capital on which rate per cent. must be paid, the more machinery employed relatively to labor in the production of commodities, the more do profits enter into the cost of production, and the more powerfully do changes in the rate per cent., in the time of advance, and in the risk of deterioration, tell upon the value of commodities so produced, as estimated in other commodities. This whole matter is exceedingly well put by Mr. Mill in the fourth chapter of his third book, and I shall here enrich my own pages by transcribing two or three paragraphs from his.

1

"All commodities made by machinery are assimilated, at least approximatively, to the wine in the preceding example. In comparison with things made wholly by immediate labor, profits enter more largely into their cost of production. Suppose two commodities A and B, each requiring a year for its production, by means of a capital, which we will on this occasion denote by money, and suppose to be £1000. A is made wholly by immediate labor, the whole £1000 being expended directly in wages. B is made by means of labor which cost £500, and a machine which cost £500, and the machine is worn out by one year's use. The two commodities will be of exactly of the same value; 1 which, if computed in money, and if profits are twenty per cent. per annum, will be £1200. But of this £1200, in the case of A, only £200, or one sixth, is profit; while in the case of B there is not only the £200, but as much of £500, (the price of the machine,) as consisted of the profits of the machine-maker; which, if we suppose the machine also to have taken a year for its production, is again one sixth. So that in the case of A only one sixth of the entire return is profit, whilst in B the element of profit is not only a sixth of the whole, but an additional sixth of a large part.

"The greater the proportion of the whole capital which consists of machinery, or buildings, or material, or anything else

1 Better; the two commodities have exactly the same cost of production.

which must be provided before the immediate labor can commence, the more largely will profits enter into cost of production. It is equally true, though not so obvious at first sight, that greater durability in the portion of capital which consists of machinery or buildings, has precisely the same effect as a greater amount of it. As we have just supposed one extreme case, that of a machine wholly worn out by a year's use, let us now suppose the opposite and still more extreme case, of a machine which lasts forever, and requires no repairs. In this case, which is as well suited for the purpose of an illustration as if it were a possible one, it will be unnecessary that the manufacturer should ever be repaid the £500 which he gave for the machine, since he has always the machine itself worth £500; but he must be paid as before a profit on it. The commodity B therefore, which in the case previously supposed was sold for £1200, of which sum £1000 were to replace the capital, and £200 were profit, can now be sold for £700, being £500 to replace wages, and £200 profit on the entire capital. Profit, therefore, enters into the value of B in the ratio of £200 out of £700, being two sevenths of the whole, or 284 per cent., while in the case of A, as before, it enters only in the ratio of one sixth, or 16 per cent. The case is of course purely ideal, sinco no machinery or other fixed capital lasts forever; but the more durable it is, the nearer it approaches this ideal case, and the more largely does profit enter into the return. If for instance, a machine worth £500 loses one fifth of its value by one year's use, £100 must be added to the return to make up this loss, and the price of the commodity will be £800. Profit, therefore, will enter into it in the ratio of £200 to £800, or one fourth, which is still a much higher proportion than one sixth, or £200 to £1200, as in case of A.

"From the unequal proportion in which in different employments profits enter into the advances of the capitalist, and therefore into the returns required by him, two consequences follow in regard to value. One is, that commodities do not exchange in the ratio simply of the quantities of labor required to produce them, not even if we allow for the unequal rates at which different kinds of labor are permanently remunerated. Suppose as before an article A made by £1000 worth of immediate labor. But instead of B made by £500 worth of immediate labor, and a machine worth £500, let us suppose C, made by £500 worth of imme

diate labor by the aid of a machine which has been produced by another £500 worth of immediate labor; the machine requiring a year for making, and worn out by a year's use; profits being as before twenty per cent. A and C are made by equal quantities of labor, paid at the same rate; A costs £1000 worth of direct labor; C only £500 worth, which however is made up to £1000 by the labor expended in the construction of the machine. If labor, or its remuneration, were the sole ingredient of cost of production, these two things would exchange for one another. But will they do so? Certainly not. The machine having been made in a year by an outlay of £500, and profits being at twenty per cent., the natural price of the machine is £600; making an additional £100, which must be advanced over and above his other expenses, by the manufacturer of C, and repaid to him with a profit of twenty per cent. While therefore the commodity A is sold for £1200, C cannot be permanently sold for less than £1320.

