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ESSAYS
ECONOMICAL SUBJECTS
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i ESSAYS
7
ON
ECONOMICAL SUBJECTS
BY
HIBERNICUS,
UHIVBRSITT]
DUBLIN:
E. PONSONBY, ii6, G RAF TO N-ST R EET.
LONDON: SIMPKIN, MARSHALL, &c CO.
IBS';.
\^?,
34
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DUHLIN :
PRINTED AT THE UNIVERSITY PRESS,
KY P0N8ONBY ANP WELDRICK.
UNIVBRSITT]
PREFACE,
In offering this collection of essays to the public,
the only defect for which I think it necessary to
apologize is the amount of repetition which it con-
tains. The intimate connexion of the different
topics comprised in the science of Political Eco-
nomy renders it difficult to avoid such repetition,
especially when they are dealt with in separate
essays written at different times, and some of which
were not originally designed to form part of a
collection. I had intended doing something to
correct this fault while the volume was passing
through the press, but I had usually to sign the
earlier sheets for the press before seeing the later
in print, while the later form of the exposition was
least susceptible of curtailment. The views which
I have advocated are, of course, put forward with
the view of being criticized, and I have no apology
to offer for them. In a series of essays, however,
written during my hours of leisure, while engaged
in a very different occupation, they may not have
been expounded with the precision which would be
b
vi Preface.
looked for in a professedly scientific treatise, and
it is not improbable that I may have occasionally
stated, without acknowledgment, something- that
has been already better expressed by others.
The passages referring to the late Mr. Fawcett
were written during the lifetime of that distinguished
Statesman and Economist, whose loss the country'
now deplores. I have made hardly any change in
them except the substitution of the past tense for
the present. The sentiments of such a man do
not die with him, and the importance of correcting
any errors which may have crept into his writings
is in no respect lessened by his death.
I have devoted a good deal of space to the con-
sideration of the views of Mr. Henry George.
Whatever be thought of the general soundness of
Mr. George's theories, no writer on the science
can afford to despise his works ; and there are
branches of Political Economy on which he has, in
my opinion, thrown an important light. It is un-
fortunate that his views on the Ownership of Land
should have been made a political question. The
economical theory of Free Trade has, however,
suffered from the same cause ; and yet we find some
ardent politicians, like the late Mr. Fawcett, willing
to deal with it in a really scientific manner (though,
perhaps, his scientific views were unconsciously
coloured by his political sentiments). It were to
Preface, vii
be desired that Mr. George had adhered more
closely to this purely scientific mode of treatment.
There are, I fear, many passages in his writings
which are calculated to enlist the passions as well
as the reason of his readers in his favour.
As to the buying -out of the land -owners,
which has been frequently suggested of late years,
I may here make a remark. There has been un-
doubtedly a fall in the value of land in this country
arising from natural causes, and the land-owner has
no right to expect his interest to be purchased at
its value before the fall. This fall is the chief cause
of the reduction of rents which is being effected by
Land Commission in Ireland, though not by any
means the sole one. But there is a further fall in the
value of land in Ireland which is due, not to natural
causes, but to agitation, and to the repeated inter-
vention of the legislature which fills every one in-
terested in land with incertitude as to what is
coming. This latter fall shows itself in the diffi-
culty of selling the landlord's interest in land, and
the reduced number of years' purchase for which it
sells even after the rent has been judicially fixed.
Securities which pay fixed (or nearly fixed) di-
vidends, such as the Funds and the Preference
Shares of solvent Railway Companies, never brought
higher prices than at present, and the landlord's
interest (measured in years' purchase of the rental)
viii Preface.
would have participated in the general high prices
if rents were deemed equally secure. If a judicial
rent of £\ a-year sells for £Zo, while £\ a-year
guaranteed by a Railway Company sells for ;^ioo,
the difference arises from the public estimate of the
relative security of the two investments. But this
difference is almost entirely produced by what I
may call artificial causes. It is true that even
from natural causes there would be a greater chance
of the judicial rent being diminished or remaining
unpaid ; but for this the possibility — perhaps I may
say the probability — of a rise would, under ordinary
circumstances, form an adequate set-off It would
plainly be unjust to compel land-owners to sell
their lands at the reduced value thus produced —
produced to a great extent by the action of the
very legislature that compelled them to sell and
became the purchasers. However, I do not think
the Nationalisation of Land is likely to be adopted
by our legislature even under the New Reform
Bill, and if there is no further legislative inter-
ference with land in Ireland for a few years, the
selling value of the landlord's interest will begin to
increase, although the rental may remain stationar}^
The condition of Ireland has, I think, hitherto
attracted too little attention from the writers on
Political Economy in the sister kingdom, and when
they have touched on it at all they have been too
Preface, ix
ready to accept one-sided and coloured state-
ments without inquiry. Accordingly, I have called
attention to some matters connected with Ireland
which seem to have been overlooked. I am not
aware, for instance, of any writer who has re-
ferred to the light thrown by the condition of
Ireland on the question of Free Trade. English-
men seem to have frequently jumped to the con-
clusion either that the state of Ireland is so anoma-
lous as to evade all laws (a view which, if correct,
would render a science of Political Economy im-
possible), or else that all her peculiarities are ac-
counted for by the misrule of the English Govern-
ment and the misconduct of the English and
Scotch settlers ; in which latter case they dispose
of the whole question by a quotation or two from
some very unreliable source, and a few vague cen-
sures on the manner in which Ireland has hitherto
been governed. But if the economical facts of any
country are to be studied with a view of scientific
explanation, they must be studied carefully and
impartially, and for this purpose, in a country where
political sentiment runs high, it is absolutely ne-
cessary to hear both sides of the story, and then to
use one's own independent judgment. We can
hardly expect politicians to do this, but we have
a right to expect it from professed writers on
Political Economy. Such a writer, for instance,
X Preface.
was the late Mr. J. S. Mill ; yet he started in his
well-known treatise on Political Economy with
a statement which was, I believe, at all times a
very coloured one, and when he became aware that
this statement was no longer applicable, he refused
to alter it, merely inserting a note in his later
editions to the effect that it would require too much
re-writing to keep such statements always in accor-
dance with the facts in the case of a work which
went through several editions. I hope this lazy
method of dealing with such a subject (which Mr.
Mill seems to have applied to Ireland only) will not
be adopted by future expounders of the science.
The different parts of the United Kingdom afford
to the theoretical economist a rare opportunity of
observing the operation of the same laws under
widely different circumstances, and it is one which
ought not to be neglected. To verify an alleged
economical law, it must be shown to hold good in
every part of Her Majesty's dominions.
I have inserted four of the longer notes in the
text as Appendices to the respective Essays to
which they relate.
CONTENTS.
I. Free Trade and Fair Trade, .
Note on the Excess of Imports over Exports
II. The Principle of Population, .
III. The Ownership of Land, .
IV. Capital and Labour,
Note on Mr. George's Theory,
V. Rent, Economic and Actual, .
VI. Commercial Crises, .
VII. Interest,
VIII. The English Church Establishment
IX. Unearned Wealth, . . . •
Note on the House of Lords, . . . •
X. War,
Note on Government by Party in relation to
Foreign Policy,
PAGE
I
25
32
51
75
103
1 1 1
137
168
195
221
236
246
277
UHIVBRSITT]
FREE TRADE AND FAIR TRADE.
T)ERHAPS the greatest error of Political Economists
in every department has been that of overlooking a
part of the question, and of laying down as true without
qualification, or with too little qualification, propositions
that in reality hold good only within certain limits of
time, place, and circumstance. In no branch of the sub-
ject, however, has this feature been so conspicuous as in
that which relates to International Trade, where the
rival theories having been adopted by opposite political
factions, calm reasoning has often given place to impas-
sioned invective, and arguments calculated to catch the
ear of the populace have been put forward with a poli-
tical object by persons who ought at least to have been
aware of their defects. There are, therefore, special
reasons for bringing back the Free Trade question to
the region of calm, logical, and impartial inquiry. A
triumph of five-and-thirty years in England is no proof
of the infallibility of the system unless we are to regard
the English people as infallible; for very few foreign
countries have followed our example in the matter of
Free Trade, though we can hardly suppose that the
B
2 Free Trade and Fair Trade.
leading statesmen of other nations are ignorant of the
arguments in its favour, which in this country seem to
be still regarded as irresistible. Why have other coun-
tries failed to adopt a system which both reason and
experience have shown to be so beneficial ? and why is
the number of persons in this country who are dissatis-
fied with it again on the increase ? The past history of
Political Economy might suffice to suggest in answer
that something had been overlooked by its advocates.
Now the first thing that occurs to an impartial reader
on perusing some of the treatises in which the advan-
tages resulting from the remission of duties on exports
and imports are so largely insisted on is, that as much —
or nearly as much — could be said in favour of the remis-
sion of any other kind of taxation. And the next thing
that occurs to him is, that so long as we require to raise
the same sum in taxation — including under that head
both the national revenue and local taxes — every remis-
sion of taxation in one direction must be accompanied
by increased taxation in another. It is not then suf-
ficient for the advocate of Free Trade to prove that the
country would gain by the remission of all duties on im-
ports and exports. It would doubtless gain by the
remission of any kind of taxation, provided that this
remission involved nothing farther : but what must be
proved is, that it would gain more by the remission of
duties on exports and imports than it would lose by the
imposition of the other taxes which this remission would
necessitate ; which, I think I may affirm, the advocates
of Free Trade have not hitherto proved. Remission of
^^ at THii^^
triIVERSITY]
Free Trade mid Fair 7>^S?^'^^^^
taxation is always a good thing when it can be effected,
and the imposition of additional taxes is an evil when it
can be avoided. But the problem of Free Trade and
Fair Trade has nothing to do with the increase or dimi-
nution of taxation. It solely relates to the comparative
merits of different modes of taxation, some one or other
of which we are compelled by our national necessities
to adopt. The general taxation of the country has, in
fact, largely increased since the Free Trade principle
was adopted by our legislature ; and the annual reve-
nue levied in this manner was never larger than it is
under the present Liberal and Free Trade Administra-
tion. I do not say that this is the consequence of Free
Trade, though there might be as good reason for saying
so as for contending that the general prosperity of the
country since 1845 has been the consequence of it. But
this much, at least, seems clear, that the adoption of
Free Trade has not hitherto diminished the general tax-
ation of the United Kingdom, nor does there seem any
reason to believe that the fuller application of the same
principle would diminish it. And so long as our na-
tional expenditure continues at its present figure, what
is gained in one way must be made up in another. In
proportion as the Customs yield less, other taxes must
be made to yield more.
Another fact which should not be lost sight of is, that
our adoption of the principle of Free Trade has never
been more than partial, and that it is only a few bold
theorists who would even now propose to render it
complete. We still raise twenty millions a year of our
B 2
4 Free Trade and Fair Trade.
national revenue by duties on imports, each of which
restricts our trade with foreign countries : for all these
taxed commodities would be imported more largely and
sold more cheaply if the duty was remitted. And it may
be added that one of the taxed articles — tea — forms a
portion of the food of the greater part of the population ;
for the beverage which we drink at our meals every day
ought plainly to be included in the phrase " the food of
the people." So long as this is the case, it cannot be
pretended that we have adopted the Free Trade prin-
ciple in its entirety. And what is the reason why, not-
withstanding our vaunted adoption of Free Trade, we
still levy twenty millions a year in taxes on imported
commodities ? Plainly, either because our Liberal and
Free-Trade Chancellors of the Exchequer have failed to
discover any better method of levying the amount, or
else because the methods which they, in their individual
capacity, would prefer would raise such a storm of oppo-
sition as to threaten the stability of any Ministry that
proposed them. In fact, the remission of duties on im-
ports would, to a large extent, involve the remission of
duties on articles of home production also, or what for
financial purposes comes to the same thing, to a dimi-
nished revenue from them. Take, for example, the case
of alcoholic drinks. If we admitted these duty-free from
foreign countries, leaving our own excise duties un-
altered, the home producer would soon be driven out of
the market, and the excise duties on home-made alco-
holic drinks would produce an insufficient sum — to say
nothing of the obvious unfairness of placing burdens on
Free Trade and Fair Trade. 5
the home-producer from which the foreigner was ex-
empt, with the consequence, perhaps, of compelling the
home consumer to buy, not in the cheapest but in the
dearest market (since the home market might be the
cheapest, if both were alike exempted from taxation).
The Free Trade principle, consistently carried out, would
thus involve a loss to our revenue, not of twenty millions
a year, but of forty millions; for the Excise Duties
should be abolished as well as the Customs. How,
then, is this sum to be made good ? The Free Traders
have not as yet supplied a satisfactory answer. Indeed
the modes in which our present system of taxation limits
freedom of trade are almost endless. The very making
of bargains — the essence of all trading — forms, in many
cases, a subject of taxation. An agreement is of no force
unless it bears a stamp. The most ordinary transfer is
subject to similar duties. I pay a tax every time I with-
draw money from my banker, and whenever I sell goods
(beyond a very trifling amount) I am bound to give the
purchaser a receipt and to pay a duty on giving it.
Larger stamps must be attached to mortgages, bills of
sale, bills of exchange, and other deeds and documents
which are in constant use among persons engaged in
trade. I cannot even forward a letter or a telegram ex-
cept on terms of paying to the Government more than
the cost of forwarding it — the excess being, of course,
another form of taxation. I cannot insure my life, my
house, or my property, without incurring similar penal-
ties ; which I must likewise pay when I take a lease of
my residence or my business premises. And almost
6 Free Trade and Fair Trade.
every market is subject to tolls, which are usually appli-
cable to local, if not to national, purposes. Are these
things consistent with Free Trade ? If they are, how is
a duty on imported articles inconsistent with it ? Why
may we not impose a toll on the foreigner for the privi-
lege of selling his goods in our market ? But the ques-
tion need hardly be asked when it is obvious that, as a
matter of fact, we do impose it ; and when, moreover, we
impose it not only on the foreigner but on the home
producer also. If we tax French wine and brandy and
Chinese tea, we also tax English beer and Irish whiskey.
There is hardly an article of drink in general use which
is not taxed, if we except water ; and, when we include
local rates under the general head of taxation, water
itself is sometimes taxed also.
I admit that when a duty is high enough to act as a
prohibition, it must in general be regarded as an evil.
Its tendency is to render certain articles dearer without
bringing in any compensation in the shape of an in-
creased revenue (accompanied with diminished taxation
in other directions). It compels the British consumer
to buy in a dearer instead of a cheaper market without
any counter-balancing advantage. I am only defend-
ing duties which limit, but do not prevent, the impor-
tation of foreign commodities, and which consequently
yield a revenue to the State. As regards these duties,
it seems to me that the Free Traders have hitherto
failed, not only to prove that they could be abolished
with advantage, but even to show that they could not
be increased with advantage. If the duty on foreign
Free Trade aiid Fair Trade, 7
wines was doubled, they would still continue to be
imported. No doubt the income derived from the duty
would not be doubled, because the quantity of wine im-
ported would be diminished ; but still, I think, it must
be admitted that an increased duty on wine would,
within certain limits, yield an increased revenue. In-
deed, it might have this effect, even if the actual returns
from the wine duty were not increased : for the dearness
of wine would induce many persons to substitute for
it home-made alcoholic drinks, which also pay high
duties ; and though the Customs might exhibit no in-
crease, the effects of the enhanced duty would be mani-
fested in an augmented return from the Excise. Now,
what is the stock argument against an increase in the
wine duty, or any other duty on imported articles ?
That if the tariffs were higher, the British consumer
would have to pay a higher price for imported 00m-
modities. Of course he would ; but the British con-
sumer is also a British tax-payer, and what he lost in
the former capacity might be made up to him — and
more than made up to him — in the latter. An in-
creased wine duty, which increased (whether directly or
indirectly) the general revenue of the country, would
lead, as a matter of course, to the remission of other
taxation. Wine-drinkers would probably lose by the
change ; persons who do not drink wine would prob-
ably gain ; but whether the English people as a whole
would gain or lose remains an open question. That
when tariffs are raised beyond a certain point they do
not increase the revenue must be conceded. But no
8 Free Trade and Fair Trade.
financier will admit that in England this point is even
approached at present. There is hardly an article of
import that could not be made to augment the national
revenue, either by imposing a duty or by increasing the
present duty, as the case may be.
I have hitherto assumed that everything that in-
creases the aggregate wealth of the nation should be
regarded as beneficial, and that everything that dimi-
nishes it should be considered as injurious ; and I have
merely contended that it has not been shown either that
the further reduction of our import duties would in-
crease the national wealth or that their augmentation
would diminish it. But Political Economy treats of the
distribution as well as of the production of wealth, and
it will, I think, be generally admitted by thoughtful
men that under certain circumstances an improved dis-
tribution of wealth may afford a full equivalent for a
diminished production or accumulation. If, for in-
stance, the tendency of Free Trade was to amass wealth
in the hands of a comparatively small number of per-
sons leaving the masses poorer than before, the fact
that it increased the aggregate wealth of the nation
would hardly afford a sufficient reason for its adoption.
It is, therefore, worthy of notice that protective duties
would alter very materially the distribution of wealth in
the country, and that consequently the Protectionist is
not refuted by proving that his system tends to reduce
the aggregate wealth of the nation. To take a simple
instance, let us consider the effect of imposing a duty on
imported corn, whether prohibitive or merely pro-
Free Trade a7id Fair Trade. g
ductive of a revenue. In either case, the importation of
foreign corn would be lessened, and we should in con-
sequence raise more corn at home. This would involve
the conversion of pasture lands into tillage with an
additional demand for agricultural labour ; and this
additional demand for agricultural labour would soon
extend to all other branches of unskilled labour. No
man who could earn half-a-crown a day as an agricul-
tural labourer would continue to work in a factory for
two shillings. That this increased value of unskilled
labour would be real, and not merely nominal, be-
comes evident when we consider that it would result
from an increased demand. The labourer would, no
doubt, have to pay higher for his food ; but that his
wages would be increased in more than the same pro-
portion is implied in the very notion of an increased
demand for labour. And that there would be an in-
creased demand for labour — or rather for unskilled
labour— is on Free Trade principles manifest. No doubt
corn-producing countries, like Russia and America,
would purchase less of the manufactures which we now
give them in exchange for corn, and this would proba-
bly lead to the closing of some of our factories and to
a diminished demand for factory hands. But the very
essence of the Free Trade argument is, that a larger
number of labourers would be required to raise the re-
quisite additional amount of corn in England than to
produce the manufactures which we now exchange for
the imported corn ; whence it necessarily follows that
there would be an increased demand for unskilled
lo Free Trade and Fair Trade,
labour accompanied by a real increase in wages. The
farmers would also gain by the change in the first in-
stance, and the landlords would gain by it ultimately.
Millers and corn-buyers would participate in the gain.
Other classes of the community, on the other hand, would
lose. The manufacturers, with a contracted market and
higher wages, would have to be contented with smaller
gains. Merchants would, in many instances, lose by
the falling off in foreign trade ; and as there is little
opening for skilled labour in agriculture, skilled labour-
ers would probably suffer, while their unskilled brethren
would gain. Persons with fixed incomes, or incomes
derived from fees which are determined by law or
custom, would likewise lose by the enhanced price of
provisions. This redistribution of wealth might be ad-
vantageous or the reverse, but it must be taken into
account in endeavouring to form a fair estimate of the
effects of Free Trade and Protection. When we have
said that the imposition of a duty on imported corn
w^ould lessen the aggregate wealth of the country, we
have stated the truth perhaps, but not by any means the
whole truth — not everything that should be considered
before deciding whether the tax in question would prove
beneficial or injurious to the country. Two further over-
sights, however, are involved in the argument which I
am now considering. The first of these consists in not
observing that a non-prohibitory duty on imported corn
may confer a larger benefit on the community by the
remission of other taxes than it takes from them by
increasing the price of corn. It may not, therefore.
Free Trade and Fair Trade. 1 1
diminish the aggregate national wealth at all, and may,
in fact, even increase it. The second oversight consists
in not considering the effect of our Poor Laws, owing to
which it may sometimes be of advantage to the nation
to employ labour in what would otherwise be unre-
munerative work. Thus, if an able-bodied pauper costs
the country eightpence a-day while he is being sup-
ported in idleness, it will be of advantage to the nation
to pay him a shilling a-day for doing sixpence worth of
work, provided that this employment enables him to
support himself. The public works or private works
supported by Government loans, which have often been
resorted to in Ireland when famine was impending, have
hardly ever proved remunerative. They were only de-
fensible on the ground that the loss to the country
would have been greater if all the paupers were sup-
ported by the Poor Rates. It was better to employ
labour on works, the annual return from which, when
completed, did not exceed 2 per cent, of the outlay,
than to maintain the labouring classes in idleness at the
public expense. The proposition that it is best for the
country that every commodity should be produced where
it can be produced most cheaply only possesses abso-
lute truth where there is no pauperism, or rather no
able-bodied paupers. In other cases it maybe better to
employ paupers in unremunerative labour than to sup-
port them and leave them unemployed. The labour of
our convicts probably never suffices to pay for their
maintenance ; but, even in a pecuniary point of view, it
is better to compel them to work than to leave them
1 2 Free Trade and Fair Trade.
idle. But though the nation might sometimes gain by
the employment of unremunerative labour (by which I
mean labour which produces less than the labourer con-
sumes), it does not follow that all classes of the com-
munity would gain. The persons who would lose by an
increase in the price of corn for the most part contribute
very little towards the Poor Rate, and their private
charities are not very extensive. They would not,
therefore, feel the advantages resulting from the di-
minution of pauperism, and would, no doubt, cry out
against the increased price of corn as an unmixed evil.
But it is plain that, whether the evil or the good would
preponderate, the character of an unmixed evil does not
belong to it.
And, moreover, though the advocates of Free Trade
usually overlook the distribution of wealth altogether in
their reasonings, there is one instance in which they
fully recognise its importance. In the case which
I have been considering — that of a duty on imported
corn — they seem to think it a sufficient answer to the
Protectionist to say that the benefit derived from the
increased value of the land would ultimately be ab-
sorbed by the landlords. But if the only question to be
considered is the effect of the proposed enactment on
the aggregate wealth of the community, is not a shilling
in the pocket of the landlord of equal value with a shil-
ling in the pocket of the labourer, or (to come nearer to
the truth) with a shilling in the pocket of the merchant
or manufacturer ? Moreover, if this is the only argu-
ment against the re-enactment of the Corn Laws, it is
Free Trade and Fair Trade. 1 3
evident that the evil might be remedied by the adoption
of a different system of land tenure, as has indeed been
done in Ireland. Formerly in that country (Ulster, per-
haps, excepted) the rent was supposed to represent the
full letting value of the land, though some landlords al-
lowed their tenants to hold it at a somewhat lower rate.*
But now the tenant's interest in the land is assumed to
have in all instances a saleable value, independent of
any improvements which he or his predecessors may
have made, so that in fact the landlord and tenant are
co-owners of the soil. The proportion in which any
future augmentation of value is to be divided between
them will depend on the unguided decision of a tribunal
the composition of which will always be largely influ-
enced by political motives ; and as the tenants possess
more political power than the landlord, it is probable
that the Government of the day will seek on all occa-
sions to give the occupier the whole benefit of the * un-
earned increment of the land.' f
* Some of the statements made on this subject in treatises on Political
Economy are, however, incorrect. It never was the practice, within my recol-
lection, to fix a rent which the tenant could not possibly pay. Such a system
might, indeed, have the two -fold advantage (to the landlord) of enabling him
to extract the utmost penny in good years as well as in bad ones, and of
enabling him to get rid of his tenant when he chose to do so. But to take such
a case as is related by Mr. Mill, of land worth ^^50 a-year being let for ;^350,
it is evident that such a letting could not be more beneficial to the landlord
than a letting at ;^8o or ;^ioo. Such extremely extravagant bidding could
only suggest doubts as to the sanity or solvency of the tenant. If the com-
petition was really of this character the highest bidder would probably be the
least desirable tenant of the entire number. For my own part (although Mr.
Mill cites his authority), I disbelieve the story altogether.
t Many speakers and writers, in considering the effect of the decisions
under the Irish Land Act, have forgotten that formerly the landlord was
14 Free Trade and Fair Trade,
Another serious oversight on the part of the Free
Traders consists in descanting on the advantages of
universal Free Trade without observing that it is not in
our power to render Free Trade universal. International
trade or barter consists in the interchange of two com-
modities, one of which is produced in each country. As
this interchange can only take place with the consent of
both countries, each of them possess the right of impos-
ing a tax or duty as a condition of permitting it to take
place. It might be better for both countries to forego
this right, and to allow the interchange to take place
freely ; but the practical question is, whether it is for
our advantage to permit it to take place freely, so far
as we are concerned, though the other country insists
upon taxing it. For that neither our arguments nor
our example will induce other countries to forego their
right of taxation has been proved by the experience of
more than thirty-five years. The question, then, is as
follows : — Is one-sided Free Trade advantageous to this
country when complete freedom of trade — freedom at
both ends — is impracticable ? The advocates of Free
Trade contend that it is ; but much of the plausibility
entitled to exact the full competition -rent, whereas the judicial rent under
the Land Act is fixed on the assumption that the holding — when held at that
rent — has in all cases a saleable value which the Commission fixes whenever
it is required to do so. Thus, if the full competition-rent is £io a-year, and
the saleable value of the holding is fixed at ,^50, the Land Court (taking the
value of money at 5 per cent.) will fix the judicial rent at £"] \os. The tenant
can (if the Court has fixed the amount correctly) on the next day either sublet
at ;^io a-year, or sell his interest for ;i^5o. Yet the landlords have been
charged with oppression and robbery merely because the judicial rent is less
than that previously paid.
Free Trade and Fair Trade, 1 5
of their case results from confounding universal Free
Trade with a trade which is free on one side only.
The principal argument in favour of this one-sided
Free Trade is in substance as follows : — Even if we can-
not induce other countries to buy our products on fair
terms, we should try to buy their products as cheaply
as we can. But all taxes on foreign products will raise
their price. If we tax them, we shall have to pay more
for them. In retaliation for being compelled to sell at
a low price, are we to resolve to buy at a high one ? It
would be best for us indeed if we were free both to buy
and to sell — to buy in the cheapest market and to sell in
the dearest ; but if that cannot be, freedom of purchase
alone is an important advantage. Let us buy in the
cheapest market, even if we cannot sell our goods to as
much advantage as we had reason to expect.
Now, it seems to me that in this reasoning the dis-
tinction between the cost of imported commodities to
the British public and their cost to the individual Bri-
tish consumer is entirely overlooked. Assuming that
the duty is not prohibitive — that the foreign commodity
continues to be imported, and that the duty on importa-
tion is paid— the cost to the country is less than the cost
to the consumer by the whole amount of the net revenue
which the duty produces ; and as the consumer is al-
most always a tax-payer he obtains, as already ob-
served, in that capacity a benefit at least equal to the
loss he sustains in his capacity of consumer. If we im-
posed a duty on American corn, not high enough to act
1 6 Free Trade and Fair Trade.
as a prohibition, does anyone imagine that the price
received by the American producer would be increased ?
But if not, the increased price which the English con-
sumer would pay for American corn simply represents
taxation, every penny of which would be paid into our
national treasury to the relief of our tax-payers.* But
the fact is, that under ordinary circumstances the
American farmer would have to sell his corn at a lower
price, and consequently England would purchase it at a
reduced cost. For the increased price paid by the con-
sumer would lessen the demand, and the diminution of
the demand would lead to a fall in the price, meaning
of course the price received by the foreign producer. In
the particular case of corn there would be a counter-
vailing disadvantage. Its increased price would lead
to raising an additional quantity of corn in this country
at a greater cost than that for which (in the absence
of the duty) we could have purchased American corn.
Whether we would gain or lose on the whole by this
change would depend on special circumstances ; but the
argument is at all events wholly inapplicable to manu-
factures, where increased production at home does not
imply a proportionally larger expenditure of labour.
Buy in the cheapest market is undoubtedly a good prin-
ciple, but it is subject to two qualifications. The first is,
* I need not except the expenses of collection. We could remit other
taxes, and thus obtain an equivalent reduction in the cost of collecting them.
Possibly, however, an opponent would say that a portion of the increased
price represents not taxation but rent. Be it so. The rent goes into the
pockets of British subjects, and adds to the general wealth of the country.
Free Trade and Fair Trade. 1 7
that we must regard the cheapness to the nation which
buys and not the cheapness to the individual consumer.
The second is that, by the cheapest market, we must
understand that which is naturally the cheapest, not
that which has been rendered the cheapest by artificial
means, such as the imposition or remission of duties, or
the granting of bounties. Supposing that, when free of
toll, potatoes could be sold for fourpence per pound in
Galway, and for fivepence per pound in Dublin, we may
render Galway the dearer market by imposing a duty of
twopence per pound on all potatoes sold there ; but, for
economical purposes, Galway must still be regarded as
the cheaper market — as that in which, apart from our
own artificial regulations, it would be most advanta-
geous to buy potatoes. And when we speak of being
able to purchase corn or any other commodity more
cheaply in the foreign market, we should consider whe-
ther this greater cheapness may not be owing to the
rates and taxes which the home producer has to bear,
and whether by a remission of some of the existing bur-
dens on land the English farmer might not be enabled
to compete with, and even to undersell, the foreigner.
There is, however, another patent defect in the argument
w^hich I am now examining. Did anyone ever urge
the cheapness of a market as a reason for exempting it
from tolls ? Or is it not evident that it is the cheapest
market which is capable of bearing the heaviest tolls ?
If so, the cheapness of the foreign market is no reason
for exempting foreign commodities from duty, but rather
affords evidence that they are capable of bearing higher
c
1 8 Free Trade and Fair Trade,
duties than our home-made articles. Again, it is said
that all our imports must be paid for in exports, and
that therefore the countries which supply us with im-
ports must take our exports in exchange, no matter
how high their tariffs may be. True, we cannot procure
imports without paying for them ; but is it therefore of
no consequence to us what price we have to pay ? If a
foreign country, by imposing a duty on English cloth,
compels us to give ten yards of cloth in exchange for
the same amount of corn that we formerly purchased for
nine yards, is the exchange as advantageous to us as
before ? It may be said, indeed, that if the trade was not
of some advantage to us it would not go on ; for traffic
will only take place when both parties are gainers,
although one party may gain more by it than the other.
But the question is not whether the trade is advan-
tageous, but whether it is more advantageous to us than
it would be if we imposed a duty on it. That, in most
cases, we could impose a duty without stopping the
trade altogether must be admitted ; and to say that the
trade as it exists is beneficial to us is no answer to the
question whether it could not be rendered more bene-
ficial by the imposition of a duty. The argument, more-
over, is often gravely put forward as if the price which
we received for our goods was of no consequence so
long as we succeeded in selling them. I may add that
the existence of a trade does not in reality prove that the
country gains anything by'it. It only proves that cer-
tain classes do so ; for if we allow the interchange to
take place freely it will go on so long as any class of
Free Trade and Fair Trade, 1 9
the community profits by it.* Those who make a profit
by buying corn in Russia or America, and selling it
here, seldom bear any portion of the loss occasioned by
throwing our agricultural labourers out of employment.
The existence of the Slave Trade will hardly be relied
on as affording evidence that the trade is beneficial to
the country which supplies the slaves, or even to the
country which purchases them. It is beneficial to one
powerful class, and that in the absence of legal restric-
tions is sufficient to insure its continuance. But it is
said that if we increase our tariffs other countries will
do the same, and we shall eventually lose more by the
increase of their tariffs than we shall gain by the in-
crease of our own. Seeing, however, that other countries
have not followed our example in lowering our tariffs,
they are hardly likely to follow it in increasing them ;
nor could they regard the increase on our part as an act
of hostility towards them without confessing that they
had previously been guilty of similar acts of hostility
towards us. But assuming that other countries did
enter into such a contest with us, need we fear the
issue ? I think not.
In the first place, the value of our imports largely
exceeds that of our exports, and consequently, unless
* In stock-jobbing (which is so largely practised by persons who are not
stock-brokers), it is plain that taken together the buyer and seller must in
the long run be at the loss of the stock-broker's fees. An extensive inter-
change is thus carried on at a net loss to the parties engaged in it. The
same observation applies to all kinds of betting agencies. And speculative
purchases of foreign commodities are by no means unfrequent. Men often
engage in speculations which must on the aggregate involve a loss to those
engaged in them, because individuals may gain.
C 2
20 Free Trade and Fair Trade,
these proportions were considerably altered by the rival
impositions, we would have the power of taxing an
amount of foreign products much larger than the amount
of our products which could be taxed by foreigners. In
the second place, our present duties being unusually
moderate, would bear more augmentation (without stop-
ping the trade) than those of other countries. In the
third place, our very extensive colonies afford us means
both of procuring the required imports, and of disposing
of our exports, which other countries do not possess.
There is, in fact, hardly an article of general consump-
tion in this country which cannot be produced at no
very extravagant rate either in Great Britain or in some
of her colonies. Lastly, in such a contest the superior
wealth of this country could hardly fail to tell. Ulti-
mately, both parties would probably agree to a simul-
taneous reduction of their tariffs, but the reduction on
the part of the foreigners would be much larger than
ours. We would be in the position of the successful
party in a strike or lock-out, and could recompense our-
selves for our losses in the contest by increased gains
after its termination. But in order to lead to this result,
the rise in our tariff should be general. If we abstained
from taxing * the food of the people ' — foreign corn — or
the raw materials of our manufactures, we should be
fighting with one hand tied behind our back. A tem-
porary increase in the price of food and of most articles
of manufacture should be submitted to, while the market
for the latter would be temporarily contracted with con-
siderable loss to our manufacturers and merchants.
Free Trade mid Fair Trade, 2 1
Every strike and lock-out involves a present loss to the
parties engaged in it ; and to this rule an international
commercial contest would undoubtedly prove no excep-
tion. But as long as our tariff is not higher than those
of other countries, we shall have done nothing to pro-
voke such a contest, while if we should be forced into it,
the prospects of success would be in our favour.*
Another stock argument in favour of Free Trade is
the great prosperity which the country has enjoyed under
it. That other countries have prospered under the sys-
tems of Fair Trade, and even of Protection, is sufficiently
obvious ; but I think the true answer to this argument
is — Ireland. Not that, in a certain sense, Ireland has
not prospered under the system of Free Trade ; for, by
getting rid of her surplus population, increased comforts
have been secured to those that remain ; and of late
years the smaller tenant-farmers have been enriched at
the cost of the Church and of the landlords. But the
state of Ireland under the system of Free Trade pre-
sents a striking contrast to that of Great Britain under
the same system. Her population has diminished by
at least three millions, or more than one-third of the
whole. Almost every branch of industry and manufac-
* With a higher tariff, too, we should be in a more favourable position for
negotiating commercial treaties with other countries. If the revenues which
England and France derived from the trade between them were nearly equal
in amount, an agreement to surrender both would not be improbable. But
so long as one country derives a larger revenue from the trade than the other,
the former will not be willing to forego its advantage. Our position as re-
gards commercial treaties is not a strong one, for the simple reason that we
have too little to give up in return for the concessions which we ask from the
other side.
2 2 Free Trade and Fair Trade.
ture has advanced in Great Britain, and the Free Traders
claim the credit of the improvement ; but where is the
branch of industry or manufacture in Ireland that has
not declined during the very same interval ? Her
exports of whiskey and porter have indeed increased,
but it so happens that these exceptional articles are
highly taxed, which the declining manufactures are not.
Thousands of acres of tillage have been converted into
pasture every year, and yet the population remains as
purely agricultural as ever. If a Liberal Ministry de-
clared by its Land Act of i860 that the relation of
landlord and tenant should thenceforward be deemed to
depend not on tenure but on the contract of the parties,
it has found itself compelled to retract this principle
(which was not consistently carried out even in the Act
of i860) in detail, until freedom of contract as regards
land has almost vanished, and the contract of tenancy
is no longer made by the interested parties, but partly by
Act of Parliament and partly by a body of Government
officials. If Free Trade is rightly credited with the in-
creased population of England and Scotland, with the
growth of arts and manufactures and of every branch
of trade, and with the general accumulation of wealth in
those countries, how is it that almost everything is re-
versed in Ireland under the very same system ? It is idle
to speak of oppressive laws, of an alien Church, of rack-
renting, or of absenteeism. These evils, so far as they
exist at all, existed in a much more aggravated form
before the Repeal of the Corn Laws ; and we ought, on
the Free Trade theory, to find in Ireland since then, not
Free Trade and Fair Trade, 23
only the progress due to Free Trade, but the further
progress due to the removal or mitigation of those evils.
Add to this, too, that since the Repeal of the Corn Laws
there has been no inconsiderable influx of capital into
Ireland — not only of English and Scotch capital, but of
the earnings of Irish settlers in America and Australia,
and of Irish labourers on the other side of the Channel.
Why then are the vaunted benefits of Free Trade totally
invisible in Ireland ? If any satisfactory answer can be
given to this question, it will be one not complimentary
to recent Liberal legislation. The true answer, how-
ever, I apprehend is, that the prosperity of England and
Scotland has been as little due to Free Trade as the
misfortunes of Ireland have been ; and that, had Protec-
tion continued in force, the condition of both countries
would be pretty much as at present — perhaps a little
better, perhaps a little worse.
One more argument may be glanced at in conclusion.
It is, that taxes on imported goods increase the price by
more than the amount of the tax, since the merchant
who pays the duty will not sell except at a price that
leaves him a profit on the duty as well as on the original
purchase-money. If the merchant is a British subject,
it is evident that the aggregate wealth of the country is
unaffected by this increased price, and the argument,
moreover, is as applicable to taxes on home-made com-
modities as to taxes on imported goods. But the argu-
ment involves a further fallacy. If the merchant can
sell the goods as soon as he pays the tax, he will not
require any profit on it. He only requires a profit
24 Free Trade and Fair Trade,
because he has to wait for some time before he is able
to sell, or rather to obtain payment. The ultimate pur-
chaser then pays more than the tax undoubtedly, but he
does not pay it until long after the tax has been levied
— until after he has enjoyed the protection which the
tax procured, and even perhaps received a part of the
tax himself as interest on funded capital, or in payment
of his salary as a Government official. A deferred pay-
ment must always be greater when it is made, but many
a tax-payer would prefer to pay the tax with interest
added at the end of a year, rather than to pay it without in-
terest now. Take the simple case of a keg of new whiskey.
If I buy it immediately after the payment of the tax, I
can buy it for what may be called the natural price, with
the duty added. But I prefer not to drink it until it is
seven or ten years old ; and instead of buying it new
and storing it in my cellar until it has attained the re-
quired age, I probably choose to buy old whiskey from
a grocer, and to pay him seven or ten years' interest on
the duty, as well as on the natural price. I thus pay
much more than the duty, but I pay it not only after the
time fixed for payment, but after I have enjoyed the
benefit of the tax. And that this deferred payment is,
in my opinion, a full equivalent for the higher price
is evident, since otherwise I would have bought new
whiskey, and stored it for myself till it was ready for
use.
Free Trade and Fair Trade, 25
Note on the Excess of Imports over Exports.
In the foregoing remarks on Free Trade and Fair
Trade I have omitted all reference to the excess of our
Imports over our Exports, because I believe that until it
has been traced to its proper source it does not bear on
the question of Free Trade and Protection at all. The
phenomenon is in fact one which may arise from several
different causes, some indicative of national prosperity
and others of the very reverse. In the first place, it
may be noted that the same phenomenon may present
itself in the case of both of the countries which are
concerned in any particular branch of traffic. It is
quite possible that the value of our Imports from Aus-
tralia might be ;^ 25,000,000, and that of our Exports
;^ 20,000,000, while Australian statistics exhibited the very
same figures. For, with the addition of freight, interest,
and insurance, the goods which were worth ;g 20,000,000
when they left our shores might be worth ;^ 25,000,000
when they reached Australia ; while the Australian goods,
which are worth ^25,000,000 when they arrive here,
may have been worth no more than ^20,000,000 when
they were shipped at the antipodes. The present ex-
cess of our Imports over our Exports on the whole,
however, is too large to be accounted for in this manner,
and other explanations must therefore be sought for.
Some people seem to imagine that we must pay the
difference in money — that is, in precious metals. But
when precious metals are included in the returns of Ex-
26 Free Trade arid Fair Trade.
ports and Imports this explanation is evidently incor-
rect ; while, even if they vi^ere excluded, it is certain that
the precious metals are not being exported at a rate
capable of accounting for the difference. That such an
exportation of precious metals is not desirable may, I
think, be conceded ; for, having no great mines of gold
and silver in this country, we get our precious metals
from abroad, and unless when an oversupply is acciden-
tally received we only import enough to supply our own
wants. If we reduced this quantity by exportation it
would, I think, be a symptom of increasing poverty — a
proof that we could not afford to use so much of these
metals as we were using before,* Even from this point of
view, however, as we could not restore a man to wealth
by preventing him from disposing of his gold and silver
plate or parting with the money in his purse, so we
cannot restore a country to prosperity by preventing
it from parting wdth its gold and silver. It is clear,
however, that we are not paying for the difference in
value between our Imports and our Exports in cash ;
but one cause of the excess of the former may be that
we are running in debt, or rather bringing over foreign
capital for investment. If foreign capital was being in-
vested in this country there would naturally be a large
excess of Imports over Exports while the investment
was going on. If ten millions of French capital was
invested in this country last year, the Imports from
France would increase relatively to the Exports by
* The same effect, however, might be produced by a larger circulation of
paper money.
■OKIVBHSITT]
Free Trade ^^^^^Cft^fJ^'^K^^^ 27
ten millions (assuming no French capital to have in-
vested during the preceding year). But this invest-
ment of foreign capital again might arise from different
causes. It might arise from the fact that England was
in so prosperous a condition as to afford the best field
for investment ; or it might be that our own capitalists
were in such difficulties that they were willing to bor-
row foreign capital on almost any terms. However,
there are many other possible explanations of the same
excess. It might arise from the interest of English
capital aready invested in foreign countries. This,
again, is rather a mixed symptom. Foreign invest-
ments of English capital may have arisen either from
its superabundance or from the difficulty of obtaining
any profitable method of employing it at home. Of
course, while this investment of English capital abroad
was in progress, there would be a relative excess of
Exports over Imports, but after the investments had
ceased, and while the investors were simply drawing the
interest or dividends on the capital invested abroad, this
condition of things would be reversed, and the Imports
would exceed the Exports in more than the ordinary
proportion. This excess, however, would be still fur-
ther augmented when the English capitalists were re-
calling a portion of their foreign investments. This
latter process would have exactly the same effect as the
investment of foreign capital in England, and it might
be caused either by the abundant opportunities of effect-
ing good investments in England or by the fact that the
English capitalist found his home capital so reduced
28 Free Trade and Fair Trade,
that he was compelled to recall what he had invested
elsewhere.
