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The Pamphlet Collection of Sir Robert Stout: Volume 70

As to Capital

As to Capital.

Socialism proposes to abolish private capital as "a grinding tyrant," And some who are not socialist yet blame the existing system of capitalist employment of labor as bring- page 31 ing woes upon the working-classes, through making selfishness, at the impulse of competition, to be the mainspring of business life. We will begin at the beginning, and look at the things, and allow them to explain themselves. As a matter of fact, under the existing régime of capital, the working-classes have earnings as large as they are prepared to make a good use of. It is also a matter of fact, that it is impossible for a capitalist, or for any one else, to prevent that happy condition, so long as working-men are not made slaves, as socialism would make them. For if they be free, the capitalist cannot obtain the labor he wants unless they be satisfied with the wages-price he offers for it. But now, in a straight forward, simple way, let us go into the A B C of the matter.

What is "Capital"?—It is commodity available for production because not required for consumption. It is money that can be applied to employment of labor. It is ten shillings which a frugal Frenchman in London wishes to invest in a pair of shoes, hoping to sell them next week at Paris for eleven shillings. An English workman wishes to obtain employment, that his children may have food. The two men enter into a free contract of labor. Consequently, a young Parisian dances to school more gaily in the elation of new shoes, the London children have supper, and the frugal Frenchman adds one shilling to his capital.

Here we seem to see, that to make capital a grinding tyrant, and wages woful to the workman, would be absurd; as it would be, to say that sunrise makes the birds to mourn, and the flowers to fade. It seems to be for the workman as a well in the desert, and for business life "as heart's blood to the stricken deer." But let the capital be £ 10,000, which employs 100 workmen, who support 100 families, which go to make "sweet Auburn, loveliest village of the plain." Still we see no "grinding tyrant," nor villainous Legree; but (Ruth ii. 1—4) in the harvest a gracious grandee page 32 Boaz, with a blessing for the reapers, and gleanings for the widow forlorn, and a necessity of his nature "to scatter bounties o'er a smiling land."

Now, however, to make sure that we see the matter through and through, and round and round, let us look at it closely in a number of cases.

First Case.—The capitalist is a co-operative association of working-men, every one of them contributing £100 of the £10,000 and all sharing alike in the profits, losses, and risks. What would be the meaning and effect of raising the wage-rate from ten shillings a day to twelve? Suppose that ten shillings is all that the business will really yield. Then they are living on their capital to the amount of £10 a day: the business is bleeding to death at the rate of £3,000 a year. They are ruining the 100 families, and impoverishing the thriving town, as surely, though not so visibly, as if the 100 workmen were taken out and. Shot to death at one stroke of the bell. In this case clearly, the most vital interest of the whole community, and especially of the working-class, is, to guard that capital most sacredly, as the soldier shields his heart in battle; or as brave Horatius, in barring the way to the heart of Rome, was nerved by the thought that he was shielding lives more precious than "the ashes of his fathers, and the temples of his gods."

Second Case.—The capitalist is an individual employer, whom we will call Samuel Budget!. He is a father to his work-people: taking a practical interest in their economics, education, recreation; and leading them in the service of God. But, with a warm heart in his bosom, he has not a soft head on his shoulders. He began, when a very small boy, with walking a number of miles to sell for a penny (?) a horse-shoe he had found on the road. With him, "business is business." at which no man can outwit him. Suppose that he is entreated, in the name of human fellowship and universal brotherhood, to raise the wage-rate two shillings page 33 a day. Against such a proposal he is hard and unyielding as a flint. It only strikes out of him a flashing fire of scorn, as if you had implored him, for mercy's sake, to soften the rigors of the multiplication table. And it is well for the workpeople that this "master" is masterful, with an unbending soul of steel. Where is the £10 a day to come from? Shall he add so much to the price of his commodities?—his customers, i. e., the business, wilt leave him. If he pay the extra two shillings a day out of his own pocket, the business will bleed to death at the rate of £3,000 a year.

