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: