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TORRENS



VGES AND COMBINATION.




ON



WAGES AND COMBINATION.



ON



WAGES AND COMBINATION



R. TORRENS, Esq. M.P. F.R.S.



LONDON:

LONGMAN, REES, ORME, BROWN, GREEN, & LONGMAN,
PATERNOSTER ROW.



1834.



LONDON:
PRINTED BY T. BRETTELL, RUPERT STREET, HAYMARKET.



CO

CD



TO THE

o

ELECTORS AND INHABITANTS

OF

BOLTON.



a



n



Gentlemen,

I have been, for some time, engaged in
preparing an extensive work upon the
financial and commercial resources of the
country. This work contains some chap-
ters upon wages, and upon the effects of
combinations for regulating them, which
appear peculiarly applicable at the pre-
sent crisis ; and, therefore, without waiting
for the more general work, of which they
form a component part, I publish them in
a detached and separate form.

To the Inhabitants of Bolton, it is of
paramount importance, that wages should
be permanently high. The great majority

12081



VI

of the people, whose only source of income
is their labour, have a direct and imme-
diate interest in obtaining for that labour
the greatest possible reward ; the house
keepers who engage in the local trade
of the district, have a more indirect, but a
not less certain interest in high wages,
inasmuch as, with the increase in the
labourers' means of purchasing, their bu-
siness and their profits must increase
also; and the proprietors of houses, of
cottages, and of building ground, have
an interest in high wages, because, in
proportion to the general prosperity, the
demand for tenements will increase, and
rents will improve, and be more punc-
tually paid. Thus, it is the universal in-
terest of the town, that labour should
obtain an ample reward ; and, as the
representative of that universal interest, I
have felt it to be my duty to endeavour
to ascertain, upon what principles, and to
what extent, it is practicable to* increase
wages.



Vll



Bolton has had the honour of originating
some of the most important improvements
in the great staple manufacture of England ;
and I trust that it is destined to have
the further honour, of setting an enlightened
example, of the manner in which those im-
provements may be rendered most con-
ducive to the prosperity of the country,
and to the permanent comfort and hap-
piness of the people.

With these views I request permission,
to dedicate the following pages to you,
as a testimony of my sincere respect, and
as a memorial of the enduring gratitude
I feel, for the proud distinction which your
partial favour has conferred upon me.

I have the honor to be,

Gentlemen,
Your faithful Servant, and
very sincere Friend,

R. TORRENS.



CONTENTS.



Page

CHAP. I. — On the general Principles
which regulate Wages - - - 1



Definition of the Term Labour - - - 2

Definition of Wages - - - - -.5

The Maximum of Wages - - - - 7

The Minimum of Wages - - - - l\

On the circumstances which determine the point at

which actual Wages settle - - - -, - -18
How the proportion between Capital and Labour

regulates actual Wages - - - -15

Beyond a certain point, the proportion between

Capital and Labour ceases to have any injluence

on Wages - - - - - - 20

The means by which Wages may be increased - - 23
There is no tendency in Population to increase

faster than Capital, and thus to degrade Wages 27



X



p

CHAP. II.— On the Eject of Machinery
upon Wages - - 33

CHAP. III.— On the Effect of Combinations
for reducing Wages - - - - 45

CHAP. IV.— On the Effect of Combinations
for Raising Wages - - - - 57

In a country not depending upon foreign markets,
Combinations may raise Wages to their maxi-
mum, provided the supply of labour does not
increase in a greater proportion than the work
to be performed - - - - - 57

In a country depending upon foreign markets,
Combinations for raising Wages beyond the
limit determined by foreign competition, ulti-
mately occasion, not an advance, but a reduction
of Wages - - - - - - CiQ

In a country possessing superiority in manufac-
turing for the foreign markets, Wages may be
raised within the limits of such superiority - - 73

The Corn Laws deprive the operatives of England
of the high comparative Wages due to the supe-
riority which England possesses in manufac-
turing for the foreign market - - - - - -81



XI



Page

CHAP. V.— On Mr. Fielden's Scheme
for Limiting the Hours of Labour - - 90

CHAP. VI. — On the Question, would the
Profits of the Farmer be Reduced by such
a reduction in the value of Food, as ivould
admit of an Increase of real Wages? - 100

CHAP. VII. — On the Question, ivould a
Free Trade in Corn diminish Employ-
ment, and reduce Wages, by contracting
the Home Market, in a greater 'proportion
than it extended the Foreign Market? - 120



ERRATUM.

l'agc 102 — Case II.— for one quarter of corn, read two quarters of corn.



