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INSTITUTE OF


INDUSTRIAL


RELATIONS


LIBRARY


UNIVERSIiY OF


CALIFORNIA


B E RK E


I EY



HOURS AND WAGES

IN RELATION TO PRODUCTION



LUJO BRENTANO



TRANSLATED BY MRS. WILLIAM ARNOLD




EontJon

SWAN SONNENSCHEIN ^ CO

New York: CHARLES SCRIBNER'S SONS

J 894



MSI. OF ICT. EriATIcas



BUTLKB & TaNNKB,

Thb Sblwood Pbimtinq Works,
Frome, and London.






Co tlje P^morg

OF MY Teacher,
J. A. R. VON HELFERICH,

IN GRATITUDE AND LOYALTY.



ivi62270



o



AUTHOR'S PREFACE.



My paper on " The Relation of Wages and Hours of Labour
to Production " appeared in 1875, originally in the first half
of the fourth annual volume of Holzendorff 's Jahrbuch^ and
afterwards as a separate pamphlet. It was a tract for the
times, inspired by a speech of Minister of Finance Camp-
hausen, in the Reichstag, and the corresponding rescripts of
the then Prussian Ministry of Commerce. The contradiction
with which I was met led me to a further inquiry, entitled
" The miners' out-put, particularly in Prussia, and the rise
of wages dating from 1872," which appeared in the second
half of the fourth annual volume of Holzendorff' s Jahrbuch
in 1876. This second article only supplied additional con-
firmation of the results of the first one.

Since then I have kept the question constantly before me
and have accumulated a large quantity of material from the
past as well as from the present. All this could only lead to
the deepening and widening of the theoretical treatment of
the subject. In proportion as my views developed, I regu-
larly embodied them in my lectures (c/. Richard Paber, "The
Rise of Agrarian Protectionism in England," Strasburg,
1888, p. 114) ; and I have had the great pleasure of being the
means of stimulating two of my hearers, Dr. Gerhart von
Schulze-Gävernitz and Dr. Ludwig Sinzheimer, to the



AUTHOR'S PREFACE.



further prosecution (in inquiries into the cotton and iron
industries respectively) of my lines of thought. After the
thorough-going confirmation which my views have received,
not only from those inquiries, but also from the quite recent
book of the American Schoenhof, and from the masses of
material brought to light in all countries by the Eight Hours
Movement, I may perhaps be permitted to regard them as
permanently acquired to science.

In my lectures, the examination of the influence of wages
and hours of labour on pi'oduction forms the conclusion of a
comprehensive inquiry into the effect on production of labour
systems in general and of technical improvement. I do not
overlook the fact that it is only in this connection that the
examination in question becomes complete. If, nevertheless,
I herewith publish it by itself, the reason is twofold. In the
first place, years must necessarily go by before the publica-
tion of my Political Economy, while this particular question
claims at present so large a portion of the public intei-est that
an attempt from a scientific quarter to supply a clue to its
difficulties may perhaps not appear unwelcome. In the
second place, it would be impossible for a manual to adduce
all the evidence, and to treat the question with the fulness
which its great practical importance warrants.

In allowing the following inquiry to appear by itself, I
cannot refrain from dedicating it to the memory of the man
from whose lectures a quarter of a century ago I received
the first inspiration of its fundamental idea.

L. BRENTANO.
Munich.



TABLE OF CONTENTS.



PAGE

The Transformation in the Theory of the Relations between

Wages and Production 2

The Change in the Economic View of Factory Legislation. . 22
The Cause of this Transformation a Change in the Conditions

of Labour 38

The Change on the Part of the Workman 39

Influence of Migration 41

Influence of the Increasing Competition in the World Market . 46
The Increase of Production by Higher Pay and Shorter Hours,

and its Limits 47

The Change on the Part of the Employer 49

Effect of the Diminution of the Hours of Labour on the Number

of the Unemployed 69

Effect of the Eate of Wages and of the Duration of Labour on

the Power to meet Competition 72

The Interest of the Nation and the Policy by which it can be

Protected 75

APPENDICES.

A. Messance on the Effect of Cheap Years 79

B. Arthur Young on the Effect of Higher Wages on Production 87

C. The Effect of the Fall in Wages of 1874 on the Production

of the Prussian Miners 88

D. Sir Joseph Crowe's Views on the Relation between English

and German Production 89

E. Sir Lowthian Bell on Wages and Production ... 92

F. The German Iron Inquiry Commission of 1878-79 on the

rise in Wages of 1872 99

vii



TÜi TABLE OF CONTENTS.

