Riches and Poverty (1910)

by L. G. Chiozza Money

As a result of the small amount of land required as a base for the establishment of industrial plant, or for the warehouse or stores of a distributive business, it is usually but a small part of the total product of an industrial or commercial organisation which is taken by the owner of its site. That this is usually true is obvious from the fact that of a total annual income of £1,840,000,000 the owners of area are able to exact but £106,000,000. Of this £106,000,000 again, as was pointed out in the last chapter, £35,000,000 is exacted from farmers who make the meagre profit of from £17,000,000 to £26,000,000 per annum over and above their rentals. Out of the teeming populations of the towns, with all their manufacturing and commercial activities, the owners of area are able to draw but about £57,000,000.

Now let us revert to the extraordinary figures which are the basis of the frontispiece to this volume.

We have shown that, of a total income of £1,840,000,000, as much as £634,000,000 is taken by a small group of persons numbering 280,000, or with their families 1,400,000. The great landowners are obviously amongst these 280,000 persons, and the greater part of British land rents are therefore included in their income. But, if the whole of it be included, there still remains £528,000,000 of income not derived from land rents, and taken by a very small number of persons.

The explanation of this fact is to be found in the monopoly of capital which we examined in Chapter 6. In so few hands is the greater part of the accumulated capital of the country concentrated that, in spite of the fall in the rate of interest, the lion's share of the national income is secured by a few. Each "dose" of capital may produce a smaller return than of old, but there are more "doses" of capital in the possession of the few capitalists, and these, in relation to the whole population, add but very slowly to their numbers, so slowly that we get the extraordinary congestion of capital revealed by the Death Duty returns and pictured in the table in pages 74 and 75.

Thus the monopoly of capital is a more far-reaching thing than the monopoly of land, and it secures for a number of people almost as limited as the great land-owning class, a gross profit compared with which the sum of British land rents is insignificant.

It is of interest to show, from a number of concrete examples, how the joint product of mental and manual labour comes to be shared up between those who work and those who wait.[28]

The following particulars are extracted from recent balance-sheets of ten well-known industrial joint-stock companies, each of which is representative of hundreds of others. I shall distinguish the concerns by a letter only, for I am not criticizing individuals, but seeking to illustrate the causes which produce inequalities of wealth.

Company A owns a well-known proprietary article. The balance-sheet examined is dated 1904. Its issued capital is £1,000,000, and there are no Debentures. A Profit and Loss a/c shows that the year's sales amounted to £411,000. The total expenditure incurred in manufacturing the year's production was only £218,000. There was therefore a balance of profit amounting to £193,000. That is to say, after paying all outgoings, including wages, salaries, rent, advertising, and so forth, produce which cost £218,000 to manufacture was sold for nearly twice as much. A dividend of 20 per cent. was paid for the year, and £30,000 carried to reserve. What, then, did those get who worked to produce the goods which were sold for £411,000? Obviously, a part only of the £218,000, probably not more than £100,000. If it be taken as £100,000, we see that those who worked to make the products of the Company (including the brain work of managers, foremen, etc.) obtained only £100,000, while the shareholders of the Company took £192,000. A great slice of the increment went into the pockets of individuals who certainly had not earned it.

Company B is a restaurant company and the balance-sheet is for 1903. It does not publish a Profit and Loss a/c. The issued capital is £189,000, but a great deal of this is "water," for bonus shares have been issued year after year. In the year under review the profits amounted to £76,000, or over 40 per cent. of the amount of the watered capital. We do not know what the Company pays in wages, but I doubt if it reaches £30,000 per annum, or one-half the amount of the year's profits. The employees are chiefly young girls who are paid a few pence per hour. This case is an exceedingly instructive one to the student of "unearned increment," because the restaurants are many in number and situated on most valuable sites. After paying the ground landlord's unearned increment, the sleeping partners in this concern gain, as they sleep, a hundredfold more unearned increment than the ground landlords.

Company C sells an article of food. The balance-sheet is dated 1903. Its issued capital is £2,000,000, and there are £500,000 of 4½ per cent. debentures. Much of the capital is represented by goodwill. The net profit for the year, after paying Directors' fees, amounted to £139,000. In spite of the enormous capital, the sleeping "ordinary" partners get 7 per cent. Again we do not know the wages paid, but it is hardly likely to be as much as the net profit of £139,000. If the employees get that sum, which is doubtful, the sleeping partners gain as much as all the workers who make and sell the products of the Company and manage and direct it.