TRADE-UNIONS 13 



irregularities in receipts and payments. This fund in money, 

 or in assets easily convertible into money, forms a kind of dis- 

 tributing reservoir, and might be called the reservoir fund. If 

 it were not for a fund of this kind the richest man might be in 

 continual straits for a few pounds because receipts do not arrive 

 daily, but at intermittent and at more or less uncertain times. 

 Xo solvent manufacturer (except in times of panic) would have 

 any difficulty in doubling the wages of all his workmen next 

 week and for many weeks following (though he might ulti- 

 mately be ruined by the process), any more than a solvent con- 

 sumer would have any difficulty in doubling his weekly expen- 

 diture, though he might ultimately leave himself without a 

 penny. All money received by a manufacturer is first paid into 

 the reservoir fund ; from that fund it may pass into four distinct 

 channels : it may be spent, it may be invested in fixed capital 

 unproductively. in fixed capital productively, or finally, in circu- 

 lating capital out of which wages are paid. If the manufacture 

 is profitable, the receipts paid into the reservoir fund continually 

 exceed the sum returned into the circulating channel ; an in- 

 crease in the wages of the workmen increases the sum to be 

 returned, and diminishes the sums flowing into the three other 

 channels. Even if the trade is not profitable, wages may be in- 

 creased, but only by drawing back through the second or third 

 channel sums previously invested, until the manufacturer is 

 wholly ruined. To allow this last re-absorption, savings made 

 by some other person are certainly required, and in hard times 

 these savings may not be forthcoming, so that in common 

 language our manufacturer cannot realise his a>>ets. He will 

 be all the sooner ruined in this case by unprofitable trade ; but 

 so long as trade is profitable, in order to pay increased wa^es 

 he need only divert out of the reservoir fund what, up to that 

 time, he has habitually spent or consumed as income. Thus 

 there is no material obstacle to an increase of wages, so long as 

 any profit whatever is made by trade. 



Having sifted the wages fund argument, we find that it 

 tells us nothing as to the possible price of labour, because it 

 does not tell us how the wages fund itself- is determined. It 

 may increase by obtaining a larger share of the gross receipts 

 from the sale of produce, though profits may be less ; it may be 



