Frank Ireson.

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THE LIBRARY

OF

THE UNIVERSITY

OF CALIFORNIA

LOS ANGELES



^TcEToEPAfjn



ME



^)<'p^ml^ UNION^<i\



^ticalC^^



THE
PEOPLE'S PROGRESS




^ THE



PEOPLE'S PROG



A STUDY OF THE FACTS OF NATIONAL
WEALTH, WITH SOME ANSWERS TO

SOCIALISTS



BY FRANK IRESON, B.A.



AUTHOR OF
' A TEXT-BOOK OF BOOK-KEEPING '



WITH DIAGRAMS



LONDON
JOHN MURRAY, ALBEMARLE STREET, W.

1910



PRINTED BY

BAZELL, WATSON AND VINEY, LD.

LONDON AND AYLEaBLKY.



PREFACE

This volume is the outcome of a private discussion
(1) as to the extent to which the Artisan Class
has benefited by the undoubted progress of the
people of this country during the last sixty years,

S.O and (2) as to the possibility of gain to that class
by a Socialistic redistribution of our present national
income.

_ Inquiry upon these two questions has resolved
itself into an investigation of the Sociahst dictum

5 that "the proportion of income received by the

'^ Manual Labour Class is very small in comparison
with the proportion received by Capital." In the

Q following pages an attempt has been made to define
and compare these proportions, and to show, from
the point of view of a pronounced Individualist,
how fallacious are many of the so-called " facts "
brouglit forward by Socialist writers, in relation
not only to the Distribution of Income, but also
to the Rewards of Capital.

A special feature is the importance herein attached
to the margin between the " receipt " and the
" enjoyment " of income, resulting in that increase
of capital which plays so vital a part in the improved

V



vi PREFACE

economic condition of the country. Attention is
also specially directed to the need for Headwork,
as well as Capital and Handwork, in order to
make up the three factors imperatively necessary
to modern wealth-production.

The estimates of income relate principally to
1905, that being the year on which was based the
Report of the Select Committee on Income Tax.
The sources from which all the figures are obtained,
chiefly Blue Books or works on economics, are
quoted throughout.

The word " Socialism " is herein used to connote
the leading feature of that school of thought,
whereon all its adherents are agreed, viz. the State
Ownership of Capital, and the consequent Suppres-
sion of Private Enterprise.

F. I.

December 1909.



CONTENTS



PART I. THE DISTRIBUTION OF INCOME

CHAP.

I. The National Income



II. The PRopoRTfox of Poor People



III. The Division of Income



IV, Socialist Estimates of Income



V. The Natiox\s Savings



VI. The Schpll's Income of the Rich



VII. Income not Available for Redistribution
VIII. Egmjal Redistribution of Income

IX. Graded Redistribution of Income
X. Mis-statements of Income . . . .

XI. Inaccuracy of the Income-tax Statistics .

XII. The People's Progress . . . .

XIII. International Socialism . . . .

vii



PAGE

3
9

12

i8

21

27

30

35
38
44
51

59
67



VUl



CONTENTS



PART II. THE REWARDS OF CAPITAL



CHAP.



XIV. The Nature of Capital .



XV. The Operation of Capital



XVI. The Three Factors of Wealth-production



XVII. The Owners of Capital



XVIII. The Rewards ok Capital



XIX. Capitalists as Trustees for the Public



XX. Family Affection the Chief Incentiv
Thrift



XXI. Unearned Income



XXII. Increment caused by the Coa;

XXIII. The Master of Commerce
Tables A to M
Diagrams One to Five .



M unity



E to



PACK

n
82

88

96

104

112



117

124

130

136

145
155



PART I

THE DISTRIBUTIOX OF INCOME



PART I

THE DISTRIBUTION OF INCOME

CHAPTER I

THE NATIONAL INCOME

The annual income of the United Kingdom in
1903 has been computed by Sir R. GifFen {Jour f ml
of Royal Statistical Society, vol. Ixvi., part iii.)
to amount to £1,750,000,000. This figure repre-
sents an average of the estimates of the leading
economists, and in adopting it we are £50,000,000
below the estimate for 1902 of the Fabian Society
{Facts for Socialists, p. 2). Probably by 1905 the
income in question had increased to at least
£1,800,000,000, but the lower amount has never-
theless been taken by the writer as a basis figure,
in order to a\()id (as will be seen below) any
overstatement as to the income of tliose who do
not pay income tax.

