-uv ^^=C CD C-NR III LjJ J] -^ Ln ii ^ REESE LIBRARY UNIVERSITY OF CALIFORNIA Received ^^dtyc£^^,^^:^_ _ i88/_ Accessions No.ZS^/_^_^___ Shelf No. db Oh = ^o Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/effectsofmachineOOnichricti THE EFFECTS OF MACHINERY ON WAGES BY J. S. NICHOLSON, B.A., SCHOLAR OF TRINITY COLLEGE, CAMBRIDGE. Die Lohnfiage ist eine Culturfrage." — Bbkntano. BEING THE CAMBRIDGE COBDEN PRIZE ESSAY CAMBRIDG¥t DEIGHTON, BELL InD CO. LONDON: GEORGE BELL AND SONS. 1878, <5 Cambrilific : FEINTED BY C. J. CLAY, M.A. AT THE CNIVIIKSITY PRESS. /S/oG VJ? COBDEN PKIZE. A Prize of the value of £60, to be awarded once in three years, was offered to the University by the Committee of the Cobden Club, and was accepted by Grace of the Senate, June 1, 1876. The following are the conditions : 1. The Prize shall be awarded for an Essay on some subject connected with Political Economy, and shall be payable in money to the successful Candidate. 2. The Candidates for the Prize shall be members of the University who, having commenced residence, are not of more than three years' stand- ing from their first Degree on the first day of the Easter Term of the academical year in which the subject is announced. 3. The Adjudicators shall be the Professor of Political Economy for the time being, and two persons to be nominated by the Vice-Chancellor and the Donors respectively, and appointed by Grace of the Senate : and the Prize shall be awarded to the writer of the Essay which, in the judgment of at least two of the Adjudicators, certified under their hand to the Vice- Chancellor, is the most deserving. 4. The subject of the Prize shall be fixed by the Adjudicators or a ma- jority of them ; but the subject of the first Prize shall be fixed by the Donors, subject to the joint approval of the Vice-Chancellor and the Pro- fessor of Political Economy. 5. The times when the Adjudicators shall be appointecl, the subject announced, and the Essays sent in, shall be fixed from time to time by Grace of the Senate. 6. The Prize shall be first awarded some time in the year 1877. 7. The Donors of the Prize reserve to themselves the right to determine the said Prize on giving one year's notice to the Yice- Chancellor. 8. The Prize shall be called the " Cobden Prize." The adjudicators of the 1877 Prize were Professor Fawcett, M.P., Sir John Phear (now Chief Justice of the Supreme Court, Ceylon), and Prof. Cliffe Leslie. PHEFACE. In the following pages greater space has certainly been devoted to the evil than to the good results of machinery, and lest I be supposed to hold pessimist views on the subject a word of explanation seems desirable. I observed whilst collecting materials for my Essay, that though many writers of repute had clearly and fully discussed the good effects of Machinery, hardly one had noticed the evils inherent in its use. For example, the veteran economist M. Chevalier devotes quite a third part of his Cours d'Economie Politique (first published I believe in 1840) to an elaborate and detailed eulogium of Machinery, but he passes over the dangers, or treats them as if they were of small Importance. Instead therefore of attempting to re-write what had been done so well already, I thought it better to give my attention to the parts of the subject which had received but little attention, and merely to notice in their proper place the results already fully treated of by other writers. For example, under the heading " Machinery as auxiliary to labour," I thought it sufficient simply to state the two important positions that the increased cheapness in commodities w^as so far a rise in real wages, and that the enormous increase in our wealth due to machinery must ceteris paribus increase the demand for labour, and thus raise wages. Further exposition on this part seemed especially unnecessary since Prof. Cliffe Leslie in his Essay on VI PREFACE. the course of Agricultural Wages in Europe had demonstrated historically that wages had risen through these influences. In cases where the good results seemed to me to have been insufficiently stated, I endeavoured to put them in a clearer light ; e.g. the increase of skill required by machinery and the better distribution of labourers. Still in attempting to make a slight advance on previous writers, and if possible to write what might be of some practical use, I was induced in general to give more consideration to the dangers of machinery, which appeared to me to have been almost entirely overlooked. The first step towards the amelioration of the evils caused by Machinery is to see distinctly what the evils are. The greatest, I take it, lies in the fluctuations and precariousness of wages, the inevitable result of a system of large industries. In many cases the proxi- mate cause of this evil is over-production, and working-men have not unnaturally rushed to the conclusion that limitation of the supply is a remedy for all their troubles. But this is apply- ing to freely produced commodities the laws which govern monopoly values only. Over-production I have pointed out can only exist " relatively to the demand and the means of distribu- tion," and in this sense is very likely to occur. But it is useless to consider one factor to the exclusion of the others ; supply can only be perfectly adjusted by a perfect knowledge of the demand and the means of distribution, both of which depend on a number of varying causes. Let working men, then, instead of attempting the impracticable task of regulating supply, consider the remedies which lie within their reach ; in the first place, let them imitate the masters in saving when times are good, and secondly let them use their political influence towards the improvement of international relations, for it is to international disturbances that the most serious fluctuations are due. No operation on supply could have been effective in stopping the over-production consequent on the conclusion of the Franco- German war, but the high wages then obtained might have been saved to a greater extent, and if France had not been under personal government the war might never have occurred. PREFACE. Vll My apology for apparently wandering sometimes from the "strictly economic" consideration of the subject lies in my conviction of the truth of Mill's^ assertion, *'that there are perhaps no practical questions, even amongst those which approach nearest to the character of purely economic questions, which admit of being decided on economical premises alone. " J. S. NICHOLSON. ^ Principles of Political Economy, Preface. Trinity College, Cambridge. 11 June, 1878. INTRODUCTION. § 1. Scope and Method. In any economic inquiry two perfectly distinct methods are possible, and for making choice of one to the exclusion of the other some justification seems necessary. The differences between the two have been ex- pressed in various forms, of which the correlative terms "induc- tive and deductive" and "positive and hypothetical" seem to mark the implied distinction most clearly. It is true that much has been written to prove on the one hand that the so-called deductive school do not take as premisses' "arbitrary figments of the mind formed without reference to concrete existences;" and, on the other hand, it has been urged that so-called "induc- tive " writers are really as deductive as their opponents. Again, the "positive" writers never profess to give all the causes of any social phenomena, and "hypothetical" writers always lay stress on the possibility of disturbing causes which may vitiate their results. But whatever may be said as to the logical identity of the two methods, it cannot be denied that the "regulative ideas" which dominate them are essentially op- posed: the one lays most stress on facts, the other on "theory'." We may take as an example of the deductive method Ricardo's chapter on the Effects of Machinery on Wages ; or^^ ^ still better, a paper by Tozer published in the Cambridge Phi- ^ losophical Transactions (Vol. yi.). From their point of view ^ machinery has or has not a good effect on the wages-receiving Ny"' 1 Cairnes, Log. Meth. ii. p. 48. 2 [Cf. On Method ; Mill, Auguste Comte and Positivism, pp. 82- Englische Gewerkvereine, 2te Theil, pp. 311—314.] C. E. ; Brentano, 1 THE EFFECTS OF class according as the gross revenue is or is not increased. Now no doubt if their assumptions be granted and disturbing causes not taken into account, the solution obtained is perfectly correct, but it passes over all those parts of the problem which have the greatest practical importance; it leaves out of account those effects which working men are actually discussing at the present time; it does nothing, to use Bacons phrase, "for the relief of man's estate." With this method of course the ques- tion appears at first sight to be considered in a far more scientific spirit. The conclusions arrived at apply to all times and places; subject to disturbing causes, it is true, but these are by implication subordinate. As Cairnes says, with practical considerations Political Economy of this sort has no more to do than Geology with coal mines. The other method narrows economic inquiries to certain definite times and places ; it looks for its problems in societies either actually existing or which have existed in the historic past, and it considers the legal, social and intellectual conditions of those societies as important factors to be taken into account. For example, instead of assuming perfect freedom of competi- tion and deducing therefrom, certain results, it attempts to discover how far in any system of industry competition is free and to investigate the force of actual counteracting causes. The former method has given us the doctrine of the Wages Fund, the latter Brentano's Englisclie Gewerkvereine. Though fully conscious of the difficulties attending the so- called Inductive Method, I have ventured to adopt it in the hope that the results obtained, although meagre, may have some bearing on questions which demand a practical solution. In the present condition of Economic History I have found it very often impossible to get in a compendious statement the different classes of facts required, and in some cases I have been com- pelled simply to indicate positions which demand further investigation. So far as I know. Chevalier (Cours d' Economic Politique) is the only writer who has treated the question in all its bearings at all adequately, and he writes in an optimist view which appears to me unwarranted. Under the conviction however that in investigating the effects of Machinery on Wages it would be more profitable to MACHINERY ON WAGES. S limit the inquiry to a particular time and country, I have only considered that period of economic history which is known as the era of Machinery, and for the most part only the effects produced in England. This period may be said to extend from the time of publication of the Wealth of Nations to the pre- sent day. Before proceeding to details it is necessary to define what is to be understood by Wages and Machinery, and some discussion of the Wages question seems requisite partly in order to avoid endless repetition, and partly to indicate in what different ways Machinery may affect Wages. § 2. Wages, "Wages" is usually defined as the reward for any personal exertion, at whatever time and in whatever form received by the labourer. According to this definition, the capitalist who undergoes any intellectual exertion in considering whether an investment will pay receives wages; the "under- taker" (if we may adopt Mill's literal rendering of "entrepreneur" and "Unternehmer") receives wages for his exertions in plan- ning work and supervision : clerks, clergymen