The undertaker's profit is that branch of the national income in which the greater number of new fortunes are made. If a landowner has a large income, he generally considers himself obliged to make a correspondingly large outlay, one in keeping with his position; and workmen who are not undertakers themselves seldom have the means to make large savings. Besides, undertakers stand between the purchasers of their products and the lessors of the productive forces used by them in the peculiarly favorable situation which I may describe by the expression: having, as they say in card-playing, "the lead."[196a-1] When, in the struggle for prices, one party occupies a position which enables him to observe every change of circumstance much sooner than his opponent, the latter may always suffer from the effects of erroneous prices. If, for instance, the productiveness of business increases, even without any personal merit of the individual undertakers themselves, it will always be some time before the decline in the price of commodities and the rise in the rate of interest take place, as a result of the increased competition of undertakers, consequent upon the extraordinary rate of the undertaker's profit. It is difficult, and even impossible in most instances for the proprietors of the productive forces which they have rented out, to immediately estimate accurately the profit made by undertakers. On the other hand, the least enhancement of the price of the forces of production is immediately felt by the undertakers, and causes them to raise their prices. They just as quickly observe a decline of the prices of the commodities, and know how to make others bear it by lowering wages and the rate of interest.[196a-2] It should not be forgotten that the persons most expert, far-seeing, active and expeditious in things economic, belong to the undertaking class.[196a-3] [196a-4]
[196a-1] The same principle is effective in intermediate commerce, and in the intervention of bankers between government and state creditors.
[196a-2] This is much less the case in rents, for the reason that contracts here are made for a much longer term. Hence, here the farmer has as much to fear as to hope from a change of circumstances. Hence, too, we meet with a farmer who has grown rich much more seldom than with a manufacturer or a merchant.
[196a-3] If an undertaker can cede his higher reward to another and guaranty its continuance, the circumstances which enable him to do this assume the nature of fixed capital; for instance, the trade or clientèle secured by custom or privilege. If the undertaker has not the power to dispose of it in this way, the increased profit either disappears with his retirement from the business or falls to the owner of the capital employed, and still more to the land owner. Thus, for instance, how frequently it has happened that a store, which has been largely resorted to by the public, drawn thither by the business tact of the lessee, has afterwards been rented by the owner at a higher rent! (Hermann, loc. cit. 210.)
[196a-4] Lassalle's socialistic attacks on Political Economy have been directed mainly against the undertaker's profit or reward. Compare the work "Bastiat-Schulze von Delitzsch, der ökonom. Julian oder Kapital und Arbeit," 1863. By means of state credit, he would have this branch of income turned over to common labor. Dühring also, Kapital und Arbeit 90, declaims not so much against capital as against "the absolutism of undertakers." Schäffle D. Vierteljahrsschrift Nr. 106, II, 223, objects to this, that undertakers give value in exchange to unfinished products, a great service rendered even to the laboring class, who otherwise would have to resign the advantages of the division of labor.
The undertaker's profit is precisely the part of the great politico-economical tree from which further growth chiefly takes place. To artificially arrest it, therefore, would be to hasten the stationary state, and thus make general and greater the pressure on workmen and capitalists, which it is sought to remove locally. Hence Roesler, Grundsätze, 507 ff., very appropriately calls the undertaker's profit the premium paid by society to those who most effectually combat the "law of rent." The importance of a good undertaker may be clearly seen when a joint stock manufacturing company pays a dividend of from 20 to 30 per cent., while one close by, of the same kind, produces no profit whatever. But, at the same time, the socialistic hatred of this branch of income may be easily accounted for, in a time full of stock-jobbing, which last never produces except a pseudo-undertaker's profit.
CHAPTER VI.
CONCLUDING REMARKS ON
THE THREE BRANCHES OF INCOME.
INFLUENCE OF THE BRANCHES OF INCOME ON THE PRICE OF COMMODITIES.