Tills 1,750 millions is shared, in unecpial pro-
portions, amongst a po|)ulation whicii in 1905 was
estimated at 43,221,145 (Cd. 4413, p. 190). Reckon-
ing the average family to consist of about four and
a half persons (Cd. 2174, p. 193), there are in round
numbers 10 milhon famihcs in the United Kingdom,

3



4 THE NATIONAL INCOME

The income averages £175 per family, or £40 per
person.

According to the estimate of Sir Henry Primrose
(Bhie Book 365, p. 8), about 1,100,000 people in this
country pay income tax, the aggregate income of
these people, disclosed in 1905, being £728,000,000.
He points out, however, that the whole of this
amount is not received by the said taxpayers, since
a portion of it, estimated by him at £50,000,000,
and comprising the items set out on page 48, is
not distributed among them. This deduction being-
made, the income actually received appears at
£678,000,000, and it is shared amongst these 1,100,000
people as shown in the first and third columns of
the upper part of Table A (p. 145). With their
families, which as a rule are smaller than amongst
the poor, we can reckon that this group comprises
about 4,000,000 persons.

It will be noticed that these payers of income
tax, frequently referred to as the " Classes," are
divided in the proportion of one rich person with
over £5,000, 29 persons of the Upper Middle Class
with £700 to £5,000, and 80 persons of the Lower
Middle Class with £160 to £700. Among the
Classes, therefore, only i man in no is rich. As
compared with the total of male adults in the
country (see Table M, p. 154), the proportion of rich
is I man in 1,150.

The remainder of the population, commonly
styled the " Masses," who pay no income tax
because their individual incomes are less than £160
a year, are about 39,000,000 in number. Their
annual income works out at 1,750, less 728, equals
1,022 millions sterling. In order to get some idea
as to how this amount is divided, reference can be



THE NATIONAL INCOME 5

made to the following figures (Cd. 4413, p. J07),
compiled from the Census of 1901. It will be
noticed, from Table M, that the number of
23,197,575 unoccupied persons mentioned below is
chiefly made up of children under fifteen, married
women, and old people over sixty-five.

Males. Females. Total.

Total of Persons Occupied . . 12,951,186 5,309,960 18,261,146
Without specified Occupations

or Unoccupied— all ages . . 7,151,222 16,046,353 23,197,575

20,102,408 21,356,313 41,458,721



Allowing for increase of population, the number of
" persons occupied " in 1905 may be taken at
19,000,000.

The poorest group amongst these comprises the
casual, the incompetent, and the aged or ageing
workers, who form what may be termed the camp-
followers of the industrial army. With them there
are included many who earn little or nothing, such
as the 1,113.830 persons of both sexes and all ages
(Cd. 4413, p. 240), including vagrants and insane,
who in 1905 received outdoor or indoor poor relief.
The luimber of these incompetents and casuals, in
so far as they are industrially occupied upon irregular
and uncertain work, may be estimated at about
1,000,000, and their earnings, averaging say £2^
per worker, may be taken at about £25,000,000
anruially {Rirhcs mid Povcrtij, by L. G. Chiozza
Money, pp. 24, 25). In view of the large pro-
portion of this group who earn nothing whatever,
we can reckon on an average of only one worker
to eacli family, and the number of families there-
fore at 1,000,000. As there are about 10,000,000
families in the United Kingdom, whereof this



6 THE NATIONAL INCOME

residuum forms a tenth })art, it lias come to be
known as the "submerged tenth."

Next we come to the Manual Labour Class,
whose number and earnings in 1886 were computed
by Sir Robert Giffen (Cd. 7063, I., p. 472) as
follows : —

Aggregate Earnings.

£

439,000,000

118,000,000

46,000,000

29,000,000





Number.


Annual Average
jier Wage-earner






£


* d


Men


• 7,300,000


60





Women


. 2,900,000


40





Boys


. 1,700,000


23


8


Girls .


. 1,260,000


23






13,160,000 48 o o 632,000,000



He points out that these estimates were made " at
a period of depression, and not at a period of
prosperity : they give a minimum, not a maximum,
figure." They include allowances for lodging, food,
free coal, clothing, etc., where these extras are
given as well as wages. Finally — and a special
note should be made of the fact — they include
allowance both for want of employment and for
short time, being based, not on a weekly wage,
but upon " the actual wages paid by employers
for a whole year " (Cd. 7063, I., Answers 6915 and

6935)-

In order to bring these figures up to date, we

can take note of the following particulars, as to
the general course of wages and increase in popula-
tion (Cd. 4671, p. 44), the wages in 1850 being
stated at the figure 100 as a basis for comparison.



