Chapter 4: Free Income

    Industry of the modern sort -- mechanical, specialised,
standardised, drawn on a large scale -- is highly productive.
When this industrial system of the new order is not hindered by
outside control it will yield a very large net return of output
over cost, -- counting cost in terms of man power and necessary
consumption; so large, indeed, that the cost of what is
necessarily consumed in productive work, in the way of materials,
mechanical appliances, and subsistence of the workmen, is
inconsiderable by comparison. The same thing may be described by
saying that the necessary consumption of subsistence and
industrial plant amounts to but an inconsiderable deduction from
the gross output of industry at any time. So inordinately
productive is this familiar new order of industry that in
ordinary times it is forever in danger of running into excesses
and turning out an output in excess of what the market -- that is
to say the business situation -- will tolerate. There is constant
danger of "overproduction," So that there is commonly a large
volume of man power unemployed and an appreciable proportion of
the industrial plant lying idle or half idle. It is quite
unusual, perhaps altogether out of the question, to let all or
nearly all the available plant and man power run at full capacity
even for a limited time.
    It is, of course, impossible to say how large the net
aggregate product over cost would be -- counting the product in
percentages of the necessary cost -- in case this industrial
system were allowed to work at full capacity and with free use of
all the available technological knowledge. There is no safe
ground for an estimate, for such a thing has never been tried,
and no near approach to such a state of things is to be looked
for under the existing circumstances of ownership and control.
Even under the most favorable conditions of brisk times the
business situation will not permit it. There will at least always
be an indefinitely large allowance to be reckoned for work and
substance expended on salesmanship, advertising, and competitive
management designed to increase sales. This line of expenditures
is a necessary part of businesslike management, although it
contributes nothing to the output of goods, and in that sense it
is to be counted as a necessary deduction from the net productive
capacity of the industrial system as it runs. It would also be
extremely difficult to make allowance for this deduction, since
much of it is not recognised as such by the men in charge and
does not appear on their books under any special descriptive
heading. In one way and another, and for divers and various
reasons, the net production of goods serviceable for human use
falls considerably short of the gross output, and the gross
output is always short of the productive capacity of the
available plant and man power.
    Still, taken as it goes, with whatever handicap of these
various kinds is to be allowed for, it remains patently true that
the net product greatly exceeds the cost. So much so that
whatever is required for the replacement of the material
equipment consumed in production, plus "reasonable returns" on
this equipment, commonly amounts to no more than a fraction of
the total output. The resulting margin of excess product over
cost plus reasonable returns on the material equipment is due to
the high productive efficiency of the current state of the
industrial arts and is the source of that free income which gives
rise to intangible assets. The distinction between tangible
assets and intangible is not a hard and fast one, of course, but
the difference is sufficiently broad and sufficiently well
understood for use in the present connection, so long as no pains
is taken to confuse these terms with needless technical verbiage.
    To avoid debate and digression, it may be remarked that
"reasonable returns" is also here used in the ordinary sense of
the expression, without further definition, as being sufficiently
understood and precise enough for the argument. The play of
motives and transactions by which a rough common measure of
reasonable returns has been arrived at is taken for granted. A
detailed examination of all that matter would involve an extended
digression, and nothing would be gained for the argument.
According to the traditional view, which was handed on from the
period before the coming of corporation finance, and which still
stands over as an article of common belief in the certified
economic theories, "capital" represents the material equipment,
valued at its cost, together with funds in hand required as a
"working capital" to provide materials and a labor force. On this
view, corporation securities are taken to cover ownership of the
plant and the needed working capital; and there has been a
slow-dying prejudice against admitting that anything less
tangible than these items should properly be included in the
corporate capitalisation and made a basis on which to issue
corporate securities. Hence that stubborn popular prejudice
against "watered stock" which corporation finance had to contend
with all through the latter half of the nineteenth century.
"Watered stock" is now virtually a forgotten issue. Corporation
finance has disposed of the quarrel by discontinuing the relevant facts.
    There is still a recognised distinction between tangible
assets and intangible; but it has come to be recognised in
corporation practice that the only reasonable basis of
capitalisation for any assets, tangible or intangible, is the
earning-capacity which they represent. And the amount of capital
is a question of capitalisation of the available assets. So that,
if the material equipment, e.g., is duly capitalised on its
earning-capacity, any question as to its being "watered" is no
longer worth pursuing; since stock can be said to be "watered"
only by comparison with the cost of the assets which it covers,
not in relation to its earning-capacity. The latter point is
taken care of by the stock quotations of the market. On the other
hand, intangible assets neither have now nor ever have had any
other basis than capitalisation of earning capacity, and any
question of "water" in their case is consequently quite idle.