PAGE

G. Senior on the Method of Economic Investigation . . .101
H. Orthodox English Political Economy on Factory Legislation

in the Forties 102

I. Elijah Helm on the Present Position of the English Cotton

Industry 103

J. The Ship-builder, John Scott, on Hours of Labour and Pro-
duction 104

K. English Firms which have Introduced the Eight Hours Day 105
L. Joseph Chamberlain on the Kesults of Shortening the

Working Day in his Works 106

M. The Agreement of 1892 about the Eight Hours Day in the

London Building Trade 107

N. Werner von Siemens on the Increase of the Labourer's

Requirements as the Condition of Larger Production . 107
O. On the Causes of the Transference of Cotton Spinning from

the North to the South of Lancashire 108

P. Number of Spindles and Consumption of Cotton per Spindle

in Great Britain and Ireland 109

Q. Table showing the Displacement of Child by Adult Labour

in the English Cotton Mills 110

R. Sir William Petty on the Results of an Increase in the

Income of the Poorer Classes 110

S. The Position of the Handloom Weavers working at Home in

the District of Zittau, according to OflScial Data . . .111
T. Macaulay's Speech on the Ten Hours Bill (with special

reference to pp. 24 foil.) 115



THE HOÜßS AND WAGES OF LABOUR

IN REFERENCE TO PRODUCTION.



Social reform is the order of oar day. The most impor-
tant questions at issue at present are those of the organi-
zation of working men for the protection of their special
economic interests, and of workmen's protective legisla-
tion — objects ardently longed for, clamorously demanded,
keenly championed on the one hand, and on the other
vehemently opposed.

What are the causes of this conflict ? I will not go
into all of them at present, but will confine myself in this
place to one, the most important of all, insomuch as it
exercises the strongest influence on the judgment, not
only of the employer, but also of the good citizen — the
menace, namely, supposed to be involved in such organi-
zation and such legislation, to the power of the country
to hold its own in the market of the world. For, although
undoubtedly the traditional views, feelings, and opinions
of the propertied classes place many awkward obstacles
in the way of economic and social progress, nevertheless
they are comparatively easy to overcome, and would
vanish of their own accord so soon as the one dread has
been set at rest, that the rises of wages and the curtail-
ments of work-time to which such workmen's organiza-
tions and workmen's protective legislation point, will so
increase the cost of production that the home industry

B



HOURS WAGES AND PRODUCTION.



will lose its power of competing with other countries in
the market of the world. To every one, therefore, who
has at heart the lasting prosperity and power of his
country, the relation of wages and work-time to produc-
tion must be the Alpha and Omega of all questions of
social reform. I would invite the reader to enter upon
the consideration of these relations as impartially as
possible, in the objective spirit of the observer in a
physical science.

In the first place let us ask what science has to teach
us about this relation. And here we are met by a sur-
prising transformation in theory when we compare the
writers of the seventeenth and eighteenth centuries with
those of the nineteenth. Houghton,^ Petty, Temple,
Child,^ and, in their earlier writings, Josiah Tucker^

^ For a full exposition of the doctrines of Houghton, Petty, and
Temple, the earlier ones of Arthur Young, and the later ones
of Tucker, cf. Gerhart v. Schulze-Gävernitz, "Industry on a
Large Scale {GroHsbetrleh) — An Economic and Social Advance :
a Study in the Field of the Cotton Industry." Leipzig, 1892.
(Introduction.)

- Schulze-Giivernitz (loc. cif. p. 5) has erroneously reckoned
Child among Adam Smith's foi-erunners. Sir Josiah Child writes
in "A New Discourse of Trade " (Ed. 5, Glasgow, 1751, p. 12) :
" And for our own poor in England, it is observed, that they live
bettor in the dearest countries for provision, than in the cheap-
est, and better in a dear j'ear than in a cheap, especially in rela-
tion to the public good, for in a cheap year they will not work
above two days in a week ; their humour being such, that they
will not provide for a hard time, but just work so much and no
more as may maintain them in that mean condition to which
they have been accustomed."

