The student may find himself by this time sadly puzzled to know what is the real truth of the matter. If the opinions of those who have studied industrial conditions closely differ so widely, is there any way of finding out what does become of the goods produced by society ; whether capitalists, landlords, employers, or laborers get the surplus ; or whether all share in it ; and, if the latter, whether there is any way of telling which shares of the surplus will be liberal and which ones will be small ? The truth seems to be that the surplus is dis tributed with as great regularity, and as strictly in accordance with law as are the minimum shares ; but that it is not always the same class that holds the favored position. At one time capital, at another land, at another managing ability, and at another labor, may be able to se cure for itself the free surplus. At any given time that one of the factors, necessary in pro duction, which is increasing at the slowest rate, will be able to secure the benefits of the im provernents in production and to reduce the shares of the other factor as nearly as possible to the minimum fixed by the laws of It is this share also which must bear the perma nent burdens of At the time of the Napoleonic wars, the price of food rose, agricul tural products increased in value, there was a strong demand for land, and rent became in Eng land the share which most attracted attention. The supply of land could not keep pace with the demand for food ; cultivation was pushed down to poorer lands, and the income from other sources than land was very much reduced. Under those circumstances, rent was the share which took the surplus, because land was the 1 Patten, The Stability of Prices, p. 31.
2 Ibid.
factor in production most urgently in demand, and it was land which eventually bore the per manent burdens.
In a later period the industrial revolution and the changes in demand created an altogether new place for capital. The opening up of new countries, and the improvements in transporta tion, made land more plentiful, but capital was lacking to take advantage of the new opportuni ties. The land could be had for little, because its owners were competing with each other for the capital necessary to develop it. Wages were low because the new industrial processes had lessened the demand for labor in particular industries, and because in England a vicious system of poor relief reduced the general stand ing of living and unduly stimulated the growth of population. The most slowly increasing fac tor was capital, or rather capital and managing ability combined, for they were not yet easily separated, as became possible afterwards with the extension of credit. Profits (including in terest) were, therefore, the share which increased so enormously as to excite the apprehension of socialists, trade-unions, and cooperative leaders.
It was thought that the interests of capital and labor were in direct conflict, no account being taken of rent. The possession of capital was seen to be the means by which the largest share in the surplus of society was secured, and it brought as its penalty the necessity of providing for the burdens of society. If, for example, a poll-tax was levied on laborers, it was thought that it would be shifted to capitalists, since laborers only received sufficient for maintenance, and they could pay the tax only by securing a corresponding increase of wages.
We have been passing through a period in America in which not land, nor labor, nor capi tal was the most slowly increasing factor, but rather managing ability. The opportunities for developing new industries and the supply of all the essential physical factors have been present in greater abundance than the organizing skill and enterprise required to make them really productive. The lack has not been greater than
in other countries, but has only been relatively noticeable in comparison with the supply of other factors. Profits in the narrower sense, independent of interest, as a return for superior management, have been large because the men who have the qualities displayed by the cap tains of industry have been rare, and those who have appeared have been able to secure the other requisite factors on easy terms. Monop olies have arisen under these conditions, and the taxation of monopolies has been a source from which communities have been able to se cure a large part of their revenues, though not so much has been made of this opportunity as might have been. Permanent burdens have rested in this instance, as in the earlier ones, upon the factor which was able to secure the largest part of the surplus.
The nearest rival for the lion's share of the surplus product has been, not capital, nor land, but labor. The fall in the price of food indicates a rise rather than a fall in the margin of cultiva tion. The differences in the qualities of soils have become less rather than greater. Rent has diminished rather than increased, except in the special instances of ground rents, of terminal facilities, and of favored building spots which follow the law of profits rather than that of rent. The rate of interest, after eliminating the ele ment of risk, has considerably fallen. Capital is saved for a much smaller reward than formerly. The appreciation of future wants has become more general. Neither rent, nor interest, have been increasing their portion of the surplus, though it is from the surplus that both are drawn in the first instance. In the competition be tween employers and laborers for the surplus product, the present tendencies seem to favor wages and not profits. It is true that there is a large class of unemployed, and that in excep tional cases it is still possible to make extraor dinary profits. But the number of employers who are capable of organizing some special in dustry profitably is increasing. This works to the advantage even of the unemployed, for one reason of their lack of employment is the absence of men of this kind. If there are enough ef fective managers to utilize all the good oppor tunities for industrial activity, it will go far toward giving employment to all. Increased steadiness of demand enables an employer of even moderate ability to keep his establishment in operation. Demand for new commodities calls for abilities of a kind not already in use.
New discoveries make possible the establishment of an industry in a new place, on a more eco nomical basis, or with a different kind of motive power. The development of new qualities in the laborers permits the introduction of an in dustry from a foreign country. Many similar tendencies are at work, the effect of which is to increase the rate at which employing and man aging ability is supplied, and so to reduce the rewards of the few who have supplied it. It would seem that in the near future, effective labor is more likely to be the limiting factor than any other. If it should be true that land, capi tal, and directive intelligence are all supplied at a more rapid rate than efficient labor, then we may expect to see wages remain, as it has to some extent already seemed to be, the residual claimant on the industrial product, the natural heir to all the improvements that come from industrial and social progress. To maintain such a position there must exist a high standard of living and a series of social institutions which prevent an undue pressure of population, and se cure adequate hours of recreation and the main tenance of a high type of family and social life.