•«^;Hlfl.H,iJip-»"-»/ " ■'; 
 
 THE ECONOMICS 
 OF PROGRESS 
 
 THE RT. HON. 
 
 X M.ROBERTSON. MP
 
 Jd 
 
 
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 \\
 
 UNIVERSITY OF CALIFORNIA 
 AT LOS ANGELES
 
 THE ECONOMICS OF PROGRESS
 
 BOOKS BY THE RIGHT HON. 
 J. M. ROBERTSON, M.P. 
 
 SHAKESPEARE AND 
 CHAPMAN 
 
 A Thesis of Chapman's Authorship of 
 "A Lover's Complaint," and his origin- 
 ation of "Timon of Athens," with in- 
 dications of further problems. Cloth, 
 10/6 net. 
 
 THE FUTURE OF MILITARISM 
 
 An Examination of F. Scott Oliver's 
 " Ordeal by Battle." Cloth, 2/6 net. 
 
 T. FISHER UNWIN, Ltd., London.
 
 THE ECONOMICS OF 
 PROGRESS 
 
 BY THE RIGHT HON. 
 
 J. M. ROBERTSON, M.P. 
 
 AUTHOR OF "trade AND TARIFFS," "THE EVOLUTION OF STATES," 
 "the FALLACY OF SAVING," ETC. 
 
 LONDON 
 
 T. FISHER UNWIN, LTD. 
 
 ADELPHI TERRACE
 
 First Published in 1918 
 
 • « > • J • • • 
 •• . .. !v .'. . 
 
 All righu reaervtd
 
 
 -' HE 
 
 PREFACE 
 
 n 
 
 These lectures were delivered in October- 
 
 VN 
 
 \^ 
 
 December, 1917, to the Political and Economic 
 Circle of the National Liberal Club. They are 
 printed mainly as given, but with some com- 
 j pressions, a few improvements of statement, 
 some little annotation, some postscripts, and the 
 inclusion of some passages omitted in delivery. 
 
 Their usefulness, I conceive, might have been 
 increased by more systematic annotation from 
 economic literature; but other pressing occupa- 
 tions make that impossible. Since, further, they 
 make no pretension to constitute a systematic 
 economic treatise, but aim only at a partial 
 practical application of economic ideas to the 
 great problem of " reconstruction," a larger 
 array of authorities might suggest a much 
 higher estimate of their lasting utility than I 
 put upon them. 
 
 If they are at any point much outside of 
 economic " orthodoxy," it is in their treatment 
 of the scientific conception of Capital. As to 
 that, the critical reader may be referred to a 
 small treatise published by me twenty-five years 
 
 202956
 
 vi PREFACE 
 
 ago, " The Fallacy of Saving " — a somewhat 
 unfortunate title at best, and one specially likely 
 at present to appal the practical man. In self- 
 defence, therefore, I may explain that the book 
 is not at all a dissuasion to thrift, but a historical 
 and critical study of the economic doctrine of 
 saving for investment, from Turgot and Smith 
 onwards, leading up to a view of the economics 
 of Consumption. Such as it is, it presents the 
 grounds for the view of Capital put in these 
 lectures, and of a number of correlative positions 
 there taken. 
 
 The vindication of Ricardo in the introductory 
 lecture is, I trust, not irrelevant, though specially 
 motived by the fact that 1917 is the centenary 
 year of the issue of his chief work. It is meant 
 to suggest to some readers that economic analysis 
 is not a wholly uninteresting subject. It may 
 be well to add, however, that I have never been 
 uncritical of the great theorist. One of my 
 earliest efforts in economics (apart from teaching 
 a class) was an essay on Rent (1886), in which 
 I criticised the theory associated with his name, 
 and argued for the re -casting of it in a larger 
 formula . 
 
 The further attempt to close the strange schism 
 between " historical " and " analytic " economics 
 is perhaps hampered by an air of hostility to 
 the claims of the former, though that arises only 
 in so far as they have involved disparagement
 
 PREFACE vii 
 
 of the latter. That I set store by both modes 
 of investigation is, I hope, indicated even by the 
 occasional use I have tried to make of historical 
 illustration. In my view, the " historicals " would 
 do well to give more heed to economics, and the 
 economists proper to give freer entrance to 
 history. It seems time for both " schools " 
 to bury the hatchet — if there be any polemists 
 left who preserve it. The fact that Sir W. J. 
 Ashley, who in 1888 set out a little defiantly on 
 his valuable Introduction to English Economic 
 History and Theory, has given us our only 
 annotated edition of Mill, tells of a rational 
 adjustment of objectives. 
 
 It will be observed that I have devoted two 
 lectures to the crucial question of Population. 
 This is not, I think, a disproportionate amount 
 of attention to a problem which for over forty 
 years I have held to be vital in the ratio of the 
 neglect bestowed upon it. The relatively full 
 handling of it seems substantially justified by 
 the fresh discussion of the subject which began 
 in the Press after the two lectures had been 
 schemed. 
 
 December 1917.
 
 CONTENTS 
 
 Pkepace . 
 
 • • 
 
 PACK 
 
 V 
 
 I (Introductory) 
 The Aim and Use op Economic Science 
 
 II 
 
 The Economics of Education . 
 
 The Economics of Labour 
 
 The Economics of Land 
 
 III 
 
 IV 
 
 V 
 
 The Economics of Capital 
 
 VI 
 The Economics of Commerce . 
 
 VII 
 The Economics of Population (i) 
 
 VIII 
 
 The Economics of Population (ii) . 
 
 Index 
 
 58 
 
 91 
 
 122 
 
 151 
 
 185 
 
 222 
 
 260 
 295 
 
 IX
 
 THE ECONOMICS OF PROGRESS 
 
 THE AIM AND USE OF ECONOMIC SCIENCE 
 
 There is an old standing and clastic dispute 
 as to whether definitions should come at the 
 beginning or at the end of a disquisition. In 
 this case I shall please either both sides or 
 neither by defining one of my terms at the 
 beginning and the other at the end of my dis- 
 course. It will deal with the question of what 
 economics drives at ; what kind of knowledge it 
 seeks and what kind of light it can be asked 
 to give. After that discussion we can more 
 usefully say what we mean by economics than 
 we can at the outset, though there are dozens of 
 definitions to choose from, all more or less 
 suggestive. 
 
 But as to " progress," a definition is needed to 
 avert philosophic debate ; and I accordingly pre- 
 mise that by that word I mean " rise in quantity 
 and quality of pleasurable life." Mere rise in 
 quantity of life I should not so define : thereby 
 hangs the economic problem of population.
 
 ^ THE ECONOMICS OF PROGRESS 
 
 which is still so commonly ignored in our 
 current social science. Granted my definition 
 of progress, for the purposes of this discussion, 
 I would add that by such an inexact expression 
 as " the economics of progress " I wish to con- 
 vey the notion of applying economic tests and 
 economic guidance on all the main lines on which 
 national betterment is hoped for. It may be 
 objected that such a service is always associated 
 with economic science. But here again we 
 touch on an old dispute, which seems to come to 
 the front periodically. It is indeed hardly 
 possible to talk of " applying " economics with- 
 out raising it ; and I now deliberately do so, with 
 some hope of curtailing such dispute in future, 
 as I happen to be in sympathy with both sides. 
 Quite recently I have seen a demand that 
 political economy should become worthy of its 
 name by becoming the guide of politics, with 
 an implied denial that it had been so in the 
 past. But both the demand and the denial 
 have been made many times, which amounts to 
 saying that some economists have repeatedly 
 proposed to give guidance to politics — unless we 
 are to suppose that the people who chronically 
 condemn political economists have never them- 
 selves studied economics. In point of fact, to 
 say nothing of Adam Smith and his predecessors, 
 as early as J. B. Say and Sismondi economists 
 were claiming to exist for the purpose of guiding
 
 THE AIM OF ECONOMIC SCIENCE 3 
 
 social and legislative action; and, on the other 
 hand, economists have been many times con- 
 demned for the guidance they offered. Genera- 
 tions ago they were told that the " laws " they 
 laid down for politicians were false dogmas ; and 
 that they really erred in supposing they could 
 give any light to legislation. And at least a 
 generation ago it had become the fashion for 
 professional economists to protest that they 
 had no dogmas to offer. Some of their pre- 
 decessors, however, had propounded many prin- 
 ciples of action which had the aspect of dogmas ; 
 and which certainly purported to be rules for 
 action. And it would be strange if they had not. 
 Trouble, indeed, began with the use of the 
 word " laws." Metaphor (to speak of it meta- 
 phorically) can be both the life and the death 
 of exact thinking. It vivifies conceptions, and 
 it also tends to denaturalise them; notably so 
 in the case of the transfer of the word " law " 
 from its political use to the domain of Nature, 
 external and internal. The " laws " of physical 
 science are simply statements of observed con- 
 stancy of sequence in phenomena under given 
 conditions ; and whereas in physics the sequences 
 can be stated in terms of invariables, in the 
 domain of volition they can be stated only as 
 averages of constant tendency. Economic law, 
 therefore, is a generalisation of average tendency 
 in the events it covers. Still, it is science just
 
 4 THE ECONOMICS OF PROGRESS 
 
 so far as the case admits of science; and if 
 economic science is supposed to attain to any 
 important truths, they must surely be supposed 
 to guide action, having regard to the subject 
 matter. The trouble was that, as happens in 
 the development of all sciences, some of the 
 early theories were wrong; and that even when 
 they were right they were far from winning 
 general acceptance. If blame is fitly to be 
 passed for the errors, it is certainly due also to 
 many of those who have denounced economists 
 for imaginary errors. 
 
 And this, I venture to say, applies to some 
 professed economists — if, that is, we are to 
 devote ourselves to dealing out blame in return 
 for blame. The better course, perhaps, is to 
 vindicate. A generation ago, and more, there 
 was a fashion of decrying what were called the 
 orthodox or classic economists, not for their 
 fallacies, which were by such critics in general 
 overlooked, but on the score that they had treated 
 economics as a set of abstract problems, raising 
 questions of how men tended to act in given 
 economic circumstances, instead of going to 
 history to find how they had acted, and learning, 
 as we there would learn, that men were actuated 
 by many motives besides those assigned in 
 current economics to " the economic man," as 
 the objectors christened the kind of normal 
 man whom the economists rightly took for
 
 THE AIM OF ECONOMIC SCIENCE 5 
 
 granted in their reasonings. Further, the critics 
 declared, it was this habit of abstract reasoning, 
 without regard to history, that had led to the 
 manufacture of false economic dogmas, of " laws " 
 which did not operate, and of political precepts 
 which obstructed reform. 
 
 That indictment, I maintain, was almost 
 wholly astray. Wrong conclusions and mistaken 
 precepts had been in certain matters propounded 
 from the first by men who did study the 
 historic past; and the "abstract" men really 
 erred less in both regards than the others. 
 Take the two cases of Adam Smith and Ricardo. 
 Adam Smith, it has been justly claimed, is the 
 real founder of the " historical school " so-called, 
 some of whose German extremists have de- 
 nounced him as the creator of an unreal or 
 immoral " economic man." Economic history 
 is the constant background to his reasoning. 
 Yet he erred at times not merely in economic 
 analysis, as when he said that rent was a factor 
 in forcing price, but in extending his sound argu- 
 ment for freedom in trade to a disparagement of 
 " protection " in the endowment of education ; 
 and yet again when, avowedly setting aside on 
 political grounds his free trade principle with 
 regard to the Navigation Laws, he gave a 
 historically wrong account of their effects. 
 
 It is not now common to disparage Smith as a 
 great pioneer economist because he thus made
 
 6 THE ECONOMICS OF PROGRESS 
 
 mistakes. We begin to realise that pioneers 
 cannot escape mistakes ; and " science " in 
 general may be said, in the words of Cam pbell- 
 Bannerman, to have " come to the time of life 
 at which we begin to thi nk we niay have made 
 mistakes ourselves." I mention these, not to 
 disparage one great economist, but in order to 
 vindicate another. Smith was no blind dog- 
 matist : he could learn. When Bentham pointed 
 out his error in advocating laws against usury, 
 Smith candidly avowed himself corrected. And 
 his failure to rectify, after Hume's criticisms and 
 Anderson's exposition, his statement that rent 
 is a factor in the price of corn, is possibly due to 
 the fact that in another passage he had stated 
 the case correctly ; ^ while he may have con- 
 sidered that Anderson's reduction of the con- 
 cept of rent to economic surplus did not cover 
 all the phenomena described by the word. But 
 his discussion of mine rents, as well as his con- 
 flicting dicta on land rent, show that the pheno- 
 mena perplexed him; and he never unified his 
 view. 
 
 However that may be, these things are for- 
 given to Smith, on the ground sensibly put by 
 McCuUoch— who has been, I think, unfairly 
 represented as an infallibilist — that a science 
 involving so many considerations as enter into 
 economics can be perfected only by slow degrees, 
 1 Compare pp. 28, 07 of McCulloch's ed., 1839.
 
 THE AIM OF ECONOMIC SCIENCE 7 
 
 by much experience and observation, and by 
 the patient labours of the " most ignenious 
 men." But it has been otherwise with Ricardo. 
 For some reason that can only be guessed at, 
 the good-will shown to the Scotchman has been 
 largely denied to the Jew, who was just as much 
 a pioneer in most things as Smith; but a rather 
 more circumspect one. Not only has he been 
 assailed for dealing with the problem of rent 
 as it faced him in his own country and in his own 
 time ; he was accused by Cliffe Leslie of having 
 " ignored the essential difference between station- 
 ary and progressive society, between the ancient 
 world with its simple and customary methods and 
 prices, and the modern " — not to mention his 
 being wrong as to the relation between profit 
 and wages ; and Professor Marshall, who inci- 
 dentally showed that it was Leslie who was 
 under a hallucination about stationary societies, 
 has seen fit to put a defence of Ricardo which 
 offers a rather worse example of the sin com- 
 monly charged on Ricardo than can be found in 
 Ricardo's works. 
 
 It was in the year 1885, when dealing in his 
 inaugural lecture with what may be called the 
 Comtist attack on Ricardian methods, that 
 Professor Marshall saw fit to defend the English 
 economists in general thus — 
 
 " And as to their tendency to indulge in 
 excessively abstract reasonings, that, in so far 
 
 ,^ ./.
 
 8 THE ECONOMICS OF PROGRESS 
 
 as the charge is true at all, is cliiefly due to the 
 influence of one masterful genius, who was not 
 an Englishman, and had very little in common 
 with the Enghsh tone of thought. The faults 
 and virtues of Ricardo's mind are traceable 
 to his Semitic origin : no English economist 
 has had a mind similar to his." 
 
 That paragraph always recalls to me Lincoln's 
 desire to be informed of the name oTThe brand 
 of whisky that Grant was accused of drinking, in 
 order that he might send it to some of his other 
 generals. We could do with more of the Semitic 
 element in the economic field if it meant more 
 Ricardos. If the " English tone of thought " 
 involves the acceptance of Professor Marshall's 
 explanation of Ricardo, it might usefully change 
 its key. I could never understand how the 
 eminent Professor supposed he was giving an 
 explanation of anything in that pronouncement, 
 or how he could suppose he knew what he said 
 to be true. If we were to apply his method we 
 should have to infer a non-English — possibly a 
 Semitic — ancestry for Newton, who developed 
 a line of thinking and of scientific analysis of 
 which no previous Englishman seems to have 
 dreamt. Professor Marshall cites no previous 
 Semite who handled economic problems in 
 Ricardo's fashion, any more than he mentions 
 the fact that Ricardo abandoned Judaism. He 
 was a Semite, and there's an end on't.
 
 THE AIM OF ECONOMIC SCIENCE 9 
 
 By this criterion, i t was the Semitic origin of 
 Goschen that determined his study of the theory 
 of the foreign exchanges ; and equally it must 
 have been Marx's Semitic origin that alone made 
 possible his kind of socialism, his historical 
 philosophy, and his fierce moral attitude to the 
 matters on which Ricardo so tranquilly abstained 
 from moralising. And when we find the late 
 Leone Levi handling the subject of " Work and 
 Pay " with much moral fervour and poetic 
 quotation, we must refer those phenomena also, 
 if we are to follow Professor Marshall's theory of 
 psychic physiology, to Levi's Semitic origin. 
 If this is to pass for scientific method, the question 
 is, should we have explained or settled anything 
 if we did? 
 
 I fear it is not for me to pretend to speak 
 with authority of the " English tone of thought " ; 
 and if I point out that McCulloch's mind found 
 itself much in harmony with Ricardo's I may 
 elicit some festive thesis about affinities between 
 the Scot and the Semite. But I recall that it 
 was not only the Scots, Hume and Anderson, 
 who anticipated Ricardo in seeing the economic 
 nature of British rent. The Englishmen, West 
 and Malthus, did so also; and all four seem to 
 have proceeded quite independently. And when 
 we remember that the principal contribution 
 to English economic theory after Ricardo is 
 commonly held to be Jevons's doctrine of
 
 10 THE ECONOMICS OF PROGRESS 
 
 marginal utility, and that that doctrine long 
 found little recognition in England, we are 
 yet again set asking whether Jevons ought to 
 be regarded as alien to the English tone of 
 thought, and whether a new phonetic force 
 should be given to the v in his name. 
 
 It is all the more edifying to note that Jevons 
 in turn was a hot assailant of Ricardo, not on 
 the score of being too abstract, but for not 
 being abstract enough. Jevons's own abstrac- 
 tion consists broadly in getting the simple 
 mathematical formula for every economic rela- 
 tion ; and with this procedure Professor Marshall 
 appears to be well pleased, though it may be 
 doubted whether Jevons would have reciprocally 
 applauded the other's non-mathematical ex- 
 positions. For Jevons, Ricardo's treatment of 
 the subject of wages w^as a business of " mazy 
 and preposterous assumptions " ; ^ the true 
 doctrine, attained at an early date by " the 
 French school " {i. e. French economists in 
 general), being that " wages are the share of the 
 produce which the laws of supply and demand 
 enable the labourer to secure." It is a simple 
 and pleasing doctrine, albeit abstract. And if 
 Ricardo tried to get a little further into things, 
 it was not in virtue of being more abstract, but 
 of a concern to be concrete, after the manner of 
 Adam Smith. In a word, Jevons's formula of 
 1 Theory of Pol. Econ., 2nd ed., Pref., p. xlix.
 
 THE AIM OF ECONOMIC SCIENCE 11 
 
 wages amounts to nothing beyond stating the 
 law of wages in the same way as the law of 
 market price. '* You take " (if you can't help 
 it) " what you can get." 
 
 Now, Jevons's " simplism " neither meets the 
 demand of the historical school for a retro- 
 spective treatment nor faces the complexity of 
 the facts. Ricardo, seeking a sociological or 
 " philosophical " view of wages, first posited a 
 " natural " wage which should just enable the 
 labourer to subsist and propagate without undue 
 increase, and then proceeded to note factors of 
 deviation. It was doubtless a sketchy analysis ; 
 and when it attains to a recognition of the fact 
 that a wage tolerated by one country's standard 
 of comfort will not be tolerated by another's, 
 we feel that the method is awkward, though 
 hardly " mazy and preposterous." Neverthe- 
 less, the results constitute or contain some 
 really decisive economic truths, whereas Jevons's 
 entirely " abstract " generalisation leads no- 
 where. Ricardo's speculations have given rise to 
 endless thinking; and Marx based his Socialism, 
 broadly, on his interpretation of them. Right 
 or wrong, they were fruitful. 
 
 Jevons's general judgment of Ricardo is that 
 " that able but wrong-headed man . . . shunted 
 the car of economic science on to a wrong line ; 
 a line, however, on which it was further urged 
 towards confusion by his equally able and
 
 12 THE ECONOMICS OF PROGRESS 
 
 wrong-headed admirer, John Stuart Mill." ^ 
 Science ought to be able to be a little more 
 explicit than that, which informs us merely 
 that Jevons disagreed, with irritation. If we 
 examine his own " Theory," however, we get, 
 besides his cherished abstractions, very little 
 indeed that can either guide or warn us as to 
 policy, as Ricardo and Mill alternately guide and 
 warn, even when they go astray. After his 
 disparagements, Jevons leaves standing his 
 avowal that he accepts Ricardo's view of circulat- 
 ing capital, 2 and, as regards his theory of capital 
 in general, adds that " the views of the nature of 
 capital expressed in this chapter generally agree 
 with those entertained by Ricardo and various 
 other economists." ^ His own work, in fact, 
 consisted simply in reducing to their most general 
 forms the Ricardian abstractions, certainly 
 making the matter much less interesting and 
 incomparably less suggestive. 
 
 What Cliffe Leslie would have had to say 
 about this abstracting of the abstract, we cannot 
 well guess. That formula about wages, one 
 would suppose, would have evoked from him 
 an anathema. Sooth to say, his own language 
 about stationary and progressive societies is 
 that of a false historical theory, uncritically 
 
 ^ Theory of Pol. Econ., 2nd ed., Prcf., p. Ivii. 
 
 2 Id., p. 263. 
 
 3 Id., p. 280.
 
 THE AIM OF ECONOMIC SCIENCE 13 
 
 adopted from Maine,^ and at once apriorist and 
 empirical; that his phrase about the "simple 
 and customary methods and prices " of the 
 ancient world is as ill-grounded in history as 
 it is in economic theory; and that his censure 
 of Ricardo's doctrine in regard to the relation 
 between profits and wages expresses simply a 
 failure to understand what Ricardo was driving 
 at. We shall see that in a later lecture; but 
 it is really worth while at this point, when we 
 are questioning what economic science can do, 
 to note how Leslie's theorem of " simple and 
 customary prices " in antiquity relates to Pro- 
 fessor Marshall's conception of Semitic heredity. 
 The ancient Semites, it would appear, were in 
 Professor Marshall's view hereditary specialists 
 in abstract reasoning; and Ricardo had not 
 only a propensity that way, but a gift for making 
 money on the Stock Exchange ; but on Cliffe 
 Leslie's view his ancestors in Palestine had no 
 notion of haggling in the market. Ricardo, I 
 fear, would not have thought the proposition 
 worth discussing ; but even the historical student 
 must be at a loss to understand how Leslie, 
 following the lead of Maine, who made so much 
 of Genesis, could contrive so completely to 
 ignore the narrative of Joseph's dealings in 
 corn, to say nothing of twenty other Biblical 
 and Homeric references to matters of prices, 
 1 See the author's Buckle and his Critics, 1895, pp. 402 seq.
 
 14 THE ECONOMICS OF PROGRESS 
 
 You will see I am making a stand for the 
 economic method of Ricardo. Cliff e Leslie was 
 an able man, well worth reading still at many 
 points; but Ricardo was a greater than he. 
 His attack on Ricardo was part of a largely 
 fallacious movement of reaction, stimulated by 
 early Comtism, against economic analysis as 
 such. It was part of Comte's personal equation, 
 which so largely shapes his particular system, 
 to be impatient of all exact scientific thinking 
 save that kind for which alone he had personal 
 qualifications, to wit, the mathematical. He 
 disparaged political economy as he disparaged 
 psychology; and some of his followers, who 
 shared his limitations, indemnified themselves 
 by clamouring to have economics swallowed up 
 in sociology. Now, I entirely agree with them 
 that economics should become ancillary to 
 sociology, as should all the human sciences ; but 
 this is not in the least practicable by their plan 
 of abandoning economic method in economics. 
 Every science, whatever be its ultimate service 
 to sociology, must be carried on for its own 
 purposes by men bent on sheer truth in the given 
 science. To tell them to turn their specialism 
 into a branch of sociology, carrying it on for 
 prescribed sociological ends, is to try to turn 
 them into a sort of superior quacks. 
 
 And since some of the Comtists have seen fit 
 to pass unsparing censure upon the scientific
 
 THE AIM OF ECONOMIC SCIENCE 15 
 
 economists for not being historico-sociologists 
 instead, we are compelled to point out, as did 
 Professor Sidgwick in his 1885 address on " The 
 Scope and Method of Economic Science," that 
 Comte's own sociology, as finally presented by him 
 in a forecast of the necessaiy evolution of Europe, 
 is the most appalling collapse in sheer folly to be 
 found in the history of modern culture. That 
 forecast proved, as Sidgwick said, " how com- 
 pletely the delusive belief that he had constructed 
 the science of sociology could transform a 
 philosopher of remarkable power and insight 
 into the likeness of a crazy charlatan." ^ The 
 worst that sane criticism can- say of Ricardo and 
 Ricardo's methods falls immeasurably short of 
 that. The work of Comte has simply to be done 
 all over again, by men who either cultivate or 
 assimilate true historic science, and all the 
 " human " sciences, in a way that he did not. 
 
 John Mill totally failed to do it; his dream 
 of an " Ethology," or science of national char- 
 acter, is a hopelessly unscientific conception, 
 from which he might have been saved by the 
 analogy of the economic science which he did 
 study. It was a mere blind alley, as he tacitly 
 recognised by turning away from it. And other 
 men of his day fared no better. It is not scientific 
 historiography to set out as Maine did with the 
 assumption that the vast complex of ancient 
 1 Address cited, 1885, p. 55.
 
 16 THE ECONOMICS OF PROGRESS 
 
 evolution is to be solved by taking Genesis as 
 your groundwork. Maine's Ancient Law is now 
 discredited because, professing to be historically 
 inductive, he was not so, but simply backed 
 tradition against preliminary scientific hypo- 
 theses. His formula of progressive and un- 
 progressive societies is a bad historical fallacy, 
 corrected long before his day by men whom he 
 would not take the trouble to read, and finally 
 receded from by himself. And where Maine 
 fails the a priori sociologists, who despised 
 psychology and economic analysis, and thought 
 to reach economico-sociological science by 
 hand-to-mouth induction from lightly-scanned 
 historical records, have failed much more 
 seriously. 
 
 But here again let me guard myself. It is 
 because I profoundly believe in the possibility 
 and the necessity of sociology that I condemn 
 the unscientific handling of the task. Since 
 1885, truly scientific work has been done in 
 sociology, in France and in the United States, 
 by men who did not make light of the methods 
 of economic science. They take the right course 
 of studying their science upon its own lines. 
 You will never attain a scientific sociology save 
 by the scientific cultivation of all the ancillary 
 human sciences ; and that can never be attained 
 by men who make light of the first requisites 
 of scientific method. Obviously there is no
 
 THE AIM OF ECONOMIC SCIENCE 17 
 
 more important branch of history than that of 
 social conditions; and those who competently 
 cultivate it may do a great service to economic 
 knowledge. But when they set out by assuming 
 that they are either superseding or constituting 
 economic science proper; that the work of 
 tracing guild history and medieval commerce 
 and feudal production and tenures and so on 
 does away with Ricardian analysis of economic 
 transactions, they are partly undoing their own 
 useful work. 
 
 So much am I in sympathy with that work 
 that I believe it can be made in a high degree 
 helpful to the spread of economic science, properly 
 so-called. Just as in the teaching of logic, so 
 in the teaching of economics, there is a danger 
 that concentration on an abstract analysis shall 
 make the study repellent to the many people 
 who have no natural bias to such analysis. It 
 is an old complaint that logic in particular is 
 turned to utter futility for youth by its reduction 
 to a set of symbolisms in which one can see no 
 relation to the actual tasks of reasoning on living 
 problems. To teach logic by way of reasoning 
 on interesting questions, instead of dead formulas, 
 is a method so obviously sound that only the 
 fear of raising " burning " questions in the 
 academic world can explain its avoidance. In 
 the case of economics, save perhaps as regards 
 the one issue of free trade, there is no such
 
 18 THE ECONOMICS OF PROGRESS 
 
 excuse; and from personal experience I can 
 recommend to teachers the habitual use of 
 historical illustration in economic teaching. It 
 vitalises the theoretic knowledge. But, observe, 
 the theoretic science must be studied at the same 
 time, if the historic procedure is to be sound. 
 The grossest economic errors are to be found 
 put forth by living historians of the highest 
 eminence when they attempt economic solutions 
 without proper economic preparation. 
 
 When, then. Professor Marshall saw fit to 
 censure Ricardo on the score that he " omitted " 
 certain lines of historic or social investigation, ^ 
 I cannot but think that he lapsed in critical 
 method. Ricardo was not a professor, called 
 upon to convey a complete course of instruction, 
 lasting through years, to a set of special students. 
 There were no economic chairs in his time, and 
 there was very little economic science. We know 
 from John Mill that Ricardo would not have 
 written his book at all but for the entreaty and 
 strong encouragement of James Mill. He was 
 from his boyhood a stockbroker, and, having 
 made his fortune, he devoted himself with the 
 most marked public spirit to public service, 
 sitting for four years in Parliament, and all 
 along setting himself to elucidate the great 
 economic problems of the hour — notably that of 
 currency and that of the Corn Laws. His 
 ^ Inaugural Address, 1885, p. 19.
 
 THE AIM OF ECONOMIC SCIENCE 19 
 
 principal book, which, be it observed, was not 
 entitled by him " Principles," but "On the Prin- 
 ciples of Political Economy and Taxation," he 
 published in 1817, while he was still on the 
 Stock Exchange. Leaving that arena, having 
 made his fortune, he entered Parliament in 1819, 
 with only four years of life before him. In that 
 period, besides attending carefully to his duties 
 in the House, he wrote his essay on the Funding 
 System (1820) ; his masterly pamphlet on " Pro- 
 tection to Agriculture " (1822) ; and his " Plan 
 for the Establishment of a National Bank " 
 (1823). If I did not beUeve that Professor 
 Marshall has thought better of the criticism he 
 put forth in 1885, I should be disposed to com- 
 ment adversely on the kind of blame he passed 
 upon the work of a man who so filled his little 
 leisure with public service of the rarest value. 
 But the Professor has embodied those parts of 
 his address in his Principles of Economics, where 
 he has brought the charge of narrowness against 
 other great pioneer thinkers on social science, 
 not on the score of any bigoted rejection of truth, 
 but simply because they left something to be 
 done by their successors. It is as if one should 
 blame Copernicus for not doing the work of 
 Kepler and Newton. 
 
 And this has maintained the fashion of unjust 
 disparagement of a man whose work visibly 
 widened the boundaries of science, and who,
 
 20 THE ECONOMICS OF PROGRESS 
 
 when tried by the fair test of his capacity 
 relatively to the best ability of his own time, can 
 be seen to be head and shoulders above all in 
 his chosen field. There are standards and tests 
 of right criticism as well as of right reasoning 
 in economics ; and when we find the anonymous 
 Britannica article on Ricardo imputing not only 
 " narrowness " but, in effect, hardness of heart 
 to one of the most actively benevolent of men, 
 we are entitled to ask those who constantly 
 put forward a demand that economics should 
 be a sympathetic study of " the real life of men 
 as they actually are or have been," whether 
 they think they are conducting by that standard 
 their own criticism, where beyond all question 
 it ought to be applied. While some English 
 writers thus uncritically belittle a great founder 
 of English economic science, Wilhelm Roscher, 
 the most learned of all writers on economics, 
 and the modern founder, after Smith and Jones, 
 of economico-historical methods, avowed that 
 he " gratefully availed himself " of Ricardo's 
 results; and it is the verdict of Sidgwick that 
 there has never been " any fundamental disagree- 
 ment between Ricardians and Roscherians as 
 to the right method of studying the history of 
 economic facts." ^ 
 
 How should there be ? Economic historio- 
 graphy, as hitherto practised, is not really a 
 
 ^ Address cited, p. 32.
 
 THE AIM OF ECONOMIC SCIENCE 21 
 
 rival economic method. It is not a study of 
 economic transactions as such, but a tracing of 
 economic institutions and hfe conditions gener- 
 ally. At most, it sometimes checks a modern 
 generalisation by old data — seldom to much 
 purpose. Ricardo, a man of business, whose 
 little leisure had been given to economic and 
 physical science, and who had little further help 
 to the knowledge of past economic history than 
 had been given him by Adam Smith, dealt with 
 economic problems as they lay before him. In 
 regard to the problems of value, price, rent, 
 wages, profits, money, and taxation, he took the 
 only possible economic method, that of analysis 
 of tendency as measurable by money motive. 
 It is, as Cairnes pointed out, the logical substitute 
 for experiment in matters in which there can be 
 no experiment. Roscher's method was to take 
 either theories of social forms or the theoretic 
 results which Ricardo and others had yielded 
 him, and go to history for illustrations — a method 
 which deserves only praise. But if it be suggested 
 that Roscher has added more to economic know- 
 ledge than Ricardo did — a thing which Roscher 
 himself would never have claimed — I venture an 
 emphatic denial. No new economic truth is 
 associated with the name of Roscher— though he 
 had the merit of looking at all the doctrines of 
 the past, and partly recognising that there was 
 something in the case put by Lauderdale and
 
 22 THE ECONOMICS OF PROGRESS 
 
 Sismondi against Smith's optimistic belief in 
 the absolute economic virtue of parsimony. 
 
 I say this with nothing but good-will for 
 Roscher, for whose research every student of 
 economics ought to be grateful. He was one of 
 the last of the Germans to teach economics in 
 an international spirit; and in his Politik he 
 made a manful stand against Csesarism at the 
 height of the Bismarckian era. But that does 
 not make him a great economic thinker. In 
 the same volume of the Britannica in which 
 Ricardo is disparaged, Roscher, by one of the 
 pleasing chances of cyclopsedics, gets scant 
 praise ; and his way of contrasting the historic 
 with the " philosophic " method in economics 
 is pronounced " unfortunate." Professor Mar- 
 shall, on the other hand, declares ^ that — 
 
 " it would be difficult to over-rate the importance 
 of the work that has been done by the great 
 leaders of the school in tracing the history of 
 economic habits and institutions. It is one of 
 the chief achievements of the age, and is an 
 addition of the highest value to the wealth of the 
 world. It has done more than anything else 
 to broaden our ideas, to increase our knowledge 
 of ourselves, and to help us to understand the 
 central plan as it were of the Divine government 
 of the world." 
 
 When a distinguished professor of economics 
 writes in that strain, we are entitled to ask 
 ^ Address cited, p. 39.
 
 THE AIM OF ECONOMIC SCIENCE 23 
 
 critically what he means. In the same address, 
 just before this panegyric, Professor Marshall had 
 emphatically declared ^ that " It is vain to speak 
 of the higher authority of a unified social science " 
 — here agreeing with Professor Sidgwick. " Econo- 
 mists," he adds, " would gladly find shelter under 
 its wing " if it existed. " But it does not exist ; 
 it shows no signs of coming into existence.'''' What 
 then is the meaning of that pronouncement as 
 to the " great achievement " of the historico- 
 economic school in helping us "to understand 
 the central plan as it were of the Divine Govern- 
 ment of the world " ? If sociology, the " unified 
 social science," not only did not exist but showed 
 no signs of coming into existence, what can be 
 the justification of the other hyperbole ? 
 
 The problem in Professor Marshall's case seems 
 insoluble; and I can but add that when he 
 writes further ^ of the " boundless gratitude " due 
 to the great thinkers of the historic school," he 
 seems to me to add misuse of language to hyper- 
 bole. Ricardo he admits ^ to have " added more 
 to the theory [of economics] than any one else " ; 
 but to him no gratitude is offered ; only reproach 
 for narrowness, because he did not in his little 
 time, spent in clearing the path of theory through 
 the jungle of the phenomena, devote himself 
 also to a wide historic or social survey. But if 
 that reproach were as just as it is unjudicial, 
 1 p. 35. 2 p. 51. 3 p. 32.
 
 24 THE ECONOMICS OF PROGRESS 
 
 it would still be unwarrantable to speak of the 
 historic researchers as " great thinkers." No 
 English usage, academic or other, warrants such 
 a description of such men. Roscher justly gave 
 that title of " great thinker " to Ricardo,^ he 
 did not claim to have superseded him. Diligence 
 in the tracing of economic history, without the 
 attainment of any new sociological law — and 
 Professor Marshall expressly declares that none 
 has been attained — is not a display of great 
 thinking. 
 
 The residual fact is that science in history has 
 advanced slowly because the historians, whether 
 economic or not, are not only not often great 
 thinkers, but too often not even exact thinkers 
 in the matter of induction as to historic causa- 
 tion. Professor Marshall himself has pointed 
 out, as Bagehot and Cairnes and Mill did before 
 him, and as Sidgwick did contemporaneously, 
 that sociological facts do not yield their theoretic 
 interpretation by the simple statement or colla- 
 tion of them. There too there is needed a 
 process of historical analysis, a calculus of the 
 play and consequence of motives, just as in 
 economics proper ; and of such scientific analysis 
 not one historian in ten ever seems to tliink. 
 The most diligent workers, the men who faith- 
 fully master all the documents, constantly seem 
 to suppose that beyond that no intellectual effort 
 
 1 Die Grundlagen der Nation alokonomie, § 154, note 7.
 
 THE AIM OF ECONOMIC SCIENCE 25 
 
 is required; that the comment, the interpre- 
 tation, the sociological induction and deduction, 
 are to be done by simply offering more or less 
 plausible reflections. I freely grant that most 
 of the economists have at times talked sheer 
 nonsense — something worse than erroneous 
 reasoning. Smith did, when he affirmed that 
 nature helped in agriculture but not in manu- 
 factures; McCulloch did when, to prove that 
 labour was needed to create value, he spoke of 
 the industrial effort of plucking fruit or raising 
 water to the mouth. ^ The brilliant and accom- 
 plished Cairnes did when he alleged ^ that " the 
 wages of a day-labourer and the salary of a 
 minister of state depend on the same principle — 
 the demand for and supply of their services." 
 Mill did — and this to my thinking is the most 
 distressing instance of all — when he argued 
 round and round in a vain circle to prove that 
 " demand for commodities is not demand for 
 labour." Needless to say, I shall be lucky if 
 you do not detect some nonsense in these lectures. 
 But I confidently affirm that nonsense as hopeless 
 as any of these samples is constantly being 
 propounded by historians in their attempted 
 explanations of historical evolution. 
 
 Time does not permit of any full exhibition 
 of examples. We may sum up that, just because 
 
 ^ Principles of Political Economy, 2nd ed,, 1830, p. 66. 
 2 Logical Method of Political Economy, 2nd ed., p. 12.
 
 26 THE ECONOMICS OF PROGRESS 
 
 of the greater breadth and complexity of the 
 issues involved, empiricism in historical interpre- 
 tation means a greater depth of error; and the 
 further circumstance that there is so little 
 systematic criticism of historical generalisation, 
 as compared with the constant play of it in 
 economics, leaves the scientific interpretation of 
 history in many hands in a state that may fairly 
 be called lamentable. But, to return to our 
 special theme, even the specialists in economic 
 history, who are supposed by the champions of 
 that study to be in a position to reach truths 
 that economic analysis cannot yield, have wholly 
 failed to justify those large pretensions. As 
 Professor Sidgwick put it a generation ago,^ 
 when we turn to the economic content of their 
 work as done in Germany " we find everywhere 
 the old economic motives assumed and the old 
 method unhesitatingly applied. The proof of 
 the pudding, as the proverb says, is in the eating; 
 but our historical friends make no attempt to 
 set before us the new economic pudding which 
 their large phrases seemed to promise. It is 
 only the old pudding with a little more ethical 
 sauce and a little more garnish of historical 
 illustrations." Much admirable research in eco- 
 nomic history has been done since Sidgwick so 
 spoke ; but his generalisation holds good, and 
 that of necessity. 
 
 ^ Address cited, p. 36.
 
 THE AIM OF ECONOMIC SCIENCE 27 
 
 In our own day the value of the ethical sauce 
 becomes a rather pungently interesting question. 
 For if it was at all the business of the economist 
 to concern himself as such with ethics in the 
 economic relation, the need must have been at 
 least as pressing in international as in national 
 affairs, were it only because international ethic 
 is notoriously the more backward, and is on the 
 other hand clearly a factor in international 
 trade. And if there is anything on which 
 economic history might be expected to throw 
 light, it would be on international relations. 
 Now, among the German literati who have taken 
 part in the debate on the causation and guilt 
 of the present war, there have been at least three 
 economists of the historical school or schools — 
 Schmoller, Brentano, and Sombart. Of Brentano 
 I have to say with special regret that even before 
 the war he put forward the assertion that if 
 Britain would only consent to recognise private 
 property at sea in naval war, the German policy 
 in naval armaments would soon change ; whereas 
 the facts were, as he could easily have ascertained 
 and ought to have known, (1) that the British 
 Government had repeatedly expressed to the 
 German its willingness to make private property 
 at sea immune, if only the German Government 
 would make such agreement a basis for concurrent 
 restriction of naval armaments ; and (2) that the 
 appeal was met again and again by an absolute
 
 28 THE ECONOMICS OF PROGRESS 
 
 refusal. And now the German Government has 
 made an end of every shred of right of private 
 property in war on land that was ever recognised 
 by jurists, save only in so far as it respects some 
 foreign rights in order to secure its own. 
 
 Schmoller was commonly bracketed with 
 Brentano as a reformer in his earlier days; and 
 in an old polemic with Treitschke he made a 
 stand for principles of sympathy and social 
 amelioration as against the brutal conservatism 
 of his colleague. But in making that stand he 
 avowed that he had been entirely at one with 
 Treitschke in his ideas of historical interpreta- 
 tion; that is to say, that he was a German 
 Nationalist and a German nation-hater. To some 
 of us it is therefore not in the least surprising 
 to learn that Schmoller, who died the other day, 
 has contributed to war literature the prediction 
 that " England will seize Calais." " Fortun- 
 ately," writes Dr. Epstein, who communicates the 
 report in the Economic Journal,^ " it will not 
 undermine his position as a scholar." Possibly 
 not ; but what about his repute as an interpreter 
 of history, which is what he mainly undertook 
 to be ? What is the thinking or judging power 
 of the mind that gave out that prediction ? 
 And when a man shows himself thus devoid 
 of comprehension as regards the history of his 
 own day, what reason is there for supposing Mm 
 
 A Sept. 1917, p. 438.
 
 THE AIM OF ECONOMIC SCIENCE 29 
 
 to have understood the history of the past? 
 The critical account of SchmoUer would appear 
 to be that he stood with Trcitschke at a historic 
 standpoint of primary racial or national prejudice, 
 reading international history as a mere unmoral 
 partisan, but differed from Treitschke in pre- 
 scribing a sympathetic temper towards Social 
 Democracy. In other words : "As much 
 Prussic acid as you like for other nations; but 
 sympathy for our own populace." 
 
 Of Schmoller we are told that " The English 
 classical economists did not appeal to his mind, 
 which was essentially realistic, abhorring all 
 dogma and theory and caring only for facts " ; 
 also that his influence as a teacher was immense, 
 and that he was the chief " Professor-maker " 
 for Germany in his day. So his has been the 
 influence which above all others may be supposed 
 to have shaped the ethic that served as " sauce " 
 in the German economico-historical teaching of 
 the last generation. It would seem to follow 
 that in the matter of playing " procuress to the 
 lords of hell " the post-Roscherian historical 
 school has outgone all the achievements falsely 
 ascribed to the Ricardians, who in their " narrow" 
 way were promoters of peace on earth. 
 
 To Sombart, who survives, must be accorded 
 the status of high-priest of war for war's sake 
 among the Germans of his generation. His book 
 on " Sociahsm and the Socialist Movement "
 
 30 THE ECONOMICS OF PROGRESS 
 
 he wound up with a dithyramb on the natural- 
 ness and the beneficence of war, " the father 
 of all things," this by way of making out 
 that " class war " is or may be a purifying and 
 elevating thing. War is " natural, just as much 
 as the thunderstorm is natural " — or, we might 
 add, as rape and murder are natural. " Only 
 he who regards war as something artificial, 
 brought about by wicked men, will think that 
 the motives of his opponents are wicked." How 
 then does the Sombartian gospel of war work 
 out for the World War ? " It is quite possible," 
 wrote Herr Sombart in tuning up for his dithy- 
 ramb, " to respect the man in one's opponent. 
 Have we not all been able to do so in our own 
 experience ? " That apparently referred to the 
 life of peace ; but the dithyramb expressly 
 justifies the position of " one who regards war 
 and struggle as having been the means of 
 bringing about all that has occurred in history." 
 Such is the promise; what is the proof, of 
 the pudding? In 1915, Professor Sombart pro- 
 duced a book on Handler und Helden, " Traders 
 and Heroes," in which, even as the Hero-Kaiser 
 pronounced on the "" contemptible little army," 
 the Professor discourses on the contemptible 
 British people. The very case of the tribute 
 paid by them to Captain von Miiller of the 
 Emden — the very case in which they avowed 
 their respect for a brave, dangerous, and yet
 
 THE AIM OF ECONOMIC SCIENCE 31 
 
 honourable enemy — ^this is taken by the learned 
 Professor as illustrating simply the debased and 
 " disgusting " English ideaUsation of " sport," 
 which is the correlative or symptom of English 
 ignobleness in general. So that the dithyrambist, 
 the high-priest of war, is not only himself in- 
 capable of respecting an opponent in war, but 
 is astounded and disgusted when the opponent 
 actually exhibits chivalrous respect for a chival- 
 rous foe. The mere use of the word " sporting" 
 has stupefied his judgment; he does not know 
 that it means " chivalrous "— " playing the game 
 honourably, but intrepidly." The high-priest of 
 holy war turns out to be the vulgar German of 
 war and commerce, foul-tongued, brutal, boastful 
 as a savage, drunk with self-praise, and therefore, 
 in his own eyes, God's Anointed. And all the 
 while the paean to war goes on, in full blast. 
 " Here the Godhead reveals itself " ; war is " a 
 holy thing, the holiest on earth " ; "we are a 
 people of warriors " ; " Militarism is Potsdam 
 and Weimar in sublime union." And the Rape 
 of Belgium, we may add, is doubtless Olympic. 
 
 After this, one returns with some sense of 
 security to the economists who took honesty 
 for granted in their analysis, and did not profess 
 to find much light for economic science in the 
 study of the historic past with its panorama of war 
 and rapine, slavery, cruelty and shame. Not that 
 they ever made light of historical investigation.
 
 32 THE ECONOMICS OF PROGRESS 
 
 I can imagine some of them studying that side 
 of things and coming to the conclusion that it 
 called for more scientific judgment than most 
 historians seem to possess. However that may 
 be, it is instructive to learn that in Germany 
 itself, led by the Treitschkes and the Schmollers 
 and the Sombarts to its present happy predica- 
 ment, " the historical school is said to have had 
 its day"; and that "in many quarters the 
 demand is made that business men should take 
 part in economic teaching at the universities." 
 It seems that the professors, so generally selected 
 by Schmoller, " are associated with the slaughter 
 of the pigs, which has brought them into bad 
 odour." ^ And though I am far from inferring 
 that because Ricardo was a good man of business, 
 therefore a man of business will make the best 
 economist, I can well believe that in the matter 
 of the pigs either a Ricardian or a man of 
 business would have given better counsel. 
 
 I will not at this point refer you further to 
 the Germans. But I will invite you to study the 
 work of our two English professors, Thorold Rogers 
 and Dr. Cunningham, on " The Economic Inter- 
 pretation of History " and " The Growth of 
 English Industry and Commerce," and say 
 whether they yield any new scientific light on 
 economic problems. You will certainly find in 
 Cunningham valuable and interesting collections 
 
 ^ Dr. Epstein, in Econ. Journal, Sept. 1917, pp. 432-3.
 
 THE AIM OF ECONOMIC SCIENCE 33 
 
 of facts not to be gathered from the ordinary 
 histories; and to that extent you will very 
 usefully vivify your conceptions of historic evolu- 
 tion. But I warn you that in the first you will 
 find much rashly speculative and erroneous 
 treatment of historic fact; and in the second 
 some fallacious handling of economic inference 
 — ^when any inference is offered. 
 
 On his first page, Rogers protests that " in 
 nearly all histories, and in nearly all political 
 economy, the collection and interpretation of 
 economic facts have been habitually neglected." 
 The charge is quite true against ordinary his- 
 tories, which, even when they speak of commerce, 
 generally fail to indicate its exact nature and 
 its exact movement; and which as a rule seem 
 to take peoples in the past as having necessarily 
 subsisted somehow, without ever trying to realise 
 the how. Broadly speaking, they are con- 
 stantly dealing with the national organisations 
 and frictions of aggregates whose individual way 
 of life is taken for granted. But when Rogers 
 wrote, there had been produced scores of treatises 
 dealing with the economic life of many countries ; 
 and unless these are irrationally excluded from 
 his survey as being neither " histories " nor 
 " political economy," Rogers is simply denying 
 their existence. He seems to have known 
 nothing of German economics, or of the special 
 researches made in France and Italy. Arnold
 
 34 THE ECONOMICS OF PROGRESS 
 
 Toynbee, who could recognise the problem of 
 economic science, and who vindicated the " deduc- 
 tive method," had outUned a piece of industrial 
 history in terms of economic life much better 
 than Rogers has elucidated any period whatever. 
 And he took an amount of trouble about his 
 facts which Rogers never took. 
 
 One of Rogers's first accusations against " the 
 political economist of the later school," with 
 whom he appears to identify the Ricardians, is 
 that of " obtaining the largest possible result at 
 the least possible cost of labour " — in other 
 words, of sliirking as far as possible all labour. 
 He for his part claims to verify Ms conclusions. 
 Two pages later, we find liim affirming that in 
 the Plantagenet period England was " the only 
 wool-producing country in Europe." In the 
 next paragraph we are told that England had 
 a "practical monopoly"; and that this was 
 the result of the king's peace, seeing that in no 
 other country did husbandmen dare to keep 
 sheep. In the next paragraph, the monopoly 
 again becomes " complete." If any Ricardian 
 economist had ever talked like this, there would 
 have been some justification for an attack on 
 his indolent " method." No one ever did. It is 
 left for the professed zealot of historic -economic 
 verification to write economic history with no 
 verification, and, while professing a purely induc- 
 tive method, to proceed on deduction of the most
 
 THE AIM OF ECONOMIC SCIENCE 35 
 
 reckless kind. The assertion under notice is 
 wildly wrong. Spain and Portugal were export- 
 ing wool all the time. About the year 1338, 
 Florence, having coarse wool of her own, was 
 importing finer wools " from Tunis, Barbary, 
 Spain, Portugal, Flanders, and lastly even from 
 England.'' In 1308, her large manufacture of 
 coarse woollens had been carried on " with no 
 intermixture of English wool." ^ In 1262, 
 mention is made of importation of Spanish wool 
 into England.^ Flanders imported her wool 
 chiefly from England and Spain, through the 
 whole period,^ though the English was then 
 reckoned the best.* 
 
 Observe here that Rogers reaches his false fact 
 by way of spurious deduction — trying the very 
 economic method which he is always denouncing, 
 
 ^ Villari, First Centuries of Florentine History, 1901, 
 p. 319, citing G. Villani. 
 
