wealth which, as we have seen, goes annually in profits to the employer.

2. The opportunity secured for the laborer to produce independently of the employer. Under the present system, the employer determines the nature and the amount of the product. His interest alone decides these questions. If the industry entailed a loss to him, he could shut down part of the work and dismiss the laborers. Under the coöperative system, the interest of the many laborers might determine upon the continuance of production even in dull times, when the returns of the product sold at whatever it would bring would be preferable to nothing at all.

4. The workman would be incited to greater industry and to greater carefulness in dealing with materials and machinery. 5. The workman would be encouraged to greater frugality and to greater saving, having the ready opportunity of investing his savings in his own business.

6. Finally, the moral, social, and political character of the workman would tend to be improved "by giving him a larger stake in society, making his remuneration directly dependent on his own exertions, and admitting him to a participation in the deliberations and decisions of industry." (Walker, Political Economy.)

Notwithstanding these advantages, the obstacles that oppose the success of coöperative societies are many and serious. The following are the principal difficulties to be met with:

1. The want of economic education among the laboring classes. The laborers will ordinarily not have the ability to choose a manager capable of directing a business enterprise; and if such a one be chosen, they will scarcely yield him the almost despotic power or recognize the need of that perfect submission to his orders which contribute much to the success of great industries as carried on at present. If the industry is small, it might indeed be possible to dispense entirely with the manager, for then all the laborers might as a committee of the whole POL. ECON. - 28

determine the several questions which enter into production, but such a scheme would be practically impossible in a large industry, where hundreds and even thousands would be employed.

2. The want of capital. Capital is an absolute necessity for production, and the larger the industry, the greater the amount of capital needed. But it is difficult to imagine where laborers could collect the sums necessary for production. Their own possessions are but small, and the security they could offer would scarcely be sufficient to engage capitalists to intrust them with their money.

It may be suggested that the government supply the capital. But, besides the objection that this would be a direct step towards Socialism, such a course would be the worst kind of paternalism, and would tend to destroy utterly the spirit of self-reliance and independence essential to every self-respecting citizen.

This experiment was, in fact, tried in France in 1848. The sum of $400,000 was supplied by the government to coöperative societies. Very little success resulted. Says Gide: Nothing is easier than to waste money that is freely received, especially when the government is the donor." (Principles of Political Economy, p. 650.)

3. Coöperative societies tend to reëstablish the very institutions which they seek to eliminate, the class of employers and the wage system. When these societies have proved successful, very often they shut out all subsequent applicants for admission on the coöperative plan, hire laborers to whom are paid the current wages, and keep for themselves, the original founders, all the profits. Not infrequently the original coöperators sell out their shares at a profit, and some one individual more energetic than the others absorbs the entire concern and passes over to the ranks of employers. Thus the attempt at coöperation has missed its aim.

These difficulties and many others have rendered the efforts at coöperation comparatively unsuccessful. It has met with most success when it has been limited to industries on a small

scale, in which the initial expenditure is small and which aim to supply the local market.

After an experimental trial, in 1909-1910, of the coöperative system at the Furness shipyards in England, under which the employees were to receive 9 per cent of the sums invested by them in the business, and a proportionate share in the profits, the scheme was abandoned by vote of the employees, because it was inconsistent with the principles of trade-unions and tended to injure trade organizations.

As things appear to-day, it seems that the employer, or entrepreneur, is a necessity in the business world, and that the time is not yet come for his supplanting. Indeed, as Walker says: "The power of the master in production — the captain of industry has steadily increased throughout the present century [the nineteenth], with the increasing complexity of commercial relations, with the greater concentration of capital, with improvements in apparatus and machinery, with the multiplication of styles and fashions, with the localization and specialization of manufactures."

QUESTIONS

1. What is meant by the term manager"? What qualities should the manager possess?

2. Explain what is meant by the term "profits" according to English economists; according to French economists.

3. What constitute profits in a business? What does cost of production include?

4. Explain the principle that regulates profits. Give an illustration.

5. Are the wages of laborers dependent in any way on the profits of a business?

6. What objections are made against profits by Socialists?

7.

State the means proposed to do away with profits.

8. What is a joint-stock company?

9. What is profit sharing? What are the objects aimed at by profit sharing? 10. What may be the reason why the capitalist receives an increase of interest on his capital when the profits of a business increase, while the laborer does not receive an increase of wages under similar circumstances?

II. What is the aim of coöperation? What advantages is it alleged to possess? What are the obstacles to successful coöperation?

CHAPTER XXIII

WAGES

Definition and Explanation. Wages, in general, means the income received by a person in exchange for his labor.

It is not, however, to be taken in its broadest sense as a remuneration for any kind of labor, for the professional man and highly placed officials give their labor and receive a remuneration which is not called wages. Such remunerations are called fees, salaries. The laborer, then, who receives wages is to be limited to him who is hired and employed by an entrepreneur.

Historical Sketch.

tively recent date.

The present wage system is of comparaUnder the family economy, the wage system scarcely existed. In former times all the work was done by slaves.

In the earlier part of the medieval period, the Feudal System held sway. The productive forces were employed mostly in agricultural pursuits, and the labor was performed by the villains and the serfs for the benefit of the feudal lords and the upper classes composing the nobility. The condition of the serfs was but little removed from that of slaves.

Opposition arose against the power of the feudal barons, and towns were formed, which depended immediately upon the kings, from whom charters were obtained. The kings themselves were willing to establish such chartered free towns, as they thereby secured for themselves aid and assistance against the encroachments and domination of the feudal lords.

Gradually the towns grew. They opened their gates to the multitude of serfs who found existence under their feudal masters intolerable. Such refugees were gladly welcomed, and received the freedom of the town.

The various industries were carried on by individual workers.

These in course of time formed themselves into guilds and crafts, which were partly religious and partly trade organizations. There were three classes among the tradesmen :

1. The Masters, who had passed through the lower grades and received the freedom of the town. They were allowed to produce the various commodities of their trades, and offer them for sale in their shops and at the fairs which were regularly held in the town.

2.

The Journeymen, who were really more than mere wage earners. They were closely allied to the masters, and aspired to become, and did become, masters in their turn. They worked for the masters and received for their labor a portion of the proceeds of the masters' product. Before becoming masters, they were frequently obliged to show their proficiency by turning out a masterpiece.

As time went on, the journeymen found it difficult to become masters, because of the increase of the masters by reason of the increased population, and because, frequently, the masters sought to prevent the greater addition to their ranks through fear that an increase in their number would reduce their profits.

3. The Apprentices, who were obliged to serve under their masters for seven or ten years, and who received from them the necessaries of life and a small yearly pittance. After learning his trade, the apprentice became a journeyman.

The guilds and crafts gradually came to an end during the sixteenth and seventeenth centuries.

After the beginning of the sixteenth century, while the agricultural industry increased greatly, the manufacturing industries began the wonderful progress which has continued unto our own times.

These industries were carried on mostly within the family. There were no large factories. The product was sold immediately to the consumer; there were no middlemen.

In the eighteenth century came the mechanical inventions which have revolutionized the condition of the working class. In 1753 the shuttle was invented by Kay; the water frame