Natural law of wages—State-laws regulating wages—Enactments regulating consumption—The labour-fund and the want-fund—Ratio of capital to population—State of industry at the end of the seventeenth century—Rise of manufactures—Wages and prices—Turning over capital.

The old chroniclers relate that our Norman king, Henry I., had once a terrible vision, of soldiers, and priests, and peasants, surrounding his bed, one band succeeding another, and threatening to kill him. The legend became the subject of illuminated drawings in an ancient MS. preserved at Oxford, and one of these represented the tillers of the land, with spade, and fork, and scythe, demanding justice. The cultivators were loaded with heavy exactions, so great that the tenants of the crown even offered to give up their ploughs to the king. They ploughed, but they reaped not themselves. In such a state of things there could be no accumulation, and no profitable labour. The funds for supplying the wages of labour were exhausted. The country was depopulated.

During the next two centuries, the condition of the people had been materially improved. Capital had increased, and so had population. But capital had increased faster than population, and hence the improvement. The class of free labourers had for the most part succeeded to the old class of villeins. Labourers for hire, without understanding the great principles which govern the rate of wages, any more than did their masters, would practically seek to measure their earnings according to those principles. The lawgivers determined the contrary.[37] The Statute of Labourers, 23rd Edward III., says:—"Because a great part of the people, and especially of workmen and servants, late died of the pestilence, many, seeing the necessity of masters and great scarcity of servants, will not serve unless they receive excessive wages." They were therefore to be compelled to serve, and they were to serve at the same wages which they had received three years before. The ratio of population, in consequence of the pestilence, had fallen considerably below the ratio of accumulated capital seeking to employ labour. Under the natural laws of demand and supply, the scarcity of labourers and the excess of capital would have raised the wages of labour. These laws were not to operate. Forty years after this enactment of Edward III., comes the statute of Richard II., which says that "Servants and labourers will not, nor by a long season would, serve and labour without outrageous and excessive hire, and much more than hath been given to such servants and labourers in any time past, so that for scarcity of the said servants and labourers the husbands and land-tenants may not pay their rents, nor scarcely live upon their lands." Here was a distinct conflict between the capitalists seeking profits and the labourers seeking wages. The law-makers resolved that the hires of the servants and labourers should be "put in certainty;" and they fixed the rate of wages throughout the land. They settled the contest in favour of profits, arbitrarily. To avoid this interference with the due payments of their labour in proportion to the ratio of capital and labour, the husbandmen might have fled to the towns, and some did so. But they were met there by the enactment that the artificers should be subject to the same controlling power, and that the boy who had laboured at the plough and cart till he was twelve years old should continue so to labour for the rest of his life. This state of things was truly slavery without the name. Some such marvellous folly and injustice went on for several centuries. But, regulating wages, the laws also undertook to regulate the cost of food and of clothing—their quality, and their consumption—how much people should eat, and what coats they should wear. These absurdities also went on for centuries—of course under a perpetual system of open violation or secret evasion. The people, we may safely conclude, never fully believed what their rulers told them of their prodigious kindness in managing private affairs so much better than individuals could themselves. Mr. Sergeant Thorpe, judge of assize for the northern circuit, in a charge to the grand jury in 1648, tells them to be vigilant against servants taking higher wages than those allowed by the justices,—to enforce the laws against everybody who bought every thing for the sustenance of man, with intent to make a profit by it—against every tradesman who did not produce his wares in conformity with the statutes;—wonderful laws, which would not permit the tanner to sell a piece of leather that had not been kept twelve months in the tan-pit, and which forbade the cloth-maker to use lime in whitening linen cloth. "And thus you see," says solemn Mr. Sergeant Thorpe, "how the wisdom of the common laws of this nation, and of the parliaments, from time to time, hath provided for the security and ease of the people; and hath furnished us with a salve for every sore; and gives us rules and instructions how to govern ourselves, that we may be helpful and useful to one another."[38] Instead of providing the salve, it probably would have been better not to have made the sore.

