The Industrial Revolution - Part Four

0:00THE INDUSTRIAL REVOLUTION, PART 4

0:30of Benefit There are a couple of items, however, that I think I must bring forward. One of them deals with the question of wages as it relates to men who went to work in the early factories and mills in England, and of course it has been claimed that they were paid such a very, very small wage indeed. This is one of the prime areas of contention, I think, and in In order to understand what the wages actually were, we can't merely state them. We have to go back and find out what the purchasing power of money was at the time the Industrial Revolution began. You see, the important thing is to realize that money has no fixed value.

1:19And therefore, it isn't the number of dollars or pounds that you are paid that matters so so much as what you can buy with it after you get it. And in order to understand the actual amount of earnings that men working in the Industrial Revolution period got, we must not just talk in terms of the coins or the money that they received, we have to talk in terms of what they were able to purchase with whatever it was that they were paid. Now to set that matter straight, let me point out that at this time, and we're going back now to the period of 1760 to 1830, at this time Great Britain was using a coinage system that was based on pounds, shilling and pence. Most of the money in circulation was metallic.

2:17There were a few paper five-pound notes or notes of larger denomination. Actually they were very large. The British made five- and ten-pound notes that often had to be folded over many times before you could put them into your pocket or into a purse. Most of the money was simply coins. There were some gold coins in circulation. The gold florin and gold eagles were in use. Much of the coinage was silver, the shilling is a silver piece, and of course there were not only shillings but there were six penny pieces, some of those were silver and some copper, and then there are three penny pieces, usually copper, penny and half penny and even farthing pieces which are also usually copper. So you have a great amount of coinage that Much of Great Britain did not enjoy anything in the way of a coin wage. Servants, for example, usually worked for room and board. Apprentices might work for many years without ever being

5:10This will come as a surprise to you, but I can assure you that according to the evidence we have, if that man were to present his penny at a wayside inn, where he could be admitted There were some inns that wouldn't even tolerate him coming through the front door. But if there was an inn that more or less catered to lower class people, and he could get in there with his one penny, that beggar could buy room and board for a week. Now, of course you understand he didn't get a private room and maid service and fresh linens and three meals a day. On the contrary, he had an opportunity of sleeping on the floor in the common room with others who could afford such luxury. Also, he would have one meal a day, probably at noon and undoubtedly consisting of black bread, gruel, and possibly a bit of meat or fish as the inn could afford. And that would be it. For six or seven days, he could sleep

6:14Keep on the floor, inside, and he would have one meal a day, for one penny. Now, that's not sumptuous fare. But think of the difference between having that and having nothing. And that is the condition that preceded the Industrial Revolution. The British people en masse had nothing. And then suddenly, as industry began to develop, more and more men and women, and and even children found themselves going to factories and mills and putting in their labor, and being paid a regular wage. Now that you understand the purchasing power of money, I'm ready to tell you what the wage rate was. The average wage rate at the time the Industrial Revolution began, notably 1760, came to about 6 pence a week. Now, in fact, we have a song

7:40to Orbit over the terrible low wage. But actually, when you consider the purchasing power, it really wasn't that low a wage. Remember that here, at that time, one penny would buy room and board for a week. What would six pennies buy? Obviously, six pennies would get you to a better room and probably two or three meals a day and you'd have money left over. Now that is the kind of purchasing power that was released. I have found a couple of instances where workers got a little less than that. I found one case where a child was paid three pence a week. And that's the lowest I've found. Now the average wage, as I've indicated, was around six pence. But there were many people who got more than that. For skilled Labor, the industrialists would pay more. And there are stories of workers who got possibly ten, twelve pence or a shilling or even two shillings even at the beginning of the Industrial Revolution. A shilling is twelve pence. By the time the Industrial Revolution has gone

8:52up to 1830 and we are beginning to find government intervening, you will find that the wages have risen to the point where the average worker, instead of getting six pence, is now getting two shillings, which is the same as twenty-four pence, and many workers are getting much more than that. In fact, there are some workers getting as high as twenty shillings a week as opposed to two, depending on their skills. So this whole development in increased wages occurred before the government got in to regulate wages, and this was done as a as a result of the natural workings of the laws of supply and demand operating in an unimpeded marketplace. So that is actually what happened. So once more when you take a look at it, you see that the businessmen who have been accused of every kind of cruelty and every kind of inhuman practice were actually engaged in doing the best they could.

