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'Ten-'^y}(rinutc Talks 
 With Workers 
 
Ten- Minute Talks 
 With Workers 
 
 From 
 
 {London^ 
 
 "Trade Supplement 
 
 Garden City New York 
 
 Doubleday, Page & Company 
 
 ig20 
 
Kt) 
 
 11 
 
 JEP 20 1920 
 
 COPYRIGHT, 1920, BY 
 
 DOUBLEDAY, PAGE & COMPANY 
 
 ALL RIGHTS RESERVED, INCLUDING THAT OF TRANSLATION 
 
 INTO FOREIGN LANGUAGES, INCLUDING THE SCANDINAVIAN 
 
 g)Ci.A576483 
 
ACKNOWLEDGMENT 
 
 Thanks are due the Times, London, Trade 
 Supplement, in which these Talks originally 
 appeared, for permission to reprint them in the 
 United States in book form. In preparing 
 them for American publication, only such edi- 
 torial interpolations were made as were con- 
 sidered desirable in order to make the Talks 
 more readable for an American audience. Al- 
 though all rights for the reprinting of the 
 Talks in whole or in part are reserved by the 
 TimeSf requests for permission to use them may 
 be made direct to the American office, 30 Church 
 Street, New York. 
 
CONTENTS 
 
 FAGS 
 
 The Partners 3 
 
 Paying Our Way 8 
 
 The Dead Partner 12 
 
 The Origin of Wealth ...... 16 
 
 The Four Factors ........ 21 
 
 The Pillars of Society 26 
 
 What Is Capital? 31 
 
 W^HAT Capital Does 37 
 
 How Capital Gets to Work 42 
 
 The Sanity of Society 47 
 
 The Cost of an Article ...... 52 
 
 What Is a Market.? 57 
 
 What Is Market Price? 62 
 
 What Is Money? ^'j 
 
 Money and Prices ........ 72 
 
 Time and Faith in Industry ']'] 
 
 What Banks Do for Us 82 
 
 The Cost of Selling 87 
 
 Foreign Competition 92 
 
 A Bill on London 97 
 
 vu 
 
Vill 
 
 Contents 
 
 PAGE 
 
 The Ups and Downs of Trade .... 102 
 
 The Great Share-out 107 
 
 What Capital Gets 112 
 
 Interdependence of Nations .... 117 
 
 The Inducement to Invest 122 
 
 What THE "Boss" Does For Society . . . 128 
 
 What the "Boss" Does For the Worker . 133 
 
 What Is the Worker Entitled to? . . 139 
 
 What Are Profits.? 144 
 
 What Do Wages Depend On.? . . . . 150 
 
 "AFairDay'sWork FOR A Fair Day's Wage" 155 
 
 Cheap Labour 160 
 
 The Standard of Comfort 166 
 
 The Great "Divvy" 171 
 
 The National Purse 177 
 
 What Is a Tax.? 182 
 
 The Factory as It Often Is .... 188 
 
 The Ideal Factory 193 
 
 Not a Machine, but a Plant .... 198 
 
 The Upward Path . 203 
 
With Workers 
 
4 Ten-Minute Talks With Workers 
 
 Alan and David could supply themselves 
 with only one or two small fish. A modern 
 steam trawler can feed a sizable town. The 
 difference in results is enormous. In one 
 case you have individual and primitive effort, 
 in the other the union in modern industry 
 of three partners, each contributing a share 
 to the final result, but each dependent on the 
 other two. 
 
 The first of these partners is, of course. 
 Labour. The trawler will lie in harbour till 
 it rots if no men go on board to get up steam 
 and head her to the fishing grounds. Now- 
 adays practical men of affairs, anxious only to 
 obtain the best results, have learnt to regard 
 Labour as what it is, namely, one of the part- 
 ners in industry. It is neither more nor less. 
 But if Labour is to maintain its title to rank as 
 a partner it must act as a partner. It must 
 contribute its share to the joint concern gladly 
 and fully. That done. Labour is entitled to 
 a full share of the results achieved. 
 
 WHAT IS CAPITAL? 
 
 The second partner is Capital. In the earli- 
 est days of human existence on the earth man 
 
The Partners 5 
 
 must have caught his fish as David and Alan 
 caught their trout, but mingled with the 
 bones of later men are found the rough fish- 
 hooks which they had invented to aid them 
 in their fishing. These fish-hooks then rep- 
 resented capital just as in our times the 
 steam trawler does. So many people make 
 the mistake of thinking that capital is an- 
 other word for money. Generally things are 
 capital. 
 
 The man whose patient labour made the 
 fish-hooks was entitled to a share of the catch, 
 and to-day the claim of Capital to rank as one 
 of the partners in industry is just. If by some 
 unfortunate miracle the whole of the capital 
 of the United States and Great Britain — their 
 railroads, their mines, their buildings, their 
 works, their plants, their tools, their roads — 
 were whirled skyward in the night, the people 
 of both countries should once more be a mass 
 of unaided men struggling grimly with the bare 
 gifts of nature for a miserable liveHhood. 
 Every man who saves instead of spending, who 
 works to-day and postpones enjoyment till 
 to-morrow, who sows in spring in hope of a 
 harvest in autumn, adds to the available amount 
 
6 Ten-Minute Talks With Workers 
 
 of capital, adds, that is, to the apparatus by 
 which Labour increases its own efficiency^ 
 
 The third partner is Brain. If you watch 
 a village smithy where the blacksmith, who 
 is in part a capitalist, works alongside his 
 man, you may think that so far as the smithy 
 is concerned it would make little difference 
 if master were man and man master. As the 
 scale of industry grows, as works get larger 
 and larger, buying raw materials and selling 
 finished articles in every corner of the globe, 
 the need for men of brains, able to direct and 
 organize all these lines of activity, becomes 
 obvious. 
 
 We cannot go back to the methods of our 
 forefathers; in attempting to do so we should, 
 Hke the Bolshevists in Russia, bring ou;- own 
 civilization down about our ears, for there are 
 a dozen mouths to feed where there was once 
 but one. For the great operations of modern 
 industry the best brains of the country are 
 required. Brain ranks with Capital and La- 
 bour as a partner in industry. 
 
 A study of the condition of the world three 
 or four hundred years ago shows that wonder- 
 ful progress has been made. Progress is many- 
 
The Partners 7 
 
 sided. It is moral, spiritual, political, civic. 
 These are the finer aspects of progress, but 
 behind them lies economic progress, the winning 
 of a life more full of the good things of life; and 
 this economic progress has been due to the 
 growth in numbers and capacity of the three 
 partners of industry. Their future depends 
 upon the recognition by each of them of their 
 mutual dependence and their common interest. 
 
II.— PAYING OUR WAY* 
 
 "My other piece of advice, Cooperfield,*' 
 said Mr. Micawber, "you know. Annual 
 income twenty pounds, annual expenditure 
 nineteen nineteen six, result happiness. An- 
 nual income twenty pounds, annual expendi- 
 ture twenty pounds ought and six, result 
 MISERY. The blossom is bhghted, the leaf is 
 withered, the God of day goes down upon the 
 dreary scene, and — and, in short, you are for- 
 ever floored. As I am!'' 
 
 Charles Dickens was a great domestic novelist. 
 He knew the people, and with a few masterly 
 strokes of his pen he reveals us to ourselves, 
 for human nature does not change. Mr. 
 Micawber's philosophy of Ufe is just as apt 
 to-day and will be just as apt in our great- 
 grandchildren's time. 
 
 "Give me," said the prophet Agur, "neither 
 poverty nor riches." Exactly. The average 
 man does not envy the very rich; riches bring 
 
 •From the Times Trade Supplement— issue of March 29, 1919. 
 
 8 
 
Paying Our Way 9 
 
 their own worries. Nor does he welcome pov- 
 erty. Only those who have been through it 
 know what it means to lie awake and wonder 
 how it will be possible to make ends meet even 
 with the exercise of the strictest economy. 
 Those Httle pairs of shoes that need repair so 
 badly! Mother knows. 
 
 No, they are usually happiest who are what 
 we call "comfortably off." They have enough 
 for their needs and can put a bit by for the 
 rainy day; it always comes. 
 
 Just the same thing applies to communities. 
 England has just had its rainy days. It is raining 
 now. One does not need to be a great economist 
 to look round the world and see that the happiest 
 nations are those that are paying their way and 
 putting a bit by. For them the sun is shining. 
 
 THE BOGY 
 
 Many people get quite unnecessarily alarmed 
 when they hear the words "political economy." 
 They think it is something too difficult for 
 ordinary minds — like the Differential Calculus 
 for the Fourth Dimension. As a matter of 
 fact, political economy is only common sense 
 applied to the affairs of States. 
 
lo Ten-Minute Talks With Workers 
 
 Every State buys from its neighbours,^ every 
 State sells to its neighbours. We call the pur- 
 chases imports, and the sales exports. 
 
 Following Mr. Micawber's line of thought 
 the ideal for every State would seem to be 
 equality between the two, but what perplexes 
 a good many Englishmen is the fact that for 
 many years England's imports of goods have 
 exceeded its exports by hundreds of millions 
 of pounds every year. The hidden explanation 
 is that they have also sold services. Their 
 ships — half the world's tonnage was theirs — 
 carried goods for other countries, and those ser- 
 vices were paid for in goods. 
 
 There was another factor. There was a time 
 when the nation exported more than it im- 
 ported. By so doing it naturally made the 
 world its debtor, and the amount was shown 
 by the investments England had abroad. It 
 built their railways and docks and sold them 
 machinery and plant; Englishmen became 
 partners in their enterprises, and their profit 
 was paid in the food and raw material that the 
 nation wanted. 
 
 Another day we shall see how the necessity 
 of paying England these immense sums led to 
 
Paying Our Way ii 
 
 Englishmen being able to get the things they 
 wanted so cheaply. Just now we will look at 
 the change that the war has brought about. 
 
 England is still getting far more imports than 
 it can pay for in exports, but its people cannot 
 now account for the difference so satisfactorily 
 as in the past. The difference is being paid 
 by the surrender of those investments abroad 
 that enabled England as a nation to live partly 
 on the interest on its savings. In other words, 
 part of the nation's capital has gone and more 
 is going every day. 
 
 The nation's purse is not like the widow's 
 cruse. The spendthrift's progress may appear 
 very pleasant, but economists and bankers 
 know that it cannot last indefinitely. Already 
 it is becoming difficult to get what we want. 
 
 People who have to get credit at the corner 
 shop know the difference it makes when you 
 cannot pay "cash" and have to ask for credit. 
 It is exactly the same with the State. Things 
 will be better when England starts to increase 
 production and pay for what it wants. 
 
 And they will not be better till then. 
 
III.— THE DEAD PARTNER* 
 
 The fact that a firm has lasted for two cen- 
 turies, in the same trade in the same city, 
 shows that so far as it is concerned the three 
 essential partners — Labour, Brain, and Capital 
 — must have worked together. For clearly, 
 if one of these partners had left the firm the 
 business would have come to an end. 
 
 Of much that has recently occurred in 
 Russia, a country bountifully endawed by 
 nature to be the fit home of a great and wealthy 
 people, we know nothing or next to nothing. 
 Of one outstanding fact we are sure: Dire 
 poverty and its awful companions — disease, 
 terror, and death — stalk through the land. 
 We know why. One of the partners is dead. 
 Capital has been killed. 
 
 No man will ever go right in studying the 
 social question unless he has clear and correct 
 notions about (i) capital; (2) capitalists; and 
 (3) the relation between them. 
 
 *From the Times Trade Supplement — issue of April 5, 1919. 
 12 
 
The Dead Partner 13 
 
 Take a big works, say a shipyard on the 
 Clyde, belonging to a limited company. The 
 whistle blows in the evening and all the men 
 stream out to their homes. Finally, the yard 
 is left silent and still, with only the night 
 watchman on duty. He walks about amongst 
 the capital — the buildings, the slips, the ma- 
 chinery, the raw materials, the half-finished liner. 
 These are the visible items of the company's 
 capital, and they are generally the more im- 
 portant part of it. There are, of course, items 
 the watchman could not see with his eyes — 
 the company's credit, its bank balances, the 
 book debts, the patent rights, and so on. 
 Capital means all these things. 
 
 The capitalists in this case are the persons 
 whose names are inscribed in the share-register 
 of the company. Some of them, no doubt, are 
 very wealthy. Others may be quite poor. 
 Some, perhaps, have the whole of their life's 
 savings invested in the company. They have 
 worked hard, and to them their capital means 
 that in their old age they will get some of the 
 fruits of industry that they have denied them- 
 selves in their prime. 
 
 Now, since capital is things and capitaUsts 
 
14 Ten-Minute Talks With Workers 
 
 are persons, it looks at first sight as if it would 
 be quite easy to **kiir' the capitalists without 
 affecting the capital. In Russia the killing 
 has quite often been literal putting to death. 
 No one in this country proposes that, at any 
 rate not openly; but many people who claim 
 to be '* advanced" thinkers want to persuade 
 our workers to put an end to capitahsts. Live 
 they certainly may: own capital they may 
 not. And this is said to be a paying propo- 
 sition from Labour's point of view. One 
 partner being dead, it is assumed that his 
 share will remain to be divided between the 
 others. 
 
 This theory has grave defects from higher 
 points of view. Looking at it, however, merely 
 as economics, we see that it leaves out of ac- 
 count the all-important truth that capital, 
 the thing, only does its share in the work of 
 producing by being used up. In the shipyard 
 you will see coal and steel, excellent specimens 
 of capital, being rapidly used up under your 
 eyes, and these must be replaced daily or even 
 hourly. The fact that bricklayers are at work 
 pointing one of the buildings and that section 
 hands are repairing the railway line shows 
 
The Dead Partner 15 
 
 that the more substantial forms of capital are 
 also used up, and want replacing. 
 
 On any given day, either by Act of Congress 
 or Parliament or by a sufficient use of machine 
 guns, it would be possible to kill off the capi- 
 taHsts, and leave the capital as it then stood; 
 but unless a new set of capitalists was called 
 into existence, there would be no capital left as 
 soon as the existing stock was used up. There 
 can be no industry without capital. So much 
 is clear. There can be no capital without 
 capitalists. If that also is not clear to any 
 worker, let him look at what is happening in 
 Russia. 
 
IV.— THE ORIGIN OF WEALTH* 
 
 When the Bible tells us that Mordecai 
 "sought the wealth of his people" it does not 
 mean that he tried to steal their property, but 
 that he diligently endeavoured to promote 
 their welfare. Wealth was once a broader 
 and, we may admit, a nobler word than it 
 is to-day. It once meant welfare; it now means 
 the material goods which secure to us one partic- 
 ular kind of welfare. Wealth does not en- 
 sure welfare, but welfare is difficult to all men 
 and impossible to most without some measure 
 of wealth. 
 
 It is one of the most difficult of the econo- 
 mist's tasks to measure the wealth of a nation. 
 For very important reasons it is now neces- 
 sary to have the most exact estimate of the 
 wealth of Germany, but it is obvious to any 
 one that there are very great differences of 
 opinion on the matter. We can see clearly 
 enough that national wealth is subject to vari- 
 
 *From the Timfs Trade Supplement — issue of April 12, 1919. 
 16 
 
The Origin of Wealth 17 
 
 ation. No one would deny, for example, that 
 England to-day is wealthier than Spain, 
 whereas in Queen EHzabeth's time Spain was 
 wealthier than England. Similarly, it is quite 
 clear that England is to-day very much wealth- 
 ier than she was in 1600, or in 1700, or in 1800. 
 In 1889 Sir Robert GifFen, a great authority, 
 estimated the wealth of the United Kingdom 
 at £10,000,000,000, or £270 per head. He 
 quoted from earlier writers an estimate of 
 the wealth of England in 1600 as £100,000,000, 
 or £22 per head. That was as far back as he 
 could go, but we can in our mind's eye trace 
 it right back to the misty times before history 
 begins, and the further back we go the smaller 
 we find man's accumulated stock of wealth 
 was and the feebler was his hold on life itself. 
 All men were once as the Eskimo and the 
 Australian bushman are to-day. Is it the 
 growth of wealth that has made civilization 
 first possible and then enduring? 
 
 THE SPRINGS OF WEALTH 
 
 The growth of wealth is due to two causes: 
 One is individual, and springs from man him- 
 self. The other is social, and depends on the 
 
1 8 Ten-Minute Talks With Workers 
 
 relation of men to one another. All through 
 history you can see these two causes operating 
 with ever-increasing strength, with the result 
 that wealth has accumulated with increasing 
 rapidity. 
 
 The beginning of wealth is any surplus over 
 present needs. But when the Eskimo gets 
 such a surplus he gorges and sleeps, and has 
 to begin again at the old level when his sur- 
 plus is exhausted. Something more than a 
 surplus is wanted, and that is the will to use 
 the time during which it lasts in turning out 
 new goods to supply new needs. When a 
 primitive man had sown his seed-corn and yet 
 had enough food-corn by him to last till har- 
 vest, his wife could sit and spin while he built 
 a better house or made utensils. In this way 
 wealth accumulated. And when money and 
 trade develop, these multiply a hundred-fold 
 ways of using surplus to the best advantage. 
 
 There is no other method of increasing wealth 
 than this old way of working for a surplus. 
 The intricate machinery of modern society 
 may hide but cannot alter the fact, for it is a 
 law of nature, and there is no appeal against 
 her ruling. The war compelled nations to 
 
The Origin of Wealth 19 
 
 consume faster than they produced, to suffer 
 deficits instead of making surpluses. They 
 did it for high and noble purposes, knowing 
 that, with a nation as with a man, life consisteth 
 not in the abundance of things possessed. 
 Now, these greater aims are accompHshed, 
 they must get back to the making of a surplus 
 if the community is to enjoy its former pros- 
 perity permanently. 
 
 In the earhest times it was seen clearly 
 enough that no man would create a surplus 
 unless he was secured in the possession and 
 enjoyment of it when made. The oldest codes 
 of law provide for this. "Thou shalt not 
 steal" is not only sound morals but practical 
 economics. The mark of Western civilization 
 is that it has, century by century, improved 
 the relations of men to one another in society. 
 Formerl}^, "the good old rule" was 
 
 They shall take who have the power, 
 And they shall keep who can. 
 
 But this "simple plan," as the poet called it, 
 kept society poor as well as individuals. To- 
 day, if a man filched a turnip out of a peasant's 
 barn, the whole force of society would come 
 
20 Ten-Minute Talks With Workers 
 
 down on him, through the local police-court, 
 to teach him better social conduct. So in- 
 grained is this feeling now that in a modern 
 mining camp, where men will drink and dice 
 with a murderer, they will combine in a mo- 
 ment to hunt down a thief. 
 
 The aim of true social reform is to bring to 
 greater perfection these two world-old causes 
 of the growth of wealth; that is, (i) to make 
 it easier for all who will make a surplus; and 
 (2) to secure them in the undisturbed enjoy- 
 ment of it. Plans which ignore the need for 
 a surplus and the need for security are doomed 
 by the nature of things to be disastrous. 
 
v.— THE FOUR FACTORS* 
 
 Until Adam Smith published his "Wealth 
 of Nations" in 1776, even wise men and prudent 
 statesmen were the victims of dangerous 
 fallacies when reasoning about national wealth 
 and the means to secure it. Since money- 
 measures wealth, it came to be identified with 
 it, which was much the same as confusing yard- 
 sticks with suits of clothes. 
 
 Again, the countries where the precious 
 metals abounded were supposed to be the 
 wealthiest countries. "They shall be my 
 East and West Indies," says old Jack FalstafF, 
 "and I will trade to them both." You will 
 remember that he got nothing but shame and 
 confusion of face out of his trading, for he 
 had wrongly estimated the Merry Wives of 
 Windsor. Men made a similar mistake in 
 deahng with the real Indies. They showered 
 on their kings barbaric pearls and gold, but 
 for all that were very poor countries because 
 
 •From the Tinus Tude Supplement — issue of April 19, 1919. 
 21 
 
22 Ten-Minute Talks With Workers 
 
 they were ill-suppHed with the four factors of 
 wealth production. 
 
 Two of these factors must be there before 
 any start can be made in the production of 
 wealth. These original factors are: (i) The 
 gifts of nature, land in particular, and (2) labour. 
 The other two, (3) capital and (4) organization, 
 are the result of social life and growth. They 
 were present, of course, in rudimentary forms 
 soon after a start was made, but their decisive 
 importance in relation to the other two came 
 later. The land we Hve in is in all essentials the 
 same England which bred the famous sea-dogs of 
 EHzabeth's day. In size and climate, in soil and 
 rocks and minerals, it is unaltered and unalterable. 
 
 If we were to plot out a piece of the Sahara 
 of the same size and shape as our own country, 
 how many of us would it support in comfort.? 
 Obviously not more than a few score, settled 
 in the rare oases. So that the first requisite 
 of wealth production is one which man does 
 not create and cannot do much to control. 
 In some lands "You tickle nature with a hoe 
 and she smiles with a harvest." In others 
 the severest toil only wrings a miserable pit- 
 tance out of her niggardliness. 
 
The Four Factors 23 
 
 The return in wealth which is given by the 
 fixed and unalterable dowry of nature depends 
 on the number and character of the people 
 who use or "exploit'* this dowry. Before 
 white men settled what is now the United 
 States, this country, though endowed perhaps 
 more bountifully than any other, was poor 
 indeed. The Red Indians had their virtues, 
 but they were not the industrial virtues. When 
 Britons emigrated to America, their training 
 in industr}^ enabled them to lay the foundations 
 of the great America of to-day. 
 
 This is so clear as not to be disputable when 
 taking a historical surve}^ of the growth of 
 industry in a modern country like our own. 
 What is not so clear is that it still remains 
 true. We can form a picture in our mind's 
 eye of the Pilgrim Fathers winning their way by 
 hard wrestling. Their task was no harder than 
 ours of to-day, when we have the colossal waste of 
 the war to make good, and nothing but hard, 
 conscientious and intelligent work will do it. 
 
 CAPITAL AND ORGANIZATION 
 
 Let us now consider the two original factors 
 as fixed. We then have a given number of 
 
24 Ten-Minute Talks With Workers 
 
 people exploiting a given extent of country. 
 Their success in doing it will depend upon 
 the two factors which have come into import- 
 ance as society has developed. 
 
 The first of these is capital, which is always 
 spoken of as so much money. Even with 
 respect to a given individual, this is only a 
 sort of shorthand definition, and a nation's 
 money is one of the smallest and least important 
 items in its capital. Our national capital 
 is that stock of tools, machines, engines, build- 
 ings, and transport agencies which we have got 
 together to assist labour to turn nature's en- 
 dowment to the best account. It rests entirely 
 with ourselves to what extent this stock of 
 capital shall grow. 
 
 Until comparatively recent times the owner 
 of capital was generally the person who applied 
 it to industrial uses. As capital became more 
 and more important, its successful application 
 to industry came to require more and more 
 skill, and consequently men who could organize 
 businesses came to be of great account. The 
 capitalist tends more and more to become a mere 
 shareholder, and the success of the company de- 
 pends on how it is "run.'' All of us have op- 
 
The Four Factors 25 
 
 portunities of watching the factor of organiza- 
 tion at work, for of two ** mills,'* with equally 
 good workers and equal amounts of capital, 
 one thrives while the other fails. 
 
 Because of certain special forms (trusts and 
 combinations of commercial and industrial 
 interests), organization has attracted more at- 
 tention as a factor of wealth-production in 
 other countries than in Great Britain. But 
 it is there that its greatest triumph has been 
 won, for forty-five million people live in those 
 little islands; and, taking them as a body, they 
 do very well indeed, thanks to a good store of 
 natural resources, exploited by skilful and in- 
 dustrious workers, using large accumulations 
 of capital, and directed by fine organizing 
 ability. 
 
VI.— THE PILLARS OF SOCIETY* 
 
 Charles II on one occasion received a gift 
 which was at the time considered well worthy 
 of reception even by Royal hands. It was 
 a few pounds of tea. **The dehcate juice," 
 as it is called by the first European writer who 
 refers to it, the Italian Botero in 1590, was at 
 first only sipped by Royalty as the rarest of 
 luxuries, and is now the common drink of all. 
 If there are such things as secular miracles, 
 this is one. It shows in the clearest fashion 
 the good work which the economic organization 
 of society can turn out. Yet in how many 
 households is a moment's thought ever given 
 to thatreal marvel, the teapot on the luncheon 
 table filled with its "dehcate juice."? 
 
 It is worth while then to examine the way in 
 which this noteworthy fact of the cup of tea 
 comes about, for it is not only a familiar fact but 
 a typical one, so that our examination of it will 
 take us down to the foundations of society. 
 
 *From the Times Trade Supplement — issue of April 26, 1919. 
 26 
 
The Pillars of Society 27 
 
 Notice, to begin with, that the cup of tea 
 on your dining table is yours. It is a com- 
 modity about to satisfy a want, and as you feel 
 the want, you must be able to control the com- 
 modity. If, as was recently happening daily 
 in Munich, another could snatch the cup out 
 of your hand as you raised it to your lips, your 
 want would go unsatisfied because your prop- 
 erty had been taken from you. There was a 
 time when a man^s power to dispose of his own 
 property in the satisfaction of his own wants 
 depended on the strength of his right arm. 
 Now the law is your right arm. 
 
 But the cup of tea on your dining table 
 is only your property because the tea plantation 
 in Assam or Ceylon is someone else's property. 
 The two rights are linked together. If out there 
 the law failed to maintain social order, so that 
 tea plantations were grabbed by any man or 
 body of men who could exert physical force 
 enough to do it, there would soon be no tea 
 plantations there and no cups of tea here. 
 