Third Case.—The capitalist has a second £10,000, which is not in the business—as the life's blood is in the body. It is simply private means. And he lays it out in raising wages from ten shillings a day to twelve. First, that is not business, but charity, like Earl Derby's subscription of £10,000 to the Manchester cotton famine fund. It is a bonus, which Budgett might as well have given to another man's work-people. It is really outside of the business: as if an eccentric wealthy grocer should present (not as ground-bait) an ounce of coffee to every purchaser of a pound of tea at his shop. Such a freak of liberality would really do harm. There is a corrupting element of pauperism in working-men's receiving two shillings a day, not out of the business, but really as a gift. And such dependence upon windfall may lead into an expensive manner of living: a bequest of £1,000 each to twelve families in a Scottish Highland glen was thus the ruin of them all but one (teste the head of that one). Further, there would be a tendency to awaken discontent elsewhere, and so spread mischief in the general business of the community. We need not, however, wear ourselves out with these apprehensions. For, 1, The £10,000 would not last long enough to do much harm: there would soon fly away the last feather of a goose that does not lay golden eggs. And 2. Budgett is not a goose, but a "successful page 34 merchant," with whom business is business. Money thus not productive goes away, after doing some harm in disturbing good business habits. If the money were laid out in doubling the business, or in establishing a new business, it would support another100 families, and help to make a second Auburn flourish, (So Jevons.) But all this time,—

What about the "enormous profits" in which, we hear, the capitalist is "wallowing"? We shall see about that under the fourth case. But before proceeding to that, we will take a side-look at the statement, often heard, that the workman has a right to the profits, because he is the sole producer. I. Is he the sale producer? (i) Without machinery his working is only beating the air: which—Paul knows—will never produce a tent. (2) Without raw material, toiling at machinery would comparatively be fruitless as the infamous tread-mill. (3) Perhaps the sole producer is capital employing machinery plus material plus labor. But supposing that the laborer is the sole producer, then 2. Does that give him a right to the produce? His labor which went into the production is not his now. He sold it, and got the price of it: just as he bought commodities at the [unclear: dealers], and paid the price of them. If the workman have a right to the employer's profits, has not the dealer a right to the workman's dinners?

But now we shall see that perhaps it is not worth while to raise bad blood by debating that punctilio about right to profits.

Fourth Case.—In this case the workmen share the profits, upon, say, this plan, That at the close of the year an actuary, on behalf of the work-people, examines the books of the business; and, after a fair deduction on account of the employer's interest in the enterprise, the profits are divided among them in proportion to the respective amounts of their wage-earnings in the course of the year.1 The principle of

1 Plan expounded by Professor Jevons in Essays in Social Reform.

page 35 this plan is as old as the time of Jacob and Laban, and is familiar in our existing pastoral economy: in cases in which a shepherd, besides fixed wages, has an interest in the increase of the flock. But of late the plan has been tried in the more complicated industries both of France and of Britain.

Benefits expected from it are: I. To the work-people, a chance of profits, a happy sense of personal interest in the business, a cordial incentive to steady industry, and immunity from strikes and the fear of them; 2. To the employer, immunity from strikes and the fear of them, a happy relation to the work-people, and an increased assurance of obtaining fair interest on his capital invested in the business, and a fair salary for labor in managing. Here the employer is seen parting with those "vast profits" in which he was supposed to "wallow," But really he has never cared much about them; and he now has got what he cares much more about, in that augmented assurance as to interest and salary. On the other hand, the workman's interest in profits can be seen to be quite insignificant as compared with his interest in the wage-earnings of steady employment.

Let us consider what, really, is "profit"—as appearing in this case.