and schoolmasters all receive wages, and finally the large class of domestic servants and still larger class of labourers hired by employers are also said to receive wages. That a term which has such a wide denotation has a connotation which is practically useless in Poli- tical Economy, and at any rate would be useless in this essay, seems evident as soon as stated ; and in fact writers who have avowedly adopted the above definition have in practice taken a meaning nearer that in popular use. On such a definition the Wages-fund theory, as held by Mill till near his death, could never have been formulated. It was only by confining the term "Wages" to the two classes last mentioned that the theory could have been enounced. At all events the present writer does not use "wages" in the large sense indicated above ; there could only result endless confusion or most cumbrous phraseo- logy. It would surely be misleading to say that wages at the commencement of the present era were high because though some of the labourers received hardly enough to live on, others had for "wages of superintendence" several thousands a year. It would be far better to make avowedly with Walker, in the most able work on the Wages question in our language, the 1—2 4« THE EFFECTS OF restriction which Mill makes tacitly, and to define wages as "the reward of those who are employed in production with a view to the profit of their employers and are paid at stipulated rates ^" As Ludlow and Jones remark, the phrase "we are all working men" as used by the brain-worker has a truth in it, but becomes a cant when carried too far. If it is requisite to give the denotation of "working classes'* more precisely, I would refer to the work of Young on Labour in Europe and America, where the wages of the "working classes" are fully tabulated. To the wages then of this class, which constitutes according to Leone Levi's estimate roughly two-thirds of our present population, I shall confine my attention, and only investigate the "wages" of the other classes so far as they influence the former. But if the wages-receiving class may be conveniently re- stricted, it seems impossible to restrict the meaning of "wages" as equivalent to reward in a similar way. On the contrary, I think that the definition should be extended. That is to say, it seems necessary to investigate the REAL not the nominal wages of labour, and to say that wages consist of all the desirable things, using the word "thing" in its widest sense, which accrue to the labourer in virtue of his position as such. Thus wages may be said to rise if commodities become cheaper, if dwelling-houses are improved, or if the habits and tastes of the labourers become more cultivated. At any rate, all will allow that improvements in the sanitary conditions of working and still more any reduction in the hours of labour, although the muscular exertion is proportionately increased, really constitute a rise in wages. As Adam Smith rather naively remarks^, "the greater part of people understand better what is meant by a quantity of a particular commodity than by a quantity of labour. The one is a plain palpable object, the other an abstract notion which although it can be made suffi- ciently intelligible is not altogether so natural and obvious." In determining^ the rate of waf]fes it is obvious that we must have regard to the ^^ quantity of labour ^ and in any philosophic sense of the term it is clear that a greater quantity of labour is in- volved in working in an atmosphere stifled with dust and pro- 1 Wages Question, p. 217. ^ Wealth of Nations, p. 14, McCullocli's edition. MACHINERY ON WAGES. 5 .ductive of "shoddy fever" than in raising an equal number of foot-pounds in the open. In fact the only tenable definition of the reward of the labourer seems to lead up to the position of Brentano that the Lohnfrage is a Culturfrage. Having thus decided what is meant by "wages" in its broadest sense and who receives the wages, it seems desirable to state once for all the position that will be taken up in this essay on the question of the determination of MONEY- wages. The question seems to fall under three heads : I. Between what limits, if such can be determined, must wages permanently remain ? II. How is the actual point normally determined ? III. What are the principal causes oi fluctuations in wages ? I. First, then, what is the superior limit above which wages cannot permanently rise ? The answer is plain : this must depend primarily on the efficiency of the labourer. If we take the extreme case and suppose that all capitalists should become so philanthropic as to be content with wages of superintendence of no greater amount than that received by most of their employes, it is manifest that if more is constantly distributed than the capital brings in, the capital must gradually dwindle away. This has recently been the case with certain co-operative societies. But the efficiency of labour only determines the quantity of a commodity which will be produced ; something else must be taken into account, viz. the money-value of this product. That money- wages are paid from tlie price obtained for the commodity is gradually taking the rank of an axiomatic proposition, the self-evidence of which seems to have been obscured for so long a time by two circumstances. lu the first place, ever since Adam Smith laid bare the fallacies of the Mercantile System, any statement of an economic law in a money form seems to have been considered ipso facto fallacious : it plainly bore the mark of the beast : if the law were really sound it should have been stated in terms of cloth and linen : money could only have been introduced to gloss over an error or a difficulty. In no other way does it seem possible to account for the manner in which, as soon as the inestimable advantages of money as a measure of 6 THE EFFECTS OF value in actual commerce have been descanted on, its importance as an explicator of ideas in print has been overlooked and everything explained on a system of barter. It is only just to say that this stricture does not apply to Cournot, who always works out his problems in terms of money, which he forcibly compares to the "mean sun" of astronomers. But whatever be thought of this historical explanation, it must be remarked, in the second place, that an important matter of fact has been over- looked or rather looked at in the wrong way : and this again has perhaps arisen from never speaking of the capitalist as having certain funds at his disposal, but a certain command of the ne- cessaries of life. A manufacturer may or may not balance his books at the end of the year, but he certainly does not sell his goods at the end of a year and then get paid : he is continually selling and being paid (or at least discounting his bills). The importance of continuity in sale and production cannot be over- estimated, though of course it is not assumed that it holds of all commodities, when agricultural produce and ironclads are glaring instances to the contrary. To return from this digression. The first position maintained is that money- wages are paid out of the money received for the product, and .this amount is the superior limit above which money -wages cannot permanently rise; and that further the amount to be divided plainly depends on the amount produced, which is a function of the efficiency of labour. It would be out of place here to discuss the question how the value of one commodity in reference to another is determined ; this so far as influenced by Machinery will be discussed later. The inferior limit below which wages cannot permanently fall, is in general given in Bicardo's formula of ''necessary wagesy Labourers must have enough to live on, or they will \ not live themselves : and enough to feed their children, or their children will not live. Between these limits which are in themselves variable — for example, a man might live a long time on two shillings a week, and the consequent degradation might utterly destroy the efficiency of his labour, so that there would not really be more than two shillings to receive — between these limits wages \ permanently lie, and it is necessary to consider MACHINEEY ON WAGES. 7 II. Secondly, the causes which determine where the point shall be under normal conditions. (a) That comjjetition both as between the labourers themselves and as between the capitalists has a considerable effect, is so evident that the effect has in general been over- estimated. But this competition must again depend partly on the numbers of labourers and capitalists, partly on the mobility of labour and capital. {13) The capitalist w^ishes to get as large profits as possible : the labourer will not, if he can help it, let wages approach the lower limit. This diversity of interests, which in practice seems greater than it is — for as Mill long ago pointed out, high wages may mean cheap labour — this supposed diversity of interests leads to a struggle of some kind. The combatants may fight with or without certain legal or social restrictions. Taking '' quantity of labour " in the sense given above, we see that in England, even at the present day, law and custom both influence wages. Not to mention the prominent cases of factory legislation, the laws regulating the treatment of sailors and the laws against truck, the slightest reflection shows that the laws relating to education and the Poor-laws have a considerable effect on wages. Again, custom as distinguished from written law is by no means without influence. For instance, it makes a difference whether labourers bargain separately for their wages or combine together and make their agreements in masses. The opponents of Trades-Unions, for example, say their tendency is to make wages unfair, to pay good and bad alike, that they are opposed to piecework, and^ make other allegations of the same sort, allowing that in these things at least they are to a certain extent successful. Thus it is clear that Trades-Unions have at any rate a considerable effect on wages, whether they can or cannot raise them, for on the above showing they affect the way in which the " Wages- fund" is distributed. It would besides be easy to enumerate instances of customs more properly so called, of which those prevailing in the building trade are the most curious. III. So far the Wages question has been regarded solely as a statical problem ; it is necessary thirdly, to glance at the cause of fluctuations in wages. It was noticed above that 4)^ 8 THE EFFECTS OF money-wages are limited by the price of the product. Experi- ence shows that wages vary with this price. The author of '^Market Fluctuations" says\ "We find that wages in a manu- facturing district rise and fall almost invariably with the rise ^ and fall of the market for the manufactures produced by that labour ; " and the same fact has been stated by Brassey. Thus fluctuations in wages depend on all those complicated causes which give rise to the fluctuations in the price of a commodity. A change of fashion, a distant war, still more a war at our own doors, a change in the mode of production, a good harvest — these, and they are but examples, all influence wages. Thus we get as a general result that Wages depend on a vast complexity of causes which it is impossible to put under one grand law. Several attempts have been made in this direction, the most celebrated of which is the Wages-fund theory, and the most curious von Thiinen's law^ of Jap. Hence it is evident that Machinery may influence Money- Wages in many ways : it may afl'ect them by operating on the superior limit : it may give rise to different relations /f} between masters and men : it may increase or diminish the mobility of labour : it may or may not increase the continuity of employment. But there is still a preliminary difiiculty to solve. What is Machinery ? § 3. Machinery. Here, as before in discussing the defini- tion of Wages, we shall find it the simplest plan to fix the meaning of the term by considering its denotation. We could of course say vaguely that by Machinery we mean any mechani- cal contrivance which is auxiliary to labour. But in this way we should include the simplest tools and contrivances, even those in use in th6 prehistoric age ; and this would be to discuss the question on abstract grounds, whilst it was distinctly stated at the outset that the aim of the present essay was to trace the effect of those aids and substitutes for labour characteristic of the present age, to contrast the eff'ects of complex Machinery and of simple tools. Still the distinction aimed at is not altogether the same as that indicated by Babbage^ as existing between making and manufacturing: it is rather my intention to ^ Rationale Mark. Fluct. p. 156. 