The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface.
• Conversation I.: Introduction.
• Conversation II.: Introduction — Continued.
• Conversation III.: On Property.
• Conversation IV.: On Property— Continued.
• Conversation V.: On the Division of Labour.
• Conversation VI.: On Capital.
• Conversation VII.: On Capital — Continued.
• Conversation VIII.: On Wages and Population.
• Conversation IX.: On Wages and Population. Continued.
• Conversation X.: On the Condition of the Poor.
• Conversation XI.: On Revenue.
• Conversation XII.: On Revenue Derived From Property In Land.
• Conversation XIII.: On Revenue Derived From the Cultivation of Land.
• Conversation XIV.: On the Revenue of Those Who Do Not Employ Their Capital Themselves.
• Conversation XV.: On Value and Price.
• Conversation XVI.: On Money.
• Conversation XVII.: Subject of Money Continued.
• Conversation XVIII.: On Commerce.
• Conversation XIX.: On Foreign Trade.
• Conversation XX.: Continuation of Foreign Trade.
• Conversation XXI.: Subject of Foreign Trade Continued.
• Conversation XXII.: On Expenditure.

CONVERSATION VIII.

ON WAGES AND POPULATION.

mrs. b.

In our last conversation I think we came to this conclusion, that capital is almost as beneficial to the poor as to the rich; for though the property of the one, it is by its nature destined for the maintenance of the other.

caroline.

It comes to the labourer in the form of wages; but since we must allow the capitalist a profit on the work of the latter, I should like very much to know what proportion that profit bears to the wages of the labourer?

mrs. b.

It varies extremely, but the wages of the labourer can never be permanently less than will afford him the means of living, otherwise he could not labour.

caroline.

On the other hand, they can never be equal to the whole value of the work he produces; for if his master made no profit by him he would not employ him.

mrs. b.

Such then are the two extremes of the wages of labour, but they admit of many intermediate degrees of variation. If besides furnishing subsistence for himself, the wages of the labourer would not enable him to maintain a wife and bring up a family, the class of labourers would gradually diminish, and the scarcity of hands would then raise their wages, which would enable them to live with more comfort and rear a family; but as the capitalist will always keep wages as low as he can, the labourer and his family can seldom command more than the necessaries of life.

caroline.

By the necessaries of life do you mean such things only as are indispensably necessary for its support?

mrs. b.

No; I mean such food, clothing, and general accommodation, as the climate and custom of the country have rendered essential to the preservation of the life, health, and decent appearance of the lowest classes of the people. Fuel, for instance, and warm clothing, are necessary articles in this country; but they are not so in Africa. Civilisation and the progress of wealth and manufactures have greatly extended the scale of necessaries; the use of linen is now considered as necessary by all classes of people, and shoes and stockings, in England at least, almost equally so. Houses with glazed windows and a chimney are become necessaries; for if our poor were deprived of such accommodation it would very materially increase mortality amongst them. In Ireland the peasantry bring up their children in a mud-cabin, the door of which answers also the purposes of window and chimney.

caroline.

Then would it not be better that the labouring classes here should, like the Irish, accustom themselves to hardships and inconveniences, rather than indulge in a degree of comfortable accommodation, the privation of which, in a season of distress, is attended with so much misery?

mrs. b.

No; I would on the contrary wish rather to extend than contract the scale of the necessaries of life. There is more health, more cleanliness, more intellect, and more happiness, developed in an English cottage than in an Irish cabin. There is more strength, vigour, and industry in an English peasant, who feeds on meat, bread, and vegetables, than in an Irish one, who subsists on potatoes alone.

caroline.

No doubt I would wish the lower classes every comfort which they can afford; but as their wages will not always allow them such gratifications, I thought it might be better that they should not be accustomed to them.

mrs. b.

By lowering the scale of the comforts and accommodations of the poor, you not only diminish their enjoyments, but deprive them of a resource in seasons of distress. If their usual fare is confined to the bare necessaries of life, they cannot be reduced lower: and when a scarcity occurs, a famine must ensue. This is the case with the Hindoos, who subsist almost wholly on rice; when this supply fails, they perish by thousands.

caroline.

It is then most desirable that the rate of wages should be such as to afford the lower classes something beyond a mere subsistence; but what is it that determines the rate of wages?

mrs. b.

It depends upon the proportion which capital bears to the labouring part of the population of the country.

caroline.

Or, in other words, to the proportion which subsistence bears to the number of people to be maintained by it?

mrs. b.

Yes; it is this alone which regulates the rate of wages, when they are left to pursue their natural course. It is this alone which creates or destroys the demand for labour. In order to render it more clear to you, let us simplify the question by examining it on a small scale; — let us suppose, for instance, that we have founded a colony in a desert island; that the settlers have divided the land amongst them, and cultivated it for their own subsistence; and that being both proprietors and labourers, they reap the whole reward of their industry. Thus situated, should a ship be wrecked on the coast, and some of the crew effect their escape to shore, what would ensue? They would furnish a supply of labourers, who would be dependent on the original settlers for maintenance and employment.

caroline.