It is not what remains of net returns from sale after deducting the amount of wages paid in course of the year. There also has to be deducted, before we reach a remainder which is profit, the amount of the following items on the employer's account; 1. Fair interest on his capital. It would have been bearing interest elsewhere if it had not been in this business. He is not to give the use of his money gratuitously: does a land-owner give the use of his land without rent? That would be charity, not business. 2. A fair salary for his management of the business. He may really be a Wellington of business, worth a hundred ordinary managers, But into the present calculation there page 36 enters only ordinary salary, such as he would be earning in the service of others with the same expenditure of skilful energy. 3. Insurance against business losses, along with provision for keeping up the machinery, etc. The expense of this has to be met out of ordinary revenue: otherwise, so far, what goes on is not business, but gambling at the risk of capital, which is, risk of throwing the work-people out of employment and means of living.

When these items are deducted there may be nothing in the "profit" margin. There may be a loss: perhaps a ruinous loss (and the workmen have no risk of that). The prudent employer is satisfied (though there be no "profit") if he obtain for himself, as means of living and thriving, the above items 1. and 2. A speculative business may have windfalls of large profit; but in such a business employment is precarious, while to an individual workman the amount coming from a large "profit" might be comparatively insignificant. [unclear: For] the most important thing to a workman—steady employment—cannot be made sure of except in a steady-going business, where the chances of profits are small. And thus, happily for all parties, the mere speculative matter of profit is in reality of small importance.

Now let us pause to consider the moral interest of the matter here appearing. We saw that the actual amount of wage-earning is sufficient if wisely used. But if there be anything dishonest or rotten in the nature of the economy, that result must be precarious, and those who believe in God cannot hope for a blessing on prosperity so obtained (Prov. i. 32). It is therefore a thing to be truly thankful for that we have seen an honest, wholesome economy in what is the very heart and the backbone of the interest of the great laboring class, whose economical condition is in large measure equivalent to the happiness or unhappiness of mankind. And the talk about selfishness as resulting from competition may now be disposed of in few words.

page 37

What is "selfishness"?—It is nota regard to one's own interest. Wise self-regard is (Bishop Butler) a strong virtue: the want of it is vicious weakness—e. g., of improvidence or prodigality. The existence of it is assumed, as desirable and right, in the highest law of social duty,—"Love thy neighbor as thyself." What makes real selfishness, in action or in disposition, is self-indulgence at the cost of what we ought to guard; e. g., of religion, patriotism, family, personal freedom. Socialism, sacrificing all these interests for a mess of pottage, is a perfect selfishness of the basest sort.

On the other hand, with reference to the received economic order, 1. Is it selfishness on the part of a co-operative association, to be influenced in not charging a higher price than is needful, by the fact, that to raise the price of one's goods is to close the market against the sale of them? 2. Is it selfish on Budgett's part to be influenced in his adherence to that honesty, by the fact of its being the best policy, En the interest of "his own, especially those of his own house"? On the other hand, 3., as to the workman, if he can live on ten shillings, why should he not accept this rate of wages, which will enable his employer to live? Why should it be reckoned a fine thing on his part to stand out for twelve shillings when ten shillings is the real market value of his labor? Is it because of the wrong done to his master, that a man is made a hero by battling, in his own selfish interest, for wages that will add ten shillings to the price of his neighbor's coat, or add a penny to the price of the loaf for all mankind? "Clear your mind of cant," is a precept not always practised where it is praised.

Does competition make business life to be selfish? "To the pure all things are pure." Judas (John xii. 6) will find opportunity for the dirtiness of selfishness in his treasurer-ship of sacred money for the poor. The question is about the nature of competition, not about the possible vileness of a competitor. Competition is in itself a clean thing. Ri- page 38 valry can be generous. The closest human friendship may be between two men who are rivals in the same pursuit, each of them bent with all his heart in excelling the other. Each of them may be prepared to rejoice with all his heart when it is the other that is crowned. The generous rivalry of competition in the public games may appear (cf. 2 Tim. ii. 5; 1 Cor. ix. 25) to have been the one thing in the open air of heathen life that was rested upon with pleasure by the eye of Paul. The feeling which competition, by its own nature, awakens in the heart is emulation: that to which (2 Con viii, 1–9). rising up toward the cross, Paul appeals in his endeavor—of love's provocation to good works.—to stir up the laggard Corinthians (cf. 2 Cor. xii. 13) by the example of their generous neighbors in the north (cf. Phil, i. 7; iv, 14). But a man importing selfishness hito competition will find opportunity for that ungodliness (Act. xx, 35) of inhumanity.

