THE LIBRARY 
 
 OF 
 
 THE UNIVERSITY 
 
 OF CALIFORNIA 
 
 RIVERSIDE 
 
 I!
 
 SOCIAL REFORM
 
 SOCIAL REFORM 
 
 AS RELATED TO REALITIES AND 
 DELUSIONS 
 
 BY W. H. MALLOCK 
 
 AUTHOR OF "A CRITICAL EXAMINATION OF SOCIALISM," ETC. 
 
 NEW YORK 
 
 E. P. BUTTON & COMPANY 
 1915
 
 Sherratt and Hughes, Printers, London and Manchester.
 
 u 
 X 
 
 IU 
 
 PREFACE. 
 
 THIS work, which deals with " social reform * as 
 connected mainly with the production and distribu- 
 tion of material wealth, aims at exposing certain 
 errors, so profound as to be fundamental, which form 
 the primary assumption of " reformers " of the more 
 extreme type, with regard to both these questions ; 
 and to assist sober-minded politicians and others, in 
 unmasking these errors, and combating the proposals 
 based on them. 
 
 For this purpose use has been made, for the first 
 time, of specific official information, the existence of 
 which appears to have been overlooked, relating to 
 the amount and distribution of incomes at the begin- 
 ning of the nineteenth century. McCulloch believed 
 that the records here in question had been destroyed. 
 At the same time he regarded them as so essential to 
 a true understanding of conditions at that time, that he 
 compared their supposed destruction to the loss caused 
 by the burning of the Great Alexandrian Library. 
 They are not quoted by Porter, Levi, Dudley Baxter, 
 or Giffen, or in any of the encyclopedias published 
 during the course of the nineteenth century. Two 
 copies were found by the author in the University 
 Library of Cambridge. They enable certain broad 
 comparisons to be made, which would otherwise not 
 be possible, between present conditions, and those of 
 more than a hundred years ago. 
 
 At the same time the reader must be reminded
 
 *i. PREFACE 
 
 that in respect, both of the period just mentioned, and 
 of the present, the figures available, though substan- 
 tially true to fact, cannot be taken as possessing 
 (except in a few cases) mathematical exactitude. 
 
 It is specially desirable to note this with regard to 
 the present time. In the first place, the most recent 
 statistics do not all of them relate to the same year. 
 The latest comprehensive returns with regard to wage- 
 rates relate to the years 1906 and 1907; the Census of 
 Production relates to the year 1907 ; the latest census 
 figures (i.e. Census of the Population), with regard 
 to certain particulars, are, at the present moment, 
 those for 1901. The Reports of the Income-Tax 
 Commissioners never relate to the actual year of 
 issue. Whilst these pages were in the press, the 
 Commissioners issued new details, by which to a 
 very slight degree those here given might have been 
 modified. 
 
 It must further be noted, in respect of the total 
 amounts of great masses of income, and averages of 
 individual incomes within certain limits, that these 
 are affected from year to year by general conditions 
 of trade, and increases or decreases in the percentage 
 of unemployment. Yet again, it should be noted that 
 in calculating the aggregate income of the wage- 
 earning classes on the basis (as has been done here) 
 of ascertainable wage-rates, and also of the total in- 
 come produced, as shown by the Census of Production, 
 the sum arrived at is not only liable to deductions on 
 account of unemployment, but may be reasonably 
 subject to addition in respect of public moneys, em- 
 ployed for the benefit of that class alone for example, 
 on education, and payments of old-age pensions ; 
 whilst it is reasonably contended by many eminent 
 statisticians that account should be taken of the value 
 of the unpaid domestic services of .some millions of 
 females, who perform such services, but do not work 
 for wages. Were these last included in the aggregate
 
 PREFACE *ii. 
 
 income of the wage-earners, me figures here given 
 would be increased by about 6 per cent. 
 
 The above facts being considered, it may be said 
 generally of the figures given in this volume, that they 
 possess, from one point of view, the kind of accuracy 
 obtainable in the block plans of an architect, or a 
 surveyor ; and that they possess, from another point 
 of view, both the accuracy and uncertainties of defini- 
 tion, characteristic of a non-instantaneous photograph 
 of moving objects. Their substantial and general 
 truth, however, is not thereby affected. 
 
 January,
 
 CONTENTS. 
 
 BOOK I. 
 
 CHAPTER I. 
 
 Estimates of Social Conditions, as Distinct from Schemes 
 and Theories of Reform. Causes Conducive to the 
 Popularisation of False Estimates 3 
 
 CHAPTER II. 
 
 The Sense of Social Grievance, largely Dependent on 
 Beliefs, as Distinct from Experience - - 8 
 
 CHAPTER III. 
 
 Social Grievances in the Eighteenth Century. Their Rela- 
 tion to Beliefs in a Non-Historical Past 13 
 
 CHAPTER IV. 
 
 Social Grievances in the Nineteenth Century. Their Rela- 
 tion to False Versions of History, which are now 
 Exploded. Two Examples : Production for Exchange 
 as Contrasted with Production for Use. The Alleged 
 Extermination of the Middle Classes by Capitalism 33 
 
 BOOK II. 
 
 CHAPTER 1. 
 
 The General Thesis of Social Reformers of To-day. 
 Certain Outstanding Figures by which its Relation to 
 Truth may be Tested. Number and Grouping of 
 Incomes exceeding 60 a Year, in the Years 1801 and 
 1910 49 
 
 CHAPTER II. 
 A Pictorial Comparison - - r 61 
 
 CHAPTER III. 
 
 The Aggregate of Incomes exceeding ^5,000 a Year, and 
 the proportion borne by this to the Income of the 
 Nation as a whole, in the Years 1910 and 1801 - 75 
 
 CHAPTER IV. 
 
 The General Causes of Misconception with regard to the 
 Distribution of Wealth. Delusion due to the Imagi- 
 nation ------ 90
 
 x- CONTENTS 
 
 CHAPTER V. 
 
 Imaginative Delusions as to the Distribution of Wealth, 
 fostered by the Grotesque Statistics of Agitators. 
 Statistics of the Fabian Society Examined by way of 
 an Example - - 98 
 
 BOOK III. CHAPTER I. 
 
 A General Survey of the National Income, and its Distri- 
 bution into Incomes Exceeding and not Exceeding 
 ;i6o a Year. The two main Statistical Misrepresenta- 
 tions of Agitators. Grotesque over-statements of the 
 Total subject to Income-tax. Income from Abroad. 
 The Total Home-produced Income of the Country. 
 The Average per Head of Home-produced Incomes, 
 respectively Subject and not Subject to Income-tax 113 
 CHAPTER II. 
 
 Detailed Examination of the Total Amount, Number, 
 Origin and Distribution of Incomes not Exceeding 
 
 160 a Year - 131 
 
 CHAPTER III. 
 
 Detailed Examination of the Income of the " Richer 
 Classes," or those subject to Income-tax. Total 
 
 Amount and Sources 152 
 
 CHAPTER IV. 
 
 Examination of the Incomes of the " Richer Classes," 
 continued. The number subject to Income-tax as 
 indicated by Enumerated Assessments, and the number 
 of Houses above certain Values. The Grouping of 
 Assessed Incomes as indicated by the number of 
 Houses of various Values. Details as to Distribution 
 of Incomes, small and large, Summarised - - 166 
 BOOK IV. CHAPTER I. 
 
 The Doctrine of Modern Reformers, that Modern Poverty 
 is mainly due to the inordinate growth of Wealth. 
 Two contradictory versions of this Doctrine those 
 of Marx and George. The grotesque futility of 
 both versions shown by the Statistical History of the 
 United Kingdom, as summarised in the preceding 
 Chapters 187
 
 CONTENTS xi. 
 
 CHAPTER II. 
 
 The Effective Increment of Wealth, relatively to the 
 Population since the Year 1801. Enormous numerical 
 Increase of Middle Class Workers. The Decrease in 
 relative numbers, and enormous Increase in Wages of 
 Manual Labourers - -211 
 
 CHAPTER III. 
 
 The Fallacious Assumptions of Reformers as applied to 
 particular questions. The Question of Land-rent 
 generally. The Question of "Unearned Increment." 
 The Agricultural Question - - - 232 
 
 CHAPTER IV. 
 
 Current Ideas of Reformers as to Wages, Hours, and 
 Profits. Recent Demands with regard to a general 
 Minimum Wage. The Value of the total product per 
 head of Employees in different Industries. Smallness 
 of the general margin of Profits. Particular Examples. 
 -Wild Ideas as the Ratio of Profits to Wages. The 
 way to Increase Wages generally is to Increase the 
 
 Total Product 252 
 
 CHAPTER V. 
 
 The Self-contradictions in which Reformers are involved, 
 owing to the Fallacy of the Assumptions with which 
 they start. Land-rent, Unearned Increment, Profits 
 on the Use of Capital, Profits on the Men's Invest- 
 ments, and simultaneously alleged Starvation and 
 rude Health of Agricultural Labourers - 271 
 
 CHAPTER VI. 
 
 Total of incomes and recipients. Effect of Socialism on 
 income from abroad. Specific values. Professional 
 services. Fancy values. Wages and savings. 
 Equalisation of incomes not practical politics. "Bet- 
 ter distribution." Analysis of incomes. " Transfer- 
 ences." Luxuries. Effect of an equal division - 281 
 BOOK V. 
 CHAPTER 1. 
 
 Social Grievances, as due to facts and beliefs, reconsidered. 
 Survey of Beliefs in Theories, as Distinct from
 
 xii. CONTENTS 
 
 Beliefs relating to concrete Facts. The Influence of 
 Illusory Theories, commonly called " Socialistic," 
 mainly due to False Beliefs as to Fact - - - 3 15 
 
 CHAPTER II. 
 
 Causes of the Belief that an increasing proportion of 
 modern Wealth is being appropriated by one small 
 class, reconsidered. The Influence of modern Wealth 
 as a spectacle. The lighter and graver sides of the 
 Illusion thus produced. The Popularisation of imposs- 
 ible Standards and Expectations. Reasonable Expec- 
 tation limited by the possibilities of Production. 
 Recent recognition of this fact by certain Reformers 
 Their Exaggerated Interpretations of it - - 331 
 
 CHAPTER III. 
 
 The immediate Possibilities of Increased Production con- 
 sidered. Allegations by certain Reformers as to 
 enormous waste by Armaments, by competition in 
 Manufacture, and especially by needless Advertise- 
 ment. Extravagance of these Estimates shown by 
 detailed Facts. Varying but gradual Increase of 
 National Income during different periods. Contem- 
 poraneous Increase in Income of Working Classes. 
 The latter impossible without the former. Demon- 
 stration of the closeness of their connection. Fallacy 
 of the Idea that sudden and sensational Increases cau 
 be achieved in either. "Unrest" as the result of false 
 expectations -- 342 
 
 CHAPTER IV. 
 
 Welfare and Income. How the effective value of earnings 
 is increased by general improvement of the conditions 
 under which they are earned and spent ... 560 
 
 CHAPTER V. 
 
 Conservatism and the Rights of Property. Limitation of 
 such Rights an Essential Condition of their Existence. 
 Similar Limitations of a man's property rights in 
 his own labour power --...- ^75
 
 BOOK I. 
 INTRODUCTORY. 
 
 ON THE WIDE ACCEPTANCE, IN THE PAST, OF 
 ERRORS NOW REPUDIATED, AS TO SOCIAL 
 CONDITIONS AND TENDENCIES.
 
 CHAPTER I. 
 
 THE phrase, " Social Reform," is employed 
 in the present volume in the more or less 
 specialised sense with which recent use has 
 invested it. It is employed to indicate Reform 
 as understood by those who regard the principal 
 evils which exist under contemporary condi- 
 tions, not as sores or bruises which are local 
 or accidental in their nature, but as results of 
 some organic defect in the structure of society 
 as a whole, and as curable only by some 
 similarly organic change. 
 
 Social Reform in this sense presents to those 
 who would examine the subject two questions 
 or sets of questions, each of which must be 
 considered separately : one consisting of theo- 
 ries as to social action in general, together with 
 practical schemes which have such theories as 
 their basis ; the other consisting of the estimates, 
 made and popularised by reformers, of those 
 conditions and tendencies as they actually are 
 to-day which are held by such persons to render 
 their schemes necessary. 
 
 The latter of these two questions will here 
 be considered first, such an arrangement being 
 that which logic and common sense dictate. 
 If an architect is to restore successfully a 
 cathedral which threatens to collapse, he must 
 not only be a master of the principles of 
 construction generally, he must also be a master
 
 4 INTRODUCTORY [Book 1 
 
 of the details of: this particular fabric the 
 nature <>f..its .foundations, the thickness of its 
 walls' "ahti- pillars,' a-nd the 'cause and extent of 
 each crack or subsidence. It is only in propor- 
 tion to the accuracy of his knowledge of these 
 particulars that his principles and plans will be 
 applicable to the practical vvork in view. In 
 the same way the schemes of social reformers, 
 though dependent in part on general ideas and 
 principles, can only come to possess a practical 
 meaning in proportion as they are determined 
 by a knowledge similarly accurate of the actual 
 conditions of the society for the benefit of which 
 they are advocated. 
 
 Now the peculiar danger to which social 
 reformers are liable is a neglect of this obvious 
 truth. Belonging, as they mostly do, to a 
 supersensitive class, for whom sympathy has 
 the powers and the limitations of an indefinitely 
 magnifying lens, they or, at all events, the 
 most honest of them are affected by the 
 spectacle of suffering more acutely than they 
 would be by the experience of it; and the vivid 
 pictures which the spectacle leaves in their 
 minds, and which in heightened colours they 
 reproduce for the public, are apt to be symbols 
 of the distress which they feel themselves, 
 rather than diagrams of complicated conditions 
 which are causing distress to others. 
 
 In this fact we have the main, though by no 
 means the sole, origin of a mass of mischievous 
 delusions, by which popular opinion at the 
 present day is vitiated, to an extent and in a
 
 Chap. I.] EXISTENCE OF EVILS 5 
 
 manner not perhaps sufficiently realised. These 
 supersensitive persons, largely as a consequence 
 of their honesty, are abnormally impatient of 
 criticism; and anyone by whom their own 
 estimates of social evils are questioned is 
 attacked by them as though he were maintain- 
 ing that no evils exist, and that everything is 
 for the best in this best of all possible worlds. 
 Now to anyone who reflects calmly it is obvious 
 that in actual life judgements relating to a 
 multitude of obscure details are never thus 
 reducible to a choice between two extreme and 
 mutually exclusive alternatives. To deride 
 the statement that a sick man is dying of 
 Asiatic cholera is not to affirm that he is in 
 absolutely rude health. To deny that four- 
 fifths of the population of a country are starv- 
 ing is not to assert that no section of it is 
 familiar with undeserved want. The real 
 question at issue between the extreme reformers 
 and their critics is not whether any evils of a 
 grave kind exist, but what, given their existence, 
 is their precise extent and character; and to 
 argue that anyone who accuses the extremists 
 of over-estimating them is necessarily denying 
 their existence, or is even insensible of their 
 importance, is to argue like an angry child. 
 Childish, however, as this type of argument is, 
 if considered as an appeal to reason, it consti- 
 tutes nevertheless a powerful appeal to the 
 feelings, not only of the sufferers on whose 
 behalf it is ostensibly used, but also of others 
 whose position is of a totally different character.
 
 6 INTRODUCTORY [Book I. 
 
 Human tempers and temperaments being 
 such as they are, the over-estimates of social 
 evils put forward by extremists do no doubt 
 tend to provoke, by way of reaction, an under- 
 estimate of them on the part of the opposing 
 moderates. While such a mood lasts, the 
 moderates lay themselves open, as the recent 
 history of Conservativism in this country shows, 
 to a charge of neglecting matters which multi- 
 tudes regard as vital. Popular support is more 
 or less widely withdrawn from them; and in 
 process of time the results of a general election 
 rouse them to an alarmed perception that such 
 is actually the case. This again leads presently 
 to a reaction of another kind. In order to free 
 themselves from the suspicion of being indif- 
 ferent to social evils, the moderates in nervous 
 haste betake themselves to an opposite extreme. 
 They compete with one another in proclaiming 
 their full recognition of the facts of the social 
 situation precisely as their opponents give them ; 
 and confine themselves to declaring that, these 
 terrible facts being true, it is they, and not their 
 opponents, who best know how to deal with 
 them. In this way, so far as mere facts are 
 concerned, the inflammatory picture drawn of 
 them by politicians of the most extreme type 
 secures the endorsement of those who are 
 otherwise their professed antagonists, and 
 imposes itself on public belief like a legend 
 replacing history. 
 
 How wide the difference is between facts as 
 they actually are and popular conception of
 
 Chap. I.] PREVALENT ERRORS 7 
 
 them which is generated in the manner just 
 described, it will be the object of the earlier 
 portion of the present work to elucidate. Since 
 many persons, however, will no doubt be 
 reluctant to believe that errors so great as those 
 which are here suggested can possibly exist in 
 a picture of contemporary conditions, which, 
 even if it was outlined originally by persons 
 prone to exaggeration, is accepted by so many 
 others of naturally sober judgement, attention 
 will be called, before we proceed farther, to 
 causes which render such errors at all events 
 antecedently probable, and also to examples 
 of their prevalence and the subsequent exposure 
 of them in the past.
 
 CHAPTER II. 
 
 WHAT, then, when we talk about social evils as 
 estimated by persons who regard them as 
 subjects of reform, are the evils which we have 
 in view? It is obvious that they are sufferings, 
 or conditions which produce suffering ; but they 
 are sufferings of a definite and limited kind 
 only. In brief phrase we may say of them 
 that they are grievances as distinct from griefs. 
 If a bridegroom loses his bride because she is 
 killed by an avalanche, his loss is a grief, but 
 nobody would call it a grievance. If he loses 
 his hat-box through neglect on the part of a 
 porter, his loss is a grievance, but nobody would 
 call it a grief. Between the two kinds of 
 suffering the radical difference is this that the 
 one is attributable to causes beyond human 
 control, while the other is attributable to the 
 needless misbehaviour of man. There is no 
 remedy for the one. There is presumably a 
 remedy for the other. If the grievance is the 
 grievance of an individual, the natural remedy 
 is a law-suit. If it is the corporate grievance 
 of a class, the natural remedy is legislation. 
 It is plain that the concern of the reformer is 
 with class grievances only; but these resemble 
 those of the individual in one respect so 
 important that the former will be best under- 
 stood by comparing them with the latter. 
 Both, then, resolve themselves into broadly 
 8
 
 Chap. II. J COMPARATIVE VALUE 9 
 
 contrasted groups, according as they are mainly 
 due to the direct impact of facts, or to the 
 influence of facts as presented, correctly or 
 incorrectly, to the imagination. Thus if a man 
 is wretched because his means are rarely 
 sufficient to admit of his pacifying the normal 
 demands of hunger, his grievance arises from 
 facts pure and simple. The imagination has 
 nothing at all to do with it. On the other hand 
 a man may have an income of ^2,000 a year, 
 and may have regarded himself for half his 
 life-time as a favoured son of fortune; and yet 
 if one day a lawyer persuades him that he is 
 the rightful heir to a peerage, of which, with the 
 estates attached to it, he is defrauded by some 
 distant kinsman, what has up to that time 
 seemed riches to him will assume the charac- 
 teristics of poverty; and he may well be more 
 aggrieved by the thought that he is not dining 
 off silver than he would be by the difficulty of 
 getting any dinner at all. Facts are involved 
 in this latter case just as they are in the former; 
 but they are only turned into a grievance by 
 the way in which the imagination works on them. 
 Similarly if a multitude of wage-earners find 
 that, through a fall in wages, so much butter 
 and bacon disappears from their tables, the 
 sense of grievance which arises is due to direct 
 experience. The butter and bacon disappear 
 not in imagination but in fact. On the other 
 hand the same men may be aware that their 
 wages have risen. They may daily be reminded 
 of the fact by an ampler and more appetising
 
 io BELIEFS AND [Book I. 
 
 diet; and yet they may be conscious of a 
 grievance even more acute because their leaders 
 have led them to imagine, correctly or incor- 
 rectly, that the rise ought to have been greater, 
 and that the masters could afford to make it so. 
 Between the grievances of classes, however, 
 and those peculiar to individuals, there is one 
 important difference. The part which the 
 imagination plays in producing the former is 
 incomparably greater than that which is played 
 by it in producing the latter. Let us take the 
 case of the man who, possessed of an ample 
 income, suddenly feels himself poor, because 
 he has been led to imagine that legally he has 
 a claim to millions. The facts which the 
 imagination of such a man must present to him 
 in order to produce such a change in his mental 
 state as this, are bound to comprise many 
 outside his personal knowledge. They will 
 relate to questions of marriages valid or other- 
 wise, the dates of births and deaths, and other 
 similar matters, which have rested forgotten or 
 unquestioned for it may be several generations, 
 and which can only be got together by means of 
 expert research. But such facts, however 
 obscure and numerous, are nothing in compari- 
 son with the facts which the imagination is 
 called on to assimilate when the claimant to be 
 inoculated with a grievance is not an individual, 
 but a class. Not only do the facts here 
 involved comprise the innumerable details 
 which constitute, as inter-related, the social 
 conditions of to-day : they comprise social
 
 Chap. II.] HISTORICAL FACTS li 
 
 conditions as they were at previous periods a 
 century or perhaps a century and a half ago, or 
 in the Middle Ages, or even before the dawn 
 of history, with which conditions present con- 
 ditions are contrasted. For example, the 
 discontent which expressed itself in the French 
 Revolution owed much of its character to the 
 pictures drawn by Rousseau of the many 
 amenities forfeited by our primeval ancestors 
 when they made the fatal mistake of submitting 
 themselves to social laws. 
 
 Now facts such as these being inaccessible 
 to ordinary enquiry or observation, they must, 
 in so far as the ordinary public is to be moved 
 by them, be got together by reformers who, 
 posing as sociological specialists, summarise 
 and group them so as to form a coherent 
 picture, in which, as in " a mirror held up to 
 nature " the public is invited to contemplate its 
 own condition, comparing what is with what 
 was, and also with what should and may be; 
 and the public must necessarily take the 
 accuracy of the picture on trust. 
 
 Such being the case, the picture may be true 
 or false. There is no reason in the nature of 
 things why it should not be entirely true. All 
 that is here being urged at the present moment 
 is this : that in proportion as the facts which 
 the picture purports to represent are remote in 
 point of time, or, even if modern, are obscure, 
 numerous and complex, and are thus beyond the 
 reach of direct common enquiry, the room for 
 error in any picture of thr^m which is presented
 
 12 EXISTENCE OF ERRORS [Book I. 
 
 to the public will be great; that it will not be 
 unnatural if the gravest errors occur, and if, 
 thus escaping exposure, they are accepted as 
 indisputable truths. 
 
 In the two following chapters some pre- 
 liminary examples shall be given of errors of 
 this kind and errors on the largest scale 
 which have been promulgated by reformers in 
 the past, which have met with prolonged 
 acceptance, but which are now relegated by all 
 to the limbo of pure delusions.
 
 CHAPTER III. 
 
 MENTION has been made of the manner in 
 which, in the eighteenth century Rousseau 
 sought to stimulate the discontent of his con- 
 temporaries by parading before them a picture 
 of the almost perfect conditions which were 
 enjoyed by the human race in the earlier stages 
 of its existence. Rousseau's procedure in this 
 respect is a type of one of the main devices 
 which all reformers employ for a like purpose. 
 Reduced to logical terms, it presents itself as 
 the following argument. All human beings 
 have, as an historical fact, enjoyed certain equal 
 advantages at some specified period. What- 
 ever advantages it is possible for all human 
 beings to enjoy, all human beings have a right 
 to enjoy; and such human beings as do not 
 enjoy them now, have by some means or other 
 been robbed of their just inheritance. Here, 
 for example, is a statement taken from an 
 English Liberal journal of to-day : ' The 
 people of England want their land back aeain; 
 and the immediate duty of the Liberal Party 
 is to give it to them." This is not explicitly a 
 statement relating to English history; but, if it 
 is not absolute nonsense, it is an historical 
 statement by implication. It must mean that 
 there was a time when, in some sense or other, 
 the land of England was the property of the 
 
 13
 
 14 SOCIAL GRIEVANCES [Book l. 
 
 great mass of the inhabitants : for nobody could 
 want a thing " back again " if he had not 
 possessed it once. The value of this particular 
 statement does not concern us here. It is 
 merely quoted as illustrating the typical 
 character of the argument drawn by Rousseau 
 from his picture of a remote past. 
 
 Expressed more definitely, Rousseau's own 
 contention was this. If we examine the life 
 of man in the primary state of nature, we find 
 it to have been, in many important respects, 
 superior to that of most Frenchmen towards 
 the close of the eighteenth century. Nobody 
 was comfortable, it is true; but this was a 
 blessing in disguise, for nobody was conscious 
 of discomfort. The primeval human being, 
 however, was a solitary cave-dwelling animal, 
 the males and the females meeting only for 
 purposes of reproduction ; and though the 
 males, like Rousseau himself, were not embar- 
 rassed by any subsequent thought of their 
 offspring, the habit of reflection was not 
 sufficiently developed to render these hermits 
 conscious of such beatitude as was theirs. In 
 order to acquire such consciousness, some 
 intercourse with their fellows was necessary. 
 There was thus room for improvement, and the 
 requisite improvements came. Caves as places 
 of residence were superseded by huts. What 
 now would be called "neighbourhoods," loosely 
 compacted, formed themselves; and the units, 
 no longer solitary, began to taste the pleasures 
 which society alone can give. They looker
 
 Chap. III.] IN THE XVIII CENTURY 15 
 
 into each other's eyes, and said to each other 
 ' We all are extremely happy." But such 
 social relations were wholly free and spon- 
 taneous. Although there was sociability, there 
 was no social authority. A man might perhaps 
 be the owner of the bed of leaves he slept in; 
 but everything out of doors was delightfully free 
 to everybody. There was no such thing as a law 
 which enabled any human being to say even of 
 a cabbage-plot which he had himself cultivated 
 :< It is mine." Here, according to Rousseau, 
 was the true golden age a secondary State of 
 Nature, which was a kind of " riper first " : and 
 in this absence of government, of laws, and of 
 protected property, which are purely artificial 
 creations, lay the secret of its lost felicity. 
 
 What the moral of all this was for the 
 contemporaries of Rousseau is obvious. Does 
 anyone surfer? Is anyone poor or oppressed? 
 The cause lies not in the fact that existing laws 
 are unjust, or that property is distributed ill. 
 The cause lies in the fact that there are any 
 laws whatsoever, or that anything like property 
 exists to be distributed ill or well. The one 
 reform needed is not to reconstruct, but to 
 destroy. Let us destroy the artificial, and 
 history shows us that happiness will take care 
 of itself. 
 
 Let us now turn to another writer belonging 
 to the same epoch, who is no less famous than 
 Rousseau, and to Englishmen yet more 
 familiar namely the poet, Oliver Goldsmith. 
 Though deficient in the energies essential to
 
 ID SOCIAL GRIEVANCES [Book 1. 
 
 active agitators, there was in Goldsmith much 
 of their characteristic temperament. In the 
 England of his day there were grievances just 
 as there were in France, and although he was 
 blind to the latter he brooded over the former, 
 and endeavoured to render his own countrymen 
 conscious of them by means precisely similar to 
 those employed by Rousseau : that is to say, 
 by contrasting contemporary facts as he saw 
 them with a picture of what he took to be the 
 facts of some distant and happier time. 
 Embarrassed by poverty himself, he was a 
 spectator of the first appreciably rapid multi- 
 plication of considerable fortunes in England 
 derived not from agriculture, but from trade. 
 He was at the same time a spectator of dis- 
 placements of the agricultural population 
 which, however they may have been due to 
 improved methods of farming, were tragedies 
 for those displaced, and which, as he under- 
 stood them, he depicts in " The Deserted 
 Village." Divested of the appeal derived by 
 them from the magic of his unforgotten verse, 
 the main propositions which he enunciates are, 
 in plain prose, as follows : 
 
 "A time there was " that is, in the Middle 
 Ages when England was a country without 
 any appreciable " grief," or (in other words) 
 appreciable social grievances. The bulk of the 
 population was then supported by agriculture, 
 and consisted of " labouring swains " who, 
 together with their wives and children, flour- 
 ished in " health and plenty " on their '' own
 
 Chap. III.] GOLDSMITH AND ROSSEAU 17 
 
 roods of land," each rood on an average 
 maintaining one member of a peasant family, 
 and so secured to its cultivators that it could 
 not be taken away from them. But now, says 
 Goldsmith, writing in the year 1770, English 
 trade had increased with such monstrous 
 rapidity that it was drawing the swains to the 
 towns or driving them into foreign exile; the 
 fields and the villages, denuded far and wide 
 of their population, were being turned by trad- 
 ing plutocrats into playgrounds for their pride 
 and pleasure ; whilst, to crown everything, 
 " trade's proud empire " itself was already 
 nearing its zenith, and was, unless English 
 virtue should somehow manage to stop it, bound 
 to collapse in a year or two, buried beneath its 
 own ruins. 
 
 Here in all its essentials the method of 
 Rousseau is reproduced. We have contem- 
 porary grievances heightened, indeed to a 
 certain extent created, by contrasting the present 
 with what purports to be an accurate picture 
 of a past, when the place of every existing 
 imperfection was taken by its enviable opposite ; 
 only Goldsmith's golden age was less remote 
 than Rousseau's, and the moral was more 
 precise which he aimed at deducing from his 
 picture of it. 
 
 How far, then, in each of these two pictures, 
 did the details of the past by which the principal 
 effect was obtained, accord with actual facts, 
 and thus form a true standard by which the 
 present might be appraised and judged?
 
 i8 ROUSSEAU [Book I. 
 
 With regard to Rousseau it is needless to 
 say much. Nobody would now deny that his 
 picture of the Golden Age, if considered in its 
 relation to facts, is altogether an absurdity. 
 The actual inhabitants of Europe in the sub- 
 primaeval age were creatures who, if Rousseau's 
 contemporaries could have seen them as they 
 really were, would hardly have excited the envy 
 of the poorest peasant who ever beat the frogs 
 into silence for the benefit of the seigneur's 
 dreams. The condition of France in Rous- 
 seau's day may have been as bad as we like to 
 think it; but it was not bad because, or in so far 
 as, it differed from the condition of the half-clad 
 savages who were the subjects of Rousseau's 
 fable. 
 
 Goldsmith's picture of the past has, on the 
 other hand, certain features which are more or 
 less historical; but his drawing of these is so 
 distorted, and their meaning is so changed by 
 the complete omission of others, that Rousseau 
 himself would have been puzzled to make the 
 whole more fabulous, had he tried. In the first 
 place, though it is true that in mediaeval Eng- 
 land the agricultural workers formed a larger 
 fraction of the population than they did in the 
 earlier years of the reign of George III, it is 
 totally incorrect to suppose that, as Goldsmith's 
 picture suggests, the entire land of the country 
 was devoted to the support of peasants. The 
 " swains," as Goldsmith calls them, occupied 
 a part only, and paid a rent for their annually 
 allotted strips in the form of " week-work " and
 
 Chap. III.] GOLDSMITH 19 
 
 " boon-work " on the domains of the manorial 
 lords. Again, though it is true that each 
 " swain," villein or cottar had a legal right to 
 the use of a specified number of acres, and that 
 thus his means of subsistence could not be taken 
 away from him, this fact has a converse side, 
 no less important, which the picture of Gold- 
 smith altogether omits. The mediaeval swains 
 could not be driven from their roods, for the 
 simple reason that they were not permitted to 
 leave them. If they themselves had a firm 
 grip on their lands, their lands had a grip 
 equally firm on them; and this arrangement, 
 though from some points of view it may have 
 been a blessing, came to be felt by many of 
 them as so very much the reverse that it formed 
 one of the main pretexts for the great Peasant 
 Rebellion. Finally, as to the number of the 
 then agricultural population, which, according 
 to Goldsmith, was one person for every " rood 
 of ground," it is enough to observe that if this 
 computation were correct the agricultural 
 population of England at some time during the 
 Middle Ages must have been greater by forty 
 per cent, than that of the United States to-day. 
 It may of course be said that Goldsmith wrote 
 as a poet; but after every license on this score 
 has been accorded to him, not only does his 
 picture remain a picture full of errors, but it is 
 the errors in it and not the truths which pro- 
 vided him with the bases on which he reasoned 
 from past to present. Even if he had meant 
 that the number of the mediaeval agriculturists
 
 20 GOLDSMITH [Book I. 
 
 was only one to an acre instead of one to a rood, 
 they would have made up a. total of very nearly 
 forty millions; and to anybody who started with 
 such an idea as this, English agriculture in the 
 year 1770 (when the entire population of the 
 country was not one-fifth of that number) would 
 naturally have presented itself as an industry 
 that was fast dying, and the English fields 
 would have seemed to be already almost 
 deserts. As a matter of fact there is ample 
 evidence to show that agriculturists of England 
 at the time when Goldsmith wrote were not only 
 more numerous than they had ever been before, 
 but were beginning to increase at a rate unex- 
 ampled at any previous period; and farther that 
 agriculture as an industry, instead of being 
 injured by trade, owed to the growth of the 
 trading population and its demands that series 
 of rapid improvements which alone enabled 
 this country, in the course of another genera- 
 tion, to confront and destroy Napoleon. 1 
 Finally, attention may be called to Goldsmith's 
 estimate of the position of English trade itself, 
 which, according to him, by the year 1770 
 when measured by modern standards its growth 
 
 i. According to Mc.Culloch (see Statistical Accounts of 
 the British Empire, chapter on English Agriculture) the 
 English production of wheat was about 3,840,000 quarters 
 in 1765, 4,000,000 quarters in 1773, and nearly 6,000,000 
 quarters about twenty years later. According to Arthur 
 Young (1802) and Marshall (1790) there was during the 
 latter half of the eighteenth century a most remarkable 
 increase in the number of small farmers and free-holders.
 
 Chap. III.] NONSENSICAL ESTIMATES 21 
 
 was only just beginning had all but reached 
 the limits of possible or even thinkable expan- 
 sion, and was already on the eve of bursting- 
 such was obviously his idea like another South 
 Sea Bubble on an immeasurably larger scale. 
 The absurdity of this estimate, in the light 
 of subsequent events, is perhaps more imme- 
 diately evident, but it is hardly greater, than 
 that of the other details which make up, if not 
 the earliest, yet at one time the most popular, 
 picture ever presented to Englishmen of their 
 own social grievances. 
 
 No social reformer would maintain to-day 
 that the grievances of France or England in the 
 eighteenth century, whatever they may have 
 really been, were correctly represented in such 
 estimates as those of Rousseau and Goldsmith. 
 What is here commended to the reader's atten- 
 tion is that the fact of these estimates being 
 nonsensical was no bar to their being generally 
 accepted, and that the fact of their being 
 generally accepted was no proof that they were 
 not nonsensical. It may, however, be said that 
 Rousseau and Goldsmith lived in a pre-scien- 
 tific age, and that from errors, however great, 
 which were formulated and accepted then, no 
 inference can be drawn as to the state of affairs 
 to-day. This is no doubt true ; and, as a further 
 introduction to our examination of the social 
 estimates current at the present time, we will 
 glance at those belonging to an intermediate 
 period, during which the apostles of Reform, 
 like other thinkers and investigators, adopted
 
 22 ROUSSEAU AND GOLDSMITH [Boot I. 
 
 or claimed to have adopted, the methods of 
 advancing science. We will presently take 
 two of the best known of their generalisations, 
 and see whether these, in point of scientific 
 accuracy, are any improvement on the estimates 
 of Rousseau and of Goldsmith, or no.
 
 CHAPTER IV. 
 
 THERE is one feature in the estimates of 
 Rousseau and Goldsmith alike, which, unhis- 
 torical as they were, invests them with an 
 historical interest. Both alike represent some 
 dawning perception of that movement of human 
 affairs which is now called Evolution, and the 
 idea of which is so deeply implicated in modern 
 theories of reform. 
 
 Such being the case, let us now turn to a 
 thinker who, though not belonging to the 
 company of social reformers himself, has been 
 instrumental in furnishing them with much of 
 the present mental equipment. In the year 
 which witnessed the publication of ' The 
 Deserted Village," there was born in Germany 
 the renowned metaphysician, Hegel. Remote 
 from practical life, and indeed from ordinary 
 comprehension, as the doctrines are to which 
 he mainly owes his fame, he condescended to 
 illustrate their validity by applying them to an 
 explanation of the historical development of 
 human thought on the one hand, and of human 
 government on the other. The development 
 of human thought, he declared, exhibits itself 
 as an historical process, under the guise of four 
 " Moments," each representing the mentality of 
 some particular race or races : the Orientals 
 representing childhood, the Greeks youth, the 
 Romans manhood, and the Teutons complete 
 
 23
 
 34 HEGEL AND COMTE [Book I. 
 
 maturity. Of this same process another and a 
 rival account was subsequently provided by 
 Comte, the French prophet of Positivism. For 
 him the stages of the process were not four, 
 but three the Religious, the Metaphysical, 
 and the Positive. To discuss these doctrines 
 in detail would be nothing to our present pur- 
 pose. It will be enough to say that what for 
 Hegel was supreme wisdom was for Comte the 
 most barren folly; that Comte's supreme 
 wisdom was for Hegel the most vulgar 
 ignorance; that the one doctrine in short flatly 
 contradicts the other; and that nobody, whether 
 Comtist or Hegelian, to-day believes in either. 
 They are only mentioned here because they 
 lead up to another namely Hegel's doctrine 
 of the evolution of human government. This 
 is likewise resolved by him into a sequence of 
 ordered " Moments," the first being Despotism, 
 or government by the will of one; the second 
 being aristocracy or democracy, or government 
 by the will of a more or less numerous many; 
 the third being government by a constitutional 
 Monarchy, in which the will of the one and the 
 will of the many are unified. So far as practical 
 opinion at the present day is concerned, this 
 theory of government is in itself no less sterile 
 and obsolete than its companion theory of the 
 historical evolution of thought; but it was the 
 parent of another whose practical consequences 
 have been immense, which has coloured the 
 ideas of reformers for now nearly half a cen-
 
 Chap. IV.] KARL MARX af 
 
 tury, and which, in a modified form, colours and 
 inflames them still. 
 
 The creed or the group of creeds now known 
 as Socialism first came into being and acquired 
 that distinctive name early in the nineteenth 
 century. But, except as a protest against the 
 division, which was at that time daily becoming 
 more apparent, between the employers of 
 productive labour and the bodies of labourers 
 employed by them, Socialism suffered for a 
 very considerable period from the want of any 
 commonly accepted and precise theory as its 
 basis : and it was not till this want was supplied 
 by certain thinkers, and by one thinker in 
 particular, that it grew into a force productive 
 of any widespread movements. The particular 
 thinker in question that is to say Karl Marx 
 published in the year 1865 his celebrated 
 treatise on Capital, which has been hailed by 
 socialists all over the world as a work which 
 raised Socialism from a sentiment to an exact 
 science ; and all subsequent reformers, whether 
 calling themselves socialists or no, have been 
 influenced by certain of the doctrines to which 
 that work gave currency. 
 
 Marx concerned himself at once with theory 
 and with concrete facts; and he deserves 
 recognition, whatever may have been his errors 
 otherwise, as the first thinker who attempted, 
 in any systematic way, to associate the details 
 of history with minute economic analysis. The 
 orthodox economists, such for example as 
 Rirardo, were content to accept the industrial
 
 26 KARL MARX [Book I. 
 
 conditions of their day as though masses of 
 wage-paid labourers working for great em- 
 ployers were parts, like the sun and moon, of 
 the constant order of nature. Marx insisted 
 that such was not the case, that the system of 
 the nineteenth century was essentially a modern 
 development, and that it could only be under- 
 stood by a study of the other systems which had 
 preceded it. He accordingly aimed at pre- 
 senting the whole series as a sequence of 
 transitory, and radically different, states, evolv- 
 ing themselves in an intelligible order; and in 
 this attempt he was guided by the inspiration 
 of Hegel. Just as Hegel divided the history 
 of human government into three " Moments"- 
 Despotism, Democracy, Monarchy, so did 
 Marx divide the history of economic production 
 into three similar " Moments " Slavery, Serf- 
 dom, Capitalism, the third of which, by an 
 Hegelian unification of contraries, was doomed 
 to issue in a fourth and final " Moment " which 
 is Socialism. With the theories of Marx we 
 shall have occasion to deal hereafter. For the 
 moment we are concerned with him solely as an 
 exponent of economic history with the definite 
 statements which he made regarding the past, 
 in order to force on his disciples, by contrast, a 
 specific estimate of the present. Of the various 
 propositions which he enunciated so as to make 
 this contrast complete, and exhibit the present 
 system of capitalism in the darkest colours 
 possible, we will here deal with two. Both of 
 these were enunciated by him with the utmost
 
 Chap. IV.] MARX ON PRODUCTION 27 
 
 emphasis, and formulated with the utmost 
 elaboration; they have been vociferated at 
 socialist congresses all over the world; but 
 neither of them is really essential to the position 
 of Marx as a socialist. They can, therefore, 
 be discussed on their own merits, without 
 affronting or flattering any controversial pre- 
 judice. 
 
 One of them relates to the difference between 
 two systems of production production for use 
 on the one hand, and production for exchange 
 on the other ; and is to the effect that one of the 
 cardinal distinctions between the modern 
 capitalistic system and the systems that went 
 before it, is the fact that, under capitalism, 
 production is production for exchange, whereas 
 under the preceding systems production was 
 production for use. 
 
 The other relates to persons of moderate 
 means, who, judged by a financial standard, 
 constitute the middle classes; and is to the 
 effect that whereas, until modern capitalism 
 established itself, such persons formed a 
 numerous and important section of the com- 
 munity, the inevitable tendency of capitalism 
 is steadily to reduce their number, and (as Marx 
 said, writing in 1865) everything goes to show 
 that they will presently have been " crushed 
 out." 
 
 The difference between production for use 
 and production for exchange is simple, and is 
 commonly illustrated by a contrast, for which 
 there is some historical justification, between a
 
 28 PRODUCTION FOR EXCHANGE [Book I. 
 
 plutocrat of the ancient world and a capitalist 
 manufacturer of to-day. 1 The former, it is 
 said, produced through the labour of his many 
 hundreds of slaves the luxuries which he 
 enjoyed himself, and the necessaries which 
 were consumed by himself and his slaves also. 
 The modern manufacturer, on the other hand, 
 with his hundreds of wage-paid workers, pro- 
 duces one commodity, or class of commodity 
 only, such (let us say) as jute matting or screws, 
 of which he and his workmen use little or 
 nothing. Hence he might have a stock of 
 these which his warehouse could hardly hold, 
 and yet be as poor as a beggar so long as they 
 were in his own possession. They only become 
 wealth, available as profits and wages, because 
 of, and in proportion to the amount of, other 
 commodities, personally usable or consumable, 
 which he is able to get in exchange for them. 
 
 Is it true, then let us take this question 
 first that production for exchange is peculiar 
 to modern capitalism, and was a process 
 unknown or negligible under the systems that 
 went before it? How far this position is true 
 and how far it is fallacious, th e reader 
 may be able to judge from the following 
 vignettes drawn by contemporary writers, of 
 economic life as it was in the ancient world. 
 
 There is a curious Latin novel, " The Golden 
 Ass " of Apuleius, exhibiting the conditions of 
 life as they were under the Antonine Emperors, 
 
 i. Lassalle drew a similar contrast between the modern 
 capitalists and a Greek noble in the Middle Ages.
 
 Chap. IV.] " THE GOLDEN ASS " 29 
 
 which opens with an account, given by the hero 
 in person, of the close of a journey on horseback 
 to a certain town in Thessaly. His long route 
 having taken him through scenery of all 
 varieties, he finds himself at last in a green and 
 sequestered by-way. He has dismounted to 
 stretch his legs; and his animal, nosing the 
 grasses, is providing itself with an " ambulatory 
 meal," when he sees a little in front of him the 
 backs of two other travellers. He overtakes 
 them, makes their acquaintance, and discovers 
 who and what they are. They are, as Dickens 
 would have put it, two " commercial gentlemen" 
 gentlemen who " travelled in cheeses." 
 Another character in the same novel is a miller, 
 for whom the unlucky hero is temporarily 
 compelled to work, of whom and of whose 
 business he gives a detailed description. The 
 miller, though of no great fortune, is evidently 
 "a warm man," and he is for his neighbours 
 " our prominent and esteemed fellow-citizen," 
 as they presently show by flocking from far and 
 near to his funeral. He is a large employer of 
 labour unfortunately of a " low-grade " kind ; 
 and his premises shook, so the writer informs 
 us, with the ceaseless grinding of one mechanism 
 after another, each actuated by quadrupeds 
 trotting round and round in circles. 
 
 Now the farmers who produced the cheeses 
 "in which the commercial gentlemen travelled," 
 and the miller who produced flour on the scale 
 that has been just described, evidently did not 
 produce for their own private consumption.
 
 30 MOSCHION'S .SHIP [Book I. 
 
 They produced them for exchange. Produc- 
 tion for exchange was their occupation, just as 
 it is the occupation of the typical producers of 
 to-day. 
 
 Let us take a few other illustrations, which 
 will carry us still further. A fragment is pre- 
 served by Athenaeus of a Greek writer, 
 Moschion, which gives an account of a ship 
 built for goods and passenger traffic from the 
 designs and under the direction of Archimedes. 
 This resembled in many respects a modern 
 Atlantic liner. The state-rooms (three beds in 
 each) were ornamented with inlaid woodwork. 
 There was a roof-garden, a bath, a gymnasium, 
 a saloon and a library. The ship was sheathed 
 with lead, calked with pitch, and the nails were 
 of hard bronze. Of the materials of the inlaid 
 woodwork a portion came from Africa, the lead 
 probably from Sardinia, the cordage (as is 
 specifically stated) from Spain, and the pitch 
 from the neighbourhood of the Rhone ; whilst 
 the tin an essential ingredient of the bronze 
 used for nails came, either from Spain, or (as 
 is more likely) from Cornwall. None of the 
 producers of these many materials cordage, 
 pitch, lead, tin and so forth produced them 
 for their own consumption. They produced 
 them for exchange only; and if it had not been 
 for the practice of exchange, such materials 
 could never have been produced at all. How 
 do such transactions differ from those thai 
 prevail to-day? How can they be peculiar to 
 the capitalism of the modern times when the
 
 Chap. IV.] FAMILY MANUFACTURERS 31 
 
 building of a single ship two thousand years 
 ago involved production for exchange over half 
 of the then known world? 
 
 It may be said that the doctrine of Marx and 
 of those who follow him does not mean that, 
 before the capitalistic epoch, production for 
 exchange was altogether unknown, but that its 
 extent was comparatively small, and more 
 especially that it was in its nature an incident, 
 and not one of the bases of the economic life 
 of nations. Thus one of the shrewdest of the 
 present generation of reformers has urged that 
 the normal type of production, as opposed to 
 modern capitalism, is the production of all the 
 necessaries of existence by members of the 
 consuming family or small cluster of families, 
 the commodities obtained by exchange from 
 workers other than themselves being trifling in 
 amount, and distinguished by being " non- 
 essentials." This contention to a certain extent 
 is supported by well-known facts. There are 
 families or groups of families which have from 
 the earliest ages and many of them survive 
 still grown their own food, woven their own 
 clothing, made their own pots and pans (as was 
 till very recently done in the Island of Tyree) 
 and, by melting fat into saucers, provided them- 
 selves with their own illuminants. In the 
 eighteenth century large country houses in 
 England manufactured their own mould can- 
 dles. Great Russian households, prior to the 
 emancipation of the serfs, manufactured their 
 own carpets, and many articles of furniture.
 
 32 TRIMALCHIO [Book I. 
 
 The great slave-households of the magnates of 
 ancient Rome comprised productive workers as 
 well as personal servants. What, then, for 
 purposes of comparison, do all these considera- 
 tions come to? 
 
 In this connexion we may turn to another 
 Latin novel that of Petronius Arbiter, written 
 in the days of Nero. A prominent figure in it 
 is Trimalchio, a slave who, freed by his master, 
 had managed to make himself the richest man 
 of his period : and a considerable portion of the 
 book is devoted to an account of a banquet 
 given by him to a company of wondering and 
 half-derisive guests. The arch-millionaire's 
 conversation (herein not wholly unlike that of 
 some of his more modern counterparts) turns 
 principally on himself and his own possessions. 
 One of the casual announcements by which he 
 makes a sensation is that he has just bought 
 Sicily, because, he says, " it is pleasant, when 
 one goes to Africa, to be sailing as far as may 
 be by the borders of one's own property." His 
 great ambition or hobby, however, he does not 
 mind confessing, is to have every single thing 
 which he himself consumes or uses, produced 
 on his own estates, by the labour of his own 
 dependents, and be able to say with truth that 
 he buys and pays for nothing. The realisation 
 of this ambition, he takes care to insinuate, 
 involves the possession of properties all over 
 the world, and he admits that his object even 
 yet is not wholly accomplished. Here, then, 
 we see that when the slave-system of the ancient
 
 Chap IV.] A MODERN FALLACY 33 
 
 world was in its highest stage of development, 
 what Marx and others represent as one of its 
 normal and most distinctive features was so far 
 from being a commonly realised fact that the 
 mere idea of realising it is represented by a 
 contemporary satirist as the foible of an absurd 
 vulgarian whose head has been turned by the 
 growth of his own millions. 
 
 Indeed the radical fallacy of the view we are 
 now discussing that production for exchange 
 is in any sense a peculiarity of the modern 
 world, may be seen by the simple reflection 
 that, if taken in its strictest sense, production 
 for exchange begins with the first divisions of 
 labour, such as the allocation of spinning to 
 women, and hunting and husbandry to men ; the 
 males of the family wearing what is produced 
 by the females, and the females eating what is 
 produced by the males. So long, however, as 
 the consuming group is small, production for 
 exchange may be regarded as a maturing 
 embryo rather than a process which has been 
 born into distinct existence. Its distinct exist- 
 ence begins, not with the mere division of labour 
 amongst a group so small that the products are 
 consumed in common, but with such a separa- 
 tion of industries that the persons engaged in 
 each constitute a community by themselves, 
 each being detached from the rest by the special 
 character of its work, by its immediate interests, 
 and in most cases by distance. 
 
 How early this feature developed itself may- 
 be seen from what we know of Phoenicia. The
 
 34 THE PHCENICIANS [Book 1. 
 
 production of the dyed stuffs for which the 
 Phoenicians were famous not only involved 
 industries so totally alien in kind as the weaving 
 by the Phoenicians themselves of a certain 
 portion of the material, and the importation of 
 a portion, probably still greater, from remote 
 countries such as Egypt and Persia; but the 
 business of dyeing was itself elaborately sub- 
 divided also, amongst the makers of the traps 
 in which the shell-fish containing the dye were 
 caught, the catchers, the crushers, the refiners 
 of the brilliant fluids, the dippers, and the 
 highly-expert blenders of dyes of various 
 quality. It is obvious that these groups were 
 supported not by any sharing amongst them- 
 selves of their own immediate products, but by 
 other products fitted to sustain life, which were 
 allocated to each in exchange for them; whilst 
 the bulk of the completed output was wealth 
 for the Phoenicians at large only because it was 
 exchanged by their merchant princes for the 
 products of other countries. It has been said 
 that production for exchange is as old as the 
 separation of industries. We shall be asserting 
 what to many people will perhaps be still more 
 self-evident, if we say that it is as old as com- 
 merce. 
 
 Was commerce, then, prior to the capitalistic 
 epoch, a relatively negligible process, as the 
 writer just quoted asserts, in respect either of 
 its volume, or (what is by no means the same 
 thing) its importance ? In the first place, was it, 
 as he suggests, merely a traffic in superfluities?
 
 Chap. IV.] THE PHOENICIANS 35 
 
 An interesting sidelight is thrown on this point 
 by Trimalchio. Having inherited, so he tells 
 his guests, one half of his master's fortune, he 
 at once embarked in commerce as the royal road 
 to riches. He built five vessels, and filled them 
 with such assorted goods as he thought most 
 certain to sell well in the Roman market. His 
 judgement was justified bv the event. They 
 were sold at an enormous profit. And of what 
 did these goods consist? A portion, it is true, 
 consisted of superfluities that is to say, of 
 Oriental perfumery; but the larger part con- 
 sisted of wines, of beans, and of bacon. 
 Similarly, the vessel of Archimedes carried on 
 her maiden voyage so Moschion mentions a 
 comparatively small consignment of miscel- 
 laneous goods, which may or may not have 
 consisted of superfluities; but the bulk of the 
 cargo consisted of three things corn, wool, 
 and pickled Sicilian fish. 
 
 The importance of early commerce, however, 
 is, as has just been said, not measurable by its 
 mere magnitude. Everybody knows that the 
 Phoenicians imported tin from Cornwall. 
 Cornwall was, indeed, the chief, though Spain 
 was a minor source, from which that metal was 
 obtainable by the ancient Mediterranean 
 nations. Now as may have been suggested to 
 the reader by the fact already mentioned that 
 the nails used by Archimedes were not of iron 
 but bronze, bronze wfes for the industries of the 
 nations in question what hardened iron and 
 steel are for those of the modern world; and of
 
 36 TIN AND FLINT [Book I. 
 
 this material an essential element was tin. 
 Thus, as Rawlinson in his History of Phoenicia 
 indicates, this particular commodity, tin, obtain- 
 able only from regions then unimaginably 
 distant, was essential to the life of the whole 
 civilised world whose arts and industries had 
 developed themselves round the shores of the 
 Mediterranean Sea. In other words, had it not 
 been for commercial enterprise, that world, 
 whose civilisations are the direct ancestors of 
 our own, could hardly have raised itself above 
 the conditions of the Stone Age. Nor is this 
 all. If we go back to the Stone Age itself, the 
 same situation is repeated. The arts of the 
 Stone Age were dependent on the use of flint; 
 but flint, like tin, is obtainable in certain districts 
 only; and all who lived elsewhere must have 
 obtained their flints from these a transaction 
 possible only by means of exchange or com- 
 merce. Or again we may, if we like, take the 
 case of mediaeval England. No doubt the 
 households of the manorial lords and the 
 peasantry were self-supplying to an extent 
 which is almost unknown to-day ; but life and 
 the arts of life required two things at all events 
 which in nine localities out of ten were obtain- 
 able by commerce only that is to say salt and 
 iron. Salt was obtainable only from a few 
 mines or brine-pits, or on the sea-coast by 
 vaporisation. Except for importations from 
 abroad, iron was obtainable only from districts 
 where ore and firewood existed in close 
 proximity; and iron and salt alike from places
 
 Chap. IV.] HERBERT SPENCER 37 
 
 thus peculiar were supplied to the bulk of the 
 population by an all-pervading process of 
 exchange. 
 
 It is needless to multiply illustrations of a 
 fact which is practically universal ; and why it 
 is universal has been explained with trenchant 
 simplicity by Herbert Spencer in his account of 
 the beginnings of human progress. The start- 
 ing-point of all progress was, he says, the 
 " localisation of industries." This event has 
 resulted from the varied character of the 
 " habitats " occupied by neighbouring commu- 
 nities, or by different portions of each. Climate, 
 soil, exposure, and mineral substances are 
 distributed by Nature in a manner so unequal 
 that the production of certain things is not 
 possible at all except in certain places, and is 
 possible with a maximum of advantage in not 
 more than a few. Hence what we call civili- 
 sation is developed by human effort in propor- 
 tion as industries are separated in such a way 
 that the prosecution of each is confined to the 
 places which are most favourable to it. In 
 other words production with exchange for its 
 immediate object has been the warp of civilisa- 
 tion since civilisation first began; the exchange 
 of the products as distinct from an immediate 
 use of them, has been its woof ; and then as now 
 commerce threw the shuttle. In other words 
 again, to sum the matter up, a process which 
 social reformers, professing to be scientific 
 historians, have declared to be virtually peculiar 
 to the capitalism of the modern world, has been
 
 38 DANDIES AND DRUDGES [Book I. 
 
 an essential feature of production under all 
 systems alike not merely under Serfdom and 
 Slavery but in times which preceded both. 
 
 Let us now take the other of the two asser- 
 tions here chosen for examination, as having 
 till recently formed an integral part of the 
 version of economic history promulgated by 
 most reformers. This is the assertion that 
 under the modern capitalistic system persons 
 of moderate means, or the middle classes, are 
 disappearing. Such an assertion, though 
 invested with a special prominence by socialists, 
 has not been peculiar to them, nor did they 
 even originate it. Before it began to figure in 
 the manifestos of " scientific socialism," it had 
 been solemnly elaborated by Carlyle, who was 
 not even a democrat. It was for a time adopted 
 by Disraeli himself, and represented an idea 
 which, if vaguely, was very widely diffused. 
 ' The day," wrote Carlyle, " seems to be not 
 far distant when the very rich, or ' the Dandies/ 
 and the very poor, or ' the Drudges,' shall be 
 two sects parting England between them, 
 each recruiting itself from the intermediate 
 ranks, till there be none left to enlist on either 
 side. I could liken them," he exclaims, " to 
 two bottomless boiling whirlpools which have 
 broken out on two opposite quarters of firm 
 land, which man's art might yet cover in, but 
 the diameters of which are daily widening . . . 
 so that presently (unless man's art intervenes 
 with some vast reform) even this intermediate 
 film will likewise be washed awav : and then
 
 Chap. IV.] " SCIENTIFIC SOCIALISM " 39 
 
 we have the true Hell of Waters, and Noah's 
 Deluge is out-deluged." 
 
 So far as this contention is concerned, all 
 that was done by Marx, as the founder of 
 scientific socialism, was to adopt a loose opinion 
 then widely prevalent, to translate it from the 
 language of sentiment into that of a scientific 
 formula, to assign the fact asserted to a single 
 specific cause, and present it as one of three 
 necessary results, inseparably connected, of 
 which that cause was the common origin. The 
 cause in question was, according to him, the 
 substitution of production by machinery, the 
 property of great employers, for production by 
 small implements, the property of the employed 
 themselves a change, he said, which was first 
 witnessed in England, where its effects began 
 to be general by the beginning of the nineteenth 
 century. 
 
 Such being the case, rhetorical assertions, like 
 Carlyle's, that " intermediate films " were being 
 swept away by " whirlpools," are reduced by 
 "scientific socialism" to a proposition sufficiently 
 definite to be tested by detailed evidence. In 
 the first place it relates to a definitely specified 
 period. In the second place it relates to a 
 definitely specified country; for, modern 
 capitalism, said Marx, having been established 
 first in England, it is in England that we must 
 look for the most complete exemplification of 
 its results. In the third place it substitutes for 
 Carlyle's intermediate " film " persons whose 
 incomes are in excess of the earnings of skilled
 
 40 . MARX AND THE MIDDLE CLASSES [Book I. 
 
 labour, but do not approach those of " the great 
 capitalist lords," or even reach the amount at 
 which riches are popularly taken to begin. The 
 lower of these limits is at the present time taken 
 by most controversialists as /i6o a year, whilst 
 the higher may, according to the point of view, 
 amount to anything up to perhaps .5,000. At 
 any rate, if we adopt for our extremes ,160 
 and /Xooo, the persons whose incomes lie 
 between these two amounts will comprise the 
 majority, if they do not comprise the whole, 
 of those whom Marx had in view when he spoke 
 about the Middle Classes. 
 
 What, then, with regard to these classes did 
 Marx mean by the assertion that, under 
 capitalism, they were being gradually "crushed 
 out"? He meant, writing in the year 1865, 
 that ever since the year 1801 incomes in 
 England lying between the limits in question 
 had, as a statistical fact, been continually 
 decreasing in number, and would necessarily, 
 unless the capitalist system were abolished, go 
 on decreasing until there were none left. 
 
 Now if there is any difficulty in testing this 
 proposition, it lies not in the discovery of 
 evidences sufficiently precise and authoritative. 
 It lies rather in the selection of them, their 
 number is so ample. These comprise two 
 series of records, extending from the opening 
 year of the nineteenth century to to-day, one of 
 these giving the results disclosed by the collec- 
 
 
 
 tion of Income-tax, as imposed at various dates ; 
 the other giving the number of private houses
 
 Chap. IV.] ~ MIDDLE CLASS INCOMES 41 
 
 in England, classified year by year in accord- 
 ance with their annual values. The significance 
 of these two sets of data, if we aim at complete 
 exactitude, cannot indeed be determined with- 
 out enquiries which at the present moment 
 would be impracticable : but the broad results 
 derivable from the two taken together lie on 
 the surface, and are enough for our present 
 purpose. No minor modifications can affect 
 them in any substantial way. 
 
 Of the hundred and thirteen years, then, for 
 which the modern capitalist system has by this 
 time been on its trial in England, let us start 
 with considering one particular portion a 
 middle period consisting of thirty years, and 
 beginning with the year 1850. In the present 
 connection this period has a special interest, 
 because it was in the middle year of it 1865 
 that the socialist doctrine of the disappearance 
 of middle-class incomes was formally pro- 
 pounded by Marx in the work that made him 
 famous. If, therefore, this doctrine should 
 have any truth whatever in it, we may expect 
 that its truth would be very signally illustrated 
 in what were then for him the immediate past 
 and future. Now it so happens that this 
 particular period was, with reference to the 
 precise question before us, examined by the 
 well-known statistician, Professor Leone Levi, 
 aided by a prominent official of the Department 
 of Inland Revenue. Taking the higher limit 
 of Middle Class incomes as ,1,000, and the 
 lower as .150, his definition of them was
 
 42 MIDDLE CLASS INCOMES [Book I. 
 
 virtually identical with that which has been 
 adopted here. His aim was not to exhibit the 
 number of such incomes as a whole; for he 
 confined himself to incomes identified by the 
 collectors of Income-tax as derived from 
 businesses not carried on as companies. His 
 aim was to exhibit their rates of increase only. 
 Dividing, then, the business incomes identified 
 as earned by individuals into two groups 
 namely those ranging from ^150 to ,500, and 
 those ranging from ^500 to ,1,000, he showed 
 that during the thirty years in question the 
 number of the former had increased by 136 per 
 cent., and that of the latter by 125 per cent., 
 whilst 134 per cent, was the increase for both 
 groups taken together. 
 
 Let us now extend our survey, and consider 
 what has happened with regard to Middle Class 
 incomes as a whole from the beginning of 
 capitalist ascendancy up to the present day. 
 
 Approximate accuracy being all that is here 
 required, the present number of such incomes 
 in England is sufficiently indicated by the 
 number of private houses whose annual value 
 lies within certain limits. It is commonly 
 agreed that houses whose annual cost to their 
 occupants is more than 20 in respect of rent 
 alone (which means, if rates be included, ^25 
 as a minimum) mainly represent incomes in 
 excess of ^160, whilst those whose rental value 
 does not exceed ,100, will mainly represent 
 incomes not exceeding ,1,000. The total 
 number of such dwellings in the year 1910,
 
 Chap IV.] MARX' FALLACIES 43 
 
 exclusive of lodging houses and places of 
 residence over shops, was (for England and 
 Wales) 1,322,000. From this number a certain 
 deduction must be made in respect of houses 
 shared by more families than one; but when 
 this fact has been allowed for to the fullest 
 extent possible, the number of such houses 
 occupied by single families, and each repre- 
 senting an income within the limits here in 
 question, cannot have been less than 1,100,000. 
 
 Let us now see how matters stood in the year 
 1801. The records of private houses relating 
 to that year are not sufficiently detailed to be 
 serviceable for our present purpose ; but other 
 evidence is extant, which will presently be 
 described at length, of a yet more direct kind. 
 This evidence shows that the actual number of 
 incomes between ^160 and ^1,000 could not, 
 in the year 1801, have been more than 90,000, 
 if indeed it was quite as much. 
 
 What then is the net result of these broad 
 and indubitable facts as related to the doctrine 
 of Marx, so long and so widely accepted, that 
 the number of such incomes in England has, 
 under the influence of capitalism, been for more 
 than a hundred years constantly growing less 
 and less? If that doctrine be taken to mean 
 that their number has been diminishing 
 absolutely, its absurdity is so wild as to render 
 comment superfluous. It may, however, be 
 urged that there has meanwhile been an increase 
 of 26,000,000 in the population of the country 
 as a whole; and that Marx, when he spoke of
 
 44 ERRORS OF REFORMERS [Book 1. 
 
 the number of the Middle Classes as diminish- 
 ing, meant to speak of a diminution which was 
 not absolute, but relative. Even, however, had 
 this been his meaning (which it was not) his 
 doctrine would practically have been no nearer 
 to the truth. Between the years 1850 and 1880 
 the population increased from seventeen to 
 twenty-six millions that is to say in a ratio of 
 ten to fourteen only. The number of Middle 
 Class incomes had increased, during the same 
 period, in a ratio, as we have seen already, of 
 ten to twenty-three. Between the years 1801 
 and 1911 the population had increased from 
 nearly nine millions to thirty-six that is to say, 
 in a ratio of one to four. The number of 
 Middle Class incomes had, as we have seen 
 already, increased from ninety thousand to 
 considerably over a million that is to say in a 
 ratio of one to twelve. In whatever way this 
 doctrine is turned or twisted, it is so far from 
 being correct as a statement of the actual results 
 of capitalism, that it is related to facts only in 
 the sense of being a direct inversion of them. 
 We will here end our consideration of errors 
 on the part of reformers which, having ceased 
 to be " planks " of their historical " platform," 
 no longer require refutation for the purposes 
 of practical controversy. They have been 
 dealt with as subjects of a useful preliminary 
 criticism, because they have all, within times 
 comparatively recent, been asserted as indu- 
 bitable truths by earnest and influential men; 
 because popular thought and sentiment haye
 
 Chap. IV.] FACTS AND BELIEFS 45 
 
 been widely and profoundly influenced by 
 them; and because they show what a highly 
 complex product is, in most cases, that sense 
 of grievance to which reformers make appeal, 
 and how largely dependent on beliefs as to 
 facts which are beyond experience, rather than 
 on facts as experienced by the aggrieved 
 persons themselves. 
 