But if those settlers have not raised a greater quantity of subsistence than is necessary for their own use, how can they maintain the new-comers? Without capital, you know, they cannot employ labourers.

mrs. b.

You are perfectly right. But it is probable that the most industrious of them will have raised somewhat more subsistence than is absolutely necessary for their own consumption. They will possess some little stock in reserve, which will enable them to maintain and employ at least a few of the shipwrecked crew. Yet as these poor destitute men will all be anxious to share in this little surplus, each will offer his labour in exchange for the smallest pittance that will support life. Thus the capital of the island being inadequate to the maintenance of its population, the competition amongst the labourers to get employment will render wages extremely low, and the capitalist will derive a high profit from the industry of his labourers. A small capital, therefore, creates but a small demand for labour.

caroline.

By demand for labour do you mean the demand of the poor for work, or of the capitalist for workmen?

mrs. b.

Certainly the latter. The demand for labour means the demand for labourers by those who have the means of paying them for their work, whether it be in the form of wages, maintenance, or any other kind of remuneration.

But what will happen in our colony, when the labourers shall have richly repaid their employers by the fruit of their industry?

caroline.

By raising a more plentiful harvest they would of course have a more plentiful subsistence.

mrs. b.

The harvest, you must observe, belongs, not to the men who produced it, but to their employers; how, therefore, does it follow of course that the labourers obtain a larger share of it?

caroline.

I suppose, that their masters having more capital are willing to bestow a larger proportion of it on their labourers.

mrs. b.

I believe that the capitalist will always make as high a profit as he can upon the work of his labourers; and that when his capital increases, he will choose rather to increase the number of his workmen than the rate of their wages. But the power of employing more labourers increases the demand for labour; and this, as I shall explain to you, eventually raises the wages or reward of labour.

The capital of the settlers will probably be so much augmented by the industry of the labourers, that there will no longer be any difficulty in maintaining the new-comers. The possessors of this increased capital will be eager to procure the services of the labourers; one perhaps to build a hut, another to fence a field, a third to construct a boat, and so on. For the surplus, unless employed, will yield no profit; the competition therefore will no longer be amongst the labourers to obtain work, but amongst the masters to obtain workmen; and this will necessarily raise the price of wages, and consequently diminish the profits of the capitalist.

caroline.

Oh, that is very clear. If John offers a man a shilling a day to work at his house, and Thomas gives eighteen-pence to those who will build his boat, while James pays two shillings for fencing his field, wages must rise to two shillings a day: for if John and Thomas did not give as much as James, the latter would monopolise all the labourers.

mrs. b.

You see therefore that it is the additional capital produced by the labour of these men, which by increasing the demand for labour raises their wages. Thus, whenever capital for the maintenance of labourers abounds, the capitalist must content himself with smaller profits, and allow his workmen a more liberal remuneration.

caroline.

Oh, that is charming! that is exactly what I wish. But, Mrs. B., if, during the second year, our colonists employ their labourers in building houses and fencing fields, instead of cultivating them, subsistence will again fall short, and the labourers will be reduced to their former necessitous condition; unless having once experienced such distress, they guard against it in future.

mrs. b.

That does not depend on the choice of the labourers, who must do the work they are hired to perform, of whatever nature it may be. But their employers will be careful to provide for their maintenance, for they know that those who should neglect to make such a provision for their future services would be deprived of them. They cannot work without subsistence, nor will they work without an ample subsistence whilst any of the colony has it to offer them. If John therefore does not raise so great a harvest as James, he will not be able, the following year, to employ so many workmen. Each landed proprietor therefore will take care to direct the labour of his workmen towards raising the requisite subsistence, before he employs them in any other description of labour: it is for this subsistence that there will be the greatest demand, and it is demand which regulates supply.

Now let us suppose that the shipwrecked crew had brought wives with them, and reared families: would that have affected the rate of wages?

caroline.

Their wages would remain the same; but as they would have to maintain their wives and children as well as themselves, they would not fare so well.

mrs. b.

And if there were not food enough for them all, the most weakly of the children would die, not precisely of hunger, but of some of those diseases which want of sufficient and proper food engenders. It is evident, therefore, that a labourer ought not to marry unless his wages are adequate to the maintenance of a family; or unless he has, like your gardener, some little provision in store to make up the deficiency.

Suppose now, after several years of prosperity, that a hurricane makes such devastation amongst the crops of our colonists as to reduce the harvest to one half what it was the preceding year; what effect would this have on the wages of labour?

caroline.

It would unquestionably reduce them, for the stock of subsistence would be diminished. But in what manner the reduction would take effect I do not clearly see.

mrs. b.