9:52Now, where do these reports come from that make us feel that the businessman is such a sub-human, indifferent to human misery type of person? Where does it come from? Well actually we know. You see, right around 1830, the opposition to the factories and mills, largely engendered in the pulpit and by writers of the time who were excoriating the entire process, built up to such a crescendo that a man appeared on the British scene whose name is Michael Sadler who has gone down in history as a major factor in bringing a number of the conditions supposed to exist in factories to light. Michael Sadler listened to the reports in his community and talked with his Mr. Sadler was a respectable citizen. He had had a good education. He was a man of some means, and after listening to all of the reports that he'd heard and hearing his own minister attack the factories and the factory system, so-called, Mr. Sadler and some of his friends went into parliament in London and laid a complaint against the businessmen

11:14and the factory owners, charging them with every kind of malpractice and cruel and inhuman treatment that you've heard me mention and that you've heard mentioned in books and periodicals. Parliament, of course, listened to this accusation in amazement, stunned to believe that such conditions could exist in England. They had no idea that things were as bad as Sadler alleged. So, they appropriated a sum of money for an investigation, and curiously, they turned it over to Mr. Sadler to conduct the investigation. Now, there's no doubt that Mr. Sadler meant well. He set up offices in London, and he sent out into the various districts where there were factories and mills operating, and he asked people in those districts to come into his office in London and to give testimony as to the conditions that existed in the factories in their neighborhoods. And during the entire summer of 1830, I believe it was, 1830 to 31, people trooped into London and virtually confirmed his worst suspicions.

12:22As a matter of fact, they said many things that were even more colorful than he had supposed. And he tabulated all of these things, he asked a great many questions, and the people gave The Theory of Money and Credit

13:01that Mr. Sadler tabulated all through the summer. By the autumn he ran out of money, and so he caused his report to be published, he gave it to the press, and he gave it to Parliament, and this is the famous Sadler Report that almost everybody has heard about. It wasn't until it had been published that the businessmen, the industrialists, the mill owners and so on, even knew that their factories had been investigated. No one had gone into to the factories, no one had talked to them. And so, in great alarm, they organized a committee, and they went in to see Parliament, and they said, how does it happen that we British subjects have virtually been accused and tried and condemned in the public press, and we haven't even had a hearing? Nobody's heard our side of the story. What you say about the factories doesn't apply to our factories. Ours aren't like that. We think that we have a right to Well, the fact that the businessmen did this created virtually a major scandal, because

14:06Parliament had assumed that Mr. Sadler would check both sides, and this he hadn't done. This in fact created enough of a scandal so that it reached the ears of King William IV, the reigning monarch of the time, and William appropriated another sum of money and ordered a second investigation. Now this supplemental investigation was placed in the hands of a series of men who were appointed by the parliament to conduct the investigation. A list of questions was drafted and these men were sent out into the districts where there were factories. They were called upon to enter the factories and find out what the conditions were and to interview the employees who were there. You see it had been discovered that many of the people testifying for Mr.

15:25are computed. By no means is it a whitewash. There are conditions in the factories that, by our standards, are intolerable. But when you view the conditions that existed prior to the Industrial Revolutionary period, and then you get the material out of the supplemental reports, instead of getting a general picture of businessmen engaged in a veritable conspiracy To exploit their workers and to extract the last ounce of strength out of them that they could for money, you have quite a different picture. Instead, what you find is the businessmen, if anything, are being very soft-hearted. Some of them are even building schools so that the children in their factories can get an education at the expense of the mill owner.

16:12You find recreational facilities being provided in many cases. You find the factories constantly being re-designed so that conditions will improve, and the businessmen are in the forefront of trying to bring about these reforms long before Parliament ever got into the act. And yet today, very few people have ever heard of this supplemental investigation. I hadn't heard of it myself until a relative few years ago. I had heard about the Sadler Report as And who hasn't? It is a report that is readily available. Anyone who studies economics, certainly advanced economics, in our leading universities, is going to be told of and possibly asked to read the Sadler Report. But the Sadler Report is not true. There is a supplemental report that refutes it, at least in its major points, and nobody ever heard of this supplemental Report.

17:11Well, nobody is too strong. I ran across it one day when I was reading a book entitled The Treatment of Capitalism by the Historians. This was a series of essays that was collected by a great economist named Friedrich Hayek. And in this collection of essays, there is an essay by a Professor William Hutt, who who at that time was Professor of Economics at the University of South Africa in Cape Town. And he mentioned the supplemental reports and marveled in his essay that nobody seemed to pay any attention to them and that they, in essence, refuted the worst charges of the salary report. Well, I had never heard of these supplemental reports, so I wrote to Professor Hutt and I asked him if I could get a copy. He informed me that the only copy The Theory of Money and Credit

19:01go into the British Museum and get a copy made of the supplemental reports. And this was approved, and we did so, so that we became probably one of the few people, one of the few institutions in this country to have access to the entire supplemental report, as well as the satellite report, on microfilm. And when you read these two reports, you can detect the difference at once. As a matter of fact, one of the men who claimed, who hailed the Sadler Report as a great breakthrough, at last the truth was being revealed about the unscrupulousness of the businessmen, one such man is a man named Friedrich Engels that many people remember because he co-authored the Communist Manifesto with Karl Marx. I have a book in which Friedrich Engels mentions the Sattler Report and admits that the Sattler Report is not accurate and apologizes for Mr. Sattler, saying that, well, after all, Mr. Sattler was a very devoted man and a very fine gentleman, but you can't really rely on the Sattler Report. And yet even today,

