Labor, in the distribution of wealth, falls into three general classes:

1st, Physical or muscular effort.

2d, Mental effort or enterprise, applied to the union of capital and labor.

3d, Subsidiary labor, or professional services, auxiliary to direct efforts in production.

The reward of the first is called wages; that of the second, profits; of the third, salaries, fees, &c., but another name for wages.

In these three general forms, labor receives its reward. It is, however, to be observed, that, though the distinction is clear between the wages of direct labor and the compensation paid for subsidiary labor,-like professional services,

- yet the laws which govern are so similar as to render separate examination unnecessary. Both are controlled by the proportion of supply and demand.

Capital is loaned in two general forms: —

1st, When invested with a permanent character and having a fixed place, as houses, fields, &c.,-its compensation is called "rent.”

2d, When in a shape, however solid and tangible, which is not intended to be retained, but may be altered to suit the business, or removed for convenience of location,i.e., where not the identical product, but only an equivalent, is to be returned, -its compensation is called "interest.

Such, then, are the forms in which capital does its part in production; and such the forms in which it receives its share in distribution. They are, in their nature, the same, and in scientific treatment might properly be discussed under one title; but the common names are so deeply fixed in the mind, so intimately associated with political economy, and so interwoven with daily experience, that only confusion could result from speaking of them as one.

Production, thus far, has been charged with wages (and under this term we include all the rewards of auxiliary

labor, salaries, fees, &c.), profits, interest, and rent. Between these parties the product is to be divided. This division is made by natural laws, which, if not interfered with by legal enactments or social customs, will secure to each its rightful share.

But, while this is true, another party enters the field, and makes a peremptory claim to a portion of the wealth which the joint efforts of these has produced. That party is government, demanding a revenue for its maintenance, to which all must and should contribute. This is done in the general form of taxation.

Distribution is now complete,-wages, profits, interest, rent, and taxation. These we shall examine in their order.

CHAPTER II.

WAGES.

SINCE labor and capital join together in production, each may rightfully claim, and in the nature of things must receive, a share of whatever is produced.

The share which labor receives is called "wages;" and by this general term is meant that compensation which the employer pays to the employed for his personal services. The law of value is the law of wages. Wages confer value, and are measured by it. They depend essentially on the conditions of cost, supply, and demand. Competition comes in to influence their rate, as it does the price of other commodities.

Wages vary greatly in different countries, and in different parts of the same country; they vary, too, in all the em ployments and occupations of society. These differences, however, are neither accidental nor arbitrary, but depend on certain laws which it is our purpose to point out.*

* A part of this chapter appeared in the "Merchant's Magazine" in 1857.

The joint instrumentality of labor and capital being necessary to the production of wealth, it follows that the interests of the two parties are closely connected; that capital is as dependent on labor as labor is upon capital.

If this is so, the probabilities of an equitable division will depend on the freedom with which both parties are able to act, and the equality on which they stand when the contract or copartnership is formed.

Whatever, in social arrangements or civil institutions, destroys the natural freedom and equality of the parties, gives one an advantage over the other; and the party having the advantage will profit by it.

Wherever, by class legislation, capital is allowed to tyrannize over its copartner, or concentrate itself in vast aggregations, and thus increase its natural power over labor, which cannot be thus brought into powerful and permanent combination, the latter will be compelled, in one form or another, to take up with less than its just reward.

But, however unjust or arbitrary laws or institutions may be, it is evident there are certain limits beyond which the wages of labor cannot be reduced.

The cost of labor is identical with the cost of maintaining the laborer in such circumstances that he can not only support himself, but rear a family of children sufficiently numerous at least to keep the supply of laborers good.

Hence he must receive what has been properly denominated necessary wages; that is, to use in part the definition of Adam Smith, "such wages as will enable him, not only to obtain the commodities absolutely necessary to the support of life, but whatever else the customs of society render it indecent for persons in his rank in life to be without.'

There being, then, no uniform and established standard of wages, they vary according to the expenses of subsistence in different countries, and the condition in which the laboring classes are willing to live.

The cost of labor, or the current rate of wages that can

permanently exist, depends on the necessary expenses of living; and these expenses, in turn, depend upon the condition of the laboring classes. Hence, other things equal, the more educated and morally and intellectually elevated any community of laborers may be, the higher will be their standard of wages.

Wages are not high in proportion to the wealth of a community, but rather to the disposition that exists amongst those possessing wealth to pay it out for labor; and this disposition will depend much upon the security and profita bleness with which capital can be employed in production, and the enterprise and aspirations of the people.

We make the following divisions of our subject:—

NOMINAL AND REAL WAGES.

There is often a considerable difference between the nominal and real wages, or between the wages of the employé when received in money or when realized in such commodities as his wants require. As this is a question of fact, we refer to pages 177, 178, of this work, as shown in Table V. In that table we find the prices of ten commodities, which the laborer would be likely to use in his ordinary consumption, such as sugar, coffee, molasses, pork, cheese, rice, salt, &c.

By taking the wages of the laborers at certain periods, and the prices at corresponding periods, we ascertain the desired results. We have added the year 1864 from the best unofficial sources at hand:

* It is to be regretted that we have no carefully prepared tables of wages in the United States. Such are greatly needed. We have taken the rates mentioned according to our own observation, and believe them essentially correct.

Nominal wages fell from 1836 to 1840 by one-fifth, or twenty per cent; yet the real wages (as shown by the less number of days required to procure the same commodities) were higher in 1840 than 1836 by more than thirteen per cent. In 1843, when the nominal wages were but one dollar, real wages were about sixty per cent better than in 1836, when the nominal wages were twenty-five per cent higher. In 1864, when nominal wages were at one dollar and fifty cents, real wages were but little more than half what they were in 1843 at one dollar.

In this connection, it seems appropriate to mention the great difference to the laboring classes between a value and a credit currency. If the latter, as we have endeavored to show, raises prices and causes speculation, and if the price of labor does not rise in proportion to the rise of prices, then it must follow that wages were really less at all times of inflation than when the currency is in a natural condition. How great these fluctuations are we have seen in Table V., pages 177, 178, from which, as an illustration in point, we give the following triennial synopsis :

Years

Prices

1834. 1837. 1840. 1843. 1847. 1850. 1853. 1856. 1859. $19.13 $28.40 $20.73 $14.82 $20.82 $16.20 $22.47 $25.02 $22.11

Every one acquainted with the rate of wages will realize at once that they have not corresponded to their fluctuations in prices, and that the laboring and salaried classes must have suffered great injustice in consequence.

CHAPTER III.

PROPORTIONATE RISE AND FALL OF WAGES.

ALTHOUGH wages rise and fall with the general rise and fall of commodities, they do not in equal proportion. The fact is one of common observation; but the reason of this dif