Intangible assets will not hold water.
    Corporation finance is one of the outgrowths of the New
Order. And one of the effects wrought by corporation finance is a
blurring of the distinction between tangible assets and
intangible; inasmuch as both are now habitually determined by a
capitalisation of earning-capacity, rather than by their
ascertained cost, and it is difficult, if not impossible, to draw
a hard and fast line between that part of a concern's
earning-capacity which is properly to be assigned to its plant
and that which is due to its control of the market. Still, an
intelligible distinction is maintained in common usage, between
tangible assets and intangible, even if the distinction is
somewhat uncertain in detail; and such a distinction is
convenient, so long as too sharp a contrast between the two is
not insisted on.
    The earning-capacity of the tangible assets is presumed to
represent the productive capacity of the plant, considered as a
mechanical apparatus engaged in an industrial process for the
production of goods or services; it is presumed to rest on the
market value of the mechanical output of the plant. The plant is
a productive factor because and in so far as it turns to
practical account the state of the industrial arts now in use, --
the community's joint stock of technological knowledge. So soon,
or so far, as the plant and its management falls short of meeting
the ordinary requirements of this current state of the industrial
arts, and fails to make use of such technological knowledge as is
commonly employed, the whole works ceases by that much to be a
productive factor. The productive efficiency, and the productive
value, of any given item of industrial equipment is measured by
its effective use of the technological knowledge current in the
community for the time being. So also, the productive value of
any given body of natural resources land, raw materials, motive
power -- is strictly dependent on the degree in which it fits
into the industrial system as it runs.
    This dependence of productive value on conformity to and use
of the state of the industrial arts is constantly shown in the
case of land and similar natural resources, by the fluctuation of
rental values. Land and other resources will be more valuable the
more suitable they are for present and prospective use. The like
is true for the mechanical equipment, perhaps in a more
pronounced degree. Industrial plant, e.g., is always liable to
depreciation by obsolescence in case the state of the industrial
arts changes in such a way that the method of work embodied in
the particular article of equipment is displaced by new and more
suitable methods, more suitable under the altered circumstances.
In such a case, which is of very frequent occurrence under the
new order of industry, any given plant, machine, or similar
contrivance may lose all its value as a means of production. And
so also, on the other hand, a given plant, as, for instance, a
given railway system or dock, may acquire additional productive
value through changes in the industrial system which make it more
suitable for present use.
    Evidently the chief, or at least the indispensable, element
of productive efficiency in any item of industrial equipment or
resources is the use which it makes of the available
technological knowledge; and evidently, too, its earning-capacity
as a productive factor depends strictly on the same fact, -- the
usufruct of the state of the industrial arts. And all the while
the state of the industrial arts, which the industrial equipment
so turns to account for the benefit of its owner, continues to be
a joint stock of industrial knowledge and proficiency
accumulated, held, exercised, increased and transmitted by the
community at large; and all the while the owner of the equipment
is some person who has contributed no more than his per-capita
quota to this state of the industrial arts out of which his
earnings arise. Indeed the chances are that the owner has
contributed less than his per-capita quota, if anything, to that
common fund of knowledge on the product of which he draws by
virtue of his ownership, because he is likely to be fully
occupied with other things, -- such things as lucrative business
transactions, e.g., or the decent consumption of superfluities.
    And at this point the difference between tangible assets and
intangible comes in sight, or at least the ground of the habitual
distinction between the two. Tangible assets, it appears, are
such assets as represent the earning-capacity of any mechanically
productive property; whereas intangible assets represent assured
income which can not be assigned to any specific material factor
as its productive source. Intangible assets are the capitalised
value of income not otherwise accounted for. Such income arises
out of business relations rather than out of industry; it is
derived from advantages of salesmanship, rather than from
productive work; it represents no contribution to the output of
goods and services, but only an effectual claim to a share in the
"annual dividend," -- on grounds which appear to be legally
honest, but which can not be stated in terms of mechanical cause
and effect, or of productive efficiency, or indeed in any terms
that involve notions of physical dimensions or of mechanical action.
    When the theoreticians explain and justify these returns that
go to adroit salesmanship, or "managerial ability," as it is also
called, it invariably turns but that the grounds assigned for it
are of the nature of figures of speech -- metaphor or analogy.