2 cf, Scliaffle, Kaiut. u. Social, p. 666. 3 Babbage, Econ. of Mach.. and Man., p, 100. MACHINERY ON WAGES. 9 consider those characteristics of Machinery, using the word in its widest sense, that have in any way influenced Wages during the present era, leaving out of account or only introducing by way of contrast those appliances to which labour had before adapted itself, those which had, so to speak, become permanent in the industrial economy of the previous era, just as a Ricardian, in discussing rent, considers improvements in land after a certain time as parts of the " original and indestructible powers of the soil." What then are these characteristics of Machinery which are to be considered ? Manifestly for the present purpose it would be of little service to describe, as Babbage does, the different kinds of machines and classify them. The only fruitful method seems to consist in considering in detail the different ways in which Machinery may affect wages as alluded to above. It is true that this mode of procedure involves a certain amount of repetition, but the advantages of looking at the subject from different points of view seem so great as to overbalance this inconvenience. When above I speak of confining the subject to the present era, I must not be understood to imply that, to use a mathematical term, I shall only consider the dynamics of the subject, i.e. the momentary effects of new inventions; for I think it no less important to discuss the conditions under which our industry has come to be carried on, and which may for the present at least be considered stable or rather statical. After making trial of various different methods of dividing the subject, the following division has been adopted, the justifi- cation for which can only appear in the sequel. I shall accordingly proceed to treat Machinery as affecting Wages in the following ways : — I. As a substitute for labour, II. As auxiliary to labour. III. As affecting the division of labour. IV. As concentrating labour and capital, Y. As affecting their mobility, especially as regards ''foreign trade,'' under which term I include the grouping of industries. 10 THE EFFECTS OF MACHINERY ON WAGES. Throughout the inquiry I shall use the term " Wages " as embracing all the desirable things the labourer receives for his work, and by " Work " I shall understand quantity of labour as defined above. Very often, no doubt, the most important and always the most obvious element in Wages is the money received, and in quantity of labour the number of hours' work done ; but in treating of a period which has Avitnessed such vast changes in production and organization, it is clear that many other factors are too important to be neglected. f L 1 15 Iv A ]{ Y UNIVKl^^ilTV OF CALIFORNIA. CHAPTER I. EFFECTS OF THE SUBSTITUTION OF MACHINERY FOR LABOUR. The question here to be discussed may be said to include the dynamics of the subject. I shall here investigate simply the immediate or closely proximate effects of the substitution of machinery for labour. It has generally been acknowledged that as labourers are paid out of circulating capital any increase of fixed at the expense of circulating capital must pro tanto tempo- rarily injure the labourers. It is indeed self-evident that if a machine does what was before done by men, the immediate effect, with which we are here alone concerned, is to throw those "^ men out of employment. As Chevalier well puts this objection to the introduction of machines, " Si a I'aide d'une machine on fait avec un ouvrier la besogne qui exigeait auparavant le travail de dix, on en met neuf sur le pav^." The usual answer^ Chevalier's included, is to lay stress on the temporariness, and to assure workmen that eventually machinery does increase the number of men employed. The validity of this answer must depend entirely on the meaning given to the word ''temporarily." It is a small consolation to a working man to be assured that in a year's time he will have plenty of work, if in the mean time he must remain breadless. Loss of work even for a few weeks may . , exhaust his credit and the affection and means of his friends, and there may remain nothing for him but starvation, unless Poor-laws or private charity come to the rescue. Thus it is clear that " temporary " must be interpreted in reference to the general position of the labourer. If he has accumulated a little money he may emigrate ; if he is intelligent, he may discover /^ 12 THE EFFECTS OF there is work for him in another part of the country : but sup- posing he has neither " funds nor friends," and has no know- ledge worthy of the name except of the twenty square miles in his immediate neighbourhood, if he looks upon the workhouse in the light of a prison, and his narrow intellect sees nothing in the future but misery and starvation, then, to such an one the introduction of machinery is and must be an evil. In order therefore to solve the problem for the immediate future of a change, it is worth while attempting to discover the law, if there be one, of the introduction of machinery on the one hand, and on the other what causes tend to increase the mohilitij of labour, under which expression all remedies seem to fall. The importance attached to this aspect of the question has arisen from the supposition (which itself depends mainly on a misinterpretation of the events which occurred at the com- mencement of this century) that a sudden introduction of machinery on a large scale might possibly happen. If however ^it is found that in the literal sense of the words such a thing is almost impossible, and that both the suddenness and the extensive adoption of improvements tend to diminish with the progress of society, results founded on the supposition are of little interest and no value, and we may turn to characteristics of greater importance. I am quite aware of the truth which Jevons^ allows in treating of the progress of invention from another point of view, that " the extension of the sciences and the arts is the last thing that can be subjected to rigorous laws. " But I also hold with him that " in a long course of progress, like that which marks the rise of civilization in England, we may observe tendencies, not free from exception, of an instructive kind." The law or tendency which, as I read it, History reveals, is — I. That a radical change made in the methods of invention will be gradually and continuously adopted ; and II. That these radical changes, these discontinuous leaps, tend to give place to advances by small increments of invention. I. Suppose in the first place that a radical change is intro- duced by some ingenious producer into a certain manufacture, 1 Jevons, Goal Question, p. 68. MACHINERY ON WAGES. 13 which will lead to the employment of less labour. That this invention will be adopted in process of time by all other manu- facturers is evident, but I maintain that in comparison with the ^ mobility of labour the change will be slow. We have an instance of radical change in the steam-engine. Watt's patent for a " method of lessening the consumption of steam and fuel in fire engines" was published on Jan, 5th, 1769, and it may be said that the movement of substituting steam as a motive power is not yet over. Every day we hear of steam being extended to some new employment (e.g. steam ploughs) and to some out-of-the-way district. The history of the power-loom again shows that the adoption of an invention is comparatively slow. In 1813 there were not more than 2400 power-looms at work. In 1820 they were increased to 14,150. In 18^g)they were 100,000. But the important thing to notice is that in this time the number of hand-looms had increased rather than diminished \ A striking instance offers itself as I write : I find the following in Capital and Labour (vol. iv. p. 77). "The introduction of machinery into the watch manufactory of Swit- zerland must, it is feared, have a disastrous effect on those engaged in that industry. In the cantons of Neufchatel, Geneva, and Berne there are, it is estimated, about 40,000 men and women engaged in watchmaking, and the division of labour has been applied to such an extent that 120 persons are required to produce a complete watch. Each person makes in one year about 40 watches, or one in nine days. Considering the fact that an American factory hand turns out 190 machine made watches per year, and that 1000 workmen can make 366 watches per day, it is evident that changes must occur in the Swiss watch trade. If the Swiss employers introduce machinery and the demand for their watches remains as it is, they could afford employment to only 8,400 persons instead of 40,000 as at present. Should they continue to employ hand labour there will be a rapid decline in their trade. It cannot however be reasonably supposed that the effects will he so sharp and decided. Watchmaking machinery is costly, &c." As far as I am aware there is only one large manufactory for watches by machinery -j^ in England : and it is clear that the adoption of machinery 1 Porter, Progress of the Nation, p. 186. 14 ' THE EFFECTS OF must be gradual. The more enterprising the capitalist the sooner he will make the change, but the change will not in reference to labour be sudden. In the instances quoted above, the workmen so to speak receive timely warning and may- prepare against the evil. However highly organised a society becomes, changes of a radical kind are met with a good deal of resistance. There is the expense involved, there are the vested interests to overcome, there are the customs and prejudice of consumers, and above all there is the intelligence required in the capitalist. That the change must come there can be no doubt, but that it will come comparatively slowly and give the workmen time to get other employment is no less true. The change will at first be adopted by some enterprising capitalist in the centre of a highly competitive region, and will gradually extend to the manufactories of less competent masters in more remote districts. II. But secondly the law as stated asserts that inventions tend to become more continuous, to advance by "little increments," not by leaps. For instance, even in the infancy of power-loom weaving, where we might have expected greater rapidity, we have only gradual improvements. This is clearly shown by Porter \ "A very good hand weaver 25 or 80 years of age will weave two pieces of shirting [of specified quality and dimension^] per week. In 1823 a steam-loom weaver about 15 years of age attending 2 looms could weave nine similar pieces in a week. In 1826 a steam-loom weaver about 15 attending to 4 looms could weave 12 similar pieces in a week, some 15. In 1833 a steam-loom weaver from 15 to 20, assisted by a girl of 12, attending to 4 looms could weave 18 pieces." Certainly in one way the changes here noticed are rapid, but changes can with regard to labour only be called sudden with reference to the mobility of labour. The progressive character of invention might be illustrated ad infinitum. As Porter remarks^ "It would fill many large volumes to describe the numerous inven- tions which during the present century have imparted facility to our manufacturing processes, and given perfection to the articles made." There is however one striking proof of the gradual development of improvements. Notwithstanding the 1 Porter, Progress of the Nation, p. 183. ^ md^ p. 266. MACHINERY ON WAGES. 