Capital: A Critique of Political Economy, Vol. III. The Process of Capitalist Production as a Whole

Karl Marx
Marx, Karl
(1818-1883)
CEE
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Editor/Trans.
Frederick Engels, ed. Ernest Untermann, trans.
First Pub. Date
1894
Publisher/Edition
Chicago: Charles H. Kerr and Co.
Pub. Date
1909
Comments
Das Kapital, based on the 1st edition.

Part I, Chapter VI
THE EFFECT OF FLUCTUATIONS IN PRICE.

I. Fluctuations in the Price of Raw Materials, and their Direct Effects on the Rate of Profit.

I.VI.1

THE assumption in this case, as in previous ones, is that no change takes place in the rate of surplus-value. This assumption is necessary in order that this case may be analysed in its pure state. However, it would be possible that a certain capital, whose rate of surplus-value remains unchanged, might employ an increasing or decreasing number of laborers, in consequence of contraction or expansion caused by fluctuations in the price of raw materials such as we are about to analyse here. In that case, the mass of surplus-value might vary, while the rate of surplus-value remained the same. Still, it will be convenient to set aside also such a case as a side-issue. If improvements of machinery and changes in the price of raw materials simultaneously influence either the number of laborers employed by a certain capital, or the level of wages, one has but to tabulate 1) the effect caused by the variations of constant capital in the rate of profit, and 2) the effect caused by variations in wages on the rate of profit. The result then becomes apparent of itself.

I.VI.2

But in general, it should be noted here, as in previous cases: If variations take place, either in consequence of economies in the constant capital, or in consequence of fluctuations in the price of raw materials, they always affect the rate of profit, even though they may leave the wages, and therefore the mass and rate of surplus-value, untouched. They change the magnitude of the C in s' v/C, and thus the value of the whole fraction. It is therefore immaterial, in this case, in contradistinction to what we found to be the case in our analysis of surplus-value, in which sphere of production these variations take place, whether the lines of production affected by them produce articles of food for laborers, or constant capital for the production of such articles, or not. The deductions made here apply just as well if these variations occur in the production of articles of luxury, and by the production of articles of luxury I mean all production not serving for the reproduction of labor-power.

I.VI.3

In the raw materials we include here also the auxiliary substances, such as indigo, coal, gas, etc. Furthermore, so far as machinery falls under this head, its own substance consists of iron, wood, leather, etc. Its own price is therefore affected by fluctuations in the prices of raw materials used in its construction. To the extent that its price is raised through fluctuations, either in the price of the raw materials of which it consists, or of the auxiliary substances consumed in its operation, the rate of profit is lowered. And vice versa.

I.VI.4

In the following analysis it will be necessary to confine ourselves to fluctuations in the price of raw materials, not so far as they go to make up the raw materials of machinery serving as means of production, or as raw materials in auxiliary substances applied in the operation of machinery, but in so far as they are raw materials contributing to the process in which commodities are produced. We make only this remark: The wealth of nature in iron, coal, wood, etc., which are the principal elements used in the construction and operation of machinery, presents itself here as a natural fertility of capital and becomes an element in determining the rate of profit, independently of the highness or lowness of wages.

I.VI.5

Since the rate of profit is represented by s/C, or s/(c+v), it is evident that everything which causes a variation of the magnitude of c, and thereby of C, must also bring about a variation in the rate of profit, even if s and v, and their mutual proportions, remain unaltered. Now, raw materials constitute one of the principal portions of constant capital. Even in industries which consume no raw material, in the strict meaning, it enters as auxiliary material, or as a component part of machinery, etc., and fluctuations in its price influence to that extent the rate of profit. If the price of raw material falls by the amount d, then s/C, or s/(c+v), become s/(C-d), or s/((c-d)+v), in other words, the rate of profit rises. On the other hand, if the price of raw material rises, then s/C, or s/(c+v), become s/(C+d), or s/((c+d)+v), in other words, the rate of profit falls. Other circumstances remaining unchanged, the rate of profit falls and rises, therefore, inversely as the price of raw material. This shows, among other things, how important the low price of raw material is for industrial countries, even if fluctuations in the price of raw materials were not accompanied by variations in the selling sphere of the product, that is to say, quite aside from the relation of demand to supply. It follows furthermore that foreign trade influences the rate of profit, even aside from its influence on wages through the cheapening of the necessities of life, for it affects the prices of raw or auxiliary materials consumed in industry or agriculture. It is due to the imperfect understanding of the nature of the rate of profit and its specific difference from the rate of surplus-value that economists (like Torrens) give a wrong explanation of the marked influence of the prices of raw material on the rate of profit, as demonstrated by experience, and that on the other hand economists like Ricardo, who cling to general principles, misapprehend the influence of such factors as the world's trade on the rate of profit.

I.VI.6

We may realise, then, the great importance of the abolition or reduction of tariffs on raw materials for industry. Already the first rational development of the protective system made the utmost reduction of import duties on raw materials one of its cardinal principles. This, and the abolition of the duty on corn, was the main object of the English free traders, who took also, above all, care to have the duty on cotton abolished.

I.VI.7

The use of flour in the cotton industry may serve as an illustration of the importance of a reduction in the price of an article, which, although not strictly raw material, is an auxiliary and, of course, at the same time one of the principal elements of food. As long ago as 1837, R. H. Greg*13 calculated that the 100,000 power looms and 250,000 hand looms then operated in the cotton mills of Great Britain consumed 41 million lbs. of flour in the smoothing of chains. To this was added a third of this quantity for bleaching and other processes. The total value of the flour so consumed was placed by him at 342,000 p.st. per year for the preceding ten years. A comparison with the prices of flour on the continent showed that the raise in the price of flour forced upon the manufacturers by the corn-laws amounted alone to 170,000 p.st. per year. For 1837, Greg estimated it at a minimum of 200,000 p.st., and he mentions the fact that one firm had to pay 1,000 p.st. more per year for flour. In consequence of this "Large manufacturers, careful and calculated business men, declared that 10 hours of labor per day would be enough, if the corn-laws were repealed." (Rep. Fact., Oct. 1848, page 98.) The corn-laws were repealed. Also the duties on cotton and other raw materials. But no sooner had this been accomplished than the opposition of the manufacturers to the Ten Hours Bill became more violent than ever. And when the ten hour day in factories nevertheless became a law soon after, the first result was an attempt to reduce wages all around.

I.VI.8

The value of the raw materials and auxiliary substances passes entirely, and all at one time, into the value of the product in whose creation they are consumed, while the elements of fixed capital transfer their value only gradually to the product in proportion as they are worn away. It follows that the price of the product is influenced to a far higher degree by the price of raw materials than by that of fixed capital, although the rate of profit is determined by the total value of the capital, regardless of how much of this capital is consumed in the product. But it is evident—although we mention this merely incidentally, since we are still assuming that commodities are sold at their values, so that fluctuations of price caused by competition do not concern us here—that the expansion or restriction of the market depends on the price of the individual commodity and is inversely proportioned to the rise or fall of this price. For this reason we note in reality that a rise in the price of raw material is not accompanied by a corresponding rise of the price of the product, nor a fall in the price of the raw material by a corresponding fall of that of the product. Consequently the rate of profit falls lower in one case, and rises higher in the other, than it would if products were sold at their value.

I.VI.9

Furthermore, the mass and value of the employed machinery grows with the development of the productivity of labor, but not in the same proportion as this productivity, in other words, not in the same proportion as the machine increases its output. Those lines of industry, which consume raw materials, so that the objects on which they expend their labor are themselves products of previous labor, express the growing productivity of labor precisely by the proportion in which a certain increased portion of raw material absorbs a definite quantity of labor. In other words, this increasing productivity is measured by the increasing amount of raw material converted into products, worked up into commodities, for instance, in one hour. To the extent, then, that the productivity of labor is developed, the value of raw material forms an ever growing component of the value of the product in commodities, not only because it passes wholly into them, but also because every aliquot part of the aggregate product contains an ever decreasing share of that portion which represents the wear of machinery and that other which represents newly added labor. In consequence of this falling tendency the other portion of value which represents raw material increases correspondingly, unless this growth is counterbalanced by a proportionate decrease in the value of the raw material due to a growing productivity of the labor required for its production.

