We are now in a position to explain the question put above,why wages in America are double what they are in England.An American ironmaster,if asked to give a reason for the high wages he pays,would say that the land determines the rate of wages in America,because under the Free Homestead Law,any man can get a piece of land for a nominal sum,and no puddler will work for less than he can get by working on this land.Now,in the Western States the soil is very fertile,and though the average yield is lower than in Wiltshire,the return in proportion to the labour expended is greater.Moreover,labour being scarce,the workman has to be humoured;he is in a favourable position in making his bargain with the employer,and obtains a large share of the produce.Thus agricultural wages are very high,and this explains also the cause of high wages in the American iron-trade and other American industries.In consequence of these high wages the manufacturer is obliged to make large use of machinery,and much of our English machinery,e.g.that of the Leicester boot and shoe trade,has been invented in America.Now,better machinery makes labour more efficient and the produce per head of the labourers greater.Further,according to the testimony of capitalists,the workmen work harder in America than in England,because they work with hope;they have before them the prospect of rising in the world by their accumulations.Thus it is that the produce of American manufactures is great,and allows of the labourer obtaining a large share.High wages in America are therefore explained by the quantity of produce the labourer turns out being great and by the action of competition being in his favour.
There are,however,other causes influencing the rate of wages in America which are less favourable to the workmen.
Protection,for instance,diminishes real wages by enhancing the cost of many articles in common use,such as cutlery.It is owing to Protection also that capitalists are able to obtain exceptionally high profits at the expense of the workmen.By combining and forming rings they can govern the market,and not only control prices but dictate the rate of wages.Six or seven years ago,the whole output of Pennsylvanian anthracite was in the hands of a few companies.Hence it was that,in the Labour War of 1877,the workmen declared that,while they did not mind wages being fixed by competition,they would not endure their being fixed by rings,and that such rings would produce a revolution.And the monopoly of these companies was only broken through by a great migration of workmen to the West.The experience of America in this instance is of interest in showing how,as industry advances,trade tends to get concentrated into fewer hands;hence the danger of monopolies.It has even been asserted that Free Trade must lead to great natural monopolies.
This may be true of a country like America which has internal but not external free trade,but only of such a country;for foreign competition would prevent a knot of capitalists from ever obtaining full control of the market.
I have shown why wages are higher in America than in England.
We may go on to inquire why they are higher in England than in any other part of Europe.The great reason is that the total amount of wealth produced in this country is larger,and that from a variety of causes,material and moral.The chief material causes are our unrivalled stores of coal and iron,and perhaps,above all,our geographical position.On the moral side,our political institutions,being favourable to liberty,have developed individual energy and industry in a degree unknown in any other country.On the other hand,it has been said that the exclusion of the labourer from the land in England must have tended to lower wages.And no doubt the adoption of a system of large farms has driven the labourers into the towns,and made the competition for employment there very keen.But,to set against this,the efficiency of English manufacturing labour is largely due to this very fact,that it is not able to shift on to the land.While in America the whole staff of a cotton factory may be changed in three years,in England the artisan 'sticks to his trade,'and brings up his children to it;and thus castes are formed with inherited aptitudes,which render labour more efficient,and its produce greater.I believe the higher wages obtained in England,in comparison with the Continent,are mainly due to greater efficiency of labour -that this is the chief cause why the total produce is greater.But if we go further,and ask what determines the division of the produce,the answer must be:mainly competition.To return to the comparison with America,the reason why the English labourer gets lower wages than the American is the great competition for employment in the overstocked labour-market of this country.
I must notice an objection to the theory of wages as stated above.Wages,I have explained,are the labourers'share of the produce,and are paid out of it.But,it may be said,while our new Law Courts,or an ironclad,are being built -operations which take a long time before there is any completed result -how can it be correctly held that the labourer is paid out of the produce?It is of course perfectly true that he is maintained during such labours only by the produce of others;and that unless some great capitalist had either accumulated capital,or borrowed it,the labourer could not be paid.But this has nothing to do with the rate of wages.That is determined by the amount of the produce and is independent of the method of payment.What the capitalist does is merely to pay in advance the labourer's share,as a matter of convenience.
We will next inquire what are the limits to a rise of wages in any particular trade?The answer depends on two thing.First,is the capitalist getting more than the ordinary rate of profits?
