4. By what means has the wages-fund, in such a country as this, been greatly increased?

5. Why has not the condition of the labourer improved in proportion to this increase of the wages-fund?

6. Describe the principal effect of the repeal of the corn laws upon the condition of the labourer.

7. What are the main features of Malthus' essay on population?

8. Into what classes does he divide the checks upon population?

9. As civilisation advances, which of these checks becomes the more powerful?

IO. In what two ways does an increase of population deteriorate the condition of the labourer?

II. Why is emigration an insufficient remedy for overpopulation?

12. Describe the influence of the average rate of profit upon the wages-fund.

13. Are labourers ultimately benefited by an increase of wages which reduces their employers' profits below the average rate?

14. How does the increased efficiency of labour affect the wages-fund?

15. Is the price of labour subject to fluctuations?

16. Do high prices produce high wages? Give illustrations.

17. Describe the manner in which competition raises exceptionally low wages, and reduces exceptionally high wages.

18. Why does competition act much more slowly upon the wages of labour than upon the prices of commodities? 19. Indicate some of the limitations of competition as between different classes of labourers.

20. Has the condition of the agricultural labourers been improved by competition?

21. Would the wages of women be probably improved by greater freedom of competition?

22. Enumerate Adam Smith's five causes which produce different rates of wages on different employments.

23. Give examples of the effect of these five causes upon wages.

24. What is the controlling principle which lies at the root of Adam Smith's five causes of different rates of wages in different employments?

I. Mrs Browning makes Aurora Leigh say:

"It takes a soul

To move a body: it takes a high-souled man
To move the masses even to a cleaner stye.

.Your Fouriers failed

Because not poets enough to understand
That life develops from within."

Compare this with what political economy teaches as to the importance of "raising the standard of comfort," if an improvement in the condition of the labouring classes brought by increased wages, is to be real and permanent.

2. Will the labourers in a depressed trade be more benefited by receiving charity or by being assisted to migrate to other localities where their labour is required?

3. In November, 1870, this paragraph appeared in a daily paper. "The population engaged in the production of coal and iron are recovering from depression, and are again marrying and giving in marriage at their usual pace." What effect will this have on the prosperity of the workmen in the iron and coal trades?

4. Is the fact that one blackbird can do very well in a cage, any reason for supposing that twenty blackbirds in the same cage would do equally well?

5. Give any reasons which are suggested by the contents of the last chapter, why the salaries earned by governesses are in general so small compared with those which are earned by men engaged in teaching.

CHAPTER III. On the Profits of Capital.

Profit is the reward of Capital for the service it renders in the Production of Wealth. Capital was defined, in a previous Section, as that part of wealth which is set aside to assist future production. Capital is consequently the result of saving; but, in order to fulfil its functions, it must be either wholly or partially consumed. It is evident that the owners of wealth will not consent to its being appropriated to assist future production, unless they are rewarded by a share of the produce. This share is termed profits. It is thought by some, that it is an injustice that capital should receive any reward for its part in the production of wealth. Capitalists are by such persons denounced as selfish usurers, and the interest which their wealth returns to them is regarded as if it had been stolen from the public. M. Bastiat combated these notions (which at one time were very prevalent in France) in a series of little tracts, in which by a number of examples he shewed the real nature of the profits of capital, "proving that it is lawful, and explaining why it should be perpetual." The following is an abridgement of one of his examples. "There was once in a village a poor carpenter, who worked hard from morning to night. One day James thought to himself, ' With my hatchet, saw, and hammer, I can only make coarse furniture, and can only get the pay for such. If I had a plane I should please my customers more, and they would pay me more. Yes, I am resolved, I will make myself a plane.' At the end of ten days, James had in his possession an admirable plane, which he valued all the more for having made it himself. Whilst he was reckoning all the profits which he expected to derive from the use of it, he was interrupted by William, a carpenter in the neighbouring village. William, having admired the plane, was struck with the advantages which might be gained from it. He said to James:

'You must do me a service; lend me the plane for a year.' As might be expected James cried out, 'How can you

think of such a thing, William? Well, if I do you this service, what will you do for me in return?'

W. Nothing. Don't you know that a loan ought to be gratuitous?

7. I know nothing of the sort; but I do know that if I were to lend you my plane for a year, it would be giving it to you. To tell you the truth, that was not what I made it for.

W. Very well, then; I ask you to do me a service; what service do you ask me in return?

7. First, then, in a year the plane will be done for. You must therefore give me another exactly like it.

W. That is perfectly just. I submit to these conditions, I think you must be satisfied with this and can require nothing further.

7. I think otherwise. I made the plane for myself and not for you. I expected to gain some advantage from it. I have made the plane for the purpose of improving my work and my condition; if you merely return it to me in a year, it is you who will gain the profit of it during the whole of that time. I am not bound to do you such a service without receiving anything in return. Therefore, if you wish for my plane, besides the restoration already bargained for, you must give me a new plank as a compensation for the advantages of which I shall be deprived.

These terms were agreed to, but the singular part of it is that at the end of the year, when the plane came into James's possession, he lent it again; recovered it, and lent it a third and fourth time. It has passed into the hands of his son, who still lends it." Let us examine this little story. The plane is the symbol of all capital, and the plank is the symbol of all interest. If therefore the yielding of the plank by the borrower to the lender is a natural and equitable remuneration, we may conclude that it is natural and equitable that capital should produce interest. We may also conclude that interest is not injurious to the borrower. James and William are perfectly free as regards the transaction to which the plane gave rise. The fact of William consenting to borrow proves that he con

siders it an advantage to himself. He borrows, because he gains by borrowing.

The Profits of Capital are composed of three elements. The interest on capital, namely, the sum which a borrower gives to the lender for the consideration of a loan, forms only a part of the Profits of Capital. The Profits of Capital are composed of three elements: interest on capital, compensation for risk, and wages of superintendence. The interest on capital, at any particular time and in any country, can be ascertained by the interest yielded, at the same time and in the same country, by those securities which involve no risk and no labour of superintendence. In this country, Government stock affords such a security. Those who invest money in the Funds are with reason confident that they run no risk of losing it, and the possession of stock does not involve any labour. The owners of Government stock receive nearly 3 per cent. interest on their capital, and therefore 3 or 24 per cent. is the current rate of interest at the present time in this country. If more than this is now given in this country for a loan, it is because the lender has not complete confidence in the ability of the borrower to pay; and therefore compensation for risk increases the sum which is given for the loan. If the profits of capital were no greater than the interest on capital, no one would take the trouble or incur the risk of entering into business. If the employment of money in trade yielded only a profit of 3 per cent., merchants and shopkeepers would withdraw their capital from business and buy Government securities. The profits of capital are greatest in those pursuits in which the greatest risk is incurred and where the labour of superintendence is most costly; the variableness of these two elements produces great variations in the rate of profit in different trades. A butcher, for instance, realises larger profits than a draper because his labour of superintendence is more disagreeable, and he also incurs greater risk, for in this climate a thunderstorm or a sudden alteration from cool weather to intense heat is often sufficient to destroy his whole stock of meat.

In uncivilized countries, the insecurity of property causes