Chapter 5, they amount to £43,000,000 per annum, or far more than is
paid in wages in one of the most dangerous and most useful of all occupations.
It is instructive to note how the joint-stock company promoter calculates the wages factor in forming his plans. I recently had sent to me the prospectus of a gas company, formed to take over and enlarge an existing concern. It began by picturing the fat dividend "earned" by other gas companies, thus:—
The profitable nature of the Gas Companies, and the favour in which their Shares are held by Investors, is shown by the following particulars, which are obtained from the Stock Exchange Official List, Stock Exchange Year Book, and other Official sources:
The Croydon Gas Company pay 14 per cent., and the £100 Ordinary Stock is quoted at £320.
The Wakefield Gas Company pay 11½ per cent., and the £25 Ordinary Shares are quoted at £63.
The Brentford Gas Company pay 12 per cent., and the £100 Consolidated Stock is quoted at £250.
The Staines and Egham District Gas Company pay 13 per cent., and the £25 Ordinary Shares are quoted at £60.
While the Eastbourne Gas Company's A and C Stock pay dividends of 15 per cent. respectively, and the £10 Shares are now standing at 165 per cent. premium.
What all men who live by work and not by dividends should note is, how such beautiful results are arrived at. Inquiry will show that common "gas" is extracted from certain suitable varieties of coal by the hard labour of individuals employed in the handling of the inventions of the dead. It is hard work and exhausting work. If the shareholders, who only stand and wait, receive such princely dividends, what is the share of those who make the gas?
The company prospectus referred to is good enough to reveal the nature of the division of the spoils. Its own statement is as follows:—
Taking the consumption of Gas at only 30,000,000 cubic feet per annum, and after allowing for the total cost of Coals, Labour, etc., and crediting the sales for Coke and Residuals, Rates, and Taxes, Materials, etc., the income of the Company should be as follows:
By sale of 30,000,000 feet of Gas at 5s. 10d. per 1,000 cubic feet (present price being 6s. 10d.) £8,750 0 0
" sale of Coke, Tar, Breeze, and Residuals, including Meter Rentals 1,813 0 0 ----------- £10,563 0 0
To purchases:
" 3,000 Tons of Coal at 17s. 6d. per ton £2,650 0 0
" Purification, 2d. per 1,000 feet 250 0 0
" Repairs and Renewals to Works and Machinery, 4d. per 1,000 feet of Gas made 500 0 0
" Repairs, Services to Mains, Lamp Columns, and Meters, 2d. per 1,000 feet of Gas made 250 0 0
" Directors' Remuneration, Secretary and Manager's Salary, Wages at works, Rates and Taxes, etc., and Miscellaneous Expenses 1,353 0 0 --------- 5,003 0 0 ---------- Net Profit £5,560 0 0
To pay 6 per cent. on 15,000 Preference shares at 6 per cent £900 0 0
To pay 12 per cent. on 15,000 Ordinary shares at 12 per cent. 1,800 0 0 --------- 2,700 0 0 --------- Leaving a surplus, available for further dividends on the Ordinary Shares and for Reserve Fund £2,860 0 0 ----------
The company expects to sell its gas and by-products for £10,563. It further expects that its entire outlay in producing the £10,563 worth of gas, etc., will be only £5,003, leaving a net profit of £5,560! Now let us look for the estimated _remuneration of labour_.
Here are the lines:—
To directors' remuneration, secretary and manager's salary, wages at works, rates and taxes, etc., and miscellaneous expenses £1,353
And the repair and renewal items, which include some wages 750 ------ Total £2,103 ======
So that £2,103 per annum covers, not only wages at works, salaries, directors' fees, but repairs, rates and taxes, and miscellaneous expenses, which must include postages, stationery, etc. It is obvious, therefore, that the total reward of all bodily and mental labour, all furnace-feeding and more or less scientific management, all work whatsoever connected with the gas-making and repairs is calculated by the promoters to cost something less than £2,103. Therefore, it is actually promised to investors, in the light of day, that they can take out of the product of the company's labour profits amounting to £5,560, while all the workers, including managers, are to take only about £1,500. And nothing is more certain than that, in the present condition of what we prettily call the "labour market," thousands of men, with thousands of women and children dependent upon them, would clamour to have the chance to take a share of the £1,500 while working to make £5,560 for the investors. Nor is it that we are merely examining the extravagant promises of a prospectus. There is nothing impossible in this scheme; the company has a good thing, and it is bound to make fine profits. I have given above a few specimens of gas dividends. Here are some more:
Nominal Value Price Name of Company. of Shares Dividend. of Shares or Stock. (1905). The British Gas Light Co., Ltd. £20 10 p.c. £41 The Ipswich Gas L. Co. (A Stk.) 10 13½ p.c. 28 Eastbourne Gas Co. (C Stock) 10 15 p.c. 28 Harrogate Gas Co. (A Stock) 100 17 p.c. 340 Aldershot Gas and Water Co. 10 11½ p.c. 23 Portsea Is. Gas Lgt. Co. (B Shs.) 50 13 p.c. 127 European Gas Co., Ltd. 10 11 p.c. 23 Bournemouth Gas and Water Co. 10 14 p.c. 30 Watford Gas and Coke Co. 100 13½ p.c. 276
In each of these cases the remuneration of labour is much less than the remuneration of those who "wait."
Thus the records of public companies place at our disposal a very fair picture of distribution as it is. We cease to wonder at the terrible error in the distribution of the nation's income. It is brought home to us that a few individuals, through a monopoly of capital, have a great economic advantage over the multitude of their fellows. That it is impossible to argue that the error of distribution accords, even roughly, with the intrinsic value of the various orders of services, is sufficiently shown in the case of these companies, for their gross profit is usually subject to deduction for the reward of brain-power before assessment by the Income Tax Commissioners. We see that it is not any form of ability, either in design or in organization (which is but design) or in manual effort which secures the largest rewards in industry. It is capital, as capital, which takes the lion's share of the product of the mental and manual labour exercised upon the small area of land which serves for the basis of our industries.[30] The landlord's share, although actually great, is relatively small. In agriculture the conditions are different. It is the landlord, as landlord, who takes the lion's share of the product of the cultivated acres of the United Kingdom.
[Footnote 28: I use this phrase with intention. Interest, once defined as the reward of "abstinence," is now usually explained by the economists of the schools to be the reward of "waiting." "Abstinence" has been laughed out of court.]
[Footnote 29: The State has now agreed to buy out this undertaking.]
[Footnote 30: In view of the fact that the Single Tax doctrines of Henry George are still sedulously propagated in this country it is of interest to quote here the following passage from one of Mr George's latest works:
"_We have no fear of capital, regarding it as the natural handmaiden of labour; we look on interest itself as natural and just; we would set no limit to accumulation, nor impose on the rich any burden that is not equally placed on the poor; we see no evil in competition, but deem unrestricted competition to be as necessary to the health of the industrial and social organisms as the free circulation of the blood is to the health of the bodily organism—to be the agency whereby the fullest co-operation is to be secured. We would simply take for the community what belongs to the community, the value that attaches to land by the growth of the community; leave sacredly to the individual all that belongs to the individual; and, treating necessary monopolies as functions of the State, abolish all restrictions and prohibitions save those required for public health, safety, morals, and convenience._"—From "The Condition of Labour" by Henry George. Published by Swan, Sonnenschein, 1891. Pages 91 and 92.
This gospel of unrestricted competition (in the same volume Henry George chided Pope Leo XIII. for counselling the State to restrict the employment of women and children) is actually preached to the poor as a solution of the problem of poverty.]