 We will now pass on to doctrines which are 
 in full vitality to-day, and enquire whether they 
 are less erroneous than those which we have 
 been just considering.
 
 BOOK II. 
 
 AN EXAMINATION OF THE FUNDAMENTAL ERROR 
 UNDERLYING CURRENT THEORIES OF REFORM.
 
 CHAPTER -I. 
 
 (THE doctrine, whose absurdity has been exposed 
 in our preliminary criticism, that one of the 
 main results of the modern capitalistic system 
 has been to diminish the number of moderate 
 or middle class incomes, is, let it be said once 
 more, by no means so frequent now in the 
 mouths of reformers as it once was. As 
 originally formulated by Marx, however, and 
 accepted as scientifically true by the reformers 
 of the nineteenth century, it did not stand alone. 
 It was associated with two others, the three 
 together being as follows : 
 
 Under the modem system of capitalism (the 
 results of which are most apparent in England] 
 it is a matter of theoretical necessity and of 
 historical fact also, that, whether the middle 
 classes dwindle or no, and in the end will 
 altogether disappear, the rich become ever 
 richer^ and the mass of the population poorer. 
 
 Now though the doctrine as to the middle 
 classes is more or less in abeyance, the two 
 others, relating to the rich and the poor, are 
 promulgated as industriously to-day as they 
 ever were in the past, and probably win accept- 
 ance from an even wider public. They have, 
 it is true, been subjected to certain modifica- 
 tions to some by socialists, to others by more 
 tautious radicals; but the general version of 
 economic history embodied in them is not only 
 
 49
 
 5- DIFFUSION OF WEALTH [Book li. 
 
 not discarded, but has merely re-expressed 
 itself in more plausible forms, so that numbers 
 even of sober men are to-day very timid in 
 rejecting it. It is, indeed, for contemporary 
 reformers what an old story is for a novelist who 
 tells it in an amended way, divesting the scenes 
 and characters of traits too outrageous to be 
 credible, but leaving the sequence of events and 
 the principal situations as they were. As thus 
 modernised for the present generation it may 
 be fairly summed up as follows, in terms which 
 are largely borrowed from a member of the 
 present Government. 
 
 The structure of English society at the begin- 
 ning of the nineteenth century was compara- 
 tively sound and simple. Wealth existed, but 
 was not in the aggregate overwhelming. 
 Poverty existed, but not to an extreme degree. 
 In any case, since that time the wealth of the 
 country as a whole has, relatively to the popula- 
 tion, increased to so vast an extent that, if only 
 it were well distributed, it might (to use a phrase 
 of to-day) be "as plentiful as water everywhere." 
 As a matter of fact there has been no such 
 result as this. In whatever directions the new 
 wealth may have gone, there has been no 
 general diffusion of it. A portion no doubt has 
 been secured by middle class families, and a 
 limited section of highly skilled artizans; but 
 this portion has been small ; and the mass of 
 the working classes are no better off than 
 formerly. Their wages in terms of money 
 have perhaps risen slightly; but what they can
 
 Chap. 1.] MR. MASTERMAN'S FALLACIEvS 51 
 
 buy with their money in the way of comforts 
 and decencies is less to-day than it was in the 
 days of their great-great-grandfathers. Where, 
 then, have the missing millions gone? They 
 have gone to swell the fortunes, already great, 
 of the rich, the result being, as the statesman just 
 referred to expresses it, that we see in this coun- 
 try to-day, to an extent never seen before, " a 
 society fissured into unnatural plenitude on the 
 one hand, and (as an inevitable consequence) 
 into unnatural privation on the other." This 
 assertion is not taken from any electioneering 
 speech, and does not therefore represent the 
 excitement of an unguarded moment. It is 
 taken from a book 1 which the author has many 
 times re-issued, and in which he repeats and 
 elaborates it so as to leave no doubt of his 
 meaning. The riches of the rich in England 
 since the beginning of the nineteenth century 
 have, according to him, not only increased 
 absolutely, which indeed would have been but 
 natural ; they have increased out of all propor- 
 tion to the increase of wealth generally. The 
 golden head has grown faster than any other 
 part of the body, and is crushing the limbs by 
 the enormity of its mere brute weight. In other 
 words, the percentage of the national income 
 represented by what this writer calls " the piled 
 up aggregations of the superwealthy " has by 
 this time come to be something so preposterous, 
 and the percentage left for the remainder of the 
 
 i. " The Condition of England," by Mr. Masterman.
 
 52 DISTRIBUTION OF WEALTH [Book II 
 
 community so small, that the principal evils oi 
 the present time are attributable, mainly if not 
 exclusively, to this novel and peculiar cause. 
 
 Such is the estimate formulated by a 
 prominent radical statesman of the situation 
 with which it is the mission of contemporary 
 radicalism to deal; and it fairly represents the 
 ideas now dominant in the minds, not only of 
 radicals generally, and (it is needless to add of 
 socialists), but also of numerous persons who 
 are otherwise opposed to both. Accordingly, 
 before we attempt to examine any questions of 
 detail, it will be necessary to begin with a con- 
 sideration of the general picture or conception 
 of things to which all the assertions of reformers 
 as to questions of detail are subordinated, and 
 from which indeed they are in part dedused. 
 
 How, then, in respect of its main features 
 does the distribution of wealth in England in 
 the year 1911 compare broadly with its distri- 
 bution at the beginning of the nineteenth 
 century? 
 
 It has been contended by some that a 
 comparison of this kind is impossible, because, 
 though so far as the present time is concerned 
 the requisite evidences, if not complete, are 
 abundant, no similar evidences as to the earlier 
 time is extant. Thus a serious critic in a serious 
 conservative journal has declared, with regard 
 to the beginning of the nineteenth century, that 
 nobody can make so much as a reasonable 
 guess at what the income of the country at that 
 time was, to say nothing of the manner in which
 
 Chap. I.] INCOMES IN 1801 53 
 
 it was distributed amongst different classes. 
 That such views should be prevalent is enough 
 to show the need for a more careful scrutiny 
 of actualities. 
 
 The evidences supposed to be wanting are 
 accessible to those who look for them. It has 
 already been observed, and it is a matter of 
 common knowledge, that this country was, in 
 the year 1801, subjected to an income-tax, of 
 which the general results have been preserved. 
 But it is not commonly known for the fact has 
 escaped the attention even of historians like 
 McCulloch and Porter that the records which 
 were, according to McCulloch, destroyed, still 
 exist in their integrity. Such, however, is the 
 case. It must be added that the year in 
 question was the year of the first census. A 
 report on that census, and the report relating 
 to the income-tax were printed and issued in 
 conjunction by order of the House of Commons 
 in the year 1802, and from these two documents 
 together a mass of facts is ascertainable which 
 to most readers will be novel. The year 1801 
 shall be therefore our starting-point. 
 
 The then population of England and Wales 
 was approximately 9,000,000, which may be 
 taken as representing 1,800,000 families, 1 and 
 100,000 families, or half a million persons, are 
 
 i. That is to say " natural families " averaging five 
 persons. If the word "family" is taken to mean a house- 
 hold, the number was much less ; for the overcrowding of 
 the population in 1801 was much greater than it is to-day.
 
 54 INCOMES IN 1801 [Book II. 
 
 shown by the returns, which are singularly 
 systematic and minute, to have been supported 
 on incomes in excess of ^160 a year. Of the 
 rest of the inhabitants of the country 8,500,00x3 
 persons more than 4,500,000 were women and 
 children not working for wages, whilst the 
 number of the actual bread-winners was a little 
 below 4,000,000, of whom about one-third were 
 women, lads and girls, and the number of the 
 adult males about two millions and a half. If 
 we roughly take all those persons as belonging 
 to the working classes who were not supported 
 on incomes exceeding ^160 a year, the working- 
 classes consisted of 1,700,000 families; and for 
 every two of such families there were, on an 
 average, three adult male bread winners. The 
 entire number of separately received incomes, 
 earned or unearned, from the largest down to 
 the smallest, may be taken with reasonable 
 accuracy as 4,100,000. 
 
 Let us now subdivide these farther into six 
 characteristic groups, and see what, according to 
 the returns, was the number comprised in each. 
 In accordance with a note appended to the 
 document in question, the numbers actually 
 tabulated shall in each case be increased by 
 one-eighth, as it was subsequently estimated 
 that they were deficient by approximately that 
 amount, and for simplicity's sake round figures 
 shall be employed. The advantage of sim-
 
 Chap. I.] INCOMES IN 1801 55 
 
 plicity will be great, and the sacrifice will be 
 so small as to be negligible. 1 
 
 There is, then, detailed evidence to show that 
 in the year 1801, out of about 4,100,000 earned 
 and unearned incomes, 
 
 The number of those exceeding/" 5,000 
 
 a year was about ... ... ... 1,100 
 
 The number of those between ,1,000 
 
 and ^5,000 a year was about ... 11,000 
 The number of those between ,160 
 
 and ,1,000 a year was about ... 90,000 
 The number of those between 3O/- and 
 
 62 /- a week was about ... ... 90,000 
 
 The number of those between 22 /- and 
 
 3O/- a week was about ... ... 160,000 
 
 The number of those below 22 /- a 
 
 week or /6o a year was about 3,752,ioo 2 
 
 Let us next consider how matters stand 
 to-day, when set forth in a similar manner. 
 
 The population of England and Wales 
 to-day is 36,000,000. The number of persons 
 receiving separate incomes, whether earned or 
 unearned, is in excess of i6,ooo,ooo 3 Of these, 
 
 1. The total number of persons liable to income-tax on 
 more than ^60 a year, actually recorded in the returns for 
 1801, was about 315,000. The number shown in the text 
 (one-eighth being added) is, as will be seen, about 352,000. 
 
 2. Between 1,310,000 and 1,500,000 of these would have 
 been women, lads, and girls. 
 
 3. The number for the United Kingdom is about 
 20,000,000.
 
 56 CLASSES OF INCOMES [Book II. 
 
 about 15,000,000 whom, following our previous 
 procedure, we may group together as the work- 
 ing classes, earn or receive not more than ,160 
 a year, or 625. a week. The number of persons 
 in England and Wales receiving incomes in 
 excess of this amount is, as we shall see 
 presently, about 1,200,000. 
 
 For the purpose of subdividing these into six 
 groups, as we have done in the case of the year 
 1801, the principal evidences are as follows. 
 As to incomes exceeding ,5,000 a year, their 
 number is directly ascertainable from the 
 returns relating to supertax. As to incomes 
 lying between ,1,000 a year and ,5,000, we 
 may take their number as corresponding to the 
 number of private houses whose annual values 
 lie between ,100 and ,200. As to incomes 
 lying between ,160 and ,1,000, it has already 
 been explained that we may, after making a 
 certain deduction, take their number as corres- 
 ponding to the number of private houses whose 
 annual value lies between ,20 and ,100. As 
 to the incomes of the 15,000,000 workers which 
 lie below the present income-tax limit, the 
 elaborate investigations of the Board of Trade, 
 mainly relating to the years 1906-7, will provide 
 us with evidence sufficient for the comparison 
 here in view : but, before making use of this, 
 there is one fact to be considered. 
 
 Of such incomes, about one-third consist of 
 the earnings of women, lads and girls. Now 
 the precise figures for 1801 stop short at 
 incomes exceeding ,60 a year, or 22/- a week :
 
 Chap. I.] ADULT MALE WORKERS 57 
 
 and not only is it certain that in 1801 no such 
 incomes were earned by women, lads or girls; 
 but, as appears from the latest investigations of 
 the Board of Trade, that only a small per- 
 centage of them are earning such incomes now. 
 Hence though the earnings of all of them may 
 have very greatly increased, we shall, if we take 
 60 as our standard, have no adequate means 
 by which this increase may be measured, just 
 as the growth of children from six to twelve 
 years old could not be measured by reference 
 to a vertical scale on which no point was marked 
 that was lower than sixty inches. The average 
 stature of the children might have risen from 
 thirty-six inches to fifty; but until it exceeded 
 sixty inches, such a method of measurement 
 would record no growth at all. For this reason 
 the earnings of women, lads and girls must be 
 excluded from our present survey, and our 
 attention must be confined to those of adult 
 males. 
 
 With regard to adult males, the case is totally 
 different. Here the dividing line of ,60 a 
 year, or 22 /- a week, provides us with an index 
 whose informative value is of the highest. It 
 appears from a comprehensive analysis of the 
 Board of Trade returns, supplemented by the 
 results of a semi-official enquiry, recently 
 carried out by a committee of well-known 
 economists, that, out of about 10,000,000 adult 
 male workers, 1 whose earnings are not in excess 
 
 i. This figure includes not only wage-paid labourers but 
 the lower middle classes.
 
 $8 GROUPS OF INCOMES [Book II. 
 
 of 62 /- a week, or ^i 60 a year, about 2,000,000 
 earned less than 22 /- a week, about 2,000,000 
 earned between 22 /- and 3O/-, and about 
 6,000,000 earned between 3O/- and 62/-. The 
 significance of these facts with regard to the 
 adult male workers will be evident when we 
 compare them with those given already, which 
 corresponded to them in the year 1801. The 
 number of adult male workers having been at 
 that time about 2,500,000, it will be seen that 
 those earning more than 3O/- a week were 
 approximately 90,000, or only 3'6 per cent, of 
 the whole; that those earning from 22 /- to 3O/- 
 a week were 160,000, or only 6'4 per cent, of 
 the whole; and that those earning less than 22 /- 
 a week amounted to no less than 90 per cent, of 
 the whole. On the other hand, at the present 
 day, if we take these groups in the same order, 
 it will be seen that the percentage of the whole 
 represented by each respectively has risen in 
 the case of the first from 3'6 to 60 : that it has 
 risen in the case of the second from 6'4 to 20; 
 and that it has fallen to 20 per cent., in the case 
 of the third, from 90. In other words, the 
 situation has been almost exactly inverted. 
 Whereas in 1801 only 10 per cent, of the adult 
 male workers earned more than ^"60 a year, at 
 the present time only 20 per cent, earn less. 
 
 These observations having been made, thr 
 whole of the six characteristic groups of 
 incomes, as already dealt with in respect of the 
 earlier period, shall now be taken together, and
 
 Chap. l.J INCOMES IN 1910 59 
 
 the number comprised in each shall be given as 
 it is, or approximately as it is, to-day. 
 
 In the year 1910, then, out of nearly 
 11,200,000 incomes separately earned or re- 
 received in England and Wales (exclusive of 
 the wages of women, lads, and girls) detailed 
 evidence of the kinds already specified shows 
 that 
 
 The number of incomes exceeding ,5,000 a 
 year was about 10,000 (supertax figures). 1 
 
 ;The number of incomes between ^"1,000 and 
 ,5,000 a year was about 60,000 (evidence 
 of houses). 2 
 
 tThe number of incomes between ,160 and 
 , 1,000 a year was about 1,100,000 (evi- 
 dence of houses). 2 
 
 ,The number of incomes between 3O/- and 62 /- 
 a week was about 6,000,000 (Board of 
 Trade figures). 
 
 (The number of incomes between 22/- and 3O/- 
 a week was about 2,000,000 (Board of 
 Trade figures). 
 
 ; The number of incomes below 22 /- a week was 
 about 2,000,000 (Board of Trade figures). 2 
 
 i. The supertax total for the United Kingdom is about 
 11,000. One-tenth is here deducted in respect of Scotland 
 and Ireland. 
 
 a. See Book III, Chapters i and ii, where the figures 
 dealt with relate not to England and Wales, but to Great 
 Britain or else to the United Kingdom.
 
 6o 1801 AND 1910 [Book II. 
 
 Here we have two sets of comparable figures 
 before us those for 1910 and those for 1801 
 the immense significance of which, if they were 
 merely set side by side and left to speak for 
 themselves, would be obvious to those familiar 
 with statistical presentations of history. By 
 most readers, however, it will probably be best 
 understood if we express it in a pictorial form 
 which appeals more directly to the imagination.
 
 CHAPTER II. 
 
 WE will begin, then, with representing the 
 condition of things in 1801 by an imaginary 
 town and its environs, containing a population 
 of 9,000 persons. We shall thus have a unit 
 representing a thousandth part of what was then 
 the population of England and Wales that is 
 to say 9,000,000 : and the total number of 
 incomes in each group, as already given, can, 
 by the simple process of striking off three 
 noughts, be reduced to the number that would 
 have existed in such a typical microcosm. Thus 
 the total number of incomes exceeding ,5,000 
 a year having, then, as we have seen, been 
 something over 1,000, and the total number 
 between 160 and 1,000 having been about 
 90,000, we may say with sufficient accuracy that 
 in our town of 9,000 inhabitants there would 
 have been one income of the former amount, 
 and 90 incomes of the latter ; and so on through- 
 out. 
 
 We will next apply the same treatment to 
 incomes as they exist to-day, so that the figures 
 for both dates may be reduced to a common 
 denominator. The population of England and 
 Wales to-day being 36,000,000, is almost 
 exactly four times as great as it was in the year 
 1801. A typical population, therefore, of 
 
 9,000 persons will in this case represent, not a 
 
 61
 
 62 A TOWN IN 1801 [Book II. 
 
 thousandth, but a four-thousandth part of the 
 whole ; and in order to make such a community 
 representative, the actual number of incomes in 
 each group must be reduced, not only by 
 striking off three noughts as previously, but also 
 by dividing this reduced product by four. 
 Thus the total number of incomes exceeding 
 ;5,ooo a year being to-day about 10,000, the 
 average number per 9,000 persons will be 
 strictly two and a half ; and for purposes of a 
 broad comparison we may conveniently call it 
 two. The total number of incomes between 
 ;i6o and ,1,000 being to-day about 1,100,000, 
 the average number per 9,000 persons will 
 similarly be 275; and so on throughout. 
 
 We will assume farther, in both cases, that 
 there is one family of five persons to a house; 
 that, in the case of incomes exceeding ,160 a 
 year, there is one house to every income; and, 
 in the case of incomes not exceeding that 
 amount, there are about two houses to every 
 three incomes earned by adult males. 
 
 The way in which these preliminary assump- 
 tions will work out, may be conveniently sum- 
 marised thus : 
 
 In a town and its environs containing 9,000 
 inhabitants and 1,800 houses, incomes and 
 houses would, at the two dates specified, have 
 been as under, on the supposition that the 
 distribution followed that prevailing in England 
 and Wales as a whole. The number of incomes 
 is exclusive of the wages earned by women, lads 
 and girls.
 
 Cnap. II.] A PICTORIAL COMPARISON 63 
 
 1801. 1910. 
 
 Range of Income* J 11-3 1 i ? & ! 
 
 llll 
 
 fc-' fc 
 
 Over ,5,000 a year i i ... 2 2 
 
 ;i,ooo to ,5,000 ii ii ... 15 15 
 
 ;i6o to ,1,000... 90 90 ... 275 275 
 
 3O/- to 62 /-a week 90 60 ... 1,384 908 
 
 22/- to 3O/-aweek 160 106 ... 462 300 
 
 Under 22)- a week 2,248 1,532 ... 462 300 
 
 One more set of assumptions still remains to 
 be made namely, that every house represent- 
 ing an income of over ,5,000 a year is a 
 castellated structure with a tower and a flag 
 flying on it; that every house representing an 
 income between ,1,000 a year and ,5,000 is 
 a flat-roofed " classical mansion," which is dis- 
 tinguished by a pillared portico; that every 
 house representing an income between ,160 a 
 year and ;i,ooo is distinguishable by being 
 roofed with slates; that every house represent- 
 ing an income between ,160 a year and ;6o, 
 is distinguishable by being roofed with tiles; and 
 that those representing incomes below ,60 a 
 year, or 22 /- a week, are distinguishable by 
 being roofed with thatch; and we will imagine 
 an inquisitive stranger visiting such a town in 
 the year 1801. 
 
 The town, we will so suppose, lies in a hollow 
 with wooded slopes surrounding it; and from 
 one of these slopes, as he looks through a gap
 
 64 A TOWN IN 1801 [Book II. 
 
 in a hedge, he sees it spread out beneath him. 
 His first impression is that it is altogether a town 
 of thatch, the prevailing colour being brown ; 
 but he presently notes that the brownness is 
 variegated here and there by the gleamings of 
 blue slate, or by short red streaks indicative of 
 a street or two roofed with tiles. Presently, as 
 his eyes wander from the town to its environs, 
 he realises that, separated from one another by 
 a quarter of a mile or more, certain houses with 
 porticoes show their white fronts amongst 
 shrubberies; whilst at one point a castle lifts 
 above a group of trees some turrets on the 
 highest of which a solitary flag is fluttering. 
 Having entered the town to examine things 
 more minutely, and having lost himself in the 
 region of thatch, he at last reaches a street about 
 a quarter of a mile long, lined with houses which 
 are slated, which have high Georgian windows, 
 and some of which bear on their doors a brass 
 plate with a name on it. Here he encounters 
 a personage who is a house-agent and surveyor 
 of taxes, and from him he learns without 
 difficulty the following interesting particulars. 
 The castle with the flag is one of the local 
 sights. There is nothing in those parts to 
 compare with it. The mansions with the 
 pillared porticoes, though they differ consider- 
 ably in size, are all fit for the honour of being 
 occupied by a county family : and round the 
 town there are no fewer than eleven of them. 
 The street which is the scene of this conversa- 
 tion contains ninety houses forty-five on each
 
 Chap. II.] A TOWN IN 1911 65 
 
 side not one of which is the home of a citizen 
 having anything less than ^160 a year. Some 
 of these citizens must have nearly ^"1,000. Of 
 tiled houses there are nearly 170, each of these 
 containing one worker or more who is making 
 to say the least of it his 22 /- a week; so/-, 
 4O/-, and even 6o/- being the earnings of a 
 considerable number. These tiled houses, if 
 arranged in opposite rows would make up a 
 street nearly half a mile in length ; whilst as to 
 thatched houses, occupied by the mass of the 
 population, none of whose earnings are up to 
 the twenty-two shilling standard these houses 
 would, if set in a line, reach to another town 
 nearly ten miles away. 
 
 And now let us suppose that our stranger 
 returns to his own home, falls into a deep sleep, 
 and wakes up like Rip van Winkle no years 
 afterwards, determined to revisit the scene 
 which it seems to him he was inspecting yester- 
 day. He discovers that somebody is watching 
 his return to consciousness a gentleman of 
 excitable aspect, who describes himself as a 
 social reformer. The situation of the stranger 
 is elucidated; and the reformer, having learnt 
 his intentions, addresses him in these solemn 
 terms : 
 
 ; ' My very dear friend, you must prepare 
 yourself for a grievous shock. The condition 
 of England while you slept has been steadily 
 growing worse and worse. This once was a 
 land of plenty. It is a land of starvation now, 
 and the town you are about to revisit is an
 
 66 A TOWN IN 1911 [Book II. 
 
 image in miniature ot the change. Do not 
 misunderstand me. The wealth of the country 
 as a whole has increased beyond the dreams of 
 avarice; but where has this increase gone? If 
 you want an answer it is flaunted before your 
 very eyes by what now are the homes of 
 Englishmen. Most of the increase has gone 
 in a mad multiplication of castles and of 
 mansions hardly less pretentious. You will 
 find that your little town is now ringed round by 
 these by thirty new great flag-flying castles, 
 and by seventy new mansions pillared temples 
 of opulence. Where has the new wealth gone ? 
 Dwellings such as these will answer you. It is 
 true that the houses described by you as tiled 
 or slated are still in good repair. Some of them 
 perhaps have even an extra storey; and by 
 means of striped blinds, and lace curtains in 
 their windows, they endeavour, pathetically 
 enough, to simulate an air of affluence ; but 
 these houses and their occupants the smaller 
 professional men, and a handful of skilled 
 wage-earners in point of number do no more 
 than hold their own; whilst the mass of the 
 population five-sixths of the whole have, as 
 their houses will show you, gained nothing. 
 They have lost. They are still under the same 
 thatch, but the thatch has been left to rot, and 
 now gives to the place the aspect of one great 
 dunghill. You must be prepared, in short, for 
 an unexampled and appalling spectacle a 
 I'ollection of human dwellings which is fissured 
 into two extremes unnatural superwealth
 
 Chap. II.] HOUSES IN 1911 67 
 
 crowded and glittering on the slopes, and a 
 mass of unalleviated squalor festering under 
 straw below." 
 
 With these ominous words in his ears, the 
 awakened sleeper starts on his way to verify 
 them. The outskirts of the town are reached. 
 He cannot have missed his way; for here, seen 
 through an avenue, is the castle then the only 
 one which had caught his attention or existed 
 at the time of his first visit. But where are the 
 thirty new ones, which now crown the hills in a 
 circle, and indent the horizon with their towers ? 
 He can see the opposite heights, but no sign of 
 a castle is anywhere. Presently he encounters 
 an elderly man, whom he addresses, and finds 
 that he has secured, as he did on a former 
 occasion, a house-agent and surveyor of taxes 
 for his informant. 
 
 " I am," says the stranger, practising an 
 innocent deception, " looking about for a house 
 here. It might be large something like this 
 castle. It might be of moderate size, worth, 
 say, from 100 to 200 a year. But one thing- 
 it must be it must be modern built at all 
 events since the beginning of the nineteenth 
 century. You've thirty new castles that's 
 what a friend tells me; so the chances are you 
 could find me something suitable in your 
 books." 
 
 " I don't know, sir," says the agent, " who 
 may have been telling you tales, but I've been 
 in the house business here for more than fift 
 years. My father was in the same line before
 
 68 HOUSES 1M 1911 [Book I!. 
 
 me, and his father before him : so I ought to 
 know what I'm talking about. This castle of 
 Sir John's was reconstructed in the year 1799, 
 and since that time a matter of a hundred and 
 ten years the number of houses that have been 
 built of the same class what do you think it 
 is? It's one, sir, no more than one. That's 
 been built by a gentleman from South Africa, 
 and he only moved into it a couple of months 
 ago." 
 
 " I may," says the stranger, " have mistaken 
 my friend's meaning. I certainly understood 
 him to speak of a great multiplication of castles, 
 occupied by families with more than ,5,000 a 
 year; but he may merely have meant what I 
 suppose you would call large mansions, with 
 accommodation, say, for from eight to a dozen 
 servants. If you've only one new castle, the 
 number of new mansions must be very nearly 
 a hundred." 
 
 The agent smiles, and makes a calculation on 
 his ringers. " Of such residences," he replies, 
 " eleven would be no good to you. You'd 
 think them much too old. As you might see 
 for yourself from an old plan in my office, they 
 were standing twenty years before the battle of 
 Waterloo." 
 
 " Yes, yes," says the stranger : " I believe 
 you about the eleven old ones. What I want 
 to hear about is the hundred or so which must 
 be new. Whereabouts are they situated ? " 
 
 " You can," the agent replies, " if you look 
 between those two elm trees, see four of them
 
 Chap. II.] HOUSES IN 1911 69 
 
 for yourself white houses with pillars, stand- 
 ing on the hill opposite. You can tell the dates 
 of them by their names. The lower one on the 
 left is ' The Pavilion/ so called after ' The 
 Pavilion ' of the Prince Regent. To the right 
 of that is ' St. Albert's/ called after the Prince 
 Consort. The gilt ornament, six feet in 
 height, on the portico, is a copy of the Albert 
 Memorial. Of the two top houses, the one 
 to the right is ' Beaconsfield/ The newest 
 of all the one to the right is Edwardstown 
 classical outside, inside Jacobean, with smoked 
 oak panelling, and called after his late Majesty. 
 You were speaking just now of a hundred new 
 houses or thereabouts. Well, sir, let me tell 
 you this. Not a single new house, lying within 
 the limits you mention, has been built here, 
 except those four, since the year 1801." 
 
 The stranger is silent with surprise. Pre- 
 sently the agent, as if a fresh thought had struck 
 him, begins again. 
 
 " It has," he says, " been just occurring to 
 me, sir, that the explanation of your little 
 mistake may be this. There are new houses 
 here, different from those yonder very genteel 
 residences, but on an altogether smaller scale 
 most of them costing you ^30 a year, a few of 
 them up to ninety, many not more than twenty ; 
 and many of these call themselves by fancy 
 names the names of castles like Walmer, 
 Dunrobin, Alnwick, or of big places like Sand- 
 ringham, Welbeck, Clumber; and these names 
 may have misled you. That would account for
 
 70 SLATES AND THATCH [Book II. 
 
 everything. Of new houses of this kind there 
 are nearer two hundred than one every one of 
 them built since the days when my father was 
 a boy nice places, not inside the town, but 
 ranged all round it at just a convenient distance. 
 I ought to mention that they have small accom- 
 modation for servants none for more than 
 three, most for not more than one ; but if a house 
 of this description would suit you otherwise for 
 a month or two why, your servants could get 
 capital lodgings in almost any of the streets 
 close by." 
 
 " I'm afraid," the stranger replies, " that 
 plan would hardly work. I'm sorry to say 
 anything derogatory of your native place, but 
 I think you'll admit that I'm not wrong as to 
 one thing. The houses in the town itself, with 
 the exception of a few like your own, are little 
 better than so many thatched hovels, and hardly 
 a penny has been spent on them for the last 
 three generations. I couldn't ask any servant 
 of mine to lodge in a thatched dog-hole." 
 
 ' Well, sir," says the agent, " seeing's better 
 than talking. If you'll step so far as the stile 
 at the end of that short foot-path, you can with 
 your own eyes see the whole thing in a nut- 
 shell." The stranger goes with his guide, and 
 the promised spectacle is before him. Except 
 for the four new mansions whose porticoes he 
 has seen already, and the raw new castle of the 
 South African magnate, the higher slopes 
 remain as they were when he first saw them. 
 Lower down is a novelty a circle of slated
 
 Chap. II.] SLATES AND THATCH 71 
 
 villas, forming a continuous fringe with the 
 body of the town enclosed by it. This is 
 astonishing enough this glittering sign that a 
 class must have more than trebled itself which, 
 according to his friend, the reformer, had barely 
 escaped extinction ; but what strikes the stranger 
 dumb is the body of the town itself. Where is 
 the mass of thatch, which must now be sodden 
 and ruinous? Where is the great expanse of 
 almost unbroken brown ? The prevalent colour 
 of the town is now not brown, but red. Except 
 for some patches of slate, it seems that there 
 are tiles everywhere. It is only after he has 
 been staring for many minutes in silence, that 
 something catches his eye which is oddly 
 familiar to his memory something which now 
 suggests to him an incongruous group of hay- 
 ricks. It is the sole remnant of the thatch 
 which he remembers as all but universal. This 
 alone remains to show him that he is not 
 dreaming. 
 
 ' That, sir," says the agent at last, " is 
 different from what you expected. And yet 
 you're in the right thus far. There was a 
 time I'm speaking of the beginning of the last 
 century when out of 1,800 houses, those that 
 were thatched numbered 1,530. We know the 
 figures from the rate-books. But since that 
 time, a good many things have happened. With 
 the exception of three hundred, every one of 
 those thatched houses has been pulled down 
 and rebuilt built of brick, and roofed, as you 
 see, with tiles. Some of them about three
 
 72 LOCAL BUILDING TRADE [Book II. 
 
 hundred are a bit smaller than the rest; but 
 in each of these last there's now one man or 
 two, earning twenty-five or twenty-six shillings 
 a week, whose grandfathers lived under 
 thatch, and were lucky if they earned sixteen. 
 Of the bigger of these tiled houses, there's 
 something above nine hundred, in every one of 
 which there's one man or two, as may be, earn- 
 ing anything from ^80 to i 60 a year ; whereas, 
 if you'll only believe it, in 1801 there were, 
 barring the gentry, only ninety men in the place 
 earning so much as 3O/- a week. Lord bless 
 you, sir, if these things happen to interest you, 
 you may take again the case of those smart new 
 slated villas. There's hardly a family living 
 in one of those, whose grandfathers were not 
 born and brought up under thatch like the rest 
 of them. There's a lot of new money been 
 made in this town since then. Perhaps your 
 informant didn't take that into account." 
 
 " On the contrary/' says the stranger, " he 
 did ; and he told me that the kinds of people to 
 whom the new money went could be seen by the 
 different classes of houses it was used to build. 
 He told me as a known fact that nearly all of 
 this new money was used in building big castles 
 and so forth, and that nothing was left for the 
 improvement of houses of any other kind." 
 
 ' I wish, sir," says the agent, " you'd only 
 been here last week, and had heard an Address 
 given by my son-in-law a builder himself 
 on the history of our local building trade, since
 
 Chap. II.] A PICTORIAL COMPARISON 73 
 
 the beginning of the last century. He showed, 
 going into the figures, that the five big houses, 
 inclusive of the one new castle, represented a 
 building cost of about ;6o,ooo; cost of 170 
 new slated villas, ,170,000; ditto of 900 
 superior dwellings for artizans, ^360,000; ditto 
 of 300, same style but smaller, ,80,000. Total 
 for all new houses, ^"670,000. Well, sir, if 
 j6o,ooo amounts to nearly all of ^670,000, 
 the party who gave you your information may 
 be right not otherwise. Ask him, when next 
 you see him, if he'd say that one-and-ninepence 
 was ' nearly all ' of a pound. I don't know 
 who the gent can have been, unless he was a 
 wild-eyed chap who came here a year ago ' to 
 inspect conditions ' as he called it. He spent 
 three hours amongst the thatch, gossiping with 
 a lot of loafers; and when somebody proposed 
 to show him the rest of the town, he said that 
 the thatch and the loafers were the only things 
 that interested him. Anyhow, whoever your 
 informant was or was not, he seems to have got 
 things pretty much upside down. With regard 
 to the way in which things have really gone 
 with regard to what hasn't happened, likewise 
 with regard to what has his meaning is only 
 correct if you take it, like a dream, by con- 
 traries." 
 
 If this illustration, representing in rough 
 pictorial form the contrast between actual facts 
 and the versions of them now popular, errs at 
 all, it errs, so far as it ^oes, in representing the
 
 74 A PICTORIAL COMPARISON [Book II. 
 
 contrast as less violent than it is. It may, 
 however, be objected that even if pictorially 
 correct, the two pictures need not prove what 
 at first sight they appear to prove, and the 
 grounds on which this objection may be raised 
 shall be considered in the next chapter.
 
 CHAPTER III. 
 
 THE purpose of the two pictures being to 
 exhibit the fallacy of the idea that the increas- 
 ing wealth of this country has been mainly 
 appropriated by the rich, it may be objected that 
 the manner in which houses of different kinds 
 are used to represent incomes between certain 
 limits or above them, is so loose as to cover 
 the possibility of widely different results. It 
 may thus be true that in the year 1801 such a 
 typical town would have contained eleven 
 substantial houses representing incomes between 
 ,1,000 and ^"5,000 a year, and not more than 
 fifteen in the year 1910: but the average of 
 such incomes may have been smaller at the 
 earlier date than at the later. It may have been 
 ^2,000 in one case, and be ,3,500 in the other ; 
 and though the houses may have increased in 
 number by little more than a third, the amount 
 of income represented by them may have 
 possibly more than doubled itself. It is, how- 
 ever, to incomes exceeding ^"5,000 a year that 
 this contention applies with the greatest force; 
 for here, according to the terms ofthe definition, 
 there is no upper limit whatsoever. Thus if a 
 castle is taken to represent an income of which 
 nothing is stated except that it exceeds this 
 minimum, our typical town might have con- 
 tained one castle at one time, and a century 
 later might have contained no more than two; 
 
 75
 
 /6 INCOMEvS IN 1801 |Book II 
 
 but the old castle might represent an income 
 of barely ,6,000 a year, and the new one an 
 income of ; 180,000. The number of castles 
 would not have been more than doubled; but 
 the income represented by castles would have 
 been multiplied by more than thirty. Hence, 
 for anything that our pictures show to the 
 contrary the castles might have robbed the 
 town, if not to the extent which the language 
 of reformers suggests, yet at all events to an 
 extent which renders their exaggerations 
 excusable. 
 
 In such objections there is nothing which is 
 a priori impossible. Their value can be tested 
 by specific evidence only : and with regard to 
 the most important of them, to which we will 
 here confine ourselves, namely, that relating to 
 incomes in excess of ,5,000, we happen to have 
 evidence which is exceptionally direct and 
 ample. The official report on the income-tax 
 of 1 80 1 enables us to ascertain with very fair 
 exactitude, not only what was then their num- 
 ber this we have seen already but also their 
 entire amount. Information of a similar kind 
 is now available with regard to the present day, 
 as a result of the special investigations neces- 
 sary in connection with the super-tax to which 
 now all incomes in excess of ^"5,000 are liable. 
 
 Of such incomes, in the year 1801, so far as 
 England and Wales are concerned, the average 
 per head was ,9,970, or practically ; 10,000 
 a year; and the number, as already stated,
 
 Chap. III.] INCOMES IN 1801 AND 1911 77 
 
 having been about 1,100, the aggregate amount 
 of the whole maybe taken as about i 1,000,000. 
 
 The number of such incomes in the year 
 1910, as disclosed by the assessors of super-tax, 
 was approximately 11,000 in respect of the 
 United Kingdom, the average income per head 
 being ,12,000 a year; and the aggregate 
 amount of the whole was i 30,000,000. l 
 
 Let us now consider what, at each of these 
 two dates, was the aggregate income of all 
 classes taken together. 
 
 From the income-tax figures for 1801 it is 
 directly ascertainable that, out of a total popu- 
 lation of 9,000,000 persons, half a million, or 
 100,000 families, subsisted on incomes exceed- 
 ing ;i6o a year, their aggregate income being 
 60,000,000 ; that another half million of 
 persons subsisted on incomes lying between 
 ,160 a year and ,60, their aggregate income 
 being ,24,000,000; and that the rest of the 
 population, consisting of 8,000,000 persons 
 were supported by about 3,700,000 workers, 
 none of them earning as much as 22/- a week. 
 Of these last, a third must have been women, 
 boys and girls, who cannot have earned between 
 them more than ,13,000,000. Of the re- 
 mainder, consisting of two and a half million 
 
 i. It appears, from supplementary information issued 
 whilst these pages were in the press, that the total was 
 about 3^ per cent, in excess of the sum above stated. This 
 fact, however, does not substantially alter the general 
 conclusion given in the text.
 
 78 THE NATIONAL INCOME [Book II. 
 
 men, one million were workers engaged in, or 
 connected with, agriculture, who cannot have 
 earned between them more than 2 6, 000,000 ;* 
 whilst the remainder men, who, apart from the 
 specially skilled artizans, represented the mass 
 of labour other than agricultural even if we 
 assume them to have received on an average 
 as much as ^40 a head, could not have earned 
 between them more than ^56,000,000. In 
 other words, we shall be appreciably over the 
 mark, but sufficiently near it for the purpose of 
 a broad comparison, if we assume that the 
 income of England and Wales at the beginning 
 of the nineteenth century amounted to as much 
 as ^180,000,000. 
 
 The national income to-day, when considered 
 for statistical purposes, is commonly taken to 
 mean the income of the United Kingdom. The 
 question of its amount has been approached in 
 various ways; but for several years there has 
 been a general consensus of opinion that it 
 could not be less than two thousand million 
 pounds; whilst an elaborate volume, 2 which 
 throws much new light on the matter, and was 
 issued by the Board of Trade in 1912, leads 
 to the conclusion that it considerably exceeds 
 
 i. The average earnings of an agricultural labourer at 
 the beginning of the nineteenth century were commonly 
 computed to be not more than ^21 a year. As supple- 
 mented by payments out of the rates they may possibly 
 have reached the sum mentioned above. 
 
 3. The Final Report in the Census of Production for the 
 year 1907.
 
 Chap. III.] THE RICHES OF THE RICH 79 
 
 that sum. If we wish to adhere to the letter 
 of our previous comparison, and deal in both 
 cases with England and Wales only, a deduc- 
 tion would have to be made in respect of 
 Scotland and Ireland. Since, however, the 
 question now before us relates to proportions 
 rather than to absolute amounts, our figures 
 will be simplified, and our comparison will be 
 practically unaffected, if, as regards the present, 
 we deal with the United Kingdom, and, as 
 regards the earlier period, with England and 
 Wales only. 
 
 To begin, then, with a comparison of the 
 broadest kind, the outstanding facts and figures 
 which call for our consideration are these. 
 
 In the year 1801, of the class of persons 
 whose incomes exceed ,5,000 a year the class 
 specially meant by reformers when they declaim 
 about the riches of the rich the average income 
 per head was ,10,000 a year; the number of 
 such persons was 1,100; their aggregate income 
 was 1 1,000,000 ; and the income of the nation 
 was ; 1 80,000,000. 
 
 At the present time, 1 of the same class of 
 persons, the average income is 12,000; the 
 number of such persons is 11,000; their aggre- 
 gate income is but slightly in excess of 
 ^130,000,000, and the income of the nation 
 is in excess of 2, 000,000,000. 
 
 Now if these figures should be examined by 
 any one who entertains the idea that an increas- 
 
 x. This phrase refers throughout to the year 1910.
 
 8o THE RICHES OF THE RICH [Book II. 
 
 ing proportion of the income of this country is 
 being appropriated by the rich, the result of 
 which process is a constant increase of poverty, 
 two facts may be deduced from them which 
 might seem, if quoted on a platform, to favour 
 such a conclusion. In the first place the 
 average income of the persons here in question 
 has risen from about ,10,000 to ; 12,000 a 
 year an increase of 20 per cent. In the 
 second place, whilst, at the beginning of the 
 nineteenth century there was, in England and 
 Wales, one of such incomes to every 9,000 
 inhabitants, there is at the present time in the 
 United Kingdom one of such incomes to every 
 4,100 inhabitants. 
 
 Taken by themselves, however, facts such as 
 these prove nothing. The nation may be com- 
 pared to an individual who carries his income 
 in his pocket, and the rich to a thief who 
 abstracts from it a certain number of sovereigns. 
 The extent to which the victim is impoverished, 
 or even appreciably inconvenienced, does not 
 depend on the amount of the theft alone. It 
 depends also on the amount from which the 
 theft is made. Other things being equal, the 
 inconvenience experienced by the victim if 2 
 be taken from 20 will in all probability be 
 less, it will certainly not be greater, than it 
 would have been had i been taken from 10. 
 
 Similarly, with regard to the income which, 
 if we like to put it so, is stolen by the rich from 
 the income of the community at large, the 
 practical question for the community at any
 
 Chap. III.] AGGREGATE OF INCOMES Si 
 
 particular period is, what is the proportion of 
 the abstraction to the total from which it is 
 abstracted? If we re-examine our figures with 
 this consideration in view, the result will be 
 remarkable, and to many people surprising. 
 iThe income of England and Wales having 
 been j 180,000,000 in 1801, the aggregate of 
 incomes exceeding ,5,000 a year namely 
 ;i 1,000,000, will have amounted to 6' 3 per 
 cent, of the whole. The income of the United 
 Kingdom being at the present time more than 
 ; 2, 000,000,000, the aggregate of incomes 
 exceeding ,5,000 is a sum which relatively to 
 the whole is certainly not greater but probably 
 a trifle smaller. Our information, however, is 
 not sufficiently precise to justify us in insisting 
 on the difference between these two fractions. 
 For argument's sake, they may be here taken 
 as identical. It is enough for the moment to 
 insist on the broad fact, which definite evidence 
 places beyond all doubt, that the aggregate 
 income of " the rich," despite its huge absolute 
 increase, has, relatively to the income of the 
 country as a whole, not undergone any increase 
 whatsoever, but, singular as the fact may seem, 
 is substantially the same to-day as it was a 
 century, or more than a century, ago. 
 
 Thus far, however, the figures bearing on the 
 case have been taken at their " face value/' 
 Certain considerations have been omitted to 
 which due weight must be given before even a 
 general conclusion can be presented in its final 
 form.
 
 82 PROFITS AND WAGES [Book II. 
 
 In most cases when attention is called to the 
 magnitude of the income of the rich, however 
 " the rich " may be defined, the special object 
 in view is a comparison of their aggregate 
 income with the aggregate income of the multi- 
 tude commonly called " the poor," or of the 
 " employed " as opposed to the employers, or 
 of the " labourers " as opposed to the " capi- 
 talists " or the " takers of profits." Now, 
 except in the case of certain professional 
 earnings, such as those of a lawyer or a doctor, 
 it is obvious that whenever any large income is 
 produced, the employment of labour is a 
 necessary part of the process ; that the labourers, 
 in order to live, must be paid wages of some 
 sort; and that profits, however large, are merely 
 part of a total, larger still, of which wages 
 constitute the remainder. There are no persons 
 who, as the result of their own logic, are bound 
 to insist on this fact more forcibly than socialists. 
 To admit that profits can exist which have no 
 wage-bill as their concomitant, would be to admit 
 that wealth can be produced without any labour 
 at all. If any English employer sought to 
 maintain this position on the ground that he 
 had recently transferred his works to France, 
 and no longer paid any wages to Englishmen, 
 socialists would be the first to inform him that 
 he had no more altered the situation than he 
 would have done if, his works having been 
 situated originally on the English bank of the 
 Tweed, he had re-erected them in an opposite 
 field in Scotland, so that his labourers now
 
 Chap. III.] PROFITS AND WAGES 83 
 
 lived at the Scotch end of a bridge, whilst he 
 himself lived on, and received his profits, at the 
 English end. His profits would still be one 
 part of a total business income of which his 
 labourers would receive another, whether he 
 and they were divided by a stream of water 
 or no. 
 
 Now the kind of case here indicated, of an 
 employer living in this country and his labourers 
 living in another, is so far from being imaginary 
 that it has a most important bearing on all 
 current computations of the income of the 
 United Kingdom to-day. Of that income, as 
 commonly computed by statisticians, a con- 
 siderable portion consists of profits arising from 
 enterprises the seat of which is not in this 
 country, but abroad; and the labour employed 
 in which is not home labour, but foreign. 
 
 In all cases other than these, the total value 
 produced by any business or industry, however 
 it may be divided into profits and the wages of 
 those employed, is duly included by statisticians 
 in their estimates of the income of the nation. 
 Let us, for example, imagine two brothers living 
 at Dover, each of whom has a factory situated 
 in that town. The annual product of each is 
 equal to ,20,000, of which 10,000 is profits, 
 and ,10,000 is wages. In any statement of 
 the income of this country, the united profits of 
 these brother employers would appear as 
 ;2O,ooo on the profit side of the entries, and 
 the wages paid by them as ,20,000 on the 
 wages side. The statistical statement would
 
 84 AN EXAMPLE [Book II. 
 
 be so far complete. The two sums would be 
 comparable, and the result we should get by 
 comparing them that profits and wages were 
 halves of the same total would be correct. 
 
 But if, of the two factories owned by these 
 Kentish brothers, one happens to be situated, 
 not at Dover but at Calais, and the labourers 
 employed by its owner are not English but 
 French, the profits of the brothers and the total 
 of the wages paid by them, will be in this case 
 precisely what they were in the other ; but they 
 would not, according to current statistical 
 methods, be so entered in any statement of the 
 income of the United Kingdom. The united 
 profits of the brothers would still continue to 
 figure as ,20,000 in the aggregate income of 
 the employers, but of the wages corresponding 
 to these profits, and still actually equal to them, 
 one half, because it was paid on the opposite 
 side of the Channel, would vanish from our 
 insular records of the aggregate income of the 
 employed, and only the other half, still paid at 
 Dover, would remain. We should still have 
 ,20,000 on the profit side of the entries, but on 
 the wages side, only ,10,000 instead of 
 j2O,ooo to correspond to it. Hence, if these 
 entries were taken as indicating the actual ratio 
 of the income of employers in this country to 
 the income of those employed by them, the 
 conclusion thus reached would, it is sufficiently 
 obvious, be either absurdly misleading, or in its 
 very nature impossible. We should either 
 have to believe, in respect of these two busi-
 
 Chap. III.] PROFITS FROM ABROAD 85 
 
 nesses, that wage-rates were 50 per cent, below 
 the prevailing level, or else that one of them, 
 though no less lucrative than the other, had 
 managed to dispense with wages, or in other 
 words with labour, altogether. In order to 
 render our insular records such that any true 
 comparison between profits and wages might be 
 based on them, it is clear that we should have 
 to do one or other of two things. We should 
 have to strike out the profits of the factory at 
 Calais from our profit-income, or else add the 
 wages paid to the labourers at Calais to our 
 wage-income. 
 
 These observations apply, it is needless to 
 say, to the whole of that portion of the income 
 of this country which appears in statistical 
 statements as ' profits coming from abroad/' 
 and if our object is to compare one group of 
 insular incomes with another, either all profits 
 from abroad must be eliminated as having no 
 wages to correspond to them, or the corres- 
 ponding wages, which are paid abroad, must 
 be included. The former method is the sim- 
 plest; and we will now apply it to the totals, 
 as already given, of incomes exceeding ^5,000, 
 in the year 1801 and at the present time 
 respectively. What, then, is the amount which, 
 on account of profits from abroad, must in each 
 case be deducted from /" 11,000,000 in the first 
 case, and from ,130,000,000 in the second? 
 
 If we make the assumption, which at any rate 
 is broadly true, that the bulk of profits is 
 included, no matter what their origin, in the
 
 86 HOME AND FOREIGN PROFITS [Book II. 
 
 aggregate of such incomes as are now subject 
 to income-tax namely those exceeding ;i6o 
 a year, and if we assume farther (which is all 
 that can be done here) that the distribution of 
 the foreign element amongst all such incomes 
 is equal, an answer sufficiently accurate for our 
 present purpose is obtainable. At the begin- 
 ning of the nineteenth century, according to the 
 then recent estimate of Pitt, out of every pound 
 of income which would now be subject to 
 income-tax, profits from abroad mainly from 
 the West Indies amounted to no more than 
 sevenpence. At the present time, according to 
 the latest information, out of every such pound 
 they amount to at least five shillings. What, 
 then, we shall have to deduct from the two sums 
 here in question will be sevenpence in the pound 
 from ,11,000,000 for the year 1801, and five 
 shillings in the pound from ^"130,000,000, in 
 respect of the present time. 
 
 The result will be that whereas, taken in its 
 integrity, the total has increased in the ratio of 
 one to twelve, the home-produced portion has 
 increased in a ratio of only one to nine. Hence 
 if the gross total, relatively to the income of the 
 nation, is, as we have seen, no greater to-day 
 than it was more than a century ago, it is plain 
 that the home-produced portion of it will be 
 now considerably smaller. It will have 
 amounted, at the beginning of the nineteenth 
 century, to fifteen pence out of every pound of 
 the home-produced income of the nation. It
 
 Chap. III.] A DELUSION 87 
 
 will amount at the present time, as nearly as 
 possible, to a shilling. It must farther be noted 
 that the home-produced income of the nation 
 would, if divided equally in 1801, have yielded 
 an average income of less than 20 per inhabi- 
 tant. It would yield, if similarly divided, more 
 than twice that amount to-day. The effect, 
 therefore, in 1801 of "the abstractions of the 
 rich," on the average share per person, would 
 have been a loss of fifteen pence in the pound 
 out of 19 155. It would be a loss of only a 
 shilling in the pound out of 45 to-day. 
 
 It is needless, at the present stage of our 
 enquiry, to labour these details farther. Prac- 
 tically the object with which they have been set 
 forth, is that of elucidating one broad conclu- 
 sion, namely this : that the primary idea or 
 thesis with which social reformers start, which 
 is the foundation of all their projects of reform, 
 and is the key to their interpretation of the 
 conditions which require to be reformed, is 
 altogether a delusion. Their primary thesis is 
 that all the social evils of to-day, as contrasted 
 with those of yesterday, are due in the last 
 resort to the ever-increasing proportion which 
 is being taken from the income of the community 
 in order that it may be added to " the piled up 
 aggregations " of a class to whose present riches 
 the past affords no parallel; and all their pro- 
 jects of reform are reducible to some device or 
 other by which the reservoirs of this class, 
 supposed to be inexhaustible, may be tapped,
 
 88 A FALLACY EXPOSED [Book II. 
 
 and their contents administered in doses to the 
 mass of the population generally. If there are 
 any persons to whom the language of reformers 
 is applicable when they declaim in this manner 
 about the all-engrossing modern rich, these 
 persons must be all comprised in the class whose 
 incomes, to say the least of them, exceed ,5,000 
 a year; and the broad conclusion here placed 
 before the reader is that the wealth of the 
 typically rich class, relatively to the wealth 
 distributed amongst the population generally, 
 is a quantity which, instead of increasing, has 
 for more than a hundred years been actually 
 growing less and less; and that all those ideas 
 as to modern poverty and reform, which have 
 the contrary opinion as their basis, must be 
 altogether readjusted. 
 
 The case of the lesser rich will, with similar 
 results, be considered in a future chapter, when 
 the analysis of the income of the nation can be 
 presented in greater detail. For the moment 
 it will be enough to observe that the moral 
 suggested by our pictures of the same typical 
 town, as to the actual diffusion of wealth in 
 contrast to its supposed concentration, errs, if 
 it errs at all, not by overstating but by under- 
 stating realities. 
 
 At the same time it must be admitted that 
 the fallacy here exposed is by no means peculiar 
 to the reformers who specialise in the trade of 
 disseminating- it. It represents an opinion 
 which is more or less vaguely held by a very
 
 Chap. III.) A FALLACY EXPOSED 89 
 
 large number of otherwise cautious persons, 
 and this opinion being diametrically opposed 
 to facts, a delusion so widely spread must have 
 some cause or causes of an important and 
 discoverable kind. In the following chapter 
 these causes, of which there are several, will be 
 surveyed.
 
 CHAPTER IV. 
 
 ONE of the reasons why the total wealth of the 
 rich may seem to have increased relatively to 
 the total wealth of the country, whereas in 
 reality it has not increased but declined, is no 
 doubt the fact that the number of rich in- 
 dividuals has increased in relation to the 
 number, though not to the income of the 
 population. The actual number of the rich, 
 however, has always been so small that a 
 relative increase of this particular kind would, 
 if it stood by itself, be even now not very 
 conspicuous, being equivalent to no more than 
 an addition, in the course of a century, of one 
 rich household to every eighteen hundred 
 houses. 
 
 But there is another standard of measure- 
 ment, taken in relation to which the increase of 
 the rich has been enormous, not only in respect 
 of their number, but of their aggregate income 
 also. This standard consists of the geogra- 
 phical area of the country, which, unlike the 
 population, and unlike wealth in general, 
 instead of increasing, always remains the same. 
 To put the matter roughly, if we imagine the 
 country to be divided into eleven hundred 
 parishes all of equal size, whereas there would 
 at the beginning of the nineteenth century have 
 been only one person in each with more than 
 ^5,000 a year, there would be at least ten
 
 Chap. IV.] CAUSES OF MISCONCEPTION 91 
 
 to-day; and if the whole of each parish had 
 been visible from its own church steeple, any 
 observer, on whatever steeple he perched him- 
 self, would to-day see at a glance ten times as 
 many great houses as he would have seen had 
 he lived in the days of his great-grandfather. 
 If from such a spectacle, repeated wherever he 
 went, he derived the impression that the rich 
 were fast getting hold of everything, the 
 impression would be natural enough; but how 
 widely at variance such appearances may be 
 with realities, can be seen by considering an 
 analogy, which relates not to wealth but health. 
 Let us suppose that a tropical island, pre- 
 viously unoccupied, is one day discovered to 
 be astonishingly rich in rubber. An enormous 
 influx of settlers is thereupon expected, and a 
 town is rapidly built which will accommodate 
 twenty thousand persons. The climate, how- 
 ever, proves to be so pestilential that only one 
 thousand persons can be induced to remain and 
 brave it; and amongst these thousand the 
 annual death rate is 100 nearly six times as 
 great as the death-rate of the United Kingdom. 
 Let us now suppose that science discovers a 
 means by which the pestilent air is purified. 
 The terrors of the climate disappear. Colonists 
 arrive in the number at first anticipated. The 
 fever-stricken and almost empty town soon has 
 its full population of twenty, instead of a 
 single, thousand, and the annual death-rate 
 falls from 100 per 1,000 to 15 a rate lower 
 than that of any country in Europe. Neverthe-
 
 92 GEOGRAPHICAL DISTRIBUTION [Book II. 
 
 less, if bereaved persons were accustomed to 
 wear black for a year, any one who visited this 
 town now, which has been transformed from the 
 unhealthiest into one of the healthiest in the 
 world, would encounter in a tour of its streets 
 three hundred persons in mourning, whereas he 
 would have encountered no more than a 
 hundred in the old days when each of these 
 streets was a death-trap, and one man out of 
 every ten to be met in them would have had but 
 twelve months to live. As a spectacle appeal- 
 ing to the eye, the signs of death would have 
 been multiplied; but the ravages of death, as 
 actually experienced by the population, would 
 from a ghastly maximum have been reduced to 
 an abnormal minimum. The reduction would, 
 it is obvious, be the one vital fact. The specta- 
 cular increase would be illusory, because 
 altogether irrelevant. 
 
 Similarly, with regard to the rich in the 
 United Kingdom, their aggregate wealth has 
 increased, and increased in a visible way, if 
 measured by its average amount per square 
 mile of the national area. It has, at the same 
 time, decreased rather than increased, if 
 expressed as so many pence per pound of the 
 national income. This decrease, or at all events 
 this failure to increase, is the sole relevant, 
 indeed the sole actual fact, so far as the wealth 
 or the poverty of the mass of the population is 
 concerned. The increase, which shows itself 
 only when measured by an irrelevant standard, 
 has, when considered as a strictly economic
 
 Chap. IV.) WEALTH AND POVERTY 93 
 
 symptom, no meaning whatsoever. It is 
 nothing but an optical delusion. 
 
 Nor do these observations apply to the rich 
 only. An optical delusion of precisely the 
 same kind is produced in the case of the con- 
 spicuously poor also. In London, for example, 
 the number of paupers per 1,000 of the popula- 
 tion might to-day be only half of what it was 
 at the beginning of the nineteenth century ; and 
 yet the actual number now living within walking 
 distance of Hyde Park Corner, would have so 
 increased that the crowd of unfortunates would 
 have doubled itself who could be mustered in 
 Hyde Park to make a show of their tatters. 
 
 Optical delusions, however, even when known 
 to be such, often exert an influence which it is 
 hard to escape; and the delusions which have 
 just been noted as to riches and extreme poverty 
 are heightened by various circumstances the 
 effect of which on the imagination is cumulative. 
 
 Though of incomes exceeding ,5,000 a year, 
 the average income per head, in the course of 
 more than a century, has risen only from 
 jio,ooo to i 2,000, a number of individual 
 incomes are now comprised in this group of a 
 magnitude unknown at any previous period; 
 and the imagination of the superficial observer 
 is often so affected by these ultra-conspicuous 
 fortunes that he takes them to be representative 
 for the precise reason that they are exceptional. 
 Here we have the origin of the declaration, 
 which is a commonplace amongst modern 
 reformers from the Chancellor of the Exchequer
 
 94 POVERTY AND WEALTH [Book II. 
 
 downwards, that the contrast to-day between 
 wealth and extreme poverty is greater and more 
 menacing than it ever was before. And in a 
 certain sense this statement is true ; but, if taken 
 in connection with the issue which agitators 
 intend to raise it, its truth is completely barren. 
 If poverty be represented by an income of ten 
 shillings a week, there is a greater difference 
 between poverty and an annual income of five 
 hundred thousand pounds, than there is between 
 poverty and an annual income of fifty thousand. 
 But if the riches of the rich be regarded as 
 affecting the popular welfare in the sense that, 
 if it were not appropriated by a small number 
 of persons, the income of the nation in general, 
 and of the poor in particular, would be larger, 
 the incomes of these persons individually, are 
 a matter of complete indifference. What affects 
 the nation at large is the total amount of the 
 " theft," not the number of thieves, or the share 
 taken by each. 
 
 The fact, however, that a certain number of 
 the incomes of the rich to-day are enormous, 
 cannot be entirely disposed of by the above 
 obvious criticism. This may be seen by reflect- 
 ing on certain of the results that would ensue 
 if these enormous fortunes disappeared, and all 
 incomes in excess of /s,ooo a year, whilst 
 remaining what they are in respect of their total 
 amount, were merely raised or reduced to what 
 is their present average in other words to 
 1 2,000 a year. The effects of this change 
 would be remarkable. There would be a
 
 Chap. IV.] EXPENDITURE OF THE RICH 95 
 
 sudden cessation of nearly all the proceedings 
 with which wealth in the imagination of the 
 public has now come to be identified. The 
 sensational prices now paid for pictures and 
 other works of art would become things of the 
 past. What man with only ,12,000 a year 
 would give for a china saucer or a sucking-bottle 
 of rock crystal three times as much as it costs 
 him to keep three sons at Eton? Who would 
 spend two years' income on pearls for his wife's 
 neck, and deprive himself for two years of the 
 means of providing her with a new petticoat? 
 Who would give three years' income for the 
 pleasure of hanging in his dining-room a 
 portrait of the wife or the grandmother of a 
 total stranger, and leave himself for three years 
 without the price of a dinner? What would 
 become of all the great entertainments at which 
 singers and pianists delight unwillingly silent 
 companies at an average rate of ^"1,000 an 
 hour? Such things would cease to be. What 
 would become of the yachts of six hundred tons 
 and more, with whose size, whose beauty and 
 whose movements the newspapers to-day render 
 all the world familiar? Their day would be 
 over. Nobody would be rich enough to keep 
 one of them in commission for six weeks. The 
 same fate would overtake the only hotels which 
 now enjoy any special reputation for luxury. 
 They would have either to close their doors 
 or entirely change their character. 
 
 It is true that hotels of this class are few. 
 So are great yachts. So are the jewels, the
 
 96 MISLEADING IDEAS [Book II. 
 
 pictures and other works of art, whose prices are 
 counted by thousands and tens of thousands of 
 pounds. So are the great entertainments whose 
 splendour fills the newspapers. The great 
 buyers and entertainers are exceedingly few 
 likewise. Yet if these features of to-day, few 
 as they are, were to disappear (as they would 
 if the income of nobody exceeded ;i 2,000) the 
 riches of the rich as a body would remain as 
 great as ever, but they would, so far as the 
 imagination of the public is concerned, seem so 
 to have dwindled that no rich men were left. 
 Conversely, if things having been reduced to 
 such a state as this, were once again to become 
 what they are to-day if a few thousands of 
 incomes fell from ; 12,000 to ^5,000, and a 
 couple of hundred rose to ,60,000 or more, 
 fabulous sales of gems would once more fill the 
 newspapers, the great yachts would float again, 
 the hotels de luxe would be regilded; and the 
 impression produced on the imagination of the 
 public would be irresistible that the riches of the 
 rich were being swollen to a magnitude more 
 vast than ever, whereas the total amount had 
 not increased by a halfpenny. 
 
 Here, then, stated briefly, we have the more 
 general causes which, whereas in actual fact the 
 riches of the rich, relatively to the wealth of the 
 nation, are less now instead of greater than they 
 were at the beginning of the nineteenth century, 
 combine to produce a delusion that the case has 
 been exactly opposite. But to these general 
 causes another remains to be added, of a
 
 Chap. IV.] A VAGUE DELUSION 97 
 
 different kind, and incomparably more impor- 
 tant. This consists of the specific teaching of 
 reformers, whether socialists or extreme radicals, 
 whose business has been to translate a more or 
 less vague delusion, to which any uninstructed 
 person may be liable, into a body of statistical 
 statements which affect to be so precise that 
 they are offered to the public as the basis of a 
 definite social policy. These monstrous and 
 ludicrous statements shall be dealt with in a 
 separate chapter.
 
 CHAPTER V. 
 
 Of the statements just referred to the most 
 comprehensive and most characteristic are those 
 which relate to the total amount of the national 
 income to-day, and the manner in which it is 
 distributed amongst various classes of the popu- 
 lation. The reader shall first be shown by an 
 examination of one of the most recent and also 
 one of the most favourable examples of them, 
 how fallacious these statements are in respect 
 of their general character. We will then deal 
 more minutely with each of their more important 
 details. 
 
 This example of the performances of modern 
 reformers as statisticians is provided by a 
 synopsis of the national income and its distri- 
 bution, which has been issued by the Fabian 
 Society as a trumpet-call to the discontented. 
 The Fabian Society, its avowed object being 
 the establishment of a bureaucratic socialism, 
 claims that its members are persons of high 
 education and intellect, and are by no means to 
 be confounded with the agitators of the street 
 corner. Its leading spirit is Mr. Sidney Webb, 
 who is honourably known as an historian of 
 certain industrial movements, and whose 
 opinions as to Poor-law Reform and other 
 kindred questions have been seriously consulted 
 by many who have no sympathy with his 
 
 98
 
 Chap. V.] THE FABIAN SOCIETY 99 
 
 socialism. Closely associated with Mr. Webb 
 as a member of this Society is Mr. B. Shaw, 
 whose triumphs as an intellectual dramatist are 
 sufficient to attest that his talents are of a very 
 unusual order. When, therefore, an elaborate 
 statement as to a question of the first importance 
 is issued by such a society on the authority of 
 such men as these, we may assume that the 
 statistical ideas which reformers now seek to 
 popularise are being presented in the maturest 
 form with which the knowledge of the reformers 
 can invest it. 
 
