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VI.  THE  VILLAGE  COMMUNITY.     By  G.  L.  Gomme.     Illustrated.     . 
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head.    Illustrated. 

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bULLY  in  Mind, 

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generalisations  concerning  genius  which  has  yet  been  brought  together  "— 
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Gresham  Professor  of  Geometry.    Illustrated.  '  *' 

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I    XVIII.  PROPERTY :  ITS  ORIGIN  AND  DEVELOPMENT.     By  Pro- 
fessor Letourneau. 
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and  interpreted  his  facta  with  considerable  judgment  and  learning."— (Fe«(- 
minttcr  Review. 

'      XIX.  VOLCANOES :  PAST  AND  PRESENT.    By  Edward  Hull.  M  A.. 
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Illustrations. 

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sanitation  bearing  upon  the  preservation  of  public  health."— ia?ice<. 

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Weismann.    Illustrated. 
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"His  accuracy  is  undoubted,  yet  his  facts  out-marvel  all  romance.  These 
facts  are  here  made  use  of  as  materials  wherewith  to  form  the  mighty  fabric 
of  evolution." — Manchester  Guardian. 

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Sexual  Characters.    By  Havelock  Ellis.    With  Illustrations. 
"There   is   no   work   approaching   his   [Mr.  Ellis's]   in   exhaustiveness, 
accuracy,  and  fairness  of  judgment." 

/   XXV.  THE  EVOLUTION  OF  MODERN  CAPITALISM.    A  Study  op 
Machine  Production.    By  John  A.  Hobson,  M  A.    With  Diagrams. 

XXVI.  APPARITIONS  AND  THOUGHT-TRANSFERENCE :   or,  the 
Communication  of  Sknsations,  Ideas,  and   Emotions  otherwisb 

THAN  BY  THE  KNOWN  SENSES.      By  FRANK  PODMORE.      Illustrated. 


THE  CONTEMPORARY  SCIENCE  SERIES. 

Edited  by  IIAVELOCK  ELLIS. 


EVOLUTION 
OF  MODERN  CAPITALISM. 


Digitized  by  tine  Internet  Arciiive 

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littp://www.arcli  ive.org/details/evolutionofmoderOOIiobsiala 


THE  EVOLUTION 


OF 


MODERN  CAPITALISM 


A  STUDY  OF  MACHINE  PRODUCTION. 


BY 


JOHN  A.  HOBSON,  M.A., 

AUTHOR  OF   "problems  OF   POVERTY." 


LONDON : 

WALTER   SCOTT,   LTD., 

24  WARWICK   LANE,   PATERNOSTER   ROW. 
1894. 


THE  WALTER  SCOTT  PHESS,   NEWCASTLE-ON-TYNE. 


CroRARY 

IMTERSn  Y  Oi   CALIFORNM 

BAMTA  BAHBARA 


PREFACE. 


In  seeking  to  express  and  illustrate  some  of  the  laws  of 
the  structural  changes  in  modern  industry,  I  have  chosen  a 
focus  of  study  between  the  wider  philosophic  survey  of 
treatises  on  Social  Evolution  and  the  special  studies  of 
modern  machine-industry  contained  in  such  works  as 
Babbage's  Economy  of  Manufactures  and  Ure's  Philosophy 
of  Manufactures,  or  more  recently  in  Professor  Schulze- 
Gaevernitz's  careful  study  of  the  cotton  industry.  By  using 
the  term  "  evolution  "  I  have  designed  to  mark  the  study  as 
one  of  a  subject-matter  in  process  of  organic  change,  and  I 
have  sought  to  trace  in  it  some  of  those  large  movements 
which  are  characteristic  of  all  natural  growth. 

The  sub-title,  A  Study  of  Machine-Production,  indicates 
a  further  narrowing  of  the  investigation.  Selecting  the 
operation  of  modern  machinery  and  motors  for  special 
attention,  I  have  sought  to  enforce  a  clearer  recognition  of 
organic  unity,  by  dwelling  upon  the  more  material  aspects  of 
industrial  change  which  mark  off  the  last  century  and  a 
half  from  all  former  industrial  epochs.  The  position  of 
central  importance  thus  assigned  to  machinery  as  a  factor 
in  industrial  evolution  may  be — to  some  extent  must  be — 
deceptive,  but  in  bringing  scientific  analysis  to  bear  upon 
phenomena  so  complex  and  so  imperfectly  explored,  it 
is  essential  to  select  some  single  clearly  appreciable  stand- 
point, even  at  the  risk  of  failing  to  present  the  full  com- 
plexity of  forces  in  their  just  but  bewildering  interaction. 


VI  PREFACE 

In  tracing  through  the  Business,  the  Trade,  and  the 
Industrial  Organism  the  chief  structural  and  functional 
changes  which  accompany  machine-development,  I  have 
not  attempted  to  follow  out  the  numerous  branches  of 
social  investigation  which  diverge  from  the  main  line  of 
inquiry.  Two  studies,  however,  of  "the  competitive 
system "  in  its  modern  working  are  presented ;  one 
examining  the  process  of  restriction,  by  which  competition 
of  capitals  gives  way  to  different  forms  of  combination;  the 
other  tracing  in  periodic  Trade  Depressions  the  natural 
outcome  of  unrestricted  competition  in  private  capitalist 
production. 

In  some  final  chapters  I  have  sought  to  indicate  the 
chief  bearings  of  the  changes  of  industrial  structure  upon  a 
few  of  the  deeper  issues  of  social  life,  in  particular  upon 
the  problem  of  the  Industrial  Town,  and  the  position  of 
woman  as  an  industrial  competitor. 

A  portion  of  Chapters  VIII.,  IX.,  and  X.  have  already 
appeared  in  the  Contetiiporary  Review  and  in  the  Political 
Science  Quarterly  Review,  and  I  am  indebted  to  the  courtesy 
of  the  editors  for  permission  to  use  them. 

I  have  also  to  acknowledge  most  gratefully  the  valuable 
assistance  rendered  by  Dr.  William  Smart  of  Glasgow 
University,  who  was  kind  enough  to  read  through  the 
proofs  of  a  large  portion  of  this  book,  and  to  make  many 
serviceable  corrections  and  suggestions. 

JOHN  A.  HOBSON. 


CONTENTS. 


CHAPTER  I. 

PAGE 

INTRODUCTION .         I 

Section. 

1.  Industrial    Science,    its    Standpoint    and    Methods    of 

Advance. 

2.  Capital  as  Factor  in  Modern  Industrial  Changes. 

3.  Place  of  Machinery  in  Evolution  of  Capitalism. 

4.  The  Monetary  Aspect  of  Industry. 

5.  The  Literary  Presentment  of  Organic  Movement. 

CHAPTER  II. 

THE  STRUCTURE  OF   INDUSTRY  BEFORE  MACHINERY       .        lO 

1.  Dimensions  of  International  Commerce  in  early   Eigh- 

teenth Century. 

2.  Natural  Barriers  to  International  Trade. 

3.  Political,  Pseudo-economic,   and   Economic   Barriers — 

Protective  Theory  and  Practice. 

4.  Nature  of  International  Trade. 

5.  Size,  Structure,  Relations  of  the  several  Industries. 

6.  Slight  Extent  of  Local  Specialisation. 

7.  Nature  and  Conditions  of  Specialised  Industry. 

8.  Structure  of  the  Market. 

9.  Combined  Agriculture  and  Manufacture. 


viii  CONTENTS. 

Section.  PAGE 

10.  Relations  between  Processes  in  a  Manufacture. 

11.  Structure  of  the   Domestic  Business:    Early  Stages  of 

Transition. 

12.  Beginnings  of  Concentrated  Industry  and  the  Factory. 

13.  Limitations    in    Size    and     Application    of    Capital — 

Merchant  Capitalism. 

CHAPTER  III. 
THE   ORDER   OF  DEVELOPMENT  OF  MACHINE  INDUSTRY        44 

1.  A  Machine  differentiated  from  a  Tool. 

2.  Machinery  in    Relation   to    the   Character  of  Human 

Labour. 

3.  Contributions  of  Machinery  to  Productive  Power. 

4.  Main  Factors  in  Development  of  Machine  Industry. 

5.  Importance  of  Cotton-trade  in  Machine  Development. 

6.  History  refutes  the  "  Heroic  "  Theory  of  Invention. 

7.  Application  of  Machinery  to  other  Textile  Work. 

8.  Reverse  order  of  Development  in  Iron  Trades. 

9.  Leading   Determinants   in    the   General  Application  of 

Machinery  and  Steam-Motor. 
10.  Order  of  Development  of  modern  Industrial  Methods  in 
the    several    Countries— Natural,    Racial,    Political, 
Economic. 

CHAPTER   IV. 
THE  STRUCTURE  OF   MODERN   INDUSTRY  ...       88 

1.  Growing  Size  of  the  Business-Unit. 

2.  Relative  Increase  of  Capital  and  Labour  in  the  Business. 

3.  Increased  Complexity  and  Integration  of  Business  Struc- 

ture. 

4.  Structure  and  Size  of  the  Market  for  different    Com- 

modities. 

5.  Machinery  a  direct  Agent  in  expanding  Market  Areas, 

6.  Expanded  Time-area  of  the  Market. 

7.  Interdependency  of  Markets. 


CONTENTS.  ix 

Section.  paou 

8.  Sympathetic  and  Antagonistic  Relations  between  Trades. 

9.  National  and  Local  Specialisation  in  Industry. 

10.  Influences  determining  Localisation  of  Industry  under 

World-Competition. 

11.  Impossibility  of  Final  Settlement  of  Industry. 

12.  Specialisation  in  Districts  and  Towns. 

13.  Specialisation  within  the  Town. 

CHAPTER  V. 

THE  FORMATION  OF  MONOPOLIES  IN  CAPITAL.  .  •     H? 

1.  Productive  Economies  of  the  Large  Business. 

2.  Competitive  Economies  of  the  Large  Business. 

3.  Intenser  Competition  of  the  few  Large  Businesses. 

4.  Restraint  of  Competition  and  Limited  Monopoly. 

5.  Facilities  for   maintaining  Price-Lists   in   different  In- 

dustries. 

6.  Logical  Outcome  of  Large-Scale  Competition. 

7.  Different  Species  of  "  Combines." 

8.  Legal  and  Economic  Nature  of  the  "  Trust." 

9.  Origin  and  Modus  Operandi  of  the  Standard  Oil  Trust. 

10.  The  Economic  Strength  of  other  Trusts. 

11.  Industrial  Conditions  favourable  to  "Monopoly." 

CHAPTER  VL 
ECONOMIC  POWERS  OF  THE  TRUST  .  .  .  .     143 

1.  Power  of  a  Monopoly  over  earlier  or  later  Processes  in 

Production  of  a  Commodity. 

2.  Power  over  Actual  or  Potential  Competitors. 

3.  Power  over  Employees  of  a  Trust. 

4.  Power  over  Consumers. 

5.  Determinants  of  a  Monopoly  Price. 

6.  The  Possibility  of  low  Monopoly  Prices. 

7.  Considerations  of  Elasticity  of  Demand  limiting  Prices. 

8.  Final  Summary  of  Monopoly  Prices. 


X  CONTENTS. 

PAOB 

CHAPTER  VII. 

MACHINERY  AND   INDUSTRIAL  DEPRESSION       .  .  .     167 

Section. 

1.  The  external  phenomena  of  Trade  Depression. 

2.  Correctly   described    as   Under-production    and    Over- 

production. 

3.  Testimony  to  a  general  excess  of  Productive    Power 

over  the  requirement  for  Consumption. 

4.  The   connection    of   modern   Machine-production    and 

Depression  shown  by  statistics  of  price. 

5.  Changing  forms  in   which   Over-supply  of   Capital   is 

embodied. 

6.  Summary  of  economic  relation   of  Machinery  to  De- 

pression. 

7.  Under-consumption  as  the  root-evil. 

8.  Economic  analysis  of  "  Saving." 

9.  Saving  requires  increased  Consumption  in  the  future. 

10.  Quantitative  relation  of  parts  in  the  organism  of  Industry. 

11.  Quantitative  relation  of  Capital  and  Consumption. 

12.  Economic  limits  of  Saving  for  a  Community. 

13.  No  limits  to  the  possibility  of  individual  Saving — Clash 

of  individual  and  social  interests  in  Saving. 

14.  Objection  that  excess  in  forms  of  Capital  would  drive 

interests  to  zero  not  valid. 

15.  Excess  is  in  embodiments  of  Capital,  not  in  real  Capital. 

16.  Uncontrolled  Machinery  a  source  of  fluctuation. 

CHAPTER  VIII. 

MACHINERY  AND  DEMAND   FOR   LABOUR  .  .  .     220 

1.  The  Influence  of  Machinery  upon  the  number  of  Em- 

ployed, dependent  on  "  elasticity  of  demand." 

2.  Measurement  of  direct  effects  on  Employment  in  Staple 

Manufactures. 

3.  Effects  of  Machinery  in  other  Employments— The  Evi- 

dence of  French  Statistics. 


CONTENTS.  XI 

Section.  PAGE 

4.  Influence  of  Introduction  of  Machinery  upon  Regularity 

of  Employment. 

5.  Effects  of  "  Unorganised  "  Machine-industry  upon  Regu- 

larity. 

6.  Different  Ways  in  which  modern  Industry  causes  Un- 

employment. 

7.  Summary  of  General  Conclusions. 

CHAPTER  IX. 

MACHINERY  AND  THE  QUALITY  OF   LABOUR     .  .  .     244 

1.  Kinds  of  Labour  which  Machinery  supersedes. 

2.  Influence  of  Machine-evolution  upon  intensity  of  physi- 

cal work. 

3.  Machinery  and  the  length  of  the  working  day. 

4.  The  Education  of  Working  with  Machinery. 

5.  The  levelling  tendency  of  Machinery — The  subordina- 

tion of  individual  capacity  in  work. 

CHAPTER  X. 

THE  ECONOMY  OF  HIGH  WAGES  .  .  .  ,261 

1.  The  Economy  of  Low  Wages. 

2.  Modifications  of  the  Early  Doctrine — Sir  T.  Brassey's 

Evidence  from  Heavy  Manual  Work. 

3.  Wages,  Hours,  and  Product  in  Machine-industry. 

4.  A  General  Application  of  the  Economy  of  High  Wages 

and  Short  Hours  inadmissible. 

5.  Mutual   Determination  of  Conditions   of  Employment 

and  Productivity. 

6.  Compressibility  of  Labour  and  Intensification  of  Effort. 

7.  Effective  Consumption  dependent  upon  Spare  Energy 

of  the  Worker. 

8.  Growth  of  Machinery  in  relation  to  Standard  of  Com- 

fort. 

9.  Economy  of  High  Wages  dependent  upon  Consumption. 


Xll  CONTENTS. 

PAQE 

CHAPTER  XI. 

SOME     EFFECTS     OF      MODERN      INDUSTRY     UPON      THE 

WORKERS   AS  CONSUMERS 285 

Section. 

1.  How  far  the  different  Working  Classes  gain  from  the 

Fall  of  Prices. 

2.  Part  of  the  Economy  of  Machine-production  compensated 

by  the  growing  Work  of  Distribution. 

3.  The  Lowest  Class  of  Workers  gains  least  from  Machine- 

production. 

CHAPTER  XII. 

WOMEN   IN   MODERN   INDUSTRY 290 

1.  Growing  Employment  of  Women  in  Manufacture. 

2.  Machinery  favours  Employment  of  Women, 

3.  Wages  of  Women  lower  than  of  Men. 

4.  Causes  of  Lower  Wages  for  Women. 

5.  Smaller  Produclivity  or  Efficiency  of  Women's  Labour. 

6.  Factors  enlarging  the  scope  of  Women's  Wage-work. 

7.  "Minimum   Wage"   lower   for   Women — Her   Labour 

often  subsidised  from  other  sources. 

8.  Woman's  Contribution  to  the  Family  Wages — Effect  of 

Woman's  Work  upon  Man's  Wages. 

9.  Tendency  of  Woman's  Wage  to  low  uniform  level. 

10.  Custom    and    Competition    as    determinants   of    Low 

Wages. 

11.  Lack  of  Organisation  among  Women — Effect  on  Wages. 
12    Over-supply  of  Labour  in  Women's  Employments  the 

root-evil. 

13.  Low  Wages  the  chief  cause  of  alleged  Low  "  Value  "  of 

Woman's  Work. 

14.  Industrial  Position  of  Woman  analogous  to  that  of  Low- 

skilled  Men. 

15.  Damage  to   Home-life    arising   from  Women's   Wage- 

work. 


CONTENTS.  xm 

PAGE 

CHAPTER  XIII. 

MACHINERY  AND  THE  MODERN  TOWN       .  .  .  .     324 

Section. 

1.  The  Modern  Industrial  Town  as  a  Machine-product. 

2.  Growth  of  Town  as  compared  with  Rural  Population  in 

the  Old  and  New  Worlds. 

3.  Limits  imposed  upon  the  Townward  Movement  by  the 

Economic  Conditions  of  World-industry. 

4.  Effect  of  increasing  Town-life  upon  Mortality. 

5.  The  impaired  quality  of  Physical  Life  in  Towns. 

6.  The  Intellectual  Education  of  Town-life. 

7.  The  Moral  Education  of  Town-life. 

8.  Economic  Forces  making  for  Decentralisation. 

9.  Desirability  of  Public  Control  of  Transport  Services  to 

effect  Decentralisation. 

10.  Long  Hours  and  Insecurity  of  Work  as  Obstacles  to 

Reforms. 

11.  The  Principle  of  Internal  Reform  of  Town-life. 

CHAPTER  XIV. 

CIVILISATION  AND  INDUSTRIAL  DEVELOPMENT         .  .    350 

1.  Imperfect    Adjustment    of    Industrial   Structure  to   its 

Environment. 

2.  Reform  upon  the  Basis  of  Private  Enterprise  and  Free 

Trade. 

3.  Freedom  and   Transparency  of  Industry  powerless   to 

cure  the  deeper  Industrial  Maladies. 

4.  Beginnings  of  Public  Control  of  Machine-production. 

5.  Passage  of    Industries  into  a   public    Non-competitive 

Condition. 

6.  The  raison  d^lire  of  Progressive  Collectivism. 

7.  Collectivism  follows  the  line  of  Monopoly. 

8.  Cases    of    "  Arrested    Development ; "     the    Sweating 

Trades. 


xiv  CONTENTS. 

Section.  page 

9.  Retardation  of  rate  of  Progress  in  Collective  Industries. 

10.  Will  Official  Machine-work  absorb  an  Increasing  Pro- 

portion of  Energy  ? 

11.  Improved    Quality  of    Consumption   the    Condition   of 

Social  Progress. 

12.  The  Highest  Division  of  Labour  between  Machinery  and 

Art. 

13.  Qualitative  Consumption  defeats  the  Law  of  Decreasing 

Returns. 

14.  Freedom  of  Art  from  Limitations  of  Matter. 

15.  Machinery  and  Art  in  production  of  Intellectual  Wealth. 

16.  Reformed    Consumption    abolishes    Anti-Social    Com- 

petition. 

17.  Life  itself  must  become  Qualitative. 

18.  Organic  Relations  between  Production  and  Consumption. 

19.  Summary  of   Progress  towards  a  Coherent   Industrial 

Organism. 

INDEX 385 


THE  EVOLUTION 
OF  MODERN  CAPITALISM. 


THE    EVOLUTION 
OF   MODERN    CAPITALISM. 


CHAPTER  I, 

INTRODUCTION. 

§  I.  Industrial   Science,    its    Standpoint    and    Methods    of 

Advaftce. 
§  2.   Capital  as  Factor  in  Modern  Industrial  Changes. 
§  3.  Place  of  Machinery  in  Evolution  of  Capitalism. 
\  4.   The  Monetary  Aspect  of  Industry. 
%  5.   The  Literary  Presentnient  of  Orgastic  Movement. 

1  §  I.  Science  is  ever  becoming  more  and  more  historical 
^n  the  sense  that  it  becomes  more  studiously  anxious  to 
show  that  the  laws  or  principles  with  whose  exposition  it  is 
concerned  not  merely  are  rightly  derived  from  observation  of 
phenomena  but  cover  the  whole  range  of  these  phenomena 
in  the  explanation  they  afford.  So  likewise  History  is  ever 
becoming  more  scientific  in  the  sense  that  facts  or  pheno- 
mena are  so  ordered  in  their  setting  as  to  give  prominence 
to  the  ideas  or  principles  which  appear  to  relate  them  and 
of  which  they  are  the  outward  expression.  Thus  the  old 
sharp  line  of  distinction  has  slipped  away,  and  we  see  there 
is  no  ultimate  barrier  between  a  study  of  facts  and 
a  study  of  the  laws  or  principles  which  dominate  these 
facts.  In  this  way  the  severance  of  History  and  Science 
becomes  less  logically  justifiable.  Yet  it  is  still  convenient 
that  we  should  say  of  one  branch  of  study  that  it  is 
historical  in  the  sense  that  it  is  directly  and  consciously 

I 


2  THE   EVOLUTION    OF 

engaged  in  the  collection  and  clear  expression  of  facts  or 
phenomena  as  they  stand  objectively  in  place  or  time 
without  any  conscious  reference  to  the  laws  which  relate  or 
explain  them;  of  another  branch  of  study  that  it  is  scientific 
because  it  is  engaged  in  the  discovery,  formulation,  and 
correct  expression  of  the  laws  according  to  which  facts  are 
related,  without  affecting  to  give  a  full  presentment  of  those 
facts.  The  treatment  in  this  book  belongs  in  this  sense  to 
economic  science  rather  than  to  industrial  history  as  being 
an  endeavour  to  discover  and  interpret  the  laws  of  the 
movement  of  industrial  forces  during  the  period  of  the 
eighteenth  and  nineteenth  centuries. 

It  cannot,  however,  be  pretended  that  any  high  degree  of 
exactitude  can  attach  to  such  a  scientific  study. 

Two  chief  difficulties  beset  any  attempt  to.  explain  indus- 
trial phenomena  by  tracing  the  laws  of  the  action  of  the 
forces  manifested  in  them.  The  first  is  that  only  a  limited 
proportion  of  the  phenomena  which  at  any  given  time 
constitute  Industry  are  clearly  and  definitely  ascertainable, 
and  it  may  always  be  possible  that  the  laws  which  satis- 
factorily explain  the  statical  and  dynamical  relations  of  these 
may  be  subordinate  or  even  counteracting  forces  of  larger 
movements  whose  dominance  would  appear  if  all  parts  of 
the  industrial  whole  were  equally  known. 

The  second  difficulty,  closely  related  to  the  first,  is  the 
inherent  complexity  of  Industry,  the  continual  and  close 
interaction  of  a  number  of  phenomena  whose  exact  size 
and  relative  importance  is  continually  shifting  and  baffles 
the  keenest  observer. 

These  difficulties,  common  to  all  sciences,  are  enhanced 
in  sociological  sciences  by  the  impossibility  of  adequate 
experiment  in  specially  prepared  environments. 

The  degree  of  exactitude  attainable  in  industrial  sciences 
may  thus  appear  to  be  limited  by  the  development  of 
statistical  inquiry.  Since  the  collection  of  accurate  statistics, 
even  on  those  matters  which  are  most  important,  and  which 
lend  themselves  most  easily  to  statistical  description,  is  a 
modern  acquirement  which  has  not  yet  widely  spread  over 
the  whole  world,  while  the  capacity  for  classifying  and 
making  right  use  of  statistics  is  still  rarer,  it  is  held  by  some 
that  in  a  study  where  so  much  depends  upon  accurate  state- 
ments of  quantity  little  advance  is  at  present  possible. 


MODERN   CAPITALISM.  3 

And  it  is,  of  course,  true  that  until  the  advance  of 
organised  curiosity  has  provided  us  with  a  complete 
measurement  of  industrial  phenomena  over  a  wide  area 
of  commerce  and  over  a  considerable  period  of  time,  the 
inductive  science  of  Economics  cannot  approach  exactitude. 

But  a  study  which  cannot  claim  this  exactness  may  yet 
be  a  science,  and  may  have  its  value.  A  hypothesis  which 
best  explains  the  generally  apparent  relation  between  certain 
known  phenomena  is  not  the  less  science  because  it  is  liable 
to  be  succeeded  by  other  hypotheses  which  with  equal  re- 
lative accuracy  explain  a  wider  range  of  similar  phenomena. 
It  is  true  that  in  studies  where  we  know  that  there  exists 
a  number  of  unascertained  factors  we  shall  expect  a 
more  fundamental  displacement  of  earlier  and  more  specu- 
lative hypotheses  than  in  studies  where  we  know,  or  think 
we  know,  that  most  of  the  phenomena  with  which  we  are 
concerned  are  equally  within  our  ken :  but  the  earlier 
scientific  treatment,  so  far  as  it  goes,  is  equally  necessary 
and  equally  scientific. 

In  modern  industrial  changes  many  different  factors, 
material  and  moral,  are  discernibly  related  to  one  another 
in  many  complex  ways.  According  as  one  or  other  of  the 
leading  factors  is  taken  for  a  scientific  objective  the  study 
assumes  a  widely  different  character. 

For  example,  since  the  end  of  Industry  is  wealth  for 
consumption  it  would  be  possible  to  group  the  industrial 
phenomena  accordingly  as  they  served  more  fully  and 
directly  to  satisfy  human  wants,  or  as  they  affected  quanti- 
tatively or  qualitatively  the  standard  of  consumption,  and 
to  consider  the  reflex  actions  of  changed  consumption  upon 
modes  of  industrial  activity.  Or  again,  considering  Industry 
to  consist  essentially  of  organised  productive  human  effort, 
those  factors  most  closely  related  to  changes  in  nature,  con- 
ditions, and  intensity  of  work  might  form  the  centre  of 
scientific  interest ;  and  we  might  group  our  facts  and  forces 
according  to  their  bearing  upon  this.  These  points  of  view 
would  give  us  different  objective  scientific  studies. 

Or,  once  more,  taking  a  purely  subjective  standpoint,  we 
might  search  out  the  intellectual  expression  of  these  indus- 
trial changes  in  the  changing  thought  and  feeling  of  the 
age,  tracing  the  educative  influences  of  industrial  develop- 
ment upon  (i)  the  deUberate  judgments  of  the  business 


4  THE  EVOLUTION   OF 

world  and  of  economic  thinkers  as  reflected  in  economic 
writings;  (2)  politics,  literature,  and  art  through  the 
changes  of  social  environment,  and  the  direct  stimulation  of 
new  ideas  and  sentiments.  The  deeper  and  more  important 
human  bearings  of  the  changes  in  industrial  environment 
might  thus  be  brought  into  prominence  as  well  as  the 
reaction  by  which,  through  the  various  social  avenues  of 
law,  public  opinion,  and  private  organised  activity,  these 
intellectual  forces  have  operated  in  their  turn  upon  the 
industrial  structure. 

The  crowning  difficulty  of  an  adequate  scientific  treat- 
ment consists  in  the  fact  that  each  and  all  of  these  scientific 
objects  ought  to  be  pursued  simultaneously ;  that  is  to  say, 
the  whole  of  the  phenomena  —  industrial,  intellectual, 
political,  moral,  esthetic — should  be  presented  in  their  just 
but  ever-changing  proportions. 

This  larger  philosophic  treatment  is  only  named  in  order 
that  it  may  be  realised  how  narrow  and  incomplete  would 
be  even  the  amplest  fulfilment  of  the  purpose  indicated  in 
the  title  of  this  book. 

§  2.  Industrial  science  has  not  yet  sufficiently  advanced  to 
enable  a  full  treatment  of  the  objective  phenomena  to  be 
attempted. 

The  method  here  adopted  is  to  take  for  our  intellectual 
objective  one  important  factor  in  modern  industrial  move- 
ments, to  study  the  laws  of  its  development  and  activity, 
and  by  observing  the  relations  which  subsist  between  it  and 
other  leading  factors  or  forces  in  industry  to  obtain  some 
clearer  appreciation  and  understanding  of  the  structure  of 
industry  as  a  whole  and  its  relation  to  the  evolution  of 
human  society.  This  central  factor  is  indicated  by  the 
descriptive  title  peculiarly  applied  to  modern  industry. 
Capitalism.  A  clear  view  of  the  phenomena  grouped  to- 
gether under  the  head  of  the  Industrial  Revolution  cannot 
fail  to  give  prominence  to  the  changes  that  have  taken  place 
in  the  structure  and  functional  character  of  Capital.  What- 
ever transformations  have  taken  place  in  the  character  of 
land,  the  raw  material  of  industrial  wealth,  and  of  labour,  or 
those  abilities  and  faculties  of  man  which  operate  upon  the 
raw  material,  have  occurred  chiefly  and  directly  through  the 
agency  of  the  enlarged  and  more  complex  use  of  those 
forms  of  material  wealth  which,  while  embodying   some 


MODERN   CAPITALISM.  5 

element  of  human  effort,  are  not  directly  serviceable  in 
satisfying  human  want. 

Writers  upon  Political  Economy  have  brought  much  meta- 
physical acumen  to  bear  upon  definitions  of  Capital,  and  have 
reached  very  widely  divergent  conclusions  as  to  what  the 
term  ought  to  mean,  ignoring  the  clear  and  fairly  consistent 
meaning  the  term  actually  possesses  in  the  business  world 
around  them.  The  business  world  has  indeed  two  views  of 
Capital,  but  they  are  consistent  with  one  another.  Ab- 
stractly, money  or  the  control  of  money,  sometimes  called 
credit,  is  Capital.  Concretely,  capital  consists  of  all  forms 
of  marketable  matter  which  embody  labour.  Land  or 
nature  is  excluded  except  for  improvements :  human  powers 
are  excluded  as  not  being  matter :  commodities  in  the  hands 
of  consumers  are  excluded  because  they  are  no  longer 
marketable.  Thus  the  actual  concrete  forms  of  capital  are 
the  raw  materials  of  production,  including  the  finished  stage 
of  shop  goods ;  and  the  plant  and  implements  used  in  the 
several  processes  of  industry,  including  the  monetary  imple- 
ments of  exchange.  Concrete  business  capital  is  composed 
of  these  and  of  nothing  but  these.^  In  taking  modern  in- 
dustrial phenonema  as  the  subject  of  scientific  inquiry  it  is 
better  to  accept  such  terminology  as  is  generally  and  con- 
sistently received  by  business  men,  than  either  to  invent 
new  terms  or  to  give  a  private  significance  to  some  accepted 
term  which  shall  be  different  from  that  given  by  other 
scientific  students,  and,  if  we  may  judge  from  past  experience, 
probably  inferior  in  logical  exactitude  to  the  current  mean- 
ing in  the  business  world. 

§  3.  The  chief  material  factor  in  the  evolution  of  Capital- 
h 

^  Professor  Marshall  regards  this  restricted  use  of  capital  as  "mis- 
leading," rightly  urging  that  "there  are  many  other  things  which  truly 
perform  the  services  commonly  attributed  to  capital "  {^Principles,  Bk. 
II.,  chap.  iv.).  But  if  we  enlarge  our  definition  so  as  to  include  all  these 
"other  things"  we  shall  be  driven  to  a  political  economy  which  shall 
widely  transcend  Industry  as  we  now  understand  the  term,  and  shall 
comprehend  the  whole  science  and  art  of  life  so  far  as  it  is  concerned 
with  human  effort  and  satisfaction.  If  it  is  convenient  and  justifiable 
to  retain  for  certain  purposes  of  study  the  restricted  connotation  of 
Industry  now  in  vogue,  the  confinement  of  Capital  as  above  to  Trade 
Capital  is  logically  justified.  For  a  fuller  treatment  of  the  question  of 
the  use  of  the  term  Capital  in  forming  a  terminology  descriptive  of  the 
parts  of  Industry  the  reader  is  referred  to  Chapter  VII.,  and  in 
particular  to  Appendix  I. 


O  THE   EVOLUTION   OF 

ism  is  machinery.  The  growing  quantity  and  complexity  of 
machinery  appUed  to  purposes  of  manufacture  and  con- 
veyance, and  to  the  extractive  industries,  is  the  great  special 
fact  in  the  narrative  of  the  expansion  of  modern  industry. 

It  is  therefore  to  the  development  and  influence  of 
machinery  upon  industry  that  we  shall  chiefly  direct  our 
attention,  adopting  the  following  method  of  study.  It 
is  first  essential  to  obtain  a  clear  understanding  of  the 
structure  of  industry  or  "the  industrial  organism"  as  a 
whole,  and  of  its  constituent  parts,  before  the  new  industrial 
forces  had  begun  to  operate.  We  must  then  seek  to 
ascertain  the  laws  of  the  development  and  application  of 
the  new  forces  to  the  different  departments  of  industry  and 
the  different  parts  of  the  industrial  world,  examining  in 
certain  typical  machine  industries  the  order  and  pace  of  the 
application  of  the  new  machinery  and  motor  to  the  several 
processes.  Turning  our  attention  again  to  the  industrial 
organism,  we  shall  strive  to  ascertain  the  chief  changes  that 
have  been  brought  about  in  the  size  and  structural  character 
of  industry,  in'  the  relations  of  the  several  parts  of  the 
industrial  world,  of  the  several  trades  which  constitute 
industry,  of  the  processes  within  these  trades,  of  the 
businesses  or  units  which  comprise  a  trade  or  a  market,  and 
of  the  units  of  capital  and  labour  comprising  a  business. 
It  will  then  remain  to  undertake  closer  studies  of  certain 
important  special  outcomes  of  machinery  and  factory 
production.  These  studies  will  fall  into  three  classes, 
(i)  The  influences  of  machine-production  upon  the  size  of  the 
units  of  capital,  the  intensification  and  limitation  of  com- 
petition; the  natural  formation  of  Trusts  and  other  forms  of 
economic  monopoly  of  capital ;  trade  depressions  and  grave 
industrial  disorders  due  to  discrepancies  between  individual 
and  social  interests  in  the  working  of  modern  methods  of 
production.  (2)  Effects  of  machinery  upon  labour,  the 
quantity  and  regularity  of  employment,  the  character  and 
remuneration  of  work,  the  place  of  women  in  industry 
(3)  Effects  upon  the  industrial  classes  in  the  capacity  of 
consumers,  the  growth  of  the  large  industrial  town  and  its 
influences  upon  the  physical,  intellectual,  moral  life  of  the 
community.  Lastly,  an  attempt  will  be  made  to  summarise 
the  net  influences  of  modern  capitalist  production  in  their 
relation  to  other  social  progressive  forces,  and  to  indicate 


MODERN   CAPITALISAL  7 

the  relations  between  these  which  seem  most  conducive  to 
the  welfare  of  a  community  measured  by  generally  accepted 
standards  of  character  or  happiness. 

§  4.  Since  every  industrial  act  in  a  modern  community  has 
its  monetary  counterpart,  and  its  importance  is  commonly 
estimated  in  terms  of  money,  it  will  be  evident  that  the 
growth  of  capitalism  might  be  studied  with  great  advantage 
in  its  monetary  aspect.  Corresponding  to  the  changes  in 
productive  methods  under  mechanical  machinery  we  should 
find  the  rapid  growth  of  a  complex  monetary  system  reflect- 
ing in  its  international  and  national  character,  in  its  elaborate 
structure  of  credit,  the  leading  characteristics  which  we 
find  in  modern  productive  and  distributive  industry.  The 
whole  industrial  movement  might  be  regarded  from  the 
financial  or  monetary  point  of  view.  But  though  such  a 
study  would  be  capable  of  throwing  a  flood  of  light  upon  the 
movements  of  concrete  industrial  factors  at  many  points, 
the  intellectual  difficulties  involved  in  simultaneously  follow- 
ing the  double  study,  in  constantly  passing  from  the  more 
concrete  to  the  more  abstract  contemplation  of  industrial 
phenomena,  would  tax  the  mental  agility  of  students  too 
severely,  and  would  greatly  diminish  the  chance  of  a  sub- 
stantially accurate  understanding  of  either  aspect  of  modern 
industry.  We  shall  therefore  in  this  study  confine  our  atten- 
tion to  the  concrete  aspect  of  capitalism,  merely  indicating 
by  passing  references  some  of  the  direct  effects  upon  indus- 
trial methods,  especially  in  the  expansion  and  complexity 
of  markets,  of  the  elaborate  monetary  system  of  modern 
exchange. 

§  5.  The  inherent  difficulty  which  besets  every  literary  pre- 
sentation of  the  study  of  a  living  and  changing  organism  is 
here  present  in  no  ordinary  degree.  A  book  of  physiology 
is  necessarily  defective  in  that  it  can  neither  present  the 
just  simultaneity  of  phenomena  which  occur  together,  nor 
the  just  sequence  of  phenomena  which  are  successive. 
Diagrams  may  serve  effectively  to  set  forth  tolerably  simple 
simultaneity,  but  a  complex  diagram  inevitably  fails  of  its 
object ;  for  it  confuses  the  sight  of  one  w^ho  seeks  to  simul- 
taneously grasp  the  whole,  and  thus  compels  a  successive 
examination  of  different  parts  which  is  generally  inferior  to 
skilled  narration,  in  that  it  affords  no  security  of  the  fittest 
order  of  examination   of  the  parts.      For  certain   simple 


8  THE   EVOLUTION    OF 

relations  between  the  movements  of  a  few  definite  objects 
a  working  model  may  be  serviceable;  but  when  complex 
changes  of  shape,  pace,  and  local  relations  exist,  when 
intricate  interaction  takes  place,  and  when  new  phenomena 
arise  affecting  by  their  presence  all  former  ones,  little  can 
be  effected  by  such  visual  presentment.  Still  less  can  a 
succession  of  diagrams  assist  us  to  realise  the  continuity  of 
the  working  of  such  shifting  forces  as  are  presented  in 
industrial  movements. 

Thus  while  the  impossibility  of  adequate  experimentation, 
the  difficulties  of  scientific  observations  of  phenomena  so 
vast  in  scope  and  so  intricate  in  their  relations,  make  the 
student  of  sociological  subjects  more  dependent  upon 
printed  records  for  his  material  than  is  the  case  in  most 
other  sciences,  these  printed  records  induce  a  sequence  of 
thought  antagonistic  to  the  grasp  of  a  living  and  moving 
unity.  This  cause  is  primarily  responsible  for  the  failure  of 
many  of  the  ablest  and  subtlest  economic  treatises  to  impress 
upon  the  reader  a  clear  conception  of  the  industrial  world 
as  a  single  "going  concern."  Each  piece  of  the  mechanism 
is  clearly  described,  and  the  reader  is  informed  how  it  fits 
into  the  parts  which  are  most  closely  related  to  it,  but  no 
simultaneous  grasp  of  the  mechanism  as  a  working  whole  is 
attained.  When  we  graft  upon  the  idea  of  a  mechanism 
that  character  of  continuous  self-development  which  trans- 
forms it  into  an  "  organism,"  the  synthesis  of  the  changing 
phenomena  is  still  more  difficult  to  comprehend.  These 
difficulties  can  only  be  overcome  by  a  recognition  that 
the  scientific  imagination  must  play  a  larger  part  here 
than  it  does  in  those  sciences  whose  subject-matter  is  more 
amenable  to  direct  observation.  In  the  latter  the  chief 
function  of  the  imagination  will  be  the  increase  of  know- 
ledge by  means  of  hypotheses  which  tentatively  transcend 
the  region  of  known  facts. 

In  economic  science,  as  Cairnes  has  ably  shown,  the  use 
of  hypothesis  is  much  wider,  serving  in  large  measure  as  a 
substitute  for  experiment.^  But  the  scientific  imagination 
has  another  constant  service  to  perform.  Its  exercise  is 
constantly  required  by  the  economist,  and  in  general  by 
the  sociologist,  to  gather  into  true  relations  of  time,  space, 

^  Logical  Method  of  Political  Economy,  p.  8l,  etc. 


MODERN   CAPITALISM.  9 

and  causality  those  intricately  connected  phenomena  which, 
though  individually  amenable  to  sensuous  presentation, 
are  not  able  to  be  thus  presented  as  an  aggregate  in  their 
right  organic  order. 

The  attempts  to  construct  a  deductive  economic  science 
upon  a  piece-meal  basis  by  framing  special  and  separate 
theories  of  wages,  rent,  value,  the  functions  of  money,  and  so 
forth,  are  now  recognised  to  be  in  large  measure  failures  pre- 
cisely because  they  involve  the  fundamental  scientific  fallacy 
of  supposing  that  the  several  parts  of  an  organic  whole  can 
be  separately  studied,  and  that  from  this  study  of  the  parts 
we  can  construct  a  correct  idea  of  the  whole.  As  in 
economic  theory  so  in  the  comprehension  of  industrial 
history,  no  detailed  investigation  of  a  number  of  different 
heaps  of  facts  laboriously  collected  by  intellectual  moles 
will  suffice  for  our  purpose.  To  understand  the  evolution 
of  the  system  of  modern  industry  we  must  apply  to  the 
heaps  of  bare  unordered  facts  those  principles  of  order 
which  are  now  recognised  as  the  widest  generalisations  or 
the  most  valid  assumptions  derivable  from  other  sciences, 
and  endeavour  without  slavish  conformity  to  the  formulae 
of  these  other  sciences  to  trace  in  the  growth  of  industrial 
organisms  those  general  laws  of  development  which  seem 
common  to  all  bodies  of  closely-related  phenomena. 


lO 


CHAPTER  II. 

THE  STRUCTURE  OF  INDUSTRY  BEFORE  MACHINERY. 

§    I.  Dimensions  of  International  Commerce  in  early  Eigh- 

teetith  Century. 
§    2.  Natural  Barriers  to  International  Trade. 
§    3.  Political,  Pseudo-econofnic,  and  Economic  Barriers — 

Protective  Theory  and  Practice. 
§    4.  Nature  of  Internatiojtal  Trade. 
§    5.  Size,  Structure,  Relations  of  the  several  Industries. 
§    6.   Slight  Extent  of  Local  Specialisation. 
§    7.  Nature  and  Conditions  of  Specialised  Industry. 
§    8.   Structure  of  the  Market. 
§    9.   Combined  Agriculture  and  Manufacture. 
§  10.  Relations  between  Processes  in  a  Manufacture. 
§  1 1.   Structure  of  the  Domestic  Business :  Early   Stages  of 

Transition. 
§  1 2.  Beginnings  of  Coficentrated  Industry  and  the  Factory. 
§  13.  Limitations   in    Size   and   Application   of    Capital — 

Merchant  Capitalism. 

§  I.  In  order  to  get  some  clear  understanding  of  the  laws  of 
the  operation  of  the  new  industrial  forces  which  prevail  under 
machine-production  it  is  first  essential  to  know  rightly 
the  structure  and  functional  character  of  the  "industrial 
organism"  upon  which  they  were  destined  to  act.  In  order  to 
build  up  a  clear  conception  of  industry  it  is  possible  to  take 
either  of  two  modes  of  inquiry.  Taking  as  the  primary  cell  or 
unit  that  combination  of  labour  and  capital  under  a  single 
control  for  a  single  industrial  purpose  which  is  termed  a 
Business,  we  may  examine  the  structure  and  life  of  the 
Business,  then  proceed  to  discover  how  it  stands  related  to 
other  businesses  so  as  to  form  a  Market,  and,  finally,  how  the 


THE   EVOLUTION   OF   MODERN    CAPITALISM.      II 

several  Markets  are  related  locally,  nationally,  internationally 
so  as  to  yield  the  complex  structure  of  Industry  as  a  whole. 
Or  reversely,  we  may  take  Industry  as  a  whole,  the  Indus- 
trial Organism  as  it  exists  at  any  given  time,  consider  the 
nature  and  extent  of  the  cohesion  existing  between  its 
several  parts,  and,  further,  resolving  these  parts  into  their 
constituent  elements,  gain  a  close  understanding  of  the 
extent  to  which  differentiation  of  industrial  functions  has 
been  carried  in  the  several  divisions. 

Although  in  any  sociological  inquiry  these  two  methods 
are  equally  valid,  or,  more  strictly  speaking,  are  equally 
balanced  in  virtues  and  defects,  the  latter  method  is  here 
to  be  preferred,  because  by  the  order  of  its  descent  from 
the  whole  to  the  constituent  parts  it  brings  out  more 
definitely  the  slight  cohesiveness  and  integration  of  industry 
beyond  the  national  limits,  and  serves  to  emphasise  those 
qualities  of  nationalism  and  narrow  localism  which  mark 
the  character  of  earlier  eighteenth  century  industry.  We  are 
thus  enabled  better  to  recognise  the  nature  and  scope  of 
the  work  wrought  by  the  modern  industrial  forces  which 
are  the  central  object  of  study. 

While  the  Market  or  the  Trade  is  less  and  less  deter- 
mined or  confined  by  national  or  other  political  boundaries 
in  modern  times,  and  nationalism  is  therefore  a  factor 
of  diminishing  importance  in  the  modern  science  of 
economics,  the  paramount  domination  of  politics  over 
large  commerce  in  the  last  century,  acting  in  co-oper- 
ation with  other  racial  and  national  forces,  obliges  any 
just  analysis  of  eighteenth  century  industry  to  give 
clear  and  early  emphasis  to  the  slight  character  of  the 
commercial  interdependency  among  nations.  The  degree 
of  importance  which  statesmen  and  economists  attached  to 
this  foreign  commerce  as  compared  with  home  trade,  and 
the  large  part  it  played  in  the  discussion  and  determination 
of  public  conduct,  have  given  it  a  prominence  in  written 
history  far  beyond  its  real  value.  ^ 

It  is  true  that  through  the  Middle  Ages  a  succession  of 
European  nations  rose  to  eminence  by  the  development  of 
navigation  and  international  trade,  Italy,  Portugal,  Spain, 
France,  Holland,  and  England;  but  neither  in  size  nor  in 

^  A.  Smith,  Wealth  of  Nations,  Bk.  iv.,  chap.  i. 


12  THE   EVOLUTION    OF 

character  was  this  trade  of  the  first  importance.  Even  in 
the  case  of  those  nations  where  it  was  most  developed  it 
formed  a  very  small  proportion  of  the  total  industry  of  the 
country,  and  it  was  chiefly  confined  to  spicery,  bullion, 
ornamental  cloths,  and  other  objects  of  art  and  luxury. 

It  is  important  to  recognise  that  in  the  first  half  of 
the  eighteenth  century  international  trade  still  largely 
partook  of  this  character.  Not  only  did  it  bear  a  far 
smaller  proportion  to  the  total  industry  of  the  several 
countries  than  does  foreign  trade  to-day,  but  it  was  still 
engaged  to  a  comparatively  small  extent  with  the  transport 
of  necessaries  or  prime  conveniences  of  life.  Each  nation, 
as  regards  the  more  important  constituents  of  its  consump- 
tion, its  staple  foods,  articles  of  clothing,  household  furni- 
ture, and  the  chief  implements  of  industry,  was  almost 
self-sufficing,  producing  little  that  it  did  not  consume, 
consuming  little  it  did  not  produce. 

In  1 7 1 2  the  export  trade  of  England  is  officially  estimated 
at  ;^6,6zi4,io3,^  or  considerably  less  than  one-sixth  of  the 
home  trade  of  that  date  as  calculated  by  Smith  in  his 
Memoirs  of  Wool.  Such  an  estimate,  however,  gives  an  ex- 
aggerated impression  of  the  relation  of  foreign  to  home  trade, 
because  under  the  latter  no  account  is  taken  of  the  large 
domestic  production  of  goods  and  services  which  figure  in 
no  statistics.  A  more  instructive  estimate  is  that  which 
values  the  total  consumption  of  the  English  people  in 
1 7 13  at  forty-nine  or  fifty  millions,  out  of  which  about 
four  millions  covers  the  consumption  of  foreign  goods.^ 
In  1740  imports  amounted  to  ^^6,703,778,  exports  to 
■;,^8,i97,788.  In  1750  they  had  risen  respectively  to 
;!^7>772,339  and  ;^i2,699,o8i,^  and  ten  years  later 
to  ;^9,832,8o2  and  ;^i4,694,97o.  Macpherson,  whose 
Annals  of  Commerce  are  a  mine  of  wealth  upon  the 
history  of  foreign  commerce  in  the  eighteenth  century, 
after   commenting  upon   the  impossibility  of  obtaining   a 

1  Macpherson,  Annals  of  Commerce,  vol.  ii.  p.  728. 

^  Smith,  Memoirs,  vol.  ii.,  chap.  iii.  As  the  approximate  calcula- 
tion of  a  very  competent  business  man  these  figures  are  more  reliable 
than  the  official  figures  of  imports  and  exports,  the  value  of  which 
throughout  the  eighteenth  century  is  seriously  impaired  by  the  fact  that 
they  continued  to  be  estimated  by  the  standard  of  values  of  1694. 

*  Whitworth's  State  quoted,  Macpherson,  vol.  iii.  p.  283. 


MODERN   CAPITALISM. 


13 


just  estimate  of  the  value  of  home  trade,  alludes  to  a 
calculation  which  places  it  at  thirty-two  times  the  size  of 
the  export  trade.  Macpherson  contents  himself  with  con- 
cluding that  it  is   "a  vast  deal  greater  in  value  than  the 

PROGRESS  OF  FOREIGN  TRADE  IN  ENGLAND. 


5Q0Mil  ''^Q^    10  20  30  40  50  60  70  80  90  'QP°IG.  20  30  40  50  60  70  80    'Q^^ 


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whole  of  the  foreign  trade. "^  There  is  every  reason  to 
believe  that  in  the  case  of  Holland  and  France,  the  only 
two  other  European  nations  with  a  considerable  foreign 
trade,  the  same  general  conclusion  will  apply. 

'  Annals,  vol.  iii.  p.  340. 


14  THE   EVOLUTION   OF 

The  smallness  of  the  part  which  foreign  trade  played  in 
industry  signifies  that  in  the  earUer  part  of  the  eighteenth 
century  the  industrial  organism  as  a  whole  must  be  regarded 
as  a  number  of  tolerably  self-sufiicing  and  therefore  homo- 
geneous national  forms  attached  to  one  another  by  bonds 
which  are  few  and  feeble.  As  yet  there  was  little  special- 
isation in  national  industry,  and  therefore  little  integration 
of  national  parts  of  the  world-industry, 

§  2.  Since  the  breaking-down  of  international  barriers  and 
the  strengthening  of  the  industrial  bonds  of  attachment 
between  nations  will  be  seen  to  be  one  of  the  most 
important  effects  of  the  development  of  machine-industry, 
some  statement  of  the  nature  of  these  barriers  and  their 
effect  upon  the  size  and  character  of  international  trade 
is  required. 

Though  considerable  advances  had  been  made  by 
England  and  Holland  at  the  beginning  of  the  eighteenth 
century  in  the  improvement  of  harbours,  the  establishment 
of  lighthouses,  and  the  development  of  marine  insurance,^ 
navigation  was  still  subject  to  considerable  risks  of  the  loss 
of  life  and  of  investments,  while  these  "  natural "  dangers 
were  increased  by  the  prevalence  of  piracy.  Voyages  were 
slow  and  expensive,  commerce  between  distant  nations  being 
necessarily  confined  to  goods  of  a  less  perishable  character 
which  would  stand  the  voyage.  Trade  in  fresh  foods, 
which  forms  so  large  a  part  of  modern  commerce,  would 
have  been  impossible  except  along  the  coasts  of  adjoining 
nations.  With  these  natural  barriers  to  commerce  may  be 
reckoned  the  defective  knowledge  of  the  position,  resources, 
and  requirements  of  large  parts  of  the  earth  which  now  fill 
an  important  place  in  commerce.  The  new  world  was  but 
slightly  opened  up,  nor  could  its  known  resources  be  largely 
utilised  before  the  development  of  more  adequate  machinery 
of  transport.  We  can  scarcely  realise  the  inconveniences, 
costs,  and  risks  entailed  by  the  more  distant  branches  of 
foreign  trade  at  a  time  when  the  captain  of  a  merchant- 
ship  still  freighted  his  vessel  at  his  own  expense,  and  when 
each  voyage  was  a  separate  speculation.  Even  in  the  early 
nineteenth  century  the  manufacturer  commonly  shipped 
his  surplus  produce  at  his  own  risk,  employing  the  merchant 

^  Cunningham,  History  of  English  Industry,  vol.  ii.  p.  287,  etc. 


MODERN   CAPITALISM.  15, 

upon  commission,  and  in  the  trade  with  the  Indies,  China, 
or  South  America  he  had  frequently  to  He  out  of  his  money 
or  his  return  freight  of  indigo,  coffee,  tea,  etc.,  for  as  long 
as  eighteen  months  or  two  years,  and  to  bear  the  expense 
of  warehousing  as  well  as  the  damage  which  time  and  tide 
inflicted  on  his  goods. 

§  3.  Next  come  a  series  of  barriers,  partly  political,  partly 
pseudo-economic,  in  which  the  antagonism  of  nations  took 
shape,  the  formation  of  political  and  industrial  theories 
which  directed  the  commercial  intercourse  of  nations  into 
certain  narrow  and  definite  channels. 

Two  economic  doctrines,  separate  in  the  world  of  false 
ideas,  though  their  joint  application  in  the  world  of  practice 
has  led  many  to  confuse  them,  exercised  a  dominant 
influence  in  diminishing  the  quantity,  and  determining  the 
quality  of  international  trade  in  the  eighteenth  century. 
These  doctrines  had  reference  respectively  to  the  construc- 
tion and  maintenance  of  home  industries  and  the  balance 
of  trade.  The  former  doctrine,  which  was  not  so  much  a 
consciously-evolved  theory  as  a  short-sighted,  intellectual 
assumption  driven  by  the  urgent  impulse  of  vested  interests 
into  practical  effect,  taught  that,  on  the  one  hand,  import 
trade  should  be  restricted  to  commodities  which  were  not 
and  could  not  with  advantage  be  produced  at  home,  and  to 
the  provision  of  cheap  materials  for  existing  manufactures; 
while  export  trade,  on  the  other  hand,  should  be  generally 
encouraged  by  a  system  of  bounties  and  drawbacks.  This 
doctrine  was  first  rigidly  applied  by  the  French  minister, 
Colbert,  but  the  policy  of  France  was  faithfully  copied  by 
England  and  other  commercial  nations  and  ranked  as  an 
orthodox  theory  of  international  trade. 

The  Balance  of  Trade  doctrine  estimated  the  worth  of  a 
nation's  intercourse  with  another  by  the  excess  of  the 
export  over  the  import  trade,  which  brought  a  quantity  of 
bullion  into  the  exporting  country.  This  theory  was  also 
widely  spread,  though  obviously  its  general  application 
would  have  been  destructive  of  all  international  commerce. 
The  more  liberal  interpretation  of  the  doctrine  was  satisfied 
with  a  favourable  balance  of  the  aggregate  export  over  the 
aggregate  import  trade  of  the  country,  but  the  stricter 
interpretation,  generally  dominant  in  practice,  required  that 
in  the  case  of  each  particular  nation  the  balance  should  be 


l6  THE   EVOLUTION   OF 

favourable.  In  regarding  England's  commerce  with  a 
foreign  nation,  any  excess  in  import  values  over  export  was 
spoken  of  as  "a  loss  to  England."  England  deliberately 
cut  off  all  trade  with  France  during  the  period  1702  to 
1763  by  a  system  of  prohibitive  tariffs  urged  by  a  double 
dread  lest  the  balance  should  be  against  us,  and  lest  French 
textile  goods  might  successfully  compete  with  English 
goods  in  the  home  markets.  On  the  other  hand,  we 
cultivated  trade  with  Portugal  because  "  we  gain  a  greater 
balance  from  Portugal  than  from  any  other  country  what- 
ever." The  practical  policy  prevalent  in  17 13  is  thus 
summarised  by  one  of  its  enthusiastic  upholders — "  We 
suffer  the  goods  and  merchandises  of  Holland,  Germany, 
Portugal,  and  Italy  to  be  imported  and  consumed  among  us; 
and  it  is  well  we  do,  for  we  expect  a  much  greater  value  of 
our  own  to  those  countries  than  we  take  from  them.  So 
that  the  consumption  of  those  nations  pays  much  greater 
sums  to  the  rents  of  our  lands  and  the  labour  of  our  people 
than  ours  does  to  theirs.  But  we  keep  out  as  much  as 
possible  the  goods  and  merchandises  of  France,  because  our 
consumption  of  theirs  would  very  much  hinder  the  con- 
sumption of  our  own,  and  abate  a  great  part  of  forty-two 
millions  which  it  now  pays  to  the  rents  of  our  lands  and 
the  labour  of  our  people."^  Thus  our  policy  was  to  confine 
our  import  trade  to  foreign  luxuries  and  raw  materials  of 
manufacture  which  could  not  be  here  produced,  drawn 
exclusively  from  countries  where  such  trade  would  not  turn 
the  balance  against  us,  and,  on  the  other  hand,  to  force  our 
export  trade  on  any  country  that  would  receive  it.  Since 
every  European  nation  was  largely  influenced  by  similar 
ideas  and  motives,  and  enforced  upon  their  colonies  and 
dependencies  a  like  line  of  conduct,  many  mutually  profit- 
able exchanges  were  prevented,  and  commerce  was  confined 
to  certain  narrow  and  artificial  grooves,  while  the  national 
industrial  energy  was  wasted  in  the  production  of  many 
things  at  home  which  could  have  been  more  cheaply 
obtained  from  foreign  countries  through  exchange. 

The  following  example  may  suffice  to  illustrate  the  in- 
tricacy of  the  legislation  passed  in  pursuance  of  this  policy. 
It  describes  a  change  of  detailed  policy  in  support  and 
regulation  of  textile  trade  : — 

^  Smith,  Memoirs  of  Wool,  vol.  ii.  p.  113. 


MODERN    CAPITALISM.  1 7 

"  A  tax  was  laid  on  foreign  linens  in  order  to  provide  a 
fund  for  raising  hemp  and  flax  at  home;  while  bounties 
were  given  on  these  necessary  articles  from  our  colonies, 
the  bounty  on  the  exportation  of  hemp  was  withdrawn. 
The  imposts  on  foreign  linen  yarn  were  withdrawn. 
Bounties  were  given  on  British  linen  cloth  exported ;  while 
the  making  of  cambricks  was  promoted,  partly  by  pro- 
hibiting the  foreign  and  partly  by  giving  fresh  incentives, 
though  without  success,  to  the  manufacture  of  cambricks 
within  our  island.  Indigo,  cochineal,  and  logwood,  the 
necessaries  of  dyes,  were  allowed  to  be  freely  imported."  ^ 

The  encouragement  of  English  shipping  (partly  for  com- 
mercial, partly  for  political  reasons)  took  elaborate  shape  in 
the  Navigation  Acts,  designed  to  secure  for  English  vessels 
a  monopoly  of  the  carrying  trade  between  England  and  all 
other  countries  which  sent  goods  to  English  or  to  colonial 
shores.  This  policy  was  supported  by  a  network  of  minor 
measures  giving  bounties  to  our  colonies  for  the  exportation 
of  shipping  materials,  pitch,  tar,  hemp,  turpentine,  masts, 
and  spars,  and  giving  bounties  at  home  for  the  construction 
of  defensible  ships.  This  Navigation  policy  gave  a  strong 
foundational  support  to  the  whole  protective  policy.  Prob- 
ably the  actuating  motives  of  this  policy  were  more 
political  than  industrial.  Holland,  the  first  to  apply  this 
method  systematically,  had  immensely  strengthened  her 
maritime  power.  France,  though  less  successfully,  had 
followed  in  her  wake.  Doubtless  there  were  many  clear- 
thinking  Englishmen  who,  though  aware  of  the  damage 
done  to  commerce  by  our  restrictive  regulations  about 
shipping,  held  that  the  maintenance  of  a  powerful  navy 
for  the  defence  of  the  kingdom  and  its  foreign  possessions 
was  an  advantage  which  outweighed  the  damage.^ 

The  selfish  and  short-sighted  policy  of  this  protective 
system  found  its  culminating  point  in  the  treatment  of 
Ireland  and  the  American  plantations.  The  former  was 
forbidden  all  manufacture  which  might  either  directly  or 
indirectly  compete  with  English  industry,  and  was  com- 
pelled to  deal  exclusively  with  England;  the  American 
colonies  were  forbidden  to  weave  cloth,  to  make  hats,  or  to 

^  Chalmers,  Estimates,  p,  148. 

-  Cf.  Cunningham,  Grozvtk  of  English  Ittdustry,  vol,  ii.  p.  292. 

2 


1 8  THE   EVOLUTION   OF 

forge  a  bolt,  and  were  compelled  to  take  all  the  manu- 
factured goods  required  for  their  consumption  from  England. 

The  freedom  and  expansion  of  international  commerce 
was  further  hampered  by  the  policy  of  assigning  monopolies 
of  colonial  and  foreign  trade  to  close  Chartered  Companies. 
This  policy,  however,  defensible  as  an  encouragement  of 
early  mercantile  adventure,  was  carried  far  beyond  these 
legitimate  limits  in  the  eighteenth  century.  In  England 
the  East  Indian  was  the  most  powerful  and  successful  of 
these  companies,  but  the  assignment  of  the  trade  with 
Turkey,  Russia,  and  other  countries  to  chartered  companies 
was  a  distinct  hindrance  to  the  development  of  foreign 
trade. 

Our  foreign  trade  at  that  period  might  indeed  be  classed 
or  graded  in  accordance  with  the  degree  of  encouragement 
or  discouragement  offered  by  the  State. 

Imports  would  fall  into  four  classes. 

1.  Imports  forbidden  either  (a)  by  legislative  pro- 

hibition, or  (^)  by  prohibitive  taxation. 

2.  Imports  admitted  but  taxed. 

3.  Free  imports. 

4.  Imports  encouraged  by  bounties. 

Exports  might  be  graded  in  similar  fashion. 

1.  Prohibited   exports   (e.g.,    sheep   and   wool,    raw 

hides,  tanned  leather,  woollen  yarn,  textile  im- 
plements,^ certain  forms  of  skilled  labour). 

2.  Exports    upon    which    duties    are    levied    (e.g., 

coals  2). 

3.  Free  exports. 

4.  Exports    encouraged   by    bounties,  or  by  draw- 

backs. 

The  unnatural  and  injurious  character  of  most  of  this 
legislation  is  best  proved  by  the  notable  inability  to 
effectively  enforce  its  application.  The  chartered  com- 
panies were  continually  complaining  of  the  infringement  of 
their  monopolies  by  private  adventurers,  and  more  than  one 
of  them  failed  through  inability  to  crush  out  this  illegal 
competition.     A  striking  condemnation    of  our  policy  to- 

^  Smith,  Wealth  of  Nations,  Bk.  iv.,  chap,  viii,  ^  /bid. 


MODERN   CAPITALISM.  I9 

wards  France  consisted  in  the  growth  of  an  enormous 
illicit  trade  which,  in  spite  of  the  difficulties  which  beset  it, 
made  a  considerable  part  of  our  aggregate  foreign  trade 
during  the  whole  of  the  century.  The  lack  of  any  clear 
perception  of  the  mutuality  of  advantage  in  foreign  and 
colonial  trade  was  the  root  fallacy  which  underlay  these 
restrictions.  Professor  Cunningham  rightly  says  of  the 
colonial  policy  of  England,  that  it  "  implied  that  each  dis- 
tinct member  should  strengthen  the  head,  and  not  at  all 
that  these  members  should  mutually  strengthen  each 
other."! 

So,  as  we  tried  to  get  the  better  of  our  colonies,  still  more 
rigorously  did  we  apply  the  same  methods  to  foreign 
countries,  regarding  each  gain  which  accrued  to  us  as  an 
advantage  which  would  have  wholly  gone  to  the  foreigner  if 
we  had  not  by  firmness  and  enterprise  secured  it  for  our- 
selves. 

The  slight  extent  of  foreign  intercourse  was,  however, 
partly  due  to  causes  which  are  to  be  regarded  as  genuinely 
economic.  The  life  and  experience  of  the  great  mass  of  the 
population  of  all  countries  was  extremely  restricted ;  they 
were  a  scattered  and  rural  folk  whose  wants  and  tastes  were 
simple,  few,  home-bred,  and  customary.  The  customary 
standard  of  consumption,  slowly  built  up  in  conformity  with 
local  production,  gave  little  encouragement  to  foreign  trade. 
Moreover,  to  meet  the  new  tastes  and  the  more  varied  con- 
sumption which  gradually  found  its  way  over  this  country, 
it  was  in  conformity  with  the  economic  theory  and  practice 
of  the  day  to  prefer  the  establishment  of  new  home  in- 
dustries, equipped  if  necessary  with  imported  foreign  labour, 
to  the  importation  of  the  products  of  such  labour  from 
abroad.  So  far  as  England,  in  particular,  is  concerned,  the 
attitude  was  favoured  by  the  political  and  religious  oppres- 
sion of  the  French  government  which  supplied  England  in 
the  earlier  eighteenth  century  with  a  constant  flow  of  skilled 
artisan  labour.  Many  English  manufacturers  profited  by 
this  flow.  Our  textile  industries  in  silk,  wool,  and  linen, 
calico-printing,  glass,  paper,  and  pottery  are  special  be- 
holden to  the  new  arts  thus  introduced. 

Among  the  economic   barriers   must   be   reckoned   the 

'  Growth  of  English  Industry  ^  vol.  ii.  p.  303. 


20  THE   EVOLUTION   OF 

slight  development  of  international  credit,  and  of  the 
machinery  of  exchange. 

§  4.  These  barriers,  natural,  political,  social,  economic, 
against  free  international  intercourse,  throw  important  light 
upon  the  general  structure  of  world-industry  in  the  eigh- 
teenth century. 

In  this  application  they  determined  and  strictly  limited  not 
only  the  quantity  but  the  nature  of  the  international  trade. 
The  export  trade  of  England,  for  example,  in  1730  was 
practically  confined  to  woollen  goods  and  other  textile 
materials,  a  small  quantity  of  leather,  iron,  lead,  silver,  and 
gold  plate,  and  a  certain  number  of  re-exported  foreign 
products,  such  as  tobacco  and  Indian  calicoes.  The  import 
trade  consisted  of  wine  and  spirits,  foreign  foods,  such  as 
rice,  sugar,  coffee,  oil,  furs,  and  some  quantity  of  foreign 
wool,  hemp,  silk,  and  linen-yarn,  as  material  for  our  specially 
favoured  manufactures.  Having  regard  to  the  proportion 
of  the  several  commodities,  it  would  not  be  much  exaggera- 
tion to  summarise  our  foreign  trade  by  saying  that  we  sent 
out  woollen  goods  and  received  foreign  foods.  These 
formed  the  great  bulk  of  our  foreign  trade.i  Excepting  the 
woollen  goods  and  a  small  trade  in  metals,  leather  is  the 
only  manufactured  article  which  figured  to  any  appreciable 
extent  in  our  export  of  1730.  At  that  time  it  is  clear  that 
in  the  main  English  manufacture,  as  well  as  English  agri- 
culture, was  for  the  supply  of  English  wants.  The  same  was 
true  of  other  industrial  countries.  Holland  and  France, 
who  divided  with  England  the  shipping  supremacy,  had  a 
foreign  trade  which,  though  then  deemed  considerable,  bore 
no  greater  proportion  to  the  total  industry  of  these  countries 
than  in  the  case  of  England.  Germany,  Italy,  Russia, 
Spain,  and  even  Portugal  were  almost  wholly  self-sustained. 

Regarding,  then,  the  known  and  related  world  of  that  time 
in  the  light  of  an  industrial  organism,  we  must  consider  it  as 
one  in  which  the  processes  of  integration  and  of  differentia- 
tion of  parts  has  advanced  but  a  little  way,  consisting  as 
yet  of  a  number  of  homogeneous  and  incoherent  national 
cells. 

This  homogeneity  is  of  course  qualified  by  differences  in 
production  and  consumption  due  to  climate,  natural  pro- 

^  Macpherson,  Annals,  vol.  iii.  pp.  155,  156. 


MODERN   CAPITALISM.  21 

ducts,  national  character  and  institutions,  and  the  develop- 
ment of  industrial  arts  in  the  several  nations. 

§  5.  This  consideration  of  the  approximate  homogeneity 
of  the  national  units  of  world-industry  gives  a  higher 
scientific  value  to  the  analysis  of  a  single  typical  indus- 
trial nation  such  as  England  than  would  be  the  case  in 
modern  times,  when  the  work  of  differentiation  of  industrial 
functions  among  the  several  nations  has  advanced  much 
further. 

Taking,  therefore,  the  national  industry  of  England  as  the 
special  subject  of  analysis,  we  may  seek  to  obtain  a  clear 
conception  of  the  size,  structure,  and  connections  of  the 
several  branches  of  industry,  paying  special  regard  to  the 
manufactures  'upon  which  the  new  industrial  forces  were 
chiefly  to  operate. 

It  is  not  possible  to  form  a  very  accurate  estimate 
of  the  relative  importance  of  the  different  industries  as 
measured  either  by  the  money  value  of  their  products, 
or  by  the  amount  of  labour  engaged  in  producing  them. 
Eighteenth  century  statistics,  as  we  saw,  furnished  no 
close  estimate  of  the  total  income  of  the  nation  or  of 
the  value  of  home  industries.  Since  no  direct  census 
of  the  English  population  was  taken  before  1805,  the 
numbers  were  never  exactly  known,  and  eighteenth  century 
economists  spent  much  time  and  ingenuity  in  trying  to 
ascertain  the  growth  of  population  by  calculations  based 
upon  the  number  of  occupied  houses,  or  by  generalising 
from  slender  and  unreliable  local  statistics,  without  in  the 
end  arriving  at  any  close  agreement.  Still  less  reliable  will 
be  the  estimates  of  the  relative  size  and  importance  of  the 
different  industries. 

Two  such  attempts,  however,  one  slightly  prior  to  the 
special  period  we  are  investigating,  and  one  a  little  later, 
may  be  taken  as  general  indications  of  the  comparative  im- 
portance of  the  great  divisions  of  industry,  agriculture, 
manufacture,  distribution  or  commerce. 

The  first  is  that  of  Gregory  King  in  the  year  1688. 
King's  calculation,  however,  can  only  be  regarded  as  roughly 
approximate.  The  quantity  of  combined  agriculture  and 
manufacture,  and  the  amount  of  domestic  industry  for 
domestic  consumption,  renders  the  manufacturing  figures, 
however   carefully  they   might   have   been   collected,  very 


22 


THE  EVOLUTION   OF 


deceptive.     The  same  criticism,  though  to  a  less  degree, 
appUes  to  the  estimate  of  Arthur  Young  for  1769. 


00 
00 
CD 

Z 

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a. 
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o  o 


^ 

r^ 

§- 

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r^ 

^ 

f^ 

r 

If   to   Young's   estimate   of  the   population    dependent 
upon  agriculture  we  add  the  class  of  landlords  and  their 


MODERN   CAPITALISM.  23 

direct  dependents  and  a  proper  proportion  of  the  non- 
industrious  poor,  who,  though  not  to  be  so  classed  in  a 
direct  measurement  of  occupations,  are  supported  out  of 
the  produce  of  agriculture,  we  shall  see  that  in  1769  we  are 
justified  in  believing  that  agriculture  was  in  its  productive- 
ness almost  equivalent  to  the  whole  of  manufactures  and 
commerce. 

In  turning  to  the  several  branches  of  manufacture,  the 
abnormal  development  of  one  of  them,  viz.  the  woollen, 
for  purposes  of  foreign  trade,  marks  the  first  and  only  con 
siderable  specialisation  of  English  industry  before  the  advent 
of  steam  machinery.  With  the  single  exception  of  woollen 
goods  almost  the  whole  of  English  manufactures  were  for 
home  consumption.  At  the  opening  of  the  eighteenth 
century,  and  even  as  late  as  1770,  no  other  single  manu- 
facture played  any  comparable  part  in  the  composition  of 
our  export  trade. 

According  to  Chalmers,^  in  the  period  1 699-1 701,  the 
annual  value  of  woollen  exports  was  over  two  and  a  half 
million  pounds,  or  about  two-fifths  of  the  total  export  trade, 
while  in  1769-71  it  still  amounted  to  nearly  one-third  of 
the  whole,  giving  entire  or  partial  employment  to  no  fewer 
than  "a  million  and  a  half  of  people,"  or  half  of  the  total 
number  assigned  by  Young  to  manufacture. 

Next  to  the  woollen,  but  far  behind  in  size  and  import- 
ance, came  the  iron  trade.  In  1720  England  seems  to 
have  developed  her  mming  resources  so  imperfectly  as  to 
be  in  the  condition  of  importing  from  foreign  countries 
20,000  out  of  the  30,000  tons  required  for  her  hardware 
manufactures.^  Almost  all  this  iron  was  destined  to  home 
consumption  with  the  exception  of  hardware  forced  upon 
the  American  colonies,  who  were  forbidden  to  manufac- 
ture for  themselves.  In  1720  it  is  calculated  that  mining 
and  manufacture  of  iron  and  hardware  employed  200,000 
persons.^ 

Copper  and  brass  manufactures  employed  some  30,000 
persons  in  1720.* 

Silk  was  the  only  other  highly  developed  and  consider- 

^  Chalmers,  Estimate,  p.  208.     See,  however,  Baines,  who  gives  a 
slightly  smaller  estimate,  History  of  the  Cotton  Manufacture,  p.  112. 
•^  Macpherson,  Annals,  vol.  iii.  p.  114. 
*  Ibid.,  vol.  iii.  p.  73.  *  Ibid.,  vol.  iii.  p.  73. 


24  THE   EVOLUTION   OF 

able  manufacture.  It  had,  however,  to  contend  with 
Indian  competition,  introduced  by  the  East  India  Com- 
pany, and  also  with  imported  calicoes.^  In  1750  there 
were  about  13,000  looms  in  England,  the  product  of  which 
was  almost  entirely  used  for  home  consumption.  Cotton 
and  linen  were  very  small  manufactures  during  the  first 
half  of  the  eighteenth  century.  At  the  beginning  of  the 
century  the  linen  trade  was  chiefly  in  the  hands  of  Russia 
and  Germany,  although  it  had  taken  root  in  Ireland  as 
early  as  the  close  of  the  seventeenth  century,  and  was 
worked  to  some  extent  in  Lancashire,  Leicestershire,  and 
round  Darlington  in  Yorkshire,  which  districts  supplied  the 
linen-warp  to  the  cotton  weavers.  ^  As  for  cotton,  even  in 
1760  not  more  than  40,000  persons  were  engaged  in  the 
manufacture,  and  in  1764  the  cotton  exports  were  but  one- 
twentieth  of  the  value  of  the  woollen  exports.^  The  small 
value  of  the  cotton  trade  and  an  anticipatory  glance  at  its 
portentous  after-growth  is  conveyed  in  the  following 
figures : — 


Home  Market.  Export  Trade. 

1766  i^379>24i         ...  ;^22o,759  (Postletwayte) 

1 0,074,000  J  ^ 


I619-21     13,044,000 
1829-31     13,351,000 


The  many  other  little  manufactures  which  had  sprung  up, 
such  as  glass,  paper,  tin-plate,  produced  entirely  for 
home  consumption,  and  employed  but  a  small  number  of 
workers. 

§  6.  If  we  turn  from  the  consideration  of  the  size  of  English 
industry  and  the  several  departments  to  the  analysis  of  its 
structure  and  the  relation  to  the  several  trades,  we  shall  find 
the  same  signs  of  imperfect  organic  development  which  we 
found  in  the  world-industry,  though  not  so  strongly  marked. 
Just  as  we  found  each  country  in  the  main  self-sufficing,  so  we 
find  each  district  of  England  (with  a  few  significant  excep- 
tions) engaged  chiefly  in  producing  for  its  own  consumption. 
There  was  far  less  local  specialisation  in  industry  than  we 

^  Smith,  Memoirs  on  Wool,  vol.  ii.  pp.  19,  45. 

^  Smith,  ibid.,  vol.  ii.  p.  270;  cf.  also  Cunningham,  Growth  of 
English  Industry,  vol.  ii.  p.  300. 

**  Toynbee,  Industrial  Revolution,  p.  50. 

*  Schulze-Gaevernitz,  Der  Grossbetrieb,  p.  77* 


MODERN   CAPITALISM.  2$ 

find  to-day.  The  staple  industries,  tillage,  stock-raising, 
and  those  connected  with  the  supply  of  the  common 
articles  of  clothing,  furniture,  fuel,  and  other  necessaries 
were  widespread  over  the  whole  country. 

Though  far  more  advanced  than  foreign  intercourse,  the 
internal  trade  between  more  distant  parts  of  England  was 
extremely  slight.  Defective  facilities  of  communication 
and  transport  were  of  course  in  large  measure  responsible 
for  this. 

The  physical  obstructions  to  such  freedom  of  commerce 
as  now  subsists  were  very  considerable  in  the  eighteenth 
century.  The  condition  of  the  main  roads  in  the  country  at 
the  opening  of  the  century  was  such  as  to  make  the  carriage 
of  goods  long  and  expensive.  Agricultural  produce  was 
almost  entirely  for  local  consumption,  with  the  exception  of 
cattle  and  poultry,  which  were  driven  on  foot  from  the 
neighbouring  counties  into  London  and  other  large  markets.^ 
In  the  winter,  even  round  London,  bad  roads  were  a  great 
obstacle  to  trade.  The  impossibility  of  driving  cattle  to 
London  later  than  October  often  led  to  a  monopoly  of  winter 
supply  and  high  prices.^  The  growth  of  turnpike  roads, 
which  proceeded  apace  in  the  first  half  of  the  century,  led 
to  the  large  substitution  of  carts  for  pack  horses,  but  even 
these  roads  were  found  "  execrable  "  by  Arthur  Young,  and 
off  the  posting  routes  and  the  neighbourhood  of  London 
the  communication  was  extremely  difficult.  "  The  great 
roads  of  England  remained  almost  in  this  ancient  condition 
even  as  late  as  1752  and  1754,  when  the  traveller  seldom 
saw  a  turnpike  for  two  hundred  miles  after  leaving  the 
vicinity  of  London.  "^ 

Rivers  rather  than  roads  were  the  highways  of  commerce, 
and  many  Acts  were  passed  in  the  earlier  eighteenth 
century  for  improving  the  navigability  of  rivers,  as  the  Trent, 
Ouse,  and  Mersey,  partly  in  order  to  facilitate  internal 
trade  and  partly  to  enable  towns  like  Leeds  and  Derby  to 
engage  directly  in  trade  by  sea,*  and  to  connect  adjoining 
towns  such  as  Liverpool  and  Manchester.  In  1755  the 
first  canal  was  constructed,  and  in  the  latter  part  of  the 
century  the  part  played  by  canals  in  the  development  of  the 

^  Defoe,  Tour,  vol.  ii.  p.  371.  ^  Chalmers,  pp.  124,  125. 

^  /i>td.,  vol.  ii,  p.  370.  *  Defoe,  Tour,  vol.  iii.  p.  9,  etc. 


26  THE   EVOLUTION   OF 

new  factory  system  was  considerable.  But  in  spite  of  these 
efforts  to  improve  methods  of  transport  in  the  earlier 
eighteenth  century,  it  is  evident  that  the  bulk  of  industry 
was  engaged  in  providing  articles  for  local  consumption, 
and  that  the  area  of  the  market  for  most  products  was 
extremely  narrow. 

The  facile  transport  of  both  capital  and  labour,  which  is 
essential  to  highly  specialised  local  industry,  was  retarded 
not  merely  by  lack  of  knowledge  of  the  opportunities  of 
remunerative  investment,  but  also  by  legal  restrictions  which 
had  the  influence  of  checking  the  free  application  and 
migration  of  labour.  The  Statute  of  Apprentices  by  requir- 
ing a  seven  years'  apprenticeship^  in  many  trades,  and  the 
Law  of  Settlement  by  impairing  mobility  of  labour,  are 
to  be  regarded  as  essentially  protective  measures  calcu- 
lated to  prevent  that  concentrated  application  of  capital  and 
labour  required  for  specialisation  of  industry. 

Within  the  nation  we  had  for  the  most  part  a  number  of 
self-sufficing  communities,  or,  in  other  words,  there  was 
little  specialisation  of  function  in  the  several  parts,  and 
little  integration  in  the  national  industry.  With  the  single 
exception  of  Holland,  whose  admirable  natural  and  artificial 
water  communication  seemed  to  give  unity  to  its  commerce, 
the  other  countries  of  Europe,  France,  Germany,  Italy, 
Spain,  Russia,  were  still  more  disintegrated  in  their  industry. 

§  7.  In  regarding  those  districts  of  England  in  which 
strong  indications  of  growing  industrial  specialisation 
showed  themselves,  it  is  important  to  observe  the  degree 
and  character  of  that  specialisation. 

We  find  various  branches  of  the  woollen,  silk,  cotton, 
iron,  hardware,  and  other  manufactures  allocated  to  certain 
districts.  But  if  we  compare  this  specialisation  with  that 
which  obtains  to-day  we  shall  observe  wide  differences. 

In  the  first  place,  it  was  far  less  advanced.  The  woollen 
industry  of  England,  though  conveniently  divided  into  three 
districts — one  in  the  Eastern  Counties,  with  Norwich,  Col- 
chester, Sandwich,  Canterbury,  Maidstone,  for  principal 
centres ;  one  in  the  West,  with  Taunton,  Devizes,  Bradford 
(in  Wilts),  Frome,  Trowbridge,  Stroud,  and  Exeter;  and 
the  third,  in  the  West  Riding,  is  in  reality  distributed  over 

^  Smith,  Wealth  of  Nations,  vol.  i. ,  chap.  x. ,  part  3. 


MODERN   CAPITALISM. 


27 


almost  the  whole  of  England  south  of  the  Thames,  and  over 
a  large  part  of  Yorkshire,  to  say  nothing  of  the  widespread 

INDUSTRIAL   ENGLAND    IN    1830. 

LAIIGE  TEXTILE  DISTRIC 
TEXTILE  CENTRES.  ■ 

LARGE   IRON   DISTRICTS   ||{||| 


production,  either  for  private  consumption  or  for  the  market, 
in  Westmoreland,  Cumberland,  and  indeed  all  the  North  of 
England.     Where  the  land  was  richer  in  pasture  or  with 


28  THE   EVOLUTION   OF 

easier  access  to  large  supplies  of  wool,  the  clothing  manu- 
factures were  more  flourishing  and  gave  more  employment, 
but  over  all  the  southern  and  most  of  the  northern  counties 
some  form  of  woollen  manufacture  was  carried  on. 

The  only  part  of  England  which  Defoe  regarded  as 
definitely  specialised  in  manufacture  is  part  of  the  West 
Riding,  for  though  agriculture  is  carried  on  here  to  some 
extent,  the  chief  manufacturing  district  is  dependent  upon 
surrounding  districts  for  its  main  supply  of  food.^ 

Iron,  the  industry  of  next,  though  of  far  inferior  import- 
ance, was  of  necessity  less  widely  distributed.  But  in  1737 
the  fifty-nine  furnaces  in  use  were  distributed  over  no  fewer 
than  fifteen  counties,  Sussex,  Gloucester,  Shropshire,  York- 
shire, and  Northumberland  taking  the  lead.^  So  too  the 
industries  engaged  in  manufacturing  metal  goods  were  far 
less  concentrated  than  in  the  present  day.  Though  Sheffield 
and  Birmingham  even  in  Defoe's  time  were  the  great  centres 
of  the  trade,  of  the  total  consumption  of  the  country  the 
greater  part  was  made  in  small  workshops  scattered  over  the 
land. 

Nottingham  and  Leicester  were  beginning  to  specialise  in 
cotton  and  woollen  hosiery,  but  a  good  deal  was  made  round 
London,  and  generally  in  the  woollen  counties  of  the  south. 
Silk  was  more  specialised  owing  to  the  importation  of 
special  skill  and  special  machinery  to  Spitalsfield,  Stockport, 
Derby,  and  a  few  other  towns.  In  Coventry  it  was  only  the 
second  trade  in  1727.^ 

The  scattered  crafts  of  the  wheelwright,  the  smith,  car- 
penter, turner,  carried  on  many  of  the  subsidiary  processes 
of  building,  manufacture  of  vehicles  and  furniture,  which 
are  now  for  the  most  part  highly  centralised  industries. 

When  we  come  presently  to  consider  the  structure  of  the 
several  industries  we  shall  see  that  even  those  trades  which 
are  allocated  to  certain  local  areas  are  much  less  concen- 
trated within  these  areas  than  is  now  the  case. 

But  though  stress  is  here  laid  upon  the  imperfect  differen- 
tiation of  localities  in  industry,  it  is  not  to  be  supposed  that 
the  eighteenth  century  shows  England  a  simple  industrial 
community  with  no  considerable  specialisation. 

^  Defoe,  Totir,  vol.  iii.  p.  84. 

2  Scrivener,  History  of  the  Iron  Trade. 

*  Defoe,  Tour,  vol.  ii.  p.  323. 


MODERN   CAPITALISM.  29 

Three  conditions  of  specialised  industry  are  clearly 
discernible  in  the  early  eighteenth  century  —  conditions 
which  always  are  among  the  chief  determinants, 

1.  Physical  aptitudes  of  soil — e.g..,  since  timber  was  still 
used  almost  entirely  for  smelting,  iron  works  are  found 
where  timber  is  plentiful  or  where  river  communication 
makes  it  easily  procurable.  So  the  more  fertile  meadows 
of  Gloucester  and  Somerset  led  these  districts  to  specialise 
in  the  finer  branches  of  the  woollen  trade.  A  still  more 
striking  example  is  that  of  South  Lancashire.  By  nature  it 
was  ill-suited  for  agriculture,  and  therefore  its  inhabitants 
employed  themselves  largely  in  the  cotton  and  woollen 
trades.  The  numerous  little  streams  which  flowed  from 
the  hills  to  the  neighbouring  sea  gave  plenty  of  water- 
power,  and  thus  made  this  district  the  home  of  the  earlier 
mills  and  the  cradle  of  machine-industry.^  The  "grit"  of 
the  local  grindstones  secured  the  supremacy  of  Sheffield 
cutlery,  while  the  heavy  clay  required  for  the  "  seggars,"  or 
boxes  in  which  pottery  is  fired,  helped  to  determine  the 
specialisation  of  Staffordshire  in  this  industry.^ 

2.  Facility  of  Market. — The  country  round  London, 
Bristol,  and  other  larger  towns  became  more  specialised 
than  the  less  accessible  and  more  evenly  populated  parts, 
because  the  needs  of  a  large  town  population  compelled 
the  specialisation  in  agriculture  of  much  of  the  surrounding 
country ;  cottagers  could  more  easily  dispose  of  their  manu- 
factures; improved  roads  and  other  facilities  for  convey- 
ance induced  a  specialisation  impossible  in  the  purely  rural 
parts. 

3.  The  Nature  of  the  Commodity. — When  all  modes  of 
conveyance  were  slow  the  degree  of  specialisation  depended 
largely  upon  the  keeping  quality  of  the  goods.  From  this 
point  of  view  hardware  and  textiles  are  obviously  more 
amenable  to  local  specialisation  than  the  more  perishable 
forms  of  food.  Where  conveyance  is  difficult  and  expensive 
a  commodity  bulky  for  its  value  is  less  suitable  for  local 

^  Schulze-Gaevernitz,  Der  Grossbetrieb,  p.  52. 

^  Cf.  Marshall,  Principles,  p.  328.  In  the  case  of  Staffordshire, 
however,  there  existed  an  early  trade  in  wooden  platters  dependent 
on  quality  of  timber  and  traditional  skill.  When  the  arts  of  pottery 
came  in,  the  new  trade  taken  up  in  the  same  locality  ousted  the  old, 
though  there  was  no  particular  local  advantage  in  materials. 


30  THE   EVOLUTION   OF 

specialisation  in  production  than  one  containing  a  high 
value  in  small  weight  and  bulk.  So  cloth  is  more  suitable 
for  trade  than  corn;^  and  coal,  save  where  navigation  is 
possible,  could  not  be  profitably  taken  any  distance.^ 

The  common  commodities  consumed,  as  food,  fuel,  and 
shelter,  were  thus  excluded  from  any  considerable  amount 
of  specialisation  in  their  production. 

§  8.  Turning  from  consideration  of  the  attributes  of 
goods  and  of  the  means  of  transport  which  served  to  limit 
the  character  of  internal  trade  and  determine  the  size  of 
the  market,  let  us  now  regard  the  structure  of  the  market, 
the  central  object  in  the  mechanism  of  internal  commerce. 

The  market,  not  the  industry,  is  the  true  term  which 
expresses  the  group  of  organically  related  businesses. 
How  far  did  England  present  a  national  market?  How 
far  was  the  typical  market  a  district  or  purely  local 
one? 

The  one  great  national  market  town  was  London.  It 
alone  may  be  said  to  have  drawn  supplies  from  the  whole 
of  England,  and  there  alone  was  it  possible  to  purchase  at 
any  season  of  the  year  every  kind  of  produce,  agricultural 
or  manufactured,  made  anywhere  in  England  or  imported 
from  abroad.  This  flow  to  and  from  the  great  centre  of 
population  was  incessant,  and  extended  to  the  furthermost 
parts  of  the  land.  Other  large  towns,  such  as  Bristol,  Leeds, 
Norwich,  maintained  close  and  constant  relations  with  the 
neighbouring  counties,  but  exchanged  their  produce  for 
the  most  part  only  indirectly  with  that  of  more  distant  parts 
of  the  country. 

The  improving  communication  of  the  eighteenth  century 
enabled  the  clothiers  and  other  leading  manufacturers  to 
distribute  more  of  their  wares  even  in  the  remotest  parts  of 
the  country,  but  the  value  paid  for  their  wares  reached  the 
vendors  by  slow  and  indirect  channels  of  trade,  passing  for 
the  most  part  through  the  metropolis. 

But  while  London  was  the  one  constant  national 
market-place,  national  trade  was  largely  assisted  by  fairs 
held  for  several  weeks  each  year  at  Stourbridge,  Winchester, 
and  other  convenient  centres.     At  the  most  important  of 

^  Smith,  Wealth  of  Nations,  Book  III. ,  chap.  iii. 
2  Westmoreland  coal  did  not  compete  in  the  Newcastle  market. — 
Wealth  of  Nations,  Book  I.,  chap.  xi.  p.  2. 


MODERN   CAPITALISM.  3 1 

these  the  large  merchants  and  manufacturers  met  their 
customers,  and  business  was  transacted  between  distant 
parts  of  the  country,  including  all  kinds  of  wares,  English 
and  foreign.  Thus  we  had  one  constant  and  two  or  three 
intermittent  avenues  of  free  national  trade.  The  great 
bulk  of  markets,  however,  were  confined  within  far  smaller 
areas. 

In  the  more  highly  developed  and  specialised  textile 
trades  certain  regular  market-places  were  established  of 
wide  local  importance.  The  largest  of  these  specialised 
district  markets  were  at  Leeds,  Halifax,  Norwich,  and 
Exeter.  Here  the  chief  local  manufacturers  of  cloth, 
worsted,  or  crape  met  the  merchants  and  factors  and 
disposed  of  their  wares  to  these  distributing  middle- 
men. 

It  was,  however,  in  the  general  market-places  of  the 
county  town  or  smaller  centres  of  population  that  the 
mass  of  the  business  of  exchange  was  transacted.  There 
the  mass  of  the  small  workers  in  agriculture  and  manu- 
facture brought  the  product  of  their  labour  and  sold  it, 
buying  what  they  needed  for  consumption  and  for  the 
pursuance  of  their  craft.  Only  in  considerable  towns  were 
there  to  be  found  in  the  earlier  eighteenth  century  any 
number  of  permanent  shops  where  all  sorts  of  wares  could 
be  bought  at  any  time.  The  weekly  market  in  the  market- 
town  was  the  chief  medium  of  commerce  for  the  great  mass 
of  the  population. 

Regarding  the  general  structure  of  Industry  we  see  that 
not  only  are  international  bonds  slight  and  unessential, 
but  that  within  the  nation  the  elements  of  national  cohesion 
are  feeble  as  compared  with  those  which  subsist  now.  We 
have  a  number  of  small  local  communities  whose  relations, 
though  tolerably  strong  with  other  communities  in  their 
immediate  neighbourhood,  become  greatly  weakened  by 
distance.  For  the  most  part  these  small  communities  are 
self-sufificing  for  work  and  life,  producing  most  of  their  own 
necessaries,  and  only  dependent  on  distant  and  unknown 
producers  for  their  comforts  and  luxuries. 

Trade  is  for  the  most  part  conducted  on  a  small  steady 
local  basis  with  known  regular  customers. 

Outside  of  agriculture  the  elements  of  speculation  and 
fluctuation   are  almost   entirely  confined  to  foreign  trade. 


32  THE   EVOLUTION   OF 

Capital  and  labour  are  fixed  to  a  particular  locality  and  a 
particular  business.^ 

§  9.  Turning  to  the  structure  of  the  several  industries  we 
find  that  different  employments  are  not  sharply  separated 
from  one  another.  In  the  first  place,  agriculture  and  manu- 
facture are  not  only  carried  on  in  the  same  locality  but  by 
the  same  people.  This  combined  agriculture  and  manu- 
facture took  several  forms. 

The  textile  industries  were  largely  combined  with  agri- 
culture. Where  spinning  was  carried  on  in  agricultural 
parts  there  was,  for  the  most  part,  a  division  of  labour 
within  the  family.  The  women  and  children  spun  while 
the  men  attended  to  their  work  in  the  fields. ^  Every 
woman  and  child  above  the  age  of  five  found  full  employ- 
ment in  the  spinning  and  weaving  trades  of  Somerset  and 
the  West  Riding.^ 

This  method  prevailed  more  largely  in  the  spinning  than 
in  the  weaving  trades,  for  before  the  introduction  of  the 
spinning-jenny  the  weaving  trade  was  far  more  centralised 
than  the  other.  For  example,  a  large  quantity  of  weaving 
was  done  in  the  town  of  Norwich  while  the  earlier  process 
was  executed  in  the  scattered  cottages  over  a  wide  district. 
But  even  these  town  workers  were  not  specialised  in  manu- 
facture to  the  extent  which  prevails  to-day.  Large  numbers 
of  them  had  allotments  in  the  country  to  which  they  gave 
their  spare  time,  and  many  had  pasture  rights  and  kept 
their  cattle  on  the  common  lands.  This  applied  not  merely 
to  the  textile  but  to  other  industries.  At  West  Bromwich, 
a  chief  centre  of  the  metal  trade,  agriculture  was  still  carried 
on  as  a  subsidiary  pursuit  by  the  metal  workers.'*  So  too 
the  cutlers  of  Sheffield  living  in  the  outskirts  of  the  town 
had  their  plot  of  land  and  carried  on  agriculture  to  a  small 
extent,  a  practice  which  has  lasted  almost  up  to  the  present 
day.      The  combined   agriculture  and   manufacture  often 

^  Adam  Smith,  writing  later  in  the  century,  observes  with  some 
exaggeration,  "A  merchant,  it  has  been  said  very  properly,  is  not 
necessarily  the  citizen  of  a  particular  country.  It  is  in  a  great  measure 
indifferent  to  him  from  what  place  he  carries  on  his  trade,  and  a  very 
trifling  disgust  will  make  him  remove  his  capital,  and  together  with  it 
all  the  industry  which  it  supports,  from  one  country  to  another." — 
Book  III.,  chap.  iv. 

2  Defoe,  vol.  ii.  p.  37.  ^  Ibid.,  vol.  ii.  p.  17. 

*  Annals  of  Agriculture,  chap.  iv.  p.  157. 


MODERN   CAPITALISM.  33 

took  the  form  of  a  division  of  labour  according  to  season. 
Where  the  weaving  was  not  concentrated  in  towns  it 
furnished  a  winter  occupation  to  many  men  who  gave  the 
bulk  of  their  summer  time  to  agriculture.  Generally  speak- 
ing, we  may  take  as  fairly  representative  of  the  manu- 
facturing parts  of  England  the  picture  which  Defoe  gave  of 
the  condition  of  affairs  in-  the  neighbourhood  of  Halifax. 
He  found  "  the  land  divided  into  small  enclosures  from  two 
acres  to  six  or  seven  acres  each,  seldom  more ;  every  three 
or  four  pieces  of  land  had  a  house  belonging  to  it — one 
continued  village,  hardly  a  house  standing  out  of  speaking 
distance  from  another — at  every  house  a  tenter,  and  on 
almost  every  tenter  a  piece  of  cloth  or  kersie  or  shalloon — 
every  clothier  keeps  a  horse — so  every  one  generally  keeps 
a  cow  or  two  for  his  family."  ^ 

Not  only  were  agriculture  and  many  forms  of  manufacture 
conjoined,  but  the  division  of  labour  and  differentiation  of 
processes  within  the  several  industries  was  not  very  far 
advanced.  The  primitive  tillage  of  the  common-fields 
which  still  prevailed  in  the  early  eighteenth  century,  though 
the  rapid  enclosure  of  commons  was  effecting  a  considerable, 
and  from  the  wealth-producing  point  of  view,  a  very 
salutary  change,  did  not  favour  the  specialisation  of  land 
for  pasture  or  for  some  particular  grain  crops.  Each  little 
hamlet  was  engaged  in  providing  crops  of  hay,  wheat,  barley, 
oats,  beans,  and  had  to  fulfil  the  other  purposes  required  by 
a  self-subsisting  community.  This  partly  arose  from  the 
necessity  of  the  system  of  land  tenure,  partly  from  ignorance 
of  how  to  take  advantage  of  special  qualities  and  positions 
of  soil,  and  partly  from  the  self-sufficiency  improved  by 
difficulties  of  conveyance.  As  the  century  advanced,  the 
enclosure  of  commons,  the  increase  of  large  farms,  the 
application  of  new  science  and  new  capital  led  to  a  rapid 
differentiation  in  the  use  of  land  for  agricultural  purposes. 
But  in  the  earlier  part  of  the  century  there  was  little 
specialisation  of  land  except  in  the  West  Riding  and  round 
the  chief  centres  of  the  woollen  trade,  and  to  a  less  extent 
in  the  portions  of  the  counties  round  London  whose  position 
forced  them  to  specialise  for  some  particular  market  of  the 
metropolis. 

'  Defoe,  vol.  iii.  pp.  78,  79. 


34  THE   EVOLUTION   OF 

§  lo.  As  the  small  agriculturist  on  a  self-sufficing  farm 
must  perform  many  different  processes,  so  the  manufacturer 
was  not  narrowed  down  to  a  single  process  of  manufacture. 
A  large  part  of  the  ruder  manufactures  were  home  produc- 
tions for  home  consumption,  and  the  same  hands  tended 
the  sheep  which  furnished  the  wool,  and  spun  and  wove  the 
wool  for  family  use.  The  smith  was  in  a  far  fuller  sense 
the  maker  of  the  horse-shoe  or  the  nail  or  bolt  than  he  is 
to-day ;  the  wheelwright,  the  carpenter,  and  other  handi- 
craftsmen performed  a  far  larger  number  of  different  pro- 
cesses than  they  do  now.  Moreover,  each  household,  in 
addition  to  its  principal  employments  of  agriculture  and 
manufacture,  carried  on  many  minor  productive  occupations, 
such  as  baking,  brewing,  butter-making,  dressmaking,  wash- 
ing, which  are  now  for  the  most  part  special  and  inde- 
pendent branches  of  employment. 

In  the  more  highly-developed  branches  of  the  textile 
and  metal  trades  the  division  of  processes  appears  at  first 
sight  more  sharply  marked  than  to-day.  The  carder, 
spinner,  weaver,  fuller  in  the  cloth  trade  worked  in  the 
several  processes  of  converting  raw  wool  into  finished  cloth, 
related  to  one  another  only  by  a  series  of  middlemen  who 
supplied  them  with  the  material  required  for  their  work  and 
received  it  back  with  the  impress  of  their  labour  attached, 
to  hand  it  out  once  more  to  undergo  the  next  process.^ 
But  though  modern  machine-production  will  show  us  these 
various  processes  drawn  together  into  close  local  proximity, 
sometimes  performed  under  the  same  roof  and  often  making 
use  of  the  same  steam  power,  we  shall  find  that  a  chief 
object  and  effect  of  this  closer  local  co-ordination  of  the 
several  processes  is  to  define  and  narrow  more  precisely 
the  labour  of  each  worker  and  to  make  the  spinner  and  the 
weaver  confine  himself  to  the  performance  of  a  fractional 
part  of  the  full  process  of  spinning  or  weaving.  Thus  we 
find  that  English  industry  in  the  early  eighteenth  century  is 
marked  on  the  one  hand  by  a  lack  of  clear  differentiation 
as  regards  industries,  and  on  the  other  hand  by  a  lack  of 
minute  differentiation  of  processes  within  the  industry. 

§  II.  We  must  now  descend  from  the  consideration  of  the 
Industry  and  the  Market,  or  group  of  related  businesses,  to 

^  Cf.  Burnley,  Wool  and  Wool-combings  p.  417. 


MODERN   CAPITALISM.  35 

examine  the  character  and  structure  of  the  unit  of  industry 
— the  Business, 

In  a  study  of  the  composition  or  co-operation  of 
labour  and  capital  in  a  Business  before  the  era  of 
machine-production  there  are  five  points  of  dominant 
importance — (i)  The  ownership  of  the  material;  (2)  the 
ownership  of  the  tools;  (3)  the  ownership  of  the  pro- 
ductive power;  (4)  the  relations  subsisting  between  the 
individual  units  of  labour ;  (5)  the  work-place. 

English  manufacturing  industry  in  the  first  half  of  the 
eighteenth  century  furnishes  a  variety  of  different  forms  of 
business  of  widely  different  nature  and  complexity.  The 
simplest  form  of  manufacturing  industry  is  that  in  which  an 
industrial  family  owning  the  raw  material  and  the  requisite 
tools,  and  working  with  the  power  of  their  own  bodies  in 
their  own  homes,  produce  commodities  for  their  own  con- 
sumption. This  private  production  for  private  consumption 
survived  largely  in  the  eighteenth  century,  not  merely  in  the 
case  of  agriculturists  who  produced  the  more  necessary 
articles  of  food  for  themselves  as  well  as  for  the  market, 
but  also  in  the  case  of  farmers  and  cottagers  in  the  remotest 
parts  of  the  country  who  produced  their  own  wool  and  flax, 
and  spun  and  wove  it  for  their  own  use.^ 

From  this  primitive  form  which  required  no  commerce 
and  no  industrial  organisation  we  may  trace  the  growth 
of  various  forms  of  higher  industrial  development,  many 
of  which  co-existed  in  eighteenth  century  England. 

The  simplest  structure  of  "  domestic  "  manufacture  is  that 
in  which  the  farmer-manufacturer  is  found  purchasing  his 
own  material,  the  raw  wool  or  flax  if  he  is  a  spinner,  the 
warp  and  weft  if  he  is  a  weaver,  and,  working  with  his 
family,  produces  yarn  or  cloth  which  he  sells  himself,  either 
in  the  local  market  or  to  regular  master-clothiers  or 
merchants.  The  mixed  cotton  weaving  trade  was  in  this 
condition  in  the  earlier  years  of  the  eighteenth  century. 
"  The  workshop  of  the  weaver  was  a  rural  cottage,  from 
which,  when  he  was  tired  of  sedentary  labour,  he  could 
sally  forth  into  his  little  garden,  and  with  the  spade  or  the 
hoe  tend  its  culinary  productions.  The  cotton-wool  which 
was  to  form  his  weft  was  picked  clean  by  the  fingers  of  his 

^  Smith,  Memoirs  of  Wool,  vol.  ii.  p.  297. 


$6  THE   EVOLUTION   OF 

younger  children,  and  was  carded  and  spun  by  the  older 
girls  assisted  by  his  wife,  and  the  yarn  was  woven  by  him- 
self assisted  by  his  sons."  ^ 

Following  as  the  central  point  the  ownership  of  the 
requisites  of  production,  we  find  in  the  next  stage  that  the 
ownership  of  the  material  has  passed  from  the  workman 
into  the  hands  of  the  organising  merchant  or  middleman, 
who  usurps  the  title  "manufacturer."  The  workman,  how- 
ever, still  retains  the  ownership  of  the  implements  of  his 
craft  and  works  in  his  own  house.  The  condition  of  the 
worsted  trade  later  in  the  century,  about  1770,  well  illus- 
trates this  industrial  form. 

"The  work  was  entirely  domestic,  and  its  different 
branches  widely  scattered  over  the  country.  First,  the 
manufacturer  had  to  travel  on  horseback  to  purchase  his 
raw  material  among  the  farmers,  or  at  the  great  fairs  held 
in  those  old  towns  that  had  formerly  been  the  exclusive 
markets,  or,  as  they  were  called,  '  staples '  of  wool.  The 
wool,  safely  received,  was  handed  over  to  the  sorters,  who 
rigorously  applied  their  gauge  of  required  length  of  staple 
and  mercilessly  chopped  off  by  shears  or  hatchet  what  did 
not  reach  the  standard  as  wool  fit  for  the  clothing  trade. 
The  long  wool  thus  passed  into  the  hands  of  the  combers, 
and,  having  been  brought  back  to  them  into  the  combed 
state,  was  again  carefully  packed  and  strapped  on  the  back 
of  the  sturdy  horse,  to  be  taken  into  the  country  to  be  spun. 
,  .  .  Here,  at  each  village,  he  had  his  agents,  who  received 
the  wool,  distributed  it  amongst  the  peasantry  and  received 
it  back  as  yarn.  The  machine  employed  was  still  the  old 
one-thread  wheel,  and  in  summer  weather  on  many  a  village 
green  might  be  seen  the  housewives  plying  their  busy  trade, 
and  furnishing  to  the  poet  the  vision  of  contentment 
spinning  at  the  cottage  door.  Returning  in  safety  with  his 
yarn,  the  manufacturer  had  now  to  seek  out  his  weavers, 
who  ultimately  delivered  to  him  his  camblets  or  russels,  or 
tammies  or  calimancoes  (such  were  the  leading  names  of 
the  fibres)  ready  for  sale  to  the  merchant  or  delivery  to  the 
dyer."  2 

The  condition  of  the  cotton-trade  in  Lancashire  about 

^  Ure,  History  of  the  Cotton  Manufacture,  vol.  i.  p.  224. 
^  James,  History  of  the  Worsted  Manufacture ,  p.  323  (quoted  Taylor, 
The  Modern  Factory  System,  p.  61). 


MODERN   CAPITALISM.  37 

1750  illustrates  most  clearly  the  transition  from  the  inde- 
pendent weaver  to  the  dependent  weaver.  So  far  as  the 
linen  warp  of  his  fabric  was  concerned  he  had  long  been  in 
the  habit  of  receiving  it  from  the  larger  "  manufacturer  "  in 
Bolton  or  in  Manchester,  but  the  cotton  yarn  he  had 
hitherto  supplied  himself,  using  the  yarn  spun  by  his  own 
family  or  purchased  by  himself  in  the  neighbourhood.  The 
difficulty  of  obtaining  a  steady,  adequate  supply,  and  the 
waste  of  time  involved  in  trudging  about  in  search  of  this 
necessary  material,  operated  more  strongly  as  the  market  for 
cotton  goods  expanded  and  the  pressure  of  work  made 
itself  felt.i  It  was  this  pressure  which  we  shall  see  acting 
as  chief  stimulus  to  the  application  of  new  inventions  in 
the  spinning  2  trade.  In  the  interim,  however,  the  habit 
grew  of  receiving  not  only  linen  warp  but  cotton  weft  from 
the  merchant  ar  middleman.  Thus  the  ownership  of  the 
raw  material  entirely  passed  out  of  the  weaver's  hands, 
though  he  continued  to  ply  his  domestic  craft  as  formerly.^ 
This  had  grown  into  the  normal  condition  of  the  trade  by 
1750.  The  stocking-trade  illustrates  one  further  encroach- 
ment of  the  capitalist  system  upon  domestic  industry.  In 
this  trade  not  only  was  the  material  given  out  by  merchants, 
but  the  "  frames  "  used  for  weaving  were  likewise  owned  by 
them,  and  were  rented  out  to  the  workers,  who  continued, 
however,  to  work  in  their  own  homes.^ 

§  1 2.  Two  further  steps  remained  to  be  taken  in  the  transi- 
tion from  the  "domestic  "  to  the  "factory"  system,  the  one 
relating  to  the  ownership  of  "power,"  the  other  to  the  work- 
place, (a)  The  substitution  of  extra-human  power  owned 
by  the  employer  for  the  physical  power  of  the  worker; 
(d)  the  withdrawal  of  the  workers  from  their  homes,  and  the 
concentration  of  them  in  factories  and  work-places  owned 
by  the  capitalists. 

Although  these  steps  were  not  completely  taken  until  the 
age  of  steam  had  well  set  in,  before  the  middle  of  the 
eighteenth  century  there  were  found  examples  of  the  factory, 
complete   in   its   essential  character,   side  by  side  and  in 

^  Baines,    History  of  the  County  Palatine  of  Lancashire,  vol.    ii. 

P-  413- 

^  Ure,  History  of  Cotton  Mamfacttire,  vol.  i.  p.  224,  etc. 

*  Dr.  Aikin,  History  of  Manchester  (quoted  Baines,  p.  406). 

*  Taylor,  The  Modern  Factory  System,  p.  69. 


38  THE  EVOLUTION   OF 

actual  competition  with  the  earlier  shapes  of  domestic 
industry. 

Capitalist  ownership  of  extra-human  industrial  "power" 
was  of  course  narrowly  restricted  before  the  age  of  steam. 
Water-power,  horse-power,  and  to  a  much  smaller  extent, 
wind-power,  were  utilised.  But  the  most  important  services 
water  rendered  to  industry  prior  to  the  great  inventions 
were  in  facilitating  the  transport  of  goods,  and  in  certain 
subsidiary  processes  of  manufacture  such  as  dyeing.  Though 
a  considerable  number  of  water-mills  existed  early  in  the 
century,  they  played  no  large  part  in  manufacture,  A 
natural  force  so  strictly  confined  in  quantity  and  in  local 
application,  and  subject  to  such  great  waste  from  the  back- 
ward condition  of  mechanical  art,  was  not  able  to  serve  to 
any  great  extent  as  a  substitute  for  or  aid  to  the  muscular 
activity  of  man. 

But  although  the  economy  of  mechanical  power  was  not 
yet  operative  to  any  appreciable  extent  in  concentrating 
labour,  certain  other  notable  economics  of  large-scale  pro- 
duction were  beginning  to  assert  themselves  in  all  the 
leading  manufactures.  Indeed  so  powerful  are  some  of  the 
economies  of  division  of  labour  and  co-operation  even  in  a 
primitive  condition  of  the  industrial  arts,  that  Professor 
Ashley  considers  it  not  improbable  that  the  great  manu- 
factory might  have  become  an  important  or  even  a  dominant 
feature  of  the  woollen  trade  as  early  as  the  sixteenth  century, 
if  legislative  enactments  had  not  stood  in  the  way.^  As  it 
was,  these  earlier  centralising  forces,  while  they  drove  the 
workers  to  work  and  live  in  closer  and  compacter  masses, 
did  not  at  first  dispose  them  in  factories  to  any  great  extent 
They  continued  for  the  most  part  to  work  in  their  own 
houses,  though  for  material  and  sometimes  for  the  im- 
plements of  their  craft  they  were  dependent  upon  some 
merchant  or  large  master-manufacturer.  This  was  the  con- 
dition of  industry  in  the  neighbourhood  of  Leeds  in  1725. 
"The  houses  are  not  scattered  and  dispersed  as  in  the 
vicarage  of  Halifax,  one  by  one,  but  in  villages,  and  those 
houses  thronged  with  people  and  the  whole  country  in- 
finitely populous.  "2     In  the  more  highly-developed  branches 

^  Economic  History^  vol.  ii.  p.  237. 
*  Defoe,  Tour^  voL  iii.  p.  89. 


MODERN   CAPITALISM.  39 

of  the  cloth  trade,  however,  where  the  best  looms  were  a 
relatively  costly  form  of  capital,  the  foundation  of  the  factory 
system  was  clearly  laid.  In  Norwich,  Frome,  Taunton, 
Devizes,  Stourbridge,  and  other  clothing  centres,  Defoe 
found  the  weaving  industry  highly  concentrated,  and  rich 
employers  owning  considerable  numbers  of  looms.  Some 
of  this  work  was  put  out  by  the  master-manufacturers,  but 
other  work  was  done  in  large  sheds  or  other  premises  owned 
by  the  master.  This  large  organised  "  business,"  half 
factory,  half  domestic,  continued  to  prevail  in  the  important 
West  of  England  clothing  industry  up  to  the  close  of  the 
eighteenth  century.  "The  master  clothier  of  the  West  of 
England  buys  his  wool  from  the  importer,  if  it  be  foreign, 
or  in  the  fleece  if  it  be  of  domestic  growth ;  after  which,  in 
all  the  different  processes  through  which  it  passes,  he  is 
under  the  necessity  of  employing  as  many  distinct  classes  of 
persons;  sometimes  working  in  their  own  houses,  some- 
times in  that  of  the  master  clothier,  but  none  of  them 
going  out  of  their  proper  line.  Each  class  of  workman, 
however,  acquires  great  skill  in  performing  its  particular 
operation,  and  hence  may  have  arisen  the  acknowledged 
excellence,  and,  till  of  late,  the  superiority  of  the  cloths  of 
the  West  of  England."  ^ 

So  again,  in  the  cotton  industry  of  Lancashire,  the  hold 
which  the  merchants  had  got  over  the  weavers  by  supplying 
them  with  warp  and  weft  led  in  some  cases,  before  the 
middle  of  the  century,  to  the  establishment  of  small 
factories  containing  a  score  or  two  of  looms,  in  which  hired 
men  were  employed  to  weave.  A  little  later,  though  long 
before  steam  power,  Arthur  Young  finds  a  factory  at 
Darlington  with  over  fifty  looms,  a  factory  at  Boynton  with 
150  workers,  and  a  silk  mill  at  Sheffield  with  152  workers. 
Even  where  the  final  step  of  substituting  the  factory  for 
the  home  had  not  been  taken  the  subordination  of  the 
handicraftsman  to  the  master  who  provided  the  materials 
and  paid  the  wages  was  tolerably  complete.  By  the 
middle  of  the  century  the  free  artisan  was  gradually  passing 
into  the  condition  of  a  hired  "  hand."  Improved  means  of 
communication  were  beginning  to  expand  the  area  of  the 

^  Report  from  the  Committee  on  the  Woollen  Manufacture  of  England 
{1806). 


40  THE   EVOLUTION   OF 

market,  enlarged  businesses  enabled  labour  to  be  profitably 
divided,  and  required  a  more  effective  control  over  the 
workers  than  could  be  obtained  over  a  scattered  population 
of  agricultural  manufacturers. 

§  13.  Regarding  the  Business  as  a  combination  of  Labour 
and  Capital,  we  perceive  that  one  strongly  distinctive  charac- 
teristic of  the  pre-machinery  age  is  the  small  proportion 
which  capital  bears  to  labour  in  the  industrial  unit.  It  is 
this  fact  that  enabled  the  "  domestic "  worker  to  hold  his 
own  so  long  in  so  many  industries  as  the  owner  of  a  sepa- 
rate business.  So  long  as  the  mechanical  arts  are  slightly 
developed  and  tools  are  simple,  the  proportion  of  "  fixed 
capital "  to  the  business  is  small  and  falls  within  the  means 
of  the  artisan  who  plies  his  craft  in  his  home.  So  long  as 
tools  are  simple,  the  processes  of  manufacture  are  slow, 
therefore  the  quantity  of  raw  material  and  other  "  circulat- 
ing capital"  is  small  and  can  also  be  owned  by  the  worker. 
The  growing  divorcement  in  the  OAvnership  of  capital  and 
labour  in  the  industrial  unit  will  be  found  to  be  a  direct 
and  most  important  result  of  those  improvements  in 
mechanical  arts  which,  by  continually  increasing  the 
proportion  of  capital  to  labour  in  a  business,  placed 
capital  more  and  more  beyond  the  possession  of  those 
who  supplied  the  labour  power  required  to  co-operate  in 
production. 

In  the  middle  of  last  century  there  were  very  few 
instances  of  a  manufacturing  business  in  which  a  large 
capital  was  engaged,  or  in  which  the  capital  stood  to 
the  labour  in  anything  like  modern  proportion.  It  was 
indeed  the  merchant  and  not  the  manufacturer  who 
represented  the  most  advanced  form  of  Capitalism  in  the 
eighteenth  century.  Long  before  Dr.  Johnson's  discovery 
that  "an  English  merchant  is  a  new  species  of  gentleman," 
Defoe  had  noted  the  rise  of  merchant-princes  in  the 
Western  clothing  trades,  observing  that  "  many  of  the  great 
families  who  now  pass  for  gentry  in  these  counties  have 
been  originally  raised  from  and  built  out  of  this  truly  noble 
manufacture."^  These  wealthy  entrepreneurs  were  some- 
times spoken  of  as  "  manufacturers,"  though  they  had  no 
claim  either  upon  the  old  or  the  new  signification  of  that 

^  Tour,  vol.  ii.  p.  35. 


MODERN   CAPITALISM.  4I 

name.  They  neither  wrought  with  their  hands  nor  did 
they  own  machinery  and  supervise  the  labour  which  worked 
with  it.  They  were,  as  has  been  shown  above,  merchant- 
middlemen.  The  clothing  trade  being  the  most  highly 
developed,  evolved  several  species  of  middlemen,  including 
under  that  term  all  collectors  and  distributors  of  the  raw 
material  or  finished  goods. 

(a)  One  important  class  of  "factors"  engaged  themselves 
in  buying  wool  from  farmers  and  selling  it  to  clothiers, 
and  appear  to  have  sometimes  exercised  an  undue  and 
tyrannous  control  over  the  latter  by  an  unscrupulous 
manipulation  of  the  credit  system  which  was  growing  up 
in  trade.  ^ 

(d)  The  "  clothiers "  themselves  must  be  regarded  in 
large  measure  as  middleman-collectors,  analogous  in  func- 
tion to  the  distributors,  who  still  rank  as  one  of  the  grades 
of  middlemen  in  the  cheap  clothing  trade  of  London 
to-day.  2 

(c)  After  the  cloth  was  made  three  classes  of  middlemen 
were  engaged  in  forwarding  it  to  the  retailer — (i)  travel- 
ling merchants  or  wholesale  dealers  who  attended  the  big 
fairs  or  the  markets  at  Leeds,  Halifax,  Exeter,  etc.,  and 
made  large  purchases,  conveying  the  goods  on  pack-horses 
over  the  country  to  the  retail  trader;  (2)  middlemen  who 
sold  on  commission  through  London  factors  and  ware- 
housemen, who  in  their  turn  disposed  of  the  goods  to 
shopkeepers  or  to  exporters;  (3)  merchants  directly  en- 
gaged in  the  export  trade. 

With  the  exception  of  shipping  and  canal  transport 
(which  became  important  after  the  middle  of  the  century) 
there  were  no  considerable  industries  related  to  manu- 
facture where  large  capitals  were  laid  down  in  fixed  plant. 
Even  the  capital  sunk  in  permanent  improvements  of 
land,  which  played  so  important  a  part  in  the  development 
of  agriculture,  belonged  chiefly  to  the  latter  years  of  the 
eighteenth  century.  Almost  the  only  persons  who  wielded 
large  capitals  within  the  country  were  those  merchants, 
dealers,  or  middlemen,  whose  capital  at  any  given  time 
consisted    of  a   large   stock  of  raw  material    or   finished 

1  For  an  interesting  account  of  the  cunning  devices  of  "factors  "  see 
Smith's  Memoirs  of  Wool,  vol.  ii.  p.  311,  etc. 
-  Cf.  Booth,  Labour  and  Life  of  the  People,  vol.  i.  p.  486,  etc. 


42  THE   EVOLUTION   OF 

goods.  Even  the  latter  were  considerably  restricted  in  the 
magnitude  of  their  transactions  by  the  imperfect  develop- 
ment of  the  machinery  of  finance  and  the  credit  system. 
In  1750  there  were  not  more  than  twelve  bankers'  shops  out 
of  London.i  Until  1759  the  Bank  of  England  issued  no 
notes  of  less  value  than  ^20. 

Joint-ownership  of  capital  and  effective  combination  of 
the  labour  units  in  a  business  were  only  beginning  to  make 
progress.  The  Funded  Debt,  the  Bank  of  England,  the 
East  India  Company  were  the  only  examples  of  really 
large  and  safe  investments  at  the  opening  of  the  eighteenth 
century.  Joint-ownership  of  large  capitals  for  business 
purposes  made  no  great  progress  before  the  middle  of  the 
eighteenth  century,  except  in  the  case  of  chartered  com- 
panies for  foreign  trade,  such  as  the  East  India  Company, 
the  Hudson's  Bay  Company,  the  Turkish,  Russian,  East- 
land, and  African  companies.  Insurance  business  became  a 
favourite  form  of  joint-stock  speculation  in  the  reign  of 
George  I.  The  extraordinary  burst  of  joint-stock  enterprise 
culminating  in  the  downfall  of  the  South  Sea  Company 
shows  clearly  the  narrow  limitations  for  sound  capitalist 
co-operation.  Even  foreign  trade  on  joint-stock  lines  could 
only  be  maintained  successfully  on  condition  that  the 
competition  of  private  adventurers  was  precluded. 

Joint-capital  had  yet  made  no  inroad  into  manufacture, 
one  of  the  earliest  instances  being  a  company  formed  in 
1764  with  a  capital  of  ;^ioo,ooo  for  manufacturing  fine 
cambrics.2 

The  limits  of  co-operative  capitalism  at  the  opening  of 
the  period  of  Industrial  Revolution  are  indicated  by  Adam 
Smith  in  a  passage  of  striking  significance : — "  The  only 
trades  which  it  seems  possible  for  a  joint-stock  company 
to  carry  on  successfully,  without  an  exclusive  privilege,  are 
those  of  which  all  the  operations  are  capable  of  being 
reduced  to  what  is  called  a  routine,  or  to  such  a  uniformity 
of  method  as  admits  of  little  or  no  variation.  Of  this  kind 
is,  first,  the  banking  trade;  secondly,  the  trade  of  insurance 
from  fire  and  from  sea  risk  and  capture  in  time  of  war; 
thirdly,  the  trade  of  making  and  maintaining  a  navigable 

'  Toynbee,  Industrial  Revolution,  p.  55. 
'^  Cunningham,  vol.  ii.  p.  350. 


MODERN   CAPITALISM.  43 

cut  or  canal;  and  fourthly,  the  similar  trade  of  bringing 
water  for  the  supply  of  a  great  city."^ 

In  other  words,  the  businesses  amenable  to  joint-stock 
enterprise  are  those  where  skilled  management  can  be 
reduced  to  a  minimum,  and  where  the  scale  of  the  business 
or  the  possession  of  a  natural  monopoly  limits  or  prohibits 
competition  from  outside. 

*  IVeallh  of  Nations,  Bk.  V.,  chap,  i.,  part  3. 


44 


CHAPTER  III. 

THE  ORDER  OF  DEVELOPMENT  OF  MACHINE  INDUSTRY. 

§    I.  A  Machine  differentiated  from  a  Tool. 

§    2.  Machinery   in  Relation  to  the   Character  of  Human 

Labour. 
§    3.   Contributions  of  Machinery  to  Productive  Power. 
%    4.  Main  Factors  in  Developmeiit  of  Machine  Industry. 
§    5.  Importance  of  Cotton-trade  in  Machine  Development. 
§    6.  History  refutes  the  ^^  Heroic"  Theory  of  Invention. 
§    7.  Application  of  Machinery  to  other  Textile  Work. 
§    8.  Reverse  order  of  Develop?nent  in  Iron  Trades. 
§    9.  Leading  Determinants  in  the  General  Applicatioti  of 

Machinery  and  Steam-Motor. 
§10.   Order  of  Development  of  modern  Industrial  Methods 

in  the  several  Countries — Natural,  Racial,  Political, 

Economic. 

§  I.  It  appears  that  in  the  earlier  eighteenth  century,  while 
there  existed  examples  of  various  types  of  industrial  structure, 
the  domestic  system  in  its  several  phases  may  be  regarded 
as  the  representative  industrial  form.  The  object  of  this 
chapter  is  to  examine  the  nature  of  those  changes  in  the 
mechanical  arts  which  brought  about  the  substitution  of 
machine-industry  conducted  in  factories  or  large  workshops 
for  the  handicrafts  conducted  within  the  home  or  in  small 
workshops,  with  the  view  of  discovering  the  economic  bear- 
ing of  these  changes. 

A  full  inductive  treatment  would  perhaps  require  this 
inquiry  to  be  prefaced  by  a  full  history  of  the  inventions 
which  in  the  several  industries  mark  the  rise  of  the  factory 
system  and  the  adoption  of  capitalist  methods.  This,  how- 
ever, is  beyond  the  scope  of  the  present  work,  nor  does  it 


THE    EVOLUTION   OF  MODERN    CAPITALISM.      45 

Strictly  belong  to  our  scientific  purpose,  which  is  not  to 
write  the  narrative  of  the  industrial  revolution,  but  to  bring 
such  analysis  to  bear  upon  the  records  of  industrial  changes 
as  shall  enable  us  to  clearly  discern  the  laws  of  those 
changes. 

The  central  position  occupied  by  machinery  as  the  chief 
material  factor  in  the  modern  evolution  of  industry  requires 
that  a  distinct  answer  should  be  given  to  the  question, 
What  is  machinery  ? 

In  distinguishing  a  machine  from  a  mere  tool  or  handi- 
craft implement  it  is  desirable  to  pay  special  attention  to 
two  points,  complexity  of  structure  and  the  activity  of  man 
in  relation  to  the  machine.  Modern  machinery  in  its  most 
developed  shape  consists,  as  Karl  Marx  points  out,  of  three 
parts,  which,  though  mechanically  connected,  are  essentially 
distinct,  the  motor  mechanism,  the  transmitting  mechanism, 
and  the  tool  or  working  machine. 

"The  motor  mechanism  is  that  which  puts  the  whole  in 
motion.  It  either  generates  its  own  motive  power,  like 
the  steam-engine,  the  caloric  engine,  the  electro-magnetic 
machine,  etc.,  or  it  receives  its  impulse  from  some  already 
existing  natural  force,  like  the  water-wheel  from  a  head 
of  water,  the  windmill  from  wind,  etc.  The  transmitting 
mechanism,  composed  of  fly-wheels,  shafting,  toothed  wheels, 
pullies,  straps,  ropes,  bands,  pinions,  and  gearing  of  the 
most  varied  kind,  regulates  the  motion,  changes  its  form 
where  necessary,  as,  for  instance,  from  linear  to  circular, 
and  divides  and  distributes  it  among  the  working  machines. 
These  two  first  parts  of  the  whole  mechanism  are  there 
solely  for  putting  the  working  machines  in  motion,  by 
means  of  which  motion  the  subject  of  labour  is  seized  upon 
and  modified  As  desired."^ 

Although  the  development  of  modern  machinery  is 
largely  concerned  with  motor  and  transmitting  mechanisms, 
it  is  to  the  working  machine  we  must  look  in  order  to  get 
a  clear  idea  of  the  differences  between  machines  and  tools, 
A  tool  may  be  quite  simple  in  form  and  action  as  a  knife, 
a  needle,  a  saw,  a  roller,  a  hammer,  or  it  may  embody 
more  complex  thought  in  its  construction,  more  variety 
in  its  movement,  and  call  for  the  play  of  higher  human 

1  Karl  Marx,  Capital,  p.  367. 


46  THE   EVOLUTION   OF 

skill.  Such  tools  or  implements  are  the  hand-loom,  the 
lathe,  the  potter's-wheel.  To  these  tools  man  stands 
in  a  double  relation.  He  is  handicraftsman  in  that 
he  guides  and  directs  them  by  his  skill  within  the 
scope  of  activity  to  which  they  are  designed.  He  also 
furnishes  by  his  muscular  activity  the  motive  force  with 
which  the  tool  is  worked.  It  is  the  former  of  these  two 
relations  which  differentiates  the  tool  from  the  machine. 
When  the  tool  is  removed  from  the  direct  and  individual 
guidance  of  the  handicraftsman  and  placed  in  a  mechanism 
which  governs  its  action  by  the  prearranged  motion  of  some 
other  tool  or  mechanical  implement,  it  ceases  to  be  a  tool 
and  becomes  part  of  a  machine.  The  economic  advantage 
of  the  early  machines  consisted  chiefly  in  the  economy  of 
working  in  combined  action  a  number  of  similar  tools  by 
the  agency  of  a  single  motor.  In  the  early  machine  the 
former  tool  takes  its  place  as  a  central  part,  but  its  move- 
ments are  no  longer  regulated  by  the  human  touch.  ^  The 
more  highly  evolved  modern  machinery  generally  represents 
an  orderly  sequence  of  processes  by  which  mechanical 
unity  is  given  to  the  labour  once  performed  by  a  number 
of  separate  individuals,  or  groups  of  individuals  with  differ- 
ent sorts  of  tools.  But  the  economy  of  the  earlier  machines 
was  generally  of  a  different  character.  For  the  most  part 
it  consisted  not  in  the  harmonious  relation  of  a  number 
of  different  processes,  but  rather  in  a  multiplication  of  the 
same  process  raised  sometimes  to  a  higher  size  and  speed 
by  mechanical  contrivances.  So  the  chief  economic  value 
of  the  earlier  machinery  applied  to  spinning  consisted  in 
the  fact  that  it  enabled  each  spinner  to  work  an  increased 
number  of  spindles,  performing  with  each  the  same  simple 
process  as  that  which  he  formerly  performed  with  one.  In 
other  cases,  however,  the  element  of  multiplication  was  not 
present,  and  the  prime  economy  of  the  machine  consisted 
in  the  superior  skill,  regularity,  pace,  or  economy  of  power 
obtained  by  substituting  mechanical  direction  of  the  tool 
for  close  and  constant  human  direction.  In  modern 
machinery  the  sewing-machine  illustrates  the  latter,  as 
the  knife-cleaning  machine  illustrates  the  former. 

1  Marx  points  out  how  in  many  of  the  most  highly  evolved  machines 
the  original  tool  survives,  illustrating  this  from  the  original  power-loom. 
(Capital,  p.  368.) 


MODERN   CAPITALISM.  47 

The  machine  is  inherently  a  more  complex  structure 
than  the  tool,  because  it  must  contain  within  itself  the 
mechanical  means  for  working  a  tool,  or  even  for  the 
combined  working  of  many  tools,  which  formerly  received 
their  direction  from  man.  In  using  a  tool  man  is  the 
direct  agent,  in  using  a  working  machine  the  transmitting 
mechanism  is  the  direct  agent,  so  far  as  the  character 
of  the  several  acts  of  production  is  not  stamped  upon 
the  form  of  the  working  machine  itself.  The  man  placed 
in  charge  of  a  machine  determines  whether  it  shall  act, 
but  only  within  very  narrow  limits  how  it  shall  act.  The 
two  characteristics  here  brought  out  in  the  machine, 
complexity  of  action  and  self-direction  or  automatic 
character,  are  in  reality  the  objective  and  subjective 
expression  of  the  same  factor — namely,  the  changed  rela- 
tion of  man  towards  the  work  in  which  he  co-operates. 