But, after all, it is scarcely candid to laugh at the wisdom of "the good old times" in regulating trades, when in our own day, we have had excise laws which interfered in the most absurd way with production, and some of which still interfere. Nor can we look with perfect complacency at the manifest impolicy and injustice of fixing the rate of wages, when, within the last quarter of a century, we have had justices at work all over the country to keep down the wages of labour, by paying labourers not in proportion to their earnings, but according to their necessities; and raising up a fund for the encouragement of idleness and improvidence, by a diversion of the real funds for the maintenance of labour. The Poor Laws, as they were administered in the beginning and middle of the last half century, did this evil, and a great deal more; and persons of influence, with the most benevolent intentions, could see no difference between the parish allowance to able-bodied labourers, and the wages which they could have really commanded for their labour if this opposing fund had not been called into action. In those times, and even after a strenuous effort had been made to bring about an improvement, educated gentlemen used to say—"something must be done to give the labourers employment upon fair wages;" and they were accustomed to believe that "some plan should be devised whereby work should be at hand."[39] These gentlemen, and many others, did not understand that there is a natural fund for the maintenance of labour which is to produce such beneficial results; that this fund cannot be increased but by the addition of the results of more profitable labour; that whatever is paid out of the fund for the support of unprofitable labour has a direct tendency to lower the rate at which the profitable labour is paid,—to prevent the payment of "fair wages;" and that there is a "plan" which requires no devising, because our necessities are constantly calling it into operation,—the natural law of exchange, which makes "work at hand" wherever there is capital to pay for it. Such reasoners also held that the labourers were not to seek for the fund "about the country on an uncertainty;" but that the work for the labourers "should be at hand"—"it should be certain." This clearly was not the ordinary labour-fund. That is neither always at hand, nor is it always certain. It shifts its place according to its necessity for use; it is uncertain in its distribution in proportion to the demand upon it. The fund which was to work this good was clearly not the labour-fund—it was the want-fund; and the mistake that these gentlemen and many others fell into was that the want-fund had qualities of far greater powers of usefulness than the labour-fund; that the parish purse was the purse of Fortunatus, always full; that the parish labour field was like the tent of the Indian queen in the Arabian tale—you could carry it in the palm of your hand, and yet it would give shelter to an army of thousands. All these fallacies are now, happily, as much exploded as the laws for the regulation of wages and the price of commodities. The real labour-fund—the accumulation of a portion of the results of past labour—is the only fund which can find profitable work and pay fair wages.

It is extremely difficult to ascertain the ratio of Capital to Population at any particular period; yet some approximations may be made, which, in a degree, may indicate the activity or the inertness of the labour-fund, in regard to the condition of the labourer.

At the end of the seventeenth century, about half the land of England and Wales was, according to the best authorities, held to be under cultivation, either as arable or pasture. As the whole area of England and Wales is about thirty-seven millions of acres, this would show a cultivation of eighteen million five hundred thousand acres. The entire quantity of wheat, rye, barley, oats, pease, beans, and vetches, grown upon these eighteen million and a half acres, was estimated at less than ten millions of quarters, wheat being little more than a sixth of the whole produce. The quantity of stock annually fattened for food was even more inconsiderable. We may safely assume that in a century and a half the amount of agricultural produce in England has increased five-fold. Two-thirds of the whole area of England and Wales are now under cultivation; for in the census returns of 1851 we have twenty-five million acres of farm holdings, occupied by two hundred and twenty-five thousand farmers. In the calculations of Gregory King, in 1688, the number of farmers was given at a hundred and fifty thousand; but the number of lesser freeholders, who were doubtless cultivators, was also a hundred and twenty thousand. The produce of the land has increased at a greater rate than the increase of population. According to the commonly received estimates, the population of England and Wales was about five millions and a half, perhaps six millions, at the end of the seventeenth century; it is now eighteen millions. The inhabited houses, according to the hearth-books of 1690,[40] were one million three hundred and twenty thousand. In 1851 they were three million two hundred and seventy-eight thousand. The hearth-books of 1685 show that, of the houses of the kingdom, five hundred and fifty-four thousand had only one chimney—they were mere hovels.

