216 



GENERAL INCREASE OF WAGES, ETC. 



Mr. Ogilvy adopts the view that it would come out of the 

 pocket of the capitalist or employer; and T from a consider- 

 able practical experience in the building and letting of 

 houses, gained during five years in a large city, affirm that it 

 comes out of neither employers nor wage-earners as such, but 

 out of the pockets of all persons who 'inhabit houses, i.e., the 

 consumers of houses so to speak. For let us take an instance of 

 the process whereby the 20 per cent, increase ultimately comes 

 to fall upon the consumers of houses, whether rich or poor, 

 employer or employed, as it is attempted to be shown in the 

 following imaginary dialogue between the three persons 

 already referred to. 



Dialogue between Landlord and Builder. 

 A. — Capitalist, a landlord of houses, deriving his income from 



investing his money in houses. 

 B. — Employer, a building contractor, who derives his income 



from his capital and plant and his directing skill as a 



builder and organiser. 

 A. — My dear I?, I propose to build four additional dwelling- 

 houses, similar to the four which you built for me for £1,600 

 two years ago : 1 at £500, 2 at £400, and 1 at £300 ; and I 

 shall be obliged if you will give me an estimate of what you 

 will now build four similar houses for me in the same 

 locality. 



B.—I shall be happy to do so, but you must be prepared to 

 pay a higher price, as all building trade wages and materials 

 have now gone up 20 per cent. 



A. — What ? Do you mean to infer that I can afford to pay 

 the extra 20 per cent, out of my pocket when my average 

 profit hitherto at the old rates only yields me 5 per cent, on 

 capital outlay in buildings, repairs, taxes and other necessary 

 expenses in connection with letting, etc.? It is impossible ! 



B.— Well, there is no help for it. If you won't build others 

 will ; for as the population increase is not likely to be greatly 

 affected for any length of time by the rise in the wages and 

 materials of the building trade, more houses must be built 

 by some one or other. 



A. — That is all very true, but how can landlords afford to 

 build houses at such prices at the old scale of rental ? 



B. — Eental of buildings, not land rent, in all times and 

 places, you are surely well enough aware, is determined by 

 current rates and prices of land, labour, and materials, and 

 not upon old rates of rental. You are no more called upon 

 to let your houses at the old rates of rental than I 

 am to contract for the building of houses at the 

 old contract prices. In my profession we base our estimates 