 The following are the main propositions 
 contained in this remarkable document, the 
 figures given being for the year 1905. 
 
 The total income of this country is 
 ;:, 920,000,000. 
 
 Of this nearly one half, or ,925,000,000, 
 consists of incomes exceeding ,160 a year, and 
 is thus appropriated by the rich or the relatively 
 rich. 
 
 The remainder ^"99 5, 000,000 represents 
 the income of the poor, and is made up mainly 
 of weekly wages or salaries, ^730,000,000 
 being the earnings of industrial labour, and 
 ^265,000,000 being the earnings of a miscel- 
 laneous body comprising shop-assistants, com- 
 mercial clerks, and the lower ranks of the 
 employees of the State and Local Authorities. 
 
 It would, however, the Fabian writer con- 
 tinues, be incorrect to suppose that these two 
 sections of " the poor," perform between them 
 the whole of the necessary work of the country
 
 ioo THE FABIAN SOCIETY [Book II. 
 
 There is a certain section of the rich or the 
 comparatively rich the active heads and 
 managers of productive and commercial busi- 
 nesses, professional men and others whose 
 services are as necessary as manual labour 
 itself, and who earn their incomes as honestly 
 as any manual labourer. But how much 
 between them do men such as these receive? 
 Out of the ,925,000,000, which represents the 
 total of incomes in excess of .160, these men 
 receive no more than ^225,000,000. And 
 what becomes of the rest? Here we are 
 brought to the astounding, the almost incredible 
 fact, that the rest, amounting to ^700,000,000 
 nearly 37 per cent, of the entire income of the 
 nation is appropriated by a class absolutely 
 and avowedly idle, comprising here the writer 
 is very precise more than 660,000 adult males, 
 not one of whom has ever " pretended to have 
 so much as the shadow of an occupation." 
 Here, in the existence of this multitude of " the 
 idle rich," is the cause of all those evils which 
 it is the mission of the reformer to eradicate. 
 Here, reduced to scientifically exact propor- 
 tions, is the fact which before all others must 
 be burnt into the reformer's consciousness. 
 
 It is claimed on behalf of these figures and 
 statements that they are one and all of them 
 based on specific information derived mainly 
 from the following authoritative sources; the 
 latest Board of Trade Reports on the various 
 rates of wages current respectively in the various 
 businesses of the country ; the elaborate analyses
 
 Chap. V.] FABIAN STATISTICS TOT 
 
 of the incomes subject to Income-tax, which are 
 set forth by the Commissioners of Inland 
 Revenue; and the Cens-is Reports relating to 
 the number of individuals engaged, in each. class 
 of occupation, or not epgaged :iji ^lay. And. in 
 a certain sense this claim is correct. The 
 Fabian statistician has, with a few exceptions, 
 not invented his figures. He has found them 
 in the documents cited by him; but he has 
 misunderstood, and ridiculously mis-stated their 
 meaning. 
 
 His errors are least though even then they 
 are flagrant when he is dealing with the income 
 of the " poor," or the mass of incomes not 
 exceeding ,160 a year. The aggregate of 
 these he sets down as no more than 
 ^995,000,000, made up of the wages and 
 salaries of productive workers; but in order to 
 reduce their income to this figure, he not only 
 fails to include a sum of ^"50,000,000 known 
 to go to such persons as interest on invested 
 capital; he also deliberately suppresses a sum 
 of ; 1 00,000,000, which represents the wages 
 earned by domestic service. Servants, he says, 
 produce nothing that has any economic value. 
 Their work adds nothing to the sum of the 
 national income; and in dealing with the 
 national income, both they and their wages must 
 be eliminated. Considered on its own merits, 
 this puerile contention hardly needs exposure. 
 In any case a few words will be enough to point 
 out its absurdity. Nobody denies that a potter 
 produces an economic value when he coats a 
 
 H LIBRARY 
 
 UNIVERSITY OF CALIFORNIA
 
 102 FABIAN FALLACIES [Book II. 
 
 dinner-plate with a glaze, without which it would 
 be useless because it could not be washed clean. 
 It is -^obvious., that, a servant who washes it 
 produces a value likewise, because for practical 
 purposes the, plate, if it were never washed, 
 would be just as valueless as it would be if it 
 were not washable. Again, nobody denies that 
 the workers in a great biscuit factory are pro- 
 ducing values when they turn flour into biscuits. 
 How does a cook fail to produce values likewise 
 when she turns raw meat into soup in a private 
 kitchen? Servants produce values just like 
 any other workers, and whenever any estimates 
 are made of the luxuries which rich men pur- 
 chase, the value of domestic services is one of 
 the most important items. The Fabian statis- 
 tician, therefore, in respect of the income of 
 " the poor," is at once seen to be wrong to the 
 extent of 150,000,000; but if we merely add 
 to the total which he himself gives the income 
 which he excludes, though he does not deny its 
 existence, the aggregate of incomes not exceed- 
 ing 160 a year will, in the year 1905, have 
 been nearly ,1,150,000 according to his own 
 authorities : and even if we suppose that since 
 that date it has done no more than increase in 
 the same ratio as the population, the total for 
 to-day, which in that way would be reached, 
 would not differ by more than six per cent, 
 from what, as we shall see presently, is the true 
 amount. 
 
 It is when the oracle of the Fabian Society 
 comes to his main subject the income and
 
 Chap. V.) " THE IDLE RICH " 103 
 
 number of the rich, and of the " idle rich " in 
 particular, that his carnival of error begins in 
 downright earnest. 
 
 Let us first take his figures as they stand. 
 According to him, the total number of " the 
 rich," or persons subject to income-tax, in the 
 year 1905, somewhat exceeded 1,000,000, but 
 was not as much as 1,100,000. In other words, 
 it must have been approximately 1,050,000, the 
 number of the absolutely idle being at least 
 660,000. The aggregate income of " the rich " 
 was ^925,000,000; that of the absolutely idle 
 section was ^"700,000,000 ; that of the occupied 
 was ,225,000,000. Now these figures can be 
 put to a very simple test, by comparing them 
 with certain others, given by those very authori- 
 ties on which the Fabian writer relies. These 
 latter figures relate to the occupied section 
 only firstly to their number, secondly to their 
 total income. Let us begin with the question 
 of their number. 
 
 According to the Census of 1851, the clergy, 
 the barristers, the solicitors and doctors of the 
 country amounted to no less than 150,000. By 
 the year 1905 the number of them had certainly 
 not decreased. According to the Report of the 
 Commissioners of Inland Revenue for the year 
 1905, there were 60,000 business firms (exclu- 
 sive of public companies), each of which firms 
 must have represented at least one active 
 partner; the number of salaried employees 
 (earning more than 160 a year), of business 
 houses and of the State, was more than 500,000;
 
 i<H WORKERS AND IDLERS [Book II. 
 
 and to these must be added at least 20,000 
 farmers. If such be the number of a portion 
 of the occupied rich only, and if the number of 
 the rich altogether was at that time not much 
 more than 1,000,000, how can the number of the 
 rich who are absolutely idle be by any possi- 
 bility 660,000? It could not have been as 
 much, or anything like so much, as half of this. 
 It is obvious that the computation of Mr. 
 Webb's statistical expert not only has no rela- 
 tion to fact, but is inconsistent with even his 
 own primary data. 
 
 Let us now take the question of incomes. 
 The aggregate of incomes exceeding ,160 
 a year, amounted, according to him, to 
 ^925,000,000. This figure is taken from cer- 
 tain tables in the Report of the Commissioners 
 of Inland Revenue for the year 1905, but if 
 we refer to those tables themselves, and consider 
 the various items of which the total is made up, 
 the following can be at once identified (to say 
 nothing of others) as earnings of the occupied, 
 and not the appropriations of the idle : Income 
 of farmers, ,17,000,000; Income of working 
 partners in private business firms, ,60.000,000; 
 Income of 503,000 employees, ,116.000.000; 
 Total ,193,000,000. If the income of the idle, 
 then, was really 7 00,000,000, and this portion 
 only of the income of the occupied class be 
 added to it, there would have been no more than 
 ^32,000,000 left, to be divided amongst the 
 learned and all other professions, to sny nothing 
 of shopkeepers, owners of mills, agents, or of
 
 Chap. V.] FABIAN FALLACIES 105 
 
 any working partners in businesses run as 
 companies. 
 
 Such, even if we suppose the figures quoted 
 by the Fabian statistician from the Commis- 
 sioners of Inland Revenue, to bear the meaning 
 which he himself ascribes to them, are the 
 results of his insane estimate of the income of 
 " the idle rich." 
 
 But what we have glanced at thus far has 
 been the surface of his mistakes only. They 
 originate in an ignorance deeper than anything 
 that has been yet suggested. His figures with 
 regard to the income of the rich are, as has been 
 said already, not inventions of his own. He 
 has found them in official reports, and he quotes 
 them with substantial accuracy; but he totally 
 mistakes their meaning. They are figures rep- 
 resenting, as is very carefully explained in these 
 documents, " the gross amount or amounts 
 brought under the review of the Commissioners" 
 for the purposes of ascertaining what the amcymt 
 liable to taxation is ; or, in other words, what is 
 the true net total of private incomes exceeding 
 ^160 a year. But, though this net total is 
 included in it, much is included also which, 
 before the net total can be reached, has to be 
 thrown overboard. This portion, which may 
 be called the refuse, of the " gross amount 
 reviewed," consists of various elements which 
 have one common characteristic. They form no 
 part of the total of which the Commissioners are 
 in search, namely that which is divided amongst 
 private individuals in net incomes exceeding
 
 To6 FABIAN FALLACIES [Book II. 
 
 ^160 a year. They consist : Firstly, of incomes 
 which do not exceed that sum, and of the 
 revenues of charitable bodies; Secondly, of 
 amounts which are not income at all, but are on 
 the contrary outgoings, comprising insurances, 
 and, what is far more important, the cost of up- 
 keep of all the farms, private liouses, business 
 premises, factory plant, railway plant, and ship- 
 ping of the United Kingdom; and Thirdly, of 
 over-assessments, including the imaginary rent 
 of premises shown to be empty. In the year 
 1905 these three portions were nearly, though 
 not precisely, equal; each amounting to about 
 ^60,000,000, and the actual total to 
 1 80,000,000. * All these amounts were struck 
 off from the " gross amount reviewed " in order 
 to reach the residue which alone represented the 
 total of net private incomes exceeding ,160. 
 
 The total income, therefore, of the rich or the 
 relatively rich, was not ^925,000,000, as the 
 Fabian writer asserts. It was not more than 
 ^"745,000,000. By reference to more recent 
 information, which will be dealt with in another 
 chapter, it will be seen that even this sum 
 exceeds the reality by something like 100,000; 
 but for the moment let us take it as it stands 
 as it stands disclosed in the pages, parts of 
 which at all events the Fabian statistician must 
 have consulted; and now let us apply to his 
 figures, as thus corrected, the same test which 
 
 i. The actual figures for 1905 were : Small exempted 
 incomes, ^52,400,000 ; Charities, ^10,500,000 ; Upkeep and 
 Insurances, 61,700,000; Over-assessments, 55,600,000.
 
 Chap. V.] NUMBER OF " IDLE RICH " 107 
 
 already we have applied to them in their crude 
 form. 
 
 If some 660,000 idle rich men men who 
 have never even professed to have so much 
 as " the shadow of an occupation," really 
 appropriated between them ^700,000,000, how 
 much would be left for those of the " rich " who 
 were occupied for the salaried employees, for 
 the larger farmers and shopkeepers, for all the 
 active partners in all the other businesses in the 
 Kingdom, and for the whole of the professional 
 classes? If the income of the idlers equals 
 that which the Fabian statistician ascribes to 
 them, the share of the occupied will be 
 ^45,000,000 only, which is hardly more than 
 one-third of the income earned by the salaried 
 employees alone, and is only one-fifth of the 
 sum ^225,000,000 which the Fabian statis- 
 tician himself declares to be the earnings of the 
 occupied rich as a whole. 
 
 But the full measure of his absurdities has not 
 been disclosed yet. A farther point still 
 remains to be considered. This is not the 
 income of the " idle rich," but their number, 
 which the Fabian sage declares to be about 
 660,000. Here we shall get a new, and indeed 
 a sensational light, on the manner in which the 
 social statistics of the modern reformer are 
 elaborated. How is this number reached? 
 Strange to say, it is no mere freak of the 
 imagination. The authority on which it is 
 based can be very easily identified. It is based 
 on the Census Returns for the year 1901, and
 
 io8 NUMBER OF THE " IDLE RICH " [Book H. 
 
 claims to represent the number of adult males, 
 there given respectively for England, Scotland 
 and Ireland, as "unoccupied persons." Whether 
 this total is absolutely correct or no, is not very 
 material. In any case it is large. The number 
 of such persons in England and Wales alone is 
 given in the Returns as 543,000. The charac- 
 teristic error of the Fabian lies not in the total 
 number itself, but in the fact that he has no 
 suspicion of what the number really means. 
 Of what does the reader think that this body of 
 adult males, described in the Census Returns 
 as "unoccupied persons" consist? Barely 
 one-fifth of the number namely persons de- 
 fined as " living on their own means " can by 
 stretching the meaning of the words be identified 
 with " the idle rich," the age of half of these 
 being more than sixty-five years. The re- 
 mainder, amounting to 80 per cent, of the 
 whole, was made up of what? It was made up 
 of tradesmen and others who had retired in 
 their declining years from a life of active 
 business; of 25,000 pensioners drawing ,200 a 
 year; and a mixed group of more than 160,000 
 persons, consisting mainly of " special inmates" 
 of workhouses, but including also the blind, the 
 insane and the imbecile, permanently housed in 
 asylums, and last, but not least remarkable, a 
 certain number of convicts. All these, like 
 " supers " in a Christmas pantomime, are 
 paraded by Mr. Webb and his friends before 
 the eyes of a gaping multitude, who are invited 
 to regard them with feelings of revolt and
 
 Chap. V.] MISLEADING BLUNDERS 109 
 
 horror, as so many gilded voluptuaries who are . 
 eating up the wealth of the nation. 
 
 Here, then, in this tissue of nonsense, we 
 have not only an example but (as has been said 
 already) a highly flattering example, of the 
 methods and the degree of accuracy, repre- 
 sented by the social estimates of the social 
 reformers of to-day. If we turned from Mr. 
 Webb and his Society to reformers of rival 
 schools, we should find the same absurdities 
 repeated in even wilder forms. With regard 
 to the rich in the special sense of the word 
 namely persons whose incomes exceed ,5,000 
 a year we should find their aggregate income 
 set down as almost exactly double what it has 
 been shown to be by official investigation. 1 We 
 should find the income of the comparatively 
 rich namely all those whose incomes exceed 
 160 a year, set down by one reformer 
 as ,1,300,000,000, and by another as 
 ; i, 600,000,000, whereas the Fabians content 
 themselves with a poor ,925,000,000. 
 
 If, however, the statistics of the reformers are 
 really of a kind so preposterous, so utterly out 
 
 i. Mr. Money informed the Select Committee of Income 
 Tax, in the years 1905-6, that the imposition of a supertax 
 on incomes exceeding ^5,000 would disclose an aggregate 
 income of ^250,000,000. The actual amount disclosed several 
 years later was not much more than ,130,000,000. Mr. 
 Hyndman has declared that the capitalists and plundering 
 classes absorb ten-thirteenths of the entire income of the 
 nation. One of the leading Trade Union agitators in 
 Scotland has declared that 60 per cent, of the income of 
 the nation is stolen from the workers by the profit-takers.
 
 no ERRORS EXPOSED 
 
 of relation to the iacts of contemporary life, 
 why, some readers may ask, is it necessary to 
 spend time on a minute examination of blunders 
 which must be sufficiently patent to any sober 
 and intelligent man? The answer is that, 
 however preposterous these blunders may be 
 seen to be, the moment they are examined 
 seriously, yet until they are so examined the 
 ordinary intelligent man has no means of know- 
 ing that they are blunders at all. At all events 
 he will be unable to identify them and measure 
 their precise extent; and until they are so 
 identified, and can thus be exposed in detail, 
 the reformer may repeat them with impunity, 
 multitudes will continue to accept them ; and 
 even moderate men will imagine that they are 
 substantially, if not literally, true. 
 
 Finally it may be added that when, with 
 regard to any question, gross errors have won 
 a very wide acceptance, the identification of 
 these errors with more or less precision is the 
 best and most convenient preparation for an 
 exposition of the actual facts : and to such an 
 exposition we will now go on to address our- 
 selves.
 
 BOOK III. 
 
 A STATISTICAL REVIEW OF THE INCOME OF THE 
 UNITED KINGDOM AND ITS DISTRIBUTION 
 AT THE PRESENT DAY.
 
 NOTE. 
 
 The statistical portion of this work, in so far as 
 it may present any difficulties to the general reader, 
 is mainly comprised in Book III., which those who 
 are more interested in final results than in details 
 may use at their discretion for purposes of reference. 
 
 It had been the author's original design to have 
 relegated many of the figures given in Book III. to 
 a supplement consisting of very elaborate tables : 
 but, as for various reasons this has been thought 
 undesirable, certain references are given in foot- 
 notes to a series of Statistical Monographs, con- 
 taining minute analyses of official information, 
 which have been issued by him for the use of 
 speakers and others, from the offices of The Liberty 
 and Property Defence League, 25, Victoria Street, 
 S.W., and which are obtainable by application to 
 the Secretary at that address.
 
 CHAPTER I. 
 
 IN any general review of our national income 
 and its distribution, there are four points to be 
 considered : 
 
 Firstly, the net total, or the total available 
 by the recipients for their own private expendi- 
 ture on the necessaries and luxuries of existence. 
 
 Secondly, the division of this total amongst 
 the two sections of the population commonly 
 described as the richer and the poorer classes, 
 or those subject and not subject to income-tax. 
 
 Thirdly, the composition of the national 
 income generally, when translated from terms 
 of money into the things that money represents. 
 
 Fourthly, the amount going to each group of 
 recipients, relatively to the number of persons 
 comprised in each group separately. 
 
 To begin, then, with the net total. This, 
 according to the latest information namely, 
 that provided by the recent Census of Produc- 
 tion would appear at first sight to be nearly 
 2,200 million pounds. 1 In the Census of Pro- 
 
 i. The Census of Production deals with the national 
 income from an entirely new standpoint. It deals with 
 the actual value of material goods produced and consumed 
 in the United Kingdom, and the actual cost and value of 
 services. Other computations are based on wages-returns, 
 and income-tax returns. The Census of Production is 
 entirely independent of these. 
 
 "3
 
 ii4 NET INCOME [Book III. 
 
 duction, however, the term " net income " is 
 employed in a somewhat unusual sense. It 
 includes the cost, borne mainly by the employ- 
 ing classes, of the upkeep of all the farm-lands, 
 buildings, machinery, shipping, and industrial 
 appliances by means of which the income is 
 produced; and if this be deducted, the re- 
 mainder the true net income will amount, as 
 we shall see presently, to about 2,020 million. 
 This total coincides almost exactly with that 
 which expert statisticians had already reached 
 by different methods of enquiry. Moreover, 
 when it is remembered that the figures of Mr. 
 Webb and his friends relate to the year 1905, 
 and that the population and income of the 
 country have since that time increased, we shall 
 find that it corresponds substantially with 
 socialist computations of the national income 
 also. 
 
 We thus start with a fact as to which all 
 parties are agreed. The first difference between 
 facts and the wild fallacies of reformers appears 
 in connection with the division of this total into 
 incomes which exceed and which do not exceed 
 ,160 a year, and which are respectively subject 
 and not subject to income-tax. 
 
 It will presently be shown in detail that this 
 latter group of incomes amounts at the present 
 time to about 1,300 millions, whereas according 
 to Mr. Webb and his brother socialists it was 
 barely 1,000 millions five or six years ago. But 
 this discrepancy is not so great as it seems. If 
 Mr. Webb and his friends had stated their case
 
 Chap. I.] THE NATIONAL INCOME 115 
 
 in full, the then total would, according to their 
 own admissions have been hardly less than 
 1,150 millions; and if allowance be made for 
 the increase in the number of wage-earners, and 
 for a certain increase in wage-rates, which have 
 taken place since then, the present total, even 
 according to the data of the socialists, would 
 not differ by more than 6 per cent, from that 
 which has just been stated. 
 
 Here, then, we have two figures as starting- 
 points 2,020 million pounds as the net income 
 of the nation, and 1,300 millions as the total of 
 incomes not exceeding ^160 a year figures 
 which may indeed be subject to some revision 
 when examined more minutely, but the sub- 
 stantial correctness of which even reformers do 
 not seriously dispute. 
 
 The main errors of the reformers, whether 
 calling themselves socialists or not the errors 
 which place their estimates out of all relation to 
 reality begin (let it be said once more) when 
 such persons, turning from what they call the 
 income of the " poor," exercise their powers of 
 analysis on what they call the income of the 
 " rich," These errors are mainly of two kinds. 
 each of which can be identified with the utmost 
 ease. The first consists, as was explained in 
 the last chapter, in identifying " the gross 
 amount reviewed for income-tax purposes, by 
 the Commissioners of Inland Revenue " with 
 the total of net incomes exceeding ^160 a year. 
 The second consists of the inclusion of profits 
 coming from abroad, and involving the wages
 
 n6 BASIS OF INCOME TAX [Book III. 
 
 of foreign productive labour only, in the total 
 which is compared with the wages of labour in 
 the United Kingdom. 
 
 With regard to the first of these proceedings, 
 we have already seen in detail how it resulted 
 in the representation by Mr. Webb and his 
 friends of the incomes subject to income-tax in 
 the year 1905 as amounting to no less than 
 ;9 2 5, 000,000; whereas the very documents 
 from which this figure was taken demonstrate 
 that the true total was, to say the most of it, 
 not in excess of ^745,000,000. If the Fabians, 
 by way of providing a new exhibition of incom- 
 petence, were to apply the same method of 
 computation to the matter as it stood in the 
 year 1910, they would give the total of incomes 
 in excess of ,160 as amounting to no less than 
 ^1,045,000,000, such having been in that year 
 the gross total " reviewed." This is precisely 
 what in his book, " Socialism and Syndicalism," 
 Mr. Philip Snowden docs. The main statistical 
 proposition with which he opens his argument 
 is that, the income of this country being about 
 ^"2,000,000,000, the rich and the comparatively 
 rich namely, the persons subject to income- 
 tax had, in the year 1910, an income of 
 ^1,045,000,000 between them. 
 
 Here we have an error so constantly and so 
 obstinately repeated repeated even in the 
 House of Commons, and there listened to 
 without any efficient protest that its true 
 character may with advantage be impressed 
 once more upon the reader. When the Income-
 
 Chap. I.] AN ILLUSTRATION 117 
 
 tax Commissioners record that such and such 
 a " gross amount " has been " reviewed " by 
 them, they simply mean that they have collected 
 a vast number of documents, each purporting 
 to represent a certain sum of money, and have 
 reviewed them, or (in plain English) gone 
 through them, with the object of picking out 
 those and those only, which stand for net private 
 incomes amounting to more than ^160 a year. 
 Their procedure in short is like that of a detec- 
 tive who, employed to look for proofs that the 
 managing director of a company has been 
 robbing the company by paying into his private 
 account cheques of a value in excess of the 
 salary due to him, finds a bundle of cheques in 
 the office of the supposed delinquent, which 
 have been returned from the bank as cashed; 
 and reviews or goes through the whole, in order 
 to ascertain which of them have been converted 
 by the manager to his own personal use. Let us 
 suppose, then, that the value of the whole collec- 
 tion reviewed turns out to be ,1,045; tnat tne 
 salary due to the manager was admittedly ,^820, 
 that cheques to that amount paid to himself are 
 identified; that the rest, to the value of ,225, 
 have been paid to a painter and a paperhanger 
 for redecorating the company's premises, and 
 that information to this effect is placed by the 
 detective in the hands of the person employing 
 him. What would be said of such a person 
 if, at a general meeting of the shareholders, he 
 declared that the manager had appropriated 
 out of the company's funds .1,045 when only
 
 ii8 "GROSS AMOUNT REVIEWED" [Book III. 
 
 ^"820 was due to him, the sole ground for the 
 charge being the fact that cheques for the larger 
 amount had been found in the manager's desk, 
 and that somebody or other had taken a look 
 at all of them? If Mr. Snowden in similar 
 circumstances were the object of a similar 
 accusation based on similar grounds, the terms 
 which he would apply to his accuser may be 
 very easily imagined. The conduct of such an 
 accuser would in no way differ from that 
 deliberately practised, in connection with the 
 income of the " rich " by Mr. Snowden himself, 
 and his brother reformers generally. 
 
 Let us now return to the " gross amount 
 reviewed " by the Income-tax Commissioners 
 in the year 1910, which was ,1,045 turned into 
 so many millions. Mr. Snowden seriously 
 declares that such was the amount " observed " 
 by them as made up of incomes exceeding ,160. 
 The Income-tax Commissioners observed 
 nothing of the kind. On the contrary they ob- 
 served and stated, by means of eight analytical 
 tables, that, out of the sum which Mr. Snowden 
 quotes / ^225,ooo,ooo 1 consisted of amounts of 
 a character wholly different from that which he 
 
 i. Whilst these pages were in the press, a new Report 
 was issued by the Commissioners of Inland Revenue, in 
 which an item of information is for the first time given, 
 showing that for the last year or two about 5,000,000 hafi 
 been included in the official deductions, which is really a 
 new group of abatements, in respect of children. This 
 affects the figures given in the text to the extent of about 
 one-third per cent.
 
 Chap. I.] COST OF UPKEEP 119 
 
 deliberately ascribes to them. They observed 
 that about ^"70,000,000 was only money on 
 paper, consisting of over-assessments rectified on 
 appeal or otherwise; that another ^70,000,000 
 was income going to " poor " persons and 
 cfrarities; and that a sum considerably larger 
 was not income at all, but consisted of insur- 
 ances, together with the cost of upkeep of all 
 the farms, all the buildings, all the machinery, 
 and industrial appliances of the kingdom. 
 Hence, so far as the facts of the case are shown 
 by the official reports dealing with the collec- 
 tion of income-tax, the aggregate of private 
 incomes exceeding ,160, was, in the year 1910, 
 not ^1,045,000,000, but ^820,000,000; and 
 even this sum, as shall now be shown, is 
 excessive. 
 
 We here come to a matter which persons like 
 Mr. Snowden cannot be blamed for neglecting ; 
 for definite information with regard to it only 
 became accessible towards the close of the year 
 1912. This is the cost of upkeep. It has 
 always been asserted by business men of all 
 kinds that the statutory allowances in respect 
 of this class of outgoings fall very far short of 
 the actual sums expended. In the year 1910 
 these allowances amounted to ^67,000,000. 
 The actual cost, as compared with the amount 
 " allowed " has, in the Census of Production, 
 been made for the first time the subject of 
 official enquiry. The various forms of capital 
 requiring such expenditure for their mainten- 
 ance are, in the Census of Production, deak
 
 120 INCOME OF "RICH AND POOR [Book TIT. 
 
 with one by one ; and the actual cost of upkeep, 
 including renewals, is given as exceeding the 
 allowances by at least ^100,000,000. This 
 excess must therefore be added to the official 
 deductions; and the true net total of incomes 
 subject to income-tax will have been in the year 
 1910, not ,820,000,000, as shown in the report 
 of the Commissioners, but, as presently will be 
 shown in detail, about ^"720,000,000. 
 
 The net income of the country being, then, 
 by common admission, ,2,000,000,000, or a 
 very little more, about *j 20,000,000 is the 
 share of the rich and the comparatively rich, 
 and ^1,300,000,000 is the share of the poor 
 and the comparatively poor. In other words, 
 the aggregate income of the rich, instead of 
 being, as Mr. Snowden and the Fabian oracle 
 declare, nearly as great as, or even greater than, 
 the aggregate income of the " poor," is in 
 reality not much more than half of it. 
 
 But even yet we are far from having reached 
 the true facts of the case; for if we proceed to 
 consider these two portions with a view to 
 drawing any moral from a comparison of their 
 respective magnitudes, it still remains for us to 
 take account of the farther fact, that a very 
 large fraction of the income going to the "rich" 
 consists of profits from abroad, which, so far 
 as their origin is concerned, have no connection 
 whatever with labour in this country. The 
 significance of this fact has already been 
 explained at length; but it may, in view of its 
 importance, be advantageously restated here.
 
 Chap. I.] MR. SNOWDEN'S FIGURES xai 
 
 When persons like Mr. Snowden, or Mr. 
 Webb and his friends, divide the national 
 income into two contrasted portions the one 
 subject to income-tax, and roughly described 
 by them as " profits," the other exempt from 
 income-tax, and roughly described by them as 
 " wages " they invariably summarise their 
 moral in the following familiar language :; 
 " Here are the profits of capital : there, the 
 wages of labour. How huge the one, and how 
 relatively small the other ! " Now apart from 
 any error in the actual figures given, such a 
 comparison, even in this rough form, would be 
 legitimate, were but one condition fulfilled. 
 This condition is that both figures are complete, 
 in the sense that everything which each purports 
 to include is included in it. But in computa- 
 tions such as Mr. Snowden's, and those of his 
 brother reformers generally, this condition is 
 absent. One of the figures is complete. The 
 other, even according to their own principles, 
 is not. It is one of the cardinal doctrines of 
 all such persons that no profits on capital are 
 producible without labour, or in other words, 
 without the payment of wages; for, unless they 
 received wages, the labourers could not live. 
 Such being the case, in the total described as 
 " profits " everything received by persons 
 domiciled in this country to which it is possible 
 to apply that name is included; and so far as 
 " profits " originate in England, Scotland or 
 Ireland, the wages corresponding to such profits 
 are duly included in the total described as
 
 xaa WAGES PAID. ABROAD [Book III. 
 
 " wages." But with regard to profits from 
 abroad, this is not so. Whilst they appear in, 
 and help to inflate, the total of profits stated, 
 our home statistics contain no trace whatever 
 of the wages of labour which correspond to 
 them. These, if stated anywhere, are stated in 
 the industrial statistics of the Rand, of the 
 United States, of Egypt, of the Argentine 
 Republic, and various other regions. They 
 are certainly not stated in those of the United 
 Kingdom. 
 
 Hence, to compare profits from abroad with 
 the wages of labour at home, is according to 
 the principles of the reformers themselves an 
 absurdity. If any general comparison between 
 " profits " and " wages " is to be made, either 
 the wages paid abroad must be added to the 
 home wage-bill, or the profits coming from 
 abroad must be deducted from the total subject 
 to our home income-tax. Now a certain portion 
 of the wages so paid abroad namely, those 
 corresponding to the profits from certain foreign 
 railways might be estimated with some accu- 
 racy; but we have no means of arriving at a 
 reliable computation of the whole. We cannot 
 therefore adopt the course of adding these 
 wages to the wage-bill of our own country. We 
 must do what will lead us to a practically 
 equivalent result. We must deduct these 
 profits from abroad from the total which is taxed 
 at home. Only so can we get two sums which 
 are really comparable the wages paid to 
 labour in this country, and the only profits in
 
 Ohap. I.] DEDUCTIONS 123 
 
 the production of which that labour is a factor. 
 What, then, is the sum to be thus deducted, 
 ki respect of the year 1910, from the total of 
 net incomes on which income-tax was paid by- 
 inhabitants of the United Kingdom ? Of alt 
 the elements of which the taxable total is 
 composed, these profits from abroad are the 
 element which of late years has increased most 
 rapidly. For example, since the year 1904 
 whilst the taxable total has increased by less 
 than n per cent., profits from abroad have 
 increased by more than 50 per cent., and have 
 now, according to the latest information, reached 
 the enormous sum of ,240,000,000. It will 
 however, be shown presently that of this 
 imported income about one-fourth is absorbed 
 by the costs of commercial distribution, and 
 that not more than ^180,000,000 is a direct 
 addition to those profits which are purely 
 of home origin. If, then, from a grand total 
 of *j 20,000,000 we deduct this sum which in 
 its origin is as purely foreign it would be if it 
 tumbled into the British Islands out of the 
 moon, the total of the home-produced incomes 
 in excess of ,160 will, in the year 1910, not 
 have amounted to more than ^"540,000,000. 
 If this sum be added to the income of the poorer 
 classes, we have for the year IQTO a home- 
 produced national income of 1,840 millions. 
 Of this the share of the poorer classes will have 
 been 1,300 millions, and the share of the richer 
 will have been 540 millions. Thns, wherens 
 according to Mr. Srtowden, the latter sum, or
 
 124 INCOME ANALYSED [Book III. 
 
 " profits," formed more than half of the total, 
 and the former sum, or " wages " formed a 
 fraction appreciably less, profits, so far as the 
 home-produced income is concerned, were in 
 reality considerably less than one-third, and the 
 " wages " corresponding to them w r ere very 
 nearly three-quarters. 
 
 Such are these masses of income as expressed 
 in terms of money; but money is merely the 
 measure, it is not the substance, of income. 
 As must be obvious to anyone who will give 
 himself the trouble to reflect, the substance of 
 income resolves itself into two elements, namely 
 material goods, such as food, clothes, fuel, 
 houses, and so forth, in the first place ; and 
 personal services received by one person from 
 another, in the second place, such as those 
 rendered by the teacher, the doctor, the domes- 
 tic servant, or the railway porter who handles 
 the luggage of the excursionist. Any individual 
 who kept fairly accurate accounts might find out 
 in what proportions goods and services com- 
 bined to make up income in his own individual 
 case. The question which he would have to 
 answer would be of a very simple kind : How 
 much do I spend on having things made for 
 me, and how much do I spend on having things 
 done for me? But the matter is not so simple 
 when we are dealing with the income of a 
 nation ; and so far as the income of the United 
 Kingdom is concerned, there was till very lately 
 no direct evidence to show how much of it, as 
 measured in terms of money, was made up of
 
 Chap. I.] THE IMPORTED ELEMENT 125 
 
 personal services, and how much of goods. In 
 the Census of Production such ev'ience may at 
 last be found. It is there shown that, if we 
 take the national income in its integrity, a little 
 more than twelve hundred million pounds out 
 of a total of over 2,000 million is accounted for 
 by the value of goods at the time of their 
 passing into the hands of the commercial dis- 
 tributors; and that the complicated process of 
 distribution, by which alone they are rendered 
 accessible to the final users or consumers, 
 increases their value by about 33 per cent. 
 that is to say, by about 400 million pounds. 
 Thus something over 1,600 million pounds, or 
 about four-fifths of the total income of the 
 nation, is represented by goods as invested with 
 their final value, or their value at the time when 
 the use or enjoyment of them begins; and the 
 remaining 400 millions is represented by ser- 
 vices. 
 
 If, however, we confine our attention, as we 
 are now doing, to that part of the national 
 income which is produced in the United King- 
 dom, and in the production of which home 
 labour co-operates, and thus eliminate the part 
 which comes to us ready-made from abroad, 
 not only will the total be reduced, but the above 
 proportions will be altered. The imported 
 element consists, and can only consist, of 
 material goods of one kind or another; and it 
 is from the goods-income, as above stated, that 
 the required deduction must be made. The 
 home-produced goods-income, apart from the
 
 xa6 HOME AND IMPORTED INCOME [Book III. 
 
 value added by the process of commercial 
 distribution, is shown by the Census of Pro- 
 duction to be not more than ^9 7 0,000,000. 
 Accordingly, if the income of the United 
 Kingdom be taken as the income produced 
 within our own insular borders, the primary 
 value of the material goods comprised in it will 
 be as 970 out of a total of 1,840, instead of a 
 total of 1,200 out of a total of 2,020, or 57 
 instead of 65 per cent. ; whilst the income 
 represented by distribution and personal ser- 
 vices may, for the purposes of the present 
 argument, be assumed to remain the same. 
 
 Provisionally, then (for the figures require 
 some slight qualification) what we have seen 
 thus far may be briefly summed up thus. The 
 home-produced income of the United Kingdom 
 amounts to-day to about ^"1,840.000,000. 
 About three-fifths of this consists of goods as 
 lying at the places of production; about one- 
 fifth is the value added to them by the process 
 of bringing them to the consumers; about one- 
 fifth consists of personal services; and the total 
 thus composed is divided into two portions 
 the one, amounting to ,1,300,000,000, and 
 consisting of incomes not exceeding ^160 a 
 year; the other consisting of incomes above that 
 limit, and amounting in the aggregate to 
 ;5 40,000,000 
 
 We may now proceed to the question on 
 which, for practical purposes, the whole signi- 
 ficance of the above facts depends that is to 
 say, the number and character of the persons
 
 Uiap. l.j " LEISURED CLASSES" 137 
 
 amongst whom respectively these two portions 
 are divided. 
 
 Of the total population of the United King- 
 dom, which is approximately 45,000,000, about 
 26,000,000 are persons of working age, or be- 
 tween the ages of fifteen years and seventy. Of 
 these 26,000,000 persons about 20,000,000 are 
 " workers for gain," or producers of income 
 in one way or another. Of the remaining 
 6,000,000, it is possible that as many as 100,000 
 may be men described as " living on their own 
 means " men who, whether usefully active or 
 idle, do not depend for their incomes on pro- 
 ductive efforts of their own; and to these men 
 whom, according to our point of view, we may 
 identify as the " leisured," or denounce as the 
 " idle " classes, we may for argument's sake, 
 add an equal number of women. The rest of 
 the 6,000,000 persons who, although they are 
 of working age, are technically described in the 
 census returns as " unoccupied," are women, 
 mostly married, who as members of working 
 families, pass their lives in performing the 
 duties of unpaid servants in bearing and rear- 
 ing children, darning their husband's socks, 
 cooking the household dinner, and scrubbing 
 the household floor. 
 
 Of the 20,000,000 workers, about 14,000,000 
 are males, including men and youths, and 
 6,000,000 are females, including women and 
 girls. About 12,000,000 are engaged in the 
 production of material snoods ; about 4,000,000 
 in selling them to the final buyers; and about
 
 128 PAYERS OF INCOME TAX [Book III. 
 
 4,000,000 in rendering personal services other 
 than the unpaid services of the women already 
 mentioned. 
 
 Thus the number of separate incomes directly 
 earned, or directly produced, by work, being 
 approximately 20,000,000, and the assumed 
 number of the " idlers " being as much as 
 200,000, the number of separate incomes 
 received as resulting from work or otherwise, 
 may be taken as 20,000,000, with 200,000 
 added. 
 
 Here, then, is the final question to which this 
 preliminary survey has been leading us. The 
 home-produced national income being divisible 
 into two sums the one amounting to 1,300 
 million pounds made up of incomes below a 
 certain limit, and the other, amounting to 540, 
 millions, and consisting of incomes above it 
 amongst how many persons respectively out of 
 20,200,000 are the former sum and the latter 
 sum apportioned? This question will be most 
 readily answered by beginning with a considera- 
 tion of the latter namely the ^540,000,000 
 which is made up of incomes exceeding ,160 
 a year. 
 
 The number of persons whose incomes 
 exceed ^160 a year, and who are thus subject 
 to income-tax has by certain statisticians been, 
 for the last six years, carelessly estimated at 
 1,100,000. This figure, however, as will be 
 shown by detailed evidence presently, falls far 
 short of the truth, the number of persons subject 
 to income-tax to-day being definitely indicated
 
 Chap. I.] AVERAGE INCOMES 129 
 
 as something like 1,400,000, who may, together 
 with their families, be taken as representing a 
 population of about 7,000,000 individuals. 
 Hence, if the total number of incomes be 
 20,200,000, and the number of those exceeding 
 ;i6o a year be deducted, the number of per- 
 sons whose incomes do not exceed that sum 
 will be about 18,800,000; and 38,000,000 will 
 be the number of the total population repre- 
 sented by them. 
 
 With these figures before us, we are able to 
 state intelligibly what the distribution of the 
 home-produced income of the United Kingdom 
 is, as between those two groups which the social 
 reformers distinguish as the richer and the 
 poorer classes. If the two portions of that 
 income which are here in question be divided 
 respectively, first by the number of the direct 
 recipients, and then by the number of the 
 recipients with that of their families added to 
 it, the average income per head will in each 
 case be as follows. 
 
 Of the direct recipients of incomes, in the 
 case of the poorer classes, the average income 
 per head will be ^69. In the case of the richer 
 (additions from abroad being excluded) the 
 corresponding average will be ,400. 
 
 Of the total population represented by the 
 direct recipients, the average income per head 
 in the case of the poorer classes will be ,34. 
 In the case of the richer classes, it will be ^80. 
 
 In other words, if the aggregate income of 
 the poorer classes were divided in equal shares
 
 130 MR. KEIR HARDIE [Book ffl. 
 
 amongst all its direct recipients, and if the 
 aggregate income of the richer classes (in so 
 far as it is of home origin) were divided in the 
 same way, we should have on the one hand 
 nearly 19,000,000 persons each in the financial 
 position at present occupied by a moderately 
 skilled mechanic; and on the other hand we 
 should have nearly one and a half million (all 
 of those now denounced by persons like Mr. 
 Keir Hardie as exorbitantly rich, being included) 
 each of whom financially would occupy the 
 precise position now occupied by Mr. Keir 
 Hardie himself and other members of his party, 
 who, having ceased to perform labour, receive 
 what they regard as a moderate salary for 
 representing it. 
 
 Such statements, however, though provi- 
 sionally they have their uses, give a very imper- 
 fect picture of the graduated actualities of the 
 situation ; and before we moralise farther on the 
 facts as thus far stated, these shall now be 
 reconsidered in detail. We will begin with the 
 aggregate of incomes not subject to income-tax, 
 and the direct recipients (their number being 
 18,800,000) amongst whom that aggregate of 
 1,300 million pounds 1 is divided. 
 
 i. This includes income of Charities (about 12 millions), 
 as shown in income-tax deductions ; hut does not include 
 profits of co-operative societies (estimated at about it 
 millions) which are not reviewed by the Commissioner*.
 
 CHAPTER II. 
 
 THE 18,800,000 "producers" or "workers for 
 gain," none of whose incomes exceed ^160 a 
 year, and who for rhetorical purposes are con- 
 tinually called " the poor," are for similar 
 purposes also continually spoken of as " the 
 employed," the " labourers " or the " wage- 
 earners." 
 
 To the majority of them no doubt these latter 
 terms are applicable, but not by any means to 
 the whole. The millions of persons in question 
 comprise three groups at all events which, with 
 equal frequency and with much greater accuracy 
 of suggestion, are roughly distinguished by the 
 name of the "Lower Middle Classes." Neither 
 the number, composition, or the incomes of 
 these last have been dealt with by the Board of 
 Trade in any of their enquiries into earnings 
 and hours of labour. They have, however, 
 been made the subject of a systematic investi- 
 gation by a committee of distinguished econo- 
 mists (including Professor Cannan and Mr. A. 
 Bowley), to whom semi-official assistance of an 
 exceptional kind was given; and a very 
 elaborate report, embodying the results of their 
 work, was presented to the British Association 
 in the year 1910 on the occasion of its meeting 
 at Sheffield. 
 
 According to this report, the Lower Middle 
 Classes, not subject to ;r !come-tax, comprise (in 
 
 131
 
 132 LOWER MIDDLE CLASSES JBook III. 
 
 addition to a variety of workers who would 
 commonly be included in the labour-class) the 
 three following groups, which account between 
 them for 2,300,000 persons, and an aggregate 
 income of ^250,000,000. 
 
 (1) Heads of small businesses, mostly 
 shops. Number, 640,000; aggregate earnings, 
 ^"66,000,000; average earnings per head, ^103. 
 
 (2) Farmers not subject to income-tax. Num- 
 ber, 360,000;* aggregate earnings. ^34,000,000; 
 average earnings per head, ^95. 
 
 (3) Persons engaged in professional or quasi- 
 professional work e.g., government officials, 
 business clerks and agents, and officers in the 
 army, navy and mercantile marine. Number, 
 1,300,000; aggregate earnings, ^120,000,000; 
 average earnings per head, ^92. 
 
 To the earnings of these groups must be 
 added about /i ^3O,ooo,ooo 2 from investments, 
 thus bringing up the total income to the amount 
 that has just been stated. 
 
 The remaining persons (including about 10 
 per cent, of independent workers) and the 
 remaining income, will correspond to what is 
 commonly understood by the labouring classes 
 and their wages. The number of these persons 
 will be about 16,500,000, and their aggregate 
 
 1. This number is reached by a collation of the figures 
 given in the Report here referred to, with those given in 
 the Census of Agricultural production. 
 
 2. See Income Tax Returns for 1910, under the heading 
 of small incomes, "reviewed" and then "exempted."
 
 Chap. II.] WAGE-EARNERS 33 
 
 income about ,1,050,000,000, of which 
 ^20,000,000 is, however, interest on invest- 
 ments. The earned income or the wage-income 
 of these 16,500,000 persons will be accordingly 
 ,1,030,000,000, which means a general average 
 per head of 62 a year, or 235. nd. a week. 
 
 But though such would be the income of each 
 wage-earner if wages were divided equally, 
 they are not so divided ; and for this there is a 
 very obvious reason that, in certain respects at 
 all events the wage-earners are themselves 
 unequal. Some of them are boys and girls 
 under eighteen years of age, and whilst most 
 of the adults are men, a large number are 
 women. The non-adults naturally earn less 
 than the adults. The women on the whole earn 
 less than the men. These facts are notorious, 
 and recent information enables us to state them 
 in specific form. If we take the average of 
 weekly earnings per head in each of these 
 groups separately, they will be los. for girls, 
 135. 6d. for boys, and I2S. 6d. for non-adults 
 as a whole. They will be i8s. for women, and 
 305. for men. Farther, out of a total working 
 body of sixteen and a half millions, the non- 
 adults account for about one-sixth, or 2,700,000 
 persons, and the adults for about 13,800,000, 
 of whom 4,300,000 are women, and 9,500,000 
 are men. Thus, whilst the average of annual 
 earnings for all these workers together is 62 
 a year, this resolves itself into ,33 for about 
 one-sixth of the number namely the non- 
 adults; ,47 for about one-fourth namely the
 
 134 WAGE-EARNERS [Book III. 
 
 women; and ^77 for about two-thirds namely 
 the men. 
 
 Such approximately are the broad results 
 disclosed by an examination of the latest Board 
 of Trade enquiries into wages, of the census of 
 the population in so far as it relates to employ- 
 .ments, and of the more detailed figures given 
 in the Census of Production as to the number 
 of men, women, boys and girls engaged in each 
 of the industries with which that work deals. 
 
 But even this analysis is insufficient for our 
 present purpose. Let the averages for non- 
 adults and for grown-up men and women be 
 respectively what they may, it is constantly 
 urged by reformers, when such averages are 
 quoted, that in each of these cases a certain 
 number of persons will be earning more than 
 the average, and others at the bottom of the 
 scale will be earning very much less. Thus 
 two women may be earning an average of 
 ^47 a year each, or ^94 between them; but 
 the one may be a skilled milliner who earns 
 ,70, and the other a common sempstress who 
 earns only ^24. Two men may be earning 
 6os. a week between them, and it is true to say 
 that on an average each of them is earning 305. ; 
 but in reality the one may be an engineer whose 
 share is 455., and the share of the other, who is 
 a stone-breaker, may be no more than 155. 
 Thus general averages as to wages may suggest 
 a diffused prosperity, and at the same time may 
 cover, although in a sense correct, a vast 
 diffusion of poverty and even of extreme want.
 
 Cbap. II.J " HALF-TIMERS " Hf 
 
 And this argument, although the results of its 
 application are by most reformers exaggerated 
 to an extreme degree, is true. If we wish to 
 discover from an examination of current wage- 
 rates what the practical distribution of income 
 amongst the wage-earning classes is, we must 
 take some dividing limit above and below 
 which adequate wages and inadequate are 
 respectively admitted to begin. Such a limit 
 is, for purposes of general controversy, now 
 taken by most reformers as 255. a week a limit 
 which is apparently quoted with reference to 
 adults only, and more especially to adult males. 
 We will, therefore, adopt it in this sense here, 
 and proceed to consider how many men and 
 women earn more and less than the critical sum 
 in question. 
 
 Let it first, then, be noted with regard to the 
 non-adults (of whom a few are " half-timers " 
 earning 55. a week, whilst an appreciable 
 minority earn from 155. up to i8s.), that the 
 average for the whole being 125. 6d., the annual 
 earnings of the whole will be approximately 
 ^"90,000,000, whilst their number, as has been 
 said already, is 2,700,000. Thus the aggregate 
 annual earnings of the adults will be 
 ^"940,000,000, of whom 4,300,000 are women, 
 and the remainder, 9,500,000, are men. 
 
 Let us first take the earnings of the women. 
 It was observed in an earlier chapter with 
 reference to incomes at the beginning of the 
 nineteenth century that not many women even 
 to-day earn more than 225. a week. The
 
 136 MALE WAGE-EARNERS [Book III. 
 
 number of those earning more than 255. is 
 naturally smaller still. It is, however, not 
 inappreciable. It appears that the mass of the 
 women workers earn from 145. a week up to 
 175. 6d. ; that at the bottom of the scale there is a 
 residuum or " submerged tenth/' barely earning 
 half that sum; and that at the top, there is a 
 sixth, whose earnings range from 2 is. up to as 
 much as 305., but who, if taken together as one 
 superior class, will not on an average earn more 
 than 275. or 26s. The aggregate earnings of 
 the women are about ^200,000,000. 
 
 Let us now turn to the men to the army of 
 adult male bread-winners who in respect not 
 only of their numbers, but also of their position 
 and the amount of their earnings, are the main 
 determining factor in the welfare of the wage- 
 paid population. 
 
 The total number of these males is, as has 
 been said already, about 9,500,000.* The 
 
 i. These figures are dealt with in detail, and presented 
 in a series of Tables in "Statistical Monographs," 19, 21, 
 3> 35- The trades or industries dealt with comprising 
 agriculture, maintenance of rural roads, maintenance of 
 urban roads, linen and jute trades, silk, cotton, wool, 
 hosiery, millinery, boots, and all clothing trades, as well 
 as all textiles; pig iron, iron and steel, engineering, ship- 
 building, tin plate, light castings, railway wagons, electric 
 lighting, gas, tramways, and water. See Board of Trade 
 Yellow Books on agriculture, clothing trades, textile 
 trades, metal trades, and public utility services. The 
 recent Analytical Tables of Earnings which have been used 
 are those relating to persons working for normal hours, 
 i.e., not those working overtime, or only for a portion of 
 the normal working day.
 
 Chap. II.J WAGE-EARNERS 137 
 
 average earnings per head are, it has been said 
 also, about 305. a week (in strictness a little 
 less), or in other words about yj a year; and 
 the aggregate earnings of the whole amount in 
 round figures to ^740,000,000. 
 
 Such being the case, it appears from a minute 
 examination of the evidences that the number 
 earning more than 255. a week is about 
 6,500,000, that their weekly average per head is 
 335. 6d., that their annual average is ^88, and 
 that the aggregate of such earnings for the year 
 is a trifle in excess of ^570,000,000. Of the 
 3,000,000 adult males remaining, it appears 
 that the aggregate earnings for the year are 
 nearly 170,000,000^ and that their weekly 
 average per head is 2 is., and their annual 
 average about ^54. 
 
 Now in the numerical proportion borne by 
 the richer of these two groups to the poorer 
 there is nothing perhaps very different from 
 what the majority of persons might expect; but 
 the average rate of earnings in the one case 
 differs so greatly from the average rate in the 
 other, that it is desirable to illustrate the matter 
 by a few particular instances. 
 
 Let us begin with two of the cases in which 
 the average rate of earnings for all adult males 
 is at its lowest, namely, the maintenance of 
 rural roads and the jute trade. 
 
 For those employed in the maintenance of 
 rural roads, the general average is i8s. a week; 
 but for the small minority who earn more than 
 
 i. This will include a fraction from invested capital.
 
 138 METAL TRADES [Book III. 
 
 255. the average rate is 315.; and for the 
 majority who earn less it is 175. 
 
 In the jute trade the general average is 2 is.; 
 but the average for the richer minority is 315., 
 as in the case of rural roads ; but for the poorer 
 majority it is 203. 
 
 In the cotton trade the general average is 
 28s. 6d. ; but for the richer group, which in this 
 case forms 60 per cent, of the whole, the average 
 is nearly 335. ; for the poorer minority it is, as 
 in the case of the jute trade, 2os. 
 
 In the great metal trades tin-plate, iron and 
 steel, ship-building, pig iron and engineering 
 the general averages are 415., 365., 335., 325., 
 and 3 is. respectively; but for the large 
 majorities earning more than 255. a week and 
 in these trades they constitute about 80 per 
 cent, of the whole the respective averages are 
 475., 495., 375., 395. and 355.; whilst for the 
 poorer minorities the averages range from 2 is. 
 to 22s., being not much higher than the average 
 in the case of cotton. 
 
 Indeed throughout the whole field of wage- 
 paid industry (with the exception of agricultural 
 and casual urban labour) the same fact presents 
 itself. The adult males earning less than 255. 
 a week earn approximately the same in one case 
 as they do in another, and the great variations 
 manifested by the averages for adult males as 
 a whole are due to the groups whose earnings 
 exceed that limit partly because of the amounts 
 which their members earn per head, but mainly 
 because of the number, in ca<"h casr. of this
 
 LAap. II.J WAGES IN ALL INDUSTRIES 139 
 
 higher rank of workers as compared with the 
 number of the lower. The principal trades in 
 which the proportion of the former to the latter 
 is greatest are coal-mining, all industries con- 
 nected with iron and steel and other metals, the 
 building industries (wood-work, plumbing and 
 decoration included), and the public utility 
 services such as gas, electric lighting, and tram- 
 ways ; to which, strange as it may seem, must be 
 added all the clothing trades. Of the adult 
 males working in these latter industries the 
 proportion earning more than 255. a week ranges 
 from 76 to 86 per cent. 1 
 
 If, however, all the industries of the country 
 are taken together, such proportions are reduced, 
 mainly by the agricultural, casual and certain 
 textile workers, to about 68 per cent. ; or, in 
 other words, as has been said already, out of 
 nine and a half million adult male wage-earners, 
 about six and a half millions earn more than 
 255. a week, and the number of those who earn 
 kss is about 3,000,000. 
 
 Let us now take all the workers together, 
 and consider what in a general way, the facts 
 just stated mean. The number of such per- 
 sons, if non-adults be included, is about 
 16,500,000; and if all these persons are treated 
 
 i. The percentage of males in the millinery trade earn- 
 ing more than 403. a week is higher than in any other, 
 being 69 per cent. In the lace trade it is 54. The percent- 
 ages of those earning more than 353. a week in the 
 tnillinery trade, the lace trade, and the hat trade are 72, 
 ^, and 50. The percentages earning more than 353. a 
 week are 85, 84, and 83.
 
 140 FAMILIES [Book ill. 
 
 as separate units, and everybody is called poor 
 who earns less than 255. a week, reformers may 
 say with truth that, despite all alleged progress, 
 more than half of the wage-earners remain 
 below the poverty limit to-day. 
 
 But as purporting to represent the concrete 
 facts of life, such a statement would be true 
 on one supposition only the supposition that 
 every wage-earner was an absolutely isolated 
 animal, sleeping, cooking its meals, and eating 
 its meals in solitude. Such, however, is not 
 the case. The wage-earners, like the majority 
 of human beings of all ranks live not alone, 
 but in families. Let us endeavour to see, with 
 some approach to precision, how this fact affects 
 the wage-earners of the United Kingdom. The 
 average family is, by most statisticians, taken 
 as five persons; and the correctness of this 
 estimate would appear to be borne out by the 
 circumstance that to-day in the United Kingdom 
 there are 9,000,000 occupied houses or tene- 
 ments, which, if we allow five occupants to each 
 will give us a total of 45,000,000 persons a 
 number almost exactly equal to that of the 
 present population. Account must be taken, 
 however, of a certain disturbing factor, namely 
 the existence of domestic servants. These, to 
 the number of some two and a half million, 
 inhabit the houses of their employers, and are 
 thus abstracted from their own family groups. 
 If then we assume, as we reasonably may, that 
 their employers are the 1,400,000 persons 
 subject to income-tax, each of them represent-
 
 Chap. II.] WAGE-EARNERS 141 
 
 ing on an average a natural iamily of five, and 
 each family occupying a separate house, the 
 addition to their households of this number of 
 servants will raise the number of occupants per 
 house in this special group from the natural 
 average of five to an average of approximately 
 seven; and the population contained in them 
 will be about 1 0,000,000. F arther, if with regard 
 to the families of the lower middle classes, we 
 assume that these are neither augmented by the 
 presence of servants, nor reduced by supplying 
 them, but conform to the natural average of 
 five persons to a family, these may be taken as 
 representing a total population of 5,000,000, 
 and as occupying 1,000,000 separate houses or 
 tenements. 
 
 Here then are 2,400,000 houses, and a popu- 
 lation of 15,000,000 persons, which being 
 eliminated, leave us with 6,600,000 houses on 
 the one hand, and a population of 30,000,000 
 persons on the other, by whom the houses are 
 occupied at the average rate of 4^ persons 
 to a house. These 30,000,000 persons will 
 consist of the remaining wage-earners and their 
 families. The actual wage-earners (non-adults 
 included), after the deduction of two and a 
 half million servants, will number 14,000,000; 
 and if with regard to the servants we make 
 these three assumptions that the males are 
 taken from the men earning more than 255. 
 a week, that three-fourths of the females are 
 women, and one-fourth girls the composi- 
 tion of this body of 14,000,000 wage-earners
 
 14* WAGE-EARNERS' HOUSEHOLDS [Book III. 
 
 will, in respect of their earnings, be as follows. 
 There will be 6,000,000 men earning more 
 than 255. a week; there will be 3,000,000 men 
 earning less; there will be 3,200,000 women and 
 1,800,000 non-adults, all of them earning less 
 than 255. a week likewise; and if we suppose 
 the whole body to have been called out for 
 inspection from their 6,600,000 houses, the 
 members of the richer group wearing white 
 clothes, and those of the poorer black, the num- 
 ber of the whites would be six, and the number 
 of the blacks would be eight, million; and the 
 ordinary agitating reformer, having such a 
 spectacle before him would at once say that 
 here was an answer to the question of how 
 wealth is really distributed amongst the wage- 
 earning classes of to-day. 
 
 This is really no answer at all ; for a spectacle 
 such as that which we have imagined would not 
 present to us even the rudiments of the real 
 question. The primary fact to be borne in 
 mind is this that these millions of wage- 
 earners all of them live in houses, that if they 
 did not live in houses they would die, and that 
 the number of houses in which as a fact they 
 do live is nearly one-half of the number of the 
 labourers themselves. This means that, on an 
 average, the wage-earners live in couples that 
 there are on an average two of them to every 
 working household; and that the character of 
 the life lived within the household walls 
 depends practically on the joint earnings of 
 both.
 
 Chap. II.] INDIVIDUAL EARNINGS 143 
 
 This is no speculative statement. It is 
 a statement the truth of which is illustrated and 
 substantially attested by the bricks and mortar 
 of the 6,600,000 houses in which the masses of 
 the wage-earning population of this country 
 pass their lives; 1 and if all the wage-earners 
 earned the same amount, the result would be 
 very simple. Every household income, on an 
 average, would be double the income earned 
 by each of its working members. Servants and 
 their wages being deducted, the masses of the 
 wage-paid workers would earn between them 
 ^930,000,000 a year, or ,66 per head ; and the 
 income of every household would be ^132. 
 
 But individual earnings, as we have seen, 
 differ. For one group the average is /88 a 
 year, for another it is ^54, for another it is ^47, 
 and for another it is ^33 ; the number of persons 
 in the groups are very unequal likewise; and 
 how they and their earnings can be combined 
 into 7,000,000 couples, one couple on an 
 average being allotted to every household, is 
 a problem of which no solution is even arith- 
 metically possible which will coincide with the 
 arrangement suggested by a consideration of 
 the units separately. 
 
 The situation will, perhaps, be more easily 
 grasped by the reader if we reduce our figures, 
 
 i. Compare these figures with columns 3 to 7 in table i, 
 TO!, vi, of Census of England and Wales, 1911, dealing 
 with "Buildings of various kinds." The figures given in 
 the text are the approximate figures for the United 
 Kingdom.
 
 144 A STATISTICAL PUZZLE [Book III. 
 
 in respect of persons and houses so as to 
 deal with hundreds and with tens instead of 
 millions and hundreds of thousands. Let us 
 suppose, then, that the wage-earners, other than 
 domestic servants, are 140 in number instead of 
 14,000,000, and that the houses or separate 
 tenements which we know them as a fact to 
 be domiciled are, not nearly 7,000,000 in num- 
 ber, but 7O. 1 Now matters being represented 
 on this reduced scale, the 140 wage-earners 
 will, in accordance with what we have seen 
 already, be made up of 60 men who on an 
 average earn ^"88 a year, of 30 men who earn 
 ^54, of 32 women who earn ,47, and of 18 non- 
 adults who earn ^33 ; and we may suppose that 
 these persons are 140 little dolls, which represent 
 so many different incomes, and with which we 
 have to play a puzzle-game, the object being to 
 fit these dolls in couples into 70 little toy houses, 
 in such a manner as to produce some prescribed 
 result. 
 
 If the puzzle were set by an optimist, the 
 prescribed result would be so to arrange these 
 couples that the joint incomes represented by 
 them should as nearly as possible be equal. 
 If the puzzle were set by a pessimist by Mr. 
 Snowden or any other reformer, who desires to 
 paint the present in the darkest hues which the 
 colour-box of imaginable possibilities affords 
 
 i. The correct number would of course be 66; but by 
 slightly raising this, the process of calculation is simpli- 
 fied, and the general character of the results not substan- 
 tially altered.
 
 Chap. II.] PROBABLE RESULT 145 
 
 the proposed result would be so to arrange the 
 dolls as to couple all those representing the 
 smallest incomes together, and thus fill with 
 poverty the largest number of houses. 
 
 Such is the game (if the word may be used 
 inoffensively) which the reformers play them- 
 selves. Let us consider the utmost lengths to 
 which in the present case it can carry us. The 
 darkest result would be reached by beginning 
 with the non-adults 18 in number, and assign- 
 ing them in nine couples as the sole bread- 
 winners to nine out of the 70 houses; then to 
 treat the 32 women likewise, assigning them, 
 in 1 6 couples, as the sole bread-winners to 16 
 houses; and then to take the 30 men earning 
 less than 255. a week, and assign, them in 15 
 couples, as the sole bread-winners to 15 houses 
 more. In this way we shaii get 40 households, 
 of which, if we take them together, the average 
 income will be ^88 per household ; and the only 
 persons left will be 60 men earning more than 
 255. a week, their annual average being ,88 
 per head. These similarly we must combine 
 into 30 couples, and assign them as sole bread- 
 winners to the 30 houses remaining. 
 
 Here is a result which is at all events arith- 
 metically possible; and if it were translated 
 into the language current on radical or socialist 
 platforms, it would have a very familiar and at 
 the same time a striking sound. " Even if 
 some of the working-classes," we may imagine 
 Mr. Snowden saying, " are moderately well-to- 
 do, these are but a favoured minority. Only
 
 MO WAGE-EARNERS [Book III. 
 
 40 per cent, of our working-class families to-day 
 are supported on household incomes exceeding 
 100 a year; whilst 60 per cent, live on incomes 
 which are not only below that limit, but which 
 are, if measured by averages, not more than 
 one-half of the incomes that rise above it." 
 
 But the distribution of wage-earners which 
 would justify such a statement, although 
 possible as a matter of arithmetic, is absolutely 
 inconsistent with what we know as to concrete 
 facts. We know, without consulting statistical 
 records that all the non-adult workers those 
 whose earnings are lowest are not in reality 
 grouped together in couples so as to form the 
 sole bread-winners of any one class of house- 
 holds. We know also the same thing as to 
 women; and definite statistics confirm what 
 common sense and observation tell us. In 
 Part I of the Report on the Census of 1851, a 
 most interesting section is devoted to the treat- 
 ment of this very question. It is there show* 
 from an examination of a large number of 
 representative families th** there is one adult 
 male at least in each of every six families out 
 of seven; and this fact alone would compel us 
 to reconstruct the scheme of distribution which 
 has been mentioned as not arithmetically impos- 
 sible. Instead of crowding the whole of our 
 90 adult males into 45 houses at the rate of 
 two per household (thirty of these households 
 belonging to a conspicuously favoured minority) 
 we shall have to distribute 60 of them amongst 
 60 houses at the rate of one per household; and
 
 Chap. II.] AND HOUSEHOLDS 147 
 
 the women and the non-adults, however they 
 may be distributed actually, must at all events 
 be distributed somehow, and not left together 
 at the bottom of the scale like a sediment. 
 There are various ways in which, without 
 violating these conditions, our 140 wage-earners 
 might conceivably be combined into couples, 
 and got into our 70 houses. The reader may 
 find it amusing to work them out for himself. 
 It is enough here to say that if ^100 a year be 
 taken as a standard household income there is 
 no credible arrangement of the 70 couples in 
 question according to which the incomes of less 
 than half of them would conspicuously exceed 
 that standard, and the incomes of more than a 
 half conspicuously fall below it. Let us only 
 assign, as a beginning, one adult male per house 
 to 60 houses out of our 70, and in whatever way 
 we may dispose of the 80 wage-earners remain- 
 ing there will be 60 household incomes exceed- 
 ing 100, and not more than 10 below it. 
 Between these two groups of incomes the 
 difference will be very striking, the average in 
 the case of the former being greater by 60 or 
 perhaps by 70 per cent, than the average in the 
 case of the latter. 1 From each average in 
 i. In an interesting article on "Wages," in vol. xxxiii 
 of The Times edition of the Encyclopaedia Britannica, the 
 writer notes that wages, under modern conditions, show a 
 tendency to "cluster" round two points 325. to 353. a 
 week on the one hand, and ais. to aas. on the other. 
 These figures refer to the close of the nineteenth century, 
 and confirm those given in the text, which are based on 
 independent and later data.
 