 HEALTHY COMPETITION 
 
 The first pillar on which society rests is 
 private property. This does not mean that 
 
28 Ten-Minute Talks With Workers 
 
 society has no claim on the property it safe- 
 guards. It has; and to-day that claim is most 
 thoroughly and rigorously pressed. A man 
 died recently leaving a huge fortune, of which 
 the Government claimed a very considerable 
 part as "death duties." It does mean that 
 having, in its own interests, stated and exacted 
 its own claims, society must, also in its own in- 
 terests, see that the balance which it does not 
 claim is rigorously safeguarded for the owner. 
 How much society can claim without defeating 
 its own object by destroying the motive to 
 create wealth is a very important question. 
 
 In the next place, the cup of tea is on your 
 dining table because any one who likes is free 
 to offer to serve you, the consumer of tea, in 
 the capacity of a supplier of tea. And since 
 men have of their own free will undertaken this 
 work, and of these men you have selected one 
 to serve your turn, he knows that he must do 
 it well or lose your custom. There is nothing 
 improper or immoral in changing your grocer 
 because you do not like his tea — in compelling 
 him, that is, to compete with his fellow-grocers 
 for your custom. It is never, as you know, 
 competition which serves us to which we object 
 
The Pillars of Society 29 
 
 but only that competition which injures us. 
 But we cannot have the advantages of the 
 one without submitting to the stress of the 
 other, and in fact every man worth his salt, 
 whatever his station in life, is the better for 
 having to compete with others. 
 
 During the war competition had to be 
 superseded in many directions by rationing. 
 The way in which we braced ourselves to the 
 new system and made the best of it was re- 
 markable, but everybody welcomes the relaxa- 
 tion of control and the consequent revival 
 of competition, because the war showed how 
 much better served the public was when it was 
 "up to" its servants, the shopkeepers, to serve 
 them well or lose their custom. InteUigent 
 competition between individuals able to com- 
 pete is the best safeguard of efficient social 
 service, and is the second pillar on which society 
 rests. 
 
 In the third place, your cup of tea is at your 
 disposal because there is an equal chance for 
 any person who so desires to become its pur- 
 veyor. Castes and guilds and "mysteries" 
 no longer stand between any man and his 
 career. Any man who wishes may become 
 
30 Ten-Minute Talks With Workers 
 
 a grocer. That is the modern way, less pic- 
 turesque and not at all a beaten track, but a 
 much more efficient way. The third pillar 
 on which society rests is equality of opportunity 
 for all. 
 
 Granted, as it must be granted, that the 
 society resting on these three pillars is not 
 perfect in all its parts, it is still clear enough 
 that to knock away any or all of the pillars 
 will simply bring society down in ruins. That 
 was mere theory two years ago; it is now an 
 indisputable truth. 
 
VIL— WHAT IS CAPITAL?* 
 
 If you glance over the older books on political 
 economy you will see that they contain long 
 and wrangling discussions as to capital. Cer- 
 tainly many generations of students at our 
 older universities have sharpened their wits 
 against John Stuart Mill's " Fundamental Prop- 
 ositions Respecting Capital/* and especially 
 the last and most famous, which is that "a 
 demand for commodities is not a demand for 
 Labour." These skirmishes in the text-books 
 have been a mere picnic compared with the 
 battles that have been fought around capital 
 in the great world outside our ancient univer- 
 sities. 
 
 It is always a good plan to study the word 
 that stands for a thing as a help to under- 
 standing the thing itself. Now there are 
 three common words which are all so nearly 
 related to one another that they may be written 
 thus: cattle — chattel — capital. Capital, 
 
 *From the Times Trade Supplement — issue of May s, 1919. 
 31 
 
32 Ten-Minute Talks With Workers 
 
 then, is a thing, a chattel — sonething that can 
 be seen with the eyes and touched with the 
 hands; and it looks as if the origin of capital 
 goes back to those far-ofF times when man was 
 deeply concerned with those living things now 
 called in our language "cattle," from which 
 he could get constant supplies of food and cloth- 
 ing, at that time his only idea of wealth. 
 
 The only logical way of looking at the age- 
 long history of man is to take for granted 
 that the higher grew out of the lower; the com- 
 paratively good out of the relatively bad. 
 Men who lived by keeping animals must have 
 come later than men who lived by killing them. 
 The pastoral stage follows on the hunting stage. 
 One day, back there in the times we have to 
 imagine as best we can, there appeared on earth 
 the first capitalists — men who had captured 
 and tamed cattle instead of kilHng them, and 
 who, claiming them as their own, called them 
 ** chattels," a lawyer's term for one kind of 
 property. 
 
 FOUNDATIONS OF SOCIETY 
 
 Human nature alters very slowly, if it alters 
 at all, and we may be pretty sure that man's 
 
What Is Capital? 33 
 
 need for capital and the services it does for 
 him are in principle to-day what they were 
 then. These early capitaHsts, it will be seen, 
 postponed the kiUing and eating of captured 
 animals in order that they might have 
 later on a larger supply always available. 
 They thus became far wealthier than they 
 had been before, and, what was of greater 
 social consequence ultimately, the ups and 
 downs of hunting — abundance one week and 
 penury the next — became a thing of the 
 past. 
 
 Let us turn at once from this peep at ancient 
 society and look closely at our own. We see 
 that it differs from this older society in this 
 respect. Men in a modern society are sur- 
 rounded by a vast and complicated mass of 
 things, which, collectively, are spoken of as 
 "wealth," from the economist's point of view, 
 and "property," from the lawyer's point of 
 view. 
 
 The first business of a scientist is to 
 classify the objects which his science deals 
 with. If we do the same, we see almost at 
 once that these things called "wealth" or 
 "property" fall into two great groups. Let 
 
34 Ten-Minute Talks With Workers 
 
 us put some of them into their right group, 
 as follows: 
 
 First Group 
 
 A factory 
 A dray-horse 
 A motor-truck 
 A five-dollar gold piece 
 A bale of raw cotton 
 A Jacquard loom 
 Williams on "Real Prop- 
 erty" 
 A sack of wheat 
 An ox 
 
 A roll of printing-paper 
 A jar of marmalade in a 
 grocery store 
 
 Second Group 
 
 A cottage 
 A hunter 
 A touring car 
 A watch charm 
 A lady's blouse 
 A bicycle 
 Shakespeare's Works 
 
 A loaf of bread 
 A roasted sirloin 
 A copy of the Times 
 The same jar on the break- 
 fast table. 
 
 The difference between the two groups is 
 obvious. All these things are wealth, since 
 all of them are worth something, and can be 
 sold for money. They are all property, since 
 in respect of each of them there is one person 
 whom a law court would declare to be the 
 owner to the exclusion of every other person. 
 From the economic point of view, however, 
 there is a clear-cut distinction between them, 
 for, whereas the "goods" in the right-hand 
 column directly satisfy the wants of man, 
 
What Is Capital? 35 
 
 those in the left-hand column do not. The 
 former are " consumption-goods,'^ the latter 
 "production-goods," or capital. 
 
 Production-goods are destroyed as such in 
 passing into consumption-goods, just as the 
 latter in turn are destroyed, in a longer or 
 shorter time, in satisfying human needs. A 
 lady's blouse wears out very rapidly; the Jac- 
 quard loom that wove its material also wears out 
 at last. The well-being of us all depends most 
 closely on the supply of capital, which, as is now 
 clear beyond dispute, is not some noxious weed 
 which is choking the goodly growth of society, 
 but the bridge between the gifts of nature and 
 the needs of man, the link between the industry 
 of the past and the industry of the future. 
 
 Sometimes the two kinds of goods, as in 
 our last items, are ahke in form and differ only 
 in place, but all economic effort resolves itself 
 in the end into turning production-goods into 
 consumption-goods. 
 
 What, then, are capitalists? Always the 
 owners of production-goods or capital; often 
 they are also the supervisors of the processes by 
 which society gets goods to consume the order 
 to satisfy its wants. 
 
36 Ten-Minute Talks With Workers 
 
 And a man who is not a capitaHst becomes 
 one when he decides not to buy an article for 
 consumption from the stock already existing, 
 but to use his money to increase the supply of 
 production-goods. Society, therefore, needs 
 both capital and capitaHst. 
 
VIII.— WHAT CAPITAL DOES* 
 
 Financially, the capital of a given firm is 
 the market value in money of all the things 
 it possesses and uses for the purpose of carry- 
 ing on its business. The constant use of money 
 as a measure of capital tends to hide the real 
 nature of capital. Socially, capital is that part 
 of the wealth of the nation which is used not 
 for the direct satisfaction of human needs, 
 but for the production of commodities which 
 can provide these satisfactions. In its right 
 place, the bicycle factory, a ton of steel tubing 
 is very useful. If it was dumped down in 
 front of your house you would rightly regard 
 it as a nuisance. A bicycle, of course, would 
 be another matter entirely. If we think of 
 capital as things, not as money, our reasoning 
 in economics will never get into a tangle. 
 
 The functions of capital may be considered 
 from two points of view: (i) that of society in 
 general, and (2) that of the workers in particular. 
 
 *Frona the Times Trade Supplement — issue of May lO, 1919. 
 
 37 
 
38 Ten-Minute Talks With Workers 
 
 Capital enables the production of goods to 
 be carried on by methods which give the best 
 possible results in output. You live in the 
 middle of a large town, yet you have at your 
 very hand, at any moment of the day or night, 
 a full supply of the commodity you need most 
 — fresh water. All you have to do is to turn 
 a faucet, and that faucet is the last visible 
 piece of a vast accumulation of capital — pipes, 
 pumping machinery, and reservoirs — which 
 brings you water from a mountain lake a hun- 
 dred miles ofF. If you live in the country, 
 you would have a well, a winch, a rope, and a 
 bucket — also a mass of capital, but requiring 
 far more effort on your part to get at the water. 
 If even this small array of capital vanished, 
 and every time you wanted a drink you had 
 to go to the stream and scoop the water up in 
 your hand, you would have a painful lesson 
 in the economics of capital. 
 
 A REMARKABLE FEAT 
 
 Capital enables us, then, to substitute for 
 straightforward but inefficient methods of pro- 
 duction the methods which are roundabout 
 but efficient. The savage kills an animal and 
 
What Capital Does 39 
 
 uses the dried pelt as a garment. Nothing 
 could be more direct. It is recorded that in 
 the eighteenth century an Englishman won a 
 big wager by dining one night in a jacket which 
 had been wool on a sheep's back twenty-four 
 hours previously. That was much less direct. 
 To-day a sheep-farmer in Wyoming will wear 
 a suit made from cloth manufactured in Massa- 
 chusetts from wool grown in his own district, 
 perhaps on his own ranch. Nothing could be 
 more roundabout, but it is the modern way, 
 thanks to capital. 
 
 Again, capital, though it makes production 
 roundabout, makes it constant and certain 
 instead of intermittent and dubious. You 
 cannot but notice how independent we have 
 become of local fluctuations in natural supplies. 
 In England, in the Middle Ages, Yorkshire 
 might be starving while Surrey was bursting 
 with harvest. Now, at any rate in peace 
 times, the processes of manufacture and the 
 flow of commodities are so constant that even 
 slight interferences when they occur, as through 
 an industrial dispute, are regarded as strange. 
 Once they would have been too usual to be 
 noticed much. 
 
40 Ten-Minute Talks With Workers 
 
 Once more, capital enables productive proc- 
 esses to be carried on while the result is remote 
 in time, while those who carry them on are 
 still in a position to enjoy, meanwhile, all the 
 , necessaries and comforts of Hfe. Unaided labour 
 has to live from hand to mouth, to produce to- 
 day the goods which will satisfy the needs of 
 to-day. Capital relieves industry of this neces- 
 sity, and enables plans to be laid far ahead and 
 a distant return to be waited for in comfort. 
 
 HOW LABOUR BENEFITS 
 
 From the point of view of Labour, it is to be 
 noted in the first place that Capital in the 
 specialized form of machinery and engines is 
 constantly relieving man of more and more 
 of the "donkey work" of industry. Coal' 
 cutters, for example, relieve miners of much 
 heavy work without reducing their earnings. 
 Too much cannot be done to reheve man of 
 toil that steam and electricity can do as well as 
 he. 
 
 Again, Capital takes the risks of industry 
 ofF the shoulders of Labour. The first claim 
 on the product of industry, both in fact and 
 in law, is the wages of the workers. That 
 
What Capital Does 41 
 
 the goods when produced do not sell, or are 
 sold at a loss, makes no difference to this first 
 and most important claim. And since Capital 
 must shoulder the risks of production, caution, 
 insight, and brains become of increasing import- 
 ance, and so again tend to improve the national 
 industry and increase its output. 
 
 The difference made in the output of labour 
 when assisted by highly specialized forms of 
 capital is almost incredible. It was calculated 
 that the labour-power used in growing barley 
 in the United States in 1896, if it had only the 
 capital-power of 1830 at its disposal, would 
 have produced just under three million bushels, 
 whereas, with the actual capital-power of 1896 
 to aid it, the harvest was nearly 70 million 
 bushels. In other words, nearly 96 per cent, 
 of the product was due to capital. Another 
 calculation showed that capital-power appUed 
 to pinmaking increased the efficiency of the 
 labour-power no less than ninety-fold. • 
 
 This, then, is what capital does, and this 
 is the service that capitaHsts render to society. 
 It also explains why, in Russia and elsewhere, 
 the enemies of capital turn out to be the 
 enemies of mankind. 
 
IX.— HOW CAPITAL GETS TO WORK* 
 
 Think of capital as things and you will 
 always go right in your thinking about capital. 
 So far we have steadily kept to this rule. For 
 it has this great advantage, that when you come, 
 as you must at certain times and for special 
 purposes, to think of capital in terms of money, 
 you still continue to think in straight lines and 
 not in tangles. 
 
 As you walk about England, still by far the 
 best way to see it as it is, you come every 
 now and again on a curiously narrow, straight 
 bit of land, grass grown and tangled, with a 
 hedge on each side. It looks like a ruler-shaped 
 field. There are several reasons to account for 
 these ribbons of grass-land, all of them very 
 interesting. One of them is that it is a bit 
 of old Roman road. There are other bits of 
 Roman road that you can distinguish from a 
 stretch of modern road only by their straight- 
 ness, for to a Roman engineer a road was the 
 
 •From the Times Trade Supplement — issue of May 17, 1919- 
 42 
 
How Capital Gets to Work 43 
 
 shortest distance between two given points. 
 You can motor to-day over miles of road along 
 which the legions of Severus and Agricola 
 marched. 
 
 Now a road Is a typical piece of capital. If 
 you want to walk for pleasure you take to the 
 fields. Roads are business routes. 
 
 But a road would very soon go out of business 
 if it was not "kept up," and the annual cost 
 of keeping-up the Nation's highways is enor- 
 mous. For nearly 2,000 years money has been 
 spent freely on those bits of Roman roads in 
 France and England still in use to keep them 
 as roads. Where it has not been spent, you 
 see the result — "No Road." 
 
 Money is shorthand for capital. If you 
 asked: "What is the capital of the Pennsylvania 
 Railroad.?" and someone began to reel off" an 
 inventory of the line — so many thousand loco- 
 motives, so many tens of thousands of carriages, 
 down to so many balls of string and lumps of 
 chalk — you would really be none the wiser. 
 When the capital is given in money you can 
 carry it in your head. Moreover, you can 
 compare it with other capitals. 
 
 This is one convenience of thinking of 
 
44 Ten-Minute Talks With Workers 
 
 capital in terms of money. There is, however, 
 a much better reason than this. For income 
 is also measured and paid in money, and 
 unspent income is the only source of new capital. 
 Capital wears out with use. Some of it, cir- 
 culating capital as the old text-books call it, 
 can be used only once; some of it, fixed capital, 
 can be used over and over again, but that, too, 
 wears out and must be replaced. Shoe-leather 
 is circulating capital, and you know how clever 
 your youngsters are at circulating it. A 
 Blake stitcher is fixed capital. It makes many 
 shoes, but goes to the junk pile in the end. 
 
 All good firms devote part of their profits 
 or income to keeping up their capital. They 
 have a depreciation account, in money, which 
 grows larger as the capital-goods they own de- 
 teriorate, and it is spent on renewing or replac- 
 ing them. 
 
 UNSPENT MONEY 
 
 The unspent income of private persons goes 
 into banks. Stockings as banks have fortu- 
 nately gone out of fashion. Money in a stock- 
 ing does nothing. Money in banks soon gets 
 to work. It becomes capital. 
 
How Capital Gets to Work 45 
 
 At one time, then, unless a man could use 
 his unspent income in his own business, he had 
 no other resource than to let it lie idle. You 
 see in museums and old curiosity shops the 
 oak coffers, with heavy iron hinges and locks, 
 in which it was kept. It was, then, a natural 
 and profitable development that a class of men 
 should arise who would devote themselves to 
 getting this idle money out of these coffers and 
 set it to work as capital. A capitaKst is a man 
 who owns capital. He often, but not always, 
 is a man who knows how to use his unspent 
 income as new capital. When he does not know 
 this, the man who can show him how is just the 
 friend he wants. Let us call such a friend 
 a financier. Then we may put the position 
 thus: A capitalist owns economic-power, which 
 in outward form is so much unspent income in 
 bank or strong box. A financier is a man who is 
 on the lookout for new and useful ways in which 
 this idle economic power can be got actively to 
 work in the national industry. CapitaKst and 
 financier are partners in the maintenance and 
 increase of our national supply of capital. 
 
 Before we note the obvious disadvantages 
 of this partnership, we must observe that it 
 
46 Ten-Minute Talks With Workers 
 
 has to exist, in some form or other, if the eco- 
 nomic interests of society as a whole are to be 
 properly served. Some person or persons there 
 must always be who shall provide the channels 
 by which the numerous tiny driblets and rivulets 
 of private savings can run into the great stream 
 of our national industry, for if that dries up 
 the national life will begin to flag and decay. 
 And, as recent experience in England has shown, 
 no one can do it worse when he tries than a 
 Government official. 
 
 The disadvantage, of course, is that the 
 sound, acute, and honest financier is apt to 
 be simulated by the shady and unsound "com- 
 pany promoter," who merely lies the money 
 out of the investing public and loses it for them. 
 Much capital is thus wasted. 
 
 There are, however, remedies available. The 
 law can be made far more stringent than it 
 now is, and so choke most, if not all, of this 
 nefarious financing. Also, persons with capi- 
 tal on the lookout for a financier need not let 
 greed for impossible dividends blind their judg- 
 ment, and can always get advice from their 
 bank managers. Penal servitude and common 
 sense could cure all the evil. 
 
X.— THE SANITY OF SOCIETY* 
 
 Nothing is easier than to denounce society. 
 The news printed in any issue of a newspaper 
 will provide a hundred texts for a hundred 
 screeds, all as much alike as the leaves on an 
 oak tree, and none of them helpful. The idle 
 rich are contrasted with the deserving poor — 
 idleness and desert being taken for granted, 
 and the trick is done. 
 
 Now, clearly enough, to assert that society 
 is all wrong is to assume that our forebears were 
 all fools, an assumption not to be made lightly. 
 For society as we have it was their work, 
 being in part an unconscious growth from their 
 habits and instincts as human beings, and 
 in part the conscious adaptation of that 
 growth, by lopping and pruning and grafting, 
 to ends deemed to be socially desirable. 
 The task of economic science, the practical 
 result w^e should like to see issue from its 
 investigations, is to ascertain within what limits 
 
 •From the Times Trade Supplement — May 24, 1919. 
 
 47 
 
48 Ten-Minute Talks With Workers 
 
 further conscious adaptation is desirable and 
 possible. 
 
 In the meantime, there is a bigger fact to 
 be observed than the famous "upper ten" 
 at one end of the social scale and the "sub- 
 merged tenth" at the other, and that is the 
 serried ranks in between — millions of men and 
 women and children who do, in one measure 
 or another, enjoy the comforts and amenities 
 of life. If you live in one of our moderate- 
 sized towns, which knows not the glaring con- 
 trasts of New York or London, and where social 
 phenomena can be seen steadily through a clearer 
 and clearer atmosphere, you will see, if you ob- 
 serve things with an unprejudiced eye that, 
 taking the broad results, men get out of society 
 on an average and in the long run what they 
 put into it. The mechanism of society is 
 sound enough, and the social mind is sane 
 enough, to bring about a fairly close approxima- 
 tion of merit and reward. A man gets what 
 he is worth, and that is all he can rationally 
 expect. 
 
 Another point is of great importance. All 
 over the world now, as you ponder over this 
 talk, men are at work for you — planting the 
 
The Sanity of Society 49 
 
 coffee you will one day drink, sowing the corn 
 you will one day eat, shearing the wool you 
 will one day wear, curing the tobacco you will 
 one day smoke, and so on indefinitely. You 
 can do none of these things for yourself. Un- 
 less they are now done for you, you will, in 
 the short run, be on the rocks. These men 
 do not do these things because they love you. 
 To begin with, they do not even know you. 
 They do them to serve themselves, yet they 
 also serve you. In other words, society is 
 sane enough and clever enough so to organize 
 the self-regarding instincts of man as to pro- 
 duce results that could not be bettered very 
 much at any given moment if men suddenly 
 became what they never will be, absolutely 
 unselfish and altruistic. 
 
 OTHER GOOD POINTS OF SOCIETY 
 
 Again, as society is now organized, the re- 
 sults of failure come home to those who fail. 
 There are exceptions, to be sure, but the general 
 rule is clear enough. Would you really like 
 it altered? If a friend fails in business you 
 are very sorry, and naturally do all you can 
 to ease his fall and put him on his feet again. 
 
50 Ten-Minute Talks With Workers 
 
 **The friendly lead" is a standing tribute to 
 the sweetness in human nature. But, on reflec- 
 tion, you see that the fact that failure comes 
 home to those who fail is a powerful educa- 
 tive factor which society cannot aflPord to dis- 
 pense with. 
 
 Observe that it is not a question of abrogating 
 the rule. That we could not do if we would, 
 for no legislative legerdemain can make failure 
 into success. The question is, rather. Would 
 it be social wisdom to alter it if we could ? The 
 answer is clearly in the negative. Society, that 
 is, is sane on this vital matter. Once more, 
 we find it utilizing the basic instincts of the 
 individual, and organizing them for the common 
 good. 
 
 Finally, as we can see that the great body 
 of society is all right, we learn that the line 
 of advance is to deal with the part that is ad- 
 mittedly unsound. Nothing said so far implies, 
 or is intended to imply, that undeserved poverty 
 is to blemish forever the fair face of society. 
 Some poverty is the economic result of failure, 
 but most of it is due to want of opportunity. 
 There has been no failure because there has 
 been no chance of success. 
 
The Sanity of Society 5I 
 
 It is in dealing with this problem that society 
 has got to make a new and better use of its 
 sanity. We all see that now, and are pre- 
 pared to follow where the truth leads us. It 
 will not lead us to Bolshevism. So far as 
 that is an attempt to mend the economic frac- 
 tures of society it has been a grievous failure — 
 a total wreck, not a repairing job. 
 
XL— THE COST OF AN ARTICLE* 
 
 "The second thing I would fain have had," 
 says Robinson Crusoe, "was a tobacco-pipe; 
 but it was impossible to me to make one; 
 however, I found a contrivance for that, too, 
 at last." And after three or four years had 
 elapsed he writes again: "But I think I was 
 never more vain of my own performance, 
 or more joyful for anything I found out, than 
 for my being able to make a tobacco-pipe. 
 And though it was a very ugly, clumsy thing 
 when it was done, and only burnt red like other 
 earthenware, yet as it was hard and firm, and 
 would draw the smoke, I was exceedingly 
 comforted with it/' 
 
 There are few better text-books of elemen- 
 tary political economy than "Robinson Crusoe," 
 though it is now the fashion to smile when one 
 refers to it, since Robinsonian economics, as 
 they are called, look very unlearned beside the 
 geometrical diagrams and slabs of calculus 
 
 *From the Times Trade Supplement — issue of June 7, 1919. 
 52 
 
The Cost of an Article 53 
 
 which are now so much in vogue. But Defoe 
 was a sun-clear thinker as well as a delightful 
 romancer, and his account of the efforts of his 
 shipwrecked hero to satisfy his needs is as sound 
 as it is effective. Anyhow, in trying to find 
 out what is meant by the cost of an article 
 we cannot do better than start by asking what 
 Robinson Crusoe's tobacco pipe cost him. 
 And, as he was alone, and there were no com- 
 plications due to social growths, the answer 
 leaps out from Defoe's vivid pages. And it 
 is this: The cost of Crusoe's pipe was the 
 effort of making it, and his joy over his first 
 smoke shows that he felt he had got a bargain. 
 To begin with, as you will observe, we are 
 keeping clear of the wire entanglements of 
 money. Just as we thought of capital as 
 things, so we are now to think of cost as efforts. 
 You go down to breakfast and pick up the loaf 
 on the table. All the efforts that went to the 
 making of his pipe Crusoe himself exerted. 
 Of the long chain of connected efforts, ending 
 with that of the baker's boy who brought the 
 !oaf to your door, you have exerted none. 
 The price of the loaf is the money you paid 
 for it. The cost of the loaf is the sum of the 
 
54 Ten-Minute Talks With Workers 
 
 efforts that have gone to the making of it. 
 The connection between the two things, price 
 and cost, is this: You do not want a single 
 link in the chain of costs that need not be there, 
 while you have got to make it worth the while 
 of every man who contributes a link to go on 
 with the job. In short, you do not want to 
 come down to breakfast to-morrow and find 
 no loaf. 
 
