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LIBRARY

OF THI^,

UNIVERSITY OF CALIFORNIA.

>

Received.



Accessions No. &^/< Shelf No...




THE RELATION OF LABOR



TO THE



LAW OF TO-DAY



BY



DR. LUJO BRENTANO

PROFESSOR OF POLITICAL ECONOMY IN THE UNIVERSITY
OF LEIPSIC



TRANSLATED FROM THE GERMAN BY

PORTER SHERMAN, A.M.

AUTHOR OF " A TARIFF PRIMER "



TOGETHER WITH AN INTRODUCTION BY THE
TRANSLATOR




G. P. PUTNAM'S SONS

NEW YORK LONDON

27 WEST TWENTY-THIRD ST. 27 KING WILLIAM ST., STRAND

^e fuufturbother $ress
1891



COPYRIGHT, 1891

BY
PORTER SHERMAN, A.M.



Ube ftnfcfeerbocfeer press, flew 2?otft

Electrotyped, Printed, and Bound by
G. P. Putnam's Sons



CONTENTS.



TRANSLATOR'S INTRODUCTION ...... i

PREFACE . . . . . . . . . .10

INTRODUCTION 13

The Principle of Authority 13

Individualism ......... 14

J Socialism 15

v The Three Principles in Relation to Each Other . . 16

The Task of Science 17

The Task of this Book ........ 18

BOOK I.

PREDECESSORS AND DEVELOPMENT OF THE LABOR
QUESTION.

CHAPTER I. THE LABOR QUESTION AND HISTORY . . 21

The Oldest Order of Society 22

Dissolution of the Oldest Order 23

Opposition of the Large and Small Landed Proprietors . 24
The Guilds . 25

CHAPTER II. THE GUILDS IN THE CITIES .... 26

Origin of the Patriciate . . . . . . .27

Degeneration of the Patriciate ...... 28

Oppression of the Handiworkers . . . .28

CHAPTER III. ORIGIN OF THE LABOR GUILDS ... 31
Conflicts of the Guilds 33

CHAPTER IV. VICTORY OF THE LABOR GUILDS . . .35
The Laborers after the Victory of the Guilds . . .35
Effect of Independence upon the Guilds .... 38
Beginning Degeneration of the Labor Guilds ... 38
Origin of a Special Labor Class ..... 40
Controversy between the Employers and Laborers . . 40
Origin of the Labor Question . . . . 41



IV CONTENTS.

CHAPTER V. PROGRESSIVK DEGENERATION or THE GUILDS . 44

Special Organization of the Journeymen .... 45

Absolutism and Industry ....... 47

Patriarchal Solution of the Labor Question ... 48

CHAPTER VI. THE LAW OF APPRENTICES OF ELIZABETH . 50

The Law of Apprentices and Industry on a Large Scale . 52

The Dissolution of the Old Order and the Laborers . . 54

CHAPTER VII. ORIGIN OF THE TRADES UNIONS ... 57

Organization of the Trades Unions ..... 58

The Law of 1800 against Coalitions ..... 60
The Repeal of the Law of Apprentices . . . .61