 148 HOUSEHOLD INCOMES [Book III. 
 
 reality there will of course be individual diver- 
 gencies. Of the household incomes which 
 exceed ^100 a year, many will exceed that sum 
 by a very small amount ; others will be as much 
 as ^250 or more. Of household incomes which 
 are less than ,100, some will be as much as 
 ,90, others not more than ,50, whilst in both 
 groups there will be a minority of solitary 
 workers, of whom those earning as much as the 
 individual average will be few, and those 
 earning less will be relatively, if not absolutely, 
 numerous. Could all these facts be identified 
 and proper allowance made for them, any 
 statement which in general terms is possible, 
 would call no doubt for many important quali- 
 fications; but a general statement is sufficient 
 for our present purposes; and it may be said 
 with confidence as to the 14,000,000 wage- 
 earners who are not in domestic service, but 
 occupy independently nearly 7,000,000 houses, 
 that at least four-fifths of them belong to a 
 well-marked superior class in which the average 
 household income is about ^140, ^100 being 
 the minimum; and that one-fifth (which means 
 a population of about 6,000,000 individuals out 
 of 30,000,000) belong to a class equally well- 
 marked, in which the average household income 
 is approximately ^75 or ^80, and 100 is the 
 maximum. 
 
 Neither for these summary statements, nor 
 for the analytical figures preceding them, can 
 it be claimed that their accuracy is more than 
 approximate, or for general purposes substan-
 
 Chap. II.] THE REFORMER'S FIGURES 140 
 
 tial. In this respect they resemble the block 
 plans of buildings as shown on a map the scale 
 of which is (let us say) 24 inches to a mile. On 
 such a map the respective shapes and sizes of 
 the manor house, the farm houses, and the 
 cottages, would be shown with a precision which 
 for general or comparative purposes was suffi- 
 cient, though they would be of small use to a 
 builder in contracting for the alteration or 
 repair of any particular structure. The fore- 
 going figures and summaries possess, it may be 
 safely said, at least such an accuracy as this; 
 and widely as they differ in many respects from 
 the statements of the ordinary reformer, they 
 are, if taken as a whole, confirmed in a remark- 
 able way by figures which reformers themselves, 
 though not realising their cumulative signifi- 
 cance, are accustomed to quote as indubitable. 
 One instance of this fact will be enough. In 
 the course of a Parliamentary debate on the 
 condition of the wage-earning classes a debate 
 suggested by certain then recent strikes a 
 prominent labour-member, who was the prin- 
 cipal speaker on the occasion, having contended 
 that the condition of these classes was one of 
 increasing misery, enlarged on the additional 
 hardships entailed on them by the strikes in 
 question; and the climax of his argument was 
 an estimate of the actual total of wages which, 
 owing to these strikes, had been lost by them 
 in a few short weeks. The actual amount 
 quoted by him does not concern us here. It is 
 interesting only on account of the basis on which
 
 ISO WAGES AND HOUSEHOLDS [Book in. 
 
 it was estimated. That basis was the assump- 
 tion that for wage-earners of all grades the 
 average weekly wage-rate is 245. per head. 
 This sum is slightly in excess of the average 
 which has been given here ; but the two are, for 
 practical purposes, identical. The annual 
 earned income of the wage-paid workers as a 
 whole, computed on this basis, is ; 1,030,000,000. 
 If we add to this the earnings of the lower 
 middle classes about 2 2 0,000,000 together 
 with a farther sum of ^"50,000,000 from invest- 
 ments (which is ear-marked in the reports of 
 the Commissioners of Inland Revenue as going 
 to persons not subject to income-tax) we reach 
 the grand total of ^1,300,000,000 as the 
 aggregate income of the 18,800,000 persons, 
 none of whose incomes individually amount to 
 more than ,160 a year; and this sum, though 
 not purporting to be exact, may therefore be 
 accepted as not open to serious dispute. 
 
 Such being the case, it will be seen from the 
 details already given, that servants and their 
 wages being excluded, about 1,2 00,000,000 
 is divided amongst some 8,000,000 households, 
 each household on an average containing two 
 working members; that about 1,000,000 of these 
 are households of the lower middle classes, the 
 average household income being about ^200; 
 that about 6,000,000 are households of the 
 richer section of wage-earners, the average 
 household income being about ,145; and that 
 about 1,000,000 are households of the poorer 
 section of wage-earners, the average household
 
 Cfcap. II.] WAGES AND HOUSEHOLDS 131 
 
 income being about ^75 or So, though the 
 actual household income will vary in various 
 cases from anything under ,100 down to some- 
 thing barely sufficient for the primary needs of 
 life. 
 
 From the income of " the poorer classes " 
 as a whole, we will now turn to that of the 
 " richer " namely of those persons whose 
 incomes are in excess of ^i 60 a year, and being 
 thus subject to income-tax are directly dealt 
 with in the Reports of the Commissioners of 
 Inland Revenue.
 
 CHAPTER III 
 
 IN dealing with the income of the richer classes, 
 as in dealing with that of the poorer, the main 
 points to be considered are firstly the total that 
 is distributable, secondly the number of the 
 recipients, and thirdly the division of these last 
 into groups, according to the magnitude of the 
 incomes comprised by each. 
 
 The total amount, and the total number of 
 the recipients, have both been stated provi- 
 sionally, and in general terms, already. Each 
 of these questions shall be now reconsidered, 
 and the statements made with regard to them 
 shall be explained in detail and verified. We 
 will begin with the total of net private incomes, 
 in excess of ^160 a year, as shown by a colla- 
 tion of the income-tax returns for the year 1910 
 with certain information which has been pro- 
 vided by the Census of Production since these 
 returns were issued. 
 
 The total amount reviewed in the year 1910, 
 for the purpose of ascertaining the aggregate 
 of such private incomes, was, as we have seen, 
 ; i, 045, 000,000. We have seen also that, out 
 of this total, the amount recognised by the Com- 
 missioners as being either not income of any 
 kind, or not consisting of incomes exceeding 
 ,160 a year, was ^225,000,000. This amount 
 was made up of ^75,000.000 (or 33*3 per cent.) 
 
 152
 
 Chap. 1II.1 INCOME OF RICHER CLASSES 153 
 
 in respect of over-assessments; of ^71,000,000 
 (or 315 per cent, in respect of small incomes 
 and incomes of charities); of 12, 000,000 (or 5 
 per cent.) in respect of insurances; and of 
 ,67,000,000 (or 29-2 per cent.) in respect of 
 upkeep. These items, which are called the 
 statutory deductions, amount, as has been said 
 already, to ^225,000,000; but, in order to 
 understand more fully their nature and their 
 precise incidence, it is necessary to note that the 
 " gross amount reviewed " is classified into five 
 portions, in accordance with their respective 
 sources. 
 
 The first of these (Schedule A) comprises the 
 rent of agricultural land, of the sites of build- 
 ings, and of the buildings as such. The "gross 
 amount reviewed " was ^276,000,000. The 
 deductions were ^62,000,000 in respect of over- 
 assessments, small incomes, income of charities, 
 and insurances; and ^42,000,000 in respect of 
 upkeep. 
 
 The second portion (Schedule B) comprises 
 the profits of farmers. The gross amount 
 reviewed was ^17,000,000. The deductions 
 were ^12,000,000, almost entirely in respect 
 of small incomes. 
 
 The third portion (Schedule C) comprises 
 interest on government stock, home and foreign. 
 The gross amount reviewed was ^49,000,000. 
 The deductions, mainly in respect of small 
 incomes and charities, were ,3,600,000. 
 
 The fourth portion (Schedule D) comprises 
 all gains arising from professions and busi-
 
 t$4 TAXED INCOMES [Book III. 
 
 nesses, other than the salaries of employees. 
 The gross amount reviewed was ^557,000,000. 
 The deductions were ,46,000,000 in respect of 
 over-assessments; ^21,000,000 in respect of 
 small incomes, charities, and insurances; and 
 j2 5, 000,000 in respect of upkeep of trade 
 premises, machinery, shipping, and industrial 
 plant generally. 
 
 The fifth portion (Schedule E, and a small 
 part of D) comprises the salaries of employees 
 of private business houses, business companies 
 and the State. The gross amount reviewed was 
 ^146,000,000. The deductions, mainly in 
 respect of over-assessments and insurances, 
 were 12, 000,000. 
 
 Thus, if we take into account the statutory 
 deductions only, it would appear that the 
 aggregates of net private incomes in excess of 
 ;i6o which are comprised respectively under 
 each of the above headings were as follows : 
 (i) rents of all kinds, 172 million pounds; (2) 
 farmers' profits, 5 million; (3) interest on 
 government stock, 45 million ; (4) profits or 
 similar gains from all professions and busi- 
 nesses, 463 million; (5) salaries of employees, 
 135 million; the sum of all these items being 
 820 million. 
 
 The Census of Production, however, shows 
 as has been said already, that the statutory 
 deductions are deficient, being short by more 
 than 30 per cent, of the actual amount required. 
 The deficiency, which amounts to about
 
 Chap. III.] COvST OF UPKEEP 55 
 
 i 00,000,000, l being wholly in respect of 
 upkeep, it affects only the first of the above 
 groups of incomes, namely, that comprising the 
 rent of farms and of all buildings; and the 
 fourth, which comprises the profits of all busi- 
 nesses involving the use of machinery, ships, 
 railways, and industrial plant generally. So 
 far as the first group is concerned, the Census 
 of Production shows that the actual outgoings 
 in respect of agricultural upkeep are about 
 1 5, 000,000, or ,8,000,000 in excess of the 
 statutory allowances. Thus ^8,000,000 out of 
 the ; 1 00,000,000 is accounted for. The 
 remainder, namely, ,92,000,000, relates to the 
 upkeep of manufacturing and carrying equip- 
 ment of the Kingdom, and represents the 
 excess of the actual cost of such upkeep over 
 a statutory allowance of ^25,000,000, the true 
 total being ^117, 000,000. Let our figures, 
 as previously given, be corrected in these two 
 particulars, and our general analysis of the net 
 total subject to income-tax will be as follows: 
 
 i. As against a total in respect of all kinds of upkeep, 
 which is allowed by the Income Tax Commissioners, and 
 which amounts to above 67,000,000, the actual upkeep 
 costs, as shown in the Census of Production (see Final 
 Report, p. 36), are as follows : Agricultural upkeep, 
 15,000,000; upkeep of buildings, 35,000,000, which ia 
 the official allowance; upkeep of shipping, 8,500,000; 
 upkeep of railways, and public utility equipment, 
 38,000,000; and of manufacturing plant generally, 
 71,000,000; the total being about 167,000,000.
 
 156 KENT [Book III. 
 
 (1) Net rent of farm-lands, building-sites and 
 buildings, ^166,000,000. 
 
 (2) Farmers' profits, as before given, 
 ,5,000,000. 
 
 (3) Interest on government stock, as before 
 given, ^45,000,000. 
 
 (4) Gains from professions and businesses 
 other than agriculture, ^370,000,000. 
 
 (5) Salaries of employees, as given before, 
 j 1 34,000,000. 
 
 The total of which items is ^720,000,000. 
 
 Here we have a synopsis of net private 
 incomes in excess of ,160 a year, as analysed 
 in accordance with the methods of the Commis- 
 sioners of Inland Revenue. In two cases the 
 figures have been revised, but the general 
 arrangement is the same. Certain of the 
 figures, namely, those relating to rent, to interest 
 on government stock, and gains from profes- 
 sions and businesses, may be readily analysed 
 farther. 
 
 The sum total of rent going to persons whose 
 incomes exceed ,160 a year can be shown to 
 resolve itself into the four following portions : 
 (i) rent of farm-lands (including all landlords' 
 improvements), ^33,000,000^ (2) rent of build- 
 ing-sites, commonly called ground-rent, as dis- 
 
 i. The "gross amount reviewed" in 1910 was 52, 000,000. 
 From this (according to Census of Production) 15,000,000 
 must be deducted in respect of agricultural upkeep ; and 
 from the remaining 37,000,000 about 4,000,000 consists 
 of certain over-assessments, and rent going to owners 
 whose incomes from all sources do not exceed 160.
 
 Cnap. III.J PROFESSION AI. PROFITS 15? 
 
 tinct from the rent of buildings, ^35,000,000; 
 (3) rent of private dwellings, as distinct from 
 the rent of sites, ^62,000,000; (4) rent of 
 premises used for manufacture or trade, as 
 distinct from the rent of sites, ^34,ooo,ooo. 2 
 
 Interest on government stock can be shown 
 to resolve itself into ^15,000,000 from home 
 stock, and ^30,000,000 from foreign. 
 
 Profits from professions and businesses may 
 be divided by taking the former, in accordance 
 with a current estimate, as ^60,000,000. Thus, 
 the total, as we have seen, being about 
 ^370,000,000, the profits from business that 
 is to say production and commercial distribu- 
 tion will be about ^310,000,000. 
 
 The attention of the reader is called to these 
 sub-classifications, because they will enable us, 
 with a clearness not otherwise possible, to 
 realise what the composition of the whole 
 amount here in question is. We will, therefore, 
 for reasons which will appear presently, re- 
 arrange in the following order the portions 
 
 i. Of the "gross amount reviewed" in respect of build- 
 ings and sites (which, allowance being made for over- 
 assessments, is a little over ^200,000,000), ground rent 
 accounts for about one-fifth, or .40,000,000. Of this about 
 one-seventh goes to charities and persons whose incomes 
 do not exceed ^160. 
 
 2. Out of the "gross amount reviewed" in respect of 
 buildings alone, ^42,000,000 was in respect of factories 
 and other trade premises, and ^34,000,000 in respect of 
 upkeep. Nearly one-sixth of the total rent of private 
 houses goes to charities, and persons with incomes not 
 exceeding 160.
 
 158 PROFESSIONAL INCOMES [Book III. 
 
 which have thus been differentiated, and begin 
 by placing certain of them in a group by them- 
 selves. 
 
 Professional earnings and the salaries of 
 employees, the former estimated at ; 60,000,000, 
 the latter known to be ^134,000,000; total 
 ; 1 94,000,000. 
 
 Interest on home government stock, 
 ^15,000,000. 
 
 Ground-rents of all buildings, ^34,000,000. 
 
 Structure-rent, as distinct from ground-rent, 
 of private houses, ^63, 000,000. 
 
 These portions, yielding a total of 
 ^306,000,000, have been thus grouped together, 
 because the character of each is sufficiently 
 intelligible to everybody, and the amount in 
 each case can be in the main determined by 
 reference to information provided by the 
 Commissioners of Inland Revenue ; whilst the 
 remainder, amounting to ,414,000,000, has 
 only just become susceptible of anything like 
 complete analysis. It consists entirely of 
 profits or dividends arising from productive 
 enterprises carried on or owned by British 
 subjects, whether in this country or abroad, and 
 from the commercial enterprises, including 
 transport, by means of which the products 
 become accessible to the final buyers. It 
 includes, under these headings, the rent of 
 agricultural land, and farmers' profits, these 
 together being treated as agricultural profits : 
 and also the rent of factory buildings and other 
 business structures, these being treated as a
 
 Chap. III.] CENSUS OF PRODUCTION 159 
 
 part of industrial and commercial capital. 
 These amounts, which have been already 
 stated, are ascertainable from the income-tax 
 returns, but our information otherwise with 
 regard to business profits has till lately been 
 meagre in the extreme. The Census of Pro- 
 duction supplies us with the information which 
 before was wanting. 
 
 In order to utilise this for our present purpose, 
 let us briefly review it as a whole. 
 
 In the year 1907 the total net value 1 of all the 
 goods produced for final use or enjoyment in 
 this country was, by the time they reached the 
 final buyers, about ; 1,600,000,000. Goods of 
 home manufacture accounted for about 
 ,960,000,000, goods imported as the property 
 of British subjects from abroad for ^240,000,000; 
 total ,1,200,000,000. A sum equal to one- 
 third of this, that is to say about ^400,000,000, 
 was added to the value of the goods by those 
 processes of commercial distribution which 
 enabled the final buyers to acquire them. The 
 whole of this ,1,600,000,000, however, did not 
 go, as personal gain, to the sellers. A sum 
 equal to very nearly one-tenth of it was con- 
 sumed in the maintenance of manufacturing 
 and commercial capital : ^95,000,000 (to put 
 the matter roughly) in the maintenance of the 
 productive equipment of the United Kingdom, 
 
 i. It must always be noted that the term "net value" as 
 used in the Census of Production means the total selling 
 yalue minus the cost of raw-materials, which have to be 
 defrayed by the producers, mainly in the form of expenses, 
 out of the gross value.
 
 i6o GOODS FROM ABROAD [Book III. 
 
 and ^60,000,000 in the maintenance of the 
 commercial or distributive equipment. Thus 
 the net receipts of the manufacturing classes 
 (agriculturists included) were ,865,000,000; 
 and the net receipts of the commercial classes 
 were ^340,000,000 ; and the receipts as a whole, 
 therefore, foreign profits included, would at first 
 sight appear to be made up as follows : receipts 
 from home manufactures (including" both profits 
 and wages), ^865,000,000; receipts from com- 
 mercial businesses (wages and profits included), 
 ^340,000,000; goods from abroad (profits 
 only), ^240,000,000. 
 
 Such however, is not precisely the case. 
 The goods from abroad as soon as they 
 reach these shores must, no less than those 
 of home manufacture, become the subjects 
 of commercial distribution; the costs of which, 
 to the extent of about ^60,000,000^ will 
 ultimately be paid out of these goods them- 
 selves, as a man who distributed twenty- 
 four pounds of tea might be paid by being 
 
 i. Sir R. Giffen estimated more than fifteen years ago 
 that about ^50,000,000 of the wages of the working classes 
 of this country, employed in distribution, was in reality 
 of foreign origin. This means that if it were not for goods 
 imported from abroad, as the property of British owners 
 (and not in exchange for exports), the British workers 
 would not receive wages for handling them. It is possible 
 that the amount earned, whether in the form of profits or 
 wages, by the handling of such goods, may be somewhat 
 underestimated in the text, in which case what we may 
 call pure profits from abroad would be less than 
 180,000,000, and perhaps not be more than ^160,000,000.
 
 Chap. III.] PROFITS AND DIVIDENDS 161 
 
 allowed to keep half a dozen for his own 
 consumption. This ^60,000,000 therefore, 
 though in a certain sense imported, may more 
 properly be regarded as the earnings of the 
 commercial classes at home; and pure profits 
 from abroad, as the phrase would be commonly 
 understood, will not have been more than 
 ; 1 80,000,000. The total profits and dividends, 
 therefore, of the United Kingdom, which arise 
 from the production and distribution of goods, 
 amounting in all to about ^414,000,000, are in 
 reality made up as follows : 
 
 Profits (subject to income-tax) derived from 
 home manufactures and agriculture, about 
 ; 1 64,000,000. 
 
 Profits (subject to income-tax) from distribu- 
 tive businesses, including those of businesses 
 dealing with goods-income of foreign origin, 
 about ,70,000,000. 
 
 Profits (i.e., goods owned by British subjects) 
 from abroad, about ^180,000,000. 
 
 We may here revert for a moment to a fact 
 which has been already mentioned, namely that 
 about one-fifth of the total income of the nation, 
 or ^400,000,000, according to the census of 
 production, represents neither goods nor the 
 distribution of goods, but services. This fact 
 requires some explanation. The word " ser- 
 vices " as thus employed includes not only 
 services of a non-material character, such as 
 those rendered by a domestic servant, or by 
 a teacher, but also the consignment by one 
 party to another, not of the possession of goods.
 
 i6a PROFITS AND WAGES [Book III. 
 
 but the temporary use of certain of them, such 
 as a dwelling-house, a building-site, a railway 
 carriage, a berth on a steamer, or the appliances 
 employed by the post-office for the transmission 
 of letters. Such being the case, the income 
 representing services will, in so far as it con- 
 sists of profits subject to income-tax, consist of 
 rent of private houses (as already given) 
 ^62,000,000; rent of building-sites (as already 
 given), ^34,000,000; professional earnings (as 
 already estimated), ^60,000,000; to which must 
 be added ^24,000,000 out of the total of 
 employees' salaries, this being the amount 
 earned by state officials, and other kindred 
 functionaries; and also (though here is a sum 
 which might no doubt be classified otherwise) 
 interest on money lent to the British Govern- 
 ment, the amount, as already stated, being about 
 ,15,000,000. These sums together make up 
 nearly ^200,000,000. The remainder, not sub- 
 ject to income-tax, will consist of the wages of 
 domestic servants and certain other workers, 
 and the earnings (whether as salaries or other- 
 wise) of officials, teachers, agents, and profes- 
 sional or quasi-professional persons belonging 
 to the lower middle class. 
 
 To some readers, no doubt, these details may 
 seem wearisome. They are, however, worthy 
 of close attention, and all of them bear directly 
 on the social controversies of to-day. The 
 various groups of taxable profits dealt with may, 
 however, according to the point of view front 
 which we happen to be regarding them, be
 
 Chap. III.] INACCURATE CLASSIFICATION 163 
 
 classified in many ways without disturbing 
 individually any details of the foregoing 
 analyses. 1 The whole oi them shall now be 
 once more taken together, and presented in the 
 way most consonant with customary habits of 
 thought. 
 
 It is customary with most persons when 
 considering the incomes of the rich and the 
 relatively rich, and especially when considering 
 them for purposes of social agitation, to divide 
 the recipients into classes which are recognised 
 as at once familiar and distinct, not by a strict 
 logic, but by common experience and by the 
 imagination. The imagination, indeed, per- 
 sonifies them as so many typical figures, of 
 which as many as nine may without difficulty, 
 be distinguished: (i) the country landlord; (2) 
 the urban ground-landlord; (3) the owner of 
 house property ; (4) the capitalist who is a direct 
 employer of labour in this country, such as the 
 manufacturer, the large farmer, and the mer- 
 chant; (5) the capitalist who, not being a direct 
 employer himself, lives on the interest of capital 
 which the direct employer uses; (6) the profes- 
 sional man; (7) the government functionary; 
 (8) the business employee, such as the manager, 
 
 i. Thus the salaries of business employees exceeding 
 ftido a year might be grouped with the profits of both 
 manufacture and distribution ; in which case the business 
 profits of the nation would not be ^234,000,000, but 
 ^334,000,000 : and if foreign profits be added, the profits 
 having material goods as their basis, would be at least 
 ^500,000,000.
 
 164 CLASSIFICATION OF INCOMES [Book III. 
 
 the cashier, or the clerk; (9) the man whose 
 fortune is derived from South Africa, from 
 Mexico, from the Argentine Republic, or from 
 any country other than the United Kingdom. 
 
 For our present purposes, however, these 
 types may be reduced to five, namely (i) the 
 owner of land of whatever kind, whether agri- 
 cultural or urban; (2) the owner of house 
 property; (3) the professional man or the 
 functionary, living on fees, stipend or salary; 
 (4) the capitalist who, whether as an active 
 business man or a shareholder, employs labour 
 in the United Kingdom with a view to business 
 profit; (5) the man who, whether as a principal 
 or shareholder, derives his income from the 
 employment of labour in other countries. 
 
 The aggregate amount, and also the amount 
 per of the taxable income of the country, 
 going to persons of each of these five types 
 respectively, will be as follows : 
 
 Amount per /,' 
 of total subject 
 to income tax 
 -Amount of Income 8. d. 
 
 Owners of land, rural 
 
 and urban ... ... 68,000,000 ... I 10 
 
 Owners of house pro- 
 perty ... ... 62,000,000 ... i 9 
 
 Professional men and 
 
 employees ... ... 194,000,000 ... 5 5 
 
 Capitalists employing 
 
 labour in this country 216,000,000 ... 6 o 
 
 Capitalists employing 
 
 labour abroad ... 180,000,000 ... 5 o 
 ^720,000,000 20 o
 
 Chap. III.] CLASSIFICATION OF INCOMES 165 
 
 It must, of course, be remembered that these 
 types are in actual life not mutually exclusive. 
 The same individual may figure in various 
 characters. An owner of land may be also an 
 owner of houses, or of shares in a manufactur- 
 ing business. A doctor, or a clergyman, or a 
 manufacturer may be also an owner of land. 
 Thus the coincidence of the several amounts 
 in question with the actual incomes of persons 
 of the types severally corresponding to them 
 will be more or less imperfect; but, as the 
 sources of the incomes received by various 
 persons are no less the subject of current con- 
 troversy than the amounts, and as many of the 
 proposals urged by the most vehement reformers 
 turn on them, the above general analysis of the 
 sources of the taxable income the net amount 
 of this being ^"720,000,000 has, as will be 
 seen presently, a most important bearing on 
 the concrete facts of the situation. 
 
 Having thus dealt with the sources of that 
 income and its amount, we will now consider 
 the number of those amongst whom it is distri- 
 buted, and also the numbers of those whose 
 individual incomes lie within different limits.
 
 CHAPTER IV. 
 
 THE number of persons whose incomes exceeded 
 .160 a year would, according to estimates 
 submitted to the Select Committee on Income- 
 tax, appear to have been in the year 1904 or 
 1905 something in excess of 1,100,000, which 
 we may take roughly as meaning 1,150,000. 
 In a previous chapter the number at the present 
 time has here been given as 1,400,000. With 
 regard to this larger figure it may, therefore, be 
 observed at starting, that even had the lower 
 one been correct at the time when it was put 
 forward, we know as a fact from the income-tax 
 returns that one group of taxpayers alone 
 that is to say the salaried employees has 
 increased since then by about 140,000; so 
 that, according to the most moderate com- 
 putations, the total to-day would be nearly 
 1,300,000. The reasons for concluding that 
 the true number is not less than 1,400,000, shall 
 now be explained in detail. 
 
 If income-tax were assessed to-day as it was 
 in the year 1801, no disagreements as to the 
 present question would be possible ; for in that 
 vear every assessed person was called on to 
 make a declaration of what his total income 
 from all sources came to. The number of such 
 persons could therefore be directly ascertained 
 and stated, and they and their incomes were, in 
 
 166
 
 Chap. IV.] SOURCES OF INCOME it>7 
 
 the Report of the Commissioners, divided into 
 more than thirty minutely graduated groups. 
 
 But the total amount subject to income-tax, 
 as we have seen in the last chapter, is primarily 
 classified to-day with a view to its sources, rather 
 than to the individual recipients. The sources 
 to re-state with certain added particulars what 
 has been said already are ownership of lands 
 and houses, professional work, businesses carried 
 on by companies, by individual persons, and by 
 private firms, and finally salaried employments. 
 With one notable exception it is in respect of 
 incomes derived from these last three sources 
 only (the net total of which is less than 
 ;3<x>,ooo,ooo), that any enumeration is given 
 of individual assessments whatsoever. The ex- 
 ception relates to incomes in excess of ^5,000. 
 To these we shall return hereafter; but their 
 number is small, and for the moment it is not 
 important. For the moment it is enough to 
 observe that, of the total amount to be accounted 
 for the individual assessments enumerated 
 relate to far less than a half. Thus whilst we 
 are, for example, told with the utmost exactitude 
 the number and the individual earnings of the 
 whole army of salaried employees, no similar 
 information is provided as to the owners of real 
 property, or the principal partners or the share- 
 holders in any business of any kind which is 
 carried on as a company. Hence with regard 
 to the larger portion of the taxable income of 
 the country it might seem that any computation 
 of the number of separate individuals receiving
 
 168 ASSESSMENTS AND INDIVIDUALS [Book III 
 
 it would be little more than guess-work. Such, 
 however, is not the case. Let us begin with 
 the enumerated assessments and see how far 
 they will carry us. 
 
 The total number of these in the year 1910 
 was 1,310,000. But even this figure cannot, 
 without farther consideration, be accepted at 
 its face-value; for one individual may be 
 assessed under more than one heading as a 
 government clerk, for example, in which case he 
 is assessed as an employee; and also as an 
 author, in which case he is assessed as a 
 " person." It is therefore obvious that the 
 number of individual assessments is greater 
 than the number of separate individuals repre- 
 sented by them. On the other hand we have 
 more than ,400,000,000 which is not accounted 
 for in the form of individual assessments at all; 
 and if we consider these two facts together, it 
 may seem at first sight that we are as far from 
 any definite conclusion as we should have been 
 had the enumeration been altogether suppressed. 
 
 But such a conclusion would be, even on the 
 face of it, incorrect. In the first place, of these 
 enumerated assessments, there are very nearly 
 800,000 namely, those relating to employees 
 and partners in private firms which really do 
 what they seem to do, and represent the same 
 number of separate individuals; and what we 
 know from the census of the population with 
 regard to the occupations of the people will 
 enable us to add roughly some 430,000 separate 
 individuals more, consisting of professional
 
 Chap. IV.J A COINCIDENCE 169 
 
 men, shop-keepers, factory-owners and large 
 farmers. A farther addition may be made of 
 some 100,000 men and a considerable number 
 of women, describable, in the language of the 
 census returns, as " living on their means " ; 
 and we thus approach a total of separate 
 incomes which is not very different from that 
 of the assessments separately enumerated. 
 
 It is true that such a coincidence, in so far 
 as it really exists, is literally a coincidence in 
 the ordinary sense of the word; for it is not a 
 result which is referable to any known and 
 calculable causes. That it is, however, a 
 reality, and is more or less constant in character, 
 is suggested by the curious fact that it, or 
 something very like it, was observed and 
 brought to the notice of Professor Leone Levi 
 by a prominent official of the income-tax depart- 
 ment about thirty years ago. It was stated by 
 this official that the separate assessments of 
 "persons" disclosed, in respect of their amounts, 
 a close similarity to that which is known by the 
 commissioners to prevail throughout the body 
 of the taxpayers generally ; and farther that the 
 total number of those subject to income-tax was 
 from year to year about three times the number 
 of the assessments enumerated in this special 
 group. In the year 1910 the number of the 
 assessments of "persons" was 436,000. Hence 
 the total number of those subject to income-tax 
 to-day would by parity of reasoning be about 
 i ,300,000 ; and though the great and dispropor- 
 tionate increase which, during the last thirty
 
 170 HOUSES AND OCCUPIERS [Book III. 
 
 years, has taken place in the class of salaried 
 employees would lead one to expect that the 
 figure thus reached would be too low, we should 
 not be reasoning without some grounds if we 
 adopted it. 
 
 Nevertheless it may be admitted that any 
 estimates thus formed would be not very precise 
 and not very convincing if we were not able at 
 once to correct and corroborate them by means 
 of evidence of a different kind altogether, to 
 which reference has been made already, namely 
 that supplied by houses. 
 
 It is commonly recognised that the annual 
 value of a house bears a fairly general ratio 
 to the income of its responsible occupier. 
 Many people are content with the rough 
 assumption (correct within certain limits) that 
 the ratio of house-rent to income on an average 
 is as i to i o. A farther assumption is general 
 of a more precise kind, that persons whose 
 incomes are not more than 160 a year are 
 unlikely to spend more than 20 a year in 
 house-rent, which, rates being added, would 
 mean an outlay of ^26, or, in some cases, of 
 30. This assumption, which is the outcome 
 of common experience, has received the sanc- 
 tion of legislation; for just as the incomes not 
 exceeding ^160 are exempt from income-tax, 
 so houses whose annual value is not in excess 
 of 20 are correspondingly exempt from house- 
 duty. The number of houses, therefore, whose 
 value exceeds the sum in question, and the 
 number of incomes exceeding 160 would,
 
 Chap. IV.] ANNUAL VALUE OF HOUSES 171 
 
 according to this assumption, be identical; and 
 the number of such houses having in the year 
 1910 been very considerably more than 
 i, 600,000, L such would be the number of the 
 persons subject to income-tax also. But this 
 argument, it is obvious, must not be pushed too 
 far. A large number of houses worth more 
 than 20 a year are notoriously inhabited by 
 two or more separate occupiers whose means 
 would not permit of their renting such premises 
 singly; and this fact is insisted on with much 
 emphasis by statisticians who, with a view to 
 accentuating their picture of the manner in 
 which wealth is concentrated, are anxious to 
 maintain that the rich, and the comparatively 
 rich do not consist even by this time of very 
 much more than 1,100,000 persons. The argu- 
 ment is correct in principle. The only question 
 is, how far it will carry us ; and this can only be 
 determined by examining facts in detail. 
 
 We may begin, then, by observing that, on 
 the admission of all parties, houses whose 
 annual value is upwards of ^"40 may be taken 
 
 i. The number of ordinary private houses worth more 
 than j2o a year was, in 1910, 1,534,000 : but to this num- 
 ber must be added about 100,000 separate flats, residential 
 suites or tenements, of an average rental value of ^40. 
 These are separately classified in the returns. The large 
 number of them are situated over shops, the residential 
 rent of which, according to expert enquiries, averages one- 
 third of the total rent. Thus only those residences are 
 here included which form part of premises whose total 
 ralue is more than j6o. See Statistical Monograph 23.
 
 172 PRIVATE DWELLINGS |Book III. 
 
 with substantial accuracy as the homes of single 
 families, and as each representing an income 
 which will not be less than 400 a year. The 
 question, therefore, of the number of houses 
 the rent of which is shared by two groups of 
 occupants or by more, is a question which 
 relates mainly to houses whose annual value is 
 from 20 a year to ^40. 
 
 In view of the information available, we can 
 deal with the question most precisely if we 
 confine our attention to England. The number 
 of private dwellings in England worth more 
 than 20 a year is 1,540,000. If the number of 
 persons subject to income-tax in the United 
 Kingdom is not more than 1,150,000, the 
 number in England alone will be approximately 
 1,000,000; and, having assigned to these the 
 same number of the most valuable houses in 
 the country, we shall be left with 540,000 
 houses worth from 20 a year to ^40, each 
 of which, according to our present hypothesis, 
 would be necessarily divided into at least two 
 tenements, and let to occupiers who were not 
 subject to income-tax, or who were not (in 
 other words) rich enough to rent the whole of 
 it. Is this possible? 
 
 In order to see whether it is, let us consider 
 what is definitely known as to the housing of 
 the population as a whole. If we deduct the 
 1,000,000 houses assignable without dispute to 
 persons subject to income-tax, the remaining 
 private dwellings in England number 6,320,000, 
 and the number of separate occupiers, or
 
 Chap. IV J LODGERS 173 
 
 occupying groups, is 6,988,000. This means 
 that there are in England 668,000 separate 
 lodgers or lodging families; and if no house- 
 holder took in more than one of these, there 
 would be 668,000 separate dwellings each of 
 which was sub-divided, and shared by two occu- 
 piers between them. It is, however, known 
 from the reports relating to overcrowded 
 tenements, that the lodging population of 
 England comprises about 560,000 occupiers, 
 who cannot share between them more than 
 130,000 separate houses or dwellings. As to 
 the 108,000 lodging occupiers who remain, 
 and who are not in the overcrowded class, even 
 if in no case there were more than one lodger 
 or lodging family to a house, the number of 
 houses receiving them could not be more than 
 108,000. It would thus appear that the number 
 of houses which are inhabited by more families 
 or separate occupiers than one, cannot exceed 
 some 240,000. In any case they cannot be as 
 many as 300,000; whereas, according to what 
 we have seen already, they could not be fewer 
 than 550,000, if only a million houses worth 
 more than 20 a year were inhabited by persons 
 who, being rich enough to occupy them singly, 
 would (by common admission) presumably 
 be subject to income-tax. In short, if we 
 consider what we know as to the housing of the 
 population as a whole, without any reference 
 to evidence of any other kind, it appears that 
 the number of persons subject to income-tax in 
 England, and so distinguished by their single
 
 174 OCCUPANCY [Book III. 
 
 and undivided occupancy of houses or dwel- 
 lings worth more than 20 a year, cannot be 
 less than 1,250,000; and that the total number 
 of such persons in the United Kingdom cannot, 
 according to similar evidence, be less than 
 1,400,000. 
 
 We will not, however, dwell longer on such 
 evidence considered by itself. A certain 
 crucial portion of it shall now be re-examined 
 more minutely, in connection with evidence of 
 an independent kind, the significance of which 
 appears thus far to have escaped the notice of 
 statisticians. The only point at issue with 
 regard to the occupancy of houses as evidence 
 that the income of the occupiers exceeds 160 
 a year, relates to houses worth between 20 a 
 year and ^40, and costing, if rates be included, 
 from 26 a year to /.So. Attention has been 
 called to the fact that a remarkable correspon- 
 dence discloses itself, however indirect may be 
 its origin, between the number of enumerated 
 assessments and the total number of persons 
 presumably subject to income-tax; and when 
 we come to collate these assessments with the 
 number of houses which appear to represent 
 such persons, the correspondence becomes more 
 remarkable still. The number of houses worth 
 more than ^40 a year, and presumably occupied 
 by persons whose incomes exceed ^400, is 
 indeed much greater than the number of similar 
 separately enumerated assessments ; but be- 
 tween the number of houses worth from 20 a 
 year to AO. and the number of assessments
 
 Chap. IV.] ASSESSMENTS 175 
 
 between ^ 160 a year and ^400, there is a 
 parallelism if not an identity of the closest 
 and most striking kind. Thus in the year 
 1910 the assessments between these limits in 
 Great Britain numbered 970.000. The number 
 of houses worth from 20 a year to ^40 
 was 1,100,000 a difference of 13 per cent. 
 This fact, if it stood alone, might have no 
 special significance; but if we look back over 
 a period of nine years we shall find that it is 
 continuous. In the year 1901 the number of 
 enumerated assessments between ;i6o and 
 400 was 767,000; the number of houses worth 
 from 20 a year to ^40 was 865,000 a differ- 
 ence of 12 per cent. The year 1902 was a year 
 of notorious over-building; and from 1903 to 
 1906 the number of houses exceeded that of 
 assessments by as much as 1 5 per cent ; but this 
 abnormal excess having exhausted itself, the 
 difference between houses and assessments 
 sank back to its former proportions; and from 
 1906 to 1910 it was once more about 12 per 
 cent. 1 
 
 i. If we express the number of assessments, and the 
 number of houses in the year 1901 by the index number 
 loo, the rate of increase for each during the years specified 
 will be as follows : 
 
 Number of Number of Number of Number of 
 
 assessments houses Meessments houses 
 
 between worth from between worth from 
 
 Yar 160 & 400 20 to 40 Year J60&400 20 to 40 
 
 1901 ... 100 ... loo 1905 ... no ... 116 
 
 1902 ... 103 ... 103 1908 ... I2O ... 124 
 
 1903 ... 106 ... no 1909 ... 122 ... 125 
 
 1904 ... 109 .. 113 1910 ... 126 ... 126
 
 176 HOUSES AMD OCCUPIERS [Book III. 
 
 A correspondence so sustained and close 
 cannot be the result of chance. The number of 
 the houses exceeds that of the assessments 
 throughout; but (one year being taken with 
 another) it exceeds it in a regular ratio, the 
 actual average excess being something like 
 120,000, exclusive of flats, and the residential 
 portions of various premises otherwise used for 
 business, the number of which is about 100,000. 
 It appears, then, all things being considered, 
 that the number of incomes between ,160 a 
 year and ^400 will account for and correspond 
 to 970,000 houses worth from 20 a year to 
 40. To these, in respect of Ireland, must be 
 added about 30,000 more, so that the total 
 number of incomes between 160 a year and 
 ^400 will be about 1,000,000. 
 
 We are thus left with 430,000 houses worth 
 more than ^40 a year, which will all be occupied, 
 on the admission of all parties alike, by persons 
 whose incomes are in excess of ^400. Now as 
 to these houses there is one thing which we know 
 directly, that amongst their occupants in the 
 year 1910 were about 11,000 persons whose 
 incomes were in excess of ,5,000, and not only 
 probability but specific evidence assures us that 
 each of such persons will be the possessors of 
 more houses than one. We may assume that they 
 will have occupied between them something like 
 30,000. There will thus remain about 400,000 
 houses worth more than ^40 a year, and about 
 390,000 persons as their occupants, whose in- 
 comes will range from ^400 a year to ^"5,000.
 
 Chap. IV.] RENTAL VALUE 177 
 
 Thus the houses will outnumber the occupants 
 by something like 10,000, and these 10,000 extra 
 houses we take to be secondary residences of 
 persons whose incomes, though short of ,5,000, 
 are at all events not less than ,1,000. In what 
 proportions, then, is the aggregate income of the 
 entire body of 390,000 persons divided ? There 
 are various data by means of which an answer 
 to this question may be reached. 
 
 One of these consists of the rental value of 
 the houses taken in groups, and the presumed 
 general ratio borne by rent to income. Another 
 consists of the known total of income with which 
 we can compare a known total of rent. The 
 aggregate of incomes exceeding ,5,000 is 
 definitely known to be about 13 5, 000,000; 
 and if the recipients of this sum occupy the 
 30,000 houses which stand first in the scale of 
 values, their house-rent will in the aggregate 
 amount to about ; 10,000,000. Of the whole 
 of the remaining houses worth more than 
 ,20 a year the aggregate rental value is 
 ,5 6,000,000 j 1 and the aggregate income of all 
 persons subject to income-tax, other than those 
 whose incomes are more than ,5,000, is about 
 ^"585, 000,000. With regard, therefore, to these 
 persons as a whole, the ratio of rent to income 
 as approximately I to 10 is established as an 
 actual fact. 
 
 i . The actual total rent of all private houses worth more 
 than 20 a year is ^68,000,000 : but ^2,000,000 is here 
 deducted in respect of houses assumed to be occupied by 
 persons not subject to income-tax.
 
 178 ABATEMENTS [Book III. 
 
 In addition to these data are the following, 
 of a quite independent kind, which relate 
 specially to incomes between ^160 a year and 
 ^400. The enumerated assessments of in- 
 dividuals, as given in the official returns, are 
 so given as to be susceptible of sixteen different 
 analyses; 1 and the result of these is to show 
 that of incomes lying between / 160 a year and 
 ^400 the general average is ^260. Thus, if 
 there are 1,000,000 persons whose incomes are 
 of this magnitude, the total income of the group 
 will be ^260,000,000. And there are two 
 other sets of data by which such a conclusion 
 is corroborated. Incomes of this class are 
 subject to certain " abatements." That is to 
 say, a part of them is relieved from income-tax; 
 and it appears from an examination of the 
 assessments of salaried employees a case with 
 regard to which a direct comparison is possible 
 that the amount " abated " is a little less than 
 a half of the total income dealt with. If this 
 fact be taken in connection with the total 
 amount abated under all schedules, it will 
 appear that the estimate of ^260,000,000 as 
 the aggregate income of the 1,000,000 persons 
 here in question, is too small rather than too 
 large. Let us take it, however, as it stands. 
 Adding this to the total of incomes in excess of 
 
 i. These are given under the headings of person, private 
 firms, employers assessed under Schedule D, and employers 
 assessed under Schedule E. Each of these groups is dealt 
 with in four Tables, relating to the United Kingdom, 
 England, Scotland, and Ireland.
 
 Chap. IV.] AGGREGATE INCOME 179 
 
 j5,ooo, we have a sum of ,395,000,000 which, 
 being deducted from ^720,000,000, leaves us 
 with ^325,000,000 as the aggregate income of 
 390,000 persons, whose incomes range pre- 
 sumably from ,400 to ,5,000, and who occupy 
 between them 400,000 houses worth from ,40 
 a year to 200. Of these houses, 336,000 are 
 worth from ^40 a year to ;ioo; and 64,000 are 
 worth from ;ioo a year to 200. It appears, 
 therefore, reasonable, in view of what we have 
 just seen, to assume that 326,000 of the former 
 will be occupied by the same number of persons, 
 having incomes exceeding ,400 but not exceed- 
 ing ,1,000; the extra 10,000 of them being 
 occupied as secondary residences by persons 
 whose means are larger; and that these last, 
 having incomes between ;i,ooo a year and 
 ,5,000, will occupy, as their principal resi- 
 dences, the 64,000 nouses worth from ;ioo a 
 year to ,200. 
 
 Now just as there is evidence to show that 
 of incomes between ,160 and ,400 the average 
 is ,260, so also is there similar evidence to 
 show that of incomes between ,400 a year and 
 ;i,ooo the average is ,630. If then, the 
 number of incomes in this group has been 
 correctly given, the aggregate income will be 
 ^205, 000,000. The aggregate of incomes 
 between ,1,000 a year and ,5,000 will be 
 1 20,000.000. l But before these suppositions 
 
 i. The enumerated assessments exceeding- .1,000 a year 
 are too few to yield a trustworthy average, the reason 
 being that a far larger proportion of them are derived from
 
 i8o HOUSE-RENT INCOME [Book III 
 
 are accepted it is necessary to test them by 
 considering how far they harmonise in detail 
 with one of the principal data on which they 
 are all founded, namely, the common working 
 assumption that house-rent bears to income an 
 average ratio of approximately i to 10. That 
 this is not an assumption merely, but a verifiable 
 fact in such cases as are here in question, we 
 have already seen by taking facts in the mass, 
 and comparing the total of incomes in excess 
 of ;i6o with the total rent of the houses which 
 the recipients of such incomes occupy. The 
 ratio of rent as a whole to income as a whole 
 was, we have seen, as i to about 10^; whilst, if 
 incomes exceeding ,5,000 with the houses 
 corresponding to them are deducted, the ratio 
 for the remainder is almost exactly i to 10. 
 The remainder of houses and incomes, however, 
 being divided into three groups, it will be 
 obvious that this precise ratio will not prevail 
 for each of them ; for a number of incomes com- 
 prised in the lowest group will be certainly not 
 far from the minimum of 160, and cannot 
 therefore by any possibility be ten times as great 
 as the minimum rent which is 21. The ratio, 
 therefore, in this group will be less than the 
 general average; and in each of two others it 
 is bound to be somewhat greater. Let us, then, 
 
 real estate, and other sources not analysed in the returns. 
 Those, however, given under the beading of " private 
 firms" yield, in the case of incomes between ^1,000 and 
 ^5,000 a year an average which approaches ^2,000.
 
 Chap. IV.] RENT AND INCOME 181 
 
 in respect of each group of houses take the 
 average rent per house as ascertainable from 
 the official returns; let us also, in respect of each 
 corresponding group of incomes, take the 
 average income per person, as deducible, in 
 accordance with the figures already given, from 
 the aggregate income of the group and the 
 number of persons comprised in it; and let us 
 consider the results. 
 
 These can best be shown by means of a short 
 table : 
 
 Range of Range of Range of Range of 
 
 income income income income 
 
 160-400 400-1000 1000-5000 over 5000 
 
 Number of persons as 
 
 estimated above ... 1,000,000 326,000 64,000 11,003 
 
 Average income ... 260 630 1,980 12,000 
 Range of rent per 
 
 house 20-40 40-100 100-200 over 200 
 
 Average rent per house 28 60 150 900 J 
 
 Ratio of rent to income 1 to 9i 1 to 10$ 1 to 12i 1 to 13$ 
 
 It will be seen that, according to this scheme, 
 the ratio of rent to income distributes itself in 
 the precise manner which antecedently will have 
 seemed most probable, the former relatively to 
 the latter being largest when the latter is small, 
 and gradually growing less and less in propor- 
 tion as the latter increases. Except in respect 
 of incomes exceeding .5,000 a year (with 
 regard to which our information is direct) it 
 cannot of course be pretended that the fore- 
 going figures have any mathematical accuracy; 
 
 i. This is the average for more houses than one. The 
 average for such houses singly would be about 330. 
 There are about 1,000 houses in the United Kingdom worth 
 more than 900 a year. 
 
 M
 
 i8a NATIONAL INCOME [Book Hi. 
 
 but so many items of evidence wholly indepen- 
 dent of one another combine to support them, 
 that they may be taken as representing correctly 
 the general facts of the situation. 1 
 
 And now the main results of the survey of 
 national income as a whole, which has formed 
 the substance of this and the three preceding 
 chapters, shall be briefly recapitulated, before 
 we go on to a detailed examination of their 
 significance. 
 
 The income of the United Kingdom being, 
 by common admission, 2,000 million pounds, 
 or a very little more, it appears that about 1,300 
 million is made up of individual incomes or 
 earnings none of which exceeds 160 a year, 
 
 i. As to the figures given in the text relating to income* 
 from 160 to ,400, and ,400 to 1,000, and their respective 
 correspondence to houses worth from 20 to 40, and from 
 40 to 100, the aggregate of incomes in each group, and 
 the aggregate house rental for each group, will naturally 
 form parallel percentages respectively of the aggregate of 
 incomes up to ,1,000, an d the aggregate of house rentals 
 up to 100. The substantial correctness of the estimates 
 given in the text will be corroborated by an examination 
 of the complete assessment (for they are not all complete) 
 of employees (Schedule E) from 160 a year up to 1,000. 
 The total is 97,000,000. The total of those up to 400 is 
 55,000,000, or about 57 per cent, of the total up to 1,000. 
 The total rent of all the private houses in Great Britain 
 from 20 to 100 is 50,000,000. The total rent of those 
 worth from 20 up to 40 is 31,000,000. In other words, 
 it is 60 per cent, of the total up to 100. The correspond- 
 ence of house rent to increase in the approximate ratio of 
 i to 10 is thus illustrated by five sets of directly ascertain- 
 able facts.
 
 Chap. IV.] DISTRIBUTION OF INCOMES x8| 
 
 the average income per recipient being just 
 short of 70 ; that about 460 millions is 
 divided amongst 1,330,000 recipients, these 
 consisting of two groups a million persons 
 with an average of ^260 a year, and less than 
 a third of a million with an average of ^630 
 a year; whilst the average for both would be 
 j33o; and that a sum of 260 millions remains, 
 which is divided amongst about 74,000 reci- 
 pients, and would, if divided equally, yield an 
 income per head of ,3,600, but which is as a 
 fact divided between two groups into more than 
 60,000 incomes averaging nearly ,2,000, 
 and about n,ooo incomes averaging ; 12,000. 
 
 It has been farther shown that, from certain 
 points of view, the significance of the distribu- 
 tion of incomes as thus generally stated, is 
 largely modified by the fact that about one-eighth 
 of the total income, and about a quarter 
 of the total subject to income-tax is imported 
 into this country from abroad, that its produc- 
 tion involves the employment of no home labour 
 whatsoever, and that it is therefore in no way 
 comparable with any wages paid in the United 
 Kingdom. 
 
 Many of these facts, if taken one by one, 
 coincide substantially with what is admitted by 
 social reformers themselves; but how widely 
 they differ, if taken as a whole, from the general 
 picture which social reformers draw, will be 
 seen from the examination of them with which 
 the following Book will be occupied.
 
 BOOK IV. 
 
 INCREASE AND DISTRIBUTION OF WEALTH 
 FROM THE YEAR 1801 UP TO THE PRESENT TIME, 
 THE ACTUAL FACTS AS COMPARED WITH 
 CURRENT MISCONCEPTIONS.
 
 CHAPTER I. 
 
 THE opening chapters of this work were devoted 
 to showing, with the aid of certain historical 
 illustrations, how social grievances, regarded 
 as the subject-matter of theories or projects of 
 reform, are made up of one or of another, or of 
 both, of two distinct elements; the one being a 
 consciousness of fact directly experienced, the 
 other being beliefs about fact which multitudes 
 come to entertain, but which are often altogether 
 fallacious. It was further shown that the 
 element of belief becomes more and more 
 important, and at the same time more liable 
 to error, in proportion as the facts involved 
 become more complex and numerous. Book 
 II was devoted to showing how, in the case of 
 our own country, belief as to social conditions 
 has actually during recent times been vitiated 
 by errors so monstrous and so profound that no 
 sane judgment as to theories or projects of 
 reform is possible for those by whom such errors 
 are accepted. Certain typical generalisations, 
 constantly repeated by reformers as essential 
 elements of their position, were examined one 
 by one ; they were contrasted with ascertainable 
 facts of an equally comprehensive character. 
 But this survey was of a general and preliminary 
 kind only. It was concerned with the exposure 
 of fallacies rather thar with the exposition of 
 
 187
 
 188 RICH AND POOR [Book IV. 
 
 truths. Accordingly in Book III a detailed 
 examination of facts as they actually are to-day 
 took the place of a mainly negative criticism; 
 and, equipped with the results of this, we are 
 now in a position to return to our former sub- 
 ject, and compare the realities of the present 
 and a more or less recent past with popular 
 delusions, in many precise ways which were not 
 at first possible. 
 
 Let us, then, begin with considering once 
 more the proposition which all modern reformers 
 take as their common starting-point, and see 
 what it means when translated into exact 
 terms. This proposition in its general form is 
 to the effect that, of the vast increase of wealth 
 which for more than a hundred years has been 
 the main characteristic of the progressive 
 countries of the world, and of our own country 
 in particular, the larger part has been appro- 
 priated by a very limited class, and that all 
 outside this class have, relatively to their 
 numbers, been actually growing not richer but 
 poorer; whence it follows that all projects of 
 reform must resolve themselves into some 
 scheme whereby the supposed accumulations 
 of the few may be broken up, and so distributed 
 as to secure individual affluence for the many. 
 Now the general idea thus expressed is, as we 
 have seen already, by no means peculiar to 
 reformers of the more extreme kind. The 
 moral imagination of Carlyle and the political 
 imagination of Disraeli were at one time pro- 
 foundly affected by it. But it was for them a
 
 Chap. I.] KARL MARX AND HENRY GEORGE 189 
 
 general idea only. It was too indefinite to be 
 tested, or to form the basis of any coherent 
 policy. It only became influential when certain 
 thinkers adopted it, who translated its implica- 
 tions into formulae more or less exact, and 
 presented these to the world, and induced 
 multitudes to accept them, as the strictly 
 scientific outcome of elaborate economic analy- 
 sis. Of these thinkers there are two who, in 
 virtue of the influence they have exercised, 
 and in some respects of their remarkable talents, 
 stand before all others. These thinkers are 
 Marx and Henry George. In point of time at 
 all events, the first of these is Marx. Let us 
 then consider what was the precise form or 
 significance with which Marx invested the 
 doctrines here in question. 
 
 The whole secret, according to him, of 
 modern wealth and poverty lies in the process 
 by which material commodities are produced. 
 Up to the close of the eighteenth century, he 
 argued, the prevalent method of production was 
 production by isolated labourers (such as the 
 hand-loom weavers), or small groups of wage- 
 earners working for small employers, a pro- 
 minent feature of which system was that the 
 labourers, to a great extent, owned the imple- 
 ments used by them, whilst even those owned by 
 the masters were comparatively few and simple. 
 But by the end of the eighteenth century a 
 change, which had been gradually maturing, 
 rapidly became general, and became so first in 
 England. Not only the tools of the individual.
 
 igo KARL MARX [Book IV. 
 
 but the simple plant of the small workshop also, 
 gave place to vast mechanisms actuated by 
 steam or water. Workshops disappeared by 
 the dozen, and were supplanted by single 
 factories. The independent craftsman, the 
 little brotherhood of employees, and the small 
 master himself (their implements or their plant 
 being superseded), alike became members of 
 larger wage-paid groups, using means of pro- 
 duction which were no longer their own pro- 
 perty. But, so Marx continued, there was no 
 finality here. Just as during the early years of 
 the nineteenth century the first generation of 
 factories, relatively large and few, swallowed 
 up the independent workers and the last 
 generation of workshops, so, shortly afterwards, 
 did the second generation of factories, fewer 
 and larger still, begin to swallow up the 
 second. This process, said Marx, had been 
 continuous since the beginning of the nineteenth 
 century, and was, at the time when he wrote 
 that is to say about sixty-five years later daily 
 becoming more rapid and general; so that all 
 the productive businesses in this country at all 
 events would soon be in the hands of a few 
 'great factory lords," who owning the means or 
 mechanisms of all effective production whatso- 
 ever could dictate to the nation the terms on 
 which the nation should be allowed to use them. 
 These terms, said Marx, are at once simple and 
 inevitable. In return for allowing the nation 
 to produce anything, " the great factory lords " 
 will demand and retain everything, except so
 
 Chap L] ADMISSIONS OF SOCIALISTS 191 
 
 much of the product, given back in the form 
 of wages, as will enable the nation tp keep body 
 and soul together, and render life by one degree 
 more tolerable than suicide. Wages, indeed, 
 though for two generations they had been 
 declining, had not yet reached their absolutely 
 irreducible minimum, nor had the rich secured 
 as yet the whole surplus wealth of the Kingdom ; 
 but, writing in the year 1865, the hour, he said, 
 was fast approaching when such a situation 
 would be realised; and then, but not till then, 
 would their great revolution come. It would 
 come then, but it would not come before, 
 because in order that multitudes may produce 
 any great result, all must be compelled to act 
 by some common and equal pressure, and this 
 pressure must be such that inaction is no longer 
 tolerable. 
 
 Here we see the meaning of those three 
 general propositions, that the rich are becoming 
 ever richer, the poor are becoming ever poorer, 
 and that the middle classes are being crushed 
 out, which for thirty years were accepted by 
 socialists as indubitable. Latterly even social- 
 ists, in so far as they are serious thinkers, have 
 been driven to admit that, if taken in their 
 original form, these propositions are greatly, 
 perhaps grossly, exaggerated; but, subject to 
 certain modifications, they are still regarded as 
 summaries of actual facts and tendencies, not 
 only by socialists but by radical reformers also. 
 "All the new wealth that is year by year 
 created," said Mr. Snowden on one occasion,
 
 jya MR. MASTERMAN [Book IV. 
 
 speaking in the House of Commons, " goes 
 to-day, as it has always gone, to swell the riches 
 of those who were enormously rich already " ; 
 whilst the lot of the poor, with the exception 
 of a favoured minority, is, in consequence, year 
 by year growing harder. The gap in Mr. 
 Snowden's argument on that special occasion 
 was subsequently filled up by Mr. G. B. Shaw r , 
 who declared that the appropriations of the rich 
 have now become so inordinate that even the 
 middle classes are ceasing to be as much as 
 barely "comfortable"; and the moral of both 
 these alleged facts has been summed up by Mr. 
 Snowden in the assertion that " there is but one 
 way under heaven by which the poor may be 
 made richer, and that is by making the very 
 rich few poorer." The language used by 
 radicals is essentially the same in purport. Of 
 the radical attitude of mind with regard to these 
 particular questions, there is no more typical, 
 and no more elaborate example, than that 
 provided by a book to which reference has 
 been made already " The Condition of Eng- 
 gland," by Mr. Masterman. Mr. Master- 
 man indeed admits, though in somewhat hesi- 
 tating accents, that modern wealth in this 
 country during the last hundred years or so, 
 has by no means been concentrated to such an 
 extent as Mr. Snowden supposes; but from the 
 beginning of his book to the end of it his 
 principal thesis is that " superwealth " has been 
 concentrated in the hands of one small and 
 emphatically novel class to an extent so unex-
 
 Chap. I.] THE " SUPERWEALTHY " 195 
 
 ampled, so preposterous and overwhelming, 
 that a relative if not absolute poverty, equally 
 unexampled, is the consequence. 
 
 Now if statements of this kind have any 
 meaning at all, their meaning must be one which 
 is, from its very nature, susceptible of transla- 
 tion into more or less precise terms; and the 
 first thing to do is to consider the precise mean- 
 ing which the persons by whom such statements 
 are made attach to the term " rich." Who are 
 the individuals rich enough to produce such 
 results as these? 
 
 A statistician, who has made himself the 
 mouth-piece of the extreme school of reformers, 
 was questioned as to this very point by the Select 
 Committee on Income-tax; and he answered 
 that any man had reached the beginning of 
 "riches" when his income amounted to " a few 
 thousands a year" a definition which harmon- 
 ised with the view then under discussion, that all 
 incomes in excess of ,5,000 a year might fairly 
 be made subject to a super-tax; but the persons 
 whose riches were distinctive of the modern 
 world, and of this country in particular the 
 persons whose riches were the prime cause of 
 poverty were persons, he said, whose incomes 
 were of incomparably greater magnitude, and 
 had indeed never been paralleled in any pre- 
 vious period. 
 
 Similarly, Mr. Masterman, in spite of 
 certain vacillations of language, ties him- 
 self down to the assertion that " the super- 
 wealthy," or the rich in the typically modern
 
 194 MR. SNOWDEN AND MR. HYNDMAN [Book IV. 
 
 sense, are numerically " a tiny body," whose 
 incomes are counted, not in thousands of 
 pounds, but in tens of thousands. The typical 
 "rich," as they figure in Mr. Snowden's rhetoric, 
 are described by him as men who can afford to 
 give their wives, if their wives are silly enough 
 to want it, 10,000 a year to spend on the 
 ornamentation of their own persons. 
 
 " The great factory lords," as they figure in 
 the "scientific" argument of Marx, who were eat- 
 ing up, not the poor only, but the lesser "lords" 
 as well, were certainly no less affluent than the 
 plutocrats of Mr. Snowden's vision; as we may 
 see by the description which Mr. Hyndman 
 Marx's faithful disciple gives of the outward 
 signs by which we may know the breed. 
 According to Mr. Hyndman, the modern 
 factory lord is almost too genteel to be sure 
 as to where his own factory is situated ; or if 
 he does condescend now and then to have a 
 cursory look at it, he merely " sits in a chair, 
 and watches the machine go." During the 
 summer months he is to be found in Grosvenor 
 Square, or some similarly desirable neighbour- 
 hood, where his huge dining-room is full of 
 gold plate and powdered footmen. In the 
 autumn he is to be found catching salmon in 
 Norway at a probable cost of ^"100 per fish ; or, 
 incurring an expense still greater, he is lounging 
 dressed up as a yachtsman, nncl smoking a huge. 
 cigar, on a floating palace which rocks itself on 
 the smooth waters of the Solent. 
 
 Such descriptions make it perfectly evident
 
 Chap. I) GROUPS OF INCOMES ANALYSED 195 
 
 that the men who, according to the doctrine of 
 modern reformers, from Marx down to Mr. 
 Masterman and Mr. Snowden, are so rich that 
 their riches are the sole or the principal causes 
 of the poverty of everybody else, cannot to 
 put the matter in a very moderate way be 
 persons whose incomes are less than ,20,000 a 
 year. 
 
 Let us, then, take this doctrine as to the 
 distribution of modern wealth in the form in 
 which Marx stated it, and test it by comparing 
 conditions in this country to-day with the condi- 
 tions corresponding to them at the beginning 
 of the nineteenth century. We have made such 
 a comparison in a rough way already. We are 
 in a position to do so now in very much greater 
 detail. 
 
 In the year 1801 the income of England 
 the richest (indeed then the only rich) portion 
 of the United Kingdom cannot, as we have 
 seen already, have been more than ^180,000,000. 
 About eleven hundred persons, whom here we 
 may call Class A, had incomes exceeding ^5,000, 
 their aggregate income being 1 1 ,000,000. 
 This sum being deducted, something less than 
 ^170,000,000 remained for the rest of the 
 population about 9,000,000 persons. These 
 we may divide into three groups, B, C and D ; 
 Group B, comprising half a million persons, 
 supported on incomes ranging from ,160 up 
 to ^5,000, their aggregate income being about 
 ^"50,000,000; Group C, representing half a
 
 I9& MARX ON WAGES [Book IV. 
 
 million persons more, 1 who were supported on 
 incomes ranging from 60 to ;i6o, their 
 aggregate income being about ^24,000,000; 
 and Group D, representing 8,000,000 persons, 
 supported on incomes none of which exceeded 
 60 a year, their aggregate income being 
 ^96,000,000, and the average per head 12. 
 
 And now let us apply to these data the 
 " scientific " propositions of Marx, which are 
 reproduced in the reasoning of all subsequent 
 reformers, and see what, after more than 100 
 years of capitalism, the condition of affairs 
 must be in this country to-day, if those proposi- 
 tions are true. 
 
 Let us begin with Groups C and D, which 
 will comprise the upper and the lower ranks of 
 the then wage-earning population. According 
 to Marxian " science," wages, as we have seen 
 already, tend under capitalism to sink to a dead 
 level, and that level itself gradually becomes 
 lower and lower, till a point is reached below 
 which any farther reduction would be literally 
 inconsistent with the maintenance of the 
 workers' lives. If such, then, be the case, it 
 is obvious that after more than 100 years of 
 capitalism two things will have happened in 
 this country. The small minority of wage- 
 earners about 6 per cent, of the total who in 
 1 80 1 earned more than 60 a year, will have 
 had their wages reduced to what then was the 
 
 i. This half million comprised, according to the income- 
 tax returns for 1801, about 250,000 actual workers, earning 
 from 22S. to 628. a week.
 
 Chap. I.] GROUPS OF INCOMES 197 
 
 general average amongst the vast majority; 
 and that average, which was then 12 per head 
 of the wage-earning population and their 
 families, will by this time be appreciably less. 
 We may safely say that it will not be more than 
 ^10. 
 
