Chapter X: Section 5: of the statutes requires a brief explanation. In the first year,

the calculation of the advances to be made to the association members could not, of course, be based upon the net profits of the previous year, and the committee therefore suggested a fixed sum of one shilling per hour. This strikingly high rate will perhaps excite surprise, particularly in view of the scale of prices that prevailed at the Kenia; and it may reasonably be asked whence the committee derived the courage to hope for such a high rate of profits as would justify the payment of such an advance. But this valuation was not recklessly made, it was in truth the expression of extreme prudence. The results of the associated productive labour hitherto in operation had actually been much more favourable. The corn industry, for example, had yielded a gross return of a little over 41,000 cwt. of different cereals for a total expenditure of 44,500 hours of labour. The average price of these cereals in Eden Vale at that time was not quite 3s. per cwt., as we had grown more than we needed, and the export through Mombasa yielded only 3s. on account of the still very primitive means of transport. We had therefore, in round figures, agricultural produce worth 6000£. The cost of producing this was: materials 400£, amortisation of invested capital (implements and cattle) 300£; so that 5,300£ remained as net profit. As a tax to cover all those expenses which, in accordance with our programme, had to be incurred by the commonwealth, and which will be spoken of further on, not less than thirty-five per cent. was set aside. Thus a round sum of 3,400£ remained as disposable profit. Divided by the 44,500 hours of labour, this gave 1s. 6d. for each hour. This was also approximately the average profit of the other kinds of production, so far as it was possible to assess it in the absence of a general market at the Kenia. Thus it could be assumed with the utmost confidence that, had we been able to control the prices of all commodities by means of supply and demand, there would either have been paid, or might have been assessed, at least a price equivalent to that which produced the agricultural profit. For we could at once have produced--as far as our supply of labour went--and disposed of cereal crops valued at 3s. per cwt. at Eden Vale; therefore, in the period of work through which we had already passed everyone was able to earn at least 1s. 6d. by one hour's labour. But, as will presently be seen, we were entering upon the next period of work with much improved means; therefore, apart from unforeseen contingencies, the productiveness of our labour must very considerably increase, so that, in granting an advance of one shilling for each hour of labour, we calculated that we were advancing scarcely the half of the actual earnings--an assumption that was fully borne out by the result. In later seasons it became the practice of most associations to make the advance as much as ninety per cent. of the net profits of the previous year.

As to the salaries of the directorate, these were from the beginning very different in different associations. Where no extraordinary knowledge and no special talent were necessary, the overseers were content to have their superintendence valued at the price of from eight to ten hours of work per diem. There were directors who received as much as the value of twenty-four hours of work per diem, and in the very first year this amounted to an income of about 850£. The functionaries of a lower grade received, as a rule, the value of from eight to ten hours of work per diem. In most cases the controlling council of inspection received no extra remuneration for their duties.

The credit granted to the associations in the first year of work reached an average amount of 145£ per head of the participating workers; and if it be asked whence we derived the funds to meet the requirements of the total number of our members, the answer is, from the members themselves. And the reference here is not merely to those voluntary contributions paid by the members on their joining the International Free Society, for these contributions were in the first instance devoted to the transport service between Trieste and Freeland, and would not have sufficed to supply our associations with capital if they had all been devoted to that purpose. The credit required in the course of the first year rose to nearly two million pounds sterling, while the voluntary contributions up to that date did not much exceed one million and a-half. The principal means which enabled us to meet the requirements of our members were supplied us, on the one hand by the Society's property hi disposable materials, and on the other hand by the members' tax.

It should be mentioned here that, for the first year, the committee reserved to itself the right of deciding the amount and the order of granting the credit given. This, though merely negative, interference with the industrial relations of the associations was not in harmony with the principle of the producers' right of unconditioned self-control; but was so far unavoidable, inasmuch as our commonwealth had not yet actually attained to that high degree of productiveness of labour which is the assumed result of the perfect realisation of all the fundamental principles of that commonwealth. Later, when we were more fully furnished with the best means of production which technical progress placed within our reach, and we were consequently no longer occupied in provisionally completing and improving what already existed, there could never be any question whether the surplus of the current production would suffice to meet the heaviest fresh claims for capital that could arise. It was different at the beginning, when the need for capital was unlimited, and the means of supplying that need as yet undeveloped. The Free Commonwealth could not offer more than it could supply, and it had therefore to reserve to itself a right of selection from among the investments that applied for credit. Thanks to the thorough solidarity of interests created by the free mobility of labour, this could happen without even temporarily affecting the essential material interests of the producers by giving some a dangerous advantage over others. For if, as was scarcely to be avoided, certain productions were helped or hindered by the giving or withholding of credit, this was immediately and naturally followed by such a shifting of labour as at once restored the equilibrium of profits.