Not that these standard theoretical explanations are to be set
aside as faulty, inadequate or incomplete; their great volume and
sincerity forbids that. It is rather that they are to be accepted
as a faithful account of an insubstantial fact in insubstantial
terms. And they are probably as good an account of the equitable
distribution of free income as the principles of the modern point
of view will tolerate.
    But while intangible assets represent income which accrues
out of certain immaterial relations between their owners and the
industrial system, and while this income is accordingly not a
return for mechanically productive work done, it still remains
true, of course, that such income is drawn from the annual
product of industry, and that its productive source is therefore
the same as that of the returns on tangible assets. The material
source of both is the same; and it is only that the basis on
which the income is claimed is not the same for both. It is not a
difference in respect of the ways and means by which they are
created, but only in respect of the ways and means by which these
two classes of income are intercepted and secured by the
beneficiaries to whom they accrue. The returns on tangible assets
are assumed to be a return for the productive use of the plant;
returns on intangible assets are a return for the exercise of
certain immaterial relations involved in the ownership and
control of industry and trade.

    Best known by name among intangible assets is the ancient
rubric of "good-will," technically so called; which has stood
over from before the coming of the new order in business
enterprise. This has long been considered the original type-form
of intangible assets as a class. By ancient usage the term
denotes a customary preferential advantage in trade; it is not
designed to describe a body of benevolent sentiments. Good-will
has long been known, discussed and allowed for as a legitimate,
ordinary and valuable immaterial possession of men engaged in
mercantile enterprise of all kinds. It has been held to be a
product of exemplary courtesy and fair dealing with customers,
due to turning out goods or services of an invariably sound
quality and honest measure, and indeed due to the conspicuous
practice of the ordinary Christian virtues, but chiefly to common
honesty. Similarly valuable, and of a similarly immaterial
nature, is the possession of a trade-secret, a trade-mark, a
patent-right, a franchise, any statutory monopoly, or a monopoly
secured by effectually cornering the supply or the market for any
given line of goods or services. From any one of these a
profitable advantage may be derived, and they have therefore a
market value. They afford their possessor a preferential gain, as
against his competitors or as against the general body of
customers which the state of the industrial arts and the
organisation of business throws in his way. After the analogy of
good-will, it has been usual to trace any such special run of
free income to the profitable use of a special advantage in the
market, which is then appraised as a valuable means of gain and
comes to figure as an asset of its possessor. But all this goes
to explain how these benefits go to these beneficiaries; it does
not account for the fact that there is produced a net output of
product available for free distribution to these persons.
    These supernumerary and preferential gains, "excess profits,"
or whatever words may best describe this class of free income,
may be well deserved by these beneficiaries, or they may not. The
income in question is, in any case, not created by the good
deserts of the beneficiaries, however meritorious their conduct
may be. Honesty may conceivably be the best policy in mercantile
pursuits, and it may also greatly serve the convenience of any
community in which an honest merchant is found; yet honest
dealing, strictly speaking, is an agency of conservation rather
than of creation. A trade-secret may also be profitable to the
concern which has the use of it, and the special process which it
covers may be especially productive; but the same article of
technological knowledge would doubtless contribute more to the
total productivity of industry if it were shared freely by the
industrial community at large. Such technological knowledge is an
agency of production, but it is the monopoly of it that is
profitable to its possessor as a special source of gain. The like
applies to patent-rights, of course. Whereas monopolies of the
usual kind, which control any given line of industry by charter,
conspiracy, or combination of ownership, derive their special
gains from their ability to restrain trade, limit the output of
goods or services, and so "maintain prices."
    Intangible assets of this familiar kind are very common among
the business concerns of the new order, particularly among the
larger and more prosperous of them, and they afford a rough
measure of the ability of these concerns profitably to restrict
production. The very large aggregate value of such assets
indicates how imperative it is for the conduct of industrial
business under the new order to restrict output within reasonable
limits, and at the same time how profitable it is to be able to
prevent the excessively high productive capacity of modern
industry from outrunning the needs of profitable business. For
the prosperity of business it is necessary to keep the output
within reasonable limits; that is to say, within such limits as
will serve to maintain reasonably profitable prices; that is to
say, such prices as will yield the largest obtainable net return
to the concerns engaged in the business. In this connection, and
under the existing conditions of investment and credit,
"reasonable returns" means the same thing as "the largest
practicable net returns." It all foots up to an application of
the familiar principle of "charging what the traffic will bear";
for in the matter of profitable business there is no reasonable
limit short of the maximum. In business, the best price is always
good enough; but, so also, nothing short of the best price is
good enough. Buy cheap and sell dear.