 Next, as to the persons comprehended in 
 Group B, whose incomes, whilst greater than 
 those of the best-paid wage-earners, were less 
 than those of the poorest of the conspicuously 
 rich; under the influence of capitalism the fate 
 of such persons as these is, according to the 
 " science " of Marx, " to be crushed out of 
 existence." It is obvious, therefore, that after 
 capitalism has been crushing them for more 
 than a hundred years, they will at all events be 
 not more numerous to-day than they were when 
 the general process of "crushing them out" 
 began. 
 
 And now let us apply these generalisations 
 to the actual figures in question. 
 
 Groups C and D namely the wage-earners 
 of England and their families formed together 
 in the year 1801 a population of about 8,500,000 
 persons. The population of the United King- 
 dom to-day is five times as great as the popula- 
 tion of England then. If, therefore (for such 
 is our hypothesis), the middle classes have 
 remained stationary, the wage-earnmgf or the 
 " expropriated " classes of the United Kingdom 
 and their families will by this time have come 
 to constitute very nearly the entire population : 
 their present number will be about 44,000,000
 
 198 " EXPROPRIATORS " [Book IV. 
 
 persons, and their average income having sunk 
 to ,10 per head, their aggregate income will 
 be about ^440,000,000. 
 
 Group B, which we are here supposing to 
 have been only " crushed out " in the sense 
 that its numbers have not exhibited any actual 
 increase, will to-day, if the theory of Marx be 
 true, be no richer than it was in the year 1801, 
 when its aggregate income was not quite so much 
 as ^"50,000,000. It is therefore obvious that the 
 wage-earning classes of the United Kingdom, 
 together with the classes whose incomes, 
 though greater than those of the wage-earners, 
 do not exceed the sum of ,5,000 a year, will 
 to-day divide between them, if the theory of 
 Marx be true, an aggregate income which 
 may approach, but cannot possibly exceed, 
 ^500,000,000. Whatever may be the income 
 of the country over and above this will be taken 
 by the great " expropriators." Even if these 
 be held to include everyone now subject to 
 super-tax, the majority of them, and most of 
 their aggregate income, must, according to the 
 reformers (if their language means anything) be 
 represented by the men whom Mr. Masterman 
 describes as the " tiny body " of the " super- 
 wealthy " by the men who, according to Mr. 
 Snowden, were " enormously rich already " a 
 hundred years ago, and to whom "every increase 
 of wealth " has continued to go since by the 
 men whom Mr. Hyndman describes as the 
 " lords of palatial yachts " by the men who,
 
 Chap. I.] RELATIVE WEALTH igg 
 
 as has here been very modestly stated cannot 
 have less than a trifle of ^"20,000 a year. 
 
 Now, however absurd such a conclusion 
 might seem on the face of it, there would, unless 
 there were some means of checking it, be a 
 difficulty in proving its incorrectness in any 
 precise way. But such means exist, and they 
 consist of a reference to facts, very precise in 
 kind, which are not disputed by the most 
 extreme amongst the reformers themselves. 
 
 One of these is the fact that the income of the 
 United Kingdom amounts to-day to something 
 over .2, 000,000,000. Now from this it follows 
 that if, after more than a century of capitalism, 
 the mass of the population has, relatively to its 
 numbers, become poorer rather than richer than 
 it was at the beginning of the nineteenth cen- 
 tury, the total sum, which the men whose 
 incomes run to tens of thousands of pounds, are 
 year by year abstracting from the mass of their 
 fellow countrymen, must amount by this time 
 to considerably more than fifteen hundred 
 millions. Here is a conclusion which at all 
 events has the merit of being definite. Is such 
 a conclusion, then, anywhere near the truth? 
 
 The question can be answered by another of 
 the facts referred to. This is the fact that, 
 after a prolonged and searching inquisition by 
 the Commissioners of Inland Revenue, the 
 actual total of all incomes exceeding ,20,000 
 a year has been now definitely ascertained ; and 
 that total, according to the latest returns, is 
 ,56,200,000. Instead of being 1,500 millions,
 
 200 HENRY GEORGE [Book IV. 
 
 it is very little more than one-thirtieth part of 
 it. Here we have, on the one hand, the exist- 
 ing situation as it would be if the " scientific " 
 reasoning of Marx, and of those whom he still 
 influences, were correct; and here we have, on 
 the other hand, the microscopic mouse of reality 
 which the touch of frigid truth elicits from the 
 labouring mountain. 
 
 To the future student of the history of 
 popular beliefs, it may well seem astonishing 
 that the Marxian estimate of the growth of the 
 conspicuously rich should not only have com- 
 manded for years the unquestioning assent of 
 millions, but should still in all its essentials 
 dominate the minds of reformers who regard 
 themselves as judicial thinkers, and proficients 
 in social science. But before we allow ourselves 
 to dwell upon this point farther, let us turn 
 from Marx to that other thinker, Henry George, 
 whose influence is more recent, and has perhaps 
 been even more extensive. 
 
 Although it appears from letters published 
 after his death that George knew nothing of 
 Marx otherwise than by vague report, and had 
 never read so much as a single page of his writ- 
 ings, his estimate of social tendencies in the 
 modern world and the estimate of Marx are in 
 certain respects identical, and expressed in 
 almost the same language. What, George asked, 
 are the two great facts by which all progressive 
 countries, and England more than any other, 
 have been distinguished under the capitalistic 
 system ? One, he said, was an enormous increase
 
 Chap. I.] H. GEORGE'S THEORIES aoi 
 
 of wealth; the other was a concurrent increase, 
 no less enormous, of poverty. And what was 
 the explanation of this appalling paradox ? In 
 its general form, his answer was precisely that 
 of Marx. The explanation, he said, lay in the 
 fact that as fast as wealth increased, indeed on 
 the whole faster, it was appropriated by one 
 small group of persons who constantly grew 
 richer and richer whilst everybody else grew 
 poorer. Up to this point his agreement with 
 Marx was complete; but when it came to the 
 question of who the plunderers were the answer 
 of one sage, in the most sensational way, con- 
 tradicted that of the other. According to Marx, 
 these persons were the factory lords, or capi- 
 talists. According to George they were the 
 owners of the prairie value of land. So far 
 were the wicked capitalists from victimising the 
 poor labourers, that the poor labourers, and the 
 poor capitalists along with them, were victimised 
 by the wicked landlords. 
 
 Stated in precise form, his fundamental pro- 
 position was this : that in whatever ratio the 
 income of any progressive country increases, 
 the portion of it which is taken by landowners as 
 the rent of crude land, or land-rent as distinct 
 from interest on human improvements, constantly 
 increases in a ratio greater still. If the total 
 income within a given period doubles itself, 
 land-rent will within the same period have trebled 
 itself, and so the process will continue till "the 
 earnings of capital " (as he put it) no less than 
 " the wages of labour " are so far absorbed by
 
 903 H. GEORGE'S THEORIES [Book IV. 
 
 land-rent that the landowners appropriate the 
 entire and increasing difference between the 
 total of the national product, no matter how 
 great, and the amount which is just sufficient to 
 keep the rest of the population alive. 
 
 This doctrine, which he deduced from his 
 observation of affairs in America, was, he said, 
 exemplified to an extent still greater in England, 
 where the process in question had been operative 
 for a very much longer time; and early in the 
 " eighties " he made his appearance in London 
 for the purpose of informing Englishmen of 
 this remarkable fact. The case in England, 
 and indeed in the United Kingdom, was, he 
 said, singularly simple. There was no need 
 for statistics. The salient facts were matters 
 of common knowledge. The whole soil of 
 these islands was owned by a class which could 
 be at once identified that is to say, by the 
 lords and the country gentlemen. They were 
 enormously wealthy a hundred years ago; and 
 every year that enormous wealth increases, not 
 because they own more acres (for that would not 
 be passible), but because relatively to the in- 
 creasing wealth of the country, an ever increas- 
 ing sum is exacted for each acre ; the result 
 being such was the upshot of his reasoning 
 thirty years ago that the prairie rent appro- 
 priated by the great landlords already amounted 
 to the overwhelming and unimaginable sum 
 which, so far as the rest of the nation was 
 concerned, divided increasing poverty from a 
 general and increasing affluence.
 
 Chap. I.] THE ACTUAL FACTS 203 
 
 Now as to the application of his doctrines 
 to this country, George was in one way right. 
 The questions raised by it are simple to an 
 extreme degree. Although he himself was 
 totally unaware of the fact, we know by direct 
 evidence what, during a hundred years and 
 more, the actual land-rent of this country at 
 successive dates has been. We are also able to 
 compare its amount and increase with the 
 amount and increase of incomes derived from 
 other sources; and the first fact which is dis- 
 closed by even the most cursory examination 
 of the data is that the doctrine on which the 
 whole fabric of George's reasoning rests is a 
 fallacy so fantastic that its birth-place might 
 have been a cell in Bedlam. If any fact of 
 economic history is more indubitably demon- 
 strable than another, this is the fact that land- 
 rent in this country, relatively to the national 
 income, is a fraction which, instead of increasing 
 constantly grows less and less. In the year 
 1801 the land-rent of England and Wales 
 amounted to 20 per cent, of a total income of 
 ; 1 80,000,000. To-day, out of a total income 
 of more than ^2,000,000,000, it barely amounts 
 to so much as 4 per cent. 
 
 But what principally concerns us here is not 
 George's theory as such, but the actual state 
 of affairs at the present time, as compared 
 with that state as it would be were George's 
 theory true. If we substitute great landlords 
 for great owners of factories, it would be 
 similar to that deducible from the rival
 
 204 THE ACTUAL FACTS [Book IV. 
 
 theorising of Marx. The bulk of the popula- 
 tion of Great Britain and Ireland would 
 to-day be subsisting on an income of about 
 ; 5 00,000,000 ; and the peers and the country 
 gentlemen the only rich men in the Kingdom 
 would, as the owners of the crude or unim- 
 proved soil, be appropriating a rental of more 
 than ,1,500,000,000. What are the actual 
 facts ? If from the definitely known rental of the 
 United Kingdom we deduct that portion only 
 which consists of interest on buildings and other 
 works of construction, and treat all interest on 
 agricultural improvements as land-rent, the 
 entire net rental of rural and urban land does 
 not amount to so much as ^"80,000,000. Of 
 this sum, as we have seen in a former chapter, 
 about ^12,000,000 goes to charitable bodies and 
 to more than a million and a half of very small 
 owners, none of whom have incomes in excess 
 of ,160; whilst about ^S^oOjOOO 1 goes to per- 
 sons who have satisfied the Commissioners of 
 Income-tax that their incomes from all sources 
 are not in excess of ^700. How much, then, 
 remains for the great landowners, the peers and 
 the country gentlemen, the monsters of George's 
 imagination, whose exactions in the form of land- 
 
 i. The amount of abatements (Schedule A) granted on rent 
 going to persons with not more than ^700 a year, is about 
 ,11,500,000, which, from the interesting analogy afforded 
 by abatements under Schedule E, appears to be rather less 
 than half of the total, which would in this case be about 
 ^24,000,000. Of this one-third may be taken as land-rent, 
 the remainder being the rent of buildings.
 
 Chap. I.] LAND-RENT 205 
 
 rent are so colossal that they have reduced the 
 capitalists to poverty, and those employed by 
 the capitalists to destitution? Even if every- 
 body should be called a great landowner whose 
 estate consists of more than 1,000 acres, the 
 total land-rent going to such persons cannot 
 by any possibility amount to as much as 
 ^40,000,000. The land-rent of all estates 
 worth more than ,10,000 a year cannot amount 
 to more than < 2o,ooo,ooo, 1 of which about one- 
 seventh is probably derived from London. 8 
 But, without insisting on these latter details, 
 let us make George a present of the land-rent 
 of all estates sufficient to support an owner in 
 the leisure of even a struggling gentleman ; and 
 ^"40,000,000 a year is a greatly exaggerated 
 estimate of the sum which he would find in his 
 hands were he still alive to claim it. He would 
 find ,40,000,000, whereas if there were any 
 truth in his one cardinal doctrine the least he 
 would find to-day would be very nearly forty 
 times as much. 
 
 Even the doctrine which persons like Mr. 
 
 1. According to the New Domesday Book, the gross 
 rental value of estates of more than 10,000 acres (buildings 
 included) was about one-sixth of the gross rental surveyed. 
 The gross rental of estates exceeding 1,000 acres was about 
 one-third of the total. The figures in the text, therefore, 
 err on the side of excess. (See Statistical Monograph, i.) 
 
 2. The current assertion of reformers is that the land of 
 London is owned by eight persons. The number of owners 
 who have been identified by the London County Council is 
 about 35,000. (See Statistical Monograph, i.)
 
 206 THE SUPER WEALTHY [Book IV, 
 
 Masterman and Mr. Snovvden have, consciously 
 or unconsciously, inherited from the "science" of 
 Marx becomes reasonable, if judging it by its 
 results, we compare it with this doctrine of 
 George. If the doctrine of Marx be tested by 
 actual facts, the great factory lords and other 
 mammoths of superwealth, with their palaces 
 and their huge yachts, with their wives who spend 
 ; 1 0,000 a year on their petticoats, and whose 
 very dogs, Mr. Snowden complains, look at 
 him through motor-goggles these super- 
 wealthy persons can at least be definitely shown 
 to possess between them an income of 
 ^56,000,000. Indeed if we so far extend our 
 definition of the superwealthy as to include 
 everybody whose income is in excess of .5,000, 
 which is only half of what, according to Mr. 
 Snowden, the ladies of the class in question 
 can afford to spend at their dressmakers, this 
 class, whose wealth reduces the rest of the 
 nation to poverty, can, exclusive of what it 
 derives from abroad, be shown to possess an 
 income of about 1 00,000,000 : whereas if we 
 include in the exactions of the great landowners 
 the rental of every harassed squire who can 
 barely make both ends meet, and is lucky if he 
 can drive his wife to the train in a pony-trap, the 
 Georgian superwealth of the country will not 
 amount to one half of the Marxian; 1 and whilst 
 
 i. Even if we include the rent of buildings, rent has not 
 increased in accordance with the monstrous theory oi 
 George. Tn the year 1862 the gross rent of lands and 
 houses was ^114,000,000. In 1906 it was 222,000,000 an
 
 Chap. IJ MR. MASTERMAN AND MR. SNOWDEN 207 
 
 the income of the country has risen to more 
 than ; 2, 000,000,000, even the superwealth of 
 the Marxian expropriators will barely be 5 per 
 cent, of it. 
 
 Let us, then, put into its simplest form the 
 doctrine preached to the nation by those who, 
 like Mr. Masterman and Mr. Snowden, and 
 other typical reformers, declare that contem- 
 porary poverty, whatever may be its character 
 or extent, is due to the fact that the super- 
 wealthy are appropriating an increasing per- 
 centage of the income of the United Kingdom ; 
 and what will this doctrine come to when 
 translated into terms of fact? In order to 
 realise what it will come to, let us reconsider 
 the following particulars. The income of the 
 population of England (the richest portion of 
 the United Kingdom) was 20 per head in the 
 year 1801. The income per head of the popu- 
 lation of the United Kingdom is ^"45 to-day. 
 Thus if it were not for the appropriations of 
 persons whose incomes exceed ,5,000 or 
 ^"20,000 a year, the average for the population 
 at large would by this time have more than 
 doubled itself. The population at large may, 
 then, be compared to a lon^-lived individual, 
 who a hundred years ago had an income of 
 
 increase of 95 per cent. The income from " trades and 
 professions " (Schedule D) increased during the same 
 period by 455 per cent. Between 1885 and 1906, land-rent, 
 apart from building-rent, increased by 5-^ per cent. Income 
 from trades and professions increased by 85 per cent.
 
 4o8 A CHILDISH THEORY [Book IV, 
 
 ^200 a year; and the superwealthy may be 
 compared to an agent who collected this income 
 for him, and charged a commission for doing 
 so. The gross income of the former, according 
 to the admission of everybody, will by this time 
 have risen in the proportion of 24 to 45 ; and 
 Marx, George, Mr. Masterman, Mr. Snowden, 
 and their reforming kindred, are like persons 
 who should inform him that, instead of being 
 richer, he was now poorer than ever, because the 
 agent, who had charged 6 per cent, for collect- 
 ing ,200 in the year 1801, now charges 5 per 
 cent, for collecting ^450. 
 
 Such is the childish and at the same time 
 astounding absurdity to which, when translated 
 into the disenchanting language of figures, that 
 theory of superwealth as the cause of an increas- 
 ing poverty reduces itself, which is the basis 
 to-day of all projects of extreme reform, and 
 determines not only the reasoning of reformers 
 with regard to individual problems, but provides 
 them in each case with the outlines of some 
 foregone and usually wrong conclusion. In 
 all human societies there have always been 
 grave evils. The society of to-day may have 
 evils peculiar to itself; but whatever these may 
 be, and however grave they may be, one thing 
 at least is certain. Their origin, and the means 
 by which they may be cured or mitigated, are 
 not those which the reformers of to-day sup- 
 pose. 
 
 Radicals like Mr. Masterman, and socialists 
 like Mr. Snowden, may no doubt say with
 
 Chap. IJ MODERN REFORMERS 309 
 
 truth that they dissociate themselves from 
 certain exaggerations of which Marx and 
 George were guilty; but the fallacy of their 
 position is thereby not radically altered. The 
 error of Marx and George is not a mere 
 exaggeration of facts. It is a positive and 
 direct inversion of them. Marx and George 
 were both of them like a passenger in a south- 
 bound train, who with glaring eyes should 
 announce to a couple of fellow travellers that 
 they were hurrying north at a speed of twa 
 hundred miles an hour. Mr. Masterman, Mr. 
 Snowden, and other reformers of to-day are 
 like travellers who, looking with an air of great 
 calm at their watches, should announce to their 
 informant that their speed was considerably 
 less than he thought it was ; but who joined with 
 him in yelling that they were being taken from 
 York to Edinburgh, when all the while they 
 were being taken from York to London. 
 
 It is not contended that, with regard to details 
 here and there many of them of grave impor- 
 tance the most extreme reformers may not be 
 perfectly correct; but such details as they see 
 correctly are placed by them in a wrong setting, 
 which prevents them from perceiving their 
 significance as parts of a general system of 
 things whether a system of things as they are 
 at any moment, or a system regarded as chang- 
 ing from one condition to another. 
 
 If social conditions, then, in the United 
 Kingdom, are so radically different from whr.t 
 reformers declare them to be, in respect both of
 
 aio MODERN REFORMERS [Book IV. 
 
 their present character, and of their present 
 character as compared with their character 
 during the recent past, let us with the aid of 
 the facts which are now before us, endeavour 
 to summarise in a generally intelligible form 
 what, with regard both to the production and 
 distribution of wealth, has really taken place 
 since the beginning of the nineteenth century.
 
 CHAPTER II. 
 
 LET us once more review the general condition 
 of things as it was in the year 1801 ; and follow 
 so far as we can the very remarkable changes 
 which each of its salient features has undergone 
 between then and now. 
 
 The population of England and Wales was 
 then 9,000,000. The direct recipients of 
 incomes whether earned or otherwise, numbered 
 slightly more than 4,000,000. Of incomes 
 exceeding ^160, each is commonly computed to 
 represent a family of five persons. Of incomes 
 below that limit, the number may with sufficient 
 accuracy be taken as about one half of the 
 number of the persons supported by them. The 
 then number of incomes exceeding ^160 a year 
 was about 100,000, the population supported by 
 them then amounting to half a million. The 
 number of incomes between 80 and ^"160 was 
 slightly but not much smaller, the population 
 supported by them amounting to about a quarter 
 of a million; whilst the rest of the nation, or 
 more than 8,000,000 persons, were supported 
 on incomes which did not exceed ,80, and of 
 which only one in everv twenty amounted to 
 more than ^60. 
 
 And now, subdividing these groups, as we did 
 in an earlier chapter, let us see what, according 
 to the income-tax returns for the time, was the 
 
 211
 
 aia THE NATIONAL INCOME [Book IV. 
 
 aggregate income of each. The aggregate of 
 incomes in excess of ,5,000 a year was 
 ; 1 1, 000,000; that of incomes between ^"1,000 
 and ^5,000 was about ^21,000,000; that of 
 incomes between 160 a year and ^1,000 was 
 about ,28,000,000; that of incomes between 
 So and ^160, was about ^"10,000,000; whilst 
 i 10,000,000 was the income of the rest of the 
 nation, and 1 80,000,000 the income of all 
 these groups together. 
 
 Now the entire income of the United King- 
 dom to-day is nearly twelve times as great as 
 the income of England and Wales in the year 
 1801, the excess of the latter sum over the 
 former amounting to appreciably more than 
 i, 800 million pounds. How, then, may these 
 two sums be compared, so that the increase may 
 disclose most clearly its true social significance ? 
 The question will be sufficiently simple if we 
 assume roughly that conditions in England and 
 Wales at the beginning of the nineteenth 
 century were similar to those of the United 
 Kingdom as a whole, and remember that the 
 population of the United Kingdom to-day is 
 to the population of England and Wales then, 
 almost exactly in the proportion of five to one. 
 For, these premises being given, one result is 
 self-evident. If we suppose that the income 
 of England and Wales as it then was, has in 
 respect both of its total amount and the amount 
 of each group of incomes into which it v/ns th^n 
 divided, been multiplied by five, we shall get n
 
 Chap. II.] 
 
 GROUPS OF INCOMES 
 
 213 
 
 condition of things as it would be at the present 
 day, if the amount and distribution of wealth 
 had changed in one way only; that is to say, 
 if, its proportional distribution being constant, 
 it had merely increased in the same ratio as the 
 population. In that case, from the point of 
 view of the individual, everything would be 
 exactly as it was at the beginning of the nine- 
 teenth cenury. Every class would be larger; 
 but, relatively to other classes, its magnitude 
 would remain unaltered; and no individual, to 
 whatever class he belonged, would have more 
 to spend or less to spend on the necessaries and 
 superfluities of life than his great-grandfather 
 had a hundred and ten years ago. 
 
 Let us see in detail how, had the course of 
 events been such, matters would stand to-day. 
 For this purpose all that we have to do is to 
 turn to the groups of incomes, as just now given, 
 which in the year 1801 made up the total income 
 of about 9,000,000 persons, and multiply the 
 aggregate amount in the case of each group by 
 five. The figures will be as follows : 
 
 
 
 Aggregate in. 
 
 
 
 come per group 
 
 
 
 as it would be 
 
 
 Aggregate in- 
 
 to-day, had the 
 
 
 oome per group, 
 
 increase been 
 
 
 M it was in 
 
 proportionate to 
 
 R*nge of Income*. 
 
 the year 1801. 
 
 the general in- 
 
 
 
 crease of the 
 
 
 
 population. 
 
 Fxceedinsr 1 000/ ver ' 5 ' 000 
 lul & * 1)UUU \1,000 5,000 .. 
 
 . 11,000,000 ,. 
 . 21,000,000 .. 
 
 . 55,000,000 
 . 105,OOU,000 
 
 160 1,000.. 
 
 . 28,000,000 .. 
 
 . 140,(K30,000 
 
 Not exceeding ... 160 
 
 . 120,000,000 .. 
 
 . 60U,(X),000 
 
 180,000,000 ... 900,000,000
 
 ai4 DISTRIBUTION OF WEALTH [Book IV. 
 
 Now if such were all that "material progress" 
 had accomplished, it would have accomplished 
 one miracle at all events. It would have 
 enabled within the limits of a small geogra- 
 phical area a vastly greater number of human 
 beings to live, than ever lived or could have 
 possibly lived within them before; but no indi- 
 vidual human being would be a penny the better 
 or the worse for it than members of his class 
 would be had there been no progress at all. 
 What, however, are the actual facts ? It will be 
 seen from the above table that, if wealth had 
 merely increased in proportion to the increase 
 of the population, the entire income of the 
 United Kingdom to-day would not, at the 
 utmost, be more than ^900,000,000. It is in 
 reality more than double that sum, exceeding 
 it by no less than ^1,120,000,000; and here- 
 in this additional sum we see what, relatively 
 to its numbers, the population has really gained. 
 
 The situation to-day is what it would be if 
 Fate had found the population in respect of 
 wealth and its distribution no richer and no 
 poorer per head of its various classes than it 
 was more than a century ago, and if, con- 
 densing the results of progress into a single 
 dramatic moment, it had made the popula- 
 tion a present of an additional income of 
 ^"1,120,000,000, and allowed its members to 
 divide it according to their own abilities. The 
 practical question, therefore, virtually comes to 
 this : in what condition of things has the divi -
 
 Chap. II.] 
 
 THE SUPERWEALTHY " 
 
 sion as a fact resulted? This shall be shown 
 by means of another table. The income of 
 each group shall, in the first place, again be 
 given, as it would have been had the national 
 total, in respect both of its amount and its 
 distribution, merely kept pace with the increas* 
 ing number of the population. Secondly in 
 the case of each group shall be given its aggre- 
 gate income as it actually is to-day ; and thirdly, 
 in each case, the excess shall be given of the 
 latter sum over the former, which will show the 
 proportion secured by each class of the popula- 
 tion of the total increment of ; 1,12 0,000,000. 
 
 
 Aggregate income 
 
 
 of each group as it Increases in 
 
 
 would be to-day, aggregate income 
 
 JUnge of Income* 
 
 bad wealth increased Aggregate income of each group : 
 
 omprised in each 
 
 since 1801 in the of each group as it i.., net gain 
 
 group. 
 
 eame ratio as the actually is to-day, relatively to th 
 
 
 population. population. 
 
 Oer 5,000 
 
 ... 55,000,000 .. 130,000,000 . 
 
 75,000,000 
 
 1,000- 5,000 
 
 ... 105,000,000 
 
 .. 130,000,000 . 
 
 25,000,000 
 
 160 1,000 
 
 ... 140,000,000 
 
 .. 460,000,000 . 
 
 320,000,000 
 
 Not over 160 
 
 ... 600,000,000 
 
 .. 1,300,000,000 . 
 
 700,000,000 
 
 
 900,000,000 
 
 .. 2,020,000,000 . 
 
 1,120,000,000 
 
 Here, then, we have an answer in substan- 
 tially accurate detail to the stock question of 
 the reformer " Where has the increasing 
 wealth due to modern progress gone ? " The 
 answer, given in tones of elegiac irony by 
 persons like Mr. Masterman, is, " Most of it 
 has gone to increase the piled-up aggregations 
 of the superwealthy." The answer shouted by 
 persons like Mr. Snowden is, "All of it is going, 
 just as all of it has ever gone, to increase the
 
 2i6 FALLACIES OF REFORMERS [Book IV. 
 
 riches of those who were enormously rich 
 already." In reality if " the enormously rich " 
 and the " superwealthy " mean the persons with 
 huge yachts and the wives who wear a fortune 
 in their tiaras, the " all " or the " most " of the 
 increment which is asserted to have gone to 
 these, will not amount to so much as one thirty- 
 third part of it. Even if we include in this 
 class all persons whose incomes exceed ,5,000 
 a sum as to which we have the authority of 
 Mr. Lloyd George for saying that it means 
 " comparative poverty " instead of conspicuous 
 wealth the " rich " of Mr. Snowden's dreams 
 will, instead of getting all of the increment, 
 have got only one fifteenth; whilst if we reflect 
 on the fact emphasised in previous chapters 
 that a large part of their gains is imported from 
 foreign countries (as, for instance, in the case of 
 American Marconi Telegraphs) their share of 
 the increment originating in the United King- 
 dom will certainly not be more than four-and-a- 
 half per cent, of it. Of the remaining 1,050 
 millions, 95 per cent, has gone to persons with 
 incomes not exceeding ^1,000; and, even if no 
 allowance be made for income imported from 
 abroad, 86 per cent, has gone to persons with 
 incomes not exceeding ^400. 
 
 It will thus be evident to the reader that, from 
 whatever point of view we regard the matter, 
 the current doctrine of reformers as to modern 
 conditions and tendencies, whether that doctrine 
 be taken in its extremest or in its more modified 
 forms, is not an exaggeration of realities; it is
 
 Cbap. II.] ANALYSIS OF INCREMENT 217 
 
 (as has been said already) a downright and 
 direct inversion of them. 
 
 But the actual facts of the situation have as 
 yet been but half stated. However opposite 
 to truth the ideas of reformers may be as to 
 the manner in which wealth, as it continues to 
 increase, distributes itself, the fact remains, as 
 the foregoing figures show, that the portion 
 which has gone to the richer classes is consider- 
 able. Thus whereas the aggregate of incomes 
 not exceeding ^160 a year has in absolute 
 amount increased by about 1,200 million pounds, 
 the aggregate of home-produced incomes ex- 
 ceeding ;i6o has at all events increased by 
 some 480 millions. 
 
 Of what elements, then, let us ask, is this 
 latter increment composed? 
 
 About ^40,000,000, or 8 per cent., is the 
 increased rental of agricultural lands and of 
 building-sites. Here we have the one group 
 of incomes which has failed to increase in a 
 ratio which even approaches that of the increase 
 of the population. 
 
 About 10 per cent, or ,48,000,000,* is the 
 i. This estimate is based partly on the common estimate 
 of the professional income, viz., 60,000,000, and partly on 
 an examination of the assessments under Schedule D, re- 
 lating to the year 1812, and issued in the year 1816. The 
 total profits from professions and trades exceeding 160 a 
 year amounted to no more than 22,000,000 : but there was a 
 total of about 15,000,000, consisting of incomes between 
 160 and 600, which (allowance being made for a ten 
 years increase in the national wealth since 1801) will allow 
 us to estimate the professional income in that year at 
 about 12,000,000.
 
 i8 MANUFACTURED GOODS [Book IV. 
 
 increase in professional incomes an increase 
 which appears (for we cannot here speak 
 exactly) to have been about the same as the 
 increase of the population. 
 
 Of the remaining 82 per cent, of the incre- 
 ment here in question a remainder amounting 
 to about ^392,000,000 the whole, except one- 
 sixteenth, namely the salaries of Government 
 employees is derived from the production 
 and commercial distribution of material things, 
 whether as bought by those who enjoy them, or 
 hired by them for temporary use. These things 
 are broadly divisible into the structures of 
 private dwelling-houses, and ordinary merchant- 
 able commodities, including use of the means 
 of travel. 
 
 The increase derived from the production, 
 the selling and the letting of such material 
 things, amounts to nearly $ 70,000,000. Of 
 this sum about ,52,000,000 is accounted for 
 by the increase in the structure-rent of private 
 dwellings. This increase, owing to the increased 
 cost of building, and the ampler accommodation 
 demanded, is somewhat greater than the 
 corresponding increase of the population; but 
 the difference is comparatively small. The 
 really important change, which colours the 
 whole situation, is that which is due to the 
 increase in the production of the mass of manu- 
 factured goods; and amounts approximately to 
 $ 1 6,000,000. 
 
 The total of incomes exceeding ^160 a year 
 which have their origin in the production and
 
 Chap. II.] PROFITS AND SALARIES 819 
 
 distribution of these has increased from about 
 ;2 8,000,000 T in the year 1801 to ^316,000,000 
 in the year 1910. In other words, whereas the 
 population has increased five fold, this par- 
 ticular group of incomes has increased twelve 
 fold; whilst it still remains for us to note an 
 increase which is absolutely smaller, but which 
 is in its own way by no means less remarkable. 
 This is the increase in the aggregate of incomes 
 exceeding 160 which goes to the officials of 
 the governmental beaurocracy. The total of 
 the corresponding incomes in the year 1812 was 
 not so much as ^i,ooo,ooo. 2 It amounts at the 
 present time to about ^24,000,000. 
 
 And now reverting to the increase in the 
 income from the production and distribution of 
 goods, which if rent of houses be excluded, is 
 about ^316,000,000, let us note one further 
 fact that this sum is essentially of a composite 
 character. It comprises two distinct (indeed 
 we may say of two contrasted) elements, the one 
 consisting of ordinary profits and interest, which 
 go to the heads of businesses and the persons 
 who own shares in them ; and the other consist- 
 ing of salaries exceeding ^"160 a year, which go 
 to a multitude of functionaries whom these per- 
 sons employ ; and out of a total business increase 
 of nearly ^320,000,000, profits and dividends, 
 
 i. It must be noted that these figures refer solely to 
 Incomes in excess of ,160 a year. 
 
 t. The total assessed under Schedule E in the year 1812 
 was not as much as ^6,000,000, or about one-twenty-fourth 
 part of corresponding amount to-day.
 
 o SALARIED WORKERS [Book IV. 
 
 in round figures, come to about 200,000,000, 
 whilst ; 1 20,000,000 (or over one-third of the 
 total) goes to persons who are in reality a 
 superior class of wage-earners. 
 
 When these two groups are taken separately, 
 the increase in income from the manufacture 
 and distribution of goods presents itself in a 
 new light. If the profit-incomes or share- 
 incomes exceeding ^160, which were derived 
 from business in 1801, amounted to about 
 ^28,000,000, the total will by this time have 
 increased about sevenfold, or not 50 per cent, 
 faster than the population; but the salaried 
 employees earning more than 160, are numeri- 
 cally a new creation ; and from what has been 
 said already it will be seen that the same 
 observation applies to the class kindred to 
 them, namely to the officials of our state bureau- 
 cracy. 
 
 Of these two salaried classes the number 
 to-day is about 650,000. It represents a popu- 
 lation equal to about half that of England in 
 the reign of George II; and is more than six 
 times as great as the entire number of persons 
 whose incomes exceeded ,160 in the year 
 1 80 1. The number of these last, as we have 
 seen already, was at that time about 100,000; 
 and had such persons only multiplied in the 
 same ratio as the population, their number 
 to-day would be not more than half a million. 
 It is, however, in reality, as we have already 
 seen likewise, nearly three times as great, or 
 about 1,400,000. That is to say, the absolute
 
 Chap. II.] THE LOWER MIDDLE CLASSES a 
 
 increase exceeds the proportional increase by 
 900,000; and of this absolute increase of 900,000 
 persons, 72 per cent, consist of salaried em- 
 ployees of business houses and of the state. 
 A similar phenomenon discloses itself if we 
 turn our attention to the classes described as 
 " the lower middle." These may be broadly 
 taken as comprising all persons having incomes 
 between 80 and ^160 a year, who are engaged 
 otherwise than in ordinary manual labour, or 
 commercial or domestic service; and they do 
 not, in respect of the kinds of work performed 
 by them, differ greatly from the salaried classes 
 whose earnings are on a higher scale. The 
 number of such persons in the year 1801, as 
 ascertainable from the income-tax returns, was 
 nearly, though not quite, 100,000, or together 
 with their families about 250,000, the average 
 income per earner having been about ^"90. The 
 number of persons in a corresponding position 
 to-day is (as was shown in Book II, Chapter III) 
 about 2,300,000; or together with their families 
 certainly not less than 5,000,000, the average 
 income per earner being rather more than ^"100. 
 Thus in the year 1801 the upper middle class, 
 with incomes rising to ,1,000 a year, and the 
 lower middle class, with incomes rising from 
 ;8o to ,160, represented, together with their 
 families, 750,000 persons. To-day, they repre- 
 sent twelve millions. They form to-day about 
 27 per cent, of the population, whereas at the 
 beginning of the nineteenth century they formed 
 not so much as 9 per cent.
 
 222 MANUAL WORKERS [Book IV. 
 
 And this fact has a converse side which is no 
 less important. The remainder of the popula- 
 tion in the year 1801, which may roughly be 
 taken to correspond to the manual workers, 
 whether these be productive or distributive, 
 numbered more than 8,000,000 out of a total 
 population of 9,000,000. They formed, that 
 is to say, about 92 per cent, of the whole. 
 To-day, out of a total population of 45,000,000, 
 they number about 33,000,000, and they thus 
 form no more than 73 per cent, of the whole. 
 The classes representing economic positions 
 and activities other than those of the ordinary 
 manual labourer have increased in the ratio of 
 i to 1 6. The classes representing ordinary 
 manual labour have increased in a ratio of 
 barely more than i to 4. 
 
 Now to those who are inclined to believe in 
 the general theory of Marx as to the enrichment 
 of the few at the expense of the labouring 
 many, it may seem that we have here at all 
 events a modified confirmation of it; and atten- 
 tion shall be called to certain farther particulars 
 by which such persons may be tempted at first 
 sight to consider that their position is confirmed. 
 The body consisting of persons other than 
 manual labourers has already been divided into 
 those respectively supported on incomes 
 exceeding ,5,000 a year, on incomes between 
 ,1,000 and "5,000, on incomes between ,160 
 and 1,000, and on incomes between "80 and 
 ^160; and the aggregate income of each group 
 has been given in respect of each date in
 
 hap. H.) AVERAGE OF INCOMES 333 
 
 tion. It now remains for us to observe that 
 not only have the number and aggregate income 
 of each of these groups increased, but the 
 average income per head has in each case 
 increased likewise, the increases ranging from 
 10 to 20 per cent. 1 Any platform orator 
 with these figures before him might plausibly 
 adduce them as proving at least as much as 
 this : that a minority consisting of less than 
 one-third of the nation was eating up every 
 increase that ought to have gone to the 
 majority. We have, however, only to turn to 
 the income of the majority itself; and the 
 following fact will be apparent. It is precisely 
 amongst the majority amongst the mass of 
 manual labourers that the rate of increase in 
 the average income per earner has been greatest. 
 Let us consider how this is. 
 
 If all incomes other than those of the manual 
 labourers be taken together as a whole, it will 
 be found that, though for each sub-section the 
 average income has increased, the general 
 average has not increased, but declined. Such 
 a result may at first sight seem a paradox; but 
 the explanation is extremely simple. If one 
 man has ^40 a year and another 20, the 
 average income per head of the two men is ^"30. 
 If there are two men with incomes of ^42, and 
 eight men with incomes of 22, one class of 
 
 i. Thus the average of incomes exceeding 5,000 a year 
 has risen from 10,000 to 12,000. The average of middle- 
 class incomes between 80 and 160 appear to have risen 
 by about 10 per cent.
 
 324 AVERAGE OF INCOMES [Book IV. 
 
 income will have increased by 5 per cent., the 
 other will have increased by 10; but whereas in 
 the first case we had two men with an average 
 income of ^30, in the second we have 10 men 
 with an average of only 26. Each class of 
 income has increased both in average amount 
 and number; but the numerical increase of the 
 larger incomes has been small, and the numerical 
 increase of the smaller incomes has been large. 
 This is precisely what has happened in the case 
 of the incomes here in question. Of incomes in 
 excess of 160 a year, the number of those in 
 excess of ^"1,000 has not increased in a century 
 by as much as 70,000. The number of those 
 ranging from i ,000 down to , 1 60 has increased 
 meanwhile by more than a million and a quarter. 
 Hence it appears that, strange as some readers 
 may think it, the average amount of incomes in 
 excess of ^160 was as much as ^600 in the 
 year 1801, whereas to-day it is only ^500, 
 additions from abroad included ; whilst if these 
 additions be excluded, as we have seen in an 
 earlier chapter, the average does not exceed, if 
 it indeed reaches, ,400. And these facts 
 become even more important when we consider, 
 with regard to the increase of the non-labouring 
 classes, how large a part of it is contributed by 
 those called " the Lower Middle." 
 
 For, in proportion as the entire Middle Class 
 has increased in a ratio greater than that of the 
 increase of the mass of the population, certain 
 persons who would, had all classes increased 
 equally, have to-day been included in the class
 
 Chap. II.] INCOMES ABOVE AND BELOW ^1,000 225 
 
 of manual labourers, will have passed over into 
 a class the earnings of which are larger, and 
 whose functions, though not less valuable, are 
 yet of a different character. It is necessary to 
 grasp this fact if we wish to form any clear 
 picture of what, during modern times, has really 
 happened with regard to the distribution of 
 wealth; and to the outlining of such a picture 
 we are now in a position to proceed. 
 
 Let us begin, then, with a few words as to 
 incomes in excess of ^1,000. The number of 
 these in the year 1801 was, as we have seen, 
 not more than 11,000. In the year 1910 it was 
 approximately 75,000; but this merely numerical 
 increase is too small to be important; and 
 though this aggregate income has risen in the 
 ratio of i to 8^, the income of the nation has 
 risen in the ratio of i to 12. Thus relatively 
 to the whole, the income of this group has 
 declined. We will, therefore, confine our atten- 
 tion to the mass of incomes remaining. 
 
 The aggregate of incomes not exceeding 
 ;i,ooo in the year 1801 was ,150,000,000. 
 In the year 1910 it was 1,7 60,000,000. The 
 former sum was divided between nearly 
 9,000,000 persons, of whom barely three- 
 quarters of a million belonged to the middle 
 class, and eight millions and a quarter to 
 the labour class. The latter sum was divided 
 between nearly 45,000,000 persons, of whom 
 nearly 12,000,000 belonged to the middle 
 class, and 33,000,000 to the labour class; 
 whereas if both these parts had increased in the
 
 226 INCOMES OF MANUAL WORKERS [Book IV. 
 
 same ratio as the whole, the labour class would 
 have numbered more than 41,000,000, and the 
 middle class would have fallen appreciably 
 short of 4,000,000. This means that there are 
 in the United Kingdom to-day more than 
 8,000,000 persons who, had no changes resulted 
 from the modern capitalistic system other than 
 an increase of wealth proportionate to the 
 increase of the population, would have been 
 members of the class that lives by manual 
 labour, but who have in reality, through the 
 workings of that system, been raised out of the 
 ranks of manual labour altogether, thus practi- 
 cally constituting a labour class of a new kind. 
 And now let us turn to the mass of the 
 manual labourers themselves. Just as rela- 
 tively to the number of the population as a 
 whole the number of workers of other kinds has 
 increased, so, in the same relative sense, the 
 number of the labourers has decreased. But 
 between these two bodies this is not the only 
 contrast. The average income per earner or 
 per head in the case of both bodies has 
 increased; but in the case of the body which 
 has relatively declined in number namely 
 the labourers the increase in average income 
 has beyond all comparison been greatest. 
 Middle class workers of various grades, who 
 a hundred years ago were earning ^80, ^200, 
 ^300 or ;6oo, would to-day be earning 
 from 100 to ;66o. Such incomes will 
 have increased by 10, or in some cases by 20
 
 Chap. II.] INCOMES OF MANUAL WORKERS aaf 
 
 per cent, but how do matters stand with regard 
 to the manual labourers? Had the entire 
 income of the country in the year 1801 been 
 divided equally amongst all, the share per head 
 of the population would have only been 20. 
 The share per worker would have been not more 
 than ,45. The actual average for all manual 
 labourers, from the highest grade to the lowest, 
 was, as may be seen from the figures quoted 
 in previous chapters, not more than ,29. l 
 The corresponding average for to-day the 
 average independent of skill, age and sex is, 
 as has likewise been shown in a previous chapter, 
 more than 60. Thus, whilst the remuneration 
 of work other than manual has risen on the 
 whole (we may say roughly) by 15 per cent., the 
 remuneration of manual work has risen by no 
 less than 120 per cent. 
 
 In other words, if we exclude only those 
 employers, heads of enterprises, administrators, 
 and owners of property, whose incomes exceed 
 ;iooo the total of these incomes, in so far as 
 it is of home origin, being not more than 9 per 
 cent, of the entire income of the nation and if 
 we take all other kinds of workers together, scien- 
 tific, administrative, clerical, manual and educa- 
 tional, by whom the wealth of the country is 
 produced, and the workers prepared for the 
 production of it, the history of the production 
 
 i. The middle class workers being deducted, there was 
 in 1801 an income of ^110,000,000 on a maximum to be 
 divided amongst a population of more than 8,000,000 
 persons, of whom about 3,800,000 were workers.
 
 2x8 SUMMARY [Book IV 
 
 and the distribution of wealth from the begin- 
 ning of the nineteenth century up to the present 
 time, may be broadly summed up as follows. 
 
 After all allowance has been made for the 
 increase of the population, the financial incre- 
 ment resulting from the progress of more than 
 a century is an additional income amounting to 
 i, 1 20 millions, of which about one-eleventh 
 goes to persons having more than ^1,000 a 
 year. The total left for distribution amongst 
 the rest of the nation amounts thus to 1,020 
 millions; and if (examining somewhat more 
 minutely the specific evidence at our disposal 1 ) 
 we add certain farther details to the analysis 
 already given, the result may be summarised in 
 the following amended statement. 
 
 Of the total sum, amounting to 1,020 million 
 pounds, by which, as compared with conditions 
 in 1 80 1, the increase in the income of the 
 labouring and middle classes exceeds the 
 increase in their number, 
 
 13 per cent, has gone in increasing the num- 
 ber of incomes between ,400 a year and 
 ,1,000, and slightly raising at the same 
 time their average amount, which is now 
 about ^630. 
 
 i. In the returns for 1801, incomes between ,160 and 
 .1,000 are divided into those exceeding and not exceeding 
 500. The numbers exceeding and not exceeding ^4 
 have, for the purposes of the tabular statement in the text, 
 been arrived at by reference to current assessments, 
 Schedule E, which may be taken as indicating the propor- 
 tion of incomes between ^400 and ^500 to the rest, in 1801.
 
 Chap. II.] LABOURERS 229 
 
 17 per cent, has gone in increasing the num- 
 ber of incomes between ;i6o and ^400, 
 and slightly raising at the same time 
 their average amount, which is now about 
 ^260. 
 
 20 per cent, has gone in increasing the num- 
 ber of incomes between ^90 and ,160, 
 not earned by wage-paid manual labour, 
 and in slightly raising at the same time 
 their average amount, which is now about 
 ;ioo. 
 
 50 per cent, has gone to manual labourers, 
 not in increasing their number (for this, 
 relatively to the population has declined 
 by 20 per cent.) but in more than doub- 
 ling the average per head earned by 
 them, this having been raised in the ratio 
 of 100 to 220. 
 
 With regard to the labourers, certain special 
 observations must be added. Had their number 
 increased in the same ratio as the population, 
 and not been diminished by the elevation of a 
 large proportion of them to the ranks of what 
 is really a labour class of a new kind, they 
 would have appropriated of the increment 
 in question, not 50 per cent, but 70; but the 
 fact that they alone have, relatively to their 
 number, more than doubled their earnings, 
 whilst no middle class incomes have even 
 approached such an increase, must be taken in 
 connection with a farther fact, which has already
 
 230 INCOMES OF LABOURERS [Book IV. 
 
 been discussed at length. To say with regard 
 to the labourers that the average income per 
 earner (irrespective of skill, age, and sex) is 
 now over ,60 as compared with 29 in the year 
 1 80 1 is not in itself sufficient to indicate what 
 has really happened. Unlike all middle class 
 incomes, each of which has a definite lower 
 limit, the earnings of labour may in many cases 
 sink to an indeterminate minimum which, if not 
 supplemented by poor-relief, would be insuffi- 
 cient to support life. It has, however, been 
 pointed out that, whereas in the year 1801 only 
 10 per cent, of all incomes not exceeding ^160 
 a year were above what reformers to-day quote 
 as the poverty limit, only 20 per cent., if so 
 much, now fall below it. It is therefore obvious 
 that the increase in the remuneration of labour 
 has affected all groups except one, which is at 
 once small and exceptional. This group, 
 precisely because it is exceptional, will presently 
 be considered by itself. The groups of persons 
 at the other end of the scale, whose incomes 
 exceed ^"1,000, ,5,000 or ,20,000 (relatively 
 insignificant though their aggregate income be), 
 will for the same reason be considered separ- 
 ately also. 
 
 Meanwhile, confining ourselves to the great 
 body of the population, who represent at least 
 90 per cent, of the home-produced income of 
 the country, we may again observe with regard 
 to them that 86 per cent, of it has gone in 
 doubling the income of the majority of the 
 labouring classes, and in multiplying the
 
 Chap. II.] A FUNDAMENTAL MISCONCEPTION 331 
 
 incomes of middle class workers, none of 
 which exceed ^400 a year; whilst 14 per 
 cent, has gone to a group comparatively 
 small, none of whose members have more than 
 ji,ooo a year, their average income being not 
 so much as ^650. 
 
 Everything, in short, has happened which, 
 according to the reformers, has not happened. 
 And now it must be observed that this funda- 
 mental misconception on their part does not 
 merely affect them and their followers by 
 influencing their general judgment of things, 
 and their general temper and attitude of mind 
 towards them. It vitiates their treatment and 
 conception of each single question or problem 
 on which, as the subject-matter of reform, 
 public attention from time to time is concen- 
 trated. The chief of these questions or prob- 
 lems shall be reviewed in the next two chapters; 
 and some of the ludicrous and contradictory 
 errors of judgment shall be signalised, which 
 reformers, whether radical or socialist, are 
 accustomed to bring to the solution of them.
 
 CHAPTER III. 
 
 A DISTINGUISHED American writer, in his annals 
 of "A Tramp Abroad," describes how a traveller 
 on arriving at a mountain hotel in Switzerland, 
 slept so long that, intending to see the sunrise, 
 he found himself watching what he subsequently 
 discovered to be the sunset. This misconcep- 
 tion, among other effects on his conduct, caused 
 him to sally from his bedroom with nothing on 
 but a dressing-gown, and encounter a congre- 
 gation of guests elaborately costumed for 
 dinner. The profound misconception of social 
 actualities as a whole, which is distinctive of 
 the reformers of to-day, affects in a similar 
 manner their judgment in respect of the various 
 particular questions with which all politics, in 
 so far as they are practical, are concerned. 
 
 The most striking illustration of this is the 
 case, described already of Marx and Henry 
 George. Both started with the same general 
 theory that one class was growing so inordin- 
 ately rich that every other class was the victim 
 of increasing poverty. Both maintained that 
 this movement was exemplified in the British 
 Islands on a scale more appalling than in any 
 other country of the world : and each realised 
 that if this theory was to be invested with any 
 practical meaning, the particular class of Britons 
 which was seizing on everything must be iden- 
 
 333
 
 Chap. III.] THEORIES OF MARX & GEORGE 233 
 
 tified, and some explanation given of the why 
 and how of its depredations. Marx identified 
 this class with the great modern manufacturers, 
 George with the great landlords. Thus all 
 reform for Marx reduced itself to an industrial 
 question; for George all reform reduced itself 
 to a rent-question, or a land-question. Each 
 of these questions relates to a multitude of 
 detailed facts; and we have seen already to 
 what an astonishing extent the general theory 
 with which both reformers started reproduced 
 its errors, when applied by each to the group of 
 particular facts selected by him. 
 
 The same mental process is in operation 
 amongst reformers still. But to-day each of 
 the two original questions is broken up into 
 several, according to the varieties of intelli- 
 gence, education and temper, which reformers 
 have, since the days of George and Marx, 
 brought to bear on the teachings of those who 
 are still their masters. Thus the land-question 
 resolves itself into one thing for the single- 
 taxer, into another for the socialist, and again 
 into another for the radical ; whilst the industrial 
 question, with which socialists are mainly pre- 
 occupied, resolves itself, according as it is 
 approached by socialist reformers or radical, 
 into " questions " which point to the extinction 
 of the private capitalist altogether, or to 
 " questions " which imply his perpetuation by 
 enabling his opponents to endure him. 
 
 In the present and the following chapters 
 certain of the most important of these separate
 
 a$4 " SINGLE TAKERS " [Book IV. 
 
 " questions " shall be dealt with one by one ; 
 and in each case it shall be shown how the 
 general theory which all the reformers adopt 
 as the explanation of all social evils, vitiates 
 their estimates of the actualities with which they 
 propose to deal. These " questions " are as 
 follows : 
 
 The land-question as understood by the 
 single-taxers. 
 
 The land-question as understood by the mass 
 of radicals. 
 
 The land-question as it appears under the 
 form of the " agricultural question." 
 
 The industrial question as a question of 
 wages. 
 
 The industrial question as a question of 
 profits. 
 
 In the present chapter we will deal with the 
 questions that relate to land. 
 
 With regard to the single-taxers, it is needless 
 to say more than a word or two. Like dunces 
 put in a corner, they form a class by themselves, 
 scouted by all the others. The conservative 
 rejects them, because the essence of their 
 programme is robbery. The socialist rejects 
 them because their robbery would not go far 
 enough. The radical rejects them for another 
 reason, which he shares with the conservative, 
 and with most socialists also, but which, in the 
 ca* of the radical is deserving of special notice, 
 and which will be stated presently. The single- 
 taxers, who would confiscate all land-rent under 
 the guise of a tax which should supersede all
 
 Chap. ITT 1 THE LAND QUESTION 235 
 
 others, represent in its childish integrity the 
 fundamental doctrine of George, that the rent 
 of crude land, in every progressive country, 
 eats up most of the wealth created by capital, 
 as well as that created by labour, and that it is 
 making its largest meal in Great Britain and 
 Ireland. They accordingly maintain, as the 
 basis of their practical proposals, that no matter 
 how many millions or hundreds of millions of 
 pounds the public expenditure of this country 
 amounts, or may one day amount to, land-rent 
 does and will amount to a sum still greater. 
 But, plausible as their scheme may sound, the 
 radicals of to-day reject it. And why? The 
 reason why they reject it is this. They realise 
 that the one proposition as to fact on which the 
 single-taxers take their stand is a piece of 
 grotesque nonsense, and that any policy based 
 on it would end in ruin and ridicule. 
 
 Let us now, in the searchlight of exceedingly 
 recent history, consider the " land-question " as 
 understood by the radicals themselves. Having 
 rejected one fiction with regard to the rent of 
 land, they have at once adopted another, which 
 in some ways is even more preposterous. Their 
 reasoning has been virtually as follows. ' The 
 landlords have not yet succeeded in robbing 
 the nation to the extent, or nearly to the extent, 
 which certain persons suppose; but, since all 
 poverty is due to the increasing accumulations 
 of the superwealthy, the landlords must be 
 obviously amongst the first offenders somehow. 
 How, then, in their case is the trick of accumu-
 
 336 RENT OF LAND [Book IV. 
 
 lation done?" Armed with the major premiss 
 that the trick is being brought off somehow, tne 
 radicals were quick in agreeing as to what the 
 operation was. " It may be true," they said in 
 effect, " that the rent of land to-day is not as 
 a whole greater than the income from other 
 securities; but in one respect stands alone. It 
 stands alone in the fact that, unlike income 
 from shares in any kind of commercial enter- 
 prise, it exhibits an automatic increase a 
 portent unknown to stockbrokers; and here, in 
 this 'unearned increment/ and not in land- 
 rent as such, we identify those thefts on which 
 the landlords thrive, and which leave the homes 
 of the people defenceless against ' the wolves 
 of hunger.' It is useless to object," the argu- 
 ment thus continued, " that the land-rent of the 
 country even now is not more than so much. 
 What the people must be made to realise is its 
 daily and hourly increase, and the fact that 
 every year this increase is itself increasing. 
 Let this be compared with the increases of 
 income from other sources, and it leaves them 
 all behind. Does anybody doubt this? We 
 can open his eyes by instances." 
 
 The train of powder having been laid, the 
 match was forthwith applied to it. From 
 radical platforms everywhere cases were cited 
 (or let off, like school-boys' crackers) of diminu- 
 tive plots of land, which only yesterday were 
 let for $ an acre, and had just been re-leased 
 for ^300, or had been bought by the father of 
 some noble duke for ,5,000, and had just been
 
 Chap. III.] THE ACTUAL FACTS 3J5 
 
 resold by the son for something like ^"50,000; 
 and each exhibition of instances was wound up 
 with the moral that " this sort of thing is in 
 progress all over the country." Such argu- 
 ments, as emanating from the leaders of radical 
 opinion, are remarkable ; but what is still more 
 remarkable is the instant and eager acceptance 
 of them by the whole radical public. New 
 instances of the sensational gains of landlords 
 crowded the columns of the ministerial journals; 
 and the image of the " unearned increment " 
 grew to such vast proportions that multitudes 
 saw in a tax of 10 per cent, on it the promise 
 of pounds of salmon on the table of the poorest 
 worker, and the rarest of refreshing fruits from 
 thousands of miles of hot-houses. 
 
 And meanwhile what were the actual facts of 
 the situation ? The radicals professed to arrive 
 at these by an examination of specific instances, 
 to each of which they drew attention as being 
 at once startling and representative. These 
 instances may have been startling, and a large 
 number of them may have been true ; but what 
 the radicals omitted to detect, or to admit, was, 
 that each was only startling because, instead of 
 being representative, it was exceptional. The 
 radicals might just as reasonably pick out five 
 famous artists, each of whom gets for a picture 
 ten hundred pounds to-day, whereas not many 
 years ago he was getting no more than ten ; and 
 then invite us to conclude that the earnings of 
 artists as a whole good, bad and indifferent 
 are a hundred times greater to-day than in
 
 *38 TOTAL RENTAL [Book IV. 
 
 the reign of the late King Edward. The 
 actual facts can be ascertained by a very simple 
 method. Year by year the Department of 
 which the Chancellor of the Exchequer is the 
 head, issues a statement of the rent derived 
 both from land and buildings; the gross incre- 
 ment in respect of both these sums is for each 
 year ascertainable by the simplest of arithmeti- 
 cal processes ; and, if we concede, in accordance 
 with the common computation, that the ground- 
 rent of a building, on an average, is as much as 
 one fifth of the gross rent, we can determine 
 with an accuracy sufficient for all general pur- 
 poses, what year by year has been the increase 
 in the rent of land itself. We can also, by 
 reference to similar official records, compare the 
 increase in land-rent with the contemporaneous 
 increase in incomes from other sources. Let 
 us then see what, according to the Commis- 
 sioners of Inland Revenue, has actually taken 
 place in the course of the last fifteen years. In 
 each case we will content ourselves with the 
 gross amounts as given, which, though greater 
 than the true totals will be all that we require 
 for a comparison. 
 
 In the year 1895 tne gross agricultural rental 
 of the United Kingdom (over-assessments and 
 outgoing's included) was ^55,000,000; the 
 ground-rental (urban and suburban) was 
 ^3 1 ,000,000 ; the rental as a whole being- 
 ^86,000,000. The corresponding- figures in 
 the year 1910 were, agricultural rental. 
 ^"52,000,000; ground-rental, ^44,000,000; th:-
 
 Chap. III.] RENT OF LAND AND INCOMES 259 
 
 rental as a whole being 96,000,000. Let us 
 now compare the rent of land with incomes from 
 two other sources only the rent of buildings 
 as distinct from the ground they stand on, and 
 interest derived from shares in foreign railways 
 and loans to foreign governments. In the year 
 1895, the building-rental was 12 3, 000,000; 
 the income derived from foreign loans and 
 railways was ^54,000,000; the total of the two 
 revenues being ^17 7, 000,000. In the year 
 1910 the corresponding figures were, building- 
 rental ^178,000,000; interest from foreign 
 railways and foreign government loans, 
 ; 1 01,000,000; the total of the two revenues 
 being ^279,000,000. It will thus be seen that 
 whilst incomes other than land-rent have 
 increased, during the period in question, by 
 more than ,100,000,000, land-rent has been 
 so untrue to its reputation that it has managed 
 to increase by one tenth of that total only. But 
 not only is its increase, compared with that of 
 the other incomes from property, negligible in 
 absolute amount. This amount, small as it is, 
 has for some time past, been annually growing 
 less and less. The agricultural rental has not 
 increased at all. It has on the contrary dwin- 
 dled at an average annual rate of ,400,000. 
 The only increase has been an increase in the 
 total of urban ground-rents; and this on a 
 yearly average has amounted approximately to 
 ,870,000. If, however, the fifteen years we 
 are dealing with be divided into three quin- 
 quenniums, we shall find that between the years
 
 340 UNEARNED INCREMENT [Book IV. 
 
 1895 and 1900 the annual increase averaged 
 about S 50,000, that between the years 1900 
 and 1905 it rose, nominally at all events, to 
 more than ^"900,000 j 1 and that between the 
 years 1905 and 1910 it was not more than 
 ;6oo,ooo. 2 Finally, if we compare these 
 increases with the increase of the national 
 income as a whole, the largest of them as well 
 as the smallest represent a relative decrease. 
 Thus, to sum the matter up, the " unearned 
 increment " of land-rent not only possesses 
 none of the qualities which the radical imagina- 
 tion ascribes to it, but is remarkable for others 
 of a kind precisely opposite. It is a signal 
 illustration (if we look at it from a speculative 
 standpoint) of what economists call the law of 
 " diminishing returns " ; and what is far more 
 important for all practical purposes, its absolute 
 amount, as compared with the wealth of the 
 nation, is insignificant. The reformers of 
 to-day who announced that, by placing a special 
 tax on it, they were taking some seven-leagued 
 step towards the abolition of poverty, are like 
 
 1. This high average for the years 1900-1905 is mainly 
 due to overbuilding in the year 1903. The nominal in- 
 crease in house-and-site values thus caused, was double 
 the average ; but, as appears from the Deductions (Schedule 
 A of the Income-Tax Returns), there resulted a greater 
 increase in the amount deducted in respect of unoccupied 
 premises 
 
 2. During this last quinquennium there has been a con- 
 tinual decline from the higher level of previous years down 
 
 to about ^300,000.
 
 Chap. III.] " THE AGRICULTURAL PROBLEM " 241 
 
 a sportsman of the type of Tartarin, who should 
 organise a vast expedition against a supposed 
 man-eating tiger, and at the end of the day come 
 back with a dormouse. So grotesque a mis- 
 conception of the actualities of this particular 
 question could hardly have arisen in the minds 
 of the radical leaders themselves, and would 
 certainly have been never accepted by multi- 
 tudes with acclamations of unhesitating belief, 
 had it not been a part of, or a deduction from, 
 that wider misconception of the general trend 
 of affairs, which has in the preceding pages 
 been the main subject of our enquiry. 
 
 The treatment of the " land-question," under 
 the form of " the Agricultural Problem," by 
 reformers of all kinds (who in this connection 
 comprise certain conservatives) is in some 
 respects yet more interesting as an illustration 
 of similar results arising from the same cause. 
 It is more interesting because, in the way of 
 actual facts, there is more for the reformer to 
 go upon. With regard to agriculture in this 
 country, the following facts are admitted by all 
 parties : 
 
 In the first place it is politically desirable that 
 the maximum amount of food should be pro- 
 duced within our own borders; in the second 
 place, for reasons other than those of insular 
 self-support, a rural population is an important 
 national asset ; in the third place, the amount of 
 bread-stuffs produced in the United Kingdom 
 has, throughout the lifetime of the present 
 generation, been declining; and lastly, the
 
 443 MR. MASTERMAN'S FALLACIES [Book IV. 
 
 number of persons engaged in the business of 
 agriculture has, throughout the same period, 
 been steadily declining also. All these points 
 are deserving of serious consideration; but the 
 moment they are interpreted in the light of the 
 current theory of reformers, they are so dis- 
 guised, perverted or inverted, that no sane 
 judgement with regard to them is, so long as 
 they are presented in such forms, possible. 
 
 Let us see how this feat of perversion is 
 accomplished by Mr. Masterman. In his book, 
 ' The Condition of England," he professes to 
 give, for the guidance of the conscientious 
 radical, a survey of English agriculture, and 
 what he calls " the life of the countryside " from 
 the beginning of the nineteenth century up to 
 the present time. According to him in the days 
 of our great grandfathers, when modern super- 
 wealth was as yet in the germ only, English 
 agriculture was in a state of ideal prosperity; 
 the English peasantry were the backbone of the 
 population; the individual peasant or labourer 
 was a comparatively free man, and, though not 
 without its hardships, " his lot was no ignoble 
 one." But now in the course of little more 
 than a hundred years every one of these features 
 has undergone a disastrous change. The 
 villages, once the centre of England's life, have 
 been depopulated. Out of every ten village 
 families nine have disappeared for ever. The 
 few men who are left, although they have now 
 got votes, have lost that sense of independence, 
 which was, when they were voteless, their very
 
 Chap. III.] SLAVES OF A THEORY *43 
 
 remarkable characteristic. To-day, says Mr. 
 Masterman, they " are still as slaves before their 
 lords " ; they are moreover by this time so sunk 
 in poverty that " the wonder of the case is not 
 that so many go; the wonder is that any 
 remain"; whilst, to crown the miserable story, 
 the business of agriculture itself (if not exactly 
 dead) is dying. 
 
 Mr. Masterman's statement, if it does not 
 represent facts, is an excellent representation 
 of the representations of them made by modern 
 reformers. Plutarch was said by a critic to be 
 so much the slave of style that, if it had been 
 necessary for the literary perfection of a 
 sentence, he would have made Caesar kill 
 Brutus instead of Brutus killing Caesar. The 
 reformers in the same way are the slaves of 
 their general theory, which constrains them so 
 to represent the history of British agriculture 
 that it may form an indictment against the 
 present system of landowning, because that 
 system is associated with a certain class of 
 landowners, to whose avenues and great houses, 
 to whose pheasants, to whose foxes, and to 
 whose deer, and indeed to whose vermin 
 generally, the life of the agricultural worker 
 and the powers of the soil have been immolated. 
 
 Now without discussing how far the present 
 system of landowning may be responsible for 
 the main facts of our modern agricultural 
 history, let us take these facts as Mr. Master- 
 man and his friends represent them, and
 
 144 AGRICULTURE [Book IV. 
 
 compare them with the corresponding facts 
 which are attested by statistical evidence. 
 
 The primary propositions of Mr. Mastennan 
 and his friends (which a good many conserva- 
 tives have been induced to accept) are these : 
 
 (1) Agriculture, regarded as a productive 
 business, has been declining for more than a 
 hundred years. 
 
 (2) The number of persons engaged in 
 agriculture has been declining for more than a 
 hundred years. 
 
 (3) The wages of the agricultural labourer 
 have been declining for more than a hundred 
 years : all these results being due to the 
 general fact that this country is a country of 
 " avenues " leading up to the houses of the 
 " superwealthy." 
 