 THE WEALTH-CREATING POWERS 
 
 Now this is where some people try to make 
 difficulties that do not exist for intelligent 
 people. They see the effort of the man who 
 sows the corn, of the man who reaps it, of 
 the sailor or the railroad engineer who transports 
 it, of the miller who grinds it, of the baker who 
 bakes it, of the boy who delivers it. All these 
 efforts, they agree, form part of the real cost 
 of the loaf, and must be duly compensated in 
 the cash paid by the eater of the loaf. The 
 loaf-creating powers of labour are admitted by 
 all. 
 
 But the corn was ground in a mill, and 
 a mill is capital, belonging to a capitaHst. 
 What effort does he put forth entitling him to 
 
The Cost of an Article 55 
 
 compensation? His legal right is, of course, 
 obvious, but what is his economic right? The 
 loaf-creating powers of the capitalist mill- 
 owner are denied by many. He is pictured 
 for the sake of effect as an idle lounger, waxing 
 fat on the exaction of "tolls" to which he has 
 no economic right, and to which a wiser form 
 of society would deny him a legal right. 
 
 Now if it were an easy thing to create cap- 
 ital, there might be something in this argu- 
 ment. Capital we must have. Our very ex- 
 istence now depends on a full and continuous 
 supply of it. The men who create capital in- 
 crease production, sometimes increase it a hun- 
 dredfold, as we saw in the case of the American 
 barley crop. The wealth-creating powers of 
 capital are no less marked than those of labour. 
 So on that account only the owner of capital 
 is economically entitled to a share of the product. 
 
 The older economists told us that the share 
 of capital was the reward of "abstinence," 
 and there is much truth in this, for the origin 
 of new capital is always unspent income, and 
 saving involves the deHberate foregoing of 
 present satisfactions. But, as a matter of 
 fact, much capital is contributed by men who, 
 
56 Ten-Minute Talks With Workers 
 
 on account of their large incomes, cannot ra- 
 tionally be said to abstain from the enjoyment 
 of any present satisfactions. And the economic 
 justification of their share of the product of 
 industry lies in the wealth-creating power of 
 the capital they own. These men, moreover, 
 are usually distinguished by business capacity 
 of the highest order, which society, in its own 
 interests, must command, and must therefore 
 pay for. 
 
 The cost of an article is therefore the sum 
 of wealth-creating efforts that have gone to 
 its production. These efforts are contributed 
 under modern conditions by two sources — 
 labour of hand or brain, and capital. To both 
 sources compensation is economically due, and 
 is forthcoming out of price. 
 
XIL— WHAT IS A MARKET?* 
 
 For an account of what a market was like 
 in England in the far-ofF ages before history 
 begins, ages which are so dim that not even 
 the oldest legends go back to them, we must 
 go to Mr. Howitt's account of a market between 
 groups of Australian black fellows. 
 
 The two parties approach the appointed 
 spot, the men in front armed to the teeth and 
 the women behind carrying the goods. The 
 chiefs go out ahead of their respective troops, 
 and assure each other that they come in peace 
 and not for war. After other formalities the 
 market opens. A boomerang, for example, is 
 exchanged for a bundle of cord for tying up 
 the hair. "If in these cases," says Mr. Howitt, 
 "the parties are not satisfied, there is first an 
 argument, and then a regular combat between 
 all the men present." 
 
 The chief points of a market appear even 
 in this primitive meeting. It is a definite spot 
 
 'From the Times Trade Supplement — issue of June 14, 1919. 
 
 57 
 
58 Ten-Minute Talks With Workers 
 
 where at an appointed time an exchange of 
 goods takes place. Not in particular that there 
 is no passing of money. Goods are exchanged 
 for goods. Money came later, and the market 
 was settled in a given place, often distinguished 
 by a "market cross," still standing in many of the 
 older English towns. Note, too, that the modern 
 tendency is to do away with the use of money in 
 all big markets, where it is replaced by "paper.'* 
 If by some unexpected whim all the merchants 
 and dealers in New York City took it into their 
 heads next Monday morning to trade for "cash 
 down," business would come to a dead stop. 
 
 Schoolboys are forever "swapping" their 
 peculiar treasures — a top for a dozen marbles, 
 a pen-knife for a baseball-bat, and so on. In- 
 deed, Adam Smith thought that man had an 
 inborn tendency to truck or barter — a sort of 
 marketing instinct — and even modern psycholo- 
 gists think the point worth investigating. Cer- 
 tainly we cannot go back to a time when men did 
 not trade. Amber, found only in the Baltic, 
 was common in the earliest ages of Ancient 
 Greece. And epochs before that goods moved 
 about the pre-historic world in marvellous 
 fashion. Expert judges think that certain 
 
What Is a Market? 59 
 
 stone axes, discovered in France along with 
 other rehcs of primitive man, are made of a 
 kind of jade found only in far-off Asia. 
 
 MARKETS ONCE LOCAL LUXURIES 
 
 This peep at the trading of our primitive 
 ancestors and their present-day representatives 
 ■■ — the Australian black fellows being a sort 
 of living ancestors — shoWs us that markets were 
 originally a luxury. Trade begins with the 
 exchange of superfluous goods. A man with 
 a tomahawk to spare barters it for a bundle 
 of hair-cord. Goods are made for personal use, 
 not for sale in a market. Later, as life becomes 
 settled and industry more productive, separa- 
 tion of employments, which the economists 
 usually miscall ** division of labour," begins. 
 The markets become necessary, and are fixed 
 for known spots and certain dates. But for 
 long ages markets are only local. When on 
 market-day in a country town you see a farmer 
 sell three cows and buy a plough, you are watch- 
 ing a process of marketing which has gone on 
 unchanged in essentials from time immemorial. 
 
 But these local markets, important as they 
 are even to-day in our rural economy, are of 
 
6o Ten-Minute Talks With Workers 
 
 little consequence in comparison with the 
 developed markets of the modern world. For 
 markets, once merely local institutions, have 
 become nation-wide, and finally world-wide. 
 If you go into the gallery of the Manchester 
 Cotton Exchange, in England, you will look 
 down on a vast swarm of men doing business 
 together. At one end of the Exchange is a 
 large board on which prices are displayed. The 
 figures are altered, and there is a hum of busi- 
 ness. Prices having changed in New Orleans, 
 the news is flashed by cable, and Manchester 
 men are all agog to get busy. So it is with 
 wheat, copper, rubber, tin, and a hundred other 
 staple commodities. For these the market is 
 the whole world, and the cable makes commer- 
 cial houses in London and Buenos Aires as 
 close together for business purposes as two ad- 
 joining houses were a century ago. 
 
 NOW A NATIONAL NECESSITY 
 
 When Napoleon called England "a nation of 
 shopkeepers" he spoke in angry jealousy, 
 for he knew that the Nation's commercial 
 strength would in the end enable it to wear down 
 his supreme military strength. 
 
What Is a Market? 6i 
 
 But England's commercial supremacy has 
 had its dangers as well as its advantages. For 
 when markets were held for the local exchange 
 of superfluous commodities, the stability of life 
 did not depend on them. To-day Lancashire 
 must find a market abroad for about four fifths 
 of its staple products. That cannot, of course, 
 be called the sale of superfluous commodities. 
 It is the vital necessity of continuous existence 
 for a large section of the industrial population; 
 and the same holds good, though not in so 
 marked a degree, for many other industries. 
 
 In a word, as markets have expanded, Eng- 
 land's dependence upon them has become closer 
 and closer. And this has had three conse- 
 quences which you will do well to keep in mind : 
 (i) A market is not now a callosity which can 
 be exercised without injuring the body politic, 
 but a nerve centre which can be easily de- 
 stroyed, and with irreparable consequences; 
 (2) as markets have grown world-wide, so has 
 the competition to retain them; (3) the main- 
 tenance of our national place in these world- 
 markets requires the services of men of the 
 highest grades of business ability. Marketing 
 is no longer a butterwoman's job. 
 
XIII.— WHAT IS MARKET PRICE?* 
 
 The central fact of modern industry is that 
 nearly all goods are produced for sale in a mar- 
 ket. This is true of minerals dug out of the 
 ground, or crops grown on it, and of articles 
 manufactured upon it. Occasionally the ac- 
 tual worker acts as salesman, but most workers 
 make or help to make goods which others will 
 have to sell to unknown customers, who may 
 be living in another continent. 
 
 In the majority of cases the goods which 
 the worker makes would be of no value to him 
 If they were given to him, for he has no personal 
 use for them and could not himself find a cus- 
 tomer for them. 
 
 The work of retaining old markets and finding 
 new ones is the most serious p re-occupation 
 of the "boss," and in doing it skilfully and con- 
 tinuously he renders an incomparable and ir- 
 replaceable service to his workers. The return 
 in money he gets in his market for the goods he 
 
 *Frora the Times Trade Supplement — issue of June 21, I9I9- 
 62 
 
What Is Market Price? 63 
 
 sells there is called their "price." Assuming for 
 the present that we know what money is — though 
 we must not be too confident that we do — let us 
 consider what market prices are and do. 
 
 The first law of the market is that there can- 
 not be two prices for the same article in the 
 same market at the same time. A copy of a 
 certain book may be on the "fifteen-cent table" 
 outside the door of a second-hand bookstore 
 and a precisely similar copy on the shelves inside 
 the shop for a dollar and a half. The case is 
 indeed an actual one, and when the purchaser 
 of the fifteen-cent volume asked the bookseller 
 for the reason, the actual and quite sufficient 
 explanation was given that "the people that 
 grub around the fifteen-cent table box aren't 
 the same sort of people that come inside." Here, 
 then, were two markets that looked like one. A 
 market is really a body of intelligent buyers 
 meeting a body of intelligent sellers, and as they 
 know all the facts of the situation there can only 
 be one price for one article. This is a very 
 important fact when the sellers belong to differ- 
 ent countries, and continuous employment in 
 the factories of their respective countries de- 
 pends on their success. 
 
64 Ten-Minute Talks With Workers 
 
 The second law of the market is that the 
 price obtained in it has yet to be such as to 
 make it worth while for the seller to resort to 
 that market again and again. The price re- 
 ceived for the article must, on the average and 
 in the long run, be equal to the total money 
 expenses of producing it, including in these 
 expenses the share which the manufacturer 
 regards as due to himself, and the constant 
 effort of the manufacturer is to bring about 
 this equality between expenses and prices. 
 
 COST AND PRICE 
 
 The cost of an article is the effort or the 
 series of efforts which have to be exerted in 
 order to produce it, and effort is work of body 
 or mind, or both. The price of the article is 
 the money received for it when it is sold. What, 
 then, is the relation between cost and price? 
 Cost is clearly something quite definite, far it 
 is work that has to be done, and no man will 
 work continuously or produce a given article 
 unless the work is sufficiently rewarded to 
 make it worth his while to go on with it. If 
 it is not, he will turn his efforts into a more 
 remunerative direction. Price, on the other 
 
What Is Market Price? 65 
 
 hand, is constantly varying, and is generally not 
 knowable in advance. 
 
 Of course, all prices do not vary equally. 
 Before the war, for example, while the price of 
 wheat varied from day to day, the price of a loaf 
 of bread would remain fixed for weeks together. 
 And, as a general rule, retail shop prices vary 
 slowly, wholesale prices of manufactured 
 articles vary much more, and wholesale prices of 
 crops and raw materials vary frequently, and 
 sometimes violently. Everybody remembers 
 certain "booms" and well-known "slumps." 
 
 Cost varies much less and more slowly. 
 Apart from changes due to new inventions, 
 the sum of efforts required to produce an article 
 is likely to remain fairly constant over relatively 
 long periods, during which there may be, as was 
 pointed out above, frequent oscillations of 
 market prices. Now the sum of money 
 payments necessary to persuade people to 
 put forth the efforts required may be called 
 the "normal price" of an article — that is, the 
 cash value of the cost. Another good modern 
 name for the same thing is "long-period price." 
 The older writers called it the "natural price." 
 
 During short periods there may be a differ- 
 
66 Ten-Minute Talks With Workers 
 
 ence, even a big difference, between normal 
 price and market price. If the difference is 
 in favour of the manufacturer he will, if he 
 is wise, put most of his unexpected gains into 
 a special equalization account. For competi- 
 tion is sure to eat away these super-profits, 
 and likely also to go still further and bring 
 market price below normal price. For when 
 one looks at it, it is impossible to expect that 
 the reward of economic effort shall be greater 
 than is necessary to induce men to exert it. 
 There is a powerful force ever at work to pro- 
 duce an equilibrium between effort and reward. 
 Combinations amongst those who put forth the 
 efforts may for a time enable them to keep the 
 market price above the normal or natural price, 
 but hitherto such combinations have never suc- 
 ceeded in establishing this as a permanent result. 
 The strongest combination is kept at or near 
 the economic level by the possibility of com- 
 petition as surely as by its actual operation. 
 
 Finally, while there are good economic reas- 
 ons for declining to regard labour as a com- 
 modity, the laws which govern the prices of 
 commodities do, in fact, operate in governing 
 the wages or price of labour. 
 
XIV.— WHAT IS MONEY?* 
 
 So FAR, in these short studies, Httle attention 
 has been paid to what may well seem to some 
 the very first subject which demanded our 
 attention. The one thing we must all have is 
 money, because all the goods and services with 
 which we satisfy our wants are purchased with 
 money. What is first in importance in eco- 
 nomic life would seem to be first in importance 
 in economic science. Yet we have left it aside, 
 deliberately and of set purpose, for later treat- 
 ment, and the fact that we are able to do so 
 without losing grip of reality indicates the fact 
 that money, important as it is, is not the all- 
 important thing. 
 
 Suppose a community in some isolated Utopia 
 with a social system like our own in every re- 
 spect save this: That it is a closed economy, 
 doing no foreign trade, having, indeed, no com- 
 munications with the outer world. Now, if 
 by some miracle every Utopian woke up one 
 
 *From the Times Trade Supplement — issue of June 28, 1919. 
 67 
 
68 Ten-Minute Talks With Workers 
 
 morning to find that every coin he possessed 
 had during the night turned into two coins, 
 it is quite clear that nobody would be any better 
 ofF. Nobody can eat, drink, or wear coins. 
 But if instead of every coin turning into two 
 coins every loaf had turned into two loaves, every 
 gallon of milk into two gallons, every yard 
 of cloth into two yards, the Utopians would 
 indeed be economically blessed among men. 
 
 In our own case, to be sure, important alter- 
 ations from this supposed case arise, first from 
 our trade with other countries, and secondly, 
 from the fact that when the stock of money is 
 increasing, our individual shares of it do not 
 increase in the same ratio, a matter to which 
 we will return later. 
 
 What, then, is money? Shakespeare, as 
 usual, tells us the exact truth in the fittest pos- 
 sible words. In his day English standard coins 
 were made of silver. There were no copper coins, 
 and few gold coins. Shakespeare, then, would 
 rarely see any except silver coins. When Bassanio 
 was making his choice of the caskets he passed over 
 the silver one, addressing the metal in scorn as : 
 
 Thou pale and common drudge 
 'Tween man and man. 
 
What Is Money? 69 
 
 This is the exact economic truth: money is 
 a drudge between man and man. A drudge 
 that does a certain work — namely, that of 
 passing goods from one man to another. Money 
 is simply a tool to move commodities with. 
 It performs exactly the same work as a wagon; 
 and just as it would be senseless for a nation 
 to accumulate unnecessary wagons, so it is 
 useless for a nation to accumulate unnecessary 
 coins. 
 
 MONEY IS A TOOL 
 
 In explaining the functions of capital we 
 have already observed that tools form a main 
 element of capital, and that the invention of 
 rough tools first started primitive man on the 
 road of economic development. Amongst the 
 most important of these early tools was money. 
 Abraham paid for the cave and field of Mach- 
 pelah with "four hundred shekels of silver, 
 current money with the merchants," so that 
 in the dawn of written history money was in full 
 use, and was made, too, of the metal that formed 
 the standard money of England till 18 16, and 
 of all other leading nations until only a compara- 
 tively few years ago. It is probable that coins 
 
yo Ten-Minute Talks With Workers 
 
 began as decorations for the body, the need 
 for decoration being probably as urgent with 
 primitive man as it is with naked savages and 
 wealthy ladies to-day. The earliest known 
 European coins are simply rings of bronze. 
 
 How important a tool money is appears on 
 a moment^s reflection. The only alternative 
 to its use is the direct barter of goods for goods. 
 The carpenter has made a table and wants 
 bread. He cannot find a baker who wants a 
 table, and if he could, his table would be worth 
 so many loaves that most of them would be use- 
 less before he could eat them. The time and 
 inconvenience saved by the use of the tool, 
 money, are inconceivably great. 
 
 FACE VALUE 
 
 But just as there are knives that will not 
 cut and carts that break down under quite a 
 moderate load, so there may be specimens 
 of the tool, money, that will not do their work 
 well. Anything can be money that will do the 
 money work, and a curious assortment of things 
 have been used as money at one time or another 
 — blocks of salt, cubes of pressed tea, bales of 
 tobacco, bullets, shells, and so on. What is 
 
What Is Money? 71 
 
 the essential thing about money? Simply 
 ready acceptability by everyone to whom it is 
 offered. The writer once put a sovereign and 
 a pound weight in a bowl of mercury to explain 
 to a child the principle of flotation, and then 
 tried in vain for days to get shopkeepers to take 
 the sovereigns because the mercury had given 
 it a silvery appearance. Finally, a friendly 
 bank manager accepted it, after weighing it 
 against a sovereign from his till to make sure! 
 For this reason the making of coins has for 
 many centuries been taken over by the State, 
 though it is quite a recent thing, comparatively, 
 for the State to do the work with absolute ac- 
 curacy and honesty. 
 
 Every piece of money bears its value stamped 
 or printed on it — its "face value," as it is called. 
 Whatever thing is universally accepted by a 
 people in exchange for goods is money with that 
 people. If it is universally accepted at its 
 face value it is good money. 
 
XV.— MONEY AND PRICES^ 
 
 Before you begin to discuss any topic in 
 the economics of money say over to yourself 
 three times very firmly the following tag: 
 "What is the price of a pound o*f strawberries? 
 Fifty cents. What is the price of fifty cents? 
 A pound of strawberries." Then you will be 
 ready to begin well and think straight. 
 
 Movements in the market price of straw- 
 berries are well worth observing. They have 
 a comparatively short "season," and during 
 so short a period the quantity of money current 
 in the country can be regarded as constant, or 
 so nearly constant as not to affect matters much. 
 Then, as the quantity of strawberries offered 
 for sale increases, the price falls. The first 
 strawberries sent to the market this year sold 
 readily at a dollar and a half a pound. Very 
 good strawberries have later been on sale at 
 seventy-five cents and the price has dropped to 
 twenty cents for rather inferior fruit. 
 
 'From the Times Trade Supplement — issue of July S. I919« 
 72 
 
Money and Prices 73 
 
 If, then, the quantity of money remaining 
 current and the supply of goods increasing, 
 we get more goods for a given coin, we can see 
 that the contrary is true also. If goods remain 
 constant in quantity and the supply of money 
 increases, we shall have to give more coins for 
 a given quantity of goods. In short, one cause 
 of higher prices is more money. It is not the 
 only cause, for prices rise as goods become 
 scarcer. But all goods do not become scarce 
 at one and the same time, and a general rise 
 of prices is fairly certain to be due to an in- 
 creased supply of money. The strawberry crop 
 this year may be exceptionally good, but still 
 we shall not see excellent strawberries selling 
 at the fruitstands and grocery stores in the 
 United States for fifteen cents a box, as we did 
 before the war. Even in the presence of a good 
 crop there is a force at work which keeps prices 
 from falling to pre-war levels. That force is 
 the purchasing power of much larger supplies 
 of money. 
 
 GOLD AND PAPER 
 
 Money is a tool. It is Hke a wagon, for it 
 is used to shift goods from hand to hand as a 
 
74 Ten-Minute Talks With Workers 
 
 wagon shifts them from place to place. And 
 as there is a proportion between the quantity of 
 goods to be shifted and the number of wagons 
 required to shift them, so there is a similar 
 proportion between supply of money in use and 
 the stocks of goods on sale. Suppose that one 
 man had an absolute monopoly of the supply 
 of wagons, and largely over-estimated the num- 
 ber required. Then, in order to recoup himself 
 for making useless wagons, he would have to 
 charge more for those actually used. Now 
 the supply of the goods-shifting tool, money, 
 is actually in the hands of one authority, 
 the Government, and if it issues more money 
 than is needed the users of money will have 
 to pay for the mistake in higher prices for 
 the same goods, or fewer goods for the same 
 prices. 
 
 As trade increases, that is, as the quantity 
 of goods to be shifted increases, the number of 
 wagons and dollars required to shift them also 
 increases. One of the most important functions 
 of the Government is to issue the necessary 
 addition to the supply of dollars, and as it has to 
 give in goods for the gold as much as it gets in 
 goods for the dollar, it is under no temptation to 
 
Money and Prices 75 
 
 issue more money than the markets will readily 
 absorb without affecting prices. 
 
 If, however, instead of coining gold into eagles 
 and dollars the Government is allowed to print 
 pretty little bits of paper and call them dollars 
 the case is altered at once. 
 
 INFLATION 
 
 It is probable that in England too much 
 paper money has been issued. The Govern- 
 ment claims that it has exercised the greatest 
 care and only issued it in response to the de- 
 mands of the market and after careful inquiry. 
 It was necessary to replace the disappear- 
 ing sovereigns, and to allow for the war- 
 produced flush of trade. In our own case, 
 the conviction that part of the rise in prices 
 is due to unnecessary issues of paper is the result 
 of much weighing of evidence that cannot be 
 undertaken here. But it is clearly established 
 that it is necessary to return at the earliest 
 possible moment to our pre-war pride — an 
 open market for gold and a strict gold basis for 
 our currency and exchanges. 
 
 In other cases, the result of "inflating" the 
 country with paper money is obvious. In 
 
76 Ten-Minute Talks With Workers 
 
 Russia, for example, the issue of paper roubles 
 has been simply ridiculous. "Kerensky notes" 
 are tumbled about in sackfuls, almost at 
 waste-paper prices. The Russian prices we 
 see quoted in our newspapers — a dollar and a 
 quarter for a pound of sugar, and things like 
 that — bear testimony to a vast surplus of 
 *' paper'' as well as to a shortage of goods. For 
 goods may be very cheap as well as very scarce. 
 *'Eggs are cheap in the Highlands," said Dr. 
 Johnson, "not because eggs are many but be- 
 cause pence are few." 
 
 As long as all prices, including the price of 
 labour — wages — move in the same direction 
 at the same rate, neither good nor harm is done 
 to particular individuals unless their money 
 incomes remain fixed at their former level. 
 Falling money-wages may be, and frequently 
 are, consistent with rising commodity-wages; 
 for commodity-wages depend mainly on the 
 output of goods and money-wages mainly on 
 the supply of money. This point is of great 
 importance to-day, for while no one wants to 
 see a fall in commodity-wages, a fall in money- 
 wages may be necessary to maintain our power 
 to sell our goods in oversea markets. 
 
XVL— TIME AND FAITH IN INDUSTRY* 
 
 Capital renders its chief service to industry 
 by enabling it to take advantage of stage-to- 
 stage methods which lengthen the interval 
 between the beginning and the end of the in- 
 dustrial process, between the preparation of 
 the raw materials and the marketing of the 
 finished article. When a Roman publisher 
 wanted to produce an edition of Horace he col- 
 lected a number of writing slaves, gave them 
 the simple tools and materials they required, 
 and then another slave dictated while the 
 others wrote. Few copies could be produced, 
 and they were full of variations. 
 
 To-day when a pubHsher wishes to produce 
 an edition of Horace the process is very different. 
 The press has taken years to bring it to its 
 present stage, and even then there is much to 
 do before the plates are on the machine, and 
 the word *'Go" is given. But when the start 
 is made, there are more copies of Horace on 
 
 •From the Times Trade Supplement — issue July 12, 1919. 
 
 77 
 
78 Ten-Minute Talks With Workers 
 
 hand in a day than all the pubhshers of Rome 
 could have turned out in a year, all exact and 
 all alike, and costing less than half a dollar each. 
 Modern processes in industry require time, 
 often a very long time, for their competition, 
 but it pays to take the time, pays everybody; 
 in the given case publisher, workers, and read- 
 ers are all better satisfied. They live better 
 while the job lasts, they have the laborious work 
 taken off their hands by expensive machinery, 
 and they have a better and cheaper article at 
 the end. But this stage-to-stage plan of doing 
 things requires more than time. It requires 
 faith. It is an indispensable condition of suc- 
 cessful production that men shall have con- 
 fidence in one another and in the stability of 
 the social system of which they are the working 
 part. This social faith, which enables men to 
 combine and plan for years ahead, is called in 
 economics "credit." 
 
 FINANCIAL CREDIT 
 
 A man goes into a shop and asks for a hat. 
 He is fitted and suited. Its price is five dollars. 
 He puts down a five-dollar gold piece and the 
 hat is his. There is no question of credit here. 
 
Time and Faith in Industry 79 
 
 The transaction is over and done with. He 
 puts down "greenbacks." Now the transaction 
 is not quite over — very nearly, indeed, but still 
 not quite. It is over between the hatter and 
 his customer, for the "greenbacks" are legal ten- 
 der. It is not over between the hatter and the 
 State, for the time has to come when the State 
 will honour its bond and deliver up a five-dollar 
 gold piece which cost something to make, for the 
 bits of paper which cost nothing. As Americans 
 all beheve in the complete rock-like stability of 
 the American State, the people take its legal ten- 
 der paper with indifference. 
 