Level of Wages. Population.

1850 100 27,000,000

1885 .
1900 .

173-3 43,221,000



1905
1907



1494 36,000,000

1787 41,155,000



181 7 44,100,000



THE NATIONAL INCOME 7

Allowing for the rise in wages and for the increased
population, we can estimate that in 1905 there were
fuUy 14,000,000 manual workers (men, women, boys,
and girls) earning £750,000,000, being an average
of £53 per head per annum.

The next group to be considered is that con-
sisting of people who are neither income-tax payers
on the one hand nor manual labourers on the other
hand. For instance there were in this country, at
the time of the last Census, 482,000 clerks, 158,000
agents and travellers, 276,000 school-teachers, 254,000
civil servants engaged in Government work, 52,000
ministers of religion, 133,000 persons connected with
art, music, and the drama, beside a large number
of small traders, shop-keepers, shop-assistants,
farmers, inn-keepers, lodging-house-keepers, pen-
sioners, etc., together with struggling professional
men, and various people living in retirement on
their modest private means, whose individual profits
or wages were in most cases below £3 per week.
The group is probably about 3,000,000 in number
of persons occupied, and there can be little doubt
that it is steadily growing, owing partly to the
spread of education, which tempts people to desert
handwork for headwork, and partly to general
economic causes. Its income in 1886 was esti-
mated by Sir Robert GifFen (Cd. 7063, I,, p. 473)
at " not less than 150 to 200 millions sterling per
annum." Allowing for the increase since then of
salaries and wages and population, and {"or the
existence within this group of various people with
small private means l)ut no occupation, the writer
computes its income in 1905 at £247,000,000, being
at the rate of a little over 30.S'. per week per person
occupied. (In Riches and Poverttj, p. 18, the



8 THE NATIONAL INCOME

respective Hgures are taken at 3,000,000 and
£225,000,000.)

These three groups, comprising' what is known
as the •' Masses, " are set out at the foot of Table A.
Their 9 million families include 18 million workers,
and their income aggregates £1,022,000,000, being
an average of £113 per family. This figure is
slightly higher tlian is admitted by any of the
Socialist statisticians, but in this connection attention
may be drawn to the following, w^ritten in 1909 : —

" The expenditure in poor relief in England and
Wales is about fourteen millions. The cost of
old-age pensions must be placed at another eight
millions. In addition to this, there is a very large
outlay by charitable institutions. In London alone,
according to the latest issue of the ' Annual Charities
Register,' an income of over ten millions is annually
expended by charitable agencies. If we allow half
as much more for the rest of the country, nearly
forty millions is, in one way or another, being ex-
pended on the poor."

In addition to this there is 20 millions, raised by
taxation, applied to the education of the children
of the Masses, thus bringing the total up to 60
millions annually.

The same total is mentioned by the Poor I^aw
Commission (Cd. 4499, p. 52), as "our annual
expenditure upon poor relief, education, and public
health."

It is safe to compute that tlie bulk of this amount,
say 50 millions, is in one form or another given
by the Classes to the Masses. It should thus be
deducted from the income of the former, and added
to the income of the latter, in computing what is
actually enjoyed by both.



CHAPTER II

THE PROPORTION OF POOR PEOPLE

The nintli volume of Mr. Booth's work Life and
Labour of the People contains, on p. 427, the
following : —

" The result of all our inquiries makes it reasonably
sure that one-third of the population are on or about
the line of poverty, or are below it, having at most
an income which, one time with another, averages
twenty-one shillings or twenty-two shillings for a
small family (or up to twenty-five or twenty-six for
one of larger size), and in many cases falling much
below this level."

On p. 21, vol. ii. of his work, Mr. Booth classifies as
follows the population of London (1887-92) : —



Inmates of Institutions (Workhouses,


Persons.


Per cent.


Hospibils, etc.)


99,830


2-32


Very jioor .....

I'oor ......

Working (lass (comfortable) .


354,444

938,293
. 2,166,503


2178)
50-28


.Mifldlii and f jijkt Classes


749,930


17-40




4,309,000


too- 00



Although tliis table ni.'iy represent fairly enough tlie
proportions of the Poor and Middle Chiss resident in

9



10 THE PROPORTION OF POOR PEOPLE

London, it is not necessarily correct as applying to
the whole of the United Kinp^dom. On the writer's
computation, the Middle and Upper Classes comprise
between them not 17 but 10 per cent, of the entire
population of the country, and the " comfortable "
working class comprises not 50 but 65 per cent.
( Table ^C).