Gregory King has given 'A Scheme of the Income and Expense of the several Families in England, calculated for the year 1688.' He considers that, in the aggregate, there were five hundred thousand families who were accumulators—that is to say, whose annual expense was less than their income. He values this accumulation at three millions. The number of persons comprised in the accumulating families was two million six hundred and seventy-five thousand. Of this number only one-fifth belonged to the trading classes—merchants, shopkeepers and tradesmen, artisans and handicrafts. The remainder were the landholders, farmers, lawyers, clergy, holders of office, and persons in liberal arts and sciences. But there was a large non-accumulating class, consisting of two million eight hundred and twenty-five thousand, whom he puts down as "decreasing the wealth of the kingdom,"—that is to say, that their annual expense exceeded their income; and this excess he computes at six hundred and twenty-two thousand pounds, which reduces the annual national accumulation to two million four hundred thousand pounds. The positive plunderers of the national capital were thirty thousand vagrants, such as gipsies, thieves, and beggars. We were in a happier condition than Scotland at the same period; where, according to Fletcher of Saltoun, there were two hundred thousand "people begging from door to door," out of a population of one million, for whose suppression he saw no remedy but slavery. We were more favoured, too, than France; where, as Vauban records, in 1698, more than a tenth part of the population of sixteen millions were beggars, in the extremity of hunger and nakedness.[41] But we may be sure that in England the two million eight hundred and twenty-five thousand "labouring people, out-servants, cottagers, and paupers," who are put down by Gregory King as non-accumulators, were working upon very insufficient means, and that they were constantly pressing upon the fund for the maintenance of profitable labour. It is a curious fact that he classes "cottagers and paupers" together; but we can account for it when we consider how much of the land of the country was uninclosed, and how many persons derived a scanty subsistence from the commons, upon which they were "squatters," living in mean huts with "one chimney."

The small number of "artisans and handicrafts," comprising only sixty thousand families, is of itself a sufficient indication that our manufactures, properly so called, were of very trifling amount. In various parts of this volume we have incidentally mentioned how slowly the great industries of this country grew into importance. At the period of which we are now speaking, nearly every article of clothing was, in many districts, of domestic production, and was essentially connected with the tillage of the land. The flax and the wool were spun at home; the stockings were knit; the shoes were often untanned hide nailed upon heavy clogs. Furniture there was little beyond the rough bench and the straw bed. The fuel came from the woods and hedges. About forty thousand of the cottages mentioned in the hearth-books had some land belonging to them; and, to prevent the growth of a "squatter" population, it was the business of the Grand Jury to present, as a nuisance, all newly-erected cottages that had not four acres of land attached to them. There was a contest perpetually going on between the more favoured portion who had regular means of subsistence, and the unhappy many who were pressing upon those means, in all the various forms of pauperism. One of the means of keeping down this class was to prevent them having dwellings.

Towards the end of the seventeenth century, then, we see that there was some accumulation of capital, however small. There was then a vague feeling amongst the accumulators that something might be saved by setting the unemployed and the starving to other work than was provided for them in the fields. Population was pressing hard upon Capital. It pressed, chiefly, in the shape of increasing demands upon the poor-rate. The remedy universally proposed was "to set the poor to work." The notion was extremely crude as to the mode in which this was to be effected; but there was a sort of universal agreement expressed by sober economists as well as visionary projectors, that the more general introduction of manufactures would remedy the evil. Of course, the first thing to be done was to prohibit foreign manufactures by enormous duties; and then we were to go to work vigorously at home, knowing very little of the arts in which foreigners were greatly our superiors. But we were to go to work, not in the ordinary way of profitable industry, by the capitalist working for profit employing the labourer for wages, but by withholding from the poor the greater part of the want-fund, and converting it into a labour-fund, by setting up manufactures under the management of the poor-law administrators. Here, in these "workhouses" was the linen trade to be cultivated. Mr. Firmin set up a workhouse in Aldersgate Street, of the results of which, after four years, he thus speaks:—"This, I am sure, is the worst that can be said of it, that it hath not been yet brought to bear its own charges." Sir Matthew Hale was for setting up a public manufactory of coarse cloth, of which the charges for materials and labour in producing thirty-two yards would be 11l. 15s. He calculated that the cloth, if sold, would only yield 12l. The excellent Judge does not make any calculation of the cost of implements, or rent, or superintendence. He desires to employ fifty-six poor people, who are paid by the parish 400l. per annum, and by this cloth manufacture he will give them the 400l. for their work, and save the parish their cost. One thing is forgotten. The pauper labour yielding no profit, and consequently preventing any accumulation, the labourers must be kept down to the minimum of subsistence, which appears to be about seven pounds per annum for each labourer. The earnings of the artisan and handicraft are estimated by Gregory King at thirty-eight pounds per annum. These were the wages of skilled labourers. The pauper labourers were unskilled. If these schemes had not broken down by their own weight, and workhouse manufactories had gone on producing a competition of unskilled labourers with skilled, the rate of wages would have been more and more deteriorated, and the amount of poor seeking workhouse employment as a last resource more and more increased. Experience has very satisfactorily demonstrated that these schemes for employing the poor ought to be strictly limited to the production of articles of necessity for their own consumption. Even the production of such articles is scarcely remunerating,—that is, the produce scarcely returns the cost of materials and superintendence. Even the boasted Free and Pauper Colonies of Holland have turned out to be commercial failures. They are not self-sustaining. The want of skill in the colonists, and their disinclination to labour, having no immediate individual benefit from their labours, have combined to produce the result that one good day-labourer is worth five colonists working in common. There are also tenants of small colonial farms, at a low rent, and having many advantages. They are not so prosperous as the little farmers out of the colony, who pay a higher rent, and have no incidental benefits. The solution of the question is thus given:—"The certainty that the society will maintain them, whether they save or not, has an unfavourable influence on their habits."[42]