Some  of  the  directing  or  mental  effort,  skill,  art,  thought, 
must  be  taken  over,  that  is  to  say,  some  of  the  processes 
must  be  guided  not  directly  by  man  but  by  other  processes, 
in  order  to  constitute  a  machine.  A  machine  thus  becomes 
a  complex  tool  in  which  some  of  the  processes  are  re- 
latively fixed,  and  are  not  the  direct  expression  of  human 
activity.  A  machinist  who  feeds  a  machine  with  material 
may  be  considered  to  have  some  control  over  the  pace  and 
character  of  the  first  process,  but  only  indirectly  over  the 
later  processes,  which  are  regulated  by  fixed  laws  of  their 
construction  which  make  them  absolutely  dependent  on  the 
earlier  processes.  A  machine  is  in  the  nature  of  its  work 
largely  independent  of  the  individual  control  of  the 
"  tender,"  because  it  is  in  its  construction  the  expression 
of  the  individual  control  and  skill  of  the  inventor.  A 
machine,  then,  may  be  described  as  a  complex  tool  with  a 
fixed  relation  of  processes  performed  by  its  parts.  Even 
here  we  cannot  profess  to  have  reached  a  definition  which 
enables  us  in  all  cases  to  nicely  discriminate  machine  from 
tool.  It  is  easy  to  admit  that  a  spade  is  a  tool  and  not  a 
machine,  but  if  a  pair  of  scissors,  a  lever,  or  a  crane  are 
tools,  and  are  considered  as  performing  single  simple 
processes,  and  not  a  number  of  organically  relative  processes, 
we  may  by  a  skilfully  arranged  gradation  be  led  on  to 
include  the  whole  of  machinery  under  tools.  This  diffi- 
culty is  of  course  one  which  besets  all  work  of  definition. 


4o  THE   EVOLUTION    OF 

But  while  it  is  not  easy  by  attention  to  complexity  of 
structure  always  to  distinguish  a  tool  from  a  machine, 
nothing  is  gained  by  making  the  differentia  of  a  machine  to 
consist  in  the  use  of  a  steam  or  other  non-human  motor. 

A  vast  amount  of  modern  machinery  is  of  course  directed 
not  to  combining  tools  or  series  of  productive  processes 
upon  which  the  productive  skill  of  man  is  closely  engaged, 
but  to  substituting  other  motors  for  the  muscular  power  of 
man.  But  though  certain  tools  as  well  as  certain  forms  of 
human  effort  are  here  replaced  by  machines,  these  tools  are 
not  commonly  embodied  in  the  machinery  for  generating 
and  transmitting  the  new  force,  so  that  the  mere  considera- 
tion of  the  different  part  played  by  the  worker  in  generating 
productive  force  does  not  assist  us  to  distinguish  a  machine 
from  a  tool.  A  type-writer,  a  piano,  which  receive  their 
impulse  from  the  human  muscles,  must  evidently  be  included 
among  machines.  It  is  indeed  true  that  these,  like  others 
of  the  same  order,  are  exceptional  machines,  not  merely  in 
that  the  motive  power  is  derived  more  essentially  from 
human  muscles,  but  in  that  the  raison  d'Hre  of  the  mechanism 
has  been  to  provide  scope  for  human  skill  and  not  to  destroy 
it.  But  though  it  is  true  that  a  high  degree  of  skill  may  be 
imparted  to  the  first  process  of  the  working  of  a  piano  or  type- 
writer, it  is  none  the  less  true  that  the  "  tool,"  the  implement 
which  strikes  the  sound  or  makes  the  written  mark,  is  not 
under  immediate  control  of  human  touch.  The  skill  is  con- 
fined to  an  early  process,  and  the  mechanism  as  a  whole  must 
be  classed  under  machinery.  Nothing  would  indeed  be 
gained  in  logical  distinctness  if  we  were  to  abandon  our 
earlier  differentia  of  the  machine  and  confine  that  term  to 
such  mechanical  appliances  as  derived  their  power  from  non- 
human  sources — the  fact  which  commonly  marks  off  modern 
from  earlier  forms  of  machine  production.  For  we  should 
find  that  this  substitution  of  non-human  for  human  power 
was  also  a  matter  of  degree,  and  that  the  most  complex 
steam-driven  machinery  of  to-day  cannot  entirely  dispense 
with  some  directing  impulse  of  human  muscular  activity, 
such  as  the  shovelling  of  coal  into  a  furnace,  though  the 
tendency  is  ever  to  reduce  the  human  effort  to  a  minimum 
in  the  attainment  of  a  given  output. 

This  consideration  of  the  difficulties  attending  exact 
definitions  of  machinery  is  not  idle,  for  it  leads  to  a  clearer 


MODERN   CAPITALISM.  49 

recognition  of  the  nicely  graded  evolution  which  has 
changed  the  character  of  modern  industry,  not  by  a  cata- 
strophic substitution  of  radically  different  methods,  but  by 
the  continuous  steady  development  of  certain  elements, 
common  to  all  sorts  of  industrial  activity,  and  a  correspond- 
ing continuous  degeneration  of  certain  other  elements. 

§  2.  The  growth  of  machine-industry  then  may  be  measured 
by  the  increased  number  and  complexity  of  the  processes 
related  to  one  another  in  the  mechanical  unit  or  machine, 
and  by  a  corresponding  shrinkage  of  the  dependence  of  the 
product  upon  the  skill  and  volition  of  the  human  being 
who  tends  or  co-operates  with  the  machine.  Every  product 
made  by  tool  or  machine  is  quct  industrial  product  or  com- 
modity the  expression  of  the  thought  and  will  of  man ; 
but  as  machine-production  becomes  more  highly  devel- 
oped, more  and  more  of  the  thought  and  will  of  the 
inventor,  less  and  less  of  that  of  the  immediate  human 
agent  or  machine-tender  is  expressed  in  the  product. 
But  it  is  evidently  not  enough  to  say  that  the  labour- 
saving  machine  has  merely  substituted  the  stored  and  con- 
centrated effort  of  the  inventor  for  that  labour  of  the 
handicraftsman  which  is  saved.  This  would  be  to  ignore 
the  saving  of  muscular  power  due  to  the  substitution  of 
forces  of  nature — water,  steam,  electricity,  etc.,  for  the 
painful  effort  of  man.  It  is  the  thought  of  the  inventor, 
plus  the  action  of  various  mechanical  and  other  physical 
forces,  which  has  saved  the  labour  of  man  in  the  produc- 
tion of  a  commodity  The  further  question — how  far  this 
saving  of  labour  in  respect  of  a  given  commodity  is  com- 
pensated by  the  increased  number  of  commodities  to  which 
human  labour  is  applied — is  a  consideration  which  belongs 
to  a  later  chapter. 

In  tracing  the  effect  of  the  application  of  modern 
machinery  to  English  industry  there  appear  two  prominent 
factors,  which  for  certain  purposes  require  separate  treat- 
ment— the  growth  of  improved  mechanical  apparatus,  and 
the  evolution  of  extra-human  motor  power. 

We  speak  of  the  industry  which  has  prevailed  since  the 
middle  of  the  eighteenth  century  as  machine-production, 
not  because  there  were  no  machines  before  that  time,  but 
firstly,  because  a  vast  acceleration  in  the  invention  of  com- 
plex machinery  applied  to  almost  all  industrial  arts  dates 

4 


50  THE   EVOLUTION   OF 

from  that  period,  and  secondly,  because  the  application 
upon  an  extensive  scale  of  non-human  motor  powers  mani- 
fested itself  then  for  the  first  time. 

One  important  external  effect  and  indication  of  the 
momentous  character  of  these  changes  is  to  be  found  in 
the  quickening  of  that  operation,  the  beginning  of  which 
was  observable  before  the  great  inventions,  the  substitution 
of  the  Factory  System  for  the  Domestic  System. 

The  peculiar  relation  of  Machinery  to  the  Factory 
System  consists  in  the  fact  that  the  size,  expensiveness, 
and  complexity  of  machinery  on  the  one  hand,  and  the 
use  of  non-human  power  on  the  other  hand,  were  forces 
which  united  to  drive  labour  from  the  home  workshop  to 
the  large  specialised  workshop — the  Factory. 

"The  water  frame,  the  carding  engine,  and  the  other 
machines  which  Arkwright  brought  out  in  a  finished  state, 
required  both  more  space  than  could  be  found  in  a  cottage, 
and  more  power  than  could  be  applied  by  the  human  arm. 
Their  weight  also  rendered  it  necessary  to  place  them  in 
strongly-built  walls,  and  they  also  could  not  be  advantage- 
ously turned  by  any  power  then  known  but  that  of  water. 
Further,  the  use  of  machinery  was  accompanied  by  a  greater 
division  of  labour,  and  therefore  a  greater  co-operation 
was  requisite  to  bring  all  the  processes  of  production  into 
harmony  and  under  a  central  superintendence."^  Hence 
the  growth  of  machine-production  is  to  a  large  extent 
synonymous  with  the  growth  of  the  modern  Factory 
System. 

§  3.  Man  does  his  work  by  moving  matter.  Hence 
machinery  can  only  aid  him  by  increasing  the  motive 
power  at  his  disposal. 

(i)  Machinery  enables  forces  of  man  or  nature  to  be 
more  effectively  applied  by  various  mechanical  contrivances 
composed  of  levers,  pulleys,  wedges,  screws,  etc. 

(2)  Machinery  enables  man  to  obtain  the  use  of  various 
motor  forces  outside  his  body — wind,  water,  steam,  elec- 
tricity, chemical  action,  etc.^ 

Thus  by  the  provision  of  new  productive  forces,  and  by 
the  more  economical  application  of  all  productive  forces, 
machinery  improves  the  industrial  arts. 

'  Cooke  Taylor,  History  of  the  Factory  System,  p.  4C2. 
2  Cf.  Babbage,  p.  15. 


MODERN   CAPITALISM.  5 1 

Machinery  can  increase  the  scope  of  man's  productive 
ability  in  two  ways.  The  difficulty  of  concentrating  a  large 
mass  of  human  force  upon  a  given  point  at  the  same 
time  provides  certain  quantitative  limits  to  the  productive 
efficiency  of  the  human  body.  The  steam-hammer  can 
perform  certain  work  which  is  quantitatively  outside  the  limit 
of  the  physical  power  of  any  number  of  men  working  with 
simple  tools  and  drawing  their  motor  power  from  their  own 
bodies.  The  other  limit  to  the  productive  power  of  man 
arises  from  the  imperfect  continuity  of  human  effort  and 
the  imperfect  command  of  its  direction.  The  difficulty  of 
maintaining  a  small,  even,  accurate  pressure,  or  a  precise 
repetition  of  the  same  movement,  is  rather  a  qualitative 
than  a  purely  quantitative  limit.  The  superior  certainty  and 
regularity  of  machinery  enables  certain  work  to  be  done 
which  man  alone  could  not  do  or  could  do  less  perfectly. 
The  work  of  the  printing  machine  could  not  be  achieved  by 
man.  Machinery  has  improved  the  texture  and  quality  of 
certain  woollen  goods  ;^  recent  improvements  in  milling 
result  in  improved  quality  of  flour  and  so  on.  Machinery 
can  also  do  work  which  is  too  fine  or  delicate  for  human 
fingers,  or  which  would  require  abnormal  skill  if  executed 
by  hand.  Economy  of  time,  which  Babbage^  accounts  a 
separate  economy,  is  rightly  included  in  the  economies  just 
named.  The  greater  rapidity  with  which  certain  manufactur- 
ing processes — e.g.,  dyeing — can  be  achieved  arises  from  the 
superior  concentration  and  continuity  of  force  possible 
under  machinery.  All  advantages  arising  from  rapid  trans- 
port are  assignable  to  the  same  causes. 

The  continuity  and  regularity  of  machine  work  are  also 
reflected  in  certain  economies  of  measurement.  The  faculty 
of  self-registering,  which  belongs  potentially  to  all  machinery, 
and  which  is  more  utilised  every  day,  performs  several 
services  which  may  be  summed  up  by  saying  that  they 
enable  us  to  know  exactly  what  is  going  on.  When  to  self- 
registration  is  applied  the  faculty  of  self-regulation,  within 
certain  limits  a  new  economy  of  force  and  knowledge  is 
added.  But  machinery  can  also  register  and  regulate  the 
expenditure  of  human  power.  Babbage  well  says  : — "  One 
of  the  most  singular  advantages  we  derive  from  machinery 

^  Burnley,  Wool  and  Wool-combing,  p.  417.  t 

^  Economy  of  Machinery,  p.  6. 


52  THE   EVOLUTION    OF 

is  in  tlie  check  which  it  affords  against  the  inattention,  the 
idleness,  or  the  knavery  of  human  agents."^  This  control  of 
the  machine  over  man  has  certain  results  which  belong  to 
another  aspect  of  machine  economy. ^ 

These  are  the  sources  of  all  the  improvements  of 
economies  imputed  to  machine-production.  All  improve- 
ments in  machinery,  as  applied  to  industrial  arts,  take 
therefore  one  of  the  following  forms : — 

(i)  Re-arrangement  or  improvement  of  machinery  so  as 
to  utilise  more  fully  the  productive  power  of  nature  or  man. 
Improvements  enabling  one  man  to  tend  more  spindles,  or 
enabling  the  same  engine  at  the  same  boiler-pressure  to 
turn  more  wheels,  belong  to  this  order  of  improvement. 

(2)  Economies  in  the  source  of  power.  These  will  fall 
under  four  heads — 

1.  Substitution  of  cheaper  for  dearer  kinds  of   human 

power.  Displacement  of  men's  labour  by  women's 
or  children's. 

2.  Substitution  of  mechanical  power  for  human  power. 

Most  great  improvements  in  the  "labour-saving" 
character  of  machinery  properly  come  under  this 
head. 

3.  Economies  in  fuel  or  in  steam.     The  most  momentous 

illustration  is  the  adoption  of  the  hot  blast  and  the 
substitution  of  raw  coal  for  coke  in  the  iron  trade. ^ 

4.  The  substitution  of  a  new  mechanical  motor   for  an 

old  one  derived  from  the  same  or  from  different 
stores  of  energy — e.g.,  steam  for  water  power,  natural 
gas  for  steam. 

(3)  Extended  application  of  machinery.  New  industrial 
arts  owing  their  origin  to  scientific  inventions  and  their 
practice  to  machinery  arise  for  utilising  waste  products. 
Under  "waste  products"  we  may  include  (a)  natural  materials, 
the  services  of  which  were  not  recognised  or  could  not  be 
utiHsed  without  machinery — e.g.,  nitrates  and  other  "waste" 
products  of  the  soil;  (^)  the  refuse  of  manufacturing  pro- 
cesses which  figured  as  "waste"  until  some  unsuspected  use 
was  found  for  it.  Conspicuous  examples  of  this  economy  are 
found  in  many  trades.     During  the  interval  between  great 

^  Econo7ny  of  Machinery,  p.  39. 

^    Vide  infra,  p.  249. 

^  Scrivener,  History  of  the  Iron  Trade,  pp.  296,  297. 


MODERN   CAPITALISM.  53 

new  inventions  in  machinery  or  in  the  application  of  power 
many  of  the  principal  improvements  are  of  this  order.  Gas 
tar,  formerly  thrown  into  rivers  so  as  to  pollute  them,  or 
mixed  with  coal  and  burnt  as  fuel,  is  now  "  raw  material  for 
producing  beautiful  dyes,  some  of  our  most  valued  medi- 
cines, a  saccharine  substance  three  hundred  times  sweeter 
than  sugar,  and  the  best  disinfectants  for  the  destruction  of 
germs  of  disease."  "  The  whole  of  the  great  industries  of 
dyeing  and  calico-printing  have  been  revolutionised  by  the 
new  colouring  matters  obtained  from  the  old  waste  material 
gas  tar."^  These  economies  both  in  fuel  and  in  the  utilisa- 
tion of  waste  material  are  largely  due  to  the  increased  scale 
of  production  which  comes  with  the  development  of 
machine  industry.  Many  waste  products  can  only  be 
utilised  where  they  exist  in  large  quantities. 

§  4.  If  we  trace  historically  the  growth  of  modern  capitalist 
economies  in  the  several  industries  we  shall  find  that  they 
fall  generally  into  three  periods — 

1.  The  period  of  earlier  mechanical  inventions,  marking 

the  displacement  of  domestic  by  factory  industry. 

2.  The  evolution  of  the  new  motor  in  manufacture.     The 

application  of  steam  to  the  manufacturing  processes. 

3.  The  evolution  of  steam  locomotion,  with  its  bearing 

on  industry. 

As  these  periods  are  not  materially  exclusive,  so  also 
there  are  close  economic  relations  subsisting  between  the 
development  of  machinery  and  motor,  and  between  the 
improvements  in  manufacture  and  in  the  transport  industry. 
But  in  order  to  understand  the  nature  of  the  irregularity 
which  is  discernible  in  the  history  of  the  development  of 
machinery,  it  is  essential  to  consider  these  factors  both 
separately  and  in  the  historical  and  economic  relation  they 
stand  to  each  other.  For  this  purpose  we  will  examine  two 
large  staple  industries,  the  textile  and  the  iron  industries 
of  England,  in  order  that  we  may  trace  in  the  chief  steps 
of  their  progress  the  laws  of  the  evolution  of  modern 
machinery. 

The  textile  industry  offers  special  facilities  to  such  a  study. 
The  strongest  and  most  widespread  of  English  manufac- 
tures,   it   furnishes   in    the    early   eighteenth    century   the 

'  Sir  Lyon  Play  fair,  North  American  Review  ^  Nov,  1892. 


54  THE  EVOLUTION   OF 

clearest  examples  of  the  several  forms  of  industry.  To  the 
several  branches  of  this  industry  the  earliest  among  the 
great  inventions  were  applied.  This  start  in  industrial 
development  has  been  maintained,  so  that  the  most  advanced 
forms  of  the  modern  factory  are  found  in  textile  industry. 
Moreover,  the  close  attention  which  has  been  given  to, 
and  the  careful  records  which  have  been  kept  of  certain 
branches  of  this  work,  in  particular  the  Lancashire  cotton 
industry,  enable  us  to  trace  the  operation  of  the  new 
industrial  forces  here  with  greater  precision  than  is  the 
case  with  any  other  industry.  As  Schulze-Gaevernitz, 
in  his  masterly  study,  says  of  the  cotton  industry — • 
"  The  English  cotton  industry  is  not  only  the  oldest,  but 
is  in  many  respects  that  modern  industry  which  manifests 
most  clearly  the  characteristics  of  modern  industrial  methods, 
both  in  their  economic  and  their  social  relations."  ^ 

The  iron  industry  has  been  selected  on  the  ground  of 
its  close  connection  with  the  application  of  steam-driven 
machinery  to  the  several  industries.  It  is  in  a  sense  the 
most  fundamental  industry  of  modern  times,  inasmuch 
as  it  furnishes  the  material  environment  of  the  great 
modern  economic  forces.  Moreover,  we  have  the  advan- 
tage of  tracing  the  growth  of  the  iron  manufacture  ab  ovo, 
for,  as  we  have  seen,  before  the  industrial  revolution  it 
played  a  most  insignificant  part  in  English  commerce. 

Lastly,  a  study  of  the  relations  between  the  growth  of  the 
iron  and  the  textile  industries  will  be  of  special  service  in 
assisting  us  to  realise  the  character  of  the  interaction  of  the 
several  manufactures  under  the  growing  integration  of 
modern  industry.^ 

§  5.  In  observing  the  order  of  inventions  applied  to 
textile  industries,  the  first  point  of  significance  is  that 
cotton,  a  small  industry  confined  to  a  part  of  Lancashire, 
and  up  to  1768  dependent  upon  linen  in  order  to  furnish 
a  complete  cloth,  should  take  the  lead. 

The  woollen  trades,  in  the  first  half  of  the  eighteenth 

^  Der  Grossbetrieb,  p.  85. 

^  The  important  part  which  the  cotton  and  iron  industries  play  in 
the  export  trade  of  England  entitles  them  to  special  consideration  as 
representatives  of  world-industry.  Out  of  ^^263,530,585  value  of 
English  exports  in'  1890,  cotton  comprised  ^^74,430,749;  iron  and 
steel,  ;^3i.565>337- 


MODERN   CAPITALISM.  55 

century,  as  we  saw,  engaged  the  attention  of  a  vastly  larger 
number  of  persons,  and  played  a  much  more  important 
part  in  our  commerce.  The  silk  trade  had  received  new 
life  from  the  flow  of  intelligent  French  workers,  and  the 
first  modern  factory  with  elaborate  machinery  was  that  set 
up  for  silk  throwing  by  Lombe.  Yet  by  far  the  larger 
number  of  the  important  textile  inventions  of  the  eighteenth 
century  were  either  applied  in  the  first  instance  to  the 
cotton  manufacture  and  transferred,  sometimes  after  a  lapse 
of  many  years,  to  the  woollen,  worsted,  and  other  textile 
trades,  or  being  invented  for  woollen  trades,  proved  unsuc- 
cessful until  applied  to  cotton.^ 

Although  the  origin  and  application  of  inventive  genius 
is  largely  independent  of  known  laws,  and  may  provision- 
ally be  relegated  to  the  domain  of  "accident,"  there  are 
certain  reasons  which  favoured  the  cotton  industry  in  the 
industrial  race.  Its  concentration  in  South  Lancashire  and 
Staffordshire,  as  compared  with  the  wide  diffusion  of  the 
woollen  industries,  facilitated  the  rapid  acceptance  of  new 
methods  and  discoveries.  Moreover,  the  cotton  industry 
being  of  later  origin,  and  settling  itself  in  unimportant 
villages  and  towns,  had  escaped  the  influence  of  official 
regulations  and  customs  which  prevailed  in  the  woollen 
centres  and  proved  serious  obstacles  to  the  introduction 
of  new  industrial  methods.^  Even  in  Lancashire  itself 
official  inspectors  regulated  the  woollen  trade  at  Man- 
chester, Rochdale,  Blackburn,  and  Bury.^ 

The  cotton  industry  had  from  the  beginning  been  free 
from  all  these  fetters.  The  shrewd,  practical  business 
character  which  marks  Lancashire  to-day  is  probably  a 
cause  as  well  as  a  result  of  the  great  industrial  development 
of  the  last  hundred  years. 

Moreover,  it  was  recognised,  even  before  the  birth  of 
the  great  inventions,  that  cotton  goods,  when  brought  into 
free  competition  with  woollen  goods,  could  easily  under- 
sell them  and  supplant  them  in  popular  consumption. 
This  knowledge  held  out  a  prospect  of  untold  fortune  to 
inventors  who  should,  by  the  application  of  machinery, 
break   through   the   limitations  imposed  upon  production 

^  Cunningham,  chap.  ii.  p.  450. 

^  Schulze-Gaevernitz,  Der  Grossbetrieb,  p.  34. 

'  Ure,  The  Cotton  Manufacture,  p.  187. 


56  THE    EVOLUTION    OF 

by  the  restricted  number  of  efficient  workers  in  some 
of  the  processes  through  which  the  cotton  yarn  must 
pass. 

But  the  stimulus  which  one  invention  afforded  to  another 
gave  an  accumulative  power  to  the  application  of  new 
methods.  This  is  especially  seen  in  the  alternation  of 
inventions  in  the  two  chief  processes  of  spinning  and 
weaving. 

Even  before  the  invention  of  John  Kay's  Fly  Shuttle, 
which  doubled  the  quantity  of  work  a  weaver  could  do  in  a 
day,  we  found  that  spinners  had  great  difficulties  in  supply- 
ing sufficient  yarn  to  the  weavers.  This  seems  to  have 
applied  both  to  the  Lancashire  cotton  and  to  the  Yorkshire 
woollen  manufactures.  After  the  fly-shuttle  had  come  into 
common  use  this  pressure  of  demand  upon  the  spinners 
was  obviously  increased,  and  the  most  skilful  organisation 
of  middleman-clothiers  was  unable  to  supply  sufficient 
quantities  of  yarn.  This  economic  consideration  directed 
more  and  more  attention  to  experiments  in  spinning 
machinery,  and  so  we  find  that,  long  before  the  invention 
of  the  jenny  and  the  water-frame,  ingenious  men  like  John 
Kay  of  Bury,  Wyatt,  Paul,  and  others  had  tried  many 
patents  for  improved  spinning.  The  great  inventions  of 
Hargreaves  and  Arkwright  and  Crompton  enabled  spinning 
to  overtake  and  outstrip  weaving  and  when,  about  1790, 
steam  began  to  be  applied  to  considerable  numbers  of 
spinning  mills,  it  was  no  longer  spinning  but  weaving  that 
was  the  limiting  process  in  the  manufacture  of  woollen  and 
cotton  cloths. 

This  strain  upon  weaving,  which  had  been  tightening 
through  the  period  of  the  great  spinning  improvements, 
acted  as  a  special  incentive  to  Cartwright,  Horrocks,  and 
others  to  perfect  the  power-loom  in  its  application,  first  to 
woollen,  then  to  cotton  industries.  Not  until  well  into 
the  nineteenth  century,  when  steam  power  had  been  fully 
applied  by  many  minor  improvements,  were  the  arts  of 
spinning  and  weaving  brought  fully  into  line.  The  com- 
plete factory,  where  the  several  processes  of  carding,  spin- 
ning, weaving  (and  even  dyeing  and  finishing),  are  conducted 
under  the  same  roof  and  worked  in  correspondence  with 
one  another,  marks  the  full  transition  from  the  earlier  form 
of  domestic   industry,   where   the    family   performed   with 


MODERN   CAPITALISM.  5/ 

simple   tools   their   several   processes   under  the  domestic 
roof.^ 

§  6.  The  history  of  these  textile  inventions  does  a  good 
deal  to  dispel  the  "  heroic  "  theory  of  invention — that  of 
an  idea  flashing  suddenly  from  the  brain  of  a  single  genius 
and  effecting  a  rapid  revolution  in  a  trade.  No  one  of  the 
inventions  which  were  greatest  in  their  effect,  the  jenny, 
the  water-frame,  the  mule,  the  power-loom,  was  in  the  main 
attributable  to  the  effort  or  ability  of  a  single  man;  each 
represented  in  its  successful  shape  the  addition  of  many 
successive  increments  of  discovery;  in  most  cases  the 
successful  invention  was  the  slightly  superior  survivor  of 
many  similar  attempts.  "  The  present  spinning  machinery 
which  we  now  use  is  supposed  to  be  a  compound  of  about 
eight  hundred  inventions.  The  present  carding  machinery 
is  a  compound  of  about  sixty  patents." ^  This  is  the 
history  of  most  inventions.  The  pressure  of  industrial 
circumstances  direct  the  intelligence  of  many  minds  towards 
the  comprehension  of  some  single  central  point  of  difficulty, 
the  common  knowledge  of  the  age  induces  many  to  reach 
similar  solutions :  that  solution  which  is  slightly  better 
adapted  to  the  facts  or  "grasps  the  skirts  of  happy  chance" 
comes  out  victorious,  and  the  inventor,  purveyor,  or,  in 
some  cases,  the  robber  is  crowned  as  a  great  inventive  genius. 
It  is  the  neglect  of  these  considerations  which  gives  a 
false  interpretation  to  the  annals  of  industrial  invention  by 
giving  an  irregular  and  catastrophic  appearance  to  the  work- 
ing of  a  force  which  is  in  its  inner  pressure  much  more 
regular  than  in  its  outward  expression.  The  earlier  incre- 
ments of  a  great  industrial  invention  make  no  figure  in 

^  Modern  economy  now  favours  the  specialisation  of  a  factory  and 
often  of  a  business  in  a  single  group  of  processes— ^.^. ,  spinning  or 
weaving  or  dyeing,  both  in  the  cotton  and  woollen  industries.  This, 
however,  is  applicable  chiefly  to  the  main  branches  of  textile  work. 
In  minor  branches,  such  as  cotton  thread,  the  tendency  is  still  towards 
an  aggregation  of  all  the  different  processes  under  a  single  roof,  both 
in  England  and  in  the  United  States. 

-  P.  R.  Hodge,  civil  engineer — evidence  before  House  of  Lords 
Committee  in  1857. 

In  Germany  a  spinning-wheel  had  been  long  in  use  for  flax-spinning, 
which  in  eff"ect  was  an  anticipation  of  the  throstle  (cf.  Karmarch, 
Technologic,  vol.  ii.  p.  844,  quoted  Schulze-Gaevernitz,  p.  30),  and 
machine-weaving  is  said  to  have  been  discovered  in  Danzig  as  early 
as  1579. 


S'S  THE   EVOLUTION   OF 

the  annals  of  history  because  they  do  not  pay,  and  the 
final  increment  which  reaches  the  paying-point  gets  all 
the  credit,  though  the  inherent  importance  and  the 
inventive  genius  of  the  earlier  attempts  may  have  been 
as  great  or  greater. 

There  is  nothing  fortuitous  or  mysterious  in  inventive 
energy.  Necessity  is  its  mother,  which  simply  means  that 
it  moves  along  the  line  of  least  resistance.  Men  like  Kay, 
Hargreaves,  Arkwright,  Cartwright,  set  their  intelligence 
and  industry  to  meet  the  several  difficulties  as  they  arose. 
Nearly  all  the  great  textile  inventors  were  practical  men, 
most  of  them  operatives  immersed  in  the  details  of  their 
craft,  brought  face  to  face  continually  with  some  definite 
difficulty  to  be  overcome,  some  particular  economy  desirable 
to  make.  Brooding  upon  these  concrete  facts,  trying  first 
one  thing  then  another,  learning  from  the  attempts  and 
failures  made  by  other  practical  men,  and  improving  upon 
these  attempts,  they  have  at  length  hit  upon  some  con- 
trivance that  will  get  over  the  definite  difficulty  and  secure 
the  particular  economy.  If  we  take  any  definite  invention 
and  closely  investigate  it,  we  shall  find  in  nearly  every  case 
it  has  thus  grown  by  small  increments  towards  feasibility. 
Scientific  men,  strictly  so-called,  have  had  very  little  to 
do  with  these  great  discoveries.  Among  the  great  textile 
inventors,  Cartwright  alone  was  a  man  leading  a  life  of 
thought.^  When  the  spinning  machinery  was  crippled  in 
its  efficiency  by  the  crude  methods  of  carding.  Lees  and 
Arkwright  set  themselves  to  apply  improvements  suggested 
by  common-sense  and  experience;  when  Cartwright's  power- 
loom  had  been  successfully  applied  to  wool,  Horrocks  and 
his  friends  thought  out  precisely  those  improvements  which 
would  render  it  remunerative  in  the  cotton  trade. 

Thus  in  a  given  trade  where  there  are  several  important 
processes,  an  improvement  in  one  process  which  places  it 
in  front  of  the  others  stimulates  invention  in  the  latter,  and 
each  in  its  turn  draws  such  inventive  intelligence  as  is 
required  to  bring  it  into  line  with  the  most  highly-developed 
process.  Since  the  later  inventions,  with  new  knowledge 
and  new  power  behind  them,  often  overshoot  the  earher 
ones,  we  have  a  certain  law  of  oscillation  in  the  several 

*  Cf.  Brentano,  Uber  die  Ursachen  der  heutigtn  socialen  Not ; 
Der  Grossbeirieb,  p.  30. 


MODERN   CAPITALISM,  59 

processes  which  maintains  progress  by  means  of  the  stimulus 
constantly  applied  by  the  most  advanced  process  which 
"  makes  the  pace."  There  is  nothing  mysterious  in  this. 
If  one  process  remains  behind  in  development  each  incre- 
ment of  inventive  effort  successfully  applied  there  brings  a 
higher  remuneration  than  if  applied  to  any  of  the  more 
forward  processes.  So  the  movement  is  amenable  to  the 
ordinary  law  of  "  Supply  and  Demand "  enforced  by  the 
usual  economic  motives.  As  the  invention  of  the  fly-shuttle 
gave  weaving  the  advantage,  more  and  more  attention  was 
concentrated  upon  the  spinning  processes  and  the  jenny 
was  evolved ;  the  deficiency  of  the  jenny  in  spinning  warp 
evolved  the  water-frame,  which  for  the  first  time  liberated 
the  cotton  industry  from  dependence  upon  linen  warp : 
the  demand  for  finer  and  more  uniform  yarns  stimulated 
the  invention  of  the  mule.  These  notable  improvements 
in  spinning  machinery,  with  their  minor  appendages,  placed 
spinning  ahead  of  weaving,  and  stimulated  the  series  of 
inventions  embodied  in  the  power-loom.  The  power-loom 
was  found  to  be  of  comparatively  little  service  until  the 
earlier  processes  of  dressing  and  sizing  had  been  placed  on 
a  level  of  machine  development  by  the  efforts  of  Horrocks 
and  others.  Not  until  after  1841  was  an  equilibrium  reached 
in  the  development  of  the  leading  processes.  So  likewise 
each  notable  advance  in  the  machinery  for  the  main  pro- 
cesses has  had  the  effect  of  bringing  an  increase  of  inventive 
energy  to  bear  upon  the  minor  and  the  subsidiary  processes 
— bleaching,  dyeing,  printing,  etc.  Even  now  the  early 
process  of  "ginning"  has  not  been  brought  fully  into  line  in 
spite  of  the  prodigious  efforts,  made  especially  in  the  United 
States,  to  overcome  the  difficulties  involved  in  this  prepara- 
tory stage  of  the  cotton  industry. 

The  following  schedule  will  serve  to  show  the  relation  of 
the  growth  of  the  cotton  industry  as  measured  by  consump- 
tion of  raw  cotton  to  the  leading  improvements  of  machinery. 

Cotton  Imported.  Inventions  &c. 

lbs. 

^73°       1)545)472     1730    Wyatt's      roller-spinning      (patented 

1738). 
1738     Kay's  fly-shuttle. 
1741       1,645,031     1748     Paul's  carding-machine  (useless  until 
improved     by     Lees,    Arkwright, 
Wood,  1772-74). 


60  THE   EVOLUTION   OF 

Cotton  Imported.  Inventions,  &c. 

lbs. 

1764       3,870,392     1764     Hargreave's  spinning-jenny  (patented 

1770),  for  weft  only. 
1 764     Calico-printing  introduced  into  Lanca- 
shire. 
1768     Arkwright  perfects  Wyatt's  spinning- 
frame  (patented  1769),   liberating 
cotton  from  dependence   on  linen 
warp. 
I77n 
to    y    4,764,589     1771     Arkwright's  mill  built  at  Cromford, 

1775J 

1775     Arkwright  takes  patents  for  carding, 

drawing,  roving,  spinning. 
1779     Crompton's  mule  completed  (combin- 
ing jenny  and    water-frame,  pro- 
ducing    finer     and     more     even 
yarn). 

1781       5,198,775 

1785     18,400,384     1785     Cartwright's  power-loom. 

Watt  and  Boulton's  first  engine  for 
cotton-mills. 

1792     34,907,497     1792    Whitney's  saw-gin. 

1813     51,000,000     1813     Horrocks' dressing-machine. 

1830  261,200,000  1830  The  "Throstle"  (almost  exclusively 
used  in  England  for  spinning 
warp). 

1832  287,800,000     1832     Roberts'  self-acting  mule  perfected. 

1 84 1  489,900,000     1 84 1     BuUough's  improved  power-loom. 

Ring  spinning  (largely  used  in  U.S.A., 
recently  introduced  into  Lanca- 
shire). 

From  this  schedule  it  is  evident  that  the  history  of  this 
trade  may  be  divided  with  tolerable  accuracy  into  four 
periods. 

(i)  The  preparatory  period  of  experimental  inventions  of 
Wyatt,  Paul,  etc.,  to  the  year  1770. 

(2)  1770  to  1792  {area),  the  age  of  the  great  mechanical 
inventions. 

(3)  1792  to  1830,  the  application  of  steam  power 
to  manufacture  and  improvements  of  the  great  inven- 
tions. 

(4)  1830  onward,  the  effect  of  steam  locomotion  upon 
the  industry  (1830,  the  opening  of  the  Liverpool  and 
Manchester  railway). 


MODERN   CAPITALISM.  6l 

If  we  measure  the  operation  of  these  several  industrial 
forces  within  these  several  periods,  as  they  are  reflected 
on  the  growing  size  of  the  cotton  industry,  we  shall 
realise  the  accumulative  character  of  the  great  indus- 
trial movement,  and  form  some  approximately  accurate 
conception  of  the  relative  importance  of  the  develop- 
ment of  mechanical  inventions  and  of  the  new  motor- 
power. 

§  7.  The  history  of  the  cotton  industry  is  in  its  main  out- 
lines also  the  history  of  other  textile  industries.  We  do  not 
possess  the  same  means  of  measuring  statistically  the 
growth  of  the  woollen  industries  in  the  period  of  revolution  ; 
but  since,  on  the  one  hand,  many  of  the  spinning  and  weav- 
ing inventions  were  speedily  adapted  into  the  woollen  from 
the  cotton  industry,  while  the  application  of  steam  to 
manufacture  and  the  effects  of  steam  locomotion  were 
shared  by  the  older  manufacture,  the  growth  of  the  trade 
in  the  main  conforms  to  the  same  divisions  of  time.  The 
figures  of  imported  wool  are  not  so  valuable  a  register  as  in 
the  case  of  cotton,  because  no  account  is  taken  of  home- 
produce,  but  the  following  statistics  of  foreign  and  colonial 
wool  imported  into  England  serve  to  throw  light  upon  the 
growth  of  our  woollen  manufactures. 

STATISTICS    OF   WOOL   IMPORTED    INTO   ENGLAND. 


lbs. 

lbs. 

1766 

1,926,000 

1830 

32,305,000 

I77I 

1,829,000 

1840 

49,436,000 

1780 

323,000 

1850 

74,326,000 

1790 

2,582,000 

i860 

151,218,000 

1800 

8,609,000 

1870 

263,250,000 

I8I0 

10,914,000 

1880 

463,309,000 

1820 

9,775,000 

1892 

743,046,104 

In  the  silk  industry  the  influence  of  machinery  is  compli- 
cated by  several  considerations  especially  affecting  this 
manufacture.  Although  the  ingenuity  and  enterprise  of 
the  Lombes  had  introduced  complex  machinery  into  silk 
throwing  many  years  before  it  was  successfully  applied  to 
any  other  branch  of  textile  industry,  the  trade  did  not  grow 
as  might  have  been  expected,  and  the  successive  increments 
of  great   mechanical   invention   were   slowly   and   slightly 


62  THE   EVOLUTION    OF 

applied  to  the  silk  industry.  There  are  special  reasons  for 
this,  some  of  them  connected  with  the  intrinsic  value  of 
the  commodity,  others  with  the  social  regulation  of  the 
trade. 

The  inherent  delicacy  of  many  of  the  processes,  the 
capricious  character  of  the  market  for  the  commodities,  the 
expensive  production  of  which  renders  them  a  luxury  and 
especially  amenable  to  the  shifts  of  taste  and  fashion,  have 
preserved  for  artistic  handicraft  the  production  of  many  of 
the  finer  silk  fabrics,  or  have  permitted  the  application  of 
machinery  in  a  far  less  degree  than  in  the  cotton  and 
woollen  industries. 

Moreover,  the  heavy  duties  imposed  upon  raw  and 
thrown  silk,  which  accompanied  the  strict  prohibition  of 
the  importation  of  manufactured  silk  goods  in  1765,  by 
aggravating  the  expenses  of  production  and  limiting  the 
market  at  the  very  epoch  of  the  great  mechanical  inven- 
tions, prevented  any  notable  expansion  of  consumption  of 
silk  goods,  and  rendered  them  quite  unable  to  resist  the 
competition  of  the  younger  and  more  enterprising  cotton 
industry,  which,  after  the  introduction  of  colour-printing 
early  in  the  nineteenth  century,  was  enabled  to  out-compete 
silk  in  many  markets. 

Even  in  the  coarser  silk  fabrics  where  weaving  machinery 
was  successfully  applied  at  an  early  date,  the  slow  progress 
in  "  throwing  "  greatly  retarded  the  expansion  of  the  trade, 
and  after  the  repeal  of  the  duty  on  imported  silk  in  1826 
the  number  of  throwing  mills  was  still  quite  inadequate  to 
keep  pace  with  the  demands  of  the  weavers.^  Subsequent 
improvements  in  throwing  mills,  and  the  application  of  the 
ingenious  weaving  machinery  of  Jacquard  and  later  im- 
provers, have  given  a  great  expansion  to  many  branches  of 
the  trade  in  the  last  fifty  years. 

But  the  following  statistics  of  the  consumption  of  raw 
and  thrown  silk  from  1-765  to  1844  indicate  how  slight  and 
irregular  was  the  expansion  of  the  trade  in  England  during 
the  era  of  the  great  inventions  and  the  application  of 
the  steam-motor,  and  how  disastrously  the  duties  upon 
raw  and  thrown  silks  weighed  upon  this  branch  of 
manufacture. 

^  Porter,  Progress  of  the  Nation,  p.  219. 


MODERN  CAPITALISM 

Average  Importation 

1 

lbs. 

lbs. 

1765^ 

1823 

2,468,121 

1766 

1-  715,000 

1824 

4,011,048 

1767  J 

1825 

3,604,058 

1785] 

1826 

2,253,513 

1786 

'    881,000 

1827 

4,213,153 

1787  J 

1828 

4,547,812 

i8on 

1829 

2,892,201 

^° 

-  1,110,000 

1830 

4,69.3,517 

1812  J 

1831 

4,312,330 

1814 

2,119,974 

1832 

4,373,247 

1815 

1,475,389 

1833 

4,761,543 

1816 

1,088,334 

1834 

4,522,451 

1817 

1,686,659 

183s 

5,788,458 

1818 

1,922,987 

1836 

6,058,423 

1819 

1,848,553 

1837 

4,598,859 

1820 

2,027,63s 

1838 

4,790,256 

1821 

2,329,808 

1839 

4,665,944 

1822 

2,441,563 

1840 

4,819,262 

63 


In  the  linen  industry  the  artificial  encouragement  given  to 
the  Irish  trade,  which,  bounty-fed  and  endowed  with  a  mon- 
opoly of  the  British  markets,  was  naturally  slow  to  adopt 
new  methods  of  production,  and  the  uncertain  condition 
of  the  English  trade,  owing  to  the  strong  rivalry  of  cotton, 
prevented  the  early  adoption  of  the  new  machine  methods. 
Although  Adam  Smith  regarded  linen  as  a  promising  in- 
dustry, it  was  still  in  a  primitive  condition.  Not  until  the 
very  end  of  the  eighteenth  century  were  flax  spinning  mills 
established  in  England  and  Scotland,  and  not  until  after 
1830  was  power-loom  weaving  introduced,  while  the  intro- 
duction of  spinning  machinery  into  Ireland  upon  a  scale 
adequate  to  supply  the  looms  of  that  country  took  place  a 
good  deal  later. 

We  see  that  the  early  experimental  period  in  the  cotton 
industry  produced  no  very  palpable  effect  upon  the  volume 
of  the  trade.     Between  1700  and  1750  the  manufacture  was 

*  Selected  from  Porter,  p.  218. 

"  In  1824  Mr.  Huskisson  introduced  the  principle  of  free  trade, 
securing  a  reduction  of  the  duties  on  raw  and  thrown  silks,  and  in  1825, 
1826,  considerable  further  reductions  were  made.  (Cf.  Ure,  Philosophy 
of  Manufacture,  p.  454,  etc. )  But  protection  of  English  silk  manu- 
factured goods  was  maintained  until  the  French  Treaty  of  i860. 


64  THE   EVOLUTION   OF 

stagnant.^  The  woollen  manufacture,  owing  largely  to 
the  stimulus  of  the  fly-shuttle,  showed  considerable  expan- 
sion. The  great  increase  of  cotton  production  in  1770-90 
measures  the  force  of  the  mechanical  inventions  without  the 
aid  of  the  new  motor.  The  full  effects  of  the  introduction 
of  steam  power  were  retarded  by  the  strain  of  the  French 
war.  Though  i8og  marks  the  beginning  of  a  large  con- 
tinuous expansion  in  both  cotton  and  woollen  manufactures, 
it  was  not  until  about  18 17,  when  the  new  motor  had  estab- 
lished itself  generally  in  the  large  centres  of  industry  and 
the  energy  of  the  nation  was  called  back  to  the  arts  of 
peace,  that  the  new  forces  began  to  fully  manifest  their 
power.  The  period  1840  onwards  marks  the  effect  of  the 
revolution  in  commerce  due  to  the  application  of  the  new 
motor  to  transport  purposes,  the  consequent  cheapening  of 
raw  material,  especially  of  cotton,  the  opening  up  ©f  new 
markets  for  the  purchase  of  raw  material  and  for  the  sale  of 
manufactured  goods.  The  effect  of  this  diminished  cost  of 
production  and  increased  demand  for  manufactured  goods 
upon  the  textile  trades  is  measured  by  the  rapid  pace  of  the 
expansion  which  followed  the  opening  of  the  early  English 
railways  and  the  first  establishment  of  steam-ship  traffic. 

§  8.  The  development  of  the  textile  trades,  and  that  of 
cotton  in  particular,  arose  from  the  invention  of  new 
machinery.  This  machinery  was  quickened  and  rendered 
effective  by  the  new  motor.  The  iron  trade  in  its  develop- 
ment presents  the  reverse  order.  The  discovery  of  a  new 
motor  was  the  force  which  first  gave  it  importance.  The 
mechanical  inventions  applied  to  producing  iron  were 
stimulated  by  the  requirements  of  the  new  motor. 

In  1 740  the  difficulty  of  obtaining  adequate  supplies  of 
timber,  and  the  failure  of  attempts  to  utilise  pit-coal,  had 
brought  the  iron  trade  to  a  very  low  condition.  According 
to  Scrivener,  at  this  time  **  the  iron  trade  seemed  dwindling 
into  insignificance  and  contempt."^ 

The  earlier  steps  in  its  rise  from  this  degradation  are 
measured  by  the  increased  application  of  pit-coal  and  the 
diminished  use  of  charcoal. 

The  progress  may  be  marked  as  follows : — 

1  Cf.  Ure,  History  of  the  Cotton  Manufacture,  vol.  i.  p   223. 
-  Scrivener,  History  of  the  Iron  Trade,  p.  56. 


MODERN   CAPITALISM.  6$ 

(i)  The  application  of  Watt's  earlier  improvements  upon 
Newcomen's  engines,  patented  1769,  was  followed  by  a  rise 
in  the  average  output  for  furnaces  worked  with  charcoal. 
The  average  output  of  294  tons  in  1750  was  increased  to 
545  tons  in  1788. 

(2)  The  substitution  of  coke  for  charcoal  proceeding 
pari  passu  with  improved  methods  of  smelting  yielded  an 
average  output  for  coke-fed  furnaces  of  903  tons  in  1788. 
To  this  epoch  belong  also  Cort's  inventions  for  puddling 
and  rolling  (patented  1783-84),  which  revolutionised  the 
production  of  bar-iron. 

(3)  The  introduction  of  Watt's  double-power  engine 
in  1788-90.  In  1796  the  production  of  pig-iron  was  double 
that  of  1788,  and  the  average  output  per  furnace  raised  to 
1048  tons. 

(4)  The  substitution  of  hot  for  cold  blast  in  1829, 
effecting  an  economy  of  coal  to  the  extent  of  2  tons  18 
cwt.  per  ton  of  cast-iron. 

(5)  The  adoption  of  raw  coal  instead  of  coke  in  1833, 
effecting  a  further  reduction  of  expenditure  of  coal  from 
5  tons  3jE^  cwt.  to  2  tons  5^  cwt.  in  producing  a  ton  of 
cast-iron. 

These  were  the  leading  events  in  the  establishment  of 
the  iron  industry  of  this  country.  The  following  table 
indicates  the  growth  of  the  production  of  English  iron  from 
1740  to  1840  : — 


Year. 

No.  of  Furnaces. 

Average 

1  Output. 

Total  Produce. 

Tons. 

Tons. 

1740 

59 

294 

17,350 

1788 

77 

9091 
545' 

coke 
charcoal 

[|       61,300 

1796 

121 

1048 

125,079 

1806 

133 

1546 

258,206 

1825 

364 
(261  in  blast) 

2228 

703,184 

1828 

365 
(277  in  blast) 

2530 

1839 

378 

3592 

1,347,790 

Here  we  see  that  economy  of  power  rather  than  improved 
machinery  is  the  efficient  cause  of  the  development  of 
industry,  or  more  properly,  that  economy  of  power  pre- 
cedes and  stimulates  the  several  steps  in  improvement  of 
machinery. 

5 


^6  THE  EVOLUTION   OF 

The  substitution  of  coke  for  charcoal  and  the  application 
of  steam  power  not  merely  increased  enormously  the 
volume  of  the  trade,  but  materially  affected  its  localisation. 
Sussex  and  Gloucester,  two  of  the  chief  iron-producing 
counties  when  timber  was  the  source  of  power,  had  shrunk 
into  insignificance  by  1796,  when  facilities  of  obtaining  coal 
were  a  chief  determinant.  By  1796,  it  is  noteworthy  that 
the  four  districts  of  Stafford,  Yorkshire,  South  Wales,  and 
Salop  were  to  the  front. 

The  discovery  of  the  hot  blast  and  substitution  of  raw 
coal  for  coke  occurring  contemporaneously  with  the  opening 
of  railway  enterprise  mark  the  new  interdependence  of 
industries  in  the  age  of  machinery. 

Iron  has  become  a  foundation  upon  which  every  machine- 
industry  alike  is  built.  The  metal  manufactures,  so  small 
in  the  eighteenth  century,  attained  an  unprecedented  growth 
and  a  paramount  importance  in  the  nineteenth. 

The  application  of  machinery  to  the  metal  industries  has 
led  to  an  output  of  inventive  genius  not  less  remarkable  in 
this  century  than  the  textile  inventions  of  the  eighteenth 
century. 

"  In  textile  manufacture  it  was  improved  machinery  that 
first  called  for  a  new  motor ;  in  metal  manufacture  it  was 
the  new  motor  which  rendered  necessary  improved 
machinery.  .  .  .  For  all  modern  purposes  the  old  handi- 
craft implements  were  clearly  obsolete.  The  immediate 
result  of  this  requirement  was  the  bringing  to  the  front  a 
number  of  remarkable  men,  Brindley,  Smeaton,  Maudsley, 
Clements,  Bramah,  Nasmyth,  etc.,  to  supply  mechanism  of 
a  proportionate  capacity  and  nicety  for  the  new  motive- 
power  to  act  upon  and  with,  and  the  ultimate  result  was 
the  adoption  of  the  modern  factory  system  in  the  larger 
tool-making  and  engineering  workshops,  as  well  as  in  metal 
manufactories  proper.  Thus  there  gradually  grew  up," 
says  Jevons,  "  a  system  of  machine-tool  labour,  the  substi- 
tution of  iron  hands  for  human  hands,  without  which  the 
execution  of  engines  and  machines  in  their  present  perfec- 
tion would  be  impossible."^ 

In  the  later  era  of  machine  development  an  accumulative 

^  Cooke  Taylor,  Modem  Factory  System,  p.  164;  cf.  also  Karl  Marx, 
Capital,  p.  381. 


MODERN   CAPITALISM.  67 

importance  is  attached  to  the  improvements  in  the  machine- 
making  industries.  The  great  inventions  associated  with 
the  names  of  Maudsley  and  Nasmyth,  the  cheapening  of 
steel  by  the  Bessemer  process,  and  the  various  steps  by 
which  machines  are  substituted  for  hands  in  the  making 
of  machinery,  have  indirect  but  rapid  and  important  effects 
upon  each  and  every  machine-industry  engaged  in  produc- 
ing commodities  directly  adapted  to  human  use.  The 
economy  of  effort  for  industrial  purposes  requires  that  a 
larger  and  larger  proportion  of  inventive  genius  and  enter- 
prise shall  be  directed  to  an  interminable  displacement  of 
handicraft  by  machinery  in  the  construction  of  machinery, 
and  a  smaller  proportion  to  the  relatively  unimportant  work 
of  perfecting  manufacturing  machinery  in  the  detailed  pro- 
cesses of  each  manufacture  engaged  in  the  direct  satisfaction 
of  some  human  want. 

A  general  survey  of  the  growth  of  new  industrial  methods 
in  the  textile  and  iron  industries  marks  out  three  periods  of 
abnormal  activity  in  the  evolution  of  modern  industry.  The 
first  is  1780  to  1795,  when  the  fruits  of  early  inventions  are 
ripened  by  the  effective  application  of  steam  to  the  machine- 
industries.  The  second  is  1830  to  1845,  when  industry, 
reviving  after  the  European  strife,  utilised  more  widely  the 
new  inventions,  and  expanded  under  the  new  stimulus  of 
steam  locomotion.  The  third  is  1856  to  1866  {circa),  when 
the  construction  of  machinery  by  machinery  became  the 
settled  rule  of  industry. 

§  9.  Bearing  in  mind  how  the  invention  of  new  specific 
forms  of  machinery  in  the  several  processes  of  manufacture 
proceeds  simultaneously  with  the  application  of  the  new 
motor-power,  we  find  ourselves  quite  unable  to  measure  the 
amount  of  industrial  progress  due  to  each  respectively.  But 
seeing  that  the  whole  of  modern  industry  has  thus  been 
set  upon  a  new  foundation  of  coal  and  iron,  it  is  obvious 
that  the  bonds  connecting  such  industries  as  the  textile  and 
the  iron  must  be  continually  growing  closer  and  stronger. 
In  earlier  times  the  interdependency  of  trades  was  slight  and 
indirect,  and  the  progress  in  any  given  trade  was  almost 
wholly  derived  from  improvements  in  specific  skill  or  in 
the  appHcation  of  specific  mechanical  invention.  The 
earlier  eighteenth  century  did  indeed  display  an  abnormal 
activity  in  these  specific  forms  of  invention.     For  examples 


68  THE   EVOLUTION   OF 

of  these  it  is  only  necessary  to  allude  to  Lombe's  silk 
mill  at  Derby,  the  pin  factory  made  famous  by  Adam 
Smith,  Boulton's  hardware  factory  at  Soho,  and  the 
renowned  discoveries  of  Wedgwood.  But  all  increased 
productivity  due  to  these  specific  improvements  was  but 
shght  compared  with  that  which  followed  the  discovery  of 
steam  as  a  motor  and  the  mechanical  inventions  rendering 
it  generally  applicable,  which  marked  the  period  1790  to 
1840.  By  this  means  the  several  specific  industries  were 
drawn  into  closer  unity,  and  found  a  common  basis  or 
foundation  in  the  arts  of  mining,  iron-working,  and  engin- 
eering which  they  lacked  before. 

From  these  considerations  it  will  follow  that  the  order  in 
which  the  several  industries  has  fallen  under  the  sway  of 
modern  industrial  methods  will  largely  depend  upon  the 
facility  they  afford  to  the  application  of  steam-driven 
machinery.  The  following  are  some  of  the  principal  charac- 
teristics of  an  industry  which  determine  the  order,  extent, 
and  pace  of  its  progress  as  a  machine  industry : — 

(a)  Size  and  complexity  of  Structure. — The  importance  of 
the  several  leading  textile  manufactures,  the  fact  that  some 
of  them  were  highly  centralised  and  already  falling  under 
a  factory  system,  the  control  of  wealthy  and  intelligent 
employers,  were  among  the  chief  causes  which  enabled  the 
new  machinery  and  the  new  motor  to  be  more  quickly  and 
successfully  appHed  than  in  smaller,  more  scattered,  and 
less  developed  industries. 

{b)  Fixity  in  quantity  and  character  of  demand. — Perfec- 
tion of  routine-work  is  the  special  faculty  of  machine- 
production.  Where  there  is  a  steady  demand  for  the  same 
class  of  goods,  machinery  can  be  profitably  applied.  Where 
fashion  fluctuates,  or  the  individual  taste  of  the  consumer  is 
a  potent  factor,  machinery  cannot  so  readily  undertake  the 
work.  In  the  textile  industries  there  are  many  departments 
which  machinery  has  not  successfully  invaded.  Much  lace- 
making,  embroidery,  certain  finer  weaving  is  still  done 
by  human  power,  with  or  without  the  aid  of  complex 
machinery.  In  the  more  skilled  branches  of  tailoring, 
shoe-making,  and  other  clothing  trades,  the  individual 
character  of  the  demand — i.e.,  the  element  of  irregularity — 
has  limited  the  use  of  machinery.  A  similar  cause  retains 
human  motor-power   in   certain   cases   to   co-operate  with 


MODERN   CAPITALISM.  69 

and  control  complex  machinery,  as  in  the  use  of  the  sewing- 
machine. 

(c)  Uniformity  of  material  and  of  the  processes  of  produc- 
tion.— Inherent  irregularity  in  the  material  of  labour  is 
adverse  to  machinery.  For  this  reason  the  agricultural 
processes  have  been  slow  to  pass  under  steam-power, 
especially  those  directly  concerned  with  work  on  the  soil, 
and  even  where  steam-driven  machines  are  applied  their 
economy,  as  compared  with  hand  labour,  is  less  marked 
than  in  manufacturing  processes.  To  the  getting  of  coal 
and  other  minerals  steam  and  other  extra-human  power  has 
been  more  slowly  and  less  effectively  applied  than  in  dealing 
with  the  matter  when  it  is  detached  from  the  earth. 

{d)  Durability  of  valuable  properties. — The  production 
of  quickly  perishable  articles  being  of  necessity  local  and 
immediate  demands  a  large  amount  of  human  service 
which  cannot  economically  be  replaced  or  largely  aided  by 
machinery.  The  work  of  the  butcher  and  the  baker  have 
been  slow  to  pass  under  machinery.  Where  butchering 
has  become  a  machine-industry  to  some  extent,  the  direct 
cause  has  been  the  discovery  of  preservative  processes  which 
have  diminished  the  perishability  of  meat.  So  with  other 
food  industries,  the  facility  of  modern  means  of  transport 
has  alone  enabled  them  gradually  to  pass  under  the  control 
of  machinery.  Until  quite  recently  cakes  and  the  finer 
forms  of  bakery  were  a  purely  local  and  handicraft  product. 

{e)  Ease  or  simplicity  of  labour  involved. — Where  abund- 
ance of  cheap  labour  adequate  to  the  work  can  be 
obtained,  and  particularly  in  trades  where  women  and 
children  are  largely  engaged,  the  development  of  machinery 
has  been  generally  slower.  This  condition  often  unites 
with  ib)  or  {c)  to  retain  an  industry  in  the  "domestic  "  class. 
A  large  mass  of  essentially  *' irregular"  work  requiring  a 
certain  delicacy  of  manipulation,  which  by  reason  of  its 
narrowness  of  scope  is  yet  easily  attained,  and  which  makes 
but  slight  demands  upon  muscular  force  or  intelligence, 
has  remained  outside  machine  -  production.  Important 
industries  containing  several  processes  of  this  nature  have 
been  slower  to  fall  into  the  complete  form  of  the  factory 
system.  The  slow  progress  of  the  power-loom  in  cotton  and 
wool  until  after  1830  is  explained  by  these  considerations. 
The  stocking-frame  held  out  against  machinery  still  longer, 


70  THE  EVOLUTION  OF 

and  hand  work  still  plays  an  important  part  in  several 
processes  of  silk  manufacture.  Even  now,  in  the  very 
centre  of  the  factory  system,  Bolton,  the  old  hand-weaving 
is  represented  by  a  few  belated  survivors.  ^ 

(/)  Skilled  Workmanship. — High  skill  in  manipulation  or 
treatment  of  material,  the  element  of  art  infused  into 
handicraft,  gives  the  latter  an  advantage  over  the  most 
skilful  machinery,  or  over  such  machinery  as  can  economic- 
ally be  brought  into  competition  with  it.  In  some  of  the 
metal  trades,  in  pottery  and  glass-making  there  are  many 
processes  which  have  not  been  able  to  dispense  with  human 
skill.  In  these  manufactures,  moreover,  more  progress  is 
attributable  to  specific  inventions  than  to  the  adoption  of 
the  common  machinery  and  motor-power  which  are  not 
largely  available  in  the  most  important  processes. 

From  these  considerations  it  will  appear  that  where  an 
industry  is  large  and  regular  in  character,  it  falls  more 
readily  and  completely  under  the  control  of  machinery, 
where  it  is  small  and  irregular  it  conforms  more  slowly  and 
partially  to  the  new  methods.  Most  of  the  extractive  in- 
dustries of  agriculture,  stock-raising,  fishing,  mining,  hunt- 
ing, are  irregular  by  reason  of  the  nature  of  their  material 
and  its  subjection  to  influences,  geological,  chemical, 
climatic,  and  others  which  are  but  slightly  under  calculation 
or  human  control.  The  final  processes  by  which  com- 
modities are  adapted  to  the  use  of  individual  consumers 
necessarily  partake  of  the  irregularity  or  variety  of  human 
tastes  and  desires.  We  shall  therefore  find  most  regularity 
in  the  intermediate  processes  where  the  raw  materials,  having 
been  extracted  from  nature,  are  being  endowed  with  those 
qualities  of  shape,  position,  etc.,  which  are  required  to 
enable  them  to  satisfy  human  wants.  The  manufacturing 
stages  where  machinery  finds  fullest  application  are  in 
nearly  all  cases  intermediate  stages  of  production.  Even 
where  machine-production  seems  directly  to  satisfy  some 
human  want,  there  are  commonly  some  final  processes 
required  which  involve  individual  skill.  Almost  all  products 
which  satisfy  the  desires  of  man  pass  through  a  large  number 
of  productive  processes  which  may  be  classed  as  extractive, 
transport,  manufacturing,  and  distributive.  These  are,  of 
course,  not  in  all  cases  clearly  distinguishable.  Mixed  with 
^  Schulze-Gaevernitz,  p.  140. 


MODERN   CAPITALISM. 


71 


the  extractive  processes  of  mining  and  wheat-raising  are 
several  processes  of  transport  and  manufacture  :  the  various 
stages  of  manufacture  may  be  broken  by  stages  of  transport: 
a  final  process  of  manipulation  or  manufacture  may  precede 
the  final  act  of  distribution,  as  in  the  sale  of  drugs  to  the 
consumer.  But,  generally  speaking,  these  four  kinds  of 
productive  processes  mark  four  historic  stages  in  the 
passage  from  raw  material  to  finished  commodity. 

The  two  middle  stages  of  transport  and  manufacture  have 
fallen  far  more  fully  under  the  control  of  steam-driven 
machinery  than  the  others,  and  it  is  in  the  elaboration  of 
older  manufacturing  and  transport  processes  and  the  addition 
of  new  processes  that  we  trace  the  largest  effects  of  the 
evolution  of  modern  industrial  methods. 

The  following  list  of  the  divisions  under  which  workers 
engaged  in  the  production  of  material  wealth  are  classified 
for  purposes  of  the  census  may  serve  to  bring  out  more 
clearly  this  proportionate  development  of  machinery.  The 
figures  appended  give  the  numbers  engaged  in  the  several 
occupations  in  1891,  and  serve  to  approximately  indicate 
the  relative  importance  of  the  several  principal  branches  of 
industry : — 


Agriculture 

1,311,720 

Textiles     i 

,128,589 

Fishing 

25,225 

Dress         ] 

,099,833 

Mining      

561,637 

Earthenware      and 

Stone,    clay,   road- 

glass      

90,007 

making  ... 

209,972 

Chemicals  and  com- 

Transport— 

pounds  

56,047 

(a)  Railways     ... 

186,774 

Books        

135,616 

(d)  Roads 

366,605 

Animal  substances 

(c)  Canals,  rivers. 

(manufacture)  ... 

76,566 

seas 

208,443 

Vegetable  substances 

(d)  Messages  and 

(paper,  etc.) 

196,889 

porterage  ... 

194,044 

General  mechanics 

Houses,     furniture. 

and  labourers    ... 

805,105 

and  decorations 

820,582 

Commercial — 

Food  and  lodgings 

797,989 

(a)  Merchants 

Iron  and  steel 

3«o,i93 

and  agents... 

363,037 

Other  metals 

146,550 

(i>)  Dealers     in 

Ships  and  boats  ... 

170,517 

money 

21,891 

Carriages  and  har- 

(c) Insurance    ... 

31,437 

ness 

108,780 

Engineers  and  sur- 

Machines and  im- 

veyors     

15,441 

plements 

342,231 

72  THE  EVOLUTION   OF 

In  glancing  down  this  list  of  the  chief  industries  engaged 
in  the  production  of  commercial  wealth,  it  will  be  recognised 
at  once  that  the  manufacturing  and  transport  industries  are 
those  to  which  steam-power  and  the  economies  of  large  pro- 
duction have  been  especially  applied.  Though,  historically, 
the  first  industrial  use  of  steam-power  was  in  coal-mining, 
it  remains  true  that  the  extensive  application  of  modern 
machinery  to  agriculture  and  the  other  extractive  industries 
is  of  comparatively  recent  growth,  while  the  work  of  retail 
distribution  has  hitherto  made  but  trifling  use  of  machinery 
and  steam-power.  Only  within  the  last  few  years  have  a 
few  gigantic  retail  distributive  businesses  shown  a  tendency 
to  apply  steam  and  electricity  to  mechanical  contrivances 
for  purposes  of  distribution. 

§  lo.  The  new  industrial  forces  first  applied  to  the 
cotton  spinning  of  South  Lancashire,  and  rapidly  forcing 
their  way  into  other  branches  of  the  textile  manufactures, 
then  more  gradually  transforming  the  industrial  methods 
of  the  machinery,  hardware,  and  other  staple  English  manu- 
factures, passed  into  the  Western  Continent  of  Europe 
and  America,  destroying  the  old  domestic  industry  and 
establishing  in  every  civilised  country  the  reign  of  steam- 
driven  machinery.  The  factors  determining  the  order  and 
pace  of  the  new  movement  in  the  several  countries  are 
numerous  and  complex.  In  considering  the  order  of 
machine-development,  it  must  be  remembered  that  the 
different  nations  did  not  start  from  an  equal  footing  at 
the  opening  of  the  age  of  great  inventions.  By  the  begin- 
ning of  the  eighteenth  century  England  had  established 
a  certain  supremacy  in  commerce.  The  growth  of  her 
colonial  possessions  since  the  Revolution  and  the  drastic 
and  successful  character  of  her  maritime  policy  had  enabled 
her  to  outstrip  Holland.  In  1729  by  far  the  greater  part 
of  the  Swedish  iron  exported  from  Gothenburg  went  to 
England  for  shipbuilding  purposes.^  At  the  close  of  the 
seventeenth  century  Gregory  King  placed  England,  Hol- 
land, and  France  at  the  head  of  the  industrial  nations  with 
regard   to   the   productivity  of  their   labour.^      Italy   and 

1  Yeats,  The  Growth  and  Vicissitudes  of  Commerce,  p.  284. 

'  The  average  income  for  England  in  1688  he  puts  at  ^^7  i8s.  ; 
for  Holland,  £8  is.  4d. ;  France,  £(>—^.  47.  Such  an  estimate, 
however,  has  little  value. 


MODERN   CAPITALISM.  73 

Germany  were  little  behind  in  the  exercise  of  manufacturing 
arts,  though  the  naval  superiority  and  foreign  possessions 
of  the  above-named  nations  gave  them  the  commercial 
superiority.  By  1 760  England  had  strengthened  her  posi- 
tion as  regards  foreign  commerce,  and  her  woollen  industry 
was  the  largest  and  most  highly-developed  industry  in  the 
world.  But  60  far  as  the  arts  of  manufacture  themselves 
were  concerned  there  was  no  such  superiority  in  England 
as  to  justify  the  expectation  of  the  position  she  held  at  the 
opening  of  the  nineteenth  century.  In  many  branches  of 
the  textile  arts,  especially  in  silk  spinning  and  in  dyeing,  in 
pottery,  printing,  and  other  manufactures,  more  inventive 
genius  and  more  skill  were  shown  on  the  Continent,  and 
there  seemed  a  priori  no  reason  why  England  should  out- 
strip so  signally  her  competitors. 

The  chief  factors  in  determining  the  order  of  the  develop- 
ment of  modern  industrial  methods  in  the  several  countries 
may  be  classified  as  natural,  political,  economic. 

Natural,  (i)  The  structure  and  position  of  the  several 
countries. — The  insular  character  of  Great  Britain,  her 
natural  facilities  for  procuring  raw  materials  of  manufacture 
and  supplies  of  foreign  food  to  enable  her  population  to 
specialise  in  manufacture,  the  number  and  variety  of  easily 
accessible  markets  for  her  manufactures,  gave  her  an  immense 
advantage.  Add  to  this  a  temperate  climate,  excellent  in- 
ternal communication  by  river  (or  canal),  and  an  absence 
of  mountain  barriers  between  the  several  districts.  These 
advantages  were  of  greater  relative  importance  before  steam 
transport,  but  they  played  a  large  part  in  faciHtating  the 
establishment  of  effective  steam  transport  in  England. 
Extent  of  sea-board  and  good  harbourage  have  in  no  small 
measure  directed  the  course  of  modern  industry,  giving  to 
England,  Holland,  France,  Italy  an  advantage  which  the 
levelling  tendency  of  modern  machinery  has  not  yet  been 
able  to  counteract.  The  slow  progress  of  Germany  until 
recent  years,  and  the  still  slow  progress  of  Russia,  is 
attributable  more  to  these  physical  barriers  of  free  communi- 
cation, internal  and  external,  than  to  any  other  single  cause 
that  can  be  adduced.  Inherent  resources  of  the  soil, 
quality  of  land  for  agriculture,  the  proximity  of  large  sup- 
plies of  coal  and  iron  and  other  requisites  of  the  production 
of  machinery  and  power  rank  as  important  determinants 


74  THE  EVOLUTION   OF 

of  progress.  The  machine  development  of  France  in 
particular  has  been  retarded  by  the  slow  discovery  of  her 
natural  areas  of  manufacture,  the  districts  where  coal  and 
iron  lie  near  to  one  another  in  easily  accessible  supply. 
The  same  remark  applies  to  Germany  and  to  the  United 
States.  At  the  close  of  last  century,  when  the  iron  trade  of 
England  was  rapidly  advancing,  the  iron  trade  of  France 
were  quite  insignificant,  and  during  the  earlier  years  of  the 
nineteenth  century  the  progress  was  extremely  slight.^ 

(2)  Race  and  National  Character. — Closely  related  to 
climate  and  soil,  these  qualities  of  race  are  a  powerful 
directing  influence  in  industry.  Muscular  strength  and 
endurance,  yielding  in  a  temperate  climate  an  even  con- 
tinuity of  vigorous  effort;  keen  zest  of  material  comfort 
stimulating  invention  and  enterprise;  acquisitiveness,  and 
the  love  of  external  display;  the  moral  capacities  of  industry, 
truth,  orderly  co-operation ;  all  these  are  leading  factors  de- 
termining the  ability  and  inclination  of  the  several  nations 
to  adopt  new  industrial  methods.  Moral  qualities  in 
English  workmanship  have  indisputably  played  a  large 
part  in  securing  her  supremacy.  "A  British  trade-mark 
was  accepted  as  a  guarantee  of  excellence,  while  the  pro- 
ducts of  other  countries  were  viewed  with  a  suspicion 
justified  by  experience  of  their  comparative  inferiority."  ^ 
The  more  highly  civilised  nations  have  thus  gained  by  this 
civihsation,  and  have  widened  the  distance  which  separates 
them  from  the  less  civilised.  England,  France,  Germany, 
Holland,  and  the  United  States  are  in  wealth  and  in 
industrial  methods  far  more  widely  removed  from  Spain  and 
Russia  than  was  the  case  a  hundred  years  ago. 

{b)  Political. — Statecraft  has  played  an  important  part 
in  determining  the  order  and  pace  of  industrial  progress. 
The  possession  of  numerous  colonies  and  other  political 
attachments  in  different  parts  of  the  world,  comprising  a  large 
variety  of  material  resources,  gave  to  England,  and  in  a  less 
measure  to  France,  Holland,  Spain,  a  great  advantage. 
The  tyrannical  use  these  nations  made  of  their  colonies  for 

^  In  1810  the  total  produce  was  140,000  tons. 
„  1818  „  „        „    114,000    ,, 

,,  1824  ,,  ,,        ,,    164,000    ,, 

(Scrivener,  History  of  ihe  Iron  Trade,  p.  I53-) 

'  Yeats,  Growth  and  Vicissitudes  of  Commerce,  p.  285. 


MODERN   CAPITALISM.  75 

the  purpose  of  building  up  home  manufactures  enabled 
them  to  specialise  more  widely  and  safely  in  those  indus- 
tries to  which  the  new  methods  of  production  were  first 
applied.  Even  after  the  North  American  colonies  broke 
loose,  the  policy  of  repression  England  had  applied  to 
their  budding  manufactures  enabled  her  to  retain  to  a 
large  extent  the  markets  thus  created  for  her  manufactured 
goods. 

The  large  annexations  England  made  during  the  eigh- 
teenth and  early  nineteenth  centuries  gave  her  a  monopoly  of 
many  of  the  finest  markets  for  the  purchase  of  raw  materials 
and  for  the  sale  of  manufactured  goods.  The  large  demand 
thus  established  for  her  textile  and  metal  wares  served  not 
only  to  stimulate  fresh  inventions,  but  enabled  her  to 
utilise  many  improvements  which  could  only  be  profitably 
applied  in  the  case  of  large  industries  with  secure  and 
expanding  markets. 

But  the  most  important  factor  determining  the  priority  of 
England  was  the  political  condition  of  continental  Europe 
at  the  very  period  when  the  new  machinery  and  motor- 
power  were  beginning  to  establish  confidence  in  the  new 
industrial  order.  When  Crompton's  mule,  Cartwright's 
power-loom.  Watt's  engines  were  transforming  the  industry 
of  England,  her  continental  rivals  had  all  their  energies 
absorbed  in  wars  and  political  revolutions.  The  United 
States  and  Sweden  were  the  only  commercial  nations  of  any 
significance  who,  being  neutral,  obtained  a  large  direct 
gain  from  the  European  strife.  Yet  England,  in  spite  of 
the  immense  drain  of  blood  and  money  she  sustained,  under 
the  momentum  of  the  new  motor-power  far  outstripped  the 
rivalry  of  such  states.  Though  she  had  to  pay  a  heavy 
price  for  her  immunity  from  invasion,  she  thereby  secured 
an  immense  start  in  the  race  of  modern  machine-produc- 
tion. Until  1820  she  had  the  game  in  her  own  hands.  In 
European  trade  she  had  a  practical  monopoly  of  the  rapidly 
advancing  cotton  industry.  It  was  this  monopoly  which, 
ruthlessly  applied  to  maintain  prices  at  a  highly  remunera- 
tive rate,  and  to  keep  down  wages  to  starvation  point,  built 
up,  in  an  age  of  supreme  and  almost  universal  misery  for 
the  masses,  the  rapid  and  colossal  fortunes  of  the  cotton  kings. 
Not  until  peace  was  established  did  the  textile  and  other 
factories  begin  to  take  shape  upon  the  Continent,  and  many 


76  THE   EVOLUTION   OF 

years  elapsed  before  they  were  able  to  compete  effectively 
with  England.  Switzerland  was  the  first  continental  country 
to  actively  adopt  the  new  methods.  The  large  supply  of 
water-power  stood  her  in  good  stead,  and  the  people  took 
more  willingly  to  the  factory  system  than  in  other  countries.^ 
France  was  slower  in  her  development,  in  spite  of  the  strong 
protective  system  by  which  she  strove,  though  not  very 
successfully,  to  exclude  English  cotton  goods.  The  fall  of 
English  prices  and  profits  in  the  cotton  trade  between  1820 
and  1830  marks  clearly  the  breakdown  of  the  English 
monopoly  before  the  cheap  labour  of  Alsace  and  the  cheap 
raw  material  of  the  United  States,  now  organised  in  the 
factory  system  with  the  new  machinery.^  In  this,  the  most 
advanced  trade,  the  world-competition  which  now  is  operative 
in  a  thousand  different  industries,  measuring  and  levelling 
economic  advantages,  first  clearly  shows  itself,  and  in  1836 
Ure  finds  the  continental  nations  and  America  competing 
successfully  with  England  in  markets  which  had  hitherto 
been  entirely  her  own. 

(c)  Economic  Conditions. — The  transformation  of  Eng- 
lish agriculture,  the  growth  of  large  farms,  drove  great 
numbers  of  English  peasants  into  the  towns,  and  furnished 
a  large  supply  of  cheap  labour  for  the  new  machinery. 

This  movement  was  accelerated  by  the  vices  of  our  land 
tenure.  In  France  and  Germany,  where  the  agricultural 
workers  had  a  stronger  interest  and  property  in  their  land, 
they  were  less  easily  detached  for  factory  purposes.  But 
in  England,  where  the  labourer  had  no  property  in  the  land, 
reformed  methods  of  agriculture  and  the  operation  of  the 
Poor  Law  combined  to  incite  the  large  proprietors  and 
farmers  to  rid  themselves  of  all  superfluous  population  in 
the  rural  parts  and  accelerated  the  migration  into  the  towns. 

^  Schulze-Gaevernitz,  Z>ef  Grossletrieb,  p.  48. 

^  Ellison,  History  of  the  Cotton  Trade,  presents  the  following  interest- 
ing table  (yarn,  40  hanks  to  the  lb.) : — 


1779. 

1784. 

1799. 

1812. 

1830. 

1882. 

s.     d. 

s.     d. 

s.    d. 

s.    d. 

s.     d. 

8.     d. 

Selling  price   . 
Cost  of  Cotton 

16     0 

10  II 

7     6 

2     6 

I      2\ 

0   10^ 

(18  oz.)    . 

2      0 

2      0 

3    4 

I     6 

0    71 

0    7i 

Labour  &  Capita 

ll   14   0 

8  II 

4    2 

I     0 

0    6| 

0    31 

MODERN   CAPITALISM.  JJ 

Here  the  population  bred  with  a  rapidity  hitherto  unknown. 
The  increase  of  population  in  England  and  Wales  during 
the  thirty  years  from  1770  to  1800  is  placed  at  1,959,590, 
or  2  7^j  per  cent,  while  during  the  next  thirty  years,  1800 
to  1830,  it  amounted  to  5,024,207,  or  56!  per  cent.^  This 
large  supply  of  cheap  labour  in  the  towns  enabled  the 
Lancashire  and  Yorkshire  factories  to  grow  with  startling 
rapidity.  The  exhaustion  left  by  the  Napoleonic  wars,  the 
political  disorder  and  insecurity  which  prevailed  on  the 
Continent,  retarded  until  much  later  the  effective  competi- 
tion of  other  European  nations  who  were  behind  England 
in  skill,  knowledge,  and  the  possession  of  markets.  The 
American  manufactures  which  had  sprung  up  after  the 
revolution  had  made  considerable  strides,  but  the  conquest 
and  settlement  of  vast  new  areas  of  land,  and  the  immense 
facilities  afforded  for  the  production  of  raw  material,  retarded 
their  rate  of  growth  until  long  after  the  opening  of  this 
century.  It  was,  indeed,  not  until  about  1845  that  the 
cotton  manufacture  made  rapid  strides  in  the  United  States. 
During  the  twenty  years  previous  the  progress  had  been 
very  slight,  but  between  1845  and  1859  a  very  substantial 
and,  making  allowance  for  fluctuations  in  the  cotton  crops, 
a  very  steady  growth  took  place.  ^ 

Another  great  economic  advantage  which  assisted  Eng- 
land was  the  fact  that  she,  more  than  any  other  European 
nation,  had  broken  down  the  old  industrial  order,  with  its 
guilds,  its  elaborate  restrictions,  and  conservative  methods. 
Personal  freedom,  security  of  property,  liberty  to  work  and 
live  where  and  how  one  liked,  existed  in  England  to  an 
extent  unknown  on  the  Continent  before  the  French  Revo- 
lution. The  following  account  of  the  condition  of  the 
cotton  manufacture  in  Germany  in  the  eighteenth  century 
will  serve  to  indicate  the  obstacles  to  the  reformed  methods 
of  industry: — "Everything  was  done  by  rule.  Spinning 
came  under  public  inspection,  and  the  yarn  was  collected 
by  officials.  The  privilege  of  weaving  was  confined  to  the 
confraternity  of  the  guild.  Methods  of  production  were 
strictly  prescribed;  public  inspectors  exercised  control. 
Defects  in  weaving  were  visited  with  punishment.    Moreover, 

^  Porter,  Progress  of  the  Nation,  p.  13.     Eighteenth  century  figures 
are,  however,  not  trustworthy.     The  first  census  was  in  1801. 
^  Ure,  Philosophy  of  Manufactures t  p.  531. 


78  THE  EVOLUTION   OF 

the  right  of  dealing  in  cotton  goods  was  confined  to  the 
confraternity  of  the  merchant  guild :  to  be  a  master-weaver 
had  almost  the  significance  of  a  public  office.  Besides 
other  qualifications,  there  was  the  condition  of  a  formal 
examination.  The  sale  also  was  under  strict  super- 
vision; for  a  long  time  a  fixed  price  prevailed,  and  a 
maximum  sale  was  officially  prescribed  for  each  dealer. 
The  dealer  had  to  dispose  of  his  wares  to  the  weaver, 
because  the  latter  had  guaranteed  to  him  a  monopoly  of 
the  export  trade."  ^ 

Under  such  conditions  the  new  machine-industry  could 
make  little  advance.  Excepting  in  the  case  of  the  woollen 
industries,  England  had  for  the  most  part  already  shaken 
off  the  old  regulations  before  1770.  In  particular,  the 
cotton  trade,  which  was  in  the  vanguard  of  the  movement, 
being  of  recent  growth  and  settling  outside  the  guild  towns, 
had  never  known  such  restrictions,  and  therefore  lent  itself 
to  the  new  order  with  a  far  greater  facility  than  the  older 
trades.  Moreover,  England  was  free  from  the  innumerable 
and  vexatious  local  taxes  and  restrictions  prevalent  in 
France  and  in  the  petty  governments  of  Germany. 
Although  the  major  part  of  these  foolish  and  pernicious 
regulations  has  been  long  swept  away  from  Germany  and 
other  continental  nations,  the  retarding  influence  they 
exercised,  in  common  with  the  wider  national  system  of 
protection  which  still  survives,  kept  back  the  cotton 
industry,  so  that  in  Germany  it  still  stands  half  a  century 
behind  its  place  in  England.^ 

The  following  figures  show  how  substantial  was  the  lead 
held  by  England  in  the  cotton  manufacture  a  little  before 
the  middle  of  the  century. 

^  Schulze-Gaevernitz,  Der  Grossbeirieb,  p.  34. 

"  In  1882  42  per  cent,  of  the  German  textile  industry  was  still  con- 
ducted in  the  home  or  domestic  workshop,  while  only  38  per  cent,  was 
carried  on  in  factories  employing  more  than  50  persons.  More  weavers 
were  still  engaged  with  hand-looms  than  with  power-looms,  and  the 
latter  was  so  little  developed  that  the  hand-loom  could  still  hold  its  own 
in  many  articles.  Knitting,  lace-making,  and  other  minor  textile  indus- 
tries are  still  in  the  main  home  industries. — {Social  Peace,  p.  113.) 
"While  in  England  in  1885  each  spinning  or  weaving  mill  had  an 
average  of  191  operatives,  each  spinning  mill  in  Germany  in  1882 
employed  an  average  of  10  persons  only." — (Brentano,  Hours,  Wages, 
and  Production,  p.  64. ) 


MODERN   CAPITALISM. 


79 


NUMBER  OF  SPINDLES  WORKING  IN  COTTON   MILLS  IN  1846.^ 


Spindles. 

England  and  Wales 

•     15,554,619 

Scotland 

,       1,727,871 

Ireland  .... 

215,503 

Austria  and  Italy  . 

1,500,000 

France  .         ,         .         . 

3,500,000 

Belgium 

420,000 

Switzerland    . 

650,000 

Russia    .... 

.       7,585,000 

United  States 

3,500,000 

States  of  the  Zollverein 

815,000 

35,467,993 

The  development  of  the  cotton  industry  in  1888  in  the 
chief  industrial  countries,  as  indicated  by  the  consumption 
of  raw  cotton,  is  expressed  in  the  accompanying  diagram. 

Lastly,  the  national  trade  policy  of  England  was  of 
sigrial  advantage  in  her  machine  development.  Her  early 
protective  system  had,  by  the  enlargement  of  her  carrying 
trade  and  the  increase  of  her  colonial  possessions,  laid  the 
foundation  of  a  large  complex  trade  with  the  more  distant 
parts  of  the  world,  though  for  a  time  it  crippled  our 
European  commerce.  While  we  doubtless  sacrificed  other 
interests  by  this  course  of  policy,  it  must  be  generally 
admitted  that  "  English  industries  would  not  have  advanced 
so  rapidly  without  Protection." ^  But  as  we  built  up  our 
manufacturing  industries  by  Protection,  so  we  undoubtedly 
conserved  and  strengthened  them  by  Free  Trade — first,  by 
the  remission  of  tariffs  upon  the  raw  materials  of  manufacture 
and  machine-making,  and  later  on  by  the  free  admission 
of  food  stuffs,  which  were  a  prime  essential  to  a  nation 
destined  to  specialise  in  manufacture.  France,  our  chief 
national  competitor,  weakened  her  position  by  a  double 
protective  policy,  not  merely  refusing  admittance  to  foreign 
manufactures  in  her  markets,  but  retaining  heavy  duties 
upon  the  importation  of  foreign  coal  and  iron,  the  founda- 
tional constituents  of  machine-production.  This  protective 
policy,  adopted  by  nations  whose  skill,  industry,  and  natural 
resources  would  have  rendered  them  formidable  competitors 


^  Ure,  Philosophy  of  Manufactures,  p.  515. 
^  Toynbee,  Industrial  Revolution,  p.  79. 


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MODERN   CAPITALISM.  8 1 

to  English  manufacturers,  has  hindered  considerably  the 
operation  of  those  economic  forces  which  impel  old  and 
thickly-peopled  countries  to  specialise  in  manufacture  and 
trade,  and  so  has  retarded  the  general  development  of 
modern  machine-production.  But  while  protective  tariffs 
indisputably  operate  in  this  way,  it  is  not  possible  to 
determine  the  extent  of  their  influence.  In  a  large 
country  of  rich  resources  a  high  degree  of  specialisation 
in  manufacture  is  possible  in  spite  of  a  protective  policy. 
The  pressure  of  high  wages  is  an  economic  force  more 
powerfully  operative  than  any  other  in  stimulating  the 
adoption  of  elaborate  machinery.^  Both  in  the  textile  and 
the  iron  industries  the  United  States  present  examples  of 
factory  development  more  advanced  even  than  those  of 
England.  Certain  processes  of  warping  and  winding  are 
done  by  machinery  in  America  which  are  still  done  by 
hand  labour  in  England.^  The  chain  and  nail-making 
trades,  which  employ  large  numbers  of  women  in  South 
Staffordshire  and  Worcestershire,  are  made  more  cheaply 
by  machinery  in  America.^  Moreover,  the  high  standard 
of  living  and  the  greater  skill  of  the  American  operatives 
enables  them  to  tend  more  machines.  In  German 
factories  a  weaver  tends  two,  or  rarely  three  looms;  in 
Lancashire  women  weavers  undertake  four,  and  in  Massa- 
chusetts often  six  looms,  and  sometimes  eight.* 

Thus  we  see  how  the  new  industrial  forces  were  deter- 
mined in  the  order  of  their  operation  by  the  character  and 
conditions  of  the  several  countries,  their  geographical  posi- 
tion and  physical  resources,  the  elements  of  racial  character, 
political  and  industrial  institutions,  deliberate  economic 
policies,  and,  above  all,  by  the  absorbing  nature  of  the 
military  and  political  events  contemporary  with  the  outburst 
of  inventive  ingenuity.  The  composition  of  these  forces 
determined  the  several  lines  of  less  resistance  along  which 
the  new  industry  moved. 

The   exact    measurement   of   so    multiform   a    force   is 

1  The  highly  elaborate  American  machine  industry  of  watch-making 
is  a  striking  example  of  this  influence  of  high  wages.  Cf.  Schulze- 
Gaevernitz,  Social  Peace,  p.  125. 

"^  Schoenhof,  Economy  of  High  Wages,  p.  279. 

8  Ibid.,  pp.  225,  226. 

*  Schulze-Gaevernitz,  p.  66  (note).  This  six  and  eight-loom  weaving 
is,  however,  at  a  lower  speed. 

6 


82 


THE   EVOLUTION   OF 


impossible.  The  appended  tables  and  diagrams  may, 
however,  serve  to  indicate  the  progress  of  the  several 
industrial  nations  as  measured  by  (i.)  development  of  rail- 
way and  merchant  shipping;  (ii.)  consumption  of  coal  and 
iron;  (iii.)  application  of  steam-power;  (iv.)  estimated  annual 
value  of  manufactures  : — 

I.  COMPARATIVE  MILEAGE  OF  RAILWAYS,    1840  TO   1890. 


1840.      1850.       i860.        1870. 
800     6,600      10,400      15,500      17,900        19,800 


1880.  IS90. 

United      King- 
dom 
Continent        of 

Europe  800     7,800    21,400    47,800     83,800     110,200 

United  States  .  2,800    9,000     30,600     53,400    93,600     156,000 
India         .         .      —        —  800      4,800      9,300       16,000 

Australia  .         .      —        —  200       1,200      5,400       10,100 

Rest      of      the 
World   .        .      —         —        2,800      5,500     18,400      42,300 

RAILWAY  MILEAGE  IN  RELATION  TO  AREA  AND 


POPULATION. 

Railway 

Density  of  Populat 

ion           Mileage 

Area. 

Square  Miles,    pe 

r  Square  Mile  (1890).           (1888). 

United  Kingd 

om     .         120,849 

320 

19,810 

France    . 

204,092 

184 

20,900 

Germany 

.         208,738          . 

233 

24,270 

Russia     . 

.      1,902,227 

42 

17,700 

Austria   . 

240,942 

166 

15,610 

Italy 

1 10,623 

260 

7,830 

Spain 

197,670 

86 

5,930 

Portugal 

34,038 

.         136 

1,190 

Sweden 

170,979 

28 

4,670 

Norway 

124,495 

16 

970 

Denmark 

15,289 

133 

1,220 

Holland 

12,648 

350 

1,700 

Belgium 

11,373 

530 

2,760 

Switzerland 

15,976 

190 

1,870 

Greece    . 

25,041 

88 

370 

Turkey 

65,909 

73 

900 

U.S.A.      (excl 

uding 

Alaska    anc 

1    In- 

dian  territor 

y)    •    1,175,550 

21 

156,080 

Japan 

•      145,655 

274 

910 

India 

.     964,992 

229 

15,250 

Austi'alia 

•   3,030,771 

1.20 

10,140 

Canada 

•   3,315,647 

1.45 

12,700 

Egypt  (cultiv. 

area)         12,976 

638 

1,260 

MODERN   CAPITALISM. 


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THE   EVOLUTION  OF 


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MODERN   CAPITALISM. 


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THE   EVOLUTION   OF 


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MODERN   CAPITALISM. 


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CHAPTER  IV. 

THE   STRUCTURE   OF   MODERN   INDUSTRY. 

§    I.   Growing  Size  of  the  Business-Unit. 

§  2.  Relative  Increase  of  Capital  and  Labour  in  the  Busi- 
ness. 

§  3.  Increased  Complexity  and  Integration  of  Business 
Structure. 

§  4.  Structure  and  Size  of  the  Market  for  different  Com- 
modities. 

§    5.  Machinery  a  direct  Agent  in  expanding  Market  Areas. 

%    6.  Expanded  Time-area  of  the  Market. 

%    7.  Interdependency  of  Markets. 

§    8.  Sympathetic  and  Antagonistic  Relations  between  Trades. 

§    9.  National  and  Local  Specialisation  in  Industry. 

§  10.  Influences  determining  Localisation  of  Industry  under 
World-  Competition. 

§11.  Impossibility  of  Filial  Settlement  of  Industry. 

§  12.  Specialisation  in  Districts  and  Towns. 

§  13.  Specialisation  within  the  Town. 

§  I.  Turning  once  more  to  the  unit  of  industry,  the 
Business,  and  thence  to  the  Trade  and  the  Market,  or 
area  of  competition,  it  is  necessary  to  examine  the  struc- 
tural and  functional  changes  brought  about  by  the  action 
of  the  new  industrial  forces. 

In  considering  the  effect  of  modern  machine-production 
upon  the  Business,  the  most  obvious  external  change  is 
a  great  increase  in  size.  The  typical  unit  of  production  is 
no  longer  a  single  family  or  a  small  group  of  persons  work- 
ing with  a  few  cheap  simple  tools  upon  small  quantities  of 
material,  but  a  compact  and  closely  organised  mass  of 
labour  composed  of  hundreds  or  thousands  of  individuals, 


THE   EVOLUTION   OF   MODERN    CAPITALISM.      89 

co-operating  with  large  quantities  of  expensive  and  intricate 
machinery,  through  which  passes  a  continuous  and  mighty 
volume  of  raw  material  on  its  journey  to  the  hands  of  the 
consuming  public. 

The  expansion  in  mass  of  labour  and  capital  composing 
the  industrial  unit  does  not,  however,  proceed  at  the  same 
pace  in  the  diflferent  industries. 

The  largest  growths  are  found  in  two  classes  of  industry. 
First,  those  which  close  dependence  on  monopoly  of  land, 
or  other  privilege  conferred  by  state  or  municipal  govern- 
ment, has  placed  outside  competition.  The  size  here  is 
determined  by  that  amount  of  capital  required  to  achieve 
the  most  profitable  equation  of  supply  and  demand  prices 
under  terms  of  monopoly.^  In  this  class  are  placed  such 
large  businesses  as  railways,  gas,  or  water  companies. 
Second,  those  industries  where  the  net  advantages  of  large- 
scale  production  over  small  scale  in  competitive  industry 
are  greatest  Generally  speaking,  those  industries  where 
the  most  expensive  machinery  is  employed  come  under  this 
head,  or  where,  as  in  banking  and  financial  business,  a  large 
capital  is  managed  more  economically,  and  enjoys  a  mon- 
opoly of  certain  profitable  kinds  of  work. 

In  retail  trade,  where  neither  of  these  forces  is  so  power- 
fully operative,  the  increase  in  mass  of  capital  and  labour  is 
not  so  great,  though  here  too  the  economies  of  large-scale 
production  are  giving  more  and  more  prominence  to  the 
Universal  Provider,  and  a  large  number  of  local  shops  are 
falling  into  the  hands  of  companies.  Large  syndicates  of 
capital  at  Smithfield  are  owning  butchers'  shops  in  most 
large  towns,  the  drapery,  jewellery,  shoe  trade  are  more 
and  more  passing  into  the  hands  of  large  companies,  while 
an  increased  proportion  of  tobacconists,  publicans,  grocers, 
and  other  retailers  are  practically  but  agents  of  large 
capitalist  firms.  In  such  branches  of  agriculture  as  have 
lent  themselves  most  effectively  to  new  machinery  the 
same  movement  is  visible  in  the  prevalence  of  large  farming. 
This  is  seen  everywhere  where  land  is  placed  on  the  same 
property  footing  as  other  forms  of  capital.  Though  small 
farms  are  for  some  purposes  still  capable  of  yielding  a  large 
net  as  well  as  gross  product,  it  is  for  the  most  part  the  legal, 

1  Cf.  Chap.  VI.  for  a  discussion  of  this  equation  of  maximum  profit. 


90  THE   EVOLUTION    OF 

customary,  and  sentimental  restrictions  on  free  transfer  of 
land  that  impede  the  tendency  towards  large  farming. 

It  is,  however,  in  the  manufacturing  and  transport  in- 
dustries that  we  trace  the  most  general  and  rapid  growth  of 
the  unit  of  production.  And  here  machinery  is  the  chief 
external  cause.  Gigantic  railways  and  steamship  companies 
are  the  successors  of  stage  coach  businesses  and  small 
shippers.  The  size  and  value  of  the  modern  cotton  factory, 
iron  works,  sugar  refiner)',  or  brewery  are  incomparably 
greater  than  the  units  of  which  these  industries  were  com- 
posed a  century  and  a  half  ago.  In  certain  highly-machined 
industries  the  size  of  the  unit  is  so  enlarged  that  the 
number  of  businesses  engaged  in  turning  out  the  ever-grow- 
ing output  is  actually  diminishing.  Among  textile  industries 
the  spinning  mills  of  England  and  Wales  show  a  marked 
diminution  in  numbers  between  1870  and  1890,  while 
a  similar  movement  in  weaving  mills  is  only  retarded  by 
the  capacity  of  small  sweating  masters  to  compete  with  the 
more  developed  factories  in  certain  minor  branches,  such  as 
tape  manufacture,  and  by  the  survival  of  the  home  worker 
owning  his  loom  and  hiring  his  power  in  such  trades  as  the 
ribbon  weaving  of  Coventry.  ^ 

The  following  statistics^  of  the  cotton  and  woollen  in- 
dustries in  Great  Britain  serve  to  illustrate  the  growing 
size  of  the  unit  of  production  in  the  representative  branches 
of  textile  work : — 

Cotton. 


No. 

OF  Mills. 

No.  OF  Spindles, 

'a 

.a 

so      tc 

■pi 

CO      if 

4) 
0 

3 

.s 

'c 

G 

'E. 
m 

SB 

B 

2 
0 
Q 

11 

g.2 

1870  ., 
1890  ., 

.    1108 
.      985 

693 
990 

632 
438 

150 
175 

2483 
2538 

33,995,221 
40,511,934 

3,723,537 
3,992,885 

440,676 
615,714 

Woollen. 

1870  . 
1890  . 

.      648 

.      494 

109 

124 

860 
895 

212 

280 

1829 
1793 

2,531,768 
2,107,209 

160,993 
299,793 

48,140 
61,831 

This  increase  of  the  number  of  spindles  and  looms  in  the 
average  textile  mill  is  more  significant  when  the  "  speeding 

^  Report  to  Labour  Commission  on  Employment  of  Women  (1893),  p. 
125. 
2  Statistical  Abstract,  1878-92,  p.  182. 


MODERN   CAPITALISM.  91 

up  "  of  modern  machinery  is  taken  into  account.  The  in- 
creased size  of  the  unit  of  industry  as  measured  by  pro- 
ductivity is  even  greater  than  appears  from  the  statistics 
above  quoted. 

Schulze-Gaevernitz  points  out  that  in  the  thirty  years  be- 
tween 1856  and  1885,  while  the  factories  in  cotton  spinning 
and  weaving  only  increased  from  2210  to  2633,  the  number 
of  spindles  increased  from  28,010,217  to  44,348,921,  the 
number  of  looms  from  298,847  to  560,955,  and  that  since 
both  spindles  and  looms  worked  much  faster  in  1885  than 
in  1856,  the  output  has  increased  in  still  greater  propor- 
tion.^ 

Turning  to  another  highly-developed  machine  industry, 
that  of  milling,  we  find  a  similar  movement.  Flour  mills 
are  diminishing  in  number  both  in  England  and  in  the 
United  States.  The  period  1884-86  showed  a  diminution 
in  the  number  of  flour  mills  in  the  United  States  from 
25,079  to  18,267,  though  the  total  productive  power  of  the 
smaller  number  was  greatly  increased.  Mr.  Wells  finds  a 
similar  tendency  in  the  general  manufacturing  industry  of 
the  United  States: — "Between  1850  and  i860  the  number 
of  manufacturing  firms  and  corporations  in  the  United 
States  increased  from  123,025  to  140,433,  and  the  value  of 
manufactured  products  increased  from  $1,019,106,616  to 
$1,885,861,876,  so  that  in  that  decade  there  was  an 
increase  cf  17,408  establishments,  to  an  increase  of 
$866,755,060  in  the  value  of  products.  In  1870  there  were 
252,148  firms  and  corporations  so  employed,  producing 
$4,232,325,442  in  manufactured  products ;  or  an  increase 
of  111,715  establishments  in  the  decade  of  i860  to  1870 
gave  an  increase  of  $2,346,463,766  in  the  value  of 
products.  In  1880  the  number  of  manufacturing  establish- 
ments was  returned  at  253,852,  producing  articles  valued  at 
^SjS^S, 579,191,  or  an  addition  of  only  1704  firms  and 
corporations  was  accompanied  with  an  increase  of  product 
of  $1,133,537,749.  Here  then  is  a  demonstration  that  the 
average  product  of  a  manufacturing  establishment  in  the 
United  States  in  1880  was  just  60  per  cent,  greater  than  it 
was  in  i860."  2 

^  Social  Peace,  p.  126 ;  cf.  also  Brentano,  Hours,  Labour,  and  Pro- 
duction, p.  60. 

^  Contemporary  Review,  1889,  p.  394. 


92  THE   EVOLUTION   OF 

§  2.  While  the  mass  of  capital  and  labour  which  consti- 
tutes a  business  is  growing,  the  latter  grows  less  rapidly  than 
the  former.  That  is  to  say,  capital  is  in  point  of  size  be- 
coming more  and  more  the  dominant  factor  in  the  business. 
With  the  effect  of  this  upon  the  economic  character  and  con- 
ditions of  labour  we  are  not  here  concerned.  The  subject 
requires  a  separate  treatment.  Here  it  sufifices  to  recognise 
the  quantitative  change  that  has  taken  place.  Under 
domestic  industry  the  value  of  the  implements  used  was,  as 
a  rule,  equivalent  only  to  a  few  months'  wages.  In  1845 
McCulloch  estimated  that  the  fixed  capital  in  well-appointed 
cotton  mills  amounted  to  about  two  years'  wages  of  an 
operative.^  In  1890  Professor  Marshall  assigns  a  capital  in 
plant  amounting  to  about  jQ2oo  or  five  years'  wages  for 
every  man,  woman,  and  child  in  a  fully-equipped  spinning 
mill.  2  In  the  typical  modern  industry,  that  of  cotton-spin- 
ning and  weaving,  the  increasing  size  is  both  continuous 
and  rapid.  The  average  number  of  spindles  and  looms  to 
the  single  factory  in  1850  and  1885  are  as  follows: — 


Spindles. 

Power-Looms. 

1850 ... 

...      10,858 

155 

1885 ... 

...      15,227 

213 

Even  these  figures  do  not  fully  represent  the  facts,  for 
they  include  considerable  numbers  of  mills  of  the  older  sort, 
where  spinning  and  weaving  are  carried  on  together. 
Taking  the  more  highly  specialised  spinning  mills  in  the 
Oldham  district,  the  average  is  stated  at  65,000,  while  the 
largest  mills  have  as  many  as  185,000  spindles.  So  also 
the  average  number  of  power-looms  in  the  North  Lancashire 
district  is  placed  at  600,  the  largest  number  in  a  single 
business  amounting  to  4500.^ 

"Again,  the  cost  of  a  steamship  is  perhaps  equivalent  to 
the  labour  of  ten  years  or  more  of  those  who  work  her, 
while  a  capital  of  about  ^2^900,000, 000  invested  in  railways 
in  England  and  Wales  is  equivalent  to  the  work  for  about 
twenty  years  of  the  400,000  people  employed  on  them."* 

This  growth  in  the  unit  of  capital  is,   as  we  perceive, 

^  Porter,  Progress  of  the  Nation,  p.  216. 

2  Principles  of  Economics,  2nd  edit.,  p.  282. 

'  Schulze-Gaevernitz,  Der  Grossbetrieb,  p.  90. 

*  Marshall,  Principles  of  Economics,  2nd  edit.,  p.  283. 


MODERN   CAPITALISM.  93 

largely  due  to  the  establishment  of  large  and  expensive 
machinery  and  other  plant  as  a  leading  feature  in  modern 
production.  The  fact  that  modern  methods  are  largely 
instrumental  in  increasing  the  quantity  of  products  might 
lead  us  to  suppose  that  the  growth  of  the  raw  material  or 
circulating  part  of  the  capital  of  a  business  would  corre- 
spond with  the  growth  of  fixed  forms  of  capital.  This, 
however,  is  not  the  case.  In  the  most  highly  organised 
machine  industry  an  increasing  proportion  of  the  economy 
goes  into  the  improved  methods  of  manipulating  material 
so  as  to  prevent  waste,  and  by  improved  quality  of  work  and 
elaboration  of  manufacture  to  get  a  larger  net  amount  of 
product  out  of  a  given  quantity  of  raw  material. 

In  cotton-spinning,  for  example,  since  1834  the  waste  of 
raw  material  has  been  reduced  from  y  to  about  ~;  inferior 
materia],  once  useless,  is  now  mixed  with  better  stuff;  and 
more  important  still,  modern  machinery  has,  by  adapting 
itself  to  the  spinning  of  finer  yarn,  efiected  great  saving  in 
the  quantity  consumed  by  each  spindle.  In  many  other 
industries  we  shall  find  this  same  process  going  on,  whereby 
the  proportion  of  capital  which  consists  of  raw  material  is 
reduced,  and  the  proportion  which  consists  in  machinery 
and  other  fixed  capital  enhanced. 

The  growth  of  the  unit  of  capital  in  the  developed 
modem  manufacturing  business  entails  also  a  growth  in  the 
unit  of  labour,  though  not  a  corresponding  growth.  The 
number  of  employees  in  a  business  is  larger  in  proportion 
as  the  business  passes  into  the  stage  of  highest  industrial 
organisation.  In  the  United  States  in  1880  it  was  estimated 
that  the  average  number  of  employees  in  a  manufacturing 
business  for  the  whole  country  was  a  little  less  than  1 1,  but 
in  the  chief  manufacturing  states  of  Massachusetts,  Con- 
necticut, and  Rhode  Island  it  was  about  25,  while  in 
Pittsburg,  the  great  centre  of  iron  industry,  it  was  more 
than  33. 

§  3.  In  addition  to  increased  size  we  find  increased  and 
ever-increasing  complexity  of  structure  in  the  business-unit. 
This  has  proceeded  in  two  directions,  horizontally  and 
laterally — that  is  to  say,  by  subdivision  and  accession  of 
processes  on  the  one  hand,  and  by  an  increased  variety  of 
products,  and  therefore  of  processes,  upon  the  other  hand. 
The  constantly  growing  specialisation  of  fixed  capital  and  of 


94  THE   EVOLUTION   OF 

labour  in  our  factories  and  workshops  is  a  commonplace. 
Adam  Smith's  famous  pin  manufactory,  with  its  ten  separate 
processes,  has  been  left  far  behind.  In  a  modern  shoe 
factory  in  the  United  States  there  are  sixty-four  distinct 
processes.  Grain,  in  the  elaborate  machinery  of  a  steam 
flour  mill,  passes  through  a  score  of  different  stages, 
cleaning,  winnowing,  grinding,  etc.  The  American  machine- 
made  watch  is  the  product  of  370  separate  processes. 
The  organisation  of  a  modern  textile  factory  provides 
a  dozen  different  processes  contributing  to  the  spinning 
or  weaving  of  cotton  or  silk.  New  processes  of  cleaning, 
finishing,  and  ornamenting  are  continually  being  added. 
The  subsidiary  process  of  packing,  the  manufacture  of 
packing  cases,  the  printing  of  labels,  etc.,  are  taken  on 
in  many  factories.^  Many  branches  of  production  which 
were  formerly  carried  on  in  separate  places  and  as 
separate  business-units  are  grouped  together  under  the 
factory  roof,  or  if  still  separated  locally,  and  executed 
by  separate  machinery  and  power,  are  related  as  forming 
part  of  the  same  business,  and  are  under  the  same  manage- 
ment. So  in  the  woollen  manufactures  the  preliminary 
processes  of  sorting  and  cleansing,  carding  or  combing, 
as  well  as  the  main  processes  of  spinning  and  weaving, 
fulling,  dyeing,  and  finishing,  each  of  which  was  once 
committed  to  a  separate  and  independent  group  of  workers, 
are  now  frequently  found  going  on  simultaneously  in  a  single 
factory.2  Thus  a  number  of  small  simple  business-units 
representing  the  various  stages  in  the  production  of  a 
commodity,  come  to  group  themselves  into  a  large  complex 
unit. 

This  complexity  is  further  increased  by  constant  demand 
for  variety  in  size,  quality,  and  character  of  goods  to  meet 
the  growing  variety  of  demand  in  a  market  of  increasing 
area.  Special  classes  of  goods  must  be  manufactured  for 
Australia,  for  Egypt,  for  Burmah.    Less  civilised  customers, 

^  The  works  of  Messrs.  Colman,  at  Norwich,  comprise  among  others 
the  following  subsidiary  departments: — Coopery,  engineering  shop, 
saw  mills,  box-making,  packing,  paper-making,  printing,  laboratory. 
To  the  most  highly  developed  businesses  of  pottery  and  machine- 
making  schools  of  art  and  design  are  not  uncommonly  attached. 

^  A  good  deal  of  the  cleansing  and  combing  in  the  cloth  and  worsted 
trades  is,  however,  done  separately  on  commission  by  large  firms  such 
as  Lister's.     Cf.  Burnley,  p.  417. 


MODERN   CAPITALISM.  95 

including  such  countries  as  China  and  Persia,  insist  upon 
their  imported  goods  being  made  up  and  packed  in  some 
familiar  form  long  after  the  use  or  convenience  of  this 
form  has  passed  away.  The  exigencies  of  close  competi- 
tion require  constant  experiment  in  new  lines  of  goods  to 
benefit  the  fancy  of  a  newly-opened  market,  or  to  get  away 
the  trade  of  some  competitor.  Moreover,  the  increasingly 
important  part  which  is  played  by  advertising  in  the  trades 
where  competition  is  keenest  is  followed  by  a  very  singular 
result,  which  seems  at  first  sight  to  contravene  the  growing 
specialism  or  diiferentiation  of  function  that  marks  modern 
trade.  Finding  that  goods  advertise  one  another,  manu- 
facturers are  frequently  induced  to  add  new  departments  to 
their  business,  expanding  the  scope  and  variety  of  their 
productions.  In  retail  trade  this  tendency  is  widely  oper- 
ative. The  modern  grocer  sells  tinned  meats,  cakes,  wine, 
tea-pots,  and  Christmas  cards,  the  draper  sells  every  sort  of 
ornamental  ware,  the  stationer,  the  oil  shop,  the  china  shop 
set  out  an  increasing  and  miscellaneous  number  of  differing 
wares,  moving  towards  the  position  of  a  general  dealer. 
The  Stores  and  the  Universal  Providers  represent  the 
culmination  of  this  movement  in  the  retail  business,  re- 
turning to  an  enlarged  and  more  complex  form  of  the 
primitive  little  "general  shop"  of  the  village.  But  this 
same  economy  is  strong  enough  in  certain  classes  of  manu- 
facture to  overpower  the  advantages  of  an  expansion  of 
business  in  the  older  form.  Up  to  a  certain  point  the 
economies  of  production  upon  a  large  scale  will  make  it 
advantageous  to  a  manufacturer  to  employ  all  the  capital  at 
his  command  in  producing  increased  quantities  of  the  same 
class  of  goods.  But  after  the  market  for  these  goods  is 
fairly  supplied  it  may  pay  better  to  appeal  to  a  variety  of 
wants  by  new  species  of  goods  of  the  same  generic  char- 
acter, than  by  attempting  to  force  new  markets,  or  to  effect 
an  increased  sale  in  the  old  markets  at  such  reduced  prices 
as  the  increased  scale  of  production  may  permit.  The 
business  of  Messrs.  Huntley  &  Palmer  is  a  striking  example 
of  this  enterprise,  issuing  in  a  large  variety  of  products  and 
of  processes  which,  though  generically  related,  cover  a 
widening  range  of  food  luxuries.  The  new  products  which 
are  taken  on  will  of  course  not  only  reap  the  advantage  of 
being  effectively  advertised  by  the  earlier  products,  but  con- 


g6  THE   EVOLUTION   OF 

sisting  largely  of  new  adaptations  of  the  same  kind  of  raw 
material,  the  economies  of  purchase  and  transport  will  be 
almost  as  great  as  attend  an  increased  production  of  the 
same  goods,  while  much  of  the  machinery  of  management, 
and  even  of  manufacture,  can  be  utilised  for  the  new  pro- 
cesses. This  tendency  not  merely  to  multiply  processes  in 
the  manufacture  of  a  single  commodity,  but  to  increase  the 
variety  of  commodities  turned  out  by  analogous  processes 
in  a  single  business,  is  also  operative  in  certain  textile  and 
metal  industries,  where  an  increasing  proportion  of  the 
expensive  machinery  and  skilled  labour  is  engaged,  not  in 
narrowly  specific  processes  of  manufacture,  but  in  generating 
power  and  in  transmitting  it  for  a  number  of  later  uses  to  be 
governed  by  specific  machinery.  There  is  in  many  factories 
an  increasing  facility  to  take  on  new  processes,  and  to 
transfer  a  large  portion  of  the  plant  from  the  manufacture 
of  one  class  of  goods  to  another  class. 

"  Most  of  the  operatives  in  a  watch  factory  would 
find  machines  very  similar  to  those  with  which  they 
were  familiar  if  they  strayed  into  a  gun-making  factory 
or  sewing-machine  factory,  or  a  factory  for  making  textile 
machinery.  A  watch  factory,  with  those  who  worked  in 
it,  could  be  converted  without  any  overwhelming  loss  into 
a  sewing-machine  factory."^  Thus  in  the  evolution  of  the 
modern  business  we  see  not  only  a  number  of  processes 
in  the  production  of  a  commodity,  each  of  which  consti- 
tuted a  separate  business-unit  in  the  earlier  division  of 
labour,  growing  together  into  a  large  complex  whole,  but 
a  growing  together  of  analogous  processes  in  the  produc- 
tion of  different  commodities,  a  lateral  aggregation  of 
processes.  So  we  recognise  that  the  growing  complexity 
of  the  business-unit,  whether  we  regard  it  from  the  point 
of  view  of  capital  or  of  labour,  arises  in  large  measure 
from  an  increased  integration  of  productive  processes. 
The  business-unit  is  larger,  more  heterogeneous,  and  more 
highly  integrated. 

§  4.  Ascending  from  the  business-unit  to  the  larger 
unit  in  the  structure  of  industry,  the  Market,  or  groups  of 
directly  competing  businesses,  we  find  similar  changes  have 
taken   place.     In   considering   these  changes  the  relation 

*  Marshall,  Principles  of  Economics ,  2nd  edit.,  p.  517. 


MODERN   CAPITALISM.  97 

between  Market  and  Trade  should  be  clearly  grasped.  The 
mere  fact  that  two  persons  or  groups  of  persons  in  different 
places  are  engaged  in  similar  processes  of  production,  that 
is  to  say,  belong  to  the  same  trade,  has  no  significance 
for  us.  The  trade  or  aggregate  of  productive  units  of  a 
particular  sort  receives  industrial  unity  only  in  so  far  as 
there  is  competition  of  the  units  in  buying  the  raw  materials, 
tools,  and  labour  for  carrying  on  their  trade,  and  in  selling 
the  results  of  their  activity.  Weavers  of  cotton  goods  in 
Central  China  belong  to  the  same  trade  as  weavers  in 
Lancashire,  and  conduct  their  craft  with  similar  imple- 
ments to  those  which  still  prevail  in  the  cottage  industries 
of  France  and  Germany,  but  such  competition  as  may  exist 
between  them  is  so  indirect  and  slight  that  it  may  be 
neglected  in  considering  industrial  structure.  It  is  in  the 
competition  of  a  market  that  businesses  meet  and  are 
vitally  related.  In  a  trade  there  may  be  several  markets 
whose  connection  is  distant  and  indirect.  Market  is  the 
name  given  to  a  number  of  directly  competing  businesses. 
"Economists  understand  by  the  term  market  not  any 
particular  market-place  in  which  things  are  bought  and 
sold,  but  the  whole  of  any  region  in  which  buyers  and 
sellers  are  in  such  free  intercourse  with  one  another  that 
the  prices  of  the  same  goods  tend  to  equalise  easily  and 
quickly."^ 

A  single  competitive  price  is  then  the  essential  feature 
and  the  test  of  a  market.  Businesses  in  such  close  relation 
with  one  another  that  the  prices  at  which  they  buy  and  sell 
are  the  same,  or  differ  only  by  reason  of  and  in  correspond- 
ence with  certain  local  advantages  or  disadvantages,  are 
members  of  a  single  market.  The  money  market  is  a 
single  market  throughout  the  world.  The  price  of  money 
in  London,  Rome,  Rio  de  Janeiro,  may  differ,  but  this 
difference  will  correspond  to  certain  differences  of  risk. 
There  will  be  a  tendency  towards  a  single  price,  or,  putting 
the  case  in  other  words,  wherever  in  the  world  ^loo  of 
money  represents  the  same  commodity  the  same  price  will 
be  paid  for  its  use,  while  any  difference  in  its  value  as  a 
commodity  will  be  accurately  reflected  in  the  difference  of 
price. 

^  Coumot,  Recherches  sur  les  Principes  MathSmatiques  de  la  Theorie 
des  Richesses  (quoted  Marshall,  Principles  of  Economics,  p.  384). 

7 


98  THE   EVOLUTION   OF 

Absolute  freedom  of  intercourse  is  not  essential  to  the 
establishment  of  a  common  market.  Market  tariffs  and 
other  advantages  and  disadvantages  may  place  the  competi- 
tors on  an  unequal  footing.  Moreover,  in  order  to  form  part 
of  a  market  as  helping  to  determine  the  price,  a  business 
need  not  actively  enter  the  field  of  competition.  Fear  of 
the  potential  competition  of  outsiders  often  keeps  down 
prices  to  a  level  above  which  they  would  rise  were  it  not 
for  the  belief  that  such  a  rise  would  bring  into  active,  effective 
competition  the  outsider.  England  had  until  recently  a 
monopoly  of  the  market  for  cotton  goods  in  certain  Eastern 
countries,  but  the  price  at  which  she  sold  was  determined 
by  the  possibility  of  rival  French  or  German  merchants,  as 
well  as  by  the  direct  competition  of  the  several  English 
firms.  In  certain  commodities  the  market  is  conterminous 
with  the  trade,  that  is,  we  have  a  world-market  This  is 
the  case  with  many  of  the  forms  of  money,  the  most 
abstract  form  of  wealth,  and  the  most  highly  competitive. 

Dealers  in  Stock  Exchange  securities,  in  the  precious 
metals,  are  in  active,  constant  competition  at  all  the  great 
commercial  centres  of  the  world.  Other  staple  commodities, 
whose  value  is  great,  durable,  and  portable,  such  as  jewels, 
wheat,  cotton,  wool,  have  to  all  intents  and  purposes  a 
single  market. 

This  world-market  represents  the  fullest  expansion  due 
to  modern  machinery  of  transport  and  exchange,  the  rail- 
way, steamship,  newspaper,  telegraph,  and  the  system  of 
credit  built  up  and  maintained  by  the  assistance  of  these 
material  agents. 

The  market-area  for  various  commodities  varies  with  the 
character  of  these  commodities,  from  the  world-market  for 
stock  exchange  securities  down  to  the  minimum  market 
consisting  of  a  few  neighbouring  farmers  competing  to 
sell  their  over-ripe  plums  or  their  skim-milk.  The  chief 
qualities  which  determine  the  market-area  are — 

(a)  Extent  of  demand.  —  Things  in  universal  or  very 
wide  demand,  which  are  at  the  same  time  durable,  such  as 
money,  wool,  wheat,  compete  over  very  wide  areas.  Things 
specially  accommodated  to  the  taste  or  use  of  a  particular 
locality  or  a  small  class  of  individuals  will  have  a  narrow 
market.  This  is  the  case  with  clothes  of  a  particular  cut, 
and  with  many  kinds  of  fabrics  out  of  which  clothes  are 


MODERN   CAPITALISM.  99 

made.  The  market  for  certain  classes  of  topographical 
books  will  be  confined  to  the  limits  of  a  county,  though  the 
book  market  for  many  books  is  a  world-market. 

{b)  Portability. — Even  where  the  demand  is  far  from 
a  general  one,  the  market-area  may  be  very  wide  where 
high  value  is  stored  in  small  bulk.  Smoking  tobacco  and 
more  highly  valued  wines  and  liqueurs  are  examples  of 
this  order.  The  market  for  common  bricks  is  local,  though 
Portland  marble  finds  a  national  market. 

(c)  Durability. — Durable  objects  and  objects  which  can 
easily  be  brought  within  reach  of  modern  means  of  rapid 
transport  have  a  wide  market.  Perishable  goods,  as,  for 
example,  many  fruits  and  vegetables,  have  for  these  reasons 
a  narrow  market. 

§  5.  Modern  machinery  has  in  almost  all  cases  raised 
the  size  of  the  market.  The  space-area  of  competition  has 
been  immensely  widened,  especially  for  the  more  durable 
classes  of  goods.  It  is  machinery  of  transport — the 
transport  of  goods  and  news — that  is  chiefly  responsible  for 
this  expansion.  Cheaper,  quicker,  safer,  and  more  calcul- 
able journeys  have  shrunk  space  for  competing  purposes. 
Improved  means  of  rapid  and  reliable  information  about 
methods  of  production,  markets,  changes  in  price  and 
trade  have  practically  annihilated  the  element  of  dis- 
tance. 

Machinery  of  manufacture  as  well  as  of  transport  has  a 
levelling  tendency  which  makes  directly  for  expansion  of 
the  area  of  competition.  As  the  spread  of  knowledge  places 
each  part  of  the  industrial  world  more  closely  en  rapport 
with  the  rest,  the  newest  and  best  methods  of  manufacture 
are  more  rapidly  and  effectively  adopted.  Thus  in  all 
production  where  less  and  less  depends  on  the  skill  of  the 
workers,  and  more  and  more  upon  the  character  of  the 
machinery,  every  change  which  gives  more  prominence  to 
the  latter  tends  to  equalise  the  cost  of  production  in 
different  countries,  and  thus  to  facilitate  effective  competi- 
tion, 

§  6.  Modern  methods  of  production  have  also  brought 
about  a  great  expansion  in  the  time-area  of  the  market. 
Competition  covers  a  wider  range  of  time  as  well  as  of  space. 
Production  is  no  longer  directed  by  the  quantity  and  quality 
of  present  needs  alone,  but  is  more  and  more  dependent 


lOO  THE   EVOLUTION   OF 

upon  calculation  of  future  consumption.  A  larger  propor- 
tion of  the  brain  power  of  the  business  man  is  devoted  to 
forecasting  future  conditions  of  the  market,  and  a  larger 
proportion  of  the  mechanical  and  human  labour  to  pro- 
viding future  goods  to  meet  calculated  demands.  This 
expansion  of  the  time-market,  or  growth  of  speculative 
production,  is  partly  cause,  partly  effect  of  the  improved 
mechanical  appliances  in  manufacture  and  in  transport. 
The  multiplication  of  productive  power  under  the  new 
machinery  has  in  many  branches  of  industry  far  outstripped 
the  requirements  of  present  known  consumption  at  remuner- 
ative prices,  while  increased  knowledge  of  the  widening 
market  has  given  a  basis  of  calculation  which  leads  manu- 
facturers to  utilise  their  spare  productive  power  in  providing 
against  future  wants.  So  long  as  industry  was  limited  by 
the  labour  of  the  human  body,  assisted  but  slightly  by 
natural  forces  and  working  with  simple  tools,  the  output  of 
productive  energy  could  seldom  outstrip  the  present  demand 
for  consumable  goods. 

But  machinery  has  changed  all  this.  Modern  industrial 
nations  are  able  to  produce  consumables  far  faster  than 
those  who  have  the  power  to  consume  them  are  willing  to 
exercise  it.  Hence  there  is  an  ever-increasing  margin  of 
productive  power  redundant  so  far  as  the  production  of 
present  consumptive  goods  is  concerned.  This  excess  of 
productive  power  is  saved.  It  can  only  be  saved  by  being 
stored  up  in  some  material  forms  which  are  required  not  for 
direct  consumption  but  for  assisting  to  increase  the  rate  at 
which  consumables  may  be  produced  in  the  future.  In 
order  to  make  a  place  for  these  new  forms  of  saving  it  is 
necessary  to  interpose  a  constantly  increasing  number  of 
mechanical  processes  between  the  earliest  extractive  process 
which  removes  the  raw  material  from  the  earth  and  the  final 
or  retailing  process  which  places  it  in  the  consumer's  hands. 
New  machinery,  more  elaborate  and  costly,  is  applied; 
special  workshops,  with  machines  to  make  this  machinery — 
other  machinery  to  make  these  machines;  there  is  an 
expansion  of  the  mechanism  of  credit,  the  system  of  agents 
and  representatives  is  expanded,  new  modes  of  advertising 
are  adopted.  Thus  an  ever-widening  field  of  investment  is 
provided  for  the  spare  energy  of  machine-production.  The 
change  is  commonly  described  by  saying  that  production  is 


MODERN   CAPITALISM.  lOI 

more  "  roundabout."^  A  larger  number  of  steps  are  inserted 
in  the  ladder  of  production.  This  increased  complexity  in 
the  mechanism  of  production  is  not,  however,  the  central 
point  of  importance.  We  must  realise  that  the  change  is 
one  which  is  essentially  an  increase  in  the  "  speculative " 
character  of  commerce.  The  "  roundabout "  method  of 
production  signifies  a  continual  increase  in  the  proportion 
of  productive  forces  devoted  to  making  "future  goods"  as 
compared  with  those  devoted  to  making  "  present  goods." 
Now  future  goods,  plant,  machinery,  raw  material  of  com- 
modities, are  essentially  "  contingent  goods  "  :  their  worth 
or  waste  depends  largely  upon  conditions  yet  unborn  :  their 
social  utility  and  the  value  based  upon  it  depend  entirely 
upon  the  future  powers  and  desires  of  those  unknown 
persons  who  are  expected  to  purchase  and  consume  the 
commodities  which  shall  come  into  existence  as  results  of 
the  existence  and  activity  of  these  future  goods. 

The  actual  time  which  elapses  between  the  extractive 
stage  and  the  final  retail  stage  of  a  commodity  may  not  be 
greater  and  is  in  many  cases  far  less  under  the  new  methods 
of  industry.  The  raw  cotton  of  South  Carolina  gets  on  the 
wearer's  back  more  quickly  than  it  did  a  century  and  a  half 
ago.  But  when  we  add  in  the  time-elements  involved  in 
the  provision  of  the  various  forms  of  intricate  plant  and 
machinery  whose  utility  entirely  consists  in  forwarding 
these  cotton  goods,  and  whose  existence  in  the  industrial 
mechanism  depends  upon  them,  we  shall  perceive  that  the 
"  roundabout "  method  signifies  a  great  extension  of  the 
speculative  or  time-element  in  the  market.^ 

§  7.  The  growing  interdependency  of  trades  and  markets, 
the  ever  closer  sympathy  which  exists  between  them,  the 
increased  rapidity  with  which  a  movement  affecting  one 
communicates  itself  to  others,  is  another  striking  character- 
istic of  modern  trade.  This  interdependency  is  in  large 
measure  one  of  growing  structural  attachment  between  trades 

1  It  ought,  however,  to  be  kept  in  mind  that  the  application  of  the 
"roundabout"  method  is  only  economically  justified  by  a  continual 
increase  in  consumption.  So  far  as  a  given  quantity  of  consumption  is 
concerned  the  result  of  the  "roundabout"  method  is  to  diminish  the 
quantity  of  capital  which  assists  to  produce  it. 

'^  Professor  Bohm  Bawerk  shows  this  increased  time  of  production 
to  be  the  essential  characteristic  of  capitalist  production.  Cf.  Positive 
Theory  of  Capital. 


I02  THE   EVOLUTION   OF 

and  markets  formerly  in  faint  and  distant  sympathetic  rela- 
tionship. Formerly,  agriculture  was  the  one  important 
foundational  industry,  and  from  the  feebleness  of  the 
transport  system  the  vital  connections  and  the  unity  it 
supplied  was  local  rather  than  national  or  international. 
Now  the  agricultural  industries  no  longer  occupy  this 
position  of  prominence.  The  coal  and  iron  industries 
engaged  in  furnishing  the  raw  material  of  machinery  and 
steam-motor,  the  machine  manufacture,  and  the  transport 
services,  are  the  common  feeders  and  regulators  of  all 
industries,  including  that  of  agriculture.  They  form  a 
system  corresponding  to  the  alimentary  system  of  the 
human  body,  any  quickening  or  slackening  of  whose  func- 
tional activities  is  directly  and  speedily  communicated 
to  the  several  parts.  Any  disturbance  of  price,  of  efficiency, 
or  regularity  of  production  in  these  foundational  industries 
is  reflected  at  once  and  automatically  in  the  several 
industries  which  are  engaged  in  the  production  and  dis- 
tribution of  the  several  commodities.  The  mining  and 
metal  industries,  shipbuilding,  and  the  railway  services  are 
recognised  more  and  more  as  furnishing  the  true  measure 
and  test  of  modern  trade;  their  labour  enters  in  ever 
larger  proportion  into  the  production  of  all  the  consumptive 
goods. 

Besides  the  general  integration  or  unification  of  industry 
implied  by  the  common  dependency  of  the  specific 
trades  upon  these  great  industries,  there  are  other  forces 
engaged  in  integrating  groups  of  trades.  Foremost  is  the 
"roundabout"  method  of  production,  to  which  our  atten- 
tion has  been  already  directed.  Not  merely  does  this 
capitalist  system  bring  a  number  of  trades  and  processes 
under  the  control  of  a  single  capital,  as  a  single  complex 
business,  but  it  establishes  close  identity  of  trade-life  and 
interests  among  businesses,  trades,  and  markets  which 
remain  distinct  so  far  as  ownership  and  management  are 
concerned. 

§  8.  If  we  take  the  mass  of  capital  and  labour  composing 
one  of  our  staple  productive  industries,  we  shall  find  that  it 
is  related  in  four  different  ways  to  a  number  of  other 
industries. 

(i)  It  has  a  number  of  trades  which  are  directly  co- 
ordinate— i.e.,  engaged  in  the  earlier  or  later  processes  of 


MODERN   CAPITALISM.  IO3 

producing  the  same  consumptive  goods.  Thus  the  manu- 
facture of  shoes  is  related  co-ordinately  to  the  import 
trades  of  hides  and  bark,  to  tanning,  to  the  export  trade 
in  shoes,  and  to  the  retail  shoe  trade.  A  common  stream 
of  produce  is  flowing  through  these  several  processes,  and 
though  from  the  point  of  view  of  ownership  and  manage- 
ment there  may  be  no  connection,  there  is  a  close  identity 
of  trade  interest  and  a  quick  sympathy  of  commercial  life 
at  these  several  points. 

(2)  Each  important  manufacturing  industry  has  a  number 
of  industries  which  in  their  relation  to  it  are  secondary, 
although  in  some  cases,  having  similar  relations  to  a  number 
of  other  trades,  they  may  in  themselves  be  large  and  import- 
ant In  the  large  textile  centres  are  found  a  number  of 
minor  industries,  planers,  sawyers,  turners,  fitters,  smiths, 
engaged  in  irregular  work  of  alteration  and  repairs  upon  the 
plant  and  machinery  of  the  textile  factories.  The  same 
holds  of  all  important  manufactures,  especially  those  which 
are  closely  localised. 

