"('stmcnt of capital in ind;.;s!ry;
hut the (;:i\.pcncUI.:c that was tflUs obtained in the difficult art of
passing GlpiL11 from where it is not much wanted, to ,... here it is
 ml!ch w,l!1tcd, bJS bccn of great use to the world. It has~
prcpar('d tIle way for th.1t organiz.l\ion of capital which is
cli"ectcd :}y the ban.ks and other a;;cnC;<.::s of the modern money
market.
    §..j., Adxancing to more mo(krn times we find a continual
g"lowth of the specialisation 0r ui\'isioll of labuur. The broadetit
diyision i.~ that bct\\":~l"n r:'... ~:c:.:.il.l:r<ll and manufacturing Jabour.
In mcJia:,·a! time~ the C0untr)' fulk used in the internls of
<lgricultlIre to spin and w(:.1.'';:, to nuke ShUC5 and huild housc.,;,
lLt as agri(ulwrc bC~'.ilm; sys:<:ala~izt!d, as m:tdlincry cam..:
into usc in 1l1.,nufa(:turc. anJ [IS the skill of tmint.:d <irtisans
increased~ the fannin~ P,,;ltlla!ion grade.ally made iess and less
for itself, anu bou;;ht mure and morc from the towns. The
               URGA"lZATlON OF DIDUSTRY.                                           47
:lO'rjcl!ituri~ts
                were of cOurse scat:cr..:u ov::::r the land, bllt manu-
i;cttlrers cun:;regated in cl05ely peopled dbtricts.
    In thc:o<.: districts a further dj\"jjj'_lfl or speei.llis:l.!i{m ll<ls
'::rDW~1   up, and separate trades h3.\"c sou:;ht ;;.:pa,-ate localities.
-r ill! textile tradES have separated th<.:I!Jsdn:'s tram other [[.ldes.
 l h<bL! that work in wool do not gcw.:r"llly Jin~ among- the
I.:l.nc:l.shire cottOrt worhr5, but :lre coil{;..;t(:u together in York-
:,:lirc; and they thcmsch ~'S fIrc divided into the .. woollen trade))
.mn the "\\"orstcd trad.:," <loll thc"c ag.~ in sprc:1d Olit intu
\-":.:ous br.J.llchcS', each of which has a f.n-our;:L' u:strict (If its,
{;W[1.    This cullection into the same lo,::a~ity of 1.11 ~c number:;,
v. ho are cng.lgcd in the same trade i::; calkcl the Loca.lisatioD t
of industry.
      A mallufactt!ring district offers many soci.:1 advantagrs.
 ~·:xpuil.'nC(' sl",;:ws that sk,llt'd arti~ans :ne intelligent and sclf-
:-,_'1..1.nt. eV1.'1l Whe!l til:':lr work is lllotlUtOl;OU:;. They have
     _'ape:l from the dom;nion of ';I.!SlOIIl. and ,we <.pt to consider
'\ :l,:tllt:f they cannot b{'\{'~!" their condit 10n by mon;,g from one
piace to ar.other, and C\'I.:n from ont.: occupation to another.
. Thus in modern times a larg'.:: lilllnber of "o:::i<ll ~l1d ( :ono-
1:-1: ~ changes hal c j;-:crc:lseu the extent to which lhl,: ul~trioution
  ,f \\'(',,~th is determined by free compC'tlt:on. \\'orkmen compete
..... f;) ('nl! another for the Ir;<)st ad\'~ll\:.I;eoLl:> emplo)mc:~t; and

   Llp!oy"rs' compete for the chcapbt and most d1ici"llt labour,
 .':tl v)e \\'ilh one another III thc im cntion of new in.lchll1erv and
1.\ ".\" modh of manuf<ic;.Jc.              For c;.Ic!1 new i!l\('n~;()1l :-IJl(! (:.Ich
   l:".\' ad:lptation of an olu proCl'::',; :ead,; to new w"!~ 5 (If car;-ying-
   :l bu:-;incss; and c\"C"ly ~uch ch.lnge in a tL'ld<.' brings with
  , rrt:~h op<:ning-s throu;,;h which new mctl, b,)th ullplcycrs
   . J l;cbour(:fS, may cdg~ th"ir way i,)to the trade. In fact the
  ;",l! 11, the st':~mshil'. the prilltino--prcss awl the t.cl . . .;r<1ph givc in-
     ;: . . . mcnts anu facilities lor c(lmptlilion in all.jirll_';'( 11:- it com-
                                                                           <


,,~j,ion 01 \\ hich the car-her cl\·jliz.:1lions Wl..n~ \\ hu:iy inL:lj)dble.
        T!'l'"e ch.ll1;,;:e,; ha','(~ brQught with (hem ,ulOtha great change.
"-,',nHcriy prodt.: •     .:lion t:!lcd to be chiefly ;n lhe hands of !:imall
\hskrs j that is of men each of whom p~'()(,bccd ;,::ood;:; for sale
 ,. !lis own ncighbouriwotl, \\'i~h the aldol lJne or I\\,d apJJrl,:ntice!'>
   ,A jjircd \\orkmcn. But as we sinH su: in t:l<.: next cJnpter,
      . pfogr~~s of c\'cnts has put the:;c small mastus at .1. cominu-
 ~!ly incrcasinb" disauv:ll1tag-e in compditi,)n with the UWf,crs of
   lrgc f:l.ctr.ries. And the machinery in these factom.!''; grows
  teadiiy. The :m'.ount which a m.ll1llf:ictt:fef d~vo,e~ tJ the pur- ;
   Jl3.SC of lnJ.Lhinc-'"\ IflLH:ascs much laster tin:) t:,c amOL: ilt which:
   c spends (In lll~ hlfe ot labour.                 In ot::~r '\0n~ ..... AUX1II:Uj' t
  ,:rlta1 is incre3.::.ir.g- at a frc.tt~r r.ltc than l{eraurteratory.
        Large factories conCl.:ntrated III one place senti theIr ~oods to
1:1J.rkct allover tl1e world. The manufacturer, the workman,
                        DOOK I.        CHAP. VII. $ ;_
   and the shopkeeper of :'Ibnrhc:;te[ arc dependent for their welJ-
   bein;; not only on each other"s conduct, bnt abo on the course of
   C\'cnts in otiler p:nts at' EngLlnrl. and in otb.:r COll1!cries. Thu'>
  t·sol:i,~ty has become the complex bouy of mutu::dly dependent-
  ~\·orkers \\-bich we now sec, by steps S(I smail that year after
  .;·ear th~ indu';trial arr3.ilg-cments have s(,cmed to men just what
  Jhcy were before, by ch:mg('s as insensible as those through
   l\"!lich J. seed passes into a trre."
         These ckmges havo,,: uec:1 morc markc:J in E:1~land than in
   any other country. Thl: advelitLlfoUS ract's who peopled her
    shores brought with them a spirit of enttrpri:>c which has been
    transmitted to their dc:;cendanrs. lIer seas and rivers have
    promoted commerce, ann ",j,h jt that llexibility of habits which
    is caused 1y frcc illkrcouTse with distant place:;. Her climate
   has been sl:;gu:arly f.~\"c'llrabJc to r:lpid eh.m;cs in :lgrieulturc.
    Being entrenched by the sea she lu~ l'SClP(:;U the dc\'astatint;
    wars which h:lye discourageu the a':CUIlHl:atiDll of capit ~; on thl'
    Continent. Her land 1.11"::', her p00r L1',\:;, and her pulitical and
    social arran~cmcnts ~cncrai:y 11:I\'c h'!".ded u) draw a sharp linL'
    between the rich and the pO~)f ; su tll.it ne.nl)' her wholL' c:lpitaJ
   !l.IS been a.cul1lul~~ted in ~'{)H1fl:tratin:ly fl\\" lur.ds; and her
    rich mines of coal and iron ban~ giren pmmincncc to thost:
    ind\~ ·tl its in whicll, as \\-e shall ~eL', productiun on a lar;;e scale
   is at th.;: gre:lle'>t advaota;;t', iIi which brgc c;lpitals have the
    best chance of bC'comi~:f.!' largu-, \\-hik small Gl}'uab ,ucingrcat
   risk of becoming: S~11:11, r.
       § 5, The ;;ro\\'in; intd:ig-c!1cc of the labourer and the in-
   erc,blll;; facility of IllOYI.:I1lL'nt from 00e part of the countr)' to
     a:!Other h.l\·~ call,;,,'d a dose (or.lnll.n;catioll and to SOUle extent a
     frcc c:r,~alatiGn of !abom bct\':-.:co the \',1fI0US centre:, of ind1lstry.
     Cap!:al is t:\-ery day obL,i:liog f:-l'C(I(1:1.1 of circub:i'm. :lod SI)
     arc the skill and ability b;. which capit<ll ;5 ll,<.u'::.t:,:~d; profits
     tend to cqt:ality in Jificrcnt (O(CtiP:lt:·Jt~::) ;u;.d ia t:itfercnt part,
     uf the «mn'l"\".
          'It i~ not i~ldccd true tllJ.t <i tl!oLlsanJ. pounds invlC'stcd in onc
     trade will bring in the same plofits as a thuusand pounds
     ill\'dten. in any other; fcr pr<d;t.,; ;'Ire •        .:xccptionally high in
     tra,!C::i th:lt are cx('eptic.:lally (~:{li,:ult or disagreeable, 111e free
     c:rrulatioll of c.lpiL11 C.lTlI~ot h~mO\'e inequalities th:lt are due
     to thesC' C.1.U.3CS, ill:t It (i0'2S C:tU5e the ratc of intac:;: at which
     a trarksman can bO:TOW money, 00 g00d security, LJ be nearly
     the s,une in eyery to',\'11 ami c\'~-rv trade in the kin-,.:ciom. Hence
     arises an important La',\', the full 1l1l.:anin:; of "'hich \Vill appeal
     furth(~r on, ,-;z,
           Profits tend cootinu.:1l1y to equality in all trades which
~I invol\-c equal risks, discomforts and exertions; and which require
.. ~ equally rare natural <Ibilities and an equally expensive training!
                             CHAPTER VIII.

                            DIV1SIO~      OF LADOlJR.:


 ..,...1.   PLATO extolled the ancient Egyptians for having turned
 to good account their knowledge of the fact tlut division of
 labuur Kino's in...:rease of {lexterity in (:'.-cry p:lrtin:Llr workman.
  Use Lt'colnc,; second nature; arId there <ire m,mv k.llds of work
 whIch can ue June well onl.\' when the\' llan: 'ueen practised
 from chil(lltood. .r\ carpenter, a bl.tcks,;lith, or a co.dllliner is
 st.:]dom gG~,J at his trade unlc5'S he has been at it all his
 life.
      'Yh('n the divisiofl of labot~r is carried yerV fJ.r a man's whole
:·atk:llion j~ concentrated on or,,:: opcqtion. :.\ h,)use carpenter
 ll,l:,dies a gre,lt ll'.:ln~· tor.;" Oile after another, and \'OC-S many
 dif(crUH kmds f)f \\nrk; but in a \'~ry hrge furnitc:rc manu·
 factory <1 lll<tn will often w(lrk all the year round ,It making'
 some IJ.lrt of a taLJe or a chair. In cloth factories m:my women
 and chi!dn'n do ~carcely anything all day but tie together
 broken thr~";lds on tile spinning jcnnl'. litany wOcker:; in metal
 facro!l~'~ do nothi01;:: bu; I~t a piece of me:at into a socket, and
 vull down a iu;,c:k ~o as to dn:] or punch or stamp the mctal in
 sonic p.lrti~u';lr W:1"" Sltcb operatIOns Are pcrf()l"med by men,
 WOlTl('n. and CH'n children, WIth a rapidity and a;\ unerring
 accuracy" whidl ('_xcecd what the illlma:1 h:l.nd CQuld, by
 those \\ hn bJd never ~ecn them, be ~upposcd capable of
acql1:r,.I;;;   ~.'J


    1 It is hrlil'\'('(l tllat in such C:lSCS there is a rhy;:;ica1 (':hange in the
nen'c!' 1)\- whic~) ll,e nl(\I:,,,n~ of the 11amb ;Ire diTt'~'letl, a.)(] that nn in·
t;m:l\c c~!1nl:xi"n tllI;S gr.1olu:llly grows up l;l'twe~n thC',e naves and the
n('Ht':~ uf si~hl, \\'l1'lcl1 <'n;,b1c~ them all to work III perlect htum()ny
Wilh \),1[' ;)n,l:her for the pcrf(Jflu:l!l':<' o( thl~ p:lrtTl'uhr cI~."s of opera·
tiuns. Wb~n the OI't'r:1li;JJ1 \\':u. t:rs! p~rf(lrm<.:d. lIlt.. -, s~'n_~('ry" or feding
ner\'es of the l'P': ,md 11::tr:d sellt up n me:..~:tg!;: to the l.oriin to acqaaint it,
with the exact state of things. The mind was thus set to COO,;lder the:
      M.                                                                       4
  jO                          BOOK 1.                 CHAP. VIII. § 2. 3-
     There aT'? m;,ny kind;; of ~:":ill \';hich arc :)I)t. strictly s'ilcaking,
 IP:lWi:tl, uut wLit h rc':cmhk manu,:tl skill In rl'q .. irill';'; llneicc
 t"!0m (:.lrh chil~ih:1od. Snch fVf i;:.s'.J.:~ce is the work of the
 wool s(lrt~r, wllo S')rts a flee(''; of wool n:;U) ci,;itt liT ten h(~ap~
 of different qilalitiC'". He h:1:; ;::T,ulually acquirc\1 a wonder- •
 ful (l;.;cc'rnment L:. touch antl Sibht of TIllfiUlc differences of
 qu.l1;',y.
       ~ 2.     A .<;cc('nd al_h-ant:l.~e of ~i\'is;lIn of jabour is the
 e~on01~ly of skill ,,:ld of 0Ih("r~ mental and pily~i(al cxc~-llcncies,
 which is !.!>tall1cd ~J:- kCl'pi:~~ a m3i1 a!\\'J.:;; oCGipied 00 the
 11l,S"he-..t ch~:i (If woJrK fdr w11l(i1 he j:, lilted.
       :'\[r e_lL,b;J:~c \\as the tir:>: ~0 in:::j"t u!l 111:5, ITc says," The
 m:l<,~(r m,u1I1facturcr Ly dh i,-iing- (he work to b~ c.',c'.utc:l into
 dificH'l;t proecssc'';, each r~·';·:'Tln:.;- di:1erc)lt dl'.;r(·('s of skil )f of
 force, (,\11 pt!rch:~s.: ('''.IC;} :il:lt flr(''-'i~e qU:'.IltJt:, I)f both II" '-l is
 r:.cco;s..;:,ry for each prOCtS5; \\h<2ro;~,., tf ;Jle wlle,le wo:'                're
 executed by one wOlkman, (Jut p'Ls,m must p,,~~c~s SLlt11I..H.-.d
 slilJ to perform th~ most Jift!C1!It. ;~Ild s\lff~cient ~{r,:ngth to
 ex'~cute th,~ mo"t l.tborioU3 p:' :"t' operation..,; iuo ,\'hich the
 W0Tk is rll\-idc,~ ,. In :1:;:; l:II-,~,' f. It()[·y \\c m:ly see )"Lll.!ng
 children (;\1,;. :1\',:0: li~',:,l \\'c'.;:\'~ cr pi ;,,1\16" \;p l(lo.:;e thIC:lds,
 .~I'\ef chi!dr:l1 ;\:,,1 w,)r,u.::n :~l:)\i"'_,;:- 11'~;n'ilr w\·ights. or Uking
 '-:'"111.; of m,lc1::n<c~ ~hclt C:111 ~':<l:- bt· man:l,:;-e,1, 'Illik the t:lsk of
  kc:~ring till' llla('j-,111~'5 in I',(I:-kil'_:"; order ~s cntru':ited to skilled
  ll\cr);.l!lic~,    Th,,"(~ 'lila J,;,'cp iiw m<lthl;)e ill unler an: paid
 as hi:,:h \\,.1:"0(.:5 as !hc (k'hS \\110 ar: occupied in kuping
 the a,-cnunt.:; (If the cstal)I:,h.nc!"':t h~lt ,heTe would be :t great
 wa,;,c of e:'ticicncy if the nWC']I,\ll,{,:; spent part of thcir time in
 kecpill;; account~J and the ckrks part of theirs j:l repairing the
 rnacbincs.

iC.1<;C-; i~ do.:~cralin(',1 Ly:lD ;~,:~                : .. (' 1\   ,i\\l ];:ll ~;,')~~~,I L ... dU[len, .. xt; a.nd
'so.:n~   ,;Ol'!l hl- the '"df"rul:"                 ~'L'i'~~ ":-      1;1(; h:"!I'H1 fljnf(! or J('~_~ du'Tls},
  (lrJLj " \ ' , !            ",'f·c "I' 'r~ \,1 "_,, <. i', '" ilv o.::-:ccut<:J.          1~(lt thcr(; ~'::;IllS to
:b"r.)w tip, ,lfln ~_'",~., ,;! pr,:' .1("(", ;, U1"~(, 'L~<:'(' "OfLll('xion l.e".""(-'11 the
  SUlsl,ry :n,,J tl,~, , li".:r, n: ILt'rY\~', wh(l~e ([J-':': c'r.:tti0t1 i~ ;l"jllired; ~o that
  when tI\1' rig!:: t,m(' C"lTlC~ [,'r t),c pJ.rti(. tkr m'n"("IllC:l~ ,_,I n. rm~(;r. the
  Stin\u:J.~ '.I'i.;,-:\ ;)rc):l'~ t~ Ill."!: 1l""-'_ll:C:lt l~ inq;g:lkd ."!t .me>: l,y the
 ," 5('1; C,![v" n::!' '-.' "1:1 \ I ,rim..: 11', (\J :h.' 1!'.l!1l t 1, ,-' r·:("or. 1     or    t I :.11 1ll:)\'C'll\cnt,
 ·Wht'll !!'C (Ollf.,_ "jell !p" ~'~'CI:'-,e ',I,'jJ ~·-t.~hb)wd. e::l~h ~-;\r: (,f !hi: opc-
  rat;0n r,)ilo,\s ,:r, I~'" 1,]"<.. ,:,:,1i" ..; ,,;;,',-'''::-'/,.7/1:1. 1}].1_1 is I,) ~:-ty, 1l:L' mind
  is no: (.,Ik<l j,. r\1 ,,:1 il: tLe <:"" (:.~' ,l;l\'~lti(1J) i, r((.i!:;rc'I, th.:: whole
  flll':)(,-.1 t ; l : r('"',     ,:; l.h:rt:, {{)f ' , 'li-..,::;,: :;\,.ll!: o:h<'r dlllJ~~; ',r it may lie
  id:, 1'd b.: :(";-C'; nil (,-:_,1)' ie"               l;g, i!I,O [.;:1 and rr,· .. h ;\[I:\"i~yin ,he in-
  ten':o.h "f tk· :';'1::'" ';,,,rk. 1r: \\:11 1             ;1;:":;. wri;i:lg. ,uid J'hy:n~ the: PI:i.tlO,
  we ~~", 'lr"'.i W.. "::1::1 III ("":l~:!).'\'ti P;'lL'::C~' (r01:, .:\,il,.]l. -;r"l C":m lit per·
  formt:d ;.dm')~t autolll:t:;C'1!!:,'-; 111,,::;;11 (.\'CJ1 (~W : il:l!~i~,~ par,", (,f them
  require the full .-1.ttention of tho:>!! who llJ,ve 11(): been tlalr.cd t':l them.
                                               ['1"1510:\ OF L\BOCR.                                                5I
        Tl')C' C'cnnomy 0{ inventions is ;JCSl attained when it is tbe
 btlsin(;~S    of a Ct.'rujil. .,'.,.[ of pcople to s::udy (very !:cw if;l-er.t10;l
 wbieh b·:a.rs of) tl_lcir l.anicuLl.r trade. F0r e;Jeh III W L:'3.C:inh
 id\.',l. wi::-, fc:!arJ uOi.h tL, processes and nl.1chincry lias mil.n~·
 praui(Al .lppil<.:a:ions. K:l<1wkdgc is acqJircJ in wurking OUl
 one iln-ennUli th:l~ 15 ljh~ly to b<..' ul U:'>2 in s·~-ckln;:.; for ,)~jl·:r,;.                                   If
 h(1\\-('\"er ,h~ v."nk of lhlllking is cO!itln~d to a few, (;i'.'I.;:("n oi
 b')ol.:- i~ cani{',j ~01) f.lr. It is Sl.:u Ih,.t \\.hatcvcr '>,jpl'r:or;f~­
 Am'..Ti( a has 0,-,'1", El\;bnd in mecl:an,":;:-. i in -.-(::l:j";lS ~Ild ~lll[li"; ,:-
 nf:,1t~ ill l11;'I::i! ... :turc, is brgcly l:l1e to the t:i1(Our.I;':L'lw::nt
 \\"l;lll~ AI~~(:ri..:,~n Lm~'l(lycrs _:.::in~ to llh.icpn,duli ,:u:d o,iginat~
 i,:g: th,),::_'!lt               ;l   In'.>   l,cr :   "ci,'   WrH).,:illl:n.
         ];~r~~, ;'-~
                -)l.'-'t."_l;:; Ih: cmr,[uy{-r "hou:J be the tnntu nllnq of
 th,:, v, bilk' 1        h;te sh'.H1;d be IJCCllpIU!, not in d0111g work, hllt
 ,0      ,I·    "l,i,~'.;; ',\'it:l W'_.'li"::          .s \<1 IJc dUll,-. hvw it is, tc 01.: li.:Jllt', 2.nr:
 ',\;l.'                tJ do:t                    ,\5 Bd';cbct say". "11(' ~e:_t!l'5 \Ih,tt ;;·.,,-),h
 .',:,'         h~            r;l:,d r         ::n,! \.il:,t n(,t: whdt bI'Ol: .... ht (0 J)):t:-kct <~'ld
 ',\I~.n                ~:.       il        1S    lb.' g-cr:cra[ of the ann)'; h,~ tiX'."5 (,:1 the
  I,ll:: ".' cp,..'r;'                         '1:, Qr;aniz~'s its mC~d1~. :md Sl!p~'nlltr:lId5 its
  ~,x,_, \J~:oIn,       It !~ t!qCS this well, the L,(lsinfss :,UCCl'cJs and
  cont::il,¢~           if       doc'i it ill, the !JlJSil~t'S"; hils ;l!ld cc.\se_~.
  E\-en\],;:IC!. d" nil" on til~ curn:dncss ll! '.1"~ l!l:scen Gci,oions,
  on t1;c s,,_'i-ct, :l(;:Y of the d. tcrminin,:: llli:ld."
        § 3, ~\ ,:, til rc:--:-.lrd tIl the eC(l!.():ny uf TIuchincry.
        J,l-;t ;~.., I)       i~ \\'a~t0 W~ll'nC\'er a sk,lkd m;ill :s C?ng-;l<::!'cd on
  w,,~l; ill \\!Ji 'h~~ 5k;:i is uscles,;;, ~() thCTC j3 \\':.t~te \\-];l"i:-<..'\er a
  Ill<l.cll.l'" !i,c It" A hbcksmi::h cOlJ~d s()mC'tim~s find u:c fiX a
 Stt.:J:n ),:: ",          • but tiler..: \\Olultl be so lIluc:h \\<151':' iI' kCt"p:lJ;; it
 i(ne th,' "g; r part of the d;;.y, that li(: can;)ot :l(i'lrd t() ba\(" it.
       :\LJ:,~-' tlll:-'>.;~ c 'nTiIlue tu bc l1l'lde hy h.l~ld ',', b:c/-: wpuld
 !o;...; ,I"C' h:J.\:: b(,-,fj m •• tie better :lnu more ell,".}pl), l.:~' ma-
t,hillt':....       (/l<.::e had b.ccn. 2. l.tr;.;'_' .d~'~ll'-ll1d for th( m. } or the
                    !   ,;'

trtJ,l':<' (,XPC'1-iC and n:.k In,'(llvt'd In l{w<.:!:t~ng and p,itcntjn;; a
P'_\\'     f)J'u,:._,;.:;:             01      a   w"\'        madlll1", i~ l:i'.~ s;)_m'~ \\11\..'111, r '.!J{'   in-
····r;tll'n i.'i to '\JC aCJJlil('<J. :l) the productl'Jn lrt nl.lny ';I"lds "r ft~\\".
D:i: th,~ pn,,-It to ue Uai\":t.i [Will the iml'ntlUn dcpc:".ds on
:h,2' ~'xt(>l'" of the m.(lluLv t lJre to ,,-hich ic GEl b,.' 2jT,:icu,
T),(> :,,,,'ostitutioll of macilli:ery for h.l:l(;\\'(.rk h"s '01;,c:;tnes
1ll \'- ;'lit for <t oriU;.1"!t im'eotlOo by \\ L,,~h :l g;-c.-!t practical
c];"oI1':II!'r can. he on.:T0)lJl(·' b~l: mo~t ncw machillL'S ~l~-e rcaH),
-<id.lrt:~\!OUS of olJ on_·~. \\-hich ar~ 5lJrc to l:c m ... de a:j 50011 a~
               '~       a dcnlana flO L' :ncm.
                           t),C gr<..'at ;;i,-h"tnt:J..;e that the human tun(; hJ.<) over
                                , that the hand em bring tools to "'ork ll~.un the
                                 . ',,,t a:,y p;\,;itiu:;; and wany i!:I[hlrt,mt \lI{,lh,l.t :(al
                                     .erely llew plalls for rorying tht.: ~';:\\' i;l        ":,+
                                                           •    I"                 ,
                   nOOK I.             CH.W. VIII.        1.·-7.
11 md. Tl1is is snm::.-timcs done b:: g;\'in~ n ~\'! mn";rm('nts to
the tU<l1s tlut are driven 1.;\" a 11lac:linc, Lut mlJrc of(en it
cum:~ts 't. l.l,.kin.,; some ne\~' fixrd or nw\"ing SJ(:;"'CL for hold-
ing (lfUl.ly the material exac:1r a" it i3 w:1ntcd. , . . .
    § 4. \Ve h<"lvC seen tha.t the ad\'alltag'2s of 1-'I)\"]510n of labour
cannot he ui;,tail':.:d III the pruduc r io:1 -01 a:::.y (omt~wLl;ly unless
it is one for whidl the demand is \"~ry grc<lt, SO (b,]! it is pro.
dlvcu in very large quantities. \Vc ha-.:c oc:...t to inqUire how
far th(se advantages are dependent on the Slle of the f.lctories
in which the work is done.
     This question is a very important one, bec~'_use the hope of
rising in the world i:i one of the chief induCl.:ments to energetic
ar.tlOn, and to thrifty habits. The; prosperi Iy of the n:.uion
depends grtatiy upon how far the upper clas:es are TC'c;-uited
by tht: best ~tn:n,;t:l and ab;]:t~ that ;5 born ;l nong- the lower
class!:,;. And onl: of the (';.-;It:~t and l!e.dthl'~.'>t n..utl:S upwards
wh:o.::ll a '.ro;'lm;;   1~11!l   can fu!101\' is that of I:r", "'-1\ Ill6' ;-. little
nlonc\' whi[~ workin;:; as (mell\;m or o\crlo( 'r, an ..1 then
starti~6 a :,ll\<ln esla'uli::;hm(,l1t In .. hat brallch ot i;, b'I...;:ness of
 whi(nhe is a In.1stcr. \Ye ~~ .. ,;: find tbat ::'Ollle 0' 'e (ltil;an;ages
 of eli\ l~lon of labour can be ubta;l\cd only ,n I'cr. arg-c faclones,
 \lUt that many uf them, nltlrt' th,tn <It first sight Jcars, Can be
  ~t:cured by ~null hcturics ar,d \\orkshops, pruvi               ~ there are a
 Vel y t!reat number uf them in :1,(: s.lrne trade.
        The manllf.lctt!re of a r('mn:,)dltv often COL             ; of severilJ
 distin1't 5ofa&"cs, t~) each of which a sClJarate mOlu the factory
 \5 dc\'(]tcJ.      But if ,he tmal ,1tnOldH of the COl1lm( y produce~.
  is y<.ry large, it nl:1y be rl(l!it<1bk to dc:vutc 51. ~/ly!~ ~rn ?..J1
  t..l.ClOrI('S to each of tilc::.c Seq):;.
        It' there are rnal1r factories. large or small, at eng~ged in
.the S.Ulle process, .'>JivsidlIUY iW/'iJ!ri£:; will gro'~ up to meet
·their specL3! wants,
        §;, Fir5tly, there arc ,the jndll~trics which make the special
 t()ols and maduncry r~q\l;red. fvr t!le pro(es~. There ;"lrc. for
  in::.t;lnfc, hl.rgc works In \\Iuc/l tlll~ lll;tcJllnr:ry w"lliCU for the
  woollen ::ade5. is fll:ldc by a \'a5t number of cLlmpie..x machines.
        St'WlIoly, there arc the ~lIbS!JLMY \Ildu::.tri('s whLe.., f ... cilLt..ltc
  cOfil~nul.;cat;on between \;1!10US branches of a trade,                  Their
  aid i" ;:npon:mt t') all clas~es of factories, but especially to ll·\oSL!
  which aTC "c,'oled entirely I,) one st;;ge of a process of mart ... \~
  facture. L:nder \11;50 h..:ad ('·)O)e cnriers, railway companies,
   and all cb.s~('s of a;,;cnb "rrt itHcll'aeaiate tr.1.ders, and <lLT'lj ..
   th05e who collect 3nd sprc . .H.1 i;)fonnation by trade ne"
   ;lnrJ in <",her ways. lh:;!;             ;).1:;0 come under this r
   pa)mcnt (\.11' ;..;o~d$ IS j,. ,tattd ~'Y them as If-
 .g-Dods is. by tIle raih\·:::IYS, Bllt funhcr, they pas::.,
               ,    '· . . nd to [13 _.1 "",1 .. L ... lwln whicl
                      D [V[S[Ol\ OF LkBOUIl
                                                    .     h .        n r
                                                         °r
 to new men who h :1Ve but llul.:- op:t"tl or t elf ow ;h;
 the most i.~porta;.t of the forces. \.... i-nell
 tendency toward~ " le concentrauon of manu acture
                                                             posc
                                                                      in th't.

 of a few l.lrge finn                                ':  umbers will b
        h.lt small Ll( Jrics,.whatevcr their n                  ;\0', of th
  greal disad\'antag relauyely to )ar~e unle;"5 m ~her
  collected together in the s:tme d,I?Xnct. \~e may
  th' ·'1d\·.lnta'-'e~ of ll1e Loc"ti::rltzO Il 0,"' Industry .
      .. ~ 6. Tb~ Lo' :n.iilatiL'o 01 I ncJ.ustr)' pron:ot~S                     _ation
. of s'kil1 and t3.stC, and the diffu:::.ic;n of lechrl1ca                 ..;tlge.
         \\ !tne IMrie i, as,jCS of peopl(.~ art! W<?;Yl'             .,e same kind
  nf H",ic, the'v eO ':cate one a~l(.Jther..                  ... ill and the taste
  rUJY;ll"! for lh,'; r w(j:'k arc ~rl ~hc al" .and c1111dren breathe
  tht;lll a~ they g;:J'(Jw ~:r: Thl's I; ~ ... <.!n particularly in such
  l1i.tr;.q(acturcs 3.5 !those ut_glJ.ss ~:~~, pottcry.
         .\g~lln, e3.ch 11 nan p·rl..'.:'.s by the ideas of his neighbours; he
   is ~tln;\lbted by COntact with lhose who arc interested in his
   <.two pursuit to tllake new experiments; ar.d each successful
   in':er.tion, whet"1e' it bl! a new machine, a.new process, or a
   new \\',1Y of or· nizing th~ u:.Jsiness, is likely when unce started
   to spread ~nd:                be improved upon.
          In a dlstl. t in which an indus!TY 1s localized a skilled
   workman is                .re of finding' work to snit him; a master em
    C;\Sl~y fi11:l. :acancy among his f0fcmcn ; and generally the
    CCOllOlllY of <, kill C:l.1l be clrried furthcr thnn in an isolated
    factory how' cr lar~e. Thus both 13.:·;,;e .lml "m;\l1 factoric.;; arc
    ber.di~c~              the localization of industry and by the aS~lStance
    of sub,;,              tr.:H.les. But these benefits 31C most imp'lrtant to
    the _':1,tll           )rie_~, arid free them from many of the disadvantages
    unt;~!- \\')1           "ley would otherwise bvour in competition with
    large facti
          §7. ::: •. u Ic1rge factory has many speci3l advantages.
           hrstly~ ~r\.ltcr economics C3.11 be att:lmed by a lar;;e than
     h;-r a Sn1<.l.ll f3ctory in such matters <)s the arrang-cment of
     Lli llLng-s. :;~('3.m engines, and other_ machinery; ami again in
     ~_l\:h work as that of clerks, doorkeepers, stOktTS, rcpalrrrs of
     n,'lcllinc!', &c. One hi.;h chimney C;tO mdke a draught for a
     i:ngc fUTll:lce as well as for a small one; one doorkeeper can
    acmit fi\-e hur.dr~d men as easily as fifty.
          A::;-,Iin a lar~c factory can often affon\ to ha'."c :J. m.Jehine
          ' ' I Will:~ that is <.lone by hand in a sm;,ll factory.         It is true
                     III factor)" devoted to one shor~ sta:;e of the proc(:Ss of
                     m~ may have tbe best and -mos~ hi;;Itly specialized
                          nut such a betory would not come ;"to existence
                         'tntag.c of ha~-ing ~pecial nuchint>ry tvr this stage
                              ~Il established. If there is a hrge demand for
                                  ine it may be worth a mall's while to spend.
\.\,;,',Ir('r   w,,,
     nut \'~rv Hit. _      . IlI05( jnir"or~'lnt ;)(L.:mc :gcs to Lrgc firms
"'i,lsist ;11 'their fa...     :' .f,.,. bl 1;' \1'16" .'.Ild sdli 1.1':;-. The expense
iilvolved        il~ bl.lvin~:   a \.; __ ,~::   (j<);I; .t.:~. 01 ~l)".d:;   i~ alWCl)5 sm~,!Jer
In pro;. ,rt~on       th.1n th..i~ 'Cui :.)~:·i !!,':: ~ :olTlai] ,II' :.mlity: .A 1" rg l:
li.l~1 .'.:3in::.. in the tran,;p0rt of .c:v(,(!.~; p,;rtICt,d',trly.If It ha~ a
r~tlwa\" s~(Ln'~o           Tt    bl'ts ~1r011l0: ,lnd tn\"'~.I"(l1               Ill)     m(orm:ltlJO
Irom l~:bhiy iJaid ;:g(Ont5; <"ind                  t;lLb   h:af),s ',dll'J;, .'IIld fn'l1l wllum
In buy, whten aWL \~h It to nUnL:lolcture, \\L'~,I :nrl to \I/wm to
~l'lJ, aud h~tl\' 1,dwD1 to trust ;l~!d whom \Jut                 tru:-ot. lt Cln
;\11Grd, tu ad\'cfr;"c lar,~t'h' in ill:,): dl'.11 i)y ,,_l' .. 1 If commercial
tr.l.vclkrs . .'ion!l"h,l<,~ Ii! '; ;d~.-, 1,c a!:(.I\·L'/ (or     It.' cOllf;dE'nc~
",hid, ron",I'I\( r.s f"L~ t1.at <-t Llr,~e house ,rill                                t   dc;'s(.(;:nd to
petty U l;'k;, a!~-J disllollc:,t:cs; It kl.'j ,(lO l\,,~ch tu                         05(,.
      In ~Olil<': tr.IJC.s .1 l..lr.~,' f~~1ll gaili~ lI!'ldl L:-' flc \·.lriC~\' of
it::> war:'s.      "\ ow;dl'r, wLo II, L:~ <l '-.,r· ,.; 1",,:', \,-r '.If !);'t:iS
l!l!in.,;~, like', :0 ('Jr~!<::' tl)('111 or a Iii 11-: 'w:',ic:l', i:as a    number
J)f l'!lh'~'!5 .u',j car, ,',il I'll ;1 Llr b'.> ;u,11 radulls 0             i;-olll its
0\\";1 rcc,,JCICCS . •\ J:lr~'.: linn ;.:.1i:1:> ot"t{'!1 in the r.1.       of sUJ-;cr.
 intendL'lv:e; but nut ~o much ;,-; at ji,,~t sight a                       rs..it I"
true tJl,ct \!l "null W'lf!,:" the m,lster (lr ma".I?                      If)ks <.I.f~'..'r
mall}'      th:n:;s \\hich          iT! hr~e         wc,,-ts        are left to             C<ll(:   of a
IOrem.l\1 or on:rlvokcr;                     but bi:cd (","t'rlIlL,k<.'rs h_,,-c nut [he
~dlJl( intCJc-;t and CIlCT;':;Y             in prL"-~\)tjr;:-: W.:lste t;)I()Ugh c.l.T~'les,s­
lH::ss OJ dh:,UTII:::.tv thai.              the ma_,ter lli:11Scli has,        '11H:r(. ap,'
SUml' (Jad..::-, p.l;-:i~-':Llr;y           th0_~C ((m':c:~lcd "'i!h th~ 1)1l,,'';: va)~I­
able md,\;~, in \" hich l.lr~" finn:; are on the wLuic at ;l, ui~­
ad\·,mt.1;::'..' a::. tOi1IP,lrt:(l \\i:h sm,l!! 011(S irt till; m.jt~('r Clf
::'UpCl i\:tt:I,dcrlcc.
     §~.     T111r..: .1i",_'    many branches              {'"If   t,ndc in which the ad\"a.n-
t.lges of dj\'j:;i<J!1 of hi)l)tJr .lnd "?CCi.lt:,~;':l(lo\ oj m,l(;;,i lcry 51
tv ha\'c ft'J.cheJ   tl~l lr liwit.  j;, (u[:"l', :,p:r.nill;;, for i :-0:
t.lrge f.ll:t'Jry conuil1::i m;:!!y r{l{,m~ \\-h:ch arc c.\,~ctlr a
r~-5.p'S:->;       :0;" tbat it re::.'_     :,.j,ic~ ~c\('r;.l ~1l13.1kr          fa:,:wl
t'):;:e\l,l?r. It h::s tllell no <=:-C,1t :td';a)\ta~L \"·,:r ~mJl'
ill tile \\-nl ~ of prodllrtion, i)l;t it iJa,:, thr,~c g"-~nC'1 z.:
buyin:; and s(:ling and ur ;o.nizing: wbd\ a Iz.                                   .
                          VI        YISION OF LALO[;R.                                of S\lch a
                                                                                       <;,   it may
always        h:1XC    over             small      01.":       \VhL'J: the owrt'r 'm into
facton'       w,Ult5  to P'                 nlMe CCIl>li.l} lnto Ilis bl1s:ine~:·.' spin,
answc'r lli::; IHllpose                     IJut lip tOl'no, for !";.t~~L!,~ !,;.' Y;·'11\5;
calic:o. He then h                           n ,Hhan(;I~~c 0\ cr tllO:'C 1\ 110 on!. tllse
bt:'~t;.,.e l;~' h:l.S ~,I) t                 e a:wlIt fll:.~;:~'.! .l rnarkl't '0) h'!'5 \,;. cf
:md 1,,- has an at!\':l                        over th(be lAin !l':erdy 1\'C,)\,lO ll·~c<-1.1
 he k~s :1'-' tr0::~le al                      "r:;:Jin.",; (or .It:,; ",:.tlng ti: c ~J,l:lt~
th~ \;~rn ~h;:J.f. 11<' ll.                     'h.\\ uso:d t,1 he tLe ,,"\Ilk of $(;\"\.:1
 distlllct I:-,llks is J                          ow under on~ fOlvf.
      This ch;w:.;c i.~                             (" 1') the m:_,d'rn fa,::;iti,':; l'or l'
 gt"o\\"til (.f linn_' \\ h                           \'_1< ,,''':'')S \-.f c'.r;t:I~. The :):.!m"
 of very we;:tlti_1Y n                               -e-.h:",J rcl.);l(iiy l,r b;e; and tl
  Limit<-d L!ab-.l1: iC 1                                cn,II,kd thost' whL' ,re !':ot r:c
 ;lOti who ]lc-'d':J.jJS                                   ("r L;hi;,'~::", (~ t:lkc ~h;\r('s
 large tr,l\].~':;; COliC                                  Iljl..:-nhl1l:,; Ill· if ',\'~ld·_' fo~tl1nc
 This l1.\s kJ tLl.                                         (,! \';:I'>! (u:r;':>l,:C:' ;;1 almo
 eycn' bl'allch 01 \-                                        l(llh'l)\ l!IHj,-'r~:d;(' (1!!"r:'~i,
  (01" v"hidl n<' pI!'                                         1 sutn:e.  Th~ L(:nd\.r~ ;.H
  North \\'~::lI_ln 1~                                       ·kId.,,::l C:\f'~ul ;';r;:,('f ~h:
  the whule arCI                                              ))J,l:lY (,f ti:c :,,~~C:; \\ho
  names vecu!',) I                                             'r\". There dues nl,t see
  to be ~,ny lim;t tc                   \,            .. ...:.J1tli w1-.~ch ;l. ~'.~,.;h: tradi!
  comp,l!';\' c,tn pI                  )iy m,owge in a bu~il1(s') \d,'~L c.:;,n I
   mar;,l;t'.; by 1)(1'                nd Gel's n-::Jt lequire tbe uold enterprise at
   pron;pt J ... ,~,sLon              ;in~je l!lind.
       Uut t;iis gr                   ,:ni.l.:ncy t~) the concclltr:ltion of ca~it<l
   is OPil\I:,;.::d by 1             nCf(,;\.- in; v:\riety in tL~ o'J!l.h;::r of tbin
   thaI 11,,\''': tu b..      rlC', and in ti~r '1~0GC''' 0: cuil"!;;- thC'm, ;r,(:~
   tri:s subs:di Ir)'       v the nil'! 6t:lj,:.!ohz- . ! illd'Jstrics af" SP1;lli;1l
   l:p continually, and wheft th'2'-' ;"-:C'lm~' \\'"il ('st.l:)I!~hl:ti olh
   indli'trie'> ~,_~b,> id:ary to th(:s~ !luke theIr :-:ppe,i.L\lH>~. T
   g-Hl'>\ 1::~ _,'a1w: .:0 of the want-; of man, the .t:rvwi::;-: rc"ourc
    of in\'C':,:,(;1l !.1Y. \" hiLiI th;'-Y ;lH: !ll,:t, cont:n,laily m,.k.; ot't:nin
    IJY wh:ch new n'it'n edge thr-jr \''-.lY into b;:"lIH:-::S. A ~1.1n
    at ~:,c Ti;".!~'· DircctlJ!"), of I,(,"(~tln or lun·f :'::y "til
    Lu:;e lUillll:b':~.llrill.C:- town will dl.:.(,')\ ("r an :lst(mishin~ \'3ric
     ,-.f trad~.> \\ il.'~f} :,fC all-nost C~,t'.ft.\' ~n ti:,·, h;lmis of Sll1:
     ll;;ls~('rs.

         ~ I). \VhaU'\'ef m.ly be thr. res it of the Cr<,l:';st L,·twe
     I.HY ;1nd small ~a":tf)ric;;, it appca:s ,{'rtain that the dl'.i"j,
     ofLl~)()L:r \\dl con lL ::L.,;1i!v increJ.:Oc. 'I'll;", i"ld'ca~~ is (:lle of\'il
     imp~)nanc,::. It add,";                to
                                  mc")'s P0\\'C:- O\'C!' natLlr<;-. and (,lrthE
     ,,;ocia.l progress by ll\'---casing w\!:1.hh. It.;; effects. arc for I

          I    ~ho:!,<;;~ ~\cts>.P;lss~~.i~ 1~:.5--!~(,L (,!'3hlc.a Comr:l.n} by"
        LI!1Hte'.l     ,,\ter Its 1( •. \     0 ~ccur\! ItS.   "'.M, L<J\,;ers :lbJ.mst losing
      l.Lw the ar.~0.Hlt of th'::lr ;h;u..:s by it.> LJ'url:o
   most part BOOK I.                    CHAP. VIII. §               9--rr.
   IS said tQ
   skill Cfl ~,)od, but in some p3rt ('\-il.                          Divisio:l of labour
   suU<:r      l:1Crca<,c the lutcc:rla:'uil' of inl               ·,try.   A man "huse
   place n be turned to              t1C(ount In      ani'         nc trar.c i ... likejy to
  ac(. much wh"1l lh,tt trade is dc-pre'                           . or hi~ skill is 'dis.
    no'.u bv nL,,~hinerv. On the oth~r                              , di\'ision of labour
    s· . . St()!1{5 producers to 5eli in widely                      It rn,trkcts, and it is
     t Yen' lii-;,:!y that all of them                             ..! d('p~cssed at the
   lm\~ (:1~1e. A;":-Ilo the di\"bion or                              sometimc') enables
'" 'U       ,1 to P:l!'S ,--,,\;;11), 10,. t\lO~'{ n trad             1.1>,1 to be totally
 '.:: tl(~.  A (Ollnlry \YZllchmaker ('                             :1511), become a <Tun.
   ':?l'r or \'icc \'crsa : bnt Illany                              "1 ill a large w;[ch
lau,ory ({)uld easily fint\ c!ll?lo~                                 large riHe foetor)',
ana \ icc versa. \\'hen the late                                      r c:lt~lC to a close,
a famous ri!lL: !";tCrOIT d~\'olcd if                                ; !>('w:ng mac hines.
As we proceed funl1cr, I\e sh                                        -casollS for think.
ing that whatcI'f'r tendency the,                                     ~ 1IIlcenain:I' of in-
dustry,is to he ascrl!)(d to oth-                                      <li\'ision of/abouT.
     I'.llt di\-i~i ,n of hb(,llf                                    lably cause some
11/""(J/Ol1),, This is ;1. \'{'r~ r                                   'C oi wnrk which
im-oivcs (onti'lUCU l1~usc'-lL                                           rs of work in a
bad atm(;"\lh-Te. Bnt w)                                                 ,and the hours
of work n',! cxrcso;l\ e,                                              r~' il~j\lrrous. As
Mr :\a~m\'tl; S;lI S " .; If \- . . . .1 C:l_! ..", (il<.              C f:Jrl'~ of a man
YOll II-ill lie;_':r:,d~ the 111:111, He :-!.-,~:" to 1               lise s.) plry,:ically
t:xh,ws!t'C: ~:l.i: it i~ ,In utter lh~l:r,ill\ to ~                   that fIl:in 'J{C:l.U
.md iU:P'Ac \·our_~ .. :f.' l!e W,~,_!;,i L~11 a~_                     mmedmtelv - h ...
Intlst g'u :tr.II tab..'     ~ome c:>.C;,'::I·c'lIL         L,ut       uu   takt~ the I~lal~
wI. J 1.;; been slIpo::nntcndnl,; ~":'i;-,,' Ve _,~ of               'ciJino::n' all <i:lV
in which ther.; is \,CfY litllc or oni\ r.t -lillil1ll 1 of ell! for ili~
brutl' I"r<.'..::. )-"t] \\,:I! li;)d th,lt 111_\\ 1;)".- in~d;I..'~ t"laj power. if he
has a:ly ~!. <1::, \Idl COllie f0n:~. d.::J l:c wt\1 1 )C. a I~'ad('r and
a self !'I!1ti\-aled man. I h:I\,t;- fOl:r~J th:n .lg .:l,111 :lnd again.
1 think Ihis i:; the n ..·5u1t c.,f nl:lcliih'r';, th,-,t :t Likes :Iwav
the HC":('S~ltr Iv( brute lJ.hour, a ... (: \',~r~' nlUl 11 dl'\',lk" the
intclkcll;ai ,."lJ moral position oi t;".! '\')lkin~ r:J.J~s,-s. The
!l\an.,~:·n,( nt of m:\chilicry reqUil:..:i "IlL h jud, ~lljl !1~ .'Hd r:::·
sourcc.' The cxp(,rJcnc,! 01 En:.;bhl;l.'n itl oad..... '\':,,\ Col,intrics
~hew-; tlut (.):;.t!y and delicate machinery ~<ll:nl)t be.\I()d~ed
profiu1}\y by 3. dull an,: l;!nOnnt Iwopk, /W\I C\'cr low may
be thc l';lte of \\':l~:('s \\ h:ch th:::y :!rc I'. iJ1ing- to take. The work
of tIl\' n';cch:mic, ('\,en where it i~ apP-lrcntll monotonous, makes
him "hn::wd. c1uti<.)u~ al:d p:',m'.jJt.
     1\;::.1.in (:;,,1; \\'lll'n di\'i~i'J!l of hbour makes the work of an
indi·.. H:uallll('no!(\fiouS and uniiurm. it makes the work of the
4;<.)umry Jt IJ.rgc chan:;c(ul and vari:.Jus- The wurker in a town

       J   Tenth Repolt of Trades Vn;on CunUl';ssiuncr~, 18CS, p. 65.
                    DIVISION OF LABOUR.                                57
whose mental and physical energies are not strained by his
work c:-.rl hardly f.liI to be educated by th,.! \'ariety and e)(cite-
ment of the ~'drious work til<l( is going on dround him. His
neighboL:fS b;we Interests in hIe sufliclently like his, and yet
sufficir.!ntly different, toenahlc him to learn from them new wa)s
of looking at things.
    There is more division of labour in the town th.l.n in the
country; but the       a~ricultural \.ll)()lIfCr   lag'> behind the town
workm:m in intelligence. The .ldvanccs that have recently
been marie in agricultural science are Chiefly due to the mental
activity of towns-people.
    § [0. It will be useful to refer to the La.w of Division of
Labour, which mav be ~tatcd thus ;-
        \Vhen the dcm:md for a commodity becomes \'ery large,
           the process of 1ll3king It i:; generally di ... ideJ among
           sever;d distinct classes of workers, each with Its proper
           appliances, and t!;tch ailh.:d by Subsidiary industries,
    It lead:;; th..:: way to the Law of Increasing Return, which
is:~
       l The  Di\'ision of Labour tc!his tG diminish the difficulty of
       t malIn:; a commodity. and therefure to IncrcJ.:;e the re-
      . turn uLlt:lincd by a gln:n amount of l'ffort.
    The tot:;.1 diliJculty of producing- a commodity of any kind
is generally   ,~o\'ernni by the C0nCltJ'rC:Jt .il:ti,m of the L1W;; of
Dir:;illl~!Il11;,lnu of 1ncrca~in~ Return. Of these t,\'cl ,', 'nt1i,-1 lng
i:Hlut:llCCS som~timc;; the one prf'pO;'h.i('r,lt'>, sometime>; the vt!ler.
The fonner prcponder.ltt's In such a case as that of bl.:l.nkc!'>, in
Wlll.::h the cust uf the 1-.lW matel i.1; is grt'at and there i'5 littie
r'JOln for further economics in malHlfacturc; \\hill! watch-
m:l~in.c: anrI o!her li;:ht meta.! tnul's atTord good inst:lnces of
the prcpvlldennce of the La\\' of lncrcaslng Rct:Jrn.
     ~ r I. TflC largest industry is t!1:tt of agriculture; but there
is ~carccly arlY other indu;;try which is abll' toJ make so little use
of the a,hantages of divi-;ion of hbour ar:d of prllJuction on a
hrge s..::ile. For agricultural labourers cann,J( Le grouped
to)..;",-,ther in larg:e ma"ses; they IB'lst be scattereJ over lhe
colllllry. ,·\nd e:teh season of t!le ~'('ar h:1S it::; spf'Lial \\I)rk:
:. 111:11) rann(lt :,pend his life in rc.lpil:g. So th::lt tl:e \\l):k of
a,:;li,:ultllf\! C,111nOt ue broken up Il1W a \',bt numbC'r of parts
cadi of which is performed hy a lUI;d of j"bO\lrers who dcvute
lhei~ JivC5 to acq;..:iring a speci:tl sL:E in :hi.; class OfWOlk,
     .\;;r:n,lturc, however, SCCI:)~ 10 be fl)llll,vir.g in the s:cps of
m-lnufac:urc. Field steam-engines .!re becom:l:;":- COlDmon, aad
new nuchincs to be worked by thun or by hf'L-,e power are
appearing in rapid s-'lccession. The fields denun,l eyery day do
sm;:dler number of dull labourers anJ a greater number of
intelligent mechanics.
                               BOOK I.            CHAP. VIII. § 12.
        This change j<; cxeTcisin~ an important influence in the
   competition llctw{'(;n small and larg-e f;1rms. The small fanner
   C,I!lHot 0.1\\,,\)"3 ;\(r-.>nl to h;l\C a licllj nClm-cli',;inc; h~ cannot
   afford ttl h<ln~ a f,"l"C,tt numb,-r cf machines fur ocGl.sional use.
   Thus f;\"Cry yc:tr FU!~ hIll at;) grC:1ter clisRt!\"tnUgl' Iclatn-dy to
   the io.r,.::e Lmncr. This dis:l(J\,.lnta~c is d;mini~hcd hut not Ie·
   o:o\"cd by the' rapid growth ofa <,ub~i(:i:lry i;-Illu~try, whi..:h under-
   LIkes st(',l:n ptll'j~~hin:; tlln.:.,l1i:"I':.':, ~\:(: (c.r (.lrlllers. Th..:: growth
   of tlii::; industry IS t:IC most il:1portant step tOAilnls obtaining
    the ad':a,;;,lc;{,5 of division of labour that has ever Ul!e[1 maoe
    Lr 'l:;r;urltur~.
',\        In (.ump:trison with a small brmer a brg-e f:'trmcr gains
    sumething- in economy of building-5, and in economy of !l1atcl"lals.
    He is able to hav~ a hcttl'f TO~<l:lOn (i!' no!):.; he C:l.11 ;,;':Ild a
    gre:lt i,l:l.:lY bhourt:!rs into a fi.drl il1 wh:ch there is ar:yth!ng to
    be d<lne quickly. He Can, a~ 3. !ulc, borrow capit;d !rom the
    lnn\~s 111(>1"(' ('.lsi1y than a sm;l:! falm.:-r em. Lastly. til .... l.uge
    [(rmcr is like;y to ha\-c IrldTC knowicdg .... ~l:1d grcater skllland cn-
    terpri"_' th:m the smail fan:ler lle prclb.1Lly received a better
    educa:io;l ,It st,i.rtir:;; anJ he can at'f,):-d to le,ln' to subllr-
    cJin.ltc~ J:luch w,,)rk that the small f.HJl1,:r does himscif, so th:;tt
    he ha~ lI!or(" :,iC <1:1(\ apport I".. ~y fel;- i,lCf'.'<l.::ing h~j know; .... d;e.
    Arl'i 25 hrm_'i r.h.l'_.~(· hands froln ~ime tl) time, till.' ablest
    LmHcrs ar( Lkdy to !~n.l till':r \\"::y ,0 \\lC br~-:~'si larms, Thus the
    {":01l'J::l:-' ,:.i skdl is carridi lurth,.:· ,,;:,!..:r a system oi large, than
    1Jn,l..:r {'I'...: (',f ~nHil, farrns. Un tIle o~her h.,nu the large f~rmcr
    lo.~(':=. m til'.' Bla!.tei of O'LI['l ,.il:te:-:J.::::;r,_'. The ~Ilnll fanner works
    h,lnl him~elf: h~ \\-atchc::; br (,\'"r)" trilling g-ain ;.r:d cv<'ry small
    s,n-in.::::: and t1,0,;(' wb, \\ork u~tkr h:lll Il::l.ie litdt:: opportunity
   -of being- id·,· '-,r        di:.h()nc~t,
          ~ I:.!.      Th('~c ;!(lLl.llta:,.:cs    cn:lble !'pade husbandry to be as
    saclc"."ful on snu!l ho!":in;;s as on br~c. A large market
    ~J.r<k:n bJ.s fell' a,lv:tnta,.~es ()':er a :crn:lll vne c*pt in buyi::lg
    .• n.1 selli n,;". An inlc1!if;-:r.t n: U-k.l't RJ.rCcn':-f whn culth'atc$ a
    few a(Tl''j hy the \;ll)(lur ,)f !:im~;..-lf, hi~ f:ll~jily, :l:>d p(·rhaps one
    or two llii('li labou:-crs, (:m P;lI- J. b;:.;:' ren Ivr his ~3.rden, and
    yd or:1 wry good \'.:t,~CS lllf hi;1~~t:j[ and very gl)I)U jJrofits
    n:1 h;"    (~Pit,tl. Simi1.ul:.· <l.           wdl   ~n:m:l;:;:('d   small   vln~'y<:\rd   in
    SOi.:,i:~';a J:u:'ope seems tc       he ahle to j1CJld its own ag<linst
    the Compt"lltl'iO of 1.lT;:('! ,in':'~at".ls. E..I(b vine has it:; own
    :,:stot";·, the suil i:; ~cl.'om <.:x<!,'tly of the same char,lcter
    f,-,r .-rUlly CO!~'.ecu<'l\ c y;.rd~, an(l tl:e cultivator of a l.lrge
    \"i;i'·~a;.:l could r.ot Ca:-l.I' in hi~ he.d Iluny uf the trifling
    d... tatls      ;:!.1.t PIo(:C~   the a,,;(ion of h.m who devotes all his life
    to       Et:1-: pk... ,Jf gT01.lt'd.
         0\;',
        D:.lt the r,l'::'atcr part A the sma11 holdings on thE' continC'nt
    ha\'e f;cmrali;: the adv:1::.tage of being owned by those who
                           DIVISlO)I OF LAlJOl'R                                          59
cuhiv,J.!C them. It has aln.::::"ly bVL'n rClnarkcd 1 th:1.t th(' pe~~ant
pr("r,::l'tur haj in Janu d CJ-,l~,,~.!nt S\);i:l:.': ot pil':ls\.l'C ;"           I '''.!:':~
llll",t ;H'hllil(' :,;>.!~·~t a;','\ I: ,,~t LVII\TT~I(IH of 5;.'.111'_>'     :l;" '.    1-1~
lr,\'l'c:~ 11,,, c~qJJt;j,i a:t,: ;,\L·".,t d'l Iii;; bC1d. \,>,:hu,';~ :-<.. :.:-1,;. ;,;;
hi6lt ,t prl ~'r on l,is capiul .. -:,; d,e wealthy [;'In,cr v".ul<.:, ,(I'd
\"."Ill:()~: (·;.;".:ctiClg a." high wJgc" fill" his toil as ,\,_~,,;',: 'CJ':
dl::ll1 inJc,J by thl! -111fCd )":wu[cr. He may thrOll.~~1                          lilt ,Jl
t:1:J.Ci1;;H;: ..... or of knowleJ::;-c rdain I~~etho(is of C\l1tlv,,~i,)n that
b;J.\'c k'-l~ dis,:ardcd as \:".:,:~-bl b\ tht Cngii~ll LJ":n::r; and
l,lS pr\-·~)".I(C i::; f;:l.!nerally k.o." 1!1 pr~'VJ:".iun to tht' ;jm(lun~ [If
Ld}()~lr spent In l.t,Sing it tita;~ I'S--lbc else with an 1:;;..;::<, j·,,;;;l.
j\u: hI'; l,?oduc(' per ,\Cfe is oftc') 1.lrs\'!, an~l ]; ... n·,.I::. llnJcr
:-tL,,:r.,i,!<.' u)I1,:nions, t'\:li:r.:'ll' :.0 llf)ld Itj:j u·.·;n Lr;1 lu!'; Iln:e
iE a!i l\!dS(' lJr:l!l:-bes uf ("t'I~;\';lti('n In wilif'.h lh';r'~ i~ \1'1 ~:ICat
",culle ((,r macblnery, and !Il ·,I!JI.;ll :IH.:re is ::J. cv!;,.,r.lct t:..:mJ.Du
II';·   Cl.IC'\t\   and tl:ou:;lll(ul attultio!l to SIll.ltl uetalls.-
                                                  !   Btl: sec   ne~t   Ch31'kt.
                                 CHAPTER IX.

                                 TE~iJRE    OF LAND.


   ~ I. A GREAT dc:ti ha3 alrc;}dy been said incideol:llly
about (he tenure of kind. In tracing- the gr"dual or~anizaliCln
of illd:Jstry, we ntl:iccd lL'\\' in Yery early times hn-! was no
man)s properly; how tnJ(:~ of s[tvagC5 wandcrICd o\"el" it and
supported themseh"cs by !nlll!ing; !ww, ;Jt~rwards ad,'pting a
pastoL.1 life, they uron! halt <io:ncsticatcd herds s)t).\ I;: fr,)m (,ne
paqme to another. \\'c ~~I·.': ho",v, w!len a;;riculrurc appea.red,
IJ.nu uCCJ.mt:: t::(: propl!ny of \'i!:a:;e (O;,"\Tl11IDi~IC:;. Re(en! hi5tOri-
cal rC5C.J.rch h.l'; ,.1112\\ J, d~:lt ill <,Iii,"; ,I ercr)' p;}rt of E'.:mpc. in
many parts (}f As;a. ;!nd probably m some other phr:C5, tbe
lawl ot e.lch such \'jll'l:~t commu:1ity was gCl,eralJy divil!t::d into
three parts, or to) u:;e tJ ': T("I:UrlIC name. into three ),{:lrk.,.
     The To·.\·n ~L.u k co:1t::l.lncU the hm!ses, which              were the
pri''';l~e propcnr d [he .~(;\ cIa! fc..milic::. who l!vcd            in them.
Th~ Ar:1hle L\brk wa~ J.\·;\.lcd IJ1IJ) tl.('cc fields, one           of which
W.lS kJ( Cd!ow e:\dl yl."<.1:', the other t\\U ;)\'!lng clllti\·ated.     Each
fam:\" i,:: \ :,)r ll>' ~~ a lot ~:': l:arh f..:-j,j ; so aj al.\"a,·s 10 have
its p~I'p,.r ,h.lre 01 l.w·.l ]1\ Cl,lti\'<ltion. In most c<)!..II:tJi('s thr::
jUl:> '.\crc }~"IJo(iir;:dJy r(dISlr;bu/ed.
     The rl::ill~n\:cr of the land "'JS the Cornman :-'Iark. This
W.1.S not clllm ated, .1.nd each family had equal rights of pasture
and of o::lin: wood ill it.
     !"he ")"~('·!ll of v~lla;c communities somewhat modified
a-.r~.ai1s        In   Russia ~l\(: lnnia in the prc~('nt day.     It has some
··L.. ",:\~.\~CS; -=~trC!H"C [;,\s\'ry IS  seldom found il\ it; men lcall
, :'3,;-·:,('d .mll I.TJ':.\t·nlcJ, but munotonoliS li\'e<;, The cOinn,unity
            jl',~lousl~' to pn",,·c.nt anyone from adopting methoJs 01'
\\;1t",,< .. 'l
c,,:~j\':ltion that Me- Gf!tJ'Jscd ,0 :\5 intere!;ts, or even to it5 habits
                           TENURE OF /..A);D.
 and prejudices. Thus grows up in the course of time a network
 of c~~(,imIl.ry nllcs~ which hampers the freedom and enterprise
 "Jf inrli·-idua;". and hithC'rto has been found to check and hinder
'atrri(uitur<li improvement of eH'ry kind.
   I:> 1:1 Western Europe this system W3S transformed into the
 military sy:;tcm of feudalism by the wars and conquest of the
 )'lirJJJe Ages. In Feudalism the notions of ownership and
 g,At'fnmcnt were so blended that the son:rcig:n was regarded as
 ~13.\[ing a kind of ownership of the land.          His subjects hehl it
 from him on condition of rCIH\er;nl{ him mil;tar)' service when
 required. Gradu,tlly the ribhts of the So\'cr{.!i<::"ll to l,mu luve
 !cll!en into abeyance, and priL.\tc persons h.ne now pnctically
 und:sp:.Jted possessIOn of it, u\.!t even to the prcscnt (hy Uar.
 gains abo:Jt land <Ire not deterr..:.incd by free competition in
 4u:;'~ the same way as baq;ains about other tllings. Each
  na:ion has special ia\"s, ctl'itoms, and sentimcnts wHh regard
 to the transfer and tenure of bnd.
       S 2. A large part of the Continent is owned br Peasant
  Prop .. ie,ors. \Vc h;n·e seen how the peasant lu\'cS his I:md as
  his itie-od, how gbdly he iOl-12Sl:;; IllS e::tn1ings in it; how he gets
  to k::ow the history oj every sll'l:ue y:ud of it. He may not
  know of, or may be unable to affurd the advanced methods of
  the rich English farmer. But ill Sl)mc kinds of culti~·a!ion he
  c.:\cds; and even though he does not gener3.11y turn his labour
  to the best account, his untiring zeal oftcn raises a large gross
  prod:..lce.
       In some portions of Southern Europe the Metayer tenure
 prevails. The metayer has an hereditary ri;;ht to cultivate a
  small p;cce of land on cOIHlition of g:ivin,; a certain portion of the
  prodlJcc, generally one haIr. to the landlord. The landlord sup-
  plies the whole or a p:ut, according to local custom. of th<.: capital
  rcquilcd ior working the Llfl(P. The metayer rcsembles the
  vedsa~t proprict<)r in having fixity of tcnure.             But in some
 other respects he resembles the members of a Yilla;;e com-
  munity. For he is harassed and hampered by thc rules which
  have grown up to secure the landlon.Ls sb::l.lc of the produce;
  and since he retains only a fixed portion of the fruits of hi!>
  labour, he has not as strong an incentive to cxertion as the
  pCJ.),ant proprictor has.
       The land of America is cultivated by those who own it'.
       1 With regard to Metayers, Irish Cottiers and Peasant proprietors,
    the re.'uter is referred to Mill, Bk. 11., ami Cliffe Leslie's .sys1t!1It 0/ Land
    Tmttrt.
"    1 ,. The American farmer is at lea,>t in nine hundred and ninety-fi\'e
: cases out of a thou'i>and the owner of the land he cultivates," Mr
. !{ugg-Ies' report puhlished by the New York Chamber of COmm~T(c.
    lK~ ~.
                          nOOK I. CIUI'. IX. § 2.
  The e,1.Se with which men get hr.,] prewnts the growth of an~
  consiJe- :ti):e d:.l'>:i of ag"ricultural labourers at present; so that
 the knilfC of land i:1 America res~mt.ks In m"ny ways that
 <,f p~,hai-lt vruprictqrs. But the f,lrms ar(, not small, and the
 farm..:r..; arL' g-en..:rally educated men, fu!! of restless energy.
 They fi'e:'{,l~'n::y scll theIr farms and mrH"C we<;1.\\·ard5 to larger
 farms or richer soil; they are a!wa\"s on. the look out for
 ill1prl>\'crl nnchincry and impro\'(·d methods of CUltiV,ltiol), And
 in many nthcr W.lys they j..'-n:se-nt a 5trikin~ (,flntrast to the
 pat:'~nt -mJ uncnt..:rpris:n:; pC:lsAnt ptopri~'t<'rs of Europe, aman;:;
 wt:o):n :;i',! l;tnd. <1,':11 th': method of culti\,lting it d.;:scend with
 litt!e ':;ldr..::C {!()!ll ftther t() 5'1n.
      T:1C: s!::tr;:! of t!I.e produce tktt the metayer {l,lYS to the
 lar.U;·)r~1 jj sometimes call~d ., rent." nut in this bGok the word
 ""iU ah1".lY" mC:ln that payment which the owner of hnd C3.n
 ob:aill by ,'ree competitiu:1 for lcn'l:n:; (o',l~ th,~ esc of it to others"
      Ri,.-h l;mJ aIT')r(!:;' a hr~~1 r rdum t.) t:'1! C:J.pit:l1 cmpioyed
 on it th:m cUllld hI} obtaillcd by applyi;l:: the same amolmt of
 c.lp;t d to the cu!ti,"ation of poor bud. In a popul·)u~ c()uotry
 in ",hi,.'!! tl:;TC is ;.t ~r~~ Qc-m:ln,i for flood, .1.;,d ~1) which there-
 fore S0tnC ;",G h;"!:; ru l.h.! rJ::::~'d :It gr...'at p:'pen.'~e from poor
 laMl, the "ahlc 0;' th'':: produce r~t:::,eJ from t:1e rich land wilt be
 l)~Or~' th~m s!Jt-nC;(l1t to p.:h' th~ expenses (If r~ising it.            This
.surplu,> viluc the L'\\ner retain') it he cultivates the land himself.
 But ia i.:.",_·;.m.-{ i"lnJ. some oth~r cOuntrics there are always
 capivL,,~s ·.\"I!ling: t(l cu1t~\·a:,~ th,:, LtlLl Wltb their own c~pital.
 and tc o 1~ .. '; tbi'i ~llrplus to !hc landl'-Jrd in the hrm of rent.
 Th~:; !>'.'t,tem fl."'" the ~[eat ad,'ant-:::;,· ,~[ gj';ing the m,:m,lgement
 "f the landlO lhose \\ hu ha·.. e c<tpi:., 1, ,:g-ricultur:tl skill :lnu itking
 I\)r the werk, \\"c J;"lVC aJrt.td) -:L'n t:la[ the advantages of
 di\'i~io)n of :-1bour a:-.G. of prOGllctlO'1S on a Luge 5c:lle are of
 les:> impo:-ullc.e in .lg-riculture than in ma.nufacture: but their
 im}-'o:-::lnce i",   incn::1,~!o;;.
     Lc,q~     ;C;I:-.(,5 h~h'C secured to some f:lrmers the results of
 their Illlprovements, but when based on the high prices that
 prc\,:ld . :d some year:. ago, liwy 1::1.\'('. rll,tdc the recent f;J.\1 in
 pnce" JJ:"e~5 heavily 011 thc Lnnt'r. The i\;riclliura! Holdings
   An of IS';3 has secured to t.;V('I}' f.lrmcr, 011 k.l.vmg his farm,
   ccmpcr.~atlOn for some I)f his lInpr,)\·eme:-;!s tlncond:tionally,
   al,tl f.n ~onlt; others pro\·ided they were done with his Iand-
   1c.rd'o. ,".'n)L:1t.
        Tilt; t,,~;, (>'fticr p'lys a rent (uf the lise of his land lnd
   'u!,;·;.I~C5 it ;]~ hi-; ow~ ri~k.             Ellt hCI C his res~mbbnce to
'. the Er,.;l:.:,b fJ.nnl'r end.,;. The !ric,') Cottier is a poor and
   UIlCducl.{(.'tl pea::.J.I:t who I ,'r'lt5 .1 ,;m.l Ii P;(~t of 1,10d either uirectly
 .fro:n its owner or from <=. m:\:JklilAIl \\bo makt's a li\'ing by I
   sublettiug land. lIe has not the English habits of foresigbt
                        TE:-;l"RE OF U.:-;D.
a:ld Sl:;r control; and a great injury W.'l~ done hilll \\h~n frce
cor.)p('ti~ion "nd free contract for the hire of land were forced
.Jpon him. They 'vere excellent thin~s in rheJ)lselves: but
hG W.l:' not ready for tllc:m.                He recklessly Off:..'TCd rents that
It \\".1'; not po:=;,;ible for him to pay. and thu,> pllt hilllSl':{ at
the mer,Y (If the LlOdoi\'ner. or muf": often the mi,jdlcillan. from
Wh0l11  he          rcnted his plot. The m('~ismcs adnp~('d to dirninish
the bad r('suits of this mistake :J.rc fat Irom satisfactory. but arc
pro~)ably the be'st that could he found. A (air rent' for eat.:h
piot h:lS bClCn fixnl. on appiicatj'm, by Commi.ssioners appo:nted
lor the p<lrp,l->e; their decision bun;:; 0p;lbk of n:YJ';lOn after
th·:.' 1.1!J:,'e of fifteen years. :U<:anwhiJe the tenant 15 Eecurro
by law ;-t:;ail1st (,\'iction except for ju!'t CHI<;C a~d has the power
,)f 5(']::n'.,; his right of OCCLipation. Th<..'r..: is a .,::ll ~lll:.ett1cd
cr,r,tr(wersy as to haw f.lf the QWllcl"!"hip of land in lrLl;md,
.1I"d in S(lmc parts of Scotland and Indi~l, was de fad,;' divided;
and as tn lww br ;-tn injustice h.-.:-; been done by the rdll:>aJ of
the En~lish /;1'.\1 tr) fecog:nis(' tl12..t di\'i~ioi~.
        o 3· Th~ Jiscllssion of the qtlc!"tior: as to which is thc best
<;-:ste:~\ "f land tenure has been complicated bv ;;.o:n(' uncer!a:r;tv
 ,,', to 7hc ;nean:ng of the term '·thc"best :.ystem," By the b('st
 'Y,,;{('1l1 'O,)lIH~ mean that which giyes the j!.rcatc;;.t gro<,s produce,
0"1 1 1(.>[j me, III that which g-il'e", tile: grc~tc~i nct Of smp:us produce

 "frer dcdlicting the ne;::es5:1ric" of life for the labourus. while
I)theh agaill mean that which c0ntri!)~ltes Illo,:;t to m;ln'" M'cnt.T<ll
 \\"(:ii-lki;"i:';. ,Yc ha\'c seen l"<.<l':.on fc'!' thinkmg th~lt tl1C gr(':1tcst
 net plodu.:c is on the ;1Vcra~e obtained under the ~y::.t{'m of
 iar;;;..:: (arm'>; and that n. ,"cry L1r;;~ gross produce is (,btain{!d in
 sam.; of those districts in which therc is an intcllig;cnt and
 cI1Lr:!c:ic l',H""e of peas,tnt projlrietors; for their ulluring zeal
 :;eep;:; 'Jr; .lpplyin;.:- more laboUI" to the land 10:,;':- after the return
 fr"~n it h:1'i dimmishcd so far that a capitalist farmer WQuid
 h,\\"(' ce<"l.scd from further ctllt.i~':ltion.
        Fconomi,;,s are not a:::-rcl'd [1.5 to \\·h:lt systcm best promotes
 ~,-ncrai wdl-bein,:;.             If.1. vote could be taken from ;111 Econo-
 Ir,:o:_~ lh:".tl:;hotJt the \\"Cn-:d, it would probably be ,:;i\'t:n ill f~l\"our
 uf t\:.:~ S', stem under which the la:Hi is owned by its cuhi...-ator,
 \·,hct'wr'in large farm,; as in new cOlintries. or in sm::tll plots as
 In U!J. ;·.nd th!::i view h:1S been adopted by mnny Er,gITshmcn.
  ','-It Ik,uJ:' all English Economists of the iJw>t ~('",-,cr,lti:ln had a
    ~~O:l.~ pn:fclcnce for the 5y~tcm of Jarg-c f:1rm'i. ThiS is r~.rtlf
 ,:',tC to l:t,: same ca:.lses th:lt h<l\-:..' prollloted the cmploy:nc;lt of
   1f);I' capitals in Engli<;h nun\.lfar.tll!·c;;l, partly to the fact tlut
 ! 11..:;1:-.'1(('", p()c;iti0n iil the Great Frl~nlh war ,\-as 1ar;;ely owing
    , :\lc Ydst 111'/ produce cf her manllfactares and apic.ulture.

                          I   See Book. [. ell. ,oiL § ..
                     BOOK· I.       CHAP. IX. § 3.
      But recent events (1835) have a~ain incrcas.cd the dif.'iculties
  against which peasant proprietors have had to contend. Great
  importations of grain and meat from new countries have luwered
  prices, but the burden of the fall has been borne in En;;Jand
  chict-1y by the landlords ami farmcr~. The JabOllff'rS have
  on the avera;..:e at least as much of the Ilccessaries, cnmf(,rts and
 luxuries of life as at any pn.'vlolls time; and this in spite of the
 fact that many of the ablest and strongest of them ha\"c mi;:;Tated
 to the towns or to nc ..... cou:H! ics. Hut the peasant prupr:etors,
 panicubrly of arable J.lIul, have nothin;; to shield them from
 the full effects of the fall in pnccs. l'Ilany of them hal"c lost
 nearly all their little marg:in of sailings, and not a few are
 in debt. E\-en those wbo are in o:.Jt\varJ app~"ar;lnce pros-
 perous frequently work h:trdcr and Jive mort! sparely than
 the English labourer",
      :\Ieanwhile the growth of commercial h<lbits among the
 agricultural c1:ls~~:) in all rountries is it'adiog them to compare
 the llct return to be g-ot from the owoC'rship of land, with
 the protit that couln b: C:lrnc-u with a capital equ.1.1 to the value
 of tile land, if Jt were applied in farfTlin 6 or any othr.:r bl!siness.
 And tlio':>c who re·~.1.nl tilt' cuiti\'ation of land rr.erely as a mean.o;
 of gettin:s: a Ilve\dlOod are It.:ss wlllin:; thztn they were to sink
 their capital in buying bnd for Lumin:; purposes at its fuli
 price.
      But the dc"ire for the owne!"ship of tmd as an end in it5elf
 is still :.trcng cverywher~, and is ~:llning- a new for...:e among the
 English working clas';C3. It IS tu be hopeJ th::n ere long there
may be a gn'at JOcreasc in the numbcr of those w110 own small
 plots which they may cuitj\"at~ with tk'ir spark, or on which
they may ft'ed a cow or <'. horse. A mO\'CllIcnt is being made
witt! the purpose of :srOllpm6 together a number of small
holdings, 50 th,11 they ma~ sbare the usc of expen"i\·e machinery.
The qualltle<; of honesty, gO'Jd humour and trU':itflllnt:;.., that arc
need:.;u to s(;,~tlrc tlit' Uhlll<llC su,:cc:):, (If tbis plan, arc required
in c\'cn a ili~;hcr degree for the bOld'.;t", but p.:rllap.s mort im-
port:1l)t, vcnlilre of cvopcl"J.tin: f.mlling,
      The system of erlt,J.lis and settlements, and the intricate
rig:hts in land allowed b)' l:..n;;li5h law to persons )C't unborn
ba\'c c:..tusl'd mall)' lar:;..: propcrti,'s to be k('pt to~ctlu:r without
sufiicicnr capItal for g'ood cultivJ.tion; and ha .... e made the
e..xpCll~C'" nf transfer often prohibitory in the case of sl1l,d; plots.
It is to be hopcd tha.t a speedy rdorm of the 1.:l.W, aided by
a gond land rcgi.jter, w1l1 promote the form:ltlOn of small
propcrties. In a few cases iL may perhaps lead to their ex·
tinc,il.iO, but it Will probably IJ.rgely jncrease their number
where they are most w.:.l.nted.
                               BOOK II.

                          NOR~AL           VALUE.


                              CHAPTER I.

                   DEFl~1TIO);S.       LAW OF DDIAJIOD.

     § I. 1::-; the present Book we arc to inquire into the influ~
 eOlee that comiletition exuts upon wages profits and prices.
 uf course competition is onl1 one out of many (tlUS('::' by
 which they arc determined. In backward countries compL'tition
 exerts. but little in!lucIHc men do not forccast the future,
 and J.diber:::tely .slup!..: the-ir cl.lur~e b)' a caln-j;)tion of di~t:\nt
 advJ.[l(agcs. They c,lthcr drift along u;1dcr the influence of
 custom, Lioing the same work in the same "',lY, and for ,he
 same renHJ.nt.:r8.tion as their fathers did it. But in .1(h-,msed
 countri(s, rarticu!;uly in \\'cstern Europe. Nnr~hc:-n America
and AU'5:rdlia., ccmpt·titiuD is far the most in:pvrtant ~~i all
the innUl'DCeS th.\t :..t,·lt'.:::t W:1gcs proiit:::; 'l!~ll prices. ;"nd it
will t1J<.:rc(~lre be our bc:::;t iJI.,m to b .... ;,.;:n 01,l' examm:nun of
wages pl'ofit~ :1tld prices by inquirin;; jJOW they would be de·
t~nnillt~d if free comp('tition \\'CfC the l'nl), ldLH:llce :l<.',illg
UP(ln them, In nouk IH" \ylH.:n \\c arc disclls,<,in;; :!Ilarket
valu('s, our attention \~'ii~ be dif~(t('d cuiefly to otl:cr in·
fluenc~s.     nut in this ~ccond Book .w~ b ... ve to shut our ('yes
to th,_',,,~ other 1I1l1u( n',,'. ;~ as far a'i we c<l.I1, <'"lIld think ()~ 1)' of
the cf(c.\."/5 which would bc prvduced in the jong run by free
<:ompctition j if e~'ery one were qUick to seek out and foHo\t'·~
     Y.                                                                  s
                   BOOK II.        CHAP. I. § 2,3.
 his own economir.: in!crests. \Ve haye in this Hook to ex::unine
 Nurmal VtlfllU. For :--~
       Tj1.at cQndi,iOn of a thin~ which would be hrought about
         JbY the l.lEtlisturbed actIOn of free competition is called
          'hs Nm:m.al Condition.
     §:!. [Th<,! which       IS   according to the laws or precepts made
 by authority is   le~;ll.     That which is according to th~ Laws of
   n"ture in the!'. ordinary operation is normal. Of course every-
   thing in nature happen:;, in one sense, z.ccordin~ to the Laws
  of ncl~ure. Put '-err often we have in vicw some particular
  set of Law~ ~ and when it is understood that special refcre"ce
  is made t,) these Laws) we may say th~t that conuiuon of a
   thing ".. hleh is brouu-ht about by their undisturbed action .. ;,
  its normal condition. Every tree ,c:'rows acconling to the L), s
  of nature, hut if a tree is phntcd in sltch a pu"ition that it
  cannot grow II !1<ltura]ly," th::lt is according to the laws of its
  own nature, its shape is saId to be abnormal. So it IS in one
  sense ;1.ccordin,~ to the Laws of nature that the branches of a
  tree are s',v,1yeu by the wi[ld_ Yet we say that tht'y are in their
  normal position only when the wind is stilL This is the position
  which tl}(~y ;1dopt, and in wh'ch they rcst when,not d::;turbed .
. \\'hCll we speak of :\orma! values. or Nnrmal pIKes, or l\:ormal
. wa;'~s, or :-';onnaJ prolits, tlIe P.1rtiCl.':!;Jr sct ul Laws which we
  ha';e in v:~\\" arc thOSe? Law,; of hum.:m nature and human onduct
  which are hrol;,:;ht into play \\-l1cn compClition is perfectly free.
  It is trLle that when mln is intl,lcr.r::ed Ly custom or prejudice,
  or when he h pre'.. cnt~d by i~llori\r.ce or apathy from competing
  freely, his action is ~r:('ordll:.:"; to the La\\'s of his nature, and is
  in one senst ilfl.tunl. But it is not according to those Laws
  of his nature \vhirh I\'e 11.1I'c speciallY in view \\-hen riiscussing
  the econ0m:c cwilitlOn of highly ci\'iJised countries. \\·e there·
  for..: (10 Il'Jt cdl his :t.cti(.n 1\ollnal in the special or technical
  sense in which th(' word is uo;cd here.
        1f the wind b!cw equal!;: fr;)m <l!~ qU.lrtcrs the mean or
  average pOSItion of a hr:!nch ,n1u:d be tile S,lTne a~ itj normal
  pOSltlOn.       But if the wind blew morc tOW<lJ(.Is the ca~t than
  tow;}rcls the west, the mean pOSi:lO!l of the branch would be to
  the cast of its l1()fJna] positiun. And il~ the same \\-ay WIth rcgard
:to \-,Liu::,· if c()mpc~it;on wcre perfectly free. the a\'cLlgc value
 of a thillg wou:d be thc ,S,mle:15 its Kormal \'~liue. But since in
~fact (Olllpt.'\ltifJO is not perfectly free. the avcrag-c \'alue of a
hhing- may lilf!·cr froUl Its ~ ormal \"J.\uc; although the two seldom
:differ fl'\lCl!,
        Auam >iw!:h and the older Economist!> spoke of the
  ~'N.lttll.'!" ntes of ,... agcs profits and pric(s. They used the'
  word :\atur.tl to mean that which is aCCf,rcting- to m:ln's nature
  when competition is free. But it has been found best to use
                                 D£F!~ITIONS.

,j   ~ormar'      (or this purpose, bec.:wse the word U Natural" has
been llsellloosclv: men oftcn caU an arrall~ement·i N,:tural"
merely hecau"c they approve it. and without taking the trouhle
to cumin/; whether the La\\'5 of Nature actually tend to bring
it about.]
     § 3. Before entcrinJ' upon tllC theory of i\annal "aluc it
v.;:l be well to define some ...ords which win be used in it.
     The growth of the spin: uf competition CLluses lnen to look
about them to see whelc tl1CY can buy ChC;lpcst, 3r,d where they
can sell dearest. A man ma\' not trouble himself much ahout
sm,!!! r~t3.il purchases: he          m:,y
                                       give b,llf a (rO\\[1 for a packet
uf pap . . "!" in Olle shop which he c'>ul·i h:n c gnt for two shillings
in ai1()tlh:r. nut it is other'l-isc with wbuic:-;J.le p:·ices. A
m::tn:Jfacturer cann0~ sell a ream of paper for S;X shillings while
h:s n:::i:.:;~l)OI.H is selling it at five. For those who,;c bU5i!lt'~S it
i'; [0 dl':d in paper know ;Jmo'>t ex lnty the low('~t Price) at
\\ 1.:<:11 it eln be bou::;hl, and wiU not p:1y more th;~n this. The,
lltarHlf,cttlrcr has [0 sell at abOl~t the ma; J,:('~ vnt.:, thJt is at
:1b(l,li ~he price at which otLer m::mufactu:",'l"S ar~ s~'~iirl~ at the
SJ.mc tlC'('. \\'hcn the compctit!<.m among de:dcl's i~ pcrfcd, [hat!
('all be :I':t one price in the s,\01I: n.:uket : so that "'l' tna:; say
         -JA Market for a warc is a plJ.ce where tll('rl~ i5 such ,:om·
             'petition among buyers, and als'l ;o.mong- sejlPrs, thi\t
             it~e ware cannot have two dillerent prices at the samt:
             tmlC.
      IIOrigin;"lllYl" s<1ys ~fr levans, "a m;'l_r:,'~t waS;l pub:i, pIa,(>
in a 10·.1!l \"'hCrl~ provisions and other o~Jccts ,vcrt! e;,,:pClc-LJ fa:'
s"k; hut tbe \l'orJ has bccn generalized, ';0 <l~ tv In~'.:n any
body ot persons who are in intlmJ.tc busi·le~'i rd,l[;o:lS and
:Jfll' 011 c ... tl:fisn'C tr.:ln~actiGns in ,,11\· C(1)' I:l"ciitv. ,\ .l~rcat
,it!' H'.3y nmt:Jin as m:my nurkcts ~" there :I'-e ;:;,port:1nt
i.Jr,\I;ch('~ of tracie, and. t:l<.'S":: markct~ 1l1:1Y (I~ !:l:t~ pot be
;.-'c:dilCd. The celHr,l1 point uf a m:'rk'~'r i" th' j:llblic c-..:~
d\:\\~:--:r., m,\r~   or <l:.lfticm I0011'.S, \Ih,·;-,., the <;'.1;\1''; ;>.:o.:rl:!{! to
:,l~'el    :1l,J tr;u,,,;y-t bll<;ir:c.;s. In Lnl,,:nn. tht; Stock M.'l'ket,
the CL))'n '\LrkC't, the Cu::l :,Ltrkd, t:'" ,n;:u .\\arkC't, and
1<11';\ 0[hcfS '!r~ distillcfl\- jOCI:;"-(,,/: il: ~!.llKh1,?s!e:· the Co:ton
~!.lr~d, t:l(' Cot,,,n \\·.t~t:: :~l.ili'-lt. <-~:1t.i others. Hut till'; dis.
   :lrtiL';l of 10cal1tl' ;, !wt n..;'cc ,J"\'.           The traders IIIJ,Y' be
Sr(~',Hl 0':('1' a Wh()I"; t('i\\-U) or I<:;i.,;; of Cllun:1Y, J.lld yet nuke
;~ J:l-l!-',;:-'!t, if thc:' :~r'~. iJY In' \;15 <Jf faws, mc,:~ii~:':-<C, pLbl:shed
pr:l~' :'.;;t<;. t)~.· po~; o!:irc Q, oILcrwi<;(', 1'1 CJq~C cl'mmullication
 ·uti! :\', h _ltiler.'· T:nt i~l tllcy will all ray lhc S;'!l~e pr:cc for
:ilP ",,!lIe th:n_~ in tJ1C ~:m1e place. \\",It:n it i; ~aid tlut the
      i~ ~be sa;:"l~ 1'-)r ::I!l the dea!t:rs in :1. market that extends
I-,;'i c ,
 )vu :! l.uge dis:rict. c.1ch hll!'\'r is suppo.5eu to pay extra the
.;xpcnsc of its bei \~g ddiverCl\ tl\ him.
                                                                            5- 2
                             BOOK Il.            ClL\J'. l. §4-6.
       -1-.        There are tw~) ways in whirh ::l. pcr~Gn may regard
,1ny~hing          that he h;d. lIe ffi:ly c(lll~id(:r its use to hiI115('lf. or
tlC (;laY ('on,,;,J:r wlut L<,' (an ubt'lin in cx:(h:1!~'';:(' fl1f it. From
the I)nc p·.Jira l,f yiew h,~ look", at Wh,lt Ad;llll Smit~! calls its
V:.11:.:<: In llse, from :hc o;hcr at its v;dtle :n cxch.lr:,;,,-'.
            Th(: va.lue in use or utiii~y of a thins tu a pLrson is the
               3.1110.J:;t of r;L:.lS:~lC or sat::,;{actioll which he d~ri\·e.'i
                         pcsse;;"il.~ it.
                   fro,'.)                                                           .
       ,   Thc~       value in exchange or cxch:mgc                     \'alu~
                                                                   of a tbing is
                   !l.:c pcw(-r of I,urcha:,in~ other goui..l5 which i~:> P<Jss,'s-
                   "'IOJ!. conn;Ys.
    "V:diJ~' " 5tanJl~J;; atune always means \'alue in cxchang~,
an\i nevcr yah:c in usc.
    VaL!~ implic.~               a rcbt;()rl between commo,1itics.               F0r instance',
1hc vall.C' 01 <l jJ<Jun.j 01 bed lllay be it." Ih)WCr (,f fJilT';]I.i~j:1R
three pounds of ~tJ;;.\r 1)1" f.':c :,:::-..ulli oIK)ld. lfS~l~ar We're' tv
become scarce or gold were t() b,:crmlC morL' plentiful, the v;lICle
(If a jJo::.und oi lk'ef mio:-llt become the pow,:r of p~lr("b;bi-l,:~ two
po\lIH15 or ~ll:..::tr 01 ,:x ;.;r.lil:S ({ :.;c:ld. Such ach,~n~!I~ w')ldd not
justify us in ,:a)"::-'6 tk::t th.·                    of beef had faHen (If nsc'n,
                                                  \",l;L1C
but on]\,           til..tt It   luJ                                 all,j r!~·~'!l r..::lJ.·
                                       fJ;j~';l 1·_'::1.~il'~;V:1' ~u<.:::ar.
 tin'll       tog·r.h:. But if \\(' f'l\~f1rl t':;I: ,1. p~t:nJ. (·f hcf would
('\:(.h:ll1";(; Lr a ;.!'r..: . i:<..:r qU:l1,tity of almost evay other com·
m()di~y tl: 1n bdure. '.\C mi~l;[ tllcn ~;I:'- that its y;.luc had risen,
its ,'a~:..;.C' \\ ol):d 11;!',c 1';s(-'n r,,;ati, c';y to (on11:wflitics in general;
i'. wo::kt 1I;"c ():-'tain~'J a gr'-'d.ter pur,:il:1;;.ing PQw~r o\cr com·
n!t'uities in ;;t.:l-Lcr<l.l.
       In C\c.'r'. "':;',l~:~cd .ount!'\-" some cl)D1mvdttY is cho5cn as a
medium o(c~c:hai1.';<': and a n;c;tslJrc :)f the \'"iue, or gcnc-r,ll pur.
ch;hinX powet', of o:her thin.:..;:'. TlJi5 (:ommodity is gcnaallr
one of tln; precIOus rn·'hl~, gold anl! ~il\'cr; coins of fixed weight
arc mad..! of th,:~;,· !':lct.lis ;]:1<1 strl.;n~,,-·d by Govcrnm.c:~:, and
arc tbe llJLmC', of t:)t ("'~l1~tF. The lilIlnber (jf them for which
d. ,P01:nd uf h~~l'f '~:ln l,,; cxchJ.ll;;cd I cprcscntc; its yalue and i~
cdkc: its f·,-i,-~·.         Ii:"', cf bec0m<;-o ,Clr..:c, ;lnu ri5cs in pr:ce,
wbik t~e pr:c,'~ of ;di ,)~h('r t:lin~3 rt'm;:in unch.mi;cd, there
l::i a r['it" in the gc:ncl'aljilJ:c;usln:; r()\\~'r or \'aluc: _)f !Jed,
      ()f CUl1r:;~' til,.'! ",d:.:e (If money it~df may h:1\ l' Llllcn; that
13, cJ.ch cnin m:~y p'.Hchasc /;::s; of an 0111._'( rOnlllludlties tban
before. In ti,at o~(', lhull6'h the price l'" veef h~s risell, its
\'~111~ 0: :';Tnt:r::tl purcb.:-in:; po\\'cr ITl3Y have rcmai;,ed sta-
ti(m,.H:' : t:lC g-r~',lkr pri~'c fur which it is sold may onl.y ;::-ivc
the puwer of p:.lrch.".sing- ~hc samc J,mount of other commouities
as \)cfOfL.'
      In a l.ltCT chapter l sr.mcthiag will be said of the chan~es
that rna)' occur in the purchasing ruwcr of money. I3ut w.bil~
                                       ) Book     Ill.   ella;), I.
                     lli.ll~ITlO';S.                   LAW OF DDU.';D.                                     69
('xamining the theory of Xcrmal yalue we 0,11.111, (or convenience,
,1~SL!!~IC th~t the- purchas;ng puwer of money n:nnins un-
ch:l!1~kd.    .so th;)t a n~e or (,til in the p!ice of a thtng: will
a;\Va~s l\)t,ln a ri:;t! or Ltll III ib gener;)} purch:lsin;:;: puwer or
(·xci~dn;e i'.l:l\C.
     ~ 5. It :hilligs were rxchan~('d for one ::J.l~other withe-ut Hw
1\5e of l:1onf'Y there would Le no di,,:inction between bu.yers and
~c1:cr=-; but this cli:.-tinction m:lkes it.~ 2!lpc:r::.nce as ~ocn as
Inane\" con;C5 into use 10 reprL'sclI: b~'ncr,;[ ilUrciusin; pOi\"Cr.
        , A buyer is one who wish~s t<) 00::lOn a jl.1rt[.:ular com-
                     modity and ol!-('r:;         In   CXC1U!IZ(!       fLlr   It a   C<-'rtalll   amount
                     of   IW'Ilty,     that I::, of comllFu;.d oyer co .. LnwLii!.ics in
                     h~'I1(:raL
         A seller is one who is wi!ling- to part with a particular
            cvmn,odity th;lt he has :!l hi:, p0s..,e5~io;" ~·.',d de\ll"nd~
            b cxcilan;;c f(,f it ;l. (('nail! <llllo:":Ill of mo'l(Y, that is,
            of C(,mm3.nd onT Lommodi:jc~ in g(·IH.:r:d.
    The pri..::e of any commodity in a ma.rk..:t is dctcnniucd by
the <:agcrlIt;'s5 oi buyers on the one :)arH~> an,.l the ('a,-~f"[I;'-;~~ of
s~~!('rs on :h'~' o:her. The remainder of t~l(' t:!.ap:t:[ 1\i., h,o:: n(ru-
pieJ. ill c.\p!ainini; thc Law of the ea;;("I"n<--s,; ot" b"~l:;·s, or the La-;L'
,If I), -''-,lil.i.
 . ~ b. It is a matter of comraon c:,;)('ri2nc~ tInt t~w larger
the ~tc'.:k which se!kr" lktcrmi,H! tQ sell, the: hllH: \\'i:1 be the
pr:~'c at which i, ,~.10 be g,-,t nd of.         I i.-,- ':'~"'Jd, the 1(1\\"(,( the
pri..::e ,it \\hich an~:hif!g i,; (,fL'J"(,u r')T ~,lk, :hc' t~l'c.t:cr is th.::
"mJ~.nt of it whic:h C111 be sold olT.            Ex;'!~~);)J.-,; p·;'·t,r t·) U~
c-,'<..r: day. In .1 gn:lc-! apple ye:t:', the pr.co..; of :ti'l,ks is [,)W;
I:. / b.ld year it is high.       .\t Ull.: 'cnd of 1:1C SC\'>\lll a f.l'.>ll:on-
;-':)~ S~\tlP seils ofl at a gre.1t red'..H.:ioll, :lnt! ~(J get5 ma.!1Y
l     ';'(!:nC'rs.
     Ti:t'SC f;:cts ~hcw how the l:Uih' of any:I::ng to a man, its
p.lwrr oi s,-.';sfying- his w,,-JJ[';~ dcpen(!.; ran!y u;"ni~ ~il~' qU:H!tity
l'f :!i::~:::--; of til·:." ~an;c 1-.:10(1 ti::t! he 11:'..,> ,,_:'-.:ac:.y. Th(' IHvTC he ;las
(JI;~ til'> Lss \\-:li be tLc u:;li~Y c( Il;(',~ ('of it t,.., him,                   Sup;}0.se
;.e \' :ltlts 10 fn,\' ~0mc lt1ll11':1. If he ,;,,'_ni 1;0[ get it for
;"-,> :.Lm fiYe st;iliin:.;~ " y,lI"j he !;-'_~:,~ h.:: ",ii'Il); tfl 1>ll)' ;\
        .:1 .. ~ lrd      :1t   this jJ:-i.:s· :llat I';, I:),: \',,~;l"':' .         !." "   r t:t:lity of
    l y~!r(i  to l::im 111:1)' bt~ g-rr.ttcr tiun t;I(' .~.1:1,:.\C". III tint he
,',I :),; o:Jt'in by S[!,:l,Ji:l:; (lIe ti\'~ ::'~!I:"",> 1;< :tn;' ,)~ht'~ -,,',:1.\-.
 i ;\:: 11':- m,l)" 5UP~) jse Ih:1t hl: is "hk t·') !:ct jl: ~:1.·t> ,:i or',,; ~;Ii,!:![;;:::
;11\ ~lr;~: e,u:j~\;:i ~:~: \~ th\1;~~ ~
   ;                                       J;r:{,~ ;;\~(,l~ll.~ :':~;~ ~ 'c~: ~j i:~'t;.~:·le~I~\ i~ .:I:~ c~~~:
                                                              ..
    ':,\;';:-.:ci('n h.,; ("-".;U g'i't b.,- "I:"~;"~j,'':: :11': ::!·.il: ;)~~ in o:her ways;
    \'::t t:I,H ti;~ u:iL:\, (jf it t.Y,-:J:\-i::-,t \',1"'\ \"". ',;,'i lJ~ kss than
    ,il~" 'i.l.t:Sf:!Ct:O:l. 'In other woj-,J" a ,';:1:) ,-, :ll't Jr:(,l.illr,',I' ,he
    ,.t::i~>'   of   d~e    twen:icth yan'.; ;hc             fl:l;t 1 :.lrJ. \\!., ~t     L'-.: huys,      'Iv
 70                  BOOK II.        CHAP. I. § 7.
 tbC \lr Jevons' happy phra3(" the Final Utilit.)' of a yard of
 lianllcl to him is measmf'd uy one shillin::;.
     jn ~jJuki!ll:.~ of the uti~ity 0: a commodity we mU3t always
 have in (''-IT m,::"';s some particular anwunt of that commodity
 and ::he p:u:icuL!T person to whom it is usefd.
     The utility ()i a commodity to any onc dcpcncls on the
 amc,:nt (Jf It he has at lhe timt', and the 0rpo:-tunity he has or
 expei L; L<) have of gt~tting it, or other things that win serve as
 subs,;t'.Ites for it. But further, the price which he is witlingto
"pay for a thmg depends not only on its utility to 111m but ... 1:>0
-' on Jus means; that is, the amount of money or general pnr-
-~ chasing power at his di5posal. A greater utility will be re'"luired
   to induce him to b:J.y it If he is poor that) if he is rich. A shillin;;
 is the measure of k<;s pleasure to a rich man, than to a poor one.
 A rich man in ooubt wh·,~ther tv speno a shilling all. a single cigar,
 i" w<::ighing against one another smaller ple.l'5Ures than a pvor
 man, \\ho is doubting whether to spend a shilling on a supply of
 'obacco that witlla.~t hlln for a month. The' clerk with /, 100 !l
 \'car will walk into business in a much hC:lvkr rain than the cicrk
 ~ith £300 a year; far a ~ixpennr urnnilJTJs bre measures a
 g-reJ.ter utility to the pOOrl'l' m;}D than to the richer. If the
 poor(.!T man spends the mO!1C~'. Ill: will sulfer more from th,.~
 '~'ant of it afllTward~ tl!aa the richer would.         The utility, or'
 ,.tti..,f.tction, or y,llne in lise that IS m~'a~lIf(~d in the poorer
 man)s mmd hr sixpencc is ,;;-rCJ.tcr th;m that mcasurCrl by it in'
 the richer man's milld. Ii the richer tHan rHles a hundred'
 times in the year ~'IJd th(" poorer ma,l tWCf!ty times, then the
 utilil y of the hundredth ride ,\ bieh the rirlICr m~tn is only just
 induc·.'d to take i:'i Illc;l:;ured to him by sixpence; amI the
 utilit~, of the tWt'llticth ride whkh the poore,' man is only just
 indncl'd to take is It1c:tsurcd to him b} ~ixpence. For each of
 them the Final Utility is mcasur~d by ~i",pence; but this Final
 Utility j>i greater in the C<lse of the poora man than in that of
 the richer.
       § 7. Tlt,~ lower the price that a man has to pay for a
 thing, the more of it is he likely to buy. A fall in price will
 rtf}t inlieed make c"cr)" pur;:!nscr inCT:lSe his purchases.           It
 might in the case of sug-,lr : it wO:'lld no: ill the case of carpets.
  tiut a fall in the price of carpds would in.duce some of
 the householders in a l~~rg~ markd to buy new carp~ts;
 just as ;:In tl:1h<.: •• lthr autllmn increascs the mort.llity of a large
 lawn, though many person~ arc uninjured by it. For ill a large
 lilclrkd th~'n~ mllst be SOUle who an: dU\l})tin~ whether to re~
 placl! an ()~,j carpet by a nl!w one; and their decisio~l will be
 affected by a fall in the price uf carpets. Therl.! will not be
 ,tll:- l',~3.ct relation between the fall in price and the increase (,f
 J,,'mar,d. A fall of one-tcn:h in tbe pri...:c may increase the sale9
                    L"W OF DEMA!'iD.
by a twentieth or by a quar~cr, or it may double them. But in
a large lllJ.rket every fall in price will cause an increase of
demaJ~d. The Law of Demand then is:-
       The amount of a commodity which finds purchasers in
           a market in a gl\"en time dtpends on the price i\~
        ~ which it is offered for sale; and varies so that
         . the amount demanded is increased by a fall in price
         , and cimir.i"hed by a rise in price. Its price measures
         j its Final Utility to each purchaser, that is, the
        : value in use to him of that portion of it which it is
         only just worth his while to bu)"_
                               CHAPTER II.