T£2>°



W\



ON

WAGES and COMBINATION.

CHAPTER I.

ON THE GENERAL PRINCIPLES WHICH
REGULATE WAGES.

1 he principles which regulate the wages of labour
form, without any exception, the most interesting
and the most important division of Political Eco-
nomy. The labouring classes compose the great
bulk of every community ; and a country is happy
or miserable, as they are well or ill supplied with
the necessaries, comforts, and enjoyments of life.
The study of Political Economy, if it did not
teach the way in which labour may obtain an
adequate reward, might serve to gratify a merely
speculative curiosity, but could scarcely conduce to
any purposes of practical utility. It claims the
peculiar attention of the benevolent and good,
mainly because it explains the causes, which depress
and elevate wages, and thereby points out the
means, by which we may mitigate the distress,

B



and improve the condition, of the great majority
of mankind. Political Economy is not, as has
been erroneously stated, the appropriate science
of the statesman and the legislator ; it is peculiarly
and emphatically, the science of the peojile.

Definition of the Term Labour.

To many of our readers it may be matter of
surprise that we should deem it necessary to give
a formal definition of a word so simple, and so
generally understood, as the term labour. The
fact is, that recent economical writers, of no in-
considerable eminence, have employed their terms
in so many different senses, and extended their
signification to so many dissimilar things, that the
language of the science has been rendered loose
and indeterminate; and that, in using the most
familiar words, it often becomes necessary, not
only to explain what their meaning is, but to point
out what it is not.

Our first parents, even before the condemnation
to " eat by the sweat of their brow," could not
have brought the fruits of Eden to their lips by a
thought, or a wish ; they must have employed
some degree of muscular or manual exertion, in
order to gather them. Now muscular, or manual
exertion, employed in order to procure the objects
of desire, is that which, in the language of Poli-
tical Economy, we denominate labour.

Mental exertion, when employed, as it often is,



in procuring for us the objects of our desire, is
called mental, or intellectual labour. Whenever
the term is used without such qualifying epithets,
it means human muscular exertion, and nothing
more.

In the production of wealth, the agency of the
inferior animals, the agency of machines, and the
agency of the powers of nature, are frequently
employed to produce effects similar to those, which
are produced by human agency. But it is not,
therefore, correct to speak, as some economical
writers do*, of the labour of cattle, the labour of
machines, and the labour of nature. In the lan-
guage of Political Economy, every thing should be
precise and definite ; and our terms, instead of
being generalized, so as to confound distinctions,
should be particularized, so as to mark the shades
of difference between analogous objects — and to
place them before us separate, and, as it were, at
a distance from each other. Instead of applying
the same common term to the several agencies of
men, of cattle, of machines, and of nature — we
should say the labour of men, the work of cattle,
the action of machines, and the operations of
nature.

It is sometimes said, that " in the idea of labour,
the idea of subsistence is includedf ;" and that
" when we speak of labour as a thing by itself,
the idea of subsistence is included in it." Such

* M'Culloch. f Mill.



loose modes of expression are, to say the least of
them, neither very logical, nor very intelligible.

Labour is one thing ; the subsistence which
supports the labourer is another, and a very dif-
ferent thing ; and confounding these two different
things under one common term, can only lead to
ambiguity, misconception, and error. To say,
that, when we consider labour as a tiling by itself,
we include in the consideration another and a
different thing, is manifestly absurd and contra-
dictory.

