Britain for the British

by Robert Blatchford

Surely that is just and reasonable. And that is what Socialists advise.

A capitalist owns a large factory and manages it. He pays his spinners fifteen shillings a week; he sells his goods to the public at the best price he can get; and he makes an income of £10,000 a year. He makes his money fairly and lawfully.

But if the workers and the users of yarn can find their own capital, build their own factory, and spin their own yarn, they have a perfect right to set up on their own account.

And if by so doing they can pay the workers better wages, sell the yarn to the public at a lower price, and have a profit left to build other factories with, no one can accuse them of doing wrong, nor can anyone deny that the workers and the users have proved that they, the producers and consumers, have done better without the capitalist (or middleman) than with him.

But there is another kind of capitalist—the shareholder. A company is formed to manufacture mouse-traps. The capital is £100,000. There are ten shareholders, each holding £10,000 worth of shares. The company makes a profit of 10 per cent. The dividend at 10 per cent. paid to each shareholder will be £1000 a year.

The shareholders do no more than find the capital. They do not manage the business, nor get the orders, nor conduct the sales, nor make the mouse-traps. The business is managed by a paid manager, the sales are conducted by paid travellers, and the mouse-traps are made by paid workmen.

Let us now see how it fares with any one of these shareholders. He lends to the company £10,000. He receives from the company 10 per cent. dividend, or £1000 a year. In ten years he gets back the whole of his £10,000, but he still owns the shares, and he still draws a dividend of £1000 a year. If the company go on working and making 10 per cent. for a hundred years they will still be paying £1000 a year for the loan of the £10,000. It will be quite evident, then, that in twenty years this shareholder will have received his money twice over; that is to say, his £10,000 will have become £20,000 without his having done a stroke of work or even knowing anything about the business.

On the other hand, the manager, the salesman, and the workman, who have done all the work and earned all the profits, will receive no dividend at all. They are paid their weekly wages, and no more. A man who starts at a pound a week will at the end of twenty years be still working for a pound a week.

The non-Socialist will claim that this is quite right; that the shareholder is as much entitled to rent on his money as the worker is entitled to wages for his work. We need not contradict him. Let us keep to simple facts.

Suppose the mouse-trap makers started a factory of their own. Suppose they fixed the wages of the workers at the usual rate. Suppose they borrowed the capital to carry on the business. Suppose they borrowed £100,000. They would not have to pay 10 per cent. for the loan, they would not have to pay 5 per cent. for the loan. But fix it at 5 per cent. interest, and suppose that, as in the case of the company, the mouse-trap makers made a profit of 10 per cent. That would give them a profit of £10,000 a year. In twenty years they would have made a profit of £200,000. The interest on the loan at 5 per cent. for twenty years would be £100,000. The amount of the loan is £100,000. Therefore after working twenty years they would have paid off the whole of the money borrowed, and the business, factory, and machinery would be their own.