In order to trace its consequences step by step, we may suppose that John, finding his capital will not maintain more than one half of the number of labourers he before employed, reluctantly discharges the other half. These poor men wander about the colony seeking for work; but instead of finding any, they meet only with companions in distress, who have lost their employment for similar reasons: thus without resource they return to their masters, and entreat to be employed on lower terms. John, who had discharged these men, not for want of work to give them, but for want of funds to pay them, is happy in his reduced circumstances to employ labourers at lower wages. He therefore makes a new agreement with them, and determines to discharge those whom he had originally retained in his service unless they will consent to work for him on the same terms. These men, aware of the difficulty of finding employment elsewhere, are compelled by necessity to accept the conditions, and thus wages are reduced to one half their former rate throughout the colony.

caroline.

It appears as evident as possible. I have only one objection to make, which is, that though this may be the case in our colony, it certainly is not so in other places. Wages, so far from being reduced, are, I believe, frequently raised during a scarcity; at least there are great complaints amongst the poor if that is not done.

mrs. b.

In countries where money is used, it is unnecessary to make any reduction in the rate of wages during a scarcity, because the high price of provisions occasioned by a scarcity produces a similar effect. If you continue to pay your labourer the same wages when the articles of provision on which he subsists have doubled in price, his wages are less efficient by one half, because he can procure with them only one half of what he did before the scarcity.

caroline.

But this is a kind of imposition upon the poor labourers, who, I suppose, are at least as ignorant as I am of political economy, and are not aware that a shilling can purchase more at one time than it can at another, and therefore during a scarcity continue to work at the usual rate of wages for want of knowing better.

mrs. b.

Knowledge in this instance would only teach them that they must bear with patience an unavoidable evil. The alternative for capitalists, when capital is diminished, is to reduce, either the number of their labourers, or the rate of their wages — or rather, I should say, the remuneration of their labour; for the money-wages frequently remain the same. Now is it not more equitable to divide the maintenance amongst the whole of the labouring class, than to feed some of them amply, whilst the remainder starve?

caroline.

No doubt it is; but would it not, in this instance, be allowable for the legislature to interfere, and oblige the capitalist to raise the rate of wages in proportion to the rise of price of provisions, so as to afford the labourers their usual quantity of subsistence? I think the rate of wages ought to be regulated by the price of bread, as that is the principal subsistence of the poor; so as to enable them to purchase the same quantity of bread whatever its price may be.

mrs. b.

Or, in other words, that every man may eat his usual quantity of bread, however deficient the harvest is in its produce; for unless you could find means to increase the quantity of subsistence, it will avail nothing to raise the rate of wages.

caroline.

Very true; yet two shillings will purchase twice the quantity of bread that one will; is not that true also Mrs. B.? and yet these truths appear incompatible.

mrs. b.

One of them must therefore be an error; two shillings would not purchase twice the quantity of bread that one did if wages were doubled, because provisions would continue to rise in price in proportion to the advance on wages.

caroline.

But I would prohibit the farmer from raising the price of his corn and his cattle, and then there would be no necessity for the butcher and the baker raising the price of meat and bread. It is not just that the farmer, when he has a bad crop, should throw his misfortune on the public, and be the only person who does not suffer from it; which is the case if he raises the price of his produce in proportion to its scarcity.

mrs. b.

The farmer consumes as well as produces provisions; and as a consumer he partakes of the evil of the advance of price. If he sell his corn for twice the usual price, what he consumes at home stands him in the same value, for such is the price it would fetch at market.

But supposing it were possible to prevent the rise in price during a scarcity, what consequences would ensue? Keep in mind the important point, that the harvest has yielded but half its usual product; that whilst the wages of labour and the price of provisions undergo no alteration, the labourers purchase and consume the usual quantity of food, and at the end of six months . . . .

caroline.

You need not finish the sentence, Mrs. B.; at the end of six months the whole stock of provisions would be consumed, and the people who excited my commiseration would be starved.

mrs. b.

This would infallibly be the case, were such a measure persevered in; but though it has often been attempted by sovereigns more benevolent than wise to set limits to the price of provisions, the consequences soon became so formidable as to compel the legislature to put a stop to a remedy which was as ineffectual as it was pernicious. “In the year* 1315 England was afflicted by a famine, grievous beyond all that ever were known before, which raised the price of provisions far above the reach of the people of middling classes. The parliament, in compassion to the general distress, ordered that all articles of food should be sold at moderate prices, which they took upon themselves to prescribe. The consequence was, that all things, instead of being sold at or under the maximum price fixed by them, became dearer than before, or were entirely withheld from the market. Poultry were rarely to be seen. Butchers’ meat was not to be found at all. The sheep were dying of a pestilence, and all kinds of grain were selling at most enormous prices. Early the next year the parliament, finding their mistake, left provisions to find their own price.”