A  somewhat  similar  relation  appertains  between  those 
manufactures  engaged  in  producing  the  main  body  of  any 
product  and  the  minor  industries,  which  supply  some  slighter 
and  essentially  subsidiary  part.  In  relation  to  the  main 
textile  and  clothing  industries,  the  manufacture  of  buttons, 
of  tape,  feathers,  and  other  elements  of  ornament  or 
trimmings  may  be  regarded  as  subsidiary.  In  the  same 
way  the  manufacture  of  wall-papers  or  house  paint  may  be 
considered  subsidiary  to  the  building  trades,  that  of  black- 
ing to  the  shoe  manufacture.  These  subsidiary  trades  are 
related  to  the  primary  one  more  or  less  closely,  and  are 
affected  by  the  condition  of  the  latter  more  or  less  power- 
fully in  proportion  as  the  subsidiary  elements  they  furnish  are 
more  or  less  indispensable  in  character.  The  fur  and  feather 
trades  are  far  more  dependent  upon  direct  forces  of  fashion 
than  upon  any  changes  of  price  or  character  in  the  main 
branches  of  the  clothing  trade.  On  the  other  hand,  any 
cause  which  affected  considerably  the  price  of  sugar  would 
have  a  great  and  direct  influence  on  the  jam  manufacture, 
while  the  rise  in  price  of  tin  due  to  the  M'Kinley  tariff 
caused  serious  apprehension  to  the  Chicago  manufacturers 
and  exporters  of  preserved  meats. 

(3)  The   relations   between    one    of  the    great   arterial' 


104  THE   EVOLUTION   OF 

industries,  such  as  coal-mining,  railway  transport,  or  machine- 
making,  and  a  specific  manufacture  may  be  regarded  as 
auxiliary.  The  extent  to  which  the  price  of  coal,  railway 
rates,  etc.,  enters  into  the  price  of  the  goods  and  affects  the 
condition  of  profits  in  the  trade  measures  the  closeness  of 
this  auxiliary  connection.  In  the  case  of  the  smelting 
industries  or  in  the  steam  transport  trades,  even  in  the 
pottery  trades,  the  part  played  by  coal  is  so  important  that 
the  relation  is  rather  that  of  a  primary  than  an  auxiliary 
connection — i.e.,  coal-mining  must  be  ranked  as  co-ordinate 
to  smelting.  But  where  heat  is  not  the  direct  agent  of 
manufacture,  but  is  required  to  furnish  steam-motor  alone, 
as  in  the  textile  factories,  the  connection  may  be  termed 
auxiliary. 

(4)  The  relationship  between  some  industries  is  '*  sympa- 
thetic" in  the  sense  that  the  commodities  they  produce 
appeal  to  closely  related  tastes,  or  are  members  of  a  group 
whose  consumption  is  related  harmoniously.  In  foods  we 
have  the  relations  between  bread,  butter,  and  cheese ;  the 
relation  in  which  sugar  and  salt  stand  to  a  large  number  of 
consumables.  Some  of  these  are  natural  relations  in  the 
sense  that  one  supplies  a  corrective  to  some  defect  of  the 
other,  or  that  the  combination  enhances  the  satisfaction  or 
advantage  which  would  accrue  from  the  consumption  of 
each  severally.  In  other  cases  the  connection  is  more 
conventional,  as  that  between  alcohol  and  tobacco.  The 
sporting  tastes  of  man  supply  a  strong  sympathetic  bond 
between  many  trades.  The  same  is  true  of  literary,  artistic, 
or  other  tastes,  which  by  the  simultaneous  demand  which 
they  make  upon  several  industries,  in  some  proportion 
determined  by  the  harmonious  satisfaction  of  their  desires, 
throw  these  industries  into  sympathetic  groups.^  These  four 
bonds  mark  an  identity  of  interest  between  different 
industries. 

The  relationship  is  sometimes  one  of  divergency  or  com- 
petition of  trades.  Where  the  same  service  may  be  supplied 
by  two  or  more  different  commodities  the  trades  are  related 
by  direct  competition.  Oil,  gas,  electricity,  as  illuminants,  are 
a  familiar  example  of  this  relationship.     Many  trades  which 

^  For  a  full  and  valuable  treatment  of  these  harmonious  relations, 
.from  the  point  of  view  of  consumption  and  production,  see  Patten's 
Economics  of  a  Dynamic  Society. 


MODERN   CAPITALISM.  I05 

produce  commodities  that  are  similar,  but  far  from  iden- 
tical in  character,  feel  this  relationship  very  closely.  The 
competition  between  various  kinds  of  food,  which  with 
different  kinds  and  degrees  of  satisfaction  may  produce 
the  same  substantial  effects,  between  fish  and  meat, 
between  various  kinds  of  vegetables  and  drinks,  enables 
us  to  realise  something  of  the  intricacy  of  the  relations 
of  this  kind.  In  clothing  we  have  antagonism  of  interests 
between  the  various  fabrics  which  has  led  to  great  industrial 
changes.  The  most  signal  example  is  the  rise  of  cotton, 
its  triumph  over  woollen  clothes  by  the  earlier  application 
of  the  new  machinery,  and  over  silk  by  the  early  superiority 
of  its  dyeing  and  printing  processes.^  So  in  recent  years 
in  the  conflict  among  beverages,  tea,  and  in  a  less  measure 
cocoa,  have  materially  damaged  the  growth  of  the  coffee 
industry  so  far  as  English  consumption  is  concerned. 
Where  such  rivalry  exists,  an  industry  may  be  as  power- 
fully and  immediately  affected  by  a  force  which  raises  or 
depresses  its  competitor  as  by  a  force  which  directly  affects 
itself. 

§  9.  The  growth  of  numerous  and  strongly-built  structural 
attachments  between  different  trades  and  markets  related  to 
different  localities  implies  the  existence  of  a  large  system 
of  channels  of  communication  throughout  our  industrial 
society.  By  the  increased  number  and  complexity  of  these 
channels  connecting  different  markets  and  businesses,  and 
relating  the  most  distant  classes  of  consumers,  we  can 
measure  the  evolution  of  the  industrial  organism.  Through 
these  channels  flow  the  currents  of  modern  industrial  life, 
whose  pace,  length,  and  regularity  contrast  with  the  feeble, 
short,  and  spasmodic  flow  of  commerce  in  earlier  times. 
This  advance  in  functional  activity  of  distribution  is  thus 
expressed  by  Mr.  Spencer : — "  In  early  English  times  the 
great  fairs,  annual  and  other,  formed  the  chief  means  of  dis- 
tribution, and  remained  important  down  to  the  seventeenth 
century,  when  not  only  villages,  but  even  small  towns,  devoid 
of  shops,  were  irregularly  supplied  by  hawkers  who  had 
obtained  their  stocks  at  these  gatherings.  Along  with 
increased  population,  larger  industrial  centres,  and  improved 
channels  of  communication,  local  supply   became  easier; 

^  Cf.  Porter,  Progress  of  the  Nation,  pp.  177-206. 


I06  THE   EVOLUTION   OF 

and  so  frequent  markets  more  and  more  fulfilled  the  purpose 
of  infrequent  fairs.  Afterwards,  in  chief  places  and  for  chief 
commodities,  markets  themselves  multiplied,  becoming  in 
some  cases  daily.  Finally  came  a  constant  distribution, 
such  that  of  some  foods  there  is  to  each  town  an  influx 
every  morning;  and  of  milk  even  more  than  once  in  the 
day.  The  transition  from  times  when  the  movements  of 
people  and  goods  between  places  were  private,  slow,  and 
infrequent,  to  times  when  there  began  to  run  at  intervals 
of  several  days  public  vehicles  moving  at  four  miles  an 
hour,  and  then  to  times  when  these  shortened  their  intervals 
and  increased  their  speed,  while  their  lines  of  movement 
multiplied,  ending  in  our  own  times,  when  along  each  line 
of  rails  there  go  at  full  speed  a  dozen  waves  daily  that  are 
relatively  vast,  sufficiently  show  us  how  the  social  circula- 
tion progresses  from  feeble,  slow,  irregular  movements  to  a 
rapid,  regular,  and  powerful  pulse."  ^ 

The  differentiation  of  function  in  the  several  parts  of  the 
industrial  organism  finds  a  partial  expression  in  the  localisa- 
tion of  certain  industries.  As  there  is  growing  division  of 
labour  among  individuals  and  groups  of  individuals,  so  the 
expansion  of  the  area  of  competition  has  brought  about  a 
larger  and  larger  amount  of  local  specialisation. 

Roughly  speaking,  the  West  of  Europe  and  of  America 
has  specialised  in  manufacture,  drawing  an  ever  larger 
proportion  of  their  food  supplies  from  the  North-West  States 
of  America,  from  Russia,  the  Baltic  Provinces,  Australia, 
Egypt,  India,  etc.,  and  their  raw  materials  of  manufacture 
from  the  southern  United  States,  South  America,  India,  etc., 
while  these  latter  countries  are  subjected  to  a  correspondent 
specialisation  in  agriculture  and  other  extractive  arts.  If  we 
take  Europe  alone,  we  find  certain  large  characteristics 
which  mark  out  the  Baltic  trade,  the  Black  Sea  trade,  the 
Danube  trade,  the  Norwegian  and  White  Sea  trade.  So  the 
Asiatic  trade  falls  into  certain  tolerably  defined  divisions  of 
area,  as  the  Levant  trade,  the  Red  Sea  trade,  the  Indian,  the 
Straits,  and  East  Indian,  the  China  trade,  etc.  The  whole 
trade  of  the  world  is  thus  divided  for  commercial  purposes.^ 
Though  these  trade  divisions  are  primarily  suggested  by 

^  Principles  of  Sociology,  vol.  i.  p.  500  (3rd  edit.). 
2  For  a  detailed  account  of  the  national  trade  divisions,  cf.  Dr.  Yeats, 
The  Golden  Gates  of  Trade. 


MODERN   CAPITALISM.  lO/ 

considerations  of  transport  rather  than  of  the  character  of 
production,  the  geographical,  climatic,  and  other  natural 
factors  which  determine  convenient  lines  of  transport  are 
found  to  have  an  important  bearing  on  the  character  of  the 
production,  and  convenience  of  transport  itself  assists  largely 
to  determine  the  kind  of  work  which  each  part  of  the  world 
sets  itself  to  do. 

The  establishment  of  a  world-market  for  a  larger  and 
larger  number  of  commodities  is  transforming  with  mar- 
vellous rapidity  the  industrial  face  of  the  globe.  This  does 
not  now  appear  so  plainly  in  the  more  highly-developed 
countries  of  Europe,  which,  under  the  influence  of  half  a 
century's  moderately  free  competition  for  a  European 
market,  have  already  established  themselves  in  tolerably 
settled  conditions  of  specialised  industry.  But  in  the  new 
world,  and  in  those  older  countries  which  are  now  fast 
yielding  to  the  incursions  of  manufacturing  and  transport 
machinery,  the  specialising  process  is  making  rapid  strides. 

Improved  knowledge  of  the  world,  facile  communication, 
an  immense  increase  in  the  fluidity  of  capital,  and  a  con- 
siderable increase  in  that  of  labour,  are  busily  engaged  in 
distributing  the  productions  of  the  world  in  accordance 
with  certain  dominant  natural  conditions.  Those  in- 
dustrial forces  which  have  during  the  last  century  and  a 
half  been  operative  in  England,  draining  the  population 
and  industry  from  the  Southern  and  Eastern  counties,  and 
concentrating  it  in  larger  proportions  in  Lancashire,  the 
West  Riding,  Staffordshire,  and  round  the  Northumbrian 
and  South  Wales  coal-fields,  specialising  each  town  or 
locality  upon  some  single  branch  of  the  textile,  metal,  or 
other  industries  for  which  its  soil,  position,  or  other  natural 
advantages  made  it  suitable,  are  now  beginning  to  extend 
the  area  of  their  control  over  the  whole  surface  of  the  known 
and  inhabited  globe. 

As  large  areas  of  Asia,  South  and  Central  Africa, 
Australia,  and  South  America  fall  under  the  control  of 
European  commercial  nations,  are  opened  up  by  steamships, 
railways,  telegraphs,  and  are  made  free  receptacles  for  the 
increased  quantity  of  capital  which  is  unable  to  find  a  safe 
remunerative  investment  nearer  home,  we  are  brought 
nearer  to  a  condition  in  which  the  whole  surface  of  the 
world  will  be  disposed  for  industrial  purposes  by  these  same 


I08  THE    EVOLUTION   OF 

forces  which  have  long  been  confined  in  their  direct  and 
potent  influence  to  a  small  portion  of  Western  Europe  and 
America.  This  vast  expansion  of  the  area  of  effective  com- 
petition is  beginning  to  specialise  industry  on  the  basis  of  a 
world-market,  which  was  formerly  specialised  on  the  more 
confined  basis  of  a  national  or  provincial  market.  So  in 
England,  where  the  early  specialisation  of  machine-industry 
was  but  slightly  affected  by  outside  competition,  great 
changes  are  taking  place.  Portions  of  our  textile  and  metal 
industries,  which  naturally  settled  in  districts  of  Lancashire, 
Yorkshire,  and  Staffordshire,  while  the  area  of  competition 
was  a  national  one,^  seem  likely  to  pass  to  India,  to  Germany, 
or  elsewhere,  now  that  a  tolerably  free  competition  on  the 
basis  of  world-industry  has  set  in.  It  is  inevitable  that  with 
every  expansion  of  the  area  of  competition  under  which 
a  locality  falls  the  character  of  its  specialisation  will  change. 
A  piece  of  English  ground  which  was  devoted  to  corn- 
growing  when  the  market  was  a  district  one  centred  in  the 
county  town,  becomes  the  little  factory  town  when  com- 
petition is  established  on  a  national  basis;  it  may  become 
the  pleasure-ground  of  a  retired  millionaire  speculator 
if  under  the  pressure  of  world-competition  it  has  been 
found  that  the  manufacture  which  now  thrives  there  can  be 
carried  on  more  economically  in  Bombay  or  Nankin,  where 
each  unit  of  labour  power  can  be  bought  at  the  cheapest 
rate,  or  where  some  slight  saving  in  the  transport  of  raw 
material  may  be  effected. 

§  ID.  The  question  how  industry  would  be  located, 
assuming  the  whole  surface  of  the  globe  was  brought  into 
a  single  market  or  area  of  competition,  with  an  equal 
development  of  transport  facilities  in  all  its  parts ;  or  in 
other  words,  "  What  is  the  ideal  disposition  of  industry  in 
a  world-society  making  its  chief  end  the  attainment  of 
industrial  wealth  estimated  at  present  values?"  is  one  to 
which  of  course  no  very  exact  answer  can  be  given.  But 
since  this  ideal  represents  the  goal  of  modern  industrial  pro- 

^  Foreign  competition  with  English  textiles,  though  comparatively 
modern  so  far  as  the  more  highly  developed  machine-made  fabrics  is 
concerned,  was  keenly  felt  early  in  the  century  in  hand-made  goods. 
Schulze-Gaevernitz  points  out  that  the  depression  in  work  and  w^ages 
of  the  hand-loom  workers  in  1820  was  due  more  to  foreign  competition 
than  to  the  new  machinery.     (Der  Grossbetrieb,  p.  41.) 


MODERN   CAPITALISM.  IO9 

gress,  it  is  worth  while  to  call  attention  to  the  chief  deter- 
minants of  the  localisation  of  industries  under  free  world- 
competition.  The  influences  may  be  placed  in  three 
groups,  which  are,  however,  interrelated  at  many  points. 

(i)  The  first  group  may  be  called  Climatic,  the  chief 
influences  of  which  are  astronomical  position,  surface  con- 
tour, prevalent  winds,  ocean  currents,  etc.  Climatic  zones 
have  their  own  flora  and  fauna,  and  so  far  as  these  enter 
into  industry  as  agricultural  and  pastoral  produce,  as  raw 
materials  of  manufacture,  as  sustenance  of  labour,  they  are 
natural  determinants  of  the  localisation  of  industry.  In 
vegetable  products  the  climatic  zones  are  very  clearly 
marked.  "The  boreal  zone  has  its  special  vegetation  of 
mosses,  lichens,  saxifrages,  berries,  oats,  barley,  and  rye; 
the  temperate  zone  its  peas,  beans,  roots,  hops,  oats,  barley, 
rye,  and  wheat ;  this  zone,  characterised  by  its  extent  of 
pastures,  hop  gardens,  and  barley  fields,  has  also  a  dis- 
tinctive title  in  the  '  beer  and  butter  region.'  The  warm 
temperate  zone,  or  region  of  *  wine  and  oil,'  is  characterised 
by  the  growth  of  the  vine,  olive,  orange,  lemon,  citron, 
pomegranate,  tea,  wheat,  maize,  and  rice;  the  sub-tropical 
zone,  by  dates,  figs,  the  vine,  sugar-cane,  wheat,  and  maize ; 
the  tropical  zone  is  characterised  by  coffee,  cocoa-nut, 
cocoa,  sago,  palm,  figs,  arrowroot,  and  spices ;  and  the 
equatorial  by  bananas,  plantains,  cocoa-nut,  etc."^ 

(2)  The  second  group  is  geographical  and  geological. 
The  shape  and  position  of  a  country,  its  relation  in  space 
to  other  countries,  the  character  of  the  soil  and  sub-soil,  its 
water-supply,  though  closely  related  to  climatic  influences, 
have  independent  bearings.  The  character  of  the  soil,  which 
provides  for  crops  their  mineral  food,  has  an  important  bear- 
ing upon  the  raw  materials  of  industry.  The  shape  and 
position  of  the  land,  especially  the  configuration  of  its  coast, 
have  a  social  as  well  as  climatic  significance,  directing  the 
intercourse  with  other  lands  and  the  migrations  of  people  and 
civilisations  which  play  so  large  a  part  in  industrial  history. 

(3)  Largely  determined  by  the  two  groups  of  influences 
named  above  are  the  forces  which  represent  the  national 
character  at  any  given  time,  the  outcome  of  primitive  race 
characteristics,  food  supply,  speed  and  direction  of  industrial 

*  Yeats,  The  Golden  Gates  of  Trade,  p.  12.     (Philip  &  Son.) 


no  THE   EVOLUTION   OF 

development,  density  of  population,  and  the  various  other 
causes  which  enter  in  to  determine  efficiency  of  labour. 
The  play  of  these  natural  and  human  forces  in  world-com- 
petition leads  to  such  a  settlement  of  different  industries  in 
different  localities  as  yields  the  greatest  net  productiveness 
of  labour  in  each  part. 

§  II.  But  this  world-competition,  however  free  it  may 
become,  can  lead  to  no  finality,  no  settled  appointment  of 
industrial  activity  to  the  several  parts  of  the  earth.  Setting 
aside  all  political  and  other  non-economic  motives,  there  are 
three  reasons  which  render  such  local  stability  of  industry 
impossible. 

There  is  first  the  disturbance"  and  actual  loss  sustained  by 
nature  in  working  up  the  mineral  wealth  of  the  soil,  and  the 
flora  and  fauna  sustained  by  it,  into  commodities  which  are 
consumed,  and  an  exact  equivalent  of  which  cannot  be 
replaced.  The  working  out  of  a  coal-field,  the  destruction 
of  forests  which  reacts  upon  the  elementary  climatic 
influences,  are  examples  of  this  disturbance. 

Secondly,  there  is  the  progress  of  industrial  arts,  new 
scientific  discoveries  applicable  to  industry.  There  is  no 
reason  to  believe  that  human  knowledge  can  reach  any  final 
goal :  there  is  infinity  alike  in  the  resources  of  nature  and 
in  the  capacity  of  the  development  of  human  skill. 

Lastly,  as  human  life  continues,  the  art  of  living  must 
continually  change,  and  each  change  alters  the  value 
attached  to  the  several  forms  of  consumption,  and  so  to  the 
industrial  processes  engaged  in  the  supply  of  different 
utilities.  New  wants  stimulate  new  arts,  new  arts  alter  the 
disposition  of  productive  industry,  giving  value  to  new 
portions  of  the  earth.  Ignoring  those  new  material  wants 
which  require  new  kinds  of  raw  material  to  be  worked  up 
for  their  satisfaction,  the  growing  appreciation  of  certain 
kinds  of  sport,  the  love  of  fine  scenery,  a  rising  value  set 
upon  healthy  atmosphere,  are  beginning  to  exercise  a  more 
and  more  perceptible  influence  upon  the  localisation  of 
certain  classes  of  population  and  industry  in  the  more 
progressive  nations  of  the  world. 

§  1 2.  The  same  laws  and  the  same  limitations  which  are 
operative  in  determining  the  character  and  degree  of  special- 
isation of  countries  or  large  areas  are  also  seen  to  apply 
to  smaller  districts,  towns,  and  streets.     Industries  engaged 


MODERN   CAPITALISM.  Ill 

in  producing  valuable,  durable  material  objects  in  wide 
demand  are  locally  specialised ;  those  engaged  in  providing 
bulky  perishable  non-material  goods,  or  goods  in  narrow 
demand,  are  unspecialised,  England,  where  internal  inter- 
course has  been  most  highly  developed,  and  where  internal 
competition  has  been  freest  and  keenest,  shows  the  most 
advanced  specialisation  in  several  of  its  staple  industries. 
The  concentration  of  cotton  spinning  in  South  Lancashire 
is  an  example,  the  full  significance  of  which  often  escapes 
notice.  From  the  beginning  South  Lancashire  was  the 
chief  seat  of  the  industry,  but  it  is  now  far  more  concen- 
trated than  was  the  case  a  century  ago.  Several  of  the 
most  valuable  inventions  in  spinning  were  first  applied  in 
Derbyshire,  in  Nottingham,  at  Birmingham,  and  in  Scotland. 
Scotland  then  competed  closely  in  weaving  with  Lancashire. 
Now  the  Scotch  industry  is  confined  to  certain  specialities. 
In  spite  of  the  enormous  growth  of  the  manufacture,  the 
local  area  it  covers  is  even  narrower  than  last  century. 
Within  Lancashire  itself  the  actual  area  of  production  has 
shrunk  to  some  25  square  miles  in  the  extreme  south,  while 
the  two  great  cities  are  further  specialised — Liverpool  as  the 
market  for  cotton,  Manchester  for  yarn  and  cotton  cloths. 

Moreover,  the  localisation  of  various  departments  of  the 
trade  within  Lancashire  is  still  more  remarkable.  Not  only 
have  the  old  mills  in  which  spinning  and  weaving  were 
carried  on  together  given  way  before  division  of  labour,  but 
the  two  processes  are  mostly  conducted  in  different  districts, 
the  former  in  the  towns  immediately  around  Manchester, 
the  latter  in  the  more  distant  northern  circuit.  Nor  is  the 
speciaUsation  confined  to  this.  Spinning  is  again  divided 
according  to  the  coarser  and  finer  qualities  of  yarn.  The 
Oldham  district,  with  Ashton,  Middleton,  and  other  towns 
south  of  Manchester  are  chiefly  confined  to  the  medium 
numbers.  Bolton,  Chorley,  Preston,  and  other  northern 
towns  undertake  the  finer  numbers.  In  weaving  there 
is  even  more  intricate  division  of  labour,  each  town  or 
district  specialising  upon  some  particular  line  of  goods.  ^ 
Moreover,  it  must  be  borne  in  mind  that  the  substitu- 
tion   of   the   factory   for    the   domestic    system   and   the 

1  Cf.  Schulze-Gaevernitz's  minute  investigation  of  this  whole  subject, 
Der  Grossbetrieb,  pp.  98,  99,  etc. 


112  THE   EVOLUTION   OF 

continual  enlargement  of  the  average  factory  indicates 
an  important  progressive  concentration.  So  the  cotton 
industry  does  not  in  fact  cover  nearly  so  large  a  local 
area  as  when  it  was  one-hundredth  the  size.  The  same 
is  true  of  the  other  chief  branches  of  the  textile  and 
metal  industries.  Nor  is  it  only  in  the  manufactures  that 
towns  and  districts  are  closely  specialised.  The  enormous 
increase  of  commerce  due  to  machinery  of  manufacture  and 
of  transport  requires  the  specialisation  of  certain  towns  for 
purely  commercial  purposes.  London,  Liverpool,  Glasgow, 
and  Hull  are  more  and  more  devoted  to  the  functions 
of  storage  and  conveyance.  Manchester  itself  is  rapidly 
losing  its  manufacturing  character  and  devoting  itself  almost 
exclusively  to  import  and  export  trade.  The  railway  service 
has  made  for  itself  large  towns,  such  as  Crewe,  Derby, 
Normanton,  and  Swindon.  Cardiff  is  a  portentous  example 
of  a  new  mining  centre  created  when  the  machine  develop- 
ment of  England  was  already  ripe. 

The  specialisation  of  function  in  a  large  town  is,  however, 
qualified  in  two  ways.  The  strong  local  organisation  of  a 
staple  trade  requires  the  grouping  round  it  of  a  number  of 
secondary  or  auxiliary  trades.  In  large  textile  towns  the 
manufactures  of  textile  machinery,  and  of  subsidiary 
materials,  are  found.  The  machine-making  of  Manchester 
is  one  of  its  most  important  industries,  furnishing  the 
neighbouring  textile  towns.  Leeds  is  similarly  equipped 
for  the  woollen  trade.  This  is  one  of  the  respects  in  which 
the  superior  development  of  the  English  cotton  industry 
over  the  continental  ones  is  indicated.  In  Alsace  alone  of 
the  continental  centres  has  the  concentration  of  industry 
advanced  so  far  as  to  furnish  a  local  machine  industry 
specially  devoted  to  cotton  machinery.  Germany  is  still 
mainly  dependent  upon  England  for  her  machines.^  So 
likewise  with  regard  to  co-ordinate  trades,  there  is  an 
advantage  in  the  leading  processes  being  grouped  in  local 
proximity,  though  they  are  not  united  in  the  same  business. 
Thus  we  find  dye-works  and  the  various  branches  of  the 
clothing  trade  largely  settled  in  the  large  textile  towns, 
such  as  Leeds,  Bradford,  Manchester,  Bolton.  The  unit 
of  local   specialisation   is   thus   seen   to   be   not   a   single 

^  Schulze-Gaevernitz,  p.  no. 


MODERN   CAPITALISM.  II 3 

trade,  but  a  group  of  closely  allied  trades,  co-ordinate, 
dependent,  and  derivative. 

Round  some  large  industries  in  which  men  find  employ- 
ment minor  parasitic  industries  spring  up  stimulated  by  the 
supply  of  cheap  abundant  labour  of  women  and  children. 
In  metal  and  machine  towns  such  as  Birmingham,  Dudley, 
Walsall,  in  Newcastle-on-Tyne,  and  other  shipbuilding 
towns,  where  the  staple  industries  are  a  masculine 
monopoly,  textile  factories  have  been  planted.  The  same 
holds  of  various  mining  villages  and  of  agricultural 
villages  in  the  neighbourhood  of  large  textile  centres. 
There  is  in  the  midland  counties  a  growing  disposition 
to  place  textile  factories  in  rural  villages  where  cheap 
female  labour  can  be  got,  and  where  the  independence 
of  workers  is  qualified  by  stronger  local  attachments 
and  inferior  capacity  of  effective  trade  union  organisation. 
As  textile  work  passes  more  and  more  into  the  hands  of 
women, 1  this  tendency  to  make  it  a  parasitic  trade  thriving 
upon  the  low  wages  for  which  women's  labour  can  be  got 
where  strong  and  well-paid  male  work  is  established,  will 
probably  be  more  strongly  operative. 

§  13.  The  specialisation  of  certain  districts  within  the  town, 
though  far  less  rigid  than  in  the  mediaeval  town,  is  very 
noticeable  in  the  larger  centres  of  industry.  Natural  causes 
often  determine  this  division  of  localities,  as  in  the  case  of 
the  riverside  industries,  brick-making  and  market-gardening 
in  the  outer  suburbs.  Round  the  central  station  in  every 
large  town,  for  convenience  of  work  and  life,  settle  a  number 
of  industries  related  to  the  carrying  trade.  Every  trade, 
market,  or  exchange  is  a  centre  of  attraction.  So  the 
broking,  banking,  and  the  general  financing  businesses 
are  grouped  closely  round  the  Royal  Exchange.  Mark  Lane 
and  Mincing  Lane  are  centres  of  the  corn  and  tea  trades. 
In  all  town  industries  not  directly  engaged  in  retail  distribu- 
tion there  are  certain  obvious  economies  and  conveniences 
in  this  gregariousness.  Agents,  travellers,  collectors,  and 
others  who  have  relations  of  sale  or  purchase  with  a  number 
of  businesses  in  a  trade  find  a  number  of  disadvantages  in 
dealing  with  a  firm  locally  detached  from  the  main  body,  so 

^  For  the  gain  of  female  over  male  employment  in  textile  factories, 
cf.  Chap,  xi. 

8 


114  THE   EVOLUTION   OF 

that  when  a  district  is  once  recognised  as  a  trade  centre,  it 
becomes  increasingly  important  to  each  new  competitor  to 
settle  there.  The  larger  the  city  the  stronger  this  force  of 
trade  centralisation.  Hence  in  London,  untrammelled  by 
guild  or  city  regulations,  we  find  a  strong  localisation  of 
most  wholesale  and  some  retail  businesses.  In  retail  trade, 
however,  the  economic  gain  is  less  universal.  Since  retail 
commodities  are  chiefly  for  use  in  the  home,  and  homes 
are  widely  distributed,  the  convenience  of  being  near  one's 
customers  and  away  from  trade  competitors  is  often  a  pre- 
dominating motive.  Shops  which  sell  bread,  meat,  fish, 
fruit,  groceries,  articles  which  are  bought  frequently  and 
mostly  in  small  quantities,  shops  selling  cheaper  articles  of 
ordinary  consumption,  such  as  tobacco,  millinery,  stationery, 
and  generally  shops  selling  articles  for  domestic  use,  the 
purchase  of  which  falls  to  women,  are  widely  dispersed.  On 
the  other  hand,  where  the  articles  are  of  a  rarer  and  more 
expensive  order,  when  it  is  likely  that  the  purchaser  will 
seek  to  compare  price  and  character  of  wares,  and  will  pre- 
sumably be  willing  to  make  a  special  journey  for  the  purpose, 
the  centralising  tendency  prevails  in  retail  trade.  So  we 
find  the  vendors  of  carriages,  pianos,  bicycles,  the  heavier 
articles  of  furniture,  jewellery,  second-hand  books,  furs,  and 
the  more  expensive  tailors  and  milliners  clustering  together 
in  a  special  street  or  neighbourhood. 

Effective  competition  in  retail  trade  sometimes  requires 
concentration,  sometimes  dispersion  of  business.  But  the 
most  characteristic  modern  movement  in  retail  trade  is  a 
combination  of  the  centralising  and  dispersive  tendencies, 
and  is  related  to  the  enlargement  of  the  business-unit 
which  we  found  proceeding  everywhere  in  industry.  The 
large  distributing  company  with  a  number  of  local  branch 
agents,  who  call  regularly  at  the  house  of  the  con- 
sumer for  orders,  is  the  most  highly  organised  form  of 
retail  trade.  In  all  the  departments  of  regular  and  general 
consumption  the  movement  is  towards  this  constant  house- 
to-house  supply.  The  wealthier  classes  in  towns  have 
already  learned  to  purchase  all  the  more  perishable  forms  of 
food  and  many  other  articles  of  house  consumption  in  this 
way,  while  the  growing  facilities  of  postage  and  conveyance 
of  goods  enable  them  to  purchase  from  a  large  central  store 
by  means  of  a  price-list  all  other  consumables  into  which 


MODERN   CAPITALISM.  II 5 

the  element  of  individual  taste  or  caprice  does  not  largely 
enter.  This  habit  is  spreading  in  the  smaller  towns  among 
the  middle  classes,  so  that  the  small  dispersed  retail 
businesses  are  becoming  more  and  more  dependent  upon 
the  supply  of  the  needs  of  the  working  classes,  and  of  such 
articles  of  comfort  and  luxury  as  may  appeal  to  the  less 
regular  and  calculable  tastes  of  the  moneyed  classes.  Just 
as  in  towns  we  have  a  constant  automatic  supply  of  water 
and  gas  instead  of  an  intermittent  supply  dependent  on  a 
number  of  individual  acts  of  purchase,  so  it  seems  likely 
that  all  the  routine  wants  of  the  consumer  will  be 
supplied. 

How  far  mechanical  inventions  may  be  applied  to  in- 
crease the  facility  and  cheapen  the  cost  of  this  distribution  it 
is  difficult  to  say.  The  automatic  machine  for  distributing 
matches  and  sweetmeats  is  adaptable  to  most  forms  of  routine 
consumption.  In  the  larger  stores  many  kinds  of  labour- 
saving  machinery  are  already  applied.  As  steam  or  electric 
power  is  adopted  more  widely  in  the  local  transport  services 
the  retail  distribution  of  goods  from  a  large  single  centre  is 
likely  to  proceed  apace,  and  a  displacement  of  human 
labour  by  machinery  similar  to  that  which  is  taking  place  in 
manufacture  will  take  place  in  distribution.  So  far  as  the 
wants  of  large  classes  of  the  public  become  regular  and  their 
consumption  measurable  in  quantity,  machinery  will  un- 
questionably take  over  the  labour  of  distribution,  especially 
in  the  large  towns  which  are  absorbing  in  a  way  convenient 
for  mechanical  distribution  a  larger  proportion  of  the  con- 
suming public.  With  each  new  encroachment  of  machinery 
into  the  domain  of  the  distributing  trades  the  characteristics 
of  machine-industry,  enlarged  mass  of  the  business,  increased 
area  of  the  market,  increased  complexity  of  relations  to 
other  trades,  increased  specialisation  of  local  activity  will  be 
clearly  discernible. 

We  thus  see  in  the  several  departments  of  industry,  under 
the  pressure  of  the  same  economic  forces,  an  expansion  of 
size,  a  growing  complexity  of  structure  and  functional 
activity,  and  an  increased  cohesion  of  highly  differentiated 
parts  in  the  business,  the  market,  and  in  that  aggregation  of 
related  trades  and  markets  which  forms  the  world-industry. 
The  physical  instrument  by  which  these  economic  forces, 
making   for   increased   size,   heterogeneity,   and   cohesive- 


Il6     THE   EVOLUTION    OF   MODERN    CAPITALIS^L 

ness,^  have  been  able  to  operate  is  machinery  applied  to 
manufacture  and  transport.  Moreover,  each  new  encroach- 
ment of  machinery  upon  the  extractive  and  the  distributing 


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industries  brings  into  prominence  within  these  processes  the 
same  structural  and  functional  characteristics. 


^  In  a  free  application  of  Spencer's  formula  of  evolution  to  modern 
industry  I  have  not  included  the  quality  of  "  definiteness,"  which  close 
reflection  shows  to  possess  no  property  which  is  not  included  under 
heterogeneity  and  cohesiveness. 


117 


CHAPTER  V. 

THE   FORMATION    OF   MONOPOLIES    IN   CAPITAL. 

§    I.  Productive  Economies  of  the  Large  Busitiess. 

%    2.   Competitive  Economies  of  the  Large  Business. 

§    3.  Intenser  Competition  of  the  few  Large  Businesses. 

§    4.  Restraint  of  Competition  and  Limited  Monopoly. 

§    5.  Facilities  for  maintaining  Price-Lists  in  different  Ln- 

dustries. 
§    6.  Logical  Outcome  of  Large-Scale  Competition. 
§    7.  Different  Species  of  ^^Combines.^^ 
§    8.  Legal  and  Economic  Nature  of  the  ^'' Trust. ^^ 
§    9.   Origin  and  '■^ Modus  Operandi"  of  the  Standard   Oil 

Trust. 
§  10.   The  Economic  Strength  of  other  Trusts. 
§11.  Lndustrial  Conditions  favourable  to  "Monopoly." 

§  I.  The  forces  which  are  operating  to  drive  capital  to 
group  itself  in  larger  and  larger  masses,  and  the  consequent 
growth  of  the  business-unit,  require  special  study  in  relation 
to  changes  effected  in  the  character  of  competition  in  the 
market  and  the  establishment  of  monopolies.  The  econ- 
omies which  give  to  the  large  business  an  advantage  over 
the  small  business  may  be  divided  into  two  classes — 
economies  of  productive  power,  and  economies  of  com- 
petitive power. 

In  the  first  class  will  be  placed  those  economies  which 
arise  from  increased  sub-division  of  labour  and  increased 
efficiency  of  productive  energy,  and  which  represent  a  net 
saving  in  the  output  of  human  energy  in  the  production  of 
a  given  quantity  of  commodities,  from  the  standpoint  of  the 
whole  productive  community.     These  include — 

{a)  The  effort  saved  in  the  purchase  and  transport  of 


Il8  THE   EVOLUTION   OF 

raw  materials  in  large  quantities  as  compared  with  small 
quantities,  and  a  corresponding  saving  in  the  sale  and 
transport  of  the  goods,  manufactured  or  other.  Under 
this  head  would  come  the  discovery  and  opening  up  of 
new  markets  for  purchase  of  raw  materials  and  sale  of 
finished  goods,  and  everything  which  increases  the  area  of 
effective  competition  and  co-operation  in  industry. 

{b)  The  adoption  of  the  best  modern  machinery.  Much 
expensive  machinery  will  only  "save  labour"  when  it  is 
used  to  assist  in  producing  a  large  output  which  can  find  a 
tolerably  steady  market.  The  number  of  known  or  dis- 
coverable inventions  for  saving  labour  which  are  waiting 
either  for  an  increase  in  the  scale  of  production  or  for  a 
rise  in  the  wages  of  the  labour  they  might  supersede,  in 
order  to  become  economically  available,  may  be  considered 
infinite.  With  every  rise  in  the  scale  of  production  some 
of  these  pass  from  the  "unpaying"  into  the  "paying" 
class,  and  represent  a  net  productive  gain  in  saved  labour  of 
the  community. 

(c)  The  performance  of  minor  or  subsidiary  processes 
upon  the  same  premisses  or  in  close  organic  connection 
with  the  main  process,  the  establishment  of  a  special  work- 
shop for  repairs,  various  economies  in  storage,  which  attend 
large-scale  production. 

{d)  Economies  consisting  in  saved  labour  and  increased 
efficiency  of  management,  superintendence,  clerical  and  other 
non-manual  work,  which  follow  each  increase  of  size  in  a 
normally  constructed  business.  These  are  often  closely 
related  to  {b),  as  where  clerical  work  is  economised  by  the 
introduction  of  type-writers  or  telephonic  communication, 
and  to  {c\  as  by  the  establishment  of  more  numerous  and 
convenient'  centres  of  distribution. 

(e)  The  utilisation  of  waste-products,  one  of  the  most 
important  practical  economies  in  large-scale  production. 

(/)  The  capacity  to  make  trial  of  new  experiments  in 
machinery  and  in  industrial  organisation. 

§  2.  To  the  class  Economies  in  Competitive  Power 
belong  those  advantages  which  a  large  business  enjoys  in 
competing  with  smaller  businesses,  which  enable  it  either  to 
take  trade  away  from  the  latter,  or  to  obtain  a  higher  rate 
of  profits  without  in  any  way  increasing  the  net  productive- 
ness of  the  community.     This  includes — 


MODERN   CAPITALISM.  II9 

(i)  A  large  portion  of  the  economy  in  advertising,  travel- 
ling, local  agents,  and  the  superiority  of  display  and  touting 
which  a  large  business  is  able  to  afford.  In  most  cases  by 
far  the  greater  part  of  this  publicity  and  self-recommenda- 
tion is  no  economy  from  the  standpoint  of  the  trade  or  the 
community,  but  simply  represents  a  gain  to  one  firm 
compensated  by  a  loss  to  others.  In  not  a  few  cases  the 
"  trade  "  may  be  advantaged  to  the  damage  of  other  trades 
or  of  the  consumer,  as  when  a  class  of  useless  or  deleterious 
drugs  is  forced  into  consumption  by  persistent  methods  of 
self-appraisal  which  deceive  the  public. 

(2)  The  power  of  a  large  business  to  secure  and  maintain 
the  sole  use  of  some  patent  or  trade  secret  in  machinery 
or  method  of  manufacture  which  would  otherwise  have  gone 
to  another  firm,  or  would  have  become  public  property  in 
the  trade,  represents  no  public  economy,  and  sometimes 
a  public  loss.  Where  such  improvement  is  due  solely  to  the 
skill  and  enterprise  of  a  business  man,  and  would  not  have 
passed  into  use  unless  the  sole  right  were  secured  to  his 
business,  this  economy  belongs  to  the  productive  class. 

(3)  The  superior  ability  of  a  large  business  to  depress 
wages  by  the  possession  of  a  total  or  partial  monopoly  of 
local  employment,  the  corresponding  power  to  obtain  raw 
material  at  low  prices,  or  to  extort  higher  prices  from  con- 
sumers than  would  obtain  under  the  pressure  of  free 
competition,  represent  individual  business  economies  which 
may  enable  a  large  business  to  obtain  higher  profits. 

§  3.  Now  all  these  forces  operative  in  trades  which  are 
said  to  be  subject  to  the  law  of  increasing  returns  tend  to 
increase  the  size  and  to  diminish  the  number  of  businesses 
competing  within  a  given  area.  In  some  industries  the 
expanding  size  of  the  market  or  area  of  competition  keeps 
pace  with  this  movement,  so  that  the  total  number  of  the 
larger  competitors  within  the  market  may  be  as  great  as 
before.  But  in  most  of  the  markets  the  growing  scale  of 
the  business  is  attended  by  an  absolute  diminution  in  the 
number  of  effective  competitors,  or  at  any  rate  by  an  increase 
which  is  very  much  smaller  than  the  increase  in  the  amount 
of  trade  that  is  done. 

So  long  as  we  have  merely  the  substitution  of  a 
smaller  number  of  large  competing  businesses  for  a  larger 
number  of  small  ones,  no  radical  change  is  effected  in  the 


120  THE   EVOLUTION   OF 

nature  of  industry.  So  long  as  every  purchaser  is  able  to  buy 
from  two  or  more  equally  developed  and  effectively  com- 
peting firms  he  can  make  them  bid  against  one  another  until 
he  obtains  the  full  advantage  of  the  economies  of  large-scale 
production  which  are  common  to  them.  So  long  as  there 
remains  effective  competition,  all  the  productive  economies 
pass  into  the  hands  of  the  consumer  in  reduction  of  price. 
Nay,  more  than  this,  a  competing  firm  cannot  keep  to  itself 
the  advantages  of  a  private  individual  economy  if  its  com- 
petitor has  another  private  economy  of  equal  importance. 
If  A  and  B  are  two  closely  competing  firms,  A  owning 
a  special  machine  capable  of  earning  for  him  2  per  cent, 
above  the  normal  trade  profit,  and  B  owning  a  similar 
advantage  by  possession  of  "cheaper  labour,"  these  private 
economies  will  be  cancelled  by  competition,  and  pass  into 
the  pocket  of  the  consuming  public. 

There  is  every  reason  to  believe  that  with  a  diminution 
in  the  number  of  competitors  and  an  increase  of  their  size, 
competition  grows  keener  and  keener.  Under  old  business 
conditions  custom  held  considerable  sway ;  the  personal 
element  played  a  larger  part  alike  in  determining  quality  of 
goods  and  good  faith ;  purchasers  did  not  so  closely  com- 
pare prices ;  they  were  not  guided  exclusively  by  figures, 
they  did  not  systematically  beat  down  prices,  nor  did  they 
devote  so  large  a  proportion  of  their  time,  thought,  and 
money  to  devices  for  taking  away  one  another's  customers.^ 
From  the  new  business  this  personal  element  and  these 
customary  scruples  have  almost  entirely  vanished,  and  as 
the  net  advantages  of  large-scale  production  grow,  more 
and  more  attention  is  devoted  to  the  direct  work  of  com- 
petition. Hence  we  find  that  it  is  precisely  in  those  trades 
which  are  most  highly  organised,  provided  with  the  most 
advanced  machinery,  and  composed  of  the  largest  units  of 
capital,  that  the  fiercest  and  most  unscrupulous  competition 
has  shown  itself.  The  precise  part  which  machinery,  with 
its  incalculable  tendency  to  over-production,  has  played  in 
this  competition  remains  for  later  consideration.  Here  it 
is  enough  to  place  in  evidence  the  acknowledged  fact  that 

^  There  still  survive  in  certain  old-fashioned  trades  firms  which  do 
business  without  formal  written  contracts,  and  which  would  be  ashamed 
to  take  a  lower  price  than  they  had  at  first  asked,  or  to  seek  to  beat 
down  another's  price. 


MODERN   CAPITALISM.  121 

the  growing  scale  of  the  business  has  intensified  and  not 
diminished  competition.  In  the  great  machine  industries 
trade  fluctuations  are  most  severely  felt;  the  smaller 
businesses  are  unable  to  stand  before  the  tide  of  depression 
and  collapse,  or  are  driven  in  self-defence  to  coalesce.  The 
borrowing  of  capital,  the  formation  of  joint-stock  enterprise 
and  every  form  of  co-operation  in  capital  has  proceeded  most 
rapidly  in  the  textile,  metal,  transport,  shipping,  and  machine- 
making  industries,  and  in  those  minor  manufactures,  such  as 
brewing  and  chemicals,  which  require  large  quantities  of  ex- 
pensive plant.  This  joining  together  of  small  capitals  to 
make  a  single  large  capital,  this  swallowing  up  of  small  by 
large  businesses,  means  nothing  else  than  the  endeavour  to 
escape  the  risks  and  dangers  attending  small-scale  production 
in  the  tide  of  modern  industrial  changes.  But  since  all  are 
moving  in  the  same  direction,  no  one  gains  upon  the  other. 
Certain  common  economies  are  shared  by  the  monster  com- 
petitors, but  more  and  more  energy  must  be  given  to  the 
work  of  competition,  and  the  productive  economies  are 
partly  squandered  in  the  friction  of  fierce  competition,  and 
partly  pass  over  to  the  body  of  consumers  in  lowered  prices. 
Thus  the  endeavour  to  secure  safety  and  high  profits  by  the 
economies  of  large-scale  production  is  rendered  futile  by 
the  growing  severity  of  the  competitive  process.  Each 
big  firm  finds  itself  competent  to  undertake  more  busi- 
ness than  it  already  possesses,  and  underbids  its  neigh- 
bour until  the  cutting  of  prices  has  sunk  the  weaker  and 
driven  profits  to  a  bare  subsistence  point  for  the  stronger 
competitors. 

.  So  long  as  the  increased  size  of  business  brings  with  it 
a  net  economic  advantage,  the  competition  of  ever  larger 
competitors,  whose  total  power  of  production  is  far  ahead 
of  sales  at  remunerative  prices,  and  who  are  therefore 
constrained  to  devote  an  increased  proportion  of  energy 
to  taking  one  another's  trade,  must  intensify  this  cut-throat 
warfare.  The  diminishing  number  of  competitors  in  a 
market  does  not  ease  matters  in  the  least,  for  the  intensity 
of  the  strife  reaches  its  maximum  when  two  competing 
businesses  are  fighting  a  life  or  death  struggle.  As  the 
effective  competitors  grow  fewer,  not  only  is  the  proportion 
of  attention  each  devotes  to  the  other  more  continuous  and 
more  highly  concentrated,  but  the  results  of  success  are 


122  THE   EVOLUTION   OF 

more  intrinsically  valuable,  for  the  reward  of  victory  over 
the  last  competitor  is  the  attainment  of  monopoly. 

§  4.  To  keen-eyed  business  men  engaged  in  the  thick 
of  large-scale  competition  it  becomes  increasingly  clear  that 
good  profits  can  only  be  obtained  in  one  of  two  ways. 
A  successful  firm  must  either  be  in  possession  of  some 
trade  secret,  patent,  special  market,  or  such  other  private 
economy  as  places  it  in  a  position  of  monopoly  in  certain 
places  or  in  certain  lines  of  goods,  or  else  it  must  make 
some  arrangement  with  competing  firms  whereby  they 
shall  consent  to  abate  the  intensity  or  limit  the  scope  of  their 
competition.  It  will  commonly  be  found  that  both  these 
conditions  are  present  where  a  modern  firm  of  manu- 
facturers or  merchants  succeeds  in  maintaining  during 
a  long  period  of  time  a  prosperous  or  paying  business. 
The  firm,  though  in  close  competition  over  part  of  the  field 
of  industry,  will  have  a  speciality  of  a  certain  class  of  wares, 
at  any  rate  in  certain  markets,  and  it  will  be  fortified  by  a 
more  or  less  firmly  fixed  rate  of  prices  extending  over  the 
whole  class  of  commodities.  Both  of  these  forces  signify 
a  restriction  upon  competition. 

To  the  older  economists,  who  regarded  free  competition 
as  the  only  safe  guarantee  of  industrial  security  and  pro- 
gress, it  appeared  natural  that  capitalists  continually  engaged 
in  the  maximum  competition  would  yet  secure  a  living  rate 
of  profit,  for  if  this  were  not  the  case,  they  ingenuously 
urged,  capital  would  cease  to  remain  in  such  a  trade. 
With  the  fallacy  involved  in  this  theory  we  shall  deal 
in  a  later  chapter.  It  is  sufficient  here  to  observe  that 
where  keen  competition  is  operative  in  modern  machine 
industries  the  average  rate  of  profits  obtained  for  capital 
is  generally  below  that  which  would  suffice  to  induce 
new  capital  invested  with  full  knowledge  to  come  into 
the  trade. 

In  highly  organised  trades,  where  the  natural  effects  of 
free  competition  have  been  fully  manifested,  we  find  that 
the  hope  of  a  profitable  business  is  entirely  based  upon 
the  possibility  that  a  trade  agreement  will  so  mitigate 
competition  as  to  allow  a  rate  of  selling  prices  to  obtain 
which  remains  considerably  higher  than  that  which  free 
competition  would  allow. 

As  the  field  of  competition  is  narrowed  to  a  compara- 


MODERN   CAPITALISM.  1 23 

tivel/  few  large  competitors,  there  arises  a  double 
inducement  to  suspend  or  mitigate  hostilities ;  as  the 
competition  is  fiercer  more  is  gained  by  a  truce;  as  the 
number  of  combatants  is  smaller,  a  truce  can  be  more 
easily  formed  and  maintained.  In  most  machine-using 
countries  each  branch  of  a  staple  industry  endeavours  to 
protect  itself  from  free  competition  by  a  combination  of 
masters  to  fix  a  scale  of  prices.  This  is  the  normal  condi- 
tion of  trade  in  England  to-day.  These  combinations  to 
fix  and  maintain  prices  are  not  equally  successful  in  all 
trades,  but  they  are  always  operative  to  a  more  or  less 
extent  in  modifying  or  retarding  the  effects  of  competition. 
Where  trade  unions  of  operatives  are  strong,  well-informed, 
and  resolute,  or  where  outsiders  have  large  facilities  for  in- 
vesting capital  and  dividing  the  trade,  the  endeavours  to  main- 
tain prices  and  to  secure  a  higher  than  the  competitive 
rate  of  profits  are  unsuccessful.  The  joint  operation  of  both 
these  conditions  in  the  cotton-spinning  trade  explains 
why  the  Lancashire  spinners  have  been  unable  to  check 
the  effects  of  cut-throat  competition.  But  throughout 
all  branches  of  textile,  metal,  pottery,  engineering,  and 
machine-making  trades  strong  and  persistent  endeavours 
are  made  by  co-operative  action  of  capitalists  to  limit 
competition  by  fixing  a  scale  of  prices  which  should  not 
be  underbid. 

Where  competing  railways  fix  a  tariff  of  rates  for  carriage, 
or  competing  manufacturers  fix  a  scale  of  prices  for  their 
goods,  their  object  is  to  secure  to  themselves  in  higher 
profits  a  portion  or  the  whole  of  the  productive  and  com- 
petitive economies  attending  large-scale  production,  instead 
of  allowing  them  by  unrestricted  competition  to  pass  into 
the  hands  of  their  customers.  Suppose  that  a  number  of 
steel  rail  manufacturers  freely  competing  would  drive  down 
the  selling  price  to  j£i  a  ton,  but  that  by  a  trade  agreement 
they  maintain  j£i  los.  as  the  minimum  price,  los.  per 
ton  represents  the  economies  of  production  which  they 
divert  from  their  customers  into  their  own  possession  by 
a  limitation  of  the  competition.  Part  of  the  los.  may 
represent  the  actual  saving  of  the  labour  which  would  have 
been  spent  in  competition  as  prices  fell  from  ;^i  los.  to 
^1.  Part  may  represent  a  taking  in  higher  profits  of  some 
of  the  economies  of  new  machinery  or  improved  methods 


124  THE   EVOLUTION    OF 

of  production  common  to  the  competing  firms,  and  which 
would  inevitably  have  led  to  a  fall  of  price  if  the  competitive 
process  had  been  allowed  free  play. 

The  prices  thus  fixed  are  monopoly  prices — that  is  to  say, 
they  are  determined  by  the  action  of  a  number  of  com- 
peting capitals  which  at  a  certain  point  agree  to  suspend 
their  conflict  and  act  as  a  single  capital ;  when  the  bidding 
is  above  a  certain  figure  they  are  many,  when  it  is  below 
that  figure  they  are  one.  The  condition  in  such  a  trade  is 
one  of  limited  monopoly.  The  prices  fixed  by  such  trade 
agreements  will  generally  be  different  from  those  of  a  single 
firm  with  the  absolute  monopoly  of  a  market,  whose  prices 
are  arranged  to  yield  the  maximum  net  profit  on  the  capital 
engaged.  For  since  the  economies  of  competition  and 
some  of  the  economies  of  production  would  be  far  greater 
for  a  single  producing  firm  with  a  monopoly,  the  schedule 
of  supply  prices  measuring  the  expenses  of  producing  the 
different  quantities  of  goods  will  be  different,  and  this 
difference  will  be  reflected  in  a  different  scale  of  non- 
competitive market  prices  from  that  which  would  issue 
from  a  trade  agreement.  Moreover,  a  loose  voluntary 
compact  between  trade  rivals  yields  a  monopoly  of  a  far 
feebler  order  than  does  the  unity  of  a  single  capital.  If 
a  scale  of  prices  were  fixed  which  would  yield  a  consider- 
ably higher  profit  than  the  market  rate,  the  temptation 
to  secure  a  larger  share  of  trade  by  secret  underbidding 
through  commissions,  drawbacks,  or  otherwise,  or  even  by 
an  open  cutting  of  rates,  is  very  powerful.  Moreover,  the 
ability  of  a  number  of  firms  with  conflicting  interests  to 
secure  this  monopoly  by  quick  and  vigorous  repression  of 
the  attempts  of  outside  capital  to  come  in  either  for  the 
purpose  of  sharing  the  higher  profits,  or  of  being  bought 
out,  is  far  less  than  in  the  case  of  a  single  monopolist  firm. 
So  the  scale  of  prices  fixed  by  a  number  of  competing  firms 
will  generally  be  nearer  to  the  competition  prices  than 
would  be  the  case  with  the  prices  of  a  single  monopolist. 

§  5.  The  recognition  of  the  advantages  of  limiting  compe- 
tition by  price  tariffs,  and  the  experience  of  the  difficulty  of 
maintaining  such  tariffs,  lead  competing  businesses  to  take 
further  steps  in  the  curtailment  of  competition.  Where  a 
powerful  trade  opinion  can  be  focussed  on  an  offender 
against  the  scale,  where  he  can  be  boycotted  or  otherwise 


MODERN   CAPITALISM.  I25 

subjected  to  punishment,  and  where  outsiders  can  be  pre- 
vented from  intruding  into  the  trade,  a  common  scale  of 
profitable  prices  can  often  be  maintained  with  the  verbal  or 
even  the  tacit  consent  of  those  concerned.  This  is  the 
case  in  many  manufactures  where  the  fixed  and  well-known 
character  of  the  goods  makes  a  close  price-list  possible. 
Retail  dealers  in  local  markets  are  often  able  to  keep  a  close 
adherence  to  a  rigid  scale  by  the  pure  force  of  esprit  de 
corps.  The  price  of  bread,  meat,  milk,  coals,  and  other 
articles  sold  locally  by  well-known  measures,  is  seldom,  if 
ever,  regulated  by  free  competition  among  the  vendors.  In 
articles  where  more  depends  upon  the  individual  quality  of 
wares,  and  where  a  rigid  tariff  is  less  easily  fixed  and  less 
easily  maintained,  as  in  the  case  of  vegetables,  fruit,  fish,  and 
groceries,  trade  agreements  are  less  easy  to  maintain.  Still 
more  difficult  is  it  to  maintain  a  tariff  for  articles  of  dress 
or  adornment  of  the  person  or  the  house,  and  in  other 
articles  where  the  consumer  is  less  confined  to  a  narrow 
local  market. 

The  general  experience  of  manufacturing  and  mercantile 
businesses,  where  each  firm  is  closely  confronted  by  other 
firms  of  similar  capacity  and  equipment  at  every  point  in 
the  market,  indicates  an  increasing  difficulty  in  maintaining 
prices  at  a  profitable  level.  Everywhere  complaints  are 
heard  of  a  reckless  use  of  the  productive  power  of 
machinery,  of  over-stocked  markets,  of  a  cutting  of  prices  in 
order  to  get  business,  and  of  a  growing  inability  to  make 
a  living  rate  of  profit. 

§  6.  The  endeavour  of  a  number  of  individual  businesses 
in  a  trade  to  fix  and  maintain  a  certain  profitable  scale  of 
prices  is  constantly  frustrated.  The  introduction  of  new 
machinery  enabling  certain  firms  to  make  a  profit  at  prices 
below  the  tariff  induces  them  to  utilise  their  full  pro- 
ductivity, cut  prices,  and  still  sell  at  a  profitable  price; 
others  involved  in  the  meshes  of  speculative  production 
are  compelled  to  cut  prices  and  effect  sales  even  at  a 
loss ;  the  difficulty  of  finding  safe  investments  drives  new 
capital  into  the  hands  of  company-promoters,  who  fling  it 
with  criminal  negligence  into  this  or  that  branch  of  pro- 
duction, underbidding  the  tariff  to  win  a  footing  in  the 
market.  All  these  forces  render  loose  agreements  to  limit 
competition   more   and   more   inadequate   to  secure  their 


126  THE   EVOLUTION   OF 

purpose.  Frequent  experience  of  the  impotence  of  these 
partial  forms  of  co-operation  drives  trade  competitors  to 
seek  ever  closer  forms  of  combination.  An  issue  of  this 
necessity  is  the  Syndicate  and  the  Trust.  By  raising  the 
co-operative  action  so  as  to  cover  the  whole,  and  by  thus 
reducing  the  competition  to  zero,  it  is  hoped  that  a  union 
may  be  formed  strong  enough  to  maintain  monopoly  prices. 
Thus  the  Trust  is  seen  as  the  logical  culmination  of  the 
operation  of  economic  forces  which  have  been  continually 
engaged  in  diminishing  the  number  of  effective  competitors, 
while  increasing  their  size  and  the  proportion  of  their  energy 
devoted  to  the  competition. 

At  each  stage  in  the  process  the  smaller  competitors  are 
eliminated,  and  the  larger  driven  to  increase  their  size  so 
that  the  whole  may  be  illustrated  by  a  pyramid,  the  base  or 
first  stage  of  which  consists  of  a  larger  number  of  small 
units,  and  each  higher  stage  of  a  smaller  number  of  larger 
units,  with  a  Trust  or  Monopoly  Syndicate  for  its  apex. 

§  7.  The  motive  which  induces  a  number  of  businesses 
hitherto  separate,  or  associated  merely  for  certain  specific 
actions,  such  as  the  fixing  of  prices  or  wages,  to  amalgamate 
so  that  they  form  a  single  capital  on  which  a  single  rate  of 
interest  is  paid,  is  a  double-edged  one.  There  is,  on  the 
one  hand,  the  desire  to  protect  themselves  against  excessive 
competition  and  cutting  of  rates,  and  on  the  other  hand 
a  desire  to  secure  the  advantages  which  arise  from  mon- 
opoly. The  way  in  which  Syndicates  and  Trusts  are 
regarded  depends  very  much  from  which  of  these  two 
aspects  they  are  regarded.  Those  who  consider  these  busi- 
ness "combines"  as  arbitrary  and  high-handed  interferences 
with  freedom  of  commerce,  undertaken  in  order  to  place  in 
the  hands  of  a  few  persons  a  power  to  rob  and  oppress 
the  consuming  public  by  legalised  extortion,  regard  the 
motive  of  combination  to  be  monopoly.  On  the  other 
hand,  the  combining  firms  represent  themselves  as  the 
victims  of  circumstances,  bound  in  self-protection  to  com- 
bine. Our  analysis  of  the  operations  of  commercial  com- 
petition enables  us  to  see  that  these  two  forces  are  not 
really  separate,  but  are  only  two  ways  of  looking  at  the 
same  action.  Every  avoidance  of  so-called  "excessive" 
competition  is  ipso  facto  an  establishment  of  a  monopoly. 
The  tariff  of  prices  established  a  weak  and  partial  monopoly. 


MODERN   CAPITALISM.  12/ 

The  "combine,"  whether  it  takes  the  name  of  "ring," 
"syndicate,"  or  "trust,"  succeeds,  in  so  far  as  it  estabhshes 
a  stronger  and  more  absolute  monopoly. 

In  their  economic  aspect  these  terms  are  somewhat 
vague,  the  vagueness  arising  in  some  degree  from  the 
changing  and  secret  shapes  these  combinations  often  find  it 
convenient  to  adopt  in  order  to  preserve  the  appearance  of 
competition,  or  to  avoid  public  obloquy  or  legal  inter- 
ference. "  Combine"  is  probably  the  generic  term  which 
covers  all  these  operations.  A  syndicate  of  capitalists  are 
said  to  form  a  "combine"  with  the  view  of  controlling 
prices  so  as  to  pay  a  profitable  interest.  If  they  .ipply  their 
capital  not  to  the  acquisition  of  the  plant  and  machinery  of 
manufacture  with  the  view  of  regulating  production,  but 
directly  and  mainly  to  the  planning  of  some  speculative 
stroke  or  series  of  strokes  in  the  produce  market,  obtaining 
temporary  control  of  sufficient  goods  of  a  particular  kind  to 
enable  them  to  manipulate  prices,  they  are  said  to  form 
a  "corner"  or  "ring."  Such  forms  of  combined  action  are 
generally  of  short  duration.  Technically  they  consist  in  an 
artificial  diversion^  of  a  particular  class  of  goods  from  the 
ordinary  channel  of  a  number  of  competing  owners  into  a 
single  ownership,  so  that  they  may  be  held  and  placed 
upon  the  supply  market  at  such  times  and  in  such  ways  as 
to  enable  the  owner  to  obtain  a  famine  price.  The  follow- 
ing description  of  a  wheat  "  corner  "  will  serve  to  exemplify 
this  method  of  "combine  "  : — 

"  The  man  who  forms  a  corner  in  wheat,  first  purchases 
or  secures  the  control  of  the  whole  available  supply  of 
wheat,  or  as  near  the  whole  supply  as  he  can.  In  addition 
to  this  he  purchases  more  than  is  really  within  reach  of  the 
market  by  buying  'futures,'  or  making  contracts  with 
others  who  agree  to  deliver  him  wheat  at  some  future  time. 
Of  course  he  aims  to  secure  the  greater  part  of  his  wheat 
quietly,  at  low  figures ;  but  after  he  deems  that  the  whole 
supply  is  nearly  in  his  control,  he  spreads  the  news  that 
there  is  a  *  corner '  in  the  market,  and  buys  openly  all  the 
wheat  he  can,  offering  higher  and  higher  prices,  until  he 
raises  the  price  sufficiently  high  to  suit  him.     Now  the  men 

^  There  need,  of  course,  be  no  actual  diversion  of  goods  into  the 
possession  of  the  Ring :  the  essence  of  the  monopoly  consists  in  the 
control,  not  in  the  possession  of  goods. 


128  TITE   EVOLUTION   OF 

who  have  contracted  to  deliver  wheat  to  him  at  this  date 
are  at  his  mercy.  They  must  buy  their  wheat  of  him  at  what- 
ever price  he  chooses  to  ask,  and  deliver  it  as  soon  as 
purchased,  in  order  to  fulfil  their  contracts.  Meanwhile 
mills  must  be  kept  in  operation,  and  the  millers  have  to  pay 
an  increased  price  for  wheat ;  they  charge  the  bakers  higher 
prices  for  flour,  and  the  bakers  raise  the  price  of  bread. 
Thus  is  told  by  the  hungry  mouths  in  the  poor  man's  home 
the  last  act  in  the  tragedy  of  the  corner,  "^ 

These  "corners,"  of  which  in  various  forms  and  degrees  the 
speculative  business  on  the  stock  and  produce  markets  largely 
consists,  are  attempts  to  substitute  for  a  time  a  high  mon- 
opoly price  for  a  competitive  price  by  "  rigging  the  market." 
Since  the  calculations  upon  which  these  "corners"  are 
based  are  essentially  hazardous,  attempted  corners  fre- 
quently break  down.  One  of  the  most  special  examples  of 
the  collapse  of  a  powerful  corner  in  recent  years  is  that  of 
"La  Socidt^  Industrielle  Commerciale  des  M^taux,"  com- 
monly known  as  the  "Copper  Syndicate."  A  body  of 
French  capitalists,  for  the  most  part  not  owners  of  mines  or 
metal  merchandise,  but  speculators  pure  and  simple,  placed 
a  sum  of  money  with  the  intention  of  cornering  the  supply 
of  "tin."  Before  completing  this  design  they  were  induced 
to  undertake  a  larger  speculation  in  the  "copper  market." 
In  1887  they  entered  into  contracts  with  the  largest 
copper-producing  companies  in  various  countries,  agreeing 
to  buy  all  the  copper  produced  for  the  next  three  years  at 
a  fixed  price  of  13  cents  per  pound,  with  an  added  bonus 
equivalent  to  half  the  profit  from  their  sale  of  the  same. 
In  1888  the  Syndicate  sought  to  extend  its  contracts  with 
chief  mining  companies  to  cover  a  period  of  twelve  years, 
arranging  with  them  also  to  limit  the  output  of  copper.  For 
some  time  they  held  the  market  in  their  grip,  and  prices 
advanced  considerably.  But  partly  owing  to  a  failure  to 
complete  their  contracts  securing  a  restriction  in  production, 
and  partly  from  inability  to  meet  their  current  liabilities,  the 
"  corner"  was  broken  down  in  1889,  and  the  artificially  in- 
flated prices  fell.  Not  only  are  the  makers  of  "  corners " 
liable  to  these  miscalculations,  but  they  are  liable  to  be 
overthrown   by  counter   combinations  of   capitalists  or  of 

^  Baker,  Monopolies  and  the  People,  p.  81. 


MODERN    CAPITALISM.  1 29 

operatives.  The  breakdown  of  a  formidable  attempt  to 
"corner"  cotton  in  Lancashire  in  1889  was  due  to  the 
prompt  action  of  the  Trades  Unions,  who  undertook  to 
unite  with  their  employers  in  a  stoppage  of  work  for  such 
length  of  time  as  was  requisite  to  force  the  collapse  of  the 
"ring." 

In  the  same  year  a  formidable  flour  syndicate  broke  down 
before  the  firm  attitude  of  the  co-operative  flour  mills. ^ 

But  though  the  speculative  character  of  modern  commerce, 
assisted  by  the  abundant  use  of  credit,  has  lent  special 
facilities  to  the  formation  of  "corners"  and  "rings,"  it  is 
hardly  necessary  to  say  that  commerce  has  never  been  free 
from  them.  The  celebrated  "corner"  in  grain  which 
Joseph  organised  on  behalf  of  the  King  of  Egypt  was  one 
of  the  largest  and  most  successful.  The  commercial  law  of 
the  Middle  Ages  is  full  of  provisions  against  engrossers,  fore- 
stallers,  and  regrators,  all  of  whom  were  engaged  in  artificially 
raising  prices  to  the  consumer  by  obtaining  some  sort  of 
monopoly.  Organised  rings  to  secure  a  monopoly  of  the 
food  supply  of  some  great  city  have  been  frequent  through- 
out history.  Cicero  informs  us  of  the  celebrated  ring  of 
capitalists  under  Crassus  to  raise  food  prices  at  Rome,  A 
closely-formed  combination  of  northern  coalowners  con- 
tinued to  restrict  output  and  impose  monopoly  prices  upon 
London  consumers  for  a  considerable  time  in  the  middle  of 
the  eighteenth  century.^ 

In  modern  times  these  "  corners  "  are  essentially  of  brief 
duration  so  far  as  they  consist  in  narrowing  the  stream  of 
commerce  at  a  particular  point  so  as  to  check  its  free  flow. 
Most  of  them  are  confined  to  goods  which  are  dealt  with  upon 
commercial  exchanges,  and  are  amenable  to  the  operations  of 
skilled  speculators.  The  "deal "  must  be  upon  a  scale  large 
enough  to  enable  a  big  net  profit  to  be  secured  in  a  short  time. 
The  stimulation  which  artificially  inflated  prices  apply  to 
the  early  productive  processes,  the  activity  of  other  specu- 
lators, and  the  check  given  to  consumption  by  high  prices, 
generally  preclude  the  possibility  of  a  "  corner  "  lasting  long. 
The  strength  of  the  copper  "corner,"  had  it  succeeded, 
would  have  lain  in  the  hold  it  would  have  obtained  over 

^  Cf.  Miss  Potter,  The  Co-operative  Movement,  p.  199. 
^  Porter,  Progress  of  the  Nation,  pp.  283-285. 

9 


130  THE   EVOLUTION   OF 

the  early  extractive  stage,  preventing  the  operation  of  the 
natural  stimulus  of  high  prices  to  increase  production.  If  the 
Copper  Syndicate  had  established  its  hold  upon  the  mining 
companies,  it  would  have  been  able  to  hold  the  market  for 
an  indefinite  period,  passing  from  the  state  of  a  "corner" 
into  the  more  durable  and  established  position  of  the  Trust. 
§  8.  A  Trust  may  be  regarded  from  an  economic  aspect, 
or  from  a  legal  aspect.  Economically,  the  term  Trust  is 
applied  to  a  class  of  syndicates  which  have  established  a 
partial  or  total  monopoly  in  certain  productive  industries 
by  securing  the  ownership  of  a  sufficient  proportion  of 
the  instruments  of  production  to  enable  them  to  control 
prices.  Legally,  a  Trust  is  a  form  of  business  associa- 
tion— "a  trust  of  corporate  stocks  by  means  of  which  a 
body  of  men  united  in  interest  are  enabled  to  carry  on 
business  through  separate  corporate  agencies."^  It  is  a 
company  of  companies,  under  which,  while  the  formal 
structure  of  the  original  companies  is  maintained,  they  are 
incorporated  as  single  cells  in  the  larger  organism  which 
directs  their  activity.  The  constitution  of  the  Trust  is 
best  explained  by  a  description  of  its  origin  in  the  in- 
dustry of  the  United  States.  The  owners  of  a  majority 
of  the  shares  in  a  number  of  corporations  hitherto 
separate  in  their  constitution  (though  they  may  have 
been  acting  in  agreement  with  one  another,  or  have 
been  largely  owned  by  the  same  persons)  agree  to  place 
their  shares  of  stock  in  the  full  control  of  a  body  of  persons 
called  trustees.  These  trustees  may  or  may  not  be  share- 
holders or  directors  of  the  several  corporations.  They  *'  act 
under  an  agreement  that  they  will  cast  the  votes  represented 
by  the  stock  so  held  for  the  perpetuation  of  the  trust  during 
the  time  agreed  upon,  and  in  furtherance  of  its  purposes  : 
will  elect  the  officers  provided  for  by  law  in  each  of  the 
corporations,  and  in  behalf  of  all  of  them  manage  the  busi- 
ness of  all,  except,  it  may  be,  in  small  matters  of  detail." 
"Each  shareholder,  upon  surrendering  his  corporate  stock 
to  the  board  of  trustees,  receives  a  certificate  entitling  him 
to  an  interest  in  all  the  property  and  earnings  of  all  the 
corporations  of  the  trust."  ^ 

1  C.  S.  T.  Dodd,  "Ten  Years  of  the  Standard  Oil  Trust,"  Forum, 
May  1892. 

2  "The  Standard  Oil  Trust,"  Roger  Sherman,  Fojtim,  July  1892. 


MODERN   CAPITALISM.  I3I 

These  certificates  are  believed  in  many  cases  to  certify  a 
money  value  far  in  excess  of  the  real  value  of  the  stock 
surrendered  at  the  time  when  the  Trust  was  formed.  The 
Report  of  the  New  York  Chamber  of  Commerce  for  1887-88 
estimates  the  "certificates",  given  by  the  Sugar  Trust  to 
the  shareholders  of  its  constituent  corporations  as  bearing 
"water''  to  the  amount  of  200  per  cent,  so  that  the  nom- 
inal dividend  of  io|  per  cent,  paid  during  the  year  repre- 
sented a  real  net  profit  of  3i|^  per  cent.  Such  statements 
cannot,  however,  be  verified,  since  it  is  the  interest  of  the 
only  persons  who  actually  know  to  keep  secret  such  an 
arrangement. 

It  is  asserted  by  many,  and  several  State  courts  have 
sustained  the  position,  that  a  Trust  is  in  America  an  illegal 
association,  because  it  implies  on  the  part  of  its  constituent 
corporations  a  violation  of  the  conditions  under  which  they 
received  the  powers  and  privileges  conferred  in  their  charters 
by  the  government  of  the  several  States.  Their  illegality 
consists,  it  is  held — 

(i)  In  surrendering  the  power  to  manage  and  control 
their  business  to  some  persons  other  than  those  legally 
authorised. 

(2)  In  engaging,  through  the  Trust,  in  kinds  of  business 
not  authorised  by  the  charter. 

§  9.  It  is,  however,  the  economic  character  and  powers 
of  the  Trust,  and  not  its  legal  position,  which  concern  us 
here. 

The  following  short  history  of  the  origin  and  modus 
operandi  of  the  Standard  Oil  Trust,  the  largest  and  in  some 
respects  the  strongest  of  these  organisations,  will  serve  to 
give  distinctiveness  to  the  idea  of  the  Trust : — 

Petroleum  began  to  be  an  article  of  extensive  commerce 
about  the  year  1862.  The  wells  from  which  the  crude 
petroleum  oil  was  drawn  were  in  Pennsylvania,  and  the 
work  of  boring  the  wells  with  machinery  and  extracting  the 
oil  grew  to  be  a  considerable  business.  The  crude  oil  was 
sold  to  various  refiners,  who  set  up  factories  in  Cleveland 
(Ohio),  in  Pittsburg,  and  in  several  other  cities.  By  1865 
these  factories  had  become  pretty  numerous,  and  in  that 
year  a  private  refinery  at  Cleveland,  owned  by  a  few 
partners,  obtained  a  charter  forming  it  into  a  corporation 
entitled    the   Standard   Oil   Company,   with    a   capital   of 


132  THE   EVOLUTION    OF 

$100,000.  Until  1870  the  progress  of  the  company  was 
comparatively  slow.  In  order  to  increase  their  hold 
upon  the  sources  of  production  in  Pennsylvania,  and 
to  expand  their  trade,  they  began  to  purchase  stock  in 
corporations  already  existing  in  that  State,  and  succeeded 
in  establishing  others,  with  which  they  worked  in  close 
alliance.  A  Standard  Oil  Company  was  organised  at  Pitts- 
burg, the  stock  of  which  passed  into  the  hands  of  the 
owners  of  the  Cleveland  Company.  They  then  proceeded 
to  establish  agencies  in  other  States,  primarily  for  the  sale  of 
their  goods,  but  when  these  businesses  were  firmly  planted 
they  obtained  for  them  from  the  several  States  charters 
incorporating  them  as  companies  for  refining  oil.  In  1872 
the  shareholders  of  the  Standard  Oil  Companies  at  Cleve- 
land, Pittsburg,  and  Philadelphia  organised  another  corpora- 
tion called  the  South  Improvement  Company,  obtaining  a 
charter  from  the  State  of  Pennsylvania,  This  corporation, 
which  was  in  fact  though  not  in  legal  form  the  "  Standard 
Oil  Companies,"  then  entered  into  contracts  with  the  New 
York  Central  and  Hudson  River  Railroad  Company,  the 
Erie  Railway  Company,  and  several  other  lines  which 
traversed  the  oil-producing  country,  for  the  shipment  of 
petroleum.  The  South  Improvement  Company  agreed  to 
ship  over  these  railways  all  the  petroleum  products.  In 
return  the  railway  companies  agreed  to  carry  their  goods, 
not  upon  the  terms  open  to  other  customers,  but  with  a 
system  of  rebates,  paid  not  only  upon  the  oil  shipped  by 
the  company,  but  upon  that  shipped  by  any  other  com- 
peting companies.  "  In  one  locality  the  railroad  companies 
were  to  charge  oil  shippers  as  freight  not  exceeding  $1.50 
per  barrel,  and  pay  a  rebate  to  the  South  Improvement 
Company  of  $1.06  per  barrel,  whether  it  was  the  shipper  of 
the  oil  or  not,  so  that  under  these  contracts  the  Standard 
Oil  Company  members  would  pay  no  more  than  44  cents 
per  barrel  as  freight  to  the  carrier,  while  their  competitors 
would  pay  $1.50,  and  of  this  last  sum  the  railways  were  to 
pay  back  to  the  combination  $1.06  per  barrel."^ 

Though  this  monstrous  conspiracy  was  quickly  unmasked, 
and   the   South   Improvement   Company  lost  its   charter, 

'  Roger  Sherman,   "The  Standard  Oil  Trust,"   The  Foi~um,  July 
1892. 


MODERN   CAPITALISM.  1 33 

secret  negotiations  with  the  railway  companies  enabled  the 
Standard  Oil  Companies  to  strengthen  themselves  by  this 
system  of  rebates  paid  out  of  the  pockets  of  their  business 
rivals.  Chiefly  by  means  of  these  and  other  discriminating 
contracts  they  were  enabled  to  enlarge  their  sphere  of 
activity,  and  making  full  use  of  their  growing  capital, 
succeeded  in  destroying  or  absorbing  their  competitors, 
until,  as  early  as  1875,  they  held  a  practical  monopoly  of 
the  refineries  of  the  interior.  No  fewer  than  seventy-four 
refineries  are  stated  to  have  been  bought  up,  leased,  or 
bankrupted  by  the  Standard  Oil  Company  in  Pennsylvania 
alone  in  the  course  of  its  career. 

Until  about  1878  the  chief  source  of  power  of  the  com- 
pany seems  to  have  been  the  alliance  with  the  railroads  and 
the  local  monopolies  obtained  by  buying  up  or  crushing 
rival  businesses.  But  the  president,  Mr.  Rockefeller,  and 
his  associates  were  men  of  keen  business  abihty,  who  under- 
stood how  to  make  use  of  the  inventive  genius  of  the  abler 
employees  who  passed  into  their  service,  and  of  the  improve- 
ments in  method  of  production  and  distribution  of  oil  which 
were  suggested.  In  the  next  few  years  the  company  were 
enabled  to  effect  enormous  economies  in  the  storage  and 
conveyance  of  oil.  Pipe  lines  were  laid  down  connecting 
New  York,  Philadelphia,  Baltimore,  Buffalo,  Pittsburg, 
Cleveland,  and  Chicago,  and  a  network  of  feeding  lines 
joining  the  sources  of  supply.  Thousands  of  huge  tanks 
were  erected  for  holding  surplus  stores ;  a  large  number  of 
agencies  were  established  along  the  sea-shore  with  storage 
attached.  Further  considerable  economies  were  effected  by 
the  undertaking  of  the  manufacture  of  barrels  and  cans  and 
other  subsidiary  articles  required  in  the  trade.  At  the  close 
of  1 88 1  the  owners  of  the  entire  capital  of  fifteen  corpora- 
tions and  parts  of  the  stock  of  a  number  of  others,  the  latter 
chiefly  trading  companies,  established  the  Trust.  The 
number  of  shareholders  thus  associated  was  forty,  and  they 
placed  their  stocks  in  the  hands  of  nine  of  their  number  as 
trustees,  who  continued  to  administer  the  whole  business, 
paying  interest  upon  the  certificates  which  represented  the 
stock  of  the  several  shareholders  until  March  1892,  when 
the  Trust  was  legally  dissolved.  The  legal  dissolution  of 
the  Trust  has  not,  however,  materially  impaired  its  economic 
unity  and  power ;  on  the  contrary,  it  has  extended  in  the 


134  THE   EVOLUTION    OF 

United  States  its  monopolic  control  of  the  market,  and  has 
already  established  a  strong  control  over  several  European 
markets  for  the  sale  of  oil,  and  over  the  chief  natural 
sources  of  supply.  Although  a  practical  monopoly  in 
many  parts  of  the  interior  had  been  acquired  at  a 
tolerably  early  date,  there  continued  to  be  active  com- 
petition in  all  branches  of  the  petroleum  business  until 
1884,  when  the  war  of  rates,  which  had  been  waged  for 
some  time  with  a  formidable  Canadian  competitor,  the 
Tidewater  Company,  ceased,  an  alliance  being  formed 
between  the  rivals.  From  that  time  the  Standard  Oil 
Trust  has  held  a  practical  monopoly  over  the  greater  part 
of  the  country.  It  has  introduced  new  economies  in  the 
machinery  of  refining,  has  found  profitable  uses  for  naphtha 
and  other  waste  products,  and  has  vastly  increased  its  out- 
put and  the  machinery  of  distribution.  Not  content  with 
controlling  the  market  for  crude  oil,  it  has  during  the  last 
few  years  obtained  the  possession  of  larger  and  larger 
portions  of  the  oil-producing  country,  forming  companies 
to  acquire  mining  rights,  sink  wells,  and  oust  the  private 
producers  from  whom  it  had  previously  been  content  to 
purchase  the  raw  material  at  their  own  prices. 

Bearing  in  mind  the  fact  that  the  actual  unification  of 
businesses  took  place  a  good  many  years  before  the  forma- 
tion of  the  Trust,  there  is  nothing  in  the  account  given 
above  inherently  inconsistent  with  the  following  explanation 
afforded  by  the  Standard  Oil  Trust  of  their  proceedings  : — 

"  The  Standard  Oil  Trust  offers  to  prove  by  various 
witnesses  that  the  disastrous  condition  of  the  refining 
business,  and  the  numerous  failures  of  refiners  prior  to 
1875,  arose  from  imperfect  methods  of  refining,  want  of 
co-operation  among  refiners,  the  prevalence  of  speculative 
methods  in  the  purchase  and  sale  of  both  crude  and  refined 
petroleum,  sudden  and  great  reductions  in  price  of  crude, 
and  excessive  rates  of  freight;  that  these  disasters  led  to 
co-operation  and  association  among  the  refiners,  and  that 
such  association  and  co-operation,  resulting  eventually  in 
the  Standard  Oil  Trust,  has  enabled  the  refiners  so  co- 
operating to  reduce  the  price  of  petroleum  products,  and 
thus  benefit  the  public  to  a  very  marked  degree."^ 

^  Argument  of  Standard  Oil  Trust  before  the  House  Committee  on 
Manufactures,  1888  (quoted  Baker,  Monopolies  atid  the  People^  p.  21). 


MODERN   CAPITALISM.  135 

So  far  as  this  furnishes  an  explanation  of  the  motives 
leading  to  the  earlier  growth  of  the  Company,  the  consolida- 
tion of  rival  companies,  no  doubt  it  contains  a  considerable 
element  of  truth.  The  Standard  Oil  Trust,  however,  differs 
from  most  others  in  that  it  was  not  directly  formed  by  the 
union  of  a  number  of  leading  rival  businesses,  but  was 
merely  a  reorganisation  upon  a  firmer  basis  of  a  single  com- 
plex business.  The  motive  of  self-protection,  though  it 
might  be  operative  in  the  early  history  of  the  Company, 
cannot  be  adduced  as  the  true  motive  of  the  formation  of 
the  Trust. 

Since  the  claim  of  the  Standard  Oil  Trust  to  be  a  public 
benefit  rests  upon  the  fall  of  price  to  the  customer,  resulting 
from  the  various  economies  and  improvements  adopted  by 
the  Trust,  it  may  be  well  to  append  a  diagram  showing 
the  actual  fall  of  prices  during  the  twenty  years  1870  to 
1890. 

In  this  diagram  we  note  that  from  1870  to  1875  there 
was  a  rapid  reduction  of  price  in  consequence  of  the  fact 
that  these  were  years  of  keen  competition  with  other 
Pennsylvanian  businesses.  1875,  which  marks  the  estab- 
lishment of  a  monopoly  of  the  interior  trade  in  the  hands  of 
the  Standard  Oil  Trust,  also  marks  a  sharp  rise  of  prices. 
The  expansion  of  their  business  brought  them  into  contact 
with  new  and  more  distant  competitors,  and  a  fall  of  price 
continued  until  1879,  while  prices  continued  to  oscillate 
until  1 88 1,  the  year  of  the  formation  of  the  Trust.  From 
the  time  of  the  formation  of  the  Trust  the  fall  of  price  has 
been  only  half  a  cent.  The  moral  is  obvious.  So  long  as 
there  is  competition,  in  spite  of  the  expense  of  conducting 
the  strife,  prices  fall ;  when  the  competition  is  suspended, 
and  there  is  a  saving  of  friction,  the  public  gains  no  further 
reduction. 

The  reason  why,  even  after  the  complete  monopoly  had 
been  attained,  the  price  of  oil  was  not  put  up  again  will  be 
apparent  when  we  come  to  examine  the  economic  limits  of 
the  power  of  a  Trust. 

§  10.  A  large  number  of  these  Trusts,  similar  in  their 
constitution  to  the  Standard  Oil  Trust,  and  with  the  same 
object  of  maintaining  a  scale  of  prices  based  upon  mon- 
opoly, have  been  founded  in  the  United  States.  Some  have 
undoubtedly  owed  their  establishment  to  the  prevalence  of 


136 


THE   EVOLUTION    OF 


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MODERN   capitalism;  1 37 

low  profits  in  a  trade  where  close  competition  has  led  to  a 
constant  cutting  of  prices,  and  their  foundation  has  been 
leniently  regarded  as  an  act  of  self-defence.  To  this  order 
belong  the  Whisky  Trust,  the  Cotton  Oil  Trust,  the  Cotton 
Bagging  Trust,  and  others.  Indeed,  one  well-informed 
writer  upon  the  subject  holds  that  this  is  the  normal  origin 
of  the  Trust,  "With  the  exception  of  the  Standard  Oil 
Trust,  and  perhaps  one  or  two  others  that  rose  somewhat 
earlier,  it  may  be  fairly  said,  I  think,  that  not  merely  com- 
petition, but  competition  that  was  proving  ruinous  to  many 
establishments,  was  the  cause  of  the  combinations."^ 

This  condition  of  ruinous  competition  must  be  recognised 
as  the  normal  condition  of  all  highly-organised  businesses 
where  modern  machinery  is  applied,  and  which  are  not 
sheltered  by  some  private  economy  in  the  shape  of  special 
facilities  in  producing  or  in  disposing  of  their  goods.  Even 
the  Standard  Oil  Company,  as  we  saw,  claimed  that  a  policy 
of  consolidation  was  forced  upon  it  by  the  conditions  of 
the  market.  But  this  claim  is  not  a  refutation,  but  an 
admission  of  the  statement  that  the  object  of  a  Trust  is  to 
obtain  monopoly  prices ;  for  these  ruinously  low  prices 
and  profits  are  the  result  of  free  competition,  and  the  only 
alternative  to  this  free  competition  is  monopoly.  Hence  it 
is  a  legitimate  conclusion  that  the  economic  object  of  a 
Trust  is  to  substitute  monopoly  for  competitive  prices,  and 
to  do  this  more  effectively  than  can  be  done  by  the  mere 
acceptance  of  a  common  price-list  by  the  separate  firms 
engaged  in  a  branch  of  production.  In  order  to  attain  this 
object  it  is  not  necessary  that  the  Trust  shall  Comprise  all  the 
capital  engaged  in  an  industry.  Even  when  the  Standard  Oil 
Trust  was  firmly  established,  and  was,  according  to  its  own 
admission,  paying  12^  or  13  per  cent,  on  its  highly-watered 
stock,  there  appears  to  have  existed  no  fewer  than  iii 
smaller  independent  companies  competing  with  it  directly 
or  indirectly  at  some  point  within  the  area  of  its  market.^ 
But  the  Standard  Oil  Trust  was  able  to  control  prices,  as 
the  producer  of  some  75  per  cent,  of  the  total  product,  and 
the  practical  monopolist  over  the  main  area  of  its  market. 
Similarly  the  Sugar  Refineries  Trust  in  1888  had  a  firm  grip 

^  J-  W.  Jenks,  Ecotiomic  Journal,  vol.  ii.  p.  73. 

"  Report  to  the  Commission  of  the  Senate  of  New  York  State,  p.  440. 


13S  THE   EVOLUTION   OF 

over  prices  by  its  possession  of  80  per  cent,  of  the  sugar 
refining  capacity  of  the  Atlantic  Coast,  or  65  per  cent,  of  the 
sugar  consumed  in  the  United  States. ^  There  are  other 
cases  where  a  formally  constructed  Trust  is  for  a  time 
engaged  in  close  effective  competition,  either  with  another 
Trust,  as  was  the  position  of  the  Standard  Oil  Trust  over  a 
portion  of  its  markets  in  the  period  1881  to  1884,  or  with 
powerful  companies  not  organised  as  Trusts.  This  is  what 
Mr.  Gunton  appears  to  consider  the  normal  condition  of  a 
Trust,  one  in  which  competition  takes  place  between  a  few 
large  bodies  of  capital  instead  of  between  many  smaller 
bodies.^  Certain  Trusts  have  certainly  been  compelled 
to  struggle  for  the  retention  of  their  monopoly  power  over  the 
market.  A  notorious  example  is  that  of  the  Sugar  Trust, 
which,  after  a  most  successful  start  in  1888,  found  itself  in 
1890  face  to  face  with  a  new  and  formidable  competitor  in 
the  shape  of  the  Claus  Spreckles  refineries  of  Philadelphia 
and  San  Francisco,  and  was  compelled  to  forego  the  high 
profits  it  had  been  making  and  fight  for  its  existence  under 
terms  of  keenest  competition. 

But  in  so  far  as  a  Trust  stands  in  this  position  it  has 
failed  to  achieve  its  industrial  end  of  checking  "  ruinous 
competition  "  and  the  "  cutting  of  prices."  It  is  not  in  the 
possession  of  the  chief  economies  of  a  Trust  so  long  as  it 
remains  at  warfare,  for  it  is  compelled  to  expend  all  that 
it  gains  from  the  enlarged  scale  of  business  and  from  the 
cessation  of  competition  among  its  constituent  companies 
upon  the  strife  with  its  single  antagonist.  A  Trust  in  this 
inchoate  condition  has  no  special  economic  character  dis- 
tinguishing it  from  other  large  aggregates  of  competing 
capital.  It  is  with  fully-formed  trusts  which  are  able  to 
control  prices  and  regulate  to  some  degree  production  and 
profits  that  we  are  concerned.  An  economic  Trust  has  its 
raison  d'etre  in  monopoly.  It  may  not  have  eliminated  all 
actual  competitors,  and  is  generally  limited  in  its  power 
by  the  possibility  of  outside  opposition,  but  so  far  as  its 
power  extends  it  must  be  able  to  regulate  prices  upon 
non-competitive  lines. 

§  II.  A  large  number  of  different  articles  have  at  some 

^  Economic  Journal,  vol.  ii.  p.  83. 

^  "  The  Economic  and  Social  Aspect  of  Trusts,"  Political  Science 
Quarterly,  Sept.  1888. 


MODERN   CAPITALISM.  139 

Stage  in  their  production  fallen  under  the  monopoly  of  a 
Trust.i 

As  is  the  case  with  "  corners  "  and  "  rings  "  in  the  produce 
market,  certain  classes  of  commodities  lend  themselves  more 
readily  than  others  to  the  monopoly  of  Trusts. 

There  are  three  classes  of  industry  which  more  easily 
than  others  permit  the  formation  of  effective  trusts. 

(i)  Industries  connected  with,  or  closely  dependent  on, 
the  nature  and  properties  of  land.  When  the  whole  or  a 
large  proportion  of  the  raw  material  required  for  producing 
any  class  of  goods  is  confined  within  a  restricted  area,  the 
possession  of  that  land  by  a  single  body  of  owners  will  give 
a  strong  monopoly.  It  was  not  essential  to  the  Standard 
Oil  Trust  in  its  earlier  years  to  own  the  sources  of  the 
oil  provided  they  could  possess  themselves  of  the  stream 
after  it  had  left  the  source.  But  they  have  strengthened 
this  monopoly  lately  by  securing  the  ownership  of  the  oil 
lands  in  Pennsylvania.  The  most  striking  example,  how- 
ever, is  the  monopoly  of  the  anthracite  coal  region  in 
Pennsylvania  by  the  shareholders  of  the  Pennsylvania  and 
Reading  Railway.  The  tendency  of  a  Trust  to  strengthen 
its  industrial  position  and  at  the  same  time  to  find  a  profit- 
able investment  for  its  surplus  profits  by  fastening  upon 
an  earlier  process  of  production  or  a  contiguous  industry, 
and  drawing  it  under  the  control  of  its  monopoly,  is  one 
of  the  most  important  evidences  of  the  rapid  growth  of  the 
system  in  America.  The  rapidity  with  which  the  whole 
railway  system  is  passing  into  the  hands  of  the  two  great 
monopolist  syndicates  with  the  necessary  result  of  stifling 
competition  is  in  some  respects  the  most  momentous 
economic  movement  in  the  United  States  at  the  present 
time.  The  magnificent  distances  which  separate  the  great 
mass  of  the  producers  of  agricultural  and  other  raw  products 
from  their  market  makes  the  railway  their  only  high-road, 
and  the  fact  that  except  between  a  few  large  centres  of  popu- 
lation there  is  no  competition  of  rival  railways,  places  the 
producer  entirely  at  the  mercy  of  a  single  carrier,  who  regu- 
lates his  rates  so  as  to  secure  his  maximum  profit.  Indeed, 
so  fast  is  the  amalgamation  of  railway  capital  proceeding 

*  Baker,  writing  1890,  names  fifty-nine  articles  which  have  at  various 
times  formed  the  material  of  Trusts,  ranging  in  importance  from  sugar 
and  iron  rails  to  castor-oil,  school  slates,  coffins,  and  lead  pencils. 


140  THE   EVOLUTION   OF 

that  even  between  large  cities  there  is  Httle  genuine  com- 
petition. The  same  is  true  of  the  telegraph  and  the  supply 
of  such  things  as  water  and  gas,  which,  by  reason  of  their 
relation  to  land,  and  the  power  thus  conferred  upon  the 
owner  of  the  first  and  most  convenient  means  of  supply, 
are  "natural"  monopolies.  Where  such  industries  are 
left,  as  in  most  cities  of  America,  to  private  enterprise,  they 
form  the  objects  of  a  monopoly  which  is  commonly  so 
strong  as  to  crush  with  ease  attempts  at  competition  where 
such  are  legally  permissible.  Jay  Gould's  Western  Union 
Telegraph  Company  is  an  example  of  an  absolute  mon- 
opoly maintained  for  many  years  without  the  possibility 
of  effective  competition.  The  purchase  of  Western  lands 
in  order  to  hold  them  for  monopoly  prices  has  been  a 
favoured  form  of  syndicate  investment  during  the  last  forty 
years. 

(2)  Articles  which  for  economy  of  transport  and  distribu- 
tion require  to  be  massed  together  in  large  quantities  are 
specially  amenable  to  monopoly.  Grains  produced  over  a 
wide  area  have  often  to  be  collected  in  large  quantities  to 
be  re-assorted  according  to  quality,  and  to  be  warehoused 
before  being  placed  in  the  market.  So  the  produce  of 
thousands  of  competing  farmers  passes  into  the  hands  of 
a  syndicate  of  owners  of  grain  elevators  at  Chicago  or  else- 
where. The  same  is  true  of  meat,  fish,  fruit,  vegetables, 
dairy  produce.  All  these  things,  raised  under  circum- 
stances which  render  effective  co-operation  for  purposes  of 
sale  well-nigh  impossible,  flow  from  innumerable  diverse 
places  into  a  common  centre,  where  they  fall  into  the  hands 
of  a  small  group  of  middlemen,  merchants,  and  exporters. 
Even  the  retail  merchants,  as  we  have  seen,  are  able  to 
make  effective  combinations  to  maintain  prices  in  the  case 
of  more  perishable  goods. 

In  England  the  combination  of  retail  merchants  com- 
monly takes  the  form  of  a  trade  regulation  of  prices  re- 
stricting competition.  But  in  the  United  States  regular 
Trusts  have  been  in  some  cases  established  in  retail  trade. 
The  Legislative  Committee  of  New  York  State,  in  its 
investigations,  discovered  a  milk  trust  which  had  control  of 
the  retail  distribution  in  New  York  City,  fixing  a  price  of 
three  cents  per  quart  to  be  paid  to  the  farmer,  and  a  selling 
price  of  seven  or  eight  cents  for  the  consuming  public. 


MODERN   CAPITALISM.  I4I 

Hence  it  arises  that  the  prices  paid  by  the  consumer  for 
farm  produce  are  picked  pretty  clean  by  various  groups  of 
monopolists  or  restricted  competitors  before  any  of  them  get 
back  to  the  farmers  or  first  producers. 

The  farmer,  from  his  position  in  the  industrial  machine,  is 
more  at  the  mercy  of  Trusts  and  other  combinations  than 
any  other  body  of  producers.  In  the  United  States  he  is 
helpless  under  the  double  sway  of  the  railway  and  the 
syndicate  of  grain  elevators  and  of  slaughterers  in  Chicago, 
Kansas  City,  and  elsewhere.  In  England,  in  France,  and 
in  all  countries  where  the  farmer  is  at  a  long  distance  from 
his  market,  farm  produce  is  subject  to  this  natural  process 
of  concentration,  and  we  hear  the  same  complaints  of  the 
oppressive  rates  of  the  railway  and  the  monopoly  of  the 
groups  of  middlemen  who  form  close  combinations  where 
the  stream  of  produce  narrows  to  a  neck  on  its  flow  to  the 
consumer.  The  position  of  the  American  farmer,  crushed 
between  the  upper  and  the  nether  mill-stone  of  monopoly,  is 
one  of  pathetic  impotence. 

(3)  In  those  industries  to  which  the  most  elaborate  and 
expensive  machinery  is  applied,  and  where,  in  consequence, 
the  proportion  of  fixed  capital  to  labour  is  largest,  the 
economies  of  large-scale  production  are  greatest.  Here,  as 
we  have  seen,  the  growing  strain  of  the  fiercer  competition 
of  ever  larger  and  ever  fewer  capitals  drives  towards  the 
culminating  concentration  of  the  Trust.  Where,  owing 
either  to  natural  advantages,  as  in  the  case  of  oil  and  coal, 
or  to  other  social  and  industrial  reasons,  a  manufacture  is 
confined  within  a  certain  district,  and  is  in  the  hands  of  a 
limited  number  of  firms  in  fairly  close  commercial  touch 
with  one  another,  we  have  conditions  favouring  the  forma- 
tion of  a  Trust.  In  most  of  the  successful  manufacturing 
Trusts  some  natural  economy  of  easy  access  to  the  best  raw 
material,  special  facilities  of  transport,  the  possession  of 
some  state  or  municipal  monopoly  of  market,  are  added  to 
the  normal  advantages  of  large-scale  production.  The 
artificial  barriers  in  the  shape  of  tariff,  by  which  foreign 
competition  has  been  eliminated  from  many  leading 
manufactures  in  the  United  States,  have  greatly  facilitated 
the  successful  operation  of  Trusts.  Where  the  political, 
natural,  and  industrial  forces  are  strongly  combined,  we 
have   the   most   favourable   soil  for  the  Trust.     Where  a 


142     THE  EVOLUTION   OF  MODERN   CAPITALISM. 

manufacture  can  be  carried  on  in  any  part  of  the  country, 
and  in  any  country  with  equal  facihty,  it  is  difficult  to  main- 
tain a  Trust,  even  though  machinery  is  largely  used  and  the 
individual  units  of  capital  are  big. 

Each  kind  of  commodity,  as  it  passes  through  the  many 
processes  from  the  earth  to  the  consumer,  may  be  looked 
upon  as  a  stream  whose  channel  is  broader  at  some  points 
and  narrower  at  others.  Different  streams  of  commodities 
narrow  at  different  places.  Some  are  narrowest  and  in  fewest 
hands  at  the  transport  stage,  when  the  raw  material  is  being 
concentrated  for  production,  others  in  one  of  the  processes  of 
manufacture,  others  in  the  hands  of  export  merchants.  Just 
as  a  number  of  German  barons  planted  their  castles  along 
the  banks  of  the  Rhine,  in  order  to  tax  the  commerce 
between  East  and  West  which  was  obliged  to  make  use 
of  this  highway,  so  it  is  with  these  economic  "narrows." 
Wherever  they  are  found,  monopolies  plant  themselves  in 
the  shape  of  "rings,"  "corners,"  "pools,"  "syndicates,"  or 
"  trusts." 


143 


CHAPTER  VI. 

ECONOMIC   POWERS   OF  THE  TRUST. 

§  I.  Power  of  a  Monopoly  over  earlier  or  later  Processes  in 

Production  of  a  Commodity. 

§  2.  Power  over  Actual  or  Potential  Competitors. 

§  3.  Power  over  Employees  of  a  Trust. 

§  4.  Power  over  Consumers. 

§  5.  Determinants  of  a  Monopoly  Price. 

§  6.  The  Possibility  of  low  Monopoly  Prices. 

%  7.  Considerations  of  Elasticity  of  Demand  limiting  Prices. 

§  8.  Final  Sumniary  of  Monopoly  Prices. 

§  I.  It  remains  to  investigate  the  actual  economic  power 
which  a  "monopoly"  possesses  over  the  several  departments 
of  an  industrial  society.  Although  the  "trust"  may  be  taken 
as  the  representative  form  of  monopoly  of  capital,  the  econ- 
omic powers  it  possesses  are  common  in  different  degrees 
to  all  the  other  weaker  or  more  temporary  forms  of  combina- 
tion, and  to  the  private  business  which,  by  the  possession  of 
some  patent,  trade  secret,  or  other  economic  advantage,  is 
in  control  of  a  market.  These  powers  of  monopoly  may  be 
placed  under  four  heads  in  relation  to  the  classes  upon  whose 
interests  they  operate — {a)  business  firms  engaged  in  an  ear- 
lier or  later  process  of  production ;  (^)  actual  and  potential 
competitors  or  business  rivals ;  {c)  employees  of  the  Trust 
or  other  monopoly ;  {d)  the  consuming  public. 

{a)  The  power  possessed  by  a  monopoly  placed  in 
the  transport  stage,  or  in  one  of  the  manufacturing  or 
merchant  stages,  to  "  squeeze  "  the  earlier  or  less  organised 
producers,  has  been  illustrated  by  the  treatment  of  farmers 


144  THE   EVOLUTION    OF 

by  the  railways  and  by  the  Elevator  Companies  and  the 
Slaughtering  Companies  of  the  United  States.  The  Standard 
Oil  Trust,  as  we  saw,  preferred,  until  quite  recently,  to  leave 
the  oil  lands  and  the  machinery  for  extracting  crude  oil  in 
the  hands  of  unattached  individuals  or  companies,  trusting 
to  their  position  as  the  largest  purchasers  of  crude  oil  to 
enable  them  to  dictate  prices.  The  fall  in  the  price  paid  by 
the  company  for  crude  oil  from  9.19  cents  in  1870  to  2.30 
in  1 88 1,  when  the  Trust  was  formed,  and  the  maintenance 
of  an  almost  uniform  lower  level  from  1881  to  1890,  testifies 
to  the  closeness  of  the  grip  in  which  the  company  held  the 
oil  producers;  for  although  improvements  in  the  machinery 
for  sinking  wells  and  for  extracting  oil  took  place  during 
the  period,  these  economies  in  production  do  not  at  all 
suffice  to  explain  the  fall.  Indeed,  the  method  of  the 
company's  transactions  with  the  oil  producers,  as  described 
by  their  own  solicitor  in  his  defence  of  the  Trust,  is 
convincing  testimony  of  their  control  of  the  situation: — 
"  When  the  producer  of  oil  puts  down  a  well,  he  notifies 
the  pipe  line  company  (a  branch  of  the  Trust),  and  immedi- 
ately a  pipe  line  is  laid  to  connect  with  his  well.  The 
oil  is  taken  from  the  tank  at  the  well,  whenever  re- 
quested, into  the  large  storage  tanks  of  the  company, 
and  is  held  for  the  owner  as  long  as  he  desires  it.  A 
certificate  is  given  for  it,  which  can  be  turned  into  cash  at 
any  time;  and  when  sold  it  is  delivered  to  the  purchaser 
at  any  station  on  the  delivery  lines.  "^  In  similar  fashion 
the  Sugar  Trust,  before  the  competition  of  the  Spreckles 
refineries  arose,  controlled  the  market  for  raw  sugar.  Nor 
was  this  power  exercised  alone  over  the  producers  of  raw 
sugar.  It  extended  to  dictating  the  price  at  which  the 
wholesale  grocers  who  took  from  them  the  refined  sugar 
should  sell  to  their  customers.-  This  power  of  a  monopoly 
is  not  merely  extended  to  the  control  of  prices  in  the  earlier 
and  later  processes  of  production  and  distribution  of  the 
commodity.  One  of  the  most  potent  forms  it  assumes  in 
manufactures  where  machinery  is  much  used  is  a  control 
over  the  patentees  and  even  the  manufacturers  of  machinery. 
Where  a  strong  Trust  exists,  the  patentee  of  a   new  in- 

-  S.  C.  T.  Dodd,  The  Forum,  May  1892. 

*  "  Trusts  in  the  United  States,"  Economic  Journal,  p.  86. 


MODERN   CAPITALISM.  145 

vention  can  only  sell  to  the  Trust  and  at  the  Trust's  price. 
Charges  are  even  made  against  the  Standard  Oil  Trust 
and  other  powerful  monopolies  to  the  effect  that  they  are 
in  the  habit  of  appropriating  any  new  invention,  whether 
patented  or  not,  without  paying  for  it,  trusting  to  their 
influence  to  avoid  the  legal  consequences  of  such  conduct. 
There  is  indeed  strong  reason  to  believe  that  the  irrespon- 
sible position  in  which  some  of  these  corporations  are 
placed  induces  them  to  an  unscrupulous  use  of  their  great 
wealth  for  such  purposes. 

§  2.  {/>)  Since  the  prime  object  of  a  Trust  is  to  effect 
sales  at  profitable  prices,  and  prices  are  directly  determined 
by  the  quantitative  relation  between  supply  and  demand,  it 
is  clearly  advantageous  for  a  Trust  to  obtain  as  full  a  power 
in  the  regulation  of  the  quantity  of  supply  as  is  possible. 
In  order  to  effect  this  object  the  Trust  will  pursue  a  double 
policy.  It  will  buy  up  such  rival  businesses  as  it  deems  can 
be  worked  advantageously  for  the  purposes  of  the  Trust. 
The  price  at  which  it  will  compel  the  owners  of  such 
businesses  to  sell  will  have  no  precise  relation  to  the  value 
of  the  business,  but  will  depend  upon  the  amount  of  trouble 
which  such  a  business  can  cause  by  refusing  to  come  into 
the  Trust.  If  the  outstanding  firm  is  in  a  strong  position 
the  Trust  can  only  compel  it  to  sell,  by  a  prolonged 
process  of  cutting  prices,  which  involves  considerable 
loss.  For  such  a  business  a  high  price  will  be  paid.  By 
this  means  a  strongly-established  Trust  or  Syndicate  will 
bring  under  its  control  the  whole  of  the  larger  and  better- 
equipped  businesses  which  would  otherwise  by  their  compe- 
tition weaken  the  Trust's  control  of  the  market.  A  smaller 
business,  or  an  important  rival  who  persistently  stands  out 
of  the  Trust,  is  assailed  by  the  various  weapons  in  the  hands 
of  the  Trust,  and  is  crushed  by  the  brute  force  of  its  stronger 
rival.  The  most  common  method  of  crushing  a  smaller 
business  is  by  driving  down  prices  below  the  margin  of 
profit,  and  by  the  use  of  the  superior  staying  power  which 
belongs  to  a  larger  capital  starving  out  a  competitor.  This 
mode  of  exterminating  warfare  is  used  not  merely  against 
actually  existing  rivals,  as  where  a  railway  company  is  known 
to  bring  down  rates  for  traffic  below  cost  price  in  order  to 
take  the  traffic  of  a  rival  line,  but  is  equally  effective  against 
the  potential  competition  of  outside  capital.      After  two  or 

10 


146  THE   EVOLUTION   OF 

three  attempts  to  compete  with  Jay  Gould's  telegraph  line 
from  New  York  to  Philadelphia  had  been  frustrated  by  a 
lowering  of  rates  to  a  merely  nominal  price,  the  notoriety  of 
this  terrible  weapon  sufficed  to  check  further  attempts  at  com- 
petition. In  this  way  each  strongly-formed  Trust  is  able  to 
fence  off  securely  a  certain  field  of  investment,  thus  narrow- 
ing the  scope  of  use  for  any  outside  capital.  This  employment 
of  brute  force  is  sometimes  spoken  of  as  "unfair"  competition, 
and  treated  as  something  distinct  from  ordinary  trade  com- 
petition. But  the  difference  drawn  is  a  purely  fallacious 
one.  In  thus  breaking  down  a  competitor  the  Trust  simply 
makes  use  of  those  economies  which  we  have  found  to 
attach  to  large-scale  businesses  as  compared  with  small. 
Its  action,  however  oppressive  it  may  seem  from  the  point 
of  view  of  a  weaker  rival,  is  merely  an  application  of  those 
same  forces  which  are  always  operating  in  the  evolution  of 
modern  capital.  In  a  competitive  industrial  society  there 
is  nothing  to  distinguish  this  conduct  of  a  Trust  in  the  use 
of  its  size  and  staying  power  from  the  conduct  of  any 
ordinary  manufacturer  or  shopkeeper  who  tries  to  do  a 
bigger  and  more  paying  business  than  his  rivals.  Each 
uses  to  the  full,  and  without  scruple,  all  the  economic 
advantages  of  size,  skill  in  production,  knowledge  of 
markets,  attractive  price-lists,  and  methods  of  advertisement 
which  he  possesses.  It  is  quite  true  that  so  long  as  there 
is  competition  among  a  number  of  fairly  equal  businesses 
the  consuming  public  may  gain  to  some  extent  by  this 
competition,  whereas  the  normal  result  of  the  successful 
establishment  of  a  Trust  is  simply  to  enable  its  owners  to 
take  higher  profits  by  raising  prices  to  the  consumer.  But 
this  does  not  constitute  a  difference  in  the  mode  of  com- 
petition, so  that  in  this  case  it  deserves  to  be  called  "  fair," 
in  the  other  "  unfair." 

It  is  even  doubtful  whether  such  bargains  as  that  above 
described  between  the  Standard  Oil  Company  and  the 
Railways,  whereby  a  discriminative  rate  was  maintained  in 
favour  of  the  Company,  is  "unfair,"  though  it  was  under- 
hand and  illegal.  In  the  ordinary  sense  of  the  term  it  was 
a  "  free  "  contract  between  the  Railways  and  the  Oil  Com- 
pany, and  in  spite  of  its  discriminative  character  might  have 
been  publicly  maintained  had  the  law  not  interfered  on  a 
technical  point.     The  same  is  even  true  of  the  flagrant  act 


MODERN    CAPITALISM.  I47 

of  discrimination  described  by  Mr.  Baker: — "A  combination 
among  manufacturers  of  railway  car-springs,  which  wished 
to  ruin  an  independent  competitor,  not  only  agreed  with 
the  American  Steel  Association  that  the  independent  com- 
pany should  be  charged  $10  per  ton  more  for  steel  than 
the  members  of  the  combine,  but  raised  a  fund  to  be  used 
as  follows :  when  the  independent  company  made  a  bid  on 
a  contract  for  springs,  one  of  the  members  of  the  Trust  was 
authorised  to  under-bid  at  a  price  which  would  incur  a  loss, 
which  was  to  be  paid  out  of  the  fund.  In  this  way  the 
competing  company  was  to  be  driven  out  of  business."^ 
These  cases  differ  only  in  their  complexity  from  the  simpler 
modes  of  underselling  a  business  rival.  Mean,  underhand, 
and  perhaps  illegal  many  of  these  tactics  are,  but  after  all 
they  differ  rather  in  degree  than  in  kind  from  the  tactics 
commonly  practised  by  most  businesses  engaged  in  close 
commercial  warfare.  If  they  are  "  unfair,"  it  is  only  in  the 
sense  that  all  coercion  of  the  weak  by  the  strong  is  "  unfair," 
a  verdict  which  doubtless  condemns  from  any  moral  stand- 
point the  whole  of  trade  competition,  so  far  as  it  is  not  con- 
fined to  competing  excellence  of  production. 

The  only  exercise  of  power  by  a  Trust  or  Monopoly  in 
its  dealings  with  competing  capital  which  deserves  to  be 
placed  in  a  separate  category  of  infamy,  is  the  use  of  money 
to  debauch  the  legislature  into  the  granting  of  protective 
tariffs,  special  charters  or  concessions,  or  other  privileges 
which  enable  a  monopoly  company  to  get  the  better  of  their 
rivals,  to  secure  contracts,  to  check  outside  competition, 
and  to  tax  the  consuming  public  for  the  benefit  of  the 
trust-maker's  pocket.  Under  this  head  we  may  also  reckon 
the  tampering  with  the  administration  of  justice  which  is 
attributed,  apparently  not  without  good  reason,  to  certain  of 
the  Trusts,  the  use  of  the  Trust's  money  to  purchase 
immunity  from  legal  interference,  or,  in  the  last  resort,  to 
buy  a  judgment  in  the  Courts. 

How  far  the  more  or  less  definite  allegations  upon  this 
subject  are  capable  of  substantiation  it  is  beyond  our  scope 
to  inquire,  but  certain  disclosures  in  connection  with  the 
Tweed  Ring,  the  Standard  Oil  Company,  the  Anthracite 
Coal  Trust,  and  other   syndicates  induce  the  belief  that 

'  Baker,  Monopolies  and  the  People,  p.  85. 


148  THE   EVOLUTION    OF 

the  more  unscrupulous  capitalists  seek  to  influence  the 
Courts  of  Justice  as  well  as  the  Houses  of  Legislature  in 
the  pursuance  of  their  business  interests. 

§  3.  (c)  The  more  or  less  complete  control  of  the  capital 
engaged  in  an  industry,  and  of  the  market,  involves  an 
enormous  power  over  the  labour  engaged  in  that  industry. 
So  long  as  competition  survives,  the  employee  or  group  of 
employees  are  able  to  obtain  wages  and  other  terms  of 
employment  determined  in  some  measure  by  the  conflicting 
interests  of  different  employers.  But  when  there  is  only 
one  employer,  the  Trust,  the  workman  who  seeks  employ- 
ment has  no  option  but  to  accept  the  terms  offered  by  the 
Trust.  His  only  alternative  is  to  abandon  the  use  of  the 
special  skill  of  his  trade  and  to  enter  the  ever-swollen 
unskilled  labour  market.  This  applies  with  special  force  to 
factory  employees  who  have  acquired  great  skill  by  in- 
cessant practice  in  some  narrow  routine  of  machine-tending. 
The  average  employee  in  a  highly-elaborated  modern 
factory  is  on  the  whole  less  competent  than  any  other 
worker  to  transfer  his  labour-power  without  loss  to  another 
kind  of  work.^  Now,  as  we  have  seen,  it  is  precisely  in 
these  manufactures  that  many  of  the  strongest  Trusts  spring 
up.  The  Standard  Oil  Company  or  the  Linseed  Oil  Trust 
are  the  owners  of  their  employees  almost  to  the  same  extent 
as  they  are  owners  of  their  mills  and  machinery,  so  sub- 
servient has  modern  labour  become  to  the  fixed  capital 
under  which  it  works.  It  has  been  claimed  as  one  of  the 
advantages  of  a  Trust  that  the  economies  attending  its 
working  enable  it  to  pay  wages  higher  than  the  market 
rate.  There  can  be  no  question  as  to  the  ability  of  the 
stronger  Trusts  to  pay  high  wages.  But  there  is  no  power 
to  compel  them  to  do  so,  and  it  would  be  pure  hypocrisy 
to  pretend  that  the  interests  of  the  labourers  formed  any 
part  of  the  motive  which  led  a  body  of  keen  business  men 
to  acquire  a  monopoly.  One  of  the  special  economies 
which  a  large  capital  possesses  over  a  small,  and  which  a 
Trust  possesses  ^ar  excellence,  is  the  power  of  making 
advantageous  bargains  with  its  employees. 

It  is  possible  that  a  firm  like  the  Standard  Oil  Trust  may 
to  some  limited  extent  practise  a   cheap   philanthropy  of 

^  Cf-  Chapter  ix. 


MODERN   CAPITALISM.  I49 

profit-sharing  in  order  to  deceive  the  public  into  supposing 
that  its  huge  profits  enrich  many  instead  of  few.  But  there 
is  no  evidence  that  the  employees  of  a  Trust  have  gained  in 
any  way  from  the  economies  of  industrial  monopoly,  nor,  as 
we  see,  is  there  any  ^  priori  likelihood  they  should  so  gain.^ 
But  the  practical  ownership  of  its  employees  involved  in 
the  position  of  a  monopoly  is  by  no  means  the  full  measure 
of  the  oppressive  power  exercised  by  the  Trust  over  labour. 
Since  the  means  by  which  Trust  prices  are  maintained  is 
the  regulation  of  production,  the  interests  of  the  Trust  often 
require  that  a  large  part  of  the  fixed  capital  of  the  com- 
panies entering  the  Trust  shall  stand  idle.  "When  com- 
petition has  become  so  fierce  that  there  is  frequently  in  the 
market  a  supply  of  goods  so  great  that  all  cannot  be  sold 
at  remunerative  prices,  it  is  necessary  that  the  competing 
establishments,  in  order  to  continue  business  at  all  (of 
course,  under  perfectly  free  competition  many  will  fail), 
check  their  production.  Now  an  ordinary  pool  makes 
provision  for  each  establishment  to  run  in  one  of  the  two 
ways  suggested.  Manifestly  a  stronger  organisation  like 
the  Trust,  by  selecting  the  best  establishments,  and  running 
them  continuously  at  their  full  capacity,  while  closing  the 
others,  or  selling  them,  and  making  other  use  of  the  capital 
thus  set  free,  will  make  a  great  saving.  The  most  striking 
example  of  this  kind  in  the  recent  history  of  the  Trusts  is 
furnished  by  the  Whisky  Trust  More  than  eighty  dis- 
tilleries joined  the  Trust.  Formerly,  when  organised  as  a 
pool,  as  has  been  said,  each  establishment  ran  at  part 
capacity,  one  year  at  40  per  cent,  one  year  at  only  28  per 
cent.  A  year  after  the  organisation  of  the  Trust  only 
twelve  were  running;  but  these  were  producing  at  about 
their  full  capacity,  and  the  total  output  of  alcohol  was  not 
at  all  lessened.  The  saving  is  to  be  reckoned  by  the  labour 
and  running  capital  which  had  formerly  been  employed  in 
nearly  sixty  distilleries.     It  must  be  borne  in  mind  that  on 

1  Mr.  George  Gunton,  in  writing  upon  "The  Economic  Aspect  of 
Trusts"  {Political Science  Quarterly,  Sept.  1888),  claims  a  rise  in  wages 
as  one  of  the  advantages  of  Trusts,  but  Mr.  Gunton  throughout  his 
argument  assumes  that  a  Trust  is  a  large  competing  capital  and  not  a 
monopoly.  If  a  Trust  were  a  competing  capital  its  formation  would  be 
an  economic  and  social  advantage,  tending,  as  he  says,  **  to  increase 
production,  to  lower  prices,  and  to  raise  wages."  But  as  a  Trust  is  not 
a  competing  capital  it  does  none  of  these  things. 


I50  THE   EVOLUTION    OF 

the  product  of  these  twelve  distilleries  good  profits  were 
made  on  the  capital  represented  in  more  than  eighty  plants. 
All  the  greater  Trusts,  such  as  the  Standard  Oil,  the  Cotton 
Oil,  the  Cotton  Bagging,  and  the  Sugar  Trust,  have  followed 
this  plan  of  closing  entirely  the  weaker  establishments  and 
running  only  the  stronger,  thereby  effecting  a  saving  in 
capital  and  labour."^ 

Here  we  see  a  Trust  exercising  its  economic  power  of 
regulating  production.  That  power,  as  we  shall  see  below, 
is  not  merely  confined  to  closing  the  inferior  mills  in  order 
that  the  same  aggregate  output  may  be  obtained  by  a  full 
working  of  the  more  efiicient  plant.  Where  over-production 
has  occurred  it  is  to  the  interest  of  the  Trust  to  lessen 
production.  With  this  end  in  view  it  will  suddenly  close 
half  the  mills,  or  works,  or  elevators  in  a  district.  The 
owners  of  these  closed  plants  get  their  interest  from  the 
Trust  just  as  if  they  were  working.  But  the  labour  of  these 
works  suddenly,  and  without  any  compensation  for  disturb- 
ance, is  "saved" — that  is  to  say,  the  employees  are  deprived 
of  the  services  of  the  only  kind  of  plant  and  material  to 
which  their  skilled  eiforts  are  applicable.  It  is  probable 
that  one  result  of  the  formation  of  each  of  these  larger  trusts 
has  been  to  throw  out  of  employment  several  thousands  of 
workers,  and  to  place  them  either  in  the  ranks  of  the 
unemployed  or  in  some  other  branch  of  industry  where  their 
previously  acquired  skill  is  of  little  service,  and  where  their 
wages  are  correspondingly  depressed.  From  the  account 
given  above  of  the  changes  in  organisation  of  production 
under  the  Trust  it  might  appear  that  the  effect  upon  labour 
was  not  to  reduce  the  net  employment,  but  to  give  full, 
regular  employment  to  a  smaller  number  instead  of  partial 
and  irregular  employment  to  many,  and  that  thus  labour, 
considered  as  a  whole,  might  be  the  gainer.  An  industrial 
movement  which  substitutes  the  regular  employment  of  a 
few  for  the  irregular  employment  of  many  is  so  far  a 
progressive  movement.  But  it  must  be  borne  in  mind  first 
that  there  is  usually  a  net  reduction  of  employment,  a 
substitution  not  of  50  workers  at  full-time  for  100  at  half- 
time,  but  of  30  only.     For  not  only  will  there  be  a  net 

^  J.  W.  Jenks,  "Trusts  in  the  United  Sia.\.ts"  Economic  Journal, 
vol.  ii.  p.  So. 


MODERN   CAPITALISM.  I5I 

saving  of  labour  in  relation  to  the  same  output,  the 
result  of  using  exclusively  the  best  equipped  and  best 
situated  factories,  but  since  the  Trust  came  into  existence 
in  order  to  restrict  production  and  so  raise  prices,  the 
aggregate  output  of  the  business  will  be  either,  reduced  or 
its  rate  of  increase  will  be  less  than  under  open  competition. 
The  chief  economy  of  the  Trust  will  in  fact  arise  from  the 
net  diminution  of  employment  of  labour.  As  the  Trust 
grows  stronger  and  absorbs  a  larger  and  larger  proportion 
of  the  total  supply  for  the  market,  the  reduction  of  employ- 
ment will  as  a  rule  continue.  Of  course,  if  the  scale  of  prices 
which  the  Trust  finds  most  profitable  happens  to  be  such 
as  induce  a  large  increase  of  consumption,  and  therefore 
to  permit  an  expansion  of  the  machinery  of  production,  the 
aggregate  of  employment  may  be  maintained  or  even 
increased.  But,  as  we  shall  see  below,  there  is  nothing  in 
the  nature  of  a  Trust  to  guarantee  such  a  result.  The 
normal  result  of  placing  the  ordering  of  an  industry  in  the 
hands  of  a  monopoly  company  is  to  give  them  a  power 
which  it  is  their  interest  to  exercise,  to  narrow  the  scope  of 
industry,  to  change  its  locale,  to  abandon  certain  branches 
and  take  up  others,  to  substitute  machinery  for  hand  labour, 
without  any  regard  to  the  welfare  of  the  employees  who 
have  been  associated  with  the  fixed  capital  formerly  in  use. 
When  to  this  we  add  the  reflection  that  the  ability  to 
choose  its  workmen  out  of  an  artificially  made  over-supply 
of  labour,  rid  of  the  competition  of  other  employers,  gives 
the  Trust  a  well-nigh  absolute  power  to  fix  wages,  hours  of 
work,  to  pay  in  truck,  and  generally  to  dictate  terms  of 
employment  and  conditions  of  life,  we  understand  the 
feeling  of  distrust  and  antagonism  with  which  the  working 
classes  regard  the  growth  of  these  great  monopolies  on  both 
sides  of  the  Atlantic. 

The  following  is  a  short  summary  of  the  findings  of  a 
Committee  of  Congress  with  reference  to  the  relations 
existing  between  the  railroad  and  coal  companies  which 
control  the  anthracite  coal-fields  in  Pennsylvania  and  the 
coal-miners: — "Congress  has  found  (Document  No.  4) 
that  the  coal  companies  in  the  anthracite  regions  keep 
thousands  of  surplus  labourers  in  hand  to  underbid  each 
other  for  employment  and  for  submission  to  all  exactions  ; 
hold  them  purposely  ignorant  when  the  mines  are  to  be 


152  THE   EVOLUTION   OF 

worked  and  when  closed,  so  that  they  cannot  seek  employ- 
ment elsewhere ;  bind  them  as  tenants  by  compulsion  in 
the  companies'  houses,  so  that  the  rent  shall  run  against 
them  whether  wages  run  or  not,  and  under  leases  by  which 
they  can  be  turned  out  with  their  wives  and  children  on 
the  mountain-side  in  mid-winter  if  they  strike;  compel 
them  to  fill  cars  of  larger  capacity  than  agreed  upon ;  make 
them  buy  their  powder  and  other  working  outfit  of  the 
companies  at  an  enormous  advance  on  the  cost;  compel 
them  to  buy  coal  of  the  company  at  the  company's  price, 
and  in  many  cases  to  buy  a  fixed  quantity  more  than  they 
need;  compel  them  to  employ  the  doctor  named  by  the 
company  and  to  pay  him  whether  sick  or  well;  'pluck' 
them  at  the  company's  store,  so  that  when  pay-day  comes 
round  the  company  owes  the  men  nothing,  there  being 
authentic  cases  where  '  sober,  hard-working  miners  toiled  for 
years,  or  even  a  lifetime,  without  having  been  able  to  draw  a 
single  dollar,  or  but  few  dollars  in  actual  cash,'  in  'debt  until 
the  day  they  died;'  refuse  to  fix  the  wages  in  advance, 
but  pay  them  upon  some  hocus-pocus  sliding-scale,  varying 
with  the  selling  price  in  New  York,  which  the  railway  slides 
to  suit  itself;  and  most  extraordinary  of  all,  refuse  to  let  the 
miners  know  the  prices  on  which  their  living  slides,  a 
'fraud,'"  says  the  report  of  Congress,  "on  its  face"  (pp.  71 
and  72).  The  companies  dock  the  miners'  output  arbitrarily 
for  slate  and  other  impurities,  and  so  can  take  from  their 
men  5  to  50  tons  more  in  every  100  than  they  pay  for 
(p.  76).  In  order  to  keep  the  miners  disciplined  and  the 
coal  market  under  supplied,  the  railroads  restrict  work,  so 
that  the  miners  often  have  to  live  for  a  month  on  what  they 
can  earn  in  six  or  eight  days,  and  these  restrictions  are  en- 
forced upon  their  miners  by  holding  cars  from  them  to  fill, 
as  upon  competitors  by  withholding  cars  to  go  to  market. 
(Document  No.  4,  p.  77.) 

Labour  organisations  are  forbidden,  and  the  men  inten- 
tionally provoked  to  strike  to  affect  the  coal  market.  The 
labouring  population  of  the  local  regions,  finally,  is  kept 
"  down  "  by  special  policemen,  enrolled  under  special  laws, 
and  often  in  violation  of  law,  by  the  railroads  and  coal  and 
iron  companies,  practically  when  and  in  what  number  they 
choose,  and  practically  without  responsibility  to  any  one  but 
their  employers,  armed  as  the  Corporation  see  fit  with  army 


MODERN   CAPITALISM.  1 53 

revolvers  or  Winchester  rifles,  or  both ;  made  detectives  by 
statute,  and  not  required  to  wear  their  shields,  provoking 
the  public  to  riot  (pp.  9  and  93-98),.  and  then  shooting 
them  legally.  "  By  the  percentage  of  wages,"  says  the 
report  of  Congress,  "by  false  measurements,  by  rents, 
stores,  and  other  methods  the  workman  is  virtually  a  chattel 
of  the  operator.  "1 

§  4.  {d)  Those  who  admit  that  a  Trust  is  in  its  essence 
a  monopoly,  and  that  it  is  able,  by  virtue  of  its  position,  to 
sell  commodities  at  high  prices,  sometimes  affirm  that  it  is 
not  to  the  interest  of  a  Trust  to  maintain  high  prices,  and 
that  in  fact  Trusts  have  generally  lowered  prices.  We  have 
here  a  question  of  fact  and  a  question  of  theory.  Of  these 
the  former  presents  the  greater  difficulty.  It  seems  a  simple 
matter  to  compare  prices  before  and  after  the  formation  of 
the  Trust,  and  to  observe  the  tendencies  to  rise  or  fall. 
This  comparison  has  been  made  in  a  good  many  cases, 
with  the  result  that  some  Trusts  seem  to  lower  prices,  others 
to  raise  them.  The  growth  of  the  Standard  Oil  Company 
and  the  strengthening  of  its  power  was  attended,  as  we  saw, 
by  a  considerable  fall  of  price.  So  also  we  are  told 
respecting  the  Cotton  Seed  Oil  Trust,  formed  in  1883, 
that  "  during  these  four  years  the  price  of  cotton  seed  oil 
fell  more  than  eight  times  as  much  as  it  did  during  the  five 
years  before  the  Trust  was  formed."  ^  The  rates  of  the  most 
absolute  monopoly,  the  Western  Union  Telegraph  Com- 
pany, are  very  little  higher  than  those  which  prevail  in 
England,  where  the  Government  works  the  telegraph  system 
at  a  considerable  loss  each  year.  The  Sugar  Trust,  on  the 
other  hand,  directly  it  was  formed,  raised  prices  consider- 
ably. The  same  is  true  of  several  of  the  other  most 
conspicuous  combinations. 

Now,  it  is  argued,  if  it  be  admitted  that  prices  have  in 
fact  fallen  under  the  administration  of  some  of  the  strongest 
Trusts,  it  cannot  be  maintained  that  Trusts  have  a  tendency 
to  raise  prices.     In  reply,  it  is  pointed  out  that  in  almost  all 

*  H.  D.  Lloyd,  Essay  on  "  Trusts,"  reprinted  in  Boston  Daily 
Traveller  (June  16,  1893). 

^  G.  Gunton,  Political  Scietue  Quarterly,  Sept.  1888.  This  state- 
ment, however,  appears  in  contradiction  to  the  "Report  of  the  Com- 
mittee on  Investigations  relative  to  Trusts  in  the  State  of  New  York," 
p.  12. 