In the writings of political economists, we fre-
quently meet with the phrases " accumulated
labour," " hoarded labour." These forms of ex-
pression are incorrect. We may accumulate and
hoard the articles which labour has produced ; but
the labour itself, the action of the human muscles,
ceased to exist the instant it was performed, and
became, in the nature of things, incapable of being
either accumulated or hoarded. " Accumulated
labour," and " hoarded labour," are, at the best,
but figurative expressions, not of the happiest kind ;
and to introduce them into the precise and accurate
discussions of Political Economy, is to substitute
the diction of poetry for the nomenclature of
science.

The term labour, then, when its meaning is un-
qualified by the epithet " mental," or " intellectual,"
signifies the action of the human muscles, directed
to obtain the objects of desire ; and it signifies
nothing more.



.)



Definition of Wages.

When men cease to work upon their own account,
they must receive from their employers, in exchange
for their labour, such articles of wealth, as may
be necessary to preserve them in working con-
dition, and to enable them to keep up the race
of labourers. The articles of wealth which the
labourer receives, in exchange for his labour, are
denominated wages. When the quantity of neces-
saries and comforts which the labourer receives is
large, wages are said to be high ; when it is small,
they are said to be low.

When money becomes the instrument of ex-
changing one thing for another, a distinction must
be made between money wages, and commodity
wages ; or, in other words, between nominal and
real wages. Real wages consist of the quantity
of necessaries and comforts which the labourer
receives ; nominal wages of the sum of money, in
which he is paid. If money always retained the
same value, in relation to the necessaries and
comforts of life, nominal wages would always be
a correct measure of real wages ; and both would
rise or fall together, and in the same proportion.
But the exchangeable power of money is liable to
constant fluctuations, and therefore nominal wages
often rise while real wages fall, and fall while real
wages rise. It is almost superfluous to add, that
it is on the state, not of nominal, but of real wages,
that the condition of the working classes depends.



6



It is sometimes said that wages rise and fall,
not as the labourer receives a greater or a less
quantity of wealth* ; but, on the contrary, as lie
receives a greater or a less proportion of the whole
wealth produced. Thus, if the labourer had re-
ceived, as his annual wages, fifty quarters of corn
and fifty suits of clothing, when the whole annual
produce of his labour was one hundred quarters
and one hundred suits ; then, if he should receive
only twenty-five quarters and twenty-five suits
when the whole produce of his labour became only
forty quarters and forty suits, his wages, instead
of having fallen one-half, would have experienced
a considerable rise ; because the proportion of
twenty-five to forty-five is greater than the pro-
portion of fifty to one hundred. In this sense of
the terms, wages may be falling while the labourer
is earning a more abundant quantity of all the
necessaries and comforts of life ; and may be rising,
while he is sinking to a state of the utmost desti-
tution, and actually perishing of famine. This is
a strange and unnecessary, not to say absurd,
perversion of language.

The term wages is sometimes employed in a
very extensive sense, being made to signify not
only that which is given to the labourer, but all
the other advances of the capitalist. This gene-
ralization is improper. The term capital is the
general term, comprising that which is given to

* Ilicardo, M'Culloch, Mill.



the labourer, and that which s advanced as seed,
material, and machinery ; the term wages is the
specific term, marking that particular portion of
the capitalist's advances which is given to the
labourer for his labour. When we extend the
signification of the term wages to seed, material,
and machinery, we render it synonimous with the
term capital. For the sake of convenience and
precision, it is necessary that some one term should
be appropriated to signify that particular portion
of capital which is advanced directly and imme-
diately to the labourer, in payment for his labour ;
and the term which general usage has so appro-
priated is — wages. To call seed, material, and
machinery, wages, is a confounding of terms ; to
call them the wages of that non-entity, accumulated
labour, is still worse. Such vague generalization
involves us in endless ambiguity, obscurity, and
confusion. In the vocabulary of Political Economy,
as in the language of common life, the term wages
signifies that which is paid for labour, and
signifies nothing more.

The Maximum of Wages.

As wages are paid out of the produce of industry,
it is obvious that there are natural and necessary
limits, beyond which they cannot be permanently
increased. Thus, if 100 labourers, expend 200
quarters of corn for seed and implements, and
raise a return of 500 quarters, it is physically



8

impossible that their wages should continue to he
more than 300 quarters ; because, if they did,
seed and implements would not. be replaced, and
the capitalists could not continue the cultivation
of the earth. Again, if it were necessary to resort
to an inferior soil, upon which 100 labourers, with
an expenditure of 200 quarters for seed and im-
plements, could raise no more than 400 quarters,
then, for the same reason, it would become
physically impossible that the annual wages of ]00
men should exceed 200 quarters of corn.