                                LAW OF Sl-PPLY.

   § I. IT was said in tk last chapter that the exchange
value or the price (If a commod!ty is detiCrmined by the ea~er­
nes'i of buyers on the one h.l.r:.J, :lnd th~ e:J.;;crnc~s of sellers
on tbe other. The L:1\\" of Dcm:lnll is ;] g-cner;)l statement of
the Hetior! of bu~crs. Tlu LI~i' "f jif//h)', to \\'hich W{; now turn
has tn en with tbto: <1ction of ::,,_;;~'r,;.
    The La\,"s ul1~cC'rnin.;::: the ac:ion of '>f'!leTs f.-:t!l into two
distinct cla~s-::,;. J"Lc()rdin~ as the cummotii:ie-; which. arc sold
can Ul! prc><lucr-d fru':y by anyone~ or arc mUHopo!:zcd. Dcicr-
       fll(' c;!i1sid.l'rat;on of the latter. we m:ty at present confine
rin),::"
tll<f a~t<':NLnll to thin~s the pn,cillcion of which is frce to"~
'tbps(' \'. l~kh anyone n1Jy proGU~-c.
        \\-e Inve to ir:s.uire how      :l l~::tn   caJc,lbtcs the p:'ke which
 will r{,~l1um nte h:m for FrJdl1'!:~-":' aCOmIll(1dity . •The'inc{uiry is
 J;fti..:ult; :nd t!\Cl Jon: i: \1"11: be ilc~t to con<d'~r fir~t rhe ,>iruplc
 Gb:? of a p:·od.u:-cr who In:l.kc~ th;n~5 with his own.,llJ.nd!\.
      Let u,r; S·.lppU:'C then tl.::'\t ~~ Carp('ll:e: is douhl:'l.~ \;'!lClher
 it is \\olih bi~ w);:lc to l:<iKC bu.... es f"l" s.lle. h ("J.lc!la:i~;
 the pri('~ '.\ hii'll ". :il-Tl'I'll1!lt.;U'C him, h,! m,:~t allow !'Lll" W(,~ll'
 ,·\td te.lr '-If 1001:;., Jor-J.hc pr:<e of 1l1.l:cri,li, lOt in~t:!'c:;t on tlw
 (.1.pi~,ll he h.1S in\·\.'ste1'l in t,)1;1:; allt! l:utC:ria!~. ;l::d f·,. nn~ uf
 hi; \\"rksh(.p. ~,·'t l,e nlllS: aJbw fo:" hi; own 'L,.>-:                            Of
 {"():JL'(' he UOt'" Jwt \':ly hmlSt,:i wa:: 5.              D,;: h~ c:1.1cu:al.'s t:le-·
 w,.g<.:s he ,:'-)ulJ ('.lm by other \\,(Jrk til:}t is 35 ffilFh to hi" taste
 ;;nd ~"t Ilhlrc f;,\: S"Ulll';. It w;n !!·}t b:? worth hlS while !o pru-·
 l:UU~ lh¢ br·x l1!:lcss 1:-; price \\ ill.Tt'p3.Y 111:11 the firs~ Ill('n-
 ~lon('J (''\\)<:::1,(,;. and .~J"rrl h:m :-I1CIo remu:,';:',lt:, ~ i~)r .his
.)abo\;!" as sllal: r.ot be j, .~ ltl,I:: tLt,:,,-, \\,l.:':~-'';' '1 t.:;:, h.'r'~:lY be
;e\pl"<~~s':d by s:lying til.11 i ... \\ ,il not b,_' won",~.,pis \' hile: to
~pr~)dl!r:e it, if il~ price i-: Id's tllill ·its E.1fi;':lJ t(;.'p,-,:d.:c'!i()JI.
  \\ ~ ::~\Ist ctrdu.ly C:\.ln1m(' the meaning o(t:_:~ tt.:tItn,
                                LAW OF SUl'FLY.                                       73
      § 2. The ptOductlon of a c0mm0dity requirE's the use
of tools, machinery, "orkshvps, ct<:.; It aLu consumes L.lW
:"atcnal <lnd bbol\r. Thlls it r<'qulI(:S (.lpital and bbour; and
capital, a:. we hJ.ve s('cn) is the res:'llt of labour and abstint'nce.
:-: ow there arc t>"o ways of est:n,.-n;ng these Yarious elements.
     Firstly, \\'c may rcgarJ them as so l~luch labot:r and abs·
tinenC<!. The carp2nter's work in m~"!.kin~ the: box invo!vcd
muscular exer~ion and fati;;l:e; and :~b~tiner.ce from im-
mediate consumpticm was nccl:~_~ary ;n Oh:C:r to pr;)\-iclc the
tools with which he \1:(lrkeJ. :\l'X~ \\ith p~_:1.rJ to the wo)d of
which th~ box was m:,dc. It lILtV have 1)'-'_'11 ',:;rcwn on bnd
tl'nt p.1.iLl rent; but in order to <l.\"oi~l consid~'nll:':; rent at prcsc:nt,
\\C HI.l;.' ~~FPose th;:lt it \\",lS g'Jt frOiTI S()!"C (Jf tlli: wild for-:: _ -,b of
Soutb Amcrwa.               II, thiS U~~ there W:lS c1ea:'ly no rent p3.id for
it;   I.h.. t   we          reckon the h!Jour of tl~i)~~ who cut the tree
                     !1):'lSt
d(Jwn, and of those "yho hrVtl,::::ht it t,~, :hc clr['cntt'r. And ~o 011,
       Then at:"ain the:,:: i" another set 0: ('11-(~n~ ,1Ild aLstilll'llCt'S
 of whicl: accou!lt m'Jst k' u;~,-:n, The' Clb:i~';-.cy of ,1 1c' CUV~'l;tCr'S.
 \\ ,)rk in H1:lL.;.ing the L'JX (kpen(L l:ot Oldy 0:1 tho..! cxer',ion which
"}--,c ~;r.J.('rg(j('s at the time uf makin;..:- it, bllt also upon h:s s].;ill in
"arpe!itcnn 6 , Aud to acquire tlllS "kill, he aTIl: hi::; t'.":'~:'tTS b.:u1
 tv I:xe"n thcrnselv('s; and illS p:l,-.::nt~ had to UC,(, 5c:lf-~len;al to pay
 ')ie e':pcmes of his cducit:on,              In het hi..; skiJ io> Ferson;;.1
 Capit.tl: which owc~ i:s ex..istcl~«: to !J bOllr ;,,!~ld ab,,~j:1('l1ce. Thth
!I H: ll the production of the h0'( is the rcs\:lt c:f:l ~:n:at n:Hnhcr nf
 ,'(;d! Is and abs!in(>nce~ undcr,~uae by (hli't.:r..::nt peaplc ~t diff..::re),l
~l~S,
      I( ',dl be       com'~nient      to l1avc a collectiyc name for all tJH;lia
L:~l::,r:s   :u:d    abstin{':~cl'S  reckoned to;cthcr. T;lis j" found in t:,c
term "c"st 0f.1-'ro,;UctlOl::'                                                .
           'The Cost of Production of :l. thin;; th·::'tt C0n:;;i~t~ of
              the <;JTorh ;1:'" abstincllccs rcquired fill' producin,~ it.
         The C:l.rpntu, hn\-c', ,,'~, in dcc.din; \\'i~ct:kT t:) m,lk" the
:1,'1::0:. or Cut, wo:;ld not car·;:- tel C(;,:nlnc a:l t:,ese u';urts
  ,'ld ,sacri!~ccs; be \\'u:lld tiecide in ,l Ill.uch ((<e!' ".-lY, Ill:
"\ (,uld calculate \\ hat it is pwp J3CJ t.o.ffall !:s EXpCllS~~ of
 :'ruduction, lIe \\ol.!ld, as we haH: seen, W;lllt to kn(,w wh:tt
pricc;; t1J,~ yano,Js etfort~ amI ::;acrit;,-c3 in (>',',-;lion \you:,l COHl-
 annd in the open lll:l.rkd; be ",\)u:d, "",It to l:no\\' \d-:at p;-icc he
 woulJ ha \"(! to pay f 'r his m:i.tt ;-;:.;.1. w helt \,';l:'-;"S he cO;JIJ oot:tir'. fcor
 h:~ o',\'n l~h(lllr, what \\,\0, tl~.~ l:lrc ofintcr(st ,1.t whir:h lie eoulJ
 ',IUITOW , .:-:1. ,- ~ti:it':1 ;t~ hc' \\,IT. ;l'd, and so on, Thes~ ,-ariol\s ~um'>
 pf m'-';1,2'. "1 L:n tahn tl'g(;thef may t.:,e (;ll;,~J the E.t/h'JI::id ~/
  /Jrr)dl"""~ of tll:: box_              It h,"lS :;.irc:tcl" b(V,l s('en that tb:: work
 of ]:',Ul In p'fjld",~:icn (()il,j',:S .'"<2a.L:.-· U Jl10\ i:1:":- thin~:; and L'-
 :,:rang;ng ~~~ ~~!--O th:"t th:~ ;t"o::~'Of ::i!-;.in:.::- a l:,"x W ll13.rk~,t h
 .b J;:nuch'l-'~odiJ:tlye as that v( m::u~Ing It. Tlw Expenses of F,J-
74                  BOOK II. CHAP. II. § 3, 4-
duction of a box when offered for sale in any market include
 therefure the expense of carrying it to that market. 'Ve may
then sa\":-
          -rl'he Expenses of Prodnction of a thing in a market are
              the sum of the prices of tbc dforts and s3.crifices which
              are rccitiircd for its production there: or, in otht'r words,
              the sum of the expenses which would have to be incurred
              by a person who ::.iluulJ purchase them at tht'ir market
              plices.
     § 3. Th¢ carpenter would decide to make boxes if the price
 which he coutd obtain for them conred the-IT Expenses of pro-
 duction; and other c.lrpenters in sim:J.!r circumstances would do
 the same. Thus the supiJly of boxes would be increased; and
 the increased competitIOn of sellers would lower the price of,
 boxes toxards their Expenses of prod:.lct!On. If many carpen-
 ters thought that the demand fur boxes would continue to be
 iar:;c rel.ni\"dy to the supply, and that therefore the price of a
b<;x would lon,:': remain greata than its Lxpenses of prouuction;
then they would not only kcep to the box-making trade them-
selves, but also bring: up their sons to the work. By so doing
they would increase the supply of boxes, and tl1en perhaps the
increase migh~ be so great a5 to force: down the price below the
 Expenses 01 production.
     If the price falls below the Expenses of production, carpen-
ters will seek c\'cry com'coif-nt opportunity of turning to some
other occupation, 1 hose who were specially skilful in box-
making would indeed lose the Ixnefits 01 this skill if they sought
another employment. But SOl1h' would gradually leave the trade,
and carpeolLrs would oat hrill;; up their sons to it. So the
supply of boxes would be le:;stncd; the competition of sellers
would diminish and that of bUVl~rs would increase until the
price was again brought up to tlu; Expenscs of production.
     § 4- The carpentc{ then working with his own tools, raw
matt.!riai, etc., calculates the Expenses of prod 'JcLion of a box,
including his own remuneration among them, that is, including
what he could earn in mh:.:r way 5 by labour that was cqually
difficult and equ..llly attrJ.clive to him, 1f now we look at an
employer who has men to make boxes, \\"c find that he will
ca;cubte the Expen3cs of pmducing a box vcry m'arlyas the
nrpcnt'~r would.            lIe would ha\-e to 2.lTange for making
payments not only for his raw materi31, etc" but also for the
wa.s:es of thosl! whom he crnployed. And ~e woulJ ha\"e to allow
for the rcmuneLl.:ion of his own Llbour in managll1g the business
--hi":'i own Earnings (!.l.l!anagclJlent 1, as we may say-just as tht:
C.lrpentc~l- Iud to allow for tht: remuneratlOn of his own work.

     I   These are sometimes called ., V(at::es of Superintendenc~"
                            LAW OF S(;PPLY.                                7S
     At a later stage we shall see thn.t there is a market for husiness
ability \"efy much as there is a market for carpenters' work; that
an empl,)yer get.:; to know the v;c;ue of his own time, the Eamings
uf j\Ial~.l;.!cmcnt which he may fairly expect to get, almost as ex:.v:t-
1'1 ~o :t ,:arpenter knows wlnt ' ..'ages he may eXDcct. lie generally
Tl!ckons rhe::,e Earnin~s together with the intcn:st on hi~ capital;
he calls the two together ,. pror.ts ;":and expect:> to m,,\;:(' a certain
ute d profits in hi:; business. He expects to h.t\ C rc:urneu to
him \\ i:h profits all his Circulating capital, such as raw 1:1at~rial,
\\'~,ich i~ consumed in a sin:,.;-lc use, and the ",-ages which he pay:.
J.V;,lY.   And he expcLls to reech-e pro!i;s, tn,;-cthcr with an       :111ow-
a::,_c !.,,:- ,')"prcc4lIzDJt, on his Fixed capit,}l', Depreci,nion in-
(i,:,iL:s the wear and tear of his buildinRs, machinery, etc., and
their tendency to become obsolete through the pro';l't.'ss 0f in-
n;ntw.I1, and the change:; ()f traJL~,
      TIlt! iatercst which he t'xpects to receive, depends not only on
the amount of capital im'cstcd, and the ann<lal rate of interest;
!J1.:t "b.) O!1 the tlInc which elapses between his 11l.l.king each uut-
i..ly all the production of goods and his receiVIng the price of
these goods. Let the n.t..: of intercst be (I\'e per cent . .1. year.
If then he spends £100 in the Jlmduc~ion of a thi:1~ one year
IJef,He it is ready for sate, there wlll be a C()lTeSp()lI(:,n~ sum of
£5 :'.i be reckoned undLT the head 01 intercst in as Expenses of
i1r'.,d:!c!on, Dut if he has to "pLiH~ the £100 t,\[) ye:.rs before
die tbin; is ready for sale, t:l~ COlT('~pondin:..;- "um to be reckoned
IltlJ<.T illterest '\'ould bE £10 j l'r, at compuund interest, SOllle~
thing- o,'('r flO.
     la dccidin~ for instance whether to make some boxes, the
manufacturer calculates the price that he \dl ,:;('t for them, and
he c,:lcuL:::.tcs tLeir Expenses of prodclction, I-I c m;)b'~ a (!efmite
all/)\\',Incc fur the rl'mllner,lticn of hiS o\\"n labour just as the
,'arile:lter dncs for his. I I!' :··-.:cko:,'> in these ('x}Jcnscs not only
th..: o'ltla;,' or 1ll01l('~' that /;,.: will nuke, but intcrc:;.t on this out-
;.IY t("l~.~l'tLvr wah hiS own Earnings of ~lanag('mo.'nt, or more
~~r:';,l:-J profit'>,        sees his way to gettin~ .J. price that will
                         If he
(, .... '-t' t!t-~se Fxpci\:ies
                             of production, and therefore gwe him
ad.:quatc prOlli.S, he is content aid continues his pn)duction,
 l~ lie sees h1:) way lO getting- a. still hi~hcr pril;e, Of,t' which will
atlord hnn exceptionally high profits, h·.; strains e\ l-ry nerve and
1;0: :'"c'ws morc capilal in order to extend h.is business <lnd increase
!.i~ supply.      But if he expects that lhe price \,i11 I,e kss than
t:lc-,:;e E,pcnses of prod,,·~tio;l ;Jnd therefor\!' not afford him
;J.d~q\J3.tc profits he checks his supply. and perhaps begins to
'.;.1:,1.;. about directing his capital and his energies to some other
l>,J,l~ch of productiOn.


                            • See Book   I.   ch. m. § 7-
76                      BOOK II.          CHAP. II. § 5-7.
    § 5. Thus w.:' sec that the interest of ('very prodnc.;.r of a
commodity is a:waY3 to calculate the amount of it that is being
p;o:lnc:cd tor market. If this amO\1T,t ~,-,cms likely to) be sf!lall
so thou its pr:ce will rise abo\'(: ItS Expenses of r~:)[:uctionJ he
will prudl1ce a:; m'lCh as h ... can, so as to dtr;,"e .\s much bt';wfit
as pOisibie from the hi.:;h price Whlc:h he' 8.11ti(:ip:1t'~5. If, on the
other ha!1d, th(' amount b:-l1U;;ht to market SeCl:15 I.kcJy to 1l~ so
~r{,Jt th:tt it~ pr:cc w:ll f..:ll bci,)w its Expenses of produn:on,
then he \\1:; chC'ck :li5 0\\]1 produ,:ion S,) {,U as he com-enit>lltiy
(an. So that if the price of ,t COtllllHHEty is likely to bE' higher
th:l!l il5 Exp,-nscs of pr,)c\tlCtion, it is the interest of e,lch
producer to do wll?tt he can w increase the supply; and the
effcct of thi~ ;;:; 10 lower the price t{)\\-arcis it" Fxr~n;;cs of
!)r,)c1:.lc~ion. ;\nd if its price is W:cly to be ]O\\icr tban its
EX. penses of production, it is th:.: interest of c;}ch pr,)du(cr to                         dOl
what he can to ch:::ck tbe suppl;'; and the ",(fen of this is to
raIse the price tuwards the I::"pcnscs of pl')du'.::~io'l. That is
to sa\" :--
         . ]E\'er~' prod.lccr of a cammollitr cakulatcs the prir:e at
           . which he will be :l'o:'c to sel] it, ::m'\ the Exuenscs oC
              pr,)dl"~'ing it. He tbu;; dcte;·)l,:n<.:'s \';hcthr~r i:lcrease   to
              or d;nl~n:~h hi" pruJ~i~ti(,n. If there is free C01;1?cti-
              tion, th:tt is. if he is n(,t acting- in com!)in:lticln with
              other proc!l:cns, h' inc,",lSCS (Ir dim1l1:shcs his supply
              aCCt':-~i:i_~ ,)', tile !):icc of         !he C)l'.H'.1Cldi~y seems likely
              to b(;   ;.!r~'aler or J"ss than          i:s EXjJtll'<:S of t>rml\:ction"
              TL1l5 h('. i" 1e,1        11\-   l,i.~   OlIn illtl:rests to act in the
              S;,jlh'  way as he ~\r,~'lJ if hi" on!), objcc~ we're to
            n.'~lll.l~C ~;-tC _,mOlI'.t p'oi"!ll~l'tl so that it cO'clld j,;st be
            :"(Jlrl ulf at .1. pri -,~ e,p.ll ((I it.,; Expcnses of p:-urhction.
      This Lll'." of :-JUj1i:]Y ri" Iy L", l'~lkll the L3.w of Normal
Supply~ LL ':::l.l,~e i: rd,'rs t(' the r2::>lil~s th.u arc III the l{)n~~ run
',:",;uc::n ;,b('::: by free c,jmrct~:i',". uf cotirse;")l1 the L:·.j',en'5{,s
,If pro,_:,: ~:ifJn of a th~ng- ar,-' th('I'.i'd·,"cs Eahl,~ to Y:U-:;lt;0n.
\\-:lc.;"~ 11,1\- ri:;'_' ,~.1d fall. tile r~l:e <)! :;,!crc!~t ma.\" r:;'_~ ;\1:\1 1":111;
and s.' (\,1." \;l:t we S\l;:ll ~'r('~c·~tly !:llrJ ttat wi:h S"ll:e ':-~CCP4
~In.\, J~l-"_ Ex;:":nscs ,Ire th('I1l~l'l':l'~ ~':J\'('):;c,l in : .. e ]"'ll~ run
lJY 1> ()nomic          Ll\\'~:   an,l \\ ' !>llall pr<..'s(·);t:y   ~(t   to   111,(1'~1   t.mU
wlnt ;;; In"a:'.t j - \ 1;<.:: :'\ orm:).: ":,' '-"oS, 'he 2\ ,-,r:ll,tl rate (·f iJ::cres:t
;\:H1 ~0 0;'.. T:l~ F.'\p('n~(,5 of j·~·:),lt~ction with wl!:ch "'C are
hCIC f':,l!1Ct'l"l:L-d ;\12 t~l',:::;e :\0r1,1,t!
                                               ExpC:f:scs.
     ~ 6. in tl~e .1!~()\.(' i::u~·!'.'TJ)n it was as::;um~d that if tl.e
lLI : ~ of :'),1::4:nakillg br',~.HllC' cX'<'i :i"nnll;: profit<1bk, a grl',"!t
m:lny i1(''--'i~~'~ wuu:J lJ("~in t; r:--.:~ke lJi1xcs, or wonkl m,lkc more
box';:-> :1;>\1'. b.:.forc: th:;t j", i~ \\:15 supposed that the b::"x-lUakT.g
,r<"u:e is <jP"" ~o frcc ("o:r:t)('t~tion.
     We 111lg1H h::!.\c sCPF0;,cU that the boxes were of a p.cculiar
                            LAW OF SUPPLY.                                         77
kind and      p;itel~ted,   so that only one pC'Json had the ri;;:ht of
mak:l _, them. nt that all the b()X·lll:1.kf'["s cOlllbin,:d to).;dher.
dl:J T-'.'. Cl,.];: _,,'P: 1'll.:W cOiner::. cc.:t of tb..: tr,lc\::, lJut also a,;rc~u
;lnw:,.,: ,L>:'l~>_ ,-(:5 Cl~ [Q 11l)W li1.1.11)' boxes th(,y would lkl.ke. In
these ('8."CS ill" soupplv would not be i-;v\ erllcd uy the Law
(J( :\(':-rll .• l Sl;P!,ly.      The ~upply mi~11t ;)(: :imal!, [wd the pricl!
\ :1: );1,.<:.:, <lbul'C the Expe:j~es of prudunioOl, and ret \-rrkl:':LLr'i
m\'~'!:t liN i]j( :-ea~,:, but rath('r d\min:sh the supp;y 5(: .10' h) r,l.is~
the ~:ll'ic:; $\ ill (ilftlll.::r. This could not h~ppen if CO!1lpctlti1ln v:cre
fn'<.:, -:)~C.'USL thcl1 anyone \\110 chc·::kcd his prud:: -~ll:ll II hC'\1
 r:-;'~L.:; \r :!,~ f.:\ceptil.na!!y h:gh, \\(~\1:d Juse by ~() ,l,),n;_            For
v', he:-:') \\TJllid :;0 1m pr0ducin:..: f,lS" and bcforr Ion;; : ll,,- wiLe would
Ll1. ami hlS Up~h-·rtt:lllty of m:lk;ng boxe" and s(']J!r.~ tlll:m at
a :Ii~h pr~(;:: \\0uJd !JJ.\"C p"~s~<:d aW:l)". "'E\'(~rr one lliU:-t 1l1:lke
hL'), \\ Iuk tbe sun shines, bccrll,sc ill: cJ.'lnot make :1 :;,hi,lC when
he \\','.I:t-s t.-)., Cndc:r frec competition a sin~k prodt:..:cr cannot
contr.;l prices; 31:d tIH::rd0r~ (-<-leb or.e trie,; tn g~'t as much
prot;t ,1.0, ~.,. can O\!t (,f thc til:,c of high prices; llc !)l:lkes and
~en'~:o lr,:;rh-t <1'; :n,l;l}' goods:15 he can whenen:r thl:ir price
is aL0Vl: tiltir Exp~'nsc~ ofprodu(tion.
     -, 7. I he Laws uf iJ('ll1;md ,\0,( :--'trpp1r tdl us that a ri",e in
pricc lc~~ens Ult:' alllOilll[ dC:i ••lIldt:d and increases that ,>upplied,
and tll~t a (.111 il, priCl' lllUl'a::,c::; ti'J(' amount Jt'maNkd and
k5,':;('1l~ tl1:1t ""pr11co.        This l:olllpetitl(,!l ["nds to lndkc tIll" ex-
'~1:al;';'_! \'.du'_: ,~,lc'h ;J.~ jU5t to "e'luate supply .lOll dL",n,tnd," i,e,
-,uch ,ha~ t!Jr :lIllO;lIi, th;(t pcop;e ar'~ ,\-illl]".~ 10 ~e:l at t!'.l'. ,'a1ue
i,; equat t,) the amount which can hn,i purch,l,-,'rs :11- tl: :t \-aluc.
Thl, tClllkllcy uf competition to equate SClpyly and j'),m::lHl i~
thC' c('ll[rai fdet of th l: Theory nf L;..:chang.:, \\hr:hcr ~~yplled to
::\orlll.tl Y;ill:es or to )Ltrket i1u,:;,-;:.t;:)!:s oi valUL:,
       J~ut ill c(ln5id.cring ;"'orld:Ji \,:1:;1'''::_, we hale not only to in-
quire which ,)( the ~o)ods ,tll(;)(ly purCh:!"'l-d \\,;11 b, lmJL1;:;ht tu
m~rke~, Ucit tn g:o dcer1cr ailll in,.pi~{: v:ll;u C\llS~ dc,~rmi:t.;:,> the
.lll)')(;r:.t.;; 'If ;he :hing" ~lroduCo:l:. \Ve luvc fIJ'J.lld ;1Ii5 call:,C in
the E:\tk'L~'~"" {If Prodlt(tic\l1; when tlw pn,'l: is ,-d}o\'c ,hem
thcr;; h <.l tendcnr.y to icc'ease :;1.lpply :wd bwer 1"1 ;cc; h her,
the ~l'":("c 15 bdv'.v th~lll there IS ::t t~IHlc!l(~' to k:ss~'n ~up;dy anll
 rai ,,> price; when the pricl! is equal to tlKIH thue is clpilibriullI
 or r..:st.
    TI1l;~ ~he Law of Normal Value, OT • .1.S Adam Smith would
 have said, (,i -:"atllr;.l Value is:-           -
        The :\ ,';ll],d 1-,tIUe of a thlll;; in any market. or, that \·a.luc
           \\ hl,:11 wuuld on th~ aver"b'C be brul1;~ht abO'..It br
           till: '_llldi5tt:rbt:d action uf free cornp~-tltlOn 3.mCIl~ it'>
           P:\H!ucers, is equa.l to its Expenses of PI" ,duct!o:l thal'.
           \\-hcnc\'cr the value IS below this le\'el, iu.ct·~ ar.!
           Lrought into play \\hich tend. to raise :t; whenever it i;.
                     BOOK II.               CHAP. II. § 8-10.
                   . abO\ c this lcwl. £i.)rces 0.re brou::;rlt into play which tend
                  i, to k,\\ cr it. The value of a commoditri-=. il' equilibrium
                   !aEd hJ.s n<-1 tendellcy either tv ri:sc or to iall ,\1Ien the
                     8Jl)Ount pruducccl can just be sold at a price equal to its
                     Expenses of productir:!l.
        But tbis law 15 nut CO;'l.l'jl:C because it takes no aCCOtlnt of
the i.l..-( that the Exp::nscs ,,( pro,!Uctil,n are not fixcc\. but dr-
pend lIP()n the 3illOlHlt rr~'(!::.<-"!. To this point \H? :,h:lll returnl.
        It fOj;I()w~ (rom this Law tint thin;:;:$ whv;e Expenses of pro-
duction in any n:arkct are '-''illal, tend to h~l'.'c the s:.tmeexch~1Oge
Y:1J..!e; anti to exchan~e fur one an'Jthcr ill that llI:trkd, For
the sake of br,~Yity it Li i!~ual tu oClit all mC'ntion of tile place
in \'-h!ch till" ('xc\',ange is StlPpO~,'J to be made; but whenever
W~ ~1Jt'ak of the n:!.1ti\·t' exd,:tIlgc \".11uc,:> o( two c0!11moditi~s we
must h,1\:c in our mjnds SO!;10: one pJrtic.lLll" plarc in which
we suppo~c tlit'rn to b~ c:\..:lnn;L'd. 1f tb0 \'alue of salt is COIT:-
par\.:d wid, th:lt of tin, it m,1.ke" a grt"J-t diff..'rcnce whether ~he
market to whic:, r(-Lrcncc i~ m<ldc is near the Cheshire salt
mint'~ or the Cornish til, mi!'::s"
        ~:::i        S,) far lw!il~r;,~ J\1.:o bC',"'!) sad of thr W;ty in wh!,~h
In"'.lr,u~cc a;':J.in"t r.,i;: l':·l'.::"" 111\0 Expeo':>('s Df production.
lr,::,,:'-,lilCC :1:..;,~iIlSt rhe (_k~~!'I(:j,)!, ::nd the dC?l-,'r:~:iO!l of
cflr'::;o.l m~\ 1','1 hdn" Ll<' c l)<.: ill,.-illLkd under the hl\\,1 of wear
an"ct t(',l[ 01 flU id,;'~~, \I1:!,:r' ;11,:ry, de. Prudent Hlclllllfacturers
..J;,'t;(;: :l.:,Jy ;n-\;r .... I;ll:r I'!"' ~:l:"('~ :\:-:1.~!ht firc by payi:.g to an
 !llsur.\~lCC C'm:panl' a ;",'il1.,:111 ',\"!1:.';1 ther COll!"t as t,ne of the
:JL'('I',;",1.ry E-"Pt'!""l'~ "f tJ "it tJl:~';'LS;," and !llt'), make a yearly
::tllo\\·,lnc..:: fer tile lkpr:t'!,1 .:; of t:'c'ir :-,).,clJint'!'Y tLmc:.;.;-h the
con~t<iI1t lCn(].,,·:1'_·\" f il~I't'n::'-',l r,'         ;,.!t:!" cbs,:oktr.; tint Wil!ch is
old. A pru<icl,t "Shl~(I,\ncr, ,I i· l;"(,3 n()~ p:"y J,. pn"miUOl to
undcn\r:~cl's (u in;;;\!r'~ Li~ .,It:rl (;:1 '.';t n ';n;:;]~(', puts by 3. fixed
sum ~l\~nu, nv tp form an i,,'-uJa:;ce fUEd of his own,
        S(cc,:d!y~ t:1erl!' i" the r~:,L of h:1\ in~ to se!! tIle 'Pro¥
duce at a iv,s, For il~,",t:!m'~', j;""n ;li:cl otho.:r things hJl\"t· l)ften
to be sq~d fur kss th.lr. th('iJ ;':,\pc'J';;cs of prt;lh':~'l)n ",\-h('n
:rJde :s ~'.:(!,~:Ll~' dcprcss<'d; _1.:~d ;1 ch,1.1J':;c (If [::,_hli,11 J'l:1.Y
h;l\'~ the' S.LIlH' tlT\ n I-'ll ;,n;clc . . of dr('s~"                   gut. th, J -tW of
~um,.d \- ,:UI.C ':1:\.1.;6 8jj.\)\\'an(-e f(ir this ri·,k onc!", -lnd Tt In-
:::malllC :L'.1iJ!5t it :5 1",;11'1:- 1.:1.L11." ,1 "Cpaiatc h("-"c1., 1: i'i r,..1Ily
C()',!l'tU\ ~W1P~ \)n~r; for the ("1;i:1,'C th:,t the price of the C0IH-
m:'," \ :,),,~. f,,1] bvln'.\' _:hc LXpC;'~l'S J p!odllct;or. is of the
5'"L::' l~':'J a~ thc ,-i.;-,ncc tli.-,t th,; pnce mJ.': ri-:c '"Cry high"
\Vncr: til·.~ an' ,ag'o.: pr:f" at" hich i: is sold is computed, the lnw
prices an' re.i;:o:-,cd ):1 to:.:'_'tl1o:'T with the hi::;h prices. The
trade is thl'reforc a rC!llUr...:r:!'tiyc oue if this a\'cragc price

                            l   S:...-e IY)O'k   II.   chap"   Y.   § 3.
                           LAW OF Sl;PPLY.                                         79
covers the Expenses of production, without any separate nUow                         a


,J.flee bemg m~\de I'or the in~ur~:mce agamst the risk of a fill in
price.
      § 9. It is important to remember tint there is no necessary
connection bnw(;cn the selling price of any indivjdu;)l thing
and i;5 E'-pcnscs of production; the connection is bttween the
Expensc,~ lof cJ.rryin~ un a certain prucess of production aod the
total sum that is rl!ccivcd by sellin; the products. Then; IS
no connection between the Expenses of a jishinr; boat on any
excursion ul:d the pric.; which b got for its haul. The h:;.ui m;q
be bad. and the price bot fOl' it much below its Expen"e,; of
produei('ll, or the haul may be good anJ the price IJlII.::h abov\!
these L':'ilCJl5CS. \Vh;lt the Law of J'\orm:11 Va~ilc states is that
[he !(,~l! pric~ got for the fish must in the long run, t;l.i;:ing good
and b.\I\ h,w\s together, cover tile Expenses of the boat.
      The price of every individual thin,; is, .is We saw m the last
cbapler, limited by its \'alue in use to the purchaser. If a boat
bw'!;;:; bac k onlya few fish, only a :3maii pnce can be got ft;r the
catch, ,so again,the \'alue in u"e of a bell with a lla,·, in it iz. ,-ery
iitt!c: it can ue used only a~ (,ld metal and therefore its price
IS onlY that of the old metal in it.                ,Vllen It was being cast the
same trouble ~md expense were mcurred for it a" for otb:r b~ l1s
wh;ch I,:rwd out ~ound. Its Expcn:;cs uf pnH.iunin:l \YC!·C the
S:lme :15 :hc'sc of SOU!hl bells: but :h:y han~ great \·ait:e in u~e
and are tht:rf:fore ~old at a hi;;h price. The pnce of ca.ch
!..nr,in:1ar b<.':! is limited b:- its \"aiuc jn use; wh;lt the Law of
.'\ orn::tl \. a! uc st:\tt::S b that the price ot cracked Lcils and
:,ounli lie:is to,;cthcr must in the lOD(! run co\·cr the e_,pcnses
01 makinc: ldl;;.
      S 1,).' [file main outline of the Law of ~onnal Value
W;lS worb:J out bv.\dam Smith and Ricm.io.                            The\' weTe
cnt:!dl !e) buard against impl~ in;; that the pr;t:{' 0& each
IIldi\·;du.J1 thin:; is cG.ual to its E:.:pcnses of production: but
,,::1I thi:; mistake has belen malie. Thi;;: m;"take Ins indeed
led ~on,e people to approve a proposal m.ldc !J\' i\lt Clrcy, to
,,;ty that the V;llue ot a thing i5 equal to us EXFc;l.':oCS (ur, as
hI.' S,l:'~: Co"t: of r<'jr(ldllciio)l.
      ; ~ :.,; Cjllile trlle. as :'\[r C;lr(;y says, th:lt when n new Im'cntion
Ins ycry much rliminished the difficul:y of makir.:;. ",;y, a steel
r:ltl, no one \\·ill par for an (lld s~ccl rail a prH:C (qua! to the
expenses which wl';re inri.lrred in m:lking it hy the old method.
 H\.' "ecn;s II) tb;t~k I.li;lt they \\ W .lh<::l: ~ p.lY for;: a pri.:'~ O:"4',!:d to
:h,; Expe;":sc5 e,f ilg reprc(:llcinn. t];:\t is (,f pr(,dll.:ill~ a ,,::nilar
I,d In- :hc r·cw mnhod. Lut lhis is not the (.1-;C Ii t;-ade has
Ike"llle S~lddenly bad . .:J.ncl in,n-m:ls:·'lS have nl,In\' s:eel rails
.':1 h:mc1. no t-':Jc \\-ill IXIY f,'r a ~:cel r~1.I1 ~l price ·eq'i:ll to its
 Expenses of H'prOdtlction ; becallse rails are bcin~' salt! tor less.
So                   BOOK II.         CHAP. II. §         10.

.\gJ.in, no one will pay for a. bell with a flaw in it, or for a dress
that lns bone out of Ll.sh'on, the Expenses of its reproduction.
\\'JJt~n h_~hro!l is dJ.,vlacm~ bro<1d ribbons by narro"-, broad
ribbons sdl fL,r less. and narrow ribbons s(:l1 for more than their
EXpCtl~L'S of repruduction.       Gunpowder in time of war and
(rl;i11n(: in Ilme li[ fevCf uflcn fetch more than their Expenses
uf rcprvductiun.
      11 the phr;:~2 "Expenses of reprodt!ction." ,h:rc substituted
 f(Ir tile phra~c" Expense::; of production" III our Law of :"ormal
 \":I\t!C, the mCc111i:lg of the L;1W wouid nN t.t! a!t{::cd by the
 (ha1l 6 C', For the L.xpcns.cs d Tcpwr\uc!ion of a thing are in
 the 10n~ ru:J. the sJ.:ne as its Expenses of productlon. The
 statement, tholt ,-alue rHust be cc:u,lI to Expcn~t:" of production,
 .:md that it mus: be equal t() Expen::;es (,f rcproJl<ction, are equally
.fabc \\r.(:n the}' rd<:r to the market yJ,[uc of <1ny indiddual
 thin,:;, and equally true \\,~lVIl they nf(;r to the ~(mn:ll Value
 allout which the market v.ll,!e oSCl:lat~·", The aclv<wt,,;;es of
 tlle t\~1J pl:rases ar(' ~o far aL,,)Ut cq\..·.dy b:l);,nced: but the
 ph.a.,.c EXPCl1.'C5 of prouuction has Lll:" \f'ry ~rt:at adl':l.Otage
 over it:. li\:ll. that it c,L\ls ~"tcnLL'n to the way:n wInch the
 difficc,lt)' (of r;roc::..;c;:~; a thit-.:'; (!2~(;nni!:cs sllPl1iy in the: tirst
instance, and value; 1tl the S(;( 0:)(.1. ]'r'.,uuc.er5 d'..'batin;:; whether
 to ic<-n:.l:;~ their 5;J[!iJlr «f a C'-'~'l!,r>di:y do not inquire 1', hether
 the price they get fjr!~ will cov, r its E:>'Fcnses ofretJwductiop.,
 but whcth~r tho.: !-Jl'ice will caver its Expenses of production.]
                          CHAPTER Ill.

                                  RENT.


      § I. ]1' remains to inquire how the Expenses (If production
of a commQdi~y may be affeckJ by the paymc[;t of rt'nt fo!" the
land on which it is produced; but bC"fol'c do:n:~ lbis it will be
well to t:tke up our account or lhe rC:1t of land W:lt:rc '_\'C l~'ft it
at the c;)U of the first book. Ren: w.l.:> then d':'t1neti a_~ that pay-
ment fN the ljse of land which the owner C.l:~ ')1:>la:n bv fr<:!e
compt:~ltion f()r lending out the U~C of it h) ,.)tht.':5. \Ye have
nowJo inquire how the amoullt of this rel~t j:, uCknnined in any
part!~ular case.
      Sll~!JO_~C a fanner to haY(~ £500 \yhich he is thinking of
::JPllly;:l~ ia c",tm. cultivation of hIS farm; and to ha\"e cakt'iatC'd
that it win only just ans\\"cr his pt:rpose to GO so. He has
calculated, that is, that if he appllt:s thl5 ('xtr;\ £500 he will,
..Iftcr paying for labour, s/~ed. taxcs, &c., 2ct an ('xtra. net produce
of lhe vabe of about Say, £-1-0; i.e. at tJ!e r:l~e of 8 per cent. on
the extra out~ay. This is, we SLPPOSC, jl:st '''Ilf'i.ci~nt to remu-
nerate him: so tIl at if he expcctt'd t,) ,t;d less, the ci~aTlCe of
the impro\'em"nt turning out un~ll'~t',:."ssftll al"d the prosp,'ct of
r!.ddilional tT0uhle in working it. would induce tim to imcst the
mvllry in raihay st(l(.ks or some o:)"~r sr:c~rit:cs,
      He hc.1rs ;,t this time that a ~:nali adja-:·{'nt ~>-:a of 50 acres
is to be let, and IlL' is asked Wh,lt rL~lt he w,,:.:ld h,c ',I iHin~ t!J pay
f,)r it. roEs £500 would jl!::.t be Cr:.Oli,::~ f()r ~\")rLi(lg lLis farm,
and he CO<l!d work i~ wiLl the S:ll:lC trouble tha~ ;t would b'ive
him to apply th~ I'xtra £5'x/ til th(' hrm he ain:ady has, He
ca.icuiates that taking O:le year ',\':111 another he m:ly o:pcct to
j;.ct frol1'\. it LJOOWOilh of het vroJllce aftcr p-.;,ying: for lal..lOUI,
"eeu. taxes, ,';"-c.
    ~o he wlll pay just £('0 Tcnt fo~ the usc of this land. If hc
can get the la::d for this he \, ill take It: i.Hlt he will nN bl\C
any more for ;1 : ar','~ it v. ill not ut: likdy If) he \\-,-,n:1 ;,!:y ,)ne
else's while to offer r.lor..:', So the landlord camw: eet InuTe than
this fl)T it.   If he puts up the tum to comp::~l:lun ard plays off
     JI.                                                             6
8.                         BOOK II.           CHAP. lII. § 2.
one farmer again~t another) he may just get [50; and this is
then the compeition rent, or as it is sometimes t.:aIled the
Economic rent or the farm. Many di:.turbing circumstances
~uch as custom, the absence of an act;,·c spirit of competition on
the-rart of the farmers. generosity or sluggishness on the part of
the bnJJord, may (.lase the actual rent to he less than thi .. , But
 £60 is the rent that will be obtained, if then::! is a perfectly good
 market fl'T the bin: of land: that is, if on the CIne hand the land~
 lord exerts him,clf to get the best rent he can fur the land, and
 nn the oti,er h.md there are competent men in the neighbour-
 hood who arc rcady to T(?nt farms.
      § 2. This iIll1;;tr3.ti(-n she\\s liS that
          :i; The Economic rent of a piece of land is found by
             subtractinri from the yalue of its annual produce an
             amollnt suf6cient to return the hrmer's outlay with
             profits.
      Of course allowance must be made for the ri~k of bad har-
 ycsts: this is done by assuming- thlt t11.: h:Hyest is an average
  ooe. It must ~15o be ~~II_~Pf):>~'Cl th"t thl:! f.lrmer has neither more
  r,vr less skiil anJ cnterpn'3-(, tiJan m·)st others ;n his neighbour-
  hood. or as we ma\' s:w. th:lt he j" an .lyeraze farmer!. The
  rent then i5 the surplus ~;::urn ',"hidl the lard givcs In an avcrag-e
: harvc~t, ;;.fter tCpayillg the aver;;.~e farmer's otlth~' with profits,
> providec! he 10.15 apJJlied so much capital to it a" to make this
    ,;urpIlI::' return ,is large a5 h..: C:U!. If he. h;)5 J:pplied less than
    this amount of capital some ODe else who imends to apply more
    than he har; d,)w.~, and thus obtain a larger smplu5 return, may
    uffer to p.1:' a hi;:-hcr rent
         Further the abm'c illll~tration shews th3.t :
               (ii) The amount of produce which a farmer must retain
                  in oruer to be r;.'nluncratl::d for his outlay, can be dis-
                  covereu by obseving what amount of addition;}l rctum
                  is just sufficient to induce him. or another farmer in the
                   same nei;h~our!lOoll, to app1y extra capit.ll to l:.is ktnd:l.
        } .-\ fJr:11cf of !1l'-',,; 'l:::n ()rd;~J.r:: ::hillty(\ug~lt in ju&ti..::e to reta.in for
    himseif tLi.t P"r\lOJl oi \ill~ f'o.::: l'ro,ic;ce of the l.l:!~d which is due to his
    exception.:i.l qU;lkiCS. St,..::h a f.-::rmcr is almost cert:l.in to imprO\'e his
    bl1<l. ,u:d iJ)v('~t ell'ital in Jt In huioll~ W.1y<;. Hi~ L1n,llnnl. till
    rc:co.::lldy,(,(\llid 11i,e hi<. rent ,,1."n'e tInt wlu(h tile bn,.l":lluld l):lXc paid,
    if it had flm1.\N'li In ·Le 11;l~.l1- (,f ~n ur.\:nary f;lTll1er, h)' the threat of
    ejccti!lg h;~11 wl'h '-,:: C\'l~;i'l'~l~":'li· II ror hi~ inTr')HJnt'l.h. J::.:: t~,is has
    ~~\~:~~c\\:~\.l;~;~l~;~//.~~~:~j:,~~ f.;~~ l~i~:~~ i~~~Jz.it h=-s l-:en in a bfeat
        ;! The fir~t r ,1.r: of ,r.e th('.'r~· \':1.S known to Economiqs before Adam
    Sm;lh',~ time. It;~ cv~m.>ll!y, t];( •.:g-h perhap5 (-rroneol:~ly, suppo~eci. that
    be ha..l no :,nowiedbe of t!:is ~econd part. Ricardo diJ more tow:ml!
    workin~ O'J~ ti1c !'ecr:nJ }'olll than anyone else: h'lt hI." did nut invent it.
    :U\d tht: (eril'll lfi which he state,l it is open to some exceptions.
                                       RE/;T.
     That is, it can be discovered by observing the Return to bis
last V{!.~e (\f capital. The return to this do~e remunerates him,
but onl;: just remunt:r<ltes him; therefore ~f he n::\;iins for him-
self as many timr:3 this rctUnl as he applied dus:.;~. he will just
L-:: r':-:,luoer.ltcd f0C applying them. 'j hcrcfore to Ii.nd his rent,
,-his rdurn mu!:>t °ue m~dtlpilcd by the number uf dUSL'" he ~ppli~s,
and then ,:;uotracted fron't llis lNal produce. The Law of Rent
then is;-
         if    a farmer applies as much capital to his land as be
              pIofitably can, his rent i., \\11,'l.t remains after deducting
              from his total produce the n:-~Uj:l to his last dose
              multipli:.::d by tile number of doses he applies t •

      1 In nook r. Clw.p. iv. § 3 it was shewn that if tbe closes 0;" capital
"' IHc:t a brmcr :ll'tJii<:<; to a gtl'en pi<:ce ()( l:lnd are measured alo,lg the
J.nc O..r, th~ rcturu~ due to tbe ~e\tral (:o~t'S G!ll Le rcpn',cntcd by (he
!lO-,"\;re OP(!Jf.      it was abo sn,:w;l th:l:, Vl' a(.;(.,-,<lat of tbe Law of
1 i!tlli:,:shilig' RetlilU, whci! a ccn.,:a numLec uf d'}~e~ h:, e lot'l-n a~)[:1ied
:'j LLc L\!~d ....he rd~m." t:) thc~e do~es mu~t ,jirnini",h; that i.i tho::
lir,e /'(} mu:>t gfaJ.uaIlY:ll-'pro.lch ()J..
     This di:lgr:lm nuy be lI~ed to represent the theor;.' of rent. After
the [,mr,cr hob :lprlil:d a ("unsider3Lle number of do-,.e", to the land, the




                  I
                    o
                     I
; ":rns \I:!l begin to dimini~h.              A point will he reaclled at which lhe
I "-ur:l ,llie to the la~t dose or-Iy ju~t revays tbe {,!rIner for ap'll; in;::; it,
"\: ~his roi::t he w,~l n')p, L·;t cae!} d()~<.: t,..;£ro, and kt lht.: 1:1.'t J,)se
".:, ,":1 it h wOTlh lii~ wble to :l;)pl~.. be the fi,nidh. ~llfI,,)o;:e that tlJi~
f l, ::::1 thse i., represen:"d on the fig-nrc hy tr.t! p":nt ;l!; S0 that ..1!Q,
:he 1",": _:rn J.ue to It, i!, ju~t s\lf!lci(;;lt tu rClJay tll(; larmcr f,_'r :cppl) ing a
J·)~C (If [,{O.
       S;ncc 'he retunl t<)thi~ do~e jnst remunerates the: f.umcr, the rc:um" to
 ,!'j~ olli<.!1' doses nll;_,: lllore th:lo rem,u erate ;lim. Fer iJis~.lncl', S.\-' bt:ing
,r.l' re:'~rr: :0 the d""e at ~\~ dro. ... · (}:'R jJ:Jr:;I!"i t,) Ox Cl,{tln£" Slv in
T l:'l: UP i'l N, t:lc'll .\'1' is "Glial to Q.lI, af"l \il~\cfc,re _\'Tj~ IL:I~
i<w.i'JIl uf the r·'tura due to "he ,"'th dose which;~ :·f'r,~!il,.J tu [o'nallllO'
:a!c [:11: farnv::r I""f J.Fpl:;ing that do",~; 7S is ~U:-Fi\l'_; ;-'!'",l\.;(e wl.ICh the
,;o.ndtorO CLl) C::l;11l as r~n:, :)J if we draw verticallir,,5flOJn ot~ler l}l);nts'
Hl Ox, the portions of them that lie lJctwecn Ux a11l1 RQ will be those

                                                                             6-.
                               L<JUh lI.                   CHAP, HI. § 3,4.
    § 3. It rr.1.Y Inppm th:lt tl"'r~ is in tl.~ r.ci:-:hh~lilrhol)d land
for \\nidl 1:'1 r<-'nt can be Ubr,lined, lK'( Lll~~ til\: rctu!""n to the
L\pit;:ll ''-pp::...:d tu thi5 land l··?tn,ml:'r,l.~"':::'. b~l' \>111;. ju.~t rClllU11C-
r:ltc~J      tl:t' fJ.nl:c:r.In this l~:!S"': \>"(: m:.y ~,ly t1ut
             1he amount of p~o~--j'.l(C whJC:h :l iarmt'T muSt retain
               ia order to hI" rem:.m...:lated [()r hi" outlay, is equal to
               the prod'lee that cOllhl be rai.,cd by the S."IIll"': amount
               c.f c' pit,tl l'fclm an adj H::.'nt piece c'l bml that pays no
               n'I1~, but yct is cult:\·.lIcd.
    The L01\\' uf Rc'ilt may tlwr,~f(Jrc he stated thus:-
          Th~ r;~'nt [{ a p;...:-:e of l.llld is the (,"-'(,~S of its produce
             o'·:cr thl:' pr!'duce of all ~l(lJoll{'nt piece ()f land which
             is (ultl\-;ltl'd \\[th ~n eqUid .,mount of capi:.ll, and
             whidl would 110t be culli,'atcd at all if r{:~,t werc de-
             nn:-tded fc,r it.
     r.:l:".~ (lnt i--. cult:\ ,~teJ. but is ,,0 poor 0.'> not t') be able to
pay an:__ ' 1-:, is of:cn sl'l)kcn of as (lI1 t/!, J/.u::;11I rjc.'ti'li1/11tion.
    [§ 4, \\ h~·::,--,\·cr the :i,crc;\sc.! ueu,:.wd fur fooL: e<n:ses a rise in
the \'3.lu2 of a.:;ricll~'llral pro~:\!'_,.', it ca,l~L; a twofold rise in the
relit o[ i:u;d. :\5 the Y'lhe ell IUIJz! ri"c~, the amot!lJt of it whi<;a
is l1{'C('::'>;lrv tu r('";lHlll~';':\le the (,Hmer for hi::, ou'.Ln- c.imii'.ishes:
'mel Ul(;l"d;l;-e the ~:nl':~;s por:ic,n ~)f lhe produce, which the
hnnlord cm cLtim ;15 rt'nL ,:1'~r''':i''-_',; ill .,muunt. And a"
C.1Lb. j1;Jt; (·f this SUl"j/1I3 Tl'l.o ::1 value thr. vallie of the rcnt
i" r,1h~'d t',\i':L~ once ,r) pr')i,,-,rtion Itl the in,"-Tt'asc in the
 i;~\'),:j·,t (': Ii,,,, pr"d~lCc wh:,~h h0C5 a~ Il.:llt, aJj(.l once                                      in pro-
j..-O!(l·)tl .,-, Ilw r.~!.' in \ .tIu:: of C.1C!! ?"lrt (>£                     :t.
      11'. :1 \~(\;:     \. ill \I ~I:'~:l ~hC"H; is an\' un,:ultiYd,cu          bod, an
i~lcr<C.',~L       tl"~' d"::,1ancl fur fllo(! ClU5CC:; 0.Cl ~'''!'_'1i~),m of the
                  iii
:\Iar:":~l1 ot ndll\·;:':.ion, .tt the ",amI..: ti'll~ that ;t r 1'--!<;l'S a rise in
the r"nt of l:ln'.L 111 ~ll;h (-,1~," i: : j s(l(n,~,tim,:; :-~1id 111<.Lt the
Ii~,- 1:1 \"('nt i:-, c:lu.~cd 11'.' the L''''''.'i'~:(1\1 ot t~.c ,\Lu~in of clllti-
\.,\1",",        .: tlll::; :~ II1C"r)"' ,',-' til':" t\\,) C]:<'I;l:.'.C., -, the effects
O!"l::": ~J.I"t· C~·.bC: '-:1., l:ie ia,rct~:': in the d(:lln~ll~ L'r f,\od,
     Un the 'Jth~'r har:,l·., h~'I1 a ,:.'l!iJo'.'::ut\ ~',f tit,., J"lI,:lrH: fur [,'od,
or ill( n·;,,:,'_d :':lc:;:li:.·, k'! ~h Imp,·I:':.I:,(;1l Cili~("':"1 foll; in lb \';due,
th('~e :" :1 t,\,,)t'uhl Id!i I", r,·j,t.      For :he am,'Hnt (Ji ~I.!.':;·l .. ultur::tl
prod:J(c ',v;,i(:h b llClx~::,.lr)" ,U (C:lll\!l]Cr<.ite tbe farTl1~~r for his
]1"'"   ":1,    ,·f   1;'"' [('lill    :.s   t.l   ,he   r\lrrC:~:'nw:~Jl:':: d,,"c~   of cai',i~~.l   l;,.:t   :lre re·
,\.; 1 :,'                                      And ':j(",~ i,on,I'Il' \1 :ji\;:J ;it;: Ldween
                 (":11' n-:r~:t~ ;111' f:lt'llI~r,
l.''::' :,1 I.j . be sur! .j,;-, pani"!I' "\ l;i~~111.': I ·wj), '1.1 L.;.n (,i;\irr1 :l~ r('lit.
        If n·"., \    ~ 'H'C\'-,·. ,-S Wi' 'nl :),,'-,.r"',;1 '.: tJ.,·,\; \'. ,':.,' ; ;:W'" are
tLei.; ~::             ', ..1t ,.':: :::·f :',l';" \,;1 \1:' l 'I--' ,;p~(t; ; '.1/\..-'; !he~j
 i'('.:;'                    T'l"":"     i':" I :.,' .,( Ifl" ;.~·,~.i. "1.1 (:,.:: qme war
,. ,) 'r,'         " ...•. ,:~" I, rt::,I'~ .,k'..r~ (If ti:·~ f-'p',d::,,': :,1'<1 1'1:12 "",v,,:.
,,)1: ;fif 'liI/'." I,'rt:"l (~/ ti:e /rJO:.'d~ 7<! .. ~,(jJ i/',. J,lr',,,-r /l.IS h' J""ay tt'
Ii;, 1.111:;',",;,··/ <1;-   i'.':t,
                                        REliT.                                           Sj
outlay increases; and thcref(lre the surpks portion ,~hich
dle landlord can cl;,:m as rent diminishes. And a., e<lch part
d this surplus falls in v.l!ue, th~ value of the rent is Inw..?red
twice, once In proportion to thl! diminution in the amOl1nt of the
product! which go'-,s a'" rent, and once in proportion to the faU in
\ali.:e of each part of it.
      But tht! dicct of increased facili~ies for the im?ort:J.tion of
food in lowering rents can only be temporary. The (':lose with
which it t!i\abks Jdb')'lfcr:. to obtain an amplc supply of food
l,lcreascs [he gro\\th of popubtion cll:cl wealth; so that before
\'::>n;; the turnerS will find the demar.a fiJI milk. n .. g-crablcs, hay,
o-traw and other pmdllcc, wj~ich callnot ea,>iiy be imp'lrted from
distant cOlmaies, much gn~,::t.l('r than. it would Ilthawlse have
iJ'~cn ; and the Cklll:tnd for other kinds of their produce not
much ks,,;. After th." To'pc,ll of the Corn· laws in 1t...;S, it was
expected that the frce impmt:ltior. of corn \I;Gu:d m;).kc rents fan;
but thClr repeal has Gl\lSt.::J ,In otnonno,lS inCf(':,se in England'::,
\\·..:ahb, and re[lts are "l.'l"ry much hi.:;hl'r tlun they w(:t"I.; then.
At :he prc'>cnt time however, the grcat j·::':e1I}pnH':nt (,f wbf:at
ridJo; anJ rallw,tys in tilt! nurth·\\'est uf .America. anu the H('w1r
Ji5co';cred methfJd~ of importing frc:ih fl1l::;,t , are lo\\'uin.s the
pri,;es of corn and me,tt i ;mu threatening tu cause ;" fait ,)f rents.
 But hy incre;tsing the growth of population ~l1d wealth, free
trade has much rai:.ed the "alue of 1.1I1d fur aU other purposes
than that of a~riculture. If we add to ;l..~riciJ:u1ral r~lIts, the
grol:nd rents 01 buildings and milling r('n'.:; .::nd infcr<..'::.t on the
pri!:!.'s F,id for the 1.1.nLl on \\Lif:i! r ~ihLl:;S haye becfl made,
\Ie find that 11-:(" tQ~:\l \"aluc vf the i.lnd, ir,Jepcndentlr of the
improvements made 111 it, 11:1,s incr~'ased vcr', much since l8.t8•
. In;l country'wbich illlp~lr'.,; a great deai'offoorJ, an increase
In its productl{.il 3.! IFJJ:1~ WII! Iwt mlldl ar{cct its price; and
tbc:efore un impro'''':meat in the arts of prc,dtlCtion wiil n:,tkc
t',lt b:t:;.: c!]l.ni:l..' in tile amOllnt olthe p;-odun' ,\hich i::, ,cqu~rcd
to rel.un tit,;: f;trIner's vutLty wj;h profi:s'; nC2.r]y the WIl,·,!..; l)f the
ir.CJc.i~C wi:! go lCi the ;J.r,dlorl1 i:; the furm of hi,;her l('nts.
      la ,1 country whi..:lt prO{;~lCeS it'> own food, the im~',cdiate
cff..:ct oi a sudden imp,c)',emer,t :!~ th,~ arts (Jf c:1ti"ation "'ould
b'-! to lllwer lhe rmc~ (Jf a~I'i(tdtur,ll proc\llCe. to nwkc it
u,lprl,!itabIt.: to apply so much Glp:lal as before 10 good land,
;Lld t'J thr(iW some lanJ Ollt of c .. d~i'.. ation, It can be ~hcwn
,I::.: if the fall m price did Il.dt at once ll~<ld tn :1.11 increased
(~':l~l:','1d tOt' fUNL the p:lrt of [be l'rt11iuce w::ich RC'cS tD the
l.mG!'JrJ::; -- tlH:ir'; corn )'c",)[5" - would pro:xluiy Ldl' ; .lad that
      1 ~!iJl, after kicardv, S:lys they wo"Id cert.:illly rdl. He ,5,umes
'I.::.t 'h<.' cL:!l:\·.\k,l p:lrt of;!. eour.try C,)(,~;:;,~ 'e[ tl",lt"~ 'l'~:1:i:i;~ 01 bud,
)"ld'lm:..:- at an tcpal expC':lse 60. &I, .and 100 h:.,'::cl~; ar.,l he theD
~hews Illat Iln improYemo;'ut which In.:(f.'a..)o.=u the l"I:lurn to ea"h dose af
86                   nOOK Il. CHAP. Ill. § s.
their rents measured in money would certainly fall After a time
however the growth of population \vould c"use such a demand
for food l}lat i:s value would ri~e to i:s old levd : no more corn
than before would 1Je required to return with profits each dose of
the farmer's c.:lpital, more capital would be applied in cultivation
than bd)re the improvement, :lnd there would be a very great
increa'>c of Tents.]
     [~5.     It has already been seen that the L'lw of Diminishing
Return don not apply to mineral produce in the same way as it
docs to a,;l'icultural. For this reason (he theory of the Tent of
land CMlllO! be applied directly to mines. It is true that the rent
of a mine is the t'xc'_'ss of the value of its produce oyer that amount
which is required to return with profits the capital of those who
rent the mine; and we can determine what this amount is
by discovering how much produce could be obtained by this
ca.pital if it were applied to a mine which is being worked but
for which no rent is paid. (J ust before a mine is abandoned it
passes. as a rule, through the stage of being worked, but yield·
iug no surplus from which rent can be paId.)
     But it is not true of a mme as it is of a farm that this rent is
a fixed annu~ll p.lyment. Thae is a cert-lin maximum net
 surplus whICh c:m      ue   got fwm a farm by applying just the right
amount of opital to it, and the rent is tixed so as to be equal to
 the vahlC of this smphs in an <l.'icragc harvest. It is the busi-
 ness of the tenant to apply the ~';lpital requisite for obt~\ining this
 net stlrplu;;; the Llndlord has IW further concern in the matter,
 than to see that the ten,lot dLl~ "- not lea\'e the land in a worse
 condition than he fi~ds it in. .And farming- contracts arc all
 subje..::t to a genen.! (onoitlcn that the land is not to be im-
 powr:shcG by the t( n:mt.
     But LlltH.fact::. fl)r the relit of mines cannot be subject to this
 condition. b('caliS(' :I. milll' is impm'crishcd whenever ore is taken
 from it. The owner rnu5t therefore take ore that those towhom
 he leases it do not work it so 35 to raise a very large amount
 annlully without paying- him a rent cqui\'alent to the deterioration
 of his property. This deterioration may be regarded as the
 diminution of the power t1ut the mine h,1S (If returning to capi-
 tal surplus profits O\:cr and abmc the ordin"ry trade profits:
 and COTn::>!Jonds therefore to the ~urplus profits whi..:h the lessees
apit::tl by on.::-third, w0uH Jvwer com-rents in the ratio of 60 to 16J.
But the distnllllth.Hl ot [~'rt;lity in a country might be <,u(:h tbat we
~hllUld rather ~llppo-,~e it to c·.:msist of Ihree quliiti . . s yidding: at an equal
expense 60, 6;,. and I J 5 hushels; ;1n,} In that n5C the improvement
would ~aist· ,~.rn·r .... nts in the r.l.tio 60 10 (j6~_ Problems of this kind
canDot ;)c pr,"p<:riy t~e:J.ted hy numerical illu.str3.tion!lj they can be
solved ea.~i1y anc! completely by the aid of math..!llUtics or of diac:rams
like th:lt giv.:n in the present chaptt:r.
                             RENT.
can make by working the mine, that is to the .rent which the
v~ncr   can obtain from them. It is an extremely difficult tJroblem
to calculate what bargain should be maLIc ill the case of any
particular mine. It should secure the interests of the owner and
yet le::we the lessees proper fn.'edom to dt!cidc for themselves
how much capital th~y will applr in any year to the worktng of
the mine, and therefore how l,lUch produce they will faise from
if. In practice this is roughly done by his demanding a roy..:l!)'
of so much a ton on the gross produce raisedJ in a.ddition to a
fixed annual payment.]
                          CHAPTER IV.

                  RE~T    IN RELATION TO \' ALUE..

    § I.  ,,-£    may now consider the relation of rcnt to Expenses
of production and to nJue.
    \Ve have ~een t113.1 the Normal value of a thing, or that
value \'hich woulrl on th~ avc:rage and in the long run be
brought <tbout hy the undi~turbcd actio;. of free competition
among: it5 producers, is equ:ll to it,> Expenses of production.
 Hut this Law requirc~ further explanalion, becau:>e it often
happens that difter.:nt portions of the same commodity bave
different Ex:)t'ns('s of pr,)0.uction. \\'c shalt- nnd that its price
is then rcguiatc(l by the Expenses of production of that portion
which is r"ised under the most unfamurable c:-..isting circum-
stancrs.
    Suppo<;e fGr instance that, with an aver;).;e han'('st, ten
million quarters of corn :lre raised in England, and tllat the
ExpensE's uf prodllction llf the la:;t milli,jfi qUdrtefs ale at the
rate of 50s. a qUa.:'!2r. If the f.Lmers h:ld expected to get less
than 50S. :l. qaar~er tlicy II QuId Jlot h:l.' C r'li_~cu th~se last
qU'trtcrs. .\nd :,JJ1CC they nna it ",'orth their while to raIse the
whole ten million. we know that they get 50S, for each of the
bst lllillior.. And in the 5:tl:,(" market thelc can on1\' be one
price joJr (J')C and th.,' salll~ co);nmodity. Therefore the' average
}Jrice f1f <I:: the Ct'rn in the m,ll ket must be 50S,
    The l:>',pcnse5 of pI od'-lctio'1 of some of tbe corn may have
been o:l1y 3D." a quarter. The 50S. got for a yuart(Cf of this
corn L~ cii\ i",l:d im,) 30.1. which goes tl'} the farmer, :>.nd 2OS.
which, 3.5 we ba\'.: ~cen, ~oes to the landlord as rent. And if a
persl);1 lo<_,ks:J,1 this corn he nny ar::-;u~ that its whole Expenses
of pr,)J".lcli(\ll were 3OS, to cOI"I.:r tnc tarm'~r's malay and 20"'-. to
pay his rC!lt, and that therefore rent enters into the Exper.scs
of producti(]l1 of this corn. He would be right if he. m;!ant
               RENT IN RELATION TO VALuE.                                         89
  only that the Expenses of production of this particular quarter
 ef corn cannot be f(lund by mer6lr reckoning up the wages and
 profits of the labour and capital that were spent in r3.ising it.
 13ut he would be wrong if In:: meant that the s(:Uing price of
 corn was governed by the rcntthat has to b~ P11d fur the use
 of land. He would then br: mistaking cause for effect, and
 effect for cause. Rent I:; not the cause of a high prke of (orn,
 bllt its effect The price of corn must be on the avera;:;e just
 11i;11 cnuugh to cover the Expenses of production ofth:H pr>cJ(;n
 \If it whic:h is ra·lS~d under the most \\nf.1.\'oura.\.lle c0ndi'.~ons.
 The amount that is raised, and the p,ice at which it 15 sold,
 Me thu,; gOl'erned by the numbers of the populatil'n whidl
 tlemands corn on the one hand, and uy the amount of fertile
 land, which is the source of supp])', on the other, The price
 is determined by the Expense:::. of produCtion of that which
 is raised under the most unfavourable condiiinns and wlllch p:lYs
 no renL The rent is governed by the ec-:ccss of this price over
 the Expenses of production ~.Jf the other prod,\(;c th;..t the
 farmer raises more easily, Ricardo taught tLit RCl1t does
 not enter into Exp('~,ses of productIOn, lJr this ht! mc,.n~ ~hat :-.
           The l'\ormal value oi a commodity i.~ clJ'lal to the
              Expem<?s nf production of t1l:1t poni,;.n uf It \\hich is
              r,Usc"l ur,der the most unfa\"our:1btc CXi3tillg circum-
              stances, and which pays no rent. lZcnt Cl'es not
              determine the !\ornul value of PIO,jUC<.'; but is
              determined b, it,
        [§ 2, It h:lS o;tcn been sCl:d that the doctrinr', ReD! docs not
 enter into Expenses of production, appiie~ to raw pI.,duce but
 not to manufactLlreu. This statl:ment requires to be illtc:rpreted
 carefully. For it is as :nrc uf trl.l.nufactu[cd as of a.~'icultural
produce t'hat i::.- price mmt equal the Expcn':ics l.f proJ.action of
 tbat portion of It which 15 r;-ii~ed under the most ur.fa':o~lrable
cxi5~jng circlllllstances, and P,lY::' no rent.              It mar be ,,<,iii that
(",CIY m:lnufacturer ill Eug-l.l:1d pays ground-reno                    But it is no
]12"5 true th::lt every h<)p-,;:'o\\'er in En;;Llnd pays n:;,r.                   The
pr:ce of hops must be t'lju;tl ~o the Expen5(,-, of p:ocllldi<m of
~\-],l.t pm·tion of his Cfe,p Whl.,:h 15 ciu(' to hI'" l .• .ot (;05(,'; (,f c.lpitai-
those dvscs which he is only just induced to d.pply to the
1..\I:d,-and though other pOrlioa<; Qf hi" (lOP pay n~nt, this
]l0r;ion uoes not. As the h;";p-.,.~rowcr reckuns how much
cap:cl! it will answer his p;lI-pr)~( cD expend on an acre of bnd,
SQ a man bulldin:; a woollell f.:tCtdry reckons 110\\' milch capital it
\\"ll an'>\\Cf his PlJrpo~e to exp~'n,j Ull a y.ud of builliing ground.
If be is building a HeW {:letnrr, he will wci,;h a';;1inst one
:tnother the aUV3.nt,l:.;es of building it (say) thret: or four ~wriC$
l' lg h.   He may think that the adv.:.nt:::l;.!es and disadvantages of
the fourth storya.re nearly balanced. 'fhat is, he may think the
                       BOOK IJ.           CHAP. IV. § 2.
extra doth that he will obtail! by indng a fourth story, will on
the wbole jL!st cover its Expenses (,f production including profits
on the' capital im'ested in bu!lding the fourth story, but not
induding any ground-rent. He must p:,y the ground-rent
whether he has three stories or four; so that if he decides on
h::lVing the fourth stOTY, the extra cloth due to it will be cloth
which he has only just been induced roproduce, cloth produced
under the most IlnfavourabJe existing circumstances, cloth
whio.:h pays no ground-rent.
     It is trut! that a manufdcturer when making up the profit and
loss account of his business would count his rent among his
expense;;. If the ground-rent in, say, Leeds rises, a manufac-
turer finding his E.xpenses of production increased may move
into the country, leaving the land on which he used to work to
be b:.Ult over wi'h shops and warehouses) for which a town
situation is more vabablc than it is fur factories t , For h~ may
think that the savin.,,; in ground-Icnt th~lt he \\·ili make bymo\'ing
into the cO'..lJ:tr)', tUb"c:hcr with other advantages of the Change,
will more than cOi.lnterbalance its di!>cHh"antagcs, In a discussion
as to whether it w,,"s worth his willie to d~1 so, the ground-rent
of his factory would be reckoned among the E.lI.penses of pro-
duction of IllS cloth.
     This is true. But it is no less true that in making up the profit
and loss acc{)unt of the ...:t:1ti\ ·ti.ion of land. the farmer's rent must
be reckoned among his Exp('n~es. A hop_grower, for instance,
ma), find th3.t (In dcc(,unt of t!'c high rent which he pays for his
land, the price of his hvps Will not (oyer their Expenses of
production \\ here he is; and may abandon hop· growing, or
seek olher land for it; while tile land that he leaves may
perhaps be let to a m.llk'~t·g;ird('ni~r. AfreT a while aga.in the
dem,HHi fQr bnd in the nt'i).',bLHll:rhood may become so great
th~t the price which the .,iarket·g,trdener obtain:, for his produce
will not pay its Expenses of production, including rent; and so
he in bis turn m~kes rol)1l1 for, say, a building company,]
    1 This process is actnJ,;r." g-oing on. "'h..:n steam came into nse
some illdu~trics tb:l.t had b'~<':I: -cl.ttered throl1&h)'lt tht: country where-
el"er ',\J.ter·p"wcr WJ.~ to [.,c: .,..1, were bruLOght tl ,; .... ther into l. few large
!()wn~.  ~')W there is a ckmge          in the ('ppCls;:e direction, and many of
lhe~e tOWD:> are becDming th~            commercial centres of manufacturing
districts.
                          CHAPTER V.

              lsrLUENCE OF DEMA..'JD ON VALt;E.


   § I. A CHANGE which affects the Expenses of production of
all commodities in like proportion docs not alter the purchasing
power of one thing r('lati~'elr to another; it does not alt~r values.
 For instance if interest on capital were an C'q:Jally important
element in the Expenses of production of all commodities, a rise
or fall in interest would not affect values. But in [,)et interest is
a very large element in the Expenses of prouucti,m of some
thing:s, and J. very S111;\1l eleluent in tho:.e of ochers. It is a large
clement in cases in WhICh a great deal of Fixed capital is used,
particu:<.lriy if, as happens in some kinds Gf mining, much of it
h,ts to be sunk a long time before any return can he ~ot for itl .
.·\g~lin the manuf<lcture of lace by machiaery reqUIres much
 F!xed capital, and interest enters as a very important element
into its Expenses of production. all the other hand the
 Expense~ of produu;oll of hand-made lace cons.ist almost
c.\(-:il~in?!y of wages; interest enter~ into them to a "cry insig-
:~!i;' __ .1nt extent. A fall in the rate of intcrest would then lower
tile value of machine-made r{'\ativdy to kind-made lace.
Another cause which may alter the Expenses of production, and
:hercfore the 1\onual yalue of a thing, is the disconTY of an
1mpro\'ed method of making it. Another is a cbange in the
 ~\Grmal rate of wages of some class of workmen who are
"nga-;cd in making it, Another is a .::hange in tht: difficulty
of ')!oducing it, occasioned by a change in the amount of it
tha. is prvduced. The effects of this bst cause will be
cX<lmined In the present chapter.
      S 2. \Ve have already st:en that some commodities obey the
L:1w of Increasing, and others that of Diminishing Return. For
ir stance, the more capital and labour are applied tn watch-
 ~ lking, the smaller will be the difficulty of producing a watch.
                             1 Book II. ch. ii. § ....
                   nOOK II. CHAP. V. § " 3.
A temporary increase in tl1C demand fOT w:'ltches will no doubt
raise their price, thus raising the wages        0: labour and the profits
on Capi!;1\ in the tra.de :J.UQ\'~ their I"onn:tl level. nut a slow
and graJl;:t1 increase in the demand will hring with it a
corresponding supply of labour and cap,tat in the tr:ldc, 50
that wage~ and pro5.ts will remain at about th'"'ir ::--;orm,\l
level. And m( anwhilc ad ... antu;c will be taken of tlH.c;e
various economics which arise, as we b~\\·e seen, from
increased (i~·ision of lab()ur and proJucuvn on a hr;;er scale-.
Thus a bTac:J.:lt ~rowth of the deaLl.nd for w.:ttch~~ will d::ninisb
their E"!;C:ilses of pro,\union tlnd theTCf.. re their N onmd value.
    On the    O[il(;[   hand   J.O   increased supply of      Taw   produce,
however gr:1duaHy it may ue cat!eJ forth, IS almflst sure to obey
the Law of l>j'll.ni.;;hing Return. It !JlJy indeed happen that
the new dema:1l11c:lds to cpenin::;s up 01 fresh sources of suppi~',
and to ImprO\'c!ll:::nrs in the arts of pwductio:l; but the b"<'n::!rai
progrr:;s of knowled;;e would in anr case h:we d')fh: mu . . h
to\\-.uds D!'ingin; abDut such chan.::;es. And on the whole,
an inc)"~;t3c (,f tlemand for LlW p:-oJuce seems ;,.:most always to
lncrca~-= the (:i~-rit:uJty .:f p;·"dlldOg- 1(, and tilcrc(o:-e t,) in'~n.·<1"e
it:::. .:\ormal E xpcn'>cs of productIon. '-mdt!JcrL'fure its::-'; orma I \·alue.
        Adam Sl1\ith POi:-l','.;d alit that in ,Ill unci\:ilised country
wood alld meat and leather and milk are {)f low value
relati\·eJy n(!t ord\' to manul.lcturcs, but also to cern. For
\.,.hcre there is a;, un]im:u-"l supply of bnd, trees can be
cut cl,"'wn :1:1d anim:lb can he leared without tile steady
work. S0 abh"rrcnt to 11',·I(I\·ill~ed ra,;t'::':, tha.t i3 required for the
culti\·.l.uon of com. (;[.'.,:.1:1.11)". as Cl\"ilis::ltion pro~:Tlsse~, the
illcrcasin.~ sl'arcity of liwd, and the incre.lse of capital ann
patient llldt·.,try C:IU.~C" the :\ ormal V:l.L1C of waod and
animal pr,-,du<2c to rise n::latJ\'eIy t'J that of corn, at the: sarne
time tInt the :;';-orm:-tl \',·c:uc oi (orl) rises rdative;y to that
of m;J.nufacturc\l comr::1Oli!ties.         /\mGllg" <;ome s,~\'age races
and oCC,tSiULaIIY wher.: there is a s!-larsl: clvil.sed population,
,t p0u!HI 0: :ll'~.1.t exchar.~~l ~ f')T kss thi\ll a l-HJuIlll 01 corn. Bu.t
in E!I.c;lan,l ('1"I;n D(;forc ti.e repe:il "t the Corn Laws a pOllnd of
meal \V.lS w(Jlch ('.\'0 (lr thre(' t",.:1'·,l<; QI wbe ... t. Anci now that
tIle artificial ub~tacles to the illipUna:lo;l of corn are removed,
wllilc the n,I\llr:li hindr;Llce,> to the import~l;ion of fresh
;lnim.l.l fOl)" a~-c not yet surmo'.mted, the dlfjlcllity of obtain:ng
whe:\t ha,; bl:en stiil funh,-r n:Lul\eiy tu that of o0t:J.in:n;; meat i.
~o that now :1 pOL.nJ of t-:0od lllt::lt "ill purchase abuu~ s(', en
pou;cds of wbe:\t.
        ~ J.  \\'c are now in a position to see wha.t is the nature of
tile in::ucl:;::e which IJc:ll1:l.nd exercist's on V.due. Ther(l'-5
cne cxccpt:onal case ii1 'which value is determined entin;~~'
 u;: dernanJ. This is tI.e case of a commodity which 15 fix'
               INFLUEKC£ Of' DnlAND ON \·,\U;E.                                       93
amount, ;':5 for instance Rapha-.:I's piC:liTC'i. Their price depends
on tile dc:-ire tn,n people h:we f'Jr s;lch picture:.• "nd the mean~
ilt th::ir dlspL .."al fur purdl.l~ing them. ACl0rdint! to the Law
0:" Demand tl~c pr:ce of :.l cummodity "llIea"un:::i its Final
 \]:iiit~· tu <':teh purrha.ser, til:tt i::., the value in llSf" t') him of that
 ]Ion ion n( it, which it is l)nly just worth his wl~i~1" III buy,"' TIn:
 ).:''''':,ltcr the number of picture::;, the :c"''' \\ in be 'J\I,: Cl,:noetition
 among purcilasers (or thein, t!":c less will be ~he price which
 11,(\IS,}rCS their \'aluc in ll~~ to those who <lce onlv iust induced
 t. p:.m::hv:"e them. In this exccpti,1:1.11 case in wlllCil the supply
 :~ fixed, tL~ price is determined svldy by th,~ uli:i.y of the thillg;
  lktnand l:> the sole rc~L:!ator of value.
      The "Pj>os:tc extr·_ me case vcry nrcly OCCUTS; it is that
 it", which the ); ~Hll1:t1 Expenses or pr(,ductJOrl are flxeJ ; Tila: is,
 .1rc the Sa~)ll" wha:c\'er be the ~nWi.n~ produced. In tid;; ca"c
 :\ unl1,d \",tl,lC is dctcrminl'd b\' E:>.P<.:llSr.:::. l,f prl)";i~ct;un alone.
 '; h..: p::lrt \\ lliLh [);:lllJ.nd rl.l)"S )'''-''<': IS to ddnmine the aJ11()\..:fjt
 pr(l(lllu::d, [f llO O\~<: \\i:l pay fur the thing a price e'i11a1
 tu     it~   :;xcd   EXPt'I1~C5     of prr.d uClOn, :he th:n;; will not he made;
  ") tltat c\en in t:lis exceptional case J)['lllal~d is :1 conc.ition of
 . -lit:,::. And If there nrc any ,\"ilO wlll gJ\'e this pl ice, the
 ,U,l"unt V'oduccd is dctcnni:lcd by the condition that its value
   :1 uo.:c tn tllose P~l-,:l::hcrs who arc only ju::.t iml:lccc.l to buy it, is
 'llC,ict1rcd b:; Ihi., p~i<:e.
        liut 1:\ the Ci"'t \)lll~ost cor~~moJities it is not true cid]("f that
 the .1.n101lnt prud:lccd is iixt'd, PT that the Expenses o! pro-
 ';l'cll<ln an: iixcu; and thercfl)re as a rule, Den,and 15 one,
 hIt emly ('1.(' ,-,f :.0." ,:...:.l!SCS that dt"(crmir,e value, An increase
 (,f    Delll~I:;<i ill(_TC:\~";"       tlw amount proGu("(,d, :--.r,d tll:,,; ~l!cr., the
 !"~";be:;         of IJr~1Jllctiun; so that \,;1]UC d'Pl'~ld_~ r:,:t1y 01)
 I '(";n_l.li[l~ iJ<.:cal!:;'i'-: S'J1JJl;-).1 Y,due is eq,nl to. ::\{)(ll!'] Expcnst' ..;
,,: pro')'';·.~CiI071, .11"0([ i)-:;;i In(i i~ one O! .lle lktc:-milling- C:'.l'5C5 of
1;.'_'5';:; J~x~en,·e;;,           'lb..:! L<l.w of ~onnal \-,llllt!\ rccil..:.il<.'" then
 :'-'   ~)(! ~:,,:pj!L-nH:'it.;,i   by till !::>latement tb:tt:-
             '1 It'.: l\\ilTp.;)l ~t:prly of a comma"lit)' is 5t~ch th,l.t its
                 ~OIW;l; 1.:\1'Cn5c". of prociti,:t\On C"I\~,ll tiw jl!"ice which
       \
                 Wlll \-:dl ivrth a dC!11and for thiS amount; and the
                 pri'_c :>') (:ctcnnir,ed i:; the :'\\)rm .• l price,
         T);(' ::\ ornnl pri·_·c of a wmllludit~, is thtert'to:-e r;~)t lix{'d. but
rl"!<:n m~ or hit ::.l~wly, And we.,sh;.11 pr-:c;c1',·.i;.' s'~C 11:)\','
 ~ll(', 'iwJll!tC tb<2 MarKet price             c~cIJLlt("j \\"]:~t C,;J;lj-C.l.ratln·
 1 ~~J,.,:I:y ;.;p ;,nd C0,\·n on eilher si,ic (,t the .L\onnal r:-I(C; just
 d~ ;1 '\'rk l1.nl111"_- ll!J the ~:,rLI:f: (,f the '\'a~rr oj[ilLl:e., (luickly
  ',Ii' dnd. down w;tll e\"uy passj;~~ '\-:.I.\·e (In (;"i~lj(::- ~id.c 01 the
 ... '",level of the watt'l. whik th:'.t 1.1~':'Il knJ itsclfis risLl~;:; or
  l..:il:ng 510 .... 1)' \\ilh the :1owing or cbb:ng t:d'2.
                                   CHAPTER VI.

                                       DISTRIBUTION.

