TRA DE- UNIONS 1 1 



generally invest in other undertakings, and if his profits fall 

 below a certain point, he will endeavour in all ways to divert 

 the use of his fixed capital to other objects. He may be unable 

 to control his personal expenditure ; and so, if wages rise and 

 profits fall beyond a certain point, his contribution to the wages 

 fund will diminish, and possibly disappear, owing to his ruin. 

 But how is this certain point to be determined ? Are all manu- 

 facturers habitually carrying on their business at such profits, 

 that should these diminish they will diminish their annual 

 payments in wages ? We think not, and if not, the wages fund 

 may increase in the face of diminished profits. 



Let us turn to the second class of capitalists, men who, not 

 being manufacturers, save to invest money, with the object of 

 obtaining an assured income as the reward of their saving. A 

 portion of each new saving will find its way into the wages fund. 

 Will these savings be increased or diminished as the rate of in- 

 terest is high or low ? On the other hand, a high rate of interest 

 is a greater temptation to investment than a low one ; but then 

 with a low rate of interest, a much larger sum must be invested 

 to return a given income, and a given ideal income, of say 

 1,OOOZ. per annum, is generally the object of investors of this 

 class. Is it clear that the saving for investment in countries 

 with a high average rate of interest is greater in proportion to 

 the incomes than in countries where a low rate of interest 

 obtains ? We doubt it extremely ; indeed, we entirely disbe- 

 lieve that saving increases in proportion to the rate of interest 

 to be obtained. We do not belie v-e that men determine if they 

 can get 10 per cent, that they will invest l,000/.,but if they can 

 only get 5 per cent, they will spend it. The contrary proposition 

 is more nearly true : if men can get 10 per cent, for their money 

 they will consider they have made a sufficient provision for their 

 family by investing 10,000/. ; if they can only get 5 percent. 

 they feel compelled to invest 20,000/. before retiring from 

 business. In fine, both with the manufacturer re-investing old 

 savings in his own business, and the professional man investing 

 new savings, diminished profits on capital lead to diminished 

 expenditure, and not always or generally to diminished saving. 

 The reason why this fact is very generally denied may probably 

 be a confusion between profits and the fund out of which savings 