The increase of population was very small during the first fifty years of the eighteenth century. It absolutely declined at one period. The two million four hundred thousand pounds that were calculated by Gregory King as annual savings, were probably more and more trenched upon by pauperism and war, by "malice domestic, foreign levy," under a disputed succession. The upper classes were licentious and extravagant; the labourers in towns were drunkards to an excess that now seems hardly credible. Hogarth's 'Gin Lane' was scarcely an exaggeration of the destitution and misery that attended this national vice. About the middle of the century, or soon after, sprang up many of the great mechanical improvements which made us a manufacturing people; and which, in half a century, added a third to the population. In spite of the most expensive war in which England had ever been engaged, the accumulated capital, chiefly in consequence of these discoveries and improvements, had increased as fast as the population in the second fifty years of the eighteenth century. In the present century the population has doubled in fifty years; and the accumulated capital has more than doubled. Population has been recently increasing at the rate of one and a half per cent.; capital has been increasing at the rate of two and a half per cent.[43] It is this accumulation which has been steadily raising the rate of wages in many employments of industry; whilst the chemical and mechanical arts, the abundant means of rapid transit, the abolition or reduction of duties upon great articles of consumption, and the freedom of commercial intercourse, have given all the receivers of wages a greatly increased command of articles of necessity, and even of what used to be thought luxuries.

There is nothing more difficult in economical inquiries than the attempt to ascertain what was the actual rate of wages at any given period. The fluctuations in the value of money enter into this question, more or less, at every period of our history. We find the nominal rate of wages constantly increasing, from one generation to another, but we cannot at all be certain that the real rate is increasing. That nominal rate always requires to be compared with the prices of the necessaries of life. What pertains to wages pertains to all fixed money-payments. A Fellow of a college applied to Bishop Fleetwood to know if he could conscientiously hold his fellowship, when the statutes of the college, made in the time of Henry VI., say that no one shall so hold who has an estate of 5l. a year. The Fellow had an estate of much larger nominal amount. The Bishop made a very valuable collection of the prices of commodities, and he thus answers the conscientious inquirer:—