 Suppose the customer pays for his hat with 
 a check on his bank. Credit steps in at once. 
 The transaction is not over. The hatter be- 
 lieves, first, that the customer has a balance 
 at the bank, and, secondly, that the bank is 
 sound and will meet the check. The customer 
 in his turn believes that the bank will honour 
 the check. Often enough, for big transactions, 
 it is the bank that beheves in the customer, for 
 it has agreed to let him draw on a "credit" 
 put to his account. 
 
 As soon as credit falters, trouble comes. 
 "Paper" to the value of many hundred millions 
 
8o Ten-Minute Talks With Workers 
 
 of dollars is in circulation at any given moment, 
 and the first shock to credit spreads itself out 
 like the ripples that circle outward when a 
 stone is thrown into a pool. If the shock is 
 very severe, as when some great bank stops 
 payment or a famous commercial house files 
 its petition, a "crisis" follows. No man will 
 take "paper," and as the "spot cash" available 
 can only do a mere fraction of the normal work 
 of buying and selling the "panic" spreads until 
 here and there the cooler heads take courage 
 and begin to get back to normal ways. 
 
 INDUSTRIAL CREDIT 
 
 Time and faith are the conditions of success- 
 ful industry — time enough to do things so as to 
 do them most abundantly and profitably, and 
 faith enough in one another to make us trust to 
 the uncertainties of the future, since we are at 
 any rate certain of ourselves. Everybody can 
 see the importance of "credit" in the narrower 
 sense of meeting one's bond the moment it falls 
 due. But surrounding this narrower financial 
 credit is the wider circle of industrial credit. 
 Banker must be sure of customer and customer 
 of banker, but that, important as it is, is not 
 
Time and Faith in Industry 8i 
 
 enough. Anything which introduces uncer- 
 tainty into the industrial future is bad for the 
 *'boss" and dangerous to the worker. 
 
 For it is not usualty very difficult for the 
 *'boss" to adapt himself to the new set of 
 circumstances brought into being by an in- 
 crease in wages or a decrease in hours, pro- 
 vided that he has time to do it in and feels 
 assured that the new conditions will abide while 
 he does it. Much the same appHes to changes 
 in his markets brought about by fiscal and other 
 changes. And it will be particularly unfor- 
 tunate if these two sets of difficulties work to- 
 gether. The war has disturbed all our markets, 
 and on regaining old ones and winning new ones 
 America's commercial future depends. Now 
 nobody can do this except the ** bosses." The 
 notion that the Government can do it is merely 
 childish, and if it is not done the workers will 
 be the first and heaviest sufferers. Hence it 
 follows that industrial credit must be firmly 
 re-established. Men and masters must, in 
 their own interests and in the country's in- 
 terests, be able to face the future with com- 
 plete assurance in one another. 
 
XVIL— WHAT BANKS DO FOR US* 
 
 The invention of money, the tool of trade, 
 was one of the greatest strides ever taken 
 along the road of progress. It enabled a man 
 to turn a surplus of perishable commodities 
 into a stock of coins having a permanent 
 value. A hoard of eggs or apples becomes 
 valueless in a very short time. Sold for cash, 
 the coins received for them can be easily and 
 safely stored for an indefinite period, still 
 retaining their power to purchase other goods. 
 Not all their power, maybe, for if you had 
 hidden a dollar in the chimney in 1913, and 
 took it out now, it would purchase things 
 quickly enough, but only to about half the ex- 
 tent of 191 3. And, into the bargain, it has been 
 idle all the time. 
 
 We have already seen that the problem of 
 keeping unwanted money quite safe was solved 
 at first by locking it up in a strong box or hiding 
 it in a "stocking." It was the hoarded wealth 
 
 *From the Times Trade Supplement — issue of July 19, 1919. 
 82 
 
What Banks Do for Us 83 
 
 of France that enabled her in 1871 to pay off 
 the German indemnity with unexpected rapid- 
 ity. But it was soon reahzed that hoarded 
 wealth is unprofitable wealth. The parable 
 of the talents has both a spiritual meaning and 
 an economic bearing. To keep money safe 
 and busy was a problem that men were long in 
 solving quite satisfactorily. You will remem- 
 ber how the Vicar of Wakefield's hot argument 
 on the morning of his son's wedding was cut 
 short by unwelcome news: "The merchant in 
 town, in whose hands your money was lodged, 
 has gone off . . . and is thought not to 
 have left a shilling in the pound." To "lodge" 
 money with a "merchant in town" did, indeed, 
 ensure that it should not be idle, but did not 
 ensure that it should be safe, as the good Vicar 
 learned to his cost. This merchant was a 
 rogue, but if he had been perfectly honest the 
 safety of the money "lodged" with him would 
 have depended on him alone. Honourable 
 failure on his part would have been just as heavy 
 a blow to the Vicar. The risk of failure must 
 be spread over so wide an area as to become 
 negligible before a satisfactory method of safe 
 keeping and fruitful using is obtained. Our 
 
84 Ten-Minute Talks With Workers 
 
 modern banlrs have provided us with what we 
 want. 
 
 HOW BANKS WORK 
 
 Suppose that a hundred men in a town 
 have ^500 each for which they have no immedi- 
 ate use, and that these hundred men all de- 
 posit it in the same bank. The manager of the 
 bank now has $50,000, and he must be pre- 
 pared to pay every penny of it out on demand. 
 But he knows that it is wholly unhkely that 
 all the men will want all their money at exactly 
 the same time, and therefore he need not keep 
 it all idle. If, therefore, a man comes to him 
 with a likely proposition to establish a new 
 works in the town, he can afford to let him 
 have, say, $25,000 to do it with. Of course, he 
 only does this on good security. Moreover, 
 he does not part with all the $25,000 in a lump, 
 but gives the new customer a credit for that 
 amount and allows him to draw on it. As 
 soon as the new works begins to sell its prod- 
 ucts, the owner begins to pay in the checks 
 he receives from his customers, and if the, 
 business succeeds well, the bank manager will 
 soon have recouped himself for the credit he 
 
What Banks Do for Us 85 
 
 gave. In actual practice, a banker finds that, 
 taking an average over a long period, he need 
 only keep in his till every one dollar in every 
 four or five deposited with him; much of the 
 rest can be utiHzed to promote new business 
 enterprises. Occasionally the banker needs a 
 larger margin in his till. In a country town, 
 for example, he will want more just before 
 harvest or round about rent-day, but this is 
 easily managed by getting cash from one of the 
 larger banking centres. What the farmers take 
 out to pay in rent, the landlords soon put back 
 as rent received, and the stress is soon over. 
 Chests of money frequently go from the large 
 banking centres to the smaller towns in prepara- 
 tion for an emergency such as this, and often 
 come back unopened. Their mere presence 
 is enough. 
 
 BANKERS AND WORKERS 
 
 Workers do not generally have accounts in 
 our large joint-stock banks and do not make 
 payments by check, but to infer that they 
 have no concern with the banks would be 
 absurd. The banker is, in fact, one of the 
 worker's best friends, for, as we have seen, it 
 
86 Ten-Minute Talks With Workers 
 
 is the banker's task to put to effective indus- 
 trial use the greater part of the spare cash and 
 permanent savings which are entrusted to his 
 keeping. Banks grow as industry grows, and 
 industry grows as banks grow. Each keeps 
 the other, for a bank is simply a place where 
 credit is organized and, as it were, harnessed 
 to the industrial wagon; and credit, just so 
 long as it is absolutely flawless, can do any- 
 thing that cash can do. Neither for current 
 business nor for expansions of business could 
 we return to a "spot cash" basis. There is 
 cash enough for transactions across the count- 
 ers of retail shops, and not much beyond that. 
 The big things of business are all done by checks 
 on banks, and it is of course transactions of this 
 kind that provide work and wages. Banks are 
 reservoirs of economic power, but this power will 
 flow out of them into the channels of trade only 
 while the social system of which they are part is 
 stable and active. As soon as the machine-guns 
 began to rattle in Berlin the banks shut and 
 barricaded their doors, and until they opened 
 them again business and the work and wages that 
 depended on it were paralyzed. Powerful as they 
 are, banks are singularly delicate institutions. 
 
XVIIL— THE COST OF SELLING* 
 
 When the coal-man carries a bag of coal 
 round to the back of your house and dumps it 
 down in the shed, it is natural for you, especially 
 in these days, to compare two things: (i) the 
 seventy-five cents which you put into his grimy 
 hand; and (2) the fifteen cents which the 
 mine-owner got for it at the pit-head. 
 
 These may not be the exact figures, but they 
 are near enough for our purpose, and indeed any 
 figures not wholly irrational would serve us 
 equally well. At any rate, it will be well to 
 note that the argument is not necessarily upset 
 if the figure? are proved not to be quite right. 
 
 Then what does the difference of sixty cents 
 stand for? It is only coal still, now that 
 it is in your shed. You give a tailor a bale of 
 cloth and he returns you a suit. Here you can 
 see the difference, and understand that you are 
 paying him for the visible and useful change he 
 has made in the thing itself, for a bale of cloth 
 
 ♦From the Times Trsd? Supplement — issue of July 36, I9I9' 
 87 
 
88 Ten-Minute Talks With Workers 
 
 is not a suit of clothes. But whether at the 
 mouth of the mine or in a New York house, 
 a hundredweight of anthracite is, so far as the 
 eye can see, one and the same thing, and should, 
 it would seem, be sold at the same price. 
 
 Clearly, however, there is a great difference 
 between coal in the place where you want 
 it and the same coal in a place where you 
 cannot get at it. You want coal in your 
 scuttle, and if your scuttle is empty, and the 
 weather is cold or the dinner uncooked, a train- 
 load of coal on the railway behind your house 
 can bring you no comfort. In other words, 
 when a commodity is physically ready for use 
 in satisfying human needs it has to be placed 
 in the hands of the human beings who want 
 those needs satisfied. It must have place- 
 utility added to form-utility, as the economists 
 put it. 
 
 THE CHAIN BETWEEN 
 
 Suppose that, at a given moment when you 
 urgently need it, you would give two dollars 
 for a bag of coal rather than go without it — 
 a not extravagant supposition. In fact, how- 
 ever, you pay only seventy-five cents for 
 it. On this occasion, then, you do not lose 
 
The Cost of Selling 89 
 
 sixty cents, as some shallow minds would have 
 vou believe. On the contrary, you gain a dollar 
 and a quarter — quite a different matter, to be 
 sure, but surely the right way of looking at it. 
 
 Occasionally, there is no gap between the 
 place in which the article is ready for use and 
 the place in which it is to be used. If you have 
 a garden, potatoes come out of it into the 
 saucepan and on to the table. For most of 
 us who live in towns, however, there is such a 
 gap, often a very broad one; and that gap is 
 filled with a number of men who are hard at 
 work bridging it for us, and the work of these 
 men, being done from purely economic motives, 
 must be paid for. From our point of view it is 
 just as important for us to have men to deal in 
 coal as it is to have railwaymen to transport it 
 and miners to dig it. If when you wanted 
 coal you had to knock off work, and race around, 
 jingling seventy-five cents in your breeches 
 pocket, hunting for a man with coal to sell, your 
 life would be much poorer and less pleasant. 
 
 THE MIDDLEMAN 
 
 It is quite usual to speak sarcastically of 
 the "middleman," and to say that he is a 
 
90 Ten-Minute Talks With Workers 
 
 parasite, who renders no return for the pay- 
 ment he exacts. He is no parasite, for we 
 cannot do without him — ^which is the final 
 test in Hfe. Like a coal-owner or a coal-miner, 
 he may exact from us more than we think he 
 is worth, and then the simple plan is to see 
 if we can get his service rendered by someone 
 else at a cheaper rate. The cooperative societies 
 in England originated in the determination of 
 the Rochdale pioneers to see whether they could 
 cut out the retailer, and as the plan succeeded 
 their successors have gone still further, and, in 
 some lines at any rate, cut out the wholesaler — 
 only, however, to replace both by retailers and 
 wholesalers under their own control. 
 
 Similarly, State action could not dispense 
 with the chain of middlemen. It could only 
 turn them into civil servants, doing their work 
 for salaries instead of profits, and there is not 
 an atom of assurance that the addition made 
 to the final selling price by these new salaries 
 would be less than that added by the old 
 profits. The cost of selling, in short, is as 
 much a part total cost as the original cost 
 of production, and must be met out of the 
 retail price paid by the ultimate consumer. 
 
The Cost of Selling 91 
 
 The service rendered by the middleman is 
 therefore an indispensable one, and is measured, 
 as shown above, by the price actually paid by 
 the consumer for a given article and the price 
 he would be willing to pay rather than go with- 
 out it. So that if you look at the compHcated 
 process of selling from your own point of view as 
 consumer, you see that you gain by it. Now 
 look at the same process from the other end of 
 the chain. As a producer, engaged, we will 
 suppose, in a Massachusetts woollen mill, it is 
 necessary that there should be in existence men 
 who will devote themselves to the selling of the 
 cloth you turn out. True, they do it not 
 because they love you or like the colour of 
 your eyes, but because they want to make 
 money. 
 
 Whichever end of the chain you stand at — 
 the producer's end or the consumer's end — 
 the advantage of the links in between is obvious. 
 Of course there may be unnecessary links, 
 which can be cut out with profit. The odds are, 
 however, that there are not. Men cannot 
 permanently get pay for unnecessary work. 
 What the middleman gets, it is generally worth 
 our while to let him get. 
 
XIX.— FOREIGN COMPETITION* 
 
 So MUCH of England^s national industry has 
 been diverted into war-channels that the coun- 
 try has ceased to be what it was before the war, 
 the greatest exporting nation in the world. 
 English exports, both in absolute value and in 
 value per head of population, were greater 
 than those of any other country. By any 
 known test of export power, the nation held the 
 first place. Let us see how it stood in this 
 respect. 
 
 Its exports in 191 3 were valued at 635 million 
 pounds, of which 525 milKon pounds' worth was 
 British produce. These exports, taken in con- 
 junction with the services rendered to foreign 
 nations by British ships and the interest due to 
 England on money lent abroad, enabled the 
 country to get in exchange imports valued at 
 769 million pounds. These imports were not 
 mere luxuries for the rich. There were some 
 luxuries, but in the main they were food and raw 
 
 *Froin the Timis Trade Supplement — issue of August 2, 1919. 
 92 
 
Foreign Competition 93 
 
 materials for the nation, wheat and flour and 
 oil; cotton, timber, and wool, and all the thousand 
 and one things that a manufacturing nation 
 must have. 
 
 During the war conditions have changed. 
 The nation has been realizing its foreign in- 
 vestments and the Germans have sunk many 
 British ships. It is therefore necessary for the 
 country to increase its exports of manufactured 
 articles enormously, or it is quite clear that 
 England will not be able to pay for the food and 
 raw materials that its people need more than ever 
 and for which a higher price is now demanded. 
 
 But during the war something else has 
 happened besides the change for the worse in 
 England's economic position. The United 
 States has become the greatest exporting coun- 
 try instead of the United Kingdom; owing to 
 the war other nations find it equally necessary 
 to increase the total value of their exports, 
 and some fresh exporting countries have come 
 into the field. 
 
 EXPORT TRADE 
 
 Now let us ask ourselves how is export 
 trade conducted? We know that nations as 
 
94 Ten-Minute Talks With Workers 
 
 such do not trade. Clearly the trade returns 
 really represent merely the aggregate trans- 
 actions of individuals and firms. And when an 
 order for a foreign market is being placed, who 
 gets it? It does not come automatically to 
 any particular country, generally speaking. 
 Orders in the long run are placed where the best * 
 terms can be made. Usually it is a matter 
 of relative price and quality, though some- 
 times it becomes a question of quick delivery. 
 But whatever the conditions the orders go to 
 the firm that can offer the most advantageous 
 terms, and whether a British or an American 
 house can put forward the more attractive offer 
 depends very largely indeed on the workers. 
 
 From the Englishman's point of view, the 
 plain truth is that in the days to come more 
 than ever will depend upon the industrial 
 efficiency of the British workman, for he will 
 have the American worker as a direct com- 
 petitor both in home and neutral markets. 
 The testimony of observers as to the respec- 
 tive merits of British and American workers 
 has always been curiously uniform. The finish 
 of British work has been unrivalled. Once 
 made, the English machine, kind for kind, holds 
 
Foreign Competition 95 
 
 the field. In the United States, on the other 
 hand, the output per man has always been very 
 high. The American worker is supplied with, 
 welcomes, and indeed demands, the best possible 
 machinery, and stretches himself to wring all 
 he can out of it. The American worker has 
 never adopted the "Ca'canny" poHcy. He 
 knows that his boss must have unit-cost of 
 production cut very fine, and he has no objec- 
 tion to helping to get it done. Exceptions 
 there are, no doubt, but that is the universal 
 testimony to the outlook of the American 
 worker, and it accounts for his high efficiency 
 and his high wages. 
 
 THE NEW FACTOR 
 
 Before the war United States manufacturers 
 looked in the main to their home market, and 
 the efficiency of the American worker did not 
 much effect us in big neutral markets. The 
 war has turned the eyes both of American 
 manufacturers and their workers toward these 
 world markets; and England will have to meet 
 and beat them there, or Englishmen will not 
 get the orders that enable them to import 
 in return the food and raw materials they need. 
 
96 Ten-Minute Talks With Workers 
 
 Awkward? I agree. But it is of no use to 
 attempt to blink the plain facts. If you have 
 no money and no work your credit soon comes 
 to an end, and you cannot get food or clothes. 
 In international relations the same rule holds. 
 If we fail in the face of competition, down will 
 go our exports, and very soon we shall be crying 
 out in vain for imports. It will be of no use to 
 blame the Government or hold public meetings. 
 The result of neglect of economic laws is dis- 
 aster, overwhelming and inevitable. 
 
 When Mr. Hoover said the other day that 
 Europe must work or starve, he knew what he 
 was talking about. It was merely a plain 
 statement of fact. 
 
XX.— A BILL ON LONDON* 
 
 Before the war, note the Hmitation very 
 carefully, merchants and manufacturers all 
 the world over asked for nothing more in 
 payment for the goods they sold than **a 
 bill on London." A Sao Paulo planter sold 
 his coffee to a Hamburg broker, and would 
 have payment in *'a bill on London." Let 
 us see what a bill is. 
 
 On November 20, 1906, E. S., a manu- 
 facturer in Zurich, sold to W. D. in London 
 ladies' dress goods to the value of £453 9s. 9d. 
 Having sent off the goods he wrote the fol- 
 lowing document, on a printed form, much 
 like a check in appearance: 
 
 Zurich, Nov. 20th, 1906. ^453 9-5". 9^- 
 
 Three months after date pay by this first oj exchange 
 
 to our order the sum oj four hundred and fifty three 
 
 pounds, nine shillings and ninepence sterling, and 
 
 place the same to our account as advised. 
 
 To W. D., London. E. S. 
 
 *FtOfn the Times Trade Supplement — issue of August 9, 19T9. 
 
 97 
 
98 Ten-Minute Talks With Workers 
 
 Here is the position: W. D. in London 
 has the goods in his warehouse. E. S. in 
 Zurich has a pretty piece of paper in his pos- 
 session, which gives him the right to receive 
 English sovereigns in London in three rnonths' 
 time. Strictly speaking, he should have sent 
 the bill on London to W. D. for acceptance, but 
 W. D. being a thoroughly well-known house, 
 E. S. did not bother. E. S. wanted Swiss 
 francs there and then in Zurich. Let us see 
 what happened to this bill, which we can find 
 out quite simply, for everybody who handled it 
 wrote his name on the back. 
 
 E. S. sold it to a firm in Zurich, Messrs. 
 F., who paid it into their bank. Then the 
 bank sold it to Messrs. M. in Zurich^, whc 
 posted it to Berlin. Here it got into the 
 head office of the Imperial Bank, from which 
 it went to the Crimmitschau branch, the 
 manager of which sold it to B. B. wanted 
 it because he had bought some goods from 
 G. and P., of London, to whom he posted it. 
 G. and P. on the due date sent it to W. D., 
 who paid the cash. Such is the life-story 
 of a typical "bill on London." Some are 
 more detailed, and go an even more circuitous 
 
A Bill on London 99 
 
 round from birth to death, but the principle 
 and effect are always the same. They ac- 
 cumulate in hundreds in the hands of bill 
 brokers, who buy them up at less than their 
 face value, and either dispose of them at a 
 profit or hold them till maturity and collect 
 their full value. 
 
 THE worker's interest IN BILLS 
 
 Now at first sight it looks as if the ordinary 
 British workman, doing his day's work in 
 mine or mill or shipyard, had no concern with a 
 bill on London. You would probably look 
 in vain for a workman who had ever seen one. 
 Yet the tie of interest between the workman 
 and the bill is direct and intimate. 
 
 E. S. in Zurich wanted to sell his bill. He 
 did so quite easily as it happened, but natur- 
 ally he did not sell it for £453 9s. 9d. It 
 was ** discounted." Cash three months off 
 is worth less than spot cash. Now the two men 
 to note carefully are E. S., who had sold goods 
 to one Englishman, and B., who had bought 
 goods from another. V/hat the bill did, you 
 see, was to come in, as a sort of fairy godmother 
 of trade, and make an export balance an import. 
 
lOO Ten-Minute Talks With Workers 
 
 In every commercial city of the world there are 
 men who play the parts of E. S. and B., and a 
 very great deal depends on whether there are 
 more of the one sort than the other. 
 
 For example, there are in New York to- 
 day many more men with bills on London 
 to sell, because they have sold goods to Lon- 
 don, than there are men who want to buy bills 
 on London, because they have bought goods 
 from there. A hundred sovereigns is the 
 monetary equivalent approximately of 486I- 
 dollars, but when there are far more bill sellers 
 than there are bill buyers, the sellers will have 
 to come down in price. They must be Content 
 with fewer dollars, and at the time of writing 
 they get much less than 486! dollars for their 
 100 sovereigns. But all things are bought and 
 sold for dollars in America, and now you can see 
 why the Food Controller in England told the 
 people recently that when he sent a "sovereign" 
 to America he only got food worth 17s. 6d. for it. 
 The New York rate of exchange is against the 
 British currency — heavily against it — and that 
 is a very awkward fact for all Englishmen : most 
 important of all for the English workers, be- 
 cause the people buy there a great part of their 
 
A Bill on London loi 
 
 food, and are at present buying it in a depre- 
 ciated currency — the bill on London. 
 
 THE ONLY REMEDY 
 
 There is only one method of raising the New 
 York price of a bill on London, and that is to 
 have more buyers of bills who, by competing to 
 get them, will raise the price. There is only one 
 method of creating buyers of these bills, for the 
 only people who want to buy them are foreign 
 buyers of British goods. There is only one 
 method of creating more foreign buyers of Brit- 
 ish goods, and that is by putting British goods 
 on the world-markets on more favourable terms. 
 
 So what we have learned from our study 
 of a bill on London is that the British work- 
 man would raise every 17s. 6d. of his wages 
 to 20s. if the American exchange was pulled 
 round into Englishmen's favour by larger 
 exports on their part. They should not 
 necessarily have to sell to the United States to 
 do this. If they got many large new customers 
 in Rio and Buenos Aires, they would buy 
 the bills to pay them with from New York, 
 and so do the trick. This is the only remedy. 
 
XXL— THE UPS AND DOWNS OF TRADE* 
 
 So FAR back as the year 1662 Sir William 
 Petty had observed that trade has its ups and 
 downs, which tend to recur in a regular rhythm. 
 He speaks of the number of years, seven as he 
 suggests, which "makes up the cycle within 
 which dearths and plenties make their revolu- 
 tion." Every one of us can remember periods 
 of excitement Hke the "rubber boom," and of 
 depression like the "copper slump," though we 
 may not have lived long enough or read widely 
 enough to notice the periodicity of the move- 
 ments up and down. It is not easy, of course, 
 to say what a crisis or slump exactly is and ex- 
 actly when it occurs, but during the last century 
 there were in England such depressions, more 
 or less deeply marked, in the following years: 
 1810-11, 1815, 1825, 1836-9, 1847, 1857, 1866, 
 1873, and 1890. In six of the cases the depres- 
 sion in England coincided in time with depres- 
 sions in both France and the United States. 
 
 It will be seen that the wave length of trade, 
 
 *Frotn the Times Trade Supplement — issue of August i6, 1919. 
 
 102 
 
The Ups and Downs of Trade 103 
 
 from trough to trough, is very often ten years. 
 Jevons, noting this, connected the depressions 
 with years of minimum sunspots, which also occur 
 about every ten years, and are Hkely to be accom- 
 panied by deficient harvest. Though very in- 
 genious, this theory cannot be said to be estab- 
 lished. "The Civil War in the United States," 
 says President A. T. Hadley, "quite broke up the 
 ten-year round of crises, and, as it did not have 
 any appreciable effect upon the sunspots, it may 
 be said to have broken up the theory also." 
 
 Yawning and smiling are both infectious, 
 and so are hopefulness and despondency in 
 business. Modern methods make them so. 
 Industry is not carried on now in watertight 
 compartments. Trades live on one another now 
 as they never did before. Industry is interlocked 
 with industry, and country with country. And 
 this is well, for it keeps people in touch with 
 one another. There are still ups and downs in 
 trade, but the cable and the commercial Press 
 prevent their coming as sheer surprises. 
 
 THE EQUALIZATION OF WAGES 
 
 In every well-managed business some of 
 the extra profits of the fat years are kept aside 
 
104 Ten-Minute Talks With Workers 
 
 to make up the lower profits, or in part to re- 
 place the actual losses, of the lean years. For 
 the ideal in business is steady, continuous run- 
 ning, with risks reduced to a minimum. 
 
