CAPITAL AND ITS REWARD
And so, in fact, he does. But we have not yet found out how he got the money that he lent. That money can only have been got by work done or services rendered, for which other people were ready to pay. Capital, looked at from this point of view, is simply stored up work, and entitled to its reward just as much as the work done yesterday. The capitalist lives on the work of others, but he can only do so because he has wrought himself in days gone by or because someone else has wrought and handed on to him the fruits of his labour. Let us take the case of a shopkeeper who has saved a hundred pounds. This is his pay for work done and risk taken (that the goods which he buys may not appeal to his customers) during the years in which he has saved it. He might spend his hundred pounds on a motor cycle and a side-car, or on furniture, or a piano, and nobody would deny his right to do so. On the contrary he would probably be applauded for giving employment to makers of the articles that he bought. Instead of thus consuming the fruit of his work on his own amusement, and the embellishment of his home, he prefers to make provision for his old age. He invests his hundred pounds in the 5 per cent. debenture stock of a company being formed to extend a boot factory. Thereby he gives employment to the people who build the extension and provide the machinery, and thereafter to the men and women who work in the factory, and moreover he is helping to supply other people with boots. He sets people to work to supply other people's wants instead of his own, and he receives as the price, of his service five pounds a year. But it is his work, that he did in the years in which he was saving, that is earning him this reward.
An interesting book has lately appeared in America, called "Income," in which the writer, Dr. Scott Nearing, of the University of Pennsylvania, draws a very sharp distinction between service income and property income, implying, if I read him aright, that property income is an unjust extortion. This is how he states his case:
"The individual whose effort creates values for which society pays receives service income. His reward is a reward for his personality, his time, his strength. Railroad president and roadmender devote themselves to activities which satisfy the wants of their fellows. Their service is direct. In return for their hours of time and their calories of energy, they receive a share of the product which they have helped to produce.
"The individual who receives a return because of his property ownership, receives a property income. This man has a title deed to a piece of unimproved land lying in the centre of a newly developing town. A storekeeper offers him a thousand dollars a year for the privilege of placing a store on the land. The owner of the land need make no exertion. He simply holds his title. Here a man has labored for twenty years and saved ten thousand dollars by denying himself the necessaries of life. He invests the money in railroad bonds, and someone insists he thereby serves society. In one sense he does serve. In another, and a larger sense, he expects the products of his past service (the twenty years of labor), to yield him an income. From the day when he makes his investment he need never lift a finger to serve his fellows. Because he has the investment, he has income. The same would hold true if the ten thousand dollars had been left him by his father or given to him by his uncle.... The fact of possession is sufficient to yield him an income."
Now, in all these cases of property income which Dr. Nearing seems to regard as examples of income received in return for no effort, there must have been an effort once, on the part of somebody, which put the maker of it in possession of the property which now yields an income to himself, or those to whom he has left or given it. First there is the case of the man who has a title deed to a piece of land. How did he get it? Either he was a pioneer who came and cleared it and settled on it, or he had worked and saved and with the product of his work had bought this piece of land, or he had inherited it from the man who had cleared or bought the land. The ownership of the land implies work and saving and so is entitled to its reward. Then there is the case of the man who has saved ten thousand dollars by labouring for twenty years and denying himself the necessaries of life. Dr. Nearing admits that this man has worked in order to get his dollars; he even goes so far as to add that he had denied himself the necessaries of life in order to save. Incidentally one may wonder how a man who has denied himself the necessaries of life for twenty years can be alive at the end of them. This man has worked for his dollars, and, instead of spending them on immediate enjoyment, lends them to people who are building a railway, and so is quickening and cheapening intercourse and trade. Dr. Nearing seems to admit grudgingly that in a sense he thereby renders a service, but he complains because his imaginary investor expects without further exertion to get an income from the product of his past service. If he could not get an income from it, why should he save? And if he and millions of others did not save how could railways or factories be built? And if there were no railways or factories how could workers find employment?