CHAPTER VIII. ADAM SMITH 63

Adam Smith and the Encyclopaedists .... 63

The Physiocrats ........ 65

The Physiocrats and the Laborers ..... 67

Adam Smith and the Laborers ...... 69

Adam Smith and the Repeal of the Law of Apprentices . 70

CHAPTER IX. CONSEQUENCE OF THE REPEAL OF THE LAW

OF APPRENTICES 75

Crisis of the Labor Question ...... 76

CHAPTER X. THE FACTORY SYSTEM 81

The First Factory Law 83

The Ten-Hour Movement 84

The Ten-Hour Law 85

Extension of the Factory Laws ..... 86

The Effects of Factory Legislation 87

The Principle of Factory Legislation .... 88

Principle of the English Labor Laws .... 88

CHAPTER XL THE LAWS AGAINST COALITIONS BETWEEN

1814 AND 1824 ......... 90

Effects of the Law against Coalitions .... 90

Repeal of the Law against Coalitions .... 92

Development of Coalition Legislation .... 92

CHAPTER XII. EFFORTS AGAINST SOCIETY AND THE STATE . 94

Robert Owen 95

The Idea of Associations 97

Productive Associations ....... 98

CHAPTER XIII. CHARTISM 101

Parliamentary Reform of 1832 101

The People's Charter 102



CONTENTS. V

The Chartist Movement ....... 103

The Tenth of April, 1848 105

Result of Chartism ........ 106

CHAPTER XIV. THE DEVELOPMENT OF THE ENGLISH TRADES

UNIONS 108

Local Trades Unions ....... 109

Extension of the Trades Unions to Several Places . .no
Government of Trades Unions . . . . . .in

Unions of Trades Unions . . . . . . .in

Scope of the Trades- Union Movement . . . .112

Trades Unions and the Mass of Laborers . . . .113

CHAPTER XV. THE TASK OF TRADES UNIONS . . .115
Trades Unions and the Labor Contract . . . . 116

Trades Unions and Wages . . . . . 117

Regulation of the Supply of Labor . . . . .119

Labor Stipulations besides Wages . . . . .120

Main Features of Trades- Union Policy . . . .121

The Trades Unions as Relief Societies .... 123

Increase in the Contributions . . . . . .123

Administration of the Funds . . . . . .124

Solvency of Trades Unions . . . . . .126

The Labor Guilds of the Present 127

CHAPTER XVI. COALITIONS OF EMPLOYERS .... 129
Trades Unions of Employers . . . . . .129

The Lock-Out 13!

Success of the Lock-Out . . . . . . 131

CHAPTER XVII. THE BATTLE OVER THE LABOR STIPU-
LATIONS 133

Cost of Labor Controversies . . . . . .135

The Effects of Labor Controversies 136

CHAPTER XVIII. THE DEVELOPMENT OF THE LABOR CON-
TRACT . . . . . . . . . . .138

Mundella .......... 139

Mundella's Courts of Arbitration and Agreement . . 140
Rupert Kettle ....... . 143

Kettle's Courts of Arbitration and Agreement . . 144

Difference between the Two Systems .... 145

The Trades Unions and the Courts of Arbitration . . 147
Efficacy of the Courts of Arbitration . . . .148

Success of the Courts of Arbitration . . . 149



VI CONTENTS.

CHAPTER XIX. RETROSPECT 152

Present Condition of English Laborers . . . .152

BOOK II.
ECONOMIC PRINCIPLES OF THE LABOR QUESTION.

CHAPTER I. LABORERS AND THE ECONOMIC DEVELOPMENT . 161
Lassalle's Iron Law of Wages . . . . . .162

Price and the Cost of Production . . . . .164

The Cost of Production of Labor 164

The Peculiarity of the Law of Wages . . . .166

" Cruelty " of the Law of Wages 167

The Law of Wages and Progress ..... 167

CHAPTER II. LABOR AS A COMMODITY 169

The Peculiarity of Labor as a Commodity . . .169

The Laborer as a Seller of a Commodity . ' . . .172

CHAPTER III. ETHICAL CONSEQUENCES OF THE PECULIARITY

PF THE COMMODITY LABOR 173

The Sale of Labor and the Residence of the Laborer . 174
Determination of the Residence of the Laborer . .174
Determination of the Place of Work . . . 175

Determination of the Surroundings of the Laborer . -175
The Sale of Labor and the Disposal of Time . . .176

CHAPTER IV. ECONOMIC DISADVANTAGES IN THE SALE OF

LABOR 179

Unreserved Offer of the Seller of Labor . . . .180

The Supply of Labor in Case of a Falling Demand . . 181
The Lowest Limit of Wages ...... 182