     § r. \\"E have seen that the Expenses of production of a
commodity m:ly be reckoned in such a wa.y that rent dDt"s not
er1la in:o them. Thl:! Icma;nmg EXpl'f1s.es may be classeo as
w,;,;es, profits, the eXpcl1~e of raw m:llc;-;.:LI, and other Circulating
C.ipitJ.J, the \Icar :dhl h::ar ()t- Fi,,-,·;j (;}jJitai, and t.l.'l.t'S.   For
in:-tanC'c. the Expenses ot n~;1kir:~ a box, pllltl:'lg as.idc rent and
t:!!.C"i, IndY bc ctv,;:;,'d ~s fir~tly th' \\".l~:~·~ 0: the (:,u-pcl1tcrs who
n~.I'~·~' ii:. and the i1f(,ht.:: ot' t~!C ~lunu£:',cturC!"5 !Jr II hn;n they
'veL' cmplllyed ; s('wnJly the prid: of thl' W00G, hinges, luck and
othlr Ci:-cu!,J.~in:; npital that \'.1.S used up in making it; and
!hi; c:iy tIte wcar .Uld \,_'"11 ()f the buildmgs, m;:tchim:ry and
nlhcr FI'..('.\ cap:,.,! el11pl'.l~Tl;.
       ll,lt ali inC'S<.; ma.: .IS ~ rd~'. be chssed as wagc'; a:ld proflts.
                           o
                               ,




 For tbe re-palls of Fi'\l'J uopltal and the outlay of Circulating
capiul may be divided into wab"cs, prmib, the repairs (jf Fixed
ami the ou~L\y of Clro:ubtin;::- t:ar,iul ~ and th~se E).penscs can
:lgai:t lw an.l1y..;cd in lLe' 'alBC w;:!y ; arlO so on.
       oFor iilo.;t::tIW<.', the ji~lCe of the lock, or the e:-.pcnses of
 r('pa~l"il\":- the f'laning- m.,o-.:hmc u:"l:d in making the bux, may be
 revo,]n,J i1'0[<) the \\,I;:("j ,wd J>ruli!~ of~hose who made the lock
(Jl" rt'io,.II"t>i cb.(· 1l1J.r:II,r:c. the pri,~c of tlie Circul;,ltmg c.lpit.l.l they
 uscd \:p. amI ti1~ \\ l'olr and te;:n of the Fixtd Clplta..l they
 unp!c,::ocLi, :md ~o <In.
       It j j tn:e tk.t s'}el'.:! of the e,pcn<;es incurred mar be
 rnof:"puly pilLe:'> of CULlin thin;:-s; ;;<; for inslanel"': the IJrlCC of
 tL~ luck il it is p3~L!nt "\,-hlle o:hus may be t:lxes; and these
                                   0




 (;1l1P,01. I.J( :11di:~e,i in:o \\:t;;cs <1:,d prvll:os. Hut though such
 c~coioo:o"nj must ,,<Jt L~ <. vcrloo;"';cd, ;.tnd though in a few Ca5C!
 !hey Clrc 0i ~r<..'.1t il,1pur· ..mcl', we 11lay yet SOl)" that the Expl:nses
 of pr(J(]u<.:11dn of ;>. lilin;; G.i1 ;:;C!WT,111r be di\OidcJ lllto W,lgCS
 ~J").d l'rolit<       Thc::.:' 1\".1-:-""" and prot!:.,; in; lud.:: bC"t\\O(Ocn them
 thL! ;Ol'ml.Ol'\.':0.'<tl0n \'f ti.°~ (':YiJrts and ab.iitinencL!s required for
 produci':g it. \Ve h,m; nn' to consider how these efforts. and
 abstllll:!r.ccs :::m:: me3s"Jrcd by their :>cveral rcmunnations; that
                              DISTRIBliTION.                                            95
is how the Cost of prodllction of a thing is measured by its
Expenses of production. We shall thus see what is the influence
~h.1.t Cost of production exerts on value--llot directly indeed, but
indiuctly-Cost of pruducti(m affecting" Expenses of production,
and Expcn5cS of pWGllction a.fiecting \'alue,
   § 2. That pan of the net income of a country which is
.leri\'cd (rom a farm is nct the wlwk ....:duc of the crop'>, but
 mly what remains after deducting !.he \"alde of the seed sown in
Jt, of the food of the horses who ploughed It, of the we:!r 2nd
tt'ar uf the plough, ::md so on. So thL: w~olc net annual income
df a countn' consists of ~U those commod;ties and conveniences
  ,{ life, \\'h-ic11 are produ,.:cd durir.g til" yt'Cl.:", after making
    lIowancc for replacing the Allxii13ry capital that is consumed or
 ,\ om out tlUl"!ll;"; tlH~ year. This net annual income is tliv·ided
   ::(0 :-firstly         t'lll"liJI~~"s of ~Il kinu£ of work        ,including
   1l1,>iness m ..lllaricmcnt, secondly iut,'Yo'sl on C3.plta., tJ'llrdly nllt
   :btaincr. I,)r the the of LInd or any other property that is
 ':aturaIly ur <l.rtific;,d1r limited, fourthl), trlX(S paid to the state.
   \nd a correspon,~i";:r clas':>illCatlOn mar be maJe of those
   ,mong whom the in,:ome is diviGctl: they rna)' l>e classed
  ~s firstly tho'5c .,.. 1:0 {'arn an income by work, secondly capi-
    ellists, thirdly i:lndillnis, fourthly the StatC'. Of course the
    .llll~ person may ,I!'pear in two or more of these classes;
     ::lployers g(;nerali), <l~Jpear in the fIrst two ciasst's, and
  · ~;)(llorJ., who fdml thelr own land in the first thr{'c. Again, the
    ·<ate is gcnera:!)" a bndlllrt! ;)nd a capita/tOle
          ln the first Bo·)k we have inqUIred into the Production of
   realth j and have seen how the leal net annual income of the
    0untry is determined. \Ve hare seen how that share of it
   ditch the bndiorJ em claim as rent, is fixed by definite
  ,'cnnomic laws; :wd as the ~harc which the StJ.tc assumes to
    :self as taxes depends on causes which cannot be examined
  i;t'rC, we mu:,t LLke it for gramcd.              \Yc may then regard the
  ..!J~10\1l1t \\hich remains after dl.'tillcting rent and taxes from the
      <..~ a:lf'.u.ll i:lC(lme of the CGuntry. as ;1 ;iV(:ll rune:, and can it
    i,_~ \\'ages.and·prufits rune!.            Tile pruhkm of Dis{ri{;uti(1n
   ;:h wbch we silall be chielly occupied ;jllrin~ tht: r:.:s'. of the
  '~('sent\"o]umc (onoists of an ;;-:-iuiry into the way in \\hich this
 · u:ld i~ diyiLlI'U ~lp.
      § 3· The term "labourer" [;:1,01 \}eCl u.:,cd by Ecunomist" to
   :cJlHle all kind,; of workers, and not merely unsblled lahourers,
 · ) wh()n1 t!le term is contlllcJ j;., cr_d-~ \Jsa~e. And the term
 .. \\';),C;CS;;   has been used to indurlc the           ~:::lrnings   oj all kinds of
    'r~;:c'\cept that of bU5incss m:lIl<l3Cmcnt.
    .1 "1 he way ({ :opk:ng at ~he S(']1fC(, from wnich \vages are paid is n0t
  ':lte the ~.::.we as thJ.t adop>. .! ill .,\ i •.• t h~s t.ee:J. :;alled. "the \\"ages-Fund
   eor)"." This will be di~(;U5~~d at a later stage; sce Book Ill. ch. VI.
                        !lOOK II.       CHAP. VI. § .J, 4-
    The EarnIngs of ~-I::mag(;ment .... re generally classed with
inter"';t b\' Economists as well as by men of bu"ir.ess. And this
is dOl&bt!.,ss the be:')t dassin(ation in nunv so..::ial and some
economic inquiries; becallse those who g~:t the Earnings of
i\b.nagement J.re to some ("Xtt:l~t.1. separate dass from !hose who
gc: c;n-nin;!"s of other kinJs. AcclJunt will be taken of this
LlCt when we come to disc\l-;=- ~·L.lfkst values. but in the tl!·:::orv
of !-:orr.lal value,,> we arc ~eeking for fundamental economic
bws. And it is a universal rule of ~..:icnc;c that In seeking
lhese fundalHen~al hws) we shou:~i C:.IS5 to,;e:her tllill~S that arc
<;imi~,lr in nature, ,lad In;.!.), be ('~pec!cd to obey similar laws.
And therd0re \;c "iI.,lI flnct it I)('st to class £arntn.;s of ::\b.nagc-
'n~nt      with the e.uning:s     Dr   o~hl.'r   kinc!s of w(lrk ; becaUSe they
arc s:mil.lr in l-,atur(: to other earnint-:<;. a 'ld arc in t:l(; long Tun
gO\'e-ncd bv the same LlWS. The c:Jrnings of a business il1<1n
arc IInl'cl"tain, but so <'l.fe th(,se of a fi~ht'r;H;m; Ihey are got
bv      Tllt!llt31   wurk. btlt so ,t!"e    thv~c    (,f tilt! barrister and the
phvsician. whuse income.:; Ita\'0 heen d:'.ssed by ali Lconomists
with t!~e W.1~CS of ::;kJ]CJ 1.1·wur. ,\nd if instead of classing
Eam:;;~s \,f )'b! :lg:~;,:l':lt \\:t:~ (I' her ~'alnillg'), we werc to cia'>"
them \~:lh !n,f'rf'st "nd(,f the iwad n( prohts, we should be
das~:n.t; to;:;cther two thin-.:s clJtircly di\{erent in nature an(;
go,c.:rnt·d by \\bolly dis::'ltnilar 1:1.\'-s.         For though ill the
ila~'[I' ~ \';c:~sllU(:(:S Qf tr,tdt" Jt is sometimes ;!::ticult to draw"
clear i:!H' betw(:('[l 111c ir.tere'it on a bU5lneS,,; f:'\::m's capital ant.
IllS L;trllin,:;s     or;,lar.agemL'nt, yet we sh.Jl! tinrl that there i~
liltle in common Letw('cn tho~c funtl.llilental Jaws whic;~
determine ill the h)ng' r:~l~ ;h~ :-";0:-,1,,11 rate 01 inlcrcs:, And rhos,
which d.etermine tl c I\(lnnal E..rnings of )Ian<lgcmcnt. l'
~ecms ~hcrL'forc h<::'Ot to C~:I'>S E.ul1::'lgs of :\lan:l.~em('nt wit'
wages '.mdcT the hL':l.d of j~rln!i}f,~-l; to rcgarJ tllC net :ncon
(If lb.'.:: cnc:ntry, 3.ftcr dl'duc:in;.::- rent and taxes, <J,-; di,.. ided n·
ir.to waj.'cs J.nJ l,ru;-rt~, 0ut \;>w i::!r?rcst and carnin~:::<;; and 1
c,Lli    i~ t!l~ l:an;iHr;c-,,'n,j,j;,'hrc'd FUlld.      \Ye have tilcn to set'
I'JftL~ law~ \\-bid} ,:l'tc;min~' in tI,e leng run tll,,[ rCnluneralio.
of  a:),~tmcn(e V.ilich i., c-.:l,'d i:1~crc;;t. :lnd dlOiC \'ariot:
rcm:~neJ:lt:ons of ill(~o.;::itrr "hid\ ;1.re calh:'d (,;lrn:Il~;s.
    TLi~ inquiry has two sides, that of Supply ar:d that (
Demanri, Th· L1W d ::111pply (.f clpital h:L~ Le('r. aiready di-
cu,,~r"!: ,md ~l :-,.( ::t.,tl r'.CC,':lllt h;!s been g;\-l:llllftht:: increase'
pL'pllb~ .,_-,'\, lIllt ,..d!l'C atcount must UI.! gi\Tn of the Laws (
Sup):,' C,l l:~.:>k:jicJ bL!H~r. of skilled l.lbour a;,o. 1)( businf'
Pt'·,Ylr. .\ft('I'wards we ~h.Jil cons:ckr ,Le rda:lOll<;' in whic
~:cr:~);,l ~'-.prly a;-:r! Demand s';Il.d to l':lC a:1U:rv'r. and ti
Laws wI);..;!! dL't,~rminc >: (,rm,l) I n~, rest and ;\ ormal Earnings
    [§ 4. But before gr.ing f:.mncr it ,yill bt; well to gtl:t;
ag;linst some misunJl":>t.)nziings.
                                             I', I:-iT rZl13 U 'rIO~.                                      97
        Firs:1y, snr.,(; COdll_'ion                  ha~ ari~\:    11 flO1n the use of          ~hc ~snll
  Cn~t ot UfOJU(':',{J;t" ill tW(l ,,~'f;:..,'S.          It ILl'"> been u~e(t to
:ndirate ,dlat ;).1": htn' (,l;kd the "Expen:;(;~." as well;:'i wLat
'~ jEre ."tlkd t~\C "C'I,:,( of PLclL!ni,);:l,'l                 Th<.:s the L"w of
,;\ ('I l))"i, \ .1!,'L In,, )),'[:n "t<t:cZ\ t:.J be th:lt \·~l:Lo.'! !C;H.is to equal
C(,st ofprcJl1<.:t;on;        this 01 (,CH:r~(' docs I:d /llC:ln t},;tt the \';due
  d- a tlllllg- "~,ld5 10 equal \< )J:lt is c;dkd ill tLi~ ouvk its Cost
'.f t,;O,illctH,m, i.f'. thl.! CI't"lft>; a11J :\lb~:n\'r,re<; th.,t h;1\-C been
;'f ~:i:,:, J for n;;1kj~:;:- it.  \\"il<ll;~ l:;,'.lllt i" t/;;tt tiiC va:t.:e d thr.
t~l1r,:'; tenel" ~o (''l~Ll\ t~,c sum of tit ,;-.<.: \':lh,~" \I'hid, m{'~15Llrc the
 ,fl....'rt" :1', 1 a~)~:ir:l'n(~~ n;',jl:i?,_'J (,,'>1" m,':~~ll~; j~: th3t lS, Cost
  " prod",:; on is ~ise-,I tu d·, ~l:'le Wh,lt \>:'c iI,.·,'~ L'xprL~s,_d by
    c t<;rm LXP-'it~";:; pt l-'rL'dll'~:l('n_            I'Dr:m t::xcLJ.'\;~ \':1111(; or
     icC'! thO:t:-;-!l it m:ly he tlt:I;!l to a Sd                        or   ('v,: :rl~:': ',~:t:l'~     or
      ':(:~, C.l;':irlt       e(p~,l to ;1 set of tll::),;',,; ul"l~lk(' Ie k.in.J to it.
                                 Lc"
          -c (lnllUt <.\'C!i I)t.' :I'::: ui[(I~t OJI.lplrisun l.)o'tI,\':,'~1\ (olW set
         ,f')fts ;\nc', ab,;;t:ncl,'::l':> ;,\:d ~:10·,!':C:'. \\'f' ClnJ l't :,U;-,:v.1C"t the
,d,iJOl:r       (J( a C:J1TCI1tl', IIi :l;Ji,;in;l. ,\ l:ox ire)]!, t;jC lauuur of
       ',\:ltcL;n;,kc- "< l;\,,;,i\<~ ,"\ w~tch. ell\ \\1;:' (";lll ,:-'~btLtct
'i:(: (,'-'·h~n::.:c mcasm-..-.: or P":':::c (,f t!;(; \\(,rk ()f ;~ C..lrpcnlr:r
  n 'In!-.:,' ;; abo:>. 1r":J;1l tbe pril e of tI:e \\"nrk of :l v.-;lId,ll"d.:cr in
'l,:i.kitl:;- a \U to... h. 1 t 1':1J.j" h3.Pl"':l tlL'..t (1)\ he,m's \\'o~k by
:1 bu< .. ('~s JlI,lnJ.;':cr. or [I',Ll ~ ::'~' \\,{}"l: b)".l \\.ltclllllakL'r. or three
  I ,:,-~' ''\"'Jrk Ly a ":JTcilce:', '1i ~'.'nli.<l;s' wlirk i:y <:11 :<:,:ricultural
,,,/wilr-"r, n;:.ty "it I;:\\"<'~ t:l~ S,lmc (;:-.cli:Irl:,e tlI~0.sure: sar, a
.~:'l:f;':;t      .A :;L:~!!l;'l ,l:,'y ,'d~.) b\: tL.' '-.'\.":b.lll~(' IM.\5i..,"'~ (,f the
 1i.J,;~::,'~'n("c di" S:lCflll(C ;m L';';cd ll1 cI~,: i'Jan ot 2'..) ::;uinc0.s hr a
:C,t[.            'n~e~c \",lr:Ul)" L'f{lH'S          ;,:](1 aL,.:::~o,ces, lhC'"c t:":,,'l'l('nts of
1~·I.l"~      cf pruG.\:ct:on, arc     (,::::rl,      ;:-ly 11,'t (q,.nl to   on~ ;tnot\wr. Hue
'illY ',,, '.1-1 ,;) ,',\,,!, an eq:.1;,l                   Irdlll~rHc ,;[:1'11 "aL·~, b,~callse
 h,lr b ":,·-'Illic mC"~,~IJr('S, the expenses which would have
~o     be incurred by anyone who would pmcha:se them                                               :lrC   an
"qu;,1.]
       [:;. /\6,::I1;t i~ sl'mc;im':s ir:-"l"'li('d tklt t.est,;,'':> tLc fuur
'l:l~-c~       who :-;.:r TC~pcCl,i\'l.'I;· t',\,llir:g,;;, i'ltC'n:~:. rent :lnd tlxe5,
  hl'!"'''; i;; :lEother d',stilF't d.lo~ <If "<.: ..m~llmcr~'; ,\\·',\0 l.~a,y bear
':.':' b',;rdcll ur lL'J.,P :];.~ b'~:jo:fi.t llf ''::C0i10111ic cb,m::;e.=;. l:tlt thrrc
  -i ,-_'1 ~;I'dl C;<t~:'.    <)f c\:",,~..: die Ulll~',.I:~lI"::·" (i: allY ,(urticular
   ';:;~modity \ri;l S:.JII"\.T ~Ll a 1:,F,iY if .1ri;t!'I::,'; ~1:uuL! r.,j5e i(5
 '~i( ~~.          (f for in-,ta.nce tli,' \\':I~~,'S of tce pr"dl,,-~'r~ ri~e, then
 ,::1 be a b,Il!1 to thl'; br.llH.h ,-,f j;,d~,~'(Y J: tlw (:.\p\'n5~ (It
:ly: COlhuin<'rs; that is, prolably of 5'"m~ l~'IH.ilon::;. ;'.Ild ~ilmc
                  1
 k:tlrl~ i~ ~.,\:~ c1rtti t:;~:\~~~r~1 ~lt~'~:l': :~l':) ~:l~~~~, ;,,: i':),~lj ;;;- '.~~:~ \;~,' ./\~:~;; '~~J
 .lI')",1'    ',-:'..   ,'h 0-"";.-0' he ',lc\ ,:t :~ C',~ '!l p .. i'~'     l,~:: :':" \\";1': 0f 1. fo; na!
        ",":l"n           ;,,'II~"U\ til' ILl rUe; (._" .... , ,.-,! l:l,lllY ,i b, n!"cic[~,       Sec'tb e
  ,'r'I';' .. '" /\,'7,/;-, lc.r         '\i';;\ I':-j",
             ~.                                                                                      7
                             nOOK lI.        CHAP, VI. § 5, G.
C::lP:~'-.~;S~S,    :In·] some laboUl'crs and the State.            Cut there     i~   no
sep:n.w,:: cbss of COIlSl;mer;;; (·f thill).:"';: in g-Ulc:r:tl, on whom the
bun~l'n       or lite        g,tH]   of any cClJr!omic ch;.ln,;e   Cll}   be throJl\"n.
F\'crv sudl \Junien a:ld en~ry slIcit gain m115t bc~ distril)lctcd
;]~lH)ri;; tL~ rL'".:ei\"~rs (Jf earn:I};;S, <-apl!.l~:~tS! Ll,Jlurds, ;!r.d the
~::IIC.    ThcTl' is ,.")f ..:O\!rsc ;t cl.b3 (If (:epc;1~knt~---d:jldn;:n,
:n\ ctl:Lb. Jl<1·.. jh~rS anJ others-but \\ hat they c"nSm!lC j.;; p,.rtlOned
out to them by the \\ in of others \I-ho ha.l c an il1Jepcndcl1; i~·
,'·)mc ; and n()~ :lcconlillg to cCdllUmic hws. The con:',ltrlpti':m
of th~J:-'c ,-rho llLpcnd on the suppon of .,nothcr, is re,-dly a part
of   hI'".   (cn.surnprj,m.]
      [~6.         r\.:.:.lilL   there <lrc some intricate qt1C':=.t\ons conncctC";
with the inteq}fc: ,lion oi the term ",/l~ llet annu.li iocome (
a country:' Tb.:;, ha\e but lit!k bcarin~ {)ll tlw m:tin ,n::c:umC':
of the b(,ok, bur they l\\n:lOt he L'11~lr'~ly ignore,:' Ti<s n
incume lS found. by c!cuilcl1l1g {['Jill til" total produce .,:.i 1-'
and. c;'f.icti anti hb.,.c:r, wh:lIcn'i" is i"cq,llr{'J til lcp!ac ...:
Auxill.ir:' ca;lit,d consumed 0r wClrn ()l,t in the yC1L But ••
mu_~t be rC!11l :"1\;c1'(,(: th:tt this toul prodIJ((: ind-':l:c~ alll'('sults
of m:Il1'j wvrk, 1\,lliLll h:t'.e markd ',;\11.:(>, whethLf the work
be m:ll~ual or flh'lltal, \1 \}(thcr it prorlUI.>'s m.lt<:riai wC:llth or
nl)t, It incltu:lc" (b~ llC'~lt:ll~ dL'ri\-c·J lrom ,he allncc of a
pr,\s:ci.,n, the pk:t~,:r..! ;"t {rum JlL:~alin~ a pr<lf:ssiuIl.!i singer.
and t':ll.' e:1joymcnt of all other s('r\'i..;es "bich one person
Hl:ly Lc hired to perform hr .l;wth ..'r, It includes the services
i'cn,,Lrcd llot ouiy hy the:- (0I:1nil.><':3 ur:n'r, but also by the
~'()ddlrl)dn ,,-ho tl;i\",',~ .t pr;,ate tarri:lg:c.               It indud(':; the
set \ ",'e" l,r tlh' JI'>l~lC<j(' ~,;"\ .11., who m,tkes or IIH'ndj or c!c:ln~
a Clrpt't or a dr<:ss. as \\'·-.:li as the results of the work of
the tlpill,l:;ien:r, the mdiinr'r, and the dy~ •.
      \Ye mU::.t Il'."\\'C\-..:;r be c.lH.:ful un, tu count the S:1me thing
t\\'i(~..     If we h,l', c counted :l carpet at Its full value, \\'C have
alr\"tdy UJ\!ll:cJ thl! y,llws ot tile ";Im and the L1bour th:tt were
used III nlJ.kill,l; it ; ant! ;hese must nat be COU1~tlti a,;.l:n. Bul
(t the e,rp"': i~ ck.1.'lcd br dOJnI.-,,,tJC ...,en ant;:; or :tt <.!eam.
"CO:.lti!~:':: wu!ks, the nlue of the !abO'.l: :-'p~'nt in dc:mi~)~ it
lllu~t b~ (l'lIn:L'u in ~(P ,r.llely; fur o:iJ;2rwj::,e thc result" of this
LbtJ'.Ir \',-"'Jld be ;ti~r':4t·tl:a O!llitt('d from the inn'ntory of those
ne\\'iy-pr0(~'1,,'('d '-,':n;lluJi['icj and conveniences which constitute
tile ) ('.ll iik<llilC "I the ({)un~ry.
      A..;.,:f1, .'llp:)")~(: a Lndo',\-llCr Wilh an .l.nnll"l in('ome of
£10,('>00 I- :-~:-,~ I',lntc ~eLrt:!:Hy at a sahry of £500: who hire~
a Sl'n-a:lt .,; v. ,t;::l''' ~·f £. 50, It Jl,:t~. seem th,lt if the inC')llleS or
 :tll1h'~s(' :~lrL'(~ pt.''!'::,()!':; Me ('(1t!ntl(; III;lS palt of th:? l:et ineom ...·
uf t~,e <,,:(lI.ll~n-. ':-,'!l,e of It ~\ i:i be COl::llCU twice on:r ,llld S'1me
thr~'c time."_ 'Lut this i~ nl)t :he ,:,,_0<:'. The Lmdh)rd tra!"'_:;fer~
to h;s 5eCT\;[.lry, in ret'J.l'lI for his assistance, part of the purchasing
                           DISTRIDUTlO)[.                                     99
power dC-Ti\'ed from ~hc produce of land; and the sec: etar), again
transfers part (If this to bis servant m return for h15 aS3ist:\nc(',
The hrm produce the Ltlll(' ot which ~OC.:i as rent tu :he land-
lord, the assistance which the bndlorG. uer;\'C5 [r<)m the w.-'rk
of the secretary, ;"l.I1d that which the sccrt:;.tfY d'-,ri\'('~ frum lhe
work of the servant ::ire independent p:,rt~ of lil'2 rcal net !ncomc
of the country; and thcrdore the [,!O. 'CYj :lnj ti,e i,;ooand the
150 which ate their money mea:iur~·~. r::LJ~t ~dl be counted in
",hen we arc cstim;l~ing the income (,f :hc cQt,ntry.
    The benefit which a man gCb from h'!n~ in a })ircd h,-':'50
must he rc..:konc-l in the total proc:u("e oi t:,1;': c·}umr) 5 land.
l;lb~)ur and c~pi~al; fur the f('llt tlut he pay:". ~ft(:r d:.:duc-
tinns ha\-e been made for Dcpre-:.btll.n, is th,; InhTcst on the
capital of the owner of the hou~e ; ;\r.,1 the E~rnillgs-and-inter­
est Fund must therefore inc1u<.!1! th<.! IA;n(:Ji~ \\))Ich is ;.;ot from
li\ing- in it.
      If a In;lll lives in his own house, the benefit he dcrin;s from
it. .afLcr making d'::QUCt;(111 fer Dcprcci.1.tion and. r('\lJ.\r~. J'i p:nt
of the real income of the coantry; and. tb,! S:llllC \'My lJ'_' s.l;d
of tl:..' b£>r.dlt 11'~ gets from the use of (urnitu!(', (;lJ:hc~, and
other things whi\:h arc not in or<:inary usatie ru:l,uwd ;'_Inong-
c:1.pital. This ::')10'<n th;t1 our account ()f the E;,\rl\;I1:.:;-s-and-
interc~t FI:.I1(! rc'1l1ires a ~Iit:'ht cor:l.:ction.  "-e (,u){ht stn<:tly to
regard it as found by tkducting (re ll1 the nd prll:uc(: ('{ the
countr~', nor o11ly {"r n=-nt and <•• 'C'i, 1;,;[ al~o {<jr thl..' b~'nerits
that arc deri\'eJ from the usc of flrnlt,m.: ar!d o[I1(.:r commodities
which we do nvt call opital, oecat:"c they arc in tile hand:; of
cor:.~un'ers.      In cstimaticg t)le~e be ndi l." , allowance mu~t of
cour=c be m:llh: for Deprcci:l.LOn and n:pall'S.
      It lIuy ue noticed that if \\'1.: jJ;1(1 ;:dCiltcd tIle plan which Mr
JeYOll:; has aJxucatcd. uf ca!JiL;"; all commollit;cs In the hallds of
(on~un.ers. clpilaJI; that is of u~lng the VI ord capILli <10;; ~~-ILlIljy-
1l1<~'\F with :\Iaterial wealth, thl::; la~t difl1culty \\ould 11(,[ h;'(\e
:tri~'_lj. for we shoul,l have inciuded tt,\C' uL'r:cti~" de,'in:'d frum
:iH~ u~,e of these C('1!1J1ludiii(;s as P;U{ of tho.'! ]-.<trnin~,>-and­
:ntcrb: Funel, and rcgankd the- O\lller of them as paymg
interest lv himsc!1 ; just ,15 m r~ck{)nill;~ up the rent" of a
,'oUntry VIC ~UPp{}sc a la!1downer who f:;rn~ h~s o\\'n land to
1',1)" rent tf) him~e:f, Ullt ~Ir J(:\,ons' plan, t:lnugh it would
 be COil'. (,t~icnt in some ·.L') . is c,. opposed to orJIO,LJ:. u:"a;;c, that
lt s'-'cms best to adhere 10 lhe old ll:,e cf the word.          tn lhi::. ::;cnse
It in( lude:; carria;5c horses th:ll :lre ~ct m:t on hir..: ..1nJ farm
hors(';s wiloe"!.!r owns them. It meludes a doctor's hor:i":s and

    1 T~,'(J;)' of Po/:'tical F.UJnl'fflY. pp. ~-l-5-r;!.n, ~rr Giffen includes
all m~~tr;al wealth ll~ld\!r the £~,=-oo,ooo,ooo at wh.ch he e3tirnatc'5
I. the capital"' of the country.
I.x:.               BOOK II.           CHAP. \T § 6.
<":trr:age if he li:res them, in whi •."h case ~hc ren~nuc front thrill
enter:;; into (be E;\rn;ng:5-arhl-ir,ter..:.st Fund; bt:t if tht:r arc his
OWIl; ;lllLl t1~cd partly for his own enjoyment, partiy as a SOllrce
of re-,entle, it is d::T:cul~ to s.t)' llOW mL.:ch of t::cir vake should
be regarded as capital I.]

                       .l   See Book   I.   ch. iii. §   I.
                                     nnPTER \"[ l.

                           SUPPLY OF U:-'SKILLED LADOUR.

    ~ r. "THE Real wa.ges (,f labour may be said to consist in
th~-quailtl:Y oi the Il<.:cc-.-.;,r;e,;. and ,.onvcp.:enct's of life ti1:1t :1,C
)';,,:011 1,))"    it; i:5       Nominal wages in the quai1t;:y of money .. _
The !J.L,)mer is rich '):- p')Ilr, 1'; \\', 1\ or i!l H',y:tn!erL in propnrtioll
tv :11': r,-'a!. not to the- r.lij:~;:,:ti, \\';~;es of hi:-- b~)'lUr I:'
    TIl::; d:s:in~-tion is \ cry i:lIp(lrt::-.nt; bllt lrl th,~ pr.:.st'!lt book
we  hA\"(~ a~r, cd to r.C'~lcct \"ari:ttio.:s in t',e purcil.J.sill~ power of
lllOIl\X. AnJ so lol1( as we do til is. a risc or fall in tile ;\c>:ninal
or Ill-;ncy    \\"<1;;(''; of hbnur means j115t the S.llllC as:l t i70C dr fall
10l t!ie ;c:ll"l'al pur,:hJ.sin:; power of th::se m·.lI1t:y \\,;'1';1.'';, ;lnd
th~ni('Ie jllst Ib~ same::ls <l rise or fall ~f R(;::tl \\":tg~'<;.
      Tlh~rc lS ~.ncth('r distinction \\·l:.:ch tun,s upon the c.ilT..:rence
bC1W(;('n ~I\'O w:.y3 in which wages :n<:ly hc ntc:1s:1rccl.
            Tht~ Wa~(3 that ;1 m:m earns ][l a day m.ty be called
              his Time wages: the W<1,::(;5 tklt are' p,1.i\l' t~, him (or
              c1oin~ a gln~n amount of Wt,~'k 01 ,1. :;'\'en ql!.llity
              (whcthu the bar~.lin mad'2 \\i~;l him is U\· :ilc dow or
              hy the pkce> may bp. called his Task wages.                    .
      For in5t.1nCl', if a m~n is Jlir..'d ;It 15'- a \\(,l':';: 1.:1ri a boy
(l.t 5.1'. a week, a:Hl the nun C(le" th:'ce tiriles ,15 much work on
the ,l\'_"fa~e as the boy, their Task \\'.1'.,:-6 ;trl' equal thOUg!l their
T:!,~,: \\"a~e5- arc ~lf:('qlnl.    The fu:] lJll]lOl t:mC\~ {'\f til!,; J;stinc-
t'en     \~ia     :Je sec:n fu:·t!wr en.              The \'"-1),;,3 uf wlw.h      \\1.'   ;:,pcak in
,::,s d~ap·.,~r are Red/             J.' (JIl2 'i/rl..r[t·s.
       \\'~.      ha\'c alrc'dJ-;Y secn that acconLng to the Law of
l'cJr.. u!aticn     'oJ,   rj"e in the ratl' of                W3~C:>  c;:tuses ci:her:t rise in
the S::I:l(.ia:-d (,i C)]llfort of the                           ~w'Jple, 01'   :tn i',Gt.'ase III
~he n'..:r.l;l;?r    l·r
                  marr;:l:;cs :"Ind birti~'.                       ,\ r:sc i:1 the St ,nt.!ard of
C':·.fl)r~ :3 :l!;l~o~t ,,:lre to incrc.J.s'':the pt.'rccnt:l:':;C of children
Ii   h·) zr(\\y  -'J !,.! ~!iiciellt worke:·s. Thc}"(Jo:'e a ri3e in wagc,;
                   1::'
,.,:~nrd all\;\y", promot'.:5, ;H1,i a f..1Il in W:lriC:;; 3:most ..llways
(;ll'Chs, the growth oi 1.'O;H:htioa."
                             1   If';.'ailh ('/ ,Yali,'IIS, Book!. cb. v.
102               BOOK II.       CHAP. VII. § :,2.
       It is true that when the labourer's wife :md'chiIdrcncan earn
 ~ood wa6"cs, he !nay be able to bring up his family in com(ort
 L'ven when his own wages .lre lox But this correction is
of much Ics:> importance than at first si::;ht arpc.J.rs. For if the
 mother were not workin; for wage:;, she would be doin:; work at
 home that would promote the hc;drh, and the moral. if not the
 intellectual education of her children. While she is earning
 wag<:s, some of tlii" wurk will be ncgleckd~ anJ she will have
 to spend part of her wages on hi] in:-;- other.; to do tbe f('st of it.
The wages of the chftdrcn thcmsdn:s are perhaps a more impor-
 tant means of pro\-jdin;- them with fllod and. clolhin::;-; but those
children who arc :;(":t to carn W:'l~C<; ,It an e<lrlyage are o(('n
unhealthy as we'll 3S i.::::-norant. So :hat we shall HOl go Yuy far
 \HCm~ if, in cotl!liu(:ring the effect of \\'ag-es on the growth
of popul.J.tion, \\e cO!~fin~' 0ur attention to those carncil by the
labourer himself. Perhaps the chief exception to this rule is the
case of .1::;-ricultural families in new countries, who work together
so that the famiiy lif.: is not broken up, and the physical) mental
and Illura: 'wei!-bein;- 0f the children is \\'l'll cared fur.
      § 2, The Standd.rd of Comfort which ~'Otlng people are
prudent enuugh to secure [ur thl'IDS(:l\-C5 before they marry,
yaries from pla:::e to place and from time to time. \Vhen a
high Stalluad (of Comfort sets in, SJCial opinion req~lires parents
to provide whof..!some rooms. nourishing food Llnd a good
education for their children. The next generation of workers is
thfC'l1 healthy, intelligent and skilful, and of great yalue to
emplOyers. who by C01l1pCl:r.;; wi:h one another keep up tbe
Tate of wa;;es : the produ('(' raIsed by them is so great that their
share inneases \\-;th()ut dimlliishing Hle rate of profit':>. It is
true that a rise in wages may learl to dissip;J.ti,)n and extrava-
gance: and fail to benefit the rising: generatIOn; but Stich
case., :trl! rarc c-.:ccpt in d:stricts in ,vhich men, ancl, what
is Jlerhaps more irnpOrLtnt, women l:a.vc been rendered hard,
t:oar.,c and rc(kle~s by the nature of their occllpatiolls.
      \\-hcn a Tl~e in \\:t",es results in ,Ill iwpro,·ement in the
honKS, the food, edtiCd.til)rl and th-;rcforc in the working
"ftlcicncy of the ~'l·op;e. it nny dc\'ate them permallcnfly. And
5') if \\-agcs an:: alrt:ady ycry low, a fllrlht'r fall mJ.Y (' Hlse a
d<:.7addtiofl if lafJrmr, "\\7 nh less food, which i& the fuel of
the human machine, less force wlll be gener0.te,i; ,\ ith lc~'i
cloO-in,.; more force will Lc wasted by cold; wilh scant:'.:r and
Inean~T qll:lT't-·r~_ a fo,llcr ::tir and diminished access to the light
will pn:n;nt the food from being dU:y digested in the s;omach,
and liw Llood from btir:,; duly oxy(i;scd in the hm;;s; w:ll lower
the t,me of the s\-s:em, anu expose the subject incr(,3.sin~ly to
the rav.l;.;es of disease. N (1W in ...11 these ways th~ labourer
tecomes less cfficitnt SiOlply throuz:h the reduction of his
                 SUPPLY OF UNSKILLU) L\ilOl;R.                                     10j

wag:c-s t ."  The produce of his labour is less: tlle portion that
ho.: rccein.'s a5 his share is smaller, but the portion th,u c:lpital
rccei\es as its share is n,)t g-r~arer. H\Y:lat is takell from wage.:>
no m:'1n ,.;-aiI's: it i" lu;:;~ to the l:dlOUH!! and to th~ w'lrld.})
     § 3. SO ,",IT we ha\e been cflr.sidcring the (auses that
':ecnninc the SI!Pp!y (If unsk;i!c(: !"bouT ;;encraHy; but the
~'-;i]'ply of un4il!edlaboUf in allr particuhr tr,1(:c i::i determined
I):. other thlO~'j uC::I<.k:i the r,He ot II.lf::-':S. If cqllal \~,lges were
I)!(("H'd   In   ship.   ~Dinri   to tll{:   '\ll'dittlran~~an     and the !'\orth Sea,
tliC former w(-ulel be full at.u th~ Lilla t:l1Ilty; so hi:;her wages
arc offered on thl~ latter "hips to cot:ntel'balanc~ the disad.
\,;mt:1::;e of the l.w:..;-cni:t! dim,Ltc to wLch t!~l':: ~:til. Carters
\dw wnrk und.::rgr<,,',md iJ~ mi!;c'; are palll more tkm cartas
\\"110 work abo\ e ground; and ag-ain, ;J. night porter gc~..:, higher
\\.1;:('5 th:tll a day porter. If a trad,.: b,IS any disad\·,ulta:';2. such
:," unh::alihincs.3, dirtine,;~. 8:c., hi~hcl \\<1):':('5 will b(' nccc~~ary
1,-, ind\;ce ll)l"n [0 s('f>k ,be Ir:l.d.L' th;..m wnuLl b;w(' becn reqllirl'o
1,) the absence ()f the d!'j,llh ~lI1t.l]..';e ; and the PI'l:(,:;";U r adJition
tl) wa;,:es may be c.1J1cd the moncy value of this di,,;,dvant;t~e.
In the s~llIe way if a trade offers any cxr:.cptinnal rcrsol\;d ad-
\-.-:nta;:;c. sllch as a go!)d so.:ial position, lower \\"<I)..;'cs will
;I:tract men to it tkm would be nccbsary in a tl':!.\e 5nnil;>.r in
other r-.cspccts, but \~'ithout tb,> adr:mta:;e : arid tlIi~ diJTerence
of \\,:Ig~~s i~ the lhea;;~rc (lr lllOiWY \aluc ot 'h!... 'Ld\",'r't,l;:;~.
           If the W:J.;:::'~'" :lnd the llld\cy cCj\;:\'alenh of the other
             SpCCi'll ad\,<lm.l;:;'_'~ oi a trad.:- be ;Hi(!eti t,\,::-c:ti1er into
             ():K S:;!Jl. and tLe money "alues of its sTwel:,l dis;rd·
             '\:ant<tg:L'~ be subtracted from the sum, the Lalance that
               rCllu'i-b Illay be caikJ the              Net Advantages         of the
               tl"<Hk
    ! ('any uli~:"'il:e(1 o("ctlp.":Ition offers higher :\ ct Ad\'antagcs
111."ln0lhcr occup:ltions in th(' S<lr')e place, :ldJitjo),al stlppiie3.of
:.dJdUr will a'S ,1 nd\: si~t'cdi;y Jr :(t )!l[O It and \\ rll lor.:(' down ItS
'\ l,~h   To this gcneral rule there arc important eXCl:ptlOns:
b~t they will be best d;SCllS:,cd at aLter st,L:;!.!.

                           1 Walker      Oil   WJ';~s,   ch. IV.
                         CHAPTfR VIII.

                   SUPPLY OF ShILLED LABOL"R,

     § r. \\'E hu\'e seen that the s\lpply of unskilled labour
de,}ends chi(·tlv on the fooo, clothing and other necessaries of
life which l.lbnurers ;).1\"(':: bec,l :lb10.: tQ <lfl"ord their children in
prccec1;ng gcner;1;io1':s. The natural instij},:t5 which arc common
10 all rall~s of human lii·(', and even among the iowcr annnals,
induce parent, to exert rh('m~{'kcs to prov:de I"GUll and "heltl:r
for thL'ir mY:-iprin;. But it is otherwi,.;c With the speci.il require-
ment':> oi th,~ skilled Jabourl'T: for his educ;llion uem:lllds an
investment of upit31, titt: fruits of which \viIl appear in af,er
time in his wa~cs.
     Adam Sm"ith S:lYS: H \Vhen any expensive machine is
erreteu, tLe extl:lOrdinary work to be perfonned by it before it
 is worn our. it lllu~t be ex?cctd. wi:l replace tlJ(' l'apilallJid out
 upon it, with '!! ;ea"t tJle ordin"rr prohts, .\ llwn educated at
the c\:pense of much Lthour and time 10 :lny (If th()~(' cmploy-
 mer.ts ,.-hid1 require ext,aordin~,ry de:-..tcrity a:1.d 51\.',:1. liMy be
cOlllpared to one of ,1""iSe expensive rnacl,incs. The work
whidl he learn:; to pl'l'iunn, it- ml1~t be expected, oyer and
aboI'(: tl,e: u ~uJl "age., of CJl1lmon b.bour, \\Lll replace to him
the W;I,l]C opcn.~e of his Ct!,1C~ltilln, with at le3.st the ordinary
prahts of an c1lualiy ,abable capital. It must do thi:; too in a
 Tl'as(!n,d)]e time, rc/ard bc:ng had to the ,-err uncertain duration
 of hUIll.tTl Lfe, in t)1\! ""line manner:b to the more certain duratiun
 of tl;e L).LCLilo":."
     Tli-.:s .\d.lm ~)ll1ith seel1lS to imply that the Laws which deter·
 mi"1l' the :1l';<:'>tl11(:nt of Glpital in th~ education of the labourer
 arc sitnil.lr to tho,,' which ;,;-ovcrn the il1\'estment of ctpiLtI in
 <\nr H'Jhlil'lc CL)[Il!ll(,dity. lf this were the casE', the .:sormal
 lJn,:c or \\',l:,;e of skilled lahour would be rktcrmincd simpl~' h)'
 its E.:XpC:1S~S of pr,ltLiction. j~lst as the price of a cOfillllOJity is
 dcu::nntl'(·d. Take. fur in<,tan·-:c the supply of c:tr~-horses.
 There is some price which on an u\'eragc ju", repJ.ys the
 expenses ~lf r{:aring and breaking in horses of \';lr:()tl<; kind,,: and
 such a nmn1A" of each kind are reared as will sell for pric~s
                  SUPPLY OF SKILLICU L.UlOVR,                                                10 5

 whir:h will (m'er their rcspecti','e ExpensE':> of production.
 Thc-,alcuhtions of horse dealer::; llta~' fail through their having
 incomplete kl!ow!ed:~e of (he circmmtanccs of the mark-::t, or
 because of sudd<'Jl (:h3.n~;es in the dem;)nd for hOf!)I;"S. Still if
 \\e t:lke long- periods. !h~: a;'er<lgc S·.l~l)y cf h(>TS('S of Yorious
 kinds is such, that the pric(;o; at wh:ch they C.:tll b~ sold arc
 equal ttl the EXPC:15':S of rCZlrin; an...! prcparir.g them for their
 several kinds of work.
     Again. the skiP 0: a sla\'e is \·cndihlc. ;!Dd therefore the Law
 of :\ort:ul SllppJy applies to it. A :;i,l\(,-OW:ler \\ho rears
 siaw;", [(lr hia' in diffen:nt emp!oyment;;;, c!lcalatcs t~lC expenses
 of ca..::h kin,j of tLlimn;, and !he p:-ol}dol\! futu(' ([('''land for
 each kind of work, He estimates th'~ ratc of hire and the
 kng-th ot time during which i: em be e~tr!~ed. lIe allows fo~
 inCllmtancy l)f emp:oym(::1~ ;:>::,l (or Lt1Cen,lintr cf ,<:;:ccess, but
 no~      ilccc5:.arily for a:ly disl,:omfcT":i         {'x~e:,t t!l(1~e
                                                                    which ar..:-
 likely to inj,lre the      h('a~;h   <lr.d    "jWftCIl th,~ life of the
                                                                    51a\'c, He
  nl!lr,\'S fur tbe fact til Lt !"~ CXDC!1:3l S of cduC;l':ion \\ III be in-
   c'Jrr('u S;)O:1, and tha~ the wag-c.s \\:l! not be reccivcu for In;Jny
   ~'<"aT~; afkr having mad<.: tht',;<.' c::tIc~j~~;O!1S he C:!l tell whet~)"2'r
  it will be \\onh bis w!l:lc to hri:lg up the s1:1n: ;:s "n U1~,>ki]J.~d
   ur :lS <l skiilcd b.bo:i~e4 lIe will know whether the hi;:;hcr
- \\':t~es wh:ch the sLn-c 0IUl can! f"'f h::!l will be wurlh more to
  hi,il th::m the extra cxp'.'nscs irw,-,;\'{'u m ;::-i'.'ing him the higher
  trJiJlin~,    Suppose f~\r instance Le (,!lds that by incurring an
  exl;-,l e',pen":;e ul {TOO lor tl1c ~:.,\'I-,:\ f;d,;,:,.:ion, he C:t'1 SCCllC',
  ;Iftc;- allowing tor the cLance 111:1t t~.c !>!,n'c 11\.IY c:(; ea:'iy, a~l
  i:1cre:tscd receipt in wages w!.ich will 0,1:\' he' cq'JJ.I to £100
  !iJ-lTl::ad over the (cst of the ~1.1\'e's life t:mc; he will then
  (',n:ain:y not giYe him the Cdd":.lticl. He wuulll nN g:\'C ;~ if
  thi-; i:J~:rCHCd ,'a:l1c wOl.:iJ be /... -:!oo. If:t were £j():J he mi.:;ht
  be in doubt, but if:t Wt·rc .£400 he wCHlld prub.J.:11y ~!,-e it I,
        Thus slave-ownel''> :Hljust the supply of any lind of 3kill('d
  c,la\'c iabour to the d';m;md fc,r it. 5 J that the pecu"::I:-Y gain
  wl.ich 15 deri\'l'd. 1":0:1) a 51.1\"(: .. W'Jrk in a!'y occupatiun r():-rc-
  spu'l,is to the tr'JI1:)le ard eXjl-~'!:s,' ,)f hring-ir,;; him up to it:!,
        ~ z. But parl'~its "hen "l';';Clll'g- traJcs fo: th~ir ':hildrcn
  c.iffer from slave-owners when c!lOn.,in~ occup.lti(lrls for their
  :;hm:~s in four important res.iKcts, hrstl;:~ parents iII estimatin~

       1 Ca!~~lations   of this lil(,i   ~ue   workd    O:lt   in En;;!:']',. Der   P,.~is   dcr
 .: ,..h.-it,
       ~ For this rc:l.;;on thf' :'Ot',:llation of a !'obve co:m,ry mi;,;ht he heller
 c ~nc<"c:..:d tll,ln the chilcb:n of p<"ur bt.f,t:r<"r~!11 a free rou:lll}"; but their
 m w :r~ gcuel'.ll~y k.lr t)l:tt {'ullc:.tio:l Il.i:,;ilt :",::,j them '0 reb,.!; ane.
 ;;. ~:.\\'e, b<.'t:l;tsc bl! ;" :'. slJ.vc, is a[mo"~ ~'!\'J~" :':'11' ;:;1(1 al':lthetic in
 charleer: :.ud the attenpl to cd\tc\te hi'll f~lr difri,ult work, or for
 Ibj-';IL-;bility, is like trying to put a. po::,h 0n s ... ft wood. Bu~ in a..'1ci.;·nt
 tOO                     BOOK 11.             CHAP. Vlll. § 2.
 the Net Ad .... anta~es of a trade for their son take account of
 t.::verything that wilJ add to hi" comfurt and happin{;S5, while
 the    sb\"t~·(.wncr Ill;!~'       take ,iccount of such thing,> only so far as
 the-v ...tfcd the     ~l::t,   c's cfticic!1(\',
    ·Secane!)", p:lIcnh \\1:0 '..:i\'(; their son an expensive education
 expect tInt he, not they, ",iiI rcap its chid fruits; but !hc 51;t....e'5
 skill i:; the pr,~pcrty (If his owner. P~rr-nts re.:i~'mblc the slayc·
 owner iI, haym;; to cstim;,tc on the one hJ.nd the KLt .-\d,-amagcs
  of ca<;h occupatiun, and U!l ~h:; other the troubll.' :lIld expenso::: of
  fJrcp<!ling for it. B111 e\'t~n when they h.1\"e lll::tde these estim:,tes
  the" canuot decide on the:r COllrsc b,' a mere arithmetical calcu-
  IJ.tiCm. as llC can. For th~'y mu:-t ab~ dl:'cidethi,; I1W)" .. ! question:
  Tu what extent are y, e re:td\' to sacrifice ourseh'es fOI' 01:1" son'$
·l.Jcndlt? What is th~ v;,iuc to us of an a.dvantabe that will be
 Cl",jC'\   c-d by him?
     ThL!<.Ly, fLW parents are capit.1Ji::;:$; most of them cannot
 borl'~)w mllney all anything like th·.! ~alllC terms as a capitali5t
 Lan. To take: an c~tremt! case: some unskilled lauouTers,
 C\'en w.:lL the help of the ,,,ages th:J.t their children bring- in,
 cano(lt      pur,-h3.~c 3.S     m;lch food and clothing <1.r;d house-room as
 the he:ddl of the fan,ily 1"\.'qUlrC5; and it would be u5eless
 to a~:':' nnc of them t" ca!cub:c th<~ ad\·anta~e. which _his
 son m:;;!lt dtrivc if £50 wep' ~l"'cnt in preparin;.; him for a
 skLi;ul \H:cup:nion. It j.., j,l.;dy tb ...lt theo.e a(hanta;;cs may
 i:h.:lud.;; \\:,,;c.<> fur his son wlll'1"l ~T\)\\'11 up at tlic ratt! uf £30 a
 year mr;;-<: !.h~l'l tho,;e cl an ll:hkJkd bbourer. If he worked
 out this ~um he w0uJd rind III \', al!u\\jll'~ the m.Hkct-r~tte of
 inten:st, the prescnt \'aluC' of ell<." ,e CX:ICL "';~es WOUld be se\'eral
 hun~rt'd Vlllndc:.          In slwh a ca.:;e a sla\'c-O\\'ncr "<JUld make
 the outlJ.~ Oil business punClp1cs. The (;lth..:r does not because
 he cann(,:
       Fnunl;ly, in as."urning that the sb",e'O\\'01cr is a capit3.1i,;t,
 we SUPPQSi.·,t him to m;uu~~e his .1ff<lirs as cClplule businessmen
 do. \\'C s:lf.!'u5Cd that hL' 1~ ah'a~'s on tl:e look (mt, ;:[<; bllslness
 men an', fer prunt;,bIe in\(;st1l1cnts of Jtis ("pHal; ~hat he
 watches the \";~l idti(,n5 of Sl:Pi)iy and d~m;llld \\ lth rr~;..trcl to
 Nch p;1r~lcu!.\r kll1u of sla\"c's skill; and that he i~ contli,uaily
 making out the protit and loss accoun~s (If y,lrlOUS mod(:s of
 educ.lt,ng his sbycs.                               ..     ..      .    .
    But paTl'l1ts do not gc')erally carryon t.hc.r lnC]\I:nes m tIl]:;
 Llisincs~-like wav: a poor and ignoralJt pati.:llt IS not likely to
 think of obt::J.inin·g flJr his son a lut in life Ycry diifercnt from his

 Crecc<~ ar.U Rome, whell the n;oral seDse of the                     world had [Jot o"..lti,'l"own
 ~bvcry,     .. n(; si:1\"cS worked ·.\·ithout Cl, f~tling of dq:;rad.ltion, m?-"ter~
 \:~et1 of:<'1' [.) ;:;':·.t· ii. !J;g:ll [t-.rJ.ry or a.r:i.<;:lc eu;ca.tion to theirsl;nes as
 a malhr \)[ b .. ~uu:s~.
                SUPPLY OF SKILLED LABOUR.                                      107

own. A man hrougbt up with n;trrow sllrroundings is apt to
acquiesce in them. His own :otart in lifo: was a poor one, and it
seems to him quite reason:ll:>lc tint he Sil'Jllld make \~hat he can
ut;t of the Jabcllr of hi::: son; his wa:;..:" almost illlply that the
world expects him to do i':, and his nc:~hbollrs do ::; so he
allu ..... s a small pre-sent gJ.i'l to llim.-;elf to outweigh a             f;h',H
future ad\'ant:l~e f,)f his son. Tht~ P("'f ~rL: mm',·u as much as
an~' other parents by th,~ si;l'~ of tll<: seific'!'ings of lhcircl1ddrcn,
but tht')' arc cardes':i about thl' distant fllt~lr{; both of their chil-
dren and uf thclJl~eh'e5; [or they han' not a vivid imagination;
they are ruk-J by cus\(lrJ.1 3.nd nut by the deliberate u~e of their
reason. The lower we ;::;0 10 tli{' ~,;!d,ll sC<l.lc the less do parents
seem to see the bCP.L:its that the:. may ('(-,)l(er on their SLlns by
invL~tin;; trouble and nwney :n tlj(-;r educa.tion ; and the sl1lallL'f
is their puwer 01 making such s.lcritlccs. The rate of interc:'it
a, which pJ.r~·nts di~count futllre ad":lm;tgcs to their childn_'n
incrcases with the n.1["[ol\ !lC"S of lh(;ir eUUC<lLon ... nd the
pressure ()f imlll",diate \LUII.
   ~ 3-  ;\[d\ \\ ;,5 SO ll11Ch imprcssec1. by the (!iffi.:u1ties that
hesft a   pan::f'_~    in th(; attempt to    brin~     up his son to an occl1pa-
tion widely diJ1crent in ch:.r;-lI"t('r fr')i1l h!s o\\"n, that he s;w} ; -
.. So compictc, indeed, has hi,hel to }Jl'cn the separation, sa
"trangl), nUrk('d the line of df-marcation, between d,C diftelent
",rradl:.:> (If Ltbourers, as tll be almost eCJulvalent to an hereditary
di~linCtic.n of ca--te ; e.,ch employment ut:in~ chi e t1.y rCt'rclitt:u
from the: chilJrcn of tiltl~l' alrt:'.tdy t'Pl?loYl'd in iI, or in cmpl0Y-
nwnts of the same rank ',J, Ith it in SO-:Ial cstim.ttiuII, or frolll tile
childr<~n of persons \\ ho_ if origin..tlly of a 101\ er rank, have
::-uccectled in raising 'L~msclve5 hy their o.:crtirms. The
liberal pi (lfc~5iun:'i are llLuslJ:-- supplied b:' the StillS of {':t!l~r the
profe::;sio:1J.1 or idle cl.1.::.s,,-::,;: the more lllg;lly 5kilkd manual
..::mploynH-'''t~ :!!-c fi!!cd IIp from '11~ sons of ;~killcd ;ut:z,lnsl or
the (b:"" of tradesmen '.\ ho nnk with then: : the lowl'r classe!' of
~kiJlcd employments arc in a simil.u GlSt"; alld 1Inskilled
labourer,;, with occasion.1i eXCl'ptj,.-::-;, rLlH~lin from f.ltlH'f to son
in their pristlnc condition.    Consct-!\lcmly the wages of l'ach
r1ass have hitherto becn re~uhted by the inc)'l:~"e of its own
population rather than that of the g--?ncral pupulation of the
country:-
     But he go('s on, "The changes now so T:lpidly taking place
m    usages anri ideas are undermining aJl these distinC-
tions ; t~h~ ha:,its or disabilities whi("~l eh,lined people to thetr
iJe.reditary conditi.::>n arc fast w~.1r;Tli-:" al'-;Jy, a;:.d every class is
.:xposed to increa~ed and increasing competition from at least
i.he class immedi3.tdr below it 1.')

                J     Political Ei.:m<'lJI)', Book   II.   ch_ xiv, §   1.
108                 BOOK II. CHAP. VIII. § 3, 4.
      Thi5   mO~'ement        has contilll1('d since he \\Totc, and the
('.iY;":un;; beh~-tcn the \-:lrions ;":I-adcs of Er,giish sociLty <Ire not
$0 1<..'Jriy mark..:J in this gcrh:r:uion as th.!y were i:1 the last.
E,\t~h 0\ \lill's four ;;:raJcs I:; sl.l~)tliYi(lcd illlO ,1 )]\1;',i),- ~ vi il..'sst"r
~rtlJt''', risi];;:; one auove the otllt::r like the step., ()f a lon:; stair.
0'<':: \h1.t j" :Lrrilrl:;etl in four fli;;llb, with :1 shurt !:mding at the
end (Jf ca..:h of them.
    l'.tTcnt5 genc!-:!lly bring IIp t1jc;r chil(1r.~n to an oc.:upation
in th,~ s.nne sor-t,tl grade as their own. }:ut Wd..:n the 51!PP!)' of
Ld)')'.Ir ill nne ';.-.tl~(' j,; such that it~ :'\('t Ad·.-:lnn,;e~ :tn.: much
gr':d'.l'r than t:wsc in the: grad.~ nt'xt ~;elr)w, the more th')lj;hlful
and sdC-dcnying p::ncnt., in th(' :';r:ltlc b(';ul\ ~I\l~h,their "';f!S into
that ;:.;r:tdc, Thus th·,:: L;:.w of Supply, tll(1u;~h ib :lui\,n is more
sIO\\' with re;a!"d to bbour of dJfcH'lit g-ral\.':> th:ln ,\ lth f'~':;J.rd
t<J {!:[i'l'TL':lt kill'!s I.If c"~llmodi:ll'~, "o.:t .1ctS in tl:l' 5'1\:.e ,,,-w in
the t'.I"<1 (\1<;,'5, \\ b('1\ th~ :\n ~\d\'.;!'~:'.'~e5 "f a t1ad('; :-;:i(' <:l.bo\'c
wh:u is required to cOlllpenS:.l\c (t,r the lr,luhk and expense of
p:-·.. ;' . . r:n:..; Lli ~t, i.1'. arc ,Ibnnr:l).'lliyl::,:.:h) f,wC{s ,if<: ht\):l:~ht into
pl.ty wh:ch tend to i!lcre;t~e lhe S\1pjJ:~' of labuur in tll,lt trade.
'1':\c i:ld'c.1.<;e wiil come lir~t amI citi':!1-: from o~:l(:r trades :n the
 ~a:nt.' :-::-;lde, UtileS,> t:)O' ~d '-\(~I':lJ)ta:;(,;s of other t:'<Hk" in the
S,lmL' '..::r,tdc ar(' al~o ;)!'~)'-"Jll:dh' hi,.:~). In that ca~(' the i,~cr("l5C
of sllnply will (.;:1)(' r:hil'll:, fr,,:n Ille graLL, jJjjIIl':d;,I~t:)y be~ow,
ar.d \\Iil come more "iO'.I-h', In anI' Lb'! the' ltlCrea~<.:: Iq;] be
Chlt:'fl:. due tn the aC[i(ll~ (,i' p,lr~':j:s 1n sclcctin;,:- ~ln o..:,,;~:?;l.tifjn
 fl.r t~I~':r ch,\(h'n, u,:~ \\i~l Lc til so;n.~ c:o.:~U)t C:lIl~(:u by a
 Cl\,ll~:-;(; ()f ocn:r:J1i,'n on the p:lr~ of ad'-1Its, On the other h:mu,
 wlten :h(' X('t :\dl';\n:;,;,:", i:1 ~l tr.Hi-.' f.\ll below what i5 n'4uired
 to ':-\"~;'l'\.'<1,,~\tc ,he :rU:il)~c ,t;lU l'~)l('l1'>e of prepanng for it,
 fo,·c:.:;; w:ll he l)ril'.:~!ll in:,) r~:l.y \\ beh kr.d to d'm;l;i~h the
 supply ZJl l.lbcu', _Ft r \h ... Tnust \ crsalilc men in th~ tr:IJe, ::md
 th(h~ 1\ lit) luvc lbo' leasl t,1St·~ :ll;d the least SDl'clali:>l'.i skill for
 tIll' work, will !:lq:;i:l LI ~c,'k o\:lcr occupations'; and pdrcu,s will
 :Hoid bnn~;i'lb up their S\l;,~ to it.
       To cnnlpL."c u<., :tum;nt of the C"l!se~ wh;ch Jetcmllne the
 surply of <iiti:r,':lt 1:ln0l5 (Jf skillf'd labour WL' must cxanllnc the
 \'-lIIO'.)., ad\'c\r.tOl~cs ,l;'it! ,ji.,J.dI.'3nta:..;c~ th,1t attr.lct men to or
 r,'pel them from ~iff('rent lrndc5, and the various il'lllustrial
 q~l.ll!:le~ th li. 11:,IY !,(' n·qcired in n tradc.
        § 4, Ftr~tl~', wi:h rcga .. j to the various advantages and
 disadl ::nt,l,'o.:\.·::; of whtdl ac( 0unt must be laken in estimating the
  Net .'.\I\·,ll1:_ac:es of:l. tr,l'!c,
        C n,;c!, thl:; h,'ad mu~t ob,'iously be reckoned the const,mcy
 0,. iI" Vl:~·t,u:.y 11' CI':l'/'::'JI1;,,,t in a trade, and the clianlu of
 n'-'l,·,~.l I'rj.::':"u in;1. 1'0 allow f,lr th<.'5C incqu:l1itics we must,
 when we a 1",' c'>t:m;:ltin s the \\',l~~t:S of a trade l lovk for
 thf.! \\;1:;('3 ~.lrned not in a <.Lty but in a year, or evcn in
                  SUPPLY OF SKILLED LABOUR.
                                Llve all <"!.'".::ragc SU(:(,(,:,.S in it.
s<!vcral )",:.'ars, by those \\1:u                                         \\'e
,:;:tnnotmea~urc the w'\b"cs ,,( .l 6~hcnnan by the pri,:c for
whic:l }:c C:ln ~t';l llis fIsh "-hell b~ l'<.:lu~ns \~ :th a D0at full,
\\ithout tatin~ account 01 ti\e l~'o<my Ii:l),,, \\;wn he rc::urns
'Y1\":n,; takl~;} nc.\h;l~g, ""e C.l.,,,,(,t reck·,.:! the W,':C::CC; of :l. d0<:k
,lorter as those which are to h<: had wh,'n the ddCL" arc full elf
~11ips f'"agcr U; bl~ un:0.l'!t:J, witi:.)ut Llkir:...;- ac,: ....,unt of tho,! fact
:hat   501',Cll"'';1C5   the   h:l1"lk,ur      is nearly t'llli':;' ;;,nd m",~ of t:lC
f,,,,teL'; w,oit:ni; in t11("r,,-,:d id: 'i~'.~""          Ij, C\J;i"ql lr:!:,c;- t::~· Wd,_.'::5
uf a br:ckhyer, a (;'npenl<-r :'!!l~ a ra';\\,lY t\l.1.rd. \If: nll:,,{ 1(>
:ncmlcr that the r.IJ\Vay ::'.;::',f.; ~):':""~ III ;;,t b ~t:',:.:r(' at all
 ,;mcs, that Ih1! c,1rpcnkr may 1)1: I!'.n)\\;, <)u~ d 'vur~ 1., ... dulnt'5S
lif trade, and tl,at bri(k!:~:~T'~ \1,,:;'" 1:1:;,;> be ill:crrdptl'J by
,ldness (';f tr,(de ;lnd b,' U,d',l\''',:r.l:)lc w(:ather. h cst,nutinz
:hc earnin:.;~ of lqrr;~tcl'j \H:: Jl!,,:,: ',<~ke :.:c,,'ount (,f ~hc lH<,ny wh't)
iail as welt as of (he {e~\' who S'Jc":l'a,
       But indq)cnilt'ntiy tlf consiJ,:ratlc:'j 5u·:h as these, \', lLich
prop\"rl~' Cill,:r ,)1ln l'~~r ('<llll.\~e t,t ~h(: ,r;'~'fag,.· \',3~~C~ to b~
('amea in.1 trade, tnc,'<.: are oth<.:r :u.hallt:l,.;:.:sand Gi:-i,~u ... al't<lg~'5
I\hich mu~t b.~ n.:ckoned s('pa~-a:c;:·, The:sc nu:: 1>.:- cl:L~,,('d
::~\der the h..::tds DC "",'alllti,,.,:;.', CUI ../fO,-t :l:,.l s,,:ie! }",,-/i: 'I.
 !hn:.:er l:-lay be re~-:,trdl'd ,oS:1 \..:::,1 ,',t' ll:ll.l',l::lIi:-,c',s, Dirt-f,es __ _
  lhysiaJ and mC'lll:l1 str.~ij). :tn.\.ic:, ;,:)d mi)J1utoJ!Y ;no:: tlie- chief
  li5r:{,\,,(0r',!o :., b~ COIIS:dcICU.          Ad •• "l :--,;<t:l POII:t"; «lIt 11\,<t th~
 :vlTsion \Ihdl 1l1'~11 h,l\'e for tlle .. ,·),k oi a UlIt(,j,'_i, 3:id
,0 some C\: ... !:t ["I' the t;u~(h '~' jll:;:(,l.:', r. i,e5 th,~ (;1: :llI.;s o!
',utc\:cr" ;1')["" 'll'v,,~ pf L,\k('r~. If (:ar;li:l:';S were Cl.jll:ll in Ihl:
[',\'0 tl'.\des Ib         :I:;mh~'r of lJ;:d-.;efs woc::J inue2::-i', ::nd th;'lt tif
:)l1t,h\'~-": '\1',;;'.::. c;imin:sh. \lilt'! th,: w:~;.::c'> It h,,:(ht:s ha,; lis;cn
,dl','\"> tho)::;c f''- !J.:kcrs (,1,('.;,:;:10 til C'f.llr('n~"tte f._,r tl:L {;,~.,:~rfc­
 J \'r<.'s~ 3::r! th:: ~c..-:.,· (;L,>,l(h;,n!:1~:l':' 01 tLc b\:t>:!kl;S \\'lrk
,\,~-,l~'l, the \\,:1::;,";:; of d,\;lh:,tic :ol'~\.ln~~. i"':ludir.,~ their board
 l',d io,:,,;i:--::.:II 1;[':.-1\ ili,,:-l:t'r t!l.ln al'e Ibosc t)t wor:-;C1'. \\l;" 0\)
,\',)rk (If cOLLJ.l d't't'I,:ul1\ in :,lctoriC') or ill th~':~ 0',\';) ltOli'l.''j,       For
,liC ~('r\'a:l': nlu<,t "h,.l~-;; St::il11\t to sume lo~s of frf:cJvm, :l]id if
-.;lC lnpP":l'> to laB 'under the COlitrol of an ill,m.lnJ~Cl'ed
mi_~,rc~", tl' SOLIC 10;.s c,f dl;n~t)',
      \\'ilcn th . , J::;a~n'('auh,::,cs'5 of nork t:lkes the {or:n of
-':lr:;I'I(;'S It gV[j,_'ra!;:: h"l~ ti,,: (,.nk-';- d!~J.'!·:,l1iH;,:<,; of i".t'oll'in:;
 t k~~ of :::ol'iai PO:;ilic-ll; tilo:: Hl 'st ril~,l;';JCC.(~)k of all WI)]'',.: is
dl:e!iy In'~c b\' tbo",.' who C:rl.ih': ,.:<.:1 ailY tJt).~:' cmpl,)YU':llt j
and ;~s '\_l:;('S .are- tl: .. n.:!cfr~ \0)\\-, ill CO:lS"ClUCh"l" of !Lp. in·
  '(m1Ih.:tcllce of tho::,.;c ... l\u do it, :l!:d in "'pite \)f i:s 1'(1.uJ.,ive
'.;\,,1'<\,::1"1'. l;pt pt'r~ ::;;.1 dj"(\lJllC(.;-t \rhit" "ri~{<; fn-m :.;. 'it'n5:C
foj (bn,::;ti', oilerl dOl        n,'! It:j' 1 n~ec',    '\_' .\dXll S:~::th ,,;1),5:
:·Th..: o.,n::;f:r~ ""d :.<,irbl<.:;,Jth I.'_S(:lP,_" i.': .l ble of ad\'(:nturc"i J
mstcJ.d of (ilShc;lrt<.:nin;; )'l)\l:~S V-:uplc ~<.;:em fre'1ucntly to
110              BOOK II.        CHAP. VIII. § 4, 5.
recommend a trade to thcrQ ... the (h"tant prosp~ct of hazards
from which '\c can hope to extncate oUT"che::. b} (ouraze and
addre~s is not disdgree:lble to us, :lnJ does nnt raist the wages
of lahour in any employm(,nt. It is otherwise with those in
\\hich coura:,::e and address can he of no avail. In trades whirh
are known t'O be \'Cry unwholesome, the wages of labour are
alw<lys fcm:lrk:l.bly lllgh.:'
       The fact that an occupation offers some "ery high prizes,
attracts men lcto it in two ways, Firstly. youn:; men form,
fortul1:ltcly for the world, high estimates of their own chances
of attailling excelh:ncc, and thu~ are more attracted by the
prosp<:'cts of a gr .... at success than tiley afC deterred by the fear
d failure; and scconul~', the s()ci~t1 rank of an occupation
depends mO!(' on the highe,;t dignity and the best position
which cnn uC' ;It:ained through it, than on the average good
furtu'1c of '.1105(: en:;:lg~d in it. The learned profe!:>sions oner
such hi;h ;lttr,I-::tions independcn~ly of the earnings to be got
in .hem, that their ;:J.\.t.::r3.gt' c.l.rnin;;s arc much lower than what
could IJe e:trn~'(t by an eq,"al amount of trained ability and in-
dustry :n oti1l'r oc(:ujlations.
       § ). Xext, ~,) cotlsidl'r the Yrl_riou'i ind;15trial qualities,
physicll, mel:tal and. mt1r;!l, that may be wanted in a trade.
A m:-lll"s pbysiClI <ll'ld moral lju,llitics depend cllldly upon
the ch:u<tctcr of hi,; hO:-:le ill \'outh. If he was \l"d! fed and
hO'.lsed, if hs fath::r, :1I;i.! \\-11.1'1 is perhaps more impllrtant, if
hi,; mother had energy ,md kindne..;,s a',d honesty, he js pretty
~ute '.0 hase tho~e phy~;,~.l.l ami 11wr:ll qualiti"s which are a
n"Ct'sjary contliti,·n of i!ldusu-iai dii,:ioh'Y. That p~rt of a
ma:l's \'\'a;:;es which he owes to hi" education may be regarded
a5 a kil,d of Im}i! 0n th~ capit<ll invested in it: that pan
which he owes to ex(t'pti~'.lial n.Hural quC>.litics may be re·
garded r1S a kind of 1'1'11,'/ t11at is, i: is the income dt:ri\'cd from
an ag-cnt (If ptoduction tlte 5upplr of which is determined by
n;].tur.J.! G,U5b, nnrJ. not by the l:elibcrale outlay of human
effort for tlie' s:\ke ut future ;l(IL1IH,1;:,:e.
       TIl(' W:lc-;CS in a ti':l.tk that re:.j,uircs only physiql strength,
whc'n ~lll:Y ,lre p.--ud by :.111~ day, ar~ generally verr low; but
 ,\ k'i1 ttw)' :ut:' P;' lel by the piece, as in the Cl."C of na~'yics, an
e:-,cl'yr:nn.dly str<ln~ !lUll -can so;netimes carn hi;;h ",-:lges.
:\11I~h \\"rk that reqllires great strength is aJ"o to some extent
(kty :ll'ci disagrc('ahk: .:lnd when it requircs spcciaHy trained
skill, ;tr:II th,lt JTlt,:!Ji:';L:nl:c and j~tcl:::ml'tit which fmd a good
orurket ia ::my trade, It recel\',-,s very bigh wa:.;cs. Fc.r instance
111 •. 11)" i)f th0'<C engaged in ir,)n ~Hld g"L1.sS works must h;l\'e great
,];,tvr,;J intdli.!:!cnce ilnd :l. JO:1g special training. They are often
t hrnWll ():;t of cmploymcr:~ by d(:'pre~siot1s of trade, and their
skill wu1!ld be useless to them if for any reason they had to
              Sl'PPLY OF SK!LLEq LADOliR.                                   III

lea'-c the tratic. Their work is din)" and uisagreeaole. and it
requires great physical strcn;tb, and a power, whIch many
strv:lg men h;n"c not. of Cnd\.lrl'L~ great and sudden yariatio~1S
of heat and cold. So It b nut to be w011Jcrcd at that in lImes of
pro:operity the best irun he.1tcrs :11h1 glass-b!owers, working
piece work, can      c:'lm       w;lge'> many times as hi:.:;h   ;l';   those of
SOUl(' to whm,! Ctlst(JlJ) h;J.s giycn a hi;i:cr soci3.1 j)O_"itl 'no
    2\1.'10)' kinds of oflice ""ork require a rare cumb.l:J.tion of
high r.luHal and mor:d qualities; but ;l)mOst any (l:je em be
easily tau;;ht to uo the work uf a CO;))<I';.~ clerk, ar.d pl'Obabl)·
there will ~oon be few mOl ur \\'U[i1Ul in Engbnd whu (OUlnot
write fairly welL "'hen .tll can wrae. the work of COl-Jying.
\vhich used to earn highn wa~t:.s than almost any kind
of manuai labour, v.ill r:..t'jk am(mg un~killed tr:lGcs. In fa"t
the better kinds of artisan \\'OJ k educatl: d. man mor~" and wiil
be better paid than those: kinds of der~'s \\-ork ,,'I:ich c;:,1l fo,
neither judgment r."f rcspull':iibility, The best thlllg tJut an
artisan ca~l <..iu f~,r his 5nrl is to br:n:; him 'Jp to 0:1 tillJfl)u;;hly
the work that lies at his h<1o(l, ,,0 that he mav ullder~~and the
mech,U1ical, chemical or othe :-;Lienlific principles that bear upon
it; and m<ly enter int!) :hc spirit of any new improvcment th:,!
may bc made in it       I f hi.;; ",,)11 sholllJ pru\"I.!" to 11::\\'c gout:!
nacllral :1.bliitICS, he is far morc likely Lo rise to a hi;.::h po,;ition
in the world from the bench of an anl3~n than from the dL'sk of
a clerk.
    § 6, !\ext, if we compare those industrial qualities which
are Non-specialised, and can be turned to account in many
trades, with those which arc Specia:iscd to one nan.e, we
sh.,ll tind that the furmer are I"isin.; in import3.[]cc: rC!J.tn·ely to
Lhe latter.
      It has already be('n remarked that the division of bbo'.lr
~ometimes cnaLk", a 11;,(n to IJass casily between trades which
u<.,cd to be tot<l.lly dis:i·,,,l, rhis l"Clllark nuy be c"tcnded.
 rhe great tC:1du1(j' of the ::;ruwth of nuchinery is to supplant
Il1dlllwl work ,\bidl r<..qu;lcs only physic;ll strength, or skill
~hat I,; got by the ("'n~tant practice of one set of mo\'enH.'nt~
 \lachincry ran nl.lh:C uni(or;n lllo\"('m~'lIb more accurately and
'ctTu!I'·cly than !~-I:1~J (..in; and lllO",t of the wllrk which was
llone Ly tho-;c \1110 w('rl: specially :okilful with thcir t"ll1gvrs a
few gcncrJ.tion::. a;;o, is now J"IlC by nlJ.chinery; and since
n"lchinf'ry does nut incr0,1.ch much on that Jl12.tll!:11 work which
l"l'q·uir..:s judgmt:nt) while the m:lI,at;elilcnt of llI;J.chincry generally
docs require judt:Jl1cnt, there is a tnu.:h greater d<?Glz..nd now
,han formerly for intel1i~.:ence and resource. Those qualities
which enable mcn to dc..:ide ri.shtly and quickly in new and

                             1   Lvvk   I.   ch. "iii, § 9.
1J~                       1l0c)K II.               CHAP. VII!. § 6, 7.
,~,/tiLult use", ~re            th!. COmllll)!l prc)pcrty of the b':ltcr cla<,s of
w(,r!..:~:l·n ~n      ai, \(,,,t every tid-de; rU:ll <1 p<.;rS"n wi,l) h,'~ .1.l..111:i1cd
lliL.:!ll ;ll ,'11(" tt,,,;:.: '.'"ll Llsdy tLln_'(~'r lh~'Tn ~,_, al ,)~lll'r.               '1'11o...'y
arc :\o:!-3pc         :;:l:i-~C.!.    It is l'll;\"C\'l~ tru·,.: tllat !l'~rc is    1.. ,:ch
tc~l1\)iL,ll tT"H.lc knclW:cu::.,e wah rl':'::,lrd tu prr'll~~CS and tbe
<pniilY of 1ll"LTi;d_~, w!ljc.h is 1,[ ]1:t:<..! ll~C S.l,C in ·.l:t· tr.1 ~c in
whit'll it w:\s ;h.'quircci; and the i'ru.:r~':;s 01 illl:~ls1r: It'Tl':s tD
in·~!<.'.!~~ lh,~ alm'(!::~ of the Sp~'ci,tllj._'d k',d-,<"(t"d,;l.: \\-:- ·-h is.
uo.::,.:,kJ u\· t;,L.: b::tta ch..:s of \\Drklll'_':' ill a;i!-'(J~t C'>"LTY t:":Hlc .
     . ~ 7., ;\\ _·l;1\-l·,-"'.'<":r. tlutthc SUP]'!)' f;{sk.!kd ].lb~'\J~ i~ l}vt
:tdJu:,lC.l ,,_, t,:l.' CCIlLt.LU f'r " :,::, r.btl: ;~.~ tbe o.:ijl;,.y (,1 a
\'t'l~diblc cu:nm<;d,t)· ;5 .1,.r "t~J to 1~:,' r.kr;iO\;:cl. fur ::.               Fur a
C:tPltdlL": em dn 0:,: 11:3 (' l!,ital tr. l' ,,'J~!,~i:J; ,,:1:- ":.1: .l:~')' lily
\,1.:..:11 i~ ill )~~·""l r:crn.llld. ,,11,\ u·,.I: \i~l his l'(;'\'a,-d ill l;lC hl,,e;h
l-'r:~c t!U( he: ,~(-:3 {or It,         Hu~ ,!:l ,. 'p:,.Llijt c:c~:s h) :h,,! t'.\:>{ n.-':'
.,t' iLlTC"Cll1;:;: tbl' supply 01 ::'I,;lk.:l i.,':)OUH..'l"S in Q1':)' tr,',uC, t:l;::
··~:a "h':'l al:'lUir,'J \\'ia 1).:1(11".;;, I:(l~ til him. tIll; t<> tbose-
\\!lO\l1 h~ !l:J,s l'l;ucatc,l. 'I'lL' Ll!',iy P:lrt;dll.:\~'~·[lli(':1 !'1 [hi-- r,rk
is lll,~ \\'i:!l in ti:..:: ~y'lc'nl "f;tpPl'lllli ',-h:}J; 'L.i" S:,~\~;'-J              c;,
t'n~d)le (;l)1it3.1i~:j tu IJ;\', "t 31'1'1<: Clj):t.li TIlCdiL1Ll:, to t;lvr.1-
;,('ih'~ ~n tile ld·,(.l:;nn of [he :,r.r.~ ~)r' ,lll.' l' ,,'I·c. ~,a~~, s.              in
S'_-':;-.::: t:l __ l'S the ('11:n:v\', r i-J,\\'j a l.)u 1..." l:-l:~'.:r:-_I/,,! \\a,.\'t:~ iOt'
.::~'nr:tl \l.lre> d\:'i~':',:; '\'.i 1(11 '112 i~ 1",dr.:-..: tflC !:'.1':'~; but
(111I"1n:.,: ti,e ];>.,t \','-0 or t':1:'~'~ y(',~rs of h;::; ~;)p;-cll~ic ..'·;h:p. the
' , ; ~:. ')":. ji \1"(',:'1 l:lUC\ ll1LJr..; lh.m th~ \,""l~_.~ f"r \'.hidl;                    is
L",;I\"~ 1., --:l"ve by th;~ lert1i:> "f t!:: .1j1pr..::,,: . . c,'.ij1; ;t,ld tLu ...
i'I"<'~ \.\;1:1 I~l:\ i,;'st tiL' 1 'lJ('n~'~ \\h:cl', hl" lll' ~tl'r il;Cllrrui ior
ie,'::, htl:,] il: \M;'lli'; h_," \\·.lgl'S :11lc1 ;,. :'0:; !r'~I;, h" ~;HI::.J1.<:·
Ill.\cdl,ll :~nd hi,; rlill!::-'Y \.~C ('t" tol;~~.           r\,t t1".( :';''-''!v:r, !, bO;lrs
\;1":',:- '--"I:          di"I,h',\;1:,I~ ____ 1 h~ ~Pl:':~ l':o ;he a~< ::, :'_I~ _        '..rod .
. :IH' ,'-) ,l'l o,:ycn :~r(',\kr ',x~cnt to L'.. W countrks. :'l c:, r, !~l(is
u: ,,\::t~:1,,:, to tho' hll:~~,l t,) ,1 Ill.l~tl"r f,;r a :0'1.; per:.\.: \,1 ':.~l·S
 :\1<1['1 :>\'L r in .\,!..,,1 Sn:,tb'~ ::nll' i1 \\,L~ (:.)11\:;1 .. '                   . th,l[
It,;,:i~,1 ~ olkn n'_:;k.~t(''-! 10 .;i\·c ]',;,;lI.r ;::S!r.ld~"'l ,l"' 1he!i
  lI'P:': l,' ,:'~. :1ild til:s c\'il :;; :-;"(';11<:( n:w. 1:.,111 it W:lS t:l.'!J.
 ;:ur th': h(: ,,~~'d t,\ be :,1,:,:1.:. U) dl{' ma~:(;i who h:1u a direct
     ,',lL~' ii1 •. ·,\,nl;;;; tim \<en: wh;h: now h:: i" LI'l~ht hv a
 ,,:t,'l.: -1"';;':ll,:n \1 Ill) ~:~'ll"I'\;ly L<_~ 1,0 ~:.:dl i;;l~rL"t~ I;\.."t if
   , 0..: \\', ll·!-.i":'!: "  tk· :ll'PI n1' II e.__ f,~:hcr Ll' \\ ill t.lkc lHins wi~h
 :1le b.l: ,\'._. :j)t,;;",ll~h; l'illpl":ds hkc to 11.1\(';'~ .1;'-'IJrl;!lticc')
 the ,>,-,n, ',)\ t:,·,,,e al:,:hiy j, th"T c:lI;,hy; .l.:l'-] f,~h(:r~ jik~
,."h.I',·       ",(::!   O':J~ ;ll',);cn' '~l'd: 1111().'l" tlwl'il.           S01i,{;th 11':;- Eke;]
,,',Id,' '-,I~t.' lL~::; ~:r\,wn I:i,l             Il\     :11\5 W:l)   i!l   b"Lbj bkwlllg- aad
 ~Oll:~'     o:!. - '~.1   ~,-,~   .
      . \"     \\~   :::1\',·   6('0,::'   'I.::   J.\~e     !f intcr('~: ,1t wl!i,'j; par('z,ts
 (1:5~"1J"\. lutu: .... ;uh c:~t;\..;:.-·:; to              their SUi), incrC;!';',Ci w!th :h..:
 ll.arCW1K ,5 uf their cdu':all"rt                         and tLe p~'c5::;'lre (;f jn:mt.l):lb.'
                SUPPLY OF SKILLED LABOUR.                                       II3
want. This fact afford:) :l stron;- ar~ume!1t in fayour of any
public 0r priL\lc ~c:iol1 which If::I;> aid -the poorer c/a,.;ses of
p,nent'> j:l t::h-il\~ a:l impro-.Td CdtlCl:~0:1 tv tlH::,r children.
10 tLis n..ttlu G,-,\'cr:;Il)l'lH will find :( LLrc.:t pccuni.J.n' gain
111 doil1~ 1,l.at a pn';;,te inui\'id\;:ll wi!! not do tide3'i from a
sens,':- of dull',   A   l.;0\·C:l~ml:l1: W1'lcll Cl:1   horr<l'x muf)('I-,:lS our,>
('an, at   :t l:t'tlt' on:r thr~'e per cent. ;JLtcre<;t, Inay 11"-.\:";(, a good
lnvcst);lcr,t by spcj'd:r:~ l\1L)I!l-Y un cducl.\"~n. t.!ld Ihu5 :1d-
V:lfiC:U: the: c~!pit.ll wbidl lhe poor 1l1.111 ILlS no lnC,ltlS of
oorrU,\;I1" :'t "..1'\' tulcr;i.'·,!c r,I~C of il\tl:r~·"t . . \h0U: 3. tC'l'th uf
tile tot:l:' i;'':Ol~:C of th(~ w,mtry is p.lid to GlJ','L-LllliLT,t in
in1IJeri:ll ::l.nJ LOL.il I;1X,'5; ~o :11;,t wi~h the pr~'sC:"j~ rate of
titXl'S LOlcrllrnent \\i1\ ~.lin .\10:;: ,1 tenth 'Jf \',h:.ltd(:r inO:lc.'asc
in the p.<Lcinnal \\'ealt.h~ CUI1lCS r:'Ufll an i:nI)f'wcc: system of
('u,tc:.tic.n. And it i5 jJrOb"ll!!C th~.t thi;:; k:",:/l. \\·,-,uld If; suf.
tir:icnt to rqny with i;-,tcrc~t ;wy (Jl1:by til.lt Cf'Y(T\l',\Cnt m;)y
mak~ on tlpt '_-CIl("!".-,j :wd techniC,l! ('dllc,~,i.,n.\\hi,·h i~ rC"~I,.;;rcd
'0 enaL:l! Lilglis:ll111'rl 10 huhl thl.-ir UWIl in cuwp'::lition \\',th
'hose 1\-]'U 11<11 e lJet:n t:n:ght in the adl~lir,lLlt: schools, that arc to
i)(! found in some forci:,;n count!';.::::;,
                              CHAPTER IX.

                      SUPPLY OF       Br;SI~ESS      l'OWER.


    § I. LET us next ir'!qllir-:- what are the C1use~ which deter-
mine the supply of h:J:>'lles~ p0wcr of diffC'fcnt bnds; and how
the rate nf E.i\"rlli:l:-;~ t..[ :\Iana;;ement in a trade affects the
suppl~' of 1m3-,ness pow('r in it.
    The "u,;ccssful harri~tcr ;)T plly",ir:ian 111ay ohtain caml;lp;s
cr;nal to those lOf three      h~IIH:,r('d   un">k!!ied Ld)l)lIrer:.; but lin the
whole thl.! most high!~t ~1-liri wllr;';: i_~ ~h;1t of b.;siw'.ss man;lgc-
went. It is only wIthin the: l,bt ff'w ~':nt.:rati0ns ~hat thi.o, work
has taken It:> present sl::l.pe: it b nnly quite n..'cL'ntly, ;,nd unl)'
in a few c()tl'ltril's, that mach i:,tc;lt:ct of the hi~hcSl Ml.kr has
been reqh~rcrl fOf, .lnfl !:in:-n to. the ta~k u( Cl':luuc(in;; lll.lOU-
fat'ttlfll1'::- ,ll:d COlllJ;lCrc;all'ntetvrisL'5.
      In o:d ~Lln{'" th,~re W,l;; Ettle v:1ria'.:on in th~ characte: cf the
thir.:;-, tint Wlrc lnJ.d,', or in the manner Df ma',;,~!1g them.
Invellti(l;-;" came ~!(;\\ly; in some trade;; ncw procc,>sc,; were
5',:\rCC d;:,cl1n'rcd Qnce in a (I'ntury; and after they had been
nnce CLS(lwcred, a g'~nerati(ln ,;r mOle l11i;,;ht (iapse before they
(ame in!o ;.;cner;11 U~~. The b'.Isincs<; 1ll.1.n ot former limes
rcquir<:d indll"ilry, SO'..1!\I! judgment, and thc pD\\Cr of dealing
with men; but h~ ,culd. vC2ry often ;;ct 0:1 \\ ithOl:t much faculty
for oTl~in:ttil~g- nt'w ~dH:m.'.~. But nolV the manufan~xcr or
'll{'rchallt who ron\ln:s a brgc capital cannut b(· sure c'·cn of
holdin); hi,,: owr:: UlliL'"S he i~ r;uick to tak... adv;mtage of new in~
n;lIt~(1!\:~, ann h<l5 ::-001(' !'()\\·er of ~tr;kin; out hew lint's fo;
11im~df.      Th(; Jifficulty ~)f this work of pio;"t('crin..; I;; incrt'~sin:,.:
In .n !!1y W;"\;'·".   F\lr !:ishioll anrt !a,,:e chJ.n~~C' r.wrc rapidly
Ihall tbey t:~cd to r,(); <l!ld these l:han;..e5 a{(ut the grea~
m,l.Sc;(>,; ul the p(\PiJl.t~i')n. ~:Hl not ollly tb~ urper classcs as ii'
the (lhh·n tlmc~. Ano. again every change In the m:1nr,cr at
carrywci on any trade alters the ch:tracter of the things that it
             SL;Pl'LY OF BI'SIXESS POWER.                             lIS
wants to bu)' from other trades, and each trade buys frum and
s~H::; to'many more trades now than fonnerl}'. A manufacturer
has to watch the progre% of t'1e trades to which he sells, as
well ;],5 of his own.
       AgJir., those m.tions which had no manufactures were con-
tent till L:llC\Y to bu~' any of the. ordinary English goods that
WDulll at all serve their purpose. BlOt now t;IC English manu-
facturer met't~ the competition of Americans :md o~.h('rs, who
make a special stl;dy 0f the needs of each backward country.
To hold his own. he mu"t vary the machines and implements
and oth<:r things which he offt'ls to other countries so as tc>
suit yarious climates ancl various soils; he must meet the
special requirements of races of different temperaments and
habits. ar.d in different phases of ci .... ilization. This reqllirc$
wide k::owledge and a const~nt activity of intellect.
       ;,Iu(h of the wurk uf business is then so di!TIcult, and re-
quire,. so much special training and 5<1ch a rare combinatir>o of
natural qu:.>.iitics, that the Earnings of ':\lan:l~emeTit got by it
m~ly be \'(;ry high, withuut there being many men who can do
the work and get thc.:,c high earnings.
      §::!. \V,~ have a:rearly seen th:tt the fa.clll:ies required by
the skilled we.rkman,-his 1'er:.onal capital--may be classed as
Spec:alised and :-; on-specialised. The skill and knowledge
d1ich arc of l:ttlc use saVe in the trade in which they han? been
 ~cq~:ired arc Specialised t:apital; the gen.:ral ability and re-
,omce, the energy :lnd stren~th of 'character, the honesty and
steadiness, which can h{' cJ.sily transkrrcd from one trade to
'(n'"Jlhe:", :m:: .." on-'>iJl":i,lli~ed capital. .\ml we have SCLn that
"I!L F'_'tires:> of inl"cntion rends to diminish the imp0I1ance of
me:"'.' 1l1.1r.ua! ~"h:i;!, a'1(1 of the knowleJ;-e of the rules of thumb
:h:lt ha'.C: be.:n h,u;ucu duwn from e:lrlier ~:cnerations, and that
tl'(!,"(-1r:rc in many, though not in all trades, the importance of the
 \P;-kraan':-:, :1pCCidli::ocd qualities has diminished rciatiH~ly to his
\: on-~pcciaLs:::(t
      The same change is !;(I:ng on with greater rapidity in the
Cl~(' pf the cll1plm"('r. The employer whL) W:IS "master of his
'nen" m thi", sense that, if any of them were doing their work
:':d;y. he ("ould shew them hO\': t.) do it hetter, i5 becomi.ng rare
in !l1,I;~y trades; and mllr:h \\"Ill'k that used to be dor.e tw the
~le2J of a b:15ir.c:,oo ::} :~()\\" done by foremen, overlliol,:crS; and
 "lib-contractors. This -:hange is to Le rt:grc-ttt'd; it tenus to
:m?;'.lf tnc thf)rO~lg;1n""s oC work, ar.{l it C;\.:15e-> estrangement
I'.;;~\\('cn the cmph,yer and th~ ('mploycd by lessenin;; his
~·erson,d i~lll;.l,'nc~: ovt'r them, Hut e"ij a::; the cha:Jgc is i,1 -;ome
   "me(~:" _1'- 1us the arlvant:tge of leaving the \\'~~;-,ic time and
  ncrgy ot the head of the bu "mess free f,)r \\" h:1t !~;.t5 become. in
   liS modt:rn phase of the division of lauol<l', his chief work.
116                  BOOK 11.          CHAP. IX. § 3.
nagchot Lompare~ lilm tG tIle miEtary cummander of modern
tim!.::::. W\:'I, in:,te:J.~i of mixing in the (rar himself, sits at the far
end Cif a ;dq;Llpb-wire with his head over :>ome papers, and
ciirl".~t:i and orb,mize:; from a di~t,Ll1ce.       It is his work to !>tudy
char.;;es in the t1ULTkcts in which he huys, and in those in which
he sdls; to be 01\ the alert for new wants and new inventions,
and to devise new :11OC.CS of getting over n,~w difficulties.
And most of the qualities that arc required for this w()rk are
::\on-spcci:lliscd. They depend partly (.n early tf;lining, partly
on the cduc..ltion of business; b'U.t if CdliCa.tt::d in O:H! trade they
can 1;(' tratlSfcrrcd to a::,)(il<.'l".
     It is true that a man ,d1O is not \~'en acquainted with the
technic;].\ details [>1 tlll' tn_dl' i;) which he is engaged, is at some
dis.ldLlnt;1.,--,C, Ihlwcl-cr ~reJ.t be h:s go.:l~cral or i'\on-speci:lliscd
b\Jsir,c~::i 111.)\\ .:.:r,  l;\:t, :15 Ib;..:chot p{lint~ out, the disaJ\';\ntage
need !lIlt 1)c n::ry !,;rl'at if llc h;.s ;), cump\'tcnt staff of sub-
ordir,3~es w];o pu~,,('ss the fequisite Iktaill.:d knowledge.                     So
tll1t the hl:dd (Jf m:.l.n;lg-JI)~ mind at a business may lose less
tb::n thos,~ wlio wu:-k lim:..:r him wou!d by changin).,( his trade.
A mill'ster of :;l--lte m:)I: lllCWe [r,lm 111e InLii.lll t)ffice to the
FOl'cj;;'~ Office, or fnJlll· thc i'oor Lm Board to the ALimiralty,
\lit:lOut any ;:;-rC:>.t los" ofeft~(il'n::.:y, He obtains intornution on
technic.ll l:ctal!s lr011\ the Jll'fIlla:1L'nt SecrctJ.ries and .-:-krks
under him. Ills jUd';-llH:t:t ,lr;ll ~<1;';,lci:y arc as useful i~l one-
ofti!'\! <I::i in anctiler, ,,,hile 1lI11·,-il of lh~ technic,l} know:eJge of
his sl:hl)rdin:l~e" i5 t,f little \'allll! save in lh.lt office in which it
11.15 L-e:l aC'I'l:I~'d,          It is tr,Ie that" Little good for tllt: most
part (·);11("5 of people 'I!tO hJ.\C been brou:,.;ht up on one side of
lIlt! h'.lsill~':-:- \,-urlLl ~o:c; (l'litc to the other sld ...~, of f,trmcrs' sons
go:u;.; to cott<Jn spilln:n,s.:, (r of l.lc<..'u:nk::;-s' sons going into
sl:,ppin~,         Each ~()rt of tr;J.dc has a traditIOn of its Ol\-n, which
is nen:r hl'iacn, ,HQb3uly could not bt: \\rittc'll, which can only
be learr.t in {!'.t~mcll:", :lIld which is bl'st t:::lk<.:n in ~arly ljfe,
befor..: tl;(' min(i is ~h.lpL'd :lnd the idea!:' fixh!. But c:1!'h trade
in ll~odcrl1 CllnWlt'r(\! i., sllrround<..'d by SUb5irll.HY ilmi kinJred
trade'S, which h.niJur:sc tht' im:l~indtion \\ith it, J.l:d tn:.1ke its
~tate k1l0\\I1'." And \\hell hi~h prOllts arC' \)cin:; made in that
tude, busll1cs::i power carnes i:.o.to it from the ~urrounding
tr~:Llk:,.
    § 3- \Ye ha\\.! seCD th:l.t the supply of !'killed workers in any
trade {lep(,lHls (In the {'st(mate that men form [or themselves,
and }u:-,': h (urm (ll( their chdcir,~n, of its ~et ,\dLmtagcs on
the OJ;'o' k\n\l. and of the difficulties (If preparing for and enter~
ing jt on il:l' Other, \\'e 5;1\\' t:",t if they In,tdf' their calcula-
ti~'ns cOlr..:c,I'", a.'.j !flhu'e we;(' no n,ltl:f.ll Of artificia.l barriers
against entering a tr:.lJ(', the s'lpply would be so adjusted to lh..::
                     1 In   F.;rimjhtl;' R'''Z'intJ, vol.   XIx"
                      Slil'PLY OF BUSI:\LSS POWER.                                  I17
demand that the                ~ct .\dv.1nta:;es of being in th<lt trade wouJd
Lorrc~rond            to :h(' trouble arlit ('xpen~e (If preparin;;!" fL-r it. And
W~ hd.ve now             seen hOlt,' the ::'\Ipply of bu",iness p«wer in a tLtde
is increa':ieu br a ris . . in the      Earnln;.;~ of I\j anag.::Jnt'llt that call be
,..:-ot in it.        Dllt th~ ca~~ of ~USiIH;"'i p,)\\'cr Jiffers from tInt of
skilkd labour in several rC5p(,c~S.
    Firstly, the. ~n:ra6c LtmillbS (If :-'Iana:;cment cannot be
eetsiiy a~ccrtair;cd. It is ('omp;l:-ativcly {'asy to find out the
IU.:f"   of br:ckL1YCJ" or puddlels uy saikln;; an 3\Tra;;C between
the wJ::;-es  th~l! are c:llned by mer; ~"f ';:,~io,!~ l:q~reb of cfri.=iency,
.md .,;!,r,\'inr! for the inc<mst:l .. cy uf their pmploymcnt. Hilt the
l:an,,:l";s of \lana~'clUl"lt \\;lich a man is getting-, dD only be
f,m!:.:! af!t;f 11uklOC: l:jl a careful account of the TI,-t proiits of his
b;:~;ne:,s, ::nd deJlloin,;i interest un his C;lPlt,li.     Till! exact
~tate of his 3ft.lirs I;:' \'f~l'n nut kO(mn b' bim~'"'lf j :1:1 1 it can
:,~'iJ8:n be gu{';:,scc. J.t all accurately cvc1i by tIK'St' wh.} arc in
:]1,_, s:tme tr.1.Je \\-jth himself            It is n(lt true cn'n in a littk
-, :iiagc at tho..! prC5C!\t [by th.lt enTf one knv,\'$ all his Hci;h-
 1)(I\\r'5.1ffalrs. ,. The \-jE,lge innkecper, puGlic<m or shopkeeper.
 II \::) is r'l<l.ki::g: a. small furtuDc (!ov,:; not jm'itc cnmpctition by

tc~lin:-": L;:, nc:i;Lb0clTS uf llis prOlli-S, and the m,m who i') not
'!'\:li;- wl'!1 do(s ljN alan~\ his creditors by c-xpo5inz; th·,; SI:itP of
)\ ~ a;f.lil'sl:' nut w;nt we :In: I'll"" (Escus.,ing :Ire tbt C,'il:SC<;
dl.lt d,~t('1 mine the 5UjlL_';Y of b"sincss pO'.H'r in (';tell tr:tdl' in
;/!:- [J/lX rtll!: .li,n til,' aYCr,l:;(' Llt~ of profits in a. trade c.m-
not Ti':C or filn much wilhollt geIlcrnl atkn:;(1n bein:;.attraclcd to
:11': (:U:l~" L,,';'.)l'': Ill!l? ATh( thou.-.:h it is a Ilh1re difr1( u;t t.15k
rC>r .1 bll';;lle~j r1)J.:', thJ.:l for a sLllci lalJOurci' to rir.d (lUe
',dlc!hcr h: flJuld improH' hi,s rro~pc-cts hy chang-ing h;" trade,
 .l" Ill", hu~in'_':is m:Hl loa,;; gl'C,lt upportunities for discon::ring
1\',1:1t1.!v.:r (,.Jll b..: ;~'Ulhl Ollt nbL)ut 11k prcsc;)t :t!1d fl1t:lre tJl Gther
::-,H.':0.:5; if h~ wi"he5 to chan;:: ;lis "..rdC!,', he can, as we haY\!
~('Cl1. gcncr.111~·        do so lIlMC! casily :h:ln tl-:c ski lied workman
Ui!l: and he em ch(),,~e ;ltl\' tr,lllc for his "on_
     ~c(l):1di:;, the supply u( blisinC's~ power in a trade differs
Irom the s:l!)ph" of skilled labour In Ii.::"'; p:lrtly d'-'pC'nJcr.t on
the sup;'!ly ()f capilJ.I necessary to gi\e it SC')p·~.              l;ut this
l\!)f~!'c.nu' :1:;'-,li:\ lS less imponant th<m it :1pIW_Uo;,     \\-c C,1nnot
p~. 'pcrh {;,;tTllinc her.:!' the b~lll:in_~ ,u:u o!hvr mOll...:rn a,::;encie'i
  _ \\-!l:ch c.J.pi:.J.I is tr:msfurt.'d frtlCI "h'2r~' it is not \Ll.n'.t::d to
\'_h~:e !t is v,anted.          F·Jr our present plJqJO~(: it is sufficient to
.bS\;mC th:tt .. A \'Cl'Y great rn:lny (If the qrongrst he-ads in
Fn;bnJ spend their mind", 011 little ClSl' thatl thinking whether
1) her pcopic w~ll p.ly t~lcir d('bt~. .'\nd the cumbined ag::·;rt.'~atc
d these persons is a prep.Hcel li'<lchinc r("ldy to carry capit;li m

                 1.   Cifft: Le;;lic ill F.Jr:ni,:,-h!!y RI'1.'zr.(', ...01. xxv.
118               nOOK II. CHAP. IX. § 3.
any direction. The moment any set of traders want capital,
the best of them, those whose promises ::tre known to be good,
j:!ct it in a. minute\ because it is lying ready in the hands of
those who know, nod who li\·c by know:nz, tha( they are lit to
ha .... e it 1." A man who has business power and a little capital can
get more capitaL If he turns this to good account his improved
position will t:nable him to borrow still more; and thus before
long he may wield a capital so large lh:lt his profits !e:lve him a
rich income after paying intert'';t on what he has borro\\ed.
 Again, a man withotlt capital m"y be taken into prhoate partner-
 ship by otbers; or he may l;ecvme the manager of a joint-stock
 company. ., It is no longer true that il man becomes 3.0
 employer because he is a capitaii:,t. )lcn command capital
 because they ha,-e the qualifications to profitably emplo), labour,
 To these captains of industry (or organizers of indu"try;' capital
 and labour alike resort for the 0pI-,onunity to perform their
 several functions~."
         \\'I! may conclu<.!e then that though there are several differ-
 ences betwecn the ca~c of business pt1wer and that of skilled
  labour, yet these dilTeT.:nCt.::i do not prevent th'.! supply of busi-
  ness power in a trade from being lktcmlined in all essentla.l
  re5vccts in the same way as the supply of skilled 1,lbollr. \Ve
  shall huwcvn sec further (In that the Earnings of ~I::nagc­
  me-nr of a man work in,:; with borrO\·.-cd capital fall short of
  the income of 2. man uf equal ability working with his own
  capital by more than the mere interest on it.

