Whence Do Wages Come, and Whence Profits?

What you now stand in need of, aye, more than of bread, is the knowledge of a few elemental principles of political economy and of sociology.

Be not frightened at the words. It is only the capitalist professors who try to make them so difficult of understanding that the very mentioning of them is expected to throw the workingman into a palpitation of the heart. The subjects are easy of understanding.

The first point that a workingman should be clear upon is this: What is the source of the wages he receives; what is the source of the profits his employer lives on? The following dialogue is not uncommon:

Workingman”“Do I understand you rightly, that you Socialists want to abolish the capitalist class?”

Socialist”“That is what we are after.”

Workingman”“you are!? Then I don’t want any of you. Why, even now my wages are small; even now I can barely get along. If you abolish the capitalist I’ll have nothing; there will be nobody to support me.”

Who knows how many workingmen in this hall are typified by the workingman in this dialogue!

When, on payday, you reach out your horny, “unwashed” hand it is empty. When you take it back again, your wages are on it. Hence the belief that the capitalist is the source of your living, that he is your bread-giver, your supporter. Now that is an error, an optic illusion.

If early in the morning you go on top of some house and look eastward, it will seem to you that the sun moves and that you are standing still. Indeed, that was at one time the general and accepted belief. But it was an error, based upon an optic illusion. So long as that error prevailed the sciences could hardly make any progress. Humanity virtually stood stock still. Not until the illusion was discovered, and the error overthrown, not until it was ascertained that things were just the other way, that the sun stood still, and that it was our planet that moved at a breakneck rate of speed, was any real progress possible.

So likewise with this illusion about the source of wages. You cannot budge, you cannot move one step forward unless you discover that, in this respect also, the fact is just the reverse of the appearance: that, not the capitalist, but the workingman, is the source of the worker’s living; that it is not the capitalist who supports the workingman, but the workingman who supports the capitalist; that it is not the capitalist who gives bread to the workingman, but the workingman who gives himself a dry crust, and sumptuously stocks the table of the capitalist.

This is a cardinal point in political economy; and this is the point I wish first of all to establish in your minds. Now, to the proof.

Say that I own $100,000. Don’t ask me where I got it. If you do, I would have to answer you in the language of all capitalists that such a question is un-American. You must not look into the source of this, my “original accumulation". It is un-American to pry into such secrets. Presently I shall take you into my confidence. For the present I shall draw down the blinds, and keep out your un-American curiosity. I have $100,000, and am a capitalist.

Now I may not know much; no capitalist does; but know a few things, and among them is a little plain arithmetic. I take a pencil and put down on a sheet of paper, “$100,000.” Having determined that I shall need at least $5,000 a year to live with comfort, I divide the $100,000 by $5,000; the quotient is 20. My hair then begins to stand on end. The 20 tells me that, if I pull $5,000 annually out of $100,000, these are exhausted during that term. At the beginning of the 21st year I shall have nothing left.

“Heaven and earth, I would then have to go to work if I wanted to live!”

No capitalist relishes that thought. He will tell you, and pay his politicians, professors and political parsons, to tell you, that “labor is honorable.” He is perfectly willing to let you have that undivided honor, and will do all he can that you may not be deprived of any part of it; but, as to himself, he has for work a constitutional aversion. The capitalist runs away from work like the man bitten by a mad dog runs away from water.

I want to live without work’ on my $100,000 and yet keep my capital untouched. If you ask any farmer, he will tell you that if he invests in a Durham cow she will yield him a supply of 16 quarts a day, but, after some years, the supply goes down; she will run dry; and then a new cow must be got. But I, the capitalist, aim at making my capital a sort of $ 100,000 cow, which I shall annually be able to milk $5,000 out of, without her ever running dry.

I want, in short, to perform the proverbially impossible feat of eating my cake, and yet having it. The capitalist system performs that feat for me. How?