The Standard of Living and its Effect . . . .183

The Diminution of the Supply of Labor, and Death and

Misery 187

The Sale of Labor and the Increase in the Demand . . 188
The Supply of Labor and the Future Demand . . .190
The Supply of Labor in the Future Market . . . 190
The Economic Principles of the Labor Question . . 192
/-CHAPTER V. THE TREATMENT OF LABOR IN FORMER TIMES, 195
Repeal of the Old Labor Legislation . . . .196
New Regulations in the Sale of Labor .... 196
Importance of Coalition for the Sellers of Labor . . 197

CHAPTER VI. TRADES UNIONS AND THE SALE OF LABOR . 199
The Trades Unions and a Falling Demand . . . 200
The Trades Unions and a Rising Demand . . . 202



CONTENTS. Vli

Trades Unions and the Future Market .... 203

Trades Unions and Increase of Population . . . 205

Trades Unions and Labor as a Commodity . . . 210

CHAPTER VII. THE POSSIBILITY OF INCREASING WAGES . 212

The Doctrine of the Wages Fund 212

General Enhancing of Wages . . . . . .214

An Increase of Wages and Foreign Competition . .215

Increase of Wages in Industries with a Monopoly . . 218

Thornton's New Wages-Fund Theory .... 220

Increase of Wages and Consumption .... 222

The Increase of W T ages and the Class of Manufacturers . 223
/ The Enhancing of the Prices of Articles Consumed by

Laborers ......... 224

Increase in Wages and Capitalization . . . .225

The Trades Unions and Increase of Wages . . . 228

CHAPTER VIII. THE RATE OF WAGES AND THE AMOUNT OF

PERFORMANCE 229

Adam Smith upon the Rate of Wages and the Amount of

Performance ........ 230

Observations since the Time of Adam Smith . . . 231

The Increase of Wages in 1872 . . . . . 231

The Time of Labor and the Amount of Work Done . .233

First Effects of Every Increase in Wages .... 235

Transient and Sudden Increase in Wages .... 235

Elevation of Wages and the Laboring Capability of Nations, 236

CHAPTER IX. THE COURTS OF ARBITRATION AND AGREE-
MENT 240

Obstacles to the Courts of Arbitration and Agreement . 240
Erroneous Ideas of the Court of Arbitration . . .241

The English Experiences . . . . ... . 242

The Business Nature of the Labor Contract . . . 243

Alleged Attacks upon Liberty and Property . . . 244

The Task of the Courts of Arbitration .... 245

The Transactions in the Courts of Arbitration . . . 246

A Case Hard to Decide ....... 249

Economic Justification of Courts of Arbitration . .251

The Choice of the Impartial Umpire .... 252

Economic Importance of the Courts of Arbitration . . 253

Other Regulations of the Courts of Arbitration . . . 255

CHAPTER X. LEGAL EQUALITY OF EMPLOYERS AND LA-
BORERS 257



Vlll CONTENTS.

Quarrels on Account of Hurting the Feelings . . . 258

Courts of Arbitration and Legal Equality .... 260

CHAPTER XI. RETROSPECT 262

V Foundation of the Labor Question . .- . . . . 262

Labor Legislation ........ 263

Trades Unions ......... 264

The Relation of Labor to the Law of To-Day . . . 265

CLOSING CONSIDERATIONS.

CHAPTER XII. THE SOLUTION OF THE LABOR QUESTION . 266

The Goal of the Development of Humanity . . . 269

V~ -rAim and Limits of the Labor Movement .... 272

/'/ The Labor Question and the Contented .... 273
The Ecclesiastical View of the Labor Question . .275
The View of the Social Democrats . . - . . .277

Pulling Down the Higher Classes ..... 280
The Elevation of the Lower Classes . . . . .281