The argument from the excess of Imports over Ex-
ports is thus of very little force either way. But, on the
whole, I think the present large excess cannot be re-
garded as either in itself beneficial or as a symptom of
prosperity. It cannot be accounted by the freight, in-
surance, and interest on the goods exported and im-
ported ; nor do I think it is fully explained even when
the interest and dividends on foreign investments are
added. Even if this explanation was sufficient, it would
imply that foreign investments of English capital had
ceased, and as this cessation does not arise from the
greater abundance of profitable investments at home, it
indicates a diminution of national prosperity. But to
explain such an excess of Imports over Exports, as
we actually experience, I think we must admit that a
transfer of capital from foreign countries to England is,
or at least recently was, in progress ; and this, I be-
lieve, arises from English investors recalling their
foreign capital in order to fill up the gaps in their home
capital which have been caused by the depression of
trade. This undoubtedly is not an evil in itself, but
rather a mode of mitigating existing evils ; but then it
is a symptom not of prosperity but of depression. The
advantages or disadvantages of international trade,
however, depend much more on the quantity than on
the value of the goods which are exchanged. Suppose
that our trade with China is carried on by an exchange
of cotton goods for tea, we might in consequence of a
Free Trade and Fair Trade, 29
bad tea crop have to give twice as much cotton for the
same quantity of tea in 1885 as in 1884, and yet the
value of the Imports and Exports might continue to
bear exactly the same proportion to each other as
before. Moreover, looking merely at the pecuniary
values, both Exports and Imports would probably ap-
pear to have increased, though in reality the former
had done so while the latter had fallen off. There
would be nothing in the figures to indicate that the
terms of the exchange had become less favourable to
us ; and the effect in question might be produced not
only by a bad tea crop but by the Chinese Government
imposing a heavy duty on the exportation of tea or on
the importation of cotton. It is idle to suppose that
foreign countries would sell us ;£ 400,000,000 worth of
their goods for ^250,000,000 worth of ours. Provided
that we select the proper place and time for estimating
values,* the value of what we sell to other countries
must always be equal to the value of what we buy from
them ; and whenever this rule is apparently departed
from, one or other of the contracting parties is either in-
curring or paying off a debt, or else paying or receiving
the interest on a debt. As long as the trade goes on,
no Export or Import duties will affect the equality of
values ; but these duties may most seriously influence
the proportions in which the productions of one country
* The place and time should be taken during the transit. Thus, for Eng-
land and America, the middle of the ocean would probably be the place of
equal values. If there was no indirect trade between the countries, the value
of Imports and Exports would here be equal, supposing that no debts had
been, or were being, incurred on either side.
30 Free Trade and Fair Trade.
will exchange for those of another. The important
question is not, Is the price of what we are getting
equal to the price of that which we are giving for it ?
for, subject to the qualification already referred to, this
must always be the case. It is rather, Are we getting a
fair price for what we sell and procuring what we buy at
a fair price ?
Reciprocity, let me add, is a different thing from reta-
liation. The latter aims simply at injuring other coun-
tries, who have injured us by their restrictions. The
former aims at deriving as much revenue as we can
from the products of those other countries, which try to
derive as much revenue as they can from our products.
It simply lays down that, in regulating our system of
taxation, we are to have regard to the conduct of other
countries towards us — to avoid pressing on those which
treat us liberally, and to throw the weight of our Im-
port Duties on those which have adopted tariffs hostile
towards us. But I do not contemplate either retalia-
tion or reciprocity as permanent states. They are
merely modes of bringing other countries to their senses
and arriving at a settlement of difficulties. War, as a
permanent state, is eminently undesirable, but it is
sometimes necessary as a means to an end. It is the
same thing with a war of tariffs. It is only defensible
as a means to an end. The war of tariffs, however,
already exists. Other nations have by their tariffs de-
clared war on us. Are we to submit or to resist ? When
some distant and puny chieftain makes war on us, we
would often suffer less by allowing him to do us all the
Free Trade and Fair Trade, 3 1
mischief in his power than by sending an expedition
against him ; but as a rule we send the expedition never-
theless, and probably if we did not, we should soon have
a dozen petty chieftains on our hands instead of one. I
see no reason why the same rule should not be applied
to hostile tariffs. If the foreign State which adopts
them denies that they are hostile, it cannot charge us
with hostility in adopting a similar course ; and if it
confesses that they are hostile, how can it quarrel with
us for meeting hostility by hostility ? If we leave food-
producing countries, for instance, under the impression
that we are so anxious to procure cheap food that we
will allow them to tax our exports to any extent without
imposing any tax on the food w^hich we import from
them, can we feel surprised at finding that our exports
are heavily taxed ? And I doubt if the taxation would
be as heavy, if these powers believed that there was any
serious danger of retaliation.
THE
PRINCIPLE OF POPULATION
'T^HE theory of Malthus has obtained such general
acceptance among those who aspire to be re-
garded as authorities in Political Economy, that the
man who ventures to oppose it is frequently looked upon
as totally ignorant of that science, if not as incapable of
reasoning. And yet the opponents of the theory are
perhaps as numerous as ever, while outside the charmed
circle of Political Economists the doctrine in question
has had hardly any influence. It is, moreover, worthy of
note that the defence of the theory has often begun and
ended with 'You have misunderstood us.' When any
theory is generally misunderstood, we may suspect that
it has not been stated with sufficient clearness and pre-
cision. And it will not be difficult, I think, to show that
this is the case with the Malthusian doctrine.
Succinctly stated, this doctrine is, that population has
a tendency to increase faster than the means of subsist-
ence. This proposition appears to be resolvable into
three : viz., population has a tendency to increase ; the
means of subsistence have a tendency to increase ; and
the former tendency is stronger than the latter. There
The Principle of Population. 2iZ
is, however, no reason to think that the means of sub-
sistence have in themselves any tendency to increase or
to diminish — that the earth is becoming either more or
less suited to the wants of man independently of the
results of human labour expended on it.* The second
and third propositions, therefore, resolve themselves into
the assertion that equal increments of labour applied to
land do not produce equal increments in the produce of
the soil. This proposition, together with the tendency
of the population to increase, constitutes the essence of
the theory of Malthus. The two questions to be con-
sidered therefore are, first, Has population a tendency
to increase ? and second, Is it true that equal increments
of labour applied to the soil must produce a constantly
diminishing return ?
The first of these questions is stated with a total want
of scientific precision. Population has no tendency to
increase or to diminish, or to do anything else, for the
simple reason that population is not a cause but an,
effect. There are causes which tend to increase the
population no doubt; in fact every birth increases it.
But there are also causes which tend to diminish the
population ; and in fact every death diminishes it. The
true causes at work in the case are births and deaths ; or
rather the causes which produce or prevent births, and
the causes which produce and prevent deaths. In parti-
cular countries, though not as regards the whole globe,
* There are probably causes in operation which will ultimately tend to
diminish the means of subsistence, but up to the present I doubt if their effects
are appreciable.
34 l^he Principle of Population,
the causes which produce or prevent emigration or im-
migration must also be considered. We may speak if
we choose of either of these sets of causes as counter-
acting the other ; but the fact is that both of them are
equally positive in their character. Deaths do not simply
prevent or retard births : they carry off the population
as positively as births produce it. If births continued
while deaths ceased the earth would soon be over-popu-
lated ; but if deaths continued while births ceased the
human race would soon become extinct. There are thus
two counter-tendencies, one of which if unchecked would
increase the population beyond all reasonable limits,
and the other of which if unchecked would soon reduce
it to absolute zero. But when it is said that one of these
sets of causes tends to prevail over the other, what is the
meaning of the assertion ? Is it meant that it actually
prevails, and that the population of the earth is in fact
increasing ? The Malthusians repudiate this interpreta-
tion of their doctrine, and it is plain that as a matter of
fact the population is increasing in some places and
diminishing in others ; and even in the same locality the
aborigines are often diminishing in number while the
foreign settlers are increasing. But if the actual preva-
lence of one set of causes over the other is not asserted,
I can attach but two other meanings to the fundamental
thesis of Malthusianism, viz., either that the population
does in fact increase when man is in what may be termed
his normal condition, or that the tendency to increase is
becoming stronger with the lapse of time, so that it may
be expected ultimately to become everywhere prevalent.
The Principle of Population, 35
The former, I think, comes nearest to the real meaning
of the Malthusian. He selects some country in which
the rate of increase is very rapid as representing the
normal condition of the human race. He infers that
man in his normal state has a tendency to increase with
at least that degree of rapidity ; and then he shows that,
if this rate of increase continued, the population would
soon be in excess of the means of existence.
The people of North America, and particularly of
the United States, are usually referred to as representing
this normal state of society, and as exhibiting the rate
of increase which would be realised if all mankind were
placed in the same conditions. Here, independently of
immigration, the population — or rather the white popu-
lation — doubles itself in every thirty years ; and in parti-
cular districts this thirty years is said to be narrowed to
fifteen. Having shown that the human race can increase
at this rate, it is inferred that if all hindrances were
removed it would do so. The first question, therefore,
that occurs to us is whether North America can be taken
as representing the normal state of mankind. Would it
be possible in fact for all mankind to live under the con-
ditions which are there realised ? The answer must, I
think, be in the negative. In the first place the healthi-
ness of the climate is above the average. I think it may
be fairly doubted whether the rate of increase would even
approach the actual figure if the ravages of yellow fever
extended to the whole country instead of being confined
to some, of the southern districts. Then the occupations
of the people are unusually healthy. They are mainly
D 2
36 The Principle of Population.
agricultural, and manufacturing or mining industry can
never be carried on without a larger percentage of deaths
than occurs in the agricultural and rural districts. Fur-
ther, there is such a demand for labour, and children
become helpful at so early an age, that they are looked
upon as a source of profit rather than as a burden ; and
(as even Malthusians have remarked) a widow with seve-
ral children is regarded as possessing a fortune and is
sought after accordingly. Where children are a source
of profit, births will be considerably in excess of the
average. For these and other reasons, I do not think
the people of North America can be regarded as re-
presenting the human race in general in relation
to the present question. But there is a special rea-
son why the Malthusian should not so regard them.
It will, I think, scarcely be denied that since the
first settlement of the United States the means of sub-
sistence have increased more rapidly than the popu-
lation. This, say the Malthusians, is quite consistent
with our theory. Notwithstanding the general tendency
of population to increase more rapidly than the means
of subsistence, we never denied that under special cir-
cumstances and within certain limits the means of sub-
sistence might increase faster than the population. True :
but how can you take as the type of the normal con-
dition of mankind a country in which the means of
subsistence is increasing more rapidly than the popula-
tion ? Is not such a state of things, on your own show-
ing, altogether exceptional ? But if we are to exclude
countries in which this exceptional condition prevails,
The Principle of Population, 37
we must exclude not only North America but England,
and almost every other country in which any consider-
able increase of population has been established by
statistics. In fact, the world may at present be almost
divided into countries in which the means of sub-
sistence is increasing quite as fast as the population,
and countries in which we have no proof that the popu-
lation is increasing at all. But the state of the former
countries is, according to the Malthusian, exceptional,
while no evidence in favour of his theory can be derived
from the latter.
An universal tendency to an increase in the popula-
tion has not, in my opinion, been established. The
proof hardly extends beyond the Caucasian race and
the temperate zone. In numerous instances, districts
once populous are now lying almost deserted without
apparently any deterioration of the soil. True, there
have been wars, pestilences, and famines in these dis-
tricts ; but the Malthusians assert that these calamities
only bring the principle of population into full swing,
and that in the natural course of things all traces of
them are obliterated in a comparatively short time — the
country having by that time again peopled up to the
means of subsistence. The modern Egyptians, though
behind the Europeans in civilization, are probably quite
as civilized as the inhabitants of Thebes, with its hundred
gates. The modern Turk is as civilized as the Ninevite
or Babylonian of old. The Governments of modern
times are probably not more oppressive and exacting
than their predecessors. Why, then, do not the valleys
38 The Principle of Population,
of the Nile, the Euphrates, anc the Tigris teem with
their former millions of inhabitants ? But we have a
very striking case in point in the Sandwich Islands.
The present population is believed to be about one-
fourth of what it was when Captain Cook discovered
them a century ago. There have been no great wars,
famines, or pestilences since then, and no extensive
emigration. The population seems to be dying out
from mere paucity of births — a cause which apparently
does not affect European settlers in the very same
locality. Had the Sandwich Isl^ds been the first
country in which a census was taken at regular inter-
vals, we should probably have had a school of Political
Economists contending that the Human race had a ten-
dency to die out, and that the wisest legislation could
do no more than postpone the catastrophe. That some
races have a greater tendency to multiply than others
cannot, I think, be doubted, however the fact may be
explained. The slaughter of successive hosts of bar-
barians by the Romans had little or no effect in pre-
venting the advent of fresh invaders from the very
same quarters ; while there are other instances in
which a slaughter and devastation, apparently smaller
in amount, has permanently reduced the population, or
at least where the gap thus made in it has not yet been
filled up.
I now turn to the second element of the theory —
namely, that the produce of the soil does not tend to
increase in proportion to the amount of labour bestowed
on it. Here it must, of course, be admitted that the soil
The Principle of Population, 39
of the world is not capable of producing an indefinite
amount of food, and that, therefore, if the human race
continued to increase indefinitely, a point would ulti-
mately be reached at which the produce of the soil would
no longer suffice to supply the wants of the population.
But no one probably imagines that we are as yet even
approaching this state of things, and it is possible that
however rapid the increase of the human race might be,
some physical change in the condition of our planet
would render it incapable of supporting human life
before this final Mal^usian period was arrived at. But
it is one thing to sa^ that equal increments of labour
must ultimately fail to produce equal increments in the
means of subsistence, ^nd another thing to say that
they do not do so at present. No one, in my opinion,
has proved that the point at which equal increments of
labour will fail to produce equal increments of food has
as yet been reached in the greater part of the world,
and until then the population can have no general ten-
dency to increase faster than the means of subsistence
(unless, indeed, on the assumption of increased idle-
ness). That two men on a desolate island could in
general procure more than double the quantity of food
that one man could procure, will, I think, be conceded ;
and the same thing holds good for considerably larger
numbers. The full advantages of the division of labourZL.
can only be experienced where there is a pretty dense
population. Every advance in the art of agriculture^
leads to increased production from a given quantity of
labour. How vast, for instance, was the improvement
40 The Pririciple of Population,
effected when horses and cattle were first trained to
take part in agricultural operations ; and the same im-
. provement goes on with every new agricultural imple-
ment that is invented. Even improvements in other
manufactures are here beneficial; for by lessening the
amount of labour required for manufacturing operations,
they allow a larger proportion of the total labour of the
country to be applied to the cultivation of the soil. The
arts of agriculture are advancing, and are likely to con-
tinue to advance during a period of which no one can
foresee the end, and the effect of every advance is to in-
crease the amount of food which can be produced by a
given quantity of labour. But it is said that when we
require to raise more food, in order to meet the wants
of an increasing population, we must either take less
fertile land into cultivation, or cultivate fertile land
beyond the point where equal increments of labour will
produce equal increments of food. Strictly speaking,
\. this can only be true where the art of agriculture is sta-
tionary. Where it is advancing, the wants of an in-
creasing population can often be supplied with little or
no increase in the amount of labour devoted to agri-
culture ; and railways, canals, &c., have a similar effect
in enabling food to be transferred with less labour from
the place where it is produced to the place where it is
consumed. But even apart from this, the truth of the
proposition is questionable; or rather, as elsewhere re-
marked, by ' fertile land ' the Political Economist does
not mean the same thing with the vulgar. He regards
for example, the situation of the land as an element in
The Principle of Population, 41
its fertility, land adjoining a town being considered
more fertile than land of the same quality in a rural
district, because its produce can be conveyed to the
consumers at less expense and with less deterioration.
Understanding * fertile lands ' in this sense, it is evident
that railways, canals, and other means of communi-
cation actually increase the fertility of the lands in re-
mote and rural districts, for they enable the produce of
these lands to be conveyed to the market with less cost
and deterioration ; and the same thing is accomplished
by the shifting or spreading of the population. Every
town or village that springs up in the interior increases
the fertility of the surrounding land, because its produce
can now find a market with less labour and expense in
conveying it to the consumers. Some lands, again,
possess a very high natural fertility, but in order to
utilise it require a preliminary outlay which the early
settlers cannot afford. When capital becomes more
plentiful and interest lower, the cultivation of these
lands is immediately undertaken. It is, therefore, by
no means universally true that every extension of culti-
vation involves a resort to less fertile lands. The lands
in question may be resorted to, simply because they
have become (in the economical sense) more fertile than
they were — because they have become at least as fertile
as some of the lands already in cultivation. In this
sense, the discovery of a valuable gold mine adds enor-
mously to the fertility of the surrounding lands, and
will probably diminish the fertility of the land adjoining
the nearest towns, since a portion of the town popu-
42 The Principle of Population.
lation will be drawn away to work the gold mines. It
may be an abuse of language to employ the term fertile
in this sense, but it is the only sense in which it is
universally true that every extension of cultivation in-
volves a resort to lands of less fertility ; and even thus
it is only true that it involves a resort to lands which
were formerly less fertile. "When Edinburgh was the
largest town in Scotland, the adjoining land (if at all of
fair quality) was the most fertile in that country. Now
the land adjoining Glasgow has supplanted it, and
perhaps in some future age the most fertile land may be
that which lies around Dundee or Aberdeen.* The ex-
tension of cultivation, therefore, by no means involves
the necessity of resorting to inferior soils ; and in Ame-
rica, for instance, the land newly taken into cultivation
is often superior in quality to that which has long been
in use, while even its present defects of situation will
soon be alleviated or removed. The labourer is not
compelled to apply his labour to less fertile land in the
popular sense of that term, though he may have to go
in search of fertile land, instead of finding it ready to
his hand. The world, however, is wide. The amount
* In no state of society is it true that none but the most fertile land (in the
economical sense) would be cultivated. Suppose a country in which the land
is physically of the same quahty throughout, while the population occupies a
town, a village, and a detached house. The land surrounding the town is,
economically speaking, the most fertile ; but, notwithstanding tliis, the villa-
gers would find it more to their advantage to till the land adjoining the
village than to bring all their supplies from the neighbourhood of the distant
town. And in like manner the isolated householder would till a spot adjoin-
ing his house rather than fetch his food from a distance. That spot would be
the most fertile to him and his family, though not to any one else.
The Principle of Population, 43
of fertile land which still remains uncultivated is enor-
mous, and even at the most rapid rate of increase the
labourer will be able for centuries to find fertile land to
work upon, provided that he is willing to go in search
of it. But it may be said that in an old country, like
England, at all events, an increase in the population
will necessitate the recourse to less fertile soils, or to
the stimulation of fertile soils beyond the point where
additional labour will produce a proportionate return.
To this contention, however, more than one answer may
be given. First, as already noticed, improvements in
the art of agriculture may suffice to produce the needed
supply without applying labour in a less remunerative
manner than at present. Secondly, in consequence of
improvements in the other arts a smaller proportion of
the population may suffice to perform the non-agri-
cultural work, leaving an increased proportion available
for agricultural operations. Thirdly — what has to a
large extent occurred — we may produce manufactured
articles, and exchange them for the products of the
labour of other nations employed on more fertile
lands; and improvements in the manufacturing arts
may enable us to make this exchange with undimi-
nished advantage, notwithstanding our increased popu-
lation. The labour of ten factory hands may exchange
for as much foreign-grown corn when our population is
fifty millions, as it did when our population was ten
millions. Lastly, we have the resource of emigration.
In Ireland, during the last thirty years, the births have
always exceeded the deaths, but the population has
44 The Principle of Population,
continually decreased, owing to the persistence of emi-
gration; and the result has been that the condition of
the home population has improved, while the emigrants
are, in general, better off than if they had remained at
home. Of course, there is a limit to the advantages of
emigration. If the population of the world doubled,
even once in a century, a period would ultimately be
reached in which every country would be over-popu-
lated, and no more room would be left for emigrants. But,
to all appearance, this period is still excessively remote ;
while all the known facts are consistent with the as-
sumption that there is in certain climates or in cer-
tain races a natural tendency to decrease, and that the
population of some countries can only be kept up by
emigration from other quarters of the globe in which
different conditions prevail.
Summarily, then, it has not been proved that there
is any tendency in the human race in general to increase
except in the sense that there are causes which, if they
acted alone, would increase it; in which sense it is
equally true that it has a tendency to diminish, since
there are causes which, if they acted alone, would dimi-
nish it. Neither has it been shown that the tendency to
increase is, in fact, stronger than the tendency to dimi-
nish, except in particular cases, and cases which, from
their very nature, must be regarded as exceptional. The
history of these cases, in fact, has generally been, that
advancing civilisation has increased the means of sub-
sistence, and the increase in the means of subsistence
has been followed by an increased population, the rate
The Principle of Population, 45
of increase in the latter instance almost invariably fall-
ing short of the former. Nor has it been shown that
equal increments of labour have hitherto failed to ex-
tract equal increments of produce from the soil. There
are indeed instances in which this is the case ; as, for
example, when the tiller of the soil, ignorant of the prin-
ciples of agriculture, sows the same crop year after year
with an equal, or even an enhanced, amount of labour,
and reaps in return a continually decreasing harvest.
But the question relates to the due application, not to
the misapplication, of labour. And here all that has
been proved is, that a point must ultimately be reached
at which increasing labour will cease to afford a propor-
tionate return, and will, perhaps, cease to afford any
return at all. But that we have, even in England, ap-
proached this point has not been proved ; while, if it had
been reached, we might still support our increasing popu-
lation, not by the application of additional labour to the
soil, but by exchanging our manufactures for food pro-
duced in foreign countries under more favourable condi-
tions. Consequently, if the meaning of the assertion,
that population has a tendency to increase faster than the
means of subsistence, is, that there is a serious danger
that it will, in fact, increase faster, the existence of this
danger has not been established. And if this be not its
meaning, what does it mean ? Does it imply anything
more than that people are born, and that if they did
not die the population of the world would become ex-
cessive ; or that, in some places and under some circum-
stance, the births do, in fact, exceed the deaths, just as
^^§^/FOB.lS^
46 The Prificiple of Population,
the deaths exceed the births in other places, and under
different conditions ? If Malthusianism is reduced to
this, it is probably the most barren truism that was ever
sought to be imposed on the world under the guise of a
scientific discovery.
But the Malthusian will perhaps say that, at all
events population tends to increase up to the means of
subsistence, and always keeps pressing upon the means
of subsistence. Population has, as already remarked, a
tendency to increase not merely up to the means of sub-
sistence but above them, but it has likewise a tendency
to diminish and, in fact, to disappear altogether. Such
tendencies may be thrown out of account on both sides.
But if it is meant that population does in fact increase
up to the means of subsistence, the statement is not true.
There are many countries in which the means of sub-
sistence are in excess of the population, and in which
this excess is actually increasing. Then, what is meant
by saying that population keeps constantly pressing
against the means of subsistence ? Judged by a rich
man's standard, the majority of the population in every
country would, no doubt, be classed as poor; but where
is the civilized country in which the labouring popula-
tion has to be satisfied with the bare necessaries of ex-
istence? Or can the Malthusian point out a civilized
country in which the condition of that class is degene-
rating, in consequence of an increase in their numbers,
without any accompanying decline in agriculture, trade,
or manufactures ? Where the means of subsistence are
shortened the population will, no doubt, usually press
The Principle, of Populatio7i» 47
severely against what is left, until emigration or some
other cause relieves the pressure ; but this is a very dif-
ferent thing from the alleged augmented pressure of an
increasing population. I doubt if any example of this
latter kind can be adduced. I do not think, for instance,
that the Irish people were poorer before the failure of the
potato crop, with a population of eight millions, than
they were in the time of Dean Swift, with a population
of two millions. The means of subsistence were short-
ened by that failure, and then the population of Ireland
was found to be pressing severely against the means of
subsistence; but, up to that point, the pressure seems
to have been no greater than it had been two centuries
before. If uncivilised races do not enjoy more than
the mere necessaries of existence, the reason is that
they do not seek for more, at least when any consider-
able amount of labour is necessary in order to procure
it. If the North American Indian had the same desire
for the decencies and luxuries of life that the European
has, he would doubtless have found means of gratify-
ing his tastes. But the Indians have been constantly
pressing against their means of subsistence, simply be-
cause they never cared to possess means of subsistence
in excess of their actual wants ; and, if accident should
supply such an excess, it would, doubtless, be wasted in
a very short time. And the same observation will apply
to almost all uncivilised races. Placed in the midst of
plenty, they will barely perform enough work to save
themselves from starvation ; and they will be found to
be pressing as hard against the means of subsistence
48 The Principle of Population.
when their numbers are diminishing as when they are
increasing. When half of them are carried off by war,
or famine, or pestilence, the other half will be no richer
than before ; except that indeed the animals and fish, on
which they feed, may multiply when there are fewer
people to kill them. Population never presses as closely
against the means of subsistence in civilised countries
as in uncivilised; yet, in the former, the population is
always more dense, and the soil is frequently less fertile.
But, the Malthusian will reply, population has a ten-
dency to press more closely against the means of
subsistence in densely-populated countries than in coun-
tries where the population is thinner. Probably it has
such a tendency ; for the causes which tend to increase
or to diminish the inhabitants of any particular country
or district are so numerous, that population may be said
to have a tendency to do almost anything. But if it has
a tendency to press more closely against the means of
subsistence, it has also a tendency to press less closely
upon them, and the latter tendency appears to be in
practice the more powerful. This mode of speaking of
tendencies and counter-acting tendencies is, however,
misleading. There are two sets of positive causes which
tend to produce opposite effects, and the phenomena
which we actually witness result from the joint operation
of both. The Malthusian has not, I think, established
any one of the three following propositions: — i. That
the population of the world is, in fact, increasing more
rapidly than the means of subsistence. 2. That it in-
creases more rapidly when mankind is in the normal
The Principle of Population. 49
state ; or, 3. That, at some future period, it will increase
more rapidly. Perhaps it maybe said that if the rate of
increase experienced in North America continued, the
population of the world would, ere long, outgrow the
means of subsistence, and that, under the same condi-
tions, this rate of increase would continue. Doubtless it
would continue under the same conditions : but one of
these conditions appears to be, that the means of sub-
sistence should continue to increase at least as rapidly
as the population. A population which doubled itself,
under that condition^ in every fifteen years, would never
lack the means of subsistence.
That the population of the world has been kept down
by deplorable and preventable causes (among which war
holds the first place) must indeed be admitted ; and it
follows, almost as a matter of course, that in the absence
of these causes it would have been larger than it is. But
it does not follow that it would have been too large. If,
indeed, Malthus had shown that, notwithstanding the
ravages of incessant wars, the population of certain
countries had remained (on the average) stationary, and
was apparently as large as these countries could (in the
existing state of civilization) maintain, he would have
gone a considerable distance towards proving his theory ;
for he would have shown to a considerable degree of
probability that, in the absence of war, the population of
these countries would have become excessive. But if it
appears that the population of the countries which have
been scenes of perpetual hostilities is declining, the Mal-
thusian cannot refer to them in support of this theory,
50 The Principle of Population,
for the fact that war has reduced the population affords
no evidence that in the absence of war the population
would have increased. There are many countries too in
which population appears to be pressing closely enough
against the means of subsistence, and which, notwith-
standing, could support double the present population
without any advance in their state of civilization; for there
would be no difficulty in procuring double the quantity of
land now in cultivation, which, under the same rude sys-
tem of tillage, would yield double the produce, and thus
support double the population in precisely the same way
that the existing population is supported — in a suffici-
ently scanty manner, perhaps, but not more scanty than
at present. True, a failure of crops would carry off twice
as many people under these new conditions, but it would
also leave twice as many behind. As already noticed,
it would seem that uncivilized races, however sparse the
population may be, will not keep any considerable dis-
tance ahead of the means of subsistence; and if this
sparse population is declining, the means of subsistence
will be suffered to decline in almost the same proportion.
But can Malthus or his disciples point out an instance in
which an uncivilized race, having enjoyed more than
usual immunity from war, famine and pestilence, has,
without any failure of crops or cattle, been reduced to
the verge of starvation by the mere increase of its own
numbers ? That would indeed be a case in point : but I
doubt whether it exists.
THE
OWNERSHIP OF LAND
A TTACKS on private property in land, especially
^ ^ when the owner is not the occupier, have become
so frequent of late years that the time seems to have
arrived for inquiring into their validity. In doing so I
desire to state, in the first place, that I do not regard
any kind of property as absolutely inviolable. The
punishment of certain crimes in this country includes
the forfeiture of both landed property and goods. Our
bankruptcy laws, under certain circumstances, lay hold
of both for the benefit of the creditors ; and there are
circumstances under which both may be compulsorily
taken from a person who has committed no offence and
incurred no liability, as when a man's land is taken to
construct a railway, or his cattle are doomed to slaughter
in order to prevent the spreading of a contagious disease.
In this latter class of cases the law of this country has
always awarded compensation to the injured person;* but
* That is when the cattle are slaughtered ; for the grazier often suffers
great loss from restrictions without any compensation in cases where slaughter
is not considered necessary. Hence the grazier naturally seeks to evade these
restrictions, which in consequence prove for the most part ineffectual. Such
is, I believe, the explanation of the failure of the restrictions to confine foot-
and-mouth disease within narrower limits than before they were adopted*
The restrictions have proved at once vexatious, injurious and ineffectual.
E 2
52 The Ow7ier ship of Land.
into the propriety of awarding compensation it is not my
present purpose to enter. I propose simply to inquire
whether property in land differs in any important respect
from property in anything else. If I succeed in esta-
blishing that it does not, I think I may leave the question
of compensation to take care of itself.
It is hardly necessary to refute writers like Mr. Henry
George, who describe private property in land as simple
robbery, which the State may resume at any time with-
out giving the compensation which it is admitted ought
to be given when other kinds of private property are
appropriated to the use of the nation. It is sufficient to
say that the Government of this country — the Sovereign,
the Lords, and the Commons, the latter of whom directly
represent the people — has always recognised private
property in land. The legislature has, by its conduct,
induced men to invest money in the purchase of land,
and to lend money on the security of land. It has made
laws regulating the devolution of property in land, on
the faith of which the public has acted. It has instituted
courts for the purpose (either solely or among other
things) of selling landed property, and of transferring
the ownership from one person to another ; as, for in-
stance, when a mortgage is foreclosed. It has granted
lands as a reward for public services; and even sold
them itself and pocketed the proceeds : as, for instance,
in the case of sales of land by the Irish Church Tem-
poralities Commissioners. The country may have been
robbed, as Mr. George says ; but, if so, it has most dis-
tinctly assented to the retention of the stolen goods by
The Ownership of Land. 53
the robber, and to his dealing with them (and inducing
other persons to deal with them] as if they were his own.
And in the great majority of instances the land is now
in the hands of persons who have either bought it them-
selves, or whose ancestors have bought it under the
sanction of the laws. There are various ways of buying
land besides what is commonly known as a purchase.
It may be bought by a marriage settlement. It may be
bought by the owner paying off charges which amounted
to its full value. It may be bought by the owner ex-
pending money in order to convert what was almost
worthless into a valuable property : and this he may
have done, not merely by improving the soil, but by
bringing a railway or canal to the neighbourhood, or by
starting some branch of mining or manufacturing in-
dustry. He may even have bought it by letting it on
lease at a low rent for a long period, binding the lease-
holder to make improvements during his tenure. Some
of these modes of purchase, indeed, relate to part of the
value rather than to the whole ; but even then, this part
may be all that the owner enjoys, the rest being covered
by mortgages and charges for members of his family.
There is probably not a landowner in the United King-
dom a considerable portion of whose income is not de-
rived from some of the sources which I have mentioned;
and in a very large number of cases the present owner
possesses nothing that either he himself or his ancestors
have not paid for— paid for with the full sanction of the
State. Our laws have, indeed, carefully defined the
limits of time within which property wrongfully ac-
54 The Ownership of Land.
quired can be claimed and recovered by the rightful
owner or his representatives ; and, to take a case into
which land does not enter, few persons would doubt that
the man who succeeds to a diamond or a painting which
his grandfather stole one hundred years ago has a better
claim to it than the grandson of the man from whom it
was stolen. The one family has been acting for nearly
a century on the assumption that the diamond belonged
to it, and has made arrangements and contracted liabili-
ties on that assumption. The other family has not.
The right man — the real culprit — cannot now be pun-
ished, and family arrangements should not be disturbed
in order to punish the wrong one. This is the spirit of
every code of laws which includes a Statute of Limita-
tions ; and the tendency of all recent legislation has
been to shorten, not to lengthen, the periods of limita-
tion. Robbery of land, if it ever occurred, does not
differ from robbery of anything else ; and the continued
retention of the land is no more a repetition or continua-
tion of the crime than the continued retention of the
diamond or (what comes to the same thing) of its proceeds.
Mr. George would hardly contend that if the descendants
of the original thief had sold the diamond and invested
the proceeds in some remunerative undertaking they
would cease to be robbers, but that they would continue
to be so as long as they retained it unsold ; while, even if
this were conceded, the descendants of the land-robber
would be free of all blame as soon as the land was sold
or charged to the full value. On the theory of Mr.
George, the original robber of the land or his descend-
The Ownership of Land. 55
ants might sell it and retain the full price, while the
comparatively innocent man who purchased from them
(perhaps through the medium of a public court) would
lose everything. He might even remain liable for a
portion of the purchase-money which he borrowed, while
losing the land on the security of which he borrowed it,
and to which he looked for its repayment.*
But to revert to the question whether there is any
material distinction between property in land and other
kinds of property, I shall take the argument in favour of
the distinction from the pages of perhaps the ablest
advocate of it — the late Mr. J. S. Mill. * The essential
principle of property,' says he, ' being to assure to all
persons what they have produced by their labour and
accumulated by their abstinence, this principle cannot
apply to what is not the produce of labour, the raw
material of the earth' {Political Economy y book il.,
cap. ii. sect. 5). But much the greater part of every
man's property is not the produce of his own industry or
abstinence. I did not make the table at which I write,
or the pens, paper and ink which I use in writing.
Mr. Mill would probably have admitted that they are
not the less my property because I bought them with
money left to me by my father or by some one else : but
surely the case is clear if I bought them with money
* I may add that Mr. A. R. Wallace's proposal to give the landlords a
terminable annuity equal to the present rent would be just as honest as to give
a mortgagee or a fund-holder a terminable annuity equal to his present annual
income. It would be a less extensive confiscation than that advocated by
Mr. George, but it would be equally confiscation ; just as stealing half-a-crown
is robbery as well as steahng a pound.
56 The Ownership of Land.
which I earned for myself. And if I buy land with the
money which I have thus earned, is it the less my pro-
perty because it is not the produce of labour but the
bounty of nature ? My property in it is the produce ot
my labour. If I had not invested the produce of my
labour in that way, I could have invested it in other ways
with equal advantage to myself; but I invested it in land
with the full consent of the State — bought it perhaps, as
already observed, from an officer of the State whose
business was to sell it, and who received a salary from
the State for so doing. If I was entitled to no property
that was not the direct produce of my own industry and
abstinence, I would very soon either die of starvation or
be sent to prison as a thief. But the convertibility ot
one kind of wealth into another lies at the very basis of
all political economy ; and since land is a species ot
wealth, why may I not convert the wealth which I ac-
quire by my labour into land as well as into any other
kind of wealth ? To limit a man's property to what he
has produced himself is to deprive him of all the advan-
tages of what is known as the division of labour.
Mr. Mill thinks that the distinction between landed
property and any other kind of property would appear
clear ' if the land derived its productive power wholly
from nature, and not at all from industry, or if there were
any means of discriminating what is derived from each
source'* [Political Economy, book ii. cap. ii. sect. 5).
* Mr. A. R. Wallace thinks there can be no great difficulty in discrimi-
nating between what is derived from each source, because that is just what the
Irish Sub-Commissioners are doing. He might as well contend that there is
no great difficulty in predicting the future from the stars, because Zadkiel
The Ownership of Land, 57
This I do not concede, but the question is hardly worth
discussing. Land in a state of nature is usually worth-
less ; or at least the State is of opinion that a new
citizen is worth more to it than a plot of unreclaimed
land, and will often not merely grant the plot rent-
free to an immigrant, but actually contribute towards
his expenses in coming out to take it. But conce-
ding that land derives its value in part from the bounty
of nature, what kind of property does not ? Are the
stones which form the walls of my house the sole
produce of art or labour ? Are the lime and the sand
which formed the mortar ? Is the timber which formed
the table at which I write ? Is the coal which warms me,
or the gas which affords me light r Is the steel which
forms my pen, or the materials out of which my paper
is made ? The fact is, that all kinds of property consist
of the produce of the soil in a form more or less altered
by labour ; and the produce of the soil is nothing but
the soil itself in an altered form, the alteration being
mainly the result of the bounty of nature. In a well-
fenced, drained, cultivated and manured farm, situated
near the city, the soil has undergone greater changes
as the result of human labour than the walls of my
house, the planks in the floor (probably cut from trees
which no human hand ever planted), or the coal in
does it every year. Whatever the faults of the Sub-Commissioners may be,
however, I do not think they have attempted any such task. They limit their
attention to improvements made at a comparatively recent period. If it was
proved to their satisfaction that the holding, which they are inspecting, formed
the bed of a lake ten centuries ago, I do not think they would assume that
the tenant or his predecessors in title had drained the lake.
58 The Ownership of Land.
the grate. To all, nature has contributed something;
to all, labour has likewise contributed something ; and
to most of them capital (or abstinence on the part of
the capitalist) has contributed something also. If the
fact that nature contributes something is sufficient to
render a thing unsuited to become private property,
there could be no such thing as private property at all :
but if the fact that labour contributes something is suffi-
cient to justify the existence of private property, it will
be difficult to point out an acre of valuable land in
the kingdom to which labour has not contributed its
quota. And, as already remarked, even where labour
has contributed nothing, the present owner or his pre-
decessors may have given a large amount of labour in
exchange for the land.
'No man,* says Mr. Mill, in the section following
that which I have already quoted, * made the land. It
is the original inheritance of the whole species. Its
appropriation is wholly a question of general expedi-
ency. When private property in land is not expedient,
it is unjust.' He might have added that no man made
the trees, or the coal, or the iron : that they are equally
the original inheritance of the whole human race, and
that private property in them is unjust whenever it is
inexpedient (and it might be said that private property
in coal is inexpedient when the owner burns more than
is necessary for household or industrial purposes). But
though man did not make the land, the trees, the coal,
or the iron, he altered them by his labour ; or if he did
not alter them he gave labour in exchange for them.
The Ownership of Land, 59
Moreover, in some cases, he did make the land. He
drained a lake, or banked off the sea, or reclaimed a
tract of perfectly worthless waste. Mr. Mill, himself, in
urging the claims of the landowners to the compensa-
tion of which Mr. George would deprive them, says : * If
the land was bought with the produce of the labour and
abstinence of themselves or their ancestors, compensa-
tion is due to them on that ground : even if otherwise,
it is still due on the ground of prescription ' {Political
Economy, book 11. cap. ii. sect. 6). But what I contend
is that he has failed to point out any real distinction
between landed property and other kinds of property.
Both are equally the produce, partly of nature and partly
of labour ; and labour has probably contributed more
towards the present condition of many a farm than
towards that of the gold sovereign now in my purse.
We have already seen Mr. Mill declaring that the
land is *the original inheritance of the whole human
race.' Elsewhere, when speaking of the Irish land-
lords, his statement (in which he is not singular) is,
*The land of Ireland — the land of every country — be-
longs to the people of that country ' [Political Economy ^
book II. cap. X. sect. i). But between these two pro-
positions there is a wide chasm. Have the Hottentots
an equal right to the soil of England with the people of
that country ? Had the Saxons, the Danes and the
Normans, a right to that soil when they came over as
invaders ? or have their descendants a right to it now ?
Does every Irishman or Scotchman who settles in Eng-
land thereby acquire a right to share the soil with the
6o The Ownership of Land.
former inhabitants ? These, and similar questions, arise
on every side. Probably there never was a country in
which the right of every inhabitant to a portion of the
soil (whether exclusively or in common with others) was
admitted ; for I doubt if this was true even of France
after the Revolution of 1789. What, then, is meant by
asserting a right which has never been acknowledged,
and which, if it existed, would as regards the present in-
habitants be very often a mere right of conquest ? Mr. Mill
could hardly allege that this equal right of all men to
the soil was by Divine appointment. It is plain that it is
not by human appointment. Whose appointment then is
it, or how is its existence to be proved ? But conceding,
for the sake of argument, that the land of the country
originally belongs to the people of the country, surely
the people of the country can deal with it as they think
proper, and grant it or sell it to persons who thencefor-
ward become the owners. Property is of little use either
to an individual or to a community if they cannot dis-
pose of it. If land, granted for the use of a school
or university, could only be granted for one genera-
tion, the stability of our educational institutions would
be greatly impaired. Again : to whom, on such princi-
ples, does the soil of America belong ? Is it to the Red
Indians, the original inhabitants, who are as yet far
from extinct ? to the English settlers who dispossessed
them (often by violence or fraud) and their descendants ?
or to the host of immigrants, Germans, Irish, negroes,
and Chinese, who arrive in swarrns every year ? How-
ever, the contention that the land of the country belongs
The Ownership of Land. 6i
either to the people of the country or to the whole
human race, really rests on the assumption that it is the
gift of nature, and not the result of human labour and
abstinence ; and as this assumption is only true of land,
in the same sense that it is true of any other kind of
property, the theory in question falls to the ground. To
everything that possesses value, nature contributes some-
thing ; but there is hardly a single valuable commodity
to which she contributes everything. Land, at all events,
is no exception to the general rule.
But the ownership of land is said to be a monopoly,
and to be attended with all the evils of a monopoly. The
fact is, however, that every kind of private property is a
monopoly in the same sense that the ownership of land
is so. If you want to buy or to rent my land, you must
pay what I require or do without it ; but the same ob-
servation is true if you want to buy or to hire my horse.
The opponent of private property in land may reply that
he could buy or hire another horse, to which I answer
that he could also buy or rent other land. And the horse
may be an Eclipse or a Blair Athol, to whom no equal
can be found elsewhere, while it is very rarely that
equally good land cannot be procured in the market.
