TEN MINUTE TALKS' WITH WORKERS.

Taranaki Daily News, 10 January 1920, Page 11

TEN MINUTE TALKS' WITH WORKERS.

yni.r-.WHAT CAPITAL DOES. Financially, tlie capital of a given firm is the market value in money of all the things it possesses and Uses for the purpose of carrying on its business. The constant use of money as a measure of capital tends to liide the real nature of capital. Socially, capital is that part of the wealth of the nation which is used not for the direct satisfaction of human needs, but for the production of commodities which can provide these satisfactions. In its right place, the bicycle factory, a ton of steel tubing is very useful. If it was dumped down on your allotment yon would rightly regard it as a nuisance. A bicycle, of course, would bo another matter entirely. If we think of capital as things, not as money, our reasoning in economics will never get into a tangle. The functions of capital may be considered from two points of view: (1) that of society in general, and (2) that of the workers in particular. Capital enables the production of goods to be carried on by methods which give the best possible results in output. You live in the middle of a large town, yet you have at your very hand, at any moment of the day or night, a full supply of the commodity you teed most —fresh water. All you have to do Is to turn a tap, and that tap is the last visible piece of a vast accumulation of capital—pipes, pumping machinery and reservoirs—which brings you water from a mountain lake a hundred miles off- If you lived in the country, you would have a wet!, a winch, a rope and a bucket —also a mass of capital, but requiring far more effort on your part to get at the water. If even this small array of capital vanished, and every time you wanted a drink you had to go to the stream and scoop the water up in your hand, you would have a painful lesson in the economics of capital.

a remarkXble FEAT.

Capital enables'us, then, to substitute for straightforward but inefficient methods of production the methods which are roundabout but efficient. The savage kills an animal and use 3 the dried pelt as a garment. Nothing could be more direct. It is recorded that, in the 18th century an Englishman won a big wager by dining one night in a jacket which had been wool on a sheep's back 24 hours previously. That was much less direct. To-day a sheep-farmer on the Darling Downs will wear a suit made from cloth manufactured in Yorkshire from wool grown in his own district, perhaps on his own run. Nothing could be more roundabout, but it is the modern way, thanks to capital. Again, capital, though it makes production roundabout, makes it constant and certain instead of intermittent and dubious. You cannot but notice how independent we have become of local fluctuations in natural supplies. In the Middle Ages Yorkshire might be starving while Surrey was bursting with harvests. Now, at any rate in peace times, the processes of manufacture and the flow of commodities are so constant that even slight interferences, when they occur, as through an industrial dispute, arp regarded a 9 strange. Once they would have been too usual to be noticed much.

Once more, capital enables productive processes to be carried on while the result is remote in time, while those who carry them on are still in a position to enjoy meanwhile all the necessaries and comforts of life. Unaided labor has to live from, hand to mouth, to produce to-day the proods which will satisfy the needs of to-day. Capital relieves industry of this necessity, and enables plans to be laid far ahead and a distant return to be waited for in comfort. HOW LABOR BENEFITS.

From the point of view of labor, it is to be noted in the first place that capital in the specialised form of machinery and engines is constantly relieving man of more and more of the "donkey work'' of industry. Coal-cutters, for example, relieve miners of much heavy work without reducing their earnings. Too much cannot be done to relieve man of toil that steam and electricity can do as well as he.

Again, capital takes the risks of industry off the shoulders of labor. The first claim on the product of industry, both in fact and in law, is the wages of the workers;. That the goods when produced do not sell,- or are sold at a loss, makes no difference to this first and most important claim. And since capital must shoulder the risks of production, caution, insight, and brains become of increasing importance" and so again tend to improve the national industry and increase its output. The difference made in the output of labor when assisted by highly specialised forms of capital is almost incredible. It was calculated that the labor-power used in growing barley in the United States in 1896, if it had only had the capital-power of 1830 at its disposal, would have produced just under three million bushels, whereas, with the actual capital-power of 1896 to aid it, the harvest was nearly 70 million bushels. In other words, nearly 96 per cent, of the product was due to capital- Another calculation showed that capital-power applied to pin-making increased the efficiency of the labor-power no less than 90-fold.