The Elevation of the Material Condition of Laborers . 282

Improvement in the Income from Labor .... 283

Importance of Unity in Civilization ..... 285

Treitschke and the Education of Laborers . . . 286

Necessity of Greater Leisure for the Laborer . . . 288

The Participation of Laborers in Political Life . . 288

The Right of Suffrage and Duty of Bearing Arms . . 289

The Right of Suffrage and Property 290

The Right of Suffrage and National Civilization . . 292

The Political Parties and the Laborers .... 292

The Workingmen and Patriotism ..... 294

The Means for Reaching This End 295

Free Competition ........ 296

Communism ......... 297

Association ......... 297

Labor Legislation . . . . ... . . 298

The Trades Unions and Courts of Arbitration . . . 299
The Means for the Solution of the Labor Question . . 300
Authority, Free Competition, Association . . .301
Relation of the Three Principles in Our Age . . 303
This Relation and the Solution of the Labor Question . 304
The Law of To-Day and the Solution of the Labor Ques-
tion . 35




TRANSLATOR'S INTRODUCTION.

THE fact that we must go to Germany for the best
account of English trades unions, which is contained in
Dr. Brentano's " Labor Guilds of the Present," of which
this work, as to quantity of matter, is an abridgment, as
to extent of ground covered, an enlargement, may at first
thought cause surprise.

This fact is not owing wholly or mainly fo the German
habit of research. It has a deeper cause. The classical
political economy of England, prevalent also in this
country, has been built up almost exclusively on the side
of capital and the capitalist, and is full of theories and
assumptions. Writers who have worked upon the struc-
ture have been mainly bankers, capitalists, or doctrinaire
professors. This accounts for its capitalistic and theo-
retical character. In this country we have produced as
yet few or no original investigators in the economic field.
" With few exceptions the works produced in the United
States have been prepared as text-books by authors en-
gaged in college instruction, and therefore chiefly in-
terested in bringing principles previously worked out by
English authors within the easy comprehension of under-
graduate students." This accounts for the capitalistic
and theoretical character of the political economy preva-
lent in this country, and it is owing to a theory, an
exploded theory, the wages-fund theory, that the relations
of labor have not been scientifically discussed by our



2 TRANSLATOR S INTRODUCTION.

economists, and that the treatment of the labor question
has been left mainly to unscientific, more or less so-
cialistic, even revolutionary, writers. The wages-fund
theory was taught by John Stuart Mill in the first
editions of his " Political Economy." Mr. Thornton, in
his work " On Labor : its Wrongful Claims and Rightful
Dues," has exploded this theory. J. S. Mill acknowl-
edged the correctness of Thornton's disproval and
omitted the theory from the subsequent editions of his
work. Professor Cairnes, in his " Principles of Political
Economy," has restored this theory, and it is now taught
in the American colleges with Professor Cairnes' " Prin-
ciples " as a text-book. This at least is the case at Yale,
where special emphasis is laid upon this exploded theory.
According to the wages-fund theory, there is no labor
question ; there can be none any more than there can
be a dry-goods question, a groceries question, or a special
economic question as to any other commodity offered in
the market for sale. And why discuss a question that
does not, that can not, exist ? There is, accordingly, no
theoretical labor question in this country, but only a
burning practical one, all the more burning because it
finds no solution in theory.

But what is this theory of the wages fund ? It is very
simple and easy to be understood. The capitalist has in
his pocket at any given time a certain, definite, " de-
terminate " sum of money, neither more nor less, which he
proposes to invest in the purchase of labor, and does, as
a matter of fact, so invest. The laborers who receive
this fund as wages, on the other hand, are not a definite
but a variable quantity. And we have here only an
example in division in which the dividend the wages
fund is constant, and the divisor the number of
laborers is variable ; this will give a variable quotient,



TRANSLATOR'S INTRODUCTION. 3

the wages of each laborer. The smaller the number of
laborers, the higher are wages ; and the larger the number,
the lower are wages. When this number of laborers
becomes so large as it always, by another theory, tends
to do that wages are no longer sufficient to support the
laborer and his family that is, to cover the cost of pro-
duction, want, disease, starvation, and death ensue
until the number of laborers is again reduced a little
below the starvation point, and wages again rise. This
is the " iron law of wages." When you ask the professors
who teach it if it is not pessimism, their answer is : " It
is true ; we will not quibble as to terminology."