When there is but one apothecary or hotel-keeper in a
village, the people are much more in his power, as re-
gards charges, than the farmers are in that of the land-
lord ; for the inn-keeper or apothecary has a practical
monopoly of that business, since an opposition hotel or
apothecary's shop would not be likely to prove remuner-
ative. If indeed all the land of the country was in the
62 The Ownership of Land,
hands of a single owner, or if the landowners combined
to raise the rents, there might be something in this
monopoly objection ; though I do not see that a combi-
nation of landlords to raise the rents is more objection-
able than a combination of employers to lower wages.
This last kind of combination has sometimes been suc-
cessfully carried out when a small number of persons
are practically the only employers of labour (or of some
particular kind of labour) in a certain district ; and those
who cry out so loudly against landlordism have seldom
anything to say against it. But landlords have never,
I believe, attempted to raise rents by such means, and
in a country like this there are two good reasons why
they should not do so. The first is, that a landlord can
only manage a limited quantity of land himself, and if
he does not succeed in letting the residue, it must lie on
his hands idle and unprofitable. In a new country like
America, where land is very cheap, and subject to few
burdens, and where the increase in its value is some-
times very rapid, a speculator may often make money
by buying land and letting it lie idle for some years
until the price has risen in the market ; but this is not
the case with any part of the United Kingdom. In this
country, if a combination of landlords to raise rents took
place, the class would probably lose more by their unlet
lands than they would gain by the high rents derived
from those which they succeeded in letting. A second
reason why such a combination must fail may be derived
from the relation between rent and labour. If the land-
lord is not content to leave his unlet lands idle and
The Ownership of Land. 63
unprofitable, he must cultivate them, and employ labour
for the purpose. Now, no man who can earn three shil-
lings a-day as a labourer, will take land at a rent that
will only leave him two shillings a-day as a remunera-
tion for his labour on it. Unless the rent is low enough
to enable him, on the average, to earn as much by work-
ing on his farm as he could earn by any other occupation,
he will not take the land at that rent ; and if landowners
mean to let their lands at all, they must regulate their
rents by the average wages of labour. Again, as a rule,
the more land remains on the hands of the landowner
the higher will be the wages of labour ; for while land-
owners do not work themselves, and seldom exercise a
very effectual supervision over the work, they frequently
adopt a style of cultivation which requires more labour
than is bestowed on the land by the ordinary tenant.
It may be objected that I am here assuming that the
tenant will till the land himself; but this is not the case.
If he does not till it himself, he must hire labourers, and
the rent which he can afford to pay to his landlord will
evidently depend on the amount which he has to pay to
his labourers. The economical theory of rent is indeed
sufficient to prove that rent is not always the result of
a monopoly. One acre of land will, in return for the
same amount of labour, produce five barrels of wheat
more than another acre. Assuming these lands to be
similarly situated, it is plain that, apart from any mono-
poly, the annual value of the one acre exceeds that of the
other acre by five barrels of wheat, provided that the
cultivation of wheat is, in both cases, the most profitable
64 The Ownership of Land,
mode of using the land. This excess of value some per-
son or persons must enjoy, and the persons who en joy-
it (whatever designation we may give them) are in reality
the owners. As a matter of fact, if all the land of the
United Kingdom was taken up from the present occu-
piers (compensating all who had made improvements for
which they had not already been compensated), and let
by public auction, without reserve, to the highest bidder,
I have little doubt that the result would be beneficial
rather than injurious to the present landowners, after
charging their estates with the full amount of compensa-
tion thus awarded. Instead of combining to raise the
rents artificially, the landlords have, in fact, usually let
their lands at a lower rent than that to which the un-
restricted competition of intending tenants would raise
it, if the landlords were compelled by law to accept the
highest offer. Nor would the monopoly of land (such as
it is) be got rid of by always allowing a valuable interest
to the occupier. The effect of such a provision would
be simply to divide the monopoly among two persons —
to make two persons co-owners instead of vesting the
ownership in one. A person seeking to take land must,
under such circumstances, buy from two persons instead
of one. He must pay something to the landlord, and
something to the outgoing tenant (whether by a single
payment, or an annual one) ; and instead of paying less
than under the system of * landlordism,' he would pro-
bably have to pay more. Such appears to be the actual
state of the case where the Ulster Tenant-Right custom
exists. It is not easier, but more difiicult, to obtain land
The Ownership of Land. 65
there than in other parts of Ireland, and the person who
desires to become an occupier has to pay more for the
privilege of occupation than he would have to pay else-
where. But in any part of the kingdom a really solvent
man looking for land, and unable to procure it at the
competition rate, is a very rare spectacle. Rent fixed
by competition is, indeed, the very opposite of rent
fixed by a monopolist or combination of monopolists. I
admit, of course, that competition may raise rents higher
than is desirable, but it can only do so when there is an
over-population, or when wages is undesirably low ;
for which things the landowners are not to blame.
For my own part, however, I fail to see that the oc-
cupier of land ought, in all cases, to have a valuable — a
saleable — interest in it. The value of every kind of
property is greatest when the owner is free to deal with
it as he likes ; and if a landowner is prohibited from
letting except on condition of giving to the occupier a
valuable interest in the land, the value of his ownership
is diminished. Part of the value of the ownership, which
he thus loses at every letting, is transferred to the tenant,
but only a part of it ; for the tenant's interest would also
be more valuable if he was at liberty to sublet, either in
whole or in part, without conferring a valuable interest
on the sub-tenant. By such a division of ownership
between two persons the total value of the ownership is
therefore diminished; and if the landlord receives no
compensation for what he is deprived of, the change will
frequently consist in taking from him what he has paid
for, and making a present of it to another person, who
66 'The Ownership of Land,
may have done nothing to earn it. I am not, of course,
speaking of securing to the occupier the value of his
improvements. I am only dealing with the question
whether he ought to have a valuable interest in the soil,
irrespective of any improvements made either by him-
self or by his predecessors in title. But not to dwell
further on the injustice of creating such an interest at
the cost of the landlord (it could only be created either
at his cost or at the cost of the State), no provision of
the kind will, I believe, prove permanently successful.
Give the occupier a valuable interest, and he will bor-
row money upon it, charge it for some member of his
family to whom he does not intend to leave it, sublet it
at a profit rent, or sell it to some one who will borrow a
part of the purchase-money or leave a part of the pur-
chase-money outstanding at interest. If you restrict the
occupier from dealing with it in some of these ways, you
lessen the value of his interest in it (for that value is
always greatest when he is most free to deal with it as
he wishes), while you will probably fail to accomplish
your object. If, when leaving the land to his son, the
tenant cannot charge it for his daughter, he can leave
it to the former, on condition of providing a portion
for the latter. If he cannot sell it, and leave a portion
of the purchase-money outstanding as a charge on it, he
can sell it, and leave some of the purchase-money out-
standing as a personal debt due to him by the purchaser,
charging a higher rate of interest in consequence of the
increased risk. The future tenant, between rent and in-
terest, may have to pay the full annual value of the land.
The Ownership of Land. 67
his annual outgoings being increased rather than di-
minished by the legal restrictions on dealing with the
tenancy. Higher interest was probably never charged
and paid than during the prevalence of the Usury Laws ;
and restrictions on dealings with land have very much
the same effect as restrictions on borrowing money at
interest. But it never has been proved that an unim-
proving tenant ought to have a valuable interest in the
soil, still less that an interest in his favour should be
created at the cost of the landlord ; and I am rather
a,t a loss as to the grounds on which such a proposition
could be seriously defended. The law as administered
in Ireland may have done this in practice, but it has
never assented to it in theory.
And here I may offer a few remarks on the subject
of tenants' improvements. Taking two farms, whose
annual value in their present condition is equal, but one
of which is unimprovable, while the other is susceptible
of improvement, can the landlord's interest be said to be
of equal value in both instances ? Clearly not. Sup-
pose, for instance, that the average rate of interest is
£^ per cent., but that £1000, judiciously expended on
the latter farm, would produce a return of ^8 per cent.,
is it not plain that the improvable quality of this farm
is worth ^30 a-year ? This £^0 a-year the landlord may
either realise by letting the land on a perpetual tenure at
^30 a-year over its present annual value; or by letting
it to an improving tenant for a long term of years at a
rent somewhat less than this ; or, finally, by letting it
for a comparatively short term, at a rent equal to or even
F 2
68 The Oimiership of Land.
below the present value. When the term is long enough
to repay the principal expended by the tenant, together
with interest at ^5 per cent., the tenant is compensated ;
and if the improvable quality of the land belongs to the
landlord, the tenant has, in justice, no further claim on
it. This is generally recognized in one class of leases,
namely, building leases. The tenant has here no claim
on the land after his lease expires, and he only builds
what he thinks will repay him within that period. And
if a landlord granted a long lease of land suitable for
building, without inserting any building covenant in his
lease, he might feel certain that the tenant would pro-
ceed, in his own interest, to build ; though of course he
prefers a covenant defining the kind of buildings to be
erected, and binding the tenant to give them up in good
repair. But as the rent reserved in such leases always
exceeds the annual value of the land, considered simply
as land, and the tenant could not afford to pay it without
building, it is certain that he would build in any event.
How does an agricultural lease differ from this ? The
tenant knows the duration of his tenancy, forms his own
judgment as to whether his improvements will repay
him within that time, and regulates his conduct accord-
ingly. It is only where the landlord has encouraged the
tenant directly, or indirectly (as for instance by the cus-
tom of not disturbing an improving tenant on the expi-
ration of his lease), to expend money on improvements
that will not repay the outlay and interest within the
term of the lease, that the latter seems to me to have
any just claim for compensation : and in assessing com-
The Ownership of Land. 69
pensation in such cases, it should be borne in mind that
the improvable quality of the land belonged originally
to the landlord, and that the tenant is only entitled to
be repaid his expenditure with interest — the rate of in-
terest being of course higher in cases where the outlay
involved risk. On any other principle I do not see why,
when a coal-mine is discovered on an estate, the land-
lord should not be compelled either to work it himself,
or to lease it in perpetuity at the annual value of the
land considered merely as land.
I now come to what may be regarded as the final
stronghold of the opponents of private property in land
— the fact that its value often increases without any
labour or abstinence on the part of the owner. I say
often increases, for it cannot be alleged that it always
does so. It sometimes diminishes without any default
in the owner, as the experience of the last six years
may suffice to prove ; but, according to political econo-
mists generally, it more frequently increases, and may,
therefore, be said to have a tendency to increase.*
* Suppose,' says Mr. Mill, * that there is a kind of income
which constantly tends to increase without any exertion
or sacrifice on the part of the owners — those owners
* In reality rent, like population, has no tendency either to increase or to
diminish, for the simple reason that it is an effect, not a cause. But there are
causes which tend to increase rent, and causes which tend to diminish it, just
as there are causes which tend to increase the population, and causes which
tend to diminish it. If the former set of causes are usually stronger than the
latter, we may, in a popular sense (though not with scientific accuracy) say,
that rent or population has a tendency to increase. In both cases, however,
this conclusion seems to me to have been arrived at too hastily, and applied
too universally.
70 The Ownership of Land.
constituting- a class in the community whom the natural
course of things progressively enriches, consistently
with complete passiveness on their own part. In such
a case it would be no violation of the principles on
which private property is grounded if the State should
appropriate this increase of wealth, or part of it, as it
arises. This would not properly be taking anything
from anybody. It would be merely applying an acces-
sion of wealth created by circumstances to the benefit
of society, instead of allowing it to become an unearned
appendage to the riches of a particular class. Now this,'
he continues, * is actually the case with rent ' {Political
Economy^ book v. cap. ii. sect. 5) ; and accordingly he
proposes to absorb * the uneg,rned increment of the land '
in taxation. One would think that the answer to this
reasoning is sufficiently obvious. The fact that rent has
(with certain intermissions) increased in money value
(whether this represents a real increase in the rent, or a
diminution in the value of gold and silver) has been
well known for many years,- and has been taken into
account by all purchasers and settlors of land, and by all
persons who lend money on mortgages. The ^ unearned
increment of the land ' has been bought and sold with
the full approval of the State, and forms a material ele-
ment in its present market value. If, when the average
rate of interest on good security iS;^4 per cent., a man
gives thirty years' purchase for land, the difference
between twenty-five years' purchase and thirty years'
purchase represents the market value of his expectation
of an unearned increment ; and if the State announced
The Ownership of Land. 71
its intention of appropriating this unearned increment
to its own use for the future, the market value of land
would be immediately reduced by at least five years'
purchase. This expectation of increment is as much the
property of the owner as the improvable quality of the
land, and in fact the two stand on precisely the same
footing. Mr. Mill seems to have been aware of this, for
he says in the section already quoted, that in absorbing
the future increment of the rent, * all injustice to the
landlords would be excluded if the present market price
of their land was secured to them, since that includes
the present value of all future expectations.' But would
the State be really a gainer by purchasing the future
expectations of the landlords at the present market
price ? That is at all events doubtful. Supposing that
the State had, at the time when Mr. Mill published the
last edition of his book, agreed to secure to the landlords
the then market price of the land, and to appropriate
to public purposes all future increments of rent, which
party would have gained by the arrangement ? Is it
not certain that the State would have been called upon
to pay millions to the landlords, in order to secure to
them the market price of their lands in 1870 or 1872 ?
But Mr. Mill probably did not exactly intend what his
words seem to imply. He meant only that the absorptive
process was not to commence until the market price of
the land rose above its (then) present figure. Such an
enactment, however, would evidently have proved in-
jurious to the landlords. As soon as it was provided
that the present market price of their land could not be
72 The Ownei'ship of Land.
increased, but might be diminished, the market price
would fall ; just as the market price of sheep would fall
if it was enacted that mutton and wool should, under no
circumstances, sell for more than at present, but might
sell for less. For years after such a Bill became law,
the market price of land would be lowered, and it would
afford but a poor compensation to the landlord if, after
the lapse* of perhaps a quarter of a century, it ultimately
reached its original figure, which under the supposed
conditions it could never exceed.
Here let me add that land is not the only thing that
has this tendency to increase in value without any
exertion on the part of the owners. Railroads, tram-
ways, canals, and the various branches of mining in-
dustry, have a tendency to become more productive with
the general progress of the country. Fisheries — the
produce of the sea and the rivers — tend to rise in value
as rapidly as the produce of the land. And further, I
do not think it has been proved that rent has any uni-
versal tendency to increase apart from the improvements
effected in the soil by labour and abstinence. The prin-
cipal argument that rent has a tendency to increase, in-
dependently of these causes, is that every extension of the
margin of cultivation increases rent, and the increasing
population of all countries in the normal state leads
to successive extensions of the margin of cultivation.
Whether population has in fact this tendency to increase
I have elsewhere considered. For my present purpose,
however, it is sufficient to point out that the extension
of the margin of cultivation is neither the cause of an
The Ownership of Land. 73
increase of rent, nor even a constant sign of it. It may
be true that the economic rent of cultivated land is at
any time measured by the excess of its produce over that
of the least productive land in cul tivation ; in which case
it would seem to follow that if the course of cultivation
was constantly to pass to worse land, until it reached the
very worst in the country, this excess must, in the case
of good land, be constantly on the increase. But the fal-
lacy of this theory consists in supposing that the fertility
or productiveness of all the land in the country is con-
stant, whereas it is perpetually changing. For econo-
mical purposes, as I have elsewhere noticed, the situation
of the land forms an important element in its fertility.
A road, a railway, a canal, even steam communication
between two seaports, alters the fertility or productiveness
of no small portion of the land. It makes some land
better than it was, and diminishes the excess of the pro-
duce of the best land over that which is thus improved.
A similar effect is often produced by the mere shifting
of the population. Agricultural produce is most valuable
in the most densely populated districts, and if the popu-
lation moves from one locality to another, the value and
rent of land rises in the latter district, and falls in the
former. Facilities for the importation of food also tend
to low^er rent. They lessen the pressure of an increasing
population, which tends to extend the margin of cultiva-
tion. Instead of raising the additional food required,
we may produce something that will exchange for this
additional food when imported from other countries, and
the production of this exchangeable commodity (cotton
74 The Ownership of Land.
suppose, or ironj may have no tendency to increase the
rent of land. Summarily, therefore, it does not appear
that in every civilized country population constantly
increases; if it did increase, it would not follow that
the margin of cultivation in that country would neces-
sarily be extended; and lastly, an extension of the
margin of cultivation may be accompanied with a de-
crease instead of an increase in rent. This last effect
will be produced when a large quantity of land suddenly
receives a great accession to its productiveness, as, for
example, by making a railway through a naturally fertile
district, whose productions were hitherto cut off from any
available market by the want of good means of commu-
nication. Rents in the newly-opened district would, no
doubt, rise, but they might still remain almost nominal,
while the rents of the land adjoining the market would
experience a very heavy fall. The tendency of rent to
increase cannot, therefore, be laid down as a general
law, and the experience of the last few years has shown
that the exceptions to it are not merely theoretical.
_-s=r:
-y-^ of TBa *^
;TJFI7BRSITT]
CAPITAL AND LABOUR.
T^EW questions in the range of political economy
attract more attention at present than the mutual
relations of Land, Labour, and Capital. I believe if we
arrive at a true conclusion as to the connexion of the
two latter, their mutual relation to land (or rent) can be
easily determined.
That capital is the result of labour is generally con-
ceded ; whence it follows that labour does not always
require previously acquired capital for its support. And
the same thing is otherwise evident. A man cast on
an uninhabited island, where fruit, fish, and game
abounded, could support himself by his own labour
without any previous capital ; and if food was sufficiently
abundant, he might lay by a stock of it to maintain
himself while making a house to dwell in, or a boat to
escape from his place of exile. This stock would be his
capital saved from the produce of labour, which was
undertaken without capital. Or he might collect food
enough for each day, before the working hours were
over, and spend the rest of the day at work on his house
or his boat, thus labouring without capital, and yet pro-
ducing works of permanent value. But works of any
7 6 Capital and Labou r.
importance, which require time for their completion, can
rarely be undertaken without capital. Such works can
seldom be used or sold in an unfinished state. A ship
cannot be put to any use until it is ready to be launched ;
and it could not be built unless there was sufficient
capital somewhere to support the workmen (to say no-
thing of procuring the materials) until it was completed.
This capital may indeed exist in different places, and
in the hands of different persons. The workman himself
may have a sufficient fund in hand to support him until
the work is done ; or he may be supported by a shop-
keeper who sells goods on credit, to be repaid at the
same period ; or his employer may have the requisite
capital; or, finally, this capital may exist only in the
hands of a person with whom the employer has con-
tracted, and who again may have borrowed the whole
or a part of it from some other capitalist. But some-
where or other the requisite capital must exist, and exist
in such a form that it will reach the workman if he is
not the original possessor of it. It is true that the value
of the unfinished ship increases from day to day, and
that the owner may be able to sell it, or to borrow money
on it long before it is completed. The unfinished ship
may thus be termed a part of his capital ; and though
he pays the workmen from day to day, his capital may
go on increasing during the whole time. But if the un-
finished ship may thus be termed capital, it is at all
events not the kind of capital which is required for the
maintenance of labour ; whereas, without a supply of
capital available for the maintenance of labour, the
Capital and L abour, 7 7
building of the ship could not have gone on. It is true,
indeed, that the whole of the capital necessary to main-
tain the labourers during the building of the ship need
not have existed before the work was commenced. Some
of it may have been created while the building was in
progress. For example, the employer may have realized
a profit on another ship while the work was progressing,
and may apply this profit in payment of the labourers.
But this newly-created capital was not created by the
building of the unfinished ship. That ship cannot be
made use of to pay the labourers until it is finished and
sold ; and therefore the proposition laid down by Mr.
George, that labour is sustained by its own produce,
seems to me, when stated generally, to be unfounded.
It is not true of any great and permanent work, and is
hardly true of any description of work in an old and
civilized country.
The case, however, becomes clear when we pass from
labour in general to hired labour, which is much the
most common kind of labour in all civilized countries.
No person without capital can hire labour — at least un-
less he is believed to have capital. For no man would
labour for hire, subject to the condition that he was to be
paid out of the proceeds of his own toil. Such a hiring
would amount to an agreement that if the proceeds of
his labour exceeded the wages agreed upon, the employer
should take the excess, whereas if these proceeds fell
short of his wages, the labourer should be satisfied with
them. For if the employer was avowedly a man with-
out capital, it is plain that he could not pay the labourer
7 8 Capital and L abou r.
anything more than the proceeds of the latter's own
labour, and an agreement to pay more would be so much
waste paper. In every hiring, therefore, it is assumed
that the employer has the means of paying the wages
which he undertakes to pay, even though he should
have to dispose of the finished work at a loss — that the
farmer, for example, can pay his labourers, even if a bad
harvest should not yield enough to pay the rent, seed,
and taxes, without drawing on his other resources. The
employer is thus a capitalist. He takes the risk, and
agrees to pay the labourer a fixed sum in any event, this
sum being low enough to give him a reasonable expec-
tation of realizing a profit on the transaction. And be-
sides the risk, he has almost always to advance a por-
tion at least of the wages. His profit, accordingly,
should be sufiicient to cover interest as well as risk,
together with, in most cases, a remuneration for his
own trouble in planning and superintending the work.
There is thus, at all events, an element of truth in the
economical maxim that Labour is limited by Capital.
A man does not usually commence building a house
unless he sees his way to finishing it, either with his
own capital or with the capital of others, which he con-
fidently calculates on being able to borrow ; and a great
deal of capital has to be expended on the house before
any product of this expenditure comes in. In fact no pro-
duct comes in until the house is inhabited. The man who
buys an uninhabited house must be himself a capitalist.
It may be added, that the greater part of the labour,
which is not the subject of hire in this country, consists
Capital and Laboici\ 79
of the agricultural labour of the occupiers of land and
their families. But for this kind of labour capital is also
required ; for the soil only yields products capable of
being sold or of directly maintaining labour after con-
siderable intervals, and while waiting for these returns
the tiller of the soil must be supported either by his own
capital or by the capital of others. Though his fields
might bear promise of a splendid harvest, if no one
within his reach possessed more food than he required
for his own consumption, the farmer would starve before
the time for reaping arrived. He might indeed find
capitalists willing to give him credit ; but then his labour
would be supported by their capital (or perhaps by the
capital of persons who had given them credit) until his
crops were ready for the market.
To this extent, then, labour is supported and limited
by capital ; and, all other things being alike, the more
capital there is in any district seeking investment the
greater will be the demand for labour. But even then
it is the proportion between capital and labour, and not
the actual amount of capital, that must be looked to. If
the capital is doubled while the labouring population is
trebled, a diminished demand for labour and decrease in
wages will result. A great capitalist, moreover, fre-
quently does not invest all his capital in his own district,
or even in his own country ; while in order to produce
an increased demand for labour at any particular place
there must be an increased amount of capital seeking
for investment at that place. With these qualifications
the increase of capital is in itself of advantage to the
8o Capital and Labour,
labourer, and so far it may be said that the interests of
the capitalist and of the labourer are identical. But this
identity extends no further. It is for the interest of the
capitalist that there should be a large supply of labour-
ers in his neighbourhood, because every increase in the
number of persons seeking employment tends by com-
petition to diminish wages. On the other hand it is not
for the interest of the labourer that there should be too
many hands seeking employment. The fewer competi-
tors he has, the better bargain he can make with his
employer. Further, it is evident that (leaving rent out
of account for the present)/the produce of labour affords
the fund out of which bom the wages of the labourer
and the profits of the capitalist must ultimately be paid
(or repaid if the wages has been previously advanced)S
It may be for the interest of both parties that this fund
should be as large as possible ; but when we come to
the distribution of the fund, every increase in the propor-
tionate share of the one must be accompanied by a
diminution in the proportionate share of the other. It
is the interest of the capitalist to keep wages down to
the sum which is necessary to maintain the labourer
and keep him in working condition. It is the interest
of the labourer to keep down the capitalist's profits to
the lowest percentage that will induce him to continue
the work. Interests which are identical as regards the
creation of the fund, are thus hostile as regards its
distribution. Hence come strikes and lock-outs. In
the former the men surrender their wages for a time in
order to obtain a larger share of the common fund for the
Capital and Labour, 8 1
future ; in the latter the employers surrender their profits
for a time, with a similar object. The co-operative
system is the only one which avoids this conflict of in-
terests. In the system of employer and employed — of
capitalist and labourer — it is inevitable.
But the increase — even the proportionate increase —
of capital may be accompanied with incidents which
render it useless to the labourer. For not the whole,
but only -a part of the capital invested in any work, is
employed in the payment of wages. Thus, when capital
is invested in making a railway, there is in the first place
a large sum paid for the purchase of land. This may
continue to be capital in the hands of those who receive
it, but very little of it is usually expended in the main-
tenance of labour in the district through which the
railway passes. Another large sum is expended in the
purchase of wood and iron. Much of the price of these
articles consists of the repayment of labour, but of labour
in a different district, and often in a different country
from that in which the railway is made. So too of the
engines and carriages, and other articles which I need
not specify in detail. Nor is this all. As the railway
will yield no profit for a considerable time, enough capital
must be provided to pay the labourers, not for a few days,
but for months or even years, before the line itself can
be looked to as a means of repaying the labour expended
on it. And that this circumstance tends to lower wages,
or at least to keep it from rising, is easily shown.
Suppose I have £\oqq to expend in wages, if I
expend it in a work which is expected to yield a return
G
82 Capital and Labour,
in ten days, I may lay out ;£ioo a-day in labour; but
if I have to wait for ten months before receiving the return,
I can only expend ;£ioo a-month, or about one-thirtieth
part of what I could lay out in the former case. If I
am the proprietor of a fishing-boat, the very first day's
fishing may produce enough to pay the fishermen their
wages ; and if I can sell the fish immediately on landing,
the labour may, in this case, be maintained out of its
own produce without any capital except the boat and
fishing-tackle. But at all events a very few days' wages
would be sufficient for me to keep in hand to meet con-
tingencies. Again, if I am the proprietor of a boot and
shoe manufactory, I will have boots and shoes to sell
in a few days after the work commences, and a small
sum will suffice for the payment of wages, provided that I
can obtain a ready sale for my goods when made. In the
case of a railway or a ship, on the other hand, I may
have to continue paying the labourers for months or
even years before the work produces anything. Hence
it is evident that works which yield quick returns can
be carried on with less capital, in proportion to the num-
ber of labourers employed, than works which yield slow
returns. This will be the case unless the part of the
work which I may term materials, as opposed to labour,
requires a greater outlay in proportion to the number
of labourers in the former instance than in the latter.
But the reverse of this is usually the case. In works of
slow return the materials are generally more expensive
in proportion to the number of labourers than in works
of quick return (materials, as already remarked, often
Capital and Labour. 83
include a good deal of labour, but then it is labour per-
formed in a different locality, and in some cases labour
performed many years before). The substitution of
works of slow return for works of quick return therefore
always tends to reduce wages;* and we shall I think
see that this substitution is one which naturally accom-
panies the growth of capital and materially lessens the
advantages which the labourer might otherwise expect
to derive from that growth. If capital doubles itself
while the labouring population increases by one-half,
we might expect to find that wages had risen ; but such
a change may have taken place in the modes of expend-
ing capital during the interval, that wages will have
actually fallen.
Early settlers and the early capitalists in countries
emerging from barbarism usually expend their capital
on works of quick return. Their capital is small, and
they cannot afford to be deprived of the use of it for any
considerable time. They have no such means of under-
taking great works as Joint Stock Companies, Banks,
&c., afford in a more advanced state of society. And as
they can select the very best investments which are
capable of being worked with a small capital, their
profits are usually large — a circumstance which makes
* The distinction between works of quick return and works of slow return
coincides to a considerable extent with that drawn- by Political Economists
between Circulating Capital and Fixed Capital. And it is usually conceded
that with the growth of capital and progress of civilisation the proportion of
Fixed to Circulating Capital tends to increase, and that the increase may foi
the time at least injure the labourer. But in Circulating Capital itself the
rapidity of circulation differs very considerably, and this difference has also an
influence on wages.
G 2
84 Capital arid Labour.
rapid returns peculiarly desirable. A profit of 5 per
cent, four times in the year is better than a profit of 20
per cent, at the end of it, and the difference is propor-
tionally greater than if the quarterly profit was one per
cent., and the annual profit four. At what price could
a grocer sell a keg of ten-year-old whiskey if the average
profits of trade were 40 per cent, during the time that he
had lain out of his money ? But at the present rate of
profits the price of ten -year-old whiskey is not extrava-
gantly high. Quick returns and large profits are thus
at first the order of the day. Capital accumulates
rapidly, the demand for labour increases and wages
rises. But no country can afford opportunities of un-
limited investment, capable of producing large profits
and quick returns, under any system of Land Laws that
could be devised. The demand for any article dimin-
ishes as the supply increases, or at all events customers
must be sought for at greater distances — thus rendering
the returns slower and the profits smaller ; and if wages
has risen in the meantime, profits will be still further
reduced. This observation would apply to every branch
of industry and manufacture, even if the cost of the
materials did not increase when a larger quantity of
them was used. But an increasing capital accompanied
with diminished profits naturally induces the capitalist
to enter upon greater works, requiring a longer continu-
ance of labour, and yielding slower returns. Works
which could not be undertaken without loss when the
current rate of interest is 7 per cent, may be undertaken
with advantage when it has sunk to 3 J. And the invest-
Capital and Labour, 85
ment of capital in such undertakings tends, as we have
seen, to lower wages.
Moreover, there is another reason why, as capital
increases, a smaller proportion of it is applied to the
maintenance and remuneration of labour. This is the
discovery of labour-saving appliances which always
keeps pace with advancing civilisation. Better imple-
ments effect a considerable saving of labour. Fences,
roads, &c., afford a further saving ; and when the labour
of domestic animals was first employed in the produc-
tion of wealth there was a saving of human labour to an
extent which it is difficult fully to appreciate. After-
wards the power of water and wind, and finally of steam
and electricity, were applied to the same purposes as the
toil of the horse and the ox : while wagons, cars, and
indeed almost all kinds of machinery were constructed
so as to lessen friction, and thus enable labour to be
applied to greater advantage. Labour was no doubt
necessary to effect most of these improvements, but the
labour which was thus expended bore no proportion to
that which was saved. Now this saving of labour is by
no means an unmixed gain to the human race : for a
large part of mankind are dependent on their labour for
subsistence, and whatever lessens the demand for labour
is injurious to them. It compels them to accept lower
wages, and increases the chance of their being left for
a time without any employment. It has a counter-
balancing advantage in promoting a rapid accumu-
lation of capital, which as we have seen is on the whole
favourable to interests of the workman : but though
86 Capital and Labour,
wages may in this way be prevented from actually
falling, it is plain that it -will not increase proportion-
ally to the increase of capital, even if the number of
labourers remains constant ; and also that when capital
is increasing faster than the labouring population, wages
may be lowered rather than raised by the change. To
this it is to be added that for most of these labour-
saving appliances a certain amount of skilled labour is
required. Thus even a good ploughman will earn more
than an ordinary agricultural labourer. Now in a primi-
tive state of society the distinction between skilled and
unskilled labour hardly exists, while as civilisation pro-
gresses it becomes very marked, and the difference in
wages is often considerable. This division of labourers
into two classes tends to raise the wages of the higher
division and to depress that of the lower ; and as the
majority of the labourers belong to this latter division,
it is by their wages that the general rate of wages
is usually estimated. Here is another reason why
increasing capital does not always lead to increased
wages.
Mr. George, to whose views on the subject of capital
and labour I have already referred, contends that these
labour-saving appliances ought to raise wages, and that
the Land Systems usually adopted afford the only expla-
nation of why they do not. Such appliances, he thinks,
ought to raise wages, because they increase the effi-
ciency of labour ; and he appears to think that in a well-
organised State no labourer would be left unemployed,
inasmuch as labour is not maintained by capital, but by
Capital and Labour, 87
its own produce. And if all the labourers continued to
be employed while the efficiency of their labour was
enhanced, it would be natural to anticipate an increased
rate of wages. I have already expressed my dissent
from a part of this theory. Labour, I apprehend, must^*^^
to a certain extent be supported by capital, and the ex-
tent to which it must be thus supported increases with
the progress of society ; and thus, even in a well-organ-
ised society, labourers may lack employment for want
of the capital necessary to employ them. Further, the
value of increased efficiency is not to be measured by
its quantity. Suppose, for instance, that when we
already manufactured a sufficient amount of cotton to
supply the wants of our population, a discovery was
made which doubled the efficiency of labour [in its pro-
duction, and that the resource of exportation (a resource
which cannot be universal) was not open to us. It is
plain that we would not use double the quantity of
manufactured cotton while it remained at the same price
as before. Men in fact would not increase their con-
sumption of cotton at all until the price was lowered.
Then they would perhaps wear more clothes and buy
new garments on occasions when formerly they would
have been satisfied with patching up the old ones ; but
making every allowance for this, I doubt whether they
would consume a double quantity. But if their consump-
tion fell short of this double quantity, the number of
labourers engaged in the manufacture of cotton would
be reduced, and some of the present labourers would
have to seek employment in new branches of industry ;
88 Capiial and Labour.
and when labourers are seeking for employment wages
always falls.
Where, moreover, could these labourers procure em-
ployment ? Either in some existing branch of industry
or in some new one. In the former case they would
compete with those already employed, and thus tend to
lower wages. Even if the employers in these branches
of industry were willing to take all the hands thus dis-
engaged, the increased production would fail to generate
an increased demand at the same prices, and the fall in
prices would lead to a reduction in wages. But, suppose,
on the other hand, that the labourers are transferred to
new branches of industry. In a wealthy and civilised
country, the only reason why any branch of industry is
new is that it could not previously have been worked
with profit. And how can it be worked with profit now
if labour is not cheaper ? This I believe is only possible
in two cases, viz. : — when the growing wealth of one
section of the population produces a demand for luxuries
which did not previously exist, and when the new labour-
saving appliance is one which enables something that
could not previously have been made without loss to
be made with profit. In both these cases there is an
increased demand for labour ; but the former is a mis-
application or consumption of capital which cannot
prove advantageous to the labouring classes in the long
run. It is the latter only that really benefits the labourer.
If a mine is of such a character that it can be profitably
worked with rude machinery, w^hen the only mode of
access is by a rough country road, improved machinery
Capital and Labour, 89
and a connecting railroad may injure the labourers ; *
but it is otherwise when the railroad and good machinery
must be brought to bear before it can be worked with
advantage. On the whole, however, I believe it will
be found that labour-saving appliances have a much
greater effect in diminishing than in creating a demand
for labour. Without them capital would increase more
slowly, but the labourer's share of the total produce
would remain undiminished, and the value of the total
produce would correspond more closely with its quantity.
A slower growth of capital might thus prove more
favourable to wages. f
I may remark, however, that if we limit the term
* It would probably improve the condition of the labouring classes for the
time, however, because a much greater quantity of the ore or other produce
would be raised. But then the mine would be worked out much sooner, after
which the labourers would have to look elsewhere for employment.
t It may also be worth while to remark that labour-saving appliances do
not always increase the quantity of the produce. Thus, the substitution of
ploughing for digging undoubtedly produces a lighter crop from the same
extent of land, and in gardens and other places where the highest style of
culture becomes necessary, hand-labour is still resorted to. But the substi-
tution has become almost universal, because the saving of labour is proportion-
ately much greater than the diminution in the value of the crop ; and if a
method of growing half our present crops on the same extent of land with
one -tenth of the labour was discovered, it would probably be adopted as an
improvement in agriculture. It may be indeed that horse -labour enables a
greater extent of land to be tilled, and that thus on the whole its effect has
been to produce a greater quantity of corn even after deducting the com con-
sumed by the horses. But there are evidently hmits to the apphcation of this
principle ; for we do not possess an unlimited quantity of land capable of
being tilled. In some future age, if the price of corn should become very high
and the production of the largest amount of it for human sustenance should
become an object of primary importance, we may have to get rid of our horses
and resort once more to the spade. Labour-saving appliances of the kind
which I have just referred to may tend at once to lower wages and raise the
price of food.
J
90 Capital and Labour. .
Capital (as is usual with Political Economists) to wealth
destined for production,* the alleged dependence of
labour on capital must be confined within still narrower
limits. For wealth spent unproductively often gives a
good deal of employment : as when a monument or
statue is erected, or buildings, &c., are ornamented in a
manner which does not enhance their utility. Wealth
thus spent either diminishes the capital of the country
or checks its growth, as does also wealth spent in war ;
but while it is being spent, it may create a great de-
mand for labour and raise wages accordingly. War,
in addition to this, diminishes the number of labourers,
unless we are to reckon soldiers among labourers : and
in some contests a great many soldiers perish or are
rendered unfit for labour. Both war and unproductive
expenditure thus raise wages, and increased wages may,
therefore, accompany a diminishing capital — diminish-
* I have not defined Capital, because definitions usually suggest difficulties
with regard to certain articles which are on the border-land between that
which is meant to be included and that which is meant to be excluded ; and
it is thus often possible for a critic to show that the author has used the term
in a sense inconsistent with his own definition. My use of the term Capital
will, I think, be sufficiently understood by anyone who seeks to understand
rather than to criticise. But it may be objected that I should not have spoken
of the labourer's savings as capital, because he must support himself whether
he is employed or not. Supposing, however, that a labourer can obtain j^^
for performing a piece of work by waiting for payment until it is finished, while
he can only obtain ^^4 if he insists on being paid in advance, is not his support
while engaged in this work a more profitable investment for his savings than
if he lodged them in a savings bank ? When he is out of work he may no
doubt have to draw on his capital for his support, as his employer must do
while his mill is idle owing to a strike or a lock-out. But his wealth does
not cease to be capital because he is sometimes compelled to spend a portion
of it. So long as it is not spent, and is available for such an investment as I
have mentioned, it seems to me to be properly capital.
Capital and Labour. g i
ing even relatively to the number of labourers. This
process indeed can be only a temporary one, and wages
will probably experience a heavy fall at the end of it ;
but as this fall does not come until the war is over or
the unproductive expenditure is at an end, it will gene-
rally take place just when capital again commences to
augment. Low wages will then for some time coexist
with increasing capital as high wages had coexisted
with diminishing capital.
Many writers describe the rate of wages as deter-
mined not by the relation between the amount of capital
and the number of labourers, but between the portion
of this capital which is destined for expenditure in wages
and the number of labourers between whom this portion
is divided. This part of the general capital of the
country is sometimes spoken of as the Wages Fund.
Nowjun the first place, if the term Capital is used in the
usual limited sense, we must, in order to make this
statement true, exclude servants, soldiers, &c., from the
class of labourers ; for their wages is not drawn from
capital — from wealth employed for the purpose of pro-
duction. But seeing that a labourer may enlist or
become a servant, it is plain that the wages of the one
class of workers must influence that of the other. In the
second place, the theory in question takes no account
of the difference between skilled and unskilled labour,
but assumes that the Wages Fund is divided equally
among all those who participate in it. In the third
place, there is in reality no Wages Fund. Capitalists
92 Capital a7id Labour,
seldom determine beforehand how much they will pay-
away in wages, and how much they will invest other-
wise. If materials rise, for instance, they must either
invest a larger sum in the purchase of them or purchase
a smaller quantity. In the one case they will have less
capital left to pay their labourers ; in the other they will
require fewer labourers to do their work : in which latter
case, less labour being required, wages will fall with the
diminished demand, and the amount paid to the labour-
ers will be lessened in even a larger proportion. Large
profits coming in during the year may induce the
capitalist to extend his operations and employ more
labour, while losses or slowness of sales may compel
him to contract them. Similar fluctuations are often
produced by speculation. But the most serious of all
the objections to this theory is that it takes no account
of the difference between capital circulating rapidly
and capital circulating slowly. In the former case
the employer's Wages Fund (if he has one) may
consist of three or four days' wages only : in the
latter it may have to include a sufficient sum to pay
the workmen for a whole year. What light can be
thrown on the problem of wages by adding such items
as these together and dividing them by the total num-
ber of labourers ? The proprietor of a fishing-boat may
have nine-tenths of his capital invested in the boat and
its appliances, and yet may pay double the value of the
boat in wages every year. The only way to arrive at
even the average rate of wages would be to treat as the
Wages Fund the sum expended in the payment of
Capital and Labour. 93
wages during a year (or some other definite period), and
to divide it by the number of labourers.* But the
Wages Fund in this sense is not any part of the capital
which existed at the beginning of the year or at any
other specified time, one portion of it being probably
destroyed as capital before another portion was pro-
duced. Moreover, such a calculation as this, if it could
be made, would only give us the variations of money-
wages ; and the value of money- wages to the labourer
is very different in dear and cheap years. And if there
was any cause which tended as civilisation advanced
to render the food of the working-man (the principal
item of his expenditure) dearer or cheaper, an increase
of money- wages might take place without any improve-
ment in his condition, or a diminution without any in
jury. Similar effects, too, might be produced by the
discovery of new gold and silver mines, or by the
working out of those which at present yield our prin-
cipal supply. For money-wages is wages in gold or
silver, and the value of a given amount of money will
always vary with that of these metals. The Wages
Fund theory is thus from every point of. view untenable.
While, then, it is true, in a certain senseVthat labour is
limited by capitalj^nd that the increase of capital (other
things remaining the same) is in general beneficial to the
labourer, it is also true that other things do not remain
the same, and that advancing civilisation and growing
wealth are always accompanied by new applications of
* Even this would not give the average rate of wages in the popular sense,
for it supposes that all labourers are in constant employment.
94 Capital and Labour.
capital which are less beneficial to the labourer than the
old ones. And while the production of wealth is in
general beneficial to both parties, in the distribution of it
and its increments, the interests of employer and em-
ployed are opposed. This opposition, I believe, can
only be overcome by the labourers becoming capital-
ists ; and as their individual capitals are very small,
this again can only be effected by an extensive system
of co-operation. The difficulty of working extensive
co-operative societies among the lower classes are, how-
ever, so great that, for some time at least, the conflict
between Labour and Capital must continue. Whether
wages could be fixed by a system of arbitration, as rents
are now fixed in Ireland, seems doubtful. It would be
an interference with individual liberty, on the one hand,
to compel an employer to keep his factory open and to
employ the same number of hands at wages which he
was unwilling to give as trenching too largely on his
profits, and on the other hand to compel the labourer
to work, although the wages were such as he was un-
willing to accept. And if the Court of Arbitrators fixed
wages at too high a figure (as they probably would do in
any country where political power was chiefly vested in
the working classes ; for Government Arbitrators are
usually selected with a view of pleasing the party whose
favour the Ministers are most anxious to secure), failures
among the employers, resulting in leaving a number of
labourers unemployed, would be the necessary conse-
quence. Masters and men must, therefore, I think, be
left to settle their own differences. But the growth of
Capital and Labour. 95
the co-operative system would afford considerable aid
in settling them. The wages paid by the co-operative
societies, and the balances distributed among the mem-
bers as profits at the end of the year or half-year,* would
show the men what wages they might reasonably ex-
pect, while leaving a fair profit for the masters ; and the
masters would hesitate to reduce wages much below
this point lest, besides inducing the men to strike, they
should thereby extend the system of co-operation and
raise up formidable rivals in trade. It may be added
that, as the augmentation of capital is not always advan-
tageous to the working-classes, the temporary stoppage
of this accumulation, caused by conflicts between the
employers and employed, do not always injure them,
though it is of course attended with suffering at the
time. The mere accumulation of wealth, apart from
all considerations as to its distribution, is not the object
at which any economist or statesman should aim.