 2 Cunningham, English Industry and Commerce, 4th ed., 
 I, 314, note. 
 
 ^ Gibbins, Hist, of Commerce in Europe, 1891, p. 83; 
 H. Schcrcr, Hidoire du Commerce, Fr.tr. 1857, i. 368, 371-2. 
 
 ^ When Smith A\Tote, this was no longer the fact. Enghsh 
 manufacturers continued to support their demands for pro- 
 tection by asserting that Enghsh wool was the best, and 
 essential to the finer manufactures of other countries. 
 Smith replied : " It is so perfectly false that English wool 
 is in any respect necessary for the making of fine cloth, 
 that it is altogether unfit for it. Fine cloth is made alto- 
 gether of Spanish wool. English wool cannot be even so 
 mixed with Spanish wool as to enter into the composition 
 without spoiling and degrading, in some degree, the fabric 
 of the cloth " (Bk. IV, Ch. VIII).
 
 36 THE ECONOMICS OF PROGRESS 
 
 and which he misappHes because he knew not 
 how to handle it. The export duty on Enghsh 
 wool, he alleges, was entirely paid by the foreign 
 buyer; and this, he says, could happen only 
 under four conditions : (1) the article taxed 
 must be a necessary of life, for which (2) there 
 could be no substitute, and (3) in the use of 
 which there is an appreciable economy; and 
 (4) there must be " absolutely no other source 
 of supply." Taking for granted without proving 
 it, that the English export duty on wool was 
 wholly paid by the foreigner, he deduces that 
 England must have been the only source of 
 supply. All this parade of spurious " Ricardian " 
 argument falls, then, at once, since the last 
 condition did not exist. 
 
 And this is typical of Rogers's work. On the 
 very next page he tells how he discovered a 
 cause, " hitherto unsuspected," for the " sudden 
 and enormous increase of price in all Eastern 
 products at the close of the first quarter of the 
 sixteenth century." As to this sudden rise in 
 the price of all Eastern products, no detail or 
 reference is given by Rogers in all his many 
 reiterations of this assertion ; but that may pass, 
 in view of the prodigy of his explanation. Look- 
 ing for the cause, he found it in " the conquest 
 of Egypt " by SeHm I (1517), which " blocked " 
 the only remaining road that the Old World 
 knew to India. All this again is hallucination.
 
 THE AIM OF ECONOMIC SCIENCE 37 
 
 The causation alleged was certainly " hitherto 
 unsuspected," because it did not happen. Selim 
 did not close Egypt : he made a new treaty with 
 the Venetians, and their Eastern trade went on 
 as before. 
 
 Now, this false fact, which Rogers alleges in 
 four of his books, and four times in one of them,i 
 is by him constantly and confidently affirmed to 
 explain not only the alleged rise in prices but the 
 decay of the Italian cities ; the ruin of the trade 
 of Alexandria, an alleged cessation of the trade of 
 the Rhine and the Danube, which impoverished 
 the German barons, who thereupon pillaged their 
 peasantry, thus bringing about the Peasants' 
 War, and yet other phenomena. " Nothing," 
 he assures us, " has been more entirely ignored 
 by our paste-and-scissors historians than this 
 fact and its consequences." ^ " Historians," he 
 says again, " are of course completely ignorant 
 of anything but the fact." And he continues : 
 " This event entirely destroyed commerce with 
 the East, of which the centre was, and had been 
 for two centuries at least, the city of Alexandria ; 
 and it was only in time, and that a time long 
 deferred, that it was restored by means of the 
 Cape Passage." ^ The historic facts being (1) 
 
 ^ Econ. Interp. of Hist., p. 11 ; Six Centuries of Work 
 and Wages, p. 157; Holland, p. 49; Indust. and Comm. 
 Hut. of England, pp. 8, 93, 3G9, 400. 
 
 ^ Last cit., p. 93. 
 
 2 Id., pp. 400-1. Cp. Six Centuries, as cited. 
 
 202956
 
 38 THE ECONOMICS OF PROGRESS 
 
 that, as aforesaid, the trade through Egypt still 
 went on; (2) that the Eastern trade through 
 Aleppo increased under the Ottomans, Alexandria 
 being not the sole centre for that trade ; (3) that 
 the Cape Passage was established by Vasco di 
 Gama in 1498; and (4) that a large Portuguese 
 trade with the East followed immediately, so 
 that as early as 1503 pepper was brought to 
 England in Portuguese ships. ^ 
 
 Thus the whole thesis on the strength of which 
 Rogers flouts all the historians, as he had flouted 
 all the economists, is a tissue of gross historic 
 errors. He burkes the real economic history, and 
 invents a false one. Of verification he never 
 dreams. Both Scherer and Heyd give the facts 
 as to the continuance of Eastern trade by Egypt 
 and Syria after Selim's conquest ; ^ and the facts 
 as to the Portuguese trade by the Cape are 
 notorious. Rogers simply made a heedless guess, 
 and violently reaffirmed it many times over, with 
 a fusillade of aspersions to support it. 
 
 Take, yet again, his astonishing thesis, pro- 
 pounded in at least two of his books, that the 
 chief source of the silver supply of Europe, before 
 the discovery of the New World, was England.^ 
 For this " hitherto unsuspected " fact, in turn, 
 not a single historical testimony is offered. It 
 
 ^ Heyd, Hist, du Commerce du Levant, Fr. tr. 1886, ii, 526. 
 
 '■^ Rel's. in Evolution of States, p. 222. 
 
 3 Econ. Interp., p. 186; Indust. and Comm. Hist., p. 327.
 
 THE AIM OF ECONOMIC SCIENCE 89 
 
 is simply a blind guess put with an " I believe " : 
 the silver, he thinks, was extracted from sulphuret 
 of lead. Such working, we know, there was; 
 but that is the sole ground for the theory that 
 it yielded the main silver supply of Europe— a 
 thing incredible,^ and never hinted at by any 
 chronicler; whereas there is abundant evidence 
 as to the output in Germany. ^ Such, then, is 
 the economic interpretation of history, as reached 
 by the inductive and deductive faculty of an 
 economist specially distinguished for his explosive 
 contempt of economic theory and his professed 
 concern for historic verification. Of all econo- 
 mic historians, past or present, Rogers is perhaps 
 the most untrustworthy. His generalisations in 
 regard to old agricultural conditions, though pro- 
 fessedly founded on documents, are as untrust- 
 worthy as the others, seeing that he constantly 
 draws from his scanty data illicit inferences,^ 
 at which Ricardo would have stared. And though 
 Dr. Cunningham's historical work is incom- 
 parably superior in point of range and verifica- 
 tion, and often though not always corrects Rogers, 
 he hardly pretends to reach general truths; so 
 that of guidance for action in respect of our own 
 social problems you will find in him, I may say, 
 surprisingly little. 
 
 ^ Cp. Cunningham, II, 3, note 3. 
 
 2 Evolution of States, p. 460. 
 
 3 Cp. Cunningham, I, 327, 399, 449, notes ; 450, 522,
 
 40 THE ECONOMICS OF PROGRESS 
 
 That criterion of guidance for action raises 
 another old and recurrent dispute. Professor 
 Sidgwick in the last passage cited from him 
 speaks of the " ethical sauce " served up by the 
 German historical school of economists. Now, 
 I will no more make light of the bearing of ethics 
 than I do of the importance of true history 
 in the discussion and comprehension of social 
 problems. But again I will venture to vindicate 
 the methods of science proper in economics as 
 against those who, before and after Ruskin, have 
 reproached economists for positing an " economic 
 man " who is entirely selfish, and for inquiring 
 only how things go in industry and commerce, 
 not how they ought to go, or how often they 
 go morally wrong. Professor Marshall casts 
 his stone in this direction also, censuring the 
 Ricardian economists for lack of sympathy with 
 labour, and so on. Again I rejoin with a charge 
 of bad criticism ; and repeat that there are 
 principles of criticism as well as of economics; 
 that they are partly ethical; and that this sort 
 of criticism is unethical as well as unscientific. 
 
 Ricardo did not profess in his writings to 
 discuss the ethics of the social system. Even in 
 politics, he was more occupied in elucidating 
 difficult concrete problems which few people 
 even tried to understand than in appealing to 
 moral emotion with demands for a radical recon- 
 struction of society in the years immediately
 
 THE AIM OF ECONOMIC SCIENCE 41 
 
 following the battle of Waterloo, when English 
 public life was more brutally reactionary than 
 it has ever been in later periods. Did he then do 
 a disservice to the cause of labour? Professor 
 Marshall blames him on the score of *' giving an 
 opportunity to sciolists to misapply economic 
 doctrines." By hook or crook, Ricardo must be 
 made responsible for not having put everything 
 right. Did his expansive successors, then, do 
 so much better ? Mill supplies, if not " ethical 
 sauce," at least an abundance of sympathetic 
 language ; and he elaborated the sophism about 
 demand for commodities not being demand for 
 labour by way of showing how good citizens 
 might help labour. As it was a pure nullity, it 
 could yield no fruit in action. On the other 
 hand, he had adopted and formulated the 
 " Wages Fund " theory, which was more fre- 
 quently than any other economic formula 
 employed by " sciolists " to condemn strikes. 
 And in the end he withdrew that formula, as he 
 well might, since that too was an argument in 
 a circle. 
 
 What then did Ricardo teach on the same 
 problem ? Not, as Marx would have it, an " iron 
 law of wages " : he taught on the contrary 
 (1) that wages, other things remaining the same, 
 could increase only by curtailing profits — mean- 
 ing the rate of profit; and (2) that " the friends 
 of humanity cannot but wish that in all countries 
 
 J
 
 42 THE ECONOMICS OF PROGRESS 
 
 the labouring classes should have a taste for 
 comforts and enjoyments, and that they should 
 be stimulated by all legal means in their exertions 
 to procure them. There cannot be a better 
 security against a superabundant population." 
 Barring the later discovery of prudential checks,/ 
 we have here the whole economic truth, and 
 
 • that philanthropically put. As against this, I 
 can see neither point nor justice in Professor 
 
 ".Marshall's assertion that the Ricardians 
 
 " did not see how liable to change are the habits 
 and institutions of industry : in particular they 
 did not see that the poverty of the poor is the 
 chief cause of the weakness and inefficiency 
 which are the cause of their poverty; they had 
 not the faith that modern economists have in 
 the possibility of a vast improvement in the 
 condition of the working classes." ^ 
 
 Ricardo did see and say these things; he did 
 have the faith denied him, barring the scope of 
 the term " vast " ; and if after a hundred years 
 Professor Marshall will say that the improvement 
 has been vast, I should say that Ricardo did 
 believe in the possibility of a vast improvement. 
 Nor can I see how, when he plainly posited the 
 improvability of the position of labour, he can 
 be said to have " regarded man as, so to speak, 
 a constant quantity." ^ He expressly dwelt on 
 the great differences in the development of the 
 mass in different countries. 
 
 ^ Inaugural Lecture, pp. 16-17. ^ Id., p. 15. 
 
 I
 
 THE AIM OF ECONOMIC SCIENCE 43 
 
 If Professor Marshall meant that Ricardo took 
 man to be a " constant quantity " in respect of 
 his remaining normally a seeker of his own 
 advantage, the issue would be different. But I 
 do not think he can have meant that; for he 
 makes the same assumption in his own econo- 
 mics ; though his way of echoing the old platitude 
 that men of business are in general occupied in 
 making money for their families raises some 
 dubiety. It is to be regretted that such issues 
 should still be raised. Who, in the name of 
 common sense, ever doubted that men see in 
 the well-being of their families their own advan- 
 tage ? And who was ever disturbed by being 
 called selfish for seeking that ? As handled even 
 by Professor Marshall, the debate on the " selfish- 
 ness " of the " economic man " is really idle. 
 Selfishness as a term of reprobation is valid only 
 against wilful disregard of the equalitarian claims 
 of others : applied to ordinary economic conduct 
 it is a misuse of language. 
 
 But here we are reminded that a considerable 
 economic school in Germany over a genera- 
 tion ago was denouncing the " selfishness " of 
 " Smithianismus " in general, and loudly de- 
 manding a higher tone or a loftier vocabulary 
 of prescription in regard to economic action. 
 We have now had the proof of the pudding in 
 regard to that profession of lofty motive. For 
 twelve or twenty years past, I am told, it was
 
 44 THE ECONOMICS OF PROGRESS 
 
 impossible to find economics taught as economics 
 in any German class-room : everywhere the 
 science was subordinated to the preaching of the 
 gospel of German national advancement by com- 
 mercial and political means. And now we have 
 academic Germany effusively united over the 
 war in which that gospel has culminated. From 
 a blatant profession of a wordy idealism we 
 attain to the foulest dream of national rapine 
 that ever corrupted a nation or devastated the 
 earth. 
 
 With emphasis, I invite you to reaffirm that 
 honest trade does not profess to be more or 
 better than trade; that the "economic man" 
 of the economists is not an abstract prodigy of 
 selfishness, but the normal economic man of 
 commerce, who is honest and law-abiding and 
 likes to be on good terms with his customers; 
 that such pursuit of gain is the natural and normal 
 economic motive of mankind; and that it is by 
 enlightening men all round, to the end of enab- 
 ling them to choose the best course for all, and 
 to discriminate sanely between orders of gain, 
 that economic life is to be raised. German 
 Socialism has added its " ethical sauce " to 
 economic theory; and German Socialism is up 
 to the neck in the policy which calls German 
 aggression self-defence. It seems safer to be 
 simply scientific. 
 
 For what have we seen as the outcome of all
 
 THE AIM OF ECONOMIC SCIENCE 45 
 
 the demands for a transcending of economic 
 science on the part of economists ? On the part 
 of the would-be sociologists, who disparaged 
 Ricardo, total failure to produce the sociology 
 they prescribed. It is another and later school 
 who have laid the foundations of a real socio- 
 logical science. On the part of Mill, abortive 
 sociology and a considerable body of economic 
 fallacy, with much good work, some bad pre- 
 scriptions, and some mistaken forecasts. On the 
 part of the vilipenders of analysis, and cham- 
 pions of historic verification, either a tissue of 
 historical untruth or — in the case of the really 
 scholarly men — a careful historical record which 
 makes little direct additions to our scientific 
 Comprehension of economic causation. On the 
 part of the ethicists in Germany, a final gospel 
 of burglary ; at home, what ? 
 
 Professor Marshall in his Principles of Econo- 
 mics presented himself as assiduously concerned 
 to work out the mathematics of " the law of 
 diminution of marginal utility " through sixteen 
 highly technical pages of small type. We do 
 not seem yet to have drowned analysis in either 
 ethical or philanthropic sauce. A few years after 
 feeling that he must blame the Ricardians 
 " much " for their " omissions " — that is, for 
 leaving something undone — we find Professor 
 Marshall avowing that all the abundant activity 
 of modern times had " only shown the more
 
 46 THE ECONOMICS OF PROGRESS 
 
 clearly that economic science is and must be one 
 of slow and continuous growth." Ricardo, it 
 appears, has still " added most to economic 
 theory." As regards ethical forces, in the Pro- 
 fessor's work (he says) " no attempt is made to 
 exclude the influence of any motives, the action 
 of which is regular, merely because they are 
 altruistic." But what difference that makes in 
 the mathematics of the law of diminution of 
 marginal utility, or any other economic con- 
 ception, I have not been able to discover. 
 Perhaps Ricardo, who subscribed to nearly every 
 charity in London, and ran at his own expense 
 an almshouse and two country schools, may not 
 be found very seriously attainted by the new 
 economics in 1917, the centenary year of the 
 first issue of Ms book. 
 
 The simple fact is that the earlier British 
 economists left out refinements about the indi- 
 vidual modifications of economic motive because 
 they took for granted, to begin with, that 
 they were dealing with the action of normally 
 honest men, and normally sympathetic men. 
 They knew perfectly well — they could not help 
 knowing — that some men drive harder bargains 
 than others do; that most men like to be on 
 good terms with their customers, and will often 
 "cut prices" on that account; that good men 
 in trade help each other; that good employers 
 will at times bear loss to keep their men in
 
 THE AIM OF ECONOMIC SCIENCE 47 
 
 employment ; and that hard men, on the other 
 hand, will often get bad service, and injure their 
 own trade. But they neither included nor 
 excluded such variations, simply because it was 
 not their scientific business to do so. They aimed 
 at finding the general laws of general action. 
 Ricardo must have known perfectly well that 
 what might be termed " customary rent " actually 
 existed in some cases in England in his own day, 
 as it does to some extent in our day. He did 
 not discuss it, because it admitted of no economic 
 estimate. He wrote not for carpers but for men 
 intent on reaching general economic truths. 
 
 And the men who followed him, whether or 
 not they agreed with him, as a rule reasoned in 
 the same scientific spirit. They certainly took 
 for granted normal honesty in trade. If any one 
 of them sinned in seeming to " exclude " that, 
 it was John Mill, who in his essay " On the Defi- 
 nition of Political Economy," after avowing that 
 " there is perhaps no action of a man's life in 
 which he is neither under the immediate nor 
 under the remote influence of any impulse but 
 the mere desire of wealth," proceeds to say 
 that " the political economist inquires what are 
 the actions which would be produced by this 
 desire, if, within the departments in question, it 
 were unimpeded by any other." ^ Now, that 
 is a gratuitous overstatement. The economist 
 
 ^ Essays on some Unsettled Questions, ed. 1874, pp. 139-40.
 
 48 THE ECONOMICS OF PROGRESS 
 
 always assumes, albeit tacitly, that the desire of 
 gain, in the transactions he is generalising, is 
 " impeded " by regard for law, honesty, and 
 normal reciprocity. To exclude these motives is 
 to falsify the definition. Of course Mill did not 
 really exclude them in his economic analysis. 
 Like his predecessors, he took them for granted, 
 simply ignoring divergence from these conditions, 
 as being incalculable, and irrelevant to his pur- 
 pose. He was not contemplating an economics 
 of piracy, though such a thing might conceiv- 
 ably be constructed — in Germany. And even 
 his gratuitous overstatement of the economic 
 theory never really misled anybody, though it 
 has perhaps stimulated gratuitous debate. 
 
 But one thing — among many others — Mill does 
 well and rightly say in that essay, which, written 
 eighty-seven years ago, sets forth, with only 
 some errors of formulation, the essence of the oft- 
 reopened argument on economic method. It is 
 this : " Political Economy does not of itself 
 instruct how to make a nation rich ; but whoever 
 would be qualified to judge of the means of 
 making a nation rich, must first be a political 
 economist." ^ That I take to be our guiding 
 principle in the consideration of what I have 
 taken leave to call " The Economics of Pro- i 
 gress." Economics is to politics what a science 
 
 1 Essays, as cited, p. 121. Cp. Senior, Polit. Econ., 2nd 
 ed., 1850, Introd., p. 3.
 
 \ 
 
 THE AIM OF ECONOMIC SCIENCE 49 
 
 is to a utilitarian art, what physiology is to 
 medicine, what mechanics is to bridge-building. 
 It is not the only science ancillary to politics,^ 
 but it is one of the most vitally important; 
 and if you seek to ignore or defy its truths in 
 your legislation you will infallibly work harm, 
 as a hundred governments have done through 
 hundreds of years. 
 
 It lies in the nature of the case that its guid- 
 ance is more often inhibitory than prescriptive. 
 Prescription is being constantly offered from all 
 quarters : there will never be any scarcity of 
 that; and the political economist, speaking as 
 a politician, may well offer his prescription like 
 another. And he does. All the economists, 
 broadly speaking, have been politicians. Smith 
 was : Ricardo was, and that not merely on 
 economic questions — he put forward in the House 
 of Commons one of the first and one of the best 
 pleas for the Ballot : the Mills were keen politi- 
 cians : Senior, Bagehot, Fawcett, Cairnes, Jevons 
 (Rogers, even !), were all much interested in 
 practical politics, economic and non-economic./ 
 And though I think they were generally rightV 
 they ran the common risk of being wrong in thei ' 
 
 ^ " To decide in each case how these [economic] cor - 
 elusions are to be acted upon belongs to the art of goverr ■ 
 ment, an art to which Political Economy is only one c ' • 
 many subservient sciences."— Senior, as cited. Compar ; 
 Sidgwick, Principles of Pol. Econ., Bk. Ill, Ch. I, as to th$ 
 " Art of Political Economy."
 
 50 THE ECONOMICS OF PROGRESS 
 
 political prescriptions, in spite of being econo- 
 mists. When Mill suggested the expediency of 
 legal restraints on marriage by way of checking 
 over-population, he gave the laissez-faire opti- 
 mist, Rickards, and later Rogers,^ an unfortunate 
 opportunity to protest, ^ and thereby to discredit 
 his cause. And where Mill, in a most valuable 
 section of his book, could thus err, less qualified 
 economists have erred from time to time. The 
 premature amateurs of social science, demand- 
 ing that political economy should play the 
 preceptor, far outwent Mill by suggesting such 
 things as a " Board of Public Economy " that 
 might control the applications of Capital, and a 
 systematic control of Consumption by " fiscal 
 regulations " and " application of honorary dis- 
 tinctions " ^ — proposals far in advance of scientific 
 preparation, and far more encouraging to fiscal 
 quackery than to right action. 
 
 Let us faithfully distinguish between individual 
 aspiration and scientific knowledge. The pur- 
 suit of social progress by legislative methods is 
 part of the search for the good. Economic 
 science is part of the search for the true. If you 
 impose the object of the first upon the actual 
 work of the second, you are wilfully importing 
 
 ^ Six Centuries, p. 524. 
 
 ^ Rickards, Population and Capital, 1854, p. 243. 
 
 ^ E. g. Jennings, Natural Elements of Political Economy, 
 1855, pp. 226, 268-9. Cp. pp. 200-5. The idea, it is worth 
 noting, has been appHed during the war.
 
 THE AIM OF ECONOMIC SCIENCE 51 
 
 the personal equation where it is your duty to 
 keep it out. The true, in this case, is not the 
 whole end in view : it is a means to an end. The 
 end of life, as Goethe has it, is an action, not a 
 thought. But true thought is essential to right 
 action. The true serves the good by giving light, 
 not heat. To accuse it of narrowness because it 
 does not offer you driving power is to be guilty 
 of narrowness. If you find the light inadequate, 
 try to get more ; but never pretend that your 
 heat is light; that your aspiration justifies your 
 plan. If you are concerned to transcend narrow- 
 ness, prove it by accepting light from any light- 
 giver with gratitude, instead of blaming him for 
 not giving more when he visibly laboured much 
 to produce what he did. 
 
 And, first and last, do not take for granted that 
 truth is easily reached; that the empirical in- 
 ference, the first induction, is the right one. 
 Nay, do not take for granted that the current 
 orthodox economic doctrine is true. Science has 
 no dogmas. It was unnecessary for Professor 
 Marshall to tell us, first, that he does not " assign 
 any universality to economic dogmas," and then 
 that " the only part of economic doctrine that 
 has any claim to universality has no dogmas." ^ 
 No science has any dogmas : it offers only 
 propositions which are one and all absolutely 
 open to debate. And I affirm that one general 
 ^ Inaugural Address, p. 25.
 
 52 THE ECONOMICS OF PROGRESS 
 
 proposition, laid down by Smith and by a multi- 
 tude of economists since, is essentially untrue. 
 
 But the bulk of current economic science I 
 take to be tested and sound, in the conditional 
 sense in which economic propositions are now 
 commonly put by economists — that is, as state- 
 ments of tendency. In one of his too frequent 
 divagations of mood — a " mood of recoil," as 
 Professor Ashley puts it — John Mill wrote that 
 " In political economy, for instance, empirical 
 laws of human nature are tacitly assumed by 
 English thinkers, which are calculated only for 
 Great Britain and the United States. Among 
 other things an intensity of competition is con- 
 stantly supposed, which, as a general mercantile 
 fact, exists in no country in the world except 
 these two." ^ That was written when he was on 
 the wild-goose chase of a Science of National 
 Character; and it is a bad fallacy — an attempt 
 to derive from national character what even on 
 his own view was a mere difference of degree 
 in the development of competition supposed to 
 result from the less forward state of French 
 manufacturers as compared with British and 
 American. Before Mill we find Sismondi, and 
 before Sismondi we find other French econo- 
 mists, noting the evil effects of competition ; and 
 in the work of Dunoyer, De la liberie du Travail, 
 written in the years before and after 1840, and 
 1 System of Logic, Bk. VI, Ch. IX, § 3.
 
 THE AIM OF ECONOMIC SCIENCE 53 
 
 published in collected form in 1845, we find not 
 only mention of an abundance of vehement 
 French discussion on the evils of competition, 
 but the express statement, that " among us it is 
 more developed than elsewhere ''^ ^ — this by an 
 economist who is arguing that competition is 
 everywhere impeded by a number of limitary 
 forces. So far can an economist divagate from 
 simple fact when he is bent on discrediting the 
 assumption of normal economic motive in indus- 
 trial countries. Dunoyer may have overstated 
 the case as to France ; but Mill's phrase is sheer 
 fable. 
 
 It was said of the late Stanley Jevons that he 
 became latterly obsessed — or possessed — by a 
 mania for contradicting Mill ; and I hope we shall 
 not imitate liim : we all owe Mill so much. It 
 would be pleasant to take from him, if we could, 
 our definition of political economy. There are a 
 hundred half-good definitions — all, as I said, 
 suggestive. But if we are to have a definition 
 at all it should be water-tight. Ricardo at- 
 tempted no definition; which was perhaps a 
 proof of his sagacity. James Mill offered the 
 simple and practical-looking one suggested by 
 the term itself, and originally meant to be 
 expressed by it — that political economy is in the 
 State what " economy," house management, is 
 in the home. But this is inaccurate : political 
 1 Work cited, I, 412-13.
 
 54 THE ECONOMICS OF PROGRESS 
 
 ^_^,^onomy on that view would bo the financial and 
 other management of the State. John Mill gave 
 several definitions, of which the best is the 
 earliest : " The science which treats of the pro- 
 duction and distribution of wealth, so far as they '| 
 depend upon the laws of human nature," or, 
 more briefly : " The science relating to the 
 moral or psychological laws of the production 
 and distribution of wealth." ^ 
 J But he goes on to avow that neither of these 
 y definitions is scientifically accurate, for lack of 
 limitation ; and he proceeds to say,^ among other 
 things, that political economy not only deals 
 merely with the pursuit of wealth in the social 
 state, but " predicts only such of the phenomena 
 of the social state as take place in consequence 
 of the pursuit of wealth." This is the definition 
 to which he refers in the Logic,^ where he repeats 
 and endorses it. Now, his own economics rightly 
 and very ably takes account of the phenomena 
 of population, including the spontaneous ten- 
 dency to increase and multiply; and that is 
 clearly not a thing that takes place in consequence 
 of the pursuit of wealth. The final definition, 
 then, is inexact. In the Principles it becomes 
 still more so : Political Economy is declared at 
 the outset " to investigate the nature of Wealth 
 and the laws of its production and distribution " ; 
 
 ^ Essays, as cited, p. 133. ^ p. 137. 
 
 3 Bk. VI, Ch. IX, § 3.
 
 THE AIM OF ECONOMIC SCIENCE 55 
 
 whereafter it has, of course, to be explained that 
 the science does not deal with the physical laws 
 of production, which are the subjects of other 
 sciences ; and there is no final formulation at all. 
 Still, we now see the way to the definition. 
 Cairnes, with Mill in view, offers at the close of 
 his second lecture on Logical Method two defini- 
 tions, of which the first is astonishingly clumsy, 
 while the second runs : " the science which traces 
 the phenomena of the production and distribu- 
 
 tion of wealth up to their causes in the principles 
 of human nature and the laws and events, 
 physical, political, and social, of the external j 
 world." We certainly have it all there ; but we 
 have more. Economists really cannot occupy 
 themselves in tracing the phenomena of the 
 production of, say, cotton and dyes up to their 
 causes in the physical laws of the external world. 
 Shall we not best get our definition by looking 
 at the constant drift of economic discussion, 
 which is the ascertainment of the proximate 
 conditions (or causes, or circumstances, or normal 
 tendencies) which determine the general distri- 
 bution of wealth in the industrial-social state ; 
 and, further, the causes, etc., which make for 
 increase ^ or decrease in the production of wealth ? 
 Does that leave anything out ? It covers the 
 
 ^ Mill, by denying the necessity for an increase in the 
 production of wealth (Bk. IV, Ch. VI, § 2), left no clear 
 ground for discussing production at all. 
 
 14
 
 56 THE ECONOMICS OF PROGRESS 
 
 phenomena and the causation of rent, profits, 
 wages, interest, and taxation ; and it takes into 
 account, as causal or conditional factors, educa- 
 tion, public health, laws, customs, doctrines, 
 superstitions, international policy, thrift prac- 
 tices, prolificacy, and parental prudence. 
 
 Following the custom, I will offer a second and 
 briefer definition of actual economics : " The 
 science of the proximate causation of the distribu- 
 tion of wealth, and of its increased production, 
 in the industrial-social state." And perhaps it 
 will be well to add that " wealth " means or 
 should mean, in economics, the aggregate of the 
 desirable things and services that are sharable 
 and are in demand; and that distribution of 
 wealth means distribution of shares of command 
 of wealth. As I have suggested, you might have 
 an economics of burglary ; or you might have an 
 economics of the savage state, or the gipsy state, 
 or of the Eskimo state, or of the Papal State. 
 But I don't in the least mind the reproach of 
 temporarily neglecting these aspects of human 
 life ; and I don't suppose you will. In fact, I 
 will avow that, like Ricardo, I shall discuss only 
 British rent, not metayer or ryot or serf rents ; 
 and that the progress I shall have mainly in view 
 is the progress of the industrial nations, though 
 I shall take for granted that we all desire the 
 progress of humanity in all its stages ; and may 
 have occasion to indicate that a concern for the
 
 THE AIM OF ECONOMIC SCIENCE 57 
 
 progress of the backward races would tend to 
 promote our ow^n. 
 
 So that a discussion of the Economics of 
 Progress will mean a discussion of the forms or 
 lines of economic causation which chiefly bear on 
 plans for the promotion of progress — or, to put 
 the case again more concisely — an inquiry as to 
 what economic conditions are most favourable to 
 progress, as defined at the outset. 
 
 Let me say finally that I do not dispute the 
 general truth of Mr. Hobson's thesis ^ that " the 
 art of social as of individual conduct must always 
 defy exact scientific guidance, the methods of 
 science being incompetent closely to predict or 
 direct the creative element in organic processes." 
 Clearly, the creative element, proximately con- 
 sidered, is the aspiration, the ideal, which science 
 does not dictate, but enlightens. Where the 
 aspiration is lacking, the light is unused. But it 
 gives just the kind of " guidance " that light can 
 give, and without it there is no salvation. 
 1 Work and Wealth, 1914, Pref., p. \iii.
 
 (C 
 
 II 
 
 THE ECONOMICS OF EDUCATION 
 
 Nearly seventy years ago Stuart Mill wrote : 
 A thing not yet well understood and recognised 
 is the economical value of the general diffusion 
 of intelligence among the people." ^ The pro- 
 position is no less true to-day. And yet if there 
 is anything upon which economists of all schools 
 are bound to agree, it is that a great increase in 
 the productivity of a nation is possible only 
 through the diffusion of new knowledge.^ Schemes 
 of " reconstruction " are not such novelties in 
 our history as some to-day seem to suppose. 
 They have abounded for centuries. To go back 
 no further than the half century after the Civil 
 War, we find already in that period a literature 
 which ranges from the mere pecuniary economics 
 
 ^ Principles of Political Economy, Bk. I, Ch. VII, § 5. 
 
 2 " The economic structure is not built up of a definite 
 quantity of dynamic force, in which the human units are 
 so many cogs, levers, and pulleys. The mental condition 
 of mankind is, when all is weighed, the greatest factor in 
 the complicated mechanism. ... To put the matter in 
 another way, social and economic evolution can proceed no 
 faster than the mental factor is capable of being attuned 
 to the new conception and outlook." — C. J. Melrose, Tfie 
 Data of Economics, 1915, pp. 113-14. 
 
 58
 
 THE ECONOMICS OF EDUCATION 59 
 
 of the mercantile system to schemes of systematic 
 national upbuilding. Here, for instance, as early 
 as 1677-81, is a book, not even named by Cossa, 
 of which the title tells its story : 
 
 Yarranton (Andrew) England's Improve- 
 ment by Sea and Land. To out -do the Dutch 
 without Fighting, to Pay Debts without Moneys, 
 to set at work all the Poor of England with the 
 Growth of our own Lands. To prevent un- 
 necessary Suits in Law ; with the Benefit of 
 a Voluntary Register. Directions where vast 
 quantities of Timber are to be had for the Build- 
 ing of Ships ; with the Advantage of making 
 the Great Rivers of England Navigable. Rules 
 to prevent Fires in London, and other Great 
 Cities; with directions how the several Com- 
 panies of Handicraftsmen in London may always 
 have cheap Bread and Drink. 4°. London, 1677. 
 
 England's Improvement by Sea and Land. 
 
 The Second Part. Containing I. An Account 
 of its scituation, and the Growths and Manu- 
 factures thereof. II. The Benefit and Necessity 
 of a Voluntary-Register. III. A Method for 
 Improving the Royal-Navy, lessening the Grow- 
 ing Power of France, and Obtaining the Fishery. 
 IV. Proposals for Fortifying and Securing Tan- 
 gier. ... V. Advantageous Proposals for the 
 City of London, for the Preventing of Fires 
 and Massacres. ... VI. The Way to make 
 New-Haven in Sussex fit to Receive Ships of 
 Burthen. VII. Seasonable Discourses of the 
 Tinn, Iron, Linncn, and Woollen Trades; with 
 Advantageous Proposals for Improving them 
 all. 4°. London, 1681. 
 
 Yarranton had been a London linendraper's
 
 60 THE ECONOMICS OF PROGRESS 
 
 apprentice in the reign of Charles I ; then, 
 " the shop being too narrow and short for his 
 large mind," he turned to a " country life " ; 
 whereafter he became a soldier in the Civil War. 
 In 1652 he "entered upon ironworks," and while 
 at that trade " made it his business to survey 
 the three great rivers of England, and some small 
 ones; and made two navigable, and a third 
 almost completed." He next " studied the great 
 weakness of the rye -lands, and the surfeit it was 
 then under by reason of their long tillage," and 
 " did by practick and theorick find out the reason 
 of its defection, as also of its recovery," setting 
 forth the remedy in his two books entitled 
 "Yarranton's Improvement by Clover," where- 
 by, he claimed, " great part of Worcestershire, 
 Gloucestershire, Herefordshire, Shropshire and 
 Staffordshire have doubled the value of the land, 
 by the husbandry discovered to them." Here, 
 then, unless he doth protest too much, is a 
 practical and capable " reconstruct or," well 
 worth listening to when he propounds schemes 
 for enriching the nation and giving productive 
 employment to the poor. 
 
 It would be fallacy to suppose that Yarranton 
 had no influence because it does not appear in 
 legislation : all intelligent propaganda makes for 
 mental change; and as he influenced agricultur- 
 ists he may well have influenced others. But 
 it is matter of history that his large hopes were
 
 THE ECONOMICS OF EDUCATION 61 
 
 not realised; and it is matter of common-sense 
 that they could not be. Such a general enriching 
 of a country as he schemed, involving as it does 
 an intelligent readjustment of practice among 
 the majority, means a corresponding mental 
 change ; an opening up of a thousand new in- 
 tellectual windows ; a change of head, which is 
 at least as uncommon as a change of heart. And 
 as there was no moral machinery to bring it 
 about, it simply could not take place. The 
 concern of middle-class people, whether rich or 
 poor, in matters of public policy, ran to questions 
 of religion. After 1677 came the delirium of the 
 Popish Plot; the parliamentary strifes over the 
 succession ; the accession and the policy of James 
 II; the insurrection of Monmouth; and the 
 Revolution ; and then faction politics da capo. 
 
 It never occurred to anybody that the rational 
 education of the mass of the people could be a 
 means to national enrichment. With a relatively 
 vast pauper class, often reckoned in those days 
 at a full fourth of a population of about five 
 millions, men went on helplessly paying a poor- 
 rate equal to half the total revenue of the crown ; ^ 
 listening to scheme after scheme for employing 
 the poor, and never agreeing on any. The idea 
 of first making the poor fit for employment was 
 [indeed cherished by some, and took shape about 
 [700 in Charity Schools, which must have counted 
 ^ Macaulay, Ch. Ill : Students' ed., I.
 
 62 THE ECONOMICS OF PROGRESS 
 
 for something, but education for the mass was 
 the one great moral and material interest most 
 lamentably neglected throughout the eighteenth 
 century. So far from believing that education was 
 a good thing for working-folk, the shrewd people 
 held that it would play the miscliief by making 
 them averse not only to " the dirty work " but 
 to manual labour in general. So shrewd a man 
 as Mandeville could see no deeper than this.^ In 
 other words, the educated classes were themselves 
 uneducated in point of civil wisdom and eco- 
 nomic science. The slow enrichment of England 
 went on fortuitously, some men making improve- 
 ments in agriculture, some developing trade; 
 some at length initiating a new age by a series 
 of mechanical inventions which gradually trans- 
 formed manufacturing industry. Down to the 
 date of the Franco-German War, England had 
 no national system of education. In 1833 Sir 
 William Hamilton could write without challenge 
 that " the English people are the lowest in the 
 scale of knowledge." ^ Throughout the century 
 the public provision in that kind had been a series 
 of pitiable makeshifts, beginning in and limited 
 by ecclesiastical interests. 
 
 Now, it cannot be charged against the " old " 
 economists that they did not realise the economic 
 importance of education. Even Adam Smith, so 
 
 ^ Fable of the Bees. 
 
 2 Discussions on Philos. and Lit., 1851, p. 538.
 
 THE ECONOMICS OF EDUCATION 63 
 
 wedded to laissez-faire as to affirm that the edu- 
 cation of middle -class women in his day, being 
 in no way provided for or controlled by the State, 
 was " accordingly " more useful to them than was 
 that received by men at the universities ^ — even 
 he avowed that there ought to be publicly pro- 
 vided schools for the mass of the people ; and he 
 even proposed measures of indirect compulsion 
 to attend them by making an examination a con- 
 dition of permission "to set up any trade either 
 in a village or town corporate." The reasons he 
 gives, indeed, are hardly economic. He seems to 
 imply that education will serve to heighten the 
 *' martial spirit " about which he was so anxious, 
 and which he so absurdly maintained to be elimi- 
 nated, along with intelligence, by the artisan life 
 as compared with the agricultural ; ^ and he fur- 
 ther points out that education tends to preserve 
 the common people from the politically dangerous 
 " delusions of enthusiasm and superstition." But 
 his successors went much further, and, having 
 their eyes on present facts, pointed out the 
 economic value of popular instruction. 
 
 Ricardo, in his succinct way, indicated that 
 the " stimulation " of the higher life of the people 
 was the surest way of raising their condition. In 
 1848, Mill devoted an important section of his 
 
 1 Bk. V, Ch. I, Art. 2. 
 
 * A proposition which ehcited from McCulloch an un- 
 wontedly vehement refutation.
 
 64 THE ECONOMICS OF PROGRESS 
 
 seventh chapter to the economic importance of 
 education, laying even more stress on the moral 
 than on the intellectual factor — to the extent of 
 partly overlooking the immense importance of 
 the reaction of the latter on the former ; and in 
 the following year Hill Burton devoted a chapter 
 of his Political Economy to the same subject. 
 Both cited convincing evidence as to the economic 
 superiority of the educated over the uneducated 
 worker, other things being equal, and the econo- 
 mic waste, national and individual, resulting from 
 the special deteriorations of efficiency incident to 
 the status of ignorance. Yet twenty years and 
 more were to elapse before the nation politically 
 took up the problem, to the extent of establishing 
 a national minimum by the Education Act of 
 1872. The dryasdust men, the analysts and 
 calculators, had fully indicated the ample econo- 
 mic motive; the man in the street and the man 
 in the pulpit, alike economically uneducated, 
 were in large part mainly concerned about the 
 catechism when they did consent to face the 
 need. 
 
 Then, after a thirty years' trial, a Conservative 
 Government, with the backing of certain pro- 
 fessed democratic "experts," abolished the School 
 Boards by way of securing the better endowment 
 of the schools of the Church of England. They 
 did not yet dare to abolish the Boards in Scotland ; 
 but in England the one institution calculated to
 
 THE ECONOMICS OF EDUCATION 65 
 
 set up a general interest in education disappeared. 
 Thus it can still be said, as an educationist 
 said to me the other day : " In Scotland you 
 believe in education; in England we don't" — 
 this, of course, by way of rough generalisation. 
 If there was an economic case for education 
 seventy years ago, there is even a stronger case 
 to-day. With the shortening of working hours 
 has gone an intensification of toil, and such an 
 extension of the division of labour that the ele- 
 ment of handicraft has been in a sense eliminated 
 from trades in which it was formerly potent. As 
 Mr. Butler put it, " Machines feed by mannery." 
 To preserve alike the independence and the 
 efficiency of labour there is visibly necessary an 
 increase in adaptability on the worker's part — 
 a capacity to move from one industry to another. 
 This is in fact recognised by all intelligent friends 
 of labour, and is partly provided for by the modern 
 developments in technical instruction. But all 
 the while, the raised standard of industrial comfort 
 means to a large extent an increased means of 
 recreation; and to keep recreation on a high 
 rather than on a low plane was seen in Mill's day to 
 be one of the functions of education which counted 
 for most in economic efficiency. National better- 
 ment as regards drinking habits can be seen in 
 the case of the upper and middle classes to be 
 very largely a matter of a rise in the taste for 
 recreation. We are apt to call the factor in the
 
 he THE ECONOMICS OF PROGRESS 
 
 change "culture" rather than "education." Well, 
 so be it. In those terms, then, " culture " for the 
 workers is an economic " asset." It means im- 
 proved industrial efficiency. If nothing short of 
 a higher culture could transform the drinking 
 habits of the upper and middle classes in the 
 lump, nothing short of a higher culture will do it 
 for the workers. 
 
 But that is only a general aspect of the matter. 
 Let us particularise. One fact long known to 
 observing people has been brought home by 
 the war to everybody, namely, that even the 
 primeval trade of soldiering is learned much more 
 quickly by educated than by uneducated men; 
 that whereas Napoleon held that it took generally 
 five, and at the least three years to make an 
 efficient soldier, an educated population can be 
 trained far more quickly. The simple fact is that 
 the man who has used his mind in learning a num- 
 ber of things can use both mind and body better to 
 learn yet other things than can the man of narrow 
 knowledge — that is, as a general rule, making all 
 necessary allowance for the acquired physical 
 incapacities of the too sedentary man. And 
 this brings us at once to the economic bearing 
 of education on the industries of peace. 
 
 Here again the war has been a means of proving 
 in a general way what has long been held by many 
 of us, that the skilled trades, specially so called, 
 are in many cases not nearly so hard of acquire-
 
 THE ECONOMICS OF EDUCATION 67 
 
 ment as they have been supposed to be; and 
 that all apprenticeship, much as it has been 
 shortened in modern times, still tends to be 
 needlessly prolonged. But the vital point is that 
 the average worker nearer adolescence, given 
 some education to begin with, can acquire skill 
 much more rapidly than the average boy in his 
 first teens. You might put it that the average 
 boy of fifteen, leaving school at that age, will 
 master his trade at the same age^ at which it is 
 mastered by the boy who began at thirteen ; and 
 that the boy who begins his trade at seventeen 
 '' will at nineteen be as efficient as the hoy who 
 began at fifteen, if the trade be one calling for 
 any use of intelligence. If this be broadly true, 
 and I think it is, it is clearly an economic fact 
 of the first importance from the point of view 
 of national Avell-being. Some enlightened em- 
 ployers in Lancashire have already abolished the 
 half-time system in their works on economic 
 grounds. The nation cannot long lag behind 
 that lead. 
 
 From the point of view of the individual it is 
 of course equally clear. It has been said that 
 as regards middle-class or commercial life, every 
 year of a boy's schooling after thirteen — or after 
 fifteen : the figure varies — is worth a thousand 
 pounds later as capital, or a hundred pounds in 
 power of earning salary. That is probably an 
 extravagance ; but if there is enough truth in
 
 68 THE ECONOMICS OF PROGRESS 
 
 it to make it pass current, as it seems to do, 
 among business men, it tells the same tale as 
 to the economic significance of education. In 
 neither case is the general theory upset by 
 the exceptions. Ricardo began his business 
 life at fourteen, having come a few years 
 earlier from Holland, and having to acquire 
 the English language. He did so to the extent 
 of being able to delight infinitely in Shakespeare, 
 and he made his fortune on the Stock Exchange. 
 But apart from the consideration that even he 
 might have been made more intellectually 
 efficient by a longer education, it is quite certain 
 that the average man, or the majority of men, 
 can be. 
 
 There emerges the general fact that the boy in 
 his early teens is wasting life in slowly acquiring 
 a trade in th e very years in which he could best 
 be acquiring the education which would not only 
 "make him much more quickly eflicient at 'his 
 trade, but would give him a mental cast that 
 would best safeguard him against economic de- 
 terib'ration:"* For the power of learning the things 
 taught at school obviously increases rapidly after 
 thirteen. Everything that calls for reflection — 
 language, science, history — becomes more assimi- 
 lable to the widening intelligence. It is what 
 he learns after thirteen that makes the main 
 difference between the educated and the unedu- 
 cated man; and the difference, as Carlyle put it
 
 THE ECONOMICS OF EDUCATION 69 
 
 long ago, is as that b etween the stunted and the 
 well-grown tree. In many cases a superior 
 natural ability, not happening to be associated 
 with the faculty or appetite for self-culture, 
 yields a less efficient mind than a lower natural 
 ability that has been educated. These are among 
 the kinds of fact of which economics has to take 
 account just as it does of the law of diminishing 
 return or the effects of tariffs on trade. 
 
 Extension of the years of schooling, then, is 
 extension of national productivity and national 
 efficiency, meaning as it does better habits, better 
 recreation, less crime, better public health, less 
 burden on the community in the necessary sup- 
 port of inefficiency and crime, less of heedless 
 prolificacy, and consequent easing of all the 
 pressures on the standard of comfort and on the 
 market for labour, while leaving the amount of 
 real labour power much greater. I do not here 
 enter in detail into the question of the manner 
 and matter of the education to be given. These 
 are matters for the educationist : I am putting 
 the case from the point of view of economics, 
 merely emphasising the fact that the economic 
 view is not limited to that of technical educa- 
 tion strictly so-called. By all means give the 
 young some training in the doing of things, in 
 the use of their hands and their eyes, as 
 Adam Smith urged a hundred and forty years 
 ago. Let them be taught to handle tools, to 
 
 HOAkMNMRWMMl*^ -^
 
 70 THE ECONOMICS OF PROGRESS 
 
 draw, to use their muscles, their hmbs, as well 
 as their brains. But do not infer that efficient 
 education, from the economic point of view, 
 means simply the development of the faculties 
 directly needed to do given work. The workman 
 who will rather spend a shilling on a concerS, or 
 on a book that will yield him happy hours, than 
 on beer, is a more efficient and producti^ c vv ork- 
 man, even for purposes of muscular effort. Xti&t 
 is sound " traditional " political economy. 
 
 At least equally obvious is the economic value 
 of education to the man of industry and commerce. 
 In the words of Professor Walker, " Nothing costs 
 the working classes so dearly, in tKe loiig'rtrrrT' as 
 the bad or merely commonplace conduct of busi- 
 ness." ^ They gain by all advances in business 
 ^skill. Of late years, I learn, there has been set 
 up in the University of Cincinnati a system under 
 which pupils in engineering spend alternately a 
 week at the college class and a week in the works ; 
 with the result that Cincinnati macliinery has 
 acquired a special reputation for ingenuity and 
 efficiency all over the world. That is only one 
 instance of a general law. Within the last 
 decades there has dawned on the business world 
 the importance of the kind of educated ability 
 which is systematically sought by the State 
 through its system of Civil Service Examinations ; 
 and we hear of great business houses seeking their 
 1 The Wages Question, 1884, p. 250.
 
 THE ECONOMICS OF EDUCATION 71 
 
 higher recruits among young men with good uni- 
 versity records — a thing which a generation ago 
 would have been generally scoffed at in the City. 
 But so far as my knowledge goes, English com- 
 merce is still backward in the matter of attention 
 to foreign languages. Despite the number of 
 new language schools in the large towns, it 
 appears that before the war English commercial 
 houses relied largely on German clerks for their 
 foreign correspondence; and for many years it 
 has been a standing reproach that whereas Ger- 
 man traders assiduously appeal to all possible 
 foreign customers by catalogues giving sizes, 
 quantities, and prices in the language of the 
 customer, the average English house continues 
 to offer only its English catalogue, with English 
 measures and English prices. 
 
 Here again we can trace economic and other 
 causation in the matter of linguistics. France, 
 till lately, remained in general the most backward 
 of the industrial European countries in respect 
 of acquaintance with foreign tongues, simply 
 because France had first developed a ripe and 
 abundant literature, to which other nations 
 turned. Only in the eighteenth century, when 
 French men of letters had become conscious of 
 a relative stagnation in their intellectual life, 
 do we find them in large numbers learning 
 English, as educated Englishmen learned French. 
 Germany, coming into the stream of modern
 
 72 THE ECONOMICS OF PROGRESS 
 
 literature about the same period, turned to the 
 hteratures of all the more advanced countries, 
 and thus became, as regards its educated class, 
 with one exception, the most linguistic of Euro- 
 pean nations. The exception was Holland, whose 
 position as middleman to all northern Europe 
 forced on her large trading class, and so on her 
 educated classes in general, the need of knowing 
 some or all of the leading northern languages. 
 Thus the Dutchman of to-day is far more of a 
 "TTnguist than the Englishman. Needless to say, 
 there Js no such thing as a nationalUr' a racial 
 gift in that respect. The faculty of learning 
 foreign tongues is equally distributed among all 
 races ; and the percentage of incapacity will be 
 found to be everywhere.ro.uch the same. 
 