 The first and the third of these propositions 
 are the exact reverse of the truth. The second 
 has an element of truth in it, but omits, obscures, 
 shuffles out of sight, buries, the one part which 
 alone can render the whole intelligible. 
 
 With regard to agriculture considered as a 
 productive business, its prosperity, like that of 
 any other business whatsoever, must, as Mr. 
 Masterman and all other reformers will admit, 
 be measurable by the volume together with 
 the value of its products. T hey not only 
 admit this, but as agitators they argue on the 
 admission. Thus, the current annual value of 
 the agricultural output of Great Britain has been 
 lately quoted bv them, on the authority of 
 the Census of Production, as ^220,000,000:
 
 Chap. Ill] AGRICULTURE 245 
 
 and this total, by a reformer of Mr. Masterman's 
 school, is cited as evidence of a " decline " in 
 our agricultural products which only just fails 
 to fill reasonable men with "despair." 1 Now 
 without going into details, it will be enough for 
 our immediate purpose to compare this admitted 
 figure with another which is no less indubitable. 
 In the year 1798 it was computed by Pitt and 
 his advisers that the income of Scotland was 
 about one eighth of that of England and Wales. 
 Hence, the latter having, at the beginning of the 
 nineteenth century, been certainly not more than 
 ; 1 80, 000,000, the entire income of Great Britain 
 cannot by any possibilityhave much exceeded, 
 if indeed it reached, a total of ; 2 00,000,000. 
 In other words, the present value of the agri- 
 cultural output alone the output of that 
 industry which reformers describe as "dying" 
 is actually greater to-day than the entire income 
 of the country from all sources whatsoever at 
 the time when this industry, according to the 
 doctrine of the reformers, was enjoying a 
 prosperity which it has now lamentably lost. z 
 With regard to the alleged decline in the 
 
 1. See Report on the Rural Problem, by Mr. Harben, 
 issued on behalf of the Fabian Society, 1913. 
 
 2. The wheat-supply of England in 1801 was sufficient 
 for nearly the whole population, and was about equal to 
 the home-grown supply to day. The meat-supply and the 
 supply of dairy and garden produce has increased by 70 
 per cent, since the years 1835-40, if we may judge by the 
 figures for those years given by McCullock, as compared 
 with those given in the Census of Agricultural Production 
 pr the year 1907.
 
 24& AGRICULTURAL POPULATION [Book IV. 
 
 number of the agricultural population, the 
 reformers are perfectly correct in declaring 
 that a decline has occurred, and that it is one 
 of the most remarkable occurrences of the 
 period here in question. Their error, whether 
 this arises from intention or helpless ignorance, 
 relates to the date at which the decline began. 
 That date which, according to their own asser- 
 tions, was the beginning of the nineteenth cen- 
 tury, was not the beginning of the nineteenth 
 century, but the middle of it. So far as the 
 Census Returns enable us to speak with 
 accuracy, up to the year 1851 the agricultural 
 population, instead of declining in number, 
 continued steadily to increase. Then, but not 
 till then, did any general decline begin; and 
 the present results of this downward movement 
 have been what? That the agricultural popu- 
 lation of Great Britain to-day is so far from 
 being (as Mr. Masterman suggests) very nearly 
 extinguished, that its number is not less, indeed 
 appears to be slightly larger, than it was in 
 what Mr. Masterman represents as its golden 
 age; 1 whilst, relatively to the persons employed, 
 the value of the product has, to say the least of 
 it, doubled itself. 
 
 Finally, with regard to the hopeless and 
 
 i. The approximate figures for England and Wales, as 
 discoverable from a careful examination of the Census 
 Returns, and the difference they exhibit in respect of 
 classification, are as follows : Number of persons directly 
 engaged in Agriculture: 1801, 1,500,000 1,600,000; 1851, 
 1,900,000 2,000,000; 1907 1910, 1,500,000 1,600,000.
 
 Chap. II1.J AGRICULTURAL WAGES 4? 
 
 increasing poverty which is alleged by reformers 
 to be the lot of the agricultural labourer, it may 
 be admitted for the sake of argument, or even 
 without any such reservation, that his wages are 
 lower than they should be, and that means exist 
 for augmenting them; but the truth of these 
 contentions being assumed, the point to be noted 
 is, that the reformers cannot express it without 
 converting it into a falsehood. Whatever may 
 be the average wages of agricultural labour 
 to-day, there is one thing which they are not. 
 They are not lower than they were at that 
 particular period whence, according to the 
 reformers, their tragic decline dates. On the 
 contrary they are incomparably greater; and 
 their rise since then, even if slow at first, has 
 been continuous. The annual earnings of an 
 English agricultural labourer were in the year 
 1 80 1 commonly computed at 21 a year. 
 Their average fifty years later had risen to ^28; 
 at the present time, according to the latest 
 information, it is slightly over ^45. * 
 
 It is outside the scope of the present volume 
 to discuss the agricultural question in relation 
 to any special policy. The point here insisted 
 on with regard to the three propositions just 
 examined, which reformers enumerate as indi- 
 cating the essential facts of the situation, is not 
 only that they happen to be false, but that no 
 sound policy which has these for its basis is 
 possible. 
 
 All parties alike would desire that our 
 
 i. See Blue-book, Cd. 4671 of 1909, p. 36.
 
 248 AGRICULTURAL WORKERS [Book IV. 
 
 agriculture as a whole should in point of pro- 
 ductive efficiency be very greatly increased ; but 
 the question really at issue being how to make 
 it greater than it is, those persons are merely 
 darkening counsel, and turning the attention of 
 the public in a totally wrong direction, who 
 popularise a belief that it is indefinitely less 
 than it was before the " superwealthy " had 
 crippled it in some fabulous though recent past. 
 Similarly the decline in the number of the 
 agricultural workers, is by all parties alike 
 regarded as in itself a misfortune; but to 
 represent the decline as dating from the begin- 
 ning of the nineteenth century, when the actual 
 date was the middle of it, is to obscure the only 
 causes which can render the event intelligible. 
 The beginnings of the decline coincided with 
 the triumph of free-trade principles; and little 
 though the early free-traders may have realised 
 this themselves, to produce this precise decline 
 was their logical if not their conscious object. 
 Their reasoning was the reasoning of all 
 business men. It was mainly peculiar and 
 efficacious because specially applied to corn 
 the main food of the people, specially the 
 food of the poor. If ten men in Russia can 
 provide us with twenty loaves of bread, why 
 should the poor such was the gist of their 
 argument pay fifteen men in England to 
 provide them with the same quantity? The 
 primary effect of their free-trade policy on 
 agriculture was a great development of labour- 
 saving machinery of machinery designed to
 
 Chap. III.] INFLUENCE OF FREE TRADE 349 
 
 enable ten English bread-producers to perform 
 the work which had previously required fifteen. 
 The second result was a development, gradual 
 at first, then rapid, the purpose of which was 
 similar, namely the saving of labour without 
 diminution of the product; and this second 
 result was the transference of agricultural 
 enterprise from the production of one kind of 
 staple food, namely bread, which relatively 
 to the requisite area requires most labour, to the 
 production of another kind, namely meat, which 
 relatively requires least. The farmers, in 
 adopting this policy, merely followed the course 
 which the adoption of free-trade principles by 
 the nation at large imposed on them. A decline 
 in the number of the agricultural workers 
 relatively to the product of agricultural work, 
 was not merely a result of free-trade in food- 
 stuffs. It was the crucial result at which the 
 free-trade movement aimed. These observa- 
 tions are not made with the intention of advo- 
 cating a return to agricultural protection. 
 Their intention is merely to indicate the com- 
 plicated nature of the questions which the 
 decline in the number of the agricultural 
 workers raises, and to show how, if the date at 
 which the decline began is hidden, as reformers 
 hide it, under a flood of historical fallacies, 
 all discussion of these questions is a wrangling 
 in the dark, and all attempts to deal with them 
 are leaps in the dark. 
 
 The same thing remains to be said as to the 
 third proposition of the reformers, which con-
 
 250 WAGES TO-DAY [Book IV 
 
 verts the contention, deserving of all respect, 
 that the agricultural labourers should be better 
 paid than they are, into the sensational fable 
 that they are worse paid than they were, and that 
 the sinister diminution in their number has been 
 accompanied by a diminution no less sinister 
 in their wages. This is not merely an intrusion 
 of fable into the domain of fact. It is the 
 intrusion of a fable so pernicious in kind that, 
 of all the facts involved, the fact which is most 
 vital to the problem at issue is hidden by it. 
 The vital fact is that, as the number of the 
 workers has diminished, their wages, instead of 
 diminishing, have increased in almost the same 
 proportion; the remarkable result being (as can 
 easily be shown by a careful examination of 
 the figures), 1 that two agricultural labourers on 
 an average, at the present day, divide between 
 them a sum which is slightly in excess of that 
 which was divided between three in the year 
 1850. The conclusions which may be drawn 
 from this fact are various and far-reaching. 
 What is here urged is merely that they are of 
 such profound importance that, unless the fact 
 in question is fully and fairly recognised, the 
 future of agricultural wages and the agricultural 
 i. It appears that there has been no appreciable, if any, 
 decline in the number of agricultural " occupiers," i.e., 
 fanners of various grades ; the class which has declined, 
 consisting of wage-paid labourers. The diminution of thes* 
 (as compiled by all parties) has, since the year 1850, been 
 in the ratio of about 150 to 100. The increase in average 
 wage-rates since 1850, has been in the ratio of 100 to 158. 
 See Cd. 4671, as above.
 
 Chap. III.] ERRORS OF REFORMERS 251 
 
 question generally cannot be profitably dealt 
 with by any reformer whatsoever, whether he 
 be a radical restraining a socialist, a socialist 
 outbidding a radical, or a conservative who, 
 borrowing his premises from one of these or the 
 other, is tempted to outbid both. 
 
 Such, then, are some of the particular errors- 
 errors relating to land which result from the 
 general theory common to all reformers that 
 the clue to every social grievance is the dispro- 
 portionate " piling up of the aggregations " of 
 some small and " superwealthy " class at the 
 growing expense of all the rest of the com- 
 munity. 
 
 In the following chapter we will turn to the 
 " industrial question " ; and it shall be shown 
 how, in connection with this, the same fallacious 
 theory has resulted in errors of an even greater 
 magnitude.
 
 CHAPTER IV. 
 
 IN so far as it relates to immediate demands 
 and hopes, the " industrial question " resolves 
 itself, as has been said already, into a wages 
 question on the one hand, and a profits question 
 on the other, the second of these being the 
 converse side of the first. 
 
 The wages question, from the point of view 
 of the wage-earners, has its origin in two very 
 natural desires, one being to maintain their 
 earnings the other being to increase them : and 
 the latter, as experience shows, is no less 
 reasonable than the former. The industrial 
 history of this country for more than a hundred 
 years has been a history, not only of an increase 
 in the production of wealth generally, but of 
 an increase in the wages of the individual 
 labourer also, and though reformers do their 
 utmost to hide, and actually to invert, this fact, 
 a large number of the wage-earners more or less 
 clearly recognise it. Hence the portion of 
 their general thesis which reformers at the 
 present time whether strike-leaders, profes- 
 sional politicians, or other apostles of discon- 
 tent find most efficacious, in many quarters at 
 all events, is the contention that, even if 
 absolutely rates of wages have risen, they have 
 risen in a far smaller ratio than the value of the 
 total product; and that, thus considered in the 
 light of what at once is just and possible, the 
 
 352
 
 Chap. IV.] THE WAGES QUESTION 253 
 
 wage-earners as a body are the victims of an 
 ever-increasing wrong. Here is the old story 
 again of " the piled-up aggregations of the 
 superwealthy," carrying with it the inference 
 that the only problem for the wage-earners is 
 how to make new inroads on a practically 
 inexhaustible hoard. 
 
 This contention, as applied more particularly 
 to manufacturing industry, has now resolved 
 itself into a demand for a universal minimum 
 wage. For such a demand in the abstract there 
 is much which may be reasonably said : but 
 even in the abstract, the question of whether it 
 is reasonable or otherwise implies a reference 
 to something like actual facts. For example, 
 if, relatively to the population to-day, indus- 
 trial productivity to-day were no greater than 
 it was at the time of the battle of Waterloo, the 
 most moderate of the present demands now made 
 in relation to wages generally would have no 
 more meaning than the baying of a dog at the 
 moon; for the entire wealth of the country 
 would be insufficient to satisfy them. Practi- 
 cally, therefore, a minimum wage means nothing 
 unless it means a certain specific amount which 
 can be compared with that of the entire distri- 
 butable product. 
 
 Let us then consider the most recent of the 
 definitely formulated proposals which have 
 been put forward, in connection with this 
 question, by prominent leaders of strikes and of 
 other reforming movements. Such proposals 
 are all of a double character. They comprise,
 
 354 A MINIMUM WAGE [Book IV. 
 
 in addition to a great increase in wages, a great 
 reduction in the length of the working day. 
 This reduction has, by advanced reformers, 
 been long defined as a substitution of six daily 
 hours for nine; but the minimum wage to be 
 paid for these six hours has not till lately been 
 defined with the same precision. Precision 
 began and it is interesting to note this as 
 the result of the preliminary issue of certain 
 portions of the Census of Production, according 
 to which the value of this country's manufac- 
 turing output, if divided by the number of 
 the persons employed in producing it, would 
 work out at something like ^100 per head. 
 Hence it was at once argued on labour plat- 
 forms that, since nothing produces wealth but 
 ordinary manual labour, the lowest wage which 
 is due to the operatives of this country cannot 
 be less than a matter of forty shillings a week. 
 A minimum wage, then, of forty shillings a 
 week, the hours of daily labour per day being 
 reduced from nine to six, represents the kind 
 of arrangement which, according to contem- 
 porary reformers, is the least that labour should 
 aim at as a full satisfaction of its claims. The 
 calculation is exceedingly interesting, because 
 its bases can be at once identified; and, by 
 examining these, we can detect the manner in 
 which reformers reason. These bases are to 
 be found in the elaborate summary which the 
 Census of Production gives of the entire selling 
 value of the products of all, and of each 
 separate group, of the chief manufacturing
 
 Chap. IV.J NEED OF CAPITAL 355 
 
 industries of Great Britain and Ireland, and 
 of the number of persons employed in each of 
 them and in all together. And the results, so 
 far as they go, are given by the reformers 
 accurately. The entire selling value of the 
 output is, in round figures, 700 million pounds. 1 
 The number of persons employed is, in round 
 figures, seven millions. But the meaning of 
 these two sums is very far from being what, at 
 first sight, it appears to be. There are various 
 facts which the agitating reformers overlook. 
 
 In the first place the production of the total 
 values in question involves the use of avast mass 
 of capital, which is embodied mainly in build- 
 ings and endlessly elaborated mechanisms. 
 These buildings and mechanisms would soon 
 be a useless scrap-heap unless they were subject 
 to a process of constant renewal and repair. 
 The cost of this process, as the Final Report 
 on the Census of Production shows, and as 
 has also been explained elsewhere in the present 
 volume, comes out of the product-value that 
 is to say, 700 million pounds; and amounts on 
 a yearly average to 11 per worker. Of those 
 workers whose earnings are less than ^160 a 
 year, the average actually earned per head is 
 
 i. This does not include the value added by commercial 
 transport and distribution, nor does it include the value of 
 the output of a number of minor industries. The workers 
 involved represent approximately one-half of the wage- 
 mrning population.
 
 256 WAGES AND PROFITS [Book IV. 
 
 If the salaried staff be included, many 
 members of which earn more than ;i6o, the 
 average earned per head of the whole employed 
 body is 72. It will thus be seen, in the first 
 place, that out of the 100 per head, which 
 presents itself to the fancy of the reformers as 
 available for distribution amongst the wage- 
 earners, the theoretical maximum is not more 
 than ^"89; in the second place, of this ^89, 
 more than 80 per cent, goes as wages already; 
 and farther, that of every ^100 of the value 
 of the products sold, what remains with the 
 employers for distribution as profits and 
 dividends, is ,17, or little more than a sixth; 
 whilst even this, as the Census of Production 
 indicates, is considerably diminished by rates, 
 and other less important charges. 
 
 But this is the beginning, not the end of the 
 matter. 
 
 These calculations assume that, except in 
 respect of wages, the productive process will 
 remain what it is to-day, and that the volume 
 and the value of its products will be, at all 
 events, not less than they are. It remains for 
 us to take account of the fact that, concurrently 
 with a rise of wages, the reformers demand a 
 reduction in the hours of labour. Now from 
 every point of view this demand is of the first 
 importance, but more especially from that of 
 
 i. The average for all such workers, if domestic servants, 
 and agricultural labourers be included, is, as has been 
 Shown in a former chapter, about 6t per head. For other 
 workers alone it is slightly more.
 
 Chap. IV.] LABOUR AND WEALTH 257 
 
 the reformers themselves. The very nature 
 of the claims which they advance on behalf of 
 wage-paid labour shows them to be possessed 
 by the old socialist idea that such labour is the 
 sole producer of wealth, and that the amount 
 of wealth produced by a given number of 
 labourers rises and falls with the number of the 
 hours for which they labour. 1 And if other 
 conditions all remain unchanged such as the 
 knowledge and intellectual energy by which 
 the details of labour are determined, and if the 
 hours devoted to labour are the quantity which 
 alone varies, this theory is plainly true. It is 
 obvious, therefore, that if, other things being 
 equal, the quantity of labour, as measured by 
 time, diminishes, the value of the total product 
 will be diminished in like proportion. The 
 proposed reduction of labour-hours, being a 
 substitution of six per day for nine, or of eight 
 working months in the year for the present 
 number of twelve, will reflect itself in the value 
 of the product, which, from its present total of 
 some 700 million pounds will be reduced 
 accordingly to no more than 470 millions. If 
 from this sum we deduct the costs of upkeep 
 
 i. This is one of the cardinal doctrines of the "economic 
 science" of Marx. It is of course subject to this qualifica- 
 tion, that the number of labour-hours regarded as possible 
 per day does not exceed that for which the physical 
 strensfth of the worker can be maintained. Thus, though 
 a reduction of nine hours to six means a reduction in the 
 outr-ut, a reduction of 16 hours to nine might mean an 
 increase.
 
 S8 WORKERS AND PRODUCTS [Book IV. 
 
 of capital, the total left for distribution amongst 
 seven million wage-earners would work out, 
 should the wage-earners get the whole of it, at 
 something slightly less than 60 per head, or 
 12 less than the average which they earn now. 
 
 If, however, instead of being content with 
 mere general conclusions such as these, we 
 examine the industries individually to which 
 these conclusions refer, the facts of the case 
 will reveal themselves in a yet more instructive 
 light. We shall find that the value of the 
 products as related to the number of the 
 workers, though amounting to a general average 
 of ,100 per head, conforms to this average in 
 a few of the individual cases only, diverging 
 from it otherwise in various and most remark- 
 able ways. 
 
 Of this the most prominent example is 
 provided by a group of industries which include 
 the supplies of electricity, gas, and water, but 
 which are for the most part of a chemical or 
 quasi-chemical character. 1 These account for 
 an output of 130 million pounds out of a total 
 of 700 millions that is to say, nearly one-fifth 
 of the whole; but they employ between them 
 only one fourteenth of the workers that is to 
 say, about 500,000. The output per head 
 ranges from ^"150 up to .330, the average for 
 the group being ^260, as against the avera_2fe 
 
 i. These comprise oils, paints, varnishes, drugs and all 
 kinds of chamicals, ink, artificial ice, sugar, and the brew- 
 ing or distillation of alcoholic beverages. This group also 
 comprises publishers.
 
 Chap. IV.] UPKEEP OF CAPITAL 259 
 
 of ^100 for the productive industries generally. 
 The causes of this phenomenon have been much 
 discussed by experts. At all events the group 
 is an exception ; and its importance, as measured 
 by the number of the workers, is negligible. 
 
 If for these reasons, then, we set this group 
 aside, and deal only with the great mass of the 
 manufacturing industries of the country, we are 
 left with an output value of 570 million pounds, 
 and a working population of six-and-a-half 
 millions. Of these workers collectively, the 
 output value per head is ^88. They are, 
 however, as a fact, divisible into three great 
 sections, the output value per head being in 
 each case as follows. In one section, compris- 
 ing less than one-sixth of the whole, it is 126 \ l 
 in a second section, comprising less than one- 
 quarter of the whole, it is ^87 ; whilst in the 
 third section, comprising far more than one-half, 
 it does not exceed ^78. s If, in respect of the 
 cost of upkeep of capital, we deduct from these 
 sums severally no more than a tenth, the sums 
 actually distributable will be, about ^114 in the 
 case of one-sixth of the workers; in the case of 
 
 i Of the 1,000,000 workers comprised in this section 
 by far the larger number are coal-miners. Most of the 
 others are engaged in public works, cheese-making, bacon- 
 curing the preparation of preserved meats and pickles, 
 and the making of aerated waters. 
 
 2. This section comprises all the great metal trades. 
 
 3. This section comprises all the textile trades except 
 lace-making; also the clothing trades.
 
 36o A MINIMUM WAGE [Book IV- 
 
 a quarter, about ^78; and in the case of more 
 than a half, it will not exceed ^70. 
 
 Here we see what is the real nature of the 
 problem involved in the demand, based as it 
 generally is on the equality of human needs, 
 for a minimum wage which shall somehow be 
 secured to everybody. It is obvious that, in the 
 case of no industry whatsoever, can such a 
 minimum be greater than the total value of the 
 products divided by the number of the workers ; 
 and, if in any industry, a greater sum is de- 
 manded, such an industry can no longer exist. 
 It will have to be abandoned, like a plot of 
 land so barren that an occupier, paying no rent, 
 cannot extract enough from it to keep body and 
 soul together. Thus, though, in the case of 
 one-sixth of the workers namely those em- 
 ployed in the industries yielding an output of 
 ;ii4 per head, a minimum wage of /"ico 
 would at all events be theoretically possible, 
 yet if this were demanded on behalf of the great 
 mass of their fellows, the whole of the industries 
 on which these depend for their living, would 
 be hopelessly bankrupt before a year was over. 
 The highest minimum which, even in theory, 
 could possibly be made general, would not be 
 more than 70 : and even this would be possible 
 on one condition only that the number of 
 working hours remained what it is to-day. If 
 this number were reduced in the proportion 
 which the reformers contemplate, the highest 
 general minimum could not possibly be more 
 than
 
 Chap. IV.] THE PROFITS QUESTION 261 
 
 Let this sum be compared, firstly with the 
 ^100 which the reformers regard as possible, 
 and declare to be the minimum of what is just; 
 and secondly, with the average, as already 
 shown, which is actually now being earned by 
 workers of all grades; and two things will be 
 evident. One is the grotesque exaggeration 
 which, in this case as in all others, characterises 
 the reformers' estimates of the amount of wealth 
 existing. The other is the narrowness of the 
 margin which, in manufacturing industry, divides 
 the present receipts of the employed from the 
 total value produced. 
 
 But before we insist on these points farther, 
 let us consider the whole matter from a fresh 
 point of view. Let us consider it, not as a 
 wages-question, but as a profits-question, which 
 is the wages-question inside-out. About thirty 
 years ago, Mr. Hyndman became prominent as 
 the leader of a socialist movement in England, 
 and as one of the founders of a body which 
 originally described itself as the Social Demo- 
 cratic Federation. In this latter capacity he 
 issued a Manifesto, which was mainly a statis- 
 tical statement, emphasised by violent rhetoric, 
 as to the actual ratio of profits to the wages of 
 productive labour. The purport of this state- 
 ment was that, the income of the United 
 Kingdom being at the date in question 1,300 
 million pounds, the share of the wage-earners 
 was 300 million only, the remaining 1,000 
 millions, of which they alone were the creators, 
 being taken, under the name of profits, by a
 
 262 PROFITS AND WAGES [Book IV. 
 
 class which, if not absolutely idle, was active 
 only in the business, not of production, but of 
 theft. Here we have the doctrine of Marx as 
 applied to conditions at a certain specified 
 moment; which doctrine was that, under the 
 capitalistic system, profits generally, and manu- 
 facturing profits in particular, are to wages as a 
 whole, in the ratio of 10 to 3. It is probable 
 that most reformers to-day, even those who call 
 themselves socialists, would allow that Mr. 
 Hyndman's statement erred slightly on the side 
 of exaggeration; but the language used by such 
 persons, from the Chancellor of the Exchequer 
 downwards, shows that they regard it as indica- 
 tive of the kind of thing that happens. 
 
 Now if we consider businesses solely as 
 " going concerns," the ratio of profits to wages 
 will of course vary enormously. One reason 
 is that, in some cases, as in that of a railway, 
 vast sums must necessarily be spent in wages, 
 before the business can begin "to go" at all; 
 and the wage-bill for past, as well as for current, 
 labour, must be paid out of the annual takings 
 as soon as these accrue. Another reason is 
 that, whilst all employers of labour must bring 
 to the task of directing it a certain amount of 
 ability, for otherwise the products of the labour 
 will not even pay the wage-bill, there are 
 certain businesses, such as that of producing a 
 book, or some patented mechanical contrivance, 
 in which the element of the ability involved 
 varies to so great an extent that the selling value 
 of the product may be ten times the amount of
 
 Chap. IV.] AGGREGATE OF PROFITS 363 
 
 the labour-bill, or only three times, or may not 
 exceed it at all. Now it is obvious from what 
 has been said already, that, if profits be re- 
 garded as a quantity which can be drawn upon 
 to increase wages, the extent to which they can 
 be used for this purpose must be determined, 
 not by the product per wage-earner which is 
 realised in exceptional businesses, but by that 
 prevailing in those which can just manage to 
 maintain themselves. For the moment, however, 
 let this point be waived. Let us treat profits as 
 Mr. Hyndman himself and other reformers 
 treat them that is to say in the mass; and 
 compare their actual aggregate in this country 
 to-day with the actual aggregate of industrial 
 wages corresponding to them. 
 
 A broad comparison of this kind may be made 
 in two ways. 
 
 If we confine ourselves to the manufacturing 
 industries, as analysed in the Census of Produc- 
 tion, we know that the total value of the product 
 is about 700 million pounds, that outgoings in 
 respect of upkeep are about 1 1 per cent, of 
 this, and that the net total which is distributable 
 must accordingly be about 620 millions. Far- 
 ther, it has been shown that the wage-earners, 
 their number (inclusive of the salaried staff) 
 being seven million, earn on an average ^72 per 
 head. Thus the total wage-bill comes roughly 
 to 505 millions. The amount, therefore, which 
 remains for distribution as profits and dividends 
 will be about 115, or perhaps 120 million pounds 
 out of a distributable total of 620 millions. In
 
 264 THE COUNTRY'S WAGE BILL [Book IV. 
 
 other words, profits will be somewhat less than 
 one-fifth of it. 
 
 Let us now take all the businesses of the 
 United Kingdom together the commercial, the 
 carrying, the agricultural, as well as the manu- 
 facturing. In Chapter III, Book III, of the 
 present work, the distributable output value of 
 all these businesses (profits from abroad 
 excluded) were shown to amount to about 1,260 
 million pounds, and the total of all profits 
 subject to income-tax whether commercial, 
 agricultural or industrial, in so far as they are 
 of home origin, were shown to amount to about 
 230 millions. This sum being deducted from 
 the total value produced, what remains for 
 distribution amongst the employees is about 
 1,030 millions; and if the analyses of business 
 wages and salaries, as given in Chapters II and 
 III of Book III are examined, it will be seen 
 that the actual business wage-bill of the country 
 is substantially of the same amount. The total 
 of all wages not exceeding 635. a week, exclu- 
 sive of those earned by domestic servants, 
 comes to about 930 millions, and the total of 
 the larger incomes earned by the salaried staff, 
 and subject to income-tax, comes to 100 millions. 
 Hence if we take all businesses together, the 
 output of which involves the payment of wages, 
 the result is substantially the same as in the 
 case of manufactures only. Profits, as a whole, 
 are indeed something less. To speak more 
 exactly, they are about 18 per cent, of the net
 
 Chap. IV] PROFITS OF COAL MINING 265 
 
 selling value of the entire distributable product, 
 and wages as a whole are about 82 per cent. 
 
 Here, however, we have the general average 
 only. In particular cases profits will be rela- 
 tively larger, and in the majority of cases not 
 nearly so much. Of this latter fact it is possible 
 to give an illustration which is exceptionally 
 precise, and on an exceptionally large scale, 
 and with regard to which there is peculiar and 
 direct evidence. In the case of certain busi- 
 nesses, though of certain businesses only, the 
 gross profits (that is to say profits including the 
 costs of upkeep) are specially stated by the 
 Commissioners of Inland Revenue. Of these, 
 for two reasons, the most important is that of 
 coal-mining : for not only are the profits stated 
 in one set of returns, 1 but in another set is 
 stated year by year the actual corresponding 
 value of all the coal sold. In the year 1907 
 that dealt with by the Census of Production 
 the selling value of all the coal produced 
 (exclusive of the quantity consumed by the 
 mines themselves) was ^106,000,000. The 
 gross profits (royalties included) did not amount 
 to so much as ; 16,000,000; and hence it is 
 sufficiently obvious that, of the total sum dis- 
 
 i. The mining profits, as ear-marked in the returns, 
 comprise a small percentage from mines other than wool ; 
 therefore the actual amount is somewhat less than that 
 stated in the text. See Statistical Monograph 20, in 
 which the figures relating to the question, for a period of 
 fifteen years, are analysed.
 
 266 PROFITS OF COAL MINING L Buok IV. 
 
 tributable, the net profits could not have 
 amounted to so much as one-seventh. 
 
 But other evidence may be quoted of a kind 
 more precise still. During the great coal-strike 
 of the year 191 1, a book was issued by a member 
 of the parliamentary Labour Party, aided by a 
 North-country accountant, in which the balance 
 sheet of a colliery company, selected by the 
 authors as typical, was reproduced and analysed. 
 The object of these authors, though they were 
 far from being wild extremists, was to exhibit 
 the gains of the colliery companies as excessive ; 
 and the details which, in this instance, they 
 submitted to the public were as follows. The 
 total receipts of the company in question for a 
 year were, in round figures, ,710,000; the total 
 spent in wages was 631,000; the declared 
 dividend was ,39,000; and a sum about equal 
 to the dividend was set aside as a reserve fund. 
 The principal comment of the authors on these 
 items was to the effect that the actual profits of 
 the business were understated by one-half ; that 
 the whole of the reserve fund ought properly 
 to have been added to them; and that the true 
 profits, instead of being ,39,000 were ,78,000. 
 That the authors, who expressed their recogni- 
 tion of such reserves as funds set aside for 
 future business contingencies, should endeavour 
 to represent them as a species of " concealed 
 profits " is sufficiently astonishing ; but, even 
 if we admit this contention, what is the upshot 
 of the matter according to the authors them- 
 selves? Tt is this that in the case of a bust-
 
 Chap. IV.l LETCHWORTH 167 
 
 ness selected by themselves as typical, profits 
 barely exceed one-seventh of the total disbursed 
 as wages, and are, of the total takings, not more 
 than one-ninth. 
 
 Let us now consider an example, the scale 
 of which is minute, but which has nevertheless 
 a peculiar interest of its own. This is the case 
 of a printing business, which has been estab- 
 lished at Letchworth on the basis of co-partner- 
 ship. The arrbition of the promoters, as set 
 forth by themselves, is to solve all difficulties 
 relating to profits and wages, by enabling the 
 workers to be ultimately their own capitalists, 
 so that wages and the profits of capital, though 
 still theoretically distinct, shall nevertheless go 
 to the same persons. After this business had 
 been for some years in operation, a balance- 
 sheet was issued for the year 1911. It is there 
 shown that the number of workers was 90, that 
 the total earned as wages was, in round figures, 
 ^5,340, that the total net receipts were ,6,310, 
 and the profits on capital were ^970. This 
 means that wages were allocated at the rate of 
 rather less than ^60 per head, and that profits 
 in each case represented a bonus of ^10, the 
 total receipts per head being thus raised to ^70. 
 Now it may be observed that the wages, as 
 calculated in this case, are lower than the 
 general average current to-day for labour of all 
 kinds, and that the amount added to them by 
 profits is thereby relatively increased : but even 
 so, it will be seen that, of the total net receint^. 
 profits account for less than 16 per cent. ; whPst
 
 a68 MR. HYNDMAN'S THEORIES [Book IV. 
 
 if wages be reckoned according to the normal 
 standard, the percentage will be less than 12. 
 Moreover, it may be added that wages and 
 profits together do not in this case yield more 
 than an average per worker of 265. lod. a week. 1 
 
 According to Mr. Hyndman, let it be said 
 once more, the profits of the capitalists as a 
 whole exceed business wages in the propor- 
 tion of 10 to 3 : and the minds of reformers 
 generally are dominated by some idea which is, 
 in its effects on their general attitude, similar. 
 If profits were really what Mr. Hyndman 
 imagines, the business profits of the United 
 Kingdom to-day would be considerably in ex- 
 cess of 3,000 million pounds. The actual sum, 
 as we have seen, is not one twelfth of this sum. 
 Profits by their magnitude are so far from 
 dwarfing wages, that wages on the contrary are 
 more than four times as great as profits : and 
 the particular instances which have just now 
 been given, are not only illustrations of this 
 fact in its general form, but they illustrate also 
 the fact, still more important, that if the 
 average of business profits as a whole be 18 
 or even 20 per cent, of the entire business 
 product, it is, in the majority of individual 
 industries, a very much smaller fraction. 
 
 This latter fact is the more important of the 
 
 i. The workers are not analysed in the statement issued, 
 but it may be noted that average per head, in a highly 
 skilled trade, like that of printing, is less than the rate 
 of the wages earned in the cotton trade by men of all 
 grades.
 
 Chap. IV.] WAGES AND PRODUCT 260 
 
 two it is indeed the salient fact of the situa- 
 tion ; because, if anything like a general mini- 
 mum wage be possible, which means more foi 
 the wage-earners than the absolute necessaries 
 of life, its amount must be limited, not by what 
 is possible in the industries in which the product 
 per worker is greatest, but by what is possible 
 in the case of those in which the product is 
 least. Such being the case, the actual total of 
 wages is divided from the total product by so 
 narrow a margin, that a general rise in wage- 
 rates is practicable in one way only that is to 
 say, by making the total product larger, and not 
 by encroachments on the margin as it actually 
 is. It is in this way only that wage-rates have 
 risen in the past ; and only in the same way can 
 they be increased generally in the future. The 
 idea common to reformers, that there is always, 
 under the existing system, a vast hoard of 
 profits withheld from the mass of the popula- 
 tion, and that nothing is necessary but gain 
 possession of an ever-increasing portion of it, 
 is not merely to suggest illusory conceptions of 
 progress, but to divert attention from the condi- 
 tions which, so far as wages are concerned, 
 alone make progress possible. 
 
 The long and short of the matter is that this 
 supposed hoard is a phantom which, as it floats 
 before us, imposes itself on our eyes as a reality ; 
 but the moment we try to capture it in any defi- 
 nite place, it disappears. We have seen that this 
 is so when we try to capture it in the form of 
 land-rent, whether this be the rent of farms (a
 
 270 " LABOUR UNREST " [Book IV. 
 
 quantity which is decreasing absolutely), or the 
 annual increase in the rent of the sites of urban 
 buildings, or the rent of land as a whole. We 
 have now seen that such is the case also when 
 we try to capture it in the product of manufac- 
 turing and commericial industry. 
 
 A not unnatural result of the prevalence of 
 such illusions (though, as will be seen presently, 
 they are by no means its sole cause) is the 
 condition commonly described as social or 
 labour " unrest." The chief characteristics of 
 this, which are very curious and not sufficiently 
 recognised, shall be considered in the following 
 chapter.
 
 CHAPTER V. 
 
 A REFORMER, who occupies a high official 
 position, has made himself famous by the 
 yehemence of his repeated attacks on persons 
 who, while they sleep, grow rich through the 
 appreciation of their investments who have 
 bought them at one price, and whose brokers 
 sell them for a greater. But when it hap- 
 pened to become matter of public knowledge 
 that he was an active member of this class 
 himself, and had only failed by accident to be 
 a fortunate member also, he declared that in 
 his own case he being a poor man, with an 
 income of not much more than ,5,000 a year- 
 such methods of self-enrichment were abso- 
 lutely beyond reproach, and that only a " foul 
 lip" would dare to assert the contrary. 
 Now apart from certain circumstances of a 
 purely adventitious kind, none of his critics, 
 whether their mouths were foul or otherwise, 
 did assert the contrary. They did not even 
 suggest it. Their contention was, not that he 
 had done anything which could be condemned 
 by other people, but that he had done some- 
 thing which was publicly condemned by 
 himself. The incident in question, when 
 divested of its personal associations, remains 
 interesting as an example of the necessary 
 contradictions which arise, when a reformer, 
 whose reforming equipment is a set of fallacious 
 
 271
 
 272 THE FOOD QUESTION [Book IV. 
 
 principles, finds them confronted with those, 
 much more reasonable in character, which he 
 applies as a matter of course to the conduct of 
 his own life. 
 
 The principles of the reformers, however, 
 when applied to actual affairs, result in contra- 
 dictions far more profound than this. 
 
 Let us now pass to other examples, which are 
 really important features of the social contro- 
 versy to-day. Of these some of the most 
 remarkable relate to land and agriculture. 
 
 There is no contention more frequent in the 
 mouths of reformers than the contention that a 
 proportion of the wage-earners (variously 
 stated, but always alleged to be large) suffers 
 from the want of food sufficient in amount and 
 quality; and whenever this generalisation is 
 applied to any group of wage-earners in par- 
 ticular, its principal clause invariably relates 
 to meat, and runs as follows : " The supply of 
 meat is so small, and the price of meat so high, 
 that such and such persons only taste it three 
 times, twice, or possibly once a week." 
 
 Into the merits of such a contention we need 
 not now enquire. All that concerns us here is 
 to take it in connection with another, equally 
 common, and advanced by the same persons. 
 This relates to the decline in the number of 
 agricultural labourers, as caused by the conver- 
 sion of arable land into pasture. A given 
 amount of pastoral products, as measured in 
 terms of value, requires they say, relatively to 
 the requisite number of acres, fewer men to
 
 Chap. V.] THE FOOD OF THE PEOPLE 273 
 
 produce it than a similar amount of the products 
 which result from tillage. Cattle accordingly 
 flourish at the expense of men. Wealth 
 accumulates, and the agricultural labourers 
 decay. Here we have a contention which, so 
 far as it goes, is true ; but what is its substantial 
 meaning? Pastoral products are virtually 
 but another name for meat, just as the products 
 of tillage are virtually another name for bread. 
 If, then, there is any truth in the contention 
 that an insufficient supply of meat is one of the 
 main grievances from which the workers of this 
 country suffer, how can it also be a grievance 
 that agriculture, as now conducted, aims mainly 
 at making the supply of meat more plentiful ? 
 Each of these two grievances flatly contradicts 
 the other. 
 
 Again, when reformers are dealing with the 
 food of the people, there is one class which they 
 adduce before all others as the victims of 
 insufficient feeding, and that is the class of 
 labourers by whom food is produced. Partly 
 owing to the superwealth of dukes, partly to 
 the super-tyranny of large farmers, or the super- 
 something of something else it does not much 
 matter what the rural labourers are, according 
 to the reformers, more miserably underfed than 
 any other section of the population. The 
 urban workers have at all events food enough 
 to keep them in fit condition to perform the 
 tasks assigned to them; but the agricultural 
 labourers go always with such empty stomachs 
 that their arms can hardly lift the implements
 
 374 "THE AGRICULTURAL LABOURER" [Book IV. 
 
 with which they hoe potatoes. They are not 
 so much men as crippled shadows of men ; and 
 their children, after a childhood of weeping 
 over half-empty platters, are, when they reach 
 maturity, little better than the shadows of a 
 shade. No wonder that, under such conditions, 
 the agricultural population declines, and the 
 whole nation is suffering a fatal and untold loss. 
 Such, according to the reformers, is one 
 aspect of the agricultural question : but when 
 they turn to another, which, from a national 
 point of view, is what gives the first its impor- 
 tance, the grievance on which they insist with 
 an emphasis no less eloquent, is of a curiously 
 different character. The principal ground on 
 which, from the point of view of the nation, 
 they bewail the decline in the number of the 
 agricultural labourers, is that of all sections of 
 the population these labourers are the most 
 virile and the healthiest. The soldiers who 
 confronted Napoleon a hundred years ago, the 
 most stalwart of the policemen who patrol our 
 streets to-day, were and are, we are told, reared 
 in our agricultural cottages, and the men who 
 live in such cottages are still the best men we 
 have . ' The agricultural labourer," said Mr. 
 Lloyd George at Middlesbrough, " is a strong 
 sturdy fellow. He has great powers of 
 endurance; and when the tim^ comes for the 
 great employers of labour to pick and choose 
 between the men they have got and the a<m- 
 tural labourer, the latter, with his stronger 
 physique, manages to survive in the selection."
 
 Chap. V.) CONTRADICTORY THEORIES 375 
 
 Here, then, are t\vo of the main indictments 
 now urged by reformers against the existing 
 agricultural system. They are urged alter- 
 nately, urged with equal emphasis, by the same 
 agitators in the course of the same month; and 
 are cheered alternately by precisely the same 
 audiences. Either of them may conceivably be 
 true ; but it is impossible that they can both be 
 true. In proportion as there is sense in the 
 one, the other is necessarily nonsense. How 
 can the agricultural labourers be so crippled by 
 underfeeding that the utmost they can do is to 
 totter, under a load of rheumatism, from the 
 cradle into an early grave, and be at the same 
 time " fellows so sturdy and of such endurance" 
 as to render them the arch-embodiments of the 
 physical manhood of the nation? 
 
 But these astonishing self-contradictions of 
 reformers in respect of land are merely exam- 
 ples of the errors and uncertainties of thought 
 which vitiate their attitude towards social 
 conditions generally, and arise directly or 
 indirectly from the fallacy of their primary 
 assumption the assumption that, to whatever 
 extent the wealth of the country grows, an 
 overwhelming share of it, and a share which is 
 relatively as well as absolutely increasing, is 
 appropriated by some rich, or rather by some 
 super-rich, minority. From this assumption it 
 follows, as has been said already, that all reform 
 must, in its last analysis, consist of getting the 
 whole or most of the supposed plunder back 
 and the first practical step which the
 
 276 MARX AND GEORGE ON PLUNDER [Book IV. 
 
 reformers have to take is to discover in what 
 place the great bulk of it has been hidden. 
 
 What, then, have they to say as to this 
 fundamental question? Certain of their asser- 
 tions have been reviewed in previous chapters. 
 They shall be reviewed once more, together with 
 certain recent modifications of them. 
 
 First and foremost come those of two really 
 powerful thinkers, Marx and Henry George. 
 
 Marx asserted that the great bulk of the plun- 
 der went, in the form of profits, to thegreat capital- 
 ist lords. George asserted that it did nothing 
 of the kind that the whole of it went, as land- 
 rent, to dukes and earls and squires. Radicals 
 repudiate the assertions of Marx and George 
 alike, but they pick out various, and mutually 
 exclusive, parts of them, each of which, succes- 
 sively or alternately, they declare to be greater 
 than the whole. The more moderate socialists 
 of to-day follow the same procedure : and the 
 different accounts given by these reformers 
 collectively of how the wealth of the people is 
 eaten up by the super-rich may be summarised 
 as follows in a sequence of separate statements. 
 
 It is absurd to say of the income of the 
 United Kingdom that most of it is absorbed by 
 land-rent, for the total of land-rent is too small. 
 What is really eating up the wealth of the 
 people is not land-rent as a whole, but the 
 annual increase of a fraction of it namely 
 annual increase of the rent of the sites of urban 
 , buildings.
 
 Chap. V.] CONFLICTING THEORIES 277 
 
 What is eating up most of the wealth of the 
 people is not interest on capital, if capital be 
 considered as a whole; for the active users of 
 capital receive no more than they deserve. 
 What is eating up the wealth of the people is 
 interest on that part of it which is owned by 
 mere investors, such as holders of Marconi 
 shares. 
 
 What is eating up the wealth of the country 
 is not interest on the whole of even this par- 
 ticular part. It is interest on only so much of 
 it as goes to persons whose incomes are not 
 much more than ,5,000 a year. 
 
 What is eating up the wealth of the people is, 
 in any case, the income of persons with more 
 than ,5,000 a year. 
 
 What is eating up the wealth of the people 
 is the income of persons with more than ^"20,000 
 a year. 
 
 What is eating up the wealth of the people 
 is interest on capital after all, if the word 
 " capital " be used in its widest sense : for most 
 of the capital of this country consists of the 
 gitts of nature. Of this natural capital, as Mr. 
 Lloyd George said at Swansea, by far the 
 largest part, in point of value, consists of our 
 great coal-deposits; and what is really eating 
 up the wealth of the people, is interest on these 
 coal-deposits, which is known under the name 
 of royalties. 
 
 The reformers, in short, agree with one 
 another as to one thing only that there is a 
 vast mass of secreted treasure somewhere; but
 
 278 CONFLICTING THEORIES [Book IV. 
 
 one of them says it is here, another says it is 
 there; and few of them agree with themselves 
 for more than two years running. Their own 
 " unrest," or the " unrest " which they en- 
 deavour to foment, is like the " unrest " of 
 the relations of a defunct miser, who are per- 
 suaded that he has hidden in his house some 
 enormous amount of cash, and who gather 
 there after the funeral in order to find their own. 
 He has made them, before his death, a paltry 
 gift of ,2,000 between them; but this, they 
 think, is only a tenth of what will be theirs 
 presently. The most knowledgeable of their 
 number are deputed, before anything is broken 
 open, to mark the receptacles which are likely 
 to be the chief hiding-places. A cellarette 
 under the dining-room sideboard is at once 
 marked amidst acclamations. " Listen," cries 
 an expert, " you can hear the sovereigns chink. 
 You can tell by the weight of the thing that at 
 least there are fifteen hundred of them." The 
 lid is smashed, and there the sovereigns are; 
 but instead of fifteen hundred the number of 
 them is less than seventy. A second expert 
 exclaims, " You are looking in the wrong place. 
 The bulk of the stuff is here in this padlocked 
 tin, labelled ' dog-biscuit.' Talk about four- 
 teen hundred ! Here are a good three thou- 
 sand. Bring the poker and let us see." The 
 poker is used. The tin is half full of pennies. 
 On the top of the pennies lie some sovereigns, 
 but their number is no more than twenty. 
 '' Fools," a third expert exclaims, " to be
 
 Chap. V.] " CONCEALED TREASURE " 279 
 
 looking amongst bottles and biscuits. Here are 
 five thousand hidden amongst the coals in the 
 coal-scuttle." The coals accordingly are 
 emptied out on the floor, and amongst the dust 
 is discovered the shining of ten half-crowns. 
 A fourth voice exclaims, " Don't waste your 
 time downstairs. Quick, follow me to his bed- 
 room. It is all sewn up in his mattress." The 
 mattress is ripped open. The carpet is strewn 
 with horse-hair. From amongst the horse-hair 
 comes a crisp crackle of something. The 
 relations are all on their knees feeling for bank- 
 notes : and nothing rewards their search but 
 some fragments of torn brown paper. Sud- 
 denly from under the bed a portly cat emerges. 
 A little girl, who had stayed with the deceased 
 frequently, recognises an old playmate, and 
 addresses it by the name of "Duke." On one of 
 the relations, who happens to be the Chancellor 
 of the Exchequer, the effect of the word "Duke" 
 is electrical. ' There," he exclaims, " there is 
 the object of our search at last. The missing 
 ten thousand sovereigns have been eaten up 
 by the cat." Hereupon ensues the crowning 
 act of the drama. A new actor enters, the late 
 miser's solicitor. " Don't lose heart," he says 
 with an encouraging smile. " How much have 
 you found? Ah, just as I thought. Ninety 
 pounds, or a hundred. Well, the rest is here 
 here in this very room. You can all of you 
 find it without moving a step." " Where," cry 
 the relations in chorus. " For mercy's sake tell 
 us where." " I will/' the newcomer replies,
 
 a8o ANSWER TO REFORMERS [Book IV. 
 
 " It is all in your own pockets." There is a 
 speechless gasp of consternation, and the same 
 speaker proceeds. " My late friend," he says, 
 tk during the course of his last illness divided 
 amongst you a couple of thousand pounds. 
 Apart from the hundred which you have just 
 discovered for yourselves, that was his whole 
 fortune. The odd hundred will, I am sure, be 
 extremely welcome. It will pay nearly half 
 the expenses of getting yourselves here and 
 home again." 
 
 And the same answer is the true answer to all 
 social reformers who, reasoning and feeling on 
 the supposition that the root of most social evils 
 is the abstraction by the few of the bulk of 
 current wealth from the many, set themselves to 
 discover exactly where the bulk of current 
 wealth is hidden. The answer is " The bulk 
 of it is in your own pockets already." 
 
 The chief of the detailed facts which have 
 been elucidated in the preceding shall now be 
 reconsidered in a manner which will put this 
 this statement to the test.
 
 CHAPTER VI. 
 
 THE final, the most general and the most 
 comprehensive test to which we can put the 
 theory that some vast hoard of wealth is with- 
 held from the majority by the few, is to take 
 the whole mass of incomes subject to income- 
 tax, and consider how much would be available 
 for redistribution, if all of them, or as many of 
 them as rise above certain sums, were divided 
 according to principles of the crudest socialistic 
 equality, or such drastic graduation as finds 
 favour with extreme radicals. 
 
 In the year 1910 the net total of such incomes 
 was, as we have seen already, about 720 million 
 pounds. Thus, the number of direct recipients 
 being about 1,400,000, and these together with 
 their families representing a population of about 
 7,000,000 persons, their average income per 
 head was a little over ^"100. On the other 
 hand the number of the population not subject 
 to income-tax being 38 millions, and the aggre- 
 gate income of these persons being 1,300 
 million pounds, their average income per head 
 was no more than ^34. Such being the case, 
 socialists will probably argue that, if the income 
 of the richer classes were cut up into 38 million 
 equal shares of ^19, a bonus of 19 would be 
 forthcoming for every member of the poorer 
 classes, the average income of each being raised 
 
 from ^34 to ^53. 
 
 981
 
 282 EQUALIZING INCOMES [Book IV. 
 
 In such a calculation, however, the following 
 fact is ignored, that, if all the incomes of the 
 present rich and poor are to be equalised, the 
 present rich must at all events be left with 
 something; and this cannot be less, just as it 
 cannot be more, than the present average per 
 head of the present population as a whole; 
 which average being a forty-five-millionth part 
 of a national income of just over 2,000 million 
 pounds, is approximately ^45. Accordingly 
 the share of the income now subject to income- 
 tax, which would have to be left with those who 
 at present receive the whole of it, would be ^45 
 per head of some seven millions persons, or 315 
 millions out of a total of 720 millions. The 
 result of which fact is that, under a regime of 
 equal distribution, the present average per head 
 of the classes not subject to income-tax would 
 be raised from ,34 to ^45, not from ^34 to 
 ^53. The theoretical bonus would be not 
 ^19, but 11. 
 
 Such would be the case on the supposition 
 that the 720 millions was diminished only by 
 the amount which its present recipients would 
 retain. But this, as shall now be shown, is very 
 far from being the case. 
 
 Independently of any claims on the part of 
 its present recipients, there are three portions 
 of the income subject to income-tax which any 
 attempt at redistribution on the equalising prin- 
 ciples of socialism would altogether eliminate. 
 
 In the first place there is the portion which 
 comes into this country from abroad.
 
 Chap. VI.] INCOME FROM ABROAD 083 
 
 In the second place there are certain sums 
 'commonly described by statisticians as being, 
 for income-tax purposes, " counted twice over." 
 
 In the third place there are savings, which, 
 if not made by the rich, would have to be made 
 by the nation. 
 
 The primary result of the adoption of 
 socialistic principles would be the disappear- 
 ance of the income from abroad. It would 
 disappear for two reasons; and if both of them 
 were not operative, either one of them would 
 be sufficient. One reason is that the owners 
 would cease to import it; for who would import 
 goods for the pleasure of seeing them confis- 
 cated? The other is that, even if it reached 
 these shores, a socialist Government would be 
 bound not to receive it. As Mr. Keir Hardie 
 on one occasion very logically observed, the 
 " profits or income from abroad " ought, on 
 socialist principles, " never to come into this 
 country at all," but ought, we may suppose him 
 to have meant, though he did not explicitly say 
 so, to remain in the countries whence it came, 
 and be redistributed there. The profits from 
 abroad, which are included in the income now 
 subject to income-tax, amount, as has been 
 explained already, in reality to more, and at all 
 events not to less, than 190 million pounds. 1 
 
 i. This includes about ^10,000,000, in respect of profits 
 of commercial distribution, which would cease if the 
 income from abroad, in the form of goods to be distributed fr 
 no longer came into this country.
 
 284 SUMS COUNTED TWICE [Book IV. 
 
 Here is the first deduction from the total of 
 720 millions. 
 
 The second deduction consists of sums 
 counted twice over. As examples of the sums 
 which this phrase is used to describe, we may 
 take the payments made by a man of large 
 means to a confidential agent, whom he would 
 probably call " a treasure," and to some distin- 
 guished doctor. He pays his agent (let us say) 
 ,1,000 a year; and taking it into his head one 
 day that he is threatened by some mortal 
 disease, he pays ^"1,000 to some doctor of 
 European celebrity for coming from London 
 to the South of France to visit him. Now both 
 these sums of ,1,000 it is argued, figure first in 
 the income-tax returns as income of the man 
 who pays them, and then figure as income of 
 the men to whom they are paid. If, however, 
 we take things as they actually are to-day, this 
 argument is fallacious. It would be true only 
 on the assumption that the rich man, instead of 
 spending so much of his income, simply 
 alienates so much of his fortune that he gives 
 so much away, and gets nothing in return for 
 it. As a matter of fact, in each case, he receives 
 a specific value which for him is a full equiva- 
 lent the luxury of advice from his agent, 
 which relieves him of all business worries; the 
 luxury of an opinion from a doctor who reassures 
 him with regard to his health, as no other 
 doctor could have done; and these values, 
 though they are mental and not material, are 
 values as truly as they would be if thev con-
 
 Chap. VI.] MENTAL AND MATERIAL VALUES 285 
 
 sisted of chairs and tables. But whilst such is 
 the case so long as fortunes remain unequal it 
 would cease to be the case the very moment we 
 tried to equalise them; and the ordinary con- 
 tention as to values of this kind, would at once 
 become correct. The reason is that values of 
 this particular kind are values only in concen- 
 tration, and are essentially not distributable. 
 We can see this by considering what would 
 happen if, instead of paying one doctor a fee 
 of 1,000, our patient had summoned a 
 thousand doctors, for the purpose of debating 
 on his ailments, and had paid each of them a 
 fee of twenty shillings. The thousand-pounds- 
 worth of satisfaction received by him from this 
 medical parliament would be only mental or 
 subjective, but it would be susceptible of distri- 
 bution none the less; for the rich man's ^1,000 
 if given to a thousand poor men, would enable 
 each to secure the attendance of one of the 
 doctors which the rich man would have other- 
 wise monopolised. But if all large incomes 
 were divided up into little ones, a fee of a 
 pound would be as much as could be paid by 
 anybody to any doctor, no matter how eminent; 
 and so far as the medical specialist whose case 
 we have been imagining is concerned, there 
 would be nothing to divide but his railway fare. 
 The same argument applies to houses which, 
 standing on exceptional sites, command excep- 
 tional rents because rich men compete with one 
 another for their occupation. A house with a 
 view from its windows of unique and renowned
 
 a86 FANCY VALUES [Book IV. 
 
 beauty, may command a rent of ^"500 a year, 
 whereas nobody would give 100 for it were 
 it situated in a field in Essex. This sum of 
 jCsoo figures in the income on which the lessee 
 pays income-tax. The same sum figures in the 
 taxed income of the lessor. In connection with 
 the ownership and the occupation of this house 
 the income-tax returns would show a total of 
 ;i,ooo. But if all large incomes were so 
 levelled down and reduced that a house-rent 
 of ,100 a year was the utmost that could be 
 paid by anybody, this particular ^1,000, 
 as soon as the redistributors touched it, would 
 shrivel away to a sum which could not exceed 
 200. There would be nothing to divide but 
 the ownership of this one house and its occu- 
 pancy, the former of which would represent 
 100 to the owner, whilst the latter represented 
 another ^100 to the occupant. Only these two 
 sums would remain. Four-fifths of the original 
 total would have vanished into thin air. 
 
 Here we have two classes of this kind of 
 income, and to one or other of them all such 
 income belongs. It is a kind of income con- 
 sisting of fancy values represented by fancy 
 prices as paid by rich men, either for specific 
 and exceptional services, like those of a great 
 doctor, or for exceptional things, like a building- 
 site of unique beauty. It may be argued that 
 such fancy values are not real income in any 
 case. The contention is untrue ; but even 
 were it true, it would not concern us here. 
 What concerns us here is the fact that, whether
 
 Chap. VI.] PROFESSIONAL SERVICES 287 
 
 they are real income or no, they figure as such 
 in the records of income subject to income-tax. 
 They go to make up the net total of that income 
 which appears from those records to be about 
 720 millions; and that total, if these portions 
 are eliminated, is thereby decreased. The 
 sum which these portions represent has by 
 certain statisticians been over-estimated. It is 
 at all events considerable; and what is really 
 its approximate amount is not difficult to calcu- 
 late. 
 
 So far as professional services are concerned 
 the amount may be calculated thus. We may 
 take it, if the object in view is a regime of 
 equalised wealth, that the total at present paid 
 for such services represents fancy values in so 
 far as it yields an income per head of the 
 professional classes which exceeds what would, 
 if all incomes were equalised, be the average 
 family income in all classes alike. That 
 average could not, as we shall see presently, be 
 even in theory, more than ,200. Now the 
 actual average earnings of the professional 
 classes to-day appears from an examination of 
 the income-tax returns to be about ,350. This 
 means that of the payments made to the profes- 
 sional classes to-day the portion which is fancy 
 value amounts to 40 per cent., and if this ratio 
 be applied to professional earnings as a whole 
 the estimated total being, as we have seen, about 
 ^"60,000,000 the deduction to be made, if the
 
 388 FANCY VALUES [Book IV. 
 
 fancy value is to disappear, will be about 
 
 ;24,OOO,OOO. 1 
 
 The element of fancy values now included in 
 site-rents may be calculated in a similar way. 
 If every average family, consisting of five 
 persons, had ^200 a year, and no such family 
 had more, no family this we may reasonably 
 assume would be able to spend on house-rent 
 more than 20 a year. This means a site-rent 
 of ^4, or 1 6s. per person. Of the 400,000 
 houses worth more than ^40 a year, the 
 average gross rent per house is about ^100 
 a year, and the average site-rent about 2O\ 
 but for this class of houses the average number 
 of occupants is, owing to the presence of ser- 
 vants, not five per house, but is very nearly nine ; 
 so that, taken per head of the occupants, the 
 site-rent will be approximately 465. This is 
 305. more than the maximum site-rent per person 
 which by any possiblity could be paid if no aver- 
 age family had more than 200 a year. We may 
 therefore take it that this extra thirty shillings 
 represents the fancy value which persons whose 
 incomes range from ^"400 a year upwards 
 attach to certain sites in virtue not of their area, 
 but of their beauty, their convenience, or of their 
 
 i. In strictness, about ^5 ,000,000 should be added to the 
 present salaries to Government officials, from Cabinet 
 Ministers downwards. The argument in the text does not 
 apply to the salaries of business employees ; for these are 
 paid for services which result in the production and distri- 
 bution of material goods, which, unlike fancy services, are 
 in their nature distributable.
 
 Chap. VI.] DIVISION PER HEAD 289 
 
 fashionable or quasi-fashionable character. 
 Such persons, together with their families and 
 their servants (for the servants' accommodation, 
 just like that of their employers, is paid for at 
 a fancy rate) make up a population of about 
 3,600,000 individuals; or, if we take account of 
 Ireland, which the above figures exclude, the 
 total number here in question will amount to 
 about 4,000,000, each unit of which will, in 
 respect of site-rent, represent a fancy value 
 averaging about 305.; the aggregate of fancy 
 site-values being thus about ,6,000,000. 
 
 Here, then, we have three sums, namely 
 ^190,000,000 in respect of income from abroad, 
 ^24,000,000 in respect of fancy values attached 
 to professional services, and ^"6,000,000 in 
 respect of fancy values attached to selected 
 building-sites; these three items amounting to 
 220 million pounds, which would have to be 
 deducted from a total of 720 millions before 
 the residue was reached which, even in theory, 
 was susceptible of redistribution. This means 
 that the theoretically redistributable total, so 
 far as we have yet considered the matter, would 
 be 500 million pounds. This, added to a non- 
 assessed income of 1,300 million, means a 
 national income of 1,800 millions, which, 
 divided amongst a population of 45 million 
 individuals, means an income per head of $o. 
 The present average per head of individuals 
 dependent on incomes not subject to income- 
 tax, is, as we have seen already, ^34. Hence, 
 if no modifying facts still remained to be
 
 290 SAVINGS [Book IV. 
 
 considered, an equalising redistribution of the 
 total of all incomes in excess of ^160, would 
 mean for those whose incomes are now on a 
 smaller scale, an average addition per head of 
 6 to ^34 that is to say an increase of 
 approximately 17 per cent. 
 
 But a farther modifying facts remains in the 
 background still, to which allusion has already 
 been made, and which we must now examine. 
 This is the fact that out of the entire national 
 income there is a considerable portion which is 
 annually not spent but saved, and that the 
 larger portion of the annual savings of the 
 nation consists of savings made by the richer, 
 not by the poorer, classes. Of what, then let 
 us ask, do savings in their ultimate form con- 
 sist? They do not consist, or consist only to 
 a very small extent, of hoards of money or even 
 of consumable commodities. They consist of 
 money values converted into new structures, 
 mechanisms and other plant by means of which 
 new commodities may be produced and distri- 
 buted, or else into permanent utilities, the chief 
 of which are new houses. The annual savings 
 of the country, according to the Census of Pro- 
 duction, amount to-day to about ,270,000,000. 
 Of this total, in the year 1907, about 
 1 00,000,000 was represented by exports con- 
 sisting of, or destined to be converted into, imple- 
 ments of British enterprise, production or distri- 
 bution, in countries other than our own; the 
 remainder represents similar things or imple- 
 ments situated in the United Kingdom, and
 
 Chap. VI.] SAVINGS 391 
 
 (except in the case of ships) not removable 
 therefrom. These things and their values were 
 in round figures as follows : Manufacturing 
 and commercial plant, ^93,000,000; Public 
 Utility Services, such as Gas, Water and 
 Electricity, ,11,000,000; Ships and Railway 
 Extension, ,8,000,000 each; and new private 
 houses, ,50,000,000. 
 
 Let us see what practically these savings 
 mean. As a matter of pure business, their 
 object is the production of income in the form 
 of new profits for division between the active 
 users of the saved capital on the one hand, and 
 mere lenders or investors of it on the other. 
 The total return looked for will be now about 
 6 per cent., of which half will be the reward of 
 use, and half will be the reward of mere saving 
 or investment, though the users and the inves- 
 tors will be in many cases the same persons. 
 Such being the case, we might expect on general 
 principles that a saving in one year of 270 
 millions would result in new profits to the extent 
 of some 1 6,000,000 in the next. Farther, 
 since (with certain exceptions, all profits carry 
 with them a corresponding amount of wages) 
 we might expect to discover in wages a corres- 
 ponding increase also. And such results, we 
 find, have actually taken place. The net total 
 of incomes subject to income-tax in the year 
 1908 exceeded the net total for the year 1907 
 by about ,21,000,000. Of this sum, however, 
 about ,5,000,000 was not profits but wages 
 that is to sav the s?!nries of new emplovees at
 
 aga WAGES AND PROFITS [Book IV. 
 
 salaries exceeding .160. The increase 
 in profits, interest or dividends, amounted 
 accordingly to about ; 16,000,000. Of this 
 sum about ,7,000,000 came from abroad; 
 about ,3,000,000 was the rent of houses; and 
 about 6,000,000 was new profits or interest 
 from industrial and commercial undertakings 
 situated in the United Kingdom. Let us now 
 take the question of wages. It has already 
 been explained that, in the case of profits from 
 abroad, though they carry with them corres- 
 ponding wages, these wages must be looked for 
 in countries other than our own. They make 
 no show in the accounts of the British Islands. 
 House-rent is also peculiar, although in 
 another way. A house yields a profit to the 
 builder and wages to the builder's workmen, 
 whilst the process of construction lasts; but 
 whereas a factory and its equipments yield no 
 return to anybody unless they are used by a 
 number of wage-paid workers the occupation- 
 value of a house, as represented by the rent 
 paid for it, is enjoyed by the members of the 
 occupying household directly, without the 
 intervention of any other labour than their own. 
 It is, then, only in connection with the profits 
 of about ,6,000,000, which result from the 
 creation of new manufacturing plant and kin 
 dred equipments, in England, Scotland and 
 Ireland, that a corresponding increase in wages 
 paid in this country is to be expected; and since 
 profits as a whole appear, as we have seen 
 already, to be something like a fifth part of the
 
 Chap. VI.] WAGES AND SAVINGS 293 
 
 total distributable product, we should expect 
 that profits to the extent of ,6,000,000 would 
 carry with them some wage-bill of ,24,000,000 
 or thereabouts : and a portion of such an 
 increase can be very easily identified. Though 
 the rise in wage-rates has for some years been 
 very slow, it appears that in the year 1908 they 
 showed an average increase over those of the 
 twelve months preceding, which, though less 
 than i per cent., is perceptible, amounting to 
 something like ,8,000,000 : and to this sum 
 must be added the increase of ,5,000,000 in 
 respect of new wages and salaries exceeding 
 635. a week. But if the total of new wages 
 approaches the sum just mentioned, something 
 like half has still to be found elsewhere. And 
 here we are brought to what is really the most 
 important feature of the situation. 
 