The relations of Capital and Labour thus seem to
me to be sufficiently intelligible without introducing
the consideration of Land or Rent, and to afford an
explanation of the fact that material progress is not
always accompanied by an increase of wages or a dimi-
nution of poverty. It may be said, indeed, that if land
always yielded equal increments of produce for equal
increments of labour this would not be the case; for
land would then afford unlimited facilities for the in-
* Assuming, of course, that wages and dividends were not artificially forced
up by drafts on their capital, and their accounts falsified with a view of raising
wages in the neighbourhood. There would be a strong temptation to do this
when a strike or lock-out was contemplated or in progress.
q6 Capital and Labour,
vestment of capital without any diminution in the re-
turns or therefore in the rate of wages. But supposing-
that we applied ten times the amount of labour to the
land and obtained ten times the present produce, w^hat
should we do with it ? How could we consume ten
times the existing amount of flax or cotton or even of
corn r If the entire population of the country increased
tenfold, we should no doubt be in pretty much the same
position as at present. But, if the population increased
in any smaller proportion, the value of the new produce
would not be ten times that of the old ; and though if
wages was paid in kind the labourer would receive as
much as before, the part which he did not consume
would be less valuable to him for the purpose of ex-
change. This would be true whether the land was rent-
free or the rent varied in proportion to the produce.
It is not, therefore, because equal increments of labour
applied to land do not yield equal increments of produce,
that when capital increases faster than population the
rate of profits must fall. If equal increments of labour
applied to every commodity yielded equal increments of
produce, no doubt exchanges would always take place
on the same terms, however population might vary. But
even then there would be a limit to useful production.
If A could only exchange his oats for B's wheat, and
vice versa, production would stop when A grew sufficient
oats and B sufficient wheat to supply the wants of both.
Whatever was raised beyond this would have no ex-
change-value, because it could not be exchanged. But
the growth of capital is evidently in one respect inimical
Capital and L abour, g 7
to the working classes. Capital is one of those things
of which it is emphatically true that to him that hath
shall be given ; for, under ordinary circumstances, the
annual increment is pretty nearly in proportion to the
principal*. With the growth of capital, therefore, there
is always a tendency towards its accumulation in a com-
paratively small number of hands ; and if the original
capitalist is a worker, his successors frequently live on
what he has left them, z. e. on the produce of other peo-
ple's work, which produce, for their numbers, they con-
sume in much larger quantities than the working classes
do. Now in a country in which equal increments of
labour yielded equal increments of produce in every
department, how could the condition of the working
classes be improved by an increase in the number and
consumption of the idlers ? But it may be said that the
application of capital renders the increment of produce
more rapid than that of the applied labour. It often
does ; and this is, in fact, the only reason why the accu-
mulation of wealth in the hands of a comparatively small
number of persons, who spend most of its annual income
on themselves, is not an unmixed evil to the working
classes. Whether idle people are supported in a palace,
a workhouse or a gaol is of little consequence to the
working classes, save in so far as it costs more to
support some than others. I do not of course mean
* A small capitalist often realises a higher rate of profit, because he can
give closer attention to his business ; but, on the other hand, he has usually to
spend a larger proportion of his profits in maintaining his household, &c,, so
that the increase of his capital is slower notwithstanding his higher rate of
profit.
HT
gS Capital and Labour,
that all men of fortune are idlers. Some, for instance,
who have turned their attention to the affairs of State,
are among the hardest-worked and the most valuable
members of the community; and others perform a large
amount of excellent work in other departments. But
there are many persons in every wealthy country who
perform no valuable work, and still a larger number
who spend a great deal more than the value of their
work* — to say nothing of those who do actual mischief.
Now, if produce is proportional to population, when more
is consumed by idlers less will be left for distribution
among working men, and as capital increases more
will be consumed by idlers. On the other hand, if pro-
duce increases more rapidly than population, a larger
amount of it may be consumed both by the idlers and
by the workers ; and when this results from the growth
of capital (or of wealth), all classes are benefited thereby.
In short, as capital increases produce increases, but so
does unproductive consumption ; and the advantage or
disadvantage to the labourer will depend on the propor-
tion between these latter. But it is not owing to the fact
that equal increments of labour applied to land fail to
yield equal increments of produce, that both profitsf and
* Thus, though charities in general are very useful to society, a man who
does no active work, but with a fortune of ;^io,ooo a-year, gives 2^2000 in
charity, is not a much more useful member of society than the man with ;^8ooo
a-year who spends it all on himself. In economic phraseology, each of them
spends ^^8000 a-year unproductively.
1 1 mean the rate of profits. The absolute quantity usually increases,
because capital increases more rapidly than the rate of profits falls. The term
Profits, as used here, includes what is sometimes called Wages of Superin-
tendence — the return for the capitalist's labour in planning and superintend-
Capital and Labour, 99
wages often fall as society advances. Until men can
consume an unlimited quantity of commodities, an un-
limited amount of capital cannot be invested as profit-
ably as a limited amount; nor, I believe, is a society
possible in which the same proportion of an increasing
population can always be employed, for the same num-
ber of days in the year, in labour the efficiency of which
is constantly increasing. Increased efficiency of labour
would, under the most favourable circumstances, lead
rather to shorter hours and more intervals of recreation
than to higher wages. But even this it cannot effect,
whatever degree of fertility the land may possess, unless
the number and expenditure of the idle population is
kept within reasonable limits. If the labour of one
man, working constantly throughout the year, produces
enough to maintain ten persons for the same period, he
will not be allowed many intervals of rest in a country
where there are nine idle persons for one worker, or
where the number of both classes are equal and each
idler consumes on an average as much as nine workers.
And, speaking not of food but of commodities in general,
one idle man or woman sometimes consumes as much
as one hundred workers. He sometimes, moreover, con-
sumes not merely commodities but labour : for he employs
ing the work. It is doubtful whether this kind of wages (if it is to be so
called) rises and faUs with ordinary wages. At all events it is generally for
the interest of the capitalist that this kind of wages should increase, and for
the interest of the labourer that it should diminish. It is by no means neces-
sary, however, that a capitahst should earn wages of superintendence. He
may employ a manager, or he may lend his money to the person who really
conducts the business. The capitalist is thus not unfrequently an idler. /
H 2
lOO Capital and Labour,
a number of persons who would otherwise be productive
labourers in ministering to his own comforts or luxuries.
My intention is not to censure the idle persons to whom
I refer.* I am considering the question economically,
and showing how their existence and expenditure tends to
keep down wages. At the same time, I may remark that,
their unproductive consumption is not so large as it
appears at first sight. A considerable portion of what
they spend is in fact merely transferred to other persons
who use it productively. It is only the first cost of what
they consume which involves unproductive labour : and
unproductive labour itself may not be an evil in
countries where the demand for productive labour is
inadequate; though of course men of fortune would even
in that case confer a greater benefit on society by using
their wealth productively.
In conclusion, let me say that it is not rent or private
property in land which produces the large class of idle
people which is to be met with in all wealthy nations.
No doubt some hereditary owners of land are idle, and
the purchase of land or a morgage on land is a con-
venient investment for a man who has a good deal of
money and does not intend to work. But there are
plenty of other investments open to him — for example,
shares in public companies, debentures, purchases of a
portion of the national debt : while, even if cut off from
* *If any man will not work neither let him eat' is, however, an ethical
maxim, which those who are engaged in the training of youth should enforce
more frequently than they are in the habit of doing. Every man who has the
power of contributing by his labour to the good of society is, in my opinion,
morally bound to do so.
Capital and Labour. loi
these, he has still the simple resource of lending his
money at interest to persons who are in good credit,
taking care, of course, not to risk too much on a single
loan. The law might, perhaps, impose a limit on the
amount of money which a man might receive by gift or
bequest, or in any other manner without earning it ; but
when he has once received it, he cannot be prevented
from investing it in a way which enables him to live in
idleness on its annual interest. Nor, if it were possible
to prevent such investments, would it be desirable to do
so. The money would in that case be hoarded, and its
possessor would support himself in idleness by making
annual drafts on his hoard. Hereditary owners of land,
moreover, are not more idle than persons who succeed
in any other manner to fortunes of equal magnitude ; in
fact they are less so, for they feel an interest in their
lands which is rarely felt in stocks and shares. But,
notwithstanding all this, if we regard the total annual
income of the country as a common fund, it is evident
that when more of it is consumed by idlers there will be
less left for the workers, and vice versa ; and wages, de-
pending entirely on the share of the workers, must be
either lowered or checked in its advance, when the share
of the idlers increases, unless the common fund increases
so rapidly that both shares can be augmented at once.
An idle population is thus an injury to the workers, and
the injury is greater when the consumption of the idlers
increases. But material progress usually creates a class
of idlers whose expenditure is very large — a fact which
becomes more apparent when we consider that its ten-
r02 Capital and Labour,
dency is not only to accumulate capital in a compara-
tively small number of hands, but also to increase rents.
For this reason material progress cannot be an unmixed
benefit to the working classes ; nor would it be so if
private property in land was abolished.* Wise legisla-
tion may, perhaps, render it more beneficial than it is.
Co-operation among the labourers may effect something
more ; but I doubt whether the attendant evils can ever
be wholly surmounted — at least unless by some social-
istic system which would bring with it much greater
evils than it removed, and which assumes wholesale
confiscation as its starting point.
* More especially if the land-owners were adequately compensated for its
abolition ; for this would leave them incomes probably as large as before,
while they would have greater inducements to idleness, and I may add to
absenteeism and foreign investments. But I can see no more reason for con-
fiscating the rights of the present land-owners than for confiscating those of
the shareholders in a Railway Company, And if terminable annuities equal
to their present incomes would be an adequate compensation in the one case,
they would be an equally adequate compensation in the other.
Capital and Labour, 103
CoNCLUSORY Note.
Mr. George endeavours to establish the identity of
the interests of the capitalist and the labourer by another
argument which it may be desirable to criticise briefly.
The profit of the capitalist admittedly consists of three
elements — interest, insurance (or rather compensation for
risk), and what is designated wages of superintendence.
The grounds on which Mr. George summarily disposes
of the second of these elements are not to me very in-
telligible ; and he assumes that wages of superintendence
does not differ from ordinary wages, save that the labour,
being of a superior kind, obtains a higher remuneration.
Interest alone remains to be considered ; and he en-
deavours to prove (in the face of statistics which seem
to establish the contrary) that wages and interest must
always bear a fixed proportion to each other, and that,
therefore, both must rise or fall at the same time. Inte-
rest, he truly states, is the return or profit due to capital
as such. But capital is the produce of labour, and is,
in fact, merely stored-up labour, just as coal is stored-
up heat. Hence the earnings of capital and the earn-
ings of labour must bear a fixed relation : * for if wages
fall, interest must also fall in proportion, else it becomes
more profitable to turn labour into capital than to apply
it directly ; while if interest falls, wages must likewise
proportionally fall, or else the increment of capital
would be checked.'
This quotation is only saved from absurdity by the
1 04 Capital and Labour,
doctrine already examined that the wages of labour is
not drawn from capital but from its own produce. If
this were really so, the labourer whenever his wages
sank too low could, as Mr. George puts it, 'work for
himself and earn more in that way ; though even then
it is probable that he would hardly find himself able to
lay aside any considerable portion of his earnings and
turn it into capital. I assume that when Mr. George
speaks of turning labour into capital instead of applying
it directly, he means using it to produce capital for the
labourer himself, instead of using it to produce capital
for his employer. For the so-called * direct ' application
of labour means the application of it to produce capital
for the employer. Thus, during the whole time that a
ship is being built or a railroad being made, the labour-
ers' work is directed towards the creation of capital for
the employer — the reproduction of destroyed capital and
the creation of additional capital. The theory, therefore,
amounts to this, that if wages sank too low the labourer
would work for himself, and endeavour to create capital
for himself in that way, while if wages rose too high the
capitalist would leave him to work for himself, and de-
cline to employ him any longer at a rate which was in-
sufficient to remunerate the employer. But then the
question arises. Can the labourer work for himself?
There are very few works which he could undertake
without capital, and even in these few he would usually
find no opening. He can earn little or nothing by
working for himself, and as a rule he does not attempt
it. When out of work he first lives on his savings, if
Capital mid Labour. 105
he has any, and then on the poor rates or on private
charity until he can procure employment again. If a
labourer could always be hired at the same wages that
he could earn for himself when out of employment, he
could often be hired at a sum insufficient to sustain life
itself. But the poor law^s and private charity suffice
to prevent wages from sinking to this point, and the
competition among capitalists usually keeps it at a con-
siderably higher level.
It is no doubt true that, when profits are unusually
high, not only does the capital already in use increase
rapidly, but many persons are induced to use as capital
wealth which would otherwise have been hoarded or
spent on themselves. This increase of capital produces
an increased demand for labour, and wages rises in con-
sequence : while the reverse effect takes place when
profits are unusually low. But this does not prove that
there is any fixed proportion between capital and wages.
It is when profits are unusually high absolutely and not
proportionally to wages, that wages tends to increase ;
and it is when profits are unusually low absolutely and
not proportionally to wages, that the latter tends to
diminish. There is no reason why wages should not
be as high absolutely, when the ordinary current rate of
interest is two per cent, as when it is five per cent. ;
and as a matter of fact it varies slightly, if at all, with
the slow variations of interest in an old and long-settled
country. Wages may even rise when interest is falling.
It is only sudden and violent changes in interest or
rather profits that appear to have any effect on wages.
lo6 Capital and Labour,
Nor is it correct to say that capital is merely stored-
up labour. Its first nucleus, if I may so speak, may have
been the produce of labour, but it very soon becomes the
mixed product of land, labour and interest, or rather
profits. The part of it which is due to wages of super-
intendence may, perhaps, be said to be the produce of
labour, but it is not ordinary labour, nor, as I believe,
governed by the same laws. The phrase * wages of
superintendence,' I may observe, is an inadequate one.
It is one thing to decide on the best investments for
capital : it is another to superintend the management
of the capital which has been thus invested. * Wages
of superintendence ' points to the latter task, but the
former is often the more important. Mr. George would,
no doubt, describe the performance of the former func-
tion as labour also ; but can the same thing be said of
the abstinence of the capitalist in not consuming what
he has produced, and in applying it to the production of
more wealth ? However, even conceding in its fullest
extent the proposition that capital is stored-up labour,
why should its remuneration bear a fixed proportion to the
wages of present labour, unless the whole amount of
stored-up labour bears a fixed proportion to the whole
amount of presently-available labour ? Otherwise there
may be a difference between them similar to that which
exists between skilled and unskilled labour. And in
fact they do not bear any fixed proportion to each other.
In every prosperous country stored-up labour (if that is
a correct description of capital) increases more rapidly
than presently-available labour : and interest falls more
Capital and Labour, 107
rapidly than wages. Indeed wages may not fall at
all.
Mr. George might, perhaps, reply that if private pro-
perty in land was abolished, every labourer could work
for himself whenever he chose to do so, and that he would
do so whenever wages sank too low. But the cultiva-
tion of land requires capital, and if the labourer has no
capital he cannot apply his labour to the cultivation of
land for himself with advantage. Moreover, Mr. George
would not, I think, be satisfied with proving that if
private property in land was abolished there would not
be any conflict between the labourer and the capitalist.
He seeks to prove that there is no real conflict between
them at present, and that it is the land-owner who keeps
down — and equally keeps down — the earnings of both.
This appears to me to be a mistake. The capitalist and
the labourer are, for the most part, in the position of the
man who has food and the man who has not ; and the
former may in many cases treat with contempt the
threat that if he charges too much for his food the
latter will produce food for himself It is, indeed, just
when wages are lowest that the labourer is least able
to convert his labour into capital. He is in no posi-
tion to resist any proposed reduction of wages unless
he has saved something when wages were compara-
tively high.
I should, perhaps, observe that Mr. George, like
Ricardo and others, speaks of high and low wages
rather in a comparative than in a positive sense. He
UITITEIISI
1 o8 Capital and Labour,
refers rather to the proportion of the total produce
which the labourer receives than to the actual amount
of it. Even in this sense I do not think his statement
is correct ; but whether it is so or not is of little practical
moment. If, without any material change in the price
of the necessaries of life, the labourer who has been
earning two shillings a-day earns half-a-crown, he is for
all practical purposes receiving higher wages than be-
fore, and he will not concern himself much as to whether
there is a technical sense in which his wages may be
said to have been diminished. On the other hand, if
his wages were reduced to one-and-sixpence, his com-
plaints would scarcely be silenced by pointing out the
technical sense in which his wages had been raised.
To him his wages are highest when they enable him
to command most of the necessaries and comforts of
life, and they are lowest when they enable him to com-
mand least of them. And a similar observation maybe
made with respect to the capitalist, except that in his case
luxuries must be added. Now can it be said that when
the capitalist (supposing the amount of his capital un-
altered) is in a position to enjoy most of the necessaries,
comforts, and luxuries of life, the labourer is in a posi-
tion to do the same ? and not only so, but that their
command over these various enjoyments increases or
diminishes in precisely the same proportion ? Such a
doctrine seems to me to be neither sustainable in theory
nor consistent with known facts.
Combinations of employers, if sufficiently extensive.
Capital and Labour, 109
could force wages down to almost any extent, but for
the resources afforded by the poor laws, by private
charity, and by emigration. But reducing it too low
might prove a short-sighted policy on the part of the
employers, because (to say nothing of the loss incurred
during the original conflict) it would soon impair the
efficiency of the labourers, and after a time reduce their
numbers — at least unless the labouring classes could be
recruited from the middle classes, which is rarely the
case. But the employer ceases to have a common in-
terest wdth the labourer as soon as the rate of wages
suffices to keep the latter in working condition, and to
prevent the number of labourers from diminishing.
Assuming the work to be equally well done in both
cases, he has exactly the same interest in reducing the
wages of his labourers as in reducing the fuel of his
steam-engine. Nor do I think employers would, in
general, concern themselves much as to whether the
current rate of wages would reduce the number of
labourers at the end of fifteen or twenty years. An
early diminution in the number of labourers would
concern them ; but if they were assured of large profits
for a considerable time, * after that the deluge ' might
not appear a very formidable prediction. In the days
of American slavery there were States where, in the
current phraseology, slaves were * raised,' and others
where they were * used up ' ; and hired labourers would,
I believe, be often used up by their employers if the
latter could treat them as they pleased. The restrain-
no Capital ajid Labotcr,
ing forces are the poor laws, charity,* competition
among employers themselves, and the saving habits of
a portion of the working classes : to which may be
added the wdllingness of some landlords to let their
lands in small holdings, of some shopkeepers to sell
goods on credit, and the final resource of emigration.
But co-operation among the labourers themselves would,
I believe, form the most effectual check on the rapacity
of capitalists, while it would act also as a preservative
against strikes, in the case of a really fair employer.f
* Including philanthropy, or a sense of justice among many of the employ-
ers. Some of the latter, no doubt, would not adopt the using-up system
imder any circumstances,
t That a demand for commodities is not a demand for labour is an axiom
which some Political Economists never tire of insisting on. The present may
be a suitable occasion for making a few remarks on it. As simply stated, it is
an obvious but unproductive truism ; but the real question, I apprehend, is
whether a demand for commodities ^ro^z^c^j- a demand for labour. Of course
an increased demand for some commodities, accompanied by a diminished de-
mand for other commodities, may not produce an increased demand for labour
generally. But an increased demand for any commodity will, I believe, pro-
duce an increased demand for labour in the production of that commodity ;
and this increased demand for labour may not always require the application
of additional capital to the production of the commodity in question. Thus,
suppose the commodity to be ready-made clothes. The master tailor may be
able to supply the wants of his customers without increasing his capital, be-
cause every sale of ready-made clothes replaces (with profit) the capital in-
vested in them. The change in his capital will be that it circulates more
rapidly than before, the article which, on the average, remained on his hands
for six months being now (we will suppose) disposed of in three. But to
supply the increased demand he must employ an additional number of work-
ing tailors, and there will thus be an increased demand for that kind of labour.
This increased demand for labour results from an increased demand for com-
modities, and not from an increased capital. The axiom is in fact about as
true as that an increased demand for beef is not an increased demand for store
cattle. No doubt it is not ; but it produces it, and I believe it does so di-
rectly and without any intermediate link, at least on some occasions.
RENT, ECONOMIC AND ACTUAL
A LTHOUGH the question of Renthasbeen touched on
^ ■*■ in more than one place in this volume, a somewhat
fuller examination of its nature seems desirable at a time
like the present, when the Land Question has acquired
a prominence to which I think it is scarcely entitled on
its own merits. The theory of rent usually adopted by
Political Economists since the time ofRicardo is in sub-
stance as follows: — When men first began to cultivate
land it was rent-free, and they selected the most fertile
land in the country or district and cultivated it only.
But as population increased, it became necessary to pro-
duce more and more food, and it was found that the
land in cultivation did not produce as large a return for
the additional labour and capital expended on it as
it had done in response to the first application. It was
likewise found that by applying capital and labour to
inferior land as good a return might be obtained as by
applying additional labour and capital to the good land
already in cultivation. Hence inferior land came to be
cultivated ; and as population continued to increase, the
margin of cultivation became more and more widely ex-
tended. But as soon as land of different qualities came
112 Rent^ Eco7io7iiic and Actual.
to be cultivated, rent made its appearance. The good
land yielded a larger return for the labour and capital
expended on it than the bad land, and hence the pro-
prietor of the good land would not exchange with the
proprietor of an equal quantity of bad land without
receiving an equivalent for the difference.* If one field
yielded twenty barrels of wheat, while another yielded
only fifteen barrels when the same amount of capital
and labour was applied to it in the most advantageous
manner, the former was worth more than the latter by
five barrels of wheat in the year, which amount of wheat
or its equivalent in money the owner of one should give
annually to the owner of the other, in order to make the
exchange of fields a fair one ; and if the inferior field
consisted of the worst land which could be profitably
cultivated (when rent-free), five barrels of wheat would
be the annual rent which an occupier could afford to pay
for the better field — the largest amount which he could
give for the use of it while making the usual profit on
its cultivation. Acreable rent thus represents the
difference in produce between an acre of the land we are
considering and an acre of the worst land in cultivation,
supposing the capital and labour expended to be in both
cases the same: and rent in this sense must exist when-
ever land of different qualities is in cultivation. Under
different systems of land tenure this rent may belong
* Neither would he have done so previously. In answer to this, Ricardo
would perhaps say that the bad land had no exchange value until now, and,
therefore, could not have been exchanged for anything. But is not this
equally true of the good land on his theory ? As long as it produces no rent
it has no exchange value.
Reni^ Economic and Actual , 1 1 3
to the occupier or to some other person (usually the
landlord), or partly to one and partly to the other ; but
it exists in all cases and belongs to somebody. Rent
in this sense, it is added, does not raise the price of any
article of agricultural produce. All wheat of the same
quality will sell in the same market for the same price,
and if it costs more capital and labour to raise one part
of it than to raise the rest (this more expensive part
being required to meet the wants of the population), it
must all sell at the price which enables the more expen-
sive part to be grown with profit.* The less expensive
portion of the crop would not, therefore, be sold more
cheaply if the land was rent-free. The only effect would
be to give the occupier a larger profit. The rent — the
differential value of the cultivated soil — must, therefore,
be enjoyed by somebody, even if that somebody should
prove to be the State. There are some further develop-
ments of this theory which I need not state here. For
my purposes, I think this recapitulation w^ill prove suf-
ficient.
It is no objection to this theory that, considered
historically, rent did not arise in the manner thus de-
scribed ; for, whenever rent becomes a matter of contract,
and its amount is fixed by considerations of profit, its
nature becomes independent of its origin; and even,
when actual rent is not regulated by these consider-
* For if a cultivator who grows wheat for profit cannot realise a profit on
the most expensive part of what he grows, he will cease to grow that part.
The result would be different under a system of Land Nationalisation. If the
State grew all the wheat necessary for the consumption of the people, it could
sell at the average cost of production.
I
1 1 4 Rent^ Economic and Actual.
ations, we can ascertain how it would be altered if it
was so regulated, and thus arrive at the theoretic or
economic rent. There is, however, an ambiguity in the
word * cultivated ' which it is desirable to point out in
the first instance. Does that term refer solely to tillage, or
does it include pasture also ? If cultivation means tillage,
the theory affords no explanation of the fact that some
of the agricultural land which produces the highest rent
consists of permanent pasture. If it includes pasture
also, it is not true that men would, under any circum-
stances, commence with cultivating the most fertile
lands only ; for they would probably allow their flocks
and herds to roam over a wide tract of country, select-
ing for themselves the herbage which proved most
grateful to them. The fencing-in of the most fertile
pasturage would be postponed to a considerably later
period. Nor can any rule be laid down as regards the
earliest settlers, except that they will select the localities
which they consider, on the whole, most advantageous.
If they wished to be near the sea for the purpose of fish-
ing or of communicating with other countries, they
would prefer inferior land on the shore to superior land
in the interior. If they wished for an abundant supply
of fuel they would select a location in the vicinity of a
wood. Climate, the presence of water, &c., would also
come into consideration. As they would practically
have as much land as they wished to take, they would
care little as to what amount of produce could be de-
rived from a given quantity of land. They would rather
seek the largest return for a given amount of labour and,
Re7ity Economic and Actual, 1 1 5
capital. But even then the land which was in this sense
the most fertile might require more capital and labour,
and, perhaps, also more time than they could command,
in order to obtain the best return which it was capable
of yielding. In whatever sense we employ the terms
* fertile ' and * productive,' it does not seem to be true
that in a new country cultivation commences with the
most fertile or the most productive land, and then
gradually extends to the less fertile or less productive.
The fertility of the soil, moreover, is constantly changing.
Two or three corn crops in succession will diminish, for
a time at least, the fertility of almost any soil ; and if
there is abundance of land to be had without any great
difference in quality, cultivation will frequently pro-
ceed by raising two or three corn crops in succession
on one patch of land, and then leaving it to take care
of itself and tilling a neighbouring patch in the same
manner : in which case when the first-tilled patch has
enjoyed a sufficient rest, it is found to be fit for tillage
again. Even in old and long-settled countries, the
statement that the progress of cultivation is from
superior to inferior soils requires large qualification.
For all the land of the country which produces any
kind of herbage is under cultivation, if under that term
we include pasturage. Cattle and sheep in small num-
bers can be maintained on the most barren lands,
which lands can always be let at a trifling rent if the
landlord so desires. There is either no margin of culti-
vation in this case, or else that margin had extended
itself to the entire soil of the country before the memory
I 2
1 1 6 Rent, Economic and Actual.
of any living man. But if cultivation means tillage
only, some of the very best land in old countries is not
under tillage, and this not merely when it forms part
of a gentleman's or nobleman's demesne, but even
when it is farmed for profit ; and in Ireland, at all
events, there has been a steady conversion of tillage
into pasture for a considerable number of years.* A
disciple of Ricardo might, perhaps, explain this fact
by the declining population of Ireland, which would as
naturally lead to throwing the less fertile lands out of
cultivation as an increasing population leads to the
cultivation of them. But with such a food-market as
England in our immediate neighbourhood, this expla-
nation is untenable, and, in fact, it is often the best land
that is going out of cultivation, or rather out of tillage.
This land being capable of fattening cattle and sheep,
it is found more profitable to use it for that purpose
than for raising corn.
It cannot be denied, indeed, that in the majority of
civilised countries population seems to be almost con-
stantly on the increase, and more food is thus required
in every successive year. To meet this demand we can,
by better cultivation, derive more food from the same
quantity of tillage land, and sometimes, at least, from the
same quantity of pasturage also. No one, perhaps, has
ever yet seen an acre of land which could not possibly
be made to produce a heavier crop or to feed more beef
and mutton. But, under all ordinary circumstances,
♦ The quantity of land described as waste appears to be also on the in-
crease. But even this land will usually yield a trifling rent.
Rent^ Econo7nic and Actual, 1 1 7
the production of additional food from the same land
is attended with increased labour and expense ; and it
is usually found more profitable to increase the quantity
of land in cultivation than to force cultivated land be-
yond a certain point. The new land thus cultivated is
usually less fertile than that which is already in cultiva-
tion, and a differential rent thus springs up. It is not very
easy to see, however, how the exact amount of this rent
should be measured. It is rarely that the same amount
of capital and labour can be applied with as much ad-
vantage to an acre of bad land as to an acre of good.
The mode of cultivation is different, and neither, per-
haps, is cultivated in the most profitable manner. The
best rule to find the economic rent would seem to be as
follows : — Assume the land in both cases to be cultivated
in the manner usual with that kind of land ; deduct
from the value of the produce of an acre of each the
value of the labour, and a profit on the capital employed
at the rate usual with investments of equal risk, and
the difference will be the difference of the acreable
rents. When the rent thus calculated sinks to zero,
we have reached what is called the margin of cultiva-
tion ; but in a country fairly civilised and with a tolerably
dense population it never quite sinks to zero. Where
there is such a margin of cultivation it affords a measure
of rent ; but it certainly is not the cause of it. The
margin of cultivation is not a cause but an effect. It
depends on several causes, and might be determined
by anyone who had an accurate knowledge of these
causes, and of the country in which they operated. The
1 1 8 Rent^ Econornic and Actual.
authors who lay so much stress on the margin of cultiva-
tion as determining rent (to say nothing of Mr. George,
who, apparently, makes it determine wages and interest
also) should have asked themselves the question, What
determines the margin of cultivation ? or to put the
same question in a form more applicable to old countries.
What determines the point to which cultivation will be
carried ?
To get rid of the question as to pasture, I will
suppose that I am offered a tract of land rent-free, pro-
vided that I undertake to till it ; and also that I have
enough capital to till it in the most profitable manner.
My first inquiry will be, what is the most profitable me-
thod of tilling it ? Having ascertained this, I find, sup-
pose, that on this most advantageous mode of tilling it
the capital required will be ^3 per acre, of which ;^ 2 will
be expended in w^ages, and that the probable return
will be ^3 5 J. per acre. Now, if the current rate of
profit on similar investments is 10 per cent., it is plain
that I will decline the offer ; but if it is 7^ per cent., I
will accept it, because the investment will yield a little
more than that amount on my outlay. Hence, first, the
margin of cultivation will depend on the current rate
of profits extending when profits are lower, and con-
tracting when they become higher.* But there are
many other causes which will likewise extend or con-
tract the margin of cultivation. First, supposing that
* Mr. George's assertion is that interest depends on the margin of cultiva-
tion, falling as it falls (z. e. extends), and rising as it rises {i.e. contracts). This
I believe, inverts the relation of cause and effect.
Rent^ Econoinic and Actual, 1 1 9
the current rate of interest is 10 per cent, still, if wages
falls 5 per cent., while other things remain unaltered,
I can till the land with advantage ; for I only require
£2 18^. to replace my capital, and 55-. \od. profit, while
the land yields ;^3 55". The same effect would be pro-
duced if, other things remaining the same, I discovered
a mode of growing as large an amount of corn with a
saving of 5 per cent, in the quantity of labour. A saving
of seed and manure to even a small amount would like-
wise enable me to accept the offer with advantage. And
so, of course, would a slight increase in the price of
agricultural produce, unless the cost of labour increased
at the same time ; while increased facilities for carrying
the produce of this farm to the market, afforded by a
road, a canal or a railway, might also increase the
value of the agricultural produce as it stood on the
land, though the market price remained unaltered.
Thus any one of these causes would extend the mar-*
gin of cultivation ; and an equal number of causes of
an opposite character would contract it, and compel
me to give up the land which I held on the terms al-
ready referred to, inasmuch as I could no longer till it
with profit. It is true that there is a mutual relation
among these several causes, in consequence of which
the variations of all are frequently simultaneous. Thus,
when the price of corn rises, the wages of agricultural
labourers often rises, because there is a greater demand
for agricultural labour ; and when labour-saving appli-
ances are discovered, their application to the better
1 20 Rent, Economic a7id ActuaL
kinds of soil will lower the price of corn.* But though
these variations are simultaneous they are not equiva-
lent in amount ; and it is just because they are not
equivalent in amount that the margin of cultivation
varies at all. Considered by itself the extension of the
margin of cultivation raises wages, because it produces
an increased demand for labour, more labour being re-
quired to obtain a given quantity of agricultural pro-
duce from bad land than from good. But the farmer
is often induced to extend the margin of cultivation by
the low rate of wages, when he would be deterred from
doing so if wages was higher. An extension of the
margin of cultivation thus usually coexists with low
wages and low profits ; but it is their effect, not their
cause. It, is, however, one of those effects which react
* Labour-saving appliances are of two kinds, viz, those which produce an
increased return from the same land without applying a proportionally increased
amount of labour either directly or indirectly ; and those which produce a di-
minished return from a still more diminished quantity of labour. Both kinds
of discovery tend, in the first instance at least, to lower wages ; but the first
kind usually contracts the margin of cultivation, while the latter extends it.
The former of these facts is overlooked by Mr. Henry George, who thinks that
any labour-saving improvement which increases the produce of inferior lands
without requiring more capital and labour must lead to an extension of the
margin of cultivation. But if the productiveness of good land is increased in
the same or a higher proportion, the margin of cultivation will not extend, but
contract. Lands of very superior quality will now produce enough food to
supply the wants of the population, and the inferior soils will not be resorted to
at all. No doubt they would now produce a larger return in kind for the same
expenditiu-e of capital and labour, but they would not yield as large a return
in value. The owners of the superior land would be able to undersell the
owners of the inferior even more effectually than before. Mr. George is,
therefore, in error in assuming that all labour-saving improvements tend to
raise rents. One class of them apparently does so ; the other class does the
reverse.
Rent ^ Economic ayid Actual, 121
upon their causes, and render these causes less power-
ful in action than before. It is, in short, a kind of
natural remedy for low wages and low profits — a remedy
which alleviates those evils though it may fail to remove
them. The margin of cultivation thus affords to a certain
extent a measure of rent, wages, and profits, but its exten-
sion is not the cause of the increase of the first or of the
diminution of the second and third. Thus, to take the
case of rent, the rent of good land will always be higher
where there is no inferior land to resort to, and every
resort to inferior land lessens the demand for good
land, and lowers the rent. This result is most marked
when the inferiority is one of situation which becomes,
to a large extent, remedied by roads, railways, canals,
or improved sea-communication. In this case, when
the produce of the inferior land is rendered available,
the rent of superior land sometimes experiences a
serious decline. Indeed, as noticed elsewhere, the vari-
ations in the distribution of cultivation often depend
on the varying fertility of different soils — varying in the
economic if not the literal sense. Such variations are
not properly described either as extensions or as con-
tractions of the margin of cultivation, though the result
of them may be the cultivation of a greater or less
breadth of land than before. What really occurs is,
that the changed circumstances of the country necessi-
tate a resort to different lands from those previously
cultivated ; as would be the case, for instance, if the
sea swallowed up a portion of the land, and receded
from another portion situated in a different locality.
1 2 2 Rent^ Economic and Actual,
There is, however, another point of view from which
Ricardo's theory of rent requires examination. It re-
presents rent in the economic sense as the value of the
produce of any given piece of land over that of an equal
quantity of the worst land in cultivation. I have al-
ready noticed that the quantity of capital (including
payments to labourers) required to cultivate land is
very different in the case of lands of different qualities ;
and, to make a fair comparison between two kinds of
land, we must suppose both to be cultivated in the most
profitable manner. On the theory of Ricardo, whether
the margin of cultivation rises or falls, the difference
of rent between two farms, both of which lie within this
margin, will be constant so long as the capital, labour,
and produce is so. But it seems clear that the current
rate of profit must also be taken into account. Let us
take two farms, one of which can be best cultivated
with a capital (including payments to labourers) of
^lo per acre, when it will yield a return of ^14, while
the other can be best cultivated with a capital of ;^3
per acre, when it will yield a return of £a^. What is
the difference of rent ? It is plain that to answer the
question we require further data. If we suppose the
current rate of profits to be 25 per cent, or 10 per cent.,
we can, indeed, answer the question ; but, contrary to
the theory of Ricardo, we do not obtain the same an-
swer. If the rate of profit be 25 per cent., the rent of
the first farm is;^i 10^. per acre, and that of the second
farm is 5^., while if the rate of profit is 10 per cent, the
acreable rents are ^3 and 14^. respectively. The differ-
Rent^ Ecojiomic arid Actual. 1 23
ence of rents is^i ^s. per acre in the former case, and
not less than ;^ 2 6^. in the latter, although both farms
are, in both instances, comprised within the margin of
cultivation. Perhaps the disciple of Ricardo would
reply that I should not have compared an acre of each
kind of land, but an acre of the good land with 3I acres
of the bad. Possibly : but this is in the first place to
abandon the theory as an explanation of acreable rents,
while in the second place it involves a definition of fer-
tility which will often conflict with the theory that cul-
tivation proceeds from the more fertile to the less fertile
lands. For it is not impossible that the best return for
the capital and labour expended may be afforded by an
extensive mountain farm, where a comparatively small
number of hardy cattle and sheep range at large over
the mountains, and this land may, in proportion to the
capital and labour expended on it, yield the highest rent,
though in proportion to its extent it yields the lowest.
But we do not begin with mountain farming. On the
contrary, it is probable that the mountains were left in
the possession of wild animals long after the lowlands
were cultivated, and that even the very limits of these
mountain farms were originally marked out by the cul-
tivators of the lowlands building fences to exclude the
wild animals that still inhabited the mountains. The
race of wild deer in fact are not yet extinct in some of
the most mountainous districts. When we once get rid
of the idea of acreable rent, almost any theory of rent
may be adopted, provided we select units of good and
bad land to suit our purpose. In fact by selecting
1 24 Rent^ Economic and Actual.
suitable units it might be plausibly maintained that the
economic rent of all land was identical.
To recapitulate ; rent, it is said, tends to rise as
civilisation advances ; for the population will increase,
and this will generate a demand for more food, which
can only be obtained by cultivating inferior soils, or
by forcing the cultivation of land already in cultiva-
tion to a higher point. In both these cases the
additional food can only be obtained at a greater ex-
penditure of labour. The value of food will be fixed
by that which is obtained at the greatest expendi-
ture of labour, and is nevertheless required to supply
the demand. The power of raising food at a less
expense than this becomes thus a source of profit to
whoever possesses it, and this is the case with the own-
ers of all land which lies within the margin of culti-
vation for the time being. In answer to this it may be
said, in the first place, that in some civilised countries —
and countries whose state of civilisation appears to be
advancing — population is almost stationary ; of which
France affords a remarkable example. But, unless
population increases, the theory in question with all its
corollaries falls to the ground. In the next place, in
every civilised country discoveries are constantly being
made which enable food to be produced with less
labour than before ; and the tendency of rent to rise
will not show itself unless the increased demand for
food, arising from a growing population, requires that
the quantity of agricultural labour should be increased
to a greater extent than these discoveries diminish it.
Rent^ Economic and Actual, 125
Whether this will be the case or not will depend on
many circumstances : on the rapidity with which the
population advances — on the rapidity with which the
return which the soil yields to additional labour di-
minishes when we have passed the point where the
proportionate return is at a maximum — on the quantity
of land in the country the cultivation of which has not
yet been pressed to this maximum point — on the num-
ber and value of the labour-saving appliances which
have been discovered, including among labour-saving
appliances those which prevent the waste of food; and on
the possibility of importing food from other countries —
a possibility which may keep food at a moderate price,
and prevent rents from rising to any great height in a
country which is too densely-populated to supply food
for its inhabitants otherwise than by exchanging its
manufactures or mineral produce for food supplied from
elsewhere.* The tendency of rent to rise is thus not by
* Mr. George has an easy method of getting over such considerations as these.
Since all wealth, says he, is interchangeable, the man who produces any kind
of wealth produces food ; for he produces that which he can exchange for
food. And, since labour becomes more productive as civilisation advances,
he can produce more wealth with the same amount of labour in an advanced
state of society than in its primitive condition ; and it is tacitly assumed that
this increased amount of wealth can be exchanged for more food. Now, it is
evident that unless the production of food increases at the same rate as the
production of other commodities, these commodities will not exchange for the
same amount of food as before. A gold-digger does not produce food. He
can only obtain food by exchanging his gold for food grown by someone else,
and whenever the food-supply runs short, gold will purchase less food than
heretofore. Though the gold-digger might obtain twice as much gold as he
did previously, he would be a loser by the change, if the price of food was
trebled in the meantime. Food is a necessity for the human race. The man
who produces no food must exchange what he does produce for food at the
126 Rent^ Economic and Actual,
any means universal. There are causes which tend to
raise it, and which operate over a great part of the civil-
ised world ; but there are also causes which tend to
lower it, and which are even more universal in their
operation, though they may sometimes prove inferior
in strength.
Actual rent, however, will only coincide with eco-
nomic rent under circumstances which rarely occur.
To make them agree we must suppose that the tenant
has no interest in the soil, and no permanent tenure —
that the landlord keeps back no portion of his land from
the market, and accepts nothing short of what I may
term the market-rent. In this case, the tenant will
obtain the ordinary profit on his capital (including
payments to labourers), the ordinary wages for his own
labour (the amount which a man of equal bodily and
mental powers, &c., could earn with equal exertion
in a different occupation), and a certain compensa-
tion for his risk.* The rest of the proceeds will, in
the absence of taxes, pass to the landlord in the shape
current rate of exchange, no matter how favourable to the food-producer that
rate of exchange maybe. Notwithstanding the interchangeable character of
wealth, the possibility of producing increased quantities o{ other\imds of wealth
affords no security against the shortening of our supply of food. The fallacy,
in Mr. George's argument, is in fact the same as in that of the Free-traders,
who maintain that even one-sided free trade is beneficial, because other
countries must purchase from us a sufficient quantity of our goods to pay for
what we take from them. So they must ; but the question is, at what price }
* This risk is greater under a Free -trade tariff than under a Protectionist
one. For, under a Protectionist tariff, the farmer will be, to a considerable
extent, secured against the losses occasioned by a bad harvest by the increased
price of food ; whereas under a Free-trade tariff a good harvest in one food-
growing country may coincide with a bad harvest in another, and almost en-
tirely prevent an increase in the price of food in the latter.
