The Guardian And Evening Star, with which is in corporated the West Coast Times. WEDNESDAY. DECEMBER 23. 1923

Hokitika Guardian, 23 December 1925, Page 2

The Guardian And Evening Star, with which is in corporated the West Coast Times. WEDNESDAY. DECEMBER 23. 1923

CONEESSIOXS OF A CAPITALIST. Sir Ekn'k.st Bknn has published a Imok which ho calls “The Confessions of a Capitalist.” It is an attractive title for a still more attractive hook. Though Called a “confession,” remarks a reviewer, the hook is in effect a defence of capitalism by a man who has himself succeeded as a capitalist. .Sir Ernest Bonn opens with the very true •statement that most hooks on economies are dull. They do not appeal to the ordinary reader because they are too abstract. Therefore it occurred to him that he would write a concrete account of his own experiences to illustrate the economic theories on which capitalism is based. He has done this in a way which certainly will appeal to the general reader, for the style is conversational lather than dogmatic, and the book is filled with apt illustrations from daily lile of the practical working of sound economic principles. Sir Ernest Bonn has made his money mainly by the publication of trade newspapers, lie states that he is now securing an income of about £IO,OOO a year. Lest his readers slrmld treat this confession as in itself a condemnation of capitalism. he goes on to point out that his £IO,OOO is earned or made or acquired, or whatever word he preferred, by dire'ting a liusiiie-s with a turnover of £•100.000 a yea i \ so that £300.000 is paid away to workers of one sort or another. and only fid in the £ retained by himself, not only for his present service in directing the business, hut for his past service building it up. Incidentally, more than half the fid. which he nominally retains is in prncti<o intercepted hv the Chancellor of the Exchequer. One of the points which Sir Ernest Bonn presses in the course of his argument is the importance of commerce as distinct from manufacture. He even goes so far as to say that “'Wealth is exchange.” Tt would he more strictly accurate to say that the growth of wealth dejxnnL on exchange. 1 lie point is one on which not only Socialists hut also Protectionists habitually go astray. Protectionist newspapers constantly write as if the only thing that mattered was fho making of things, ignoring the rather important consideration that things

.ill- 111.1(11' io oe sold, and that the making of them would he sheer waste without some organisation for selling them. Hint is the work of commerce, and it is, generally speaking, more difficult work than manufacturing. The same point lias been well pressed by Gordon Selfridge in his “Romance of Commerce.” usefnly quoted in the present volume. It is the importance of commerce that ultimately explains the comparatively large incomes that business men are able to earn. As Sir Ernest Benn puts it: —“The business man is the agent of exchange and because it is. as a rule, far more difficult to exchange an article than to make it. the business man generallv secures a higher remuneration for his part in wealth production thap the la.

homer who performs the simpler and easier work of wielding the hammer or the .saw.” Among the agents of exchange are hankers and insurance agents, both habitually sneered at by rS'-cialists; yet, without the hanker to provide the credit and the insurance agent to take the risk, a very large portion of the world's business would he practically impossible, and people who are now drawing wages lor making goods to exchange with one another through the agency of commerce would he condemned to idleness. In turn, the hanker and the insurance agent and the business man depend upon persons in all elases of life who save money and invest it. Socialists seem to imagine that when their ideal organisation of society is established saving will he .superfluous; yet the Russian Soviet, alter establishing Socialism, is now begging the capitalists of England to provide it. with credit, and English Socialists are condemning English capitalists for hesitating to lend money to Russia without some guarantee lor repayment. Not only is saving tho basis of capitalism; it is also, as Sir Ernest Bcnn points out, essential fo human life; “l nloss there is saving life comes to an end. We have only to eat all the potatoes of this year's crop to make quite sure that no potatoes will exist next year.” A very useful chapter headed ‘‘l’rclit and Loss” opens with the excellent statement that “The first and bv far the most important function of profit is to balance loss.” This is a point which Hie street oralor habitually overlooks, lie reads in the newspaper of some big dividend declared by some company, or of some big fortune left by a deceased capitalist, and he holds up that fact to his audience of comparatively poor persons as a final proof that the capitalist is a robber, lie fails to mention that for every capitalist who makes a large profit there are a great many who make large lokscss. More important still, lie overlooks the fact that the capitalist, in the vast majority of cases at any rate, only makes a profit by rendering seivice. Unless the capitalist organises the production or sale of something that the community wants lie gets no payment, and makes no profit. Nor is il true that the capitalist's profit involves loss to other people, either capitalists or labourers, (in the contrary. a successful business gives good servin' all round, and people who deal with the successful capitalist are not robbed, but benefited. If is true that cases may arise where a capitalist or group of capitalists, i,- able temporarily to secure a monopoly, and acquires the power to extort unfair terms from his customers; but even where a capitalist has this power, it seldom pays him to me il to the detriment of the persons with whom he is dealing, for ill the long run he would probably injure himself more lhaii them. In any ease, provided trade is tree it is difficult for any group of capitalists, however powerful, to prevent competition. Tn his description of his experiences in the United Stales. Sir Ernest Heim lavs stress on I lie difference- in the mental attitude of the English ami of the American working man. The English working man concentrates his mind on the preservation of the “job" for himself and his pals; the American working man is keen on getting as lunch money as he can by doing whatever he is asked to do in the quickest possible way. As a result the American wage-earner call turn up his nose at doles and pensions; instead he buys his own home and his own motor ear. lie also invests his savings m industrial undertakings. often becoming a shareholder in the firm for which he works. As Sir Ernest Reim says, ibis is the best form of profit sharing. It. maintains the essential distinction between the functions of (he canitali-t and those of the wage earner, Imt ii makes ihe wage earner himself a capitalist. \t the same time it is important lhal lhe capitalistic wage earner, like the capitalist. should learn the wisdom of not putting all his eggs in one basket.