 It is still common to hear Russians spoken of 
 as potentially good linguists, and the French 
 and even the English as collectively much less 
 gifted. The explanation is sometimes offered 
 that the special difficulty of the Russian language 
 develops the linguistic faculty in all who master 
 it ; and it is true that the mastery of tlie grammar 
 of one's own language is a help to mastering that 
 of others; but language study .in^^Jius^a- - has 
 simply been -an-extTeiifie case of the kind ..seen in 
 Germany, the nation most backward of all^iruits 
 literature being forced in a special degree to 
 turn to the literatures of the others when it was 
 moved to seek culture. Educated Frenchmen and
 
 THE ECONOMICS OF EDUCATION 78 
 
 Englishmen in the a verage are just as capable of 
 learning tongues as Russians or Germans ; it is 
 the habitoi msuTarity, not natural lack of faculty, 
 ITiat has kept the Englishman the least linguistic of 
 the northern Europeans, saving only the French, 
 who, however, since 1870 have become much 
 more linguistic than formerly. Hitherto the Eng- 
 lisHman could count on going through Europe 
 and finding his own language spoken by the 
 waiters of all the hotels. That was plainly an 
 economic development. English money elicited 
 English-speaking waiters. And if the waiters 
 of all the nations in Europe could learn English 
 in order to make money, the English money- 
 maker can do as much. If he desires to keep 
 the trade of the Latin and Slav races after the 
 war in competition with a Germany which will 
 strain every nerve to recover her commerce, he 
 will travel on the linguistic path — as indeed he 
 has been doing for one or two decades past. 
 
 But economics is also concerned with the 
 political problem of the provision of improved and 
 higher education by the State. It has been 
 truly said that one effect of the national system 
 set up in 1872 was to provide the commercial 
 world with cheap clerks. It would follow that, 
 whatever it may have done for the clerks, it 
 tended to raise the wages of the hand-workers 
 by relatively lessening the pressure on their
 
 74 THE ECONOMICS OF PROGRESS 
 
 labour market. What then are the economic 
 pros and cons of an extension of the school life 
 of the mass ? I leave open the question whether 
 such a measure should be resorted to immedi- 
 stely after the war, when, according to one set 
 of prophets, we shall find a shortage of labour 
 in most fields as soon as the first confusion of 
 demobilisation is over. If that should prove to 
 be the case, there will doubtless be opposition 
 to any new restriction of the supply. But sooner 
 or later the issue must be faced, in the national 
 interest; and it is not impossible that in some 
 industries there may be rather unemployment 
 than shortage when the war is over; while in all 
 there is likely to be a period of transition. The 
 restriction of the juvenile labour supply, we have 
 seen, means ultimate increase, not decrease, of 
 production. It is therefore to the State's interest 
 to secure it soon. 
 
 At whose expense ? First, as regards the 
 schools, clearly at the State's. Feeless education 
 having been established as regards the elementary 
 schools, it cannot be restricted to them if the 
 State enacts an extension of the compulsory 
 school-going age. Mr. Fisher, while seeking to 
 promote the resort to the secondary schools, 
 may reasonably object to increase the number of 
 " free placers " there at present. Those working- 
 folk who send their children to those schools at 
 present evidently can afford to do so, though.
 
 THE ECONOMICS OF EDUCATION 75 
 
 it may be, with some pinching. But the reform 
 before us is a compulsory extension of the school 
 age, which will enfofce-'On workiiig-folk the com- 
 plete maintenance of their children for certain 
 years longer than they completely maintain 
 them at present; and though large sections of 
 labour are in favour of the measure, it will 
 certainly meet with some labour resistance. 
 Then the prolonged education must not itself 
 have to be paid for when the elementary is not. 
 Already there is, I presume, complete agreement 
 that the continuation night-schools which have 
 latterly been so much pressed for should be fee- 
 less. Now, the secondary schools will only be 
 doing much better what the continuation schools 
 are planned to do. 
 
 I say much better, for, whatever the educa- 
 tionists may think — and I fancy they will mostly 
 agree with me on the point — the continuation 
 school is too heavy a demand on the average 
 boy. It isalreadyL recognised tliat he must not 
 be expected to do a full day's work while he 
 attends night classes. But even to make him 
 do harel work half the day and study at night 
 is obviously to ask of him what is not asked of 
 the middle-class boy of the same age ; and is 
 thus a partial frustration of the very object of 
 school extension, which is to make him both 
 mentally and physically more efficient. Con- 
 tinuation night schools, in fact, are an inadequate
 
 76 THE ECONOMICS OF PROGRESS 
 
 if not a positively bad device for the purpose in 
 view as regards young people doing a full day's 
 work. It is quite true that the average working- 
 boy tends to waste his leisure. But the way 
 to cure that is to give him tastes which will 
 incline him to a better use of it, not to inflict on 
 the fagged mind a task of night-schooling which 
 we positively know to be in many cases too heavy 
 for it ^^ School y our, boy till ^fifteen, and it will 
 be on the average easier to get him to use his 
 leisure well after fifteen. School him till seven- 
 
 teen, and you will have made hirn^oisppscd 
 to use all his leisure to better purpose than 
 does the boy who left school at fifteen, and 
 much more still than the boy who leaves at 
 thirteen. 
 
 Politically speaking, an extension of two years 
 is as much as there is any use in asking for at 
 a given time. It will be as great an economic 
 change as the population is capable of at one 
 stroke. For it will be claimed that wages must 
 go up appreciably, or remain up, even when 
 prices fall, to enable the working classes as a 
 whole to bear the burden. To that the first 
 answer is that the very restriction of the supply 
 of the juvenile labour of both sexes — for of course 
 the sexes must be treated alike — will certainly 
 tend to raise wages. Obviously this will be the 
 case as regards half-timers. And the further 
 answer is that the good wages which on all
 
 
 THE ECONOMICS OF EDUCATION 77 
 
 \ grounds are desirable can be provided only by 
 \ an increase in the tOtat""'nafrofiar production, 
 I "tOwarSs which improved national education is 
 I the greatest of all steps. That is the clear econo- 
 l mic issue. In the plain interest of the workers 
 I 'themselves, productivity must be greatly in- 
 \ creased; and productivity never can be greatly 
 I increased, relatively to population, without a 
 lift in the national mental power. The rapid 
 increase in certain forms of production which 
 set in towards the end of the eighteenth century 
 through the advent of machinery was accom- 
 panied by a spontaneous increase of population 
 which went far to neutralise the gain, the result 
 being a pullulating proletariate living at low levels, 
 so that Mill in 1848 could write, as Sismondi wrote 
 before him, that " liitherto it is questionable if 
 all the mechanical inventions yet made have 
 lightened the day's toil of any human being." ^ 
 To-day we can speak more cheerfully, and say 
 I that there has been a considerable lightening. 
 But there is a very plain prospect that the gain 
 will be partly lost unless the nations address 
 themselves to their problem with a new scientific 
 consciousness. 
 
 Mill seems to have held to the last that "it is 
 
 only in the backward countries of the world that 
 
 increased production is still an important object : 
 
 in those most advanced, what is economically 
 
 1 Principles, Bk. IV, Ch. VI, § 2.
 
 78 THE ECONOMICS OF PROGRESS 
 
 needed is a better distribution, of which one 
 indispensable means is a stricter restraint on 
 population." ^ The latter part of the sentence 
 is perfectly true and profoundly important, as 
 we shall see more fully when we come to deal 
 with the population question; but the former 
 is plainly not true. What Mill feared was that 
 all^gains from increased production might be 
 swallowed up in mere blind advance of population ; 
 and he rightly reminded his generation that an 
 ever more thickly crowded world did not mean 
 a state of progress if the people were not living 
 better lives. It was not till the next generation 
 that the danger could be seen to be averted by 
 the definite decline in the British birth-rate, as 
 it had been earlier in France, and has since been 
 in other countries, and latterly even in Germany. 
 But that decline has coincided with a clear in- 
 crease in production, which is one more proof 
 of the truth put by Ricardo, that raised standards 
 of comfort promote prudence in procreation. 
 
 Thus we may be doubly sure that in our day 
 Mill would have realised the vital necessity of 
 an increase in productivity. The Census of 
 Production, if nothing else, would have forced 
 the conclusion upon him. One of the things it 
 seems to prove, as against vague calculations of 
 average industrial earning power, is that large 
 numbers of workers who would be classed without 
 i Principles, Bk. IV, Ch. VI, § 2.
 
 -'^ yy. A- 
 
 THE ECONOMICS OF EDUCATION 79 \f 5^,^ 
 
 »jq piestion as ^^ productive " create wealth only " - .- 
 a very little in excess of tlicir own earnings. -^ 
 
 The broad fact is that a very large number 
 even of the hand-workers is occupied in work of 
 little economic or other value ; and this partly 
 because the workers in question are under- 
 educated, and partly because the consumers 
 of their product or services are so. 
 
 This is not the connection in which to take 
 into account all the various forms of life that 
 represent rather weights on the workers than 
 contributors of useful service — ^the idle classes, 
 commonly so-called, whose existence as such 
 Mill recognised as a social calamity; the classes ^ 
 
 ^)f_ men-servants who minister to the idle rich; 
 the classes concerned with primitive amusement 
 — as betting-men, the personnel of" horse -racing, 
 and so on, who are of course strictly grades 
 of the class which provides amusements. Now, 
 inane as is much of the amusement provided 
 "for the majority, it was declared by close ob- 
 servers thirty years ago to have greatly improved 
 in tone and surroundings as compared with that 
 of a generation earlier; it is presumably still 
 better now; and a good lift in the educational 
 standards would multiply the number for whom 
 much of the amusement now going is no amuse- 
 ment at all. And it is just conceivable that the 
 present war, which has impressed on large 
 numbers of the non-combatants of the idle class
 
 80 THE ECONOMICS OF PROGRESS 
 
 the necessity of doing something for the common 
 good, may leave behind it a conviction that such 
 activity should not end with the war, but become 
 normal in peace. Such a permanent change 
 of attitude would be an economic factor of 
 considerable importance. The entry of numbers 
 who might be idlers into the general life would 
 mean a greater competition for what we may 
 term ability-posts, and would tend, not neces- 
 sarily to reduce the remuneration of these, but 
 to prevent that class in general from securing a 
 proportionally larger share of the national divi- 
 dend than is received by labour, commonly 
 so-called, which, further, would gain as aforesaid 
 from the lessening of the crude labour supply 
 by extension of the period of schooling. 
 
 But recruits furnished by the idle class to the 
 economically active army of the nation would 
 of course not all be eligible for ability-posts. 
 To some extent the class might increase the 
 proportion of service which it renders disin- 
 terestedly, or with little gain, by way of the 
 cultivation of the sciences. At one time that 
 service was noticeable, as regards the historical 
 field in particular; and the apparent falling off 
 since the days of Darwin and Buckle is presum- 
 ably to be set down to the enlarged attractions 
 of modern travel. Again, however, the economic 
 survey raises the question whether the supply of 
 ability for mental production of all kinds cannot
 
 THE ECONOMICS OF EDUCATION 81 
 
 be maximised in the national interest. What, 
 in particular, would be in the light of economics 
 the best policy in the case of the universities ? 
 
 We are at once met by the modern humani- 
 tarian claim that there ought to be for all an 
 " educational ladder " from the common school 
 to the university — and this of course for both 
 sexes. ^ By some the claim is put with the 
 apparent meaning that all should actually pass 
 through the university; and it is quite con- 
 ceivable that a highly organised society may 
 one day secure some such equality of opportunity 
 for all its members; though doubtless the uni- 
 versities will then be as different from those of 
 to-day as society will be. But for the present 
 there can clearly be no economic recommendation 
 to such a course. That is to say, even if it 
 could be seriously contemplated in practical 
 politics, it would spell economic loss, not gain. 
 University life in England was still, before the 
 war, a field of play rather than work for multi- 
 tudes of the so-called students; the fact being 
 that a rather large percentage of those sent to 
 the universities were not fitted to derive much 
 profit from the life. It was indeed customary 
 in England to extol the unive rsities chiefly as 
 
 ^ The Workers' Educational Association, in its pamphlet 
 on the subject, speaks only of universities, saying nothing 
 of new ones, or of colleges for girls. But we may assume 
 that the Association would not dispute the necessity of 
 treating the sexes alike. 
 
 G
 
 82 THE ECONOMICS OF PROGRESS 
 
 places where young men could make friendships. 
 As if friendships could not as well be made 
 outside the universities. 
 
 The economic inference is to be drawn in the 
 simplest way. The nation wants all it can use 
 of the best mental as well as the best industrial 
 production. It is not merely that we want 
 scientific brains for the development of the 
 physical sciences which enter so vitally into 
 physical production. Mental life of all kinds is 
 part of the conception of progress. The broad 
 movement of industrial and commercial life 
 appears to be towards a kind of saving which 
 tends to ehminate what may be termed over- 
 easy hfe as well as idle life. Multiple shops on 
 the one hand, and co-operative shops on the 
 other, tend to reduce the intermediate classes 
 who to a considerable extent represented a 
 medium culture element in life. On the other 
 hand, it has been said with truth that the pro- 
 cess of ability employing capital tends to gain 
 upon that of capital employing ability. If 
 then these processes were to become maximised 
 without special provision for the higher mental 
 life, we might have a progress in which quantity 
 of pleasurable life rose without a rise in quality, 
 or with a fall in quality in some quarters. In that 
 case there would be reason to fear retrogres- 
 sion, moral, political, intellectual, and therefore, 
 finally, economic.
 
 THE ECONOMICS OF EDUCATION 83 
 
 Evidently the progressive course would be to 
 elicit as far as possible what potential faculty 
 the nation contains. There are many reasons 
 for believing that the percentage of superior 
 congenital faculty all round is as high in the 
 artisan as in the middle class, and perhaps higher 
 than in the idle rich class, which may broadly be 
 said to represent the result of the single faculty 
 of wealth-acquisition. The " educational ladder," 
 then, should be a means of sending either to 
 universities or higher technical schools those 
 found to be specially fitted to utilise them to the 
 national advantage; and to that end there is 
 required a development of the existing means 
 of scholarships and bursaries. The selection 
 should of course be made on all the lines of 
 study — classical, historical, literary, as well as 
 on the scientific, though for the present it will 
 probably be advisable to offer the stronger 
 inducements in the last field. And the example 
 of Cincinnati, to which I have referred, might 
 profitably be considered and followed. 
 
 Such an entrance into university life of a 
 large body of students whose business is to 
 work and not to play might conceivably have 
 an educative effect on those undergraduates who 
 go for the latter purpose. It is probable, how- 
 ever, that it will not be easy to turn universities 
 like Oxford and Cambridge into highly progres- 
 sive places, even if it be not the case, as some
 
 84 THE ECONOMICS OF PROGRESS 
 
 think, that their physical cHmate is injurious 
 to mental energy; and I should personally like 
 to see the new university policy directed to de- 
 veloping a great teaching university in London 
 as well as to raising the status and efficiency 
 of the other provincial universities. A rise in 
 real efficiency in all these, as proved by teaching 
 results and by the output of the professors, 
 would be the best means of forcing progress on 
 Oxford and Cambridge. 
 
 Needless to say, the better payment of teachers, 
 alike in the elementary and the secondary schools, 
 is an essential part of the process of betterment. 
 To pass criticism, as is sometimes done, on the 
 faults or deficiencies of the class, demanding of 
 it a level of culture and mentality for which no 
 proper provision is made by training and salary, 
 is just as idle as mere criticism of the shortcomings 
 of an uneducated proletariate. The experience of 
 recent years has shown that even the numbers 
 of the class required by the present school system 
 could not be maintained by the pre-war scales of 
 salary ; and already Mr. Fisher has taken steps to 
 give effect to the new consciousness of the nation's 
 need for better schooling. But it may be doubted 
 whether the policy will be duly developed unless 
 the nation in the mass can be made to realise 
 that national education in the end pays for 
 itself; that higher education rates or grants 
 mean later-on more efficient national production,
 
 THE ECONOMICS OF EDUCATION 85 
 
 less waste of life, less crime, less drunkenness, less 
 unemployment, and less unemployableness. 
 
 If it be still honestly feared by some that a 
 general raising of the standard^ of culture and 
 comfort will tend to check industrial output by 
 making multitudes unwilling to seek the kinds 
 of factory and workshop and mining employment 
 in which the bulk of the nation's profit-earning 
 production is done, the answer is that no such 
 check has ever been met hitherto, though the 
 standards of life and education have undoubtedly (^ it , , 
 risen greatly in one or two hundred years. All ^d^'^ ' 
 now receive some education, a state of things 
 in which, in the opinion of many people in Mande-ri:^^*-'- 
 ville's day, the dirty work would not get done. tV-*" 
 The dirty work, for one thing, is to-day less 
 ^ dirty; and it will have to be made still less so. 7.^r/r 
 
 But the experience of Scotland and the United ,^ ; 
 States, at stages at which their popular education 
 was admittedly superior to that of England, has 
 never revealed any check to industry through 
 unwillingness to do factory or other manual 
 work. In well-educated Massachusetts, for two 
 or three generations past, there has been a suffi- 
 ciency of efficient factory labour; though of 
 late the supply has been largely drawn from the 
 labour of immigrants. 
 
 We are told, indeed, that the American do- J 
 mestic servant declines to brush boots. Thatu 
 is a phase of the snobbery of comparative W
 
 86 THE ECONOMICS OF PROGRESS 
 
 non-education, like the English servant's refusal 
 to eat margarine in war-time when her mistress 
 I does eat it. But we are also told that the poor / 
 I student in the United States will go to earn/} 
 money in vacation time by acting as a waiter 
 in a summer hotel. Education has freed him I 
 from snobbery. 
 
 It is perfectly true, on the other hand, that 
 industrial life is in general trying, monotonous, 
 exhausting. Lord Leverhulme has lately been 
 telling us as much, and insisting, with the wisdom 
 and knowledge of a ripe captain of industry, on 
 the necessity for making it less burdensome. 
 It is, in fact, actually becoming so in England. 
 The comforts of factory life in recent years have 
 greatly developed, largely through the practical 
 philanthropy of many good employers, who have 
 seen that such betterment is in the interest of 
 employers and employed alike, the former gaining 
 in the matter of good relations if not in money. 
 Unquestionably the popular education of the 
 past forty or fifty years has made for what . 
 \ is called industrial discontent, by making the 
 \ masses realise more clearly, were it only through 
 , their novel-reading, the contrast between their 
 \ actual lives and that made possible by wealth. 
 But there is all the difference in the world be- 
 tween an educated and an uneducated discontent. 
 There was bitter discontent in the first half of the 
 last century, and it was often brutally and at 
 
 \
 
 THE ECONOMICS OF EDUCATION 87 
 
 times criminally expressed. But the more the 
 workers are rationalised by education, the more 
 manageable will be the strifes between capital 
 and labour, even though the labour demand goes 
 on steadily rising. 
 
 We shall have to consider under other heads 
 the economics of these relations : what we are 
 considering for the moment is the economic 
 value of education to industrial efficiency. The 
 broad fact faces us that the better educated 
 countries get through their industrial strifes 
 with least friction, least violence. Spain is 
 probably the worst educated of the countries 
 of Western Europe. I have seen an attractive 
 account of the village life of Spain which made 
 it out to yield a larger share of joy and happiness 
 than that of any industrial country. And that 
 may be true, though the picture was rather 
 idyllic than scientific, and made no attempt to 
 estimate the per contra in the mental life. But 
 Spain, like other countries, inevitably tends to 
 become more industrial ; and in so far as she does, 
 the effect of her illiteracy is seen in violences in 
 excess of anything seen here. In so far, again, 
 as industrial strife in the United States has in 
 the past generation exhibited new developments 
 of violence, the phenomena are largely to be 
 traced to the immense influx of new population 
 from Europe, yielding relatively cheap labour 
 which created great wealth, but brought with
 
 88 THE ECONOMICS OF PROGRESS 
 
 it the penalty of lower standards of civilisation, 
 new poverty among the masses, new industrial 
 evils, and new violence from inevitable discon- 
 tent. The levelling up of that new population 
 by the American education system is the best 
 general means of making the problem manageable. 
 
 Wlio doubts, further, that the relative in- f 
 dustrial inefficiency of Russia, like the political, | 
 is mainly a result of illiteracy ? Shibboleths 
 about race-character, and the oriental element, » 
 j and all the rest of it, may serve to solve such 
 i problems for those who will not look at social 
 phenomena scientifically; but any one who will 
 study social causation on comparative lines can 
 see where the true solution lies. What Russia 
 has visibly too little of, we cannot easily have 
 too much of. 
 
 Need I meet, finally, the objection from fear 
 of education in the case of agricultural labour? 
 There, if anywhere, life is dull, and dirty work 
 is abundant. These very facts, together with 
 the economic factor of low wages, have in the 
 recent past been admittedly driving the rural 
 population more and more to the towns. People 
 forget, indeed, that the rural population is the 
 most prolific, and that it has always maintained 
 in England a sufiicicnt labour supply to keep 
 wages in peace time lamentably low. The 
 much higher agricultural wage of Scotland is 
 undoubtedly attributable to the better rural
 
 THE ECONOMICS OF EDUCATION 89 
 
 education, as well as to the better general educa- 
 tion which makes Scottish agriculture in general 
 more efficient. But the better education has 
 increased, not diminished, the agricultural output, 
 while yielding the much higher wage. 
 
 If any one hopes, then, that agricultural labour 
 for England is in future to be kept abundant 
 and efficient, whether or not at higher wages, 
 by keeping the labourer badly educated, he is % , 
 simply reading the problem backwards. Edu- ' * ^. 
 cation will make country life more and not less CM'^^'a^'H 
 attractive. It does so now. Vacuity of mental 
 life drives many country people to the glare and 
 excitement of the towns; better mental life fits 
 men better for the relative peace of the country, 
 where they can get from books the stimulus that 
 the bookless seek in the picture-show. All this, 
 I fear, may seem to some a substitution of non- 
 economic for economic considerations, but it 
 is a part of the argument for the economic 
 importance of education, and it is really raised 
 by those who have not understood that. And 
 I have devoted this lecture to the subject 
 because I doubt whether anything but a new 
 economic impulse will enable English education 
 to shake off the fetters of non-economic and 
 non-rational ideas which down to our day have 
 lamed and hampered it. 
 
 If it be true, as is stated by the Workers' 
 Educational Association, that " in 1915-16 not
 
 90 THE ECONOMICS OF PROGRESS 
 
 less than 60,000 children, mostly between the ages 
 of eleven and fifteen, left school, presumably to 
 enter industry, at an earlier age than they would 
 previous to the war," w^e have already taken 
 a measurable step backward. It ought to be 
 retrieved with no avoidable loss of time.
 
 Ill 
 
 THE ECONOMICS OF LABOUR 
 
 When we have put increase of national pro- 
 duction as the nation's urgent interest, and tlie 
 education and well-being of the worker as the 
 first necessities of the case, it may be permissible 
 to discuss the economics of labour with some 
 scientific detachment. The philanthropic econo- 
 mists and journalists having duly scolded Ricardo, 
 who was as philanthropic as any of them, for 
 not spreading his philanthropy all over his 
 economics, it may now perhaps be taken for 
 granted that he who plans for progress plans 
 for the lifting of labour. But it may still be 
 useful to think of it in terms of economic forces. 
 
 Ages ago, labour figured as the curse laid on 
 man for his primal sin — a sufficient revelation of 
 the real conditions of primitive life. The labourer 
 was typified in the slave, the curse-bearer. To- 
 day, having got rid of the slave, and having 
 listened patiently or otherwise to the prophets 
 who, doing no work with their own hands, have 
 fulminated precepts about its dignity, we know 
 that labour, in the sense of rational occupation, 
 is the condition of mental vigour and steady 
 
 91
 
 92 THE ECONOMICS OF PROGRESS 
 
 happiness for all ; and that Labour, with a capital 
 L, is the Power in the national Power-House. 
 The name which was interpreted as a curse has 
 become, by an equally simple process of thought, 
 a name by which the majority exalts itself, the 
 worker figuring himself as the salt of the earth, 
 the wealth-maker, and all others as relatively 
 parasitic. The new idea has the great merit of 
 involving a conception of human solidarity, in 
 which the nations figure as having a bond of 
 union, or common interest, outbulking any 
 grounds of hostility. But that conception has 
 been reached by many at the price of a new 
 concept and principle of disunion — a league of 
 the hand-workers against all who are not of 
 them, and an ideal of a " social revolution " in 
 which they shall set their feet on the other's 
 necks. We are to remember that many men 
 have lived their whole lives, some toiling with 
 their hands, some not, yearning for this consum- 
 mation, without seeing any radical modification 
 of the social system which they hated. 
 
 In due course there may haply occur the 
 Hegelian process of transformation of both ideals 
 — ^that of the status quo and that of the revolu- 
 tion — into a third, not quite as different from both 
 as water is from the hydrogen and oxygen which 
 constitute it, but still different. For a genera- 
 tion, the publicists of the Fabian Society, 
 bourgeois to a man, hardly did a day's work with-
 
 THE ECONOMICS OF LABOUR 93 
 
 out aspersing the bourgeois^ root and branch, as 
 something to be ehminated from the scheme of 
 things. To-day, perhaps, we can reaUse that 
 there is no more merit involved in being born to 
 handicraft than in being born to shop-keeping, 
 or lawyering, or doctoring, or journalism; and 
 that a grocer is typically just as wholesome a 
 member of society as the Local Preacher who 
 ministers to Labour, or the director or manager 
 of the Co-operative Store. The Co-operative 
 Store is Labour doing its own shop-keeping : the 
 difference is simply group-trading instead of 
 individual trading. And there is nothing in 
 the nature of things that will make more than 
 an economic difference between two men in the 
 two positions. 
 
 For Labour, when all is said, simply seeks its 
 economic interest just as the private adventurer 
 or the capitalist did. And thus far we have not 
 at all attained even to an economic solidarity of 
 labour groups. While Labour, with the capital 
 L, is much acclaimed as an aggregate or totality, 
 its sections in a nation, in a town, run their 
 economic interests each for itself. There have 
 been hundreds of strikes on the score of the 
 claims of one trade union as against another : 
 the trades which collectively make ships have 
 pitched strikes over their respective boundaries. 
 The " skilled " groups, alike in State employ- 
 ment and in private employ, insist on their
 
 94 THE ECONOMICS OF PROGRESS 
 
 privileges as against the lower grades, just as 
 barons may have done as against commoners. 
 And many, from the beginnings of trade union- 
 ism, have resolutely limited the number of 
 apprentices, without ever saying anything about 
 the number of children born to the memibers. 
 Each union protected itself, while adding to the 
 host of the unprotectable. It is significant that 
 in the new constitution proposed for the Labour 
 Party, the claims of the unskilled workers are 
 recognised as having equal weight with those of 
 the skilled. But the question of the correlative 
 social obligation on Labour in the matter of the 
 birth-rate has not yet been theoretically faced. 
 
 Leaving for separate treatment this and other 
 phases of the population problem, let us simply 
 consider the wages question as it normally 
 emerges for the trade unionist. The union is 
 made, primarily, to get a larger share for the 
 group; and in order to make it worth while for 
 the majority to join, the rules are shaped to 
 secure the best available wage for each rather 
 than to let special capacity earn a special reward. 
 This is in the nature of the case : on no other 
 footing would it be worth the while of the majority 
 to pay their dues. Collective bargaining is 
 bargaining at a relative advantage; and collec- 
 tive bargaining means looking to the interest of 
 all the members, compromising against the few 
 rather than against the many. Doubtless this
 
 THE ECONOMICS OF LABOUR 95 
 
 tends to the curtailment of the total product ; for 
 by the law of self-interest no man will be much 
 concerned to do more work than his fellow for 
 the same wage. And if it be thought that this 
 is a..black mark against the name of labour, let 
 it be remembered tliat such bargaining was long 
 ago forced on labour by employers who, whether 
 or not under compulsion of competition among 
 themselves, refused to yield on any other footing 
 to labour's demand for its larger share. 
 
 But capital has also its devices for self-pro- 
 tection as against the workers' plan for keeping 
 wages near one level — at least it had twenty 
 years ago. I remember one room in a boot 
 factory at Northampton in which nine men sat 
 at a semi-circular bench. A boot-upper at a 
 certain stage of its construction was put on at 
 one end, and, passing through the nine hands, 
 came off at the other. At each end of the bench, 
 the workman was a pace-maker. Thus the seven 
 men between were as far as possible forced to 
 work at the pace of the fast workers who took 
 on and gave off. Hygienically, it seemed to be 
 all wrong, for the majority of the men seemed to 
 be reduced to utter limpness when the day was 
 over, lacking energy for serious reading or for 
 any other exercise. I do not know whether the 
 system has by this time been radically amended : 
 if not, amended it must be, one day. 
 
 One result of such labour pressure in the past
 
 96 THE ECONOMICS OF PROGRESS 
 
 generation in the United States has been the 
 creation of a new tramp class, estimated at from 
 a milUon upwards. It is recruited by men for 
 whom, once more, labour spells the primal curse. 
 Some of them may be simply lazy; many are 
 simply revolted slaves, who will face any of the 
 chances of the wanderer's life rather than bear 
 that burden of joyless, mechanical, mindless toil 
 at the machine. We return to the precept of 
 Lord Leverhulme : for the most obvious economic 
 reasons, labour at the machine must be made 
 something less murderously monotonous. I 
 understand that the remedy is being gradually 
 found in the United States, though industry 
 there is still in the state of calling for immigrant 
 labour in times of expansion and discharging 
 it wholesale in times of depression, as in the 
 winter of 1914. As the educational system does 
 its work, substituting comparatively educated 
 labour for that of ill-educated or illiterate alien 
 immigrants, alleviations are found to be neces- 
 sary. There Avill always be a multitude of organ- 
 isms for which such simple routine work, under 
 tolerable conditions of strain, is relatively the 
 most fit. But education prevents their being 
 over-numerous, and so keeps up the wage. It 
 will be so here. 
 
 Other trades will be similarly affected. Coal- 
 mining, railway and dock and transport labour, 
 are all trying; and all infallibly seek for better
 
 THE ECONOMICS OF LABOUR 97 
 
 wages as compensation. In Durham and North- 
 umberland this has long been made automatic, 
 as regards coal-mining, by the instrument of a 
 Joint Board which regularly reviews prices ; 
 and labour aspirations tend to run towards the 
 general ideal of Socialism — a State control of all 
 means of production which shall yield a national 
 dividend for all who work, thus eliminating the 
 idle class. Meantime, there is not only a sharing 
 into profit and interest, with special remunera- 
 tion for supervision and direction, but a regular 
 system of piece-work, under which the better 
 producer earns accordingly. And thus far this 
 quite suffices to keep up, in peace time, an increas- 
 ing labour supply. Many of the miners are men 
 of intellectual tastes, leading good mental lives, 
 yet working steadily in the pits. 
 
 Now, this is, by the old standard of the 
 Physiocrats, absolutely productive work, yielding 
 fuel and power in an ever-increasing degree. In 
 the coming years, it will be the nation's business 
 to economise that power, creating great electric- 
 power centres, electrifying railways, saving fuel 
 in every possible way. Years ago, men well 
 qualified to judge had come to the conclusion 
 that the process can be consummated by the 
 nationalisation of the mines. Others saw in 
 mine nationalisation a special difficulty, inasmuch 
 as governmental control of coal output means 
 responsibility alike for the total output, for the
 
 98 THE ECONOMICS OF PROGRESS 
 
 amount of labour employed, and for the price 
 of coal. Thus the Government would be called 
 upon to sell coal at the lowest possible price, and 
 at the same time to pay labour the highest 
 possible wage— a not very pleasant predicament 
 for those in power. 
 
 On the other hand, mine nationalisation, if 
 otherwise feasible, presents by far the most 
 rapid means of turning what has been, in Wales, 
 a purely capitalistic exploitation of national 
 resources and of labour into something more 
 civilised and nationally more profitable. The 
 Welsh mining villages, Avarrens of little garden- 
 less houses packed together on hillsides which 
 they turn to deformity, tell half the secret of the 
 chronic strifes of the Welsh coal-trade : part 
 of the other half is told by the estimate that the 
 midland and northern English coal-masters, on 
 the whole, deal most fairly by their men; the 
 Scotch coal-masters, on the whole, less fairly; 
 and the Welsh coal-masters rather less fairly 
 still. These strifes spell economic waste; and 
 the war will leave us in a situation in which we 
 cannot afford such waste. National economy 
 prescribes a national solution by national manage- 
 ment. Economics, the science of the play of 
 economic motive, takes note of how such motive 
 will affect State management. 
 
 The actual experience of State control during 
 the war has undoubtedly advanced the problem
 
 THE ECONOMICS OF LABOUR 99 
 
 towards the practical stage. But that means 
 that we shall face squarely the issue raised by the 
 Syndicalists who propound the ideal that every 
 industry should divide the results of its own 
 production. So crude and inconsiderate is this 
 idea that it is hard to believe that it can be 
 seriously entertained. Clearly this is not Social- 
 ism : as Socialists have pointed out, it is the 
 negation of Socialism. What is the " produc- 
 tion " of railways, of docks, of transport in 
 general, of the picture-shows which entertain the 
 workers, of the school-teachers, of the street- 
 sweepers ? What " product " have those indus- 
 tries to divide ? They subsist by the tolls they 
 can charge, by the wages and salaries allotted to 
 them. They are part of the common effort of 
 the community, to be sustained out of the surplus 
 product of all exchangeable goods. Syndicalism 
 negates not only the solidarity of the State but 
 the solidarity of labour. It does not even rise 
 to the old ideal of the right of all labour to the 
 total product. It is the dream of sectional 
 proletarian egoism, which is blinder than that of 
 capitalism. 
 
 No : the fuller sharing of labour in its product, 
 the progressive ideal, attainable only step by step, 
 is a matter of continuous all-round adjustment, 
 in which the part of the State is one of gradual 
 advance in range of administration. Long before 
 the war, railway nationalisation had seemed to
 
 100 THE ECONOMICS OF PROGRESS 
 
 many a feasible step; and though there was 
 latterly a visible weakening in the belief, due to 
 the fear that a good bargain in the public interest 
 was no longer possible, the experience of the war 
 has again brought it under practical considera- 
 tion. State management has meant a great 
 economic saving — saving of labour, pooling of 
 plant, abolition of waste of power and service in 
 competition. Is that saving to be continued, 
 as it largely may be, with full restoration of 
 travelling facilities, in peace as in war ? 
 
 The question evokes from some an objection 
 which takes us at once to the fundamentals of 
 the economics of labour. We must find work, 
 they say, for the men who return from the war. 
 Unemployment has so often multiplied distress 
 among us, before the State machinery for its 
 relief took shape, that this way of thinking is 
 very natural. Work is felt to be necessary for 
 the feeding of the workers ; and any work that 
 brings wages is so far a solution. But we want 
 in the national interest to maintain only that 
 work which either maximises production or 
 yields other benefit. To duplicate railway ser- 
 vices to make posts for the purpose of giving 
 employment, is merely to enlarge the claim on 
 the national product without adding to the 
 product itself. To make two men do work that 
 one might have done is not a case of making two 
 blades of grass grow where one grew before. It
 
 THE ECONOMICS OF LABOUR 101 
 
 is not really a case of finding work for hands to 
 do : it is a finding of posts, of wages. It is not 
 sound economy to add to an idle class a demon- 
 strably superfluous class either of wage-earners 
 or salary-earners. 
 
 It is very likely, indeed, that a proper distribu- 
 tion of labour, a lightening of the strain of over- 
 long working-hours, would mean the absorption 
 of much of the old and new personnel of the 
 railway system, even with nationalisation and 
 consequent abstention from competitive waste. 
 It may be that three signalmen ought to do, in 
 short shifts, what two signalmen formerly did in 
 long ones. But still we shall have to aim at 
 economy of labour, of power. If the electrifica- 
 tion of railways should mean saving of engine- 
 staff as well as of coal, it will have to be pursued. 
 
 And thus we come again to the inevitable 
 preoccupation of the workers as a class rightly 
 seeking economic self -protection. The tactic of 
 " making work " is the parry to the economic 
 process which chronically " scraps " labour as 
 machinery and organisation improve. Ricardo, 
 who as we saw was accused of not looking at 
 things from the workman's point of view, put 
 the most definite pronouncement ever made by a 
 leading economist of the truth of the workman's 
 complaint against machinery. In the chapter 
 on Machinery which he inserted in his third 
 edition, he expressly declares that, after having
 
 102 THE ECONOMICS OF PROGRESS 
 
 held the contrary, he had been forced ^ to the 
 conclusion that " the substitution of machinery 
 for human labour is often very injurious to the 
 interests of the class of labourers." No one, so 
 fas as I know, has ever made that avowal so 
 unreservedly in the name of economic science. 
 
 And it is a true avowal. The only qualifica- 
 tion of which it admits is that " in the long run " 
 more labour is employed as a result of advances 
 in machinery. Cheaper production means more 
 population and therefore more work. And that 
 is no answer to the fact that in the meantime men 
 are thrown idle. " While the grass grows, the 
 steed starves." Mill, after trying to enfeeble 
 Ricardo's avowal by incoherently denying that 
 " improvements in production are often, if ever, 
 injurious, even temporarily, to the labouring 
 classes in the aggregate, ^^ was moved to confess 
 that " // the sinking or fixing of capital in 
 machinery or useful works were ever to proceed 
 at such a pace as to impair materially the funds 
 for the maintenance of labour, it would be in- 
 cumbent on legislators to take measures for 
 moderating its rapidity." And then he adds 
 an avowal which, confused as it is, gives away 
 the case : 
 
 ^ Apparently by the reasoning of Barton, 0)i the Con- 
 dition of the Labouring Classes. Yet in the Index to 
 MeCuUoch's ed. Barton is referred to only as being " refuted " 
 in a note in which he is highly praised.
 
 THE ECONOMICS OF LABOUR 108 
 
 " Since the improvements whicli do not di- 
 minish employment on the whole, almost always 
 throw some particular class of labourers out of it, 
 there cannot be a more legitimate object of the 
 legislator's care than the interests of those who 
 are thus sacrificed to the gains of their fellow- 
 citizens and of posterity." 
 
 Sixty years were to elapse before the legisla- 
 ture took the problem in hand; and it is argu- 
 able that the delay is partly to be ascribed to the 
 unmeaning qualifications which Mill had put upon 
 Ricardo's plain proposition. Machinery had been 
 desperately fought in the early part of the cen- 
 tury by men who knew that it meant the taking 
 of the bread from their mouths for the time being ; 
 and there is no record, so far as I know, of any 
 proposal by employers in those days to provide 
 systematically against that interim of starvation. 
 Professor Marshall indeed wrote as long ago as 
 1879 that " When an employer displaces by a 
 machine the special skill which men have spent 
 their lifetime in acquiring, and which constitutes 
 their whole capital, he generally exerts himself 
 to prevent their sinking down to the level of 
 unskilled labourers." But he admits that was 
 not universally done.^ 
 
 Only in our own day do we hear of such an 
 arrangement as that made by the Bradford Dyers' 
 Association, which is reported to have worked 
 
 ^ Economics of Industry, 1879, p. 198.
 
 104 THE ECONOMICS OF PROGRESS 
 
 thus far well. " The Association agreed with 
 the Trade Union that they would not discharge 
 more than 5 per cent, of their hands in any one 
 year owing to the introduction of improved 
 methods or labour-saving appliances; and that 
 for any men they did so discharge within the 
 limits of 5 per cent, they would pay through the 
 Trade Union funds, for any one year, a sum 
 equivalent to the amount which the Trade Union 
 paid in the shape of unemployment benefit." ^ 
 There is the solution, at long last. It 'pays the 
 manufacturer, when he introduces new machin- 
 ery, to provide that labour shall not bear the 
 whole burden of the transition stage. If only 
 the capitalists had taken to heart, a century ago, 
 the plain avowal of Ricardo ; or if only Mill had 
 pressed it home instead of minimising it, how 
 much of suffering and strife might have been 
 spared; and how much more rapid might have 
 been the progress of industry ! 
 
 For the distress inflicted at every advance has 
 ^meant the partial frustration of the advance, 
 even on the economic side. The distressed 
 labourers cease to consume anything beyond the 
 barest necessaries, thankful if they can have 
 these ; and the check to consumption invariably 
 reacts on production. The poverty of a thousand 
 men restricts the well-being of thousands more. 
 
 1 Pamplilct on Productivity of Labour after the War, by 
 B. Ellinger, 1917, p. 13.
 
 THE ECONOMICS OF LABOUR 105 
 
 If we are to maximise production in future, we 
 must see to it that the scourge of unemployment 
 is averted to the full extent to which it can be, 
 alike by public machinery and by trade contract 
 between masters and men. In so far as it arises 
 from improved methods of production it is clearly 
 manageable, for the improvement in the terms 
 of the case adds to the national wealth, and can 
 bear the burden of the readjustments. In so far 
 as it arises from trade depressions, it calls for a 
 more extended application of the system of 
 insurance. And that too is possible, and there- 
 fore peremptory, even if we count on a great 
 diminution of the evil in future. 
 
 But there is another side to the labour problem 
 as it will present itself after the war. Production 
 for export in general competes with the produc- 
 tion of other nations in general; and manufac- 
 tures do so in particular. As regards coal, we 
 are economically advantaged against most by our 
 natural resources : as regards manufactures, we 
 must for the rest rely on our labour power, organ- 
 isation for cheap production, and commercial 
 enterprise. Those who talk of our becoming a 
 self -feeding nation after the war may or may not 
 realise — in general, they apparently do not realise 
 — that if that consummation were reached we 
 could not conceivably remain a great manufactur- 
 ing country as at present, when so much of our 
 manufactures goes to pay for our imported food.
 
 106 THE ECONOMICS OF PROGRESS 
 
 But they presumably must realise that after the 
 war we shall have to do much exporting of manu- 
 factures to pay our foreign debt; and they 
 cannot be supposed to contemplate a speedy 
 reduction of our exports. How then will manu- 
 facturing labour fare in so far as its product has 
 to compete in foreign markets with the similar 
 products of foreign industry? 
 
 This is a crucial question ; and I would remind 
 those who dream of keeping Germany poor that 
 low-paid German labour may be one of the most 
 serious factors in our industrial problem in the 
 near future. The general truth of the " economy 
 of high wages " does not solve the problem. It 
 is perfectly true that relatively cheap labour 
 in any community tends to be relatively bad 
 and accordingly to be really dear labour; and 
 we have in the past maintained the highest wage 
 levels in Europe, largely by reason of the economic 
 advantages we derive from Free Trade. If from 
 any motive whatever we put any fiscal obstacles 
 in the way of our obtaining all requisites of pro- 
 duction at the lowest rates — be it chemicals, 
 dyes, leather, machinery, lubricants, or raw or 
 half-manufactured materials — the whole situa- 
 tion will be changed to our grievous disadvantage. 
 But that is not all. If German labour in general, 
 remaining as efficient as before in respect of educa- 
 tion and steadiness, should be forced in future 
 to live on much lower real wages, the law of the
 
 THE ECONOMICS OF LABOUR 107 
 
 economy of high wages will so far be modified 
 in favour of German production. It would of 
 course be only a question of time when German 
 labour would begin to profit by its increased 
 share in world production, and the old levels 
 would be returned to. But the point is that an 
 intermediate period of low wages in Germany, so 
 far from being a cause for jubilation here, might 
 very well turn out to be a serious menace to our 
 own manufacturing prosperity. And this is only 
 one of the many reasons for holding that the 
 poverty of any one State is a handicap to all. 
 
 Two things stand out clearly. Labour will be 
 much wanted; and labour must be reasonably 
 well paid, or it will go elsewhere. We have had 
 many predictions as to an efflux from our shores 
 of men who in the war have lived an open-air 
 life, and will seek to continue it in other lands if 
 they cannot do so here. I am disposed to dis- 
 count such predictions ; but even if they be dis- 
 counted, it is pretty certain that the United States 
 and our own Dominions will hold out attractions 
 to many of our workers after as before the war. 
 At our present rate of net increase of popula- 
 tion, indeed, this may still be desirable. On the 
 other hand, if our power of export of manufac- 
 tures is to be maintained, there must be the 
 fullest economical utilisation of our labour power. 
 The trade unions have for the duration of the 
 war given up many of their self-protective
 
 108 THE ECONOMICS OF PROGRESS 
 
 restrictions; and these restrictions must either 
 be restored or compensated by other arrange- 
 ments which shall hold labour equally secure 
 against loss. 
 
 This is the great practical problem which faces 
 masters and men at the conclusion of the war, 
 and which ought to be in the intermediate time 
 the subject of active adjustment. The war has 
 proved that there was much labour power which 
 was not utiUsed in peace. That labour power is 
 the great offset to the loss caused by the slaughter 
 and the casualties. 
 
 In so far as women can economically do work 
 formerly done by men, their labour should con- 
 tinue, at least for the time being, to be utiHsed, 
 provided of course that the returning men can 
 be employed to equally good purpose on the work 
 that women cannot do equally well. For obvious 
 reasons, the labour of unmarried or childless 
 women is to be preferred to that of the married 
 who have children, for whom the national ideal 
 is the life of the home. But under those Hmita- 
 tions, more work for women is no less socially 
 than economically desirable, given the proper 
 attention to health conditions. It will be a 
 fitting accompaniment to their enfranchisement. 
 And in so far as this means transference of some 
 male labour from old to new tasks, it is earnestly 
 to be hoped that organised labour will itself face 
 the problem, offering not passive resistance but
 
 THE ECONOMICS OF LABOUR 109 
 
 constructive proposals. It will all be in its own 
 economic interest. Neither labour nor capital 
 can thrive if they do not set themselves to get 
 the maximum production from the industrial 
 machine, always on the condition that the indus- 
 trial standard of comfort is maintained or raised, 
 not lowered. Broadly speaking, everything is in 
 favour of betterment for labour if only economy 
 of total production is kept in view. There has 
 been much betterment : there ought to be more. 
 The old Marxian formula of an " iron law of 
 wages," falsely deduced from Ricardo's brief 
 handling of the subject at a time when the out- 
 look as to redundant population was least pro- 
 mising, has long been exploded — which is a very 
 different thing from saying that the Malthusian 
 law of population has been exploded. It is the 
 very recognition of the truth of that law under 
 previous conditions that tends to alter the factors. 
 The law that dirt is conducive to disease is 
 not " exploded " by eliminating dirt. The 
 steady rise in the popular standard of comfort 
 has revealed that superfluity of cheap life, like 
 superfluity of dirt, is reducible to control, given 
 knowledge. It is now recognised that Ricardo 
 was perfectly right in saying that labour's in- 
 creased share, as wages, is gained from profit's 
 share — that is, from the rate of profit; the rate 
 of profit per unit of production having un- 
 doubtedly decreased even while the totality of
 
 110 THE ECONOMICS OF PROGRESS 
 
 profit increases with the increased appHcation 
 of capital.! And the modern developments of 
 the principle of taxation have made it perfectly 
 certain that capital cannot hope to increase its 
 share relatively by cutting that of labour down. 
 It will not be allowed to do so. It has been and 
 will be forced to contribute to the betterment 
 of the labour upon which it rests. 
 
 After the Napoleonic wars, Britain, saddled 
 with a debt of nine hundred millions, was by 
 that very process saddled with a new idle class; 
 and a whole generation passed before that class 
 began to be subjected to due taxation. In the 
 same period, the nation as a whole was newly 
 saddled with a protective fiscal system designed 
 to keep up land rents, the primary basis of the 
 idle class; and only in the last quarter of the 
 century did that share of the national product 
 begin to be decreased by the importation of 
 newly cheap food from America. The repeal of 
 the Corn Laws, instead of reducing rents, had led 
 to their rise on a large scale, the new prosperity 
 of industry having greatly increased the consum- 
 ing power of the mass. Now that the landowners' 
 share has been for a generation definitely reduced 
 or Hmited by the cheap food production of other 
 
 1 Cp. Atkinson, The Distribution of Products, 1885, p. 71, 
 endorsing Bastiat. The point is that while the return per 
 cent, on capital in industry may even increase, the produc- 
 tion done by the capital must be still greater in proportion 
 to earn the profit.
 
 THE ECONOMICS OF LABOUR HI 
 
 countries tending to undersell our own in our 
 own markets, the class has revived the demand 
 for a fiscal machinery whicli shall restore rents, 
 under pretext of restoring agriculture; and of 
 this demand we shall doubtless hear much in the 
 years to come. And labour, in its own interest, 
 must be on its guard against any legislation 
 which shall have that effect. Rent must not 
 again be allowed to trench disastrously on labour's 
 share of its own product. 
 
 So much for the clear rights of labour, and its 
 economic policy. It is a question of retaining 
 and increasing labour's share of its own output. 
 Everything depends upon right economic method, 
 whether resistant or constructive. If rent can 
 be nationalised, well and good. Until it can be 
 — and the solution is probably a good way off — 
 the right policy is to prevent its being artificially 
 enhanced, and at the same time to tax it with 
 vigilance. 
 
 On the other hand, the greatest error that 
 Labour could commit would be to harbour the 
 delusion that its share of the command of wealth 
 can be appreciably increased without an increase 
 in wealth production, proportionally to the labour 
 effort. Merely to increase production by in- 
 creased individual toil all round would of course be 
 simple retrogression. But only through an increase 
 of real production by economy of labour power 
 of all kinds can labour be really advantaged.
 
 112 THE ECONOMICS OF PROGRESS 
 
 Its increasing share has been a matter of con- 
 tinuous adjustment : a catastrophic attempt to 
 secure the whole would not only upset the entire 
 existing system without any security for the 
 steady working of a new one : it would wholly 
 fail to yield the increased share of goods hoped 
 for by those who contemplate it. 
 
 As for the programme put forth by the Guild 
 Socialists — a continuous battle between Labour 
 and Capital, the former aiming directly at the 
 elimination of the latter — it would be difficult 
 to plan a worse way of increasing output. Indeed 
 no such aim appears to be involved. The demand 
 is for the complete control of the workshops by 
 labour, not for the increase of output, but by 
 way of making an end of the capitalistic system. 
 The end is as defensible as any other ideal. The 
 means proposed tend directly to the curtailment 
 of production, which means poverty for the 
 worker as surely as for the employer. 
 
 There is always a certain element of economic 
 illusion about individual wealth ; and the illusion 
 magnifies with the magnifying of shares of wealth 
 in terms of money. Moralists and economists 
 can agree that the chief advantage given by com- 
 mand of wealth is just command of art, beauty, 
 culture. Medieval wealth figured largely as com- 
 mand of personal services, of troops of retainers, 
 gratifying the sense of power ; and even medieval 
 literature is full of homily on the impossibility of
 
 THE ECONOMICS OF LABOUR 113 
 
 maximising happiness by that or any other self-re- 
 garding use of wealth. Modern wealth figures as 
 command of amenity in surroundings — spacious 
 Kouses, elbow-room, beautiful surroundings within 
 and without the house, travel, leisure. It is in 
 part the spectacle of these that rouses and sus- 
 tains proletarian discontent. But in large part 
 the discontent is also roused and fed by the mere 
 record of the large fortunes of modern capitalism, 
 the figures of the fortunes of the multi-millionaires. 
 The announcement that So-and-So has amassed 
 ^five million pounds~or fifty million dollars sets 
 up a greater stress of indignation, probably, 
 than the spectacle of thousands of families with 
 incomes of five thousand pounds. And yet the 
 multi-millionaire is not at all proportionably a 
 consumer of the output of labour. It is much 
 better for labour that he should own forty million 
 dollars than that four hundred men should own 
 a hundred thousand dollars each. He cannot 
 consume a tithe of what they would consume. 
 His accumulation really represents a relative 
 restriction of idle living; and his capital as a 
 productive force may be as well and better applied 
 by him than by them. He cannot run forty 
 houses, or forty yachts. And the chances are 
 that he will devote to public purposes, such as 
 university endowment, what in their hands would 
 be devoted to the maintaining of four hundred 
 families in luxury. 
 
