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It will endeavor to put the United States in that attitude, in respect of the trade and intercourse of the world, which its geographical position, its natural resources, its political character, and its power justly entitle it to; first, by co-operating with the Central American republics in the construction and control of the great inter-oceanic passage-way across those States; and secondly, by developing, through government encouragement, a closer intercourse of sympathy and commerce with the republics and other nations of the continent; and in so doing it will not look with mute and humble acquiescence upon the aggressive policies and enterprises of the rivals of the United States in the same direction.
It will endeavor to suppress and eradicate the debaucheries in the civil service that have grown to such enormous proportions in the government as at present administered, so as to make the officers of the United States the servants and not the masters of the people.
These are some of the great and important topics of national concern that the Republican Party has occupied and still occupies a definite and positive attitude upon. There are others— such as the importation of the criminals and paupers and other unassimilable people of other countries, who are a constant menace to our welfare-that cannot now be discussed.
Candor and good faith are as essential in political parties as in the affairs of private life. Elections should not be won by evasive generalities, which never result in the ends the people had looked for in giving their votes, and it is hoped that the intelligent confidence of the people of the republic cannot be imposed upon twice successively. Underlying the organization of all parties there always are the personal independence and responsibility of the individual citizen, however enveloped they may be by party associations and party discipline; and to this independence and responsibility believers in true republican government may generally, if not always, appeal for the preservation of the liberties that must be common, and for equality of rights that must be real, in fact as well as in name, and for administrations that live up to their professions.
GEORGE F. EDMUNDS.
HOW CAN WAGES BE INCREASED?
As my book upon "The Distribution of Products," which consists mainly of an essay on "What Makes the Rate of Wages?" is now passing to its fourth edition, and is attaining a wide circulation, I am very glad to find it reviewed by Mr. Frederick Hawley, in the "Quarterly Journal of Economics" for April, 1888, published for Harvard University. If there are any important errors either in the theory or in the figures which are presented in this essay, I greatly desire to correct them. From Mr. Hawley's review and from some previous notices of the book I have been led to believe that I have not made the reasons for my conclusions as plain as I might have; I therefore beg to repeat the main propositions which I have attempted to sustain, and to give more conclusive proofs, if I may do so, that these propositions are correct.
The fundamental idea of the book is as follows: the annual product, or the product of each series of four seasons, is, and must be in the nature of things, the source of all rents, profits, interest, wages, salaries, and earnings. This product is the result of the joint application of labor and capital. It therefore follows:
1. That in this product, or in its distribution or consumption, all persons take some part who are engaged in gainful occupations, numbering in the census of 1880 a fraction less than one in three of the population, and listed under the respective heads of professional and personal service, trade and transportation, manufacturing, mechanical, and mining pursuits, and agriculture. By far the larger proportion of each of these classes is now, and must continue to be, either in the position of small farmers, who work harder than their hired men and who outnumber the hired men engaged in agriculture, of wage-earners, or of persons who are in receipt of small salaries; nearly all, with the exception of the farmers, are in the position of the employed
rather than of the employer. The gains or savings of these working classes, which may be added to the capital of the country, amount to a large sum in the aggregate; but, with few excep tions, they are small in amount in each individual case. The lives of the great majority are mainly spent in getting a living.
2. These "working classes," so called, constituting by far the greatest proportion of all who are occupied for gain, now secure for their own use and consumption substantially ninety per cent. of the total annual product of this country; consequently, that part of the annual product which is, or can be, in an average year, secured by capital for its service, whether the capital be owned by the rich, the well-to-do, or in part by the wage-earners themselves, cannot exceed ten per cent. on the average. This is the increment which can be set aside for the maintenance and increase of the capital of the nation.
3. The working classes, making use of that term not in the broader but in the narrowest sense in which it is customarily applied, have been, and are still, securing, for their own use and enjoyment, for consumption or savings, decade by decade, subject to temporary fluctuations in each ten years, an increasing share of a constantly increasing product or its equivalent in money, and will continue to do so as long as the competitive system is the rule in commerce, in production, and in distribution.