I.VI.10

Again, we know that the raw materials and auxiliary substances, the same as wages, form parts of the circulating capital and must be continually reproduced in their entirety through the sale of the product, while the machinery is renewed only to the extent that it wears out, a reserve fund being accumulated for that purpose. And it is not so essential that each individual sale should contribute its share to this reserve fund, so long as the total annual sales contribute their annual share. We see, then, once more that a rise in the price of raw material can curtail or clog the entire process of reproduction, since the price realised by the sale of the commodities may not suffice to reproduce all the elements of these commodities. Or, it may render a continuation of the process on a scale fitting for its technical basis impossible, so that either a portion of the machinery remains idle, or the whole machinery works only a part of the usual time.

I.VI.11

Finally, the expense due to waste varies in direct proportion to the fluctuations in the price of raw material, rises and falls with them. Of course, there is a limit also in this case. In 1850 it was still reported, in the factory reports for April, 1850, page 17, that one source of considerable losses through the raising of the price of raw material would hardly be noticed by any one who is not a practical spinner, namely losses through waste. The reporting inspector had been informed that a rise in the price of cotton implied a greater rise in the expenses of the spinner than is indicated by the difference in price. The waste in the spinning of coarse yarns amounts to fully 15%. If this percentage causes a loss of ½ d. per lb. when cotton is worth 3½ d., then the loss increases to 1 d. per lb. as soon as cotton rises to 7 d. per lb. But when, as a result of the American Civil War, cotton rose to a height not equalled in almost a century, the report read differently. We learn from the factory reports of October, 1863, page 106, that the price then paid for cotton waste, and the return of the waste to the factory as raw material, offered some compensation for the difference in the loss through waste between Indian and American cotton. This difference amounted to 12½%. The loss in working up Indian cotton is 25%, so that really this cotton costs the spinner one-fourth more than he paid for it. The loss through waste was not so important while American cotton was quoted at 5 or 6 d. per lb., for it did not exceed ¾ d. per lb. But it became a matter for serious consideration, when cotton cost 2 sh. per lb. and the loss through waste amounted to 6d.*14

II. Appreciation, Depreciation, Release, and Tie-up of Capital.

I.VI.12

The phenomena analysed in this chapter require for their full development the credit-system and competition on the world-market, the latter being the basis and vital element of capitalist production. These more concrete forms of capitalist production can be comprehensively presented only after the general nature of capital is understood. Moreover, such a presentation lies outside of the scope of this work and belongs in its eventual continuation. Nevertheless, the phenomena mentioned in the title of this chapter may be discussed at this stage in a general way. They are interrelated among themselves, and at the same time touch upon the rate and mass of profits. They are entitled to consideration right here for the further reason that they create the impression that not only the rate, but also the mass of profit—which is actually identical with the mass of surplus-value—could increase or decrease independently of the movements of surplus-value, whether it be its mass or its rate.

I.VI.13

Are we to consider the release and tie-up of capital on one side, its appreciation or depreciation on the other, as different phenomena?

I.VI.14

The question is first: What do we mean by the release and tie-up of capital? Appreciation and depreciation explain themselves. They do not signify anything but that a certain given capital grows or declines in value as a result of general economic conditions of some sort, for we do not discuss any particular fate of some individual capital. They indicate, in short, that the value of the capital invested in production rises or falls, aside from the question of its self-expansion by means of the surplus-labor employed by it.

I.VI.15

By the tie-up of capital we mean that a certain portion of the total value of the product must be reconverted into the elements of constant and variable capital, if production is to proceed on the same scale. By the release of capital we mean that a portion of that part of the total value of the product which had to be reconverted into constant or variable capital up to a certain time becomes disposable and superfluous, provided production is to continue on the same scale. This release or tie-up of capital is different from the release or tie-up of revenue. If the annual surplus-value of a certain capital C is equal to x, then a reduction in the price of commodities consumed by the capitalists would suffice to procure the same enjoyments as before by means of x - a. In other words, a portion of the revenue equal to a is released, and may serve either for the extension of consumption or the reconversion into capital (for the purpose of accumulation). Vice versa, if x + a is needed in order to continue the same scale of living, then this scale must either be reduced or a portion of revenue equal to a and previously accumulated must be drawn upon as revenue.

I.VI.16

The appreciation or depreciation may strike either the constant, or the variable capital, or both. In the case of the constant capital it may affect either the fixed, or the circulating portion, or both.

I.VI.17

In the case of the constant capital we have to consider the raw materials and auxiliary substances, including half-wrought articles, all of which we comprise here under the term raw materials, furthermore, machinery and other fixed capital.

I.VI.18

We referred in the preceding analysis especially to variations in the price, or the value, of raw materials, and to their influence on the rate of profit. And we announced the general law that, other circumstances remaining the same, the rate or profit is inversely proportioned to the value of the raw materials. This is unconditionally true of a capital newly invested in any business enterprise, where the investment of capital, that is to say the conversion of money into productive capital, is just taking place.

I.VI.19

But aside from this capital in process of new investment, a large portion of the already functioning capital is engaged in the sphere of circulation, while another portion is busy in the sphere of production. One portion exists on the market in the shape of commodities waiting to be converted into money; another exists in the shape of money of some kind waiting to be reconverted into elements of production, finally, a third portion exists in the sphere of production, either in the primitive form of means of production (raw materials, auxiliary substances, half-wrought articles purchased on the market, machinery and other fixed capital), or as products in process of manufacture. The effect of appreciation or depreciation of any of these depends in a large measure on the relative proportions of these things. Let us leave aside, for the sake of simplicity, all fixed capital, and let us consider only that portion of constant capital which consists of raw materials, auxiliary substances, partly wrought articles, and commodities in the making or in a finished state.

I.VI.20

If the price of raw material, for instance of cotton, rises, then the price of those cotton goods which were made while cotton was cheaper—both half-wrought articles like yarn, and finished goods like cotton fabric—rises along with that of the rest. So does the value of the cotton held in stock and waiting to be worked up and that of the cotton in process of being worked. This last-named cotton then represents by indirection more labor-time than was incorporated in it, and consequently it adds more value than its own original one to the product which it goes to make up, and more than the capitalist paid for it.

I.VI.21

If, then, a rise in the price of raw materials finds on the market a considerable quantity of finished commodities, whatever may be the state of their perfection, the value of these commodities rises, and consequently the value of the existing capital is enhanced. The same is true for the supply of raw materials in the hands of the producers. This appreciation of value may indemnify the individual capitalist, or even an entire sphere of capitalist production, for the loss caused by a fall in the rate of profit incidental to a rise in the price of raw materials, or it may even more than make good that loss. Without entering into the details of the effects of competition, we may state for the sake of completeness that, in the first place, when the supplies of raw material held in stock are considerable, they tend to oppose a rise in the price of raw materials at the place where they are produced; and in the second place, when the half-wrought articles and finished goods press very heavily upon the market, they prevent the price of these things from rising in proportion to the price of their raw materials.

I.VI.22

The reverse takes place when there is a fall in the price of raw materials. Other circumstances remaining the same, it increases the rate of profit. The commodities on the market, the articles in the making, and the supplies of raw material depreciate in value and thereby counteract the accompanying rise in the rate of profit.

I.VI.23

The effect of a variation in prices of raw materials becomes so much more marked, the smaller a quantity of supplies exists in the sphere of production and on the market, for instance at the close of a business year, when great masses of raw materials are delivered anew, as happens in agriculture after the harvest.

I.VI.24

We start in this entire analysis from the supposition that a rise or a fall in prices are the expressions of actual variations in value. But since we are here concerned in the effects of such variations in price on the rate of profit, it matters little what is at the bottom of them. The present statements apply just as well in the case that prices rise or fall, not on account of variations in value, but of the influence of the credit-system, competition, etc.

I.VI.25

Seeing that the rate of profit is the expression of the excess of the value of the product over the value of the total capital advanced, a rise of the rate of profit due to a depreciation of the advanced capital would be accompanied by a loss in the value of capital. And a lowering of the rate of profit due to an appreciation of the advanced capital might be accompanied by gains.

