This section is from the "The Science Of Wealth" book, by Amasa Walker.
Having considered the two great agents by which all wealth is created, viz. capital and labor, we come to speak of their union, and to inquire under what circumstances it will be most effective.
1st, When a due proportion of each is found. Labor halts without capital; capital wastes without labor. Which shall govern the other? Which shall be the fixed quantity to which the other must conform? Labor, certainly, because it is less variable in amount. It can be diminished or increased but slowly, depending as it does on the propagation of the human race; an element that is determined positively, in the old countries, to a very gradual growth, and, in new countries, has never more than doubled itself in thirty or forty years. Capital, on the contrary, is liable to very rapid fluctuations; can be accumulated, under favorable circumstances, with great ease; and can be wasted or scattered just as fast under different conditions.
Labor, then, being that which is most restricted in quantity, capital must, in order to the highest production, conform to it. There must be as much capital as labor requires, not as much labor as capital needs. We do not put this on the ground of any superior rights of labor. Capital is the labor of the past, and has rights as perfect as that of the present.
What this proportion should be in any community, it would be impossible to declare beforehand, as it is even impossible to decide precisely what it is in fact. Still less could a proportion be determined which capital should bear to labor in all communities. It is plain that this will vary according to the occupation; as, for instance, we have seen that in agriculture there cannot be so general application of machinery as in manufactures; while, on the other hand, because its operations cannot be localized or made independent of the seasons, the number of tools is thereby greatly increased; each farmer requiring certain tools, yet not using them to their full capacity at any season, and letting them lie idle for months.
The mechanic, on the other hand, while he uses a greater share of tool-power, has it yet so arranged that the tools lie idle little of the time.
It is plain that the proportion will vary, also, according to the natural advantages a person or community enjoys. Expensive clothing and shelter are essential to the support of the laborer in some climates; in others, a piece of cotton cloth and a bamboo hut serve for protection the year round. In some countries, there is required an immense system of pipes and conduits to water the soil, barely to preserve animal life; in others, an equable moisture is preserved the whole twelve months without any application of capital. In some, strongly constructed and carefully connected dikes and levees, extending hundreds of miles, are essential to the use of the land ; others were placed high and dry at first. In some, the soil is so generous with fruit, that, " if you tickle Nature with a hoe, she laughs with a harvest;" in others, the earth has to be carried in baskets up the sides of the mountains. That which, in one country, would be capital, acquired by labor and having value, is, in another, a free gift.
For these and other manifest reasons, the proportion that should exist between labor and capital cannot be determined with any considerable degree of assurance. It is plain that there should be as many tools as workmen needing to use them, else some will stand idle. It is equally plain that an excess of tools will not help at all in production. Capital is the instrument of labor ; and the instrument should, of course, be adapted to the power of the laborer and the work to be done.
By the census of 1860, " the real and personal property of the Union was valued (slaves excluded) at $14,183,000,-000."* A calculation made at the Treasury Department estimates the products of 1860 at 26.8 per cent of the wealth of the country at that time. Without intending to vouch at all for the correctness of this estimate, it is doubtless approximately true; and, if so, we shall be surprised, if we look at the large proportion of annual product to the accumulated wealth of the nation. If, for the sake of convenience, we call the annual product 25, instead of 26.8 per cent, we find that it amounts to $3,545,750,000 per annum. It certainly appears almost incredible that the total amount of wealth accumulated in the country since its first settlement should be only equal to four times the product in 1860 ; but such we understand to be the statement. If so, it shows what an immense proportion of all the wealth annually produced is annually consumed. From these figures, too, we may make an estimate of the proportion of the product which belongs to labor and capital. Allowing for the use of the latter ten per cent, in the shape of interest and rent, or use, the amount will then stand thus: —
* Report of the Secretary of the Treasury, 1865.
Aggregate national wealth, $14,183,000,000, at 10 per cent, is $1,418,300,000, which deducted from the whole product, as before, of $3,545,750,000, will leave us the share of labor, $2,127,450,000, or about two-thirds of the whole.
From these statistics, we find that the whole national wealth is only equal to about seven times the gross earnings of labor for a single year.
We have also an opportunity of comparing the wealth and production of the United States with Great Britain. The estimated wealth of the latter, according to Leone Levi (see his work on Taxation, page 6), is $30,000,000,000, or $1000 per capita; the estimated yearly production, $3,000,-000,000, or $100 per capita. The wealth of the United States, according to the foregoing figuring, and taking the whole population, as in 1860, at 31,443,321, is $451 each ; while the amount of product per capita is $112 each: so that, while Great Britain has more than double the capital, she has less annual product per capita. This is a confirmation of the well-known fact, that capital and labor, interest and wages, are at least double in this country what they are in Great Britain. We must not confound the annual product with the annual accumulation; the latter being but a small fraction of the former.
Capital should, at least, increase in a degree corresponding to the increase of population. If it does not, labor is crippled, wages fall, and starvation eventually ensues. Ireland may be quoted as an illustration. Her soil, wrested from the people by conquest at different periods, from the reign of Henry II. to the Battle of the Boyne, has passed into the hands of foreigners, who draw away annually all her surplus products. Population increases from year to year; but capital does not increase correspondingly. Nay, even the waste of the soil and of implements is not fully and honestly supplied.
What is the necessary consequence? Increasing poverty, and ultimate starvation or emigration. We have said that capital is formed from the annual savings of labor. Four million pounds a year go from Ireland to absentee landlords, and eight million pounds are taken away every year in taxes. The Irish people can make no savings. There can be no increase of their capital. Starvation or emigration is their inevitable fate.