                     1   Bagehot, 1. c.
                     I   Walker on Il"a.:es. ch. Xl\·.
                                   CH.\PTER X.

                                        I~TERf":;T.



    § I. THE Laws            (If   ~o,mal       SUflplv of c:<pital and of diffcrE'nt
kind:; of inuu.<ry       kl.\   c no\y betn c.\.,l'T\!n('d.    OC!T next ~'.'_'p i_~ to
invc~t;~_,~e     the lcb.tiull bc'''c:::n :\"01"1:n1 Supply and                  1)~1l1,md.
_1.nd ,ht:: .... :ty in which the ?\urm,--ti i:,;c-rc,;t on clpi~.11. 'lId the
:\(I~'l1nl e:1rnill;:-~ ()f 1~.lch kind of indu~try) are dctc~:~,i!) .. J.
     \\"e h~lYe .'iccr,l th:1t thl! tO~J.l r,ct :mnu;J.l prnitlCe of a
u,1-mrv·,.; capital :'l~,t in(bstry, af;:er rent ::Iud t;l':es ha\'~' bc('n
{:('u;I,-tcd f:Jll) il.eon,,:>::; of int('TC5t on (";lpIL.d, a'ld the c.):-llings
"f (j,ll>r'_'n{ ki'1ds of I!1d~l"Ln'; and we 11;tt"(' called i', dlC' f:.-,Irll-
:,:':'5-,u:d-ild.-r. st I'~'/J/J,   The '>hare which cap:Lll obt:l.:ns of
tll:~    F'nnd d<:pcw!.:i tirsti_~' upon the :tmount of t1-.,c Fund; and
~(n:\llk 011        the ll',lnn(', in which it is di,"!ded.
       hr.;,i.ly, ,,"itl! I<..,.:an.1 to th~ amount of tbe Earnin;.;-s-and-
i:-.tere~, Fund th.l: is ohtair,ed by a gi"cn a,nl)unt of capital
:-tn<l hbuur. This dqJcl:ds on the extent zlt,d t~L' ri( r.n{'-.,s of
 thr n,.tur~\ <;OtlrLl':; \if [\).;"ricu\tura\ and minl'r~li \\"e~.lth, on the
 r·'()g-:',;~:; that has D("\'n nude in the arts of a6r~,"1I::ur('", mining,
;llld. manufacture, ,HItl on the means that n;tlu,',; :,lld a,t han:
 il;,j,i,~ d for co:.I"t~yil~; menJ g00ds and nt:\\~ r.ipil~l;' :1nJ in~
c:x;wns:\:e!y [r('lIl \llle r1acc to another. A country whic:lJ has
. "!:Li,l ,nt ::lnll ca~~' co:nn.tl'1ication with distant r!:".ct..s can
(!f:en ubt:lin a Ycry h1;;11 rdurn to hn C<lpit~l ,111,1 bb(Jur cY(~n
:~L0'.;,~;1 11';;r OWI1 .';,1);\ lie puor: f.)\" th,~ cuncc:1tr<.l:ion of her
:'I(>J3~r;; lil.l.Y gil'::' her S,U(11 arlvantn.;:::-c:s in In:tn\1f:'J.ct\lre ~I!~J in
the (,),:-:- :ll;; :r:'l L' th:,t she Gin pLrch~sc Ir,tiCh of Jlf'r food
'1,,(1   rlW   lI\atc'i:,l   from :1.broad at .\            m\ldcr~t::   cost.    Bl't the
:,l..:h,-)( ,C\i1l·;\5 01 all ar,. obt,1:t\,':rt  l~eW C~'1l1:trics where the
,':'" (,f Cil'i!2l:1:i(lu ~rc u~cd in (urnin,.:: to account the: rich
rl:,":rCl::; 0; "\J.tl:re; this conrliciO:l hU'.I"ever can no: he fully
':,hti('~l unless the j)(1p::;.ltioll is :;::ftlckntl) clC'n~c to enable
  ',~nl t',) ()r;';,Il,>Zr ca'iy ~ilC;i.rJS nf commllnicatiun with one
.lnothcf and ;l':aiJ :b':'ll1":', h'c~ ol[ the Di\'j~ion of labour.
                                   1   Book   II.   rh. vi. §   1.
 J2<.l                        BOOK II.           CHAP. X. § 2.
         SlIdl then are the         C:lUS(,S   which detcrn::nc the "~JnOU!1t of the
£arnings-:md-il1tt'rcst Fund which ;":aturc Iytllr;)'i t(l a gil'en
amount of .. :qAal and industry. Om' )j~',t ·:;tep i,,; to inquire
r.ow this Fut"!d is dlyidcd into the S!l.lr,~ 1\ bidl c.\f'iui ta~c<; as
ir.tcn:st, <llHl th:lt which in~lu5try take., as c 'I nJn~<:;. Afkr-
watc~s we sh,1l! h:lYc to ir.qnire how the share which goes to
industry i" di\'ided ~mon,; the ":11 ious ranks of unskilled and
si,;tlkd l.tbot1r, and h\l:,-incs_~ P::J\Yt'f_
        \Ylwn :\ capiL!!!';>t employs hi.~ own ,3pir',l in business. he
  mll"-t ;)1.:: r('..:koncJ both :lmOl!;,!" those who Sllpply the c::tpitaI
  wh~ch ;:"ds industry in pt(lciucriof!, ,end among those whuse
  ir,duslr)" fon~1s the drmand for the .'litl of cap:!aJ. The interest
  ~\ !lich he ;::;-et" for his capital is 11u~ clrady nl.lri,;t'd oft il: practice
  f;",,:n the Farn!n:r.~ ci )t,U:1"L'metlt ~d,i(h he ~et" bv hi~ work;
  1::.;; t\\-q ;ire reck~~lCU to;..;~tht:r ~lrl'_kr till' n:l\1,C c,f p;'ot~:~. DClt
.ior the p'lrposc5 of thc()ry \\'': !~\:I-;t di~:in;~ui!>h between the
  two: \\C !li'!::;t l'q_-:::ud :1'> intt'n.:~, :lul part 01 his inco)lfle which
; IH:! cf'ulti ~et uy l'_'i!ding hl~ C:lj.lll:d t) be used by others; jU5t
  as, if a m.m Cl1ltil-,ltC3 hi') own bnJ, We must rcgant :ts rent
 that portIon of 1115 in..-:o,,'(; ,\ h;L;l he (GulJ :;ct !'Y lett;n~ the
 la:ld to uther::;.
      ~ ~    Til(' rate of intcrCSi '.Y!iich fc5ulb fro:n the di\ i~ion
lof the Earning:~-ar:d-il\lcr('st Fll!~t1 into the "h,H(,3 uf capital
 ,tOll i',,;u-;try \,ill be f(mlll( !,) dl'p~'r:d ll[)(,n the ur.r""lCY vi tIle
[J~m.v!d :;.1' il!ciu:.tty fdr the aiJ of capital.
      In ;1 ci\'i!iJ.cd st.lte aU prodl1::tillll r('qllire_~ both capital and
 inJu-.a.- j each fif th~5C tkm,HHl::; the' a:d of the other. hut not
 tu the· ~_Ui\C extent at c_t":'\ rer,t tlmes :tnd pl.'ces. 1: in :loy
 phce       ~!--.'~l'e   i5   :111 auufL<l:I:;t "~:l;ply   c,f indllstry and a s'::J.rcc
 SllPP:Y .,f c:lpit_al, while slIch I1h,thIJds of productiull art u:>t:li ,IS to
 gin: {h')se \\'ho ;:11'<..' \\orking wi:h mu..:h Au:\ilury c~pit;d ~ ;.;rea.t
 advar.tJ.b"c 0\'('1' t!lOse wLo :\rc \\\)rking "i;h r,Jc; then .he
 ,!em.1:)d of i::.du:,try for the aid of capital wiii 1)<.;· ur;;lTt. That
 IS t(~ ",ly. ;:l, ;';;\'(11 amrlltnt (,f c;\\illal (!Til,It'ye.l ill l1fodncti()R
 '\L~l be ;l[)k tl) ~:t t a la.~~c !:-IM1<,; c,f the P:'UL:li,_',-' \\l!idl it aids
 indl!':r~' ia r,\is:n:,.:; ')<.:c:t'J.sc induqry ~::; in -,:I;,:'~~'l !l('(J of the
 as~:s;,I1-.,· of a pc<lt de~t of C;"'Ipil,d. ar,d the s .. ,trCiiY of clpi~al
 C'Lll)lt::5 11)e ("I\\ncr:< of it to hOld ,)\,1 fqr \'i'IT a';v.,l)!a''::c()lls
 temlS \', idlO11t r,[nlli!l~ a:ly risk of ;:s b·_:1\.:, ldt ilMI'irl'~~ ,-'J,
      C"r~'.'('r"dy, t!i'.' l:dl1:tad ()f indl1~try hlr th(' ~;J. of (,tp:lal
 "'il; 'l"t Ul n:~'{'nt if ther..:' i5 .11arg~' ~upply of capital in pn.'p'lrtion
 to   Lh' P,ll"":::t::,)!), ,~n(r the :ndi:l)ds 01 p:ociuct'on ;HC stIch that
 110 :~t('at   g.Lil \\'oui~~ ;I:-LCl' fro:ll an in,:rc,l'-,..c in ti,-,; ;,\1i,'Unt of
 Au-~.i,.l:'Y '·_'p~~J.1 ",,~'J, lndustry will nnt then be c():nrd1cd
 to r"".,11 II' t:.!rilai (;)()ll~h of :hL' prddl:cc to :llfcm.l a h;gh Lite
 of i!',[, H:,.,t.                                                          .
     Ihu5 w~ see that, other things Lcic.g eflt:at, an incrose oC
                                   I);TEREST.                                         121

~apital     will dim'nish the       co~npetition    of indu5try for the <"lid of
(3:~lt3.1;      <lnd will tend to l';dsc c.\rn!ng,> a: the ('''pen o.!: of
IIItt:rcst.      1:1 just the S:lmc \\:IY, other tLi:1~s bc;n~ '-q\!<~!J an
l;;rreasc of popul.1tion, (;:1p1[;"11 bein,:':- s_t<1~~()I~<try, wiil increase
th(> con,p~i;tiol1 of illltustry for the <lid of capital, and will ra':ic
il;~('re.::t at the cxpcn~c of carnings.
       Hut otha thin;;,> do not gC!ler~lIy remain c~ual. The pro~
1-:'':-';S of ci,ijiz3non llln'':<1Sc;s l!lC ckma:1d of illut.strt' for the
~lirl of upi:«l indL:p~'l1ricmiy of an~' incrc:1.5(, in the pop {dation of
~he cv:.!ntry.       F',r It Lmscs .:l. Crl:i:inu,d innc3Sc ill the al!lOunt
:lml expensiveness of the til:lchinery and (,tiler thio6"s which
l:lt",,\ usc as means to the atf.linmcnt of their (:nos. Let us look
<11 ,'-('me in~tanc('s of this ell.ln;.;f',
     Formerly lacn pumped up by hand, or                     brL~~:ght      in   huc:~ets
\\h,ltc":t:r     \\'alcr they wanted. :\ow w<ltl'r-cumpanics erc.::t
t.;\p(,1;si,'e works. :md the \\'a:,;-r !lO\\-_~ Wil(-12 It is wan:vd. En'ry
:'-:1' h    w;1~"r-surpl~' Tcpn:;ents cfl"prt ('l:onomis(;d 0:-                 being
!'"pit;tI!",,:d. Su all tile moJ\'rn Contr:,"al1';':s for li<-:l~tin::; and
ill:.;; :l;~ t',)\\"n5-: fvr c3.lT)ing l'ae'1 ";H~ ~(I'_;GS by r.>:!·\:lYs and
.'.1:,;1;;;, ~nd f...r c3rrY)ll;; news by tl'le,;r;lpll, ena~le men to altai:)
1jl(':] "I:cis \\ith m,;ch IeS5 tot:.:1 e!i"ort tlt'lll '_hey ot~lt-'r'\";,;"~ c('u:d,
In u·r,ciiti'1l1 tl:;,t they c:>.pilal:s'~ a l:u:;c part oi lhl'ir r-tToJft;
~\;:lt ;s un (flndi:lOli ~hat they make a grclt ot:ti:lY at sIal Ii::,; in
:11(; "X))('c;1tion oi o'.il';":- rc_\\:nded uy lhe bC'nctils th,~y 'I!ll
\!t.:-~\C trom it in the Lour:St~ "~i Yt·J.ls.      A,'::,l:n. the i.l\O~''': ciurahic
tl;t' F;xcd upital tilat i~ u5-eu, the lar~cl :It\.: tv:.,l ;-U:l<i,j:-L[ of [he
c;!:)::,~l tL:l! can be cmpio)cd,            Fur l:l<;ll~l~ tll(; :1;T~r.~ILt of
'",li/l;,:! ~\"h;('h ca:1 pnJfit.lbly be inv(:5-t<.:J !;~ til:::- bui!l~:ng,:> \:[ a
cou!".:ry illcreas<:s l~li):dl.,· wiLe,l mJSSiH' C!O!1(: ~)l!ild'l:~s be-:;in
to (::~p::l.CC w00dc!1 icd)l ics that :li<? qui,~k~," !_,·_.ilt ;J.:1J tkl.t
qUll;';'iy l'<:'Tish. This cll:m~c is now ~:I':"~ f,U ;n .\1111.:1":.':\,
       _\lmo5~ ,'very import:1:Jt 11l\-cntiotl k:,.!" to ~n i'1Cr(';1<;c oi the
<:,' ! ~ fer the profi:a::;le t'!1lP:o:. ;ncr.t of capiLlI.         \\'hci;('n:r a
;:I:h:,;:'(' :-; nude to J.<) ~\"ork th,:: ilse,\ tJ i)(C drl'lc ~)y h:,n~, the
"   _'~'C (.,]' 'h~ ('r.l;)L,~'mnH l'!     - I~::.'"I: is inc:-~~ ,:,(.J"    The Net
Return at        ~l machine ULlY !K'      c..:llI1-,l :1.:: t!l~ ,-aL:e (.J the work
!:~,l: it d".:_~ aft<..f al!owir,i!-)1' l)..:prcci,tt:,':l ::mo tile (:.\pcnscs (,f
\. :!.:11:~ it, ;;iclt:ciil:; the L:lJ:nu:~~-" tiC ;'LLi.l;;\.Ul~·:It. ::-.bcbin ..... ~
:1,-': "('\.Ii :!1H'Il:,:{l wit:'.!1 LIl:-\,lt i),: \1., ,: :J', '.!:;-c t!ior Net
 R,t'.r,! w(1t:1J not aff"rd t!:t: m::ukct lat.! oi i:,t-.rC::it on the
:.:,\p:t;!\ i~1\"nt(d ir.. thell}. 1:-1 course (.[\;;n(', when tili..! m.aehinc
 I; ;';:pdj,"cc1 so th,\t its Xe~ keturn \\'Qll1,: aifl'rd t~li~ interest, it
i~ bi,)u.c:i;t into usc, and ut{.'rs a frL'sh ii~';d fvr C,tj)J:;:t!. Thus
.;\"",y Jr.(fl·,;"C in th~ ;:d\"l·~t 1gee; that (,1I1 b<;: (I:)~;~il)e'l by the
';';c 01 o:;!l.'nsin? m:lCh;lll~ry ;nCrea5!~S tilC SCOjY:c f(1:' the pr0fit-
au·,' empl':I~'J1l'_'nt of C!pit.tl, aile thu5 rai-cs til.;: {,U<..' vf Interest.
     \\"c     !>l:C   ~hcn   that an increase in the durability of Fixed
                       DO OK II. CHAP. ". ;; ). 4-
C:lpitJ.l, and an cX:tcndL'd usc of m:l.l::hincry anu 0tllcr Aux:i1iary
capiul, ::lcrcasf; the amoun~ of Ctpttal which is required to
assist and gin: employment tIl luciL:stry j COll",C:fS{;h- evc.y ~uch
chan~{' d1Il1l!l"\S:lCS the <lmOllnt of industry \\hich i~ le<{ui;cd to
assist ,1:'(\ ~,;ivc empbynwnt 10 capi~.ll. E\'t~l:-' sud. ch.lnge
inCrl'.ls":" tl_IC denund of il!dj ... trr (OJ the aid of c1.pitai.
       § 3. ,-\ cu, thL' amount 'J! (J.Plf.t[, of wilich the :tid in
prodllCli:.Jn b demancterl. by a gi\"cn pupulatiutl in a ;,!;ivcn state
of the w ts of prudl:ctiOIl, dl'jJC:I(;S on tho..: fJ.tc of interest at
 \\-hll:h the)" C:l11 (Ju:aiu ;~S ai,l
       To 11X tht:' ide,b, let liS take smile particular tr.. de, S<1~' that
of h<l.tnu~,:in:;J and in'_luu:L' \\ILlt O(lcrmlncs the amnltnt of
C:J.pit'II',rhich it absor;Js. SUl'plh:! tL.t! the Pte: of lLt<:!I'Cst is
 4 per ,:,cnt. per anmlnl I'll ptn,sliy :;00..-1 ~('curi~y ; :m(; tboll :he
 ):_Hmakin:;,: Iralk ah.;orb:; a ,"ai_jll.l] c,t" ,-,nc milliun Pl'lllld". This
 lmpL ..'s ~h:l~ there i" ,'t lllil1;'~:1 P(".Illch worth "f c:1.p;tal which
 the hatm:tkil~;; trade Clil t',nll to ::;0 ;';"l"1 ,lccount IL:' they
 w(lulu. p;'!~ -+ pt:r ccnt. pl"r :ll1nUlll 111'/ flJr the u,(, Oi ii. r .. ther
 (tun go Irit!\')~t it: nct. '[Ilt 15 I.'X'~[Ll,i\·,· o( all a!!u,vU,Ct'-j for
 Trade ,In<.l P~'rsonal I'-i.-L ;1llr1 Dq)f('l~ati()n_ Sume things
 arc nCCCS.:.,-I;-V tG thun; rlh": tn1.l"'~ kn"c not cn;\' some (ood,
 clothil:',:, an,j" b)u:,erlilll:.l. to',:;' :1.i",\) S()lll~' cir(d,ltill~ capital such
 a~ ral'.' m:lt~: ial ;end ~vOlC 1":,'-',<.1 CJp!tJ.l SU,.;h.1.5 teo]:; and perhaps
 a little n1.lc:~ilH ry.
        Of ce't,r",; cumpctilio:l p!"n'cncs an~ thin~ more thall the ordi·
  nary ((,Ide' proftt In:in:-:; ~,~,: b~ .be use of thiS capit;d; but tilt: 1055
  of it \\·(.J~;:d Lo.: SJ illj\l!'l')U~ ,:,.11 tlwse in the trade \\ ot:ld hMC bc('n
  wlllin:; to pay ,0 per ('(-nL ',<1 t!te capital, if they could no .. have
  go' tht:! usc uf i: nn ~',l.,:cr terms. There m,lY be ,·ther ma·
  {,ilil:\'ry '.d:idl the tr,hk \\,,',,::J h:n'e rl'f'.l:Ol'd tLl Jl~po.:n:"l! with
  i1 the LIte l)f Inl[,I('~t beld ~-,..~'n :!o p('r (,Ilt. per anJlum) bllt not
  it" It luJ \)·:en hi:-;hn. If tb: LIt ..: IL\,: lh'CI: 10 per unt., stilt
  mure \\'u\J,l haw: been u~('d; ~f it h,td bl.'L'n 7 per cellt., still
  mllr';'!: if 5 per ce)1:., s:ill mc-','; ar.d linally the ra~c b(':n~ -t per
  Cl'nt, they lise Ilior,: ~!ij!. \\"hcn they have 1h;5 :J.!~l:Jl.Int the
   Final l"lIht~·, 3.:' we may S,IY. cf the lIl;jclll:~ery, Ll'. t:-e utility
  uf th,1t n~,lI:hin('ry \1 bit:h .it is (1111)' ju~t worth tIIeir while to
  ell!;:luy. is 11;":l-uJ"('(1 by -1- pn cr~llt. A ri~':! in the ra:e of
   intl'r(':;t \Illuld chcL:k tll'~ir u~c 0f 111;:,chin"ry; fIJr they wDuld
  .1.('>:d 111L: usc of ~l'l t~l.1t did not hl"e a Het ar,nu:i1 surpius of
   IllUf<.' ~Il.\n 4- pcr cent. un its "aItle.             And.1 fail III 111<: rate of
   i:J!t'fL'S: \\(mid 1{'.l,j them     'U      .,kman,l the aid uj lTI.)lC capit:!l,
  and to) ;r:~r .. d\lco.' machirwry which ~:1.\T:l net al'lHl.ll ~\:rt-Jlus o(
   S~)lll~,th;r:; !L.,s lll.1n -!- I~('r (::IIt. on its \·a.lue,       J\~,\in. l:,e lo\\"cr
   ti:C late vf Il\l('rc:>t tl~e IWlre suhst..tr,(t.d \~(;.I !lC tile s(Yle of
  b:litding u"cJ f,,!" the ha~lHJ.kInb f.vtones ;m,l th:.:: hqmes                  of   t11e
  hatma\.;cr::. And a f..Lil 1;1 the ratc of intl.'fcst will kJ.d to (he
                             INTEKEST.                                 "3
employment of more capital in the hatmaking trade in tl\e form
of larger stock; of Taw material and of the tinished commodity
in the ha"ds of r~tail dCiikrs.
      A [ali in the rate: of interest would increase the demand for
C:lpit.ll on the part of some trades muT':: than of others. A
century ::t.t;O it wouJt! ha ....e had little cff<:ct upon agr~culture j but
now it ,,·ould much promote the use of farmi:Jg machinery and
of improvements the return to which is upcctcd to be spread
oyer a long period of years. In cotton manufacture, again, it
wudd ha\"e but little effect, because the work of that trade is of
so uniform a character, and on so large a scale, as to gh'e
C(,jltil;'UUUS employment to almost any machine lhJ.t can be
invented for it; thuu:;h even in that trade an increased command
o\.-.:r capital will quickt:n the adoption uf impro\'ements in
m;Khinerr. But in the wood and iron manufactur:nt;" tr3des
thcr~ are a great many machines which it would be ecollomi:,,\
 to use if ther could bc kt'pt continualiy at \"ark; but for \\h;o,.;h
 :-;m~tll factoriLS c,n only tilld occasional emJJloymer!t.        The use
of such m3chinery wouid be Increased. by a. fJ.ll in the rate of
illtcrc~t.
      Of course there are some YC3rs of depression of trade in
which tbt Xet Return of a good deal of machinery is nothing
at all; and again some machinery is made: which ne'-cr gi\'es
any I\ct Return. nut if we look at avcrage results, \'Ie lind
 that the :Ket annual Rl.:turn of the machinery aml other capital
In use in a country just a(!0Ids intere:.t on its ,"alne at tbe rate
current there. If for instance wc SUIJpo:;cd, \\"11.1t is about the
fact, tlut the rate of interest in En,..;lalld is 4 per cent., and that
.-.11 thc various tr~ldcs pf Engl.lnd c1111-'lo), between them in
differc~t Wil}S a c.lpital of ,£4,ooo,r)QO,ooo; thi::; woulJ show that
£4-.ooo/xJO,ooo is jl1st tllat amuunt of capit:ll which cao be
cmiJln~('d III En~la.!ld at the present (nuc witlwut tlte u"c of any
wllll.11 is thOll:;ht likely, aiter allowing for risks, to give an
anntul ~('t Rdllm of k~s than 4- per c~nt on its yalue.
      ~ 4. Thus t:lC Dcmar.d for the loan of cavilal obl')'s a law
!>imil:n to that which hold:; for the sale of commudities. Just
as there is a certain amount of ;t conllilOditr which can lind
purchaser" at any g-iycn price~and "hen the price ri:;cs the amount
lhat can be 501d diminishes, so it is with regard to the use of
clpital. In any gi ...·en stale uf the arts of production in a
c\,un~ry, there is a certain amount of capital which it WDUlrl
be \\ onh while (or the \'arious trades to employ in i~dustry if
tbey h.n~ to allvw capiurs share of the year';; Earnin~5,and·
mtl'rl'~t Fund to be 7 per ccnt. on the capital; or, as we ma~'
",:y, if they have to P:lY 7 per cent. pl.-r annum fur the U!'ie
01 capital If they ha\'c to pay 6 per cent. for its usc, it will
oe worth their white to empluy <I. larger amount; if 5 per cent.
                     BOOK II.          CHAP. X §§ 5--7.
a    lar~er   amount stillj if 4 per      (('t,t.   a br,;ec amount still    j   ana
so onL.
       There is also the demand fOf the ll)an of \realth by persons
Of     Slates who do not in;cnd to use it productively, but who
 mOI(g,t~e tlH.'!r future incvnlc;; to ca;lblc them to incr..:-ase their
 cxp('nuLlure ill the pre::.cnt. Thi" part also (If the tlcmanti for
 npit;l] wj]J be The :;fCah:r the luWl"C the rate of iuterest at which
 k,,1.lh c ... n be' oht:lin-:d.
       We see then that the ddnand for capital depends on the
inumbccs of thl' population, tht' natural fo::sources of the country,
,the SC0pe that ,he arts of production a:Yord f'Jf the cr.J.ployml'nt
 of .\uxLliary capital) .1.nd the needs of ur.pr0dt:cti,-c consumers.
 The amount of capital which can hnd borrowers in a market in
 <t r.;il'cn tliTle dcpt:nJ" (1(1 til\" (;Ite of int('rcst at ..... hich it is
 ,)ffen.:d fur loan, and v,Hio.::' "'0 that the amount demamlcd is
 in<.:rcJ.s'-.:,1 by a f .. ll and dimin: . . i."::d ll~ a ri,;(' i:') this rate. The
 C'lrrellt raIC: of iJ)t(;rI,:5t ll,t':l'3UrCS the r In,11 Ctllity to each
 bOHOWt.'r; that i~, t\:!~ ;).,lVd"',l~e tu lJ:m of that C\pital which he
 is only just imluccd to l'U'P!UY"
       § 5. Th~ annual additi(1) t;") t~l'~ .-:apit.-.l of a (01lDtn- i~ not
 any C'.lt:-.;ilkrabic part of the whole: so {klt if we consider only
 short periods of time we m:!)" withoL.:t any gr{'~t error, roJ~ard
  the S'Jrdy:to; fix~d during (Ltt time On thi~ <;tlppositiw, the
  l.a\'.' of the ratc of intq~'''l bccnmcs ~imilar to that of lIte \"J.jue
 of a commo<lity, the 3!ll0~I!1t of \~ biel! ("annot be i!,(rC';tscd:
  ] )cnund is ttle sole rc.~,dator of \ :due. The rare of Hltere~t is
 then simply dcterm:l;cd ;}'; j\l:;t th:lt whirh will c311 fvrth a
 dcnund ior th,~ L'xisli!,~F cap:~.d"
       § 6. Btl, when \\"e~'3.re ('~",!i~:,:1cr:n::; l')ng period;; of time we
 cannot n('t~!l"C( tLe ir..!h:c<lcC \\"hich rh...: ra:e of ir"crest (;xc!"cises
  0n the incre:ise of c.lpit;l.l : and the pro0\e1ll. becomes d~tY!cult.
 To :,implify it, 1('~ us b('~in u/ making the opposite a5,ump:ion
 to t~nt \\ lur;J.l w(~ l:-I.lCC \\"nen \\'I~ ;":Ipposetl t;lC ,;upply of capital
 to b'_~ fixed indc!-,C'ntlC'ntly uf the rate 01 i:1tnest, Let liS nnw
 suppOSe tha~ tbe rJ.tC' of interc;:;tl-tile price that em be.' obtained
  for :hc USe nf c,lpital--cxcfCl:'C5 an o\"crwhe!min;:! influence on
 the ac:..::umui.~tii)l1 of c:l.nit:tl.
        Ltt 1):; ::Ila~ine for'ir:st:m:f' tb.t people \V,)u!d ~aYe rapidly
  if tlLey (vuld oLt.:in 5 per C(:tlt. per annum intcr('~t for their
 cJ.pit.ll; b::t that if :hey cl)ul,; n,)1 obtain a.;, bgh a rate as this,
  111<1,1': of dwm wuul~: n',be to 5<l'C and beg:n tt) consume their
  Capil,\l. In t:l:;; C:h,' rhe .:\ ur11l<11 r.;,te ~!- llll..;re"t for s(~curc
  in\'es~mf:nt3 would Lc lixed at 5 per CE-nt. For 50 Jr'ng- ~s the ratc
  of imcrc;;t was mon: than 5 pC'r cent., capit:ll wot.:1J accumulate
        C"m,p" Je\"oTJ.,., "Tlh' ;J;C:vl~ntage of c11>Jtai t') iaJ:lstry," TihWy"q"
Po/i(i.."o.ll l:."Nnomy, ch. nl.
                                 I:\TEREST.
T.'lpidly. The gro\\-th of capital would nuke the di\'ision of the
produce more faxollnble to inl\u"trv and Ie"s f:'1xourable to
capi[al; earning~ w('u:d rise anu ini~re5t would bU. If it fcll
b.::uw 5 per cent., the .1CCUlllUl..ltion uf capital would be chcl:ked,
and In,\ny would mn"ume their c:lpital. The demand of in-
("u~trr for thcaid. of Clplt.ll would tl:llS be increased, the di, i-
;;ion of the produce wou!d b~come more (:lvollrable to c;lpital ;
c,.rnings wo.!1d fall, and the rate of intcre"t would rise a,~ain to
5 per cent., and so on. Thus a rate of intcrl:st of 5 per (cnt.
ller at:nUlH ',\'oc!ld be the Centre or :Konn:Jl \'alc:c toward which
the rcmuncr.uic'n of aostint'ncc cominually gravitated. and any
'~""\'i,ltion from \\hich would be tilt a te:npo,arr irregularity,
 ,,"hidl the moment it exists, sets forces in motidn tending to
curr~'ct   it.
         On this assumption the! 1\T ormal rate uf interest w(,uld be
  fixed at 5 per cent. independently of .Ill cl1a.nges jn the 1l..:1d for
  t:ll' cmpiuy;nen: or c:~pit,tl; :-ouch as the oIl,'nirl; up ()f ri<:h nc'''''
  r:()untric'5, or inn:ntilllls th<l.t f:.ay(' room for V;bt t::x:ensions of
   FI'\ed capital. Of course slich a change mi,;ht r,1ist.: the "Ite oT
  intcrc~t temporarily; but since thi.; ri~e would. 011 sur present
  hY)luth..:-sis J clll Llpidly into o.i~tencc a \':ht incrt!'-ls(" of capital,
 :r;ercst would nut remain fur any considerable time.; hi,c:1wr than
   ~ per .:-:cnt. On thi" supposition the 1\Oflllal rate (J( intclest
  '.\ lU:d Lc: ri~jdlr fixed in the same W;lY as is the ~nrmai value
 "r a c0ll1moditr, the Expenses of production of w}lich are inde·
 p,~ 'ldt'nt of the amount produced t.
         §;-. TIut in bct the inrluencc which the rate of interest
 ,'XCI 1.; on the accumtlhtioa of c:lpi[al is much weaker th,m
 ',,, ~ hwe supposed it to be: in this ima,::.:illarr C1St"o The motin.':)
    II!ICh men Ilavc fur s,l·.rin:; :lle \'ariOlls, and their ch;u,v:~ers
 ': fif::' wide]!'; some will be j'npr:Jvidr?Olt howe\'cr Jli~;h be
 :he L~tc of 1!l!t::t('Sl; and howcI cr low it be, others wjll save
 I 'r u",ir families and for their own old agc                    On tlie whole,
,. f:tll In the rate of interest in a country ;'i likely tu check
;'It! <;;rowti\ of capital in some ways, and to pmmotc it in
    ".!;l'r~. out the la:t('r effects are on a snnllcr 5(:11:: th:m
.11<': funner, so th:,t a b!l in the rate of interest" iiI diminish
t:1C r:,le of a:cumulation of capital to so;n(' ext .... llt, tl!o;J;;h often
'mly to a srnJ.ll {'xtcnt:l.
        1~\\';jIT,i.n6 then, we find that the ucmand for c:tpital, other
'h,m Lhat which comes from unproducti'.. c coml1mcr~, depends
     'I the natural r{'sources of the country, the \I'Jffiu('rs of its in·
     lb~ ... i:,ll popdation, and tIlt.: S{;1.te of the arcs of pr(jd1lction; this
   'U'I_1:1U detcrmines the ratc of interest at wh;ch any given
 _'I~1Ount of capi1al can be employed in the country,                 Th~ supply


     1   Sec nook   H,   eb. v. § 3,               ~   Book I. ell. vi, § 4.
1~6                   BOOK II.         CHAP. X. §§ 8-10.
depends upon the slow operation of many causes, one of which
is the rate (If interest.
      Combillin:-;-   the~L'   Laws of Supply and Demand we get the
Law of the Norma.l Rate of Interest, which is:-
          \\1111:n the economic condition,; of a country ha\'C~ been
             ncarly uniform for a long pcrtotl of time, the supply of
             capital J:> sllch, that the r,HC of interest which can be
             ohtaint-'d for it j" th;tt which has been rcyuircG. to (.luse
             this supply tu be fOl:hcomin.;; and the rate thus Geter.
            nLincd is the !\orm<ll ratc.              The r.lte is in cyuilibrium
            when      is JlIST that:1t which the whole supply of capital
                      It
           can find employment.
     § S. The gre3tcr part of the capital in England has
been accumulated since the cauotn' entered on the economic
phase in wllich it :5 now; and' the T\ormaJ rate here is
.1Lout four per cent. a year on :;oo.J <;ecurity_ In the case of
Engi::trHi the infh:cnre which forel;;n markets exert on the rate
of inttTl'st is of prj;,)ary impDn.1.ncc. If the rate 'wrc to rise
mueh abo . . . e f(Jur pe[ cenL, a ~re;lt deal uf capit:1l tint is now
sent :-tbruad for ;n\'e~tmcnt \\"oldd be; rl't.J.incd at home. )"lore
capital \\ ,mlri be cm?\t)ycd here; the demand of capital for the
aill (If llHltbll'\" \\·ol!ld ns(:; ~ll;d ~h.~ ,\,)~lld makt:: wa;::;cs rise
.tt the c;;pcr.se 'of inlt'rcsL On t1w (,ther h<1I1<1, if the rate were
to f,ll! milch be\')\\' f,),lr l'lT CCflt,. tLt:: aIl10l,nt of capital ~eeking
im'C,>(Olcnt hccrc w\;,::J d':ll:!'~h; tl1<:T(' lHnJld be k~s com~
petili')l1 on th~ p:::ln Gf ("pJt:ti roll' th~~ a:d of indt:strr j the
dil'isi,m \If the ~rrJdllC: (If "IOil.ll and iil-.:l."tr .... wC'illd be more
faYi)l:nb:c!o \':ipit:ll; .1nd th("nt(' ('I interest would risco
     The;'; ormal"ratl'        of
                              lntcro...:.,t in 1', ng-];tnd oot''> nut seem likely
to dCI'iak mud\ from fllur pc,- (t.'nt. !")f o.;,,~ne til~le to come; but
it m.ly he ::.llJwly ;llte'led b:' cha~6"~ i:1 the field. of employment,
II'hlk the n~arkct LIt..! of mtl'rC'::.t i~ O::i<:il!.lt;n~ ratlidly up and
down (-,11 eith('r ~l(:(: vf the ~on':1:tl r:lte 3S a cel1'rc.
     § 9. Bcr.-m~ :11(' imTntion {.If t~\e steam-engine it seemed
likch·that the :\('Irll~.t! r:ltl' of :n:erest in \\-cstern E1.:rc)pc would
S(\O\; bc,:ome lmlTr :11.1n it i,-; n{\\,:. 'j he (ln~)~cs th<lt h,1\ c come
o\'\'r th\' t.lec of modern indll~try h~t\-l' given room fN the
                             (If a \-:-'5t amClunt of Au",lliary c<lpital
pr\)11Ial.>lc Cl11p!I)Yll:,-nt
ni \\ 11,·-11 l;o-:J,o.X\ -Y:n h:ln: hcen  inh'~:C'd in Eng!r ... h railways_
~un-e~~i\T ill\'cnti"fl::i to;,:;-clhn with the (k\'c1opml'nt <,f foreign
commcr(c h;t\·c enabled clpiul to \ilCreT>(' much Lister than
POp\\:,I\.ion. w;thc)ut CJ.U:,.il,; an~·Ll11 in the ratC' of interest. And
hi'::;·(lrv rClords Sc\ eral (J:hcr pCT:dcis during which the wealth
.mol '-,t;Jital of:l n;1tlun incr<.'.Is,"t!, ~Ty rapidly. while at the same
time \!1l' c'pt'ni,,; out (of n~'w Ileld~ for the employment of capital
"as C;llls:n~ ,1 ri,;c jol i.:H: r;'I:<:   01   int('l"c51.
      In new COllntn!::; thl.! return which nature gives to man's
                                      INTEREST.                                              127
,ork is often so rich that, thou~h the W:l~;CS of labour are h;g:h,
:,.n pc-f cent. or more CUI lJt: g'A f(lr the usc uf capital. Bllt
':'pitai (1151\('5 in from older countries; ~md bt.,t"ore a district
>',';' been occupied fDr many generatIOns, tbe richest f,.aural
,· ... Jr.:('s of\\calth become pri\J.t,. p~-op';ny f,r \\hich a hi~li rent
 .., demanded. And then the prull11cc -"hi..;h rCllnirc':; to be
  ~.\·:d('J between C.1pil:ll and J.liJuur, the E 11 nlnb":;·a ,d-int~-,;cst
.Fu:id, obeys the Law of Dim:111:'!ling Return :lOU dues not
;,,·.-r'_'.l::e as fa-..t as the capital incrc3.s~':>: $0 tint it roo long<':f
   '-f,::ils a \"Cry milch hi~her r;t:e cf :r.:C-rt.':Ot than that whir:h Cl:1
;·c h:..u i:l uldt.:~ C"~I:l~r;e_~. .\ L1tC uf ci;.:-Lt IJcr cent. on 50JnJ
,:(-, <.:st:uent'> has ;pr'_J.cI hkc a\\'J.\ C ~tc'Hjdy m-er the ;'::1\:,ltCf part
'_ (the    ~ r,nh ~\llh'ri":J.n COrltin~nt; and thb is ~eil:'~ f'J'Iuwet! by
',,',lIes ofsc\ea antl       ot5~X and ':\'\~n riYL' pl'f cent. intl'f,'.;;t that
:-.:.''-c a:r.:;,dy s~ancd ('ll :beir way wC5twarJ. and ~ou!h\\"ard from
,lIt' :\lJrlhLTn Atbn:ic St<~te".
       ~ IO.    It is di(hClllt 10 force.:l."t the dist:1nt future of the r:.ltc
   j ,;,tcrc>st.   llilhert'j thc progll.::-'s of ell :lil~I~:OIl. has iilcrca,,~d
'!I(' willingness 10 ~,FC .It a               L.w r;ltL'    In old cOllt.t:il'5,
  :, -,vhich ILl'n 'He ,llC.l~toIllCJ to v.ork p:uicl1tly felr ~mal; g.lins
"'hi to ,,-,till'..? highly the poss('s"jvn ..,f a 5L'~llrc inccnl', a.
.'j'.'- r.1(,: of jolt:r.>:. seems to ho.'.t' l:ttk lcf~.·-:t in (~~('cking­
r;'; ,',:' 'emulation ",I cap;:.,l.        In ,bl~bnd ['.Ir ii\~lalH-', in .,pik
      ':IL':1.'1''- rate of intcrl'st, the capitai ~',f ,he country h ;ncr '::l'>LIl;..;"
      :Le aVCfa;e r;1~C (If ab"lIL £::.o~",::xx.\vXJ :n,l1u,dJy, Ih;;~ i ..
      :l lit:le morC' !h:l\\ a 'h:rti<.;th (,f i~s to:al :l):)U\JIlt. If lhl::> la:c
 ,~   mcr(-;tse were      ,~.J':>·"::11C(1   fof fuUf hU!lcil'l,d   :'['.1.1'':;.   tile ClPLt<lt
   ","ned l)y Eng:lisl:lllt:a '\')I~lJ be multiplied .1. mlli,o;] fold, and III
   :,.::ht h-..;ndrC'd yc,:ns a bilil():l fold. But l,owevt:f hi::;11 'he hopes.
        !!lay have of thc L:t'J~'~ pr(>;;r,'~O:; nfthe arts (If 11r(,d~lCli('n. 'w
 <~l:n": suppose tha! there will CI'er be .1. field ftJr I;;e pn)fit.Ltl..::
    ~lljlhyml'f'.t of :1<; Il':ldl CJ.pi;d! :l'i thi,:;_        Soor.cr vr LlteL the
    li'.! g,G\\'lh ()f c;ipi:.\l i!Hbt In. rca.,c the c01~lpe:ition of cJ.pit II
( ~ tht: ::lId of lab,)lJr, an,1 (!llnLn.~h the ('l)mpctit:O:l of labour
  . ,I' the ::lid of capital; S,) til:,t capi~;:Lrs share of the ~o:;tl net
., ;-uduce \vill (caSe to be plUr-ortion ,:c:y a~ ];lr~l' as before_
 .~, (:. at the s~mc time, the twl,t! nd product' ~hat can be
     \'_:.incd by a gi\'en amot:Et Df capit:ll anJ l.l')our \\i!J Gimini-:;h
  J .:ording t':l the L:1w of            J)L!lliru::-h;l~g l":'ctum. So that ulti-
::l..:dv the ::\onnal r,!!c I,f J:1tcr('st will f;d1.
        T1;(',e is no rC;,lson t" thin:": t~\J.t it \\'Ili fall rJ.pidly down to
       ;ltil/inllOll ::'1\,1 th'_:11 ~'~':t1il;n '5t.nionary.    }{:lIh':f ~hould , .... c
    ,-:,,·,~t that, \\-i!h suml; c,:~:;ht ,'sr:i!iati{,ns, the ::\'-~rm,d ratc
.'1 ;·It('r('~: w;l1 h'cp on [.ti:I:1,C;-, bL:t th,lt the r,ttl' c:f It:, £.ill will
    cCOll!C (ontillt1'1h- :.lowc:· and "jO)Wl'T.            It J-; thue, )ikcl\' nt::V('i
'c' attain but .d';,1jS t.> be approaching it:; 1JliJ;ll"'''~. But
   '~haH: no nu.;ilns uf guessing \\h;ll that -miltl11lltllt will be
                                CHAPTER XI.

                                        WAGE3.


     § r. \VE have seen how the IJfuoucc of land, capital ;w.. ·
indu."'.try, ('xclu"ilc of rcp.~ :li:U taxes, is Ji\-iutu into IlltClest a:" -
Llf.;iu;,;;; in'(J the Sl1:1'T which remunerates abstincn.:c! an
         •.
the < \re \,'-;J\...:!l n:T:'\:nt;r:t~c;; ,n,:';,;: whehcr bodily or !::,~·-nr;.
Ld u;; :1(1','; loo~~ a~ the I'.. :y in wh:c:h this !;\.lter P:lrt IS .:\orma!"
sllbdi\-id~'d a;llor:,~ un~ki!L·tl ::I])""r and th" ddf<.'rcnt kmds (
skJicd htJG1:r an.l of ullsine"'j power.
     \Yc ~t:- .., n'-'r l:'JW c,_,nccrncd with the ad\'anta;:::es whiel
cusli..nn 01 sC'Clal OPPO!'tEilitil''; or ttadc organizations gi\'e to lb,·
\'a~;oll';, L!~:b, of indu"'tr~ in bargai:1illg for thdr 5c\'ual sh~m'
of tJK'I:"~'!':I1~~":H,d';Il!t'r<-:'t Fund; lJllt \\hcn v;c come tv dis..:r..:·
the tl":ur;: "f ;\i ... : k,"'~ 'ra;..!t'-; In the next Hook, we shaH sec ho
~IILh a(>-:\l"(ta~:(!5 1l1.1: C.lL~S'~ t)l,' '-,".1.ge., (if a trade to di.ver:;
[nr.t Cll:l~lJt.:raiJle time [Ium tlldr XL', mal k\"ti
      L\< U3 lir,,( i:l<luil-t: ,\hat corl':titl:~c" tLt; .:\01"111;11 ncman
for [lit:' w,',k \-JfC:F.:h tnde. Titj.., lL-llunr.\ t1t:i.J>?ods Vtrlly uP"-
the d('~ir<..' 'I!" CllrSUmel"S to o1J~,.in the things WhiCh tila, traL
procilKb ',', hl.'l!J5 to prv:]uct', and pJ.r~:y UPOI1 111(" extent:
11 hich :t:'> ,lid IS ".-.Hlled l;v 0thct iLr]u,:tri:;! l"!;l':''::.l., :\I,d tIle 0\\TIC'
ot (;1IJ!tal \, ho t'-1k(' p~rt in n,.king th(-",t: thl:-_.'::';. Tlw5 til
ul'''"IP.d fJr 1:\,,,: work of a trad~ llJ:l)" be s..:iJ to depend C"
the !',")I:/.' '.;!I,m f'r il': ",;,/ i'l pruJHctl')n. Tht: m<:aning uf thl
term ma,' be ll~.:\k m0~e c:,' tr tl\· an inU~:r;1~ion.
           r(
      The :l·j,t :jd\',UlC'_' jll E;:~(Lnd-:; \','eaith has LIl:sc{1 a gre;!
dcma::u f~\r bui:din;:.:-; and thn_~e who p-:-oJuce otht.:r Illing-s 11.:1\
h:lI.t to give mo~·..! of 1.hem th3n brfore for ti;c PlJrd1.l~c or hire'
;: ho:!~,'      Thcl'':; has 1.J~cn 311 incrl'<lSCU1"0!llPt,tition for {he ;;'1
of "he bi.!iU;Il~~ tf.1cics. whi·:h h.b r,ti:,,~d. thL':r wag('j an" ("uabIt,
them tu l·')lain <I brgt'f ~L::!.rc of tlll' wealth of the COUll try th:l
before. ).: 0\'/ suppose th;\t durin; :S'lch a rise in tht: price, .
h()u~l':;) ,h're is a :":1<1,]'·1\ che.::k tu the :'lIppJy :)f (say; hous
carrel\tf:r~.        The [L'st 0:· the ~Hdclin;; trades will tbcn find j.
dif1:cu!t to obtain the iliu of carp.:!ntcr~ to supp:y roofs, floor::.!
                                WAGES.
 ·C.   And since the w\)ck of ,nasons,           pb~:er("rs,   and master
  .uilders will be of little use without s'.Ich :lid f. Olll the carp(Cnters,
   :le competition (f the other building trac<;.o for the aid of
    upenter:. will for<:'? up the wa~es of caqJCIHCl s~ .J.nd enable
     tch of them to obtain an exccptionaliy Lu-ge :-harc of the
Larnings-and-interest FUllu.
       This competitIOn will not act di,-cctly; the mason::; will not
 l:>k the carpc'nlcl's[o:lssistthem in their work. I t will act indirectly
· ilrough the master builders; for, as lIe ::;hal) see prC5Cll11y more
   ,dlv, in all conlhcts between the differenc industrial cldsses the
    mp\oyers 0f labour act as buffl'r~, \\ lw.:h ai):;,(,r:) rMr: of the
· )1"(e of a blow, but pas"; on most of it to l)~hcr~. The SGl.rcity of
    ;"rpcntcrs will cllmpr:\ employers to offer them h::,.:hn <Inti higher
wages; the C('nsequt:'llt rise in the price o! b~illSCS wiL check the
,:cmand (or them; the employers will h:l\·c .ill O,·chlbundant
 ,;.:pply of masons and other iabo;'lrlrs, a:1(1 will lower their
·.·.ages, J\le.lnwhilc the check hl the building trade will increase
:he competition amon; master builders, and :;0 dilllln):.h their
','wn Earn:ngs of ;\Iana;.:-er.lent. Thus the increased compcti-
:lOn for the aid of c.trpentcrs will raise their wages, and this
  ·ise "ill be obtained partly at the cost of those \\ ho r~quire
;~ouses, partly at the cost of the rest of the buil(iing trades
~:ll"uding the master builders.
       S:. The deIllnnd (or unskilled lilbour depcnds on the
    ompctition there i:::. fl)r its ;lid, whether in producing things
  .1r in ministering- directly to peoplc"5 wants, It is increased
.;r.stl:: by C\"try in,'fClse lJl the amount at capital that is rLady
:0 suppOrt and a~"i~( industry. and s<c:condly b~· t!\·ery increase
111 :he "mount (If otlsine~s power and of ~kilkd labour of \"arious
kinds, that art' C''';llpding for the aid of unskilled I.lhuur In the
work of pIOJUC:I.OIl.
       "\·hell the wages of unskilled labc,urers txcerd that amount
which enab~es them to maintain the Standard of Cu:::nfurt to
 which thcy a.re acc\~s\('mclL pClplliat:on jlloCJ.~l"S LIS~; but
 whe" :lle~· arc less, the ;,:rowth of population is checked. For
in:;tanLc, the daily wages of 11llskiUcd t'!H)UrerS in England
1:a\"(' seldom becn ie."s than what \\()uld purcha,;c half a
peck of \\ heat; and they ha\·c seldom risen above \~ hat would
VlTl~hase two pecb; they have (,~cilla!('d up ~,:~(~ down be:ween
th·,'se b\o limits. If it were a bet that whencH.r tL~· day wages
(If ur.~killrd labo\!1 were less than a peck of wbt.:~lt. pu~ulation
 (.:nlir.ished, and that \\ hcne\'cr tiley wc·e greater !Ii .• n a peck
• I whc:1t, ropdati;m increased r:lp:dly; then :l. p":<..k of ',yheat
11"ould be the .--';:frm.til!ay w;lges of un:-Ll!cd bbo:;~. b)r when
·l h·gh fate f)f w •• ;,;'::' Lli.sed a rarlli growth of :Jr.skdl·.·lt labour,

" wuuld incrcas..: the ("omp("titiGI: of unskllkd Iab0LOr for the
; id .. ·f Glpital and 01 ..,-ther classes (Jf industry; and this would
       M.                                                              ?
130                    BOOK II.           CIlAP. XI. § 3.
lead to a f:J.U of wages: cool'ersely when                  3.   tow rate of   wa~es
check('d the supply of ullskilled labour, it would lead to an
incrl'ast: in Ih·" Cflfl1Vt:til'll un the part oi capital ,lnti other
c!asses ui ~ndustry {PI" th.: aid of ul,~kilIcJ J.tbour: <ind th;s
wo~tld lc:J.u t,_, ~t ri~~: d it'> \\":1,';('5. Tln:'>:l r,'ck uf wh',lt would
be the c,,-'ntrc lir :\onnal valu,," tow:tnb \1 hll...h the r('!l1uneration
of l[fJsl..ilkd bbour Cl'll.,t:mi;Y graV!t3l>.:l!, <ll.d any (~e',Lltj()n
from \\h:ch \h)uld he a tc:nporary i:r(,~l:brity, WblCh, the
mom~nt it (·\.ists, sets fmct''> in :Kti'ln te~dll:; to con C'ct it.
        The Sta:1dard of Ccmfon is not in f:J.,-~t ri;..;!uly rixcd. But
 yd it i~, ,t~ an~; plst' .J.nd tmh', 50 nearly !ix...:-d, and dues nercise
 so gre:lt an illlj'A.'IlC;e Gil thl! growth of pov!latioll, that the
 \':a(~(:s )dllCil :tf{,)lJ Ihe mean", of l}1;1i:Jtai:-,ing: tlJij Sland:ml n:::J.Y
 hirly b' u!lcd t;ll~ '\ urn,al \u.g-cs of un~kiJkd L1blJur there and
 ttl.;!!). \\"h~'n \\":\::l'~ :Ire ..It this lC\Tl they :!rc in equlli1)riutn,
 unless thclC ll:\.ppcn~ to be :It the time <! great chang..: in
 the f.dd (,:" e:nplvynh'11! f,",r Lll)()Llr, Till'; l~ the :\ormal or
  Cen~re ·,J.:U2 about \\hi,·j Ib·:tu"tio!1s of Supply and fluctu-
 ations of Dem,IlHi can:.!.! the \Varies of unskilled labour to
 osciibtc, But the :\orm:lt yaL~(· ihCif \;1rics from 111ace to
 place and from time tIl time \\'il!~ cl~,tr~;t's In ~hc StanJ,ud of
  Comfort dthe pcop!e, 1\ ri:oe of \\"~j';~'j LJ,\.J:>Ct.\Uy;t1l increJ.sed
.ot:lllamlll)[ laboll/, \\·rll b(' tnntlor;1.l"\, 1,1nle:-s it kat! to ,1 rise in
'the Stand,tni cof LCl;lfo-.n: In \~ hl,~h' C1.se it will be permanent,
  and };",l:-n'3.1 w,t;jes w'll uc r:liscd,
        ~ .,.     ~"('xt nith rd:~anl to \,HLOUS kindj of skiJleu labour,
  The dcm;).!)(.i f;l/' C.ldl "";,i"-'; of .~Lllcd labour depencis on the
  compctltlO!1 titere is fv)' it:; aid. It is increased firstl!' by
  e\'ery :llcrcasc in the Glpltai that is ready to support and <l3sist
  indll~tn", :n,d sccondly b~ cyery inCI'L:::LSe in the unskilkd labour,
  i:t tIlt: ::kiIkd blwl:r ot u:L'r cL!sscs, ~nd in th::! husint:~" power
  that arc CU'11PdiJ:.<::" 1,)r lh~' :-titl oj bbour of this c!,IS-::.
        Th{;' Gt:J~'"'~ 'I hlCh JC1I';"lh,:1C the suppl.\· C'f skill of;)ny kind
  in OIl>.: ;;(,I1<..'1'.lI01. <1r(-, ;\S he h,lI'(' ~\Cl'll, chidly tv Le sought in the
  opportunities ;1n(1 the ha")lb .;f the pr,:VJ,ll.'3 gcnC'J.llQl;,~, The
 trauhlt~ ;lml cxpcu"c \\ hl,'ll P,\r, Ill'" will1.:ndcr;,. in pn"p,ni\l:';: their
  son {'Ir ili~ \\'ork Jq)..-n': on thu:' !:'lcans, [ilCi, hilb:t.'> 01 fore-
  thou:,,!'/' and ",df-den;aL ;J11{1 tl}t',r kn"wlcd'..';t' oj :ll1d aeec.'>" (0
 varj"~I~ !r:l,ll's, The r('vrcr :inJ" the more ignorant par~nt::; are,
  the hi;;lll'r i., tlie r:H..:: ,t 11']-.[( 11 ther 'Ire likdy to disc·;,unt the
  \\,:l~c<:' WlllCh their ~on \\ ;\1 re,:, ;\'C :It a fut:m.: time.          The' lower
  p,H~:il~ aro..! in the ~,rJ(i;l\ ,,\';:111..'. d:c ).!'reatt'rmust be the ,ui'-;antage5
  which ~hey ca.n pr,)Cllre (Ul their sun uy a iolV'~"1l Olnl~y on
  his educltion in ord('r th:lt tht'\' HU\' be lllduccd to mal.I.; it.
        I'ar...:r.t" .:'C'nC'!":-dly uring up 'tll<.:ir' sons in the same industrial
  grade "" tl.cir own; thl:r,' is SU much freedom of intercourse
  bc~ween differcm traJes of the same grade in the same pla~e
                                 WAGES.                                   '3 ,
that their w;)~es (ot' more strictly their Net Advantages)
seldum d:ff~r much for any lon~ period to,cidher. An;. increase
in tlie inducements to parents to bring up their cllllc.irefl to a
tr"c!,:, or to adults to entt:r it, int'reasc:-; the supply of bbour in
it j the chief p:lrt of this supply ~cjng drd\\ n from trad,~s in the
same :=,p.d..:: \', i el1 it.
     Thus we are hrou~ht to thcLawofNormal Wages, \\hi.:his:~
          The amount of the Earnin~s·3.nd-intercst Fund, and the
             wa" in which it is di\"ided into the shares of interest
             and e:lrnings being already known, the W,1~CS of each
             trade depend on the way in which thi:~ lal:(;' :-l,3.rc is
             sub-d:\'ided. The ::-;orfl):11 \\ages of a trade "rc there-
             fore detclmined by the relation in which ilS w~;cs or
             more strictI\', its :\ ct .\(hant<lg-es\ musl s::l.Ild to t~lOse
             of other tr;d£~ in onler ~hat the 'llpply t..,f !,lbuur.in it
             Ill;'!;: hi? kept up, and thi:; dcp<.!nu~ on tho.' di(ll( lIlty of
             the wnr~ tn be dune in it, on the cxpenSi\"e,leSS of the
             general and special cr.;lc:ltion, :md un til(> . natural
             qualltie", ph~"SIC::ll, mCI:"d and moral) rcqilir.::d III it.
          '"trades in the satne indu:'lrial grade i!enerai)y r.:ql:ire an
             equ(ljiy difficult and expc:nsi'."l! c,ilh~alio~l, ;\nd have
             equal wagt~, The lov'"L'r the grade of a skilled occupa-
             lion, tlIt! higher is till' r:ltio which its wages bear to the
             exp('n"'e~ o( preparing for it.
     \\-hen :t r:st: i:1 tilt: W<l.:'CS f)f a trade abo .... e tht! !\ ormal
\ abe causc:s a r~pid increase of the n'.unucrs in it. it:> lt1cmbers
iill(l.l diminished competition on the )Jart oi oth('n {or th.::ir aid;
thl'Y an:: at a Gi~ad\"antag'? in hargajnil~C: f,)[ their share of the
pwducc uf la.ld, capi!:!.1 and indt)str~", aad their w~,g('s ["IL Con~
\'erscl~' when a fall ill the wa~c:; of this grad.:: below the :\ormal
\,<l~l,e rhl'cks ~he iJ;cr~asc of the nllmbd~ in it, the c"oml'clitJOn on
the: p,Ht cf c:lpiul and thc other classes of iJ1d!l'itr~" for' h..:- aid of
thIS trade is increased, and its wages ri!'f', Bu~ when the wa~c<;
arc at the .\"onn~tl \'alue they are iH cquihfiriul.lt/ the growth
I)f r.u'r:bf:r~ !S Ilf'ith(,f so fast as to low~r them. nor so slow as
10 r:,.:-'.' the m, To\\"ard thiS v::!Iuc the wage'S of the trade
con::"~aany gravitate, and any devi,ltion frum this tate j" a tem-
 pnrary nft',Salarity, which, the moment it exists, sets in motion
fGrec'"> te;",tb1J; 10 correct it.
      But these forces often act \"en' 510wh" uec:lt:se of the friction
 ul YariD!]; s')cl.J.iand C'conomic obstacle; that hinder men's pass-
 in;: frrJm ('ne tnhlc to a!10thC'r) e~:)('cia];y if they are in diffen.:nt
<:;rades ; :lIlt! lhe" temporary irrcglll:lrilies" nuy ('xtcnrl over Yery
 lor,~ pcriod~ of time. FJuctuat:0n" of suppl:-' a:d denl:lnd cause
 the wage,> ~Df each tr;ic.c to os,il~at'.:- 200", C ;cHi L-(:i,y,V their
 ~nrmal yalue; just as a l1u;llin;.: Lork OSCIUates ""'. ,:h each
passing wave, aboye and belDw the surface of the sea.. Th(!
                                                                   9-!
13 2                !lOOK I L        CHAP. Xl. § 3. 5·
:\orm~11 W<1,:;-C5 of ;,:kill (',( y<,t10t.:s gr;ulcs rise or fa.1l slowly, as
the ~:J('s n5e or ::111. Th(;v r:h.:l.r:-;o~ wi,h those slow changes in
th," s(>cial cnnciiti";1 (" f \-.iI10;';S r:u~k:i (If th,' r~e()plc which work
thCI115Cl\-CS out [0 the course of nuny gcnc!~:tions.
      Th~ effe~~t (If pr<;gre:.s i5 '-1S ~\ n~I(' to mere,lse the supply of
intt"iligcl1ce <lnJ ability, '>0 tiwt if the- cUficlIltr of the work to be
don(.' (liJ ntJt il~creas(', the W.lgCS (,f skilled hbOl:r \\-ould be
iikcly to fa~1. "\nd:n fact the Task-wa~Ls. th~H is the wa~c5
that arc paid for skilled labour of a g:\'cn dtic:cncYl are f.lllin;; in
many b,anchL':-' of l),2.r.:.:factllTC; thou;;h t!ley ;lre on the \\-hole
rising ill som~' trades which are under spt:Ctaily favourable
circulIls~anc('s. as fL'r instance the building trades.                    Bu:' the
difticult:.- of the work t" be uont;, and the intclligencr rl'Cjuin:t', for
doing it an~ increasing. and the average CHmng-s of the workers
-their TmlC·wagcs-arc g:enerally rising. even wherc their Task~
wagC"s arc hliing-.
      §.j.. A rise in the Timc-wages of any tr<ide I'::::lcis to diminish
 profits. IJllt if the \\",1;;C5 that are p:lid f1r work '-<ir)" J.·,:cording
to it5 ~'fficicncy-if Ta"k-wagcs arc un.1.hcrcd---the share of the
 produce of industry that is left :or vtLers y, ill be the same
 \,hethe'r Timt'-wa~('s arc hi;::h f)f jnw, It is only \\here the rise
 I1l TinH'-\\-'\~..''; 1-> not a,c, II [,p:lllied by a c()rreE'-p('IH~!Ilg increase
;il ctliciclI,:, <lad therct"ore Ta~k-wJ.c:es risc, that the chang-e is
 in.iuriolls to Lap\t.l\' In fa.::: Wh':l <I l.1bCtllfer h.-ls to be supplied
 WlUl cu:;tly machinery. a r!soc in TimC'·wa~es IS a great bt'lleht to
 clpit li. it it lc:-,([ ~o :"u(h <1:1 in::n:.l"e of efficiency as to kecp
 T:I:-<k·\\;tg' . 'o- t;r:..::h:iP,t;cd. t)( (u~)r"e the machine itsd[ SCllne-
 titlll'~ ":'l'(S tilt; pacl'," and an inthfferent worker may bl: able to
 do .1![ th.lt is r('ql;ir~J, Hut such C<lose'> arc mlldl mort: rare
 than is ;;l"neraJl:'- thought. Uf two wea\"l'rs or two turners
 workin~ side by "illl: at sin;il:u I()OlT1S or ~imiJar lathL~ driven
 by thl~ 5~m:.: m:l,:hiner~', ol)e \\'Ill oitl'n uo twenty pu cent. mOre
 ;n n day ti:;lll the oth'.'r: and it l\'ould be to the ad\';lIltage of the
 cmp!'1yet to :;c..:urc the l'llcrgetic m~Ul by payin;; l,im man: than
 tIl en!y I)(.:r I"cn!. more Timc-\\';l~c-S, that is, by payin'o! him Task~
 wat-:"d at a little hi~ht'f rat~' tll,ltl he pays :hl' incfticicl~~ man.
 For in this way lh' will turn hiS machinery and the space in his
 facto;-y to the be::,t <In'Ollill.
      Even in the case vf ullskilled labour it is to tlJe ad\·.mt<:g-e of
 capit31 th;lt Till1<::: wa;:::l'S should ri,,(', pro .... ided Task wa;cs do
 not risc tOd. If twu Iabuurers at l!-t\,. a wCf'k ',\ III dO:l3 much
 work .,s thtC(':H tH" the former are in thl' ion,.:: rlm cheaper.
 For th,-'y ar(' likely t·) remain longl'r j!l full he;tlth and stIcn~th
 and to; h,I\'C I;,.'"dt!,j,.'r Olnd ~tronger children th~il the others;
 ;-,nd ,I l~:uch h(';I\':er b~lr'\l'n will l:C Imposed 011 c:\jJltal through
 ~h(' pOer r.lt(s by thrc-e low-wag-ed than by two high-waged
 iJ.bouro.:rs.
                                  WAGES.                                       JJ3
     There is however a limit b£'\'ond which a rise in the Time-
W.l;!f'S of unski:kd bbourers ~'ill n"t cause a ;:noportiollate
increase ll[ their etIiciellc\', and ..... hen this illnir b p:'\ss<.:~i ,lnr
ft:rther ,-i'::ic in Time-\'.-agc~ will raise T,l,:::k-wa;:,cs tuu j but e\'cn
then tile fiSC of Task-I':;1:es 1\ ill be sl(J\\('r tlun ('Jut 01 Time-
wagd. Tile grnwth of (~Ipi:al and th<: prug! n~ of the .tTts of
maJ;:.;(.lCtt!,e wlil. if wars can be k<.'pt duwn. m<1kc the world rich
enoll~h t() :J.lford high nagcs for that little unskilled bb.)ur \\'hich
cannN Le ~uppLtnted b~ machinery. This incn;:!se ')f,,\~~.llth
Wl111H!f indC(-'i rJL':C the \\agc-s of Il!lskillcd i;Jhourl.'r3 11 thelT
:-llalH;lru uf Cumfort n::llIailb low ar;d they m:,rr~- impE1JLntly.
llut ~ tl)'le I11:lV ("me when the StanJ~lr,l of Comlolt of Clll-
sl.:illl'J bbr>ure:"", ,\-ii! be such as to keep thelLl from PlJidly
incr('J.~ing their numbcr5~ (;\'t.'n though their wa,;c", h,1.w become
as bi~h in old countries a~ tbey .Ht: now in new CIH1'11: ic~.
      [~.l.   The intk::nce wliir/l dem:ma c?'\er:s (111 \':;'gc., IS some-
till!(.:~ expr(.:sscd by sa~in6 that under a :,yste:ll of fr.:-c competi-
tior, e\":'f,' !~lan's w1~',·,> ,c'nd to be equal to the diJ-((!lOJkd 'i,t1/Ju
uf the   prudu(l~   (·f Lb labol.:r.
   L,-,~ u., fur ir.'it<l.n~e Jma~ine a thng to be m:tdc by unskilled
L.buur a!ol1c without any supcrintendenre, and wlth,)ut the ;lid
df any op.t;,l except th:tt \\hich W;L-; ad\a;1r.cd ic th::. p;tym.:nt
d W:l:;,·:-;. Silppose tlut this capitai bas been advanced :,.:rac\u:ll!y,
,>omt ot It a ~hOrL titnl', sunk a iOIl':; tim<, on the an.?l J;e half· ...-
YC,t!' bc[o,e the thing is r.:--\dy t~'f 5;11<'. Ld th . . . f.Ltc of inter{'~t
tor SIX l11ont1ls, allo\\-inl;' fllr l'i'ik, be fin:! pcr n'r.t. T:I,"11 if the
Ih,:',: (J.r. be 50!.! for [tc-'5, the I lisClluntul \ ,,!u': of tlli~ halt"-,t.y<'ar
LJdop_,l'.l:1Cl w;il1)(' [ILK). And cc,mpe::n"n \I',ll \'-'11,1 I,' Ituke the
Wdg,'!- (If tLose who 1Jl,I,je it equal to thi~ .r ):!-~,OU::itl~d \'~,luc of £I(x).
      liut a case d:; simple as th~s :, . . . \.t:l' (I.-Lurs in ptdCtl(l'. The'
{,;1rnin;::~ of many l!JlflT~nt -:-:n"':s 0; induqry, (In·? (II \\ hich is
.t!lllost "h-.l~-j rh.lt .)f ~tli-,c:nlltl:nJ"nCt' Of ;\I.ln.1g(,l:"~~l1t, enter
lr,,_\ t:1C E ... p~'n<s ,,)f jJrodui.'tlon, F"I rh<:'rclon' into the price of
alir"ht c'.'l,,-::thin:2: that is sold. An,] in ordt:r III dcdncc fr'An
 t~" rllleC the eJ.rI1lngs of u!'.e of thesl~ kinds. we must fint! Oltt
 Il(lt (.nl ... the   inkrest on. the car-,ital cmplo~-cd but ,11so ~he
 e;~rnij):::,,; uf the otlF'J" klllJi of in.dustry, :lOJ d.'cli:ct th(:m dll from
 th~ \<~lu.~ '_f \h'_' pr,)d'x~ ,'ais('(l.    \\TC Clan;): tJI'?n !'-pcak of the
 IJi!-c"lun:ul "a/llt of the \\"utk uf all\' ont; of !h',>;e cl;'l,,~(''', l,ut
 \Ie l,]"y ~,iji s{J~·;tk ,;f the '"::-"/,t Return" of tln,t bb.IUL The
 [\ct l{dl:rn ()f a l1\3.chilh! \Y,;S l;c!:l\o;!~l <I., the \,:Jut: of the' work
 thdt it U')(',~ after .l.l!owing for DCpl~'ciatlOn ann the Lxpcn::,C'"" :If
 \\'Jrking it, incluuing: the Earni:lg:; uf M.lIl,{~"mt:nt. Tb<: Net
Return (,I" :l man's bbun i., the value of the prflducc whirl\
 he ;,tkl·., }."lrt ;n pw.iwing :lfter de~ilh.:tir;~ clll the lither Expens{;s
of prOdUUilg: it I.
      I A sta~eIDellt of t.'lis kind has been mistaken by some writers for a
1;+                     BOOK II.       CHAP. XI. § 5.
     Thi:; phrase is very 1J~c(ul when we are examining the part
\\·hich Demand takes in d~H-:'rr.lining w,lg('S. For instance, .if
the dn)'13nJ I'ur hOllj(·"; i.'> r;.,;ng, the i':et Return of the lahour
of sUlne   "l'   .l,i (1( tht..' \',lriGus building trades m:J5t he increasing.
Thcre m..1)" be sigr,; ;.f a great.:r sc:ncitr of laboLif in one of the
buildi!];::; tr:ldes. as fUf in::.tancc that d th~ carp~nters( th:m in
others: ;:!;~O if we l)elieve that the t::.I.rnings 01 other branches
of tk !.;uild;Il:.: tr:1'\"'> ',indudint; :he Earnings of ':\l~lIlag:ement
uf th,' ma';!t.'l QU11,!ers} arc n')t !Jkdy to ri::.e, we may say th;d
the u)mpctltion fw thc ,lid of carpenter< bbllur will i:lCl"case,
that lh'~ )\d l~('a.:~n of till:;r iahl)11r wiil rise in Y3.Ju{', th,lt they
tht'n'~-": '.: \\ .~16d an iru.:n~:t~td ~h;1n' (-·f tht: EaI'Cl:ng:;-and-interest
Fllltd ; and tilat their \\".1;.;<::> w~lt ri~\ .
     •\gain :be phr<i"'" ;\ et }{t.:tum of l<-lbour can be uscftlil>"
applied in (."Xi,Lti:lln; ::-,c :lltlUt"IlCC of Dcm:tnd in cquali:,ing
Task-wa~<.'s in ~hc same l,CCllpJ.tion"               This influence mil\' be
dl..'scrihcd by sJ.\'in; th:tt unckr a 5y.:;tem 'Jf ftcc compr::ilion
even- Jl;an's wagc5, or mure' g:...--ncLll1y every man's can;:ng-s,
tcnd to tqu,ll the :\d Rctum of his inul:stry,]

th<:ory <.if W:1;:C~" But rC:1Jly it is only lh<! LlW :-" \'alue tends to
eT~al Expensc:> of,pwc!uuiou"'-writtt-n in a I1<!W form.
                                           CIHPTER XII.

                               EAR~I~GS              OF   ~rA~,\I~L\IFST.


            L   \\Y,: h,l\'e seen that the sUJlply of 11'.1'0;1:,':" TV1W('T i:-i
det~rmiI1L'd       in all e,s~ll~ial r":~l)(:n~ in Ilw same \\-~ly aqhc "~IP)!Jy
ofskiliet; labuilr; \1"\; h,n C,' n'-,w :0 (''',~1111"t \1;" L;\'\'~ ~hat gL,':c:-n
~ll(: :\orm,ll r:1rning".l'f \T:m.10!(1ll>eflt. Tlwje L,\\". appel' .1t J!rst
si-:,J,( t1 ,Ji(f\,:r !~HJ(h. <t'ld they r~·.iI!y dr) diIT,'f a i,ttl<..' tl<"11 ;:1'.,<;(,;
\dW'h :2,',wen, tho: :\.,lrln,t\ W(l;:;c:,> l,i ski l :,.(: ::\"".T: the c\!it'f
d~!Tt'!'e:v:r; <.Iri<n,.: fro1i~1 th- f.td ~h1t :ih' L;l\';,ll:',~, Of 11 \[ ,l,~f'
1I1Cr, rat) b,- n:)t.\int'd (l1l1·: h\' :h'nl' \\11,) h,1\'\' ~he e'J;L!ru! ",f
c1.pltaL L(-t 11" lben 11<..:;..:n by c(,J;np:1r!n~ til;.: Eafi1ilq..(::. of
:'>1,1;: 1.";( .nellt of t\r'l men c"rryil1£: O~~ Slmi!.lf business. thc <Jnc
with h:~ (:\\'11 C.lp::<li. ',he (ltlt,'r with u(,rrO\';eJ.
       f::c: m;w "h" \\'(1,1;:., ,.,:111 hi~ ("In r::t~.;t;ll (onc;irkro; lhat
hi" F;lrI1lll~~':=' cf \L1n:l~emcnl :lrc the \\ho_lil' !lC! r'IotJL:3 (A hi~
t;t:~i:·, ~~ Jft<~r (lcU(ICling tire inerest :ll.lt lh' '-(·'.llrl. (Jht~lm bv
k:~:ll': N;: hi;; moncy (,n ;;n(,d security.                n,~t iIItC!c·~t :'It a 1lJl,cll
h!.-:LLi" ra~1.! li:,lil \i)i~ must b", p:li(; b~' :\ Ill"              \.11:) borru\\",~
:",lp,',11 {'I;- his bL:~'I'(';S, at <lil (',-,-r:l" x:~'_";; i.is \)\\1\ 1-'n'p,~rty
j~ _~,::il' Il':lt tl) ;.;:\.,~ :;o\)d s(,C\!~':I:V f,'j" i~: and ;ntl're~t at this
high I-;ltl' ml1~t he dcdllctc(l from the 11l-,)ti:5 (If 11(:> bU'I!lC'S:->
III ('r~jer to h:l..1 ili~ Earn;;,gs (If \IaIi:L.,:-t>:nt'u. Till.' ntc of
'ntu'_'< 'Ihie:l lie' kh to \);\)' i~ 1li~h. b{'Cl:hC in his C:1<;C a new
~('t oj !,j,i;s:" ;r\'t'\">I~('d :1'0 :-.d,;itiOll tlJ :hose un;l\'oi<hble n:oks
11'1   ](!~, ,:Sl  i:, ,".('!T ~)U~iljC:=;".
            '1'iw,,' ;'i~k" \\hich arise'                fr,1m ';tl,-il C1.\;S!> ,I' 11h' c l1,ml'e
                  u1' ocs:',:C:\lJn or ri:.'pr[',:i:-l:iol1 ill \ai\TC of :lle l-:tpil~tl_
                . (,I11P 1,,"'-'''!. ('·r of t 11,~ g-(l11d s prl-'c\ u, l"j i~ ~ :';,;1 r{' i rl :.(' 1" I: .1 hk
                 fr(Hll t-Hl,;~ncss. 3.',1rt         marb:::    ClUe'!      Trad0 Risks,               Tb()<;c
                  fWl1!cr       n,,;~s wLich :H~~ 111lrtJl:\l'('(: \,-)H-n lh(' capit<ll
                  of 01;('     :11:'-11 i~ H'llkr the (onlwl df a:,',::Wl", lll.\\· bl:'
                  calkd Personal Risks. Till',:,!,' arc t!1I'~ t,) the mi~t'ake5
                  th~t tllt.' 1cn.:kr In:1y m~\b~ Wilh n'~:trd to th<: hll"rowers
                 bU5:n<:~~       ;1 1);':::__ ,   .~w.i hon~·,q~·.
       A,   mall      tr,dir.:; with hl<;' 1)\\11 "~Ipital h3o, (,\'('ry motive for
c.\~-rt1r,.s       11jm~elf to dISCi\t'r wh(th~T he is C<'lrylng on hIS
~_,u~u;ess        at a loss.          Dllt        the man    't1'01   king with oorrv\\";:;d capital
 IJO                         liUUK 11.     LHAi~.    XU.     ~:t

has not such strong mr.tins. If his moral senst! is not very
acti\'c he may, without in1l'::ding' any deiiberate fraud, carryon
a losillg" business so lon~ as to c'-'ISC' h·:avy 10.:;s(,5 to his creditors.
If ht-' h.i not a strin ~f:n"e "f hOllClur, nr~d ti.nd3 hims("!f in
diniCl!lty, he m;\y ptllngc !I,[O 1'a:;.h ~P':CulOltl()nS for jf they
;succ.l'cd, lhe :;:>;i1 will be his' and he may not care whether he
f.11:S   fpr a   Iar~('   ,'r a small   SJW.
     On~     way       1Il whIch the lender can insure himself against
these n.rious risk:, i3 by eha] gino.:: a high fate of intctest for his
loalls. Bllt a \'cry hi~;l r~l.l" \\,_'uld be required t\~ (on::-, the
risk of loans madt.' for;1 long period of tnne ; and th·.:-reforr; ~,tlch
loans an:: g:cn{:TJ.liy :ll,hie fot short periods. The ~horter these
perio"is arc the less IS tht' ri,~k which the knOt'r TlIrlS, and
the Slltlnt'r ,-;'In hI! rcco\'<2l" the u,:-e: or' his capital for h:lll,-,e)f,
if the r.(ll1r~'.' of hi.; OWI1 It.,de "hould mak.! him wish tt) do
so. _ Th\l~ H:mkc'l":; anj others are \\-illing to lend nloney for
a k l \ In')ll~h~ I ,)t a l.1Le "f illteff'st soml'tir:'I.'s I;ot cxc'-.!edmg
tbrec "I ; (',.I! rwr cent. ;~ ycar, C\'cn when the bOrfOV'-"-T ,.:annot
offer !ot"~\l1 ,ty which ,,\ uuld il-,Juce them to lC1H1 him c~pilal for
a lOllS P(':'ll)(lo( time at an~ moderate rale.
      }:ut ,'. Iliall ",ho is lrluc-h dl'pcmlenl on sllch short loans
~:ll.JOCl~~ uLder great dl':',~lh.l r,t.l;.·". For If any misfortune should
iniur._' bl~ credit. or if a (ils:tcrh.'llu:· '1( che money n'.::nkct should
c~usc ~l tt:mpor,IfY scareit:: (.f Inanablc C::1IJltal, he ma) be quickly
blou~ht Into great straits.                 lIe may not be able tu ot)tain a
TI.!tlt:w:,1 of th'.! !<lnns ()~i m(ld~'r;)~e h'rllls. or e\"(:rl on any tenns,
and nuy lhth bl.: et:t sl:un i:1 his mo~t h')l-'dul Cnrel prist:,;. One
of thc chid ~~ alPt(>m~ r,f ~n impending Ct)mmcrciai cns)s is a
r~lpid :-;tk(·t:S~i'n of fC'r, ,-J s~ I~·::; -1.t a 1o",,::; by thus.:! who ha\-'c bcen
tr,:clin~! ''.'Ith I-'-Lyit,tl iJ~,rh)',\(d L,r ~ijort p~rjod~.
      Thu~ It ;1rpea." ,hat a trader \\ho works on borrowed
rapital il:IS in flnt' tc,.-m or another to p:ly 3. hi~;h rate of interest.
J;IJ!. IliG,,~il hIgh. Tt IS nut ~lt[fi.-icntl} hlgh to prcvl'r.t 111l:1 from
c'--'!llr,:lll,; "ill. th,1,;C who tr.Hk With their 0\\0 capital. On
the c,:ttr;lr)" lllL"n \[arlil1~ \l'itJ~ 00rTll\\"cd capital s('ern likely to
rlispld(-.:" to a gn::ll l'~!<:nt lho:;.v trad!n:,; wilh th<.'ir ~'\nl.
      Tl1E' )'ca:-'O)J (,f thL~ i:-> ntJ! j",lf :0 seek. A man who has a
Upil;!i (If £,,"J.OJ(l COlli easily obtain a SCCdrc illCOlllcof [z;ooby
lentilll,_ 't out. .\nd n;ry l!kd~· he n:J.y no: (""re t() undergo the
!<:!L",)lJI_~ ,111.J '-lDx!t.~i{',; of a hUSIJ;I_S~ I:fc unless he ca:1 g-ct E:u-nings
o~- :'-1. " I ....; ': I!.t·l:t ,0/ .£2500, Or ~'\'(:n {,.c)OO a year. .:,clasivc of
("t,he VI J -,sur,lcr(' d:-:.lln,~t Tr;llk J{)~k-".             Hut a lJ},Ul of equal
,.:)ili:; \\-]-:., 0',1"11", 11;t1c r,'pital, ,\:-;,~ who thcivfon.: ':.lnnr,l 11\"(' j"
c"!nton ,_, ,1hulH \nll kil::":. will be l'{)llt-2nt \\ith k)\\t'r Earnin;;, of
).I.a:ugO:'incm. He m:1y be \\ ill:ng to cl~)pioy [;o,()(X) of l>or-