154  THE   EVOLUTION    OF 

highly-organised  modern  industries  improved  methods  of 
production  are  rapidly  lowering  the  expenses  of  production 
and  prices,  and  that  therefore  the  statement  that  Trusts 
tend  to  maintain  high  prices  is  quite  consistent  with  the 
fact  of  an  absolute  fall,  the  question  at  issue  being  whether 
the  fall  of  prices  under  the  Trust  was  as  great  as  it  would 
have  been  under  free  competition.  Moreover,  a  comparison 
of  dates  appears  to  indicate  that  the  Trust's  prices,  as  we 
saw  in  the  Standard  Oil  Company,  fluctuate  with  the  degree 
of  their  monopoly,  falling  rapidly  under  the  pressure  of 
actual  or  threatened  competition,  rising  when  the  danger  is 
past.  Finally,  opponents  of  the  Trust  allude  to  certain 
Trusts  which,  in  spite  of  the  greater  economies  of  produc- 
tion they  possess,  have  raised  prices. 

Excepting  by  the  inverse  and  questionable  method  of 
arguing  that  the  high  profits  distributed  by  a  Trust  are 
themselves  proof  that  prices  have  not  fallen  as  they  would 
have  fallen  under  free  competition,  it  is  not  possible  to  build 
a  very  convincing  condemnation  of  the  Trust  from  statistics 
of  price.  And  even  when  profits  are  high  it  is  open  to  the 
defenders  of  the  Trust  to  maintain  that  they  only  represent 
the  saving  of  the  cost  of  competition,  and  that  if  com- 
petition were  introduced  the  profits  would  be  squandered  in 
the  struggle  instead  of  passing  into  the  consumer's  pocket. 

It  is  only  from  a  deductive  treatment  of  the  subject  that 
we  are  able  to  clearly  convict  the  Trust  of  possessing  a 
power  over  prices  antagonistic  to  the  interests  of  the  con- 
suming public. 

A  Trust,  or  other  company,  or  a  single  individual  who 
has  a  complete  monopoly  of  a  class  of  goods  for  which 
there  is  a  demand,  will  strive  to  fix  that  price  which  shall 
give  him  the  largest  net  profit  on  his  capital.  The  question 
with  him  will  be  simply  this,  "How  many  articles  shall 
I  offer  for  sale  ? "  If  he  offers  only  a  small  number  the 
competition  of  more  urgent  wants  among  the  consumers 
will  enable  him  to  sell  the  small  number  at  a  high  price. 
Assuming,  for  the  moment,  that  the  production  of  these 
articles  was  subject  to  the  law  of  constant  returns — i.e.,  that 
a  few  things  were  produced  relatively  as  cheaply  as  many, 
this  small  sale  would  give  the  highest  rate  of  profit  on  each 
sale,  for  the  "  marginal  utility  "  of  the  supply  would  be  high 
and  would  enable  a  high  price  to  be  obtained  for  the  whole 


MODERN   CAPITALISM.  155 

supply.  But  if  he  possesses  large  facilities  of  production  it 
may  pay  him  better  to  sell  a  larger  number  of  articles  at  a 
lower  price  with  a  lower  rate  of  profit  on  each  sale,  because 
the  aggregate  of  a  larger  number  of  small  profits  may  yield 
a  larger  net  profit  on  his  whole  capital.  How  far  it  will  pay 
him  to  go  on  increasing  the  supply  and  selling  a  larger 
number  of  articles  at  a  lower  price  will  entirely  depend 
upon  the  effect  each  increment  of  supply  exercises  upon 
demand,  and  so  upon  prices  and  profits.  Everything  will 
hinge  upon  the  "elasticity  of  demand  "  in  the  particular  case. 
If  the  object  of  the  monopoly  satisfies  a  keen,  widely-felt 
want,  or  stimulates  a  craving  for  increased  consumption 
among  those  who  take  off  the  earlier  supply,  a  large 
increase  in  supply  may  be  attended  by  a  comparatively 
small  fall  in  prices.  Sometimes  a  large  increase  of  supply 
at  a  lowered  price  will,  by  reaching  a  new  social  stratum,  or 
by  forcing  the  substitution  of  this  article  for  another  in 
consumption,  so  enlarge  the  sale  that  though  the  margin  of 
profit  on  each  sale  is  small,  the  net  profit  on  the  whole 
capital  is  very  large.  In  all  such  cases  of  great  elasticity  it 
may  pay  a  monopolist  to  sell  a  large  number  of  articles  at  a 
low  price. 

Where  the  article  belongs  to  that  class  in  which 
the  law  of  increasing  returns  is  strongly  operative  — 
i.e.,  where  great  economies  in  expenses  of  production 
attend  a  larger  scale  of  production,  this  increase  of  supply 
and  fall  of  prices  may  continue  with  no  assignable  limit. 
On  the  other  hand,  where  there  is  little  elasticity  of 
demand,  where  an  increase  of  supply  can  be  taken  off  only 
at  a  considerable  fall  of  price,  it  will  probably  pay  a  mon- 
opolist to  restrict  production  and  sell  a  small  number  of 
articles  at  a  high  price.  It  is  this  motive  which  often 
induces  the  destruction  of  tons  of  fish  and  fruit  in  the 
London  markets  for  fear  of  spoiling  the  market.  These 
goods  could  be  sold  at  a  sufficiently  low  price,  but  it  pays 
tiie  companies  owning  them  to  destroy  them,  and  to  sell  a 
smaller  number  which  satisfies  the  wants  of  a  limited  class 
of  people  who  "can  afford  to  pay."  Now,  when  free  competi- 
tion exists  among  sellers,  as  among  buyers,  this  can  never 
happen.  It  will  always  be  to  the  interest  of  a  competing 
producer  or  dealer  to  lower  his  price  below  that  which 
would  yield  him  the  largest  net  profit  on  his  capital  were  he 


156  THE   EVOLUTION   OF 

a  monopolist.  If  he  is  a  monopolist  he  will  only  lower  his 
prices  provided  the  elasticity  of  demand  in  the  commodity 
in  question  is  so  great  that  the  increased  consumption  will 
be  so  considerable  as  to  yield  him  a  larger  net  profit.  But 
if  he  is  a  competing  dealer  he  does  not  look  chiefly  to  the 
consumption  of  the  community,  but  to  the  proportion  of 
that  consumption  which  he  himself  shall  supply.  The 
elasticity  of  demand,  so  far  as  his  individual  business  is 
concerned,  is  not  limited  to  the  amount  of  the  increased 
consumption  of  the  community  stimulated  by  a  lowering 
of  prices,  but  includes  that  portion  of  the  custom  of  his 
rivals  which  he  may  be  able  to  divert  to  himself.  Hence  it 
arises  that  under  free  competition  it  will  be  the  tendency 
of  the  several  competitors  to  drive  down  the  prices  to  the 
point  at  which  the  most  advantageously  placed  competitors 
make  the  minimum  profit  on  their  capital. 

§  5.  It  is  all  important  to  an  understanding  of  the  subject 
to  recognise  that  a  monopoly  price  and  a  competitive  price 
are  determined  by  the  operation  of  an  entirely  different  set 
of  economic  forces.  The  loose  opinion  that  it  must  be  to 
the  interest  of  a  Trust  or  other  monopoly  to  sell  at  the  same 
price  as  would  be  fixed  by  competition  is  quite  groundless. 

Let  us  look  more  closely  at  the  determinants  of  a 
monopoly  price.  Suppose  we  are  dealing  with  a  Trust 
owning  a  large  amount  of  fixed  capital,  some  of  it  more  and 
some  less  favourably  ordered  for  production,  and  having  an 
absolute  monopoly  in  the  market  for  steel  rails,  cotton 
bagging,  or  other  manufactured  articles.  First  look  at 
expenses  of  production.  A  very  small  output,  though 
produced  by  the  exclusive  use  of  the  very  best  machinery 
and  labour,  would  not  be  produced  very  cheaply,  because 
the  economies  attending  large-scale  production  would  be 
sacrificed.  Each  successive  increment  in  output  would 
involve  a  decreased  expense  per  unit  of  production  so  long 
as  the  most  favourably  situated  plant  was  employed.  If  the 
output  grew  so  large  that  worse  material  or  works  fitted  with 
inferior  plant,  or  less  favourably  placed,  were  called  into  re- 
quisition, the  economies  of  an  increased  scale  of  production 
would  be  encroached  upon  by  this  lowering  of  the  margin  of 
production.  Taking  the  Trust's  capital  at  a  fixed  amount, 
there  would  necessarily  come  an  increment  of  output  which 
it  would  not  pay  to  produce  even  if  sold  at  the  price  fetched 


MODERN   CAPITALISM. 


157 


by  the  previous  increment.  The  ton  of  steel  or  of  cotton 
bagging  which  would  only  yield  a  bare  margin  of  profit, 
if  sold  at  the  price  fetched  by  the  last  ton,  limits  the  maxi- 
mum output  of  the  business.  Under  the  pressure  of  free 
competition  this  marginal  ton  will  be  actually  produced. 
But  though,  considered  by  itself,  it  yields  a  margin  of  profit, 
it  will  rarely  if  ever  be  produced  as  part  of  the  actual  output 
of  a  Trust.  The  actual  output  of  a  Trust,  we  shall  find, 
will  be  determined  at  any  point  between  the  first  unit  of 
output  and  this  marginal  increment.  The  expenses  of  pro- 
duction will  not  increase  in  any  close  correspondence  with 

CURVE   OF    PROFIT    IN    TRUST. 


the  growth  of  the  output,  but  will  represent  the  fluctuating 
resultant  of  the  several  economies  of  production  at  the 
several  points. 

In  the  figures  A  and  B  the  perpendicular  line  ai 
represents  a  number  of  increments  of  production.  The 
expense  of  producing  a  supply  of  loo  will  be  measured  by 
the  line  bb\  that  of  producing  200  by  cc\  and  so  on.  But 
never  in  actual  industry  will  the  lines  of  growing  expense 
be  regular  in  their  relation  to  the  increase  of  production,  as 
would  be  the  case  in  the  figure  A;  they  will  always  be 
irregular,  as  in  the  figure  B.     The  curve  of  expense  ai'  in 


IS8  THE   EVOLUTION   OF 

the  figure  B  will  be  determined  by  the  resultant  of  the 
various  forces  which  make  for  increasing  and  diminishing 
returns  for  each  new  increment  of  the  requisites  of  pro- 
duction required  to  produce  the  new  portion  of  output. 
When  the  increased  scale  of  production  makes  some  new 
application  of  machinery  economically  possible,  or  where 
recourse  must  be  had  to  some  decidedly  inferior  land  for 
the  raw  material,  a  large  sudden  irregularity  may  show  itself 
in  the  curve  of  expense. 

When  we  turn  from  expenses  of  production  to  the  aggre- 
gate takings  from  the  sale  of  the  several  quantities  of 
supply,  we  shall  find  a  similar  irregularity  of  increase. 
Elasticity  in  demand,  as  tested  by  the  stimulus  given  to 
consumption  by  a  fall  of  price,  differs  not  merely  in 
different  commodities,  but  at  different  points  in  a  falling 
scale  of  prices.  A  number  of  equal  decrements  in  price, 
according  as  they  stimulate  the  satisfaction  of  weaker  wants 
of  earlier  consumers,  or  strike  into  new  classes  of  con- 
sumers, or  supply  new  kinds  of  wants,  will  have  widely 
different  effects  in  increasing  the  aggregate  takings. 

We  have  then  two  widely  fluctuating  and  highly  irregular 
gradations  of  money  terms,  representing  expenses  of  pro- 
duction and  the  aggregate  price  of  the  various  quantities  of 
supply,  each  determined  by  a  wholly  different  class  of  con- 
siderations. But  the  interest  of  a  Trust,  as  we  see,  lies  in 
fixing  supply  at  the  highest  net  profits.  Now  the  net  profits 
of  producing  and  selling  any  specified  quantity  of  supply 
are  ascertained  by  deducting  the  expenses  of  production 
from  the  aggregate  takings.  The  relation  between  the 
growth  of  expenses  of  production  and  of  aggregate  takings 
will  yield  a  different  net  amount  of  profit  at  each  increment 
of  supply.  The  diagram  opposite  will  illustrate  the  nature 
of  these  relations. 

AL  is  the  line  indicating  at  the  several  points,  B,  C,  D, 
etc.,  proportional  increments  in  supply.  If  the  monopoly 
be  a  steel  rail  trust,  B  marks  the  millionth  ton,  C  the  two 
millionth  ton  of  output,  and  so  on.  A'L'  is  a  curve  in- 
dicating, by  its  diminishing  distance  from  AL,  the  dimin- 
ishing expense  of  producing  each  unit  of  the  increased 
output,  so  that  the  expense  of  producing  the  first  ton,  if 
only  one  is  produced,  is  AA',  that  of  the  millionth  ton,  if 
one  million  are  produced,  BB',  and  so  on.    The  expenses  of 


MODERN   CAPITALISM. 


159 


producing  one  million  tons  will  thus  be  represented  by  the 
figure  ABB'A',  those  of  two  millions  by  the  figure  ACC'A'. 
Further,  let  the  curve  al  represent,  by  its  diminishing 
distance  from  AL,  the  diminishing  price  at  which  the 
several  additions  to  supply  can  be  sold,  so  that  the  first 
ton  sells  at  Aa,  the  millionth  at  B^,  and  so  on,  the  aggre- 


DIAGRAM    OF   TRUST    PRICES. 

^'  U 

A       10     20    30    4-0    50    60    70    80    90    100  110    120 


B 


C 

D 
E 
F 

cU 
H 
1 

J 
K 


V 

C 

/ 

1 

/c 

J) 

( 

fa. 

-•/ 

) 

/  e 

^1 

/ 

1  ^ 

^ 

1    Q 

" 

/ 

k 

' 

I' 

A 

K' 

/ 

J 
k 

r 

/ 

1 

I 

gate  price  of  the  first  million  tons  being  AB^a;,  that  of  the 
first  two  millions  being  KQca. 

Assuming  that  the  Trust  is  planning  a  new  business  and 
determining  the  most  profitable  output,  it  will  limit  that 
output  not  necessarily  at  the  point  where  the  selling  price 
gives  the  widest   margin  of  profit  upon   the  expenses  of 


l6o  THE   EVOLUTION   OF 

production,  as  might  be  the  case  at  the  point  B  in  the 
diagram,  but  at  the  point  F,  where  the  margin  of  profit  bears 
the  largest  proportion  to  the  expenses  of  production,  or  in 
other  words,  where  the  area  of  absolute  takings  shows 
the  largest  surplus  over  the  area  of  aggregate  expenses. 
Thus  it  will  here  be  to  the  interest  of  the  Trust  to  produce 
and  sell  six  millions  (limiting  production  at  F)  with  an 
aggregate  expense  AFF'A'  and  an  aggregate  takings  AF/a, 
yielding  an  aggregate  net  profit  A'F'/a.  They  will  not  pro- 
duce five  millions  because  the  figure  AFea  bears  a  smaller 
proportion  to  AEE'A'  than  does  AF^'  to  AFF'A'.  For  a 
similar  reason  they  will  not  produce  seven  millions. 

Since  the  fluctuations  in  the  curve  of  expenses  and  in 
that  of  selling  price  or  "  demand  "  are  determined  by  an 
entirely  different  set  of  forces,  it  will  be  evident  that  there 
may  be  several  points  in  AL  where  the  proportions  between 
the  area  of  expenses  and  that  of  profits  may  be  the  same. 
So  there  may  be  several  maxima  at  which  Trust  prices  may 
be  indifferently  fixed.  The  figure  upon  F'/  may  have  the 
same  quantitative  relation  to  the  figure  upon  FF',  as  that 
upon  H'^  to  that  upon  HH'.  In  such  a  case  it  will  be  a 
matter  of  indifference  to  the  Trust  whether  it  sells  five 
million  tons  at  a  price  loos.  per  ton,  or  seven  millions  at 
90s. 

We  have  seen  that  the  causes  which  determine  expenses 
at  the  several  points  in  A'L'  have  no  relation  to  the  causes 
which  determine  the  selling  price  at  the  various  points, 
except  to  furnish  a  minimum  below  which  the  price  cannot 
fall.  Above  this  limit  expenses  of  production  in  no  sense 
help  to  determine  monopoly  prices ;  the  true  determinants 
are  entirely  in  the  region  of  demand,  and  are  measured  by 
the  marginal  utility  or  satisfaction  afforded  to  consumers 
by  the  several  quantities  which  constitute  supply  at  any 
given  time. 

Since  expenses  of  production  always  enter  into  the  de- 
termination of  competition-prices,  which  are  fixed  by  the 
interaction  of  expenses  and  money  estimates  of  utility — i.e., 
by  supply  and  demand,  it  is  evident  that  the  curve  of 
monopoly  prices  has  no  assignable  relation  whatever  to  the 
curve  of  competition  prices,  and  that  the  most  profitable 
output  and  prices  of  Trust-made  goods  are  in  no  way  identi- 
fied with  the  most  profitable  output  and  prices  in  a  com- 


MODERN    CAPITALISM. 


I6l 


petitive  trade.  In  competition  the  curve  of  selling  prices 
tends  to  follow  closely  the  curve  of  expenses,  and  conse- 
quently the  areas  of  profits  and  expenses  tend  to  bear 
the  same  proportion  to  each  other  at  different  points  of 
increment  in  the  trade.  For  if  at  any  point  great  increases 
in  economy  of  production  are  achieved,  while  the  large 
elasticity  of  demand  maintains  a  price  nearly  the  same  as 
before,  the  wide  margin  of  profit  which  might  fix  the  actual 
price  at  that  point  for  a  monopolist  only  serves  to  stimulate 
such  increased  output  on  the  part  of  trade  competitors  as 
will  continue  until  the  flexibility  of  demand  weakens,  and 
prices  are  lowered  to  such  a  point  as  will  yield  the  normal 
margin  or  market  rate  of  profit 

There  is,  therefore,  nothing  in  common  between  com- 
petition prices  and  monopoly  prices  for  different  quantities  of 
supply,  nor  anything  to  secure  that  the  actual  quantity  of 
supply  and  the  price  shall  be  the  same  in  the  two  cases. 

§  6.  It  is,  however,  conceivable  that  in  a  certain  com- 
modity where  a  genuine  monopoly  holds  the  market,  the 
price  should  be  as  low  as  under  free  competition.  This 
may  be  illustrated  by  the  following  curves  of  expense  and 
price  : — 


where  the  economies  of  increased  production  continue  to 
be  very  great,  while  the  flexibility  of  demand  is  also  high. 
In  other  words,  it  may  pay  the  Trust  better  to  make  very 
large  sales  at  a  low  price  when  the  expenses  of  production 


l62  THE    EVOLUTION   OF 

are  low,  than  to  sell  a  smaller  quantity  at  a  higher  price  and 
with  a  higher  expense  of  production.  In  this  case  the  con- 
sumer may  get  a  part  of  the  advantage  of  large-scale  pro- 
duction along  with  the  saving  of  expense  of  competition. 
There  is,  however,  no  guarantee  to  society  that  low  prices 
will  be  fixed.  In  the  vast  majority  of  cases  it  will  probably 
pay  the  Trust  better  to  limit  production  and  sell  at  higher 
prices. 

In  the  illustration  above  we  have  assumed  that  a  monopoly 
was  starting  de  novo.  Where  a  Trust  is  formed,  as  is 
commonly  the  case,  by  an  amalgamation  of  existing  capitals 
largely  embodied  in  plant  and  machinery  of  production,  it  will 
probably  not  pay  to  limit  production  to  a  very  small  output, 
even  though  the  largest  proportionate  margin  of  profit  might 
seem  to  stand  there.  For  the  interest  upon  the  closed  mills 
and  other  idle  capital  should  be  reckoned  among  the  ex- 
penses of  production  for  the  purposes  of  determining  the 
profitable  price.  Thus  where  large  means  of  production  are 
owned  by  a  monopoly  it  will  seldom  pay  to  sell  a  very 
small  supply  at  a  very  high  price. 

So  far  we  have  treated  of  absolute  monopolies,  eliminating 
all  consideration  of  competition.  We  have  found  that  the 
supply  and  the  price  of  an  article  of  absolute  monopoly  is 
determined  by  the  relation  between  expenses  of  production 
and  flexibility  of  demand.  Although  a  new  invention  or  a 
wide  expansion  of  market  may  alter  so  considerably  the 
expenses  of  production  of  the  several  quantities  of  supply 
as  to  materially  affect  monopoly-supply  and  prices,  it  is  the 
latter  influence,  that  of  flexibility  of  demand,  that  directly 
in  each  specific  case  determines  whether  a  Trust's  prices 
shall  be  high  or  low.  When  we  find  the  Standard  Oil 
Trust  maintaining  a  low  level  of  prices,  or  the  Western 
Union  Telegraph  Company  charging  low  rates,  we  shall  find 
the  explanation  in  the  character  of  the  public  demand  for 
oil  and  telegraphic  messages. 

§  7.  A  number  of  considerations  relating  to  "  demand  " 
limit  the  economic  power  of  monopolies  to  charge  high 
prices. 

A  monopoly  price,  as  we  have  seen,  exactly  measures  the 
marginal  utility  of  the  supply,  as  indicated  by  the  quantity 
of  money  which  the  purchaser  of  the  last  increment  of  supply 
is  just  willing  to  pay  for  it.      When  this  marginal  utility 


MODERN   CAPITALISM.  1 63 

sinks  fast  with  an  increase  of  supply  the  monopoly  price  will 
be  high  for  it,  and  it  will  pay  the  monopolist  better  to  restrict 
the  output  and  sell  the  limited  supply  at  a  high  price,  because 
a  large  reduction  of  price  will  not  stimulate  a  proportion- 
ably  large  increase  of  consumption.  So  where  the  marginal 
utility  sinks  slowly,  it  will  pay  to  increase  the  supply  and 
lower  the  price,  for  each  fall  of  price  will  stimulate  a  large 
increase  of  consumption. 

Since  the  marginal  utility  of  a  number  of  increments  of 
supply  will  not  be  the  same  in  the  case  of  any  two  com- 
modities, it  is  evident  that  the  determination  of  monopoly 
prices  is  a  very  delicate  operation. 

It  is  not  possible  to  present  even  an  approximately 
accurate  classification  of  commodities  in  relation  to  the 
powers  of  a  Trust  or  Monopoly.  But  the  following  con- 
siderations will  assist  us  to  understand  why  in  some  cases 
a  Trust  appears  to  raise  prices,  in  others  to  keep  them  as 
they  were,  and  in  others  even  to  lower  them  : — 

(a)  The  urgency  of  the  need  which  a  commodity  satisfies 
enables  the  monopolist  to  charge  high  prices.  Where  a 
community  is  dependent  for  life  upon  some  single  com- 
modity, as  the  Chinese  on  rice,  the  monopolist  is  able  to 
obtain  a  high  price  for  the  whole  of  a  supply  which  does 
not  exceed  what  is  necessary  to  keep  alive  the  whole  popula- 
tion. Thus  a  monopolist  of  corn  or  rice  in  a  famine  can 
get  an  exorbitant  price  for  a  considerable  supply.  But  after 
the  supply  is  large  enough  to  enable  every  one  to  satisfy  the 
most  urgent  need  for  sustenance,  the  urgency  of  the  need 
satisfied  by  any  further  supply  falls  rapidly,  for  there  is  no 
comparison  between  the  demand  of  famine  and  the  demand 
induced  by  the  pleasures  of  eating. 

A  monopoly  of  a  necessity  of  life  is  therefore  more 
dangerous  than  any  other  monopoly,  because  it  not  merely 
places  the  lives  of  the  people  at  the  mercy  of  private  traders, 
but  because  it  will  generally  be  the  interest  of  such 
monopolists  to  limit  supply  to  the  satisfaction  of  the  barest 
necessaries  of  life. 

Next  to  a  necessary  in  this  respect  will  come  what  is 
termed  a  "  conventional  necessary,"  something  which  by 
custom  has  been  firmly  implanted  as  an  integral  portion  of 
the  standard  of  comfort.  This  differs,  of  course,  in  different 
classes  of  a  community.     Boots  may  now  be  regarded  as 


1 64  THE  EVOLUTION   OF 

a  "conventional  necessary"  of  almost  all  grades  of  English 
society,  and  a  monopolist  could  probably  raise  the  price  of 
boots  considerably  without  greatly  diminishing  the  consump- 
tion. Half  a  century  ago,  however,  when  boots  were  not 
firmly  established  as  part  of  the  standard  of  comfort  of  the 
great  mass  of  the  working  classes,  the  power  of  a  monopolist 
to  raise  prices  would  have  been  far  smaller. 

As  we  descend  in  the  urgency  of  wants  supplied  we  find 
that  the  comforts  and  luxuries  form  a  part  of  the  standard 
of  hfe  of  a  smaller  and  smaller  number  of  persons,  and 
satisfying  intrinsically  weaker  needs,  are  more  liable  to  be 
affected  by  a  rise  of  price. 

{b)  Closely  related  to  this  consideration,  and  working  in 
with  it  at  every  point,  is  the  question  of  the  possibility  of 
substituting  another  commodity  for  the  one  monopolised. 
This  everywhere  tempers  the  urgency  of  the  need  attaching 
to  a  commodity.  There  are  few,  if  any,  even  among  the 
commodities  on  which  we  habitually  rely  for  food,  shelter, 
clothing,  which  we  could  not  and  would  not  dispense  with 
if  prices  rose  very  high.  The  incessant  competition  which  is 
going  on  between  different  commodities  which  claim  to 
satisfy  some  particular  class  of  need  cannot  be  got  rid  of  by 
the  monopoly  of  one  of  them.  This  is  probably  the  chief 
explanation  of  the  low  prices  of  the  Standard  Oil.  As  an 
illuminant,  oil  is  competing  with  gas,  candles,  electricity,  and 
unless  the  monopoly  were  extended  laterally  so  as  to  include 
these  and  any  other  possible  illuminants,  the  Trust's  prices 
cannot  be  determined  merely  by  the  pressure  of  the  need  for 
artificial  light.  Though  to  a  modern  society  artificial  light  is 
probably  even  more  important  than  sugar,  a  Sugar  Trust  may 
have  a  stronger  monopoly  and  be  able  to  raise  prices  higher 
than  an  Oil  Trust,  because  the  substitutes  for  sugar,  such  as 
molasses  and  beetroot,  are  less  effective  competitors  than 
gas,  candles,  and  electricity  with  oil. 

The  power  of  railway  monopolies  largely  depends  upon 
the  degree  in  which  their  services  are  indispensable,  and 
no  alternative  mode  of  transport  is  open.  Sometimes, 
however,  they  miscalculate  the  extent  of  their  power.  The 
high  railway  rates  in  England  have  recently  led  in  several 
quarters  to  a  substitution  of  road  and  canal  traffic  in  the  case 
of  goods  where  rapidity  of  conveyance  was  not  essential. 
So  also  in  other  cases  sea-transport  has  been  substituted. 


MODERN   CAPITALISM.  165 

The  stronger  monopoly  of  American  railways  consists 
partly  in  the  fact  that  distances  are  so  great,  and  the  sea- 
board or  other  water  conveyance  so  remote,  that  over  a  large 
part  of  the  Continent  the  monopoly  is  untempered  by 
alternative  possibilities  of  transport. 

The  reverse  consideration,  the  possibility  of  substituting 
the  article  of  monopoly  for  other  articles  of  consumption, 
and  so  securing  a  wider  market,  has  quite  as  important 
an  influence  on  prices.  The  possibility  of  substituting 
oil  for  coal  in  cooking  and  certain  other  operations  has 
probably  a  good  deal  to  do  with  the  low  price  of  oil.  A 
Trust  will  often  keep  prices  low  for  a  season  in  order  to 
enable  their  article  to  undersell  and  drive  out  a  rival  article, 
a  competition  closely  akin  to  the  competition  with  a  rival 
producer  of  the  same  article.  When  natural  gas  was  dis- 
covered in  the  neighbourhood  of  Pittsburg,  the  price  was 
lowered  sufficiently  to  induce  a  large  number  of  factories 
and  private  houses  to  give  up  coal  and  to  burn  gas.  After 
expensive  fittings  had  been  put  in,  and  the  habit  of  using 
gas  established,  the  Gas  Company,  without  any  warning, 
proceeded  to  raise  the  rates  to  the  tune  of  100  per  cent. 
When  we  ascend  to  the  higher  luxuries,  the  competition 
between  different  commodities  to  satisfy  the  same  generic 
taste,  or  even  to  divert  taste  or  fashion  from  one  class  of 
consumption  to  another  class,  is  highly  complicated,  and 
tempers  considerably  the  control  of  a  Trust  over  prices. 

The  power  of  a  company  which  holds  the  patent  for  a 
particular  kind  of  corkscrew  is  qualified  very  largely  not 
only  by  competition  of  other  corkscrews,  but  by  screw- 
stoppers  and  various  other  devices  for  securing  the  contents 
of  bottles.  The  ability  to  dispense-  with  the  object  of  a 
monopoly,  though  it  does  not  prevent  the  monopolist  from 
charging  prices  so  much  higher  than  competition  prices  as 
to  extract  all  the  "  consumer's  rent,"  of  the  marginal  con- 
sumer, forms  a  practical  limit  to  monopoly  prices. 

{c)  Lastly,  there  is  the  influence  of  existing  or  potential 
competition  of  other  producers  upon  monopoly  prices. 
Where  prices  and  profits  are  very  high  a  Trust  is  liable 
to  more  effective  competition  on  the  part  of  any  surviving 
independent  firms,  and  likewise  to  the  establishment  of 
new  competitors.  This  ability  of  outside  capital  to  enter 
into  competition  will  of  course  differ  in  different  trades. 


1 66     THE   EVOLUTION    OF   MODERN    CAPITALISM. 

Where  the  monopoly  is  protected  by  a  tariff  the  possibiUty 
of  new  competition  from  outside  is  lessened.  When  the 
monopoly  is  connected  with  some  natural  advantage  or 
the  exclusive  possession  of  some  special  convenience,  as 
in  mining  or  railways,  direct  competition  of  outsiders  on 
equal  terms  is  prohibited.  Where  the  combination  of  large 
capital  and  capable  administration  is  indispensable  to  the 
possibility  of  success  in  a  rival  producer,  the  power  of  a 
monopoly  is  stronger  than  where  a  small  capital  can  produce 
upon  fairly  equal  terms  and  compete.  If  the  monopoly  is 
linked  with  close  personal  qualities  and  with  special  oppor- 
tunities of  knowledge,  as  in  banking,  it  is  most  difficult  for 
outside  capital  to  effectively  compete. 

§  8.  These  considerations  show  that  the  power  of  a  Trust 
or  other  monopoly  over  prices  is  determined  by  a  number 
of  intricate  forces  which  react  upon  one  another  with  vary- 
ing degrees  of  pressure,  according  as  the  quantity  of  supply 
is  increased  or  diminished.  But  a  Trust  is  always  able  to 
charge  prices  in  excess  of  competitive  prices,  and  it  is 
generally  its  interest  to  do  so.  It  will  commonly  be  to 
the  interest  of  a  Trust  or  other  monopoly  to  maintain  a 
lower  scale  of  prices  in  those  commodities  which  are 
luxuries  or  satisfy  some  less  urgent  and  more  capricious 
taste,  and  to  maintain  high  prices  where  the  article  of 
monopoly  is  a  common  comfort  or  a  prime  necessary  of 
life  for  which  there  is  no  easily  available  substitute. 


i67 


CHAPTER  VII. 

MACHINERY   AND    INDUSTRIAL   DEPRESSION. 

§    I.    'The  external  phenomena  of  Trade  Depression. 
§    2,   Correctly   described  as     Underproduction    and   Over- 
production. 
§    3.   Testimony  to  a  general  excess  of  Productive  Fower  over 

the  requirement  for  Consumption. 
§    4.   The    connection    of  modern    Machine-production    and 

Depression  shown  by  statistics  of  price. 
§    5.   Changing  forms  in  which   Over-supply  of  Capital  is 

embodied, 
§    6,  Summary  of  economic  relation  of  Machinery  to  De- 
pression. 
§    7.    Under-consumption  as  the  root-evil. 
§    8.  Economic  analysis  of  '^Saving." 
§    9.   Saving  requires  increased  Consumption  in  the  future. 
§  10.    Quantitative    relation   of  parts   in   the   organisrn   of 

Industry. 
§  1 1.   Quantitative  relation  of  Capital  and  Consumption. 
§  12.  Economic  limits  of  Saving  for  a  Community. 
§  1 3.  JlVo  limits  to  the  possibility  of  individual  Saving —  Clash 

of  individual  and  social  interests  in  Saving. 
§  14.   Objection  that  excess  in  forms  of  Capital  ivould  drive 

interest  to  zero  not  valid. 
§  15.  Excess  is  in  embodiments  of  Capital,  not  in  real  Capital. 
§  16.    Uncontrolled  Machinery  a  source  of  fluctuation. 

§  I.  The  leading  symptom  of  the  disease  called  Depression 
of  Trade  is  a  general  fall  of  wholesale  prices,  accompanied 
by  a  less  than  corresponding  fall  of  retail  prices.  Whatever 
may  be  the  ultimate  causes  of  a  trade  depression,  the  direct 
and  immediate  cause  of  every  fall  of  price  must  be  a  failure 


168  THE   EVOLUTION   OF 

of  demand  to  keep  pace  with  supply  at  the  earlier  price. 
So  long  as  those  who  have  goods  to  sell  can  sell  all  these 
goods  at  the  price  they  have  been  getting,  they  will  not 
lower  the  price.  The  efficient  cause  then  of  any  fall  of  price 
is  an  actual  condition  of  over-supply  at  earlier  prices.  A 
very  small  quantity  of  over-supply  will  bring  down  prices 
in  a  business,  or  in  a  whole  market,  provided  the  competi- 
tion between  the  businesses  is  keen.  Where  such  a  fall 
of  prices  quickly  stimulates  demand  so  that  the  over-supply 
is  carried  off  and  the  rate  of  demand  is  equated  to  the  rate 
of  supply  at  the  lower  price  level,  the  condition  is  com- 
monly described  as  a  "tendency  to  over-supply."  But 
it  is  important  to  bear  in  mind  that  in  strictness  it  was 
not  a  "tendency"  but  an  actually  existing  quantity  of  over- 
supply  which  brought  down  the  price. 

Where  any  fall  of  price  thus  brought  about  quickly 
stimulates  a  corresponding  increase  of  demand,  stability 
of  prices  follows,  and  there  will  be  a  full,  healthy  production 
at  the  lower  prices. 

The  mere  fact  then  that  prices  are  generally  lower  than 
they  were  five  or  ten  years  ago  is  no  evidence  of  depressed 
trade.  Depressed  trade  signifies  not  merely  low  prices  but 
relaxed  production  :  more  has  been  produced  than  can  be 
sold  at  the  lowest  profitable  prices,  and  markets  are  congested 
with  stock,  but  less  is  being  produced  than  could  be  produced 
with  existing  means  of  production.  The  fact  which  faces 
us  in  a  period  of  depression  is  an  apparent  excess  of 
productive  power.  If  this  excess  were  of  labour  alone 
it  might  be  explained  with  some  plausibility  as  due  to 
the  displacement  of  labour  by  machinery.  For  it  has 
been  admitted  that  the  first  and  immediate  effect  of 
introducing  labour-saving  or  labour-aiding  machines  may 
be  a  diminution  in  the  demand  for  labour,  even  when 
the  labour  of  making  and  repairing  the  machines  and  of 
distributing  the  increased  product  which  finds  a  sale  is 
taken  into  consideration.  The  simultaneous  application 
of  a  number  of  new  forms  of  machinery  attended  by 
other  general  economies  in  the  organisation  of  industry 
might  seem  to  explain  why  for  a  time  there  should  be  a 
general  redundancy  of  labour  in  all  or  most  of  the  chief 
industries  of  a  country.  Such  an  over-supply  of  labour 
would  result  from  the  accumulated  action  of  "  first  effects." 


MODERN    CAPITALISM.  l6g 

When  the  cheapening  influences  of  machinery  had  time 
to  exercise  their  full  natural  influence  in  stimulating  con- 
sumption the  labour  temporarily  displaced  would  be  again 
fully  utilised ;  for  the  moment,  past  labour  saved  and  stored 
in  forms  of  fixed  capital  would  do  a  great  deal  of  the  work 
which  would  otherwise  be  done  by  present  living  labour, 
But  such  an  explanation  is  wholly  negatived  by  the  fact 
that  in  a  depressed  condition  of  trade  there  is  an  excess 
of  forms  of  capital  as  well  as  of  labour.  There  exists 
simultaneously  a  redundancy  of  both  factors  in  production. 
Labourers  are  out  of  work  or  are  in  irregular  employment, 
mills  and  factories  are  closed  or  working  short  time,  the 
output  of  coal  and  metals  is  reduced,  and  yet  with  this 
relaxed  production  the  markets  are  glutted  with  unsold 
goods  unable  to  find  purchasers  at  a  price  which  will  yield 
a  minimum  profit  to  their  owners.  To  this  must  be  added, 
in  the  case  of  the  extractive  industries,  agriculture,  mining, 
etc.,  the  exclusion  from  productive  use  of  land  which  had 
formerly  found  a  profitable  employment. 

§  2.  To  this  condition  of  industry  the  antithetical  terms, 
over-production  and  under-production,  may  be  both  correctly 
applied,  according  as  one  regards  production  as  a  state  or 
as  a  process.  The  state  of  trade  in  a  depression  is  one 
of  over-production — the  industrial  body  is  congested  with 
goods  which  are  not  drawn  out  for  consumption  fast  enough. 
This  plethora  debilitates  the  industrial  body,  its  functional 
activities  are  weakened.  The  slackness  of  trade  thus 
induced  is  rightly  described  as  under-production. 

It  is  commonly  said  by  English  writers  upon  economics 
that  the  state  of  over-production,  the  redundancy  of  capital 
and  labour,  though  found  in  one  or  two  or  several  trades  at 
the  same  time,  cannot  be  of  general  application.  If  too 
much  capital  and  labour  is  engaged  in  one  industry  there  is, 
they  argue,  too  little  in  another,  there  cannot  be  at  the  same 
time  a  general  state  of  over-production.  Now  if  by  general 
over-production  is  meant  not  that  every  single  industry  is 
supplied  with  an  excess  of  capital,  but  that  there  exists  a 
net  over-supply,  taking  into  account  the  plethora  in  some 
trades  and  the  deficiency  in  others,  this  assertion  of  English 
economists  is  not  in  accordance  with  ascertained  facts  or 
with  the  authority  of  economists  outside  of  England. 

§  3.  If  a  depression  of  trade  signified  a  misapplication  of 


I/O  THE   EVOLUTION    OF 

capital  and  labour,  so  that  too  much  was  applied  in  some 
industries,  too  little  in  others,  there  would  be  a  rise  of 
prices  in  as  many  cases  as  there  was  a  fall  of  prices,  and  the 
admitted  symptom  of  depression,  the  simultaneous  fall  of 
price  in  all  or  nearly  all  the  staple  industries,  would  not 
occur.  The  most  careful  students  of  the  phenomena  of 
depressed  trade  agree  in  describing  the  condition  as  one  of 
general  or  net  excess  of  the  forms  of  capital.  They  are 
also  agreed  in  regarding  the  enormous  growth  of  modern 
machinery  as  the  embodiment  of  a  general  excess  of  pro- 
ducing power  over  that  required  to  maintain  current  con- 
sumption. 

Lord  Playfair,  writing  on  this  subject  in  1888,  says,  "It 
matters  not  whether  the  countries  were  devastated  by  war 
or  remained  in  the  enjoyment  of  peace ;  whether  they  were 
isolated  by  barriers  of  Protection  or  conducted  these 
industries  under  Free  Trade;  whether  they  abounded  in 
the  raw  materials  of  industry  or  had  to  import  them  from 
other  lands ;  under  all  these  varying  conditions  the  machine- 
using  countries  of  the  world  have  felt  the  fifteen  years  of 
depression  in  the  same  way,  though  with  varying  degrees  of 
intensity."  His  conclusion  is  "that  the  improvements  of 
machinery  used  in  production  have  increased  the  supply  of 
commodities  beyond  the  immediate  demands  of  the  world.  "^ 
In  support  of  this  position  he  adduces  the  authority  of  con- 
tinental writers  such  as  Dr.  A.  von  Studnitz,  Piermez,  Jules 
Duckerts,  Laveleye,  Trasenster,  Annecke,  and  Engel.  In 
the  United  States,  Carroll  Wright,  David  Wells,  and  Atkinson 
are  foremost  in  upholding  this  to  be  the  explanation  of 
depression  of  trade.  Mr.  Carroll  D.  Wright,  Commissioner 
of  Labour  at  Washington,  is  emphatic  in  his  assertion  of 
the  fact.  "  So  far  as  the  factories  and  the  operatives  of  the 
countries  concerned  are  to  be  taken  into  consideration 
(England,  the  United  States,  France,  Belgium,  Germany), 
there  does  exist  a  positive  and  emphatic  over-production, 
and  this  over-production  could  not  exist  without  the  intro- 
duction of  power-machinery  at  a  rate  greater  than  the 
consuming  power  of  the  nations  involved,  and  of  those 
dependent  upon  them,  demand;  in  other  words,  the  over- 
production of  power-machinery  logically  results  in  the  over- 

^  Contemporary  Review,  March  1888. 


MODERN   CAPITALISM.  I7I 

production  of  goods  made  with  the  aid  of  such  machinery, 
and  this  represents  the  condition  of  those  countries  depend- 
ing largely  upon  mechanical  industries  for  their  prosperity."^ 
The  Reports  of  the  English  "  Commission  on  the  Depres- 
sion of  Trade  and  Industry"  make  similar  admissions  of  an 
excess  of  producing  power  as  distinct  from  a  mere  miscal- 
culation in  the  application  of  capital  and  labour.  The 
Majority  Report,  defining  "over-production"  as  "the  pro- 
duction of  commodities,  or  even  the  existence  of  a  capacity 
for  production  at  a  time  when  the  demand  is  not  sufficiently 
brisk  to  maintain  a  remunerative  price  to  the  producer," 
affirms  "  that  such  an  over-production  has  been  one  of  the 
prominent  features  of  the  course  of  trade  during  recent 
years,  and  that  the  depression  under  which  we  are  now 
suffering  may  be  partially  explained  by  this  fact.  .  .  ."^ 
The  Minority  Report  lays  still  stronger  stress  upon 
"  systematic  over-production,"  alleging  "  that  the  demand 
for  commodities  does  not  increase  at  the  same  rate  as 
formerly,  and  that  our  capacity  for  production  is  conse- 
quently in  excess  of  our  home  and  export  demand,  and 
could,  moreover,  be  considerably  increased  at  short  notice 
by  the  fuller  employment  of  labour  and  appliances  now 
partially  idle."* 

The  most  abundant  information  regarding  the  excess  of 
the  machinery  of  production  in  the  several  branches  of 
industry  has  been  given  by  Mr.  D.  A.  Wells,  who  regards 
machinery  as  the  direct  cause  of  depressed  trade,  operating 
in  three  ways — (i)  increased  capacity  of  production,  (2) 
improved  methods  of  distribution,  (3)  the  opening  up  of 
new  abundant  supplies  of  raw  material.  Thus  production 
grows  faster  than  consumption.  "  In  this  way  only  is  it 
possible  to  account  for  the  circumstances  that  the  supply  of 
the  great  articles  and  instrumentalities  of  the  world's  use 
and  commerce  have  increased  during  the  last  twelve  or 
fifteen  years  in  a  far  greater  ratio  than  the  contemporaneous 
increase  of  the  world's  population  or  of  its  immediate  con- 
suming capacity."* 

The  earlier  inventions  in  the  textile  industries,  and  the 
general  application  of  steam  to  manufacture  and  to  the  trans- 

■■  Report  on  Industrial  Depressions,  Washington,  1886. 
^  Report,  pars.  6i-66.  ^  Report,  par.  106. 

*  Contemporary  Review,  July  1887. 


172  THE   EVOLUTION    OF 

port  services,  have  played  the  most  dramatic  part  in  the  in- 
dustrial revolution  of  the  last  hundred  years.  But  it  should 
be  borne  in  mind  that  it  is  far  from  being  true  that  the  great 
forces  of  invention  have  spent  themselves,  and  that  we  have 
come  to  an  era  of  small  increments  in  the  growth  of  pro- 
ductive power.  On  the  contrary,  within  this  last  generation 
a  number  of  discoveries  have  taken  place  in  almost  all  the 
chief  industrial  arts,  in  the  opening  up  of  new  supplies  of 
raw  material,  and  in  the  improvement  of  industrial  organisa- 
tion, which  have  registered  enormous  advances  of  pro- 
ductive power.  In  the  United  States,  where  the  advance 
has  been  most  marked,  it  is  estimated  that  in  the  fifteen  or 
twenty  years  preceding  1886  the  gain  of  machinery,  as 
measured  by  "  displacement  of  the  muscular  labour," 
amounts  to  more  than  one-third,  taking  the  aggregate  of 
manufactures  into  account.  In  many  manufactures  the 
introduction  of  steam-driven  machinery  and  the  factory 
system  belongs  to  this  generation.  The  substitution  of 
machinery  for  hand  labour  in  boot-making  signifies  a  gain 
of  80  per  cent,  for  some  classes  of  goods,  50  per  cent,  for 
others.  In  the  silk  manufacture  there  has  been  a  gain  of 
50  per  cent.,  in  furniture  some  30  per  cent.,  while  in  many 
minor  processes,  such  as  wood-planing,  tin  cans,  wall- 
papers, soap,  patent  leather,  etc.,  the  improvement  of 
mechanical  productiveness  per  labourer  is  measured  as  a 
rise  of  from  50  to  300  per  cent,  or  more.  The  gain  is, 
however,  by  no  means  confined  to  an  extension  of  "power" 
into  processes  formerly  performed  by  human  muscle  and 
skill.  Still  more  significant  is  the  increased  mechanical 
efficiency  in  the  foundational  industries.  In  the  manu- 
facture of  agricultural  implements  the  increase  is  put 
down  at  from  50  to  70  per  cent.,  in  the  manufacture  of 
machines  and  machinery  from  25  to  40  per  cent,  while  "in 
ths  production  of  metals  and  metallic  goods  long-estab- 
lished firms  testify  that  machinery  has  decreased  manual 
labour  331^  per  cent."  The  increase  in  the  productive 
power  of  cotton  mills  is  far  greater  than  this.  From  1870 
to  1884  the  make  of  pig-iron  rose  131  per  cent,  in  Great 
Britain  and  237  per  cent,  in  the  rest  of  the  world.^  "  In 
building  vessels  an  approximate  idea  of  the  relative  labour 

'  Contemporary  Review ,  March  1888. 


MODERN   CAPITALISM.  T73 

displacement  is  given  as  4  or  5  to  i — that  is,  four  or  five 
times  the  amount  of  labour  can  be  performed  to-day  by 
the  use  of  machinery  in  a  given  time  that  could  be  done 
under  old  hand  methods."^ 

In  England  the  rise  in  productiveness  of  machinery  is 
roughly  estimated  at  40  per  cent,  in  the  period  1850  to 
1885,  and  there  is  no  reason  to  suppose  this  is  an  excessive 
estimate.  In  the  shipping  industry,  where  more  exact 
statistics  are  available,  the  advance  is  even  greater.  The 
diminution  of  manual  labour  required  to  do  a  given  quantity 
of  work  in  1884  as  compared  with  1870  is  put  down  at  no 
less  than  70  per  cent.,  owing  in  large  measure  to  the 
introduction  and  increased  application  of  steam-hoisting 
machines  and  grain  elevators,  and  the  employment  of 
steam  power  in  steering,  raising  the  sails  and  anchors, 
pumping,  and  discharging  cargoes.  ^  In  the  construction  of 
ships  enormous  economies  have  taken  place.  A  ship  which 
in  1883  cost  ;2^24,ooo  can  now  be  built  for  ;;^i4,ooo.  In 
the  working  of  vessels  the  economy  of  fuel,  due  to  the 
introduction  of  compound-engines,  has  been  very  large. 
A  ton  of  wheat  can  now  be  hauled  by  sea  at  less  than  a 
farthing  per  mile.  Similarly  with  land  haulage  the  economy 
of  fuel  has  made  immense  reductions  in  cost.  "  In  an 
experiment  lately  made  on  the  London  and  North  Western 
Railway,  a  compound  locomotive  dragged  a  ton  of  goods 
for  one  mile  by  the  combustion  of  two  ounces  of  coal."^ 
The  quickening  of  voyages  by  steam  motor,  and  by  the 
abandonment  of  the  old  Cape  route  in  favour  of  the  Suez 
Canal,  enormously  facilitated  commerce.  The  last  arrange- 
ment is  calculated  to  have  practically  destroyed  a  tonnage 
of  two  millions.  The  still  greater  facilitation  of  intelligence 
by  electricity  did  away  with  the  vast  system  of  ware- 
housing required  by  the  conditions  of  former  commerce. 
These  economies  of  the  foundational  transport  industries 
have  deeply  affected  the  whole  commerce  and  manufacture 
of  the  country,  and  have  played  no  inconsiderable  part  in 

'  Report  Of  the  Commissioner  of  Labour,  Washington,  1886,  pp.  80 
to  88. 

^  D.  A.  Wells,  Contemporary  Review,  August  1887. 

•'  Lord  Playfair,  in  the  Contemporary  Review,  March  1888,  gives  a 
number  of  interesting  illustrations  of  recent  economies  in  transport  and 
manufacture. 


174  THE   EVOLUTION   OF 

bringing  about  the  general  fall  of  prices  by  lowering  the 
expenses  of  production  and  stimulating  an  increased  output. 

Excessive  production  of  transport-machinery,  especially  of 
railways,  has  played  an  important  part  as  an  immediate 
cause  of  modern  trade  depression.  The  depression  begin- 
ning in  1873  and  culminating  in  1878  is  described  as  having 
its  origin  "in  the  excessive  lock-up  of  capital  in  the  con- 
struction of  railways,  especially  in  America  and  Germany, 
many  of  which,  when  built,  had  neither  population  to  use 
them  nor  traffic  to  carry;  in  the  wild  speculation  that 
followed  the  German  assertion  of  supremacy  on  the  Con- 
tinent; in  the  exaggerated  armaments,  which  withdrew  an 
inordinate  amount  of  labour  from  productive  industry,  and 
over-weighed  the  taxpayers  of  the  great  European  nations ; 
and  in  over-production  in  the  principal  trades  in  all 
European  countries."^ 

Mr.  Bowley  points  out  that  "after  each  ot  the  great 
railway  booms  of  the  century,  for  instance  in  England 
about  1847,  in  America  before  1857  and  1873,  in  India 
in  1878,  and  on  the  Continent  in  1873,  the  collapse  has 
been  very  violent ;  for  the  materials  are  bought  at  exag- 
gerated prices;  the  weekly  wage  during  construction  is 
enormous;  no  return  is  obtained  till  the  whole  scheme, 
whose  carrying  out  probably  lasts  many  years,  is  complete." 

A  great  deal  of  this  railway  enterprise  meant  over- 
production of  forms  of  transport-capital  and  a  correspond- 
ing withholding  of  current  consumption.  In  other  words, 
a  large  part  of  the  "  savings "  of  England,  Germany, 
America,  etc.,  invested  in  these  new  railways,  were  steril- 
ised; they  were  not  economically  needed  to  assist  in  the 
work  of  transport,  and  many  of  them  remain  almost  use- 
less, as  the  quoted  value  of  the  shares  testifies.  It  is  not 
true,  as  is  sometimes  suggested,  that  after  a  great  effort 
in  setting  on  foot  such  gigantic  enterprises,  a  collapse  is 
economically  necessary.  If  the  large  incomes  and  high 
wages  earned  in  the  period  prior  to  1873,  when  capital 
and  labour  found  full  employment  in  these  great  enterprises, 
had  been  fully  applied  in  increased  demand  for  commodities 
and  an  elevated  standard  of  consumption,  much  of  the  new 

^  Statist,  1879,  quoted  Bowley,  England'' s  Foreign  Trade  in  the 
Nineteenth  Century,  p.  80. 


MODERN   CAPITALISM.  1/5 

machinery  of  transport,  which  long  stood  useless,  would 
have  been  required  to  assist  in  forwarding  goods  to  maintain 
the  raised  standard  of  consumption.  This  argument,  of 
course,  assumes  that  ignorance  or  fraud  have  not  caused 
a  misdirection  of  investment.  There  is  no  evidence  to 
indicate  that  the  vast  sums  invested  in  1869-72  in  railway 
enterprise  could  have  found  any  safer  or  more  remunerative 
investment.  It  is  the  overflow  of  "  savings,"  after  all  capital 
economically  needed  to  carry  on  the  work  of  production 
to  supply  steady  current  wants  has  been  secured,  that  flows 
into  the  hands  of  speculative  company-promoters.  Such 
savings  are  not  diverted  from  safe  and  useful  forms  of 
investment,  they  are  "  savings  "  which  ought  never  to  have 
been  attempted,  for  they  have  no  economic  justification  in 
the  needs  of  commerce,  as  is  proved  by  results. 

§  4.  The  direct  causal  connection  between  the  increased 
productive  power  of  modern  machinery  and  trade  depres- 
sion clearly  emerges  from  a  comparison  of  the  fluctuations 
in  the  several  departments  of  industry  in  different  industrial 
countries.  As  modern  machinery  and  modern  methods  of 
commerce  are  more  highly  developed  and  are  applied  more 
generally,  trade  fluctuations  are  deeper  and  more  lasting.  A 
comparison  between  more  backward  countries  largely  en- 
gaged in  raising  food  and  raw  materials  of  manufacture  for 
the  great  manufacturing  countries  is  sometimes  adduced  in 
support  of  the  contention  that  highly-evolved  industry  is 
steadier.  But  though  Mr.  Giffen  is  undoubtedly  correct  in 
holding  that  depressions  are  often  worse  in  countries  pro- 
ducing raw  materials  than  in  manufacturing  countries,^  this 
is  only  true  of  raw-material  producing  countries  which 
produce  for  export,  and  which  are  therefore  dependent  for 
their  trade  upon  fluctuations  in  demand  for  commodities  in 
distant  markets  whose  movements  they  are  least  able  to 
calculate  or  control.  Irregularity  of  climate,  disease,  and 
other  natural  causes  must  be  a  constant  source  of  fluctua- 
tion in  the  productivity  of  agriculture.  But  those  non- 
manufacturing  countries  which  are  little  dependent  upon 
commerce  with  manufacturing  nations,  and  which  are  chiefly 
self-supporting,  will  of  necessity  retain  a  larger  variety  of 
agriculture  and  of  other  primitive  industries,  and  will  there- 

^  Essays  in  Finance,  vol.  i.  p.  137,  etc. 


176  THE   EVOLUTION   OF 

fore  be  less  at  the  mercy  of  some  climatic  or  other  injury 
than  a  country  more  specialised  in  some  single  crop  or 
other  industry.  The  specialisation  impressed  upon  a  back- 
ward country  by  commerce  with  advanced  industrial 
countries,  confining  it  to  growing  cotton  or  wheat  or 
sheep  or  wine,  exaggerates  the  irregularity  imposed  by  nature 
upon  its  productivity,  by  making  it  subservient  to  the  fluctu- 
ating demands  of  distant  and  wholly  incalculable  markets. 
The  fluctuations  brought  about  by  irregular  consumption 
and  uncontrolled  production  in  highly-evolved  industrial 
countries  are  thus  reflected  with  terrible  force  upon  the 
more  primitively-ordered  parts  of  the  industrial  world. 
Thus  does  the  character  of  modern  machine-industry 
impress  itself  on  the  countries  which  feed  it  with  raw 
materials. 

If  we  turn  to  investigate  the  several  departments  of 
industry  in  the  more  highly-evolved  communities,  where 
statistics  yield  more  accurate  information,  we  have  most 
distinct  evidence  that  so  far  as  the  world-market  is  con- 
cerned, the  fluctuations  are  far  more  extreme  in  the 
industries  to  which  machine-production  and  high  organisa- 
tion have  been  applied.  An  investigation  of  changes 
of  wholesale  prices  indicates  that  the  most  rapid  and 
extreme  fluctuations  are  found  in  the  prices  of  textile  and 
mineral  materials  which  form  the  foundation  of  our  leading 
manufactures.  A  comparison  of  the  price  changes  of  food 
as  a  whole,  and  of  corn  prices  with  textiles  and  minerals, 
shows  that  especially  during  the  last  thirty  years  the 
fluctuations  of  the  latter  have  been  much  more  rapid  and 
pronounced.     (See  following  diagrams.) 

§  5.  It  ought  to  be  clearly  understood  that  the  real  con- 
gestion with  which  we  are  concerned,  the  over-supply,  does 
not  chiefly  consist  of  goods  in  their  raw  or  finished  state 
passing  through  the  machine  on  their  way  to  the  consumer. 
The  economic  diagnosis  is  sometimes  confused  upon  this 
point,  speaking  of  the  increased  productive  power  of 
machinery  as  if  it  continued  to  pour  forth  an  unchecked 
flood  of  goods  in  excess  of  possible  consumption.  This 
shows  a  deep  misunderstanding  of  the  malady.  Only  in  its 
early  stages  does  it  take  this  form.  When  in  any  trade  the 
producing  power  of  machinery  is  in  excess  of  the  demand 
at  a  remunerative  price,   the  series  of  processes  through 


MODERN   CAPITALISM. 


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178 


THE   EVOLUTION   OF 


which  the  raw  material  passes  on  its  way  to  the  consumer 
soon  become  congested  with  an  over-supply.  This,  how- 
ever, need  not  be  very  large,  nor  does  it  long  continue  to 
grow.  So  long  as  the  production  of  these  excessive  wares 
continues,  though  we  have  a  growing  glut  of  them,  the 
worst  features  of  industrial  disease  do  not  appear ;  profits 
are  low,  perhaps  business  is  carried  on  at  a  loss,  but 
factories,   workshops,  mines,   railways,   etc.,  are   in   active 

CORN    PRICES. 


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employment.  It  is  when  this  congestion  of  goods  has 
clogged  the  wheels  of  the  industrial  machine,  retarded  the 
rate  of  production,  when  the  weaker  manufacturers  can  no 
longer  get  credit  at  the  bank,  can  no  longer  meet  their 
engagements,  and  collapse,  when  the  stronger  firms  are 
forced  to  close  some  of  their  mills,  to  shut  down  the  less 
productive  mines,  to  work  short  hours,  to  economise  in 
every  form  of  labour,  that  depression  of  trade  assumes  its 


MODERN    CAPITALISM. 


179 


more  enduring  and  injurious  shape.  The  condition  now  is 
not  that  of  an  increasing  glut  of  goods ;  the  existing  glut 
continues  to  block  the  avenues  of  commerce  and  to  check 
further  production,  but  it  does  not  represent  the  real 
burden  of  over-supply.  The  true  excess  now  shows  itself 
in  the  shape  of  idle  machinery,  closed  factories,  unworked 
mines,  unused  ships  and  railway  trucks.  It  is  the  auxiliary 
capital  that  represents  the  bulk  of  over-supply,  and  whose 
idleness  signifies  the  enforced  unemployment  of  large 
masses  of  labour.  It  is  machinery,  made  and  designed  to 
increase  the  flow  of  productive  goods,  that  has  multiplied 
too  fast  for  the  growth  of  consumption.  This  machinery 
does  not  continue  in  full  use,  a  large  proportion  of  it  is  not 

GENERAL    FOOD    PRICES. 


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required  to  assist  in  producing  the  quantity  of  consumptive 
goods  which  can  find  a  market,  and  must  of  necessity  stand 
idle;  it  represents  a  quantity  of  useless  forms  of  capital, 
over-supply,  and  its  unused  productive  power  represents 
an  incomparably  larger  amount  of  potential  over-supply  of 
goods.  Economic  forces  are  at  work  preventing  the  con- 
tinuation of  the  use  of  this  excessive  machinery ;  if  it  were 
used  in  defiance  of  these  forces,  if  its  owners  could  afford  to 
keep  it  working,  there  would  be  no  market  for  the  goods 
it  would  turn  out,  and  these  too  would  swell  the  mass  of 
over-supply. 

§  6.  The  general  relation  of  modern  Machinery  to  Com- 
mercial Depression  is  found  to  be  as  follows : — Improved 


i8o 


THE   EVOLUTION   OF 


machinery  of  manufacture  and  transport  enables  larger  and 
larger  quantities  of  raw  material  to  pass  more  quickly  and 
more  cheaply  through  the  several  processes  of  production. 
Consumers  do  not,  in  fact,  increase  their  consumption  as 
quickly  and  to  an  equal  extent.  Hence  the  onward  flow  of 
productive  goods  is  checked  in  one  or  more  of  the  manu- 

MINERAL   PRICES. 


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facturing  stages,  or  in  the  hands  of  the  merchant,  or  even  in 
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tion automatically  checks  production,  depriving  of  all  use 
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labour.  The  general  fall  of  money  income  which  has 
necessarily  followed  from  a  fall  of  prices,  uncompensated  by 


MODERN    CAPITALISM. 


I8l 


a  corresponding  expansion  of  sales,  induces  a  shrinkage  of 
consumption.     Under  depressed  trade,  while  the  markets 


TEXTILE   PRICES. 


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continue  to  be  glutted  with  unsold  goods,  only  so  much 
current  production  is  maintained  as  will  correspond  to  the 


l82  THE  EVOLUTION   OF 

shrunk  consumption  of  the  depressed  community.  Before 
the  turn  in  the  commercial  tide,  current  production  even 
falls  below  the  level  of  current  consumption,  thus  allowing 
for  the  gradual  passage  into  consumption  of  the  glut  of 
goods  which  had  congested  the  machine.  After  the  con- 
gestion which  had  kept  prices  low  is  removed,  prices  begin 
to  rise,  demand  is  more  active  at  each  point  of  industry, 
and  we  see  the  usual  symptoms  of  reviving  trade. 

This  is  an  accurate  account  of  the  larger  phenomena 
visible  in  the  commercial  world  in  a  period  of  disturbance. 
When  the  disease  is  at  its  worst,  the  activity  of  producer  and 
consumer  at  its  lowest,  we  have  the  functional  condition  of 
under-production  due  to  the  pressure  of  a  quantity  of  over- 
supply,  and  we  have  a  corresponding  state  of  under-consump- 
tion. 

§  7.  Machinery  thus  figures  as  the  efficient  cause  of 
industrial  disease,  but  the  real  responsibility  does  not  rest 
on  the  shoulders  of  the  inventor  of  new  machinery,  or  of 
the  manufacturer,  but  of  the  consumer. 

The  root-evil  of  depressed  trade  is  under-consumption.i 
If  a  quantity  of  capital  and  labour  is  standing  idle  at  the 
same  time,  in  all  or  in  the  generality  of  trades,  the  only 
possible  reason  why  they  remain  unemployed  is  that  there 
is  no  present  demand  for  the  goods  which  by  co-operation 
they  are  able  to  produce. 

English  economists,  most  of  whom,  ever  since  the  time 
of  J.  B.  Say,  have  denied  the  possibility  of  the  condition  of 
general  over-supply  which  is  seen  to  exist  in  depressed  trade, 
are  contented  to  assume  that  there  can  be  no  general  over- 
supply  because  every  one  who  produces  creates  a  correspond- 
ing power  to  consume.  There  cannot,  it  is  maintained,  be 
too  much  machinery  or  too  much  of  any  form  of  capital 
provided  there  exists  labour  to  act  with  it ;  if  this  machinery, 
described  as  excessive,  is  set  working,  some  one  will  have 
the  power  to  consume  whatever  is  produced,  and  since  we 
know  that  human  wants  are  insatiable,  too  much  cannot  be 
produced.  This  crude  and  superficial  treatment,  which 
found  wide  currency  from  the  pages  of  Adam  Smith  and 
McCulloch,  has  been  swallowed  by  later  English  economists, 
unfortunately  without  inquiring  whether   it  was  consistent 

^  For  the  view  that  over-consumption  is  cause,  see  Appendix  II. 


MODERN    CAPITALISM.  I  S3 

with  industrial  facts.  Since  all  commerce  is  ultimately 
resolvable  into  exchange  of  commodities  for  commodities, 
it  is  obvious  that  every  increase  of  production  signifies  a 
corresponding  increase  of  power  to  consume.  Since  there 
exists  in  every  society  a  host  of  unsatisfied  wants,  it  is  equally 
certain  that  there  exists  a  desire  to  consume  everything  that 
can  be  produced.  But  the  fallacy  involved  in  the  supposi- 
tion that  over-supply  is  impossible  consists  in  assuming  that 
the  power  to  consume  and  the  desire  to  consume  necessarily 
co-exist  in  the  same  persons. 

In  the  case  of  a  glut  of  cotton  goods  due  to  an  in- 
creased application  of  machinery,  the  spinners  and  manu- 
facturers have  the  power  to  consume  what  is  produced,  while 
a  mass  of  starving,  ill-clad  beings  in  Russia,  East  London 
— even  in  Manchester — may  have  the  desire  to  consume 
these  goods.  But  since  these  latter  are  not  owners  of  any- 
thing which  the  spinners  and  manufacturers  wish  to  consume 
or  to  possess,  the  exchange  of  commodities  for  commodities 
cannot  take  place.  But,  it  will  be  said,  if  the  Lancashire 
producers  desire  to  consume  anything  at  all,  those  who  pro- 
duce such  articles  of  desire  will  have  the  power,  and 
possibly  the  desire,  to  consume  more  cotton  goods,  or  at  any 
rate  the  desire  to  consume  something  produced  by  other 
people  who  will  have  both  power  and  desire  to  consume 
cotton  goods.  Thus,  it  will  be  said,  the  roundabout  exchange 
of  commodities  for  commodities  must  be  brought  about. 
And  this  answer  is  valid,  on  the  assumption  that  the 
Lancashire  producers  desire  to  consume  an  equivalent  of 
the  goods  they  produce.  But  let  us  suppose  they  do  not 
desire  to  do  so.  The  reply  that  since  human  wants  are 
insatiable  every  one  with  power  to  consume  must  have 
desire  to  consume,  is  inadequate.  In  order  to  be  operative 
in  the  steady  maintenance  of  industry  the  desire  to  consume 
must  be  a  desire  to  consume  noiv,  to  consume  continuously, 
and  to  consume  to  an  extent  corresponding  with  the  power 
to  consume. 

Let  us  take  the  Lancashire  trade  as  a  test  case.  Evidently, 
there  could  be  no  superfluous  capital  and  labour  in  Lanca- 
shire trade  if  the  cotton-spinners,  manufacturers  and  their 
operatives,  increased  their  own  consumption  of  cotton 
goods  to  correspond  with  every  increase  of  output. 

But  if  they  do  not  do  this,  they  can  only  make  good 


184  THE   EVOLUTION   OF 

and  maintain  their  capital  and  labour  in  employment  by 
persuading  others  to  increase  their  consumption  of  cotton 
goods.  How  can  they  do  this?  If,  instead  of  desiring 
to  consume  more  cotton  goods,  the  Lancashire  employers 
and  operatives  desire  to  consume,  and  do  actually  consume, 
more  hardware,  houses,  wine,  etc.,  then  the  increased 
consumption  of  these  things,  raising  their  prices  and  so 
stimulating  their  production,  and  distributing  a  larger 
purchasing-power  among  the  capitalists  and  operatives 
engaged  in  producing  the  said  hardware,  houses,  wine,  etc., 
will  enable  the  latter  to  consume  more  cotton  goods,  and 
if  these  desire  to  do  so,  their  effective  demand  will  maintain 
the  new  capital  and  labour  employed  in  Lancashire  trade. 

But  if,  instead  of  taking  this  course,  the  Lancashire 
capitalists  and  operatives  want  not  to  consume  either  cotton 
or  anything  else,  but  simply  to  save  and  put  up  more  mills 
and  prepare  more  yarn  and  cloth,  they  will  soon  find  they 
are  attempting  the  impossible.  Their  new  capital,  and  the 
fresh  labour  conjoined  with  it,  can  only  be  employed  on 
condition  that  they  or  others  shall  increase  their  con- 
sumption of  cotton  goods.  They  themselves  ex  hypothesi 
will  not  do  so,  and  if  the  capitalists  and  operatives  engaged 
in  setting  up  the  new  cotton-mills,  etc.,  will  consent  to  do 
so,  this  only  postpones  the  difficulty,  unless  we  suppose  a  con- 
tinuous erection  of  new  mills,  and  a  continuous  application 
on  the  part  of  those  who  construct  these  mills  of  the  whole  of 
their  profits  and  wages  in  demanding  more  cotton  goods — 
a  reductio  ad  absurdum.  In  short,  cotton  capitalists  and 
operatives  can  only  effect  this  saving  and  provide  this 
increased  employment  of  capital  and  labour  on  condition 
that  either  those  engaged  in  erecting  and  working  the  new 
mills  shall  spend  all  their  income  in  demanding  cotton 
goods,  or  that  other  persons  shall  diminish  the  proportion 
of  their  incomes  which  hitherto  they  have  saved,  and  shall 
apply  this  income  in  increased  demand  for  cotton  goods. 

Now  if  the  same  motives  which  induce  Lancashire 
capitalists  and  workers  to  refuse  to  increase  their  present 
consumption  pari  passu  with  the  rate  of  production  are 
generally  operative,  it  will  appear  that  capital  and  labour 
lie  idle  because  those  who  are  able  to  consume  what  they 
could  produce  are  not  willing  to  consume,  but  desire  to 
postpone  consumption — i.e.,  to  save. 


MODERN   CAPITALISM.  "I85 

§  8.  The  process  of  "Saving"  has  received  but  scant 
attention  from  economic  writers.  Jevons  appears  to  have 
held  that  superfluous  food  and  other  necessary  consumptive 
goods,  in  whosoever  hands  they  were,  constituted  the  only 
true  fund  of  capital  in  a  community  at  any  given  time. 
Sidgwick  also  holds  that  all  "  Savings  "  are  in  the  first  in- 
stance "  food."  That  this  is  not  the  case  will  appear  from 
the  following  example: — A  self-sufficing  man  produces 
daily  for  his  daily  consumption  a  quantity  of  food,  etc., 
denoted  by  the  figure  10.  5  of  this  is  necessary  and  5 
superfluous  consumption.  This  man,  working  with  primi- 
tive tools,  discovers  an  implement  which  will  greatly 
facilitate  his  production,  but  will  cost  4  days'  labour  to 
make.  Three  alternatives  are  open  to  him.  He  may 
spend  half  his  working  day  in  producing  the  strictly 
necessary  part  of  his  previous  consumption,  5,  and  devote 
the  other  half  to  making  the  new  implement,  which  will  be 
finished  in  8  days.  Or  he  may  increase  the  duration  of  his 
working  day  by  one  quarter,  giving  the  extra  time  to  the 
making  of  his  new  implement,  which  will  be  finished  in  16 
days.  Or  lastly,  he  may  continue  to  produce  consumptive 
goods  as  before,  but  only  consume  half  of  them,  preserving 
the  other  half  for  8  days,  until  he  has  a  fund  which  will  suffice 
to  keep  him  for  4  continuous  days,  which  he  will  devote  to 
making  the  new  implement.  If  he  adopts  the  first  alter- 
native, he  simply  changes  the  character  of  his  production, 
producing  in  part  of  his  working  day  future  goods  instead 
of  present  consumptive  goods.  In  the  second  he  creates 
future  goods  by  extra  labour.  In  the  third  case  only  does 
the  "saving"  or  new  "capital"  take  as  its  first  shape  food. 
In  the  same  way  a  community  seeking  to  introduce  a  more 
"  roundabout  "  method  of  production  requiring  new  plant, 
or  seeking  to  place  in  the  field  of  industry  a  new  series  of 
productive  processes  to  satisfy  some  new  want,  may  achieve 
their  object  by  "saving"  food,  etc.,  or  by  changing  for 
awhile  the  character  of  their  production,  or  by  extra 
labour.  Thus  new  capital,  whether  from  the  individual  or 
the  community  point  of  view,  may  take  either  "  food "  or 
any  other  material  form  as  its  first  shape. 

Since  "  savings "  need  not  take  the  shape  ot  food  or 
any  article  capable  of  immediate  consumption,  Adam 
Smith   and  J.   S.    Mill  are  clearly  wrong  when  they  urge 


1 86  THE   EVOLUTION   OF 

in  terms  almost  identical  ^  that  what  is  saved  is  necessarily 
consumed,  and  consumed  as  quickly  as  that  which  is  spent. 
The  antithesis  of  saving  and  spending  shows  these  writers, 
and  the  bulk  of  English  economists  who  follow  them,  are 
misled,  because  they  regard  "  saving  "  as  doing  something 
with  money,  and  do  not  sufficiently  go  behind  the  financial 
aspect  of  putting  money  into  a  bank. 

A  closer  analysis  of  saving  yields  the  result  that,  except 
in  one  of  the  simple  cases  taken  in  our  example  above, 
where  "saving"  implied  withholding  consumable  goods 
from  present  consumption,  every  act  of  saving  in  a  complex 
industrial  society  signifies  making,  or  causing  to  be  made, 
forms  of  capital  which  are  essentially  incapable  of  present 
consumption — i.e.,  future  or  productive  goods. 

Each  member  of  an  industrial  community  receives  his 
money  income  as  the  market  equivalent  of  value  created 
in  goods  or  services  by  the  requisites  of  production,  land, 
capital,  labour  which  he  owns.  For  every  jQi  paid  as 
income  an  equivalent  quantity  of  material  or  non-material 
wealth  has  been  already  created. 

Let  A  be  the  owner  of  a  requisite  of  production,  receiving 
;^5oo  a  year  as  income  in  weekly  payments  of  ;^io.  Before 
receiving  each  ;^io  he  has  caused  to  come  into  existence 
an  amount  of  wealth  which,  if  material  goods,  may  or  may 
not  be  still  in  existence ;  if  services,  has  already  been  con- 
sumed. It  is  evident  that  A  may  each  week  consume  ;^io 
worth  of  goods  and  services  without  affecting  the  general 
condition  of  public  wealth.  A,  however,  determines  to 
consume  only  ^^5  worth  of  goods  and  services  each  week, 
and  puts  the  other  ^<,  into  the  bank.  Now  what  becomes 
of  the  ;^5  worth  of  goods  and  services  which  A  might  have 
consumed,  but  refused  to  consume?  Do  they  necessarily 
continue  to  exist  so  long  as  A  is  credited  with  the  money 
which  represents  their  "  saving  "  ;  if  so,  in  what  form  ?  In 
other  words,  what  actually  takes  place  in  the  world  of  com- 
merce when  money  income  is  said  to  be  saved,  what  other 

^  "  What  is  annually  saved  is  as  regularly  consumed  as  what  is  annu- 
ally spent,  and  nearly  in  the  same  time  too ;  but  it  is  consumed  by  a 
different  set  of  people."  [IVealtk  of  Nations,  p.  149^,  McCuUoch. ) 
' '  Everything  which  is  produced  is  consumed ;  both  what  is  saved  and 
what  is  said  to  be  spent,  and  the  former  quite  as  quickly  as  the  latter. " 
{Principles  0/ Political  Economy,  Book  I.,  chap,  v.,  sec.  6.) 


MODERN   CAPITALISM.  I87 

industrial  facts  stand  behind  the  financial  fact  of  A  deposit- 
ing part  of  his  income  in  the  bank  as  "  savings  "  ? 

To  this  question  several  answers  are  possible. 

(i)  B,  a  spendthrift  owner  of  land  or  capital,  wishing 
to  live  beyond  his  income,  may  borrow  from  the  bank 
each  ;^5  which  A  puts  in,  mortgaging  his  property.  In 
this  case  B  spends  what  A  might  have  spent ;  B's  property 
(former  savings  perhaps  ?)  falls  into  A's  hands.  A  has 
individually  effected  a  "  saving "  represented  by  tangible 
property,  but  as  regards  the  community  there  is  no  saving 
at  all,  real  or  apparent. 

(2)  C,  a  fraudulent  promoter  of  companies,  may  by 
misrepresentation  get  hold  of  A's  saved  money,  and  may 
spend  it  for  his  own  enjoyment,  consuming  the  goods  and 
services  which  A  might  have  consumed,  and  giving  to  A 
"paper"  stock  which  figures  as  A's  "savings."  Here  A 
has  individually  effected  no  saving. 

From  the  point  of  view  of  the  community  there  is  no 
real  saving  (C  has  consumed  instead  of  A),  but  so  long 
as  the  "stock"  has  a  market  value  there  is  an  apparent 
saving.  To  this  category  belongs  the  "  savings  "  effected  if 
A  lends  his  money  to  a  government  to  be  spent  on  war. 
From  the  standpoint  of  the  community  there  is  no  saving 
(unless  the  war  be  supposed  to  yield  an  asset  of  wealth  or 
security),  but  A's  paper  stock  represents  his  individual 
saving.  A's  "  saving  "  is  exactly  balanced  by  the  spending 
of  the  community  in  its  corporate  capacity,  A  receiving  a 
mortgage  upon  the  property  of  the  community.^ 

(3)  D  and  E,  manufacturers  or  traders,  engaged  in  pro- 
ducing luxuries  which  A  used  to  buy  with  his  ^^  before 
he  took  to  saving,  finding  their  weekly  "  takings  "  diminished 
and  being  reduced  to  financial  straits,  borrow  A's  "  savings  " 
in  order  to  continue  their  business  operations,  mortgag- 
ing their  plant  and  stock  to  A.  So  long  as,  with  the 
assistance  of  A's  money,  they  are  enabled  to  continue  pro- 
ducing, what  they  produce  is  over-supply,  not  needed  to 
supply  current  consumption,  assuming  the  relation  between 
spending  and  saving  in  the  other  members  of  the  com- 
munity remains  unaltered.    This  over-supply  is  the  material 

'  An  able  analysis  of  the  nature  of  "  paper  savings  "   is  found  in 
Mr.  J.  M.  Robertson's  Fa//ac^  0/ Saving".     (Sonnenschein.) 


1 88  THE   EVOLUTION   OF 

representative  of  A's  "savings."  So  far  as  real  capital  is 
concerned  there  is  no  increase  by  A's  act  of  saving,  rather 
a  decrease,  for  along  with  the  net  reduction  in  the  consump- 
tion of  luxuries  on  the  part  of  the  community  due  to  A's 
action,  there  must  be  a  fall  in  the  "  value "  of  the  capital 
engaged  in  the  various  processes  of  producing  luxuries, 
uncompensated  by  any  other  growth  of  values.  But  by 
A's  "  saving "  new  forms  of  capital  exist  which  bear  the 
appearance  of  capital,  though  in  reality  they  are  "  over- 
supply."  These  empty  forms  represent  A's  saving.  Of 
course  A,  with  full  knowledge  of  the  facts,  would  only 
lend  to  D  and  E  up  to  the  real  value  of  their  mortgaged 
capital.  When  this  point  was  reached  D  and  E  could  get 
no  further  advances,  and  their  stock  and  plant  would  pass 
into  A's  hands.  From  the  point  of  view  of  the  community 
A's  action  has  resulted  in  the  creation  of  a  number  of 
material  forms  of  capital  which,  so  long  as  the  existing 
relations  between  the  community's  production  and  con- 
sumption continue,  stand  as  over-supply. 

(4)  A  may  hand  over  his  weekly  ^^5  to  F  on  security. 
F  by  purchase  obtains  the  goods  which  A  refused  to  con- 
sume, and  may  use  them  (or  their  equivalent  in  other 
material  forms)  as  capital  for  further  production.  If  F  can 
with  this  capital  help  to  produce  articles  for  which  there  is 
an  increasing  consumption,  or  articles  which  evoke  and 
satisfy  some  new  want,  then  A's  action  will  have  resulted  in 
"saving"  from  the  point  of  view  of  the  community — i.e., 
there  will  be  an  increase  of  real  capital ;  forms  of  capital 
which  would  otherwise  have  figured  as  over-supply  have  the 
breath  of  economic  life  put  into  them  by  an  increase  in 
general  consumption.  No  real  difficulty  arises  from  a  doubt 
whether  the  goods  and  services  which  A  renounced  were 
capable  of  becoming  effective  capital.  The  things  he 
renounced  were  luxurious  consumptive  goods  and  services. 
But  he  could  change  them  into  effective  capital  in  the 
following  way: — Designing  henceforth  to  consume  only  half 
his  income,  he  would  deliberately  employ  half  the  requisites 
of  production  which  furnished  his  income  in  putting  extra 
plant,  machinery,  etc.,  into  some  trade.  Whether  he  does 
this  himself,  or  incites  F  to  do  it,  makes  no  difference ;  it 
will  be  done.  In  this  way,  by  estabhshing  new  forms  of 
useful  capital,  A  can  make  good  his  saving,  assuming  an 


MODERN   CAPITALISM.  1 89 

increase  of   general    consumption.      These  are   the   four 
possible  effects  of  A's  saving  from  the  point  of  view  of  the 
community — 
(i)  Nil. 

(2)  Bogus  or  "paper"  saving. 

(3)  Over-supply  of  forms  of  capital. 

(4)  Increase  of  real  capital. 

It  appears  then  that  every  act  which  in  a  modern 
industrial  society  is  "  saving,"  from  the  standpoint  of  the 
community,  and  not  a  mere  transfer  of  "spending"  from 
one  person  to  another,  consists  in  the  production  of  a  form 
of  goods  in  its  nature  or  position  incapable  of  present 
consumption. 

This  analysis  of  "  saving  "  convicts  J.  S.  Mill  of  a  double 
error  in  saying,  "  Everything  which  is  produced  is  consumed; 
both  what  is  saved  and  what  is  said  to  be  spent ;  and  the 
former  quite  as  rapidly  as  the  latter."  In  the  first  place,  by 
showing  that  "  saving,"  from  the  point  of  view  of  the  com- 
munity, generally  means  producing  something  incapable  of 
present  consumption,  it  proves  that  even  if  what  is  "saved" 
is  consumed,  it  is  not  consumed  as  quickly  as  what  is  spent. 
Mill  seemed  to  think  that  what  was  "  saved  "  was  necessarily 
food,  clothing,  and  so-called  finished  goods,  because  "saving" 
to  him  was  not  a  process,  but  a  single  negative  act  of 
refusing  to  buy.  Because  a  man  who  has  "saved"  has 
command  of  an  extra  stock  of  food,  etc.,  which  he  may 
hand  over  to  labourers  as  real  wages,  he  seems  to  think  that 
a  community  which  saves  will  have  its  savings  in  this  form. 
We  see  this  is  not  the  case.  Even  where  in  a  primitive 
society  extra  food  is  the  first  form  savings  may  take,  it 
belongs  to  the  act  of  saving  that  this  food  shall  not  be 
consumed  so  soon  as  it  was  available  for  consumption. 
In  short,  Mill's  notion  was  that  savings  must  necessarily 
mean  a  storing  up  of  more  food,  clothing,  etc.,  which, 
after  all,  is  not  stored,  but  is  handed  over  to  others 
to  consume.  He  fails  to  perceive  that  a  person  who 
saves  from  the  social  as  opposed  to  the  individual 
point  of  view  necessarily  produces  something  which 
neither  he  nor  any  one  else  consumes  at  once — i.e.^ 
steam  engines,  pieces  of  leather,  shop  goods.  A  "  saving  " 
which  is  merely  a  transfer  of  spending  from  A  to  B  is 
obviously  no  saving  from  the  point  of  view  of  the  com- 


IpO  THE  EVOLUTION   OF 

munity  to  which  both  A  and  B  belong.  If  A,  who  is  said 
to  save,  pays  wages  to  B,  who  makes  a  machine  which 
would  otherwise  not  have  been  made,  when  this  machine  is 
made  something  is  saved,  not  before. 

Though  Mill  does  not  seem,  in  Bk.  I.  chap,  v.,  to  regard 
increased  plant,  machinery,  etc.,  as  "  savings,"  but  rather  as 
something  for  which  "  savings "  may  be  exchanged,^  the 
more  usual  economic  view  of  "  savings "  embodies  part  of 
them  in  plant  and  raw  material,  etc.,  and  considers  the 
working  up  of  these  into  finished  goods  as  a  "  consumption." 
But  though  industrial  usage  speaks  of  cotton  yarn,  etc., 
being  consumed  when  it  is  worked  up,  the  same  language  is 
not  held  regarding  machinery,  nor  would  any  business  man 
admit  that  his  "  capital "  was  consumed  by  the  wear  and 
tear  of  machinery,  and  was  periodically  replaced  by 
"  saving."  The  wearing  away  of  particular  material  embodi- 
ments of  capital  is  automatically  repaired  by  a  process 
which  is  not  saving  in  the  industrial  or  the  economic 
sense.  No  manufacturer  regards  the  expenditure  on  main- 
tenance of  existing  plant  as  "saving";  what  he  puts  into 
additional  plant  alone  does  he  reckon  "  savings."  It  would 
be  well  for  economists  to  clearly  recognise  that  this  busi- 
ness aspect  of  capital  and  saving  is  also  the  consistent 
scientific  aspect.  "Saving"  will  then  be  seen  to  apply 
exclusively  to  such  increased  production  of  plant  and 
productive  goods  as  will  afterwards  yield  an  increased  crop 
of  consumptive  goods,  provided  the  community  is  willing  to 
consume  them.  "  Saving"  is  postponed  consumption — i.e., 
the  production  of  "  future  goods,"  plant,  machinery,  raw 
materials  in  their  several  stages,  instead  of  commodities 
suitable  for  immediate  consumption. 

§  9.  There  are,  in  fact,  two  distinct  motives  which 
induce  individuals  to  continue  to  produce,  one  is  the 
desire  to  consume,  the  other  the  desire  to  save — i.e.,  to 
postpone  consumption.  It  is  true  that  the  latter  may  be 
said  also  to  involve  a  desire  to  consume  the  results  of  the 
savings  at  some  indefinitely  future  time,  but  the  motive  of 
their  production  at  present  is  a  desire  to  reduce  the  quantity 
of  the  present  consumption  of  the  community,  and  to 
increase  the  quantity  of  postponed  consumption. 

1  Chap.  V.  §  5. 


MODERN   CAPITALISM.  19I 

It  is  this  consideration  which  gives  the  answer  to  the 
single  sentence  of  J.  S.  Mill,  which  has  been  sometimes 
held  to  offer  a  complete  refutation  of  the  notion  of  an 
existing  state  of  over-supply.  "The  error  is  in  not  per- 
ceiving that,  though  all  who  have  an  equivalent  to  give 
might  be  fully  provided  with  every  conceivable  article  which 
they  desire,  the  fact  that  they  go  on  adding  to  the  produc- 
tion proves  that  this  is  not  actually  the  case."  ^  Here  the 
present  desire  to  consume  either  what  is  produced  or  its 
equivalent  is  assumed  to  be  the  only  motive  which  can  lead 
an  individual  to  produce.  The  fact  that  people  go  on  pro- 
ducing is  regarded  as  proof  that  they  are  not  "  fully  provided 
with  every  conceivable  article  they  desire."  If  this  were 
true  it  would  be  a  final  and  conclusive  refutation  of  the 
idea  of  over-supply.  But  if  saving  means  postponed  con- 
sumption, and  the  desire  to  save,  as  well  as  the  desire  to 
consume,  is  a  vera  causa  in  production,  then  the  fact  of 
continued  production  affords  no  proof  that  such  production 
must  be  required  to  supply  articles  which  are  desired  for 
consumption.  Ultimately  a  belief  that  some  one  will 
consent  to  consume  what  is  produced  underlies  the  con- 
tinued production  of  "a  saving  person,"  but,  as  we  shall 
see  presently,  the  belief  of  a  competing  producer  that  he 
can  get  a  market  for  his  goods,  even  when  justified  by 
events,  is  no  guarantee  against  excessive  production  in  the 
whole  trade. 

If,  then,  those  who  have  the  power  to  consume  in  the 
present  desire  to  postpone  their  consumption  they  will 
refuse  to  demand  consumptive  goods,  and  will  instead 
bring  into  existence  an  excess  of  productive  goods. 

§  10.  The  diagram  on  next  page  may  serve  more  clearly 
to  indicate  the  quantitative  maladjustment  of  Consuming 
and  Saving  which  constitutes  under-consumption,  and 
exhibits  itself  in  a  plethora  of  machinery  and  productive 
goods. 

A,  B,  C,  D,  E  represent  the  several  stages  through  which 
the  raw  material  obtained  from  Nature  passes  on  its  way  to 
the  position  of  a  consumer's  utility.  The  five  stages  re- 
present the  five  leading  processes  in  production — the 
extractive  process,  transport,    manufacture,  wholesale  and 

^  Bk.  III.,  chap.  xiv.  §  3. 


192 


THE   EVOLUTION   OF 


retail  trade.  The  raw  materials  extracted  at  A,  the  wheat, 
skins,  iron,  timber,  cotton,  etc.,  obtained  from  various 
quarters  of  the  globe,  are  gathered  together  in  large  quan- 
tities into  places  where  they  undergo  various  transformations 
of  shape  and  character;  they  are  then  distributed  by 
wholesale  and  retail  merchants,  who  hand  them  over  to 
persons  who  consume  them  as  bread,  boots,  kettles, 
chairs,  shirts.  The  extractive,  transport,  manufacturing, 
and  merchant  stages  may  of  course  be  subdivided  into  many 

MECHANISM    OF   PRODUCTION. 


■NatuPC  i^l^j: 
labour  r~l 

Forms  6f  Capital  |,f^f^      " 


complex  processes,  as  applied  to  the  history  of  the  more 
elaborately-produced  commodities.  But  at  each  point  in 
the  process  of  production  there  must  stand  a  quantity  of 
plant  and  machinery  designed  to  assist  in  moving  the 
productive  goods  a  single  step  further  on  the  road  towards 
consumption.  This  fixed  capital  is  denoted  by  the  black 
circles  placed  at  the  points  A,  B,  C,  D,  E.  But  each 
machine,  or  factory  building,  or  warehouse  is  itself  the 
ultimate  product  of  a  series  of  steps  which  constitute  a 
process  similar  to  that  denoted   by  the  main  channel  of 


MODERN   CAPITALISM.  1 93 

production.  Consisting  in  raw  material  extracted  from 
nature,  the  machinery  and  plant  are  built  up  by  a  number  of 
productive  stages,  which  correspond  to  A,  B,  C,  D,  E,  into 
the  completed  shapes  of  fixed  capital,  adjusted  to  the 
positions  where  they  can  give  the  proper  impulse  to  the 
main  tide  of  production.  Each  productive  stage  in  the 
production  of  plant  or  machinery  requires  the  presence  of 
other  plant  and  machinery  to  assist  its  progress.  Each  of 
these  secondary  forms  of  fixed  capital  situate  at  a,  b,  c,  d,  e, 
has  of  course  a  similar  history  of  its  own.  To  represent  the 
full  complexity  of  the  mechanism  of  industry  thus  suggested 
would  be  confusing  and  would  serve  no  purpose  here.  It  is 
sufficient  that  we  recognise  that  at  each  point  A,  B,  C,  D,  E, 
and  at  each  of  the  points  a,  b,  c,  d,  e,  upon  the  perpen- 
dicular lines,  stands  a  quantity  of  forms  of  fixed  capital 
which  are  gradually  worn  out  in  the  work  of  forwarding 
quantities  of  A  to  B,  and  quantities  of  B  to  C,  and  so  on. 
Now  if  we  turn  to  the  point  F,  where  goods  pass  out  of  the 
productive  machine  into  the  hands  of  consumers,  who 
destroy  them  by  extracting  their  "utility  or  convenience," 
we  shall  find  in  this  flow  of  goods  out  of  the  industrial 
machine  the  motive-force  and  regulator  of  the  activity  of  the 
whole  machine. 

Let  us  take  an  illustration  from  a  single  trade,  the 
shoe  trade.  The  number  of  boots  and  shoes  purchased 
by  consumers  at  retail  shops  and  drawn  out  from  the 
mechanism  at  the  point  F,  determines  the  rate  at  which 
retailers  demand  and  withdraw  shoes  from  wholesale 
merchants,  assuming  for  the  sake  of  simplicity  that  all  shop- 
keepers deal  with  manufacturers  through  the  medium  of 
merchant  middlemen.  If  the  number  of  sales  effected  in  a 
given  time  by  retailers  increases,  they  increase  their  demand 
from  the  merchants,  if  it  falls  off  they  lower  their  demand. 
The  quantity  of  goods  which  retailers  will  in  normal  con- 
ditions keep  in  stock  will  be  regulated  by  the  demand  of 
consumers.^     Thus  the  flow  of  shoes  from  D  to  E,  and  the 

1  The  stock  of  a  small  retailer  will  not,  however,  in  all  cases  vary 
proportionately  with  the  aggregate  sales  of  all  classes  of  goods.  A 
small  shopkeeper,  to  retain  his  custom  and  credit,  is  often  required  to 
keep  a  small  stock  of  a  large  variety  of  goods  not  often  in  request.  If 
he  sells  them  rather  more  quickly,  he  does  not  necessarily  increase  his 
stock  in  hand  at  any  particular  time. 

13 


194  THE   EVOLUTION   OF 

quantity  of  shoes  which  at  any  given  time  are  at  the  point 
E,  are  determined  by  the  demand  of  consumers — that  is  to 
say,  by  the  quantity  or  pace  of  consumption.  If,  owing  to 
miscalculation,  a  larger  number  of  shoes  stands  in  the  retail 
shops  than  is  required  to  satisfy  current  consumption,  or  if 
the  flow  from  D  to  E  is  faster  than  the  outflow  from  E, 
this  excess  ranks  as  an  over-supply  of  these  forms  of  capital. 
Now  just  as  the  demand  of  consumers  determines  the 
number  of  shoes  which  stand  at  E  and  flow  from  D  to  E,  so 
the  demand  of  the  retailer  determines  the  number  of  shoes 
which  at  any  time  constitutes  the  stock  of  the  merchants  at 
D,  and  the  size  and  number  of  the  orders  they  give  to  the 
manufacturers  at  C.  Similarly  with  the  earlier  processes  of 
production ;  the  flow  of  leather  from  the  "  tanners "  and 
the  quantity  of  leather  kept  in  stock  are  likewise  de- 
termined by  the  demand  of  the  manufacturers ;  and  the 
transport  of  hides  and  bark,  and  the  demand  for  these 
materials  of  tanning,  will  be  regulated  by  the  demands  of  the 
tanners.  So  the  quantity  of  stock  at  each  of  the  points 
A,  B,  C,  D,  E,  and  the  rate  of  their  progress  from  one  point 
to  the  next,  are  dependent  in  each  case  upon  the  quantity 
demanded  at  the  next  stage.  Hence  it  follows  that  the 
quantity  of  productive  goods  at  any  time  in  stock  at  each  of 
the  points  in  the  production  of  shoes,  and  the  quantity 
of  productive  work  done  and  employment  given  at  each 
point,  is  determined  by  the  amount  of  consumption  of 
shoes.  If  we  knew  the  number  of  purchases  of  shoes 
made  in  any  community  by  consumers  in  a  given  time, 
and  also  knew  the  condition  of  the  industrial  arts  at 
the  different  points  of  production,  we  should  be  able  to 
ascertain  exactly  how  much  stock  and  how  much  auxiliary 
capital  was  required  at  each  point  in  the  production 
of  shoes.  At  any  given  time  the  flow  of  consumption 
indicated  by  F  determines  the  quantity  of  stock  and 
plant  of  every  kind  economically  required  at  each  point 
A,  B,  C,  D,  E.  What  applies  to  the  shoe  trade  applies 
to  trade  in  general.  Given  the  rate  or  quantity  of  consump- 
tion in  the  community,  it  is  possible  to  determine  exactly 
the  quantity  of  stock  and  plant  required  under  existing  in- 
dustrial conditions  to  maintain  this  outflow  of  consumptive 
goods,  and  any  stock  or  plant  in  excess  of  this  amount 
figures  as  waste  forms  of  capital  or  over-supply.     F  then  is 


MODERN   CAPITALISM.  195 

the  quantitative  regulator  of  A,  B,  C,  D,  E.^  Nor  is  the 
accuracy  of  this  statement  impaired  by  the  speculative 
character  of  modern  trade.  Speculative  merchants  or 
manufacturers  may  set  up  business  at  D  or  C  and  provide 
themselves  with  stock  and  machinery  to  start  with,  but 
unless  they  meet  or  create  a  growing  demand  of  consumers 
their  capital  is  waste,  or  else  if  they  succeed  in  getting 
trade  it  is  at  the  expense  of  other  members  of  the  trade, 
and  their  capital  is  made  productive  by  negativing  the 
capital  of  other  traders. 

§  1 1.  The  truth  here  insisted  on,  that  an  exact  quantitative 
relation  exists  between  the  amount  of  stock  and  plant, 
severally  and  collectively,  required  at  the  different  points 
A,  B,  C,  D,  E,  and  that  the  amount  economically  serviceable 
at  each  point  is  determined  by  the  quantity  of  current  con- 
sumption, would  seem  self-evident.  But  though  this  has 
never  been  explicitly  denied,  the  important  results  follow- 
ing from  its  recognition  have  been  obscured  and  be- 
fogged by  several  conceptions  and  phrases  relating  to 
capital  which  have  found  acceptance  among  English 
economists. 

Chief  and  foremost  among  these  errors  is  the  framing 
of  a  definition  of  capital  so  as  to  exclude  the  clear  separation 
of  productive  goods  and  machinery,  the  economic  means, 
from  consumptive  goods,  the  economic  end.  So  long  as  a 
definition  of  capital  is  taken  which  includes  any  con- 
sumptive goods  whatsoever,  two  results  follow.  One  is  a 
hopeless  confusion  in  the  commercial  mind,  for  in  commerce 
everything  is  capital  which  forms  the  stock  or  plant  of  a 
commercial  firm,  and  nothing  is  capital  which  does  not 
form  part  of  such  stock  or  plant.  Secondly,  to  include 
under    capital    the   food    in  the  possession  of  productive 

'  It  likewise  determines  the  quantity  of  plant  and  stock  at  a,  b,  c,d  down 
each  of  the  perpendicular  lines,  for  the  demand  at  each  of  these  points 
in  the  production  of  plant  and  machinery  is  derived  from  the  require- 
ments at  the  points  A,  B,  C,  D,  E.  The  flow  of  goods  therefore  up  these 
channels,  though  slower  in  its  movement  (since  in  the  main  channel 
only  goods  flow,  while  fixed  capital  is  subject  to  the  slower  "wear 
and  tear"),  is  equally  determined  by  and  derived  from  the  consump- 
tion at  F.  The  whole  motive-power  of  the  mechanism  is  engendered 
at  F,  and  the  flow  of  money  paid  over  the  retail  counter  as  it  passes 
in  a  reverse  current  from  F  towards  A,  supplies  the  necessary  stimulus 
at  each  point,  driving  the  goods  another  stage  in  their  journey. 


196  THE   EVOLUTION   OF 

labourers  or  any  other  consumptive  goods  is  an  abandon- 
ment of  the  idea  of  consumption  as  the  economic  end  and  a 
substitution  of  production. 

If  we  follow  Bohm-Bawerk  and  the  Austrian  economists 
in  definitely  refusing  to  include  the  consumptive  goods  of 
labourers  as  capital,^  we  get  a  conception  of  capital  which 
is  at  once  in  accordance  with  the  universal  conception  of 
commercial  men,  and  which  enables  us  to  realise  the  vital 
relation  between  capital  and  consumption.  We  now  see 
Capital  in  the  form  of  stock  and  plant  at  each  point  in  the 
industrial  machine  deriving  its  use  and  value  from  its  con- 
tribution to  the  end,  Consumption,  and  dependent  for  its 
quantity  upon  the  quantity  of  Consumption.  We  have 
seen  that  a  demand  for  commodities  is  the  true  and  exact 
determinant  of  the  quantity  of  capital  at  each  industrial 
stage.  It  is  therefore  the  determinant  of  the  aggregate  of 
wealth  which  can  function  as  useful  forms  of  capital  in 
the  industrial  community  at  any  given  time.  The  aggregate 
of  plant  and  stock  which  constitute  the  material  forms  of 
capital  at  the  points  A,  B,  C,  D,  E  must  in  a  properly  adjusted 
state  of  industry  have  an  exact  quantitative  relation  to  the 
consumption  indicated  by  F.  If  F  increases,  the  quantity  of 
forms  of  capital  at  A,  B,  C,  D,  E  may  severally  and  collectively 
increase;  if  F  declines,  the  useful  forms  of  capital  at  each 
point  are  diminished.  Since  we  have  seen  that  the  sole 
object  of  saving  from  the  social  point  of  view  is  to  place 
new  forms  of  capital  at  one  of  the  points  A,  B,  C,  D,  E,  it  is 
evident  that  the  amount  of  useful  saving  is  limited  by  the 
rate  of  consumption,  or  financially,  by  the  amount  of  "  spend- 
ing." Where  there  is  an  improvement  in  the  general  pro- 
ductive power  of  a  community,  only  a  certain  proportion 
of  that  increased  power  can  be  economically  applied  to 
"saving" — i.e.,  to  the  increase  of  forms  of  capital;  a  due 
proportion  must  go  to  increased  spending  and  a  general 
rise  in  consumption. 

§  12.  This  will  hardly  be  disputed,  except  by  those  who 
still  follow  Mill  in  maintaining  that  the  whole  of  the  current 
production  could  be  "saved,"  with  the  exception  of  what 
was  required  to  support  the  efficiency  of  labour,  a  doctrine 

^  Bohm-Bawerk,  Positive  Theory  of  Capital,  p.  67.  See  Appendix 
I.  for  conflict  of  opinion  among  English  economists. 


MODERN   CAPITALISM.  I97 

to  which  even  he  could  only  give  passing  plausibility  by 
admitting  that  the  increased  savings  which  resulted  from  an 
attempt  to  do  this  would  take  the  shape  of  luxuries  con- 
sumed by  the  said  labourers — that  is  to  say,  would  not  be 
"  savings "  at  all,  but  a  transfer  of  "  spending "  from  one 
class  to  another.^  If  capital  be  confined  to  commercial 
capital,  and  "  saving  "  to  the  establishment  of  the  forms  of 
such  capital,  no  one  will  deny  that  the  quantity  of  "saving" 
which  can  be  effectually  done  by  a  community  at  any  time 
depends  upon  the  current  rate  of  consumption,  or  that  any 
temporary  increase  of  such  saving  must  be  justified  by  a 
corresponding  future  increase  in  the  proportion  of  spending.^ 

This  will  be  generally  admitted.  But  there  are  those 
who  will  still  object  that  production  just  as  much  limits 
and  determines  consumption  as  consumption  does  produc- 
tion, and  who  appear  to  hold  that  any  increase  in  present 
saving,  and  the  consequent  increase  of  amount  of  plant  and 
stock,  has  an  economic  power  to  force  a  corresponding  rise 
of  future  consumption  which  shall  justify  the  saving.  This 
they  urge  in  the  teeth  of  the  fact  that  in  a  normal  state 
of  industry  in  machine-using  countries  there  exists  more 
machinery  and  more  labour  than  can  find  employment,  and 
that  only  for  a  brief  time  in  each  decennial  period  can  the 
whole  productive  power  of  modern  machinery  be  fully  used, 
notwithstanding  the  increasing  blood-letting  to  which  super- 
fluous saving  is  exposed  by  the  machinations  of  bogus 
companies,  in  which  the  "saving"  done  by  the  dupes  is 
balanced  by  the  "spending"  of  the  sharps.  Ignoring  the 
fact  that  the  alleged  power  of  increased  saving  to  stimulate 
increased  consumption  is  not  operative,  they  still  maintain 
that  there  cannot  be  too  much  "saving,"  because  the 
tendency  of  modern  industry  is  to  make  production  more 
and  more  "  roundabout "  in  its  methods,  and  thus  to  pro- 
vide scope  for  an  ever-increasing  quantity  of  forms  of 
capital. 

Under  modern  machinery  we  see  a  constant  increase  in 

^  Principles  of  Political  Economy,  Bk.  I. ,  chap.  v.  §  3 ;  see  also 
Bk.  III.,  chap.  xiv.  §  3. 

*  It  should  be  noted  that  an  increased  amount  of  consumption  in  the 
future  does  not  necessarily  compensate  for  a  disturbance  of  the  current 
balance  of  saving  and  spending,  for  an  increased  proportion  of  future 
income  will  have  to  be  spent  in  order  to  compensate. 


198  THE  EVOLUTION  OF 

the  number  of  direct  and  subordinate  processes  connected 
with  the  forwarding  of  any  class  of  commodities  to  its  com- 
pletion. A  larger  proportion  of  the  productive  labour  and 
capital  is  employed,  not  upon  the  direct  horizontal  line,  but 
upon  the  perpendicular  lines  which  represent  the  making  of 
subsidiary  machinery.  More  and  more  saving  may  be 
stored  up  in  the  shape  of  machines  to  make  machines,  and 
machines  to  make  these  machines,  and  thus  the  period  at 
which  the  "  saving "  shall  fructify  in  consumption  may  be 
indefinitely  extended. 

Some  of  the  labour  stored  and  the  capital  established  in 
the  construction  of  harbours,  the  drainage  of  land,  the 
construction  of  scientific  instruments,  and  other  works  of 
durable  nature  and  indirect  service,  may  not  be  represented 
in  consumptive  goods  for  centuries.  Admitting  this,  it  may 
be  urged,  can  any  limits  be  set  to  present  "saving"  and 
its  storage  in  forms  of  capital,  provided  those  forms  be 
selected  with  a  due  regard  to  a  sufficiently  distant  future  ? 
The  answer  is  that  only  under  two  conditions  could  an 
indefinitely  large  amount  of  present  "saving"  be  justified. 
The  first  condition  is  that  an  unlimited  proportion  of  this 
"  saving "  can  be  stored  in  forms  which  are  practically 
imperishable;  the  second  condition  is  that  our  present 
foresight  shall  enable  us  to  forecast  the  methods  of  produc- 
tion and  consumption  which  shall  prevail  in  the  distant 
future.  In  fact  neither  of  these  conditions  exists.  How- 
ever much  present  "  saving  "  we  stored  in  the  most  enduring 
forms  of  capital  with  which  we  are  acquainted — e.g.,  in  the 
permanent  way  of  railroads,  in  docks,  in  drainage  and 
improvement  of  land,  a  large  proportion  of  this  "saving" 
would  be  wasted  if  the  consumption  it  was  destined  to 
subserve  was  postponed  for  long.^  Neither  can  we  predict 
with  any  assurance  that  the  whole  value  of  such  "savings" 

■■  It  must  be  borne  in  mind  that  many  articles  of  utility  and  enjoy- 
ment must  in  their  fmal  processes  be  produced  for  immediate  consump- 
tion. The  "saving"  of  perishable  goods  is  confined  to  a  saving  of 
the  more  enduring  forms  of  machinery  engaged  in  their  production, 
or  in  some  few  cases  to  a  storing  up  of  the  raw  material.  So  like- 
wise that  large  portion  of  productive  work  termed  "  personal  ser- 
vices" cannot  be  antedated.  These  limits  to  the  possibility  of 
"  saving "  are  important.  No  amount  of  present  sacrifice  in  the 
interest  of  the  next  generation  could  enable  them  to  live  a  life  of 
luxurious  idleness. 


MODERN  CAPITALISM.  I99 

will  not  have  disappeared  before  a  generation  has  elapsed 
by  reason  of  changes  in  industrial  methods. 

The  amount  of  present  "  saving  "  which  is  justified  from 
the  point  of  view  of  the  community  is  strictly  limited.  We 
cannot  forecast  the  demand  of  our  twentieth  generation  of 
descendants,  or  the  industrial  methods  which  will  then 
prevail ;  we  do  not  even  know  whether  there  will  be  a 
twentieth  generation  ;  there  are  certain  large  inevitable 
wastes  in  postponed  consumption  by  reason  of  the  perish- 
ability of  all  material  forms  of  wealth,  or  the  abstraction 
of  them  by  others  than  those  for  whose  use  they  were 
intended.  Moreover,  we  do  not  believe  it  would  be  good 
for  our  descendants  to  have  the  enjoyment  of  excessive 
wealth  without  a  corresponding  personal  effort  of  producing, 
nor  would  it  be  good  for  us  to  exert  effort  without  some 
proximate  and  corresponding  enjoyment.  The  limits  of 
individual  life  rightly  demand  that  a  large  proportion  of 
individual  effort  shall  fructify  in  the  individual  life. 

Thus  there  are  practical  limits  set  upon  the  quantity  of 
"  saving  "  which  can  be  usefully  effected  by  extending  the 
interval  between  effort  and  enjoyment.  If  the  right  period 
be  exceeded  the  risk  and  waste  is  too  great.  The  analogy  of 
gardening  adduced  by  Ruskin  is  a  sound  one.^  By  due  care 
and  the  sacrifice  of  bud  after  bud  the  gardener  may  increase 
the  length  of  the  stem  and  the  size  of  the  flower  that  may  be 
produced.  He  may  be  said  to  be  able  to  do  this  inde- 
finitely, but  if  he  is  wise  he  knows  that  the  increased  risks  of 
such  extension,  not  to  mention  the  sacrifice  of  earlier  units  of 
satisfaction,  impose  a  reasonable  limit  upon  the  procrastina- 
tion. The  proportion  of  "saving"  which  may  be  and  is 
applied  to  establish  late-fructifying  forms  of  wealth,  differs 
not  only  with  the  different  developments  of  the  industrial 
arts,  but  with  the  foresight  and  moral  character  of  the  race 
and  generation.  As  our  species  of  civilisation  advances, 
and  the  demand  for  complex  luxuries  and  the  arts  of 
supplying  them  advance,  a  larger  amount  of  "round- 
about" production  becomes  possible,  and  as  regard  for 
the  future  generations  advances,  more  capital  will  be  put 
into  forms  which  fructify  for  them.  But  at  the  present  in 
any  given  community  there  is  a  rational  and  a  necessary 

^  Ruskin,  Unto  this  Last,  p.  145. 


200  THE   EVOLUTION   OF 

limit  to  the  quantity  of  "saving"  which  can  be  applied  to 
such  purposes. 

Secondly,  we  find  that  in  fact  the  surplus  "  saving  "  over 
and  above  what  is  needed  to  provide  the  necessary  forms  of 
capital  to  assist  in  satisfying  current  consumption  is  not 
absorbed  in  making  provision  for  distant  future  consump- 
tion by  more  "  roundabout  methods."  Much  of  it  goes 
into  a  mere  increase  of  the  number  of  existing  forms  of 
capital  whose  raison  (THre  lies  in  the  satisfaction  of  present 
or  immediately  future  wants.  The  multiplication  of  cotton- 
spinning-mills,  of  paper-mills,  of  breweries,  ironworks,  has 
gone  on  far  faster  than  the  growth  of  current  consumption. 
This  increase  of  productive  machinery  has  not  in  fact  been 
able  to  force  such  an  increase  of  consumption  as  gives 
adequate  employment  to  these  new  forms  of  machinery  and 
to  the  labour  which  is  at  hand  to  work  them. 

§  13.  It  is  not  therefore  correct  to  say  that  the  rate  of 
production  determines  the  rate  of  consumption  just  as  much 
as  the  rate  of  consumption  determines  the  rate  of  produc- 
tion. The  current  productive  power  of  capital  and  labour 
places  a  maximum  limit  upon  current  consumption,  but  an 
increase  of  productive  power  exercises  no  sufificient  force 
to  bring  about  a  corresponding  rise  in  consumption.  Just 
as  in  a  particular  trade — e.g.,  the  Lancashire  cotton  trade, 
an  excess  of  "  saving  "  may  be  applied  to  the  establishment 
of  mills  and  machinery  which  cannot  be  kept  working 
because  there  is  no  market  for  their  output,  so  it  is  with 
trade  in  general.  It  is  not  true  that  the  inflation  of  capital 
in  the  Lancashire  trade  is  due  to  a  misdirection  which  implies 
a  lack  of  capital  in  some  other  branch  of  industry.  In  a 
period  of  depression  like  the  present  every  other  important 
branch  of  industry  displays  the  same  symptoms  of  excessive 
plant,  over-supply  of  stock,  irregular  and  deficient  employ- 
ment of  labour,  though  not  to  the  same  extent.  Nor  is 
there  any  a  priori  reason  why  there  should  not  be  from 
time  to  time  such  general  maladjustment.  If  ignorance  and 
miscalculation  leads  to  the  investment  of  too  much  capital 
in,  say,  the  cotton  and  iron  industries,  it  is  not  unreason- 
able to  suppose  that  in  a  complex  industrial  society  there 
should  be  such  general  miscalculation  of  the  right  pro- 
portion between  saving  and  spending  that  too  much  should 
be  saved  at  certain  periods.     That  is  to  say,  turning  again 


MODERN   CAPITALISM.  201 

to  the  diagram  of  industry,  just  as  it  is  admitted  that 
miscalculation  may  induce  too  much  capital  to  be  placed 
at  A  or  B  or  C,  and  too  little  at  one  of  the  other  points 
of  production,  disturbing  the  harmonious  ordering  of  the 
parts  of  capital,  so  likewise  there  may  be  a  maladjustment 
of  the  proportion  between  A,  B,  C,  D,  E,  the  aggregate  of 
forms  of  capital,  and  F,  the  aggregate  of  consumption, 
between  "  saving "  and  "  spending."  Now  if  it  be  ad- 
mitted that  such  maladjustment  is  possible,  the  balance 
can  only  lean  one  way.  There  cannot  be  too  little  saving 
to  furnish  current  consumption,  taking  the  industrial  com- 
munity as  a  whole,  for  it  is  impossible  to  increase  the  rate 
of  consumption,  F,  faster  than  the  increase  of  the  rate  of 
current  production  :  any  increase  of  the  purchase  of  shop- 
goods  by  raising  prices  and  circulating  more  money  down 
the  paths  of  production  stimulates  and  strains  the  sinews 
of  production,  and  if  the  existing  machinery  of  produc- 
tion is  inadequate  it  supplies  a  motive-power  to  increase 
'*  saving."  In  no  case  can  a  community  consume  faster 
than  it  produces.  An  individual  can  do  so  by  living  on 
his  capital,  a  nation  may  do  so  for  a  time  by  living  upon 
its  capital,  giving  to  other  nations  by  means  of  an  increased 
debt  a  lien  upon  its  future  wealth.  But  a  whole  industrial 
community  can  never  live  upon  its  capital,  can  never  in  the 
literal  sense  of  the  term  "  spend  too  much."  This  state- 
ment requires  a  single  qualification.  While  a  community 
can  never  by  "  spending  "  deplete  its  capital,  while  it  can- 
not increase  its  "  spending "  without  at  the  same  time 
increasing  its  real  capital,^  it  will  doubtless  be  profitable 
to  a  progressive  community  to  reduce  its  consumption  for 
a  while  below  the  normal  proportion  in  order  to  fully  utilise 
new  discoveries  in  the  industrial  arts  which  shall  justify  in 
the  future  increased  consumption. 

But  with  this  necessary  qualification  it  is  true  that  a 
community  cannot  exceed  in  the  direction  of  spending. 
But  the  balance  may  lean  the  other  way.  A  community  may 
"  save  too  much,"  that  is  to  say,  it  may  establish  a  larger 

1  This  does  not  necessarily  imply  a  stimulation  of  new  savinfj.  A 
fuller  vitality  given  to  existing  forms  of  capital  will  raise  the  quantity  of 
real  capital  as  measured  in  money.  Mills  and  machinery  which  have 
no  present  or  future  use,  though  they  embody  saving,  have  no  value 
and  do  not  increase  real  capital. 


202  THE  EVOLUTION  OF 

quantity  of  productive  machinery  and  goods  than  is 
required  to  maintain  current  or  prospective  consumption. 
What  is  to  prevent  a  community  consisting  of  a  vast 
number  of  individuals  with  no  close  knowledge  of  one 
another's  actions,  desires,  and  intentions,  making  such  a 
miscalculation  as  will  lead  them  to  place  at  each  of  the 
points  A,  B,  C,  D,  E,  and  in  all  or  most  branches  of 
industry,  a  larger  quantity  of  forms  of  capital  than  are 
required  ? 

It  is  said  that  the  harmony  which  subsists  between  the 
social  interest  and  the  self-interest  of  individuals  will 
prevent  this,  or,  in  other  words,  that  individuals  would  find 
that  if  they  attempted  to  unduly  increase  the  aggregate  of 
capital  beyond  what  was  socially  advantageous  in  view  of 
the  community's  consumption,  it  would  not  pay  them  to  do 
so.     Is  this  true  ? 

An  individual  working  entirely  for  himself,  whose  capital 
lay  in  his  tools  and  his  raw  or  unfinished  commodities, 
would  never  increase  the  latter  unduly.  A  socialist  com- 
munity properly  managed  would  never  add  to  its  stock 
of  machinery  or  increase  the  quantity  of  its  raw  materials 
or  unfinished  goods,  so  as  to  leave  any  machines  unused 
or  half  used,  or  any  goods  unnecessarily  occupying  ware- 
house room  and  deteriorating  in  quality.  But  when  com- 
petition of  individual  interests  comes  in  there  is  no  such 
security. 

It  may  pay  individuals  to  build  new  factories  and  put  in 
new  machinery  where  it  would  not  pay  the  community  to 
do  so,  were  it  the  sole  owner  of  the  means  of  production. 

The  knowledge  that  enough  capital  is  already  invested  in 
an  industry  to  fully  supply  all  current  demands  at  profitable 
prices  has  no  power  to  deter  the  investment  of  fresh  capital, 
provided  the  new  investors  have  reason  to  believe  their 
capital  can  be  made  to  displace  some  existing  capital  owned 
by  others.  If  the  new-comer  can,  by  superior  business 
address,  by  successful. advertising,  by  "sweating"  his  em- 
ployees or  otherwise,  get  hold  of  a  portion  of  the  business 
hitherto  in  the  hands  of  other  firms,  it  will  pay  him  to 
build  new  factories  and  stock  them  with  the  requisite 
machinery,  and  to  begin  the  process  of  manufacture.  There 
may  be  in  existence  already  more  bicycle  works  than  are 
sufficient  to  supply  the   consumption   of  the  community. 


MODERN  CAPITALISM.  203 

But  if  a  would-be  manufacturer  thinks  he  can  withdraw  from 
other  makers  a  sufficient  number  of  customers,  he  will  set 
up  works,  and  make  new  machines,  though  his  methods  of 
production  and  the  goods  he  turns  out  may  be  no  better 
than  those  of  other  makers.  The  same  holds  at  every  stage 
of  production.  In  wholesale  or  retail  distribution  the  fact 
that  there  are  sufficient  warehouses  and  shops  in  existence 
to  adequately  supply  the  current  demand  does  not  prevent 
any  one  from  embarking  new  savings  in  more  warehouses  or 
shops,  provided  he  believes  he  is  able  to  divert  into  his  own 
firm  a  sufficient  amount  of  the  business  formerly  held  by 
others.  In  a  district  two  grocers'  shops  may  be  quite 
sufficient  to  supply  the  needs  of  the  neighbourhood,  and  to 
secure  adequate  competition.  But  if  a  third  man,  by  an 
attractive  shop-front  or  superior  skill  in  the  labelling  or 
adulteration  of  his  wares,  can  procure  for  himself  an  ade- 
quate share  of  the  custom,  it  will  pay  him  to  put  the  requisite 
plant  and  stock  into  a  shop,  though  the  trade  on  the  one 
hand  and  the  community  on  the  other  is  no  gainer  by  his 
action. 

There  is  indeed  much  evidence  to  show  that  it  may  be 
to  the  advantage  of  individuals  to  increase  the  machinery  of 
production,  even  though  there  is  no  reasonable  prospect  of 
this  machinery  being  worked  at  a  profit.  It  is  the  unanimous 
testimony  of  business  men  that  the  Lancashire  trade  has 
been  congested  with  mills  and  machinery  in  this  way.  As 
a  result  of  an  excessive  desire  to  postpone  consumption 
there  are  considerable  sums  of  money  which  cannot  find  a 
safe  remunerative  investment.  Here  is  the  material  for  the 
company  promoter.  By  means  of  the  specious  falsehoods 
of  prospectuses  he  draws  this  money  together;  with  him 
work  a  builder  and  an  architect  who  desire  the  contract  of 
putting  up  the  factory;  the  various  firms  interested  in  manu- 
facturing and  supplying  the  machinery,  the  boiler-maker  and 
fitters  of  various  kinds,  the  firm  of  solicitors  whose  services 
are  requisite  to  place  the  concern  upon  a  sound  legal  foot- 
ing, or  to  establish  confidence,  take  up  shares.  It  is  to  the 
interest  of  all  these  and  many  other  classes  of  persons  to 
bring  into  the  field  of  production  new  forms  of  capital, 
quite  independently  of  the  question  whether  the  condition 
of  a  trade  or  the  consumption  of  the  community  have  any 
need  for  them 


204  THE   EVOLUTION   OF 

§  14.  These  operations,  which  imply  a  conflict  between 
the  interests  of  individuals  and  those  of  the  community, 
pervade  all  modern  commerce,  but  are  more  prevalent  in 
businesses  where  complex  machinery  plays  a  prominent 
part,  or  where  specious  advertising  gives  the  outsider  a 
larger  chance  of  successful  entry. 

In  each  and  all  of  these  cases  it  is  to  the  interest  of  the 
individual  to  place  new  "  savings  "  in  new  forms  of  capital 
in  branches  of  industry  where  sufficient  capital  already  exists 
to  assist  in  supplying  the  current  demand  for  consumptive 
goods.  So  far  is  it  from  being  true  that  the  self-interest  of 
individuals  provides  an  economic  check  upon  over-supply, 
that  it  is  possible  that  at  each  of  the  points  of  production, 
A,  B,  C,  D,  E,  and  in  all  or  the  majority  of  industries  at  the 
same  time,  there  should  be  an  excess  of  forms  of  capital  as 
compared  with  that  which  would  suffice  for  the  output,  F. 
The  automatic  growth  of  bubble  companies  and  every 
species  of  rash  or  fraudulent  investment  at  times  of  depressed 
trade  is  proof  that  every  legitimate  occupation  for  capital 
is  closed,  and  that  the  current  rate  of  saving  is  beyond  that 
which  is  industrially  sound  and  requisite.  These  bubble 
companies  are  simply  tumours  upon  the  industrial  body 
attesting  the  sluggish  and  unwholesome  circulation ;  tiiey 
are  the  morbid  endeavours  of  "  saving "  which  is  socially 
unnecessary,  and  ought  never  to  have  taken  place,  to 
find  investments.  When  one  of  these  "bubble"  companies 
collapses  it  is  tacitly  assumed  by  unthinking  people  that 
those  who  invested  their  money  in  it  were  foolish  persons 
who  might  have  sought  and  found  some  better  investment. 
Yet  a  little  investigation  would  have  shown  that  at  the 
time  this  company  arose  no  opportunity  of  safe  remunera- 
tive investment  open  to  the  outside  public  existed,  every 
sound  form  of  business  being  already  fully  supplied  with 
capital. 

At  first  sight  it  might  appear  that  Consols  and  first-class 
railway  and  other  stocks  were  open,  and  that  the  folly  of 
the  investors  in  bogus  companies  consisted  in  not  preferring 
a  safe  2^  per  cent,  to  a  risky  5  or  10  per  cent.  But  this 
argument  is  once  more  a  return  to  the  unsound  individual- 
istic view.  It  was  doubtless  open  to  any  individual  investor 
of  new  savings  to  purchase  sound  securities  a.t  2j4  per  cent., 
but,  since   the   aggregate   of  such   soundly-placed   capital 


MODERN    CAPITALISM.  205 

would  not  be  increased,  this  would  simply  mean  the  dis- 
placement of  an  equal  quantity  of  some  one  else's  capital. 
A  could  not  buy  Consols  unless  B  sold,  therefore  the  com- 
munity to  which  A  and  B  belong  could  not  invest  any  fresh 
savings  in  Consols.  Any  widespread  attempt  on  the  part  of 
those  who  plunged  into  bogus  companies  to  try  first-class 
investments  would  obviously  have  only  had  the  effect  of 
further  reducing  the  real  interest  of  these  investments  far 
below  2^  per  cent.  The  same  effect  would  obviously 
follow  any  effective  legal  interference  with  company-pro- 
moting of  this  order.  The  fact  that  Consols  and  other 
first-class  investments  do  not  rise  greatly  at  such  times  is, 
however,  evidence  that  the  promoters  of  unsound  enter- 
prises succeed  in  persuading  individual  investors  that  their 
chance  of  success  is  not  less  than  2^  per  cent.  In  many 
instances  the  investor  may  be  acting  wisely  in  preferring  a 
smaller  chance  of  much  higher  profits,  because  a  secure  2^ 
per  cent,  may  be  quite  inadequate  to  his  needs.  For  it 
must  be  borne  in  mind  that  a  knowledge  that  the  new  bank 
or  new  building  society  is  unnecessary,  because  enough 
banks  and  building  societies  already  exist,  does  not  make  it 
impossible  or  necessarily  improbable  that  the  new  venture 
will  succeed. 

The  objection,  then,  which  takes  the  form  that  over- 
saving cannot  exist,  because  the  worst  investments  made 
with  open  eyes  must  be  productive  of  more  than  that  which 
could  be  obtained  by  investing  in  Consols,  is  not  a  vaUd  one. 
It  would  only  be  valid  on  the  supposition  that  capital  were 
absolutely  fluid,  that  the  quantity  of  soundly-placed  invest- 
ments were  indefinitely  expansible,  and  that  new  forms  of 
capital  had  in  no  case  the  power  to  oust  or  negative  the  use 
of  old  forms  of  capital.  But  this  we  have  seen  is  not  the 
case.  If  there  existed  absolute  fluidity  of  competition  in  all 
forms  of  capital,  the  fact  that  interest  for  new  investments 
stood  above  zero  would  be  a  proof  that  there  was  not  excess 
of  forms  of  capital.  Capital  appears  to  have  this  fluidity 
when  it  is  regarded  from  the  abstract  financial  point  of 
view.  A  man  who  has  "saved"  appears  to  hold  his 
"savings"  in  the  form  of  bank  credit,  or  other  money  which 
he  is  able  to  invest  in  any  way  he  chooses.  But,  as  we  have 
seen,  the  real  "savings,"  which  represent  his  productive 
effort  plus  his  abstinence,  are  of  necessity  embodied  in 


206  THE  EVOLUTION   OF 

some  material  forms,  and  are  therefore  devoid  of  that 
fluidity  which  appears  to  attach  to  them  when  reflected  in 
bank  money. 

§  1 5.  The  evils  of  trade  depression,  or  excessive  growth 
of  the  forms  of  capital  beyond  the  limits  imposed  by  con- 
sumption, are  traced  in  large  measure  directly,  but  also 
indirectly,  to  the  free  play  of  individual  interests  in  the 
development  of  machine-production.  The  essential  irregu- 
larities of  invention,  the  fluctuations  of  public  taste,  the 
artificial  restrictions  of  markets,  all  enable  individual  capi- 
talists to  gain  at  the  public  expense.  The  added  interests 
of  its  individual  members  do  not  make  the  interest  of  the 
community.  All  these  modes  of  conflict  between  the  indi- 
vidual and  the  public  interest  derive  force  from  the  com- 
plexity of  modern  capitalist  production. 

In  fastening  upon  the  uncontrolled  growth  of  machinery 
the  chief  responsibility  for  that  depression  of  trade  which  is 
derived  from  an  attempt  to  devote  too  large  a  proportion  of 
the  productive  power  of  the  community  to  forms  of  "saving," 
two  points  should  be  clearly  understood. 

In  the  first  place,  it  is  the  forms  of  capital  and  not  real 
capital  which  are  produced  in  excess.  If  there  are  500 
spinning-mills  in  Lancashire  where  300  would  suffice,  the 
destruction  of  200  mills  would  no  whit  diminish  the  amount 
of  real  capital.  If  200  mills  were  burnt  down,  though  the 
individual  owners  would  sustain  a  loss,  that  loss,  estimated 
in  money,  would  be  compensated  by  a  money  rise  in  the 
value  of  the  other  mills.  The  quantity  of  real  capital  in 
cotton-spinning  is  dependent  upon  the  demand  for  the  use 
of  such  forms  of  capital — that  is  to  say,  upon  the  consump- 
tion of  cotton  goods.  If  300  mills  are  sufficient  to  do  the 
work  of  supplying  yarn  to  meet  the  demand  of  all  manufac- 
turers, the  value  of  500  mills  is  no  greater  than  of  300; 
assuming  that  the  500  mills  equally  distributed  the  trade, 
it  would  simply  mean  that  the  real  capital  was  thinly  spread 
over  500  mills,  which  could  only  work  a  little  over  half-time 
without  producing  a  glut  of  goods,  instead  of  being  con- 
centrated upon  300  mills  fully  occupied. 

Turning  once  more  to  the  diagram, 


/  (consumption), 


MODERN   CAPITALISM.  20/ 

/(the  current  rate  of  consumption)  determines  the  quantity 
of  real  productive  power  of  capital  that  can  be  effectively 
employed  at  each  point,  a,  b,  c,  d,  e.  The  condition  of  the 
arts  of  industry,  including  the  rates  of  wages  and  other 
conditions  of  the  labour  market,  determines  how  many 
forms  of  capital  (mills,  warehouses,  ironworks,  raw  material, 
etc.)  at  any  given  time  are  socially  requisite  to  embody 
this  capital.  But  though  /  has  an  economic  power  to  force 
into  existence  the  requisite  minimum  of  these  forms  of 
capital,  it  has  no  power  to  prevent  the  pressure  of  indi- 
vidual interests  from  exceeding  that  minimum  and  planting 
at  a,  b,  c,  d,  e  more  forms  of  capital  than  are  required. 

Secondly,  over-production  or  a  general  glut  is  only  an 
external  phase  or  symptom  of  the  real  malady.  The  disease 
is  under-consumption  or  over-saving.  These  two  imply  one 
another.  The  real  income  of  a  community  in  any  given 
year  is  divisible  into  two  parts,  that  which  is  produced  and 
consumed,  that  which  is  produced  and  not  consumed — i.e., 
is  saved.  Any  disturbance  in  the  due  economic  proportion 
of  these  two  parts  means  an  excess  of  the  one  and  a  defect 
of  the  other.  All  under-consumption  therefore  implies  a 
correspondent  over-saving.  This  over-saving  is  embodied 
in  an  excess  of  machinery  and  goods  over  the  quantity 
economically  required  to  assist  in  maintaining  current 
consumptioa  It  must,  however,  be  remembered  that  this 
over-saving  is  not  measured  by  the  quantity  of  new  mills, 
machinery,  etc.,  put  into  industry.  When  the  mechanism 
of  industry  is  once  thoroughly  congested,  over-saving  may 
still  continue,  but  will  be  represented  by  a  progressive 
under-use  of  existing  forms  of  capital,  that  unemployment 
of  forms  of  capital  and  labour  which  makes  trade  depression. 

An  increased  quantity  of  saving  is  requisite  to  pro- 
vide for  an  expected  increase  of  consumption  arising 
from  a  growth  of  population  or  from  any  other  cause.  Such 
increased  saving  is  of  course  not  over-saving.  The  propor- 
tion, as  well  as  the  absolute  amount  of  the  community's 
income  which  is  saved,  may  at  any  time  be  legitimatelv 
increased,  provided  that  at  some  not  distant  time  an 
increased  proportion  of  the  then  current  income  be  con- 
sumed. If  in  a  progressive  community  the  proportion  of 
"  saving  "  to  consumption,  in  order  to  maintain  the  current 
standard  of  living  with  the  economic  minimum  of  "  forms  " 


2o8  THE    EVOLUTION    OF 

of  capital,  be  as  2  to  10,  the  proportion  of  saving  in  any 
given  year  may  be  raised  to  3  to  9,  in  order  to  provide  for  a 
future  condition  in  which  saving  shall  fall  to  i  to  11.  Such 
increased  "saving"  will  not  be  over-saving;  the  forms  of 
capital  in  which  it  is  embodied  will  not  compete  with 
previously  existing  forms  so  as  to  bring  down  market  prices. 
The  efforts  which  take  the  form  of  permanent  improvements 
of  the  soil,  the  erection  of  fine  buildings,  docks,  railways, 
etc.,  for  future  use,  may  provide  the  opportunity  to  a  com- 
munity of  increasing  the  proportion  of  its  savings  for  a 
number  of  years.  But  such  savings  must  be  followed  by 
an  increased  future  consumption  without  a  correspondent 
saving  attached  to  it.  The  notion  that  we  can  indefinitely 
continue  to  increase  the  proportion  of  our  savings  to  our 
consumption,  bounded  only  by  the  limit  of  actual  neces- 
saries of  life,  is  an  illusion  which  places  production  in  the 
position  of  the  human  goal  instead  of  consumption. 

