THE PRINCIPLES BY WHICH WAGES 
ARE DETERMINED. 
ADDRESS TO SECTION F (ECONOMIC SCIENCE AND STATISTICS) BY 
W. L. HICHENS, 
PRESIDENT OF THE SECTION. 
I HAVE chosen as the subject of my address ‘ The Principles by which 
Wages are Determined’ because I think the most burning question in 
the industrial world to-day is the proper apportionment of the proceeds 
of industry between labour and capital. A strong feeling exists in the 
minds of many that the share of capital is too large and that labour is, in 
consequence, underpaid. ‘There are those, of course, who hold with 
Mr. Tawney that capital is functionless and therefore entitled to no 
reward. It is not my intention to examine the grounds for this state- 
ment, for no one who has any experience of business can fail to recog- 
' nise that under the existing organisation of business capital has a very 
definite function—that it is indeed essential to any industrial organisa- 
tion. If there is anyone in this room who has had dealings in the City 
for the purpose of raising a loan he will feel acutely—not merely the 
unpleasant consequences that would have awaited him had none of this 
functionless capital been placed at his disposal—but also the fact that 
the capitalist has a very definite idea of the importance of his own 
function. The capitalist would, indeed, automatically cease to exist if 
he were not needed and fulfilled no function, and the fact that every 
industrialist is obliged to go to him—often on bended knee—is sufficient 
answer to the proposition that he performs no useful service. Acquisi- 
tive he may be, but he only acquires wealth because he supplies some- 
thing for which there is a real need. Capital must be paid for just as 
much as any other commodity, and if any given industry is unable to 
pay sufficient to attract it, that industry must inevitably languish and 
ultimately perish. 
Many of our industrial troubles to-day arise from the fact that people 
concentrate on one aspect of the industrial problem only and refuse to 
consider it as a whole. They are so intent on the rights of labour or of 
capital that they overlook the fact that each is necessary to the other, 
and that neither can exist in isolation from the other. It is clearly 
important, therefore, that both capital and labour should understand, 
and, what is more, sympathise with, each other’s point of view. And 
if I may venture a criticism it is that the capitalist has usually an in- 
tellectual grasp of the point of view of labour, but fails to bring a 
sympathetic understanding to bear on its aspirations. Labour, on the 
other hand, apart from some of the leaders whose opinions are in con- 
sequence suspect, neither understands nor sympathises with the 
capitalist standpoint. This is a real misfortune, for the two are indis- 
solubly bound together, and no progress is possible so long as they 
