October 23, 1919J 



NATURE 



16 = 



Ihat it will be greater in the future. Hence the most 

 important task — more important immediately than the 

 improvement of the division of the product — incumbent 

 on employers and workmen alike, is to increase the 

 national product, and that without sacrificing- leisure 

 and the amenities of life." 



I shall have failed in my object if I have left my 

 hearers under the impression that I am wedded to or 

 pleading for any particular division of the wealth of 

 the country. We hear much talk about abstractions 

 called "capital" and "labour." The terms are con- 

 venient enough if we do not let ourselves be deluded 

 with the idea that they mean more than the sum of 

 those who own the capital or supply the labour. 

 Labour itself is a somewhat ambiguous term. Until 

 comparatively recently the members of the "labouring 

 classes " so called thought it was synonymous with 

 the man who laboured with his hands. The Labour 

 Party itself has been fain to enlarge its definition so 

 as to include all those who "labour by hand or brain." 

 Not one of us is independent of capital. The most 

 poverty-stricken member of the community relies as 

 implicitly on it as the richest among us. To talk of 

 the "abolition of capital " is to use a form of words 

 which is absolutely meaningless. What most people 

 who use them really mean is one or other of two 

 things, sometimes both at the same time — either that 

 the capital is in the wrong hands and that it should 

 not be held in the way or to the amount which is at 

 present the case, or that the division of the joint pro- 

 duct of capital and industry is defective and should 

 be altered. 



I see great difficulty in saying no man's fortune shall 

 exceed some given sum, and even in saying no man 

 shall bequeath to his survivors more than some very 

 moderate amount. In either case I should fear en- 

 dangering that building up of capital which, however 

 it may be divided, is essential to our national progress. 

 When we come to the division of the joint product 

 of industry and capital other considerations become 

 apparent. The question at once arises whether any 

 other division would have been jx>ssible in the past, or 

 could be accomplished in the future, without great 

 changes in the way in which the product arises. Re- 

 ference has already been made to my own examination 

 of this matter, which leaves me in no doubt that any 

 considerable increase of the part of labour would have 

 left the share of capital so small as to have stifled 

 enterprise. 



This does not mean that large fortunes may not 

 have been made by those whose skill and industry 

 and enterprise enabled them to seize the advantages 

 presented to them. 



Those who cry out against capital overlook the fact 

 that in modern industries no man can be set to work 

 except by means of a capital sum first found for the 

 purpose. In the industries I know best something 

 above 200L is needed to put a man to work. The popu- 

 lation of this country increases at the rate of about 

 I per cent, per annum. ' This means that for every 

 1000 men to whom employment is being given, about 

 ten 3'ouths are ready to be set to work each year, and 

 something above 2000Z. must be found year by year to 

 give them employment. 



One further point must be made. Men see some 

 great enterprise (and the railways will serve very well 

 as an example), and look upon it as a capitalist or- 

 ganisation. But when the circumstances are ex- 

 amined it is found that it consists of a multitude of 

 small holdings, and comparatively few of large amount. 

 In the North-Eastern Railway something like 60,000 

 shareholders hold the 83,000,000?. of capital of various 

 denominations — say, on the average, some 1400L each. 



NO. 2608 VOL. IO4I 



Consider the widespread distress which would be 

 caused if the income from the sum were to cease. 



I have made a similar calculation for a large 

 colliery undertaking in which I am interested, 

 with "the follov.ing result. The capital in shares 

 and debentures is about 1,300,000/. There are 

 a little more than 1800 shareholders. We employ 

 5500 men. Each shareholder therefore provides 

 employment for about three men, and holds on the 

 average 725Z. Before long we shall require further 

 capital. We see our way to enlarge our operations 

 and so to provide employment near to their homes for 

 the fifty to sixty youths who, each year, grow to man- 

 hood, and need productive employment if they are not 

 to become burdens on the community. We hope our 

 1800 shareholders will have laid by enough to provide 

 the 12,000/. a year which is necessary for this purpose. 

 We are assuming they or someone will provide it, for 

 we are using our resources (reserves and depreciation 

 funds) in this way, and shortly it will be incumbent 

 on us to fund this obligation and add it to our capital. 

 We are thus brought to the last subject which I 

 desire to consider with you — the widespread tendency 

 towards what is somewhat vaguely called Nationalisa- 

 tion. It may be questioned whether any large number 

 of people have very clear ideas what is meant by 

 the term. 



Let us assume for the present purpose that it signi- 

 fies that the State shall become the owner of any 

 enterprise which is nationalised — as it owns the busi- 

 ness of the Post Oflfice, the Telegraphs, and the Tele- 

 phones. Let us ask what advantage will be gained 

 bv the assumption of ownership. A centralised man- 

 agement, even of so simple a business as that of col- 

 lecting and distributing letters and parcels, has not 

 been an unqualified success. Where the business is 

 more complicated, as in the other examples, the success 

 has been even less conspicuous. What reason have we 

 to hope, then, in such intricate matters as the railways 

 or the mines, better results will follow? 



The incentive of individual gain will have dis- 

 appeared, and with it the readiness to accept such 

 risks as those to which reference has already been 

 made. We may easily find that the developments 

 needed to find employment for our young people are 

 not forthcoming, for without such risks being run 

 no growth of employment will take place. Unless I 

 am much mistaken, a great temptation will be put 

 before politicians to make concessions to the huge 

 armv of voters who will be in the direct employment 

 of the Government. 



The experience of these five years has failed to 

 teach the lesson that you cannot touch one branch 

 of labour without affecting all others. An_ advance 

 of wages given to one section will inevitably be 

 demanded bv all others. The result will be prejudicial 

 to the whole community. As regards international 

 trade, we may find ourselves shut out of foreign 

 markets because our wages are made artificially high, 

 just as we should be excluded if, for example, the 

 shipowners could compel us to pay inordinate freights 

 on some indisoensable raw material like cotton. 



.\ cure wilf speedily come, but it may come after 

 great suffering has been inflicted on the whole com- 

 munity. Parliament can easily impose on the em- 

 ployer, whether a private individual or the State, the 

 payment of a certain wage if a man is employed, but 

 one thing it cannot do. and that is compel the em- 

 ployment of the man at a wage which the price of 

 the' article he produces will not suffice to pay. The 

 man will remain unemployed. That is the drastic 

 remedy which economic law imposes. We may escape 

 it bv making uo from some other sour-e the deficiency 