15 chaotic condition of our Patent Laws and the expense connected with them, no less than 5000 patents are annually registered in — England. Examination shows that nearly all are minor discoveries. A friend informs me that in many manufactures in this country, improvements are made which it is considered not worth while to patent, but for which the discoverer is amply rewarded by the manufacturer. An article in the Scientific American^ traces the progress of American invention with similar results. Thus "out of 2910 patents issued in the year 1857, 152 were for improved cotton gins and presses, 164 for improvements in the • steam engine, and 198 for novel devices relating to railroads and improvements in rolling stock." Results of the Law of Continuity. This doubly progressive nature of invention operates in favour of the labourer in two ways. In the first place, in all probability the market by the increased cheapness of the commodity consequent on the use of ^ machinery will he extended pari passu with the improvements, and thus the workers will not be thrown out of employment . - even temporarily. And in the second place, supposing there is no extension of the market, the labourers may be absorbed in other employments, or emigrate when the change is not very . sudden and extensive. In this they are favoured by everything *-+r — which tends to promote the mobility of labour, and apart from the increase with civilization of the education of the workinsf classes attention will be drawn to the fact in the sequel that machinery has above everything increased this mobility. So far the question relating to the introduction of machinery has been discussed entirely from the orthodox standpoint : the working class has been spoken of as composed of similar units, and we have considered simply the effect of substitutive machinery as "momentarily" throwing them out of employment. But in the short investigation which it was necessary to make concerning wages it was seen that the determination of wages / (between certain limits) depended on the relations existing between masters and men, and we have now to consider whether the introduction of machinery makes any alteration in these relations, and further we have to examine the effects of 1 Quoted in Capital and Labour, May 9, 1877. I 16 THE EFFECTS OF machinery in changing the character of the labour required. We consider the labouring class no longer as consisting of a definite number of similar units but of an indefinite number of sub-classes with more or less conflicting interests. It is at any rate quite clear that the mere conversion of circulating into fixed capital is only one element, probably a minor element, in the problem as it was worked out at the commencement of this era. For the history of all our textile manufactures shows that the improvements in machinery by cheapening production and thus extending the market ^ave employment to an ever-increasing number of hands, and yet with the apparent prosperity, the A condition of the working classes got worse and worse. Take for example the cotton industry : it was shown by Babbage^ that between 1822 and 1832 the total number of workmen increased about one-third, while the amount of manufactured goods was, owing to improvements in machinery, three times as great as before. But he goes on to say '' in considering this increase of employment it must be admitted that the 2000 persons thrown oat of work are not exactly of the same class as those called into employment by the power-loom. A hand-weaver must possess bodily strength which is not essential for a person attending a power-loom : consequently women and young persons of both sexes from 15 to 17 years of age find employment in power-loom factories." He concludes by saying that " during the whole of this period the wages and employment of hand-loom weavers have been very precarious." The same result is arrived at by Brentano^in a detailed examination of all the chief industries of the country after they were disorganized by the introduction of machinery. It was not because fewer hands were employed, but that apprentices were employed instead of journeymen and women and girls instead of men. Skilled labour of a certain order became valueless, and if machinery called into being skill of a different kind that skill was not fixed and embodied in the same labourers as before. This destruction of the labourer's only capital is one of the most pernicious effects of machinery, and when it happens there is and can be no remedy. Still if the changes are gradual the evil consequences are not so great, so that here again we see the importance of the Law of Continuity. 1 Quoted in Prog. Nat., p. 196. 2 Brentano, Gilds and Trades Unions, part v, (Eng. edit.). MACHINERY ON WAGES. ll^P- A?^^<^ A radical change in production involved a no less radical -_^ "3^ change in distribution, and the latter was no less injurious to the ,,/*. -< working classes than the former\ First of all the Statute of / \^j Apprentices fell into disuse. Under this statute 'Hhe posi- " '.^^^^x;:^ tion of the workmen was secure. The long term of service assured them the regularity of employment which they desired above everything. The magistrates were, according to the direc- tions of the Act, to assess the wages so as to yield unto the hired person, both in the time of scarcity and in the time of plenty, a convenient proportion of wages. The restrictions as to apprentices prevented a too great competition from lowering the skilled workmen to the level of common labourers." The intro- duction of the factory system, which was necessarily involved in the employment of machinery, destroyed all these restrictions on self-interest. Laissez-faire ruled supreme. The old laws inevi- tably repealed were not replaced by new ; and combinations on the part of the workmen, by which alone they could cope with the masters, were expressly forbidden. Again, the conditio7is under which the labourers worked rendered that work far more exhausting. They worked in an atmosphere poisoned with dust, worked for such long hours that it seems marvellous their race was perpetuated. Wages fell only more and more with the degradation of labour, while the "quantity of labour" rose. Children began to work in factories at five years of age, and worked the same hours as adults. They look up with their pale atid sunken faces, And their looks are sad to see; For the man's hoary anguish draws and presses Down the cheeks of infancy. * * # * * * * "For all day, the wheels are droning, turning, The wind comes in our faces, Till our hearts turn, our heads with pulses burning, And the walls turn in their ])laces. Turns the sky in the high window blank and reeling, Turns the long light that drops adown the wall, Turn the black flies that crawl along the ceiling, All are turning, all the day, and we with all. 1 Brentano, Gilds, d-c. (Eng. ed.), 104 C. E. 2 18 THE EFFECTS OF And all day the iron wheels are droning, And sometimes we could pray, *0 ye wheels' (breaking out in a mad moaning) *Stop ! be silent for to-day'." England's apparent prosperity was like the luxurious vege- tation which rises from the poisonous swamps of the Tropics : at a distance, to the casual observer, her trade throve and prospered, but below it rested on the absolute misery of thou- sands of her inhabitants. It is not requisite here to re-write this saddening page of our history, to recite once more in detail "the crimes committed in thy name, O Liberty!" They stand recorded in Parliamentary reports : they provoked the scorn and indignation of Byron, and, moved by them, England's greatest poetess wrote her finest lyric. How this state of things was gradually remedied may be read in the pages of Ludlow and Lloyd Jones : how machinery, like a tamed wild beast, was made to contribute to this good work is told by Edler von Plener (^History of Factory Legisla- tion), For it is a curious fact that in ameliorating the condition of the labourers machinery played an important part. It was only by the introduction of machinery, that manufacturers were enabled to carry out the provisions of the Factory Laws without lessening the numbers or reward of the labourers. Thus machinery was, through legislation, directly beneficial to the labourer. It has been too often assumed, under the influence in some shape or another of the theory of "necessary wages," that the capitalist and the "consumer" are the only persons who can be benefited by improvements in production, that the capitalist who first introduces machinery will at first get larger profits, but that "almighty" competition will finally transfer the benefit to the "consumer,'* and if the labourer is to be benefited at all by machinery it is in his capacity of "consumer." The fallacy of looking at the question entirely from the consumption point of view is well expressed by Thompson^ one of the National Econo- mists of America. "He (the consumer) is an innocent ens logicum manufactured by the same process of abstraction by which the economists derived their economic man, 'a covetous machine 1 Social Science and National Econovuj, p. 269. MACHINERY ON WAGES. 19 impelled to action only by avarice, and the desire for progress/ That is, they cut away or stole away (abstracted) the better half of the real being, and persisted in treating the remaining human fragment, if we can call it human, as a living reality." This language is perhaps rather too rough and vigorous, but the writer may be excused if we consider the simple fact that two- thirds of our population are labourers in the strictest sense of the term, and are engaged in production on the average teijn hours every day of the year. Surely it is clear that under these'/ circumstances an improvement in the conditions of the labourer's work is of far greater importance than an increase in the reward he receives. Cheap calico and plenty of it is a good thing, but moderate hours of labour, a healthy atmosphere, freedom and education for children, are infinitely more important. Wages may rise either by reduction of the quantity of labour or by an increase in the reward. And in the case I am now considering the former element was operated on by the introduction of ma- chinery. Mill himself has indeed alleged that labour-saving inven- tions have not lightened the toil of any human being : they ^ have only enabled a greater number to live the same life of . drudgery and imprisonment. Yet what is more natural than to suppose that other things remaining in statu quo improvements in production might be turned to the improvement of the con- dition of the labourer as producer ? Now not only is this sup- position quite possible in theory, but it has actually happened in fact. When factory legislation was first attempted, the manufacturers offered a most vigorous resistance : they extolled the advantages of free competition; they appealed to "the fundamental laws of political economy;" they made sneers at paternal government ; they insisted on the right of a man to be » free; they said such legislation was an indignity put on the human nature of both masters and men : all these things they offered as reason for their opposition, but that opposition was really founded on another economic law. For this factory legislation " appeared to threaten them with a serious loss, both through a diminution in the number of goods manufactured and an increase of expenditure \" 1 Plener, p. 96. 