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opinion upon the subject; it is therefore impossible for me to say whether his results were wrongly arrived at or not; suffice it that on this point we agree. The point of difference between us is as to the sum remaining over this wage and salary fund, which passes to capitalists and property owners, to be added to the capital of the nation. I computed this at ten per cent. of the entire product, or at $20 per capita of the population, on an average product of $200 worth of all commodities in a normal year, such as the year 1880 happened to be. The rate of accumulation may possibly yield a somewhat larger sum in a year of great prosperity, and doubtless diminishes to a less sum in years of adversity. The basis of computation in 1880 was made upon the assumed product of 50,000,000 people, of whom about one in three was occupied in gainful work of some kind; with an increase of population the average sum of the product and the average amount added to capital may increase, while the proportion per capita may not vary.

In attempting to prove that I am in error in this, Mr. Hawley alleges that "there were in the census year 4,074,238 working people engaged in rendering personal and professional service, the value of whose labor does not appear in the value of any material production." He then assumes that these four million persons sell their service at an average of $300 per year each; "therefore," he says, "this would leave a sum for personal service amounting to $1,200,000,000, to be added to the gross value of the material product." Mr. Hawley next makes a hypothetical estimate, as follows:

"Horses and other animals, hired or kept for pleasure; railways and telegraph companies, to the extent to which they are utilized for other than business purposes. together with service performed for us by various other forms of accumulated wealth, which would probably add enough to this sum to make it, in round figures. $800,000,000. Adding this to the computed value of persons engaged in personal and professional service, we have $2,000,000,000 of annual income which Mr. Atkinson fails to account for."

This passage is very obscure, but it is the turning-point of the whole question. If I catch the meaning of Mr. Hawley, he finds $2,000,000,000 worth of service rendered by professional men, by domestic servants, by men of wealth and others, also by

horses used for pleasure, by railways when not occupied for business purposes, which, as he says, "have no material basis." If they had no material basis, from what source was the money derived? He proposes to add the value of these services to a sum of products already established, and having thus added. $2,000,000,000, he assigns that additional amount to profits or to the capitalists as an addition to their proportion of the total product as computed by me. This method would warrant a very queer conclusion, which might be given in the following terms: Uncle Sam gets $10,000 a year out of his estate; he spends $9,000 a year, and saves ten per cent., or $1,000 worth of his product. "Oh, no," says the objector; "that is not a fair statement of his savings. Uncle Sam has five servants in his employ whose services are worth $300 a year each; there must, therefore, be added $1,500 to the $10,000. His true income is $11,500, and he makes $2,500 a year above what he spends; it is too much, he ought not to have so much." One would like to learn the secret of how to make a profit from the services of servants, from driving pleasure horses, and from riding in palace cars. Now, the very proposition which I have attempted to sustain is, that the entire production of the census year could not have exceeded in value $200 worth per capita on the average of population, including the very classes whose earnings he proposes to add. From that part of the production, whatever it may be, which enters into commerce, computed by me at ninety per cent. of the whole, all wages, all taxes, all profits, and the compensa tion for all services or earnings must be derived, including the payment made for professional and personal service and the service of wealth as well-unless the capital previously accumu lated in other years enters into consumption in a given year without being reproduced, which would, of course, be disastrous.

In my computation the sum of $8,100,000,000 is given as the wage and salary fund, the compensation of the small farmer, and the share of those who may be called the hard-working classes in the community in the year 1880; this being divided by the number, yielded an average to which Mr. Hawley assents. In my further computation, the domestic consumption of the farmers is estimated at $1,000,000,000, and the share of the product

assigned to the maintenance and increase of capital is put at ten per cent. of the whole. If, then, this last assignment is underestimated, an additional product must be found before it can be increased. In other words, Mr. Hawley must prove conclusively that I have omitted twenty per cent. of the total product in my computation before he can contest the sums assigned to each specific class of population or justify his own figures. I have always hoped that some thoroughly competent student would take up this line of investigation, as it seems to me fundamental. I am aware that my own work is insufficient, but I can find no evidence of product exceeding $200 worth per capita or of an increment to capital exceeding ten per cent. of that average.

