In the higher stages of civilization, the undertaker's profit has, like the rate of interest, a tendency to decline. This decline is, indeed, in part, only an apparent one, caused by the decreased risk and the smaller indemnity-premium. But it is, in part, a real one, produced by the increased competition of undertakers.[196-6] The more intelligent landowners and workmen become, the more readily do they acquire the capacity and desire to use the productive forces peculiar to them in undertakings of their own; and the number of retired persons who live from their rents grows smaller with the decline of the rate of interest. The strong competition of undertakers now leads to degeneration, and undertakings or enterprises become usual in which the gains or losses are subjective, and are destitute of all politico-economical productiveness; for instance, the purchase of growing fruits, and businesses carried on in "margins," or differences. It is self-evident that the circumstances which retard the rate of interest, or turn it retrograde, would have a similar effect on the undertaker's profit. (§ 186.) On the whole, a rapidly growing people meet with great gains and losses, but the preponderance is in favor of the former. A stationary people are wont to become more and more careful and cautious. A declining people underestimate the chances of loss, although in their case they tend more and more to preponderate over the chances of gain. (v. Mangoldt.)
[196-1] Thus Arkwright, by his talent for organization principally, attained to royal wealth, while Hargreaves, a greater inventive genius, from a technic point of view, had to bear all the hardships of extreme poverty.
[196-2] An experienced Frenchman, Godard, estimates that of 100 industrial enterprises attempted or begun, 20 fail altogether before they have so much as taken root; that from 50 to 60 vegetate for a time in continual danger of failing altogether, and that, at the furthest, 10 succeed well, but scarcely with an enduring success. (Enquête commerciale de 1834, II, 233.)
[196-3] Thus Ganilh, Théorie de l'Economie politique I, p. 145, was of the opinion that in France's foreign trade the profit was only 20, and in its internal trade, scarcely 10 per cent. of the value put in circulation.
[196-4] Hermann loc. cit. 208.
[196-5] According to Sinclair, Grundgesetze des Ackerbaues, 1821, the profit on capital of English farmers was wont to be from 10 to 18 per cent. Only in very remarkable cases, by persons in very favorable circumstances, was from 15 to 20 per cent. earned; that is, on the whole, less than in commerce and industry. In the case of farmers of meadow land, 15 per cent. and even more was not unusual; because there is a need of less outlay here, but more mercantile speculation, especially in the fattening of live stock.
At the end of the last century English farmers expected 10 per cent. profit on their capital. (A. Young, View of the Agriculture of Suffolk, 1797, 25.) And so Senior is of opinion that, in the England of to-day, industrial enterprises of £100,000 yield a profit of less than 10 per cent. a year; those of £40,000, at least 12½ per cent.; those of from £10,000 to £20,000, 15 per cent.; smaller ones 20 per cent. and even more. He makes mention of fruit hucksters who earned over 20 per cent. a day; that is, over 7,000 per cent. a year! (Outlines, 203 seq.) In Manchester, manufacturers, according to the same authority, turned over their capital twice a year at 5 per cent.; retail dealers, three times a year at 3½ per cent. (Ibid, 143.) Torrens, The Budget (1844), 108, designates 7 per cent. as the minimum profit which would induce an English capitalist to engage in an enterprise of his own. According to v. Viebahn, Statistik des Regierungsbezirks Düsseldorf, 836, I, 180, the undertaker's profit, i. e., the surplus money of the value of the manufactured articles, after deduction made of the raw material and wages, in the Berg country, amounted to, in 81 iron factories, 146,400 thalers; in 6 cotton factories, to 21,200 thalers; in 15 cloth factories, to 14,725 thalers; in 4 worsted factories, to 1,700 thalers; in 4 brush factories, to 800 thalers; in 2 tobacco factories to 10,220 thalers; in 2 paper factories, to 7,400 thalers; on an average, 1,924 thalers; although many undertakers earned only from 200 to 400 thalers, and some few from 5,000 to 10,000 thalers.
[196-6] This is, of course somewhat oppressive to many individuals, and hence we find that in those countries which are unquestionably making great advances in civilization, there are so many complaints of alleged growing impoverishment. Compare Sam. Fortrey, England's Interest and Improvement, 1663; R. Coke, A Treatise wherein is demonstrated that the Church and State of England are in equal danger with the Trade of it, 1671. Britania languens, showing the Grounds and Reasons of the Increase and Decay of Land, etc., 1680. And per contra, England's great Happiness, wherein is demonstrated that a great Part of our Complaints are causeless, 1677. Analogous claims might be shown to exist in Germany by a collection of almost any number of opinions advanced during the last thirty years.
UNDERTAKER'S PROFIT.—HAVING THE "LEAD."