Says Mr. Giffen: "If the return to capital had doubled, as the wages of the working-classes appear to have doubled, the aggregate income of the capitalist classes returned to the incometax would now be £800,000,000 instead of £400,000,000.... The capitalist, as such, gets a low interest for his money, and the aggregate returns to capital is not a third part of the aggregate income of the country, which may be put at not less than £1,200,000,000." It is found, moreover-as a suggestion that property is more generally diffused-that while there were 25,368 estates entered to probate in 1838, of an average value of £2,160 each, there were 55,359 estates in 1882 of an average value of £2,500 each.

But yet the vast increase of wealth made possible by improvements and the growth of capital would have bettered the condition of all still more had population been somewhat more limited. As it is, the material gain has been large in spite of an increase in the population from 16,500,000 in 1831 to nearly 30,000,000 in 1881. In other words, the landlords have been great gainers, while the laborers have intercepted much more than Mr. Cairnes supposed.

There are at hand some very striking data relating to the United States which point in the same direction as those of Mr. Giffen. Charts No. XIX and XX show vividly how far the increased productiveness of an industry, arising from greater skill and greater efficiency of labor in the connection of improved machinery, has enabled manufacturers to steadily lower the price of their goods, and yet increase the wages paid to their operatives. What was true of these two cotton - mills was true of others within New England; for the rate of wages paid by these mills was the rate current in the country in 1830 and in 1884. While each spindle and loom has become vastly more effective, we see by Chart No. XIX that the average production of each operative constantly increased from 4,321 yards per year in 1830, to 28,032 yards in 1884; and this it was which made possible the corresponding increase in the rate of wages from $164 in 1830, to $290 in 1884. The sum of $290 a year as an average for each operative, is stipend too small to cause any general satisfaction; but he must be gloomy indeed who does not see that $290 is a cheerful possession as compared with $164. There is, then, abundant ground for believing that in the past fifty years the condition of the working-classes in the United States has been materially improved. The diminishing proportion of the price which goes to the capital is a significant fact, and illustrates the tendency of profits to fall with the increase of capital.' The same truth seems to be

1 These mills have not been able to pay ten per cent regularly, as mentioned

seen in the table given in a previous chapter,' where the wages have been increased, but the hours have fallen per day from thirteen to eleven since 1840.

§ 2. So far we have considered the chances for improvement in an industrial order in which the present separation of capitalists from laborers is maintained. But this does not take into account that future time when cultivation in the United States shall be forced down upon inferior land, and no more remains to be occupied, and when capital may no longer increase as fast as population. What must be the ultimate outlook for wages-receivers? Or, more practically, what is the outlook now for those who are wages-receivers, and for whom a more equitable distribution of the product seems desirable? How can they escape the thralldom of dependence on the accumulations of others?

In this connection, and of primary importance, is the avenue opened to all holders of small properties to share in the increase which goes to owners of land. It has been seen that owners of the soil constantly gain from the inevitable tendencies of industrial progress. If one large owner gains, why should not the increment be the same if ten owners held the property instead of one? The more the land is subdivided, the more the vast increase arising from rent will be shared by a larger number. This, in my opinion, is the strongest reason for the encouragement of small holdings in every country. The greater the extension of small properties among the working-class, the more will they gain a share of that part of the product which goes to the owner of land by the persistent increase of population. If, then, the gain arising from improvements is largely passed to the credit of land-owners, as Mr. Cairnes believes, it should be absolutely necessary to spread among the working-classes the doctrine that if they own their own homes, and buy the land they live on, to that extent will they "grow rich while they sleep," independently of their other exertions. Land worth $500 to-day when bought by the savings of a laborer, besides the self-respect it gives him, will increase in value with the

in Chart No. XIX, but it has merely been supposed that ten per cent were demanded by capital, in order to show that, for such a dividend, it required a diminishing proportion of the price to meet that estimate.

517.

2

1 Book II, Chap. V, § 5; see also “North American Review," May, 1884, p.

* For the influences of small properties in restraining an undue increase of population, see supra, p. 119. For a more general account of the benefits arising from such holdings, consult Mill's original work, Book II, Chaps. VI and VII, and T. E. Cliffe Leslie's "Land Systems."

density of population, and become worth $600 or more without other sacrifice of his.