    Intangibles of this kind, which represent a "conscientious
withdrawal of efficiency," an effectual control of the rate or
volume of output, are altogether the most common of immaterial
assets, and they make up altogether the largest class of
intangibles and the most considerable body of immaterial wealth
owned. Land values are of much the same nature as these corporate
assets which represent capitalised restriction of output, in that
the land values, too, rest mostly on the owner's ability to
withhold his property from productive use, and so to drive a
profitable bargain. Rent is also a case of charging what the
traffic will bear; and rental values should properly be classed
with these intangible assets of the larger corporations, which
are due to their effectual control of the rate and volume of
production. And apart from the rental values of land, which are
also in the nature of monopoly values, it is doubtful if the
total material wealth in any of the civilised countries will
nearly equal the total amount of this immaterial wealth that is
owned by the country's business men and the investors for whom
they do business. Which evidently comes to much the same as
saying that something more than one-half of the net product of
the country's industry goes to those persons in whom the existing
state of law and custom vests a plenary power to hinder production.
    It is doubtful if the total of this immaterial wealth exceeds
the total material wealth in the advanced industrial countries;
although it is at least highly probable that such is the case,
particularly in the richer and more enlightened of these
countries; as, e. g., in America or the United Kingdom, where the
principles of self-help and free bargain have consistently had
the benefit of a liberal -- that is a broad -- construction and
an unbending application. The evidence in the case is not to be
had in such unambiguous shape as to carry conviction, for the
distinction between tangible assets and intangible is not
consistently maintained or made a matter of record. So, e.g., it
is not unusual to find that corporation bonds -- railroad or
industrial -- which secure their owner a free income and are
carried as an overhead charge by the corporation, are at the same
time a lien on the corporation's real property; which in turn is
likely to be of less value than the corporation's total
liabilities. Evidently the case is sufficiently confusing,
considered as a problem in the economic theory of capital, but it
offers no particular difficulty when considered as a proposition
in corporation finance.
    There is another curious question that will also have to be
left as a moot question, in the absence of more specific
information than that which is yet available; more a question of
idle curiosity, perhaps, than of substantial consequence. How
nearly is it likely that the total gains which accrue to these
prosperous business concerns and their investors from their
conscientious withdrawal of efficiency will equal the total loss
suffered by the community as a whole from the incidental
reduction of the output? Net production is kept down in order to
get a profitable price for the output; but it is not certain
whether the net production has to be lowered by as much or more
than the resulting increased gain which this businesslike
strategy brings to the businesslike strategists. The strategic
curtailment of net production below productive capacity is net
loss to the community as a whole, including both the business men
and their customers; the gains which go to these business
concerns in this way are net loss to the community as a whole,
exclusive of the business concerns and their investors. The
resulting question is, therefore, not whether the rest of the
community loses as much as the business men gain, -- that goes
without saying, since the gains of the business men in the case
are paid over to them by the rest of the community in the
enhanced (or maintained) price of the products, but rather it is
a question whether the rest of the community, the common man,
loses twice as much as the business concerns and their investors gain.
    The whole case has some analogy with the phenomena of
blackmail, ransom, and any similar enterprise that aims to get
something for nothing; although it is carefully to be noted that
its analogy with these illegitimate forms of gainful enterprise
must, of course, not be taken to cast any shadow of suspicion on
the legitimacy of all the businesslike sabotage that underlies
this immaterial corporate capital and its earning-capacity. In
the case of blackmail, ransom, and such like illegal traffic in
extortion, it is known that the net loss suffered by the loser
and the gainer together exceeds the net gain which accrues to the
beneficiary, by as much as the cost of enforcement plus the
incidental inconvenience to both parties to the transaction. At
the same time, the beneficiary's subsequent employment and
consumption of his "ill-gotten gains," as they are sometimes
called, whether he consumes them in riotous living or in the
further pursuit of the same profitable line of traffic, -- all
this, it is believed, does not in any degree benefit the rest of
the community. As seen in the perspective of the common good,
such enterprise in extortion is believed to be quite wastefully disserviceable.
