The independent. [volume] (Lincoln, Neb.) 1902-1907, 1903-09-03

the relative abundance or scarcity of
the other. Thus, capital must be rel
etively abundant where wages are
high, and relatively scarce where
wages are low. Now, as the capital
Used in paying wages must largely con-
sjst of the capital constantly seeking
investment, the current rate of inter-
est must be the measure of its relative
abundance or scarcity. So, if it be
true that wages depend upon the ratio
between the amount of labor seeking
employment and the capital devoted to
its employment, then high wages, the
mark of the relative scarcity of labor,
must be accompanied by low interest,
the mark Of the relative abundance of
capital and reversely, low wages must
be accompanied by high interest. This
is not the fact, but the contrary"
Now quite agree with Mr.. Georges
argument just quoted, and II there
were but two factors in production it
would disprove the current doctrine
that wages depend upon the ratio be-
tween the amount of labor seeking
employment and the amount of capital
devoted to its employment. AS the
case stands, Mr.. Georges argument
proves that wages do not depend en-
tirely upon the relative abundance and
scarcity of labor and capital; but let
De examine the third factor-land-be-
fore we condemn the current doctrine.
At first glance the fact that wages and
Interest generally rise and fall to-
gether in new countries seems to dis
prove the current theory of wages;
end neither Mr.. George nor any other
writer on political economy has sue
ceeded in reconciling the theory with
the facts; and Mr.. George was forced
to abandon that theory. He says: 1--WE
have seen that the current theory that
wages depend upon the ratio between
the number of labOrers and the
amount of capital devoted to the en-
ployment of labor is inconsistent with
the general fact that wages and inter-
est do not rise and fall inversely, but
conformity"
/ will attempt to explain the appar-
ent inconsistency between the theory
and the facts. If there is any truth
in the theory, the effect of an increased
supply of capital upon wages must al
ways be to raise wages; but as pointed
cut by Mr.. George it seldom does act
ually raise them. Why? | can ex-
plain it best by using an illustration:
Suppose tug-of-war between rent
and interest. Abundance of capital
and low interest are pulling wages up
and at the same time scarcity of land
and high rent are pulling wages down.
II rent is the strongest wages will fall
in spite of the fact that plenty of CAPT.
tai and low interest are pulling them
up. In new countries land is very
plentiful and rent very low, while Ia
Tor and capital are both scarce, and
interest and wages both high; but as
population increases capital becomes
plentiful and land becomes scarce, the
landlord appropriates all the benefits
to be derived from abundance of capt.
tai, and wages fall with interest in
spite of the fact that the effect of low
interest on wages is to raise them.
Wages depend partly upor the sup
lily of capital and partly on the sup
Fly of land, and will be highest where
10th are plentiful and rent and inter
est both low.
1t was Mr.. Georges failure to see
this, that forced him to abandon the
position in regard to wages and in
terest that the laws of distribution
are laws of proportion. And as no
amount of ability will enable a man
to harmonic truth and error, his
false premise, that the effect of high
interest is to raise wages, was the
cause of his failure to discover the
laws of distribution.
JAS. S. PATTON.
Riverside, Cal.