I.VI.26

As for the other portion of constant capital, such as machinery, and fixed capital in general, the appreciation of values taking place in them, and referring mainly to buildings, real estate, etc., they cannot be discussed without an understanding of the theory of ground rent, and do not belong in this chapter, for this reason. But they have a general importance for the question of depreciation.

I.VI.27

There are, in the first place, constant improvements which lower relatively the use-value, and therefore the exchange-value, of existing machinery, factory equipments, etc. This process has a dire effect especially during the first epoch of newly introduced machinery, before it has reached a certain stage of maturity, when it becomes continually antiquated before it has had time to reproduce its own value. This is one of the reasons for the irrational prolongation of the working time customary at such periods, of working with day and night shifts, in order that the value of the machinery may be reproduced in a shorter time without having to place the figures for wear and tear too high. On the other hand, if a short period of effectiveness of machinery (its short term of life compared to anticipated improvements) is not compensated in this way, then it yields too much of its value to the product by moral wear, so that it cannot compete even against hand-labor.*15

I.VI.28

When machinery, equipment of buildings, and fixed capital in general have reached a certain maturity, so that they remain unaltered in their basic construction, at least for an ordinary length of time, then a similar depreciation takes place in consequence of improvements in the methods of reproduction of this fixed capital. The value of machinery, etc., falls in that case, not because this machinery is rapidly crowded out and depreciated to a certain degree by new and more productive machinery, etc., but because it can be reproduced more cheaply. This is one of the reasons why large enterprises frequently do not flourish until they pass into the second hand, after their first proprietors have been bankrupted, so that their successors, who buy them cheaply, are enabled to begin with a smaller investment of capital at the very outset.

I.VI.29

In the case of agriculture it is evident that the same causes which raise the price of the product or lower it must also raise or lower the value of capital, since this capital consists to a large degree of this product, such as grain, cattle, etc.


I.VI.30

There still remains the variable capital for our consideration.

I.VI.31

To the extent that the value of labor-power rises on account of a rise in the price of the means of existence required for its reproduction, or falls on account of a reduction of the value of these means of existence—and a rise or fall in the value of variable capital are but expressions of these two cases—a rise in surplus-value corresponds to such depreciation and a fall in surplus-value to such appreciation, assuming the length of the working-day to remain the same. But other circumstances—a release or tie-up of capital—may accompany such cases, and as we did not analyse them so far, we may briefly mention them now.

I.VI.32

If wages fall in consequence of a depreciation of the value of labor-power (which may be accompanied even by a rise in the actual price of labor), then a portion of the capital hitherto invested in wages, is released. Variable capital is set free. For new investments of capital, this signifies a working with a higher rate of surplus-value. It takes less money than before to set in motion the same amount of labor, and in this way the unpaid portion of labor increases at the expense of the paid portion. But in the case of already invested capital not only the rate of surplus-value is raised, but a portion of the capital previously invested in wages is also released. It had been tied up until this time and formed a regular portion which had to be deducted from the proceeds of the product and advanced for wages, in order to perform the functions of variable capital, provided the business was to continue on its former scale. Now this portion becomes disposable and may be used for a new investment, either in the extension of the same business, or to perform a function in some other sphere of production.

I.VI.33

Let us assume, for instance, that 500 p.st. were required at first to employ 500 laborers per week, and that now only 400 p.st. are needed for the same purpose. If the mass of value produced in either case was 1,000 p.st., then the mass of surplus-value produced per week in the first case was 500 p.st., and the rate of surplus-value 500/500, or 100%. But after the reduction of wages the mass of surplus-value will be 1,000-400, or 600 p.st., and its rate 600/400, or 150%. And this raising of the rate of profit is the only effect produced for any one who starts a new enterprise in this sphere of production with a variable capital of 400 p.st. and a corresponding constant capital. But in a business already existing when this takes place, the depreciation of the variable capital does not only increase the rate of surplus-value from 500 to 600 p.st., and the rate of surplus-value from 100 to 150%, but 100 p.st. of the variable capital are released and enabled to exploit more labor. The same amount of labor is then not alone advantageously exploited, but the release of 100 p.st. makes it possible to exploit more laborers with those 500 p.st. at the increased rate.

I.VI.34

Now take the opposite case. Take it that the original proportion of division, with 500 laborers, was 400 v + 600 s, making 1,000, so that the rate of surplus-value was 150%. The laborer, in that case, received 4/5 p.st., or 16 shillings per week. Now, if in consequence of an appreciation of variable capital 500 laborers cost 500 p.st. per week, then each one of them will receive 1 p.st. per week, and 400 p.st. can employ only 400 laborers. If the same number of laborers as before is to be employed, then we must have 500 v + 500 s, or 1,000. The rate of surplus-value would have fallen from 150 to 100%, which is by one-third. If some new capital were now to be invested, the only effect felt by it would be this lower rate of surplus-value. Other circumstances remaining the same, the rate of profit would also have fallen, although not to the same extent. For instance, if c equals 2,000, we should have in the one case 2,000 c + 400 v + 600 s = 3,000. The rate of surplus-value would be 150%, the rate of profit 600/2400, or 25%. In the second case we should have 2,000 c + 500 v + 500 s = 3,000. The rate of surplus-value would be 100%, the rate of profit 500/2500, or 20%. However, for a capital already invested there would be a twofold effect. Only 400 laborers could be employed with 400 p.st., at a rate of surplus-value amounting to 100%. They would then produce only 400 p.st. of surplus-value. Furthermore, since a constant capital of 2,000 p.st. requires 500 laborers for its operation, 400 laborers could operate only a constant capital of 1,600 p.st. If production is to continue on the same scale as before and one-third of the machinery prevented from remaining idle, then the variable capital must be increased by 100 p.st., in order that 500 laborers may still be employed. And this can be accomplished only by tying up a hitherto disposable capital, so that a portion of the accumulation intended for an extension of production serves then merely for stopping a gap, or a portion reserved for revenue is added to the old capital. A variable capital increased by 100 p.st. produces then 100 p.st. less of surplus-value. More capital is required to employ the same number of laborers, and the surplus-value yielded up by each laborer is at the same time reduced.

I.VI.35

The advantages resulting from a release, and the disadvantages resulting from a tie-up of variable capital, affect only capital already engaged and reproducing itself under certain determined conditions. So far as newly invested capital is concerned, the advantage on the one, or the disadvantage on the other side, are limited to a raising or lowering of the rate of surplus-value and a variation of the rate of profit accordingly, if not always in the same proportion.

I.VI.36

The release and tie-up of variable capital, analysed in the foregoing, is the result of a depreciation or appreciation of the elements of variable capital, that is to say, of the cost of reproduction of labor-power. However, variable capital might also be released, if the development of the productivity, with the rate of wages unchanged, results in the possibility of getting along with fewer laborers for the operation of the same amount of constant capital. Vice versa, additional variable capital may be formed, if the productive power declines and more laborers are needed to operate the same mass of constant capital. On the other hand, if a portion of capital formerly employed in the capacity of variable capital is transferred to the constant capital, so that there is merely a different distribution between the components of the same capital, this has its influence on the rate of surplus-value and of profit, but does not belong in this discussion of the release and tie-up of capital.

I.VI.37

We have already seen that constant capital may be released or tied up by a depreciation or appreciation of its component elements. Aside from this, it can be tied up only in the case that the productive power of labor increases (not to mention the case in which a portion of the variable is transferred to the constant capital), so that the same amount of labor creates a greater product and therefore operates a larger constant capital. The same may occur under certain circumstances when the productive power decreases, for instance in agriculture, so that the same quantity of labor requires more means of production, such as seeds, manure, drainage, etc., in order to produce the same output. Constant capital may be released without depreciation, when improvements, the harnessing of natural powers, etc., enable a constant capital of smaller value to perform the same technical services as those formerly performed by a constant capital of greater value.