In the above cases, the labourer is supposed to
receive as his wages the whole produce of labour,
which remains after the replacement of the capi-
talist's other advances. This can occur only in
those rare instances in which the capitalist, without
seeking any profit for himself, employs labourers
from pure benevolence and charity. In the vast
majority of actual cases, the capitalist, in addition
to the replacement of all his advances, will reserve
a portion of the produce of industry as his profit ;
and though there will exist no physical, yet there
will be a moral impossibility, that wages should
exceed that, which remains after the capitalist's
other advances have been replaced, with the lowest
rate of increase, for the sake of which he will
carry on his business. This, then, we may call the
moral maximum of wages. The labourer may
receive more, as a benevolent gift, from men of
fortune, who do not live upon their industry ; but
he cannot receive more, in exchange for common



9



labour, in those great and permanent branches of
employment which supply the community with
the necessaries and comforts of life.

The rate of increase, which is sufficient to induce
the capitalist to continue in business, varies, from
causes, which it is not necessary here to explain.
We may for the present safely assume, that the
capitalist will not engage in the work of production,
unless he can obtain a profit of seven per cent.

If we take seven per cent, as the lowest rate of
profit, then the maximum, beyond which wages
cannot rise, will be that portion of the produce,
which remains, after replacing the advances not
consisting of wages, and deducting what is equi-
valent to seven per cent, upon the whole advances.
Thus, if a farmer advance to 100 labourers 200
quarters of corn, as wages, with 200 quarters more
for seed and implements ; and if he obtain a
return of 428 quarters, wages will be at the
maximum, for, if we take from the whole pro-
duce of 428 quarters, 200 quarters, to replace
the seed and implements consumed, and also de-
duct 28 quarters, or seven per cent., upon the
whole advance of 400 quarters, then just 200
quarters will remain to be again advanced as
wages. Under these circumstances, it is self-
evident that wages could not rise above 200
quarters for 100 men, for were more than this
given to the labourers, too little would remain,
either for seeds and implements, or for that lowest
rate of profit which will induce the farmer to
cultivate.



10



It is obvious, that the maximum of wages may
be raised, either by the cultivation of land of a
better quality, or by improvements in the effective
powers of industry ; and that it may be lowered,
either by resorting to poorer soils, or by a falling
off in the effective powers of industry. In an
improving country, better modes of culture are
gradually introduced, and labour is more effec-
tually applied, particularly in manufactures. But
the effect of such improvements, in raising the
maximum of wages, is in general counterbalanced
by the necessity of resorting to inferior, or more
distant soils for the supply of food and material.

The circumstances, which raise the maximum
of wages to the highest point, are those in which
a thickly-peopled country, excelling in manufac-
turing industry, carries on a perfectly free trade
with thinly-peopled countries, in which none but
soils of first-rate quality are under tillage. A
simple illustration will demonstrate this.

If a master manufacturer employ 100 labourers,
who fabricate for him 428 suits of clothing, and if,
from the inferior quality of the soil under cul-
tivation, he is obliged to give 200 suits for the
materials he works up, it is evident that the
highest point to which the wages of the 100
labourers can ascend will be 200 suits of clothing ;
because if more were given for labour, the capitalist
would have less than the lowest rate of profit,
which is necessary to induce him to continue in
business.

Now, let an unrestricted commerce in agri-



11



cultural produce be established with a new coun-
try, cultivating none but first-rate soils, and let
raw produce be in consequence so reduced in value
— as compared with wrought goods, that the
manufacturer can purchase his raw material for
100, instead of for 200 suits of clothing; and
immediately the maximum of wages, for the 100
labourers, will rise from 200 to 300 suits — because
the capitalist, obtaining 428 suits, and advancing
only 100 for materials, may give 300 to his labourers,
and yet retain 28 suits, or seven per cent, upon his
whole advance of 400 suits. Measured in clothing,
maximum wages will have risen 50 per cent.,
measured in raw produce they will appear to have
risen 300 per cent.