    Now, this analogy may be taken for what it is worth;
"Analogies do not run on all-fours." But when seen in the same
perspective, the question of loss and gain involved in the case
of these intangible assets and their earning-capacity falls into
something like this shape: Does the total net loss suffered by
the community at large, exclusive of the owners of these
intangibles, exceed two-hundred percent of the returns which go
to these owners? or, Do these intangibles cost the community more
than twice what they are worth to the owners? -- the loss to the
community being represented by the sum of the overhead burden
carried on account of these intangibles plus the necessary
curtailment of production involved in maintaining profitable
prices. The overhead burden is paid out of the net annual
production, after the net annual production has been reduced by
so much as may be necessary to "maintain prices at a reasonably
profitable figure."
    A few years ago any ordinarily observant person would
doubtless have answered this question in the negative, probably
without hesitation. So also, any ordinarily intelligent votary of
the established order, as, e.g., a corporation lawyer, a
commercial trade journal, or a trade-union official, would
doubtless, at that period, have talked down such a question out
of hand, as being fantastically preposterous. That would have
been before the war experience began to throw light into the dark
places of business enterprise as conducted under the new order of
industry. Today (October, 1918) -- it is to be admitted with such
emotion as may come to hand -- this question is one which can be
entertained quite seriously, in the light of experience. In the
recent past, as matters have stood up to the outbreak of the war,
the ordinary rate of production in the essential industries under
businesslike management has habitually and by deliberate
contrivance fallen greatly short of productive capacity. This is
an article of information which the experience of the war has
shifted from the rubric of "Interesting if True" to that of
"Common Notoriety."
    The question as to how much this "incapacity by advisement"
has commonly amounted to may be attempted somewhat after this
fashion. Today, under compulsion of patriotic devotion, fear,
shame and bitter need, and under the unprecedentedly shrewd
surveillance of public officers bent on maximum production, the
great essential industries controlled by the vested interests
may, one with another, be considered to approach -- perhaps even
conceivably to exceed -- a fifty-percent efficiency; as counted
on the basis of what should ordinarily be accomplished by use of
an equally costly equipment having the disposal of an equally
large and efficient labor force and equally good natural
resources, in case the organisation were designed and managed
with an eye single to turning out a serviceable product, instead
of, as usual, being managed with an eye single to private gain in
terms of price.
    To the spokesmen of "business as usual" this rating of
current production under the pressure of war needs may seem
extravagantly low; whereas, to the experts in industrial
engineering, who are in the habit of arguing in terms of material
cost and mechanical output, it will seem extravagantly high.
Publicly, and concessively, this latter class will speak of a 25
percent efficiency; in private and confidentially they appear
disposed to say that the rating should be nearer to 10 percent
than 25. To avoid any appearance of an ungenerous bias, then,
present actual production in these essential industries may be
placed at something approaching 50 percent of what should be
their normal productive capacity in the absence of a businesslike
control looking to "reasonable profits." It is necessary at this
point to call to mind that the state of the industrial arts under
the new order is highly productive, -- beyond example.
    This state of the case, that production in the essential
industries presumably does not exceed 50 percent of the normal
productive capacity, even when driven under the jealous eye of
public officers vested with power to act, is presumably due in
great part to the fact that these officers, too, are capable
business men; that their past training and present bent is such
as has been given them by long, exacting and successful
experience in the businesslike management of industry; that their
horizon and perspective in all that concerns industry are limited
by the frame of mind that is native to the countinghouse. They,
too, have learned how to think of industry and its administration
in terms of profit on investment, and, indeed, in no other terms;
that being as near as their daily work has allowed them to take
stock of the ways and means of industry. So that they are still
guided, in some considerable part, by considerations of what is
decent, equitable and prudent in the sight of conservative
business men; and this bias necessarily goes with them in their
dealings with those ubiquitous, intricate and systematic
dislocations of the industrial system which have been found
profitable in the management of industry on a footing of
competitive sabotage. They still find it reasonable to avoid any
derangement of those vested interests that live on this margin of
intangible assets that represents capitalised withdrawal of efficiency.
    In so characterising the situation there is, of course, no
inclination to impute blame to these businesslike officials who
are patriotically giving their best abilities and endeavors to
this work of enforcing an increased production in the essential
industries and diverting needed labor and materials from the
channels of waste; nor is it intended to cast aspersions on the
good faith or the honorable motives of those grave captains of
industry whom the officials find it so difficult to divert from
the business man's straight and narrow path of charging what the
traffic will bear. "They are all honorable men," But like other
men they are creatures of habit; and their habit of mind is the
outcome of experience in that class of large, responsible and
remunerative business affairs that lie somewhat remote from the
domain of technology, from that field where the mechanistic logic
of the industrial arts has something to say. It is only that the
situation as here spoken of rests on settled usage, and that the
usage is such as the businesslike frame of mind is suited to; at
the same time that this businesslike usage, of fixed charges,
vested interests and reasonable profits, does not fully comport
with the free swing of the industrial arts as they run under the
new order of technology. Nor is there much chance of getting away
from this situation of "incapacity by advisement," even under
pressure of patriotic devotion, fear, shame and need, inasmuch as
the effectual public opinion has learned the same bias and will
scarcely entrust the conduct of its serious interests to any
other than business men and business methods.