I.VI.38

We have seen in volume II that once that the commodities have been converted into money, sold, a certain portion of this money must be reconverted into the material elements of constant capital, and this in proportion to the technical nature of any given sphere of production. In this respect, the most important element in all lines—aside from wages, or variable capital—is the raw material, including the auxiliary substances, which are particularly important, in all lines of production that do not use any raw materials in the strict meaning of the term, for instance in mining and extractive industries in general. That portion of the price which has to make good the wear and tear of machinery plays mainly an ideal role in calculation, so long as the machine is at all in workable condition. It does not matter greatly whether it is paid and replaced by money to-day or to-morrow, or in any other section of the period of turn-over of the capital. It is different with the raw material. If the price of raw material rises, it may be impossible to make it good fully out of the price of the commodities after deducting the wages. Violent fluctuations of price therefore cause interruptions, great collisions, or even catastrophies in the process of reproduction. It is especially the products of agriculture, raw materials taken from organic nature, which are subject to such fluctuations of value in consequence of changing yields, etc., leaving aside altogether the question of the credit-system, for the present. The same quantity of labor may, in consequence of uncontrollable natural conditions, the favor or disfavor of seasons, etc., be incorporated in very different quantities of use-values, and a definite quantity of these use-values may have very different prices. If the value x is represented by 100 lbs. of the commodity a, then the price of one lb. of a equals x/100. If it is represented by 1,000 lbs., the price of one lb. is x/1000, etc. This is one of the elements in the fluctuations of the price of raw materials. A second element, which is mentioned at this point only for the sake of completeness, since competition and the credit-system are still outside of the scope of our analysis, is this: It is in the nature of the thing that vegetable and animal substances, which are dependent on certain laws of time for their growth and production, cannot be suddenly augmented in the same degree as, for instance, machines and other fixed capital, or coal, ore, etc., whose augmentation, assuming the natural requirements to be present, can be accomplished in a very short time in an industrial country. It is therefore impossible, and under a developed system of capitalist production even inevitable, that the production and augmentation of that portion of the constant capital which consists of fixed capital, machinery, etc., should run ahead of that portion which consists of organic raw materials, so that the demand for these last materials grows more rapidly than their supply, and their price rises in consequence. This rising of prices carries with it the following results: 1) A shipping of raw materials from great distances, seeing that the rising price covers greater freight rates; 2) an increase in their production, which, however, for natural reasons, will not be felt until the following year; 3) a using up of various hitherto unused accessories, and a better economising of waste. If this rise of prices begins to exert a marked influence on production and supply, the turning point has generally arrived at which the demand lets up on account of the protracted rise of the raw material and of all commodities made up of it, so that a reaction in the price of raw material takes place. Aside from convulsions due to the depreciation of capital in various forms, this reaction is also accompanied by other circumstances which will be mentioned immediately.

I.VI.39

So much is evident from the foregoing: To the extent that capitalist production is developed, and with it the means of suddenly and permanently increasing that portion of the constant capital which consists of machinery, etc., and to the extent that accumulation is accelerated (as it is particularly in times of prosperity), to that extent does the relative over-production of machinery and other fixed capital increase, the relative underproduction of vegetable and animal raw materials become more frequent, the above described rise of their prices and the subsequent reaction more marked. And the revulsions increase correspondingly in frequency, so far as they are due to this violent fluctuation of one of the main elements of the process of reproduction.

I.VI.40

Now, if these high prices collapse, because their rise had caused partly a falling off in the demand, partly an extension of production here, an importation of goods from remote and hitherto little noted or neglected regions of production in another place, and with them an excess of the supply over the demand, especially if this excess comes in with the old prices, then we have a result which offers various points of view. The sudden collapse of the price of raw materials checks their reproduction, and consequently the monopoly of the original producing countries, which are favored by the best conditions, is restored. It may be restored with certain limitations but still it is restored. The reproduction of the raw materials proceeds indeed, after the first impulse has been given, on an enlarged scale, especially in countries which have more or less of a monopoly of this production. But the basis on which production takes place after the extension of machinery, etc., and which, after some fluctuations, has to serve as the new point of departure, is very much enlarged by the occurrences of the last cycle of turn-over. At the same time the barely increased reproduction has been considerably checked in the secondary countries of supply. For instance, it can be easily shown by a reference to the export tables that, during the last thirty years (up to 1865) the production of cotton grows in India, whenever there has been a falling off in the American, and that there is after awhile a sudden drop and falling off in the Indian. During the period in which raw materials are high, the industrial capitalists get together in associations for the purpose of regulating production. So they did, for instance, after the rise of cotton prices in 1848, in Manchester, and a similar move was made in the production of flax in Ireland. But as soon as the immediate impulse has worn off, and the principle of competition reigns once more supreme, according to which one must "buy in the cheapest market" (instead of stimulating production in the most favored countries, as those associations attempt to do, without regard to the monetary price at which those countries may just happen to supply their product), the regulation of the supply is left once more to "prices." All thought of a common, far-reaching, circumspect control of the production of raw materials gives way once more to the belief that demand and supply will mutually regulate one another. And it must be admitted that such a control is on the whole irreconcilable with the laws of capitalist production, and remains for ever a platonic desire, or is limited to exceptional co-operation in times of great stress and helplessness.*16 The superstition of the capitalists in this respect is so crude that even the factory inspectors lift their hands in surprise, in their reports. The variation of good and bad years, of course, leads at times to the production of cheaper raw materials. Aside from the direct effect of this on the extension of the demand, an added stimulant is found in the previously mentioned influence on the rate of profit. Thereupon the aforesaid process of a gradual overtaking of the production of raw materials by that of machinery, etc., is repeated on a larger scale. An actual improvement of raw materials in such a way that not only their quantity, but also their quality would come up to expectations, for instance supplying cotton of American quality from Indian fields, would necessitate a long continued, progressively growing, and steady European demand (quite aside from the economic conditions under which the Indian producer labors in his country). As it is, the sphere of production of raw materials is extended only convulsively, being now suddenly enlarged, and then violently contracted. All this, and the spirit of capitalist production in general, may be very well studied in the cotton crisis of 1861-65, which was further aggravated by the fact that raw materials were at times entirely missing which are one of the principal factors of reproduction. The price may also rise while there is an abundant supply, namely in the case that this abundance takes place under difficult conditions. Or, there may be an actual shortage of raw material. It was the last condition which originally prevailed in the cotton crisis.

I.VI.41

The closer we approach in the history of production to our own times, so much more regularly do we find, especially in the essential lines of industry, the ever recurring fluctuation between a relative appreciation and the resulting depreciation of raw materials purloined from organic nature. The preceding statements will be verified by the following illustrations from reports of factory inspectors.

I.VI.42

The moral of this story, which may also be deduced from other observations in agriculture, is that the capitalist system works against a rational agriculture, or that a rational agriculture is irreconcilable with the capitalist system, although technical improvements in agriculture are promoted by capitalism. But under this system, agriculture needs either the hands of the self-employing small farmer, or the control of associated producers.


I.VI.43

We present now the following illustrations from the English factory reports.

I.VI.44

According to R. Baker, factory reports for October, 1858, pages 56-61, the condition of business was then better. But the cycle of good and bad times was shortened with the increase of machinery, and to the extent that the demand for raw materials increases, the fluctuation in the conditions of business occur more frequently. For the time being confidence had been restored after the panic of 1857, and the panic itself seemed almost forgotten. Whether this improvement would be lasting, depended, in Baker's opinion, to a large extent on the price of raw materials. He saw indications that the maximum had already been reached, beyond which manufacture becomes less and less profitable, and finally ceases altogether to yield any profits. Taking the prosperous years in the worsted business, 1849 and 1850, it will be seen that the price of English carded wool was 13 d., and of Australian, 14 to 17 d. per lb., and that the average price of English wool, for the decade from 1841 to 1850, never exceeded 14 d., nor that of Australian 17 d. But at the beginning of the disastrous year 1857, Australian wool was quoted at 23 d. It fell in December, at the time of the worst panic, to 18 d., but rose once more in the course of the year 1858 to 21 d. English wool likewise began in 1857 with 20 d., rose in April and September to 21 d., fell in January, 1858 to 14 d., and rose subsequently to 17 d., so that it stood 3 d. per lb. higher than the average of the aforementioned 10 years. This shows, in Mr. Baker's opinion, that either the failures of 1857, which were due to similar prices, have been forgotten, or that barely enough wool is produced to keep the existing spindles running. Or the prices of fabrics may experience a lasting rise. But he has seen in his experience that spindles and frames multiplied in an incredibly short time, not only in numbers, but also in speed; that the English wool export to France rose at almost the same rate, while the average age of sheep in England and other countries was steadily reduced, since the population was rapidly increasing and breeders were trying to turn their stock into money as quickly as possible. He often was seriously alarmed, when he saw people, ignorant of these facts, invest their ability and their capital in enterprises whose success depended on the supply of a product which can be increased only according to certain organic laws. The conditions of supply and demand of all raw materials seems to explain to Mr. Baker many fluctuations in the cotton business as well as the condition of the English wool market in the fall of 1857 and the subsequent commercial crisis.*17