 
 
 • w » -
 
 114 THE ECONOMICS OF PROGRESS 
 
 But even as divided among the four hundred, 
 the mere division of their command of wealth, 
 many times multiphed, would do practically 
 nothing for the proletariat. What it needs is 
 hundreds of thousands of decent houses of 
 moderate size, not a sharing of a few hundred 
 large houses. Let us say that there are a hundred 
 thousand really rich families in the country, 
 living in idle luxury. Apart from the eating and 
 drinking and the clothes, the luxury, as such, can- 
 not be divided, save in so far as, say, the pictures 
 might go into public picture-galleries. You can- 
 not divide the fox-hunting, the motor-cars, the 
 travel; though we should aim at enabling all to 
 travel who desire it. The whole material con- 
 sumption, divided among the mass, would be a 
 bagatelle; and a division of the rich people's 
 monev command of wealth, without an increase in 
 the actual things which constitute material wealth, 
 would tend proportionally to raise prices, though 
 it might conceivably stimulate production for 
 the time being. In fine, there is no solution for 
 labour on the lines of merely increasing the share 
 without increasing the output. More and more 
 clearly does it appear that Mill was in error 
 in stipulating for improved distribution without 
 increase of production. 
 
 But, none the less, the spectacle of inequality 
 in the sharing remains a constant source of 
 labour's discontent; and if we are to escape
 
 THE ECONOMICS OF LABOUR 115 
 
 disastrous wastage of power by labour strifes, 
 the employing class must face the precept that 
 if there is to be any reduction of shares in the 
 period of reconstruction it should fall first and 
 most on their shares rather than on those of 
 labour. There I am taking for granted a certain 
 national ideal, ostensibly much developed during 
 the war. Labour has been so visibly essential 
 to the war, both for fighting and for munitioning 
 the fight, that it is inconceivable that that 
 aspect of things should be lost sight of.^ The 
 profit-getting class has simply to remember that 
 it has hitherto had the best of things ; and that for 
 that very reason it should see to it that labour's 
 worse lot is not further worsened. Need we add 
 the economic warning that, in terms of the law 
 of normal self-interest, such worsenment would 
 mean bad times for capital ? 
 
 Two things are said about capital which we 
 shall have to consider closely when we examine 
 its special economics — two things which are 
 different ways of putting the same economic idea. 
 One is the economic warning that fluid capital, 
 
 1 " When men fight together — and many of them fall 
 together — fighting a common foe, it is certain that those 
 who are left will find some means of standing together in 
 the days of peace ahead. The attempt of Germany to 
 crush us has led to the drawing together of the different 
 classes of our people." — H. Gosling, pamplilet on Peace : 
 How to Get and Keep It, 1917, p. 12. Mr. Gosling refers 
 in particular to the good feeling between the men of the 
 Transport Workers' Federation and their officers.
 
 116 THE ECONOMICS OF PROGRESS 
 
 denied a prospect of fair interest at home, will 
 tend to go abroad : the other is the threat of 
 the capitalist that he will so act — that is, that he 
 will export his capital. The threat that he will 
 himself emigrate has very little in it; unless it 
 should unexpectedly turn out that after the war 
 some country is a very much more happy and 
 prosperous place than it was before. But I 
 suggest here that the threat is in any form a bad 
 mistake; and that the economic warning calls 
 for careful sifting. The economist, to begin with, 
 is at least not disentitled to assume that financial 
 patriotism will outlive the war ; and he is certainly 
 not entitled to assume that it will not. 
 
 Both economist and capitalist will do well to 
 consider whether the share in the national debt 
 acquired by workers during the war may not be 
 a part of the basis for a new understanding. It 
 appears to be fairly well distributed, though not 
 as well as it might be ; and it supplies a reason 
 why labour should look carefully to the main- 
 tenance of the national output. I have no great 
 fear that it will encourage strikes : the saving 
 men will not be ready to jeopardise their savings 
 by going out of work. At the same time, the 
 more thoughtful workers, who will tend to be 
 among the savers, cannot but reflect that great 
 numbers are always unable to save ; and that 
 for them there must subsist the provision of Old 
 Age Pensions, which they and we hope to see
 
 THE ECONOMICS OF LABOUR IIT 
 
 increased in amount, to say nothing of the national 
 system of health insurance. Thus the nation 
 may be held to be becoming always more truly 
 solidary. And as its power to pay pensions — pen- 
 sions to its soldiers as well as to its workers — 
 visibly depends on its total output, the labour 
 interest is yet again seen to be bound up with that 
 of increased production. If then the profit- 
 earners will only show that they are disposed 
 to live up to the ideal of the war, in which officer 
 and private are alike living and dying for the 
 State, for good life for their people and the 
 world in the future, the solution should be 
 found. 
 
 The mention of Old Age Pensions, finally, 
 raises the problem of the ideal of labour in its 
 ultimate form. Not that any state of society 
 we can construct is to be regarded as ultimate ; 
 the ultimate is the undiscovered; but that that 
 institution connects with all the higher social 
 ideals. For the mass of men, the economic 
 preoccupation is provision for the future — for 
 the family, for old age. The strictly individualist 
 solution is saving for investment. Now, saving 
 for investment means the correlative restriction 
 of consumption; and, apart from the highly 
 important factor, set up by the war, of the new 
 demand on production to pay off foreign debt, 
 restriction of consvimption means either restric- 
 tion of production or the expectation of living on
 
 118 THE ECONOMICS OF PROGRESS 
 
 the interest paid on production that takes the 
 form of, or is the form taken by, capital lent to 
 other nations. Imagine the nation once more 
 in its old position of importing annually more than 
 it exports, that is, being a creditor and not a 
 debtor nation. The amount of saving required 
 to reach that result is in the terms of the case 
 in excess of what is required to maintain capital 
 for production for home consumption. That 
 is to say, the saver relies on the consumption of 
 other nations to maintain an increasing produc- 
 tion here ; and that increasing production is 
 further, in the terms of the case, the exported 
 form of the capital lent to other nations. 
 
 Now, that is all right, practically speaking, so 
 long as the other nations need capital for the de- 
 velopment of their resources, and grow wealthier 
 even when paying interest on the borrowed 
 capital. But a real continuance of increase of 
 wealth must mean their being ultimately able 
 to become creditors, or, let us say, to balance 
 debts. Thus the tendency of all-round progress 
 is to simple exchanges between nations, without 
 any indebtedness which means a paying of tribute 
 by one to another. In that state of tilings the 
 idea of providing for old age universally by saving 
 for investment would plainly be chimerical, 
 for the universal saving would mean a universal 
 restriction of consumption, and therefore a re- 
 striction of the production to which investment
 
 THE ECONOMICS OF LABOUR 119 
 
 » 
 
 could be directed. Increasing investment would 
 mean increasing supply, which in the terms of 
 the case would not be met by demand. The 
 result would be decline in production, and there- 
 fore in income, in good life, in progress as we 
 understand it. 
 
 However far off, then, may be the state of 
 national equivalence in credits — a state which, I 
 may add, may be hastened by emigrations — it 
 seems fitting to keep it in view as a point to 
 which economic evolution tends, and to realise 
 the economic corollary that the line of greatest 
 stability is the maintenance of consumption as 
 the condition of the maintenance of production ; 
 in other words, the securing that labour shall 
 always be an adequate consumer, to which end 
 the means must in the end be a systematic 
 development of the system of Old Age Pensions. 
 If it be said that that will be Socialism I offer no 
 denial. It may conceivably lead to Socialism. 
 But I am talking simple economics, waiving 
 the question of other developments of aspiration ; 
 though some of these will fall to be considered 
 under other heads. 
 
 Even as it is, I am putting a proposition 
 which may be termed Utopian at a time when 
 restriction of home consumption is rightly the 
 order of the day, and may very well continue 
 to be so for years to come. But, to make the 
 problem clearer, let me add that the ideal of
 
 120 THE ECONOMICS OF PROGRESS 
 
 well-maintained consumption did not mean a 
 mere increase in the consumption of food and 
 ordinary manufactured goods ; but an expanding 
 provision for good employment and good life 
 by an increasing demand for artistic production, 
 fine craftsmanship, art work, art services of 
 all kinds. The law of progress, so to speak, is a 
 law of the lessening of toil for mere maintenance, 
 and a direction of surplus labour power to the 
 higher forms of production. 
 
 Long before the war, Ruskin propounded such 
 an ideal, and, feeling his way with his very im- 
 perfect though at points very acute economic 
 sense, prescribed that famihes should embody 
 their savings in fine gold plate. That was 
 certainly not a counsel of perfection, either from 
 the point of view of economics or from that 
 of art. Professor Patrick Geddes, developing 
 Ruskin, put the case much more philosophically 
 in what he termed the " new paradox that the 
 sphere of practical physical economics is to 
 discuss the ways and means of increasing not 
 so much bread, as Art." ^ The paradox, I 
 think, is valid ; that is to say, it is a real truth— 
 apart from the special temporary problem of 
 increasing bread and other necessaries. Suffi- 
 ciency first : art later. The deferring of the 
 ideal is part of the deadly price of war. But 
 
 ^ An Analysis of the Principles of Economics, Pt. I, 1885, 
 p. 23.
 
 THE ECONOMICS OF LABOUR 121 
 
 the ideal subsists. It seems to me an irrefutable 
 result of simple economic analysis. 
 
 Of course all such analysis, when put by way 
 of forecast, may turn out to be apathetic indul- 
 gence in optimism. It may be, as Andrew Lang 
 put it a good many years ago, that we are all 
 rattling back to barbarism. But for the purposes 
 of these lectures I shall assume that we are not. 
 It is at once a tragic and an illuminating reflection 
 that the war has revealed in the nations a power 
 hitherto absolutely undreamt of to " finance 
 destruction." Before the Boer War, good men 
 argued that we could not finance Old Age Pen- 
 sions. We financed that War to the tune of two 
 hundred and fifty millions. Then, within six 
 years, we actually did finance Old Age Pensions, 
 on a modest scale. Now we are financing the 
 War of Wars, at an expenditure which, relatively 
 to time, makes all previous expenditure in human 
 history, financial and vital, seem a very little 
 thing. But that w^ar too will end; and as the 
 State lives through it, it will perforce live after 
 it, however frightfully changed in its elements by 
 the slaughter. If then there is to be any truth 
 in the universally avowed will to make this 
 war an end of wars, the possibilities of the social 
 future are not to be limited. Having financed 
 the most monstrous of wars, we or our posterity 
 should be able worthily to finance Peace.
 
 IV 
 
 THE ECONOMICS OF LAND 
 
 It says a good deal for the vitality of the 
 
 Ricardian economic analysis that the " law of 
 
 rent " associated with it is in our day, after a 
 
 hundred years, the basis of a powerful political 
 
 movement — that of the Taxation of Land Values. ' 
 
 The Single Tax doctrine, though it has an older I 
 
 historic form, in its modern statement derives 1 
 
 from the so-called law of rent. That law, as it j 
 
 happens, was not of Ricardo's framing; and his 
 
 particular formulation of it is not only inade 
 
 quate, but is rather less valid than the previous 
 
 formulas of Anderson, West, and Malthus. Per 
 
 haps just because he took it from others, an 
 
 had not to work it out for himself, Ricardo put 
 
 it imperfectly thus in his chapter on Rent : 
 
 " Rent is that portion of the produce of the earth 
 
 which is paid to the landlord for the use of the 
 
 original and indestructible powers of the soil"; 
 
 land he proposed for the purposes of economics 
 
 (to confine the word strictly to that element, as 
 
 expressly distinguished from the elements of 
 
 rent paid not only for buildings but for " the 
 
 use of the capital which had been employed in 
 
 ameliorating the quality of the land." 
 
 122
 
 THE ECONOMICS OF LAND 123 
 
 On Smith's remark that the demand for timber 
 in the south of Europe had caused high rents to 
 be paid for timber land in Norway, Ricardo 
 observes that such payments are made for the 
 actual standing timber, and not for the use 
 of the land. And, consistently at this point, he 
 argues that the so-called rents of mines and 
 quarries are not in his sense rents, since they 
 have " no connexion with the original and in- 
 destructible powers of the soil." He adds, of 
 course, that if after the removal of the timber 
 on the land a payment were made to the landlord 
 for the use of the land for growing more timber, 
 that would properly be rent. We might add 
 that, in the case put, the first transaction would 
 be analogous to the taking of a farm with the 
 standing crops, which would be separately valued 
 and paid for; and that obviously that would 
 become the normal kind of economic transaction 
 in the timber trade in Europe. For if the lumber- 
 man were simply to cut down standing timber, 
 as he so long did in North America, without 
 planting new, he would soon reduce the annual 
 value of Norwegian land nearly to zero. 
 
 If we did not at once see that there is something 
 wrong with the " original and indestructible " 
 formula, we should see it, or ought to see it, 
 in the very next chapter, " On the Rent of 
 Mines," where, in flat contradiction of the pre- 
 vious chapter, we read that " Mines, as well as
 
 124 THE ECONOMICS OF PROGRESS 
 
 land, generally pay a rent to their owner " ; that 
 they vary in fertility, like land ; that the surplus 
 yield of the better over the worst becomes rent ; 
 and that " this principle is precisely the same as 
 that which we have already laid down respecting 
 land." It is remarkable that the many men 
 occupied in confuting Ricardo should have failed 
 to note how he thus confutes himself. Evidently 
 he reached his theory of rent by a piece at a time, 
 and forgot here to reduce it to consistency. At 
 first, apparently, he partly followed Smith, who 
 put farm rents and mine rents in different 
 categories.^ Later, he argued forcibly against 
 Smith's division.^ But he neither unified his 
 own doctrine nor reduced it to a solid basis. 
 
 It is plain that both the " original " and the 
 " indestructible " are mistakes. If we apply 
 the theory to mines and quarries, we are dealing 
 precisely with destructible "powers"; in fact 
 we are dealing with a compensation for the re- 
 moval of irreplaceable parts of the land. If 
 again we direct ourselves to agricultural land, 
 it becomes clear that in so far as the superior 
 fertility of a farm is due to previous " ameliora- 
 tion of the quality of the land," it will earn 
 money not as mere interest on the capital ex- 
 pended but in respect of the resulting surplus 
 produce, just like the " originally " fertile land 
 
 1 Bk. I, Ch. XI, Pt. II, McCulloch's ed., pp. 76-80. 
 
 2 Princiyles, Ch. XXIV, " Works," pp. 198-9.
 
 THE ECONOMICS OF LAND 125 
 
 which in theory may not have had capital 
 expended on enriching it. Capital might have 
 been expended to no purpose, in which case it 
 would get no compensation. It is in fact quite 
 impossible, in the case of farms which have been 
 tilled for centuries, to say what is " original " in 
 their powers. The man who buys the farm at 
 any given time buys it with all the powers it 
 contains ; and for these powers, whether original 
 or added, he will secure what Ricardo calls 
 economic rent. Land originally poor may have 
 been made excellent. All this was pointed out 
 long ago by Wakefield ; ^ and his rectification 
 ought to have been noted by McCulloch, who in 
 effect admitted the facts, ^ but neither readjusted 
 his own formula nor commented on Ricardo's. 
 
 But it is not merely the " powers of the soil " 
 that thus earn economic rent so-called. The site 
 of a farm can do so. In Ricardo's day, in Smith's, 
 and long before, as in ours, a farm situated 
 near a good market with good roads to it must 
 have paid a higher rent than one of equal fertility 
 a long way from a good market ; just as a shop in 
 a " good thoroughfare " will pay a higher rent 
 than one in a bad. In short, the surplus pay- 
 ment which Ricardo sought to isolate is only one 
 of many kinds of payment made annually for 
 special economic advantage ; and as such advantage 
 
 1 Ed. of Wealth of Nations, 1843, II, 245-6. 
 
 2 Princifles, 2nd ed., p. 448.
 
 126 THE ECONOMICS OF PROGRESS 
 
 occurs in many norms, the kind of variation 
 specified by Ricardo should properly be called 
 " one law of the variation or determination of 
 rent " ; while economic advantage in general 
 in the case of which annual rental is paid should 
 be called simply the economic determinant of 
 rent. 
 
 As regards other cases of relative economic 
 advantage, there is no practical gain to science 
 from using the term rent. The analysis in fact 
 does not properly apply to mines, where the 
 normal transaction is an annual fixed payment 
 plus an allowance of " royalty " per ton of mineral 
 raised, with further payment of " way-leaves " 
 on other land for transits. The most fertile 
 mine, unless ill-situated, of course pays the 
 highest rent or the highest royalty ; but whereas 
 the Ricardian law of rent presupposes that the 
 farmer leaves the land as good as he found it, 
 the coal-master obviously does not and cannot. 
 He pays for access to material which he removes 
 and cannot replace. As regards what was soon 
 after Ricardo called " rent of ability," there is 
 really no human advantage to be had from calling 
 the extra profits which an able man of business 
 can earn by his superior sagacity in buying and 
 selling, an economic rent for the use of liis brains, 
 even if he hires out the use of them instead of 
 running a business of his own. 
 
 Still, there is a gain from seeing all forms of
 
 THE ECONOMICS OF LAND 
 
 127 
 
 economic advantage brought into a general 
 view; and there was a great practical gain from 
 the so-called Ricardian analysis of rent. That 
 analysis, which was only imperfect, not false, 
 brought out clearly the fallacy of the charge, 
 naturally common in a time of high food prices, 
 that the high rents charged by landlords were 
 the cause of the high price of corn. As even 
 Smith had rightly stated in one passage, the 
 high rents were the effect, not the cause, of the 
 high prices ; and these in turn Avere the effect 
 either of natural or of artificial scarcity, or of 
 both — the artificial scarcity being that created by 
 the high import duties on foreign corn, a tiling 
 not easily smuggled. Obviously, if the landlords 
 charged no rent at all, the farmers would in 
 general sell at the same prices, and those with the 
 better farms would simply put in their pockets the 
 surplus of their profit over that of the farmers 
 with the worst land. If the mass of the people 
 had properly apprehended the simple economic 
 analysis, and had been able to give political 
 effect to their plain interest, instead of denoun- 
 cing landlords as landlords they would have 
 attac ked them as politicians, and demanded— what 
 
 __ ]o.rn iT.aiiiiifin, 
 
 "^""Ix istnusamisstatement to say, as some, in- 
 cluding Rogers, have done, that the Ricardian 
 law of rent is a mere truism. It was long, for 
 
 [er tne leaders' 
 later secured — ^tne 
 
 /
 
 128 THE ECONOMICS OF PROGRESS 
 
 many, an undiscovered truth; and is thus no 
 more fitly to be called a truism than is the Coper- 
 nican theory. And when Mr. W. A. Carlile, 
 after a brilliant and partly just criticism of 
 Ricardo, backs as against him Adam Smith's 
 account of the price of coal as being regulated by 
 the best mines and not by the poorest, he clearly 
 backs the wrong horse. Says Smith : " The 
 most fertile coal mine regulates the price of 
 coals at all the other mines in the neighbourhood. 
 Both the proprietor and the undertaker of the 
 work find, the one that he can get a greater rent, 
 the other that he can get a greater profit, by some- 
 what underselling all their neighbours. Their 
 neighbours are soon obliged to sell at the same 
 price." ^ " This," says Mr. Carlile, " is common 
 sense, and is of course the view of the business 
 world." It really is neither, unless we say that 
 common sense pronounces the earth to be flat. 
 Let us consider. If the poorer mines are selling 
 coal at 105. the ton, and the better mines offer 
 it at 95. or 95. 6d., the poor mines, as Smith says, 
 have to lower their price. Then where is the 
 underselling? Are the richer mines to go on 
 lowering their prices till they get to zero ? Smith's 
 unguarded proposition is an economic " bull." 
 Obviously what Smith describes could happen 
 only temporarily, and only on a declining market, 
 with a falling demand and an excess supply. 
 1 Bk. I, Ch. XI, Pt. II.
 
 THE ECONOMICS OF LAND 120 
 
 It is quite true that in bad times the poorest 
 mines, which pay the lowest rents or royalties, 
 are the first to close — a sufficiently clear proof 
 that it is not high royalties that cause high prices 
 for coals. But in good times the poorer mines 
 reopen; and it is surely obvious — if it be not a 
 truism — that what they can get for their coal 
 will " regulate " the price of coal, in the sense 
 of marking the minimum at which coal will sell. 
 The lessees of the better mines are not going to 
 sell for less when they can get that minimum, 
 any more than the lessee of the good farm will 
 sell corn for less than the farmer of the poorest 
 land can get for his. In both cases alike, the 
 lessee of the economically advantaged concern 
 may be the first to lower his price in a glutted 
 market, precisely because he can best bear the 
 loss, but that is quite another matter. On the 
 other hand he may elect to hold on because he 
 is not pressed for immediate cash, while the 
 " smaller " man is, and must sell accordingly.^ 
 That is a matter of individual calculation : it 
 may be a matter of sagacity in foreseeing the 
 course of the market. But what the poor mine 
 or farm can get per unit, the better farm or mine 
 will get. And when new farms or mines can be 
 
 ^ This certainly happens. McCulIoch, on the other hand, 
 argues {Principles of Pol. Econ., 2nd. ed,, p. 434) that when 
 price becomes unremunerative, corn will cease to be brought 
 to market. That may happen also. 
 K
 
 130 THE ECONOMICS OF PROGRESS 
 
 worked at a bare profit, the rents of more fertile 
 farms and mines will tend to rise, as the Ricardians 
 said. Ricardo was on the right track, and Smith 
 on the wrong. 
 
 What we reach as regards land in general, 
 in the broad sense which properly includes ores, 
 coal, stone and other portions of the earth, is a 
 market in which economic advantage, and conse- 
 quently gain, accrues in varying degrees irre- 
 spectively of the amount of labour or capital 
 employed. As we have put it after Mill, there 
 are " unearned increments." And this is one 
 of the permanent facts which call to land the 
 attention of all students of progressive politics. 
 Economics may here be regarded as the hand- 
 maid of ethics. For while it shows that the owner 
 of natural means of economic advantage is not 
 the arbitrary causer of extra payment for them — 
 since his abstention from gain would only trans- 
 fer the gain to other pockets — it appears to indi- 
 cate him as, in theory at least, a legitimate object 
 of special taxation. We may go further and say 
 that the natural source of economic advantage 
 ought to become public property, that is to say, 
 that either land or the so-called economic rent 
 of land should be nationalised, the former by 
 purchase, or the latter by progressive taxation 
 ^always providing that we can discriminate 
 between primary or geographical factors in eco- 
 nomic advantage and those created by individual
 
 THE ECONOMICS OF LAND 131 
 
 enterprise in improving the soil. (It is needless 
 to discuss simple confiscation.) But here the 
 ethical precept outruns economic guidance. For 
 the only strictly economic argument in support 
 of land nationalisation is that by that method 
 the unearned increment from land might be most 
 completely intercepted, since all unearned incre- 
 ment in value could be made to take the form of 
 increased rent payable to the State. 
 
 On "the other hand, a very simple analysis will 
 show that if it be counted an ethical imperative 
 to prevent or undo all alienation of land to private 
 property and gain, the process of nationalisation 
 would have to be carried further than the surface 
 soil or area. So long as ores and stones and 
 clays are allowed to be removed and to become 
 private property, the " land " in that respect — ^the 
 " national heritage " as it is called — is being alien- 
 ated. In strict theory, if all land ought to pay a 
 perpetual rent to the State, all native metals, 
 stones, and bricks ought to do so, since they are 
 irreplaceable land, and their use has a value. Of 
 course the land nationaliser may reply that in 
 those cases, or some of them, rent simply cannot 
 be charged because metals, for instance, cannot 
 be followed up. But this is a warning against 
 hasty ethical imperatives ; and if it be admitted 
 that property in houses may be allowable on 
 grounds of total expediency, it can hardly be 
 denied that property in land might be.
 
 132 THE ECONOMICS OF PROGRESS 
 
 The practical problem for the time being is, 
 surely, on the one hand, the maximisation of 
 production from the land at an economic profit 
 — ^that is, with an increased yield to the total 
 capital and labour of the community; and, on 
 the other hand, the prevention of the interception 
 of the gain by any class. Wliat, in short, is 
 the best land policy in the light of economic 
 science ? 
 
 Clearly, as the early economists pointed out, 
 any taxation which discourages the application 
 of fresh capital to cultivation is wholly wrong. 
 In all modern taxation of land values, such an 
 error is carefully guarded against. So far, such 
 taxation with us applies solely to mineral values 
 and to the new building value given to land by the 
 spread of population and by public measures, such 
 as municipal improvements. Can the principle 
 then be applied to purely agricultural land in 
 respect of national as distinct from local taxation ? 
 I do not see that it strictly can, though we are 
 told by some land-taxers that it ought to be. 
 Perhaps, however, it may be found that the dis- 
 pute is one over theoretic terms rather than over 
 economic essentials or political principles. In 
 any case I shall try to show that it need not mean 
 a practical obstacle to State action towards the 
 economic end in view. The theoretic question 
 is whether we can really isolate for purposes of 
 taxation what Ricardo called the " original and
 
 THE ECONOMICS OF LAND 133 
 
 indestructible powers " of the soil, and what 
 land-taxers rightly prefer to call the " unimproved 
 value of the land." 
 
 It has been argued— recently, for instance, 
 by Mr. Harold Storey in his very able Economics 
 of Land Value,^ a work well fitted to stimulate 
 economic thinking on many problems— that we 
 can analyse down to the unimproved value of 
 any land whatever. You deduct first the value 
 of buildings, and the cost of replacing fences, 
 hedges, gates, drains, and other improvements. 
 Then you reckon that it would take eight years 
 of total neglect to reduce long cultivated land 
 to mere " site value " ; and, assuming that the 
 annual value of the labour spent on a farm is 
 about the same as the rent, you deduct eight 
 years' rent value as representing the improve- 
 ment of the land by past capital. Wliat is left 
 will be the " unimproved value." ^ I fear this 
 will not hold. It is not merely labour that is 
 put into land : much material is sunk for pur- 
 poses of transmutation of soil; and soils are in 
 time almost indefinitely alterable. Valueless bog 
 and sea-marsh have been transmuted into good 
 land; poor into rich. A given farm has gone 
 on rising in value, it may be, for generations, 
 and at each new sale the price has in part stood 
 for the value added by improvements, Mr. 
 Storey argues that after deductions have been 
 
 1 Fisher Unwin, 1913. (Is.) ^ Work cited, p. 15.
 
 134 THE ECONOMICS OF PROGRESS 
 
 made as he proposes, the difference in values 
 of farms is strictly the difference between the 
 natural fertility values of the soil. I cannot 
 see how this is to be proved. What is now good 
 land may have been bog or marsh or sand dune 
 a hundred years ago or less. What is more, the 
 value of situation, which he recognizes, is an 
 element in farm value, and has as such been 
 actually paid for. We really must, I think, 
 have regard to this test of past price paid in 
 planning for the special taxation of agricultural 
 land. 
 
 The ethic of the question, to begin with, is 
 clear enough. An investment in land is as 
 perfectly legal as any investment in stocks or 
 shares ; and no theory of " the intentions of the 
 Creator," or of the inalienableness of the soil 
 from communal ownership, can be allowed to 
 dictate the confiscation of an investment abso- 
 lutely endorsed by past law. But in this inquiry 
 we are looking first and last to economic con- 
 siderations. Now, it is an economic considera- 
 tion which dictates the proposal of the land- 
 taxers that the burden of rates shall be removed 
 from buildings and laid upon the capital value of 
 the land in the market. As they justly argue, 
 this would encourage building, whereas the 
 present mode of rating discourages it. And here 
 arises our crux. The capital value of agricultural 
 land is a value partly made by improvements,
 
 THE ECONOMICS OF LAND 135 
 
 which cannot ultimately be valued. Tax a 
 man's land, and relieve his buildings, and he 
 will be encouraged to put up more buildings. 
 But tax the capital value of his land, including 
 the value he or his predecessors from whom he has 
 bought have put in the land, and how is he to 
 be encouraged to put in more ? Only by either 
 (a) expressly exempting from this tax any new 
 value added to his land by his expenditure on 
 it; or (b) by imposing instead a tax on all capital, 
 which would give him no motive to other forms 
 of investment. 
 
 Of these two courses, is not the latter clearly 
 the right one from the point of view of the desire 
 for maximum production, and equally from that 
 of the reformer desirous of intercepting the un- 
 earned increment as regards agricultural land? 
 To impose a tax on the supposed unimproved 
 value of land as at present, and to exempt from 
 taxation any additional accruing value that can 
 be attributed to capital expenditure on improve- 
 ment of the soil — and I can see no other way, 
 under a special land-value tax, of encouraging 
 such improvement — is first to make an arbitrary 
 estimate of the unimproved value, and to open 
 up a new difficulty as regards any future unearned 
 increment that may be supposed to combine 
 with the improved value arising from new ex- 
 penditure. Is there any need for such a pro- 
 cedure? Is not the desired result, as regards
 
 136 THE ECONOMICS OF PROGRESS 
 
 national revenue, to be attained by a uniform 
 tax on all capital values ? That plan falls to 
 to be discussed specially under the head of the 
 economics of capital : here I simply indicate 
 it as a method which solves all the difficulties 
 of the problem of " unimproved land value." 
 The national need is to secure fresh improvement ; 
 and to that end we must so lay our taxation that 
 we shall encourage and not discourage improve- 
 ment of any kind. Tax all forms of capital alike, 
 and the openings for fresh application of capital 
 remain alike, in point of attraction, all round. 
 The landowner has no motive to lay out his 
 capital in other directions. As regards build- 
 ings and soil improvement his inducements are 
 economically the same. 
 
 Harm has probably been done to the cause of 
 scientific taxation by the argument or assumption 
 that land values alone are the subject of unearned 
 increment through the simple spread of popula- 
 tion. Such increment is certainly most obvious 
 in the case of building values, and in general 
 in the monopoly value of land required for public 
 purposes near large towns. It is thus a fair 
 subject for a special intercepting taxation. As 
 regards other unearned increment in the value of 
 movable objects such as rare books, pictures, and 
 so on, the imposition of taxation is practically 
 barred (even if as regards revenue it were worth 
 while) by the simple fact of their removability.
 
 THE ECONOMICS OF LAND 137 
 
 Plan to tax them, and in a week they would 
 have gone abroad. But when, further, it is 
 argued that the whole or the main value of land, 
 whether for building or for cultivation, depends 
 on population and the social system, it must at 
 once be remarked that in the same fashion all 
 capital, and all forms of earning-power apart 
 from primary land cultivation, or hunting, depend 
 for their reward on the spread of population and 
 the social system. All forms of earning-power, 
 then, under limits of expediency, are fitly to be 
 subjected to an income-tax; and all forms of 
 capital are as fairly liable to a special tax as is 
 the capital value of land. 
 
 The ethical argument is equally clear if we 
 consider ownership of land, with its resultant 
 " economic rent," so-called, as a mode of invest- 
 ment. The purchaser of stocks or shares who 
 lives on the interest they bear, is morally in the 
 same position as the rent-receiver. So far forth 
 as those elements of their income go, they all 
 live on the general labour of the community and 
 pay tax on their incomes as " unearned." Why 
 then distinguish between them as regards the 
 taxation of their capital ? Economics gives no 
 support to the proposal. An impartial taxation 
 of all capital, limited by the considerations of 
 expediency which regulate the taxation of income, 
 will in no way discourage the application of 
 capital to any form of production. The State will
 
 138 THE ECONOMICS OF PROGRESS 
 
 get its revenue without in any way checking 
 enterprise : the tax, in fact, will stimulate to 
 further enterprise, just as does the income-tax. 
 
 Thus considered, the debate as to the unim- 
 proved value of agricultural land is seen to be 
 unnecessary, and disappears from the field of 
 practical politics. We get the required source 
 of revenue, and the required encouragement to 
 the productive use of all capital, by a perfectly 
 simple method, which raises no insoluble prob- 
 lems of analysis of the constituents of land value. 
 Land nationalisation, of course, remains an ideal 
 well worth contemplation as (a) the simplest 
 method of securing that all unearned increment 
 in land value shall in future pass to the State in 
 the form of rent, and {b) as being ultimately, in 
 all likelihood, the basis upon which all forms of 
 production from the land can best be maximised, 
 under the best conditions of life for the mass of 
 the people. But we are considering immediate 
 policy; and the immediate policy of taxation 
 indicated by purely economic tests as the right 
 one puts no bar in the way of the ultimate 
 nationalisation of land. 
 
 As regards minerals, the case is different ; and 
 we actually have begun the taxation of mining 
 royalties. Here there is no question of adding 
 to the yield of the land : the minerals can neither 
 be increased nor decreased by fiscal policy; and 
 if taxation of mining royalties be found to
 
 THE ECONOMICS OF LAND 139 
 
 influence landowners to withhold minerals from 
 exploitation, a counteracting motive can be 
 supplied (if it is thought fit) by taxing them on 
 the estimated mineral value. But even that is 
 a policy calling for much circumspection. To 
 argue, as some do, that all land should be made 
 to yield its potential economic value, is to over- 
 look considerations of public utility which may 
 outweigh the economic. We do not want, for in- 
 stance, to have coal mines opened in public parks 
 or in private gardens in towns. Such considera- 
 tions, in short, point to the general expediency 
 of nationalising minerals and mineral rights; 
 since under a national control the different 
 orders of public advantage can best be balanced ; 
 and the production of minerals can be most 
 economically controlled. 
 
 As regards uncultivated land, however, the 
 social and economic problem is yet again dif- 
 ferent. There is clearly no risk of having land 
 unduly cultivated, save in the case of ground 
 which would yield more public advantage as a 
 public park than for crop-growing. Concerning the 
 great mass of uncultivated land no such problem 
 arises; and one obvious way to promote pro- 
 duction is to put a special tax on all land which 
 is not producing food for man or domesticated 
 animals — with the reservations actually made in 
 the existing law in the interests of what we 
 may term the amenities. Broadly speaking, all
 
 140 THE ECONOMICS OF PROGRESS 
 
 unused land not open to public use ought to pay 
 a national tax. If the owner protests that it 
 yields him nothing, the answer is that it is either 
 a luxury, for which he may properly be taxed, 
 or a withholding of means of production from use. 
 If he can prove that no one will pay anything 
 for its use, he may, I think, fitly be called 
 upon either to cede it to the nation or to leave 
 it as public playground, in respect of which all 
 future increment in value should be regarded as 
 unearned. 
 
 In practice, the problem comes to be one of 
 national policy in regard to deer forests and 
 other land used solely for sport. Either these 
 lands are capable of economic production or they 
 are not. If not, they are fitly to be taxed as 
 luxuries. If on the other hand they are capable 
 of economic production — for instance, by afforesta- 
 tion — in the hands of the State, where the outlay 
 is too great or the time of profit-realisation too 
 long to permit of their exploitation by the private 
 owner, then the State is plainly entitled to take 
 them over upon their market value as it stands 
 after the imposition of the proper luxury-tax. 
 Ttiis is the one form of " conscription of land " 
 that seems to be indicated by economic con- 
 siderations as clearly expedient at the present 
 stage of State management. If, on the other 
 hand, there is good reason to believe that the 
 imposition of a heavy luxury-tax would lead
 
 THE ECONOMICS OF LAND 141 
 
 to the application of the required capital for 
 afforestation purposes by private owners, the 
 better economic course for the time being might 
 be to rely on the tax so to secure the desired 
 end. 
 
 At this point we may be faced by the plea 
 that on any view a special tax on the capital 
 value of all land would have the effect, by lower- 
 ing its market value, of making it accessible to 
 purchasers who, by buying it cheap, would be 
 in a position to apply fresh capital. This is a 
 favourite argument for a land-tax with one section 
 of the land reformers. But it is clearly not 
 economically valid. In the first place, the tax 
 proposed is usually a small one ; and there can 
 be no certainty as to the amount of land it will 
 cause to be sold. Such a pressure is actually 
 exercised in a way that is presumably more 
 effectual by the Death Duties, which are equitably 
 laid on real and personal property alike, and 
 which, we are told, do force some land into the 
 market. But there is no security that the land 
 so sold will be put to better economic use. It 
 may be used exactly as before, and often for 
 luxury. Then there would be required a progres- 
 sive tax, of uncertain operation, which on the 
 one hand would measure only the amount rich 
 men are prepared to pay for the luxury of hold- 
 ing land idle, and on the other would be a deter- 
 rent to the sinking of fresh capital in the land
 
 142 THE ECONOMICS OF PROGRESS 
 
 productively used unless the owner can be con- 
 vinced that the valuation would never rob him. 
 And I do not see how he can be so convinced. 
 
 To the luxury-tax on idle land, on the other 
 hand, the only limits are those of general amenity, 
 already recognised in our recent land taxation, 
 and that of the preparedness of the State to take 
 over and use land which the owner is no longer 
 willing to hold under the tax. And this canon 
 of taxation will have to be faced by the protec- 
 tionist school who are now pleading with a new 
 hope for a system of taxes on food imports which 
 shall make this country wholly or nearly self- 
 feeding as regards the main means of subsistence. 
 Even if we put aside the plain facts that this 
 cannot be done as regards tea and other tropical 
 produce; and that it cannot be done equally as 
 regards cereals, meat, sugar, and dairy produce : 
 facts which substantially cancel the pretence of 
 a self-feeding State — there remains the equally 
 plain fact that the landowning class cannot ask 
 for protective duties by way of promoting agri- 
 culture while it deliberately keeps large quantities 
 of land idle for purposes of luxury. Simple 
 common-sense, with little aid from economic 
 analysis, will avail to veto that ideal. If food 
 imports are to be taxed for the purpose of making 
 the State stronger in a military sense, in respect 
 of a maximised agricultural output, all idle land, 
 broadly speaking, that is capable of producing
 
 THE ECONOMICS OF LAND 143 
 
 food, must be put under a prohibitive luxury-tax. 
 To leave it idle is to stultify the pretence of 
 national interest. 
 
 Thus, while political economy warns us against 
 imperfect schemes for intercepting unearned in- 
 come from land, it equally puts us on our guard 
 against plans for enriching the landowning class 
 at the expense of all others. Already rents are 
 rising on the strength of the contingent protection 
 given to agriculture, on military grounds, for a 
 term of years, by our recent legislation. In 
 equity, that legislation should have been accom- 
 panied by an excess profits tax in the case of the 
 farmers. In the absence of such a tax, there is 
 no good ground for the attempt to secure that 
 rents shall not be raised. Let them be raised by 
 all means, and let the State secure at least a 
 share of the benefit by further graduating the 
 tax on unearned incomes, of which rent is one 
 category. By laying the tax on all forms of 
 unearned income, we shall avert the risk of 
 any consequent withholding of capital from land 
 improvement. 
 
 Within the past month,^ there has been ob- 
 truded on the community a new economic issue 
 in regard to land, in the shape of the financial 
 clause of the Petroleum Bill, upon which the 
 Government was defeated. It may be said 
 ^ /. e. in October 1917.
 
 144 THE ECONOMICS OF PROGRESS 
 
 without hesitation that the defeat was deserved. 
 Economics and ethics here again join hands. 
 Admittedly, boring for petroleum in this country 
 has been prevented by the economic fact that, 
 in the case of oil being found, the proprietor of 
 any adjoining land would be free to bore also, 
 and might tap the same supply. Only when a 
 very large area is owned or controlled by one 
 concern would the undertaking be profitable to 
 the individual. It is thus absolutely clear that 
 the work can be done only under a State monopoly. 
 But in their Bill to establish such a monopoly, the 
 Government proposed to pay a royalty of nine- 
 pence per ton to the proprietor of the land in 
 which the boring is situated. The plea is that 
 at present the landlord can obviously demand a 
 royalty before giving permission to bore; and 
 that by legally according him a royalty on the 
 results of State enterprise we shall only be 
 recognising an existing right, not creating a new 
 one. 
 
 That plea is transparently false. In the terms 
 of the case, as put by the Government, the exist- 
 ing land right is worth nothing, since any boring 
 enterprise may be followed by another on adjoin- 
 ing land which would reap the fruits. Therefore 
 no one will bore. If petroleum exists, it can be 
 profitably tapped only by the State, or else by 
 a syndicate which secures all rights. It is there- 
 fore the plain duty of the State to yield nothing
 
 THE ECONOMICS OF LAND 145 
 
 to the landowner beyond simple compensation 
 for damage done to his land, which the Bill duly 
 provides. To guarantee him a royalty on the 
 State's possible production is to endow him with 
 a source of income which he positively did not 
 possess, and which, in the nature of the case, he 
 has done and could do nothing to create. 
 
 It is not a mere question of amount, or of 
 possible extra loss to the State. Even if the 
 quantity of available petroleum be great, the 
 royalty, doubtless, would not amount to much; 
 though on the other hand it might easily happen 
 that the State would spend £10,000 to get £1000 
 worth of petroleum, upon which, had the financial 
 clause of the Bill been passed, it would have had 
 to pay royalties. But that is not the vital issue. 
 The true ground of resistance is that there is 
 neither economic nor ethical need to yield the 
 landowner a royalty, since he counts for nothing 
 in the production. The State provides the capital 
 in creating the monopoly, and it should have the 
 whole surplus of output over costs. 
 
 Some confusion of thought appears to have 
 arisen in this connection, alike among reformers 
 and Conservatives, in respect of the supposed 
 analogy between existing mining royalties and 
 those proposed to be created under the Petro- 
 leum Bill. There have always been reformers 
 who, oblivious of economics, have proposed to 
 " abolish " mining royalties. Now, at this point
 
 146 THE ECONOMICS OF PROGRESS 
 
 the Ricardian analysis is absolutely valid; and 
 mining royalties are on all fours with land rent. 
 Abolish royalties — assuming for argument's sake 
 that legal abolition would have a meaning — and 
 the amounts now paid as royalties will simply go 
 into the pockets of the lessees. Should the land- 
 lords in that case refuse to lease, you might 
 indeed compel them to do so by taxing them on 
 the amount of the estimated annual value ; but 
 you would still be only enriching the lessees. 
 Mining royalties are simply the measure of the 
 excess profits yielded by mines of varying fertility 
 and site advantage. The poorest mine pays a 
 penny a ton, or nothing. To put all on a nominal 
 rental equality is simply to endow the lessees of 
 all above the zero level. 
 
 It has been justly remarked that an immense 
 source of gain might have been secured to the 
 State without any mulcting of individuals if all 
 mineral rights in this country had been vested 
 in the crown as they were in the medieval Holy 
 Roman Empire as regards Germany ; and as they 
 actually were in Britain at an early date as regards 
 gold and silver, and later as regards saltpetre, 
 when that was found to be a vital munition of 
 war. But it is a mistake to suppose that on 
 the Continent there has resulted the due gain to 
 the State. That could have been secured only 
 by exacting mining royalties on the lines of 
 economic rent. When we are told that British
 
 THE ECONOMICS OF LAND 147 
 
 royalties on coal and iron are a handicap as 
 against lower royalties paid on the Continent, the 
 answer is that if the Continental royalties do 
 not vary as ours do, there is simply going on an 
 enrichment of Continental lessees as against the 
 enrichment of landlords here. The richer mines 
 will not sell — except, as aforesaid, on a falling 
 market — at lower prices than those earned by 
 the poorer or worse situated. The fact that 
 under the protective system the cartels sell coal 
 abroad at lower prices than they charge at home 
 does not affect the argument. Our own mines, 
 paying their economic royalties, will sell abroad, 
 as at home, at a low price on a fixed contract. 
 In any case, the economic surplus is actually 
 yielded under any system; and it would appear 
 that in Germany, where it nominally goes to the 
 State, it actually goes in practice, in large part, 
 into the pockets of favoured lessees. 
 
 It may be asked, finally, what economic science 
 has now to say on the question of small hold- 
 ings. Long ago economists pointed out that the 
 " magic of property " sufficed to make small 
 holdings profitable, the cultivators being ready 
 to put an unlimited amount of labour in the land 
 when they held it as their own. And the state- 
 ment was perfectly true. But the truth is of 
 limited application. Unless by means of an 
 amount of toil that is undesirable from the point
 
 148 THE ECONOMICS OF PROGRESS 
 
 of view of the standard of good life, small hold- 
 ings cannot profitably be multiplied beyond the 
 number requisite to yield certain kinds of produce. 
 Doubtless that number could in this country be 
 greatly increased. But to multiply small hold- 
 ings for purposes of cereal and dairy produce in 
 general would be uneconomical. The best results 
 in these directions are clearly to be attained by 
 farming on a large scale ; and labourers so em- 
 ployed may be secured better life conditions than 
 would be possible to a large population of small 
 cultivators. The once popular formula of " three 
 acres and a cow " was a lamentable instance of 
 democratic delusion in these matters. A cow is 
 only periodically in milk. Three cows would be 
 needed to secure constant supply. And the three 
 acres might be a very poor basis of income. 
 
 The object lesson furnished by Belgium, for 
 instance, is a corrective to the assumption made 
 by some land reformers that small holdings mean 
 the maximum of good life. Small holdings there 
 are — or were — far more numerous than in this 
 country, but the average standard of comfort 
 was demonstrably lower. We must remember, in 
 short, that in this country agricultural production 
 is in general not more but less profitable than 
 manufacturing; that a given amount of capital 
 and labour will secure a larger return in value 
 than the same amounts, with existing methods 
 and implements, in agriculture; and that the
 
 THE ECONOMICS OF LAND 149 
 
 excess value can probably purchase the required 
 foods in the future as it has done in the past ; 
 to say nothing of the fact that the mercantile 
 marine, of which the economic basis is the carying 
 of our imports and exports, is the political basis 
 of our fleet. What political science — or common 
 sense — has to keep in view is the maintenance of 
 all our means of strength at as high a level as 
 possible. 
 
 As regards agriculture in particular, then, the 
 true formula is the maximisation of profitable 
 production, the securing that land does not lie 
 idle which labour on either a small or a large 
 scale could cause to yield a fair return; and that 
 there shall be due encouragement to the invest- 
 ment of fresh capital in improvements of all 
 kinds. 
 
 A blind pursuit of the ideal of self -feeding, on 
 the other hand, may easily lead to the most 
 disastrous waste ; and seeing that no development 
 on that line can yield absolute security, bad 
 harvests being chronic in all regions, it behoves 
 us to resist resolutely every scheme of which the 
 motive is discernibly class enrichment while the 
 pretext is national defence. Provision has been 
 made for the special encouragement of agricul- 
 ture during the war, by guaranteeing its profits 
 for years afterwards. There can be no excuse 
 for any further commitment of the national future 
 on professedly military grounds. Future progress
 
 150 THE ECONOMICS OF PROGRESS 
 
 is rather to be made by planning towards that 
 nationaUsation of land which alone will raise 
 husbandry above the snares of the hard law of 
 things by which scarcity of food for all becomes 
 a source of special gain to the corn-grower. It 
 has kept farmers collectively in an attitude less 
 favourable to all-round public spirit than that of 
 those concerned in trade, who are conventionally 
 held to be the more selfish wealth-seekers. While 
 both callings remain on the footing of com- 
 petitive private enterprise, trade is really the 
 more humanising of the two. 
 
 It is the business of the State so to regulate 
 both as to obtain the maximum gain with the 
 minimum of social harm; and the most truly 
 progressive State is that which best does so. For 
 the present, with labour to some extent, though 
 quite imperfectly, safeguarded, maximum pro- 
 duction is to be sought on the present lines of 
 ownership. But just as surely as landowners' 
 interests are pushed, and farmers seek to obtain 
 fresh security for high profits, the demand for a 
 larger share for labour will be redoubled, with a 
 growing probability of nationalisation as the only 
 ultimate solution.
 
 THE ECONOMICS OF CAPITAL 
 
 In considering capital from the point of view 
 of national policy, there is no need to debate 
 long, though we must pause for a little, over its 
 definition. 1 For theoretic purposes, it is con- 
 veniently defined as " That portion of wealth 
 devoted to the production of more wealth." 
 The idea, however, would be more exactly 
 presented if we said : " That portion of wealth 
 and of credit, or command of wealth, used to obtain 
 more command of wealth." For the man whose 
 capital is wholly invested in stocks and shares, 
 and who sells out one and buys another where he 
 sees his way to gain, is as truly a capitalist, 
 though a non-producer, as he who devotes his 
 command of wealth to direct production; and 
 
 ^ I do not attempt to discuss the analyses of capital 
 offered by Professor Marshall {Principles, 2nd ed., Ch. IV). 
 They present the perplexity of a repeated overlapping of 
 terms. Thus, what is marked off as " Trade Capital " 
 appears again in the forms of " Consumption " and 
 " Auxiliary " Capital. The discussion of Professor Gide 
 {Principles of Pol. Econ., Eng. tr., 2nd cd., pp. 120-4), in 
 which capital is defined as consisting in objects and yet is 
 recognised " in the form of " scrip, is to me equally enig- 
 matic. It seems best to offer an independent presentment, 
 in terms of the current language of business. 
 
 151
 
 152 THE ECONOMICS OF PROGRESS 
 
 his merely invested capital is as truly capital 
 for him as the other's. I put it long ago that 
 " Capital is any economic quantity used for 
 purposes of gain; " and the definition, I think, 
 will hold; since it covers alike credit or fluid 
 capital and that which is embodied in stock or 
 in instruments of production. 
 
 Discussions on capital in our economics date 
 from Adam Smith, who, after dividing fixed 
 capital into four categories — (1) machines and 
 tools, (2) buildings used for production, (3) im- 
 provements of land, and (4) acquired and useful 
 abilties — made a further analysis of circulating 
 capital, which he described as consisting in 
 money (that is, coin) and in three categories of 
 things in the hands of traders.^ To-day it is 
 obvious that coin is least of all a capital factor 
 in the productive process, its total quantity 
 being a very small fraction of the registered 
 capital values. It is in fact merely the means 
 of transit of small sums of command of wealth. 
 If, with Mr. Melrose, we take " currency " to 
 mean now the whole mass of accredited " paper," 
 or bank credits, the available loanable " money," 
 in the larger sense, was in the pre-war period 
 many times greater than the whole mass of 
 bullion in the country. In the age of cheques 
 and scrip, Smith's definition is obsolete, as to 
 money. 
 