 The capitalist suffers first when the crisis 
 comes. It is one of the great social services 
 of capital to take a good deal of the risk of in- 
 dustry off the shoulders of the working man. 
 During short periods of poor trade the capitalist 
 can take all the risk. He can produce for 
 stock, hoping that the tide will turn. In the 
 end, however, he must throw some of the burden 
 on some of the workers, either by short time or 
 by discharging them. For in their interests 
 as well as in his own the business must be kept 
 going, even at a lower speed, so that it will be 
 there to employ the full staff at full speed as 
 soon us the chance comes. 
 
 If we could only get up to our ideal, crises 
 would not do much harm to any intelligent 
 and honourable citizen, whether master or 
 man, for the inevitable loss of profits and wages 
 might well be compensated by the oppor- 
 tunity of leisure this afforded. After all, the 
 real business of hfe is to enjoy hfe worthily; 
 and all work, whether of hand or brain, is only 
 
The Ups and Downs of Trade 105 
 
 a means, a natural and necessary means, to 
 that end. 
 
 What is really wanted is a plan for the great- 
 est possible equalization of wages during the 
 working years of life. Wages cannot be fixed 
 any more than profits, for both depend on re- 
 sults. In Russia since the Revolution it is re- 
 ported that workers have been paid their wages 
 whether they worked or not — a plan which 
 has naturally enough proved fatal to the work- 
 ers. For if any group of workers are guaranted 
 an income, whether they work or not, they will 
 take the income without the work. But cessa- 
 tion of work means cessation of output, which 
 means that the supplies of goods which con- 
 stitute the real income cease to flow, and all- 
 round poverty ensues. 
 
 This apparently easy way of escape being 
 closed in the worker's interests, it remains to 
 be seen whether another can be found. Well, 
 we are all nowadays ready to accept the posi- 
 tion that no worker should be paid less than a 
 minimum wage; that is to say, we support the 
 view that the first claim on an industry should 
 be a fair chance of a life of a reasonable standard 
 for every worker in it. Educated employers 
 
io6 Ten-Minute Talks With Workers 
 
 know that high wages tend to induce high prof- 
 its by inducing high efficiency. The older eco- 
 nomic theory that "profits are the leavings of 
 wages" is proven nonsense. 
 
 Accepting the theory of the minimum wage, 
 we have only to take into account the "wave- 
 length" of each industry. That can be got 
 pretty accurately, or at any rate is get-at-able 
 by statistics. The minimum wage must then 
 be sufficient to supply the required standard 
 of comfort for every week in that "wave- 
 length," periods of unemployment as ascer- 
 tained being included. The wage for a given 
 week of work will give more than the standard 
 life for that week, because it includes a margin 
 to be saved up against weeks of unemployment. 
 Then social effort, by trade unions or works 
 committees operating an improved Insurance 
 Act, may compel and enable the worker to save 
 and apply his margin. This is, of course, an ideal 
 — but why not strive to average out our "dearths 
 and plenties"? 
 
XXII.— THE GREAT SHARE-OUT* 
 
 So FAR we have talked only about the way 
 in which goods are produced and the mechanism 
 of exchange by which they pass from hand to 
 hand. We have now to turn our attention to 
 the ways in which the goods, after they have 
 been produced, are shared among the classes 
 which have joined forces to produce them. 
 
 Observe that the economist deals with classes 
 of persons, not with individuals. If you were 
 to ask why John Jones has a weekly income of 
 ^15, while James Smith has a yearly income of 
 $100,000, the answer could only be given by one 
 who had an intimate knowledge of the lives 
 of John J. and James S., and of their ancestors 
 for at least three or four generations. You 
 may read about the ways in which great wealth 
 came to some families, and of how poverty 
 born of crime and ignorance, broadens out like 
 a foul river from generation to generation. 
 Studies such as these are only indirectly useful 
 
 *From the Times Trade Supplement — issue of August 23, 1919, 
 107 
 
io8 Ten-Minute Talks With Workers 
 
 to us, for we want to deal with big factors and 
 broad classes. In particular we should like to 
 find what light economics can throw on the 
 position and prospects of the workers. 
 
 We notice, to begin with, a fact which is con- 
 stantly overlooked — namely, that the way 
 in which income-earning property is divided 
 among those who own it matters very little 
 to the workers, while the way in which the in- 
 come derived from it is distributed is of the 
 greatest consequence to them. Take a case 
 that might happen. Here is a big liner, which 
 belongs to one man. It is worth, we will sup- 
 pose, five million dollars. The crew on board 
 her own nothing but what they stand up in, as 
 we say; so that their total property is so small 
 in comparison as to be negligible. There is, 
 then, on the property side, a big disparity be- 
 tween the millionaire shipowner and the poor 
 sailors. But the ship is only useful as an earner 
 of freights, and the total sum earned in freights 
 is divided very differently. The seamen get 
 a very large sum between them in wages in a 
 given year, and the millionaire owner might 
 well find at the end of it that what was left for 
 him was very little. 
 
The Great Share-Out 109 
 
 ALL INCOME IS EARNED 
 
 Note again that, while from the Government's 
 point of view incomes are classed as *' earned*' 
 and *' unearned," so that they may be taxed 
 at different rates, there is no such difference 
 from the economic point of view. All income 
 must be earned, though it need not be earned 
 by personal exertion. Capital, as we have 
 seen, increases product — sometimes increases 
 it amazingly. Its contribution is as direct and 
 obvious as labour's, and its share of the product 
 is as directly and obviously earned as labour's. 
 But Capital being only lifeless things — tools, 
 machinery, &c. — its share goes to the capitalist 
 who owns it. 
 
 When the capitalist is not only the owner 
 of the capital but the man who has saved 
 or created it, no one feels any difficulty in 
 recognizing that he has earned his share. The 
 difficulty comes when the capital on which the 
 income is paid has been inherited. For then 
 the industrious rich of one generation are suc- 
 ceeded by the "idle rich" of another, and a 
 sense of unfairness is undoubtedly felt by very 
 many reflective working men. 
 
no Ten-Minute Talks With Workers 
 
 The economist, however, knows nothing of 
 generations. The industrial process is to him 
 continuous. Capital is continually wearing 
 out, and fresh capital must be continuously 
 found to replace it. To get this fresh capital 
 an inducement is required, and the inducement 
 must also be continuous. And the only effec- 
 tive inducement he can find in history is that 
 the savers or creators of capital shall be per- 
 mitted to pocket that share of the product which 
 their capital creates — a share which would not 
 be there without them and their capital. In 
 time, the world may hit on some other induce- 
 ment to capital-creation, but the economist 
 knows that as yet this has not been done. This 
 is why he must teach, in opposition to the So- 
 cialist, that all income is earned. 
 
 It is for the statesman to draw the .distinction 
 between what he calls "earned '' and *^ unearned'^ 
 incomes. Unearned income, in his sense of the 
 term, is not an evil, for it gives the opportunity 
 for leisure and culture, even if, as an offset, 
 it enables many to be frivolous and idle. When 
 capital passes at death, and thus gives to a per- 
 son the right to draw an income which he has 
 done nothing personally to earn, the statesman, 
 
The Great Share-Out 1 1 1 
 
 interpreting the social mind of his time, may 
 claim for the nation a large share, and exact a 
 higher proportion of the income derived from 
 the remainder. The incomes at the top, al- 
 ways quoted gross by those who want to create 
 social discontent, may be about cut in two by 
 the Government's claims — half for the wealthy 
 person and half for the State. 
 
 Society may not be perfect, but it is not so 
 imperfect as to allow that income shall be cut 
 clean off from contribution. Don't bother about 
 Fifth Avenue in New York. Leave that to a 
 fair but rigid Collector of Internal Revenue. 
 Look at the mill, the mine, and the factory. 
 Here every dollar of income constantly tends 
 to be the reward of a dollar's worth of effort — 
 and it is our present business to connect efforts 
 and incomes in the great social share-out. 
 
XXIIL— WHAT CAPITAL GETS* 
 
 Suppose a man came to you and said, *'Here 
 is a bag containing five hundred dollars. I am 
 going to give it to you, and you can have it now 
 or in a year's time." What would you reply? 
 Obviously you would say, ** Thank you very 
 much, ril take it now." 
 
 Go a step further. Can you imagine any 
 circumstances under which any normal man, 
 moved by ordinary human feelings, would 
 reply, "Thank you very much. Til have it a 
 year hence"? Obviously not. A proverb, it 
 has been said, is "the wisdom of many and the 
 wit of one." Well, the wisdom of the many 
 has settled our question for us: A bird in the 
 hand is worth two in the bush. 
 
 When we are studying economics we are 
 much worse off than the student of chemistry, 
 for he can make experiments, and we cannot. 
 Or, rather, "experiments" in economics are 
 generally made under such uncertain conditions 
 
 Trom the Times Trade Supplement-rissue of August 30, 1919. 
 112 
 
What Capital Gets 113 
 
 that the lessons to be drawn from them are not 
 often clear and decisive. But when you are 
 asked such a question as the above, you do 
 really perform a sort of experiment on your own 
 mind. You go further, for you assume that 
 when other men make the same experiment 
 on their minds they will get the same result. 
 They will all, in short, say "Now." 
 
 Let us continue the experiment. Suppose 
 the man offers you a choice between two bags. 
 One contains exactly five hundred dollars, and 
 you can have that now. The other, which you 
 can only have a year hence, contains more than 
 five hundred dollars. Which would you choose ? 
 
 Clearly you cannot answer that question 
 straight off. Good as it is to have five hundred 
 dollars now, it will be better to wait a year if the 
 extra dollars will make it worth your while. 
 
 How many extra dollars will make it worth 
 your while? To find that out many things have 
 to be taken into account. The giver may alter 
 his mind during the year, and if you forego the 
 five hundred dollars to get the five hundred plus 
 something, you may get nothing in the end. 
 Or, assuming that he will not alter his mind, 
 he may die in the year, or you may die. If his 
 
114 Ten-Minute Talks With Workers 
 
 health is splendid, the extra number of dollars 
 required will be less than if his health be poor, 
 because the risk is less. 
 
 THE RATE OF INTEREST 
 
 Suppose, again, that it was a firm gift under 
 deed, as the lawyers say, from him and his heirs 
 to you and your heirs, and, to make matters 
 doubly sure, the larger bag, if it is that you 
 choose, is to be locked up in a safe in a bank. If 
 you learn that the larger bag contains $505, 
 which bag will you choose? The smaller. If 
 ^510? The smaller. If ^520? The smaller; 
 but you would not answer quite so quickly, 
 would you? And at, say $530, you would 
 hesitate no longer. Another man, confronted 
 with the same choice, might stop at ^525; an- 
 other go on to ^535; but — and that's the real 
 point — all would stop somewhere. And, as 
 men living in the same country and doing pretty 
 much the same thing, come to be pretty much 
 of the same way of thinking, they would all to- 
 day in the United States stop round about 
 $525. 
 
 So we have decided that a bag containing 
 $500 to be had now, and a bag containing $525 
 
What Capital Gets 115 
 
 a year hence are of the same value. The writers 
 of the Middle Ages were of opinion that it was 
 wrong to take back more than was lent, and 
 the old usury laws were based on the theory 
 that money was "barren." But if you lend 
 a man $500 to-day and in a year's time he 
 brings you back ^525, he brings you hack 
 precisely what you lent him, since, as our argu- 
 ment shows, the two bags are of equal value 
 to you to-day. 
 
 How many extra dollars there must be in 
 the larger bag is, as we saw, something that 
 cannot be determined exactly if you take only 
 two men into account. But in practice many 
 men are always lending other men sums of 
 money, and, in general, the borrower uses the 
 loan for the purposes of his business. And men 
 who borrow for business purposes have a pretty 
 shrewd notion of the worth of the money to 
 the business, while the people who lend are 
 generally quite as well able to gauge the same 
 thing. So that competition settles how much 
 has to be added to a present ^500 to make 
 up for waiting for a year, and, whatever it 
 is, the added number is the current rate of 
 interest. 
 
Ii6 Ten-Minute Talks With Workers 
 
 THE RETURN FOR WAITING 
 
 There have been many explanations of how 
 interest comes to be paid on capital. One 
 theory is that it is the reward of abstinence; 
 another, that inasmuch as the capital increases 
 the productivity of the business, interest is the 
 agreed share of extra product which goes to 
 the owner of the capital. Both theories contain 
 part of the whole truth. Very rich men have 
 such large incomes that to talk of them "ab- 
 staining" is stilted and unreal; but capital 
 began in very real abstentions from present 
 enjoyment that thoroughly deserved all the 
 reward they got, and very much capital is 
 amassed to-day by painful strivings and savings. 
 Again, capital increases wages just as truly 
 as it earns interest, and the worker cannot get 
 his share of the increase unless the capitalist 
 gets his. But the main justification of interest 
 is the one we got by asking the simple question 
 with which we started. Interest is the money 
 value of the difference we all feel between the 
 present and the future. 
 
XXIV.— INTERDEPENDENCE OF 
 NATIONS* 
 
 Climate is not merely a matter of latitude. 
 There are many places nearer the Equator 
 than Yorkshire that are far colder than that 
 county. A good deal depends on the lay of 
 the land. Turin, for instance, is very much 
 colder in the winter than any part of England. 
 
 At the end of November, 1917, the Rome 
 correspondent of the London Times was visiting 
 the Italian front. He had with him as his com- 
 panion another correspondent. Unfortunately, 
 an accident happened to their car, and this 
 correspondent was badly hurt. With consid- 
 erable difficulty the Times correspondent was 
 able to get his companion to the nearest hospital 
 where he was at once placed on the surgeon's 
 table. The room was bitterly cold, so cold 
 that it was feared that exposure for treatment 
 would do grave harm to the wounded man. A 
 little methylated spirit was poured into a dish 
 
 •From the Times Trade Supplement — issue of September 6, 19 19. 
 117 
 
Ii8 Ten-Minute Talks With Workers 
 
 and ignited. This was placed close to the pa- 
 tient in order to raise by a few degrees the at- 
 mosphere round his exposed body while the 
 surgeons did their work. It was all that could 
 be done. There was no coal in the hospital. 
 
 Italy depends almost entirely upon the 
 United Kingdom for coal. In 191 7 she was 
 able to get from all sources a million tons less 
 than the amount of coal set aside for the domes- 
 tic use of British miners alone. In 191 8 the 
 amount was only a little above the miners' allow- 
 ance. Thousands of operations were carried 
 out under circumstances similar to those de- 
 scribed. A great many brave men died from 
 exposure in the very hospitals. 
 
 So desperate were the straits to which the 
 people of Italy were reduced that they actually 
 cut down the olive trees, which are in many 
 cases their owners' most important source of 
 income, in order to obtain a little heat for the 
 sick, the aged, and the wounded, and to run 
 the trains for the distribution of food. 
 
 SUPPOSE ENGLAND HAD NO COTTON 
 
 Let us think of these things, because they 
 bring home to us the absolute interdependence 
 
Interdependence of Nations 119 
 
 of nations under the economic system of to-day. 
 Take another case. If all the suppHes of cotton 
 for the United Kingdom were cut off, a quarter 
 of the people would have to emigrate, because 
 there would be no employment for them. Cotton 
 is vital to them, and no cotton is grown in the 
 United Kingdom; but up to the present the 
 people have always been able to obtain suffi- 
 cient cotton to keep most of their mills working, 
 though sometimes on short time. Think of 
 the misery and want that would be caused if 
 their cotton supplies were cut off. That helps 
 us to sympathize with Italy, and realize our 
 own dependence on other countries. 
 
 What seems to Italians so extremely hard 
 is the fact that their plight is not directly due 
 to the war. Industry in many places there is 
 at a standstill for want of coal, and it is the 
 workers who suffer — the poorest and weakest 
 suffer most. 
 
 Think, too, of the suffering in the humblest 
 homes resulting from entire lack of fuel! It 
 is not the fault of Italy that they are dependent 
 upon British miners for coal — alas, that we 
 have to admit that it is their misfortune. Those 
 who have instigated the miners to reduce out- 
 
I20 Ten-Minute Talks With Workers 
 
 put are always harping on the hardships of the 
 mining population in contrast with the luxurious 
 ease of the upper classes; they do not see, or 
 at any rate they do not mention, the suffering 
 that their policy entails. 
 
 A SUGGESTION 
 
 I do not believe that the British miners 
 would deliberately withhold their labour if they 
 knew the straits to which such action has re- 
 duced the workmen of Italy, and I am going 
 to throw out a suggestion here to the miners 
 and to the British Government. It is simply 
 this — that the state of affairs in Italy should 
 be frankly and fairly put to the miners them- 
 selves, and that an appeal should be made to 
 their sporting British spirit to produce the 
 comparatively small amount of coal which 
 Italy needs to bring back prosperity to her 
 industries, and a measure of comfort to the 
 poorest of her people. They fought for Engr 
 land in the war. They came in at a critical 
 moment, and nothing can disguise the truth 
 that in so doing, in a commercial sense, they 
 stood to lose very severely, since most of theif 
 trade was done with the Central Empires. I 
 
Interdependence of Nations 121 
 
 do not believe that the British miners would 
 refuse to help their Italian fellow-workers. 
 
 I know what objection will be urged. It 
 will be at once suggested that this appeal is 
 a subtle attempt to induce the miners to pro- 
 duce, for the benefit of the capitalist class, more 
 coal than they otherwise would on a hypocritical 
 pretence of helping the Italians. 
 
 The obvious way of meeting that is to let 
 the ten million tons of coal that the Italians so 
 urgently need be produced by the miners over 
 and above the ordinary output, and let it be 
 earmarked from the moment it is hewn until 
 it reaches them. 
 
 It was not the intention of the miners to 
 hurt the Italian workmen. They did not see 
 what the inevitable result of "ca canny" in the 
 mines would be. I think all labour everywhere 
 would like to put themselves right on this 
 matter if they had it explained to them, and if 
 It were divorced from the other aspects of the 
 dispute. Am I right? Is it a deal? 
 
XXV.— THE INDUCEMENT TO INVEST* 
 
 Between 1901 and 191 1 the population of 
 Great Britain increased by 3,550,000 souls, 
 or 355,000 every year. This is about equal 
 to the united populations of the great industrial 
 centres, Leicester and Preston. Now think 
 for a minute or two of the vast collection of 
 material things which the inhabitants of those 
 two towns have, and must continue to have, 
 as the economic basis of their daily lives — the 
 houses, the public buildings, the shops, the 
 factories, the railway services, the banks, light- 
 ing, drainage, and water systems, trams, motors, 
 horses, raw materials, food, clothes, goods of all 
 kinds, theatres, cinemas, and so on. 
 
 Surely nothing can be clearer than the fact 
 which follows as a consequence, namely, as 
 Great Britain adds each year to its stock of 
 people an additional number equal to the united 
 populations of Leicester and Preston it must 
 also add to its stock of material wealth as 
 
 *From the Times Trade Supplement — issue of September 13, 1919. 
 122 
 
The Inducement to Invest 123 
 
 much as these two towns possess, or go back- 
 ward and not forward. Nothing could be 
 clearer, but if any of you imagine that it is 
 done now, or is ever going to be done, without 
 the most serious and concentrated efforts, he 
 imagines a vain thing. Not even "Proud 
 Preston" would claim that she is perfect be- 
 yond criticism, but it has taken centuries enough 
 and strivings enough to make her what she is; 
 and Great Britain has got to produce her, and 
 Leicester to boot, in one year and in every year, 
 to keep as it is, much less to do what it naturally 
 wants to do — march ever forward to a better 
 social state. 
 
 INDUCEMENT WANTED 
 
 To replace all the capital that is used up in 
 the year by the existing population, to furnish 
 the supplies of new capital required by the 
 yearly addition to the population, and to pro- 
 vide on the top of all this net additions to the 
 existing stock of capital so as to create oppor- 
 tunities for increased comfort all round is of 
 course a very big job indeed, and requires con- 
 tributions from every possible source. For 
 you will recall the fact, emphasized so insist- 
 
124 Ten-Minute Talks With Workers 
 
 ently in earlier "Talks," that capital does not 
 fall as the rain from Heaven, but is the result 
 of human efforts and foresight. However poor 
 a man is, he is a capitalist if he spends less than 
 he earns and puts his savings into a good bank, 
 or into some society which banks the collected 
 surpluses of its members. For the banks are 
 reservoirs of unapplied economic power to 
 which all those resort who have "paying propo- 
 sitions'' for new industrial and commercial ac- 
 tivities. 
 
 You will not need to be told that men must 
 have some inducement. Nobody would expect 
 armies of labourers, bricklayers, builders, archi- 
 tects, and so on to settle down in waste places 
 and build a Leicester and a Preston for nothing. 
 Yet there are people who think that capital 
 gets what it does not deserve, and that is gener- 
 ally because they have not figured out the ser- 
 vice that capital renders to us all, and not least 
 to those who are workers. 
 
 PRIZES NECESSARY 
 
 Suppose a man has $500 in his bank and 
 determines to invest it. His bank manager, 
 to whom he very wisely goes for advice, would 
 
tlhe Inducement to Invest 125 
 
 deal with him somewhat as follows. He would 
 say: 
 
 (i) "Do you wish your $500 to be per- 
 fectly safe?" The man repHes, "Yes." The 
 manager would point out that he may buy a 
 mortgage on a piece of real estate or a "bond" 
 in an American railway. These carry low rates 
 of interest, only 4J per cent., but have this great 
 advantage, that if you do not get your interest 
 you claim the property. 
 
 (2) Or the manager might say: "Here is 
 a new company being formed. The project 
 is, I think, sound; the men behind it are 
 thoroughly able, experienced, and honourable. 
 They offer 5 per cent, shares of cumulative pre- 
 ferred stock, so that if you don't get your full in- 
 terest one year, the balance is owing to you — 
 that is why they are called 'cumulative.' You 
 only get 4I per cent, on your mortgage. For a 
 little less safety, you get perceptibly more in- 
 terest, and you can sell your share for what it 
 will fetch, which may be less than $500, may 
 even fall to a mere trifle, but will never rise 
 much, if any, above ^500." 
 
 (3) Or the manager may go on: "This new 
 company offers for subscription shares of their 
 
126 Ten-Minute Talks With Workers 
 
 6 per cent, preferred stock. They bind them- 
 selves to pay you 6 per cent, if they can, but not 
 to owe it you if they can't. If, however, the 
 company is a big success, as is quite likely, 
 the ^500 share will rise in price, and may 
 even go up to the neighbourhood of $650. 
 Then you can sell out and make a good 
 profit." 
 
 So far the manager has been suggesting 
 ways of "playing for safety." He has shown 
 him how the chance of profit increases as the 
 risk to capital increases. He goes on: 
 
 (4) "The company has on subscription a 
 number of $50 shares of common stock at par. 
 If you pay your ^500 for 10 of these, you run a 
 chance of getting no interest, losing the capital, 
 but you also have the chance of gaining a great 
 deal. It's for you to choose." 
 
 There is no playing for safety here. If a 
 man takes a chance, it must be on his own cal- 
 culation as to the chance of "pulling it off." 
 There are, of course, historic instances of it 
 "coming off." The New River Company, 
 formed in the reign of James I to supply 
 London with water, is a well-known case. 
 The very fact that a company is so successful 
 
The Inducement to Invest 127 
 
 shows how badly it was wanted, or how bril- 
 liantly it is managed, or both. But there 
 the risk was, and the social system must show 
 its gratitude to those who take it by letting 
 them reap the reward. 
 
XXVL— WHAT THE "BOSS" DOES FOR 
 SOCIETY* 
 
 In the development of industry the capitalist 
 employer, or the "boss," has grown into a posi- 
 tion of commanding importance. Now, unless 
 we are to adopt the foolish belief that men are 
 fools and that progress is a delusion, we shall 
 have to act on the assumption that the "boss" 
 has come to be what he is because society found 
 it worth while to let him. 
 
 Take a case in point from the past. The 
 feudal lord whom you read about in historical 
 romances seems to you a fearful monster. 
 You think of him as Hving in a moated castle 
 with a donjon keep, with serfs herded like 
 beasts on his domains, over whom he exer- 
 cised the power of life and death. It is only 
 when you put down your romance, and study 
 feudalism as a phase of social development, 
 that you come to realize that the feudal lord 
 
 *From the Times Trade Supplement — issue of September 20, 1919. 
 128 
 
What the "Boss" Does for Society 129 
 
 reall}^ did contribute largely and soundly to the 
 pragress of society. 
 
 It is Hkely to be just the same with the 
 "boss," the "capitaHst employer," the text 
 of thousands of frothy speeches which plume 
 themselves on being "advanced thought." 
 
 A hundred years ago the growth of popula- 
 tion alarmed many thinkers, and if you will 
 read one of the older books on economics 
 you will find this alarm reflected there in 
 long and anxious discussions about Malthus 
 and his famous book on the laws of population. 
 Food, said Malthus, increased only in arith- 
 metical progression (i, 3, 5, 7, &c.), while 
 population tended to increase in geometrical 
 progression (i, 2, 4, 8, &c.), so that checks 
 to population, such as famines, plagues, and 
 wars, bad as they seemed, were necessary 
 evils. Increase of population was therefore 
 an enemy of civilization. Well, if you read a 
 modern book on economics you will find that 
 these old fears have disappeared from its pages. 
 There are many reasons why this is so, but they 
 can all be summarized by saying that mass- 
 production has so far resisted the pressure due to 
 increasing population, and for the triumph of 
 
130 Ten-Minute Talks With Workers 
 
 mass-production society has to thank the 
 "boss." Since Malthus wrote, the population 
 of Great Britain has more than doubled and its 
 aggregate wealth had multiplied at least five- 
 fold up to the outbreak of the war. It is 
 easy to criticize a particular "boss," and 
 many a "boss" deserves it, but the "boss" class 
 and the "boss" system have done this much 
 for us. 
 