Rent, Economic and Actual. 127
of rent. Improvements would be effected (or at least
paid for) by the landlord, and he would from the first
enjoy the benefit of the improved quality of the land.
It may be said that what he would then receive would
no longer be rent, but rent together with interest on the
capital expended in improvements. In a certain sense
this is true ; but where are we to draw the line ? There
is probably not an acre of rented land in the kingdom
which is now in the same condition that it was two
thousand years ago ; and how much of the change is
due to the work of man, and how much to the slow
operation of natural causes, is a problem which is, gene-
rally speaking, incapable of solution. The mere ex-
tirpation of wild animals, especially such animals
as wolves and foxes, increased the productive power
of the land all over the kingdom. The fact is that
actual rent almost always includes the annual value of
improvements, made either by the landlord himself or
by some person to the benefit of whose labour he has
now a legal right ; and if economic rent does not in-
clude the same element, no one can tell what economic
rent is. But, even independently of this, the conditions
under which economic rent would coincide with actual
rent are hardly ever realised. The tenant often holds
under an old lease whose term nearly approaches to a
perpetuity. Or, without a lease of this duration, he has
made extensive improvements, of which the landlord
suffers him to enjoy the annual proceeds. The tenant
and his predecessors have held at a rent below the real
value for such a length of time that their interest in the
128 Rent, Economic and AduaL
land has come to be regarded as a right, and is in some
cases so regarded by the law. The landlord, from phi-
lanthropy or from indolence, has neglected to raise his
rents when the economic rent has risen. The legisla-
ture has given the tenant such an interest in the soil
that the landlord cannot raise the actual rent to the
economic rent, even at stated intervals. The landlord
lets his land upon leases cumbered with such burden-
some and unreasonable conditions, that no sane man
would pay the full economic rent for it when thus ham-
pered in the use of it, and when he runs the risk of for-
feiture for the most trivial reasons. In such cases the
actual rent will be higher or lower, according as the
tenant believes that the conditions will be enforced, or
that they have only been inserted for appearance sake,
or in order to add to the solicitor's costs.* Again, the
* The state of the law on this subject is a scandal to our Courts of Justice.
The lease is drawn by the landlord's solicitor, entirely in the landlord's interest,
though there are usually a number of covenants inserted which are of no real
benefit to him. By a legal fiction, however, the solicitor is supposed to be
acting for the tenant, who has thus to pay the'costs of preparing a document
■which binds him hand and foot. This document is very often imperfectly ex-
plained to the tenant, and if he objects to some of its provisions he is told that
the lease is in a form in use on the estate {though the tenant has probably to
pay for preparing it on the same scale as if it was all original matter), and that
the landlord will have no other, whether the holding is a mountain-farm or a
public-house. Building-leases of any considerable length often contain cove-
nants which become simply absurd before the lease expires. I knew one in-
stance in which a man was utterly ruined by opening a shop, because there was
a covenant against shops in a head-lease of which he knew nothing. On the
premises comprised in this head-lease there were half-a-dozen shops, some of
which had been open for years without objection, while one of them had evi-
dently formed part of the very same building with the house in which the new
shop was opened. The history of the leases in this case was somewhat re-
markable. A let the premises to B with a covenant against shops. B let a
part of them to C without any such covenant, and with covenants for title and
Rent, Economic and Actual. 129
landlord lets his land at a rent less than the economic
rent to a relative, a friend, a political adherent, or a per-
son of his own religious persuasion ; or else he does
so with the object of having the tenant in his power,
the threat of depriving the latter of a valuable interest
being much more efficacious than that of depriving
him of an interest which is worth nothing.* In some
authority to make the lease, covenants which, in a lease, are as unusual as
they are usual in all other conveyances for value ; and C naturally enough
let a part of his premises to D, with a clause that it should be lawful for him
to open a shop. The Court, however, held that this last clause was a per-
mission not a covenant, and that when D's shop was closed he had no re-
medy against C. D, seeing a number of shops open around the premises
which he was taldng, was naturally unsuspicious of danger until he was caught
in this legal trap — the lease executed and the fine payable on its execution
paid. He had, however, in the eye of the law, ' constructive ' notice of the
covenants in the head lease ; and although the original law of the country did
not allow the head landlord to enforce these covenants against a sub-lessee, a
subsequent refinement known as equity (the non-legal reader may, perhaps,
regard the term as derisive) enabled him to do so. But in the view of equity,
while the benefit of a covenant descends, it does not ascend, and D had no
equitable remedy against B on his covenant for good title and for authority
to make the lease, because that covenant was not made with D but with C.
The present Irish law as regards clauses against aUenation in leases has been
notoriously made the vehicle of almost every species of fraud. In one case a
tenant sold his holding, pocketed the purchase-money, and while retaining it
evicted the purchaser because the latter had not obtained the landlord's con-
sent to the transfer ! At best this kind of covenant enables the landlord to
act the part of the dog in the manger, lessening the value of the tenant's in-
terest without any benefit to himself. And when a tenant improves land, in
the present state of the law, he hardly knows whether he is acquiring a right
to his improvements or rendering himself liable to the landlord for what, by
a strange perversion of language, is termed committing waste I It is waste,
for instance, to convert a bad pigsty into a good dwelUng-house ; and some
writers have laid down that it is further waste to pull down the dwelling-house
and erect a pigsty again.
* The modern system of landlordism has originated to a large extent from
the feudal system under which the chieftain was a ruler, and was not entitled
to the full economic rent. Much of the spirit of this system has descended to
our own times. There are but few landlords who expect both to rule their
tenantry and to exact the full economic rent from them.
K
130 Re7it, Econo7nic and Actual.
places, too, an increase of rents, though justified by
economical reasons, is attended with unpopularity and
personal danger which deters the landlord from resort-
ing to it. From all these considerations it is pretty
evident that actual rent does not coincide with eco-
nomic rent either in its amount or in its variations,
and that in practice when the economic rent rises or
falls most of the profit or loss falls to the lot of the
tenant. In many of the cases investigated before the
Irish Land Commission the rent had not been varied
for thirty or forty years, though the tenant had at no
time been a leaseholder. The economic rent must
have varied considerably during this period, but the
landlord neither increased his rent in the good times
nor abated it in the bad ; or if he made any abatement,
it was not equal either in amount or in duration to
the fall in the economic rent which dates from the year
1879. Of course there was some one who gained or
lost by the variations of the economic rent ; but many
Political Economists (including Mr. George himself)
frequently write as if this person must necessarily have
been the landlord, which is not the case. In other
countries the deviation from the economic rent is still
greater. This, for instance, is the case with what is
called the Metayer System ; under which, if an indo-
lent and unskilful tenant extracts but £2 dm acre from
his holding, while his industrious neighbour extracts
£/\. from land of the same quality, the former pays ^i
per acre as rent, and the latter £2. This system, which
thus operates as a direct tax on industry and skill, could
Rent^ Economic and Actual, 1 3 1
only have originated when the arts of agriculture were
stationary, and must have acted as a powerful check
on their progress. The only way to make a tenant
carry cultivation to the highest point to which it can be
advantageously carried is to allow him to retain the
whole additional produce after a certain point has been
reached. When the rent is a fixed quantity of the pro-
duce instead of a fixed proportion, it can be made
more nearly coincident with the economic rent than is
possible under the Metayer System ; but it has, at least,
this drawback, that the rent is highest when the profits
are least, viz. on the occasion of a bad harvest. For
a bad harvest always raises the price of corn, though
it seldom raises it sufiiciently to compensate the farmer
for the shortness of his crop. Under the system of
which I am now speaking, the landlord's fixed quantity
of corn is most valuable when the price of corn is
highest, that is, when the harvest is bad.* The tenant
thus pays the highest rent when he is least able to
afford it. Economic rent is thus almost always a differ-
ent thing from the actual rent paid by the occupier
to the owner ; and all inferences drawn from the
one to the other are of a very precarious character.
I am willing to admit that for the most advan-
tageous cultivation of land, the tenant should have sufii-
cient security of tenure to justify him in making all
* These systems, I may remark, are not systems of co-operation. The
landlord does nothing; the tenant performs the whole of the requisite labour.
In some of them, indeed, the landlord finds the capital necessary to work the
land, an arrangement which must lead to continual difficvdties ; but even this
is not working, and therefore not co-operation. It is a mere lending of capital
not an active application of it by the capitalist.
K 2
132 Rent^ Economic and Actual.
requisite improvements, considerable freedom in deal-
ing with the land while in his occupation, as well as
in parting with it when he thinks fit, and protection
against sudden and causeless changes in his rent. But
to extend these privileges to one class of tenants, while
refusing to extend them to others, is in fact introduc-
ing a system of Protection, and diverting the stream
of agriculture from its natural channel. If, for example,
it is more profitable to use the land of a certain dis-
trict in grazing-farms than in tillage, why should the
State endeavour to foster the latter mode of cultiva-
tion artificially by granting to the tillage-farmer pri-
vileges which it denies to the grazier ? If it can be
more advantageously used in large farms, or in farms
of medium size, than in small holdings, why should
the smaller tenant be protected from disturbance to
a greater extent than his neighbours ? In all proba-
bility State interference will prove powerless to arrest
the operations of natural causes ; but, if it should suc-
ceed in arresting them, the result can hardly prove
beneficial to the country in the long run. Moreover,
if the real object of the legislature is to encourage
tillage and discourage pasturage, there is a much sim-
pler method of effecting that object. Impose a duty
on imported corn, while foreign meat, both live and
dead, is allowed to enter our ports free of charge, and
the task is accomplished.
The State would evidently gain nothing by pur-
chasing up the interests of the present owners of pro-
perty (whether called landlords or tenants) if it paid
Re7it^ Economic and Actual. 133
the full value of them : while if it purchased them for
less than the value, it would gain at most the amount
which had been deducted from the value, or in other
words, confiscated. It could also levy a large sum by
taxes on land if it so desired ; but to throw upon land
more than its fair proportion of the general taxation
would be merely another form of confiscation. And
though this taxation would form a deduction from the
economic rent of the land (being in fact a rent pay-
able to the State), it by no means follows that it would
be borne by the landlord rather than by the tenant ;
for the latter might have such an interest in the land
(the result, perhaps, of his own improvements) that he
would pay both the landlord's rent and the State rent
rather than suffer himself to be evicted. A tax pro-
portioned to the produce of the soil instead of to its
letting value (as tithe was supposed to be) is still more
objectionable. It has the same effect on depressing
industry as the Metayer System of the Continent. The
imposer of such a tax not merely forgets that after a
certain point an enhanced amount of labour is requisite
to add equal amounts to the produce of the soil, but
that, even if it were not so, he takes most from the man
who works hardest, and least from the man who per-
forms the least work. Tithe (at least if it answered
its original intention) is a tax on labour, and a most
effectual means of deterring a man from working too
hard.* Public management is seldom profitable. The
* Checks to industry more frequently occur under the present system than
landlords are perhaps aware. Leases, as already noticed, often contain such
134 Renl, Economic and Actual.
State can gain nothing without confiscation, and would
probably fail to make the most of what it confiscated.
The law of landlord and tenant no doubt requires
amendment. The contract of the parties should be
assimilated to other contracts, and such exceptional
rights as that of distress (extending even to the goods
of a stranger) should be abolished ; while the law of
real property, as it is called, might, I think, be assi-
milated in most respects to that of personal property
with advantage. But this is a very different thing
from the nationalisation of land. Again, a peasant-
proprietary may be a desirable thing ; but the example
of peasant-proprietors, whose lands are unincumbered,
proves little as to the effect of making a peasant
the proprietor of his holding, subject to a charge
equal, or almost equal, to its full value. The State,
it is suggested, might lend him the purchase-money
at a lower rate of interest than that at which he
could borrow it from anyone else ; and this loan
would result in no loss, because the State could itself
minute and burdensome covenants, enforced by clauses of forfeiture or penal
rents of absurd amount, that the tenure is almost as insecure as a yearly-
tenancy, especially if a breach of covenant has once been committed, though
perhaps years have since elapsed. Again, in bad years some landlords, in-
stead of making a general abatement, pride themselves on dealing with each
case on its own merits ; which means that the idle and improvident tenant
who has saved nothing receives an abatement, while the industrious man who
has laid by a trifle is compelled to draw upon his little hoard in order to dis-
charge his rent in full. Another plan is not to evict the tenant or compel him
to pay up the full amount,' but to keep the arrears hanging over him to be
enforced if he should ever succeed in bettering his condition, or should dare,
in any way, to assert his independence. A temporary statutory abatement of
all rents is the true remedy for such an agricultural crisis as that of 1879.
Rent ^ Economic and Actual, 135
borrow the money at the same low rate. But the only
reason why the peasant-proprietor could not borrow
the money at as low a rate of interest as the State is
that in his case the loan involves more risk; and the
difference of rate is, in fact, the exact measure of this
risk. The State would incur this risk in the case of
every peasant-proprietor to whom it made a loan. It
would never receive more than the loan with the in-
terest agreed upon ; and, unless compound interest was
charged, there is no doubt that it would sustain a loss
in consequence of having to wait for payments from
the peasant-proprietors, while making its own pay-
ments on the day that the interest fell due. Then there
would be expenses of collection, legal proceedings, and
occasional losses on the result of a sale — all which
small losses would make up a considerable loss in the
^^g'J'^g'ate. This loss the taxpayers would have to
bear for the benefit of the peasant-proprietors. Private
ownership in land is not, I believe, an evil. Extensive
proprietors are often better landlords than smaller pro-
prietors ; and though the present state of things might
be improved, no royal remedy is called for, or is likely
to succeed. It only requires an application of the same
principles which have been applied so successfully to
trade and commerce to remove almost everything that
is anomalous in our Land System. The merchant who
sells goods on credit to a shopkeeper does not require
the latter to obtain his approbation of the purchaser
before re-selling them, nor does he insist on a right of
distraining the shopkeeper's goods in case the latter
136 Rent^ Economic and Actual.
fails to repay him on the day fixed for the purpose-
He does not prescribe the manner in which the goods
are to be stored and exhibited for sale, or require the
shopkeeper to vote for his candidate at the approach-
ing General Election. On the other hand, the shop-
keeper does not expect to obtain the goods at less
than the market value, even though his father and his
grandfather may have dealt with the same firm of
merchants before him, or to obtain an abatement in
the price because the market has fallen after he
made his purchase. The application of similar prin-
ciples to land is, it seems to me, what is required in
order to place rent on its true basis — bearing in mind,
of course, that it is not in every instance that the whole
of the economic rent belongs to the landlord. The
tenant is sometimes like the publican who buys one
kind of whiskey from a distiller in order to mix it with
other whiskey which is already his own property; in
which case the mixed whiskey would not be in any
sense the property of the distiller, although the latter
was unpaid. A right to resume the land under certain
circumstances is indeed unobjectionable, just as the
man who hires out a piano retains the right of resum-
ing it under certain circumstances ; but the hirer of the
piano is not required to execute a long deed defining,
among other things, how many hours in the day it is
to be played upon, and then to pay for the deed.
Why should the hiring of land differ from this ? Or
how does renting land differ from hiring it ?
'tjitivbrsity;
commercial crises.
'THHE explanations hitherto offered by Political Eco-
nomists of the recurrence of commercial crises
cannot be regarded as altogether satisfactory, though
they are certainly more so than that of Mr. Henry
George, who ascribes these phenomena to speculations
in land. This, perhaps, may be a cause in the United
States, but in the British Empire it certainly is not so.
Nor is any real explanation afforded by the scarcity of
the circulating medium, owing to our gold and silver
having been drained away to foreign countries. Wher-
ever there are abundance of men willing to give one
valuable commodity for another valuable commodity —
the owners of which latter are also willing to exchange —
means of exchange will be found, whether the circulating
medium is plentiful or scanty.* There is, moreover, a
quantity of gold and silver constantly in the kingdom, or
* A great many exchanges are in fact carried on by means of bills of ex-
change and promissory notes, with the occasional aid of such media as brokers
and clearing-houses. If coin ran short, it would be easy to render these
means more effective. But in commercial crises there is a general distrust
which renders sellers unwiUing to accept bills or promissory notes except in a
few special cases. This distrust— this failure of credit — is much more potent
than the scarcity of coin.
138 Commercial Crises.
within easy distance of it, which an increased demand for
gold or silver coin would soon bring into the market.
And it is evident that the same amount of coin will act as
the medium in a larger or smaller number of exchanges,
according as trade is brisk or dull. If the man who
receives payment for his goods in cash immediately
afterwards proceeds to lay out the price in other goods ;
and if the vendor of these goods adopts the same course,
and so on in succession, a small amount of coin will suf-
fice for a large number of transactions. On the other
hand, if the man who receives a cash payment keeps the
money intact as long as he can, and only lays it out
when he can no longer avoid doing so, a much larger
amount of coin will be required to transact the same
amount of business. Yet there may be as much or
even more coin in circulation in the latter case than in
the former. The real distinction is, that the rate of cir-
culation has become slower; but this is not the cause
but the consequence, or rather perhaps the necessary
concomitant, of dullness in trade.*
Moreover, the quantity of coin held by banks is no
certain test of the amount in circulation. There are
times when holders of coin are more ready to deposit it
with banks than at others. Unwillingness to deposit
money in banks, for instance, may be the result of a
* The theory that prices must rise and fall according as there is much or
little money in circulation is very similar to the theory that wages must rise
or fall according as capital is plentiful or scanty. The former theory, how-
ever, is the more objectionable of the two, because there are many other
things, such as approved bills of exchange, will answer the same purposes as
money.
Commercial Crises. 139
panic owing to which the stability of the bank is
doubted. Moreover, the Charter of the Bank of Eng-
land has been so frequently suspended in severe panics,
that the public is probably by this time aware that any
real failure of the circulating medium will in this way
be averted, so that its shortness need not create any
great alarm. No country will ever be ruined for want
of gold, when it is aJDundantly supplied with other va-
luable commodities. In ordinary times the notes issued
by the several Irish banks are accepted as readily as
gold, though these banks are not subject to any such
restriction as the Bank of England, and their notes are
not a legal tender. And in the same way approved
bills of exchange are often received as money. If it is
otherwise in commercial crises the reason is, not that
customers are apprehensive of not getting gold for their
notes and bills, but that they are apprehensive of not
getting the full value of them in any shape. It is but a
small part of our dealings, either at home or with
foreigners, that is settled by payments in gold. Gold
being easily portable, and there being a ready demand
for it in almost every country, its advantages as a me-
dium of exchange with foreign countries are obvious —
especially as it admits of a minute subdivision of values.
But it is idle to suppose that trade could not be carried
on without it, or that such a trade might not, if other
circumstances were favourable, prove a brisk and remu-
nerative one.
The explanation offered by over-production has
been ridiculed by some Political Economists ; yet that
140 Commercial Crises,
in a certain sense there may be over-production seems
pretty obvious. A man placed alone on a newly-dis-
covered island might, under favourable circumstances,
produce more of everything which the island was capa-
ble of producing than he could consume ; and what is
true of a single man is evidently applicable also to a
number of men. Such a community, if cut off from the
rest of the world, might find it be«t to limit the amount
of work done, and to give up more time to recreation
and mental improvement. If the inhabitants of this
island were placed in communication with the rest of
the world, they would probably discover that they could
enlarge their production with advantage, exchanging
the additional quantity for the productions of other coun-
tries to the growth of which their own island was unsuit-
able. But does it follow that, supposing every person
capable of labour to be kept constantly at work, the
entire surplus produce of the island could still be ex-
changed with advantage to the islanders for the products
of other countries ? This I do not see : and until it is
shown to be the case, I deny that over-production is an
impossibility. But there is a narrower sense of the term
in which I think over-production is not only possible,
but not unfrequently occurs. We may produce more
than can be produced with profit or advantage. No-
thing can be produced with advantage which does not
realize enough, after paying for the labour, to replace
the capital with a reasonable profit (together with the
rent, if there is any rent to be paid). Now suppose that
when there is no real increase in the value of a given
Commercial Crises, 141
quantity of our home productions, there is an increased
demand for labour with a view of increasing their
amount, it is clear that there may be a general over-
production of all home-grown commodities. The in-
creased demand for labour will raise wages, and
probably lead to the employment of more inefficient
labourers; while in some cases the increased produc-
tion will not be proportional to the increased amount
of labour. Under these circumstances, it is evident that
even if all our home-productions continued to exchange
for each other in the same proportions as before, and if
these exchanges took place with equal rapidity (which
is not likely), still the labourers' wages estimated in
kind would be larger than before, and a smaller propor-
tion of the total produce would be left for the employer.
Nor would this be all. Employers could not extend the
scope of their operations generally without increased
capital, which they would require to borrow, and the in-
creased demand for loans would doubtless raise the rate
of interest.* Even independently of any foreign trade,
therefore, a commercial crisis resulting from over-produc-
tion is no impossibility. If there was a general belief that
the price (or rather the value) of everything produced at
home was likely to rise,t there might be such a demand
* In order to increase the total amount of capital, the rate of interest must
be such as to induce foreign capitalists to lend, or to induce men to lend a
portion of the wealth which would not otherwise be employed as capital.
Loans by one capitalist (at home) to another cannot increase the total amount
of capital employed.
t It may be said that such a behef is economically absurd ; but merchants
have ere now fallen into economical absurdities on more than one memorable
142 Commercial Crises,
for labour on the one hand, and for loans on the other,
that the employer would find himself a loser instead of a
gainer when he had paid his labourers, and returned
the loan with interest. He might find himself unable
to meet the loan when called in, and a few failures
would produce a general feeling of insecurity on the
part of the lenders, which in a country where loans are
largely resorted to might produce a crisis. But the
case is much clearer when we turn to our export trade.
Though all our home products should continue to ex-
change for each other in the same proportions as before,
the increased supply of them thrown on the foreign
market would reduce their value in foreign exchanges.
We could no longer obtain the same amount of French
wheat in exchange for a given quantity of iron, if we
attempted to force a larger quantity of iron on the
French market. There would thus be a reduction in the
value of any given quantity of our home products : for
the value of anything must be regarded as reduced if
its exchange- value is reduced in relation to some com-
modities, and is not raised in respect of the remainder.
A shilling would be of less value to me than formerly if
it still purchased the same quantity of meat, but only pur-
chased half the quantity of bread.* The significance of
occasion. And perhaps on closer analysis the absurdity of this belief will dis-
appear.
* There is no standard of absolute values. Anything is increased in value
if it will exchange for more of some useful commodities, and will not exchange
for less of any. It is diminished in value if it will exchange for less of some
useful commodities, and will not exchange for more of any. But in general
when values alter, the same thing will be found to exchange for more of some
commodities, for the same quantity of others, and for less of the remainder.
Commercial Crises. 143
over-production thus becomes clearer. The home-pro-
ducer who sends his goods to the foreign market has to
wait longer for a return than he expected, and then he re-
ceives it on a reduced scale. After paying his labourers,
he has no longer enough left to repay with interest the
loans which he has effected : and consequently, if he has
been trading on credit, he fails. If wages estimated in
kind had been cheaper, and if interest had been lower,
there might indeed have been no over-production : but
more has been produced than can be produced with ad-
vantage, or even without loss, under existing circum-
stances. And though it is possible for over-production
in this sense to be universal, it is not necessary that it
should be so in order that a commercial crisis should
result. It is sufficient if the over-production is so gene-
ral as to involve a greater demand for labour and for
loans than the circumstances will justify. It is by no
means necessary, as some Political Economists contend,
that the wrong thing should have been produced. The
labour and the borrowed money may have been applied
in the very best way in which that amount of labour and
that amount of money could have been applied. The
real difficulty was, that it was impossible to obtain so
In such cases it may have increased in value to some persons, and have dimi-
nished in value to others. The value of wheat is increased to a man, if, reduc-
ing his whole annual consumption to wheat at the present rates of exchange,
he would require less wheat to meet his expenditure ^han before ; while its
value is reduced to the man who would require more wheat for the same pur-
pose. But both of these things might occur simultaneously to different men.
And moreover, a man often varies the particular items of his expenditure when
values rise or fall. When the value of meat rises, for instance, he consumes
less meat ; and if wine falls at the same time, he consumes more wine.
144 Commercial Crises.
much labour and so much money on terms which left
any profit for the borrower and employer. But of course
when he borrowed the money and employed the labour,
he expected to realize a profit. He did so doubtless be-
cause he expected a rise in the price of the commodity
which he set about producing ; in other words, he spe-
culated on a rise which did not take place. Over-pro-
duction is thus the result of mistaken speculation.
The speculator, indeed, is very frequently not the
producer, but a merchant who purchases from the pro-
ducer. Thus, suppose a general impression arises
among merchants that manufactured cotton is likely
to rise. There is immediately a rush to buy manufac-
tured cotton in order to take advantage of the rise when
it comes, and this rush increases the price at once.
The speculative purchaser buys on credit from the cot-
ton manufacturer, or else borrows the requisite funds —
probably from a bank. The rise in the price of manu-
factured cotton induces the manufacturer to purchase
more of the raw material, and to employ more hands if
he can find a place for them, and in short to strain every
nerve to increase his production of manufactured cotton.
It may even induce persons possessed of the requisite
capital to build new factories. The quantity of cotton
in the market at first is below the average ; for the specu-
lative purchaser tries to hold over as long as he can in
order to take advantage of the greater rise in price
which he anticipates. But suppose this anticipation
proves groundless, what is the result I Sooner or
later the cotton thus held over must be thrown upon
Comjnerciai Crises, 145
the market ; and when it is, the greatly increased quan-
tity of it must lead to a heavy fall in the price. This
fall is augmented by another circumstance. The specu-
lator's credit has expired. He must realise almost at
once in order to meet the demands upon him, or failure
is the inevitable consequence ; so that, notwithstanding
the great quantity of cotton in the market, he must sell.
Hence the price falls much farther below what I may
call its natural level than it had been forced above it by
speculation ; and a considerable proportion of the cotton
speculators are ruined in consequence, while the manu-
facturers also may experience severe losses. Political
Economists may say that this was not over-production,
but production of the wrong thing. But can they show
that there was any right thing or any number of right
things — anything or any number of things which might
have been speculated in to the same extent with greater
advantage to the operators ? To produce what is , called
a crisis, however, speculation in any one commodity is
rarely sufficient. It is rather simultaneous speculation
in a number of important commodities that leads to the
result in question.
I have hitherto spoken of home products only ; but
speculative purchases of foreign commodities are usually
as efficacious in producing a crisis, if not more so. Sup-
pose, for instance, that for some reason — or without any
reason — an increase in the price of tea is expected. A
number of speculators immediately compete with each
other in purchasing as much tea as possible; for which, as
a consequence of the increased demand, they have to pay
L
146 Commercial Crises.
a higher price than was previously current. The price
of tea increases, and the consumption consequently de-
clines, while the speculators at first keep back as much of
their tea from the market as they can, in order to obtain
the utmost advantage from the expected rise. Ulti-
mately the tea has to be forced on the market in order
to meet their liabilities, and then comes a crash. The
holders of tea are even more powerless than the holders
of manufactured cotton, because resource of exportation
is much less available. Speculations of this kind often
occur simultaneously in a large number of foreign pro-
ducts, in which case there will probably be a general
collapse followed by a crisis ;* and of course the crisis
will be more intense if a similar course of speculation
in home products has been going on at the same time.
The contest in such cases is often between the specu-
lative merchants on the one side and the men of fixed
incomes, or at least whose incomes are but slightly
affected by commercial prosperity, on the other. To
men of this latter class a general rise of prices is
ruinous, and they naturally struggle against it as long
as they can. When prices go up they diminish their
consumption. They use up their stocks on hand instead
of keeping a constant supply by them. They only pur-
chase when they canot help it, and then buy as little as
they can. This occurs, not only because in many cases
* Extensive speculative purchases of foreign commodities naturally lead to
the exportation of gold, the abnormal increase of imports not being sufficiently
met by the ordinary modes of exportation. A drain of gold, as it is called, is
thus often a symptom of an approaching crisis ; but it does not appear to me
to be the cause of it.
Commercial Crises. 147
they cannot afford to increase their expenditure, but also
because there is generally among them a well-grounded
conviction that prices must fall. In the contest the ad-
vantage is entirely on their side. Loans ready to be
called in are not hanging over their heads ; and if they
were they would afford a reason for not purchasing
rather than for purchasing. They are in no such diffi-
culty as the speculator who finds that in order to realise
a profit he must not only obtain a higher price than
usual, but dispose of more than the usual quantity of
goods at that price. And not only is an anticipated rise
of prices ruinous to the merchant when his expectation is
disappointed, but even when a rise does take place, it
may fall so far short of his anticipations as to leave him
a loser instead of a gainer.*
An excess of imported goods in the market can
hardly be described as over-production. A more correct
term would be over- supply; and as this latter term is
applicable to home products also, it will be better to
speak of over-supply than of over-production. There
is an over-supply when the supply exceeds what Poli-
tical Economists call * the effectual demand ' ; but as
this phrase is misleading, and we might with equal
propriety or impropriety speak of 'the effectual supply ',
I venture to offer a few remarks on the subject of de-
* Sometimes the men of fixed incomes participate in the general expecta-
tion of increased prices, and buy as much as they can before what they regard
as the highest point is reached. But if their purchases fall considerably short
of the stock that has been laid in on speculation, this may produce the worst
crisis of all. For just when the goods which have been held over are forced on
the market the demand for them has ceased. Every one is already supplied.
L 2
148 Co77i?Jiercial Crises,
mand and supply. Demand, in one sense of the term, is
willingness to purchase by a person who has the means
of purchasing, or who can obtain credit from the seller ;
but the word is more usually employed to mean the quan-
tity of any kind of goods which persons possessed of
the requisite money or credit are willing to purchase.
Supply, on the other hand, is the quantity of goods
offered for sale. But a little consideration shows us
that neither of these quantities can be fixed, even in
relation to a particular time and place and a parti-
cular class of goods, without introducing a third ele-
ment, viz. the price. Persons having sufficient money
or credit may be willing to buy a certain quantity of
first class beef at 85^. per cwt. if they cannot get it
cheaper, but they (or others) will be willing to buy a
larger quantity at 80^., and a still larger at 75^., and so
on. The demand for first class beef, therefore, depends
on the price, not merely in the sense that the quantity
purchased will diminish when the price rises and will
increase when it falls, but that there is actually in any
given market a greater demand— a willingness to pur-
chase a larger quantity — at a lower price than at a
higher one. And a converse remark holds good of the
supply. In one sense all the cattle in the market are
offered for sale ; but there are a certain number of
vendors who are willing to sell first class beef at 75^.
if they cannot get more, while others will not sell under
80^., and others again will not sell under 85^. There
is thus a larger supply at 855^. than at 805., and a
larger supply at 80^. than at 75^. The market price is
Commercial Crises, 149
that at which the demand and supply are equal.* If
the demand at this rate exceeded the supply, some of
the buyers would be induced to advance a little in order
to obtain what they wanted, and if the supply at this rate
exceeded the demand, some of the sellers would lower
the price a little in order to effect a sale. And this in
fact often occurs at a fair or market where the price
rises or falls in the course of the day. What, then, is
meant by an over-supply ? It has two meanings : first,
there may be such a supply that some of the vendors
cannot sell unless willing to submit to a sudden and
enormous reduction. To revert to the case of a cattle-
* Even in works like the late Mr. Fawcett's Manual of Political Economy^ in
which a view approximating to the above is advocated, it is by no means clearly
expressed. Mr. Fawcett speaks as if the supply was something fixed, the de-
mand being the only variable element, and the price being adjusted when the
demand becomes equal to the supply. Thus he puts the case of a picture of
Turner's for which two persons are willing to give 1900 guineas, one of whom
will advance to 2000 guineas, but not beyond, while the other wiU not advance
beyond 1900. Here the supply being one, the demand also becomes one
at 1900 guineas, and continues equal to the supply until 2000 guineas is
reached, after which there is no demand ; hence, according to Mr, Fawcett,
the price is between 1900 and 2000 guineas, the precise sum depending on
* the higgling of the market '. But this is evidently not true if the owner of
the picture will not sell it for less than 2500 guineas. In that case there is no
price ; for there is no point at which supply and demand are equal. There is
no demand at any price above 2000 guineas ; there is no supply at any price
below 2500 ; and in the proper sense of the term there is no price, viz. there
is no sum of money combining the two properties that it can be obtained for
the picture, and that the picture can be obtained for it. There are other cases
in which it is more obvious that the supply is not fixed. Take the Stock
Exchange, for example. What is the supply of Three per cent. Government
Stock on the Stock Exchange on any given day ? No one can say. Intend-
ing purchasers have as often to seek out intending sellers as the contrary, and
a sudden rise in the price will largely increase the supply before the market
closes. Nothing is more common than to give directions to the broker to
sell out when any given Stock reaches a certain price. The Stocks with re-
spect to which this direction has been given form no portion of the supply
150 Commercial Crises,
market, it is probable that there never was a market
in which all the cattle could not have been sold if put
up by auction and knocked dawn without reserve to the
highest bidder; but in a very dull market it might be
necessary, in order to effect a clearance, to sell some of
the animals for half or one-third of their estimated value.
There might be no one who was anxious to invest in
that class of stock, and the ultimate purchaser might
be a person who knew that it would be inconvenient
to pay for them and inconvenient to keep them, but
thought them so very cheap that it was worth his
until the price in question has been reached, but become part of the supply as
soon as that figure is attained. Political Economists, moreover, have seldom
taken much note of the demand except in the sense of the demand for con-
sumption. But there is another kind of demand which in commercial countries
is more immediately potent. This I may term the speculative demand. The
producer hardly ever sells to the consumer either directly or by means of an
agent. He sells to a jobber, a merchant, or a shopkeeper, who in turn sells
to the consumers ; and there are often three or four of these intermediaries in-
stead of one. This speculative demand is frequently considerably in excess of
the consumptive demand. When a grocer buys a ton of sugar from a whole-
sale dealer he has no demand for that amount — perhaps he has not received
orders for a stone. But he expects that in the ordinary com-se of business he
will dispose of his ton of sugar in perhaps three or six months at a remune-
rative price to consumers ; and if the consumers' demand equals his supply
within that period he is satisfied. When goods are forced on the market at
a slack time, the demand is almost exclusively of this speculative character.
The man who buys does not intend to consume the goods, but thinks that by
holding them over for a time they must rise. jSpeculative purchases of this
kind do not remove the over-supply. They merely transfer it to new hands.
The same quantity of goods is still on sale, but the holder expects to get a
little more than he paid, and holds over until there is a slight rise in prices.
If his expectation proves correct the price is a remunerative one to him, but
it would probably still be unremimerative to the original producer. Demand,
I apprehend, is the quantity of goods which will he bought at a given price,
provided that it cannot be bought cheaper. Supply is the quantity that will
be sold at a given price, provided that a higher one cannot be procured.
Supply, it is sometimes stated, is regulated by the cost of production, or
rather the cost of production together \vith the current rate of profit thereon.
Commercial Crises. 151
while to make a temporary sacrifice of his convenience
with a view to an enormous future profit. Some-
thing like this often occurs in a very dull market.
It is not so much that sales are very low as that they
are very slow, and that an attempt to force a sale of
any large quantity of the goods would lead to an
enormous reduction in prices. Taking the supply as
the whole amount of the goods offered for sale, the price
at which the demand would become equal to that supply
would be an exceedingly low one — far lower than the
vendors, by holding oh and selling in small quantities
This remark, however, requires large qualification. Men of course will not
produce that which they do not expect to pay the cost of production together
\vdth a reasonable profit, and though their expectations are sometimes dis-
appointed, they are probably about fulfilled in the long run. But the cost of
production is itself different under different circumstances. If I have a flax-
mill already built, the cost of production of linen for the future is much less
than before I built it ; and the fact that the mill is no longer worth anything
like what I expended on it, will not prevent me from making linen as long as
it is more profitable for me to do so than to close the mill altogether, or to
convert it into some other kind of buHding. Nor is it certain that the mill
would be suffered to go to ruin in a short time. The profit might be sufficient
to induce me to keep the mill in repair, though not sufficient to justify the
building of a new mill. With a great many things, too, the cost of production
of a given quantity varies with the total amount produced. Sometimes we
can produce a double quantity at less than double the cost, while in other
cases more than double the cost is required. But the cost of production can-
not regulate the price unless it is always proportional to the quantity pro-
duced. In that case, no doubt, the cost of production would, in the long run,
regulate the price, while the demand would regiilate the quantity produced.
But in all ordinary cases there are two elements to be considered — the de-
mand at a given price, and the cost of production of the quantity for which
there is a demand at that price. Nay, there is a third element, namely, profits.
The commodity will not continue to be produced unless it yields a reasonable
profit over and above the cost of production. But the rate of profit
varies from time to time, and a smaller profit will be accepted when the
thing can be sold as fast as it is produced, than when it must be kept
for an uncertain and perhaps considerable time on hands before finding a
purchaser
152 Co7nmercial Crises,
at a time, might reasonably expect to realise. This is
the most usual kind of over-supply. But I think it is no
misnomer to apply that term also to all cases in which
the market price is too low to afford to the vendor a
profit on the sale of his goods. For, whenever this is
the case, the supply is in excess of the demand at all
prices which would yield a profit on the sale. The
supply, as we have seen, is in excess of the demand at
all prices above the market rate ; and when that rate is
too low to yield a profit, the supply exceeds the demand
at all remunerative rates. A supply which is too large
to be disposed of with advantage may fairly be re-
garded as an over-supply.
An over-supply may be general without being univer-
sal ; but as an over-supply of many commodities often
follows a bad harvest, it would seem that it may co-exist
with an under-supply of other important commodities.
The possibility of this co-existence I do not deny; I only
deny its necessity. The result of a bad harvest would
indeed be better termed an under-demand than an over-
supply. The large portion of the population which de-
pends for its support wholly or partly on agricultural
pursuits must retrench its expenditure when there is a
bad harvest (under which head I include an unprofitable
year for the graziers) ; and besides retrenching their
expenditure, the farmers — indeed the whole population —
will probably have to lay out a larger sum in the pur-
chase of agricultural produce. The demand for other
commodities will therefore fall off; and if merchants
have laid in their usual stocks of these (apart from any
Co?nmercial Crises. 153
operation which could be properly called speculative)
there will be an over-supply. A bad harvest, however,
or even two or three successive bad harvests, seldom
produces what is known as a commercial crisis. Nor is
it true that in such years there is always an under-
supply of agricultural produce. There may even be an
over- supply. The bad harvest may have been antici-
pated, and extensive speculative purchases of foreign
corn and other produce made in consequence ; in which
case, if the harvest turns out to be not so bad as was ex-
pected, or if the speculation has been carried too far, the
natural under-supply may be converted into an over-
supply.
Violent crises more usually follow seasons of great
prosperity, or at least of great supposed prosperity ; and
they appear to be largely produced by our credit system
and the extensive prevalence of banking. The influence
of this last cause has been pointed out by more than one
writer. Banks can only derive a profit from the moneys
deposited with them by their customers by lending
the sums thus lodged. They must, of course, keep a
balance in cash to meet contingencies ; but, so long as
this balance is not intrenched upon, the more they can
lend the better. In prosperous times lodgments increase
rapidly, and the sums drawn out are not very large.
Banks have, therefore, large sums on hands which they
seek to lend ; and, in order to place as much of it as
possible out at interest, they accept borrowers of an
inferior class to those with whom they had hitherto
dealt. Even these borrowers are considered safe enough
154 Commercial Crises.
in good times ; and as bank loans are always of short
duration, the manager expects, even if the borrower
ultimately fails, to get back the greater part if not the
whole of the debt before the catastrophe. He looks
about him, too, for other means of securing the bank.
He gets a mortgage on the debtor's property, or an
equitable deposit of the title-deeds. He gets bills of
exchange bearing other names than that of the debtor;
or he requires the^debtor to get some friend to guarantee
the amount of his overdraft. The borrower is often a
man of small capital and adventurous spirit ; or is,
perhaps, already in insolvent circumstances, and sees
no chance of keeping his head above water save that
afforded by successful speculation. Finding, therefore,
that he has more money at his disposal than he ever
had before, he speculates largely ; and the man who
speculates largely, and meets his engagements for some
time, is certain to obtain credit to a considerable extent.
At last he speculates unsuccessfully and fails ; or, even
without unsuccessful speculation on his part, the banks
and persons who have sold on credit call in their money
at a dull time, when he cannot meet his engagements,
and failure is the consequence. This failure involves
loss to others — to those who have signed bills for him,
who have guaranteed his account, who have lent him
money, or who have sold him goods on credit — some of
whom were trading in the very same way themselves.
One or more of these fails also, involving others in loss
and consequent failure '; and w^hen this process has
gone on for some time a general panic takes place.
Commercial Crises, 155
All creditors call in their money from their trade
debtors. Few of the latter can meet their obligations
at once, without raising a part at least of the required
sum in fresh loans; and such loans it is now almost
impossible to procure. Banks not only hesitate to lend,
but do not possess the means of lending, for many of
their lodgments have been withdrawn; and as, in the
general panic, a run on the bank may take place at any
time, it is necessary to keep a larger proportional sum
on hands, in order to meet the claims of the depositors
who have not as yet called for their money. In fact,
during such crises, perfectly solvent banks have some-
times been compelled, not only to give up lending but
to stop payment, because they could not call in their
loans fast enough to meet the demands of the customers
who wished to withdraw their lodgments. The means
by which such crises have been alleviated will be noticed
hereafter. I will only say here that the inability to lend
or to pay does not arise solely, or even chiefly, from the
scantiness of the circulating medium ; nor is the mere
augmentation of that medium sufficient to remove it. If
commodities were in good demand, and traders generally
had enough of them to meet their obligations, creditors
would accept payment, at least temporarily, in commo-
dities ; while, on the other hand, it would be no allevia-
tion of the calamity if banks had millions of gold coin in
their reserves, provided that in the general panic they
were afraid to lend it. These reserves would save the
banks from stopping payment, and perhaps a few of the
156 Commercial Crises.
depositors would lend their money after withdrawing it ;
but that would be all.
But commercial crises can, I believe, be guarded
against to a considerable extent by legislation ; not by
keeping a sufficient amount of coin in the country, but
by discouraging the system of extensive speculative
purchases on credit. Until the year 1883, at all events,
our law of bankruptcy made it too easy for such spe-
culators to get rid of their obligations. They had in
general only to give up their present properties — out
of which, on one pretext or other, they usually managed
to save something — in order to get clear of their debts
for the rest of their lives ; and though they should after-
wards realise large fortunes, or succeed to large proper-
ties (provided that they had no interest in them at the
date of the bankruptcy), they were not bound to pay
their creditors a shilling. In hardly any instance were
they subject to any penalty, except that of giving up a
property which was usually not nearly sufficient to pay
their debts, and almost all of which would have been
taken from them under executions if the Court of Bank-
ruptcy had not intervened. How far this state of things
has been remedied by the English Bankruptcy Act of
1883 it is too soon to judge; but I think even that Act
will be found to allow an insolvent debtor to carry on
business too long, though well knowing that his affairs
were getting worse, and that the probable dividend
which his creditors would receive was getting smaller
every day. It should, in my opinion, be the duty of a
Commercial Crises. 157
debtor who is unable to pay his debts in full, and who
has no reasonable prospect of bettering his condition,
to have recourse to the Court of Bankruptcy at once ;*
and this duty should be enforced by legal penalties.
