migration into the town; settlement laws making it impossible for poor men to remove from one place to another; arbitrary regulation of wages, either by the gilds in the towns or by national councils and parliaments, forbidding the workmen to take the competitive wages that economic conditions would have forced the employers to pay; combination laws forbidding laborers to combine in their own interest.  These conditions prevailed even in the periods and in the countries often referred to as particularly favorable for the working classes (such as England in the fifteenth century).

Sec. 3. #Growth of the wage system#.  Throughout the Middle Ages these conditions were gradually changing, and the changes were hastened by the discovery of America, by the social unrest accompanying the Reformation, and by other forces.  Servile dues in the rural districts were, by the sixteenth century, commuted for cash payments in England and had begun to disappear in the other Western countries of Europe.  The agricultural work was done partly by the peasant landowners, partly by yeomen farmers on their own land, and partly by laborers hired by landowners or by tenant farmers (enterprisers with some capital for equipment).  The growth of commerce and of the mechanical trades in the towns required larger ships, factories, and shops, and increasing investments.  This required in the towns an increasing proportion of hired laborers having little or no capital invested in industry, and living on wages.  This change went on more and more rapidly with the introduction of machinery in the eighteenth and nineteenth centuries, and “the wage system” grew steadily to be a more and more important part of the whole economic structure.[1]

Sec. 4. #Practicability of the wage system#.  This change has brought with it grave problems of social organization and social welfare, which it is not the place here to discuss.  But whatever be the difficulties of the wage system it has certain practical merits of workableness which account for its progress and dominance.[2] The larger the market and the longer the waiting period in industry, the greater the element of uncertainty and financial risk.  Under the wage contract the employer, as the one best prepared to do it, takes the risk as to the future selling price of the product; the worker gets in a definite sum at once the market value of his services.  Wage payment, therefore, is a form of insurance to the workingman; he gets something definite instead of taking chances he is ill prepared to take.  Wage payment is a form of credit to the laborer whose labor is applied to producing the goods for customers distant in time and in place.  The employer advances to the workman the present value of the future sale, discounting it at the prevailing rate of interest.

Wage payment implies a contract by which the employee on his part agrees to render service and the employer on his part agrees to pay for it.  The methods of determining and measuring the amount of service of the employee are called “methods of industrial remuneration.”  The many varieties may be grouped in two classes:  time payment and piece payment, corresponding with the two modes of measuring labor, time work and piece work.