But this interference during the first year extended only to the controlling of the amount and order of granting the credit asked, for, and not to the way in which it was used. In this respect, from the very beginning the principle of the producers' responsibility was carried out to the fullest extent. As it was necessary for the producers to be successful in order to repay the capital taken up, so it was their business to see that care was taken to make a profitable use of such capital. It is true that--as has been already stated--the consumers ultimately bear the cost of production; but they do this, of course, only when and in so far as the processes employed in production have been useful and necessary. If an association should procure unnecessary or defective machinery, it would be impossible for it to transfer to the purchasers of its commodities the losses thus occasioned; the association would not have increased, but diminished, its gains by such investments. It can therefore be left to the self-interest of those who are concerned in the associations to guard against such a waste of capital.

We now come to the question how it is possible to guarantee the equal right of everyone to equally fertile land. This problem also is solvable in the simplest manner by the free mobility of labour involved in the principle of free association. As everywhere else in the world, there was in Freeland richer and poorer land; but as more workers were attracted to the better land than to the worse, and as, according to a well-known economic law, a greater expenditure of labour upon an equal extent of land is followed by _relatively diminishing_ returns, so the individual worker obtained no higher net profit per hour of labour on the best land than upon the worst land which could be cultivated at all.

On the Dana plateau, for example, by the expenditure of 32 hours of labour 48 cwt. of wheat could be produced per acre; in Eden Vale the same expenditure of labour would produce merely 36 cwt. Therefore, as the cwt. of wheat was worth 3s. 1-1/2d., and 1-1/2d. was sufficient to cover all expenses, the land association in the Dana plateau had at the end of the year a return of 4s. 6d. for every hour of work, and, after deduction of tax and repayment of capital, 2s. 9d. for division among the members. The members of the Eden Vale association, on the other hand, had only 2s. per hour of labour to divide among the members; and as careful investigation proved that this difference was due neither to accidental uncongeniality of the weather nor to a less amount of labour, but to the character of the soil, the consequence was that in the next year the newly arrived agriculturists preferred the better land of the Dana plateau. There was now an average expenditure of 42 hours of labour to the acre in the Dana plateau, but in Eden Vale only 24; yet in the former place the additional 10 hours of labour did not yield the 1-1/2 cwt. per hour, as was the case when the expenditure of labour was only 32 hours, but merely a scant 3 qrs.; that is, the returns did not rise from 48 cwt. to 63 cwt., but merely to 55 cwt.--sank therefore to 1.34 cwt. per hour of labour. The consequence was that the returns, notwithstanding the considerable increase in the price of grain due to the improved means of communication, rose merely to 5s., of which 3s. per hour of labour was available for division among the members. In Eden Vale, on the other hand, the gross returns were lessened merely 3 cwt. by the withdrawal of eight hours of labour per acre; the produce therefore now was 33 cwt. for 24 hours of labour, or 1.37 cwt. per hour of labour. The Eden Vale association therefore numbered a trifle more than that of Dana; and as Eden Vale was a more desirable place of residence, and had more conveniences than the Dana plateau, the stream of agriculturists flowed back to Eden Vale until, after two other harvests, there remained a difference of profit of about five per cent. in favour of the Dana plateau, and this advantage, with slight variations, continued permanently.

But just as the principle of the solidarity of interests brought about by the mobility of labour placed him who used the actually worse land in the enjoyment of the advantages of the better land, so everyone, whatever branch of production he might be connected with, participated in all the various kinds of advantages of the best land; and, on the other hand, every cultivator of the soil, like every other producer, derived profit from all the increased productiveness of labour, in whatsoever branch of labour in our commonwealth it might arise, just as if he were himself immediately concerned in it. _All_ means of production are common property; the use which any one of us may make of this common property does not depend upon the accident of possession, nor upon the superintending care of an all-controlling communistic authority, but solely upon the capacity and industry of each individual.