The speculator who, when already insolvent, plays a
reckless game of double-or-quits, living expensively
during the time at the cost of his creditors, should be
treated as a criminal.
But punishing the speculator will hardly suffice to
check reckless speculation so long as funds are availa-
ble for the purpose. When a man of little or no means
sees a chance of realising a fortune, and a probability
of being able to abscond with something in hand if his
operations should prove unsuccessful, he will hardly be
deterred by the fear of punishment. The only effectual
course is to shorten the supplies ; and this, I believe,
can to a great extent be effected by the simple process
of putting banks and other money-lenders on a real
equality with the remaining creditors when the estate
comes to be administered in bankruptcy. The present
state of the law (or practice) of bankruptcy is specially
favourable to banks, who almost always succeed in
getting a larger proportion of their debt than any other
creditor. Thus, supposing that a bank has advanced
;£ 10,000 to the firm of Brown and Thompson, who be-
come bankrupts, we generally meet some such state of
* It is unfair to put a creditor or several creditors to the trouble and ex-
pense of obtaining a judgment only in time to find that no execution can be
levied under it. If a debtor has no other defence than inability to pay, he
should be bound to plead insolvency, and should thereupon be adjudicated
bankrupt.
158 Commercial Crises,
affairs as the following : — The bank holds a mortgage
or lien on the joint estate worth ^2000 — one on the se-
parate estate of Brown worth ^^looo, and one on the
separate estate of Thompson worth ;^ 1000 more — while
it holds bills of exchange, bearing the names of the
firm and of. both the partners separately, for the whole
;£ 1 0,000. In bankruptcy the three estates of the firm, of
Brown, and of Thompson are treated separately, and a
secured creditor is allowed to value his security and to
prove for the balance of his debt after deducting this
value, as an unsecured debt entitled to a dividend out
of the estate. In the case which I have been consider-
ing, the unsecured debt is evidently ^6000, for the bank
is secured between the three estates to the amount of
;^40oo. But one of the bankruptcy rules on the subject
is, that in proving against any estate a creditor need
only deduct and value the security which he holds on
that estate. The bank can thus prove against the estate
of the firm for ^8000 instead of ;^ 6000, and receive divi-
dends on the former sum. Nor is this all. Since each
of the partners has signed the bills in his own name as
well as in the name of the firm, the bank is entitled to
prove also against the separate estate of each partner ;
and in each case it can prove for ;£ 9000, and obtain di-
vidends on that sum. Suppose, now, that the estate of
the firm pays 55-. in the;^i, and that each of the separate
estates pays 2s. td., the bank will receive in all ;^4ooo
from its securities, ;^20oo from the joint estate, and
^1125 from each of the separate estates, or;£825o alto-
gether ; so that, while the ordinary creditors of the firm
Commercial Crises. 159
receive no more than 25 per cent, of their debts, the
bank receives 82 J per cent.
Other rules, however, operate still more favourably
for the bank. Thus Jones owes Brown £ 1000, for which
he gives him a bill of exchange, or promissory note.
Brown discounts the bill at a bank, and becomes bank-
rupt. This bill of exchange is not regarded by the Court
of Bankruptcy as a security on Brown's estate ; and the
bank can prove for the entire amount and draw a divi-
dend on it, provided that it has received nothing from
Jones before proving its debt against Brown. And
though Jones should afterwards pay half or three-
fourths of the amount, the debt proved against Brown's
estate will not be reduced, but a dividend will be paid on
the full ^1000, when there is only £^00 or £2^0 due to
the bank. The only qualification of this rule is, that the
bank is not to receive more than 205-. in the £ i between
the estates of Brown and Jones ; but this restriction
is very difficult to enforce in practice, and the English
trustee system is not at all suited for its enforcement.*
Of course, if Brown carried a composition with his credi-
tors, the bank would receive the full amount of the compo-
sition, without any deduction for what it might thereafter
* In Ireland the bill or note must be produced to the official assignee be-
fore payment of the dividend, and the amount of the dividend is then stamped
on it. But the bank is not bound to mark on the bill payments on account
made by other parties, nor to make any affidavit of such payments after the
debt has once been admitted. For this and other reasons, the twenty-shil-
lings-in-the-pound principle, which sounds so well in theory, can hardly be
enforced even under the Irish system, which seems to me to be far superior to
the English in everything that relates to the ascertainment of debts and the
proper distribution of assets.
i6o Cormnercial Crises.
receive, or had received since the debt was proved, from
Jones. In effect it thus receives its full composition,
and retains an assignment of Jones's debt to Brown in
addition. Another plan sometimes adopted is this : —
The Bank obtains a judgment against Brown on foot of
the bill before his bankruptcy, and then proves on the
judgment making no mention of the bill, thus sup-
pressing the fact that Jones is liable to pay anything in
respect of the same debt.* Of course, if Jones gives the
bank any security for the debt, the value of this security
is not deducted when the bank is establishing a debt
against the estate of Brown.f It may, in fact, obtain
a dividend on ;£iooo from Brown's estate when there
is only £ioo due to it, and that £ioo is more than
covered by security — provided only that the security is
not on Brown's property, but on Jones's.^ The advan-
* In bringing an action in the High Court of Justice, or I believe in any
other Court, the holder of a bill is not bound to sue on it. He may sue for
goods sold, for money due on a settled account, for cash lent, &c., according
to the consideration for the bill. In this way the existence of the biU need
not be referred to in the legal proceedings at all, although there is, in fact,
one or more other persons liable on it. In Ireland, moreover, I am informed
that, even when the action is on a bill or promissory note, it is not the practice
to require production of the bill or note before marking judgment in case the
action is undefended. A man may thus obtain judgment on foot of a bill
which is actually held by some one else at the time. I do not know whether
the English practice on this subject agrees with the Irish.
t Another course often attempted in Ireland was as follows : — The bank
sold a mortgaged estate in the Court of Bankruptcy, on which occasion
an order was made finding the sum due. It then came in to prove against the
bankrupt's general estate for the deficiency, relying simply on the order, and
suppressing all notice of the fact that the debt thus found due was really made
up of a number of bills of exchange, some of which were very probably paid
off by other parties before the declaration of the dividend.
X So in proving against the estate of a surety or guarantor, the banlc can
prove for the whole amount due at the time, without making any allowance
Commercial Crises, i6i
tage which it thus obtains over ordinary creditors is
enormous.
An attempt is sometimes made to obtain a greater
advantage over ordinary creditors by the following trick.
The debtor — perhaps at the time in insolvent circum-
stances — insures his life and assigns the policy of assur-
ance to the bank, with a covenant to pay the premiums
on it. He then becomes a bankrupt ; and the bank, be-
sides proving for the whole amount of their debt (or
rather the whole amount which is unsecured), claims a
further sum — perhaps a very large one — as the value of
its interest under the covenant in question. Thus, though
the policy may be of some value, the assignment of it to
the bank does not diminish but largely increases the
amount for which the latter proves against the bank-
rupt's estate ; for the * value of the covenant ' may be
;g looo when the value of the policy is only ^50. In fact,
the devices which an astute bank manager or bank soli-
citor resorts to in order to obtain more out of the estate
than anyone else are endless.* Their proofs of debt are
for what it is likely to receive from the principal debtor. Even if the latter
has deposited with the bank shares which can be sold any day on the Stock
Exchange, the bank can defer the sale until it has proved its debt against the
surety, which it can do without making any deduction in respect of these
shares.
* Another example may also be mentioned. When a debtor carries a
composition with his creditors he must pay those who do not send in claims as
well as those who do, at the risk of being sued by the latter for the entire
amount of the debt ; and if a partly-secured creditor sends in no claim the
debtor must estimate for himself the value of the security, and tender the com-
position on the unsecured part of the debt. Knowing the consequences of
tendering an insufficient composition, he is more likely to tender too much
than too little ; but even when the creditor has received and pocketed the
amount he is not held to have accepted the debtor's valuation of the security.
M
1 62 Commercial Crises.
among those which it is peculiarly unsafe to entrust to
the scrutiny of a trustee who has no special skill in this
department, and who may have a motive for increasing
rather than for cutting down the claim of the bank, at
which perhaps he keeps his own account.*
A somewhat different plan is taken by another class
of money-lenders, who advance money to traders in
difficulties. They lend at enormous rates of interest
(usually 60 to 120 per cent.) payable at short intervals;
and they generally find an excuse for deducting some-
thing from the cash which is described as being lent at
this rate. If such money-lenders can g«t two or three
quarters' interest paid, their actual losses will be con-
siderably reduced ; while, even if the interest is not paid,
they will probably be able to prove and obtain dividends
in bankruptcy on two or three times the original loan.
Banks are generally partly- secured creditors. They abstain from making any
claim, leaving the debtor to find out the value of the security and tender the cor-
rect amount of the composition as best he can. The debt we will suppose is
j^2000, and the composition five shillings in the pound. The debtor estimates
the security at ;^500, and pays composition on ,^1500. The bank quietly puts
this sum into its coffers, sells the security for ;^iC)00, and keeps that also ; for it
is not bound by the debtor's valuation, and having received but;^375 out of
the debt o{ £^2<xxi, it is held that it has still a charge of ^^1625 on the mort-
gaged property, though the debtor's personal Hability may be at an end. If
the case was reversed, the valuation being ;^iooo and the proceeds of the sale
^^500, the bank could probably sue for the entire debt less the £2zp compo-
sition and ;^500 proceeds of the sale ; but at all events the debtor would have
to pay composition on the difference before obtaining his certificate.
* Even as regards a Court having jurisdiction in matters of the kind, when-
ever its judges bind themselves down by hard-and-fast rules they will find that
banks and money-lenders will find means of turning these rules to their own
advantage. What is really required is that the principle of equality should
be more distinctly asserted by the statutes, and that the judges in interpreting
the statutes should make eveiy other rule subservient to this one.
Commercial Crises. 163
As between lender and borrower I have no wish to re-
enact the usury laws; but surely the case is altered
when different creditors of the same debtor come into
competition. A sells (Z £\oq worth of goods on credit,
and B lends Q, £\oo on the same day. A year after-
wards C becomes bankrupt. Why should B get a divi-
dend on ;£200, while A only gets a dividend on ^ 100 ?
The law undoubtedly ought not to take from any
creditor a security which he has fairly and honestly
obtained ; but I think it would not be unreasonable to
require him either to rest satisfied with his security,
claiming no dividend out of the bankrupt's estate, or
else to give up his security and take his dividend on the
whole debt equally with the other creditors. And I think
the law ought to prevent any creditor from proving both
against the joint and the separate estates of partners in
respect of what is substantially the same debt : as, for
example, a bill of exchange or promissory note bearing
the name of the firm and also the names of the indivi-
dual partners, or a mortgage by the partners containing
a joint and several covenant to pay. Where the debtor is
not the person primarily liable on a bill of exchange or
promissory note, the holder of the bill should be treated
as a partly-secured creditor; and every creditor who
receives a sum of money in respect of the debt from any
other source than the debtor's estate should have his
debt forthwith reduced, and receive dividends thence-
forward only on the amount which still remained due.
Everything should be done to equalize the position of
the various creditors, and to give none of them an
M 2
1 64 Commercial Crises.
advantage over the others ; and I think every security
on a trader's property should be declared invalid unless
registered like a bill of sale * If banks and money-
lenders were really placed on a level with the other
creditors in bankruptcies and compositions, a great
check would be placed on reckless speculations. The
speculator could not get money to borrow unless he was
a man of considerable means; whereas it is generally
the man who has least of his own to risk — who perhaps
even now is unable to meet his liabilities — who specu-
lates most readily and most rashly. It is of real impor-
tance to the community that this kind of speculation
should be confined within narrow limits ; and if that
object can be effected by the simple and equitable
process of making our bankruptcy law what it professes
to be — a law for the equal distribution of the bankrupt's
assets among his creditors, giving to none of them a
preference over others — it is surely high time that this
remedy was adopted.
Lastly, I may notice the mode in which commercial
crises have often been checked, if not put an end to — an
increased issue of notes by the Bank of England. The
fact that this remedy has proved so effectual has led
• And if a payment was made shortly before bankruptcy, leaving something
still due, I think the creditor might fairly be required either to retain the pay-
ment and make no further claim on the estate, or else to return it and prove
for the amount due to him when it was made. Such an enactment would, at
all events, be desirable when the payment was obtained by threats or pressure
at a time when the debtor was in difficulties. Indeed it would hardly be un-
just to require such payments to be refunded without giving the creditor any
option in the matter. Pressure, in fact, is usually resorted to because the cre-
ditor knows that the debtor is unable to meet his liabilities in full.
Commercial Crises, 165
some persons to think that the crisis was caused by the
scantiness of the circulating medium, since it was re-
moved by merely increasing that medium. This, I
apprehend, is a mistake ; and the real alleviation arises
from a Government loan or Government credit, the dis-
tribution of which is entrusted to the Bank authorities.
What conceals this fact is the circumstance that the
Government is permanently indebted to the Bank in a
sum exceeding the issue ; and that in addition to notes
issued in exchange for gold, the Bank is authorized to
issue notes representing the portion of the National
Debt of which it is the owner. If notes could only be
issued in exchange for gold under the Bank Charter Act,
the real nature of the transaction would be evident. Per-
mitting the Bank on a special occasion to issue notes in
excess of the gold held by it, accompanied by an offer to
take these notes in payment of taxes, would then evi-
dently be an offer on the part of the Government to give
the Bank credit to the extent of the issue thus authorized.
If these notes were made a legal tender, the State would,
in addition to this, command all its subjects to give
credit to the Bank also ; but the taxes are so large, and
so many persons pay them, that anyone who received
the notes could ere long find means to shift the credit
from his own shoulders to that of the Government, if he
desired to do so. A further step would be necessary,
namely, to absolve the Bank from the condition of pay-
ing gold for these notes when presented for payment — a
course which, if the issue was small compared with the
amount raised annually in taxation, would hardly lead
1 66 Commercial Crises.
to any difference between the value of paper money and
gold money. This, again, would clearly be giving
credit to the Bank ; for, of course, it would not be
permanently exempted from the necessity of giving
gold for its notes. The Government would merely
enact that the Bank should not be required to meet
its obligations in cash for a limited time ; in other
words, that the holders of the notes should for that time
give the Bank credit, and refrain from enforcing pay-
ment of the debt due from the Bank to the holder.
And if the Bank lent these notes recklessly and failed,
the Government would have to bear the loss. Having
made these notes a legal tender, and thus compelled
its subjects to take them, it could not refuse to receive
them in payment of taxes after the Bank had failed.
There is thus a Government loan or Government credit.
The Bank has to select the persons among whom the
loan is to be distributed, taking the risk of non-payment,
but as a set-off retaining all the interest which the bor-
rowers pay. The Government loan is, of course, made
for the benefit of the community, not of the Bank, and
the Government therefore ought to see that it is applied
in the manner most beneficial to the community; and if
the Directors of the Bank of England are not willing to
apply it in this manner, the Government should select a
different channel for conveying its loan to those who
are in need of it.
From the preceding remarks it will be seen that,
whatever the defects of the Bank Charter Act may be,
the necessity of suspending its provisions in case of a
Commercial Crises, 167
commercial crisis is not, in my opinion, one of them.
The Habeas Corpus Act is one of the most useful and
important measures in the Statute Book, yet there are
occasions when it becomes necessary to suspend its
provisions. The State ought not to make the notes
of any bank a legal tender without assuring itself that
those whom it compels to receive them will lose nothing
by doing so ; and in order to obtain this assurance
some provisions not very dissimilar to those of the
Bank Charter Act seem to be requisite. It is true that
there are occasions when, in the interests of the nation,
these provisions must be relaxed; but it is far better to
entrust the power of relaxing them to a finance minister
whose action can be reviewed in Parliament, than to the
Governor and Directors of the Bank. The interests of
the nation hold the first place in the mind of the former,
but the interests of the Bank occupy that position in the
minds of the latter. In Ireland we are well accustomed
to special temporary measures adopted to meet pressing
needs, but they do not shake the faith of the nation in
the general administration of justice. The unalterable
laws of the Medes and the Persians are entirely unsuited
to a state of society like ours. We must be satisfied
with adopting the legislation best suited for general use,
and entrusting the power of varying or suspending it
to some highly qualified person or persons. And this
object the Bank Charter Act of 1845 seems to me to
effect. The general question of its merits, however, lies
beyond the scope of the present article ; nor do I possess
the qualifications requisite for their full discussion.
'iJHIVBRSITT
V
INTEREST
T T SURY, or the exaction of interest for loans of
^^^ money, or other valuable property, was at one
time regarded as immoral ; and a similar theory is now
being revived in certain quarters, apparently because it
is supposed that interest lowers wages. There are some
grounds for this last opinion. Wages will be in the
long run that portion of the produce of labour which
remains after replacing the capital, paying the rent
when necessary, compensating the capitalist for his risk
and his labour in planning and superintending the
work, and paying the interest on the capital invested
in it. Other things being equal, an increase in any one
of these items will diminish wages, and a decrease in
any one of them will raise wages. But this property is
not peculiar either to interest or to rent ; and an attempt
to depress unduly any one of the ordinary elements of
production will often lessen production to such an ex-
tent as to depress rather than to elevate the remainder.
Rent cannot, I believe, be got rid of; neither can wages
of superintendence, nor insurance, which, as I have inti-
mated elsewhere, would be better described as compen-
sation for risk. This last element, indeed, enters very
Interest. 1 69
largely into the cost of production, for it enters into
interest and wages as well as into the profits of the ca-
pitalist. The rate of interest is always high when the
risk is considerable, and it sinks to the lowest point
where there is practically no danger of losing any part
of the principal. So, too, the rate of wages is higher,
not only in unhealthy and dangerous employments, but
also in those where there is most risk of the labourer
being out of work. The man who lives by picking up
odd jobs must be remunerated, for the time during which
he is at work, on a much higher scale than the man who
is in constant employment. In fact, farmers find it best
to hire some of their labourers by the year, though at
particular seasons they have little or no work for them.
And the influence of risk upon interest is evident from
the fact that men often lend money without interest, not
from motives of friendship "or gratitude, but merely be-
cause they think it will be safer than if it remained in
their own possession. This is the case when money is
lodged in a bank which pays no interest on lodgments.
It is left there because the bank is the safest place
for it.*
It is, perhaps, t^is last circurfistance which has
enabled the theory that interest ought to be abolished
to obtain some hold on the public mind. For we con-
* Also, perhaps, because the system of drawing cheques on a bank is one
of the easiest methods of obtaining change for it. We can in this way always
obtain, on the shortest notice, the exact amount of change which we require.
If my possessions consisted of a ;^ioo note, I might find it difficult to pay
£1^ 5 J. 2d. ; but if the money is lodged in a bank, I have only to draw a
cheque for that sum.
1 70 Interest.
stantly see men lending money without interest, and not
imagining that they are conferring any great favour on
the borrower thereby. The capitalist, it may be said,
would not be deterred from employing his wealth as
capital even if interest was altogether abolished, be-
cause he could not otherwise earn the wages of super-
intendence which even at present often supplies his
principal means of livelihood. He earns this wages at
present, not only on his own capital, but on the capital
which he borrows at interest ; and it would be to his
advantage if he could borrow the requisite amount of
capital without interest. The abolition of interest,
therefore, would not impede industry and commerce,
provided we distinguish between interest and insurance.
No man should be required to lend money without being
insured against loss ; but if interest was reduced to the
sum which was necessary for this purpose, more would
be left both for the working capitalist and for the la-
bourer. The landlord might indeed come in for a share
of the advantage, but I do not see how he could obtain
more than a share of it.
Political economists, however, insist that the owner
of wealth who prefers to lend it rather than to consume
it requires some compensation for his abstinence. But
if with a fortune of ;^ 10,000 I lend ;^5ooo of it for a year,
what credit do I deserve for my abstinence ? If I spent
all my property in a 3''ear, I would find myself a beggar
at the end of it. A prudent man would preserve a part
of his fortune to maintain himself in old age, and to
provide for his family, even if lending money at interest
Interest. 1 7 1
was made a capital crime. The abstinence which con-
sists in not spending my wealth as fast as it comes in
is not in any sense the source of interest. Bees and ants
practise that kind of abstinence. But though the doc-
trine in question is badly expressed, it seems to me to
be substantially correct. Men who lend money for pro-
ductive purposes do in fact practise an abstinence or
forbearance which merits a reward, and which would
not be practised unless it was rewarded. This absti-
nence consists not merely in refraining from spending
their wealth, but in parting, for the time at least, with
their control over it. If I lend a man ;^ 1000 for a year,
I cannot make any use of it during that year. I may
meet with something which I desire to purchase in the
meantime. I may meet with an investment which would
induce me to become a capitalist and earn wages of
superintendence. I may require money for an expensive
lawsuit. I may have some special reason for travelling
abroad. I may find a friend in distress and desire to
assist him. I may wish to lay out money for some po-
litical, charitable, or religious purpose. But if I have
lent the money for a year, I cannot obtain what I require
for any of these purposes unless I can find someone who
is willing to take the loan off my hands, which most
probably he will only do on receiving a premium. In-
terest proper is compensation for parting with this con-
trol over my wealth, and its amount will of course depend
on the length of time during which I am required to
part with my control over it. No one would draw a
distinction between parting with the control over his
1 7 2 hiterest,
wealth for 500 years, and losing it altogether ; for we
feel no interest in the persons who may be our heirs or
representatives at the end of that period. The compen-
sation for lending money for 500 years would not there-
fore be adequate unless it was equal, or almost equal, in
value to the amount thus lent. Money is power. Its
value arises from the power of exchanging it for other
useful commodities. When this power is vested solely
in me, I cannot be expected to share it with another
without receiving compensation for so doing ; and it is
as much shared between myself and another man when
he takes the whole for a time, and I am to enjoy it after-
wards, as when he takes a part while I keep the re-
mainder. If man was immortal, and the future was to
him of equal value with the present, there might perhaps
be no such thing as interest ; but man is not immortal,
and the value of the future decreases rapidly as that
future becomes more remote. ;^iooo, payable in fifty
years, is not of the same value to me as ;£iooo pay-
able now, because the chances are that I will not be
alive when it becomes payable, while, even if living, my
powers of enjoyment will be greatly impaired. Many
of the friends, too, who might have derived a benefit
from it if paid now, will then be dead also, or if living
will be no longer capable of being assisted by it. The
boy on whom that sum might now confer a liberal edu-
cation will then be an ignorant elderly man, whose
position in life cannot be materially improved. But
supposing that the element of risk is excluded, the only
difference between £\ooo payable now, and ;£iooo pay-
Interest. 173
able in fifty years, consists of interest, or rather discount.
No one in his senses would pay ;^ 1000 now for the same
sum, fully secured, but payable at the end of half a cen-
tury. He would offer a much smaller sum ; and the
difference would then represent the discount arising
from the condition of deferred payment. But discount
is evidently interest in a different form.
It is now easy to explain why money is often lent to
a banker without interest. It is simply because the
lender does not part with the control over it. The
banker is bound to pay it back whenever the lender
requires him to do so. The latter has as much control
over the money as if it remained locked up in his desk,
while it is in a condition of greater security. But when
the banker asks to have the money left undisturbed for
three months, or for any other definite period, the ques-
tion of interest immediately arises. The owner of the
money ceases to have complete control over it, and de-
mands and receives a compensation in consequence.
And the same consideration enters into every descrip-
tion of hiring. No one would lend a piano, a horse and
cart, or a sewing-machine, for a definite period, on terms
that merely compensated him for the wear and tear of
the article, and the risk of loss. He demands and ob-
tains a further compensation for parting with the con-
trol over the article which he lends. This compensation
is interest. Indeed, rent itself arises from a similar
source ; for if the future was of equal value with the
present, why should not the landowner lend his land
for a year on terms of getting it back in an equally good
174 Interest,
condition, when that time had elapsed ? No one, more-
over, would pay rent for land if he was bound to give
up possession whenever the landlord demanded it. On
the contrary, he would probably ask for some remune-
ration as caretaker. It is because the landlord parts
with the control over the land for a definite period that
he exacts a compensation in the shape of rent, and the
rent will naturally be higher or lower according as the
control over the land has been more or less completely
parted with.*
From these observations it seems pretty evident that
interest must always form an element in the cost of
production, though its rate may be higher or lower
under different circumstances. Money repayable at call
cannot be invested in useful works with advantage. I
would not borrow the money which was required to
build a house or a ship, if it was probable that I should
be called on to repay it before the house or ship was
completed, and in a saleable condition. I might pos-
sibly be able to effect a second loan in order to pay off
the first, but it is more probable that I would be com-
pelled to stop payment or to suspend the work. Unless,
therefore, I could borrow the money for a definite time
I would not borrow it at all, and the house or ship
would remain unbuilt, unless I had enough money of
my own for the purpose. Nor is the case materially
* And, as I have noticed elsewhere, when the actual rent is less than the
economic rent, the explanation often is that the landlord has not completely
parted with the control over the land even temporarily. He has let it subject
to a number of restrictions which are often both useless and vexatious.
Interest, 175
altered if I expend my own money for the purpose. I
must evidently deprive myself of the control over the
money until the house or ship is sold, and for this I
require some compensation. Loans for a definite pe-
riod, and interest as consequent on such loans, must
therefore always occur when money is expended pro-
ductively, and consequently interest always forms an
element in the cost of production. The notion of getting
rid of it altogether under any system which recognises
private property is chimerical. Whether it could be
dispensed with under a socialistic system I do not
inquire.
While productive loans must always bear interest,
however, it is evident that even if there were no means
of expending wealth productively, loans at interest would
still take place. Persons with fixed incomes would
often find occasions for anticipating their incomes, as,
for example, when a father wished to make some pro-
vision for a son or daughter. Or again, payment of
his income might be delayed beyond the usual time, or
the amount of it temporarily reduced, as in the case of
a landlord after a bad harvest. Such landlords and
many other persons might have occasion for loans for
a definite period, although there had been no undue
expenditure of money on their part ; and persons who
exceed their incomes often, for a time at least, possess
sufficient credit to obtain loans on the ordinary terms.
There would thus be a demand for loans of money at
interest by persons capable of repaying them — or at
least supposed to be so — even if what I may call mer-
176 Interest.
cantile loans did not exist ; and it is probable that loans
of this kind preceded mercantile loans in order of time.
I am, therefore, unable to accept the theory of Mr.
George, that interest arises from the natural tendency
of certain things to improve with time — of a calf, for in-
stance, to grow into a cow. To this theory various ob-
jections occur. We must, of course, in comparing the
calf with the cow take into consideration the labour
involved in feeding and taking care of the animal
during the interval, and the risk of its dying; and
unless the land is rent-free, rent must also be iucluded.
This being premised, why should the value of the cow ex-
ceed the value of the calf by more than the rent, wages,
and insurance required to convert the one into the other,
unless we presuppose the interest which we are seeking
to explain ? Mr. George likewise refers to wines, &c.,
which improve with age. But this in reality points to an
exceptional case, in which a loan may be made without
requiring any interest. I may safely lend a man a quan-
tity of new wine on his undertaking to return me the
same amount often years' old wine of the same quality
in ten years' time, provided that the element of risk is
excluded. Such a loan would save me the expense of
storage, &c., in the meantime, and therefore if the re-
turn of the wine was secured, I would not only demand
no interest, but probably offer a small premium to the
borrower. If Mr. George had stated that the source of
interest was the power of expending capital produc-
tively — expending it in such a manner that the new
capital produced exceeds that which has been consumed
interest. 177
in producing it — he would have been nearer to the truth.
It is this natural tendency to improvement that gives
rise to the demand for what I have called commercial
loans — loans effected by persons who are not even tem-
porarily in want, but who borrow money in order to
make a profit on it. The borrower in such cases is
often a much wealthier man than the lender; but he
wishes to add to his wealth and borrows for that pur-
pose. And while there would be a demand for loans
at interest in almost any conceivable state of society, it
is evident that this demand will be greatly increased,
and the rate of interest raised thereby in any country in
which commercial loans are largely resorted to. For the
rate of interest is regulated by the law of demand and
supply. Supposing that the element of insurance is eli-
minated, there are some persons who would prefer to
lend their money even for a long term at one-half per
cent, interest to keeping it idle in their own hands ; but
a great part of what is lent when interest is higher
would not be lent at that rate. The supply of money
ready to be lent, therefore, varies with the rate of in-
terest. And the demand varies with the rate of interest
also. If that rate was raised to ten per cent, some sol-
vent persons would still borrow money, but a great
many of those who now borrow would not do so ; while
if the rate fell to one-half per cent., many solvent per-
sons who borrow nothing at present would be tempted
to borrow by the very low rate at which money could be
procured. The current rate of interest (supposing the
element of insurance excluded) is that at which the
N
178 Interest,
supply of money on loan is equal to the demand. If
the demand exceeded the supply, some of the borrowers
would offer a slightly increased rate of interest in order
to secure the loan. If the supply exceeded the demand,
some of the lenders would offer to reduce the rate a little
in order to make sure of lending their money. Where
a demand for mercantile loans exists in addition to
what I may call the ordinary demand, the rate of inte-
rest will of course be increased ; but such a demand
usually exists in wealthy countries where there is abun-
dance of money seeking for investment at interest, and
the increased supply may more than counterbalance
the increased demand. In this case the rate of interest
will be low. Interest is paid on loans of all kinds as
well as on loans of money. Thus, when goods are sold
on credit, a discount is often allowed if they are paid
for within a limited time, and it is a common practice
to charge interest on the balances on current accounts
which have remained due for a certain time, or to pass
bills of exchange or promissory notes which bear inte-
rest from the time when they become due. Sales on
credit are thus, in fact, loans of goods at interest. Our
law, too, charges interest on all judgment-debts from
the time that judgment is marked. Wherever a dis-
count is allowed on cash payments, interest is really
charged on sales on credit, though the amount may not
vary with the time as in the case of ordinary interest.
Loans of all kinds of goods, generally speaking, not
only bear interest, but bear interest at the same rate ;
and if other goods fluctuated in value as little as gold
Interest. 179
and silver, interest on such loans might be charged in
kind rather than in money. But if I borrowed 100
barrels of wheat on condition of returning 105 barrels
at the end of 1 2 months, the value of wheat might have
so altered by that time that instead of paying 5 per cent,
interest I should be paying 25 per cent, while if it
varied in the opposite direction the lender might not
only receive no interest, but find his principal dimi-
nished. For this reason in lending goods it is usual to
value them and to stipulate for payment in money ;
though, when the time for payment arrives, it is often
effected, in great part at least, in goods, which are like-
wise valued and taken as so much money.
In countries like England the principal demand
for loans arises from the increased efficiency of labour,
resulting from the application of capital. How this
affects the rate of interest is easily explained. Suppose
that the labourer, when working for himself, either
without capital or with the scanty capital which he can
command, can earn ;^2o a-year, but that the application
of an additional sum of ^100 will raise the value of his
labour to £10 a-year, it is evident that the extra ^10
represents the increased efficiency given to his labour
by the application of £100 capital, and that if the
labourer could borrow ;^ 100 at any rate of interest (in-
cluding insurance) lower than 10 per cent., he would be
a gainer by doing so. If money was scarce in the
neighbourhood the lender might hold out for gj per
cent., and would, no doubt, succeed in getting it ; but if
money was plenty, and many persons were trying to
N 2
1 80 Interest,
lend it at interest, the labourer might succeed in pro-
curing what he required at 3 per cent., thus increasing
his own annual earnings from ^20 to ^27. But it is
clear that there would be a demand for money on loan
at all rates below 10 per cent., arising from the increased
efficiency which it conferred on labour. Most probably,
however, the labourer would not succeed in borrowing
the money, because the insurance or compensation for
risk would be so high in his case that a loan at 10 per
cent, could not be effected. The money would be sup-
plied by a capitalist, who would hire the labourer and
then apply the requisite capital. The labourer might
prefer working for himself at ;^20 a-year to serving a
master at the same wages, but an increase of his earn-
ings to ^2 1 ov £22 would probably induce him to enter
the offered employment ; and;^8 or ;^9 would then go
annually to the employer for every £100 of capital in-
vested in the undertaking, the greater part of which
would represent interest. Suppose that;£6 of it repre-
sented interest, the balance sufficing to cover wages of
superintendence, &c,, it is evident that it would be for
the advantage of the capitalist to borrow as much money
as he could at any rate below 6 per cent. ; for as long as
the rate of profit remained unaltered he could make 6
per cent, on the borrowed money, besides earning ad-
ditional wages of superintendence. A demand for loans
would thus arise on the part of the capitalist if not on
that of the labourer ; and if the rate of profits became
higher, this demand for money on loan would be in-
creased. Money on loan is in fact capital on loan,
Interest, 1 8 1
and the demand for capital on loan will be greatest
when the demand for capital is greatest, or, in other
words, when the rate of profit is highest. Assuming
that the risk is equal in the cases of borrowed capital
and of capital employed by the owner, interest will only
differ from profits by what has been called wages of
superintendence. In commercial loans, however, the
risk is seldom as great in the former case as in the
latter; for as the capitalist is bound to repay the loan
in full, so long as he has the means of doing so, any
losses which he may sustain will fall in the first place
on his own capital. The borrowed capital only suffers
(in the absence of dishonesty) when that is gone.
There are, indeed, certain occasions when there seems
to be a special demand for money as such, and loans of
money are supposed to be effected for short periods at a
higher rate of interest than would be paid for a loan of
any other commodity. This usually takes place on the
occasion of a commercial crisis. The element of risk,
no doubt, comes in here, for the chance of the borrower
stopping payment is really greater than at other times,
and is in consequence of the general panic deemed to
be even greater than it is. But anticipated high profits
come in also. This fact is concealed by the circum-
stance that there has already been a loss, and one
which, perhaps, the anticipated profit will not be suf-
ficient to make good. But if a man borrows money at
lo per cent, interest for three or six months, the reason
probably is that he expects his goods at the end of that
time to realize more than that sum over the amount
1 82 Interest,
which they would produce if an immediate sale was in-
sisted on. He expects a large increase in the present
value, and borrows money at a high rate of interest in
order to retain the goods long enough to obtain the
benefit of this increase. Hence it would seem that the
high rates of interest current at these periods do not
really form any exception to the general rule. How-
ever low the price might be, men would sell their goods
rather than borrow money if they did not expect it to
rise. And the reason why they would not pay the same
interest (supposing interest to be paid in kind) on loans
of other commodities is, that the price of these com-
modities is expected to increase. Few persons are
anxious either to sell or to buy commodities on credit
at such periods ; but no one could purchase goods on
credit at a lower rate of interest than that current for
money — the interest being computed in money not in
kind. The seller, indeed, is anxious to get ready money,
and would be unwilling to sell on credit unless the rate
of interest was a very high one. The ordinary laws
thus hold good, except that there is increased risk on
the one side and increased distress on the other ; and
consequently there is an increased demand for loans
accompanied by a diminished supply.*
Interest has its rise in the same natural causes with
profits. Profits are usually divided into wages of super-
* Risk always diminishes the supply of money oiFered on loan, for there
are some persons who will not invest their money in risky undertakings at any
rate of interest. This is more especially the case with trustees, &c., who can
gain nothing if the venture turns out successfully, but are certain to lose if it
does not.
Interest 1 83
intendence, insurance, and interest, and it is as impos-
sible to get rid of the last of these elements as of the other
two. Whenever men become willing to lend money for
commercial purposes without interest, they will also be
ready to invest it on risky undertakings without in-
surance, and to undertake the work of supervision free
of charge. Profits being the same, interest proper will
be greatest when there is least risk, and when wages of
superintendence is lowest. As regards this latter kind
of wages, it is to be observed that in many cases a
skilled manager will answer the purpose, though it may
be desirable to give him a personal interest in the con-
cern by paying him a share of the profits. Wages of
superintendence will thus vary with the wages or salary
of a skilled manager — the man who acts as his own
manager earning more or less, just as the paid manager
earns more or less. And, with material progress and
advancing education, there seems to be little doubt that
the number of persons capable of acting as skilled
managers will increase rapidly, and that wages of su-
perintendence will therefore fall. It would thus seem
that, unless the ordinary investments for capital become
more and more risky as society advances, a progres-
sively larger proportion of the profits will go in interest,
and the variations of interest and profits will follow each
other more closely. Interest, indeed, depends on anti-
cipated profits rather than on profits actually realised ;
for the rate of interest must be fixed at the time of
making the loan, while the profit is seldom realised
much before the time fixed for its repayment. But as
1 84 Interest.
society progresses our power of anticipating future pro-
fits will be increased, and profits and interest will there-
fore conform to each other more closely than at present.
Interest and profits thus going hand in hand, and
both depending on the increased efficiency of labour
arising from the application of capital, we are again led
to inquire what determines the proportion in which the
value of this increased efficiency is divided between the
capitalist and the labourer. If the capitalist got nothing
he would not apply his capital to the purpose. If the
labourer got nothing he would prefer to work for him-
self. But at this point we are, I believe, thrown back
on the old law of demand and supply — the quantity of
labour seeking employment on the one side, and the
quantity of capital seeking investment on the other.
And like other instances of the law, both demand and
supply vary with the price. There is capital — or, if you
prefer it, wealth — which men are willing to invest in
anything that will produce a profit of lo per cent., but
will not invest at a smaller rate of profit ; and there are
labourers who are willing to hire at zs. a-day, but will
take no less, or who will work at extra hours at a
certain rate, but will not do so at less than that rate.
Leaving rent out of consideration for the present, de-
mand and supply will be equal when the capital seeking
investment at a given rate of profit suffices to employ
all the labourers who are seeking employment at wages
which will just suffice to leave that rate of profit, after
deducting the wages from the produce of the labour.
If more capital than this is seeking investment at the
Interest. 185
supposed rate of profit, some of the capitalists, finding
it impossible to realise that rate, will content themselves
with a lower one. Profits will fall and wages will rise.
If, on the other hand, more labour is seeking for em-
ployment, some of the labourers will accept lower wages,
and profits will rise with falling wages until the equa-
tion of supply and demand is re-established. But the
capitalist and the labourer have a common fund to
divide between them, and the share of either of them can
never exceed the whole fund, or even become quite
equal to it. If, for example, the expenditure of ;^ 100
increases the value of labour from ^20 to £'^0 a-year,
the profits of the capitalist must always fall short of
10 per cent., while the wages of the labourer must al-
ways fall short of;^30 a-year; but profits may vary to
any extent between a nominal amount and 10 per cent.,
while wages will similarly vary between ;^20 and £^0
a-year. These variations are determined by the law of
supply and demand, and any attempt to render them
independent of that law would be vain. Every increase
of wages above the point fixed by this law would
diminish the supply of capital, and thereby diminish the
amount of employment offered ; and this remark is as
true of interest as of profits — of borrowed capital as of
capital which is used by the owner. In these observa-
tions, however, I have assumed that the only demand
for money on loan is of the kind which I have called
commercial. But in no state of society is this true. If
the demand for non-commercial loans is sufficient to
keep the rate of interest at 2 per cent., even though
1 86 Interest.
the commercial demand was entirely withdrawn, the
rate of interest must always be higher than 2 per cent.,
and the labourer's wages, in the case which I have been
examining, must always fall short of;^28 a-year
If we now suppose that the number of labourers in
the district remains constant or increases slowly, while
capital increases rapidly, a fall in the rate of interest
will take place. Capitalists will compete with each
other for the labour which is to be had, and wages will
rise ; while the increased produce arising from the ex-
penditure of a larger capital will probably not possess
the same proportionate value as before, and profits will
be still further retrenched. At first each labourer (we
will suppose) earned;^ 2 1 a-year, and the capitalist de-
rived £(^ profit from his labour; but competition ulti-
mately forces wages up tO;^24, while the produce of the
labour is only value for ^26, and the capitalist has now
a profit oi £2 on each ;£ioo, instead of ;^9 as before.
But the low rate of profit has checked the growth of
capital, and persons who would use their wealth as
capital, if profits were higher, now prefer to consume it
unproductively, or to seek investments for it in some
distant locality. The increase of wages and diminu-
tion of profits must thus ultimately cease ; and though
interest has been greatly reduced during the process,
it has not disappeared, nor can it possibly do so. There
is no longer an increasing demand for labour, because
capital has ceased to increase. The annual profits only
suffice to pay the ordinary annual expenditure of the
capitalists ; and assuming that the population does not
Interest. 187
increase, and that no improvements are made, a sta-
tionary condition is the result.
This gradual decrease of profits or interest, and
tendency towards a stationary condition, however, are
always interrupted by other changes. Suppose that
when the produce of each man's annual labour has
fallen tO;^26, and his wages have risen \.o £2/^^ a new
discovery is made which renders the produce of each
man's annual labour worth ;^35. The gain is at first
almost entirely on the side of the capitalist. By leav-
ing his employment, the labourer cannot earn more
than the ;^ 24 which he already receives — perhaps not
so much. Interest, therefore, rises, while wages remains
stationary. But at the new rate of profit capital in-
creases rapidly, not only because the present employers
add their savings to their capital, but because capital is
attracted from a distance by the high rate of interest or
profits. There is, accordingly, an increased demand for
labour, and wages begins to rise whilst interest falls — a
larger and larger proportion of the total produce going
in wages* every year, though the whole can never do
so. In these remarks, however, I have assumed the
number of labourers to be constant, or nearly so. In
point of fact, however, it usually increases, and increases
most rapidly when wages is highest; for not only do
men with high wages find it easier to marry and bring
* I mean the wages of labourers, not wages of superintendence as it has
been called. The competition of capitalists raises the wages of labourers,
but it lowers wages of superintendence. The variations of these two kinds of
wages are thus often inversely related to each other.
1 88 Interest.
up families, but high wages attract labourers from other
districts. As increased competition among capitalists
raises wages and lowers interest, so increased competi-
tion among labourers raises interest and lowers wages.