Professor Cairnes, in his " Principles," after an elab-
orate discussion of Trades Unionism, under the head of
" Discouraging Prospects " (page 281), writes : " This,
then the limitation of his numbers, is the circumstance
on which, in the last resort, any improvement at all of a
permanent kind in the laborer's condition turns. For
my own part, I cannot pretend to discern in the circum-
stances of the time any solid ground for feeling sanguine
on this point, at least so long as laborers remain what
they are mainly at present mere laborers, hired employe's
depending for each day on the result of the day's work.
But I desire to go further than this. I think the con-
siderations which have been adduced show that even
a very great change in the habits of the laboring classes
as bearing upon the increase of population a change
far greater than there seems any solid ground for ex-
pecting would be ineffectual, so long as the laborer
remains a mere receiver of wages, to accomplish any
great improvement in his state any improvement at all
commensurate with what has taken place and may be
expected hereafter to take place, in the lot of those who
derive their livelihood from the profits of capital."



4 TRANSLATOR S INTRODUCTION.

And again, under the same head of " Discouraging
Prospects" (page 283), he writes: "We see, then,
within what very narrow limits the possibilities of the
laborer's lot are confined, so long as he depends for his
well-being on the produce of his day's work. Against
these barriers trades unions must dash themselves in vain.
They are not to be broken through or eluded by any
combinations, however universal ; for they are the bar-
riers set by Nature herself. I commend the consideration
to those patrons of the laboring class who encourage an
exclusive reliance on trades unionism, and would advance
jtheir interests by confining them to their present role"

And again, under the head of " Socialistic Schemes "
(page 285), he writes : " The conclusion to which I am
brought is this, that unequal as is the distribution of
wealth already in this country [England], the tendency
of industrial progress, on the supposition that the present
separation between industrial classes is maintained, is
toward an inequality greater still. The rich will be
growing richer, and the poor at least relatively poorer.
It seems to me, apart altogether from the question of the
laborer's interest, that these are not conditions which
furnish a solid basis for a progressive social state ; but,
having regard to that interest, I think the considerations
adduced show that the first and indispensable step tow-
ard any serious amendment of the laborer's lot is that he
should be, in one way or other, lifted out of the groove
in which he at present works, and placed in a position
compatible with his becoming a sharer in equal propor-
tion with others in the general advantages arising from
industrial progress."

Could there be any bette_ argument for the laborer in
favor of the overthrow of tne social and political order
of to-day and the establish' t of socialism on their



TRANSLATOR'S INTRODUCTION. 5

ruins than that contained in these deductions, if they are
true?

Thus a groundless assumption namely, the impossi-
bility of laborers accomplishing any thing by organiza-
tion, stands in the way of the scientific study of the
labor question in this country. This doctrine is not
only taught in the schools. It has entered into the
minds of men as something axiomatic and is the pre-
vailing orthodox doctrine. It everywhere appears " in
able editorials," in magazine articles, etc., wherever the
subject is touched. In these we are told that strikes
against a falling market always fail. True. But this is
only half the truth ; the other half is : strikes against a
rising market, if well organized, always succeed, and
they may succeed against a stationary market if the
organization is perfect. The lowest rate of wages is
that below which the laborer will starve ; the highest
rate, that above which the employer will be ruined. In
the wide interval between these two extremes, the rate is
solely a question of organization and might.

We are further told that whenever a strike succeeds,
the concession would have been ultimately granted with-
out the strike. This is not true. As a rule, we never
get any thing in this world without asking for it.

Organization of labor, trades unions, knights of labor,
communism, socialism, anarchism, these ideas are jum-
bled together in men's minds without discrimination, and
condemned in the lump.