The capitalist is left free to make what use of his own he may choose, as he shall answer for it (Col. iii. 23–25; Eph. v. 9). Though he carry on his business on safe and sound business principles, he is not, in his relation to his work-people, tied to do nothing but business. In his servant he may see "a brother beloved" (Philem. 16). At a dismissal of factory operatives for the day, one was asked by Lord Panmure (" Foxe Maule"), how long he had been there; the answer was, "fifty years." In all those years there was not a day in which the Messrs. Coxe had not, at [unclear: Lockee], along with1 a strict adherence to business principles, twenty-four hours all full of "opportunity" of brotherly kindness to that man, such as his lordship had opportunity of showing to the tenants on his estates (in Eph. v. 16 the Greek word for "time" is that for "opportunity" in Gal. vi. 10—and for "season" in other places). Life is all one great "opportunity" (Act. x. 38).

A Glasgow merchant, the first Campbell of Tulliechewan, page 39 —who in his youth heard Chalmers preach the "Commercial Discourses,"—can tell in his old age (he told the present writer) that all through his prospering life he has laid himself out for opportunities of putting capable men (and women—we have been reminded at the Antipodes) on a way of business for themselves. Co-operative association is only one of those ways; and often it may not be open, or may not be the best in the particular case. An Australian grandee, who perhaps is by newspaper patriotism described as a "bloated capitalist" whose delight is in "keeping the poor man off the land," may be able to show a whole region that is occupied by thriving sheep-farmers who once were his [unclear: tenants], and whom at the seasonable time he helped on to the land, because he knew that they were worth helping. A flock-master, who is a candidate for parliamentary honors, is by the paper patriotism found out as having land of his own, and consequently being" a tyrant squatter": where-upon P. [unclear: I]., a quiet citizen, well esteemed, writes to the paper, that he, P. I, left that squatter's employment with a cheque for £1950, and knows that the only use the tyrant makes of his freehold has been, "to give the shepherds a chance."

In the ordinary course of his business relation to his work-people, an employer may (as in the case of domestic service) have abundant opportunity of showing personal kindness and respect—"honor all men." There may be the reality and the effectual practice of earnest good-will to them, though they should be away on the Hoogly, or on the sea, or scattered in hamlets and villages round the counties adjacent to Belfast and Dundee. It may or it may not be suitable to adopt the plan of workmen sharing profits. What does it matter? If the plan should be discontinued by the Dennys of Dumbarton, the royalty of heart will remain, to be a sunshine of working existence in the establishment.

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The employer's great opportunity is the business itself.—For the greatest material service a capitalist can do his work-people is, just to keep his business going in life and health, so as to give steady employment at normal wages. And there are cases in which a capitalist, who, at a darkly perilous time, could save himself and his family by timely withdrawing from the business, nevertheless holds on for the sake of the work-people and their families. He perhaps is in this way deliberately sacrificing himself for them, and racked with anxiety on their account, on occasion of that visit of keen inspection, when they look on him as an enemy who is looking down upon them as a coldly distant moon through a baleful night of storms. He, too, may have need of a kind word or look, and feel that it is not only on one side that evil may be done "through want of thought" more than "through want of heart."1 Peter (i Pet. iii. 9) will show us that (Ruth i. 1-4) the reapers ought to have a "blessing" to give to Boaz. Socialism will make impossible [unclear: all personal kindness] to work-people by destroying the relation of free contract.

1 Song of the Shirt.