Silvio Gesell - The NATURAL ECONOMIC ORDER
But it must not be supposed that the saving of a certain sum on freight is translated into an exactly corresponding increase in the proceeds of labour of the settler. In reality the proceeds of his labour will increase by only about half the saving on freight; and the reason for this is that the rising proceeds of labour of the settler on freeland raise the wages of the agricultural workers in Germany. The rising wages of farm labourers and of settlers on freeland cause industrial workers to pass over to these pursuits. The relation existing between the production of agricultural and of industrial goods is modified, and in consequence their exchange ratio is also modified. The settler has to pay higher prices for the objects of the proceeds of his labour (industrial products). The quantity of these industrial products does not, therefore, increase in proportion to the increased yield of labour of the settler on freeland resulting from lower transport costs. The difference, according to the laws of competition, falls to the industrial workers. What happens here is what happens when improved technical methods, such as steam-power, reduce the cost of production. The producer and the consumer share the gain. Here again it may be worth while to illustrate by means of figures the influence of a change of transport costs on the proceeds of labour of the settler on freeland, and consequently on rent and wages. I. The proceeds of labour of a settler on freeland in Canada with a freight-rate of $17 per ton in the year 1873. Product of labour: 10 tons of wheat shipped to Mannheim and there sold at $63 per ton $630 Less 10 times $17 for freight, etc. 170 Yield of labour ... $460 This money-yield of labour is spent in Germany for the purchase of goods for use which, when shipped to Canada cause the same expense for packing, freight, import-duties, deterioration, etc. as the wheat on its voyage to Germany 170 The proceeds of labour of the settler therefore amount to $290 II. The same calculation in the year 1884 with a freight-rate of $6 per ton. Product of labour: 10 tons of wheat at $63 per ton $630 Less 10 times $6 for freight 60 Yield of labour $570 This yield of labour, which is $110 greater than in the first calculation, is now converted into the proceeds of labour, that is, into industrial products. For the reasons indicated above, the ratio of exchange between industrial and agricultural products has been modified in favour of industry. Let us suppose that this rise in the price of industrial commodities absorbs half the increased money-yield of labour, that is 55 $515 From this we have to deduct the return freight which we must put a little higher, as the amount of the goods has increased by the amount economised on freight; instead of $60 freight amounts to 61 The proceeds of labour of the settler now therefore amount to $454 Thus the decrease in freight has raised the proceeds of labour of the settler on freeland from $290 to $454, so the wages demanded by the German farm labourer will automatically increase by the same amount, and tenant farmers will claim a correspondingly larger share of the product of labour for themselves. And rent on land will decrease in the same ratio. If in Germany in 1873 the price of 10 tons of wheat was $630 And the wages for producing it amounted to $290 Then 10 tons of land (* A ton of land: a Danish land-measure denoting the amount of land that produces one ton of grain. A ton of land therefore indicates an area of land which varies according to the quality of the soil.) brought the landowner who worked or let them, rent amounting to $340 But if in 1884 wages rise to $454, the rent must fall to $176 (that is $340, less $164 increase of wages). What the settler on freeland has to pay in freight is therefore deducted from the proceeds of his labour; and the landowner in Germany may demand this amount as farm-rent if he lets his land, or deduct it as rent from the product of his farm-labourers if he works his land himself. In other words, what the freeland settler pays as freight is pocketed by the landowner as rent.
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