 1 Bk. II, Ch. I.
 
 THE ECONOMICS OF CAPITAL 153 
 
 After his time, there grew up ^ the practice 
 of eliminating money from the definition without 
 substituting registered credits, and conceiving 
 capital as consisting in those " fixed " and " cir- 
 culating " quantities described by Smith — that is, 
 plant, buildings, land improvements, acquired 
 abilities, provisions, material, raw or partly 
 manufactured, and trade stocks. Commonly, 
 ability is set aside as a disparate item, not being 
 open to evaluation, and we are left with the cate- 
 gories of things. But this conception is equally 
 inapplicable to the procedure and the phenomena 
 of the " capitalistic " age. And still more inap- 
 plicable is it to the purposes of political economy 
 in the sense of that term which is valid both for 
 Smith ^ and for us — that is, political science in the 
 light of economic science. 
 
 To argue, as some still do, on the old lines, 
 that capital is to be conceived as consisting 
 solely in the material things already produced ^ 
 that are used for fresh production, is to exclude 
 from economic view the mass of registered 
 money credits which are constantly described and 
 
 ^ See Professor Marshall's note to his Ch. IV on the 
 history of the definitions of capital. 
 
 2 Wealth of Nations, Bk. IV, Introd. 
 
 ^ " The Avord capital should only be applied to material 
 products," writes Dr. Pierson {Principles of Pol. Econ., 
 Eng. tr., I, 177). He is immediately deprecating the appli- 
 cation of the word to personal qualities (Smith's " acquired 
 abilities "), but he means his phi-ase in its full sense.
 
 154 THE ECONOMICS OF PROGRESS 
 
 regarded as capital in the whole business world.^ 
 True, credits are all ultimately referable to the 
 values of exchangeable things; but those values 
 are all, in different degrees, in a state of flux, so 
 that irrespectively of the changes in the amount 
 of the things themselves the amount of " capital " 
 available for setting actual things and labour 
 going— the really " capital " function in produc- 
 tion — is constantly varying. In times of de- 
 pression, of large unsold and unselling stocks of 
 goods, capital is not merely " held back " : there 
 is actually less of it to come forward, since the 
 values upon which credit rests have shrunk. 
 Stoppage of production means a further decline 
 in the aggregate of values; and "capital" is 
 restored both by production and by renewed 
 demand for products. Capital, then, both from 
 the political and the economic points of view, 
 is to be conceived as a partly psychological 
 phenomenon. 2 
 
 The question, as was long ago observed, is not 
 "What is capital?" but "What is capital to 
 be ? " " What are we to regard and describe as 
 capital ? " And the scientific answer, I submit, 
 
 ^ " We must . . . take the ordinary usages of the term 
 as the foundation of our account." — Marshall, Principles, 
 I, 123. The Professor, however, does not so deal with 
 credit capital. 
 
 2 The student may profitably study the searching criti- 
 cism of Adam Smith in Professor Cannan's Distribution and 
 Production, 1893, Ch. IV.
 
 THE ECONOMICS OF CAPITAL 155 
 
 is that the word stands at bottom for any 
 economic quantity in the " capital ^ relation " 
 to other quantities. For each man, the relation 
 is in part personally determined. He may treat 
 a given sum as either capital or income. In 
 peace time there is a standing risk concerning 
 " saved capital " — that is, bank credit or com- 
 mand of wealth — that it may be accumulated 
 in excess of the opportunities for its profitable 
 use, and that the act of saving credit may be 
 carried to the point of unduly curtailing consump- 
 tion. In that case there is a struggle for survival 
 among certain capitals, and some is lost, its 
 enterprises collapsing or its products becoming 
 unsaleable at profit. In time of war — at least 
 of this war — we are conscious only of the over- 
 whelming need to save credit = capital, in order 
 that the war may be financed. After the war, 
 the problem may be, How is credit capital to be 
 found for the new financing of industry ? Per- 
 haps it may not be so : the unprecedented 
 financial conditions may yield unexpected re- 
 sults ; but it is prudent to assume that the fears 
 expressed on the subject may be partly verified. 
 For our practical purposes, again, there is 
 no need to go deeply into the metaphysics of 
 national as distinguished from personal capital. 
 Once more, capital, resting on value, is a matter 
 
 ^ On the etymologies of the word see Cannan, as cited, 
 p. 53 seq.
 
 156 THE ECONOMICS OF PROGRESS 
 
 of relations. The aggregate of values, the totality 
 of things saleable, is but an abstract sum of 
 separate possibilities of sale.^ A's house is 
 reckoned to be worth £2000 ; B's factory £10,000 ; 
 C's ship (in peace time) £30,000 ; but offer all the 
 houses and factories and ships (in peace time) 
 for sale at once, and these values will not be 
 " realised," as we oddly say when we indicate 
 the exchanging of a piece of wealth for command 
 of wealth, the universal ultimate desideratum. 
 Values are realities only in relation : aggregated, 
 they are but an arithmetical expression. To 
 say, then, as does Jevons, that " capital is 
 concerned with time " ^ is to tell only a fraction 
 of a truth. All values are " concerned with 
 time," being in the aggregate " realisable " only 
 by effluxion of time. 
 
 Nor does Jevons clear up anything by saying 
 on one page that capital " consists merely in 
 the aggregate of those commodities which are 
 required for sustaining the labourers of any kind 
 or class engaged in work " ; ^ on the next that 
 '* the current means of sustenance constitute 
 capital in its free and uninvested form''^ ;^ and 
 then that " capital enables us to make a great 
 outlay ; " ^ and yet again that " capital simply 
 allows us to expend labour in advanced ^ There 
 
 ^ On the whole question cp. Cannan, as cited, Ch. T, §§ 3-6. 
 
 2 Theory of Political Economy, 2nd ed., p. 243. 
 
 3 Id., p. 242. ■* Id., p. 243. ^ j^^ ^^ 6 /^^ p 245.
 
 THE ECONOMICS OF CAPITAL 157 
 
 may be dispute as to any one conception of 
 capital; but it cannot be at once an aggregate 
 of certain commodities, which are unintcUigibly 
 alleged to be " free and uninvested," and some- 
 thing that " enables us to make a great outlay.'''' 
 Only bank credit enables us to " make an out- 
 lay " : the commodities are the things laid-out- 
 upon. And of the commodities utilised in the 
 preliminary course of an enterprise, before it 
 earns profits, many may not have existed 
 when the enterprise began, or may have had to 
 be brought into the country from without. This 
 repetition of the old effort to reduce the concep- 
 tion of capital to commodities — food, plant, and 
 so on — in the act of affirming that it is " concerned 
 with time " (that is, permits of delay in attaining 
 profit) is simply a confounding of confusion, 
 which warns us to widen our formula. It is 
 the command of commodities, not the com- 
 modities in sum, that constitutes business capital 
 in this aspect. 
 
 What we have to realise is, first, that as regards 
 production the " capital thing " is the command 
 of wealth, registered credit, power to pay. But, 
 secondly, we have to note that all capitals, 
 separately considered, are values, negotiable 
 shares of command of wealth. They do not 
 represent any measured totality of things. Try 
 to buy things with all the registered credits in 
 the course of a few days or weeks, and the prices
 
 158 THE ECONOMICS OF PROGRESS 
 
 of things will rise enormously — the value of the 
 fluid credit shrinking in proportion; just as the 
 values of the things would shrink if they were 
 all offered for sale at once. Obviously the 
 National Debt is the sum of private credit 
 capital lent to the State ; and every holder is a 
 capitalist to the extent of his holding, on which 
 he draws interest. 
 
 Just as obviously, the National Debt is neither 
 capital for the State, nor representative of im- 
 mediately realisable values of things.^ Hence 
 the constant difficulty of stating the amount of 
 the nation's aggregate wealth — a difficulty equally 
 great with that of stating the aggregate national 
 income. The use of such calculations is solely 
 as stating the aggregate amount of the accredited 
 shares of command of wealth. A calculation 
 which, for fiscal purposes, adds up alike the 
 nation's debt, the value of the land, and the 
 amount of the mortgages on the land, stands only 
 for a fiscal fact, not for a statement of existing 
 real wealth, save in so far, it may be, as we can 
 assume that increase in the aggregate of claims 
 to wealth means increase — how far proportional it 
 seems impossible to say — in the actual quantity 
 of desirable things produced and subsisting. 
 
 ^ It is the omission to note the essential difference between 
 this negative form of capital and the positive form applied 
 to production — a difference rightly insisted on by Dr. Pierson 
 — that hardens the ordinary economist in his limitation of 
 the term capital to material things.
 
 THE ECONOMICS OF CAPITAL 159 
 
 But the fiscal fact, as it happens, is what 
 we are concerned with. Taxation is the State's 
 main instrument of energy-production, in peace 
 as in war ; and the State's relation to the problem 
 of capital after the war will be one of adjustment 
 of taxation. Already this is being recognised 
 in a newspaper discussion on the Taxation of 
 Capital — a procedure once considered so illicit 
 that so to describe any form of taxation was 
 regarded as the most effective aspersion of a 
 new tax-scheme. To-day, the advocates of 
 the method, or some of them, are so far from 
 deprecating the old resistance that they even 
 challenge new by calling their scheme one for 
 the " Conscription of Capital." It is worth while, 
 therefore, to linger a moment over that political 
 conception. 
 
 There need be no debate over the ethics of 
 the case. If a State in its need is entitled to 
 make conscription of lives, it is certainly entitled 
 to make conscription, for the same ends, of 
 property. In point of fact it has obviously 
 done so from the moment of the outbreak of 
 the war. Conscription, w^hether of life or pro- 
 perty, is not confiscation. It is only by chance 
 of war that the conscript dies : when he does, a 
 certain compensation is made to his dependants ; 
 and while he lives, he is paid a wage. So with 
 property. The State took horses and wagons 
 and land wherever it required them, making
 
 160 THE ECONOMICS OF PROGRESS 
 
 compensation for the use of the land, and for 
 the value of the horses and wagons. That may 
 consistently be described as conscription of 
 wealth, or capital, so far as it goes. 
 
 But the phrase carries, of course, the further 
 idea of proportional conscription of all capital, 
 all wealth or command of wealth, so far as the 
 nation's need may go. And in this sense the 
 proposal is more strictly equitable than any 
 plan of life conscription can be. For the con- 
 script's eligibility is one of age and health : the 
 man above the military age and the man of poor 
 health (in theory at least) are immune. Ethic- 
 ally, then, the case would seem to be clear. 
 Just, however, as in regard to land we found the 
 purely ethical conception was usefully to be 
 superseded by the economic, so do we find the 
 case to stand as regards capital. The practical 
 problem is, How can be best obtained the largest 
 command of credits for war purposes; and it is 
 fairly plain that it is much more easy to get them 
 by borrowing than by levying. Impose a levy 
 on all capital values — the only equitable course — 
 and if it be heavy enough to finance the war 
 you put millions of men in the position of having 
 to borrow in order to pay, besides setting up the 
 friction of millions of protests against the valua- 
 tion made of fixed capitals. At once, then, the 
 theoretic equity is seen to involve practical 
 inequity, or enormous risks of it, by reason of
 
 THE ECONOMICS OF CAPITAL 161 
 
 the special need for haste; and the end in view 
 is made more difficult of attainment. Decidedly, 
 we must hark back to economics. 
 
 Germany, it is understood, resorted to the 
 method of the levy very early in the war, by 
 way of calling for forced loans. All citizens 
 who had fluid capital were called upon to lend 
 it, or a portion of it; and all owners of fixed 
 capital were called upon to mortgage it to a State 
 bank for a portion of its value, and pass over the 
 amount so borrowed to the State, in return for 
 scrip. That scrip, in turn, was again called up, 
 at a reduced valuation, as a new loan; and to 
 an indefinite extent German war debt has been 
 thus built up by paper upon paper. There 
 could be no better proof of the financial superi- 
 ority — the superiority in command of wealth — 
 that has arisen in Britain under its Free Trade 
 system, as compared with the position of the 
 protectionist State. Germany had already, be- 
 fore the war, tried a levy on capital, for military 
 purposes, with the result, it is understood, of 
 great disappointment to the Treasury and no 
 less exasperation to the capitalist class, great 
 and small. One of the economic inferences is 
 that capital values under a protectionist system 
 are to an abnormal extent unreal, as compared 
 with such values in the free-trading State. 
 
 There emerges the broad fact that while the 
 protectionist State found itself thus compelled
 
 162 THE ECONOMICS OF PROGRESS 
 
 to levy forced loans from capital at a very early 
 stage of the war, the free-trading State has 
 reached the fourth year of the war without 
 requiring to do so, though making much the 
 greater financial effort in proportion to popula- 
 tion. It would indeed be rash to predict that 
 the colossal conflict can be carried to an end 
 without resort to the German expedient, but 
 conceivably it may ; and for the reasons already 
 indicated it is very desirable that it should. 
 Only a liigh rate of levy could make any serious 
 difference to the financing of the war; and the 
 higher the rate the greater the hardship, the 
 friction, and the hampering of industry. But 
 whereas any tax on capital will be levied with 
 the maximum of difficulty during war, it may be 
 levied with precaution and deliberation during 
 peaces and during peace, there is every reason 
 to believe, it will not only be a most valuable 
 means to the reduction of debt but a great 
 facilitation of the required supply of capital 
 for new industrial needs. 
 
 Those calculations, before referred to, of the 
 aggregate amount of the capital owned by the 
 entire people of the country vary significantly 
 between something like twelve thousand millions 
 and twenty-five thousand millions. The former, 
 grounded on the statistics of the death duties 
 for a generation, seems much the likelier to be 
 correct; and for purposes of exposition I will
 
 THE ECONOMICS OF CAPITAL 163 
 
 make the still safer estimate of ten thousand 
 millions. An average tax of 1 per cent ^ on 
 that sum may be assumed to be bearable without 
 great hardship, and it would yield £100,000,000. 
 The aim of such a tax should clearly be to pay 
 off debt. I gather from Mr. McKenna's speech 
 on the £400,000,000 vote of credit at the end of 
 October, 1917, that our revenue dispositions have 
 so far been made with the object of not only 
 providing from annual taxation the interest on 
 the immense debt we are piling up, but of pro- 
 viding a sinking fund. This provision, however, 
 in his opinion threatens to be inadequate; and 
 on any view it may be urged that a further 
 provision for debt reduction is highly expedient. 
 There has been discussed among business men 
 the alternative of a much larger levy on capital 
 values by way of a much more extensive reduc- 
 tion of national debt after the war, on the ground 
 that to maintain the immense revenue required 
 for paying interest on £6,000,000,000 and meeting 
 normal national expenditure will mean an income- 
 tax of crushing and crippling force. There is 
 much to be said for this view, provided that two 
 things are recognized : (1) that as the real aim 
 is to reduce prospective claim on wealth, the levy 
 should fall, in order of pressure, first and most 
 
 ^ It might be graduated from one-half per cent, on capitals 
 of £3000 to £8000 ; to 1 per cent, a considerably higher total ; 
 and thereafter graded up to 2 per cent.
 
 164 THE ECONOMICS OF PROGRESS 
 
 heavily on scrips and other sources of " un- 
 earned " income, and least heavily on capital 
 values as represented by plant and trade build- 
 ings; and (2) that it is not admissible to tax 
 war bonds themselves at the same rate as other 
 scrip. The total result of such a levy would be 
 to reduce the interest-drain on the nation by 
 paying off war bonds. 
 
 But it is obvious that any such large levy as 
 is contemplated by the argument could not be 
 met out of " bank money " ; that most of it 
 would have to be met by simple surrenders of 
 scrip, or sales of property, or borrowings ; and 
 there would arise the problem of falls in the 
 value of the scrip and property thus suddenly 
 put on the market on a great scale. The scrips, 
 indeed, might be transferred to holders of war 
 bonds at a fixed market price, in substitution 
 for their State bonds; but this would be hard 
 to adjust with equity; and in any case there 
 would arise the difficulty of borrowing at the 
 same time on a great mass of properties. There 
 may be some way of conducting such a wholesale 
 readjustment of claim on wealth without a 
 crash. Bonds or scrip bearing no interest, as 
 loans to borrowers on property, have been pro- 
 posed — a device difficult to foresee the working 
 of. Pending, then, the full formulation of a 
 workable levy on capital on a great scale, which 
 will in effect only write off a. large quantity, or
 
 THE ECONOMICS OF CAPITAL 165 
 
 successive large quantities, of debt scrip, without 
 upsetting finance in general, it may be well to 
 contemplate a levy on capital which can be 
 largely met out of income, and will involve 
 sales and borrowings only to a manageable 
 extent. 
 
 Some systematic provision there certainly must 
 be. Mr. McKenna, I believe, would be the first 
 to say that a lasting income-tax approaching 
 ten shillings in the pound would not only be a 
 great strain on the majority of those who had 
 to bear it, but might be a serious handicap to 
 industry. The sooner, then, the strain of taxa- 
 tion of incomes, at even the present figure, is 
 relieved by other methods, the better for the 
 nation in every regard. 
 
 The conscription of capital, in short, is by its 
 nature an expedient for peace, when alone it 
 can be considerately applied. In war time it 
 could not possibly take the place of other forms of 
 taxation; and its levy, suddenly made, without 
 time for careful valuations, would mean the maxi- 
 mum of friction; whereas any sum it could 
 reasonably be expected to yield can be obtained 
 by borrowing without any disturbance. In time 
 of peace, again, a 1 or 2 per cent, tax will 
 yield a relatively immense sum without any 
 serious financial strain. The amount raised may 
 be partly withdrawn from credit accounts by 
 the payers, partly raised by borrowing on fixed
 
 166 THE ECONOxMICS OF PROGRESS 
 
 capital values. So far there might be hindrance 
 to industry; or at least mere transference of 
 working capital from one hand to another. But 
 much of the tax will certainly be paid out of 
 income/ the rate of tax being so low that many 
 will prefer, as Ricardo saw, a bearable reduction 
 of expenditure to a diminution of capital. The 
 revenue for debt reduction must be found 
 somehow, and either incomes from investments 
 or the investments themselves are indicated as the 
 most obvious unearned sources, provided that 
 the tax is limited as regards smaller capitals on 
 the lines of the existing income-tax. But we 
 shall see reasons for extending the taxation 
 beyond the sources of technically " unearned " 
 income, to " fixed " capital of various kinds. 
 And inasmuch as, apart from business capital, 
 a large mass of futurely realisable values exists 
 which does not yield income — as land held for 
 pleasure, unworked minerals, furniture, jewels, 
 pictures, and other works of art — a tax on capital 
 values has here an advantage over a simple in- 
 crease in the tax on unearned income, though 
 that, especially on high incomes, may fitly be 
 taxed at a heavily graduated rate. 
 
 A tax on capital values will not only yield a 
 revenue to pay off State Debt — an obviously 
 desirable process, both on grounds of social 
 
 ^ Levies on State stock itself, for instance, would in 
 general be so paid.
 
 THE ECONOMICS OF CAPITAL 167 
 
 equity and on grounds of State finance — but so 
 far as it is paid out of income will constitute 
 a means of turning negative or unproductive 
 capital into productive. The holders of the 
 debt scrip which is paid off will in general desire 
 to preserve their capital as a remunerative 
 credit, and it will accordingly seek investment, 
 in the usual way, on productive lines. In so 
 far as the tax has been met by borrowing, it 
 will constitute an offset to the amount released; 
 but the rest will be available as free capital 
 seeking re-investment. If capital is needed for 
 home industry, it will so far be provided; if 
 not, the free credit wdll seek investment else- 
 where ; and in either case the State is being 
 gradually relieved of its gigantic burden of 
 annual interest on debt, much of which maintains 
 idle life. At that rate the entire National Debt 
 might be paid off in fifty or sixty years, the process 
 all the while tending to reduce idle living and 
 promoting wealth production. 
 
 The ethical question w^e have already con- 
 sidered. Under that head there can be no valid 
 objection save in respect of the difficulty of an 
 equitable valuation of some forms of fixed capital 
 — a difficulty always present, and one to be met 
 with deliberation. Given equity of incidence, 
 a tax on capital levied equally on all forms — land 
 values, building values, stock values, scrip values, 
 art values, and plant values — would at once solve
 
 168 THE ECONOMICS OF PROGRESS 
 
 the problem of land value taxation without doing 
 any injury to agricultural or any other form of 
 production. Where a special tax on land values 
 would tend to discourage the sinking of fresh 
 capital in land, this will leave the landowner 
 under no motive to turn his capital to any other 
 purpose. The fundamental principle of valuation 
 will just be market value : the economico -ethical 
 conundrum as to the " improved " and " imim- 
 proved " value of the land will be simply put 
 aside. In so far as the landowner has actually 
 added to the fertility and therefore to the value 
 of the soil he will suffer no injustice in being 
 taxed on that, since all other forms of capital 
 will be taxed equally. 
 
 It would indeed be consistent with equity, in 
 theory, to tax at a higher rate all forms of capital 
 yielding technically " unearned " income — that 
 is, land, houses, and scrip — as compared with 
 capital fixed in productive undertakings depend- 
 ing for their continuance on personal control by 
 the owner. The landlord, as such, gets his rent, 
 as the shareholder gets his dividend, without 
 doing anything towards production. But an 
 adequate discrimination is already made, or 
 may if necessary be further made, in this regard, 
 by the income-tax; and it seems unnecessary 
 to carry it further in the taxation of capital, 
 where it would raise the insoluble problem of 
 the " unimproved value " of the land, and so
 
 THE ECONOMICS OF CAPITAL 169 
 
 would involve, as aforesaid, the risk of diverting 
 capital from agricultural improvement. 
 
 Besides, taxation even of capital fixed in 
 plant, trade buildings, ships, and machinery, 
 will not altogether be met by borrowing. Re- 
 striction of personal expenditure is as possible 
 on the part of what we may term " working 
 capitalists " as any other, and is in the main as 
 desirable. They too can pay a moderate tax 
 on capital wholly or largely out of income; 
 and the owner of working or fixed capital is 
 better able to meet such a tax than the salaried 
 man or many professional men because he is 
 normally or often building up a " good-will " 
 wliich is an ultimate provision for him, whereas 
 the salaried man and many professional men 
 must make their final provision wholly out of 
 savings. The discrimination between earned and 
 unearned income is certainly one of the soundest 
 and most important fiscal reforms of modern 
 times ; but even that and the super-tax do not 
 represent the limits of sound taxation, of which 
 the guiding principle is the possibility of getting 
 revenue without injuring the springs of industry. 
 If, then, fixed capital can be made to yield 
 revenue without impairing productivity, by im- 
 pelling the capitalist to pay out of income, it 
 is fitly to be taxed. Good-will value is partly 
 of the nature of site value, a result of the total 
 activity of the community; and its prospective
 
 170 THE ECONOMICS OF PROGRESS 
 
 acquisition constitutes a clear capacity for tax- 
 bearing at a juncture when a dead-lift must be 
 made by the nation. The only valid counter- 
 argument would be that of arrest of industrial 
 enterprise. 
 
 There remains, however, the quasi -economic 
 objection that a tax on capital will frustrate the 
 purpose here professed by " driving capital 
 abroad " ; and here we are called upon to make 
 a new analysis. Ricardo handled the problem 
 with less than his usual power. First, he admits 
 that so-called taxes on capital and taxes on 
 income may alike fall upon income, since the 
 payer may elect to pay a capital tax out of his 
 income, diminishing his expenditure. Then he 
 argues that " it should be the policy of the Govern- 
 ment . . . never to lay such taxes as will 
 inevitably fall on capital, since, by so doing, they 
 impair the funds for the maintenance of labour," 
 and thereby diminish production.^ 
 
 The only illustration he gives, however, of a 
 tax inevitably falling on capital is the legacy 
 duty or death duty; and his objection here is 
 not only disallowed by a fiscal experience ex- 
 tending far more widely than that of his age, 
 but rebutted (1) by his own admission that the 
 desire to add to capital is constant, and (2) by 
 the consideration that the money taken by the 
 State is cither directly or indirectly devoted to 
 
 1 Ch. VIII, " On Taxes,"
 
 THE ECONOMICS OF CAPITAL 171 
 
 the maintenance of labour. Devoted to the 
 reduction of National Debt, it releases credit for 
 fresh application to production. Spent in public 
 works or in civil service salaries, it employs 
 labour that is either directly or indirectly pro- 
 ductive. Further, a tax on capital which is not 
 in effect confiscatory is a fresh incitement to 
 effort to create new capital. That objection, 
 then, may be dismissed. In the case before us, 
 the, effect in view is the turning of nationally un- 
 productive capital — or rather debt, the negation 
 of productive capital — into productive capital. 
 
 Mill, I think, does not discuss the subject; 
 and Sidgwick, who disclaims offering any de- 
 tailed theory or system of taxation, also avoids 
 it, as do Professor Marshall and many other 
 economists. Professor Bastable, who necessarily 
 faces it in his valuable work on Public Finance, 
 notes how hitherto the taxation of capital has 
 hardly ever gone beyond land and buildings, 
 and observes that 
 
 " Floating capital as such is so closely combined 
 with other elements, and is so hard to trace, that 
 its separate taxation is hardly ever presented. 
 Unless this large part of wealth is reached in 
 some way there is an undue encouragement given 
 to it. Investments in land and industrial enter- 
 prises are checked, and the distribution of 
 taxation is so far unfair. These reasons point 
 towards the adoption of the general income- 
 
 \jCL2\,9 • • • 
 
 1 Public Finance, 1892, p. 403,
 
 172 THE ECONOMICS OF PROGRESS 
 
 Tliis reasoning, I think, offers no bar to a 
 general tax on capital, which ought to reach 
 floating capital like every other kind. France, 
 Professor Bastable notes, has employed a sub- 
 stitute for our income-tax on interest in the 
 Impot sur les valeurs mobilieres which was intro- 
 duced in 1872, and which yields no great revenue. 
 But " in some of the South German States a 
 special capital-tax has been developed " — this 
 more than a quarter of a century ago. " Bavaria 
 has a capital-tax besides its income-tax; and 
 South Wiirtemberg and Baden have somewhat 
 similar imposts." ^ To these. Professor Bastable 
 offers no economic objection, dwelling merely 
 on the difficulty of making a tax on the yield of 
 capital properly effective. 
 
 Dr. Pierson, in turn, suggests that the Impdt 
 sur les valeurs mobilieres should, when the time 
 is ripe, be discarded in favour of a progressive 
 income-tax; ^ but from his general treatment 
 of the question of a property-tax I do not gather 
 that, as regards our present special problem, he 
 would urge any economic objection to a 1 per 
 cent, tax upon all capital. 
 
 We now revert to the purely modern objection, 
 undreamt-of in Ricardo's day, that taxation of 
 capital as such will tend to " drive capital 
 out of the country." Probably, indeed, that 
 
 1 Public Finance, 1892, p. 404. 
 
 2 Principles, Eng. tr., 1912, II, 594.
 
 THE ECONOMICS OF CAPITAL 173 
 
 objection was raised long ago to the income-tax, 
 in which case it would have to take the form of 
 the threat that the capitalist himself would go. 
 That particular threat, I think, we may now 
 ignore, income-tax being now a fairly widespread 
 burden ; and Britain being on the whole a pretty 
 good country to live in — with Free Trade. But 
 there remains the problem of the removal of his 
 " floating " capital. The true general answer, 
 I believe, is that foreign investment of floating 
 capital has always taken place in due proportion 
 to the attractions offered by foreign investments 
 — safety, of course, being one of the determinants 
 of attraction. Some years ago we were told that 
 such foreign investment of capital was the special 
 Nemesis of Free Trade; but it immediately 
 turned out, as might have been expected, that 
 exactly the same complaint was being made in 
 protectionist Germany and France, which States 
 both contemplated measures to guard against 
 the trouble. During the war, there is reason to 
 believe, both States, like ourselves, have found 
 their foreign investments highly convenient. 
 
 Observe, first of all, that foreign investment 
 in the mass means exportation of produce. 
 You cannot export land, or mines, or railways, 
 or factories, or houses, or mortgages — save as 
 scrip, which is not the form of capital required 
 by the foreigner. He borrows in order to do 
 things; and he gets his loan in the form of
 
 174 THE ECONOMICS OF PROGRESS 
 
 goods. There is no other way in which large 
 sums of capital value can normally go abroad 
 for investment. In order, then, that floating 
 capital should go abroad there must first be 
 exportation of goods, which means, pro tanto, 
 additions to home capital out of profits. The 
 value of those exports he may leave abroad, as 
 he did in the past when he lent money abroad; 
 but if he receives interest on it he will be taxable 
 on the capital. He who has invested abroad, of 
 course, may leave his interest to be invested 
 there as fresh capital ; but if he is ever to receive 
 interest on that at home (and we have concluded 
 that he is not likely to remove himself), he makes 
 himself liable to taxation; and his interest, 
 further, must come in the form of foreign 
 produce, which will tend to reduce prices for 
 us. What the State would theoretically tend 
 to lose, then, would be simply the amount 
 represented for the time being by the income- 
 tax on the amount of interest turned for the 
 time being into capital abroad. As soon as he 
 does receive interest, he indicates his foreign 
 capital, upon which he will be taxable here just 
 as upon his income. 
 
 To escape the tax on capital, in short, he will 
 have to leave his interest on his foreign capital 
 accumulating abroad as capital till his death, 
 and then his heirs will pay the death duties. 
 To what extent, then, is this process likely to
 
 THE ECONOMICS OF CAPITAL 175 
 
 affect the yield of a 1 per cent, tax upon capital ? 
 Surely to a very small extent indeed. It is 
 precisely that kind of investor who is most 
 likely to pay the tax out of income, being 
 presumably not necessitated to borrow. The 
 amount of money thus invested abroad will 
 probably, indeed, be less than the amount we 
 shall actually require to send abroad in payment 
 of our interest to foreign debt-holders in excess 
 of their interest on debt to us and their payments 
 for freight and insurance services rendered by us. 
 All the while, be it remembered, most foreign 
 States will be compelled, like us, to tax incomes 
 heavily, and may very likely have to resort to 
 the same expedient of a tax on capital. On the 
 whole, then, there is very small ground for 
 supposing that the threatened exodus of capital 
 will be such as to affect appreciably the amount 
 available for industrial purposes at home. A 
 considerable superiority in the rate of safe 
 interest abroad would be a much stronger 
 inducement to export of capital than would a 
 1 per cent, capital-tax. The tax on £10,000 
 would be £100. Invested at home at 5 per cent., 
 the £10,000 would yield £500, leaving £400 clear. 
 But interest on money productively invested at 
 home will often be above 5 per cent.; and I 
 imagine that after the war it will long remain 
 high enough to keep the bulk of our floating 
 capital at home. The immense amount of
 
 176 THE ECONOMICS OF PROGRESS 
 
 reconstruction work called for in the devastated 
 countries will gradually create a greatly increas- 
 ing demand for labour as soon as the primary 
 food needs are secured, and in such a state of 
 things capital will find remunerative employment. 
 If it be objected by those hopefully bent on 
 " making an end of capitalism " that we have 
 offered no prospect of their speedy success, the 
 answer is that a moderate tax on capital, such as 
 is here proposed, is a much more scientific way 
 of making a beginning of an end of capitalism 
 than any of their plans of class war and con- 
 fiscation. When national debt is paid off, even 
 if we have not by that time nationalised land 
 and mines, as well as railways, the established 
 practice of taxing capital may be utilized for 
 any further experiment in State action that 
 acquired experience may indicate as desirable. 
 Any other way of getting rid of capitalism than 
 by gradual evolution is absolutely chimerical, 
 unless the zealots are to content themselves 
 with a universal industrial smash in which 
 wealth and leisure and culture will alike dis- 
 appear, and the survivors will resume the primal 
 task of getting a bare living from the soil. Hatred 
 of the capitalist as capitalist is one of the puerili- 
 ties of men who, had they been born to capital, 
 would mostly have used it just as other men 
 have done. Substitution of another economic 
 system for capitalism can be attained only by
 
 THE ECONOMICS OF CAPITAL 177 
 
 the controlled and rational progressive action 
 of the whole community, in which capital itself 
 will share, as in the past. Among reformers 
 there are two schools of error, the dupes of hope 
 and the dupes of hate. It is hard to say which 
 can miscalculate the more widely; but of the 
 latter we may be sure that they at least will 
 never build. 
 
 As against the champions of social revolution, 
 we shall doubtless hear much in the reconstruc- 
 tion period from the school of reformers whose 
 formula is " Free Banking," or, as some of them 
 put it, " Free Trade in Capital." They are 
 quite as earnest as the Socialists, and quite as 
 convinced that they hold the sole secret of 
 social salvation. Some such doctrine as theirs 
 has appeared chronically in our economic litera- 
 ture for at least seventy years past, since John 
 Gray, newspaper proprietor of Edinburgh, pub- 
 lished his Social System, a Treatise on the Principle 
 of Exchange (1846 ?), and his Lectures on the Nature 
 and Use of Money (1848). Gray's scheme, em- 
 bedded in masses of denunciatory rhetoric, is 
 for a Standard Bank, issuing Standard Money, 
 which is to consist solely of certificates of actual 
 produced goods or real property at a fixed value. 
 The producer is to intimate to the bank his 
 production or possession of these goods or 
 properties, and is forthwith to be credited 
 with their value in standard money, all money 
 
 N
 
 178 THE ECONOMICS OF PROGRESS 
 
 received for the sale of his goods being payable 
 solely to the bank. He, however, is to give 
 " security " that he will " retake " at the full 
 fixed price any portion of his goods or property 
 that may not be found saleable at this price, 
 when called upon to do so. 
 
 By this scheme, making " exceptions " only 
 for traders (1) in perishable, or (2) dangerous, 
 or (3) " fanciful " goods (" such as ladies' made- 
 up dresses or millinery "), or (4) " goods made or 
 imported for special or peculiar purposes " 
 (such as new machinery) — making these sug- 
 gestive exceptions. Gray promises to secure a 
 state of things in which there will never be 
 gluts, because all production will constitute de- 
 mand, the standard money representing goods, 
 and trade depression and unemployment will 
 vanish. The idea is that the producer who is 
 at once credited with the value of his production, 
 as fixed by himself, can become a consumer to 
 that amount, and so nothing will be left unsold. 
 Nevertheless, be it noted, the merchant is to give 
 in advance " security " that he will take back 
 his goods at their fixed value if they are not 
 sold. As to who shall give that security — a 
 proceeding apparently calling for another bank, 
 of a still more peculiar kind — Gray does not 
 appear to have troubled his fervent head.^ 
 
 ^ Lectures o)i the Nature and Use of Money, 1848, pp. 
 109-19.
 
 THE ECONOMICS OF CAPITAL 179 
 
 According to the Economist of May 27, 1848, 
 some such bank was actually established in 
 France in that year of wild hopes and wild 
 schemes. It w^as called " The National Society 
 and Bank of Exchange," and among its pro- 
 moters were F. Bastiat, Michel Chevalier, and 
 Emile de Girardin. It was, or was to be, a 
 " Bank without Capital," such as Gray had 
 previously proposed. How long it lasted, or 
 whether it ever started, I am not aware. Con- 
 cerning all such schemes, as concerning the 
 economic optimism which used to persist in 
 declaring that because all production " is de- 
 mand " the one thing needful is to produce some- 
 thing of which there is not a glut — the short 
 and simple criticism is that they ignore one 
 fundamental fact, namely, that producers in 
 general seek, not to consume to the value of 
 their production, but to withhold part of their 
 command of wealth by way of provision for the 
 future. Upon that economic rock the ship of 
 perpetual-motion-in-banking always founders. 
 
 You may, if you like, say that the savers are 
 all seeking the commodity called remunerative 
 credit — for it may be so conceived. So be it. 
 The answer is that that commodity is not in- 
 definitely producible, and has a way of suddenly 
 contracting under pressure. For the remunera- 
 tion of credit depends largely upon continuity 
 of demand for products, which in the nature of
 
 180 THE ECONOMICS OF PROGRESS 
 
 the case is liable to chronic interruption by 
 reason of relative under-consumption, resulting 
 from, or intensified by, the desire to retain 
 command of wealth for the future. The " cursed 
 fraction " will never wholly disappear, though 
 commercial vigilance may greatly limit its ex- 
 pansion, while men are bound to save credit 
 by way of private provision for their families 
 and their old age. 
 
 As regards those other schemes of " Free 
 Banking " which rely upon a free issue of notes, 
 the criticism is the same. Such banking has 
 been represented as working marvels in Scotland 
 between 1716 and 1844, a period described as 
 " the only example of Free Banking the world 
 possesses." ^ Doubtless there was much pro- 
 gress in Scotland, especially in the latter part of 
 that period; and the Scottish banking system 
 of Cash Credits played a large part in the pro- 
 cess. But there has been much greater progress 
 since, because an unlimited issue of notes is not 
 essential to the giving of banking credit, and can 
 no more solve the problem of trade depression 
 than could the Standard Bank schemed by 
 Gray. 
 
 That more may be done for industry by 
 further developments of banking credit is, indeed, 
 very likely; and a State Bank may well, as 
 
 ^ A. E. Hake and O. E. Wesslau, Free Trade in Capital, 
 1890, p. 276.
 
 THE ECONOMICS OF CAPITAL 181 
 
 Mr. Melrose argues,^ be a necessary development 
 of the near future. The note issue, which in 1914 
 he argued, as others of us had argued before, 
 ought to be taken over by the State, has under 
 stress of war been taken over, and State paper 
 money has doubtless become a permanent thing 
 in our national life, representing as it does a 
 national asset which the State cannot sanely 
 surrender. Absolute limits to further State 
 action no prudent prophet will set. But while 
 the State has a potential faculty, thus far un- 
 measured, of stimulating production by its use 
 of its virtually unlimited credit, it is not credible 
 that that power can come into use on a large 
 scale save by way of gradual development of 
 State functions. Controllers are far from popular, 
 however necessary in war time. 
 
 What has been done in war is not a trust- 
 worthy precedent. War, strictly speaking, has 
 no economics : it has only expenditure, loans, 
 and taxes ; and there is all the difference in the 
 world between production for profit and produc- 
 tion for destruction. But what is most important 
 of all is the fact that every operation of State 
 finance in peace is a battle-ground of interests, 
 all represented in the legislature. It was with 
 great difficulty that we were able to get State 
 support for a British Dyes concern in an early 
 stage of the war. These are not conditions for 
 1 Data of Economics, p. 377.
 
 182 THE ECONOMICS OF PROGRESS 
 
 the successful handling of a scientific mechanism 
 of any delicacy. Thus far the idea of a State 
 Bank for the financing of foreign commerce has 
 not made any promising progress ; and as the 
 inner history of the Deutsche Bank remains, 
 and is likely to remain, unwritten, there are wide 
 openings for scepticism as to the beneficent 
 possibilities of the plan. In any case it could for 
 the present be only one factor in promoting a 
 trade which has a hundred other sources of 
 economic energy; and upon these sources our 
 main reliance must be placed. 
 
 Concerning capital, then, we sum up that it 
 is a force whose full operation depends upon 
 mental as well as physical conditions. As re- 
 gards potentiality, it is certainly a varying 
 aggregate — varying in respect not merely of the 
 quantities of the things on which it ultimately 
 rests but of the state of enterprise for the time 
 being. Nowhere is this so plain as in the United 
 States, where productivity is a matter of great 
 tides and great ebbs, hard to calculate in advance. 
 In a market without " confidence," all business 
 is more or less suspended, checking production, 
 throwing labour idle. Restore " confidence " 
 somehow, and business credit does the work of 
 capital, thus in effect indefinitely enlarging the 
 power of the factor. In taxing capital, then, 
 you are taxing values, not a " sum of com- 
 modities." Where you might mismanage would
 
 THE ECONOMICS OF CAPITAL 18a 
 
 be in the use to wliich you directed the share of 
 credits, or command of wealth, so taken. You 
 might employ it in setting labour to certain 
 tasks. But in this case the proposal is that, 
 leaving credits to be formed from values by all 
 the energies of the nation, you simply release 
 regularly certain credits from their form of State 
 debt and compel them to seek another re- 
 munerative form. The chances are that they 
 will seek it in fresh production. 
 
 And the instrument of taxation, by which 
 the transition is achieved, is peculiarly the 
 instrument of the State. State issue of paper 
 money is one transaction, by which the State 
 nets the sum of the issue. State banking is an 
 enterprise still to be tried, involving uncertainties. 
 State industries in peace are also problematical, 
 though seen to be expedient if they can be 
 profitably conducted. But in applying taxation, 
 under due limitations, to capital, the State is 
 merely exercising in a new direction one of its 
 special functions ; and in paying off debt with 
 the proceeds it will be turning nationally negative 
 capital into positive and productive, while at 
 the same time potentially lessening the amount 
 of idle life. 
 
 Postscript 
 
 Since this lecture was delivered and re- 
 vised, Mr. Bonar Law has made an important
 
 184 THE ECONOMICS OF PROGRESS 
 
 pronouncement on the question of " Conscription 
 of Capital " in reply to a deputation of Labour 
 politicians. He has wisely declared against resort 
 to any levy on capital during the war; but 
 implies that it will probably be necessary after- 
 wards. From his guarded words it may be 
 inferred that he contemplates the possibility of 
 a considerable levy, but commits himself to no 
 scale or scheme. It is to be hoped that those 
 who advocate a large levy, or a succession of 
 large levies, will carefully formulate their scheme 
 or schemes, and vigilantly calculate the probable 
 economic sequences.
 
 VI 
 
 THE ECONOMICS OF COMMERCE 
 
 The fundamental political problem as to inter- 
 national commerce may be said to be almost 
 as old as commerce itself. Exchange between 
 separate communities or groups is really a new 
 beginning of civilisation after the attainment 
 of tribal institutions. It may, as Deniker sug- 
 gests,^ have originated in the exchanging of 
 presents. But it soon becomes a barter; and, 
 as Emerson put it, and others have in effect 
 put it before and since, " the greatest melior- 
 ator of the world is selfish, huckstering trade." ^ 
 Where the tribes eye each other as natural 
 enemies, to be killed and eaten at opportunity, 
 the instinct of barter is the one enduring motive 
 to peaceful contact. It operates before the stage 
 of special tribal industries, sometimes assigned as 
 
 1 The Races of Man, Eng. tr., 1900, p. 270. Cp. Lctoiir- 
 neau, U Involution du Commerce, 1897, p. 6. " Des cadcaux, 
 mais, point d'cchangcs," says Lctourncau of the Fucgians. 
 
 2 Society and Solitude : Works and Days. There are in 
 Emerson a number of similar (and some contrary) passages 
 on trade. The most notable is that in the discourse entitled 
 The Young American, in which he extols trade as the force 
 or factor which superseded feudalism, but will itself in 
 turn pass away, superseded by something higher. 
 
 185
 
 186 THE ECONOMICS OF PROGRESS 
 
 its first basis : among the Australian aborigines 
 we see it taking place in respect of natural local 
 products. So strong is the proclivity that enemy 
 tribes who taboo all other intercourse have a 
 way of exchanging products without seeing each 
 other.^ But even as all barter is a seeking for 
 advantage on both sides, the individual process 
 of conveying reciprocal advantage is for ever 
 faced and curbed by the animosities and interests 
 of the rest of the groups between whose members 
 trade takes place. 
 
 The ruler or the Government at a very early 
 stage seeks his or its gain from the transaction; 
 sections of the states or communities concerned 
 similarly seek what they call protection as against 
 the " foreign " trader who competes with them, 
 even as they seek to shield themselves against 
 competition at home ; and as every individual 
 or group is primarily seeking his or its own gain, 
 political adjustments come to be made in the 
 interest, real or supposed, of those groups or 
 sections which have the predominating political 
 influence. They claim, of course, that they are 
 really seeking the interests of the community, 
 or the majority; and they may really believe 
 what they say. But as all the warring interests 
 
 ^ Cp. Dcnikcr, as cited ; Otis Mason, Origins of Invention, 
 1895, p. 364; im Thurn, as there cited; Carl Lumholtz, 
 Among Cannibals, 1889, p. 106 (which checks the negative 
 conclusion of Letoui'ncau) ; Codrington, The Melanesians, 
 1891, p. 298.
 
 THE ECONOMICS OF COMMERCE 187 
 
 make the same claim, it is only by means of a 
 comprehensive economic and pohtical science 
 that we can get at the truth. And, as you 
 know, the fiscal truth is about as much in dis- 
 pute to-day as ever, among those actually 
 concerned in trade. Still, though every strong 
 economic interest can always get economists to 
 put its case, there is happily a large measure 
 of consensus among experts on the purely eco- 
 nomic issues ; though the experts may continue 
 to differ on the contingent political issues. 
 
 At an early stage in our own written history we 
 can see the main lines of conflict defining them- 
 selves. The King, representing the State, wants 
 revenue; and he seeks it, among other ways, as 
 barbaric chiefs had sought it long before him, 
 by levying tolls on the foreign traders who desire 
 to trade in his territory. These tolls are frankly 
 termed " customs " : they originated in barbaric 
 custom. Within the boundary of the king's 
 peace, the territorial lords keep what they can 
 of their ancestors' power of toll-taking on trade 
 by charging tolls on the home produce that comes 
 to fixed markets on their domains. Kings and 
 lords alike are taxing trade; and it is fairly 
 obvious that in effect they are just taxing con- 
 sumers. The competition of sellers in the taxed 
 markets is neither more nor less; or, if it is 
 affected at all, it will tend to be rather less. 
 The buyer, then, really pays the tolls.
 
 188 THE ECONOMICS OF PROGRESS 
 
 Soon we find that the wealthier buyers, in- 
 cluding the very class who exact market tolls 
 on home produce, recognise the burden laid on 
 them by imposts on foreign traders or import 
 duties on foreign goods ; and at the time of Magna 
 Carta the nobles of England, in their own 
 private interest as buyers of foreign wines and 
 goods, are all for Free Trade with foreign coun- 
 tries.^ Accordingly, Magna Carta provides ^ 
 that foreigners shall be allowed to trade freely 
 in England, paying only the established tolls and 
 customs — a veto on the irregular tolls charged 
 by King John as by other kings before him. It 
 is even provided that in time of war enemy 
 traders shall not be made to suffer unless Eng- 
 lish traders suffer in the enemy country. But 
 this was far from satisfying the home trader,^ 
 who treated even his countrymen of other towns 
 as aliens, and particularly desired to limit foreign 
 competition, even in respect of the goods that 
 could be produced only by the foreigner. The 
 home trader wanted his middleman profit; and 
 he further reasoned, in his own way, as did the 
 deputation of orange-growers who appealed to 
 President McKinley for an import duty on 
 bananas. " We don't grow bananas," said 
 President McKinley : " why do you want a tariff 
 against them? " " We feel," repUed the spokes- 
 
 1 W. S. McKcchnic, Magna Carta, 1905, p. 469. 
 
 2 Ch. XLI. 3 McKechnie, p. 140.
 
 THE ECONOMICS OF COMMERCE 189 
 
 man of the deputation, " that a man who is full 
 of bananas hasn't any room left for oranges." 
 All the while, too, foreign traders in their own 
 countries took the same line towards English 
 traders. The result was that the liberalism of 
 Magna Carta was only intermittently operative, 
 under certain kings, and exclusiveness was more 
 nearly the rule.^ 
 
 Thus, between simple jealousy of the in- 
 dividual foreign trader, seen to be making high 
 profits while the home trader made lower, and 
 resentment of the competition of foreign goods 
 with either similar or different home products, 
 our ancestors had " raging, tearing propagandas " 
 for tariff reform before democracy and news- 
 papers were dreamt of; and during centuries, 
 every sectional interest in turn made its pull 
 with some degree of success. Sometimes the 
 landowning class carried the day against the 
 home traders. Anon the trading class, who 
 from the first sided with the Crown in the matter 
 of special imposts on foreign traders, appealed 
 successfully to jealousy of the foreigner; and at 
 times it harped in particular on the unemploy- 
 ment alleged to be caused at home by the import 
 of foreign commodities. When wool was the 
 staple export, the king could with general con- 
 sent levy export duties on it, since he thereby 
 
 1 Cp. Sir W. J. Ashley, Introd. to Eng. Econ. Hist, 1888, 
 Pt. I, pp. 105-9; Pt. II (ed. 1906), pp. 12-20.
 
 190 THE ECONOMICS OF PROGRESS 
 
 seemed to be " making the foreigner pay " more 
 for English wool which the foreigner needed for 
 his manufactures. Whether the foreigner did 
 not simply charge the more for the woollen 
 cloths or other goods which he sent in return; 
 or whether the English exporter had not to pay 
 the export duty when the Flemish weavers were 
 importing wool largely from Spain, were ques- 
 tions not generally asked — save by those most 
 immediately concerned. 
 
 Wlien England became a woollen -manufac- 
 turing country on a considerable scale, the plot 
 thickened. The producer of wool wanted the 
 foreign market; the home manufacturer wanted 
 the wool kept at home, because he wanted it 
 kept cheap. Of course he pleaded the interest 
 of the community, patriotically subordinating 
 to that the special interest of the wool pro- 
 ducers. In the same patriotic spirit, the ship- 
 owner demanded that foreign goods should be 
 brought in English ships, thereby strengthening 
 the naval power of the country. Every plan, 
 broadly speaking, was tried in turn; every plan 
 in course of time was seen and pronounced by 
 some, including powerful statesmen, to be a 
 failure, causing loss and not gain; and every 
 abandoned plan, none the less, was tried again 
 by another generation. Always the battle was 
 one of interests, claiming to be disinterested. 
 Science there was none : or, let us say, science
 
 THE ECONOMICS OF COMMERCE 191 
 
 was but beginning to be made possible, as 
 astronomy was made possible by ages of as- 
 trology. Very slowly is truth reached by way 
 of self-seeking; but that is how the search 
 generally begins. 
 
 Here and there we catch wiser voices in the 
 babel ; but it is with Dudley North, in the reign 
 of William and Mary, that we get the first clear 
 pronouncement of the truth that nations in trade 
 relate to each other just as do individuals within 
 a nation; and that " all favour to one trade or 
 interest is an abuse, and cuts so much of profit 
 from the public." ^ At that period the pre- 
 dominant economic creed, among men of busi- 
 ness as among the mass of the people, was that 
 abundance of gold and silver constituted national 
 wealth, even as it apparently constituted wealth 
 for individuals. Even Locke, struggling to reach 
 scientific views of money, could write that " riches 
 do not consist in having more gold and silver, 
 but in having more in proportion than the rest 
 of the world, or than our neighbours, whereby 
 we are enabled to procure to ourselves a greater 
 plenty of the conveniences of life than comes 
 within the reach of neighbouring kingdoms and 
 States." 2 And this error he could commit while 
 recognising that the countries which actually 
 
 ^ Cited by McCulloch, Principles of Pol. Econ., 2nd ed., 
 1830, pp. 43-4. 
 
 ' Consequences of the Lowering of Interest, etc., 1691, 
 Miirray's rep., p. 226.
 
