[166-4] McCulloch, Principles, 104, seq. 2d ed.
[166-5] Thus, in France, during the continental blockade, distant ocean commerce declined, and manufactures flourished instead. (Lotz, Revision, III, 134.)
[166-6] Thus, Adam Smith divides "the funds destined for the payment of wages" into two kinds: the excess of employers' income over their own maintenance, and the excess of their capital over the demands of their own use of it. (Wealth of Nat, I, ch. 8.) Senior considers it a self-evident principle, that the rate of wages depends on the size of the "fund for the maintenance of laborers compared with the number of laborers to be maintained." (Three Lectures on the Rate of Wages, 1830, Outlines, 153, ff.) But what determines the quota of the aggregate national wealth and national income that is to constitute this fund? Carey, Rate of Wages, 1835, has a very exhaustive commentary on Senior.
[166-7] Watts, Statist. Journal, 1861, 500, asserts altogether too generally that an "increase of profit increases the future wages-fund, and consequently the demand for laborers;" and that therefore every new machine useful in manufactures must also be of use to the laboring class. The employer engaged in any enterprise who has grown richer, can pay more wages, but whether he will do it depends on other causes, and even his ability to do it, in the long run, on his customers. When John Stuart Mill, Principles, I, ch. 5, 9, says that only the capital which comes into the hands of labor before the completion of their work contributes to their support, it is as if he were to explain the phenomena of prices by demand and supply, and nothing else, denying the influence of the cost of production, of value in use, and of the deeper determining causes upon them. (Supra, § 107, note 1.) Compare Roesler, Z. Kritik der Lehre vom Arbeitslohn, 1861, 104 ff. In England, the superstition which to a great extent attached to the idea "wages-fund," was first questioned by F. Longe, Refutation of the Wages-Fund Theory of modern Political Economy, 1866. See also Thornton, On Labour, II, ch. 1. Even John Stuart Mill dropped his earlier erroneous views on this subject. (Fortnightly Review, May and June, 1869.) Not, however, without exaggeration, as is proved by his well-known saying, that laborers needed capital but no capitalists. Still, even here, he tenaciously holds that a rise in wages which increases the price of some classes of commodities, must decrease the aggregate demand for commodities. But better paid workmen may now increase their demand for commodities to the same extent that the purchasers of labor who do not gain as much as before, or the consumers of the goods whose price has been enhanced diminish theirs. (Brentano, in Hildebrand's Jahrbb., 1871, 374.) Only, this increase need not affect the very commodities influenced by the decrease.
[166-8] Thus, the person who builds his own house is wont to pay his workmen better than a contractor or builder by profession; and the maker of the entire manufactured article, as a rule, suffers less frequently than the maker of only half of it. (Hermann, Staatsw. Unters., II, Aufl., 471.)
DIFFERENCE OF WAGES IN DIFFERENT BRANCHES OF LABOR.
All the causes which make wages higher in some branches of labor; than in others, may be divided into three great categories.[167-1]
A. Rare personal acquirements. The supply of labor requiring rare personal ability will always be limited.[167-2] Such labor must, naturally, have great value in use, when a small supply of it is met by a great demand.[167-3] It sometimes happens that a species of labor can be utilized only by a small circle of persons who demand it. But the wages for it is raised very high by the great solvability of those who do demand it. How frequently it happens, for instance, that a minister is paid a very high salary for the ability he possesses of making complicated and dry affairs of state attractive to the personal taste of his sovereign.[167-4] Here, particularly, the confidence which the workman inspires by his skill and fidelity enters as an element. Without this confidence, there are many kinds of business which would be crushed out entirely by the control it would be necessary to subject them to, and others would not be possible at all.[167-5] When, for instance, in a large manufacturing establishment, understrappers, workmen, foremen, subordinate superintendents, directors, etc., draw different salaries, their pay, if equitably graduated, should be in harmony with the principles laid down in § 148, The head of a manufacturing establishment, for instance, who has organized a more perfect division and coöperation of labor, himself, and by means of which ten men are enabled to perform the work before performed by twenty, may equitably retain, as the reward of his organizing power, a considerable amount of what was previously paid out in wages. Louis Blanc's proposition, that all should receive equal salaries is, as Bastiat remarks, equivalent to the assertion that a yard of cloth manufactured by a lazy or unskillful workman is worth as much as two yards manufactured by an industrious and skillful one.[167-6]
Such qualified labor, as is treated of here, may be most accurately estimated, the quality of which supposes a certain cost of acquisition. This cost may be considered as the outlay of so much capital, which, with interest,[167-7] should come back to the workman in his wages. Otherwise, others would be deterred from entering the same business by the example of his loss. Here, especially, it is necessary to take into account the long period of apprenticeship or tuition, and the large fees paid for the same; and this, whether they depend on the natural difficulties in the way of acquirement or on artificial obstacles opposed to freedom of competition.[167-8] The influence of these circumstances is particularly great in those kinds of labor which require a "liberal" education.[167-9] Among the costs of production proper, peculiar to this labor-force, must be included, also, the necessary support of the workman, during the interval between the completion of his studies and the beginning of his full reward.[167-10]