The RURAL. NEW-YORKER 
A Primer of Economics 
By John J. Dillon 
Part: XXI 
What are wages? 
Wages are that part of the reward of 
enterprise which* is paid to labor. 
What is the wage-fund? 
That part of the wealth of the country 
expended in wages is called the wage- 
fund. 
Is the wage-fund capital? 
That part of the wage-fund which goes 
to pay productive labor is capital. The 
part that pays unproductive labor is not 
capital. The wages of the hired man are 
capital. The wages of a family coachman 
are not. 
What is understood by natural price of 
wages? 
When the laborer receives just enough 
to furnish shelter, clothes, food and neces¬ 
sary comforts for himself and his family 
he is said to receive the natural price of 
wages. 
What is the market price of wages? 
The market price of wages is the money 
actually paid for it. 
How are the wages of labor regulated? 
In absence of artificial interference, 
wages are regulated by competition, or by 
the demand and supply of labor. It is 
the proportion between the number of 
people working for wages, and the wage- 
fund. which includes wages paid to all 
persons working for hire, whether em¬ 
ployed productively or unproductively. 
How are wages increased? 
Taking the wage class as a whole, an 
increase of the wage-fund, that is, of the 
capital used to remunerate labor, will 
cause an increase of wages. A decrease 
in the number of laborers or. which is the 
same thing, a decrease of population, 
tends to increase wages. A decrease in 
the cost of food and. to a lesser degree, 
a decrease of the cost of clothing and 
housing, has the effect of increasing 
wages. That is to say. it increases the 
net reward of labor. The money wage 
is not increased, but the laborer gets more 
in food and clothing and housing and 
entertainment than before. 
IIow are wages reduced? 
A decrease of the wage-fund or an in¬ 
crease of the number of laborers tends to 
reduce wages. An increase in the cost 
of food and other necessities also has the 
effect of reducing wages. That is. the 
laborer gets less in necessities and lux¬ 
uries with the same money v r age than 
before. When the cost of food, clothing 
and shelter increases so that labor is no 
longer able to live in its accustomed com¬ 
forts. the money wages are necessarily in¬ 
creased. Ilis reward or wages is not the 
money received, but the amount of neces¬ 
sities and comforts the money wage will 
buy. Given a definite money wage, there¬ 
fore. his actual reward or wage is greater | 
when supplies are cheap, and less when 
they are dear. 
Ts it possible to increase money wages 
without benefiting wage earners? 
It is possible to increase the money 
wages of labor without benefit to labor. 
Labor may receive an increase of money 
wage and be worse off than before. This 
may result from a decrease in the pur- ■ 
chasing power of the money, or from an j 
increase in the cost of clothing, housing 
and food to a degree to exceed the in¬ 
crease of wages. On the other hand, con¬ 
ditions that decreased the money wage 
might actually benefit labor. This may 
result from an increase of the purchasing 
power of money or from a decrease in the 
cost of shelter, food and clothing. The ! 
real value of the money wage is the 
amount of necessities and comfort it will 
buy. 
Does a demand for goods increase the 
demand for labor or affect the price of 
wages? 
The demand for goods, unless it brings 
new capital into the wage-fund, does not 
increase the demand for labor, or affect 
the price of labor. The demand for labor 
is expressed in the amount of capital and 
other wealth devoted to the payment of 
wages. Unless this wage-fund is in¬ 
creased. a demand for any particular com¬ 
modity simply determines the field in 
which labor is to be employed, but it does 
not increase wages. 
Would a destruction of capital injure 
workmen by reducing wages? 
A destruction of capital would no doubt 
reduce the portion of capital and other 
wealth devoted to the* payment of wages, 
and if so, the destruction of capital would 
injure the wage earners by reducing their 
wages. The same effect is produced by 
any influence, such as riots, rebellions or 
other causes that intimidate capitalists 
and cause them to withdraw capital from 
productive enterprises. Our present in¬ 
come tax and excess profits tax law is 
driving capital out of productive enter¬ 
prises. and encourages extravagance and 
waste in personal expenditures, and in 
public officials by driving investments to 
non-taxable Government, bonds. This re¬ 
duces capital and the wage-fund. Labor 
suffers from any reduction in the wage- 
fund, no matter what the cause, am 
profits from its increase. 
Do high prices increase wages? 