 192 THE ECONOMICS OF PROGRESS 
 
 produced the gold and silver were generally 
 poor, and that Spain, which had for centuries 
 commanded the output of the chief mines of the 
 world, was poorer than France and England, 
 which got their bullion by trade — thus proving 
 that produce buys bullion rather than bullion 
 produce. 
 
 Dudley North was not thus misled by his own 
 analogy. " A people," he wrote, " cannot want 
 money to serve the ordinary dealing, and more 
 than enough they will not have." ^ But, though 
 he coached Locke on some points, North had 
 small influence in his day; his treatise dis- 
 appeared; and the nation continued to proceed 
 on the conviction that if it received more produce 
 than it exported, it was losing; torturing its 
 foreign trade in the hope of getting its profit 
 in the shape of bullion. Broadly speaking, 
 nearly every nation which in that age was 
 enriched by foreign trade was enriched in its 
 own despite ; and in respect of her Asiatic trade 
 even Holland, by far the most enlightened of 
 trading States in the seventeenth and eighteenth 
 centuries, aimed rather at money than at produce. 
 
 As regarded her general trade, Holland was led 
 to wise courses by her special conditions. Her 
 one relatively great national source of wealth 
 was fishing ; the sea-craft thus developed enabled 
 
 ^ Developed by Ricardo, High Price of Bullion : Works, 
 p. 265 seq.
 
 THE ECONOMICS OF COMMERCE 193 
 
 her to add a great carrying trade by sea to the 
 land transit trade which she evolved in virtue 
 of her position as a middleman State ; and 
 having practically no manufactures to protect 
 she practised something like Free Trade, charging 
 the lowest harbour dues and customs in Europe. 
 When, in the early part of the eighteenth century, 
 she had 10,000 sail, manned by 168,000 men, the 
 British mercantile marine carried only 27,000 
 men. But not even that object lesson could be 
 learned by the rival nations. Adam Smith's 
 Wealth of Nations appeared in 1776 ; and though 
 his doctrines had begun to be acted on by English 
 statesmen within fifty years, seventy were to 
 elapse before England got rid of her Corn Laws. 
 
 The lesson of Free Trade was finally learned 
 by English traders only through their own and 
 the nation's sufferings from tariffs, commented 
 for them by economists, and in particular by 
 one man of political genius. As early as 1820, 
 the merchants of London, now enlightened by 
 Ricardo as well as by Adam Smith, presented to 
 Parliament a petition, drafted by Thomas Tooke, 
 in which they clearly and forcibly stated the evils 
 of the protective system, both as to food and 
 manufactures; and the Edinburgh and Man- 
 chester Chambers of Commerce followed suit. 
 But only after another quarter of a century, 
 marked by inordinate misery from scarcity and 
 dearness of food and chronic unemployment on
 
 194 THE ECONOMICS OF PROGRESS 
 
 an immense scale, was the decisive step taken 
 by Peel in 1846; and even then it was made 
 possible only by imminent famine and the fears 
 of social catastrophe. Mere economic science, 
 mere reasoning, even when propounded by a 
 Cobden with power enough to convince a Peel, 
 would not have attained the end without that 
 menace. 
 
 The traders themselves were in the mass con- 
 vinced only by their own hardships from pro- 
 tection; and ever since, in any period in which 
 British trade seems to any of its sections to be 
 relatively flagging, and that of any protectionist 
 country seems to be gaining ground, numbers 
 of them, as innocent of economic knowledge as 
 their ancestors of the eighteenth century, agi- 
 tate for a return, in their own apparent sectional 
 interest, to a system of protective duties against 
 foreign imports. It is the opinion of leading 
 tariffists in our own day that if Mr. Chamber- 
 lain, instead of proposing on imperialistic grounds 
 a system of colonial preferences which involved 
 import duties on food, had crusaded solely for 
 import duties on foreign manufactures, he or 
 his adherents would have carried their point 
 within ten years at the outside. 
 
 However that may be, the second year of the 
 World War has seen, in despite of the political 
 truce, a violent revival of the propaganda for 
 a protective tariff; and the nation's righteous
 
 THE ECONOMICS OF COMMERCE 195 
 
 wrath against the arch-enemy is being con- 
 tinuously exploited towards a tariff system 
 professedly aiming primarily at prevention of 
 trade with Germany, but confessedly bound to 
 operate in other directions also. On the de- 
 cision made in that regard may turn the nation's 
 commercial and political destiny. A hasty de- 
 cision is being clamoured for by men demon- 
 strably incapable of understanding the economic 
 issues they raise. The nescience which oppressed 
 our trade in the ages of ignorance hopes to re- 
 cover the seat of power in a time of passion. Is 
 there enough of acquired knowledge and conserved 
 sanity to save us ? 
 
 Before we discuss our immediate problem, 
 let us briefly note the motives and factors which 
 in modern times have served to sustain and even 
 to re-introduce protective systems in other coun- 
 tries. First comes the case of the United States. 
 Immediately on the conclusion of peace after the 
 Anglo-American War of 1812, English traders, 
 pinched by the long Napoleonic wars and hungry 
 for a re-opening market, flooded the United States 
 with what we to-day term dumped goods. (For 
 dumping is a British invention; and used to be 
 described by Continental economists as " the 
 British method.") The same thing had hap- 
 pened in 1783. The underselling, indeed, was 
 compulsory to an extent far in excess of the 
 design, for the competing exporters so overdid
 
 196 THE ECONOMICS OF PROGRESS 
 
 their competition that they had often to sell at 
 a loss. The natural result in the States was a 
 common conviction, or at least an argument 
 put with much semblance of conviction, that 
 the old enemy was aiming, by deliberate under- 
 selling, at the extinction of American manu- 
 factures, and could, as a matter of fact, in this 
 way destroy American industries which were 
 essential to national defence in the event of 
 another war. And seeing that all the while the 
 British Government maintained its tariffs against 
 American produce, the rise of an American tariff 
 was a matter of course.^ Tariffs evoke and 
 provoke tariffs; and after raising the devil in 
 America our fathers fostered him by ill deeds 
 till he could not be laid. 
 
 Still, even in America the ultimate British 
 resort to Free Trade had a conciliatory influence ; 
 and in the 'fifties there was a visible reaction 
 in the States in the same direction. Had not 
 the Civil War supervened, America might have 
 gone as far in Free Trade as we. But the great 
 burden of debt left by that war gave an irre- 
 sistible impulse to a tariff on all imports for 
 revenue's sake; and the vested trade interests 
 thus built up have never since been overthrown. 
 Absit omen. 
 
 In Germany the process was similar. A Free 
 Trade movement followed there upon the heels 
 1 See Trade and Tariffs, p. 100.
 
 THE ECONOMICS OF COMMERCE 197 
 
 of our success; and though the convulsions of 
 1848 arrested progress, in the 'sixties Bis- 
 marck was working out a Free Trade poUcy in 
 Prussia. Even after the Franco -German war, 
 that pohcy was continued in Prussia; and in 
 1875 it was enacted that the import duties on 
 iron, already reduced in 1873, should altogether 
 cease in 1877. But now came the reversal, on 
 grounds not economic but political; not com- 
 mercial but militarist. Bismarck, as Imperial 
 Chancellor, demanded an increased revenue to 
 support armaments, in the face of the un- 
 expectedly vigorous revival of France. The 
 contributory German States refused to increase 
 their matricular contributions ; and Bismarck, 
 who had no principle higher than the will to 
 national power, at once began planning for a 
 tariff. The advent of cheap American wheat, 
 on the one hand, and a heavy fall in manu- 
 facturers' prices on the other, gave him his 
 opportunity. To the landlords he offered food 
 duties against American produce ; to the manu- 
 facturers, a tariff against competitive imports; 
 and, getting the support of both, he set up the 
 tariff, which held down to 1914. 
 
 In France, finally, the causation was equally 
 independent of economic wisdom. French agri- 
 culture being nearly adequate to the nation's 
 needs, there was no such pressure of famine 
 prices as finally coerced Peel in 1846; and
 
 198 THE ECONOMICS OF PROGRESS 
 
 French manufacturers had never got far enough 
 ahead to face loss of protection as did those of 
 England. Yet even there, Cobden's Treaty of 
 Commerce of 1860 was working prosperously; 
 and it was the new burden of debt from the 
 Prussian war of 1870 that drove the French 
 Republic, like that of the United States, to a 
 system of high tariffs for revenue. Manufactures 
 being thus protected, the agriculturists had a 
 double claim to protection against American 
 wheat, and the burden was thus freshly riveted. 
 And once a nation sets up a systematic tariff, 
 an era has to pass before it can be shaken off. 
 
 Everywhere, then, we see militarism and the 
 pressure of war burdens reinstating protection- 
 ism where it had been discredited by economic 
 science. Again I say, absit omen. 
 
 But, of course, the protectionists everywhere, 
 our own included, claim to have economic 
 reasons for their system, denying its evils, and 
 professing to find evils in the system of Free 
 Trade. We had a ten years' run of their pro- 
 paganda from 1903 to 1913. We all remember 
 the internecine articles of the creed. The 
 foreigner was getting rich at our expense. He 
 made us pay for his army and navy by the 
 duties he placed upon our goods. At the same 
 time he was keeping us out of his markets, thus 
 contriving to make us pay without taking our 
 goods. We ought, therefore, to make him pay
 
 THE ECONOMICS OF COMMERCE 199 
 
 by taxing the goods he sent to us, and at the 
 same time we ought to keep out those same goods 
 altogether, so as to afford constant employment 
 to our own workers. By a tariff of 10 per cent, 
 upon imports of manufactures reduced to nothing, 
 we were to raise some £14,000,000 a year, which 
 was to cancel the £14,000,000 we should be pay- 
 ing on imported foods, and was at the same time 
 to meet the £14,000,000 required for Old Age 
 Pensions. 
 
 By much hard work on the part of Free- 
 Traders, these unplausible pleas were prevented 
 from gaining possession of the national intelli- 
 gence. Wlien trade happened to be bad, as 
 notably in 1908-9, as a result of an immense 
 industrial collapse in the heavily-tariffed United 
 States, the task was hard. Vast unemployment 
 in the States did not dissuade tarifiists from 
 propounding tariffs as a cure for a much less 
 unemployment at home ; and a sick proletariate 
 is in large part ready for strange drugs. When 
 thousands of ostensibly educated traders are 
 incapable of mastering even the elements of the 
 science of international exchanges, how shall 
 unemployed workers be relied on to analyse the 
 nonsense of the empirics ? Yet we weathered 
 that storm, too; and we began 1914 with trade 
 at the highest levels it had ever reached. Less 
 than half the expansion that had actually 
 occurred after 1903, had it taken place under a
 
 200 THE ECONOMICS OF PROGRESS 
 
 tariff system, would have been claimed by 
 tariffists as certifying their theory beyond the 
 possibility of challenge. And since 1914 we 
 have piled up and borne a financial burden much 
 greater than even that of tariffed Germany, 
 (financing tariffed France, tariffed Italy, tariffed 
 Russia, tariffed Canada, and tariffed Australia), 
 with a population only two-thirds of that of 
 Germany. Free Trade alone has made the feat 
 possible. And they tell us, as before, that we 
 must abandon Free Trade. 
 
 One economic truth, meantime, has been 
 established for all who can see economic facts. 
 International trade, based on manufactures, is 
 visibly the supreme means of international en- 
 richment.^ Adam Smith himself could not have 
 denied it had he been alive to-day. He has to 
 answer for a mystification, arising partly out of 
 his hankerings after the doctrine of the French 
 Physiocrats as to the special " productiveness " 
 of agriculture, which, he said, was aided by the 
 forces of Nature, whereas manufactures, he fondly 
 fancied, were not. Further, he was moved to 
 his mystification by the perpetual outcry of the 
 protectionists for the artificial fostering of a 
 foreign trade that needed only to be let alone. 
 
 ^ " During the present [nineteenth] century, one of the 
 principal causes of the great increase of wealth in the 
 United Kingdom has been the development of foreign 
 trade." — Professor J. Shield Nicholson, Principles of Pol. 
 Econ., 1893, I, 200.
 
 THE ECONOMICS OF COMMERCE 201 
 
 In this connection he worked out a theorem to 
 the effect that home trade is nationally the most 
 profitable of all ; that foreign consumption trade 
 is less profitable; and that a carrying trade is 
 the least profitable of all. Yet in the very 
 section in which he puts this thesis he avows 
 that Holland, with the largest carrying trade in 
 Europe, is "in proportion to the extent of the 
 land and the number of its inhabitants, by far 
 the richest country in Europe " ^ — which puts 
 his theorem in the waste-paper basket. 
 
 It is idle to argue, as he goes on to do, that 
 Dutch wealth is not an effect but a cause of 
 the Dutch carrying trade. On this view, national 
 wealth drives nations to the trade which is least 
 helpful to wealth. But what caused the Dutch 
 wealth to begin with ? Clearly not the Dutch 
 home trade. Holland, long before Smith's day, 
 did not grow corn enough to feed her people, 
 or timber enough to build her ships. Her great 
 natural industry was fishing. Supposing that 
 to be paradoxically reckoned produce of the 
 land, for argument's sake, we may indeed 
 reason that, shipping being developed by fishing, 
 the carrying trade is a result of earned wealth. 
 But Dutch wealth grew more and more with 
 the growth of the carrying trade, as against a 
 slower growth of the wealth of other countries. 
 
 Smith's confusion came of his good old myopic 
 
 1 Bk. II, Ch. V.
 
 202 THE ECONOMICS OF PROGRESS 
 
 way of seeing one side of a problem at a time, 
 without mentally seeing all together. He was 
 right in objecting to the proposed State measures 
 for furthering foreign trade, for the measures 
 were bad ; but he gave wrong reasons for the 
 objection. If he had at tliis point taken a 
 comprehensive \'iew of wealth-getting he would 
 have realised that ultimately, in the broadest 
 aspect, it is a process of getting return for services 
 or quasi-services. The landowner, being in pos- 
 session of the land, gets rent for letting it be 
 used. The service may be called blackmail or 
 extortion, but legallv it remains a service. The 
 farmer and the manufacturer alike get their 
 vaiying return for the services of producing food, 
 clotliing, etc.; and so through all society. The 
 lender of capital at interest is socially in the same 
 case, whatever we may think of the etliics of it. 
 Wien we come to the commonest services, we 
 find the remuneration low, because of the abun- 
 dance of the supply. But some purely personal 
 services are rewarded verv hio-hlv indeed. Smith 
 liimself pointed to the opera-dancer or singer, 
 to wliich instance we may add those of the great 
 medical specialist, the successful barrister, and 
 the expert in general. Now, these get their large 
 share of command of wealth without directly 
 producing any material wealth; and what is 
 done in the individual relation may be done in the 
 international. Holland had both the largest
 
 THE ECONOMICS OF COMMERCE 203 
 
 and the best carrying service; and was exactly 
 in the position of the prosperous farmer or large 
 manufacturer as regards general certainty of 
 reward. She was collectively much richer, 
 in terms of real wealth as well as of command 
 of wealth, than corn-producing Poland, or wool- 
 producing and gold-receiving Spain. Bacon put 
 the case a century and a half before Smith : 
 " It cometh many times to pass that . . . the 
 work and carriage is more than the material ; as 
 is notably seen in the Low-Countrymen, who 
 have the best mines above ground in the 
 world." 1 
 
 I discuss Smith in this connection because his 
 argument is either explicitly or implicitly founded 
 on to this day by protectionists. You have all 
 heard of his formula of the " two capitals." A 
 home manufacturer, selling liis goods at home, 
 replaces his own capital and also that of the 
 merchant who buys his produce. (The " two " is, 
 of course, a mere abstraction : there may be 
 twenty or two hundred capitals involved. But 
 let us grant him the abstraction and follow the 
 argument.) If, he contends, the home manu- 
 facturer sends his goods to Portugal instead of 
 to a part of liis own country, he replaces only 
 his own capital in this country, a Portuguese 
 capital being substituted for that formerly 
 employed in dealing with Ms produce at home. 
 ^ Essay Of Seditions and Troubles.
 
 204 THE ECONOMICS OF PROGRESS 
 
 Here we have the whole protectionist circle in 
 a nutshell. 
 
 The curve begins at once, by the evasion of 
 the fact that to balance the exported goods 
 other goods must come from Portugal, the 
 handling of which here, in the terms of the case, 
 will employ a second capital here. Further, the 
 withholding of the manufacturer's home supply 
 will leave in operation the old demand for 
 equivalent goods at home ; and that demand 
 will employ, in the terms of the case, a third 
 capital. The only answer open for Smith is 
 to say that the required third capital does not 
 exist, and cannot be created when required; 
 and he does frequently argue that at any given 
 moment there is only a certain amount of 
 capital in existence, and that therefore only a 
 certain amount of production is possible. And 
 as McCuUoch frequently used the same argument, 
 McCulloch was not entitled to reply, as he did, 
 that the demand for the withheld home goods 
 would elicit the required capital. 
 
 But in terms even of Smith's own complete 
 account of the trade process, as distinguished 
 from his definition of capital, we realise that 
 capital is not a fixed amount of tilings plus 
 money for two days together. As he avows, 
 both agriculture and manufactures are normally 
 tending to increase their output in excess of the 
 existing demand. Then the excess is, on his 
 own premises, new capital. Further, saved
 
 THE ECONOMICS OF COMMERCE 205 
 
 credit may one day lie idle, and next day be 
 used. Smith must have known that in Scotland 
 in his own day credit capital was supplied by 
 putting cash at the disposal of a farmer or trader 
 on personal security; and as the same cash 
 could be used many times over, the supply of 
 effectual credit capital was elastic. All men 
 of business know further that capital, broadly 
 speaking, is never lacking for the production of 
 demanded goods where raw material and labour 
 are present^. 
 
 And the whole mystification is finally disposed 
 of when Smith avows that the goods exported 
 are really a surplus over the production for 
 home demand. Normally, he avows, the home 
 production of corn, woollens and hardware was 
 greater than the home demand; and the excess 
 had to go abroad or waste. Why, then, did he 
 write as if the exporter was withholding from 
 home consumption goods for which there was 
 a home demand ? By way of rebutting the 
 unsound demand for an artificial fostering of 
 foreign trade — a demand to which the true 
 answer would have been that foreign trade and 
 carrying trade alike were hampered both by 
 protective duties and by those Navigation Laws 
 which Smith, inheriting an old fallacy, felt bound 
 to defend as a means of national strength.^ To 
 repel a bad argument for the artificial fostering 
 
 ^ Tlie question is discussed at length in the author's 
 Cobden Club pamphlet, Shipping after the War, 1916.
 
 206 THE ECONOMICS OF PROGRESS 
 
 of foreign trade, he framed a thoroughly bad 
 argument against foreign trade as such. 
 
 And it is doubly bad because, as he elsewhere 
 insists, it is in the nature of foreign trade to 
 secure certain produce at a lower outlay of 
 capital and labour than would be required to 
 raise it at home. This part of Smith's case the 
 tariffists never mention. Their irrational assump- 
 tion that the aim of industry is not produce but 
 employment commits them to what he regarded 
 as the supreme absurdity of expending on a 
 given form of production many times more 
 labour and outlay than would purchase the re- 
 quired produce from abroad with goods produced 
 at home at a relative advantage. 
 
 There, in short, lies the fundamental cause 
 and justification of international trade. It ex- 
 tends human advantage beyond the nation just 
 as home trade extends it beyond the parish, the 
 town, the county. Clearly, home trade is to be 
 zealously cultivated; and it always is, up to 
 the existing economic possibilities. Foreign trade 
 is a second step, forced by circumstances. If 
 home trade meant the possible maximum of 
 production, it should be secured within the 
 township, or at least within the county. It 
 exceeds these bounds precisely because the 
 county cannot yield all the possible supply or 
 all the possible demand as regards any one form 
 of production. For the very same reason, trade
 
 THE ECONOMICS OF COMMERCE 207 
 
 must expand beyond the limit of the nation, 
 unless you are to put the most rigid limits on 
 population, and, at the same time, on consump- 
 tion, as regards variety. If you would have 
 a self-sufficing State — ^the State dreamt of by 
 Fichtc — it must consume all it produces, or 
 waste a surplus ; and it can consume only what 
 it produces. So you cannot have new citizens 
 ad libitum to produce new boots and coats and 
 ships and machines as well as new food. If land 
 were unlimited, you could turn all surplus hands 
 to that, limiting other forms of labour to require- 
 ment. But with limited land you will, in a very 
 few years, under any system, run up against the 
 very fatality of unemployment which is the 
 tariffist's starting-point, and his last ditch. 
 
 In times of trade depression, he argues as if 
 depression could not only be cured, but in future 
 averted, by preventing or taxing importation. 
 Sometimes he proposes only to prevent importa- 
 tion of manufactures, sometimes also that of 
 foods, and of such raw materials as we could 
 ourselves produce. All the while, the fact faces 
 him that in the richest tariffed countries, notably 
 the United States, there are great flood-tides of 
 unemployment. It is the special scandal of the 
 tariffist movement in this country that it denies 
 or evades or seeks to suppress that fact. 
 
 Give him his tariff system and you will simply 
 multiply unemployment, given no change in
 
 208 THE ECONOMICS OF PROGRESS 
 
 population. Either you keep out foreign goods 
 or you do not. In one breath he talks of keeping 
 them out so as to provide employment at 
 home ; in the next he talks of raising a revenue 
 by taxing them, which means letting them in. 
 Let us suppose that all are kept out which could 
 be produced at home. Then you must instantly 
 readjust the exporting trades which formerly 
 paid with their produce for the imports. You 
 cannot go on building ships and making machines 
 and textiles for the foreigner if you are not to 
 buy his goods with them. That hallucination 
 of selling without buying roots in the bullion 
 delusion — ^the notion that bullion is national 
 wealth. Stop your unsaleable exports, and you 
 must turn all hands to producing only for the 
 home demand. Your shipbuilding industry will 
 at once shrink to a fraction of its former size; 
 your exports of cottons and woollens will shrink 
 in a similar proportion, as will your engineering 
 work. 
 
 The tariffist replies, " Oh, we will take our 
 imports in the form of raw material." What 
 raw material ? If your imported raw material 
 is always to equal in value your manufactured 
 exports, you are getting no foreign profit for your 
 labour on that side. Either you export just what 
 suffices to pay for your imported material — ^^vhich 
 means a great contraction of your manufactures — 
 or you continue to export more. How is the
 
 THE ECONOMICS OF COMMERCE 209 
 
 profit to come ? If in cereals, you will be told 
 you arc injuring home agriculture. Stop that 
 also, and you disemploy not only the bulk of 
 your shipbuilders, sailors, dockers, exporters, 
 and myriads of transport workers, coal miners, 
 textile-workers, engineers, but the multitude who 
 do the clerical work of those trades. You cannot 
 possibly employ your present population at a 
 profit on production for the home market, any 
 more than you can employ the population of the 
 Midlands or Yorkshire on work for the Midlands 
 or Yorkshire. The unemployment problem roots 
 in the population problem, under which head 
 we must finally consider it. Unemployment 
 was upon us before there could be any pre- 
 tence of its being caused, save occasionally in a 
 particular small industry, by foreign imports. 
 Foreign trade greatly expanded the possibilities 
 of population and employment alike. Cut 
 down your imports and you cut down your 
 exports, retreating at once to economic limits 
 within which your expanded population could 
 not have come into existence, and cannot now 
 exist. 
 
 The tariffist, once more, really wants to sell 
 without buying, to export ad libitum without 
 taking an equivalent import in things. And 
 this conception, I repeat, comes of the bullion 
 delusion — the notion that the balance ought to, 
 and can, come in cash. Long ago, a Russian
 
 210 THE ECONOMICS OF PROGRESS 
 
 economist, Tchernychewsky, reproached Mill for 
 arguing against the bullion delusion, which, he 
 declared, was no longer entertained by anybody.^ 
 He was badly mistaken. The buUion delusion 
 subsists to this day in England; and it will be 
 odd if it does not subsist in Russia. Many 
 tariffists repudiate it ; but popular tariffism con- 
 stantly trades upon it. Newspaper articles and 
 circulars have been sent round by the thousand 
 in which it is taken as a self-evident fact that if 
 in 1913 Germany exported £80,000,000 worth 
 of goods to this country and imported from it 
 only £40,000,000, we lost £40,000,000 by the 
 transaction. By nine out of ten of those who 
 assent to it, that proposition is taken as putting 
 an irrefutable truth, the assumption being that 
 the balance of £40,000,000 must be, and is, paid 
 in cash. 
 
 Some, it is true, try to put some other con- 
 ception between those of " loss " and payment 
 in cash, by way of momentary homage to the 
 fact that the so-called " adverse trade balance " 
 never is paid in cash. Bullion movements are 
 all recorded, like the movements of goods; 
 and decade by decade, whatever may be the 
 small annual fluctuations, our stock of bullion 
 increases. The modern bullionist, therefore, has 
 to find some other explanation. Invariably it 
 is a new delusion. Let us take the most recent 
 ^ UEconomie Politique fugee par la science, 1874, I.
 
 THE ECONOMICS OF COMMERCE 211 
 
 instance, the book Victory or Free Trade ? " By 
 a British Resident \i. e. now, ex-resident] in 
 Germany," recently issued from the National 
 Review office, with a blusterous preface by Mr. 
 Maxsc. That book, chiming so far with the 
 other tariffist propaganda, states ^ that in the 
 year before the war Germany sold us about 
 £80,000,000 worth of goods, and we sold Germany 
 £40,000,000 worth. " So Germany had the advan- 
 tage of £40,000,000 on the transaction, wliich she 
 could draw from us in the form that suited her 
 best, or keep in the form of credit in Britain 
 to use in her manipulations against us." Ob- 
 serve that for many years past there had been 
 some such excesses on the trade between us and 
 Germany, so that according to this writer 
 Germany had a standing profit which she never 
 drew. 
 
 But, observe further, the United States, in 
 terms of this case, had a far larger " advantage," 
 selling us about £120,000,000 worth of goods, and 
 taking only about £30,000,000 worth in return. 
 And, finally, observe that in terms of this theory 
 the whole world outside Britain had a colossal 
 annual advantage over us, since we imported 
 on our whole turnover about £150,000,000 more 
 than we exported ! And all the world was thus 
 accumulating a colossal power to draw from us 
 thousands of millions — for the balance has been 
 
 1 Work cited, p. 66.
 
 212 THE ECONOMICS OF PROGRESS 
 
 so during scores of years — " in the form that 
 suited her best " — or, as our anonymous sage 
 suggests as an alternative, had been using it to 
 buy up British property. Long ago, in fact, most 
 British property must have been owned by 
 foreigners. 
 
 And while this propaganda incites fear of any 
 deposit of foreign capital among us, the main 
 tariffist movement, as represented by Mr. Bonar 
 Law, expressly urges tariffism on the score that 
 it will cause foreign capital to be invested in this 
 country. That thesis is visionary enough; but 
 what of the thesis that foreign capital is buying 
 us up — or has long ago bought us up ? 
 
 We are dealing once more with the economic 
 Mad Hatter — or, let us say, the economic irra- 
 tionalist. In that interesting work, The Maniac, 
 I read that, " Lunatics do not ' lose their reason,' 
 they merely reason from false premises." Here 
 the lunatic has an advantage over the bullionist 
 tariffist, who merely reasons irrationally from 
 any premises. The " Resident's " prescription 
 is that we should stop trading with Germany. 
 The real conclusion from his argument is that we 
 should either stop trading with all the world 
 or shut off at least the United States, France, 
 Russia, Australia, Canada, Holland, Norway, 
 the Argentine RcpubUc, Belgium, Denmark, 
 Sweden, Switzerland, Spain, Portugal, Roumania, 
 Brazil, Egypt, Peru, and several other countries ;
 
 THE ECONOMICS OF COMMERCE 213 
 
 which all send us more than they take from us ; 
 and trade solely with Bulgaria, Turkey, China, 
 Cuba, India, the Gold Coast, Italy, Japan, Java, 
 Persia, Siam, and Uruguay, which usually take 
 from us more goods than they send us. 
 
 Need I explain to any one but a tariffist that 
 our total excess of imports is our profit, our 
 interest on investments abroad, and our payment 
 for freights and other services; and that where 
 one country takes from us less than we take 
 from her, the balance is made up either in these 
 ways or by a contra-account, in which she buys 
 from China or India or Japan or Turkey or 
 elsewhere, against our credits in those countries ? 
 On the face of the case, it is we who reap the 
 advantage in trade with Germany, getting in 
 1913 twice what we gave, and with the United 
 States, getting three or four times what we gave. 
 In reality much of the excess we received from 
 those countries was return on our shipping and 
 investments, while the remainder was balanced 
 by produce of India and the East, to which we 
 exported much more than we took directly back. 
 
 But of course this explanation and con- 
 frontation will not deter the tariffists from 
 asserting that we lose by our trade with Germany, 
 saying nothing of our trade with the United 
 States, our own Dominions, France, and the 
 rest of the world in general, where, in terms of 
 tariffism, we lose far more heavily still. Hate,
 
 214 THE ECONOMICS OF PROGRESS 
 
 they trust, will blind our people's eyes to the 
 primary fraud of the statement. Or shall we 
 conclude that they are utterly incompetent to 
 realise the process of international trade ? Either 
 way, we must content ourselves with putting 
 on record the economic facts in the light of which 
 alone the problems of international trade after 
 the war can be rationally considered. 
 
 The demand is that we shall either absolutely 
 boycott the trade of Germany or place our trade 
 with her under tariff restrictions which will 
 greatly check it as compared with any other 
 foreign trade we carry on. Let me say at once 
 that if we could either boycott or penalise the 
 trade of Germany in any way so as to depress 
 her without injuring ourselves I should make 
 no demur. I am no more concerned to help the 
 Germans in trade than to help the Turks to 
 recover Armenia or Palestine : for their guilt, 
 there is no commercial penalty that I would not 
 exact if I believed it exigible. But as hate 
 blinded them it can blind us. We are concerned 
 to know the possibilities.^ 
 
 As to a boycott, observe, to begin with, that 
 the tarifhsts who advocate a boycott have 
 abandoned their pet principle of " making the 
 foreigner pay." One school, it is true, is advocat- 
 ing the exaction from Germany of an indemnity 
 
 ' The problem is discussed at greater length in the author's 
 Cobdcn Club pamphlet, Fiscal Policy after the War, 1916.
 
 THE ECONOMICS OF COMMERCE 215 
 
 to Britain as well as to Belgium and France — the 
 indemnity to be in our case twenty thousand 
 millions. It is not clear that even that school 
 realises that it is asking for payment in goods. 
 It is quite possible that they also believe that the 
 proposed payment can be made in cash. But 
 those who, perhaps realising that Germany could 
 not possibly pay the war costs of the Allies, call 
 simply for a boycott, are declaring that hence- 
 forth they will not ask the enemy foreigner to 
 pay. 
 
 Now, if there is any foreigner you ought now 
 to want to compel to pay — something — it is the 
 German. But, according to the tariffist of yester- 
 day, he was to be made to pay by letting in his 
 goods under a tariff. By refusing to let them 
 in at all the tariffist appears to confess that a 
 tariff does not make the foreigner pay, after all. 
 If, however, you apply and can really work a 
 boycott, you are simply refusing to let Germany 
 pay her due indemnity to Belgium. It can be 
 completed only in goods : all Germany's bullion 
 would not suffice; and any excess of bullion 
 over Belgium's real trade needs would simply 
 have to go elsewhere, to buy the things really 
 required. If such excess of bullion should come 
 our way, are we to refuse to deal ? Is German 
 gold, even, to be refused, while we affirm our 
 determination to have German ships by way of 
 a scrap of indemnity to ourselves ?
 
 216 THE ECONOMICS OF PROGRESS 
 
 But, next, as to the things which Germany 
 ought to be compelled to hand over to Belgium — 
 ores, coals, raw material, machinery, manu- 
 factures, tools, furniture, cloths, and so on. 
 Supposing Belgium gets a temporary excess of 
 any one kind of German product — and it will 
 hardly be possible to calculate all the needs with 
 exactitude — are we to refuse to receive any of 
 such excess, however useful it might be to our 
 trade, in exchange for goods of ours that Belgium 
 might wish to buy ? If we do, we shall have the 
 edifying knowledge that she will certainly do her 
 trade with some other country, possibly with 
 Germany by a re-exchange. 
 
 And this brings us to the question : Whatever 
 we may do, is it really believed here that our 
 Allies — in particular Russia and Italy — will also 
 refuse to trade with Germany in future ? Mr. 
 Maxse may believe it ; no intelligent trader will. 
 Russia and Germany are geographically fore- 
 ordained to trade ; and there is not the slightest 
 likelihood that the United States, as represented 
 by President Wilson, will refuse to resume trade 
 with Germany after peace. If, then, Germany 
 gets into these and all the neutral markets, it 
 will matter little to her whether or not she gets 
 into ours; while it will matter a great deal to 
 us if she gets into those markets on better terms 
 than we do. And that is what will certainly 
 happen if our tariffists get their way to the
 
 THE ECONOMICS OF COMMERCE 217 
 
 extent of imposing not merely a least-favoured 
 nation tariff or a boycott on Germany, but a 
 second heaviest tariff on neutrals, and a third 
 heaviest on our Allies, with most-favoured-nation 
 treatment only for our own Dominions. That 
 way madness lies. If we put Russian, Rou- 
 manian, American and Argentine corn at a dis- 
 advantage as compared with Canadian, Indian, 
 and Australian, we shall simply drive the first- 
 named countries into the arms of Germany, 
 which will promptly offer them mostfavoured- 
 nation treatment. And so with wool and wine 
 and anything else. Our tariflfism will be Ger- 
 many's opportunity. 
 
 As for a tariff directed solely against Germany, 
 it is really not worth w^hile. It would impose on 
 us a costly and precarious system of trade in- 
 quisition to discover whether goods coming from 
 Switzerland, Holland, and Scandinavia are not 
 really German in origin, or made in those coun- 
 tries by German capitalists. The natural and 
 righteous resentment of our people will for many 
 a day prevent much direct importation from 
 Germany; though, for that matter, if we really 
 needed German fertilisers for our soil, finding 
 others less useful or more costly, we should not 
 be very well advised to refuse to have them. 
 As for roundabout trade, we should be under a 
 constant liability of mystification, which a tariff 
 would only intensify. And if you do levy a
 
 218 THE ECONOMICS OF PROGRESS 
 
 tariff on imports that you really need, remember 
 that it is you who pay the tax, and not the 
 foreigner — as even the tariffists seem now to 
 begin to see. 
 
 What the Germans are really afraid of, I 
 believe, is not being driven out of our markets, 
 especially when our tarifhsts are planning to 
 drive them into all other markets, but the refusal 
 to them of certain raw materials produced within 
 the British Empire, notably wool, copper, and 
 animal and vegetable fats. If Britain and the 
 United States combined to refuse them wool 
 and cotton, they might conceivably be badly in- 
 convenienced. But there again, supposing the 
 United States were willing to refuse to send 
 cotton to Germany, we should have to reckon 
 with all Europe, for traders in other countries 
 would be eager to buy for Germans, and sell on 
 to them. We should have to set up a perpetual 
 quarrel -breeding " blockade " policy by way of 
 preventing her from getting what she wanted 
 through her neighbours. 
 
 In fine, the policy of deliberately depressing 
 Germany after the war is not economics. It is 
 just war continued — more waste, no gain, and 
 after all no security. No gain, because if you 
 could keep Germany poor you would be keeping 
 her neutral customers also poor, and thus help- 
 ing to keep yourselves poor. Poverty is an 
 international thing, like trade. All the nations 
 suffer from the war : all will suffer if there is
 
 THE ECONOMICS OF COMMERCE 219 
 
 much commercial war afterwards. And con- 
 tinued universal distress is a very negative sort 
 of security for peace, even if you wanted to buy 
 security at that price. So that, whatever ethics 
 may say, economics says that the game of 
 economic revenge is not worth the candle. If 
 you could take a moral and Christian satisfac- 
 tion in keeping German women and children 
 ill-fed in perpetuity in punishment for the crimes 
 of German men, you would at least get no profit, 
 commercial or political, out of the transaction. 
 " C'est magnifique, mais ce n'est pas la guerre," 
 said the Frenchman concerning the charge of 
 the Light Brigade at Balaklava. " Ce n'est pas 
 magnifique, et ce n'est pas I'economie politique," 
 must be our comment on the dream of perpetual 
 economic injury. 
 
 In point of fact, it is a typically German con- 
 ception. It was a German economic historian, 
 Friedrich List, who summed up the whole plun- 
 dering and blundering process of English pro- 
 tectionism in the eighteenth century as one of 
 careful and sagacious national egoism, to the 
 end of building up a British manufacturing 
 supremacy, after attaining which we could allow 
 ourselves the luxury and the further profit of 
 Free Trade. ^ That is one of the grossest delusions 
 
 1 The National System of Political Economy (Eng. tr., 
 1904), Ch. IV. It is noteworthy, however, that in a later 
 chapter (XXVII) List writes : " It is especially owing to 
 her dvil, mental, and religious liberty, to the nature and
 
 220 THE ECONOMICS OF PROGRESS 
 
 of the pseudo-science which so largely passes 
 current in Germany as historiography. There 
 was simply no continuous national calculation 
 in the business : it was a perpetual clash and 
 counterplay of conflicting sectional egoisms, each 
 trade's hand against the rest, with some measure 
 of ultimate compromise against the wretched 
 consumer, who paid for all the blunders alike. 
 When our ancestors framed the Navigation Laws 
 by way of injuring Dutch shipping, they simply 
 hamstrung their own. The woollen trade sought 
 to strangle the linen and the cotton trades ; and 
 the landlords did their best to starve all alike. 
 Planning between times to best other nations, 
 we only trammelled ourselves. 
 
 Incomparably our greatest progress, alike in 
 power, in wealth, and in good life, has taken 
 place since we adopted the ideal of Free Trade; 
 and our nearest approach to trade supremacy, 
 so-called, has been made in that period. The 
 conception of a national policy of injury to 
 other nations, a policy never really applied even 
 when it was cherished, has long been obsolete in 
 our politics. It belongs to the age of economic 
 darkness. To accept it anew at the hands of 
 the very enemy who has been inspired by it, and 
 whom we are out to defeat, would truly be a 
 
 excellence of her political institutions, that the commercial 
 policy of England has been enabled to make the most of 
 the natural riches of the country, and fully to develop the 
 productive powers of the nation " (Trans, cited, p. 258). 
 That is to say, liberty is good in everything but trade.
 
 THE ECONOMICS OF COMMERCE 221 
 
 reception of the seven devils in the swept and 
 garnished house. 
 
 Postscript 
 
 Doubtless this view will elicit from the un- 
 reasoning tariffist the epithet " pro-German." 
 The use of that epithet in anonymous and other 
 communications to the Press and to individuals 
 passes in many quarters for rebuttal of any 
 appeal to commercial common sense in these 
 matters. An avowedly aged gentleman used it 
 lately on a postcard to me on which he remarked 
 that I probably had shipping shares, whereas he, 
 though once a Free Trader, was now enlightened 
 in virtue of the fact that he had " hay to sell," 
 which was " quite another matter." As it hap- 
 pens, I have no shipping or any other shares, 
 and no interest in any commercial concern, and 
 the one commodity I regularly sell — as apart 
 from things literary — is just HAY 1 And I am 
 totally unable to conceive how any fiscal policy 
 in regard to Germany can increase my very small 
 returns on that article. 
 
 But on the politico-ethical issue I desire the 
 reader to note that the policy of " economic war 
 after the war " is not here opposed, as by some, 
 on grounds of charity or humanity towards 
 Germany, but first and last on the ground that 
 in the nature of things no such policy can be 
 applied without as much injury to ourselves as 
 can possibly be inflicted on the enemy.
 
 VII 
 
 THE ECONOMICS OF POPULATION (I) 
 
 I SAID in the last lecture that trade troubles 
 are as old as trade. The problem of population 
 is older still, being, indeed, prior to humanity. 
 At this point economics can posit the testimony 
 of biology ; but it is worth noting that economics 
 first grasped and expounded the case for purposes 
 of scientific generalisation, passing it on to the 
 biologists. Historically, Darwinism derived from 
 Malthusianism : it was Malthus who showed Dar- 
 win his problem,^ as other men had shown him 
 his. We, however, are not here further concerned 
 with biology than as regards our human problem : 
 the recessive problem of biology is another matter ; 
 and biological speculation as such, instead of 
 helping us, only deflects our humanist inquiry. 
 
 Of course the perception that in Nature life 
 runs immensely to waste is far older than 
 Malthus, and in his youth it had been much 
 dwelt on. To go no further back, Mary Woll- 
 stonecraft saw and formulated for herself the 
 fact that Tennyson puts in his lines on Nature — 
 
 " So careful of the type she seems, 
 So careless of the single life," 
 
 ^ Darwin's Autobiography in Life and Letters, I, 83. 
 
 222
 
 THE ECONOMICS OF POPULATION 223 
 
 It was " an old reflection " of Mary WoUstone- 
 craft's, she wrote in 1795, " that it is the 
 preservation of the species, not of individuals, 
 which appears to be the design of Deity through- 
 out the whole of Nature." Writing before 
 Darwin, Tennyson could tell the sterner truth 
 established by science — 
 
 " So carcfiil of the type ? but no. 
 
 From scarped cliff and quarried stone 
 She cries, ' A thousand types are gone : 
 I care for nothing; all shall go.' " 
 
 Which is only a larger and more poetic way of 
 putting the prose of Malthus — 
 
 " Throughout the animal and vegetable king- 
 dom. Nature has scattered the seeds of life 
 abroad with a most profuse and liberal hand, 
 but has been comparatively sparing in the room 
 and the nourishment necessary to rear them." ^ 
 
 Turning from the economics of Nature to the 
 economics of man, we find him at a very early 
 stage brutally stating his view of it by the 
 simple process of infanticide. I once read a 
 brilUant speculation, by the late Mr. Harry 
 Quilter, to the effect that at some early stage of 
 civilisation the human species was saved by 
 cannibalism. I have never seen adequate an- 
 thropological evidence for that interesting hypo- 
 thesis; but anthropology is heavily laden with 
 the evidence of the one-time universality of 
 1 Essay on the Principle of Populatiov, Ch. I, p. 2.
 
 224 THE ECONOMICS OF PROGRESS 
 
 infanticide.^ Let it be realised at once that 
 this is not a specialty of exceptionally brutal 
 people even among savages. Eskimos, who 
 practise infanticide, are fond of their children, 
 and never eat till the little ones have had their 
 share. Savages in general are kind to their 
 children, never punishing them,^ yet they mostly 
 commit infanticide in time of scarcity. Professor 
 Hobhouse notes concerning the Yahgans of 
 Tierra del Fuego that " they hold human life 
 sacred, with the exception, common among 
 savages, that they allow infanticide. This, how- 
 ever, does not prevent the existence of strong 
 affection for the children who are allowed to 
 survive, or of a similar feeling on the part of 
 the children towards the parents. Property is 
 not held in common, but they are free in giving, 
 and hold hospitality a duty. They are neither 
 cruel nor malicious." ^ Of the still more primi- 
 tive Veddahs of Ceylon, who show no trace of 
 an idea of a creative God, and who also practise 
 infanticide, it is told that " they respect the 
 property even of strangers, and would not even 
 take a few leaves from a banana tree without 
 coming to ask leave." * 
 
 Such are the adjustments of population to 
 
 ^ See Letourncau, Sociology, Eng. tr., Ch. V. 
 
 2 Id., pp. 150-1. 
 
 3 L. T. Hobhouse, Morals in Evolution, 1906, I, 47. 
 « Id., p. 45.
 
 THE ECONOMICS OF POPULATION 225 
 
 subsistence in what we may term the static 
 savage state, the state in which savage tribes 
 struggle on within their Umits of territory, 
 having no notion of conquest. Under conditions 
 which admit of expansion, we see wanderings of 
 famihes and tribes, of hordes, with the accom- 
 paniments, often, of primitive conquest. What 
 is called " prehistoric history " is substantially 
 made up of such movements, mostly testifying 
 to the pressure of population on the means of 
 subsistence. At some stages the movements are 
 immense, and they recur in age after age. 
 Southern and northern Europe alike tell of 
 successive invasions of whole regions by waves 
 of different races; and after some regions have 
 settled down into relatively stable civilisation 
 they are faced alternately by the need to shed 
 off colonies from their own aggregate and to 
 resist the menace of new swarms treading on 
 their own heels. Chronically there recur wars 
 of conquest, economically motived,^ solving the 
 problem by massacre and rapine. And always, 
 under the re -settlement, there recur the old 
 conditions of distress, even the primitive death- 
 rate having to be supplemented by the old 
 
 ^ " This [pressure of population] always remains a chief 
 cause of international disputes and wars. These struggles 
 keep doxvn the net growth of the world's population with the 
 maximum of pain and misery.'''' — Report on Hie Declining 
 Birth-Rate, by the Commission of the National Council of 
 Pubhc Morals, 1916, p. 43. 
 Q
 
 226 THE ECONOMICS OF PROGRESS 
 
 device of infanticide, pitifully disguising itself as 
 exposure of infants to chance. 
 
 Doubtless the practice, established by whole 
 ages, was often maintained irrespectively of any 
 inquiry as to whether it could be dispensed with. 
 Men did it, as they performed their religious 
 rites, because their fathers had done it before 
 them. But then their fathers had seen and 
 given reasons for doing it; and it is vain to 
 dispute that the custom was kept in force by 
 normal economic pressure. It figured as a quite 
 " moral " procedure. In Terence's comedy, The 
 Self -Tor mentor, the personage who utters the 
 famous saying, " I am a man : nothing that is 
 human is alien to me," has previously insisted 
 on exposing his own child to the chance of death 
 or salvage. Exposure was licit for both Greeks 
 and Romans, like the selling of a child by its 
 father into slavery; and the ancient Germans 
 (need I add, Anglo-Saxons, Kelts, and other 
 " Aryans " ?) lived under the same law. When 
 the pagan Diocletian forbade the sale of children 
 into slavery, the result was found to be an 
 increase of infanticide ; and in the seventh cen- 
 tury, accordingly, the Christian Church is found 
 recognising the right of sale, as the less of the 
 two evils. ^ Economic pressure is recognised all 
 round. 
 
 ^ Report on The Declining Birth-Rate, by the Commission 
 of the National Council of Public Morals, 1916, p. 223.
 
 THE ECONOMICS OF POPULATION 227 
 
 Such pressure the Christian veto on infanticide 
 (derived from the Judaic idea of fruitfulness, 
 natural to an often decimated and dispersed 
 people) could not alter. It simply left the 
 murder check to be replaced by the other de- 
 structive and preventive checks, an enormous 
 death-rate doing most of the work, and chronic 
 war most of the rest. Sacerdotal celibacy 
 counted for a little. But in Protestant England 
 it was rather the coincidence of the new regime 
 with an age of peace than any discontinuance 
 of celibacy that forced the question of popula- 
 tion on the minds of Tudor statesmen. ^ Bacon 
 saw it from two sides, remarking in his essay, 
 Of Seditions and Troubles, that "the matter of 
 seditions is of two kinds, much poverty and much 
 discontentment," and that " the rebellions of 
 the belly are the worst." And thus he prescribes 
 prevention : 
 
 a 
 
 To which purpose serveth the opening and 
 well-balancing of trade ; the cherishing of manu- 
 factures ; the banishing of idleness ; the repress- 
 ing of waste and excess by sumptuary laws ; the 
 improvement and husbanding of the soil ; the 
 
 1 " The English legislation, beginning in 1536 and leading 
 up to ' the poor law of Elizabeth,' was but the English 
 phase of a general European movement of reform. . . . 
 Neither in its origin nor in its early stages was the poor law 
 of England in any way peculiar to that country." — Professor 
 Ashley, Introd. to Eng. Econ. Hist, and Theory, Pt. II, p. 350. 
 Cobbett's theory of its causation through the suppression of 
 the monasteries is thus a delusion.
 
 228 THE ECONOMICS OF PROGRESS 
 
 regulating of prices of things vendible; the 
 moderating of taxes and tributes, and the like. 
 Generally it is to be foreseen [i. e. provided] that 
 the population of a kingdom {especially if it be 
 not mown down by wars) do not exceed the stock 
 of the kingdom which should maintain them. 
 Neither is the population to be reckoned only 
 by number; for a smaller number that spend 
 more and earn less do wear out an estate sooner 
 than a greater number that live lower and 
 gather more. Therefore the multiplying of 
 nobility and other degrees of quality in an 
 over-proportion to the common people doth 
 speedily bring an estate to necessity; and so 
 doth likewise an overgrown clergy; for they 
 bring nothing to the stock; and in like manner 
 when more are bred scholars than preferments 
 can take off." 
 
 Let us not make light of Bacon because he pre- 
 scribed sumptuary laws and the fixing of prices, 
 of which expedients the latter has been revived 
 by us in war time, and the former is translated 
 into counsels of perfection, to say nothing of 
 the raising of railway fares. The fact remains 
 that he not only saw broadly the problem of 
 population, but put in advance the ethical and 
 political comment that the idle class is the least 
 excusable in the matter of over-breeding. To 
 that aspect of the matter he recurs in the essay, 
 Of the True Greatness of Kingdoms and Estates — 
 
 " Let states that aim at greatness take heed 
 how their nobility and gentlemen do multiply
 
 THE ECONOMICS OF POPULATION 229 
 
 too fast. For that maketh the common subject 
 to be a peasant and base swain, driven out of 
 heart, and in effect but the gentleman's labourer. 
 Even as you may see in coppice woods : if you 
 leave your staddles too thick, you shall never 
 have clean underwood, but shrubs and bushes. 
 So in countries, if the gentlemen be too many, 
 the comn;ons will be base." 
 
 He was thinking first and mainly of military 
 strength, with his eye on the history of France ; 
 but the argument holds for a wider ideal. Bacon's 
 radical wisdom was in advance of his time, w'hich 
 could but attempt, by a Poor Law, to deal with 
 the mass of floating poverty that the closing of 
 the monasteries merely threw into sharper relief. 
 And the failure of that system, through cen- 
 turies, to exclude unemployed poverty, is one 
 of the testimonies to the law of population. 
 The idea was that the idle poor should be set 
 to work. And a century later you find the 
 publicists complaining that the cure does not 
 operate. How could it? In given economic 
 circumstances, to set the idle poor to useful 
 work, you had to take the work frorn the poor 
 who were working — a mere shifting of the un- 
 employment. And in the latter part of the 
 eighteenth century, when new manufactures 
 greatly widened the market for labour, the 
 people simply populated up to the widened 
 limit, still over-breeding. 
 