I.VI.45

The most flourishing time of the worsted industry of the West-Riding of Yorkshire was from 1849 to 50. This industry employed 29,246 persons in 1838, 37,000 persons in 1843, 48,097 in 1845, 74,891 in 1850. (Factory Reports, 1850, page 60.) This prosperity of the carded wool industry began to excite certain forebodings in October, 1850. In his report for April, 1851, sub-inspector Baker says in regard to Leeds and Bradford that the condition of business is very unsatisfactory. The carded wool spinners are rapidly losing the profits of 1850, and the majority of the weavers do not make much progress. He believes that more wool machinery is momentarily standing idle than ever before, and the flax spinners are likewise discharging laborers and stopping machinery. The cycles of the textile industry are very uncertain, and he thinks that people will soon realise that no proportion is observed between the productivity of the spindles, the quantity of raw materials, and the increase of population. (Page 52.)

I.VI.46

The same is true of the cotton industry. In the same report for October, 1858, we read that, since the fixing of the hours of labor in factories, the amounts of raw material consumed, of production, and of wages in all textile industries have been reduced to a simple rule of three. The inspector quotes from a recent lecture by Mr. Payns, who was then mayor of Blackburn, on the cotton industry, in which the industrial statistics of that region were very accurately compiled. The mayor said in substance that every actual horse-power operates 450 self-actor spindles with preparatory spinning machinery, or 200 throstle spindles, or 15 looms for cloth 40 inches wide, with machinery for reeling, warping and smoothing. Every horse-power employs two and a half laborers in spinning, or 10 in weaving. Their average wages are fully 10½ shillings per capita per week. The worked up average numbers are Nos. 30-32 for the warp and Nos. 34-36 for the woof. Assuming the product of one week's spinning to be 13 ounces per spindle, the weekly output of yarn would be 824,700 lbs., which imply a consumption of 970,000 lbs., or 2,300 bales of cotton valued at 28,300 p.st. In a circle of five miles around Blackburn the weekly consumption of cotton amounted to 1,530,000 lbs., or 3,650 bales, at a cost-price of 44,625 p.st. This is one-eighteenth of the entire cotton spun in the United Kingdom, and one-sixteenth of the entire mechanical weaving.

I.VI.47

The inspector says that according to the calculations of Mr. Payns the total number of cotton spindles in the United Kingdom would be 28,800,000, and it would require 1,432,080,000 lbs. of cotton to keep them going at full speed. But the cotton imports, after deducting the exports, amounted in 1856 and 1857 only to 1,022,576,832 lbs. so that there must have been a shortage of 409,503,168 lbs. Mr. Payns, who had the kindness to discuss this point with the inspector, held that a computation of the annual consumption of cotton, based on the consumption of the Blackburn district, would total up too high, on account of the difference, not only of the numbers spun, but also of the excellence of the machinery. He estimated the total consumption of cotton per year in the United Kingdom at 1,000 million lbs. But if he is correct, and there is actually a surplus-import of 22½ million lbs., then the inspector thinks that demand and supply are nearly balanced, without taking into account the additional spindles and looms which are about to be erected in Mr. Payns' own district, according to him, and the same applies probably to other districts as well. (Pages 59, 60.)

III. General Illustration. The Cotton Crisis of 1861-1865.

Preliminary History, 1845-1860

I.VI.48

1845. Prosperity of cotton industry. Price of cotton very low. L. Horner says on this point that he has not witnessed a more active period of business than that of the last summer and fall. Especially in the spinning of cotton. Throughout the entire six months he received every week reports of new investments of capital in factories. Now new factories were being built, now the few vacant ones had found new renters, now factories which were in operation were extended, new and stronger steam engines installed and more working machinery added. (Factory Reports, November, 1845, page 13.)

I.VI.49

1845. The complaints are beginning. For some time the inspector hears general complaints among the manufacturers over the depressed state of their business. During the last six weeks, he says, various factories have begun working short time, generally 8 hours instead of 12. This seemed to become general. There had been a great rise in the price of cotton, while the price of the products had not alone not risen, but fallen to a lower figure than that before the rise in cotton. The great increase in the number of cotton factories during the preceding four years must have caused a strong increase in the demand for raw material and a large supply of products on the market. Both of these things must have operated to depress profits, so long as the supply of raw material and the demand for the product remained unchanged. But they actually had a far stronger influence, because the supply of cotton had recently been insufficient, and the demand for the product had let up in various inland and foreign markets. (Factory Reports, December, 1846, page 10.)

I.VI.50

The rising demand for raw materials went, of course, hand in hand with the overstocking of the market with products. By the way, at that period the expansion of industry and the subsequent stagnation were not confined to the cotton districts. The carded wool district of Bradford contained in 1836 only 318 factories, but 490 in 1846. And these figures do not by any means express the actual extension of production, since the existing factories were at the same time considerably enlarged. This was especially true of the flax mills. According to the factory report, November, 1846, page 30, all of them had contributed more or less, during the preceding 10 years, to that overstocking of the market which was to blame for the stagnation of business at the time being. The depression in business followed naturally after such a rapid expansion of factories and machinery.

I.VI.51

1847. In October, a money panic. Discount 8%. This was preceded by a collapse of railroad speculation, and of jobbing with East-Indian bills of exchange.

I.VI.52

The factory report for October, 1847, page 30, states that Mr. Baker presented very interesting details concerning the rise in the demand for cotton, wool, and flax, in recent years, caused by the expansion of these industries. He held that the increased demand for these raw materials, particularly at a time when their supply had fallen far below the average, was sufficient to explain the prevailing depression in those lines of business, without reference to the insecurity of the money-market. This view was fully supported by the personal experience of the writer of the report, and by statements made to him by experts in business. All these various lines of business had been very much depressed, when discounts were still practicable at 5% and less. On the other hand, the supply of raw silk was abundant, prices reasonable, and the business correspondingly brisk until a few weeks previously, when doubtless the money-panic affected not only the dealers in raw silk, but still more their principal customers, the manufacturers of custom made goods. A glance at the published official reports showed that the cotton industry had increased by almost 27% during the preceding three years. As a result, cotton had risen in round figures from 4 d. to 6 d. per lb., while yarn, thanks to the increased supply, stood only a trifle above its former price. The wool industry commenced to expand in 1836. Since then it had grown by 40% in Yorkshire, and still more in Scotland. The increase in the worsted industry was still larger.*18 The calculations showed in its case, for the same length of time, an expansion of more than 74%. The consumption of raw wool had, therefore, been very large. The linen industry showed since 1839 an increase of about 25% in England, 22% in Scotland, and almost 90% in Ireland,*19 the consequence of this, and of the failure of flax crops, was that the price of the raw material rose by 10 p.st. per ton, while the price of yarn had fallen by 6 d. per bundle.

I.VI.53

1849. Beginning with the last months of 1848, business revived. According to factory reports, 1849, pages 30, 31, the price of flax, which was so low that it guaranteed a reasonable profit under all possible future circumstances, induced manufacturers to push their business steadily. The wool manufacturers were very busy for a time in the beginning of the year. The writer of the report feared, however, that consignments of woolen goods often took the place of real demand, and that periods of seeming prosperity, that is to say, of full employment, did not always coincide with periods of legitimate demand. The worsted business was particularly good for some months. In the beginning of this period, wool stood especially low. The mill-owners had stocked them-selves at advantageous prices, and no doubt in considerable quantities. When the price of wool rose with the spring auctions, the mill-owners had the advantage, and they retained it, since the demand for goods became strong and irresistible.

I.VI.54

On page 42 of the factory report for April, 1849, we read that, considering the fluctuations in the conditions of business, which had taken place in the factory districts for three or four years, it must be admitted that there is somewhere some great disturbing cause. May not the productive power of the increased machinery have become a new element?