2—2 20 THE EFFECTS OF That class legislation may be carried too far, that paternal : government is at best the lesser of two evils, that self-reliance is an inestimable blessing worth some sacrifice to attain, are pro- positions in political philosophy too obvious to be disputed : nay more, I would say, they require to be specially emphasized at the present day. But by 1840 ample time had been given to Laissez-faire to develope freedom and self-reliance, and what had been the result ? The feelings between the labouring and employing classes had become more and more embittered, and the old reliance on Law had been replaced in the workmen by the new reliance on Trades-Unions. But with such vast evils as were alluded to above, Trades- Unions were as unable to cope as was free competition. Hence in the determination of a *' reasonable natural wage" in the sense in which "wages" has been used throughout this Essay, legislation was absolutely necessary. How this legislation improved the condition of all parties concerned is recorded in Plener's History^ already referred to, a work which but for the nature of the subject-matter might be called dry and uninteresting, so little is the historian moved by aught but facts. "When" he says "the masters had learned to bow before unavoidable necessity, they endeavoured to regain in the ground of the law what they were in danger of losing by its being acted upon. In order to produce in the shorter working /^day the same quantity of goods as hitherto, the system of working had to be made more productive of greater results. This could be done in two ways : first by an increased amount of work done by the operators, and next by the introduction of better and faster machinery'* Again he writes (p. 98), " The reduction of the working day could only be balanced by an increase of productiveness through the machinery ^ and though the astonishing progress of machinery in the first half of the present century. , .was to a great extent caused by the general condition of production, it is an indisputable fact that it was factory legislation which gave the direct impulse to the intro- duction of the time-saving machines." Thus once at least in our history the introduction of labour- saving machinery at once saved the labour of the labourer and 1 Plener, Hist. Fact. Leg. MACHINERY ON WAGES. 21 thus raised his real wages. It is true that commodities did not become so cheap as they might otherwise have done, but it must be remembered that the greatest number of consumers is taken from the labouring class, so that in this instance the " consumer " gained in his capacity of producer. Similarly Brentano has noticed that when improvements are made in machinery, the Unions try to gain all the advantages, and in certain conditions this seems justifiable. The Statical Problem. So far I have considered the immediate consequences of the introduction of machinery, or more properly of the transition from one mode of production to the other. But if we suppose the industrial organisation of society to have become stable, we may still examine the effects of machinery as one of the most important factors. It is accordingly necessary to examine the question as one of economic statics, and first of the effects of machinery as auxiliary to labour. CHAPTEH II. MACHINERY AS AUXILIARY TO LABOUR. Jones* draws a useful distinction between "auxiliary" and " sustaining " capital, and a similar distinction may be made be- tween the labour-saving and auxiliary characters of machinery. Not only does the actual introduction of machinery as a sub- stitute for labour affect wages at the moment, but the fact that man's labour is increased in efficiency by mechanical aids, has important bearings on the reward of that labour. And first of all, we may just glance at the tremendous ^ increase in the efficiency of labour which arises from the use of machinery. Chevalier^ has made some interesting investigations on the productive powers we now possess, compared with those of an earlier period. His results are of course very rough, and still greater changes have been made since the work was written (1840), but they present the matter in a startling way. For instance, he deduces that one workman performs at the present time (1840) in spinning cotton, an amount of work equivalent to that of -320 men before 1769. In a note^ appended to the last edition (1855), he says that, owing to subsequent improvements, the ratio should be expressed by 700. Striking as Chevalier's results are, however, they pale before those obtained by Dr Engel (quoted in Econonfiist, March 10, 1877). " The aggregate steam power in use in the world is at present 1 Lit. Bern. (edit. Whewell), p. 63. Cf. Bagehot, Postulates II. 2 Cf. Hearn, Plutology, 170. Babbage, Econ. Man. 6. 3 Chevalier, Cours d'Econ. Polit. i. p. 319. THE EFFECTS OF MACHINERY ON WAGES. 23 8 J millions horse power employed in stationary engines, and 10 millions horse power in locomotive engines. This force is maintained without the consumption of animal food, except by the miners who dig the coal, and the force maintained in their muscles is to the force generated by the product of their labour as 1 to 1000. This steam power is equal to the working force of 25 millions of horses, and a horse consumes three times as much food as one man. The steam power is therefore equivalent to the saving of food for 75 millions of human beings. Further, three power-looms attended by one man produce 78 pieces of cotton fabric, against 4 pieces pro- duced by one hand-loom worked by one man in the year 1800. A carpenter's planing machine does the work of 20 men. A M'^Cormick's corn reaper doubled the grain produce in the United States by enabling the available labour to harvest the extended crops." i. The most obvious result of this wonderful decrease in the expenditure of human toil in producing commodities, is that these commodities fall in price. This fall means, ceteris paribus, a rise in wages, i.e. real wages. Even supposing the labourers, by excessive multiplication of numbers and competi- tion, reduced their wages to anything approximating to the " ne- cessary wages " of Ricardo, they would still gain by the increased cheapness of commodities : for any economy of necessaries, and some economy is always possible, gives an increased command over luxuries. This result is so obvious in itself, and has been developed to such an extent by all the optimist writers on machinery, that it seems unnecessary to dwell on it farther. Definite tables of the relative values of corn and manufactures at different periods have been obtained by Thorold Rogers and Young {Labour in Europe and America), and that the working classes can, if they choose, buy these luxuries, is shown by the amount of alcoholic liquors annually consumed by them. ii. Increase of productive power necessarily involves, human nature remaining the same, increased accumulation of capital, and as Adam Smith ^ observed, " It is not the actual greatness of national wealth but its continual increase, which occasions a rise in the wages of labour. It is not accordingly in the richest 1 P. 31 (M^CuUoch edit.). 24 THE EFFECTS OF countries, but in the most thriving, and in those which are [ growing rich the fastest, that the wages of labour are I highest." The increase of wealth in England, for instance, in this cen-bury, has been enormous : and, unless the industrial conditions attendant on the present modes of production have given more power to the employer than the employed in the question of distribution, it is evident that the wages-receiving class must have benefited. That they have done so, is shown partly by their savings (in Savings Banks &c.), partly by their consumption of luxuries. Here again it seems un- necessary to go further into detail, for the proposition main- tained is simply that part of the Wages-fund theory which has never been contradicted — the more circulating capital there is engaged in a trade, the higher, ceteris paribus, will wages be. iii. So far nothing but good seems to result from the use of the auxiliary machinery, but serious evils have been pointed out as inherent in the large system of production, and these must be carefully considered. The power of machinery is from \/ one point of view too great and continuous : machines breathing fire and smoke, those slaves of iron and steel, as Cournot calls them, can go on night and day at high pressure. Hence results the tendency of machinery to add enormously to the toil of the labourers, to increase the day's labour both in length and in- tensity. Trades-Unions object to piecework because, to use a rowing phrase, the best men set too fast a stroke for the comfort of the average workman, but the strength of the strongest is as water compared with the strength of machinery. This objection to machines has been forcibly stated by Chevalier^ : " Les ma- chines imposent a I'homme des travaux ^crasants.. Faible ap- pendice d'un puissant appareil, petit engin lid k un engin immense, I'ouvrier doit se plier a ses allures, se prater a la rapidity de ses mouvements, le suivre dans sa course incessante, en un mot, il doit marcher, tourner, travailler, autant qu'il plait a la machine infatigable." Experience shows that the objection thus stated should not be dismissed, as Chevalier contemptuously does, with — " pure rhetorique que tout cela ! " The following facts from Robert Owen'^ may be added to those 1 Gours d'Econ. Polit. i. 366. * Ap. Young, Labour Eur. and Am. p. 180, note. MACHINERY ON WAGES. 25 given above under Substitution, on the excessive hours of labour produced by the use of machinery : "As a rule we find children of 10 years old worked regularly 14 hours a day, with but half an hour's interval for the midday meal, which was eaten at the factor}^ In some cases mills were run 15, and in exceptional cases, 16 hours a day with a single set of hands, and the owners do not scruple to employ children of both sexes from the age of eight." It is not necessary to repeat what was said above on the necessity of factory legislation : fortunately we seem to have approached the limit of Government interference, and amongst the masters a better state of feeling has grown up in relation to their workmen. iv. But another danger of an entirely opposite kind lurks in this immense power of machinery, which is continually showing its reality, and remedies for which will, it is to be feared, be the fruit of long years of tentative adaptation to the new environment. What all sensible working men desire, what the advocates of Trades-Unions say is their chief object, is to get a " steady sufficient wage" but it has been proved inductively ^^ that the greatest fluctuations in price occur in those commodities which require for their production the most fixed and the least circulating capital. From the modern point of view, w^hich regards wages as paid out of the price of the product^ this is perhaps the most important of the results of machinery. 