§  16.  Machinery  has  intensified  the  malady  of  under-con- 
sumption  or  over-saving,  because  it  has  increased  the  oppor- 
tunities of  conflict  between  the  interests  of  individuals  and 
those  of  the  community.  With  the  quickening  of  competi- 
tion in  machine  industries  the  opportunities  to  individuals 
of  making  good  their  new  "  savings  "  by  cancelling  the  old 
"  savings  "  of  others  continually  grow  in  number,  and  as  an 
ever  larger  proportion  of  the  total  industry  falls  under  the 
dominion  of  machinery,  more  and  more  of  this  dislocation 
is  likely  to  arise ;  the  struggles  of  weaker  firms  with  old 
machinery  to  hold  their  own,  the  efforts  of  improved 
machinery  to  find  a  market  for  its  expanded  product, 
will  continue  to  produce  gluts  more  frequently,  and  the 
subsequent  checks  to  productive  activity,  the  collapse  of 
businesses,  the  sudden  displacement  of  large  masses  of 
labour,  in  a  word,  all  the  symptoms  of  the  malady  of 
"depression"  will  appear  with  increased  virulence. 

It  must  be  clearly  recognised  that  the  trouble  is  due  to 
a  genuine  clash  of  individual  interests  in  a  competitive 
industrial  society,  where  the  frequent,  large,  and  quite  incal- 
culable effects  of  improved  machinery  and  methods  of 
production  give  now  to  this,  now  to  that  group  of  com- 
petitors a  temporary  advantage  in  the  struggle.  It  was 
formerly  beheved  that  this  bracing  competition,  this  free 
clash  of  individual  interests,  was  able  to  strike  out  harmony, 


MODERN   CAPITALISM.  209 

that  the  steady  and  intelligent  pursuit  by  each  of  his  own 
separate  interest  formed  a  sure  basis  of  industrial  order  and 
induced  the  most  effective  and  serviceable  disposition  of 
the  productive  powers  of  a  community. 

It  now  appears  that  this  is  not  the  case,  and  that  the 
failure  cannot  in  the  main  be  attributed  to  an  imperfect 
understanding  by  individuals  of  the  means  by  which  their 
several  interests  may  be  best  subserved,  but  is  due  to  the 
power  vested  in  individuals  or  groups  of  individuals  to 
secure  for  themselves  advantages  arising  from  improved 
methods  of  production  without  regard  for  the  vested  in- 
terests of  other  individuals  or  of  society  as  a  whole. 


APPENDIX  I. 

ARE   GOODS   IN    THE    POSSESSION    OF    CONSUMERS    CAPITAL? 

The  question  whether  food,  clothing,  etc.,  which  are 
"  capital "  so  long  as  they  form  part  of  the  stock  of  a  shop- 
keeper, are  to  be  regarded  as  ceasing  to  be  capital  when 
they  pass  into  the  possession  of  consumers  has  seldom  been 
definitely  faced  by  English  economists.  Jevons  was  perhaps 
the  first  to  clearly  recognise  the  issues  involved.  He 
writes  : — "  I  feel  quite  unable  to  adopt  the  opinion  that  the 
moment  goods  pass  into  the  possession  of  the  consumer 
they  cease  altogether  to  have  the  attributes  of  capital. 
This  doctrine  descends  to  us  from  the  time  of  Adam  Smith, 
and  has  generally  received  the  undoubting  assent  of  his 
followers.  Adam  Smith,  although  he  denied  the  possessions 
of  a  consumer  the  name  of  capital,  took  care  to  enumerate 
them  as  part  of  the  stock  of  the  community."  {The  Theory 
of  Political  Economy,  2nd  edit,  p.  280.) 

As  a  historical  judgment  this  is  very  misleading.  Adam 
Smith,  chiefly  impressed  by  the  necessity  of  separating  con- 
sumptive goods  from  goods  used  as  a  means  of  making  an 
income — e.g.,  commercial  capital,  quite  logically  severed 
revenue  from  capital  as  a  distinct  species  of  the  community's 
stock.  His  "  followers,"  however,  differed  very  widely,  and 
usually  expressed  themselves  obscurely.  Generally  speak- 
ing, the  English  economists  of  the  first  half  of  this  century 

14 


2IO  THE  EVOLUTION   OF 

inclined  to  the  inclusion  of  certain  consumptive  goods  in 
the  possession  of  labourers  under  capital.  Ricardo,  for 
example,  thus  expresses  himself: — "In  every  society  the 
capital  which  is  employed  in  production  is  necessarily  of 
limited  durability.  The  food  and  clothing  consumed  by 
the  labourer,  the  buildings  in  which  he  works,  the  imple- 
ments with  which  his  labour  is  assisted,  are  all  of  a  perish- 
able value.  There  is,  however,  a  vast  difference  in  the 
time  for  which  all  these  different  capitals  will  endure.  A 
steam  engine  will  last  longer  than  a  ship,  a  ship  than  the 
clothing  of  the  labourer,  and  the  clothing  of  the  labourer 
than  the  food  which  he  consumes."  {Principles  of  Political 
Economy,  1817,  p.  22.)  The  last  sentence  is  conclusive  in 
its  inclusion  under  capital  of  goods  in  the  possession  ot 
labourers.  McCulloch  again  regrets  Smith's  exclusion  of 
"  revenue "  from  capital,  insisting  that  "  it  is  enough  to 
entitle  an  article  to  be  considered  capital  that  it  can  directly 
contribute  to  the  support  of  man  or  assist  him  in  appro- 
priating or  producing  commodities,"  and  he  would  even  go 
so  far  as  to  include  "a  horse  yoked  to  a  gentleman's  coach," 
on  the  ground  that  it  was  "  possessed  of  the  capacity  to 
assist  in  production."  {Principles  of  Political  Economy, 
Part  I.,  chap.  ii.  §  3.) 

Malthus  does  not,  so  far  as  I  can  ascertain,  face  the 
question.  James  Mill  alone,  among  the  earlier  nineteenth 
century  economists,  definitely  excludes  labourers'  consump- 
tive goods  from  capital.  {Principles  of  Political  Economy, 
chap.  i.  §  2.)  J.  S.  Mill  is  not  equally  clear  in  his  judgment. 
In  Bk.  I.,  chap.  iv.  §  i,  food  "  destined  "  for  the  consumption 
of  productive  labourers  apparently  ceases  to  be  capital  when 
it  is  already  "appropriated  to  the  consumption  of  produc- 
tive labourers."  This  position,  however,  is  not  consistent 
with  his  later  position  regarding  the  unlimited  character  of 
saving,  which  can  only  be  justified  by  regarding  real  wages 
when  paid  as  continuing  to  be  capital.  Fawcett  is  vague, 
but  he  is  disposed  not  only  to  include  under  capital  food 
which  is  in  the  possession  of  consumers,  but  to  exclude 
food  which  is  in  the  possession  of  dealers.  "  If  a  man  has 
so  much  wheat,  it  is  wealth  which  may  at  any  moment  be 
employed  as  capital;  but  this  wheat  is  not  made  capital  by 
being  hoarded;  it  becomes  capital  when  it  feeds  the 
labourers,  and  it  cannot  feed   the   labourers  unless   it   is 


MODERN   CAPITALISM.  211 

consumed."  (^Manual  of  Political  Economy,  Bk.  I.,  chap,  iv., 
p.  29.)  Among  later  English  writers,  Cairnes,  like  all 
holders  of  the  "Wages  fund"  doctrine,  does  not  clearly 
meet  the  question,  "  Does  the  food,  etc.,  forming  the  real 
wage  fund  which  is  one  part  of  capital,  cease  to  be 
capital  when  it  is  actually  paid  out  in  wages  ?  "  He  plays 
round  the  question  in  Leading  Principles,  Part  II.,  chap.  i. 
Bonamy  Price  includes  consumptive  goods.  "  It  is  to  be 
remarked  of  all  this  capital,  these  materials,  implements,  and 
necessaries  for  the  labourers,  that  they  are  consumed  and 
destroyed  in  the  process  of  creating  wealth,  some  rapidly, 
some  more  slowly.  Thus  the  very  purpose  of  capital  is  to 
be  consumed  and  destroyed;  it  is  procured  for  that  very 
end."  {Practical  Political  Economy,  pp.  103,  104.)  Since, 
he  adds  a  little  later,  "an  article  cannot  be  declared  to  be 
capital  or  not  capital  till  the  purpose  it  is  applied  to  is 
determined,"  it  would  appear  that  flour  in  the  dealer's 
hands  is  not  capital,  but  that  it  only  becomes  capital  when 
handed  over  to  persons  who  productively  consume  it. 
Thorold  Rogers  appears  to  take  the  same  view,  holding 
the  food  of  a  country  to  be  part  of  its  capital  irrespective 
of  the  consideration  in  whose  hands  it  is.  {Political 
Economy,  p.  61.)  Professor  Sidgwick  appears  to  regard 
"  food  "  consumed  by  productive  labourers  as  capital.  "  On 
this  view  it  is  only  so  far  as  the  labourer's  consumption  is 
distinctly  designed  to  increase  his  efficiency  that  it  can 
properly  be  regarded  as  an  investment  of  capital."  {Principles 
of  Political  Economy,  Bk.  I.,  chap,  v.) 

General  Walker  apparently  holds  that  stored  food  used 
to  support  productive  work  is  capital  in  whosoever  hands  it 
lies.  {Political Economy,  2nd  edit.,  §  87.)  He  is,  however, 
concerned  with  illustrations  from  primitive  society,  and 
possibly  might  hold  the  food  ceased  to  be  capital  if  paid 
over  by  one  person  to  another  as  wages. 

Hearn,  on  the  contrary,  definitely  excludes  consumptive 
goods.  "  The  bullock,  which  when  living  formed  part  of  the 
capital  of  the  grazier,  and  when  dead  of  the  butcher,  is  not 
capital  when  the  meat  reaches  the  consumer."     {Plutology, 

P-  I35-) 

Professor  Marshall  defers  to  the  commercial  usage  so  far 
as  to  apply  the  term  Trade  Capital  to  "  those  external  things 
which  a  person  uses  in  his  trade,  either  holding  them  to  be 


212  THE   EVOLUTION    OF 

sold  for  money,  or  applying  them  to  produce  things  that 
are  to  be  sold  for  money."  But  turning  to  the  individual, 
he  insists  upon  speaking  of  the  necessaries  he  consumes 
to  enable  him  to  work  as  "capital."  "Some  enjoyment  is 
indeed  derived  from  the  consumption  of  the  necessaries  of 
life  which  are  included  under  capital ;  but  they  are  counted 
as  capital  because  of  the  work  for  the  future  which  they 
enable  people  to  do,  and  not  on  account  of  the  present 
pleasure  which  they  afford."     {Principles,  2nd  edit.,  p.  125.) 

These  instances  show  that  Jevons  is  wrong  in  attributing 
to  English  economists  a  general  acceptance  of  the  belief 
that  goods  cease  to  be  capital  when  they  come  into  the 
possession  of  consumers.  They  also  serve  to  explain  the 
source  of  the  conflict  of  judgment  and  the  confusion  of 
expression.  Economists  who  take  it  to  be  the  end  of 
industrial  activity  to  place  in  the  possession  of  consumers 
goods  which  shall  satisfy  their  desires,  regard  "capital" 
as  a  convenient  term  to  cover  those  forms  of  wealth  which 
are  a  means  to  this  end,  and  are  thus  logically  driven  to 
exclude  all  consumers'  goods  from  capital.  This  view  of 
capital  coincides  with  the  ordinary  accepted  commercial 
view  which  regards  capital  not  from  its  productivity  side 
but  from  its  income-yielding  side.  Those  economists,  on 
the  other  hand,  who  actually,  though  not  avowedly,  take 
production  to  be  the  end  of  industry,  regard  as  "capital" 
all  forms  of  material  wealth  which  are  means  to  that  end, 
and  therefore  include  food,  etc.,  productively  consumed  by 
labourers.  If  work  considered  as  distinct  from  enjoyment 
be  regarded  as  the  end,  it  is  reasonable  enough  that  some 
term  should  be  used  to  cover  all  the  forms  of  material 
wealth  serviceable  to  that  end.  It  is,  however,  unfortunate 
that  the  term  "capital"  should  be  twisted  from  its  fairly 
consistent  commercial  use  to  this  purpose. 

Dr.  Keynes,^  who  seems  to  think  the  sole  diflliculty 
as  regards  the  definition  of  capital  arises  from  the  differ- 
ence in  the  point  of  view  of  the  individual  and  of  the 
community,  suggests  the  use  of  two  terms,  "revenue 
capital"  and  "production  capital."  But  these  terms  are 
doubly  unsatisfactory.  In  the  first  place,  the  "productive 
consumption  "  economist  might  fairly  claim  that  as  his  food, 

^  Scope  and  Method  of  Political  Economy,  p.  162. 


MODERN   CAPITALISM.  213 

etc.,  enabled  the  workman  to  obtain  his  wages  or  revenue, 
they  belonged  to  revenue  capital.  On  the  other  hand, 
regarding  it  as  essential  to  distinct  terminology  to  sever 
entirely  consumptive  goods  from  productive  goods,  I  should 
insist  that  the  "  production  capital "  of  the  community  was 
synonymous  with  its  "  revenue  capital,"  and  that  although 
the  individual  view  of  capital  is  not  always  coincident  with 
the  community's  view,  that  difference  cannot  be  expressed 
by  the  distinction  of  "  revenue  capital "  and  "  production 
capital." 

Moreover,  the  consumptive-production  economists,  to  be 
consistent  and  to  preserve  the  continuity  of  the  conception 
of  economic  activity,  would  do  well  to  abolish  labour-power 
as  a  separate  factor,  and  to  include  the  body  of  the  labourer 
with  its  store  of  productive  energy  as  a  species  of  capital. 
For  it  is  urged  {e.g.,  by  Professor  Marshall)  that  the  fact  that 
the  food  consumed  by  labourers  enables  them  to  earn  an 
income  entitles  it  to  rank  as  capital.  In  that  case  the 
"  wages  "  which  form  that  income  should  rank  as  interest 
upon  the  capital.  Again,  there  is  no  reason  for  breaking 
the  continuity  of  the  capital  at  the  time  when  the  "food" 
is  actually  eaten.  The  food  is  not  destroyed,  but  built  up 
into  the  frame  of  the  labourer  as  a  fund  of  productive  energy. 
If  consumptive  goods  are  once  admitted  as  capital,  the 
labourer's  body  must  be  likewise  capital  yielding  interest  in 
the  shape  of  wages  If  the  other  factor  "  natural  agents  "  be 
still  retained  (an  unnecessary  proceeding,  since  all  land,  etc., 
which  is  productively  serviceable  is  so  by  reason  of  the  appli- 
cation of  some  element  of  stored  labour,  and  may  therefore 
be  called  "capital"),  labour  could  be  resolved  into  natural 
agents  (the  infant  body)  and  capital  (the  food,  etc.,  used  to 
strengthen  and  support  the  body).  Wages  could  then  be 
reckoned  partly  as  rent,  partly  as  interest.  It  is  difficult  to 
understand  why  "productive-consumption"  economists,  some 
of  whom  have  evidently  contemplated  the  change  of  termin- 
ology, have  refused  to  take  a  step  which  would  at  any  rate 
have  the  merit  of  imparting  consistency  to  their  terminology. 
It  is,  of  course,  true  that  no  "  productive-consumption " 
economist  would  straightly  admit  production  not  consump- 
tion to  be  the  economic  goal,  but  his  terminology  can  only 
approximate  to  consistency  upon  this  supposition. 

Mr.  Cannan,  in  his  able  exposure  of  Adam  Smith's  mixed 


214  THE   EVOLUTION   OF 

notions  upon  Capital,  inclines  to  an  extended  use  of  the 
term  which  shall  include  "the  existing  stock  of  houses, 
furniture,  and  clothes"  on  the  ground  that  they  are  "just as 
much  a  part  of  the  surplus  of  production  over  consumption, 
and  therefore  the  result  of  saving,  as  the  stock  of  ware- 
houses, machinery,  and  provisions.^  Moreover,  whether  in 
merchants'  or  consumers'  hands  they  produce  a  real  income, 
in  the  latter  case  consisting  of  the  comforts  and  conveniences 
which  attend  their  consumption.  But  if  this  view  be 
accepted  all  forms  of  wealth  must  rank  as  capital;  the 
distinction  between  those  which  have  been  saved  and  those 
which  have  not  loses  all  meaning;  so  long  as  a  piece  of 
wealth  which  has  been  made  exists,  it  has  been  saved,  and 
is  an  "  investment "  which  will,  at  any  rate  in  the  satisfac- 
tion due  to  its  consumption,  yield  a  real  income.  But  this 
extension,  though  logically  defensible,  must  be  rejected  on 
grounds  of  convenience.  When  economists  can  be  got  to 
recognise  the  necessity  of  measuring  all  "  incomes,"  as 
indeed  all  "  outputs,"  in  terms  of  human  satisfaction  and 
effort,  then  it  may  be  well  to  recognise  that  all  forms  of 
wealth  which  have  figured  as  producers'  capital  continue  to 
exist  as  consumers'  capital,  yielding  an  income  of  satisfac- 
tion until  they  are  consumed.  To  place  the  consumptive- 
goods  on  a  common  level  with  forms  of  productive  capital, 
it  would  of  course  be  necessary  to  make  the  usual  provision 
against  wear  and  tear  and  depreciation  before  reckoning 
income.  There  would  be  no  justification  for  reckoning  the 
total  use  of  a  coat  worn  out  and  not  replaced  as  income 
from  capital. 

As  matters  now  stand,  the  only  logically  accurate  corre- 
lation of  economic  activities  which  shall  enable  us  to  give  a 
clear  and  separate  meaning  to  capital  and  labour-power  in- 
volves the  distinct  recognition  of  unproductive  consumption 
— i.e.,  consumption  considered  as  an  end  and  not  as  a  means 
to  further  production  of  industrial  wealth,  as  the  final  object 
of  economic  activity.  In  other  words,  it  is  the  benefit  or 
satisfaction  arising  from  the  destruction  of  forms  of  indus- 
trial wealth  that  constitutes  the  economic  goal.  Life  not 
work,  unproductive  not  productive  consumption,  must  be 
regarded  as  the  end.     The  consideration  that  a  good  and 

^  Production  and  Consumption,  chap.  iv.  §  2. 


MODERN   CAPITALISM.  21$ 

wholesome  human  life  is  identified  with  work,  some  of 
which  will  be  industrial  in  character,  so  that  many  forms 
of  industrial  wealth  will  be  destroyed  under  conditions 
which  enable  them  to  render  direct  service  in  creating  new 
forms,  does  not  impair  the  validity  of  this  conception.  The 
inability  of  most  economic  thinkers  to  clearly  grasp  and  to 
impress  on  others  the  idea  of  the  industrial  organism  as  a 
single  "going  concern,"  has  arisen  chiefly  from  the  circular 
reasoning  involved  in  making  "production"  at  once  the 
means  and  the  end,  and  the  inconsistent  definitions  required 
to  support  this  fallacy. 


APPENDIX  II. 

"  OVER-CONSUMPTION  "   CONSIDERED   AS   CAUSE   OF 
DEPRESSION. 

It  is  of  course  quite  possible  that  a  temporary  over-pro- 
duction in  one  or  several  trades  may  be  explained  by  a 
correspondent  under-production  in  others — that  is  to  say, 
there  may  be  a  misplacement  of  industrial  enterprise.  But 
this  can  afford  no  explanation  of  the  phenomenon  Depres- 
sion of  Trade,  which  consists  in  a  general  or  net  over- 
supply  of  capital,  as  evidenced  by  a  general  fall  of  prices. 

In  like  manner  it  is  possible  to  explain  a  commercial 
crisis  in  a  single  country,  or  part  of  a  commercial  community, 
as  the  reaction  or  collapse  following  an  attempt  to  increase 
the  quantity  of  fixed  capital  out  of  proportion  to  the  growth 
of  the  current  national  income,  by  a  reckless  borrowing. 
This  attempt  of  a  single  country  to  enlarge  its  business 
operations  beyond  the  limits  of  the  possible  savings  of  its 
own  current  income,  Mr.  Bonamy  Price  and  M.  Yves  Guyot 
speak  of  under  the  questionable  title  of  Over-consumption. 
Since  they  tender  this  vice  of  over-consumption  as  the  true 
and  sufificient  explanation  of  commercial  crises,  it  is  neces- 
sary to  examine  the  position. 

Professor  Bonamy  Price  applied  the  following  analysis  to 
the  great  crisis  in  the  United  States  of  1877  : — 

"  We  are  now  in  a  position  to  perceive  the  magnitude  of 
the  blunder  of  which  the  American  people  were  guilty  in  con- 
structing this  most  mischievous  quantity  of  fixed  capital  in 


2l6  THE   EVOLUTION    OF 

the  form  of  railways.  They  acted  precisely  like  a  landowner 
who  had  an  estate  of  ;^io,ooo  a  year,  and  spent  ;!^2o,ooo 
on  drainage.  It  could  not  be  made  out  of  savings,  for  they 
did  not  exist,  and  at  the  end  of  the  very  first  year  he  must 
sell  a  portion  of  the  estate  to  pay  for  the  cost  of  his  drain- 
ing. In  other  words,  his  capital,  his  estate,  his  means  of 
making  income  whereon  to  live  was  reduced.  The  drainage 
was  an  excellent  operation,  but  for  him  it  was  ruinous.  So 
it  was  with  America.  Few  things  in  the  long  run  enrich  a 
nation  like  railways ;  but  so  gigantic  an  over-consumption, 
not  out  of  savings,  but  out  of  capital,  brought  her  poverty, 
commercial  depression,  and  much  misery.  The  new  rail- 
ways have  been  reckoned  at  some  30,000  miles,  at  an 
estimated  cost  of  ;^i 0,000  a  mile;  they  destroyed  three 
hundred  million  of  pounds  worth,  not  of  money,  but  of 
corn,  clothing,  coal,  iron,  and  other  substances.  The 
connection  between  such  over-production  and  commercial 
depression  is  here  only  too  visibly  that  of  parent  and  child. 
But  the  disastrous  consequences  were  far  from  ending  here. 
The  over-consumption  did  not  content  itself  with  the 
wealth  used  up  in  working  the  railways  and  the  materials 
of  which  they  were  composed.  It  sent  other  waves  of 
destruction  rolling  over  the  land.  The  demand  for  coal, 
iron,  engines,  and  materials  kindled  prodigious  excitement 
in  the  factories  and  the  shops ;  labourers  were  called  for 
from  every  side;  wages  rose  rapidly;  profits  shared  the 
upward  movement;  luxurious  spending  overflowed;  prices 
advanced  all  round ;  the  recklessness  of  a  prosperous  time 
bubbled  over;  and  this  subsidiary  over-consumption  im- 
mensely enlarged  the  waste  of  the  national  capital  set  in 
motion  by  the  expenditure  on  the  railways  themselves. 
Onward  still  pressed  the  gale ;  foreign  nations  were  carried 
away  by  its  force.  They  poured  their  goods  into  America, 
so  over-powering  was  the  attraction  of  high  prices.  They 
supplied  materials  for  the  railways,  and  luxuries  for  their 
constructors.  Their  own  prices  rose  in  turn  ;  their  business 
burst  into  unwonted  activity;  profits  and  wages  were 
enlarged ;  and  the  vicious  cycle  repeated  itself  in  many 
countries  of  Europe.  Over-consumption  advanced  with 
greater  strides;  the  tide  of  prosperity  rose  ever  higher; 
and  the  destruction  of  wealth  marched  at  greater  speed." ^ 
1  Contemporary  Review,  May  1879. 


MODERN   CAPITALISM.  2l7 

Now,  in  the  first  place,  our  analysis  of  saving  and  the 
confinement  of  the  term  consumption  to  direct  embodi- 
ments of  utility  and  convenience  forbid  us  to  acknowledge 
that  the  action  of  the  United  States  or  the  analogy  of  the 
improving  landowner  is  a  case  of  over-consumption  at  all. 
If  the  landowner  borrowed  money  on  his  estates  in  order  to 
live  in  luxury  for  a  season  beyond  his  income,  or  similarly, 
if  a  State  raised  loans  in  order  to  consume  powder  and  shot, 
the  term  over-consumption  rightly  applies.  But  where  the 
landowner  borrows  so  much  money  to  improve  his  land  that 
he  is  unable  to  hold  out  till  the  improvements  bear  fruit, 
and  must  sell  his  land  to  pay  the  interest,  he  is  not  rightly 
accused  of  over-consumption.  His  reduced  consumption 
later  on  while  practising  retrenchment  is  simply  a  pro- 
cess of  "  saving "  which,  when  complete,  is  to  take 
the  place  of  an  amount  of  "saving"  previously  made 
by  some  one  else  and  borrowed  by  him.  What  hap- 
pened was  simply  this.  A,  wishing  to  drain  his  land, 
had  not  "saved"  enough  to  do  it;  B  has  saved,  and 
A,  borrowing  his  "saving,"  holds  it  for  a  time  in  his 
shape  of  drainage.  If  he  can  continue  to  pay  interest 
and  gradually  "  save "  to  pay  off  the  capital,  he  will 
do  so ;  if  not,  as  in  the  case  supposed,  B,  the  mortgagee, 
will  foreclose  and  legally  enter  upon  his  savings  in  the 
shape  of  "  drainage  "  which  he  really  owned  all  along.  But 
even  if  A  in  this  case  were  rightly  accused  of  over-consump- 
tion, this  over-consumption  must  be  considered  as  balanced 
by  the  under-consumption  of  B,  so  that  as  regards  the 
community  of  which  A  and  B  are  both  members  there  is 
no  over-consumption. 

Now,  precisely  the  same  line  of  reasoning  applies  if  for 
the  individual  A  we  take  the  country  of  the  United  States. 
If  it  tries  to  increase  its  factories,  machinery,  etc.,  in  excess 
of  its  ability  to  pay,  it  can  only  do  so  by  borrowing  from 
other  countries ;  and  if  it  cannot  pay  the  interest  on  such 
loans,  the  "  savings,"  in  the  shape  of  fixed  capital  which  it 
has  endeavoured  to  secure  for  itself,  remain  the  property  of 
the  other  countries  which  have  effected  the  real  saving 
which  they  embody,  assuming  them  to  have  a  value.  If 
the  action  of  the  United  States  be  called  over-consump- 
tion, it  is  balanced  by  an  under-consumption  of  England, 
France,  or  other  countries  of  the  commercial  community. 


2l8  THE   EVOLUTION   OF 

Mr.  Price  sought  to  avoid  this  conclusion  by  saying  nothing 
about  the  individual  from  whom  the  landowner  or  the 
country  from  which  the  United  States  borrowed  in  order  to 
increase  the  fixed  capital.  But  as  the  landowner  and  the 
United  States,  ex  hypothesi,  did  not  make  their  improve- 
ments out  of  their  own  savings,  they  made  them  out  of 
somebody  else's  savings,  and  that  conduct  which  is  styled 
over-consumption  in  them  is  balanced  by  an  equal  quantity 
of  under-consumption  in  some  other  party.  If  thus  we 
look  at  the  individual  landowner  or  the  single  country  of 
the  United  States,  we  might  say,  accepting  Price's  view  of 
consumption,  that  he  and  it  were  guilty  of  over-consump- 
tion, and  that  this  was  the  cause  of  the  commercial  crisis. 
But  since  this  over-consumption  is  absolutely  conditioned  by 
a  correspondent  under-consumption  of  some  other  member 
of  the  industrial  community,  it  is  not  possible  to  conclude 
with  Professor  Price  that  over-consumption  can  even  for  a 
time  exist  in  the  community  as  a  whole,  or  that  such  a 
condition  can  be  the  explanation  of  a  crisis  commonly  felt 
by  all  or  most  of  the  members  of  that  community. 

What  actually  happened  in  the  case  of  United  States 
railways  was  that  a  number  of  people,  either  in  America  or 
in  Europe,  under-consumed  or  over-saved :  their  excessive 
saving  could  find  no  better  form  to  take  than  American 
railways,  which,  ex  hypothesi,  were  not  wanted  for  use.  A 
number  of  persons  who  might  have  made  and  consumed 
three  hundred  million  pounds'  worth  more  of  corn,  clothing, 
coals,  etc.,  than  they  actually  did  consume,  refused  to  do 
so,  and  instead  of  doing  so  made  a  number  of  railway 
lines,  locomotives,  etc.,  which  no  one  could  consume  and 
which  were  not  wanted  to  assist  production.  What  occurred 
was  a  waste  of  saving  power  through  an  attempt  to  make  an 
excessive  number  of  forms  of  capital. 

Even  if,  some  years  later,  many  of  these  forms  obtained 
a  use  and  a  value,  none  the  less  they  represent  an  excess 
or  waste  of  "  saving  "  to  an  extent  measured  by  the  normal 
rate  of  interest  over  that  period  of  time  which  elapsed  before 
they  fructified  into  use.  In  a  word,  what  had  happened  was 
not  over-consumption,  but  under-consumption. 

M.  Guyot  appears  to  think  that  in  the  community  as  a 
whole  too  much  saving  can  be  put  into  the  form  of  "  fixed  " 
capital  and  too  little  into  circulating  capital,  and  that  such  a 


MODERN   CAPITALISM.  2I9 

condition  of  affairs  will  bring  depression.  "  Fixed  capital,' 
he  says,  "  cannot  be  utilised  if  there  is  no  available  circu- 
lating capital.  Ships  and  railways  are  useless  if  there  are 
no  commodities  for  them  to  convey;  a  factory  cannot  be 
worked  unless  there  are  consumers  ready  to  buy  its  products. 
If,  then,  circulating  capital  has  been  so  far  exhausted  as  to 
take  a  long  time  replacing,  fixed  capital  must  meanwhile 
remain  unproductive,  and  the  crisis  is  so  much  the  longer 
and  more  severe."  ^ 

To  this  there  are  two  sufiticient  answers.  The  prevalence 
of  low  prices  for  goods  of  various  kinds  as  well  as  for  plant 
in  a  time  of  depression,  the  general  glut  of  goods  which 
forms  one  phase  of  the  depression  proves  that  the  crisis 
does  not  arise  from  storing  too  much  saving  in  plant 
and  too  little  in  goods.  Where  there  exists  simul- 
taneously a  larger  quantity  of  plant,  raw  material, 
finished  goods,  and  labour  than  the  industrial  society 
can  find  use  for,  no  assertion  of  maladjustment,  either 
as  between  trade  and  trade,  •  country  and  country,  fixed 
and  circulating  capital,  will  afford  any  explanation. 
Secondly,  M.  Guyot  gives  away  his  entire  position  by 
admitting  "  a  factory  cannot  be  worked  unless  there  are 
consumers  ready  to  buy  its  products."  A  "consumer" 
here  can  logically  only  mean  one  who  buys  finished 
goods  for  personal  use,  and  if  this  be  generally  applied  it 
amounts  to  a  clear  admission  that  under-consumption  is  the 
reason  why  there  appears  to  be  a  glut  of  capital,  fixed  or 
other. 

*  Principles  of  Social  Economy,  p.  245.     (Sonnenschein.) 


220 


CHAPTER  VIIL 

MACHINERY   AND   DEMAND    FOR    LABOUR. 

§  I.  The  Influence  of  Machinery  upon  the  number  of 
Employed,  dependent  on  '•^  elasticity  of  demand.'^ 

§  2.  Measurement  of  direct  effects  on  Employment  in  Staple 
Matiufaciures. 

§  3.  Effects  of  Machinery  in  other  Employfnents — The  Evi- 
dence of  French  Statistics. 

%  4.  Influence  of  Introduction  of  Machinery  upon  Regularity 
of  Employment. 

§  5.  Effects  of  "  Unorganised"  Machine-industry  upon  Regu- 
larity. 

§  6.  Different  Ways  in  which  modern  Industry  causes  Un- 
efnployment. 

§  7.  Summary  of  General  Conclusions. 

§  I.  In  discussing  the  direct  influences  of  machinery  upon 
the  economic  position  of  the  labourer  we  must  distinguish  its 
effects  upon  (i)  the  number  of  workers  employed;  (2)  the 
regularity  of  employment ;  (3)  the  skill,  duration,  intensity, 
and  other  qualities  of  labour;  (4)  the  remuneration  of 
labour.  Though  these  influences  are  closely  related  in 
complex  interaction,  it  is  convenient  to  give  a  separate 
consideration  to  each. 

(i)  Effects  of  Machinery  upon  the  number  of  Employed. — 
The  motive  which  induces  capitalist  employers  to  introduce 
into  an  industry  machinery  which  shall  either  save  labour 
by  doing  work  which  labour  did  before,  or  assist  labour  by 
making  it  more  efficient,  is  a  desire  to  reduce  the  expenses 
of  production.  A  new  machine  either  displaces  an  old 
machine,  or  it  undertakes  a  process  of  industry  formerly 
done  by  hand  labour  without  machinery. 


THE   EVOLUTION   OF   MODERN   CAPITALISM.     221 

In  the  former  case  it  has  been  calculated  that  the 
expenses  incurred  in  making,  maintaining,  and  working  the 
new  machines  so  as  to  produce  a  given  output  will  be  less 
than  the  corresponding  expenses  involved  in  the  use  of  the 
old  machines.  Assuming  that  the  labour  of  making  and 
working  the  new  machines  is  paid  at  no  lower  rate  than  the 
labour  it  displaces,  and  that  the  same  proportion  of  the 
price  of  each  machine  went  as  wages  and  as  profits,  it  must 
follow  that  the  reduction  of  expenses  achieved  signifies  a 
net  displacement  of  labour  for  a  given  quantity  of  pro- 
duction. Since  the  skilled  labour  of  making  new  machines 
is  likely  to  be  paid  higher  than  that  of  making  more  old 
machines,  and  the  proportion  of  the  price  which  goes  as 
profit  upon  a  new  invention  will  be  higher  than  in  the  case 
of  an  old  one,^  the  actual  displacement  of  labour  will 
commonly  be  larger  than  is  represented  by  the  difference  in 
money  price  of  the  two  machines.  Moreover,  since  in  the 
case  of  an  old  manufacturing  firm  the  cost  of  discarding  a 
certain  amount  of  existing  machinery  must  be  reckoned  in, 
the  substitution  of  new  machinery  for  old  will  generally 
mean  a  considerable  displacement  of  labour. 

Similarly,  when  a  new  process  is  first  taken  ever  by 
machinery  the  expenses  of  making  and  working  the  machines, 
as  compared  with  the  expenses  of  turning  out  a  given  pro- 
duct by  hand  labour,  will,  other  things  being  equal,  involve 
a  net  diminution  of  employment.  The  fact  that  the  new 
machinery  is  introduced  is  a  proof  that  there  is  a  net 
diminution  of  employment  as  regards  a  given  output;  for 
otherwise  no  economy  would  be  effected. 

What  then  is  meant  by  the  statement  so  generally  made, 
that  machinery  gives  more  employment  than  it  takes  away 
— that  its  wider  and  ultimate  effect  is  not  to  diminish  the 
demand  for  labour  ? 

The  usual  answer  is  that  the  economy  effected  by  labour- 
saving   machinery    in    the    expenses    of    production    will, 

^  Against  this  we  may  set  the  possibility  of  a  fall  in  the  rate  of 
interest  at  which  manufacturers  may  be  able  to  borrow  capital  in  order 
to  set  up  improved  machinery.  Where  an  economy  can  be  effected  in 
this  direction,  the  displacement  of  labour  due  to  the  introduction  of 
machinery  may  not  be  so  large — i.e.,  it  will  pay  a  manufacturer  to 
introduce  a  new  machine  which  only  "saves"  a  small  amount  of 
money,  if  he  can  effect  the  change  at  a  cheap  rate  of  borrowing.  (Cf. 
Marshall,  Principles  of  Economics,  2nd  edit.,  pp.  569,  570.) 


222  THE  EVOLUTION   OF 

through  competition  of  producers,  be  reflected  in  a  lower 
scale  of  prices,  and  this  fall  of  prices  will  stimulate  consump- 
tion. Thus,  it  is  urged,  the  output  must  be  greatly 
increased.  When  we  add  together  the  labour  spent  in 
producing  the  machinery  to  assist  the  enlarged  production, 
the  labour  spent  in  maintaining  and  working  the  same, 
and  the  labour  of  conveying  and  distributing  the  enlarged 
production,  it  will  be  found  that  more  labour  is  required 
under  the  new  than  under  the  old  conditions  of  industry. 
So  runs  the  familiar  argument. 

The  whole  argument  in  favour  of  the  gain  which 
machinery  brings  to  the  working  classes  hinges  upon  the 
contention  that  it  increases  rather  than  decreases  the 
amount  of  employment.  Now,  though  we  shall  find  reason 
to  believe  that  machinery  has  not  caused  any  net  diminu- 
tion of  employment,  there  is  nothing  to  support  the  rough- 
and-ready  rule  by  which  the  optimism  of  English  econo- 
mists argues  the  case  in  its  application  to  a  single  trade. 

The  following  is  a  fair  example  of  the  argument  which 
has  passed  current,  drawn  from  the  pages  of  a  competent 
economic  writer: — 

"The  first  introduction  of  machinery  may  indeed  dis- 
place and  diminish  for  a  while  the  employment  of  labour, 
may  perchance  take  labour  out  of  the  hands  of  persons 
otherwise  not  able  to  take  another  employment,  and  create 
the  need  of  another  class  of  labourers  altogether;  but  if  it 
has  taken  labour  from  ten  persons,  it  has  provided  labour 
for  a  thousand.  How  does  it  work?  A  yard  of  calico 
made  by  hand  costs  two  shillings,  made  by  machinery  it 
may  cost  fourpence.  At  two  shillings  a  yard  few  buy  it; 
at  fourpence  a  yard,  multitudes  are  glad  to  avail  themselves 
of  it.  Cheapness  promotes  consumption;  the  article  which 
hitherto  was  used  by  the  higher  classes  only  is  now  to  be 
seen  in  the  hand  of  the  labouring  classes  as  well.  As  the 
demand  increases,  so  production  increases,  and  to  such  an 
extent  that,  although  the  number  of  labourers  now  employed 
in  the  production  of  calico  may  be  immensely  less  in 
proportion  to  a  given  quantity  of  calico,  the  total  number 
required  for  the  millions  of  yards  now  used  greatly  exceeds 
the  number  engaged  when  the  whole  work  was  performed 
without  any  aid  of  machinery."^ 

'  Leone  Levi,  Work  and  Pay,  p.  28. 


MODERN  CAPITALISM.  22$ 

Now,  turning  from  the  consideration  of  the  particular 
instance,  which  we  shall  find  reason  to  believe  is  peculiarly 
unfortunate  when  we  deal  with  the  statistics  of  the  cotton 
industry,  it  must  be  observed  that  economic  theory  makes 
dead  against  this  d  priori  optimism.  Ignoring,  for  the 
sake  of  convenience,  the  not  improbable  result  that  an 
economy  of  production  may,  at  any  rate  for  a  time, 
swell  profits  instead  of  reducing  prices,  it  will  be  evi- 
dent that  the  whole  value  of  the  argument  turns  upon 
the  effect  of  a  fall  of  price  in  stimulating  increased 
consumption.  Now  the  problem,  how  far  a  given  fall  in 
price  will  force  increased  consumption,  we  have  found  in  our 
discussion  of  monopoly  prices  to  involve  extremely  intricate 
knowledge  of  the  special  circumstances  of  each  case, 
and  refined  calculations  of  human  motives.  Everything 
depends  upon  "  elasticity  of  demand,"  and  we  are  certainly 
not  justified  in  assuming  that  in  a  particular  industry  a 
given  fall  of  prices  due  to  machine-production  will  stimu- 
late so  large  an  increase  of  consumption  that  employment 
will  be  given  to  as  many,  or  more  persons  than  were 
formerly  employed.  On  the  contrary,  if  we  apply  a 
similarly  graduated  fall  of  prices  to  two  different  classes  of 
goods,  we  shall  observe  a  widely  different  effect  in  the 
stimulation  of  consumption.  A  reduction  of  fifty  per  cent, 
in  the  price  of  one  class  of  manufactured  goods  may  treble 
or  quadruple  the  consumption,  while  the  same  reduction  in 
another  class  may  increase  the  consumption  by  only  twenty 
per  cent.  In  the  former  case  it  is  probable  that  the 
ultimate  effect  of  the  machinery  which  has  produced  the 
fall  in  expenses  of  production  and  in  prices  will  be  a 
considerable  increase  in  the  aggregate  demand  for  labour, 
-  while  in  the  latter  case  there  will  be  a  net  displacement.  It  is 
therefore  impossible  to  argue  d  priori  that  the  ultimate  effect 
of  a  particular  introduction  of  machinery  must  be  an  increased 
demand  for  labour,  and  that  the  labour  displaced  by  the 
machinery  will  be  directly  or  indirectly  absorbed  in  forwarding 
the  increased  production  caused  by  machinery.  It  is  alleged 
that  the  use  of  steam-hammers  has  displaced  nine  of  the 
ten  men  formerly  required,  that  with  modern  machinery  one 
man  can  make  as  many  bottles  as  six  men  made  formerly, 
that  in  the  boot  and  shoe  trade  one  man  can  do  the  work 
five  used  to  do,  that  "  in  the  manufacture  of  agricultural 


224  THE    EVOLUTION   OF 

implements  600  men  now  do  the  work  which  fifteen  or 
twenty  years  ago  required  2145,  thus  displacing  15 15," 
and  so  forth.^  Now  in  some  of  these  cases  we  shall  find 
that  the  fall  of  prices  following  such  displacements  has  led 
to  so  large  an  increase  of  demand  that  more  persons  are 
directly  engaged  in  these  industries  than  before;  in  other 
cases  this  is  not  the  case. 

The  following  quotation  from  a  speech  made  at  the 
Industrial  Remuneration  Conference  in  1885  will  present 
the  most  effective  criticism  upon  Professor  Leone  Levi's 
position : — 

"  In  carpet  weaving  fifty  years  ago  the  workman  drove 
the  shuttle  with  the  hand,  and  produced  from  forty-five  to 
fifty  yards  per  week,  for  which  he  was  paid  from  gd.  to  is. 
per  yard,  while  at  the  present  day  a  girl  attending  a  steam 
loom  can  produce  sixty  yards  a  day,  and  does  not  cost  her 
employer  i^d.  per  yard  for  her  labour.  That  girl  with  her 
loom  is  now  doing  the  work  of  eight  men.  The  question 
is,  How  are  these  men  employed  now?  In  a  clothier's 
establishment,  seeing  a  girl  at  work  at  a  sewing  machine,  he 
asked  the  employer  how  many  men's  labour  that  machine 
saved  him.  He  said  it  saved  him  twelve  men's  labour. 
Then  he  asked,  'What  would  those  twelve  men  be  doing 
now  ? '  '  Oh,'  he  said,  *  they  will  be  much  better  employed 
than  if  they  had  been  with  me,  perhaps  at  some  new 
industry.'  He  asked,  'What  new  industry?'  But  the 
employer  could  not  point  out  any  except  photography;  at 
last  he  said  they  would  probably  have  found  employment  in 
making  sewing  machines.  Shortly  afterwards  he  was  asked 
to  visit  the  American  Singer  Sewing  Machine  Factory,  near 
Glasgow.  He  got  this  clothier  to  accompany  him,  and 
when  going  over  the  works  they  came  upon  the  very  same 
kind  of  machines  as  the  clothier  had  in  his  establishment. 
Then  he  put  the  question  to  the  manager,  '  How  long  would 
it  take  a  man  to  make  one  of  these  machines  ? '  He  said 
he  could  not  tell,  as  no  man  made  a  machine ;  they  had  a 
more  expeditious  way  of  doing  it  than  that — there  would  be 
upwards  of  thirty  men  employed  in  the  making  of  one 
machine ;  but  he  said  '  if  they  were  to  make  this  particular 

^  Statement  by  Mr.  Shaftoe,  President  of  the  Trades  Union  Congress, 
1888;  cf.  Carroll  D.  Wright,  Report  on  Industrial  Depressions,  Wash- 
ington, 1886,  pp.  80-90. 


MODERN   CAPITALISM.  225 

kind  of  machine,  they  would  turn  out  one  for  every  four 
and  a  half  days'  work  of  each  man  in  their  employment' 
Now,  there  was  a  machine  that  with  a  girl  had  done  the 
work  of  twelve  men  for  nearly  ten  years,  and  the  owner  of 
that  machine  was  under  the  impression  that  these  twelve 
men  would  be  employed  making  another  machine,  while 
four  and  a  half  days  of  each  of  these  men  was  sufficient  to 
make  another  machine  that  was  capable  of  displacing  other 
twelve  men." 

In  cases  like  the  above  we  must,  of  course,  bear  in  mind 
that  a  diminution  in  employment  in  the  several  manu- 
facturing processes  directly  and  indirectly  engaged  in  for- 
warding an  industry,  is  not  of  itself  conclusive  evidence 
that  the  machinery  has  brought  about  a  net  displacement  of 
labour.  If  the  output  is  increased  the  employment  in  the 
extractive,  the  transport,  and  the  various  distributing  pro- 
cesses may  compensate  the  reduction  in  making  goods  and 
machinery. 

§  2.  The  industrial  history  of  a  country  like  England  can 
furnish  no  sufficient  data  for  a  conclusive  general  judgment 
of  the  case.  The  enormous  expansion  of  production  in- 
duced by  the  application  of  machinery  in  certain  branches 
of  textile  industry  during  the  first  half  of  this  century  indis- 
putably led  to  an  increased  demand  for  English  labour  in 
trades  directly  or  indirectly  connected  with  textile  produc- 
tion. But,  in  the  first  place,  this  cannot  be  regarded  as  a 
normal  result  of  a  fall  of  prices  due  to  textile  machinery, 
but  is  largely  attributable  to  an  expansion  in  the  area  of 
consumption  —  the  acquisition  of  vast  new  markets  —  in 
which  greater  efficiency  and  cheapness  of  transport  played 
the  most  considerable  part.  Secondly,  assuming  that  the 
more  pressing  needs  of  the  vast  body  of  consumers  are 
already  satisfied  by  machine-made  textile  goods,  we  are  not 
at  liberty  to  conjecture  that  any  further  cheapening  of 
goods,  owing  to  improved  machinery,  will  have  a  corre- 
spondent effect  on  consumption  and  the  demand  for  labour. 
If  England  had  been  a  self-contained  country,  manufactur- 
ing only  for  her  own  market,  the  result  of  machinery  applied 
to  textile  industries  would  without  doubt  have  been  a  con- 
siderable net  displacement  of  textile  labour,  making  every 
allowance  for  growth  of  population  and  increased  home 
consumption.     The  expansion  of  EngUsh  production  under 

15 


226  THE   EVOLUTION   OF 

the  rapid  development  of  machinery  in  the  nineteenth 
century  cannot  therefore  be  taken  as  a  right  measure  of  the 
normal  effects  of  the  application  of  machinery. 

What  direct  evidence  we  have  of  the  effect  of  machinery 
upon  demand  for  labour  is  very  significant.  Mr.  Charles 
Booth,  in  his  Ocaipations  of  the  People,  presents  an  analysis 
of  the  census  returns,  showing  the  proportion  of  the  popula- 
tion engaged  in  various  employments  at  decennial  points 
from  1 84 1  to  1 88 1.  To  these  may  be  added  such  statistics 
of  the  1 89 1  census  as  the  present  condition  of  their  pre- 
sentation allows  us  to  relate  to  the  former  censuses.^  If  we 
turn  to  manufactures,  upon  which,  together  with  transport, 
machinery  exercises  the  most  direct  influence,  we  find  that 
the  aggregate  of  manufactures  shows  a  considerable  increase 
in  demand  for  labour  up  to  1861 — that  is,  in  the  period 
when  English  wares  still  kept  the  lead  they  had  obtained  in 
the  world  market — but  that  since  1861  there  is  a  positive 
decline  in  the  proportion  of  the  English  population  em- 
ployed in  manufactures.  The  percentages  up  to  1881  run 
as  follows ; — 


1841'. 
1851  . 
1861    . 

1871  . 
1881   . 


27.1  per  cent. 
32.7       „ 
33-0       „ 
31-6 
30-7 


If  we  take  the  staple  manufactures,  employing  the  largest 
number  of  workers,  we  shall  find  that  for  the  most  part  they 
show  a  rising  demand  for  labour  up  to  1861,  a  stationary  or 
falling  demand  when  compared  with  the  population  after 
that  date.  The  foundational  industries — machinery  and 
tools,  shipbuilding,  metal  working  —  whose  demand  for 
labour  during  the  period  1841-61  increased  by  leaps  and 
bounds,  still  show  in  the  aggregate  an  increased  propor- 
tion of  employment,  largely  due  to  the  rise  since  1861  of  a 

^  The  merging  of  retail  dealers  with  the  "making"  classes,  the 
classification  of  merchants  with  those  engaged  in  transport  industries, 
and  certain  departures  from  precedent  in  the  mode  of  classification, 
render  a  full  use  of  the  1 891  figures  impossible  at  present. 

^  In  the  years  1831-41  there  was  an  enormous  increase  of  the 
factory  population.  Between  1835  and  1839,  according  to  Porter,  the 
increase  amounted  to  68,263,  or  a  rise  of  19.2  per  cent.  {Progress  of 
the  Nation,  p.  78. ) 


MODERN   CAPITALISM. 


227 


large  export  trade  in  machinery.  But  while  the  machine- 
making  industries  continue  to  grow  faster  than  the  popula- 
tion in  the  employment  they  give,  increasing  from  209,353 
in  1881  to  262,910  in  1891,  and  shipbuilding  also  gives  a 
proportionate  increase,  it  is  noteworthy  that  the  steel  and 
iron  trades,  which  up  to  187 1  grew  far  faster  than  the 
population,  began  to  show  signs  of  decline.  In  1881  the 
number  of  steel  and  iron  workers  was  361,343,  in  1891  it 
had  increased  to  380,193,  a  growth  of  only  5.3  per  cent,  as 
compared  with  a  growth  of  population  amounting  to  11.7 
per  cent.,  and  a  growth  of  the  number  of  occupied  persons 
amounting  to  15.3  per  cent. 

Fuel,  gas,  chemicals,  and  other  general  subsidiary  trades 
show  a  steady  advance  in  proportionate  employment  The 
textile  and  dyeing  industries,  on  the  other  hand,  showing 
an  increased  proportion  of  employment  up  to  1851,  by 
which  time  the  weaving  industry  was  taken  over  by 
machinery,  present  a  continuous  and  startling  decline  in  the 
proportion  of  employment  since  that  date.  A  considerably 
smaller  proportion  of  the  employed  classes  are  now  engaged 
in  these  trades  than  in  1841.  The  dressmaking  industries 
give  the  same  result — a  continuous  decline  in  proportion 
of  employment  since  185 1,  though  in  this  case  the  1891 
figures  indicate  a  slight  recovery.  The  following  are  the 
percentages : — 

Textile  and  Dyeing.  Dress. 


1 841 

9.1 

.    .    7-8 

I85I 

II. I 

10.3 

I86I 

10.2 

.    .    9-8 

I87I 

9.3 

.    .    8.5 

1881 

8.2 

8.1 

I89I 

7.6     . 

.    .    8.3 

The  failure  of  demand  for  labour  to  keep  pace  in  its 
growth  with  the  growth  of  population  in  the  main  branches 
of  the  spinning  and  weaving  industries  is  emphasised  by 
Mr.  Ellison.  Comparing  1850  with  1878,  he  says  : — "In 
spipning-mills  there  is  an  increase  of  about  189  per  cent,  in 
spindles,  but  only  6;^  per  cent,  in  hands  employed;  and  in 
weaving  mills  an  increase  of  360  per  cent,  in  looms,  but 
only  253  per  cent,  in  operatives.  This,  of  course,  shows 
that  the  machinery  has  become  more  and  more  automatic 
or  self-regulating,  thus  requiring  the  attendance  of  a  tela- 


228  THE    EVOLUTION    OF 

lively  smaller  number  of  workers."^  When  the  subsidiary 
branches  of  textile  industry  are  added  the  results  point  still 
more  conclusively  in  the  same  direction. 


No.  of  Spindles. 

No.  of  Looms.  No.  of  Operatives. 

1850    . 

..      20,977,817 

..     249,627      ...      330,924 

1878   . 

. .      44,206,690 

..      514,911      •••     482,903 

More  recent  statistics  show  that  the  relative  diminution 
of  employment  in  textile  industries  traceable  since  185 1, 
became  a  positive  diminution  after  1871,  though  the 
statistics  of  189 1  indicate  a  certain  recovery. 


1841 

618,5092 

I85I 

603,800 

I86I 

934,500 

1871 

970,000 

I88I 

962,000 

1891 

i,oi6,ioo3 

The  significance  of  these  figures  in  relation  to  the  demand 
for  labour  receives  further  emphasis  when  the  large  and 
rapid  displacement  of  male  by  female  labour  is  taken  into 
account.  In  the  dress  trades  it  may  be  observed  that  the 
absolute  increase  which  every  census,  save  that  of  187 1, 
discloses,  is  absorbed  by  the  tailoring  and  millinery 
branches,  where  machinery  plays  a  relatively  unimportant 
part,  and  that  in  the  boot  and  shoe  trade,  where  there  has 
been  a  greatly  increased  application  of  machinery,  there  has 
been  not  only  a  proportionate  but  an  absolute  fall-off  of 
employment  in  the  twenty  years  following  1861,  though  the 
1 89 1  census  again  brings  up  the  absolute  numbers  of  the 
boot  and  shoe  trade  to  a  little  above  the  level  of  1851.* 

The  branches  of  manufacture  which  show  a  large  in- 
crease in  the  proportion  of  employment  they  give  in  1891 
as  compared  with  1861  are  machinery  and  tools,  printing 
and  bookbinding,  wood  furniture  and  carriages,  fuel,  gas, 

^  T.  Ellison,  Cotton  Trade  of  Great  Britain,  p.  74. 

2  Only  349,452,  or  56.8  per  cent,  in  factories.     (Porter,  p.  78.) 

^  This  increase  since  1881  is  chiefly  explained  by  the  feverish  expan- 
sion and  over-production  of  the  cotton  industry.  The  census  return 
for  1 89 1  is  reduced  to  correspond  with  the  earlier  estimates  in  Booth's 
Occupations  of  the  People. 

■*  The  1851  census  gives  235,447,  that  of  1891  gives  240,000  (with 
an  estimated  deduction  for  clog  and  patten-makers). 


MODERN   CAPITALISM. 


229 


chemicals,  and  unspecified  trades  (chiefly  connected  with 
machinery).  Machinery  and  tools  alone,  among  the  larger 
manufactures,  yield  a  large  proportionate  increase  of  em- 
ployment, amounting,  according  to  the  Census  Report,  to 
27.7  per  cent  between  1881  and  1891,  though  dealers  are 
included  in  this  estimate  as  well  as  makers. 

From  these  facts  two  conclusions  may  be  drawn  regarding 
the  direct  effects  of  machinery.  First,  so  far  as  the  aggre- 
gate of  manufactures  is  concerned,  the  net  result  of  the 
increased  use  of  machinery  has  not  been  to  offer  an  in- 
creased demand  for  labour  in  these  industries  commensurate 
with  the  growth  of  the  working  population.  Second,  an 
increased  proportion  of  the  manufacturing  population  is 
employed  either  in  those  branches  of  the  large  industries 
where  machinery  is  least  used,  or  in  the  smaller  manu- 
factures which  are  either  subsidiary  to  the  large  industries, 
or  are  engaged  in  providing  miscellaneous  comforts  and 
luxuries. 

§  3.  When  we  turn  from  manufactures  to  other  employ- 
ments, we  perceive  that  while  mining  and  building  employ 
an  increasing  proportion  of  the  working  classes  since  1851, 
agriculture  offers  a  rapidly  diminishing  employment,  de- 
scending from  20.9  per  cent,  in  1851  to  11. 5  per  cent,  in 
1881,  and  9.9  in  1891.^ 

It  is,  however,  to  the  transport  trades,  to  the  distributing 
or  "  dealing  "  trades,  and  to  industrial  service  that  we  must 
look  for  the  notable  increase  of  employment.  All  of  these 
departments  have  grown  far  faster  than  the  population 
since  1841. 

1841 
1851 
1861 
1871 
1881 

The  statistics  of  1891  still  further  emphasise  this  move- 
ment. The  transport  services  show  an  enormous  rise  upon 
1881,  yielding  a  proportionate  employment  of  7.4  per  cent 

^  The  enormous  fall  between  the  census  of  1861  and  1871  is  partly 
attributable  to  changes  in  classification,  (i)  Female  relatives  of  farmers, 
included  in  1861,  were  excluded  in  later  censuses;  (2)  certain  changes 
were  made  in  the  treatment  of  "  retired  "  persons. 


Transport. 

Dealing. 

Industrial  Seryioe 

.      2.1 

5-3 

5-4 

•      4.1 

..        6.5 

4.5 

.      4.6 

7.1 

4-0 

•      4.9 

..        7-8     , 

6.0 

.     5-6 

..        7-8 

...        6.7 

230 


THE   EVOLUTION   OF 


The  dealing  classes  show  likewise  a  great  increase.  Mer- 
chants and  agents  increase  from  285,138  to  363,037,  dealers 
in  money  are  about  30  per  cent,  more  numerous,  while 
insurance  employs  more  than  double  the  number  employed 
in  1881,  and  six  times  the  number  of  1871.  Taking  drapers 
and  mercers  as  indicative  of  the  dealing  class  in  a  staple 

DIAGRAM    (comparison   OF   ENGLISH    EMPLOYMENTS). 


Ei±raclUfe, 
Agricultaral 
aricLMining 


Manufcutunng 


1841 


1851 


1861 


1971 


1881 


trade,  we  find  an  increase  from  82,362  to  107,018,  or  29.9 
per  cent.  The  numbers  of  those  employed  in  thirteen  re- 
presentative retail  trades  have  increased  between  1881  and 
1 89 1  by  not  less  than  27.9  per  cent. 

When  we  look  at  these  figures  there  can  be  no  doubt  that 
one  indirect  result  of  the  increased  production  due  to  the 
application  of  machinery  has  been  increased  employment  in 


MODERN   CAPITALISM. 


231 


the  distributing  and  transport  industries.  This  increased 
employment  in  transport  is  by  no  means  confined  to  the 
new  services  of  steam  locomotion  by  land  and  sea.  The 
earlier  apprehensions  that  railways  would  destroy  road 
traffic  is  not  justified  by  experience.  Though  employment 
on  railways  has  of  course  grown  very  fast,  road  traffic  has 
increased  almost  in  the  same  ratio. 


Railways. 

BoadB. 

I84I 

.03 

.7 

1851 

.3 

.9 

1861 

•5 

l.I 

I87I 

..        .8 

1.2 

I88I 

1.2 

1-5 

I89I 

1.4 

2.8 

The  census  returns  for  the  United  States  show  clearly 
that  carts  and  horses  have  not  been  displaced  by  railways, 
or,  more  strictly  speaking,  that  railways  have  made  more 
cartage  work  than  they  have  taken  away.  In  1850  the 
manufacture  of  carriages  and  waggons  employed  15,590  men, 
in  1870  it  employed  54,928.  During  the  same  period  of 
railway  growth  the  number  of  horses  in  the  country  in- 
creased from  4>336,7i7  to  7,145,370.  In  fact,  while  the 
population  grew  66  per  cent.,  the  number  of  carriage  and 
cart  makers,  in  spite  of  the  increased  use  of  labour-saving 
machinery  in  their  manufacture,  grew  more  than  200  per 
cent. 

It  must,  however,  be  clearly  recognised  that  the  direct 
effect  of  machinery  upon  the  transport  industries  also  is  to 
cause  a  diminished  proportionate  employment  of  labour.  A 
comparison  of  the  two  chief  branches  of  steam  locomotion 
will  bring  this  home. 

Machinery  occupies  a  very  different  place  in  the  railway 
from  that  which  it  occupies  in  steam  transport  by  sea.  The 
engine  only  indirectly  determines  and  regulates  the  work  of 
the  majority  of  railway  men.  Most  of  them  are  not  tenders 
of  machinery.  Engine-driver,  stoker,  and  guard  are  alone  in 
close  direct  association  with  the  machine.  To  them  must  be 
added  those  engaged  in  construction  and  repair  within  the 
workshops.  Pointsmen  and  certain  station  officials  come 
next  in  proximity  to  the  machine ;  shunters  and  porters  are 
also   "tending"   machinery,    though   their  work    is  more 


232 


THE   EVOLUTION   OF 


directly  dominated  by  general  business  considerations.  But 
are  we  to  say  that  the  army  of  platelayers,  navvies,  etc., 
engaged  along  the  line  is  serving  machinery  instead  of  using 
tools  ?  ^  The  work  of  ticket  clerks  and  collectors  is  only 
governed  by  the  locomotive  in  a  very  indirect  way.  Though 
the  steam-engine  is  the  central  factor  in  railway  work,  the 
bulk  of  the  labour  is  skilled  or  unskilled  work  in  remote 
relation  to  the  machine.  This  explains  why  the  growth  of 
the  railway  industry,  after  the  chief  work  of  construction  has 
been  done,  is  not  attended  by  a  diminishing  proportion  of 
employment.  On  the  contrary,  we  find  that  railway  employ- 
ment increases  faster  than  mileage  and  railway  capital.  The 
following  statistics  of  railways  in  the  United  Kingdom 
illustrate  this  fact: — 


Year. 
185I 
186I 
1871 
1881 
1 891 


Mileage. 


Capital  (paid  up). 


Operatives. 
25,200 
10,865  ;^362,327,338  53,4°° 

15,376  i;552,66i,55i  84,900 

18,175  ;^745>S28,i62  139,500 

20,191  ;^9i9,425,i2i  186,700 

But  when  we  turn  to  the  shipping  trade,  where  a  much 
larger  proportion  of  workers  is  directly  concerned  with  the 
tending  and  direction  of  machinery,  and  trace  the  effect 
upon  employment  of  the  application  of  steam,  the  result  is 
very  different. 


Sailing  Vessels 

Steamers 

Men  on 

Men  on 

(Tonnage). 

(Tonnage). 

Sailing-ships. 

Steam-ships. 

1850 

3,396,359 

168,474 

142,730 

8,700 

i860 

4,204,360 

454,327 

145,487 

26,105 

1870 

4,577,855 

1,112,934 

147,207 

48,755 

1880 

3,851,045 

2,723,488 

108,668 

84,304 

1890 

2,907,405 

5,037,666 

84,008 

129,3662 

^  The  "steam-navvy"  is,  however,  making  digging  a  machine 
industry.  Thirteen  men  with  a  machine-navvy  can  do  the  work  of 
between  60  and  70  human  navvies. 

^  The  aggregate  effect  of  the  change  upon  employment  of  seamen 
is  traced  by  the  following  figures,  in  which  the  tonnage  of  sailing  and 
steam  vessels  is  massed  together : — 

Tonnage.  Men. 


1850 

•    3,564,833     . 

151.430 

i860 

.    4,658,687 

171,592 

1870 

.    5,690,789     . 

195,962 

1880 

■   6,574,513     • 

192  972 

1890 

•   7,945.071 

213.374 

MODERN   CAPITALISM. 


233 


If  we  take  the  period  1870-90,  during  which  there  is 
an  absolute  shrinkage  of  sailing  tonnage,  we  find  that  this 
shrinkage  is  accompanied  by  a  less  than  corresponding 
diminution  of  employment.  On  the  other  hand,  the 
tonnage  of  steamships  in  this  period  increased  more  than 
fourfold,  but  brought  with  it  an  increase  of  employment 
which  is  less  than  threefold. 

TONNAGE    OF   SHIPS    IN    RELATION   TO   EMPLOYMENT 
OF   SEAMEN. 


1850  i&60      1870       laSO       1690 

French  statistics  during  the  last  half  century  indicate  the 
same  general  movement  so  far  as  employment  is  concerned, 
though  the  movement  is  less  regular. 

There  is  the  same  decline  in  the  proportion  of  those 
engaged  in  agriculture,  though  less  rapid  than  in  England, 
the  same  shrinkage  of  the  proportion  engaged  in  manu- 
facture, and  generally  in  "  making "  industries,  and  the 
same  notable  expansion  of  the  "  dealing  "  classes.  A  rapid 
growth  of  the  professional  and  public  services  is  common 
to  England  and  France.  The  following  percentages  mark 
these  movements  in  France: — ^ 

■  M.  S.  Levasseur,  La  Population  Fran^aise.     Paris,  1889. 


234  THE   EVOLUTION    OF 


1856. 

1861. 

1866. 

1872. 

1876. 

1881, 

1886. 

Agricultura 

1 

classes    , 

52.9 

53-2 

51-5 

52.5 

53-0 

50.0 

47.8 

Industrial  . 

29.1 

27.4 

28.8 

24.1 

25.9 

25.6 

25.2 

Commercial 

•       4-5 

3-9 

4.0 

8.4 

10.7 

10.5 

II.5 

Professional,^ 

1 

1 

1 

public  service, 

persons  living 

-      9-1 

9.2 

9-5 

II. I 

10.3 

10.2 

II. I 

on    their    in- 

comes .         .  . 

These  facts  and  figures  seem  to  support  the  following 
conclusions : — 

( 1 )  That  along  with  the  increased  application  of  machinery 
to  the  textile  and  other  staple  manufactures  there  has  been 
in  these  industries  a  decrease  of  employment  relative  to 
the  growth  of  the  working  population. 

(2)  That  in  the  transport  industries  the  increase  of  em- 
ployment is  in  inverse  proportion  to  the  introduction  of 
machinery  into  the  several  branches  as  a  dominating  factor. 

(3)  That  the  considerable  diminution  of  agricultural  em- 
ployment is  not  compensated  by  any  proportionate  increase 
of  manufacturing  employment,  but  that  the  displaced  agricul- 
tural labour  finds  employment  in  such  branches  of  the  trans- 
port and  distributive  trade  as  are  less  subject  to  machinery. 

In  the  rough  estimate  of  the  effect  of  machinery  upon 
employment,  its  influence  upon  English  agriculture  has 
been  left  untouched  by  reason  of  the  inherent  complexity 
of  the  forces  which  are  operative.  But  it  must  not  be 
forgotten  that  by  far  the  most  important  factor  in  the 
decline  of  English  agricultural  employment  is  the  transport 
machinery  which  has  brought  the  produce  of  distant 
countries  into  direct  competition  with  English  agricultural 
produce. 

So  far,  therefore,  as  the  statistics  of  employments  present 
a  just  register  of  the  influence  of  machinery  upon  demand 
for  labour,  we  are  driven  to  conclude  that  the  net  influence 
of  machinery  is  to  diminish  employment  so  far  as  those 
industries   are   concerned    into   which   machinery  directly 

^  From  1876  the  transport  services,  which  in  1886  amounted  to  2.8 
per  cent,  of  the  income-receiving  population,  were  included  under 
commercial.  Taking  this  into  consideration,  a  comparison  of  the 
industrial  and  the  commercial  population  of  1866  and  1886  shows  that 
while  the  former  falls  from  28.8  to  25.2,  the  latter  rises  from  4.0  to  8.7. 


MODERN   CAPITALISM.  235 

enters,  and  to  increase  the  demand  in  those  industries 
which  machinery  affects  but  slightly  or  indirectly.  If  this 
is  true  of  England,  which,  having  the  start  in  the  develop- 
ment of  the  factory  system,  has  to  a  larger  extent  than  any 
other  country  specialised  in  the  arts  of  manufacture,  it  is 
probable  that  the  net  effect  of  machinery  upon  the  demand 
for  labour  throughout  the  industrial  world  has  been  to 
throw  a  larger  proportion  of  the  population  into  industries 
where  machinery  does  not  directly  enter.  This  general 
conclusion,  however,  for  want  of  exact  statistical  inquiries 
conducted  upon  a  single  basis,  can  only  be  accepted  as 
probable. 

§  4.  (2)  Effects  of  Machinery  upon  the  Regularity  of  Em- 
ployment.— The  influence  of  machinery  upon  regularity  of 
employment  has  a  twofold  significance.  It  has  a  direct 
bearing  upon  the  measurement  of  demand  for  labour, 
which  must  take  into  account  not  only  the  number  of 
persons  employed,  but  the  quantity  of  employment  given 
to  each.  It  has  also  a  wider  general  effect  upon  the  moral 
and  industrial  condition  of  the  workers,  and  through  this 
upon  the  efficiency  of  labour,  which  is  attracting  increased 
attention  among  students  of  industrial  questions.  The 
former  consideration  alone  concerns  us  here.  We  have  to 
distinguish — {a)  the  effects  of  the  introduction  of  machinery 
as  a  disturbant  of  regularity  of  labour;  {b)  the  normal 
effects  of  machine-production  upon  regularity  of  labour. 

(fl)  The  direct  and  first  effect  of  the  introduction  of 
machinery  is,  as  we  have  seen,  to  displace  labour.  The 
machinery  causes  a  certain  quantity  of  unemployment, 
apart  from  the  consideration  of  its  ultimate  effect  on  the 
number  of  persons  to  whom  employment  is  given.  Pro- 
fessor Shield  Nicholson  finds  two  laws  or  tendencies  which 
operate  in  reducing  this  disturbing  influence  of  machiner)'. 
He  holds  (i)  that  a  radical  change  made  in  the  methods 
of  production  will  be  gradually  and  continuously  adopted ; 
(2)  that  these  radical  changes — these  discontinuous  leaps 
— tend  to  give  place  to  advances  by  small  increments  of 
invention.^ 

History  certainly  shows  that  the  fuller  application  of 
great  inventions  has  been  slow,  though  Professor  Nicholson 

'  J.  S.  Nicholson,  Effects  of  Machinery  on  Wages,  p.  33. 


2$6  THE   EVOLUTION   OF 

somewhat  over-estimates  the  mobiUty  of  labour  and  its 
ability  to  provide  against  impending  changes.  The  story  of 
the  introduction  of  the  power-loom  discloses  terrible  suffer- 
ings among  the  hand-weavers  of  certain  districts,  in  spite  of 
the  gradual  manner  in  which  the  change  was  effected.  The 
fact  that  along  with  the  growth  of  the  power-loom  the 
number  of  hand-looms  was  long  maintained,  is  evidence  of 
the  immobility  of  the  hand-weavers,  who  kept  up  an  irregular 
and  ill-paid  work  through  ignorance  and  incapacity  to  adapt 
themselves  to  changed  circumstances.^  In  most  of  the 
cases  where  great  distress  has  been  caused,  the  directly 
operative  influence  has  not  been  introduction  of  machinery, 
but  sudden  change  of  fashion.  This  was  the  case  with  the 
crinoline-hoop  makers  of  Yorkshire,  the  straw-plaiters  of 
Bedfordshire,  Bucks,  Herts,  and  Essex.-  The  suddenly- 
executed  freaks  of  protective  tariffs  seem  likely  to  be  a 
fruitful  source  of  disturbance.  So  far  as  the  displacement 
has  been  due  to  new  applications  of  machinery,  it  is  no 
doubt  generally  correct  to  say  that  sufficient  warning  is 
given  to  enable  workers  to  check  the  further  flow  of  labour 
into  such  industries,  and  to  divert  it  into  other  industries 
which  are  growing  in  accordance  with  the  new  methods 
of  production,  though  much  suffering  is  inflicted  upon  the 
labour  which  is  already  specialised  in  the  older  method  of 
industry. 

Moreover,  the  changes  which  are  taking  place  in  certain 
machine  industries  favour  the  increasing  adaptability  of 
labour.  Many  machine  processes  are  either  common  to 
many  industries,  or  are  so  narrowly  distinguished  that  a 
fairly  intelligent  workman  accustomed  to  one  can  soon 
learn  another.  If  it  is  true  that  "the  general  ability,  which 
is  easily  transferable  from  one  trade  to  another,  is  every  year 
rising  in  importance  relatively  to  that  manual  skill  and 
technical  knowledge  which  are  specialised  in  one  branch  of 
industry,"^  we  have  a  progressive  force  which  tends  to 
minimise  the  amount  of  unemployment  due  to  new  applica- 
tions of  specific  machinery. 

Professor  Nicholson's  second  law  is,  however,  more  specu- 

^  Babbage,  Economy  of  Manufactures,  p.  230. 
'^  Cf.  Thorold  Rogers,  Political  Economy  (1869),  pp.  78,  79. 
^  Marshall,  Principles  of  Economics,  p.  607 ;  cf.  Cunningham,  Uses 
and  Abuses  of  Money,  p.  59.     See,  however,  infra  Chap.  ix. 


MODERN   CAPITALISM.  237 

lative  and  less  reliable  in  its  action.  It  seems  to  imply  some 
absolute  limit  to  the  number  of  great  inventions.  Radical 
changes  are  no  doubt  generally  followed  by  smaller  incre- 
ments of  invention;  but  we  can  have  no  guarantee  that 
new  radical  changes  quite  as  important  as  the  earlier  ones 
may  not  occur  in  the  future.  There  are  no  assignable  limits 
to  the  progress  of  mechanical  invention,  or  to  the  rate  at 
which  that  progress  may  be  effected.  If  certain  preliminary 
difficulties  in  the  general  application  of  electricity  as  a 
motor  can  be  overcome,  there  is  every  reason  to  believe 
that,  with  the  improved  means  of  rapidly  communicating 
knowledge  we  possess,  our  factory  system  may  be  reorganised 
and  labour  displaced  far  more  rapidly  than  in  the  case  of 
steam,  and  at  a  rate  which  might  greatly  exceed  the  capacity 
of  labour  to  adjust  itself  to  the  new  industrial  conditions. 
At  any  rate  we  are  not  at  liberty  to  take  for  granted  that 
the  mobility  of  labour  must  always  keep  pace  with  the 
application  of  new  and  labour-disturbing  inventions.  Since 
we  are  not  able  to  assume  that  the  market  will  be  extended 
pari  passu  with  the  betterment  in  methods  of  production,  it 
is  evident  that  improvements  in  machinery  must  be  reckoned 
as  a  normal  cause  of  insecurity  of  employment.  The  loss  of 
employment  may  be  only  "temporary,"  but  as  the  life  of  a 
working  man  is  also  temporary,  such  loss  may  as  a  disturb- 
ing factor  in  the  working  life  have  a  considerable  importance. 
§  5.  {b)  Whether  machinery,  apart  from  the  changes  due  to 
its  introduction,  favours  regularity  or  irregularity  of  employ- 
ment, is  a  question  to  which  a  tolerably  definite  answer  can 
be  given.  The  structure  of  the  individual  factory,  with  its 
ever-growing  quantity  of  expensive  machinery,  would  seem 
at  first  sight  to  furnish  a  direct  guarantee  of  regular  employ- 
ment, based  upon  the  self-interest  of  the  capitalist.  Some 
of  the  "  sweating "  trades  of  London  are  said  to  be  main- 
tained by  the  economy  which  can  be  effected  by  employers 
who  use  no  expensive  plant  or  machinery,  and  who  are 
able  readily  to  increase  or  diminish  the  number  of  their 
employees  so  as  to  keep  pace  with  the  demands  of  some 
"season"  trade,  such  as  fur-pulling  or  artificial  flowers. 
When  the  employer  has  charge  of  enormous  quantities  of 
fixed  capital,  his  individual  interest  is  strongly  in  favour  of 
full  and  regular  employment  of  labour.  On  this  account, 
then,  machinery  would  seem  to  favour  regularity  of  employ- 


238  THE    EVOLUTION   OF 

ment.  On  the  other  hand,  Professor  Nicholson  has  ample 
evidence  in  support  of  his  statement  that  "  great  fluctua- 
tions in  price  occur  in  those  commodities  which  require  for 
their  production  a  large  proportion  of  fixed  capital.  These 
fluctuations  in  prices  are  accompanied  by  corresponding 
fluctuations  m  wages  and  irregularity  of  employment."^  In 
a  word,  while  it  is  the  interest  of  each  producer  of 
mahcine-made  goods  to  give  regular  employment,  some 
wider  industrial  force  compels  him  to  irregularity.  What 
is  this  force?  It  is,  uncontrolled  machinery.  In  the 
several  units  of  machine-production,  the  individual  fac- 
tories or  mills,  we  have  admirable  order  and  accurate 
adjustment  of  parts ;  in  the  aggregate  of  machine-production 
we  have  no  organisation,  but  a  chaos  of  haphazard  specula- 
tion. "  Industry  has  not  yet  adapted  itself  to  the  changes 
in  the  environment  produced  by  machinery."     That  is  all. 

Under  a  monetary  system  of  commerce,  though  commo- 
dities still  exchange  for  commodities,  it  is  an  essential  con- 
dition of  that  exchange  that  those  who  possess  purchasing 
power  shall  be  willing  to  use  a  sufficient  proportion  of  it  to 
demand  consumptive  goods.  Otherwise  the  production  of 
productive  goods  is  stimulated  unduly  while  the  demand 
for  consumptive  goods  is  checked, — the  condition  which 
the  business  man  rightly  regards  as  over-supply  of  the 
material  forms  of  capital.  When  production  was  slower, 
markets^  narrower,  credit  less  developed,  there  was  less 
danger  of  this  big  miscalculation,  and  the  corrective  forces 
of  industry  were  more  speedily  effective.  But  modern 
machinery  has  enormously  expanded  the  size  of  markets, 
the  scale  of  competition,  the  complexity  of  demand,  and 
production  is  no  longer  for  a  small,  local,  present  demand, 
but  for  a  large,  world,  future  demand.  Hence  machinery  is 
the  direct  material  cause  of  these  great  fluctuations  which 
bring,  as  their  most  evil  consequence,  irregularity  of  wages 
and  employment. 

^  Effects  of  Machinery  on  Wages,  p.  66. 

^  An  increase  in  the  space-area  of  a  market  may,  however,  in  some 
cases  make  a  trade  more  steady,  especially  in  the  case  of  an  article 
of  luxury  subject  to  local  fluctuations  of  fashion,  etc.  A  narrow  silk 
market  for  England  meant  fluctuating  employment  and  low  skill.  An 
open  market  gave  improved  skill  and  stability,  for  though  silk  is  still 
the  most  unsteady  of  the  textile  industries,  it  is  far  less  fluctuating  than 
was  the  case  in  the  eighteenth  century.     (Cf.  Porter,  p.  225.) 


MODERN    CAPITALISM.  239 

How  far  does  this  tend  to  right  itself?  Professor 
Nicholson  believes  that  time  will  compel  a  better  adjust- 
ment between  machinery  and  its  environment 

"The  enormous  development  of  steam  communication 
and  the  spread  of  the  telegraph  over  the  whole  globe  have 
caused  modern  industry  to  develop  from  a  gigantic  star-fish, 
any  of  whose  members  might  be  destroyed  without  affecting 
the  rest,  into  a  /xeya  (aJov  which  is  convulsed  in  agony  by  a 
slight  injury  in  one  part.  A  depression  of  trade  is  now 
felt  as  keenly  in  America  and  even  in  our  colonies  as  it  is 
here.  Still,  in  the  process  of  time,  with  the  increase  of 
organisation  and  decrease  of  unsound  speculation,  this 
extension  of  the  market  must  lead  to  greater  stability  of 
prices ;  but  at  present  the  disturbing  forces  often  outweigh 
altogether  the  supposed  principal  elements."^ 

The  organisation  of  capital  under  the  pressure  of  these 
forces  is  doubtless  proceeding,  and  such  organisation,  when 
it  has  proceeded  far  enough,  will  indisputably  lead  to  a 
decrease  of  unsound  speculation.  But  these  steps  in 
organisation  have  been  taken  precisely  in  those  industries 
which  employ  large  quantities  of  fixed  capital,  and  the 
admitted  fact  that  severe  fluctuations  still  take  place  in 
these  industries  is  proof  that  the  steadying  influences  of 
such  organisation  have  not  yet  had  time  to  assert  them- 
selves to  much  purpose.  The  competition  of  larger  and 
larger  masses  of  organised  capital  seems  to  induce  heavier 
speculation  and  larger  fluctuations.  Not  until  a  whole 
species  of  capital  is  organised  into  some  form  or  degree  of 
"combination"  is  the  steadying  influence  of  organisation 
able  to  predominate. 

§  6.  But  there  is  also  another  force  which,  in  England  at 
any  rate,  under  the  increased  application  of  machinery,  makes 
for  an  increase  rather  than  a  diminution  of  speculative 
production.  It  has  been  seen  that  the  proportion  of 
workers  engaged  in  producing  comforts  and  luxuries  is 
growing,  while  the  proportion  of  those  producing  the  prime 
necessaries  of  life  is  declining.  How  far  the  operation  of 
the  law  of  diminishing  returns  will  allow  this  tendency  to 
proceed  we  cannot  here  discuss.  But  statistics  show  that 
this  is  the  present  tendency  both  in  England  and  in  the 
United  States.  Now  the  demand  for  comforts  and  luxuries 
^  Op.  cii.,  p.  1 17. 


240  THE   EVOLUTION   OF 

is  essentially  more  irregular  and  less  amenable  to  com- 
mercial calculation  than  the  demand  for  necessaries.  The 
greatest  economies  of  machine-production  are  found  in 
industries  where  the  demand  is  largest,  steadiest,  and  most 
calculable.  Hence  the  effect  of  machinery  is  to  drive  ever 
and  ever  larger  numbers  of  workers  from  the  less  to  the 
more  unsteady  employments.  Moreover,  there  is  a  marked 
tendency  for  the  demand  for  luxuries  to  become  more 
irregular  and  less  amenable  to  calculation,  and  a  corre- 
sponding irregularity  is  imposed  upon  the  trades  engaged 
in  producing  them.  Twenty  years  ago  it  was  possible  for 
Coventry  ribbon-weavers  to  "make  to  stock"  during  the 
winter  months,  for  though  silk  ribbons  may  always  be 
classed  as  a  luxury,  certain  patterns  commanded  a  toler- 
ably steady  sale  year  after  year.  Now  the  fluctuations  of 
fashion  are  much  sharper  and  more  frequent,  and  a  far 
larger  proportion  of  the  consumers  of  ribbons  are  affected 
by  fashion-changes.  Hence  it  has  become  more  and  more 
difficult  to  forecast  the  market,  less  and  less  is  made  to 
stock,  more  and  more  to  order,  and  orders  are  given  at 
shorter  and  shorter  notice.  So  looms  and  weavers  kept 
idle  during  a  large  part  of  the  year  are  driven  into  fevered 
activity  of  manufacture  for  short  irregular  periods.  The 
same  applies  to  many  other  season  and  fashion  trades. 
The  irregularity  of  demand  prevents  these  trades  from 
reaping  the  full  advantages  of  the  economies  of  machinery, 
though  the  partial  application  of  machinery  and  power 
facilitates  the  execution  of  orders  at  short  notice.  Hence 
the  increased  proportion  of  the  community's  income  spent 
on  luxuries  requires  an  increased  proportion  of  the  labour 
of  the  community  to  be  expended  in  their  production. 
This  signifies  a  drifting  of  labour  from  the  more  steady 
forms  of  employment  to  those  which  are  less  steady  and 
whose  unsteadiness  is  constantly  increasing.  A  larger  pro- 
portion of  town  workers  is  constantly  passing  into  trades 
connected  with  preparing  and  preserving  animal  and  vege- 
table substances,  to  such  industries  as  the  hat  and  bonnet, 
confectionery,  bookbinding,  trades  affected  by  weather,  holi- 
day and  season  trades,  or  those  in  which  changes  in  taste 
and  fashion  are  largely  operative. 

Thus  it  appears  there  are  three  modes  in  which  modern 
capitalist  methods  of  production  cause  temporary  unemploy- 


MODERN  CAPITALISM. 


241 


ment.  (i)  Continual  increments  of  labour-saving  machinery 
displace  a  number  of  workers,  compelling  them  to  remain 
wholly  or  partially  unemployed,  until  they  have  "  adjusted  " 
themselves  to  the  new  economic  conditions.  (2)  Mis- 
calculation and  temporary  over-production,  to  which 
machine  industries  with  a  wide  unstable  market  are  parti- 
cularly prone,  bring  about  periodic  deep  depressions  of 
"trade,"  temporarily  throwing  out  of  work  large  bodies  of 
skilled  and  unskilled  labour.  (3)  Economies  of  machine- 
production  in  the  staple  industries  drive  an  increasing 
proportion  of  labour  with  trades  which  are  engaged  in 
supplying  commodities,  the  demand  for  which  is  more 
irregular,  and  in  which  therefore  the  fluctuations  in  demand 
for  labour  must  be  greater. 

Most  economists,  still  deeply  imbued  with  a  belief  in  the 
admirable  order  and  economy  of  "the  play  of  economic 
forces,"  appear  to  regard  all  unemployment  not  assignable 
to  individual  vice  or  incapacity  as  the  natural  and  necessary 
effect  of  the  process  of  adjustment  by  which  industrial  pro- 
gress is  achieved,  ignoring  altogether  the  two  latter  classes  of 
consideration.  There  is,  however,  reason  to  believe  that  in 
an  average  year  a  far  larger  number  of  the  "unemployed" 
at  any  given  time  owe  their  unemployment  to  a  temporary 
depression  of  the  trade  in  which  they  are  engaged,  than  to 
the  fluctuations  brought  about  by  organic  changes  in  the 
economic  structure  of  the  trade. 

The  size  and  importance  of  the  "  unemployment "  due 
primarily  to  trade  depressions  is  very  imperfectly  appreci- 
ated. The  following  statistics  of  the  condition  of  the 
skilled  labour  market  in  the  period  1886-92,  based  upon 
the  reports  of  twenty-two  trades  unions,  have  an  important 
bearing  on  this  point : — 

Year.  Percentage  out  of  work. 

1886        .  .10.1  per  cent.^ 


1887 
1888 
1889 
1890 
1891 
1892 
1893 


Board  of  Trade  Journal, 
For  twenty-six  societies 


8.6 
4.4 
1.8 
2.6 
4-45 
7-33 
7.9= 


November  1892. 


16 


242  THE   EVOLUTION    OF 

When  it  is  remembered  that  these  figures  apply  only 
to  the  well-organised  trades  unions,  which,  as  a  rule,  com- 
prise the  best  and  most  highly  -  skilled  workers  in  the 
several  trades,  who  are  less  likely  than  others  to  be  thrown 
out  in  a  "  slack  time,"  that  the  building  and  season  trades 
are  not  included  in  the  estimate,  and  that  women's  industries, 
notoriously  more  irregular  than  men's,  are  altogether  ignored, 
it  will  be  evident  that  these  statistics  very  inadequately  re- 
present the  proportion  of  unemployment  for  the  aggregate 
of  the  working  classes  at  the  several  periods.  The  Report 
on  Principal  and  Minor  Textile  Trades  deducts  lo  per  cent, 
from  the  normal  wages  to  represent  unemployment,  though 
the  year  1885,  to  which  the  figures  refer,  is  spoken  of  as 
"fairly  representative  of  a  normal  year."^ 

The  injury  inflicted  upon  the  wages,  working  efficiency, 
and  character  of  the  working  classes  by  irregular  employ- 
ment is,  however,  very  inadequately  represented  by  figures 
indicating  the  average  of  "  unemployment "  during  a  long 
period.  In  the  first  place,  in  such  an  estimate  no  allow- 
ance is  made  for  the  "short  time,"  often  worked  for 
months  together  by  large  bodies  of  operatives.  Secondly, 
in  measuring  the  evil  of  "unemployment,"  we  must  look 
rather  to  the  maximum  than  to  the  mean  condition.  If  a 
man  is  liable  to  have  his  food  supply  cut  off  for  a  month  at 
a  time,  no  estimate  showing  that  on  the  average  he  has 
more  than  enough  to  eat  and  drink  will  fairly  represent  the 
danger  to -which  he  is  exposed.  If  once  in  every  ten  years 
we  find  that  some  10  per  cent,  of  the  skilled  workers,  and 
a  far  larger  percentage  of  unskilled  workers,  are  out  of 
employment  for  months  together,  these  figures  measure 
the  economic  malady  of  "unemployment,"  which  is  in 
no  sense  compensated  by  the  full  or  excessive  labour  of 
periods  of  better  trade. 

§  7.  Our  reasoning  from  the  ascertained  tendencies  of 
machine-production  points  to  the  conclusion  that,  having 
regard  to  the  two  prime  constituents  in  demand  for  labour, 
the  number  of  those  employed,  and  the  regularity  of  employ- 
ment, machinery  does  not,  under  present  conditions,  gener- 
ally favour  an  increased  steady  demand  for  labour.  It  tends 
to  drive  an  increased  proportion  of  labour  in  three  directions. 

(i)  To  the  invention,  construction,  and  maintenance  of 
^  Page  xii. 


MODERN   CAPITALISM.  243 

machinery  to  make  machines,  the  labour  of  machine- 
making  being  continually  displaced  by  machines,  and  being 
thus  driven  to  the  production  of  machines  more  remote 
from  the  machines  directly  engaged  in  producing  con- 
sumptive goods.  The  labour  thus  engaged  must  be  in  an 
ever-diminishing  proportion  to  a  given  quantity  of  consump- 
tion. Nothing  but  a  great  increase  in  the  quantity  of  con- 
sumption, or  the  opening  of  new  varieties  of  consumption, 
can  maintain  or  increase  the  demand  for  labour  in  these 
machine-making  industries. 

(2)  To  continual  specialisation,  subdivision,  and  refine- 
ment in  the  arts  of  distribution.  The  multiplication  of 
merchants,  agents,  retailers,  which,  in  spite  of  forces  mak- 
ing for  centralisation  in  distributive  work,  is  so  marked  a 
feature  in  the  English  industry  of  the  last  forty  years,  is 
a  natural  result  of  the  influence  of  machinery,  in  setting 
free  from  "  making  "  processes  an  increased  proportion  of 
labour. 

(3)  To  the  supply  of  new  forms  of  wealth,  which  are  either 
(a)  wholly  non-material — i.e.,  intellectual,  artistic,  or  other 
personal  services;  (d)  partly  non-material — e.g.,  works  of 
art  or  skill,  whose  value  consists  chiefly  in  the  embodiment 
of  individual  taste  or  spontaneous  energy,  or  (c)  too 
irregular  or  not  sufficiently  extended  in  demand  to  admit 
the  application  of  machinery.  The  learned  professions,  art, 
science,  and  literature,  and  those  branches  of  labour  engaged 
in  producing  luxuries  and  luxurious  services  furnish  a  con- 
stantly increasing  employment,  though  the  supply  of  labour 
is  so  notoriously  in  excess  of  the  demand  in  all  such 
employments  that  a  large  percentage  of  unemployment  is 
chronic. 

So  long  then  as  a  community  grows  in  numbers,  so  long 
as  individuals  desire  to  satisfy  more  fully  their  present  wants 
and  continue  to  develop  new  wants,  forming  a  higher  or 
more  intricate  standard  of  consumption,  there  is  no  evi- 
dence to  justify  the  conclusion  that  machinery  has  the 
effect  of  causing  a  net  diminution  in  demand  for  labour, 
though  it  tends  to  diminish  the  proportion  of  employment 
in  the  "manufacturing"  industries;  but  there  is  strong  reason 
to  believe  that  it  tends  to  make  employment  more  unstable, 
more  precarious  of  tenure,  and  more  fluctuating  in  market 
value. 


244 


CHAPTER  IX. 

MACHINERY   AND   THE   QUALITY   OF   LABOUR. 

§  I.  Kinds  of  Labour  which  Machinery  supersedes. 

§  2.  Influence  of  Machine-evolution  upon  intensity  of  physical 

work. 
§  3.  Machinery  and  the  length  of  the  working  day. 
%  4.   The  Education  of  Working  with  Machinery. 
§  5.   The  levelling  tendency  of  Machinery — The  subordination 

of  individual  capacity  in  work. 

§  I.  In  considering  the  influence  of  Machinery  upon  the 
quahty  of  labour — i.e.,  skill,  duration,  intensity,  intel- 
lectuality, etc.,  we  have  first  to  face  two  questions — What 
are  the  qualities  in  which  machinery  surpasses  human 
labour  ?  What  are  the  kinds  of  work  in  which  machinery 
displaces  man  ?  Now,  since  the  whole  of  industrial  work 
consists  in  moving  matter,  the  advantage  of  machinery 
must  consist  in  the  production  and  disposition  of  motive 
power.  The  general  economies  of  machinery  were  found 
to  be  two^ — (i)  The  increased  quantity  of  motive  force 
it  can  apply  to  industry;  (2)  greater  exactitude  in  the 
regular  application  of  motive  force  (a)  in  time — the  exact 
repetition  of  the  same  acts  at  regulated  intervals,  or  greater 
evenness  in  continuity,  {J>)  in  place — exact  repetition 
of  the   same  movements  in   space.^     All  the  advantages 

^  Cf.  supra,  chap.  iii.  §  2. 

'^  Karl  Marx  ranks  the  chief  economies  of  machinery  under  two 
heads — (i)  Machinery  supersedes  the  skill  of  men  working  with  tools. 
"  The  machine,  which  is  the  starting-point  of  the  industrial  revolution, 
supersedes  the  workman,  who  handles  a  single  tool,  by  a  mechanism 
operating  with  a  number  of  similar  tools,  and  set  in  motion  by  a 
single  motive  power,  whatever  the  form  of  that  power  may  be."     (2) 


THE  EVOLUTION  OF  MODERN  CAPITALISM.     245 

imputed  to  machinery  in  the  economy  of  human  time,  the 
utilisation  of  waste  material,  the  display  of  concentrated 
force  or  the  delicacy  of  manipulation,  are  derivable  from 
these  two  general  economies.  Hence  it  follows  that  wher- 
ever the  efficiency  of  labour  power  depends  chiefly  upon  the 
output  of  muscular  force  in  motive  power,  or  precision  in 
the  regulation  of  muscular  force,  machinery  will  tend  to 
displace  human  labour.  Assuming,  therefore,  that  displaced 
labour  finds  other  employment,  it  will  be  transferred  to  work 
where  machinery  has  not  the  same  advantage  over  human 
labour — that  is  to  say,  to  work  where  the  muscular  strain  or 
the  need  for  regularity  of  movement  is  less.  At  first  sight 
it  will  thus  seem  to  follow  that  every  displacement  of  labour 
by  machinery  will  bring  an  elevation  in  the  quality  of  labour, 
that  is,  will  increase  the  proportion  of  labour  in  employ- 
ments which  tax  the  muscles  less  and  are  less  monotonous. 
This  is  in  the  main  the  conclusion  towards  which  Professor 
Marshall  inclines.^ 

So  far  as  each  several  industry  is  concerned,  it  has  been 
shown  that  the  introduction  of  machinery  signifies  a  net 
reduction  of  employment,  unless  the  development  of  trade 
is  largely  extended  by  the  fall  of  price  due  to  the  diminu- 
tion in  expenses  of  production.  It  cannot  be  assumed  as  a 
matter  of  course  that  the  labour  displaced  by  the  introduc- 
tion of  automatic  folders  in  printing  will  be  employed  in  less 
automatic  work  connected  with  printing.  It  may  be  diverted 
from  muscular  monotony  in  printing  to  the  less  muscular 
monotony  of  providing  some  new  species  of  luxury,  the 
demand  for  which  is  not  yet  sufficiently  large  or  regular  to 
justify  the  application  of  labour-saving  machinery.  But 
even  assuming  that  the  whole  or  a  large  part  of  the  dis- 
placed labour  is  engaged  in  work  which  is  proved  to  have 
been  less  muscular  or  less  automatic  by  the  fact  that  it  is 
not  yet  undertaken  by  machinery,  it  does  not  necessarily 
follow  that  there  is  a  diminution  in  the  aggregate  of  physical 
energy  given  out,  or  in  the  total  "  monotony"  of  labour. 

Machinery  supersedes  the  strength  of  man.  "  Increase  in  the  size  of 
a  machine,  and  in  the  number  of  its  working  tools,  calls  for  a  more 
massive  mechanism  to  drive  it ;  and  this  mechanism  requires,  in  order 
to  overcome  its  resistance,  a  mightier  moving  power  than  that  of  man." 
{Capital,  vol.  ii.  pp.  370,  371.) 
1  Principles  of  Economics,  2nd  edit.,  pp.  314,  322. 


246  THE  EVOLUTION   OF 

One  direct  result  of  the  application  of  an  increased  pro- 
portion of  labour  power  to  the  kinds  of  work  which  are  less 
"muscular"  and  less  "automatic"  in  character  will  be  a 
tendency  towards  greater  division  of  labour  and  more 
specialisation  in  these  employments.  Now  the  economic 
advantages  of  increased  specialisation  can  only  be  obtained 
by  increased  automatic  action.  Thus  the  routine  or  auto- 
matic character,  which  constituted  the  monotony  of  the 
work  in  which  machinery  displaced  these  workers,  will  now 
be  imparted  to  the  higher  grades  of  labour  in  which  they 
are  employed,  and  these  in  their  turn  will  be  advanced 
towards  a  condition  which  will  render  them  open  to  a  new 
invasion  of  machinery. 

Since  the  number  of  productive  processes  falling  under 
machinery  is  thus  continually  increased,  it  will  be  seen  that 
we  are  not  entitled  to  assume  that  every  displacement  of 
labour  by  machinery  will  increase  the  proportion  of  labour 
engaged  in  lighter  and  more  interesting  forms  of  non- 
mechanical  labour. 

§  2.  Nor  is  it  shown  that  the  growth  of  machine-produc- 
tion tends  to  diminish  the  total  physical  strain  upon  the 
worker,  though  it  greatly  lessens  the  output  of  purely  mus- 
cular activity.  As  regards  those  workers  who  pass  from 
ordinary  manual  work  to  the  tending  of  machinery,  there 
is  a  good  deal  of  evidence  to  show  that,  in  the  typical 
machine  industries,  their  new  work  taxes  their  phvsical 
vigour  quite  as  severely  as  the  old  work.  Professor  Shield 
Nicholson  quotes  the  following  striking  statement  from  the 
Cotton  Factory  Times : — "  It  is  quite  a  common  occurrence 
to  hear  young  men  who  are  on  the  best  side  of  thirty  years 
of  age  declare  they  are  so  worked  up  with  the  long  mules, 
coarse  counts,  quick  speeds,  and  inferior  material,  that  they 
are  fit  for  nothing  at  night,  only  going  to  bed  and  taking  as 
much  rest  as  circumstances  will  allow.  There  are  few 
people  who  will  credit  such  statements;  nevertheless  they 
are  true,  and  can  be  verified  any  day  in  the  great  majority 
of  the  mills  in  the  spinning  districts." 

Schulze-Gaevernitz  shows  that  the  tendency  in  modern 
cotton-spinning  and  weaving,  especially  in  England,  has 
been  both  to  increase  the  number  of  spindles  and  looms 
which  an  operative  is  called  upon  to  tend,  and  to  increase 
the  speed  of  spinning,     "  A  worker  tends  to-day  more  than 


MODERN   CAPITALISM.  247 

twice  or  nearly  three  times  as  much  machinery  as  his  father 
did ;  the  number  of  machines  in  use  has  increased  more 
than  five-fold  since  that  time,  while  the  workers  have  not 
quite  doubled  their  numbers."^  With  regard  to  speed, 
"  since  the  beginning  of  the  seventies  the  speed  of  the 
spinning  machines  alone  has  increased  about  15  per  cent."* 

We  are  not,  however,  at  liberty  to  infer  from  Schulze- 
Gaevernitz's  statement  regarding  the  increased  number  of 
spindles  and  looms  an  operative  tends,  that  an  intensifica- 
tion of  labour  correspondent  with  this  increase  of  machinery 
has  taken  place,  nor  can  the  increased  output  per  operative 
be  imputed  chiefly  to  improved  skill  or  energy  of  the 
operative.  Much  of  the  labour-saving  character  of  recent 
improvements,  especially  in  the  carding,  spinning,  and  inter- 
mediate processes,  has  reduced  to  an  automatic  state  work 
which  formerly  taxed  the  energy  of  the  operative,  who  has 
thereby  been  enabled  to  tend  more  machinery  and  to  quicken 
the  speed  without  a  net  increase  of  working  energy. 

In  the  carding,  slubbing,  intermediate,  roving,  and  spin- 
ning machinery  there  is  in  every  case  an  increase  in  the 
amount  of  machinery  tended.  But  carding  machinery  has 
been  revolutionised  within  the  last  few  years ;  the  drawing 
frame  has  been  made  to  stop  automatically  when  there  is  a 
fault,  thus  relieving  the  tender  of  a  certain  amount  of  super- 
vision ;  in  the  slubbing,  intermediate,  and  roving  frames 
certain  detailed  improvements  have  been  effected,  as  is  also 
the  case  in  the  spinning  mules  and  sizing  machines. 

To  some  extent  the  increased  quantity  of  spindles,  etc., 
and  increased  speed  may  be  regarded  as  set  off  by  relief 
due  to  these  improvements.  Moreover,  though  there  has 
no  doubt  been  some  general  speeding  up,  any  exact  measure- 
ment is  hardly  possible,  for  the  speed  of  machinery  is  very 
often  regulated  by  the  amount  of  work  each  process  is  made 
to  do;  for  example,  if  a  roving  frame  makes  a  coarse 
hank,  the  speed  of  the  spindles  does  not  require  to  be  so 
great  as  when  the  hank  is  finer;  in  that  case  the  mule  draws 
out  the  sliver  to  a  greater  extent  than  when  the  roving  is 
finer,  or,  in  other  words,  the  mule  in  one  case  does  the  work 
of  the  roving  frame  to  a  certain  extent. 

The  general  opinion  seems  to  be  that  in  the  spinning 

^  Der  Grossbetrieb,  p.  120.  '  Ibid.,  p.  117. 


248  THE   EVOLUTION   OF 

mills,  roughly  speaking,  75  per  cent,  of  the  increased  out- 
put per  operative  may  be  imputed  to  improved  machinery, 
25  per  cent,  to  increased  intensity  of  labour  in  regard  to 
quantity  of  spindles  or  "  speeding  up." 

In  the  weaving  processes  more  specific  measurement  is 
possible,  though  even  there  much  depends  upon  the  quality 
of  yarn  that  is  used.  Here  a  reduction  in  the  working  day 
is  followed  by  an  increase  in  speed  without  any  labour- 
saving  improvements.  Previous  to  the  Factory  legislation 
of  1878,  the  speed  of  looms  was  generally  from  170  to  190 
picks  per  minute  during  the  ten  hours'  day.  In  the  course 
of  about  two  years  after  the  reduction  of  hours  (6  per  cent.) 
the  general  speed  had  become  190  to  200  picks,  without 
change  in  machinery  or  raw  material,  a  growth  which  must 
have  proportionately  increased  the  intensity  of  the  work  of 
weaving.  A  deterioration  in  the  quality  of  the  raw  material 
used  for  producing  cotton  cloth  is  also  commonly  assigned 
as  a  fact  involving  more  care  on  the  part  of  the  weaver, 
and  increased  danger  and  disagreeability  of  work  owing 
to  the  heavy  sizing  and  steaming  it  has  brought  into 
vogue.  It  is  not  easy  to  argue  much  respecting  increased 
intensity  of  labour  from  the  increased  average  of  looms 
attended,  for,  as  was  recently  admitted  in  evidence  before 
the  Labour  Commission,  everything  depends  upon  the  class 
of  looms  and  of  goods  they  are  manufacturing.  "  It  is  quite 
as  easy  to  drive  five  looms  of  some  classes  as  two  of  others."^ 
But  the  prevalence  of  the  "  driving "  system,  by  which  the 
overlookers  are  paid  a  bonus  on  the  product  of  the  looms 
under  their  charge,  has  admittedly  induced,  as  it  was 
obviously  designed  to  do,  an  increased  intensity  of  labour. 

Summing  up  the  evidence,  we  are  able  to  conclude  that 
the  shortening  of  working  hours  and  the  improvements  in 
machinery  has  been  attended  by  an  increased  effort  per 
unit  of  labour  time.  In  the  words  of  an  expert,  "  the 
change  to  those  actually  engaged  in  practical  work  is  to 
lessen  the  amount  of  hard  manual  work  of  one  class,  but 
to  increase  their  responsibility,  owing  to  being  placed  in 
charge  of  more  machinery,  and  that  of  a  more  expensive 
kind  ;  while  the  work  of  the  more  lowly  skilled  will  be 
intensified,  owing  to  increased  production,  and  that  from 

*  Evidence  given  by  Mr.  T.  Birtwistle. 


MODERN   CAPITALISM.  249 

an  inferior  raw  material.  I  mean  that  to  the  operative  the 
improvements  in  machinery  have  been  neutralised  by  the 
inferior  quality  of  raw  material  used,  and  I  think  it  is  fair 
to  assume  that  their  work  has  been  intensified  at  least  in 
proportion  to  the  increase  of  spindles,  etc" 

The  direct  evidence  drawn  from  this  most  highly-evolved 
machine  industry  seems  to  justify  the  general  opinion 
expressed  by  Professor  Nicholson,  **  It  is  clear  that  the 
use  of  machines,  though  apparently  labour-saving,  often 
leads  to  an  increase  in  the  quantity  of  labour^  negatively, 
by  not  developing  the  mind,  positively  by  doing  harm  to 
the  body."i 

§  3.  When  any  muscular  or  other  physical  effort  is  required 
it  is  pretty  evident  that  an  increased  duration  or  a  greater 
continuity  in  the  slighter  effort  may  tax  the  body  quite  as 
severely  as  the  less  frequent  or  constant  application  of  a 
much  greater  bodily  force.  There  can  be  no  question  but 
that  in  a  competitive  industrial  society  there  exists  a  tend- 
ency to  compensate  for  any  saving  of  hard  muscular,  or 
other  physical  effort  afforded  by  the  intervention  of 
machinery  in  two  ways  :  first,  by  "  forcing  the  pace " — 
/.<?.,  compelling  the  worker  to  attend  more  machines  or  to 
work  more  rapidly,  thus  increasing  the  strain,  if  not  upon 
the  muscles,  then  upon  the  nerves ;  secondly,  by  extending 
the  hours  of  labour.  A  lighter  form  of  labour  spread  over 
an  increased  period  of  time,  or  an  increased  number  of 
minor  muscular  exertions  substituted  for  a  smaller  number 
of  heavier  exertions  within  the  same  period  of  time,  may 
of  course  amount  to  an  increased  tax  upon  the  vital  energy. 
It  is  not  disputed  that  a  general  result  of  the  factory  system 
has  been  to  increase  the  average  length  of  the  working  day, 
if  we  take  under  our  survey  the  whole  area  of  machine- 
production  in  modern  industrial  communities.  This  is  only 
in  part  attributable  to  the  fact  that  workers  can  be  induced  to 
sell  the  same  daily  output  of  physical  energy  as  before,  while 
in  many  cases  a  longer  time  is  required  for  its  expenditure. 

1  Op.  cit.,  p.  82.  Babbage,  in  laying  stress  on  one  of  the  "advantages" 
of  machinery,  makes  an  ingenuous  admission  of  this  "  forcing"  power. 
"  One  of  the  most  singular  advantages  we  derive  from  machinery  is  the 
check  it  affords  against  the  inattention,  the  idleness,  or  the  knavery  of 
human  agents."  {Economy  of  Machinery,  ^.  39;  cf.  also  U re,  Philo- 
sophy 0/ Manufacture,  p.  30.) 


250  THE   EVOLUTION   OF 

Another  influence  of  equal  potency  is  the  economy  of 
machinery  effected  by  working  longer  hours.  It  is  the 
combined  operation  of  these  two  forces  that  has  lengthened 
the  average  working  day.  Certain  subsidiary  influences, 
however,  also  deserve  notice,  especially  the  introduction  of 
cheap  illuminants.  Before  the  cheap  provision  of  gas,  the 
working  time  was  generally  limited  by  daylight.  Not  until 
the  first  decade  of  this  century  was  gas  introduced  into 
cotton-mills,  and  another  generation  elapsed  before  it 
passed  in  general  use  in  manufactories  and  retail  shops. ^ 
Now  a  portion  of  nature's  rest  has  been  annexed  to  the 
working  day.  There  are,  of  course,  powerful  social  forces 
making  for  a  curtailment  of  the  working  day,  and  these 
forces  are  in  many  industries  powerfully  though  indirectly 
aided  by  machinery.  Perhaps  it  would  be  right  to  say  that 
machinery  develops  two  antagonistic  tendencies  as  regards 
the  length  of  the  working  day.  Its  most  direct  economic 
influence  favours  an  extension  of  the  working  hours,  for 
machinery  untired,  wasting  power  by  idleness,  favours  con- 
tinuous work.  But  when  the  growing  pace  and  complexity 
of  highly-organised  machinery  taxes  human  energy  with 
increasing  severity,  and  compresses  an  increased  human 
effort  within  a  given  time,  a  certain  net  advantage  in  limit- 
ing the  working  day  for  an  individual  begins  to  emerge, 
and  it  becomes  increasingly  advantageous  to  work  the 
machinery  for  shorter  hours,  or,  where  possible,  to  apply 
"  shifts  "  of  workers.^ 

But  in  the  present  stage  of  machine-development  the 
economy  of  the  shorter  working  day  is  only  obtainable  in 
a  few  trades  and  in  a  few  countries ;  the  general  tendency  is 
still  in  the  direction  of  an  extended  working  day.^  The 
full  significance  of  this  is  not  confined  to  the  fact  that 
a  larger  proportion  of  the  worker's  time  is  consumed  in 
the  growing  monotony  of  production.  The  curtailment  of 
his  time  for  consumption,  and  a  consequent  lessening  of 
the  subjective  value  of  his  consumables,  must  be  set  off" 
against  such  increase  in  real  wages  or  purchasing  power  as 
may  have  come  to  him  from  the  increased  productive 
power  of  machinery.     The  value  of  a  shorter  working  day 

^  Porter,  Progress  of  the  Nations,  p.  590. 

^  Cf.  Schulze-Gaevernitz,  p.  115. 

'^  For  a  fuller  treatment  of  this  subject,  see  the  next  chapter. 


MODERN   CAPITALISM.  -251 

consists  not  merely  in  the  diminution  of  the  burden  of  toil 
it  brings,  but  also  in  the  fact  that  increased  consumption 
time  enables  the  workers  to  get  a  fuller  use  of  his  purchased 
consumables,  and  to  enjoy  various  kinds  of  "  free  wealth  " 
from  which  he  was  precluded  under  a  longer  working  day.^ 
So  far  as  machinery  has  converted  handicraftsmen  into 
machine-tenders,  it  is  extremely  doubtful  whether  it  has 
lessened  the  strain  upon  their  energies,  though  we  should 
hesitate  to  give  an  explicit  endorsement  to  Mill's  somewhat 
rhetorical  verdict.  "  It  is  questionable  if  all  the  mechanical 
inventions  yet  made  have  lightened  the  day's  toil  of  any 
human  being."  At  any  rate  we  have  as  yet  no  security 
that  machinery,  owned  by  individuals  who  do  not  them- 
selves tend  it,  shall  not  be  used  in  such  a  way  as  to  increase 
the  physical  strain  of  those  who  do  tend  it.  "  There  is  a 
temptation,"  as  Mr.  Cunningham  says,  "  to  treat  the  machine 
as  the  main  element  in  production,  and  to  make  it  the 
measure  of  what  a  man  ought  to  do,  instead  ©f  regarding 
the  man  as  the  first  consideration,  and  the  machine  as  the 
instrument  which  helps  him;  the  machine  may  be  made 
the  primary  consideration,  and  the  man  may  be  treated  as  a 
mere  slave  who  tends  it."^ 

§  4.  Now  to  come  to  the  question  of  "  monotony."  Is  the 
net  tendency  of  machinery  to  make  labour  more  monoton- 
ous or  less,  to  educate  the  worker  or  to  brutalise  him? 
Does  labour  become  more  intellectual  under  the  machine  ? 
Professor  Marshall,  who  has  thoughtfully  discussed  this 
question,  inclines  in  favour  of  machinery.  It  takes  away 
manual  skill,  but  it  substitutes  higher  or  more  intellectual 
forms  of  skill.  ^  "  The  more  delicate  the  machine's  power 
the  greater  is  the  judgment  and  carefulness  which  is  called 
for  from  those  who  see  after  it."  *  Since  machinery  is  daily 
becoming  more  and  more  delicate,  it  would  follow  that  the 
tending  of  machinery  would  become  more  and  more 
intellectual.  The  judgment  of  Mr.  Cooke  Taylor,  in  the 
conclusion  of  his  admirable  work.  The  Modern  Factory 
System,  is  the  same.  "  If  man  were  merely  an  intellectual 
animal,  even  only  a  moral  and  intellectual  one,  it  could 
scarcely  be  denied,  it  seems  to  us,  that  the  results  of  the 

1  Cf.  Patten,  The  Theory  of  Dynamic  Economics,  chap.  xi. 

^  Uses  and  Abuses  of  Money,  ■^.  iii. 

3  Principles,  p.  315.  *  Ibid.,  p.  316. 


252  THE   EVOLUTION   OF 

factory  system  have  been  thus  far  elevating."  ^  Mr.  Taylor 
indeed  admits  of  the  operative  population  that  "  they  have 
deteriorated  artistically;  but  art  is  a  matter  of  faculty,  of 
perception,  of  aptitude,  rather  than  of  intellect"  This 
strange  severance  of  Art  from  Intellect  and  Morals, 
especially  when  we  bear  in  mind  that  Life  itself  is  the  finest 
and  most  valuable  of  Arts,  will  scarcely  commend  itself  to 
deeper  students  of  economic  movements.  The  fuller  signifi- 
cance of  this  admission  will  appear  when  the  widest  aspect 
of  the  subject  is  discussed  in  our  final  chapter. 

The  question  of  the  net  intellectual  effects  of  machinery 
is  not  one  which  admits  of  positive  answer.  It  would  be 
open  to  one  to  admit  with  Mr.  Taylor  that  the  operatives 
were  growing  more  intellectual,  and  that  their  contact  with 
machinery  exercises  certain  educative  influences,  but  to 
deny  that  the  direct  results  of  machinery  upon  the  workers 
were  favourable  to  a  wide  cultivation  of  intellectual  powers, 
as  compared  with  various  forms  of  freer  and  less  specialised 
manual  labour.  The  intellectualisation  of  the  town  opera- 
tives (assuming  the  process  to  be  taking  place)  may  be 
attributable  to  the  thousand  and  one  other  influences  of 
town  life  rather  than  to  machinery,  save  indirectly  so  far 
as  the  modern  industrial  centre  is  itself  the  creation  of 
machinery.2  It  is  not,  I  think,  possible  at  present  to  offer 
any  clear  or  definite  judgment.  But  the  following  dis- 
tinctions seem  to  have  some  weight  in  forming  our  opinion. 

The  growth  of  machinery  has  acted  as  an  enormous 
stimulus  to  the  study  of  natural  laws.  A  larger  and  larger 
proportion  of  human  effort  is  absorbed  in  processes  of  in- 
vention, in  the  manipulation  of  commerce  on  an  increasing 
scale  of  magnitude  and  complexity,  and  in  such  manage- 
ment of  machinery  and  men  as  requires  and  educates  high 
intellectual  faculties  of  observation,  judgment,  and  specula- 
tive imagination.  Of  that  portion  of  workers  who  may  be 
said,  within  limits,  to  control  machinery,  there  can  be  no 


1  Page  435. 

^  A  similar  difficulty  in  distinguishing  town  influences  fro~a  specific 
trade  influences  confronted  Dr.  Arlidge  in  his  investigation  into 
diseases  of  employments.  "It  is  a  most  difficult  problem  to  solve, 
especially  in  the  case  of  an  industrial  town  population,  how  far  the 
diseases  met  with  are  town-made  and  how  far  trade-made ;  the  former 
almost  always  predominates. "     {Diseases  of  Occupation,  p.  33. ) 


MODERN   CAPITALISM.  253 

question  that  the  total  effect  of  machinery  has  been  highly 
educative. 

The  growing  size,  power,  speed,  complexity  of  machinery, 
undoubtedly  makes  the  work  of  this  class  of  workers  "  more 
intellectual."  Some  measure  of  these  educative  influences 
even  extends  to  the  "hand"  who  tends  some  minute 
portion  of  the  machinery,  so  far  as  the  proper  performance 
of  his  task  requires  him  to  understand  other  processes 
than  those  to  which  his  labour  is  directly  and  exclusively 
applied. 

So  likewise  consideration  must  be  taken  of  the  skilled 
work  of  making  and  repairing  machinery.  The  engineers' 
shop  and  other  workshops  are  becoming  every  year  a  more 
and  more  important  factor  in  the  equipment  of  a  factory  or 
mill.  But  though  "breakdowns"  are  essentially  erratic  and 
must  always  afford  scope  for  ingenuity  in  their  repair,  even 
in  the  engineers'  shop  there  is  the  same  tendency  for 
machinery  to  undertake  all  work  of  repair  which  can  be 
brought  under  routine.  So  the  skilled  work  in  making 
and  repairing  machinery  is  continually  being  reduced  to  a 
minimum,  and  cannot  be  regarded,  as  Professor  Nicholson 
is  disposed  to  regard  it,  as  a  factor  of  growing  import- 
ance in  connection  with  machine-production.  The  more 
machinery  is  used,  the  more  skilled  work  of  making  and 
repairing  will  be  required,  it  might  seem.  But  the  rapidity 
with  which  machinery  is  invading  these  very  functions  turns 
the  scale  in  the  opposite  direction,  at  any  rate  so  far  as  the 
making  of  machinery  is  concerned.  Statistics  relating  to 
the  number  of  those  engaged  in  making  machinery  and 
tools  show  that  the  proportion  they  bear  to  the  whole 
working  population  is  an  increasing  one ;  but  the  rate  of 
this  increase  is  by  no  means  proportionate  to  the  rate  of 
increase  in  the  use  of  machinery.  While  the  percentage  of 
those  engaged  in  making  machinery  and  tools  rises  from  1.7 
in  1861  to  1.8  in  1871  and  1.9  in  1881,  2.0  in  1891,  the 
approximate  increase  of  steam-power  applied  to  fixed 
machinery  and  locomotives  shows  a  much  more  rapid  rise, 
— from  2,100,000  horse-power  in  i860  to  3,040,000  in  1870 
and  5,200,000  in  1880.^  Moreover,  an  increased  proportion 
of  machinery  production  is  for  export  trade,  so  that  a  large 

'  Mulhall,  Dictionary  of  Statistics^  p.  545. 


254  THE   EVOLUTION   OF 

quantity  of  the  labour  employed  in  those  industries  is  not 
required  to  sustain  the  supply  of  machinery  used  in  English 
work.  In  repairs  of  machinery,  the  economy  effected  by 
the  system  of  interchangeable  parts  is  one  of  growing 
magnitude,  and  tends  likewise  to  minimise  the  skilled 
labour  of  repair.^ 

Finally,  it  should  be  borne  in  mind  that  in  several  large 
industries  where  machinery  fills  a  prominent  place,  the  bulk 
of  the  labour  is  not  directly  governed  by  the  machine. 
This  fact  has  already  received  attention  in  relation  to  railway 
workers.  The  character  of  the  machine  certainly  impresses 
itself  upon  these  in  different  degrees,  but  in  most  cases 
there  is  a  large  amount  of  detailed  freedom  of  action  and 
scope  for  individual  skill  and  activity. 

Though  the  quality  of  intelligence  and  skill  applied  to 
the  invention,  application,  and  management  of  machinery 
is  constantly  increasing,  practical  authorities  are  almost 
unanimous  in  admitting  that  the  proportion  which  this 
skilled  work  bears  to  the  aggregate  of  labour  in  machine 
industry  is  constantly  diminishing.  Now,  setting  on  one 
side  this  small  proportion  of  intelligent  labour,  what  are 
we  to  say  of  the  labour  of  him  who,  under  the  minute 
subdivision  enforced  by  machinery,  is  obliged  to  spend 
his  working  life  in  tending  some  small  portion  of  a  single 
machine,  the  whole  result  of  which  is  continually  to  push 
some  single  commodity  a  single  step  along  the  journey 
from  raw  material  to  consumptive  goods  ? 

The  factory  is  organised  with  military  precision,  the 
individual's  work  is  definitely  fixed  for  him ;  he  has  nothing 
to  say  as  to  the  plan  of  his  work  or  its  final  completion 
or  its  ultimate  use.  "The  constant  employment  on  one 
sixty-fourth  part  of  a  shoe  not  only  offers  no  encouragement 
to  mental  activity,  but  dulls  by  its  monotony  the  brains  of 
the  employee  to  such  an  extent  that  the  power  to  think  and 
reason  is  almost  lost."^ 

The  work  of  a  machine-tender,  it  is  urged,  calls  for 
"judgment  and  carefulness."  So  did  his  manual  labour 
before  the  machine  took  it  over.  His  "  judgment  and 
carefulness "    are    now    confined    within    narrower    limits 


^  Cf.  Marshall,  Principles  of  Economics,  vol.  i.  p.  315. 
*  D.  A,  Wells,  Contemporary  Review,  1889,  p.  392. 


MODERN   CAPITALISM.  255 

than  before.  The  responsibility  of  the  worker  is  greater, 
precisely  because  his  work  is  narrowed  down  so  as  to  be 
related  to  and  dependent  on  a  number  of  other  operatives 
in  other  parts  of  the  same  machine  with  whom  he  has 
no  direct  personal  concern.  Such  realised  responsibility 
is  an  element  in  education,  moral  and  intellectual.  But 
this  gain  is  the  direct  result  of  the  minute  subdivision, 
and  must  therefore  be  regarded  as  purchased  by  a  narrow- 
ing of  interest  and  a  growing  monotony  of  work.  It  is 
questionable  whether  the  vast  majority  of  machine  workers 
get  any  considerable  education,  from  the  fact  that  the 
machine  in  conjunction  with  which  they  work  represents 
a  huge  embodiment  of  the  delicate  skill  and  invention  of 
many  thousands  of  active  minds,  though  some  value  may 
be  attached  to  the  contention  that  "the  mere  exhibition 
of  the  skill  displayed  and  the  magnitude  of  the  operations 
performed  in  factories  can  scarcely  fail  of  some  educa- 
tional effect."^  The  absence  of  any  true  apprenticeship  in 
modern  factories  prevents  the  detailed  worker  from  under- 
standing the  method  and  true  bearing  even  of  those  pro- 
cesses which  are  closely  linked  to  that  in  which  he  is 
engaged.  The  ordinary  machine-tender,  save  in  a  very  few 
instances,  e.g.,  watchmaking,  has  no  general  understanding 
of  the  work  of  a  whole  department.  Present  conditions 
do  not  enable  the  "  tender "  to  get  out  of  machinery  the 
educational  influence  he  might  get.  Professor  Nicholson 
expresses  himself  dubiously  upon  the  educational  value  of  the 
machine.  "Machinery  of  itself  does  not  tend  to  develop 
the  mind  as  the  sea  and  mountains  do,  but  still  it  does  not 
necessarily  involve  deterioration  of  general  mental  ability." ^ 
Dr.  Arlidge  expresses  a  more  decided  opinion.  "  Generally 
speaking,  it  may  be  asserted  of  machinery  that  it  calls 
for  little  or  no  brain  exertion  on  the  part  of  those  con- 
nected with  its  operations;  it  arouses  no  interest,  and 
has  nothing  in  it  to  quicken  or  brighten  the  intelligence, 
though  it  may  sharpen  the  sight  and  stimulate  muscular 
activity  in  some  one  limited  direction."^ 

The  work  of  machine-tending  is  never  of  course  abso- 

^  Taylor,  Modern  Factory  System,  p.  435. 

^  Cf.  the  comparison  of  conditions  of  town  and  country  labour  in 
Adam  Smith's  Wealth  of  Nations,  Bk.  I.,  chap,  x.,  part  2. 
^  Diseases  of  Occupations,  pp.  25,  26. 


256  THE   EVOLUTION   OF 

lutely  automatic  or  without  spontaneity  and  skill.  To  a 
certain  limited  extent  the  "tender"  of  machinery  rules 
as  well  as  serves  the  machine ;  in  seeing  that  his  portion 
of  the  machine  works  in  accurate  adjustment  to  the  rest, 
the  qualities  of  care,  judgment,  and  responsibility  are 
evolved.  For  a  customary  skill  of  wrist  and  eye  which 
speedily  hardens  into  an  instinct,  is  often  substituted  a  series 
of  adjustments  requiring  accurate  quantitative  measurement 
and  conscious  reference  to  exact  standards.  In  such  in- 
dustries as  those  of  watchmaking  the  factory  worker,  though 
upon  the  average  his  work  requires  less  manual  dexterity 
than  the  handworker  in  the  older  method,  may  get  more 
intellectual  exercise  in  the  course  of  his  work.  But  though 
economists  have  paid  much  attention  to  this  industry,  in 
considering  the  character  of  machine-tending  it  is  not  an 
average  example  for  a  comparison  of  machine  labour  and 
hand  labour;  for  the  extreme  delicacy  of  many  of  the 
operations  even  under  machinery,  the  responsibility  at- 
taching to  the  manipulation  of  expensive  material,  and  the 
minute  adjustment  of  the  numerous  small  parts,  enable  the 
worker  in  a  watch  factory  to  get  more  interest  and  more 
mental  training  out  of  his  work  than  falls  to  the  ordinary 
worker  in  a  textile  or  metal  factory.  Wherever  the  material 
is  of  a  very  delicate  nature  and  the  processes  involve  some 
close  study  of  the  individual  qualities  of  each  piece  of 
material,  as  is  the  case  with  the  more  valuable  metals,  with 
some  forms  of  pottery,  with  silk  or  lace,  elements  of  thought 
and  skill  survive  and  may  be  even  fostered  under  machine 
industry.  A  great  part  of  modern  inventiveness,  however, 
is  engaged  in  devising  automatic  checks  and  indicators  for 
the  sake  of  dispensing  with  detailed  human  skill  and  reduc- 
ing the  spontaneous  or  thoughtful  elements  of  tending 
machinery  to  a  minimum.  When  this  minimum  is  reached 
the  highly-paid  skilled  workman  gives  place  to  the  low-skilled 
woman  or  child,  and  eventually  the  process  passes  over 
entirely  into  the  hands  of  machinery.  So  long,  however, 
as  human  labour  continues  to  co-operate  with  machinery, 
certain  elements  of  thought  and  spontaneity  adhere  to  it. 
These  must  be  taken  into  account  in  any  estimate  of  the 
net  educative  influence  of  machinery.  But  though  these 
mental  qualities  must  not  be  overlooked,  exaggerated 
importance   should  not  be   attached   to   them.     The   lay- 


MODERN   CAPITALISM.  257 

man  is  often  apt  to  esteem  too  highly  the  nature  of 
skilled  specialist  work.  A  locomotive  superintendent  of 
a  railway  was  recently  questioned  as  to  the  quality  of 
engine-driving.  "  After  twenty  years'  experience  he  declared 
emphatically  that  the  very  best  engine-drivers  were  those 
who  were  most  mechanical  and  unintelligent  in  their  work, 
who  cared  least  about  the  internal  mechanism  of  the 
engine."^  Yet  engine-driving  is  far  less  mechanical  and 
monotonous  than  ordinary  tending  of  machinery. 

So  far  as  the  man  follows  the  machine  and  has  his  work 
determined  for  him  by  mechanical  necessity,  the  educative 
pressure  of  the  latter  force  must  be  predominant.  Machinery, 
like  everything  else,  can  only  teach  what  it  practises.  Order, 
exactitude,  persistence,  conformity  to  unbending  law, — these 
are  the  lessons  which  must  emanate  from  the  machine. 
They  have  an  important  place  as  elements  in  the  formation 
of  intellectual  and  moral  character.  But  of  themselves 
they  contribute  a  one-sided  and  very  imperfect  education. 
Machinery  can  exactly  reproduce;  it  can,  therefore,  teach 
the  lesson  of  exact  reproduction,  an  education  of  quanti- 
tative measurements.  The  defect  of  machinery,  from  the 
educative  point  of  view,  is  its  absolute  conservatism.  The 
law  of  machinery  is  a  law  of  statical  order,  that  everything 
conforms  to  a  pattern,  that  present  actions  precisely  resemble 
past  and  future  actions.  Now  the  law  of  human  life  is 
dynamic,  requiring  order  not  as  valuable  in  itself,  but  as  the 
condition  of  progress.  The  law  of  human  life  is  that  no 
experience,  no  thought  or  feeling  is  an  exact  copy  of  any 
other.  Therefore,  if  you  confine  a  man  to  expending  his 
energy  in  trying  to  conform  exactly  to  the  movements  of  a 
machine,  you  teach  him  to  abrogate  the  very  principle  of 
life.  Variety  is  of  the  essence  of  life,  and  machinery  is  the 
enemy  of  variety.  This  is  no  argument  against  the  educa- 
tive uses  of  machinery,  but  only  against  the  exaggeration  of 
these  uses.  If  a  workman  expend  a  reasonable  portion  of 
his  energy  in  following  the  movements  of  a  machine,  he  may 
gain  a  considerable  educational  value;  but  he  must  also 
have  both  time  and  energy  left  to  cultivate  the  spontaneous 
and  progressive  arts  of  life. 

§  5.  It  is  often  urged  that  the  tendency  of  machinery  is  not 

^  The  Social  Horizon,  p.  22. 

17 


258  THE   EVOLUTION   OF 

merely  to  render  monotonous  the  activity  of  the  individual 
worker,  but  to  reduce  the  individual  differences  in  workers. 
This  criticism  finds  expression  in  the  saying :  "  All  men  are 
equal  before  the  machine,"  So  far  as  machinery  actually 
shifts  upon  natural  forces  work  which  otherwise  would  tax 
the  muscular  energy,  it  undoubtedly  tends  to  put  upon  a 
level  workers  of  different  muscular  capacity.  Moreover,  by 
taking  over  work  which  requires  great  precision  of  move- 
ment, there  is  a  sense  in  which  it  is  true  that  machinery 
tends  to  reduce  the  workers  to  a  common  level  of  skill,  or 
even  of  un-skill. 