2 Tucker had written in liis " Essay on Trade," the first edition
of which was published in 1750: " The men ai-e as bad as can
bo described ; who become more vicious, more indigent and



CHANGE LV THEORY.



and Arthur Young', emphatically uphold the view that
high wages are equivalent to low production. la order
to increase exertion, either actual diminution of wages is
advocated, or, what comes to the same thing, a raising
of the taxes and of the cost of living. It is accepted
as an axiom that the better off people are the less they
work.^

About the middle of the eighteenth century a reaction
begins to set in. In the first place the opposite doctrine
first shows itself in the polemics of Vanderlint, Postle-
thwait. Forster and Tucker, and then we find it fully
developed and supported in the work of Adam Smith.
He maintains just the contrary, that high wages are
equivalent to great production, and he bases this view
not only on psychological and physiological grounds, but
also on experience.^ After he has spoken of " The
common complaint that luxury extends itself even to the
lowest ranks of the people, and that the labouring poor

idle, in proportion to the advance of wages, and the cheapness
of provisions: great numbers of both sexes never working at all,
while they have anything to spend upon their vices." Cf. an
essay on "The Advantages and Disadvantages which respectively
attend France and Great Britain with regard to Trade," by Mr.
Josiah Tucker, of Bristol. 4th edition, Glasgow, 1756, p. 46.

1 The most drastic presentment of these views is supplied by
the author of " Considerations on Taxes as they are supposed to
affect the Price of Labour of our Manufactures ; also, some
reflexions on the general behaviour and disposition of the
manufacturing populace of this kingdom : showing by argu-
ments drawn from experience that nothing but necessity will
enforce labour, and that no state ever did or ever can make any
considerable figure in trade, where the necessaries of life are at
a low price." 8vo, London, 1765.

2 The discussion comes at the end of the eighth chapter of the
first book of Adam Smith's " Wealth of Nations."



HOURS WAGES AND rRODUCTlON.



will not now be contented with the same food, clothing,
and lodging which satisfied them in former times'' — a
complaint which might console many of those who lament
over the corruption of our own time — he says : " The
liberal reward of labour . . . increases the industry of the
common people. The wages of labour are the encourage-
ment of industry, which, like every other human quality,
improves in proportion to the encouragement it receives.
A plentiful subsistence increases the bodily strength of
the labourer, and the comfortable hope of bettering his
condition and of ending his days, perhaps, in ease and
plenty animates him to exert that strength to the utmost.
Where wages are high, accordingly, we shall always find
the workmen more active, diligent, and expeditious than
where they are low ; in England, for example, than in
Scotland ; in the neighbourhood of great towns, than in
remote country places. Some workmen, indeed, when
they can earn in four days what will maintain them through
;the week will be idle the other three. This, however,
ds by no means the case with the greater part. Work-
Imen, on the contrary, when they are liberally paid by the
'piece are very apt to overwork themselves and to ruin
their health in a few years. Excessive application during
;four days of the week is frequently the real cause of the
idleness of the other three, so much and so loudly com-
plained of."

And after Adam Smith has taken occasion to pen a
diatribe against the short-sighted employers who drive
their workmen too hard, he emphatically controverts the
creed that in cheap years workmen are generally idler
than in dear ones. A plentiful subsistence, it has been
maintained, relaxes, and a scanty one quickens, industry.
But even if there may be no doubt that this is correct



ADAM SMITH AND MESSANCE.



in the case of iudividual workmen, with the great majority
it is false. That men in general should work better when
they are ill fed than when they are well fed, when they
are disheartened than when they are in good spirits, when
they are frequently sick than when they are in good
health, seems not very probable. Tlie fact is that in dear
years the workmen are far more dependent, humble, and
submissive than in cheap years, the employers therefore
make better bargains and have an easier time of it in the
former than in the latter ; and so arises that point of view
to the refutation of which Adam Smith goes on to
bring some additional exact observations relating to the
influence of more or less abundant wages on production.
Among these observations are systematic data furnished
by the French tax collector Messance,^ of St. Etienne.
This author of " great knowledge and ingenuity,'^ writes
Adam Smith, has shown "that the poor do more work in
cheap than in dear years by comparing the quantity and
value of the goods made upon those different occasions in
three different manufactures ; one, of coarse woollens,
carried on at Elbceuf, one of linen, and another of silk,
both of which extend through the whole generality of
llouen. It appears from his account, which is copied
from the registers of the public offices, that the quantity
and value of the goods made in all those three manufac-
tures has generally been greater in cheap than in dear
years, and that it has always been greatest in the cheapest
and least in the dearest years. All the three seem to be
stationary manufactures ; that is to say that, though their
produce may vary somewhat from year to year, they are
upon the whole neither going backwards nor forwards."