I.VI.55

In November, 1848, in May, summer, and up to October, 1849, business became more and more flourishing. The same report states on pages 42 and 43, that this applies particularly to the manufacture of goods from worsted yarn, which centers in Bradford and Halifax. At no previous time did this business approximate the extension which it had then. The speculation in raw materials, and the uncertainty of its probable supply, has always caused greater excitement and more frequent fluctuations in the cotton industry than in any other line of business. For the time being there was an accumulation of supplies of the coarser grades of cotton goods, which worried the small mill-owners and placed them at a disadvantage, so that some of them were working short time.

I.VI.56

1850. April. Business continued brisk. Exception, according to factory report, April, 1850, page 54: There is a great depression in a portion of the cotton industry as a result of insufficient supplies of raw material precisely for coarse grades of yarn and heavy textures. It is feared that the increased machinery lately installed in the worsted business may bring about a similar reaction. Mr. Baker calculates that alone in the year 1849, the product of the looms in this business has grown by 40%, and that of the spindles by 25 to 30%, and the expansion is still continuing at the same rate.

I.VI.57

1850. October. The factory report for October states on page 15 that the price of cotton continues to cause considerable depression in this line of industry, especially for such goods as require a considerable portion of the cost of production to be spent for raw material. The great rise in the price of raw silk has led to an aggravation of the situation in many instances, also in this line. And on page 33 of the same report we learn that the committee of the Royal Association for Flax Culture in Ireland was of the opinion that the high price of flax, together with the low level of prices of other agricultural products, had safeguarded a considerable increase in the production of flax for the ensuing year.

I.VI.58

1853. April. Great prosperity. L. Horner says in the factory report for April, 1853, page 19, that at no time during the 17 years, in which he took official notice of the condition of the factory districts of Lancashire, has he seen such general prosperity. The activity in all lines was extraordinary.

I.VI.59

1853. October. Depression in the cotton industry. Overproduction. (Factory Report, October, 1853, page 15.)

I.VI.60

1854. April. The factory report for 1854, page 37, states that the wool business, while not brisk, furnished full employment for all factories. The same held good of the cotton industry. The worsted business was irregular throughout the entire preceding half year. There was a disturbance in the linen industry in consequence of the reduced supply of flax and hemp from Russia, on account of the war in the Crimea.

I.VI.61

1859. According to the factory report for April, 1859, page 19, business was still depressed in the Scotch linen industry, because the raw material was scarce and dear. The low quality of the preceding crop in the Baltic countries, from which came the main supply, was expected to exert an injurious influence on the business of this district. On the other hand, jute, which displaced flax for many coarse goods, was neither uncommonly dear nor scarce. About one-half of the machinery in Dundee was spinning jute. The factory report for October, 1859, states on page 30, that in consequence of the high price of raw material, flax spinning is not yet profitable, and while all other factories are running on full time, there are various instances of idle flax machinery. The jute mills are in a satisfactory condition, since recently this material has fallen to a reasonable figure.

1861-64. American Civil War. Cotton Famine. The Greatest Illustration of an Interruption in the Process of Production through Scarcity and Dearness of Raw Material.

I.VI.62

1860. April. The reporting inspector says in substance in factory report, April, 1860: I am pleased to be able to inform you that, in spite of the high price of raw materials, all textile industries, with the exception of silk, have been well employed during the last half year. In some of the cotton districts, laborers were advertised for, and secured by immigration from Norfolk and other rural counties. There seems to be a great lack of raw materials in all branches of industry. It is alone this lack which holds us back. In the cotton business, the number of factories erected, the extension of already existing ones, and the demand for laborers, has probably never been so great. Raw materials are sought on all sides.

I.VI.63

1860. October. The factory report for October, 1860, states on page 37, that the condition of business in the cotton, wool, and flax districts has been good. It is reported to have been very good in Ireland, for more than a year, and would have been still better but for the high price of raw materials. The flax mills seem to be waiting with more impatience than ever for the opening of the resources of India by railroads, and for a corresponding development of its agriculture, in order to secure at last a supply of flax sufficient for their requirements.

I.VI.64

1861. April. The factory report for April, 1861, states on page 33 that the condition of business for the time being was depressed. A few cotton goods factories were working short time, and many silk factories were running only a part of the time. Raw materials were dear. In almost every textile branch raw materials were quoted above the price at which they could be worked by the mass of the consumers.

I.VI.65

It now became evident that the cotton industry had produced too much in 1860. The effect of this made itself felt for the next few years. The factory report for December, 1863, page 127, states that it took between two and three years for the world-market to absorb the overproduction of 1860. And the factory report for October, 1862, pages 28 and 29, says in so many words: The depressed condition of the markets for cotton goods in Eastern Asia, in the beginning of 1860, had a corresponding influence on the business in Blackburn, where on an average of 30,000 mechanical looms are almost exclusively engaged in the production of goods for this market. The demand for labor was, therefore, already restricted at this point many months before the effects of the blockade made themselves felt. Fortunately, many factories were thereby saved from ruin. The supplies rose in value so long as they were held in stock, and this prevented the appalling depreciation which is otherwise inevitable in such a crisis.

I.VI.66

1861. October. According to the factory report for October, 1861, page 19, the business has been depressed for some time. It is not at all improbable that many factories will materially reduce their working time during the winter months. However, this was to be anticipated; quite aside from the causes which have interrupted the ordinary supply of cotton from America and the English exports, it would have been necessary to reduce the hours of labor during the coming winter, on account of the strong increase of production in the preceding three years, and the disturbance of the Indian and Chinese markets.

Cotton Waste. East Indian Cotton. (Surat.) Influence on the Wages of Laborers. Improvement of Machinery. Substitution of Starch Flour and Minerals for Cotton. Effect of this Starch Flour Ingredient on the Laborers. Manufacturers of Fine Grades of Yarn. Fraud on the Part of the Manufacturers.

I.VI.67

An inspector writes in the factory report for October, 1863, page 63: A manufacturer thinks that, so far as the estimate of the cotton consumption per spindle is concerned, I did not sufficiently appreciate the fact that, when a cotton is dear, every manufacturer of ordinary yarns (say up to No. 40, mainly from 12 to 32) spins as fine grades as he possibly can, that is to say, he will spin No. 16 instead of 12, or 22 instead of 16, etc. And the weaver who works up these fine yarns, will raise his calico to the regular weight by adding so much more glue. This expedient is now used to a shameful degree. I have it on good authority that there are ordinary shirtings for export weighing 8 lbs. per piece, of which 2 lbs. were glue. Textures of other kinds are often given as much as 50% of glue, so that that manufacturer does not lie by any means who boasts of becoming a rich man by selling his fabrics at less money per pound than he paid for the yarn of which they are made.

I.VI.68

We read furthermore in the same place: I have also been told that the weavers ascribe the growth of disease among themselves to the glue used in the woof of East-Indian Cotton and not merely consisting of flour, as heretofore. This substitute for flour is said to have the very great advantage of increasing the weight of fabrics considerably, so that 15 lbs. of yarn, after being woven, weigh 20 lbs. (This substitute was ground talcum, called China clay, or gypsum, called French chalk.) The wages of the weavers (meaning the laborers) have been very much reduced by the employment of substitutes for flour in the making of weaver's glue. This glue renders the yarn heavier, but also stiff and brittle. Every thread of the yarn passes in the loom through the bobbin, whose strong threads keep the woof in position. The stiffly glued woof continually causes breaks in the thread of the bobbin. Every break causes a loss of five minutes to the weaver for repairs. The weavers have to repair such breaks ten times as often as formerly, and the loom naturally turns out so much less during working hours. (Pages 42 and 43.)

I.VI.69

In Ashton, Stalybridge, Oldham, etc., the working hours have been reduced by at least one-third, and are reduced still more every week. This reduction of the hours of labor is in many instances accompanied by a reduction of wages. (Page 13.) In the beginning of 1861, a strike took place among the mechanical weavers in some parts of Lancashire. Several manufacturers had announced a reduction of wages by 5 to 7.5%. The laborers insisted that the scale of wages should be maintained and the hours of labor reduced. This was not granted, and a strike was called. After one month, the laborers had to give in. But then they got both. Aside from a reduction of wages which the laborers finally accepted they also worked short time in many factories. (Factory Report, April, 1863, page 23.)