7r Fluctuations in wages and discontinuities in employment are two of the greatest evils which can befall the labouring classes. - To show that the dangers here alluded to are not fanciful it will be necessary to examine briefly the theory of " Gluts!' Mill's chapter on " Excess of Supply " is one which has per-^ haps aroused more opposition, not to say ridicule, from men of business and "national economists" (e. g. Bowen) than any other doctrine of the Ricardian school The author of the Rationale of Market Fluctuations, for example, alludes to the theory in these terms : " a political economist would say it is not so : " would show that ' a family in a desert island ' would produce more clothing, if it found itself less harassed by the necessity of producing more food. But the political economist would have been wrong if he speculated in organized markets on such a 1 Cf. § 2 on Wanes. 26 THE EFFECTS OF basis : his views would not be practical." And it must be ob- served that Mill lays^ stress on the importance of liis conclusions practically. " The point is fundamental," he writes ; " any difference of opinion in it involves radically different conceptions of political economy, especially in the practical aspect!' Here, it seems to me, we have one of the most striking examples of the dangers of the deductive method. Mill thought he had taken into account all the elements of the question, and so in the face of facts, and in spite of verification, spoke of the op- posite doctrine of Sismondi, Malthus, and Chalmers, as " self- contradictory," and "a fatal misconception." And yet the ele- ment overlooked is so obvious, that Chevalier, who is, however, not fully aware of its importance, does not think it requisite to go to the trouble of proof. " L'industrie est une puissance nee d'hier, et comme toutes les puissances qui sont en voie de formation, elle est mal assise, mal organisde." If capital and labour possessed perfect mobility, if they could be transferred immediately from one employment where they are not wanted ■ to another where they are, if all the commodities manufactured ' could find perfectly organised markets where they could be exchanged at once, and if no other "disturbing" cause inter- fered, then Mill's doctrine might be not only true hypothetically but be of some value in its "practical aspects." Certainly the question is one of the most important in Economics, and owes its origin, as Sismondi pointed out, to the introduction of machinery. Take, for example, the present con- \ dition of industry. The restricted confidence, the rigorous ap- \ plication of reduction and economies, lessened wages, and failures of numberless commercial and manufacturing concerns, are mainly due, according to the Commercial Review of 1876, in the Economist^, to the over-production which ensued after the Franco-German war. No doubt this over-production began in the coal and iron trades, but it did not end there ; industry is now so sensitive that what affects one branch ipso facto affects all the rest. I do not think that what people call " gluts " are due entirely to the existence of machinery, or are even inherent in its use ; credit, free trade, and political influences are important factors, but still it is undeniably true that but for the tremen- 1 Issue of March 10, 1877. MACHINERY ON WAGES. 27 dous powers of machinery, a great depression of trade would-^ not be so long or severe. Machinery operates in two ways. In the first place, " when supply is overtaken, the demand prices fly up out of all proportion to the deficiency \" and as a consequence machinery is put to its greatest productive use, so that the capitalist may make hay while the sun shines. Wages rise, and if it is an important branch of industry such as coal or iron, the number of men employed makes an appreciable differ- ence in the demand for other commodities. The demand may not be very greatly in excess of the normal demand ; that makes no difference, prices will fly up all the same, and masters will strain every nerve to realise the consequent high profits. But when supply is found to have fully overtaken the demand, there is a tendency to depress prices just as disproportionately. Wages are reduced ; a general depression ensues, and then the second effect of machinery appears. The capitalist cannot afford to let his machines stand idle, for then he will not only lose his "minimum of profits" but the machinery itself will deteriorate, and when another revulsion occurs he will not be able to get back his old hands. Thus the continuity of employment caused by machinery is not altogether so advantageous as has been supposed : only part of the labourers are employed at reduced wages, and their employment only prolongs the depression. It does not seem necessary to discuss further under this division of the subject the fluctuations and precariousness of wages to which machinery has given rise : the question will be further discussed from the point of view of "foreign" trade and distribution of industries. 1 Ration. Mark. Fluctns. p. 12. CHAPTER III. MACHINERY AS AFFECTING THE DIVISION OF LABOUR. One of the most obvious results of the employment of machinery is the ever-increasing subdivision of labour, but the consequences of this subdivision as regards wages are not so self-evident. It will be most convenient to consider this part of the subject under two heads, (i) in relation to the " quantity of labour" involved in a day's work under the new system as compared with the old ; (ii) in relation to the reward obtained, "quantity of labour" being supposed constant. i. Division of Labour as affecting "quantity of labour J* Some economic writers have supposed that division of labour naturally degrades the labourer. Bowen\ for instance, writes : " The advantages of Division of Labour, one must admit, are subject to one serious drawback. Few things tend so effectually to dwarf the mind and stunt the faculties as the incessant and long continued repetition of a very simple task — a mechanical movement which is repeated with as little effort of thought as if it were performed by a machine." The same objection has been crystallized in a mot of Lemontez : " C'est un triste t^moignage a se rendre que de n'avoir jamais lev^ qu'une sou- pape ou de n'avoir jamais fait que la dix-huitieme partie d'une epingle." How far these allegations are true theoretically or practically has never been fully examined. Chevalier passes by the difficulty on the other side ; he simply says the workmen of Paris are as a matter of fact more intelligent than the country people. But this seems scarcely sufficient answer, and we may 1 American Pol Econ. p. 51. THE EFFECTS OF MACHINERf ON WAGES. 29 quote Adam Smith to the opposite effect on the comparative intelligence of artizans and agricultural labourers. It is well known too that sailors, fishermen, and mountaineers are far more intelligent than those of an equal rank who are not exposed to an environment so constantly changing. Here, I think, we have the clue to the right answer to the question. Machinery of itself does not tend to develops the mind as the^ sea and mountains do, but still it does not necessarily involve deterioration of general mental ability. Surely it must pro'^ tanto be considered a blessing that the energy of the labourer is not exhausted in his day's work : that his thoughts are free to wander though his hands are tied : and that after his work is over he is not too exhausted to betake himself to mental im- provement. A more forcible objection might be drawn from the physical side. Bodily exercise is in itself beneficial, and labour-saving apparatus may be carried too far for the health of the labourer. The sanitary conditions under which machinery places the labourers certainly require the careful attention of the legis- lator. Take, for example, the carding process in cotton. " The operatives who had to carry it on showed the effect of the dust in their pale, emaciated faces and in the bronchial affections from which they constantly suffered, causing cough, angemia, debility, and other formidable symptoms of pulmonary mis- chief \" Again, there are diseases and discomforts incident on the use of particular machines. These have to a certain extent been remedied by factory legislation and Government inspection, and above all by the development of higher notions of morality among the masters. Thus 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. ii. Let us examine now the effects of Division of Labour so far as arising from machinery on the reward of the labourer. The acquired skill of a labourer partakes partly of the nature of capital, partly of monopoly ; and in both respects the law holds, the greater the skill the greater, ceteris paribus, the 1 Bevan, Industrial Classes, ^depend directly or indirectly on the cotton industry alone. The important thing to notice is that what rules ' interna- tional trade ' is Reciprocal Demand, and this demand again depends on a multitude of variable elements. The imposition of a protective duty or any new tax by a foreign country may throw an industry into a state of depression ; with a crisis the pressure may become extreme, and with a war the industry may be utterly ruined. And not only are our markets liable to fluctuations from demand, but it must be observed that our raw materials are for the most part of foreign growth, and that coal and iron, the '* necessities " of machines, are of limited extent. With the cotton famine not yet forgotten, and th^ increased rise in the price of coal after the Franco-Prussian war fresh in our memory, it is superfluous to dwell on this point. The conclusion from f i this point of view is manifest : machinery has given rise to more 1 1 sudden and extensive fluctuations, and to greater precariousness of labour, than was the case in a simpler and more stable state of society. This result may seem to contradict an opinion generally held that foreign trade by increasing the number of markets tends to steady prices. The danger of depending on one foreign market has been forcibly stated by Adam Smith^: — "The industry of Great Britain, instead of being accommodated to a great number of small markets, has been principally suited to one great market. Her commerce, instead of running in a great number of small channels, has been taught to run principally in one great channel; but the whole system of her industry and commerce has thereby been rendered less secure, the whole state of her body politic less healthful than it otherwise would have been. In her present condition Great Britain resembles 1 P. 272, (McCuUocL). MACHINERY ON WAGES. 45 one of those unwholesome bodies in which some of the vital parts are overgrown, and which upon that account are liable to many dangerous disorders scarce incident to those in which all the parts are more properly proportioned. A small stop in that great blood-vessel which has been artificially swelled beyond its natural dimensions, and through which an unnatural proportion of the industry and commerce of the country has been forced to circulate, is very likely to bring on the most dangerous disorders upon the whole body politic. The expectation of a rupture with the colonies, accordingly, has struck the people of England with more terror than they ever felt for a Spanish Armada or a French invasion." This opinion — that the greater the number of markets the greater the steadiness of price — seems to me to be only true under certain conditions, conditions which at present do not hold. The enormous development of steam communication and the spread of the telegraph over the whole globe have caused modem industry to develope from a gigantic star-fish, any of whose members might be destroyed without affecting the rest, into a jie^a ^wov which is convulsed in agony by a slight injury in one part. The present depression of trade is felt just as acutely in America and even in our colonies as at home. 