This, then, is what capital does, and this is the service that capitalists render to society- It also explains why, in Russia and elsewhere, the enemies of capital.turn out to be the enemies of mankind.

IX.-HOW CAPITAL GETS TO WORK.

Think of capital as things and you will always go right in your thinking about capital. So far we have steadily kept to this rule. For it has this great advantage, that when you eonip, as you must at certain times and for special purposes, to think of capital in terms of money, you still continue to think in straight lines and not in tangles. As you walk about England, still by far the best way to see it as it is, you come every now and again on a curiously narrow, straight bit of land, grass grown and tangled, with a hedsre on each side. It looks like a ruler-shaped field. There are several reasons to account for these ribbons of grassland, all of them very interesting. One of them is that it is a bit of old Roman road. There are other bits of Roman road that you can only distinguish from a stretch of modem road by their straightness, for to a Roman engineer n road was the shortest distance between two given points. You can motor to-day over miles of road along which the lcgiqns of Severus and Agricok marched. Now a road is a typical piec?. of capital. If you want to walk for pleasure you take to the fields. Roads are business routes

But a road would very soon go out of business' if it was not "kept up," and the annual cost of keepiiig-up his Majesty's highways is enormouß For nearly 2000 years money has been spent freely on those bits of Roman road still in use to keep them as roads. Where it has not been spent, you see the result —"No Road."

Money is shorthand for capital. If you asked "What is the capital of the North-Western Railway?" and someone began to reel oil an inventory of the line -hso many thousand locomotives, so many tens of thousands of carriages, down to so many balls of string and lumps of chalk—you would really be none the wiser. When the capital is given in money you can carry it in your head. Moreover, you can compare it with other capitals. This is one convenience of thinking of capital k terms of money. There is, however, a much better reason than this. For income is also measured and paid in money: and unspent income is the only source of new capital. Capital wears out with use. Some of it, circulating capital as the old text-books call it, can only be used once, some of it, fixed capital,, can be used over and over again, but that too wears out and must be replaced. Shoe-leather is circulating capital, and you know how clever your youngsters are at circulating it. A Blake stitcher is fixed capital- It makes many shoes, but goes to the lumber room in the end.

All good firms devote part of their profits or income to keeping up their capital. They have a depreciation account, in money, which jfrows largeT as the capital-goods they own deteriorate, and it is spent on renewing or replacing them.

UNSPENT MONEY.

The unspent income of private persons goes into banks. Stockings as banks have fortunately gone out of fashion. Money in a stocking does nothing. Money in banks soon gets to work. It becomes capital. At one i.mt, then, unless a man could use his unspent income in his own business, he had no other resource than to let it lie idle. You see in museums and old curiosity shops the oak coffers, with heavy iron hinges and locks, in which it was kept. It was, then, a natural and profitable development that a class of men should arise who would devote themselves to getting this idle money out of these coffers and set it work as capital. A capitalist is a man who owns capital. He often, but not always, is a man who knows how to use his unspent income as new capital. When he does not know this, the man who can show him how is just the friend he wants. Let us call such a friend a financier. Then we may put the- position thus: A capitalist owns economic-power, which in outward form is so much unspent income in bank or strong box. A financier is a man who is on the look-out for new and useful ways in which this idle economic power can be got actively to work in the national industry. Capitalist and financier are partners in the maintenance and increase of our national supply of capital.

Before we note the obvious disadvantages of this partnership, we must observe that it has to exist, in some form or other, if the economic interests of society as a whole are to bl ! properly served. Some person or persons there must always be who shall provide tha channels by which the numerous tiny driblets and rivulets of private saving's' can run into the great stream of our national industry, for if that dries up the national life will begin to flag and decay. And, as recent experience has shown, no one can do it worse when he tries than a Government official.

The disadvantage, of course, is that the sound, acute, and honest financier is apt' to he simulated by the shady and unsound 1 "company promoter," who merely lies the money out of the investing public and loses it for them. Much capital is thus wasted. There are, however, remedies available. The law can be made far more stringent than it now is, and so choke most, if not all. of this nefarious financing. Also, persons with capital on the look-out for a financier need not let greed for impossible dividends blind therir judgment, and can always set advice from their bank managers. Penal servitude and common sense could cure all the evil.