I.VI.70

1862. April. The sufferings of the laborers had considerably increased since the last report was made. But at no time in the history of this industry have so sudden and so grievous ills been borne with so much quiet resignation and such patient self-respect. (Factory Report, April, 1862, page 10.) The proportion of the temporarily totally unemployed laborers does not seem to be much larger than in 1848, when there was an ordinary panic, which, however, was of sufficient force to induce the worried manufacturers to compile a similar statistics on the cotton industry as that now given out weekly. In May, 1848, 15% of all the cotton employes of Manchester were idle, 12% worked short time, while more than 70% worked on full time. On May 28, 1862, there were 15% idle, 35% working on short time, and 49% on full time. In the neighboring places, for instance at Stockport, the percentage of the idle and partly employed is higher, that of the fully employed lower, because coarser numbers are spun there than in Manchester. (Page 16.)

I.VI.71

1862. October. According to the last official statistics, there were in the United Kingdom 2,887 cotton factories, of which 2,109 were in the districts of Lancashire and Cheshire. The reporting inspector knew well enough that a very large number of the 2,109 factories in his district were small establishments, which employed but a few laborers. But he was surprised when he found how large was the number of these. There were 392, or 19%, which had less than 10 horse-power motors (steam or water); 345, or 16%, had between 10 and 20 horse-powers; 1,372 had 20 horse-powers or more. A very large portion of the small manufacturers, more than one-third, had been laborers not very long ago. They are men without a command of capital. The main burden would fall upon the other two-thirds. (Factory Reports, October, 1862, pages 18, 19.)

I.VI.72

According to the same report, 40,146, or 11.3% of the cotton employes of Lancashire and Cheshire, were then working full time; 134,767, or 38%, were working a part of the time; 197,721, or 50.7%, were unemployed. If we deduct from these figures the data referring to Manchester and Bolton, where mainly fine numbers were spun, a line little affected by the cotton famine, then the matter looks still more unfavorable, namely fully employed 8.5%, partly employed 38%, unemployed 53.3%. (Pages 19 and 20.)

I.VI.73

It makes an essential difference for the laborers whether good or bad cotton is worked up. In the first months of the year, when the manufacturers sought to keep their factories going by using up all the cotton bought at cheap prices, much bad cotton went into factories that usually worked only with good cotton. The difference in the wages of the laborers was so great that many strikes took place because no living wage could be made at the old piece wages. In a few instances the difference due to the employment of bad cotton amounted to one-half of the total wages, even at full time. (Page 27.)

I.VI.74

1863. April. In the course of this year, not more than about one-half of the cotton employes will work on full time. (Factory Report, April, 1863, page 14.)

I.VI.75

A very serious inconvenience in the employment of East-Indian cotton, such as the factories must use at this time, is that the speed of the machinery must be considerably reduced with it. During the last years, everything has been tried to increase the speed, so that the same machinery might do more work. However, the reduced speed hits the laborer as much as the manufacturer. For the majority of the laborers are paid by the piece, the spinners receiving so much per lb. of yarn spun, the weavers so much per piece woven. And even the others, who work on weekly wages, will suffer a reduction through the restriction of production. According to the researches of the inspector, and the data received by him, referring to the wages of the cotton employes during the year, there is an average reduction of 20% in some cases as much as 50%, compared to the wages which were in vogue in 1861. (Page 13.) The amount earned depends on the quality of the material worked up. The condition of the laborers, so far as earnings are concerned, is much better now (October, 1863) than at the same time last year. The machinery has been improved, the raw material is better known, and the laborers overcome the difficulties better with which they had to struggle in the beginning. In the previous spring, the inspector was in a sewing school in Preston (a charity institution for unemployed). Two young girls, who had been sent to a weaving establishment on the strength of a promise that they would be able to make 4 shillings per week, asked to be readmitted to the school and complained that they could not make 1 shilling per week. The inspector has had information concerning self-acting minders, that is to say, men who operate a few self-actors, who had earned 8 sh. 11d. after 14 days of full employment, and their house-rent was deducted from this sum. The manufacturer returned one-half of this rent to them as a gift. (How generous!) The minders carried home the amount of 6 sh. 11 d. In some places the self-acting minders earned from 5 to 9 sh. per week, the weavers from 2 to 6 sh. per week, during the last months of 1862. At the time of the report there was a healthier condition of things, although even then the earnings in most districts had decreased still more. Other conditions contributed to the scanty earnings, aside from the shorter staple of East-Indian cotton and its impurity. For instance, it had become the custom to mix plenty of cotton waste with the Indian cotton, and this increases, of course, the difficulties for the spinner. Owing to the shortness of the fiber, the threads break more easily in drawing out the mule and twisting the yarn, and the mule cannot be kept going so regularly. Furthermore, one girl frequently can watch but one loom, because she must pay more attention to the threads. But few of them have more than two looms. In many cases the wages of the laborers have been reduced by 5, 7.5, and 10%. In the majority of cases the laborer must handle his raw material as best he may, and try to make wages at the ordinary scale to the best of his power. Another difficulty with which the weavers have sometimes to struggle is that they are supposed to make good fabrics out of bad materials, and are fined by deductions from their wages, if the work is not all that is desired. (Factory reports, October, 1863, pages 41-43.)

I.VI.76

Wages were miserable, even in places where full time was worked. The cotton employes willingly offered themselves for all public labors, drainage, road building, stone breaking, street paving, which they did in order to get their keep from the authorities (although this amounted practically to an assistance for the manufacturers. See volume I, chapter XXV, 3.) The whole bourgeoisie stood guard over the laborers. If the worst of a dog's wages were offered, and the laborer refused to accept them, then the Assistance Committee struck him from their list. It was in a way a golden age for the manufacturers, for the laborers had either to starve or work at any price profitable for the bourgeois. The Assistance Committees acted as watch-dogs. At the same time the manufacturers, in secret agreement with the government, hindered emigration as much as possible, either for the purpose of having their capital, invested in the flesh and blood of laborers, ready at hand, or of safeguarding the squeezing of rent out of the laborers.

I.VI.77

The Assistance Committees acted with great severity in this matter. If work was offered, the laborers to whom it was offered were stricken from the lists and compelled to accept. If they refused to begin work, the reason was that their earnings were but nominal, while the work was extraordinarily hard. (Page 97.)

I.VI.78

The laborers were willing to perform any work for which they were employed in consequence of the Public Work Acts. The principles according to which industrial occupations were assigned, varied considerably in different cities. But even in places where work in the open air was not absolutely regarded as a labor test, this labor was either compensated with the bare ordinary charity sum, or so insignificantly better that it actually became a labor test. (Page 69.) The Public Works Act of 1863 was to remedy this evil and to enable the laborer to earn his wages as an independent day laborer. The purpose of this Act was threefold: 1) To enable local authorities to borrow money from the loan treasury commissioners (with the consent of the president of the state's central poor boards; 2) to facilitate improvements in the cities of the cotton districts; 3) to secure work and remunerative wages for the unemployed laborers. Up to the end of 1863, loans to the amount of 883,700 p.st. had been granted under this Act. (Page 70.) The enterprises started were mainly canalisation, road building, street paving, reservoirs for water works, etc.

I.VI.79

Mr. Henderson, president of the committee of Blackburn, wrote with reference to this to factory inspector Redgrave, that in his entire experience in the course of this period of suffering and misery nothing had struck him more emphatically or given him so much pleasure as the serene willingness with which the unemployed laborers of his district accepted the work offered to them by the city council of Blackburn pursuant to the Public Works Act. A greater contrast could hardly be imagined than that between the cotton spinner, who formerly worked as a skilled man in the factory, and the day-laborer, who now works in a depth of 14 or 18 feet on a drainage canal. (They earned thereby about 4 to 12 sh. per week, according to the size of their families, and this last enormous amount had to provide sometimes for a family of eight. The gentlemen of the bourgeoisie derived a double profit from this. In the first place, they secured money for the improvement of their smoky and neglected cities at exceptionally low interest. In the second place, they paid wages to the laborers at a scale far below the ordinary.) Mr. Henderson thinks that this ready willingness on the part of the laborers to accept the offered employment implied great self-denial and consideration, and deserved all honor, since they were accustomed to an almost tropical temperature, to work in which skill and accuracy counted for more than muscular strength, and to wages which were double, or sometimes treble, of what they could earn now. In Blackburn the men were tried at all possible kinds of labor in the open air. They dug through a stiff and heavy clay soil to a considerable depth, they did drainage work, broke stones, built roads, made excavations for street canals to a depth of 14, 16, and sometimes 20 feet. Frequently they stood in mud and water from 10 to 12 inches deep, and they were exposed to a climate whose wet cold was not exceeded, or perhaps not equalled, in any other district of England. (Pages 91 and 92.) The attitude of the laborers has been almost faultless, their willingness to accept work in the open air and to get along on it. (Page 69.)