§ 3. It will be found, however, that, of the various industrial rewards, profits tend to diminish, meaning by "profits" only the interest and insurance given for abstinence and risk in the use of capital; but that the manager's wages (wages of superintendence) are larger than is commonly supposed in relation to other industrial rewards, owing to the position of monopoly practically held by such executive ability as is competent to successfully manage large business interests. To the laborer this large payment to the manager seems to be paid for the possession of capital. This we now know to be wrong. The manager's wages are payments of exactly the same nature as any laborer's wages. It makes no difference whether wages are paid for manual or mental labor. The payment to capital, purely as such, known as interest (with insurance for risk), is unmistakably decreasing, even in the United States. And yet we see men gain by industrial operations enormous rewards; but these returns are in their essence solely manager's wages. For in many instances, as hitherto discussed, we have seen that the manager is not the owner of the capital he employs. To what does this lead us? Inevitably to the conclusion that the laborer, if he would become something more than a receiver of wages, in the ordinary sense, must himself move up in the scale of laborers until he reaches the skill and power also to command manager's wages. The importance of this principle to the working-man can not be exaggerated, and there flows from it important consequences to the whole social condition of the lower classes. It leads us directly to the means by which the lower classes may raise themselves to a higher position-the actual details of which, of course, are difficult, but, as they are not included in political economy, they must be left to sociology-and forms the essential basis of hope for any proper extension of productive co-operation. In short, co-operation owes its existence to the possibility of dividing the manager's wages, to a greater or less degree, among the so-called wages-receivers, or the "laboring-class." And it is from this point of view that co-operation is seen more truly and fitly than in any other way. For it is to be said that in some of its forms co-operation gives the most promising economic results as regards the condition of the laborer which have yet been reached in the long discussion upon the relations of labor and capital.

§4. It will be my object, then, to describe the chief forms in which the co-operative principle has manifested itself. These may be said, in general, to be four: (1) distributive co-operation, by which goods already produced are bought and sold to

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members without the aid of retail dealers; (2) productive cooperation, by which associations are formed for producing and manufacturing goods for the market; (3) partial productive co-operation in the form of industrial partnerships between laborers and employers, without dispensing with the latter; and (4) co-operative, or People's, banks. There are, of course, many other forms in which the principle of co-operation has been applied; but these four are probably the most characteristic.

Distributive co-operation is at once the simplest and the most successful form, not merely because it requires less capicapital than any other for its inception, but also because it calls for less business and executive capacity. The number of persons capable of managing a small retail store is vastly greater than the class fit to assume control of the very complex duties involved in the care of wholesale houses-or, at all events, of mills and factories. Distributive co-operation has its origin in the fact that the expenses of a middle-man between the producer and consumer may be entirely dispensed with, and in the fact that more capital had collected in the business of distribution than could economically be so employed. Its educating power on the men concerned in teaching them to save, in showing the need of business methods, and in instilling the I elements of industrial management, is of no little importance. It is, therefore, the best gateway to any further or more difficult co-operative experiments-such experiments as can be attempted only after the proper capital is saved, and the necessary executive capacity is discovered, or developed by training. In England co-operation began its history in distributive stores, and has finally led to such a stimulus of self-help in the laborer, that now co-operative gymnasiums, libraries, gardens, and other results have proved the wisdom of calling upon the laborers for their own exertions. Under the system which separates employers and the employed, high wages are not found to be the only boon which the receivers could wish; for it is sometimes found that the best-paid workmen are the most unwise and intemperate. For the most ignorant and unskilled of the workmen in the lowest strata the object would seem to be to give not merely more wages, but give more in such a way as might excite new and better motives, a desire as well as a possibility of improvement. Self-help must be stimulated, not deadened by stifling dependence on a class of superiors, or on the state. The extraordinary growth of co-operation is one of the most cheering signs of modern times. Distributive cooperation originated in Rochdale, in England, about 1844, with a few laborers desirous of saving themselves from the high prices paid for poor provisions. By uniting, they purchased

1 Cf. E. L. Godkin, "North American Review," 1868, p. 150.