 It was upon this vicious circle that the young
 
 230 THE ECONOMICS OF PROGRESS 
 
 curate, Thomas Robert Malthus, turned his critical 
 eye when, in 1798, he found his kindly Jacobinical 
 father, the executor of Rousseau and the disciple 
 of Godwin, arguing on Godwin's lines for the 
 indefinite perfectibility of man and society, given 
 only a just distribution of property. The fact 
 of the tendency of population to increase faster 
 than subsistence had long before been recognised. 
 Even if it had not been obtruded by both Plato 
 and Aristotle, of whom the latter had pointed 
 out that if there was to be equality with comfort 
 in any State there must be rigorous limitation of 
 numbers, 1 modern observation had abundantly 
 dwelt on the main phenomena. Petty, Child, 
 Wallace, Hume, Smith, Franklin, Price, and 
 Townsend had all posited the central fact that 
 population was always being restrained by lack 
 of food supply. The children that were born, 
 they saw, could not all live, even as happened 
 with the offspring of animals, the spawn of fish, 
 and the seeds of plants. Wallace (1761), after 
 outlining with ostensible sympathy an ideal 
 system of community of goods, sadly avowed, 
 
 1 Politics, Bk. II, Ch. VI ; Bk. VII, Ch. XVI. Professor 
 L. von Bortkicvicz argues in a careful study (" War Aris- 
 toteles Malthusianer ? " in Zeitschrift fiir die gesomte Staats- 
 wissenschaft, 1906, No. 26) that Aristotle's words show no 
 recognition of the " law " of Malthus, but merely provide 
 against an excess of citizens. But may we not infer that 
 Aristotle and the ancients in general, by their practice, 
 took the " law " for gi-anted ?
 
 THE ECONOMICS OF POPULATION 231 
 
 in the light of Aristotle, that increase of popula- 
 tion would soon upset it.^ 
 
 Nay, Condorcet, in his Sketch of the Progress 
 of the Human Species, posthumously published in 
 1794, had put to himself the same problem as 
 regards his vision of perfected humanity; and 
 Godwin, who far outwent Condorcet in Utopian- 
 ism, had in his Political Justice (1793) expressly 
 glanced at Wallace's dilemma. While explicitly 
 admitting that population was always tending to 
 outgo subsistence,^ he had assumed to dispose 
 of the difficulty by a set of the most visionary 
 " might-be's " ever thrown out in modern times 
 by a serious writer. Godwin, in fact, thrust 
 the problem on the notice of his readers, as did 
 Condorcet, not leaving Malthus to frame it. 
 What Malthus did was to take the generally 
 recognised truth and erect it into a vital prin- 
 ciple of social theory, correlating it at once with 
 economics and with practical politics. 
 
 This he did at the very start, in the process of 
 exposing the inanity of Godwin's suggestions as 
 to how the tendency to over-population " might 
 be " one day averted, through men becoming so 
 intellectual as to give up marriage, or lengthening 
 their lives indefinitely, and so on. There has 
 been an infinity of attempted rebuttal of Malthus ; 
 
 ^ Various Prospects of Mankind, Nature, and Providence, 
 1761, p. 107 seq. 
 
 2 Enquiry Concerning Political Justice, Bk. VIII, Ch. Ill, 
 2nd ed., p. 460.
 
 232 THE ECONOMICS OF PROGRESS 
 
 but nobody since Godwin has attempted to bolster 
 up his case, at that point ; though the notion of 
 a spontaneous falhng-off of births through intel- 
 lectual development was put by Herbert Spencer 
 in his thesis of " individuation," and was in 
 effect adopted later by Henry George. It was 
 because the mass of men, without heeding the 
 visions of Godwin, were unwilling to admit the 
 primary fact which even Godwin originally saw, 
 that Malthus had to follow up his original de- 
 structive Essay with a constructive and exposi- 
 tory doctrine which Professor Marshall has justly 
 pronounced " one of the most crushing answers 
 that patient and hard-working science has ever 
 given to the reckless assertions of its adversaries." ^ 
 It may or may not have been a disadvantage 
 to the cause of science that Malthus first put 
 his case by way of a " conservative " refutation 
 of revolutionary ideals. That circumstance, in 
 effect, long made his doctrine figure as a resist- 
 ance to political reform. But it also had the 
 effect of at once giving his doctrine a wide vogue, 
 and so forcing it on the notice of all economists. 
 And while De Quincey met it with clever sophistry 
 and McCuUoch with the a priori optimism which, 
 alone of Smith's errors, he uncritically adopted, 
 Ricardo and the two Mills recognised it in its full 
 force ; and John Mill followed Ricardo in giving 
 it a firm place in modern economics. Certainly 
 ^ Economics of Industry, 1879, p. 30.
 
 THE ECONOMICS OF POPULATION 233 
 
 it is much evaded, and its practical application 
 has been made the subject of an infinity of 
 scurrilous abuse on the one hand and culpable 
 neglect on the other. But the economic truth 
 is irrefutable. 
 
 To any one who may be attentively approach- 
 ing this question for the first time, I would 
 appeal to have a little patience before concluding 
 that he is in scientific opposition to the scientific 
 as distinguished from the ethical or social doc- 
 trine of Malthus. Nine-tenths of the opposition 
 to the former is either sheer misconception or 
 sheer irrelevance ; and the two most widely 
 current answers simply destroy each other. The 
 latter-day critics who affirm that Malthus is 
 " exploded " either do not understand the issue 
 upon which they pronounce or are so misstating 
 it as to burke the truth. 
 
 What is the fundamental doctrine of Malthus ? 
 That population tends to increase faster than 
 subsistence — faster, that is, than subsistence can 
 be made to increase at any given time. Observe, 
 the word is subsistence, not wealth. To answer, 
 as some do, that wealth, the aggregate of values, 
 increases faster than net population, is to put a 
 perfectly irrelevant proposition. It is utterly 
 beside the case. For life are required food, 
 raiment, shelter. The assertion that there is 
 plenty of wealth for all if it were properly 
 divided, we have already dealt with. It is not
 
 234 THE ECONOMICS OF PROGRESS 
 
 true. There is not a sufficiency of houses, of 
 clothes, of good food for all. Even when, at a 
 given moment, there may be a surplus of food, 
 its presence may fail to move the wheels of 
 capital quickly enough to translate it into food 
 for labour. The fact that a larger population 
 may be better fed, housed, and clothed to-day 
 than a smaller one generations ago is again no 
 answer. The claim that an ideally good social 
 system might make better use of the natural 
 resources is also no answer. Malthus himself 
 said those things. Such a form of answer ignores 
 the vital fact in the case — the physical and moral 
 sacrifice of life by which population has been 
 kept within the slowly increasing limits of 
 subsistence, in any given state of social 
 development. 
 
 For what is the meaning of " tends to in- 
 crease " ? Some critics are so inept as to offer 
 by way of rebuttal the very Malthusian premiss 
 itself, that life cannot increase beyond the means 
 of subsistence. Of course it cannot ! The point 
 is that it presses upon them, with the result that 
 a multitude of people sustain poor life with 
 subsistence inadequate to the maintenance of 
 health and strength; that the birth-rate is to a 
 large extent kept down by vice which spells 
 degradation and moral misery; and that withal 
 a vast multitude of infants born never reach 
 maturity for lack of good life conditions.
 
 THE ECONOMICS OF POPULATION 235 
 
 To these facts, gross as mountains, open, pal- 
 pable, what are the answers that pass current? 
 Two : that over-population is a distant evil ; 
 and that over-population in any one country 
 is properly to be relieved by emigration. The 
 second answer, put by Carlyle and a hundred 
 others, grants the whole case. If there is a neces- 
 sity for a constant stream of emigration, the 
 doctrine of Malthus is established, once for all ; ^ 
 and all the other pretences at answer are dis- 
 missed as irrelevance. But the irrelevance 
 constantly goes on; and the emigration answer, 
 all the while, is given without the least critical 
 realisation of what it means, morally, politically, 
 socially, ethically. 
 
 Let us dismiss the irrelevant dialectic first. 
 The best of it was early supplied by De Quincey, 
 who argued in his finest forensic style that since 
 the means of subsistence are themselves forms 
 of life, animal and vegetable, w^hich Malthus 
 declared to tend to indefinite multiplication, it 
 cannot be true that human life tends to increase 
 faster than subsistence — that is, faster than 
 subsistence tends to increase. Malthus had 
 
 ^ In the Report of the Commission of the National Council 
 of PubHc Morals on The Declining Birth-Rate (191G, p. 40) 
 occurs the remark : " It cannot, in fact, be said that there 
 exists any over-population in this country, in the sense 
 that population has actually been growing faster than the 
 available means of subsistence." This, \vith the context, 
 simply ignores the whole phenomena of emigration.
 
 236 THE ECONOMICS OF PROGRESS 
 
 chosen (unnecessarily) to put it that population 
 tends to increase at a geometrical rate — that is, 
 as 1, 2, 4, 8, 16, and so on, while food can be 
 made to increase only in an arithmetical pro- 
 gression — as 1, 2, 3, 4, and so on. De Quincey 
 answers that corn naturally multiplies (" tends 
 to increase ") at a far greater rate than that of 
 simple doubling, and that the animals on which 
 man feeds also tend to multiply far faster than he. 
 Need I point out that this is simply a trick of 
 words? The "tendency" in the tAvo cases is 
 quite diversely conditioned. A stalk of corn 
 may bear sixty-fold, and animals can breed 
 much more rapidly than man. Yes, but they 
 are far more decisively limited by their means 
 of subsistence ; their greater power of gross 
 multiplication goes with a proportionally vaster 
 destruction of life-germs ; and when we come 
 to reproducing them in quantities adequate to 
 the sustenance of nations the very first con- 
 dition of their subsistence — area — is deficient. 
 It is a question of acreage. A field of corn may 
 be made to yield annually a little more and a 
 little more ; but the cultivable area can be only 
 slightly expanded as regards this country; and 
 the whole world would not suffice even to plant 
 the entire corn seeds yielded by one harvest. 
 And so with animals and their pasture. Their 
 increase is limited, even as is man's. And 
 whereas man for himself often does not scruple
 
 THE ECONOMICS OF POPULATION 237 
 
 to breed under bad life conditions, man as owner 
 of animals is scrupulously careful to breed them 
 only under relatively good conditions, so as to 
 get the utmost economic value. In a word, 
 man's " tendency " emerges in misery, vice, 
 infanticide, shame, which only reasoned action 
 can check : the " tendency " in plants and ani- 
 mals is something we actually control, quite 
 simply, and can exploit only within limits. The 
 very fact that the cereals, the plants, the trees, 
 bear all but a minute fraction of their seeds in 
 vain, all the world over, and that the enormous 
 reproductive power of all animals means, in 
 the state of nature, an infinite struggle for exist- 
 ence, in which no large species can ever become 
 nearly so numerous as those expressly bred and 
 maintained by man for his own use, should have 
 made an end of the whole vain debate the moment 
 it was faced. 
 
 Man's power of developing his food supply 
 simply enhances his possibilities of multiplication : 
 it does not, and cannot, extend to making his food 
 supply equate with his actual, still less with his 
 potential, birth-rate. With all the outcry about 
 land monopoly, the fact remains that men can, 
 and do, generate children in excess of their power 
 to provide for them. It is only through the 
 deliberate restriction of the birth-rate that a 
 general well-being can be secured to men in 
 the mass. When Malthus opened up the subject,
 
 238 THE ECONOMICS OF PROGRESS 
 
 the idea of such dehberate restriction was en- 
 tirely new to the great body even of thinking 
 men in England, though in certain modern 
 countries, notably in Norway and Switzerland, 
 deliberate State measures for the restriction of 
 marriage had long been in operation, to say 
 nothing of the doctrine of Aristotle as to the 
 necessary restriction of the birth-rate in a well- 
 ordered State. At the outset, writing as a young 
 man keen on his argument, Malthus recognised 
 no moral means of control of the instinct of 
 reproduction. Thus he put a substantially pessi- 
 mistic case. The only checks to over-population 
 which he recognised — as apart from the special 
 chronic checks of war and pestilence — were vice 
 and misery. 
 
 By apparent implication, vice and misery were 
 to be perpetual. Not that Malthus ever formu- 
 lated a frankly pessimistic philosophy : on the 
 contrary, in his first edition he elaborated a thesis 
 of the providential character of the constitution 
 of things, in which hardship was a perpetual 
 incentive to effort. Here he anticipated at once 
 the optimistic solution of McCulloch,^ who urged 
 that very view, and the sombre doctrine later 
 evolved by Darwin, who, as fettered on the 
 socio-political side as he was masterly on the 
 biological, serenely argued that since man had 
 evolved under the stress of the individual struggle 
 1 Principles, 2nd ed., pp. 227-8,
 
 THE ECONOMICS OF POPULATION 239 
 
 for existence, that struggle must continue on 
 the old physical basis if his evolution was to be 
 continued. The essentially unscientific character 
 of that conclusion we shall see when we come to 
 consider practical solutions. For the present 
 let us note that on Darwin's view men must 
 deliberately practise imprudence because civilis- 
 ation has arisen under conditions of ignorant 
 imprudence.^ But Malthus, like Ricardo, was 
 
 ^ Darwin's view, put forward by him as one reason for 
 not giving evidence for the defence in the trial of Mr. 
 Bradlaugh and IMrs. Besant for publishing the Knowlton 
 pamphlet (IMrs. Besant's Autobiographical Sketches, 1885, 
 p. 136), has been significantly pressed into the cause of irra- 
 tionalism by Mr. Benjamin Kidd {Social Evolution, p. 37), 
 who makes it part of his reasoning that men ought rationally 
 to act irrationally, because to be rational is dangerous. It 
 is, however, adopted by a truly scientific inquirer like 
 Dr. Archdall Read, who contends that the cessation of 
 " natui-al selection " in any species ends in degeneration — 
 that is, that unless there is a struggle which kills off the 
 weak or unfit, these will multiply. The exact thesis is that 
 " regressive variations tend to be of greater magnitude than 
 progressive variations " {Principles of Heredity, 1906, p. 67). 
 It is hardly necessary, however, to point out that the 
 Darwinian " struggle " is never realised in modern society, 
 where economic advantage so largely determines society. 
 On Darwdn's own principle, biological degeneration must 
 have set in as soon as law protected property, if not sooner. 
 And the biologically " unfit " of later days happen to 
 include NeA\1;on and Darwin. The whole problem is one 
 on which mere biology is a quite blind guide to polity. 
 See it discussed by Dr. Alvan A. Tenney, Social Democracy 
 and Population (Columbia University Studies), 1906, Ch. IV. 
 Even Huxley, in his Romanes Lecture on Evolution and 
 Ethics, while rightly rejecting the preposterous counsel to
 
 240 THE ECONOMICS OF PROGRESS 
 
 an essentially and deeply benevolent man, and 
 he found his practical reconciliation with life 
 not in a thesis that this is the best of possible 
 worlds but in one to the effect that it could be 
 made better. 
 
 The teleological theory disappeared from the 
 later editions of his Essay. My friend, Dr. James 
 Bonar, in his admirable book on Malthus and 
 His Work, appears to regret that Malthus with- 
 drew his philosophic case. But I fancy the 
 withdrawal was logically necessary. Malthus 
 evolved the doctrine that over-population could 
 be averted by what he called moral restraint, 
 by which he meant simply the general post- 
 ponement of marriage by men until they had 
 secured a competence, with, at the same time, 
 a complete abstinence from vice. That solution, 
 in turn, we shall see to be profoundly wrong when 
 we come to consider it. But, right or wrong, 
 it cut the ground from under the thesis about 
 the providential beneficence of the law of popu- 
 lation. If the moral restraint specified could be 
 brought into effective operation, it would make 
 an end of the beneficent impulse to effort supplied 
 by the tendency to over-population. You cannot 
 have it both ways. It might be argued, indeed, 
 that the desire to be able ultimately to marry 
 
 " imitate the cosmic process," put a no less unscientific 
 formula when he pronounced for " combating " it. All 
 action, reasoned or instinctive, is alike part of the cosmic 
 process.
 
 THE ECONOMICS OF POPULATION 241 
 
 and have a family would still be an incitement 
 to general effort; but Malthus was prudent in 
 abstaining from that new gambit. Obviously, 
 if men consented thus to suppress the sex 
 impulse through the greater part of their lives, 
 they might renounce it altogether. 
 
 Wliat is quite incontrovertible, thus far, is 
 the primary " law " of population, so-called : 
 the proposition, that is to say, that hitherto 
 population has normally tended to outrun sub- 
 sistence, the tendency being checked only by 
 misery, vice, infanticide, war, famine, and pesti- 
 lence. If it be demurred that a record of past 
 experience does not amount to a " law," I need 
 but remind the objector of the definition given 
 in my opening lecture. There is no other 
 ground for affirming any " law " in nature. 
 But in regard to social and economic phenomena 
 as distinguished from those of extra-human 
 nature, we have to note that the knowledge of 
 a sequence in the past may constitute a motive 
 to such change of action as will alter the balance 
 of the data. Let me repeat a simple illustration. 
 It is certainly a " law " that certain physical 
 conditions promote disease. Nothing can alter 
 that primary fact. If you decide and can 
 manage to avoid or to eliminate from human 
 life in general the conditions in question, you 
 to that extent reduce the risks of disease. The 
 " law " remains a truth; but the old illustrations 
 
 B
 
 242 THE ECONOMICS OF PROGRESS 
 
 of it have more or less ceased. The law of 
 population is an analogous case. 
 
 If it be still affirmed that even the generalisa- 
 tion of past experience is not true, I would ask 
 whether he who denies has read Malthus's book. 
 It has long been notorious that most of his im- 
 pugners have never read him at all. Long ago, 
 Nassau Senior penitently avowed that he had for 
 years been discussing as the doctrines of Malthus 
 what turned out to be mere hearsay perversions 
 of them; and Harriet Martineau testified that 
 during many years in which she habitually heard 
 him discussed and denounced she hardly met 
 a single person who had seen even the outside 
 of his book.i As there have been in all at least 
 eight editions— the seventh and eighth being 
 large and cheap impressions within the past 
 forty-five years — he must have had a fair number 
 of readers in our own time ; but I fancy the old 
 procedure of denouncing and denying without 
 investigating is still common. 
 
 It proceeds normally, I think, on a confident 
 assumption that the so-called law of population 
 cannot be true ; that " where Providence sends 
 mouths it sends meat " ; and that if human life 
 were normally generated in excess of subsistence 
 we should all somehow know about it apart 
 from Malthus. Well, mankind did pretty well 
 know all about it before it became a rule of life 
 ^ Rcfs. in Bonar, as cited, p. 3.
 
 THE ECONOMICS OF POPULATION 243 
 
 to conceal certain facts. An illiterate ancient 
 pagan, redivivus, could tell the unstudious modern 
 Christian that the phrase about mouths and meat 
 is a proverbial falsism. He who tells us that 
 over-population is a long way off either means 
 (a) that the world as a whole is not over-popu- 
 lated, and that we can send our surplus abroad — 
 which is an implicit confession of the truth of 
 Malthus's doctrine — or (h) that if only we altered 
 our social arrangements immediately we should 
 be able at home to feed all who might be born, 
 which again concedes the primary case, since it 
 is thus admitted that the existing social arrange- 
 ments do not provide for the feeding of all born. 
 At this point the inquirer's outlook will be 
 cleared for him if he will but face the fact that 
 at no past stage of human history have all born 
 been tolerably provided for save where effectual 
 steps were taken to limit the number born, 
 either {a) by limiting the number or restricting 
 the date of marriages or (6) by destructive 
 resort to vice — or by both ; or (c) by compulsory 
 emigration. There is indeed one apparent class 
 of temporary exceptions — the case of which the 
 American Colonies and States, before and in Mal- 
 thus's day, are the most familiar instance — where 
 a population fairly well supplied from without 
 with resources of older civilisation finds itself 
 in a new country with an abundance of unclaimed 
 land. There, net population can actually increase
 
 244 THE ECONOMICS OF PROGRESS 
 
 so rapidly, being practically unchecked by vice 
 and misery, that it might plausibly be said that 
 all who are born are provided for. Even this 
 is not strictly true ; for in such conditions the 
 death-rate is still comparatively high by reason 
 of inadequate medical service. But let us waive 
 the qualification and let the claim stand. 
 
 Now, Malthus not only recognised this kind 
 of case, but put it in the very forefront of his 
 exposition, as proving by actual demonstration 
 the strength of the principle of reproduction. 
 Given free play, he pointed out, it could double 
 a frontier population in as little as fifteen years; 
 and it could double the whole population of the 
 early United States in twenty-five years, with 
 due allowance made for immigration. If, then, 
 population actually could thus increase in good 
 conditions, how enormous must be the presump- 
 tive destruction or merely vicious prevention 
 of new life going on in the older countries, where, 
 through their unfavourable conditions, net popu- 
 lation increased at a much slower rate. Keep 
 in view that vital distinction between gross 
 population and net — the gross being the total 
 number born, and the net the increase of the 
 living, between census and census — and you will 
 have removed a source of much misconception 
 as to Malthus' s meaning. 
 
 Obviously, the exceptional cases, so plainly 
 temporary in their character, only made clearer
 
 THE ECONOMICS OF POPULATION 245 
 
 the law as to the normal case. Instead of being 
 called a danger of the future, over-population 
 might truly be described as the slowly lessen- 
 ing colossal curse of the whole past. It was 
 presumably at its worst in the earliest stages 
 of humanity : certainly population in that epoch 
 can have increased only very slowly. We are 
 still told that " free access to land " would make 
 an end of material social evils. It was when 
 access to land was most nearly free — when it 
 was in a sense absolutely free for whole tribes — 
 that net population increased most slowly, largely 
 by reason of the universal play of the murder 
 check. Infanticide, starvation, tribal war, did 
 the work when there were no landlords either 
 in theory or in practice. The human animal at 
 that stage, like other animals, certainly produced 
 offspring the bulk of which could not find food. 
 The hunting stage can never have been one of 
 abundant net population ; but as certainly it had 
 a high birth-rate. What became of most of the 
 births we partly saw at our outset. Chronic 
 starvation, disease, and warfare kept the rest 
 witliin a narrow limit from age to age. 
 
 A word should be said on the apparent phe- 
 nomenon of declines of population not clearly 
 attributable to famine, war, or pestilence. One 
 disputed case is that of the Roman Empire in 
 general; another is that of Greece in particular, 
 as discussed by Hume in his essay Of the
 
 246 THE ECONOMICS OF PROGRESS 
 
 Populousness of Ancient Nations. As regards 
 Greece, though Hume convincingly shows how 
 exaggerated had been the estimates accepted by 
 Wallace of the population of the pre-Roman period, 
 there is reason to sum up that after Alexander 
 there was an economic exodus from Greece into 
 the newly-conquered countries where Greeks 
 could command more wealth and luxury. The 
 imposition of heavy taxation on Greece in the 
 Roman period would tend to reinforce that 
 exodus. As regards Italy, the broad causes of 
 depopulation were clear even in the republican 
 period. Small cultivators had been through 
 whole regions cleared out by rich buyers of great 
 estates, who tilled them, if at all, by slave labour. 
 In the cities, " vice and misery " increasingly 
 did their work; to say nothing of infanticide 
 and the wholesale practice of abortion. ^ Fur- 
 ther, prolonged pestilences became frequent; 
 and malaria, an old scourge, resumed its sway 
 in the ill-tilled districts of Italy, where it remains 
 to this day a standing menace to vitality. ^ 
 There is no proof of any other adjustment of 
 population to subsistence in Italy and Greece; 
 and there is no evidence of abnormal depopula- 
 tion in other parts of the empire. 
 
 As to cases of degeneration among backward 
 and discouraged tribes, such as the aborigines of 
 
 1 See The Evolution of States, pp. 26, 112, 117. 
 
 2 Id., pp. 90-1.
 
 THE ECONOMICS OF POPULATION 247 
 
 Tasmania and the Redskins, they arc plainly 
 cases of virtual decline of subsistence through 
 change of environment, and consequent demoral- 
 isation, vice, and loss of vitality. The case of 
 the Maories is instructive. In the old days they 
 cultivated the valleys, but lived for safety on 
 the hills. After the British conquest they came 
 to live, in white man's fashion, in the valleys, 
 where they were now safe, and consequently 
 suffered rapid diminution from consumption — 
 somewhat as Welsh slate -quarry men become con- 
 sumptive when they w^ork in the coal-pits. But 
 after many had died, the immune survivors bred 
 afresh : there was no failure of the principle of 
 population. In a word, that principle holds 
 for all normally placed peoples. All declines of 
 the birth-rate in modern times are demonstrably 
 due to the deliberate practice of prudential 
 restraint in marriage — a factor partly at work 
 in France before the time of Malthus, rapidly 
 developed there after the Revolution, and thence 
 developed at intervals in England and elsewhere. 
 It is a complete departure from the prescription 
 of Malthus; but instead of being, as some fal- 
 laciously infer, a disproof of his " law," it is the 
 completest possible vindication of the economic 
 truth of his primary doctrine. 
 
 There are still current, it is true, optimistic 
 " refutations " of the law of population. Replies 
 rained on it through fifty years ; there being five
 
 248 THE ECONOMICS OF PROGRESS 
 
 to the first and short form of the Essay ; though 
 Godwin in 1820 declared his surprise that no one, 
 so far as he knew, had " attempted a refutation 
 of the main principle." ^ Godwin himself had, 
 in fact, accepted the main principle in 1801 in 
 his Thoughts on Dr. Parfs Spital Sermon ^ — as 
 he well might, having put it by implication in 
 his Political Justice. His belated reply, so far 
 as it dealt with the scientific doctrine, is an 
 absolute nullity. It consists substantially in 
 asking, " If population thus tends to exceed 
 subsistence, why is the world not yet peopled ? " 
 to which the answer is Malthus's book, and 
 Godwin's own prior avowal. The world is not 
 yet peopled because difficulty of subsistence 
 has not allowed it to be. Godwin, now per- 
 sonally demoralised,^ seems in fact to have lost 
 the power of understanding the issue, though he 
 writes with plenty of vigour against what he 
 called, in a letter to his wife, " this accursed 
 apology in favour of vice and misery, of hard- 
 heartedness and oppression." * 
 
 Such language is its own commentary. In so 
 far as it may obliquely refer to Malthus's political 
 prescriptions, it is remotely intelligible; but as 
 
 ^ Of Population, Pref., p. vii. 
 
 ^ Bonar, as cited, p. 358. 
 
 ^ It is noteworthy that the otherwise demorahsed Cole- 
 ridge, who could so ill provide for his own family, was 
 equally violent in his denunciation of Malthus. 
 
 * Kegan Paul's William Godwin, 1876, II, 260,
 
 THE ECONOMICS OF POPULATION 249 
 
 a confutation the book was dropped even by the 
 anti-Malt husians. In 1830 appeared The Law of 
 Population, by M. T. Sadler, M.P., in which was 
 set forth the pleasing theory that, on a given 
 area, the number of children to a marriage 
 becomes less and less as the population becomes 
 more and more numerous. It was duly smashed 
 by Macaulay in the Edinburgh Review, as was 
 the rejoinder which followed ; ^ and Sadler's claim 
 to vindicate the ways of God to man did not 
 secure him readers in the next decade. In 1840 
 appeared The Pr'inciple of Population, in two 
 large volumes, by the Tory historian Alison. 
 The only " principle " set forth in the book 
 appears to be that "by a singular anomaly, 
 the rapidity of increase is in the inverse ratio 
 of the means which are afforded of maintaining 
 a family in comfort and independence. It is 
 greatest when these means are the least, and 
 least where they are the greatest." ^ Rich people 
 multiply most slowly; the poorest do so the 
 quickest. And this we are to take as a proof of 
 the benignity of Providence. In reality, it is a 
 strong confirmation of Malthus. For the rest, 
 Alison prescribes wholesale emigration,^ while 
 affirming that the British Islands could easily 
 feed a population of 123,000,000 on grain and 
 potatoes, with about 40,000,000 acres left wild 
 
 1 Miscellaneous Essays, ed. 1868, pp. 183-216. 
 
 2 Work cited, I, 112. Cp. p. 520. ^ jd,, p. 538.
 
 250 THE ECONOMICS OF PROGRESS 
 
 as " utterly unproductive " and only the half of 
 the remainder cultivated. And withal he gloomily 
 concludes that the possibility will never be real- 
 ised; that " we are fast approaching, if we have 
 not already attained, the utmost limit of our 
 greatness ; and that a long decay is destined to 
 precede the fall of the British Empire. During 
 that period our population will remain stationary 
 or recede ; our courage will perhaps abate ; our 
 wealth will certainly diminish," ^ and so on, in the 
 Alisonian manner. And all this, too, is supposed 
 to illustrate the goodness of Providence. 
 
 Then came The True Law of Population, by 
 Thomas Doubleday (1841 : 3rd ed. 1853), putting 
 the hopeful view that high feeding would prevent 
 over-population; and in 1854 followed the lec- 
 tures of the Oxford Professor, G. K. Rickards 
 (dedicated to Gladstone) on Population and 
 Capital, wherein was set forth yet another 
 '' true law of population as a self -regulating 
 power, capable of adjusting itself to the most 
 opposite phases of society, and, in the absence 
 of disturbing causes, proportioning the supply 
 to the demand under all the infinitely varying 
 circumstances of human nature." ^ This thesis 
 the Professor regards as in harmony with Ali- 
 son's, rejecting that of Sadler as having no 
 " substantial grounds." ^ Of Alison's forecast 
 
 ^ Work cited, Vol. I, App., pp. 569-71. 
 
 2 Work cited, Prcf., p. xii. ^ Id.y p. viii.
 
 THE ECONOMICS OF POPULATION 251 
 
 )he says nothing; the one thing they are both 
 clear about is tho ^oody^^^s of f|-oyiHpno,e in 
 
 ^e ndin^ most mouths where there is least meat. 
 Such books duly disappear,''' ancl "Maltnus's 
 remains, the classic on its theme. The last 
 notable effort to supersede it as a scientific 
 generalisation is made in the Progress and Poverty 
 of Henry George, who gathers up and repeats, 
 without any attempt at logical combination or 
 reconciliation, all the old objections and all the 
 old substitutes. The primary biological issue 
 is never really faced : we have but a series of 
 incoherent and mutually contradictory cavils 
 — that Malthus is arraigning Providence; that 
 the danger is a long way off ; that nevertheless it 
 is here, arising from bad government ; that there 
 is no principle of excess, because families die out, 
 and the descendants of Confucius, though pro- 
 vided for by the State, are only a small body 
 after 2500 years; that population need not 
 expand in perpetuity, any more than a dog must 
 grow for ever ; that the world is not yet peopled ; 
 that if there were a tendency to over-population, 
 it would have been widely recognised long before 
 Malthus ; that dense population is more favour- 
 able to plenty than thin : the more the merrier ; 
 that, nevertheless, a beneficent Providence has 
 arranged that when there are lUs t enough, the 
 multiplication will spontaneously ceas£.jaithout 
 any play of vice and miser^j^ljat- mtelkct will
 
 252 THE ECONOMICS OF PROGRESS 
 
 prevent over-prolificacy; that plants and animals 
 increase faster than mei; — all the old roujod of 
 'Hblind objections. It is an argument chasing its 
 tail. 
 
 Again and again George surrenders the case — 
 as when he says that over-population is correla- 
 tive with misgovernment ; that when there are 
 plenty of people, the check of intellectual develop- 
 ment, thus declared to be necessary, will avert 
 over-crowding. Always he puts the telescope 
 to a closed eye. The pretence that over-popu- 
 lation was not recognised before Malthus is the 
 last word of historical ignorance, uttered in the 
 face of the records of infanticide, migrations of 
 peoples, and the practice and debates of antiquity. 
 The cry that the world is not yet peopled, uttered 
 a thousand times since Godwin, is the expression 
 of the sheer intellectual collapse which will not 
 face the twofold fact of the germinal waste of 
 Nature and the universal struggle for existence 
 in all life. 
 
 It will be observed that with hardly an excep- 
 tion, from Godwin to George, the deniers of the 
 law of overplus in population make their denial 
 on theological grounds, deistic or orthodox. 
 They start from a presupposition. Now, this is 
 not the place to discuss theology; but it is the 
 place to insist that theology shall not be obtruded 
 on science. Malthus had his theology like his 
 oppugners, and held that he could theologically
 
 THE ECONOMICS OF POPULATION 253 
 
 justify himself against them. In reaUty, he had 
 made a scientific induction ; and it is on induc- 
 tion that his scientific case stands, hke that of 
 astronomy, geology, biology, and any other 
 science. Within the sphere of any given science, 
 properly so-called, theology has for the scientific 
 student no place. It is just as fatal to real 
 knowledge in sociology as in geology, from which 
 it had to be expelled before any truth could be 
 reached. Readjust your theology as you will in 
 the light of science ; call it a science in itself if 
 you please ; but recognise that if you bring it 
 into any one of the other sciences, seeking to 
 substitute its data for theirs and its presupposi- 
 tions or conclusions for their inductions, you are 
 not debating with men of science, but simply 
 appealing to other theologians. Its claim has 
 been quashed in any other regard. " Hands off," 
 the veto hinted by Bacon three hundred years 
 ago, has become an intellectual law for instructed 
 men. 
 
 If you still insist on letting theology shape 
 your politics and your ethics, thereby excluding 
 these from the normal play of science, you will 
 doubtless join in the denunciation of the neo- 
 Malthusian doctrine which substituted for the 
 profoundly wrong social prescription of Malthus 
 one framed in terms of a human and humane 
 ethic. It was at this point that Malthus ceased 
 to be inductive, to be scientific, to be even
 
 254 THE ECONOMICS OF PROGRESS 
 
 plausibly practical. I do not say that he was 
 strictly unscientific in his political prescription, 
 though he was demonstrably wrong. Dreading 
 the effect of cheap food in stimulating population 
 where it was already in excess, he opposed the 
 repeal of the Corn Laws ; and, like Dr. Chalmers, 
 he even laid down the principle that a gentry 
 class ought to be maintained in the interests of 
 the State and the interests of economic consump- 
 tion, though he did not endorse Chalmers's pre- 
 posterous proposal that the State should find a 
 sufficiency of posts for landowners' younger sons 
 at £1000 a year — a counsel fitted to make Bacon 
 turn in his grave. But Malthus's doctrine of 
 postponement of marriage was hopelessly wrong 
 from every point of view. 
 
 To begin with, it stultified, and was stultified 
 by, his own policy on the Corn Laws. Either he 
 believed that postponement of marriage could 
 and would be acted on among the workers, or 
 he did not. If he did, he had no right to keep 
 up artificially the price of food, seeing that, by 
 making it so much harder for men to save, that 
 policy only postponed the more the possibility 
 of marriage for the mass.^ Secondly, on his own 
 
 ^ Of course he tried to argue down this difficulty. Cp. 
 the Essay, Bk. Ill, Chs. X-XIII, and Principles of Pol. 
 Econ., Bk. I, Ch. IV, § 3. In the end he candidly modified 
 his attitude on the Corn Laws {Essay, ed. 1872, p. 367, 
 note), though he stuck to the fallacy that dear food meant 
 high wages.
 
 THE ECONOMICS OF POPULATION 255 
 
 view, scarcity of food meant scarcity of capital ^ 
 — another hindrance to employment and an en- 
 hancement of the evil of population. But the 
 worst aspect of all was the inevitable promotion 
 of vice and the moral misery of vice. The bulk 
 of the manhood of the country was to postpone 
 marriage till money enough had been saved by 
 each man to enable him to rear a family in com- 
 fort — a further fatal economic blunder, seeing 
 that such multiplied saving meant multiplied 
 under-consumption and consequent unemploy- 
 ment. But the economic blunder was as nothing 
 beside the moral. 
 
 A society obeying the prescription of Malthus 
 would be a society mainly of middle-aged or 
 elderly men with young wives, with a vis-a-vis 
 of old and young bachelors, many impecunious, 
 many making their pile. Thus " misery " was 
 to be averted at the price of the most inevitable 
 multiplication of vice that the world had ever 
 seen, with its moral misery framing the picture 
 of the virtuous households of old or elderly 
 husbands and young wives. If Malthus could 
 not see that this would be the infallible result, 
 he was at this point as visionary as Godwin, and 
 had no right to dismiss Godwin's visions. In 
 the first edition of liis Essay, bent only on 
 confuting Godwin, he expressly affirmed that 
 
 ^ Cp. Professor Cannan, Distrihution and Production, 1893, 
 p. 113.
 
 256 THE ECONOMICS OF PROGRESS 
 
 postponement of marriage meant vice and misery : 
 the later prescription of it as a social remedy 
 was confessedly a change of front. And we are 
 compelled to suspect, especially in view of his 
 Corn Law policy, that he had no real faith in 
 his own prescription, but was simply maintaining 
 doggedly an orthodox position which he could 
 not rationally justify. The Church on this side 
 of the question played a sorry part. Where 
 Malthus was right, it aspersed him. Where he 
 was wrong, it backed him. The Rev. Richard 
 Jones, his successor at Haileybury College, a 
 much more unctuous cleric than Malthus ever 
 was, on the one hand foully aspersed all those 
 who advocated early marriage and parental pru- 
 dence, and on the other indicated as a preferable 
 state of things one in which " not vice and 
 misery " but a practice which meant " not un- 
 mixed vice " or " faultless moral restraint," ^ 
 was the check on over-population. If any of 
 the clergy of to-day will follow him on that 
 line, let them. Hypocrisy will then be duly 
 self- advertised. 
 
 Such, then, is the scientific and the ethical 
 situation. Malthus gave a true diagnosis of the 
 social malady and a hopelessly bad remedy. Of 
 those who accepted his science, one school — 
 deriving in England, as Dr. Bonar has pointed 
 
 ^ Essay on the Distribution of Wealth, 1831, Prcf., pp. 
 xiii, xviii.
 
 THE ECONOMICS OF POPULATION 257 
 
 out,i from Robert Owen— refused his deadly 
 remedy and accepted that suggested by Con- 
 dorcet and adopted by the peasantry of France ^ 
 — reasonably early marriage, with parental pru- 
 dence. It had the assent not only of Condorcet, 
 but of James Mill, John Mill, Francis Place, and 
 Grote ; 3 as it had, at a later period, that of 
 Bradlaugh, to say nothing of the unpubhshed 
 approval of hundreds of clergymen, and hundreds 
 of thousands of decent men and women. He 
 who vilifies all these I am content to label as a 
 copromaniac. 
 
 On the ethical issue I will say nothing further 
 here but this, that the anti-Malthusian position, 
 alike in the old and in the newer sense of the 
 term, stands for a choice on the side of the 
 checks of misery, vast infant mortality, pervading 
 poverty, wholesale prostitution, and illegitimacy, 
 as against reasonably early marriage and small 
 famiUes. Every aspersion, then, which the anti- 
 Malthusians cast against their opponents recoils 
 
 ^ Malthus and his Work, p. 24. 
 
 2 The practice seems to have to some extent been cus- 
 tomary in Italy from the Renaissance onwards, and to have 
 thence become known in France. See Dr. J. Rutgcrs's 
 Rassenverbesserung (German trans, from the Dutch, 1908), 
 p. 251, citing Dr. Felix, Frciherr von Oefele, " Anticoncep- 
 tionelle Arzneistojfe " in Die Heilkiinde, Wien, 1898, and the 
 Life of Cellini, Goethe's trans., Bk. Ill, Kap. VII. 
 
 2 See the careful investigation and record by Mr. James A. 
 Field, " The Early Propagandist Movement in English 
 Population Theory," in the American Economic Review, 
 April 1911.
 
 258 THE ECONOMICS OF PROGRESS 
 
 with shattering force upon themselves. It is 
 they who, consciously or unconsciously, are the 
 champions of evil as the means to alleged good, 
 here emulating the ancient Mexican priesthoods 
 of human sacrifice. 
 
 It remains to follow out carefully the economics 
 of population on the side of industry. The sub- 
 ject is not so simple as Francis Place, James 
 Mill, and even John Mill apparently supposed it 
 to be. Neo-Malthusianism (here, I fear, I am 
 in conflict with some of my neo-Malthusian 
 friends) is not a panacea. It is not that we need 
 be troubled by such questions as the possible 
 entry of Asiatic and other races into the field 
 of the European, and the alleged danger of 
 " sterilising the skilled artisans," or the bugbear 
 of "race-suicide"; but that we shall have to 
 recognise the inadequacy of laissez-faire, even 
 with restraint of population, to secure the due 
 maintenance of production. There can be no 
 withdrawal from the policy of Old Age Pensions : 
 rather, it must be extended. The attitude of 
 many if not most Socialists towards Malthusian- 
 ism has been, in my opinion, unintelligent to the 
 last degree — a throwing of mud at a doctrine 
 which an intelligent Socialism would make its 
 own. But, all the same, the Socialist economics, 
 properly handled — which again is not always done 
 by professed Socialists — has a criticism to bring 
 to bear upon individualist neo-Malthusianism
 
 THE ECONOMICS OF POPULATION 259 
 
 which the supporters of that, as economists, 
 will do well to assimilate. The whole remedial 
 doctrine is a wider thing than either neo- 
 Malthusianism or socialistic anti-Malthusianism. 
 Both are unsoundly optimistic ; though the latter 
 is certainly the more gratuitously and dangerously 
 optimistic of the two.
 
 VIII 
 
 THE ECONOMICS OF POPULATION (II) 
 
 When Malthus put forth his first Essay in 
 1798, as he remarked in the preface to the fifth 
 edition, England was in " a period of extensive 
 warfare, combined, from pecuhar circumstances, 
 with a most prosperous foreign commerce. It 
 came before the pubhc, therefore, when there 
 would be an extraordinary demand for men, and 
 very little disposition to suppose the possibility 
 of any evil arising from the redundancy of 
 population. Its success under these disadvan- 
 tages was greater than could have been reason- 
 ably expected." We may hope, then, that even 
 in a time of far greater " demand for men," 
 thoughtful citizens may be found to face the 
 problem of over-population with the recollection 
 that, after the Napoleonic wars were over, our 
 fathers found redundancy of population a very 
 present trouble. In Germany, we are told, there 
 is now being officially urged a brutish policy of 
 indiscriminate procreation, to provide future food 
 for powder. In England it has not only evoked 
 no assent, it has been widely and warmly exe- 
 crated. Men and women here realise that the 
 
 260
 
 THE ECONOMICS OF POPULATION 261 
 
 policy of population for population's sake means 
 brutality upon brutality. The moral atmosphere 
 thus remains sane. 
 
 What we have to consider is, primarily, the 
 need for further restriction of the birth-rate, to 
 the end of better life for both parents and 
 children; and, secondarily, the effect of such a 
 reduction on the labour market. The first is 
 really the most pressing consideration of all. 
 When, in the first six months of the war, inquiry 
 was made as to the amount of distress in towns, 
 especially in London, it was found that (apart 
 from the short period of unemployment in the 
 cotton trade), while the unskilled labour that is 
 most subject to distress was in general unusually 
 prosperous, distress did exist in a number of 
 cases, which generally turned out to be those of 
 large families. Now, everybody desires to relieve 
 distress, however caused, and to secure that 
 infants, however born, shall be properly nourished. 
 But it is none the less obvious that when ill-paid 
 workers beget large families they are heedlessly 
 imposing distress on the community, and that 
 their over-breeding is very apt to mean not only 
 poor life, but lives poor in quality. If it be 
 true, as some allege, that some employers desire 
 a reserve of poor labour, all the more ought 
 those who condemn that attitude to discourage 
 large families among labourers. At once to dis- 
 credit parental prudence and to condemn those
 
 262 THE ECONOMICS OF PROGRESS 
 
 who are supposed to desire a reservoir of poor 
 labour is simple self -stultification. 
 
 The word and the cult " Eugenics " have 
 come, whether designedly or not, to the support 
 of the cause of birth-limitation. The doctrine 
 of " quality, not quantity," must appeal to every 
 one capable of harbouring a social ideal. Quan- 
 tity is in detail and in the lump the enemy of 
 quality. Even if the large family be bred of 
 sound stocks, it cannot have as good an up- 
 bringing as the small family. The father, if con- 
 scientious, is over-toiled ; the mother is physically 
 over-tasked and morally over-strained, living in 
 a perpetual round of nursing and physical 
 tendance, in which her own mental side has no 
 chance. And the children, crowded in small 
 space, ill-supplied with food, clothing, room, and 
 air, fare as ill as saplings too thickly planted. 
 The girls, still children, have to nurse and tend 
 the smaller ones; the boys seek the streets for 
 playground; if all do well in the scramble, it is 
 a miracle. Needless to say, such large families 
 mean a high death-rate, let sanitation do what 
 it will. 
 
 On the plainest grounds of common sense, the 
 parents should be taught to limit their families. 
 There are always neighbours who can tell them 
 how ; and if charitable visitors would but suggest 
 such courses they would do an amount of good 
 that they cannot otherwise hope to attain. As
 
 THE ECONOMICS OF POPULATION 263 
 
 for the sentimentalism or Socialism that de- 
 nounces society for the visible evil, it is an 
 abuse of philanthropy. Society docs provide, 
 no doubt imperfectly, public relief for the dis- 
 tress; but it is folly to suppress the comment 
 that heedless parentage is to blame for causing 
 it. When it is announced that an agricultural 
 labourer with fourteen children has a bad time 
 of it, there are always zealous reformers who 
 demand that he shall have proper housing 
 accommodation. It is really necessary to pro- 
 test. Are the authorities to build houses with 
 accommodation for labourers' families of sixteen ? 
 Are we to have a percentage of such houses, 
 beckoning for monster families ? That way mad- 
 ness lies. The philoprogenitive parents must be 
 told that they have no business to have families 
 of fourteen, or ten, or eight. 
 
 Many observers, since Smith, have noted that 
 it is usually poor people — crofters or curates or 
 labourers — who have such large families ; and the 
 sage Alison, as we saw, found this to be part of 
 the plan of Providence. The discovery belongs 
 to the order of that other, that a beneficent 
 Providence has caused rivers to flow by large 
 towns. Common-sense suggests that the well- 
 to-do people deliberately limit their families, 
 being concerned to give themselves and their 
 children the better chance of good life that goes 
 with the smaller family. Even curates are
 
 264 THE ECONOMICS OF PROGRESS 
 
 learning the lesson. If poor labourers have not 
 learned it, it is partly because they have not 
 been better taught by those who know, partly 
 because they have been positively mistaught — 
 by the curates. Let them be taught that it is 
 their plain duty to their families to keep those 
 families small; that they cannot give a good 
 life to large families ; and that they cannot with 
 large families have a good life for themselves, 
 and one of the worst aspects of British poverty 
 will begin to disappear. 
 
 Even the sentimentalists, we may presume, 
 can realise that, supposing local authorities could 
 be bullied into providing houses for agricultural 
 labourers with fourteen children, the farmers 
 certainly cannot be induced to pay such labourers 
 the double wages necessary to clothe and feed 
 their swarm.^ By no possibility can wages be 
 generally adjusted to the size of families. Even 
 if the skilled bachelor, supporting, it may be, 
 his mother, would consent to work for less w^ages 
 than were given to a less-skilled married man — 
 and I have never known a bachelor with such 
 views — the married men with small families 
 would certainly not consent to work for propor- 
 tionally less wages than were given to men no 
 
 1 Catholic propagandists, apparently, cannot realise it. 
 One of them sagely directs me to have recourse to " common- 
 sense," and agitate for increased wages all round. No ray 
 of economic thought can penetrate the intelligence of the 
 dogmatist, whose " common-sense " is common nonsense.
 
 THE ECONOMICS OF POPULATION 265 
 
 more competent who merely had larger families. 
 This is a side of the wages question that must 
 be handled by the individual wage-earner for 
 himself. He has no earthly right— and he will 
 find it of no avail to urge a heavenly one — ^to 
 be paid extra because he begets extra children. 
 If he has counsellors who urge him on patriotic 
 grounds to increase and multiply, let him call 
 upon them to finance the procedure. 
 
 By keeping his family reasonably small, he 
 not only lightens the physical burden of his wife 
 and himself : he in effect raises his wages. Is 
 he, then, doing anything to curtail production? 
 Does he tend to make labour unduly scarce ? 
 There never was an idler fear. The argument 
 on the subject keeps its head above water only 
 by proceeding in a vicious circle, evading the 
 rebuttal at each step by starting a new thesis. 
 Commonest of all openings is the cry that " if 
 the prudent people limit their families, the im- 
 prudent will not limit theirs ; and the country will 
 then be peopled from the worst stocks." In this 
 formula there are involved four distinct falsities. 
 
 To begin with, prudent people have for many 
 generations been limiting their families. In 
 France the agricultural mass have been doing 
 it for over a hundred years; and the bulk of 
 the townsfolk have long followed suit. France, 
 then, is not being over-peopled by the improvi- 
 dent. The simple fact is that mere knowledge
 
 266 THE ECONOMICS OF PROGRESS 
 
 generally suffices to make improvident people 
 provident on this point; and that when they 
 have learned to be provident in the fundamental 
 matter they tend to become provident in others. 
 In England, apart from the early popular move- 
 ment started by Robert Owen and Francis Place 
 and taken up by Richard Carlile/ and the later 
 and far wider popular movement which received 
 new life after the prosecution of Charles Brad- 
 laugh and Mrs. Besant in 1877, prudent middle- 
 class people practised prudence without seeing 
 any falling-off in middle-class population. The 
 simple truth is that the improvident poor do 
 not rear their large families, though they main- 
 tain a high enough net-rate to force emigration. 
 They mainly swell the death-rate, often rearing 
 but a few children, or none at all, at the cost 
 of protracted misery for themselves and their 
 ill-starred offspring alike. 
 
 Sometimes (2) the theory appears to assume 
 that family limitation by many will so ease the 
 labour market that the other people will be 
 induced to enlarge their families. This view, if 
 it be seriously held by any, is a wild misreading 
 of social facts. To begin with, the heedless 
 people never calculated the matter at all. They 
 merely followed their instincts, blindly and igno- 
 rantly; and they can never be more heedless 
 than they were. But, in the second place, 
 ^ Sec the research of Mr. J. A. Field, above cited.
 
 THE ECONOMICS OF POPULATION 267 
 
 (3) family limitation has never yet in any country 
 reduced the labour supply to the point of making 
 abundant openings for unskilled labour. Even 
 in Australia, with a very low birth-rate, pre- 
 cautions have been chronically taken against 
 immigration. Two simple statistical truths ought 
 to be assimilated at once. In the first place, 
 the limitation of families, while reducing gross 
 population and so reducing misery, may mean 
 as large a net population as would have been 
 attained with large families. Of the lesser num- 
 ber born, a much larger percentage will survive. 
 In the second place, sanitary and medical science 
 has within the past generation or two greatly 
 reduced the death-rate from without, as it were. 
 Does it not then follow, it may be asked, that 
 the children of the thriftless begetters of large 
 families are being thus enabled to replenish the 
 earth? The answer is (1) that the others are 
 not giving them the alleged extra room that was 
 supposed to be likely to encourage them; and 
 (2) that even sanitary and medical science cannot 
 prevent a relatively high death-rate among large 
 poor families. In a word, (3) the prudence of 
 prudent married folk does not mean that their 
 offspring are being progressively outnumbered by 
 that of the imprudent : on the contrary, it means 
 that their children are likely to rise in the world 
 as against those whose parents gave them a 
 poorer chance.
 