Capital is subject to more frequent and violent fluctua-
tions than the number of labourers. When speculation
is rife, the amount of capital in use in any particular
place or any particular branch of industry may be
largely increased by loans, or by diverting capital from
other places or other uses. A great failure may throw
a large number of labourers out of employment, and a
great deal of capital is often withdrawn from use, at
least for the time, on the occasion of a commercial
crisis. Wages, therefore, may fluctuate violently when
the progress of population has been pretty steady, and
can hardly be regarded as excessive. A fall in prices
may indeed lead to the temporary abandonment of
some branch of industry altogether. Suppose that
when a given quantity of any commodity sells, after
replacing the capital, for ;^ 2 5, the amount which goes
in w^ages is;^2i, it is evident that if the price falls to
£20 either the labourers must submit to a considerable
reduction, or else the production of the article in ques-
tion must be given up. The current rate of wages at
other occupations or in neighbouring places may in-
duce the labourers to refuse to submit, or they may be
induced to do so by some demagogue or some associa-
tion — in all of which cases the works are closed. As a
rule, interest only falls when capital is increasing faster
than the labouring population ; in which case wages will
Interest, 189
rise at the same time. But to this rule there are many
exceptions, some of which I have indicated when treat-
ing of Capital and Labour.
But what has Land or Rent to do with it ? Economic
rent, I believe, has no effect whatever either on wages
or on interest ; for economic rent is the surplus which
some land produces after paying the wages of the
labourer and the insurance, wages of superintendence,
and interest to the capitalist. It thus presupposes both
wages and interest, and consists of the balance which
remains after deducting them. Thus, suppose that there
is some land of such a quality that the expenditure of
^ 100 on it will increase the value of the labourer's wages
from £20 to ^40 a-year, while the ordinary applications
of capital will only increase it from £20 to ^30 as in
our former example, this land will manifestly be worth
;^io a-year to the owner, after providing for wages and
profits, on the same scale as when the capital is applied
in a manner which does not involve the payment of any
rent. This at least will be the case unless the risk and
wages of superintendence are greater when the capital is
applied to the land in question. Suppose, then, that the
value of the labour resulting from the expenditure of
£100 without paying rent falls to ^26, the return from
the good land being still one-third greater as before, the
rent will now have fallen tO;£8 13^. ^d. Agricultural
land is not the only thing that bears a rent in this
sense. Lines of railway, for example, are often rented
by one company from another. If the current rate of
interest is 5 per cent., and an annual outlay of ^10,000
1 90 Interest,
in working and repairing the line will produce an an-
nual revenue of ;^ 15,000 the rent of the line will be
;£4500 a-year. This rent is the surplus which remains
after payment of the working expenses, and of interest
on the capital used by the renting company. And a
line of steamships might be similarly rented, though
the element of land here disappears. As a rule, any-
thing in which fixed capital is invested is capable of
being rented ; for it will in general return a surplus
over the working expenses, and the interest on the ca-
pital which is now required to work it. Land, moreover,
usually derives a great part of its value from fixed capital
invested in it, though the investment may have taken
place long ago. But even when this is not the case,
there is no distinction between land and investments of
fixed capital as regards the present question. Rent in
both cases is what remains after wages and interest
have been paid. It falls, indeed, when wages and inte-
rest rise, and rises when they fall; and of course the
variations of wages and interest also correspond in-
versely with those of rent. But the variations of wages
and interest are the causes, and those of rent the effects,
and not vice versa. Wages and interest are the primary
elements. Rent is the residue or surplus which remains
after deducting them. I speak of economic rent. A
combination of land-owners might succeed in producing
a monopoly rent which would have the effect of lower-
ing both wages and interest; but no such combination
has, I believe, ever taken place in this country. On the
contrary, the actual rents are, I believe, usually lower
Interest 191
than the economic rents ; though this, as already no-
ticed, is partly caused by the restrictions commonly
imposed on the tenant in dealing with the land. These
restrictions are, in fact, the principal defect in the sys-
tem which is known as * Landlordism.' To make the
best use of land the occupier must have absolute control
over it, even though the period during which this con-
trol is to be exercised is of limited duration.* When
any person whose remuneration does not depend on the
profits is allowed to interfere with the management of
the land, these profits are almost certain to be less than
they would otherwise be; and even if their average
amount is not diminished, the element of risk or in-
surance is augmented.
Interest therefore is, generally speaking, an element
in production, and both it and wages are unaffected by
rent. It cannot be abolished, and if unduly kept down
it will probably lower wages by diminishing the amount
of capital applied to labour. It is evident, however, that
except in certain rare contingencies — when temporary
loans at very high rates of interest may be justifiable
and necessary — interest ought never to exceed the cur-
rent rate of profits. Profits include wages of superin-
tendence, insurance, and interest proper; and even if
we include the two latter elements under the name of
interest (as it is frequently impossible to distinguish be-
tween them in practice), wages of superintendence can
* Provided, of course, that the use is not such as to produce a present
profit at the cost of permanent injury to the soil. But restrictions in leases
usually go much beyond this.
192 Interest.
never be wholly eliminated. The current rate of profits
thus affords a test for distinguishing between reasonable
and unreasonable rates of interest on loans ; and when
a loan is made at a rate of interest manifestly exceeding
the current rate of profits, I think the onus of proving
the fairness of the transaction should be thrown upon
the lender. Such loans, as I have noticed elsewhere,
are often made, without any serious expectation of re-
ceiving payment at the extravagant rate agreed upon.
The intention, rather, is to obtain payment of a part of
the loan before the debtor fails, and to be in a position
to keep this, and to prove and obtain dividends on more
than the entire debt when bankruptcy supervenes. Thus,
A lends B;£ioo, at 100 per cent, interest, payable quar-
terly ; he receives the first quarter's interest, thus really
reducing the debt to less than ;^ 80. At the end of a
year B becomes bankrupt, and A proves in the bank-
ruptcy, and obtains dividends, not on;^8o, but on ;^ 175.
Such a transaction appears to me to be a fraud on the
other creditors of B, even though B himself may have
entered into the contract with full knowledge of the
facts, and without undue pressure or misrepresentation.
It would therefore, I think, be reasonable to enact that
high rates of interest should not be allowed in bank-
ruptcies until all ordinary creditors have been paid in
full ; and it might also be provided that the total amount
to be recovered from a debtor in any form of action
should not exceed twice the amount of the original
loan — meaning by the original loan the sum of money
which actually changed hands. Interest might be
Interest, 193
permitted to run upon the amount thus recovered until
it was paid off, but only at the Court rate of 4 per cent.
The reasonableness of such an enactment is shown by
the general practice with respect to bonds.
I may remark that, as regards loans at extravagant
rates of interest, the debtor can in many cases escape
with payment of the principal, together with interest at
a moderate rate, by appealing to a Court of Equity.
The cases in which he can and cannot escape in this
manner are, however, by no means clearly defined.
But the point with which I am at present concerned
is that payment in full of the original loan, together
with interest at a moderate rate, is always insisted on as
a condition of setting aside the nefarious bargain. This
is on the principle that *he that seeks equity must do
equity,' which principle is no doubt correctly applied
when the borrower is a solvent man; but when he is
not solvent the real equity would be, not that the lender
should be paid the proper amount of his demand in full,
but that he should be paid the same dividend on it that
the other creditors receive on their debts. This equity,
however, has not yet been recognised, and there seems
to be no alternative except to pay the amount really due
in full, or else to pay a dividend on the whole of the ini-
quitous demand. This is another result of regarding the
whole question as one between plaintiff and defendant,
the assignees or trustees in bankruptcy being regarded
as merely standing in the bankrupt's shoes. Sooner or
later it will become necessary to take a wider view, but
until then I fear great injustice will continue to be done
194 Interest,
to deserving creditors. Owing to the excessive rates
of interest charged in certain cases, the professed equa-
lity of the present law is often in practice the grossest
inequality. Here, at least, a certain revival of the
Usury Laws would be desirable.
THE
ENGLISH CHURCH ESTABLISHMENT.
' I ^HOUGH it is, perhaps, impossible to treat the
question of Church Establishments on purely
economical grounds, it has sufficient economical bear-
ings to justify its introduction into such a collection
of Essays as the present.
Church Establishments date from the period when
the Roman Catholic faith was everywhere prevalent,
and the few dissenters were regarded as criminals
whom it was the duty of the State to punish. There
was then no question of rival Churches. If any reli-
gion was to receive State assistance, there was no
doubt as to what religion should be thus favoured.
There was, in fact, but one Church w^hose very exist-
ence the State recognized — except in the way that it
recognizes robbers and murderers when it passes laws
for their punishment.
But in this country, at least, such a defence of an
Established Church is no longer tenable. Taking the
three divisions of the United Kingdom — in England
an Episcopal Church is established and endowed by the
State ; in Scotland the same position is held by a Pres-
O 2
196 The English Church Establishment,
byterian Church; and in Ireland there is no Church
Establishment at all. In the latter country, too, con-
current endowment existed to a certain extent before
the disestablishment ; and in Malta the Roman Catholic
must be regarded as the Established Church. In all
parts of the kingdom, too, the State grants toleration
to those who do not accept the established form of wor-
ship. It could not, indeed, in consistency refuse tolera-
tion in England to the Presbyterian whose Church is
established in Scotland. The notion of any abstract
superiority of one Church over another, which renders
the former alone worthy of public support, must be
abandoned by the statesman. Each man may, of
course, continue to believe in the superiority of the
religious denomination to which he individually be-
longs ; but a Cabinet Minister cannot allow his private
convictions on the subject to influence his legislative
measures. We have had both Protestant Dissenters and
Roman Catholics among our Ministers ; and the Go-
vernment has acted for many years past on the principle
that members of all religious denominations — at least
all denominations of Christians — should be treated alike,
except in matters which relate to the Church Establish-
ment. The propriety of making this exception is the
real question at issue.
We sometimes hear it said that it is the duty of the
State to provide religious instruction for all the people,
and that in performing this duty it must make a selec-
tion among the various religious bodies, since it cannot
attempt to give universal instruction in the creeds and
The English Church Establishment. 197
formularies of all.* I do not seek to underrate the im-
portance of religious instruction ; but how is it shown
that it is the duty of the State to impart it ? If it be so,
that duty is at present neglected in Ireland, and a large
majority of the representatives of the people concurred in
resolving that it shall be neglected for the future. But
the only argument in favour of imposing this duty on the
State is, I apprehend, that otherwise the religious edu-
cation and instruction of the people would be neglected.
This allegation is in direct conflict with experience-
There is not a parish or district in Ireland in which the
Roman Catholics have not provided religious instruction
for the people for centuries past without any State assist-
ance, or rather indeed in spite of State prohibition. The
Churchmen are doing the same thing since the disestab-
lishment. There is, I believe, no instance of a Protestant
population having been abandoned because it was poor
and widely scattered. And the Dissenters have seldom
if ever failed to provide religious instruction for all who
desired to receive it at their hands. The case of Ire-
land, moreover, is on this subject a strong one. For the
Roman Catholic population has always been poor, and
the Protestants have suffered heavy pecuniary losses
since the disestablishment. Yet Ireland, instead of
failing to supply religious instruction for her own peo-
ple, sends thousands of pounds abroad every year to
supply religious instruction elsewhere — in Peter's Pence
* But the English Government never seems to have thought of performing
this duty to the most numerous class of Her Majesty's subjects — the people of
India.
198 The English Church Establishment.
and subscriptions to the several Missionary Societies,
and similar objects. Poor as Ireland is, she can and
does without State aid not only afford religious instruc-
tion to all her own population, but actually supplies
funds for giving religious instruction to persons in other
countries. The notion, therefore, that State assistance
is necessary in order to place religious instruction within
the reach of everyone is chimerical.
The Church Establishment has again been defended
on the ground that the Established Church is the Church
of the majority of the population. It is doubtful whether
this assertion can be truly made as regards the Estab-
lished Church of Scotland, and it is certainly not true
of the Establishment in Wales. In England, moreover,
it is liable to considerable qualification. A man who
is careless in religious matters will usually describe him-'
self as a member of the State-endowed Church, because
if he joins any other Church he is expected to contribute
to its funds, whereas by describing himself as belonging
to the Established body, he excuses himself from paying
anything. As long as there is an Establishment, too, it
is likely to be fashionable. It will be the Church of the
gentry, and many members of the middle classes, who
seek to improve their social status, will attach them-
selves to it. But if we grant that the Established
Church is the Church of the majority, does that afford
any reason for its endowment ? To simplify the ques-
tion, let us suppose that the endowment is the direct
product of taxation. Why, then, should the minority be
taxed for the support of the Church of the majority ?
The English Church Establishnejit. 199
The minority will find it hard enough to support the
clergy of their own denominations without contributing
to the funds of any rival body. On the voluntary system
the majority would (other things being equal) support
their clergy wdth least effort. A clergyman's field of
labour is limited by local considerations no less than by
the number of persons under his care. He may find it
as easy to attend to the spiritual wants of one thousand
persons in a town, as to those of one hundred in a
sparsely-populated rural district. Now the clergyman
of a small minority is almost always in this latter posi-
tion. The portion of the population which is willing to
accept his ministrations is always sparse and widely-
scattered ; and in supporting him by voluntary contri-
butions the subscription per head must, on the average,
be larger than would be the case if the majority of the
population were of his persuasion. Of course a majority
in Parliament can do as it pleases, but there could hardly
be a more tyrannous use of the power of the majority
than to compel the dissenting minority to subscribe for
the support of the religion of the majority. With more
justice the position might be reversed. The poor and
thinly-scattered dissenting congregations, who find the
greatest difficulty in supporting their ministers, have a
far stronger claim to State assistance than the large
and wealthy congregations who can, if they choose to
do so, subscribe the requisite amount almost without an
effort. Taxing dissenters for the benefit of the Church
can only be justified on the assumption that the Church
is the best of all religious bodies, or indeed the only one
200 The English Church Establishment.
which the State should recognise. The argument that
the Church is the religion of the majority is here totally
insufficient — indeed it rather tends to prove the opposite
conclusion.
Nor is the case materially altered when we consider the
mode in which the Church endowments are actually pro-
vided. Though private property in land is, in my opinion,
justifiable, wherever private property does not exist the
land must be considered as the property of the State.
I do not of course deny that some corporate property is
in reality private property— as, for instance, that which
a railway company has purchased for the construction
of its line. But the Church lands, except when they
have been granted by private individuals, or purchased
with private money, do not fall under this head. They
are the property of the State (subject to interests which
certain individuals have acquired therein), and the State
is responsible for their proper application. Indeed there
is no other principle on which the Irish Church Act
can be justified. If the State resumed these lands the
revenues derived frofti them would enable the Govern-
ment to make a general reduction of our taxation, and
the devoting of these lands to Church purposes prevents
this reduction from being made. We are really in the
same position as if, by an agreement between the Church
and the State, the latter took over the lands and granted
an annual sum out of the produce of our taxes instead.
Grants of land to the Church by the public are equiva-
lent to grants of an annual sum raised by taxation.
But grants of land for Church purposes have some
The English Church Establishment. 20 1
special disadvantages. In the first place, they tend
to make the bishop or rector a farmer or a land-
lord, neither of which positions are conducive to his
popularity or to the efficient discharge of his duties.
(I do not of course speak of a residence with a few acres
of land, but of extensive grants of land.) In the next
place the temporary land-owner often tries to make
leases at low rents to his relatives and friends, to the
detriment of his successors ; or else to make leases
extending beyond his own life on fines, thus benefiting
himself at the expense of the Church. Thirdly, the
State does not exercise the same control over land thus
granted away that it does over an annual grant from
the public revenue ; and ecclesiastics often come to re-
gard it as the absolute property of the Church, and to
resent all State interference with it as if it was private
property, interference with which was confiscation. The
clergy are in this manner rendered to a great extent in-
dependent of public opinion, and are often disposed to
play the tyrant in their parishes, disregarding even the
plain directions of the Prayer-book itself.
Very similar observations may be made respecting
tithes and the other sources of ecclesiastical revenue.
Indeed tithes, if their original intention was carried out,
would have had a peculiarly prejudicial effect upon indus-
try. The man who raised 100 barrels of wheat where the
ordinary processes would only yield 80, would be fined
2 barrels as a reward for his energy and skill. Cultiva-
tion, in fact, can never be carried to the highest practi-
cable point where the rent or taxes follow a sliding scale,
202 The English Church Establishment.
increasing as the gross produce increases. Increased
produce beyond a certain point is always acquired by
largely increased labour and expense, and to take for
any public purpose the same proportion of this increased
produce as before is both unjust and impolitic. How
far this objection has been removed in practice I need
not consider. At best, tithes are a form of taxation,
and leave the Church in the same position as if the
clergy were paid directly out of the public revenue.
I do not deny that the greater part of this taxation
falls ultimately on members of the Established Church ;
but why should any part of it fall on other persons ? It
was contended by the friends of the Irish Church that,
though the Protestants formed a minority of the popula-
tion, the tithe-rentcharge by which the Establishment
was supported fell chiefly upon them. I am not aware
that this argument was ever refuted ; but nevertheless it
failed to influence the legislature. Moreover, if even under
the present system the Church of England is really sup-
ported by the taxation of its own members, it is clear that
these members are able to support it without obtaining
assistance from any other quarter. This latter fact, in-
deed, cannot be disputed ; for the members of the Church
include not only the most numerous but the wealthiest
part of the community. Then, why not give up the
State endowment and let the Church be supported by
its sons, who are not only well able to support it, but
who, according to the argument which I am now con-
sidering, do in fact support it ? Nor can it be alleged
that the present mode of raising the funds from its
"^x^ Of thb"^^
TJHIVBRSITY]
The English Church Esmmts/nncnf. "' 203
members is a more equitable one than voluntary contri-
bution would be. Under the present system men of
great wealth, and with a great number of Protestant
workmen in their employment, pay little or nothing,
while poorer men, who avail themselves less of the
Church services, pay a good deal. Under the volun-
tary system, no doubt, the man who estimates his reli-
gious privileges highly would contribute more than he
who estimates them more lowly ; but this seems to me
to be rather a merit than a defect in the voluntary sys-
tem. And there is another consideration which must
not be overlooked. Within the Church there are several
distinct parties, some of which are violently hostile to
others ; and under our present system a lay member of
the Church is often taxed for the support of a clergyman
from whose teaching and practice he strongly dissents.
He may absent himself from the church and go else-
where, but he must pay his tithes notwithstanding ; and
he must continue to pay them when he is actually
bringing an action against the clergyman for illegal
practices or erroneous doctrine. He is, in fact, in a
worse position than the Dissenter. He must not only
pay for ministrations of which he cannot avail himself,
but the existence of these prevents the introduction of
ministrations of which he can avail himself into his
parish : for the law does not admit of two rival rectors
in the same parish, each ministering to the portion of
the congregation that agrees with him.* The parochial
* We had, however, two rival bishops, each with his own following, in
Natal. I suppose an ardent Churchman would affirm that there was but one ;
204 The English Church Establishment.
system excludes all clergymen but one, and there is no
security that the doctrines and practices of that one will
accord with the views of the majority of his flock.
The system of State endowment, too, is entirely
wanting in that flexibility which belongs to the volun-
tary system, and which the circumstances of the country
require. We often meet with a largely-endowed parish
where there is little or no work to be done, and again
with another parish in which there is a great deal of
work, with a very scanty endowment. The latter case
often occurs when a manufacturing or mining town
grows up rapidly. The system of State endowment
fails altogether to accommodate itself to such altera-
tions of circumstances, and voluntary contributions
alone save the rising population from total neglect.
In addition to this, however, the endowments of the
different parishes appear to have been always of ,an un-
equal character ; and the division of parish from parish
was based on no fixed principle, whether as to shape,
area, or population. Such defects could be easily recti-
fied under a voluntary system ; but under that of State
endowment changes can only be brought about by a
tedious and expensive process. The change, moreover,
is in many cases rendered almost impossible by the
gross abuse of lay patronage which has been allowed
to creep into the Church. It is an injury to a private
individual to transfer a part of the parish of which he
owns the advowson to a parish in the gift of the bishop,
but, then, which was the true bishop, and which was the schismatic ? Or was
one a schismatic and the other a heretic ?
The English Church Establishment, 205
or of the Crown, or of some other layman. It is a still
greater injury to him to divert a portion of the revenues
of his parish elsewhere, or to require the rector to su-
perintend a new district : for the selling price of the
advowson or of the next presentation depends at once
on the largeness of the income and the lightness of the
work.
This abuse is, indeed, so gross that if Churchmen
bear nearly all the cost of the Establishment at present,
it is surprising that they do not offer to bear the whole,
and thereby get rid of such a crying evil. The lay pa«
tron may be an irreligious and even an immoral man.
He may, and often does, promote a relative or friend
whom he knows to be totally unfit for the post. He
may force a Ritualist on an Evangelical congregation,
or a Low-Churchman on a Ritualistic one. He may
sell the parish under circumstances which just escape
the simony laws, and perhaps would not escape them
if the facts were known, and the Ecclesiastical Courts
were appealed to; but in all this he is, practically at
least, within his right, and no one can interfere with
him. Crown patronage is often used as a reward for
political subserviency,* or a means of advancing the
Church views of a particular Minister ; and even Epis-
copal patronage is not free from the charge of nepotism
and favouritism. All these evils are aggravated by the
permission of pluralities. In these respects, indeed, the
* If we examine the votes of the bishops on any party division in the
House of Lords, we shall have little trouble in ascertaining by whom each
prelate was appointed.
2o6 The English Church Establishment,
abuses which exist in the English Church far surpass
those which existed in her Irish sister when the latter
was disestablished. Would it not be of advantage to
the Church itself to get rid of them, even if the members
had to contribute a little more for its support under the
voluntary system than they now contribute in the form
of ecclesiastical taxation ?
I have already glanced at a circumstance which
shows the weakness of the argument that the Church
ought to be endowed because it is the Church of the
majority, viz. that the Church includes persons who
entertain the most widely discordant views, and in fact
are only held together by the State endowment. The
advanced Ritualist differs much more widely from the
extreme Evangelical than he does from the Roman
Catholic. The low Evangelical differs much more from
the Ritualist than he does from the Protestant Dissenter.
But the Dissenter and the Roman Catholic are rigor-
ously excluded from the endowments which their sym-
pathisers in the Church enjoy. You must recognise
episcopacy on the one hand (that is, in England, not in
Scotland), and you must not subordinate yourself to the
Bishop of Rome on the other — these are the conditions
of State aid ; but so that you keep within these limits
you may do almost anything you please. When I speak
of the Church of England as only held together by State
pay, however, I do not mean that the present union is
a purely mercenary one. So long as there is a State
Church, any Church party that withdrew from the State
connexion, and renounced the State endowments, would
The English Church Establishment 207
have to bear the reproaches of secession, schism, heresy,
et hoc genus omne ; and men are slow to face this in ad-
dition to the loss of State support. But if State pay
was withdrawn, and the Church separated into two or
more hostile camps, there would be nothing to mark out
one as the original body, and the others as seceders.
Two sections, at all events, would probably carry with
them a portion of the bishops and clergy, as well as of
the laity, and while both would no doubt claim to be the
legitimate successors of the ancient English Church, the
public would soon perceive that there were either two
equally legitimate successors, or else none at all. There
is, I believe, no religious body in the world in which
such wide diversities of doctrine and practice exist as
in the Church of England, and the reason is that a State
endowment coexists with a good deal of indifference on
the part of the State as to the particular character of the
religious teaching. Under no voluntary system, I be-
lieve, would the members of one of the existing Church
factions subscribe for the maintenance of clergymen
belonging to the opposite faction. The differences are
too wide for voluntary contributions to flow into a com-
mon fund, but the State allows the public money to flow
into a single reservoir (from which it issues by at least
two distinct channels), for the simple reason that it has
been flowing there so long already.
The State management of this fund is, it need hardly
be said, eminently unsatisfactory. In all other cases it
is supposed to be the duty of the State to see that those
who are paid out of the public funds perform their duties
2o8 The English Church EstablhhmenL
properly. But in the case of the State Church this is
never thought of. It is left to the private persons, who
consider themselves aggrieved by the conduct of these
State officials, to appeal to the Courts at their own risk,
and at their own expense, unless they succeed in re-
covering costs against the offending clergyman. Indeed
Associations have been formed for the purpose of com-
pelling these public officers to keep within the limits of
the law, and in some cases, perhaps, for the purpose of
assisting them to evade or resist their legal obligations.
The Ecclesiastical Courts, to which the appeal must be
made, are among the slowest and most expensive of our
Courts, and the legislature has effected but little towards
providing a short and clear code of ecclesiastical offences
which would enable the Court to see at once whether
the clergyman is within his rights or not. A clergyman
often continues to draw State pay for years after he has
done acts for which any other public official would have
been summarily dismissed :* but as a set-off to this, he is
sometimes sent to prison, when no other public servant
would be sent there. In fact, while the clergyman draws
public pay, he often denies that he is a public servant at
all, and he meets with a good deal of sympathy in his de-
nial because he appears to be only asserting the supe-
riority of divine law to human. That he ought not to be
a public servant is my contention, but so long as he
draws State pay he is one ; and what right has he to
♦ And is even allowed to perform duties after being dismissed for non-
compliance with the law. This is done imder the pretext of assisting some one
else.
The English Church Establishment, 209
draw it, while carrying out his own notions of the divine
law, in opposition to the law of the State, which pays
him ? The Roman Catholic, the Presbyterian, the In-
dependent, the Methodist, and the Quaker, are, like him,
carrying out their own notions of divine law. Why,
then, should they not receive State pay as well as he ?
It is useless, indeed, to expect the Ritualist to view the
question in this light ; but the fact remains that numbers
of clergymen are now receiving public money without
conforming to the conditions which the State has an-
nexed to that payment, while the existing remedies for
this evil are of the most inadequate description. It is
not persecution to say to the Roman Catholic or the
Dissenter, *We will not give you any pay'; but it is
regarded in many quarters as persecution to say to the
Church of England clergyman, * We will stop your pay
unless you comply with the conditions which the State
has attached to it'; nor do I believe the matter will
be viewed differently until the Church has been dises-
tablished. Imprisoning a clergyman for not complying
with the State requirements is an absurdity and an ana-
chronism. Can it be contended that it is impossible to
have the Church service conducted in conformity with
the law, without imprisoning the man who conducts it
otherwise r* His imprisonment does not insure its
proper performance even while he remains in gaol ;
while, if he is at last deprived of his parish, there is
nothing to prevent a man of similar sentiments being
* And perhaps at the same time imprisoning another man for interrupting
this illegal service ! Such is the present state of the law.
2IO The English Church Establishment,
appointed to succeed him. The present condition of
English ecclesiastical law is a scandal ; and it often
happens that a law-abiding congregation has practically
no rights whatever against the law-breaking rector with
his patron and supporters. On the other hand, even
where the clergyman and his flock are in perfect unison,
they are not safe from the Ecclesiastical Courts, as at
present constituted, which may be set in motion by some
Association against the wish of the parishioners.
Another evil of the State endowment is that it di-
verts private endowments into a wrong channel. There
are many persons who are willing to contribute for the
good of the English Church, but finding that all its
pressing needs are provided for by means of the public
purse, they set about beautifying the Church fabrics,
improving the music, providing peals of bells, &c., &c.,
all of which an economist must regard as for the most
part a very unproductive expenditure of wealth. Con-
sidering the advantages of religion, the economist will
not feel disposed to decry any real help to devotion ; but
much the greater part of the expenditure to which I
refer cannot be brought under that head. Even in Ire-
land we have seen a sum sufficient to provide a per-
manent endowment for at least thirty poor parishes
expended on a cathedral, when there was already another
(and a finer one) within a few hundred yards of the same
spot, and. open to all the same class of worshippers.*
But this is much more true of England, where the sus-
* Unless, indeed, the two cathedrals were intended for the worship of the
members of two opposite factions in the Church.
The English Church Establishment. 2 1 1
tentation of the Church is provided for by the State,
and it is hardly possible for voluntary contributions for
purely Church purposes to take any other direction than
that of ornamentation. The money which is thus wasted
would probably be applied to really useful purposes if
State assistance was withdrawn. The State would gain,
and the Church, even in a pecuniary point of view, would
probably lose nothing. Its clergy would be as well sup-
ported as before, though a few sinecures, or half-sinecures,
might disappear. We should only have less expensive
edifices, and less costly and theatrical services; and
everyone knows that it was not by the magnificence of
its buildings, or the splendour of its ritual, that Chris-
tianity first made its way in the world. A nearer
approach to its primitive condition might perhaps
strengthen rather than weaken its influence for good
on the masses.
And this observation leads to another objection to a
Church Establishment so richly endowed as that of
England. When a young man of talent and learning
resolves to adopt religious teaching as his profession,
he is strongly tempted to join the persuasion in which
he may rise to be a peer of the realm, with an income
of several thousands a year ; while, even if he misses
that distinction, there are many minor prizes which he
may reasonably hope to acquire, and which are consi-
derably above anything that he can expect to achieve
in a dissenting communion. And as the Church is not
very stringent in the pledges which it exacts from its
ministers, and allows them pretty wide scope for the
P 2
212 ' The English Church Establishment,
exercise of their own judgment after their ordination,
the sacrifice of principle which a talented Dissenter is
required to make is not after all so very violent. A
direct bribe is thus held out to the ablest young men
who would otherwise become Dissenting ministers, and
in some instances at all events it has proved successful.
But as regards the allied Episcopal Churches of Ireland
and Scotland, the bribe is still more direct. The clergy-
men and members of these Churches can transfer their
services to the English Church without any sacrifice of
principle at all ; and the greater wealth of English
Churchmen would probably enable them to offer a
bribe under any circumstances. But they are not
thrown upon their own wealth for this purpose. The
State supplies the bribe ; and the sister Churches are
thus placed at even a more serious disadvantage than
the Dissenters as regards their ministry. There are
probably as many Irishmen (with Irish Divinity Testi-
moniums) in the Church of England as in the Church of
Ireland, and it is the picked men who are usually car-
ried off by the former. The English Establishment is
thus an injury to every other religious body in the king-
dom, and the injury is greatest in the case of the re-
ligious communities which approach most closely to it
both in doctrine and practice. Their best men are
tempted to leave them by positions of honour and emo-
lument which are placed by the State at the disposal of
the very Church which of all others has least need of
them — the Church of the majority, of the wealthy, and
of the people of rank and fashion — the Church which
The English Church E stab lis hmeyit. 2 1 3
could outbid the others without any help from the public
treasury.
Another evil of the Establishment is the great dif-
ficulty of reforming and amending an Established
Church. On the occasion of its disestablishment, the
Irish Church adopted a Constitution which seemed to
pledge it against all reform, two-thirds of the repre-
sentatives of both clergy and laity being required to
concur (and that more than once) in any amending
enactment which was to be passed into law by its
Synod. Considering the conservative tendencies of
Churchmen, and the unwillingness of the clergy of
either school to alter formularies which both had al-
ways asserted to be in their own favour, it might seem
at first sight that this constitution rendered change im-
possible ; yet the changes which have been adopted by
the Irish Church during the last fifteen years are per-
haps more important than those made by its English
sister in three centuries. The clergy and laity of the
English Church have no recognized method of express-
ing their wishes on the subject, and even if they had,
they might fail to set the wheels of the State machine
in motion. However clear the expression of opinion
might be, the Cabinet might have other business which
prevented it from attempting any legislation on the
subject. The Premier might belong to the theological
school which was threatened by the alterations, and for
that reason refuse to take them up. The measure might
be made a party question, and the Ministers might re-
fuse to risk a defeat on it ; or the Roman Catholic and
214 The English Church Establishment.
other non-Church members of Parliament might assist
the obstructive party in the Church in order that the
Establishment should not be strengthened by the pro-
posed reforms. By accepting the State endowment, the
Church has lost the power of self-legislation, and as the
State takes very little interest in legislating for it (and
receives very little thanks when it does so legislate), the
Church has practically become as unchangeable as if it
laid claim to infallibility. But the Church of England
makes no such claim ; and the great latitude which it
allows to its clergy in dealing with its articles and for-
mularies probably arises from the fact that the need of
amendment is generally felt, while the State connexion
renders this general feeling inoperative. The clergy-
man who publicly returns thanks to the Deity for having
regenerated the child which he has just baptized is
allowed to state in his sermon that he does not believe
that it has been regenerated, and that he is doubtful
whether it ever will be. This license of interpretation
on questions of such solemnity can hardly fail to be
productive of ill effects ; but in this instance the clergy-
man could probably say that if a vote were taken among
the members of the Church, there would be a large ma-
jority in his favour. In truth, the formularies always
represented the opinions of the bishops and clergy
rather than those of the majority of the members ; but
even as regards the bishops and clergy, they only repre-
sent the opinions which were held in the year 1662 — the
opinions of men who succeeded in fastening on the
Church until very recently a service in honour of King
The English Church Establishment. 2 1 5
Charles the Martyr, which must have delighted Mr.
Bradlaugh while it continued in force.* The Church
may be better than its formularies : but undoubtedly, in
the present day, the formularies are one thing, and the
sentiments of the majority of Churchmen are another
thing. If it be said that I should not speak of the sen-
timents of the majority of Churchmen but of those of
the clergy, I reply that the last task which the State
should undertake is that of attempting to enforce the
doctrines of any priesthood upon an unwilling people.
Moreover, what, on this assumption, becomes of the
argument that the Church of England is the Church of
the majority ? Are its formularies the formularies of the
majority ? Or would these formularies be left unaltered
if the question was decided by a popular vote ?
Penal laws of any kind against Nonconformists are
now abolished; but, still, I believe that the exclusive
patronage (in England) of one Church by the State
gives rise to no slight amount of indirect persecution.
The man who prevents the erection of a Dissenting
meeting-house on his property, and even forbids his
tenants to set lodgings to a Dissenting minister, flatters
himself that he acts from other motives than mere bi-
gotry. He is showing himself to be a loyal subject ; he
is on the side of the State, and of the State Church ; and
he fancies that he is in the same position as the Orange-
man who gets up a demonstration against the National
* Does any one now believe in the so-called Athanasian Creed ? Yes, all
the clergy do — provided that you will allow them to interpret it after their
own fashion.
2 1 6 The English Church Establishment,
League. Nor would the censure of the Government of
the day have any more effect on the one than on the
other ; for both would equally regard this particular
Ministry as seeking to subvert the English Constitu-
tion — which, however, was certain to triumph in the
long run over such puny assailants. It will be admitted,
I think, that the English oppressor has not quite as
much reason for his conduct as the Orangeman has,
and that he is not quite so certain of being censured
for his conduct by the powers that be. Be this as it
may, however, if the State placed all religious denomi-
nations on the same level, bigotry and intolerance
would have to show themselves in their true colours ;
and in the present state of public opinion this would
make them cautious about showing themselves at all.
But, in fact, if the State connexion was once broken, it
would be seen that there was no Church in the world
which was less calculated to evoke enthusiasm on the
part of its followers than the Church of England. A
Church which one party regards as Protestant and Re-
formed, and another as Catholic and Unreformed, and
whose doctrines and formularies are so loosely or incon-
sistently expressed that both parties can make out a
very plausible case — a Church in which one man may
teach one doctrine, and another may teach the opposite
without let or hindrance, and in which no member who
goes into a strange edifice knows whether the views put
forward there will agree with or differ from his own — is,
at all events, not calculated to render men bigots. Men
may fall down and worship a golden calf, but they will
The English Church Establishment, 2 1 7
scarcely worship an image so shapeless and indefinite
that one man takes it for a lion, and another for a don-
key. Bigotry requires something definite to rest upon ;
but the Church of England is all things to all men ; and
though it may thus gain some disciples, they are seldom
very ardent ones.
The advantages which the nation might derive from
the confiscated Church property, after providing for
vested interests, are too obvious to insist on ; and I fail
to see any reason whatever why this public property
should not be again applied to the use of the public.
At present a considerable portion of the public is ex-
cluded from its benefits; its uses are accompanied by
abuses which seem almost inseparable from them ;
State connexion has in more than one respect proved
injurious to the Church itself; and this particular appli-
cation of public property appears to have been founded
on a politico-religious system which no eminent states-
man of the present day would attempt to defend. The
misapplication has already continued too long. The
sooner it is now terminated the better.
Another advantage which I anticipate from the dis-
establishment of the English Church is, the emancipa-
tion of the education of the young from ecclesiastical
control. Of course, a man who supports a school out of
his own pocket, or by means of voluntary contributions,
may fairly be allowed to regulate the education given in
it ; but as regards State-supported schools, I cannot see
that the State is bound to supply religious education to
the young any more than to the old. It would indeed
2 1 8 The English Church Establishment.
be desirable to offer the use of the school-house to reli-
gious teachers at certain hours, since it would be difficult
otherwise to assemble the same number of children for
the purpose; but the schoolmaster or schoolmistress
should not be required to take any part in the instruc-
tion thus afforded. Owing to peculiar circumstances
the disestablishment of the Irish Church has not led to
this emancipation in Ireland ; and to this cause the pre-
sent condition of that country is, I believe, in some de-
gree attributable. Ecclesiastics who contribute almost
nothing to the support of the State schools are allowed
to exercise complete control over them — selecting a
teacher who is far from being the most competent to fill
the post, and dismissing him on grounds quite distinct
from immoral conduct or failure as a secular instructor.
Hence, under this pretended system of Mixed Educa-
tion, the schools are too frequently converted into hot-
beds of religious bigotry, and sometimes of disloyalty
also ; while the education given is by no means so good
as if the State took the matter into its own hands, and
selected the Commissioners of National Education for
purely educational reasons. No teacher, inspector, or
commissioner should be appointed for religious rea-
sons ; and grants (except in the form of results' fees)
should be withheld from every school which bears a
distinctly denominational character. The appointment
and dismissal of all teachers paid by the State should
rest exclusively with the State, and the State should
make its selection, having regard to educational fit-
ness and moral character. These principles seem so
The English Church Establishment. 219
obvious as regards a country where there is no Estab-
lished Church, that one would think it was unnecessary
to insist on them ; yet they are more universally disre-
garded in Ireland than in England. The school in four
cases out of five is not worked by the State, but by the
clerical manager (usually a Roman Catholic priest), who
perhaps cares nothing about secular education, is only
desirous that the fundamental principles of his creed
should be instilled into the minds of the pupils, and
prefers a teacher who has not been trained in the State
training-school to one who has. And it is for the be-
nefit of this clerical manager (or rather mismanager)
that the English taxpayer maintains the school, and
maintains it in a condition which even the report of a
co-religionist inspector often declares to be in every
respect discreditable. Secular education has not, I be-
lieve, any tendency to subvert religion. It is good in
itself, instead of being (as many of the managers seem
to think) bad in itself, unless diluted with a liberal in-
fusion of dogma. The religious instruction of the young
is not the primary object of the State. No boy is the
worse Catholic or the worse Protestant for knowing the
six books of Euclid ; but if he is sent to a school where the
primary object is to make him a good Catholic or a good
Protestant, the chances are that he will not know the six
books of Euclid as well as he ought to know them. Re-
sults' fees for answering in secular subjects may perhaps
be granted to any school ; but when the State supports a
school in any other manner than this, the total separa-
tion of the secular and religious departments should be
2 20 The English Church Establishment.
insisted on ; and the public grant should be limited to
the teachers in the former departments, who should
thereupon become servants of the State and of the
State only.
To conclude : should not a great populous and
wealthy Church, like the Church of England, be
ashamed of subsisting on the public rates, like a
pauper ?
UNEARNED WEALTH.
'TPHAT every man should be permitted to enjoy what
he has honestly earned, and should be allowed to
dispose of it as he pleases during his lifetime, will, I
think, be generally conceded. The power of disposition
after death is open to more question. It is founded
rather in the law of the land than in the nature of
things, and could plainly be altered by legislation if it
was desirable to do so. But one of a man's chief ob-
jects in earning money is to make a provision for his
wife and family in the event of his death, and to deprive
him of this power would be to deprive him of one of his
main incentives to work, besides introducing uneasiness
and anxiety into almost every family in the kingdom.
Whether the same right should be extended to provid-
ing for distant relatives, for friends who are not rela-
tives, and for persons already possessed of adequate
wealth, is open to considerable doubt ; while it is still
more doubtful whether, when an intestate leaves no
near relatives, the State should transmit his property to
persons about whom he perhaps knew nothing and
cared nothing,* rather than take possession of it for
* A considerable portion of his property is sometimes squandered in
litigation in trying to ascertain who his heirs or next-of-kin are : and when
2 22 Unearned Wealth,
public purposes. Some restriction on the law of de-
scent, and perhaps also on the power of willing, would
I think be desirable ; but the broader question seems to
depend on another one, viz.. To what extent should a
man be allowed to enjoy wealth which he has not
earned, but which has come to him by gift, bequest,
or operation of law ?
That a man should be allowed the use of some un-
earned wealth seems sufficiently obvious. If no one
could get a start in life until he had earned the requisite
amount of capital by the produce of his own labour,
the progress of every species of trade, industry, and
manufacture would be retarded ; while young men would
be found working hard in order to save a little money
at the time when they should be occupied in completing
their education. But by Unearned Wealth I mean such
an amount of unearned wealth as enables a man to
dispense with any business or profession, and to live
upon its annual proceeds in idleness. The most promi-
nent example of this kind is, perhaps, the landlord who
succeeds to his estate by inheritance or deed of settle-
ment executed before he was born ; but it is a great
mistake to suppose that his is the only case in point.
Many a man (or woman) lives on the annual proceeds
of money lent at interest, of shares in public companies,
of businesses in which he is a sleeping partner, &c. &c.,
or at least derives a sufficient income from these sources
to live upon it if he chooses to do so — this wealth not
discovered, it is difficult to discover any rational or moral ground for prefer-
ring them to other relatives.
Unearned Wealth 223
having been earned by the person who enjoys it. The
landlords are as far from being the only drones as the
tenants are from being the only working bees. But the
drone, no matter who he may be, is an injury to society
so long as he is merely a drone. In fact every man
who earns less than he consumes is an injury to society;
but there are different kinds of earning. So far from
desiring the abolition of unearned wealth, I believe
that its existence would prove in a high degree bene-
ficial to society if its possessors were conscious of the
duties which it imposed on them. And they might be
made conscious of these duties partly by legislation, but
still more by an enlightened public opinion.
If we consider society as it actually exists, we shall
see that many of its most important functions are per-
formed gratuitously. This is the ordinary case, for
instance, with a magistrate or justice of the peace.
The importance of speedy and inexpensive justice in
small matters, and of immediate inquiries on the spot
in the case of serious crimes, is manifest ; and if not
performed gratuitously, a large paid staff of officials
would require to be engaged for the purpose. The
duties of jurors are hardly less important; and then we
have poor law guardians, members of school boards,
of corporations, of committees of various charitable and
public institutions, and other similar functionaries, very
few of whom receive payment for their services. And
the highest functions of all — those of the Ministers of
State — fall under the same head. It is but rarely that a
man who has earned or is earning a livelihood can rise
224 Unearned Wealth.
to the highest eminence as a statesman. A really great
statesman must usually commence his political career
at an early age, and devote himself more exclusively to
it when once commenced than would be possible if he
had not derived a competence from his ancestors, or
perhaps from his marriage with a rich wife. There are
many sciences, too, for the adequate cultivation of
which amateurs must co-operate with paid investigators.