High prices in themselves do not cause 
high wages, except possibly in a tem¬ 
porary way; but if the high prices result 
in better profits to the manufacturer or 
dealer, and the extra profits are added 
to the wage-fund, in that event the extra 
capital, not the high price itself, would 
tend to increase wages. This same prin¬ 
ciple applies when high prices are caused 
by law. Legislation has no power in 
such cases, except to take from one class 
and give it to another. What it adds to 
one in dust'-f it takes from another. Ob¬ 
viously it cannot increase the wage-fund 
as a whole, except when the Government 
employs. labor direct, and* consequently 
cannot increase general wages. 
Since wages are regulated by supply 
and demand, will not wages be lower as 
population increases? 
When population increases faster than 
the wage-fund, wages will be lower until 
the proportion of labor to the wage-fund 
is again restored. Except when new ma¬ 
chinery reduces the cost of production, 
food under the law of declining produc¬ 
tion will increase in value with increased 
population. This will reduce the natural 
price of wages, at the same time that the 
market price declines through compe¬ 
tition. If this result, should reduce the 
income of laborers below what is required 
to procure necessities of life for the la¬ 
borer’and his family, some would die of 
want, the growth of population would he 
checked, and if this new order of things 
continued until the former population of 
labor to the wage-fund was restored, 
wages would again rise. 
What is* Malthusianism? 
^ More than one hundred years ago an 
English economist by the name of Thomas 
It. Malthus wrote an essay on popula¬ 
tion. which became famous and the theo¬ 
ries of which are sometimes called Mal¬ 
thusianism. In this essay Malthus con¬ 
tended, that if left without check both veg¬ 
etable and animal life* would increase be¬ 
yond the power of the earth to sustain 
them. In plants and irrational animals 
the power to increase is exerted, and the 
superabundance is afterwards removed 
from want of room and nourishment. In 
case of the. human family without check 
on population, he contended, the result 
would be the same. In the lower classes 
of mankind he insisted that hunger and 
famine, pestilence and war, acted as posi¬ 
tive checks on population, and that self- 
623 
among the more intelligent and well-to-d< 
classes. The doctrine has been criticised 
without stint, but has been upheld by 
many of the economic authorities of the 
past and present generation. Population 
is certainly an important factor in the 
problem of wages, and a right conception 
of its influence is fundamental to an in 
telligent and practical solution of the 
wage problem. 
What is the wage-fund of the United 
States? 
The total wage-fund of this country can 
be given only approximately, but Prof. 
King tells us that the wage records are 
more satisfactory than those of interest 
or rent. He estimates that the national 
wage hill for 1910 was $14,509,000,000. 
or approximately 47 per cent of the na 
tional income. The number of employes 
was 28.200,000. and the average money 
wage per employe per annum $507; meas¬ 
ured. however, by the tilings each employe 
had to buy as compared with prices of 
1890-1899, the $507 income equaled $401 
only in purchasing power. 
The study of the laws which relate to 
the regulation of wages is pursued by 
economists on the assumption that com¬ 
petition of both labor and capital is free, 
and that supply and demand have unob¬ 
structed play. Labor is treated as a 
whole on the basis of general averages, 
and the difference of wages in different 
employments, when discussed at all, is 
treated separately as a subject bv itself. 
Tlie science assumes that no one would 
work for* less than he could get; and that 
no one would pay more than just enough 
to secure the service. Temporary excep¬ 
tions are always present, but in a broad 
way the general law controls in the end. 
Individuals and groups may receive more 
of the wage-fund than they deserve. If 
so. others must receive less. The wage- 
fund of the country must be divided 
among the wage workers. 
restraint acted as a prudential check 
McCormick 
Deering 
Milwaukee 
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Now—as to Harvest Time! 
T HE BINDERS of the nation must come out at harvest 
time and transform a billowing acreage into a great 
stubble field ready for the plow. This is a necessity of the 
near future and every individual farmer must be ready with 
men and machines to save all the yield of his own fields. 
Will your present equipment do the right thing for you? 
We call to your attention the standard binders of the nation. 
McCormick • Deering • Milwaukee 
are time-tried names, favorably known wherever there is agriculture. 
Grain binders with these familiar names will demonstrate again that 
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Timely repairs may be your solution for this harvest, but to limp 
through the season with machines that are truly outworn will prove dis¬ 
astrous. No farmer can afford to run a binder that has served too many 
years, nor can he practice true economy with a small, inadequate machine 
if his acreage and power equipment demand an 8-foot binder. 
As harvest time approaches, take careful account of your equipment 
needs, then see the International dealer. He has McCormick, Deering 
and Milwaukee —the binders that are guarantees of high quality and 
operating efficiency. 
International Harvester Company 
Chicago (incorporated) U S A 
92 BRANCH HOUSES AND 15,000 DEALERS IN THE UNITED STATES 
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