Chapter 1, Part 2.

[4] Times of commercial panic are marked by high rates of discount, but this is evidently not a high rate of interest, properly so-called, but a high rate of insurance against risk.

[5] For instance McCulloch (Note VI to Wealth of Nations) says: “That portion of the capital or wealth of a country which the employers of labor intend to or are willing to pay out in the purchase of labor, may be much larger at one time than another. But whatever may be its absolute magnitude, it obviously forms the only source from which any portion of the wages of labor can be derived. No other fund is in existence from which the laborer, as such, can draw a single shilling. And hence _it follows_ that the average rate of wages, or the share of the national capital appropriated to the employment of labor falling, at an average, to each laborer, must entirely depend on its amount as compared with the number of those amongst whom it has to be divided.” Similar citations might be made from all the standard economists.

[6] We are speaking of labor expended in production, to which it is best for the sake of simplicity to confine the inquiry. Any question which may arise in the reader’s mind as to wages for unproductive services had best therefore be deferred.