io POLITICAL ECONOMY 



number of workmen, employing say only 50,000?. in wages at 

 his original mill, and diverting the balance of 50,000. to in- 

 crease other investments or his personal expenditure, or will he 

 curtail his expenditure, and provide 90,OOOZ, as wages for his 

 workmen next year too ? As a matter of observation, many 

 manufacturers will continue the production to the extent of 

 100,OOOZ. per annum, and will increase the amount paid as 

 wages. Their gains do not represent the profits on the wages 

 fund alone, but on the fixed capital as well. If they diminish 

 the rate of production in their factory by investing a large 

 portion of their gross annual receipts elsewhere, they greatly 

 diminish the returns on their fixed capital, so much indeed 

 as to outweigh any moderate advantage they can obtain by 

 investing annual receipts more profitably. This consideration 

 will often lead a manufacturer to continue his business with in- 

 creased wages and diminished profits. No manufacturer has 

 come before the Commission to say, ' I have always, or generally, 

 diminished my business whenever I have had to give increased 

 wages ;' and yet, whenever a man does continue his business at 

 the original rate of production, with increased wages and con- 

 stant, or nearly constant, receipts, he is increasing the wages 

 fund or his circulating capital in the face of a diminished profit. 

 Should he obtain an increase of price from the consumer, our 

 argument is strengthened. 



The greatest portion of the circulating capital of a country 

 constituting its wages fund is of this nature. Year by year the 

 savings of other classes add to this fund, but it is mainly com- 

 posed of the price received by the manufacturer for his produce, 

 a portion of which he habitually re-invests in the payment of 

 labour without any conscious effort to save. We now assert that 

 the proportion which he does so re-invest is not necessarily 

 smaller because wages are larger or profits smaller. A manu- 

 facturer will generally work his mill or factory to the utmost 

 BO long as he does obtain a profit ; he does not voluntarily set 

 aside a certain sum for wages, diminishing and increasing that 

 sum according to profits, but he employs as many men as he 

 can, and pays them what he must. How this ' must ' is de- 

 termined, shall be considered further on. Obviously there is a 

 limit to action of this sort. Any conscious savings he will 





