IV.—IT IS IMPOSSIBLE FOR WEALTH TO ACCUMU- LATE WITHOUT THE

WORKING CLASSES BEING BENEFITED.

DEAR MR. 9 The Socialists often argue as if the more wealth grew, the poorer became the people. Their talk is of the land " where wealth accumulates and men decay," and those who get. rich are denounced as plunderers of the people, and as persons who are taking the bread out of other men's mouths.

Yet, as a matter of fact, it can be shown beyond doubt that the creation of wealth must be beneficial to the working classes.

Now, though it will to some extent lead me to repeat the arguments I have used in my first and second letters, I want to deal with this side of the problem once more, and in somewhat greater detail.

When a man makes a large sum of money, he can do one of two things with it. He can either spend it or save it, but in either case he will benefit the working classes.

Let us suppose he spends it. In that case be buys a great number of objects which other men are anxious to sell. Some persons will directly sell him their labour. In such cases the benefit to the labourer is obvious. Others will sell him articles produced by labour. Here, again, there is an evident benefit to the labourer.

But it may perhaps be said :—" Suppose the rich man spends his money in buying pictures by old masters and curiosities of various sorts, which are the result of no living labour. How will the labourer benefit then ? "

The answer is, he will still benefit, though we may be one or two degrees removed from the spectacle of the benefit. That this is so can be proved by following out a transaction in pictures, old plate, or point-lace. A, the rich man, buys a picture by Tintoretto from B for 21,000. No doubt if matters stopped here the labourer would not benefit. But they cannot stop here. Money is like water,—Ilux, change, motion is the law of its being. B parts with his picture because he wants the £1,000 to spend, and proceeds at once to spend it. He lays his money out in housing himself better, in buying food and clothing, and in a hundred other ways. But these ways almost all involve the employment of the labourer.

In very nearly every case, if we follow money to its ultimate destination, we find that destination to be the employment of labour. But everything which tends to the employment of labour benefits the working classes, for it means, as I have said already, competition for their services, and therefore better remuneration. Hence we may say with confidence that money spent will in one way or other benefit the labourer. No doubt some ways of spending are less wasteful than others, and therefore more beneficial, but this is a question of degree, not of kind.

We must next take the case of money saved. If the money made by the rich man is put out to interest, and the interest spent, it is obvious, as I have just shown, that the result will be beneficial: to labour. Suppose, however, a case in which money is *put out to interest, and that interest is saved, and also- the interest of the interest,—is such a result of aecumulation beneficial to the labourer ?

Yes.

And for the reason given in Letter L, which I may

summarise here. Capital (i.e., mobilised wealth) has its price, just as labour has. If you want capital you must pay the market price for it. But we all know that the more, there is of a thing in the market, the more the price tends to fall. Hence

the more capital accumulates, the lower its price. But the price of capital is reckoned by the rate per annum at which it can be hired,--i.e., the rate of interest. Hence the accumulation of capital tends to lower the rate of interest.

But how is this good for the labourer ? In this way. Capital is primarily used to employ labour. If a manu- facturer desires to build a mill which will give employment to hundreds of workmen, he has to obtain capital with which to set up his establishment. Now whether be can work his mill at a profit depends upon the amount he will have to pay for the hire of his capital. If he can get it cheap, the mill will succeed. If, however, be has to pay dear for it, the mill cannot be started. Hence the employment or non-employ- ment of a large number of persons depends upon capital being cheap,—i.e., the rate of interest being low.

But it has been shown that the accumulation of wealth—i.e., saving—makes the rate of interest low; that is, makes capital cheap.

Therefore "saving" as well as " spending" benefits the labourer. It follows, then, that the accumulation of wealth must always in one way or other benefit the labouring classes.

Perhaps it will be said that there is a third case which I ought to have touched on, the case where men neither spend nor put their money out at interest, but hoard.

How does this, it may be asked, benefit the labourer ?

Possibly it does not benefit him as long as the hoarding is maintained, but the number of cases in which hoarding takes place in a civilised country is too small to make it worth mentioning. In any case, the moment the hoarding ceases and the money is spent or put out at interest the arguments just given apply.

What happens when money is in "the stocking" is simply this. So much circulating medium is withdrawn frotn the world and the stock of the precious metals in use is pro- portionately reduced. This is the result of boarding while it lasts. Otherwise nobody is either benefited or injured, and things remain as they were.

Yours very sincerely, J. Sr. L. S.