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 in prices, but at present the disturbing forces often outweigh altogether the supposed principal elements. Another danger, to which our merchants are continually calling attention, attends the dependence of our industry on foreign markets. England may be undersold. Against this there is one remedy which is entirely in our own power. Capitalists — even men like Brassey — cry out against Trades-Unions and assert that they will ruin our industries. The adequacy of the cause to the effect does not appear very evident, and the real danger is overlooked. Attention has already been called to the importance of technical education, and if we are undersold, the contemptuous neglect which English- men appear to entertain for this means of increasing the efiiciency of labour, will, I take it, be the principal cause. The 46 THE EFFECTS OF MACHINERY ON WA(JES. whole question is most fully discussed in Mr Scott Russell's work on Systematic Techiical Educatioiiy ch. iv. In this chapter is given a summary of the opinions of the most celebrated men, representing learned professions, applied science, engineering, education and manufacture. It is to be hoped that the opinion expressed by Mr Samuelson, M.P., is warranted when he says, "To the evils of such a condition not only our statesmen but also our people are rapidly awakening, and the disease once acknow- ledged, the remedy will soon be applied." This statement is certainly borne out by the action of men like Mason and Whit- worth and the members of the City Guild, while that the working classes are not insensible to the want is shown in the same work\ Our race, climate, and insular position, are guarantees that the process of underselling will not be very speedy, provided only we increase the efficiency of our labourers ; and the organi- sation — if I may use the phrase, the democracy of our capital gives us advantages which other nations will take years to 1 Scott Kussell, Syst. Tech. Educ, pp. 101, sqq. SUMMAEY OP RESULTS. The complexity of the problem and the method adopted of regarding the question from different points of view render it necessary to present in outline the results obtained, to compare generally the good and evil effects of machinery on the welfare of the labouring classes in the past and present, and, peering a little way into the obscurity of the future, to consider what prospects there are of the evil being eliminated and the good increased. In the introductory remarks on "wages'' an examination of the terms "reward" and "quantity of labour" led to the rejec- tion at once of the method of comparing prices and "nominal" wages at different times as giving any criteria of "real" wages. "Quantity of labour'' was defined in a similar way to that adopted by German writers as equivalent to ''expenditure of life-force": "reward" received a definition equally broad, as including all the desirable things accruing to the labourer in virtue of his position as such. With these definitions it followed at once that it was impossible to give any simple law for the deter- mination of wages, and an examination of the term "Machinery" led to the conclusion that machinery (defined historically, not abstractly) might influence wages in many different ways. I. The dynamics of the subject was then discussed, by which is meant the immediate and proximate effects of the "substitution of machinery for labour"-, — those effects which are due to the transition from one system to another. The sudden introduction on a large scale of labour-saving machinery has always been considered an evil, but the evil varies with the suddenness and the extensiveness of the change on the one hand, and the extension of the market and the mobility of labour on the other. I attempted to show that both the invention and adop- 48 THE EFFECTS OF tion of labour-saving machines tended to become more continuous^ the increments of change becoming smaller. And it is clear under these conditions that if there is any extension of the market on the reduction of prices effected by introducing machinery, the labourers may not be injured even temporarily. Still it was admitted that discontinuities would always occur, and then the only remedy appears to consist in increased mobility of labour. The preceding is the simplest case of the problem, and of very small interest and importance compared with the considera- tion of the complex social results which ensued on the introduc- tion of large factories. The old relations between masters and men, which had become comparatively stable by law and custom, were suddenly thrown out of gear ; skilled labour of a certain kind was replaced by unskilled ; the skill which was required was not embodied in the same workmen as before ; and finally the conditions, physical, intellectual and moral, in which the labourers were now compelled to work, led to a fearful degrada- tion of labour. These results, it may be said, are by no means matured, even at the present day. The relations between masters and men are not by any means in a satisfactory condition ; technical education (in England at least) is only in its infancy; and although factor}^ legislation has done a great deal, the conditions of work in large industries are still capable of vast improvement : in a word, industry has not yet adapted itself to the changes in the eiivironment produced by machinery. It was noticed as a subsidiary result that sometimes the labourers had succeeded in obtaining for themselves all the advantages caused by the improved machinery, that labour- saving machinery had, in certain instances, led to a reduction of the working hours, and of the ''quantity of labour!' II. The remainder of the discussion was mainly devoted to the examination of the statical side of the question, though of course it was not pretended that the two questions can be discussed quite separately. (1) Considering the effects of the enormous increase in the productive power of labour caused by machinery as auxiliary to labour, we saw (a) that the working classes were benefited with tiie '^i.-'k^.t-'"^ MA.CHINERY ON WAGES. ^ ^ ^ h \X^^ ^ ^ Test of the community by the increased Cheaptej«« of *apjiu- "j^'^.^] factured articles ; that this fall of price of commi6drt|es o6h,' stituted a rise m real wages, (fi) That the accumulation ot^j^A^^ capital was increased and consequently the demand for lab0\ir' (7) Against these advantages it was proved that the use' of machinery tends to excessive hours of labour ; and statistics were adduced to show that this allegation against machinery is not a mere offspring of the imagination. This evil has, however, been remedied to a great extent, partly by law, partly by custom. (h) Another danger inherent in the use of productive agents of such power as those now in vogue consists in the possi- bility of over-production in relation to the means of organisa- tion. Here it seems to me we have one of the most important effects of machinery. Wages are liable to fluctuations such as were never experienced before, and are far more precarious. Against this evil modem industry is still badly armed, and in the meantime all the labourer can do is to save when wages are high, so as to be prepared for a fall. (2) The effects of machinery on Division of Labour were next considered, with the following results % (a) Quantity of Labour seems to have been increased in many employments by the increased division of labour con- sequent on the use of machinery, not however so much on the mental side, as some writers have maintained, as on the physical. (/3) The use of machinery allows of a better distribution of labourers than formerly. Women and children find suitable employment in light work, whilst males above 18 devote them- selves to industries requiring greater energy. (7) The fact that masters all prefer piece-work ; and actual statistics of the differ- ence in wages in the same employment, with other considerations, were adduced to show that even in the use of simple machinery skill and general intelligence are required still more than formerly. (8) In connection with more complicated machinery the importance of technical education, by the aid of which the workman might hope to take a position equal if not superior to the small master of earlier times, was insisted on, and at the same time it was pointed out that the only safeguard, in case of the destruction of his fixed skill by new improvements, lay in the general cultivation of his intellectual and moral faculties. C. E. 4 50 THE EFFECTS OP (3) The effects of machinery in concentrating labour and capital were then examined : (a) It was proved both theoretically and historically that concentration naturally follows division of labour, though at the same time, in a short digression, attention was drawn to the fact that increase of national wealth consequent on the use of machinery naturally leads to the development of a number of small industries, {fi) The evils inherent in the system of large industries, and the consequent life in towns, so far as quantity of labour is concerned, were weighed, with results lamentable in the past, doubtful for the present, but promising for the future. Here again the necessity of legislation became apparent, and above all the development of a higher morality in both masters and men. (7) As regards the reward of the labourer, we saw that it was liable to severe fluctuations owing to the employ- ment of a large amount of ^oa^w^ labour and capital. {B) The question was then considered whether the workmen could hope to avoid these fluctuations ; and it was shown that the action of Trades- Unions, whatever their professions, intensified the effects last noticed and caused wages to vary with prices still more exactly, and this, it was remarked, is in reality equivalent to saying that the labourers get a share of the profits. It was then shown incidentally that partly owing to the immense abilities re- quired in the masters of large industries, partly to the low state of morality, co-operation for production was unable to give the labourers a greater .or surer share of the profits than they had already. (4) Here it was natural to make a transition to the general question of mobility of labour and capital, as affected by machinery. (a) This mobility was shown to depend on two factors, know- ledge and means of transport ; and facts were brought forward to show that both elements had, through what was called loco- motive and organizing machinery, been enormously developed. {P) The effects of this general development having by implica- tion been noticed before, attention was directed to the relative mobility of labour and capital, and it was shown that, to the disadvantage of the labourer, capital had gained in both parti- culars more than labour, the labour market being less organised MACHINERY ON WAGES. 