Sir Robert Giffen's estimate as to the number of
the Poor, i.e. of the class where the men earn less
than 20 shillings per week, is 25 per cent, of the
total population. A considerable proportion of them
are agricultural labourers. (Cd. 7063, 1., Answers 6943
and 8173.)

Whether its true percentage be 30 or 25, there
can be no. doubt as to the existence in this country
of a large number of the poor. They are frequently
referred to as the " twelve millions of people on the
verge of hunger," having been so described by the
late Sir H. Campbell- Bannerman, and if this hgure
be correct they comprise about 2,500,000 ftirailies.
That is to say, they include the aforesaid i million
families who are known as the ''residuum" or "sub-
merged tenth," together with the ij million families
who are worst off among the next higher class. The
poor condition of these 2^ million families is the
chief text of Socialism, it being assumed that their
poverty is due entirely to our present social system,
and not — as in many cases is the fact — to their own
incompetence or want of character. We can describe
them as Unskilled, or Unfortunate, or Unemploy-
able, and will reckon their annual income at the
round figure of 100 millions sterling, being an aver-
age of 15.S'. 6d. per week or £40 a year, per family.
(Cd. 7063, I., Answer 6943.)

'J'hat so large a number of families can and do live,



THE PROPORTION OF POOR PEOPLE ii

upon an income so small, is to some extent accounted
for as follows : —

"Joint households are perhaps the most distin-
guishing feature of domestic life among the poor.
There are few homes in which no trace of this system
is to be found. It is partly to insufficient recognition
of this truth that we owe many newspaper facts as
to wages received and rent paid in certain districts,
and the simply impossible margin left for food, clothes
and firing.'

This quotation is from p. 52 of Miss Loane's book
From Their Point of View. As a district nurse she
had special opportunities of observation on this point.



CHAPTER III
THE DIVISIOxN OF INCOME

Upon the foregoing basis the figures given in
Table A can be rearranged as shown in Table B.
R. stands for the Rich Class, the " upper ten " thou-
sand, with incomes above £5,000 a year. U.M. is
the Upper JNIiddle Class, with £700 to £5,000, and
L.M. the Lower Middle Class, with £160 to £700 per
family. A. is the Artisan group with £52 to £160
per family, and U. is the Unskilled.

The term Artisan is liere used in its dictionary
sense, to indicate " one skilled in any art or trade."
The group so named, in Table B, thus comprises
not only the 14,000,000 people shown in Table A
to be occupied in Handwork, but also the 3,000,000
shown in the same Table as occupied in Headwork,
say 17,000,000 workers in all. It should be pointed
out that the distinction between these two kinds of
work may be ^•ery marked or very slight, according
to circumstances. Thus a navvy who toils with pick
and shovel is undoubtedly a handworker, while the
classical master in a small school is clearly a head-
worker. But it would be quite possible for a clerk,
engaged in the merely routine work of posting ledgers,
to live less by the use of his brains than many of the

expert craftsmen who produce artistic triumphs in

12



THE DIVISION OF INCOME 13

wood and metal. In our Artisan group, which has
been so named because the skilled handworkers form
the largest portion of it, there are included all these
grades of efficient headwork and handwork, in so far
as they represent family incomes between £1 and £3
per week.

The whole classification, in Table B, rests indeed
solely on the basis of income, and takes no count
of the extent to which the different classes overlap
socially. For instance, there are plenty of people,
by education and environment purely Middle Class,
but with less than £160 per annum, who are here
comprised among the Artisans.

In all these groups, except the poorest, there are
included a certain number of persons living entirely
or partly upon their private means. Many of these
are women, as shown by the fact that in 1904-5
more than half of the 95,000 claim for repayment as
abatement, upon incomes between £160 and £700,
were made by widows and spinsters. (Blue Book 365,

At first sight it may seem surprising, in view of
the comparati\'ely low wages received by some of
the Artisan class, that their average family income
should be as high as £142 per annum, or over
54 shillings per week. Tlie explanation is twofold.
In tlie first place it must be remembered that tliis
class does not include any of the 2,500,000 families
who constitute tiie unskilled or unfortunate " poor"
<jf this country, while on the other hand it docs
include a great many people whose incomes are
close up to £160 per anrunn, and sometimes more
than that sum. For instance, it was estimated twelve
years ago that there were at least 180,000 first-class
workmen in this country who earned more than



14 THE DIVISION OF INCOME

£3 per week, but nevertheless paid no income
tax.