                  1   This is done chiefly by "discouutino; bilk"
                     EARI(INGS OF               ~IANAGD!ENT.                                 137
rowed (,.:lpitai, in addition to his own, e,.en though ;tfter allowing
(or the      intCl6C     that he:: actu3.Uy pay,;; <lnr1 the indired risks tha.t
he furlS th;'Ol1~h \\orki:1g with buIToI\cd (,tpiui, he does not
 dC:J.r more t;un i><XIO a YC.J.r by the work. lIe Gl!1 therefore
 alIonl to sell at a price tOl) luw tu gil L: tkl.t rate of pr.}!"\ts which
 thf: nun of indepenuent mean'i I'C(luircs. Tbus those who
 uep,-nd ():1 their l,u5I1le::;::; for a I1V1 :lJlood, ulHkr::oc!I and drive
 Gut of trade thl)Se who aft' not so Jepcndc:n(.
      ~ 2.    Again a man may obt;lin LUlling;; of :'\ta!lagC1l1t.'nt by
 carrying on a bu~illess with capital, til..:: owners 1.1 which takc :l
 part at !cast of the ri"k:; of the bt:sine~s. Tb~ ::,impk~t way of
 doing this is the do:..! phil of r~lrtnershjp. Tn fvrlTld llraes a man
(Jf little c'pitaJ had small Ch;1tlU:! (Ji getting hl~h EarnIngs
of Man,l;;\~ment ull1e~s he could ohlain thL' conlit\, ,ICe <>f some
\\ ('althy man or v"j\',tlC ti;-m, who ,IJmittl:d hi;n :::IS d panncr.
      Again. if a l~,an thinks that he C:\l1 )IOfllahly employ more
capital than hIs O\\n III his husinc'is, hc' <Jfter. C011V("rtS it into
a jOtnt,slclCh:. cC'llIpany. That IS lie admIts otbers to sh:lres
in hs business: they take a share of tbe n,~k and a cl,rrl''''ponding
shnr(- of the net )lTo(f.::ed::. that retn:1.in aiter paying him Earnings
of :\1ana,:r;cnlent ac(oni~n;:.: III some plan .'l;-iH,cd lIpvn between
them~,       A j-::lint-stock company of this kmd whid1 is managed
by ~l.'; chief shareholtler or sharC'hoLiL'~'~, 11;;.JY ac f 31mo~t :,b freely
:~l~tl pr'~llllptly as a pn\<ltc tinn can,      If 1.:-,,; sume ::.pcci.1.1 dlsad~
\',:ntagc~ j but under tal'our abJe circum;;tanct:~. it T\1;I:, bold its own
  "'er. i:1 trades ",hic!l require [I;'"ady enterprise ~.nJ Cjlll(k action.
      The bu;;ilh"SS of a Jarge y,int-qock compJny I;; bm'C'\'cr {Iften
,-.Irried on by U;n'ct<lrs: who g:vc it only a little oi their time,
  ,lld Ccncral ),[anagcrs, \dlO g!\e their Ilhole time. The
(;u10al l\Lwagcrs are seldom men of much c,~pital, and are
rontc:1tcd to work for n~()derate s;daril'':>, The Ln:::'IIll'sS of such
.\ company Will alml'l::.t alwJ.~s be l113nz,:;ed with Ie::'::. Llh:rt;) and
C[OIlO;l1Y than a simibr private busiwC'":>3 in abk h:-tods. As
 \[11: :oay3, it may be possib!1! to seeun; 1:1 hired ni \ll,J,;ns that
ric1<..L,' which shriuks (rom a delJberate nC!-:,len of (h:y, but not
tl:.lt t:.cal which i" continually !<l;' irig S(h":!;ICS by 1\ lu(.h gr(:J.cer
P;OI~t 111:1)' be obtained, or npcn"e :c.,tn'd, allli which is ever
auxious 'lbout small bains ami "m;l.l! :>cl.\"ing:.. 11 bowe\'cr the
     1 T},j",   j~   makilU'   Engli~h 1:,'!t",:11c\"ce in:'rt~l~ill';:Y,    I:CIIK'cratil.:, and
r',lu !II.:\ \1 harm in "'prc\'cntmg "tbe, lot:g "h!r:I(,'JIl "I g-ro.:at fa,nll!ies of
n ,'r~h;,;d ;)rtllCe5., ,J'>'lt   lht' \'Jul)en<;!!y hi   \",In:',lh:l :':   Ihe soc,,,1   :\<, In
:h.: .lnil"al i.wg':(,1ll 1- lhe prillClj.!lc 0fpl'ObT--:~~," :Cv,' LL:;;dvA':; .LiJlltba,.-d
.\" .!, !nlr0l:\lC:\lfY ~'h~i'ler.
     : Th:;: is oir));'ilr !!l some r~,,,,p\;l.h to the '"i..-1. p:~n uf introducing
"']""'(II!);': li~rlik'r~') mto a pri\";ne lirill. '1\1<.: "lo.:q'lHg pu[m:r~ .!'upply
Cru.J and        I:~ke   a share of the risk, Gut       lJ;H'e (F) j!J.rt JO     the Manage--
1r:<.:I!t.
13 8                  BOOK II.          CHAP. XII. § 3,4.
company is large, ;).nd it C3r: afford to pay fairly good sal:tries tn
its ufiicers, its affairs arc Lkcly to be in many ways better
1l1:~I~a::;-ed than thuse oi ::. f-lril'ate business in thl' hands of men
of scu·!l.d T;ltl' nbilitv. TI1(' nil::,crn'i ;}ft' l!S~l,,Jl\' men who can
brjl:~ a wiele :Ind "':lrid bll~in('~~ e'\l'u;l.':~':t'           to
                                                                   bear in J..:,Jng
down the bru.lt! pIin~ipks 01": 1\ hich tilt' alLiirs (If the cumpany
al!:! cpndtv~'_II, ;llld in jl.lcig:ng the abilitj <1nd inJuq:-y of thl.!
chiei ornci;ds IInd.::r them. ,-)u lh..it the l11:1lu;:ement of a larg-e
jnint-sto'ori,.: ,(lmp;)';,y, tli('I::"::(! c·,.:ncr"l\y Ln fr')lH ~\>:!'fl'ct, is
sdtinm \-er:' b:llll'xccpt wl:('r~' lhere 15 wdh:l ,,"ron;; C;Olllg.
     'The pl.lb::city of juiUl-StO( k companic::> hc:lp'i mO(L' th;;m it
hinder.; ,11:":J~-J Ir, trad,', i:l \\]ll(!] It i" n'_'cessarv to ohtain
],Ur)lic lul;iidcIlCL'. a~ f,)r In;;~anCt' III h;)i1~ln~ an~i inSlIraJ1l:e.
'rhc-y 1:.1\'(" :1 mOllupo]y 0{ r<,.111\'.:1\"5 .lrlJ o~her ur:dcnaklngs \I'hich
require L'n('i'J:l(.'\'~ capitals. ;\:"d th~-r .:ire fast pllc,hin;.: tllLlfway in
all !JiJ~:llC:;~,'.~ ir. Ilhieh I.tro,':c c,lp:t:l.b C;}ll be mau:Jg;c(; chiel1y ~J~'
routine .. r,;,] iiI wh:ch ~ht're lS i:tt!e need for bold i-ll';41 ,;p::cul::ni\'~
c!H::-rpr:sL'. Fn)' they (,m thrn-.: with a much lower race of
profits .. h~tn Rill rfmllner:lt~~ ~l wc:tithy capit:lltst for I:r.drt"-
going the \\',]rry and f:Ltl~lle of busll:ess. The grdw:h of
joi:1t :--Oll'"j,:: C()mp:tnie~ un'tr., ,'::rc'at oppor:unitic:i (0 those 'Iho
h<l.\'c Ihl~iTI'_"'> pOW,-'I', to obtain the control (Wer capn:LL
     :; 3. \Vc Illay next inquire how thl: Llrn!i-,g::. of )lanagernent
of 3. tJll~ir:c~,> ~1,'C f('i:!;Ctl ;" tl:c ClpJ;t! ('l!,ploycd Ill. it. Is the
:\orm;~1 n~(' ,)f profit!> for aU c:lpil'lls <'mpjuyed in 1t";}llL's of the
  !'ame G.iTi.:dty the sam~ \\"jkth~f th~ clpit.lls be large or
  small )
       / f two businc<,ses in d:ffefcnt trades are equally difficult
  anel di"';!.::-rc'-'3.blc. an~{ reqU!:(, equal ci1pita]s. there wiJi of course
  be a e'H:A;mt tend.:n'.;y t,) cqua!lty of th('ir r:arlllrlgs of )ianagc.
  mcnt. There may indeecl be gleat difiacnces bctwccn the
  Earn;ng-s {1f \Lln;l;:;t'IIlC:lt of lin' r:l(:n witll the ::,o,llliC c<lpital in
  the two tndc'~; ll,lt so Ih(xe may in one ;lnd the s.)tn~ tr,)'cC'.
  Thesl' d:;"j,.TL-!l 'cs arise (r(lln ii1cqualitle's in ability PI' :';llOd
  fortl;t,t,... j:lst ,~~ do those b,;twpcn the earning.;; of sllceo::.',,,ful .llld
  llllSu( \ ,':o",f',;! m('diC:l! men or barnstcr-;.        A;.;..I;n it IS UUl' t Llal an
  ablc' iJu;-lne-.s mdll who st.ln~ In l!I'C with a ~rc.J..t d~';d (Jf capital
. nnd ,\ ~t''''oLl bu~:ne;-.., cL,nnl'xion is hkl'ly to obta;n J-Il;;her
  E,u r'in;,.::; (If :\!.111;1::;Cl~1'_'nt (han an <:q\l:tl!y ahle man whr) Sl;1rtS
  w;th"~it th(<;,~ 'l.~h-allt;\~~·,;. But there' <ln' <;i1l\il.lr. thougil :~ma!ler.
  int'ljll:dllie'l h(,\',I(-"l\ :ile eJ.rninf::; or pr,ll'"-,slonaJ men of equal
  abilities ',yh, , S:.lrt with unequ;1; soria I advantages.
     \\"h:-.t is Incant then i~ that competition t..::nus to cq'J"1is~ the
 Earr-.ings of :-Olan:l:.:(,nlC'\)\ of men of ~\\"er;I:':': .,bilnr nnd good
 Cor·_une in ,\Y() ucc\;p:ltion<; in \\ I::.:h eql! 1/ el! ,iLls ~'I_I' ~-:11p!oye~,
 and WhlCb arc ('qll;l~ly (ilfflcuit and JIsa:;:reea:Jk 1heprotils l~
 each case are to be found by adding the' Earnings of Manage~
               EARNINGS OF MANAGEMENT.                                        139
ment to the interest em the capital employed. And since
the :.i'natlOt of capit:ll employed is the same, ,and the ratc of
inter(,st to be allowed is, under the modern system of bnnkmg,
 pract!(CIlIy the sanw for all trades. the amount of intcr(,::i~ is the,
same in the twn cases, Therefore when the Earnings of
 i'.lanagemrnt tend to equality in th'2 two ca'iCS, the profit:) of the
businesses ttnd to equaJit)'. So that ;-
           ,The profits on equal capitals tcnd continu311y to equality
                in tradC5 which involve C(Iliat risks, di~C'~'mf0rt5 and
                exertions; and ,vbich requm: equally l".lrc natural
                aLilitics and an t:<!ually expensive train mg.
       It has \lOweH!f alreadv been notict:d th:lt if £(00 h~s been
ii1ve,,~cd :n the proJuctiofl of:l lhint: tlVO y(>,U"5 hel-ore it is ready
for s.,!c, we nw"t allow rwice~ or r"ther more than twice as
much :.l:-:.d{?r the h:ad of interest <I~ jf the £ 100 \t;;.d l.T~>n im-c:;tcd
t)r"k one \"l'ar bdorc it \\o.s reath" fur sale: but the t(lui amnunt
tu :")(" aJlo\ved as Earnmgs of :\(:u;a;emcnt on the £100 \'.Ill be
nedy tIl(' same for the long peri"d and fur the S\:(o1t: S() that
th :t;lnt:al rate of profits \\-ilt Lc much low('r in tn(? furllll:~" cJose
lhdl1:n t!le latler" For this rea~on the annual late of proms all
tilt: t{)t:ll c"lpiul employed is, as .J. general fllic, 101\"c-l" iii tra~les
whi..::h nuke gre.lt u"c of Fi:\cd Clplta], than in tr:Uk5 Il1 ,,"hlCh
neatly all th~" c.lpitai I:; UrcuLuing-"
       ~ ,.     \\" .. h:lve n('xt to cx;-,min~ the con5C(lucnccs of the
 fact :i1;1\ the managcmc;-}t of a j,uge Clpit:ll in any trade almost
ab.. a~ s requires rarer Il<-itural abilities ,md a rn.-,re expensive
~f~,ir!ing than the managcmel\t uf a small C:l.pital rC(iuires"                 \Ve
 ~;::\C seen that a man \\ho cor~lluc:S a large b\.lsint''::'~ must look
 fa: aile.ld. and wide around him; .J.71.d that he nHbt be cootintt.
~ll:, ,Ill tllc hlf,k out for im),!"c)\ed methods of clrryiag on his
 U:.l~::1l'S::.. \' hii~ the 11l:l!"i \\ ho !l!a:Uge::. a smalllJl!silll's:; may be
COl~:l';lt to) fvllow the le:1;\1 th;1t is gi\,t""n to him by h~,; nc!.;hbC'urs.
Thl.: furmer pa)s subt>rd:nates to do the \\"urk(J;~ which the bIter
 <;pend" the pC'a~cr p:lrt of his tiJ;~p : and deH1t(';; :d! his l __ nergies
to p!a1l111n~, and orb,mi7i!1~. tel f,)f~'castin,; the future ar",(] pre-
p;\~lr< '""")r n, He must ha\"e it knuwkdge (.f m.::n ,,:~d the power
d ~n:I:O"L:Ir-:~ them. He must se1ect his subordinales well, and
while !:ct'pjn"~ the contl"O! of the bu~incss in his own h,,_nds, he
mUst t:";\"(. them the freedom \,hieh will c"U forth their energy
;:nll Sf'r;,,"_' of a·sponsibility. Those who cmnot do this, are m~
(';lpaL':e (,f building up a lar~(' busine~s, or even of keeping one
tn;,;"·:thl"r, if inheritance or orhcr accident shadd put them in
PUSSl:SSI(Hl of It.
      A 'T'..1.1I who ha~ all the rare qualities that are required for
manac;in;,( a larg.: bu~illt~ss will, unless he is specially unlucky,
~lla!.;e a hi.;h rate of profits on his c~pital. These profits l'Ii"iU
Ul~rcase hiS capital) and will encourage him to devise and carry
                     BOOK II. ULW. XII.                ~   5.
out bold plans on a bro~d basis. The confidence that others
have in hlln win enable him to borro',,' capical ('asd~'; and thus,
hCC1USC he hits lilt! faculties which ar~ one condition of getting
hiljb E.armng-oS vf \L:l11a~cment) he wi,1 rapidiy ;.ltquire that con-
trol of a br;.;<.~ clpltai which i5 the other conUJliun.
    'VI:! sec :ileE, lirstly, that h::2hcr f<V_1J1:i\~s :1\(' required for the
managt.·nK·~t      of a Llrge than (,f a small capit;.Il; and sec(,ndly
th:.t :hUT i., 'i process ()fsekclion C'ont,tluall~ gning (>n by \\hich
tlWSt, \I-no lu\(- some capital ,\Ill.! great hU:"in2:;s pO\\'CI", soon get
(OUtre'J 'J\ (;f :L l,lrge capita!; \\hile 011 the oth'':f hand those who
have nl\t L,,-:,,ine5':' power will ~p('('dily di5~ipa:c a large capital
if the," h:lvpcn to tiet control ;.\\Tr it. These he:'> shew that
the L:n:'ll1:;5 of :'I[z~nagl'ment !t1 iJ.rgt! bl1sinc~scs mu~t be on the
averab"" hl(::her th3.n those in small j and they even give some
rca jon [(:or tllinkin;:; that the a\"cragc Earnings of ).lana:,.:-cment
in dlffercnt bu:;iw'3Sl''. ill lile same tr:-lde vary almo:'it II, propor-
tIOn ,0 the ctp:tal cmployed. There is hov..'c\'er an independent
and strlln~a rcason for beh<:ving that there i:-; often tl1C same
avC'nge T... :C of profits Cln dilfcrcnt capit:lls in (lie saine trade.
      Let liS suppuse for instance tbat A and}; 2.re proprietors of
neighbouring colton f..lctories v,hich are :l1ikc i:l c\Try respect
excepting that A~ is twice as large as B's. They hire labour
and they buy then raw cotton. maclllnt:ry~ huilding materials,
 \:c., in the same m:lrket "n/~ at the sctme price. Therc may
..
indtx'd be ;l. few 51.;;h;: economics m A's lmsinc!Os uf which B
Cannot 3\ .1:1 hmbclf; ann on the otller hand A may havl;: to pay
subordinate::, f_r Join:; SOI11(, of the work til.lt n with his smaller
hu"i:1(~i llllLis :unc {{or doing' himsc:f.          But if th(;"c difL.:n,:nces
Lc Il(.'t'.kc~cJ, a:! the L;-.p('~':'c::o of pt(lduction, Inlier l~\,la profi.ts,
Df a yard of .A.';; c.dko Will be' the same as :~O'3C of a y.Hd of U's;
an.! ~;r,ce they sdl !D the same market at tr.c S.IIDe price, the
pro,!',s made vl1 ('Jeh :' anI of calico will be: the sam'! for A as for
 H. The r;)t'-, oj . \ '.., prolits will be the "ame itS that of B's :
A's F;.riiir, ..;~ of :\lana",,;Tml'nt will be twice those 0f B.
      The rl~uth wbich theory dn:s inu:"::,lt{'S arc contllmed by
expenenct.'. LX).l<..-rie')("I.: and tllcor} alIke ten us that ag a
.;;elh'j·aJ rull:' ;:!.:rc: is ;i con~t~ln~ cCIl<knC\· tl1 c-flualit\' of the rate
 of i'i'Ui.l::- !lOt 0:-111· on eq1lal Llpit:<S, bJt also v~ unC(jU,l: capitals
 III thE' sallll! tr..Ide, aml in tL,lks th,H are equally di"a:;reeablc
and (;Ifli..:ult. Hut lhele :....rc three impor:ant cxceplioll:j to this
rule.
    i    5. The first c:\ccption :l,ises from the fact th.lt the bead
(,f .\ LlO'';C' b':0d't:;,~ nltl'" pa~ ') wages to subo:..:lmates to do a
 tireat <.iv.1.! of ,,\,(,:,k thd.l Ih~' head of ,1 'm"n bll~i: nS does for
 hll!l-dl, ,111. \'l~' P:,Yl.lL'nt 1")1" wl:lch is H',:koned aCl(Jr:!; his
 prori':'. Far !':~t,tnCt: the a\'erare r,lte of profits made by sma,lt
 {ann . . r:. is }\lghcr th:m that made by lar;;e; bC(;aU5C the smaIL
                  EAR:-ilXGS OF MA:-lAGEMEKT.                               1·11
farmer'" profits include the wages of the work of his own hands,
and of 5upervi311lg hired hbQm more closc-ly tbn the large
Lnmcr can. Ag-~,in The rate of profits on a shupket'per's capital,
particularly in some of the clothing t~:J.ucs, is gCI)I:: .1jJ~· hi.;her
lor a ~1l1:111 than a large capital, even \\ h(:~t' tht two ~cll to the
';.Hole c\as:=. of C1l5t0t1WfS.          For the small Slhlpkc('pcr includes
among his profits the earnill'::~ that he b"c-ts by at\endin~ carc.
fully to the special wants of each (,~l=hmler; but tbc \,ngc shop-
le"Fer has to pay Il1gl1 \\'a:;c~ {(If tins wurk.
     The second exception 15 dosdy connected \\ :th the first.
There :trc m,ln\' trades in which small makers ant! dt.:.l!C'-3 arc
abl.:' tn :::octl :l.t ~~ hi;.;:her price than the iart:"c de.l\crs can. he,:ause
th,,:': (C'\ ;\,cess 10 a different class of customers. One f;,miliar
ins:,\;\Cc (Jf thIS i" Ihe fact that \ illagc :,ho;:>keepers ;;encr.dly get
a \ cry high price for their goods. Their c:Jpital j" l'ery small;
:llld their prntiF,. Ihough at a h!gh rate on their capitaL are so
small ill anh'L!I~t as not to attract l·~mlpclltton. Ag<li:l in money
lcihiin',;, th::: srnaller the so.lc on which the b:::;';l)e% i, !ran,;!\cteu,
the ,;!'<.:'atcr is lhl.: charge that is made for the 10a:1 of money. A
man \\-li') troubles himsdi to lend m0llt"}' by a few pounds at a
tiuc" ;'an often obtain a \"I.:,ry hi:;h rate (If intl'rC.,t for it. To
uk", ,ill extreme elSe. thqc urc men in Lor:do:: alld Paris and
pr,:.L.t:_.)r e!·("\\here, whu make a Ji'dng by lending money to
'_"stermvlI:,:\'r-..   Tile money is ,)ftcn lent at the bC;lnning of the
day fur tht' f,llfl:h,lSC of fruit, &c., and returned at t~H.: end of the
l~a\'. wh<-:n tht' "aies arc (Jvcr. at a prolit l,f ten per cent.; there is
].:t!e ri."k in the traut', the money so lent is seluom lust :-\owa
f.lrt!lin;; i,m:',,:cd :it ten per cent. a day would <J.lHuunt (0 a billion
pdunJs at (hc end of a year. But no onc can becume rich by
ktiding money in this way; because no one can lend milch
monty in this way. The profits on the capital rC::Illy consist
,dmost entirdy of the wages of work fur which few capitalists
1'.1\-(' :l. LISle.
      The llmd exception Z!.rises from the influence of the Law of
![;ucasing Return. In :nany industries a large capital can avail
Itself l,f ~r('at l'cunomi.;;s that are out of tht.! reach ("fa small
:::::'[I)!al: ,u;d the large m.1nufact\lfcr can m,lkc tiighcr pr'Itll5 than
the ~nl,tii manufal'turrr, The~e indusnles wo~dd rapidly be (011-
cl'n\ra:cu in the banJ~ of a iew w~althy t1rlll<;, if a man whose
practical g-enius has crc"l.tcd a large businc"s, could ensure that
;115 successors fllr se\'Cral g-cnl'l'atlons should h::ln: ,1 like geniUS,
 (llit : 1 the whole course ;r h,~tory we mcU \\Ith but \'ery few
inst:lll>:es 01 priLHe firms which hal'(: bee:l 1l1a],;l~cd with
clTIlne::t grn:u __ f'er three generations in suCCC;Sinil, The sons
  Ln!! ":i.l:H!:,uns d a ;;lIcce~~ful m:\n of h~lsincs,> ba\ e !'cirlo!TI that
 r,iTc' c0mbination of ability and assiuuity whicn \\,\)tIld enable
tkm to carryon his work. And there are man)" instances in
                  noo K II. CHAP. XII.            § 6, 7.
which a \'ast inherited business ha::; been quickly destroyed by
men who cuu!d ha . . . e managed a small bllsiness well.
      In 'i()m~ industri~':5 hrbe capitals ha\"c compktely driven
tllf.":r slI1:tller (n""ls frol~l the fic!J, and afterwards their com-
petition rL111Qn::; thcn,lsehl!s has rt,.",\t:ct'd the rate of profits '-cry
low. In rolil11~ m:115 for Jnstance there IS httll! detail which
cannot be reduced to rout:ne, and a capital of £',000,000
invested In them (.:til be contrullt:d In" O:1C able man. A rate
                                            a
of prnnr" of 20 per cent., \,-hich i~ not Ycry hi,;h :l\"cr~gc rate for
 some p.ll t':i (If tile in In u:de. ,'<)\lId give the owner of such works
 Earr::in;s l\f .'.lanag-cIHf':lt aalOul,ti:lg to more than {,150,000 a
 \Tar. A!1d since irnn-ma5tl.'rs C-ln w:th so little adclitionJ.l cffnrt
~et t:lC L,min;;s nf :'\1ana~('mcnt on an incr('a~e~1 capita),
 weJ.llhy men 1 emain in the trad~ lcngu" than in m05t others ;
 and the (umpctition of th~ great rrv!l-lJ)astcrs with one another
 is said to ha\ e reduced the a\·cra;.;c rat<.' of profits in their trade
 below the orJir.als level.
       § 6. 'Yc aft! n"ow in it p(lsition to SUIIl up our inquirY:is to the
 way in which :\ormal Earning;; of \1nnagement ~rt! determined.
       Firstly, \vith rega~d to the dell1:lntl for business power. It is
 true that thi;; dcm:lr.u is not me:ciun:d by ;~n:- dc-finite market
 price list of Earninrs of ~Ll.Ilagement, such as tha~ which states
 that carpenters' wa;;es in a ct.:rt.,in to\\'a ar~ ninepence or ten ..
 pence an hOlll"; and it is truc that the tluctn:ttion5 (If Earnings
 of \I<lnagemcllt are greater than ~hose of w<tges, because the
 fiun\\at;;~n5 of tnhk p: esperity ex,'!t :l more direct and it greater
 indllcncc on the inclilnc:, oi ('~nployc-r5 [han on those of the
 ernp:oyell. But yet tll(: (L'm.J.r.d for the aid of busincs:". power
 in production is funriollllo"m,llly (}f lhe sJ.me kind as the demand
 for the aid oi ~killlCl 1 dJ0t.r. F\.1r il,5t~mce if a IllolE:..tfacturer
  can imllrl>vc the ll1t:thr,d (,f carrying on his \)nSi!1CSS so that the
  work ')i four ht:ndred mcn produces as much as thit of five
 huncire(\ men did p: e\'jcH!,ly-, then he will gain all addlt;on to his
  Earnings of )'Ial:lgcmcnt cqu,111o the wages of a hundred men.
 Thue; the Fa.rnip.f!s of :\fJ.nagcment of:l manufacturer represent
 the \'alilc of the- addition which his work makes to the total
 produce of capital and industry: ther corre'>pond to the dtective
 deman~; that there i5 for the aid of his hbollr in production. Just
 as the W:lb"1."5 of a hired J.lbrJur('r rorres;)(lnd I:) the effective
  demanl! fllr hi" labour. The Law of Dcn,ar.d tells I:S that the
  value in l'XCh;m~L~ of ~!ny!hing i:. the measure of its Fina.l v~ltle
  in :I~C'; that is. (,f its Y~lt~e in use In those wl1-) are only just
  jl~dllCd to p~Jrch;;.se it; and that this fin:ll value in use
  diminichcs as tht.! supply of the thin;; incn·,l,",es. So it i~ with
  regard l·) skilled hbo ..:r of any kind j every increase in the
  supply of it t('nds to diminish the Final value in usc Qf the wqrk
  it docs, and therefore to lower its wages. And 50 it i::> with
                 E,\RNINGS OF              ~IANAGEMENT.

re~:lnl      to any order of busll:c<:.s power; ('vcry increase in the
5Ul'l,lr of:t tends to di!llini_~h the Fin.·~ value in use of the work
it d,),'~, and tilcrefure    t,. lowt'r 1\" Llflli ngs of ;'·1 anagemcnt.
     :-:i'."C{)lH.I;~·. with rcga!d to the supp:y of !.',,~i';6s powc-r.
i":::ll'l:n;; to the caSl- ell the: lll~llUf;l{::..ircr \I;:() ()l:t;1lnr:t: lligh
E.H~ll;:gj b) an imprO\CT;l::r.t in his lllCl;~'-!cl:" of manuf,u:ulH_" we
see II:.:, his ~uccess \\ dl in(!ucc othl':-., t(l (nllo\\' in his ~1(r'" ann
tllat ::ll,ir ( 'l:1pe[l~joll \nll fl'TCC (~~_.\\n h;~ E;))ni:\:;~. 'IiK VAlent
to ',d;i,:ll they will he forced dOl,-:) dqY:nd", UP'HI t:;c r.\lllltl'r of
tn'l.:'e \\-1 1" are    a.ble to do the \\"01k ; and thie,. '\11! tkpCl1d on thl.:
bllO;l!g-5 to Le got by it on lllL: !.;ae klfld 3l;d r:'!l:t" c.:(rj,;ulty
('0 the (ltlll'r, Tbus tbe r.ui! ... of ~hc 1',1tlJla: ,d,ilitie:, and the
(·.\JJen~J\('ness of ;h(' "'pecialli'ainillg l'~'qllin'd f('r the ·,'.•)J"k play
tbe c.. m1(:' part m dctdllllnin:.:- :..; In:ul Llnli!,;;> of \1 an<l~l !licnt
tlut 1:)0';' <in in Ge!er;l1iLin;..: the ::'\ (J! m;.} '\';a~c~ bf skilkd tlhuur.
In (,~lh,: ,,15C a rise iLL the :11C0111e td b~ carnc',J o..ch in ()\lll;tnoll
fO"':"5 "'-'11I1in:5 tu il\crl'~::'C: till' supjJly l)l ~hO:-,i~ cap.lhl!? F){ (",mint;
it: ail~ lJl either C'.-t! the t"dent t'J \\hich [he' ~u:)j.J;.I wd he
ill'.T(';\'.~d by a g~H:n n~c of in(omc, dep~nd5 L'rCH (hI: ",,)Cial
:..111-.! '~r,'\;"mic condition of (hu<;e (rc;;) '.\ hom the supply IS draw:l"
        "l'he !,:'JI1tll~i')I1s ,\il,(h (it:!:cn:,illt' the .:\orll1al d~'llland fOf,
:ted !:w :\ ('rmal c.,:IPP:" of each ktnu f.f busin'..:c..s p'. ',q'r beillg
known, it., "\:on:ul Ll!nin~5 l,f ,\fan;l~~,'nE'nt arc (ktcrr,lint'll as
. . h",:.; '.,hi,-); wi:l t:qu,llc supply ,ll:(l dt.:rl1~lOd 111 the !ong run.
Tbs the Law of :«'rm~\i E;lr:lll1 ..:';~ I)f ).!anagement i3 sim,]J,.r to
 t~\;l~ rof :h(" ::";:orm;.1 W;""\,.:,'5 of sk:lk:l~ bh,)\Jr, ;\1,0 similar ,1150 to
 the !.;.'·v uf :\orm.ll \";duc iDr (nl!llTloJitiL'sl; and i.~:--
     Tl;~   .\' orm.d sUPiJ!Y of c:Jcil l.::ind oi hu~incss pl'Wer i:; that to
'.\";v:-\ :i;c tic-ld    (l( (:nlf.'k':"l~,e:~t. '.\ill just aiforJ tbe Earnings
f)f )'hn::~e!l1'~nt        \,.. hit'h "r\.' l"l'lllir:?d to (.oil forth thic; ~llpply:
;"Inc1 :h,' I;\',\" 01 t;:c Fdrninl,;s (d ~L1n;;gcml.'nt Sl, determinl.'d is
: he '\ ','rmal r,ltc for thi ~ ordl.'l" ;If b!I~;:1eS", P(lWCr.
     'n..,.,.    COll,\jt:unr; 1I"]::ch th~:~ determine th:s :\Drmal rate
\ ,lry from pLic,' to' j':'l':'~ :In<i fj(lIn a~c to .l.;;:c: but "iltee b\lsi-
:'(';;; \"Jwcr i" l":",i:y tl;.t!i;")"l.'HCt\ frolll place ;,) pbcl'. \",\ri~tiuns
"! the;'; (,!'I1',.'l.! L;t rnin;.;~ "f ),1 a:nt!"cnll'll! between thff.::rcllt places
.f:··.· k-:-i i!"nrcrt:mt th::n tho:.e which oc.'ur ir<,tn :l:.::e I'.' ag\!o
        ~ 7       But in 5!-,ltC of th; funl:J.m{'n!,,j simil;l.I\~r bd"'een the
 T.:I" o( :\<'r111al F:Jrr.in~:s of )'b.nagcl~lcl"'.t and Old of ~ormll
      I, '- ijf skille,.~ l...L,H:r, ttn:re are stYf'IJl import,llll ditTt'r~l!cL;>
 \,( \\(en the t\\() (:;15('S, Firstly, th02 E lrnin.~s (I( .\blub,~ment
 ~\ ~'1' '11 ;i. hu.,nl,:s,; m;m gd", ocpellllupon the cap:Ll.l wi,h which
 ;,l.' l;,.~ '-taItu" 1'1 tb(' sanle wa~' as, l.mt tu .) ;::-n:~:tIC' extent than,
 ,he il,cvmr "f a proft:.,~i('fIJ.l mal. depClld::i on the start in life
 wh.-ch the s('ci,11 pcsitiull of hI':; parent:> gives him" And a

                        1   Compo Book Jr., ch" '"" § 3.
                    BOOK II.        CHAP. XII. § 8.
businC'ss man working with his own capital includes among his
Earnings the equi\'alcnt of that Insurance against Personal
RIsks which must Le allowed for, in some furm or other) by those,
who work with borru\\ed capit;d.
      Sl2c,l,)(l1:;, business men are chosen by a process of natural
selection fr\)l\l among many millions of competitors. For many
emp}0ycrs (If bbotJr, in SOnlL' p~nts of Engiand mOlC than half.
have risc., fr01ll the ranks of hired labour. Enn· artisan who
has ex..:cptJ')Il,ll Il;\lurrtl abilltics has a chanel: 01 raisin:; him.<:elftn
a post of C()llllnand. and is in fact a cal1dldate for the pnze::. that
may be c.u;t,'d by ::.uccess in bllsines~; 3nd the 3\'eragc of these
 L3rning~ 01 .\].m.!:.,;ement is hi:.;-h, partly beCduse the cbs!; (If
 cmplo) crs contain", in addition tu (IlC able men that have beelt
bom within its lanks, a Luge :'ihare of the bcst Ilatur.l! abllitk~
that ha\-c arisen amon~ the lclwer rcwks of industr~'. \Vhilc
Profls all capital in\·c5.ted in edl:C<1\IOn is a specia!!} imt>ortan'
clement in the incomes of proks"ional men, NOIt (If rare
natural abilities is a specially impurtant element in the income~
of busi lIess men.                                                 .
     The 1<-1tal amount of the Earnings of Management got by
business men in a country may be found by subtracting interest
on the 'whole amount of their own capital ftOm their total nel
incomes aft('C allowing- for all expenses and losses: and, even
after aill1wancc has bt'en m;H~e for Insur,tl1ce ag..lin;;t PerSOf'.l~
 Risks, tlli~ amo\\nt certaicly bi\"l;~s a H'ry high· rate of w;q:,;:e fl'
the skdi .-\Old .l!)ILty of business men. fillt t},is nte is not !'t) high
as at tir~: si~b: JPpears; for great deduni01;5 must be made UJ\
accOI.mt of 11i.1S'? wbo have lost their capital in trade. Thl' earning"
£If tIll' bu,1ur tbat thc~e men have \\asted, together "ith all Ih,·
capital ;hat ther h:J.ve 1()~tJ must be deducted from the Earning~
of .\l:magcmcnt got by ~t.:cre~:;ful men before the average Eam
ini,;s of )lan,Lgen:,':llt (:\11 be found. Those who fa~l arc quickl
lost fn)O\ c;l~ht a,~.l l:'I'mory ; but their l:tlmber is vt'ry grc.l'
Il i:; ~~l1d that in Amt'rica three-fourths of thos\2 ,1"110 engage ~­
trade bccon:e insoh'cnt ill the <.ours(' of the flr5t live )e.lT5 i •
     S 0. The supply of "killed labour is increasioz faster tha·
that (Jf unskilled laboUl'J and the supply of bus~n(~s paw(-
is increasing fa::,.tcr tbn that of the lower kinds of skill!-
labui.Jr. Thlls tht.' c(lm!Je~;tion of bUSIIlE'sS pO\\cr for the a,
of the 10\\(:r orders of bbom in pr()d\lC~lOIl is increasing. A:
as a consequence the Earnin;" of illanagement that can ~,
got 1,;.- Guing: work of a glH:n order of difficulty-the 1'(/..,~
Flrrn/ggs ni ;\!:-tnagcment--are diminl--Illng. The- continu"
illCrt'.I'3C in tile complexity of business, and the continual increrD
j,! ,the L!l1wunt uf carital that can be empJu)"cd in businc_
                 EAR~I);GS      OF    ~!A};AGElIIENT.                    145
 ·~dcr    a s,lngle man:l.:;cnlc:)t, <:Ire indeE:d giving to business
 _,ility of the          hi~hcst order the opportunities of obt<lining
  ,-cater E:::tr:Jin~s uf ~bn;t.";f'l~~('fjt til m were t','cr :1(:lr.:1 of in
. :li':,cr ;::~·r.('rat~I)11S. But t11t.: total amount cf the Eamings
  i ;.bndgt'I1lc:r:t is nut 60 11i;h in propllrtion to the amount
 .1 c:lpi:aJ Clllploycrl as It used [') be. :\tld the cHi.) R;lici. the
   arnillg"s of ?l.Tan:t;;cmem of a bu"inc~s bear on t;w an::r:::tg-c to
  ,e c.tpital clllpl0yed goC's on dimimslllng:; and will probably
.-o:~,-im:c!o dim;,;i_~h. For the grnl\"th of {:dm;:ltioJl \'. dl In.:rease
_·.I\)~dly ~he    supply of blis~nes~ power that IS COmpel!r;.; h-,r th~
. id of Imt'J labour in produdiO!'.; and this comp;'t,t;nn will
 ,rc\'cnt :hc Eaming-s of :t.lanA:;ement from growl!lg <IS fast as
   J.?:~:tl is likely t(J gI'uw.
       :)lDce thl! ~ol!na\ rate of Interest is likdv to fall, :mcl the
,:~t;" \\h:cb KNmal Earning-., of ;\hnag-ement Leal to c<lpit:11 is
  :k.:;y to LIlI, and slnc.:\! p~oiit:" are comp0scd of Interc-~t find
LImings of :-'L1.llag-cment, therefure the ~()rmal r:lte of profits
. .; li~d)' to fall. It WIU not fall rapidly for a til'le. anri
  h~n remain s~ationary at a m/!lim.'tJJt.       Hut ::-l.:bject to som{
 ,~,:dbtions, its fall will prob:"\b\y be co:1tmUO\1" though in-
   r~a~i[lgly ,>low, so long as the world is inhabited by men of the
" :me nature ,.... ith ourselves.
                       CHAPTER XIII.

          RELATION OF NORMAL TO MARKET VALUE.

     § I. \VE. have seen that "every producer of a commodity
 calculates the price which he will be able to obtain for it,
 and the Expenses of producing it, and determines by this
 means to wlut extent it is his own interest to increase or diminish
 his production. If there is free competition, his interest leads
 him to act in the same way as hl! would if IllS only object were
 to regulate the amount produced so that it could just be sold off
 at a price equal to its EXPl'IlSCS of production."       Thus the
 Normal value of a tbing . -tll..!t toward which the '\1arkct value
 contil1\lall~' tends-is el;ual to its Expenses of production.
Thcs~ Expenses of production Inay ultimalely be resolvc;d into
 wages and profits, or fdther lllto earnmgs and interest.
     'Ve bave seen how c..tch Expense of production measurt'S
that dTon or ;\b~tillellc(, \\hich IS the corre:.p(mding- element
of Cost of productiun. We have seen that the interest which
 can be got by abstaining from. the ilnm(:diate consumption of
£100 worth of wealtlL and !;,lving it to be used a_~ capimi, is a
 practica.Hy iix.:d anu uaitonn amount at any given time and in any
h"i\'cn (Quntr),. 'l1us }iorm:ll rate of intacst depenJs on the
()ne hand on the held tha.t there is in that time ::u,d country for
the employment of capital, and on the other hand Oll thc
~ltpplr of opital; this supply depends en man)" causes. OIle of
whkh t" the rate of interest that has hitherto prevailed in the
country.
     The Normal wages of ultSki!lt!d 1,lhrJJlr in any time and
country depend on the scope for its emplo) ment on the one hand
and on its supply on the uther. The scope for its emplt}yment
depends partly on the natural resources of the country, partJ~
on the amounts of capital. (If skilled labour and of busines-
pow{;r that arc seeking its ~tid in production. The 5uppl~
of labour depends; as rc;.:ards both quantity and quality, on
man)' cau~es, the clucf of which is the rate of ,,,,ages. It j-.
true that things which arc luxl:ries in one stage of civilization
are regarded as necessarie:; in another, and that ali such cilElnge:,
    RrLATIO); OF NORMAL TO                     ~!ARKET        VALUE. q7
atfect the );onnal wag-es of unskilled labour. But in an}: given
phase of civiLzation the i\onnal Task Wages of unskilled labour
<Ire ueariv (L';-'.':.tant.
     SO" ith rC:;·:l.rd to the earnings of skilled /ab.-)i(", including the
incomes of professional men, and of an others who render
skilled service for payment. The eamin,;;.s of each kmd of
",kilkd labour depend on the scope [(lr itS employment on
tl:c on(" hand, and on the supply of It on the other. The
cxpensiYC,1es:> of the education, an.d tilt: rarity of. ~he n.ltu.ral
qJaiitics required for It arc. the Chll~f of the condltlo~s whICh
rlet(rmine the sepp~y th.-lt will bl~ calJ<.:'d forth by any gIven ra~e
of wages j so that the supply j" ~o\"crned by Jaws similar III
mnny resJlects to the Law of :-';orm;!! Sllrpl~' of commodities. The
:\onnal wages ot !:>kl11ed hbour of "my gwen degree uf difticulty.
lIl~y YaT~' slowly, Hut at any time and p!an~ they are de-
termined by the sc,ci~d and economic condl!tOn of the people.
:tIlLl they may be said to m,'{7.'1urr: the efftjrts involved in the
w0rk. The f:let that E:uoings of )'lanagemcnt can be obtained
onl" bv those who have the control of capital, doC''i not prevent
thc;r :~ormal yalue from bcin~ determined 5ub5td!ltiJ.lly in the
same w;.y as the W,11ie5 of skilled hbour. That part of the
;..iormal Earning::; 1)1 ;"lanJ.gemcnt whi-:ll can be g:ot by a man
Whf) work5 with bvr:-o;"'cd capital, measun's the difriculty of his
uu~ine:-:.s.    A 1l1.111 who conducts a similar bL~"i!less with his own
capit:ll obtains in addition the equivalent (,f f\rr~Ollil.l Risks.
     Thus the Cost of production of a thin;; is mC:lsured by its
:\onnal Expc-n~l:s of production. If tLt.; ditticulty of pro(lucing
a rhin:s-, ,-,r it:> Cust of production is independent 0f the amf'unt
l!roduceJ, Cost of productiun determines Expl:nscs of production
and therefore d{'t(:rmincs ;\"ormal value. But when the amount
producf'<l is increased. the Cost uf production may inC'"l';~se
accordil:; to tht Law of Dil:lini-,;hin,,; Return, or may dimir.ish
accorJii'g to that of Incrc.lsinc; l\ctur'"           In order to co,-er rh,:,c
C"he,:;, the Law of i'\ormal ,".:llue mu-=.t be st:lt('d thus :-." The
:-\urmal 5upply of the commodity I::. such, th:lt its Xormal
Expenses of productIon equal the \'alue, which will call forth
a dcnund for this amount; and the price so determined is the
:\ Clrma] yalue."       ::\ orlllal \'alue still measures Cust of production,
but je; not dl·tenn;ned simjJlr by it.
     [~:!, This is an instance u:the rule that in !\aturc changes
generally rc~ct on one another. For instance it is 110t true that
the state of a OlL~n'<-, lungs is determined by that tlfhi" h _'art, or
vice ,','Ucl/ but ~t!biect tl) e:\~('rnal intluences, the conditions ('If
hi" heart, lungs arid other parts of )\15 body dc-tt.'nnine one
another, So when t'4'O unequal baUs A allll IJ are pu~ into
a smooth basin, it is nN f12,"ht to regard A'e:; position as deter-
mining the position of B. .For though it is true that if "",c
qS                  BOOK II.         CHAP. Xlli.       13.
 know (''(ac~ly \\hcr<C" A is, we can tell at once where B is,
 it is equally true that if w(' know where B is, we can tell
 whc[-c A is. Tr.~· po,;itions (If A and [j are dctemlincd simul.
  tanl:0usly by the actioil of t:H! Law of Cr<l\o-itatioo.
      So it i~ \\ ,th T'-,,..,.Ird to :'ornni \-3.\ut.'. It is true tllat in the
  ex(pt!oll:tl C:lse i:~ which the cl!fJiru;ty of pr(,duc:tion of .1 thin!!
  is I:.\.'-.'U illl.1'-'}-.lewienLly of aI'.lOunt produced, Cost of pro,hlction
  dc:errnines ::\\1ni'.1.1 V.11uc. But 3.5 a rule tht: Cost of production
  of a [::in~ is not fixed: t11C amount pwduccd and its ~orrnal
. Y~luc al"-':; to b~ re;;.trdcd as Jetcnnined simuh:1.11l'{):Jsly under the
 aC~lon of Ect'nnl1lic La',\"~
      It i" then lllCl)rrect to say, as Ri...:aruo did. that Cost of
pr,)ciuct;,-·n. <1\Or1C Jctcrmi:ws \-aiul! : bm it is no less incorrect
t<J :-linkc ,;tiolIY a1une, as (J~h(1S 11:1.\·c donc, the basis of value.
 I t i~ certain\y truc that utJlitr is :l condition ()f value alw.l)"s;
J.nJ '.h,lt in cases in which the SlIpp!:( of the c(,m01mlity is fixed,
utii;t~· determines price.         It is true that the price of o-ery
comnodity must be the measure of it:; FinZlI utility; that is
of ib \'ah\f~ i;1 1.be to those who are- only just ind1Jl:cd t~ rllrd1ase
it. Bl<t it i", not true that this Final utilitvdctl'l"mines \-;Jue; for
 it chan;;es itself, accordlIlg to the LlW ;)f Demand, with e\"ery
Ch:!.:iZ:C in the amount (,f the commodity th,H is (1fi',.:red for
 sal<.'. This ::lln()Unl, aiid therefore the fil1:l1 Ulili~~.· of the
commodity, JcpL'nd upon the relation bt:tween the circum:;tances
of supply and tho:;e oj demand.]
      § 3. \\'c ha\ e now to p.15 ... from the theory of Xonn;}l value
 to that <.,f '\larket \·~t1ue. ;";ormal results are those which would
be brougllt about by competitIOn if it ncteu freely, and alway~
 had t:me to causc those effect.,; willeh it has a tendency to (:J.use.
 Markd results are those which actuJ.llyare brought· about by
 the ,;umplex social and economIc forces of the world in which
 we live.
       \Ve have compared !'urmal value to tIle Xormal growth of
 a tree. Let us nul'.' comp:m: it to the Normal tides which there
 would be- if there were no d1.~t\lrbing wind, and no irregu~arities
 of cu.lSt linf:. Ob:;ervatwn tells us that wa .... "'5 drivl!11 by the
 wind over the sea make its ::.urfar:e rapidly rise and fall; and
 that the irre;:::uiar-itic:'> of coast lint.' pile up t1K tidal waves in
  some p:acl!j ten tillle3 as high ::1.::' they are in tlw middle of the
  OCL',ln. The theOl)' of the I'\orm.ll titles does not trlill'i what is
  the hi;S"hest point that the tide l'(a(hcs at any place in (say) the
  Bristol eh.mllcl. \\~c cannot ftnd out this ,,;ithvut examining
  the speCial cir.::umst<l.n(es of the case, and allowin; for the
  inrlucnce of the winds) and the peculiar n.ltlln: of the s11Ores.
  But 0:1 tbe other lund we can make no pro,.-;rLS:i ill cxpb:ning
  the mO\'Cll1cuts of the sea unlt·s5 we first ullderstand which of
  them are dUI! to local or transitional causes, aud which to the
    RELATIO:.i OF                ~OR)'lAL           TO   ~IARKET            VALUE. 149
~Nlll:l' i~fl~l("nc("     of the at'.ractions nftllC' :'T(lon :tr,c1 Sun. And
w-~ U:1:lU:      uo t!:is until we have tir~t \\'(l!:':l'd mIt tL~~ alJstract
til",',', ,)! ;h',: tides tiM: WT'J",l<i lJl: IUrlned j:l .i \\·>rld ill wL'..:h
llkr<:-\\Cr~;10 eli,turbin:..; uind$ :'Hd Ill) irr(".~u!.;r ::,hores.
     ~() ,,-j,:1 r::;:.lrJ 10 tlle r:1Co,y of "\c'rmal \.llu~~.      It docs not
tc:ll!,~   ,,',Iut \\ ill be   th,~   wa;res of a   c('t:~lin   \\·/)lk. or the price of a
r<.:rl.li.! thin:.:;- at any p;u-::Ol::ar time. \\'e C-I.lltllJt dl;;u!\-~'r the
~br:,(;( ,";t'\::; of a thi:1~ witl~ollt <111owing- L)r the rluctuations of
~:lh!:Y ,qd lkm.ll~~1, anu for the reSb\ance w1.:i,:h 10(;,; obstaclei
"Pi)(hC I,'       :hc frcc T~ll)n:!I:ellt \lfthe 511",';11:1 '-'1 L"0mi\l'~jtiu:l. But
Oil tt:l.' (;!:er !l;U1d \\'(' ell! make no p:-l'~T{:~~ il~ t'\plaini:lg- the
J~l'\'"c:-f.<:'n~,~ l)f WJ.~h a~l(l prices, link. ~s \'.-e [~;-::t U!ll!t',',ct,md \\ hich
of t~jt'!;l ;'~C JUl' :,) :nc;tl t:it" tr.:tn~i~l(\r.,ll C<1!hcs.J.!1d -th:cb to the
'\'~m,l,ll ;"\u:un of jr~'c cnmpc~:lion. TIle rhc"rr of :-\,)I'ma; v;ilue
i'5 t!_c ~~.l!"::ll-:- p,-,int frum \\~:ich we must ~,-t o:Jt to l:xp:ore all
ti:~ \'.l.~: ,_! 3 lrrl'gul'lr:l ics and Up.cn'nll(;SSeS oj -'I a: 1;" t ,-.l;U[,S. 1t
L',u:h·,::;; h)w the :,,' .. It t:,_;,Il \\-;\\'\.-''' of   ,,-ag(~:o   an,; pr:c>:" 'F1Uld
ll)(li~  if (:\"t;,\ Cl1t' Wf·r.: Ltf,:f:.ll t:) for<;'cJ"t tl.c fLlr.,:rc, and
deid),'ra~cly t,,') shape hi_" u:t!rs.c so as to f}ht:l1n thc ~:r~:ltf'st
CCI;; -;,:;:: ad\-:llit;t;..;C,> !.\f h:mscif and his fal~lli:. It jhll:o t!" in
,he ri,;ll~ J!o~i:iu!l (fir examining how man's aui,~n is m(;\i-.t'i,~d
hy CU~;ll:n, or ;lrMlhy, or l;',.'llcrally by lIloli\-cs ()ihcr than the
(ks:r,~ L~r \lo2"':h.
    \\-e c,m then apply our theory to explain                               fa,~ts.   ~o   far
as it w:1I b~: and thvse facts which cannot ue c,XpLtincd
b~' O~lr theory arc "li,L;!Jt-giving" f;-lL~ts, and shew us h0w to
curf(.!c: and cnbr,;e our theory. Thus ~ h,~ scicn,:c of E,~ono!~'ics
P(06rc~~es stc;\ ;)\' ;;tcp, al~t:rnate1y applyin~; thuJfY i:1 tho: sC.t;,-_h
fJr and t:xpla:·j:tti,lTl of nev: faos, aile! applyill~ new facts in
currecting and broadening and strength..:ning theory.
                           BOOK III.
                       MARKET VALUE.

                           CHAPTER l.

      CHAXGES IX TilE PL'RCHASIXr; POWER OF                )lO~EY.



      § 1. THROrCH(lt"T the discussion of the Theory of :-':onnaJ
value it W;1;; :l3SUI:l('d lhat the purchasin:z P'1\'. r-r of money
TCl1.lineu Undl:ln:,;ell 1 ; so tint :J. r:~e or fall rn tile e",change
va:uc or gener:\! purchasin~ pow<-'r (If a tlli:,::! ('(1111<..1 :1lways be
shrJrt~ .... expressed :1." a rise or fall of it~ price',  \\"e 1!)t<5t now
inquire bri(:f\y how the value or ge!1eral purdusing power of
mon,,)" Ch.lllgCS from time to time. But a full di"c~s5ion of the
tilct)ry of the \'.llue of muner belongs to the "Ec,)jwmics of
Trade ,Uld FinanCt'.)·
      1'1,(' moo;t ob'-:')l1S of the r.lUses lInt affect d;c purchasing
power.,f the prcc::J.:..; mcul" in a cou!ltry is th'2 quantity of them
th.lt i" ,h.liJ.lbk i 'T the as ];1I)I1ey. H thi:, incn.::lses ,"cry hst,
tllL're \,.jl! ~)'~ more than is \\"ar.:l.'d til <"arry on the bll~iness
of the c(1untr~' ;tt the old pri.c~, and prices \\"ill ri5~'. On the
()th~r hand. if the amour:t of the prc:ciotls mecds r::1tl.lllb
s,d:iorlarr while the· pop:l;;nion and \\',-~:'llth of tb~ cm:ntry
incr-e;h('s. there will be a ~rcat do~),\nd for Irltmcv to G'l~"y on
the bu<;ir,c",'j of the counay; the r\lrda~ing "ow('r of' the
prc<:i(lus metals wiil rise. and pr:...:es w:ll fall.
       For instance at t1)(' bc~:onin~ of t11(> s~'(tct'nth century when
the new supplics (r(\:l1 the Americm 51:\"cr mines made them-
sciycs fe~t, tLe purchyin~ power of sih'cr hegan to fall; and
~'arly :0 the SC\'c:l!ccnth centl1ry prices In London were on the
a\·.::raf!":? three times as higb as they wcre in 1500. AgJ.in prices
were high 3t the bcginnin;; of the present century.                 Ela no
                            1   Bk. 11, ch.   j,   § 4.
           CHAl\GES IN THE VALUE OF MO:\EY.                         151
important fresh supplies of metals came from the. mines till
13,0. During that time the stock of precious metals was being
dimin~shed by their use in the industrial arts and by wear and
tear; and meanwhile population and wealth were increasing
rapidly. So the purcha~in~ pOI\-cr of gold rose; and prices fell
to :.l!JOl:t h:llfwhat they were in l~k)O-----IO. About 1850 the gold
min'~s of California and Australia. l\'ere discovered, there was a
great increase in the supply of the precious metals, and prices
ros . . again.
    § z.     Dut though the amount of the precious metals in circu--
lation is the most obvious of the causes that affect the pur--
chasing power of money, a no less important cause is the
growth elf artinc:al suhstitutes (Ol" the precious metals as a
T.leoiuJll of exchang-e.
       Thc most familiar of these substitutes are bank n.)tes. They
pas~      freely from hand to hand. and exert nearly the same
influ("ncc over prices as an cquiv.:t1cnt amount of coined money
.10('::;, Hut in En;.:land this intlucnc~ is not as important as that
exercised by cheqtJcs 1 nhlCh ha\-e displaced both coin and bank
no,t's in ne:ulv all whoh'sale and in many retai; tran-;actions,
       A cheque (loes not circulate freely, but is generally gl\"Cll by
the person who rc':t,jn-,s it to his Lanker. who dem::mds va~ ment
.)f it f,)r him, But though ch('qnes do lH1t net as suh:o.t:tt:lcs for
coin :n th(; same way as b.1.nk notes do, yet the total :1tll(lunt of
thel~l IS so g-reat as to exerrjsc a ~'ery pOW ...~Iflll mt1:.lence ovc~
!'rJCC5.      Ag::LiO tl.t modern system of crLdit enables a man who
!lao;; neitll(, moncy nor anytbing that immediately rcprcsent5
monry, to oht.1in from a banker or other money tleakr the
 nll',l;~';, 0f pur\'hasin~ goods.   lie can de. this not only (,n his
o,,\r, Lkdit ,:as \\hen a bank allows him a "Book credit';" hut on
th·;, cTeoit of others who ha\'c unJertaken to pay him money at a
lU;lIre date '::15 "hen he "discount", a Bill"\
       The bu::,incss of the ci\'ihze(\ ,mrlJ has incTl'ascd Yen'
rapidly d.ur:ng: the present CC:ltUT)'; and an cnorn10t1s amount      of
C(lill woulJ h.1"C Lcen required to carry it all WIth the present
 prices. If credit h.1(1 nol found $uustitutes for coin. there
 WlJuk h:.l\'c been so great a demand for the r,rccious metals. that
 their PUf'Ch:l<;ing power would ha\'c become many times as great
 ;1:-0 It actually is; priel':) W'-Hlld b.:wc been wry l0W.         The
;;rowth of credit supplies a pcrmar:rnt sub<;~it~:te for the
 precio;Js metals, and therefore 3tfe-cls their :\onna! values, But
 c,edit fluctu;:.tes, and each rluctuat:on alters their :\-larket
\ ,1]U(·S.
    For ir.c.tance. an expansion of trco.it ('0incidcd with thci"nux
nf prccious rnet,lls consequent on the di:,Ct1 ....ery of the Californian
and Australian milles, and Increased the upward tendency
of prices. Dut in 1857 there was a crisis ... that is) man)' trading
                    BOOK Ill. CHAP. I. § 3.
firms wc'"c un<lblc to p:ty th~'ir debts, credit was violently
c0ntratttd, and prices £dl, altho1lgh the s.tore of p!ccious
meals in the ,-'t)untry \\.'n5 gro\\;ng- as rapidly ;)5 ever. .Af(~r
Jtime credit h<-'g:m to expan(! a;..:-ain, and price:> ro,,~ till Ii:>66
when there ,,'as another crisi~, an': prices fell. A~8.i:l credit
expanded . «nd price'i rose ti:1 ISi3; when, though there was
no ,:risis. ,c g-r;\dLal cnntractian of credit set ill which has
continued till 1;J79. The ll)\\"l'st point which prices re.lched
helween 1S57 J.l',d I ~66 \\"<1:'-; much hi;;her th:11l the level of 1850;
and the l{)w(:::>~ pc·int betweLll 18(.)6 and 18i3 was hi;~hcr still.
Rut since t:\Cl there- h,l~ heen :1 slight check in the supply of
gold; uut !atdy the suppiy of ;.;:vld has fallen orf: much has
been :l,bsorbC'c1 bv the new gold currencies uf GC'n~1<tny, Italy
and AJ:lcrio, and impro\'cd methods hd.\"(~ 111uch increas(;d the
pr()duction of In:'";)Y thln;s. In con~C'qucncc prices measured in
gulJ are now (ISS,) lower than in 18:;0.
     § 3. The hCg'.nning of a pcriod of ri~ing credit is often
a ~t.'rit:S ot good hMvcsts, Le::.s having to be spent in food,
there is a better demand for \.,thcr COmmOdl{i~s. l'roJucer~
lind ~hat the ur'mand for their ~ood,; is increasing; th~'y expect
to se!l at a profit. and ;:re wi!ling to pay good priCl!~ for the
prOl'!.lpt dt':ivcrr of wh:::tt th'Y want_ Empluyer~ compete with
one anotltlT f0r Lll)(1ur; '\;lgCS rise; <mei the emphycd in
spend!:,g t;:eir W~\':;b l11crcase tile demand for an kmds of
commOlli!i,'s. Xn~ p~:bbc ,;n.:! \JnLlte Comp;mics are i:>t:uted
to take a(~,'alltagc (If till' prullli~ill~ openings which shew them·
sdv('s amvn,.; the g-tncr~! n:t:-.;tj'. Thus the dC5irc to buy
and the 'ni~ingr.cs~ t,) p;::y incrC.lseu prices grow together;
Credit ij jllb:Jant. allJ rcaddyau.:epts paper prl'lIliscs to pay.
Pric('~. '\ ages :md pron.:s go cO rising: there is a g-u,eral rise in
the incomes d tho"e cn;;agtJl m trade: they .spend freely,
inn(,'bC' Ihf' dt'l,l;'(llti fur g-oods and raise prices still higher.
!I Ia!':; speculators seei;jg tht' ri~C', and thinking it will continue
buy g("lo;\s \\-ith the: expectation of selling them a.t-..a....profit.
At Sell h a ti'11C a man, \\ho has ()Illy a few hundll;d pounds. can
often borrow [!'Om b,i:lkcrs ana <.:tilers the HlC:1IlS of buying
~lanr th'H.:sand pVlIljd,' worth Gf good,>; and en'ry Olle who thLlS
cnten intu :he market as a buyer. adds to the upward tcnr!cncy
of pricc~, wl;<;;ther he buys \';ith hI;:; own or With borrowed money.
     This !l1on:m<:ot J;'')CS on for ;:,ome timc, tIll at last a .. enormous
amonnt of tn,cllng is being carrieG en by credit and w:th
borro\\ui money. Old finT::> :lIC UrJITo\\-ing in orJt;r to c:,.tclltl
tiwir b'::'~lll:~<;; new firms arc burn}\\ lng III ,!rdcr to 5!art their
bU5:(le~S, and ~pecl1lators are borro\\-ing in orJcr to buy ,.Inti
holJ g(j(.ds, trade is in a dang-trOlls condition. Those \vhosc
b,usine:-s it is to ll-nu money arc amcng the first to read the
signs of the times: and they begin to think "bcrJi.:. contr,"ctl:-lg
their 10alls. But they ...:a:mot do this without much di::-,!rblllg
            CIIA);GES     I~   THE YALUE OF               MO~EY.          153
  t!"aoe.   If they h:1d been more chary of lendin::; at nn earlier
  stil.~<." they \\'OulJ simpl~' r.ave prtventf'd some newb'lsiness
  fn . m blir.g undertaken; but when it is ~lIlCt' UI~d( ~t;\ken. it
  C:J.nilO: be n;:nndonen without a 1055 of much of the capital
  th;t; :;t:, been inn,~stcd in it. Trading companies of all Li~\ds
  han! borrowed \"ait sums with which they hJ.n:: bcgcn to) build
    f:lilw:H"s and docks and iro)1\\'ork,:; :md f;lc~or:c5: ~rjo.:es being
    hi~h t'hey l:,) not get m:1ch L:..;i!d'l:~ dune fllf their 0Ulla}'. and
    thU\l'.;h they arc llUt. yet ready to rcap prohts on their lDyest·
    men;, the\' l:;1\'c to come ag"ain into the men ket to borrow more
    GtP';~\1. the lenders of ~ap,t:-,J al;'Cady \\'i~h to cOlltr:lct their
    !ua:-;j; and ~bc dCn1:1.nd for more joans r<li~cs the rate of interest
    \f',-;' hi~h,     Distrtbt incrca"rs, thuse \\ho h:wc knt become
    ca;;'t:r to ;:occun: tlH;m"elYe::.; ar:d n.f;l"c to reOlew their loans
    on CJ.."y or cycn on any t('rm5. Svl;,C sptCllbtors r.:l.ve to
    seE g-o,-nls in order to pay their debts; and by so doing' ther
    cht\:k ,;:;.! rlsc of ptirc" This ch','ck nukes ;lH r}~hf'r spccubtvrs
    .1.m:u:1S, an\1 mJ.ny l"ll;;!l in t;' sell. Fer a spCCU;.1t.)t who has
    bO!f()Wt:d !!l')!lcy ;'It ir.tcrest te. buy g-oods nuy be ruined if
    he ho!,:s them a long tj:1~C t'\'/'Il while their price remains
    s!'ltior.,J.;'Y; he is almost ~l.!re to be ruineu jf he ho~Js them
    \Ih;;e [hclr pr:ce 611::;. \\"];.cn a 1:1r.;;c sr\~cubtor Lds, hiS
    L:l~lrc gcncl":1.11y causes tlut of others who hJ.\'c lent their
    c;niit !o lllm; and th;;ir f:>Clime :1~_tin that (If other:;;. Many
    fof thc}_~c wlu i.,d m:ly be '"('.,,;y "si"md/ tLlt is ~heir assets
    lll;J.y ex.:eeu their clc'::lts, 1),lt tlloug-l~ a m:U1 i<; sound, S'.lme
    nnt(''''. .1rd C\"cnt, .slh~h :lS the fll!llfC l,f n[h(,,'5 who :11(' known
    to h~ i:1debt~'d to h:Il:, may m.lk<: his C'l'I!itm-" SU~t)(:rt him.
    They m,lY be ,:oblc t·) dtm:l:l,i imllh'diate !-Mymcnt from him,
    while he cannot cull,'n q;;;ckly \\'r..t~ is ow:n:; to him; a~ld
    the m:lrket being- di;;turbeJ. he is Ji"tru5teJ.; he cannut borrow,
    and he fa:]", As credit by growin;; IT';d.kcs itself grow, so \~hcn
    di:M'-iSl has t3.ken the place of culliidt>nce, failure and panic
    breed paniC a:ld fadun:. "1 he commen:ial storm lc;w{:s its
    !,1.th '>:r('\\n ,,-ith ruin, \\"hen it is O\"er thl?re is a cllm, bllt
    .t dCl~l hean; calm. Those who have :'laved themseh'cs are
    itl I~O mood" to venture ab'"in; companies, whose su,::cess is
    doubtful, are wourul liP; new cOIJ1Innies cannot be fanned.
    Coal, Han, and the other materiaL5 for making Fixed o.pital
    fall i'l pric.c as rapidly as they ro::;e, Iron work:; and ships an:
    for s:l~e, V!t there ar~ no buy<.:rs at any m()dcra~e i-'rice.
          Thc:s the state of trade, to use the l:::t;llOUS words of Lord:
    O\,t';·~t0ne, "rc..-o~ .... es app<trcntiy in an est.:lbli5heu cycle. First'
    we lind it In .1. stat<.! of qu;csccnce,-oext, impro\"cmer.t,-!;row-<
    i ng- cor. ~denct·,-- prosperity ,-----.t'xcitemt:nt,-o\:cr+tradin~. -can~•
. vlli.,,>ion.-pressure,-st36'nation} -dlstrcss,-cncing a,;ain in
. , qUlcsccncc."
                              nOOK Ill. CHAP. I. § 4-
     [§ 4- After every crisis. in every period of commerciAl
depression, it i:i said. that supply is in excess of demand. Of
course there may easily be an excessive supply of some particu~
1ar commodities; so much cloth a;ld furniture and cutlery may
have been made that they cannot be sold at a remunerative price.
But somethin; more than this 15 meant. For aftl'f a crists the
warellDll~C'S ar~ overstocked \\ :th good,> in almost e\"cry important
trade j scarcely any trade can Continue undimini5,hed production
so as to 3nord a good rate of profits to capital and a ).;ood
rate oj wages to labour. And it is thought that this st;'tle of
!hin.;s is one of general oyer-production. \Ve shall hO\\"ever
tind that it really is nothing but a sUte of cammer..:ial dis()rgani-
zatinn; and that the remedy for it is <l. r~'\'i\'.J.l of confidence.
     To be:;in with, it is clear that, as \[111 sa;. s, "What constitutes
the mea uS of payment for commodllic3 is :"lmply commodities.
Each pcr~on'5 means of paying for the productions of other
people consist of those which he himself possesses. All sellers
are lnevilably, nn,l by the lI1c:1ni,~:; d the word, buyers, Could
we ~u'ld('n1y double the prodl1cti\ c powers of the country, we
should douhlc the supply of c011ltllO(li:ies in every maTket;
but we should, by the same stroke, double the purchasing
power. Ln.'rybo(ly would hring :t double demand as well
;J.S stlpply; everybody would bo:: able to buy twice as much,
be(au~c e\'cry one would have twice a::; much to offer in
ex.chan~e .,
     But though mcn have the power to purchasp they tn;;ty not
choose; to us<.! it. For when cnntidencc has been shaken by
faiiures, clpit:1l cannot be ~m to 5Tart new compa.nies or extend
ord ones, }Jrojc\;ts fur nell: raih.nys t:lt:ct ''lith no hvour,
ships lie id:e, and there are no orJers for new ships. There is
scarcch' aoy dt'Jll::,nd (,lr the \';(lrk ofnav\"i~~s, and not mud} for
the work 0'1' the bu:1dlllg <1nol the cnginc-I!l.'1king tradf's. In
~hort there is but little occllpa~io;r it any uf the trades which
lII~kc Fixed capital l, Thost.' \1 hl~C ~kill a:td (,lpiul is S['C'ci:1.lised
in these trades <1re e:unin:;; ];ttlc, :llld thcreiore buying little
of the produce of other tr;J.t\cs, Other trades, finding a poor
market fur their good;;, produce less; they earn less, and there-
fOTL' they buy less; the diminufion of the demand f(lf their wares
makes tbem demand le~s of other trades, Th<.l5 commerCIal
di"org,1nll;ttion spread.;;, the disorganization of one ',radt: throws
,nbCt'S out of blar, anJ they rC::lct on it n.nd incn.:<lsc its di::;-
organ~la!lun.

   The chief cause of the evil is a want of confidence. The
grC:ltcr part of it could be remO\'ed almost in an instant if

    1   The     C:lU!.('S   which speeially affect such tudes win be further can-
si ;crcu   In   cit. ii. § 6.
           CHANGES IX TfIE ,",\U:E OF                                              ~IO:,EY"             155
connr1ence could return, touch :1.11 intlu<,tric-') with her magic
war.d, and m;].ke them continue their P-l!tillcrion and their
t~('m;md for the wares elf o~hcrs,                    if .lJl tLtdC'i whLch make
 .,:"ooJs {{If dirc.::t conStll~lption agrt·cd to work on and to buy
c:lch other's gnod::; as in ordin,n)" times, they ',"ol1ld slIpply
one :l:'otllt'f with the means of carr<ng ,L llludcrate r;tl'.' of
pro{;r~ <ltlJ of wages. The trades wjlich m;J,ke FJ),:cd capital
mj.~~j' hal'c to wait <l little longer, but !hey tl)t) would get
emrh" mt't,t Wh'!l conflJcnr:e had revi':ed so Lrr th.lt those who
11 La C1pi: ..l to 1110 cst had made up thcir m:nl;;;;' hc.\V to in\'L'St it.
Cunhd~f)l'e b:-' growing wl)uld cause itself to ~row; credit \1 (,1::1
:.::ivc :w:rc;'1:,cd m('.,n~ oi purcklse, an,; thu'i pI Ices w~)uld rCCO;CT.
Thost' in trau(' alre¥ly \\'ouh\ m.3.ke gCiod prolits, new comp,wics
would 1)<' St:11 L:d, old businesses \\'o',lld be extended; ;lral "oon
(he!(' \,,',,\,]d be a ::::!"(j()d (!elllJ.!ld cn::n f'.,r the \\"ur;': (If th(15C \Ih:)
:1l:1kt: F,:>;cd c:lpitid. Thf're j,; of (\lUtSC no f01":11.,1 a:..:r('Lm~nt
lJ(:tlr(',~n t:l'~ dlff('rt':1! tr.Hi('3 to Let.::ia <1g-aill to wOlk full tilnc"
:I!ld ~() make a nl.i:_~cl fur (.1,:11 uthc:"s w::Jre5, But the                                   H:V~\::It
of in,lustl')' ,-·)111(>'3 ;l:)()\l! th'():J::ll the gT::Idu.ll ::Inll "flen                       ~imuJ·
::H":('()US ,c;!"dl\ th oi cunt1(k ':~'(' afP..0ng many various tr;ldes; it
!)('gill~ as ~.,){In ;:1.5 traders ti-lin;'" lInt prices will not contilluC
it>   [.1I1: and wah a re\'jv.;'[ ·-fin,iustTY pri,-es ri~t'l.]
        [§;. The conncxicn b(:\·.\('~11 ;1 fal; of prices ;)nd a suspen-
sIOn o{ ill(hstry reqliir<~,' to he furthlT w<lrked out.
    1 hl~rc is n(l reaS()!1 \\ hy 3. dcpres::.iu:l ()~' tr~Hle and a [.11\ {If
price'S should ;;;top tJ,c \\ '.Irk 0f those \"))0 can prO(lllC~ \\'ith-
"ut h:H-in~ to !ny mOlley on ace u',mt of :Jny Expenses (If
pr(1\~u(.L()n,   For insi:lllcC 3. m~n wjJO pa~'s no w;1~e'o. \~ ho
w(,r::~ with IJi'5 own il:lr.c!s, :\ncl prot.\'[ct:5 \\'h:1t raw material
h~' rcq',:lfl'S. cannot lose anything- l)v continuin~~ to WO);":.          It
do('~ Jl0t Il;::lrt,~r to him hL)\\' I'JW prices han;" falIen, pl0\'ic.ed
thdt ti',c pricc", "i his goou;; h:1\'(' not fallen more 111 prupli,t:\1J\
~h<ln tlhlSC o( otbers, \\"ht'll price:> are low, he \\ ill .~~>t few (,pi liS
[(I; 11:5 t::'0(ids: but if be can bur as In::tny thing" "'ith th(,In;1' he
(ol.:!d 11-ilb the grt'ater :1;lmher fl( ,;()iIlS he got ,rht'\l price_,> wert:
l:i~;h, he \liU not be mimed. 0)' till' fall (If J>!iccs.    I Ie \\'0uld ut.' a
      1 The moo;, rb_F:b> of ~.l! the rlJ.ns tlnt lEI'!;' Lt'cn slIg;e'k,1 b ....
                                                          or
_"::I.....:i:1j:,ts l'Uf ;lw at-tiflc:a: ~'r:;:,\lLiEltl')r. i])dll~trr is one which .• :m, ;~t
·he "ahol,\jl)l' n! c,'Illn1f"n::;11 ri~k." Thc'Y l,r,))''''',-' ~J1lt in ll:\,eS vI
 '.trr·"~\011 C,','.. :n,i','~t ).",:iJ. ,kr for'ra:d, :-1I1o!, Ly g\lara];~"('i;:;.: c.1eh
'\-P:U;d", ilh.'\"·IT aC',1ir.~_ ;:~k, c;\lI~e all in,[u':ril',' :~) ,~olk, all,llht'r(>.
!ore t.) eJ.::1 ,\1: . -;\; '-,'l',':·,' Iv buy t.!ch (,\hl'r';;. pruI:u.cts. G~w('rn:1l(nt,
l,y n,1I;1I,:-; en:r}' ri"k ;\t once, \\'tnlld, ti1~'y thir.1 , T\1:, 1)1) ,i,h:,        Bilt
 ;h''i );,1",· n,~t Y'.": ,~b"'.\·n   h.,w   (,~,)\erllr,\<:nt ,h')~l!,l   :,_11   \,·lH'~:'l'r :1. l1'.1.n\;
                           t" C;HlSe-~ t"':-"nJ h~, (iW:l cnmr,ll, nrcf llOW il;
':1,:[1:<'; W.lS l~';dly du~'
g1.\;u:lukc CQ:.J1d he wi"rkeJ without bmder.ng that fr :eJom on which
o.:ncrgy and the rrog:ress of inVt'nti(JD tkpcLld.
Ij6                     nOOK lIT.           ClIAP. T. §6.
little (l>cQuragf'd ifhe thou~ht that the price of his goods would
f:t;l mMt: th~!l tbe P~:'~c, of (Ithers; but even then h~ wouid not
be "CIT h~cl\' to s:op 'xc,wk,
       And in the sam.; way a nnnuf:1cturer, though he has to pay
for raw mater:,}1 anJ \Q';'5 '\'ould not check hi~ produnion on
aCC()llnt of:J. f.,ll i:1 prices, if :tll' fail .1.ffcct,>l :1;1 thin.;;:; el{lully, :rnd
.....ere nut lik..:.iy to) ~() fl1llhcr. If the pr ce which he got for
his ;'::0(,115 kd falkn :.Iy ,\ ljlnrler, and t:h- i)ri:c;:; which he had to
pay io:- lal'l'~:r at~d r."": I ,--:.11I.'ri;t\ Iud <11s') f,'!;'~!l by a CjU:lltU, the
tr:J.dc: ~,:"uU be .'-s Plo::tJ.;;lc tt1 him as bc·(,re the fall. Three
S'I':!'l~','~n'i wo,,:.1 now..lll t;tC \\-ork t,f fuur, hI.' would use ',"wcr
COl:t.~("~-'i in Ilh:;t~il;'il1:~ ,d' his rc(.cil-'t'i agJ.inst his uutg'_)lngs;
hut l:i~ r~':eii'::s ',\',J:JIJ st.\!~d in the :;,t:l1e n·bti'_'n to his
o:ltz;_i!l;;j a':> befure.        !jis ne~ pr":l~s WUu]d be tl~e same per-
ccnt:li;l' of hi.:; tO~31 h-.l::.ill'-'~-:;   The cu,:ntcr" by which thev are
rccku!'tcd would be Ies:. by one qu;;rtc:r, but tl;cy wonld purchase
a'> :n:1..:h d ~he r:.cn::s";cUie.'-, n)mf();-~s, and lU;":Jli,,;s of life as they
did IJI'['!Tf:.
    It hnwevcr VC:'y s·cldorn inppl.·ns in fact that the expenses
,vhich <11''1:l!luf.lctl::-cr 1!:., to p:ly out fall a~ mur:h in proportion
a5 the PlICt.: which he .c:ct~ kr hi" ;-:nod5.              For wh·.:n pri.~e~ are
ri",inr;, tIl(' I":O:~ in ll;:c ~:;(~ di th,~ i:,,: ,hed r:ommodi~y is generally
r:,'."L' rapid than til;(t in t;lL' ;Jr!:~e "I t;lt' L~',V m,l-teriJ.!. always
r:,',rt! r3pid than th::;: 111 t:;e' ]JflCC of b!)o\lr: anI! when pricc~
:1!-':~ hri:~.;. tho::: f.dl in t!1C pl';~c' r.f t!le ti;Lish,~d commodi:;.-' i"
gene;,,:ly :nor'~ rapid dun 11i,lt in the price: of the raw materi:).],
;l:way~ mnrc rapid th,UI t:"lt in t~':' pr;v:.' (If hbour.                 And
therefore when pric(:s are            f\Liq~ Ole malll.:L,cturcr's recei;lt:i arc
someti!'!":,., s·::lrcelv 5ufliciL'!lt c\ ell to rep:1\' J-Jim for his outh\'
():1 raw m~lt'-:rialj \\:"h';~' <:l:ld ,·th<.:f forme; ·of Cin:111a~in:; c::l.pitaI';

they sddqlfl gin' him i:l ;-\(ldi~lOn clh,ugh to p.l.y in:erc_~t on his
Fixe,J r;lJ,i~.ll ,'.-:---,d E.:r;)ing:; or :\L-ma~unc:jt for him';l,lf,
     EW:1 Jf th'~ prin:-"" ,:,f ttl,nur and ra',v m.ltcrial f;lll as rapidly
as tho'>e ~,f fir:i,;.,r,(:,! goo,:", the lll,lOUfJ.'::turcr may I()~e by
contin!;i~~ prouU'::ti(,a :f tl:t: fall h~\.;;; not come to an {'nJ.           Hc
mar pay fur r:,W !ll.l:cr:al anrl boom at " time when Vices
gCl1\:rally ;nye fa~k n by o~{'-s!xth; but if, by the time he comes
to s.::ll. pr:cc:s han.' Lllen by ar.0:her :,i:,th, his receipts may be
l.::ss than is :;'l~lic:('nt to cover h;~ nulla ....
      \\'l! ((,nclude then tll::1t nW:;_:~.Ktur!:lg: canno~ be carried on
except ;l.t a loll' rate of profl~, ('r <It a lth'i, wllL'n the price;; of
tlni~h(:(l ;;'Jods :lrC' low rd.:tt,\Tly to tho';e of labour and ,ra'"
I!,.,:· "i;l.;; or wLen pric<:~ arc fallin;;-, c,'cn If the price,:; of all thmgs
:l~~' h~.i:l~ cq'l.-dy,]
     [~h,    ThlL, a fall   in price<=; lowers profits anJ impoverishes
the f')a:·:Jr,:.ctllrcr: wilile it incr~ase5 the purch3sing power of
thO:,'2 wh,., have fixed inCOl-:les. So a:;J.in it enr:chc5 creditors at
           CHAAGES IN THE VALUE OF I'IIO}:EY.                                 J57
:::t'           (If ddltcrs. For if Ih..; m()n~y that is owing ((I them
        2'(~cns('
:<, r~'p_lid, this moncy gives th,:,,) ,'I. great purchasing powa: and
if th-,',- hJ.ve knt it at a h;-;cct r.-He (if interest, e:l':::i! p.lyment
lS \\orlh r.nre to them th:ln 1t w(:ulJ be if prices ,vert: hi;;h. But
fIr tht' same rea5cms th.lt it enriches creditors ar.d thn:;c who
recci\ e fixed inconws, It impoH:rishc') th05:"- men of bu~in~'s,; who
kn'e borrowed capit:li ; and it imj)UH!l'ic;hcs thtJc.c whu han.; !')
;n,lkc, .\S m':ht bUSln'2~5 men 11.1\ l~. con~:derd.\)l{~ fixed )l)()ncy
p:t:: ::lcnt:; fnr rents, saJ.u:cs, an,., ('Ih('r matkr::>. \\'h(:n pncl?s
.'J"'   :l<cr_uill~,  the i~:1pro\·em ..'nt \;i t!:\)ut:ht tl) be gl'c:tter tkln It
   ,,\,':'     h',:,1USC g~ncral opil);oll '''Llh rI':,;.:nl to the prospt:nty
"t" '.bc   (d,:ldn' i~much intlul"ncul hv th,,: autbtJritv of nunuf:tc-
cncr..; a:IJ niercballts.    Til!.:"", jlLd.:::-c hy their o\\~n expcr:t':-Jcc.
;)1;(\ i"l tUll~ of asccmling- prices their fortunes are t :tpldly
j:,\'r('."l~CU ; in a time of descend In:; prices their fnrtune:::i art~
::L-It~on:::rv or dwinGlc.   nut ;:,t<l:i~t\"s Drove that the real income
d !.ht~ C0~ntry is not n~ry mllcll Ie:'.:; i;l the pr6(,lIl tim,! of low
vrice~. ,han It was in the pCflod of hlg;h pric<'s ttl.lt \\f.:nt befl)fe -
 i~.     Th t :l.\'emgc amp',int 01 th(~ ncces"i::uie:;, CO'll f ortS ;md
 ltl,\lLric-s which are enjoyc-d hy E~~)i5hmen is probably ;;;rLittcr
 now. in ISS5. than it was in I8j2,]
                             CHAPTER II.

                        r.f,\RKET flUC1T ,\1:IQNS.

    § I. \\'E have di5CUS~c,1 c.1!;~eS that alter permanently or
temporarily the purcha~J\l'; p"\\l:r Df money; we mil)' now
ag<l.!l1 assume that the pur,h,t-..ng PC)I\-Ci' of muner rrmain5 un·
char;gl:d, unless the c(mtr.J.ry i~ 5L1trd ~ and may a,~.:lin tt\C::isurc
"aluc 0r gcner:l.i purchasi,;V: power in terms of money. and
speak. of .J. ch .• nge in gl:n~r.~) purcb,tsing power as a change:
in price.
     \\\~ h,we next to con,ider r.d\\" the market value of a com·
Illod:tr u,;cl11atcs up and down on C'ithc-r side ()f the ~ orlllal
nlue. while thJ.( ~orma.l nlue it5elf may be rising or fruling;
!>l()\\-I).
       Producers and dealers end(':i\"OUr to anticipate every tluctua-
'tion ofmarkct \'.1.iuc ; if lhey {'~:pect the price to be high, the,Y
 irrcrt':lse their supply so as l.) profi: by it; if they c'\pcct It
,to be 10w, they check tlH,'lr supply so as to avoid Jo~ing by it.
IThu'l their action, whcn they ,(to: ,~omvctln; freely with one
 anotlLd, is the sall'.e :IS it W(~t!lJ bt:: If th<.!ir ol!Jcct were to
 re~tra~n the oscil:ations \Jf tk' ma:-kct yah:c Gil either side of
                     ....
 th ... :\01 ;n:11 , Iu··. \V\l\::n th.,,) ,.;ucc('(;d, 5:1ppiy I::' 5:l.id to be
 dc)sely :\,l.'u..;t\!d to cl':llund; but t!:,~ market pri(:c I:; likcl J' to
  rleviak {.It {rum the :-';orm,JI pnce \\]Jcn the;, err in their ralcu-
  lalio;).;, (lr wh(.n they rulllbine with onc anothc-r artiricially to
  limn .,uppl>·,
       §~. The chief ,"ourre [)f error on ~hc side of supply is the
  uncertaint} of na(ur<.'"s return to m:ur's effort. A good instance
  uf this i., found in the li}h llurkC'l, l\-here Ihe fiUdU<.ltions are
  g:-;"J,t U{;GI'JSC' the 11.1.11\ of dlL~ fJshin~ boats is unct'rtain, and
  tisl, \1 ill n(l\ keep !on~. ,\t I\i!lir,g::s;;atc each dc::dcr r'ost:; l1p a
  ,;,t 0:' the fl:,h that he 11:15 for S,llc; and knowing what the
  ('1ll,'r J.eal('rs have. tile') 10 1>llt such a pric~! (Ja his, ti,;h that
  l:c n;:,y j'bt ;';l:t [iH'lTI "u!il hef(j~c the end (,f the d~ly. H he
  ji:h'~ 11 t'.'1> high, he il.l') lislt kit u':icle~s on his !J;mc .., in lhe
  C\ (,llin:::; ; if he fi\:ps il to!) :o\\', iH.~ gains less than he might.
        Ab.l.lll, tlte pri<:e of corn fluct:.:atcs much from yl!..1.f to year.
                   ~[ARKET            FLUCTUATIONS.
 Ft,; as a rule very little corn remains over from one harvest to
 we next j so that each year's consumption is almost limited
 t: the supp1y of thl! pn::vious harvest. If the harn'st is SCllltf
 :hcrc is it dl!arth of food, and hunger f{Jrccs people to give a
  .cr~· high price for it.     Ht:l'c we Ina) notice that thctuation,:; in
 '"lpp1y cause g-re.t variations in the pl-icc c·t ncccs~~\ries of iite,
 '_.:_;~ only 5!!~all variations in the price of those thing-s (or which
 ,.ibstitutcs can ue readily found, or 'l,'hich c::m be easily dis-
 i.~nscd wi:h altog<'thcr. If fish is dear, people are u.mtent
 to btlY little of it, so that evcn if the supply is vcry sh'.lr{, its
 price is nut fon.:ed up very high. But however OC.lT corn _is,
 '.'\"~ry une bu) 5 It or has it gi\'t~n to him ; ~o til at a sma:! hllmg
 ,,!'{ in thl? supply clf corn \\ iH cause a ;;rea.t rise in its price l _
         In uncivilized countri('~ the transport of grain fur any con-
  ,iderablc: distance is practi(a,~y impussible except along rivers,
 'md un the sc.\ coast. En!l: in Europe in the )"Jiddic Ages,
 ·· ...\'Hh IOC,llity ucpcndcd as a grnnal rule "n its own produce
 .;.n'~ 'h,lt of its immcIliatc: nci~hbourhood.         Iu O1L):ot years ac-
 f'lrJingly there \\"~s, ill some pJn or atba of any br~c country,
 :t real G.C'.1rth. Almost every season must bc unpropitious to some
 .1r;1O,"g the m,l1lY sOlis ami ciim;lIe", to be found in an extC'rlsl\'dTacr
 .:,f country; but as the same season is also in :;cncral mor-e than
 "rdiI:artlv favourable to others. it is only occa~illIlaltv tllat the
   !'::;rc<;.1t~ pwduce of the whole country'is deficient, 'nnd c,,'en
 I)"<.::n :1. :l less degree than th;,t of many sep:trate portions;
  ,;:Ii:c .1. dcfic;-iency at all wr.siucn,blc ext('ncli:l.~ to the \, hole
 '.:JrlJ. is a thing- almo::;t unknm,n. In mOdCrll 1i[rte:" therdure,
 :}l"lC IS oniy dearth, ,\!Jere thcre formerly \'.uuJd ha\-e been
t.lIlHne, a"d Sufr1CIcnc)" e','t.;rYII'iKrC whcn ancl('ntly there wuuld
 han: teen scarcity in som(~ places and s'Jp~rflui!}' in others ....
This effcct is much promoted I)y the existcn,:e of b.rgc c~pitals,
betOtlt;lng to what arc ClUed spcculatin.: 1l1crchant<;, whose
'business it IS to buy t:"oDds in DrOLr to res(:11 them .It a IJTofiL
 These dealers naturally buying- thin::is whell they are cheapest,
a·-.d storir.g them up to be bro\l~ht again into till: market when
 ~Jle pnce has hecome lln'.lst:alJy high; :h~ tendency of their-
 ()jl('rdtiuns is to equalise price, Of at ie,.st to moderate its ill-
, jln;iu¢s. The pri(lS of things arc neither so much dcpr.:sse<i
  4~ one time, nor !>o much raised at another, as they would be if
~P('Cul,ltl"e dealers JiLl nut exjst~."