I go to a broker. I say, Mr. Broker, I have $100,000. I want you to invest that for me. I don’t tell him that I have a special liking for New Bedford mills’ stock; I don’t tell him I have a special fancy for railroad stock; I leave the choosing with him. The only direction I give him is to get the stock in such a corporation as will pay the highest dividend. Mr. Broker has a list of all of these corporations, your New Bedford corporations among them, to the extent that they may be listed. He makes the choice, say, of one of your mills right here in this town.

I hire a vault in a safe deposit company, and I put my stock into it. I lock it up, put the key in my pocket, and I go and have a good time. If it is too cold in the north I go down to Florida. If it is too hot there I go to the Adirondack Mountains. Occasionally I take a spin across the Atlantic and run the gauntlet of all the gambling dens in Europe. I spend my time with fast horses and faster women. I never put my foot inside the factory that I hold stock in; I don’t even come to the town in which it is located, and yet, lo and behold, a miracle takes place!

Those of you versed in Bible lore surely have read or heard about the miracle that God performed when the Jews were in the desert and about to die of hunger. The Lord opened the skies and let manna come. But the Jews had to get up early in the morning, before the sun rose; if they overslept themselves the sun would melt the manna, and they would have nothing to eat. They had to get up early, and go out, and stoop down and pick up the manna and put it in baskets and take it to their tents and eat it.

With the appearance of the manna on earth the miracle ended. But the miracles that happen in this capitalist system of production are so wonderful that those recorded in the Bible don’t hold a candle to them. The Jews had to do some work, but I, stock-holding capitalist, need do no work at all. I can turn night into day, and day into night. I can lie flat on my back all day and all night; and every three months my manna comes down to me in the shape of dividends. Where does it come from? What does the dividend represent?

In the factory of which my broker bought stock, workmen, thousands of them, were at work; they have woven cloth that has been put upon the market to the value of $7,000; out of the $7,000 that the cloth is worth my wage workers receive $2,000 in wages, and I receive the $5,000 as profits or dividends. Did I, who never put my foot inside of the mill; did I, who never put my foot inside of New Bedford; did I, who don’t know how a loom looks;’ did I, who contributed nothing whatever toward the weaving of that cloth; did I do any work whatever toward producing those $5,000 that came to me? No man with brains in his head instead of sawdust can deny that those $7,000 are exclusively the product of the wage workers in that mill. Out of the wealth thus produced by them alone, they get $2,000 in wages, and I, who did nothing at all, I get the $5,000.

The wages these workers receive represent wealth that they have themselves produced; the profits that the capitalist pockets represent wealth that the wage workers produced, and that the capitalist, does what?—let us call things by their names—that the capitalist steals from them.

You may ask: But is that the rule, is not that illustration an exception? Yes, it is the rule; the exception is the other thing.

The leading industries of the United States are today stock concerns, and thither will all others worth mentioning move. An increasing volume of capital in money is held in stocks and shares. The individual capitalist holds stock in a score of concerns in different trades, located in different towns, too many and too varied for him even to attempt to run. By virtue of his stock, he draws his income from them; which is the same as saying that he lives on what the workingmen produce but are robbed of. Nor is the case at all essentially different with the concerns that have not yet developed into stock corporations.

Again, you may ask: The conclusion that what such stockholders live on is stolen wealth because they evidently perform no manner of work is irrefutable, but are all stockholders equally idle and superfluous? Are there not some who do perform some work? Are there not “directors"?

There are “directors,” but these gentlemen bear a title much like those “generals” and “majors” and “colonels” who now go about, and whose general ship, majorship and colonelship consisted in securing substitutes during the war.

These “directors” are simply the largest stockholders, which is the same as to say that they are the largest sponges; their directorship consists only in directing conspiracies against rival “directors,” in bribing legislatures, executives and judiciaries, in picking out and hiring men out of your midst to serve as bellwethers, that will lead you, like cattle, to the capitalist shambles, and tickle you into contentment and hopefulness while you are being fleeced. The court decisions removing responsibility from the “directors” are numerous and increasing; each such decision establishes, from the capitalist government’s own mouth, the idleness and superfluousness of the capitalist class.