"If for 20 years together (from 1440 to 1460) the common price of wheat were 6s. 8d. the quarter; and if from 1686 to 1706 the common price of wheat were 40s. the quarter; 'tis plain that 5l. in H. VI. time would have purchased 15 quarters of wheat; for which you must have paid, for these last 20 years, 30 pound. So that 30 pound now, would be no more than equivalent to 5 pound in the reign of H. VI. Thus if oats, from 1440 to 1460, were generally at 2s. the quarter, and from 1686 to 1706 were at 12s. the quarter, 'tis manifest that 12s. now would be no more than equivalent to 2s. then, which is but a sixth part of it. Thus, if beans were then 5s. and now 30s. the quarter, the same proportion would be found betwixt 5l. and 30l. But you must not expect that everything will answer thus exactly. Ale, for instance, was, during the time of your founder, at three-halfpence the gallon; but it has been, ever since you were born, at 8d. at the least: which is but five times more, and a little over. So that 5l. heretofore (betwixt 1440 and 1460) would purchase no more ale than somewhat above 25l. would now. Again, good cloth, such as was to serve the best doctor in your University for his gown, was (between 1440 and 1460) at 3s. 7d. the yard; at which rate, 5l. would have purchased 29 yards, or thereabouts. Now you may purchase that quantity of fine cloth at somewhat less, I think, than 25l. So that 25l. now would be an equivalent to your 5l. then, 250 years since, if you pay about 18s. the yard for your cloth. I think I have good reason to believe that beef, mutton, bacon, and other common provisions of life, were six times as cheap in H. VI. reign as they have been for these last 20 years. And therefore I can see no cause why 28 or 30l. per ann. should now be accounted a greater estate than 5l. was heretofore betwixt 1440 and 1460."[44]

But we are not to infer from these considerations that the wages of labour ought to fluctuate with the prices of commodities, or that practically they do so fluctuate. If this were the principle of wages, every improvement which lowers the price of commodities would lower the rewards of labour. Almost every article of necessity is cheaper now than it was ten years ago, taking the average of years; and the larger amount of this cheapness has been produced by improvements in manufactures, by facilities of communication, and by the removal of taxation. At the same time, taking the average of years and of employments, wages have risen. There must be some general cause in operation to produce this result.

The wages of labour cannot be reduced below the standard necessary to support the labourer and his family whilst he produces. If he cannot obtain this support he ceases to be a producer. He is starved out of existence; or he falls upon the public fund for the support of want; or he becomes a beggar or a thief. In states of society where there is no accumulating capital, the labourer necessarily receives low wages, because he maintains himself at the minimum of subsistence. Our poet Spenser, writing nearly three centuries ago upon the miseries of Ireland, describes the cottiers as inhabiting "swine-sties rather than houses." Swift, long after, describes the same state of things:—"There are thousands of poor wretches who think themselves blessed if they can obtain a hut worse than the squire's dog-kennel, and an acre of ground for a potato plantation." This condition of society unhappily lasted up to our own day. If the Irish cottier had been a labourer for wages instead of deriving his miserable living direct from the land, he would have been no better off, unless his desire for something higher than the coarsest food, and the most wretched lodging, had set some limit to the increase of population beyond the increase of capital. Population necessarily increases faster than subsistence when there is no restraint upon the increase by the disposition to accumulate on the part of the labourer. There may be accumulation in the form of his money-savings; and there may be accumulation in an increase of the conveniences of life by which he is surrounded. When there is neither money saved nor comforts increased—when there is no accumulation for the gratification of other wants than that of food—competition is driving the labourers to the lowest point of misery. The competition in Ireland was for the possession of land, at an extravagant rent, out of the labour upon which the cottier could only obtain the very lowest amount of necessaries for his subsistence. If, in the habits of the whole body of the peasantry, clothes and furniture had been as necessary as potatoes, the oppressive exactions of the landlords must have yielded to what then would have been the natural rate, whether we call it profit or wages, necessary for the maintenance of that peasantry; and the necessity, on their part, for maintaining the average status of their class, would in a considerable degree have kept down the inordinate increase of the people. A century ago the great body of the working-people of England ate rye bread, which is cheaper than wheaten. If all the workers were to come back to rye-bread, the rate at which they could be comfortably maintained would be somewhat less; and unless the accumulation from the economy were expended universally in some improved accommodation, labourers would gradually arise who would be contented with the smaller amount necessary for subsistence, and the greater number of labourers seeking for wages would depress the amount paid to each individual labourer.