51 than any other, and man the most difficult baggage to trans- port. (7) The special case of mobility by common consent, now designated international trade, under which is included the distribution of industries as well as foreign trade proper, was then briefly examined, especially in relation to fluctuations of wages ; and here again serious dangers to the labourers became ntanifest. (6) The dangers of being undersold were then con- sidered, and once more the importance of general and technical education became evident. Such are the particular results for the particular era con- sidered. These results have justified the method adopted, according to which it was said at the outset that a general answer applying to all times and places was impossible. Such an answer must depend on the systems of industrial organisa- tion, law, and morality dominant in the society we wish to con- sider. That every accession to "man's empire over Nature" may be productive of good to mankind at large no one will deny; but we must never forget that any increase in the material forces at our disposal involves an increase of intel- lectual and moral energy. "The state of every part of the social whole at any time is intimately connected with the contemporaneous state of all the others. Eeligious belief, philo- sophy, science, the fine arts, commerce, navigation, government, all are in close mutual dependence on one another, insomuch that when any considerable change takes place in one we may know that a parallel change in all the others has preceded or will follow itV If this be true, it is clear that an abstra<;t treatment of the commercial conditions apart from the rest can lead to no trust- worthy results. But restricting the answer to the Era of Machinery we have here considered, a comparatively general result may be given. The past. In reference to the past, for fifty years after the in- troduction of the improved processes of production which marked the commencement of the era, the working classes instead of benefit undoubtedly received injury. The civilized nations, Eng- land in particular, had developed forces they could not control ; ' Au/jiiste Comte and Positivism, p. 87. 52 THE EFFECTS OF the established laws and usages fell into desuetude, and there followed a general disorganisation of industrial society. The present. Though many advances towards stability have been made, the severe fluctuations in trade, the strikes and lock- outs, the recognised defects in the sanitary conditions of work, all point to inadequate adjustment even in the present. The process of adaptation to the new environment has been rendered le^ speedy than it might have been by the absurd extremes to which the doctrine of laissez-faire has been carried. This dogma, first enounced at a time when the laws affecting industry were so bad, that the greatest licence conceivable would have been better, was naturally received with great favour; it was supposed to be perfectly verified by. the success of Free Trade ; and has since been supported by a misinterpretation of the theory of evolution. Under the influence of this theory, scien- tific men feel inclined to trust to " survival of the fittest " to bring about the best state of things possible. But this is trusting to the lower instincts to do what Reason, " the highest of all instincts," is unable to perform ; it is an optimism more degrading and less justifiable than the fatalism of enervated Orientals. Aristotle said long ago^ " Law possesses a compulsory power, since it is reason proceeding from a certain prudence and intelligence ; and the law is not odious when it prescribes what is good. " Yet even now, instead of regarding Law as the highest product of progressive societies, people seem to imagine legisla- tion is a return to tyranny or paternal government. Such is not my opinion. As James Martineau^ says, "Two methods exist of aiming at human improvement : by adjusting circumstances without, and by addressing the affections within ; by creating facilities of position, or by developing force of character; by mechanism or by mind." Although ''mechanism" has done much, and this has been fully insisted upon, still I maintain that both Law and Morality, the influences affecting ** force of character, " must make great advances in the future before the working classes obtain all the benefits improved machinery renders possible. The future. The practical importance of the subject prevents ^ Quoted in J. Yeats, Technical History of Commerce, p. 430. MACHINERY ON WAGES. 53 US from resting content with indicating the probable effects of elements now existing, but compels us to inquire what new elements we should consciously strive to introduce in order to attain this end. I. First of all then, let us glance at what remains for governments to perform. If it is taken for granted that we have reached the limits beyond which legislation on sanitary conditions is not needed;, if we suppose that the new bill on the liability of employers for the injuries received by their workmen is, as Harriet Martineau would say, ''the result of a pseudo-philanthropy which is one of the disgraces of our time " ; if we suppose that no further laws on the employment of women and children are required ; still with all this, there are important matters which demand the consideration of governments. (1) In the first place, a better scheme of general and technical education is necessary. In respect to general educa- tion, taking the words in their narrowest signification, some- thing has already been done, but technical education is still left to competition and survival of the fittest. And yet, as Mr Twining^ writes after the fullest examination of the subject, "For giving our national industries a rate of progression equal to that of the age no less motive power will suffice than that of an institution on a national scale effectually supported, or still better actually constituted by Government." Again, the patent laws are in a chaotic condition, and yet it would be a great advantage to the nation if artizans were enabled to reap some of the fruits of their invention. Further, nothing is more destructive of the energies and morality of working men, than for them to imagine they are bound down by iron chains in the lowest grades of a modern caste system. It is no doubt true that there must always be hewers of wood and drawers of water, but no state of society can be considered incapable of improve- ment in which facilities are not offered to the best specimens of the lowest class to rise to any occupation for which they are adapted. Even Plato with all his aristocratic leanings admitted that if a golden child happened to be born of iron parents, he should be allowed to pass into the rank intended for him by ^Technical Training, p. 449. 54 THE EFFECTS OF Nature. It is clear that without a national system of education this promotion, except in rare cases, is impossible. (2) The New Era involves radical changes in international policy. It is a curious fact that Political Economy in its most rudimentary state arose from international relations. '*In order to understand what a market originally was, you must try to picture to yourselves a territory occupied by village com- munities, self-acting, and as yet autonomous, each cultivating its arable ground in the middle of its waste, and each, I fear I must add, at perpetual war with its neighbour. But at several points — points probably where the domains of two or three villages converged, there appears to have been spaces of what we should now call neutral ground. These were the markets \" The writer goes on to remind his readers how the Roman Jus Gentium, the foundation of modern International Law, was in part originally a Market Law. It is no less true, in these days, that Political Economy in its most important aspects, that is, when it attempts to solve completely practical problems, involves the study of international relations more highly differentiated. The doctrines of value of foreign trade, and by consequence the most important parts of the theory of taxation, manifestly rest on the relations subsisting between different countries ; capital has long since become cosmopolitan, and wages cur- rent in any one country are intimately connected with events occurring in different parts of the world. What direction legislation in thes^ matters should take, it would be presump- tuous to discuss in a superficial way at the conclusion of an essay on a special subject. Still attention may be drawn to the fact, that international relations are far behind the wants of the age. No one would recommend a return to a policy of isola- tion with an improved " balance of trade. " Still we see every day a further organisation of capital and labour, we see one country, notably our own, permitting the existence of its industry to depend on the passions of other nations, and with no security that a quarrel which it does nothing to originate may not lead to the destruction of its commerce and the misery of its inhabi- tants. II. But if there is much left for law, there is wanting, still 1 Maine, Vill. Comm., p. 192. MACHINERY ON WAGES. 55 more, a higher development of morality. ''Legislation has nearly expressed its inability to keep pace with the activity of man in discovery, in invention, and in the manipulation of accumulated wealth ; and the law even of the most advanced communities tends more and more to become a mere surface- stream, having under it an ever-changing assemblage of con- tractual rules with which it rarely interferes, except to compel compliance with a few fundamental principles, or unless it be called in to punish the violation oi good faith} T Men have a natural disinclination to regard morality as advancing ; they seem to imagine that the morality of one age is perfectly adapted to the wants of another. But morality has advanced undoubtedly, and this development must be fostered now more than ever. Theoretically many equally plausible schemes of distribu- tion may be maintained ; but these are the days of machinery and large capitals, and I cannot but think that if speculative philanthropists, like the Social-Democrats, would endeavour to remedy the defects of the present edifice rather than attempt a new construction on its ruins, they would probably do some practical good in the present, and at any rate they would, in case of failure, have the intellectual consolation of feeling assured that by this method alone has any verifiable progress taken place. Mr Bagehot, acting in this spirit, did not propose, because he saw abuses and dangers in our present banking system, that therefore everything should be demolished and reconstructed, but thought it sufficient to instil into the minds of the Directors of the Bank of England, under the pressure of public opinion, a due sense of their responsibility. In the same way I maintain that much good might be done to the working classes if a higher standard of morality were set before them : as the motto at the head of this essay states. The Wages Question is a question of Culture (using the term in its broadest sense). "It is not enough that by a decrease in the hours of labour actual hindrances in the way of the elevation of the working classes have been set aside. It is necessary that still more than ever positive contrivances and methods of culture ^ Maine, Ancient Law, p. 305. 56 THE EFFECTS OF MACHINERY ON WAGES. should be created, in order to throw open to the working classes den Zugang zu den Cultur fortschritten der Menscheit*." And in the masters no less than in the men, higher notions of morality are requisite. It is not denied that England can boast of many merchants who are fully alive to the social require- ments of the day, and who have hearts that respond to the appeal. There is, however, still room for the moral necessities of the age to be impressed upon our capitalists, whether by the calm historical method of Brentano or the passionate vehemence of Carlyle''. " The leaders of industry, if industry is ever to be led, are virtually the captains of the world; if there be no nobleness in them there will never be an aristocracy more ." ^ Brentano, Englische Gewerkvereine, 2te Th., S. 339. ' Carlyle, Past and Present, p. 233. Cambridge; printed by c. j. clay, m.a., at the university press. stainpe^-y*- ^PpKi iWi^i^!».