20:10the wage and hour laws in Great Britain and this country, and also the child labor laws in both places, are based on the Sattler Report, and the Sattler Report has been refuted. It is not a reliable instrument. By no means does this mean that working in the factories and mills of England in the latter half of the 18th century was a bed of roses. It wasn't. Conditions were hard. The wages were small. And this is always true. Every employee that I have ever met will tell me that he is deserving of more money than he is getting. I have yet to meet an employee who doesn't feel that he ought to be making more. I have rarely to meet an employer who tells me that he is overpaying his people. Or actually, I have run into that. I misstated it. What I mean is I have rarely found an employer who says that his people are overproducing.

21:08Instead, he will tend to feel that he is overpaying them. And they don't feel that way, but he and so you have arguments perpetually over the question of the amount of wages that are to be paid. And of course the proper way to resolve the wage is to put it in the free market on a competitive basis and let the most skillful earn the greatest wage. Incidentally, it's sound economics to pay high wages in return for top production. That's the best kind of a wage you can pay. The idea that you should be parsimonious in a wage is false. Sometimes the most extravagant wage you can pay is a low wage that will discourage a worker so that you have a constant turnover and the constant cost of replacing them. It's much better to pay a good wage to a good worker and encourage the worker to become a better worker. High wages that are justified is the and the Sound Economic Practice.

22:05But of course, great many people don't understand that yet, but that is the case. In any case, getting back to the Industrial Revolution period, what we found was that the supplemental reports, which give, I think, about as accurate a picture of the conditions in the factories of England around 1831, 1932 and 1933 as could be obtained, that report is largely lacking. You can't get a copy unless you're extraordinarily fortunate, and people don't know about it, and the consequence is they tend to believe the Saddle Report, which is prevalent and anybody can get a copy of it. Now why is it that when the Supplemental Report was released, the Saddle Report wasn't immediately dropped? Well, many people have Supposed that there's some kind of conspiracy here to prevent the publishing of the supplemental reports.

23:08I don't think so. Actually, it's the kind of thing that you run into with mass media all the time. If you've got a story that indicates that a certain class of people are subhuman fiends, that's going to make headlines. But if you've got a story that says that these particular people are normal people, that isn't going to make any headlines. Of course there was a story relating to the supplemental reports, but it was undoubtedly buried on page 17 next to an ad. Very few people ever saw it. Meantime, the Sadler Report got and continues to receive a lot of acclaim, virtually mandatory reading in our colleges and universities, and very few people indeed have heard of the other report. So it would be important for you in understanding the Industrial Revolution to get your hands on On both of these reports, read them both, compare them, and then make your own independent judgment.

24:05What we should have detected, and which of course scholarship really confirms, is that whenever you begin taking a particular group of people, by race, occupation, religion, or some other type of grouping, and you attribute to everyone in that group certain characteristics, Businessmen are not subhuman fiends. Also, they are not geniuses. They are just people. They are neither better nor worse than you and I. They are just people trying to make some money and trying to make money by providing goods and services that people will voluntarily by. They don't mean to be, but it turns out that the businessmen and industrialists are actually the great benefactors of mankind, not through any altruism on their part, not through any design to be helpful to people. They're acting quite selfishly. And the curious thing is, and Adam Smith saw it when he wrote his work, The Wealth of Nations, that the The better the businessman tends to business and concentrates on producing goods and services that people will want to buy, in essence, the more selfish he is in trying to amass

25:29his profits, providing that he is working in a free market. Why, the better things are for everyone. He has to treat his employees well, because otherwise he can't have a a Profitable Business. He has to therefore supply the right kind of working conditions, or they can't work productively. He has to see to it that accidents are minimized, because accidents are a tremendous cost, and drive up the cost factors and reduce the profit margin substantially. Businessmen have been in the forefront of trying to reduce costs such as this, in order to hold prices down, in order to supply more goods and services for more people at lower prices. And this, of course, we should learn if we take and examine this condition. So the industrial revolution that has been held up to us as a period of time in which terrible conditions occurred and the human situation worsened etc., really isn't quite the way it's been painted. It actually took us forward to the present time. Right now, of course, we are probably on the threshold of a new economic

26:47revolution that may take us into something else, possibly even more exciting than what we've had before. Because, while you cannot blame the industrialist of being cruel to his Employees—excepting, of course, on occasion, men are cruel to one another and this would happen. What you can lay at the feet of the industrialists is altogether too much willingness to cooperate with the state and to get the power of the state behind them. Now we are moving toward a time when perhaps we will have an economy that will be in fact a free market economy where the link or the The marriage between business and industry and the state may be dissolved. It's something to think about.