"A second consequence is that every rise or fall of general profits will have an effect on values. Not indeed by raising or lowering them generally, (which is a contradiction and impossibility,) but by altering the proportion in which the values of things are affected by the unequal lengths of time for which profit is due. When two things, though made by equal labor, are of unequal value because the one is called upon to yield profit for a greater number of years or months than the other, this difference of valué will be greater when profits are greater, and less when they are less. The wine which has to yield five years' profit more than the cloth, will surpass it in value, and much more if profits are forty per cent., than if they were only twenty. The commodities A and C, which, though made by equal quantities of labor, were sold for £1200 and £1320, a difference of ten per cent., would, if profits had been only half as much, have been sold for £1100 and £1155, a difference of only five per cent. It follows from this that even a general rise of wages, when it involves a real increase in the cost of labor, does in some degree influence values. It does not affect them in the manner vulgarly supposed, by raising them universally. But an increase of the cost of labor lowers profits; and, therefore, lowers in natural value the things into which profits enter in a greater proportion than the average, and raises those into which they enter in a less proportion than the average.

All commodities in the production of which machinery bears a large part, especially if the machinery is very durable, are lowered in their relative value when profits fall; or, what is equivalent, other things are raised in value relatively to them."

In other words, the more, or the more durable the machinery in the production of a commodity, the larger the element of profit in the price now absolutely reduced; on a rise of the rate per cent. therefore, the value of the commodity made by more or more durable machinery will relatively rise.

Having traced completely the influence of machinery on profits, a few things must now be said on its influence upon wages. Formerly the prejudice was almost universal, and is still wide-spread in many parts of the world, that the general introduction of labor-saving appliances does an injury to the laborers by taking away their work. So strongly has this been felt by the laborers, that in England, and especially in Ireland, mobs and riots have usually accompanied the introduction of machinery into those departments of production in which hand-work had previously prevailed. If work were what laborers really wanted, the prejudice in question would cease to be such, and become a sound opinion; since the only object and result of introducing machinery is to lessen work, at least with reference to a given product; and the laborers, to be consistent, should not stop with opposing new inventions, but should destroy all forms of existing capital, that there might be work a plenty for simple human hands. What the laborers really want, however, is not work, but wages, or rather, those commodities for which their wages are expended; and the question is, whether

labor-saving processes tend to lessen, not work, but work's remuneration. There is no form of proof that I know of, which amounts to a moral demonstration that the substitution of machinery for labor cannot lessen the laborer's wages; the opposite has perhaps sometimes happened, and is possibly liable to happen, especially in agriculture, in certain transitory states of society. But the general appeal can be made to experience with all safety. As a matter of fact and experience, it has not been found true that the introduction of improved processes, the substitution of Nature's forces for human muscle, has deteriorated the condition of laborers in those departments into which the inventions have been brought, or the condition of laborers generally. Exactly the reverse has usually taken place; and wages are apt to be highest rather than lowest in connection with the most and the most durable machinery, and higher rather than lower, after the introduction of more and better machinery. Operatives in manufactories, for instance, are, as a rule, better paid than farm laborers; and better paid in the first class than in the inferior establishments. Teamsters, in this country at least, and I suspect in all countries, are as well to do as before the construction of railroads. So of spinners, weavers, and artisans of every name. In explanation of these general facts, it may be noticed, (1) that labor is always required in the construction and repairs of all kinds of labor-saving appliances, and so far forth, a new market for labor is opened up in place of any loss of market possibly resulting from their introduction; (2) these forms of capital always tend to cheapen the products which they