"  Whenever  a  process  requires  peculiar  dexterity  and 
steadiness  of  hand,  it  is  withdrawn  as  soon  as  possible 
from  the  cunning  workman,  who  is  prone  to  irregularities 
of  many  kinds,  and  it  is  placed  in  charge  of  a  peculiar 
mechanism,  so  ^self-regulating  that  a  child  can  superin- 
tend it."i 

That  this  is  not  true  of  the  most  highly-skilled  or  quali- 
tative work  must  be  conceded,  but  it  applies  with  great  force 
to  the  bulk  of  lower-skilled  labour.  By  the  aid  of  machinery 
— i.e.,  of  the  condensed  embodiment  of  the  inventor's  skill, 
the  clumsy  or  weak  worker  is  rendered  capable  of  assisting 
the  nicest  movements  on  a  closer  equality  with  the  more 
skilled  worker.  Of  course  piece-work,  as  practised  in  textile 
and  hardware  industries,  shows  that  the  most  complete 
machinery  has  not  nearly  abolished  the  individual  differ- 
ences between  one  worker  and  another.  But  assuming  that 
the  difference  in  recorded  piece  wages  accurately  represents 
difference  in  skill  or  capacity  of  work — which  is  not  quite 
the  case — it  seems  evident  that  there  is  less  variation  in 
capacity  among  machine-workers  than  among  workers 
engaged  in  employments  where  the  work  is  more  muscular, 
or  is  conducted  by  human  skill  with  simpler  implements. 
The  difference  in  productive  capacity  between  an  English 
and  a  Hindoo  navvy  is  considerably  greater  than  the  differ- 
ence between  a  Lancashire  mill  operative  and  an  operative 
in  an  equally  well-equipped  and  organised  Bombay  mill. 

But  this  is  by  no  means  all  that  is  signified  by  the 
"equality  of  workers  before  the  machine."  It  is  the 
adaptability  of  the  machine  to  the   weaker  muscles   and 

^  Ure,  Philosophy  of  Manufactures,  chap.  i.  p.  19. 


MODERN   CAPITALISM.  259 

intelligence  of  women  and  children  that  is  perhaps  the 
most  important  factor.  The  machine  in  its  development 
tends  to  give  less  and  less  prominence  to  muscle  and  high 
individual  skill  in  the  mass  of  workers,  more  and  more  to 
certain  qualities  of  body  and  mind  which  not  only  differ  less 
widely  in  different  men,  but  in  which  women  and  children 
are  more  nearly  on  a  level  with  men.  It  is  of  course 
true  that  considerable  differences  of  individual  skill  and 
effort  survive  in  the  typical  machine  industry.  "  Machine- 
weaving,  for  instance,  simple  as  it  seems,  is  divided  into 
higher  and  lower  grades,  and  most  of  those  who  work  in 
the  lower  grades  have  not  the  stuff  in  them  that  is  required 
for  weaving  with  several  colours."^  But  the  general  effect 
of  machinery  is  to  lessen  rather  than  to  increase  individual 
differences  of  efficiency.  The  tendency  of  machine  industry 
to  displace  male  by  female  labour  is  placed  beyond  all 
question  by  the  statistics  of  occupations  in  England,  which 
show  since  185 1  a  regular  and  considerable  rise  in  the 
proportion  of  women  to  men  workers  in  most  branches  of 
manufacture.  Legal  restrictions,  and  in  the  more  civilised 
communities,  the  growth  of  a  healthy  public  opinion, 
prevent  the  economic  force  from  being  operative  to  the 
same  degree  so  far  as  children  are  concerned. 

Those  very  qualities  of  narrowly  restricted  care  and 
judgment,  detailed  attention,  regularity  and  patience, 
which  we  see  to  be  characteristic  of  machine  work,  are 
common  human  qualities  in  the  sense  that  they  are 
within  the  capacity  of  all,  and  that  even  in  the  degree  of 
their  development  and  practice  there  is  less  difference 
between  the  highly-trained  adult  mechanic  and  the  raw 
"  half-timer "  than  in  the  development  and  practice  of 
such  powers  as  machinery  has  superseded.  It  must  be 
recognised  that  machinery  does  exercise  a  certain  equal- 
ising influence  by  assigning  a  larger  and  larger  relative 
importance  to  those  faculties  which  are  specific  as  com- 
pared with  those  which  are  individual.^  "  General  ability" 
is  coming  to  play  a  more  important  part  in  industry  than 
specialised  ability,^  and  though  considerable  differences 
may  exist  in  the  "general  ability"  of  individuals,  the 
differences  will  be  smaller  than  in  specialised  abilities.^ 

^  Marshall,  Principles  of  Economics,  p.  265. 

2  Cf.  chap.  X.  3  cf.  Marshall,  p.  265. 


26o     THE   EVOLUTION   OF   MODERN    CAPITALISM. 

The  net  influence  of  machinery  upon  the  quaHty  of 
labour,  then,  is  found  to  differ  widely  according  to  the 
relation  which  subsists  between  the  worker  and  the 
machine.  Its  educative  influence,  intellectual  and  moral, 
upon  those  concerned  with  the  invention,  management,  and 
direction  of  machine  industry,  and  upon  all  whose  work  is 
about  machinery,  but  who  are  not  detailed  machine-tenders, 
is  of  a  distinctly  elevating  character.  Its  effect,  however, 
upon  machine-tenders  in  cases  where,  by  the  duration  of 
the  working  day  or  the  intensity  of  the  physical  effort,  it 
exhausts  the  productive  energy  of  the  worker,  is  to  depress 
vitality  and  lower  him  in  the  scale  of  humanity  by  an 
excessive  habit  of  conformity  to  the  automatic  movements 
of  a  non-human  motor.  This  human  injury  is  not  ade- 
quately compensated  by  the  education  in  routine  and  regu- 
larity which  it  confers,  or  by  the  slight  understanding  of 
the  large  co-operative  purposes  and  methods  of  machine 
industry  which  his  position  enables  him  to  acquire. 


26l 


CHAPTER  X. 

THE   ECONOMY   OF   HIGH   WAGES. 

§  I.   The  Economy  of  Low  Wages. 

§  2.  Modifications  of  the  Early  Doctrine — Sir  T.  Brassefs 

Evidence  from  Heavy  Manual  Work. 
§  3.  Wages,  Hours,  and  Product  in  Machine-industry. 
§  4.  ^  General  Application  of  the  Economy  of  High  Wages 

and  Short  Hours  inadmissible. 
§  5.  Mutual  Determination   of  Conditions  of  Employment 

and  Productivity. 
§  6.   Compressibility  of  Labour  and  Intensification  of  Effort. 
§  7.  Effective  Consumption  dependent  upon  Spare  Energy  of 

the  Worker. 
§  8.   Growth  of  Machinery  in  relation  to  Standard  of  Comfort. 
§  9.  Economy  of  High  Wages  dependent  upon  Consumption. 

§  I.  The  theory  of  a  "natural"  rate  of  wages  fixed  at  the 
bare  subsistence-point  which  was  first  clearly  formulated  in 
the  writings  of  Quesnay  and  the  so-called  "  physiocratic " 
school  was  little  more  than  a  rough  generalisation  of  the 
facts  of  labour  in  France.  But  these  facts,  summed  up  in 
the  phrase,  "  II  ne  gagne  que  sa  vie,"  and  elevated  to  the 
position  of  a  natural  law,  implied  the  general  belief  that  a 
higher  rate  of  wage  would  not  result  in  a  correspondent 
increase  of  the  product  of  labour,  that  it  would  not  pay 
an  employer  to  give  wages  above  the  point  of  bare  susten- 
ance and  reproduction.  This  dogma  of  the  economy  of 
cheap  labour,  taught  in  a  slightly  modified  form  by  many 
of  the  leading  English  economists  of  the  first  half  of  the 
nineteenth  century,  has  dominated  the  thought  and  in- 
directly influenced  the  practice  of  the  business  world.  It 
is  true  that  Adam  Smith  in  a  well-known  passage  had  given 


262  THE   EVOLUTION   OF 

powerful  utterance  to  a  diiferent  view  of  the  relation 
between  work  and  wages  : — "  The  liberal  reward  of  labour 
as  it  encourages  the  propagation  so  it  encourages  the 
industry  of  the  common  people.  The  wages  of  labour  are 
the  encouragement  of  industry,  which,  like  every  other 
human  quality,  improves  in  proportion  to  the  encourage- 
ment it  receives."^  But  the  teaching  ef  Ricardo,  and  the 
writers  who  most  closely  followed  him  in  his  conception  of 
the  industrial  system,  leaned  heavily  in  favour  of  low  wages 
as  the  sound  basis  of  industrial  progress. 

The  doctrine  of  the  economy  of  low  wages  in  England 
scarcely  needed  the  formal  support  of  the  scientific  econo- 
mist. It  was  already  strongly  implanted  in  the  mind  of  the 
eighteenth  century  "business  man,"  who  moralised  upon 
the  excesses  resulting  from  high  wages  much  in  the  tone  of 
the  business  man  of  to-day.  It  would  be  scarcely  possible 
to  parody  the  following  line  of  reflection : — 

"  The  poor  in  the  manufacturing  counties  will  never  work  any 
more  time  in  general  than  is  necessary  just  to  live  and  support 
their  weekly  debauches.  Upon  the  whole  we  may  fairly  aver 
that  a  reduction  of  wages  in  the  woollen  manufactures  would  be 
a  national  blessing  and  advantage  and  no  real  injury  to  the 
poor.  By  this  means  we  might  keep  our  trade,  uphold  our 
rents,  and  reform  the  people  into  the  bargain."  (Smith's  Memoirs 
on  Wool,  vol.  ii.  p.  308.) 

Compare  with  this  Arthur  Young's  frequent  suggestion  that 
rents  should  be  raised  in  order  to  improve  farming.^  So 
Dr.  Ure,  half  a  century  later,  notwithstanding  that  his  main 
argument  is  for  th^  "  economy  of  high  wages,"  both  on  the 
ground  that  it  evokes  the  best  quality  of  work  and  because 
it  keeps  the  workman  contented,  is  unable  to  avoid  flatly 
contradicting  himself  as  follows  : — 

"High  wages,  instead  of  leading  to  thankfulness  of  temper 
and  improvement  of  mind,  have,  in  too  many  cases,  cherished 
pride  and  supplied  funds  for  supporting  refractory  spirits  in 
strikes  wantonly  inflicted  upon  one  set  of  mill-owners  after 
another  throughout  the  several  districts  of  Lancashire  for  the 
purpose  of  degrading  them  into  a  state  of  servitude."  {Philosophy 
of  Manufacture,  p.  366.) 

^   Wealth  of  Nations,  vol.  i.  p.  86. 
^  Cf.  Northern  Tour,  vol.  ii.  p.  86. 


MODERN   CAPITALISM.  263 

So  again  (p.  298) : — "  In  fact,  it  was  their  high  wages 
which  enabled  them  to  maintain  a  stipendary  committee  in 
affluence,  and  to  pamper  themselves  into  nervous  ailments 
by  a  diet  too  rich  and  exciting  for  their  indoor  occupation." 

The  experiments  of  Robert  Owen  in  raising  wages  and 
shortening  hours  in  his  New  Lanark  mills  failed  utterly 
to  convince  his  fellow-manufacturers  that  a  high  standard  of 
comfort  among  the  workers  would  bring  a  correspondent 
rise  in  working  efficiency. 

The  history  of  the  early  factory  system,  under  which 
rapid  fortunes  were  built  out  of  the  excessive  toil  of 
children  and  low-skilled  adult  workers  paid  at  rates  which 
were,  in  many  instances,  far  below  true  "  subsistence  wages," 
furnished  to  the  commercial  mind  a  convincing  argument 
in  favour  of  "cheap  labour,"  and  set  political  economy  for 
half  a  century  at  war  with  the  rising  sentiments  of  humanity  .^ 
Even  now,  the  fear  frequently  expressed  in  the  New  World 
regarding  the  "  competition  of  cheap  labour "  attests  a 
strong  survival  of  this  theory,  which  held  it  to  be  the 
first  principle  of  "  good  business  "  to  pay  as  low  wages 
as  possible. 

§  2.  The  trend  of  more  recent  thought  has  been  in  the 

^  It  is  true  that  out-and-out  defenders  of  the  factories  against  early 
legislation  sometimes  had  the  audacity  to  assert  the  "  economy  of  high 
wages,"  and  to  maintain  that  it  governed  the  practice  of  early  mill- 
owners.  So  Ure,  "  The  main  reason  why  they  (i.e.  wages)  are  so  high 
is,  that  they  form  a  small  part  of  the  value  of  the  manufactured  article, 
so  that  if  reduced  too  low  by  a  sordid  master,  they  would  render  his 
operatives  less  careful,  and  thereby  injure  the  quality  of  their  work 
more  than  could  be  compensated  by  his  saving  in  wages.  The  less 
proportion  wages  bear  to  the  value  of  the  goods,  the  higher,  generally 
speaking,  is  the  recompense  of  labour.  The  prudent  master  of  a  fine 
spinning-mill  is  most  reluctant  to  tamper  with  the  earnings  of  his 
spinners,  and  never  consents  to  reduce  them  till  absolutely  forced  to  it 
by  a  want  of  remuneration  for  the  capital  and  skill  embarked  in  his 
business"  (Philosophy  of  Manufacture,  p.  330).  This  does  not,  however, 
prevent  Dr.  Ure  from  pointing  out  a  little  later  the  grave  danger  into 
which  trade-union  endeavours  to  raise  wages  drive  a  trade  subject  to 
the  competition  of  "  the  more  frugal  and  docile  labour  of  the  Continent 
and  United  States"  (p.  363).  Nor  do  Dr.  Ure's  statements  regarding 
the  high  wages  paid  in  cotton-mills,  which  he  places  at  three  times  the 
agricultural  wages,  tally  with  the  statistics  given  in  the  appendix  of  his 
own  book  (cf.  p.  515).  Male  spinners  alone  received  the  "  high  wages  " 
he  names,  and  out  of  them  had  to  pay  for  the  labour  of  the  assistants 
whom  they  hired  to  help  them. 


264  THE   EVOLUTION   OF 

direction  of  a  progressive  modification  of  the  doctrine  of 
the  "economy  of  low  wages,"  The  common  maxim  that 
"  if  you  want  a  thing  well  done  you  must  expect  to  pay  for 
it "  implies  some  general  belief  in  a  certain  correspondence 
of  work  and  wages.  The  clearer  formulation  of  this  idea 
has  been  in  large  measure  the  work  of  economic  thinkers 
who  have  set  themselves  to  the  close  study  of  comparative 
statistics.  The  work  in  which  Mr.  Brassey,  the  great  rail- 
way contractor,  was  engaged  gave  him  an  opportunity  of 
making  accurate  comparison  of  the  work  and  wages  of 
workmen  of  various  nationalities,  and  his  son,  Sir  Thomas 
Brassey,  collected  and  published  a  number  of  facts  bearing 
upon  the  subject  which,  as  regards  certain  kinds  of  work, 
established  a  new  relation  between  work  and  wages.  He 
found  that  English  navvies  employed  upon  the  Grand 
Trunk  Railway  in  Canada,  and  receiving  from  5s.  to  6s.  a 
day,  did  a  greater  amount  of  work  for  the  money  than 
French-Canadians  paid  at  3s.  6d.  a  day;  that  it  was  more 
profitable  to  employ  Englishmen  at  3s.  to  3s.  6d.  upon 
making  Irish  railways  than  Irishmen  at  is.  6d.  to  is.  8d. ; 
that  "in  India,  although  the  cost  of  dark  labour  ranges 
from  4^d.  to  6d.  a  day,  mile  for  mile  the  cost  of  railway 
work  is  about  the  same  as  in  England ; "  that  in  quarry 
work,  "in  which  Frenchmen,  Irishmen,  and  Englishmen 
were  employed  side  by  side,  the  Frenchman  received  three, 
the  Irishman  four,  and  the  Englishman  six  francs  a  day. 
At  those  different  rates  the  Englishman  was  found  to  be  the 
most  advantageous  workman  of  the  three."  Extending  his 
inquiries  to  the  building  trades,  to  mining,  and  to  various 
departments  of  manufactures,  he  found  a  general  consensus 
of  opinion  among  employers  and  other  men  of  practical 
experience  making  for  a  similar  conclusion.  In  France, 
Germany,  and  Belgium,  where  wages  and  the  standard  of 
living  were  considerably  lower  than  in  England,  the  cost  of 
turning  out  a  given  product  was  not  less,  but  greater.  In 
the  United  States  and  in  a  few  trades  of  Holland,  where  the 
standard  of  comfort  was  as  high  or  higher  than  in  the 
corresponding  English  industries,  more  or  better  work  was 
done.  In  short,  the  efficiency  of  labour  was  found  to  vary 
with  tolerable  accuracy  in  accordance  with  the  standard  of 
comfort  or  real  wages. 

In  his  introduction  to  his  work  on  Foreis:n    Work  and 


MODERN    CAPITALISM.  265 

English  Wages,  Sir  Thomas  Brassey  gives  countenance  to 
a  theory  of  wages  which  has  frequently  been  attributed  to 
him,  and  has  sometimes  been  accepted  as  a  final  statement 
of  the  relation  of  work  and  wages — viz.,  that  "  the  cost  of 
work,  as  distinguished  from  the  daily  wage  of  the  labourer, 
was  approximately  the  same  in  all  countries."  In  other 
words,  it  is  held  that,  for  a  given  class  of  work,  there  is  a 
fixed  and  uniform  relation  between  wages  and  efficiency  of 
labour  for  different  lands  and  different  races. 

Now,  to  the  acceptance  of  this  judgment,  considered  as 
a  foundation  of  a  theory  of  comparative  wages,  there  are 
certain  obvious  objections.  In  the  first  place,  in  the  state- 
ment of  most  of  the  cases  which  are  adduced  to  support  the 
theory  reference  is  made  exclusively  to  money  wages,  no 
account  being  taken  of  differences  of  purchasing  power 
in  different  countries.  In  order  to  establish  any  rational 
basis,  the  relation  must  be  between  real  wages  or  standard 
of  living  and  efficiency.  Now,  though  it  must  be  admitted 
as  inherently  probable  that  some  definite  relation  should 
subsist  between  wages  and  work,  or,  in  other  words,  between 
the  standard  of  consumption  and  the  standard  of  produc- 
tion, it  is  not  a  priori  reasonable  to  expect  this  relation 
should  be  uniform  as  between  two  such  countries  as 
England  and  India,  so  that  it  should  be  a  matter  of 
economic  indifference  whether  a  piece  of  work  is  done  by 
cheap  and  relatively  inefficient  Indian  labour  or  by  ex- 
pensive and  efficient  English  labour.  Such  a  supposition 
could  only  stand  upon  one  of  two  assumptions. 

The  first  assumption  would  be  that  of  a  direct  arithme- 
tical progression  in  the  relation  of  wage  and  work  such  as 
would  require  every  difference  in  quantity  of  food,  etc, 
consumed  by  labourers  to  be  reflected  in  an  exactly  corre- 
spondent difference  of  output  of  productive  energy — an 
assumption  which  needs  no  refutation,  for  no  one  would 
maintain  that  the  standard  of  comfort  furnished  by  wages 
is  the  sole  determinant  of  efficiency,  and  that  race,  climate, 
and  social  environment  play  no  part  in  economic  production. 
The  alternative  assumption  would  be  that  of  an  absolute 
fluidity  of  capital  and  labour,  which  should  reduce  to  a 
uniform  level  throughout  the  world  the  net  industrial  ad- 
vantages, so  that  everywhere  there  was  an  exact  quantita- 
tive   relation    between    work   and    wage,  production,  and 


266  THE  EVOLUTION   OP 

consumption.  Though  what  is  called  a  "  tendency"  to 
such  uniformity  may  be  admitted,  no  one  acquainted  with 
facts  will  be  so  rash  as  to  maintain  that  this  uniformity  is 
even  approximately  reached. 

§  3.  There  is,  then,  no  reason  to  suppose  that  wages,  either 
nominal  or  real,  bear  any  exact,  or  even  a  closely  approxi- 
mate, relation  to  the  output  of  efficient  work,  quantity  and 
quality  being  both  taken  into  consideration.  But,  in  truth, 
the  evidence  afforded  by  Sir  T..  Brassey  does  not  justify  a 
serious  investigation  of  this  theory  of  indifference  or  equiva- 
lence of  work  and  wages.  For,  in  the  great  majority  of 
instances  which  he  adduces,  the  advantage  is  clearly  shown 
to  rest  with  the  labour  which  is  most  highly  remunerated. 
The  theory  suggested  by  his  evidence  is,  in  fact,  a  theory  of 
"  the  economy  of  high  wages." 

This  theory,  which  has  been  advancing  by  rapid  strides  in 
recent  years,  and  is  now  supported  by  a  great  quantity  of 
carefully-collected  evidence,  requires  more  serious  consider- 
ation. The  evidence  of  Sir  T.  Brassey  was  chiefly,  though 
by  no  means  wholly,  derived  from  branches  of  industry 
where  muscular  strength  was  an  important  element,  as  in 
road-making,  railway-making,  and  mining;  or  from  the 
building  trades  where  machinery  does  not  play  a  chief  part 
in  directing  the  pace  and  character  of  productive  effort.  It 
would  not  be  unreasonable  to  expect  that  the  quantitative 
relation  between  work  and  wages  might  be  closer  in  indus- 
tries where  freely  expended  muscular  labour  played  a  more 
prominent  part  than  in  industries  where  machinery  was  a 
dominating  factor,  and  where  most  of  the  work  consisted  in 
tending  machinery.  It  might  well  be  the  case  that  it  would 
pay  to  provide  a  high  standard  of  physical  consumption  to 
navvies,  but  that  it  would  not  pay  to  the  same  extent  to 
give  high  wages  to  factory  operatives,  or  even  to  other 
classes  of  workers  less  subject  to  the  strain  of  heavy 
muscular  work. 

In  so  far  as  the  tendency  of  modern  production  is  to 
relieve  man  more  and  more  of  this  rough  muscular  work,  it 
might  happen  that  the  true  economy  favoured  high  wages 
only  in  those  kinds  of  work  which  were  tending  to  occupy 
a  subordinate  place  in  the  industry  of  the  future.  The 
earlier  facts,  which  associated  high  wages  with  high  pro- 
ductivity,  low    wages    with    low    productivity,   in    textile 


MODERN   CAPITALISM.  267 

factories  and  ironworks,  were  of  a  fragmentary  character, 
and,  considered  as  evidence  of  a  causal  connection  between 
high  wages  and  high  productivity,  were  vitiated  by  the  wide 
differences  in  the  development  of  machinery  and  industrial 
method  in  the  cases  compared.  In  recent  years  the 
labours  of  many  trained  economists,  some  of  them  with 
close  practical  knowledge  of  the  industrial  arts,  have 
collected  and  tabulated  a  vast  amount  of  evidence  upon 
the  subject.  A  large  number  of  American  economists, 
among  them  General  F.  A.  Walker,  Mr,  Gunton,  Mr. 
Schoenhof,  Mr.  Gould,  Mr.  E.  Atkinson,  have  made  close 
researches  into  the  relation  between  work  and  wages  in 
America  and  in  the  chief  industrial  countries  of  Europe. 
A  too  patent  advocacy  of  tariff  reform  or  a  shorter 
working  day  has  in  some  eases  prevented  the  statistics 
collected  from  receiving  adequate  attention,  but  there 
is  no  reason  to  doubt  the  substantial  accuracy  of  the 
research. 

The  most  carefully-conducted  investigation  has  been 
that  of  Professor  Schulze-Gaevernitz,  who,  basing  his  argu- 
ments upon  a  close  study  of  the  cotton  industry,  has 
related  his  conclusion  most  clearly  to  the  evolution  of 
modern  machine-production.  The  earlier  evidence  merely 
established  the  fact  of  a  co-existence  between  high  wages 
and  good  work,  low  wages  and  bad  work,  without  attempt- 
ing scientifically  to  explain  the  connection.  Dr.  Schulze- 
Gaevernitz,  by  his  analysis  of  cotton  spinning  and  weaving, 
successfully  formulates  the  observed  relations  between 
wages  and  product.  He  compares  not  only  the  present 
condition  of  the  cotton  industry  in  England  and  in 
Germany  and  other  continental  countries,  but  the  condi- 
tions of  work  and  wages  in  the  English  cotton  industry  at 
various  times  during  the  last  seventy  years,  thus  correcting 
any  personal  equation  of  national  life  which  might  to  some 
extent  vitiate  conclusions  based  only  upon  international 
comparison.  This  double  method  of  comparison  yields 
certain  definite  results,  which  Dr.  Schulze-Gaevernitz  sums 
up  in  the  following  words  : — "  Where  the  cost  of  labour 
(i.e.  piece  wages)  is  lowest  the  conditions  of  labour  are 
most  favourable,  the  working  day  is  shortest,  and  the 
weekly  wages  of  the  operatives  are  highest"  (p.  133).  The 
evolution  of  improved  spinning  and  weaving  machinery  in 


263 


THE   EVOLUTION   OF 


England  is  found. to  be  attended  by  a  continuous  increase  in 
the  product  for  each  worker,  a  fall  in  piece  wages  reflected 
in  prices  of  foods,  a  shortening  of  the  hours  of  labour,  and 
a  rise  in  weekly  wages.  The  following  tables,  compiled  by 
Dr.  Schulze-Gaevernitz,  give  an  accurate  statement  of  the 
relations  of  the  different  movements,  taking  the  spinning 
and  weaving  industries  as  wholes  in  England  : — 

SPINNING. 


Product  of 

Number  of 
workers 

Product  per 

Cost  of 

Average 

yarn 

worker 

labour 

yearly 

in  1000  lbs. 

miUs. 

in  lbs. 

per  lb. 

wages. 

8.     d. 

£     s.      d. 

1819-21 

106,500 

111,000 

968 

6    4 

26   13     0 

1829-31 

216,500 

140,000 

1546 

4    2 

27     6    0 

1844-46 

523,300 

190,000 

2754 

2     3 

28    12     0 

1859-61 

910,000 

248,000 

3671 

2     I 

32    10     0 

1880-82 

1,324,000 

240,000 

5520 

I     9 

44    4    o^ 

WEAVING. 


1819-21 
1829-31 
1 844-46 
1859-61 
1880-82 


Products  in 
1000  lbs. 


80,620 
143,200 
348,110 
650,870 
993,540 


Number  of 
workers. 


250,000 
275,000 
210,000 
203,000 
246,000 


Product  per 
worker 
in  lbs. 

Cost  of 
labour 
per  lb. 

s.     d. 

322 

15     5 

521 
1658 
3206 

9    0 
3    5 

2      9 

4039 

2     3 

Average 
yearly 
income. 


£  a. 
20  18 
19  18 
24  10 
30  15 
39    o 


^  Der  Grossbetrieb,  p.  132.  In  regarding  the  advance  of  recent 
average  wages  it  should  be  borne  in  mind  that  the  later  years  contain  a 
larger  proportion  of  adults.  In  considering  the  net  yearly  wages  a 
deduction  for  unemployment  should  be  made  from  the  sums  named  in 
the  table. 

2  Account  must  be  taken  of  the  depressed  condition  of  hand-loom 
weavers,  who  had  not  yet  disappeared. 


MODERN    CAPITALISM. 


269 


The  same  holds  good  of  the  growth  of  the  cotton-weaving 
industry  in  America,  as  the  following  table  shows : — 


Yearly 

product 

per  worker. 

Cost  of 

labour 

per  yard. 

Yearly 

earnings 

per  worker. 

1830    • 
1850 
1870 
1884 

Yards. 

4,321 

12,164 

19,293 
28,032 

Cents. 
1-9 
1-55 
1.24 
1.07 

Dollars. 
164 
190 
240 
290 

Of  Germany  and  Switzerland  the  same  holds.  Every  im- 
provement of  machinery  increasing  the  number  of  spindles 
or  looms  a  worker  can  tend,  or  increasing  the  pace  of  the 
machinery  and  thus  enlarging  the  output  per  worker,  is 
attended  by  a  higher  weekly  wage,  and  in  general  by  a 
shortening  of  the  hours  of  labour. 

A  detailed  comparison  of  England,  the  United  States,  and 
the  Continent,  as  regards  the  present  condition  of  the 
cotton  industry,  yields  the  same  general  results.  A  com- 
parison between  England  and  the  United  States  shows  that 
in  weaving,  where  wages  are  much  higher  in  America,  the 
labour  is  so  much  more  efficient  as  to  make  the  cost  of 
production  considerably  lower  than  in  England;  in  spin- 
ning, where  English  wages  are  about  as  highly  paid,  the 
cost  of  production  is  lower  than  in  America  (p.  156).  A 
comparison  between  Switzerland  and  Germany,  England, 
and  America,  as  regards  weaving,  yields  the  following 
results  (p.  151) : — 


Weekly 

product 

per  worker. 

Cost 
per  yard. 

Hours  of 
labour. 

Weekly 
wage. 

Switzerland  and  Germany 
England  .... 
America  .... 

Yards. 
466 
706 

1200 

0.303            12 
0.275            9 
0.2                 10 

8.       d 

II      8 
16     3 
20     3 

270  THE   EVOLUTION   OF 

The  low-paid,  long-houred  labourers  of  the  Italian 
factories  are  easily  undersold  by  the  higher  paid  and  more 
effective  labour  of  England  or  America.  So  also  a  com- 
parison between  Mulhausen  and  the  factories  of  the  Vosges 
valleys  shows  that  the  more  highly-paid  labour  of  the 
former  is  the  more  productive. 

In  Russia  the  better-paid  labour  in  the  factories  near 
Petersburg  and  in  Esthland  can  outcompete  the  lower  paid 
labour  of  the  central  governments  of  Vladimir  and  Moscow. 

Schulze-Gaevernitz  goes  so  far  as  to  maintain  that  under 
existing  conditions  of  low  wages  and  long  hours,  the  Indian 
factories  cannot  undersell  their  Lancashire  competitors,  and 
maintains  that  the  stringent  factory  laws  which  are  demanded 
for  India  are  likely  to  injure  Lancashire,^  instead  of  giving 
her  an  advantage.  The  most  vital  points  of  the  subject  are 
thus  summarised,  after  an  elaborate  comparison  of  the 
cotton-spinning  of  England  and  of  those  parts  of  Germany 
which  use  English  machinery  : — 

"In  England  the  worker  tends  nearly  twice  as  much  machinery 
as  in  Germany ;  the  machines  work  more  quickly ;  the  loss  as 
compared  with  the  theoretic  output  {i.e.,  waste  of  time  and 
material)  is  smaller.  Finally,  there  comes  the  consideration 
that  in  England  the  taking-off  and  putting-on  from  the  spindles 
occupies  a  shorter  time ;  there  is  less  breaking  of  threads,  and 
the  piecing  of  broken  threads  requires  less  time.  The  result  is 
that  the  cost  of  labour  per  pound  of  yam — especially  when  the 
work  of  supervision  is  taken  into  account — is  decidedly  smaller 
in  England  than  in  Germany.  So  the  wages  of  the  English 
spinners  are  nearly  twice  as  high  as  in  Germany,  while  the 
working  day  occupies  a  little  over  9  hours  as  compared  with  1 1 
to  III  in  Germany."     (P.  136.) 

§  4.  From  the  evidence  adduced  by  Schulze-Gaevernitz, 
modern  industrial  progress  is  expressed,  so  far  as  its  effects 
on  labour  are  concerned,  in  seven  results  :  {a)  Shorter  hours 
of  labour,  {b)  Higher  weekly  wage,  (c)  Lower  piece-wage. 
{d)  Cheaper  product,     {e)  Increased  product  per  worker. 

^  Here  Schulze-Gaevernitz  appears  to  strain  his  argument.  Though 
official  reports  lay  stress  upon  the  silver  question  as  an  important 
factor  in  the  rise  of  Bombay  mills,  there  seems  no  doubt  of  the  ability 
of  Bombay  cheap  labour,  independently  of  this,  to  undersell  English 
labour  for  low  counts  of  cotton  in  Asiatic  markets.  Brentano  in  his 
work,  Hours  and  Wages  in  Relation  to  Production,  supports  Schulze- 
Gaevernitz. 


MODERN   CAPITALISM.  27I 

(/)  Increased  speed  of  machinery,  (g)  Increased  number 
and  size  of  machines  to  the  worker. 

All  these  factors  must  be  taken  into  consideration  before 
a  full  judgment  of  the  net  results  of  machinery  upon  the 
worker  can  be  formed.  The  evidence  above  recorded, 
conclusive  as  it  is  regarding  the  existence  of  some  causal 
connection  between  a  high  standard  of  living  and  high 
productivity  of  labour,  does  not  necessarily  justify  the  con- 
clusion that  a  business,  or  a  federation  of  employers,  may 
go  ahead  increasing  wages  and  shortening  hours  of  labour 
ad  libitum  in  sure  and  certain  expectation  of  a  corresponding 
increase  in  the  net  productivity  of  labour. 

Before  such  a  conclusion  is  warranted,  we  must  grasp 
more  clearly  the  nature  of  the  causal  relation  between  high 
standard  of  living  and  efficiency.  How  far  are  we  entitled 
to  regard  high  wages  and  other  good  conditions  of  employ- 
ment as  the  cause,  how  far  as  the  effect  of  efficiency  of 
labour  ?  The  evidence  adduced  simply  proves  that  a  b  Cy 
certain  phenomena  relating  to  efficiency — as  size  of  pro- 
duct, speed  of  workmanship,  quantity  of  machines  tended 
— vary  directly  with  d  ef,  certain  other  phenomena  relating 
to  wages,  hours  of  labour,  and  other  conditions  of  employ- 
ment. So  far  as  such  evidence  goes,  we  are  only  able  to 
assert  that  the  two  sets  of  phenomena  are  causally  related, 
and  cannot  surely  determine  whether  variations  m  a  b  c  are 
causes,  or  effects  of  concomitant  variations  in  d  e  f,  or 
whether  both  sets  of  phenomena  are  or  are  not  governed  by 
some  third  set,  the  variations  of  which  affect  simultaneously 
and  proportionately  the  other  two. 

The  moral  which  writers  like  Mr.  Gunton  and  Mr, 
Schoenhof  have  sought  to  extract,  and  which  has  been 
accepted  by  not  a  few  leaders  in  the  "  labour  movement," 
is  that  every  rise  of  wages  and  every  shortening  of  hours 
will  necessarily  be  followed  by  an  equivalent  or  a  more  than 
equivalent  rise  in  the  efficiency  of  labour.  In  seeking  to 
establish  this  position,  special  stress  is  laid  upon  the  evi- 
dence of  the  comparative  statistics  of  textile  industries. 
But,  in  the  first  place,  it  must  be  pointed  out  that  the 
evidence  adduced  does  not  support  any  such  sweeping 
generalisation.  The  statistics  of  Mr.  Gould  and  Mr. 
Schoenhof,  for  instance,  show  many  cases  where  higher 
money  and   real   wages   of  American   operatives  are  not 


272  THE   EVOLUTION   OF 

accompanied  by  a  correspondingly  larger  productivity.     In 
such  cases  the  "  cheap  "  labour  of  England  is  really  cheap. 

Again,  in  other  cases  where  the  higher  wages  of  American 
workers  are  accompanied  by  an  equivalent,  or  more  than 
equivalent,  increase  of  product,  that  increased  product  is 
not  due  entirely  or  chiefly  to  greater  intensity  or  efficiency 
of  labour,  but  to  the  use  of  more  highly  elaborated  labour- 
saving  machinery.  The  difference  between  the  labour-cost 
of  making  and  maintaining  this  improved  machinery,  and 
that  of  making  and  maintaining  the  inferior  machinery  it 
has  displaced,  ought  clearly  to  be  added  in,  where  a  com- 
parison is  made  between  the  relation  of  net  labour-cost  to 
product  in  different  countries,  or  in  different  stages  of 
industrial  development  in  the  same  country.  The  omission 
of  this  invalidates  much  of  the  reasoning  of  Schulze- 
Gaevernitz,  Brentano,  Rae,  and  other  prophets  of  "the 
economy  of  high  wages."  The  direct  labour-cost  of  each 
commodity  may  be  as  little,  or  even  less,  than  in  England, 
but  the  total  cost  of  production^  and  the  selling  price  may 
be  higher.  Lastly,  in  that  comparison  between  England 
and  America,  which  is  in  many  respects  the  most  service- 
able, because  the  two  countries  are  nearest  in  their  develop- 
ment of  industrial  methods  as  well  as  in  the  character  of 
their  labourers,  the  difference  of  money  and  of  real  wage 
is  not  commonly  accompanied  by  a  difference  in  hours  of 
labour. 

The  evidence  we  possess  does  not  warrant  any  universal 
or  even  general  application  of  the  theory  of  the  economy 
of  high  wages.  If  it  was  generally  true  that  by  increasing 
wages  and  by  shortening  working  hours  the  daily  product 
of  each  labourer  could  be  increased  or  even  maintained, 
the  social  problem,  so  far  as  it  relates  to  the  alleviation  of 
the  poverty  and  misery  of  the  lower  grades  of  workers, 

^  Mr.  Gould's  general  conclusion,  from  his  comparison  of  American 
and  European  production,  is  "  that  higher  daily  wages  in  America  do 
not  mean  a  correspondingly  enhajiced  labour-cost  to  the  fnanufacturers  " 
(Contemporary  Review,  Jan.  1893).  This  he  holds  to  be  partly  due  to 
superior  mechanical  agencies,  which  owe  their  existence  to  high  wages, 
partly  to  superior  physical  force  in  the  workers.  But  Mr.  Gould's 
evidence  and  his  conclusion  here  slated,  taken  as  testimony  to  the 
"economy  of  high  wages,"  are  insufficient,  for  they  only  show  that 
high  wages  are  attended  by  increased  output  of  labour,  not  by  an 
increase  correspondent  to  this  higher  wage. 


MODERN   CAPITALISM.  273 

would  admit  of  an  easy  solution.  But  though  it  will  be 
generally  admitted  that  a  rise  of  wages  or  of  the  general 
standard  of  comfort  of  most  classes  of  workers  will  be 
followed  by  increased  efficiency  of  labour,  and  that  a  short- 
ening of  hours  will  not  be  followed  by  a  corresponding 
diminution  in  output,  it  by  no  means  follows  that  it  will  be 
profitable  to  increase  wages  and  shorten  hours  indefinitely. 
Just  as  it  is  admitted  that  the  result  of  an  equal  shortening 
of  hours  will  be  different  in  every  trade,  so  will  the  result  of 
a  given  rise  in  standard  of  comfort  be  different.  In  some 
cases  highly-paid  labour  and  short  hours  will  pay,  in  other 
cases  cheaper  labour  and  longer  hours.  It  is  not  possible 
by  dwelling  upon  the  concomitance  of  high  wages  and  good 
work,  low  wages  and  bad  work,  in  many  of  the  most  highly- 
developed  industries  to  appeal  to  the  enlightened  self-interest 
of  employers  for  the  adoption  of  a  general  rise  in  wages  and 
a  general  shortening  of  hours.  Because  the  most  profitable 
business  may  often  be  conducted  on  a  system  which  involves 
high  wages  for  short  intense  work  with  highly  evolved 
machinery,  it  by  no  means  follows  that  other  businesses 
may  not  be  more  profitably  conducted  by  employing  low- 
paid  workers  for  long  hours  with  simpler  machinery.  We 
are  not  at  liberty  to  conclude  that  the  early  Lancashire 
mill-owners  adopted  a  short-sighted  policy  in  employing 
children  and  feeble  adult  labour  at  starvation  wages. 

The  evidence,  in  particular,  of  Schulze-Gaevernitz  certainly 
shows  that  the  economy  of  high  wages  and  short  hours  is 
closely  linked  with  the  development  of  machinery,  and  that 
when  machinery  is  complex  and  capable  of  being  worked 
at  high  pressure  a  net  economy  of  high  wages  and  short 
hours  emerges.  In  this  light  modern  machinery  is  seen  as 
the  direct  cause  of  high  wages  and  short  hours.  For  though 
the  object  of  introducing  machinery  is  to  substitute  machine- 
tenders  at  low  wages  for  skilled  handicraftsmen,  and  though 
the  tireless  machine  could  be  profitably  worked  continuously, 
when  due  regard  is  had  to  human  nature  it  is  found  more 
profitable  to  work  at  high  pressure  for  shorter  hours  and  to 
purchase  such  intense  work  at  a  higher  price.  It  must,  of 
course,  be  kept  in  mind  that  high  wages  are  often  the  direct 
cause  of  the  introduction  of  improved  machinery,  and  are 
an  ever-present  incentive  to  fresh  mechanical  inventions. 
This  was  clearly  recognised  half  a  century  ago  by  Dr.  Ure, 

i8 


274  THE   EVOLUTION   OF 

who  names  the  lengthened  mules,  the  invention  of  the  self- 
acting  mule,  and  some  of  the  early  improvements  in  calico- 
printing  as  directly  attributable  to  this  cause.  ^ 

But,  admitting  these  tendencies  in  certain  machine  indus- 
tries, we  are  not  justified  in  relying  confidently  upon  the 
ability  of  a  rise  of  wages,  obtained  by  organisation  of  labour 
or  otherwise,  to  bring  about  such  improvements  of  industrial 
methods  as  will  enable  the  higher  wages  to  be  paid  without 
injuring  the  trade,  or  reducing  the  profits  below  the  minimum 
socially  required  for  the  maintenance  of  a  privately  con- 
ducted industry. 

Our  evidence  leads  to  the  conclusion  that,  while  a  rise 
of  wages  is  nearly  always  attended  by  a  rise  of  efficiency  of 
labour  and  of  the  product,  the  proportion  which  the  in- 
creased productivity  will  bear  to  the  rise  of  wage  will  differ 
in  every  employment.  Hence  it  is  not  possible  to  make  a 
general  declaration  in  favour  of  a  policy  of  high  wages  or  of 
low  wages. 

§  5.  The  economically  profitable  wages  and  hours  will  vary 
in  accordance  with  many  conditions,  among  the  most 
important  being  the  development  of  machinery,  the  strain 
upon  muscles  and  nerves  imposed  by  the  work,  the  indoor 
and  sedentary  character  of  the  work,  the  various  hygienic 
conditions  which  attend  it,  the  age,  sex,  race,  and  class  of 
the  workers. 

In  cotton-weaving  in  America  it  pays  better  to  employ 
women  at  high  wages  to  tend  six,  seven,  or  even  eight 
looms  for  short  hours,  than  to  pay  lower  wages  to  inferior 
workers  such  as  are  found  in  Germany,  Switzerland,  or  even 
in  Lancashire.  But  in  coal-mining  it  appears  that  the 
American  wages  are  economically  too  high — that  is  to  say, 
the  difference  between  American  and  English  wages  is  not 
compensated  by  an  equivalent  difference  of  output.  The 
gross  number  of  tons  mined  by  United  States  miners 
working  at  wages  of  $326  per  annum  is  377,  yielding  a  cost 
of  86|  cents  per  ton,  as  compared  with  79  cents  per  ton, 

^  Ure's  Philosophy  of  Manufacture,  pp.  367-369.  Dr.  Ure  regarded 
mechanical  inventions  as  the  means  whereby  capital  should  keep  labour 
in  subjection.  In  describing  how  the  "self-acting  mule"  came  into 
use  he  adds  triumphantly :  ' '  This  invention  comprises  the  great  doctrine 
already  propounded,  that  when  capital  enlists  science  in  her  service  the 
refractory  hand  of  labour  will  always  be  taught  docility  "  (p.  368). 


MODERN   CAPITALISM.  275 

the  cost  of  North  Staffordshire  coal  produced  by  miners 
earning  $253,  and  turning  out  322  tons  per  head.^  So  also 
a  ton  of  Bessemer  pig  iron  costs  in  labour  about  50  cents 
more  in  America  than  in  England,  the  American  wages 
being  about  40  per  cent,  higher.^ 

It  is,  indeed,  evident  from  the  aggregate  of  evidence  that 
no  determinable  relation  exists  between  cost  in  labour  and 
wages  for  any  single  group  of  commodities. 

Just  as  little  can  a  general  acceptance  be  given  to  the 
opposite  contention  that  it  is  the  increased  efficiency  of 
labour  which  causes  the  high  wages.  This  is  commonly 
the  view  of  those  business  men  and  those  economists  who 
start  from  the  assumption  that  there  is  some  law  of  compe- 
tition in  accordance  with  whose  operation  every  worker 
necessarily  receives  as  much  as  he  is  worth,  the  full  value 
of  the  product  of  his  labour.  Only  by  the  increased 
efificiency  of  labour  can  wages  rise,  argue  these  people; 
where  wages  are  high  the  efficiency  of  labour  is  found  to  be 
high,  and  vice  versd, ;  therefore  efficiency  determines  wages. 
Just  as  the  advocates  of  the  economy  of  high-wages  theory 
seek  by  means  of  trade-unionism,  legislation,  and  public 
opinion  to  raise  wages  and  shorten  hours,  trusting  that  the 
increased  efficiency  which  ensues  will  justify  such  conduct, 
so  the  others  insist  that  technical  education  and  an  elevation 
of  the  moral  and  industrial  character  of  the  workers  must 
precede  and  justify  any  rise  of  wages  or  shortening  of 
hours,  by  increasing  the  efficiency  of  labour.  Setting  aside 
the  assumption  here  involved  that  the  share  of  the  workers 
in  the  joint  product  of  capital  and  labour  is  a  fixed  and 
immovable  proportion,  this  view  rests  upon  a  mere  denial 
of  the  effect  which  it  is  alleged  that  high  wages  and  a  rise 
in  standard  of  comfort  have  in  increasing  efficiency. 

The  relation  between  wages  and  other  conditions  of 
employment,  on  the  one  hand,  and  efficiency  of  labour  or 
size  of  product  on  the  other,  is  clearly  one  of  mutual 
determination.  Every  rise  in  wages,  leisure,  and  in  general 
standard  of  comfort  will  increase  the  efficiency  of  labour ; 
every  increased  efficiency,  whether  due  directly  to  these  or 
to  other  causes,  will  enable  higher  wages  to  be  paid  and 
shorter  hours  to  be  worked. 

1  "  No.  64  Consular  Report "  (quoted  Schoenhof,  p.  209). 
*  Schoenhof,  p.  216. 


2/6  THE   EVOLUTION   OF 

§  6.  One  further  point  emerges  from  the  evidence  relating 
to  efificiency  and  high  wages.    According  to  Schulze-Gaever- 
nitz's  formula,  every  fall  in  piece  wages  is  attended  by  a  rise 
in  weekly  wages.     But  it  should  be  kept  in  mind  that  a  rise 
in  time  wages   does  not  necessarily  mean  that  the  price 
of  labour  measured  in  terms   of  effort   has   been   raised. 
Intenser  labour  undergone  for  a  shorter  time  may  obtain  a 
higher  money  wage  per  unit  of  time,  but  the  price  per  unit 
of  effort  may  be  lower.     It  has  been  recognised  that  a 
general  tendency  of  the  later  evolution  of  machinery  has 
been  to  compress  and  intensify  labour.     In  certain  classes 
of  textile  labour  the  amount  of  muscular  or  manual  labour 
given  out  in  a  day  is  larger  than  formerly.     This  is  the  case 
with  the  work  of  children  employed  as  piecers.     In  Ure's 
day  (1830)  he  was  able  to  claim  that  during  three-fourths  of 
the  time  spent  by  children  in  the  factory  they  had  nothing  to 
do.     The  increased  quantity  of  spindles  and  the  increased 
speed  have  made  their  labour  more  continuous.     The  same 
is  true  of  the  mule  spinners,  whose  labour,  even  within  the 
last  few  years,  has  been  intensified  by  increased  size  of  the 
mule.     Though  as  a  rule  machinery  tends  to  take  over  the 
heavier  forms  of  muscular  work,  it  also  tends  to  multiply 
the  minor  calls  upon  the  muscles,  until  the  total  strain  is 
not  much  less  than  before.     What  relief  is  obtained  from 
muscular  effort  is  compensated  by  a  growing  strain  upon 
the  nerves   and   upon   the   attention.      Moreover,  as   the 
machinery  grows  more  complex,  numerous,  and  costly,  the 
responsibility  of  the  machine-tender  is  increased.     To  some 
considerable  extent  the  new  effort  imposed  upon  the  worker 
is  of  a  more  refined  order  than  the  heavy  muscular  work  it 
has  replaced.     But  its  tax  upon  the  physique  is  an  ever- 
growing one.     "A  hand-loom   weaver  can   work   thirteen 
hours  a  day,  but  to  get  a  six-loom  weaver  to  work  thirteen 
hours   is   a  physical   impossibility."^      The   complexity  of 
modern  machinery  and  the  superhuman  celerity  of  which  it 
is  capable  suggest  continually  an  increased  compression  of 
human  labour,  an  increased  output  of  effort  per  unit  of 
time.     This  has  been  rendered  possible  by  acquired  skill 
and  improved  physique  ensuing  on  a  higher  standard  of 
living.     But  it  is  evident  that,  where  it  appears  that  each 

*  Der  Grossbetrieb,  p.  167. 


MODERN   CAPITALISM.  277 

rise  in  the  standard  of  living  and  each  shortening  of  the 
working-day  has  been  accompanied  by  a  severer  strain 
either  upon  muscles,  nerves,  or  mental  energy  during  the 
shorter  working  day,  we  are  not  entitled  to  regard  the 
higher  wages  and  shorter  hours  as  clear  gain  for  the  worker. 
Some  limits  are  necessarily  imposed  upon  this  com- 
pressibility of  working  effort.  It  would  clearly  be  im- 
possible by  a  number  of  rapid  reductions  of  the  working 
day  and  increases  of  time  wages  to  force  the  effectiveness 
of  an  hour's  labour  beyond  a  certain  limit  for  the  workers. 
Human  nature  must  place  limits  upon  the  compression. 
Though  it  may  be  better  for  a  weaver  to  tend  four  looms 
during  the  English  factory  day  for  the  moderate  wage  of 
i6s.  a  week  than  to  earn  iis.  8d.  by  tending  two  looms  in 
Germany  for  twelve  hours  a  day,  it  does  not  follow  that  it  is 
better  to  earn  20s.  3d.  in  America  by  tending  six,  seven,  or 
even  eight  looms  for  a  ten-hours  day,^  or  that  the  American's 
condition  would  be  improved  if  the  eight-hours  day  was 
purchased  at  the  expense  of  adding  another  loom  for  each 
worker. 

The  gain  which  accrues  from  high  wages  and  a  larger 
amount  of  leisure,  over  which  the  higher  consumption 
shall  be  spread,  may  be  more  than  counteracted  by  an 
undue  strain  upon  the  nerves  or  muscles  during  the  shorter 
day.  This  difficulty,  as  we  have  seen,  is  not  adequately  met 
by  assigning  the  heavier  muscular  work  more  and  more  to 
machinery,  if  the  possible  activity  of  this  same  machinery 
is  made  a  pretext  for  forcing  the  pace  of  such  work  as 
devolves  upon  machine-tenders. 

In  many  kinds  of  work,  though  by  no  means  in  all, 
an  increase  of  the  amount  of  work  packed  into  an  hour 
could  be  obtained  by  a  reduction  of  the  working-day; 
but  two  considerations  should  act  in  determining  the  pro- 
gressive movement  in  this  direction  :  first,  the  objective 
economic  question  of  the  quantitative  relation  between  the 
successive  decrements  of  the  working-day  and  the  incre- 
ments of  labour  put  into  each  hour ;  second,  the  subjective 
economic  question  of  the  effect  of  the  more  compressed 
labour  upon  the  worker  considered  both  as  worker  and 
as  consumer. 

^  Vide  supra,  p.  269.  These  wages,  however,  are  the  average  of  all 
the  labour  employed  in  the  weaving-sheds,  not  of  "weavers"  alone. 


2/8  THE   EVOLUTION    OF 

There  is  not  wanting  evidence  to  show  that  increased 
leisure  and  higher  wages  can  be  bought  too  dear. 

In  drawing  attention  to  this  consideration  it  must  not, 
however,  be  assumed  that  the  increase  of  real  wages  and 
shortening  of  hours  traced  in  progressive  industries  are 
necessarily  accompanied  by  a  corresponding  increase  in  the 
compression  of  labour.  In  the  textile  and  iron  industries, 
for  example,  it  is  evident  {pace  Karl  Marx)  that  the  oper- 
atives had  obtained  some  portion  of  the  increased  produc- 
tivity of  improved  machinery  in  a  rise  of  wages.  Even 
where  more  machinery  is  tended  we  are  not  entitled  to 
assume  a  correspondent  increase  in  felt  effort  or  strain 
upon  the  worker.  A  real  growth  of  skill  or  efficiency  will 
enable  an  increased  amount  of  machinery  to  be  tended  with 
no  greater  subjective  effort  than  a  smaller  amount  formerly 
required.  But  while  allowance  should  be  made  for  this, 
the  history  of  the  factory  system,  both  in  England  and 
in  other  countries,  clearly  indicates  that  factory  labour  is 
more  intense  than  formerly,  not,  perhaps,  in  its  tax  upon 
the  muscles,  but  in  the  growing  strain  it  imposes  upon 
the  nervous  system  of  the  operatives. 

The  importance  of  this  point  is  frequently  ignored  alike 
by  advocates  of  a  shorter  working-day  and  by  those  who 
insist  that  the  chief  aim  of  workers  should  be  to  make 
their  labour  more  productive.  So  far  as  the  higher 
efficiency  simply  means  more  skill  and  involves  no  in- 
creased effort  it  is  pure  gain,  but  where  increased  effort 
is  required  the  question  is  one  requiring  close  and  detailed 
consideration. 

§  7.  Another  effect  of  over-compressed  labour  deserves 
a  word. 

The  close  relation  between  higher  wages  and  shorter 
hours  is  generally  acknowledged.  A  rise  of  money  wages 
which  affects  the  standard  of  living  by  introducing  such 
changes  in  consumption  as  require  for  their  full  yield  of 
benefit  or  satisfaction  an  increase  of  consuming-time  can 
only  be  made  effective  by  a  diminution  in  the  producing 
time  or  hours  of  labour.  When,  for  example,  the  new 
wants,  whose  satisfaction  would  be  naturally  sought  from 
a  rise  of  the  standard  living,  are  of  an  intellectual  order, 
involving  not  merely  the  purchase  of  books,  etc.,  but  the 
time   to  read  such  books,  this  benefit   requires   that  the 


MODERN   CAPITALISM.  279 

higher  wages  should  be  supplemented  by  a  diminution 
in  the  hours  of  labour  in  cases  where  the  latter  are  unduly 
long.  But  it  is  not  so  clearly  recognised  that  such  questions 
cannot  be  determined  without  reference  to  the  question  of 
intensity  of  labour.  Yet  it  is  evident  that  an  eight-hours 
day  of  more  compressed  labour  might  be  of  a  more 
exhausting  character  than  a  ten-hours  day  of  less  intense 
labour  and  disquahfy  a  worker  from  receiving  the  benefits 
of  the  opportunities  of  education  open  to  him  more  than 
the  longer  hours  of  less  intense  labour.  The  advantage  of 
the  addition  of  two  hours  of  leisure  might  be  outweighed 
by  the  diminished  value  attached  to  each  leisure  hour.  In 
other  words,  the  excess  of  intense  work  might  be  worse  in 
its  effects  than  the  excess  of  more  extended  work.  This 
possibility  is  often  overlooked  in  the  arguments  of  those 
who  support  the  movement  towards  a  shorter  working-day 
by  maintaining  that  each  unit  of  labour-time  will  be  more 
productive.  When  the  argument  concerns  itself  merely 
with  alleging  the  influence  of  higher  wages,  without  shorter 
hours,  upon  the  efficiency  of  labour,  this  neglect  of  the 
consideration  of  intense  labour  has  a  more  urgent  import- 
ance. It  may  be  gravely  doubted  whether  the  benefit  of 
the  higher  wages  of  the  Massachusetts  weavers  is  not  over- 
balanced by  the  increased  effort  of  tending  so  large  a 
number  of  looms  for  hours  which  are  longer  than  the 
English  factory  day.  The  exhausting  character  of  such 
labour  is  likely  to  leave  its  mark  in  diminishing  the  real 
utility  or  satisfaction  of  the  nominally  higher  standard  of 
living  which  the  high  wages  render  possible.  Where  the 
increased  productivity  of  labour  is  largely  due  to  the 
improved  machinery  or  methods  of  production  which  are 
stimulated  by  high  wages  without  a  corresponding  intensi- 
fication of  the  labour  itself,  the  gain  to  labour  is  clear. 
But  the  possibility  that  short  hours  and  high  wages  may 
stimulate  an  injurious  compression  of  the  output  of  pro- 
ductive effort  is  one  which  must  not  be  overlooked  in 
considering  the  influence  of  new  industrial  methods  upon 
labour. 

§  8.  Duration  of  labour,  intensity  of  labour,  and  wages,  in 
their  mutual  relations,  must  be  studied  together  in  any 
attempt  to  estimate  the  tendencies  of  capitaUst  production. 
Nor  can  we  expect  their  relations  to  be  the  same  in  any  two 


28o  THE   EVOLUTION   OF 

industries.  Where  labour  is  thinly  extended  over  an  in- 
ordinately long  working-day,  as  in  the  Indian  mills,  it  is 
probable  that  such  improvements  of  organisation  as  might 
shorten  the  hours  to  those  of  an  ordinary  English  factory 
day,  and  intensify  the  labour,  would  be  a  benefit,  and  the 
rise  of  wages  which  might  follow  would  bring  a  double  gain 
to  the  workers.  But  any  endeavour  to  further  shorten  and 
intensify  the  working-day  might  injure  the  workers,  even 
though  their  output  were  increased.  Such  an  instance, 
however,  may  serve  well  to  bring  home  the  relativity  which 
is  involved  in  all  such  questions.  The  net  benefit  derived 
from  a  particular  quantitative  relation  between  hours  of 
labour,  intensity,  and  earnings  would  probably  be  widely 
different  for  English  and  for  Indian  textile  workers.  It 
would,  h  priori,  be  unreasonable  to  expect  that  the  working- 
day  which  would  bring  the  greatest  net  advantage  to  both 
should  be  of  the  same  duration.  So  also  it  may  well  be 
possible  that  the  more  energetic  nervous  temperament  of 
the  American  operative  may  qualify  him  or  her  for  a  shorter 
and  intenser  working-day  than  would  suit  the  Lancashire 
operative.  It  is  the  inseparable  relation  of  the  three  factors 
—duration,  intensity,  and  earnings — which  is  the  important 
point.  But  in  considering  earnings,  not  merely  the  money 
wage,  nor  even  the  purchasing  power  of  the  money,  but  the 
net  advantage  which  can  be  obtained  by  consuming  what  is 
purchased  must  be  understood,  if  we  are  to  take  a  scientific 
view  of  the  question. 

It  should  be  clearly  recognised  that  in  the  consideration 
of  all  practical  reforms  affecting  the  conditions  of  labour, 
the  "wages"  question  cannot  be  dissociated  from  the 
"  hours  "  question,  nor  both  from  the  "  intensity  of  labour  " 
question  ;  and  that  any  endeavour  to  simplify  discussion,  or 
to  facilitate  "labour  movements,"  by  seeking  a  separate 
solution  for  each  is  futile,  because  it  is  unscientific.  When 
any  industrial  change  is  contemplated,  it  should  be  regarded, 
from  the  "  labour  "  point  of  view,  in  its  influence  upon  the 
net  welfare  of  the  workers,  due  regard  being  given,  not 
merely  to  its  effect  upon  wage,  hours,  and  intensity,  but 
to  the  complex  and  changing  relations  which  subsist  in 
each  trade,  in  each  country,  and  in  each  stage  of  industrial 
development  between  the  three. 

But   although,    when   we   bear   in   mind   the   effects   of 


MODERN   CAPITALISM.  28 1 

machinery  in  imparting  intensity  and  monotony  to  labour, 
in  increasing  the  number  of  workers  engaged  in  sedentary 
indoor  occupations,  and  in  compelling  an  ever  larger  pro- 
portion of  the  working  population  to  live  in  crowded  and 
unhealthy  towns,  the  net  benefit  of  machinery  to  the  work- 
ing classes  may  be  questioned,  the  growth  of  machinery  has 
been  clearly  attended  by  an  improved  standard  of  material 
comfort  among  the  machine-workers,  taking  the  objective 
measurement  of  comfort. 

Whatever  allowance  may  be  made  for  the  effects  of 
increased  intensity  of  labour,  and  the  indirect  influences  of 
machinery,  the  bulk  of  evidence  clearly  indicates  that 
machine-tenders  are  better  fed,  clothed,  and  housed  than 
the  hand-workers  whose  place  they  take,  and  that  every 
increase  in  the  efficiency  and  complexity  of  machinery  is 
attended  by  a  rise  in  real  wages.  The  best  machinery 
requires  for  its  economical  use  a  fair  standard  of  living 
among  the  workers  who  co-operate  with  it,  and  with  the 
further  development  of  machinery  in  each  industry  we  may 
anticipate  a  further  rise  of  this  standard,  though  we  are  not 
entitled  to  assume  that  this  natural  and  necessary  progress 
of  comfort  among  machine-workers  has  no  fixed  limit, 
and  that  it  is  equally  applicable  to  all  industries  and  all 
countries. 

It  might,  therefore,  appear  that  as  one  industry  after 
another  fell  under  machine-production,  the  tendency  of 
machine-development  must  necessarily  make  for  a  general 
elevation  of  the  standard  of  comfort  among  the  working 
'  classes.  It  may  very  well  be  the  case  that  the  net  influence 
of  machinery  is  in  this  direction.  But  it  must  not  be  for- 
gotten that  the  increased  spread  of  machine-production  does 
not  appear  to  engage  a  larger  proportion  of  the  working 
population  in  machine-tending.  Indeed,  if  we  may  judge 
by  the  recent  history  of  the  most  highly-evolved  textile 
industries,  we  are  entitled  to  expect  that,  when  machinery 
has  got  firm  hold  of  all  those  industries  which  lend  them- 
selves easily  to  routine  production,  the  proportion  of  the 
whole  working  population  engaged  directly  in  machine- 
tending  will  continually  decrease,  a  larger  and  larger  pro- 
portion being  occupied  in  those  parts  of  the  transport  and 
distributing  industries  which  do  not  lend  themselves  con- 
veniently to  machinery,  and  in  personal  services.      If  this  is 


282  THE   EVOLUTION   OF 

so,  we  cannot  look  upon  the  evolution  of  machinery,  with 
its  demand  for  intenser  and  more  efficient  labour,  as  an 
adequate  guarantee  of  a  necessary  improvement  in  the 
standard  of  comfort  of  the  working  classes  as  a  whole.  To 
put  the  matter  shortly,  we  have  no  evidence  to  show  that  a 
rise  in  the  standard  of  material  comfort  of  shopmen,  writing 
clerks,  school-teachers,  'busmen,  agents,  warehousemen, 
dockers,  policemen,  sandwich-men,  and  other  classes  of 
labour  whose  proportion  is  increasing  in  our  industrial 
society,  will  be  attended  by  so  considerable  a  rise  in  the 
efficiency  of  their  labour  as  to  stimulate  a  series  of  such 
rises.  The  automatic  movement  which  Schulze-Gaevernitz 
and  others  trace  in  the  typical  machine-industries  is  not 
shown  to  apply  to  industry  as  a  whole,  and  if  the  tendency 
of  machine-development  is  to  absorb  a  larger  proportion  of 
the  work  but  a  smaller  proportion  of  the  workers,  it  is  not 
possible  to  found  large  hopes  for  the  future  of  the  working 
classes  upon  this  movement  of  the  earning  of  high  wages  in 
machine-industry. 

§  9.  But  though  the  individual  self-interest  of  the  producer 
cannot  be  relied  upon  to  favour  progressive  wages,  except  in 
certain  industries  and  up  to  a  certain  point,  the  collective 
interest  of  consumers  lends  stronger  support  to  "the 
economy  of  high  wages."  We  have  seen  that  the  possession 
of  an  excessive  proportion  of  "power  to  consume"  by 
classes  who,  because  their  normal  healthy  wants  are  already 
fully  satisfied,  refuse  to  exert  this  power,  and  insist  upon 
storing  it  in  unneeded  forms  of  capital,  is  directly  responsible 
for  the  slack  employment  of  capital  and  labour.  If  the ' 
operation  of  industrial  forces  throw  an  increased  proportion 
of  the  "power  to  consume"  into  the  hands  of  the  working 
classes,  who  will  use  it  not  to  postpone  consumption  but  to 
raise  their  standard  of  material  and  intellectual  comfort,  a 
fuller  and  more  regular  employment  of  labour  and  capital 
must  follow.  If  the  stronger  organisation  of  labour  is  able 
to  raise  wages,  and  the  higher  wages  are  used  to  demand 
more  and  better  articles  of  consumption,  a  direct  stimulus 
to  the  efficiency  of  capital  and  labour  is  thus  applied.  The 
true  issue,  however,  must  not  be  shirked.  If  the  power  of 
purchase  now  "  saved  "  by  the  wealthier  classes  passed  into 
the  hands  of  the  workers  in  higher  money  wages,  and  was 
not  spent  by  them  in  raising  their  standard  of  comfort,  but 


MODERN   CAPITALISM.  283 

was  "  invested  "  in  various  forms  of  capital,  no  stimulus  to 
industry  would  be  afforded;  the  "savings"  of  one  class 
would  have  fallen  into  the  hands  of  another  class,  and  their 
excess  would  operate  to  restrict  industry  precisely  as  it  now 
operates.  Though  we  would  gladly  see  in  the  possession  of 
the  working  classes  an  increased  proportion  of  those  forms 
of  capital  which  are  socially  useful,  this  simple  act  of 
transfer,  however  brought  about,  would  furnish  no  stimulus 
to  the  aggregate  industry.  From  the  standpoint  of  the 
community  nothing  else  than  a  rise  in  the  average  standard 
of  current  consumption  can  stimulate  industry.  When  it  is 
clearly  grasped  that  a  demand  for  commodities  is  the  only 
demand  for  the  use  of  labour  and  of  capital,  and  not  merely 
determines  in  what  particular  direction  these  requisites  of 
production  shall  be  applied,  the  hope  of  the  future  of  our 
industry  is  seen  to  rest  largely  upon  the  confident  belief 
that  the  working  classes  will  use  their  higher  wages  not  to 
draw  interest  from  investments  (a  self-destructive  policy)  but 
to  raise  their  standard  of  life  by  the  current  satisfaction  of 
all  those  wholesome  desires  of  body  and  mind  which  lie 
latent  under  an  "  economy  of  low  wages."  The  satisfaction 
of  new  good  human  desires,  by  endowing  life  with  more  hope 
and  interest,  will  render  all  intelligent  exertion  more  effec- 
tive, by  distributing  demand  over  a  larger  variety  of  com- 
modities will  give  a  fuller  utilisation  both  of  natural  and 
human  resources,  and  by  redressing  the  dislocated  balance 
of  production  and  consumption  due  to  inequality  of  pur- 
chasing power,  will  justify  high  wages  by  increased  fulness 
and  regularity  of  work.  But  it  must  be  clearly  recognised 
that  however  desirable  "  saving  "  may  seem  to  be  as  a  moral 
virtue  of  the  working  classes,  any  large  practice  of  saving 
undertaken  before  and  in  preference  to  an  elevation  of 
current  consumption,  will  necessarily  cancel  the  economic 
advantages  just  dwelt  upon.  Just  as  the  wise  individual  will 
see  he  cannot  afford  to  "save"  until  he  has  made  full 
provision  for  the  maintenance  of  his  family  in  full  physical 
efificiency,  so  the  wise  working  class  will  insist  upon  utilising 
earlier  accesses  of  wages  in  promoting  the  physical  and 
intellectual  efficiency  of  themselves  and  their  families  before 
they  endeavour  to  "  invest "  any  considerable  portion  of 
their  increased  wages.  Mr.  Gould  puts  this  point  very 
plainly  and  convincingly:  "Where  economic  gains  are  small, 


284    THE  EVOLUTION   OF  MODERN   CAPITALISM. 

savings  mean  a  relatively  low  plane  of  social  existence.  A 
parsimonious  people  are  never  progressive,  neither  are  they, 
as  a  rule,  industrially  efficient.  It  is  the  man  with  many 
wants— not  luxurious  fancies,  but  real  legitimate  wants — 
who  works  hard  to  satisfy  his  aspirations,  and  he  it  is  who 
is  worth  hiring.  Let  economists  still  teach  the  utility  and 
the  necessity  of  saving,  but  let  the  sociologist  as  firmly  insist 
that  to  so  far  practise  economy  as  to  prevent  in  the  nine- 
teenth century  a  corresponding  advance  in  civilisation  of  the 
working  with  the  other  classes  is  morally  inequitable  and 
industrially  bad  policy.  I  am  not  sorry  that  the  American 
does  not  save  more.  Neither  am  I  sure  but  that  if  many 
working-class  communities  I  have  visited  on  the  Continent 
were  socially  more  ambitious,  there  would  not  be  less 
danger  from  Radical  theories.  One  of  the  most  intelligent 
manufacturers  I  ever  met  told  me  a  few  years  ago  he  would 
be  only  too  glad  to  pay  higher  wages  to  his  working  people, 
provided  they  would  spend  the  excess  legitimately  and  not 
hoard  it.  He  knew  that  in  the  end  he  should  gain  thereby, 
since  the  ministering  to  new  wants  only  begets  others."^ 
If  there  are  theoretic  economists  who  still  hold  that  "a 
demand  for  commodities  is  not  a  demand  for  labour,"  they 
may  be  reminded  that  a  paradox  is  not  necessarily  true. 
In  fact,  this  particular  paradox  is  seen  to  be  sustained 
by  a  combination  of  slipshod  reasoning  and  moral  pre- 
judice. The  growing  opinion  of  economic  students  is 
veering  round  to  register  in  theory  the  firm  empirical  judg- 
ment from  which  the  business  world  has  never  swerved,  that 
a  high  rate  of  consumption  is  the  surest  guarantee  of 
progressive  trade.  The  surest  support  of  the  "  economy  of 
high  wages"  is  the  conviction  that  it  will  operate  as  a 
stimulus  to  industry  through  increased  consumption.  The 
working  classes,  especially  in  the  United  States  and  in 
England,  show  a  growing  tendency  to  employ  their  higher 
wages  in  progressive  consumption.  Upon  the  steady 
operation  of  this  tendency  the  economic  future  of  the 
working  classes,  and  of  industry  in  general,  largely  depends. 

'  E.  R.  L.  Gould,  Contemporary  Review ^  January  1893. 


285 


CHAPTER  XI. 

SOME  EFFECTS   OF   MODERN   INDUSTRY  UPON   THE  WORKERS 
AS   CONSUMERS. 

§  I.  How  far  the  different  Working  Classes  gain  from  the 

Fall  of  Prices. 
§2.  Part  of  the  Economy  of  Machine-production  compensated 

by  the  growing  Work  of  Distribution. 
%  3.   The  Lowest  Class  of  Workers  gains  least  from  Machitie- 

production. 

§  I.  In  considering  the  effect  of  machine-production  upon 
a  body  of  workers  engaged  in  some  particular  industry  we 
are  not  confined  to  tracing  the  effects  of  improvements  in 
the  arts  and  methods  of  that  single  branch  of  production. 
As  consumers  they  share  in  the  improvements  introduced 
into  other  industries  reflected  in  a  fall  of  retail  prices. 
Insomuch  as  all  English  workers  consume  bread  they  are 
benefited  by  the  establishment  of  a  new  American  railway 
or  the  invention  of  new  milling  machinery  which  lowers  the 
price  of  bread ;  as  all  consume  boots  the  advantage  which 
the  introduction  of  boot-making  machinery  confers  upon 
the  workers  is  not  confined  to  the  higher  wages  which  may 
be  paid  to  some  operatives  in  the  boot  factory,  but  is 
extended  to  all  the  workers  who  can  buy  cheaper  boots. 

How  far  do  methods  of  modern  capitalist  production 
tend  to  benefit  the  labourer  in  his  capacity  as  consumer  ? 

Economic  theory  is  in  tolerably  close  accord  with  experi- 
ence in  the  answer  it  gives  to  this  question.  Each  portion 
of  the  working  classes  gains  in  its  capacity  of  consumer 
from  improved  methods  of  production  in  proportion  to  the 
amount  by  which  its  income  exceeds  the  bare  subsistence 
wage  of  unskilled  workers.    The  highly-paid  mechanic  gains 


286  THE    EVOLUTION    OF 

most,  the  sweated  worker  least.  The  worker  earning  forty 
shillings  per  week  gains  much  more  than  twice  as  much  as 
the  worker  earning  twenty  shillings  from  each  general 
cheapening  in  the  cost  of  production.  There  are  several 
reasons  why  this  is  so. 

I.  Where  there  exists  a  constant  over-supply  of  labour 
competing  for  what  must  be  regarded  at  any  particular  time 
as  a  fixed  quantity  of  employment,  wages  are  determined 
with  tolerably  close  reference  to  the  lowest  standard  of 
living  among  that  class  of  workers,  and  not  by  any  fixed  or 
customary  money  wage.  This  is  particularly  the  case  in 
the  "  sweating  "  trades  of  large  towns.  Here  such  improve- 
ments in  machinery  and  methods  of  industry  as  lower  the 
price  of  articles  which  fall  within  the  "standard  of  living" 
of  this  class  are  liable  to  be  speedily  reflected  in  a  fall  of 
money  wages  paid  for  such  low-skilled  work.  In  other 
words,  a  "  bare  subsistence  wage  "  does  not  gain  by  a  fall 
in  the  price  of  the  articles  which  belong  to  its  standard 
of  comfort. 

Even  in  the  lowest  kinds  of  work  there  is  no  doubt  some 
tendency  to  stick  to  the  former  money  wage  and  thus  to 
raise  somewhat  the  standard  of  real  wages,  but  where  the 
competition  is  keenest  this  vis  inerticB  is  liable  to  be  over- 
borne, and  money  wages  fall  with  prices.  As  we  rise  to  the 
more  highly  skilled,  paid,  and  organised  grades  of  labour, 
we  come  to  workers  who  are  less  exposed  to  the  direct 
constant  strain  of  competition,  where  there  is  not  a  chronic 
over-supply  of  labour.  Here  a  fall  of  retail  prices  is  not 
necessarily  or  speedily  followed  by  any  corresponding  fall  of 
money  wages,  and  the  results  of  the  higher  real  wages 
enjoyed  for  a  time  impress  themselves  in  a  higher  habitual 
standard  of  comfort  and  strengthen  the  resistance  which  is 
offered  to  any  attempt  to  lower  money  wages,  even  though 
the  attempt  may  be  made  at  a  time  when  an  over-supply 
of  labour  does  exist. 

In  proportion  as  a  class  of  workers  is  highly  paid, 
educated,  and  organised,  it  is  able  to  gain  the  benefit 
which  improved  machinery  brings  to  the  consumer,  because 
it  is  better  able  to  resist  the  economic  tendency  to  deter- 
mine wages  by  reference  to  a  standard  of  comfort  inde- 
pendent of  monetary  considerations.  So  far  as  the  lowest 
waged  and  most  closely  competing  labourers  have  gained 


MODERN   CAPITALISM.  28/ 

by  the  fall  of  prices,  it  has  been  due  to  the  pressure  of 
sentiment  on  the  part  of  the  better  class  of  employers  and 
of  the  public  against  the  lowering  of  money  wages,  even 
where  the  smaller  sum  of  money  will  purchase  as  much  as 
a  larger  sum  previously. 

2.  The  smaller  the  income  the  larger  the  proportion  of 
it  that  is  spent  upon  commodities  whose  expense  of  pro- 
duction and  whose  price  is  less  affected  by  machinery. 
Machine-production,  by  the  fall  of  prices  it  brings,  has 
benefited  people  in  direct  proportion  to  their  income.  The 
articles  which  have  fallen  most  rapidly  in  price  are  those 
comforts  and  luxuries  into  which  machine-production  enters 
most  largely.  The  aristocracy  of  the  working  classes,  whose 
standard  of  comfort  includes  watches,  pianos,  books,  and 
bicycles,  has  gained  much  more  by  the  fall  of  prices 
than  those  who  are  obliged  to  spend  all  their  wages  on 
the  purchase  of  bare  necessaries  of  life.  The  gain  of  the 
former  is  manifold  and  great,  the  benefit  of  the  latter  is 
confined  to  the  cheapening  of  bread  and  groceries — a  great 
benefit  when  measured  in  terms  of  improved  livelihood 
no  doubt,  but  small  when  compared  with  the  increase 
of  purchasing  power  conferred  by  modern  production  upon 
the  I^ncashire  factory  family,  with  its  ;^^  or  ^4  a  week, 
and  in  large  measure  counterbalanced  by  the  increased 
proportion  of  the  income,  which,  in  the  case  of  town 
operatives,  goes  as  rent  and  price  of  vegetables,  dairy 
produce,  and  other  commodities  which  have  risen  in 
price. 

3.  The  highly-paid  operatives  generally  work  the  shortest 
hours,  the  low-paid  the  longest.  So  far  as  this  is  not 
compensated  by  an  increased  intensity  of  labour  on  the 
part  of  those  working  short  hours,  it  implies  an  increased 
capacity  of  making  the  most  out  of  their  wages.  Longer 
leisure  enables  a  worker  to  make  the  most  of  his  con- 
sumption, he  can  lay  out  his  wages  more  carefully,  is 
less  tempted  to  squander  his  money  in  excesses  directly 
engendered  by  the  reaction  from  excessive  labour,  and 
can  get  a  fuller  enjoyment  and  benefit  from  the  use  of 
the  consumables  which  he  purchases.  A  large  and  increas- 
ing number  of  the  cheapest  and  the  most  intrinsically  valu- 
able commodities,  of  an  intellectual,  artistic,  and  spiritual 
character,  are  only  open  to  the  beneficial  consumption  of 


288  THE   EVOLUTION   OF 

those  who  have  more  leisure  at   their  command  than  is 
yet  the  lot  of  the  low-skilled  workers  in  our  towns. 

§  2.  If  we  compare  the  statistics  of  wages  we  shall  find 
that  the  largest  proportionate  rise  of  money  wages  has  been 
in  the  highly-organised  machine  industries,  and  that  the 
benefit  which  machinery  confers  upon  the  workers  in  the 
capacity  of  consumers  falls  chiefly  to  the  same  workers. 

It  must  not,  however,  be  assumed  that  improved  methods 
of  production  yield  their  full  benefit  through  competition 
to  the  consuming  public.  On  the  contrary,  much  of  the 
economy  of  machine-production  fails  to  exercise  its  full 
influence  upon  retail  prices.  There  are  two  chief  reasons 
for  this  failure.  To  one  of  these  adequate  attention  has 
been  already  drawn,  the  growth  of  definite  forms  of  capital- 
ist monopoly,  which  secure  at  some  point  or  other  in  the 
production  of  a  commodity,  as  higher  profits,  that  which 
under  free  competition  would  pass  to  the  consumer  through 
lower  shop  prices.  The  second  consists  in  the  abnormal 
growth  of  the  distributive  classes,  whose  multiplication  is 
caused  by  the  limitation  which  the  economy  of  machinery 
imposes  upon  the  amount  of  capital  and  labour  which  can 
find  profitable  employment  in  the  extractive  and  manu- 
facturing processes.  A  larger  and  larger  number  of  indus- 
trial workers  obtain  a  living  by  a  subdivision  of  the  work  of 
distribution  carried  to  a  point  far  beyond  the  bounds  of 
social  utility.  For,  on  the  one  hand,  when  competition  of 
manufacturers  and  transporters  is  more  and  more  confined 
to  a  small  number  of  large  businesses  which,  because  their 
united  power  of  production  largely  transcends  the  con- 
sumption at  profitable  prices,  are  driven  into  closer  com- 
petition, a  larger  amount  of  labour  is  continually  engaged 
in  the  attempt  of  each  firm  to  secure  for  itself  the  largest 
share  of  business  at  the  expense  of  another  firm.  On  the 
other  hand,  shut  out  from  effective  or  profitable  com- 
petition in  the  manufacturing  industries,  a  larger  amount 
of  capital  and  labour  seeks  to  engage  in  those  departments 
of  the  distributive  trade  where  new-comers  have  a  better 
chance,  and  where  by  local  settlement  or  otherwise  they 
have  an  opportunity  of  sharing  the  amount  of  distribution 
that  is  to  be  done.  Hence  a  fall  of  wholesale  prices  is 
usually  not  reflected  in  a  corresponding  fall  of  retail  prices, 
for  competition  in  retail  trade,  as  J.  S.  Mill  clearly  recog- 


MODERN   CAPITALISM.  289 

nised,  "  often,  instead  of  lowering  prices,  merely  divides  the 
gains  of  the  high  price  among  a  greater  number  of  dealers."  ^ 
§  3.  The  wide  difference  between  the  economic  position 
of  the  skilled  mechanic  and  the  common  labourer  shows 
how  fallacious  is  that  treatment  of  the  influence  of  machinery 
upon  the  condition  of  the  working  classes  which  is  com- 
monly found  in  treatises  of  political  economy.  To  present 
a  comparative  picture  of  the  progress  of  the  working  classes 
during  the  last  half  century,  which  assigns  to  them  an 
increase  of  money  wages,  obtained  by  averaging  a  number 
of  rises  in  different  employments,  and  reduces  this  increase 
to  real  wages  without  any  reference  to  the  different  use  of 
wages  by  different  classes,  is  an  unscientific  and  mischievous 
method  of  dealing  with  one  of  the  most  important  economic 
questions.  The  influence  of  machine-production  appears 
to  be  widely  different  upon  the  skilled  mechanic  and  the 
common  labourer  considered  both  as  producers  and  con- 
sumers, and  tends  to  a  wide  difference  in  standard  of 
comfort  between  the  two  classes.  This  difference  is  further 
enhanced  by  the  indirect  assistance  which  machinery  and 
large-scale  industry  gives  to  the  skilled  workers  to  combine 
and  thus  frequently  to  secure  wages  higher  than  are 
economically  requisite  to  secure  their  efficient  work.  On 
the  other  hand,  growing  feelings  of  humanity  and  a  vague 
but  genuine  feeling  of  social  justice  in  an  ever  larger 
portion  of  the  public  often  enable  the  low-skilled  worker 
to  secure  a  higher  standard  of  comfort  than  the  operation 
of  economic  competition  alone  would  enable  him  to  reach. 
But  after  due  allowance  is  made  for  this,  the  conclusion  is 
forced  upon  us  that  the  gain  of  machine-production,  so  far 
as  an  increase  in  real  wages  is  concerned,  has  been  chiefly 
taken  by  the  highly-skilled  and  highly-waged  workers,  and 
that  as  the  character  of  work  and  wages  descends,  the 
proportionate  gain  accruing  from  the  vast  increase  of  pro- 
ductive power  rapidly  diminishes,  the  lowest  classes  of 
workers  obtaining  but  an  insignificant  share. 

^  Priiuiples  of  Political  Economy,  Bk.  ii.,  chap.  iv.  §  3. 


19 


2go 


CHAPTER  XII. 

WOMEN  IN  MODERN  INDUSTRY. 

§    I.   Growing  Employment  of  Women  in  Manufacture. 

§    2.  Machinery  favours  Employjnent  of  Women. 

§    3.  Wages  of  Women  lower  than  of  Men. 

§    4.   Causes  of  Lower  Wages  for  Women. 

§    5.  Smaller  Productivity  or  Efficiency  of  Women^s  Labour. 

§    6.  Factors  enlarging  the  scope  of  Women's  Wage-work. 

§    7.  "  Minimum    Wage "  lower  for  Women — Her  Labour 

often  subsidised  from  other  sources. 
§    8.  Woman's  Contribution  to  the  Family  Wages — Effect  of 

Wofnan's  Work  upon  Man's  Wages. 
§    9.  Tendency  of  Woman's  Wage  to  low  uniform  level. 
§  10.   Custom  and  Competitio?i  as  determi?iants  of  Low  Wages. 
§  II.  Lack  of  Organisation  among  Women — Effect  on  Wages. 
§  12.   Over-supply  of  Labour  in  Women's  Employi7ients  the 

root-evil. 
§  13.  Low  Wages  the  chief  cause  of  alleged  Low  "  Value"  of 

Woman's  Work. 
§  14.  Lndus trial  Position   of  Woman  analogous  to  that  of 

Low-skilled  Men. 
§  1 5.  Damage  to  Home-life  arising  from  Women's  Wage-zvork. 

§  I.  Modern  manufacture  with  machinery  favours  the 
employment  of  women  as  compared  with  men.  Each 
census  during  the  last  half  century  shows  that  in  England 
women  are  entering  more  largely  into  every  department 
of  manufacture,  excepting  certain  branches  of  metal  work, 
machine-making  and  shipbuilding,  etc.,  where  great  mus- 
cular strength  is  a  prime  factor  in  success. 

The  following  table,^  indicating  the  number  of  males  and 

^  The  figures  for  the  periods  1841  to  1881  are  drawn  from  Mr. 
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drawn  firom  the  Census  Report,  and  arranged  as  nearly  as  possible  in 
accordance  with  Mr.  Booth's  classification. 


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292 


THE  EVOLUTION  OF 


females  employed  in  the  leading  groups  of  manufactures  at 
decennial  points  since  1841,  clearly  indicates  the  nature 
and  extent  of  the  industrial  advance  of  woman. 

From  this  table  we  perceive  that  while  the  number  of 
males  engaged  in  these  manufactures  has  increased  by  53 
per  cent,  during  the  half  century  1841  to  1891,  the  number 
of  females  has  increased  by  221  per  cent.  This  movement, 
which  must  be  regarded  partly  as  a  displacement  of  male 
by  female  labour,  partly  as  an  absorption  of  new  manufac- 
tures by  female  labour,  proceeded  with  great  rapidity  from 


TEXTILE   WORKERS. 

1200.000   '851     1861      1871     I88f.    1891 


900.000 


600.000 


300000 


MALE. 


FEMALE^ 


the  beginning  of  the  period  up  to  1881.  The  check  apparent 
in  the  last  decennium,  in  which  the  number  of  males  em- 
ployed seems  to  have  increased  faster  than  that  of  the 
females,  does  not,  however,  indicate  a  reversal  or  even  a 
suspension  of  the  industrial  movement.  It  is  attributable 
to  an  abnormal  change  in  a  single  great  industry — the 
cotton  trade;  excluding  this,  the  employment  of  females 
in  each  group  of  manufactures  has  grown  faster  than  that 
of  males. 


MODERN  CAPITALISM. 


293 


If  we  confine  our  survey  to  adults  (excluding  males  and 
females  below  fifteen)  the  rapid  and  regular  advance  of 
female  employment  as  compared  with  male  is  still  more 
striking. 

When  we  turn  to  the  textile  industries  and  to  dress,  the 
change  of  proportionate  employment  among  the  sexes  is 
very  noteworthy.  In  textiles  and  dyeing  there  was  a  con- 
tinuous decline  in  the  absolute   numbers   of  adult   male 


1300.000 


1000.000 


700.000 


400.000 


100.000 


DRESS   WORKERS. 

1851     1861    1871     1881    1891 


FEMALE. 


workers  and  a  continuous  increase  of  female  workers  up 
to  1881.  In  185 1  there  were  394,400  men  employed,  in 
1 88 1  the  number  had  fallen  to  345,900,  while  the  women 
had  risen  during  the  same  period  from  390,800  to  500,200. 
The  census  figures  for  1891  mark  a  decided  check  in  this 
movement.  Adult  male  workers  show  an  increase  of  34,000 
upon  the  1881  figures  in  the  textile  industries,  while  the 
increase  of  female  workers  is  only  15,000.  This  is  due,  on 
the  one  hand,  to  the  feverish  and  disordered  expansion  of 


294 


THE   EVOLUTION   OF 


the  cotton  industry,  which  offers  a  larger  proportion  of  male 
employment  than  other  textile  branches  ;  on  the  other  hand, 
to  the  alarming  decay  of  the  lace  and  linen  industries,  which 
show  an  absolute  decline  of  female  employment  amounting 
to  nearly  13,000.  So  likewise  in  the  dress  industries  377,400 
men  were  employed  in  1851,  and  335,900  in  1881,  while 


800000 
900.000 
1000.000 
1100.000 
1200000 
1300000 


MO0.000 
1300.000 
1200.000 
(.100.000 
1000000 
900jOOO 
800.000 
700.000 

eooooo 

500000 
400.000 


1851     1861     1871 


MALE. 


FEMALE. 


the    number    of   women    employed    had    increased  from 
441,000  to  589,000.^ 

^  Here  also  the  figures  for  1891  give  a  result  slightly  divergent  from 
the  above.  While  the  number  of  women  employed  continues  to  increase, 
reaching  691,441,  the  number  of  men  employed  are  greater  than  in 
1 88 1,  amounting  to  408,392,  a  large  proportionate  increase,  though 
less  than  that  of  the  women. 


MODERN   CAPITALISM.  295 

These  figures  chiefly  indicate  a  displacement  of  male  by 
female  labour.  But  the  movement  is  by  no  means  peculiar 
to  the  textile  and  dress  industries  which  may  appear  specially 
adapted  to  the  faculties  of  women.  Wherever  women  have 
got  a  firm  footing  in  a  manufacture  a  similar  movement  is 
traceable ;  the  relative  rate  of  increase  in  the  employment 
of  women  exceeds  that  of  men,  even  where  the  numbers  of 
the  latter  do  not  show  an  absolute  decline.  Such  industries 
are  wood  furniture  and  carriages ;  printing  and  book- 
binding; paper,  floorcloths,  waterproof;  feathers,  leather, 
glues ;  food,  drink,  smoking ;  earthenware,  machinery, 
tools.^  Women  have  also  obtained  employment  in  con- 
nection with  other  industries  which  are  still  in  the  main 
"  male "  industries,  and  in  which  no  women,  or  very  few, 
were  engaged  in  1841.  Such  are  fuel,  gas,  chemicals ; 
watches,  instruments,  toys.  The  only  group  of  machine 
industries  in  which  their  numbers  have  not  increased  more 
rapidly  than  those  of  men  since  185 1  are  the  metal 
industries.  Over  some  of  these,  however,  they  are  obtaining 
an  increased  hold.  In  the  "  more  mechanical  portions  "  of 
the  growing  "  cycle "  industry,  hollow-ware,  and  in  certain 
departments  of  the  watchmaking  trade,  they  are  ousting 
male  labour,  executing  with  machinery  the  work  formerly 
done  by  male  hand-workers.  ^ 

From  this  and  similar  evidence  relating  to  the  statistics  of 
employment  in  modern  industrial  countries,  the  following 
conclusions  seem  justified  : — 

(i.)  That  the  tendency  of  modern  industry  is  to  increase 
the  quantity  of  wage-work  given  to  women  as  compared 
with  that  given  to  men. 

In  qualification  of  this  tendency  consideration  should  be 
taken  of  the  greater  irregularity  of  women's  work,  and  of 

^  The  recent  statistics  of  tailoring  and  shoemaking,  which  are 
becoming  more  and  more  machine  industries,  mark  this  movement 
strongly.  In  the  tailoring  trade,  while  male  workers  increase  from 
107,668  in  1881  to  119,496  in  1891,  female  workers  increase  from 
52,980  to  89,224.  In  the  boot  and  shoe  trade,  while  men  increase 
from  180,884  to  202,648,  women  increase  from  35,672  to  46,141.  In 
Leicestershire  and  Northamptonshire,  where  boots  and  shoes  are  a 
machine-industry,  40  women  are  employed  to  100  men,  though  the 
proportion  for  the  whole  industry  is  only  23  women  to  100  men. 

^  Report  to  Commission  of  Labour  on  Employments  of  Women,  pp. 
142,  146. 


296  THE  EVOLUTION  OF 

the  fact  that  a  large  number  of  women  returned  as 
industrial  workers  give  only  a  portion  of  their  working-day 
to  industry. 

(2.)  That  this  tendency  is  specially  operative  in  manu- 
facturing industries.  The  increase  of  female  employment 
in  the  "dealing"  industries  and  in  " industrial  service "  is 
not  larger  than  the  increase  of  male  employment  between 
1851  and  1881. 

(3.)  That  in  the  manufacturing  industries,  omitting  a  few 
essentially  male  industries  where  even  under  machinery 
the  muscles  are  severely  taxed,  the  increased  rate  of  female 
employment  is  greatest  in  those  industries  where  machinery 
has  been  most  highly  developed,  as  for  example  in  the 
textile  industries  and  dress. 

Out  of  1,840,898  women  placed  in  the  industrial  class  in 
1 89 1  no  fewer  than  1,319,441  were  engaged  in  textile 
industries  and  dress,  though  under  the  latter  head  there  is 
of  course  still  a  good  deal  of  hand  industry. 

It  seems  evident  that  modern  improvements  in  machinery 
under  normal  circumstances  favour  the  employment  of 
women  rather  than  of  men.  There  is  some  reason  to 
suppose  that  machinery  also  favours  the  employment  of 
children  as  compared  with  adults,  where  the  economic 
forces  are  allowed  free  play.  In  the  textile  industries  of 
the  United  States  the  work  of  women  and  children  pre- 
dominates even  more  largely  than  in  England;  in  1880  the 
number  of  women  and  children  employed  were  112,859  as 
compared  with  59,685  men,  while  in  Massachusetts  out  of 
61,246  work-people  only  22,180  were  adult  males.  So  far 
as  legislation  and  public  opinion  do  not  interfere,  the  tend- 
ency is  strongly  in  favour  of  employing  children.  Mr. 
Wade  says,  in  Fibre  and  Fabric,  "  The  tendency  of  late 
years  is  towards  the  employment  of  child  labour.  We  see 
men  frequently  thrown  out  of  employment  owing  to  the 
spinning  mule  being  displaced  by  the  ring-frame,  or  children 
spinning  yarn  which  men  used  to  spin.  In  the  weave- 
shops,  girls  and  women  are  preferable  to  men,  so  that  we 
may  reasonably  expect  that  in  the  not  very  distant  future 
all  the  cotton  manufacturing  districts  will  be  classed  in  the 
category  of  she-towns."  ^ 

^  Quoted  Wells,  Contemporary  Review,  1887,  p.  392. 


MODERN   CAPITALISM.  297 

§  2.  In  modern  machinery  a  larger  and  larger  amount  of 
inventive  skill  is  engaged  in  adjusting  machine-tending  to 
the  physical  and  mental  capacity  of  women  and  children. 
The  evolution  of  machinery  has  not  moved  constantly  in 
this  direction.  In  cotton-spinning,  for  example,  the  earlier 
machines — Hargreave's  jennies  and  Arkwright's  water-frames 
— were  generally  worked  by  women  and  children,  the  women 
who  had  been  engaged  in  the  use  of  the  older  instruments 
— the  distaff,  spindle,  hand-wheel — coming  into  the  mills. 
But  the  growing  complexity  and  size  of  the  mule  made  it 
too  cumbrous  for  women  and  children,  and  spinning  for 
a  while  became  a  male  occupation  in  England.  In  the 
United  States  the  difficulty  of  procuring  male  labour  stimu- 
lated the  invention  of  the  ring  spinning-frame,  some  sixty 
years  ago,  which  could  be  worked  by  woman's  labour.  The 
limitations  and  imperfections  of  this  mode  of  spinning 
retarded  its  adoption  in  England  for  upwards  of  half  a 
century.  But  recent  improvements  have  led  to  a  rapid 
increase  of  the  adoption  of  the  ring-frame  in  Lancashire. 
In  the  low  medium  and  low  counts  it  is  rapidly  displacing 
the  mule,  and  in  countries  where  fine  counts  are  little  spun 
it  will  probably  be  the  dominant  machine.^  In  Lancashire 
it  does  not,  however,  seem  at  all  likely  to  be  rendered 
capable  of  displacing  the  mule  in  finer  counts.  The  ring- 
frame  throws  spinning  once  more  into  the  hands  of  women 
and  of  children,  who  in  some  Lancashire  towns  are  quickly 
displacing  the  labour  of  the  men. 

So  far  as  children  are  concerned,  the  economic  tendency 
to  adjust  machine-tending  to  their  limited  strength  is 
in  some  measure  defeated  by  the  growth  of  strong  public 
feeling  and  legislative  protection  of  younger  children.  Had 
full  and  continued  licence  been  allowed  to  the  purely 
"  economic "  tendencies  of  the  factory  system  in  this 
country  and  in  America,  there  can  be  little  doubt  but  that 
almost  the  whole  of  the  textile  industry  and  many  other 
large  departments  of  manufacture  would  be  administered 
by  the  cheap  labour  of  women  and  young  children.  The 
profits  attending  this  free  exploitation  of  cheap  labour 
would  have  been  so  great  that  invention  would  have  been 

^  Marsden,  Cotton  Spinning,  p.  296,  etc.  S.  Andrew,  Fifty  Years 
Cotton  Trade,  p.  7. 


298  THE   EVOLUTION   OF 

concentrated,  even  more  than  has  been  the  case,  upon 
spreading  out  the  muscular  exertion  and  narrowing  the 
technical  skill  so  as  to  suit  the  character  of  the  cheaper 
labour.  It  is  quite  possible  that  some  of  the  oppressive 
conditions  of  our  early  factory  system,  the  exhausting  hours 
of  labour,  the  cruelty  of  overseers,  the  utter  neglect  of  all 
sanitation,  the  bad  food,  might  have  been  found  opposed 
to  the  true  interests  of  economy  and  efificiency,  and  that 
the  more  developed  factory  might  have  been  managed  more 
humanely.  But  if  we  may  judge  by  the  progress  made  in 
the  employment  of  weaker  labour  where  it  has  had  free 
scope,  it  seems  reasonable  to  believe  that,  had  no  Factory 
Acts  been  passed,  and  had  public  feeling  furnished  no 
opposition,  the  great  mass  of  the  textile  factories  of  this 
country  would  have  been  almost  entirely  worked  by  women 
and  children. 

We  have  seen  already  that  the  advantages  attending 
efificient  labour  furnish  no  guarantee  that  it  will  be  most 
profitable  to  employ  the  most  efificient  labour  at  the  highest 
wages.  The  evidence  of  industrial  history  shows  that  it 
will  often  be  most  profitable  to  employ  less  efificient  labour 
provided  that  labour  can  be  got  "  cheap."  The  increasing 
employment  of  women  in  machine-industry  is  in  nearly  all 
cases  directly  traceable  to  the  "  cheapness "  of  woman's 
labour  as  compared  with  man's 

§  3.  Thus  we  are  brought  to  the  discussion  of  the  im- 
portant question  which  underlies  all  understanding  of  the 
position  of  woman  in  modern  industry — *'  Why  are  women 
paid  less  wages  than  men  ?  " 

In  almost  all  kinds  of  work  in  which  both  men  and 
women  are  engaged,  the  women  earn  less  than  the  men. 
Where  men  and  women  are  engaged  in  the  same  industries 
but  in  dififerent  branches,  the  wage  level  of  the  woman's 
work  is  nearly  always  lower  than  that  of  the  men.  A 
general  survey  of  industry  shows  that  the  highly-paid 
industries  are  almost  invariably  monopolised  by  men,  the 
lowly-paid  industries  by  women.  This  applies  not  only  to 
unskilled  and  skilled  manual  work,  but  to  routine-mental, 
intellectual,  and  artistic  work,^  wherever  custom  or   com- 

1  This  fourfold  classification — (i)  manual,  (2)  routine-mental,  (3) 
artistic,  (4)  intellectual — is  a  serviceable  suggestion  of  Mr.  Sidney  Webb 
in  his  paper  upon  woman's  wages  (^Economic  Journal,  vol.  i.,  1881). 


MODERN   CAPITALISM.  299 

petition  are  the  chief  direct  determinants  of  wages. 
Certain  exceptions  to  this  rule,  which  readily  suggest  them- 
selves, are  explained  by  the  fact  that  the  wages  of  the 
labour  in  question  are  determined  not  by  custom  or 
competition,  but  by  some  other  law.  Where  the  product 
is  of  the  highest  intellectual  or  artistic  quality,  sex  makes 
no  difference  in  the  price;  "the  rent  of  ability"  of 
George  Eliot  or  Madame  Patti  is  determined  by  the  law  of 
monopoly  values.  In  certain  employments,  as,  for  instance, 
the  stage,  sexual  attractions  give  women  a  positive  advan- 
tage, which  in  certain  grades  of  the  profession  assist  them 
to  secure  a  high  level  of  remuneration.  So  also  in  a  few 
cases  governments  or  private  employers  pay  women  as 
highly  as  men  for  the  same  work,  though  women  could  be 
got  to  work  for  less.  But  even  in  those  occupations  where 
women  would  seem  to  be  most  nearly  upon  an  economic 
equality  with  men,  in  literature,  art,  or  the  stage,  the  scale 
of  pay  for  all  work,  save  that  where  special  skill,  personal 
attraction,  or  reputation  secures  a  "fancy"  price,  is  lower 
for  women  than  for  men. 

§  4.  It  is  easy  to  find  answers  to  the  question,  "  Why  are 
women  paid  less  than  men?"  which  evidently  contain  an 
element  of  truth.  Three  answers  leap  readily  to  the  lips : 
"Because  women  cannot  work  so  hard  or  so  well," 
"  Because  women  can  live  upon  less  than  men,"  "  Because 
it  is  more  difficult  for  a  woman  to  get  wage-work."  Each 
of  these  answers  comprises  not  one  reason  but  a  group  of 
reasons  why  women  get  low  wages,  and  the  difficulty  lies  in 
relating  the  different  reasons  in  these  different  groups  so  as 
to  yield  something  that  shall  approach  an  accurate  solution 
of  the  problem.  Setting  these  groups  in  somewhat  more 
exact  language,  we  may  classify  the  causes  as — 

a.  Causes  relating  to  "productivity"  or  efficiency  of 
labour. 

d.  Causes  relating  to  "  needs  "  or  standard  of  comfort. 

c.  Causes  relating  to  character  and  intensity  of  com- 
petition. 

§  5.  a.  Women  do  not  on  the  average  work  so  hard  or  so 
well  as  men,  so  that  if  wages  were  paid  with  sole  reference 
to  quantity  and  quality  of  the  product  of  labour  women 
would  get  less.  This  inferiority  in  the  net  efficiency  of 
women's  labour  is  partly  due  to  physical,  partly  to  social 


300  THE  EVOLUTION  OF 

causes.  The  following  are  the  leading  factors  in  this 
inferiority  of  efficiency: — 

(i)  The  physical  weakness  of  woman,  as  compared  with 
man,  closes  many  occupations  to  her.  In  manufactures 
the  metal  industries  have  been  almost  entirely  closed  to 
women,  and  most  branches  of  the  mining  and  railway 
industries.  In  England  and  America  the  rougher  work  of 
agriculture  is  almost  wholly  given  over  to  male  labour,  and 
in  several  continental  countries  there  is  a  growing  tendency 
to  spare  women  the  kinds  of  labour  which  tax  the  muscular 
forces  most  severely.  The  growing  consideration  for  the 
duties  of  maternity,  operating  through  public  opinion  and 
legislation,  favour  this  curtailment  of  woman's  sphere  of 
activity.  Further,  in  all  employments  where  physical 
strength  is  an  important  factor,  the  net  productivity  of 
woman's  labour  tends  to  fall  below  man's,  although  in 
some  cases  superior  deftness  or  lightness  of  hand  related 
to  physical  fragility  may  compensate.  Even  in  modern 
textile  factories  the  superior  force  of  man's  muscles  often 
gives  him  a  great  advantage.  In  fustian  and  velvet  cutting, 
where  the  same  piece-wages  are  paid  to  men  and  women, 
the  actual  takings  of  the  men  are  about  double.  "  Every 
person  has  two  long  frames  upon  which  the  cloth  is 
stretched  ready  for  cutting,  and  while  women  are  unable  to 
cut  more  than  one  piece  at  a  time,  men  can  cut  two  pieces 
without  difficulty."  i 

Where  physical  strength  is  not  a  prime  factor  it  may  enter 
incidentally.  So  even  in  weaving  women  are  under  some 
disadvantage  through  inability  to  work  the  heavy  Jacquard 
looms,  and  to  "  tune  "  their  looms.^ 

Where  manual  work  is  concerned  brute  strength  and 
endurance  form  an  important  ingredient  in  what  is  called 
manual  skill,  and  affect  the  quality  of  the  work  as  well  as 
the  pace  and  regularity  of  the  output.  Though,  as  we  have 
seen,  a  chief  object  of  modern  machinery  is  to  diminish  the 
importance  of  this  element,  it  plays  no  inconsiderable  part 
in  affecting  the  quantity  of  work  turned  out  by  women  as 
compared  with  men  even  in  industries  where  the  direct 
strain  upon  the  muscles  is  less  severe. 

(2)  But  even  when  we  take  those  kinds  of  work  where 

^  Report  to  Commissioji  of  Labour  on  Employment  of  Wovien, '^.  14I. 
2  Webb,  Economic  Journal,  vol.  i.  p.  658. 


MODERN    CAPITALISM.  3OI 

skill  seems  least  dependent  upon  physical  force,  men  have 
generally  some  advantage  in  productivity,  though  a  smaller 
one.  There  are  cases  in  which  this  does  not  seem  to  be  the 
case,  as  in  the  weaving  industries  of  Lancashire  and  part  of 
Yorkshire,  where  women  not  merely  receive  the  same  piece 
wages,  but  earn  weekly  wages  which,  after  making  allowance 
for  sickness  and  irregularity,  indicate  that  in  quantity  and 
quality  of  work  they  are  upon  a  level  with  the  men.^  In 
certain  branches  of  low-skilled  mental  work  the  same  holds 
true,  as  in  the  Savings  Bank  Department  of  the  Post  Office. 
But  generally,  even  where  the  "  skill "  is  of  a  purely 
technical  order,  the  man  has  the  advantage.  Where  the 
elements  of  design,  resource,  judgment,  enter  in,  the 
superiority  of  male  labour  is  unquestioned,  and  in  occupa- 
tions which  demand  these  qualities  women  are  confined 
generally  to  the  lower  routine  portions  of  the  work.  This 
is  the  case  in  the  Post  Offices  where  women  are  largely  used 
as  sorting  clerks  and  telegraphists,  and  in  numerous  offices 
of  private  business  firms.  How  far  these  defects  of  manual 
and  intellectual  skill,  which  generally  prevent  women  from 
successfully  competing  in  the  higher  grades  of  labour,  are 
natural,  how  far  the  results  of  defective  education  and 
industrial  training,  we  are  not  called  upon  here  to  consider. 
The  fact  stands  that  women  do  not  work  so  well. 

(3)  The  reluctance  of  male  workers  to  allow  women  to 
qualify  for  and  to  undertake  certain  kinds  of  work  which 
men  choose  to  regard  as  "  their  own,"  though  sometimes 
defensible  when  all  the  terms  of  competition  are  taken  into 
account,^  must  be  held  to  confine  and  lessen  the  average 

^  I  am  informed,  however,  in  Lancashire,  that  the  strongest  and 
ablest  male  workers  will  not  undertake  weaving,  finding  it  tedious  and 
monotonous. 

'^  Women  sometimes  abuse  the  superior  competitive  powers  con- 
tained in  their  lower  standard  of  subsistence,  and  the  smaller  number 
of  those  dependent  on  them,  to  undersell  male  labour.  In  Sheffield 
file-making,  where  women  are  paid  the  same  list  of  prices  as  men, 
it  is  said  that  they  practise  sweating  in  their  homes  to  the  detriment  of 
male  workers.  So  in  carpet-weaving  at  Halifax ;  recently  when  the 
men  struck  against  a  reduction  upon  their  wage  of  35s.,  women  took 
the  work  at  20s.  (Lady  Dilke,  "  Industrial  Position  of  Women," 
Nineteenth  Century,  Oct.  1893.)  In  watch-making,  "the  hand- 
work for  which  men  were  paid  about  i8s.  a-week  is  now  done  by 
women  with  machinery  for  about  12s."  {Report  to  Labour  Commission 
on  Women^s  Employments,  p.  146.) 


302  THE   EVOLUTION   OF 

productivity  of  female  labour  in  certain  departments  of 
industry.  Closely  allied  to  this  is  the  social  feeling,  partly 
based  upon  the  recognition  of  a  real  difference  of  physical 
and  mental  vigour,  partly  upon  prejudice,  which  bars 
women  from  the  highly-paid  and  responsible  posts  of 
superintendence  and  control  in  industries  where  both  sexes 
are  employed.  In  a  general  comparison  of  the  male  and 
female  wage  in  a  highly  organised  industry,  the  fact  that 
women  are  held  disqualified  for  all  posts  of  high  emolu- 
ment and  responsibility  has  a  material  effect  upon  the 
average  of  wages.  Where  men  and  women  work  in  the 
same  industry,  the  women  are  commonly  confined  to 
the  less  productive  work,  and  where  they  do  the  same 
work  they  seldom  reach  man's  level  in  quantity  and 
quality. 

(4)  This  inferior  efficiency  is  not  solely  attributable  to 
these  reasons.  Woman's  incentive  to  acquire  industrial 
efficiency  is  not  so  great  as  man's.  A  large  number  of 
women-workers  do  not  enter  an  industrial  occupation  as 
the  chief  means  of  support  throughout  their  life.  The 
influence  of  matrimony  and  domestic  life  operates  in  various 
ways  upon  women's  industrj'.  The  expectation  of  marriage 
and  a  release  from  industrial  work  must  lessen  the  interest  of 
women  in  their  work.  The  fact  that  even  while  unmarried 
a  large  proportion  of  women-workers  are  not  dependent 
upon  their  earnings  for  a  livelihood  will  have  the  same 
result  A  larger  proportion  of  the  woman's  industrial 
career  is  occupied  in  acquiring  the  experience  which  makes 
her  a  valuable  worker,  and  the  probability  that,  after  she 
has  acquired  it,  she  may  not  need  to  use  it,  diminishes  both 
directly  and  indirectly  the  net  value  of  her  industrial  life ; 
the  element  of  uncertainty  and  instability  prevents  the 
advancement  of  competent  women  to  posts  where  fixity 
of  tenure  is  an  important  factor. 

Where  married  women  are  engaged  in  industrial  work 
either  in  factories  or  at  home,  domestic  work  of  necessity 
engages  some  of  their  strength  and  interest,  and  is  liable  to 
trench  upon  the  energy  which  otherwise  might  go  into 
industry.  Even  unmarried  women  have  frequently  some 
domestic  work  to  do  which  is  added  to  their  industrial 
work.  Thus  the  incentive  to  efficiency  is  weaker  in  woman, 
her  industrial  position  is  less  stable  and  her  industrial  life 


MODERN   CAPITALISM.  303 

shorter,  while  part  of  her  energy  is  diverted  to  other  than 
industrial  channels. 

(5)  There  is  conclusive  evidence  to  show  that  women 
are  more  often  absent  from  work  owing  to  sickness  and 
other  claims  upon  their  time  than  men.^  Though  closely 
related  to  the  former  factors  this  may  be  treated  separately 
in  assessing  the  net  productiveness  of  women,  because  it  is 
distinctly  measurable.  But  in  touching  this  point  it  should 
be  remarked  that  weaker  muscular  development  does  not 
necessarily  imply  more  sickness.  The  loss  of  working  time 
sustained  by  women  could  probably  be  reduced  consider- 
ably by  more  attention  to  physical  training  and  exercise 
and  by  a  higher  standard  of  diet. 

(6)  Although  the  limitations  of  law  and  custom,  which 
limit  the  hours  of  labour  for  women  in  many  of  their 
industrial  occupations  and  forbid  them  to  undertake  night- 
work,  cannot  be  reasonably  held  to  reduce  the  net  efficiency 
of  women's  labour  taken  as  an  aggregate,  they  must  be 
allowed  to  diminish  the  direct  net  productiveness  of  women 
in  certain  employments  as  compared  with  men,  and  either 
to  bar  them  out  of  these  employments  or  engage  them  upon 
lower  wages.  In  certain  textile  factories  where  goods  of 
some  special  pattern  are  woven  at  short  notice,  and  where 
overtime  is  essential,  women  cannot  be  employed.  In  the 
Post  Office,  where  night-work  is  required  at  certain  seasons, 
women  are  at  a  disadvantage,  which  is  doubtless  reflected 
in  the  lower  wages  they  receive. 

(7)  lastly,  the  inferior  mobility  of  woman  as  compared 
with  man  has  an  influence  in  reducing  the  average  efficiency 
of  her  labour.  On  the  one  hand,  women  are  more  liable  to 
have  the  locality  of  their  home  fixed  by  the  requirements  of 
the  male  worker  in  the  family ;  on  the  other  hand,  they  are 
physically  less  competent  to  undertake  work  far  from  their 
home.  Hence  they  are  far  more  narrowly  restricted  in 
their  choice  of  work  than  men.  They  must  often  choose 
not  that  work  they  like  best,  or  can  do  best,  or  which  is 
most  remunerative,  but  that  which  lies  near  at  hand.     This 

^  Dr.  Bertillon  {Journal  de  la  Society  de  Siatistique  de  Paris,  Oct.- 
Nov.  1892)  shows  that  among  the  Lyons  silkworkers  (1872-89)  and  in 
the  Italian  Societies  (1881-85)  ^^  sickness  of  women  is  considerably 
greater  than  of  men.  In  Lyons  9.39  days  as  compared  with  7.81  for 
men;  in  Italy  8.5  as  compared  with  6.6. 


304  THE   EVOLUTION   OF 

restriction  implies  that  large  numbers  of  women  undertake 
low-skilled,  low-paid,  ineffective,  and  irregular  work  at  their 
own  homes  or  in  some  neighbouring  work-room,  instead  of 
engaging  in  the  more  productive  and  more  remunerative 
work  of  the  large  factories.  Every  limitation  in  freedom  of 
choice  of  work  signifies  a  reduction  in  the  average  effective- 
ness of  labour. 

§  6.  These  elements  of  inferior  physique  and  manual 
skill,  lower  intelligence  and  mental  capacity,  lack  of  educa- 
tion and  knowledge  of  life,  irregularity  of  work,  more 
restricted  freedom  of  choice,  must  in  different  degrees 
contribute  to  the  inferior  productivity  of  woman's  industrial 
labour. 

In  regarding  this  influence  the  experienced  student  of 
industrial  questions  hardly  requires  to  be  reminded  that 
these  must  be  regarded  not  merely  as  causes  of  low  wages, 
but  also  as  effects.  This  constant  recognition  of  the  inter- 
action of  the  phenomena  we  are  regarding  as  cause  and 
effect  is  essential  to  a  scientific  conception  of  industrial 
society.  Women  are  paid  low  wages  because  they  are 
relatively  inefificient  workers,  but  they  also  are  inefficient 
workers  because  they  are  paid  low  wages. 

While  this  smaller  productivity  diminishes  the  maximum 
wage  attainable  by  women  as  compared  with  men,  it  is 
evident  that  many  forces  are  at  work  which  tend  to  equalise 
the  productivity  of  men  and  women  in  industry :  the  evolu- 
tion of  machinery  adapted  to  the  weaker  physique  of 
women ;  the  breakdown  of  customs  excluding  women  from 
many  occupations ;  the  growth  of  restrictions  upon  male 
adult  labour  with  regard  to  the  working-day,  etc.,  corre- 
spondent with  those  placed  upon  women;  improved  mobility 
of  women's  labour  by  cheaper  and  more  facile  transport  in 
large  cities  ;  the  recognition  by  a  growing  number  of  women 
that  matrimony  is  not  the  only  livelihood  open  to  them,  but 
that  an  industrial  life  is  preferable  and  possible.  These 
forces,  unless  counteracted  by  stronger  moral  and  social 
forces,  seem  likely  to  raise  the  average  productivity  of 
women's  industrial  labour,  and  to  incite  her  more  and  more 
to  undertake  industrial  wage-work. 

§  7.  As  the  maximum  wage  may  be  said  to  vary  with 
productivity,  so  the  minimum  wage  is  said  to  vary  with 
the  "  wants  "  of  the  worker.     Women  are  said  to  "  want " 


MODERN   CAPITALISM.  305 

less  than  man,  and  therefore  the  stress  of  competition  can 
drive  their  wages  to  a  lower  level.  It  is  possible  that  a 
woman  can  sustain  the  smaller  quantity  of  physical  energy 
required  for  her  work  somewhat  more  cheaply  than  a  man 
can  sustain  the  energy  required  for  his  work,  and  that  the 
early  increments  of  material  comfort  above  the  bare  sub- 
sistence line  may  be  attended  by  a  larger  increase  of 
productivity  in  the  man  than  in  the  woman.  If  this  is  so, 
then  the  minimum  subsistence  wage  and  the  wage  of  true 
economic  efificiency,  the  smallest  wage  a  wise  employer  in 
his  own  interest  will  consent  to  pay,  are  lower  in  the  case 
of  women  than  of  men.  But  this  difference  furnishes  no 
adequate  explanation  of  the  difference  between  the  male 
and  the  female  minimum  wage.  The  wage  of  the  low- 
skilled  male  labourer  enables  him  to  consume  certain  things 
which  do  not  belong  strictly  to  his  "  subsistence  " — to  wit, 
beer  and  tobacco ;  the  wage  of  the  low-skilled  female 
labourer  often  falls  below  what  is  sufficient  with  the  most 
rigid  economy  to  provide  "  subsistence."  We  are  not  then 
concerned  with  a  difference  which  refers  primarily  to  the 
quantity  of  food,  etc.,  required  to  support  life.  The  wages 
of  the  low-skilled  labourer  in  regular  employ  would,  if 
properly  used,  suffice  to  furnish  him  more  than  a  bare 
physical  subsistence ;  the  wages  of  the  lowest-paid  women 
workers  in  factories  would  not  suffice  to  maintain  them  in 
the  physical  condition  to  perform  their  work.^ 

It  is  not  then  precisely  with  the  "standard  of  comfort" 
of  male  and  female  workers  that  we  are  concerned.  The 
economic  relation  in  which  men  and  women  workers  stand 
to  other  members  of  their  family  is  a  more  important  factor. 
The  wage  of  a  male  worker  must  be  sufficient  to  support 
not  only  himself  but  the  average  family  dependent  upon 
him,  in  the  standard  of  comfort  below  which  he  will  not 
consent  to  work.  When  little  work  is  available  for  his  wife 
and  children,  or  where  his  "standard  of  comfort"  requires 
them  not  to  undertake  wage-work,  his  minimum  wage  must 
suffice  to  keep  some  four  persons.  His  standard  of  com- 
fort may  be  beaten  down  by  stress  of  circumstances,  his 

^  This  holds,  for  example,  of  many  branches  of  the  fur,  trimmings, 
stays,  umbrella,  match-box  trades,  and  the  "finishing"  departments 
of  the  trousers  and  shirt  trades  in  East  London.  Cf.  Miss  Collet  in 
Labour  and  Life  of  the  People,  vol.  i. 

20 


306  THE  EVOLUTION   OF 

family  may  be  driven  to  take  what  work  they  can  get,  but 
in  any  case  his  wage  must  be  above  the  "  subsistence  "  of  a 
single  man.  When  the  man  is  the  sole  wage-earner,  or  is 
only  assisted  slightly  by  his  family,  as,  for  example,  in  the 
metal  and  mining  and  building  industries,  average  male 
wages  are  much  higher  than  in  the  textile  industries,  where 
the  women  and  children  share  largely  in  the  work.^ 

Women  workers,  on  the  other  hand,  have  not  in  most 
cases  a  family  to  support  out  of  their  wages.  In  the  majority 
of  instances  their  own  "sustenance"  does  not  or  need  not 
fall  entirely  upon  the  wages  they  earn.  They  are  partly 
supported  by  the  earnings  of  a  father  or  a  husband  or  other 
relative,  upon  some  small  unearned  income,  upon  public  or 
private  charity.  Where  married  women  undertake  work  in 
order  to  increase  the  family  income,  or  where  girls  not 
obliged  to  work  for  a  living  enter  factories  or  take  home 
work  to  do,  there  is  no  ascertainable  limit  to  the  minimum 
wage  in  an  industry.  Grown-up  women  living  at  home  will 
often  work  for  a  few  shillings  a  week  to  spend  in  dress  and 
amusements,  utterly  regardless  of  the  fact  that  they  may  be 
setting  the  wage  below  starvation-point  for  those  unfortunate 
competitors  who  are  wholly  dependent  on  their  earnings  for 


^  In  the  United  States  the  general  standard  of  money  wages  for 
working  women  in  cities  is  considerably  higher  than  in  England.  The 
average  wage  throughout  the  country  was  recently  estimated  to  amount  to 
$5.24per  week,  or  just  under  2 is.  But  the  divergences  from  this  average 
are  much  wider  than  in  England.  The  lowest  wages  fall  almost  to  the 
lowest  English  level,  for  some  3  per  cent,  of  the  number  averaged  were 
earning  less  than  8s.  a  week.  About  20  per  cent,  were  earning  between 
14s.  and  19s.  per  week.  The  earnings  in  the  chief  textile  industries 
show  wide  variations,  yielding,  however,  a  rough  average  of  about  20s. 
weekly  wages  in  cotton  mills,  and  about  22s.  in  woollen  mills.  A 
general  comparison  would  yield  a  standard  of  some  15s.  as  the  customary 
wage  corresponding  to  the  los.  in  England  {Report  of  the  Commissioner 
of  Labour,  1888,  chap.  iii.  and  Table  xxix.).  Some  allowance,  how- 
ever, must  be  made  for  the  more  expensive  living  in  American  cities. 
However,  in  spite  of  the  fact  that  organised  action  is  almost  unknown 
among  women  workers  in  America,  the  real  wages  are  higher  than  in 
England.  This  is  partly  owing  to  the  general  insistence  upon  a  higher 
standard  of  consumption,  partly  to  the  fact  that  a  larger  number  of 
employments  are  open  to  women  than  in  England,  and  partly  to  the 
higher  skill  and  intelligence  they  put  into  their  work.  Thus  the 
maximum  wage,  measured  by  productivity,  is  higher,  the  minimum, 
measured  by  "  wants,"  is  higher,  while  the  terms  of  competition  do  not 
so  generally  keep  down  actual  wages  I0  the  minimum. 


MODERN   CAPITALISM.  307 

a  living.  Even  where  girls  living  at  home  pay  to  their 
parents  the  full  cost  of  their  keep,  the  economy  of  family 
life  may  enable  them  to  keep  down  wages  to  such  a  point 
that  another  girl  who  has  to  keep  herself  alone  may  be 
sorely  pressed,  while  a  woman  with  a  family  to  support 
cannot  get  a  living. 

Miss  Collet,  in  her  investigation  of  women  workers  in 
East  London,  remarked  of  the  shirt-finishers,  one  of  the 
lowest-paid  employments — "  These  shirt-finishers  nearly  all 
receive  allowances  from  relatives,  friends,  and  charitable 
societies,  and  many  of  them  receive  outdoor  relief."^  This 
is  true  of  most  of  the  low-paid  work  of  women.  Even  in 
the  textile  factories,  with  the  exception  of  weaving,  most  of 
the  scales  of  wages  are  below  what  would  suffice  to  keep  the 
recipient  in  the  standard  of  comfort  provided  by  the  family 
wage. 

§  8.  The  relation  of  a  worker  to  other  persons  in  the 
family  is  such  that,  in  determining  the  minimum  wage  for 
any  member,  it  is  right  to  take  the  standard  of  comfort  of 
the  family  as  the  basis,  and  to  consider  the  mutual  relations 
of  the  several  workers  upon  this  basis.  We  shall  find  that 
not  merely  is  the  wage  of  the  woman  affected  by  the  indus- 
trial condition  of  the  adult  male  worker,  but  that  the  wage 
of  the  latter  is  aflfected  by  women's  wages,  while  the  wages 
of  child  labour  exercise  an  influence  upon  each.  The 
problem  is  one  of  the  distribution  of  work  and  wages 
among  the  several  working  members  of  a  family,  how  much 
of  the  family  work  and  how  much  of  the  family  wage  shall 
fall  to  each.  As  the  children,  and  in  many  cases  the 
women,  are  not  free  agents  in  the  transaction,  it  may  often 
happen  that  they  are  employed  for  wages  which  represent 
neither  the  cost  of  subsistence  nor  any  other  definite 
amount  but  the  prevalent  opinion  of  the  dominant  male  of 
the  family.  A  "  little  piecer  "  in  a  Lancashire  mill  may  get 
wages  more  than  sufficient  for  his  keep,  while  many  a  farm 
boy  or  errand  boy  could  not  keep  himself  in  food  out  of  the 
earnings  he  brings  home.  This  element  of  economic  un- 
freedom  in  the  lives  of  many  women  and  most  children 
must  not  be  left  out  of  sight  in  a  consideration  of  the  com- 
parative statistics  of  wages  for  men,  women,  and  children. 

^  Labour  and  Life  of  the  People,  vol.  i.  p.  410, 


308  THE   EVOLUTION   OF 

Men  workers  often  fail  to  recognise  that  by  encouraging 
their  wives  and  driving  their  children  to  the  mills  or  other 
industrial  work,  they  are  helping  to  keep  down  their  own 
wages.  Men's  wages  in  all  the  textile  industries  of  the 
world  are  low  as  compared  with  those  prevalent  in  industries 
demanding  no  higher  skill  or  intelligence,  but  in  which 
women  take  no  important  part.  If  the  male  textile  workers 
used  their  rising  intelligence  and  education  to  keep  their 
women  and  children  out  of  the  mills,  men's  wages  must  and 
would  distinctly  rise.^  The  low  wages  paid  to  both  men 
and  women  in  many  branches  of  textile  work  as  compared 
with  wages  in  other  industries  on  approximately  the  same 
level  of  skill,  goes  for  the  most  part  to  the  consuming  public 
in  reduced  prices  of  textile  wares.  It  is  true  the  Lancashire 
and  certain  of  the  Yorkshire  textile  operatives  often  enjoy 
a  fairly  high  family  wage,  but  they  give  out  a  more  than 
correspondent  aggregate  of  productive  energy. 

American  statistics  yield  some  striking  evidence  in  illus- 
tration of  the  depressing  influence  exercised  upon  male 
wages  by  the  labour  of  women  and  children.  "  Among 
factory  operatives,  all  branches  taken  together,  the  wives 
and  children  who  contribute  to  the  support  of  the  family 
are,  on  an  average,  as  one  and  a  quarter  to  each  family, 
while  among  those  employed  in  the  building  trades  the 
average  of  wives  and  children  who  work  is  only  one  to  every 
four  families.  Hence  in  the  building  trades  the  wages  of 
the  man  supply  about  gy^  per  cent,  of  the  total  cost  of  the 
family's  living,  while  among  the  factory  operatives  the  wages 
of  the  man  only  supply  66  per  cent,  or  two-thirds,  of  the 
cost  of  the  family's  living,  because  the  other  one-third  is 
furnished  by  the  labour  of  the  wife  or  children.  Nor  is  this 
because  the  cost  of  living  of  the  factory  operative  family  is 
greater  than  that  of  the  labourer  in  the  building  trades,  for 
while  the  average  family  in  the  building  trades  contains  4J 
persons,  that  of  the  factory  operative  contains  5I  persons.'^ 

^  It  must,  however,  be  borne  in  mind  that  the  results  of  such  a  policy 
followed  by  Lancashire,  or  any  other  single  part  of  the  textile  industry 
of  the  world,  would  be  qualified  or  even  negatived  if  the  example 
was  not  followed  by  their  competitors. 

"  This  effect  of  industrial  opportunities  for  women  and  children  in 
promoting  early  and  more  fruitful  marriages  is  also  illustrated  in  Lan- 
cashire ;  the  average  family  of  the  factory  operative  is  considerably 
higher  than  the  average  for  the  working  classes  as  a  whole. 


MODERN   CAPITALISM.  3O9 

The  total  cost  of  living  in  the  former  is  about  $50  a  year 
more  than  in  the  latter,  and  the  wages  of  the  man  in  the 
former  are  nearly  $250  a  year  more  than  those  of  the 
latter."^  Similar  evidence  is  tendered  from  other  trades, 
the  gist  of  which  is  summed  up  in  the  Report  of  the  Labour 
Bureau  of  Massachusetts  in  the  following  words : — "Thus 
it  is  seen  that  in  neither  of  the  cases  where  the  man  is 
assisted  by  his  wife  or  children  does  he  earn  as  much  as 
other  labourers.  Also  that  in  the  case  where  he  is  assisted 
by  both  wife  and  children  he  earns  the  least. "^ 

§  9.  But  though  the  minimum  wage  of  women  and 
children  is,  strictly  speaking,  not  to  be  measured  by  any 
ascertainable  standard  of  subsistence,  so  far  as  the  factory 
work  of  adult  women  is  concerned  los.  may  be  said  to  be  a 
standard  wage.  Factory  wages,  excepting  for  cotton-weavers, 
seldom  vary  widely  from  this  sum.  Differences  of  difficulty, 
disagreeability,  or  skill  have  little  power  to  raise  wages 
much  above  los.,  or  to  depress  them  much  below.  More- 
over, fluctuations  of  trade  and  prices  have  very  little  effect 
upon  this  wage.  Though  women  are  largely  employed  in 
industries  where  improvements  in  machinery  and  methods 
have  immensely  increased  the  productivity  of  labour,  their 
wages  are  very  little  higher  than  they  were  half  a  century 
ago.  Since  this  rate  prevails  in  many  industries  where  an 
adequate  supply  of  women's  labour  cannot  be  drawn  from 
married  or  "  assisted  "  women,  and  where  the  wage  must  be 
sufficient  to  tempt  women  who  have  to  keep  themselves, 
I  OS.  may  be  said  to  be  the  "bare  subsistence"  wage  for 
women.  The  wide  prevalence  of  this  wage  and  its  inde- 
pendence of  conditions  of  locality,  time,  nature  of  work, 
have  made  it  generally  recognised  as  a  "  customary  wage," 
and  for  any  casual  work,  or  any  new  employment  requiring 
ordinary  feminine  skill  or  exertion,  los.  is  regarded  as 
sufficient  remuneration  for  a  woman.  The  basis  of  this 
custom  is  the  knowledge  that  women  can  always  be  induced 
to  work  for  a  bare  subsistence  measured  at  los.  or  there- 
abouts, or  for  extra  comforts  procurable  by  this  sum  regarded 
as  a  subsidiary  income.^ 

^  Gunton,  Wealth  and  Progress,  p.  169. 
^  Report  of  the  Statistics  of  Labour,  p.  71. 

^  Dr.  Smart  has  a  valuable  treatment  of  the  subject  in  his  pamphlet, 
IVomen's  Wages,  pp.  22-25. 


310 


THE   EVOLUTION   OF 


It  appears  that  the  wages  of  bare  subsistence  and  the 
wages  of  extra  comforts  have  a  certain  tendency  to  equality 
in  some  of  the  low-paid  factory  trades  of  London,  though 
accompanied  by  a  difference  in  the  quality  and  intensity 
of  the  labour  involved. 

The  following  diagram  exhibits  the  uniformity  of  factory 
wages  in  East  End  women's  industries  : — 


Upon  this  table  Miss  Collet  bases  the  following 
opinion: — "The  most  striking  feature  is  the  uniformity 
of  maximum  wages  and  the  difference  in  the  skill  required, 


MODERN  CAPITALISM.  31I 

and  I  believe  it  to  be  the  fact  that  the  match  girls  and 
the  jam  girls,  who  are  at  the  bottom  of  the  social  scale, 
do  not  have  to  work  so  hard  for  their  money  as,  for  example, 
the  capmakers  and  bookbinders,  who,  in  the  majority  of 
cases,  belong  to  a  much  higher  social  grade.  And  wherC' 
as  the  bookfolder  or  booksewer  who  earns  us.  a  week 
exercises  greater  skill,  and  gives  a  closer  attention  to  her 
work,  than  the  jam  or  match  girl  who  earns  the  same 
amount,  that  sum  which  would  be  almost  riches  to  the 
dock-labourer's  daughter  represents  grinding  poverty  to 
the  daughter  of  the  clerk  or  bookbinder,  with  a  much 
higher  standard  of  decency,  if  she  is  by  any  chance 
obliged  to  depend  on  herself.  How  is  it  that  this  uni- 
formity prevails,  and  that  efficiency  brings  with  it  nothing 
but  the  privilege  of  working  harder  for  the  same  money  ?"^ 

Miss  Collet's  reply  to  the  question  is,  that  while  the 
match  and  jam  girls  pay  the  full  price  of  home,  board, 
and  lodging,  the  others  often  pay  nothing,  spending  all 
they  get  upon  dress  and  amusement.  This,  taken  along 
with  the  influence  of  the  competition  of  home-workers  in 
the  bookfolding  and  booksewing  trades,  explains  the  fact 
that  the  harder  and  higher-skilled  work  gets  no  higher 
wages. 