   1   In the middle of l:l'it century. it was calculated tint" a. deficit of
             , teuth}
             '2  do,
                                                     3 dtl_
                                                  { 8 tenth,
             3 do.      raises the price of com     16 do.
             ... do.                                18 do.
             !' du.                               . t5 do."
   ~ Mi.i1, Book IV, t:h. ii. § 1-'
160                  BOOK III.            CHAP. II. § 3.
         III recent times the action of n1€'rch.:mts and GeJkrs i!'
·equ.:di-,in~ prices has l.t'e!l muci} z:i{it'J by the s[camship, th~
;railro;lll, ;mJ. the tL'le;.;rilph. i'\Qt !ung ago news from dlstar,
;rnarh':3 W;,b many l1hm;hs in ~")~lling, now it comes in a fr",'
Jmr.l':CL'>. :\fcTChal'\':> (all en'n t-:kgr.1ph instructio;'j;; to pon~
at whi-:h their ships <lre to (all: so th;J.t a scarcity in .,
 t1.1.rkct m;1.IIV tilvltSd!.ds of /l1:k's a\\JS can be met in a (c'.\
 days hy the ~rri·:.ll ;,1 Fn;.;\j'>lt ,;;hip,;I, .
         § 3· The lllMkct price of mar,y thin.;;; is settled from d.!
 tn d:l)" hy the act:cn of cka;crs rather than by that of producer,
  ~Iany kinds of lal,- pToUuce C..in l.llly be produced at Ccrl'];'
 times of thc Ycar: and the im!ncdi;1te effect <)f it rise in til
 pri('e of such 'th;l1~s is nCe to increasv the production uf thcll'
 but si:r:.ply to illuxe ck·:tit::-s to iJr!I':!'" furw,1rd lar,;cr quantit;(
 for sale, :md pl.:rhaps to impon ftbh supplies from di5t,1!>
 place". If \\'e go illto any c.'n;, 0r \l"o0l, or cotton m,.rkd, \\
  Sh~,H ~c(' d(:3.I,.r5 sdlillg rca,iil~' on \lnc (\"y, and Itoldin~ bad
 on another. The am(,unt \,·hich c:.lch of them oflL':'s for sale :':
 any pr~\e j" go,'U nc(i by h;" clku~<ltions of the )JH'~( nt a!~,
 future ,:o!H..Iiti(lT;5 (Jf the [;l:lrkcts with which he is COI)r,cckr.
 There are .;,rJ1T''" uffers wbicb ll<l ck,tler would accept: SOIl",
  whi::h flO Or.L' \\"odd refu'>c. There i~ sOllie price \rhich will '
 acceptcd by those who ("em least afford to w~it, anJ Loy thoo
  WhO.~f~ t'\p~,ct3.tions of :he future con,ijtion of the nurket .H
 least :<l:;'"l!ltlC ; 1'<lt loot by others, The higher the price that
  biJ, tile l.\r~er will bt' til(' s;-(Ies.
         lor ir:s·an(c. :h<: C(lnditions nf :t certain ,om market In.:
  be ..,~!ch !h.!t ... f)ri,c (If ;,-:;r. w<.ll;IJ J!ltJ(,ce deakrs lJ1 it to ~.
  ;00 qu;trtcrs durin,; the d:ty; \\ hlle they would Le i:1Juc~d t
 'sell ;-00 q\l;lrtr.:r5 by a price of 51~".) TOCX) quarters by a pri,
 of 5!J·., and so on. Till!;; in any market, at any time, thel
 is ~()Ill<.> prir:e :tt which each particular amount will be olfer.'
 for 5:.lle. :\nd in the qmc ,vay thde i5 some PI ICC at ....-hl,
 each p_lrtl~-ll1:l.r ;uno,lOt "iii 11!1(1 p:Hchas('rs. Pnhaps t!
 milier..:i and the ~pccu!ator;; in corn who atknu the mark\
 wuu;d hetwCC"1l them buy 900 quarters if they could he got f,
  50)-. ",1(:11, 700 If tllL'Y cuuld be got f(IT ; IS.~ but only 600 if th('
 could ll'~t bG ~ot fer le'>5 1::3.0 5'::.f. If <':\"l'l)'one knew cXJ.·~tly tL
 st;\t·" of the 11:,11")..;('t, i:xactly hu\v eagcr buyers were tv buy an
  sellers to ~l'll. the pri\:e wuuld be iixcd at oncc at SIS, and 7('
 q .... artcTs wn..:lJ be 5~)ld off during the d:ly at this price: th
 WQ,lU Le the pr.ce which wDuld equatl' ~upply and dcman."
 But :n fact the pi ice \H1Uld o"cilL.ue up and nown during tl,c lia;
 and (". en atlh.;- S.11l1C mOJn2:1t b~r).';allls would be strU(:k <It ... hght~,
 diifclcnt pricc3 in diff~n:nt P:lrts of the same rorn-cxchange

            Compo Crump's      b~~,JJ   drpartun in Politual ECNtonlY.
                              MARKET FLUCTL\TlO:-IS.
 'he average price for the l~ay \\"m:ld be a!Jo~lt 5IS., and the total
 "'Dlmmt suld h()ulcl not dill"cr f:;~ frc!,) 700 quarters.
     Thu, t1,,' ::\"r!11 ....1 price of l:orn \"iric~ lro:u ont- :1~:C to aI'JJther
 or.Cler the s10','." <l;~uon of economic ('h;l:,.::-ej: mC:l!lwhil<' in each
,,;c the: 3.Yl:r;!,;~ pri--.:c hd'.\"C'V;) Sl!ccl'"silc h,tnTst.~ \".:lI"iCS I-ronl
\';ar to yc::r, uw!ng to ~hc t 11~'-Ir·_ ~)! proJ11.,:r[S to .d);lst the
;t..:rr1y of (8m to lilt: ~'-:'i.J.r.J (''I" it : anti tilt' d,\i~y price i:l each
'.nrkd is ::;\\':l\"cd b:lt::k\\:"rds an,J f01W:1rds r,n ('.ther :sidc of the
-,':r:r;).,;e price-for the ':-"~.'-r hv !.one cakU;;I~:ons and b:lrgainin;;.s
 .r dealers.
         In '.:hl case of corn the dcm.lnd is pretty well known hcfore-
l',wd; and the f;Ipio. fhl':ttl.1tiGns th:l~ O':CII'" in its pncc from
,'·eck'<1 weLl.;. ;lnd from t:'L:' to d:J:." are C:llC'liy due to imperfec-
t:l1nS in Ihe es~imaks tlvt dC:l]crs furm of the ",,) . . ;.;.5 in existence
;\t any tlnl('", and to ch~!l;:c~ in their for,·.:.l~b of the coming
  :,llwst. Th·.'rc arc many othl.:r thiJi;S. ~uch 3.':; co.\l and iron,
:;,~. prid~~ of which 11u(,·... atc fUJm day to rl,lY chielly in c()::Jsc-
, .IC~CC cf the e~tin1:\.ks tiut dealers fL)n~l oi the present and
'··o:a:ng demand fur them, But whate\'::r bl.: th2 Ij.l~ure i.f thl.:
nlcuL1tion hy which the bar~aiI'ill.:;;; of . . leJ.ll'rs are (l';('ily
 ,'J' ctLcd, the~e b:lfgainings, l"xc('·~,t whcn d('alcr.~ cr·mL;lll.: to
'.(' . . ~ fJ~ !O~S :utllicialiy h:.:;h, :cnd to n:ake .. he: iI1:.rk,t price such
        t,) cq'ia;c supply ,"l1d (:(:ll),llid in the In:u]:;et, Th .. t is they
"::,r11(1       !ll:1kc the price: :-i,IL'h,   tll.l.~   the an:[)Ui1t v.hic:h people are
\.:Ji,l .;:O of,'t':' fl1r sale in the m,ukc[ at that price is just ('(pHil
'" tl.c amoun: ,,·hien can find. IJllrchascl"s ;.It th;tt prt·:c in tn·;

       § 4.         Let u" next eonsi,icl" 50mc fiw:tm.t!ons of price that
.!lL)t: frr,m the Ll:lt:rc tu forecast changes in ,i~m,md,
    ,\ dung-c (of Lhbi.)" oft 'll n\Jh.'~5 th<: ,\[:Uh:ct ~,ricc of some
k:nc~ tll m.llcri,ds \'cr'; Tlll!ch hi::lief or \TIV mU'.11 lower tlla!l
:i1":r :\"ornul pl·ice. ~-\ m.lll.;f.I'~:W(;r who ~s (jlwk in l"c:ul!l1'';
 , " ,;i;-n,; 0f the tims~, :,Lll <in!i.:ip.,tc" ::, . . . ("V;~':;'.S dcm;;nd t'lr
,,·.,:,1·~   cf a ]t:Lrticui,lr ki"J, m .• h:s    Jar.~c p;"flt..;, J~\.;t in tl'..i.,; (,,5C
"j   '.)P~Y em ix~ .IGjuS:",! to lhe GCm,llili n'ry npldl'; ; ;lI1d th'rcf!JTc
  it pri:l' c.11:n'\ (,:lsily b,: Lll"c-d mlio"h b:-' an incre:l"e in (lcm:!l'.d
  ,lk~~ it . \l':'y ;..:~ ..... :lt and 'luddell,
    1l;'11 it :;; otherwi"l; ,,-illl h(J,l;,C<" the ~upply of which cannot
  'c "luickJ:: illcrC:.lsed to lllC·:t :l )lCW (!l':ll~!lrl; thci:- \·~J.\ue
    "C'!l allJ falls with ch;\Il.:;r~::o in th..: jJ)"l·~l)(.rj.y (·f the p:ace in
',' b.ch tHC'y arc, \Vben t)('rlin be'.:.1!ll·; an' impni:d rity, there
  ,·;t, :1 iZ)'\';at dC'mand fnr hou,;e rOO:l!: 1.0'J:;" j(O:" rosc ex-
11 .. ·.. ;1::':.11111y,   ;:nd   hl)(~-men e"nl~'d       in a (by morl'    W;lg(~S     th::.:)
;,":I:.:uh'Ha) b.bvur:::r.s e,uned in a '\Tl.."i,;.                On lhe o.her 1i;;r.d
:-:e ,",ilue (·f houses f<ills \"t~ry l()w in phC':s from ydlich P"jlu,
l:I·.;on is r{'~cdLng. There is morc than one place in .\mcnca In
\', hio:h .1 town of 20;000 inhabitants h;1S grown up lLl a year, but
                                                                                   II
                  BOOK Ill. CHAP. I!. § 5.6.
in a few more years has been deserted. and the houses in i:
heen left valueless. In 50mc Cornish villages which have beel
deserted Ly their m:ning populatioll, and in some other parts vi
England, houses can be baught fur 1ess than half of what i:
would co.,t to uulld them.
     § 5- Prices arc liable to great fluctua'ions in trad(~s in whic;,
thcrc.is a great usc (,f Fixed capital. For w:1en prices are a:
their Normal level, the pri..::c of goods not only returns witl:
mterest th~ ma:iUf"lctur.:r's outlay for raw matcrial and Llbou;-.
llllt also ;;;i\"es interest on his Fixed clpit.:ll \\·i~h :1:1. alk.wano:
f()r it:; Depreciation, and pays his own J::.3rnin.;:~!)f )'Llnagement
As iCOR ae:; the price pays him back wh.lt he ~p('nc!5 in ra".
llla:crial and labour \\ j,h interlO:st, l:is desire to keep his work
men to);('thCT, and to kcctJ up his trJ.dc connexions may indue,
him to go on. Thuefure, the lI10re Fixed capital a mant!-
facturer uses. the 5tr'Jll';l'T arc his inotlcements to keep hi~
(actory at work C\'CH aft.:r the price ()f his goods has fallen a
Ion;; way bc:1ov,· their l\orm:lJ yaIue, and thus to force dowl!
prices [:..inlier still.
     _\gclln, m0S1 (,f th capital that is Fixed is also Specialised
Th..:: clpit:tl fo)r in"tanec that is sunk in opening a co:'l1 mine.
cannot be withdrawn from it when the pricr of coal falls; allt:
a prudent capitalist 1,\ ill not be induced by a high pri':t: of CO;}'
to im'cst mone:~r in c.J.d mines, unless there is reason to L'XPiX'
that the pricC' will Le 3t1st3.ined fnr 3. long while. The price t"
coal may thcr,-(nrc rise (.Ir before any a:tcmpt 13 r;13de t,
incre,lse the supply by opening up nc\". mines; and ('I'cn aftc:
that, a cO!1sidcraul~ timc wia clap.jc bch)re tile suppli('s {rum tll<.
new u:ines cu, exC'-rt an;' inz1uenCl'. Coal mir:ing re,~u:r('s ab
a great deal of Sp~ciali~d Personal capital; and a s',lduen ilL"
crC~bC in the ~ll!)plr C<f coal canno~ be grot with(lut st;ddcni:.
incr(,:lsing the r,umucr of miners. J'\[cn \vho <\;·c :1Ot famiJi:l,
with the d:lng'~rs and di~c(1mfort:; of uuJcr;.:ru!,jnd life, cannl'
be attracted 10 j( exc'_T't b;: lri,;h "ag-('_~; and "jpee tileir I.loot:.
is at 11r~t Ycry il,cfti,-l("lt, the II a~c'; pa~l: f')r rajsin~:l ton of coa:
are very m;.:c!t hi;;hn t!ian the :t\dnnal ",lgCS of the work
And thcrcfure the inCT:lScd (!emanJ is able to raise t:lC price 01
CO<l.I vcry hi:;h w;thout c.l!ling forth stich all incrC;lSC of supp::~
as tu forc~ the price quickly (}(n\-n apill. On the other h:ll~t:
when the oemand f\.ir ccal j,llls ofi.~ tb(' ~Iatcrj,\l and !'er,;,m:l .
.::apital tlut iii "p('cialiscti in rnal minin:;; kcc-p up the supply .
.md the price is forced down \'ery JO\\". The usc of (oat ((\)
tlome:;tic purp0sC's \',-\1-ies but little from year to year; the- amOunl
of coal tb,lt 15 wanted for makin.C; sL:~m Yarie:; a iittlt2 more:
uut by f,lf the rna'>t importa.nt v:.uimiur;s in the dcm:md for eoa;
are due to its US\' in the rnantlfacture of Iron.
     § 6, There are great fiu(tuations in the price of iron, partly
                     1!ARKET FLUCTUATlO:-1S.
b~C'lllst..: rt ri~e in price dces no: incre;ls~ quickly the SUPj';Y of
II",: C~);l! and iron ore, and of the fixed capItal that :ue w::tnted
in ih lIl3.11uhclurc: p:ut1r because the demand -ful" in\t1 is
~.Jbjt :t ttl d(,knt chan~esJ in con-cqu('nce of ib being chiefly
bed i;l maki:l:; machines, Llilroads. and (1thcr forms uf Fi.\.cd
C:1i1it.1.l. Tht.' C.(:UUli,t for Fixed (;'ciliu1 is Jia!Jlc to mort! C:>.-
treme tluctuations tlnll the dcm;[u.l ior C'_,ml'lI)(ll;ib that 8re
\\·anteu for immediate consllmption, and thv tr.,des wlndl make
Fixed ca[Utai :tre more afrc-r-tC'd tlnll any ethers 1);,- <,!,l'rn;;:tions
cf cOlTImC"rc:,d pn,"pcrity :lI1ri adn'lsity. For while (Tl'dlt is
t":~):lnLlin;J the t:-..tld. purch;J<;~n:.:; po\\-er \\"l1ich (retii, ;,l:ns g0(:~
cLir-!ly to tr.\dcrs an(~ trar1in,~ (:,:nr:.n!v~. who, wilo.:l:l!'r they
'''lnt it to bc.:;ill or to extcD(l their bu,inc . arc ~ure to "pend
                                                         .,s,
:l. ~ll".lt p::trt (lI it on JD:l.chinclY. blilluln;:::~, ships, r;·,:h\·ay
'lu:('ri,d, :1.11,i o:hcr f(,nns of Fixed G.lllit:l.1. Ul, :.hc other il:lnd
\\It:'t<.: credit is (ont!·.lcting many fin,; [heir mc~n~ (,t purch;:-mg
:l.1tG:~clh(:r cul <Jft~ whi:e tbo.,t.' \,"!l(J~e means <!ore n(l~ str<litencd
do nut can' to invest in FIxed Clpital u:1tii t!ICY think pric{>s
ha\·c l1cariy reached their turnin~ pOill~.
     The pnce of pi.; i,·on was dOllb;,;ci, and 11:c pI·ice f)f Sl·mt.'
kinds of loal \\",1'" qlLldrupkd i:, the Yl',HS I,S7o--1673, L)'·[ ]10\\·
their prlCCS ;1re !n\\·rr tr,aP in 1070: lIn: \\:l.g"~ of bhuur in the
iron !r.l(i<.:s rosf:' 1:lty pvr cent. in tll(' :C;1I"0:' 107ll-IS73, and havC'
;1~a;;. t".tlkn· ~,llct s:lll\br Ih,1.ng·:s h:II·C o'.lurrcd \\ :th earh
t1UCtl::>'.:'..;l\ of ~~<':I:<.'rai lJrtJ~l\uilY, "r h,: I,r;cc (\1 ir0rl in E!!£:;land
amI (.tll('r (OL.;I~t:i\.'s r(l~c more rap,Yy th:m :llmost any other
price-; in tile yc;-tr" pn'ccdin~~ eacb (If the cri:,e-, oj 1837, IK . 1-7,
 lS5~ .. :1nd ll)(.b; :tIlJ it feli 1,V)rC r::pid\ than mn::..t other I'l"ic(,; in
tIl'." ;·~',ns fnllr'l'.\·il1;"; t..' 1(11 of tb:·sc ri"i-A'S; ~·0 :,Ld_ not (,:'Iy the
\.".'~('. but :,i;:o the \·:lL:<..' {l; ~;ul<..'r.11 purd:a<fl::>: pu\'. :. (f iron
n',v' a."!d fell.lt (";,.d1 of the~t' pc]"ic1rk ~C2.rly the qmc Illay be
 ':;l;d of the ll\;ilding tr",rlcs :1,. of the iron trad('~, the W:lg.:.;, of
 ·n\ 1·,ie'3 ;11'd nfolll:1::ir\l1S, bri' kL.l;:C1"~ <"Inti C:1rpcn~("r" h::\·~ risen
1.1P',,:;: tJC'urC', <!ond Ltl;ell rapidl)" ;1,(:('r. ;:;:1](\5t <,,·:.-rycn,.i-;
         In ,.one pC':i<lds r·f (omnl'~T'.. iallLl,;'<.."~~i"'ll ,l;lll~l~~ th ...' (\:11y
 ';','T !l1ll t,,:" I-'i\C,-\ G1Jlitai (C'mc <; fr'~·'ll m:,r;,:f,lct1:rl·"':; Whl d •. not
    :;,~, '.d cl(h(' th('ir works for ;1:l,'Lltio1<s \' hik tr<lde is l)ri<;k ;
lJl:t ·.11;,), wlWll tLl(;'~ is ~:'lck, ;ll:d t!,·> pri."\.:3 (,f l)uilding ,·.nd
 r:~a·_:',:~··'ry ;tre low, lake til~· l'P;) 'It'.lni:y I,r n::lkin-: such ('xte!, ..
 ~:'ill' :m:: l't.':J<1;!·s as may (na1·,,·.' ~IF·:n t"               j,y tilt' n.;',"J\:d uf
 (:.;,;:~. \1 he;) i~. cn;;l(',. l;ul tbi:o i.~<':1ll.·:,'.1     Lut r:t::1r~y ~tlfricicnt
tJ J:1.lke lip !!tc deficiency that ;~ri~c.~ flom tll.; g~::'cra\ r:ontrac ..
11:.1;1 ~.j cn:dit, {:·(;111 th,' L"li:ure of 'l\. \ linn,; ami pubh: C(l)r:?,~nie,;,
,1:1,1 1:. ;ll tLl "J,..e::c." (If :i:..'l\" C'JllliJ.1:'i,~.
         "["J-:.:, prc<;~'nt (kpr~,~.,i0;1 (It tL',k k(:- l·ccn accnmpani':G by ;:
g~·e~: (all1C':~ (Iff IJf Englar'.,fs C"p(lrb, Ullt ]1"t by a c(Jnc~p0ndI!1~
dllnmutlon of her imports. Ths is partiy d;.\e to the i,lCt that
                                                                              11-2
                  BOOK Ill.        CHAP. II. § 7, S.
Englishmen, having suffered great losses in foreign in,"estment~\
h.1.\ l: bt'en brin~i;l~ home a great deal of their capital from
abroad. \\-hen Er:~h-;h c.J.pitat b lent to foreign COllntrie~
rr:uch of it is g,,-ner:dh spc'r,t on railway lines a;ld machinery
th:1t arc b()~:ght in En:';~Jnd. This wa5 especially the case in
the :- ~·.\.rs of pro~p('rity th~lt preceded d~73: and the subsequen:
<kclll'C uf Lng];\ljd":, ('Xport~ injured tile iron trade more th;(:'.
oth..:r Englhh tral~cs. Eut it oid not ;)f{cct the b;lilLli!lg !rade,~~
ht.'1::3.uSC they do Hut m;,kc thmgs for exportdtion. 0n t1::" othe;
hand the capital which En.~lisllmcn broug-ht hO:,ll' could not b.;
inWctcd here without kaJln,-; to a dCllund for building in
yariou.,; forms, :mJ :'0 SU!llI;\\'hat sust:linin,; the buildIng trade::;.
Thi", nplains why it was th.!t ilfter 1873 prices fell n'ry rapidly
in the imn trad,-', but w('rt~ kept up for a long time in the build-
in~_ traues.
      ~ 7.     One CW3.e of an inuC';}:.e in the demand for a COln-
modi,y is a failllre in the supply of ~0mething for which it can be
substituted. Thus (he f.1i!urc vllh.e :'\1ppJy o( ';0tfon duri;lg the
Anh'nc<ln war in,_xc:13":ll the dcmand for II l)lll. A;!ain, one
ClllSC of an incre~3.e in the supply, and consequl.:nt lall in the
price I~f anyt],ln;, is an 111'- rl :ISt.! 1Il tb", dem,uHt for ::,(\mcthm~.
that is produced \\'\(h it. The prices of the ~.tS :1lld the coke
that ,He b'lt from a :.):1 of \.:).11. must toge~~her be enough to
cowr thei!' joint Expf'f:_'t.:::> of ~JI"OdllC(ion. If the d.:-mand. for ga~
ri,;es. mar'.' coke WId De pr<ldllC(:d, and its price must fall, 5l'
that the j,)Crea"eu suPVJ:" may be taken off the mn.rkd. TI1'.
rise in the price of gas mu"t be ::;ufl~.:i([H tv co\'cr thi~ fall ir
the price (If coke. and also to cover the incrca"e, if there is any
in the j0il;t Expenses of production of bas and cuke. Agair,
since the r~'r('al of the Corn L-ms much of the wheat consume(l.
in Engl:-rt,J ha~ becn importl:d, of coune "itiluut any straw
This ha.,; C;.l\l~~'\l :1 s.::trcity antl <1 consequent rise in thc price oj
straw, :md the lal'lllt'r who grows corn 11)015 to the ":r .. ·.v for "'
:;rot p:1rt of the \"aJue oi the crop.
       'nll~ V:I~:lC uf straw tIle:) i., hi:;.h in conntric", which impor.
,,-om, ;tilL! bwin 1h(\5(' which c'\pvrt com. In the S~I:nl' \':3)'th,'
price of lllutton in the wLlol-prodncing tli"t;'icts of Australia wac
at one til"c very low. The wtlvl was exported, the meat bat
to be cOHsumcu [it llOme; :In(l ,IS there W.1.S nu f;reat deman,
for it. the price of t!:e ,\0,,1 h.,d III deft-a)" alm0sl the \\hole co
the juint E:'I;j'cn5-c:, vi produl'tlun of the wool and the melt. Aftct
\\a[(-L~ the low price ot meat gave a stimulus to the Hade , ..
pr~sl.:n"in:; meat for cXjJOIta:.ion, and now its price in Australi,
ie; higher.
       Similar remar'ks apply to th ... t p.nt of thc Expenses of prl
ductio'l of a thin~ wluch depenLls IIpon transport, whether 0
,he uw material to the place of manufacLlre, or of the finished
                 11ARKET FLUCTl"ATIO!\S.                               16;
commodity to the place of sale. The expense of making and
keeping in repair roads and railways is shal"cd among the
diff,;rer.t things th:tt pass o\'er them. '''he'll the discovery of
mine:; in a di~trict leads to the making; of r:lilways to it, the
inij,J.bitanb at once find th:lt they gd a higher price for every-
thi',J; that thcy pr(]Jucc to be sent away ~o dtstant markets~ and
that tht'Y b.Jxe to pay a lower price fur thin;;s which t!:cy buy
from 3. distanCf'. Again the exports from En;.":hnd b!;ing le~5 heavy
and b1Jn,~' than those from America the '.'olllpetilion for freights
from Enbland is ::0 great ~s to keep them 'Try low) nnd thus
to throw the greater part of expense of working- the ships on
the frci..::ht of ;:{oods from America. Any inCl case in the American
dem~,nd for the }l(!a\'icr and bulkier' kinds ot En;;hh goods
i:lCreascs the competition of ~hips for frci~h{~ from America..
and so t(!nds to lower the price of Amcric,m goods in England,
Again, if a commodit>, whwh is hca\'y but not bulky, is exported
in the ~ame ship" with another which is bulky but not heavy,
the fw;;hts wJllch either of them has to pay may Lc YCI")' -"malt
or n.'ry frc-at :lcc{Jrdill~ as the d(!mand for the other of them is
very great or wry small. For instance, ships whose chief
ca~t;'l (dnsis::" of irGn r::lib. often carry light Slafluabhire
 pufferies for very low frei:;.:hts. And tin is brought from
r\\srJ.lia in wool ships as ballast, almost the whole expensc.-; of
 t:a~ ~hip~ for the double journey being- borne by the wool: but if
 t'~1(' j>roJuo:tion of miner,l1s in Australia were to increase, and
that of wool to decline, the wool migl.1t be carried for \'cry low
frei"h's
       § R,' \\~hen an incrcase in the or:m:mct for a conunodit"
 :-ai~e5 its price, the gain at lir.st gocs :1.!most entirely lllto the
ll.1nds ot the 1l1.1.llufacturcrs. llut soon their eagerness to (,,,tend
 their business lead" them to cumpde with one another for the
hire of la:JOiJr, and gr.1.dually "'at-:cs rise tin a large part of the
 :~J.m l~ tr,m~ferrcd from the emplo)'crs to the emploYld. Con-
 ~·(".rscly when the dcmd.nd slad:.:ns and the price of tho.:! commodity
 ulls, the lJl1n~en of thc fJ.n is at rir:.t borne entlft:ly Ly ~'rnploycr5;
 hut ~radl1:diy it is in a great mC3sure transferred fl"CJm them to
 th~ l"Inp:o;"ed. 1·he111;).onel" in \\hich W_'"!gcs rise i" the OIle case
:mu. h;\ in the other, anLl the distribution of the rise- or fall
 .1In'.ln.~ the various classes of workmt'll \\ ho are emplo\"('u in
 proctu..:ing the commodity! are a good ueal influenced in Li;gJand
:1t the present tim~ by trade combinations; and they \'lill be
most cOl\vcniently discus5ed at a later »tage,
        Dut It may be noticed here th"t mO\'cments in wages almost
 :1lw~)"s foUow, and scarcely eycr occasion, movements in prices.
A fiSC in price is occasioned bv an increased demand; after a
lime w<tocs rise; still the demand increases, and still the
1M                   DO OK Ill.         ClIAP. II. § 9-
price ri.ses; but the further ri"e in prlce is occ,lsi'JDCd as the
first fise was by the (;1('t th:J.t Gc;n:ln(i has incf{'a.~ed more-
rapidly ~han ~upi)ly. It is true tlnt the rise in W,\;';f'S seemed
to pby 5-Jll~,: p:1rt ill s:to,!aining tbe IIp',var,: mO\'eml':l~of }lrices;
lur i1 \1 <Iges had rcm~i,H'u }c)w, alHi th .... hhoh: ga.in of the h}gh
pri~l'~ h,,-tl R~llle lu ~)rofits. capltL.l wo'.dd h;we been attracted
in;.o tbe tr:vlc mr);(, rapirily, the supply would hal c increased
fa~~~r, :md therefore pi ices wvuld r,ot kln: ,'isen so much.
Dut ~t;ll each rise in \"::l~c:) is c:lus~d dil eeL!y by a risc il1 price.
     'l he upward ml)Y('l1wnt :n wa:;t's i<; scarcely ('vcr so g               in
proportion a" the '.lpWai"d mOl l:nj;;n~ of pricc5~ ar:d tho                   rc
:',~;Hcely eycr 50 gn.tt as the tqw:;ud mO\'cmen~ of :hl": E", !\liI';:.s
of :'-hnag-emenr. One c.:l.l''',C of thi"; is th;Jt the rr:.c: ir. pri!:<.:: goes
Ul the nr"t insLmcc, as hdS just hU:::1 -",1:l!, l n::rf'y into the
po:::kcts olth:: l·mpI0ycr: and the ri~2 ~:! -,\-,1;':l''; ,-c],:om b-:,,;ins
ul1til the risc in prunt., Ins railed Lm:l incrl',l~,Cll c(lmpll!tion
amon'; ('mploytT,~, BLlt .ll\otlwr cause is th,tt a pt'.1t deal of
risk i.s in,,:l\-l'll in brj;1:.;i',~ ;d,liti():!.1! capiul l11!U a tradc= to
meet \\ :l:lt i" not unlike;y ~o he un!y a kmp'Jr3.ry inn,:"se in
d,..l\I:lnd; ;'lnd pMt uf wh,tt ;t!'peclrS as a ri:>c in proii~s is really
or,}>; ;ns"raYl' ,\c:-:till~t th;~ r;,k.
     -In jU5t th12 "_H~)C \1,1:': W;1'~'n th-2- dem:lt~d shckcm, prices
begin tbcir do'xnw,lrJ il1O\-d;),-"nt tirst; the fdll of \Y<1g-es begins
later on; It i~ ;):~C.l"':'_ln . -,rl by "nd is not the caus(; (If the fait in
prices; and tlli.'! L;[ in [Hi,-,,; anJ the con~eqltcr.t t:1.11 in profits is
much grcatrr in pl'oportiuJl than the f3.1l in W,l~CS. At SUe:1
timcs indcc.l there is (;ftcn Ill! pr,)fit at 0111, btlt a greZ!t los;; of
capit:1L This loss ma.y iJc nne'lualiy distribetcd among the
... ari\J~IS producer", but t:t!.;:in:~ trade n5 ;l \\ h"le. it may be
re:-:-3rdc~1 as paiJ out 01 th:1t insm,lme fund which W2.5 get
to;,:ethn in time:, (If high prices <1nd hi::;-li profits.
       (§ 9. When thco \r,I~('S of any cbs; of bbOllrers h;H'c been
 ra:::>t'd by a nsc ;n the price of the c()mme<uity produced by
 them. th'~ r;:tpi(;i!:' -,.,),11 \\·11i<.:11 :\11 <ltid!ti()ll3.l supply of labOUl
 Ct)IJ1e~ intd tbe tr.lJe dCP','ntb on the rci:llion in which the~e
 wagE'''' sLtm', t,} ,hose of (,tiler tr:ldcs, If the \\'a,..;cs in this trade
 are abnormally IJi~h l"{'~-tt!'."dy to othcr~, tbe rise is likely t{,
 at~r::J.ct so much additl('l~,..tl ' - our. :15 10 pnC'\-('nt the upwarll
 InO\'Clllent of "',1:~l:5 ti-lll~l :-;()ing \'C'ry f,I:-, an.l tu make them fall
 fbt and f,H' when the time of dcprl'ssion comes. On the othCl
 h.md, if, bc:>"c :11.' rise cunc, the \\':t.gcs were :JclolY thei:
 ::\otll1.l1lcH,: ,l'iau\'cly to other tra(~t'~, the rise nuy go on fot
 i\ lon:,:- time w:tho-,lt bringin~; in mudl aduitiol1,d labour, and
 w11<1t('\'('r l-i~: i5 gained 1I';li pruhably be main~ainco,
     Thus Ire see how tbt' Law tllat :\(lrmal value is dcterminel'
by ~ormal Expenses of productlun is consIstent with the fact
                     ~!ARKET           FLUCTUATIO:-1S.
that m,wl.:C't fiuctlJ"tions II( v.l]ue arc the C:t;l~(' and not the r:on-
se(Jlle:H::~   of nurJ.:e! lluctuatiollS of Exp::tI,;(."c, rl p;-~,dJtion.
If kit:3.rdo :l.:ld Mill had t.:tkCll mnrc pJins (') ::.:11,.: (k,~( th('
di~rinc·tion", hctl':~'(,'n th" theory lOf :.;'(1(:11.11 \'3:11,""' _,1:\1 lh:lt of
~.r;1rk<'~ Llbc. tht:[¢c()u!d uot ila', t' hsn ;\~ ~l"ld, r(lYr jl,t',:,V :i<;
t!lI'le !1:'tS 1)(':.::n un th~ qllt:sci(>;j '"I:,--,thel \-~,!'J':! : , :c;.11."..:rr"j by
E :>.pe:'ses ot" production, or Expenses of produccion                    ~y   \"lluc.]
                            CHAPTER III.

   LOC.AL   VARIATlO~S       OF PRICES .\SD WAGES.            INFLUENCE
                                0J.0'   CUSTO~.


       § r. \VHE~ seeking for the Law of X Olmal value of a com~
modity, we noticed tha.t the same commodity may have different
 Nanna.l values in different markets. Its !\onnal \'alue in any
market is equal to its Expenses of productj,m there, and among
these is to be reckoned the Expense of carrying- it there from
tIll.-: plJ.cc at ,,-hieh it is made, inclilding of course any cus-
1()D1~ duties that have t('J be paid on the way.                Thus the Law
of Norma] value contains in itself the following Laws of Local
Variation v[ ::-.lormal prices:
            If two markets are supplied with a commodity from th~
               S,llHC source, its ::\ onnal \',.}ue i~ higher in the more
               di:;tant (or less :iccessibk) market by the difference
               bCtWCUl the expenses of carrying it from the place
               where it is made to those marke~s.
            If there arc t\\'o places ill whidl a commodity is made fo:-
               sJ.lc in the ~amc 1?1:lrkct, its ~onnal yalue is lower in
               the morc distant (or kss accessible; of these two placc:-,
               by t1H:: dift'crellc,; bctWC'C'Il the cxpcnSl'S of carrying it tv
               thi:> m,lrkct frollt the two places.
       These bws take i7 f,Jr :;ranted th;J.t if the difference betwccl~
 cllt' jl.i(cs of "a cDmmodity in two nnrkrts is greater than thl
 expense of can-yin:; It f!"om one to the other, SDmc one ''.lill se'
tu work to kin:; it from the cheap::r to the dearer markcl
 They assum:! llMt there OlrC men cOIH:crted with these market"
 who h.1x~' the ';,lpitai :m(~ th~ businc:;s habit:> rC4uir.~d for th\
 work; and that the dCll'.':lrl li)r the commodity is on so gr",-:
 a sc,dc ~s t;, lOak", it wolth Wlllic to org:lIlize a trafiic in it.
        These '::oLd;t.i'}Jls 3.rc fllifillec. \\"hl.'n th~ commodltv is one il
 J;:t'ne:"; , us<-, and ,\"hen the l:urkcts 'l..re large t(·\\ns in 'close com,
 mcrcial intercourse with each (-Iher; local variatIOns in th
 whok:':11c prices of the staple wares of commerce arc, with
 few exceptions, to be attributed to ditTcrences in the" ex-pens,_
           LOCAL VARIATIONS OF VALUE.                            169
01 transport. The most important of these exceptions occur
when some producers are vl'ry anxious to force their way into a
Ji~tant m:lrket.           The compctitl0n of others \\·ho ate more
:.. d\,:lnt:t~,,::ou5]\' placed for supp;yin~ this market may induce
them to sdl :tt a price so low that, after allowing fOl" the
('''pcoses ot carnage, it docs not afford them the ordinary rate of
profits; while perhaps they make up thIs dOlciency by com-
bie.in;; with one anotl~cr to sell at a high price in their own
markus. Thus for illS~J.nce English manuf:tctur('rs sometimes
sell {Toods in America at a price which, after allowing for taxes
and ~xTJcnse of transport, is Ivwer than that at which they sell in
Engbl;d; and some American goods, such as s..::wing machines,
arc sold in Clnada at a lower price, allowance being mad~
for tho.: customs duty, than in the United States. But the
tendency of compctitivll is to remove anl)malies of this kind by
ureak~ng up local comhinations. and compelling the producers
to s("ll in the home market at a price equal to the Expenses of
production of the commudity there.
       \Yhl.'re there is no organized traffic, prices arc not deter.
mined by frce competition; their local variations arc: not go-
\'C~' ,::d simply by tbe above laws.        Some account then must be
given of the local variations of the price'> of things that cannot
easily be scnt long distances to market, and of retail prices
g-cneral:y.
    §::!. First among the things which cannot be sent to market
is land. But railw;:;.ys now enable many kinds of a~ricultural
produce to be scnt eTcat distance'S to markd; '<.Ind thus bring
them under the Laws of Local Variations of Kormal prices.
And s:nce tile rent of land is the excess of the price wl . . ich its
produce fetches, oyer the expenses of raising it and sending
it tc mark,~t, it follows that, if land were always let hr frec
(ulllpctitlon for agricultural purpose" rent would be brought
under the indirect int1uencc of these laws_
    And the v;tlue of l.Uld is in a gre:1t measure determ:ned by
its rent. for suppose the rate of intc-rc.,t for safe il1ycstmcnt
were four per cent., So that people could obLain a secure in-
come of £too a year from the iu\·estmcnt of [2500. Then if
:'ent were the only auxantagc which land gan~ to its owner, and
[f rC:1t were not likely to Tis-e, peuple \\-ould be willing to pay
just £2;00 for land that would yield them a se,ure rent of £100
a year. But when people buy land they often lao;.;: forward
to a nse in its rent. The opening t:p new fields for agricu)ture
in Arnt:!rica and incre;l.scd faciiltics of tf.lnsport may indeed
check the rise in the valuf! 01 a;;-ri{'ultllr~l producc, ar,d !'o
check the rise in the rellt of English f,trms; but the rise 111 the
.cnt of .land near 1aq;c to" ns and in 1-,);1!1ULlcturing di~tricts
seems likely to continue without much interruption. This riscJ
f;O                BOO R Ill.         CHAP. lIl. §3.
in as far as it is caused by the gro,vth of papulation and in-
dependently of any action on the part of th~ l3.ndlord, 11;]<; bee:l
l.];lcd an ., unearned in.JClTlcr.t·' d the r020t of land. \\-her!.
this has been t:!>timaled, the ar:'.our.t that is added to the \'a!1!('
of the hod on account of it, can be found by a simple arith-
metiGil calculation.
     But this 1S an incomplete ;tCCOUl~t of the causes which
determine thc value of L1.:,d. For fir.:;tl~-, c\'en wh,-"re (;ompc!i-
lion is perfectly frcC'. al!owaocc :-:lll~t b L, made iur the 0th~'I"
advantages ',hich J<1])(: ;tftords hcsid·?s the right to recei,'c its
rent, S0n-,c people derive a p,'cll1i,1!- jJ:easure from tbe owner-
ship of land; they 10\'1." their ia!lci as tht'Y Im'c thpir (:O:J:.!:s, and,
they are as wi:lin:::- to pay for the :~ralltlC'tlon of til~ir :lffecti')!l
(t1r thl." cnc as for the othc'r. Till;:; (,'ciin;.:;, <1nd the socb] pu~itiop.
which lan,; gin:s~ raise lts yalu~ I'ur;!t"r ,~t:l1. But the 3.mount
of this l.:lst alL::t:ou depends ()Il r:,lti'):lJ; l.haf3cter and on socia.i
;1rran:;cr:lents w11:.:h Yary ffllm one cvuntry to <If;other and
from (J[iC time to ;;ll(l1.hcr: and these y.lrh.tiO:1s ollcy no law.
     Secondly, tile rent of la'HL is sdclum dctcnnined-by perfectly
frcc compe:ti~i"n, The cUlllfurt cf tj-,e Jandlof'l., I,he social posi.
tion which (Clung f!Jf much ~n tht~ value of hi~ bnd, reqnin'
him to live on corc.u] !crm" w:,h hi" tenant,,; and hc is sclrlom
anxiolls to drive lur~; bargain3. ',.vit:] them. The cnmpelition
for a farm is Of'("l praCl:,~,tlty 1ill1~'_(;J ~o a fc\v fan;1ies in its
ncighL,ouriwod, or nlher, to thust: w:1.O get on well w~tb thl
Jand!(lrd in pcrsoaa] and so, ial :u:tl political matters; a.nd th{'
landlord \1 uuld often find It dii'llCUlt, €:\'en jf he were inclinc6
to do so, to exact the hig:hest rent which the land could be
made to jXly.
     On rho:: tnhcr hand it is true now, as it was in .:\dam Smith's
time, th"t •. UpO:1 qual or lWJ.r1y cqud prorits men will choose
to cmpl(,y !;1('ir capitals rather in the imprm"cmcnt and eulti-
Llti(Jn (If bnd than in m'.nuf.. .:turt.'S or forci;;n trade'.'· In
some Fan,~ l,f :hc country, in which lantilort!s grant long Inscs
to their tcna!l~5, ;md cnab!c them to im'est their capital s...:cu~ely
in the bnd, competition raises rcnt::; 50 hi:;h :l~ to maKe the
farn',,'r';:; f:1k of profits lower than that in ~;:mo5t any other
trae:,-"
     ~ 3. The hindran,es to thc (rce phy of competition ill cleter-
mll'.m;; the rL:1t of land ar/;' rd:cs of the p,,~t"        In t:IC villag('
comlllunities rf Ollr Germanic ford:tthcrs, and in the simj~ar
(Onunl:l:iiics th'lt :-.t:;) ('xi. t lr. india, we 61.1\ no such thing a,;
p,i,~tc propc;~y III Lnd; the price of land IS not rukd bycom-
vetition. beC8::~c:t iw; no rric.('. Custom determines the pliccs
of m:my tl.il~,,~ tInt <Ire made and sold in the Hllagc. It b
chiefly in ~:lC c:J.se uf those thii!;;S wbich the "'I !lagers buy fror,l
outsiders, or which they make to be sold to outSiders, th.u price
                LOCAL VARL,TIOXS OF VALUE.                                                       17'
i:> f:eterminec. by bargaining ar.{; free c,,!npctiti')ll, nnd is affected
;-,t unc~ by cconumic Lh;~ng:c:<;.             A~l inHux of precim: .. meta},
into the ,ountr), would r<:u,;e the price d the~e things at Dnce;
but {,)1" a Jon;; while it ""QuId h<:.rdly affect the prices of many
thi:~.~~ that c:-I.-..:h villa;,;e ll:ade fl)f indf. Tn the cour5C! of time
how,.;\'{:1" the \"iJi<lh"crs w0ull! find th:1t t 11CY .:amed t~,uch mOTe
L:: L'~:;:k thm;s to h~ ~cn~ awa~' ;triLl sold at the l~<.':W hi;,;h
~\tl'=':':;. t)1,m by m:lkin;; thln:..::':; to lie S()!tll-t~r usc at home at th-:;
,1L! L;J:·(vrn,lry pn(~~s. Thc-y w(mjd slowly' SL:ck the more profit-
_.blc '.', o:-k; the things wanted for home conSllmpt!O!1 would
 A'come ~'~'arct:r, and in ,,-pite of custom thclr priL"CS would
~TaduJ.:ly rise.         The mure ,.;c;clll\\cd a village was, the less trade
  t Iud \\,llh distant pbccs. the L\n:c:er wlhl;,l it be bdore its
;lriC'l'''; WC:'C a((ect('d ;!y the influ:-.. ('of the prt:cious metals.
       The mflu..::ncc of custr!1ll b.l.S n',)t \'CL died out m cl\'ilizetl
 c',;mtrics. 1n agricultur:ll districts there ale n!:tny \ III <l.:;:cs which,
:l.t ;lU c\'('nt5 until quite recently. h,we had sClrcdy any inter-
 c.'curs\' with the r,'st of the country. H('for~ lh,? d,_'veiopment of
r.lilwJ.n, town'; elr.:\\' most of their s\!prlies froln the country
lyin,; inu:wdl:ltdy arOl;nd lhem, 'lnd tht' remoter districts often
 d:d no): f,~Li the inJ1UCII: l' of SOC);]\ awl ec:_momic changes in the
 il:c oj t:IC to\\'115 until more than a ~eneration after they llan
,ACurrect.
       1 iabits of (,:lteqll-isc grow slowly. Those parts of tlle country
,;-h>h till recently had scarcdy allY communication with other
pb(,'~! still she\v Imlc cag-erncss to J.·.. ail themsclYcs of the
lllr::U:~ that ,ere now \\ ithin their reach of s{:nuin e th<..':r pl'<lduce
to dis~allt marL:ts. nut they arc bei::g- rOlls('d (.Y,m their
letl"J"r:,:y by tbe enterprise (If towllsfc,ik \vlIO <lrc orga:oizi:::.;: the
~'l;)lJly of lictiry produce and other peri~!ublc things from r'_mote
(ii~tr:~ts to ;.\r;;e towns. The slug-;;ishn<:s:. of ~()me fanners, their
 \1I,\\',:1il:,;:\<.';,'> ;'0 read ne',\-spapcrs c,mnccted wilh th.:lr trade,
~·;~'.t '.heir [".b::s of 5U5PICiotls sccecy lu\',':lrds on,: anc,tbcr! pre.
 \ '.'nt lll:::l!: bcin<:; it ur:.lfurm whOJ,.;:-;,l:C price fur <lalry produce;
 ili1J i ,)f!~'n klPpCb that t\\O farmer.'. hying side by side sell
 their mlli~ at unequal pr:ccs. }),It compctitlOn is much more
 l'::('~,i\"(_; tkm it l!j,:U to Ll': "beef, ]':1',1'..00, vcal, butter, eggs
 <1ntl ;),'o[;\\.lY fur example have ri:>Cll a~,"'l1t tw('nty·fiq; per cent.
 ,:; thl' L~)!.,!ur:! mal:.:<.t, btl[ they ha\",,' [:O~1l a hundn:d )Jer Cent.
 abo·.. ·: t:·\.:,1' rate;." ;~ f\;\\' years "::':0 in t\;\.. mlar.d \J::.rb of Ireland
 aLJ SC\.Itbnd Uil the Ilew lwes uf r;.tih\,lY. Tile common price
 cf l111'at in tl.~· town" in thL' interior uf lr('iaw; bdl,!";: they were
  CPnrl('Uecl willi the ports ,HHl the En,;lish In<i!kct by railways,
  \\'<lS fro;'!1 3~d. to 4(/ .L lJ~11_llld, ano. n.)w it is f:-om ttl. to SdY'
        "'~ll ;n~c:rC~tlng eX;lInp:c 0f the morc Intimate rdations in

     i   Cliffe L<:31ic's   Es';,IYs ()II r~'I;ti(,:; ,1;;'/ .1/,)i';2~' l '..:i(,)s''P/:Y.   p. 2;7
17'                  nOOK III. CHAP. III. § 4-
which the rural districts now stand to the towns is found b\'
comparing the way in. which the ncw supplies of the pr('ciou~
metals distrihuted thcmseh'cs Over to\vn and CQuntrv after thl'
dis('oYcries of American mines at the end of the fifteenth, am~
in the ninetet'p.th century. In the fonnC"r GlSe two centurico,
dapscfi before ,he full effect of the new :supplies was felt all anI
Europe. The new silver ftmainc-d almost entirely in a fe\\
towns and commercial centre,>, ,. prices rising enormously ir.
J .ondon for example, while who:ly unaffected in parts of the
Highhnds of Scotland and of the \Vcst of Ireland, and but
little affected even in some parts of England not far from the
mctropoEs I,"
     But now it is the country districrs, th(lse whie;\ have recently
been opened up by railways \\"hich havC' absorbed the chief
share. A good in5tanee oi this is 10 be (~)und in Cermany; fo:"
whil~ some parts of the eowltry h;\\"e recently gained g"o:Jll raj~­
way comml1nic:ltionJ there arc '"ast tracts which arc still '"er:
little aft"":ctcd by the new m("ans of transport" K ('w supplies 0:
601~l have:: poured in and the banking s~"steJ)j has gro\~"n npidly:
and ju~t before IS7 3 pric('~ rose ;;cncra11),. But while the changC"'
was \'cry great in !'ome pal"b, it ""a,, very little in others ; an(~
:\[r Cli!le Leslie, after a carefu! study of price lists \vhen tho'
:nOH'l1wnt \\",15 at its hci.;ht, CO'lrltldcd that the imme(!iate ('tree:
of the change \Va" on the.: \\ bole ;lOt to climinish, Lut to increa"t"
local inequaiitics (If p:-iccs" 110 dl\"ided C;"ermany into four
mor.ctary re,.;ions, a:ld f,)\l:ui th:-tt prices remain very low ii
place,; in :tlTear uf the \',"(l;"ld':, pr()grl';:;~ in respect of their tnea,,~
of lOCOlll<lti(lll a" in other rt"~p,;;r5; 1l!:1t they ha\'e risen can,
siderably in places eommlmic.:n:ng hy steam with good market:;,
but not thl·ll1:.d\·~'s t!l~ sites of much enterprise or possessin;:
any special <ettracti'Jns; tklt they have risen rapidly in plac;.:,;
which unite the best means of communi(;1t ion ,,"ith local activit\,
or considerable re~ort frolll Rithuut; and most rapidly of a~;
in those phces which besides hann;: these advantages, lie DC.ll
the trattic ;lnrl movement (If we,:,tl'rn Europc 2,
     The special c:Hlses \\;lich aff,.:ct retJil prices will bcst b(
(o!lsidc;"..:d in conncxiol1 with J0\.<l.l variations ill the earning-
of reraill:c;;\ns, And we nnw proceed to enquire into the loca!
variativlb of \\a~cs and profit::"
    § -1-. Ac:;;Ull ::imith ~L"ils I;S th:l.t ,r man is of all sorts of
luggage the D1(1<.t difficult to be transported." ~\nd Hrentam.
~oes to the nh:Jt of the m3ttcr when he says tilat what dlS-
tillgu:shes labour f]"(lm all oth'~r wares is "the absolutdy in
dissoluble union between the bbour and him who offers it (or
      , Cliffe L(',,]i(!'s Esmp (m Pdilicnl and Aloral PIIlJosfI/,hy. p" 317,
   ~    lb, p. 331.
               '0CAL VARIATJOXS OF VALUE.                                           173
                           __ ,l'T \)( a ('pmmoc:ty ~r~::~r(lUy cares little where,
                        .1 h..: sells, so lO~1; :1.5 he ~Ch the bc:;t price for it.
                      dtog-ether J.i~r,_·r,;il~ witli tb~ 1.1:JU\lTeL Duri'l~ the
                     _ for wbi(h h,~ h'1s ,,(\ld l~'s bbe.ur, he himself mll.~t bl.!
                 .. .1.ce, ant! with those U).lll'.llllon", ar.~: s:lbject to tila!
        ""it::, which the ('rnplo~er li1a~' prescribe; and when his
\\(lrk I::; ()veT, he i" :iliil o\n~'Jlcd to till' ~,(lt~icy .-,f tLo<;l! W11,l liye
in ,!le flc::-:;hb0'.llhooJ of his wl)rk. He: r'~':~lse_~ therefore to
le:H'c hi,; hume in '>e:lfch of hi:;her wage c., lll'\e=.s he expects
.!lese W,1;":\;,5 to con-v·n3,1tC him no~ only for any di3f'Omforts
tlnt J:j.; \\'0\ k may bring, but al,;o for the separation [turn his
~',-;,;nd_, .mu reJatiOl!S and from 1;,(: fd:llil~;lT scen':s ;end as,~ocia­
,om of I\is n:.uh·e place, It has already been" 'ld that in
.<Jk(1nin6" the ?'\ct .-\J\"anta~('s which dr;l\v 1ll:.11 to an uccu·
i :,ti','.l ;lnd exert an influence on its l\or:I·,.~l W;1.'-;"'..'5, a('C(lun~
 , ,:"t be '.,!kcll of irs inc,Jen:al comfor:~. (If 1:" lh ·,lthill(SS. its
       :l',~ijh""';; and its ~(I,~i:d r('putt'.       It l11U,;t n(lW L: added tiJ:lt
 "l.I..b·I/{~; C .:"."et AJrant;:t~ls which bind ,I Ina             10 ,ill oCCllp;lti~,n
                                                                n
                                                                    •


       (l' ? j V·ticl'].lr         phcc. and so inllucllCc ih .:--,rarh:t wages,
  :IC~o.: ~·ll::.('nal friendship" :tnd aff.;ct,<lI'S and olJ associations
,,",' "",lOr.;:; the mo'-! import<lm. It i~ to thi~. no less than
". 'li,athy and ignor:lllcc, tll:~t We ILi.bl. ascriue the re:ll in-
" .cl;l;:ties that there :l.re in t1:-:: \\·a;.:;c'j of [b:" same trade in
  '),\('.:'5 n(,~ very distant from OEe anotl1('r, l~u: sllch ir;c'tualitic<;
         c)f:t:n much less thJ.l1 th,-.y '\'(luld a;)pear if we look('u at
'!':!ll(" .. \\'n:.:;cs alone \\ ithout <lllowin~ tor local "'ari;>ti\J!ls iu till...
 ,'C!',,:;,' ,;fncicIlCY d Ltb·j(Lr. In L1ct when T,1Sk"\\'::l;::'cs an!
('jual) Jon inequality of Tlme-',n,;:;-es i, no real incqual:ty: at
 ,~i ('\'ellS it is not one of those i:l.eyualitlts \\'hi:h cumpetition
":lids:o rCI1",O\"('.
       \\'(! hJ.ye already n(l~iL·[·J huw a rise in the rate of w.L;es in
 1 dis:l;ct n:ay lead in the course of a generation, ifnot SOOllpr,

      :<kh ;m increase of eff.cienc\' tInt hbour is no dearer t'J
,I,. elliployer; he h3.S not to               P:.ly     hi:;her Task .. w;tb"l's than
   "illrc ,he chan;,:-e:. For instaace, in 17iO the r..vC'ra;::-e w,-.d.;1y
     L::es 0:' a;;ricultllral labOllf"rs were 7.1. 6<1. in the s()utliern
"'lll:n:cs of Er!gland, \\"hilc they were only 6s. qd. in the n,'r .
:: (",n, '1 he ;:;-rowth uf malli!f.l'-~:lre~ i" the r:(,}thcrn COl,:1t;es
,'.is (1·'::J. ',m :lllay bhourcr.5 from the l.1nJ. and hy c:msli1g a
  : ~H,~ ~y of lab ...,ur has ra:scd ;J.'.;-r;c:.Iltl.iu! Y,;l;!CS to an ;l'''Cr:ll;C
"1":; I.!". 6ci. in 10';0, and to an J.ver:lge I fie,;. 11,)\\'. )'lcanwbiJe
'k~ 2·,·c:-,',.~e W~t;:::es ill til(' S0urbem countit',~ hal-e only nscn
to 3s. fA. in IS50~ and to about J 3;. now. But the higher wages
h:n'c so increased the aver::J.;e :;tr("r.,;~h ::J.'1d efli.clcns), of the

                       1    Ar!uilaoO'"dd:n, \",,1. Jr. p. 6.
                        ~   See ilk. II. ch. Vii. ~ z.
Ji4                 BOOK Ill.             CHAP. 1II. i '-0
northern bbourer, th:.t the Task-wa;;t.'s in t.
hi:sher than in the South.
    [§ 5- hi con:,1,-:cr:ng the infh:.cnce of wJ.g"-es on tl
of the hb0ur~rJ W'~ ought of c0ur . . e tl) IUQk not at
};ominal \Ll~C;;;, but a~ R.::l~ "":1.g"s; lh:.~ i-;. tlw 1.
comfort~ and ltl>.uries \\ hieh wages \\'ill jJr<.lCun.: fur the i;ll,
Rut comfdrts and luxurioe5 and th ..· upportunit!cs of s:lch ,1.
educa~ion as H'.:J.kes bright and inteHi,.:,.·nt workers, are .<-;eneral:.
scarce \\'here ncce';5anes ~re plem:i:..:l. So that [he mOlle
wagl's (.f labourers in diFferent p.trL~ of the worlJ are a bett·
measure than at first si.~ht appear:; 1)[ the energ:-' which the
chilrlrcll ar..:: likd:' to ha ..·e when grown up. A.ntl "\lr Bra6Sl'
assert::; ,h.ct t:JC money cost of n3.\'"... ies· ".""rk. such a~ d,i.:::gir.
a raiL\:l\ :,'c11c11, i~s Task-wage,; mCJ.surct! in mOlley, arc near!
the s:trn,.: all \)\·t.'r the ci\-ilized world. T!IC chief c'..n:ptio,
to this rule are to L,; flJemd in new co!.n:trjes~ .\r.d in p.L:-ts
old countr:c-s wliich h.1\-c recently dc\-,,'lllpc-d g!· ... H inuustri,
acti\·it,·; for tll\' l"(on'Yllic condition of these Lii::;tricts r,
s(,lllbt~s tll.lt cf ["lew '~"'lllltfies in l1\,lflY stnking: r, <;'c:cts. Dot
Time J.pd       T,1sk-\\":l~~~ ,He' g"C'JlVLlll ...    high ill sl,ch places lint
th ..'r<:: bas b..::e:1 til!le clUu;;h fOf them til be r;:dl1cc0. to th:;,·
Xonn.11 kvcl by the :..,r()I.-th of lJOpiil.ltinn.]
       [; 6. :\nothcI' .IU~,--· wl:ich tcnd~ to C',;ll;lli3C T,ISk-\\ :.l~e5 :
different place'') is the I_olllpetition of ;..;-ooJs nnde in (liffcre,
places ~lIt suld in th'.: ,,'1:;1(: market.
       For instan<.:e L;;,..,;lish au.! BeL.:i:tD. :oCOll)Oti\-C3 arc sold;
the ;:':'111(2 l-lnce it: r.l:1-;kets alXlllt cq\l;;l~y :t<x<.:ssible to EngLt",
and ];l'L:1111~1. Th·..:: r. l'UI:ll ad\-:l!)t;l~L_' f,f the iron :radcs in t~"
two cou~n'i'~s are abo!lt ~·';:.lal :>.nd tl;:..:: lone of i:ltcrl'5t i" n'~:-,t"~
the sam(>, 'll that l!W ~l;;HC vf ti)c pi \','C' which ;:;ocs to cap::"
and th\:;t'f'1'L~ tIl(- s\-:;lrc th::~ rt..'mair:s t,_, i"t!ustry mClst be ::abC',.
the ;:;:I.llll.:! i:l the t\\O caSe~; and the carninE::'~ - of Englhh an
lkl;;:~an IJf.:,dl!c(,fS cf iron mU5l be ah'J.:t cql;:d (or thc S,H'
e!TIcIl:n(:y. But s:r.c c the a\"l'r,lg~' (:I"ilcil'ncy of the Engli-
jrul1wo;-ker i-; hi;!h'_r tb,,]} that oj the lkl;i.ll1, ,,'hatev\'r U,::p:
tn t..'(]u,di,e the Tas1- w:l;e5 \If the two tends to maK" the
Tim.:·\,. a:,~\·~- U;H quaL
      TIle pl"o,h;,-cr: ot iron consi3t of many V:lriOU5 cl;:!ssc5 I
'\"()rkc':-~   SIli"h ;,j c:Jal nil ~'. IS, Iron miners, puddk~s. ~n,!!neCI
~~c.. .'.)1,1 l'1l1l)1('\'tT5; <11hl if it b<=.[Jp.:ns ,It a:1y lil:h.' :hat :I
Ta.:.k-w;):~~ ~)f in;d~r~ ~He JI,gl1l:r l!: Ent;LlI1d th;1ll 1'1 l~clg:l;!­
\\,hd...: t;;(: T,l'k·w.'l:"':cs ..·f f!ucl(;il"r;; aid {,ll.C:'fl('Cl"S ;Ul' cl·r:-.. "pOl;(
;Il,'!:: hi~li,:r in J.\d:-:i .I'~l th,Ul in LI~;.;Llnd, thC5C in, 'itJ,\li:l~
w,l] nd hl' Jirectly ;o[{, ,-ted by th-:: competition belw('cn Ll~~h~'
and lk~:.:i~tn lucf)ll,"t;n'~. l;"t hen: comes in.o p1:ty th·:, 1ll0\··.
mCnl frq:n one employment tc' another in the S:1Il1C dis, riel. <1:,.
the selection by parents for their children of the most advan
                 LOCAL VARlATW:-;S OF V,\Lt:E.                                      175
~qkl."        T!l'Qlo:'~nt withiI~ th~lr       T,cach.    The5e caus::".;;, as we
:_;".: La    whoP" :a?hsh Nonn.11 rel,~t!ons b~twe(:n the W:\~C5 of
l,~t j. is ,..les In the sam~ dbtrtct. 1f t~ E:-.;::-bnd t'uudkrs'
".1\0\~ tilnrl-bnornnlly low n:Jalin:lr to lh"sc 'if miners, while
,ll th~lt pl. miners' W;igCS ~lrC aLl,o~m.llly h-,w rc;,ltln:ly to those
 ,n~!l,r _~lcr5J there will be in each place locil (hangcs at work
~tl:ding to rnnove thc~c inequalitic.,. And if the \u'.';es    the            \lr
\'arj,)U" (:l;Js"c~ of workers engaged in rhe prudl:nion uf iron
Xd:J ill ~~U,l,,: the i:lTllC rd;t!io;l to one :l.::Glhcr in Engblld 3.5
    d,1 in Ikl:::cium., the:1 th..:: C(~mpctitilln uf their m:lm.:.facturcs
rl,~,y
. -, ;;( .:,,,1 m,ukl::; \\'lll tcnd    to   nuke the      Tasl.:-\~-agcs    of each
'ld,,~    t:4113i in the two GHlntric5.
      'r:lb compctiti0fl 3.ffo,;cts ilHlire,~~ly ()1hcr tntdcs. Taki: for
.:.':<1;1:(' the case of En,;Lsh brickLyer.:; who do not compete
"reetly with fUiei:.;ners, The w:lge"> of hr:,"1~:"Y':15 t.::::d to bear
   , t r\,lin );()\"Ill:1.1 rd~lti,m to t~'0Sl: ()f p\ldd.kr.:i:n ea.::h country j

 :;': t'iC~:::r",_,f'--' cOffijJ(i.ilion in ,he iron t;·,'.u~, by t('nning to
               'he r:l._~k-'\"l';<'S r,f p:Hldk'rs i!l f.l"!,;:;bt'.J ,l:1d nelgium,
            ai,0 tu t'qu,lb~e tll(: \\';'oo..:s (,f br:l'k:aycr:-. in t1:,' two
      '~', I':'. Til;,;; indjn~ct tendency to\\",lrJS the equality 1)[ T.asH-
  <,,,("     in t,\'o places which ('omp,'~c in n'2utral markets often
 ~"'l!)'-''' attention.        It (lC:S silently, but it acts alw~)'s, it acts
   cr. ','. iloerC', and it afkc:s c"L'ry trad-:.]
      ~ i. A stnl~in~ instance of luc:ll yariations of wa;;es is
      I:-(k-u by the \\.lb~'; of WI)111eo. The migr:wl)n of WOIl1('1i is
",Let; ':tCry grL'at. ?\L-I"yof them g:\) 1\1 ~en'i,~(' far aw.lY [rum
           h''illc) Ztnd aftu a tlJl~e lll;UI', and se~tlc in tit.:;ir ncw
".i'            .,nd some ('\"Cn go to ~et'k w'ork in faclOry towns. But
" !' :,ll i_, m,'re /J(Jund L:,' fJ.mil~· tie'S tl1:111 Illao is, and cxcq,t
            ~lle ';('1":; out to SCl \ il'('~, she ha<;, as 3. rule, less power
         ·.\i(J~iTI6 the place ill ,Ihich shL' \\-ill work th3.n h:: has. \Vc
 . ,I'     ~(-C ,[ (C,nSNll;etlCe   of this in tte hct that mil.ny textile
   . :(1:>_' ha\'{~ :;prn0t; up in iran districts t'J uktC :1.lh3.l:t:-lgc
       ;i,,: bk,ur oi the "ivcs ::Uld chilJrcn of the il"('nwl'I~(:rs,
   ~ I-h::jl~ the Stroll~"5t instance 0f th~' In(3.1 v.ui3.t:o':ls Df T .. ",k-
   :: ",.0' I~ to he found in tIw case of lh;nc,:,ti;:: sen-ants.           Their
   :l.,( ~ ;.,·C ri-:.:nt!" I:Lrid1y in Ln~lanll un(!cr the inlluencc of
     ~:r' "..-i!lg dislike to the loss f>f p{'r>ol:~\l fr~('d(lm which their
      :.1,;: !,,\'oh(s,  Ti;i~ di~;ikt' j;.-; S\., .-t;unc; in 50m~ llCW cunntries
'.~:1' !"'\" but imll1igr:111t3 will ("lltl~r do;nc:-;tic service. and they
             ;.;n Hry Ingh "'A:~cs; but in r,:lcbl,.n::l (om,trics pcopIe are
 ,. L';l'~ to llu the work of ::cr\"Ztnts k,r low \\"a2~'S.
          1;; i,:t~,~~~,l!ld nJ ... r:::; \',;'IIIL'I. :;::t low wagc~, not bCC;1USC the
   :L;\;(' ,'If ~he w(,rk tLey du ;s low, but because both they .111U
    'elr "m;):vvcrs hayc been in the h:lbit of !akm~ it hr ~rauh.d.
'h,11 ti-,l.! ~"'lg('S of women must be low. Som-:t:mes c\'e~n \."hen
     ':·;-1 ,lnd women do the same work in the S,l!n(! factory, not
 176                BOOK III.           CHAP, Ill. § 7-9,
only the Timc-w~l.~~S, hut also the Task-wage:; of the wl)m~
are Jower than tho~c of the mt:n. In S') {<lr as this inequalit:-.
due t(l custom, it w;\l disappcrr, "ith the progr,::..,s of intclligeT'
and of th,~ habit:; of competitiun. But more of it than at fl.·
sighl :.lpP'.';-ns, is due to causes that are likely to be pennan(:1
Emi-l;uy~r:> :",y that if a nnn ~'1d a wo:n:tn are t'41l;}lly g"
work..:n: tile W0man is of lc~:> ,,('[vice in tb: :ung run. For alth(llL
.she ;.,; gcnenlly In(lr~ <lnxi('l\_~ tlJdn .1 l~an :5 to merit the ;~,
prm';u of the ;employer or o':C'rlookcr,-she docs not gi\'c up i"
whok mi!u.l to her work in the ~amc w<'v as a man ril'CS: ;;
work i~ n:or(: liable to Le interrup'ed tll:l0 that of a man, [j"
she is k,.) ;ikt::ly to cuntinu..: :It it G.lring her whole life: par;
for these re.bons, her th[}~;6hts are occupied more ;"tbout 1,
home ~(~J less ,'lbOl'~ the !Jhu::e in whIch she works th-an Jlis "
and she has on t~l-..:' wh,)k ;('35 p.::rc,:stC:ir:C, alla less jung!];'
and n,:S'jllrcC in C2.,,':'S d J:t":lcnhy. Tim:; tb',u;.;h the ac(.'.1'·:,
with whi\.h women fe,i/ow tl1·.:::r in.,tPlu'OIl.:; is verv "('!"I;ice,"·
I!'. .~O;~lc bnf;,_ he,:. or the \\'01''''', :.hc l-l11P1.·( cr often r,rL'lers to h,l.
men, b,''-_':1:'':"c ;100.' Cl;-; ~'-,·:('(t from t~H',:l .",.f.:-mcn and o\'erlou"-
as \\c1l,\~ h:,.k,'rs i:l those hnw.:b.> of the bli::illll'S" in \\:
discretiO)J) 1::; '1,,1:1 ... .1 . • \;;<till many kilJS of work \\hi-h
;;c;-:.:rally rC'g.lrckJ :,' L:;bt, llccasil'nally require tt,~ u'>c ,-A g' -"
phy~;c:~ =trcn,;tl-:, ~~:,~i jl(";-i,.\jl.~ l;l(' wl'rk~ng Q\-ertimc in ~~I(.
C01e:;cnUL'::: ; ::lnu Lr sudl w"Jl'k WOlLC1 are i"t :1. disad·,:m,.
Tla:s th(' 0Cl'L1P,lt"JIlS fur whi1..h WOnlLn :ue well htted ;1rr; ,
and thtcl'('fon: (,':crcw',\'dCtl ;I:,U ha,~~y paid, .inu this influc'.
cllst0m Jnd ~~cncr:ll n;l:n;oll, and ca"s~s Wurnlil to be undt:q
w;:en r!l("! .l.!'(: '~u;ll~ d::ri~'.1\t wo~/( m·;1.
     But tlic pr0f.:r{'~':o at ::-,--:iC'l~ce ;ll1d ma-:hillt'fY ;;-; opening OUT
women ma;l)' new OC(UP,!tiGilS in which very tittle phy:':'
stre;~gth 10. 'Tr;:.;ir,'d. Telegraphy is n. good instance of thl-
and in:-e!l Ln_' lig!\te~ ;))ct;:tl tracks Wfi:l1en arC', with tbe ,Ii"
machir:c':i, d(l:n;.:- \-, ,d.:. ~hat u5cd to belung e .... clusivcly to L
and bein;.:- p:l.iJ {,·r it 1I'.1b'CS U.11[ en:;l!.'; mu,:)) hi);lH'f than
aver:>.;,:;'! wa:.;t::i of ',',"dll,(',1 -..:SCG to be, )'lC;l:~\\'hik the pro;;:;r\
of Cd:!C:lti()f, is Iitt::~,- W0f:1',';1 to do n,orc dif!::,llt work. 2:-,1
m~k;n'; them male r;;.I,]y to dem:mG , ;Ind el~lpluyer:; more f1_;
10 f-,"J.l~t thf'tn higher wa;"'; for ir; ,l"d it IS much inr.reJ.~,
thc-.r (:n:'i'loYlllf'nt in the 1:i;.;hcr p1.1t of the \\'urk of cduca'
ibl;r. i';·.;:-ju,;ic,:" ~nd trade" i.liliot'. niles. have kr;pt t!lf'mCltlt,
very Lw ou,-ip,ltil'l1:5 fur which th",y arc well fitted; but
pro~n;s; (;f u-:li;h~L:nlllcnt I'> hreaking nown thi;; OppO~I~
b"cner:tll:-, and in vncicuJ,u In ti;;J.t case in which it has L·
llh,l:,t lle~nn,C!~t,ll to th~ pt.:blic we;ll, namely tl:c ncdic:11 tr.
ment ",,~- ''-'-'-,men ;ll:~~ C:l,klren, T!:~ t'.'.pcricnu· r)f Fra.nee 51-.'
that mu..:h more of th<;! work of bu:,inc~" m:1.11agement tr;,._,
safely b.: cntrus:..::u to \,'omen than is yet done in England j a:',
                   LOCAL YARIATI01\S OF VALUE.                                    177
  -r     1.')                  belien:' that ~hc:re will be ;1 graclual
                C\"~ry re:1S0n to
   '.b:' in the llumber of C,lSCS hke lh.1.[ of one of the largest
   l>~(),·t su'J('sstu\ brass works in r;in~l::l;;ham, in which the
    ,-J ;cn~r:tlllldnag ...r is filkd !JY a WOHi~n.
     S. Local y,.nations uf proiit5 may Le caused by local
    ':'):15 pf intl-r"st, or by IncII varia:iol)s (If the E-nnings of
      :";Cill',·i.l. \\"c ha\c seen chat r!-.c growth of the modern
     C\ o! U!'I1it has crill,\E,',ed tbe rme ell mterest throughout
 . LlT1d ; ;tnd that a man of husinc,,':; h.lS in ::.0111e respect,;
  ,~,r   fa-:ilities than any other class of worker,; ha.\"c, for
       d~fr0!ll a 11!:lCC where t':.'_fC j", :l 11\Jvf market for his
  I, ~-. to (onc \\I,tTC th':::~ is a !:::wd i:1:lrk('t.   It)" trlle that
    ~b,ll',~;e of ;lbl_T he llny k\~l' ~~~tnc· Clj-tital which Jns heen
 :.;: (;!:b:I' iIl t.:stabl;~hiLC-: '\ ::.';u<)J 10c;; ~r.tJe ('(\n:~c"iun. or in
    "'"/ !nildi:~bs and otlwr lJllnt th:lt C;lllnut be rell1[wcd, but
  'U~l::~ ~nd rcs,YI!CCS fit IIIIll fur L::trnill':: what is go;!"',',:: on in
   ,:jt i·i.\Cc'~ :,'1(\ r",'r t<lk.lflg adLlnu;;c of Li~ kno\\"J~L;;;l"~ And
    j~ I'llnk [hl' Task-C,Hni:;~s of lIl:tn;:~';-,;"('nt, the (:~l!llings
         ;,;qt by ~Ildity of i1 gin'n order, {k I.{·t ·,o.:(:m tel v:u) very
          ;--, ",1 \1111': -pLl'.c tu ar;(Jtilcr. But:t tcu\erH-Y t01'-',t,(\5 the
         ::. jf Ll~k-c;d"ninc;~ (!f \l::.na,..:emcnt lJ) two piJ.C"C5 is a
         lCy t,)lI';mls 1ho in~quality uf th,- avcr.\~~c r.~,tc ot" profIts
          the :tu'!-a;,'_' "bi!it;- in one of thelll h Jlighcr th,:< Ir, the
               .\ :-:OOG Jl1-t,(:lce of this i" 5t't'1l III [he \',l'-e of Lnnmg.
   ",I, j-.("l~ tlh' pr'1Jubt;on ;5 \i;Z'Jr~'l1S ar:(j ,'lltt"J\J"isll';;, f;"\J1l1{'rs
           : \'lirer" havt! a high ~taJ1d:ln-t of cf:icl!:Jlc; :J.nd J;et Jllgh
          ,-,      ~I) thJt we .,hol1ld e:xpcct tt) find thal farmers' Ealn-
         f .\[;(r~:l;:;('mCr.t are h:;:;-h v.here bbomer.'i' \\agc~ arc high,
       i,l'.-: \\'h_rc \\';!~cs ;~rc 11l".\',     And (\'h~'l\,lt;()n !'r.ews that
       ;~ :h,' _~c'ncr;t! rule.           \\"c shoulli :,1",0 upect to tind that
             :J.'1:1- IS rkh the popuJaii,nn is \1 ell f..:d and' igorous:
      'h." tilCrcfon.: \\ bere rell:::' :l:-c hi;.;h f,lnj~L'rs' car~in::::s and
       'c~"c"        of labour are ;n,cr.l1ly high. Th; ~ ruk IS sl:hject
       '.:,,:u :;rcMer cxc{'plil1llS tharr the pn'ccl:Jr,g one. be-
           the \.i;::0ur of tilt: popcllatiun 0.11..1 tl;\,' , .. r,l.;n: r. tC5 of
       ~ .l1ld f.l:-mc-r<,' earnings ale often 11 'Jrc ;,rtt:c:rd by the
        "')l,rll'.,.)J of nnnufacttlrf'., than \A "~~ richr;t:~'> of land:
        l~'t' I.i~h in the K.Jrth (,j Ln<::brILl"\\·h~r;.: the !:1.:,(115 poor,
':1 h, y arc low in the South of En:~!a,;d hilcn: the lewd l5
:'): nnd ;\,!:lin they are very hj~h in ncw coulltri('S \\"h';I"(: land
     !,,-, gOi. i(lf nothin:; ;md no rent i" l,.,id.            l:n if \Ie cL.mpare
              t p,l,·ts of Europe whi<:h arc tmdcr C(l\\~llly f.,,:\ c>u,Jble
    Ill: ,n~ mother rcsF'_-cts, amI wh;r!: c'r~ J,I)l 1,(:,1:' m:-tnutac-
    "~ or mming JistllCb) we fi'ld that til"': rUle j,dlJs I:l.irly

       <).      There is howcyer one class of ocu;patic,n:;; in. ,.hicb
                    1 Comp. Cliffe Ledi..;, I.e) pp. 365-3;0.
   :.1.                                                                      10
th-: lo(:\~ 'ariati(lf)6 ,-,f ~'ro!'it~ ~li'c great. The r.ap:ing~
!\latug('nv (.t got by ":iJllail shopkeepers yary a ,;reat (kal f1"l
one CUU:,tJT tu an')ther. For instance 1111."Y ;]rc yelT luw
GerJll;l.lly~ a't,d they n.rc "cry h:;.:h ill Atncri·c.... For t;iere
many (,l'liMllh wl!L' han.' the t~t\!c c..q,ital and <:dl1ca:io:;. ~h,'
sln:'..l1 shopkcc].Ier rdJl:ires, and \\'hu ];l:e all c-;~sy hf~              BL::
lie\"; cr"ulllr:e" these WilO 11;\\·:;- a llulc ('Ij:v-,); horc Ll work I~
and c'ub: ~I,·~ir fortune:.; ~o ther will not KCC I) :1 shop llnk"s til
~a:1 :.;·.t a. ~(h)(i income from;L          'l'h" t:!tft.:rcnct.: !.,e[\\,:cn n'\
un,]   wfl .... k"aL:   P:'h'CS 1';:; tb\,:·,-:;'Ol"l' ;.:re.\Lf In Ll~:;bnJ th:"ll:
Germ:tny,      ~n.'J.ter in .-\.mrrir:a than m E'j",bnu ; ;till! as arl(1':
·.l)lbl'y.lt~n':c "':  the same c;t;Jst's) lar:..;e c1pitab haH: dlspla, l
l'lnall clilicdc; in th\.' r~"t:dl t!·:.de in America mure than .
England. ,];](\ ii] England more thal1 in C('n:uny.
     \\'c m;,y TIc . . t cun..;il1o..:r tlL' (\uestion :-11O;\" IS it thilt n:~
prtc(,.~ often cEffer mu(h :n diti'acnt vans of tr,c same to',' '"
that they aft' fo, in.stan(t· h:.;11:..'r in th~ \\-est·cnd l:un iii t,
E;lSt-t'n:l of Lundoll? Tht· answer IS not the same for
kILd." of tr:ttlcs. tn trades th.l: eral in things the :,>clcctiu"~
\\"hidl req((ires taste,l.he shopkeepers "j :t fa.;ilion,(uk n(:l_
uouriloud mu", be !ilen of t~~tc 1!;cm"cil co>. The\" n~\lst ::iii"
b·~ \\ L"ll [lrund~'d lI'ith til': ';,)0<1.,; th:1t ar(~ comHl:";' llltO £;15h.
Ihey mu~t r\"(\ll~ptl\" rid til(,lllseh-c3) e\'C1l ,H a Ill~5, of all gu'
tb;l.t \\0uld j()\\'l:r the ;;c~'.'ral ch.lnl"!cr 01 thlir stock; <llHl.
they 111U:ot nffo,:r thC'f n:stumCT$ a brg:(' chuil:C) their stock
gnods must I,l' Y:.'ry :;:l'<~t in P!'''pJrtll!1l Vl thclr s;,1t'~. I k
prices \\in ~dw:t~,,~ be cL.lr;;eJ in "UC!l Shvjh; '.I:1d hl~h Pi
will n('t deter the ridl fr<)tll guin~ to ther.!. BUl it J" cllffc]
wIth shops \\ bieh "l·j! pnjl'i~i(1ns and other ~o")lk in the seleLl '
llf whi..:h ilttic (,I' llU t:l~tc is n:quin.:J.             There is l1utbin:~
~';('hnt 3. sl!:'pl:'"l per W:lO can;et a \\idc repu:.ltlon inr sc.i
urdinarr things (!( :l gLlC·d q[,<ti!lY ar.d ;tt a low price, f·,
ab~orhil1;; a !ar,.;,~ p:l:"t of the tnue {,f hi::; tlis'.rid; tho::;;il
COllr.~e !w Caill\ut attral"t tIle custom of tho<;e who purch
lhrclllg-h their ScTl".1lltS and do not pa:- th.:ir bills prUll1j"
Such pC()p'lc \\ll! .l:\\".[\'O S'lPP(.>I"'..l "peeial class of shr,ps \\1;
high pnl cs ;I1":: (hargcLi from \\ llieh to UC";ll("t a comm:SS1(,ji
the servants, intt'!e~( on all (kb:s, and insaral~CC ag.lillst L,
dc-hts.
      H.et;J.;j price~ fiwtu:1tc It's..; than who1esale priccs,
rCDson ("If tlt:'- is th:it the rd'l.ikr C-ln keep his ";u,,tomer5 i( :
-idtisn€'5 Ib(",1\ that ()11 the woe'le his priu's 'lrt! fair. The:
au: \\''':'"li the l~l~rJ.;,l'; ri(,:-,<::'y, thq· do lH.l! know \\"helller in p;'
"'.';p<1u:l' eb..lr,::e 11<' 11.1:5- m,td,: proper allu\\'ance for th'2 :l~.
lu_\ll'll1~. vf the m:l:-kl'L         llnt in hrh~ \~holc.sale transJ.ctiOll'; ti
pUrCil<lSer {,X;Ul'.l!l('S each bar6"ain on its own merits.                  In 1:
pO~·~.l:ll tra:l~J.ctiv.;~ the biggliB}; and bargaining of the mad.
                    LOCAL VARIATIONS OF VALUE.                              179
aTC a fit occupation for business men; but in most T!'.:tail
transactions it i:: a waste of time and encr;;r to b:lrgain.
    [It is oftefl said that the high rent whIch a \\'e~t-end shop-
kc(;Jj~r ha:; tu    pay compels him to cn.Jr;;e high prices. But thi.:.
i~ ~(Il instance    (.f the erf()T of misLlkm;;: cause for eft ... ct~ \\hieh is
cl:cn made with regarJ to rent. If J. ::hop is !'Co situated that a
sli(,pkecper who has sufficient c:\pital anu. understands his
 bu.~,r.ess can make Luge net profit'> in it. its Tent will be hi~h:
nthcnl'ise ;,ot. The sh{)pkc~per m:ly P.l.Jke these l.ll';;e [lrot~ts
in eiTher of two way5. If his shop is in the West-enl h,: can
hope' f':lr (U.llom even tb()lIgh his Ilriccs are Jligh, a1ld perhaps
!le w,-,u:d :lot much increase his sales by selling ("h~~\ply; 50 he
.:har;cs hi,.:;h prices and pays his rent Ollt of them, If hi:; shop
Ii> in :hc La"t-cnd, r,c k .. ows that IlC must sen cheaply, or not
~d! :1: all; :111<1 he has to be conttnt \':i,h a low Lite of profit
;~H.) time he turns m"er his caplui; bt!t if ll(' [S in a tirst-rate
po'·:~i·Jn h: can turn on'Y his capital man~ times.1. year, SV his
:l!l!;:Jr.! net profits may be n;ry great, and 11(; may be 'willing- to
P"; .1 n:ry l".igh 1'el":t_ Pnces arc Juw in many of the most hi~hly
)"(::n:~G ~hurs in London; ;md they arc '-cry high in some cf the
q:'Lc-t strc<.':" in tht (JSh:o;lablc parts of london "here rent is
 ,( ~ \ l'r>' high, and in many vill<1;:;es "here rem is vcry low_
j:·:rnl jOtS llot tlwn cnter i".llto retail price any more th:m it
"ntt"f3 !Uta w!lok-sale price 1 j but some advantages of 5ituation
 'acl~c h;;.:h rents and high prices, and others cause high rel!ts
,~fld lOll"   pri'.:cs.]

                           1   See Book u. th, iv.
                                   CHAPTER IV.

                            MO;'::OP()UF.S.   Cv\ITIl:~ATIOXS.



     § I.      Ix examining m<trl~ct fluctuations ana 10Lal variation'
of   pri,_-:~ ;l.:-!d
                  wa,:;cs, we hJXe so far 5upposcd each m,tn tc
tashi();l hI;. l>wn cour,;c wlthdLlt any special rl;::;-recment with hi
:H'i:;;hbour;; in the S:lmc tr~lrk. But now we are to discu~
:he inthcnce c);<.'rtco by traGc combinations. These m.'}' bl
orgaoileu ii::O r''ifm.~l SOc!dll':> with definite rule!', or they m:l.'
,.;illl:.Jh- .\dh,'~·c.' \();,;ethcr under th·.:: inlh:;.'occ of cust()T\l or of
n:::<l! (;r s\.:PP,)3C,} community of trade or class interests.
      If the prodllC('~'::i of a commoGity are many in m::l1ber an,:
act ...:ithuut any concert, it is to the intcrt'~t of each of theIr
to ill~ r~'J',C: h~s supply of it wh~ncyer he expects to olJtain
pri~'l' :,;re.lkr tiUll its E':pl:"~L'5 of pro.:hll:liol1,     So that t:,
pri("e 01 ,\ Cl\mIlh)l~ity cannut },Illg excec::d. it:; r...:xpcn~'~<; of pH;
duct:O:I, if thert' is fr'J~ £(,n1pdlcj,)n :lmODi; its prot\U[Cr5. lk
whc:'c there is IhlL th:s frec C~\IIlPt.:~:~:():t, \dWft:! ~he whole of th
produc::on is in till~ hands of one iillll,or where it is in the hand
,,( ~e\"C;,lt Tlrm5 wlh) cumb;nc to:;!';her to limit the supply, th,
,:n'jrc   l1L:1.1"   he :n:';int<1.incd at a gO(ld deal .. bv\"(:, its ~ormall::\'ci
:\\,hel1 the l'r:cc i..; thus b::pt at .1. i~i;her 1..::\"1.:1 than th .... ExpCnsl
',of prO(:llctlon vf tht.: commOlhty it Illay be cJ.llcd a Monopol~
price.
      ,\ man          h~3   a compkte monopoly of a commorlity if no on
 but him:,df rn.a prud:lce it. Cu:nplele mor,opohes are f!
 ;:lstancc 0,;1(, a~'J by the oWllcr.,hip of a YJ.lua\.;lc miner.
 :'opri!1~~, or p( a patent ,,'h:ch fmhibit5 any on.: Jdt i~5 ownl
 trom :ll"Jhing :\ certain dung. The qllc<;tion wluch Sl!t.:h .
 mO'lc[.lojist Li . to setth:: in onlcr to dcll'rmi;)c;1t ,\hat pricc lit
                     .,
 ~hall ~(C!i. :s :1. \'cry ~illlll;'~ one, sUl'po-,;ing !.im to CNlsult on:'
 hi;:; own il:t','r,:~'   He ,,,:,:uht<-s lh,: pnce :I.: whir."h he C.":l S('.
 (,,1([; p.Irticubr :t!ll:Jtmt of th<? c<..:m'il<..1uilY, and :'.;,,0 \\Int tl'
 Exp~n,,(-; of procll.::n:; it win be, He thus determines wh:~
 will be- the tobl net prul:~S th.u he will make by olTering it f\:
                        1>lO~OPOLIES.            CO~mINATlO):S.                                   lSI

('.\. II particular price; and then fixes his price so as to make
th·, sc It.'tal net pwfits as large ;"\5 possihle l ,
      .-\ pl"<xiuc'r who has est~bli~hed a reputati(Jn for making
'()rc1.;:thirl~         particularly well! of:'cn b.1<; a partl.li monopoly.                      But
lil   d(.::id:ng ;'tt what pnce to ~ell, he must consider the risk that
.1 hi~ll price will attract the compcLitio!) of ri"al producers.
 L 1m)" bt' his best policy to secure himsdf in PQssc~"i(jn of his
p,\!'tnJ monopoly by c1urgin;; a pnce whi,:h allows or.ly a. low
,- ,'; Df protits (11\ his clpit;1\; for if he gets even low prdlls on a
 ,c;-y br.:;e C:pil,tl. his Earnin;;~ of Management will be hIgh.
       ~::!.     \Vhcn the production of a C{JJn!;10·!itr is 1Il many
ha:HI~ a r:ombin:ltion among- oealers ~eluom :l'lll'; ;It nbtaining
" (otnplct~ rnonopol~·. But combinations (or raisjn~ prices by
;'m:::ng ~\1pply h:l'-e been m:.de in every .ige, in C\ cry (L,tmtry,
  ':1Ci j,1 .:llmost e\"i.:rv trdJe.   In Inc.li:t c.tcll trade fOlms a caste
~,~- ::sdf which              is
                              gcncr.tliy in a \eTy emcient thClu;h not
kr:'l.lUy mg<l.T:ilCd c~'ll1hination. \\"i:hi;l the \'!;la:;<..'s inueed
",l'~(1:n rllles, b.!t th~ pnce 1,I.-hich is cn;cr-;ed to Eu:"opcans is
":"_'D ddiberatdy fixed at J. higher rate than that charged to
1..((I''-['S, and it IS wry seldom th:!.t anyone can be found to sdl
:,'.t EUI-up<:an at the lower price.
       llJt in a cOl1r.try in which there are no c.l:ites, a tr:.lde com·
    1l:2.::1)1l 1n <I!1)"markct has to cOEtend \\ith grt;'at dlfficlll~i,':;. If
:):"s.; who produce for the market arc many in number and
    ~.1tt( "CU O\'-er a \~ ide area, it i:; not casy to lurm and keep
" ,c',_-t)_('t a trJ,de cpmbin:ltiun,        The dJfliculty is &''TI.:;ttest in
"",u-,r: traoes in whi("h a ~rCJ.t deal of Fixed c:J.pic,1i IS uSEd .
. or :~c lornbinativr. will ,l:n; ..It k('eping the price ,It ail en~nts
'::,li .• ently high to e,l\"~'r all the E:-.pcnscs uf prodllction: whilt'
       1
      1 ,;,y h{· tLe interest vf any member o{ the COl;tuill:J.tion to
  !,   ca   S.:1:<..'   of j!is goods at any price which is more than cnou:;;h
       ;'_luru to him his actu..I.l outhy               Ol~   them, w!lhout all')\\'ir,g
 ,"I :~.;;!~ for int('rest un his Fixed capital, (-Ir for lltllcr pcrm,Int'nl
 :: ,~',c"> \\ hlCh Clnnut be a\",-,ided however Ii~:lc. be proc.uced .
  .It :il-2 l~iOrc likely indi\'idu:ll pfCldu(crs ale to col'tinue their
,rnduction and force down pricc~ bc:ow their )lonnal lev,'!, the
"l'.I'er is the b"Ci.ill which :he trade ,IS a \\hole m:t~ ~d, at the
 xp".;- ~(' uf con"umers, b:' a successful cumu:natlOll to limit pro-
 q~,,'-'J\ anCl    st;:>tain pri:.:cs. And the trades m l\hieh much
  :',"'1 capit:..l is used, J.re those in which the f,rt:'atest (!JYurts have
  'en loude to form SLlcn cvmblr,;].tioll5-,
       11'r instance, the Nonnal farcs and frcigh!.5 of a steamship

       ; Jf he     CI!(:(i,ltc<;, t~t at a :"Ii~c 1',::11 :tI\lLlUr_t   x   (':11',   be soj,l,   an,]
                         the Expell~s (,f i)[.)c~ct.ion would be z per 1.!nit of
  :i~ f,_,r :hi~ ;"U:lOunt
       «-m!lll.Aliry, he will try to fix the Fice so as to ma1..e .1Y-orZ .),
 .t.,':.-m""I.
                  nOOK III.       CHAP. IV. § J, 4.
company must be enough to give profits on th~ vast Fixet;
capi~::ll employed,as weU as to COVt:T the working expenses; but
if a ship is not full, the e:~pense incurred in carrying ao:
...dditional passcn;er M an extra ten of guods will be very
much less than the ~ orm:l.l rate. And when two lines 01"
steamers compete for the traftic between two places, they often
lower their fires and freights much below their N orrnal or
"paying" rates. If onc company is much richer than the o~her
it may choose to cominue this competition till it hac; ruine'd it:-
rival, and ohtaineu a monopoly of the traffic. But generally It
is to the interest of both companies to agree upon a tariff a!
fares and frc:ights; and if there is room cnou6"h for both of them.
they may make for a time large monopoly prohts by chaq;inl.,
rates considerably above their ~DrrnJ.lle\'d; that is, consider-
ably mure than sufficit!nt to p:.l.)' all the working expenses all(~
givc the :\"ormal rale of profits on all the capital cmployee!.
 But when the combination is made, each of the companies W:l:
 be under a ~trong temptation to make indirect concession·
which will have the effect of attracting customers, witho".
 opcnl)' lowering the tariff. A suspicion that som('thing of thi-
kinu is being done is a frequent cause of the disruption of such
 combinations. In this way a great many combinations hav~
 been made and broken up and maele again in most branchcs \1
 the carrying trade, but particularly in the trade between En.;
 lanu and America, and in the American coastin:; and ri\'~"
 traffic. The recent history of the trunk lines, which run fro:~
 Chicago and the .\lissis::.ippi \"alley to the Atlantic, has been kl
 of such {.:omb!natiolls and has containeu many startling Oln<
 romantic episodc~l, And the great coal companies of Penr··
 sylvania and Xew England have at \"ariolls times bound thcP'j'
 sdve3 to one another under pecuniary penalties not to exect',l
 a cerl,lin Ol.:tput, which i~ !lxed from time to time by a centr,l:
 (;o:nmittc~; It is more di(h..::ult to c\'ade this re~ulation than 0Ill"
 whicb tlxes the price at whi.ch the goods should bc sold.
     S 3· 1'\cxt, with regard to the difficulty of excluding the
 competition of new rivals from a distance. This varies mllcL
 with different commodities. A combination of Swiss cottOI:
 manufacturers for instance could have but wry littIe effect 1l[J{"1
 the price of cotton in the markets of the world. An agreemec
 among En!;lish cotton iIlanufacturers to limit supply might rais~
 the price apprech'bly in a time of h'Teat commerci<ll activity; bCi:
 since ("very one WJ.ots to make hay while the sun shines, enr·.
 one would be anXIOUS to get a large share of the abnormaih
 high profits that wen: then being made, and the combinatio:.
 would <l.lmost certainly be broken through. If on the othc,
        J   See 1M Rail..(.'a), Pro6l~m, by F.]. Adams) junior.
                      ~Ich   OPOLlES
hand          :tttempt to limit the prod',v\! of Eng"lish mills were made
             3:1
\\I]C:1 ll,lde was bold, and many 0)( the mill-; of ()thc: cO'.1ntries
,h'fe .3tandin::; ldk. the cf:cct of the limitac,nn WJ'!:li he to
... c~ fU-"iS"Cl t;lin~ to W(ll k in.:;lLaJ of Fo.g]:-,l!; Ln;;Llll~:-:> fureign
:-i-o'dls would re.lp the full benelle ()f ailY jitdc: risc in pncc ,here
I;l;~:,t  he, and L ve a larger ~.l~(' fn:' ,~,cir g"ood,;. \1on'over
",teh                    wonlJ) <15 has 'u':'.t :JCCI'. ·t-lt')in~'_'d out. have
             a COllJbirLl.ti,).~
t:) bt'.!r <l h-cavy strain bcca:..:sc of "th:> l.tr;:;c :li1l011ilt d     Fixed
c-ii,-:al C::lrL1p:u in it. The Lan..:a~h:rc work:~h n, \I'hen they
Wi~,:kcl           111..'lr llllploy('r~ to limit productiGn. pr{'i:JO!;cJ to re-
h;'.t; ~h!: 5traill b~- a;..:-reein~ not to \;"~lJk full liule fnr any
(",lpl,)y(:r ll:ltil rrices rose ag::in.
      ; -l-    if a cl!!nmuuity c:mnot be cas;i~' brou;;ht from a g:'cat
rlistan<.'l, ~ local combination of it,~ produt:cr5 lIlay rind it to their
.llh'.1.nt;l;.!!: to limit the supplr. For in:;t.1.tl<~e, a l(,,~ai C(ll1!hination
of the nuke!"s of icc" cuuld ri", the ptlCC where they chos('.
 j). 'HiS'.' ices C:"1l1not b..: br"1t~:ht trom a ll:s:ancc; (ilf)u~h the)
l·:·,,~:~I);y would Ilot ti\. it very hi:;h f()r fear pi r:hC(kJn.~ the
('In,_';' ,;>::011. I:ut a cO:llbirlation of com-d;.:':11crs in a place
tu \\;l\cl1 curn could not be (;3::.ily jJllpont::d \\"tlulri not he
r'_'.otraint'd b: ;Jny sllch kar; and in the :\Tiddk A~cs WhL'\l the
u:l\1e in ((-'I'll was nut ori-;-alli.led, when thl~ TlCW~ of hi;;h price5
d:,; n'.ll pass Cjuickly from one place to anuther, ane', when tIl{'
T.l.l.l''F"rt of hC<t\'~' 1!lin;,.;" by lrtnd w"s \'/"l'Y l.';\ptn~i"-~! a local
,<~)r',lJ,n"tio:L of corn-J<",dcrs often forced up th.:: pn(t' \'crv
l::g-h. ,\f:cr a wbik the !,rice ml;-:ht be hJI'.cred by trc:>h !>uptJlies,
,tlHi ,;",nl.;' pall d their ..,:(;cks llli:~ht b,n·e                ,0
                                                           be :::-ol,J at :I Joss.
Jilt( :~t [hI: worst the (orr. could he h,cf-!( :;ll next y~'ar; ~md if, ;).s
I~ll:.:ht ~;\~ily happen, they had sold half the-ir storks at more
~ ::lil t\\'l(C the priCe at which they had Lought them, lh~)' could
 !!!urd to dcstwy the rest I.
      :[\-UI now ::llmbinatlOn;:; <1:11On:; com-dealers o(C:1s;on:llly
, .l.u:c kl(,J.l disturbances in its price. A great deal of the ('JIIl
     is ((,nst,r::ll'd in Fnt:lanct j'OIr.<:'S- !rom Chica~') \,i;l :\cw
II,';:'"
\JrK; and It competition wcre perfutly flee til\.; PI;CC of corn
0\lght (,) lJe liighcl" in Enghnd than in :\cw Y(lrk by the expense
nt, can'Ylnp, it across the ;\tlantic, a1':,1 hjg-her in ~e\V Yvrk than
l.nto:;u l1y the ('\:~('jl~e uf can)ing it nearly b'l![-\'-:'Y across
      I See the ~al)le., q:'JOte,1 alJo\'c, Eook Hr. th. ii. It ~('CTJlS, therdurc,
Llui \l!1i " mi"lakcn when h" :lrgtlh. ~.)jJO'" i:-,g Al'am ;:,mith, that .• if a
;rr _:.:.1 ~:C"r :.::os ~,.-,,,.~JJt a ghJt qL:,lntilY of c"m, and vy with~)o)hlil,g it
(r".11 t1-:o.: :1,;n ,.:. h::b r:,:~('d the prlCl' \c;} "lullings a quartu, ju~~ so
111\1.h '.Ii!; '1'··l'r'L·~ be: L-'\\'t~r"d hy bnq;lng it h:H.. k." BJvk nr,
  II. ii. § .'.      ]"I,l' lll<:'oii:lc.-:'.l b\\'~ .lwl r.,);r'h ;;:.!1in-'it th,_'~," who (Combined
Irr "l~ngJ"(}~s·'·t~e ~\1pp!i(·' of [o'ld ill }.,'rlic\ll.~; 1,I:lrket;:" and tv "retail"
,>r" rr;.:ratc·' Ih<:!1\ J.t :"Ii] cAtr:l.\":l;'::Ull r1ice, though they cerLliroly did
l.;:w:-..,   Lall1 1han t:u...:Jd, Were UJJl w.!(!vlbh      ~)s    ofttl1   :>uppos{'{~.
                    BOOK       [II.    CHAP. 1\'. §§ ;,6.
the American continer.t. But it is sa:J t1-,nt combinatiofl5 o·
deah.'rs sometilncs keep up 1:5 pr;ce in hew York ll<'arl~' as higi
as th:tt at which tbe cOlTlpetitiop. of other (ollLtri<-'s j,Jrn:::. the'
ta sdl it in Engldnd; and that the Chicago corn-LtLtor" oftc I
s~cc;c<':"u in charging the baker as much in Chic;lgO a5 in .Ke',\'
 )0[,<-
        A·2;ain. the price pf a commf)dit)" in a m8.rket c:m be arti-
  ticially rai~ed \\hen thefe is a practic:t~ monopoly ot the me:u,:
  of carr: in,S; it there. C0.11 is cheap iL p:;[(:c.~ to \\ h;rh ;t (;:in h,-
  l''lsi 1:." (anica 1)}" wa!(:r; but it is gt.:n'.:r~.dl)' d~;lr ltl an jn!;t::\'
  pla,-·~·, ,Ihi,:il is d.t the lllercy ()fa sin.;h: I.l:l',\"ay comp:tny.
        § 5. ''i"e ouy lIOW :iUl1unat IZC the cunditions uf ~u':ccss of .
 ,tradt:' combination to rai<;c the price of a cnmr:wdlty in a marh
j by limiting its supply >·-Tbose who start the combination mu"

  be able to obt:tin tile ad!H::i>ion ,Ir Bearly all the tr:tdt.:r" who (;;u
  convcniently s~lpply tho..; markd, Th~ comhination mu~t 1,
  able 1.0 Impose s(ILi.'l\ (Jr pceuniarv penalties on any \\-ho arc n,'
  bithful to it: ;Iud the- commodity mu'>t be- one that is In urger."
  demand. so lliat its consllmptiun .,,\"ili nut be m'l(.h checke,
  by a ris(: in its price.
        TIH'le is a clasr- corrcspr'ndcnce between thr-se and tf-\
COJl(ll(ions of S,lCO:C,;S of a   C(JHl~)inatioll   of vuvcr.'> tn IVfee dl)\1
lKiees The uuyers ",\ ],0 st..lrt the combin:l.tion llll;",t be ab;c
in(\1.;,_<..' ntarly all thos(' \\Lo ir<..4llc:,t .be m,lfkv~ to jOin ,I:
t:1l~lI:Jll,~,~ion.     The comi)in,nion must he ;l1J!e (I! imp(j",~ SCI":
Of p<.:cu:li:lry penaltic~ \)!1 .lilY WilD :uc not bithfd tll it;
th,,: c0ll11mdity mu"" !)<.: difficult of tr:iTl"pon. or :iicn:! 1,'.:"
ue some other cause wl(ich ('xdudes I1n" h,;Ycr", f:om tl"
ll1arkd. Vbcly, tile circumstantC5 of th{' jlrOdllf\~r>.; ,[r,,: dcn~,
in it must be such that the supp:y will n.}t be )[\",11:1: Cllt'C:~·.
by a low price               Thc~p. condition.., ilrc pl"rh;'ip~ ft:JfdJed
a fe',\' LI~{'", in ,drich the- bllyers aTc \\\,·<.llthr J)v,.:rCb.111b \,,1
buy the ~(t",-i:) (or 5,d.; ::It 3. (~btall<.:e. partiL'Jiarly wherc ~'
sdLr_3 are p')Qr m(n~ sucr. :15 tio,herrn<..'a, vr wh..--t"c thl'Y b(·i.-"
to \!(lCj\·ib·:d rac('<;. And :j](:y arc l,f:(n fu!rillcd "her: t'
otryc:,; ;,r(' crnploY<.:!l":' of labour, and the :,-e:!t:l"o, ,ITe i.)]juuler,
an o\e:"-peopku ui",uict, who h.!'.e ~carL.ely ~\O) cbc..ice it:,. t'.·
their njc:ll1~~ of earning a livdihood.
      ~ v, 1":,'('r "incc \\<1;';:C5 ceascd to be fixed b.,' CliStUI1l, :1
bC';':~ln (0 JJt" :lrr.1ngul b~' c:ontract, combinatir':is <1m0n~ {l"
j)}oycn; to ]'\\\1'r W~;;C5 II:1\"c Lcen coml,lon; an~ lD nv;'
pbc('"' ;;l'~y !,.l,·c had ;\11 the con;{it:,'llS reqll!r~'ll IJi ~UC(c:- .
T:.li;.~' :'''f l:iC;:lnle the l.I'-L' ()fthr (,tnners 1n a p,u·t {",f En.~_:l.u,.·
,,·idl'h j , f.1.!- from all Luge to\ln~ al~d ~(',.l5 (of m:,J)uf:a.:tdH',
The farmcn ai~ few in number. lllvst (Jf them h;,yc knOI\-Jl \11,,'
.,notht'r from Childhood, and tllerc is g-cner.1.l!y a ·~.lCit Ilud",'l"
s:andill~ amon;; them:\5 to the fJ.te at which thl')' al'e to pay tllr\;
                        ~WNOPOLIES.                  COmllNATWNS.                          18 5
 \. •. )Jllrers. If an)" d them were to b:-l"ak thi-t':J'Th this undcrst:lnd"
 lP';. p~lIticularly if he were to do it with the'" object of drawm~
 me:) ,iW:1Y from acothcr hrmcr. he w,)111d !>Ciffer in th(' esteenl
 "f those for whose opinion he carcs ma.,t. In (act "there is
 r;tr<'ly mUt.:h competition ((Jr b.bol1\' on the part of employer~
 ;,';"/,'t.'ll:l trade irl il particular place Uilless there be competition
 (,If it from '<ili/ltolt/ I ." .And unies::; tht:re is a rnanufacturin.:..:-
 ir.I..:,stry in the nci;;hbcurhood, comp"t;',:U:l (rOl::1 withul;t seldulH
::lak('s j;5 3ppearancc in an agricul~u:';u .,-;~J:l~~c.
    U!; the vther hand laboll!.::rs ar~ in the 1)o,.;i:ion of sellers of
pcr:sh.lhle commodities: in some ,oases thc\' m:t\" like to res!
frum wurk fur a while and havc a "plaY-lhy'" j btl' if thcy afc
 h.~pt 1011;::- from work and W;1;.!:es they alL :lad particularl: the
ll1a;':'icd men, suf(('r much froln lo~in~ 111'.; Pi'lcc uf part of tllcir
 i·,~/.'!  ','.   .'I;;rict11tul"::l1 labr)lI\'~:r;; ~cldolll !i:!:;k of scckin~ \\'ol"k
   ,',,:,:(;C til'..! p~\fish:n which the:;\iTrC ber:L; ar:~i thu~ arc ~OlllC­
 \ q',es at th'2 mercy of a few L1.rmcrs ,,'Il(! may pcrhap;, dccide at
 :t!~ .~::":C't·din:lcr \\'hat wage::. to allui\".
         TLe IT.cetlll6"s ill which fanner,.; dccidL' on SlLh matters arc
,.: ..'n';';\~l;· i!!formal, and little is known :;f them except Ly the
1,: :n.'rs t;,,:·msdyes.              But wc can H·.ld ill ~ll1y newspapc! 110\\'
:!Lt.'  A~..;(/ci:.tti.on of ,rc:.t Latlc:1shbe ~o~tl" tJ\\"llers vI' of l::l11
h:"":-I' :d~\:lU!actllrers m~'r 0:) a co;:rLll<l U:l~') J.i1d \'oted tllat
\"';._'I'~ :,h,'~ld be raised or lowcrc(! 10 p~r c;:],L.; ('r how ":'.lcet-
         cf cmjJloyel":; \\ ere j,elJ a~ l;!;:d.;bma and Pr.::stOl1 to con-
          rfOJ,'Jsais Wl~:l regard to th~ r •.t..:: of .... a~l'-; IlI'U:<: by t:~c
       'h .1 n, i ::\ orth-L.ist Lancashire Asso..::iatillll uf ~.J aster c.J~tun
         ;11',"1'5, )
         C(!llluiu.1.tior;s of cmplo.\'crs in tr.1dc~ th'lt ;"Ire (;'\)Ticd on in
Im' r.~ ':0.;l1"'O~       ho\,,.'\C\'cr   DC m.lnJ.~~~tl a~ c;l~ily as C01\'.i!)n:l~HH'l.~ of
i.Hl:".C:·S. For in a t0wn nr 1TI:J.[l'.,L;ct"Jrll)g dl~.tr:c~ tllere i..::
'~'-I' :r,:l1y s':·me sort of 1;0mpdil~<)n f:-otr. without ior the ! 11~our
:1/ "  :LLlk. and to'\'n Iabf1ur..:rs ;"Ire 1ll,J"C 'lnt L) eha:;::;,- tlle!r
 ,,·,~,qntion and their abo,!·~) a;;u t~, i'lok "bout tlvm '-for the
I..:..,t    (,("~t1p,ltion fOT     their     (hi;dr~n   ,Lm farm hbourers         ~.;·c.   So
 thn ::' a combinat;'.ln of ,-m.p:oycr.~ ,.uccc:.:d in flll"c,n.; r:r:··.vn
\'''<'b''~' in a trade r:Htch bclo>\-" thC':r :\ L,rmal lc~ el) the ~upr:Y of
],1:)11'.. 1' ill \l:~ tracl,! will be dimini~l;cJ; the V'i::..: of the ',:dm·
 d-:.",;ttv wi:] be· ni::,':d In' the limita:i"n uf its :-l:pply; :liHI the
'·'l"i;.'.I)rr.;:, buying th<:ir'labour ci:l'.J.ply aLJ sc:ling tlhi,'" gC"'ds
',l::';··,iy. \I::i ma',;.e vcry hi~h prutit~, E:l,:h r,j them '"Iii i';ne
L.:ica t" :':::,L:n by attractl:'.c; more men to h:mself ('\ ~ll at a.
"Llllew:'.:l.: hi..,.her W;1cre, and c,!<'r.dil1" bis business jus: ,IL t:1C
til!lC      ,\hen       the   sdli,~g-pri~t~ of his ::;~0d5 is w:Jch :l.bu\·(· their
J. '\jJenscs of production.                \'Cl"Y slrong penalties are thcrefort:
11>6                  llOOK lIT.           C"il.-\P. IV. § 0.
Icquircd to pr,:\cnt ('."\,-11 l~~;I!,cl;lC1!rCr [r01l1 pU! ;":n~ hi-
(,wn :n~cres~c" ar.d bHh:ing: against !li~ ri\'ab III \l:'~ iab')'.\:
InhrkLt.   Hut ti,L' :;"c':a; l'eil.l!tic5 which a cv.:lbllia::on ,)'
Ill:\n,IILctm't,'f;:' L,_r~ inJli·:; 'l-'till .'Ul unbithful 111\,1:,;)\.[ ~l:e nl.<
;..:ell-.:r.:Dy wry he,tvy; f',j" I),: ~!:ldum d-':PL·I~d., f<.~;· s ,eicl), Oil
:ho~': ir, iii.,; 0\\"11 tr.H~¢:b 1.lnch ;J.j ,I. f.lrWLr 1\0('5.     .\nd ther,",
for~ :'i'.KIt ":0tnhl!l:J.tir.H::i 0(,<::\ II" .1. ".; IL'   of   }l\..(   ;.wi:J.ry   Pl'~'lit:\
r')f br-.-akm:,:- t1:e ruk.'-, :u,.: rL'~t:l;:-"; {rOllt L.lch mC[:lb'..:~ ;J. bon
{elr the: dL:'~ !J.1':'U1cn~ of t]:elll . .':luch c()moinatl(J!~j :::oCt:IH to u\
on th-.: wilt) . .: g.L:nin:; 51:-CJl:;lh ; ouL fL \1,' oC thcm arc yet \"t't:-
:,;r0:1';.
                               CHAPTER V.
                               TRADES   t:XIO~S.