 HE MAXIMIZES OUTPUT 
 
 When an engineer is constructing a new 
 machine the general problem he has to solve 
 is to produce a machine which shall give the 
 greatest possible amount of work for the least 
 possible expenditure of fuel and stand the 
 racket of doing it for the longest possible time. 
 Now a factory is, in essentials, precisely like a 
 machine. Don't fix your eye now on the work- 
 ers in the factory, for we will deal with them in 
 the next "Talk." Think only of the factory in 
 relation to society, of which you form a part. 
 What the engineer must do with his machine 
 the employer must do with his factory. He 
 must not waste labour or capital. He must 
 give society the best return he can, and in 
 
What the "Boss*' Does for Society 131 
 
 practice that is shown when he sells a standard 
 article at the lowest possible price. 
 
 True he does all this to serve his own ends; 
 but so does the worker. Neither the mine 
 owner nor the miner are thinking of serving 
 society, and no sensible person wants them to. 
 They serve the interests of society best by 
 serving their own interests. It is a sheer illusion 
 to suppose that men will work, whether as em- 
 ployers or employees, with any other end in 
 view. It is also an illusion to suppose that 
 either will suffer, or that society will suffer 
 with them because they do this. 
 
 HE ANTICIPATES REQUIREMENTS 
 
 The "boss" renders another essential service 
 to society by anticipating its future require- 
 ments. Often enough he makes a wrong fore- 
 cast, and then he suffers for his mistake. Often 
 he is right, and then he may make a fortune, 
 and this is the incentive which society, acting 
 solely in its own interest and not at all in his, has 
 appUed to the "boss" class in order to get them 
 to be brisk and acute in this all-important line of 
 activity. It is not something which you and I 
 can do for ourselves. Under modern conditions, 
 
132 Ten=-Minute Talks With Workers 
 
 which rule us and from which we cannot escape, 
 all we can anticipate is that during the next 
 year we shall certainly need many meals, some 
 new clothes, and plenty of visits to the 
 ** movies" and ball games — all of them desirable 
 things. The supply of them, when the time 
 for us to use them comes, will be due to the 
 "boss" who has organized their production. 
 
 Moreover, new lines of desire are constantly 
 opening up before the vision of far-sighted men, 
 as Mr. Ford, for example, saw the coming de- 
 mand for cheaper motors, and if they do the 
 pioneer work along these lines it is the interests 
 of society that are served quite as much as their 
 own. 
 
 The feudal lord passed away not because 
 he had not served society, but because the 
 need for his services had ceased. So, too, 
 in course of time, the **boss" may pass away 
 if the need for his special services passes away. 
 But as long as vast populations are crowded 
 into narrow spaces, the need for him will 
 remain, and any attempt to dispense with him 
 will shatter society. 
 
XXVII.— WHAT THE "BOSS" DOES FOR 
 THE WORKER 
 
 If you are content to have a mind which 
 skims over the surface of things, you will be 
 satisfied with the current teaching of those 
 who tell you that all the capitalist-employer 
 does for the worker is to "exploit" him as 
 a "wage-slave." If you are willing, how- 
 ever, to dig a little you will soon see that this 
 easy answer simply will not do, because it 
 does not cover the facts. 
 
 Nature has decided that man's needs shall 
 be satisfied only by goods, and that goods to 
 satisfy the needs shall be obtained only by 
 work. An out-West settler hunts, shoots, 
 dresses, and cooks his meat before eating it; a 
 Lancashire weaver in England or a Pennsylvania 
 miner in the United States has nothing to do with 
 any of these preliminary processes. He comes 
 home hungry from work, and there it is piping 
 hot and very agreeable. 
 
 •From the Times Trade Supplement — issue of September 27, I9I9' 
 
134 Ten-Minute Talks With Workers 
 
 In the economic evolution of society it has 
 come to pass that in a country of the "West- 
 ern" type, like the United States, very few 
 workers indeed do any work directly aimed 
 at producing the goods which are to satisfy 
 their own needs. The "boss" is the centre 
 and pivot of the complicated machinery of pro- 
 duction, distribution, and exchange which 
 brings it about that workers produce goods 
 which they do not consume and consume goods 
 which they do not produce. Apart from 
 other and higher conveniences and satisfac- 
 tions derived from sharing in this Western 
 type of civilization (security of life and limb, 
 personal freedom, rights and duties of citizen- 
 ship, &c.), the worker who "digs" a little in 
 search of social truth will soon find that even 
 on the material side work now brings more 
 to the worker than ever it did. And there 
 is one simple but sufficient proof of this, for 
 the "master man," the independent worker, 
 still exists and in quite large numbers, but 
 he is in general no better off, and very fre- 
 quently worse off, than the man who is em- 
 ployed in the same trade in a big "works"; 
 and on the top of that he has as "master" 
 
What the "Boss" Does for the Worker 135 
 
 to do for himself as "man" all the things that 
 the "boss" does for the so-called "wage-slave." 
 
 HE TAKES THE RISKS 
 
 Notice, to begin with, that the "boss" 
 takes the risks of industry off the shoulders 
 of the worker. Both in fact and law, the first 
 claim on industry is the wages of the workers 
 in it. The "boss" may make a profit; he 
 must pay the wages he has agreed to pay. 
 If just before a pay-day he goes bankrupt, 
 the unpaid workers are not ranked along with 
 the business creditors as participators in the 
 realized assets. They get their 100 cents to the 
 dollar, and the others share what is left. Work- 
 ers, it is to be feared, seldom reflect how rigidly 
 the law has hedged round their interests, but the 
 truth is that in this most important respect 
 society has put itself wholeheartedly at the 
 worker's back. 
 
 Reference was made above to the Lancashire 
 weavers. Well, in the olden days, when the 
 weaver owned his own loom and worked in 
 his own cottage, he had to gad about to the 
 housewives round about him to collect and 
 buy the yarn; and when he had woven his 
 
136 Ten-Minute Talks With Workers 
 
 cloth he had to carry it to "town" to find a 
 purchaser for it. You will find the whole 
 process described in Defoe's "Tour," a sort 
 of "Murray's Guide" to England compiled 
 by the busy author of "Robinson Crusoe." 
 The Lancashire weaver to-day spends all his 
 working time weaving. The heavy tasks of 
 buying yarn and selling cloth are done for 
 him by the "governor", or "boss". He has 
 not lost any independence worth considering 
 for its moral value, and the economic partner- 
 ship into which he has entered has greatly in- 
 creased the return he gets for his work. 
 
 Unemployment does not prove that the 
 "boss" does not take this risk and relieve 
 the worker of these tasks, any more than the 
 street accidents in New York prove that the 
 police do not control the traffic — ^which every- 
 body knows they do, and do amazingly well. 
 Unemployment (which, at its worst, is always 
 only a small fraction of employment) only 
 proves that the risks of industry are such that 
 even skilled, clever, far-sighted "bosses" 
 cannot carry them all, and must throw some 
 of them on to their partners in industry — the 
 workers. Just as wise "bosses" have an 
 
What the "Boss" Does for the Worker 137 
 
 "equahzation of profits" account, so as to 
 reduce the difference between fat and lean 
 years, so wise workers will set up a corre- 
 sponding ** equalization of wages" account; 
 and certainly the last word, scarcely even the 
 first word, as to how to do this satisfactorily 
 has not been said. 
 
 HE PROVIDES THE GUIDANCE 
 
 Carlyle taught us 70 years ago to talk of 
 "Captains of Industry." We have got to 
 talk now of "Marshals of Industry"; we have 
 got to place our best brains at the head of our 
 factories and do what they tell us, or we shall 
 lose the industrial battle. Forty-eight million 
 Britons have to live in the British Isles, nearly 
 all of them between the Clyde and the English 
 Channel, and they are not going to do it, 
 certainly they are not going to do it well, 
 unless the most capable men are in command 
 of their industrial and commercial estabhsh- 
 ments, and, being in command, are obeyed. 
 
 And this is precisely where a vast improve- 
 ment can be made. Careful experiments, 
 carried out by trained minds by scientific 
 methods, have shown that organization can 
 
138 Ten-Minute Talks With Workers 
 
 increase output almost indefinitely without 
 increasing the physical or mental exertions 
 required from the worker, and of this in- 
 creased output with stationary work the work- 
 ers claim and get a large slice. 
 
XXVIIL— WHAT IS THE WORKER EN- 
 TITLED TO?* 
 
 Workers want higher wages. Good! The 
 desire is natural and commendable. But the 
 desired result will come only from the opera- 
 tion of the right causes, and the worker can 
 discover these right causes only by sound 
 thinking. Shouting at mass meetings will 
 not affect wages any more than it will affect 
 the stars in their courses. Thinking will, 
 and at once. 
 
 Beginning where we always try to begin — 
 at the beginning and not half-way through — 
 let it be noted that every wage paid to every 
 worker, from the $75,000 per annum paid to the 
 President to the dollar and a half a day paid 
 to a charwoman, is the result of a contract be- 
 tween two persons: A, the payer of the wages, 
 and B, the receiver of them. It is the fashion 
 among "advanced thinkers" to speak of B 
 as a "wage-slave." B is a "wage-slave" to 
 
 •From the Times Trade Supplement — issue of October ii, 1919. 
 
140 Ten-Minute Talks With Workers 
 
 precisely the same extent as A, no more and 
 no less, since each of them is equally bound 
 by the contract he has entered into, and no 
 force on earth can make either A or B enter 
 into a contract, for a contract must express 
 the full consent of wilHng minds that under- 
 stand precisely what they are doing. So 
 that the first, but only preliminary, answer 
 to the question, ''What is the worker en- 
 titled to?" is simply, *'The wage he has con- 
 tracted to work for." 
 
 This, you will say, is not a very startling 
 answer. It seems, you think, to have a famihar 
 ring about it. Very well, let us see whether 
 what follows from it is of more use. 
 
 Note to begin with that only a free man 
 can make a contract. In the Southern States 
 before the Civil War there was no contract 
 between A, the planter, and B, the Negro. 
 If B, while going an errand for A, got a picayune 
 for holding C's horse, the picayune in law be- 
 longed to A. The economic mark of the legal 
 status of freedom from personal servitude which 
 the Civil War brought to B was that A now 
 began to pay him wages. The reserve process 
 is equally stringent in its effects. Cease to get 
 
What Is the Worker Entitled To? 141 
 
 wages and you cease to be free. B may give A 
 any fancy name he Hkes to camouflage his con- 
 dition. He may call him a "National Guild" 
 with Mr. G. H. D. Cole, or a "Soviet" with 
 Lenin, but that, though it may amuse him, 
 will not alter his condition of servitude. 
 
 FREEDOM OF CONTRACT 
 
 When we take a broad view of the history of 
 the worker it is easily seen how in the earlier 
 stages of the gradual process by which he 
 obtained freedom to enter into wage-contracts 
 he was at a disadvantage in comparison with 
 the other party to the contract. Exactly 
 the same thing happened in the Southern 
 States in the case of the emancipated Negro. 
 But freedom to make a contract carries 
 with it freedom to make the contract as ad- 
 vantageous as possible. B, the receiver of 
 wages, wants to get the best terms he can 
 from A, the payer of them. He can do this 
 in three ways : 
 
 (i) By joining with his fellow-workers to 
 fix the terms on which they will agree to work. 
 The law now gives the workers full liberty 
 of combination, At first trade unions were 
 
142 Ten-Minute Talks With Workers 
 
 bitterly opposed. Arnold, of Rugby, called 
 them in 1834 "a fearful engine of mischief," 
 and for long the economists "proved" that they 
 could not raise wages, which was about as inept 
 as proving that children could not eat taffy. 
 The worker has found that he can make a better 
 wage-contract as a member of a union than as an 
 isolated individual, and he is bound to avail 
 himself of the discovery. Trade-union action 
 may, however, tend to stereotype wages, which 
 is a wrong way of fixing them. It sets a mini- 
 mum below which money-wages cannot fall, 
 and is less assiduous about the maximum to 
 Vv^hich they should strive. 
 
 (2) The worker will get a more advan- 
 tageous wage-contract the more he knows of 
 the general wage-paying capacity of the in- 
 dustry in which he works, and of the particu- 
 lar wage-paying capacity of the factory in 
 that industry which employs him. His present 
 demand for a share of control is at bottom a 
 demand to have access to data on which he can 
 form a fair decision on these important points. 
 Hitherto he has had to act on guesswork, some- 
 times shrewdly right, sometimes a long way out. 
 
 (3) The wage-contract has one aspect which 
 
What Is the Worker Entitled To? 143 
 
 is pecuKar. Generally each of the two parties 
 to a contract leaves the other to carry out 
 its terms, with a suit for breach as the result 
 of failure to do so. In industry, which is not 
 a rivalry but a partnership, this will not do. 
 Our A and B do not make their contract and 
 separate, each going his own way. For whether 
 A can run the contract indefinitely on its present 
 terms, much less alter it from time to time to 
 B's advantage, depends very largely on B him- 
 self. Breach of an ordinary contract, say to 
 deliver certain goods at a stated time, can easily 
 be made out — the goods are not there, and the 
 failure is obvious. Breaches of the wage-con- 
 tract are not so easy to determine, and are un- 
 fortunately rather easy for B to make without 
 immediate detection. He may "ca'canny." 
 The breach of contract is ultimately proved 
 by the bankruptcy of the industry — but this 
 takes us into the economics of wage-fixing, 
 which will be the subject of our next "Talk." 
 
 Wages are the result of a contract. Con- 
 tracts should be carried out exactly, both in 
 the letter and the spirit. In industry, as in 
 life, it pays handsomely to keep your word 
 as your bond. 
 
XXIX.— WHAT ARE PROFITS?* 
 
 Every worker who wants to know what 
 profits are must make one of those mental 
 experiments which these "Talks" have often 
 referred to as a necessary method of getting 
 at laws which regulate our daily lives. For 
 those laws are not made by man, but are con- 
 sequences of his being man — man as nature 
 has shaped him in the course pf uncountable 
 ages. 
 
 Many workers whose incomes are called 
 wages develop into employers, and then their 
 incomes are spoken of as "profits." What 
 are profits.? Those of us who have remained 
 workers want to know the exact answer to that 
 question, and if we make up our minds to think 
 clearly we may perchance learn more about 
 profits than many who pocket them. 
 
 During the last half-century one of the most 
 noticeable movements in the industrial world 
 in all countries of the most developed Western 
 
 ♦From the Times Trade Supplement — issue of October 4, 1919. 
 144 
 
What Are Profits? I45 
 
 type has been the tendency toward combina- 
 tions. It has been particularly marked in 
 Germany, where the resulting bodies are called 
 Kartels, and in the United States, where 
 they are known as Trusts. In Great Britain 
 the trend toward combination has been less 
 obvious to the public and less thorough in 
 its results — but it exists, of course. Note, too, 
 the parallel movement in the Labour world 
 which has created the famous "C.G.T." in 
 France and the ** Triple AUiance" in Great 
 Britain. 
 
 Fixing our minds, however, on the capitaHstic 
 movement only, we shall find, if we search well, 
 that it has a most curious and, at first sight, 
 startling explanation. The combination of busi- 
 ness men is, in short, an attempt to repeal and 
 defeat the law of business profits, which is sim- 
 ply this: Profits tend to disappear. Clear all 
 prepossessions out of your mind, make your 
 mental experiment with ruthless logic, and you 
 *shall see for yourself how true it is. Note care- 
 fully the wording of the law. It is not : ** Profits 
 do as a matter of fact disappear in every case," 
 though Stubbs' Gazette proves clearly enough 
 that they do disappear in a good many cases. 
 
146 Ten-Minute Talks With Workers 
 
 No, the law is: "Profits tend to disappear"; 
 and the capitalist-employer generally has his 
 work cut out to prevent his particular profits, 
 which are all he cares about, from obeying the 
 rule. And our mental experiment is simply 
 this: Suppose yourself an employer and figure 
 out hozv you would get along. 
 
 COMPONENT PARTS OF "PROFITS " 
 
 All you got out of the business for yourself 
 you would call your "profits," and you would 
 transfer them from your business account at 
 the bank to your private account and draw 
 on them for your own personal expenditure. 
 Now clearly you would not so transfer any 
 sum until you were quite clear that it belonged 
 to you and not to the business, for that is the 
 short road to the bankruptcy court; and the 
 thing you would need to be most careful about 
 would be to see that the capital of the business 
 was kept absolutely intact. Let us suppose 
 this capital to be $250,000, and by keeping 
 it intact is meant that the real capital (buildings, 
 plant, stocks, &c.) would fetch the $250,000 
 you originally invested the very day you 
 cared to close up your business. Provided 
 
What Are Profits? 147 
 
 the business has done this for you, what else 
 can you rationally expect it to do? Two 
 things : 
 
 (i) To run your business you must yourself 
 work, and you may rightly expect your own 
 business to provide you with an income as 
 good as you would get as the salaried manager 
 of a similar business owned by someone else. 
 Put that down as ^7,500 a year, which is the 
 worth of your work to the world as tested by 
 the competition of men as good as, worse than, 
 or better than, yourself. To that you are en- 
 titled on economic grounds. 
 
 (2) You have provided the world with capital 
 worth $250,000, and kept it intact and in work- 
 ing order. This service is over and above your 
 work as manager, and unless society rewards 
 men who render this service it will not be ren- 
 dered, and then national decrepitude will set in. 
 As nobody want this, though foolish people want 
 things that will inevitably lead to it, society 
 rewards you with interest, now about 5 per cent. 
 on a perfectly safe investment — ^which yours is 
 since you could sell out for all you put in. On 
 this score you are entitled to $12,500 — making 
 a total income of $20,000 a year. 
 
148 Ten-Minute Talks With Workers 
 
 To that you are economically entitled and 
 you are economically entitled to no more. 
 
 WHY "profits" disappear 
 
 Suppose you make not the ^20,000 you are 
 entitled to but $30,000. Well, if you continue 
 to do that, other people with as much business 
 talent and as much capital as you will "cut 
 in." They will undersell you and make, say, 
 still $5,000 too much on economic grounds. 
 But $5,000 or nothing is worth having, and they 
 in turn will be undercut, and in the end the 
 "profits" will disappear. You will see this 
 coming and will not like the idea, so you will 
 do all you can to minimize competition, and 
 will welcome the Trust or Kartel if it comes 
 along. Really it is of little service to you. 
 The world is not as mad as it looks, and has a 
 persistent and generally successful dislike to 
 paying more for a service than the service is 
 worth. 
 
 The general reason why a man continues to 
 make a much bigger income from business 
 than is usual is just simply that he earns it 
 — that is, with a capital outfit worth $250,000 
 he can put in work worth, say $25,000, being 
 
What Are Profits? 149 
 
 miles ahead of you. Then his capital increases 
 fast, and so does his income. But he earns it 
 all. "Profits" — income without equivalent efforts 
 — "tend to disappear" — unless a water-tight 
 monopoly retains them. 
 
XXX.— WHAT DO WAGES DEPEND ON?* 
 
 We answered the question, *'What is the 
 worker entitled to?" by replying, "The sum of 
 money due to him under the wage-contract 
 between him and his employer." Again, as we 
 saw, this contract is, both in theory and in fact, a 
 contract freely entered into, and binds both sides. 
 Both are free men before they make the con- 
 tract; both are "slaves" to it when it is made. 
 
 This is mainly a legal question, but it is 
 tinged with morality, for if both contractors 
 are to remain worthy of the freedom with which, 
 after centuries of struggle, civilization has en- 
 dowed them, they must carry out the terms 
 of the contract both in the letter and in the 
 spirit. Of set purpose, because they are apt 
 to be overlooked in the heat of controversy, 
 we have dwelt on these two aspects of wages 
 — the legal and the moral. ' 
 
 Now we come to what concerns us mostly, 
 the economics of wage-fixing. For both the 
 
 *Frora the Times Trade Supplement — issue of October i8, 1919. ' 
 150 
 
What Do Wages Depend On? 151 
 
 wage-payer, A, and the wage-receiver, B, are 
 influenced by economic considerations in mak- 
 ing their contract, and both watch very care- 
 fully the economic results that follow from it. 
 That law is at work is obvious enough from some 
 simple facts of daily observation. For example, 
 the wages of bricklayers vary from place to 
 place at the same time and from time to time 
 in the same place, but in all places and at all 
 times they are higher than the wages of brick- 
 layers' labourers — a constant result that must 
 be connected with some constant force. Or, 
 again, those who do the ordinary work of agri- 
 culture always get a higher money-wage and 
 also a higher commodity-wage in "young" 
 countries than in "old" ones, another pretty 
 certain indication of the working of a law of 
 wages. It is of the greatest consequence that 
 we should discover this law if we can, for clearly 
 all sorts of grave errors may be made, even to 
 the wrecking of society, if we foolishly assume 
 that there is no such law. If there were not, 
 iron-moulders would do better to ask for an 
 extra ^75 a week than for an extra ^5. Their 
 very demand, you see, implies the existence of 
 limit; that is, of a law. 
 
152 Ten-Minute Talks With Workers 
 
 WAGES AND PRODUCTS 
 
 Suppose you — remember that these words 
 are the signal that we are going to make one 
 of our mental experiments — suppose you had 
 at your disposal a certain fixed amount of capital 
 (buildings, machinery, tools, raw materials, 
 power, cash, patents, &c.)j and the necessary 
 technical knowledge and human "touch" to 
 enable .you to run the business for which they 
 are adapted. Don't say "fudge," because you 
 are really only a worker, and are rather inclined 
 to suppose yourself a "wage-slave." That 
 would indeed matter if we were out after 
 profits in the business world. It doesn't 
 matter a rap now that we are out after truth 
 in the thought world. Just suppose it, so 
 that you can come at this truth by cross- 
 examining yourself — a sadly neglected practice 
 nowadays. 
 
 You would want workers. Without them 
 the plant stands idle — no workers, no product. 
 How many do you want? Not an infinite 
 number, of course, for if you got in too many 
 they might be packed in the works like sar- 
 dines in a tin, and be unable to move. Too 
 
What Do Wages Depend On 
 
 153 
 
 many workers, no work. You see, of course, 
 there's a Hmit. How would you find it ? 
 
 To make the problem a little easier, let us 
 suppose that your workers are all of one grade 
 and that the amount of skill required is such 
 that any average man in that grade is good 
 for your turn. You fix the wages in advance 
 say $25 per 48-hour week. And, being very 
 anxious to get your number of workers exactly 
 right, you take them on one at a time, and 
 watch the result — that is, you measure the 
 amount and value of the product each new man 
 adds to the total output before you engaged 
 him. We use, of course, imaginary figures, 
 but they might run somewhat as follows: 
 
 
 
 ADDED BY LAST 
 
 NO. OF WORKERS 
 
 TOTAL PRODUCT 
 
 MAN 
 
 
 
 
 
 
 
 I 
 
 32 
 
 32 
 
 2 
 
 70 
 
 38 
 
 3 
 
 120 
 
 SO 
 
 4 
 
 190 
 
 70 
 
 5 
 
 290 
 
 100 
 
 98 
 
 3.900 
 
 SO 
 
 99 
 
 3.949 
 
 49 
 
 100 
 
 3.997 
 
 48 
 
1 54 Ten-Minute Talks With Workers 
 
 Nobody now needs to try such an experi- 
 ment in reality — ages of experience have done 
 it for us and we have inherited the results, 
 so that, in the case supposed, your own tech- 
 nical knowledge would enable you offhand to 
 say that you would want about loo men. But 
 note that all we have done is to suppose you 
 to do scientifically, gradually, and accurately 
 by careful measurement (** costing") what in 
 real life you would do at once by enlightened 
 guess-work. 
 
 Start somewhere you must; we suppose you 
 to start from scratch. Finish somewhere you 
 must, or you would clutter up the factory and 
 do nothing; we suppose you to stop at the looth 
 man. Why? Because if you add another 
 you will have to pay him the trade-union rate 
 of $25, and you can see he will not earn it. 
 
 Note another thing: the last man gets as 
 wages all he adds to the product. All the men 
 are alike in grade and industry, and no one is 
 ecgnomically entitled to a penny more than 
 the last — and you can see exactly what he gets 
 and decide for yourself whether you are "ex- 
 ploiting" him as a "wage-slave." 
 
XXXL~-**A FAIR DAY'S WORK FOR A 
 FAIR DAY'S WAGE"* 
 
 Every now and again an idea which is sim- 
 mering in the minds of men strikes out for it- 
 self a happy phrase which runs from Hp to hp 
 because it sums up the idea to a dot. **A fair 
 day's work for a fair day's wage" is just such 
 a phrase. "Give me the one and I am wiUing 
 to give the other," say both the wage-payer 
 and the wage-earner, and they say this because 
 the word "fair" appeals to them. "That's 
 fair" — this sentence is heard every day. In 
 an imperfect world one does not expect perfec- 
 tion. Give him fairness, and he is content. 
 
 Our trouble is that we cannot afford to be 
 content with a phrase because it rings sweet in 
 our ears. We are not out electioneering at 
 a mass-meeting, where sound is of much more 
 importance than sense. Our business is to get 
 at the truth, which is the only thing that mat- 
 ters; and the particular kind of truth we are 
 
 *From the Times Trade Supplement — issue of October 25, 1919. 
 