These “directors,” and the capitalist class in general, may perform some “work,” they do perform some “work,” but that “work” is not of a sort that directly or indirectly aids production, any more than the intense mental strain and activity of the “work” done by the pickpocket is directly or indirectly productive.

Finally, you may ask: No doubt the stockholder does no work, and hence lives on the wealth we produce; no doubt these “directors” have a title that only emphasizes their idleness by a swindle, and, consequently, neither they are other than sponges on the working class; but did not your own illustration start with the supposition that the capitalist in question had $100,000, is not his original capital entitled to some returns?

This question opens an important one; and now I shall, as I promised you, take you into my confidence; I shall raise the curtain which I pulled down before the question, Where did I get it? I shall now let you pry into my secret.

Whence does this original capital, or “original accumulation,” come? Does it grow on the capitalist like hair on his face, or nails on his fingers and toes? Does he secrete it as he secretes sweat from his body? Let me take one illustration of many.

Before our present Governor, the Governor of New York was Levi Parsons Morton. The gentleman must be known to all of you. Besides having been Governor of the Empire State, he was once Vice President of the nation, and also at one time our Minister to France. Mr. Morton is a leading “gentleman"; he wears the best of broadcloth; his shirt bosom is of spotless white; his nails are trimmed by manicurists; he uses the elitest language; he has front pews in a number of churches; he is a pattern of morality, law and order; and he is a multimillionaire capitalist. How did he get his start millionaire-ward? Mr. Morton being a Republican, I shall refer you to a Republican journal, the New York Tribune, for the answer of this interesting question. The Tribune of the day after Mr. Morton’s nomination for Governor in 1894 gave his biography.

There we are informed that Mr. Morton was born in New Hampshire of poor parents; he was industrious, he was clever, he was pushing, and he settled, a poor young man, in New York City, where in 1860, mark the date, he started a clothing establishment; then, in rapid succession, we are informed that he failed, and started a bank!

A man may start almost any kind of a shop without a cent. If the landlord gave him credit for the rent, and the brewer, the shoe manufacturer, the cigar manufacturer, etc., etc., give him credit for the truck, he may start a saloon, a shoe shop, a cigar shop, etc., etc., without any cash, do business and pay off his debt with the proceeds of his sales. But there is one shop that he cannot start in that way. That shop is the banking shop. For that he must have cash on hand. He can no more shave notes without money than he can shave whiskers without razors.

Now, then, the man who just previously stood up before a notary public and swore “So help him, God,” he had no money to pay his creditors, immediately after, without having in the meantime married an heiress, has money enough to start a bank on! Where did he get it?

Read the biographies of any of our founders of capitalist concerns by the torchlight of this biography, and you will find them all to be essentially the same, or suggestively silent upon the doings of our man during the period that he gathers his “original accumulation.” You will find that “original capital” to be the child of fraudulent failures and fires, of high-handed crime of some sort or other, or of the sneaking crime of appropriating trust funds, etc. With such “original capital" - gotten by dint of such “cleverness,” “push” and “industry” as a weapon, the “original” capitalist proceeds to fleece the working class that has been less “industrious,” “pushing” and “clever” than he. If he consumes all his fleecings, his capital remains of its original size in his hands, unless some other gentleman of the road, gifted with greater “industry,” “push” and “cleverness” than he, comes around and relieves him of it; if he consume not the whole of his fleecings, his capital moves upward, million-ward.

The case is proved. Labor alone produces all wealth. Wages are that part of labor’s own product that the workingman is allowed to keep. Profits are the present and running stealings perpetrated by the capitalist upon the workingman from day to day, from week to week, from month to month, from year to year. Capital is the accumulated past stealings of the capitalist, cornerstoned upon his “original accumulation.”

Who of you before me fails now to understand, or would still deny that, not the capitalist supports the workingman, but the workingman supports the capitalist; or still holds that the workingman could not exist without the capitalist? If any there be, let him raise his hand and speak up now. None? Then I may consider this point settled, and shall move on.