    To return to the argument. It may be conceded that production
in the essential industries, under pressure of the war needs,
rises to something like a 50 percent efficiency. At the same time
it is presumably well within the mark to say that this current
output in these essential industries will amount to something
like twice their ordinary output in time of peace and business as
usual, One-half of 50 percent is 25 percent; and so one comes in
sight of the provisional conclusion that under ordinary
conditions of businesslike management the habitual net production
is fairly to be rated at something like one-fourth of the
industrial community's productive capacity; presumably under that
figure rather than over.
    In the absence of all reflection this crude estimate may seem
recklessly hasty, perhaps it may even be thought scandalously
unflattering to our substantial citizens who have the keeping of
the community's material welfare; but a degree of observation and
reflection will quickly ease any feeling of annoyance on that
score. So, e.g., if the account as presented above does not
appear to foot up to as much as the conclusion would seem to
require, further account may be taken of that side-line of
business enterprise that spends work and materials in an effort
to increase the work to be done, and to increase the cost per
unit of the increased work; all for the benefit of the earnings
of the concern for whose profit it is arranged. It may be called
to mind that there still are half-a-dozen railway passenger
stations in such a town as Chicago, especially designed to work
at cross purposes and hinder the traffic of competing railway
corporations; that on the basis of this ingeniously contrived
retardation of traffic there has been erected a highly prosperous
monopoly in the transfer of baggage and passengers, employing a
large equipment and labor force and costing the traveling public
some millions of useless outlay yearly; with nothing better to
show for it than delay, confusion, wear and tear, casualties and
wrangles, twenty-four hours a day; and that this arrangement is,
quite profitably, duplicated throughout the country as often and
on as large a scale as there are towns in which to install it. So
again, there is an exemplary weekly periodical of the most widely
reputable and most profitable class, with a circulation of more
than two million, which habitually carries some 60 to 80 large
pages of competitive advertising matter, at a time when the most
exacting economy of work and materials is a matter of urgent and
acknowledged public need; with nothing better to show for it than
an increased cost of all the goods advertised, most of which are
superfluities. This, too, is only a typical case, duplicated by
the thousand, as nearly as the businesslike management of the
other magazines and newspapers can achieve the same result. These
are familiar instances of business as usual under the new order
of industry. They are neither extreme nor extraordinary. Indeed
the whole business community is run through with enterprise of
this kind so thoroughly that this may fairly be said to be the
warp of the fabric. In effect, of course, it is an enterprise in
subreption; but in point of moral sentiment and conscious motive
it is nothing of the kind.
    All these intricate arrangements for doing those things that
we ought not to have done and leaving undone those things that we
ought to have done are by no means maliciously intended. They are
only the ways and means of diverting a sufficient share of the
annual product to the benefit of the legitimate beneficiaries,
the kept classes. But this apparatus and procedure for capturing
and dividing this share of the community's annual dividend is
costly -- one is tempted to say unduly costly. It foots up to,
perhaps, something like one-half of the work done, and it is
occupied with taking over something like one-half of the output
produced by the remaining one-half of the year's work. And yet,
as a business proposition it seems sound enough, inasmuch as the
income which it brings to the beneficiaries will presumably foot
up to something like one-half of the country's annual production.
    There is nothing gained by finding fault with any of this
businesslike enterprise that is bent on getting something for
nothing, at any cost. After all, it is safe and sane business,
sound and legitimate, and carried on blamelessly within the rules
of the game, One may also dutifully believe that there is really
no harm done, or at least that it might have been worse. It is
reassuring to note that at least hitherto the burden of this
overhead charge of 50 percent plus has not broken the back of the
industrial community. It also serves to bring under a strong
light the fact that the state of the industrial arts as it runs
under the new order is highly productive, inordinately
productive. And, finally, there should be some gain of serenity
in realising how singularly consistent has been the run of
economic law through the ages, and recalling, once more the
reflection which John Stuart Mill arrived at some half-a-century
ago, that, "Hitherto it is questionable if all the mechanical
inventions yet made have lightened the day's toil of any human being."