"In England and Scotland," says Mr. Morison, "the classes living by wages form the majority of the population." It has been estimated by Mr. Greg that the annual amount paid in wages is a hundred and forty millions sterling; to which may be added twenty millions for the board of domestic servants. The profits of all the operations of industry to the capitalists are estimated by Mr. Morison at ninety millions. The census returns show that there were three hundred and fifty-four thousand masters in trades, and farmers, employing fourteen hundred thousand men. This gives a proportion of about four men employed to one employer. Compared with the estimate of profits it shows that each employer, assuming the calculation to be correct, would derive a revenue of two hundred and fifty pounds a year as the recompense of his capital, skill, and risk. This is not so large an aggregate profit as is ordinarily supposed. The men employed would each receive a revenue of one hundred a year. But we must add a large number to the men receiving wages, who would not be returned by their employers; and the calculation of payments must be further diminished by the consideration that in many branches of industry, and in factory labour especially, a very large number of females are employed, as well as boys. But the fact of the general proportion of wages to profits is sufficiently striking to show that the inequality of the condition of the labourer and the employer is not so extravagantly great as we have been accustomed of late years to hear asserted.

In looking back upon the historical evidence which we possess, imperfect as it is, of the condition of society at various periods of our industrial progress, we cannot doubt that there has been a process constantly going forward by which the circumstances of all classes have been steadily raised. In the table of Gregory King, which we have several times referred to, the average income of ten thousand merchants is put down at three hundred a year; of shopkeepers and tradesmen at forty-five pounds; of farmers at forty-two pounds; and of labouring people at fifteen pounds. The income of gentlemen is taken at two hundred and eighty pounds a year. The increase of the means of these various classes at the present day as compared with the end of the seventeenth century, has certainly been threefold. If we turn to the passage which we have quoted from the 'Chronicon Preciosum,' originally published in 1707, we may at once compare the advantages which a threefold increase of means will procure. Wheat is not six pounds a quarter, nor broadcloth two pounds fourteen shillings a yard,—which would be the case if we trebled the prices of 1707. We have abundance of conveniences and comforts of which the people of Queen Anne's reign had no notion, which have been bestowed upon us by manufactures, and commerce, and scientific agriculture.

We have already stated and illustrated the general principle that the wages of labour are determined by the accumulations of capital, compared with the number of labourers. Hence it necessarily results that, as has been forcibly expressed, "the additional capital, whenever it is productively employed, will tend as certainly to the benefit of the working population at large as if the owner were a trustee for their benefit."[45] But the profitable employment of capital depends very greatly upon activity, knowledge, and foresight on the part of the capitalist. It was for the want of these qualities that all the old schemes for providing labour out of a common stock chiefly broke down. Sir Matthew Hale, in his plans for employing paupers in spinning flax and weaving cloth, knew theoretically the truth that the amount of capital available for the payment of labour would be largely increased by the rapidity with which it might be turned over. He says, "If it could be supposed that the cloth could be sold as soon as made,—which is not, I confess, reasonably to be expected—then a stock of 24l. would, by its continual return, provide materials and pay the workmen for one loom's work in perpetuity." The "if" expresses the difference between individual commercial activity and knowledge, and official sluggishness and incapacity. But it also expresses the difference between the commerce of our days, and that of the end of the seventeenth century. Without roads, or canals, or railroads, how difficult was it to bring the seller and the buyer together! All manufactures would be, for the most part, local. The cloths of Kendal might go to the neighbouring fairs on packhorses; and thence slowly spread through the country by pedlers and other small dealers; and the proceeds might return to the manufacturer at the end of a year. But the rapid turning over of capital which begins with buying a bale of cotton at New York, and having it in Sydney in the shape of calico in three months, with the bill that is to pay for it drawn at Manchester, accepted in Sydney, and discounted in London in another three months, is a turning over of capital which was scarcely imagined by the projectors and practical traders of a century ago.

This rapid turning over of capital, and the consequent more rapid accumulation of the labour-fund, depends upon the confidence of the capitalist that his capital will work to a profit. It will not so work if he is to be undersold. If wages could press upon profit beyond a certain ascertained limit, he would be undersold. The home competition of localities and individuals is perpetually forcing on the most economical arrangements in production. The foreign competition is doing so still more. If we have increased productiveness here, through scientific application, the same increased productiveness, from the same causes, is going forward elsewhere. 'Price-Currents' supply a perpetual barometer of industrial cloud or sunshine; and the manufacturer and merchant have constantly to unfurl or furl their sails according to the indications. Whenever there is shipwreck, the ship's crew and the captain partake of a common calamity; and the calamity is always precipitated and made more onerous when, from any cause, there is not cordial sympathy and agreement.