In the second place, it must be observed that we
are here dealing, not with individual incomes, but
with family incomes. It frequently happens that
there are two or more wage-earners living together,
or forming one family though living separately,
whose aggregate incomes amoimt to a very fair
sum. For instance, a father having £2 per week,
with two daughters out in domestic service, each
receiving £25 a year in wages and also her keep,
must be reckoned as possessing a family income of
about £200 a year. As there were in 1901 no less
than 1,641,154 female domestic indoor servants in
the United Kingdom (Cd. 2174, p. 272), receiving
between them each year a total effective income of
about £82,000,0000 (Cd. 7063, I., Answer 6907), their
earnings are of considerable importance.

In many other ways the purse of a workman's
family is often swelled by contributions from its
junior members. Miss Loane gives in one of
her books {The Queen's Poor, pp. 155-62) some
typical specimens of these " composite " incomes.
Mr. G. R. Sims, another authority on the condition
of the Masses in this country, has pointed out that
it is by no means uncommon, in certain industries
where the rates of pay are high, to find artisan
families, each comprising several skilled and un-
skilled wage-earners, whose aggregate income is
£300 or £400 a year, or even more. He writes : —

" In the Midlands and in Lancashire and Yorkshire
there are many working-class homes where five and
six pounds a week is spent on food alone. In
Lancashire I have known the weekly income of
one family, paying eight shillings a week rent,



THE DIVISION OF INCOME 15

amount to as much as twelve pounds. In the
JMidlands I have known a working-class family,
living in an eight-shilling-a-week house, have duck
and green peas and asparagus when these things
were expensive luxuries. The whole family were
employed in a local industry. All were earning,
and the combined savings made up a sum which
permitted the keeping of a table utterly beyond
the means of the poor professional class, the small
traders, and the middle-class people with a small
income" {Referee, July 18, 1909).

Similar revelations, as to the aggregate family wages
of the better-class Handworkers, come to light when
compensation cases are fought in the Courts. Such
a one recently occurred in London, when it tran-
spired that the husband earned £2 is. a week, with
an allowance of 5*. a week for a house, while one
son earned £2 3.S'. 6d. and the other £2 6,9. yd. a
week, making a total income of £6 16,?. id. per week.
This equals £350 per annum, which is more than
three times the average salary of the ordinary
commercial clerk.

Another help towards building up a sufficient
aggregate family income, among the poorer classes,
is the letting of lodgings, which is in effect a form
of "joint household." Over the whole country the
amount so earned nmst be very considerable, but
it does not appear, however, in any of tlie oHicial
estimates of the working-class income, since these
are all based upon wages only. Often the lodger
" pays the rent, ' and it is more than prol)able that
by his aid there is l)ridgcd over in many cases the
"impossible margin" referred to by Miss Loane
(see p. II).

It is not only in the labour class that "com-



l6 THE DIVISION OF INCOME

posite " incomes are to be found. Amongst people
who do not work witli tlieir hands, it often happens
that a hoiiseliolder's wife adds to the family resources
by taking in lodgers, or that his brothers, or sons,
or daughters contribute by their personal earnings
to produce a household purse of considerably more
than £i6o a year, on which, nevertheless, no income
tax is payable because each separate contribution is
less than that amount. It is no exaggeration to
say that there are thousands of such households,
mainly in the suburbs of large towns, which are
maintained in very considerable comfort by com-
posite incomes of this kind. In point of fact, these
households comprise Lower Middle Class people.
From the point of view of mere statistics, their
income-earners, taken separately, often appear quite
incorrectly as " poor " people.

On the basis of what is stated in the preceding
four paragraphs, we are quite justified in asserting
that many of the popular estimates as to the
condition of the Masses are misleading, because
they treat each worker as an isolated individual,
and as if he or she were the unaided breadwinner
for the family to which he or she belongs. The
error of this may be seen from the fact, already
mentioned, that in 1901 the rmmber of those " taking
part in the work of the community," exclusive of
married women engaged in domestic work, was
18,261,146 persons, being men, women, boys, and
girls. As the number of families at that time was
about 9,500,000, it follows that on an average there
were about two workers in each family. Taking
the country as a whole, it is therefore correct to
say that the average family income is twice the
average income of the individual worker.



THE DIVISION OF INCOME 17

This proportion of workers to families naturally
varies according to monetary circumstances. In the


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Online LibraryFrank IresonThe people's progress; a study of the facts of national wealth, with some answers to socialists → online text (page 1 of 10)