   § I. TRADES t;xIO:'\S are modem repr('scntativ{'s of a          ~cries
(.f mo\"ements that have t'xerCl~ed gre~lt inilucncc ova the
.-'J~'wth of the people of E:1:;land, and in(kcd of 311 other
'"lH~n:.ries of ,Vestern Europe.  For the !"pirit which ]c;t(:s the
J!:·~:nbers of a trade to combine together 3.nd cuncert a·,'rior. for
::l~ir common benefit, hag been present throll;;hout the whok
::-:riud in which modern ci\-ilization hiE gnl\\ n up. The W:lr·
\\',".rd savaG"c or the wanderin; fh~cbo0t·.::r nllly submit to :.,:mie
~ort of rude military disc,:plir:e; the p;bsi\c Orier.tal may
   (:=tuiesce in government impost:d upcn him by tLe superior
 ';la~r of a clominant caste; but the h:,:.::hcst form~ of ci\"ilil,l-
Lon have existed only where the p,'oJAl' hJ.~'c had the cner.;y)
~bl: patience. and the strcnf;th of \\'iH th.!t arc TC"juircd for a
~c50ilJtc   and   er.d\lrin~   self-;;m-crnmcnt.   These qualltic5 h:l\"c
 b: (;n most hi§:;"hly dc\-elop".,d amr,n::; the Tcut,mic races th~lt
ILl\'';: peopicc\ \Vestern Lur'_ipe. and c:-pcciaJiy am{)n,~ Lie
 LII;;li::-h; uut unfonun"tciy lhcs,~ tau's kn"e (,ften ukcll a
 ". rrow, almos: a bigoted \·iell" of the nw.-u,in:,:: of the !l'nn
.. nei:.;hbour.~' The)' ha\"!.: generally been morc :U1xiou'~ tv be
true to those whom they ha\"e rcgarof'd a~ :hc.r fricnd~, th.m to
 :\\ oid inflicting unnccc!":,ary injuries on ol1:ers ar0lInd ~hcm.
      § -z, \Ve have alr<"ady se"r1 how the citiz('ns of tb~ :".Iiddlc
 _\;es formed themsel\"c~ in! 0 town gtld::., in order to defend
thcmselH~s ag"llflst the opprcs~;ons (,f lawless barons.          TI,ey
diJ many noble and sdf-s<.lcrificing- ut:eus uf!til they lud
 .ldli,;\'ed their freedum: but aftenn.nJs they sJ.l-.k into a hahit
\.If hJ.fsh exclusiveness towards thur inferio.-s. The oPlJrcS~l'lt
CTaft':>men formf'd thcffiseln;:s into gilds. which, after a :-itrugt:,le
,)[ some centuries) o\"erthrew the Olli town ~ilt1s, took the I ule
out of their band." and governed tIle towns in their place f')I'
u::any b'CneratlOns.
      In early times so little capit:U was required in production
that the distinction between the capi~alist employer and the
IS3                 nOOK lli.          CHAP. V. § 3.
hired labourer 11J.rdiy existed. E::lch cra(t::;m;ln sl1ppFed himseli
with what httk cJ.paal he w:wtcd, ::t'Jd \\'\);-b'J with his OWII
ban(;s. He w;.:s gC!1\:raH~' aided by:>.n ::lpprenti.:c) \\ hlJ would
in d.u~ course bt'C'o!l1e il. cr:tft"mJ.n, :U)·j (\[t\:n or his o:)\..-n fallJil::
and perl ups one 01" two hircu 5l'rvilnts. F,lshions Chan;;l'f
slowly, new inventions were rarc; his servants were generali;.
hired by the y(:;l~', it 'vas to hi" interest to keep them employee i
even when there \\-:15 n{,t a go!)(t (icm:mu fllr his wares, so h(
did not \I".~it for nrl!("r~ bilt wc,rked ~~(';ldi1y. and maue things fo\
stock. Tbe even ~L'nO:lr of the Cr,!fl:':T\,J.Il'S life \\J.5 seldom di,;·
turbed saH~ by Lunines ann. pb~tK". by W.lfS :md tl'.\! tyranny c'
kinb"s or barons. '1 he (Lift giJu.:; (o::itered bone sty of work ar:d
brotherly kilHbcss, they dcfendt:u the opprcs~ed and relicyl'l
the distress of the unfortlllut<.:.
       As time" l':lt (In [he complexity of tr"Ll::- increased, m0r
capital was requir~::l fM pr,)duetir>!l, the cr.,ftsman became .•
slUalllnaster. It '1".,5 th(-Il ordel-ul on the ':lUthority, p3.rtly ('f
the gild .:I;l',! p~rtty of the 5t,lL~, how n'"ny appr"-'i:tices e;J.~:
master m!,:.,;ht han~; ho'.\' l1lJ.n~' hir'.-,j labu~!r~'r5, ar.J "hat wag{"
he should par them: and huw man!' hOllr~ he .,hnuld WUI~,
CradcLli[,' <l-; ril'hes iune::tsed the m::L-;tet's ccased to work 'wi;,',
tbeir  uwn       ha;lds and to :tssociate with their hired ser-..:lntsi all,:
in SQ,nc C:J.;;(,S rC~1.1la~>llS with reb:"rd to apprcrnicE's m.:-.de t1:
members (Jf:1. gild :tll1l(!st ;,tl c:-:c;u~in! caste,
       % 3, This soci,1l scpaL"io11 u(:tl\-ecn m3.;;!crs ami men W(,;1:
on H'--':1<ldy but ~ol1le\lhat ::,lmlly until the 1.I.ttcr part of la-
c.:fltury. II'hi'1l a grbH i:'ll,:.lse has ,c;lI'I,:n to it by a series of t!'\'
mdst imp0r:.l:1~ ;1\\('111:1,113 the \Imid )),15 kn,)wn, Bttween 1\;"
years IibO ;t;,,[ f770 R0l'~uck he~.:an to smelt iron by CO,):,
lJrinJley cOI1!lected the rislng seat,; vf manuf;"tctllres wnh III
sea by can:1.1s, \\'l:d:;\\'(\c-d d~jeo''-Lrcd the ,!rt of m,lkil'"s ('J.nlwJ'·
W.He cheaply _:md \\C'l, H ar;;reavcs imcnted tlIc sp;r,Ling jenn:
.--\rk'\J::~ht t;"jized \\").itl'~ and l!l~h's In\'C'ntlo:-,,, f"l" ~pinnll":;
l·y l'l.,]Ic"::i, and aJ1P;;cl~ wJt<:r-po\\'cr to I'lC\"C t1l<:111; and \\";l!'
w·.-cnlc-d the {'o:HiLn:Sln; slcam-C:l;C;ine. CrU:D;,tlln's mule an,!
Can \r;~ht's po',ler·locm came shortly aftC'r. Thc'>e inventions
touk ll1~ll1u{actu:'C away from It(Jll:,t:~ and ('ott::lges, :u:d gaye It
to 1""ct(,ril'S a:1li lar~c wOlksllllPS, .\rmics of workm(;n came
tugCl!lt'T wl.k!' the lll;\ll:tg-ClTI<2U .-;f Llpitalist (,lllplvytr::i, and the
mod,om \\·a;e~.,-!uc~t.(,;; maJt' j~s hr:--t appc-arance,
       I: :i~',,-ms tint [I',,\nv \..f tll': ~:trli(!r m:H:ufa-:tt;l-ers were harsh
,mu un,.uitl':at~~ IllC~, whJ made a b;<d ll'lC ot their ncwJy-
<:iOjl.l;ICQ puw,-r. Til<, crov.-ueJ tj-,~Ir b':torIC5 with apprenticc_s,
n::ally:Jf \\-h'l111 trvy tUi.'K finn} the p.1ri",h with a premium of .£5
'--',lell, The LtctPrIt''; "I'::-l' s() unhc:lltnv, amI the chii{lren \\'ork~'d
::".1 hard and .for s~lch lnng hour;, a":,' to h~ s,;:nously injured
pll}-s!c.l:ly and morally. Thc workmc:l did not ;'et know how
                           TRADES UXlONS.
     V(,tcct themsch'c5       j   and at the be;-innin;::- of th~ present
 L:il'lry their means were .:;tr,litened by the great r;<;e III the
.: .'~b (If fond ~,nd clothing that \Ya~ Gl,b'~cl by an exuaun\in:HT
   ·'e" ()\ L::td harn:'st5: a!~d ~Jy the tLlXCS and. n'::,trict\o!!~ arising
    .:a tile great Frcn::h war. A. l'arli:llr::(;l1':ar~' report of ISo(i
!>,,'.~ that "the opuknt clOlhi..:rs U1,lk'~ :: a TIll\." to h.n"<" (Jr!. ...'-
I',: J more men th:lll they can employ, and thus these ha~'e
      s::t1::d still part of their time." The work.ing mtn gn-'l,,!d
     .'I.:t for a r(':nedy :1g.1inst the!r a h('rsiti,.'s. For a k ..,l;; tIme
: H'y could thin;': oi no Lct~('r P;,ln than that of pClIt'0ning
       "li.mh.:nt to enforo:(' some or6nzwccs th,-:.~ wcre fl',1nwd b',' the
• !" •• :  ~:a:csml'n of the t:mC,i (If lb' ::i:er Tl:dvr;';, l!l particulJr
      _,' ~;r;.;ell the cn[urcelllCnt of l\\\l 'iLltut, -' p.lsscd in 1555 and
 [ ;J.\~', wh:ch Ilmitcrl the n<imber (.1 io,)m-:; each m:::.1Cr wc\ver
',1 :-;b, h~tn.:, \\hich ordered thal the !;UlJI!J,_r of :Ij-iprcnticcs in

      ::h"p should nut cXCt'cd by Hhnc tb:tJ! three tl,e !l'J!:ILl:i" of
i,,. ;;;'~Y rr~('n, <tp.d which rt'il'_'!".'ltl:tI the ;n;,:1:o:ti(-'li3 t;ld~ \\::'<c:;;
        ~;,J be pcrio;jicuiiy fix('(i by the J:.;~ti,>s cf II"!.:: porC'.         '1 hl
      ~t tr.ldes·Ul~~ons wcrl! :l!"snci,l:jo:-\'; of wuri-.;mcn f')lm·~d witl':
     '. p:I]'pose of peti:ionin:-: p;:rilJ.ll1ent ttl enf{'fCC thl'S;:O ruks,
  :"<.1 thl·ir Cf{llrts nwt Wllh .L p;u!ial ;intl tClllpOlary success.
    u: ~~~ou:;;h 5uch ordinanccs pr,)[.\ab!r did more g-l,od th,m
    mn :n th!..! times of the Tl,rj""r~, they w'Juld lu\'c il~poEed
         \",l:r:tble shackles on d-,e ;;r,;\\"h l,f m(Jl:cla I~J.lS,r;:, ,-\t
   ';,_':lh it bc'C<l.me ('-"ident to :ht'      \~nions l!i<lt      thq' \\(,d<3 look
     ".un to the gO\'crnmcnt fUf 'ill, :J.llll :h,lt tlu::y 1ll,:~t rdr, :1',
  '(' ;~!d5 hefore th<-,m had )'i ~il'd; l;]lon thc:r OlIn (:l~c:sie~
   r,Jn1 tbat t:me th('Y 1~0 lon~(:r :lppr0:.lched _,:O\'ernmcnt \':itl1
       pL!rp()se (>f md~~.:in::.: it Iu In'cl'fcre iIi ~!ll'ir bchalf; bllt they
                    agitated (or the Cl".,'Sat;un of g-ow'rnmcnt jntn~
 )~'~iti0r.t:d ;-lnt!
                    them, Step by step the u'mb:ln~lon ];'l\\" have
   '\'ncc :l;';~Ullst
    (",: rc'p~aJcd: until now c'-·:llIn;:::- ,:, iJle:.':;t\ if dl>!:e by il wvrk-
 ]',ln, \\h:ch ",,-ould lW: be iiil'gai if lkne lw .-w;'(',;c else:, ,'\nd
   ,o,h,:16' IS iUeg:ti \\hen dr)Jle by ,~ combmation ,.:,( workmcn.
  i:!cil \\-ould not be illegal \I/len done by it com~)il,:ltion of other
  ,;OPIC,
       Free t() work out their      "I\'n    Jestinic~,
                                                   the tr:td,·..;-union<; ha\'l'
    "',\';1   very much on the     lir;l'~
                                       j.ud dO',\:l by the o!(: git(;s. The
       J and (\']l 01 the ~:lJ" their indJ'.-:(:u;d seif-::-.acnlice ami
   "iT class ~(. !tishnc5~, a~t' :di:-O(!i:ccd j;l modeTn t:niJ)J1S. And
    (-;1 In m:lttl~rs of r',e~all thl're is ,;c;,Tc::ly a s:r.g-ir.: re;.;~,lation
  , :h,- IlI;lOn::; to \\'hJch a par4i~d C3.nnot he found :n the h~story
 ': ,.. lids.
       Two !,;eneratiofl5 ago unions were chietly manab'cd hy

      ~ f'1:i1ilJ anrl ?llary 1nd and 31"<!, ca? II       j   ar.rl EEzn'oeth 5tk c. 4'
  d: I;r-=n:'cU10 on   G£'lJ!, l-'p. 99, 10J'
 '<)0                 !lOOK lIi.        CHAP.       v.   ~   -\,5.
 ;;";1I0D.nt, rud(> n~cn. The law h.:..d maue a crime of 'what '"'.
 no crime. the ,,;;rct'm'~nt to rcfus.t:: tu \~Ol k in order hI ob!<t'
 higher w;J.:;cs; allC••. men who kn~)w th:1t they arc t:rimillals 1
 [he mere ob)Cct whi!:!l they ha\'c ill vic'oI:, c:ne little for :;,
 additional criminality ir.\-,))ved in the mc,ms thcy adopt:' Th,'
 knell" tha~ tLc law W,I:i f:tlt of clas'i injustice: destruni0n of Ii
 and propc:rty, when ,( \\";(5 ,Hough: for the purpose of L'nforc~"
 \\hat th(:~' Ihou;,..:ll{ .1l1:;(irc. ~(:('m'cd to them to han! a hlghL
 sanction than lh;\t ul the bw; and their mOT.ll sense became i"
 a mcasur~ rCCr)nClkd to (TimeS ot hrut.ll "joleneC',
       In ij,ar:y 01 the sll'aller unions there remains to the presc;,
 (b.:, 1l1llCh of ,ilL' f"l!~; a'1d ignon:lcc and seH~"hn(:ss. and,
 li:t;c of th-;:o ,.:io\(');;:c of c:lrlier tillles. But we m·'.f tl"l1~t th,l
 ti,(l:;{' faulte; whid; are nut nOlI' found in the b.q;est <lEd be:,-
 1l1ar,:1.'::'.cd ur;i,)n~, 1,\ ill. with t11C C()llTSe: of time and lh.: d'!.Yu;,i(
 uf b:;lwledgt', dl:;;'rIH'JI" alt0,.;cthcr. It is truC' that ('\'C'n tL
 best lllliuns J.() T~I.'i:. :!ilI;lY-; ,l<:t lip 10 the princirlcs of l\nlu~i5J;
 ;!<:; t 1)(:, .Ire CXrOunll.cd by th·~!r 1l1()~t cn!i:;::btclled mcmbcr~
  Hllt <l~ 1\ )I('ll de:tlil;:~ with the CCDnOI1l:c-; {"If t:·ad(· we do no
 trouble (J'JrY~l\"(::s to disc,":>'.. at .en:-:th the g-uilc<:; of di5honcs·.
 rnc)"(h:l!;,~; ",.1 \\'I'wn dca!~Il;; with <I;e: cl.o:1om:'~::. of unionism.
 WI.! m:ly ;"','cpt iis prilH.il'lv:; as they arc put into practice h.
 the J;\o..,t L"h,.;htl·:1ed UlllOlli;,(s. Let \15 then enquire mto th,
 constitucl'.;ll, the: rC"30Urce". the ;1il11",> and the methods of actio:
 vf tk' L,~,,,t unions of the prcscnt timl'.
       ~..j..     .-\ uainn is an ns<'oCl,-uion "f workmen in the sam
 (rade          ll~ 1Jr!!1cipJ.! l)bJC'ct:=i arc.' ",I) to pwCt:re fur the:
 member" thl' hest rctnrn (fl. tbeir hbuur ill the ~h,lpe of highc'
 WJ.:";!:~. 'l.)()ltd hours of l<lbour, and the cnforcl'mellt of certa!:
 Tcstri, t:OJ:1S ;"IS tf) the conditions (If employment, which caul"
'not Le .;cC(}mpll~h..:d exC\..'pt Ly meal'" of cr,mbill:ltion; (2) t.
'pr,wide mutual a"sur;"lllCC" for the nH:IIlDCTS by nl''::ms of pecu
 ni~ry ;\:;"3istance in Clse of ~icknc5s, accident, death, out (',"
 W(gk, 'jup'~l"anrw;"ltion whcn disabh;d by old age, loss oftoob L:
nrc. :Illd elll'!-!:r:l.U011 (."
    E\ery nll~mL('r '.If atr,lde is invited to join it:; union provide'
he Can she\\" th.lt he     has cCompiied with its rq:-ulations ;,
to apprer,[iCC5hlP, where such exist; that he is fairly sleady j
his habib, and th:::lt he is capClblc of earning the current wage
of the dist.rict wh?rc Ill.: st:cks admi"5ion. The cercmony l
mitiati<'n ret;.1ins much of the di;,;nity and solemn courtesy) an,
some eVl'n <)f the forms wluch it had am<Jng thc old gilds.
    § 5. ()riginally unions were confined to single towns
sm::lil distrius, and many are so still; but there is a stror

   '1 T,ie Conjlids      d   C,1/ital and Labour, by George Howell, ch. l'
§ -45·
                                 TRADE~          u'(roc;s.                                     '9'
 '-":C'1ry tow~Lrd,> ut'.l!i!l": ]oc;l 1:I)jrlnS bdnll'.;,ng to the same
.\   :,~         SO'11I?timcs, p.Htln;larl>" in the case of 111'IlLIS. :h~ oond
           '·,·:c,;, r. i" ;l :,light    PIl',"; 1:,'-' j'.'cd ul1iuns L!ftll lhL'IllS~'h-('~
          ,\11 /is"-Jli,-ncd ('I Fcder;ll,:d UJ1:or:.                    rJl..l~ i,,-, c,\ch j,ll'.ll
         '.:- rcnuir:_'> .' ~dj._:',n'l"nl;l,-::, sdi'''lIppr)ftinf:;. k('cl"t1,. : : its
   \1 tClnd:), cl'~I~rQlkd by It:> (, .\"1\ rll:\."S. dircctl'J by lts own
  ·c.:"·s and ,(Jlnmittecs: and '-Ixing its O\\'n payments and
  .. (f:_~, Lut 1'-:' t}ti".!::r 1 ~~pcC'";; aning in (unc('rt. upcrially in
     '.!:l:lcrs <llH_cin;; time. '\"<~";l'''' c,_,nditioll':i of bbo',lr j 5'2curity
        ie ,)nd lJl:lb, and :ilii'portill''; (;;t,h oth, r il~ .,11 (J.sec; of
      -:t'''. lu(k-oub, or Ji"I)lltc:, \\ I:h thelr Vil!l]uycrs 1,'
     :'l,'re CO'l)~.lO:,Iy d:f:'ercn[ ::niu:1'; In the S.Ull(' ~;,!d(' join
     T\-:'!T; ;:~ :\II)J.l;,!-amated l:ni'lP... which has J. {ent,';il c"m-
   'I,',· Cof m:ln8.;:-cnwJ~t. or L\'('C,l~i\-C, elected hr lh,~ \'1 iwk bGJy,
      :,:l m:n'_Lrs fc;:- which the rlll,~~ (Of the U!1i0il ll.J not lluke
     ~r r;-ui i~j,:'n, tll-.- e,,'_'CL:t:'.T ":11'<.: dl :i"i('DS -.\l,ich u,: hindll\:~
I:    "w          rex, ~e,·.cnl nw"",~ of ,icl·.~,·,·o f".m the JOt •.t
"L,l..:hes. \\-h,;-:1:l union ha" ~t",-eLll lJr.ll;,~lH:~ !hc l'rnmary
        ",:iiturc of e;\ch is gv\'ern'~(: "Y the .~Ln~'r~d r:.lIes (,f the
                 whic, pn:,,;cribe Wh;l; ii" 1 ~.:'nt.:' arc to he m:lde as
                    ]' to th·}51:: O~Jt c.f \\0:'". ti1(j:_~.;lj no~ (In st~j;';L: as hdp
           l~" '\\ ho ,lrc tr:l\'('~lj;I,::- in ~,- ,\I-,~h cf work: ',-~ ;:lp~·r.lnp\l,l­
           .:i;u-.\ancc; (Ir i:1 CbC 01 ~.>:knl'''s, ;1cci,j l il:' or dC'.lth.
          ,:,ch ~;(:' not make a,iY l-l;l: 1"Llll (,<It (1f til\' ;';'_IH'~;ll funJs
       l~ ()ll-n tL'ijJlmsibilit.,. for the: r,;rpu~c of 511piJIJning a. _~trikc,
 ''1': m('thc,d of prot:cu:!lT 'I j,il j. \ Ie\\' to obt;.i'l ,n ad\-.ll~'-(' of
               :1 Tcciuctl<-'l1 of tLL' ",O~'k;:1; hours, {,r aJ:y ()th,'l' ~pccial
               '0_-:-,!:t I,:; ~!t,. ,II ':;-,0<'1'::; (,( •• ;\\'('!1 un;on, 0, or,,:.(h ot a
               ~he rc-h;~dl ot \\'lllt!: 1,_1' '1;e L'mplo~":ls m:ly k:t<.i to a
   ,.:: • i~ ,\3. fl,l!UWS :-1 ~l~ \j)n\ ~ ilh'nt r::ngllw.t('s IIi: h tLe "DTk-
            ,- 30rne pJrticular shoJi, t~rm, or place; the p:'op,'sal h,1,5
          ~) he ~':Jb;~)iI:L'Ll h. the loo:::~1 br:1w'h or Il'J..;:c, wIJUi.' i~ is
     .\;_"2d in ~]j it~ Getail:" if the motion be C\:T;en oj\, :he
      1Ii.~,·r, of the 10c;]1 branch, it h,l5 to be "ent t(, ;ill l'X:::l'Lil!VC
   . \., :!~lion ~.'! It !1l1lst be :::c'-,nnp.1nied by full d, l.lils as to th(>
   '''L;-''-l~ c-f uniOnl~ts and r.o:l-Uni'lil;~L~ arll'uu;, the state of
       c 'nd d f..:din:; in the Jistrir:t, .1n": (1(' cl';,ncc of succe-.. s.
     '\f-: c\,e(uti\l' :1pprun~s th,,' pr<Jpos;J.], It cln:lIL~L'~ this hll
  ... ;::-,',(';1\, \\,\:h c':'l'Hnl'nt~ of it:; OW!ll tn l""cry br,lI1ch; and                  an
         ~)~r? of the s()ciC'l), J,~ye ('qual Y('tt's in ,~'_'clding on it.
             ,~'.5 tooted on ty thuse who wi\l deriH~ nil llIrert lX'ndit
            ;he   SUCft'SS of the stnkc: but who witl h:l\'c to pay a
     .11 ;,[    ~he  stnke aj),)w;1.nc",_ Consequently u:any such appli-
       'f)S    a:-e refused e,;err year.

                             I Ii'. § 31'i-
                             a lb. ~ 261 and Appendix '-I,
                              BOOK III.             CHAP. V. § 6-8.
     Once a quarter there is ,t genera! audit and "equaE!.J.tion"
of funds among the different iJranches. That is to sa~'J tL~
ba.lance of t:le income of carll lsanch ova it,; author;7cd c.xpen
ditl::-e is aJded into t!;c gl':l€'nl n.:'jCf\·~ of the SOClety, al"H
this reserve is divided out amon; tlie different branches i;
proporti'm to their llumber,,; S.l that, \\'i~h the C'xception of a reI
ex'..,aordmary local h.:vics, .,H the iuumlc of (',\eh branch i:- pa:
mto the common purse, a:ld PO p_lYl11cnt'5 (:;.n be nude f10.
this purse except by th~~ auth •. rity of the whole uniun. Thus
Iar;..:c uni')n has all the strengtb of all ur~aniLcd republic, i'
which the most II:t'::,l!i:..;c~1t members are sure of ha\"ing th,.'
opinions hC;1rd, hur in which eyery important step is nllcd 1-,
the vot(:5 of the whule lwri). It is daily becoming mort; tr.,
that th..: (; higsLn; and 1"11 ~ainli1g" which tktcmlinc mad.
fluctuations oi wages, arc Ilot h~tw":l'n indivi l11::,1 t_mpirlycr..,; ,\"
indi\-;~!u lllllC.~, U~:t betw,;cn a ~roup l'{ crnf-'l,')crs dnd a gro',
of :!:(;;1.
      i;. 0. The tl)::tL ;nm:bct" of ~!n;on:5t5 is ab0ut 1,150.0:)0: Z' .
mo:-~ thnn half uf these ;IL' rq,rc-sc~ted ;~t the Tr.uJcs-un:·
Con:;re:"s !l,;,tt ;-S !l[,\\- hdd .:\('~y y,'il.r:n :;OtllC brge tel\', n, The,
GI:';:'h)!lS:tt ~ilC"'~ C';I:.;r,>~s:s r:.t',C:1              ;ery \1 i._Ie range; out Ill'
J.C; i\l!l      j,   :l:n\Q:it COl!hr,('cl '-0       lHt:'_-:1ing the ori;mal aim of .
Unii_'!l, tint (J             illr1';(:I:cillc~   lc;~sbtion in n:;ltkr3 that sp(,c~':
;-,IL::,.;t   ,,\'-\,.kin~~
                  !H'.n.
   A PI~ll)L\:<;l h.t~ LC'cn m:tr.c to organile a ;:,:('0('r31 fedc',1.t:,
of u'lioa~ ((,r acri\'C' l.!"'-p.:.h,--;. hut Ihere =,c~m~ to be no ~
kthili:v of tL;s b(-i::~ '-',mc, ~\r!lc~s as a ';ci\;;)o,\\'c ffiC.:\S:...itl'
ca~c t1;,:- ":~:1tion.1! I'niu.tco,,;, of Fmp!vy'!r~" s!101l1rJ beCt"
st1'oI1;,:, J n Ol'mr,st (;\'cry Jaq;\:: to,\'n then' is a Trades Cul"
d . . Cll'-d by th.~ '",':;l; l~t;j"n3 anJ hra:lch(:s Ol'l1Jl.tcJn:i. I he)' I.,'
              ;Flt th~'~' t~lk·:: :-l.ctioa in SI))L~ BlaUer,> I)f gen'
little 1;(J'.\"C1'.
intere~t; a,id tbc.'}" _:<n!lC~ir.~(:, lrlJi:'J.IC uct\\'l":n ~itrl're!lt uro:
\Yht;1l .Jne union V.-.\;H., ai,! (n,m others in fdrrying on a St/
lhc l<Jcal TrJ.dc., C0!1ncli gcnl-rally                       IIlvcsti~ak     ;hc   CilSC;
t'ithcf coll~ct s\tb~criptions for the ~lri;';'ers, vr rccr,mmeml (i
tv c!c-,se ttH! ::t.-ike on lh::: b<.':it term'> tlut (".:1,:1 iJt· ~''-1~.
     ~ 7. " Thou~h l!,.i')llS do !',ot yd contain ncad::' half the \'Y
ing 1-,1-11 ;r, the C'J<ll1u}', th<-,;' dl; Ct;n:d:n more 111<111 half ('.\
m0~: ~kilful and Jni.dligcnt and ~tcady w(llker~ in ;thllost t.,\-,
,;k;;lc.] tr:tde. There are ll'l dOUjlt ':")]1IC l:"lCr.;.;ct:c ml'n, :llL"
w ra:~<.: t!l~nb(:l"(,5 in lift:, who find the 1'1>'(-s of .llini(,n bm
,omc.            li~)t l1',)re    ;!ft!   '-,XC!l:JL-''! fr-,'il1 Ulli(,n~ bl'C:'luSC till:,
below tile Ui. il'J~ -' ::;,;![,uard of e(;1ci<:ncy as WOl \..l1lcn, or                bl'.
,Ley arc un,\;lllm; to ~u:l,cr:t.:: to its fuods.
      l: m~ ·'Je \',dl (;) i:l'itl:l(~ ]~o.v it is tInt unions :--.:1\'
.,tro,l,G";J wId nil thC' be:;t \\ I'I"b:lcn. }-ir:;~ly, as h the,
of the 01, Zilus J fa':t, d:..!ig:H in the ooLiva of SeiHl,:1p
                         TRADES Ul'IQ1':S.                                  1~3

   If-defence by union. The best emplQyers admit tl13t jf the
   U(JnS ne\'cr alJuwcd their policy to be iat1i.lcnccd by me,Ht men
   'd shirks, they wuuld do \ ery l!ulc harm: tnd the be~t uniunists
   ',nit that if there were no unjust or habh t'mpJoycr~, unions
  ::-;i:t become mere Lenefit-socit-tit's; as it is, L1'.lny (<'cl their
   :'Y to ~hcJr union to be a kind of p:J.triu:bm. ~\gain, non-
   ", lnists very often cntL'T into a strike :15 heartily as llnicJOists;
   " h<l\",nz 110 resources of tbeir own, consent to b::- supported by
     , llnior.; and when Ihe strike is over those of th(:l;l who have
           honfJurable feeling join the union. Lastly, unicn-; get a
         crful hold on those \\'orking mell who drca.J nothing- 50
. '.'::1 as bt.:comin 6 LkpendcOt on the parish.                 For It can pro-
     ,c: to maint:lin a man c0!l1f()rtahly whemTcr he is out of
    'r\:. nut allY prov](lent society which did nut cunsist of men
      r:l(' ~;lll\e trade with bim:;t!f, would ('li) if it attelllpted to do
    :~. for it could nl)t t{-'.',t th~ truth of IllS st.ltcmcnt when
        . _iJ t!l:lt lie Crxdd nut gt.:t \\-ork at a reasonable W:1.g~.
        ? .). ~ext with n:;;ard t,) the C/)J! 0/ striA·N. 'Ve may add
    .<.:hcr into (one sum:111 the expenses incurred byworkingmen
          .r:kcs, imlu.ling the \\":\:;~·s IDst while they Wfre irllc. \\'e
I.,.: .:tdd wgether mlo another 5(:111 ~ll the \\";I;es they have
       'Ied di1"t'dLy h~- ::.trikes, WhellC\'er thes-I.! ba"c beeH successful
  , ,_.'jtaining a ris:; and preventing a fa!l of 1.... 1,;('5. \\'e ~hall
       I, ccrtJ.inly tlnd th;1t ll:c !<JfIncr ;,can i", very much laq;er than
          ;,1ttcr, Hut this tiel..:::; not pro\'c th:1.t Slrikc'i rost mClre to
         ;"~n~ men th:m tbe bCl\ct1t.~ l;ai!~Ld by th"m are worth              It
         lJ be as J'c.lsonal;le to art:"u(' tlut the £16,oc'0,'JOO which
          _,;ld spent on th~ Abrs:,.int~n "ar w:ts Lad!y spent, because
        Jrought hack frOnl it \'I.;l"Y little booty t"xcept King TheoJCJre's
  "'Jrclla. \\-!tetber the expo.:nditt:l'e w:.ts prudent or not, de-
     ]j,b on the ,'cry difficult qu~,:;tiGn \\hether it wa3 worth
    r '. ..YX),OOO to gi,"c one InOl'(' hint tint other 11:11ions may not
      ; ~':,t a Uriti"h subject wIth impunity. And the unionists
     . :1::ain ttut their e;,;pf':;(};turc is pr).;dent becau:;e it l~'_,kcs
        ",uy,--rs iu:llj-.,lL thty cannot lower \\ ,l;;-CS or harass their men
        .l(!n!y \\'lthoJut a rj:.k oi suffering for it. The fUllction of an
       ,y IS not to make war, but to prestJ\"t! a sallS factory peace;
.\, • :; .1. provf lhat the army has failed of its first object.             And
         ,~h th(::c :5 a! \\'a~-s a \\ ar party in a ur:ion, its cooler and abler
        II;ArS know that ~() declare a ~trike is h) confl,:ss fai!~lrc,      The
       .. :A'f of strikes ",-uuld be dilllini.'bc-d If aJl t:nion;sts ntlected
           ~ix ~cars" work at a r'se uf ... <;hiJlil'~ a. '\eck is requb'ed
           bjjcC the 10s'5 of ten ,,-('eks' wa:;es at tilil ,-y "hillings a week.
        ;;J! r.la:l}' ::otrik('S are not part of a deliberate policy; :md
     • 'u 1he trad::: qUJ.rrels of the smaller urllul.S, ,15 of the gilds
        \!lJ days, h<1.l'\! been far more often (J.llsed by lrritated
      ",unal or class feelings, than by disputes aGout wages, The
]94               BOOK Ill.         CHAP, V, § 9,       10.

organizati,m of thi' larger unions generally en:1.u\es them to p:
vent a pasJn:ol qa:lrrd frum matutir.~ [,:(0 a strike.
     S 9. L<.t us lll''(t look at the chit! ruk~ in whidl the poL
of the Un/1m3 is embodied. The rest!css Ch:1nge5 of mudt:
indu~try mJ.ke it very difficult to enforce strid re[;ubtions as
<lPP'-,.'lJ':"I.£J". Tl~i5 t j pUh.lp_~ the most imp,ntant !;"l:Htcr wh.,
must UP-luns find it best to kaye ~0 11,' decided uy lo
trade custom. );0 doubt a ::.ystem of <lpprcnticcships supp_
men ted by a ~ood ": stem of technical schools. m:ty g:'e.l:ly j)!
mote Ih(; c,lu'-;iI:\!ll ul the cmrr.try; pro\-i,![>c. ~h:lt lhc apprt'fl',
is .put to work ullder a m:m who j" pai~: tv te~H:h hilll, O( ,\ i
is in :::,omc way interested 111 making him a J:,ood workman, <1:-
that the ,.Ip!lr~nti'-l"ship rule.'. ar~ nGt uscd J.:i a r;.le.d~~ of a"
ficially lilJlilill';:: the numbers of tho~c who are brou:;l~t up
!:k~Jkd OC~ lIpations, We hJ.\ C s~'cn tlt:tt one of the chid C:1;:
of-the o,j''':l11 of unions was the bdicf tlt;1t the 1,1:l-:tC,s \'.',
tlooding their facll'rie;s wit!1 J.pprcllticC::", who, "helllhcir ::"-TY'
was over: couitl nut ;et employm.ent a1 any re:lsonal)lc \\'a~
and perh:q)" .J. few casc:, 0f the kind !lO\\' exl:.t, But tbrrc ,;:101
no jus!iji,~ation for such rules as that which the bCli!~r-;n:J.k,
prof~'ss tv lnloree, ,j;::. that there 51ull be anI>' one apprenlicl
e\,::;ry tlV<.! journeymen, or the stdl scn:'rer rules of the hattt
If sudl .1 ruk \'n :'C acted on gt:ncra\1r by the skilled traJ('~
En~l.Lnd. the. t1l""puction of skIUeu bb'.l"n:rs to ur,sUl-.:d \\\.
su..!.ldily ;":ro\\' kss. In spite of the impro\'ements i'l the cUb
prod1.lcti.m, the tot:>1 produce of indll'>try would increase
slowly or 'maId dimini"h ; the impr..;\ em':llt in the i!ltelli,;u
and tlte income of the a\cragc En.:.;li~h ,,-orkman would
stoprcd j and comp.!rcd with other cOllT1tl'ies, where such
stridions wer\.? w:t kllimn, I~ngl;u1d would bccome poor
ign~)ra!lt" It S\·\'IlI;; 110\\'<.;\ el" that a (";}:1,lidate for admi~s:G:.
a I1nion i':i "'~<.Jom .I~k('d fur hi ... indcnttlre<;, even where!
mi;;ht he cllkd for uD(kr the rules; ~nd tha.t sL~m_ely I(' ,
cent_ {'( tho~(' !:ow .,dmin:::d as members of trad..::> unions 11
been pl"v}Jcr;y ;t?iJr.:nticedl,
      ~ 10. T-r;,dcs-unlotls aim at enahlin,C; the men in the tr"
to b::r:;;;-tin as cnc c'.Impact bDdy with tIleir ernpk'y':rs, .~l.
ha,'e gl'nn:dly decide'it th;\~ this end C'lr,]lot he 3.tt.tlli",d, WIL'
their il'.s:~tin~ tb::lt. ,f w<1:-;\.'s are p.1id by time, there must 1)
each district " 1.-1{>/!JlUJJI r,ltc of wage, th:lt is a ratt:: t)L
which no Incmb.:r of the t;nion md\' work till the rule is ,"111_
and that if wages arC' p:lid by the piece, a ddailed tariff il,r 5\
paym("lltS llllht bv I:.;rccd upon.
      }, !r,:,~lr \Ylth ngard to payment by limf'. Beginntrs, ~
men, and old men are often allowed to work for less than

                             Hov.ell, ch. v. § iI.
                           TRADES VNlOXS.
(l\:ca r:H2: hut if the union ;lS a boil)' is to Ir..1ke any                 bargain
".h,lllt (,1';.' oJ.}y',,; wa~t>s, there '1)mt be some Tal::" fixed           for the
: ~;ll(, as a minimum Llte for ~hosc who Cll1not shew that they
dr,' :l:, exceptional ca'3e. Of COlllse d. specially able man may
~'.!'·n n.orc than this rate.                 This minimum is not the same
in .,11 p:uts (,f the country; _lnd some uni()lIs puilli"h in their
-,:,:11::,1 repo~ts a sta~emtnt ~)i the current r~_tc ut WJ.;:CS in every
d;'ll-i,:t :n which they h::t,·c .i It"1dj;';. For inst3.n.-:c, the car-
;'~~-.;l·rs In. ISi3 rep'xl :w. a week ;L~ l~arnstap)c and Taunton,
  ill, It 18s. at 13ri~tnL 2S)'. or 30S. :l~ iariil\:S Dnrtilcrn to'_\ns and
.'            at VmdC'n. ,\'hcre the \\'3::;('5 .:lre hi:;tl, the stanci.trd of
    ;;i(:cncv \\h;cn. a man must attJin in edL-'c to C.lrn the ,--urrene
", ,;C:, o'f tbe district is h\gh.               If then a mcmb(:r of the union
  :~ Lln:;!.il cannot get :8s. a week, he will be forbIdden to work
i.\, i>~ th.cre, hut thtj union will pay the ~xpt:me of his ;.::oing,
:,. y. ~() Tat,llton where he will be a!Jlc to ;:::ct ctllpio::mc!"!t at the
        't-e'ret W"~es. On the ether h:md ~n cX('('jltionaily aulc car-
]wn'_,'1" in Taunton is likdy t,) mj~r.~_k to l;ristol or London to
       ; hi:.;-her \q~('s. Uy thus :,cnding inefficient men to places
",:'(1\.: ,]:c 5:andanl of dticien(~y is 10',\', and indncctl:' at least
·t ••_I:.il;,~ (Jl:cicilt men tv ~o tu places where it i~ high, unions
      ',1:1 t" p!.:q.lcttl:.ltL', if nut 1;0 inkn:-;ify, local ino::qualitics of
    'IkiU1C:' 2nd ~herdore lo.~allhcqtl.11:ties of Tlme~\\'agcs.
            ~ :«(lrolly With regard to PiCr:c·,:" (!,-!.:.
                                              I             \\'hcre tht': work \'aries
", ---L.lr:t'."t(;r flOrn day to day. so th:u IV) tariff can be agreed
     " .'\ (.It" it. the unions object to lh~ system of pit"::Ct,~.\\"()rk,       :For
   ::."cr it tl;~ workman mu"t he left ~ln<lided to make his bargain
   1.1.: J!"; ,'mployer f('e e.lch separJ.t..: job: unlcs:; indeed he has
 \..J 1 ,,:.       liil \\ith.l piece-master \~ho wntracts with the employer
                    llic b.b(lul' for doing a cert,:in job I, Of the two the
 ,:\._, r l,~.l-l is til'''' m!Jrc distastdul to the unions; but they object
         :,,-dl, 110\\ ~'\"\:r even \~herc no tariff CJn be tixed. the 5\'stem
     . ,;,.',."_ .... w~,l"k i, m<lkin~ its way in spitt.: of the opposi!ion of    the
    "':'~"i', For the ablest and strong','st masters ~cnerally insist
           ,'r .\s nt'('_:~sary to cl1able them to eliry out their pLl'lS freely,
     '.;~ fO ,:et their men to usc their oe..,t ener;;ics; and 'Ouch em-
           " v: _~ nato.rr,,;lIy beat in the T lee those who yield to the unions
             :l·.s a;lLl other points. \\-herc a tariff em be agn::ed upon,
     t,l' ~,: Ions do :wt generally oppose tilL-' sys~c:n of pieCe~\H.lrk.

   ~'!:' e·\\"r:·: ~~ Oldr.pted almost t:niwrsa)ly in trades that make
   ~,., > ;·.r (\port<ltiOD, partly because in many of them tariffs
  ,::1., r. 'hly be framed, PJTlly because the stress of competition
  IS :'\"'erl'!it ill these trades.
           " .T~::· plan IllU~t not he confounded with the system under which
  ~c ;;': ·("':.:JJct i~ t:.ken by a g-ar'b of Mlrkmcn,with one of their
         "ll"d~ l,) :let:15 ,:;pokes;n,ln, This s~stem is <l form of co·operatkll,
         cl IS not objected to by unions. See Book HI. ch. ix.
                                                                        Ij--2
                J;OOK III.         CHAP. V. § ll-13.
       t: nionists however n13:atain that the system of piece-we'
 sometimes milke'S men oyer work and become prematurely 0:
 and that it (,;l~l"es work to Lc done badly. These dis3.tl\-anta:;
 reallv exist in ,J. few trildes, tholl~h ~C'ldom to any great extei
 They say further th:..t by increasing the amount ot work dOl
 b)' (-adl man it dCCT('a~L'S the lkm:1nd for hbour, ano. so 10w\
 wages. If the rcsi"t:lllCe to piece-work on this ground ext(T1
 to aU trades, it is an attempt to dllllinlsh production, and the.
 fore- to diminish the \Vag(os.-and-pronts Fund, alld therek
 It C,lil h;we liO other end than that of diminishing \\;\;.:
 gent'fally; for there is 110 such thin:;:; as gencr:tl overproductiu;
 If t:lWcver it is conlinc-d to one trade, the tcmpcJT:uy scarcity
 12.bo'Jr in that trade may in a f.:w r:ascs cause it to gain
 the -::xpense of others. But this gain can only be tempOL
 anc. must itwoh'~ a greater il\jl~ry to othcr5~.
       ~ 11. Exactly the same three disadvantages are said to
 inherent ill long !tours of lllbr,ltr. A man who labours habitu,t
 twelve or fourteen hours a day at work from which he gets
 en:0)ment mj~.ht alnU'st a,; well nnt Eve; it is better that
 sh.Ju,d work le::,s and Cclrn less. CI~ions d<.:5irc that the ~om
 cla\'s work shodd be short; ;J..nd t\ut when a man works 0\
tin;.;,! he bhould be paid at a higher r<lte than for his .:\Or11
daj·. TillS plan would contribute nH;ch to the moral and soc
pr )grc."5 of the world. But its general alloption is binuered
the fact that where it has be-en intr(;Juced, the bt~t w0rklil
often insist on \hlrkin; (lvcrt:me in onkr lO earn high w:J.t;:·
s. tb:ct :.n (:Illpioycr \Iho C'lCS not habitually work o~·ertJj.
j.)-;es hi~ best J"!1en. This is a case in Yihich the collect
will of the union is on:rridden by the individual wills oi
members.
      •-\r;otiler obstacle to its ad<Jption is that a continually
crea..,in~ p:1.rt of the outlay of the C'mploycr consists of intt'l'
on Fixed c'1;.;ital, ::nd a sillkill~ fUlHl to replace ~uch ma,:-hil,' .
a!'. i:" ;:;upersL'lkd by 11('\\' inn~ntiuns, This part of his outL:,
independent of the r.umbL'r of hour" in the d.JY's work. It l.~
be fl'.Jrcd that E1'6"I:sh workmen will not sucLct'll in obtain'
morc rest :IOJ recrcJ.tivn "ithout a great sacrifice of f.
incom.:s, 11l1k'", thC'y O\'crcomc their repng-nanel' to one hu·
remedy. rl h;,: remedy is the gr::u1uJ.l adoptlon of double 5:,.
in 11 aJes in \\-/iich much FixL'a capital is employed. ;"1.,
manufacturers :1dmit that ii thf'y could get lWU sets of lll('r:
wP,k their 1~1aLhim:T)' for eight h~ur:i a day each) they n'-
afford to Par the men as lugh r!ailr wages (or the cight hf'
work as they now pay for ten hours, and yet make a be:

                      1   S('c Rook lIJ. cb. i. ~ 4.
                      ~   ::;ee lioo\.. III. cb. ''ii.
                         TRADES U);ro:-;s.                                   197
',-rofiL         '!'\o doubt certain practical objcct!ons can be ut'b"ed
  \:";:11ll5t the plan; (or instana, a machir:e is not so well cared
',n ',':hen two men share the rc::;pon~ibj[it:.. of keeping it in order
  ,,> \Vhl'!l one man has the whole man<lgem~'nt of it; again, theTe
.',-r',tlLll,e a little dllii.culty in readjusti)):; the office arrJngl'mCn\.:;
". ~lI;t J. (by (If si\tccn hOLITS.            Dut emp!o))crs :tnd their f(\rc~
"I:~l du not seem to regard these difficulties as in5upera~le; and
"'K~icr.cc Sh~W5 that workmen soon over·.l'me the rcpu;;;uClncc
  'l:',~h thev fcel at first to double shifts.          O~le sl't mi~ht end it~
",-'! k .tt noon, :lnd the other bc;;in [hen; or whaf ImulJ p~'rh:1ps
         Letter, one shift mi,;-ht work, Sily, from 5 a.m. to II a.m.
  Ind from 1.30 p.m. to 3.30 p.m'J the second set working- from
 , 1.1 j ~\.m. to '.15 p.m. :lnd from 3-45 p.rr.. tu ()..:t-5 p.m.; the two
      " !T'1~ht chang-c places ;1t the <:nd of each ,,'cek or month.
'i'I,;,~~ is not (:nough iJ.hour In En~Ll11d to aliow such a plan to
  )._ ,u:"l-ned 31 once in all the \\ urkshops am': lact()rics fur which it
  ~ ~llited: but as machinery is gracl\l:llly worn out (Jr antiquated,
            .!ht be r('"placed on a' smaller <;(:.lle. On tIle ollv:r hand,
       Illi .
  ']"("i: ne-v,' m:1chiacry that car:.not be plo!itably ir.trodllc(,·j fl,r a
-n 1_L'l<fs'd:1)'. would be introduced for a sixtttn hours' day:
; t·,:, ..,: "'lLe introduced it woul,l be improved on: the art ofproduc~
       ;1 ',\ (,\lId pro;::-ress lllorc Tilpldly; the \\' agcs"~lnd·pn'tits Fund
 "'U dd :nCrl'.lSC ; working            me:, would be able to ('<1m highrr
 F,l,.:C~ wi~h(Jllt tt'lllpting capital to migrate to countries where
 \1 .l":l' :,r(' lower, and all class(5 of society ""''-''J1d re,l.p benefit
 i"-,nthe ~h:1ng-e.
         ~ !.!. Then: seem to be vcr\, few unions ., It Irv to control
 t!,l. amount of work that each'man does.                     nut in "many \York-
 ~'!;OPS social prc~:;ure is brought to bear on anyone whn ,,:orks so
. ,: ..1 ,h to ~et a standard of work jli,!:;her than the others like i
  "'d 1.0 doullt the Gtg:wization of unions oft('n incr('ases thi~
         d pressure. Ac;,un a furemall, if a member of the 11010n, js
  :).: tlJ lonceal th(' ~faults of the unionist workman J ~nd tn give
      '·Ir.:ln llJ:ll:ie preference over abler non-unionists. The (on-
     ..
     , [ of a branch of :l union has sumetimes gOt into the h:.nJs of
, \,'n ',I ho have used its machinery to 0!}tain full W3g"~ tor n~ry
 i:tt> "(11k: and though such cases ,1r~ rare, the misd~:l'f which
 , •. '':: clUse IS perhaps gr"aln th:1l1 that due to otl:~r kmds of
',r",)ll actiull which ba\'c attr<u;tcd a Luger share of jJuhlic attC'n-
'.1,   r,.
       ~ ~3. 'Cnion;;; arc- r:-tpidly growing out of :hc h.I1>lt of )".Illmillg,;
      ,      (,f biding. stealing or dcsrroyi!,,; t]Jc tools of an t"1l'!plo)'cr
        ".H.r~:Il1::'t1 who vrfo.;nds J;.'--li;15t thl:r rules. There i~ ILl) sign
: ': ' Ii'. dI~l~-e of the 1;.11,lt (It !Ild:(/l/:X-:l place \\ h~'re th!~ men
n,;'1 ',' struck; that is of ~'lrrO\lllrlin:; ,,11 enUances tv it ,,;lth men
 ':','n:uted Lv represent the intercsts uf tll,;: union; but CJses of
 !'t:;niJJ.·.ion on the part of these pkkets arc become rarer;
1<)8               nOOK III.         CHAP, \', § I:;'
they now confine themseln:'5 almost entirely to explaining t"
workmen who may be se.:king employment, the nature ar.d
cause of the strike. The pickl ts ar,;)c'ai to their feclint;:3 U'
class patriotism, and endc;l'I:our to dIssuade them from sidin.
with the employers :1.gdinst the employed j offt:ring them on lh,.
part of the union the repayment (Jf all the expenses to whk:.,
they lllay be put by abandoning their purpose.
      The leaders of the unions IJavc oone good service in di··
suading their followers from resistin,;:- the introduction of in~
proved pruces:>('s and macliint'ry in many trades, particltlJ.r1r 1:
tho'>c which ::nc sub.ket to iorei,:;n (ompetition. When ,1;'
employer dl.'ipLlces by a madJJne tile special Sklil whi..:h me
ba'T spent their lifetime in acquiring) and which cunstitutC's thei'
whole capital, he ;-<."n~'r.J.l;y exerts hi!ll~elf to pre .... ent {heir sink
ing down to the lev.:! of ujls\:jikd b.Lourl:'r~ : if this \\ere un:
versaUr done the l.lot pica fm rcsi~ta"ncc to machinrr)" wO'.li
be removed. It is said tl13.t a union as intelligent as tilat of t1.,
compositors is inclined to resist the introductIOn of typl'-5ettir."
machir.e.~.     And it is said that }a\rYU5, who thoug-h n"
forn1.tllr or.:aniled, are yet a more pO\H:rful body than al:
tr.J.dcs union, ar~ not as encr:,;c:ic as they might be m tl:
cndeavOtir to simplify le:,;a! prot esses.
      So far lLothing h;::::. been said of the ambition which som,
 unior.is~s have tQ r,:r;!tf(lt~· IF'ide! so as to make it less li.11)",."
to c:o.tremc tiuctu.l.tions. It is quite tntc that if a phn for doi;-.
 this can be disco\ertJ, \lorkmg men are more likel, to ex!
them,>dy<'s to carry it through than employers arc. F"
emplny..:rs arc v..:ry unwilling- t() submit to the res,rai:lt aT",
contrnl that woalrl be nC'CC5sary for carrying ou: ~uch :1 pIa:1
 and, wildt! ~icl:;,;itud(::; of lrade urin; nothin;;- but {.'\"il to workll~
 mtn, the cxcitemcl:ts and the chances ()f .::tdLlcn ~ain5 whic
 they .1!IOrd have an attraction for some cmplvycrs. But no sue:,
 plan has )et ueen proposed which secm5 tu have any chance l','
 ::iuccess.
                                       CHAPTER VI.

                     I~FLUE~CE        OF TRADES         U!ilO~S      OS WAGES.


        § r. WE hnyc .1lrcJ.dy secn how there is a continual                            contC5~
'-:~wccn   the difkrt.'llt industrial d,b~\.:'i 3.'> t·) the Ui_~tl ibtlliorl (\f
';-,(; produce elf tilt-ir jOiilt labour: \'"1..: hj\'t.: 11011' to i!lquirc how
-:):" \»ntl2"st is of..'c1l:d by              tr~;d,· (",:,1\,~~:i:i,,:m'i.   L<?t us   n'.?~lect
      .- a :t;ae the conflicting inten. 5:'i (If d:r.'t'rCDt cbso,>;; uf hired
         \,~,nr; ,1:1c! Sl1pp0:lC ~hJ.t pro,jetters eLl Ol? dil'idcd ~i,t') one
    .- ':.le clas> of c:'!i'k,ycr,;; :tnd an"ther ,1f (;,..pl,);:cd. .-\::0 l..;t liS
        .. "~ \\!H.!:her ,. would L.:!           po~~;u:·.c   fur the   cmp:l)~'('d b~'    COEI-
             ,,;. tl1wng thcmsch'es to rai5e \\a:;c5             ";CllCLldy:.l~   the ('''pense
t    f p' -'11,';.
        \Y c hnow         th,~t.     other thin;;:; being equal, it will h'.? to the
      ~er,:~t e,f an      emplu) C'r to p:ly \Ll;::::es ('ljlui to t)le net \'31uc of
i:    ~ l '.',-urer's     wmk, If h(.! canON get:l sdti~:i("rot s:..;ppl~· of Ll~)('lUr
,,-, c!;:::-;ptr tee;)s, If a [anm." f:)r in'>l.Il~L-e Ct~C\;:.l~l'-., 11-..1t ~he
  .u' ;,i an 3.-.tditl')\lJ.\ L1:,\)wcr \\0i11(1 a(:;l to Ih~ ph)(l\;rc of his
    ";i\ cnc'l::_:h to repay \vi:!! profits Ih..: oUllay of I.V. a \\oC'l'k in
   '1,:':"'. it l:i:1 be 10 It,s intcr..::sr, o~her thing--; "':::1';; ("_1t1:d~ to
     i(~ :k'se Wa:---:(;5 l'J.lhcr than );0 \\'ithout the .;:xtr:1 :1~oistancc.
      (,tk-r thin;.:~ ;H'C \"~ry likdy nol w be cqll:1:. If 'h..: current
    ~,,:t
• 'le ,in th~' p.1.ri_~h is 12.• , a week, h:: cClulrl nN b:d LF, with-
  'I ]!:ct:n;t1g ()di,ml among his brutb.cr f.lrIllCl's, and perhaps
" mrt;;"h 1~le l:tbot:rcrs atr'-"~ldy ia hh l'!lll'l,',y to Gt'Ill.1nd 14s.
" _11;(: \I'd: pwiHhly ofILl' only 125., ;);](1 cOlllpl.1in of the scarcity
 ': ;... I,ot:r. The price (If I.J'Y. "'Iii L~ m.1.int.ll!l('O b"C:ltl"~ com-
;,c: ':"t; i:: n .. ,t pC'rrcClI~ free; h:.'c;I.II~l' the bh.)ul'crs 11:1,\"(' not
      :h (h'--'~ce .:1.., tl) {he market in \';111'~:' tltl y seU their iabrmr,
   -. ! bt" a',iS!:: thc\' C.lnnot hold b,)ci..;, Ih,:ir labour at a reserve
.. ;:           ':-iJ.l lo the hi;;!l:.:st wagc \\ili(h thc cUlplo; cr             C'ln   afford
:,) r a:.-,
        'T:'C d;<'(h·ar.t.1.~e under, wh;ch ]a "~)'.;r,:,rs lic in such a case
            ::!~,   m3.y be   se~n   by   1I1i~~IJe:-in:; ll'~   PO'-.!ti.'.n ror a <:h0pkccper
            :.ke cir,-;l1T'''~:lncC::. :\.5 <l rule a ... hopke,eyer I1xcs the price
             IS ~oQds j and If tIle C1I5tomcrs who come;: into hiS 'ihop on.
200                  BOOK Ill.          CHAP. VI. §         2.

one day refuse to pay that price, he waits till others come wh(
will pay it. But if at ally time he Wf"rt' compelled to sell off hi~
goods quickly, taking whaten:r ofl~'rs he could get, and not
holding bJ.ck for allY reser>e price, hl' i11lght have to sell the",
at much less th;'\o their real value, at a.1I c\-cnts if he h.ld aeers-
to only a few buyers. For these I~W migta not happen to ha\ ,_
much occasion for his goods, 50 that it might not h.: worth thel:
while to pay him a good price; and they might c\"cn combit-"
to take ad\"::tntage of his ncct:ssity, and force him to sell at                 ,1

lower price than It would ha\"c been worth eh;:ir while fO payl.
    In the same way, if the labourer hJ.S no ~a\"ings of his OW!;,
and does not belong to a trade combination, he may have to sel"
his labour at whatever pr¥":c the employers in his nr-ighbol1!
hood may a;;ree to offer; and this price may be ccnsidcrah!,
less than they would have been willing to pay rather than f: '
without his b.bour. If thc'>c local agreements amvo,; employel
arc comm m to nearlr all places and nearly all trades, profits i:
all trades alike may be a little higher and wages a little lower
than if they had been determined by that perfectly free con,
petition which is assumed in the theory of .surma! .... alue. It I'
true that profits couiLl not be wry much higher than thei:
N onnal \·aiuC', becallse jf ther were, tile inducement to ell;
pIO\'CT5 to extend their businessc:> by hiring: morc labour at ,
higher price, would be \·ery strong; the tacit .:l:;rccmcllts amon
employers would contmually be broken throu:;h, and wag·.
would rise and profit:' would fall nearlr to their .:\"ornul le ... \~
 But still it is clear that jf the labourer:; thro:..tghom a countr·~
ha\'c been in the h:"1.bit of selling their bbour without resent
they BUY have recein:d among them a smaller share of tl;,
\Vages-:lnd-profits Fund than they woulrl. ha\'c got if there he,·
been perf..:ctiy free competltlOn among Clilp!o)"tr<:, or than th,
 would hav.c 60t if thcy haJ been able to (}Ifer their labour at .,
reserve PTlcc.
     If then the l:Jbuurers enter into local tr3.cle combinations.
and refusc to sell their labour cxcept at a rcser.·e price, it 1-
 quite possibJe that the)" may increase their sh:lle of the \Vagl"
 and-profits Fund, and raise wages at the expense of profit·
     1 If there are \'t~ry rew· bnyt>n in a nurkd, it olay mfl.ke a gn:
diff"rence whether good~ arc soid by UlIh'h or Ln~li~h .::mction. !
a Deltch auct>m th-? ~:lle5m:ln ,t:U15 ....·ith a high pnce ::md l{lwen
till he come& to a price, ~Jy 20.'., which SOIl1<' one j.., \I·jllin;: to pay rJ.th·
I!nm go without the thing:. Hut in an Ellg1i~h auc\.nll, the saksm.
w(JuLt hay!: starkd wi,h a low pri(c. :lnd I"Oli5ed it Ill! 1]<) one wcuid I"~ .
any higher: and ir tho.:re had been only on<.: per;on willing: to pay IS,
and he uid ISS., no bid beyond thi~ would uc made, ami the Ihirl.
would haH! been snlli fa! "2S. less by English th3.:1 by Dutch auctior
See Thornton 011 Labc"r, ~.md ed. pp. 56, 7.
 IXFLt:ENCE OF TRADES UXlONS ON WAGES.                                              201

l'lIt to what extent can they do this? 'Vill their action so check
the demand for their labour as to cause :l reaction in which
profib risc at the expense of wages?
     § 2'. To answer this queqion we must start from the fact that
,\-abt'~ are labour's share of the \\'a;;cs·and-profits Fund, which
,_, the    nLt produce of land, labour       and capito.ll, after deducting rent
.:nd     laxt'~.  Therefore a fi!;e inwa::;cs is at all c\"cnts i;} some
          of bringing aoout its own destruction, if it is obtained
(::'lll.';('f
:n 5vh a way a" tf) diminish this Fund.. r\ow the-ntc of profits
::; (Jne of man)' C1..USCS th:lt govern the accumulation of capital;
:md a faU in the' rate of profits, ur.le<;s counteracted by some
,,:her c:luse, tends to diminish the \Vagcs-and-profits Fund,
  II" at !cast to check its gruwth.
       It is true that thi~ diminution m.:-..y be of Iitt~e importance
:'IT some years; and meanwhile the a(h-aotage which eumhi-
,,;1.t:011 ~i\'cs labourer::; in b:lrg,lining with their elr.ploYl'r5, may
~"Is~ib!y enable them to get ,,0 large a share of the diminished
J-"end .1.5 to maintain their W,1.Li,'5.          But thcug-h the effects
-.dllel! the fall in profits exo::::rts on the \Vile;-es-an(Jprofits Fund
Tll;J.r he small at tirst, they will incrC<lc;e Sk,tdjl~-, unless the rise
111 wao;cs C'xcn':lses some comp('n~:ltl'ry l'ff..:ct.     Ii l'l on(; year
:.hey C:l.llS~ the Fund to be one per (Cilt. Ie"''' than it otherwist:
-,\,)ulu h,lYC becn, this loss wiil h;1',T increasl'd to two pET cent.
.i~ tlle cnd of the second year, to three per c('nt. at the er:d of the
:rwd year, to ten per cent. at the cnd of the tenth year, and so
'-'Ii I,   \\-hi!e this 105S illUL'a~cs ste.J.dily ycar by ye,lr, there will
I~ n() cOlTe~pondillb incrC:bc in the ;t,h<lm.l~c \\IHch combina-
t;on gives to labourers in their u;lrgaining: and sooner or b:et
the cO)lUjJetition of capit,11 fdr the aid of labour in production
". ,llbe Jimini,,;hed; wa~('s will [.lIl, and will prubab!Y go Dn falling
'Jr.:l! tilt:· rcmo\'a[ of the (.luses which checked the growth of the
\\'J.6'cs-and-prohts Fund.
        It is then clear that if a risc of wages is obtai:--cd simply at
 .:'e expense of profits, if it lowers profits without excrtin$!'
  lny compensatory effect on the W·ages-and·profib Fund, it mU5t

     1 TIlf' ca~ in thc text is unr:lcrstated. E\-cn if the ra~e of profits:
',·mlir.cJ undl.ln~t'd without :my further f.ll! thr"l1g1l(i·~t th-: ten yo.::lI'S.,
   e h~~ III tht: \\'nt;e,,-aw]·proti!S Fund \~vl;ld il~.:reasc in g'l'ometric,
11 ., In .1rlllnnetic pf\)gr(:.~,ion. B~t f" .. th~r, wage's cuuI-J not ~,e )..ept at
.~.'~',! r:li,(',j l~\d wltill)ut thr()wiIlS' a ~(_,r,!inilally in":f<,::>,;ing h:Hltn on
/()tit'-; and tilerl'fore tLe Jlminutio!1 [lJr the..;", to the growth) of the
\\"lg-,'~-and-pr()!:ts bmd w(;uhi be wry ':'I, ... h ;.:reater in the second ve:lr
;11.11\ ia th,~ Jir~t. very mud, g-ycatcr in ·tl1<.' \llird yt-:tr than in the second,
~,'1',i '0 un. Further. a f,ill in the raIl.: of intt'I~"t pro~llotes the use of
  '.1thillrry, and tC:-Ids I,) incrc:1se Auxiliary·(.l!Jital :l~ th<.: cxp('n~c of
\\ ,;::e-c,ljJi'.al, anti thm to hwer wage~. An ex;]ct treatment of :he
Fo)bkm here indicated requires the aid of mathemalic~.
                     nOOK Ill. CHAP. VI. §§ 3,4.
be sdf-dcstrur::ti\'c in the Jon<!" run. It lUust 1earl in time h
~uch a scarcity (If urit.!} :1nd of l)usitH'sS power that the tot<l
\\'a:,;('s-.lnd-pr(1fit~ Fund w::l be iO:;l,'1icient to affntc h:gh wage-
to hh0llr, even while capitoll i.~ getting a low rate of intcn'~t.
'-loU bt!:.-iness pvwet is ITCL"C\'ing low Earnings of :\Iat'.a;.;e·
ment.
       i 3- Bllt it i5 not necessary that a rise of wages whic!~
latlourers mn' obtain by the aid of their cnIllbin,Hiolls. shaul<.
he s('lf-dc."trUc~ia-. F~~ '.'vcn if it is gor at th..: c'il,'l1se
 profits in the first i~s~:1n.:c, It may be useu in 9ur.:h a \uy as to)
pn!'.cnt any c!itn,nut!(ln uf the \\".tgcs-and-profits F:.:nd, and t.
thro·.\' no perm:tncnt b~irdcn cn protits.
       FiL~tly. if bb"tlr(:r'; san:d as hr:;e a p<lrt of thcir;ncome a:-
Clpit31i:;t:, and (,lllpl,'yers llo. a rise of \\'a~C3 a~ tLe expl:llSe (,:
 f,wfit;;. would SCOllcl:iy affc,-r the arcumubt:on of C:lp;t,lL D,:'
 the ","orkin;; '~~:to-"es ,,)n,>ume nC:l.riy the ,,-hole of ttlC!r incom,
 on their illl::1CC;.,:,' \,:;lr!:~. Tlh' wages of hired !.lbc'cl[ in t~)<
 Un;: ... ct kingd'JI:; :11!1(1Unt :ro r.~ar1r [5oo,OCO.CXN; or :lbm\t 0;"
 hnlf t--,f the :ot,ll !'•.;'t <lI'lou;,l lncO:l~~ of the count,,-. Dl!t the
 ann·.~;ll savings, l'n.:n when. :111o\\'ancc io; made f,;r tht. i\':)U!'c
 and furnit::rc \~ llich \ hey bel)'. ,~nd lor', heir con:Ti buti,ms to Pl-'
 vicicnt socit'lles, furm .:l \'(:ry ~m:dl p.:lrt of the two hilndred an"
 [or:\' mdlio'1~ \Ihidl :tr~' add~·d \"t~.Hlv u. tll ... I'('~hh I)f th
 cOl:~try, It!..; ~rue th It in tl1o",,-" P:lrts (,f I·~n;;:hnrl. in whi~'
 wa;;:f:< Inn' hn::; bcen hi:.!h, many :lniz:Jll<; own tl:('ir o'.'"n bous!:>
 and :l. rise ir.. "I-J.:;CS leads in the course (,I' time ((0 ;m inGca;
 in tloe will to 5,).\"(', ;)" \\"("11 as in the power t<> S<1VC. Sull it IlIt:~
 be adl11:tt~d 11nt tile immcdi:ltc ctft...'Ct of ;J. rise of wages
  the expense of prot;t3 will he to check the gro\\th of Matcri',
 capicli.
        Sc-'_ondly. ",Ie h;]\'c 5'-('n that an increase in Tin~('·wages, if
  leads to ~tKh .m ,:1(r(';{:;C {,( efficiency that T::tsk'~\';lgCS ar..:: I
  high~r th,:n c(:fn)",', will nut 1(J\', cr proli'.s, hut ui.,e th·:tn.                 I·
  ottH.'\" I':'-,rds a l-i~,-' i:l \\',l::::-('S almost ;{]ways Ic:td::; tn an int:n:;."
  of Pt'rsun:ll capil.ll; and the increase Df the \Y<i~--:-{'s.and·pn't.·
  Fund dcpL'n,ls on (he Personal as much as OOl the :-'Iatcri.
  capiLli (,f lb,~ cDun:ry.
        A ,i,,(' of w':I):~;e" mar then to) ,1 great extent be devoted'
  n.ddin~ to the :'latcrial and Personal capital of the workt".
  da".',';~' :"ilO il:crc;::~m~ their eft)':I"::;"'}" ;l"d if so SPL':lL it \\j
   11')t Ie.>! :0 any cEm:nut:0n of rh·,; \\':1.;;c5-an<!.profits Fun~i,
   Wlil not Lc scl!-de5trnct:~-(' C'.'l>Jl thot::.:h it h~H bl'cn ohtJ.incLl
   ,he e"pcE_iC of profIt:; in the iirst in~t;lilCr:,
        It must ho\\-cn;r be not:('('d th..:t in suppo~i;:g the rise
   wages to incrca::;e the cffic:i-:ncy uf hbouras, i~ hac; been 13.1",
   for granted that the measure" by which th.ey obtain the rise'"
   itot to any great extC>lt dimlnish their cfficien..::y. It has be.
 IXFLcENCE OF TRADES UX JOXS ON WAGES.                                          '~3

t'-I:-:('O ((lr ~anted that they do not insist f)r. such regubtions
\\ :.h repud to npprentjcc"hi~5 ;)5 tend :0 pre\ ent the numaer
(It sio::ed lab()tJrcrs from lncre:v:;ing; that they d0 nnt OPP,hC
Impr')'. cmcr:.ts in machinery, i.n the F~occ~~ of manufacture, or
in it-:; arr;lIlgemcnts; and lastly that they arc able to attain their
<.:.ld,; without many s:rikes. Of cour~,~ thl! CXpCD_o,\! which
\\or;';:mcn incur ill a strike must be deducted (rom their gain5
~',:10rc the renl value of the rise Ciln be (OUl)(t,               But a further
  tT:rJ pCrf;aps mClre import.lnt ded"cli,lll               must be nude an
                                                             .;
      -(Iunt of the inc'.irect injurr which striKe . and t\e feJ.T of
 <11t;:C::' intlict on productiun. For i:r'.lLlw:ti<Jll i,:; checked, and
'hucf:)rl~ the \\',l:;cs..:wd-profits Fund j:; (!imir;i~h('d, by ner)"-
'Iling til,lt hampcb the emerprise of Clllp\oyc:r:., or that rna.kes
'hetl1 d~~ign timidly and calT)' out their (lcsigns imperfectly:
:111.' more tht!ir energy is dinrkJ fr')tn thc.r prui)cr work in pro-
  !uU),":l to ye:\:H;ouS contl'o,'er.sics \..<, h t h,)~c I'. )~(lm tlIty employ,
<~,.~ l,'o,~ \\i11 b,~ the \\'u:;:es-anc.,prv\l.:s flll,'!.
       \\·t· ,--()nd,~.:tt"! then that it j~ r.ot lmpos!!1:Jlc for trades unions
  o G"::tfJ;e Llbourers to nLtain a general r:~c ()f'\"J.~e~ \,1.1i(h tliey
'1',!L!ld no")t have otherwise got; but th~\t tllis ri:-,~· '~'il1 itself brin:;
  .'~0 opl.'l'ation causes whidl will lo\\t..r W:lgc", and that it CUI-
):,,' 1)(; Ix'rm3.nen!1 llnless it bc ubtained by 1!1C';ln5 \,h~(h du not
 'I.'rj":.lsly hinder proJuction, ~nd un:('~:, it be u,:;cd in ~uch a way
,,- ~u :.lrg-dy im.reasc if not the ':\Lltcrial yet the l'('rsonal
',,;1::'11 of b1JOurers. and to aJd a gr;2~lt de;]! to) their efftcicncy.
        [~4, This re:"lilt help" us to in".l'i'prl'l tll~~ prop{)~it:on;­
   ; ntiustry is limited by capit,1P "-J. pr'JPo~lllon \\ hich i1:1;; becn
. 1,,:1 u-:-cd a.~ n. W<l)' of stLltin~ \\j:at Ins bct,) ctlkd tlzi! U·,I.;:.-,,_
/-".'II.'d 111«11)'.   Thi~   theory h3S bC:l"n nlt:ch      ui~ur:ider,;t0od!   ilnd
 ';~ iJc~·1I til,.:: occaSLOn of In;\ny lwpul:!r fa(Ja,,~'''' Cut ("\'en ,,5
  \i/~lael! by its ablest and lIla"t clrdul t':o.:p,mcnts, it seems to
    ::r':"~isfa(::t'--l1"r; hec.IU,>e it r(·::.t~   "n the assumpti(lIl that all
     ,.~ aT:.! paid out <..)f weahh th,lt    has alrndy bel'1l sd by as
               This \\",-15 first aS~llm("d (I)r the s,lkc of simrJicjt~"
             than \\ ith the intelltiun pf bt'ing madc a u?sis of
L';vi.~o,nic ~ricnce,        But from t:l(" Inait of losing it for con-
 ,t"'.:t'llce, some cc,lllomj"ts drifted ir,:·:) the hJ.bi~ {)f thinking-
  ':.\: \\riting a~ though it were a nl'CC:'~3ry law of I':lturc that
\\':I,:;-:::;should be paider.tircly out uf wC;lltlJ tll:l! has been set by as
. ,\;11;a;'    Stanin:.:- from this oasis they ",he" cJ tl1at the circum-
~,:,:\;:~~~ of the c'.)untry clClcrmil:~ in wLat pte-portion Glpjt~l ii
,.': :u'::c1 into the (11'0 parts, AtL\lkuy and H.'ll111neLltory.        1hey
',~ l~d the RcmuneratcJry capital in the (,luntry i:3 ,; \Vagcs-
 I.,';~d;' <tnd they argued thaI no chan::.;,~ cou:d inncase this
J: '.Ind. unless it either increased the toUll amount Qf capital in
l"1·: cU\.:jjlry, or clUsed the R('muneratory capital lo incre.tse
:.; tl:c expense of the AuC\iliary.
                            1 See Book I. th. iii. § J.
                        nOOK III•. CHAP. VI. § 4.
     ,Yhen therefore trades -- t!~ion5 claimed to be ab1e to raise
wages at the expense uf pror!lS, the Ilpholders of tfle \Vage~~
Fund theory answered that thl.: anion of 'Inion'> cannot
increase, but must f.nhc[ duuinish c<tpual j thJ.t they can no:
alter the cirt:lIffista:lccs that Jetenninp. the ratio in which caDil~!
is di\':ded into At;xili:J.r\" .J.nd Rc:mu:lcr:1to!"v'; that as the\" ';,1J'
do neither 0f thL_~C thIngs, 1:1<-\" Llnnnt increase the Remu"ne-Ta-
tory c:lpi~.1.1 "bith forr:l~ th:.; \Yag-e's·Fund; <lllil that therefor~'
;'toy [isc that their efflrts lW!y (.btain in the real wages of or:,
trade, must b~ c,)mpen3ilted by a fall of at least equal amount
in the WJ.i;('s of oth('r trades. In (.lct as :\1;11 say'>, .• In th\.,
common" or \V:lg,~s·F\lntl .. thE-ory, the order of ide:ts is this.
The capit;tli~fs pccuni.:ry means consist of two part~-hi"
capital. a:1u his prOhts or irll:ome. His C:lpit;tI is what he start~
with .Jt the beginn:n:; of the year, or when he cornmenas som~
round 1)( husirw-s OP~';l<!'Jl\S : his income he cl{)~s not recei\'{;
until La..: e~d of the y·_'.tr. or u •• til th..:: round of operations is com
 plctcd. IIi.:: Clpit;1!, ex.:.:pt sl~ch part .Js is fixed in buildjn!~..;
 and mach:nuy. or laid ,Jut in fluter;als, is wh:lt he h:ts got (.
 pay wages \,-;:h, I I<: c:tnnot P;lY them out o( his incume, fo;
 he h:ls not )"ct rcc('w,_d it. \\'hen he docs receive it. he mayby
 by a portion to add Vl his capital, and as such it wiil becom~'
 p;Irt,of n(':>..t year'.> \I":::;:('5-fun£1, but has nothinri to do "ith th!:>
 yec:.r 5.
      "This distinction, howc\'er, hctwccn the relation of the ea!"':-
 tali3t to his capil,l-'" and his rel.ltion to his income, is \\-hor,
 ima;!:in:try .... 111s ','\Y;i ;:l(omc".,is adLloced from his capital an '
 repLI':l'd {rom the returns, pari passu \\ illl the ",ages he pays. L
 we choos(' to l<li: .he whole of Wh;lC he 1'0~"cs5es applicable trl
 the p3ymcnt oC W:1gt:;;, the \\'agc<;-Fu:ld that (und 1'; C'>-('xtenol\!"
                                                                   j

 with the v;h»]C pwc~cds of his lJU~!ness, aftt'r kCC'pin,; up hi"
 machir.cry, buJid:ngs and nuteriak :lnd fcding his f.unily"
 and it is cxpelldc-d jointly upon himself and his labourers, TL,
 le~s he {'Xpcl1.d~ on the DOC, the more may be c'l.penJed on tl: "
 oth,,·r. :!nd   ;.;(t- ~·,",.~·{i:'
     Th1~    b   ~i~e reason which :\fill gin's fvr wi5hing to intr,
 duel' ir.to tht.., theory of ":ages contaim'd in IllS Political E( upon \
 "those     qllJ.llt~('ltions          and hmi::lt1<1n<; which a:"c nc-c("5-:ary l'
'm.l!.::(' it. ;~:!mi::'~lhlc:' Instead (If ho!Ji;]\-:, that th~~re is a Cl~rt.l
. amu;mt ot wealth dc1ib('rateh" Sd 1; .. to be used;1~ R('munt::rL)~'":
.cap::;)!, Ill' n.":-lrGS W,Ig-('.> and prot'i·", alike as coming fmm t\.
1net produ(e of lanel, labour antI clpital \vhi<:h. after dcdurtil
 "rcr.! and taxc:>, we h::t\'e ca;lcd the W<lges-and.prDilt., Fund: j,
     1 \\.0:: h:\\"c S-C~'Tl tb,t      :l [;lit   in thc r.lte   <)i int~re~t in':r..:~,~<'"'   tho>   \:<;0::
 m.lch;r;~'r;    and o\h..:r fixe 1 f":1pit:11, :Ill,] thfrdnrt' tcr:d"-; 1,') incr\:"
 Au"i~i~'l~: c:lpital fcb::\"e:y to ]{L "1Llner;\t(){\". Hut tj.e c:-.r' ,i1(;:l{<; f': t.
 Wacc,·l-"lI'\J Theory !tc("m g,."nt:ra:Jy to h:n·c CI\"erl\lo!~eJ th!s ~.rbum'
 Or! t~"eir ,:' !e.
   r);FLt:E:-;CE Of TR.\llLS C"lO:-;S 0:-; \\",\GES.                                        205

 .-rC:,lcs thal it is the division of thi" Fund into the two parts of
 ~,ru:ih and wages Whh:b UdClll11rl(,:-; how much of the produce
   :uil Dcc,mle l<"emuCler:ltory cJ.pital.
     The difference between th::: nc\'. doctrine and the old c. m
 L" well Illusrl"atcd by the C<.I::iC of in1mi~ration of labour into
 .( tL!L'Iltry.     Accordin; to tht: old doctrine \\'ag~'5 have to bt!
 r. Ltd             WC:llth that hac; already heen set ;q};u-t as c,lpi:a\:
            Ollt (.If
  ,-:\.1 since t11(." bbourns \\ill! require "UIl.... raw matl'riC1! ~md
  '~:lplcm('nts to \\'ork-wlth, there muq be an i[,\T,'ase of Auxiliary
 {2i' ,~d. and tbcr:;folC a diminution of Remuneratu:y; and there-
  1,_,: e the total amount of wages got by th:.: br,;cr number of
 ; )uuuras must be less than th;}t which }l,lS be'~n ~llt by tb::
  ,lll;lller. Accordin;; to the new doctrine tblS r('~L!lt will 'llot
 ':cu~s'i3.rily follow: incccd the 0PPOo..HC n::,>ult is the 111,)f('
 i1ru!ublc. For the increase in the sllJlpl~ of bb(JJr w:11 il>
 d,'a~<.' tlie net produce of c<lflitai and lahour, and thercf'm:
 ::,(, \Yages-;:md·protit~ Funrl. It is true th;tl empll)ycrs \,ill
,',1::lpcte l('~s keenly than before for the lmc of ial)()ur. lXI~tly
!;l'C,c!5C there is more bbo,,:- to he hired j '1~;d paniy because
 i'_ \1 ill answer their purp,,:;e to di\"(~,t ~om(' of tht:ir means from
I',nr!;.r labourer5 to providlllg more :\uxili;I~·y C1Plt,t!; "ntl tb.:l~·
!.'r'_' the ratc of \v;].gcs will fall. nut it is nc,t ('['naill, nor l'\'cn
'" ;-~- probaldc, that th~ Wih>k' sh,m: which Jauo::r gus of the
 I.\"l,;cs-nnd-profit') hind w:1l amoun: to icss thal1 \)('fore l,
        The old mf:thod of stating the wages tJlohlcm kl\ working-
   '-.t'n tv l·::-,::.nl tht'lr wa~.:s as p:liJ l·ut (.f a f\llld of capitJ.l
.. !Ic,ldy stured u!J, the am(,unt of which i:;, for the t1Jnc at :~ast.
!~:-'L'll Independently (,f their l·xcrl:ons.    The nell" dOl.:tnne shl'wS
\ :).\- their \\-age5 Jq,,::-n,d not only on tht; c.1pn::d \\hich others
- H-e stOlcd up, but abli1 and to a greater extent, on tht:
    -itciency (if their own wurk.)

    I    Clirnes (L'lIdi!l5,~ Pr,"kij,',s, Part II, ell, t.) h:1~ argued' that there
i."~S TID   sutflcicnt rt'J.,UIl (vr ;\Jili's Ch.H;ging his j."_,,i,i.Jll. lIo.: h,1" ably
   .: \:<:0 ;\t:ll'_~ (,\d thc'JrY :J.lIJ gU;lr<:t-d it :!j:.':J.in't ~'-dl'" C<.1111l1"!1 wi,·
    ']'i'J~I:l\ion~; l,ut he h1S n·-[ '.lIlf.:L! rh: r'Ji:lt 0; :\Ii~l"_ :; w.1.rki:ne:-,I.
  ,'- ,ii';\I'D by his g'Jlng: (,n:" Contend th:lt ".m illl'rl,."~I.;, .. Jll lil" "U;l;Jly
     i.lL·l!ur. when it is l,f:t killd to be ll~t:d in ,"!)j'i!;lti,_',n \\itl, hXl:u
   ,J;::11 :lnd r:lW materbl." would ,,1\1'-<;' tL-.' \'.,,;.;c,-r.llJd to Untkrgl'
   ,',miautiu:1 ~,5 the numlJcr \Iho :ere t" ~hur(: it i~ i:lc:(;\~c:,L"
      ()n !hl.' l'lh:r banu Pr~)k'Sur.~ Il.'w)n_~, 11;1'[,· I.l'~k', lJcJ.rn :mJ
 Fl.l1:ci~ '\":J:1..t'f, nuu )lr Sh:1dwell, h,.\-c: all J.LoI'j leel the ~ame gt':lci-ar
:,j.":l tbt \\ tgl'5 :lre the' share n: tile j:rvduce \.\-hi,::h II":.:: law5 of .surply
,l~ 1 dem.l:ld t:llable the bi)();Jrcr t,) .~'2cure V,.:c Je'-,,:;;' T'h.. ".I' ri
.' .... .-:_-,11 F/""<'1JlY, sC~'<1ud c'd:tiDll, prelJ.ce, ':" ~ol. }'rnf,','<;or \\"aii~er
",:' c.o~\(,'c~c'.! ~Ollle iW'lructivc iil''':;,\D':l'~ in " !lj, II it i~ tlle ,,:bour~'r will'
:tnds h;:;, bbcur III advance to h~~ ('mplu:--er, and no\ :.he .;mFI~lycr who
.. Glances his W;lb"es to the la:>ourcr. See also Thurnton Oil LabfJilr.
                             CHAPTER VII.

   I~FlI.Ur.~CE OF TRADES 1.:XIOXS 0:-1 WAGES (C0XTI~UED).