It is for the purpose of clearing away some of this
rubbish from the public mend and disseminating correct
information on the labor question that this book is given
to the American public. Itivvould be well for employers
to know what history and political economy have to say
upon the subject. If.' : "ntile nations knew definitely



6 TRANSLATOR'S INTRODUCTION.

beforehand each other's strength, they would seldom go
to war.

It is no v/onder that in a free country governed by
universal suffrage there should come into existence a
necessary and wholesome reaction against the notions
prevailing among the educated classes upon this subject ;
that the single tax on the rental value of the rich man's
land, that a progressive income tax on the rich man's in-
come, should be popular ; and that Edward Bellamy and
Henry George should have a large and increasing num-
ber of adherents.

In this way the laborer hopes to win by wielding the
ballot what he is supposed not to be able to obtain by
wielding the spade and pickaxe. This results from teach-
ing false doctrines in our highest seats of learning, and
the wages-fund theory and consequent false notions as
to the efficacy of the organization of labor are first and
last responsible for much of the communistic movement
in this country at this time.

The political economy taught in England and in this
country has not necessarily any thing to do with given
economic facts and relations. It is mainly a priori and
deductive. Some of its writers hold that any other kind
of political economy is impossible. It supposes a case
and then draws from it all its possible deductions. It is
a hypothetical science and deals largely in tfs.

But in the meantime the organization of labor goes
steadily forward, and the impossible is realized. And at
each recurring strike employers " wonder " at its strength,
and no wonder. Here is evident antagonism between
theory and practice, between given facts in our economic
life and the doctrines taught in the schools.

Recognizing this antagonism, the political economists
of Germany have set themselves to work to correct and



TRANSLATOR S INTRODUCTION. 7

to supplement, in this and other particulars, the classical,
hypothetical, abstract, political economy.

They have rendered another important service. The
socialists Ferdinand Lassalle, Carl Marx, and others
have built their superstructure upon principles furnished
them by the English economists. By a critical examina-
tion of these principles the German economists have been
able to modify, correct, and supplement them, and have
thus undermined the theoretical foundations of socialism.

This has been the task of the historical, realistic
school. This school " makes the actual observation of
economic phenomena the task of its science." This ob-
servation may be personal or through the medium of
history. This is the Baconian, inductive method, which
had led to such rich results in the physical and natural
sciences. Its first question is : What are the facts ? It
makes very sparing use of theory and generalization till
the whole field has been canvassed.

General facts, general principles, are its end, but these
are of value only in proportion as they rest upon a wide
deduction.

The German economists recognize the existence of
the organization of labor as an economic fact, and set
themselves to work to study and explain it, like the sub-
ject of interest, of rent, the incidence of a tax, the effects
of a protective tariff, or any other economic phenomena.

Professor Brentano has had exceptional facilities for
the study of English trades unions, having spent several
years in the country, with free access to the records and
archives of the trades unions. He is master of the Eng-
lish language, and on familiar terms socially with English
manufacturers and laborers. The results of this study,
some twenty years ago, were embodied in his " Labor
Guilds of the Present." This book affords a fine illus-



8 TRANSLATOR'S INTRODUCTION.

tration of what is meant by the historical method in
political economy.

Professor Brentano occupies one of the highest chairs
of political economy in Europe, that filled from 1846 to
1889 by the venerable Dr. William Roscher, the father
of the historical school of political economy.

This book contains a powerful discussion, from the
points of view of history and political economy, of
questions which have stirred, and outside of England
are stirring, the nations to almost revolutionary depths.
In England a better organization of labor and the
resulting necessary labor legislation have led to a
peaceable solution of these questions. According to
the teachings of this book, what is the solution of the
labor problem ? The perfect organization of labor, the
resulting necessary labor legislation, and a readiness on
the part of employers to comply with this ; that is, the
legal establishment of arbitration, or, rather, the estab-
lishment of legal arbitration.

It may be thought that the discussion of German
politics contained in the closing chapter has no applica-
tion in this country. But the fundamental principles
of free government are everywhere essentially the same ;


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