78 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK 
The long-time theory of distribution which was held by the 
classical school from Ricardo on was also fundamentally based 
on a concept of supply curves. Thus if wages rose above the 
minimum, which furnished at any one time the basis of subsist- 
ence or the standard of living but which was for long periods 
constant, then this would call into being the forces of Malthu- 
sianism. Births would increase, deaths would decrease, popula- 
tion and ultimately the number of workers, would expand and 
this would cause wages to fall back to their former level. This 
tendency was supposed to be reinforced by the change in the 
supply of capital. If without any change in the total product, 
wages increased at the expense of the rate of interest, this would 
cause a decrease in the rate and would lead to a curtailment in 
saving. This fear was particularly marked in the orthodox fol-' 
lowers of Ricardo who felt that the rate of profits was already 
within a hand’s breadth of the minimum, and that if they were 
to fall much lower, virtually all of the capital would cease to be 
saved. This great decrease in the supply of capital would 
of course mean an equal contraction in the fund from which wages 
were paid and consequently would cause the rate of wages to 
fall greatly. Thus behind the writings of Senior, Mill, and 
Cairnes there is the belief in the almost infinite elasticity of the 
supply of labor, and of at least an equal shrinkability in the 
supply of capital. 
Similarly, those who like Sidney and Beatrice Webb believe 
that it is relative bargaining strength alone, or force and craft, 
vhich determines what each factor shall receive, tend either 
explicitly or implicitly to assume that the supplies of the factors 
are almost completely inelastic and will be the same irrespective 
of the price which they receive. Thus the Webbs reason that if 
through trade-union organization wages should increase and the 
rate of interest fall, the supply of capital would not decrease. 
To support this contention, they accept for certain classes the 
doctrine advanced by Sargent * that a fall in the rate of interest 
would cause an increase in the amount saved. Sargent had 
argued that the lower the rate the more men must save in order 
to secure the same annuity, and the Webbs declared that this 
would offset the tendency of other classes, such as the wealthy, 
to save less. But the Webbs held that not only would there 
probably be no diminution in the amount of capital but that there 
t W. L. Sargent, Recent Political Economy.