14 THE POPULAR SCIENCE MONTHLY. 



Impairment op the Value of Capital relatively to 

 Labor. — While the remuneration of labor has enormously in- 

 creased during recent years, the return to capital has not been 

 in any way proportionate, and is apparently growing smaller and 

 smaller. For this economic phenomenon there can be but one 

 general explanation ; and that is, that regarding labor and capi- 

 tal as commodities, or better, as instrumentalities emj^loyed in 

 the work of production and distribution, capital has become 

 relatively more abundant than labor, and has accumulated faster 

 than it can be profitably invested ; and, in accordance with the 

 law of supply and demand, the compensation for its use — interest 

 or profits — has necessarily declined as compared with the com- 

 pensation paid for labor.* 



One efficient cause of this greater abundance of capital is, that 

 every new invention or discovery produces always as much, and 

 often a much greater amount, of product on a less amount of 

 capital than was previously invested. The result of material 

 progress is, therefore, to supplement the need, or economize the 

 use of capital, and at the same time increase it. For example, 

 a first-class iron freighting screw-steamer cost in Great Britain, 

 in 1872-74, $90 (£18) per ton. In 1887 a better steamer, constructed 

 of steel, fitted with triple compound engines, with largely in- 

 creased carrying capacity, and consequent earning power, and 

 capable of being worked at much less expense, could have been 

 furnished for $35 (£7) per ton. How rapidly capital has accu- 

 mulated in recent years under the new conditions of production 

 is indicated by the circumstance that, although most of the great 

 loans which have been negotiated within the last twenty-five 



* The position has been taken, by some investigators and writers, that the great 

 decline in the value of capital — by reason of an impairment of the ability of its owners, 

 i. e., through loss of dividends on investments and of profits in business, to purchase and 

 consume the products of labor, and a diversion of capital, from lack of remunerative in- 

 come-yielding investments, into enterprises not needed and so occasioning overproduc- 

 tion—has been a prime and perhaps the main cause of all the economic disturbances in 

 recent years. That such a factor, in common with many others, has been instrumental 

 in occasioning serious disturbances, may not be questioned ; but that its influence has not 

 been in any sense primary would seem evident, when it is considered that the reason why 

 capital has increased and cheapened in these latter years is, that mankind, through a 

 larger knowledge and better use of the forces of Nature, has been enabled to produce, and 

 actually has produced, a far greater abundance of almost all material things (or, in other 

 words, a greater abundance of capital) than at any former period of their history. Capi- 

 tal, at the outset, greatly contributed to such a development, or, like the wizard in the 

 Eastern fable, it pronounced the incantation which set the natural forces at work ; but the 

 wonderful increase and consequent impairment in the value of capital was an after-result, 

 something not anticipated, and the continued progress of which the owners of capital, like 

 the enchanter, now find themselves powerless to check. The saving in the cost of the 

 freight moved on the railroads of every country, comparing 1887 with 1850, and assum- 

 ing like quantities to have been transported at the different periods, would represent 

 every year more than the original cost of the railroads and their equipment. 



