The Intermountain Catholic. (Salt Lake City [Utah] ;) 1899-1920, 1905-01-21
RELATION OF WAGE TO MACHINERY,

civilian G. Lightbown in New York Sun.)
The relation of wages to the use of machinery
is not a new discovery 1t was first advanced by
Dr. Theodore Hertzka famous Viennese political
economist. and has received the Endorsement OF
many economists both here and abroad. For ln'
stance Alfred Russell Wallace, the great English
scientist, who simultaneously with Darwin, put
forth the "Darwinian" theory, took active part
in agitating movement based this prIncIple
The scientific formula expressing this natural law
is:
"The condition determining the use of labor
saving machine is that the difference between its
and its product be greater than the difference
between the wages and the product of labor"
As l explained, the incidental cost of operating
a machine consists of power, interest, profit and
taxes. The machine must save enough In wages
more than offset these expenses, 1t cannot be
used proftaby. The amount of labor which ma
chine must save in order to be profitable is there
fore less in a country where wages are high than
in low wage country The consequence IS that the
variety of machines which will be profitable is
much greater in the high wage than in the low
wage country. Furthermore: The incidental cost
of operation is high i'll proportion as wages are
low. When taxes high, for instance, there is
naturally less left for labor out of the total prod
uct. In the low wage country. therefore. the in
centve to save labor is lessened at the same time
that the cost of operating the machine is in
creased.
The results of these tendencies on the efficiency
of nation are tremendous. The following Stats
tics relating to manufacturing industries are taken
from an article comparing American and European
commercial conditions in the Engineering Maya
zine by Mr.. j. Clark expert on this subject:
Horsepower Product per
per wage-earner. wage-earner.
United States .........2 .15 $2450
United Kingdom 0.33 500
Germany ...... ......... OBI AGO
france ............ $3.50. 100 $50
NJ, i IL
considering average wages in Europe to be
$40, or one-half those paid in the United States
the figures there being S340; and considering the
average cost of generating power about $40 per
mum on each continent it is seen that in European
factories the average percentage for labor and
power in total cost of production is PA per cent
In the United States it is IA per cent"
Our wages are twice as high as theirs, but the
percentage they form of the total cost of produc
ton is actually per cent less. This is an intense
y practical question not to be answered by calling
it academic" Commercial rivalry between the
great nations is so keen that we may be sure they
are neglecting no opportunity TO increase their
efficiency in economic competition. The fact that
our European competitors lag so far behind in
utilizing mechanical processes is prima facie evi
dence of the truth of Hertzkas theory.
In considering overproduction we must face the
fact that foreign markets do not lessen the evil.
No permanent prosperity for one nation be
based on the gradual ruin of another. The only
alternative is an increase in home demand through
increased wage rate. As l have previously
pointed out, an increase in wages would not merely
be added TO prices; the increased efficiency of labor
accompanying high wages would speedily bring
prices down at least to their former level perhaps
below it, thus leaving net increase in effective
home demand.
One of my critics has suggested that while all
this may be true. voluntary artificial increase
in wages would be mere act of charity This does
not st all follow When man is starting in bust
ness he frequently spends great deal of money
before he begins to get any return The initiation
of high wage policy would require the same sort