Thus you see that the rise in the price of provisions is the natural remedy to the evil of scarcity. It is the means of husbanding the short stock of food, and making it last out to the ensuing harvest. Government should never interfere, either with the price of provisions or the rate of wages: they will each find their respective level if left uncontrolled.

But to return to our colony. What effect would it produce on wages, were some contagious malady to carry off one half of the labourers?

caroline.

It would increase the demand for the labour of those which remained, and consequently raise their wages.

mrs. b.

We may generally state, therefore, that when the number of labourers remains the same, the rate of wages will increase with the increase of capital, and lower with the diminution of it; while if the amount of capital remain stationary, the rate of wages will fall as the number of labourers increase, and rise as the number of labourers diminish; or, as mathematicians would express it, the rate of wages varies directly as the quantity of capital, and inversely as the number of labourers.

Macpherson mentions that “a dreadful pestilence, which originated in the eastern regions, began its ravages in England in the year 1348, and is said to have carried off the greater part of the people, especially in the lower ranks of life. The surviving labourers took advantage of the demand for labour and the scarcity of hands to raise their prices. The king, Edward III., thereupon enacted the statute of labourers, which ordained that all men and women under 60 years of age, whether of free or servile condition, having no occupation or property, should serve any person of whom they should be required, and should receive only the wages which were usual before the year 1346, or in the five or six preceding years, on pain of imprisonment, the employers being also punishable for giving greater wages. Artificers were also prohibited from demanding more than the old wages; and butchers, bakers, brewers, &c. were ordered to sell their provisions at reasonable prices. The ‘servants having no regard to the said ordinance, but to their ease and singular covetise,’ refused to serve unless for higher wages than the law allowed them. Therefore the parliament, by another statute, fixed the yearly and daily wages of agricultural servants, artificers, and labourers, the payment of threshing corn by the quarter, and even the price of shoes. They also forbad any person to leave the town in summer wherein he had dwelt in the winter, or to remove from one shire to another.

“Thus were the lower classes debarred by laws, which in their own nature must be inefficient, from making any effort to improve their situation in life.”

caroline.

I had always imagined that a great demand for labour was occasioned by some great work that was to be executed, such as digging a canal, making new roads, cutting through hills, &c.; but it seems that the demand for labour depends, not so much on the quantity of work to be done as on the quantity of subsistence provided for the workmen.

mrs. b.

Work to be performed is the immediate cause of the demand for labour; but however great or important is the work which a man may wish to undertake, the execution of it must always be limited by the extent of his capital; that is to say, by the funds he possesses for the maintenance or payment of his labourers. The same observation applies to the capital of a country, which is only an aggregate of the capital of individuals; it cannot employ more people than it has the means of maintaining. All the waste land capable of cultivation in the country might be called work to be done; but one must have, not only labourers to do that work, but a sufficient quantity of subsistence to support them. In our conversation on capital we observed, that in countries of large capital great works were undertaken, such as public buildings, bridges, iron rail-ways, canals, &c. All these things are a sign of redundance of wealth.

caroline.

In Ireland I understand that the wages of common labourers are much lower than in England: is it on account of the capital of that country being less adequate to the maintenance of its population?

mrs. b.

That is, no doubt, one of the principal causes of the low price of labour in that country; but there are many other causes which affect the price of labour, arising from the imperfection of its government. The Irish are far less industrious than the English. Arthur Young, in his travels through Ireland, observes, that “husbandry-labour is very low-priced, but not cheap. Two shillings a-day in Suffolk is cheaper than sixpence a-day in Cork. If a Huron would dig for two-pence a-day, I have little doubt but that it might be dearer than the Irishman’s sixpence.”

caroline.

But, Mrs. B., the price of labour does not only vary in different countries, but very considerably in different parts of the same country. In purchasing some cutlery a few days ago, I was shown country and town-made knives and forks, apparently the same, yet the difference in price was considerable. Upon enquiring the cause, I was informed that it was owing to wages being so much higher in London than in the country.

mrs. b.

And if you had enquired the cause of the high rate of wages of London workmen, you would have heard that it was on account of their being better workmen: the ablest artificers generally resort to London, as the place where their skill will be most duly appreciated, and where their employers can best afford to reward it.

It is but just to remunerate labourers according to their ability. Your head-gardener does less work than any of the men under him; yet he has the highest wages, on account of the skill and experience he has acquired. A working silversmith has on this account higher wages than a tailor or a carpenter.

But where skill is not requisite, the hardest and most disagreeable kinds of labour are best paid; this is the case with blacksmiths, iron-founders, coal-heavers, &c.

A consideration is also had for arts of an unwholesome, unpleasant, or dangerous nature; such as painters, miners, gunpowder makers, and a variety of other analogous employments.

[* ]Macpherson’s Annals of Commerce.