 268 THE ECONOMICS OF PROGRESS 
 
 The outstanding statistical fact is that, with 
 a considerable and nearly continuous fall in the 
 birth-rate during forty years, the population of 
 Great Britain and Ireland has increased in the 
 same period from 34,000,000 in round numbers 
 to 46,026,483 (1913). In recent years, when the 
 continuous fall in the rate had become marked, 
 nearly the whole of the English Press, including 
 journals which claim to do independent thinking 
 for Liberalism, raised a panic clamour, at the 
 supposed prospect of what Mr. Roosevelt has 
 made it the fashion to call " race-suicide." In 
 1913, Mr. A. J. Mundella pointed out to the 
 editors of two of the journals in question that 
 their empirical interpretation of the term " birth- 
 rate " was a blunder, and that their inference as 
 to decline of population was a delusion. I know 
 not whether the lesson was learned ; but it seems 
 advisable to repeat his demonstration, lest we 
 should be again confronted, after the war, with 
 an exhibition of sociological fallacy on the part 
 of Liberal journalists which cannot fail to be 
 prejudicial to progress. 
 
 Twenty years ago or less, journahsts of the 
 same school were confidently proclaiming that 
 on the one hand the fall in the birth-rate had 
 demonstrated the falsity of the Malthusian " law " 
 of population, and on the other hand that the 
 large production of cereals in America and else- 
 where had made an end of all apprehension as
 
 THE ECONOMICS OF POPULATION 269 
 
 to the race's food supply. Both statements 
 revealed failure to understand the problem, 
 which the writers had simply never tried to 
 master; and the second is now generally per- 
 ceived to have been a display of ignorant 
 optimism. The fall in the British as in other 
 birth-rates was precisely the result of the 
 widened popular recognition of the truth of the 
 Malthusian law of population which followed 
 on the prosecution of the Knowlton pamphlet in 
 1877. That prosecution forced into general 
 knowledge a matter that formerly had been 
 brought to the knowledge only of a small 
 minority. It no more " exploded " the scientific 
 truth as to the principle of procreation in Nature 
 than the knowledge and application of sanitary 
 science explodes the truth that bad drainage 
 multiplies disease. 
 
 As to the world's food supply, we have had 
 in recent years pronouncements from men of 
 science which put in the gravest doubt the 
 possibility of any long continuance of the rate 
 of net increase in the world's population which 
 has been seen in the past thirty or fifty years. 
 On the validity of those pronouncements I offer 
 no opinion. The problem has not yet been duly 
 considered. It is, however, quite sufficient for 
 the purposes of practical politics to note (1) how 
 the United States, after figuring as the " granary 
 of the world," have rapidly approached the
 
 270 THE ECONOMICS OF PROGRESS 
 
 position of requiring their whole cereal output 
 for themselves, and looking for fresh supplies to 
 Canada; and (2) how, time and again, harvest 
 failures have occurred on a vast scale over the 
 whole American continent, and again — usually in 
 different years — in India and Australia. In face 
 of these facts, the optimism which dismisses all 
 concern about the world's food supply is plain 
 folly. 
 
 But no less absurd — in one sense, doubly absurd 
 — is the panic about " race-suicide " raised by 
 the same school of journalistic thought over the 
 figures of declining birth-rate in the more ad- 
 vanced civilisations. As Mr. Mundella pointed 
 out, that cry is raised in the face of a continuous 
 increase in our net population — alongside, I may 
 add, of continuous emigration. Let us take the 
 figures supplied by the Annual Report of the 
 Registrar-General in 1912. In the years 1891-5, 
 the total number of births in England and Wales 
 was 4,539,266; the deaths per 1000 born were 
 150 in the average; and the number alive at 
 one year old was only 3,854,478. 
 
 In the years 1896-1900, the total number born 
 was 4,615,887 ; but the average death-rate per 
 1000 born was 156, and the number alive at one 
 year old was only 3,895,089. In the years 1901-5 
 the total number born was 4,693,269; but the 
 average death-rate per 1000 born had fallen to 
 137; and the number alive at one year old had
 
 THE ECONOMICS OF POPULATION 271 
 
 risen to 4,046,646. In the years 1906-10, the 
 total number born had fallen to 4,604,940, but 
 the national death-rate had almost continuously 
 fallen till in 1910 it was only 13'5 per 1000 hving; 
 the infantile death-rate had fallen to 105 per 
 1000 born; and the number alive at one year 
 old was 4,066,526.1 
 
 Thus, when we compare the five years 1901-5 
 with the five years 1906-10, we find a lower 
 birth-rate, a decrease of 88,329 in the number 
 born, but a much lower infantile mortality, out- 
 weighing that decrease and showing an increase 
 of 19,380 in the number alive at one year of 
 age. Nor is that all. As Mr. Mundella had to 
 explain to the Liberal journalists in 1913, the 
 birth-rate is a percentage of the population; the 
 official figure representing the births per 1000 
 living. If then the death-rate so falls that by 
 
 ^ I append the statistics in tabular form — 
 
 
 Born. 
 
 Deaths 
 
 per 1000 
 
 born. 
 
 Births 
 per 1000 
 
 Uving 
 (average). 
 
 Deaths 
 per 1000 
 
 living 
 (average) 
 
 Alive at 
 1 year old. 
 
 1891-5 
 
 4,539,266 
 
 150 
 
 30-5 
 
 18-7 
 
 3,854.478 
 
 1896-1900 
 
 4,615,887 
 
 156 
 
 29-2 
 
 17-6 
 
 3,895,089 
 
 1901-5 
 
 4,693,269 
 
 137 
 
 281 
 
 15-9 
 
 4,046,526 
 
 
 
 
 ri32^ 
 
 
 
 
 
 
 
 118 
 
 
 
 
 1906-10 
 
 4,604,940 
 
 - 
 
 120 ■ 
 
 109 
 
 105 
 
 26-2 
 
 151 
 
 4,066,526 
 
 In 1914 the birth-rate had fallen to 23-8. 
 was 36*3 . 
 
 In 1876 it
 
 272 THE ECONOMICS OF PROGRESS 
 
 reason of the lengthened lives of the aged and 
 the saved hves of infants the number hving is 
 larger than formerly, even a maintained level of 
 births would represent a lower birth-rate — that is, 
 a lower rate per 1000 living. When, further, a 
 falling aggregate number of births actually coin- 
 cides with an increase of infant population of 
 one year old, the folly of the cry about race- 
 suicide becomes tolerably clear. When we are 
 editorially told that the figures show a " Refusal 
 to Multiply," we are compelled to ask two 
 questions : (1) Has the editor really studied the 
 figures, or only drawn a loose inference from the 
 ratio; or (2) if he has noted the figures, how 
 much multiplication, exactly, does he want ? As 
 one cannot suppose that a Liberal editor wants 
 overcrowding for overcrowding's sake, one seems 
 driven to suppose that the cry of warning has 
 been raised without any comprehension of the 
 facts of the case. In any event, it falsifies 
 them. 
 
 One psychological and three statistical delu- 
 sions, I hope, have thus been disposed of. But 
 the statistical error in the matter is a compara- 
 tively small thing beside the moral error — to call 
 it by no harder name. For the prescription to 
 prudent people to behave imprudently in the 
 supposed interests of the race is really so inhuman 
 that only utter levity or bad perversion of judg- 
 ment could secure it currency. You say to A. :
 
 THE ECONOMICS OF POPULATION 273 
 
 " Your reckless neighbour B. has a dozen chil- 
 dren : and C. is likely to have as many; if you 
 have only three or four, they will thrive and 
 propagate their thriftless stock. You too, then, 
 must become thriftless in propagation in order 
 properly to crowd his children out." Thus wilful 
 poverty is to counteract heedless poverty ; hard- 
 ship is to fight hardship; and population is to 
 be killed out by more population. It is com- 
 forting to reflect that no really prudent man or 
 woman can ever be guided by such senseless 
 counsel. But it is necessary to expose the gross 
 heartlessness of the prescription, in respect of 
 the implied moral consequences; and the crass 
 stupidity of it on the side of social science. 
 
 The formula of the " sterilisation of the skilled 
 artisans " is but a sophistication of the other. 
 If " sterilisation " be honestly meant, and is not 
 an unscrupulous falsification of the doctrine of 
 small families, the answer is that skilled workers 
 are no more likely than unskilled to be desirous 
 of having no children. Being in general the 
 more thoughtful, they realise the fundamental 
 unreason of limiting the number of apprentices 
 on the one hand and not limiting the number of 
 children on the other. If by their prudence they 
 place their children on a still higher level of social 
 advantage than their own, they are so far helping 
 to raise the economic levels for all labour. 
 
 While large numbers of the workers are thus
 
 274 THE ECONOMICS OF PROGRESS 
 
 bettering the conditions for the whole mass, not 
 only journalistic but official pronouncements ex- 
 hibit a positive failure of adaptation to the real 
 needs of the expanding population. Because the 
 annual number of births fell from 948,000 in 
 1903 to 872,000 in 1913, the Board of Education 
 announced on April 10, 1913, that despite the 
 great fall in the death-rate " there is no such 
 diminution in the child mortality as would 
 counterbalance the effect of the diminution in 
 the birth-rate." This was simply not the fact. 
 While the birth-rate was falling, the number of 
 children of five years old had actually risen from 
 704,896 to 767,987. And eight days after the 
 grossly mistaken pronouncement of the Board of 
 Education, the Local Government Board an- 
 nounced that " the numbers of children living 
 between the ages of five and six years in England 
 and Wales on April 1, 1903, April 1, 1912, and 
 April 1, 1913, are estimated to have been as 
 follows: 1903, 704,896; 1912, 761,442; 1913, 
 767,987." 
 
 On the face of the case, the Board of Educa- 
 tion, making a false deduction from the fall in 
 the birth-rate, had actually been failing to pro- 
 vide proper accommodation for an increasing 
 number of school children, though the Local 
 Government Board had the official statistics 
 which showed the error. If there is to be wise 
 handling of these problems, our State depart-
 
 THE ECONOMICS OF POPULATION 275 
 
 merits all round must get out of the rut of 
 tradition and preconception. The common atti- 
 tude on the subject of birth-rate and population 
 is scientifically on a par with the old mercantile 
 theory of imports and exports. It is an empirical 
 hallucination. 
 
 Is there then any better grounding for the fear 
 that restriction of birth-rate in any one nation 
 or set of nations constitutes a military danger 
 in view of the higher birth-rate of others ? The 
 commonly avowed basis for this misapprehension 
 is the case of Germany, which, partly by reason 
 of the transference of territory after the Franco- 
 German war of 1870, has greatly increased in 
 population while France has become nearly 
 stationary. But no notice, broadly speaking, has 
 been taken among anti-Malthusians of the fact 
 that in Germany also restriction of the birth-rate 
 has begun, and that against the demand of the 
 German militarists for a brutal promotion of 
 breeding among the proletariat there is arrayed 
 the growing determination of the more instructed 
 workers to shape their destiny on that side in 
 their own interest. In the years 1913-14 all 
 Germany was discussing the population question.^ 
 One investigator, who examined over a thousand 
 cases of the maternal history of women married 
 
 ^ See the list of publications given in Fecundity versus 
 Civilisation, by Adelyne More (with a Preface by Arnold 
 Bennett) : Allen &, Unwin, 1917, pp. 12-13.
 
 276 THE ECONOMICS OF PROGRESS 
 
 more than ten years, reached the conclusion that 
 among the richer class in Berlin the average 
 number of children to a marriage was two, while 
 among the poorer classes it was five ; and that 
 on the average less than 50 per cent, of the 
 poorer children survived to their teens. ^ Thus 
 went life in " sterile Berlin." 
 
 Yet, while in other German towns also, largely 
 through Socialist influences, the birth-rate was 
 falling, Germany as a whole was so densely 
 populated that the general level of comfort was 
 admittedly lower than in France; and this very 
 sense of over-population has justly been regarded 
 as one of the factors in the blind proclivity to 
 war which visibly affected Germany as a whole. 
 And is this, then, an argument in favour of blind 
 multiplication ? That is what we come to, on 
 the international as on the domestic side of the 
 question. The anti-Malthusians always end in 
 prescribing the deliberate increase of hardship, 
 with a tendency to a maximum death-rate, 
 by way of safeguard against over-population by 
 other people or other nations. Certainly that is 
 the German official doctrine. In the debate on 
 the birth-rate in the Prussian Diet in February 
 1916, Ministers lamented bitterly the fall in the 
 German birth-rate since 1900, which, they de- 
 clared, meant two and a half millions less of 
 
 ^ Pamphlet last cited, p. 12, referring to Felix A. Theil- 
 haber, Das sterile Berlin, 1913, p. 105.
 
 THE ECONOMICS OF POPULATION 277 
 
 population than they might otherwise have had ; 
 and they promised themselves that before the 
 next war arrives they will have remedied the 
 evil. Thus, in the country in which multiplica- 
 tion of births is still most loudly clamoured for, 
 the doctrine connects unmistakably with aggressive 
 militarism. 
 
 What would happen if the German people 
 could be dragooned into deliberate over-breeding 
 as they have been dragooned in other respects, 
 we need not inquire. It will be time enough to 
 consider that portent when it arrives. Meanwhile 
 we have the most explicit testimony to the general 
 refusal of the German workers, before the war^ 
 to accept the advice given them on the platform 
 even by Socialist women, notably Rosa Luxem- 
 bourg and Clara Zetkin, to increase their families.^ 
 Dr. W. J. Robinson, President of the American 
 Society of Medical Sociology, and of the Northern 
 Medical Society of the City of New York, has 
 told how in 1913 these ladies addressed mass 
 meetings of the German Social Democratic Party. 
 While the ordinary meetings of the party had of 
 late been poorly attended, these were crowded 
 to suffocation. And it turned out that meet- 
 ings called " against the birth-strike " furnished 
 
 ^ There is some perplexity about tliis report, as the 
 ladies named are understood to be strong anti-militarists. 
 It may be that they thought the " birth-strike " was setting 
 up an anti-Socialist prejudice.
 
 278 THE ECONOMICS OF PROGRESS 
 
 overwhelming majorities in favour of the birth- 
 strike. The anti's were hissed, and could hardly 
 get a hearing; the advocates of birth limitation 
 were cheered long and loudly. 
 
 That that temper will be reversed at the order 
 of a governing class which commands them to 
 breed like cattle I am quite unable to believe. 
 Here is the summing-up of Dr. Robinson, who 
 attended one of the meetings, which lasted until 
 11.30— 
 
 " Wliether the limitation of families is to be 
 considered a revolutionary weapon against mili- 
 tarism and capitalism is questionable; but that 
 it is a wonderful measure in improving the con- 
 dition of individual families, in guarding the 
 health of the women and in generally strengthen- 
 ing the working classes in their political and 
 economic battles — about this there could be no 
 question. And the feeling was that though the 
 Clara Zetkins and Rosa Luxembourgs, and all 
 other literal and figurative old maids, could talk 
 and scold until doomsday, the diminishing birth- 
 rate will go on diminishing still further, until 
 such a time when the people will feel that by 
 bringing a child into the world they are not 
 increasing the sum total of human misery, 
 ill-health and wTetchedness." ^ 
 
 The broad fact is that the German birth-rate, 
 which in 1876 was 42*6 per 1000 inhabitants, had 
 fallen in 1912 to 29-1; and in 1913-14 is esti- 
 
 * Rep. in The Critic and Guide, October 1913; quoted in 
 Fecundity versus Civilisation, pp. 39-40.
 
 THE ECONOMICS OF POPULATION 279 
 
 mated to have fallen to 27. The decline visibly 
 set in about 1900, when the rate was 36*8; and 
 the rate of decrease has since then been more 
 rapid than it ever was in France or England. 
 In Berlin in particular, where it was over 45 per 
 1000 in 1876, it had fallen by 1912 to 20*4, and 
 by 1914 to about 18 per 1000. After the war 
 there may very well be such a temporary recovery 
 as usually follows upon wars; but it will be 
 strange indeed if the whole limitary movement 
 of the first fourteen years of the century should 
 be reversed. In that case the German people 
 will have become more truly than ever the 
 serfs of their militarists, embracing misery and 
 degradation for themselves in the hope of inflict- 
 ing it upon others. And that is only to say that 
 they will be not more but less to be feared than 
 before; for such a people cannot yield the 
 elements of military strength; and it would be 
 the last flight of folly for the other nations to 
 adopt their policy of moral race-suicide in order 
 to be able to defeat them. The adoption of the 
 policy would be the embracing of moral defeat, 
 and the surrender of the hopes of civilisation. 
 
 In dismissing this bugbear, it may suffice 
 to note further that the military experience of 
 this war has entirely confirmed the belief in 
 the superior efficiency even for military pur- 
 poses of the nations which seek quality rather 
 than quantity of life. The nations with the
 
 280 THE ECONOMICS OF PROGRESS 
 
 longest-attained decline in birth-rate, France and 
 England, have held like iron on the Western 
 Front. The Central Powers, relying on popula- 
 tion, have failed as against them, after the first 
 rush. Russia, with the largest population and 
 the liighest birth-rate of all, has shown least 
 power of continued effort, military, financial, 
 moral, and administrative. Assuredly the omens 
 are not in favour of blind breeding. The restric- 
 tion of the birth-rate among the rest of the 
 human race is only a question of time. Russia 
 will follow the lead of the western nations ; and 
 one day Japan and China will follow that of 
 Europe. They will do so because there is no 
 other way to good life within their own borders ; 
 and because mere over-fecundity on the part of 
 any nation cannot now avail for the overrunning 
 of the rest of the world. Where Germany has 
 failed, Asiatics will not succeed. There is indeed 
 no ground for imputing to them any racial desire 
 to make the attempt. 
 
 We have seen that in Germany the popular 
 motive to limitation of births has been the desire 
 for better life-conditions, partly backed by a 
 notion that mere limitation of labour supply 
 will give them a new advantage as against the 
 capitalist employer. Here, however, they are 
 met by the economic retort that limitation of 
 labour supply will elicit further developments of 
 machinery, and that the latter state of the
 
 THE ECONOMICS OF POPULATION 281 
 
 workers will be no better than the first. There 
 is here a twofold confusion, which it is well to 
 clear up. In the first place, resort to machinery 
 goes on continuously, whether the birth-rate is 
 falling or rising. It went far, in the last century, 
 when labour supply was ruinously redundant. 
 The motive is always there. In the second 
 place, as we have seen, limitation of births does 
 not mean decline of net population. It is likely 
 to be long before population is even stationary 
 in our own country. 
 
 In France it became nearly so through the 
 twofold pressure of heavy debt-burden, with 
 relatively small increase in total production, and 
 the determination of the mass of the people to 
 maintain their standard of comfort. If in future 
 it should absolutely decline under the economic 
 burden left by the war, that will simply mean 
 that the people are again adjusting themselves 
 to their load, seeking to maintain quality rather 
 than quantity. The notion that this is a kind 
 of national decay or " race-suicide " is a halluci- 
 nation correlative with modern megalomania. 
 Population often declined or became stationary 
 for periods in France in old times, as indeed 
 it did in England, where the net increase of 
 population between the eleventh and the fifteenth 
 centuries was extremely slow. It well might be, 
 seeing that there, as in Europe generally, prob- 
 ably 75 per cent, of the children born never
 
 282 THE ECONOMICS OF PROGRESS 
 
 reached maturity. For France as for all the 
 other belligerent countries, however, there will 
 arise a new fiscal problem, involving that of the 
 considerate taxation of capital for the reduction 
 of debt; and what will be sound policy for us 
 will be so for her. In the future, the watchword 
 of political progress will be the reduction of idle 
 life simultaneously with the husbanding of life in 
 general by the maintenance of good life conditions. 
 And to maintain these conditions there will be 
 required an extension of the policy of life pro- 
 tection developed among us during the past ten 
 years. It is quite true that adequate provision 
 for old age cannot be attained among the mass 
 of the workers by a process of saving and invest- 
 ing money enough to yield a comfortable income. 
 Once the exchanges of the nations revert to a 
 normal basis by the settlement of war debts, you 
 cannot have in perpetuity increasing production 
 and increasing employment with greatly in- 
 creasing saving for investment. ^ The old expan- 
 sion of lucrative investment was correlative with 
 the expansion of population on the world's sur- 
 face. It may be indeed that the two will con- 
 tinue for a considerable time, the new populations 
 — say, in South America and Africa — paying large 
 tribute on borrowed capital in their period of 
 expansion and new exploitation.. Saving for in- 
 vestment, then, may on that basis be a resource 
 * Sec above, pp. 117-120.
 
 THE ECONOMICS OF POPULATION 283 
 
 even for large numbers of the workers in the 
 older countries. But it cannot conceivably be 
 perpetually so ; and for many if not most of the 
 workers that solution is barred. 
 
 Strictly speaking, if once we secure a general 
 rational restriction of birth-rate, the best security 
 for the maintenance of industry and production 
 would be a provision of comfortable maintenance 
 for all the workers in old age. On that basis, 
 their steady consumption would be the stay of 
 economic production, the best safeguard against 
 unemployment. Without the attainment of 
 general family limitation, such a solution could 
 not be faced; and it has only been when the 
 birth-rate had greatly fallen that even a small 
 Old Age Pension scheme could be safely ventured 
 on. Experience has justified the experiment. 
 The prospect of the small Old Age Pension has 
 not led to improvident breeding; and in due 
 time our posterity will probably have the con- 
 fident knowledge that an adequate Old Age 
 Pension will not mean a risk of over-population, 
 because the lesson will have been learned that 
 small families are the condition of comfort for 
 all. Men and women will not deliberately create 
 hardship for themselves in early and middle life 
 for the mere prospect of comfort in old age. 
 They will seek comfort for their children : that 
 is to say, they will limit their number. 
 
 But, be it observed, the required security is
 
 284 THE ECONOMICS OF PROGRESS 
 
 only in process of being attained : it has not yet 
 been realised. In hundreds of thousands of 
 families, poverty is imposed by number. The 
 case of the poor charwoman whose weekly bread 
 bill alone amounts to ten shillings is lamentably 
 common. The fall in the infantile death-rate 
 has been even more rapid than the fall in the 
 birth-rate ; the net population steadily increases ; 
 and a large annual emigration, over and above 
 that increase, has testified to an economic re- 
 dundance of hands. Under those circumstances, 
 unemployment in the countries to which our 
 emigrants chiefly went — America, Canada, and 
 Australia — must always mean unemployment 
 here. In the American depression of 1908-9, 
 the wave of emigration was thrown back. Ob- 
 viously we must maintain and develop the State 
 macliinery for relief of unemployment, at the 
 same time that we stimulate in every possible 
 way the real production that directly or indirectly 
 provides sustenance to population. 
 
 Thus far, broadly speaking, the workers have 
 done more for themselves by their individual 
 prudence than the State has done for them; and 
 that is on the whole a good thing. But when 
 they do still more the State can do more. It 
 has given them compensation for accidents, 
 national health insurance, old age pensions, fac- 
 tory laws, and mine laws, besides special pro- 
 tection for women and children. In these as in
 
 THE ECONOMICS OF POPULATION 285 
 
 other directions, there has been more active, 
 strenuous and vital reform during the age of 
 visible decline in the birth-rate than in the whole 
 previous history of the country. It is not an 
 irrational forecast then — it is a fair inference 
 from a whole crowded generation of political and 
 social change — that when there is a complete 
 control of population, with no such net increase 
 as compels emigration, the State can and will 
 secure a more complete well-being for those 
 whose toil sustains it. Given a substantially 
 good system of education, with a sound fiscal 
 system, the twentieth century may well see 
 before its close a much happier and more con- 
 tented nation than now dwells in these islands. 
 It will, I trust, be a Federal State, with Ireland, 
 self-governed, in contented union, competing in 
 prosperity and in intellectual life with her sisters. 
 There are, as we have noted, different fore- 
 casts, plans for a revolution by class war, plans 
 framed by men who cannot conceive of evolution 
 save as revolution — something catastrophic, the 
 product, not of growing good-will but of rapidly 
 intensified ill-will, to be followed somehow by 
 an unprecedented fraternity between a vanquished 
 capitalistic class and its angry conquerors. The 
 complete historical falsification of the forecast of 
 Marx and Engels, who predicted a continuous 
 worsenment of working-class life up to the point 
 of complete social explosion and overturn, does
 
 286 THE ECONOMICS OF PROGRESS 
 
 not lend apparent likelihood to the newer gospel. 
 Recent spectacles do not tend to remove our old 
 distrust of revolutions. If it be insisted that 
 revolution is a mode of evolution, it cannot at 
 the same time be denied that evolution is a 
 protracted revolution. Now, the greatest of all 
 revolutions, surely, is that gradually and peace- 
 fully wrought by evolutions. The England and 
 France of 1917 are far better and more hopeful 
 places — barring the awful hurricane of war — than 
 the England and France of 1817, after France 
 had had her Revolution and twenty years of war, 
 and England the war without the Revolution. 
 
 Whatever may be the social developments and 
 the political changes, one thing is certain : there 
 can be no good future for the human race with- 
 out a continuance of that policy of limitation of 
 births which we now see initially established in 
 the teeth of irrational outcry and ignorant pro- 
 test. We have lived to see a Church dignitary, 
 the Very Reverend Dean Inge, saying in effect 
 what Positivists and Rationalists were saying 
 forty years ago — 
 
 " Europe with a stationary population will be in 
 a much happier condition ; and problems of social 
 reform can then be tackled with some hope of success. ^^ 
 
 Those who maintain the angry outcry against 
 such doctrine are either theological dogmatists 
 who discard science in things social — unless we
 
 THE ECONOMICS OF POPULATION 287 
 
 reckon also with men who put a principle of 
 " following nature " that would have barred 
 clothes and cooked food — or mistaken optimists 
 who have resentfully seen in the doctrine of 
 family limitation a ground of resistance to social 
 reform. Of the Socialists who take that side, 
 some would almost seem to desire — I have indeed 
 heard some avow it — that social misery should 
 continue in order to keep social discontent hotly 
 burning. But even the mere resentful denial of 
 the scientific truth has never been well justified. 
 Conservatism in England has never dared openly 
 to ground itself on the law of population. It is 
 true that the old Quarterly Review, after begin- 
 ning in the regulation Conservative manner by 
 abusing Malthus, came round to the view that 
 his doctrine could be made a Tory weapon, and 
 grumbled only that he did not become a thorough 
 reactionist. But the old Edinhurgh Review stood 
 by his doctrine from the first, without going over 
 to Conservatism; and Francis Place, the two 
 Mills, Grote, Richard Carlile, and Charles Brad- 
 laugh, kept the scientific truth and the sane 
 application in constant touch with democratic 
 principles. John Mill never faltered in liis in- 
 sistence that anything approximating to col- 
 lectivism must accept as its first condition 
 limitation of births ; but he was progressively 
 more and more democratic, and even Socialistic, 
 in his politics.
 
 288 THE ECONOMICS OF PROGRESS 
 
 If some Conservatives held by the scientific 
 truth, their party never spared Bradlaugh a 
 calumny on that score. He did his work with 
 no countenance from them; and their Press 
 made his Malthusian propaganda the pretext for 
 a campaign of vilification such as modern 
 Socialism has never endured. It will be quite in 
 the common way of historical paradox if German 
 Socialism should in the end learn the lesson — as 
 it seems to be doing — sooner than the English 
 Socialism which followed the German leader in 
 vilifying the teachers of the scientific truth. 
 However that may be, the workers, all the world 
 over, are learning the lesson for themselves. 
 They are coming to see what the revolutionists 
 will not see, that mankind cannot pass by a step 
 from the worst to the best; and that only by a 
 gradual betterment in which they are the intel- 
 ligent sharers can they make a better world for 
 their children than that into which they are 
 born. 
 
 Already the more thoughtful of them know 
 that the small family means a better life for 
 themselves as well as for their children, a better 
 chance in trade disputes, in so far as it means 
 less danger of defeat, more independence in trade 
 struggles. The small family does not have the 
 wolf so near the door : and its better home life 
 is less open to the old temptations to drink and 
 disorder. Give it a still better culture life and
 
 THE ECONOMICS OF POPULATION 289 
 
 the disorder will still further dwindle. It would 
 be a sad anomaly indeed if on the side of the 
 employing class there were not an equivalent 
 moral development, a concern to maintain and 
 raise the standard of good hfe that has been 
 reached. For such a failure would mean not 
 merely a moral deficiency that would be a new 
 justification of revolutionism, but an incapacity 
 on the side of the brains of industry to read the 
 greatest of all industrial object lessons, to master 
 the broadest and most vital of all economic 
 truths— the truth that trade fives and grows by 
 good-will, within and without. 
 
 Postscript 
 
 Newspaper reports of these lectures have 
 eficited some Catholic polemic, the main burden 
 of which is to proclaim the very well-known 
 fact that the Catholic Church denounces family 
 limitation. This had also been made clear in 
 the evidence given for the Report of the Com- 
 mission of the National Society of Public Morals. 
 A few historic facts bearing on this point may 
 be worth noting. 
 
 1. It is obviously not simple concern for human 
 life as such that has determined the official doc- 
 trine of the Catholic Church. The doctrine really 
 derives from Judaic precept and practice, adopted 
 by the ancient Church as against popular pagan 
 
 practice. From this standpoint (" Be fruitful 
 u
 
 290 THE ECONOMICS OF PROGRESS 
 
 and multiply ") the Church's own practices of 
 sacerdotal and conventual celibacy stand clearly 
 condemned. They are nevertheless maintained 
 on coeval though irreconcilable traditionary 
 (really pagan) grounds. 
 
 2. On the other hand, the Church in practice 
 lays on married women the odious command to 
 make sexual submission to drunken husbands. 
 It further " condemns as wrong in principle, 
 legislation against the marriage of the physically 
 or mentally unfit, though it may (sic) and does 
 discourage such marriages " {Report above cited, 
 p. 65). 
 
 3. Another result of the traditionary ethic is 
 to lay on Catholic medical men the duty of 
 sacrificing the mother rather than the infant in 
 cases of dangerous childbirth (see the pronounce- 
 ment of Monsignor Canon Brown, Report cited, 
 p. 81). Thus in Ireland the adult life is sacrificed 
 in the Catholic hospitals, where the foetus is 
 preferably sacrificed in the Protestant. 
 
 4. Nevertheless, the great mass of the Catholics 
 in France, and multitudes of educated Catholics 
 in England, practise family limitation — in France 
 with the acquiescence of the majority of the 
 priests. The Rev. Herbert Thurston, S.J., ac- 
 cordingly denounces the religion of the mass of 
 French Catholics as " merely Catholicism in 
 name " (pamphlet on The Declining Birth-Rate, 
 Cathohc Truth Society, 1916, p. 12), and further
 
 THE ECONOMICS OF POPULATION 291 
 
 complains bitterly that while uneducated Catho- 
 lics, as in Liverpool, maintain a high birth-rate, 
 " members of the educated and comfortable 
 classes, the men especially " [by implication, in 
 England] " are prone to emancipate themselves 
 from all religious control, with an anti-clerical 
 rancour hardly known in Protestant lands." Into 
 this domestic quarrel it is unnecessary for the 
 Rationalist or Protestant to enter further. 
 
 It may further be noted that while the official 
 Jewish doctrine is dead against family limitation, 
 the Prussian figures show a lower rate of children 
 per Jewish marriage in 1895-1900 than for those 
 of either Catholics or Evangelicals. In 1885 the 
 Berlin figures showed the three nearly equal. In 
 1895-1900 they stood : 5, 4, 3-7. 
 
 Father Thurston distinguishes himself by add- 
 ing to that fulmination of the Church's orders 
 which constitutes the main Catholic argument 
 what he calls a reductio ad absurdum of the 
 opinion that there is " any necessary connection 
 between birth-rate and death-rate." As thus 
 (pp. 17-18)- 
 
 " Suppose that medical and sanitary science 
 made such progress that every cause of death 
 were eliminated except accident and senile decay. 
 . . . Whether many infants were born or few . . . 
 the number of those who each year attained a 
 great age would each year become larger and 
 larger. Even though the birth-rate were reduced 
 
 U 2
 
 292 THE ECONOMICS OF PROGRESS 
 
 until no children were born at all, we should 
 have a steadily increasing death-rate until the 
 point was reached when the deaths were equal 
 in number to the births of eighty years before. 
 Of course this is a reductio ad absurdum (!), but 
 its logical force (! !) is unanswerable " (! ! !). 
 
 In this fashion the Rev. Father could promptly 
 "reduce to absurdity" the law of gravitation; 
 and by only one further " suppose " he could 
 confute the law of death. We need not concern 
 ourselves with the Rev. Father's logic; but 
 ethical comment is stimulated by another aspect 
 of his polemic. On p. 7 he quotes Miss E. M. 
 Elderton as stating in her Report on the English 
 Birth-Rate (Eugenics Laboratory Memoirs : Dulau 
 & Co., 1914, pp. 234-5) that in effect the Brad- 
 laugh-Besant trial " has destroyed the pressure 
 (sic) which carried an English population as the 
 great colonising force into every quarter of the 
 globe." This assertion, which simply ignores the 
 statistics of emigration. Father Thurston in effect 
 endorses, though he professes to be rigorous in 
 statistics, and he or a colleague characterises as 
 " Malthusian Mendacities " what he regards as 
 erroneous generalisations concerning birth-rate 
 and death-rate. The British statistics of emigra- 
 tion stand thus — 
 
 Outward Passengers to Countries Inward 
 
 out of Europe. Movement. 
 
 1901 .... 171,715 99,699 
 
 1913 .... 469,640 227,643
 
 THE ECONOMICS OF POPULATION 293 
 
 The outward movement of alien passengers, again, 
 was, in 1901, 124,354, and the inward 60,736; 
 while in 1913 the outward figures were 232,051 
 and the inward 144,975. With the exception of 
 the bad trade years 1908-9 the British emigration 
 had increased almost continuously from the 
 beginning of the century; and in the three 
 prosperous years 1911-13 the average British 
 excess of outward over inward passengers to 
 countries out of Europe was 257,429. 
 
 Naturally Father Thurston is pained by Miss 
 Elderton's avowal that where, as in Liverpool, 
 the Irish element keeps up a high birth-rate, the 
 " population appears to be inferior in skill and 
 intelligence to nearly all the towns where the 
 birth-rate is rapidly declining." The Rev. Father 
 sees no occasion to correct Miss Elderton's delu- 
 sion as to emigration; but on this head he sees 
 fit to protest that she " seems to take it for 
 granted that destitution and thriftlessness in the 
 parents necessarily imply unfitness in the off- 
 spring " (p. 11). No such view is indicated by 
 the quotation given. As an illustration of S.J. 
 dialectic, however, the passage is instructive. Of 
 the Liverpool death-rate nothing is said. 
 
 Nor does the Rev. Father, though he claims 
 that the " natural intelligence " of the Catholics 
 in question is " very high," make any attempt 
 to prove that they are more sober, more honest, 
 more humane, or more truthful than either the
 
 294 THE ECONOMICS OF POPULATION 
 
 Catholics or the Protestants who practise family- 
 prudence. Very significant, finally, is his strenu- 
 ous hostility to improved education for the 
 workers (p. 23). " The vast majority must in- 
 evitably earn their bread by the sweat of their 
 brow, and we believe that they will be all the 
 happier and more contented with their lot if, 
 with due regard for youthful infirmity and the 
 acquisition of the bare essentials of learning, 
 they begin that process early." Such is the 
 official Catholic ideal, in the twentieth century.
 
 INDEX 
 
 Ability, " rent of," 126 
 Agriculture and education, 88 sq. ; 
 and land policy, 132 sq., 147 sq. 
 AUson, Sir A., 249 
 Anderson, Dr. James, 6, 9, 122 
 Aristotle on population, 230 
 Ashley, Sir W. J., vii, 52, 227, note 
 "Atkinson, cited, 110, note 
 
 Bacon on Dutch trade, 203; on 
 
 population, 227 sq. 
 Bagehot, 24 
 Barton, 102, note 
 Bastable, 171-2 
 Bastiat, 179 
 Belgium, economic conditions of, 
 
 148 
 Berlin, birth-rate of, 276, 291 
 Besant, Mrs., 239, note ; 266 
 Birth-rate, fall of, 78, 268 sq., 
 
 291 sq. 
 Bismarck, 197 
 Bonar, Dr. James, 240, 256 
 Bortkievicz, 230, note 
 Bradford Dyers' Association, 103 
 
 sq. 
 Bradlaugh, 239, note ; 257, 266, 
 
 287, 288 
 Brentano, 27 
 Brown, Monsignor, 290 
 Buckle, 80 
 
 Bullion delusion, 209 sq. 
 Burton, J. Hill, 64 
 Butler, S., 65 
 
 Cairnes, 24, 25, 49 
 
 Campbell-Bannerman, 6 
 
 Cannan, cited, 154, note; 155, 
 note ; 255, note 
 
 Capital, theory of, v, vi, 151 sq.; 
 taxation of, 135, 137, 161 sq.; 
 definitions of, 159 sq.; con- 
 scription of, 159 sq. ; exporta- 
 tion of, 170 sq., 172 sq. 
 
 Carlile, Richard, 266, 287 
 
 — -, W. A., 128 
 
 Carlyle, 68, 235 
 
 CathoUcism and population, 264, 
 
 note ; 289 sq. ; and education, 
 
 294 
 Chalmers, 254 
 Chamberlain, 194 
 Chevalier, 179 
 Cincinnati, 70, 83 
 Cobden, 127, 194, 198 
 Coleridge, 248, note 
 Commerce, economics of, 185 sq. ; 
 
 primitive, 185-6; international, 
 
 201 sq.,2\\ sq. 
 Comte, 14 
 
 Comtism and economics, 7, 14 
 Condorcet, 231 
 
 Conscription of wealth, 159, 184 sq. 
 Co-operation, 93 
 Corn Laws, 110, 127, 193, 254 
 Cunningham, Dr., 32, 39 
 
 Darwin and Darwinism, 222,238-9 
 
 Death Duties, 141 
 
 Deniker, 185 
 
 De Quincey, 235 sq. 
 
 Doubleday, 250 
 
 Dumping, 195 
 
 Dunoyer, 52-3 
 
 Dutch, the, as linguists, 72 
 
 Economic man, the, 4 sq., 43, 44 
 Economics, application of, to 
 
 politics, 2 sq. ; true method of, 
 
 16 sq., 47, 50; teaching of, 17; 
 
 definition of, 53 sq. 
 Edinburgh Review, 287 
 Education, economic aspect of, 
 
 58 sq. ; secondary, 74 sq. ; 
 
 Catholicism and, 294 
 
 , Board of, on birth-rate, 274 
 
 Egypt, old trade through, 36 sq. 
 Elderton, Miss E. M., 292 
 
 295
 
 296 
 
 INDEX 
 
 Emerson on trade, 185, note 
 Emigration, 107, 225, 235, 292 sq. 
 England, education in, 62 sq., 71 ; 
 
 as self-feeding country, 105, 
 
 142, 149 
 Epstein, Dr., cited, 28 
 Eskimos, 224 
 Ethics and economics, 40 sq., 45, 
 
 46, 131, 134, 137, 159, 160, 
 
 167 sq. 
 Eugenics, 262 
 
 Fabian Society, 92 
 
 Fawcett, 49 
 
 Felix, Dr., 257, note 
 
 Field, J. A., cited, 257, note 
 
 Fiscal policy, punitive, 214 sq. 
 
 Fisher, H. A., 74, 84 
 
 Food Duties, 142 
 
 France, tariffs in, 197 ; population 
 in, 265, 275, 281, 290 
 
 Free Banking, 177 sq. 
 
 Free Trade, and war, 161 sq. ; and 
 capital, 173; in Holland, 193; 
 attainment of, in England, 193 
 sq. ; recent struggles for, 198 
 sq. ; theory of, 208 sq. ; progress 
 under, 220 
 
 Geddes, Prof. P., 120 
 
 George, Henry, 232, 251 sq. 
 
 German economists, 5 sq., 26, 
 27 sq., 43, 44 
 
 German trade, 71, 194 sq. 
 
 Germany, labour in, 106 sq.; 
 mining royalties in, 147 sq. ; 
 war finance of, 161 ; taxation of 
 capital in, 172; British trade 
 with, 194 sq., 200 sq., 214 sq., 
 217 ; tariff causation in, 196 sq. ; 
 alleged poHcy of " breeding " 
 in, 260 ; population question in, 
 275 sq. 
 
 Gide on capital, 151, note 
 
 Girardin, 179 
 
 Godwin, 231 sq., 248 
 
 Goschen, 9 
 
 Gosling, H., cited, 115, note 
 
 Gray, John, 177 sq. 
 
 Greece, decline of population of, 
 246 
 
 Grote, 257, 287 
 
 Guild Socialists, 112 
 Hamilton, Sir W., cited, 62 
 Historical school, vi, 4 sq., 20 sq. 
 Hobhouse, Prof., cited, 224 
 Hobson, J. A., 57 
 Holland, early trade policy of, 
 
 172, 201 sq. 
 Hume, 6, 9, 245 sq. 
 Huxley, 239, note 
 
 Indemnities, war, how payable, 
 
 215 
 Infanticide, 223 sq. 
 Inge, Dean, cited, 286 
 Ireland, future of, 285 
 
 Jennings, cited, 50, note 
 
 Jevons, 9 sq. ; on Ricardo, 10 sq.; 
 
 on J. S. Mill, 12, 53 ; on capital, 
 
 156 sq. 
 Jones, Rev. Richard, 256 
 Joseph, 13 
 Judaism and population, 291 
 
 Kidd, B., 239 
 
 Labour, changed status of, 91 ; 
 economics of, 58 sg'., 91 sq. ; and 
 population, 94; overstrain of, 
 95 ; monotony of, 86 ; rights of, 
 111 ; in the war, 115 
 
 Land, economics of, 110, 122 sq.; 
 definition of , 130, 131 ; taxation 
 of, 69, 132 sq. ; unimproved 
 value of, 133 sq. ; uncultivated, 
 139 sq. 
 
 Lang, cited, 121 
 
 Languages, study of, 71 sq. 
 
 Lauderdale, 22 
 
 Law, defined, 3, 241 
 
 Law, A. Bonar, 183, 212 
 
 Leslie, Cliffe, 7, 12-14 
 
 Letourneau, 184, note ; 185, note 
 
 Leverhulme, Lord, 86 
 
 Levi, L., 9 
 
 List, 219 
 
 Liverpool, birth-rate in, 291, 293 
 
 Locke, 191 
 
 Logic, teaching of, 17 
 
 Luxembourg, Rosa, 277 sq. 
 
 Macaulay, 249 
 McCulloch, 6, 25, 102, 238
 
 INDEX 
 
 297 
 
 Machinery, 77, 101 sq. 
 
 McKenna, 1G3, 165 
 
 Magna Carta, 188 sq. 
 
 Maine, 13, 15-10 
 
 Malthus, 9, 122 ; and Malthusian- 
 isni, 222 sq., 230 sq.; funda- 
 mental doctrine of, 233 sq. ; 
 replies to, 232, 247 sq.; de- 
 velopment of views of, 238, 240, 
 254, note ; practical prescrip- 
 tion of, 254 sq. ; Church's atti- 
 tude to, 256; Conservative 
 attitude to, 287 
 
 Maories, 247 
 
 Marshall, on Ricardo, 7 sg-., 13 sq., 
 18 sq., 41 sq.; on historical 
 school, 22 sq. ; on economic 
 dogmas, 51 ; on effects of 
 machinery, 103; on capital, 
 151, note ; on Malthus, 232 
 
 Martineau, H., 242 
 
 Marx, 9, 11, 41, 285 
 
 Maxse, 211 
 
 Meh-ose, C. J., cited, 58, note 
 
 Migrations, 225 
 
 Mill, James, 18, 53, 257, 258, 287 
 
 , J. S., Jevons on, 12; on 
 
 Ethology, 15, 52; on demand, 
 15, 41 ; on the Wages Fund, 41 ; 
 on definition of economics, 47 
 sq., 54 sq. ; on restraint of 
 marriage, 50; on competition, 
 52 sq. ; on increase of produc- 
 tion, 55, note; 11, 114; on 
 education, 58; on effects of 
 machinery, 77, 102 sq. ; on law 
 of population, 257, 258, 287 
 
 Mines, nationahzation of, 97 sq. ; 
 rent of, 123 sq., 146 sq. 
 
 Mining royalties, 138, 270, 271 
 
 More, A., cited, 275 
 
 Mundella, A. J., 268 sq. 
 
 National Debt, 110, 158, 176 
 Navigation Laws, 5, 205 
 Neo-Malthusianism, 257, 258 
 North, Dudley, 191 sq. 
 Norway, restraints on marriage in, 
 238 
 
 Old Age Pensions, \\1 sq., 258, 283 
 Owen, Robert, 257 
 
 Peel, 194, 197 
 
 Petroleum Bill, 143 
 
 Pierson, Dr., on capital, 153, note ; 
 158, note ; on taxation of capi- 
 tal, 172 
 
 Place, Francis, 257, 258, 266, 
 287 
 
 Plato on population, 230 
 
 PoUtics, economics and, 2 sq., 49, 
 61 sq. 
 
 Poor Law, English, 227, 229 
 
 Population, law of, vii, 1, 78, 149, 
 222 sq. ; problem of, in an- 
 tiquity, 226 sq. ; Church and, 
 227 ; apparent exceptions to, 
 243 sq. ; Conservatism and, 
 287 ; Catholicism and, 264, note; 
 289 sq. 
 
 Production, Census of, 78; maxi- 
 mization of, 119, 149 
 
 Profits and wages, 7, 12, 109 
 
 Progress, defined, 1 ; law of, 120 
 
 Protectionism and war, 161 sq. ; 
 reversions to, 194 
 
 Quarterly Review, 287 
 Quilter, H., 223 
 
 Read, Dr. Archdall, 239, note 
 
 Redskins, 247 
 
 Renaissance, prudential checks in, 
 257, note 
 
 Rent, theory of, 6, 9, 56, 122 sq. ; 
 customary, 47; economics of, 
 110 
 
 Ricardo, vi ; attacks on, 7 sq. ; 
 record of, 18 sq., 46, 60; work 
 of, 23 ; on wages, 41 sq. ; on 
 education, 63 ; on machinery 
 and labour, 101 sq. ; on rent, 
 122 sq. ; on taxation of capital, 
 170, 172 
 
 Rickards, 50 
 
 Robinson, Dr. W. J., cited, 277 sq. 
 
 Rogers, Thorold, 32 sq., 49, 127 
 
 Rome, decline of population of, 
 245 
 
 Roscher, 20 sq., 22 sq. 
 
 Ruskin, 40, 120 
 
 Russia, economic life of, 88 
 
 Rutgers, Dr., cited, 257, note
 
 298 
 
 INDEX 
 
 Sadler, 249 
 
 Saving and consumption, 117 sq., 
 
 176 sq. 
 Say, J. B., 2 
 Schmoller, 27, 28 sq. 
 Scotland, education in, 85, 88; 
 mining in, 98; trade in, 180, 
 205 
 Selfishness, economic, 43 
 Semitic character, 8 sq. 
 Senior, cited, 49, note ; 2i2 
 Sidgwick, on Comte, 15; on 
 
 German school, 26 
 Silver, mediaeval production of, 
 
 38 s?. 
 Sismondi, 2, 22, 52 
 Site, in rent, 125 
 Small holdings, 147-8 
 Smith, Adam, vi ; and the his- 
 torical school, 5 ; and Bentham, 
 6; on rent, 6, 123, 128; on 
 Enghsh wool, 35, note ; on 
 education, 62 sq. ; on capital, 
 152 sq. ; on foreign trade, 200 
 sq. ; on population, 263 
 Sociahsm, German, 44, 276 sq. 
 Sociology, 14 sq., 16, 23; method 
 
 of, 24 
 Soldiering and education, 66 
 Sombart, 27, 29 sq. 
 Spain, economic life of, 87 
 Spencer, 232 
 State banking, 177 sq. 
 Stationary societies, idea of, 7, 12 
 Storey, H., 133 
 Strikes, 116 
 
 Switzerland, restraints on mar- 
 riage in, 238 
 Syndicahsm, 99 
 
 Tariffism, early, 189; modern, 
 
 199 ; theory of, 207 sq. 
 Tariffs, modern, rise of, 196 sq. 
 Tasmanians, 247 
 Taxation, 135, 137, 159 sq. 
 Tennyson, 223 
 
 Terence, 226 
 
 Theology and science, 252 sq. 
 
 Thurston, Rev. H., 290 sq. 
 
 Tolls on trade, 186 sq. 
 
 Tooke, T., 193 
 
 Trade and civiUzation, 185; hin- 
 drances to, 186 sq. ; early Eng- 
 lish, 187 sq. ; value of inter- 
 national, 201 sq. ; value of 
 good-will in, 289 
 
 Trade Unions, 93 sq. 
 
 Treitschke, 28 sq. 
 
 Turgot, vi 
 
 Unearned increment, 136 
 Unemployment, 100, 104 sq. ; 
 
 under tariffs, 199, 207, 284 
 United States, economic life of, 
 
 85 sq., 96, 199, 284; tariff 
 
 causation in, 196 
 Universities, development of, 81 
 
 sq. 
 
 Veddahs, 224 
 
 Wages, theory of, 10, 109; and 
 profits, 7, 12 ; regulation of, 97 ; 
 not adjustable for large famiHes, 
 264 
 
 Wakefield, 125 
 
 Wales, mining in, 98 
 
 Wallace, Dr. R., 230, 246 
 
 War, Sombart on, 30; and pro- 
 gress, 121 ; and population, 
 279 sq. 
 
 Wealth, hallucination of, 1 12 sq. 
 
 West, Sir E., 9, 122 
 
 Wollstonecraft, Mary, 222-3 
 
 Women, labour of, 108 
 
 Wool, English, 35; export duties 
 on, 36, 189 
 
 Yahgans, 224 
 Yarranton, 58 sq. 
 
 Zetkin, Clara, 277 sq. 
 
 Printed in Great Britain by Richard Clay & Sons, Limited, 
 brunswick bt., stamford st., s.b. 1, and bungay, suffolk.
 
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 The economics 
 
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