4. Under the relatively free conditions of society in this country as compared to all others, the members of the three classes, i. e., the so-called working classes, the well-to-do, and the rich, are constantly changing in their respective conditions. On the one hand, the prosperous classes are constantly receiving recruits from the working class; on the other hand, as has been well said, "it is rarely more than three generations from shirt-sleeves to shirt-sleeves."
No one could have been more surprised than myself when these conclusions developed themselves from the facts of life. I have but little time for the reading of books, and I am not aware that the attempt has been made by any one else to measure the proportions which may be assigned to each class in the community by first computing the subject of the division, i. e., the annual product at its final measure in money when disposed
of for final consumption.
It may be that this method is one which cannot be applied with sufficient certainty to justify the conclusion; of that each one must judge for himself as my processes are developed.
Many exceptions have been taken to these proportions in the division of the annual product, but they have usually been, on the whole, of a somewhat superficial character, like the review to which I now propose to make a rejoinder; they assume that I have intended to state that the proportion of the annual product which falls in the first process of distribution to capitalists, landlords, manufacturers, and men of business, in the form of rents, profits, or interest, is the same in amount and in proportion as that which constitutes the net profit or savings of the nation as a whole, which can be applied to the maintenance or increase of the capital of the nation. I am probably myself responsible for this confusion of thought, by my want of clearness and precision in the preparation of a treatise which was dictated in the intervals of a very busy life, and published without that careful revision which was due to the importance of the question which I have treated under the title, "What Makes the Rate of Wages?" I may not have discriminated sufficiently between the income of individuals and the net profit or savings of the nation. I therefore take the opportunity offered me by Mr. Hawley's critique to present anew some of the reasons which led me to the conclusions given as to the relative shares of labor and capital in the annual product.
On one point Mr. Hawley and I fully agree, to wit: if the workmen or laborers, or if the classes consisting of laborers, receivers of small salaries, small farmers, and the like, who now constitute the great majority of the community, do now actually obtain for their own use and consumption ninety per cent. of the gross annual product, then there is little margin for improvement in their condition except through an increase of the product itself. Or if, as Mr. Hawley says,
"the complete success of co-operation combined with nationalization of land or with the establishment of an ideally perfect system of socialism would augment laborers' incomes within the limit of only eleven per cent., and that only provided as much were produced under the new conditions as under the
old, then such a percentage of gain would be wholly insufficient to raise the recipients' wages to any condition materially superior to their present one."
That is the very conclusion to which my own mind has been brought by my special investigations and by the observation of some curious facts. For instance, in a recent strike, in which a very large number of men were engaged in a special employment whose earnings averaged $500 a year, I found that, had they secured for their own enjoyment the entire profit of the business at the time of the strike, it would have increased their wages but five per cent., or $25 per year. It was an art in which the capital required was very small in proportion to the annual product. The strike failed, and the business continued as before.
Mr. Hawley alleges that the proposition that ninety per cent. of the product is gained by those who do the work of life, and only ten per cent. goes to capital, "is so evidently false as to constitute a reductio ad absurdum." If Mr. Hawley would enter upon the line of investigation which I have followed, without any a priori conceptions or prejudices in his own mind, he might be more successful in attempting to analyze the figures on which my conclusions have been based; until then it would be prudent to repress such dogmatic conclusions as the above.
There are two sorts of discontent among working people, either of which may be promoted by a discussion of economic questions; one kind is wholesome, the other is baneful. If my conclusions can be proved, a wholesome discontent with the admittedly narrow conditions of life may be directed to the promotion of greater abundance, higher wages, shorter hours of work and better conditions of life. Such progress can be brought about only by hearty co-operation between workmen and their employers or between labor and capital, and, in my judgment, only under the competitive system. If, on the other hand, Mr. Hawley is right in alleging that capital is grasping a share of the annual product to which it is not entitled in compensation for any service rendered, then the discontent of the workmen may take a dangerous, violent, and disastrous direction. It is this conception which promotes strikes.
If, then, my conclusions are based on facts, and the view which is held by Mr. Hawley and others who have attempted to