See Appendix A.



HOUJ^S WAGES AND PRODUCTION.



Thenceforward the old view completely disappears
from economic theory. As early as 1777 the reaction
is evident in Anderson/^ and even Arthur Young ^ and
Benjamin Franklin^ in their later writino^s euiphasize the
fact that low pay is by no means equivalent to cheap
work, but rather the contrary. But it remained for two
English economists of the thirties and forties — McCuUoch
namely and Senior — who are commonly regarded as in
a special sense the theoretical upholders of the interests
of the employers, to be the most emphatic representatives
of the view laid down by Adam Smith.

McCulloch* speaks of the view of "many very intelli-
gent people, of whose benevolence no doubt can be enter-
tained, and to whose opinions on most subjects great
deference is due,^' that high wages, instead of encourag-
ing industry, usually become a fruitful source of idleness
and dissipation. This opinion applies only to individuals,
never to the masses. " Have the low wages," continues
McCulloch, " of the Irish, Poles, and Hindoos made them
industrious ? or the Idgli wages of the English, Ameri-
cans, and Hollanders made them lazy, riotous, and profli-
gate ? Just the contrary. The former are as proverbially
indolent as the latter are laborious and enterprising.
This is not a point about which there can be any doubt.
The experience of all ages and nations proves that high
wages are at once the most powerful stimulus to exertion,
and the best means of attaching the people to the insti-



' Cf. James Anderson, " Observations on the means of exciting
a spirit of National Industry." Edinburgh, 1777, p. 351.

'^ See Appendix B.

8 Cf. Roscher, I. § 173, note 3.

* McCullocli, " Principles of Political Economy." hx.\\ ed.,
London, löU3.



ECONOMISTS ON HIGH WAGES.



tutions under which they live. It was said of old,
* Nihil la3fcius est populo Romano saturo ; ' and the same
may be said of the English^ the French, and indeed of
every people.'^

Senior ^ — to quote also the man who invented the
term " wages of abstinence " for interest on capital,
and who at first was the ardent opponent of factory legis-
lation — calls attention to the fact that high wage is by
no means the same thing as high price of labour. Senior
cites the evidence of English manufacturers who had
conducted business undertakings in France, to the effect
that in spite of the lower wages in that country, the
price of labour is higher and production more costly
than in England. The English workman, they explain,
produces incomparably more. In consequence of the
smaller production of the French, a lai-ger number of
workmen is necessary for the manufacture of a certain
quantity of articles, and consequently more buildings,
more supervision — in a word, a larger capital on which
interest has to be paid. An Englishman, they said,
produces as much as two Frenchmen. Wages, con-
tinues Senior, are three times as high in England as
in Ireland, but the Irishman produces but a third of
what the Englishman does. " It may be supposed, in-
deed,'^ he concludes, " that the price of labour is every-
where and at all times the same.''

The conclusions of these English economists of the
first half of the present century are confirmed by the
following table,^ which Houldsworth, one of the largest



1 " Political Economy," 5th ed., p. 149 foil. London, 1863.
- From Schulze - Gävernitz, " Industry on a Great Scale "
{Grossbetrieh), p. 58.



HOURS WAGES AND PRODUCTION.



living cotton-spinners, laid before a Parliamentary Com-
mittee: —





A Spinner's
Weekly
Output.


Hours
of

Werk

V/ee'k.


Total
Wages.


Deduction

for
Assistants.


Net Earn-
ings of the
Spinner.


Purchasing
Power of
these Earn-
ings in lbs.
of Flour.


Yarn
Num-
ber.


Pounds

of
Tarn.


1804
1814
1833


180
200
180
200
180
200


12

9

18

13J
22^
19


74-8

do.

74

do.

69

do.


£ s. d.
3
3 7 6

3 12

4 10

2 14 8

3 5 3


£ s. d.
1 7 6
1 11
17 6
1 11
110
12 6


£ s. d.
1 12 6

1 16 6

2 4 6

3

1 13 8

2 2 9


117

124
175
239
210

267



The English econoraistSj however, of that period are
not alone. Their German confreres also corroborate
Adam Smith's doctrine by new observations. So we
find J. G. Hofmann/ the father of Prussian statistics,
showing that a Berlin wood-chopper does as much
work in ten days as an East Prussian in Labiau in
twenty-seven. William Koscher further says that a
Mecklenburg day-labourer eats nearly twice as much
as a Thuringian, but he also turns out nearly double
the quantity of work, and in paragraphs 40 and 173 of
the first volume of his " System," Roscher emphatically
confirms and gives reasons for Smith's view. The French-
man Michel Chevalier ^ holds the same relation to the
latter as does Roscher.