 As the population increases, the ranks of the 
 working classes are every year augmented by 
 new recruits, amounting in number to nearly 
 one-fifth of a million; and the wages of these 
 new wage-earners make up an aggregate of 
 approximately 12 million pounds the amount 
 requisite to complete the 24 million estimated. 
 Thus the total return which the nation as a 
 whole receives for a year's savings of 270 
 million pounds is approximately 40 millions, of 
 which new wages account for 24 millions, profits 
 of new home businesses for 6 millions, the 
 occupation-value of new houses for 3 millions, 
 and profits from abroad for 7 millions. The 
 actual loss, therefore, by savings, in respect of
 
 294 LIFE INSURANCE [Book IV. 
 
 spendable income, is not 270 millions, but only 
 230; and the question is out of whose pockets 
 do these millions come? 
 
 About 40 millions are saved in the form of 
 life-insurance premiums, of which 28 millions 
 are paid by persons not subject to income-tax. 1 
 It would farther appear that such persons make 
 savings of other kinds, notably in the form of 
 house-property, the total of which would appear 
 to be somewhat in excess of ^3O,ooo,ooo. 2 It 
 may therefore be reasonably estimated that out 
 of a loss of 230 millions in respect of imme- 
 diately spendable income, the savings of the 
 poorer classes account for about 60 millions, 
 the remainder being saved by persons subject 
 to income-tax. This remainder, however 
 namely, 170 millions comprises more than 10 
 millions in respect of life-insurance premiums, 
 which sum has been deducted already, in 
 reducing the taxable income from the so-called 
 " gross amount " to the net. The net total, 
 therefore, being about 720 millions, the amount, 
 in respect of saving, which has to be deducted 
 
 1. In the year 1907 the total of life-insurance premiums 
 was nearly .40,000,000, of this nearly 12,000,000 came 
 from persons subject to income-tax, and figures among the 
 statutory deductions, as not representing income till the 
 decease of the persons insured. 
 
 2. The income from real property going to persons with 
 less than 160 a year, and to charities, increased at the 
 rate of about 1,500,000 a year, between the years 1901 and 
 1908. See Statistical Monograph, 13; also Reports of 
 Commissioners of Inland Revenue.
 
 Chap. VI.] SPENDABLE INCOMES 295 
 
 from this, will be approximately 160 millions. 
 If to this deduction be added the bulk of profits 
 from abroad, and the element of fancy values 
 which, if incomes were equalised, would dis- 
 appear these two items amounting to about 
 220 millions the total to be deducted will be 
 380 millions before we reach the directly 
 spendable residue which socialists would find 
 available, according to their own principles, for 
 re-division. Profits from abroad, and the 
 element of fancy values, both would go for 
 reasons already stated. The element of sav- 
 ings, minus the return accruing from it, would 
 go also for reasons equally cogent; for if they 
 were not made by individuals they would 
 necessarily be made by the State. The State 
 would either seize them before anything was 
 distributed at all, or extract them by taxation 
 afterwards. In no case would they remain with 
 private citizens for the purposes of direct enjoy- 
 ment. 
 
 Thus out of the total of those net spendable 
 incomes in excess of ;i6o a year, which 
 amounts, as things are, to some 720 millions, 
 all that would remain for division would be 
 340 millions, or considerably less than half. 
 ,The present aggregate of incomes not subject 
 to income-tax would at the same time be 
 appreciably diminished also; but even if we 
 ignore this fact, the present income of the 
 nation would be reduced from something over 
 2,000 millions to 1,640 millions. This, divided 
 amongst 45 million individuals, would mean an
 
 296 EQUALIZATION OF INCOMES [Book IV. 
 
 average per head of ^36 a year. This only 
 exceeds by ijd. a day what is the average 
 income per head of the poorer classes now. 
 
 It may, however, be said truly that an absolute 
 equalisation of incomes on the principles of 
 ideal socialism is not " practical politics." 
 Indeed many socialists themselves not only 
 admit this fact, but insist on it, relegating 
 absolute equality to some indefinite future ; 
 whilst with radicals even with such of them as 
 are tinged with socialistic sympathies absolute 
 equality is not one of even their professed aims. 
 It is certainly no part of the programme of the 
 present Radical Government. Not only has a 
 leading member of that Government boasted 
 that, apart from the landlords, he had the 
 support of most of the richest men in the 
 country : but he and his colleagues are so far 
 from wishing to equalise incomes, that they 
 have themselves created a number of new ones, 
 in addition to perpetuating others, all of them 
 vastly in excess of any average that could 
 possibly be general. What they profess to aim 
 at is not an equalisation of wealth, but some 
 process which they, bishops in their palaces 
 joining them, describe as a " better distribution" 
 of it; and since this involves an attack on 
 existing wealth of some sort, their concern is, 
 in so far as they are practical men, to pick out 
 certain portions of the income subject to income- 
 tax, and concentrate their assaults on these, 
 whilst leaving the rest in a state of untouched 
 security.
 
 Chap. VI.] QUEST FOR PLUNDER 397 
 
 Now such a process of selection can be based 
 on one or the other or both of two principles 
 only. The incomes to be attacked may be 
 selected on account of their origin or else on 
 account of their magnitude; or of their origin 
 and their magnitude together. 
 
 Now we have already seen the results of the 
 radical quest for incomes which are assailable 
 on account of their origin. All land-rent; all 
 profits on capital; parts of land-rent; parts of 
 the profits on capital, all have been advertised 
 as so many mines of treasure, from which 
 social salvation may be extracted at the expense 
 of the present recipients; but every test or trial 
 has resulted in abject failure, partly because the 
 sums in question are so ludicrously less than 
 was imagined; partly because in each case, 
 though a portion goes to rich men whom the 
 radicals might be pleased to injure, a proportion 
 far larger goes to a multitude of poor men, or 
 men poor comparatively, whom it is the object 
 of the radicals not to plunder, but to conciliate. 
 Thus to refer once more to a matter of which 
 mention has been made already, we have the 
 authority of Mr. Lloyd George for saying that 
 whatever may be laid down as to the unearned 
 increment of interest, in so far as it goes to men 
 conspicuously rich, only " a foul lip " will 
 name it as an object of special attack, in so far 
 as it goes to men whom he describes as 
 " comparatively poor." In short, on any prin- 
 ciples other than those of a crude socialism 
 which the radicals emphatically repudiate, it is
 
 298 DISTRIBUTION OF WEALTH [Book IV. 
 
 impossible, if incomes are classified with regard 
 to their origin merely, to stigmatise any group 
 of them as more suitable than any other for 
 being specially and preferentially robbed to 
 finance a social millennium, or to " bring about 
 a better distribution of wealth." 
 
 The primary basis of discrimination, if any 
 discrimination is to be made, must relate to the 
 magnitude of the incomes, not to any peculiarity 
 in their origin. The only two classes of income 
 which, in respect of their origin, radical ingenuity 
 has contrived to stigmatise as wholly peculiar, 
 are mining royalties and the increases of urban 
 ground-rent; but as these two sums together 
 come to only a halfpenny in the pound of the 
 national income, and less than three halfpence 
 in the pound of the income subject to income- 
 tax, it is a little difficult to see how any super-tax 
 placed on them, even if it amounted to as much 
 as 25 per cent., could produce " the better 
 distribution of wealth " which radicals advertise 
 as their object, or could appreciably alter the 
 existing distribution. 
 
 If the incomes to be consumed, or partially 
 melted away, on the altar of " better distribu- 
 tion " are primarily selected for sacrifice on 
 account of their individual magnitude (allow- 
 ance perhaps being made for various extenuat- 
 ing circumstances) we have what Americans 
 would call a much more reasonable " proposi- 
 tion." Here we have the principle of all 
 graduated taxation; and if the object of taxation 
 is merely to provide a revenue sufficient for the
 
 Chap. Vi.J INCOMES AND TAXATION 299 
 
 purposes of national defence and government, 
 the principle is neither novel nor unjust; still 
 less is it revolutionary. If, however, such 
 raxes, as they exist, are to be supplemented by 
 new ones, the object of which is neither the 
 maintenance of government nor defence, but 
 the transference of private wealth from one 
 class of citizens to another, there is no logical 
 limit to this species of enterprise but that 
 imposed by the total amount of the incomes on 
 which it is proposed to operate, and there is no 
 excuse for it but the likelihood of some reason- 
 able consonance between its utmost possible 
 results, and those which the would-be operators 
 invite the public to expect from it. All ques- 
 tions, therefore, of justice to individuals being 
 waived, the primary question for radical 
 reformers is what precise degree of heat in the 
 tube of the financial thermometer must a man's 
 income register before it is rendered liable to 
 some special loss by " transference " ? For 
 there must be some freezing-point below which 
 incomes will be safe, unless all are to be reduced 
 to one general average. The second question, 
 this point being settled, is what is the aggregate 
 amount of those incomes which it is proposed to 
 victimise. Let us begin, then, at the bottom of 
 the scale, working our way upwards. We may 
 safely say, then, that no radical reformers, not 
 even those whose radicalism inclines to social- 
 ism, would propose to diminish by any new 
 scheme of transference incomes not exceeding 
 ..400. Mr. John Burns in his early socialistic
 
 300 DISCORDANT THEORIES [Book IV. 
 
 days, named ^"500 as the limit of legitimate 
 safety. Influential and trusted members of the 
 Labour Party in Parliament make no objection 
 and they are very sensible men to earning 
 in addition to their Parliamentary incomes .300 
 as secretaries to some Labour Association ; and 
 may also make as much as ,5 a week by con- 
 tributions to the radical-socialist press. An 
 income of ,1,000 a year may in this way be 
 earned easily; nor would those who could thus 
 earn it see anything in it which marked it out 
 for plunder. A distinguished man of letters, 
 who describes himself as a moderate socialist, 
 has admitted that he made by his writings 
 ;2,ooo a year at least, and declared that such 
 a sum was less than they were fairly worth. 
 Mr. Money who, of the reformers of to-day, 
 can alone claim to be a statistician, states, as we 
 have seen already, that riches in an invidious 
 sense only begin with incomes of " several 
 thousands" : whilst the most important evidence 
 of all is supplied by the present Government 
 itself, which not only continues to maintain 
 more than 80,000 posts, the incomes attached 
 to which range upwards to ,10,000 a year, but 
 has also in a single twelve-month created 3,000 
 new ones. We may assume then, with regard 
 to the radical or radical-socialist reformers who 
 now talk about a better distribution of wealth, 
 that the amount to which incomes may rise, 
 without being liable to diminution by some 
 special process of transference, is placed by one 
 group at .1,000 a year, by another at ,5,000;
 
 Chap. VI. J INCOME TAX 301 
 
 and that the practice of the present Government 
 raises it to at least ,10,000; whilst the language 
 in which wealth is described by all reformers, 
 indifferently when it is presented as an object 
 of attack to the imagination of the public 
 generally, is language which would, as has been 
 pointed out already, be meaningless as applied 
 to incomes of less than .20,000. 
 
 Let us, then, in the light of our previous 
 examination of the question, review once more 
 the total income subject to income-tax, together 
 with the incomes and the number of the various 
 groups of recipients, as they would present 
 themselves to a reformer who was in search of 
 material fit for transference. 
 
 The recipients, numbering as a whole about 
 1,400,000, he would find to comprise over 
 660,000 salaried employees, over 300,000 em- 
 ployers (all shopkeepers and dealers, subject to 
 income-tax, being included), over 200,000 pro- 
 fessional men, and about 20,000 large farmers, 
 the total number of such persons being about 
 1,250,000, and the remainder consisting of 
 persons living on their own means, about half 
 of whom are men retired from business, a 
 certain number widows and spinsters, and some 
 tens of thousands are men commonly called 
 f " leisured," and living on inherited fortunes, 
 not many of which are large. 1 
 
 x. These figures are derived from the Census of 1901 (the 
 tetter figures being not yet available) and in each case there 
 will have been an increase during the ten years following.
 
 303 INCOMES AND RENT [Book IV. 
 
 Of this body of 1,400,000 persons in receipt 
 of incomes exceeding ^160 a year about one 
 million would be found living in houses the 
 rental value of none of which exceeded ^40 a 
 year, the average rental being slightly under 
 ^30, the average income of the occupants being 
 about ^260, and the aggregate income about 
 ^"260,000,000. About 330,000 persons would 
 be found living in houses the rental value of 
 none of which exceeded ;ioo, whilst that of 
 the large majority of them was not much more 
 than ^50, the average income of the occupants 
 being less than ,700 a year, and their aggregate 
 income being about 200 millions. 
 
 These two groups of houses having been 
 scrutinised by the radical reformers, we may 
 assume that their door-posts would be marked, 
 as though the occasion were a fiscal Passover. 
 The destroying angels of " a better distribution 
 of wealth " would leave the householders, with 
 their parlour-maids or their " generals " undis- 
 turbed, and would concentrate their attention 
 on the superior residences remaining, whose 
 porticoes or whose lodge gates were in them- 
 selves invitations to plunder. A census of such 
 residences having been taken, what would the 
 number of them turn out to be? If allowance 
 be made for the fact that a certain number of 
 persons occupy more than one, the number of 
 houses worth over ;ioo a year would prove to 
 be not more than 73,000. Of these, about 
 1 1 ,000, as we have direct means of knowing, 
 would be occupied by persons whose incomes
 
 Chap. VI.] ANALYSIS OF INCOMES 303 
 
 exceeded ,5,000; whilst 62,000 would be 
 occupied by persons whose incomes lay between 
 that sum and ,1,000. 
 
 The aggregate income of these two groups 
 appears, if we take the figures for 1910, to be 
 approximately the same, each amounting to 
 about 130 millions, and the total for the two 
 being about 260 millions. Here, then, if any- 
 where, we come to the persons and the income 
 from whom and from which the proposed trans- 
 ferences are to be made. Let us consider what, 
 on the principles of radicalism, if these be 
 stretched to the utmost, could be transferred 
 from this total for the purposes of " a better 
 distribution of wealth." In order to arrive at 
 an answer, the two groups in question must each 
 be re-examined and subdivided. It will be 
 found, from an analysis of the evidence sup- 
 plied by houses, that the aggregate of incomes 
 between ,1,000 a year and ,5,000 consists of 
 two equal portions of about 65 millions each, 
 one of which consists of about 40,000 incomes 
 averaging ,1,500* a year, and the other of 
 20,000 incomes averaging ,3,000 a year. With 
 regard to incomes exceeding ,5,000, we know 
 that about 80 millions of the aggregate is 
 divided amongst 10,000 people; and about 
 ^50,000,000 amongst a thousand. Such being 
 the case, then, let us suppose that the radical 
 reformers are addressing each of these four 
 
 i. Of houses worth from 100 a year to .200, about 45,000 
 are worth ,120 a year, about 17,000 are worth ^170, these 
 sums being averages.
 
 304 FOUR GROUPS OF INCOMES [Book IV. 
 
 groups of persons in turn. The utmost that 
 could be said by even the most extreme of them 
 would be as follows. 
 
 To the poorest of the four groups they would 
 say, " Here are 40,000 of you, each with an 
 income of 1,500 a year. In addition to the 
 tax which you pay upon this already, we will, 
 with a view to ' transferring ' it, take from you 
 an extra twentieth." This, in round figures, 
 will come to ,3,000,000. 
 
 To the second group they would say, " Here 
 are 20,000 of you, each with an income of 
 ,3,000. In addition to the tax which you 
 already pay upon this, we will, with a view to 
 ' transferring ' it, take from you an extra 
 fifteenth." This, in round figures, will come to 
 about ,4,000,000. 
 
 To the third group they would say, " Here 
 are 10,000 of you, each with an income of 
 ,8,000. In addition to the income-tax and the 
 super-tax which you pay upon this already, we 
 will take from you an extra tenth by means of a 
 super-super-tax, which in round figures will 
 come to about ,8,000,000. 
 
 To the fourth group to the possessors of 
 those fortunes which alone are conspicuous 
 they would say, using more ceremony, " Here 
 are 1,000 of you mostly men of industrial and 
 scientific genius, whose energies have enriched 
 the nation to an extent seven times greater than 
 they have ever enriched yourselves, and we 
 regard those energies as ' one of our chief 
 national assets.' You have between you an
 
 Chap. VI.] " TRANSFERENCES " 305 
 
 income of a little over ^50,000,000 ; and there- 
 fore in addition to the income-tax and the super- 
 tax which you pay upon this already, we propose 
 by a super-super-tax to take from you an extra 
 quarter. This, we reckon gives us about 
 2" 1 3, 000,000." 
 
 The total of these sums the utmost which, 
 according to their own principles, the radicals 
 could collect for transference is about 
 ^28,000,000. Were such a sum raised as a 
 war-tax, it would no doubt be considerable ; but 
 regarded as a transference of private income 
 from the richer classes to the poorer, with the 
 object of enabling tens of millions of people to 
 imitate habits which at present are confined to 
 some tens of thousands, it would not only be 
 inadequate, it would be absolutely inappreci- 
 able. It must, moreover, be remembered that 
 most radicals, even in theory, would confine 
 their " transferences " to incomes which were 
 not less than ^5,000 a year, as we definitely 
 know from information provided by the Chan- 
 cellor of the Exchequer, who declares that even 
 that sum is by no means sufficient for himself. 
 It must be remembered farther that even if the 
 operation of transference should be extended to 
 all incomes in excess of a single thousand 
 pounds, more than a third of the total which 
 would be thus earmarked for attack is saved at 
 present in the form of productive capital, for 
 the purposes of extending those industries 
 which are the ultimate source of all incomes 
 alike. Hence, if the transferences, whose
 
 306 RADICAL REFORMERS [Book IV. 
 
 object is a ".better distribution of incomes/' are 
 not to be made by diminishing the national 
 capital, the utmost sum which for this object 
 radicals could look forward to extracting would 
 not be as much as 28,000,000. It could not 
 exceed ,18,000,000. 
 
 Such would be the case if the sum in question 
 be calculated with reference to the principles 
 which radical reformers definitely and specifi- 
 cally formulate. It cannot be doubted, how- 
 ever, that the principles which they definitely 
 formulate differ very considerably from the idea 
 which they are intended to suggest, and which is 
 alone operative on the multitudes to whom such 
 reformers appeal. This idea, which has been 
 examined in these pages already, consists of an 
 identification of the " rich " as they are to-day 
 with persons whose fortunes are sufficient to 
 render their way of life, their entertainments, 
 their yachts, their purchases of art treasures, 
 and even their wives' ornaments, spectacular- 
 persons who could not possibly play the most 
 modest of the parts imputed to them, on any- 
 thing less than ,20,000 a year. These are the 
 people whose wealth is supposed to be so 
 boundless that the transference of even a part 
 of it would suffice to transform the world. 
 
 Such an idea, as has already been pointed 
 out, is very far from unnatural ; and an interest- 
 ing passage may be quoted from a speech by 
 Mr. Bonar Law, in which he said that, apart 
 from the question of its accuracy, it was one 
 which was so natural that he could himself
 
 Chap. VI.] MR. BONAR LAW 37 
 
 sympathise with it, and to which he gave vivid 
 expression by means of a short anecdote. He 
 happened, he said, to have been dining recently 
 at one of the few really great houses in London, 
 and his hostess, with a glitter of gold plate 
 before her, with a wineglass in which the rarest 
 of champagnes was expending its bubbles for 
 her benefit, and a menu at her side comprehend- 
 ing the costliest of the world's delicacies, asked 
 him what was the cause of the " unrest so preva- 
 lent in the modern labour-world." ' I think," 
 said Mr. Law, " I can tell you. What the 
 wage-earning classes want is that you should 
 have a little less of this sort of thing, and that 
 they should have a little more of it." Here, 
 no doubt, we have a good diagnosis of the 
 malady. The malady is an imaginative want. 
 The question is whether the want is a want of 
 something which is possible, or whether it is 
 the want of something which, in the nature of 
 things, is not. The question, as Mr. Law thus 
 sets it, is very easily answered. The richest 
 men of London, such as Mr. Bonar Law's host, 
 must certainly be men whose incomes exceed 
 ^20,000 a year. Of such men the aggregate 
 income is a little over ^50,000,000 a year. If 
 savings be deducted as not directly distribut- 
 able, the amount remaining for the purchase of 
 the " this sort of thing " in question, will be 
 barely more than ^30,000,000. If only " a 
 little of this sort of thing " is to be taken from 
 the present possessors, that " little " can hardly 
 mean more than a good half of their present
 
 308 TRANSFERENCES [Book IV. 
 
 spendable income; and a half might possibly 
 come to as much as 16,000,000. If those who 
 are " unrestful " for the want of " a little more 
 of the sort of thing " which is represented by a 
 great London dinner party, comprise only the 
 manual workers and their families, they will 
 make up a population of 33,000,000 persons; 
 so that the " little more of this sort of thing " 
 which could in this way be transferred to each, 
 would come in terms of money to 95. 6d. a head. 
 If this were converted into specimens of the 
 actual delicacies present on the rich host's table, 
 the value of the transferred income might 
 conceivably be announced as follows : 
 
 " Whereas, in order to secure a better distri- 
 bution of wealth, His Majesty's Government 
 will take over one half of the spendable portion 
 of every income which exceeds ,20,000, 
 arrangements have been made with Messrs, 
 Fortnum and Mason whereby every individual 
 suffering from Labour Unrest will, three times 
 a year, namely at Christmas, Easter and 
 Michaelmas, be supplied, on application, with a 
 hamper containing portions of the sort of things 
 provided at rich men's dinners, these portions 
 representing the applicant's share of the total 
 sum taken over. H ere are some specimens of 
 the hampers, as packed for delivery : Hamper 
 A, containing one half pint of Champagne, 
 medium quality, half of one fat quail, one lark 
 in aspic ; Hamper B, containing nine oysters, 
 and the equivalent of one glass of rum punch 
 in a capsule; Hamper C, containing four
 
 Chap. VI.] A DIVISION OF LUXURIES 309 
 
 oysters, one spoonful of Russian Caviare, two 
 ounces of Strasburg pie. 
 
 " Instead of such hampers, connoisseurs can 
 be supplied with three coupons in the year, each 
 of which will entitle the person presenting it to 
 one liqueur glass of French brandy, forty years 
 old in bottle. 
 
 " Alternatively, by arrangement with a well- 
 known firm of restaurateurs, three dinner 
 coupons will be issued to each applicant, 
 entitling the holder, once in every four months, 
 to a three-and-sixpenny dinner, wine and coffee 
 included, together with after-dinner pills ad 
 libitum, worth a guinea a box,. Mothers of 
 young children will please note these last." 
 
 Such results, though each might be agreeable 
 while it lasted, would hardly suffice to produce 
 in some 33 million persons any sense of a sub- 
 stantial change in the existing distribution of 
 wealth. They would probably cause more 
 unrest, both moral and intestinal, than they 
 cured; and yet the carrying out of any one of 
 them would run away with at least ^16,000,000. 
 
 So much, then, for the possibilities of pro- 
 ducing a social millennium by means of any 
 transference-taxes which, according to their own 
 principles, radical reformers, not excluding the 
 most extreme of them, could possibly propose 
 to inflict on the conspicuously rich, or even on 
 these with the moderately rich added to them. 
 If greater results were desired, their realisation 
 could not be even attempted except by the 
 adoption of a crude and Utopian socialism,
 
 310 " COLOSSAL HOARDS " [Book IV. 
 
 which is repudiated not only by radicals, but by 
 moderate socialists also. If such principles 
 were adopted, it would seem at first sight that 
 there was considerably more to divide. Wealth 
 would be cast into a very much hotter furnace, 
 with a view to rendering it more completely 
 fluid ; but as has been pointed out in the earlier 
 part of the present chapter, this process would 
 result in the defeat of its own ends; and most 
 of the income which it was desired to pour into 
 new moulds would float away in vapour. 
 Foreign profits would go, fancy values would 
 go. Savings would remain unmelted, and 
 unavailable for any direct distribution. The 
 present recipients of incomes subject to income- 
 tax would indeed see their present average 
 income reduced from $oo a year to something 
 like ,200; but the utmost which, even in 
 theory, the masses of the population would 
 gain would be a present per head of a sixpence 
 and a threepenny bit weekly : and half this or 
 more would at once be taken away from them 
 by an equalisation of the present ordinary taxes. 
 From whatever point of view we look at the 
 matter, on whatever principles we may propose 
 to seize a part or even the whole of spendable 
 income of the few for the purpose of distribut- 
 ing it among the many in such a way as to alter 
 appreciably their present manner of living, we 
 shall find that there is nothing, or nothing 
 appreciable, to distribute. And the reason is 
 simply this, that the colossal hoard of the few 
 from which the materials of distribution are to
 
 Chap. VI.] PRESCRIPTIONS OF QUACKS 311 
 
 be drawn the colossal hoard of which the 
 modern reformer dreams, and on the supposed 
 existence of which his dreams and his schemes 
 are based, is itself a dream only. If the 
 majority want to know where the bulk of the 
 national income is really hidden, and why the 
 plunder of the minority would have so vanish- 
 ing a result, the answer to both questions is 
 simple, and has been given in a previous chap- 
 ter. Nine-tenths of the spendable income of 
 the nation is in their own pockets already, and 
 all reforms are illusory they are the mere 
 prescriptions of quacks which have a contrary 
 opinion for their basis. 
 
 To say this is not to say that there are no 
 evils to be reformed : but a complete emancipa- 
 tion from the influence of a fundamentally false 
 diagnosis of them, is the first step to be taken, 
 if we desire to see what such evils really are. 
 This observation introduces us to a new order 
 of questions which were foreshadowed in our 
 opening chapter; and to a summary considera- 
 tion of them the following Book will be devoted.
 
 BOOK V. 
 TOWARDS A NEW DEPARTURE
 
 CHAPTER I. 
 
 SOCIAL grievances being let it be said once 
 more partly due to facts directly experienced, 
 and partly to belief as to facts which is operative 
 through its effects on the imagination, griev- 
 ances of the former kind are in their nature 
 real. Those of the latter may be either real or 
 illusory, according as the beliefs in which they 
 originate are either correct or otherwise : and the 
 present work thus far has been mainly occupied 
 with a demonstration that the principal griev- 
 ances of to-day, as modern reformers under- 
 stand them, are due to beliefs which are so 
 absolutely erroneous that the real evils or 
 grievances, so long as such beliefs persist, 
 can be neither clearly seen nor remedied. It 
 remains for us to consider what these real evils 
 are : but we will first briefly review the nature 
 and origin of the beliefs by which they are now 
 obscured. 
 
 These beliefs, in so far as they have been 
 dealt with here, are erroneous beliefs as to 
 bare material facts facts relating to the dis- 
 tribution of economic wealth : but their disturb- 
 ing effect is supplemented by beliefs of another 
 kind, which, though frequent allusion has been 
 made to them, it still remains for us to examine. 
 These are beliefs relating, not to specific facts, 
 such as the actual distribution of wealth in this 
 
 315
 
 316 PRINCIPLES OF SOCIALISM [Book V. 
 
 or in any other country, but to certain general 
 principles and to ideal objects of endeavour, 
 which constitute the distinctive elements of 
 definitely articulate socialism. 
 
 The principles distinctive of socialism in all 
 its forms are broadly reducible to three, the 
 first of which has been gradually superseded 
 by the second, whilst both of them point to the 
 realisation of an ideal third. 
 
 The first of these is the doctrine that all 
 wealth is the product of manual labour. 
 
 The second an amendment of the first is 
 the doctrine that all wealth is the product of 
 society as a whole. 
 
 The third consists of an ideal object of 
 endeavour, which is commonly described as the 
 realisation of " economic freedom." 
 
 Let us take these principles in order. 
 
 The doctrine that all wealth is the product 
 of manual labour is one which has an interesting 
 history. As applied to communities in their 
 earliest childhood, it is true enough; but it is 
 true as applied to such communities only. 
 Nevertheless, if the civilisations of the ancient 
 and mediaeval world be compared with those of 
 to-day, it possesses, as applied to the former, 
 a certain relative truth, which is wanting to it 
 as applied to the latter. This relative truth is 
 sufficiently illustrated bv the contempt expressed 
 by the ruling and intellectual classes for what 
 Plato called :c Work for gain," or in other 
 words for wealth-production a contempt which, 
 except in the case of the republics of Northern
 
 Chap. 1.J WEALTH AND MANUAL LABOUR 317 
 
 Italy, survived amongst all aristocracies, whether 
 of birth or brain, from the days of Plato down to 
 those of our own grandfathers. The modern 
 developments, however, of science and scientific 
 invention, as applied to the processes of indus- 
 try, through these to the processes of transport, 
 and through both to the processes of war, have 
 for more than a century been producing changes 
 so colossal as to show one might naturally 
 have thought to even the most casual observer, 
 that an aristocracy of intellect had allied itself, 
 by means of capital, with the democracy of 
 hand and muscle ; and, in so far as the develop- 
 ment of wealth-production was in any sense pro- 
 gressive, had become the predominant, or, at 
 all events an equal, partner. And yet, strange 
 to say, the very moment when this change was 
 first generally asserting itself, was the moment 
 at which, by a curious irony of fate, the doctrine 
 that manual labour is the sole productive agent, 
 was propounded for the first time as a definite 
 and universal formula : and, what is still more 
 strange, the promulgation of this doctrine was 
 the work, in the first instance, not of the 
 champions of labour, but of the champions of 
 capital themselves. 
 
 What took place was this. In proportion as 
 industries became more elaborately divided, 
 and different groups specialised in the produc- 
 tion of single classes of commodities, of which 
 only a small part was of any use to the pro- 
 ducers, the importance of exchange as the 
 means by which wealth was finally realised,
 
 $i8 RICARDO'S DOCTRINE [Book V. 
 
 became more and more evident; and the main 
 question on which the attention of economists 
 was fixed itself, was the measure of value by 
 which exchange was regulated. Why do so 
 many hymn-books exchange for one pair of 
 breeches, or a watch or a pair of spectacles for 
 so many mugs of beer? And the final answer 
 of the economists of the orthodox or capitalistic 
 school was that formulated by Ricardo. Com- 
 modities are exchanged for one another, or in 
 other words possess value, in proportion to the 
 amount of wage-paid manual labour which, on 
 an average, is required for the production of 
 them. 
 
 Now this doctrine, of which mention has been 
 made already, is true enough even to-day if 
 qualified by a variety of assumptions, which 
 Ricardo and his school tacitly took for granted. 
 They, however, made no attempt to specify 
 them; and their doctrine, given to the world in 
 all its crude incompleteness, was converted by 
 the genius of Marx into the foundation of scien- 
 tific socialism, and applied to purposes of which 
 the authors of it never dreamed. If manual 
 labour, Marx argued, is the measure of all values, 
 manual labour the labour which is now bought 
 with wages must, it is perfectly obvious, be the 
 producer of all wealth. The labourer's wages, 
 however, represent, as a matter of fact, a part 
 of the product only : and hence the great 
 question which the modern world must answer 
 is, why the manual labourer does not receive 
 the whole? And the reason, he said, was this.
 
 Chap. I.] " MODERN CAPITALISM ' 319 
 
 The labourer must, in order to produce any- 
 thing, have not only raw materials, but tools or 
 implements also; and prior to the development 
 of the modern capitalistic system, he possessed 
 such implements in the fullest sense, for they 
 were his own. What he produced he sold ; with 
 a part of the price received he paid for his raw 
 materials ; and the remainder was the full value 
 which his personal labour had added to them. 
 But, so Marx proceeded, the rise of modern 
 capitalism has changed the situation altogether. 
 The rise of modern capitalism consists of a pro- 
 cess by which, as the implements of labour were 
 transformed into vast mechanisms, which no one 
 labourer could either possess or use singly, 
 these passed out of the hands of the labourers 
 altogether into the hands of a separate and 
 wholly non-productive class the capitalists; 
 and what this class has done, wherever it has 
 established itself, has been as follows. It vir- 
 tually divided the country into a number of 
 walled enclosures, within which the whole of the 
 labourer's tools are stored. Of the gate of each 
 enclosure some capitalist keeps the key. The 
 labourers themselves are left helpless along the 
 roads outside, and can do or produce nothing 
 unless the capitalists let them in. This the 
 capitalists do. To do so is their sole business ; 
 but they do so on condition that each labourer 
 as he goes out shall leave behind him the whole 
 of each dav's proHnct, excent about one quarter 
 of it, without which he could not live. 
 
 In other words what we call " modern capi-
 
 320 " ENGROSSING OF LOOMS " Book V. 
 
 talism " is, if Marx be correct, nothing more 
 than the triumphant generalisation of a practice 
 which was actually rife in England in the 
 middle of the sixteenth century. This was a 
 practice, inaugurated by " great clothiers " and 
 called " the engrossing of looms " (which 
 meant the acquisition of the implements of 
 production in the weaving trade), and the letting 
 them out at a " rent " to " poor artificers." 
 Now such an explanation of capitalism might 
 have had some superficial plausibility, if it 
 were not for the fact, on which Marx and his 
 followers insist with as much emphasis as 
 anybody namely the fact that, since the 
 implements have passed into the hands of the 
 capitalists, an incomparably greater product has 
 resulted from the labour of the labourers than 
 resulted from it when the implements were 
 their own personal property. That the proxi- 
 mate explanation of this is the metamorphosis 
 of the implements themselves from puny tools 
 into vast scientific organisms, was as obvious 
 to Marx as it must be to every child ; but when 
 we come to the farther question of how this 
 metamorphosis was accomplished, the theory of 
 Marx is mute. No hint of an answer is pro- 
 vided by it. Marx and his followers have 
 naturally been glib enough in retorting that the 
 metamorphosis is attributable to the modern 
 growth of knowledge. But to say this is to 
 abandon their fundamental theory altogether. 
 To whatever persons or conditions the growth 
 of knowledge may have been due, it has not
 
 Chap. 1.] " WEALTH A SOCIAL PRODUCT " 321 
 
 been due to the prosecution of mere manual 
 labour. If capitalism were no more than a 
 process like that of " engrossing " handlooms, 
 weaving would be accomplished by mediaeval 
 handlooms still. Handlooms have not hatched 
 themselves into the power-looms of the modern 
 world, because people, otherwise idle, locked 
 them up in yards, and exacted a toll from the 
 weavers who wished to go in and use them. 
 Wheelbarrows have not hatched themselves 
 into locomotive engines and goods-trains, 
 merely because they ceased to be the property 
 of the men who were allowed to wheel them. 
 Even socialists themselves have been gradually 
 driven to admit that kinds of human effort have 
 played a part in the change efforts of the 
 intellect, of the imagination, and adventurous 
 mental energy which are wholly distinct from 
 the labour which is bought and sold for wages, 
 and cannot by any ingenuity be brought into the 
 same category. 
 
 Hence, during recent years, amongst all 
 socialists who can think, the original doctrine 
 that the wealth of the modern world is the 
 product of one kind of human effort only that 
 is to say, of manual labour, has been modified 
 by the recognition that it is the product of efforts 
 of many kinds, mental as well as manual, no 
 one of which would be effective without aid 
 from the others : and thus the doctrine that all 
 wealth is a labour-product has been superseded 
 by the doctrine that all wealth is a social 
 product.
 
 322 PRODUCTIVE EFFICIENCIES [Book V. 
 
 Now this later doctrine is, in one way, a great 
 improvement on the earlier; for whereas the 
 earlier (at all events as applied to the modern 
 world) is a falsehood pure and simple, the later 
 is, in a certain sense, true. It is, however, 
 nothing more than a truism. It has no bearing 
 whatever on the practical questions in connection 
 with which it is ostensibly formulated. These 
 practical questions relate, not to the productive 
 efforts made by a society as a whole, but to the 
 different kinds of efforts made severally by 
 different classes, and the share of the product 
 which in consequence is legitimately due to 
 one class, as contrasted or compared with 
 that which is legitimately due to another. 
 The doctrine that wealth as a whole is the 
 product of society as a whole is sufficient if 
 we are willing to content ourselves with the 
 only conclusion to which it leads namely that 
 the product ought to be enjoyed by whatever 
 society may be in question, and not by some 
 other society in a different quarter of the globe. 
 The claims of classes within that society itself 
 are left by this doctrine precisely where they 
 were. 
 
 In its negative results it has, however, 
 been not unfruitful. It has relieved thinkers, 
 who still call themselves socialists, from the 
 intolerable necessity of maintaining that no 
 human being is entitled to receive more than 
 another, and that nobody but a manual labourer 
 is entitled to receive anything-. It has enabled 
 them to bring themselves so far into harmony
 
 Chap. I.] " ECONOMIC FREEDOM 333 
 
 with commonsense as to admit that productive 
 efficiencies are not only various, but unequal; 
 and that considerable inequalities in reward are 
 alike just and inevitable. But in thus aban- 
 doning one of the earlier doctrines of socialism, 
 they have been driven, by way of compensation, 
 to lay increased stress on another. In ceasing 
 to define socialism as a regime of economic 
 equality, they have become more emphatic in 
 defining it as a regime of economic freedom. 
 
 Now it is difficult to imagine a phrase more 
 captivating in its vague suggestion : but it is 
 difficult to imagine a phrase which, if invested 
 with any definite meaning and applied to the 
 modern world, is more like the shriek of 
 a lunatic. The doctrine that no human 
 faculty other than common manual labour is in- 
 volved in the production of a great Atlantic 
 liner, or in the discovery and extraction of 
 radium, is reasonable as compared with the 
 conception of economic freedom; and this 
 observation becomes more and more literally 
 true in proportion as we imagine the actual 
 conditions of to-day to be modified in accor- 
 dance with the ideas which all forms of socialism 
 postulate. The nearest conceivable approach 
 to freedom in economic work is that enjoyed by 
 the peasant who is the owner of the plot he 
 cultivates. He is free, so far as any human 
 laws are concerned, to cultivate it well or ill ; but 
 if he fails to cultivate it well, Nature is a law- 
 giver who will chastise him with cold and hun- 
 ger : and if his plot is to support him at all, he
 
 324 FAILINGS OF SOCIALISM [Book V 
 
 is not free to leave it. Moreover such isolated 
 work as the peasant's, which is free in the sense 
 that it is exempt from human dictation, is 
 precisely the type of work which socialism aims 
 at abolishing. Socialism aims, not only at per- 
 petuating, but at extending and making univer- 
 sal, those methods of production and transport 
 which have already been developed by capi- 
 talism; and of these methods the primary and 
 most vital feature is the exact correlation of 
 the work of each individual worker with the 
 work of every other, in respect of the commo- 
 dities, or parts of commodities, fashioned of 
 their kind, their number, and the precise 
 moments of their completion; and of the kinds 
 of services to be performed (such as those of 
 a pointsman on a railway) and the precise 
 moments of performing them. If there is little 
 economic freedom for the industrial employee 
 to-day, there would be incomparably less if all 
 the separate businesses that exist were consoli- 
 dated into one, by one single employer namely 
 the State, and if all the human wheels were so 
 geared together that any irregularity in one 
 communicated itself to all the rest. 
 
 Thus socialism, regarded as a body of formu- 
 lated principles and ideas, which seek to 
 accommodate themselves to facts, and thus to 
 influence human desire and action, is seen, in 
 proportion as its theoretical development pro- 
 ceeds, to move in a vicious circle. Having 
 outgrown the original fallacy that wealth is 
 produced by manual labour solely, uncontrolled
 
 Chap. I.] STATE SOCIALISM -,25 
 
 by any minds other than the labourer's own, and 
 having endeavoured to reconcile control with 
 economic freedom by a proposed transference of 
 control from private individuals to the btate, it 
 ends by offering labour a system of control so 
 drastic that, compared with the conditions of 
 to-day, it would not be freedom but slavery. 
 To demonstrate this, however, by appeals to 
 reason is one thing. To liberate the popular 
 imagination from the fallacies so exposed is 
 another : and appeals to reason would accom- 
 plish their work but slowly if they were not 
 illustrated and enforced by the teachings of 
 actual experience. But such teachings have 
 not been wanting. In the principle of State 
 socialism itself there is naturally nothing new : 
 but there has, during recent years, been a 
 remarkable and novel extension of it to a variety 
 of public services, and one or two manufactures, 
 which have been undertaken and monopolised 
 in this country, or elsewhere, by the State or 
 by local authorities elected on a democratic 
 franchise; and attention has been loudly called 
 to these enterprises by their advocates as 
 triumphant instalments of the revolution which 
 is ultimately to transform the world. 
 
 How such undertakings compare, in point of 
 efficiency, with others of the same kind con- 
 ducted by private enterprise, Heed not be 
 discussed here. The point here to be noted is 
 that manual labour, as such, achieves, when its 
 employers are elected public authorities, no 
 position which differs in any essential v\ ay from
 
 320 STRIKES [Book V. 
 
 that which it occupies when its employers are 
 private persons. And not only is this true, but 
 the employees of public authorities all over the 
 world have, during recent years, been finding 
 out that it is so. That such is the case is shown 
 by the growing number of strikes directed, not 
 against private employers, but public. In one 
 case it is a Corporation that is attacked, as the 
 public owner of municipal trams or gas-works. 
 In another it is the Central Government, as in 
 the case of the great strikes on the Western 
 railway of France. The employment of labour 
 by such representative bodies is the express 
 image of socialism in logical action. The old 
 bugbear of private profits is eliminated. The 
 question is reduced to a question of " economic 
 freedom " : and yet no sooner is socialism 
 expressed in action than labour discovers in it 
 the re-embodiment of every essential feature 
 against which socialism, as a theory and a hope, 
 protests. Nor is labour expressing this dis- 
 covery by means of strikes alone. Anyone who 
 takes the trouble to examine socialist journals 
 may find it expressed in simple and undisguised 
 language. One of these journals has published 
 a letter from a correspondent who declares that 
 " Under State socialism life would be no better 
 than hell; and that if all Englishmen were to 
 be turned into State employees, nothing would 
 be left for a self-respecting man but to emi- 
 grate." Some of the best-known thinkers who 
 have associated themselves with the socialist 
 movement have, for some years past, been
 
 Chap. I.] SOCIALISM EXAMINED 317 
 
 saying the same thing. Mr. Wells, who is 
 perhaps the acutest of these, insists that the 
 very word " socialism " is so impregnated with 
 fallacious suggestion, that it is no longer service- 
 able : and even Mr. G. B. Shaw, though the 
 insight which he displays as a dramatist appears 
 to desert him when he poses as a social philoso- 
 pher, records his recognition of the fact that 
 socialism, in so far as it means what for many 
 years it was supposed to mean that is to say 
 a mere system of State capitalism would be 
 far more likely to prove the consummation of 
 economic slavery than a release from it. 
 
 In spite, however, of such signs of the times, 
 the word socialism still stands for ideas, claims 
 and tenets, which have not lost their influence 
 over large numbers of people. But this fact 
 is one which is commonly interpreted in a very 
 misleading manner. It is commonly assumed 
 that everybody who describes himself, and who 
 votes, as a socialist, is a person who intelligently 
 assents to certain economic doctrines doctrines 
 which begin with a theory as to how wealth is 
 produced, and culminate in some scheme of 
 society which has such a theory for its basis. 
 This is true to a limited extent only. The main 
 idea which is at the bottom of popular socialism 
 is not any speculative theory : it is a crude idea 
 as to facts. It is the idea with an examination 
 of which this volume has been mainly occupied, 
 that, under existing conditions, the bulk of the 
 world's wealth is being, to an increasing extent, 
 appropriated by a small minority^ that the
 
 32S SOCIALISM A.ND PKQPKR'l Y [liook V. 
 
 majority of the population, in this country at 
 all events, is consequently growing poorer and 
 poorer; and that any theory must be true by 
 which the majority may be justified and united 
 in seizing on the supposed hoard, and leaping 
 into affluence by dividing it. A dignitary of 
 the English Church, referring to certain modern 
 restaurants, which are renowned alike lor the 
 delicacy and the costliness of the fare provided 
 by them, has expressed his wonder that the 
 dinners there eaten by the guests do not turn 
 every waiter who hands the dishes into a 
 socialist. He obviously could not have meant 
 that the mere handing of expensive puddings 
 converted the waiters into masters of some 
 elaborate economic theory. He can merely 
 have meant that the sight of a profuse expendi- 
 ture on trifles is enough to generate in the minds 
 of those who witness it a belief in the reality of 
 the hoard on which socialists propose to seize. 
 In other words, he must have meant that 
 primary basis of socialism is a belief as to 
 simple facts, and not an assent to theory. 
 
 Given an acceptance of the facts, the impor- 
 tance of the theory is immense; but apart from 
 the facts supposed, the mere theories of 
 socialism would be negligible. Indeed Mr. 
 Philip Snowden, in a work to which reference 
 has been made already, admits that such is the 
 case. The kinds of property against which the 
 theories of socialism are directed are, he says, 
 not wrong in themselves. In former days they 
 may have been essential. They have come to
 
 Chap, kj FALSE THIiSIS OF RliFURMURS 329 
 
 be wrong because, under modern conditions, 
 they have produced, and are continuing to 
 produce, certain definite and ruinous results, 
 these results being, according to him, an increas- 
 ing accumulation of wealth in the hands of a 
 small minority, and a corresponding increase of 
 poverty amongst the great mass of the popula- 
 tion ; in which process, he contends, we have the 
 fundamental fact which explains nearly all the 
 evils characteristic of the modern world. And 
 in this general thesis, however its details may 
 be modified, all social reformers of the present 
 day agree with him. 
 
 We are thus brought back to the fact, a 
 detailed elucidation of which has been the 
 object of the present volume the fact that in 
 all its details this thesis of the reformers is 
 false. In so far as it is merely an assertion 
 that social evils exist, it is no doubt true, just 
 as the cry of a man in the street that somebody 
 has knocked him down may serve to call atten- 
 tion to the truth that he has sprained his ankle 
 by slipping on a piece of orange-peel. But 
 whatever element of general truth is expressed 
 by it, is more than neutralised by the funda- 
 mental fallacy of its particulars. In calling 
 attention to the fact that real grievances exist, 
 it converts these into others which are chiefly 
 imaginary; and until the beliefs which invest 
 these phantoms with the semblance of reality 
 are dissipated, it is impossible to determine 
 with accuracy what the real grievances are, what
 
 330 WHAT ARE THE GRIEVANCES? [Book V. 
 
 is their extent and origin, or the methods by 
 which they may be abolished or mitigated. 
 
 The situation, as thus outlined, will be con- 
 sidered in the following chapter.
 
 CHAPTER II. 
 
 THE idea that an increasing proportion of the 
 income of the United Kingdom has for more 
 than a century been, and is still being, appro- 
 priated by a small and very wealthy class, is an 
 idea so diametrically opposite to the actual facts 
 of the case that, as has been said already, there 
 must be a fact of some kind, other than the 
 assertions of reformers, to account for the 
 readiness with which multitudes have accepted, 
 and are still accepting it; and what this fact is 
 has already been pointed out. Though rela- 
 tively to the income enjoyed by the great mass 
 of the population, the aggregate income of this 
 class has never before been so small as it is at 
 the present time, it has never before been so 
 large relatively to the unchanging area within 
 the limits of which it is displayed and spent. 
 It thus becomes everywhere more and more 
 observable. It attracts the simultaneous atten- 
 tion of a larger number of people, who watch 
 it growing like the mango-tree of an Indian 
 juggler, and who, though their own income has 
 collectively grown much faster, are unconscious 
 of this growth for the precise reason that it is 
 general. Hence in contemplating the rich they 
 become the victims of an optical delusion, 
 analogous to that wbi^b is experienced by a 
 
 331
 
 333 EXTENSION OF LUXURY [Book V. 
 
 railway passenger, when a train in which he is 
 travelling at a speed of forty miles an hour, is 
 passed on parallel rails by a " special " whose 
 speed is fifty. His own progress is unchecked, 
 but so far as his eyes can inform him he is 
 suddenly carried back in the direction from 
 which he came. 
 
 How natural such a delusion is can be very 
 easily realised by merely reconsidering the 
 income of the rich to-day, as compared with the 
 income of the country about a hundred years 
 ago. England was, at the beginning of the 
 nineteenth century, universally admitted to be 
 the richest country of the world. The Squares 
 of London, to the eyes of contemporary 
 observers, seemed thronged with " tumultuous 
 grandeur," with " long-drawn pomps," with the 
 " freaks of wanton wealth." No picture of a 
 street or a turnpike road was perfect without 
 its blazoned chariots, its clusters of powdered 
 footmen, or its travelling-carriage with spruce 
 postillions and four galloping horses. The 
 foreign visitor was amazed, the home-grown 
 critic was scandalized, not only by the glitter, 
 but also the wide extension of luxury : and yet, 
 of the country by which such impressions were 
 produced, the entire income was at that time 
 considerably less than the aggregate of incomes 
 in excess of ,1,000 a year to-day. As com- 
 pared with the computations of agitators, this 
 latter sum is infinitesimal. As compared with 
 the present income of the nation it is almost 
 unbelievably small. It is not only a small, but
 
 Chap. II.] THE " SUPER WEALTHY " 333 
 
 also a dwindling quantity. Of the income of the 
 nation, in the year 1801, such incomes formed 
 as much as 18 per cent. They form very little 
 more than 12 per cent, of it to-day. But, in 
 spite of its relative decline, in spite of its actual 
 insignificance as a fraction of wealth generally, 
 the aggregate income of the rich (however the 
 rich may be defined) has increased in absolute 
 amount, whilst one thing has remained un- 
 changed; and that is the size of the arena on 
 whose sands it displays its pageant. 
 
 There is, therefore, nothing to wonder at in 
 the genesis of a spontaneous impression that 
 the increasing wealth of the nation is mainly 
 expended in the production of what is really 
 one of its minor, though perhaps the most 
 conspicuous of its, signs. And this spontaneous 
 impression is intensified by various accessory 
 causes. One of these is the systematic teaching 
 of agitators; but another, the influence of which 
 is probably even wider, is the newspaper press 
 as a purely descriptive agency. There are few 
 journals in whirh some prominent column is 
 not devoted to the private and personal doings 
 of Mr. Masterman's and Mr. Snowden's friends 
 the "enormously rich" or "the snperwealthy"; 
 or of others who succeed in imitating them at 
 extreme inconvenience to themselves. Many 
 journals are devoted to nothing else, introduc- 
 ing to their readers, with an air of pntronizing 
 reverence, a select assortment of millionaires 
 and duchesses, whose furs, whose fcnthers, 
 and whose food the readers are invited to copy,
 
 334 SOCIAL UNREST [Book V. 
 
 at a cost tar exceeding the incomes of nine 
 out of every ten of them, journals supply 
 such matter because the public demands it : 
 and " if the event could trammel up all its 
 consequences," both supply and demand might 
 be accepted as an instance of life's light comedy. 
 The comedy, however, is one which has conse- 
 quences graver than itself. The concentra- 
 tion of popular thought, which the newspaper 
 press stimulates, on the modes of life which 
 exceptional wealth makes possible, tends to 
 popularise a false standard of living. This 
 standard is false because under no conditions 
 could it be realised, even approximately, by 
 the people as a whole, by the majority of 
 them, or by more than one small section. 
 Hence, in proportion as the popular imagination 
 adopts it, the people, let them do what they 
 will, are doomed to a condition of disappoint- 
 ment : and even the achievement of what other- 
 wise they might call successes, does but raise 
 them to one level after another, from which 
 successively they contemplate a wider view of 
 failure. 
 
 Here we have the explanation of that state 
 of mind, in so far as it is merely experienced 
 and not definitely formulated, which is com- 
 monly called social or economic " unrest." It 
 is, in its essence, a generally diffused desire for 
 something which is, from the very nature of the 
 case, not generally attainable. It originates in 
 a fallacy of belief, vague and only half-articu- 
 late, with regard to existing wealth, its amount,
 
 Chap. II.] GROWTH OF A DELUSION 335 
 
 and its present distribution : but it does not 
 assume the guise of a specific grievance until 
 this vague fallacy is translated into definite 
 propositions, which, claiming to be literally and 
 scientifically true, manage to get rid of actual 
 facts altogether, and present the unattainable 
 as a something within the reach of all, if they 
 will only vote together for some simple means 
 of seizing it. The process of translating a 
 popular and not unnatural delusion into a 
 systematised body of statistical and historical 
 errors, and the imposition of this on the minds 
 of multitudes as the sole basis of any true social 
 policy, has been the work of professional 
 reformers for more than sixty years : but even 
 they, with all their industry, would have failed 
 to secure for their fallacies the assent which has 
 been actually accorded to them, if it had not 
 been for the original optical delusion together 
 with its emotional consequences, which the 
 actual and spectacular reality of modern wealth 
 has occasioned. 
 
 Such being the case, it is impossible to deny 
 the force, though we may not entirely yield to 
 it, of many of the arguments which even men 
 of moderate temper urge with the object of 
 exhibiting modern wealth as an evil. There is 
 force, for example, in the contention that, unlike 
 wealth in the days when fortunes were acquired 
 slowly, and the typical rich man (who then was 
 the great landlord) was associated from his birth 
 onwards with recognised and important duties, 
 modern wealth is, to an increasing extent,
 
 336 PARVENU WEALTH [Book V. 
 
 typified by men whose fortunes have been 
 acquired in other countries, and whose sole idea 
 of duty, when they bring these fortunes to 
 England, is to buy the recognition of society 
 by outdoing it in profuse expenditure. And 
 when similar observations are hazarded as to 
 fortunes made at home, it cannot be denied that 
 in some cases they are at least equally plausible. 
 Of the conspicuous incomes of to-day it may 
 be shown by statistical evidence that but one 
 out of every five is two generations old. As 
 Goethe said, about great works of art, each 
 newly enriched person, in so far as he has 
 entered the world, " has had to create the taste 
 by which alone he can be appreciated"; and 
 this taste for himself is, with his wife's assist- 
 ance, created for the most part not merely by 
 an expenditure of his wealth, but by a compe- 
 titive expenditure, the object of which is to 
 attract attention. In this way, it may be urged, 
 the standard of mere material luxury is not only 
 raised and vulgarised amongst those who are 
 able to adopt it, but is also obtruded on the 
 great mass of the public in a form peculiarly 
 calculated both to provoke imitation and to defy 
 it, thus corrupting the populnr conception of 
 what is reallv desirable in life, robbing even 
 substantial comnctence of its power to produce 
 content, and frequently stimulating an extrava- 
 gance which reduces it to actual poverty. 
 
 Such contentions a^ these represent one side 
 of the question onlv: hut so fnr ns thcv o-o t^ere 
 is a lar^e measure of truth in them. For argu-
 
 Chap. II.] AN AVERAGE OF INCOMES 337 
 
 ment's sake let us suppose that they represent 
 the whole truth. Let us suppose that, so far as 
 its moral influence is concerned, the peculiarities 
 of modern wealth are absolutely unmixed evils : 
 but whatever its evils may be, these are not of 
 the particular kind which the practical and 
 political logic of social reformers imputes to it. 
 Its existence and its development may be the 
 cause of increasing discontent, but they cannot 
 be the cause of any actually increasing poverty. 
 They can be so, in the first place, because the 
 mass of the population as a whole grows not 
 poorer, but richer. They cannot be so, in the 
 second place, because the aggregate income ot 
 the wealthy represents a theft (if we like so to 
 express ourselves) which, relatively to the 
 income of the nation, is a gradually diminishing 
 quantity. They cannot be so, in the third place, 
 because the aggregate income of the wealthy is 
 of such an amount and character that no possible 
 redistribution of it, whether by transference- 
 taxes, by increased wages, or otherwise, would 
 appreciably alter the conditions of the masses 
 of the population generally. 
 
 The most drastic redivision conceivable of 
 the entire present income of this country 
 namely a redivision in accordance with the 
 principles of the crudest socialism would, as 
 hn^ been shown already, yield an income of 
 ^ per inhabitant, as against .^34, which is, 
 und-T existing conditions, the average per head 
 of the classes not <^]biect to incomp-tax: and 
 the increase would he more than neutralised by
 
 338 AVERAGE NET INCOME [Book V. 
 
 the equalisation of taxes, rates and savings. 1 
 The average net income per family of five 
 persons, in which such a redivision would result, 
 would be theoretically about ^130. The 
 average net income per family of the classes not 
 subject to income-tax is, at the present time, 
 about ^150. 
 
 Such an absolute equalisation, it is true, is 
 not generally advocated even by the extremest 
 of practical politicians; but a consideration of 
 its theoretical results is valuable as providing 
 us with the only rational standard by which the 
 incomes prevalent in any class can be measured. 
 Thus a class in which family incomes average a 
 few hundreds a year cannot, under existing 
 conditions, reasonably regard itself as poor in 
 proportion as these incomes fall short of ,5,000 
 or even of "1,000. A class in which family 
 incomes average .150, and individual earnings 
 range from ^50 to 7$, cannot reasonably 
 regard itself as aggrieved because these incomes 
 fall short of ,160 and ^100. Such incomes 
 
 I. The present average per head of the population, in 
 respect of taxes, rates, and savings, is about 10 per head 
 or ^50 per family of five persons. The present average 
 for the classes not subject to income-tax is about 4 per 
 head, or 20 per family. The average gross income per 
 family is 170. The average for all families, were all 
 fortunes equalised on extreme socialistic principles, would 
 be 180. Present taxes, etc., being deducted from the 
 first, leave an average net income of ^150. Equalised 
 taxes, etc., being deducted from the second, would leave 
 an average net income of ^130
 
 Chap. II.] IDEAS OF REDISTRIBUTION 339 
 
 should rather be regarded as the first beginnings 
 of riches; for they all of them raise their reci- 
 pients, to a very appreciable degree, above the 
 condition which in any case must be that of the 
 vast majority. A man in any class who is per- 
 suaded that his case is exceptional, may logically 
 maintain that he has a grievance, because his 
 income, however large, is small as compared 
 with that to which his special merits entitle him : 
 but if grievances mean conditions which political 
 reforms can remedy, it cannot be an actual 
 grievance, in the case of the masses of the 
 population, that their incomes fail to reach or 
 exceed any sum but the maximum which any 
 scheme of division could in practice secure for 
 everybody. Such being the case, what we have 
 seen is this that, whatever may be the scheme 
 of division which social reformers advocate, no 
 such scheme, even in theory, could produce the 
 kind of result which reformers present as prac- 
 ticable to the imagination of multitudes that 
 is to say, the generalisation of any condition 
 which would even remotely approach what is 
 meant by "riches," as the word is used to-day. 
 No such result could be produced by any scheme 
 of division, for the simple reason that there is 
 not enough to divide : and all programmes of 
 reform which have any such scheme as their 
 basis are directed, not against the present 
 distribution of such wealth as exists, but against 
 the present limitations of the productive facul- 
 ties of mankind. 
 
 And here it may be noted with interest that a
 
 340 ERRORS OF DISTRIBUTION [Book V. 
 
 statistician who was originally known as an 
 emphatic exponent of the view precisely oppo- 
 site who aimed at exhibiting poverty as purely 
 the result of concentrated wealth has subse- 
 quently modified this view, at all events so 
 far as to recognise that, let existing wealth 
 be distributed in whatever manner we please^ 
 the mass of the population would compara- 
 tively be poor still. Substantially, if not 
 in detail, his conclusion accords with that 
 which has been elucidated in the present 
 work, that the limitations of wealth now im- 
 posed on the great majority of mankind, 
 however they may be aggravated by what he 
 calls " errors of distribution," are determined 
 in the last resort by the limitations of the total 
 product. Nor does his agreement, however 
 qualified and partial, with the argument of the 
 present w r ork, end here. From the above 
 admission he advances to the practical conclu- 
 sion that if, not satisfied with such crumbs as 
 might come to them from the ruin of the rich, 
 the poorer classes in any substantial sense want 
 more, means must be discovered by which the 
 energies of the nation may produce more. And 
 other reformers have of late been coming to the 
 same conclusion. Here at all events we have 
 a principle which is fundamentally true, super- 
 seding or modifying one which is altogether 
 fallacious. But even this principle, when 
 reformers translate it into practical language, 
 is so distorted by visionary, or definitely polemi- 
 cal exaggerations, that, even were it wholly
 
 Chap. II.] ERRORS OF DISTRIBUTION 341 
 
 untrue, it could hardly be more misleading ; and 
 before we proceed to consider its real signifi- 
 cance, a few illustrations shall be given which 
 will show what the general character of these 
 exaggerations is.
 
 CHAPTER III. 
 
 JUST as the traditional contention of reformers, 
 and the current contention of most of them, is 
 that the actual output of wealth, which already 
 awaits seizure, is sufficient, if fairly divided, to 
 make every home in the country a scene of 
 ornamental affluence, the amended contention 
 with which we are now concerned is that, though 
 this result would be impossible unless the 
 actual output were increased, a vast and 
 immediate increase of it is not only possible 
 but easy. This general proposition means, as 
 interpreted by those who enunciate it, that the 
 economic efficiencies of the world, and of this 
 country in particular, are at the present time 
 for the most part wasted, and that, were the 
 waste checked, the product would be forthwith 
 doubled possibly trebled, or increased to an 
 even greater extent. And when it is asked what 
 the nature and the causes of the waste are, the 
 answer is that the main causes are three. One is 
 the withdrawal of a vast amount of labour and 
 talent from the production and commercial 
 distribution of domestic utilities altogether, in 
 order to manufacture and manipulate engines of 
 mere destruction ; another is a waste in the 
 manufacture of utilities themselves, which is 
 alleged to result from competition; and another 
 is the superfluous employment of multitudes in 
 
 342
 
 Chap. III.] COST OF ARMAMENTS .543 
 
 Selling utilities, who might, with prodigious 
 results, be employed in augmenting the supply 
 of them. 
 
 Now as to the first of these causes namely 
 the employment of so many men in producing, 
 in using, or in learning to use arms, who might 
 otherwise be building houses, or weaving or 
 selling stockings the country no doubt would 
 be richer were there no necessity for defending 
 it : but whether the cost of defending it can, 
 under existing conditions, be in any serious 
 sense regarded as preventable waste, is a 
 question of politics which need not be discussed 
 here. In any case any practicable conversion of 
 swords into ploughshares, trowels, or spindles, 
 though it might mean an increase in the income 
 available for private purposes, would not mean an 
 increase of more than about ,70,000,000 a 
 sum which, if large in itself, is merely a small 
 fraction of what is alleged to be the wasted 
 total. ^The largest part of this is the waste 
 which is attributed to competition, and an 
 irrational overgrowth of the staff which, directly 
 or indirectly, is engaged in commercial distribu- 
 tion. 
 
 Now it is at all events conceivable that each 
 of these kinds of waste may be a reality. 
 Whether it is so or not, and what, if it is so, 
 is its extent, are questions which are entitled to 
 consideration. 
 
 With regard to the alleged waste in manu- 
 factures as resulting from the practice of 
 competition, it is difficult to see how such a
 
 344 ALLEGED WASTE [Book . 
 
 waste could occur unless various kinds of 
 commodities, such as bread, cloth, or a book, 
 were systematically produced, like a book, in 
 two simultaneous editions, of which one only is 
 bought whilst the other is destroyed as lumber. 
 Something of this sort may occur in certain 
 cases, but it cannot occur to any very great 
 extent; and the same thing may be said with 
 regard to the corresponding waste alleged 
 to take place in the process of commercial 
 distribution. Such a waste may occur, but the 
 imagination of enthusiasts exaggerates it. 
 The full extent of the exaggeration cannot in 
 either case be precisely measured, partly 
 because the facts as they are cannot be com- 
 pletely known, and partly because the estimates 
 of the enthusiasts are not precisely stated. The 
 magnitude of these last, however, is constantly 
 suggested by illustrations, which are put forward 
 as typical, which are definite so far as they go, 
 and relate to facts ascertainable by more or less 
 definite evidence. 
 
 Of these illustrations it will be sufficient to 
 cite two, which in one form or another are those 
 most often met with. The one relates to the 
 waste which is due to commercial distribution; 
 the other, to the waste which is due to the 
 present system of manufacture. 
 
 Of the waste in commercial distribution, the 
 stock illustration is the enormous cost of adver- 
 tisement. Mr. Money, in emphasising the 
 magnitude of this waste, adduces the cost of 
 advertisement as its chief and most obvious
 
 Chap. III.] WASTE IN MANUFACTURE 345 
 
 element. It consists mainly, he says, of the 
 cost of superfluous printing; and he begs his 
 readers to consider how vast this cost must be. 
 Energies which might be employed in multiply- 
 ing boots and biscuits are frittered away in 
 persuading people, by means of printed matter 
 in the columns of newspapers, on hoardings, on 
 the backs of paper parcels, that such and such 
 boots or biscuits are superior to all others, or 
 can only be bought at one particular shop, when 
 under different titles they are really being sold 
 at a thousand, each shop through its printers 
 making the same claims for them. Other 
 writers have gone over the same ground, and 
 have declared that the cost of advertising in 
 the United Kingdom is something between 120 
 and 150 million pounds a year, which means a 
 loss of utilities representing the same value. 
 