      § I. \\'[ h:lve s('cn tInt it is not impossible fOT labourer:'.
by {(lrmll1l; tho::mse!v('s in,,) ti'.:tdc combina~iolls. tr, obtain
~eo(,L': 'i~,~ ii\ w:tgc~; ~t1,;.l that thi, )i:,,~ nM'\." be Tnaintai:lt'",
providclt i[ is so u-.ed that the \\";tgcs-ana-prorits Fund is n·:·
dim;\li:,hcd. The ro.t reint to be c./J.)senTu is that wh(,Jl
cOll:b:r;:lt;,m in any traJ,:- obtains a nse of \'.·ag-c~, tLi:; risc
seldpll1 entin.,;;' :It the c:>..pcn.'>c of pro!its; the l'llipl,)yers ;i~.
aliil(l"t <:11'.\" ~Y'"l :tbk t(J shIft n('3..rl-, Ih(' 1'.-h.)le d th . ., burden on
Olht'r:~. 1'a;t (it' it la:1s on the (:o-llsumcrs of tile tb:"65 proJu(c. I
by the trade. :ud r:lanyof tb<..'sc g(-nel'ally hdOli~ to the workir-"
cl.l5se;:,; p:H~ hJ" on o:ncr tr.LdC$ which n.rc d1ret:tly or i
c.lirc.:t!y ;J...,s(,cja~'~d wILl! this traue in tile pn1CCSg oi prodllction.
       Fur i;J<.':lC~ when Clrpentcrs by ;\ strike or :l thrC-lt f)f 1
strike ~('t l;leir W:I!..';(':' r,\i~,'d, the nno,:cr buihkrs .:;dd(lm 1)l'.-·
the chi'ef p.lrt uf till! lnll'l.1(,ll. The rise is ;,:-cncnJ:y got \\'lIl"
 (hi.! price ~i lluu=,-,::s i'i risin;:;; and l;y chcckill~ or thr<.attlll:L
 to check the Alpply t1! uuildin:; it -':.lUsc5 a ftlr~hcr rlSC in the
prin..: of bll ild 1:1.-;' ; :-!Ild this ri~(' in prke cherks till' rlt:liland fo::·
bUlldlng-. A -.:h,..:ck ill th.:: dl'nnnu [vr huiJdins- d~L'cks the ,'"
 m,l.:l,li'.lr the bholll' (If brickl.1:'l'r~, ma"uns, pl:lsrercrs, p.1.i:"l:l'l
 an.t olher workmen who arc dircclly associar..:u with :he (,,\l'
 penters lll~dcr r!1~ s:l.lne set {If crnp!lJY'_T5; anel abo for ,1~,
 bh('<li" vf b:-ickmako.:fs, ({Iwrrym.::p. :l"J other" '~'h(l, thou,c:::h 1',-,
 w,.Jlkil1,:; u:hlcr the ~am(' C"llll'loycrs WillI th~? Clrpentl'rs, al'
 indlfl',=tly 3~s()ci.\tcd wilh them ir: the \\(Ilk uf procillctilln.
 fact lll.:: interes':;; of the CtflJcnter:J .He rcbt('o te) tlwse of t1:
  brickl:I),C"rs and ma";uns, and 1-1 tlusc of ihe \Jrlckmakel'S an
  qU:llryllll·:1. III ,cry milch th,~ ~.lmc w:J.r as th.:;; are to thos..:'
  the nl:15kr hLlilrlers. 1n lll::HtC"IS that aff('ct the (kmand f·
  lmi:tlin; ,lOld its price. the interests of aH tlw<;(," (LSSl'S an:
  hclX1ll0r1)'; clnd 10 (j1;c:o;ti()r.s ,onncctc3 with the way in wI<: '
  thiS pncl' i,; shared, the lntcrc.;ts of c;lrpcnters arc v<.:ry ne,,\ 1
  as much lP- OpPosition to those of bricklayers and masons, ar,·
 'SFLlT~Cr:                    OF TRADES CSIO;\S ON WAGES.                                 307

',) ·l~"s·"' llf lmckm,tkcrs ;Jlld '1U;lH):nCil,:15 thl'Y are to t:--'o~c of
",\I.:,r lw:;·.;\:r". \;in-n the p!~rl: which ('r:l?luycr,; em S"(t hH
      ," ~J:J:jd;ng.~. ~lle chc,lp,::- lleo:y bt.:) thci: u:lcks ,~I~d till' rj,_ \;-\(.'1
     . 'an g('t thon hi([, the lt1nrC htLilci:;:,-'; \\il\ ILcy ';lll!,.L,ke,
 'I'~ t:l'~ .c;-rc;ltCf lYilllJl'       tbt'ir demand   ,"'J[   the: l.lb,mr of C.lrj',:nter:..
'. ,1   ~'i,-, 7"<"T,d a fallin the wagC-5 (,r <...11 pelHers. oth..:r things
         \ equal, \\'111 increase the demand for hrickrnakino- amI
  -':;;::,I)"ln;.
       TI' l,lh<.! an inst:tllce frO:)1 anr:.thcr           l'ra:~ch     of lJroduction: a
      ::, tll,' w:J.;;c,,; of iH!n-wot"kl:r~ may induce iron-m,bt~rs t'J t:lkt.!
    ';.; ,c.::" :ilat tlicy wau:,l othcrw1:;..: ha\"(: fcfus::d: and this will
   ;"; 10 prtn:nt a' fall in th(: wa:-;eS of che cu::l·mincrs \...·ho :':l;S'~
        .. ,,1 r" 'r the ifilll\\,(,!'k5, On llle oiLer ll..:nti a Ld] Hi tL<..' pr:cc
   ;n)tl      11:.::- to lJe b'jr:H:' r'lIth- b,' the (!;lfclCllt (i.·,~~cj of ('m~
       ,l :'~. p.ut]y ~'Y the difrl'w'nt' ci.1,;"cs (,f wurkmcn \\'ho"~ laDDu:-
   ; :I·I\~I~',~ to tile proilll'.'ti()1l of iron;         ~bc    greater til<' ::oh'lre tka
             ii,'   !)~-
                    on',,::, the kss is tint wildl 1-.:l.S to he 1.1r.;nc by c:lCh
("       _,tll\..I'S, There is tl~clS .l cont'ild ))<.:tw("cu the intefL;"b Gf :hc
      1'1 l1('lS ;u;J iron-wu:'J,..':rs \"llidl 11::" once or twitc brclllght
         :\1', 0j1\':l conth:t h ~"c('n tLt:ir UniO\1$; th~ :ron-worker,;
   ,"s::'~ tu work until thl.' c(!,ll'l'lil'Cr~ -"";.I:l! rai::.c the cual. at a
    '.';'(:' ra~e. S~lch fcults Del\\(,<-'ll unions ;:'1'(' SOllw:imcs H~ry
   ".t     .l:l<! of long st:l!Hilrg; ~n t~o.1t one of the chief lISh tlf
    "" '-C(,:1jlf'lI:i is :0 ,. pr<e\ {'I,T. a uni,m flom i:l\urrin;..: tlK odium
        .' 1 :·k~· r.hrr)tl,~h some mlsundcr.::,tar,d:n~ (l)' IJl'tl!, jC,\~Oll<;Y be-

        l ,',1(1 ''''C~l(lr,s of ()n'~ tr,Hi.~! wh~ch, in th\: (,\Ill, if it l\'-Il1 :,lkc\l
',.'         \o:,!,! not uniy ll~l\e injured uLlth p:tn:l', to the (];Sl'~llC',
              ;:ld ahv h;l.\c b(:cn        Il:Jn~us '.0 t~Jc     ':mp\oycr,    "~thullgh    he
        i:1 nit            (-,,'nCl·rn.::J in [h~ cause f)( the I1ll,lrrL'll."
                      \\;J.y
                    J:~l~ yd th,:; oppositi(ll. b",\\-ceu til,; il~t.::r('.:;t5     of ass·)·
   ',,'J     ,,~:')UpS (Jf \\Or];I11l'1l doc.'" nc'c \'o;ry Of~CI~ ,1:tract the at·
       '\'~', "f tb''': ',\,Ul':"'nwll lIH:'_:lL:,t;hl'~, \Yllt II ,,11': ~r('·:)n ~',rik~'s
        ":;hcr \\,::;-,,~':i, til(' :llte'l S giH~ l:i·)r,t! if n(,t 1,:,l:'c'ri;t!' si:pport
       '1\ ~tr;kcrs,         1:1 each \)f "m gr·,',,: il'tlu,;tric,> the t':ll;';l'ycr:-;
       "ftcn ,,>-;cn       ~,rrayed on ~l,l' lll'\.' o;iJc T ,\-hile :;cn:r,tl (i,,~3~~" of
  .j    '._,yd :l~'C :Hra:eu in ;>, ~t:-i',.;c IJn thf' "th.::r, ~tir1 :he r'o'!1la:lling
       ':~ .JI'C o~Js('n.'ing a fn-:ndly n<.utT3.l~ty t\lwards th(' ~l!-lk(:rs,
       Ah,~' LLU5es of this L,et arc not far til seck,                       Flls:;y, the
          "ycr~ "ff' rq:"rdcd J.~ the r('rn::sl::1t~;:\'C5 of capital,               TIley
         '.( ,,~, pPJli:s tho.:: rllffLrCllcc ly:t\\L'lll 11:e price uf th,'ir !=;0ods
           . '--ir omi;'!\" nn wa,;rs, on Ll\\' lll:l:~;rial, <1-1)(: "11 k,'..:pin;; up
           :,:_llldin;;::;, );-... .-~h;nery. &,~, E"'cn 1:1<;,!;,h It may be known
         . '.~y do n<Jt owJt Ilcarl), all tl'e '::<I;Ji::tl \\ h'ch they use, th\.,
       .::I,:on bc:ween t11·';- intC[.:st on it ,ulli their Ean:.ings of
:';-; ~.'O:Cincnt !..lacs not ()b:~';JJl! it~elfi and the large ~ums which

                                    1   Howell, c1, x. § 20,
                      nOOK !I!.            CHAP. YII. §}.
the~'  recei"'e seem to be a plentiful steI"C from which hight
wa~e~   may be p:lid to iaboilr. These )nr~c SU1~1S feally indu~
nOl only in~crcst :lilt! Earning" of \Lln.l;..:-cmcnt, but lnsuranc
against tht~ los:; (If c<lpital. Wh~n an <:'iI\ployer fails, hi- h)s~,
arc soon tl)rgllttcn hy others; but 5\lCCC~S, as iong as it last
forc(;s ihelf on eH'ry (Jllt'\ ooscn-.J.tion. And it is not to 1
wOllcler...:d at th.1.t in u,uks in nhlLh SllC('t;:'iS i5 uncveilly ,f
tributt:d, some workin:,; men ."houlJ jorget the bilurcs will.
have kept uo',\-n the a\"('r.1.)::o..: rate uf prurlts~ and have prevcr,',<
the aVCr;1t,;"c Enrningc; of :'Ilunagcll1t.:nt from bcin~ more thal-
fair return for the       t~iffiClitty   and strain ufthe wurk: while ti"
look greedily at the few large fortune.:; which hayc been ;::.nuss,.',
as it \I'{;ft.·. (lut (,f Iheir !(,iL
    Sec(j!~dJ:·. ,dthuugh there i., ;). \H'll-m;uxl'd class tlistinc: .
between ~kjl'!('d and unsk111ed labourer.;;, and although in so~
di:;trkts !TIprl' tlun h3.lf the ~'mployers h,I'\"C risen from ;Wl'
the emp!oYt.:'d. \'(': tile: gn'at SOCi<li divisi,m 01 th~ r:lI1b oj
dU">(I'Y   :.~ tha~ b('t\\('~'l1   employers and cmV1o)·cd.        A '.\'or)..'
Hun's   fnenJs and relation" arc seldom to be: fOllnd among
cn,v1oyers. they ;l:C gencr.dly ;;C'ltll'ICd about the trades w1'.
ar(' associa<cd II ilh his own; and he him~l'lj IS lllllCh n;'
likely to i-l..lSS onT to une of these trades than to bec~)mc
employer.
    Thirdly, 3Jtho1Jgh a ri;c in the wa~('s of one tr3.de tend,
hinder a ri'ic in t);,,; \\:1):!;~s of other trades tlut .If(' assoc::"
with it in the same rmccsc; of procillttion, ytt the W.1gCS uf
these tr~dcs arc 1 n;ltinn tlly seen 10 (ise together \\ hen
dCllland fur Ill'.' produ(o.: uf their joint 1l1cttl~lry llllrcascs, ...
to fall t(),,~t.:lh.er \\hcn it diminishes. It i" tnll' that the pro!it
the emvloye.,> .lle ;cnerJ.ily ri~ing or Lllling at tht.' same ti:~
but in this ca.~'':: the correspondence is not q,litc ~o close; .l!
as the profits (If all cmplo! cr can ollly be guessed at, Whl:\.! I
                                                          .;,
wa:,;es of a workman an: definitely known, it i . not ncar'IY
Obl·i,lUS. ~\":::1:11 the circulation flt :ab()l1r. which tends I,) k',
the e~\min~:,'jl1 diffl'r~'nt o<':cIP..ltiU1l5 in their i\nr11l;tl r('!:ttil'
to (lJ1(' :1llorher. acts much lllurc quickly' between two grnllps
;t:'SOCi,lt'..:d \\"urkmell than bct\l"(,l'n them and their emph'yc
1 ( 1:1(.' W,l~b 1)[ carp~·Jltcl.~ ;l:'C abnormally hi<:;"h (clatiu.,ly
those uf m:\SOll~, the supply Ot carpcl1L'r,,; will SOOIl b~'gi.n to
crease r('l:lti~·tly 10 tlHt (·f m:I::'OrlS, aDO tb,..' llleqtLllity \'
be redrt"·~"l'd. There is in f.l(t J belief ar.l0ng- the workll
c1a~:,('s th.lt if tIll' \1;1:... C::; (.f one trade ri:;e, there will be. and
(alt)P.'''·' ought to b:..', a CO! respunding rise in the '\.'gl~" of otlh
;t:,:>~~ ::..tlC.J \\'i:h it j;l the ",I~ne proc('c;s of protlultiou; .m,l I!
bek·f is I~:.elf a f,:rl';!t :-(llC'.'. If cnpentl:r.:;' wa,;("~ h;l.(l ri~
more r.lpicHy than meholl'S', it \'l."Oaid be .. hought falr and rca5(.:.
able that the masons should take the first opportunity of (.
 I>:FLUE"CL nF                       T\,~\DES          U"IO:-;S ON WAGES.                    20<)

'n,mding a Ii.,,,;: \\hile t!;~, Glrpcntcrs might get !Jut little
 :!llp.lthy from 01.\;."f tr:ldc;, lith..:;- Jcnuil(kd a ~.:c,-,nd li",-,. In
,:~:_,lCal         SC:Lncc \\(; ;ll:JY    llH'_~ti:..::,\~c   tilt: 111'-", uf n;Jl\Jrc \\':~hOllt
  '~;.kin,,; ar,y :t::owance         for the intluenc,' of pu[n;];u Opij~ll'n; but
'1' E(nnmnjc:~ 3.'H[ in              ether nFJr.tl s(i\~a, ,~~'. '\(' (.111<)';[ tiD :11;S:
:' .,' in the In,)r,d \\"('ri'J. tbe: uelicf tiu. a. .-lLl:l:;~' (\'..l;h~ to OLl:I'r
,,:ld \\";;1 0(C<.lf. ;.ell:!,; t(, m,tk.~ i~ (,CeLL
       ~ 3.     \'"<.: knc :,cel1 ;r; ~llccc~~i\'e cit:lvcrs!; ;i) \\hat ~rc the
   ,.(1('(.\1 (Q:ldJ1i,llh 0::. \\-11Ii h the p0\n.:. of a combiua\\o'l t,.) r.lise
,11'·-':", JC:'<:l,d,.;;       Ii:' Wh:lt arc t:i'.:' (r,lls:i:,utJcn ;l1lo! mork-::> oi
     :1'-':1. of ~.\_dt.:<; ~.t\t01j"; i,iii:, what :1:":: th~' l:11:its wi:;I~L the L'I\\"S.
       \ormal \\,\~.:'s :lOJ profits ilHP()~(' (Ill ;l!tl'mpt_" oi ('o:llG!n;~­
     'I,~ of la1WU!"dS [(, r.-,i~c W'\6~''3 blT,e~,tl:y :It the t.'p'":l~l: (,r
   ·,fH.~ ; :tr!cl      :i\   l!dW   2.   ris': III d:e Wd6<"~ of an:' ;:r,u:'> alrl',:ts
" '- inkrl'';!':' llut unly of thtir (,lllplo~('r":' and 0f the "n;~:,U1n,,;rs
 t ,he cOd)(l'\vdlty \'.l,i, .. !1 they J)C~p t" Iii vdIlC'" but ,!;~0 of tho:
  ,-de::. \\'h,ch arc assvcIated wi:h :b:m ill pr",d\: :;:.~ :;, '\"t.'
    ~      110W cul!cc,- t",:';(:t!l(:\' Ihe COnl~ltl()~h on ,...-hidl ;\IC i,ower
     :1    uniOll to uol.:l.ln a ri~e ot 'u;;..::> for its mcmkrs de-
    -:,!:).
        F!!';;tly~ ,,:th rt':';:1rd to lhc immcdiate result of J.ny Farticular
" -":c Liio-pute.
        nll~ d..:pcnds p.ntly on Ih ~ :1,:m!)cr "nd a,~·ti(}ll 01 th,: non-
        ':l:.;;t Illl.'mQl'r" of the trad,: :r.nd un the difriClllty of bqn;:,
;.,.: m('~l fro!ll other tLEL,'S 11110 ;t; ;:nrt:y on th~' 1" C'llii,try p()~i­
       " 'Jf the un inn, Uti the .:tl\lOl':ll 01 ;b tt.'';lcrvt: fUllli, :.:111 \)1 the
    , :",~)ution" ,\h;ch C:Ul he k'<'l!'cl in ~Ilp[l(\rt of:t strikt: (rom
      ',~'- Il('t t:n;a.scl\ in it, p.1,1 tly n:llh' i, "OtutiOll uf 'h.: t:nionio-b.
,~.;; ~ile ":!t.:il('f Willch they ~''ld othe:"~ h.,,V(: in the ju.:;:j,.:c of
c,' J!       <.\'n1ar,J~,       The: iml1l,_;I,i:l~e lil"!.',·: wbl.:!l a cl}{:~-k to tbt.:!
    : p!: of 1,\0,11::' \II 11.(; tl";)(> w.n h,i\'l' llpr.n the pl'icc That can
       c,:Jt for it, dt'[lend'; i"': tly li:l tbe: ~II, r':~th of any r()mbin~,tllln
   ",r(' 111:.;,' be amOli:": l:,~pk,,\,';",,. \,;lI"~:; ' l j the ~!rl'r:i-,:ll d' will

     ,: Ihe :-CSOlir':to:. ('f ]',lii\'i(~:l"',; CI.~P:":·\'L~; ,In.! p~:·t!;; on the
      , ,\ iJi,Jl tl'.( Y \\u,:"i in,,<H by ~u"'!Kn,I;Il~ \\-,)rk. TJ,c ,llllullnt
        th·", l(ls-; Jl'j'_'l~C:' on ,he m;,rsin ',I :,idl tilC s: HC ,j the
       . ].;~.: :-::i""I.'b b<.:.\\,,~t:1l the f,ri,,, vi til--.' c· :-'Illwdi~~' \'.I<ch they
           :L',' and the \,::·I.lY of CI!",:u\..~ n:; c.q-,;t d n.:qdi,,_",; ((lr pro~
  '"",i]"; it: ol11l.:f li.ill';--' Iwill'; CqlLd, t~-,i,; m,lr,~ll1 wdJ ht; the
"': ,\~.~r. the lower ~d(: Ih ... \\1. ...;'-,; of ',lH: (-,tll(:J :---:rpuj.h ',·f 1 ,]),)::.[(r5
    ,,~n        ;.h,:y unp!\!y, ;lIld [Ill'         I<lr;~r     dol' l:'X!Lnt to \\'iri·:h the
  , rm:tl l':,pl:Il->C-; 1)( )mHhctilJn vf rht: t.,}m!w'~!\l: rl,ns:~t of
  C:-l:11l1cnt ,::ur,:,c5 ;l:',d l'[ tlh' inCL'n.,sr 01, Fi"_,,,j '_~;q)ltal. !n
   'd:lating th~ ~~<-\t,: of t;lC nl.l,rkct f'l~ th~ C','ltll\L.](~il:-: a('~ount
 ','1St    !)..;   laken of tl:c s:.ocks which Cnll':'J}crs h ,-'C               j;\   h;;md, and


          \1.
''0                    BOOK III.            CHAP. VII. § 3.
of trL~ ('ompetitlOo which they must med from others who ,ne
not affc.::ted by the di5pCIC.
   The imrr.eublc issue ('of any trade conAict 'which a un; '1j
llnd~r:akes    may thereful"c depend llrOn the char,v.:tcr and t!,
per<;c'n,~; rd:ll:on'~_of thO~2 who pl.Jy .1 kldil~.~ j"lrt in it,,, \
upon a ';;~ndy 01      other ;!C< ;dcpts, n1l,dl m'.,,·..· tLan upon t"
a,-tto!} of tl:c LJ.w:; of Xunnal wa:~cs and pr,)fits.
      ScnmcL:-. \,..'Ith reg-;Hj tu lil(: pt!rm:ltlCm effects of the ~olir
of;)   trade,~ \\ni,)n,
      It'~hc (Jr:1modity           \\"hic1.-1 the trade praduces GIn be          ca~j"
hrou;;ht froin grC':lt        di5tan~c,;.   a   sin:,;h~ Ur.iOll   can   ~L:ldom. 5U,:
'Jcd il; ca\~ ... il\·~ a ;::r\.::tt s,:,\rcity <--.f It: all,l the (Ompt'tilin1} "
dist;lnt prO,1Llct.b !I~ ::1'2 ~:lll1'.~ or (I[h('r c(ountrie::. e_\crts :l~l i·,
tlUeIll"': 0[1 T.1Sk-w:'-;.:;C's Qg;.inst ",hie;' the union (.ill m.'lke h.'
;)1:1c \.::_,),1. l)m whc;" 11,) ~'1r:h (ompe',it'.on is to L,': f..:ar('d i:;
d,_nl-'::~'ss true th.'1t if;l \lni(,n CI.:l k,~('p the r.,_:mhcl of thusC'
t11<.. ,-,de Frnl:ml'ntly l~ss linn it othel'wise w"~llt1 be, ~hc pl
(l(the C':llllllUllity which tl;,-,~· ht')p to produce li1;l~' Le s . . T;"Ij·
by i::; "{.,l~"::;::Y) :lS to make i~ \'_ Irlh wllik r'll' elllployer;; t:) ;
them        y.:rm~l~~l,;ly   VC1Y   hi~h '·\,\re~.
    T~.ere lIe c.l,"e~ in which Uf1'uns h:lxC pursl1ed this enJ ,\
som~ p.Jr~i,tl s'Jcce~s, by :ne,tn.;, of :.trinx.:,;n:. rc;,.:;.:.iilt""l1S w\1
hinli,~r a:r,oL0 from iOlninc:: th,_' tr:v-\e '.\ h.\ h;\<;, n,Jt sen ,-" I
<iPPIt';,ti::(:~h;r, ar.rl \~ltich Lmit :he ntll~~b..:'r of ;'11'l't .~"\I!;l...~ \
m;l:' h_' u;';e;).          Hut th')llC;l~ 5u.:-h ::-l';~!bt:":l~ m;,.,· Lt,'l;- :1(',
fLin:o:-d '~\' .1 t~',\dc whp,c \I'~I.::::l',> .lre a!~'l\lrnut:\' !u',\-, :: b a \
(Llhtult ih:llg- to caf()r:,~ th"~ll WIld) the W.1;:":..:'", of the tr;:,uj·-
<l~-''l~')nLl.H:· Ili",;1 r,'lJ-:y<,,:y ',,) ti\lJ~" ,If Cit hers.     F.'r then L
..:rnpky,'(o, ail'-i tln,<: \\CrT"IlWn Whl I'.i.:-h t.) C!1t('r tht:.. [r"de h.
5-0 mu,h t" :!,un 1,,:; C\,tt!iic-"'; them, {)ut no n:~\.1,ltIUll.:' r
 succeed 1Dl a "Lry \''''; t;l1\" ii', prc\-elltir;.., a l.lf!;<': l:1!lu:\ (J~- "
com::~~.           It i:j .'\<,t "\ll\,l'~ta_,e" ,(1\; ,.'ll'ad" un te.' th~ k
 of e!hcr tJ:1d<,s ,.f t.'q\;:d \:itT·.~-~ity in llit' n<,-i;,'.Lbu:lrh .. \, ti,!1 c..
 r~Oi: -.'lc('c"d in ob:a:ning :l )lcrmanent ris,~· in it.:' W<\~l'~, un:'
 t:h"" is d :l)r;l,~pnndin,:..; r::.(: i.l 1\,,' \\.1:;';:> .;f 0:h,_'1' t::hks.
         It fu!I~'\\'5 thL'Jl that !:I' C0ur~,-' oj ;tC!;Dll (',lI) bl' r,t'!!rl:1ne:l:
 ;1(h',ln~:!,;L(l';--; til <uly on\.' ~r;ldC:j ltl .. t,n, uL1c=-:3 :he ;:erKr.ti po'
 l'f . hich It :" a pan ter'.~is to rai,,:.; the wa;.;-cs cf ~D tnJ{'~.
 tkll ;f\\'~ "':O'!1sider o:ll!' ~11t:nut,· ;d~d pcrtrl.1:1 .... nt df...:cb. we m'
 ,lpp1:o' to thl..' cise of a ~in~ll' till 1011 the rule which We l,.'.~t:1.".I~
 ;[~ tlle ld~' Cit,l;)L'r.       \\'c there ~aw tl1:1t IdbollTe:'i c.lnnut ,,;.'
 r:\~..:(': :[1 tif:ttin; ,1 ;;encl,tl rise ir. 1I".I:-;e:i h;: mean:; uf tr".de ('.
 b;nclt;ons ("';(CjJt on c... :t.\in c·mdlti<l;'~, .~\nd we may;,
 conclude th'lt a ~in~le tI.H1e C3\11l0;: obtain a I-Icrmancn~ 1 J
 of v:ages except on th.:: same conditions; th.-:.t is, unless the JJ

                              1   See Book III. ch. iii. § 6.
    l~FLcE:<CE                OF TRADES            UNlO~S         ON WAGES. ,"
;     :z~lt     by   me:J5llrC5which do not seriously hinder production,
  ,lOr! Ullkss those \vhe rict th\~ Illcrcascd wa~e5 usc them so as to
j    ,_·;-.:,tS~ :hcir efficiency an,l to add br~:ely to the amount, if not
J )~ater:;I1, yet of Personal I:apital in the cnllntr)'. ~o tmdes-
1::-,;0;1 poli::y is lit,:cly w be permanently successful \vhich
 orew;,:s people fro:n nukir'.~ the most of their f,iCJItics, and
do~r.:; the b','st work they can; or which h;ndcrs the acoption of
','lj.>L)Ved 11l~~buJ.<: of Vl1duction; or which much increases the
l::vcnainty of bl<::,ir.css, or in any other \ny inflicts :;reat injury
   n c~lplo::ers and ctpit:llists; or Lbl1y. ,\hich Jcad_~ to a great
    -t~r:::l,,·:; of cf):1sump'.i,):) on tI10;;'(" p'\~":n;.: c\l!(I~'mt'"b that h::lXC
        p"rnnnent ~()od !whine! thlC!n. T!ds is ;li!'.)l)st thc same as
     ,~il1~ tLl~, it C~il:-Ld Ll' ','J the lKTrll::U1<.'nt in;l'!'esi.:; of a union
    ; .1.d')Pl " policy \\-;i!C:) ;,; injurious to the general well· being,
     d th~refore mm.ll;) ,y,"'l;.
        flnt u:lfo;~ml;lttiy \:ll pecuniary in!er(;sts oftho;rwho arc at
    .': p.lrti(:..::ar tim..: mcm 1wr::: of a U[lioT'!. arc often I'cry different
     )m the \t!tin13.te :lnl~ l)', r!"i1.lncnt in!c,-('sts l,f the IInion: for
     '-:: m:ly not liy,' ion6" '--·:~')l:;.;h for the fi:ll working out in their
    .r.e or-     ~110",c r<.s·.:l~~   , .. lJ:ch, ;lcco!-di;lt:" :0 the law of       ~oTm31
     -',-.;e5 and intcn's~s. rin:,~t uitim.l'.c]V tollow from their anion. If
    ",,' cae; art~{ici,d:\' limit the nll1llGL'h in their tr:lI!c ;ol' as to
    ,'.:'p up the \\·,,;t>:,'in it almorn~ 111y hi..-;h fOf sen>r;-J; yc-'rs.itwHl
         tu th~ir p('c'.lci:'.I'Y illterl"-,;t tv tid ~o; l'H'J). thun:,~h 1j-, . c rf'gula-
    ·'I1S ':1y which they C1.tt:l.1n tIlt ir CT)d r'»ln to bril\":'- a1)Q'lt a fall
    t ',1-.1.:'02'; in the Ion;..; ru!;. ).[('n Cl.:mot be di:;suade,j from J"l1aking
     I~h regu;.1tion~ b,'- .1.I",:;,\!l)CIl\<;; "d,trc~sed to tr.'~'ir prudence, :,,;
      s,.ni'::lish.~d fr<)m their sense of dut:·,
          ~ -4-• • ; E"C('p~l on m~llkr::; (If In<;rc dc-tail. there arc perha;>s
         p:ac~ic;:1 quc-stions (;\";:n :!1\l(ong ,h(l~c which aJ-.lnroac~l n,-,.1.r('5t
        ',he chan·_'ter of p,:re t'C"I,OIl'IC ',!tiCSti'X1S ,,-hieh ;,dmit of
    ':n,::: c:ccid,~d on ccor:0:Jl,C prt"mj~es ;,It':1e~,'' ~l:H\ It is Jlii,:c un·
      (l1,i~G        and ir:jur:ou:'i to the pub;;,'        \\"C\fJ.r·~   to attempt to
    .~ ''':~3    me:1·s C(lnG,:ct in. indllstri:ll confl:cts              wnh')II~    i:lkin~
      -Ol.::1t of other 1l1(;(;ves hc~\(_!e tIll: (ks:n: f.-,r pc<-:rniafY gain.
    ;,e C')m:1L~:c:;ts assumed that no one s!luuiJ d('~i:c to ;..lin at
          l'.\PCn"(:; nf :u-: cql\31 loss of h<lPP1;'C'~;' '" o:her:,; lmt the
       :"1<1 lS nut yet real;;" for appl:.-in.:::. in pr:"l.cT.ice pnllCljJks of so
    ... \ :;. ~~10r:tlitv ,l~ thi", T11(' \' ,'rid ;~ ho\\"ev~r TLl(h-, and \\'l'r~:­
     _'lil,ll ,illlong- others ar',' re'll~Y, to endeavour to aCt t:i) to the
         ,cip!~. ti-,.H no 01.(' S11')'11ci dl"si1t.: a g-.lin which wrJ\dd in',ol\'e
        _,y rlucil greater 10:';; of ll:trpint.:~;; t(l others, (If CI)Ufse the
       ~ of {I ir;yolv('s much less lvss of h"ppiness to a nch than

      1 The r;mark~ on eC0nomic methcxl {Book I. eli. j, §S , and 3)
      ':ld L~ T,;a.i in connection with this 5('("(100.
       2 PrefJ.l' to }-wrs Politi(al Eronomy.
:2IZ               BOOK III.        CHAP. VII. j 4-
!to' a poor man.      And it would not be reasonable to ask workiT',
men to <lb~tain from a measure which would hive them a IiL:
gain of f I :.1t file expense 01 a loss of 30$. to IJrt ;1ts, un!c5_"i
could he shewn that this loss "ould f,,",ln on \",,.;-es in the Ivr.
run. But m;;:;y of them are wi!llllg to adrr.it' th.:lt no unie'
should adopt :1. (Ollr~e whIch ·...·ill r;:ti~c its 0\\'11 wagcs at t'l
expense of a much greater total .10:'5 of wages to o~b~rs; and
this princ:pl(; be generally :l,lopted :to; a basis of action, t:~C'l
nearly all the (",-i1 that stili remains in the valiey of unilJiJ-
can be r(lllO\'ci\ by such a study of econ:_~mic seineC', 8S '\ i
enit bie t ll{~m to discern those remote dft:("ts oj tht'ir al tion ",~ hi,
arc not seen':' as well as those immeJiare results •. which ;t!
sten."
    :o.Iu("h would be gained if all workmcn kllewthat each traL:
production constitutes a demrmd for the labour of other tra,l,
that sil'':': abollt h:llf of nIl the thin;,;::; that arc prodllccd ;';
bought by working me:l. work;ng m~n as a Louy ha ..-e to 1;,_
abou~ one-half of the loss thar arises from any rhcck to pml;",
tion j and tInt, thuu~h onc trade rna>' sometimes gain a hi<::l-,>
price f,lr \\·hat \\ork it Joes, by dimini,hing- pro,luction, yC::t Ot:,
half of this il:\..rc.lse in price h;-t_~ gcnerJ.l!y to be- horne by ,/
member;; of the working classes: that there o.::ann(,: be gC;l'~'
o\,(:i"-produc:ion, though there is sorr,etimcs a di:.o}":Z;:l~i;:at;c'rc
industry which looks Yer)' like it: that if. undt r the fear of 0" ~
production, c.leh trade uiminished its vroduction by. say, 0:"
tbird. the Re.,l ""ages of labour, the necess:1rics. comfort:; a,;
luxuries which w('rkin~ Elen are able to purch;).sc, would'
dimini~hed    by :luoJut   un~-third.
     l'Iluch Wd\;:-J bt:: gained if a:1 werking men would r('fer:t tIl
unnecessary h;no!r:I:1ccs in the way of those who wi:oh to learn
::>killed traJ-e arc '\'Tong; and that-It IS almost alway::; '\Ion;.; f,
one union to seck to obtain a rist' in waf~(":-; uy a line of COi,l1~l'
the general ai.!optiu:1 of which \\-ould diminish the productir n·
wealth) and therefore callse in the long run a gcncml fall
wag,-'s.
     Unfortunately working men are able to say with too mu"
truth that llM!ly of their 5upcriors in the commercial W(1,
sometimes ;:peak and often <let as though l1othin)! morc Wt
to be expected ill b\.lsines~ tt,)nsactions than that a Jli.
should avoid dbh;:"\l~esty and pursue his O~TI interest.,. It is '
COllr~~ true tb~lt e:-nployer::. ha\'c ~umctimcs no choice ('xcei
between li·nitin.; their prnciuctlOn and incurrin:-:- "cry hea' .
losses; but lb,'\' arc ;J.S liable as ,\'orkmen afe to cl1mbinc
limit pr Q duc:1U!1 en.!Tl when there is no stlch urgent OCC1:o (,
and tlw~ to ~':l;: a ,<;In;tIl b('ncr.t for the:n~dvc.:i at the co,'
of a great los:. to the rest d society_ And, as workmen a'
sometirncs tempted to t!ntcr into a contest to get wages mu:;
 I~FLliE~CE         OF TRADES U"IO"S 0); WAGES. 2'3
abo\'c their Xormal le\'cl, wages which em only be maint:ltned
nt'fi temporarily by har"h regulations and continual conflicts,
irn lllv i 11.": a great diminution of the \Yagcs-and-~rofit'i Fund,
and inll:cing: grievous injury on society; so ('l11pl(lyers are
som('t:mes under a like temptation to strive by arbitrary means
for unduly hi;:;h profits,
    The dut!e:; of dii{erent chsscs of industry to one another
may profitably be ClsCl1sscd {ruin the pulpit, in Social Science
As.~ociations, in CIMmbl"rs uf Commerce, in Tr.tdes Councils,
and in Trades-union Cmgrcsscs. And there is much to be
~aincJ from all mon:ments which tend to bring emplo)..:.;-~ face
to tJ.c'C \\ tth tneir cmp]oYl:S. to ta.lk over peacefully the ecun'.'mic
:md moral grounds of an~ c:aims that may be advanced: thl~' is
the work of Boards of Conciliation.
                         CHAPTER VIII.

               ARBITRATION AND CONCILJATIOX 1•

      § I. D1SPCTF.S relating to the Cil.rrying out of contrar
between employers and ('mplo)'cd hayc iong been settled i:
France by Conseils des Prud'homme:s, that is, by boards of "
equal number of rcprcsentath-es from the two classes with
chairman appointed by GO\'crnmcr.:. ).lr l\lunddla impro\'c
on thi" pla:l by inducing employer~ and cmphlyed in his 0""-
trade of boslery at ~ 0ttin~ham. to a~n-,c to refer thd. diSPut(
not or:!y a'S to the interpretation of P;lst contracts, but as to::-
t("rm'l on which new contracts should be made, to a bDard '
Conciliation. This board, started in 1860, has been in "ueec·
ful worl.. ever since, and a great many others ha\tl~ been fram~.
on its model. Eac.h of them consists of e:qcai numbers,
represcnlJ.lircs of employers and employed in the 5;tme trac:
with a chaimlan chos.en by the beard. If he has a Clsting '·otl
he i::i ',lfte:i practic:llly arbitrator: and :'ITf :'Ilundell3. is probab'
right In thinking that thc Lnard should gcr;erai!y disruss witho'.
voting. E::lch ~ide should li5.tcn t<1 the ar<-~uments of the 011-,(
and ende3.your to work towards a 501uti011 tt) ' \ hieh !be who
board can agree without a vole. If no surh agrCUllcnt can h
arrl\'ed at, the question shollid Lc referred to tIl(} J.rbitr~,tion
a referee who is a m('mh~'r of the board, but who is summon' "
to its meetings only when a satisfactory conclusiun car-not 1
obtaincll without his aid.
      '[hilS the work of boards of conciliation is to remove tho
Gn~5e:i of trade quarreh by friendly int{'reoursc.                Bl1t \\b
there is no such board~ and a quarrel is o!ready beginning, ti;,
best thing to be done is genel"a:ly to refer th~ dispute at once:
the deusi·)n of an Arbitrator or a CfHlrt of Arbitration. )Iischl
lla\'i:16" a:rcJ.dy begun, the work of arbitration l1111st be dll'.
quickly, and generally withOl;t the knf'wleogc required for deJ:
ing Wilh the subtler intricacies of the tl'ade j an arbitra:,
      1 On the ':'llbj~ct of this cha;->tcr consult Crompton, I"dwtl I,~
C01Jci;"iatwn.
          ARllITKATlO~ A~D                   CONCILlATW:-I.                   21;

could hard.!y Ilx, as \Ir ~lunacll3.·s bO,H'! does, a list of piece·
,-;o:-k wages hr s:x t1HJusanJ diffl.'rc-Dt usks. Hut though arb i-
tntion i~ l(l llLany \\":lys inf·, rior tu "':. stematic conciLation, it
i" mere dastic and l':wrc casih- int(l--~laccJ; and it i" the ontv
le~a·JrCI.' in a trJ.dl! 111 \\ hich h:tbib of mutual f')rbeJ.rance and
ClInn{~encc and openness h3n; not yet made l\:uch prugress; and
it rrt'pJ.l'l.'s the W:ly lor c,-,ac:i!i:u;on.                                 .
       The pnlgrcss bo:h of ar~~it:-ation a:ld conciliation depends on
the '·jchty with which ClTI?:oycrs and employed conl"rm to the
dn'!:'iO:1S. 1 he ~lIlior:.:i can gl.'llcrally answer lor all the t:niomsts
i..'unccrned, and their action ;uJircctiv ccmtruls that ~.f the nOll-
 L!uoni.s:s. Thcr~ h;cYC been "crv fc\\~ ;n"t~n...:cs i,l \yhich either
                                        to
 J:'.:.,.~h:rs or m,tn h;tY..: rei:Js(;:i    abid,' bv the award of thes'.!
to \,'h.~c dcci"ion tLcY han: 5ubmit:eil thdr casc,
       S.::!. The consjdc~a~iolls on which ILl: l:ecision of a board
0f ~'o:1C!h.\tion or of <111 arbitr ... tor l,lust bl: ba~cd, arc as
 \'<lriuu~ as human life ilsdf.             But Vd there i-.> olle broad
 pr:ncip!c ... hich must 1.!ndcrh~ thc:r ,\'urk. The:-- must, as thc
....,1";:,'1' economists would ha\'e said. (or,(orm to :\" att:re. That
,3, :h~'\' ir,;.::;t not sc:t up by ar~i<ciallllt',l;lS arran'_T:nent~ wiLieiy
 d,~-:'c:-c.:"H fr"l~l thc:>c which "'odd. h,r:c been n;1,11';t11y Lll-'1.:g-h't
.11)'JLt. Fur if they (k, tlKir \\'.,;'k wit he iI' s~r().l:'; (on:l!ct \\-:th
 n,.l1'~.tI f,)recs, and it w\~l oc JC5tr0:.t"1.        Tb('y mt:~t fuli,)\\' the
    ,\a:l'J!L· of Rennie. who , .. hen he had to con.,;truct a br'::';-d~\\,Uer
 i.1 HynlOuth ::)o'111J. first set himself to d;~,'(wcr the .-.lup(; at
'.1 hich the J1;1tural adion ()f the wa\-~,> (',f t:.1(' sea WQuld 'lrr,lllgc
,: :j,d:k of ",tunes. He tht:n let ~t(};ll'~ (~!'Op into the water so as
 to ("rill sllch a sh'lpe, <l!ld the fl'lr,:o.: ,-,f the \yaH'''', in~:t.'-ld of
 o':c:-::1l';w!n,; j-.is w0!'k, (,nly bui:~ It LW--:P,lct t( ..-:-cther a~:d
 s::'C!'6!l jtllcLl it. He cont[.,lIcd :\a:,:r~' lJl'C\l::3<! he gui,i,,;J ht:r
 L::c:-" ~':!JiJc ,-,lr.f,),-m;n6" 1,> hl'[ l.1\\'~. .\p.J this is chI: pr(,pcr
\H,rk of Il~J~5~rial c(',ncilia:i{J:1 and a:! ',ia.J.t:"I""
     \\'<.; h~,x" ~t'(n that there is a ;\(~nn,1\ va111C ahout wl::ich the
,q;;CS of cach kind of hbour ::cnd te. fiuctU<l~t',                  This yaluc
111a:- ~nllc('d cha:.;zc with ~hc growth (Jf ci,-jJi;:l;;t',n and th('
p:C;l"('~~ f)f i:l\":n;:iel1, ~ll:d with ehal1~(," in I1U1:'S jU[,Its and
ti:a,_lch'L Lut yct ~\~ :1,-.:: ~inn place a,',d in ,my g;\-en ;.,::-c the
 '\(~nLdi rel;,~i':::!"13 of lil·: \\;t~-':S of one tralk to t!Hl~e ,f ot::rrs .\;e
,kT(,-'nil1cd b:.- the opC'ra:;l.n c.f c(~'r_om!:~ L~ws: :tnlt a:l;' :..i.t·
\t"m;n tu kcq) w:.;:;:e" mudl abu\"~ or n:uch bdl'W ~hcjr natural
k\'d \\iU ue tlpposcd by stl'('n,; llJ:W,III-Ul"C!.'S, ane: will fail.
     _-\~~ain, the awan:s ::,hotl!d follCJ\\" the tende,.·~y ,)f lnt-.rrat
~aws to raise wages '.vhen trade is good, and 1o\\<::r them when
Jt i~ lnd. But the rll!,tllati"ns in the- ,\'ag,~<; of labour are
lla~"_:111j lc"s \"luic1t th:.i!l thrj:.,e in !!I<.: prices t'f 6,);)ds; and as
\'arj,i.ticns of wages introJuce a h,mn!ul 11ncertainty intu the
wor1.;:man's life, conCIliators and arlmrators should aim at
                 BOOK III.       CHAP. VIlI. § 3, '"
  making these fluctuatinns as small as they safely can, WithOll~
  holding out to either side (\ strong inducement to repudiate ('I
  evade the award. .:\lischit:f aImo;:;t always resuits in the 10,.,:
  run from an award which gives to one si.de tenns mueL
  worse than those which it knows it could obtain by a strik·
  or a lock-out.
      S 3. Boards of conciliation can meet frequently and adiu~;
  wages to each passing change of the market: but yet it is often
  Lest that they should ad(,pt a self-adjusting "Iiding S(a!~. AnJ
  courts of arbitration have no other mcans of making a settle-
  ment that shall g:ive peace to a trade fu;- a long time to con,,'
  To farm such a scale it is necessary to tJ..kc ;IS a startin:;-poil.:
  some period at which prices, profits and the wages of tho
  various branches of the trade were by general agreement con
  sidcrcd to he "fair," th;)t is .1.t their Normal value. Th'2'~e
 prices, profits and wages being taken as th.;' Sfaftd,lrd price-
  profits and wages, the next step i:; to arran;c tIM! u'cry ill,'
  portant ch;)n~c in the pn.:c of the g()(Jds prorh;c!'o shdll k
 followed without any spc,jal .1._w.:ud by a cOlTcs!l0ndin~ chdnl;C:
  in the wages of ~ach brar,eh. 1t ha:i j.ISl been s'lid th,,[
 the aim shollld be to make the 11urtl,[ltinns of wa;e5 as small ;1
 possible; "nd therc(mc the rul\~ sl:()uld not be- th:J.twages shu:.!' f
 always hear a fixed pwportic>\ to tbe selling price: but for on-:
 trade the rule mi;.!"ht be that when the pricG is ten per cer~,
 above- or below the SLlild~,rd price, wages sbouid be five pCI'
 cent. abu\'e ur beluw the standard wag-es, and so for other yari:.-
 tions ; while other trade., mi;;ht ha\'e other Llles dilTerent in
 detail, but simiiar in gener.tl c!1aractcr. A sliding scale mu~~
 no~ be expected to wLlrk fur a vcry long time to:;ethE:r without
 alteration; it must at all en:nts be recast \\henc\"('r 3!1\' con·
 siderable ch;)ngf' OCCU1"5 in the ll1ann('r of carrying on the tratlt:.
      The pro\'ision::; nf a sLdlnl! "c,de must be definite and un·
 mist;(kabk; but pe-rh:'lps more harm t1nn go')d i5 done by !r:.
 ing i'_' mo.ke thl..'!1l ('xth:mcJy sitnpic. .;\aturc is not simple Oll!
 comlJlex; and a siidm6' scale that aims not at n:~istinh' om :1r
 guiding the \\urkinti of r.atllral laws must sometimes be COI11-
 plex tuo. Thus it sbould g.:nerail)' take .lccount not only of tllt:
 price which the- nunufacturcr gets for his rioods, but aiso of thaI.
 whil.:h he pays {l)r his raw mareri,d. For instance, the St<tnc.lard
 price in the iron trade, instead of being the price f,f a ton of a
 certain kind of pig iron, might be the excess of this price 0\'(':-
 the price of the iron ~tone and L0:11 that are used in makin:;:- it.
 And the Standards in the c()tton trade should ha\'e reference tn
.the price whi<:h m,:mufacturers han! to par for their raw cotton,
 as \\cH as to those \·.. hich they get for tl!\:ir finished i~oodsl_
     1 This plan seems to eude the QLjt:'(tivus to sliding- scales urge,_
by Mr Crompton, bzdustriaJ C{)JuiiiatuJn. p. 88.
          ARBITRATION AND CONCILIATIO:\".                            217
     § 4- Theft: is great difficulty in obtaining the facts on which
 the decisions of a trade dispute should depend; it is often diffi-
 cult for working men evt.:n to ascertain the real price at which
 the produce of thetr labour is beille: s<)ld. One of the advantages
 of boards of conCIliation is that in thun trusted representatives
 of the working men may learn from their employers, i.n some
 Lase~ perhaps under (he seal of conhJenct', so much of tht:
 ~!ctual condition of the trade as may enable them to enter into
 the difficulties of the employers; to yield wben the necessities
 of the case requlfe it. and to stand firmly when they c:-m prove
 that the employers' ca':'c, on the cll1!)k'ycrs' own shewin;;. is not
 a stwng one. And mC.J.\l\\'hilc employers and employed are
 brougllt nearer to one another not only by the general influ-
(;nces of social interet\ursc, but by le~lTning- that one another's
 Jnotives are not so bad as they appe,tr to be ~\hen looked
:H from a distance through the distorting atmosphere of indus.
trialconfiict.
     But there is another, and a more thorough means by which a
<lass of working men can get to undcTstand the hidden work.
lngs of the trade in which they ale (;'lg:lgeJ. They can start
an I.:stablishment with their own capita!; and by having com-
plete control m·e. it, rccc: .. ing its profits and be,],ring its losses,
they can get acce~s to nPMly ~11 the mY'sleril's of the trade.
The knowledge thus obt;Jjl~t'd enables them to teU better than
the~· could by any othcr lllt..:ans w!'.cn a risc in w;>.2'cs would
so distur~ trade as tu do more harm than good, and "'hen It
may "'fairly" be demanded; whell :'. prvpus:ll to lower wages
i5 n0t realJy called for by tile circ:.l;r..~t:l.nctCS of the trade, and
;hould be resisted as I>Ul'.ju~t." In this and many other w;tys,
the allied movements of the C'xtension of economic knowledge
:md the improvement of ir.dustrial murality will be much pro·
moted by co-operative production.
                             CHAPTER IX.

                               CO-OPERATIO~.



     § I. THE ideal which the founders of the Co-oper:ttivc move-·
ment h;lJ. befOTe: them, \\-a~ that (If regenerating the world ;"
restr.1.i!lin~ ti;e crud fcree of comretitil)ll~ .md substitutin; f._T
brotherl. .. (rust and .",sociation. Thn' Sit\\' that ulllkr the :01\-'"
Df c(>n'pc~i,i')Jl '~lu(h <}(m~ns energy {5 \\"sted in the end(>~t\'Ol:'
to e· crrcach one another. They saw lh~ seller. whether"
comr;;(Jdnes cr bbour, slri\'ing to give as httle, al)d that ,,( ,;-
poor .1. quaiity DoS he could. ,And they !-:J.W the buyer <1.h,.1\"'
tryin;:!: t" .:,:',l' :J.Ch-:1.nt<l;:;C of the seller'" n;,x''':::;Si1rl ;:mc li!,.
forelll;.;:lv !',_;Ll. ant! c,;pecially tho:! scll~r of labour, tv :,tr~.;:::.-.:.
a~;,b~1 a !',,'dLl(oon of llrkc1 CICll when, If the h'.:ycr wer.: Ill"j
op<.!n ',ri:h hnl1. :1l' might s.ee lh,.It the redllCI!fn w::s necus~\;'.\
The" Co,opnat'\'e «',lith r is rather felt than clearly expp_';;~«:
hut it is e,lll1c<:".ly \:('ht by shrewd praCl;o:al mu" 1t is ;1,
th(>sc el il,; (;1:1 L1C in. a ~r',':~t mca"ure TL'illO\'CJ 1),: rha: 51',.1:
of hrothdiy :rust and openness, which, th011gh un.jew],)pt,:,1, ,
yet l.ltcnt in man's nature, It look" forward to a time "h~l­
inan sh::dl h:l\'e ~o far l-'rn;.;"ressed. th~lt th(r'~ t>h:lll be nl' !Kedi,'
secrecy ill b1lsiness. and each one sh:111 think of pn'moti;;;; t;~,
gencr~1 \"cL-bein.:::>: as rnw;h as "f protecting h:;;. ol·.-n interest".
   Thus its "him;.ltc aim ha3 a resemblance to !h;\t \" hid
preniled in the c;1.r)y Christi.tn UllJ~,:h, ilml \\hich kd U1C
to a cnml::·':li,\' (If g:uDds. Co-opera!,ion j>i divided from lll(,"
modern ,;,'),:i.tlislic s(~h('mcs by ~ldn)(,,'ting no dlstur1J.u'.,'c of p:
n,te llmpert::, Lr insis,ing- 0n scif-bdp, and by ~lbi,orrinb stat,
help acd all llnncccss;~ry intnLrenc{; Wilh indil'idual ireClk'l:
But in Olher rL~pccts L·o-C'per.;tion has mnch ~) mp,1'tIlY wi·J·
3nd ha3 k:1~'l!t lm.:ch (rulll ,hI.' l'nthus,a~ts of ~()D·I~i"!-'l. In he
the gr~:th:",t of Lnglt::;h sociai!:-'ts, }{()b<ert O\\Tn, wa'-; t!lC founj':'l
of CO-Opcl""tion; and m,my uf the most earn.est co-opcrJtors CJ!.
tra.:e their fait:l to h;l:l. The l'XrfaYJ.gancc pf sam.' L"f h'·
opinions wteck,~d h" best enterprises. But his uni.\o<.lndnl
bi.;;id in the latent goodl1l::-s of human natu.e anti in the              pos~'-
                                  CO-OPERATIOK.
Lilit}' of forming noble characters, 11:$ cJ.rnest desire to bring
out whatt"vcr power of right acion lll<.'n na.\'e t)y tl U~t:i-,g- them
and appeahng to their rt:a~on. his CJ.rdL':isn~.'.s ~b0;]t his own
i:".tercs\s, the unrh"alled bu~in('S5 gcr.it!£ and ltl~ight by whirh he
acqu:red Yast gains. and the g('nero~ily with which 1lC ~hared
thtm with Ills opl.!ratin::s, and otIH'fwi-;e dl"\ otcd t!Ii:'m tu his
J..,reat !,>(I'.'ial aims-all (bese traits had a great fascination fvt
Huny of those working men of the gcncf:.ltion now p:ls;;in~ away
who haY(" e:-,.ercised the profoundest Influence Q\"er vthersl.
     The w.:Jrk which co-operators hJ.ve s('t thcmsch'e" to do for
,he pres('n~, m3.Y be classed under thr·~e heads. They attempt
to remm·C or uimini~h the secrecies nnd di:;corcs that exist,
rirstly between emp!oycrs and cml'h..':'cd .,01", as is inaccurateh'
~ai{J, LJ~:;\"cen capital and labour:' ~t:c(,r;.jl:' udv;ccn retail dealers
;,nd !1l"xatc CL~stom('r5J and thirdly br:tw,-'cn ret.,ii <lnd \\hQk5alc
li(!;)h:rs :md pmduc{';,;. \\'h~It.' pur;'~!\~'S '.hest' (:lh1:=., they aim at
 ::ubli!1,:; working m..:n to empluy theIr (j'.\'n C1p,t,li ill trade and
m.lnt;(;~cturc. and to saVe o:lt of tlw profits .. jn;nt capil.ll by
.PllIt .'\   tion f0r j<):nt   purpo~b~':)
    § 2.       :\tr llabbagc was the first who clc;~rJy explained ho .....
ind,lsn;,11 co-operation would dimini-;h discor,i ;md l:mEg out the
c,',er _:T ;l.lld zeal of tbe worker",;. One of the fDrm~ of co-
. r-er:1.t:l)jl \\blCh he ;1<ho(<l!cd w..Islt!lll1sfri!lll'mb:,r.;hij. In
:his sYS{!'1T\ the organizing and ma!u;in; I>()\\'('I' remains in the
J1anlis of the employ..:rs, who pro> ,Je the grc;lkr ~hlrt (If the
clpil:11 required; bllt the w ... gcs of the E:ll1ploye,:; ut'pend
1Il 501::'C mca~ure upr)01 the pr(·fit::; of the bu~i;;.{·:,s_        The
"y~tf'm :.;,nilcr which each of the ckr/..s at \1 r Smlth-s u()l'k~t:tU ..
;'\'cc!ns :\ p·.'rccnta;.~c on all that he sc:l~. 'Jilt h".o, n',) direct
'll'(ull"try intet'cst ill I.he gcn..:r_d succe~~ <If the concern, ha-,;
  'l'en que,ted as an in:;;:;).llce oi Indusnul Partnership: it is
,'('il11r a case of payin;; wages by piL'Cc-I\'ork: but i~ is ver~'
ir.l?Onar:.t to Lotice ;hat there is ;m tlemcnt of Ci)-0!-leralion il~
.:)i3 and every other plan for p<1yin~ wages by pie..:c-\\ork The
 ,.'·stell" of 1l1{bstriat Partr.~r5hip j!- well iJh!<;~r;:;l!~ll in \-Ir
!',"c!'tirc's hC'u$(; pJ.infing cstalJlIsnment ii-, l\His. "n~sid('5
h!\n~df there are two other rartlWL~ in th\! concern-a ?Ir
    I K:!d ~Ltrx. who t:link" C.0-"!,l'r:i!:,'n t.,,-) m;ld a remedy for the
 .. -~;O,o.:~" )llCll :::tf,_ct 5",:; tty, i~ pro'Jd to l.·'~nt 0U~
                                                                h( wthe >!reat So\:ia~i~t
.,-,q·ntcd :LnJ pclt JI;to ,Iorking th(' I:mit:Lri(j!~ of tht ·''-'~lr.~ of factDry
::hJllr, tl:e senJing to ~dl'.l(J1 cf Lt"(c,ry childr"I!, ;;~1I1 tiH~ "~~'('m ...,f
  ·)··.'p"l;H:'Jn; how all th(·o;e 1){)li .. '~.~ ~\f !l1S ","re. c:lllcd l.'l':[Jl1.n and
" 'J:r.;mm;.-<It,c, ar.,\ l:\UghcJ to scorn by almObt nil re~rect:tb!(' people;
: n',; no'.- (c~p(;ctabl!.; these nOlions have ~ill'~c b~..:·...nH! tV,;s A:arif.I!, p.
: ~-~.
         Profcs:>ur Stuart',; AJdnss 10 the Co-otn'atit:e Ccttgress, ISi9'
         l.corJpmy qf llIanujcctlli#, ch. XXVI.
220                BOOK Ill.          CHAP. IX. § 3, 4-
Defoumau."'t and a Pro\'ident Society composed of all the other
persons (apparently about two hundred:: employed. Each of
these three partners ha~ a capital of J(YJ,ooo f: ant:5 invested in
the bU5iness. :\l~::>srs Leclaire a:)d Defourn;lux rccd ....e each
6000 francs (£:q.o; as wages of superintendence and divide O£le
balf of the nct profits equally hctwc<:n themsc!\-es. The other
half ,:::;oes t·) the workpeopk', two fifth::; of it being paid to the
Provident Society_ and the other three-fifths bemg distributed
among the individual members. Mr Leclaire howc\-cr resen·e.:;
to himself the ri;;ht of deciding who shall 5hare in the di!:>trihl;
tion, and to wh~lt am-Jnnt; only pledgin; himsdf never to keep
back any part, but to pay to the Pro\,idt:nt Society whaten:;
fraction of the work people':> quota may not haye b~en awarded
to individuah. I ."
    § 3, The term" Co-operative production" in its stricter us'
is howe\"{~r connned to cases in which the working men allcl
women employed supply a part at lea:;t of the capitat require·:
for the: business, and take some share in its management. I:)
former timc:>. :'-Ir Holyoak.:: says~, "'Capitalists hlred laboe:-,
paid its market.price, and took ali profits. Co-operath'c Jabot:·
proposcs to rCH'rSC this process. It" plaa is to buy capital, p"::
for it its m:1rkct-pl"!Cl', and itself t:lke ail the pront::;." Tht:,"
                                                                     <

co-opentl\'c worksh(,pis one" in which labour hires capital,dc\,l~'_ >
its o\\"n arr.1.ngt'mcnt and works for its own hand J ." '"\\"orkm"
who in;.i,;nd (ommcr:cing (Inc, fir';t sa\'e,a(cl1muJate, or sub.'cd,
all the capital they can as ::>CCtmty to c<lpitali=ts from whom tb.?~
may neeu t" borrow morE', if th<:ir own is in~uftici('nt... The'"
hire, or buy. or budd the,r pn'mise_~; enb".lge or appol:':
manager5. C~lgin~crs. designers, archikct5, accQuntants. or what-
c\;er officers they req:iirc.-at the ordinary salaries ~uch pcrs~'i\'
can command in the market, accordin;,; to their ability. E\"e!')
workm:1.l1 empluy.:d is paid wages in the same way. If tht':'
need c,lpital in e:'l.ccss of their own, they borrow it at mark(,
rates according to risks of the business-the capit:!.1 sub5cribt:(~
by the:r own membt.:f::; bemg paid for at the same rate. Thelt
rent, materials. salaries, wag-cs, business outlays of all kind:;;,
and interest on carital, are the annual costs of their undcrtak
jog. All g::tin beyund that is profit, which is diddcd among an
officer", and workmen, and customers; according to their sernce~.
Thus in lucky years when 20 per cent. proht is made, a managc~
whose saJan- i:i L;(X) gets £JOO additional; a ''''orkman wh():,.;:
wages are 1,100 a year takes £-:'0 profit, in addition to the
interest pai<! him for his proportion oC capital in the concern.
            l    Thornton au L'lbC'lIr, "lnd cd. pp. 31)6-7.
            11   HisllltJl t',f CIH1j>ffatil'" 1 vol. 11, p. I:J~.
            ~    Ib. p. 1'22.
                            CO-OPERATIO'i_                                    2::!f

T1H~re    is no second divj",ion on capaa1; the workers take ;!.:]
:'t.:rp:u~,  and thus the highest exertions of those, who by labol!'
of bLlin :If 11and create tlie pro!lt. are secured, bt'cau:;<; tlic:y fe!lp
;.11 ~lH' ;'h:I-;lntag-e. This is the di5t;nctivc principle of a CO·UP":f<i-
tl\-C \\-orksl-;opl."
         ,\ gL\UJ il:stance of such a workshop is the Hchdcn Bri(lge
F'l~;i.tll          en-operative SOclt'ty. Here every \\orker, man Of
w~'n:;ln.          must Ltc a sharehpldcr, some shares arc held by ot!lcr
 (d-(lIJ'-?ral i\'c SDcici.lCS find S0JllC bv ('outside" inc! i':i<\lI:ds, chirPI-
 I'_,)rknlvn engaged in the same tr~,:c in the neigh~'('L!hfl.ld . .Afj
 ,lu,ehoiders ha\"c equal voto.:S, and all aft.' fuch- to (u-0perak
 ~)~- gw\ng counsel j:l cases 1i d;f11f:ulty \\"h('[",' thlOir tcci.nical
 '-.nO\deJ;.:-e c:.tn Le of a'-::li!. Th!s SC'Cll"ty seems t(, h~1\"{' IllP,,;:
 t,f the cond:tions which are favul!rahk to the "ucc('ss of a cu-
 dptr:ltin.! workshop; antI these conditiot:::; ma>' now be enu-
 mer,lted.
         ~ 4.       The w(1rk by which an employer gets Earnin~s of
 "',l:l.n<tgcmcnt is of two kinds. The trst is that (,f fllganizing
 ~!'e p~oduction; of dett'l'minin;{ wh:]t shall be mrtdc and how it
 ~L~l bc made; and of dccictinf; wbe-re and when tu huy and
 _:,ell, \Yc may adopt an Amencan tC-1'n'., and call this J:'n,>:inecr-
 ,'I;_~' the busincsc;,        The second part of hi~, \\ork wh1C"h m,lY be
 t~\~icd that of Sif;'l,·rilltouidl<.-r. ,,)T1s;s!s in rr[)vidin~ fuT t1:.:
 , rOller clrrying out (,[ his instrtlCli'JliS, It may bc laid do .."" 2~a
  ;tI;~ul n:lc :hat rO-(lperati\,e w{Jrk,hops arC' not likel), 10 5t:C.
 ,:c'('U,ln tho')e l~-auc:. in which the mH k ut .i.1l~illl:ering is dlfficL<lt
     .U IInpot t:lnt-_
         F"f in such trades a bra.H: of busint''is men is at ::l grc:tt
   , ,,:,0:1.\',,: :ag,;: in cmnpcting with ::\ .;;il~d(" mdl\'idual, and a Loard
,.! \\Orkln~ men WOld~l ha\"e tn rlc-pt'iHl .1~1'il(\'iI entir('ly Gil their
 '~,:1nagcr. J;t~t n,l co-operative wu,kshop h:15 ~ ct uff('rcd a :':1j1i-
U~I,t ::;.];u y to retain the ~cn'i,-('" of ;l. manager of tirst-ralc
;:bi]::\', lIldess he is ~o much under the intlllcIlrc of tho:: Co-
    pCr.l'tl\e rmth e" to Lc \\Ilhr", ~l) \\urk fur til .... l.l.ll:lC ,It ,[ J -
     l:1r, til In 1)(, L luld get:n the CP(l1ll1 "k,'!. 1 hI'S Co "pCI.:'.tI\C
  "~:"h(l';Js L,l\'C not surcccdcd ;n ;::c ~u~t, ;lI1d they alC llllt
\"'rY;lkcl~ to 5",c('(-d in the fllnj~ c' il; h~~sili.l'~se':> that re'_luirc much
l,:\'~'n~ In' P(lWCr. such :1S m,lny klr,rls of marilillc-makin.c: trades;
(li',;hl: (~('pci,d much up{)n pas~ill; oPl!ortnm:ic'j and so re-
'; I:::f:,l~n:l h kn·.\\lcd;;c of \\hat IS ;:Olng ("1_ to.;t:thc-r with quick
'~C:c-,S!:-'1l5 :t:hl h'-lid action, sllch as trJ.dcs for m:,kin,'-': materiab
r . ; "..,',i<.:s' dres5c's in which the (;bhi( it Ch;1J1~~~'S quickly; or that
>,q'"lrc ,:1 1.11':;c capit3.1, such 35 iron rnllill~-n,IIh,; or in which
[he profits are made chiefly by successfui :-ipccllbtion.

   l l.~, rp, [l.i-~4-
   ~ I.'omparc Bru~li('r l~dl(rfJ (f,i   tlu LJ~u,.   QIttStiOllJ   pp, 1l6-IJO.
222                nOOK Ill.          CHAP. IX. § 5, 6.
     But in tr.:lde~ that easily fall into a. regular routine, so th: .
the employers' work is chicny mcr~ Sup·.'nntcndcnce. ell-oPer
tion can make gr\!::n 5:inng;; by prcvl!ncing the greater part <,-
th:,; work from luving to he dune at alL For c()-op~rators (':1'-
keep one al1uth-::-f to work, th('y ,an secure the: efficier.cy of t;-'~-'i
own fLlr,~m('n :wd otht'T Sllbr.,dinate m:Ulagers, and the;.' (.\,
prcycnt '.\'.l<;t(': a:1d mi.~m:lt':lg'_ llh.:nt in m.lOY matters of ,:<::=,,-
Thlls cc·operatin:o w,xKshops [-..;t\·c: tl:e bc~t chance of ~(lC.:,,>"
in tr.ldes in \\hich th~r, is a StCl.,-;y rkmand, in \vhich chafl,~'_
aTC shw, and t'htr::tll:l'jnns of pr!(e :"light, and in whIch 1!~_
capital is small in prc>Jlortion to tile iabl'ur employed. C:)
opf'nttiye work has 5ur.: . . eded in many trades th~l~ slIPl,i), t:
ordin:J.l'r wants of th\~ working d;lsse.;.;; and seems likely to ~~h .
rccd h manr more: ~\i~r! 1t ha'j done: \Y~il in small tradm; ship.,
antI wbale ,hips a:,d other 11"hin;;:: vessels.
    Co-npcr,ttion h:-',s hithnto made but little progress i:l ag~;
culture; ai'hou~h nwst r,{ the cund,tions for its Stl«(l'~S a
present thdC. Bu: 3,!ric!ltllrJ.l h~ourcr,;., C\"Cl1 iflh,: (.til gl-_:
cOnlnw,nd 01'cr the c:lpi!;li required I()r stocking a Lt,:;" C·1'
sehkm ~t:m(t the brunt lIt "c\'cra! b.ld harvests 1n "tl\C~'S3:011
and wh:,t i" 11'.Ol'e :m!)n~·unt, their narrow school ,\J1(t suC::'
educ<ltian 11llfit~ ~hcll\ W s('tne extent for co-operati\'e work: L~"
co·operatlon is th·; child of confidence; and ig11lwanc,~ i.; tk'
p;uent of m:~trllc;t. The" C_lmmunltics." ill Amerir.a ;\re chit):;
agnclJltu~.lj, :In,l many of them arc very succcssfu!: but t'h,:,
(Iwn th,~ land 1\ hllh they cuiti\-ate, :lnd whicb S;lPp~i(,'i m()st
tbeir s:mpl,' \\;lnts; they lta\·c .1. good dnl of pra.:t:c::d abiL:'.
and a rL':lj;I')U~ cntl;usiasLl whkh includes a spirit cf bro:hc
hood and l>1utu.ll trust.
    § 5. Hllt C\"C'1l in trades the ~cneral m;magcmcnt of which j,
beyond the IT:1Ch <If co.opcrati\"(:! dfl,rt, workmcn may (o,ol)["r<ll'..:
in taking- _"l\h~(Onlrad~. \\-'hCll Ih!..: sub-ce'ntractor is a middk
man, s:";'ilLd P(T!J3p~ ;n little but h::uq !.Jaq:;:::t;'1ing- ;)nt! se\'('l"'-'
rul~l;~~ workl1l('<l cPTl1pl.lin that the system             l,r
                                                              :')llh·c()n!i.l.l;t~.
though it may cllI.·ape:1 production, often doc,; much lurli1 t·) th·,
wod-..:m_,-.. I. Hut !Lldes UnlllllS cia not OPpOS(" .. nd CO-"!'('j.1~".·
sho'dd d,) all ,bat th~'\' can to t'\:i,'nd the lise of the pL1n I
which ,1 ~llb,contract j~' taker. h': a set of \\'orkmen, whn si.1p~·L
their own l(h)l~, sha,\~ th.: \\ hole rdponsibilirr amnn:; the
sclv("". an,l a:\' under the mders of Il.1en chos('n and paid
thl'm~dn'5.         Thi::; system has Inn.; been in ll<;C amonc:- n:l':',":'
ilnd mil',""]''' ;1l1d qu,llT~ mc;)~ Lln:l in the shipbt;:lding tr.uJcs; ~.:' .
it seem'> . ,1');dJk of ;Limust Ul~!imit,:?(l cxtcn~ion. "On a ](."
line of PIlI;"\)' e\".'ry cutting, bndge, tunnel, embankment 3~
statton is Cx;.::cuted by one or more separate sub·contractC';-·

                        1   St'(c Howell, cb. VI. §§ 3. 4'
                                  CO-OPERATJO",.
         \ [h1,<:; the co-operati,'c system may readily be ap!Jlicd to the
         .~~r;,c~i.!n ,)f every senion of the largc~t undelt:tkin:;. after it
      \~ tr~cn ;utflC!cntly su1xliviLierl 1                .'} ...... lld in man)' bc(>rics in
  \: j . h 1 10(,',1 wi:h all i'" machinerv is kt Ol!~ tt'.1. middlcm:Ul
  \; -J ;;,:d 1;,(: rCY:lisitc bbour, and' C~lf1.trac~s to do a c~rtain
    ,c-'!, ;)f \\"<.l"k f,)r a given prie'_" the' m:d(ik:'un mi6"l1t \\o'ith
:: i·.,I~.t;l;e be tli~pl~:eri!Jy a ClH1llcratill' .~·a<l.C!.
          ~ 6,          CO-(\i)c'r,~ti\,' (FiJ/t flSS(J~;ljtl(W\' lJ.1H: h::ld g-reat suuess
         C-:nn:1I1Y: p::lr:ly bo;-cll:sc the Sy~t('1:1 (;f work in ];·.q.;e 6c-
      '';c' '1<,'> In:1dl.' l11lh.:b k~~ progrt::ss th .. n in Enf:"land, .llId there
        . Y,I-: m:lruers 0f \\"orking- wcn Ilho require the ust.:' of snme
         :(::r-. ,~ing- c.lpiLll. Croups of tl,es\.; ',Yorkmen, II I~h ;'l few in
         ,r ~ ;,.'ia1 raTlb. 11:\\;.: formed the"iSo:ivcs into ~l'>~l)ci.:tti()n<;,
         ~j of \\'1i,:h In:; a nuclel1s of or·ital (If:b 0wn. and                             or
           ,~ 11;7 t!:i<3.'ls \I"ll ;'" the whole prllpC'rty ~If :111 ;~S Il'.emlwrs,
'. 1:",'\\" ;]lOT", cllJit~l at the m.lr!.;o,;t r",c (,f ;niC'rl.'st.                      It then
            :'" 1'):1115 l() !::; Jrl("m"~r~ at a r:-,:e wb~ch "'(luld s~'('m high to
           ., .. _. I1tl1\' b-:lrr'lY'"l"f, bl'~ ',\ hich is '"Cry milch l:~\\'('r th<1l1 that
         ·'·':"~.It '. "::I.~>~ \\or\":n/ \l':t~\ (\1.n \JllrruW ill the ordinary
            ~.' llf b\l~in'·;:'s; [01' the risk, th:n tile workman II13.Y get ill
         ,;,,,",HtU bd"n~ the ](l:-tit i.", n:pa1ci, ptl.'l cnlS him fr(lm b"l.:'tting-
        ";~ny l1:oderate r.JtC'. The ll'arg'in hd\\l'l'll the intl'f('st which
         .:ho.l.,.;;uiolt pay,~, antI that which it lccl:in.'s, i<; :.tllllO~t always
              '.'11' TI.' :..:i\i~: 1(:,), l:llge profit'> on I:S CapH;'l!, after ,llo\"ing
           ';,( e\\h,;;'c:'i and l,',,,s,:<:>; ar,d ot:( "f (hl'''~ prot";(~ L.::sh
      :":"i j" :lc(.)ll111iatc.J. ~" 'fLl~ :l:e :J.~~Qri;ltjon ILt(.le:. C'\cry year
        ".~ '.',ilh :ls 0\\"11. ;ll1o.i 1:;;5 with bO:-rO"l',i ':<lj)it:1l. 'rile losses
              .'t b:·:..;('.IJt",~,'tI~i~ th·; prin'"'ipl·.' (If cO·()j."l..-ration is thur0u::;hly
       '; ('d in the cm~LlIl: ,,·~:i'1'.~ of (',l,:h mem\;cr's tharaC!l't'
.           ,J':l(l\.Wt by the utih', IT'''l!lbcr~, :l1:1l1y of \\111)11) arL' llci~:h.
I ',n, "f jli~ .md know all :t)J()ut him. ,\ hi.:::h s!and.:lrd i.i
   .'Il.',ui'\cd, not llnly when .l man applies f<.'r admi:-:'iir>n, but
"i''-,rw"I",!s whell he \I;(nb to bUrf(lW; ,u"l. as no In.lll is m::.:dc
         -n,_,'>,' tha!. thr'~l' IlI')llths, lhi,~ pr,J(""t"S" of tC"lin.~ is cop..st:1ntly
             ; "n The~e as,o(iation, dlO 11l1t g-:vw !,pv::d.nC{Ab]) 3->
,11 .. 11:.:L,~h \\ ;lrkrnan's ({',o1JerJ.til·~' "I ores (:ii.;: :he)' ',\ en; pL1H:1l:rl
     ."             ;.;rc-.lt l:lC:l:,ure built up, ry t!H:? lc·r~.."ght and (,lh'fgy of
]',                1111I.'e-Delltz~ch, H~ stJ.rtL'd the 1irst of li1'~m in rS49
         rh(; l!t~k tvwn of Deliu:sch, and in IOn he reported lh.lt
T:! .rl: ',I '~rl 1S::!7 credit associ,,, icms, that t:1,--')' c.lntaincd c·\ cr
      "":}.'·"'f) 11l'.'mbers, rl);1t they OWllcd £8,ouo,cx)o c;-;,pltal and had
     ~'),()\X),OOO more on lo,1\l; ami that tIlt:)" did business to the
    .;, ... :~( vI /.; r lO)OCO,CXX)~,


     ;. r',:\:'sey, l. (. p. 1.3;.
     '. 1: 11c:-1hh readers may karn more of these Associations, and other
    0l->elJI,yc mo\'emen:s in Germany frem :\-lr R. D. D. Morier's pa~r
                         BOOK III.                 CHAP. IX. j§ 7--9.
     § 7.       Co"opcratiun endeavours "to [,romote the                                     prac(iv~         ,;-
truthfll!l~(,SS,
              justicl.:, anti economy, in prOl.l!.lcu:.nl and l"_ch:'U ..:."
J.  .lh th~ abolil<wJ of all fJ.I~e dealing. l'1~hcr " j ) dir('('~.
repre;cntin.~ any :mlC;C pr()(\ucc(l or sold' to be other thall \\,1
it j-,; known to the l'roJuc,_'r I"~ vendor 10 be; or. ;b; i!lciiL""
concealing from th..: l-'tllCh;L".:r any fact ki"\oW!! to the y,'
nuter,al '.Il be kllnwn by tLL purcha.ser . lv c(),lbk him L" .i"
of the Y,l: J[~ of '.lit-' article ln~rcha~<..'d. :::. By concilj~tinJ; LI.t'
tlictin:.:; Hltcr~'~t-; of the capiuh.st, the w~lt"kl'r, and the PUrc:k
thro:Jg~ :m t'q!li~ablc ui . . i~inn 3tn')Jl6" t!lcm (If the [UTJ.U CQmn: '
knowtl;"\", plotil l.'·
     AmI ne nuw 1-';'135 to consider tht.· \\",~,d~ "f cO·flper;>,:j".:1
ende:lwmring- to put ,he rej.ltions betweell retail d~;llt'r and,
sumer on a u('tt(;r I:)oting. The wOrk of co-open,in' s~or-,.
humbkr than lh"~ of ..:o-operau\-c w()rk',!Flp,,; L\I~. par,::,
this n:,hc,n. its sue' ,'"" has bn?!1 :.;rca:cr, The \\',,)' ,1.\;; pilJI)'
by twen:.y-ci:;ht wr,rk:ll;.4 mea jd Ruchtla:c, \\h'J ii, It:.l-i_
~crib~l~ .1 p;,und ,IPl~Ct; tu buy dutil", uatmc:d, su~ar and ],
at whoksaic pricc;,. {In': uf thcir nUlllber .l,~tl·<l ;\S a sa1c~~: .
and the pr0:1c-; went t'l ir.crc;1se the c.'i!i:a! ofthl' :'>t{lre, 1':-:
stt'adi!y fro:n this '-PI,I!! b~gi[~;lii;;'; till in 1.';-0 it had J
mcmhe's. {::-,;.:',u53 ~h,trc.LlpitaJ. and sold gOld,; ttl tlle .Hl:
of [::qx.tJjlj, Th(~ t:xal1l1,le of t],(; wClkillg lllell of Rue 1'.'
has L,t:Lr, t'L'Fo~,·_:! iw '\"<\r;.,::'-::.-: m-:n in t1l.1.:--:,' oth..::- tOWI;:;;
bct\\"~('n tlJ~'J;l, tiIC;::: \~-orkin:.; 1~'Lil''i storl''; O\\:n nearly ["Cle.
of Sh,I\·t'"C;,P't,ll. ,I'ld (~~ hU~lIlCS" ;tn1auntill:; to dbout [, I.+,('I\..IC. -','
annll,llIy. Tht,~L' ti,'~(!r'-'s do :lOt iliChul' Ih~ 5;('1".'::5 s:artcd                             h)
midrl\,~ cL:'"l's,           \..-il'LiI
                                ale tnde ..:;d Gll1CU Co-o?crativc,                                  hI..:,    ~,
which th.:t.c i:; Ycry bl:ic of the tlU(' C,)oC\"'!.nive to?lri~.
      § 8, Tile \,-.-n:;nwn's stores ita'.-e fo!lvwc,l d:"',<,:!y in "';l
steps oCtile I\.vj;ri;.:te pioneers, and ,.>nc gcnrr:\ dC.jcrtfl~i{!l
scrre fur ,Jl.       The:: citar;':,e tho::: onJmary retail pnCl's ,A
llcighbo:l1h()od; ffen til.: ;';"OS5 profil:> :it the ena of e,l(lt
tel' arc dnl,:ctt:d illterc~t Oil <:<1,.'Jtal, and :1L alluwanct.:: f,·,r Ik~
ci<ltioa and C:\.luIStOnS; al;'!. in the best store;" 2~ p,?r ",,-~ .
sd by ror l"l'adin;;·Hh)HlS. libr.tril':>, lecture,::, anJ '~!Llca~; ...
purP'\::'C-:i gcnclally. The fun:llllJef \\·oul(!. if the leaders "t ~l,
111"-)\", ml."~t had their \\"3;', be di\·i!.!cd <l:l~nll; ail the pl':""
em~';uy(ti and members or the s:orc: in propvrtion to tll'~ a"'~[
in tll~ ,1Pl'uldix Ui th,~ L'if'ycnth r,'pcllt "f t!l<: Tr.1'~'':$ C'niOIl (
mi<;,~j"l'"  a:ld fr.·m ;;, :,Pl'en I:" ~)Y )lr :.\"l\'.k t,) :l:e l('purt

~0~i;~f~;·;~t; ~~I~~~~~~rL(:.~r f'~~.t~~ 1;;( l '~~:~l 1;~~I~~.7;;I:C> ;I~~'l~:t':; ,~')~~·:.'~~c~.',t' 1"
S\,l,u!:(··Peh!hc!J·" .:' ill,":',')" ,'/),;,]', ~'~;Ir'              "I;:~; [n LY~'-j:'''~, :
Jlcir H,:<l:,lt·S')iuhc ,',"/ /) -,ri' ,-'1; ;~l!.\ in ,..:, ,atilt'::, HV;Y Lilt _ i:-"
jimr JL'; ;,,, ..-(/, U;',"idh"1l lI'i,\;, ,1 ,//ly<"!t l/"rl"lt :"',:HQ','..
       Ruk~ of lh:; Co,orer.llin: l"r.iOil.
                          CO·OPERATION.                                      225

    ,heir wages or of their respective purchases during the quu·
            Hut a mo\'emcnt begun \\ it~l hig:h aims often suffers irom
      vwn success; and even at R()c:\~dale the new comers j who
    ,.~ been attracted to the store by the th:sire of gain, have out-
      l'd the older lrIr:mlxrs, and. di\'ide the whole net profits
       "'-Jg the m.:mber:. y,j;hollt gil·in;; :l.Oy share to bbour.
       ~l\lch of the good dOJ!~ by these stores is due:o their plan
      'Lr~ing a fuJI pTlc:: at fir:it, and returning- to the comumer a
       '.: of (1:(' profits in a lun-,r sum at the end of the ql1atter : for
        worKman ie; th1.::' induced to put away week by week part of
        c3.~i9gs ;,lmost wi:hO'.lt knowing it.             He mOlY then \'"ith-
    1\\' his ~a\ !ng5, perll..lpS to buy ;-. sewing-machine, or some
     ;)rJrtant piece of furniture; and thus he i:3 often It'd to aim at
   . ' ;,,:; ~t weB-ordered hom~ in which to take pride.              1f he has
          I"y ~uch a home, the best thin,;.; he can do \\ith his "di-
          IlU" is not to l\'ith(~la\\' it, lH't to take his part in I< saving
        ; capit.'ll by juint action for joint purpos('s!' In such ~ton~s
       'c' j, I11Ul'lt real co-operation: many of the members take an
  '_'.I';c- interest in the way in \vhich the bus-ines'> is carried on,
         .-:,~,.jy with help and aJyicc whcnever it can l)c useful, and
        . i;:'.rt in the selection :lnd the S\lren'ision of the officers Qf
         "Jl:iL!Y· They them~,('J\'cs arc cducated uy this work; and are
           ,[1 to discuss and undertake bolder co· operative enterprises

          :;- by the sense that they have funds at their di~rosal which
             f:tly be llsed for the purpose, partly by their intercourse at
           :>tores with others in whom the Co-operatlvc Faith is
         "g.
        TI\e:r zeal is st'imulated in annufil Co-operative CongT('s<;cs;
'. l )I-'~ri\(,\"e Board, Union, and Gild are continually :!t ·,':ork,
            ·.·,o:.;Jing at once to consolidate anrl to broade;) th: ;;:rcat
       .,' :;r,C'l1t; and co~operators are learning: that if ~~ education is
         , .;);e for all mankind, it is life's nc-c('ssity for co-op~:·atorsl."
        ~ '1. Th:; advantages which co-operative stores h.we. in com-
                :\ with shopkeepers IllrlY be cJas:3ed thus:
                 They h<l'.e adopted cash payment::; as a principle. No
        .Y:'.cr is offtnded at being refused cr-:Jit at a store: hIlt
     c' Ff'('pcrs J10d tlwt even if they start wIth the cash system,
               ;;Ic; \J:mily avoid meeting exception;:,\l cast's hy givir.g cre-
                ': :;l!'ln the exceptional C:I:5(,S become the Tule, Tlw credit
                    llot only leads to many bad debts, but it inverts the
           ., I (,rdc. of loans, It is reasonable th:tt the trader who
                 ; trade profits on his capital should borrow directly or
                  :1;-- (ror:.l the private individual who can (1oly get interest
                 hit on the credit system the customer borrows the use of
          :.:J.' Jrom the shopkeeper.
     '; :\;, tmt11 is ably worked out in Professor Stuart's nddress.
                                                                        J5
226                   BOOK Ill. CHAP. IX. §                    10, II.

      ii. The stores in which the co-operative element is strong,
5ell un::H.lulterated goods; and others are bellC\'cd to do th'
samt'o
      iii. A store can do a lariic business without o;pcnding much
on aJvt:rti~erne!lts, ur 0:1 ;(:1. expensive site. A large sto.:-e lik,'3
to h:lW" <'1:1 imposing- flOt1t: hut this answers for a .;reat ma",'
dc.::p;utLh:i-I~S OI1!2' a~()\'c the ot!lcr.
      it',   '.\'hrn ((Jmrt;til1~ wIth the small shopkeeper it has thr
ailliant:'"c..:c (,f h,lyin _': iii ldrger quantities, and therefore mar'
ncar);' dir,'ct fn m            tlh   :JrQ{iu':er thnn h(' can,
    v:   rbo-ic Whl) h,l·.-e :\.n interest in the success of the Slela',
will w;lit w(Jre p:L'ientiy ('J be sen'eel than the ctlstomers il~ .-
pri,-atc Sh0p: ~IlHi thcnrnre the- amounl of businc-;s donL' i~
larger in prop('.rtion to th" number of tb)5C \\'ho stard b<:I1;:.,'
the c·-I\.'ntcr iI, the storE' t:lan in the shop.
   Th'e: g-r~<H {iLfjicu~ty t~1,lt the :::tores have to contend with                     ::1
seekin:.:- the     Cl;S((lJ~1   0fche     classes, arises from t!lt" ]"1
                                         \-h,d.:.ing-
that a wo;kir:,: man who is not a unionist generally wants ~"
uorro\\- fro:n ~l:')pket'pers Wilt-'ll h~ is out of cmplo)ll1cnt; ;,:1,i
th.lt even un:'l\l'~;,,~_ when excitcd by a strtl~;;k for \·icte.ry. , I '
sorely tf'mpt- tl [J ::cccept the offer uf fnendty shc'rkcq::-r
to a<ivan("c tlH' me:1n~ of sU<;lajni."J,o~ the strike f(lr .~flme t:,r,\"
lon:;t:r. And tl:erc Jorr.: m,\ny in other r.l!'1ks of life who C~""lll'
or whe.' t!link t.;wy caj:n(I~. a.~·oid spcndif1;;" their income b"(~!I,
the\" ll'cei',<:    It.
    '§   In   It is probable th;1t therc will always be SOllle $!"-'"
keepers who will orry on their busmess on the old plan, all':
who will retain th(lse '('u"tomers '.\'ho are willing ~o p<ly hi~;:
p:ices, (I\~ .~0ndltinn of r.:'cCi\·lng credit, of ha\'1.'"1;:;- as:,i~t:tJ;
a!wJ.\'<; rC'l(h- to l.ttcod on them without delay and to shew the"
illh1.1;;Kl:tU!,; lh:1L'S which th,:y do not wint t(l htly, ant;
h3.vin" "\cry ~::t)c triflc \,hi::h they buy c'.c1iH'[cd at their hon..,r
at on(~. H:Jt a~.l the~l' ~':!'\ ice.:; ~ost llhlrc to the shopkecp"
than th('~: :1re re.d!)' worth t,~ the great m.ljority of l'I,~t01l1i I
.\.nd the S',:CCl'S': ofcO-OP'~r:ltl"\ie stores has plo\Oed tll,lt th . . rt·
a grcilt      (~em,1nd    fc>r traders who will act on thL' O::,::l:2::.S, pil'1
cipk of not d"in; any thing for the customer which nn:st m ~L
10)\[' nm CL)St the: Cll~tCl!lH'r r,lOre th,,;"'. it is worth II:':> \\hiie
P,l: ier It,         j::lt th . 'r·,; ~" 11.) reason ,d~y shopkeepers whu ad· ;
th;" prin,:iple shodd ll<lt tie ~blc to hold their own 8f;<l:n!'t
C,{Lll,', t.."_.-::ert those :n \\'hl(h there is sc' lTlt'ch true C(>-OIA:~,l:
a~ to u<.' a grl'a~ SC,lTl'C of ~tr(!n:.:th.           \\'ith cqll:11 :!r:I\',1r,ta:~,~ t.
profc::"'d[l.,l ~r.\~cr \\ilh tr,liOC'(1 ,,~iIl aT 1 spe,":.-,!:~:,t Ll,~:C (
hold hi~ OW!: a;::-~~n~t jC'inl-:O'''''k compr,:lit''S IJl;1!Hl,:;h--l b:, :11;
tCHrS_ And ::.in·:e m the long- nm the Earl1:n~5 of ;\br'''~''l''
of shopkeepers arc gm'cmcd by ::lC Laws whIch Were t1i:':\l,~~'
in the secor:.t1 Eook t they will, when the new 'Sy~ttlll is fa:riY
                            CO-OPERAT!O)i.
 f'peration, obtain as good incomes as they would ha ..·c done if
 lhe old svstem had continued.
          The change will bem'tit shopkeepers br freeing them in a
~ : 2at measure from their dcpcnd":Tlce on small b!)dics of cus~
]"rners whose humour;; they have to consult; they will have the'
~Llund position that comes of doing business In a hu"iness.1ike
 I"ly.         But the change will of course t:im;nj:,\1 the number of
 ·-llOpkeepcrs whose work is required 1 ; a::d tht' procc,;;s of thin-
:-:ing out must be painful; the suffering n>::ed not howe..-er be
~~re,lt if shopk('epcrs adapt thC!HselvC's qUld':!y to the require-
r: :'nt5 of the new age, and ur~e all youn;..; men who h,:we not
      ,eclal reasons for becoming shopke('p~rs tu choose 'dome other
       CUP:Ul0l1 The general prlbjJcrity uf the COuiltry will be much
    )creased when the capital and labour tint are now wastefully
  ':nplo):ed in the retail trade, are set free for other \\-ork.
          § I r. The thild work of co-operators is to dimini<;h the dis-
   onls hctwe~n rct,1il and wholesale d('alers and producers_ For
'liis purpose they lla'-e started a Will)iesale Co-operative Society,
,1-hi(!1 aims at doing for the retail storc.'i what the nuil stores
    .'11 ,It do;ng fur the inJi\idual consume~, It buy.'> dircctlr from
       .~ produ('c!", or impor..er j it imports !'lome things itself, ilnd it
      ,s it~ 0\\1\ works for making biscillb. shoes, and ~oap_ The
   _".ail 5tlorC.'i who deal with it share in its profits: and however
    'l:C they buy, howeyer little they under:;tdlHl tbe bu~iness of
        " ;ng, they can, it is asserted, buy from it on the most favour-
        :e tenns.
         There is a plan for making this society th,~ centre of a grand
 i .ueration of Co-operators.                It is proposeJ lha.t co·op{"rati\"l~
       tl5UmCl'S should guarantee to co-oper:lti" c pruuJcers ,l ::.teady
    ,.;kc,t fur their wares~.            H:J.\-ing unllltcrrupleu employment,
      i" (.Q-opcra!ivc prouucers would, it is argued, be f;-..:e from.
:'_,·x;ety, dod be able to get high wages for t;lemse!vcs, while
   ;,(:-, produccd at a low price on the ilH'rage ; and thc c<.l·opera-
!!\,; pur.::hasers "lOuld gai<l by buying their gaoa:; ci,e.ll--ly in the
11: ,t :n..,t:mce. and ~lsQ by rece:\,Hlg a sha.re of the .,ct profits of
    !<..' c':'-',perative workshops. For it IS :1.~SllJl"H>d 'tbat th;:: nn pru-
    ',s 0: the co-opc:-J.:h'c 'h)rh.s;lops ",,-ouill be dividell bl:twec'i the
      "'Jur ..:mplayed in it and the customer5. Thl' tatai demand of
~,,·operJ.ti\"c consumer::; i5 of cour~:! not constant from year to
  , ! It h:l!:o licen calculated by Mr X~ale (ECJ1W"l!'~S 0/ CO'o/,u,lti<Ju) th:lt
';l( :'<! arc .. I, i35 ScpJ.f:lte ~stJ.blishmcnts for 2"! of the princip:-..l retail
',.·,':cs i~l London. If for each of ~l.t'~e tLHleS tht'IC were (i~:-; slwJlS,
La, :' 9 to the qUJIe mile, no one would have to go /T,.w" than a
I .:trter lJf a milt' to the nea:est shop; there would be 1~.zS6 shops in
        A~su~ing that lhi~ supply \H>uld be sufficient,     there are ill LvndolO
  I    ~l,ops tor every 100 that =tre reJ.11y wanted.
      ~ See .Jook lJJ. cil. i. § oJ.
                   BOOK Ill.        CHAP. IX. §        Tl.

yc ':. ar.d t:-terLi0T~ p,:r(cctly LnintCrlllpH::d em;-,loymcnt f:1,1
nor be g-uar::.;:~ced to th<2 workshops if their an!1Lai prc,t!
eh,~eed('j t~le :llTIullU which thL Stor~s \'\.'1'\(' willlllg" to pure!.
in die n'v.:.t t'l:hv'.''J:'.l.Ue yens. . \11<.1 the pr:cL~ :l.nd W.l,. ,-,
tbe w',rb,h0p." \m:lld ha~'e to f~lil w!ltllC\', r they leil ;.1 til(; (.
side markets: rer nthcrwisc lhe tn!.'it of co-oper,lt{-.,.:, would;
put to tvo g-;'c':l.t a. S:r,dr"
    Thc- pba \\"i:1 requ~rc much exercise: of the CQ·oper.:1·
Faith; but it wiii be a gain t() the world if m;\ny wish for it, ,w
a great ;';3.in if they achieve it.
                                    INDEX.

Arprentice~hirs. IIl,      19"                 Deduction. 3
.\rt, old   U"I:  of the word. 3               Df'gradation of labou!', 101
_\.jAil;~l.[y   opital. '9                     Dcpeciation, i.5
                                               De).lr6Sion of traile, 15<4--1.=,7,
Habba.ge, on the economy of skill.               ,63
  .'0                                          Di;;C:('i!ntcd value ("of labour, '33
Bagehot, functions of the cmp loy('r,          Distribution, 94. 95
  $1, III'); on the modem fo.cili·             D03~ of capital, '21
  t;es for borrowing c.lpit:tl, "7.
   IS7                                         Eami:>b~·~n(l·interest Fund, 96
:trusser, on th", c.niformityof Task-          Earnings of Management, is, 96.
   w~es. J 74; province oi Co-oi)e-               !   .37.    l~ I
   rativt: P!'!louction, 223                   Economics, "1,5
i;rer.tano, Gn tbe dif!l.:rence be-            ExpelJ;:;cs of production. 73. 14· 9,
   1\1 cell tIl(' price of hlbour, and
   that of commodities, 17'1.                  Fcml:ili~m, 61
~:u)er.   68                                   Final utility. 69
                                               Fixeu c:<pital, 19
 "pita1,    13.    99; Personal.   10
  arey, on the Law of Diminish-                Gild~.        4/), r8i
   ir.g: Retlim. 14; Cust of repro-            Grades of labour,        IOj
   ,illCtio:l. 79
. ircubting        (,~\1lital.
                           '9                  Hill, Octavb., on vobnteef work
   0UlmUnit)', yiHage, 44.60                     in poor-relief, 34 ..~;'
('u,(,\'mcr,9i                                 Holyo:J.\-.e, on LO"Jp,'ration, Book
t_, )-opt'ratioll, princip!c of, :uB             111. en. ix. passim
. c'-op<c;ativc uhtnlJlllion, 1.14. '11:       How.'Il, on Uillons, Bk. Ill. eh. v •
                   production, :220, '1.'1.1     passim
r "ost of production, 73; its rela-
     lion to .-:lIne, 9.5. 1,.7                Improvements. influence on rent.
    '.uier, U3                                    B;
  .reJ~t. int1uence of, i51                    Induction, 3
~ri~is, 151-15S
I.. Tomplon, on Industrial Concilia-           Jevons, on C:l!Jib,l. 10, 99; mar·
     :lOn, Book I H. en. viii.                   ket, 67; Final utility. 68;
Custom, influence of. H, '70                     wages, '205
                                               INDEX.
Juint   Expe~h~s of proJuction,                16..t   1\··~t return ora machine, III
Joint   ~tock company, 3.5. J3'i                       1\ et return of labour, 133
                                                       :Komin;].!   w~ges,        JOI
l.a.bourer. 95                                         1\ urmal, 6 S. 66
Law, I,)                                               l\ormal theory ncce!><;ary in(roj...:~.
Law of Demand. i'                                         lion to ~brket theory, I.S
         Diminj"hing Retllfu, 'l2
         Division oi labour, E7                        Organized, if.
         Incre:hing R ... tum, ~{                      O~·cr-pro<luc!i()n.         lEo"
            LOLa; V:lr:.\liu Tl5 of '-:lit,,',
               ,68                                     Peasant Proprietors, 40
            ~oml,lIEarnings of )la-                    ]'ersono.l c<1pit:.I. :-.8. /)(
              nagement, '43                                      H.i.~\...". 135
            ~ormal (;lIe of interest,                            \Vcalth,6
               ,,6                                     Piece-work. 195
            Nurnl.ll value, /i. 89. 93.                Price, 63. I fo, 158
              cf... I~o '4-6, 149. r66,J6,             Proollctire, 6
            X armal wages, 131                         Profits must u:timo.tely dimmi<
            ]','pl:!ation, 29                                     145
            Rent. l:l3                                         on c'lwll capitals, 138
            Supp;r'I6                                          on UlW,!U11 capital,;, 139
I ,e~Iie,   Cliffe. all the iimilation of
  com[_H::.iuO/), IIi. '7', li8, 18S;                  Real wages, 101
  on the incJ;nLtr intl~lclce of new                   Remuneratory capital. '9
  supplie,; of g:old, li2                              H.er.!, 6 4 ;   f)f   o:1tllrai 'lllJli,ie:;, I!-
Locaillati,m of in.lu:<try. 47. E>3                                 "4
                                                                 in l't'l:lti'on t()whok~~('pri,:,
'f :llthus, 29                                                       8S-90; to retail pl'ices,l:
~brgin of cu\lil':.ltion. 84                           }{t'prO(\llclio!l, L(~"t of, ~~
'fark~t,  6;                                           R ... l:li! profil.", 1 ii· ";!"!4
.\Ieasure, uf v:due in             ns~    bv value     Ricardo, on reut, &2 n., 8~ n., ~"
   in e:-.chJllg"f'. 69 ; of Cost "of pro-
   (~uction by 1::-'])(,I1:>es of prootic-             S.)r~ant. G~          thl,: caas('s that   I.l<:[{.;
   non, :-3,7·., ')1' 14i'                                Illlnc :,al"lllg:. 4f
:'.Idl. un the r •.:ln(ivJls of Econo·                 Schalle·Ddazsch,223
   mics 10 o(b:n              5ci~[]ces    and to      SC"iem·e. 3
   practi.:e. :-..    '!   I( ;   Uil   the in'l,._    ~('\ter. 6~
  encc of In':)!'O\'~mclO:", on 1'('111                S~1ifts, riollule,       J?fi
  S.;;; on co.,~      pr".::lct;on, 9.;
                       (>1'                            Smith. Ad'am, Ius use of tl,t:!             \H.l,
  on the fO:lr    ~r.HIt.:'i of bhour.                    n:ltural, 66
    IOi; regards \, 1ges as paid out                   Spcci.1li,ed capital, "20
   of the prt.duct of industry. ~oi                    Sp<:.:ul;'.Tors, I ~8
\1 me". "! 5, 86                                       S'allt\.ud of (;omfort, "28
'\lonopoly value, 180                                  Strike.;, cost d, 193; conJitioJ.~·
                                                           SIlC":~~S, 109-211

::';a~m}"\h,      ·)f mac.hlnervclevates
               !h;'                                    \;;.1l))3i,h.ln· in(~:l"tries, ~2
    the working das<;es, :.6                           SUilerilltf-cdc:,,-e, see Earnijlgs .
;-\ecesS.l.rics, "ag:uene-,s of the teml.                 Management
   '9
"Net ad"lTdages of a trade, 103, loS                   Task-wages, JOI
Net income of a country, 95. !)8                       Time-wages, 101
                                      lNDEX.
r:    ':'''lk)n, on the labourers' dis·       Wages-ano-pr"lits Fund. 95
     :t .. \-l1'.t:I.ge in bar~aining, '100   Wagc~- hmd, 203
!·r:..:'~   Risk;;,   j~,   135               \V.1Ik"f, on dq..;rarbtion of labour.
                                                 'OJ; (,ll the fUllc,ions of til ...
\ .L; ,e in t'lCchange,       67                empi'),:-o::r, 118; land the L('~!
            in use, 67                          sa\'ing~ har.k, 40
                                              'Yeahh, m.Hcrbl, 6
";_,-:e~,    118                                         l'L'Jsonal, 6
             Real and :-iomin.al, fOl         Women's w2£"ec:-,   f   ~,~
             TIme nnd Task, lOt

				
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