2 3 o THE POPULAR SCIENCE MONTHLY. 



during the week, and after work has stopped and he has paid his 

 hands on Saturday night take a new inventory of his capital. 

 The item of money will be less, for it has been paid out in wages ; 

 there will be less raw material, less coal, etc., and a proper deduc- 

 tion must be made from the value of the buildings and machinery 

 for the week's wear and tear. But if he is doing a remunerative 

 business, which must on the average be the case, the item of 

 finished products will be so much greater as to compensate for all 

 these deficiencies, and show in the summing up an increase of 

 capital. Manifestly, then, the value he paid his hands in wages 

 was not drawn from his capital, etc." (Progress and Poverty, page 

 53.) You will observe the qualification allowed in the sentence, 

 " if he is doing a remunerative business, which must on the aver- 

 age be the case " — a qualification that admits the incorrectness of 

 Mr. George's theory applied to unremunerative businesses. Non- 

 paying industries are not rare. One statistician tells us that from 

 ninety to ninety-five per cent of all those who embark in business 

 in this country — the majority of whom are employers of labor 

 and pay out wages — fail. It seems extraordinary that an able 

 thinker like Mr. George could believe he had discovered a gen- 

 eral law which admittedly fails in so many instances. In apply- 

 ing the theory to the case of the Great Eastern steamship, Mr. 

 George chooses a most unfortunate instance. He says : " Here is 

 a machinist or boiler-maker working on the keel plates of the 

 Great Eastern ; is he not also just as clearly creating value-mak- 

 ing capital ? " Not necessarily. It depends entirely upon whether 

 the steamship proves a success. Events since showed that she 

 was a gigantic failure. She never earned more than a mere per- 

 centage of her cost, and was finally sold for old junk. The 

 greater part of the wages paid to those workmen was drawn di- 

 rectly out of the pockets of the English capitalists, and little, if 

 any, of it was ever returned. 



The facts in all those instances selected by Mr. George simply 

 show that under certain circumstances the wage-earner brings to 

 his employer the fund out of which his wages are paid, and under 

 others (probably the vastly greater number) the wages are paid 

 directly out of the fund provided by the employer. The conclu- 

 sion is, therefore, that while Mr. George has shown exceptions to 

 the economic theory that wages are drawn from capital, he has 

 certainly failed to establish the truth of his own. 



In the broad philosophical sense, capital is always the mother 

 of labor,* which simply means that before labor is possible there 

 must be a stock or reserve fund of power— a certain potential force 

 — from which labor draws its sustenance, whether it be in the 



* See Prof. Huxley's essay, Capital, the Mother of Labor. 