I.VI.80

1864. April. Occasionally complaints about lack of laborers are heard in various districts, especially in certain branches, for instance weaving. But these complaints are due as much to the low wages which the laborers may earn in consequence of the bad kinds of yarn as to an actual scarcity of laborers in this particular line. Numerous disputes over wages took place during the preceding month between some manufacturers and their laborers. The inspector regrets that strikes occurred far too frequently. The effect of the Public Works Act is now resented by the manufacturers as a competition, and as a result the local committee of Bacup has suspended its activity. For although all the factories are not yet running, there has already been a lack of laborers. (Factory Report, April, 1864, pages 9 and 10.) It was indeed high time for the manufacturers to act. In consequence of the Public Works Act the demand for laborers grew so much that many a factory hand was making 4 to 5 shillings per day in the quarries of Bacup. And so the public works were gradually suspended; this new edition of the Ateliers nationeaux of 1848, which had this time been opened in the interests of the bourgeoisie.

Trying it on the Dog

I.VI.81

Although the very reduced wages (of the fully employed), the actual earnings of the laborers in the different factories, have been given, it does not follow that they earn the same amount week after week. The laborers are exposed to great fluctuations at this place, in consequence of the continual experiments made by the manufacturers with different kinds and proportions of cotton and waste in the same factory. The "Mixtures," as they are called, are frequently changed, and the earnings of the laborers rise and fall with the quality of cotton mixtures. At times they earned only 15% of their former wages, and in one or a couple of weeks wages fell to 50 or 60%. Inspector Redgrave, who makes this report, then proceeds to figures of wages selected from practical life. The following examples may suffice:

I.VI.82

A, weaver, family of 6 persons, employed 4 days in the week, 6 sh. 8.5 d.; B, twister, 4.5 days per week, 6 sh.; C, weaver, family of 4, 5 days per week, 5 sh. 1 d.; D, slubber, family of 6, employed 4 days per week, 7 sh. 10 d.; E, weaver, family of 7, employed 3 days, 5 sh., etc. Redgrave continues in substance: These data deserve attention, for they prove that labor would become a misfortune in some families, since it reduces not only the earnings, but depresses them so low that they become totally insufficient to satisfy anything but a small part of a family's absolute necessities, unless additional assistance were given in cases where the earnings of a family do not reach the amount which would be granted to them if all of them were unemployed. (Factory Reports, October, 1863, pages 50-53.)

I.VI.83

In no week since June 5, 1863, has the average total employment of all laborers been more than 7 hours and some minutes. (Page 121.)

I.VI.84

From the beginning of the crisis to March 23, 1863, nearly three million pounds sterling were expended by the poor boards, the central committee of charity, and the London Mansion House committee. (Page 13.)

I.VI.85

In one district, in which perhaps the finest yarn is spun, the spinners suffer an indirect reduction of wages of 15% as a result of passing from Sea Island to Egyptian cotton.

I.VI.86

In one extended district, in which cotton waste is used in large quantities as an admixture to Indian cotton, the spinners have had their wages reduced by 5%, and lost besides from 20 to 30% by working up Surat and waste. The weavers have dropped from four looms to two. In 1860 they made 5 sh. 7 d. on each loom, but in 1863 only 3 sh. 4 d. The fines, which amounted to from 3 to 6 d. per spinner on American cotton, now run as high as 1 sh. to 3 sh. 6 d. In one district, in which Egyptian cotton was used, mixed with East-Indian, the average earnings of the mule spinners in 1860 was from 18 to 25 sh., while it is only from 10 to 18 sh. now. This not exclusively due to deteriorated cotton, but also to the decreased speed of the mule, in order to give to the yarn a stronger twist, for which extra payment according to the wage scale would have been made in ordinary times. (Pages 43, 44, 45-50.) Although East-Indian cotton may have been worked here and there at a profit for the manufacturers, the wage list on page 53 shows that the laborers suffer from it, compared with 1861. If the use of Surat becomes a settled fact, the laborers would demand the same wages as in 1857. But this would seriously affect the profits of the manufacturers, unless it would be balanced by the price of either the cotton or the products. (Page 105.)

I.VI.87

House-Rent. The house-rent of the laborers living in cottages belonging to the manufacturers, is frequently deducted from their wages, even if only short time is worked. Nevertheless the value of these buildings has fallen, and the cottages are now from 25 to 50% cheaper than formerly. A cottage which formerly rented from 3 sh. 6 d. per week, may now be had for 2 sh. 4d., and sometimes for less. (Page 57.)

I.VI.88

Emigration. The employers were, of course, opposed to the emigration of the laborers, in the first place because they wished, in the expectation of better times in the cotton industry, to keep the means at hand for the profitable operation of their factories. In the second place some employers are owners of cottages in which their employes are to live, and at least some of them calculate without fail to collect at least a portion of the rent due them. (Page 96.)

I.VI.89

Mr. Bernall Osborne says in a speech to his parliamentary constituents, on October 22, 1864, that the laborers of Lancashire had behaved like ancient stoic philosophers. Perhaps they acted like sheep?


Notes for this chapter


13.
The Factory Question and the Ten Hours Bill. By R. H. Greg. London, 1837, page 115.
14.
The report makes a mistake in the last sentence. Instead of 6d. for loss, through waste, only 3d. should be allowed. This loss amounts indeed to 25% with Indian, but only to 12½ to 15% with American cotton, and this last kind is meant, the same percentage being correctly stated for the price of 5 to 6d. It is true, however, that the percentage of waste increased at times considerably, for American cotton brought to Europe during the closing years of the Civil War.—F. E.
15.
For illustrations see Babbage, among others. The usual expedient, a reduction of wages, is employed also in this instance, and so this continual depreciation works out quite contrary to the dreams of the harmonious brain of Mr. Carey.
16.
Since the above was written (1865), competition on the world-market has been considerably intensified by the rapid development of industry in all civilized countries, especially in America and Germany. The fact that the rapidly and enormously growing productive forces grow beyond the control of the laws of the capitalist mode of exchanging commodities, inside of which they are supposed to move, this fact impresses itself nowadays more and more even on the minds of the capitalists. This is shown especially by two symptoms. First, by the new and general mania for a protective tariff, which differs from the old protectionism especially by the fact that now the articles which are capable of being exported are the best protected. In the second place it is shown by the trusts of manufacturers of whole spheres of production for the regulation of production, and thus of prices and profits. It goes without saying that these experiments are practicable only so long as the economic weather is relatively favorable. The first storm must upset them and prove, that, although production assuredly needs regulation, it is certainly not the capitalist class which is fitted for that task. Meanwhile the trusts have no other mission but to see to it that the little fish are swallowed by the big fish still more rapidly than before.—F. E.
17.
It goes without saying that we do not, with Mr. Baker, explain the wool crisis of 1857 out of the disproportion between the raw material and the product. This disproportion was itself but a symptom, and the crisis was general.—F. E.
18.
A careful distinction is made in England between the woollen manufacture, which spins carded yarn from short wool and weaves it (main centre Leeds), and the worsted manufacture, which makes worsted yarn from long wool and weaves it (main seat Bradford, in Yorkshire).—F. E.
19.
This rapid expansion of the manufacture of linen yarn by machinery, in Ireland, gave the death-blow to the exportation of the linen made of hand-made yarn in Germany (Silesia, Lusatia, and Westphalia).—F. E.

Part II, Chapter VIII.

End of Notes


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