§  10.  A  knowledge  of  the  productivity  of  labour  as 
measuring  the  maximum  wage-level,  and  of  "  wants "  or 
standard  of  comfort  as  measuring  the  minimum  wage- 
level,  does  not  enable  us  to  determine  even  approximately 
the  actual  wage-level  in  any  industry.  The  actual  wage 
may  be  fixed  at  any  point  between  the  two  extremes.  So 
far  as  competition  is  an  active  determinant,  everything  will 
depend  upon  the  quantitative  relation  between  supply  and 
demand  for  labour.  When  there  is  a  short  supply  of  labour 
available  for  any  work,  wages  may  rise  to  the  maximum; 
when  there  is  more  labour  available  than  is  required,  wages 
will  fall  towards  the  minimum.  But,  as  we  have  already 
admitted,  competition  works  very  slowly  and  inadequately 
in  many  of  the  industries  in  which  women  and  children  are 
engaged.  The  force  of  custom,  assisted  by  ignorance  of 
the  labour  market,  prevents  women  from  taking  advantage 
of  an  increased  demand  or  a  decreased  supply  of  labour 

^  Labour  and  Life  of  the  People,  vol.  i.  p.  469. 


312  THE  EVOLUTION   OF 

to  lift  this  wage  above  the  customary  level  towards  the  level 
of  productivity.  Women  are  more  contented  to  Hve  as  they 
have  lived  than  men.  As  Miss  Collet  says,  "  the  content- 
ment of  women  themselves,  when  they  have  obtained 
enough  for  their  standard  of  living,  is  another  reason 
why  competition  is  so  ineffective  among  highly-skilled 
workers."^ 

This  "contentment"  or  apathy,  partly  the  result  of 
ignorance,  partly  the  result  of  sex  feebleness,  enhanced 
by  the  exhausting  burden  of  present  industrial  condi- 
tions, is  alluded  to  by  the  several  reports  of  the  sub- 
commissioners  to  the  Labour  Commission  as  a  chief 
difficulty  in  the  effective  organisation  of  women  workers, 
even  when  the  work  is  conducted  in  large  factories. 

In  other  ways,  woman  is  less  of  a  purely  *'  economic " 
creature  than  man.  The  flow  of  labour  from  one  occupa- 
tion to  another,  which  tends  to  equalise  the  net  advantages 
amongst  male  occupations,  is  far  feebler  among  women 
workers,  notwithstanding  that  trade  union  barriers  and 
the  vested  interests  of  expensively-acquired  skill  are  less 
operative  in  woman's  work.  The  reluctance  of  women  to 
freely  communicate  to  one  another  facts  regarding  their 
wage  and  conditions  of  labour  is  particularly  noted  as  a 
barrier  to  united  action. 

Those  who  have  investigated  the  conditions  of  women 
workers  in  towns  are  agreed  as  to  the  enormous  influence  of 
class  and  aesthetic  feelings  in  narrowing  the  competition. 
"The  girl  who  makes  seal-skin  caps  at  a  city  warehouse 
does  not  wish  to  work  for  an  East  End  chamber-master,  even 
though  she  could  make  more  at  the  commoner  work ;  just 
as  a  soap-box  maker  would  not  care  to  make  match-boxes, 
even  though  skilled  enough  to  make  more  by  it."^  This 
sensitiveness  of  social  distinction  in  industrial  work,  based 
partly  upon  consideration  of  the  class  and  character  of 
those  employed,  partly  upon  the  skill  and  interest  of  the 
work  itself,  is  a  widespread  and  powerful  influence  among 
women  workers.  It  tends  to  bring  about  that  equalisation 
of  wages  in  skilled  and  unskilled  industries  which,  as  we 
have  seen,  practically  exists,  for  if  there  is  an  economic  rise 

1  Labour  and  Life  of  the  People,  vol.  i.  p.  460. 
^  Ibid..,  vol.  i.  p.  459;  cf.  also  p.  469. 


MODERN   CAPITALISM.  313 

of  wages  in  the  lower  grades  of  work,  it  does  not  tempt  the 
competition  of  high-skilled  workers,  while  a  corresponding 
rise  in  the  wages  of  the  higher  grades  would  draw  com- 
petitors from  the  lower  grades  to  qualify  themselves  for 
undertaking  work  which  would  at  once  give  them  more 
money  and  more  social  respect.  The  lower  wages  often 
paid  for  more  highly-skilled  work  simply  mean  that  the 
women  take  out  a  larger  portion  of  their  wage  in  "gentility." 
This  influence,  which  is  operative  amongst  men,  reducing 
the  wages  of  routine-mental  labour  to  the  level  of  common 
unskilled  manual  labour,  is  powerful  in  all  ranks  of  women, 
rising  perhaps  in  its  potency  with  the  social  status  of  the 
woman.  Considerations  of  "gentility"  enable  us  to  obtain 
"  teachers  "  for  board  schools  at  an  average  "  salary  "  of  ^^75 
per  annum,  as  compared  with  ^^119  for  men,  the  fixed  scale 
of  women  teachers  in  the  same  grade  being  16  per  cent,  less 
than  for  men. 

Thus  custom,  ignorance,  contentment,  social  prejudices 
operate  in  different  ways  and  in  different  degrees  to  pre- 
vent women  workers  from  claiming  in  higher  wages  that 
share  of  the  increased  capacity  of  the  community  for 
making  wealth  which  men  workers  have  been  able  to 
procure. 

§  II.  The  above-mentioned  forces  operate  chiefly  as 
barriers  of  free  economic  competition.  But  women  are 
equally  at  a  disadvantage  when  and  in  so  far  as  they  do 
compete  for  work  and  wages.  Weak,  unorganised  units  of 
labour,  they  are  compelled  to  make  terms  with  large 
organised  masses  of  capital.  By  the  organised  action  of 
trade  unionism  the  majority  of  skilled  working  men  have 
been  able  to  raise  their  wages  far  above  the  bare  subsistence 
minimum,  and  to  hold  it  at  the  higher  level  until  a  firm 
standard  of  higher  comfort  is  formed  to  be  a  platform 
for  further  endeavour.  With  a  few  significant  exceptions, 
skilled  women  workers  have  been  unable  to  do  the  same. 
Instead  of  presenting  a  firm,  united  front  to  their  employers 
in  their  demand  for  higher  wages,  or  their  resistance  of  a 
fall,  they  are  taken  singly  and  compelled  to  submit  to  any 
terms  which  the  employers  choose  to  impose,  or  custom 
appears  to  sanction.  The  consequence  is  that  in  most 
instances  skilled  women  workers  are  paid  very  little  higher 
wages  than  unskilled  women  workers.     The  high  value  due 


3t4  THE   EVOLUTION   OF 

to  their  skill  goes  either  to  the  employer  in  high  profits,  or, 
where  keen  competition  operates,  to  the  consumer  in  low 
prices ;  the  woman  who  puts  out  skill  is  paid  not  accord- 
ing to  her  worth  but  according  to  her  wants.  Yet  the 
possession  of  technical  skill  is  the  basis  of  trade  organi- 
sation. Wherever  a  number  of  women  workers  possess  a 
particular  skill  and  experience,  and  are  engaged  in  fairly 
stable  employment,  the  requisites  of  effective  trade  organi- 
sation exist.  By  combination  these  women  can  wield  an 
economic  power,  measured  by  the  difficulty  and  cost  of 
dismissing  them  en  masse  and  replacing  them  by  less  skilled 
and  experienced  labour,  which  they  can  use  as  a  lever  to 
raise  their  wages  and  other  conditions  of  employment  by 
a  series  of  steps  until  they  approach  the  maximum  limit 
imposed  by  their  productivity.  That  such  action  is  feasible 
is  proved  by  experience.  Concerted  action  of  factory 
women  in  several  minor  trades,  both  in  London  and  in  the 
provincial  towns,  has  been  attended  with  success.  The 
examples  of  the  cigar-makers  at  Nottingham,  the  women  at 
Messrs.  Bryant  &  May's,  the  rope-makers  in  a  large  East 
London  factory,  show  what  can  be  done  by  determined  com- 
bination, even  confined  to  workers  in  a  single  factory. 
But  the  crucial  case  is  furnished  again  by  the  textile 
industries.  In  the  Lancashire  weaving,  where  men  and 
women  are  working  side  by  side  in  the  same  sheds,  and  are 
members  of  the  same  trades  unions,  we  find  the  one 
notable  exception  to  the  low  wages  of  women.  Here 
women's  weekly  earnings  are  nearly  the  same  as  men's. 
The  weaving  is  unquestionably  skilled  work,  but  so  also  is 
a  great  deal  of  other  textile  work  not  nearly  so  well  paid. 
It  is  beyond  doubt  the  power  of  the  joint  union  of  male 
and  female  weavers  that  alone  maintains  these  wages  for 
women.  The  same  is  the  explanation  of  the  equality  of 
wages  paid  to  men  and  women  in  the  Sheffield  file- 
making. 

*'  But  what  if  the  Union  should  break  down  ?  It  is  as 
certain  as  anything  based  on  experience  can  be,  that  in  a 
few  weeks,  or  even  days,  it  would  be  possible  for  the  em- 
ployers to  reduce  the  wages  of  the  women-weavers ;  that 
rather  than  lose  their  work,  women  would  consent  to  the 
reduction ;  that  as  they  accepted  lower  wages,  men  would 
drop  off  to  other  industries,  and  would  cease  to  compete  for 


MODERN   CAPITALISM.  315 

the  same  work;  and  that  in  a  comparatively  short  time 
power-loom  weaving  would  be  left,  like  its  sister,  cotton- 
spinning,  to  women  workers  exclusively,  and  wages  fall  to 
the  general  level  of  women's  wages."  ^  Where  these  condi- 
tions of  strong  combination  in  trades  unions  do  not  exist 
we  find  that  women's  weekly  wages  fall  considerably  below 
men's  in  the  weaving  trades.  This  is  so  in  most  of  the 
woollen  industries  of  Yorkshire,  and  still  more  in  the  minor 
and  more  scattered  textile  work  in  other  counties.^  In  the 
spinning-mills  of  Lancashire  the  women,  combined  in  unions 
of  their  own,  are  able  to  obtain  wages  considerably  higher 
than  those  which  prevail  elsewhere  for  similar  work,  though 
not  so  high  as  that  of  weavers.  The  following  table,  in 
which  spinning  and  weaving  and  other  departments  are 
"pooled"  for  purposes  of  wages,  is  sufficient  to  indicate  the 
advantage  Lancashire  women  enjoy  from  their  strong  in- 
dustrial position,  as  compared  on  the  one  hand  with  average 
factory  work  and  wages,  on  the  other  hand  with  the  less 
favourably  placed  worsted  and  linen  industries,  and  even 
with  the  woollen. 

^  Smart,  IVoman^s  Wages,  p.  23. 

-  In  some  cases  where  women  are  found  getting  the  same  rate  of 
wages  as  men,  the  industry  is  a  woman's  industry  in  which  a  few  lower- 
skilled  or  inferior  male  workers  are  employed.  The  woman's  scale 
dominates,  the  men  who  are  employed  descending  to  it.  This  is  the 
case  in  some  weaving  trades  where  men  work  still  almost  entirely  with 
hand-looms,  leaving  women  with  a  practical  monopoly  of  power-loom 
work.  {Report  of  Woollen  Manufacturesin  Miscellaneous  English  Towns, 
pp.  98,  99. )  Where  both  men  and  women  are  freely  engaged  in  the 
same  class  of  work,  the  men  are  always  (save  in  the  area  of  the  Lanca- 
shire trade  unions)  paid  at  higher  rates  :  where  the  same  rates  are  paid 
they  are  determined  upon  the  woman's  scale.  The  comparison  between 
Huddersfield  and  other  cloth-making  towns  in  Yorkshire  establishes 
this  point.  "In  the  cloth  mills  of  these  three  districts,  Bradford, 
Huddersfield,  and  Leeds,  men  and  women  engaged  upon  the  same 
work  at  the  looms  receive  the  same  pay.  In  the  Huddersfield  district 
the  proportion  of  men  to  women  among  the  weavers  is  much  greater 
than  it  is  in  the  districts  of  Bradford,  Halifax,  or  Leeds,  and  in  the 
Huddersfield  districts  alone  there  is  a  weaver's  scale,  according  to 
which  women  are  paid  from  15  to  50  per  cent,  below  men.  The  propor- 
tion of  women  is,  however,  rapidly  increasing ;  and  I  found  many  firms 
where  the  scale  is  not  in  operation.  At  some  places  men  and  women 
were  paid  alike  upon  the  woman's  scale.  At  other  firms  men  were  paid 
at  a  slightly  higher  rate  than  women,  the  women's  scale  being  the  basis 
of  calculation  for  all  classes  of  work."  (Miss  AhiahSiXa  in  Heports  on 
Employment  of  Women  to  the  Labour  Commission^  p.  loo.) 


$l6  1"HE  EVOLUTIOK   OF 


CottflOL  WooDoL  Wbofed.  Liaen. 


&   d. 

s.   d. 

s.    d. 

s.  d. 

Men     . 
Lads  and  boys 
Women 
Gills     . 

.    25    3 
.      9    4 

-     15    3 
6  10 

23  2 
8    6 

13  3 
7    5 

23  4 
6    6 

II  II 
6    2 

19    9 
6    3 
8  II 

4  II' 

Thus  we  see  that  whereas  men's  wages  are  nearly  the 
same  in  die  three  chief  English  industries,  women's  wages 
vary  widely,  yielding  a  very  great  advantage  to  the  Lanca- 
shire cotton-workers. 

§  12.  It  caimo^  howevCT,  reasonably  be  maintained  that 
the  tdiole  of  this  economic  advantage  owned  by  weavers 
and  other  wonaea  workers  in  Lancashire  is  due  directly  to 
organisation.  It  is  no  doubt  partly  due  to  the  conditions 
idiidi  also  make  Trade  Uniimism  effective,  an  abundant 
demand  for  female  labour  in  relation  to  the  supply.  In 
the  less  concentrated  woollen  industries  of  the  West  of 
En^nd,  where  a  large  supply  of  female  labour  is  avail- 
able beyond  the  demand,  the  difference  between  men's 
and  women's  wages  is  far  greater  than  it  is  even  in  those 
parts  of  Yorkshire  where  women  are  but  slightly  organised. 
This  brings  us  to  the  most  vital  point  in  the  problem  of 
the  industrial  position  of  women.  When  there  is  an  over- 
sap^y  of  labour  qualified  to  compete  for  any  work,  wages 
must  fall  to  the  minimum  of  "wants"  unless  those  in 
possession  of  the  work  are  so  strongly  organised  as  to 
prevent  outsiders  from  effectively  competing.  In  a  highly- 
dulled  trade  the  workers  may  often  have  a  practical  mon- 
c^ly  of  the  skill,  which  gives  them  both  power  to  organise 
and  power  when  organised.  But  in  a  low-skilled  trade,  or 
where  employers  are  able  to  introduce  unlimited  numbers 
of  girls  into  the  trade,  there  exists  no  such  power  to  organise. 
Those  who  most  need  organisation  are  least  able  to  organise. 
This  is  the  crux  for  low-skilled  male  labour,  and  the  great 
mass  of  women's  industries  are  in  the  same  economic  condi- 
tion, because  the  kind  of  skill  required  is  possessed  or  easily 
attainable  by  a  much  larger  number  of  competilors  for 
woric  than  are  sufficient  to  meet  the  demand  at  a  decent 
wage.  The  deep  abiding  difficulty  in  the  way  of  organ- 
ising women  workers  lies  here.    Cut  out  as  they  are,  by 

*  Revert  »H  Principal  Textile  Tradeif  p.  xxr. 


MODERN   CAPITALISM.  317 

physical  weakness,  by  lack  of  the  means  of  technical  train- 
ing, in  some  cases  by  organised  opposition  of  male  workers, 
or  by  social  prejudices,  from  competing  in  a  large  number 
of  skilled  industries,  their  competition  within  the  permitted 
range  of  occupations  is  keener  than  among  men  :  not  merely 
in  the  unskilled  but  in  the  skilled  industries  the  a\-ailable 
supply  of  labour  is  commonly  far  in  excess  of  the  demand, 
for  the  skill  is  generally  such  as  is  common  to  or  easily 
attainable  by  a  large  number  of  the  sex.  To  this  must  be 
added  the  consideration  that  a  larger  proportion  of  women's 
industries  are  concerned  with  the  production  of  luxuries 
which  are  peculiarly  subject  to  fluctuation  of  trade  by  the 
elements  of  season,  weather,  fashion,  and  rise  ©r  fall  of 
incomes.  Finally,  a  much  larger  proportion  of  women's 
work  is  done  in  small  factories,  in  workshops,  and  in  the 
home,  under  conditions  which  are  inimicable  to  the 
effective  organisation  of  the  workers.  Until  out-work  is 
much  diminished,  and  effective  inspection  and  limita- 
tion of  hours  in  small  workshops  drives  a  much  larger 
proportion  of  women  workers  into  large  factories,  where 
closer  social  intercourse  can  lay  the  moral  foundation  of 
trade  organisation  in  mutual  acquaintance,  trust,  and  regard, 
there  is  little  prospect  of  women  being  able  to  raise  their 
"customary"  wage  considerably  abo%*e  its  present  subsist- 
ence level,  or  to  obtain  any  considerable  alle%*iation  of  the 
burdensome  conditions  of  excessive  hours  of  labour,  in- 
sanitar)-  surroundings,  unjust  fines,  etc,  from  which  many 
women  workers  suffer. 

Women  cannot  in  most  of  their  industries  organise 
effectively  under  present  conditions.  In  each  trade,  there- 
fore, the  workers  employed  are  surrounded  by  a  permanent 
mass  of  p)otential  *'  black  legs  "  willing  to  take  their  labour 
from  urgent  need,  ignorance,  or  thoughtlessness,  and  pos- 
sessing or  able  to  attain  the  small  skill  required.  In  men's 
industries,  save  in  the  most  unskilled,  there  is  not  a  constant 
over-supply  of  labour,  in  most  women's  industries  there  is. 

§  13.  Comparing  women's  wages  with  men's  we  are  now 
able  to  sum  up  as  follows: — The  sm.aller  productivity  of 
woman's  work  makes  the  possible  maximum  wage  lower; 
the  smaller  wants  of  women  make  the  possible  minimum 
wage  lower ;  the  greater  weakness  of  women  as  comjietitors, 
arising  chiefly  from  excess  of  supply  of  labour,  makes  their 


3l8  THE   EVOLUTION   OF 

actual  wage  approximate  to  the  lower  rather  than  to  the 
higher  level. 

In  regarding  productivity  as  a  measure  of  maximum  wage 
it  is  necessary  to  guard  carefully  against  one  misapprehen- 
sion. So  far  as  we  are  comparing  the  wage  of  men  and 
women  engaged  upon  the  same  work,  the  smaller  wages  of 
the  latter  may  easily  be  seen  to  have  some  relation  to  the 
smaller  product  of  their  labour.  But  when  productivity  is 
expressed  in  terms  of  the  selling  value  of  the  work  no  such 
measurement  is  open  to  us.  We  are  thus  thrown  back  on 
market  value  and  are  told  that  the  reason  women  get  so 
little  is  that  what  they  make  fetches  so  low  a  price.  But 
the  circularity  of  this  argument  will  appear  on  revising  the 
question  and  asking,  "  Why  do  women's  products  sell  so 
cheap  ?  "  the  obvious  answer  being,  "  Because  the  cost  of 
labour  in  them  is  so  little," — i.e.,  because  women  receive  low 
wages.  But  if  we  refuse  to  take  selling  prices  as  the 
measure  of  productivity,  what  measure  have  we  ?  No  accu- 
rate measure  of  effort,  skill,  or  efficiency  is  open  if  we  refuse 
the  scale  of  the  market  itself  Yet  if  we  consider  the 
conditions  of  wages  and  prices  in  such  "sweated"  trades  as 
shirt-making,  we  cannot  but  conclude  that  the  consumer 
gets  the  advantage  of  the  "  sweating " ;  that  is  to  say,  a 
certain  portion  of  the  productivity  of  the  workers  passes  to 
the  consumer  through  the  agency  of  low  prices.  That 
which  might  have  gone  to  the  shirt-makers  in  decent  wages 
has  gone  to  the  purchaser.  This  criticism  of  course  posits 
a  measurement  of  productivity  at  variance  with  that  afforded 
by  competition,  or,  more  strictly  speaking,  it  discounts  the 
abnormal  terms  of  the  competition  in  the  sweated  industry. 
If  we  say  that  is,  ii^d.  as  the  retail  price  of  a  shirt  is  a 
"  sweating "  or  unfair  price,  we  mean  that  the  skill  and 
effort  embodied  in  this  product  would,  if  there  were 
absolute  equality  of  competition  and  absolute  fluidity  of 
labour,  be  measured  at  say  3s.  It  is  true  that  no  such 
measurement  is  open  to  us,  and  all  such  estimates  are  guess- 
work. But  the  idea  which  underlies  the  sentiment  against 
"  sweating  "  is  a  true  one,  although  it  has  no  exact  practical 
embodiment  so  long  as  our  only  meaning  of  "value"  is 
value  in  exchange  at  present  competitive  rates.  It  is 
therefore  not  inaccurate  to  represent  productivity  as  forming 
the  maximum  wage,  though  we  may  have  no  exact  measure 


'      MODERN   CAPITALISM.  319 

of  productivity  at  hand.  The  fact  that  any  increase  in 
productivity  of  labour  is  Hable  under  certain  circumstances 
of  competition  to  pass  away  entirely  to  the  consumer,  is  no 
reason  for  denying  that  an  increase  of  productivity  has 
taken  place  which  might  under  other  circumstances  of  com- 
petition have  gone  to  the  producer  as  higher  wages.  Though 
productivity  as  a  measure  of  maximum  wages  is  more  or 
less  of  an  unknown  quantity,  it  is  none  the  less  true  that  as 
this  "  unknown  "  fluctuates  so  the  possibility  of  high  wages 
fluctuates. 

§  14.  If  the  above  analysis  is  correct  it  is  not  difference  of 
sex  which  is  the  chief  factor  in  determining  the  industrial 
position  of  woman.  Machinery  knows  neither  sex  nor  age, 
but  chooses  the  labour  embodied  in  man,  woman,  or  child, 
which  is  cheapest  in  relation  to  the  degree  of  its  efficiency. 
Thus  the  causes  which  depress  woman's  industry  are  chiefly 
the  same  which  depress  the  industry  of  low-skilled  men  and 
children.  In  each  case  the  limits  of  productivity  and 
"  wants  "  are  lower  than  for  skilled  men  workers,  while  the 
terms  of  their  competition  keep  their  wages  to  the  lower 
level  and  check  the  full  incentive  to  efficiency.  Setting 
aside  the  case  of  children,  who  are  protected  in  some 
degree  from  the  full  effects  of  competition  upon  the  condi- 
tions of  their  employment,  the  industrial  case  of  women  is 
closely  analogous  to  that  of  low-skilled  men.  The  physical 
weakness  of  the  one  corresponds  with  the  technical  weak- 
ness of  the  other  so  far  as  efficiency  is  concerned ;  in  both 
cases  the  low  standard  of  wants  gives  a  low  minimum  wage, 
while  the  excessive  supply  of  labour,  rendering  concerted 
action  almost  impossible,  keeps  wages  close  to  the  minimum. 

§  1 5.  The  displacement  of  male  adult  labour  which  is  going 
on  by  female,  and,  when  permitted,  by  child  labour,  does  not 
necessarily  imply  that  women  and  children  are  doing  more 
work  and  men  less  than  they  used  to  do.  Before  the 
industrial  revolution  women  were  quite  as  busily  and 
numerously  engaged  in  industry  as  now,  and  the  children 
employed  in  textile  and  other  work  were  often  worked  in 
their  own  homes  with  more  cruel  disregard  to  health  and 
happiness  than  is  now  the  case.  Even  now  the  longest 
hours,  the  worst  sanitary  conditions,  the  lowest  pay,  are  in 
the  domestic  industries  of  towns  which  still  survive  under 
modern  industry.     But  though  the  regular  factory  women 


320  THE   EVOLUTION   OF 

and  the  half-timers  are  generally  better  off  in  all  the  terms 
of  their  industry  than  the  uninspected  women  and  children 
who  still  slave  in  such  domestic  industries  as  the  trimmings 
and  match-box  trades,  the  growing  tendency  of  modern 
industry  to  engage  women  and  children  away  from  their 
homes  is  fraught  with  certain  indirect  important  con- 
sequences. When  industry  was  chiefly  confined  to  domestic 
handicrafts,  the  claims  of  home  life  constantly  pressed  in 
and  tempered  the  industrial  life.  The  growth  of  factory 
work  among  women  has  brought  with  it  inevitably  a 
weakening  of  home  interests  and  a  neglect  of  home  duties. 
The  home  has  suffered  what  the  factory  has  gained.  Even 
the  shortening  of  the  factory  day,  accompanied  as  it  has 
been  by  an  intensification  of  labour  during  the  shorter 
hours,  does  not  leave  the  women  competent  and  free  for  the 
proper  ordering  of  home  life.  Home  work  is  consciously 
slighted  as  secondary  in  importance  and  inferior,  because  it 
brings  no  wages,  and  if  not  neglected  is  performed  in  a 
perfunctory  manner,  which  robs  it  of  its  grace  and  value. 
This  narrowing  of  the  home  into  a  place  of  hurried  meals 
and  sleep  is  on  the  whole  the  worst  injury  modern  industry 
has  inflicted  on  our  lives,  and  it  is  difficult  to  see  how  it 
can  be  compensated  by  any  increase  of  material  products. 
Factory  life  for  women,  save  in  extremely  rare  cases,  saps  the 
physical  and  moral  health  of  the  family.  The  exigencies  of 
factory  life  are  inconsistent  with  the  position  of  a  good 
mother,  a  good  wife,  or  the  maker  of  a  home.  Save  in 
extreme  circumstances,  no  increase  of  the  family  wage  can 
balance  these  losses,  whose  values  stand  upon  a  higher 
qualitative  level. 

The  direct  economic  tendency  of  machine-industry  to  take 
women  and  children  away  from  the  home  to  work  must  be 
looked  upon  as  a  tendency  antagonistic  to  civilisation.^  In 
the  case  of  children,  factory  legislation  of  increasing  severity 
has  been  necessary  to  prevent  the  spread  or  continuance  of 
the  evil. 2  The  factory  regulations  restricting  and  protecting 
women  are  directly  continuous  with  this  policy,  and  may  be 
regarded  in  the  light  of  a  protection  of  the  home  against  the 

^  The  evidence  adduced  by  Dr.  Arlidge  in  his  Diseases  of  Occupa- 
iions  regarding  the  effects  of  factory  life  upon  the  physique  of  children 
is  conclusive.     See  p.  38,  etc. 

^  See  Appendix  on  Factory  Legislation. 


MODERN   CAPITALISM.  321 

undue  encroachments  of  the  machine.  How  far  further 
restrictions  may  be  left  to  voluntary  action  and  the  growth 
of  a  saner  estimate  of  values,  or  how  far  further  legal  pro- 
tection of  the  home  may  be  required,  it  remains  for  history 
to  determine. 

APPENDIX. 

The  following  Table  of  Factory  Legislation  is  constructed 
to  illustrate  the  lines  along  which  State  protection  of  labour 
has  advanced  in  this  century  in  England.  P'our  laws  of 
development  are  clearly  discernible  : — 

1.  Movement  along  the  line  of  strongest  human  feeling. 

Weakest  workers  are  protected  first,  pauper  children 
who  are  the  least  "  free  "  parties  in  a  contract,  then 
protection  advances  to  other  children,  young  persons, 
women,  men. 

2.  Protective   legislation  moves  from    the   more   highly 

organised  to  the  less  highly  organised  structures  of 
industry.  Cotton-mills  are  sole  subjects  of  earliest 
Factory  Acts,  then  woollen,  then  other  textile  trades, 
trades  subsidiary  to  textile  industries,  non-textile 
factories,  larger  workshops,  domestic  workshops, 
retail  trade,  domestic  service. 

3.  Growing     complexity    of    aims    and    of    legislative 

machinery.  Primarily  Factory  Acts  aim  at  regula- 
tion of  quantity  of  labour.  Reductions  of  the 
working-day  forms  a  backbone  of  this  legislation. 
A  twelve-hour  day,  ten,  nine,  eight,  covering  wider 
classes  of  workers  and  applied  to  a  larger  number  of 
industries,  marks  the  line  of  movement.  With  each 
advance  the  basis  of  protection  is  broadened,  other 
considerations  of  machine-fencing,  sanitation,  educa- 
tion, etc.,  entering  more  largely  into  the  Acts. 

4.  Increased  effectiveness  of  legislation  with  growth  of 

centralised  control.  Local  initiative  and  control 
proves  ineffective,  yields  to  State  inspection,  the 
number  of  inspectors  growing,  and  their  power 
increasing.  Improvements  in  the  mechanism  of 
central  control,  an  increased  number  of  inspectors, 
working  men  and  women  inspectors,  are  the  distin- 
guishing features  of  recent  State  protection  of  labour. 

21 


Leading    Points    in    the    Development    of    Factory 
Legislation. 


Date. 


1802 


18191 
1820  1 


1825 


1833  \ 
1834/ 


1842 


1844-1 
to    l 

1846  J 


18471 

to    ' 

18501 


1860 
1860 


Industries 
affected. 


Cotton  and 
'other  mills' 
(applied  ex- 
clusively to 
cotton). 

Do. 

Do. 


Do. 


All  Textile 
Industries. 


Mines. 


Printworks. 


Textile 
Factories, 
Printworks, 

etc. 


Bleaching 
and  Dyeing. 

Coal   and 
Iron  Mines. 


Class  of 
Workers 

chiefly 
protected. 


Appren- 
ticed Pau- 
per Child- 
ren. 

Children 
(not  Pau- 
pers). 


Do. 


Children 
and  Young 
Persons. 


Children 
and  W  o- 
men. 

Children, 
Young 
Persons, 
Women. 


Do. 


Do. 


AllWork- 
ers. 


Nature  of 
Regulations. 


12  Hours  Day. 
Night  -  work  regu- 
lated. Education, 
sanitation. 

Prohibition  of 
work  under  9  years. 
Young  persons 
(under  16)  a  12  hour 
day.  Regulation  for 
meal-time.  Amend- 
ment of  1802  Act. 

Shortened  Satur- 
day labour.  Penal- 
ties provided  for 
breach  of  Factory 
Regulations. 


48  Hours  Week 
for  Children  (9-13), 
69  Hours  for  Young 
Persons  (13-18).  Pro- 
hibits night  -  work 
for  Young  Persons. 
Children  in  Silk 
Mills,  10  Hours  Day. 

No  undei^ound 
work. 

Factory  Acts  ap- 
plied. '  False  relay ' 
system  for  children 
checked.  6J  Hours 
Day  for  Children. 
Female  Young  Per- 
sons age  raised  to 
21.  12  Hours  Day 
for  Women.  No 
night  -  work  for 
women. 

10  Hours  Day, 
afterwards  lOJ 
Hours  Day  f of 
Young  Persons  and 
Women,  practically 
for  Men. 

Do.,  with  special 
regulations  for  over- 
time. 

Restriction  on 
male  labour  under 
12.  Safety,  ventila- 
tion, etc. 


Mode  of 
Admin- 
istration. 


Local  Jus- 
tices to  ap- 
point visit- 
ors. 

Do. 


Do. 

(Millown- 
ers  and  rel- 
atives pre- 
vented 
from  act- 
ing on  the 
Bench  in 
ref e  r  e  n  c  e 
to  Factory 
Acts.) 

Govern- 
ment In- 
spectors 
(4). 


Mine  In- 
spectors. 

Govern- 
ment In- 
spectors. 


Increased 
Staff  of 
G  o  ve  rn- 
ment  In- 
spectors. 


Mine  In- 
spectors. 


Effective- 
ness. 


Virtually 
in  o  pera- 
tive. 


Do. 


Generally 
evaded. 


1  out  of 
every  11 
millowners 
convicted 
in  1834,  in 
spite  of  de- 
fiant atti- 
tude of  ma- 
gistrates. 


Improved 
administra- 
tion, but 
'false  relay' 
system  re- 
e  stablish- 
ed.  Fines 
inadequate. 


Largely 
defied  or 
evaded  for 
some  time. 


Industries 
affected. 


Class  of 
Workers 

chiefly 
protected. 


Nature  of 
Regulations. 


Mode  of 
Admin- 
istration. 


Effective- 
ness. 


Finishing 
processes  in 
Bleach  ing 
and  Dyeing, 
Bakehouses, 
Alkali  Works. 

Non-textile 
F  a  c  to  r  i  es, 
(Earthen- 
ware, Fusti- 
an Cutting, 
Car  tridges, 
Lucifer  Mat- 
ches, Paper- 
staining). 

All  Factor- 
ies &  Work- 
shops. 


Agriculture. 


Printworks, 
Bleaching, 
Dyeing. 

Brickworks 
and  Fields. 


Agriculture. 

Factories, 
Wo  r  kshops. 
Agriculture. 


Do. 


Shops. 


Various 
Trades. 
Railways. 


Children, 
Young 
P  e  r  so  n  s. 
Women. 


Do. 


Children, 
Women. 


Children, 
Young 
Persons, 
Women. 

Children 
and  Young 
Female 
Persona. 

Children. 

Children, 
Young 
Persons, 
Women, 
(incident- 
ally Men). 
Do. 


Children, 
Young 
Persons. 

All  work- 
ers. 
Adult  males 


y   Factory  Acts 
generally  applied. 


Factory  Acts  Ex- 
tension Act.  Work- 
shops Regulation 
Act,  applying  to 
Workshops.  Fac- 
tory rules  affecting 
hours,  education, 
etc. ,  in  modified 
form. 


Act  for  Suppres- 
sion of  Agricultural 
Gangs  fixing  mini- 
mum age  at  8,  regu- 
lating employment 
of  Women. 

Application  of 
chief  provisions  of 
1867  Factory  Act. 

Forbids  employ- 
ment. Improved 
conditions  for 
Women. 

Minimum  age 
raised  to  10. 

Consolidation  of 
Factories  &  Work- 
sliops  Act  (extend- 
ing some  provisions 
to  agriculture). 

Amendment  of 
Factories  &  Work- 
shops Act.  Age  for 
Children  raised  to 
11.  Protection  in 
dangerous  trades. 

Limits  working- 
day. 

Restrictions  on 
dangerous  trades. 

Restrictions  on 
hours  of  labour. 


Work- 
shops Act 
left  at 
first  to 
local  auth- 
or  i  ti  e  s, 
brough  t 
under  Fac- 
t  o  ry  I  n- 
sp  actors, 
1871. 


Increased 
Staff  of  In- 
spectors. 


Board 
of  Trade 
power  to 
schedule 
dangerous 
trades. 


Appoint- 
m  e  n  t  of 
working 
men  and 
women  In- 
s  p  e  c  t  ors. 
I n  c  reased 
number  of 
Inspectors. 


Work- 
shops Act 
dead  letter 
in  1868-69. 
Later,  fines 
inadequate. 
Inspectors 
inadequate. 


324 


CHAPTER  XIII. 

MACHINERY  AND  THE  MODERN  TOWN. 

§    I.   The  Modern  Industrial  Town  as  a  Machine-product. 
§    2.   Growth  of  Town  as  cojnpared  with  Rural  Population 

in  the  Old  and  New  Worlds. 
§    3.  Limits  imposed  upon  the  Townward  Movement  by  the 

Economic  Conditions  of  World-industry. 
§    4.  Effect  of  increasifig  Toivn-life  upon  Mortality. 
§    5    The  impaired  quality  of  Physical  Life  in  Towns. 
§    6.   The  Lntellectual  Edtication  of  Town-life. 
§    7.   The  Moral  Education  of  Town-life. 
%    8.  Economic  Forces  making  for  Decentralisation. 
§    9.  Desirability  of  Public  Control  of  Transport  Services  to 

effect  Decentralisation. 
§  10.  Long  Hours  and  Lnsecurity  of  Work  as  Obstacles  to 

Reforms. 
§  1 1.  The  Principle  of  Internal  Refortn  of  Town-life. 

§  I.  In  the  last  few  chapters  we  have  examined  some  of 
the  influences  of  modern  machine-production  upon  men  and 
women  in  the  capacity  of  producers,  in  relation  to  character, 
duration,  intensity,  regularity  of  employment,  the  remuner- 
ation of  labour,  and  the  economic  relations  which  subsist 
between  workers  and  employers.  It  remains  to  give  special 
consideration  to  one  factor  in  the  environment  of  modern 
industrial  life,  which  is  of  paramount  importance  upon  the 
public,  both  in  its  working  and  living  capacity. 

The  biggest,  and  in  some  respects  the  most  characteristic 
of  machine-products  is  the  modern  industrial  town.  Steam- 
power  is  in  a  most  literal  sense  the  maker  of  the  modern 
town.  When  the  motive-power  of  industrial  work  was 
chiefly  confined  to  the  forces  stored  in  man,  the  economy 


THE   EVOLUTION    OF   MODERN    CAPITALISM.     325 

obtained  by  collecting  larger  numbers  of  men  to  work  in 
close  proximity  to  one  another  was  comparatively  small, 
and  was  commonly  outweighed  by  the  difficulty  of  securing 
for  them  a  sufficient  supply  of  food  and  other  commodities, 
and  by  the  greater  immobility  of  labour  at  a  time  when 
fixed  local  associations  were  a  strong  binding  force,  and 
transport  was  slow  and  expensive.  When  the  earlier 
machinery  drew  its  motive-power  chiefly  from  water,  the 
local  attachment  and  wide  distribution  of  this  power  pre- 
vented the  concentration  of  industry  from  advancing  very 
far.  Only  in  proportion  as  steam-power  became  the  domin- 
ating agent  did  the  economies  of  factory-production  drive 
the  workers  to  crowd  ever  more  densely  in  the  districts 
where  coal  and  water  for  generating  steam  were  most 
accessible,  and  to  throng  together  for  the  most  economical 
use  of  steam-power  in  industry. 

This  rapid  appreciation  of  the  economies  of  centralised 
production,  heedless  of  all  considerations,  sanitary,  aesthetic, 
moral,found  a  hasty  business  expression  in  these  huge  hideous 
conglomerations  of  factory  buildings,  warehouses,  and  cheap 
workmen's  shelters,  which  make  the  modern  industrial  town. 
The  requirements  of  a  decent,  healthy,  harmonious  indi- 
vidual or  civic  life  played  no  appreciable  part  in  the 
rapid  transformation  of  the  mediaeval  residential  centre, 
or  the  scattered  industrial  village  into  the  modern  manu- 
facturing town.  Considerations  of  cheap  profitable  work 
were  paramount ;  considerations  of  life  were  almost  utterly 
ignored.  So  swift,  heedless,  anarchic  has  this  process 
been,  that  no  adequate  provisions  were  made  for 
securing  the  prime  conditions  of  healthy,  physical  exist- 
ence required  to  maintain  the  workers  in  the  most 
profitable  state  of  working  efficiency.  Only  of  recent  years 
in  a  few  of  the  larger  manufacturing  towns  has  some  slow 
revival  of  the  idea  of  civic  life,  as  distinct  from  the 
organised  manipulation  of  municipal  affairs  for  selfish 
business  purposes,  begun  to  manifest  itself.  The  typical 
modern  town  is  still  a  place  of  workshops,  not  of 
homes. 

Transport-machinery,  the  railway  and  the  steamship,  have 
been  almost  as  important  factors  in  the  making  of  towns  as 
manufacturing-machinery.  By  easily,  quickly,  and  cheaply 
bringing  food  from  a  distance,  they  make  town  work  and 


326  THE   EVOLUTION   OF 

town  life  upon  a  large  scale  possible ;  by  imparting  increased 
fluidity  to  capital  and  labour,  they  continually  increase  the 
economic  advantages  of  highly  concentrated  industry.  In 
the  opening  up  of  new  countries  like  the  United  States  and 
Australia,  the  railway  is  the  literal  maker  of  the  town,  in 
older  countries  it  is  the  chief  alimental  channel. 

The  pace  at  which  this  concentration  of  population  in 
large  towns  proceeds  is  the  most  serviceable  measurement 
of  the  progress  which  the  various  parts  of  the  industrial 
world  are  making  in  machine-industry. 

There  are  changes  other  than  those  of  industrial  method 
which  help  the  townward  movement.  The  spirit  of  curiosity 
and  enterprise  stimulated  by  education  and  the  newspaper 
press,  a  desire  for  freer  and  more  varied  social  intercourse, 
a  love  of  sensation  and  amusement,  a  seeking  after  culture 
and  intellectual  development,  in  some  cases  the  mere 
promptings  of  idleness,  discontent,  or  even  criminal  desires, 
drive  an  increasing  proportion  of  the  younger  rural  popula- 
tion towards  the  towns.  But  it  is  the  combination  of 
industrial  changes  in  which  machinery  plays  the  central 
part — the  increased  application  of  machinery  to  agriculture 
reducing  the  demand  for  agricultural  labour,  the  develop- 
ment of  manufacturing  industries  in  towns,  the  labour  of 
transport  and  distribution  requiring  centralised  machinery — 
that  makes  this  movement  physically  and  economically 
feasible.  The  shift  in  the  proportionate  demand  for  labour 
in  towns  and  in  country  attributable  to  machine-production 
is  a  principal  direct  agent  in  the  movement. 

§  2.  In  England, /ar  excellence  the  manufacturing  country, 
the  growth  of  the  town  as  compared  with  the  country  is 
strongly  marked  during  the  last  thirty  years. 


I86L 

1871. 

1881. 

1891. 

Urban  Population^ ... 

,     62.3 

64.8 

66.6 

71.7 

Rural          „ 

■     37.7 

35-2 

33-4 

28.3 

During  the  decennium  1 881 -91  there  was  a  consider- 
able check  in  the  immigration  from  the  country  into  the 

^  According  to  Arthur  Young,  in  1770  half  the  population  was  already 
urban.  But  though  the  townward  drift,  owing  in  large  measure  to  the 
land-hunger  of  the  aristocracy  and  wealthy  merchant  class,  and  the 
labour-saving  economy  of  large  farming,  was  clearly  visible  before  the 
development  of  machine-industry,  it  is  probable  that  Young's  estimate 
goes  beyond  the  facts. 


MODERN   CAPITALISM. 


327 


large  towns,  though  the  proportion  of  townsfolk  to  country 
folk  grew  even  more  rapidly  than  in  the  preceding  ten  years.^ 
In  Holland  and  Belgium,  notwithstanding  a  large  migra- 
tion to  foreign  lands,  the  towns  grow  far  quicker  than  the 
total  population.  Thus  in  Holland  in  the  period  1870-79 
the  towns  increased  17.25,  while  the  rural  districts  only 
increased  6.8.  In  Belgium,  where  the  emigration  across 
the  border  is  still  larger,  there  is  a  tide  of  migration  of  the 

GROWTH  OF  FRENCH  POPULATION. 


Paris. 


C  Towns 
\  above 

Uoo.ooo. 


C  Papula- 
<  Hon  of 
y  France. 


parochial  or  country  population  continually  setting  towards 
Antwerp,  Brussels,  and  Liege.^ 

This  flow  of  population  to  the  towns  is  not  affected  to 

^  Mr.  Cannan  points  out  that  this  is  clue  on  the  one  hand  to  the 
healthier  conditions  of  the  towns  whose  natural  increase  is  larger; 
on  the  other  hand,  to  an  increased  migration  from  the  rural  parts  to 
foreign  countries.  ("  The  Decline  of  Urban  Immigration,"  National 
Review,  January  1894.) 

^  Ravenstein,  Statistical  Journal,  June  1889. 


328  THE   EVOLUTION   OF 

any  considerable  extent  either  by  the  rate  of  growth  of  the 
population  itself  or  by  the  small  stake  in  the  land  possessed 
by  the  bulk  of  the  agricultural  population  in  such  a  country 
as  England.  P  or  in  France,  where  the  growth  of  population 
during  the  last  half  century  has  been  extremely  slow,  and 
where  the  majority  of  the  agriculturists  have  a  definite  stake 
in  the  soil,  the  growth  of  the  town  population  is  most 
remarkable.  In  Germany  also,  where  peasant-proprietors 
are  very  numerous,  the  towns  continually  absorb  a  larger 
proportion  of  the  population.  In  1871  the  urban  popula- 
tion of  the  empire  was  36.1  per  cent,  of  the  total,  in  1885 
it  was  41.8  per  cent.  In  Austria,  Hungary,  Sweden,  Italy, 
a  similar  movement  is  clearly  traceable.  The  above 
diagram  relating  to  movements  of  French  population 
indicates  that  Paris  has  been  growing  more  rapidly  than 
other  French  towns.  In  other  industrial  countries  also  it 
is  found  that  the  pace  of  growth  varies  for  the  most  part 
directly  with  the  size  of  the  town.  In  England,  it  is  true 
that  the  largest  cities  show  during  the  last  decennium  a 
certain  slackening  in  the  pace  of  growth.  But  the  towns 
between  20,000  and  100,000  are  still  growing  far  more 
rapidly  than  those  between  5,000  and  20,000,  while  those 
below  5,000  fail  to  keep  pace  with  the  general  rise  of 
population.  This  fact  obtains  the  clearest  recognition  in 
the  preliminary  report  of  the  census  of  1891.^  "The 
urban  population  increases  then  very  much  more  rapidly 
than  the  rural  population.  And  not  only  so,  but  the 
larger,  or  rather  the  more  populous  the  urban  districts,^ 
and  the  more  decided  therefore  its  urban  character,  the 
higher,  generally  speaking  and  with  many  individual  excep- 
tions, is  the  rate  of  growth," 

The  movement  is  then  not  merely  to  town  life,  but  to 
large-town  life.  The  following  diagram  shows  the  rate  of 
growth  of  the  chief  European  centres  of  population  during 
the  present  century : — 

^  Preliminary  Report  (c.  6422),  p.  23. 

'^  It  is  often  pointed  out  that  an  Urban  Sanitary  District  is  not 
always  a  town.  But  if  rural  areas  are  sometimes  classed  as  towns, 
many  large  outskirts  of  towns,  practically  partaking  of  the  character 
of  the  towns,  are  not  included.  The  figures  cited  above  may  there- 
fore be  regarded  as  a  fairly  accurate  account  of  the  growth  of  town 
life. 


MODERN    CAPITALISM. 


329 


The  figures  relating  to  Germany  are  peculiarly  instructive 
upon  this  point : — 

GERMANY— RATE  OF   INCREASE   OF   GOVERNMENT   DISTRICTS.^ 


Per  Cent. 

Times  in  which  such  rate  occurred. 

Town  Districts. 

Rural  Districts. 

Increase. 

30 
25-30 
20-25 
15-20 
II-15 
.      9-1 1 

5-9 

3-5 

1-3 

O-I 

Decrease. 

1-0 

3-1 

5-3 
0-5 

3 

2 

10 

33 
65 
55 
50 
8 

I 

I 

I 
2 

4 

35 
69 

5^ 
28 

18 

22 
3 
4 

Longstaff,  "Rural  Depopulation,"/?"^-  of  Stat.  Soc,  Sept.  1893. 


330 


THE    EVOLUTION    OF 


German  Empire. 

1871. 

1886 

Rate  of 
Increase. 

Towns  over  100,000 
„  „  20,000 
„  „  5,000 
„          „        2,000 

Rural  Population    . 

1,968,000 
3,147,000 
4,588,000 
5,086,000 
26,219,000 

3,327,000 
4,147,000 
5,694,000 
5,734,000 
26,318,000 

69  per  cent. 

31 

24 

12 

3 

But  the  movement  is  by  no  means  confined  to  the 
densely-populated  countries  of  Europe.  If  we  turn  to  the 
"  new  world "  we  find  it  illustrated  still  more  remarkably. 
In  the  United  States  of  America,  long  before  the  population 
approached  its  present  height,  and  while  large  tracts  of  fer- 
tile land  still  remained  to  be  parcelled  out,  the  towns  began 
to  absorb  more  and  more  of  the  population.  The  following 
diagram  will  show  this  movement  to  have  been  continuous, 
and  with  a  gathering  momentum  as  the  century  moved  on  : — 

GROWTH    OF   CITY   POPULATION    IN   THE   UNITED   STATES. 


f790       1800      10       20      "SO       '40       '50      '60        70       80      "90 


rW^JJ?;^ 

^ 

^ 

w 

■ 

ss^ 

s€ 

» 

^ 

d 

i 

■ 

fc 

« 

■ 

B 

100 
90 

80 
70 
60 
50 
40 
30 
20 
10 


MODERN    CAPITALISM. 


331 


What  holds  of  the  United  States  holds  also  of  the  newly 
settled  countries  with  small  populations,  as  New  South 
Wales,  Victoria,  Canada,  and  even  Manitoba,^  Argentina, 
and  Uruguay.  Nearly  one-third  of  the  whole  popula- 
tion of  New  South  Wales  is  resident  in  Sydney,  and  a 
fourth  of  the  population  of  Queensland  in  Brisbane. 
Victoria  presents  the  most  striking  case.  In  1881  its  four 
largest  towns  contained  more  than  two-fifths  of  the  whole 
population,  Melbourne  alone  holding  one-third. 

In  Canada  there  is  the  same  diminution  of  rural  and 
growth  of  town  population.  New  Brunswick  contains  14 
counties;  in  the  decade  187 1-8 1  only  one  of  these 
showed  a  slight  diminution,  but  not  less  than  7  in  the 
decade  1 881 -91.  The  18  counties  of  Nova  Scotia  all 
showed  an  increase  in  1 871-81,  8  showed  a  decrease  in 
1 88 1-9 1.  Quebec  contains  61  counties,  10  of  which 
showed  a  decrease  in  1871-81,  26  in  1881-91.  Ontario 
has  48  counties,  only  4  of  which  showed  slight  decrease  in 
1 87 1 -81;  20  showed  a  much  more  rapid  decrease  in 
1881-91. 

The  following  table  shows  that  the  accelerating  decrease 
of  the  rural  parts  is  accompanied  by  a  correspondingly 
accelerating  increase  of  the  chief  towns: — 


1871. 

1881. 

1891. 

Kingston  ^ 
London    . 
Ottawa     . 
Hamilton 
Toronto   . 

12,407 
15,826 

21,545 
26,717 
56,092 

14,091 
26,266 
31,307 
35,961 
96,196 

19,264 
31,977 
44,154 
48,980 
181,220 

132,586 

203,821 

325,595 

The  portentously  rapid  growth  of  the  largest  cities  is  of 
course  not  wholly  attributable  to  economic  causes.  To 
form  the  capital  cities  of  the  New  World,  political  and  social 
itifluences  have  co-operated  with  industrial.  Nor  can  these 
causes  be  ignored  in  explaining  the  rapid  growth  of  certain 

1  Cf.  Longstaff,  Studies  in  Statistics,  p.  l57- 

^  These  Canadian  statistics  are  quoted  from  Dr.  LongstafTs  paper  ifl 
Journal  of  Statistical  Society,  Sept.  1893. 


332  THE   EVOLUTION    OF 

European  capitals,  especially  Berlin,  Paris,  London,  and 
Vienna.  But  the  effective  operation  of  these  forces  is 
largely  dependent  on  the  modern  machinery  of  transport, 
and  in  the  main  these  great  centres  must  be  regarded  as 
manufacturing  and  commercial  towns. 

Though  the  lack  of  any  common  statistical  basis  prevents 
us  from  being  able  to  trace  with  exactitude  the  comparative 
pace  of  this  movement  in  different  countries,  we  know 
enough  to  justify  the  general  conclusion  that  this  centralising 
tendency  varies  directly  with  the  degree  of  material  civilisa- 
tion attained  in  the  several  countries  by  the  mass  of  the 
population.  In  England,  France,  United  States,  Australia, 
where  steam  engines,  electric  light,  newspapers,  and  all  the 
most  highly  elaborated  mechanical  contrivances  are  available 
in  towns,  the  growth  of  town  life  is  most  rapid ;  in  Russia, 
Turkey,  India,  Egypt,  where  mechanical  development  is 
still  far  behind,  the  townward  march  is  far  slower.  As 
the  area  of  machine-industry  spreads,  so  this  movement  of 
population  will  become  more  general,  and  as  towns  grow 
larger  so  it  would  appear  that  this  power  to  suck  in  the 
rural  population  is  stronger  and  more  extensive. 

§  3.  These  facts  and  figures  do  not,  however,  of  them- 
selves justify  the  conclusion  that  a  larger  proportion  of  the 
world's  population  is  moving  into  towns.  In  all  the 
advanced  industrial  countries  a  smaller  proportion  of  the 
population  is  engaged  in  those  extractive  and  domestic 
industries  which  belong  to  rural  life,  a  larger  proportion 
in  the  manufacturing  and  distributive  industries  which 
belong  to  towns.  But  this  movement  is  made  possible 
by  the  fact  that  an  increasing  proportion  of  the  food  and 
the  raw  materials  of  manufacture  used  in  these  countries 
is  drawn  from  the  labour  of  the  more  backward  countries. 
The  increase  of  the  area  of  the  industrial  world  is  effect- 
ing such  a  division  of  labour  as  hands  over  an  ever- 
increasing  proportion  of  the  agricultural  work  to  the  inhabi- 
tants of  those  countries  which  do  not  rank  as  civilised 
industrial  countries.  The  known  growth  of  certain  large 
trading  centres  in  India,  China,  Egypt,  South  Africa,  etc., 
does  not  justify  us,  in  the  absence  of  careful  statistical 
inquiry,  in  assuming  that  an  increased  proportion  of  the 
inhabitants  of  these  and  other  more  backward  portions  of 
the  globe  is  passing  into  town  life.      Unless  agricultural 


MODERN   CAPITALISM.  333 

machinery  and  improved  agricultural  methods  are  advancing 
more  rapidly  in  these  great  "  growing  areas  "  than  we  have 
a  right  to  suppose,  it  would  seem  that  there  must  be  some 
increased  demand  for  agricultural  and  other  rural  labour 
which  shall,  partially,  at  any  rate,  compensate  for  the 
diminished  demand  for  such  kinds  of  labour  in  the  more 
advanced  industrial  communities.  For  although  a  large 
number  of  the  industries  subsidiary  to  agriculture,  the 
making  of  tools,  waggons,  gates,  fencing,  etc.,  have  now 
passed  from  the  country  to  the  towns,  while  the  economies 
of  machinery  and  improved  cultivation  have  advanced  so 
far  that  it  is  alleged  that  three  men  working  on  soil  of 
average  quality  can  raise  food  for  one  thousand,  still  the 
growth  of  population  with  a  constantly  rising  standard  of 
material  consumption  seems  likely  to  prevent  any  net 
diminution  in  the  proportion  of  labour  engaged  upon  the 
soil  in  the  industrial  world.  So  long  as  modern  methods  of 
production  and  consumption  in  civilised  countries  require 
an  ever-increasing  quantity  of  raw  materials,  it  would  seem 
a  priori  unlikely  that  a  smaller  proportion  of  the  whole 
industry  of  the  world  should  be  devoted  to  agricultural 
and  other  extractive  industries,  and  a  larger  amount  to 
the  manufacturing  and  distributive  industries,  where  the 
chief  economies  of  machine-production  are  so  largely 
applied. 

Since  this  growth  of  town  population  is  quicker  in  the 
advanced  industrial  communities,  slower  in  the  less  ad- 
vanced, so  it  may  well  be  the  case  that,  in  the  countries 
which  are  but  slightly  and  indirectly  affected  by  modern 
industry,  it  does  not  exist  at  all.  There  exist,  however,  no 
satisfactory  data  upon  which  a  judgment  may  be  formed 
upon  this  point. 

§  4.  The  effects  of  this  concentration  of  population  upon 
the  character  and  life  of  the  people  are  multifarious.  For 
convenience  in  grouping  facts,  these  effects  may  be  con- 
sidered in  relation  to  {A)  physical  health,  (^)  intelligence, 
(C)  morals,  though  it  will  be  evident  that  the  influences 
placed  under  these  respective  heads  act  and  react  upon 
one  another  in  many  intricate  and  important  ways. 

{A)  The  best  test  of  the  effect  of  town  hfe  upon  the 
population  is  afforded  by  a  comparison  of  the  rates  of 
mortality  of  town  and  country  population  respectively. 


334 


THE   EVOLUTION   OF 

DEATH-RATE  IN  TOWN  AND  COUNTRY  DISTRICTS  OF 
ENGLAND,    1851-90.1 


Annual  Deaths  pei 

1000. 

Deaths  in  Town  Dis- 

tricts  to  100  Deaths 

Years. 

England 

in  Country  in  equal 

and 

Town. 

Country. 

numbers  living. 

Wales. 

1851-60 

22.2 

24.7 

19.9 

124 

1861-70 

22.5 

24.8 

19.7 

126 

1871-80 

21.4 

23.1 

19.0 

122 

1881 

18.9 

20.1 

16.9 

119 

1882 

19.6 

20.9 

17.3 

121 

1883 

19.5 

20.5 

17.9 

115 

1884 

19.5 

20.6 

17.7 

117 

1885 

19.0 

19.7 

17.8 

III 

1886 

19-3 

20.0 

18.0 

III 

1887 

18.8 

19.7 

17.2 

115 

1888 

17.8 

20.9 

17.4 

114 

1889 

17.9 

19-3 

16.4 

118 

1890 

20.9 

17.4 

120 

But  as  matters  stand  at  present  the  statistics  above 
quoted  do  not  maik  the  full  extent  of  the  difference  of 
healthfulness  in  town  and  country.  When  allowance  is 
made  for  age  and  sex  distribution  in  town  and  country 
population,  the  difference  in  death-rate  appears  much 
greater.  For  in  the  towns  are  found  (a)  a  much  larger 
proportion  of  females;  (d)  a  larger  proportion  of  adults 
of  both  sexes  in  the  prime  of  life;  {c)  a  much  smaller 
proportion  of  very  aged  persons  -.^  hence  if  conditions  of 
health  were  equal  in  town  and  country,  the  town  death-rate 
would  be  lower  instead  of  higher  than  that  of  the  country. 
The  Report  of  the  Census  of  i88i^  calls  special  attention 
to  this  point,  which  is  commonly  ignored  in  comparing 
death-rates  of  town  and  country.  "  If  we  take  the  mean 
(1871-80)  death-rates  in  England  and  Wales  at  each  age- 
period  as  a  standard,  the  death-rate  in  an  urban  population 
would  be  20.40  per  looo,  while  the  death-rate  in  the  rural 

*  Report  of  Commissioners,  etc.,  vol.  xxx.  p.  65. 

^  Newsholm,  Vital  Statistics,  p.  137.    (Sonnenschein.) 

*  Vol.  iv.  p.  23. 


Paris. 

France. 

1886. 

1877-80. 

230? 

170? 

58.2 

28 

91 

6 

13-6 

10 

51.2 

41 

MODERN   CAPITALISM.  335 

population  would  be  22.83.  Such  would  be  their  respective 
death-rates  on  the  hypothesis  that  the  urban  districts  and 
the  rural  districts  were  equally  healthy.  We  know,  how- 
ever as  a  matter  of  fact  that  urban  death-rates,  instead  of 
being  lower  than  rural  death-rates,  are  much  higher.  The 
difference  of  healthiness,  therefore,  between  the  two  is 
much  greater  than  the  difference  between  their  death-rates." 
The  same  facts  come  out  in  comparing  Paris  with  the 
rest  of  France.  At  each  age  the  death-rate  for  Paris  is 
higher  than  for  France. 

Age.i 

0  to    I  year 

1  to    5  years 
15  to  20    „ 
30  to  40    „ 
60  to  70    „ 

The  English  statistics  indicate  a  slight  and  by  no  means 
constant  tendency  towards  a  diminution  of  the  difference 
between  town  and  rural  mortality,  due  no  doubt  to  improve- 
ments in  city  sanitation  and  to  some  general  elevation  of 
the  physical  environment  and  standard  of  living  among  a 
large  section  of  the  working  classes.  The  same  slight 
tendency  is  visible  in  France.  During  the  period  1861- 
65  the  urban  death-rate  was  26.1,  as  compared  with  21.5, 
the  rural  death-rate;  during  the  period  1878-82  the  rates 
were  respectively  24.3  and  20.  g.^ 

Such  indications  of  hygienic  progress  in  our  towns  are 
not,  however,  sufificient  to  justify  any  expectation  that  the 
life  of  industrial  towns  will  be  made  as  healthy  as  that  of  the 
country.  It  is  not  possible  to  ignore  the  fatal  significance 
of  the  continuous  flow  of  an  increasing  proportion  of  the 
younger,  healthier,  and  more  vigorous  part  of  the  country 
population  into  town  life.  Dr.  Ogle,  who  has  collected 
much  evidence  upon  this  subject,  sums  up  as  follows : — 
"  The  combined  effect  of  this  constantly  higher  mortality 
of  the  towns,  and  of  the  constant  immigration  into  it  of  the 
pick  of  the  rural  population,  must  clearly  be  a  gradual 
deterioration  of  the  whole,  inasmuch  as  the  more  energetic 
and  vigorous  members  of  the  community  are  consumed 

^  Levasseur,  vol.  ii.  p.  402.  '^  Ibid.^  vol.  ii.  p.  155. 


336  THE   EVOLUTION   OF 

more  rapidly  than  the  rest  of  the  population.  The  system 
is  one  which  leads  to  the  survival  of  the  unfittest," 

§  5.  Not  only  is  life  on  an  average  of  shorter  duration  in 
the  towns,  but  it  is  of  inferior  physical  quality  while  it  lasts. 
The  lowering  of  the  townsman's  physique  not  merely  renders 
him  less  able  to  resist  definite  assaults  of  disease  but  injures 
his  general  capacity  of  work  and  enjoyment.  This  pro- 
gressive deterioration  of  physique  accounts  for  the  unceasing 
flow  of  fresh  country  blood  into  the  towns.  In  spite  of  the 
advantage  of  possession  and  knowledge  of  the  town,  the 
townsman  cannot  hold  his  own  in  the  competition  for  town 
work;  the  new-comer  jostles  the  old-comer  from  the  best 
posts,  and  drives  him  to  depend  upon  inferior  and  more 
precarious  occupations  for  a  living.  Economic  conditions, 
acquired  social  tastes,  and  impaired  powers  of  physical 
labour  prevent  the  feeble  town  blood  from  flowing  back 
into  the  country  to  recruit  its  vigour.  Hence  the  impasse 
which  forces  problems  of  town  poverty  and  incapacity  ever 
more  prominently  upon  the  social  reformer. 

In  dealing  with  the  diseases  of  occupations,  Dr.  Arlidge 
says,  "It  is  a  most  difficult  problem  to  solve,  especially  in 
the  case  of  an  industrial  town  population,  how  far  the 
diseases  met  with  in  it  are  town-made  and  how  far  trade- 
made;  the  former  almost  always  predominate."^ 

It  is  not  indeed  possible  to  clearly  distinguish  the  two 
classes  of  efiects.  Since  machinery  makes  the  industrial 
town,  it  makes  it  as  a  place  to  work  in  and  a  place  to 
live  in,  and  though  certain  trade  conditions  will  operate 
more  directly  upon  the  inhabitants  as  workers,  their  effects 
will  merge  with  and  react  upon  the  life-conditions  of  the 
town.  The  special  characteristics  of  town  work  which  cause 
ill-health  and  disease  are — 

{a)  The  predominance  of  indoor  occupations,  involving 
unwholesome  air. 

(b)  The  sedentary  character  of  most  work  in  factories  or 
workrooms,  or  otherwise  the  lack  of  free  play  of  physical 
activities. 

(r)  The  wear  and  tear  of  nerve  fibre  {e.g.^  in  boiler-making, 
weaving  sheds,  etc.). 

{d)  The  wearisome  monotony  and  lack  of  interest  attend- 

^  Diseases  of  Occupations,  p.  33. 


MODERN   CAPITALISM.  337 

ing  highly  speciaUsed  and  sub-divided  machine-industry, 
producing  physical  lassitude.^ 

(e)  Injuries  arising  from  dust  fumes,  or  other  deleterious 
matter,  or  from  the  handling  of  dangerous  material  or 
tools. 

Much  valuable  work  has  been  done  of  recent  years  by 
French,  German,  and  English  physicians  and  statisticians, 
throwing  light  upon  the  specific  diseases  appertaining  to 
various  industries,  and  giving  some  measurement  of  their 
extent.  But  though  certain  specifically  industrial  qualities 
have  a  considerable  place  in  swelling  the  mortality  of  towns. 
Dr.  Arlidge  is  fully  justified  in  his  opinion  that  in  industrial 
centres  more  of  the  diseases  are  town-made  than  trade- 
made.  The  statistics  of  infant  mortality  are  conclusive 
upon  this  point.  In  comparing  the  death-rates  for  town 
and  country,  the  difference  is  far  wider  for  children  below 
the  industrial  age  than  for  adults  engaged  in  industrial  work. 
Mr.  Galton  has  calculated  that  in  a  typical  industrial  town 
the  number  of  children  of  artisan  townsfolk  that  grow  up 
are  little  more  than  half  as  many  as  in  the  case  of  the 
children  of  labouring  people  in  a  healthy  country  district.^ 
The  figures  quoted  above  from  M.  Levasseur  relating  to 
France  point  to  a  similar  conclusion.  Many  of  the  evils 
commonly  classified  as  belonging  to  specific  industries,  in 
particular  the  foul  atmosphere,  imperfect  sanitation,  and 
overcrowding,  which  are  found  in  many  factories  and  most 
city  workshops,  are  rightly  regarded  as  town-made  rather 
than  trade-made,  for  they  are  the  normal  and  often  the  neces- 
sary accompaniments  of  a  congested  industrial  population. 
In  qualification  of  this,  having  regard  to  the  effects  of 
machincKievelopment,  we  must  remember  that  the  worst 
hygienic  conditions  of  town  work  are  found  in  those  branches 
of  industry  which  have  lagged  behind  in  industrial  evolution, 
while  the  best  hygienic  conditions  are  found  in  the  most 
highly-organised  branches  of  textile  industry.  "Generally 
speaking,  the  more  elaborate  and  costly  the  machinery,  the 
more  excellent  the  architecture.  Thus  in  textile  works 
machinery  acquires  its  maximum  of  importance,  and  by  its 
dimensions   necessitates  commodious  shops,   buildings  of 

^  Dr.  Arlidge,  pp.  25,  26. 

^  Quoted  by  Professor  Marshall,  Principles  of  Political  Economy, 
p.  258.     Cf.  also  Statistical  Society,  March  1873,  ^^'^  U.S.A.  statistics. 

22 


338  THE   EVOLUTION   OF 

great  size,  and  well-ordered  arrangements  to  facilitate  the 
performance  of  the  mutually  dependent  series  of  operations 
carried  on."^ 

Legal  restrictions  upon  unhealthy  and  dangerous  employ- 
ments, shorter  working  hours,  adequate  inspection,  the 
stimulus  given  by  such  measures  to  a  more  rapid  applica- 
tion of  highly-developed  machinery,  may  succeed  in  reduc- 
ing considerably  the  physical  evils  directly  arising  from  town 
industries.  But  the  town  will  still  remain  a  more  unhealthy 
place  to  live  in  than  the  country,  and  as  on  the  one  hand 
the  fundamental  and  paramount  importance  of  a  healthy 
physical  environment  receives  fuller  recognition,  and  on  the 
other  hand  larger  leisure  and  opportunities  of  enjoyment 
and  development  make  life  more  valuable  to  the  mass  of 
the  workers  than  it  is  at  present,  the  pressure  of  this 
problem  of  town  life  will  grow  apace. 

§  6.  (B)  That  town  life,  as  distinguished  from  town  work, 
is  educative  of  certain  intellectual  and  moral  qualities,  is 
evident.  Setting  aside  that  picked  intelligence  which  flows 
to  the  town  to  compete  successfully  for  intellectual  employ- 
ment, there  can  be  no  question  but  that  the  townsman  has  a 
larger  superficial  knowledge  of  the  world  and  human  nature. 
He  is  shrewd,  alert,  versatile,  quicker,  and  more  resourceful 
than  the  countryman.  In  thought,  speech,  action,  this 
superiority  shows  itself.  The  townsman  has  a  more 
developed  consciousness,  his  intelligence  is  constantly 
stimulated  in  a  thousand  ways  by  larger  and  more  varied 
society,  and  by  a  more  diversified  and  complex  economic 
environment.  While  there  is  reason  to  believe  that  town 
work  is  on  the  average  less  educative  than  country  work, 
town  life  more  than  turns  the  scale.  The  social  intercourse 
of  the  club,  the  trade  society,  the  church,  the  home,  the 
public-house,  the  music-hall,  the  street,  supply  innumerable 
educative  influences,  to  say  nothing  of  the  ampler  oppor- 
tunities of  consciously  organised  intellectual  education 
which  are  available  in  large  towns.  If,  however,  we  examine 
a  little  deeper  the  character  of  town  education  and  intelli- 
gence certain  tolerably  definite  limitations  show  themselves. 
School  instruction,  slightly  more  advanced  than  in  the 
country,  is  commonly  utilised  to  sharpen  industrial  competi- 

^  Dr.  Arlidge,  p.  30. 


MODERN   CAPITALISM.  339 

tion,  and  to  feed  that  sensational  interest  in  sport  and  crime 
which  absorbs  the  attention  of  the  masses  in  their  non- 
working  hours ;  it  seldom  forms  the  foundation  of  an 
intellectual  life  in  which  knowledge  and  taste  are  reckoned 
in  themselves  desirable.  The  power  to  read  and  write  is 
employed  by  the  great  majority  of  all  classes  in  ways 
which  evoke  a  minimum  of  thought  and  wholesome  feeling. 
Social,  political,  and  religious  prejudices  are  made  to  do 
the  work  which  should  be  done  by  careful  thought  and 
scientific  investigation. 

Scattered  and  unrelated  fragments  of  half-baked  informa- 
tion form  a  stock  of  "  knowledge  "  with  which  the  towns- 
man's glib  tongue  enables  him  to  present  a  showy  intel- 
lectual shop-front.  Business  smartness  pays  better  in  the 
town,  and  the  low  intellectual  qualities  which  are  contained 
in  it  are  educated  by  town  life.  The  knowledge  of  human 
nature  thus  evoked  is  in  no  sense  science,  it  is  a  mere  rule- 
of  thumb  affair,  a  thin  mechanical  empiricism.  The  capable 
business  man  who  is  said  to  understand  the  "  world  "  and 
his  fellow-men,  has  commonly  no  knowledge  of  human 
nature  in  the  larger  sense,  but  merely  knows  from  observa- 
tion how  the  average  man  of  a  certain  limited  class  is  likely 
to  act  within  a  narrow  prescribed  sphere  of  self-seeking. 
Town  life,  then,  strongly  favours  the  education  of  certain 
shallow  forms  of  intelligence.  In  actual  attainment  the 
townsman  is  somewhat  more  advanced  than  the  country- 
man. But  the  deterioration  of  physique  which  accom- 
panies this  gain  causes  a  weakening  of  mental  fibre :  the 
potentiality  of  intellectual  development  and  work  which  the 
countryman  brings  with  him  on  his  entry  to  town  life  is 
thwarted  and  depressed  by  the  progressive  physical  enfeeble- 
ment.  Most  of  the  best  and  strongest  intellectual  work 
done  in  the  towns  is  done  by  immigrants,  not  by  town-bred 
folk. 

§  7.  (C)  This  intellectual  weakness  of  town  life  is  best 
expressed  in  terms  which  show  the  intimate  relation  between 
intelligence  and  morals.  A  lack  of  "  grit,"  pertinacity  of 
purpose,  endurance,  "  character,"  marks  the  townsman  of 
the  second  generation  as  compared  with  the  countryman. 
As  the  intellectual  powers  of  the  townsman,  though  quanti- 
tatively impaired,  are  more  highly  developed  than  those  of 
the  countryman,  so  it  is  with  his  "morals."     In  positive 


340  THE   EVOLUTION   OF 

attainments  of  conscience,  virtue,  and  vice,  the  townsman 
shows  considerable  advance.  This  point  is  commonly  mis- 
understood. The  annals  of  crime  afford  irrefutable  evidence 
of  the  greater  criminality  of  the  towns.  London,  containing 
less  than  one-fifth  of  the  population  of  England  and  Wales, 
is  responsible  for  more  than  one-third  of  the  annual  number 
of  indictable  crimes.^  In  France  the  criminality  of  the 
urban  population  is  just  double  that  of  the  rural  population. ^ 
In  1884-86,  out  of  each  100,000  city  population  sixteen  were 
charged  with  crimes;  out  of  each  100,000  rural  population 
only  eight.  It  is  indeed  commonly  recognised  in  crimin- 
ology that,  other  things  being  equal,  crime  varies  with  the 
density  of  population.  There  is  no  difificulty  in  under- 
standing why  this  should  be  so.  The  pressure  of  popula- 
tion and  the  concentration  of  property  afford  to  the  evil- 
disposed  individual  an  increased  number  of  temptations  to 
invade  the  person  or  property  of  others  ;  for  many  sorts  of 
crime  the  conditions  of  town  life  afford  greater  security  to 
the  criminal ;  social  and  industrial  causes  create  a  large 
degenerate  class  not  easily  amenable  to  social  control, 
incapable  of  getting  regular  work  to  do,  or  of  doing  it  if 
they  could  get  it.   " 

If  the  town  were  a  social  organism  formed  by  men 
desirous  of  living  together  for  mutual  support,  comfort,  and 
enjoyment  in  their  lives,  it  might  reasonably  be  expected 
that  a  wholesome  public  feeling  would  be  so  strongly 
operative  as  to  outweigh  the  increased  opportunities  of 
crime.  But,  as  we  have  seen,  the  modern  town  is  a 
result  of  the  desire  to  produce  and  distribute  most  econ- 
omically the  largest  aggregate  of  material  goods  ;  economy 
of  work,  not  convenience  of  life,  is  the  object.  Now,  the 
economy  of  factory  co-operation  is  only  social  to  a  very 
limited  extent ;  anti-social  feelings  are  touched  and  stimu- 
lated at  every  point  by  the  competition  of  workers  with  one 
another,  the  antagonism  between  employers  and  employed, 
between  sellers  and  buyers,  factory  and  factory,  shop  and 
shop. 

Perhaps  the  most  potent  influence  in  breaking  the 
strength  of  the  morale  of  the  town  worker  is  the  precarious 

1  W.  D.  Morrison,  "The  Study  of  Crime,"  Mind,  vol.  i.  N.S., 
No.  4. 

2  Levasseur,  vol.  ii.  p.  456. 


MODERN    CAPITALISM.  34! 

and  disorderly  character  of  town  work.  That  element  of 
monotonous  order,  which  we  found  excessive  in  the 
education  afforded  by  the  individual  machine  to  the 
machine-tender,  is  balanced  by  a  corresponding  defect  in 
machine-industry  taken  as  a  whole.  Town  work,  as  we 
have  seen,  is  more  irregular  than  country  work,  and  this 
irregularity  has  a  most  pernicious  effect  upon  the  character 
of  the  worker.  Professor  Foxwell  has  thus  strikingly 
expressed  the  moral  influences  of  this  economic  factor : 
"  When  employment  is  precarious,  thrift  and  self-reliance 
are  discouraged.  The  savings  of  years  may  be  swallowed 
up  in  a  few  months.  A  fatahstic  spirit  is  developed.  Where 
all  is  uncertain  and  there  is  not  much  to  lose,  reckless  over- 
population is  certain  to  be  set  at.  These  effects  are  not 
confined  to  the  poorer  classes.  The  business  world  is 
equally  demoralised  by  industrial  speculation,  careful  pre- 
vision cannot  reckon  upon  receiving  its  due  return,  and 
speculation  of  the  purest  gambling  type  is  thereby  en- 
couraged.    But  the  working  class  suffers  most."^ 

The  town  as  an  industrial  structure  is  at  present  inade- 
quate to  supply  a  social  education  which  shall  be  strong 
enough  to  defeat  the  tendencies  to  anti-social  conduct 
which  are  liable  to  take  shape  in  criminal  action.  The 
intellectual  training  given  by  town  life  does  not,  as  we  have 
seen,  assist  in  stimulating  higher  intellectual  and  moral 
interests  whose  satisfaction  lies  above  the  plane  of  material 
desire.  There  is  indeed  some  evidence  that  the  meagre 
and  wholly  rudimentary  education  given  to  our  town- 
dwellers  is,  by  reason  of  its  inadequacy,  a  direct  feeder  of 
town  vices.  The  lower  forms  of  music-hall  entertainment, 
the  dominant  popular  vice  of  gambling,  the  more  degraded 
kinds  of  printed  matter,  owe  their  existence  and  their  financial 
success  to  a  public  policy  which  has  confined  the  education 
of  the  people  to  the  three  R's,  making  it  generally  impos- 
sible, always  difficult,  for  them  to  obtain  such  intellectual 
training  as  shall  implant  higher  intellectual  interests  with 
whose  pursuit  they  may  occupy  their  leisure.  But,  in  taking 
count  of  the  criminality  and  vice  of  large  towns  it  is  not 
just  to  ignore  a  certain  counter-claim  which  might  be  made. 
If  our  annals  of  virtue  were  kept  as  carefully  as  our  annals 

^  Claims  of  Labour,  p.  196. 


342  THE   EVOLUTION  OF 

of  vice,  we  might  find  that  town  hfe  stood  higher  in  the  one 
than  in  the  other.  There  are  more  opportunities  to  display 
positive  goodness  and  positive  badness  in  the  town ;  Hfe  is 
more  crowded  and  more  rapid,  and  it  is  likely  that  acts  of 
kindness,  generosity,  self-denial,  even  of  heroic  self-sacrifice, 
are  more  numerous  in  the  town  than  in  the  country.  The 
average  townsman  is  more  developed  morally  as  well  as 
intellectually  for  good  and  for  evil.  That  the  good  does 
not  more  signally  predominate  is  in  no  small  measure  due 
to  the  feeble  social  environment.  Public  opinion  is  gener- 
ally a  little  in  advance  of  the  average  morality  of  the 
individuals  who  compose  the  public.  Here  is  a  mighty 
lever  for  raising  the  masses.  But  where  the  density  of 
population  is  determined  by  industrial  competition,  rather 
than  by  human-social  causes,  it  would  seem  that  the  force  of 
sound  public  opinion  is  in  inverse  proportion  to  the  density 
of  population,  being  weakest  in  the  most  crowded  cities. 
In  spite  of  the  machinery  of  political,  religious,  social,  trade 
organisations  in  large  towns,  it  is  probable  that  the  true 
spiritual  cohesiveness  between  individual  members  is  feebler 
than  in  any  other  form  of  society.  If  it  is  true  that  as  the 
larger  village  grows  into  the  town,  and  the  town  into  the 
ever  larger  city,  there  is  a  progressive  weakening  of  the 
bonds  of  moral  cohesion  between  individuals,  that  the 
larger  the  town  the  feebler  the  spiritual  unity,  we  are  face 
to  face  with  the  heaviest  indictment  that  can  be  brought 
against  modern  industrial  progress,  and  the  forces  driving 
an  increased  proportion  of  our  population  into  towns  are 
bringing  about  a  decadence  of  morale  which  is  the  neces- 
sary counterpart  of  the  deterioration  of  national  physique. 

So  far  as  we  are  justified  in  regarding  the  modern  town 
and  the  tendency  to  increased  town  life  as  results  of 
machinery  and  industrial  evolution,  there  can  be  little 
doubt  of  the  validity  of  these  accusations.  The  free  play 
of  economic  forces  under  the  guidance  of  the  selfish 
instincts  of  commercial  individuals,  or  groups  of  individuals, 
is  driving  an  increased  proportion  of  the  population  of 
civilised  countries  into  a  town  life  which  is  injurious  to 
physical  and  moral  health,  and  provides  no  security  for  the 
attainment  of  an  intellectual  life  which  is  worth  living. 

§  8.  But  powerful  as  these  centralising  forces  have  been 
during  the  last  century  and  a  half,  we  are  not  justified  in 


MODERN  CAPiTALtSM.  343 

assuming  that  they  will  continue  to  operate  with  gathering 
momentum  in  the  future,  and  that  the  results  which  are 
assigned  to  them  will  increase  in  magnitude.  Such  an 
assumption  would  ignore  two  groups  of  counteracting  forces 
which  are  beginning  to  manifest  themselves  in  the  more 
advanced  industrial  communities. 

The  first  of  these  groups  consists  of  a  number  of  directly 
counteracting  or  decentralising  forces. 

As  a  town  grows  in  size  the  value  of  the  ground  on 
which  it  stands  grows  so  rapidly  that  it  becomes  economi- 
cally available  only  for  certain  classes  of  industrial  under- 
taking, in  which  the  occupation  of  central  space  is  an 
element  of  prime  importance.  In  all  large  commercial 
cities  the  residential  quarters  are  driven  gradually  farther 
and  farther  away  from  the  centre  by  incessant  encroach- 
ments of  business  premises.  The  city  of  London  and 
the  "  down  town "  quarter  of  New  York  are  conspicuous 
examples  of  this  displacement  of  residential  buildings  by 
commercial.  The  richer  inhabitants  are  the  earliest  and 
quickest  to  leave.  As  the  factory  or  the  shop  plants  itself 
firmly  among  the  better-class  dwelling-houses,  these  in- 
habitants pass  in  large  numbers  to  the  outskirts  of  the  town, 
forming  residential  suburbs  which,  for  some  time  at  any 
rate,  are  free  from  the  specific  evils  of  congestion.  This 
encroachment  of  the  factory  and  the  shop  at  first  has  little 
effect,  if  any,  in  thinning  the  residential  population  of  the 
district.  While  the  shopkeepers  and  their  employees  live  in 
the  neighbourhood,  and  the  factory  workers  can  afford  to 
pay  the  rent  for  houses  or  lodgings  near  their  work,  the 
central  population  will  grow  denser  than  before.  But  as 
the  city  grows  in  size  and  commercial  importance,  an  in- 
creasing number  of  the  most  central  sites  will  pass  from 
manufactory  premises  and  shops  into  use  for  warehouses 
and  business  offices,  and  for  other  work  in  connection  with 
distribution  and  finance.  The  workers  on  these  premises 
will,  in  the  case  of  the  wealthier,  be  unwilling,  in  the  case 
of  the  poorer  be  unable,  to  live  near  their  work;  where 
factories  and  shops  remain,  the  great  mass  of  the  employees 
will  not  be  able  to  afford  house-rents  determined  by  this 
competition  of  a  more  valuable  commercial  use  of  land. 
So  we  find  that  the  number  of  inhabitants  of  the  city  of 
London  diminishes  in  each  recent  census,  and  the  same  is 


344  THE   EVOLUTION   OF 

true  as  regards  the  most  valuable  portions  of  Paris,  New 
York,  and  other  large  cities.  This  decentralising  force  is, 
however,  only  in  full  operation  in  the  very  centre  of  the 
largest  cities.  The  first  effect  of  the  competition  of  com- 
mercial with  living  premises  is  to  raise  house-rents  and  to 
drive  the  poorer  population  into  narrower,  less  commodious, 
and  less  sanitary  dwellings.  Where  ground  landowner  and 
builder  have  a  free  hand  the  market  value  of  central  ground 
for  small,  lofty,  cheap-built  slums  can  be  made  to  hold  its 
own  for  a  long  time  with  the  business  premises  which 
surround  them.  Even  when  ground  value  has  risen  so 
high  as  to  displace  many  of  these  slums,  the  tendency  is 
for  the  latter  to  spring  up  and  thicken  in  districts  not  far 
removed  from  the  centre.  Thus  in  London  the  densest 
population  is  found  in  Whitechapel  and  St.  George's  in 
the  East.  Indeed,  there  is  evidence  that  these  districts 
have  already  reached  "saturation  point,"  that  is  to  say, 
the  pressure  of  business  demands  for  ground,  the  increased 
competition  of  the  dwellers  themselves,  and  the  growing 
restrictions  imposed  by  law  and  public  opinion  upon  the 
construction  of  the  most  "  paying  "  forms  of  house  property, 
prevent  any  further  growth  of  population  in  these  parts. 
As  this  saturation  point  is  reached  in  one  district,  the  growth 
of  dense  population  goes  on  faster  in  the  outlying  districts, 
and,  with  forms  which  vary  with  local  conditions,  the  same 
economic  forces  manifest  themselves  with  similar  results 
over  a  wider  area.  The  poorer  population  shifts  as  short 
a  distance  as  it  can,  and  then  only  when  driven  by  a  rise 
of  rents.  Even  when  it  moves  somewhat  farther  out  it 
seldom  gets  far  enough  to  escape  the  centralising  forces. 
Residential  working-class  districts  like  West  Ham  become 
rapidly  congested  by  the  constant  flow  of  population  from 
more  central  places.  Moreover,  the  same  decentralising 
forces  are  set  up  in  the  large  suburban  districts,  by 
the  planting  there  of  factories  and  other  industrial  works 
designed  to  take  advantage  of  a  large  supply  of  labour 
close  at  hand,  and  land  procurable  at  a  lower  rental.  This 
applies  also  to  many  of  the  suburbs  originally  chosen  as 
residential  quarters  of  the  well-to-do  classes.  The  whole 
western  district  of  London,  comprised  by  Kensington, 
Notting  Hill,  Hammersmith,  etc.,  contains  large  and 
designed  areas   of  dense   poverty  and  overcrowding.     So 


MODERN   CAPITALISM.  345 

far  as  the  mass  of  poorer  workers  in  London  and  other 
large  cities  are  concerned,  it  would  appear  that  their 
endeavour  to  escape  beyond  the  limits  of  congested  city 
life  has  hitherto  been  unavailing  :  the  decentralising  forces 
of  rising  ground  rents,  uncomfortable  and  insanitary  dwell- 
ings, are  ever  at  work,  but  the  centralising  forces  set  up 
by  any  large  number  who  seek  an  outlet  in  the  same 
direction,  with  close  spacial  limitations  to  their  migrating 
tendency,  are  too  strong.  High  rents,  a  fuller  appreciation 
of  the  hygienic  advantages  of  more  space,  and  of  proximity 
to  country  air  and  country  scenes,  have  induced  an  increas- 
ing number  of  the  "middle"  classes,  and  even  of  those 
who,  in  a  pecuniary  sense,  form  the  upper  working  class, 
to  incur  the  expenditure  of  time,  trouble,  and  railway 
fares  involved  in  living  sufficiently  far  from  the  centre 
to  avoid  the  centralising  pressure.  The  most  important 
practical  problem  of  social  reform  to-day  is  how  to  secure 
this  option  of  extra-city  life  for  the  mass  of  city  workers. 
If  the  economies  of  low  ground  rent  and  slightly  cheaper 
labour  were  sufficiently  large  to  induce  the  establish- 
ment of  manufactories  at  considerable  distances  from  large 
centres  of  population,  we  might  look  in  time  to  see  the 
large  industrial  town  give  place  to  a  number  of  industrial 
villages,  gathered  round  some  single  large  factory  or 
"  works."  The  growing  facilities  of  communication  with 
large  towns  at  increased  distances,  afforded  by  recent 
expansions  of  railway  service,  and  by  improvements  in 
telegraphic  and  telephonic  media,  have  done  something 
towards  this  form  of  decentralisation.  Round  Manchester 
and  other  larger  northern  manufacturing  towns  an  increas- 
ing number  of  factories  are  springing  up ;  in  the  United 
States  the  same  phenomenon  is  still  commoner.  Smaller 
rents,  cheaper  living,  lower  wages,  especially  in  textile 
mills  where  women  are  largely  employed,  and  lastly,  more 
submissive  labour,  are  everywhere  the  economic  stimuli  of 
this  decentralisation  of  manufacture.  Assuming  that  some 
more  cheaply  and  easily  transmissible  motor-power  can 
be  found  for  manufacture,  and  that  a  cheap  and  readily 
available  transport  service  by  steam  or  electricity  is 
widely  spread,  it  seems  not  unlikely  that  the  economies 
of  decentralised  manufacture  may  widely  or  even  universally 
outweigh  the  primary  centralising  economies  which  created 


346  THE  EVOLUTION  OF 

our  great  manufacturing  towns.  Whether  a  wide  diffusion 
of  industrial  villages,  which  might  be  of  a  size  and  structure 
to  reproduce  in  a  somewhat  less  virulent  form  many  of  the 
physical  and  moral  vices  of  the  larger  towns,  and  which 
possibly  might  retard  or  nullify  some  of  the  educative  and 
elevating  influences  springing  from  the  organisation  and  co- 
operative action  of  large  masses  of  workers,  can  be  regarded 
as  a  desirable  substitute  or  remedy  for  our  congested  city 
life,  is  open  to  grave  doubt.  A  whole  country  like  England, 
thickly  blotched  at  even  intervals  by  big  industrial  villages 
comprised  of  a  huge  factory  or  two  with  a  few  rectangular 
streets  of  small,  dull,  grimy,  red-brick  cottages,  and  one  or 
two  mansions  standing  inside  their  parks  at  the  side  remote 
from  the  factories,  would,  from  an  aesthetic  point  of  view,  be 
repulsive  to  the  last  degree ;  and  out  of  a  country,  the  whole 
of  which  was  thus  ordered  for  pure  purposes  of  industrial 
economy,  it  is  difficult  to  believe  that  any  of  the  higher 
products  of  human  effort  could  proceed.  But  the  possi- 
bility of  some  such  outcome  of  the  decentralising  forces 
already  visible  must  not  be  ignored.  It  is  even  likely  that 
the  labour  movement,  advancing  as  it  does  more  rapidly  in 
large  manufacturing  centres  than  elsewhere,  may,  by  increas- 
ing the  freedom  and  power  of  labour  associated  upon  a  large 
scale,  apply  an  additional  stimulus  to  the  entrepreneur  to  place 
his  business  undertakings  so  as  to  make  strongly  combined 
action  of  labourers  more  difficult.  American  manufacturers 
are  distinctly  actuated  by  this  motive  in  selecting  the 
locality  of  their  factories,  and  have  been  able  in  many 
cases  to  maintain  a  despotic  control  over  the  workers  which 
would  be  quite  impossible  were  their  factories  planted  in 
the  middle  of  a  large  city.^ 

§  9.  This  method  of  partial  decentralisation  depends  in 
large  measure,  it  is  evident,  upon  such  progress  in  the  trans- 
port services  for  persons,  goods,  and  intelligence  as  shall 
minimise  the  inconvenience  of  a  less  central  position,  render- 
ing the  location  of  the  business  a  matter  of  comparative 
indifference.  But  it  is  to  improved  transport  services  that 
we  may  look  to  facilitate  a  kind  of  decentralisation,  the  net 

^  One  of  the  specific  advantages  in  America  has  been  the  absence  of 
any  serious  endeavour  on  the  part  of  legislation  to  put  down  Truck. 
The  grossest  abuses  of  Truck  appear  in  country  manufacturing  towns 
of  t>]t  United  States. 


MODERN   CAPITALISM.  347 

gain  of  which  is  less  dubious  than  that  arising  from  the  sub- 
stitution of  a  large  number  of  industrial  villages  for  a  small 
number  of  industrial  towns.  Is  it  not  possible  for  more 
town-workers  to  combine  centralised  work  with  decentralised 
life — to  work  in  the  town  but  to  live  in  the  country  ?  May 
not  this  advantage,  at  present  confined  to  the  wealthier 
classes,  be  brought  within  the  reach  of  the  poorer  classes  ? 
Some  small  progress  has  been  made  of  recent  years  towards 
the  realisation  of  this  ideal.  Three  chief  difficulties  stand 
in  the  way  of  success :  the  length  of  the  working-day,  which 
makes  the  time  required  for  travelling  to  and  from  a  distant 
home  a  matter  of  serious  consideration;  the  defective 
supply  of  convenient,  cheap,  and  frequent  trains  or  other 
quick  means  of  conveyance;  the  irregularity  and  uncer- 
tainty of  tenure  in  most  classes  of  labour,  which  prevents 
the  establishment  of  a  settled  house  chosen  with  regard  to 
convenient  access  to  a  single  point  of  industry.  Some 
recent  progress  has  been  made  in  large  cities,  such  as 
Vienna,  Paris,  and  London,  in  providing  workmen's  trains 
and  by  the  cheapening  of  train  and  'bus  fares ;  but  such 
experiments  are  generally  confined  within  too  narrow  an 
area  to  achieve  any  satisfactory  amount  of  decentralisation, 
for  the  interests  of  private  carrying  companies  demand  that 
the  largest  number  of  passengers  shall  travel  from  the 
smallest  number  of  stations.  It  would  appear  that  con- 
siderable extension  of  direct  public  control  over  the  means 
of  transport  will  be  required,  in  order  to  secure  to  the  people 
the  full  assistance  of  modern  mechanical  appliances  in 
enabling  them  to  avoid  the  mischief  of  over-crowded  dwell- 
ings. For  such  purposes  the  railway  has  now  replaced  the 
high-road,  and  we  can  no  more  afford  to  entrust  the  public 
interest  in  the  one  case  to  the  calculating  self-interest  of 
private  speculation  than  in  the  other  case.  A  firm  public 
control  in  the  common  interest  over  the  steam  and  electric 
railways  of  the  future  seems  essential  to  the  attainment  of 
adequate  decentralisation  for  dwelling  purposes.  Private 
enterprise  in  transport,  working  hand  in  hand  with  private 
ownership  of  land,  will  only  substitute  for  a  single  mass  of 
over-crowded  dwellings  a  number  ©f  smaller  suburban  areas 
of  over-crowded  dwellings.  The  bicycle  alone,  among 
modern  appliances  of  mechanical  speed,  can  safely  be 
entrusted  to  the  free  private  control  of  individuals,  and,  if 


348  THE   EVOLUTION    OF 

one  may  judge  by  the  remarkable  expansion  of  its  use,  it 
seems  likely  to  afford  no  trifling  assistance  to  the  decentral- 
ising tendencies. 

§  lo.  The  removal  of  the  other  two  barriers  belongs  to 
that  joint  action  of  labour  organisation  and  legislation  which 
aims  at  building  up  a  condition  of  stable  industrial  economy. 
One  of  the  most  serviceable  results  of  that  shortening  of  the 
working-day,  upon  which  public  attention  is  so  powerfully 
concentrated,  would  be  the  assistance  it  would  render  to 
enable  workmen  and  workwomen  to  live  at  a  longer  dis- 
tance from  their  work.  So  long,  however,  as  a  large  pro- 
portion of  city  workers  have  no  security  of  tenure  in  their 
work,  are  liable  at  a  day's  or  a  week's  notice,  for  no  fault  of 
their  own,  to  be  obliged  to  seek  work  under  another 
employer  in  a  distant  locality,  or  if  employed  by  the  same 
master  to  be  sent  to  a  distant  job,  now  to  find  themselves 
without  any  work  at  all,  at  another  time  to  have  to  work  all 
hours  to  make  up  a  subsistence  wage,  it  is  evident  that 
these  schemes  of  decentralisation  can  be  but  partial  in  their 
application.  An  increased  stability  both  in  the  several 
trades  and  in  the  individual  businesses  within  the  trade  is  a 
first  requisite  to  the  establishment  of  a  fixed  healthy  home 
for  the  industrial  worker  and  his  family. 

§  II.  It  is,  however,  unlikely  that  any  wide  or  lasting 
solution  of  the  problem  of  congested  town  life  will  be 
found  in  a  sharp  local  severance  of  the  life  of  an  industrial 
society  which  shall  abandon  the  town  to  the  purposes  of  a 
huge  workshop,  reserving  the  country  for  habitation.  The 
true  unity  of  individual  and  social  life  forbids  this  abrupt 
cleavage  between  the  arts  of  production  and  consumption, 
between  the  man  and  his  work.  It  is  only  in  the  case 
of  the  largest  and  densest  industrial  cities,  swollen  to  an 
unwieldy  and  dangerous  size,  that  such  methods  of  decen- 
tralisation can  in  some  measure  be  applied.  In  these 
monstrous  growths  machinery  of  decentralisation  may  be 
evoked  to  undo  in  part  at  any  rate  the  work  of  centralising 
machinery.  In  smaller  towns,  where  the  circumference 
bears  a  larger  proportion  to  the  mass,  a  .spreading  of  the 
close-packed  population  over  an  expanded  town-area  will  be 
more  feasible,  and  will  form  the  first  step  in  that  series  of 
reforms  which  shall  humanise  the  industrial  town.  The 
congestion  of  the  poorer  population  of  our  towns,  and  the 


MODERN   CAPITALISM.  349 

Struggle  for  fresh  air  and  elbow-room  which  it  implies,  is 
the  most  formidable  barrier  to  the  work  of  transforming  the 
town  from  a  big  workshop  into  a  human  dwelling-place, 
with  an  individual  life,  a  character,  a  soul  of  its  own.  The 
true  reform  policy  is  not  to  destroy  the  industrial  town  but 
to  breathe  into  it  the  breath  of  social  life,  to  temper  and 
subordinate  its  industrial  machine-goods-producing  character 
to  the  higher  and  more  complex  purposes  of  social  life.  An 
ample,  far-sighted,  enlightened,  social  control  over  the  whole 
area  of  city  ground,  whether  used  for  dwellings  or  for 
industrial  purposes,  is  the  first  condition  of  the  true 
municipal  life.  The  industrial  town,  left  for  its  growth  to 
individual  industrial  control,  compresses  into  unhealthily 
close  proximity  large  numbers  of  persons  drawn  together 
from  different  quarters  of  the  earth,  with  different  and  often 
antagonistic  aims,  with  little  knowledge  of  one  another,  with 
no  important  common  end  to  form  a  bond  of  social 
sympathy.  The  town  presents  the  single  raw  material  of 
local  proximity  out  of  which  municipal  life  is  to  be  built.  The 
first  business  of  the  municipal  reformer  then  is  to  transform 
this  excessive  proximity  into  wholesome  neighbourhood,  in 
order  that  true  neighbourly  feelings  may  have  room  to  grow 
and  thrive,  and  eventually  to  ripen  into  the  flower  of  a 
fair  civic  life.  "  A  modern  city,"  it  has  been  well  said,  "  is 
probably  the  most  impersonal  combination  of  individuals 
that  has  ever  been  formed  in  the  world's  history."^  To 
evoke  the  personal  human  qualities  of  this  medley  of  city 
workers  so  as  to  reach  within  the  individual  the  citizen, 
to  educate  the  civic  feeling  until  it  take  shape  in  civic 
activities  and  institutions,  which  shall  not  only  safeguard  the 
public  welfare  against  the  encroachments  of  private  indus- 
trial greed,  but  shall  find  an  ever  ampler  and  nobler 
expression  in  the  aesthetic  beauty  and  spiritual  dignity  of  a 
complex,  common  life — all  this  work  of  transformation  lies 
in  front  of  the  democracy,  grouped  in  its  ever-increasing 
number  of  town-units. 

^  J.  S.  Mackenzie,  An  Introduction  to  Social  Philosophy,  p.  loi. 


350 


CHAPTER  XIV. 

CIVILISATION    AND    INDUSTRIAL   DEVELOPMENT. 

§  I.  Imperfect  Adjustment  of  Industrial  Structure  to  its 
Environment. 

%  2.  Reform  upon  the  Basis  of  Private  Enterprise  and  Free 
Trade. 

§  3.  Freedom  and  Transparency  of  Industry  powerless  to 
cure  the  deeper  Industrial  Maladies. 

§    4.  Beginnings  of  Public  Control  of  Machine-production. 

§  5.  Passage  of  Industries  into  a  public  Non-compeiitive 
Condition. 

§    6.   The  ^^  raison  (Tetre^^  of  Progressive  Collectivism. 

§    7.  Collectivism  follows  the  line  of  Monopoly. 

§  8.  Cases  of  ^^ Arrested  Development:"  the  Sweating 
Trades. 

§    9.  Retardation  of  rate  of  Progress  in  Collective  Industries. 

§  10.  Will  Official  Machine-work  absorb  an  Increasing  Pro- 
portion of  Energy  1 

§  II.  Improved  Quality  of  Consumption  the  Condition  of 
Social  Progress. 

§12.  The  Highest  Division  of  Labour  between  Machinery 
and  Art. 

§13.  Qualitative  Consumption  defeats  the  Law  of  Decreasing 
Returns. 

§  14.  Freedom  of  Art  from  Limitations  of  Matter. 

§  15.  Machinery  and  Art  in  production  of  Intellectual 
Wealth. 

§  16.  Reformed  Consumption  abolishes  Anti-Social  Com- 
petition. 

§17.  Life  itself  must  become  Qualitative. 

§  1 8.   Organic  Relations  between  Production  and  Consumption. 

§  19.  Sununary  of  Progress  towards  a  Coherent  Industrial 
Organism. 


THE   EVOLUTION   OF  MODERN  CAPITALISM.    35 1 

§  I.  Modern  industrial  societies  have  hitherto  secured  to  a 
very  inadequate  extent  the  services  which  modern  machinery 
and  methods  of  production  are  capable  of  rendering.  The 
actual  growth  of  material  wealth,  however  great,  has  been 
by  no  means  commensurate  with  the  enormously  increased 
powers  of  producing  material  commodities  afforded  by  the 
discoveries  of  modern  science,  and  the  partial  utilisation 
of  these  discoveries  has  been  attended  by  a  very  unequal 
distribution  of  the  advantages  of  this  increase  in  the  stock 
of  common  knowledge  and  control  of  nature.  Moreover, 
as  an  offset  against  the  growth  of  material  wealth,  machinery 
has  been  a  direct  agent  in  producing  certain  material  and 
moral  maladies  which  impair  the  health  of  modern  in- 
dustrial communities. 

The  unprecedented  rapidity  and  irregularity  of  the 
discovery  and  adoption  of  the  new  methods  made  it  im- 
possible for  the  structure  of  industrial  society  to  adjust 
itself  at  once  to  the  conditions  of  the  new  environment. 
The  maladies  and  defects  which  we  detect  in  modern  in- 
dustry are  but  the  measure  of  a  present  maladjustment. 

The  progressive  adjustment  of  structure  to  environment 
in  the  unconscious  or  low-conscious  world  is  necessarily 
slow.  But  where  the  conscious  will  of  man,  either  as  an 
individual  or  as  a  society,  can  be  utilised  for  an  adjusting 
force,  the  pace  of  progress  may  be  indefinitely  quickened. 
A  strongly-rooted  custom  in  a  man  yields  very  slowly  to 
the  pressure  of  changed  circumstances  which  make  it  useless 
or  harmful,  unless  the  man  consciously  recognises  the 
inutility  of  the  custom  and  sets  himself  to  root  it  out  and 
plant  another  custom  in  its  place.  So  the  slowness  of  this 
work  of  industrial  adjustment  has  been  in  no  small  measure 
due  to  the  lack  of  definite  realisation  by  the  members  of 
modern  communities  of  the  need  and  importance  of  this 
adjustment.  A  society  which  should  bring  its  conscious 
will  to  bear  upon  the  work  of  constructing  new  social  and 
industrial  forms  to  fit  the  new  economic  conditions,  may 
make  a  progress  which,  while  rapid,  may  yet  be  safe, 
because  it  is  not  a  speculative  progress,  but  one  which  is 
guided  in  its  line  of  movement  by  precedent  changes  of 
environment. 

Regarding,  then,  this  conscious  organised  endeavour, 
enlightened  and  stimulated  by  a  fuller  understanding  of 


352  THE    EVOLUTION    OF 

industrial  forces  in  their  relation  to  human  life,  as  a  deter- 
minant of  growing  value  in  the  industrial  evolution  of  the 
future,  it  may  properly  belong  to  a  scientific  study  of 
modern  industry  to  seek  to  discover  how  the  forces  of 
conscious  reform  can  reasonably  work  in  relation  to  the 
economic  forces  whose  operations  have  been  already  in- 
vestigated. 

In  other  words,  what  are  the  chief  lines  of  economic 
change  required  to  bring  about  a  readjustment  between 
modern  methods  of  production  and  social  welfare?  The 
answer  to  this  question  requires  us  to  amplify  our  interpre- 
tation of  the  industrial  evolution  of  the  past  century,  by 
producing  into  the  future  the  same  lines  of  development, 
that  they  may  be  justified  by  the  appearance  of  consistency 
with  some  rational  social  end.  The  most  convenient,  and 
perhaps  the  safest  way  to  meet  this  demand  is  to  indicate, 
with  that  modesty  which  rightly  belongs  to  prophecy,  some 
of  the  main  reforms  which  seem  to  lie  upon  the  road  of 
industrial  progress,  rendered  subordinate  to  larger  human 
social  ends. 

§  2,  So  far  as  the  waste  of  economic  maladjustment 
consists  in  the  excessive  or  defective  application  of  various 
kinds  of  productive  force  at  different  points  of  industry, 
upon  the  existing  basis  of  individual  initiative  and  control, 
the  reforms  which  are  desirable  must  be  considered  as 
contributing  to  the  more  complete  establishment  of  "  free  " 
competition  in  industry. 

The  complete  breakdown  of  all  barriers  which  impede 
the  free  flow  of  commerce  and  the  migration  of  capital  and 
labour,  the  fullest  and  widest  dissemination  of  industrial 
information,  are  necessary  to  the  attainment  of  the  indi- 
vidualistic ideal  of  free  trade.  Perfect  transparency  of 
industrial  operations,  perfect  fluidity  of  labour  and  of  wealth 
would  effect  incalculably  great  economies  in  the  production 
of  commercial  wealth.  The  free-trader,  in  his  concentration 
upon  the  achievement  of  the  latter  economy,  has  generally 
failed  to  do  full  justice  to  the  importance  of  the  former. 
He  has  indeed  to  some  limited  extent  recognised  the  value 
of  accurate  and  extended  industrial  information  as  the 
intellectual  basis  of  free  trade.  But,  in  common  with  most 
economists,  he  has  failed  to  carry  this  consideration  far 
enough.     It  is  generally  admitted  that  the  increased  pub- 


MODERN   CAPITALISM.  353 

lication  of  accounts  and  quotations  of  stock,  springing  out 
of  the  extension  of  joint-stock  enterprise,  the  growth  of 
numerous  trade  journals,  the  collection  and  dissemination 
of  industrial  facts  by  government  bureaux  and  private 
statisticians,  are  serviceable  in  many  ways.  But  the  extreme 
repugnance  which  is  shown  towards  all  endeavours  to 
extend  the  compulsory  powers  of  acquiring  information  by 
the  state,  the  extreme  jealousy  with  which  the  rights  of 
private  information  are  maintained,  show  how  inadequately 
the  true  character  of  modern  industry  is  grasped.  In  the 
complexity  of  modern  commerce  it  should  be  recognised 
that  there  is  no  such  thing  as  a  "self-regarding"  or  a  private 
action.  No  fact  bearing  on  prices,  wages,  profits,  methods 
of  production,  etc.,  concerns  a  single  firm  or  a  single  body 
of  workers.  Every  industrial  action,  however  detailed  in 
character,  however  secretly  conducted,  has  a  public  import, 
and  necessarily  affects  the  actions  and  interests  of  innumer- 
able persons.  Indeed  it  is  often  precisely  in  the  knowledge 
of  those  matters  regarded  as  most  private,  and  most  carefully 
secreted,  that  the  public  interest  chiefly  lies.  Yet  so  firmly 
rooted  in  the  business  mind  is  the  individualistic  conception 
of  industry,  that  any  idea  of  a  public  development  of  those 
important  private  facts  upon  which  the  credit  of  a  particular 
firm  is  based,  would  appear  to  destroy  the  very  foundation 
of  the  commercial  fabric.  But,  although  in  the  game  of 
commerce  a  single  firm  which  played  its  hand  openly  while 
others  kept  theirs  well  concealed  might  suffer  failure,  it  is 
quite  evident  that  the  whole  community  interested  in  the 
game  would  gain  immensely  if  all  the  hands  were  on  the 
table.  Many,  if  not  most,  of  the  great  disasters  of  modern 
commercial  societies  are  attributable  precisely  to  the  fact  that 
the  credit  of  great  business  firms,  which  is  pre-eminently  an 
affair  of  public  interest,  is  regarded  as  purely  private  before 
the  crash.  As  industry  grows  more  and  more  complex,  so 
the  interest  of  the  public  and  of  an  ever-wider  public  in 
every  industrial  action  grows  apace,  and  a  correspondingly 
growing  recognition  of  this  public  interest,  with  provision 
for  its  security,  will  be  found  necessary.  So  far  as  the 
natural  changes  of  industrial  structure  in  the  private  busi- 
ness fail  to  provide  the  requisite  publicity,  the  exercise  of 
direct  public  scrutiny  must  come  to  be  enforced.  The 
reluctance   shown   alike   by   bodies   of  employers   and   of 

23 


354  THE   EVOLUTION   OF 

workers  to  divulge  material  facts  is  in  large  measure  due  to 
the  false  ideas  they  have  conceived  as  to  the  nature  of 
industrial  activity,  which  education  can  do  something  to 
remove,  but  which,  if  not  removed,  must  be  over-ruled  in 
the  public  interest. 

§  3,  It  must  not,  however,  be  supposed  that  the  most 
thorough  transparency  of  industry,  any  more  than  the 
removal  of  the  political  barriers  which  prevent  Free  Trade, 
would  tend  to  bring  about  the  desirable  adjustment  between 
the  healthy  social  organism  and  the  environment  of  machine- 
production.  Full  free  trade  would  supply,  quicken,  and 
facilitate  the  operation  of  those  large  economic  forces  which 
we  have  seen  at  work :  the  tendency  of  capital  to  gravitate 
into  larger  and  fewer  masses,  localised  where  labour  can 
be  maintained  upon  the  most  economical  terms :  a  corre- 
spondent but  slower  and  less  complete  organisation  of  labour 
in  large  masses  :  the  flow  of  labouring  population  into  towns, 
together  with  a  larger  utilisation  of  women  and  (where  per- 
mitted) children  for  industrial  work :  a  growing  keenness 
of  antagonism  as  the  mass  of  the  business-unit  is  larger, 
and  an  increased  expenditure  of  productive  power  upon 
aggressive  commercial  warfare :  the  growth  of  monopolies 
springing  from  natural,  social,  or  economic  sources,  con- 
ferring upon  individuals  or  classes  the  power  to  consume 
without  producing,  and  by  their  consumption  to  direct  the 
quantity  and  character  of  large  masses  of  labour. 

The  complete  realisation  of  full  free  trade  in  all  directions 
has  no  power  whatever  to  abate  the  activity  of  these  forces, 
and  would  only  serve  to  bring  their  operation  into  more 
signal  and  startling  prominence. 

For  the  waste  of  periodic  over-production  visible  in  trade 
depression,  for  the  sufferings  caused  by  ever  larger  oscilla- 
tions in  prices  and  greater  irregularity  of  employment  of 
capital  and  labour,  for  the  specific  evils  of  long  hours  or 
excessive  intensity  of  labour,  dangerous  and  unwholesome 
conditions  of  employment,  increased  employment  of  women 
and  children,  and  growth  of  large-city  life,  freedom  of  trade 
conjoined  with  publicity  of  business  operations  can  furnish 
no  remedies. 

It  has  been  seen  that  these  injuries  to  individuals  and 
groups  of  individuals,  and  through  them  to  society,  arise 
naturally  and  necessarily  from  the  unfettered  operation  of 


MODERN   CAPITALISM.  355 

the  enlightened  self-interest  of  individuals  and  groups  of 
individuals  engaged  in  obtaining  for  themselves,  by  the 
freest  use  of  industrial  means  available,  the  largest  quantity 
of  money. 

So  far  as  these  evils  are  in  form  or  in  magnitude  the 
peculiar  products  of  the  last  two  centuries,  they  are  in  large 
measure  traceable  to  methods  of  production  controlled  by 
machinery,  and  to  the  social  estimate  of  machine-products 
which  gives  machinery  this  controlling  power. 

If  this  is  so,  such  progress  as  shall  abate  these  evils  and 
secure  for  humanity  the  uses  of  machinery  without  the 
abuses  will  lie  in  two  directions,  each  of  which  deserves 
consideration  :  (i)  an  adequate  social  control  over  machine- 
production;  (2)  an  education  in  the  arts  of  consumption 
such  as  may  assign  proper  limits  to  the  sphere  of  machine- 
production. 

§  4.  That  machinery  subject  to  the  unrestricted  guidance 
of  the  commercial  interests  of  an  individual  or  a  class 
cannot  be  safely  trusted  to  work  for  the  general  welfare,  is 
already  conceded  by  all  who  admit  the  desirability  or  neces- 
sity of  the  restrictive  legislation  of  Factory  Acts,  Mines 
Regulation  Acts,  and  the  large  growth  of  public  provisions 
for  guarding  against  economic,  hygienic,  and  other  injuries 
arising  from  the  conditions  of  modern  industrial  life. 

These  provisions,  whether  designed  directly  to  secure  the 
interests  of  a  class  of  employees,  as  in  the  case  of  Factory 
Acts,  or  to  protect  the  consuming  public,  as  in  the  case  of 
Adulteration  Acts,  must  be  regarded  as  involving  an  admis- 
sion of  a  genuine  antagonism  between  the  apparent  interests 
of  individuals  and  of  the  whole  community,  which  it  is  the 
business  of  society  to  guard  against. 

All  this  legislation  is  rightly  interpreted  as  a  restriction  of 
the  freedom  of  individual  industry  under  modern  methods 
of  production,  required  in  the  public  interest.  Uncontrolled 
machine-production  would  in  some  cases  force  children  of 
six  or  eight  years  to  work  ten  hours  a  day  in  an  unhealthy 
factory,  would  introduce  suddenly  a  host  of  Chinese  or 
other  "  cheap  "  workers  to  oust  native  labour  accustomed  to 
a  higher  standard  of  comfort,  would  permit  an  ingenious 
manufacturer  to  injure  the  consumer  by  noxious  adulteration 
of  his  goods,  would  force  wages  to  be  paid  by  orders  upon 
shops   owned   or  controlled   by   employers,   would  oblige 


35^  THE   EVOLUTION   OF 

workers  to  herd  together  in  dens  of  infection,  and  to  breed 
physical  and  moral  diseases  which  would  injure  the  body 
poUtic,  The  need  of  a  growing  social  control  over  modern 
machine-production,  in  cases  where  that  production  is  left 
in  the  main  to  the  direction  of  individual  enterprise,  is 
admitted  on  every  side,  though  the  development  of  that 
control  has  been  uneven  and  determined  by  the  pressure  of 
concrete  grievances  rather  than  by  the  acceptance  of  any 
distinct  theory  of  public  responsibility. 

Other  limitations  upon  individual  freedom  of  industry 
imply  a  clearer  recognition  of  the  falsehood  of  the  laissez 
faire  position.  The  undertaking  by  the  State  or  the  Muni- 
cipality, or  other  units  of  social  life,  of  various  departments 
of  industry,  such  as  the  railways,  telegraphs,  post-offices,  is 
a  definite  assertion  that,  in  the  supply  of  the  common 
services  rendered  by  these  industries,  the  competition  of 
private  interests  cannot  be  relied  upon  to  work  for  the 
public  good. 

§  5.  The  industries  which  the  State  either  limits  or 
controls  in  the  interest  either  of  a  body  of  workers  or  of 
the  consuming  public  may  be  regarded  as  passing  from  a 
private  competitive  condition  to  a  public  non-competitive 
condition.  If  therefore  we  wish  to  ascertain  how  far  and 
in  what  directions  social  control  of  modern  production 
will  proceed,  we  shall  examine  those  industries  which 
already  exhibit  the  collective  character.  We  shall  find  that 
they  are  of  two  kinds — (i)  industries  where  the  size  and 
structure  of  the  "business"  is  such  that  the  protection 
afforded  by  competition  to  the  consuming  public  and  to 
the  workers  has  disappeared,  or  is  in  frequent  abeyance, 
(2)  industries  where  the  waste  and  damage  of  excessive 
competition  outweighs  the  loss  of  enterprise  caused  by  a 
removal  or  restriction  of  the  incentive  of  individual  gain. 
As  we  have  seen  in  the  analysis  of  "trusts,"  these  two 
characteristics,  wasteful  competition  and  monopoly,  are 
often  closely  related,  the  former  signifying  the  process  of 
intense  struggle,  the  object  and  ultimate  issue  of  which  is 
to  reach  the  quiet  haven  of  monopoly.  Generally  speaking, 
social  control  in  the  case  of  over-competing  industries  is 
limited  to  legislative  enactments  regarding  conditions  of 
employment  and  quality  of  goods.  Only  those  industries 
tend  to  pass  under  public  administration  where  the  mon- 


MODERN   CAPITALISM.  357 

opoly  is  of  an  article  of  general  and  necessary  consumption, 
and  where,  therefore,  a  raising  of  prices  considerably  above 
the  competition  rate  would  not  succeed  in  evoking  effective 
competition.  Since  the  general  tendency  of  industry,  so  far 
as  it  falls  under  modern  economies  of  machinery  and  method, 
is  either  towards  wasteful  competition  or  towards  monopoly, 
it  is  to  be  expected  that  there  will  be  a  continual  expansion 
of  State  interference  and  State  undertakings.  This  growing 
socialisation  of  industry  must  be  regarded  as  the  natural 
adjustment  of  society  to  the  new  conditions  of  machine- 
production.  As  under  the  economies  of  machine-produc- 
tion the  business-unit,  the  mass  of  capital  and  labour 
forming  a  single  "  firm  "  or  "business,"  grows  larger  in  size 
and  more  potent  in  its  operations,  the  social  disturbances 
which  it  can  occasion  by  its  private  activity,  the  far-reaching 
and  momentous  results  of  its  strain  of  competition,  the 
probability  of  an  anti-social  exercise  of  "  monopolic  "  power 
over  the  whole  or  part  of  its  market-area,  will  of  necessity 
increase.  The  railway  and  shipping  industries,  for  example, 
in  countries  like  England  and  the  United  States,  have 
already  reached  a  stage  of  industrial  development  when  the 
social  danger  arising  from  an  arbitrary  fixing  of  rates  by  a 
line  or  a  "pool"  of  lines,  from  a  strike  or  lock-out  of 
"  dockers  "  or  railway  men,  is  gaining  keener  recognition 
every  year.  The  rapidly  growing  organisation  of  both 
capital  and  labour,  especially  in  the  fundamental  industries 
of  coal,  iron,  and  machine-making,  in  the  machine-transport 
industries,  and  the  most  highly  evolved  manufactories,  gives 
to  a  body  of  employers  or  employed,  or  to  a  combination 
of  both,  the  power  at  any  moment  to  paralyse  the  whole  or 
a  large  portion  of  the  entire  trade  of  a  country  in  pursuit  of 
some  purely  private  interest  or  resentment,  or  in  the  acquis- 
ition of  some  strategical  position,  which  shall  enable  them 
to  strengthen  their  competing  power  or  gain  a  monopoly. 
Although  the  organisation  of  masses  of  capital  and  of  labour 
may,  as  is  often  urged,  make  industrial  strife  less  frequent, 
the  effects  of  such  strife  upon  the  wider  public,  who  have  no 
opportunity  of  casting  a  vote  for  war  or  peace,  are  more 
momentous.  Moreover,  as  these  private  movements  of 
capital  and  labour  proceed,  the  probability  of  combined 
action  between  employers  and  employed  in  a  particular 
industry,  to  secure  for  themselves  some  advantages  at  the 


358  THE   EVOLUTION   OF 

public  expense,  will  be  a  factor  of  increasing  importance  in 
industrial  evolution. 

The  Trade  Union  movement  and  the  various  growths  of 
Industrial  Partnership,  valuable  as  they  are  from  many 
points  of  view,  furnish  no  remedies  against  the  chief  forms 
of  economic  monopoly  and  economic  waste ;  they  can  only 
change  the  personality  and  expand  the  number  of  monopo- 
lists, and  alter  the  character,  not  the  quantity,  of  economic 
waste.  Society  has  an  ever-deepening  and  more  vital  in- 
terest in  the  economical  management  of  the  machinery  of 
transport,  and  this  interest  is  no  whit  more  secure  if  the 
practical  control  of  railways  and  docks  were  in  the  hands  of 
the  Dockers'  Union  or  the  Amalgamated  Society  of  Rail- 
way Servants,  or  of  a  combined  board  of  directors  and  trade 
union  officials,  than  it  is  under  present  circumstances.  On 
the  contrary,  an  effective  organisation  of  capital  and  labour 
in  an  industry  would  be  more  likely  to  pursue  a  policy 
opposed  to  the  interests  of  the  wider  public  than  now, 
because  such  a  policy  would  be  far  more  likely  to  succeed. 

§  6.  When  it  is  said  that  modern  industry  is  becoming 
essentially  more  collective  in  character  and  therefore  de- 
mands collective  control,  what  is  meant  is  that  under 
modern  industrial  development  the  interest  of  the  industrial 
society  as  a  whole,  and  of  the  consuming  public  in  each 
piece  of  so-called  private  enterprise,  is  greater  than  it  was 
ever  before,  and  requires  some  guarantee  that  this  interest 
shall  not  be  ignored.  Where  the  industry  is  of  such  a  kind, 
and  in  such  a  stage  of  development,  that  keen  competition 
without  undue  waste  survives,  this  public  interest  can  com- 
monly be  secured  by  the  enactment  of  restrictive  legislation. 
Where  such  partial  control  is  insufificient  to  secure  the 
social  interest  against  monopoly  or  waste.  State  manage- 
ment, upon  a  national,  municipal,  or  such  other  scale  as  is 
economically  advisable,  must  take  the  place  of  a  private 
enterprise  which  is  dangerous  to  society.  This  necessity 
becomes  obvious  as  soon  as  the  notion  of  a  business  as 
being  purely  "  private  "  or  "  self-regarding  "  in  its  character 
is  seen  to  be  directly  negatived  by  an  understanding  of  the 
complex  social  nature  of  every  commercial  act.  So  soon  as 
the  idea  of  a  social  industrial  organism  is  grasped,  the 
question  of  State  interference  in,  or  State  assumption  of, 
an  industry  becomes  a  question  of  social  expediency — that 


MODERN   CAPITALISM.  359 

is,  of  the  just  interpretation  of  the  facts  relating  to  the 
particular  case.  In  large  measure  this  social  control  is  to 
be  regarded,  not  as  a  necessary  protection  against  the 
monopolic  power  of  individuals,  but  as  necessary  for  the 
security  of  individual  property  within  the  limits  prescribed 
by  social  welfare.  Modern  machine-evolution,  as  is  seen, 
permits  and  encourages  the  wanton  invasion  and  destruction 
of  forms  of  capital  by  the  competition  of  new  savings  em- 
ployed in  an  anti-social  way.  It  likewise  tends  to  the 
frequent  destruction  of  the  value  of  that  labour  power  which 
is  the  sole  property  of  the  mass  of  workers.  "  The  property 
which  every  man  has  in  his  own  labour,  as  it  is  the  original 
foundation,  so  it  is  the  most  sacred  and  inviolable."^ 

There  are  certain  wastes  of  economic  power  involved 
in  all  competition ;  there  are  certain  dangers  of  monopoly 
attaching  to  all  private  conduct  of  industry.  Collective  con- 
trol deals  with  these  wastes  and  dangers,  adjusting  itself  to 
their  extent  and  character. 

§  7.  To  the  question  how  far  and  how  rapidly  may  this  ex- 
tension of  collective  control  proceed,  no  more  definite  answer 
is  possible  than  this,  that  as  a  larger  and  larger  amount  of 
industry  passes  into  the  condition  of  the  most  highly  evolved 
machine-industries  of  to-day,  and  develops  along  with  the 
corresponding  economies,  corresponding  dangers  and  wastes, 
larger  portions  will  pass  under  restrictive  legislation  or  State 
management. 

The  evolution  in  the  structure  of  capitalist  enterprise,  while 
it  breeds  and  aggravates  the  diseases  of  trade  depression, 
sweating,  etc.,  likewise  prepares  the  way  and  facilitates  the 
work  of  social  control.  It  is  easier  to  inspect  a  few  large 
factories  than  many  small  ones,  easier  to  arbitrate  where 
capital  and  labour  stands  organised  in  large  masses,  easier 
to  municipalise  big  joint-stock  businesses  in  gas,  water,  or 
conveyance.  Every  legislative  interference,  in  the  way  of 
inspection  or  minor  control,  quickens  the  evolution  of  an 
industry,  and  hastens  the  time  when  it  acquires  the  position 
of  monopoly  which  demands  a  fuller  measure  of  control, 
and  finally  passes  into  the  ranks  of  public  industry. 

Thus  it  would  follow  that,  unless  proceeding  pari  passu 
with  this  evolution  there  was  a  springing  up  or  an  expansion 

*  Wealth  of  Nations^  p.  no. 


360  THE   EVOLUTION   OF 

of  Other  industries  not  so  amenable  to  large  machine  pro- 
duction and  therefore  not  prone  to  the  dangers  and  wastes 
which  appertain  to  it,  collectivism  would  absorb  an  ever- 
increasing  proportion  ©f  industrial  effort. 

§  8.  At  present  it  appears  that  there  are  two  great  classes 
of  productive  work  which  have  not  fallen  under  machine- 
industry  and  capitalism  in  its  typical  form.  There  is  that 
work  which  machinery  is  technically  competent  to  perform, 
but  which  it  cannot  economically  undertake  so  long  as 
large  quantities  of  very  cheap  labour  are  available.  This 
class  comprises  the  bulk  of  what  are  commonly  called  the 
"  sweating  "  trades,  the  cheap  low-skilled  domestic  workshop 
labour.  The  other  class  consists  of  artistic  and  intellectual 
work  which  cannot  be  successfully  undertaken  by  machinery. 
The  first  of  these  classes  is  universally  admitted  to  comprise 
cases  of  arrested  development.  The  irregular  working  of 
the  more  highly-evolved  industries,  the  successive  supplanta- 
tion  of  branches  of  skilled  labour  by  machinery,  the  blind 
migration  of  labour  from  distant  parts,  keeps  the  large 
industrial  centres  supplied  with  a  quantity  of  unskilled  and 
untrained  labour,  which  can  be  bought  so  cheaply  that  in 
the  lowest  branches  of  many  trades  it  does  not  pay  the 
entrepretieur  to  incur  the  initial  cost  of  setting  up  expensive 
machinery  and  the  risk  of  working  it.  The  social  and 
moral  progress  of  industrial  nations  requires,  as  a  first 
condition  of  orderly  progress,  that  these  cases  of  arrested 
growth  shall  be  absorbed  into  the  general  mass  of  machine- 
industry.  These  problems  of  "  the  sweating  system,"  the 
unemployed,  the  pauper  class,  the  natural  products  of  the 
working  of  a  system  of  competition  where  the  competitors 
start  from  widely  different  lines  of  opportunity,  can  never  be 
solved  by  the  private  play  of  enlightened  self-interest,  unless 
that  enlightenment  take  a  far  more  altruistic  form  than  is 
consistent  with  the  continuance  of  competitive  industry. 
This  is  the  fundamental  paralogism  of  that  school  of 
reformers  who  find  the  cure  of  industrial  maladies  in 
the  humanisation  of  the  private  employer.  A  whole  class 
of  employers  sufficiently  humane  and  far-sighted  to  con- 
sistently desire  the  welfare  of  their  employees  (and  no 
fewer  than  the  whole  class  would  suffice,  for  otherwise  the 
less  benevolent  will  undersell  and  take  the  business  from 
the   more   benevolent)  would  be   so  highly  civilised   that 


MODERN   CAPITALISM.  36I 

they  would  no  longer  be  willing  to  compete  with  one 
another  so  as  to  injure  one  another's  business  :  they  would 
out  of  pure  goodwill  organise  into  a  "  monopoly,"  and  work- 
ing this  monopoly  for  the  exclusive  interest  of  themselves 
and  their  employees,  rack-rent  the  consuming  public;  or 
if  their  benevolence  extended  to  all  their  customers  they 
would  socialise  their  business,  conducting  it  for  the  greatest 
good  of  all  society.  Such  a  form  of  socialised  industry, 
dependent  upon  the  moral  character  of  perishable  indi- 
viduals, would  possess  all  the  weaknesses  charged  against 
State  socialism  without  any  of  the  educative  advantages 
or  the  security  and  stability  of  that  system.  The  "  captain 
of  industry"  remedy  is  a  sentimental  and  not  a  scientific 
one.  Once  regard  "  sweating "  as  a  case  of  arrested 
development  and  the  true  line  of  progress  will  be  seen  to 
lie  in  the  absorption  of  these  backward  industries  into  the 
main  current  of  industrial  movement,  leaving  them  to  pass 
through  the  necessary  phases  of  machine-production  and 
to  be  subjected  to  an  increasing  pressure  of  social  control 
until  they  are  ripe  for  society  to  undertake.  Then  there 
will  remain  outside  of  capitalist  machine-industry  only 
that  class  of  work  which  is  artistic  and  therefore  indi- 
vidualistic in  character. 

§  9.  We  now  stand  face  to  face  with  the  main  objection 
so  often  raised  against  all  endeavours  to  remedy  industrial 
and  social  diseases  by  the  expansion  of  public  control. 
Competition  and  the  zest  of  individual  gain,  it  is  urged, 
furnish  the  most  effective  incentive  to  enterprise  and 
discovery.  Assuming  that  society  were  structurally  com- 
petent to  administer  industry  officially,  the  establishment 
of  industrial  order  would  be  the  death-blow  to  industrial 
progress.  The  strife,  danger,  and  waste  of  industrial  com- 
petition are  necessary  conditions  to  industrial  vitality. 

How  much  force  do  these  objections  contain  in  the  light 
of  the  information  provided  by  our  study  of  industrial 
evolution  ?  It  should  be  recognised  at  the  outset  that  the 
economic  individualist  is  not  a  conservative,  defending  an 
established  order  and  pointing  out  the  dangers  attending 
proposed  innovations.  Our  analysis  of  the  structure  of 
modern  industry  shows  the  progressive  socialisation  of 
certain  classes  of  industry  as  a  step  in  the  order  of  events, 
equally  natural  and  necessary  with  the  earlier  steps  by  which 


362  THE   EVOLUTION   OF 

machine-industry  superseded  handicraft  and  crystallised  in 
ever  larger  masses  with  changing  relations  to  one  another. 
The  indictment  against  social  control  over  industry  is  an 
indictment  against  a  natural  order  of  events,  on  the  ground 
that  nature  has  taken  a  wrong  road  of  advancement.  It 
is  only  possible  to  regard  the  legislative  action  by  which 
public  control  over  industry  is  established  as  "  unnatural " 
or  "  artificial "  by  excluding  from  "  Nature  "  those  social 
forces  which  find  expression  in  Acts  of  Parliament,  an 
eminently  unscientific  mode  of  reasoning. 