Mr. Hawley and others who have contested these figures have not made this complete investigation. He himself sets up a mass of figures, which are his own, and then bases a criticism of my results on his own guesses at the sum of the products. In this he is like many other teachers and preachers whose zeal is greater than their knowledge, and who may do more harm in promoting discontent of a malignant kind the more sincere they are in their convictions.

The fundamental principle which I have endeavored to present in the treatment of "What Makes the Rate of Wages?" is this the fixed capital, so called, must, of course, be carried over, increasing from year to year with the population, in order that it may be made use of in co-operation with labor in the production of the wage, salary, and profit fund of the year, to wit, the total product. A small portion of each year's product, commonly called quick or active capital, is also carried forward, to be immediately consumed or expended in the next year to start upon, as a small portion will be carried forward to the subsequent year to start the work of that year upon; the remainder of the product, whatever it may be worth, is the only source of all profits, income, wages, and taxes in that series of four seasons. There is, and can be, no other source of revenue to any one, unless the fixed capital previously saved be converted into a consumable form and impaired in a bad year. I have reached the somewhat appalling conclusion that this total product does not yield to each person of the population, now or

in 1880, more than what fifty to fifty-five cents a day will purchase, including not only the commercial product, but the product consumed upon the farms. Therefore, by so much as some have more must others have less. How can the haves justify themselves to the have-nots? The method by which this conclusion has been reached is described in the book, and the statement of the method should have rendered it impossible for Mr. Hawley to have put his exceptions to the work in the form in which he has presented them. He has not read the book with the care which is due from a reviewer who has a serious purpose in view. It would be entirely free to him or to any one else to reject the whole treatise as unworthy of criticism; but, in the line of economic investigation, whoever undertakes to review either figures or the conclusions which are based upon them, should at least qualify himself to present the subject of the review itself consistently and correctly.

If this theory is a true one, to wit, that all wages, profits, and taxes which are liquidated in money must of necessity come within the limit of the salable value of that part of the product which is bought and sold, it follows of necessity that "neither the earnings of those persons who are engaged in personal and professional service, nor the support of horses, railways, and telegraph companies used for other than business purposes, nor the service performed for us by various forms of accumulated wealth" can be added to a sum which already covers the entire value of everything produced. The whole question, therefore, is, Did the commercial value of the annual product of 1880 exceed $9,000,000,000, or $180 per capita of the population$20 being added for consumption on farms-or does it exceed $200 worth per capita now?

The family group numbers five, but one in three is at work. Is the average income or product of all at work, rich and poor alike, worth only $600 a year, to be distributed as wages, profits, and taxes at the present time?

I reached that estimate by the following method:

1. I computed the wheat crop in quantity by bushels; I then found the value of the wheat exported; I next converted the remainder into bread, and priced it at the average market price

of bread, taking an average rather than a maximum; I computed the corn crop and its product in meat and dairy products at retail prices. I treated all food-products.

2. I made a careful analysis of all the fibers produced and imported, computed their value, and being familiar with the cost of manufacturing both fabrics and clothing, carpets, cordage, and the like, I converted the crude materials into their final value at the retail prices at which these commodities were sold.

3. I went through the same process with metals, timber, and other commodities, and footed up the result. Of course I could reach only approximately correct results; but having reached the total amount of the probable value of these products at retail prices in this way, I then reversed my method, and proceeded from the expenditure of the individual to the gross sum of their expenditure.

I took large averages of consumption in all its details from the reports of the bureaus of statistics, and large averages of the wages earned from these reports and from the census figures; then worked back from the unit of the individual to the gross product consumed, class by class, by the population. I next ascertained what were actually the gross average profits of business in very many lines; I estimated everything consumed in two or three large branches of industry and by many other methods I checked off the original figures. I was myself very much surprised at the close agreement of the various methods which I applied before I attempted to prove my conclusions by the final check from the census of the United States. I should have been tempted to join Mr. Hawley in pronouncing the conclusion almost a reductio ad absurdum, had not subsequent investigation and analysis confirmed the substantial accuracy of my first results. Great masses of capital impose upon the imagination and disguise the true relations of capital and the proportion of profits to production.

The error into which Mr. Hawley and others have been led is this: they have confounded the profits, savings, or addition to the capital of the nation as a whole, with the individual incomes of capitalists, middle-men, merchants, manufacturers,

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