 155 
 
1 56 Ten-Minute Talks With Workers 
 
 searching for is economic truth. When we 
 sing or shout agreement with the idea of "a 
 fair day's work for a fair day's wage," what 
 is the precise meaning we attach to the phrase? 
 The phrase is economically sound because 
 it asserts in the clearest possible way that there 
 is a vital connection between work and wages, 
 between the character of the one and the size 
 of the other. The day's work and the day's 
 wage are connected with each other as cause 
 and effect. It may not be true of a single 
 day's work of a particular man. Suppose a 
 farm hand calls on you and asks for a day's work 
 at three dollars a day. You give it him — that 
 is, you enter into a contract with him. If he 
 lay under the fence all day and smoked, you 
 would not pay him, and if he sued you for the 
 money in Court and you proved that he had so 
 acted, the Court would not compel you to keep 
 the contract because he had broken it from his 
 side. No jobbing gardener acts like this, but 
 our shrewd-eyed father of economics, Adam 
 Smith, noted long ago that a man "commonly 
 saunters a little" when he changes from one 
 sort of work to another, as from mowing the 
 lawn to potting the geraniums. If you came 
 
"A Fair Day^s Work'' 157 
 
 to the conclusion that your farm hand had 
 overdone the sauntering you would not have 
 him again. 
 
 And looking at the contract from his point 
 of view, you can easily see that if he could get 
 $3.50 from other people he would not come to 
 you for $3 ; or if, in the absence of a man willing 
 to give him ^3.50 he came to you for ^3, he 
 would be likely to give you only ^3 worth of 
 labour for $3 in wages — and no one can say 
 that he would be acting wrongly. 
 
 PAY AND PRODUCT 
 
 Generally it makes a difference whether an 
 employer with a fixed stock of capital employs 
 a smaller or a larger number of men, because 
 certain overhead charges (rent, for example, 
 which varies with the area rented, which must 
 be larger for the larger number of men) in- 
 crease as the size of his staff increases. Sup- 
 pose, however, what is in many cases nearly 
 true, that it does not matter to an employer 
 whether he engages 100 men at ^4 a day each or 
 80 men at $5 a day each, since the output 
 in each case is the same, and his overhead 
 charges vary so little with the number of his 
 
158 Ten-Minute Talks With Workers 
 
 men that he can neglect the variation. 
 Which, then, is the fair day's wage and which 
 the fair day's work? Each is clearly fair. It is 
 unfair for the employer to expect a $5 output 
 from a $4. man, and for a $4. worker to expect a 
 ^5 wage. Moreover, it is not only unfair but 
 uneconomic, which settles the matter. If 
 workers who contract to do work worth $5 
 only do work worth ^4, they must in time bring 
 the business to bankruptcy whatever their 
 employer may be. No fallacy is more per- 
 sistent or more stupid than that of supposing 
 that a change in name causes a change in nature. 
 No employer now, in the past, or in the future, 
 can pay ^5 for $4 worth of work. Whether he 
 be a "bloated capitahst," a Guild, a Soviet, a 
 "Co-op.," a Municipality, or the State itself can 
 never make any difference to that. And 
 it is equally true that no employer can con- 
 tinuously get ^5 worth of work for ^4 in wages. 
 Labour is too mobile, too intelligent, and now 
 too well-organized to allow that. 
 
 Fairness is a habit of mind, and both parties 
 to the wage-contract benefit by having it. 
 But both a fair day's work and a fair day's 
 wage will not be easily ascertained even by 
 
"A Fair Day's Work" 159 
 
 fair-minded men unless each of them is fully 
 acquainted with the actual position of the in- 
 dustry and its changes from time to time. No 
 one to-day denies that there is, and always must 
 be, a causal connection between product and 
 pay. What is wanted is some means by which 
 both employers and men can ascertain the par- 
 ticular connection which exists at any time 
 selected for inquiry. In other words, the 
 line of advance seems to be to put a good 
 deal more life and reality into the idea, em- 
 phasized all through these "Talks," that 
 industry is a partnership. Now partners 
 make a fair division of the proceeds because 
 they all have access to a full knowledge of 
 how things are going. 
 
 Anyhow, let us agree that no wage is too 
 high if it is a fair day's wage for a fair day's 
 work. The notion that workers can earn too 
 much is as foolish and as socially injurious 
 as the notion that they can work too much. 
 "Ca' canny" is bad whoever practises it. 
 
XXXIL— CHEAP LABOUR* 
 
 One of the chief practical difficulties of 
 our time, as indeed of all times, is the tenacity 
 with which old and bad doctrines grip the 
 minds of men and hold them in thraldom. 
 Two connected stupidities, for they are noth- 
 ing else, may usefully be considered. 
 
 The first stupidity is apt to rule the 
 minds of employers. It used to be expressed 
 in the proposition that "Profits are the 
 leavings of wages": from which it followed, 
 or seemed to follow, that the lower the wage 
 for which an employer could get his workers 
 to agree to work the higher his own profits 
 would be. Workers believed it as well as 
 masters. 
 
 As it is impossible in these ''Talks" to do 
 more than touch lightly on a few subjects, 
 an attempt has been made to indicate ways 
 of grappling with economic questions. Our 
 old school-friend, Euclid, is a good guide here, 
 
 *From the Times Trade Supplement — issue of November i, 1919. 
 160 
 
Cheap Labour i6i 
 
 for one of his best devices for showing that a 
 proposition is not true is to suppose that it 
 is true, and trace out the results which would 
 follow. You go gaily on till you run up against 
 a sheer impossibihty, which proves, of course, 
 that it cannot be true. 
 
 So here, if you are inclined to think that 
 cheap labour is profitable labour to the em- 
 ployer, you naturally agree to the proposition 
 that the more you cheapen labour the more you 
 increase profits. Now the most thorough- 
 going way of cheapening labour is to make a 
 slave of the labourer, since then you have only 
 to give him enough food, clothing, house-room, 
 and leisure to keep him alive and fit to work. 
 Well, that plan was tried and the result was 
 never in doubt. Negro slavery in the Southern 
 States was an economic failure, just as serfdom 
 in medieval England was. Slaves and serfs 
 can do only the simplest kind of work, and al- 
 ways do even that in a wasteful and slovenly 
 v/ay. 
 
 In the same way "sweated" labour is not 
 in general profitable labour, and the attempt 
 to grind the face of the poor defeats itself. 
 An employer gets in the long run just the 
 
1 62 Ten-Minute Talks With Workers 
 
 thing he pays for, no less and no more. He 
 "buys" cheap labour and gets a "commod- 
 ity*' worth the price he pays for it. 
 
 THE ECONOMY OF HIGH WAGES 
 
 No wage is too high if every penny of it 
 is well and truly earned, and the test of its 
 being earned is simple enough — the market 
 test. For the wages of labour, "advanced," 
 as the older books put it, by the capitalist, 
 have to be recovered in the price of the com- 
 modity. If the wages are thus recovered, 
 not one by a mere fluke, but continuously 
 over a period long enough to smooth out 
 the effects of short-period fluctuations, then 
 they have been earned, however high they 
 are. 
 
 The earlier experiments of Brassey, which 
 proved that it was better economy to employ 
 highly paid English labourers to build rail- 
 ways on the Continent than low-paid local 
 labourers, have of late years been reinforced 
 b}/ experiments carried out, as it were, on 
 laboratory lines. From the employer's point 
 of view, the object is to reduce the labour- 
 costs of each separate job, but this does not 
 
Cheap Labour 163 
 
 mean that he may or can thereby reduce 
 the wages received by the worker. The usual 
 result in practice is that the workers get more 
 wages while the labour-cost of their work is 
 reduced. What it comes to is that the sen- 
 sible employer is he who succeeds in paying 
 higher wages and the sensible workman is he 
 who consents to earn them. 
 
 In our last *'Talk" we supposed a case 
 in which it was a matter of indifference to 
 an employer whether he had 100 men earning 
 ^4 each per day or 80 men earning ^5 each, 
 since for the same labour cost he got the same 
 output. In practice it can rarely if ever be 
 a matter of indifference, since the question of 
 capital comes in to affect it. For a $5 man 
 can look after better machinery than a $4. man, 
 and there will be a distinct advantage in run- 
 ning 80 high-grade machines rather than 100 
 of lower technical efficiency. 
 
 But here we come up against the second 
 stupidity, as we quite frankly and justly 
 called it, which is that each labourer must 
 restrict his output in the supposed interests 
 of his class. When during the war the supply 
 of butter was greatly diminished the people 
 
164 Ten-Minute Talks With Workers 
 
 of Europe were put on rations so as to make it 
 go all round. There never was any need to 
 ration work, that is to limit the quantity done 
 by each worker so as to make it go all round, and 
 at the present time the persistence of this silly 
 old belief is doing nations great harm. To 
 particular kinds of work at a given time there 
 may be a limit. So much may be wanted, and 
 no more. To work in general there is no such 
 limit at any time, and in these days it would 
 probably be impossible to find a limit in any 
 particular direction, for the world is hungry 
 for goods of every conceivable kind. 
 
 Suppose you could do a job in three work- 
 ing days without unduly exerting yourself, 
 which no one wants because that, too, would 
 soon be uneconomic, but take six days to do it 
 in order "to give another chap a chance." Well, 
 that motive is a good one, but whereabouts 
 is the other chap.^' To do the very thing 
 you want to do you must at least do the job 
 in the three days, and then "play," so that 
 the foreman can put this other man on in your 
 place at your machine or bench. Your plan 
 does nothing but keep the portion of capital 
 you operate idle half the time, which, apart 
 
Cheap Labour 165 
 
 from its obvious unfairness to your employer, 
 simply turns you in time into an inveterate 
 slacker, and keeps the other chap off the works 
 altogether. A result you did not expect, you 
 say. Very likely, but it is the result. 
 
XXXIIL— THE STANDARD OF COM- 
 FORT* 
 
 Man has been defined or described in a mul- 
 titude of ways. From the economist's point 
 of view he may be labelled ^*a bundle of needs." 
 If before we go to sleep we stop to reflect on 
 the events of the day, we shall note, if we 
 reflect deeply enough, that what has happened 
 to us is that we have felt one need after 
 another and done our best to satisfy it. We 
 have been hungry and taken food; cold and 
 put on an overcoat; jaded and gone to the 
 pictures; and now we are sleepy and have 
 come to bed. 
 
 The economist does not, as economist, 
 make any distinction between needs. It is 
 well for the worker when he prefers many 
 books and little beer to no books and much 
 beer, but both beer and books satisfy needs; 
 both require eflPorts to produce, and hence 
 they take equal rank in our particular studies. 
 
 *From the Times Trade Supplement — issue of November 8, 1919. 
 166 
 
The Standard of Comfort 167 
 
 Some people call economics "low" on this 
 account, but if it did otherwise it would cease 
 to be scientific, and so cease to be useful. 
 Society advances as the needs of its members 
 multiply and ramify in all directions. Man 
 advances as his needs become of a higher 
 quality. 
 
 When any need is unsatisfied the result 
 is discomfort. It is wholly wrong to suppose 
 that riches and comfort are one and the same 
 thing, or even that riches bring comfort. Riches 
 are things outside ourselves; comfort is a feeling 
 within ourselves. That man is rich in the only 
 useful sense of the term who has every want 
 satisfied, whose life is always lived up to the 
 standard of comfort which he has fixed for him- 
 self. He may have fixed it unwisely. The 
 economist cannot help or alter that. 
 
 COMMODITIES NOT COINS 
 
 Another great truth follows from this. Needs 
 are satisfied by commodities — a general term, 
 which includes (i) goods, and (2) services — 
 and hence the standard of comfort is a commod- 
 ity-standard, not a money-standard. The con- 
 tents of your pay-envelope do not matter much. 
 
1 68 Ten-Minute Talks With Workers 
 
 the contents of your larder and chest of drawers 
 matter very greatly, and the former may 
 "increase" by leaps and bounds while the latter 
 are steadily diminishing. Nominal or money 
 wages and real or commodity wages must al- 
 ways be sharply distinguished, and the business 
 of the worker is to get more of the latter. He 
 may have to forego some of the money wages, 
 but he will be very foolish if he hesitates at 
 that. 
 
 This truth, always very important in theory, 
 has in these days become of the greatest possible 
 practical concern to every working man. Be- 
 fore the war there was during short periods, 
 say, one to four years, so little change in the 
 value of money that when you got more money 
 wages your standard of comfort was at once 
 raised, and remained pretty steady on the new 
 level. During the war the purchasing power of 
 -money has gone down with a run, and your 
 chief business and duty has been to see that 
 your money wages went up with a run to keep 
 matters balanced. Many of you by working 
 harder and for longer hours have, as a matter 
 of fact, got a money wage which, in spite of 
 the increase in prices, has made you better off. 
 
The Standard of Comfort 169 
 
 STICK TO THE STANDARD 
 
 Nobody worth considering wants you to 
 lower your standard of comfort. In fact, one 
 great fault of pre-war days was that the worker 
 was apt to be contented with too low a standard. 
 He did not want enough of some things that 
 matter greatly. John Stuart Mill was of opin- 
 ion that the best hope for the workers lay in their 
 getting, somehow or other, a big sudden Hft in 
 their standard of comfort, for then, of course, they 
 would want to continue to live on the higher level. 
 If the war, as there is good reason to suppose, 
 has given us this big sudden Hft, then out of the 
 greatest evil that ever afflicted civilization great 
 good may come — on one condition. 
 
 Now you will do wisely to get this condition 
 off by heart and in your heart, so that it comes 
 out in conduct. And indeed these "Talks" 
 will have failed in their object if they have not 
 helped you to find a creed to work and live by 
 advantageously. Here it is, and it is as coldly 
 scientific as the analysis of your water-supply. 
 
 In the long run only the worker can raise his 
 standard, and only the worker can keep it 
 raised. He must not look without — to his 
 
1 70 Ten-Minute Talks With Workers 
 
 union, to Parliament, to the State, or to any 
 of the new-fangled things, Guilds and Soviets, 
 which he is tempted, being human, to admire 
 because they are new. Nay, in the long run, 
 it is no use looking to his employer. He must 
 look to himself. 
 
 Now the economic secret — and it is dis- 
 creditable that it should be a secret — of the 
 last five years is that the worker has been able 
 to raise his standard of comfort because ordi- 
 nary economic conditions had been superseded 
 by war conditions. Millions were working for 
 the Government, and their work had no more 
 to do with the law of supply and demand than 
 with the law of capillary attraction. Other 
 millions had their standard raised automatically 
 to keep pace with the new standard of "war- 
 work." It may not be pleasant to reflect on it, 
 but the war put the worker on stilts as it were. 
 Now he has got to walk on his own feet. 
 
 Can it be done.? Certainly. Keeping the 
 standard ? Certainly. Within very elastic limits 
 the worker can fix his own standard providing he 
 puts in the work which will keep it where he has 
 fixed it. He cannot do it otherwise himself, 
 and nobody can do it for him in any case. 
 
XXXIV.— THE GREAT "DIVVY"* 
 
 If you are a member of a "Co-op.," you 
 know what the "divvy" is. It is the sum of 
 money left at the end of the quarter to be 
 divided among the members. It is not divided 
 equally among them, for that, pleasant as it 
 sounds to some people when the talk is of equal 
 division among them of somebody else's money, 
 would never do when it is suggested that the 
 rule of equal division should be applied to a sum 
 of money which they have done more than 
 others to bring into existence. At the "Co-op." 
 the size of the "divvy" depends upon the trade 
 done, so the member who has purchased most 
 goods gets most ** divvy" — a fair and proper 
 way of sharing it out. 
 
 With this familiar illustration in mind, let 
 us turn to the "Great divvy," as we may call 
 it, and the way in which it is shared out. 
 By the "Great divvy" we mean the yearly 
 supply of wealth produced in this country to 
 
 *From the Times Ttide Supplement — issue of November 15, 1919. 
 171 
 
172 Ten-Minute Talks With Workers 
 
 be divided among all the members of the 
 community for them to live on. The text- 
 book name for it is national dividend or 
 national income; and it must be sharply dis- 
 tinguished from the national revenue, which 
 is only a part of it — that part, namely, which 
 is paid to the Secretary of the Treasury, 
 who uses it to foot the bills of our national 
 expenditure. 
 
 Although the real annual income of each of 
 us consists of a stream of goods and services 
 it is necessary to speak of it as so much money. 
 You get, say ^i,ooo a year, the manager ^10,000 
 and the "boss" ^25,000 — and so on all through 
 the land. It is the sum of all these separate 
 personal incomes that makes up the "Grand 
 divvy" — the national income. 
 
 ITS AMOUNT 
 
 What does it amount to? Even before the 
 war nobody knew quite exactly what the na- 
 tional income was. Of how many of your 
 neighbours, even if they are intimate friends, 
 do you know the yearly income? The only 
 person one is obliged to give the information to 
 is the local income-tax assessor, and even theu 
 
The Great ** Divvy'' 173 
 
 one has only to make a declaration of total 
 income when claiming that part of it shall 
 go tax-free. Still, the income-tax people are 
 shrewd and experienced, and though no doubt 
 much income is hidden, it is not very much in 
 comparison with the whole. As a matter of 
 fact, the estimate of the amount of the national 
 income in any given year, which looks to you, 
 perhaps, as if it were merely adding up a long 
 "sum," is a very difficult task. Let us take 
 the case of Great Britain. Fortunately a most 
 competent and painstaking expert. Professor 
 Bowley, has worked at the question, and we 
 cannot do better than rely on him. He thinks 
 that in the year 191 1 the total British national 
 income from work done at home — the separate 
 incomes of all of us put together — came to 
 1,900 million pounds, of which 1,046 million 
 pounds was received by those who did not pay 
 income-tax and the remainder by those who did. 
 In that year an Englishman paid income-tax if 
 his income was more than £160 a year, so that if 
 we assume that those who do not pay income-tax 
 are the working classes in the narrowest sense 
 of the term — and that is also a very illogical 
 sense — they get rather more than half of the 
 
174 Ten-Minute Talks With Workers 
 
 whole. To the 1,900 million pounds earned 
 at home must be added another 190 million 
 pounds which are the profits on British invest- 
 ments abroad. 
 
 THE BIG INCOMES 
 
 It is only since the "super-tax" was imposed 
 in 1911-1912 in Great Britain that information 
 has become available as to the big incomes 
 there. In 1914-1915, when incomes of more 
 than £3,000 were "super-taxed," it was esti- 
 mated that 28,800 persons had such incomes with 
 a total of nearly £23 1 ,000,000. You will remem^ 
 ber that this was gross income, and that out 
 of it income-tax, super-tax, and excess-profits 
 tax had all to be paid, and the three put to- 
 gether probably cut these incomes in half — 
 half for the State and half for those who 
 got them. Even so, they were big incomes, 
 and they are eyed very enviously by some 
 people. 
 
 Suppose that out of the above £231,000,000 
 156 milHons were left to be spent as private 
 income after satisfying the claims of the Chan- 
 cellor of the Exchequer. Suppose, further, 
 that, angered at the existence of about 30,000 
 
The Great "Divvy" 175^ 
 
 plutocrats with an average income of £5,000 
 each while so many persons are hard up, it 
 was decided, after consultation with Messrs. 
 Lenin and Trotsky, to kill off these bloodsuckers 
 of democracy. Very well, then you would kill 
 off their incomes with them so far as they were 
 earned in business, and kill off, too, the earnings 
 of the workers in these industries unless you 
 replaced the dead bourgeoisie by equally com- 
 petent "advanced thinkers," which is not in 
 the very least likely. 
 
 Suppose, further, that, not being impressed 
 with this prospect, you let the 30,000 live on 
 condition that they went on just as before, and 
 simply grabbed their incomes. Then you would 
 have £156,000,000 a year to divide among the 
 workers, £3,000,000 a week, 60 million shillings 
 a week among a population of 20,000,000 
 workers and their dependents. Allow them 
 on an average one dependent each, and you 
 would get for them 2s a week each, and that 
 only on the quite ludicrous supposition that 
 the big incomes you were stealing and dividing 
 up went on being earned by those who were 
 robbed of them. 
 
 The truth is that nothing worth having could 
 
176 Ten-Minute Talks With Workers 
 
 be got for the workers by dividing the big 
 incomes among them. Workers are too many 
 and big incomes too few for that plan to work. 
 Incomes must be lifted up from helozv by harder 
 and more skilful industry. 
 
XXXV.— THE NATIONAL PURSE* 
 
 "Economics" is a Greek word, not disguised 
 in the very least, and means just "house- 
 keeping" and nothing rriore, as you will find on 
 reading a translation of Xenophon's "Eco- 
 nomics." It is well to recall this, as indeed it is 
 always well to see how words have come to mean 
 what they stand for nowadays, for it fixes our 
 minds on the central truth. For we all know 
 the secret of good housekeeping, which is simply 
 to spend wisely but not meanly, and to have a 
 bit over at the end of every week. 
 
 In England the national housewife is called 
 the Chancellor of the Exchequer. A witty 
 statesman of fifty years ago described the 
 Chancellor as "an animal that lives on sur- 
 pluses." The present Chancellor in this year 
 will not have much to live on, for he is faced 
 with a deficit of about £475,000,000, and as the 
 total revenue of the last financial year before 
 the war was just under £200,000,000, the serious- 
 
 *From the Times Trade Supplement — issue of November 22, 1919. 
 177 
 
178 Ten-Minute Talks With Workers 
 
 ness of the position is self-evident. He thinks 
 that in the first "normal" year, the mark of 
 which will be that the national housekeeping 
 accounts will balance without further borrow- 
 ing, the yearly revenue and expenditure will be 
 about £800,000,000. The rise in prices of 
 course affects the nation's accounts as it does 
 those of private citizens. Suppose we say that 
 the £200,000,000 of 1913-1914 means the same 
 thing as £400,000,000 now. Then the war 
 has doubled the pre-war costs of Great Britain's 
 national housekeeping, even when allowance is 
 made for the rise in prices. Pensions and interest 
 on war loans account for most of the difference. 
 
 NO BOTTOMLESS PURSE 
 
 **It doesn't matter. It's Government 
 money." How often, before the war as well 
 as since it began, we have either heard the 
 very words or seen men acting in a way that 
 showed that they were thinking it, though they 
 were too wise to say it. A man soon learns the 
 depth of his own purse, since he has to put in 
 every penny that he takes out, but when the 
 purse is of unknown depth, and is filled as fast 
 as assiduous carelessness can empty it, from 
 
The National Purse 179 
 
 some mysterious and ever-flowing source called 
 the Treasury, the most grotesque things are 
 Hkely to be done, and in fact are done. 
 
 How deep is the British Chancellor*s purse? 
 We know fairly well how much money went each 
 year into all the people's purses put together 
 before the war — namely, £2,090,000,000 in 191 1, 
 and about £2,200,000,000 when war broke 
 out. So that is the most he could then have 
 got each year if the people had all starved to 
 death to let him have it. As he has to let them 
 live in order to have taxpayers to tax, this upper 
 limit has to come down very considerably on 
 this account. But not only must the people 
 live; their industries must live, too, and these 
 have to be fed with fresh capital — and another 
 large slice must come ofF for that. 
 
 Clearh^ then, on financial grounds only, 
 the theory that "it doesn't matter because 
 it's Government money" is very mistaken. 
 It is also very wrong on all higher grounds. 
 With exceptions so few as not to matter much, 
 every penny that goes into the Chancellor's 
 purse — the Treasury — has to be taken out of a 
 citizen's purse. In other words, it is a physical 
 impossibiHty to make him better off without 
 
i8o Ten-Minute Talks With Workers 
 
 making someone else worse off, and there is not 
 so much moral difference as some people think 
 between robbing a man directly on the highway 
 and robbing him indirectly by extravagant 
 national housekeeping. 
 
 "leave it to fructify*' 
 
 The old rule was that money was best left 
 to fructify in the pockets of the people. Ex- 
 cessive taxation is a heavy burden on the 
 springs of industry. Of course heavy taxa- 
 tion is unavoidable now; the British Chancellor 
 or in the United States the Secretary of the Treas- 
 ury must have his 800 millions, or whatever it 
 turns out to be, in his first normal year. But 
 heavy taxation, the result of heavy liabilities, is 
 one thing; excessive taxation, the result of un- 
 necessary expenditure, is another and very 
 different thing. It is wrong to say that Govern- 
 ment expenditure is unproductive, for it maintains 
 and enlarges our civilization, and to that extent 
 is a good thing in itself. It is true, however, 
 that Government expenditure does not directly 
 widen and deepen the channels of industry, 
 and it is more than ever necessary that in- 
 dustry should be fed with-every available penny. 
 
The National Purse i8i 
 
 Moreover, when taxation becomes exces- 
 sive, it is almost sure to become unfair, and 
 there is no more fertile source of social unrest, 
 and no surer cause of industrial decline, than 
 taxation which does not hold the scales evenly 
 between citizen and citizen. And this unfair- 
 ness may quite easily be brought about in ways 
 that the most fair-minded Chancellor or United 
 States Congress cannot avoid. 
 
 What is true in England is essentially true 
 in the United States and other countries. 
 The war has brought a noteworthy case of 
 this. For most people the rise in prices has 
 been balanced by a rise in incomes, but there 
 are countless thousands who have either had 
 no such increase or a very inadequate one. 
 Their case, bad enough on this ground only, 
 has been made worse by the increase of tax- 
 ation. It is not a very proper thing perhaps 
 to talk of "middle classes," for it reminds 
 us of the other and abominable phrase — **the 
 lower orders." It is, however, a fact worthy of 
 your close attention that people whom you 
 would have envied five years ago are now liter- 
 ally **the New Poor." 
 
XXXVL— WHAT IS A TAX?* 
 
 What is a tax? The question is apparently 
 a very easy one, but it is part of both the 
 difficulty and the charm of our study that the 
 easy things turn out to be the hard ones. Still, 
 by beginning at the beginning, as we always try 
 to do, we may go a little way in the right direc- 
 tion, so that we can finish the journey by our- 
 selves at leisure. 
 