But  though  this  growing  exercise  of  social  control  can- 
not be  regarded  as  "  fighting  against  the  constitution  of 
things,"  ^  it  may  be  considered  by  those  who  hold  we  have 
no  guarantee  of  the  future  development  of  the  human  race,  as 
one  of  the  lines  of  action  in  which  the  advancing  enfeeble- 
ment  of  man  may  express  itself:  the  abandonment  of 
individual  strife  in  commerce  may  be  regarded  as  a  mark  of 
diminishing  vitality,  which  seeks  immunity  from  effort  and 
an  equable  condition  of  material  comfort,  in  preference  to 
the  risks  and  excitement  ©f  a  more  eventful  and  arduous 
career.  Order  will  be  purchased  at  the  price  of  progress  : 
the  abandonment  of  individual  enterprise  in  industry  is  part 
of  the  decadence  of  humanity.  This  is  the  interpretation 
which  Dr.  Pearson,  in  his  National  Life  and  Character, 
places  upon  the  socialistic  tendencies  of  the  age  :  the  sup- 
pression of  competitive  industry  in  order  to  cure  poverty, 
physical  misery,  and  social  injustice,  will  produce  a  society 
which  is  "  sensuous,  genial,  fibreless."  The  validity  of  such 
a  judgment  rests  upon  two  assumptions :  first,  that  social 
control  of  industry  necessarily  crushes  the  spirit  of  indi- 
vidual enterprise  and  checks  industrial  progress;  second, 
that  extension  of  State  control  over  capitalist  industry 
necessarily  implies  a  diminished  scope  of  individual  control 
in  the  production  of  wealth. 

The  first  assumption  is  open  to  a  number  of  criticisms 
which  must  be  held  to  greatly  modify  its  force,  and  which 
may  be  summarised  as  follows  : — 

(i)  Much  individual  enterprise  in  industry  does  not  make 
for  industrial  progress.  A  larger  and  larger  proportion  of 
the  energy  given  out  in  trade  competition  is  consumed  in 

^  Spencer,  Conlemporary  Review ^  March  1884. 


MODERN   CAPITALISM.  363 

violent  warfare  between  trade  rivals,  and  is  not  represented 
either  in  advancement  of  industrial  arts  or  in  increase  of 
material  wealth, 

(2)  History  does  not  show  greed  of  gain  as  the  motive  of 
the  great  steps  in  industrial  progress.  The  love  of  science, 
the  pure  delight  of  mechanical  invention,  the  attainment  of 
some  slight  personal  convenience  in  labour,  and  mere 
chance,  play  the  largest  part  in  the  history  of  industrial 
improvements.  These  motives  would  be  as  equally  oper- 
ative under  state-control  as  under  private  enterprise. 

(3)  Such  personal  inducements  as  may  supply  a  useful 
stimulus  to  the  inventive  faculty  could  be  offered  in  socially- 
controlled  industry,  not  merely  publicity  and  honour,  but 
such  direct  material  rewards  as  were  useful. 

Industrial  history  shows  that  in  modern  competitive 
industry  the  motive  of  personal  gain  is  most  wastefully 
applied.  On  the  one  hand,  the  great  mass  of  intelligent 
workers  have  no  opportunity  of  securing  an  adequate  reward 
for  any  special  application  of  intelligence  in  mechanical 
invention  or  other  improvement  of  industrial  arts.  Few 
great  modern  inventors  have  made  money  out  of  their 
inventions.  On  the  other  hand,  the  entrepreneur,  with  just 
enough  business  cunning  to  recognise  the  market  value  of 
an  improvement,  reaps  a  material  reward  which  is  often  enor- 
mously in  excess  of  what  is  economically  required  to  induce 
him  to  apply  his  "  business  "  qualities  to  the  undertaking. 

(4)  The  same  charges  of  weakened  individual  interest, 
want  of  plasticity  and  enterprise,  routine  torpidity,  are  in  a 
measure  applicable  to  every  large  business  as  compared  with 
a  smaller.  Adam  Smith  considered  them  fatal  barriers  to 
the  growth  of  joint -stock  enterprise  outside  a  certain 
narrowly-defined  range.  But  the  economies  of  the  large 
business  were  found  to  outweigh  these  considerations.  So 
a  well-ordered  state-industry  may  be  the  most  economical 
in  spite  of  diminished  elasticity  and  enterprise. 

But  while  these  considerations  qualify  the  force  of  the 
contention  that  state  -  control  would  give  no  scope  for 
industrial  progress,  they  do  not  refute  it  The  justification 
of  the  assumption  by  the  State  of  various  functions,  military, 
judicial,  industrial,  is  that  a  safe  orderly  routine  in  the 
conduct  of  these  affairs  is  rightly  purchased  by  a  loss  of 
elasticity  and  a  diminished  pace  of  progress.     The  arts  of 


364  TPIE    EVOLUTION    OF 

war  and  of  justice  would  probably  make  more  advance 
under  private  enterprise  than  under  public  administration, 
and  there  is  no  reason  to  deny  that  postal  and  railway 
services  are  slower  to  adopt  improvements  when  they  pass 
under  government  control. 

It  may  be  generally  admitted  that,  as  the  large  modern 
industries  pass  from  the  condition  of  huge  private  mon- 
opolies to  public  departments,  the  routine  character  will 
grow  in  them,  and  they  will  become  less  experimental  and 
more  mechanical.  It  is  the  nature  of  machines  to  be 
mechanical,  and  the  perfection  of  machine-industries,  as 
of  single  machines,  will  be  the  perfection  of  routine.  Just 
in  proportion  as  the  machine  has  established  its  dominancy 
over  the  various  industries,  so  will  they  increase  in  size, 
diminish  in  flexibility,  and  grow  ripe  for  admission,  as 
routine  businesses,  into  the  ranks  of  state-industry.  If  the 
chief  object  of  society  was  to  secure  continual  progress  in 
military  arts  and  to  educate  to  the  utmost  the  military 
qualities,  it  would  be  well  to  leave  fighting  to  private 
enterprise  instead  of  establishing  state  monopolies  in  the 
trade  of  war.  It  sacrifices  this  competition,  with  the  progress 
it  induces  and  the  personal  fitness  it  evolves,  in  order  that 
the  individual  enterprise  of  its  members  may  be  exercised 
in  the  competition  of  industrial  arts,  inducing  industrial 
progress  and  evolving  industrial  fitness.  The  substitution 
of  industrialism  for  warfare  is  not,  however,  understood  to 
imply  a  diminution  of  individual  enterprise,  but  an  altera- 
tion in  its  application. 

If,  starting  from  this  point  of  view,  we  regard  human  life 
as  comprising  an  infinite  number  of  activities  of  different 
sorts,  operating  upon  different  planes  of  competition  and 
educating  different  human  "  fitnesses,"  we  shall  understand 
how  the  particular  phase  of  industrial  evolution  we  are 
considering  is  related  to  the  wider  philosophic  view  of  life. 
All  progress,  from  primitive  savagedom  to  modern  civilisa- 
tion, will  then  appear  as  consisting  in  the  progressive 
socialisation  of  the  lower  functions,  the  stoppage  of  lower 
forms  of  competition  and  of  the  education  of  the  more 
brutal  qualities,  in  order  that  a  larger  and  larger  proportion 
of  individual  activity  may  be  engaged  in  the  exercise  of 
higher  functions,  the  practice  of  competition  upon  higher 
planes,  and  the  education  of  higher  forms  of  fitness. 


MODERN   CAPITALISM.  365 

If  the  history  of  past  civilisation  shows  us  this,  there  is  an 
a  priori  presumption  that  each  further  step  in  the  repression 
of  individual  enterprise  and  in  the  extension  of  state-control 
does  not  mean  a  net  diminution  in  individual  activity  or 
any  relaxation  of  effort  in  self-assertion,  but  merely  an  eleva- 
tion of  the  plane  of  competition  and  of  the  kind  of  human 
qualities  engaged.  This  is,  in  fact,  the  philosophical  defence 
of  progressive  socialism,  that  human  progress  requires  that 
one  after  another  the  lower  material  animal  functions  shall 
be  reduced  to  routine,  in  order  that  a  larger  amount  of 
individual  effort  may  be  devoted  to  the  exercise  of  higher 
functions  and  the  cultivation  by  strife  of  higher  qualities. 

To  suppose  that  the  reduction  of  all  machine-industry  to 
public  routine  services,  when  it  becomes  possible,  will  imply 
a  net  diminution  in  the  scope  of  individual  self-expression, 
rests  upon  the  patent  fallacy  of  assigning  certain  fixed 
and  finite  limits  to  human  interest  and  activity,  so  that 
any  encroachment  from  the  side  of  routine  lessens  the 
absolute  scope  of  human  spontaneity  and  interest.  If,  as 
there  is  reason  to  believe,  human  desires  and  the  activities 
which  are  engaged  in  satisfying  them  are  boundless,  the 
assumption  that  an  increase  in  the  absolute  amount  of 
state-control  or  routine-work  implies  a  diminution  of  the 
field  for  individual  enterprise  is  groundless.  The  under- 
lying motive,  which  alone  can  explain  and  justify  each 
step  in  progressive  socialism,  is  the  attainment  of  a  net 
economy  of  individual  effort,  which,  when  it  is  released 
from  exercise  upon  a  lower  plane  of  competition,  may 
be  devoted  to  exercise  upon  a  higher.  If  the  result  of 
extending  social  control  over  industry  were  merely  to  bring 
about  a  common  level  of  material  comfort,  attended  by 
spiritual  and  intellectual  torpor  and  contentment,  the  move- 
ment might  be  natural  and  necessary,  but  could  hardly  be 
termed  progress. 

But  such  a  view  is  based  upon  a  denial  of  the  axiom  that 
the  satisfaction  of  one  want  breeds  another  want.  Experi- 
ence does  not  teach  the  decay  but  the  metamorphosis  of 
individuality.  Under  socialised  industry  progress  in  the 
industrial  arts  would  be  slower  and  would  absorb  a  smaller 
proportion  of  individual  interest,  in  order  that  progress  in  the 
finer  intellectual  and  moral  arts  might  be  faster,  and  might 
engage  a  larger  share  of  life.    To  future  generations  of  more 


366  THE   EVOLUTION   OF 

highly  evolved  humanity  the  peculiar  barbarism  of  our  age 
will  consist  in  the  fact  that  the  major  part  of  its  intelligence, 
enterprise,  genius,  has  been  devoted  to  the  perfection  of 
the  arts  of  material  production  through  mechanical  means. 
If  it  is  desirable  that  more  of  this  individual  energy  should 
be  engaged  in  the  production  of  higher  forms  of  wealth  by 
competition  upon  higher  planes,  this  can  only  be  achieved 
by  the  process  of  reducing  to  routine  the  lower  functions. 
Higher  progress  can  only  be  purchased  by  an  economy  of 
the  work  of  lower  progress,  the  free,  conscious  expression 
of  higher  individuaHty  by  the  routine  subordination  of 
lower  individuality.  Industrial  progress  would  undoubtedly 
be  slower  under  state-control,  because  the  very  object  of 
such  control  is  to  divert  a  larger  proportion  of  human 
genius  and  effort  from  these  occupations  in  order  to  apply 
them  in  producing  higher  forms  of  wealth.  It  is  not, 
however,  right  to  assume  that  progress  in  the  industrial 
arts  would  cease  under  state-industry ;  such  progress  would 
be  slower,  and  would  itself  partake  of  a  routine  character — 
a  slow,  continuous  adjustment  of  the  mechanism  of  produc- 
tion and  distribution  to  the  slowly-changing  needs  of  the 
community. 

§  ID.  A  most  important  misunderstanding  of  the  line  of 
industrial  development  arises  from  a  conviction  that  all 
production  of  wealth  embodied  in  matter  tends  to  pass 
under  the  dominion  of  machinery,  that  an  increasing 
number  of  workers  in  the  future  will  become  machine- 
tenders,  and  that  the  state-control  of  machine-industry  would 
bring  the  vast  majority  of  individuals  into  the  condition  of 
official  machine-workers.  This,  however,  is  by  no  means 
a  reasonable  forecast.  In  competitive  machine-industry, 
although  it  is  to  the  interest  of  the  individual  business  to 
"  save"  as  much  labour  as  possible,  the  play  of  competition 
causes  to  be  made  and  worked  a  much  larger  quantity  of 
machinery  than  is  enojgh  to  maintain  the  current  rate  of 
consumption,  and  thus  keeps  in  the  ranks  of  manufacture  a 
much  larger  quantity  of  labour  than  is  socially  necessary. 
Yet  in  a  typical  manufacturing  country  like  England  statis- 
tics show  that  the  proportion  of  the  working  population 
engaged  in  machine  manufactures  is  not  increasing.  If, 
then,  by  the  gradual  elimination  of  competition  in  the 
machine-industries,  the  quantity  of  machine-work  were  kept 


MODERN  CAPITALISM.  367 

down  to  the  social  requirements  of  the  community's  con- 
sumption, the  proportion  of  machine-workers  would  be  less 
than  it  is,  assuming  the  demand  for  machine-made  goods 
continued  the  same. 

But  what,  it  may  be  said,  will  become  of  the  increasing 
proportion  of  the  workers  not  required  by  machinery  ?  will 
they  go  to  swell  indefinitely  the  ranks  of  distributors? 
Will  the  number  of  merchants,  jobbers,  speculators,  shop- 
keepers, agents,  middlemen  of  various  sorts,  grow  without 
limit  ?  Assuming  that  the  work  of  distribution  were  left  to 
competitive  enterprise,  and  that  the  quantity  and  quality  of 
consumption  remained  the  same  as  now,  this  result  would 
seem  necessarily  to  follow.  The  labour  saved  in  manu- 
facture would  pass,  as  it  does  now,  to  intensify  the  com- 
petition of  the  distributive  trades  and  to  subdivide  into 
needlessly  small  fragments  the  necessary  but  limited 
amount  of  distributive  work.  But  these  assumptions  are 
not  necessarily  correct.  If,  as  seems  likely,  the  increased 
intensity  of  competition  forced  the  growth  of  strong  mon- 
opolies in  certain  departments  of  distribution,  the  anti-social 
power  thus  bestowed  upon  individuals  would  necessitate 
the  extension  of  state-control  to  them  also.  The  work 
of  distribution  would  thus  pass  into  routine-industry  ad- 
ministered by  the  public  for  the  public  interest.  Thus  the 
area  of  socialised  industry  would  extend  until  it  absorbed 
one  after  another  all  industries  possessing  the  machine- 
character  and  capable  of  administration  by  routine.  It 
might  thus  appear  that,  after  all,  the  forebodings  of  the 
individualist  would  be  verified,  the  work  of  life  would  be 
reduced  to  a  dull  monotonous  mechanism  grinding  out 
under  bureaucratic  sway  an  even  quantity  of  material  com- 
forts for  a  community  absorbed  in  the  satisfaction  of  its 
orderly  behaviour. 

This  goal  seems  inevitable  if  we  assume  that  no  change 
takes  place  in  the  quantity  and  quality  of  the  consumption 
of  the  community,  that  individual  consumers  save  or  try 
to  save  the  same  proportion  of  their  incomes  as  now, 
and  apply  the  portion  that  they  spend  to  the  purchase 
of  increased  quantities  of  ever-cheapening  machine-made 
goods. 

But  are  we  justified  in  considering  it  necessary,  or  even 
probable,  that  consumption  will  in  amount  and  character 


368  THE   EVOLUTION   OF 

remain  unchanged?  In  proportion  as  the  large  industries 
pass  into  the  condition  of  monopolies,  whether  under 
private  or  public  control,  the  area  of  safe  and  profitable 
investment  for  the  average  "saving"  man  will  be  more 
restricted.  Thus  some  of  the  useless  "saving"  which 
takes  the  shape  of  excessive  plant,  machinery,  and  other 
forms  of  capital  will  be  prevented.  In  other  words,  the 
quantity  of  consumption  will  increase,  and  this  increase  will 
give  fuller  employment  to  the  machinery  of  production  and 
to  the  labour  engaged  in  working  it  and  in  distributing  the 
increased  product.  If,  however,  increased  consumption 
merely  took  the  form  of  consuming  increased  quantities  of 
the  same  material  goods  as  before,  the  gain  would  be  limited 
to  the  rise  of  material  comfort  of  the  poorer  classes,  and  this 
gain  might  be  set  off  by  the  congested  and  torpor-breeding 
luxury  of  the  better-to-do.  A  mere  increase  in  quantity  of 
consumption  would  do  nothing  to  avert  the  drifting  of 
industry  into  a  bureaucratic  mechanism. 

§  1 1.  It  is  to  improved  quality  and  character  of  consump- 
tion that  we  can  alone  look  for  a  guarantee  of  social  progress. 
Allusion  has  been  already  made  to  the  class  of  artistic  and 
intellectual  work  which  cannot  be  undertaken  by  machinery. 
It  must  never  be  forgotten  that  art  is  the  true  antithesis  of 
machinery.  The  essence  of  art  in  this  wide  sense  is  the 
application  of  individual  spontaneous  human  effort.  Each 
art-product  is  the  repository  of  individual  thought,  feeling, 
effort,  each  machine-product  is  not.  The  "  art "  in  machine- 
work  has  been  exhausted  in  the  single  supreme  effort  of 
planning  the  machine ;  the  more  perfect  the  machine  the 
smaller  the  proportion  of  individual  skill  or  art  embodied 
in  the  machine-product.  The  spirit  of  machinery,  its  vast 
rapid  power  of  multiplying  quantities  of  material  goods 
of  the  same  pattern,  has  so  over-awed  the  industrial 
world  that  the  craze  for  quantitative  consumption  has 
seized  possession  of  many  whose  taste  and  education 
might  have  enabled  them  to  offer  resistance.  Thus,  not 
only  our  bread  and  our  boots  are  made  by  machinery, 
but  many  of  the  very  things  we  misname  "art-products." 
Now  a  just  indictment  of  this  excessive  encroachment  of 
machinery  is  not  based  upon  the  belief,  right  or  wrong, 
that  machinery  cannot  produce  things  in  themselves  as 
fit  or  beautiful  as  art.     The  true  inadequacy  of  machine- 


MODERN   CAPITALISM.  369 

products  for  human  purposes  arises  from  the  fact  that 
machine-products  are  exactly  similar  to  one  another,  whereas 
consumers  are  not.  So  long  as  consumers  consent  to  sink 
their  individuality,  to  consume  articles  of  precisely  the  same 
shape,  size,  colour,  material,  to  assimilate  their  consumption 
to  one  another,  machinery  will  supply  them.  But  since  no 
two  individuals  are  precisely  similar  in  physical,  intellectual, 
or  moral  nature,  so  the  real  needs  of  no  two  will  be  the 
same,  even  in  the  satisfaction  of  ordinary  material  wants. 
As  the  dominance  of  machinery  over  the  workers  tends  to 
the  destruction  of  individuality  in  work,  obliging  different 
workers  to  do  the  same  work  in  the  same  way  with  a 
premium  upon  the  mere  capacity  of  rapid  repetition,  in  the 
same  way  it  tends  to  crush  the  individuality  of  consumers 
by  imposing  a  common  character  upon  their  consumption. 
The  progressive  utilisation  of  machinery  depends  upon  the 
continuance  of  this  indiscriminate  consumption,  and  the 
willingness  of  consumers  to  employ  every  increase  of  income 
in  demanding  larger  and  larger  quantities  of  goods  of  the 
same  pattern  and  character.  Once  suppose  that  consumers 
refuse  to  conform  to  a  common  standard,  and  insist  more 
and  more  upon  a  consumption  adjusted  to  their  individual 
needs  and  tastes,  and  likewise  strive  to  follow  and  to  satisfy 
the  changing  phases  of  their  individual  taste,  such  individ- 
uality in  consumption  must  impose  a  corresponding  in- 
dividuality in  production,  and  machinery  will  be  dethroned 
from  industry.  Let  us  take  the  example  of  the  cloth- 
ing trade.  Provided  the  wearing  public  will  consent  to 
wear  clothes  conforming  to  certain  common  patterns  and 
shapes  which  are  only  approximate  "  fits,"  machinery  can  be 
used  to  make  these  clothes  ,  but  if  every  person  required 
his  own  taste  to  be  consulted,  and  insisted  upon  an  exacti- 
tude of  fit  and  a  conformity  to  his  own  special  ideas  of 
comfort,  the  work  could  no  longer  be  done  by  machinery, 
and  would  require  the  skill  of  an  "artist."  It  is  precisely 
upon  this  issue  that  the  conflict  of  machine  versus  hand- 
labour  is  still  fought  out.  The  most  highly-finished  articles 
in  the  clothing  and  boot  trades  are  still  hand-made ;  the 
best  golf-clubs,  fishing-rods,  cricket  bats,  embody  a  large 
amount  of  high  manual  skill,  though  articles  of  fair  average 
make  are  turned  out  chiefly  by  machinery  in  large  quantities. 
These  hand-made  goods  are  produced  for  a  small  portion  of 

24 


370  THE   EVOLUTION   OF 

the  consuming  public,  whose  education  and  refinement  of 
taste  induces  them  to  prefer  spending  their  money  upon  a 
smaller  quantity  of  commodities  adjusted  in  character  to 
their  individual  needs,  than  upon  a  larger  quantity  of 
common  commodities. 

Assuming  that  industrial  evolution  places  an  increasing 
proportion  of  the  consuming  public  in  secure  possession  of 
the  prime  physical  necessaries  of  life,  it  is  surely  po(^ible 
that  they  too  may  come  to  value  less  highly  a  quantitative 
increase  in  consumption,  and  may  develop  individuality  of 
tastes  which  require  individual  production  for  their  satis- 
faction. In  proportion  as  this  happens,  hand-work  or  art 
must  play  a  more  important  part  in  these  industries,  and 
may  be  able  to  repel  the  further  encroachments  of  machinery, 
or  even  to  drive  it  out  of  some  of  the  industrial  territory  it 
has  annexed.  But  although  the  illustration  of  the  present 
condition  of  the  clothing  trades  serves  to  indicate  the  nature 
of  the  contest  between  machinery  and  art  in  the  region  of 
ordinary  material  consumption,  it  is  not  suggested  that  social 
progress  will,  or  ought  to,  expel  machinery  from  most  of  the 
industries  it  controls,  or  to  prevent  its  application  to  indus- 
tries which  it  has  not  yet  reached.  The  luxury  and  foppish 
refinement  of  a  small  section  of  "fashionable"  society, 
unnaturally  relieved  of  the  wholesome  necessity  of  work, 
cannot  be  taken  as  an  indication  of  the  ways  in  which  indi- 
viduality or  quality  of  consumption  may  or  will  assert  itself, 
in  a  society  where  social  progress  is  based  upon  equality  of 
opportunity,  and  the  power  to  consume  has  some  just  rela- 
tion to  abiUty  and  merit.  It  seems  reasonable  to  expect 
that  on  the  whole  machinery  will  retain,  and  even  strengthen 
and  extend,  its  hold  of  those  industries  engaged  in  supply- 
ing the  primitive  needs  of  man — his  food,  clothing,  shelter, 
and  other  animal  comforts.  In  a  genuinely  progressive 
society  the  object  will  be  so  to  order  life  as  to  secure,  not 
merely  the  largest  amount  of  individual  freedom  or  self- 
expression,  but  the  highest  quality.  If  an  undue  amount  of 
individuality  be  devoted  to  the  production  and  consumption 
of  food,  clothing,  etc.,  and  the  conscious,  refined  cultivation 
of  these  tastes,  higher  forms  of  individual  expression  in 
work  and  life  will  be  neglected.  The  just  economy  of  indi- 
viduality will  therefore  relegate  certain  branches  of  produc- 
tion to  machinery,  in  order  that  the  energy  saved  by  such 


MODERN   CAPITALISM.  37I 

routine-work  may  be  set  free  for  higher  individual  endeavour. 
The  satisfaction  of  the  primary  animal  wants — hunger,  thirst, 
cold,  etc. — are  common  to  all;  in  these  purely  physical 
demands  there  is  less  qualitative  difference  in  different  men ; 
as  the  needs  are  the  same  the  consumption  will  be  the  same. 
The  absence  of  wide  individual  differences  of  taste  marks 
out  the  commodities  for  routine  or  machine-production.  As 
individuals  are  nearest  alike  in  their  prime  physical  needs, 
so,  as  they  gradually  develop  higher  material  wants,  and, 
after  these  are  satisfied,  aesthetic,  intellectual,  moral  wants, 
their  individualism  becomes  more  and  more  marked.  It  is 
therefore  in  the  most  highly  developed,  or,  as  they  are  some- 
times called,  the  more  "artificial"  wants  of  man,  that  the 
diversity  of  individual  nature  shows  itself  most  strongly,  and 
demands  a  satisfaction  peculiar  to  itself  which  only  art  can 
give.  In  a  highly  evolved  society  it  is  likely  that  many 
physical  needs,  and  even  some  intellectual  needs,  will  be 
common  to  all,  and  will  engage  little  individual  attention. 
These  may  be  graded  as  routine  wants,  and  may  be  satisfied 
by  machine-made  goods.  As  a  society,  safely  ordered  in 
the  supply  of  ordinary  physical  comforts,  continued  to 
develop,  a  less  and  less  diversity  would  show  itself  in  the 
ordinary  aspect  of  its  material  civilisation,  because  the 
individuality  which  once  found  expression  there  is  raised 
to  a  higher  plane  of  activity.  The  enrichment  and  enlarge- 
ment of  human  life  in  such  a  society  would  undoubtedly 
manifest  itself  in  a  greater  likeness  between  the  individual 
members  in  the  lower  modes  of  life,  but  the  extent  of  indi- 
vidual difference  in  the  higher  modes  would  be  ever  widen- 
ing. The  object  of  the  levelling  in  the  lower  processes  of 
life  would  be  that  higher  individual  differences  might  have 
opportunity  to  assert  themselves.  In  a  progressive  society 
thus  conceived,  where  socialisation  and  individuation  grow 
inseparably  related  and  reacting  on  one  another,  there  is 
evidently  no  fixed  limit  to  the  progress  of  machinery.  As 
each  higher  want  is  educated,  some  lower  want  will  drop 
into  the  position  of  a  routine-want,  and  will  pass  into  the 
rightful  province  of  machinery.  But  though  a  large  propor- 
tion of  material  commodities  would  doubtless  be  made  by 
machinery,  it  is  not  signified  that  art  will  be  banished  from 
what  are  commonly  called  the  industrial  arts.  On  the  con- 
trary, art  may  be  in  many  ways  the  friend  and  co-operator 


372  THE   EVOLUTION    OF 

of  machinery,  the  latter  furnishing  a  routine  foundation  for 
the  display  of  individual  taste  and  of  individual  satisfaction 
in  the  consumer.  One  of  the  most  hopeful  signs  of  the 
last  few  years  is  the  growing  intrusion  of  art  into  the 
machine-industries, — the  employment  of  skilled  designers 
and  executants  who  shall  tempt  and  educate  the  public  eye 
with  grace  of  form  and  harmony  of  colour.  In  pottery, 
textile  wares,  hardware,  furniture,  and  many  other  indus- 
tries, the  beginnings  of  public  taste  are  operating  in  demand 
for  variety  and  ornament.  May  not  this  be  the  beginning 
of  a  cultivation  of  individual  taste  which  shall  graft  a  fine- 
art  upon  each  machine-industry,  apportioning  to  machinery 
that  work  which  is  hard,  dull,  dangerous,  monotonous,  and 
uneducative,  while  that  which  is  pleasant,  worthy,  interest- 
ing, and  educative  is  reserved  for  the  human  agent  ? 

§  1 2.  Machinery  is  thus  naturally  adapted  to  the  satisfaction 
of  the  routine  wants  of  life  under  social  control.  The  charac- 
ter of  machine-production,  as  has  been  shown,  is  essentially 
collective.  The  maladies  of  present  machine-industries  are 
due  to  the  fact  that  this  collective  character  is  inadequately 
recognised,  and  machinery,  left  to  individual  enterprise  and 
competition,  oppresses  mankind  and  causes  waste  and  com- 
mercial instability.  In  a  word,  the  highest  division  of 
labour  has  not  been  yet  attained,  that  which  will  apportion 
machinery  to  the  collective  supply  of  the  routine  needs  of 
life,  and  art  to  the  individual  supply  of  the  individual  needs. 
In  this  way  alone  can  society  obtain  the  full  use  of  the 
"labour-saving"  character  of  machinery,  minimising  the 
amount  of  human  exertion  engaged  in  tending  machinery 
and  maximising  the  amount  engaged  in  the  free  and 
interesting  occupations.  Engaged  in  satisfying  the  steady, 
constant  needs  of  society  under  social  regulation,  machinery 
would  no  longer  be  subject  to  those  fearful  oscillations  of 
demand  which  are  liable  unforeseen  to  plunge  whole 
masses  of  workers  into  unemployment  and  poverty,  and  to 
waste  an  infinite  amount  of  "saving."  Where  the  fluctu- 
ations in  consumption  were  confined  to  the  region  of 
individual  taste,  the  changes  of  taste  and  growing  variety 
of  consumption  would  furnish  the  education  of  the  artist, 
who  will  acquire  skill  and  flexibility  by  freely  following 
and  directing  the  changing  tastes  of  consumers. 

In  such  a  forecast  it  is  of  course  useless  to  endeavour  to 


MODERN   CAPITALISM.  373 

predict  how  far  art  will  continue  to  occupy  itself  with 
industry,  or  how  far,  set  free  by  machinery,  it  will  be 
absorbed  in  the  creation  of  finer  intellectual  or  spiritual 
products,  or  in  what  are  now  termed  the  fine  arts.  This 
must  depend  upon  the  nature  of  the  harmonious  develop- 
ment of  human  capacities  of  effort  and  enjoyment  under 
conditions  of  individual  freedom,  and  the  interaction  of  the 
free  development  of  individuals  in  a  society  founded  upon  an 
equality  of  the  material  means  of  life.  The  study  of  the 
qualitative  development  of  consumption  in  modern  society 
is  only  just  beginning  to  be  recognised  as  the  true  starting- 
point  of  economic  science,  for  although  many  of  the  older 
economists  did  verbal  homage  to  the  importance  of  this 
branch  of  study,  it  has  been  reserved  for  recent  thinkers 
to  set  about  the  work.^ 

§  13.  It  is  hardly  too  much  to  say  that  the  whole  of  social 
progress  depends  upon  the  substitution  of  qualitative  for 
quantitative  methods  of  consumption.  In  so  far  as  indi- 
viduals apply  their  growing  ability  to  consume  in  order 
to  demand  increased  quantities  of  the  same  articles  they 
consumed  before,  or  flash  variety  of  fashionable  goods  in 
no  wise  adjusted  to  individual  need  or  taste,  they  extend 
the  dominion  of  machinery.  In  so  far  as  they  develop 
individual  taste,  delicacy  rather  than  quantity  of  satisfaction, 
they  give  wider  scope  to  work  which  embodies  conscious 
human  skill  and  deserves  the  name  of  art. 

But  there  is  another  bearing  of  this  point  of  equal  signifi- 
cance. Political  economists  have  a  dismal  formula  called 
the  Law  of  Diminishing  Returns,  which  casts  a  dark  shadow 
upon  industrial  progress  as  it  is  commonly  conceived.  The 
more  food  and  clothing,  fuel,  and  other  material  goods  we 
require,  the  further  we  have  to  go  for  the  material,  and  the 
harder  it  is  to  get :  we  must  plough  inferior  lands  yielding 
smaller  crops,  we  must  sink  deeper  shafts  for  our  coal  and 
iron.  As  our  population  grows  ever  larger,  and  this  larger 
number  wants  more  and  more  pieces  of  the  earth  to  feed 

^  Professor  Jevons'  work  upon  this  branch  of  Economics  was  marred 
by  an  attempt  to  treat  it  purely  mathematically,  that  is  to  reduce  qual- 
itative to  quantitative  differences — an  impossibility.  Among  recent 
writers.  Professor  Patten,  of  Pennsylvania  University,  has  made  by  far 
the  most  important  contributions  towards  a  systematic  treatment  of 
the  economics  of  consumption. 


374  THE   EVOLUTION   OF 

its  machines  and  to  turn  out  the  increased  quantity  of 
goods,  the  drain  upon  natural  resources  is  constantly 
increasing.  The  material  world  is  limited ;  in  time  Nature 
will  become  exhausted,  and,  long  before  this  happens,  the 
quantity  of  human  labour  required  to  raise  the  increased 
supply  of  raw  material  in  the  teeth  of  the  Law  of  Diminish- 
ing Returns  will  far  exceed  the  economies  attending  large- 
scale  machine-production. 

This  danger  will  also  be  found  to  result  entirely  from  the 
quantitative  estimate  of  human  wealth  and  human  life. 

Confining  our  view  for  the  moment  to  that  branch  of 
production  which  is  engaged  in  providing  food,  to  which 
the  Law  of  Diminishing  Returns  is  held  to  apply  with 
special  rigour,  we  can  see  without  difficulty  how,  by  a 
progressive  differentiation  of  consumption,  we  can  mitigate 
or  even  utterly  defeat  the  operation  of  this  law.  If  the 
inhabitants  of  a  country  persist  in  maintaining  a  single 
narrow  standard  of  diet,  and  use  the  whole  of  their  land 
for  growing  wheat  and  raising  sheep,  not  merely  do  they 
waste  all  other  fine  productive  qualities  belonging  to 
certain  portions  of  the  cultivated  or  uncultivated  soil,  but 
every  increase  in  their  narrow  consumption  drives  them  to 
worse  soil,  obliges  them  to  put  more  labour  into  a  quarter 
of  wheat  or  a  sheep,  and  increases  the  proportion  of  their 
aggregate  product  which  goes  as  rent.^  If,  on  the  other 
hand,  a  community  cultivates  a  varied  consumption  and 
seeks  to  utilise  each  portion  of  its  soil  for  whatever  form 
of  food  it  can  grow  best,  instead  of  grading  its  land  ex- 
clusively according  to  its  wheat  or  sheep-raising  capacity, 
it  is  able  to  defeat  the  "niggardliness  of  nature"  which 
asserts  itself  when  the  community  insists  upon  a  continual 
extension  of  the  same  demands.  For  land  which  may 
be  very  bad  for  wheat-growing  or  grazing,  which  may 
even  be  "  below  the  margin  of  cultivation "  for  these 
purposes,  may  be  well  adapted  for  producing  other  com- 
modities. A  large  variety  of  alternative  uses  will  enable 
us  to  get  the  largest  net  amount  of  utilities  out  of  Nature, 
and  a  community  which,  in  lieu  of  an  extension  of  demand 
for  the  same  commodities,  asserts  its  civilisation  in  the 
education  of  new  demands  and  a  greater  complexity  in 

^  VsXiGvCs  Premises  of  Political  Econowy,  chap.  iv. 


MODERN   CAPITALISM.  375 

the  standard  of  its  comfort,  may  draw  from  the  land  an 
indefinite  increase  of  wealth  without  putting  forth  more 
labour  or  paying  higher  rent.  It  is  simply  one  more 
example  of  the  economy  attainable  by  division  of  labour 
and  specialisation  of  function. 

§  14.  What  applies  to  food  will  equally  apply  to  the  use 
of  the  earth  for  providing  the  raw  material  of  all  other  forms 
of  material  wealth.  A  people  with  growing  variety  of  con- 
sumption is  ever  finding  new  and  more  profitable  uses  for 
slighted  or  neglected  capacities  of  nature.  The  social 
progress  of  nations  must  be  chiefly  determined  by  the 
amount  of  their  intelligent  flexibility  of  consumption.  Mere 
variety  of  consumption  in  itself  is  not  sufficient  to  secure 
progress.  There  must  be  a  progressive  recognition  of  the 
true  relations,  between  the  products  which  can  be  most 
economically  raised  upon  each  portion  of  the  soil,  and  the 
wholesome  needs  of  mankind  seeking  the  full  harmonious 
development  of  their  faculties  in  their  given  physical  en- 
vironment. A  progressive  cultivation  of  taste  for  a  variety 
of  strong  drinks,  though  it  might  provide  an  increased 
number  of  alternative  uses  for  the  soil,  and  might  enhance 
the  aggregate  market-values  of  the  wealth  produced,  would 
not,  it  is  generally  held,  make  for  social  progress.  That 
nation  which,  in  its  intelligent  attainment  of  a  higher 
standard  of  life,  is  able  to  thoroughly  assimilate  and  har- 
monise the  largest  variety  of  those  products  for  which  their 
soil  and  climate  are  best  adapted,  will  be  foremost  in 
industrial  progress  and  in  the  other  arts  of  civilisation  which 
spring  out  of  it. 

The  case  is  a  simple  one.  A  mere  increase  in  the  variety 
of  our  material  consumption  relieves  the  strain  imposed 
upon  man  by  the  limits  of  the  material  universe,  for  such 
variety  enables  him  to  utilise  a  larger  proportion  of  the 
aggregate  of  matter.  But  in  proportion  as  we  add  to  mere 
variety  a  higher  appreciation  of  those  adaptations  of  matter 
which  are  due  to  human  skill,  and  which  we  call  Art,  we  pass 
outside  the  limits  of  matter  and  are  no  longer  the  slaves  of 
roods  and  acres  and  a  law  of  diminishing  returns.  So  long 
as  we  continue  to  raise  more  men  who  demand  more  food 
and  clothes  and  fuel,  we  are  subject  to  the  limitations  of 
the  material  universe,  and  what  we  get  ever  costs  us  more  and 
benefits  us  less.     But  when  we  cease  to  demand  more,  and 


376  THE  EVOLUTION   OF 

begin  to  demand  better,  commodities,  more  delicate,  highly 
finished  and  harmonious,  we  can  increase  the  enjoyment 
without  adding  to  the  cost  or  exhausting  the  store.  What 
artist  would  not  laugh  at  the  suggestion  that  the  materials 
of  his  art,  his  colours,  clay,  marble,  or  what  else  he  wrought 
in,  might  fail  and  his  art  come  to  an  end  ?  When  we  are 
dealing  with  qualitative,  i.e.  artistic,  goods,  we  see  at  once 
how  an  infinite  expenditure  of  labour  may  be  given,  an 
infinite  satisfaction  taken,  from  the  meagrest  quantity  of 
matter  and  space.  In  proportion  as  a  community  comes  to 
substitute  a  qualitative  for  a  quantitative  standard  of  living, 
it  escapes  the  limitations  imposed  by  matter  upon  man. 
Art  knows  no  restrictions  of  space  or  size,  and  in  proportion 
as  we  attain  the  art  of  living  we  shall  be  likewise  free. 

§  15.  So  far  the  consideration  of  reformed  qualitative 
consumption  has  been  confined  to  material  goods.  But  a 
people  moving  along  the  line  of  progress,  seeking  ever  a 
more  highly  qualitative  life,  will  demand  that  a  larger  pro- 
portion of  their  energy  shall  be  given  to  the  production  and 
consumption  of  intellectual  goods. 

This  world  likewise  is  at  present  largely  under  the 
dominion  of  Machinery  and  a  Law  of  Diminishing  Returns. 
By  making  of  our  intellectual  life  a  mere  accumulation  of 
knowledge,  piling  fact  upon  fact,  reading  book  upon  book, 
adding  science  to  science,  striving  to  cover  as  much  intel- 
lectual ground  as  possible,  we  become  mere  worshippers 
of  quantity.  It  is  not  unnatural  that  our  commercial  life 
should  breed  such  an  intellectual  consumption,  and  that 
the  English  and  American  nations  in  particular,  who  have 
beyond  others  developed  machine -production  and  the 
quantitative  genius  for  commerce,  should  exhibit  the  same 
taste  in  their  pursuit  after  knowledge.  Pace,  size,  number, 
cost,  are  ever  on  their  lips.  To  visit  every  European  capital 
in  a  fortnight,  see  acres  of  pictures,  cathedrals,  ruined  castles, 
collect  out  of  books  or  travel  the  largest  mass  of  unassorted 
and  undigested  information,  is  the  object  of  such  portion  of 
the  commercial  life  as  can  be  spared  from  the  more  serious 
occupations  of  life,  piling  up  bale  after  bale  of  cotton  goods 
and  eating  dinner  after  dinner  of  the  same  inharmoniously 
ordered  victuals. 

Our  schools  and  colleges  are  engaged  in  turning  out  year 
by  year  immense  quantities  of  common  intellectual  goods. 


MODERN   CAPITALISM.  377 

Our  magazines,  books,  and  lectures  are  chiefly  machine- 
products  adjusted  to  the  average  reader  or  hearer,  and  are 
reckoned  successful  if  they  can  drive  a  large  number  of 
individuals  to  profess  the  same  feelings  and  opinions  and 
adopt  the  same  party  or  creed,  with  the  view  of  enabling 
them  to  consume  a  large  number  of  copies  of  the  same 
intellectual  commodities  which  can  be  turned  out  by  intel- 
lectual machinery,  instead  of  undergoing  the  effort  of  think- 
ing and  feeling  for  themselves.  This  danger,  connected 
with  the  rapid  spread  of  printed  matter,  is  a  grave  one. 
Happily  there  are  visible  here  also  counteracting  influences, 
forces  that  tend  to  individualise  intellectual  consumption 
and  thus  to  stimulate  the  higher  arts  of  intellectual  pro- 
duction. In  a  progressive  community  it  will  be  more  fully 
recognised  that  it  is  not  sufficient  to  induce  people  to  give 
more  time  and  attention  to  intellectual  consumption ;  they 
must  demand  intellectual  goods  vitally  adjusted  to  their 
individual  needs. 

§  1 6.  To  the  increased  regard  for  quality  of  life  we  must 
likewise  look  to  escape  the  moral  maladies  which  arise  from 
competition.  For  what  is  the  cause  of  anti-social  com- 
petition? It  is  the  limitation  of  quantity.  Two  dogs  are 
after  one  bone.  Two  persons  wish  to  consume  one  com- 
modity at  the  same  time.  Now,  even  in  material  goods,  the 
more  qualitative  consumption  becomes,  and  the  more  insist- 
ent each  individual  is  upon  the  satisfaction  of  his  peculiar 
tastes,  the  smaller  will  be  the  probability  that  two  persons 
will  collide  in  their  desires,  and  struggle  for  the  possession 
of  the  self-same  commodity.  Even  in  art-objects  which  are 
still  bounded  by  matter,  among  genuine  lovers  of  art  the 
individuality  of  each  stands  out  in  mitigation  of  the 
antagonism  of  competition,  for  no  two  will  have  precisely 
the  same  tastes  or  estimates,  or  will  seek  with  equal  avidity 
the  same  embodiments  of  art.  As  we  rise  to  purely  Intel 
lectual  or  moral  enjoyments,  competition  gives  way  to 
generous  rivalry  in  co-operation.  In  the  pursuit  of  know 
ledge  or  goodness  the  rivalry  is  no  longer  antagonism— 
what  one  gains  another  does  not  lose.  One  man's  success 
is  not  another's  failure.  On  the  contrary,  the  enrichment 
of  one  is  the  enrichment  of  all.  Both  in  the  production 
and  the  consumption  of  the  highest  goods  of  Science,  Art, 
and  Virtue,  social,  not  anti-social,   motives  are  the  chief 


3/8  THE  EVOLUTION   OF 

stimulus.  In  the  highest  forms  of  consumption,  the  practice 
of  the  noblest  arts  of  life,  the  enjoyment  of  the  finest 
intellectual  and  spiritual  goods,  there  is  no  purely  selfish 
consumption.  For  though  the  highest  individuality  is  then 
attained,  the  enjoyment  of  one  individual  requires  the  en- 
joyment of  others.  The  attainment  of  the  highest  reaches 
of  knowledge  is  impossible  for  the  individual  without  the 
constant  and  increasing  aid  of  other  minds  and  the  inspiring 
"spirit  of  the  age";  the  enjoyment  of  such  knowledge  is  in 
an  even  wider  communication.  The  practice  and  enjoy- 
ment of  the  arts  of  goodness  are  necessarily  social,  because 
the  good  life  can  only  be  lived  in  a  good  society.  Spinoza 
has  summed  up  the  truth  in  saying — "  The  highest  good  is 
common  to  all,  and  all  may  equally  enjoy  it."  So  it  appears 
that  the  highest  goods  are  essentially  at  once  individual 
and  social,  pointing  once  more  the  attainment  of  the  higher 
synthesis  in  which  the  antagonism  of  the  "one"  and  the 
"  all,"  which  shows  itself  in  the  lower  planes  of  competing 
effort  and  enjoyment,  disappears. 

§  17.  One  necessary  condition  of  this  progressive  life 
cannot  be  ignored.  Human  life  itself  must  become  more 
qualitative,  not  only  in  its  functional  activities,  but  in  its 
physical  basis.  The  greatness  and  worth  of  a  community 
must  be  seen  more  clearly  to  consist  not  in  the  numbers, 
but  in  the  character  of  its  members.  If  the  number  of 
individuals  in  a  society  continually  increases,  no  reform  in 
methods  of  consumption  can  prevent  the  constant  increase 
in  the  proportion  of  human  energy  which  must  be  put  into 
the  production  of  the  prime  material  necessaries  of  physical 
life  which  are,  and  in  spite  of  all  improved  methods  of 
treating  nature  will  remain,  ultimately  subject  to  a  law  of 
diminishing  returns  :  so,  less  and  less  energy  can  be  spared 
for  the  life  of  varied  and  delicate  consumption,  high  indi- 
viduality and  intellectual  and  moral  growth.  Professor 
Geddes  has  well  expressed  the  importance  of  this  truth : 
"The  remedy  lies  in  higher  and  higher  individuation — 
i.e.,  if  we  would  repress  excessive  multiplication,  we  must 
develop  the  average  individual  standard  throughout  society. 
Population  not  merely  tends  to  out-run  the  means  of  sub- 
sistence, but  to  degenerate  below  the  level  of  subsistence, 
so  that  without  steadily  directing  more  and  more  of  our 
industry  from  the   production   of  those   forms   of  wealth 


MODERN   CAPITALISM.  379 

which  merely  support  life  to  those  which  evoke  it,  from  the 
increase  of  the  fundamental  necessities  of  animal  life  to 
that  of  the  highest  appliances  of  human  culture,  degenera- 
tion must  go  on,"i 

§  1 8.  One  final  consideration  remains.  Modern  large- 
scale  industry  has  enlarged  and  made  more  distinct  an 
unnatural  and  injurious  separation  of  the  arts  of  production 
and  the  arts  of  consumption.  Work  has  become  more  and 
more  differentiated  from  enjoyment,  and  in  a  twofold  way. 
Modern  machine-industry  has  in  the  first  place  sharpened 
the  distinction  between  the  "  working  classes,"  whose  name 
indicates  that  their  primary  function  is  to  labour  and  not  to 
live,  and  the  comfortable  classes,  whose  primary  function 
is  to  live  and  not  to  labour,  which  private  enterprise  in 
machine-industry  has  greatly  enlarged.  The  extremes  of 
these  large  classes  present  the  divorcement  of  labour  and 
life  in  startling  prominence.  But  since  work  and  enjoy- 
ment are  both  human  functions,  they  must  be  organically 
related  in  the  life  of  every  individual  in  a  healthy  com- 
munity. It  must  be  recognised  to  be  as  essential  to  the 
consumer  to  produce  as  for  the  producer  to  consume.  The 
attempt  on  the  part  of  an  individual  or  a  class  to  escape 
the  physical  and  moral  law  which  requires  the  output  of 
personal  exertion  as  the  condition  of  wholesome  consump- 
tion can  never  be  successful.  On  the  plane  of  physical 
health.  Dr.  Arlidge,  in  his  book  upon  The  Diseases  of 
Occupations,  points  the  inevitable  lesson  in  the  high  rate  of 
disease  and  mortality  of  the  "unoccupied  class"  in  that 
period  of  their  life  when  they  have  slaked  their  zest  for 
volunteer  exertion  and  assume  the  idle  life  which  their 
economic  power  renders  possible.  The  man  of  "inde- 
pendent means  "  cannot  on  the  average  keep  his  life  in  his 
body  nearly  so  long  as  the  half-starved,  ill-housed  agri- 
cultural labourer,  from  whose  labour  he  draws  the  rents 
which  keep  him  in  idleness.  The  same  law  applies  in  the 
intellectual  world.  The  dilettante  person  who  tries  to 
extract  unceasing  increments  of  intellectual  or  aesthetic 
enjoyment  from  books  or  pictures  or  travel,  without  the 
contribution  of  steady,  painful  intellectual  efi"ort,  fails  to 

^  Professor  Patrick  Geddes,  Claims  of  Labour.  Cf.  The  Evohition  oj 
Sex,  chap.  xx.  (Contemporary  Science  Series :  Walter  Scott). 


380  THE   EVOLUTION   OF 

win  an  intellectual  life,  for  the  mere  automatic  process  of 
collecting  the  knowledge  of  others  for  personal  consumption 
without  striving  to  enlarge  the  general  stock,  congests  and 
debilitates  the  mind  and  prevents  the  wholesome  digestion 
and  assimilation. 

The  same  necessary  evil  arises  from  the  sharp  separation 
of  the  processes  of  production  and  consumption  in  the 
individual  life  of  the  worker  Industry  which  is  purely 
monotonous,  burdensome,  uninteresting,  uneducative,  which 
contains  within  itself  no  elements  of  enjoyment,  cannot  be 
fully  compensated  by  alternate  periods  of  consumption  or 
relaxation.  The  painful  effort  involved  in  all  labour  or 
exertion  should  have  linked  with  it  certain  sustaining 
elements  of  related  interest  and  pleasure.  It  is  the 
absence  of  this  which  condemns  machine-tending  from  the 
human  standpoint,  it  is  the  presence  of  this  which  dis- 
tinguishes every  art.  Hence  in  a  progressive  society  we 
must  look  to  see  not  the  abolition  of  machinery,  but  the 
diminution  of  machine-tending  which  attends  the  growing 
perfection  of  machinery,  in  order  that  the  arts  may  be  able 
to  absorb  a  larger  share  of  human  exertion. 

The  arts  of  production  and  consumption  will,  in  the 
evolution  of  a  wholesome  industrial  society,  be  found  in- 
separable :  not  merely  will  they  be  seen  to  be  organically 
related,  but  rather  will  appear  as  two  aspects  of  the  same 
fact,  the  concave  and  the  convex  of  life.  For  the  justly 
ordered  life  brings  the  identification  of  life,  a  continuous 
orderly  intake  and  output  of  wholesome  energy.  This 
judgment,  not  of  "sentimentalism"  but  of  science,  finds 
powerful  but  literally  accurate  expression  in  the  saying 
of  a  great  living  thinker,  "  Life  without  work  is  guilt, 
work  without  art  is  brutality."  Just  in  proportion  as 
the  truth  of  the  latter  phrase  finds  recognition  the  con- 
ditions which  make  "  life  without  work "  possible  will 
disappear.  Everything  in  human  progress  will  be  found  to 
depend  upon  a  progressive  realisation  of  the  nature  of  good 
"  consumption."  Just  in  proportion  as  our  tastes  become 
so  qualitative  that  we  require  to  put  our  own  spontaneity, 
our  sense  of  beauty  and  fitness,  our  vital  force,  into  what- 
ever work  we  do,  and  likewise  require  the  same  elements  of 
spontaneity  and  individuality  in  all  we  enjoy,  the  economic 
conditions  of  a  perfect  society  will  be  attained. 


MODERN   CAPITALISM.  38 1 

§  19.  This  forecast  of  the  social  and  industrial  goal  seems 
justified  by  a  thoughtful  interpretation  of  the  tendencies 
visible  in  the  development  of  modern  industry.  How 
fast  may  be  the  progress  towards  such  an  ideal,  or  how  far 
such  progress  may  be  frustrated  or  impaired  by  the  appear- 
ance of  new  or  the  strengthening  of  old  antagonistic  forces, 
lies  beyond  the  powers  of  legitimate  speculation.  The 
endeavour  to  test  industrial  evolution  by  reference  to  the 
wider  movements  of  human  life  brings  into  prominence  two 
great  tendencies  whose  operations,  attested  not  dimly  by 
modern  history,  are  in  close  accord  with  the  general  trend 
of  the  development  of  social  and  individual  life  and  the 
relations  subsisting  between  the  two. 

As  modern  industrial  societies  develop  they  disclose 
certain  material  wants  which  are  common  to  all  or  most 
members,  and  are  less  subject  to  fluctuations  in  quantity 
or  quality  of  demand  than  others.  These  routine  wants, 
representing  that  part  of  consumption  which  is  common, 
can  be  supplied  most  economically  by  highly  organised 
machinery  and  highly  concentrated  methods  of  production. 
But  so  long  as  the  machinery  for  the  satisfaction  of  the 
common  wants  remains  outside  the  common  control,  and  is 
worked  for  the  benefit  of  sections  of  the  community  whose 
interests  conflict,  both  with  one  another  and  with  the 
general  interest,  an  immense  amount  of  waste  and  danger 
arises  from  the  working  of  the  machinery,  and  grave  social 
maladies  are  engendered.  These  maladies  evoke  in  the 
best  ordered  and  most  intelligent  communities  an  increas- 
ing pressure  of  public  control.  This  public  control  is 
strengthened  and  extended  in  proportion  as  the  highly 
evolved  structure  of  the  industry  enables  its  administrators 
to  exercise  powers  of  monopoly  either  in  relation  to  the 
treatment  of  its  employees,  or  in  relation  to  the  price  or 
quality  of  the  commodities  it  supplies  to  the  public.  Such 
industries  as  develop  these  economic  powers  of  monopoly 
in  the  highest  degree,  and  in  relation  to  the  supply  of 
prime  necessaries  or  comforts  of  common  life,  pass  gradually 
into  the  condition  of  public  industries  organised  for  the 
public  good.  It  seems  likely  that  all  the  important  machine 
industries  engaged  in  satisfying  common  routine  wants  will 
gradually  develop  the  monopolic  characteristics  which  accrue 
to  large  production,  and  will  pass  by  degrees  through  the 


382  THE   EVOLUTION   OF 

different  phases  of  public  control  until  they  become  merged 
in  public  industry. 

This  so-called  socialistic  movement  in  industry  represents 
the  growing  cohesiveness  of  modern  societies.  At  all  times 
there  is  a  strong  natural  tendency  to  supply  common  wants 
by  common  efforts.  So  long  as  the  common  wants  in  their 
wider  significance  only  extend  to  protection  of  the  person 
and  of  certain  forms  of  personal  property,  state-work  is 
confined  within  these  protective  limits,  and  the  work  of 
producing  common  wealth,  so  far  as  it  exists,  is  left 
to  village  communities  or  other  small  units  of  social 
organisation.  As  the  elements  of  steady  common  con- 
sumption grow  in  number,  the  common  organisation 
of  activity  to  supply  them  will  grow,  and  where  the 
supply  has  at  first  been  left  to  private  enterprise,  the  abuse 
of  power  and  growing  inconvenience  of  competition  will 
drive  them  into  public  industry.  But  since  the  very  raison 
d'etre  of  this  increased  social  cohesiveness  is  to  economise 
and  enrich  the  individual  life,  and  to  enable  the  play  of 
individual  energy  to  assume  higher  forms  out  of  which  more 
individual  satisfaction  may  accrue,  more  and  more  human 
effort  will  take  shape  in  industries  which  will  be  left  to 
individual  initiative  and  control,  the  arts  in  which  the 
freedom  of  personal  spontaneity  will  find  scope  in  the  ex- 
pression of  physical  or  moral  beauty  and  fitness  and  the 
attainment  of  intellectual  truth.  The  infinite  variety  which 
these  forms  of  artistic  expression  may  assume,  fraught  with 
the  individuality  of  the  artist,  will  prevent  them  from  ever 
passing  into  "routine"  or  "common"  industries,  though 
even  in  the  fine  arts  there  will  be  certain  elements  which,  as 
they  become  part  of  the  common  possession,  will  become 
relatively  void  of  individual  interest,  and  will  thus  pass  into 
a  condition  of  routine  activity.  The  idea  of  continuity  in 
human  progress  demands  this  admission.  But  since  each 
encroachment  of  routine  into  the  "finer  arts"  is  motived  by 
a  prior  shifting  of  the  interest  of  the  consumer  into  forms 
of  higher  refinement,  there  will  be  a  net  gain  and  not  a  loss 
in  the  capacity  of  individual  exercise  in  artistic  work.  In 
every  form  of  human  activity  the  progress  of  routine 
industry  will  be  the  necessary  condition  of  the  expansion  of 
individual  freedom  of  expression.  But  while  the  choice  and 
control  of  each  higher  form   of  "industry"  will  remain 


MODERN   CAPITALISM.  383 

individualistic,  in  proportion  as  the  moral  bonds  of  society 
obtain  fuller  conscious  recognition,  the  work  of  the  "  artist " 
likewise  will  be  dedicated  more  and  more  to  the  service  of 
his  fellow-men.  Thus  will  the  balance  of  the  social  and 
individual  work  in  the  satisfaction  of  human  wants  be 
preserved,  while  the  number  of  those  wants  increase  and 
assume  different  values  with  the  progress  of  the  social  and 
individual  life. 


INDEX. 


Abraham,  Report  on  Employment 

of  Women,  315 
Adjustment  in  progressive  industry, 

351 

Agriculture,  32,  41,  102;  agri- 
cultural labour,  333 

Andrew,  S.,  Fifty  Years'  Cotton 
Trade,  297 

Apprentices,  statute  of,  26 

Arkwright,  50,  56 

Arlidge,  Dr.,   252,  255,  320,  336, 

337,  379 
Art  in  industry,  371-378 
Ashley,  Professor,  Econotnic  History, 

38 

Babbage,  Economy  of  Manu- 
factures, 50-51,  236,  249 

Baines,  History  of  Cotton  Manu- 
facture, 23,  37 

Baker,  Monopolies  and  the  People, 
128,  134,  139,  147 

Board  of  Trade  Journal,  241 

Balance  of  trade,  15 

Banking,  42 

Bertillon,  303 

Birtwistle,  T.,  248 

Bohm-Bawerk,  Positive  Theory  of 
Capital,  10 1,  196. 

Booth,  Charles,  Labour  and  Life  of 
the  People,  41  ;  Occupations  of 
the  People,  226,  228,  290 

Bowley,  A.  L.,  England's  Foreign 
Trade,  174 

Brassey,  Foreign  Work  and  Eng- 
lish Wages,  265-266 

Brentano,  Uher  die  Ursachen  der 
heutigen  Not,  58 ;  Hours  and 
Wages  in  Relation  to  Pioduction, 
78,  91,  270 

Burnley,  Wool  and  Wool-Combing, 
33,  51,  94 


Business,  evolution  of  the,  10,  35, 
40,  88,  92 

Cairnes,  J.  E,,  Logical  Method  of 

Political     Economy,     8 ;     Some 

Leading  Principles    of  Political 

Economy,  211 
Canada,  town  population,  331 
Canals,  25 

Cannan,  E.,  Production  and  Con- 
sumption, 214  ;  Decline  of  Urban 

Immigration,  327  (note) 
Capital,  meaning  of,  5  ;  fixed,  40 ; 

growing  size  of,  92-93  ;  excessive 

forms  of,    170,   etc.  ;    definitions 

of,    209-215 ;    concentration    of, 

117-122 
Capitalism,  4,  40 ;  factors  in  growth 

of,  73-81,  loi 
Carding,  57 
Cartwright,  58,  75 
Census,  occupations  of  the  people, 

71,  228;  town  population,  328; 

mortality  in  towns,  334 
Chalmers,  Estimate,  23 
Chartered  companies,  18 
Child-workers,  in  domestic  industry, 

32 ;    in  factory,   297,    307,   319 ; 

legal     protection     of,     322-323 ; 

child  mortality,  337 
Climate,  73,  109 
Clothier,  39,  40,  etc. 
Collet,  305,  307,  311,  312 
Competition,    104,    108,    118,    120, 

etc.  ;  "  unfair,"  146 
Consumption,  insufficient  quantity, 

180,     etc;      progressive,      284; 

quality  of,  368 
Concentration  of  industry,  38,  loi 
Cooke-Taylor,  The  Modern  factory 

System,  36,  37,  50,  66,  251-252, 

255 


386 


INDEX. 


Corner,  127,  129 

Cotton,  24,  37,  55,  63,  105  ;  con- 
sumption of,  80  ;  machinery,  90, 
247 ;  statistics,  228  ;  spinning  la- 
bour, 246;  factory  legislation,  322 

Cournot,  Recherches  stir  les  Prin- 
cipes  Mathematiques  de  la  Theorie 
des  Richesses,  97 

Crime  in  towns,  340 

Crompton,  56 

Cunningham,  History  of  English 
hidustry,  14,  19,  42,  55  ;  Uses 
and  Abuses  of  Money,  236,  251 

Custom,  in  women's  industries,  311 

Decentralisation,  345 
Defoe,  Tojir,  25,  28,  32,  33,  38,  40 
Depression  of  trade,  171,  206,  etc. 
Dilke,  Lady,  301  (note) 
Differentiation,  106 
Diminishing  returns,  law  of,  374 
Dodd,  C.  S.  T.,  Ten   Years  of  the 

Standard  Oil  Trust,  130,  144 
Domestic  industry,  35,  69,  78 
Dress  trades,  293,  294 
"Driving,"  248,  249 

Economy  of  competitive  power, 
118;  of  high  wages,  261-286 

Ellison,  T.,  History  of  the  Cotton 
Trade,  76,  228 

Europe,  growth  of  towns,  329 

Factor,  41 

Factory,  37,  39,  57  ;  system,  50, 
319,  320  ;  legislation,  321-323 

Fairs,  30,  105 

Foreign  trade,  in  England,  13,  73  ; 
Europe,  20,  106 

Fox  well,  H.  S.,  The  Claims  of 
Labour,  341 

Foundational  industries,  102 

France,  English  trade  with,  16 ; 
machine- development,  74;  em- 
ployments, 233 ;  town  popula- 
tion, 328,  335  ;  treaty,  63 

Free  trade,  63,  79,  352-354 

Gas-tar,  53 

Geddes,    Professor    Patrick,     The 

Evolution    of    Sex,    379 ;     The 

Claims  of  Labour,  379 


Germany,  79 ;  cotton  trade  in,  77- 
78,  81 ;  town  population,  329 

Giffen,  R. ,  Essays  in  Finance,  175 

Gould,  272,  284 

Gunton,  G. ,  The  Economic  and 
Social  Aspect  of  Trusts,  138,  149, 
153;  Wealth  and  Progress,  271, 
309 

Guyot,  Yves,  Principles  of  Social 
Economy,  219 

Hargreaves,  56 

Halifax,  31,  33,  41,  301  (note) 

Hearn,  Plutology,  211 

Hodge,  evidence   before  House  of 

Lords,  57 
Holland,    trade    of,     16,     17,    26 ; 

towns  in,  327 

Immigration,  19,  326-331 
India,  108,  270,  280 
Industrial  organism,  11,  20,  105 
International  trade,  14,  75 
Invention,   "heroic"  view  of,  57; 

by  small  increments,  58-59 
Iron  trade,  23,  28,  72,  84 ;  growth 

of,  64-66 

Jamks,  History  of  Worsted  Manu- 
facture, 36 

Jenks,  J.  W.,  137,  150 

Jevons,  W.  S.,  Theory  of  Political 
Economy,  185,  209,  373 

Joint-stock  company,  42,  121,  353 

Kay,  fly-shuttle,  56 

Keynes,     Scope     and     Method    of 

Political  Economy,  212 
King,  Gregory,  22,  72 

Labour  organisations,  152,317,357 
Lancashire,  29,   55,  81,    iii,    183, 

184,  270,  297,  314 
Leeds,  31,  41 
Levasseur,    M.   S.,    La  Population 

Francaise,  233,  335 
Levi,  Leone,   Work  and  Pay,  222 
Linen  manufacture,  24,  63 
Lloyd,  H.  D.,  153     * 
Localisation  of  industry,  109,   iil- 

"5 
Lombe,  55,  61,  68 


INDEX. 


387 


LongstafF,  Rural  Depopulation,  329; 
Studies  in  Statistics,  331 

Machinery,  place  of,  in  modern 
industry,  6 ;  definition  of,  45, 
etc. ;  evolution  of,  60;  machine- 
making,  66,  67;  laws  of  applica- 
tion, 68-70;  relation  to  trade 
depression,  chap.  vii. ;  produc- 
tivity of,  173;  effects  on  demand 
for  labour,  chap.  viii. ;  effects  on 
character  of  labour,  chap.  ix. ; 
education  of,  257;  gain  to  workers 
from,  281;  machine-goods,  287; 
social  control  over,  355 ;  economic 
limits  of,  369;  intellectual,  376 

Macpherson,  Annals  of  Commerce, 
12,  13,  20,  23,  32 

Mackenzie,  Introduction  to  Social 
Philosophy,  349 

Malthus,  Principles  of  Political 
Economy,  210 

Market,  10,  96,  99;  towns,  30 

Marsden,  Cotton  Spinning,  297 

Marshall,  Principles  of  Economics, 
5  (note),  29,  96,  97,  211,  221 
(note),  236, 245, 25 1, 254,  259, 337 

Marx,  Capital,  45,  46,  66,  244 

Middleman,  41 

Mill,  J.  S.,  Principles  of  Political 
Economy,  185,  189-191,  197,  210, 
289 

Mill,  James,  Elements  of  Political 
Economy,  210 

Money,  7,  97,  98 

Monopolies,  89,  124,  356;  economic 
powers  of,  chap,  vi.;  monopoly- 
prices,  1 56,  etc.;  monopoly  wages, 
299 

Morrison,  The  Study  of  Crime,  340 

Motor,  45,  66,  67 

Mulhall,  Dictionary  of  Statistics,  251 

Navigation,  risks  of,  14;  acts,  17 
Newsholm,  Vital  Statistics,  334 
Nicholson,   J.    S.,   Effects  of  Ma- 
chinery on  Wages,  235,  238,  239, 
249 

OVER-CONSUMITION,  2x5-219 
Over-production,    169,    171;    econ- 
omic diagnosis  of,  176-190 


Over-crowding,  344 
Owen,  Robert,  263 

Parasitic  industries,  113 

Patten,  S.  N. ,  Theory  of  Dynamic 
Economics,  104,  251,  373;  Pre- 
mises of  Political  Economy,  yj^ 

Physiocrats,  261 

Playfair,  Sir  L.,  53,  170,  173 

Population,  English,  22,  77;  statis- 
tics of,  326-332;  population  ques- 
tion, 378 

Porter,  Progress  of  the  Nation,  62, 
63.  71  ^  105.  129,  226,  250 

Portugal,  English  trade  with,  16 

Potter,  The  Co-operative  Movement, 
129 

Power,  38 

Price,  Bonamy,  Practical  Political 
Economy,  211,  215 

Prices,  fall  of,  285;  fluctuations  of, 
176 

Protection,  18,  77,  79 

Publicity  in  business,  353 

Railways,  comparative  statistics, 
82,  139,  140,  112,  174,  231,  232, 

347 

Ravenstein,  Statistical  Journal,  327 

Retail  trade,  114,  1x5,  229;  mul- 
tiplication of  retailers,  288 

Ricardo,  D.,  2x0 

Ring-spinning,  127 

Robertson,  J.  M.,  Fallacy  of  Saving, 

187 
Rogers,  Thorold,  Political  Economy , 

2X1,  236 
Ruskin,  J.,  Unto  this  Last,  199 
Russia,  73,  79,  270 

Saving,  analysis  of,  185-X90,  198- 

20  X 
Schoenhof,  Economy  of  High  Wages, 

81,  275 

Schulze-Gaevernitz,  Der  Grossbe- 
trieb,  24,  29,  54,  55,  70,  76,  78, 
8x,  X08,  III,  247,  250,  267-270, 
276;  Zum  Socialen  Frieden,  91 

Scrivener,  History  of  Iron  Trade, 
28,  52,  64,  74 

Secondary  industries,  103 

Shaftoe,  224 


388 


INDEX. 


Sheffield,  29 

Sherman,    R.,    The    Standard   Oil 

Trust,  130,  132 
Shipping,  83,  173,  233 
Sidgwick,    Principles    of  Political 

Econofny,  185,  211 
Silk  trade,  23,  55,  61-63,  238,  240 
Smart,  Dr.,    Womeiis  Wages,  309, 

315 
Smith,  Adam,   Wealth  of  Nations, 

II,   18,  26,  30,  32,  43,  63,   185, 

209,  255,  262,  359,  363 
Smith,   Memoirs  of   Wool,   12,  24, 

35,  41,  262 
Socialism,   356-361;   in  relation  to 

competition,    364,   365;    in  rela- 
tion to  individualism,  370,  etc. 
Specialisation,   local,   28,   etc.,  33, 

93 
Spencer,  H.,  Principles  of  Sociology , 

106,  362 
Spinning,  56,  57;  statistics  of,  79, 

268,  269;  ring-spinning,  296,  297 
Spinoza,  378 
Staffordshire,  29 

Standard  Oil  Trust,  131-137,  144 
Statistical  abstract,  90 
Steam  power,  85,  86 
Supply  and  demand,  68,   162-166; 

applied  to  invention,  59 
Swreating  286,  307,  310,  318,  360, 

361 
Sympathy  in  trades,  104 
Syndicates,  89,  126,  128 

Textiles,  protected,  17,  domestic 
industry,  32,  54,  68,  112;  statis- 
tics, 228,  296;  wages,  242,  316; 
men  and  women  in,  292,  303 

Towns,  as  machine-products,  324, 
etc. ;  growth  of  town  populations, 
326-332;  mortality  in,  334;  phys- 
ique in,  336;  intelligence  in,  338; 
morals  in,  339,  340 

Toynbee,  The  Industrial  Revolu- 
tion, 24,  42,  79 

Trade  unions,  357;  among  women, 

313,  317 

Transport,  machinery  of,  173,  325; 
monopolies  in,  139,  140,  cheap- 
ening of,  347 

Truck,  152,  346 


Trust,  126,  141;  definition  of,  130, 
131;  Standard  Oil,  131-137;  con- 
ditions of,  139  etc.;  economic 
power  of,  chap.  vi. 

Under-consumption,  182,  etc. 

Unemployment,  241 

United  States  of  America,  75,  76, 
81,  91,  93,  130,  140,  141,  172, 
231,  269,  274,  275,  296;  colonial 
policy,  67 ;  women's  wages  in, 
306  (note),  308,  309;  growth  of 
town  life,  330 

Ure,  History  of  the  Cotton  Manu- 
facture, z(>,  37.  55,  63,  64,  77, 
79;  Philosophy  of  Manufacture, 
258,  262,  263,  274 

Wade,  Fibre  and  Fabric,  296 

Wages,  "natural,"  261;  economy 
of  low,  264,  298;  economy  of 
high,  266-275;  women's,  299,  etc. 

Walker,  F.,  Political  Economy ,  211 

Waste,  utilisation  of,  52 

Watch-making,  94,  96,  301  (note) 

Watt,  65,  75 

Weaving,  32,  56;  power-loom,  63; 
survival  of  hand  weaving,  70, 
236;  comparative  statistics  of, 
81,  268,  269;  labour  in  weaving, 
248,  276;  women  and  children  in, 
297,  300 

Webb,  S. ,  Economic  Journal,  298, 
300 

Wells,  D.  A.,  Contemporary  Re- 
view, 91,  171,  173,  254,  296 

Women,  employment  of,  259, 
290-321 

Woollen  trade,  23,  26,  34,  54-57, 
61,  73;  report  of  committee  on 
manufacture  39 ;  statistics  for 
Great  Britain,  90 

Working  classes,  condition  of,  289, 
379;  legal  protection  of,  322,  323 

Wright,  Carroll  D.,  Report  on  In- 
dustrial Depressions,  171,  224 

Yeats,  The  Growth  and  Vicissitudes 
of  Commerce,  72,  74 ;  The  Golden 
Gates  of  Trade,  106,  109 

Young,  Arthur,  Tours,  22,  25,  39, 
262,  326 


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PEER  GYNT:  A  Dramatic  Poem. 
By  HENRIK  IBSEN. 

TRANSLATED   BY 

WILLIAM   AND   CHARLES   ARCHER. 


This  Translation^  tliough  unrhytned,  preserves  throughout  the 
various  rhythms  of  the  original. 


"  In  Brand  the  hero  is  an  embodied  protest  against  the  poverty  of 
spirit  and  half-heartedness  that  Ibsen  rebelled  against  in  his  country- 
men. In  Peer  Gynt  the  hero  is  himself  the  embodiment  of  that  spirit. 
In  Brand  the  fundamental  antithesis,  upon  which,  as  its  central  theme, 
the  drama  is  constructed,  is  the  contrast  between  the  spirit  of  com- 
promise on  the  one  hand,  and  the  motto  '  everything  or  nothing '  on 
the  other.  And  Peer  Gynt  is  the  very  incarnation  of  a  compromising 
dread  of  decisive  committal  to  any  one  course.  In  Brand  the  problem 
of  self-realisation  and  the  relation  of  the  individual  to  his  surroundings 
is  obscurely  struggling  for  recognition,  and  in  Peer  Gynt  it  becomes  the 
formal  theme  upon  which  all  the  fantastic  variations  of  the  drama  are 
built  up.  In  both  plays  alike  the  problems  of  heredity  and  the  influence 
of  early  surroundings  are  more  than  touched  upon;  and  both  alike 
culminate  in  the  doctrine  that  the  only  redeeming  power  on  earth  or  in 
heaven  is  the  power  of  love."— Mr.  P.  H.  Wicksteed. 


Loudon  :  Walter  Scott,  Lihited.  24  Warwick  Lane. 


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THE 

THEATRICAL    ''WORLD" 
FOR  1893. 

By  WILLIAM  ARCHER. 


This  year  has  been  a  pecuharly  interesting  theatrical  season, 
with  several  Ibsen  productions,  the  visits  of  Signora  Duse  and 
the  Comedie  Frangaise,  and,  above  all,  the  production  of  "  The 
Second  Mrs.  Tanqueray."  It  will  therefore  be  good  news  to 
students  of  the  theatre  that  Mr.  William  Archer  is  about  to 
publish,  through  Mr.  Walter  Scott,  an  almost  complete  reprint 
of  the  well-known  criticisms  that  have  appeared  weekly  during 
the  year  over  his  initials  in  the  World. 

The  book  will  be  called  "The  Theatrical  '  World'  for  1893," 
and  the  articles  will  be  reprinted  as  they  stand,  in  order  to  form 
(with  the  aid  of  a  full  index)  as  complete  a  record  as  possible  of 
the  leading  events  of  the  year.  The  work  will  be  supplemented 
with  a  few  short  critical  articles  which  have  appeared  in  other 
papers.  The  date  of  the  production  of  each  play  will  be  stated, 
and  the  date  of  its  last  performance,  if  that  falls  within  the  year. 
In  some  cases  foot-notes  will  be  added  to  amplify  anything 
upon  the  text  in  the  light  of  later  events.  The  volume  will 
appear  as  early  as  possible  in  January,  and  will  be  sold  at 
2s.  6d. — London  Daily  Chronicle. 


London  :  Walter  Scott,  Ltd.,  24  Warwick  Lane. 


Crown  Svo,  cAout  350  pp.  each,  Cloth  Cover^  2I6  per  Vol.; 
Half-Polished  Morocco,  Gilt  Top,  t^s. 

COUNT  TOLSTOI'S  WORKS. 

The  following  Volumes  are  already  issued — 


A  RUSSIAN  PROPRIETOR 

THE  COSSACKS 

IVAN   ILYITCH,   and  other 

Stories 
MY  RELIGION 
LIFE 

MY  CONFESSION 
CHILDHOOD,       BOYHOOD, 

YOUTH 
THE  PHYSIOLOGY  OF  WAR 
ANNA  KARENINA.     3/6 


WHAT  TO  DO  ? 

WAR  AND  PEACE.     (4  vols.) 

THE  LONG  EXILE,  and 
OTHER  Stories  for  Child- 
ren 

SEVASTOPOL 

THE  KREUTZER  SONATA, 
AND  FAMILY  HAPPI- 
NESS 

THE  KINGDOM  OF  GOD  IS 
WITHIN  YOU. 


Uniform  with  the  above — 
IMPRESSIONS  OF  RUSSIA.     By  Dr.  Georg  Brandes. 


NEW  'BOOKLETS'  BY  COUNT  TOLSTOI. 

Bound  in  While  Grained  Boards,  with  Gilt  Lettering. 
Price  One  Shilling  each. 


WHERE  LOVE  IS,  THERE  GOD 

IS  ALSO 
THE  TWO  PILGRIMS 
WHAT  MEN   LIVE  BY 
THE  GODSON 


IF  YOU  NEGLECT  THE  FIRE, 
YOU  DON'T  PUT  IT 
OUT 

WHAT     SHALL     IT    PROFIT     A 

MAN? 


These  little  stories,  issued  in  Russia  as  tracts  for  the  people,  possess  all  the 
grace,  na'ivetd.and  power  which  characterise  the  writings  of  Count  Tolstoi;  and 
while  inculcating  in  the  most  penetrating  way  the  fundamental  Cliristian  prin- 
ciples of  love,  humility,  ajid  charity,  are  perfect  in  their  art-form  as  stories 
pure  and  simple. 


London :  Walter  Scott,  Ltd.,  24  Warwick  Lane,  Paternoster  Row. 


DRAMATIC  ESSAYS. 

EDITED  BY 

WILLIAM  ARCHER  AND  ROBERT  W.  LOWE. 

Three  Volumes,  Crown  Svo,  Cloth,  Price  3/6  each. 

Dramatic  Criticism,  as  we  now  understand  it— the  systematic  appraise- 
ment from  day  to  day  and  week  to  week  of  contemporary  plays  and 
acting — tegan  In  England  about  the  beginning  of  the  present  century. 
Until  very  near  the  end  of  the  eighteenth  century,  "the  critics"  gave 
direct  utterance  to  their  judgments  in  the  theatre  itself,  or  in  the  coffee- 
houses, only  occasionally  straying  into  print  in  letters  to  the  news-sheets, 
or  in  lampoons  or  panegyrics  in  prose  or  verse,  published  in  pamphlet 
form.  Modern  criticism  began  with  modem  journalism ;  but  some  of 
its  earliest  utterances  were  of  far  more  than  ephemeral  value.  During 
the  earlier  half  of  the  present  century  several  of  the  leading  essayists  of 
the  day — men  of  the  first  literary  eminence— concerned  themselves  largely 
with  the  theatre.     Under  the  title  of 

"DRAMATIC    ESSAYS" 

will  be  issued,  in  three  volumes,  such  of  their  theatrical  criticisms  as  seem 
to  be  of  abiding  interest. 

THE  FIRST  SERIES  will  contain  selections  from  the  criticisms 
of  LEIGH  HUNT,  both  those  published  in  1807  (long  out  of  print),  and 
the  admirable  articles  contributed  more  than  twenty  years  later  to  The 
Taller,  and  never  republished. 

THE  SECOND  SERIES  will  contain  selections  from  the  criticisms 
of  WILLIAM  HAZLITT.  Hazlitt's  Essays  on  Kean  and  his  contem- 
poraries have  long  been  inaccessible,  save  to  collectors. 

THE  THIRD  SERIES  will  contain  hitherto  uncollected  criticisms 
by  JOHN  FORSTER,  GEORGE  HENRY  LEWES,  and  others,  with 
selections  from  the  writings  of  WILLIAM  ROBSON  (The  Old  Playgoer). 

The  Essays  will  be  concisely  but  adequately  annotated,  and  each 
volume  will  contain  an  Introduction  by  William  Archer,  and  an 
Engraved  Portrait  Frontispiece. 

London  :  Walter  Scott,  Limited,  24  Warwick  Lane. 


A  NEW  ISSUE  of  the  WORKS  OF 

NATHANIEL  HAWTHORNE. 


Messrs.  WALTER  SCOTT,  LTD.,  have  pleasure  in 
announcing  thai  they  are  about  to  issue,  in  monthly  volumes, 
a  new  edition  of  THE  WORKS  OF  NATHANIEL 
HA  WTHORNE. 

As  a  master  of  the  art  of  prose  and  an  exquisite  story -teller, 
Hawthorne  now  needs  no  introduction  to  the  English  reading 
public.  This  edition  will  be  printed  on  antique  paper;  each 
volume  will  contain  A  Frontispiece  in  Photogravure 
from  drawings  by  T.  Eyre  Macklin  and  James  Torrance. 
The  cover  for  the  volumes  has  been  designed  by  Walter 
Crane.  "  The  Scarlet  Letter^^  which  7vill  be  the  first  volume, 
will  be  issued  in  November,  to  be  folloiued  early  in  December 
by  "  The  House  of  the  Seven  Gables!'' 

In  Twelve  Vols.,  Crown  8vo,  Antique  Paper,     Price  2/6  per  VoL 

THE  SCARLET  LETTER. 

THE  HOUSE  OF  THE  SEVEN  GABLES. 

THE  BLITHEDALE  ROMANCE. 

A  WONDER-BOOK  FOR  GIRLS  AND  BOYS. 

MOSSES  FROM  AN  OLD  MANSE. 

OUR  OLD  HOME. 

TANGLEWOOD  TALES. 

TRUE  STORIES  FROM  HISTORY  AND  BIOGRAPHY. 

TWICE-TOLD  TALES. 

THE  NEW  ADAM  AND  EVE. 

LEGENDS  OF  THE  PROVINCE  HOUSE. 

THE  SNOW  IMAGE. 

London :  Walter  Scott,  Limited,  24  Warwick  Lane. 


Second  Edition,  Crown  8vo,  Cloth,  Price  6s. 

MODERN    PAINTING. 

By  GEORGE  MOORE. 


SOME  PRESS  NOTICES. 

"  Of  the  very  few  books  on  art  that  painters  and  critics  should  on  no 
account  leave  unread  this  is  surely  one." — The  Studio. 

"  His  book  is  one  of  the  best  books  about  pictures  that  have  come 
into  our  hands  for  some  years." — St.  Jameses  Gazette. 

"  If  there  is  an  art  critic  who  knows  exactly  what  he  means  and  says 
it  with  exemplary  lucidity,  it  is  '  G.  M.' " — The  Sketch. 

"  A  more  original,  a  better  informed,  a  more  suggestive,  and  let  us 
add,  a  more  amusing  work  on  the  art  of  to-day,  we  have  never  read 
than  this  volume." — Glasgow  Herald. 

"Impressionism,  to  use  that  word,  in  the  absence  of  any  fitter 
one, — the  impressionism  which  makes  his  own  writing  on  art  in  this 
volume  so  effective,  is,  in  short,  the  secret  both  of  his  likes  and 
dislikes,  his  hatred  of  what  he  thinks  conventional  and  mechanic, 
together  with  his  very  alert  and  careful  evaluation  of  what  comes  home 
to  him  as  straightforward,  whether  in  Reynolds,  or  Rubens,  or  Ruysdael, 
in  Japan,  in  Paris,  or  in  modern  England." — Mr.  Pater  in  The 
Chronicle. 

"As  an  art  critic  Mr.  George  Moore  certainly  has  some  signal 
advantages.  He  is  never  dull,  he  is  frankly  personal,  he  is  untroubled 
by  tradition. " —  Westminster  Gazette. 

* '  Mr.  Moore,  in  spite  of  the  impediments  that  he  puts  in  the  way  of 
his  own  effectiveness,  is  one  of  the  most  competent  writers  on  painting 
that  we  have." — Manchester  Guardian. 

"  His  [Mr.  Moore's]  book  is  one  that  cannot  fail  to  be  much  talked 
about ;  and  everyone  who  is  interested  in  modern  painting  will  do  well 
to  make  acquaintance  with  its  views." — Scottish  Leader. 

"  As  everybody  knows  by  this  time,  Mr.  Moore  is  a  person  of  strong 
opinions  and  strong  dislikes,  and  has  the  gift  of  expressing  both  in 
pungent  language." — The  Times. 

' '  Of  his  [Mr.  Moore's]  sincerity,  of  his  courage,  and  of  his  candour 
there  can  be  no  doubt.  .  .  .  One  of  the  most  interesting  writers  on  art 
that  we  have." — Tall  Mall  Gazette. 


London:  Walter  Scott,  Ltd.,  24  Warwick  Lane. 


LIBRARY  OF  HUMOUR 

Cloth  Elegant^  Large  Crown  Svo,  Price  3/6  per  vol. 

VOLUMES  ALREADY  ISSUED. 

THE  HUMOUR  OF  FRANCE.  Translated,  with  an 
Introduction  and  Notes,  by  Elizabeth  Lee.  With  numerous 
Illustrations  by  Paul  Frdnzeny. 

THE  HUMOUR  OF  GERMANY.  Translated,  with 
an  Introduction  and  Notes,  by  Hans  Miiller-Casenov.  With 
numerous  Illustrations  by  C.  £.  Brock. 

THE  HUMOUR  OF  ITALY.  Translated,  with  an 
Introduction  and  Notes,  by  A.  Werner.  With  50  Illustrations 
and  a  Frontispiece  by  Arturo  Faldi. 

THE  HUMOUR  OF  AMERICA  Edited,  with  an 
Introduction  and  Notes,  by  J,  Barr  (of  the  Detroit  Free  Press). 
With  numerous  Illustrations  by  C.  E.  Brock. 

THE  HUMOUR  OF  HOLLAND.  Translated,  with  an 
Introduction  and  Notes,  by  A.  Werner.  With  Numerous  Illustra- 
tions by  Dudley  Hardy. 

VOLUMES  IN  PREPARATION. 

THE  HUMOUR  OF  IRELAND.  Selected  by  D.  J. 
O'Donoghue.     With  numerous  Illustrations  by  Oliver  Paque. 

THE  HUMOUR  OF  RUSSIA  Translated,  with  Notes, 
by  E.  L.  Boole,  and  an  Introduction  by  Stepniak.  With  50 
Illustrations  by  Paul  Frenzeny. 

THE  HUMOUR  OF  SPAIN.  Translated,  with  an  Intro- 
duction and  Notes,  by  S.  Taylor.     With  numerous  Illustrations. 

To  be  followed  by  volumes  representative  of  England, 
Scotland,  Japan,  etc  The  Series  will  be  complete  in  about 
twelve  volumes. 


London:  Walter  Scott,  Limited,  24  Warwick  J^ne. 


WORKS   BY  GEORGE   MOORE. 

Crown  8w,  Clothy  Price  3^.  6^.  each. 
TWENTIETH  EDITION. 

A     MUMMER'S     AVIFE. 

"'A  Mummer's  Wife*  is  a  striking  book — clever,  unpleasant, 
realistic.  .  .  .  No  one  who  wishes  to  examine  the  subject  of  realism 
in  fiction,  with  regard  to  English  novels,  can  afford  to  neglect  'A 
Mummer's  Wife.'  " — Athenaum. 

"  '  A  Mummer's  Wife,'  in  virtue  of  its  vividness  of  presentation  and 
real  literary  skill,  may  be  regarded  as  in  some  degree  a  representative 
example  of  the  work  of  a  literary  school  that  has  of  late  years  attracted 
to  itself  a  great  deal  of  notoriety." — Spectator. 

EIGHTH  EDITION. 

A    MODERN    LOVER. 

"  It  would  be  difficult  to  praise  too  highly  the  strength,  truth, 
delicacy,  and  pathos  of  the  incident  of  Gwynnie  Lloyd,  and  the 
admirable  treatment  of  the  great  sacrifice  she  makes." — Spectator. 

SEVENTH  EDITION. 

A    DRAMA    IN    MUSLIN. 

"  Mr.  George  Moore's  work  stands  on  a  very  much  higher  plane 
fhan  the  facile  fiction  of  the  circulating  libraries.  .  .  .  The  characters 
are  drawn  with  patient  care,  and  with  a  power  of  individualisation 
which  marks  the  born  novelist.  It  is  a  serious,  powerful,  and  in  many 
respects  edifying  book." — Pall  Mall  Gazette. 

Crown  Svo,  C/ofk,  Price  6s. 
VAIN     FORTUNE. 

With  Eleven  Illustrations  by  Maurice  Greiffenhagen. 
A  few  Large- Paper  Copies  on  Hand-made  Paper,  Price  One  Guinea  net, 

A  VOLUME  of  ESSAYS  by  GEORGE  MOORE. 

Crown  Svo,  Cloth,  Price  ds. 
MODERN     PAINTING. 

Crown  Svo,  Cloth,  Price  ^s. 

THE    STRIKE    AT   ARLINGFORD. 

Play  in  Three  Acts. 


London:  Walter  Scott,  Limited,  24  Warwick  Lane. 


NEW    ENGLAND    LIBRARY. 

CLOTH,  GILT  TOP,   2s.  BACH. 

Contains  the  foUowingr  Works— 

NATHANIEL  HAWTHORNE. 

r.  THE  HOUSE  OF  THE  SEVEN  GABLES. 

2.  THE  SCARLET  LETTER. 

3.  MOSSES  FROM  AN  OLD  MANSE. 

4.  THE  NEW  ADAM  AND  EVE. 

5.  TWICE-TOLD  TALES. 

6.  LEGENDS  OF  THE  PROVINCE  HOUSE. 

7.  THE  SNOW  IMAGE. 

8.  OUR  OLD  HOME. 

9.  TANGLEWOOD  TALES. 

10.  THE  BLITHEDALE  ROMANCE. 

11.  TRUE  STORIES  FROM  HISTORY  AND 

BIOGRAPHY. 

12.  A  WONDER-BOOK  FOR  GIRLS  AND  BOYS. 

A.  S.  HARDY. 

13.  BUT  YET  A  WOMAN. 

THEO.  WINTHROP. 

14.  CECIL  DREEME. 

15.  JOHN  BRENT. 

16.  EDWIN  BROTHERTOFT. 

17.  CANOE  AND  SADDLE. 

0.  W.  HOLMES. 

18.  AUTOCRAT  OF  THE  BREAKFAST-TABLE. 

19.  PROFESSOR  AT  THE  BREAKFAST-TABLE. 

20.  POET  AT  THE  BREAKFAST-TABLE. 

21.  ELSIE  VENNER. 

22.  A  MORTAL  ANTIPATHY. 

WASHINGTON  IRVING. 

23.  THE  SKETCH  BOOK. 

24.  CHRISTMAS. 

In  ordering,  it  is  saicient  to  note  ttie  numbers  to  tlie  al)07e  titles. 

London:  Walter  Scott,  Limited,  24  Warwick  Lane. 


BOOKS    OF    FAIRY    TALES. 

Crown  Svo,  Cloth  Elegant^  Price  ^/6per  Vol. 

ENGLISH    FAIRY   AND    OTHER 
FOLK  TALES. 

Selected  and  Edited,  with  an  Introduction, 

By  EDWIN  SIDNEY  HARTLAND. 

With  Twelve  Full-Page  Illustrations  by  Charles  E.  Brock. 


SCOTTISH  FAIRY  AND  FOLK  TALES. 

Selected  and  Edited,  with  an  Introduction, 

By  Sir  GEORGE  DOUGLAS,  Bart. 

With  Twelve  Full-Page  Illustrations  by  James  Torrance, 


IRISH  FAIRY  AND  FOLK  TALES. 

Selected  and  Edited,  with  an  Introduction, 

By  W.  B.  YEATS. 

With  Twelve  Full-Page  Illustrations  by  James  Torrance. 

London:  Walter  Scott,  Ltd.,  24  Warwick  Lane,  Paternoster  Row. 


THE  SCOTT  LIBRARY. 

Cloth,  Uncut  Edges,  Gilt  Top.      Price  is.  6d.  per  Volume. 


VOLUMES   ALREADY  ISSUED— 

1  MALORY'S   ROMANCE   OF   KING    ARTHUR  AND  THE 

Quest  of  the  Holy  GraiL    Edited  by  Ernest  Rhys. 

2  THOREAU'S  WALDEN.     WITH  INTRODUCTORY  NOTE 

by  Will  H.  Dircks. 

3  THOREAU'S    "WEEK."      WITH  PREFATORY  NOTE  BY 

Will  H.  Dircks. 

4  THOREAU'S     ESSAYS.       EDITED,    WITH    AN     INTRO- 

duction,  by  Will  H.  Dircks. 

5  CONFESSIONS  OF  AN  ENGLISH   OPIUM-EATER,  ETC. 

By  Thomas  De  Quincey.    With  Introductory  Note  by  William  Sharp. 

6  LANDOR'S  IMAGINARY  CONVERSATIONS.    SELECTED, 

with  Introduction,  by  Uavelock  Kills. 

7  PLUTARCH'S    LIVES    (LANGHORNE).      WITH     INTRO- 

ductory  Note  by  B.  J.  Snail,  M.A. 

8  BROWNE'S     RELIGIO    MEDICI,    ETC.      WITH    INTRO- 

duction  by  J.  Addington  Symonds. 

9  SHELLEY'S    ESSAYS    AND   LETTERS.     EDITED,  WITH 

Introductory  Note,  by  Ernest  Rhys. 

10  SWIFT'S  PROSE  WRITINGS.  CHOSEN  AND  ARRANGED, 

vith  Introduction,  by  Walter  Lewin. 

11  MY  STUDY  WINDOWS.     BY  TAMES  RUSSELL  LOWELL. 

With  Introduction  by  R.  Qarnett,  LL.D. 

12  LOWELL'S  ESSAYS  ON  THE  ENGLISH  POETS.     WITH 

a  new  Introduction  by  Mr.  Lowell. 

13  THE  BIGLOW  PAPERS.     BY  JAMES  RUSSELL  LOWELL. 

With  a  Prefatory  Note  by  Ernest  Rhys. 


London :  Walter  Scott,  Limited,  24  Warwick  Lan«. 


THE  SCOTT  LIBRARY-continued, 

14  GREAT    ENGLISH    PAINTERS.      SELECTED    FROM 

Cunningham's  Liveg.    Edited  by  William  Sharp. 

15  BYRON'S     LETTERS     AND     JOURNALS.       SELECTED, 

with  Introduction,  by  Mathilde  Blind. 

16  LEIGH  HUNT'S  ESSAYS.     WITH  INTRODUCTION  AND 

Notes  by  Arthur  Symons. 

17  LONGFELLOW'S     "HYPERION,"     "  KAVANAH,"     AND 

"  The  Ti-ouveres."    With  Introduction  by  W.  Tirebuck. 

18  GREAT     MUSICAL    COMPOSERS.      BY    G.    F,    FERRIS. 

Edited,  with  Introduction,  by  Mrs.  William  Sharp. 

19  THE  MEDITATIONS  OF  MARCUS  AURELIUS.     EDITED 

by  Alice  Zimmern. 

20  THE  TEACHING  OF  EPICTETUS.    TRANSLATED  FROM 

the  Greek,  with  Introduction  and  Notes,  by  T.  W.  Bolleston. 

21  SELECTIONS  FROM  SENECA.     WITH  INTRODUCTION 

by  Walter  Clode. 

22  SPECIMEN  DAYS  IN  AMERICA.     BY  WALT  WHITMAN. 

Revised  by  the  Author,  with  fresh  Preface. 

23  DEMOCRATIC    VISTAS,     AND     OTHER    PAPERS.      BY 

Walt  Whitman.    (Published  by  arrangement  with  the  Author.) 

24  WHITE'S  NATURAL  HISTORY  OF  SELBORNE.     WITH 

a  Preface  by  Richard  JeSeries. 

25  DEFOE'S     CAPTAIN      SINGLETON.       EDITED,      WITH 

Introduction,  by  H.  Halliday  Sparling. 

26  MAZZINI'S     ESSAYS :     LITERARY,      POLITICAL,    AND 

Religious.    With  Introduction  by  William  Clarke. 

7  PROSE  WRITINGS  OF  HEINE.     WITH  INTRODUCTION 
by  Havelock  Ellis. 

28  REYNOLDS'S    DISCOURSES.       WITH    INTRODUCTION 

by  Helen  Zimmern. 

29  PAPERS  OF  STEELE  AND  ADDISON.   EDITED  BY 

Walter  Lewin. 

30  BURNS'S     LETTERS.       SELECTED     AND    ARRANGED, 

with  Introduction,  by  J.  Logie  Robertson,  M.A. 


I.ondon:  Walter  Scott,  Limited,  24  Warwick  Lane. 


THE  SCOTT  LIBRARY— coniinued. 

31  VOLSUNGA    SAGA.      William  Morris..    WITH    INTRO- 

duction  by  H.  H.  Sparling. 

32  SARTOR   RESARTUS.     BY  THOMAS  CARLYLE.     WITH 

Introduction  by  Ernest  llhya. 

33  SELECT    WRITINGS     OF    EMERSON.       WITH    INTRC- 

duction  by  Percival  Chubb. 

34  AUTOBIOGRAPHY     OF    LORD     HERBERT.       EDITED, 

with  an  Introduction,  by  Will  H.  Dircks. 

35  ENGLISH     PROSE.     FROM      MAUNDEVILLE     TO 

Thackeray.    Chosen  and  Edited  by  Arthur  Galtuu. 

36  THE  PILLARS  OF  SOCIETY,  AND  OTHER  PLAYS.     BY 

Henrik  Ibsen.    Edited,  vitb  an  Introduction,  by  Uavelock  Ellis. 

37  IRISH     FAIRY     AND    FOLK    TALES.       EDITED    AND 

Selected  by  W.  B.  Yeats. 

38  ESSAYS    OF    DR.    JOHNSON,    WITH    BIOGRAPHICAL 

Introduction  and  Notes  by  Stuart  J.  lleid. 

39  ESSAYS     OF    WILLIAM    HAZLITT.      SELECTED    AND 

Edited,  with  Introduction  and  Notes,  by  Frank  Carr. 

40  LANDOR'S    PENTAMERON,    AND   OTHER  IMAGINARY 

Conversations.    Edited,  with  a  Preface,  by  H.  Ellis. 

41  POE'S  TALES   AND   ESSAY.S.     EDITED,  WITH   INTRO- 

duction,  by  Ernest  Rhys. 

42  VICAR  OF    WAKEFIELD.      BY    OLIVER    GOLDSMITH. 

Edited,  with  Preface,  by  Ernest  Rhys. 

43  POLITICAL     ORATIONS,      FROM     WENTWORTH     TO 

Macaulay.    Edited,  with  Introduction,  by  William  Clarke. 

44  THE  AUTOCRAT  OF  THE  BREAKFAST-TABLE.   BY 

Oliver  Wendell  Holmes. 

45  THE  POET  AT  THE  BREAKFAST-TABLE.     BY  OLIVER 

Wendell  Holmes. 

46  THE   PROFESSOR   AT   THE   BREAKFAST- TABLE.      BY 

Oliver  Wendell  Holmes. 

47  LORD     CHESTERFIELD'S     LETTERS     TO    HIS     SON. 

Selected,  with  Introduction,  by  Charles  Sayle 


London:  Walter  Scott,  Limited,  24  Warwick Laott. 


THE  SCOTT  LIBRAEY-continued. 

48  STORIES  FROM  CARLETON.    SELECTED,  WITH  INTRO- 

duction,  by  W.  Yeats, 

49  JANE  EYRE.  BY  CHARLOTTE  BRONTE.  EDITED  BY 

Clement  K.  Shorter. 

50  ELIZABETHAN     ENGLAND.      EDITED     BY    LOTHROP 

Withington,  with  a  Preface  by  Dr.  Furnivall. 

51  THE  PROSE  WRITINGS  OP'  THOMAS  DAVIS.     EDITED 

by  T.  W.  RoUeston. 

52  SPENCE'S     ANECDOTES.       A     SELECTION.       EDITED, 

with  an  Introduction  and  Notes,  by  John  Underbill. 

53  MORE'S  UTOPIA,  AND  LIFE  OF  EDWARD  V.     EDITED, 

with  an  Introduction,  by  Maurice  Adams. 

54  SADI'S    GULISTAN",    OR    FLOWER    GARDEN.     TRANS- 

lated,  with  an  Essay,  by  James  Ross. 

55  ENGLISH     FAIRY    AND    FOLK    TALES.      EDITED    BY 

E.  Sidney  Hartland. 

56  NORTHERN    STUDIES.     BY   EDMUND    GOSSE.     WITH 

a  Note  by  Ernest  Rhys. 

57  EARLY  REVIEWS   OF   GREAT  WRITERS.     EDITED  BY 

E.  Stevenson. 

58  ARISTOTLE'S      ETHICS.        WITH      GEORGE      HENRY 

Lewes's  Essay  on  Aristotle  prefixed. 

59  LANDOR'S  PERICLES  AND  ASPASIA.      EDITED,  WITH 

an  Introduction,  by  Havelock  Ellis. 

60  ANNALS   OF  TACITUS.     THOMAS   GORDON'S    TRANS- 

lation.    Edited,  with  an  Introduction,  by  Arthur  Gal  ton. 

61  ESSAYS    OF    ELIA.      BY    CHARLES    LAMB.      EDITED, 

with  an  Introduction,  by  Ernest  Rhys. 

62  BALZAC'S     SHORTER     STORIES.       TRANSLATED     BY 

William  Wilson  and  the  Count  Stenuock. 

63  COMEDIES    OF    DE     MUSSET.      EDITED,     WITH     AN 

Introductory  Note,  by  S.  L.  Gwynn. 

64  CORAL    REEFS.      BY    CHARLES     DARWIN.      EDITED, 

with  an  Introduction,  by  Dr.  J.  W.  Williams. 


London :  Walteb  Scott,  Limited,  24  Warwick  Lane. 


THE  SCOTT  LIBRARY— continue  J. 

65  SHERIDAN'S     PLAYS.       EDITED,     WITH     AN     INTRO- 

duction,  by  Hudolf  Dircks. 

66  OUR  VILLAGE.      BY  MISS  MITFORD.      EDITED,  WITH 

an  Introduction,  by  Ernest  Rhys. 

67  MASTER  HUMPHREY'S  CLOCK,  AND  OTHER  STORIES. 

By  Charles  Dickens.    With  Introduction  by  Frank  T.  Marzials. 

68  TALES  FROM  WONDERLAND.   BY  RUDOLPH 

Baumbach.    Translated  by  Helen  B.  Dole. 

69  ESSAYS  AND  PAPERS  BY  DOUGLAS  JERROLD.  EDITED 

by  Walter  Jerrold. 

70  VINDICATION    OF    THE    RIGHTS    OF    WOMAN.       BY 

Mary  Wollstonecraft    Introduction  by  Mrs.  E.  Robins  Pennell. 

71  "THE  ATHENIAN  ORACLE."    A  SELECTION.    EDITED 

by  John  Underbill,  with  Prefatory  Note  by  Walter  Besant. 

72  ESSAYS      OF      SAINT- BEUVE.       TRANSLATED      AND 

Edited,  with  an  Introduction,  by  Elizabeth  Lee. 

73  SELECTIONS  FROM  PLATO.   FROM  THE  TRANS- 

lation  of  Sydenham  and  Taylor.    Edited  by  T.  W.  Rolleston. 

74  HEINE'S  ITALIAN  TRAVEL  SKETCHES,  ETC.     TRANS- 

lated  by  Elizabeth  A.  Sharp.    With  an  Introduction  from  the  French  of 
Theophile  Gautier. 

75  SCHILLER'S     MAID     OF     ORLEANS.      TRANSLATED, 

with  an  Introduction,  by  Major-General  Patrick  Maxwell. 

76  SELECTIONS  FROM  SYDNEY  SMITH.     EDITED,  WITH 

an  Introduction,  by  Ernest  Rhys. 

77  THE  NEW  SPIRIT.     BY  HAVELOCK  ELLIS. 

78  THE  BOOK  OF  MARVELLOUS   ADVENTURES.     FROM 

the  "Morte  d' Arthur."    Edited  by  Ernest  Rhys.    [This,  together  with 
Ho.  1,  forms  the  complete  "Morte  d' Arthur."] 

79  ESSAYS   AND  APHORISMS.     BY  SIR  ARTHUR  HELPS. 

With  an  Introduction  by  E.  A.  Helps. 

80  ESSAYS     OF     MONTAIGNE.       SELECTED,     WITH     A 

Prefatory  Note,  by  Percival  Chubb. 

Si  THE    LUCK    OF    BARRY    LYNDON.        BY    W.     M. 
Thackeray.    Edited  by  F.  T.  Marzials. 


I/ondon:  Wali£b  Scott,  Limited,  24  Warwick  Lane. 


THE  SCOTT  LIBRARY— continued. 

82  SCHILLER'S    WILLIAM    TELL.      TRANSLATED,    WITH 

an  Introduction,  by  Major-General  Patrick  Maxwell. 

83  CARLYLE'S     ESSAYS      ON      GERMAN      LITERATURE. 

With  an  Introduction  by  Ernest  Rhys. 

84  PLAYS  AND  DRAMATIC  ESSAYS  OF  CHARLES  LAMB. 

Edited,  with  an  Introduction,  by  Rudolf  Dircks. 

85  THE    PROSE    OF    WORDSWORTH.       SELECTED    AND 

Edited,  with  an  Introduction,  by  Professor  William  Knight. 

86  ESSAYS,    DIALOGUES,    AND    THOUGHTS    OF    COUNT 

Giacomo  Leopardi.      Translated,  with  an  Introduction  and  Notes,  by 
Miijor-General  Patrick  Maxwell. 

87  THE    INSPECTOR-GENERAL      A    RUSSIAN    COMEDY. 

By  Nikolai  V.  Gogol.    Translated  from  the  original,  with  an  lutroductioa 
and  Notes,  by  Arthur  A.  Sykes. 

88  ESSAYS  AND  APOTHEGMS  OF  FRANCIS,  LORD  BACON: 

Edited,  with  an  Introduction,  by  John  Buchan. 

89  PROSE  OF  MILTON :  SELECTED  AND  EDITED,  WITH 

an  Introduction,  by  Richard  Garnett,  LL.D, 


London :  Walter  Scott,  Limited,  24  Warwick  Lane. 


GREAT  WRITERS. 


A  NEW  SERIES  OF  CRITICAL  BIOGRAPHIES. 
Edited  by  Eric  Robertson  and  Frank  T.  Marzials. 

A  Complete  Bibliography  to  each  Volume,  by  J.  P.  ANDERSON, 
British  Museum,  London. 


Cloth,  Uncut  Edges,  Gilt  Top.     Price  1/8. 


Volumes  already  Issued — 

LIFE  OF  LONGFELLOW.    By  Prop.  Eric  S.  Robertsoic 
"A  most  readable  little  work." — Liverpool  ilereury. 

LIFE  OF  COLERIDGE.    By  Hall  Caine. 

"Brief  and  vigorous,  written  throughout  with  spirit  and  great  literary 
skill. " — Scotsman. 

LIFE  OF  DICKENS,    By  Frank  T,  Marzials. 

"Notwithstanding  the  mass  of  matter  that  has  been  printed  relating 
to  Dickens  and  bis  .vorks  ...  we  should,  until  we  came  across  this  volume, 
have  been  at  a  loss  to  recommend  any  popular  life  of  England's  most  popular 
novelist  as  being  really  satisfactory.  The  difficulty  is  removed  by  Mr. 
Marzials's  little  book." — Athenmum, 

LIFE  OP  DANTE  GABRIEL  R03SETTI.     By  J.  Knioht. 

"  Mr.  Knight's  picture  of  the  great  poet  and  painter  is  the  fullest  and 
best  yet  presented  to  the  public." — Tht  Oraphic 

LIFE  OF  SAMUEL  JOHNSON.    By  Colonel  F.  Grant. 

"  Colonel  Grant  has  performed  his  task  with  diligence,  sound  judgment^ 
good  taste,  and  accuracy." — Illustrated  London  Mews. 

LIFE  OF  DARWIN.     By  G.  T.  Bettant. 

"  Mr.  O.  T.  Kettany's  Life  of  Darwin  is  a  sound  and  conscientious  work." 
—Saturday  Review. 

LIFE  OF  CHARLOTTE  BRONTii.    By  A.  Birrell. 

"Those  who  know  much  of  Charlotte  Bronte  will  learn  more,  and  those 
who  know  nothing  about  her  will  find  all  that  is  best  worth  learning  in  Mr. 
Birrell's  pleasant  book."— Sf.  James'  Gazette. 

LIFE  OF  THOMAS  CARLYLE.     By  R.  Garnett,  LL.D. 

"This  is  an  admirable  book.  Nothing  could  be  more  felicitous  and 
fairer  than  the  way  in  which  be  takes  us  through  Carlyle's  life  and 
works." — Pali  Mall  Gazette. 


London :  Walter  Scott,  Limited,  24  Warwick  Lane. 


GREAT    WRITERS— continued. 

LIFE  OP  ADAM  SMITH.     By  R,  B.  Haldanb,  M.P. 

"Written  with  a  perspicuity  seldom  exemplified  when  dealing  irith 
economic  science." — Scotsman. 

LIFE  OF  KEATS.     By  W.  M.  Rossetti. 

"  Valuable  for  the  ample  information  which  It  containa." — Cambridg* 

Independent. 

LIFE  OF  SHELLEY.    By  William  Sharp. 

"The  criticisms  .  .  .  entitle  this  capital  monograph  to  be  ranked  with 
the  best  biographies  of  Shelley." — Weitminster  Review. 

LIFE  OF  SMOLLETT,    By  David  Hannay. 

"  A  capable  record  of  a  writer  who  still  remains  one  of  the  great  masters 
of  the  English  TiO\ A."— Saturday  Review. 

LIFE  OF  GOLDSMITH.     By  AusTd  Dobson. 

"The  story  of  his  literary  and  social  life  in  London,  with  all  its  humorous 
and  pathetic  vicissitudes,  is  here  retold,  as  none  could  tell  it  better." — Daily 
Hews. 

LIFE  OF  SCOTT.    By  Professor  Yongb. 

"This  is  a  most  enjoyable  book." — Aberdeen  Free  Pren. 

LIFE  OF  BURNS.    By  Professor  Blackie. 

"  Tlie  editor  certainly  made  a  hit  when  he  persuaded  Blackie  to  write 
about  Bums." — Pall  Mall  Gazette. 

LIFE  OF  VICTOR  HUGO.    By  Frank  T.  Marzials. 

"  Mr.  Marzials's  volume  presents  to  us,  in  a  more  handy  form  than  any 
English  or  even  French  handbook  g^ves,  the  summary  of  what  is  known 
about  the  life  of  the  great  poet." — Saturday  Review. 

LIFE  OF.  EMERSON.    By  Richard  Garnktt,  LL.D. 

"  No  record  of  Emerson's  life  could  be  more  desirable." — Saturday  Review. 

LIFE  OF  GOETHK    By  James  Sime. 

"Mr.  James  Sime's  competence  as  a  biographer  of  Goethe  is  beyond 
question." — Manchester  Guardian. 

LIFE  OF  CONGREVE.    By  Edmund  Gossk. 

"Mr.  Gosse  has  written  an  admirable  biography."— .^eac^emy, 

LIFE  OF  BUNYAN.    By  Canon  Venables, 

"A  most  intelligent,  appreciative,  and  valuable  memoir." — Scotsman. 

LIFE  OF  CRABBE.     By  T  E.  KEBBEL. 

"No  English  poet  since  Shakes))eare  has  observed  certain  aspects  of 
nature  and  of  human  life  more  closely."— Athenaum, 

LIFE  OF  HEINE.    By  William  Sharp. 

"  An  admirable  monograph  .  .  .  more  fully  written  up  to  the  level  of 
recent  knowledge  and  criticism  than  any  other  En;$lisb  work." — Scotsman. 


London :  Walter  Scott,  Limited,  24  Warwick  Lane. 


GREAT  WRITBRS-continued. 
LIFE  OF  MILL.    By  W.  L.  Courtney. 

"  A  moat  sympathetic  and  discriminating  memoir."— OUugoui  HercM. 
LIFE  OF  SCHILLER.    By  Hbnbt  W.  Nbvinson, 

"  Presents  the  poet's  life  in  a  neatly  rounded  picture."— Scof»>na»». 
LIFE  OF  CAPTAIN  MARRYAT.    By  David  Hannat. 

"We  have  nothini?  but  praise  for  the  manner  in  which  Mr.  Hannay  baa 
done  justice  to  him."— Saturday  Revieio. 

LIFE  OF  LESSING.    By  T.  W.  Rolleston. 

"  One  of  the  best  books  of  the  sexio3."—Manche»ter  Guardian. 
LIFE  OF  MILTON.    By  Richard  Garnett,  LL.D. 

"  lias  never  been  more  charmingly  or  adequately  to\d."—Seottuh  Leader. 
LIFE  OF  BALZAC.    By  Frederick  Wedmork. 

"  Mr.  Wedmore's  monograph  on  the  greatest  of  Fiench  writers  of  Action, 
whose  greatness  is  to  be  measured  by  comparison  with  his  successors,  is  a 
piece  of  careful  and  critical  composition,  neat  and  nice  in  style." — Daily 
Newg. 

LIFE  OF  GEORGE  ELIOT.    By  Oscar  Brownxng, 

"A  book  of  the  character  of  Mr.  Browning's,  to  stand  midway  b*- 
tween  the  bulky  work  of  Mr.  Cross  and  the  very  slight  sketch  of  Miss 
Blind,  was  much  to  be  desired,  and  Mr.  Browning  has  done  his  work  with 
vivacity,  and  not  without  skiU." — Manchester  Ouardian. 

LIFE  OF  JANE  AUSTEN.    By  Goldwin  Smith. 

"  Mr.  Goldwin  Smith  has  added  another  to  the  not  inconsiderable  roll 
of  eminent  men  who  have  found  their  delight  in  Miss  Austen.  .  .  .  His 
little  book  upon  her,  just  published  by  Walter  Scott,  is  certainly  a  fas- 
cinating book  to  those  who  already  know  her  and  love  her  well ;  and  we 
have  little  doubt  that  it  will  prove  also  a  fascinating  book  to  those  who 
have  still  to  make  her  acquaintance."— <Spec<ator. 

LIFE  OF  BROWNING.    By  William  Sharp. 

"This  little  volume  is  a  model  of  excellent  English,  and  in  every  respect 
it  seems  to  us  what  a  biography  should  be." — Public  Opinion. 

LIFE  OF  BYRON.    By  Hon.  Roden  Noel. 

"  The  Uon.  Roden  Noel's  volume  on  Byron  is  decidedly  one  of  the  most 
readable  in  the  excellent  'Great  Writers'  series." — Scottigh  Leader. 

LIFE  OF  HAWTHORNE.    By  Moncueb  Conway. 

"  It  is  a  delightful  causerte— pleasant,  genial  talk  about  a  most  interest- 
ing man.  Easy  and  conversational  as  the  tone  is  throughout,  no  important 
fact  is  omitted,  no  valueless  fact  is  recalled ;  and  it  is  entirely  exempt  from 
platitude  and  conventionality." — The  Speaker. 

LIFE  OF  SCHOPENHAUER.    By  Professor  Wallace. 

"We  can  speak  very  highly  of  this  little  book  of  Mr.  Wallace's.  It 
is,  perhaps,  excessivt^ly  lenient  in  dealing  with  the  man,  and  it  cannot 
be  said  to  be  at  all  ferociously  critical  in  dealing  with  the  philosophy." — 
Saturday  Review. 


London :  Walter  Scott,  Limited,  24  Warwick  Lane. 


GREAT    WRITBRS-continued. 
LIFE  OF  SHERIDAN,    By  Lloyd  Sanders. 

"To  say  that  Mr.  Lloyd  Sanders,  in  this  little  volume,  has  produced  tha 
best  existing  memoir  of  Sheridan,  is  really  to  award  much  fainter  praise 
than  the  work  deaery ea."—M(mchester  Examiner. 

LIFE  OF  THACKERAY.    By  Herman  Merivale  and  F.  T.  Marzials. 
"The  monograph  just  published  is  well  worth  reading,  .  .  .  and  the  book, 
with  its  exofllent  bihliography,  is  one  which  neither  the  student  nor  th» 
general  reader  can  well  afford  to  miss." — Pall  Mall  Gazette. 

LIFE  OF  CERVANTES.    By  H.  E.  Watts, 

"  We  can  commend  this  book  as  a  worthy  addition  to  the  useful  series 
to  which  it  belunirs." — London  Daily  Chronicle. 

LIFE  OF  VOLTAIRE.    By  Francis  Espinassb. 

George  Saintsbury,  in  The  Illustrated  London  Keion,  says:— "In  this 
little  volume  the  wayfaring  man  who  has  no  time  to  devour  libraries  will 
find  most  things  that  it  concerns  him  to  know  about  Voltaire's  actual  life 
and  work  put  very  clearly,  sufiSciently,  and  accurately  for  the  most  part." 

LIFE  OF  LEIGH  HUNT.    By  Cosmo  Monkhousb. 
LIBRARY  EDITION  OF  "GREAT  WRITERS,"  Demy  8vo,  2s.  6tl. 


London .  Waltkr  Scott,  Limited,  24  Warwick  Lane. 


SELECTED  THREE-VQL.  SETS 

IN    NEW    BROCADE   BINDING. 

6s.  per  Set,  ia  Shell  Case  to  match.     May  also  be  had  bound  In 
Roan,  with  Roan  Case  to  match,  9s.  per  Set. 


THE  FOLLOWING  SETS  CAN  BE  OBTAINED— 
POEMS    OF 


WORDSWOETH 

KEATS 

SHELLEY 


LONGFELLOW 

WHITTIER 

EilERSOJf 


Hoaa 

ALLAN  RAMSAY! 
SCOTTISH  MINOR 
POETS 


SHAKESPEARE 
BEN  JONSON 
MARLOWE 


SONNETS  OF  THIS 

CENTURY 
SONNETS  OF  EUROPE 
AMERICAN  SONNETS 


HEINE 

GOETHE 

HUGO 


COLERIDGE 
SOUTH EY 
COWPER 


BORDER  BALLADS 
JACOBITE  SONGS 
OSSIAN 


CAVALIER  POETS 
LOVE  LYRICS 
HEERICK 


CHRISTIAN  YEAR 
IMITATION  of  CHRIST 
HERBERT 


AMERICAN  HUMOR- 
OUS VERSn 

ENGLISH  HUMOROUS 
VERSE 

BALLADES  AND 
RONDEAUS 


EARLY  ENGLISH 

POETRY 
CHAUCER 
SPENSER 


HORACE 

GREEK  ANTHOLOGY 

LAND OR 


GOLDSMITH 

MOORE 

IRISH  MINSTRELSY 


WOMEN  POETS 
CHILDREN  OF  POET» 
SEA  MUSIC 


PRAED 

HUNT  AND  HOOD 

DOBELL 


MEREDITH 
MARSTON 
LOVE  LETTERS 


BURNS'S  SONGS 
BURNS'S  POEMS 
LIFE  OF  BURNS, 

BY  BLACKIE 


SCOTTS  MARMION,  &C. 
SCOTT'S  LADY  OF  LAKB 
LIFE  OF  SCOTT,       [<fcc. 
By  Prof.  YONGE 


London:  Walter  Scott,  Ltd.,  24  Warwick  Lane,  Paternoster  Row. 


SELECTED  THREE-VOL.  SETS 

IN    NEW   BROCADE    BINDING. 

6s.   PER  SET,   IN  SHELL   CASE   TO  MATCH. 

Also  Bound  in  Roan,  in  Shell  Case,  Price  9s.  per  Set. 


O.  IV.  Holmes  Set— 

Autocrat  of  the  Breakfast- 
Table. 

Professor  at  the  Breakfast- 
Table. 

Poet  at  the  Breakfast-Table. 


Landor  Set — 

Landor's  Imaginary  Conver- 
sations. 
Pentameron. 
Pericles  and  Aspasia. 


Three  English  Essayists — 
Essays  of  Elia. 
Essays  of  Leigh  Hunt. 
Essays  of  William  Hazlitt 


Three  Classical  Moralists- 
Meditations  of  Marcus 

Aurelius. 
Teaching  of  Epictetus. 
Morals  of  Seneca. 


Walden  Set— 
Thoreau's  Walden. 
Thoreau's  Week. 
Thoreau's  Selections. 


Famous  Letters  Set — 
Letters  of  Byron. 
Letters  of  Chesterfield. 
Letters  of  Burns. 


Lowell  Set — 

My  Study  Windows. 
The  English  Poets. 
The  Biglow  Papers. 


Heine  Set — 

Life  of  Heine. 
Heine's  Prose. 
Heine's  Travel- Sketches 


Three  Essayists — 
Essays  of  Mazrini. 
Essays  of  Sainte-Beuve. 
Essays  of  Montaigne. 


Schiller  Set — 
Life  of  Schiller. 
Maid  of  Orleans 
WiUiam  Tell. 


Carlyle  Set — 
Life  of  Carlyle. 
Sartor  Resartus. 
Carlyle's  German  Essays. 


London ;  Walter  Scott,  Ltd.,  24  Warwick  Lane,  Paternoster  Row. 


IBSEN'S    PROSE    DRAMAS. 

Edited  by  WILLIAM  ARCHER. 

Complete  in  Five  Vols.    Crown  8vo,  Cloth,  Price  3/6  each. 

Set  of  Five  Vols.,  In  Case,  17/6;  in  Half  Morocco,  in  Case,  32/6. 

"  We  seem  at  last  to  be  shown  men  and  women  as  they  are  ;  and  at  first  it 
is  more  than  -we  can  endure.  .  .  .  All  Ibsen's  chatacters  speak  and  act  as  if 
they  were  hypnotised,  and  under  their  creator's  imterions  demand  to  reveal 
themselves.  There  never  was  such  a  mirror  held  up  to  nature  before  :  it  is 
too  terrible.  .  .  .  Yet  we  must  return  to  Ibsen,  with  his  remorseless  surgery, 
his  remorseless  electric-light,  until  we,  too,  have  grown  strong  and  learned  to 
face  the  naked — if  necessary,  the  flayed  and  bleeding— reality." — Speaker 
(London). 

Vol.  I.  "A  DOLL'S  HOUSE,"  "THE  LEAGUE  OF 
YOUTH,"  and  "THE  PILLARS  OF  SOCIETY."  With 
Portrait  of  the  Author,  and  Biographical  Introduction  by 
William  Archer. 

Vol.  n.  "GHOSTS,"  "AN  ENEMY  OF  THE  PEOPLE," 
and  "THE  WILD  DUCK."     With  an  Introductory  Note. 

Vol.  HL  "LADY  INGER  OF  OSTRAT,"  "THE  VIKINGS 
AT  HELGELAND,"  "THE  PRETENDERS."  With  an 
Introductory  Note  and  Portrait  of  Ibsen. 

Vol.  IV.  "EMPEROR  AND  GALILEAN."  With  an 
Introductory  Note  by  William  Archer. 

Vol.  V.  "ROSMERSHOLM,"  "THE  LADY  FROM  THE 
SEA,"  "HEUDA  GABLER."  Translated  by  William 
Archer.    With  an  Introductory  Note. 

The  sequence  of  the  plays  in  each  volume  is  chronological ;  the  complete 
set  of  volumes  comprising  the  dramas  thus  presents  them  in  chronological 
order. 

"  The  art  of  prose  translation  does  not  perhaps  enjoy  a  very  high  literary 
status  in  England,  but  we  have  no  hesitation  in  numbering  the  present 
version  of  Ilisen,  so  far  as  it  has  gone  (Vols.  L  and  II.),  among  the  very 
best  achievements,  in  that  kind,  of  our  generation." — Academy. 

"We  have  seldom,  if  ever,  met  with  a  translation  so  absolutely 
idiomatic. " —  Glasgow  Herald. 

LONDON :  Waltbe  Soott,  Limited,  24  Warwick  Lane. 


THE   CANTERBURY   POETS. 

Edited  by  William  Sharp.    I.n  1/-  Monthly  Volumes. 

Cloth,  Red  Edges       -         Is.       \   Red  Roan,  Gilt  Edges,  2s.  6J. 
Cloth,  Uncut  Edges   -        Is.       i   Pad.  Morocco,  Gilt  Edges,   5s. 


THE  CHRISTIAN  YEAR   By  the  Rev.  John  Keble. 

COLERIDGE Edited  by  Joseph  Skipsey. 

LONGFELLOW   Edited  by  Eva  Hope. 

CAMPBELL Edited  by  John  Hogben. 

SHELLEY Edited  by  Joseph  Skipsey. 

WORDSWORTH   Edited  by  A.  J.  Symington. 

BLAKE    Edited  by  Joseph  Skipsey. 

WHITTIER    Edited  by  Eva  Hope. 

FOE    Edited  by  Joseph  Skipsey. 

CHATTERTON   Edited  by  John  Richmond. 

BURNS.    Poems Edited  by  Joseph  Skipsey. 

BURNS.    Soners   Edited  by  Joseph  Skipsey. 

MARLOWE Edited  by  Percy  E.  Pinkerton. 

KEATS Edited  by  John  Hogben. 

HERBERT Edited  by  Ernest  Rhys. 

HUGO    Translated  by  Dean  Carrington. 

COWPER Edited  by  Eva  Hope. 

SHAKESPEARE'S  POEMS,  Etc Edited  by  William  Sharp. 

EMERSON  Edited  by  Walter  Lewin. 

SONNETS  OF  THIS  CENTURY Edited  by  WilUam  Sharp. 

WHITMAN    Edited  by  Ernest  Rhys. 

SCOTT.    Marmion,  etc Edited  by  William  Sharp. 

SCOTT.    Lady  of  the  Lake,  etc.    Edited  by  William  Sharp. 

PRAED  Edited  by  Frederick  Cooper. 

HOGG    Edited  by  his  Daughter,  Mrs.  Garden. 

GOLDSMITH Edited  by  William  Tirebuck. 

LOVE  LETTERS.  Etc By  Eric  Mackay. 

SPENSER Edited  by  Hon.  Roden  NoeL 

CHILDREN  OF  THE  POETS Edited  by  Eric  S.  Robertson. 

JONSON    Edited  by  J.  Addington  Symonds. 

BYRON  (2  Vols.) Edited  by  MathUde  Blind. 

THE  SONNETS  OF  EUROPE Edited  by  S.  Waddington. 

RAMSAY   Edited  by  J.  Logie  Robertson. 

DOBELL    Edited  by  Mrs.  DobeU. 


London:  Walter  Scott,  Limited,  S-t  Warwick  Lane. 


THE   CANTERBURY  POETS-continued. 

DAYS  OF  THS  YEAR „ With  Introduction  by  WiUiam  Sh&rp 

POPE    Edited  by  John  Hogbeni 

HEINE    Edited  by  Mrs.  Kroeker. 

BEAUMONT  AND  FLETCHEA  Edited  by  John  S.  Fletcher. 

BOWLES.  LAMB.   &c Edited  by  William  Tirebuck. 

EARLY  ENGLISH  POETRY Edited  by  H.  Macaulay  Fitzgibbon. 

SEA  MUSIC    Edited  by  Mrs  Sharp. 

HERRICK Edited  by  Ernest  Rhys. 

BALLADES  AND  RONDEAUS Edited  by  J.  Glceson  White 

IRISH  MINSTRELSY    Edited  by  H.  Halliday  Sparling'. 

MILTON'S  PARADISE  LOST EiUtedby  J.  Bradshaw,  M.A.,  LL.1). 

JACOBITE  BALLADS Edited  by  G.  S.  Macquoid. 

AUSTRALIAN  BALLADS Edited  by  D.  B.  W.  Sladen,  B.A. 

MOORE   Edited  by  John  Dorrian. 

BORDER  BALLADS  Edited  by  Graham  E.  Tomson. 

SONG-TIDE   By  Philip  Bourke  Marston. 

ODES   OF  HORACE Translations  by  Sir  Stephen  de  Vere,  Bt 

OSSIAN Edited  by  George  Eyre-Todd. 

ia:.FIN  MUSIC    Edited  by  Arthur  Edward  Waite. 

BOUTHEY Edited  by  Sidney  E.  Thompson. 

CHAUCER  Edited  by  Frederick  Noel  Paton. 

POEMS  OF  WILD  LIFE Edited  by  Charles  G.  D.  Roberts,  M.A. 

PARADISE  REGAINED Edited  by  J.  Bradshaw,  M. A.,  LL.D. 

CRABBE Edited  by  E.  Lamplougb. 

DORA  GREENWELL    Edited  by  William  Dorling. 

FAUST  Edited  by  Elizabeth  Craigmyle. 

AMERICAN  SONNETS   Edited  by  William  Sharp. 

IJijrDOR'S  POEMS  Edited  by  Ernest  Radford. 

GREEK  ANTHOLOGY Edited  by  Graham  E.  Tomson. 

HUNT  AND  HOOD Edited  by  J.  Harwood  Panting. 

HUMOROUS  POEMS Edited  by  Ralph  H.  Caine. 

LYTTON'S  PLAYS Edited  by  E.  Farquharson  Sharp. 

GREAT  ODES Edited  by  William  Sharp. 

MEREDITHS  POEMS Edited  by  M.  Beth»m- Edwards. 

PAINTER-POETS Edited  by  Kineton  Parkes. 

WOMEN  POETS  Edited  by  Mrs.  Sharp. 

LOVE  LYRICS Edited  by  Percy  Holburd. 

AMERICAN  HUMOROUS  VERSE Edited  by  James  Barr. 

MINOR  SCOTCH  LYRICS Edited  by  Sir  George  DongUa. 

CAVALIER  LYRISTS Edited  by  WiU  H.  Dircks. 

GERMAN  BALLADS Edited  by  Elizabeth  Craigmyle. 

SONGS  OF  BER ANGER Translated  by  William  Toynbee. 

HON.  RODEN  NOEL'S  POEMS.  With  an  Introduction  by  E.  Buchanan. 
SONGS  OF  FREEDOM.  Selected,  with  an  IntrodacUon,  by  H.  S.  Salt 
CANADIAN  POEMS  AND  LAYS  ....  Edited  by  W.  D.  Lighthall,  M.A. 
CONTEMPORARY  SCOTTISH  VERSE.    Edited  by  Sir  Geo.  Douglas. 


NEW  EDITION  IN  NEW  BINDING. 

In  the  new  edition  there  are  added  about  forty  reproductions 
in  fac-simile  of  autographs  of  distinguished  singers  and  instru- 
mentalists, including  Sarasate,  Joachim,  Sir  Charles  Hall^, 
Paderewsky,  Stavenhagen,  Henschel,  Trebelli,  Miss  Macintyre, 
Jean  G^rardy,  etc. 


Quarto,  cloth  elegant,  gill  edges,  emblematic  design  on 

cover,  6s.     May  also  be  had  in  a  variety 

of  Fancy  Bindings. 

THE 

Music  of  the  Poets  : 

A  MUSICIANS'  BIRTHDAY  BOOK. 

EDITED  BY   ELEONORE   d'eSTERRE  KEELING. 


This  is  a  unique  Birthday  Book.  Against  each  date  are 
given  the  names  of  musicians  whose  birthday  it  is,  together 
with  a  verse-quotation  appropriate  to  the  character  of  their 
different  compositions  or  performances.  A  special  feature  of 
the  book  consists  in  the  reproduction  in  fac-simile  of  auto- 
graphs, and  autographic  music,  of  living  composers.  Three 
sonnets  by  Mr.  Theodore  Watts,  on  the  "Fausts"  of  Berlioz, 
Schumsinn,  and  Gounod,  have  been  written  specially  for  this 
volume.  It  is  illustrated  with  designs  of  various  musical 
instruments,  etc.;  autographs  of  Rubenstein,  Dvorak,  Greig, 
Mackenzie,  VUliers  Stanford,  etc. ,  etc. 

London :  Walter  Scorr,  Lid.,  2*  Warwick  Lan« 


sr 


THE  LIBRARY 

UNIVERSITY  OF  CALIFORNIA 

Santa  Barbara 


STACK  COLLECTION 


THIS  BOOK  IS  DUE  ON  THE  LAST  DATE 
STAMPED  BELOW. 


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