 The waste which must somehow occur it is 
 not specified how in the process of manufac- 
 ture itself, is similarly illustrated by pointing to 
 the admitted fact that multitudes are inade- 
 quately supplied with articles of necessity such 
 as clothes, and comparing this fact with various 
 sensational estimates of the rate at which 
 modern machinery enables these articles to be 
 multiplied. Of such estimates, that which is 
 most precise and popular, relates to the cotton- 
 trade. "A single girl," it is said, " can, in a 
 single year, make enough cotton cloth for the 
 shirts of three thousand men. One hundred 
 girls could make shirts for the whole of Man- 
 chester. Such being the case, if anybody is in
 
 346 PRINTING AND ADVERTISING [Book V. 
 
 ' want of a shirt, we may form some idea of how 
 little manufacture does in proportion to what 
 it might do." 
 
 Let us now compare each of these estimates 
 with what can be definitely known as to the 
 facts which it purports to represent. 
 
 To begin with the cost of advertising, which 
 is said to represent a loss of far more than 100 
 million ; if the cost of printing is the main 
 element involved, at least 100 million must 
 be the cost of printing alone. Now it so 
 happens that, in respect of the United King- 
 dom, we know with substantial exactitude what 
 the annual cost of printing of all kinds comes 
 to; and of this, the cost of advertisements can 
 form no more than a part. The total cost 
 that of paper included is stated in the Census 
 of Production; 1 it is also minutely analysed; 
 and the only kinds of printing which can possi- 
 bly comprise advertisements, are thus made 
 clearly distinguishable. These consist of the 
 printing of daily and weekly newspapers (trade 
 journals included), of magazines of all kinds, of 
 "job and general printing," and also of the 
 printing of trade notices on cards, card-paper 
 boxes, and wrappings used for parcels. The 
 cost of the printing of all newspapers and 
 periodicals is in round figures ,14,000,000; the 
 cost of "job and general printing," which 
 includes that of posters, is ^13,000,000; and 
 that of printing trade notices on parcel-paper, 
 
 i. See Final Report on the Census of Production pp 
 608-626.
 
 Chap. III.] " GIRL !N THE COTTON TRADE " 347 
 
 cards and boxes, is not one-third of a million. 
 If we suppose, then, that as much as one half 
 of all newspapers and literary periodicals are 
 really devoted to advertisements, and not either 
 to news, or literature, and that as much as four- 
 fifths of "job and general printing" is accounted 
 for by advertisements of one kind or another, 
 the cost of printing advertisements, even on 
 these excessive assumptions, can hardly amount 
 to so much as ^18,000,000. How, then, if, as 
 Mr. Money and other writers suggest, the cost 
 of advertisements is mainly the cost of printing, 
 can the total waste by advertisement be as much 
 as 150 million, or even 120, or any thing remotely 
 approaching either the one sum or the other? 
 
 Let us now take the case of the redoubtable 
 " girl in the cotton-trade," whose unaided 
 exertions in a year could make shirting for three 
 thousand men. How is such an estimate 
 reached? It is far from being a mere guess, 
 It is evidently reached and arithmetically it 
 will pass muster by taking the total number of 
 yards of cotton cloth produced annually by all 
 the mills of the country, then dividing this total 
 by the total number of operatives, and finally 
 assuming that every operative is a girl. If four 
 or five yards of cloth be allowed for every shirt, 
 the average output per " girl " will, as thus 
 computed, have been given with sufficient 
 accuracy. 
 
 But what is the fundamental assumption on 
 which the whole of this computation rests? It 
 is the assumption that the girl not only plays
 
 348 TRUTH AND ABSURDITY [Book V. 
 
 her part in weaving the cloth in question, but 
 has grown the cotton in America out of which the 
 cloth is made, that she has put it on board the 
 steamer in which it is brought to England, that 
 she has helped to build the steamer itself, and 
 is finally the sole constructress of the steam- 
 driven loom used by her. In reality, of the 
 cloth which emerges under the movements of 
 her hands, 80 per cent., if its quantity be 
 measured by its cost, is the product of cotton- 
 growers on the other side of the Atlantic, and 
 of ship-builders, seamen and engineers whom 
 the girl has never even seen. 1 She barely 
 produces one-fifth of what of the logic of her 
 friends ascribe to her. 
 
 Here we have two examples of the manner 
 in which polemical visionaries, even when they 
 start with a principle which is in itself sound, 
 that the basis of general progress is increased 
 efficiency of production, convert this profound 
 truth into a mere misleading absurdity by their 
 reckless inflation of the facts which they offer 
 to the world as illustrations of it. The loss of 
 productive efficiency by the waste of it in useless 
 printing, the actual efficiency of the individual 
 when engaged in the production of utilities, are 
 both blown out by them to four or five times 
 their actual magnitude : and it is evident from 
 
 i. The cost of the raw material relatively to the value 
 added to it by manufacture is, in round figures, as ^174 
 to 45. Of this latter sum, about 4 is represented by the 
 upkeep cost of manufacturing plant alone. See Census of 
 Production, pp. 35, 36, 339.
 
 Chap. III.] A TEST APPLIED 349 
 
 the vehemence of their language that the exag- 
 geration of their general outlook is considerably 
 greater than that which even their illustrations 
 register. 
 
 We need not, however, dwell on such exag- 
 gerations longer. We shall subject them to a 
 better criticism by extracting the element of 
 truth from them which they no doubt contain, 
 and seek, with the aid of history, to reduce it 
 to its true proportions. 
 
 There are four periods, representable by 
 particular years, which years may conveniently 
 DC selected for consideration because our infor- 
 mation with regard to them is such that certain 
 comparisons between them can be very easily 
 made. These are the years 1801, 1850, 1880, 
 and 1910. With regard to the first and last of 
 them, the information here required has been 
 set forth at length in the present volume. With 
 regard to the two others, similar information is 
 derivable from the statistical analyses of Sir R. 
 Giffen, of Professor Leone Levi, and also those 
 of Mr. A. Bowley, by the latter of which the 
 former have been slightly, but only slightly, 
 modified. 1 
 
 Let us then, in respect of each of these dates 
 first consider the income of the country as a 
 whole, and, dividing each total by the then 
 
 1. See Sir R. Gifien's Address to the Royal Statistical 
 Society, November, 1883 ; Prof essor Leone Levi 's Statistical 
 Paper on " Changes in the Distribution of Wealth in 
 relation to the income of the Labouring Classes ; also, 
 " National Progress in Wealth and Trade," by Mr. A. 
 Bowley.
 
 350 GROWTH OF INCOMES [Book V 
 
 number of the population, express the income in 
 terms of such and such a sum per head. Let 
 us next give our attention to the working classes 
 only, defining these roughly, but in a way which 
 will serve our purpose, as all persons, men, 
 women and children, supported on incomes not 
 exceeding 160 a year; and let us express their 
 income, in each case, by a like general average. 
 
 The income of the entire population, then, in 
 the year 1801, represented, as we have seen 
 already, an average of 20 per head. 
 
 In the year 1850 it represented an average of 
 ,24 a head. 
 
 In the year 1880 it represented an average of 
 ^35 per head. 
 
 In the year 1910 it represented an average of 
 ^45 per head. 
 
 The income of the working classes, in the 
 year 1801, represented an income of ^14 per 
 head. 
 
 In the year 1850 it represented an average of 
 per head. 
 
 In the year 1880 it represented an average of 
 per head. 
 
 In the year 1910 it represented an average of 
 per head. 
 
 Now let us suppose that in the year 1801, 
 when the working-class income averaged ^14 
 per head, and the national income as a whole 
 averaged 20, some reformer had foreseen in a 
 dream that three generations later the working- 
 class income would have risen to an average of
 
 Chap. III.] THE ACTUAL FACTS 351 
 
 per head, and had incited the masses to 
 demand that this rise should take place immedi- 
 ately. It is obvious that the realisation of such 
 a demand would have been impossible, and that 
 the " unrest " caused by the expectation of it 
 would have been purely artificial and mis- 
 chievous ; for if all the wealth then existing had 
 been equally divided amongst everybody, it 
 would have fallen short by ; 120,000,000 of the 
 minimum sum by which these expectations could 
 be satisfied. Even if the prevision of our 
 reformer had been limited to such conditions 
 as were realised in the year 1880, and he had 
 demanded that the working-class income should 
 be at once raised from an average of ^"14 per 
 head to an average of ^24, such a demand at 
 the beginning of the nineteenth century would 
 have been equally impossible, though not to a 
 degree so striking : for the sum required to 
 satisfy it would have exceeded the whole income 
 of the country by something like ^40,000,000. 
 What has actually taken place may, with 
 substantial accuracy, be understood at a glance 
 by placing the above figures in two parallel 
 lines, thus : 
 
 Year. 
 
 1801 
 1850 
 1880 
 1910 
 
 National incomes 
 expressed as 
 average ir comes 
 per head of the 
 entire population. 
 
 /2O 
 
 Working-class 
 incomes expressed 
 as average incomes 
 per head of persons 
 supported on income* 
 not exceeding 
 ;1CO a year. 
 
 /24 
 
 /I7 
 
 /. 
 
 /2 4
 
 352 REDISTRIBUTION [Book V. 
 
 These figures cover three periods, the first 
 being half a century, and each of the last two 
 being a period of thirty years, or, as it would 
 be commonly called, a generation. During 
 each of these two last periods the average 
 income per head of the working classes so far 
 increased that it was, at the end of each, sub- 
 stantially the same as it would have been thirty 
 years before, had the entire income of the nation 
 been divided equally amongst everybody. In 
 the year 1850 such a division of the entire 
 income would have yielded to everybody a 
 share of ^24. This is the precise sum which, 
 in the year 1880, was the actual income per head 
 of the working-classes alone. In the year 1880 
 a similar division of everything would have 
 yielded to everybody a share of ^"35. In the 
 year 1910 the average income per head of the 
 working-classes alone fell short of this sum by 
 only a small fraction. Between the years 1801 
 and 1850 an analogous change took place, 
 though it was slower and not so great. The 
 average income per head of the entire popula- 
 tion having been ^"20 in the former year, the 
 average income per head of the working-classes 
 alone was in the latter year 17. At the end 
 of half a century it fell short by only 15 per 
 cent, of what would have resulted from an equal 
 distribution of the entire income at the begin- 
 ning of it. 
 
 In these calculations all consideration is 
 waived of the enormous loss which, as has been 
 explained already, would have accompanied
 
 Chap. III.] RESULT OF THE TEST 353 
 
 any equal distribution, had such been actually 
 effected : but the figures above given are 
 sufficient, and sufficiently accurate, to illustrate 
 the broad facts which alone we have here in 
 view. 
 
 The first of these is the fact that the classes 
 not subject to income-tax, who alone, even in 
 theory, could benefit by any arbitrary scheme 
 of redistribution, enjoy at the present time an 
 average income per head which an equal 
 division of the income of all classes would have 
 been insufficient, even in theory, to provide for 
 them at any time earlier than that of the death 
 of the late Lord Beaconsfield : that the total, 
 which their present average income represents, 
 exceeds by no less than ^450,000,000 what 
 would, when Lord Beaconsfield died, have been 
 the entire income of the country, had the coun- 
 try's productive powers, relatively to the number 
 of its population, not increased since the date 
 of the erection of the Crystal Palace; and that 
 it exceeds by no less than ,600,000,000 what 
 the income of the country at the time 
 of Lord Beaconsfield's death would have 
 been had the country's productive powers, 
 relatively to the number of its popula- 
 tion, not increased since the beginning of the 
 nineteenth century. It will thus be seen how 
 fantastically small is the part which any scheme 
 of mere redistribution as such could have 
 possibly played in raising the level of wealth 
 generally, as compared with what has actually
 
 554 THEORIES OF WASTE [Book V. 
 
 been accomplished by the development of the 
 productive process; and how, apart from that 
 development, no appreciable rise could have 
 been brought about at all. 
 
 On the other hand, great though the increase 
 of productive power has been, the foregoing 
 survey of it illustrates its gradual character, 
 and warns us against the danger of basing 
 impatient hopes on vague estimates of its 
 latent possibilities of acceleration. There may 
 no doubt be an element of truth in the asser- 
 tions which we have been just considering, that 
 productive efficiency is wasted to some appreci- 
 able extent, by superfluous advertising, by 
 competition between rival businesses which, 
 were they united, would yield a larger output, 
 and by a multiplication of middlemen, whether 
 keepers of shops or otherwise, beyond what is 
 requisite for the convenience of the public 
 customer. That such waste, however, cannot 
 be so considerable, that any sensational results 
 can be hoped for by merely checking it, is 
 indicated, not only by our examination of the 
 instances which are adduced to prove its magni- 
 tude, but also by the course of events from the 
 beginning of the nineteenth century up to the 
 present time. The waste by the glut of middle- 
 men, the waste by competition in manufacture, 
 and above all the waste by competition in elabo- 
 rate advertisement, are represented as being, in 
 a marked and special sense, amongst the more
 
 Chap. III.] PRODUCTIVE EFFICIENCY 355 
 
 recent, not amongst the earlier, developments of 
 the modern productive system. If then, the 
 kinds of waste in question are really as great as 
 thinkers of a certain school represent them, their 
 cumulative effects will have been greater since 
 the middle of the nineteenth century than they 
 were during the earlier half of it. In other 
 words, owing to a haemorrhage of productive 
 power, the income per head of the nation will, to 
 some appreciable degree, have increased more 
 slowly during the later period than it did during 
 the earlier. If, however, we consider the facts 
 of history, we shall not only not discover that 
 anything of this kind has occurred. We shall 
 discover that what has actually occurred has 
 been something the precise reverse of this. 
 Between the years 1800 and 1850 the national 
 income increased from ^20 per head of the 
 population to ^24 that is to say by 20 per 
 cent. Between the years 1850 and 1910, the 
 national income increased from 24 per head 
 of the population to ^45 that is to say by 90 
 per cent. This means that, during the earlier 
 period, the average yearly increase per head of 
 the population was is. /d. ; and that the average 
 yearly increase during the later period was 75. 
 It is therefore plain that though the efficiency 
 of the productive process may be somewhat 
 lessened by a waste, which the ingenuity of 
 master minds may in course of time reduce, no 
 great, still less any sudden and melodramatic 
 developments would result from so minor an 
 achievement as that even of completely check-
 
 356 PRODUCTIVE EFFICIENCY [Book V. 
 
 ing it. The efficiency of the productive pro- 
 cess such is the teaching both of common 
 sense and of history depends mainly on two 
 things firstly, on the quiet, the laborious, the 
 intense concentration of intellect, of energy, 
 of practical and constructive imagination, not 
 on the facile feat of devising remote ideals, 
 but on the feat of wringing from Nature, step 
 by difficult step, those secrets the mastery of 
 which converts her into the slave of man; and 
 it depends secondly on the development and 
 stabilization of such social conditions as will 
 force these faculties into action by providing 
 them with their extremest stimulus. Such con- 
 ditions being given, modern history teaches us 
 that the increased efficiency of production, 
 though originating in the energies of a minority, 
 does as a fact cause, and is the only process 
 which can cause, a continuous increase in the 
 product which distributes itself amongst the 
 vast majority; but history teaches us also that 
 this increase is gradual, and is continuously 
 limited by the fact that at any given time the 
 actual share of the majority falls short of the 
 distributable total by a fraction so small, and 
 in many respects so volatile, that, as has been 
 shown already, most of its substance would, in 
 any process of diffusion, vanish. 
 
 One farther illustration of this fact shall be 
 given. The average of all incomes up to ^i 60
 
 Cfaap. III.] FALSE HOPES 357 
 
 a year is to-day, as we have seen already, ,34 
 per head of all the persons supported on them ; 
 and if we exclude those profits which, 
 coming into this country from abroad, depend 
 on foreign and not upon home labour, the total 
 of all incomes, small and great, represents an 
 average of ^40 per head of the entire popula- 
 tion. Now the average of all incomes up to 
 160 a year, which we have here roughly 
 described as the wages of the working-classes, 
 was in the year 1801 ^14 per head of all per- 
 sons supported on them. Hence, if the whole 
 home-produced income of the country were 
 to-day divided equally, the gain of the 
 working-classes would have been ^26 per 
 head. A gain of 26 in no years means 
 that weekly wages have each year on an 
 average increased at the rate of id. per head, 
 or about 5d. per family. If the average 
 increase per year in weekly wage-rates had been 
 I Jd. per head, or as much as 6jd. per family, the 
 entire home-produced income of the United 
 Kingdom to-day would, if divided equally, 
 disappear altogether before the wage-bill was 
 fully paid, and the wage-earners would be 
 clamouring for their arrears to absolutely empty 
 coffers. 
 
 Calculations of this kind, which the reader 
 may verify for himself, will show how small, at. 
 any given moment, is the increase in wage- 
 
 x
 
 35 GENERAL AVERAGES [Book V. 
 
 rates, or in the average income per head of 
 the great majority of the population, which any 
 mere redistribution of incomes, as then existing, 
 could produce. They will also illustrate how 
 any general expectations, such as those fomented 
 by reformers, which greatly exceed the possi- 
 bilities of the present or of the immediate future, 
 are one of the chief curses, as well as one of the 
 chief characteristics, of the age. By no means 
 the whole, but by far the most conspicuous part, 
 of what is called the " unrest " of the modern 
 world is due not to poverty, still less to an 
 increase of poverty ; but to an increase of discre- 
 pancy between expectations, and even the 
 remotest possibility of satisfying them. Nor 
 does this evil end with itself. It distracts 
 attention from the nature of many evils which 
 are far more important than the limitations of 
 mere income, and which are far more amenable 
 to reform by political and Governmental means. 
 The welfare, however, of any mass of human 
 beings, whether an entire population or a class, 
 is not to be measured solely by the annual 
 incomes of the individuals or the families 
 comprised in it. Still less, in the case of classes 
 which are numerous, can it be measured by 
 incomes as stated in terms of mere general 
 averages. For certain purposes such a method 
 of statement is indispensable : it is, indeed, in 
 terms of general averages only that the vital
 
 chap. III.] AND MINUTE PARTICULARS 339 
 
 questions at issue can be reduced to intelligible 
 form; but for other purposes, as has been 
 pointed out already, general averages must be 
 considered with reference to more minute par- 
 ticulars. 
 
 Both these points the relation of welfare to 
 conditions other than actual income, and the 
 relation of the actual distribution of incomes to 
 certain summary methods of expressing it, 
 shall be now considered separately.
 
 CHAPTER IV. 
 
 THAT welfare, even in the opinion of those 
 reformers who are most vehement in identifying 
 it with an artificial redistribution of incomes, 
 does not depend solely on the absolute amount 
 of these, is shown by certain examples of it, 
 so ideal in their alleged perfection, that 
 the destruction of them is cited by such 
 reformers themselves as representative crimes 
 of the modern social system. Goldsmith's 
 chief indictment against the " proud trade " 
 of his day was that it tended to exterminate 
 the felicities of the country cottage. On this 
 indictment a curious commentary will be found 
 in the pictures drawn by Bewick for an 
 edition of " The Deserted Village." Bewick 
 knew what in his day a country cottage was 
 like as well as Goldsmith himself : and what 
 such a residence was in its ideal form these 
 pictures clearly show, so exact was the artist's 
 drawing of them. It was a cabin with two win- 
 dows and a roof which assisted the chimney in 
 carrying off the smoke. A similar observation 
 applies to the houses of those hill-side High- 
 landers, whose prosperity, destroyed by the evic- 
 tions of ruthless landlords, is a favourite topic on 
 the platforms of reformers still. Now if anybody 
 to-day set himself to rebuild " Sweet Auburn," 
 as Goldsmith and as Bewick imagined it, there 
 would not be a house in it which any sanitary 
 
 360
 
 Chap. IV.] IMPROVEMENTS IN HOUSING 361 
 
 authority would not condemn as unfit for human 
 habitation : and a new Duke of Sutherland, 
 who should provide his tenantry with replicas 
 of those dwellings from which the occupants 
 were driven a hundred years ago, would be 
 as vehemently attacked by reformers for having 
 built them up, as his predecessors were for the 
 crime of having burnt them down. In imput- 
 ing prosperity and happiness to English and 
 to Highland populations whose houses would 
 to-day be regarded as signs of the extremest 
 poverty, the reformers may be quite correct 
 perhaps more so than they would be willing to 
 admit. At any rate their argument constitutes 
 a substantial recognition of the truth that 
 welfare depends not only on absolute income 
 even on income as indicated by the structure of 
 the material home : and if we reconsider the 
 period dealt with in the present volume, and the 
 earlier portion of that period in particular, we 
 shall see how wide in its applications this truth 
 is. 
 
 We have seen how, since the beginning of 
 the nineteenth century, the income per head of 
 the wage-earners has very much more than 
 doubled itself; but although this increase has 
 been on the whole continuous, about 80 per 
 cent, of it has been realised during the last sixty 
 years, and only 20 per cent, during the fifty 
 years preceding. The comparative slowness 
 of the advance made during this earlier period 
 was partly due to the cost of the Napoleonic 
 wars ; partly to the fact that the old-fashioned
 
 363 IMPROVEMENTS IN HOUSES [Book V. 
 
 race of craftsmen, such as the hand-loom 
 weavers, their skill being reduced in value by 
 the new factory methods, suffered an actual 
 loss ; and partly to the fact that the new increase 
 of wealth was largely neutralised by an abnor- 
 mal increase of the population. During the 
 latter half of the nineteenth century the popula- 
 tion of Great Britain increased by about 78 
 per cent. It increased by as much as 100 
 per cent, during the earlier. In any case, 
 between the years 1801 and 1850, the increase 
 in wage-rates, though far from inappreciable, 
 was slow; and it was moreover obscured by 
 accompanying events and conditions which 
 attracted and deserved very much more atten- 
 tion on the part of those who busied themselves 
 with the real well-being of the people. Fore- 
 most amongst these were the squalid and 
 insanitary houses in which, round the new 
 factories, a new race of workers was congre- 
 gated houses ran up with a haste often barely 
 sufficient to meet the demands of crowds 
 who multiplied with a haste still greater : the 
 condition of the factories themselves, which 
 were filled with unfenced machinery, and which 
 often, in respect of their structure, were not 
 more healthy than the houses; and more par- 
 ticularly the employment, for extravagant and 
 inhuman hours, of armies of little children, to 
 which the factory system lent itself. To these 
 conditions must be added the uncertain price of 
 corn, which sometimes caused by falling a 
 delusive sense of plenty, and then caused by
 
 Chap. IV .] SANITATION 3>3 
 
 rising visitations of spasmodic famine, these 
 being signalised by the recurrence, then familiar, 
 of bread-riots. In spite of persistent friction 
 between political parties, all these evils were 
 attacked, in some cases by Radicals, who found 
 themselves opposed by Conservatives, in some 
 cases by Conservatives, who found themselves 
 opposed by Radicals, in some by a spirit of 
 humanity which was independent of faction. 
 The hours of labour were reduced ; the labour of 
 children was protected with peculiar care; the 
 general conditions of factory work were ame- 
 liorated; a measure was carried which has 
 ultimately had the effect, not only of reducing 
 the average price of bread, but also of saving 
 the poor from the calamity of its violent fluctua- 
 tions ; and attention was fruitfully concentrated 
 on the great problem of housing. 
 
 In all these ways, quite apart from any rise in 
 wages, the welfare of the people had, at the 
 time of the opening of the first Great Exhibi- 
 tion, been notably improved as compared with 
 what it was before the battle of Waterloo. The 
 evils of inadequate, of insanitary, and of squalid 
 housing were those which had proved to be 
 least easily alterable : indeed at the present day 
 improvement in this respect remains one of the 
 principal questions which present themselves to 
 the sane reformer. If, however, we compare 
 the conditions which prevail to-day with those 
 which prevailed at the beginning of the nine- 
 teenth century, we may form some idea of how 
 much has been actually accomplished. It is
 
 t04 SLUMS [Book V 
 
 often supposed that the slum, the blind alley, 
 and the tenement house, with their swarming 
 populations, are distinctively and mainly the 
 products of the modern factory system. This, 
 however, is altogether a delusion. It is true 
 that during the earlier years of the nineteenth 
 century, such evils were, by the growth of that 
 system, aggravated : but in a form more aggra- 
 vated than anything which prevails to-day, 
 they were inherited by the nineteenth century 
 from the century which went before it. In 
 England and Wales to-day, the average number 
 of persons per house is 5. In the year 1801 
 the number was 6^. That is to say it was 30 
 per cent, greater. The actual number of houses 
 in England and Wales was at that time little 
 more than 1,400,000. Had houses between 
 then and now increased only in the same ratio 
 as the population, their number to-day would 
 be 5,600,000. As a matter of fact it is upwards 
 of 7,000,000. This means that the people 
 to-day have for their accommodation 1,400,000 
 houses more than they would have had, if since 
 the year 1801, the house-supply, relatively to 
 their number, had undergone no change. It 
 must further be noted that the improvement 
 which these figures indicate does not consist of 
 an increase of house-space only. It includes 
 improvements in planning, in sanitation, in 
 lighting, in water-supply, and in general struc- 
 ture. It is true that these improvements have 
 been accompanied by an increased cost of 
 construction : but experience hn^ gradually
 
 Chap. IV.] LOCOMOTION 365 
 
 shown the houses can be improved substantially 
 by an increased expenditure, not of money, but 
 of scientific care. Thus, recent extensions of 
 trams and workmen's trains now make it possible 
 for the wage-earner to be provided in a rural 
 suburb with a house incomparably better than 
 any urban lodgings obtainable for the same, or 
 even for an appreciably larger rent. Analo- 
 gous observations apply also to food. If the 
 wives of all the workmen in Great Britain and 
 Ireland could acquire an aptitude for cookery, 
 such as is common in France, a change would 
 be effected in the welfare of many million house- 
 holds, which is not to be secured by any mere 
 rise in wages, and which feminine skill might 
 realise at an actually reduced cost. 
 
 These examples are sufficient to illustrate the 
 fact that, although income may be taken as the 
 primary measure of welfare, and though increase 
 of income in any general sense can only be 
 due to, and is always limited by, an increase in 
 the total product which existing genius and 
 energy enable the nation to extract from the 
 collective possibilities of the moment, incomes, 
 their amount being given, may be virtually 
 increased in a different, and hardly less impor- 
 tant, way that is to say by improvement in the 
 conditions under which they are earned, and 
 improvements in the means and opportunities 
 of spending them to the best advantage. Such 
 being the case, the point which is here insisted 
 on, comes in few words to this : that whilst, 
 for reasons which have been elucidated in this
 
 366 COMPARISON OF INCOMES [Book V. 
 
 volume, the State would be impotent to raise 
 the general level of incomes by any of those 
 political processes of redivision or transference, 
 with which social reform is to-day commonly 
 identified, the conditions under which given 
 incomes are earned and spent, may by political 
 action be so fruitfully modified that the effi- 
 ciency of given incomes as instruments of 
 welfare will be increased, and will enable the 
 recipients to secure for themselves a more and 
 more favourable environment. Such political 
 action has, as the history of the last century 
 shows us, ameliorated the average conditions 
 of private life in the past; and if soberly and 
 sagaciously continued, to the exclusion of other 
 methods, we may expect that farther ameliora- 
 tions will result from it in the near future. 
 
 It will, however, be noted that the conditions 
 to which this statement is applied, are qualified 
 by the term "average," the significance of which 
 has been discussed already, and which now must 
 be considered again, with renewed reference to 
 its implications. 
 
 If the income of one class is to be compared 
 with the income of another, or the income of one 
 class at one time is to be compared with the 
 income of the same class at another time, the 
 average income per head of such a class or 
 classes, is a sufficient measure, and it is the only 
 measure by means of which such comparisons 
 can be made. It affords, however, a very im- 
 perfect index of the manner in which incomes 
 are distributed within the limits of each class
 
 Chap. IV.] THE RESIDUUM 307 
 
 itself. Thus, in Chapter II of Book III of the 
 present work, the entire population supported 
 on incomes not exceeding ^160 a year was 
 taken together, and the average income per 
 earner was shown to be ^69. But such a 
 general average was shown to cover the fact 
 that this population is really made up of various 
 groups firstly, a business group, per head of 
 which the average income is ^100; secondly, 
 to take the case of adult males only, a group 
 of skilled wage-earners, per head of which the 
 average income is ,88; thirdly, of a group of 
 wage-earners, commonly called unskilled, of 
 whom the average income per head does not 
 exceed ^54, and the actual incomes of a certain 
 number of whom can barely provide them with 
 the necessaries, still less with the decencies, of 
 existence. The number of this lowest class, 
 commonly called the " residuum," has been 
 grossly over-estimated by some, and has doubt- 
 less been under-estimated by others; but serious 
 enquirers agree that, even if gradually diminish- 
 ing, 1 it may still be taken to represent one-tenth 
 part of the population. In any case, whatever 
 may be its exact proportion, it represents a 
 
 i. One sign of its diminution is the decrease which took 
 place between the years 1891 and 1901 in the number of 
 overcrowded tenements. The Statistics relating to this 
 fact are clearly summed up in the Article on Overcrowding 
 in the Cambridge edition of the Encyclopaedia Britannica. 
 The total number of paupers relieved in the year 1899 was 
 .33 per cent, of the population. In the year 1911 it was 
 *.i2 per cent. The lowest percentage (2.1) was in the 
 jear 1901.
 
 3 68 STATIONARY WANT [Book V. 
 
 condition sufficiently deplorable and extensive 
 to demand the attention of the prudent states- 
 man, as well as to excite the compassionate 
 sympathies of the philanthropist. Now this 
 exceptional class this " residuum," this " sub- 
 merged tenth " by no means monopolises all 
 the hardships of poverty; but it provides the 
 modern reformer with the readier materials of 
 agitation, and does most to invest with plausi- 
 bility the fatuities of his proposed remedies. 
 We will, therefore, before going further, con- 
 sider the phenomenon of the " submerged 
 tenth " by itself. 
 
 Why a society, in which wealth is otherwise 
 generally increasing, should continue to preci- 
 pitate a sediment of almost stationary want, is 
 a problem so complex that an attempt to deal 
 with it adequately would in this place be an 
 impertinence. But, whatever may be the causes 
 of the evil, and whatever may be the various 
 methods by the concurrent adoption of which 
 there is most promise of remedying it, 1 there 
 are two general observations which may be 
 made with equal confidence. One is that all 
 the remedies proposed by reasonable men have 
 the common object of raising the submerged 
 by enabling them to raise themselves by 
 bringing them and keeping them within the 
 pale of normal industry. The other observa- 
 tion, which alone need be here amplified, is 
 that the typical remedy proposed by social 
 
 i. See the interesting work "Unemployment, a Problem 
 of Industry," by Mr. W. H. Beveridge, pp. 236, 237.
 
 Chap. IV.] " THE BROKEN POOR " 369 
 
 reformers is one which would operate in a 
 manner the precise reverse of this; that the 
 results of its application would be at once fatal 
 and ludicrous; and that it is based on an 
 assumption so childish and grotesque in its 
 crudity, that few of those who promulgate it by 
 direct statement or innuendo can for a single 
 moment believe seriously that it is true. 
 
 The most direct rendering of it is perhaps that 
 of Mr. Snowden. "There is but one way under 
 heaven," he says, "of making a poor man richer, 
 and that way is by making a rich man poorer." 
 It seems to escape his comprehension that a way 
 very much more obvious is that of putting the 
 poor man in the way of making something for 
 himself. Mr. Snowden perhaps may believe 
 in his own principles; but let us take this same 
 doctrine as preached by other reformers, who 
 occupy positions of greater responsibility than 
 his. The destitution of the " broken poor " is 
 represented by Mr. Masterman as the peculiar 
 and inevitable consequence of the magnitude of 
 modern "superwealth." " I was lately," said 
 another statesman, " in the company of three 
 men, each of whose incomes is more than suffi- 
 cient for the support of three hundred skilled 
 workmen at 355. a week." "I," said a third 
 statesman, "could give you the name of a man 
 who spent, to my knowledge, on two balls and a 
 garden-party enough to keep ten families in 
 modest affluence for a year." Now these last 
 two statements (which, with mere variations of 
 detail, are commonplaces on Radical platforms)
 
 370 QUESTIONS FOR RADICALS [Book V. 
 
 may doubtless represent facts; but the facts 
 taken by themselves have no more interest or 
 significance than the sole fact which, according 
 to Dr. Johnson, his friend, Topham Beauclerk, 
 brought back from his tour in Egypt, that 
 " there was a green snake on the top of one 
 of the pyramids." The only significance they 
 possess lies not in themselves, but in the conclu- 
 sions which those who dwell no them intend 
 obviously that they shall suggest. These 
 conclusions, as Mr. Masterman and Mr. Snow- 
 den blurt out with very refreshing candour, are 
 firstly, that to put it in plain language for 
 ever y ,1,000 which any one man adds to his 
 income, ten men or more (as the case may be) 
 are deprived of the means of securing any 
 regular income whatsoever; and secondly, that 
 the sole way of remedying the extreme destitu- 
 tion experienced by those who have nothing 
 regular to do, is to pay them a handsome salary 
 for continuing to do nothing. 
 
 Now let any Radical statesman be asked the 
 two following questions : Firstly, let him be 
 asked whether, should it so happen that he, as 
 the result of a perfectly legitimate speculation 
 in the shares (let us say) of some American 
 Company, were lucky enough to increase his 
 income to the extent of /"i,ooo, he seriously 
 believes that he would thereby be adding ten 
 or more new recruits to the bands of outcasts 
 who shiver on the benches of the Thames 
 Embankment? He will answer of this we 
 may be certain that such a belief is nonsense
 
 Chap. IV.] WEALTH AND THE WORKLESS 371 
 
 that it is inconsistent alike with common sense 
 and with his own practice, and with the ambi- 
 tions and successes of his own nearest friends. 
 So much being taken for granted, let the further 
 question be put to him of whether the proposi- 
 tion that the income of this or that rich man 
 would, were it only divided amongst such and 
 such a number of poor men, suffice to keep 
 them all in conditions of modest affluence, 
 means anything else than that so many thousand 
 pounds would suffice to endow the whole of 
 them with the comforts of year-long idleness? 
 It must mean this if it has any meaning at all : 
 and if it means anything practical it must mean 
 by obvious implication that the true remedy for 
 the destitution arising from want of work, is 
 actually to use, by some device or other, the 
 rich man's thousands in the way thus described 
 as possible; and this again must mean, if 
 practice be translated into principle, that the 
 true remedy for unemployment is to render 
 employment superfluous. That any reformer, 
 whether Radical or even extreme Socialist, 
 would definitely avow this principle as his own, 
 is not to be seriously supposed. He could not 
 even fail to admit that if the want of work alone 
 should entitle a man to more than, or even as 
 much as, he could earn by the performance of 
 it, want of work would become the most profit- 
 able of all professions, and the cultivation of 
 incapacity and misfortune, the most popular of 
 all arts. 
 
 So far, then, as poverty in its more extreme
 
 372 LABOUR-EXCHANGES [Book V. 
 
 forms is concerned, whilst political action may 
 assist in reducing it to a minimum, such action 
 will be of a nature entirely opposite to that 
 which in their character of agitators, the 
 reformers of to-day suggest. Indeed, to a 
 certain extent, the conduct of such reformers 
 themselves, when they act as statesmen, shows 
 this. Labour-exchanges, for example, the 
 introduction of which into this country may be 
 claimed by a Radical Government as one of 
 its most honourable achievements, involve no 
 doubt the expenditure of public revenue; all 
 public revenue is an abstraction from private 
 incomes; and the principal abstraction is an 
 abstraction from the pockets of the rich. But 
 such an abstraction is in this case, an incident 
 not an object. The object is not to transfer 
 income from one class to another, but to enable 
 those who have nothing to produce a substantial 
 something. Why, then, in the case of the 
 extreme reformers of to-day, is there this 
 discrepancy between the principles they embody 
 in a certain definite measure, and those which 
 they vociferate with every antic of conviction 
 when, in quest of popular support, they appeal 
 to the imagination of multitudes ? The reason, 
 no doubt, consists to a certain extent of an 
 internal discrepancy (honest so far as it goes) 
 between ideas vaguely suggested by emotional 
 animus on the one hand, and ideas suggested 
 by common sense on the other : but mainly 
 consists of the fact that the former are at once 
 more simple, and are calculated to arouse
 
 Cfcap. 1V.J UNDERLYING PROBLEMS 373 
 
 expectations of a far more ample kind. The 
 unfortunate result is that reformers whose 
 policy and whose power rest on this dual basis, 
 create more grievances by stimulating novel 
 and impossible expectations than they cure, or 
 possibly could cure, by the diminution of old 
 hardships. 
 
 The foregoing observations are so far limited 
 in their scope that they relate specially to those 
 forms of exceptional poverty which, like a brutal 
 blot, persists at the bottom of a page otherwise 
 covered with memoranda of general progress. 
 But the maladjustments of existing society, and 
 even the phenomena of poverty itself, are by no 
 means confined to the limits within which as a 
 spectacle, the latter are most obtrusive. Let 
 the artificial grievances, due to the inflammation 
 of impossible hopes, to false conceptions of 
 things as they are and tend to be, and to a trust 
 in those projects of reform (whether Radical or 
 crudely Socialist) which have such fallacies as 
 their foundation let all these be eliminated, 
 and modern life will exhibit itself to the eyes of 
 sober judgment, partly indeed in the light in 
 which the Conservative sees it now; but not in 
 that light alone. Facts and principles which 
 Conservatism, in the widest sense of the word, 
 has often been tempted to ignore, because 
 hitherto the expression of them has been asso- 
 ciated with fantastic and malignant error, will 
 assume their true proportions, and exhibit their 
 true nature. The elucidation of these such 
 is the author's design will be undertaken in
 
 374 A FUTURE VOLUME (Book V. 
 
 another volume, to which the present may be 
 regarded as prefatory : but some indication of 
 what these facts and principles are, will be given 
 in the following (and for the present) our 
 concluding chapter.
 
 CHAPTER V. 
 
 CONSERVATISM, as a protest against reform, if 
 reform be taken in the sense in which, through- 
 out this volume, the word has been exclusively 
 used, is not a protest against change. It is a 
 protest only against change in the organic 
 structure of society. So defined, it stands 
 for the rights of individual property, property 
 being taken to include not only land and capital, 
 but all the incomes which, under a system of 
 individual ownership, society does as a matter 
 of fact enable various individuals to earn by 
 the exercise of their various capacities. For 
 Conservatism, in this general sense, a salary 
 of 1,000 a year is property no less than 
 the interest on 1,000 one pound shares. The 
 organic reformer may contend that a man's 
 right to the first may, by dismissal, be any 
 day taken away from him, whilst his right to 
 the second is alone in his own possession, and 
 that Conservatism stands for the conservation 
 of this latter kind of right only, whilst it leaves 
 the former so precarious that it is not a right at 
 all. Suchanaroaiment is correct if we consider the 
 earner as an individual. It is incorrect if we con- 
 sider him as a type of the earning population 
 generally. However secure may be the income 
 from lands or shares, incomes earned by effort 
 are in the mass no l^ r >rnre. There is, as a 
 
 375
 
 3f6 CONSERVATISM [Book V. 
 
 matter of fact, an element of insecurity in each, 
 the measure of which in one case is the total 
 percentage of unemployment, whilst we may 
 take it to be in the other the annual number of 
 bankruptcies as compared with the number of 
 estates annually changing hands at death. It 
 might be shown by statistical evidence, were this 
 the place to examine it, that the chances of loss 
 through bankruptcy and the chances of loss 
 through unemployment, are closely connected 
 and are very nearly the same : l but, apart from 
 such details it is obvious that without income 
 from effort there would be no income from 
 ownership, and that, if both be taken in the 
 mass, they stand and fall together. 
 
 Conservatism, then, in this larger sense in 
 which sense it is often called Individualism 
 represents the rights of individual property as 
 justified by their concrete results. It recognises 
 indeed, that, as a consequence of imperfections 
 which are inseparable from human nature, these 
 results will, from period to period, comprise 
 elements of evil, but it insists that such evils 
 
 I. One great example of the insecurity of income de- 
 rived from ownership is the decline, since the year 1879, 
 of the rent of agricultural land, amounting to 27 per cent. 
 Income derived from building-sites has, as a whole, shown 
 greater stability : but whilst ground-rents have risen in 
 aome localities, they have fallen in others. The owner ol 
 houses in a locality which is being gradually deserted, is 
 Hke an employee who is ceasing to be employed. No 
 tenant will employ the land or buildings of the one, just 
 as no master will employ the labour or the abilities of tht 
 other.
 
 Chap. V.] THE RIGHTS OF PROPERTY 377 
 
 would be intensified, not remedied, by destroy 
 ing the roots of the tree with a view to improv- 
 ing the general quality of the fruits. The main 
 difficulty which Conservatives have to face lies 
 in the fact that a variety of very real evils have 
 been so identified by extremists with demands 
 for impossible remedies, that the necessity 
 for opposing and of exposing the latter gives 
 rise to a diffidence in admitting the full serious- 
 ness of the former. 
 
 For example Conservatism is identified, both 
 in fact and in the popular imagination, with a 
 special insistence on the rights of property in 
 land; and such rights are the special objects of 
 attack on the part, not only of reformers who 
 assail property generally, but of those who 
 regard it, in any other form, as sacred. The 
 main argument of such persons consists of 
 an exposure of certain results which the prin- 
 ciple of private property in land always renders 
 possible, and may any day render actual. The 
 most extreme of these is that pictured by Henry 
 George, who argued that this principle, so long 
 as it is recognised by law, would enable a rich 
 American to purchase the fee-simple of the 
 whole of the United Kingdom, and gradually, 
 as leases terminated, to evict the whole of the 
 inhabitants. Such an event would, he argued, 
 be intolerable ; and its mere possibility this 
 was George's conclusion constitutes a reduc- 
 tion of the principle of private property in land 
 to an absurdity. 
 
 Now there may be nothing in the law to
 
 3?8 A MAN AND HIS OWN [Book V. 
 
 make such an event impossible as a matter 
 of mere theory; for the law concerns itself, 
 not with possibilities, but with likelihoods; 
 but we may safely say that if such an event 
 became likely, laws would come into existence 
 which would put it out of the question. The 
 jus utendi et abutendi the principle that 
 it " is lawful for a man to do as he wills with 
 his own " would, within certain limits, be 
 altogether abolished. This fact is held by 
 reformers generally to demonstrate, at all events 
 so far as land is concerned, that the principle of 
 private property is altogether untenable; and 
 the crude version of that principle, to which 
 many Conservatives adhere, leaves them, so 
 long as they adhere to it, defenceless against 
 the logic of their adversaries. This logic itself, 
 however, owes all its apparent strength to the 
 fact that those who make use of it do not push 
 it far enough. Even extreme socialists repu- 
 diate and they are perfectly honest in doing 
 so the charge that they make any attack on 
 private property as a whole. They maintain 
 with the utmost vehemence that a man's pro- 
 perty is absolute in all articles of personal use, 
 such as clothes, furniture, crockery, knives and 
 forks, pens, ink, and paper : whilst Henry 
 George, and all Radicals along with him, make 
 the same claim for houses, factories, live-stock, 
 and all manufactured goods. In respect of 
 such things as these, the reformers maintain 
 that the rights of private property are inviolable. 
 Of such things, however, it would be difficult to
 
 Chap. V.] PROPERTY UNDER LIMITATIONS 379 
 
 find one, in respect of which these rights are not 
 subject to limitations no less important than 
 those which apply to the case of land. The 
 most rigid socialist would admit the rights of 
 private property in a suit of clothes, of a pen, 
 or of a pocket knife ; but no code would allow 
 a man to strip himself naked in the street, or 
 to use his pen for the purpose of writing libels; 
 whilst if the practice of carrying pocket-knives 
 out of doors led to the constant use of them in 
 murderous assaults or quarrels, property-rights 
 in knives would be so far restricted that they 
 practically ceased beyond the limits of a man's 
 own home. Few would deny that a man has a 
 property in his own saliva : and yet few would 
 not wish to restrain him from spitting in his 
 neighbours' faces. 
 
 The fact is that property of all kinds is 
 held under limitations of one kind or another; 
 and each kind of property is held under 
 limitations, implied or legally enacted, which 
 are appropriate and peculiar to itself. Indeed 
 the object of all law, is in the last resort, 
 a limitation of those precise rights, the exist- 
 ence of which is its first assumption, and the 
 conservation of which is one of its main objects. 
 Of this fact, rights of property in land are 
 only one example, and in many states of 
 society the limits which the law must impose 
 on these are far from the most important 
 example of the limits it must impose on all. 
 Thus no society could exist in which landlords 
 were not restrained from sticking 1 their pocket-
 
 380 TWO MODERN EXAMPLES [[Look V. 
 
 knives into anybody who happened to offend 
 them; but a country may be fairly prosperous 
 in the absence of any laws which forbid the 
 sale of it by its landowners to a syndicate of 
 foreign sportsmen. 
 
 The rights of private property are, therefore, 
 in no way invalidated by the recognition that 
 they are all subject to some sort of restriction. 
 On the contrary, the surest way to discredit 
 them is to deny the fact that in every case 
 certain reasonable restrictions are necessary. 
 But the principle here indicated is capable of a 
 wider interpretation than the word " property " 
 in any of its usual senses suggests : and in this 
 wider interpretation of it we shall find the key 
 to the real problems and difficulties distinctive 
 of the modern world, which by the extreme 
 reformers of to-day are altogether misappre- 
 hended. 
 
 Let us take two examples of property in its 
 distinctively modern form namely a railway, 
 and a great factory for the production of novel 
 dyes, which has been established in a spot 
 previously bare of inhabitants, by the chemical 
 and mechanical genius of some one man. 
 
 If we suppose the railway, like the factory, 
 to be the first enterprise of its kind, and to have 
 been likewise constructed and equipped by the 
 genius of one man, it is obvious that, before 
 either of the two works was begun, either of 
 these two men had the right to abandon it 
 altogether, or, having begun it, to leave it 
 uncompleted. Most of the great inventions to
 
 Chap. VJ. FRUITS OF SUCCESS 381 
 
 which the wealth of the modern world is due, 
 have been realised in the face of incredulity, 
 and often of actual opposition. Their authors 
 bave had originally not only the right to 
 abandon them, and thus throw away any capital 
 which they had already expended in their incep- 
 tion. They have often had to struggle for so 
 much as the right to begin them. Such is the 
 case at starting. In respect of the property 
 which such undertakings represent, the jus 
 utendi et abutendi as vested in the authors is 
 unqualified. But when such undertakings the 
 railway or the great factory is completed and 
 in successful operation, a new set of circum- 
 stances gradually or at once develops itself. 
 Along the route of the railway, or in the neigh- 
 bourhood of each terminus, houses are built 
 which would not have been built otherwise. 
 The factory, in proportion as it prospers, creates 
 a town around it, in what before was a waste. 
 And if such enterprises be taken in their 
 integrity, they not only create houses and 
 populations which are new in particular places; 
 they create a population which, apart from them, 
 could never have come into existence. As soon 
 as this result is accomplished, the position of 
 the authors and owners of such enterprises 
 undergoes, from this nature of the case, a very 
 important change. The jus utendi, in respect 
 of their property, remains fundamentally un- 
 affected : but the jus abutendi, in so far as this 
 means the right to close their works, and allow 
 them to go to ruin, would carry with it, if
 
 382 EFFECTS OF STRIKES [Book V. 
 
 exercised, entirely new consequences. A man 
 wno had destroyed the beginnings of a railway, 
 before any railways were in operation, would, 
 if the enterprise were his own, have merely 
 destroyed the whole or a portion of his own 
 property. To close or destroy a railway which 
 had been in operation for years, would be not 
 only for an owner or for owners to abuse their 
 own property. It would be, at the same time, 
 to destroy a population also. That the employ- 
 ing classes will ever combine as a whole to 
 destroy or permanently close their railways, 
 yards, or factories from which their entire 
 revenues are derived is no more likely than the 
 landlords of the United Kingdom should com- 
 bine to sell its surface to Henry George's 
 hypothetical American : but sporadic examples 
 of this exercise of the jus abutendi are one of 
 the unfortunate results which, with a growing 
 frequency, the existing system of industrial 
 disputes necessitates. This result is the coun- 
 terpart of the exercise of another jus abutendi 
 that is to say the exercise of the right to strike. 
 So far as individuals are concerned, a man in a 
 free country has the right to abstain from 
 working, so long as he only surfers by it. Any 
 group has a similar right, so long as those who 
 suffer are the members of that group alone. 
 But when this right is so exercised that it inflicts 
 an injury on the great masses of the population, 
 its character changes in essentially the same 
 way as the jus abutendi changes in the case of 
 a great employer, who, if he should abandon
 
 Chap. V.] THE TRUE CONSERVATIVE 383 
 
 or close his works altogether, would not only 
 ruin himself, but thousands or tens of thousands 
 for whom he has made life possible. 
 
 That the jus abutendi^ in respect of a man's 
 property in his own labour, may require legal 
 restriction, is a conclusion which recent events 
 have been forcing on sober men, to whose 
 general sympathies it may be unwelcome, 
 but, as in the conduct of most disputes, the 
 temper of the disputants is a factor even more 
 important than their rights, it is a counsel of 
 Conservatism, not a counsel of revolt, that the 
 owners of property should set a sober example 
 by cultivating a sense of the logical and ulti- 
 mate limitations to which, either by practice or 
 legislation, the rights of property must be 
 submitted, in order that their substantial integ- 
 rity may be maintained. 
 
 Such are the suggestions which, together with 
 Others kindred to them, must be reserved for 
 fuller expression in another volume, in which 
 the facts elucidated in the present will it is the 
 author's intention be reconsidered in connec- 
 tion with general ideas and princinles the loose 
 and self-contradictorv manner in which many 
 of these are commonly accepted, and the sub- 
 stratum of truth which a careful analysis may 
 extract from them.
 
 INDEX. 
 
 Abroad, profits .rom, home earnings 
 in connection with, 82-85, 120, 
 160 
 
 See also Income from abroad. 
 Advertising, annual cost of, 345 
 Agriculture in England, fallacious 
 picture of, drawn by Gold- 
 smith, 18, 19 
 as a productive business in 1801 
 
 and 1910, 244, 245 
 Agricultural labourer, earnings of 
 
 in 1801, 78 
 
 alternately alleged to be starv- 
 ing and abnormally healthy, 
 274 
 Agricultural population in 1801, 1850 
 
 and 1910, 246, 247 
 wages, their increase concur, 
 rently with diminution in 
 number of labourers, 247, 250 
 "question," 234-241 
 Mr. Masterman on, 242 
 contradictions of reformers with 
 
 regard to, 272 
 meat versus wheat, 272 
 Agricultural upkeep, cost of, 155 
 Apuleius, production for exchange 
 illustrated in his Romance of 
 "The Golden Ass," 28 
 AnBMnents, as a waste of productive 
 power, 391 
 
 Athenaeus, fragment from Moschion, 
 quoted by him in relation to 
 ancient shipbuilding, 30 
 
 Averages, their use and limitations, 
 130, 359, 367 
 
 Beliefs as to concrete facts, aa causes 
 of a sense of grievance, 1, 315 
 in general theories and ideals, 
 as causes of a sense of griev- 
 ance, 316 
 
 Bewick, his illustrations of ' Th 
 Deserted Village," 360 
 
 Bread, fluctuation in price of, 363 
 
 Carlyle, his delusions as to the dis- 
 tribution of wealth, 38 
 
 Capitalism, Karl Marx's crud? theory 
 of, 318 
 
 Census of England and Wales in 
 
 1801, 53 
 professional clases in 1851, 103 
 
 Census of Production, manner in 
 which the national income is 
 computed, 78, 113 
 figures given in, as used bj 
 
 agitators, 255 
 
 real facts underlying them, '258, 
 260 
 
 Child-labour in factories, 363 
 
 Coal-mining, ratio of profits to 
 wages in, 265 
 
 385
 
 386 INDEX 
 
 Commerce, ancient, 36 Fabian Society, its absurd statistic* 
 
 Phoenician, 36 and statements as to the 
 
 in Stone Age, 36 national income, 98-110 
 
 ancient cargoes, Sicilian and non-assessed income, 102 
 
 Roman, 35 incomes subject to income-tax, 
 
 Competition, an alleged source of 105 
 
 waste, 341-350 number and income of the "idle 
 
 Comte, his theory of mental de- rich '" 10 -107 
 
 velopment 24 total number of persons subject 
 
 Cotton trade, earnings of men in, 138 3 
 
 income of domestic servants, 101 
 Contradictory estimates by re formers ^, 
 
 factories, improvements in structure 
 of grievances and possibilities, 
 
 277 of > 363 . 364 
 
 Family, " natural," number of 
 Cookery, importance of education person comprisingj 53 
 
 ' Families, number and earnings of 
 
 working class, 140-144 
 
 Deductions from gross amount, re- Composition of> according to 
 viewed for income-tax, 105, Census of 1851, 146 
 
 106, 117-119 r , , 
 
 Farmers, gross income of, as re- 
 
 Diarwli, his false estimates of social viewed by Income-tax Corn- 
 
 tendencies in "Sybil," 38 missioners, 104 
 
 Distribution, commercial, values " Fancy Values," 284-290 
 
 added to manufactures by, Free-trade, its effects on the number 
 125-126 of agricultural population, 249 
 
 Division of labour in Phoenicia, 36 
 
 George, Henry, analysis of his doc- 
 
 Ec onomic freedom, idea of, 323 trine as to the proportionate 
 
 Socialism the negation of, 329 distribution of wealth, his 
 
 E.nployees subject to income-tax, contradiction of the doctrin* 
 
 104 of Marx, 201 
 
 their aggregate income in 1910. absurdity of his doctrine shown 
 158 by the facts of history, 201- 
 
 Salaries of, Schedule E, in 1812, 207 
 
 219 note Goldsmith, imaginary grievance* 
 
 Enormous growth of, 220 formulated by, 16 
 
 Engrossing of looms in the sixteenth Goods, amount of national incom* 
 century, 320 represented by, 125, 126
 
 INDEX 
 
 387 
 
 Goods 
 
 imported from abroad, 126 
 total income represented by, and 
 
 the commercial distribution of 
 
 them, 159 
 Grievances, as due to experience, or 
 
 to beliefs, 8 
 
 Hegel, his influence on Marx, 23 
 Hoard of the rich quarrels amongst 
 reformers as to where it is, 
 277 
 
 Hours of labour, reduction de- 
 manded, 254 
 
 effects of reduction of, on 
 
 divisible output, 257 
 Houses, of working-classes, in con- 
 nection with number of fami- 
 lies, 141 
 
 Census of 1911, 143-170 
 
 number worth more than 20 a 
 year, classified enumeration 
 of, 170, 173 
 
 houses worth more than 20 a 
 year, let to more than one 
 family, 174, 175 
 
 number of houses worth from 
 20 to 40 a year, as com- 
 pared with enumerated assess- 
 ments between 160 and 400 
 a year, 175, 176 
 
 aggregate rental of all houses 
 between certain values, 177 
 
 ratio of rent of, to income of 
 
 occupants, 178, 182 
 Housing accommodation in 1801 and 
 
 1910, 369 
 
 Hyndman, Mr., on the ratio of 
 profits to wages, 261 
 
 Idle rich real composition and 
 
 number of, aa compared with 
 
 the absurd estimates of th 
 
 Fabians, 108 
 
 Incomes in 1801, as shown by in- 
 come-tax returns, 53 
 number of, exceeding 160 
 
 year, 1,000 and 5,000, 56 
 number exceeding 60 in 1801, 
 
 58 
 
 general synopsis of, in 1801, 55 
 general synopsis of, in 1910, 
 
 56-59 
 the two synopses reconsidered, 
 
 212, 213, 228 (See alo 
 
 National Income) 
 pictorial comparison between 
 
 incomes in 1801 and 1910, 64 
 National, in 1801 and 1910, 78 
 totals of, above and between 
 
 certain limits, 77 
 proportion to total, of incomes 
 
 exceeding 5,000 in the years 
 
 1801 and 1910, 79 
 diminishing amount of large, 
 
 relative to income of nation, 
 
 81 
 from abroad, not related to 
 
 wages paid at home, 82, 86 
 non-assessed, total of, 115 
 subject to income-tax, 116 
 net amount of, exceeding 160 
 
 a year, 123 
 
 total of home origin, 123 
 gross total of assessed, confused 
 
 by socialists with net total, 
 
 116
 
 388 
 
 INDEX 
 
 fitcomes in 1801. 
 
 represented by goods and ser- 
 vices amount of each, 124 
 
 total number of, separately 
 
 earned or received, 123 
 Income-tax, number of classes not 
 subject to, 129 
 
 average amounts of incomes not 
 subject to, per head of re- 
 cipients, 129 
 
 average amount of assessed in- 
 comes, per head of recipients, 
 130 
 
 number of persons subject to, 
 129 
 
 gross amount reviewed for pur- 
 puses of, in 1910, 152 
 
 gross amount reviewed under 
 each schedule, 153, 154 
 
 deduction under each schedule, 
 154 
 
 insufficient allowances for cost 
 of upkeep, 154 
 
 actual cost, as shown by Census 
 of Production, 155 
 
 et total of income subject to, 
 in 1910, 156 
 
 different classifications of in- 
 comes subject to, 161 
 
 incomes subject to, analysis of 
 amounts of, according to 
 origin, 164 
 
 number of persons subject to, 
 166-183 
 
 numeration of persons subject 
 to, in 1801, 166 
 
 numeration of persons subject 
 to, to-day, 167 
 
 Income tax 
 
 Leone Levi on the significant* 
 of the enumerated incomes, 
 169 
 
 relation of enumerated income! 
 to houses of certain values, 
 170 
 
 Incomes subject to, decline in aver- 
 age amount of, since 1801, 228 
 enormous increase of small, 224 
 Increment, unearned, absurd radical 
 
 ideas as to, 236, 237 
 decline during last fifteen years, 
 
 239, 240 
 compared with increment of 
 
 dividends, etc., 238, 239 
 " Industrial Question," two aspect* 
 of a wages question and a 
 profits question, 252 
 
 Labour, theory of, as source of all 
 
 wealth, 317-321 
 origin of theory, 319 
 Labouring classes, increase of eara- 
 ings per head of, 223, 227, 229 
 decline in number of, relatively 
 
 to population, 222-226 
 Land question, different aspect* of, 
 254 
 
 /r, ./,,,,..t/s v *\ 
 
 Marx, his theory of economic pro- 
 duction as derived from 
 Hegel, 26 
 contradicted by Henry Georg*. 
 
 201 
 
 his main propositions as to th* 
 tendencies of society undr 
 capitalism, 49
 
 INDEX 
 
 389 
 
 Marx- 
 analysis of his doctrines as to 
 
 the distribution of wealth, 
 
 189-192 
 fallacy of these doctrines as 
 
 shown by history, 195-201 
 Manufactures, total net selling value 
 
 of home, 160 
 Masterman, Mr., grotesque picture 
 
 drawn by, in his book " The 
 
 Condition of England," 50, 52 
 Metal-trades, earnings of men in, 
 
 138 
 Middle classes, their disappearance 
 
 as alleged by Marx, 40 
 enormous growth of, as shown 
 
 by Leone Levi, also by the 
 
 evidence of houses, 42 
 growth of, greater than that of 
 
 any other class, 221, 222 
 virtually a new labour class, 
 
 225, 226 
 Millinery-trades, large number of 
 
 men earning high wages in, 
 
 129 
 
 Minimum wage, See " Wages." 
 Money, Mr., his exaggerated esti- 
 mate of the riches of the very 
 
 rich, 110 note 
 on waste, 345 
 
 National income, per head of popu- 
 lation in. 1801 and 1910, 212, 
 213 
 
 as it would be to-day, had pro- 
 ductive efficiency not increased 
 since 1801, 214 
 
 net average increment per head, 
 215 
 
 National income 
 
 increment of, per head, how 
 divided amongst classes, 215 
 
 sources of increment land-rent, 
 buildings, manufactures, com- 
 merce, professions, salaries, 
 217 
 
 scheme for redistributing, 287 
 
 maximum theoretical bonus to 
 poorer classes, 282 
 
 portion from abroad not avail- 
 able for Socialists, 283 
 
 portions " counted twice over " 
 not distributable, 284-290 
 
 portion saved, not distributable, 
 290 
 
 analysis of savings, 291 
 
 interest and earnings due to 
 
 savings, 291-293 
 
 Optical delusion, caused by the 
 spectacle of modem wealth, 
 90, 331 
 
 enhanced by modern newspapers, 
 334 
 
 Petronius Arbiter, sidelights thrown 
 by his novel on production 
 for exchange in the time of 
 Nero, 32 
 
 Population, abnormally rapid growth 
 between 1801 and 1850, 362 
 
 Poverty, extreme range of, 141-148 
 
 Production for exchange, falsely 
 represented by Socialists, as 
 peculiar to modern society, 23 
 in Phoenicia, 34 
 
 its primeval character as ex 
 plained by Herbert Spencer. 
 37
 
 390 INDEX 
 
 Production, possibilities of increase " Rich," the 
 
 of, real and illusory, 341-350 false ideas as to, produced by 
 
 Productive efficiency, table illustrat- specifically false statistics, 
 
 ing growth of, 352 99-110 
 
 incomes of all classes dependent Riches of the rich relatively to the 
 
 on, 354-357 income and the area of the 
 
 Products, average value of, per r/ead country, 90, 381 
 
 of workers in manufactures, Rousseau, as a creator of false 
 
 255 grievances, 14 
 Professions, income from, 157 
 Profits from businesses carried on in 
 
 the United Kingdom, 158 Savings, annual, amount and nature 
 
 Private firms assessed to income- of, 291 
 
 tax, 104 of poorer classes, 294 
 
 Profits of business, different ways Servants, the Fabian Society on 
 
 of classifying, 162-168 incomes of, 102 
 
 Profits, variations of, in different presence and absence of, their 
 
 businesses, 262 effects on number of persons 
 
 general ratios of, to wages, 265 per household, 140 
 
 as shown by balance sheets of a Services, proportion of the national 
 
 great coal company, 266 income represented by, 123-126 
 
 as shown by the balance sheet analysis of incomes represented 
 
 of a co-operative enterprise, by, 161 
 
 267 Ship, built by Hiero at Syracuse, its 
 
 construction, 30 
 
 " Questions," social, as treated Single -taxers, repudiated by radi- 
 
 separately, 233, 234 cals, 234-236 
 
 Reformers, sense in which the word Snowden, Mr. P., his wild statistical 
 
 is used in this volume, 1 misstatements, 117, 119, 123 
 
 Rent of lands, sites of houses, sites " Social product," theory of wealth 
 
 of business premises, and of as a, 321 
 
 buildings, 156, 157 Socialism, State, in action, 326 
 
 Residuum, social, 368 revolt against, 326, 327 
 
 " Rich," the, aggregate income of, its appeal mainly based on 
 
 declining relatively to national erroneous beliefs as to fact, 
 
 income, 86 328, 329 
 
 false impressions as to, pro- State officials, salaries of, 161, 369 
 
 duced by their conspicuous- " Superwealthy " the, as described 
 
 ness, 95 by Mr. Masterman, 51
 
 INDEX 391 
 
 Taxes, equalization of, as affecting Wages 
 
 result of an equal division of minimum, as demanded, would 
 
 incomes, 338 produce general bankruptcy, 
 
 Theories of economic production, 260 
 
 and theoretical ideals, 316 increase of, between 1800 and 
 
 Tin-trade, its importance to ancient 1850, and 1850 and 1910, '^z 
 
 civilisation, 35 Waste of productive power, alleged, 
 
 Tin-plate trade, high earnings of by armaments, competition, 
 
 men in, 138 needless advertising, 341, 350 
 
 Trimalchio (character in Roman typical overestimates of, 346, 
 
 novel), how he made his for- 347 
 
 tune by commerce, 37 Wealth of England in 1800, regarded 
 
 at' the time as unexampled, 
 332 
 Upkeep of capital, as allowed for ff et ts of, as producing a false 
 
 by Income-tax Commisioners, stand, rd of livii-, 334 
 
 peculiarities of modern, criti- 
 real cost of, as shown in Census c j smg to wn i en j t i s opeQ) 
 
 of Production, 114-120 -35 
 
 details of actual expenditure on, not in any divect sense th6 cause 
 155 of poverty, 337-371 
 
 Welfare, dependent not on income 
 
 Wages, total amount of, under 83s ., 
 
 Workers, total number of all kinds 
 a week (men s), 137 
 
 of. men, boys, women and 
 not exceeding 25s. a week 
 
 girls, 127-129 
 (men's , 137 
 
 average incomes of, per actual 
 of women, boys and girls, aver- 
 
 worker, and per worker with 
 ages and totals, 133, 135, li,c 
 
 family, 129 
 wide difference belween average 
 
 , , subject to income-tax, number 
 
 efirned by skilled and un 
 
 , ... , * of, and averse income, 129 
 
 skuled adult males, 13/ 
 
 not subject to income-tax, total 
 examples of this difference iu 
 
 income or, 12o 
 various trades, 138. 14< 
 
 belo'.vnng to thf- Lo<"er Middle 
 minimum demand for. 253 
 
 ( inss. 131 
 
 minimum oropoa^u by .strike 
 
 tnu'.urv into tlieir number ain 
 leaders, 254 T ,,. . .. 
 
 earnings of Lower Middle 
 grounds of particular demand C!ass by Committee of 
 
 254 Economists, 132
 
 A 001 374212