 One of the very few things we know about 
 Shakespeare's father is that he was fined for 
 having a heap of refuse in front of his door. 
 They were not very sensitive to these things 
 then, and we may be pretty sure that the 
 nuisance was a bad one and of old standing. 
 Whether John Shakespeare offended again is 
 not known. What is known is that a few 
 years later, in April, 1564, the plague broke 
 out in Stratford and swept off most of the 
 inhabitants. It spared John Shakespeare's 
 house, and so his baby boy, William, only a 
 
 •From the Times Trade Supplement-r-issue of November 29, 1919. 
 182 
 
What Is a Tax? 183 
 
 week or two old, lived to write the greatest 
 things in the world's literature. 
 
 Now observe that John Shakespeare had 
 to remove his own refuse. He had either to 
 do the job himself, and lose his time, or pay 
 someone to do it. You are not in that posi- 
 tion. Your refuse is removed for you, nor 
 do you have to hunt for a man to do it. The 
 municipality sends him, and pays him, and you 
 repay it his wages when you pay your "rates,'* 
 which are only local taxes. 
 
 In this and many similar cases it is clear 
 that the payment of a tax is the purchase 
 of a commodity or services. The postman, 
 the poHceman, and the teacher are just as 
 much your servants as the "charlady" 
 and the washerwoman who come on their 
 appointed days to help your wife in her house- 
 work. 
 
 IN DARKEST AFRICA 
 
 Suppose you were taken up on the magic 
 carpet of the Eastern fairy tales and suddenly 
 transported into a native village in darkest 
 Africa. Well, you would miss many things 
 very sadly — the clean and lighted streets. 
 
1 84 Ten-Minute Talks With Workers 
 
 perfect sanitation, safety of life and limb, 
 freedom to enjoy yourself and your property 
 in your own way. You would miss all that 
 makes life as you now know it possible. 
 In a word, you would miss civilization, and 
 surely you would soon come to the conclusion 
 that though you had now no rates and taxes 
 to pay, you would gladly pay them to get the 
 great boons you formerly got for them at 
 home. 
 
 When you are buying a hat you pay great 
 attention to two points — (i) the quality of 
 the hat, and (2) the price you are asked to 
 pay for it. You want the quality to be as 
 high and the price as low as possible. Foolish 
 people sometimes talk as if you were acting 
 improperly when you do this, but you know 
 that if you do not do it for yourself nobody 
 is in the least likely to do it for you. 
 
 In precisely the same way a tax should 
 be regarded as the price paid for something — 
 namely, the services rendered by the Govern- 
 ment. You cannot do without these services, 
 and you cannot render them to yourself. 
 Once every man was his own policeman. What 
 do you think would become of us if that time 
 
What Is a Tax? 185 
 
 came back again, and you had to spend a good 
 portion of your time safeguarding goods al- 
 ready possessed instead of at work producing 
 more? 
 
 THE FIRST DUTY OF CITIZENSHIP 
 
 In our last *^Talk" we referred to the view, 
 so often expressed and so generally acted on, 
 that "it doesn't matter. It's Government 
 money." It is no use being shocked by it, 
 because it is not so much the fault of those who 
 are wasting your money as it is your fault for 
 allowing it to be wasted. If you make this 
 tainted atmosphere it is useless for you to com- 
 plain that officials breathe it. Make it sweet! 
 That is the only remedy. 
 
 In John Shakespeare's day the English State 
 did very little for the citizen. It had got to the 
 point of fining him when the refuse heap in front 
 of his door grew too much of a nuisance, but, 
 as you may remember, even two centuries later 
 when Dr. Johnson arrived in Edinburgh in the 
 dark he growled out to Boswell that he knew 
 he was there because he smelt it — for Edinburgh 
 was the Athens of the North from one point 
 of view and Auld Reekie from another. 
 
1 86 Ten-Minute Talks With Workers 
 
 In these later days the tide has turned, and 
 is running strongly in the other direction. The 
 State does far more than it used to do, and 
 every day new calls are made on its activities. 
 Hence the first business of the citizen is to 
 remember that a tax is a price, and that it is 
 just as true of State services as it is of the ser- 
 vices rendered by hat-makers and housemaids, 
 that the man who pays a penny more for them 
 than they are worth to him is not doing some- 
 thing noble and patriotic, but something un- 
 economic and foolish. 
 
 In private life the relation between the price 
 paid and the commodity received in return is 
 always watched more or less carefully, for to 
 each one of us this relation is a matter of direct 
 personal concern. Your hat must fit, because 
 you have to wear it: it must be worth its price 
 for you have to pay for it* The man who does 
 not make sure of these points is not fulfilling 
 his first duty to himself and to those dependent 
 upon him. The fact that the hatter is a known 
 and definite person and the hat a simple and 
 easily judged commodity makes it very easy. 
 You cannot see the State, and perhaps you 
 have never reflected that a tax, direct or in- 
 
What Is a Tax? 187 
 
 direct, is really the purchase price of an import- 
 ant commodity — the Government. If you now 
 recognize the fact you will also realize that the 
 first duty of citizenship is to see that you get 
 your money's worth to the last penny. 
 
XXXVIL— THE FACTORY AS IT 
 OFTEN IS.* 
 
 When a man is working by himself on his 
 own account there is no chance of a division 
 of interests. Suppose a friend of yours has 
 built up a one-man business, so that he is both 
 employer and worker. Part of his time is 
 spent in buying materials and selling the fin- 
 ished article, and part of it in making the goods 
 he sells; and his total income is due, not to one 
 of these activities, but to them all put together, 
 so that in our minds we can set aside so much 
 of the income and say that that is due to him 
 in his capacity as worker. Moreover, there 
 is a measure to go by — namely, the weekly 
 wage of men who do the same or similar work — 
 say, ^20 a week. 
 
 Go a step further. Suppose he offered you 
 a wage of ^20 a week to come in and do the 
 work of manufacturing while he confined him- 
 self to the job of buying and marketing. In 
 
 *From the Times Trade Supplement — issue of December 6, I9I9- 
 
 i88 
 
The Factory as It Often Is 189 
 
 other words, you take over one side of the busi- 
 ness and get every penny of what that side 
 brings in. Are you cheated ? Not of so much 
 as a pennyworth. Is he a gainer? In one 
 sense not at all. He saves himself ^20 worth 
 of work and loses $20 of income. If he gains, it 
 is by having time to extend the business, and if 
 he succeeds you gain by his success, for there 
 is continuity of work and wages for you, and 
 a good chance of higher wages out of a more 
 profitable business. 
 
 As put here, by way of a little parable, does 
 it not become clear that there is no more 
 clashing of real economic interest in the two- 
 man business than there was when it was a one- 
 man show? Whatever fresh interests have 
 come in to cause friction and generate heat, it 
 cannot be denied that they are not economic 
 in character, matter of dollars and cents, as 
 we say, since neither of the two men loses, 
 while both stand to gain, by the evolution of 
 this particular industrial undertaking. But 
 since, as a matter of fact, this evolution has 
 brought about great and grave difficulties, it 
 is all-important to observe that there is no 
 need whatever for them to be economic, and 
 
I go Ten-Minute Talks With Workers 
 
 that the industrious attempts of "advanced 
 thinkers," so called, to insist that they are, is 
 just an idle pretence. 
 
 THE FACTORY SYSTEM 
 
 The modern method of carrying on industry 
 is often called "the factory system," because 
 its great mark is that work is carried on in large 
 factories owned by one man or group of men 
 by salaried workers. The old-time weaver 
 with his own hand-loom in his own cottage 
 has given place to the large weaving shed, 
 costing with its wonderful power looms very 
 many thousands of dollars. Here and there, as 
 in the Hebrides and the West of Ireland, hand- 
 loom weaving in cottages is still carried on for 
 special purposes, but we should soon be in rags 
 if we all had to depend on "Harris tweeds." 
 Production on a large scale is no whim, no de- 
 vice of greedy capitalists. It is the inevitable 
 result of population on a large scale. The 
 47,000,000 people in the British Isles could no 
 more be clothed by hand-looms than they could 
 be fed on grouse. To a country like Great 
 Britain the factory system is hardly less indis- 
 pensable than the atmosphere. 
 
The Factory as It Often Is 191 
 
 To be sure, when you look at a big mill or a 
 vast shipyard, it does seem as if the men and the 
 masters were foes by nature. But in economics 
 the difference between the real and the appar- 
 ent, between the seen and the unseen, is vital. 
 If the output of a given factory were a fixed 
 quantity, say 100,000 yards of cloth, to be 
 divided between the capitalist and the workers, 
 the share of cloth to go to the workers could 
 not go up unless the capitalist's share went 
 down. Hence the old view, held by masters 
 generally, that profits were the leavings of wages. 
 Many workers to-day, on the other hand, talk 
 and act as if they held the view that wages 
 were the leaving of profits. 
 
 IS THE MODEL FACTORY POSSIBLE? 
 
 Hence comes the factory as it often is — a 
 place were the unseen basic harmony of interests 
 is marred by the clash of opposing interests 
 which have no economic substance in them. 
 Both sides are blameworthy. It is common 
 enough for employers to fix a piece-rate scale 
 and then cut down the rates as soon as the 
 workers, stimulated by the opportunity, are 
 making big money. It is common enough for 
 
192 Ten-Minute Talks With Workers 
 
 workers to limit their output, not only because 
 they think they are thereby giving unfortunate 
 fellow-workers a chance of a job — ^which is bad 
 reasoning but good morals — but because they 
 cannot make an extra ten cents for themselves 
 without putting an extra penny or so into the 
 "boss's" pocket, which may be good reasoning 
 or bad, according to circumstances, but is shame- 
 less citizenship because it robs the nation of 
 needed goods. But the biggest factory on earth 
 — Ford's or Piatt's — is just our little two-men 
 factory writ large. That, you must agree, was 
 a model, and the question is: Cannot we have 
 a 2,000 men factory that shall also be a model? 
 
XXXVIIL— THE IDEAL FACTORY* 
 
 In our last "Talk" we discussed the factory 
 as it often is. We have now to consider the 
 factory as it might be, and might easily be, 
 if we were only wise enough to set about the 
 task of making it. 
 
 What we want to do, if we can, is to find some 
 means of making really considerable improve- 
 ments by simple means lying ready to our hands. 
 We want to produce a maximum of result with 
 a minimum of effort. Let us see how, in theory 
 at any rate, this is not by any means so difficult 
 as many people imagine. Take any factory 
 you know and suppose that the following 
 changes are made in it: 
 
 I. To begin with, it is agreed that nobody 
 shall work in the factory without obtaining, 
 in wages, sufficient to provide him with a full 
 and rounded life. In other words, there is to 
 be a minimum wage in our factory, higher than 
 which, of course, a man can go as far as he 
 
 *From the Times Trade Supplement — issue of December 13, 1919. 
 
194 Ten-Minute Talks With Workers 
 
 pleases to go or is capable of going, but below 
 which, so long as he works in that factory, he 
 shall not fall; and this minimum wage shall be 
 so fixed that with it he can obtain food, house- 
 room, clothing, amusements, and education 
 sufficient for his needs. Our ideal factory, in 
 short, makes it its first business to do social 
 justice to everybody working in it. 
 
 2. Starting from this minimum wage, wages 
 are graded upward according to the quality 
 and quantity of the work done. No attempt 
 whatever is made to limit a man's earnings. 
 There are to-day some people who were quite 
 shocked when they learned that it was possible 
 for a miner to earn ^4,000 a year. Why should 
 they be? And, on the other hand, not a few 
 working men entirely decline to believe that 
 any man's work can be worth $50,000 a year, 
 although Sir Albert Stanley, who probably 
 knows very well what he is talking about, said 
 recently that he wanted to come across a man 
 capable of earning this sum. In our ideal fac- 
 tory the lower limit is fixed, but the upper 
 limit is unfixed, and nobody would think of 
 complaining because another got more than 
 himself, since he would recognize that the simple 
 
The Ideal Factory 195 
 
 and sufficient reason was that the man was 
 worth more. 
 
 NO INDUSTRIAL PARASITES 
 
 3. In the ideal factory every worker would 
 be just as keen to earn every penny he got as 
 to get every penny he earned. He would real- 
 ize that every penny in wages which he received 
 but did not earn was a penny illegitimately put 
 into his pocket by taking it out of somebody 
 else's. He would realize that slacking, skirking, 
 wasteful use of materials and inefficient running 
 of machinery were offences against himself, 
 and were not to be looked upon lightly merely 
 because the foreman happened not to find 
 them out. The worker who did not put a 
 pennyworth into the products for every penny 
 he got in wages would be regarded, and rightly 
 regarded, as a social parasite — like fleas on dogs, 
 which add nothing to the efficiency of the ani- 
 mal though they have what is for them an easy 
 life. 
 
 4. From this it follows that our ideal factory 
 would render far greater services to society 
 than are rendered to-day by many factories 
 in which the organization is imperfect and the 
 
196 Ten-Minute Talks With Workers 
 
 driving force not of the highest quahty. Since 
 every man is put to the job at which scientific 
 observation proves that he can do the best work, 
 whether at the bench or in the board room, the 
 result is that every unit of the product is turned 
 out at the lowest possible cost in eflFort, and 
 is therefore able to be sold at the lowest possible 
 price, and will be sold at this price under the 
 influence of competition. So that our ideal 
 factory would not only yield the best possible 
 life for all who worked in it, but the cheapest 
 possible goods for all who bought its products. 
 Society would gain just as much by the change 
 as the factory itself. 
 
 5. Perhaps the best point about this ideal 
 factory would be that no one in it would ever 
 get into his head the foolish notion that he was 
 benefiting himself or his class if he adopted 
 what is called "ca' canny." If the factory, 
 for example, was turning out houses — for of 
 course we are using the word "factory" in a 
 general sense — and there was a great demand 
 for houses, because building operations had been 
 suspended during a long and terrible war, the 
 idea of laying it down as an inexorable law that 
 a bricklayer must not lay more than 300 bricks 
 
The Ideal Factory 197 
 
 a day would be scouted as the ravings of a mad- 
 man, which is just about all it is. There would 
 be no temptation to think in money, which is 
 the root of so many social absurdities, but every 
 reason for thinking in goods, which it has been 
 one of the chief objects of these "Talks" to 
 encourage. 
 
 IS OUR IDEAL IMPOSSIBLE? 
 
 Now what is there about our ideal factory 
 which is not capable of immediate realization? 
 The answer is, it could all be done, and done at 
 once, if all engaged in industry, masters and 
 men alike, would recognize that they were part- 
 ners and not rivals, that the first thing to be 
 done was to work out a scheme for a division 
 of the product which all would recognize as 
 fair, and then set to work to make the product 
 as large as possible in the interests not only 
 of the factory but of society itself. In our 
 ideal factory the ordinary economic motives 
 are fully recognized, and play their part just 
 as they do to-day, and it may perhaps be useful 
 to all concerned to reflect that the ideal is not 
 in some far distant future, but lies at our very 
 feet if we will only stoop to grasp it. 
 
XXXIX.— NOT A MACHINE, BUT A 
 PLANT* 
 
 In the older books on political economy the 
 writers deal at great length with three factors 
 or agents of production — (i) land, by which 
 they mean the total endowment which nature 
 has given to any particular country; (2) labour; 
 and (3) capital. All modern economists add a 
 fourth factor of production — organization. 
 
 Now all sciences which are concerned with 
 the life of man in society reflect, as in a mirror, 
 the changes which take place in the society they 
 depict; and you may be quite sure that this 
 addition of a new factor to the three old ones 
 has been suggested, and in fact made necessary, 
 by some important change in society itself. 
 
 The population of England has increased 
 very rapidly during the last 150 years; the capi- 
 tal available for the further production of 
 wealth has increased at a much ' greater rate. 
 But these are not the significant changes of the 
 
 *From the Times Trade Supplement — issue of December 20, 1919. 
 198 
 
Not a Machine, But a Plant 199 
 
 period, for what has happened has been a re- 
 markable change in the way in which England's 
 national resources, its increasing population, 
 and its accumulating wealth have been organ- 
 ized so as to produce the greatest possible re- 
 sults. Great railways, great steamships, great 
 limited Hability companies, great banks, great 
 factories, great markets have sprung up and 
 are steadily growing greater. We can see these 
 things being done with our own eyes, and the 
 operations are very closely similar, we are 
 inclined to think, to those of constructing a 
 machine or building a house. 
 
 THE MAKING OF LAWS 
 
 Another operation which is constantly going 
 on, and which also tends to give us the idea of 
 society as something to be made or built, is the 
 making of laws by the Legislature. Many 
 people imagine that all we have to do to put 
 right things that are admittedly wrong is to 
 pass an Act of Parhament or of Congress. 
 
 Is "profiteering'* complained of? Pass an 
 Act of Congress to put it down, and all will be 
 well. Does your chimney smoke.? Make it 
 half-a-dozen courses higher and put a cow! on 
 
200 Ten-Minute Talks With Workers 
 
 it, and all will be well. Does not everyday 
 observation show us that people ask both ques- 
 tions with the same ease and answer them with 
 the same assurance? Well, England did pass an 
 Act of Parliament to stop profiteering, and with 
 no result worth talking about. This constant 
 attempt to tinker society by Acts of Parliament 
 inevitably suggests to many people the belief 
 that society is a thing that can be tinkered. 
 
 It is not to be denied, of course, that bad 
 laws and bad administration may work a society 
 much harm, and that wise laws may profit a 
 people exceedingly. But the type of mind 
 which we have been describing is dangerous, 
 as we can see for ourselves when fanatics who 
 are imbued with it get into power in any coun- 
 try, for they proceed to act on their belief. 
 If society is a machine which has been built, 
 it can be taken to pieces and rebuilt on another 
 pattern. The Bolshevists, for example, have 
 broken the old Russia to pieces and are trying 
 to reconstruct there a new world on a special 
 pattern of their own, and a very bungling job 
 they are making of it. The thing has been 
 tried over and over again on a smaller scale, 
 and you can read a most interesting account 
 
Not a Machine, But a Plant 201 
 
 of some of these new-fangled notions in Nord- 
 hofF's "Communistic Societies of the United 
 States." Such schemes, however, come to 
 nothing when tried on a small scale, and when 
 tried on a large scale, as in Russia, they may 
 bring a great people to ruin and desolation. 
 
 SOCIETY IS A GROWTH 
 
 The truth is that society is not a machine, 
 but a plant. In other words, if it is to flourish 
 at all it must grow and cannot be made. This 
 resemblance between a society and a living 
 creature has so impressed many thinkers that 
 they have drawn up elaborate and very fanciful 
 analogies between the organs of a living body 
 and the so-called "organs" of the body politic. 
 Close as the resemblance is, however, it must 
 not be pressed in detail, for not much good 
 is derived from saying that roads and railways 
 are the arteries of society, its telegraph wires, 
 its nerves, and so on. But no intelligent person 
 can read a short but good economic history of 
 any country without realizing how true it is 
 that society grows and cannot be made, and 
 that all attempts to restrain or coerce it are 
 bound to be failures. 
 
202 Ten-Minute Talks With Workers 
 
 There is one respect in which the resemblance 
 is not only close, but full of instruction and hope. 
 Selective breeding and training can in a very 
 few generations work a striking improvement 
 in any species of plant or animal. The English 
 chrysanthemum, which fifty years ago was a 
 tiny and not very attractive flower, has been 
 trained into the gorgeous beauty which it now 
 displays. Again, California has been made one 
 of the chief regions for the growing of figs by 
 skilful scientific experiment. English sheep 
 and cattle, now by far the best in the world, 
 were once not noticeably diflferent even at 
 their best from those of other countries. 
 
 Is this true of society? Can this wonderful 
 growth be trained to grow into ever higher and 
 nobler forms.? If this question can be answered 
 in the affirmative, the future of the human race 
 is assured. The chrysanthemum was made 
 what it is because skillful men set to work to 
 produce a perfect relation between the plant 
 and its environment. The future of society 
 depends upon whether we can develop amongst 
 the full body of citizens the same skill and the 
 same patience. 
 
XL.— THE UPWARD PATH* 
 
 The Great War has quite obviously thrust 
 upon us all the necessity and the duty of shaping 
 a better ordered State. 
 
 A man's lot in life, when he is only one 
 among millions, cannot be wholly of his own 
 shaping. On Canadian wheat lands and Aus- 
 tralian sheep-runs, or in the great farming 
 regions of the United States — the man himself 
 counts for most. What he is in himself de- 
 termines what he shall be in his social environ- 
 ment. In the congested manufacturing and 
 industrial districts what the man is in himself 
 counts much less, though it is still the all- 
 important factor. There, an inherited en- 
 vironment which he did nothing to make and can 
 do little to alter, determines his chances, shapes 
 his capacities, and moulds his character, and what 
 we all feel now is that, in so far as that environ- 
 ment can be changed for the better by wise and 
 purposeful social action, it shall be changed. 
 
 ?From the Times Trade Supplement — issue of December 27, 1919. 
 203 
 
204 Ten-Minute Talks With Workers ' 
 
 It is as if we stood at the foot of some great 
 mountain and saw the City of our Dreams 
 glittering in a reality of gold and marble on the 
 summit, and inquired anxiously for the Upward 
 Path. 
 
 To begin with, we can look at the map of 
 the route by which we have got so far as we 
 have toward the goal. For a man is blind 
 to the plainest teachings of social history 
 who asserts, as some do, that progress is a 
 myth, and that there is no reason to suppose 
 that either man or his environment will go 
 on improving. The newest developments of 
 that newest of sciences, anthropology, show 
 us man in his beginnings, and the fact of all- 
 round progress — intellectual, moral, spiritual, 
 and social — is unmistakable. Yet on the for- 
 ward road there are certain danger-spots to be 
 avoided. 
 
 DANGER SPOTS 
 
 The first danger spot is that of the Marxian 
 with his "materiaUstic conception of history." 
 The economist is mainly occupied in studying 
 the arrangements which have been developed 
 in the course of the centuries for increasing the 
 
The Upward Path 205 
 
 output of material wealth, and he constantly has 
 to safeguard his soul by reflecting that, impor- 
 tant as wealth is, there are things more impor- 
 tant still. In theory the Socialist is striving for 
 a better state of society; in practice the Social- 
 ists all the world over attach an importance 
 to material wealth which it does not possess. 
 They divide people into two classes, the 
 ** Haves" and the "Have-nots," and their 
 proposals are intended to promote a better 
 distribution of wealth by taking from the 
 "Haves" in order to give to the "Have- 
 nots." 
 
 German Socialists placed materialism in the 
 forefront of their creed, and when the Great War 
 broke out they rallied to the side of the Kaiser 
 not only in their capacity as German citizens 
 but as Socialists, and some of their leaders 
 even went so far as to propound theories the 
 effect of which was that the Great War, and the 
 German methods of starting and conducting it, 
 were necessary stages in the evolution of the 
 better social state for which they were seeking. 
 Necessary as it is to produce more wealth, and 
 important as it is that the distribution of it 
 when produced should not display the dis- 
 
2o6 Ten-Minute Talks With Workers 
 
 proportions which now exist, the way of the 
 Marxian materiaUst is not the upward path for 
 which we seek. 
 
 Another danger spot is to be avoided. Fifty 
 3^ears ago the social philosophy of Herbert 
 Spencer was attracting a good deal of attention. 
 The best-known expression of it is to be found 
 in his little book, "Man versus the State.'* 
 To Spencer it seemed as if there was a necessary 
 antagonism between the individual and the 
 State. His mistake was a very simple one. 
 He confused the State with the Government. 
 Now the Government is always a known and 
 definite group of men, who may indeed be 
 very foolish men and do extremely foolish 
 things; but it is the shallowest of thinking 
 which confuses a group of men with that 
 invisible atmosphere which surrounds and 
 shapes our lives — the State. It will always 
 be the duty of the wise citizen to watch the 
 group of persons who govern him with wary 
 and circumspect attention, and one of the 
 best gifts of progress has been the accumula- 
 tion of means — the platform and the Press 
 for example — which enable the citizen to do 
 this. 
 
The Upward Path 207 
 
 MAN IN THE STATE 
 
 Our feet are indeed already on the upward 
 path since we are beginning to reaHze that 
 the State has duties to perform to each of its 
 citizens. The "poHceman" view of the State, 
 according to which all the State had to do was 
 to keep the ring while the citizens battled 
 against one another, is hopelessly out of date. 
 We must be careful not to go to the other 
 extreme. If it was once regarded as a matter 
 of indifference to the State that an agricultural 
 labourer should rear a large family on a pittance 
 of a few dollars a week in an insanitary cottage 
 the lesson to be drawn from our change of mind 
 is not, as many seem to think, that the citizen 
 shall have the legal right to live on State doles. 
 ** Bread and Circuses" ruined Imperial Rome 
 and doles would soon ruin the United States or 
 Great Britain. 
 
 The view of the State proper to our own 
 times and circumstances is that it should 
 strive to be the educated State, that is to say 
 that it should bend its efforts to produce a 
 race of citizens capable of developing their 
 own individualities to the fullest extent. 
 
2o8 Ten-Minute Talks With Workers 
 
 The object of these talks has been to con- 
 tribute a little toward the fund of ascertained 
 knowledge and clear thinking which are vitally 
 necessary to those who are seeking this up- 
 ward path. The worker is at the cross- 
 roads. We have endeavoured to show him 
 which turning he should take. 
 
 THE END 
 
THE COUNTRY LIPE PBESS 
 GARDEN CITY, N. Y.