Far more important, however, than all these detached



' Quoted from Roscher, I. § 40, note 1.

* Michel Chevalier, " Cours d'economie politique," I. p. 115.



B RASSE Y ON HIGH WAGES.



observations is Brassey's ^ modern testimony, for Brassey
was one of the largest contractors and employers of
labour in the world. He built railways in every quar-
ter — one might almost say, in every country in the
world. He thus had ample opportunity of comparing
the working-men of all nations, and must necessarily
have acquired a wide knowledge of the price of labour in
all countries. His son, Lord Brassey, who carries on his
father's business, has published these experiences of his
deceased parent in several works which have gone
through a large number of editions. In one of these
Lord Brassey says openly that he " feels himself im-
pelled by many and potent influences to take the em-
ployer's view of the labour-question." This makes the
testimony of this world-experienced man of business all
the more important.

What, then, is this testimony ?

In his father's enterprises, in almost every country of
the civilized world and in every corner of the globe, the
price of labour was everywhere the same, whether wages
were high or low ; for when wages were low, the work
done was correspondingly small. On the other hand, in
those places where wages and work done were both small,
the latter increased with the rise of wages, so that some-
times the price of work was cheaper after a rise in wages
than it had been before. He animatedly repudiates the
" allegations which, in times of commercial depression.



' Thomas Brassej^, " Work and Wages," 2nd ed., London,
1872. " Lectures on the Labour Question," London, 1878.
" Foreign Work and English Wages considered with reference
to the Depression of Trade," London, 1879. Arthur Helps, "Life
and Labours of Mr. Brassey, 1805-1870," London, 1872.



HOURS WAGES AND PRODUCTION.



are invariably made, that our trade has gone to other
countries, because the wages of the British Avorkmen are
excessive/^ The British export trade is, he says, con-
tinually on the increase, and the fact is that the greatest
increase has taken place in those trades in which the
wages are highest. It is not true that the price of labour
is higher in England than on the Continent. Thus the
Miilhausen printing-works import their cotton-goods for
printing mainly from England — a proof that such goods
are produced more cheaply in England, although higher
wages are paid in Manchester than in Alsace. He held
that the Hindoos constituted the sole exception ; in their
case a rise in wages did diminish the work done.

Brassey's first work appeared in 1872 — at a moment,
therefore, of the greatest economic change and of the
most considerable increase of wages in all branches of
industry and in all civilized countries. In 1873 came
the reaction. And then the accuracy of the judgment
we have quoted from Brassey was once more confirmed :
once more the workmen were made responsible for the
depression, and reductions of wages were recommended
as the best means of restoring economic health. This
opinion and this advice were even supported with all
the authority of his office by the then Prussian Finance
Minister, Camphausen, in the Bank Debate in the Reich-
stag, on January 2Gth, 1875 ; and the then Prussian
Minister of Trade, Achenbach, wrote as follows in a re-
script of March 28Lh, 1876, to the Department of Public
Works, especially to the Administration of the Mines :
"At present the work done has remained not incousider-
ably below that of foi'mer years, and it is just in the last
few years, in wiiich the wages of the workmen have been
raised to a disproportionate extent, that the production



WAGES AND OUTPUT IN COAL-MINING. II

of the workman has almost without exception still further
fallen off/' If, therefore, under the present less favour-
able circumstances adequate profits were to be attained,
it was necessary that the "production of labour should
be increased, for the securing of which end an adequate
lever is to be found in the lowering of the reward of
labour/'

Never, we may suppose, has an administration drawn
from some few figures more untenable conclusions. At
once the late Professor Erwin Nasse^ made it clear that
the protest instantly made by the miners against the
assertion of the Minister of Trade was entirely justified.
According to the official records, the year of the great
rise in wages in the largest State mines, 1872, was fol-
lowed by a considerable increase in the average output
of the workman. These records showed the following
figures (cwt.) in the case of the largest mines : —

Saarbruck Mines ...

The Kmg's Mine (Upper Silesia)

Queen Louisa's Mine (Upper Silesia) ...


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