It will be seen that, representing the profits of 1900 by 100 and calculating the profits of other years as percentages of 100, the total profits index number rises from 86.8 in 1893 to 112.5 in 1908.
The wages are treated in the same way, the rates of the years before and after 1900 being expressed as percentages of the rates of that year. It will be found that the index number expressing the unweighted average of the building, coal-mining, engineering and textile trades, and agriculture rose from 90.1 in 1893 to 101.0 in 1908.
It is a striking contrast:—
PROFITS AND WAGES CONTRASTED
(From Table on page 112).
| Profits. Per cent. of those of 1900. | Wages. Per cent. of those of 1900. | |
| 1893 | 86.8 | 90.1 |
| 1900 | 100.0 | 100.0 |
| 1908 | 112.5 | 101.0 |
It should be remembered that the income tax assessments are largely made upon the average of the profits of the three years preceding the year of assessment (see Chapter 21), and that the income tax has been better collected in recent years, but even when allowance is made for this the figures remain remarkable.
The table does much less than justice to the growth of profits, for this reason. As will be seen by the table on page 37, the growth of income tax payers has been chiefly in the region of small salaries, which (see p. 36) average about £200 a year. The addition of 10,000 income payers at £200 a year adds but £2,000,000 to a year's aggregate assessment. But the addition of 10,000 £200 income tax payers in a year, little as it adds to the aggregate, waters down the average income tax income (col. C, p. 112), and so lowers the Profits Index Number. If one could separate the small salary earners from the table, profits would show a much more decided growth, considerable as is the rise in the index number as modified by the small fry.
On the other hand, the Wage Index Number deals with certain trades—mining, textile, engineering, building, agriculture—which have certainly gained more in wage rates in the period than a great mass of labour outside the groups named. Therefore, while the Profits Index Number minimizes the growth of profits, the Wage Index Number exaggerates the growth of wages as a whole. On the latter point, see Chapter 2.