are paid out of the produce of labour, and that produce is realised by exchange with the produce of other labour, which other labour also, in this exchange, realises its own wages.

In order to put the matter as forcibly as possible, let us take an illustration, and one which is not a fanciful one, but is an actual illustration from industrial life-one for which names and dates can be given if necessary.

Mr X., in the present year of grace, decided to start a manufactory of Y. in the town of Z. For this purpose he put down a capital of £5500. This capital he expended as follows:

He calculated his wages at £100 a week, and estimated to have his manufactured product on the market in a fortnight after starting work.

Now, according to the Wage-Fund Theory, he would be able to pay a fortnight's wages out of his capital, and his wage fund being then exhausted, he would have to stop. But he did not stop. From the first moment he started he went ahead, increasing his output weekly and paying more weekly. Where then did the wages come from which he kept paying?-simply out of his customers, or, in more precise words, out of the goods he was engaged in producing. His scheme

worked out exactly as planned. He had his goods delivered and in his customers' hands within a fortnight, and by means of a little extra discount, induced them to pay prompt cash for the goods. After the first fortnight, therefore-that is to say, from the moment that he began to get his returns from his customers (or, in other words, from the manufactured product itself) he was no longer paying wages out of his circulating capital. The wages he paid came from the product of the labour of the men he was employing.

What is the conclusion here? First and foremost, that the wages paid by this employer were neither provided out of nor limited by his circulating capital. Nor were they provided out of any other form of capital at all, whether middleman's credit or any other. They were provided out of and limited by the amount of the manufactured product itself. Secondly, therefore, and as a consequence, it was to the interest of this employer's workpeople to produce as much as ever they humanly could. The more goods they produced the more wages they produced. The only limit to their wage-earning capacity was their own working or producing capacity.

Let it be carefully borne in mind that here I am not discussing the question as to the way in which, or the proportions in which, the total product was or should be divided between employer and employed. That is a separate problem. All

D

that I am showing by this illustration is that the workmen's wages are not restricted to or provided by their employer's fund of circulating capital, or by any other fund whatsoever, save and except the created product itself which is the result of their own working.

It is, therefore, to the interest of this employer's workmen to work up to their full limit, to make their output a maximum quantity, and never and at no time to restrict their output. This is the statement of the question from the point of view of the producers of one article only.

The next step in the argument is as follows. This activity, which is to the interest of the producers of one article, is to the interest of the producers of all other articles. For how would the increased product of any one worker or set of workers find a market if other producers did not keep an equal pace with them? If other producers jogged on at a stagnating rate, refusing to increase their output proportionally, then the goods produced by this single go-ahead body of workmen would find an insufficiency of other goods to exchange for them in the market, and so their particular product would fall in market price. There would be just that phenomenon of over-production or glut which has been the everlasting terror of the Trades Unions. But if all producers were animated by the same go-ahead spirit, if they all increased their output pro

portionally, then the exchange of commodities would remain undisturbed, exchange or prices would be left even or steady. The only result would be that more goods or products of a would pass in exchange for more goods or products of bc d, etc., or in other words that consumption (which means enjoyment) has increased all round without any detriment to prices.

To the superficial observer it might seem that, if the general exchange of commodities is kept even or steady, then all parties concerned are practically in the same state as before. But surely such a fallacy is too apparent and ridiculous. For everybody concerned in such a flourishing state does, by producing more of one article, become possessed of, or has in his hands the means to become possessed of, more of the general stock of all other goods. His purchasing capacity is greater, and his consuming capacity, or, what is the same thing, his enjoyment capacity, is greater, or, in other words, his standard of living has advanced. In these words we have, in a nutshell, the whole problem of the economy of high wages. High wages, of necessity, mean high consumption, or high consuming power, and this, of itself, means a higher standard of comfort or higher scale of living. And a higher standard of living means an absolutely unmixed boon and blessing to the labouring classes. For, after a certain point has been reached-after the lower wants

of life, such as food and shelter and clothing have been satisfied - all other wants that emerge, and are indulged, partake of a higher and ever higher nature. The English workman of to-day has a higher consuming capacity than the Italian workman-ergo, his standard of comfort is higher; ergo, his mental and moral status is higher. Or, again, the English workman of to-day has a higher consuming capacity than the English workman of fifty years since— ergo, his standard of comfort is higher; ergo, his mental and moral status is higher. Such statements are matters of plainest everyday fact, and need only to be made to be instantly accepted. Put in a concrete form, the meaning of them will be grasped in a moment. Consuming capacity has increased, simply because productivity or producing capacity has increased. Let us say that, in the past fifty years, the producing capacity of the country has been quadrupled, owing to improvements in machinery and organisation, and that, as a consequence, wages have advanced fifty per cent. The working-man finds himself obliged to spend the whole of that fifty per cent. advance, simply because his scale of living-his miscellaneous wants of life have increased correspondingly. Is he, therefore, no better off than before? Most decidedly better off. By means of his bicycle, or the electric tram, he can live at a greater distance from his work,