England having acquired in manufacturing in-
dustry an efficacy unexampled in the history of
the world, and having the new countries of the
American continent open to her commerce, is
placed in that precise situation, in which the
maximum of wages may be elevated to the highest
attainable point. But the vast, the incalculable
advantages of this situation are counteracted by
the restrictive system, which excludes cheap raw
produce from our markets.

The Minimum of Wages.

The mininum below which wages cannot per-
manently fall, consists in a quantity of the neces-
saries and conveniences of life sufficient to preserve
the labourer in working condition, and to induce



\2



him to keep up the race of labourers. The point,
below which wages cannot fall, is not a fixed and
immutable point, but is, on the contrary, liable to
considerable variation. The shelter and clothing
indispensable in one country may be unnecessary
in another. A labourer in Hindostan may con-
tinue to work with perfect vigour, while receiving
a supply of clothing which would be insufficient
to preserve a labourer in Russia from perishing.
Even in countries, situate in the same climate,
different habits of living will often occasion vari-
ations in the minimum of wages, as considerable
as those which are produced by natural causes.

The labourer in Ireland will rear a family
under circumstances which would not only deter
an English workman from marriage, but would
force him on the parish for personal support.
Now, it is certain, that a gradual introduction of
capital into Ireland, accompanied by such a diffu-
sion of instruction amongst the people, as would
impart to them a taste for the comforts of life,
might raise the minimum of wages in that country
to an equality with their minimum in England;
and we can conceive a succession of impoverishing
and calamitous causes, which might so reduce the
spirit of the people of England, as to render them
satisfied with the scanty pittance, that the labourer
obtains in the sister island. Alterations, however,
in the minimum of wages cannot be suddenly
effected. So far as this minimum depends upon
climate, it is unchangeable ; and even so far as it
is determined by the habits of living, and the



:{



established scale of comfort, it can he effected only
by those circumstances of prosperity or decay, and
by those moral causes of instruction and civiliza-
tion, which are ever gradual in their operation.
The minimum of wages, therefore, though it varies
under different climates, and with the different
stages of national improvement, may, in any
given time and place, be regarded as very nearly
stationary.

On the circumstances, which determine the point,
at which actual Wages settle.

We have seen, that the minimum of wages is
that quantity of the products, of industry, which
climate and custom render necessary, in order to
support the labourer while at work, and to induce
him to keep up the race of labourers ; and it has
appeared that the maximum of wages is that
quantity of the products of industry which re-
mains, after replacing the advances, not consisting
of wages, and paying the capitalist the lowest rate
of profit, which will induce him to continue the
work of production.

Now, when climate and custom have fixed the
minimum, below which the reward of labour can-
not fall, and when the quality of the soil, the skill
with which labour is applied, and the degree of
freedom which is allowed to trade, have deter-
mined the maximum, beyond which it cannot rise,



14



what is the precise circumstance which fixes the
point at which actual wages settle ?

In order to put this important question in a
more exact and definite form, we will assume that
the minimum wages of the labourer are five
quarters of corn a year ; and that the minimum
profit, for the sake of which the capitalist will
make advances, is seven per cent. ; and we will
suppose that a farmer, by employing 100 labourers,
and advancing 500 quarters of corn for seed
and implements, obtains a reproduction of 1605
quarters. In this case, what is to determine the
wages which the 100 labourers shall receive ?
They may receive only 500 quarters, should wages
fall to the minimum; or they may receive 1000
quarters, should wages rise to the maximum ;
because, as the farmer obtains a reproduction of
1605 quarters, he may, in addition to his advance
of 500 quarters for seed and implements, pay 1000
quarters to his 100 labourers, and still have, upon
this whole advance of 1500 quarters, the minimum
profit of seven per cent., which is sufficient to
induce him to continue his business. What then
determines whether the 100 labourers shall receive
as their wages 500 quarters or 1000 quarters,
or some medium quantity between these two
extremes ?

The answer to this question is, that the one and
the only cause which can determine where, between


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