Geology is one of these ; and Astronomy has now, I
think, reached the same condition. Putting everything
together, I doubt whether the work which is performed
gratuitously for the public is not of even greater value
than that which is performed by the paid servants of the
State. Every man who succeeds in improving the sani-
tary condition of a country village confers a benefit on
the public.
But while a good deal is thus done gratuitously, a
great deal more ought to be done ; and what is done
ought to be done a great deal better. Men of unearned
wealth do not sufficiently recognize their duties to
society, and no strong public opinion compels them to
recognize it. In fact a great part of the unpaid duties
which I have referred to are discharged by persons who
earn their own bread and who employ their leisure hours
for the purpose, rather than by those who find their
bread ready earned for them. The most active magis-
trates, poor-law guardians, members of school boards,
and committee-men, are often professional men, clergy-
men, or men of business, who have abundance of other
work on hands ; while those who have ample leisure for
Unearned Wealth. 225
the performance of these public duties take little or no
part in the discharge of them. We frequently find the
Government compelled to employ a paid magistracy in
the very localities where men of unearned wealth are
most numerous, while those of the latter class who act
as magistrates take no pains to qualify themselves for
the duties of that office, and are often most irregular in
their attendance. The result is not unfrequently a mis-
carriage of justice. * Justice's justice ' is almost a pro-
verbial phrase in England ; while * I make no more of
him nor I would of a jistice of the pace ' may be taken
as the Irish equivalent. The practice of appointing
unqualified magistrates (from the impossibility of pro-
curing qualified ones) has indeed been carried so far,
that unqualified persons are often appointed paid magis-
trates without a murmur of disapproval being called
forth by the selection (provided that the appointee is
not personally or politically obnoxious) ; and if the
stipendiary has only the good sense not to talk too
much he is secure of his post for the rest of his life.*
The verdicts of juries are often not remarkable for
sagacity ; but unfortunately our existing law is just as
ready to call aw^ay the man who is earning his bread
from his daily occupation as to require the idler to per-
form at least one duty to the public. As non-attendance
* And the loud talker, however ignorant, may get a better post provided
that his sentiments agree with those of the Government of the day — as those
of an astute stipendiary usually do. The man who commits every Orangeman
for trial under one Ministry would probably commit every Nationalist under
the next.
Q
226 Unearned Wealth,
is only punished by fines, those who can pay fines most
easily are least frequent in their attendance. It is the
struggling man, whose attendance is required at his
shop or his farm, who is most certain to be found in the
jury-box when the wealthy drone is at the racecourse,
the concert, or the cricket-match ; or perhaps engaged
in hunting, shooting, or yachting. Or he may be en-
gaged in doing mischief. Idle people are not usually
amongst the most moral members of society ; while the
fussy activity of unqualified persons is often a source of
no small evil. Landlords in particular, when they be-
come active members of society, are apt to degenerate
into petty tyrants ; and the tenant is often exposed to
loss by being forced to comply with his master's whims.
One general impression amongst active landlords ap-
pears to be that the highest style of culture is the most
profitable. This is only true within certain limits, and
even then subject to the qualification that the cultivator
understands the system. Give the tenant a secure
tenure and freedom to manage his farm as he pleases,
and you may feel pretty certain that he will adopt the
mode of culture which is most advantageous under the
circumstances : but if the farm is managed by one who
principally regards appearances and thinks little of the
profits provided that his own rent is paid, the conse-
quences can hardly fail to be injurious. Landlords
have a sufficiently wide field of duties to perform
towards the public without dictating to the tenant what
crops he shall grow, what rotation he shall adopt, what
Unearned Wealth, 227
fences he shall make, or where he shall grind his corn.
Misdirected activity often has consequences quite as bad
as those of idleness.*
In the first place, then, those who are born to wealth
should be educated with a view of using it aright.
Public opinion should insist on this ; and possibly some
legislation in this direction is also required. Every
man who is expected to become a magistrate, or a
member of many of the local boards, should have an
University degree ; and degree examinations (at least in
the case of some degrees) should be re-modelled with a
view of testing the qualifications of a man of leisure for
the performance of his duties to the public. No man
should become a justice of the peace without having
previously acquired an elementary knowledge of law ;
and I may add that some legal knowledge is highly
desirable in the case of a juror also. Every man of
unearned wealth should moreover be instructed in the
elementary principles of social and political • science,
and his future duties towards society should be im-
pressed on his mind from an early age. When arrived
at maturity, public opinion should require him to per-
form the duties for which he had thus been fitted. The
magistrate who seldom sat on the bench, the juror who
was not found when wanted, the guardian who was
rarely at his post, should all (in the absence of some
good excuse) become objects of public reprobation.
And I think income tax might be imposed at a much
* Even this misdirected activity, however, is as frequently that of the
agent as of the landlord.
Q2
2 28 Unearned Wealth,
higher rate on unearned incomes, unless the person in
the receipt of them could show that he was engaged in
the performance of some unpaid public duty. Men of
business and professional men should be exempted from
serving on juries altogether, unless the number of men
of leisure in the district was too small to supply the
want.
I may here state that it is by no means my intention
to object to innocent recreations. It is, on the con-
trary, desirable that the majority of mankind should
enjoy more recreation than they do. The end of human
life is not wealth, still less is it labour ; and though,
generally speaking, man must earn his bread with the
sweat of his brow, it is by no means necessary that every
man should be constantly engaged in thus earning it.
Without accepting in full what is known as the Utili-
tarian or Greatest-happiness principle, it is certain that
pleasure or happiness is a higher and more important
end than wealth, and that wealth is not the sole, or even
the principal, source of pleasure or happiness. A great
cricketer, a great billiard-player, a great chess-player,
even a great jockey, probably confers more pleasure on
the human race than the head of the house of Roths-
child. Nor do I contend that everyone should enjoy the
same amount of pleasure ; for whether that object is de-
sirable or not, it seems to me impossible of attainment.
I merely object to men who do nothing for society — who
merely enjoy pleasures themselves, without conferring
them on others, or at all events whose services to
society are no equivalent for the pleasures which they
Unearned Wealth, 2 2g
enjoy under the protection of our laws. * If any man
will not work neither let him eat/ contains, I believe,
a good deal of sound political economy ; and though a
man need not keep constantly at work in order to earn
enough for his own support, he must do some work to
attain that object. The man who is born to a fortune
of ten thousand pounds, comes into the world with an
order for ten thousand pounds' worth of the labour of
other men. Should society allow him to put this order
in force without giving it some equivalent ? And more
especially, should it do so when it exacts from some of
its members numerous and important unpaid services,
such as those of magistrates and jurors ?
No doubt there are men born to wealth w^ho are in-
capable of conferring any service on the public. There
are idiots, and lunatics, cripples, and persons of hope-
lessly delicate health. No one, I believe, w^ould desire
to deprive such persons of a reasonable competence ;
but what more than that do they require r Of what
advantage is an estate of ;^ 20,000 a-year to a lunatic
who resides at an asylum, the keeper of which at most
receives ;£iooo, while the balance, after providing for
law costs, creates a fund for relatives of whom the
lunatic knows nothing. Nor indeed is there almost any
case in w^hich a man physically incapable of working
can really enjoy a large fortune, while its possession
sometimes exposes him to annoyance and even danger.
A man of wealth may also be unable to do much for
society owing to a different cause. Brought up without
much education, he may succeed to a large fortune when
230 Unearned Wealth,
of mature years. But the very fact that he has been
thus brought up, shows that he has not entertained the
expectation of becoming a millionaire from his youth.
His good fortune has come upon him unexpectedly, and
the State would disappoint no reasonable expectations
and arrangements entered into on the strength of them
by limiting the amount of his luck. If it should not
think proper to do so, at all events there is one thing
that it can insist upon, namely, that he should educate
his family with the view of rendering them useful mem-
bers of society. His sons may confer upon the country
the benefits which he himself is unable to confer.
There are few boys, I believe, who do not possess a
taste for some useful pursuit, if this taste was encouraged
from the outset. But in the case of those who have to
earn their own livelihood, the parent must, to a large
extent, choose "what the child's pursuit is to be, and
even where the father wishes to give free scope to the
son's talent, his means are often too limited for the pur-
pose. It is therefore only in the case of the children
of the wealthy that the disposition and abilities of the
child can be really studied, and a career moulded for
him in accordance with his tastes. It is idle to suppose
that mere attendance at school is sufficient for this pur-
pose. There are teachers and teachers ; and some, who
are well qualified to impart information, fail to obtain a
sufficient influence over the pupil to induce him to learn.
Dispositions, too, often change with age. Idle boys
often become studious men, and there are as striking
instances of late as of early development. And if it is
Unearned Wealth, 231
known at a school that a boy is not destined for an
University career, or for any competitive examination,
the teacher v^^ill, I believe, usually become more or less
indifferent as to his proficiency. There is, moreover,
another reason v^hy school is insufficient to bring out a
boy's real abilities. Many of the subjects which are of
most importance in life are almost wholly excluded from
the ordinary scholastic curriculum. Such subjects are
Experimental and Natural Philosophy (including As-
tronomy, Geology, and Mechanics], Logic, Mental and
Moral Science, Sociology, and Political Economy. The
boy who leaves school an ignoramus might, if some of
these branches of learning had been presented to him,
have become a burning and a shining light ; but on
leaving school he subsides into a country gentleman —
or a town gentleman — and these sciences remain to him
but empty names for the rest of his life. How can we
tell whether a man who has never opened a book on
Political Economy has or has not a taste for it ? And if
we sometimes hear him urging an absurd argument on
a political question, it may be that the same argument
was accepted by men of first-rate ability before the time
of Adam Smith, with whose writings, and those of his
successors, the reasoner is altogether unacquainted.
Not merely country gentlemen, but men in general are
not so stupid as they are sometimes described. They
often repeat what they have heard, without understand-
ing it in all its bearings, and are not perhaps masters of
the art of expression ; but they may, notwithstanding,
have obtained a very good grasp of any subject which
2;^ 2 Ufiearned Wealth.
they have really endeavoured to comprehend. Want of
education and study, not want of ability, is the real
defect here, and a considerable step would be taken
towards remedying it if, in the case of the wealthy, an
University education was always insisted on. University
education itself however, as already noticed, is suscep-
tible of considerable improvement. A youth may be
prevented from taking a high position in some depart-
ment for which he has a decided talent, by being com-
pelled to cram up something else which he positively
dislikes as a means of obtaining his degree. And I
think there can be no doubt that both at schools and
Universities too much stress is laid upon the languages
and literature of Greece and Rome. These are not the
studies which are calculated to render the pupil most
useful to society in his after-life. They are capable of
little or no expansion, while the sciences are advancing
on all sides with giant strides ; and to give to classics
anything like the same proportionate weight that was
given to it a hundred years ago, is simply to ignore the
great feature in the progress of the century. The
statue which was as large as a child of three, falls far
short of the stature of a youth of twenty. The case of
classics and science is similar, except that the latter has
not probably attained half its full growth as yet. In
classics, moreover, we can only seek for men who have
mastered their subject ; in science we seek for men who
will advance it. The classical scholar merely preserves
the intellectual wealth that has been transmitted to us ;
the man of science adds to the national stock. Even if
Unearned Wealth, i'^'})
the one kind of learning was of equal importance with
the other, production is entitled to a preference over
preservation.
The gentleman or lady usually looks down upon the
man who has earned his own money and the members
of his family. There would be some ground for this
feeling if the superiority of education, which ought to
exist, really did so. But in most cases, I believe, no
superiority will be found, except a little superficial
polish in manner, dress, and accent ; while in solid
information the self-made man, however imperfectly
educated, is often in advance of the inheritor of wealth.
The manner and appearance of the gentleman, no
doubt, shows that he has moved in polite society : but
what good has he ever done by moving in it ? Is that
society either better or worse than if he had not moved
in it ? And what has he himself gained by the con-
nexion ? I once heard of a definition of a gentleman
as * one who never did a hand's turn for himself or any-
one else,' and I fear there is a considerable amount of
truth in it. If indeed his intercourse with society, even
in that limited circle, had made it more moral, more in-
telligent, more active, or more charitable, it could not
be said that he had lived to no purpose. But there are
few persons of whom such a statement can be made.
The majority are simply no better and no worse than
their neighbours ; and if some are better than the ave-
rage, others are worse. Their airs of superiority rest
upon the slenderest basis. They ought to be really
superior, but they are not. The fault, however, is per-
234 Unearned Wealth.
haps not theirs but that of their parents, or indeed that
of society itself: for it is seldom that we find anyone
doing more for society than public opinion requires
him to do. Disinterested philanthropy is as rare as a
wish to stand well with our fellow-men in common. If
society wishes individuals to serve it, that wish must be
plainly and clearly expressed, and must be enforced by
the weapons with which society enforces its wishes —
praise and blame. Anything beyond this is unnecessary
and injurious; but society as a body has never, I be-
lieve, employed other weapons. Rattening, boycotting,
assaults, murders, and other species of outrage, are not
the weapons of society, but of particular classes, who
seek to promote their class-interests by these means;
and the victims of these outrages are often supported
by another class whose interests run counter to those of
the former. When society is unanimous, such methods
are unnecessary, and are not resorted to ; but they very
frequently occur when the struggle is one between class
and class. Class struggles, as I have elsewhere noticed,
cannot be prevented by legislation ; but a good Govern-
ment should prevent the employment of these means of
warfare. And I may add that the surest method of pre-
vention is to make outrages injurious, not merely to the
individual, but to the class in whose interest they are
resorted to.* * There must be an end to outrages before
we legislate' is a principle which, however unpopular at
* This class almost always sympathises with the criminals. If the class —
not merely its leaders — disapproved of these crimes, they would not take
place. But even the expressed disapprobation of the leaders is often faint,
and I fear sometimes insincere.
Unearned Wealth,
235
the present day, Governments will, I believe, be ulti-
mately compelled to adopt. Society in general, how-
ever, is usually too inactive in the assertion of its own
interests : and in urging it to do a little more than it
has hitherto done, I have no fear of inciting it to out-
rage. It should teach men of unearned wealth what
their duties are, and enforce their performance by ex-
pressing its disapprobation when they are neglected.
Few men will persist in a course of action (or inaction)
of which all classes disapprove and avow their disap-
proval.*
* But if men are allowed to enjoy unearned wealth without rendering any
service to society, I fear that for a considerable time to come, at all events,
there will be toadies willing to express approval of their conduct in the hope
of a little base gain. The other measures referred to in the earlier portion of
this Essay cannot therefore be wholly dispensed with.
UFI71IISITT1
236 Unearned Wealth.
Note on the House of Lords.
Closely connected with this question of Unearned
Wealth is one which promises ere long to become a
burning question — that of the House of Lords. In the
future a rightly-constituted House of Lords will, I be-
lieve, be of more value and importance to the country
than at any past period. As regards the Lower House,
we are plainly drifting towards the result that every
man (and probably every woman) shall have a vote,
that no one shall have more than one vote, and that
each vote shall be of equal value as regards returning a
representative. Under such a system wealth, talent,
and education cease to be represented. It is true, in-
deed, that the man of wealth, talent, and education
may, to a certain extent, have a better chance of being
chosen as the representative of the people, but he will
not represent wealth, talent, or education. He will re-
present a constituency in which the lower classes will
predominate ; and he will probably be chosen for a short
time, and will be set aside at the next election if he
dares to oppose his private convictions to the popular
feeling. And under the present system of government
by party he will probably degenerate, not merely into
the spokesman of his constituents, but into the spokes-
man of one section of his constituents.* There is not
* For as the other section will be pretty certain to vote against him in any
case, his only chance of re-election is to retain the favour of his own section,
though its numbers may be diminishing. In this way the representative of a
Unearned Wealth, 237
much independence to be found among the members
of the House of Commons as it is. There will be less
in future. The Sovereign at present never interferes
with the decisions of Parliament; and if we are not to
have a Democracy, pure and simple — if we are to give
any weight to property, education, and talent — we must
preserve the House of Lords. A peer who is in no dan-
ger of losing his vote because he records it against the
mob, and who either seeks no office, or at all events can
support himself without one, is not only in a position to
form an impartial judgment, but to vote in accordance
with his convictions ; and if the House was so con-
structed that every peer should be competent to form a
judgment on the most important political questions of
the day, while a considerable proportion of the inde-
pendent men capable of forming such a judgment were
peers, the Upper House would form a most valuable
adjunct to the Lower. But the Upper House as at pre-
sent constituted does not fulfil these conditions. Public
opinion apparently does not require the legislator by
inheritance to qualify himself for becoming one.
Every peer who succeeds to a peerage by descent
should, I think, be required to pass a qualifying exami-
nation before he is allowed to sit or vote in the House
of Lords. This would be the first preservative against
unqualified legislators in the Upper House. But the
same provision should be extended to persons created
peers, unless for public services of a non-political
majority may become the representative of a minority long before he ceases
to sit.
238 Unearned Wealth,
character. In addition to this a property qualification
should be required. We do not want needy peers, who
intend to use their hereditary powers of legislation as a
means of earning a livelihood. A limitation should be
placed on the number of peers to be created by the
Crown. The House is already attaining formidable
dimensions ; and an unlimited power of creating new
peers, vested in a Minister chosen by the Lower House,
would be clearly fatal to the independence of the House
of Lords. But I think any man possessing certain qua-
lifications might have the right of claiming the peerage,
subject perhaps to a veto, for reasons assigned, to be
vested in a responsible Minister. The qualifications,
both as to education and property, should in this case
be higher than in that of a hereditary peer succeeding
to the title ; but I see no reason why, when these quali-
fications were high enough, the peerage should not be a
matter of right. A certain number of life-peers, too,
might be elected by the educated classes — the graduates
of the several Universities for instance. These consti-
tuencies are represented in the Lower House, but their
representatives are too few to possess any important
influence there. The Lower House will ere long repre-
sent the lower classes only, and the Upper House should
therefore represent the upper classes, if they are to be
represented at all. But it ought to represent all that
is good in the upper classes, and to represent it in the
best way.
The value of such a representation has, I think, been
clearly shown by the history of this country since the
Unearned Wealth, 239
last Reform Bill. Carried by a Conservative Ministry,
that measure resulted in the first instance in a Liberal
majority large enough to render the Conservatives
almost powerless in the House; and such a majority has
always a tendency to become tyrannical and irrespon-
sible. It continued to rule the country long after the
wave of popular feeling that had called it into power
had died away. The Ministers still commanded large
majorities on party questions, when bye-election after
bye-election had proved that popular feeling was as
much opposed to them as it had once been in their
favour. At last a General Election took place; and
substituting * Conservative ' for * Liberal ' the same his-
tory was repeated to the letter. Then came a third
General Election, and with it a Liberal majority, larger,
more irresponsible, and more tyrannical, than that
which had ruled either of the preceding Parliaments.
Has the wave of feeling that called the Liberals
again to power died away once more ? I do not know ;
but it is a significant fact that for some time past the
Conservatives have been clamouring for a General
Election, while the Liberals have been doing their
utmost to avoid it. They are at the same time endea-
vouring to work again upon the popular mind in a new
direction, so as to have a new election-cry when the
dreaded dissolution becomes inevitable. The further
extension of the Franchise will, I believe, make those
features, for a time at least, still more marked. Popu-
lar constituencies will want ballast — at all events until
they have been educated to make a right use of their
240 Unearned Wealth.
political privileges. It may be long before we again see
a Minister at the head of one of those narrow majorities
which compels him to consult the public sentiment at
every step. We are, I fear, more likely to see him
occupying the position of a dictator, because his clap-
trap went down with the populace four or five years
ago, and thus rendered him secure against all oppo-
nents until the next General Election, when he will
disappear for a season — perhaps to re-appear in still
greater power at the following dissolution. From faults
of this character popular constituencies have seldom
been free ; and for that reason it is seldofti safe to trust
the government of a great country into their hands alone.
Vox populi is hardly tox Dei when it says one thing
one day and the opposite on the day following. An
Upper House, not dependent on the breath of popular
clamour, is therefore of great value ; and its value in
the future is likely to be enhanced rather than the con-
trary. But to be of real value it must be a properly-qua-
lified Upper House. It must not represent merely class
interests or party interests. It must represent the inde-
pendent opinions of men better qualified to judge than
the masses, who can apply the drag to the wheel in a
manner for which the masses themselves will afterwards
feel thankful — of men who can anticipate the popular
feeling of the future as well as read the popular feeling
of the present. It is only a genuine aristocracy of the
best kind that can save us from an aristocracy of orators
varied by the monarchy of a single orator. The popu-
lace, no doubt, may be educated so as to know how to
Unearned Wealth. 241
govern the country ; but I fear it will be long before
they possess this education. It is in fact * the lie which
is half the truth ' that at the present juncture has most
weight with the masses ; for unadorned truth is seldom
of much use to a party orator, and therefore it obtains
but little hold on the public mind. Polemical language,
which the orator will not afterwards repeat or defend
in argument, is much more to his purpose. We ought
to have one House at least where this kind of speech-
making would be at a discount — where a clearly-marked
distinction would be drawn between the statesman and
the orator on the one hand, and between the orator and
the liar on the other. This should be the function of a
properly-constituted House of Lords.
Shorter Parliaments would, indeed, remove some of
the evils to which I have referred. With annual Parlia-
ments we should never run the risk of being governed
by a body which represented the public feeling of the
past instead of that of the present. But the greater
instability of Ministries, and the more immediate
dependence of the representatives upon their constituen-
cies which this system would introduce are evils of con-
siderable magnitude. I incline to think that the best
arrangement would be septennial or quinquennial Par-
liaments, as at present, with a clearly recognized right
on the part of the Upper House to enforce a dissolution
when any question which was not before the country at
the preceding General Election had become the pro-
minent topic of the day. * This question is an impor-
tant one. It has not hitherto been before the country :
R
242 Unearned Wealth.
you must take the opinion of the country upon it now,'
is surely as reasonable a demand as the Upper House
could address to a Minister whose majority in the Lower
House was the result of an election held before the
question alluded to had attained its present prominence.
In fact there is nothing better calculated to keep the
Upper House in harmony with the people than its de-
claration that it prefers the judgment of the people to
that of a set of gentlemen who once represented them,
but do so no longer. An appeal from the existing
House of Commons to the popular constituencies which
returned it, is one which, even if misplaced in an indivi-
dual instance, manifests at once the confidence of the
Upper House in the masses, and its desire to consult the
wishes of the masses. The real danger in such cases is
twofold. First, that some demagogues may succeed in
representing the matter as a conflict between the repre-
sentatives of the people and a body of hereditary legis-
tors, and thus obtain the verdict of the country in favour
of the former upon a false issue — that the country, for
example, may restore to power a Ministry of whose
foreign policy it disapproves, because it believes that
this Ministry is fighting for the liberties of the
people against the House of Peers. Secondly, that
the Upper House, desiring to get rid of some ob-
noxious measure, may try the chance of an appeal to
the country, having previously determined to reject
the Bill in question whatever the result of the popular
verdict may be. Now it seems clear that when the
Upper House submits an issue to the people, it is bound
Unearned Wealth. 243
to abide by their finding on that issue ; unless, indeed,
the jury has been tampered with and imposed upon by
false testimony and misdirection — in which case a new
trial might be insisted on. But, even when the verdict
was disputed on these grounds, a conflict between the
Upper House and the people would be inevitable ; and
it could hardly fail to be fraught with mischief to the
country. There would not be much danger of such a
conflict, however, with a well-constituted House of
Lords. With such a body an appeal would only take
place when there was a good prospect that the people
would take part with the Lords rather than with the
Commons; or else when the Lords, having avoided
expressing any opinion in the first instance, were ready
to acquiesce at once in the verdict of the country, and
could not be accused of any inconsistency or sacrifice of
principle in doing so. The masses will undoubtedly
form the governing body of the future. The only
appeal will be from the representatives of the past to
the representatives of the present or of the future ; from
the people ill-informed to the people better informed;
from their hasty decision to their mature judgment;
from passing sentiment to permanent reason ; from
oratory to logic ; from specious falsehoods urged by
eloquence to plain truths supported by clear evidence ;
from figures of speech to matters of fact. Every man
is liable to be led astray at times by the influences
which I have mentioned, and large numbers are often
simultaneously deceived by them. In time they will
discover their error ; and if the Upper House can antici-
R 2
244 Unearned Wealth,
pate this time, and truly predict its arrival, it is justified
in holding its ground for a while against any amount of
popular clamour. And if its forecast proves correct, and
the people ultimately adopt the views of the Peers, the
latter will come out of the conflict strengthened, not
weakened. But I fear the present House of Lords can-
not be relied on either to limit its resistance to popular
feeling to the class of cases to which I have referred, or to
maintain its ground firmly in cases of this class. It wants
confidence in its own judgment, because it strongly sus-
pects that this judgment is based on insufficient reasons.
It is, in truth, a case of * follow my leader ' in both Houses,
the followers having frequently in both cases a shrewd
suspicion that the leader is about to take a leap in the
dark ; but want of knowledge or want of independence
prevents the members of both from seriously entertain-
ing the question, *Is my leader right?' If we consider
the number of questions not at all considered at the last
General Election, and with respect to w^hich those who
were then returned had never formed any decided
opinion, but on which all the Liberals now vote one
way and all the Conservatives the other, we can hardly
regard our representatives otherwise than as chessmen
whom the principal players move at will. Is it con-
ceivable, for instance, that all the Conservative mem-
bers should in the exercise of their private judgment
have come to the conclusion that the Egyptian policy of
the present Ministry is wrong, while each of the Li-
berals arrived independently at the conclusion that it
is right ? This policy was one which could hardly be
Unearned Wealth. 245
said to result from the previous declarations of the party
or any of its members, for the whole question did not
arise until after the General Election. No impartial man,
I believe, can arrive at any other conclusion than that
a number of men voted for this policy simply because
it was the policy of the Ministers, and that a number of
others voted against it for the same reason. Some of
these, doubtless, formed no opinion on the subject, and
simply followed their leaders. Others, I fear, voted in
opposition to their own convictions in order to keep
their own party in office, or to get them into office.
And these remarks are as true of the Lords as of the
Commons. What we want in both Houses is men who
will form an independent judgment and adhere to it. It
is not merely in the Cabinet that the intended measures
should be discussed and decided. The members of the
party at least should be consulted ; and no course should
be adopted by any Ministry which would not be ap-
proved of by the House of Commons on a really inde-
pendent vote. * Vote contrary to your private convictions,
or else I will resign and denounce you as a traitor to the
cause,' is a demand which no Minister should address to
his followers; but it is practically addressed to them
more than once in almost every session of Parliament.
A good Upper House would prove a material check to
such proceedings. But does the present House of Lords
operate as such a check ? I fear not.
WAR.
A LTHOUGH the time may be very far distant when
the nations will beat their swords into plough-
shares and their spears into pruning-hooks, there can
be no doubt that, with the advance of civilization and
of popular institutions, wars will become less frequent.
Neighbouring countries do not now look upon them-
selves as natural enemies; they rather regard them-
selves as natural friends, who are nevertheless liable
to quarrel occasionally. A wrong done by one civilized
nation to another creates a feeling of dislike to the
aggressor throughout the civilized world ; and the influ-
ence of public opinion in other nations is perhaps
already felt to some extent, and is certain to be felt in
a much higher degree hereafter. In the days of absolute
monarchies a sovereign may have thought little of the
comforts and even the lives of his people ; but, now that
power is being placed in the hands of those who suffer
by war, hostilities will not be lightly entered upon.
International trade has been greatly extended of late
years, and its interruption by war involves a loss to
both countries. Until the present century France was
looked upon as the natural enemy of England ; but
War, 247
even independently of our trade with France, who is there
now that would not regret having our intercourse with
that country cut off, and our friendly relations inter-
rupted ? Wars are expensive, and the expense appears
to increase rather than to diminish with the progress of
civilization; and when the taxpayers become rulers,
this item attains no inconsiderable importance. Then
there is the loss of life, the hardships of the conscription
that has often to be resorted to, and the necessity of pro-
viding for those who have been disabled in the service
of their country — all of which considerations will have
more weight with the masses than with absolute rulers.
With the disappearance of Absolutism, wars of mere
caprice will disappear. Wars of conquest, at least
among civilized countries, will also become rare. Not
only are the people of one civilized country unwilling to
keep those of another civilized country in enforced sub-
jection, but they find it unprofitable to do so. Unless
there are some special reasons for it (such as the acquisi-
tion of a scientific frontier, as it has been termed), ruling
over a discontented people is an expensive and thankless
task, and the ruling nation finds itself weakened rather
than strengthened thereby. It is only when it can make
the conquered people contented with their new situa-
tion that the acquisition proves of real value. There is,
moreover, another obstacle to wars of conquest. Many
civilized countries possess local forces capable of ac-
complishing a good deal in resisting an invading
army, but almost incapable of being employed in ag-
gressive warfare. Should this system be extended, and
248 War,
these local forces organized with care, each of the belli-
gerents may find itself stronger than its adversary in
defensive, and weaker in offensive, warfare ; in which
case a continuance of hostilities could hardly prove be-
neficial to either. It may be hoped, too, that in future
statesmen will be more open to the calls of reason and
justice. If we exclude revolutionary wars (which, how-
ever, may be in most cases indirectly traced to despot-
ism), there is hardly an European war of the present
century that did not arise from the wrong-headedness of
some autocrat ; while the wars of the nineteenth cen-
tury have, I believe, been considerably fewer than those
of the eighteenth.
These observations are, of course, less applicable to
semi-civilized and barbarous races. Civilized races have,
I fear, often indulged in purely aggressive wars against
these latter, with a view of self-aggrandizement ; and
their anxiety to extend their trade, and to form colonies,
will lead to a continuance of these aggressive wars for
some time longer. But at other times these wars are
forced upon us. Forbearance on the part of the civi-
lized races is regarded as weakness, and nothing but a
sharp lesson will compel their savage neighbours to
keep the peace. It is in the gradual extension of civi-
lization over the world that we must seek a remedy for
such wars as these, and in the meantime mere rapacity
should be forcibly suppressed. Civilized races should
neither rob, nor allow themselves to be robbed, nor
should they harbour or encourage robbers ; and the case
is made worse when murder is added to robbery, even
War. 249
though the murderers risk their own lives in the attempt.
Assassins are often courageous, but that circumstance
only renders them more dangerous to society.
The object of the present Essay, however, is — treat-
ing war as for the present a necessary evil — to consider
the manner in which it ought to be conducted. That
war between civilized countries is now conducted in a
much milder manner than formerly is evident, and most
persons will, I think, admit that this is a decided im-
provement. I may add that this improvement does not
seem to have affected the rapidity or completeness of the
successes gained by the armies whose campaigns were
conducted in accordance with what are now recognized
as the usages of civilized warfare. But it seems to me
that a mutual agreement among civilized nations to
carry the same system farther would be both desirable
and practicable. The first rule should be, I apprehend,
that under all ordinary circumstances warfare should be
confined to organized belligerents. The invading army
(for one of the contending armies must always occupy
that position) should inflict no injury on the people
which is not absolutely necessary for military purposes.
The defending army should follow the same course ; and
the people should likewise abstain from inflicting any
injury on the invaders. Peijiaps in a genuine war of
conquest this last rule might be departed from ; but most
wars of invasion are not wars of conquest. Both parties
frequently become invaders in turn ; and neither have
any intention of permanently annexing the portion of
the enemy's territory which they occupy during their
250 War,
operations. Indeed it may be doubted whether the em-
ployment of undisciplined and half-armed masses in re-
sisting an invasion is ever justifiable. Their resistance
brings great suffering on themselves and their country,
while it rarely, if ever, exercises an important influence
on the issue of the campaign. In open fight they are
slaughtered like sheep ; but they often play the part of
wolves towards the wounded and stragglers whose deaths
infuriate but hardly weaken the enemy. Nobody seriously
imagined that after the armies of France had been deci-
sively defeated, the advance of the victorious Germans
could be arrested by the efforts of t\ie franc-ttreurs ; and
beyond the limits of Alsace and Lorraine there never
was any real risk of conquest and annexation. The
franc'tireurs inflicted some loss on G-ermany at the ex-
pense of a much greater loss to France, and most pro-
bably their employment did not mitigate a single clause
of the subsequent Treaty of Peace. It would have been
far better for France, and better also for Germany, if the
Republican rulers of the former country had at once ac-
cepted the position in which the Emperor had placed
them, and made the best terms they could with an
enemy whom they could not compel to relinquish his
acquisitions, and who was practically in possession of
Alsace and Lorraine when they succeeded to power.
I should have almost thought it unnecessary to lay
down this rule against doing injury for which there is
no strategic reason, were it not that I find an opposite
doctrine laid down in the late Mr. Fawcett's very able
Manical of Political Economy, It does not, however, appear
War, 251
to have been adopted by the Ministry of which he was
a member. That there may be no misrepresentation, I
think it best to state the theory in his own words. Hav-
ing explained how it is that defeated nations often recover
very rapidly from the calamities of war, he justly remarks
that this is not the case when any considerable portion
of the fixed capital of the country has been destroyed in
the contest. He then proceeds, * The richer a country is
the more severe maybe the injury inflicted on her by war,
if the enemy should destroy any considerable part of the
wealth which is in the form of fixed capital, and which
constitutes her industrial plant. If Germany had adopted
this policy in her war with France, it would have been
impossible for France to have recovered her prosperity
with the very remarkable rapidity to which allusion has
just been made. Of late years a feeling of false huma-
nity has attempted to make the rights of private pro-
perty respected in war. Life may be sacrificed with as
much prodigality as ever.* The foremost mechanical
genius of a mechanical age is devoted to the production
of weapons of death ; but civilization, it is said, demands
that there should be no wanton destruction of property.
No such attempt to palliate the material disasters of
war ought to be encouraged. War will be rendered
less frequent if a whole nation is made to feel its terri-
ble consequences, instead of concentrating all the horrors
* Mr. Fawcett should have added 'in battle.' In former wars vast num-
bers of lives were sacrificed otherwise than in battle. This is now rarely done,
and creates a general feeling of indignation when it is. The massacres at
Batak and Panegurishta cost the present Sultan half of his European ter-
ritory. It is to be regretted that the other half did not follow.
252 War.
in the sacrifice of thousands of helpless victims who may
be marshalled at the caprice of a despot. If any nation
should ever threaten England with invasion, England
ought to speak in unmistakable language that her ven-
geance would not be confined to a retributive slaughter
of soldiers, but that she would destroy all the public
works upon which the wealth of the nation mainly de-
pended. This will give a practical check to vaulting
ambition, and might arouse a nation to restrain the
military designs of the most despotic ruler.' [Manual of
Political Economy, pp. 34-5.)
It is not clear whether Mr. Fawcett intended to speak
of a threatened invasion of England only, or also an in-
vasion of her dependencies — of India, for example, by
the Russians, or of South Africa by the Boers. The
two latter instances, however, are almost enough to
refute the theory. The Czar would smile if we threat-
ened to destroy the great railway from St. Petersburg
to Odessa in revenge for an invasion of India by his
troops ; and the Boer has no fixed capital to destroy
except perhaps his slaves (whom he alleges are not
slaves). But the principle, if good for anything, must be
applied to both combatants ; and if this country was in-
vaded, Mr. Fawcett would scarcely have wished to. see
it applied by the enemy to the fixed capital of England.
No doubt, owing to our insular position and the strength
of our navy, we are tolerably free from risk of invasion
so far as our own soil is concerned ; but, with the excep-
tion of the United States, what civilized country is in
the same position ? If the principle of destroying fixed
War, 253
capital had been adopted by both belligerents during
the Napoleonic wars, how much of the fixed capital of
Europe would have been left at the end of them ?* If we
except the limited amount of damage that can be inflicted
by a hostile navy, this destruction of public property and
fixed capital can only be effected by an invading force,
and the invaders are most frequently the aggressors.
Moreover, as already remarked, the assailants often be-
come defenders and the defenders assailants in the
course of the same campaign, or in two successive cam-
paigns ; in which case the destruction of property on
one side would probably be as great as on the other.
Mr. Fawcett seems to have regarded the rapid recovery
of France as a thing to be regretted — at least from
the German point of view. But is it so ? How has
the renewed prosperity of France injured Germany ?
or how is it likely to injure her ?
I do not believe there is any instance in history in
which a victorious army (unless wholly composed of
mercenaries) was arrested in its course of success and
compelled to make peace, because the money to carry
on the war was not forthcoming. Nor is there an in-
stance of a country, abundantly supplied with brave and
disciplined troops, having yielded to the enemy through
monetary pressure. If the Prussians could have de-
stroyed half the wealth of France, it would not have
* And as France was not invaded till the very end of these wars, the
adoption of the rule would have had no tendency to induce the French people
to stay the hand of the Emperor. Europe might have had additional motives
for submitting to his dictation, but tliat would have been all.
254 War,
saved them after the battle of Jena ; nor if the French
could have treated the Prussians similarly after the
battle of Sedan, would it have influenced the terms of
peace. And if the Grand Army had carried its destruc-
tive propensities a little farther, how many of those who
composed it would have escaped alive from the snows
of Russia ? The military effects of this destruction of
property are in general very small; and as no nation
can count upon uniform success, it would be well for
belligerents to recollect that the country which is
worsted in the struggle may have to pay a war indem-
nity to the enemy. If in revenge for a Russian invasion
of India we laid Odessa in ashes, we might have to re-
build it at our own expense as a condition of retaining
any portion of our Oriental dependencies, and we might
thus learn an useful lesson with regard to the wanton de-
struction of private property in war. Had the French
employed their fleet in this way during the late contest,
it is not improbable that their war indemnity might have
been doubled.
Mr. Fawcett relies on the deterrent effects of the de-
struction of fixed capital ; but it has other effects which
are equally worthy of notice. If the invaders make war
on the people, the people will make war on them.
Guerillas, franc-itreurs, and treacherous guides will be
found on all sides ; and if private property is doomed, the
defending army or the people themselves will destroy it,
and thus expose the advancing force to great incon-
venience for want of food and provender. But suppos-
ing these difficulties surmounted, and the victorious
War. 255
invaders dictate a peace to the people whom they have
ruined, what will be the result ? The conquered will no
doubt shrink from a conflict on the same terms, but they
will eagerly look out for an opportunity of revenge. The
French, for instance, would watch for a chance of obtain-
ing the assistance of Austria or Russia in order to pay
the Germans back in their own coin, and whenever the
German Emperor found himself in difficulties, and was
anxious to secure at least the friendly neutrality of
France, he would find that country ranged on the side of
his enemies. It is, indeed, the old barbarous methods of
warfare, which (softened, perhaps, as regards the lives of
non-combatants) Mr. Fawcett sought to revive, that have
given rise to those national antipathies which have been
transmitted from one generation to another, and are
perpetually breaking out into acts of hostility — that
have prevented the fusion of conquering and conquered
races, and have often made territorial acquisitions a per-
manent source of weakness to the conquerors. War would
have a greater deterrent effect if, whenever a town was
captured, the inhabitants were massacred ; but Mr. Faw-
cett would not have advocated a return to this practice.
He would only impoverish them ; but he would do that
as permanently as possible, so that years of progress
would be necessary to recover the ground lost by the
war, the only gain being that they would, as he sup-
posed, be slower to engage in a new contest with the
victors. The latter are as likely to have been in the wrong
as in the right, and to have been the aggressors as the
defenders, and the deterrent effects of the war may
256 War,
consist in inducing the vanquished to submit to injuries
and insults which they would otherwise have resented —
to submit until they see, or believe they see, an opportu-
nity of revenge. And revenge in this case would pro-
bably go considerably beyond the limits within which
Mr. Fawcett sought to justify it. Reprisals usually repay
the original debt with interest at a very high rate. The
true rule I believe is, that no injury of any kind should
be inflicted without adequate military reasons.
But I now come to a second rule which does not
appear to be fully recognised by civilized nations, and
which seems still more obvious, viz., that war should
not be carried on in such a manner as to injure the coun-
tries which take no part in it. This rule is violated by
the common process of blockading an enemy's coast.
This blockade often intercepts a great part of the
trade of the blockaded country. In this trade there are
always two countries concerned, one of which is pro-
bably neutral ; and it is perhaps on this latter country
that the blockade inflicts the greatest loss. If the
French, for example, should blockade the Chinese coast,
it seems certain that, at least so far as the Anglo-Chinese
trade is concerned, we would be injured to a greater
extent than the Chinese. Sometimes, indeed, neutral
powers object to a blockade as ineffective, and call upon
the blockading power to render it effective, or else to
abandon it. But the effective blockade is the worst of
all blockades, and should not be permitted unless there
are very strong military reasons for it. Even then I
think compensation should be made to the injured
War, 257
neutrals. The blockade of an enemy's coast, like the
destruction of property, hardly ever exercises an im-
portant influence on the question of peace and war.
The practice seems rather to have descended to us from
the days when each country tried to do the other as
much damage as possible, without distinguishing be-
tween belligerents and non-belligerents. The blockade
of the Confederate States would have effected nothing
unless the Federals had proved victorious in the field ;
and if the Confederates had fitted out a hundred Ala-
bamas to commit licensed robberies on the high seas,
it would not have saved them from the consequences of
Grant's and Sherman's successes. But the blockade
injured other countries and England in particular,
where the cotton famine is not yet forgotten ; while the
Southern privateers, had they been more numerous,
would have injured other countries also by the partial
stoppage of their trade with the United States. Indeed,
the wanton destruction of fixed capital in any country
can hardly fail to affect other countries injuriously.
Destroy the railways, canals, ports, and factories, of
any country, and its trade with other countries must
suffer, to the detriment of both. To return to a former
illustration : if we could destroy a large portion of the
fixed capital of Russia in revenge for her invasion of
India, the price of Russian corn would be considerably
enhanced after the peace ; and if circumstances threw
us mainly upon Russia for our food supply, we might
find that the Russian agriculturists were earning as
much as before, while we were paying a much higher
s
258 War,
price for our bread. The injury in this case, however,
would be only indirect.* In that of a blockade it is direct.
The stoppage of the cotton trade between England and
the Southern States occasioned quite as considerable a
loss to the former country as to the latter. A single
country, indeed, could hardly refuse to recognize block-
ades without involving itself in hostilities with the
blockading belligerent, but an united determination on
the part of civilized countries would at once put an end
to them. No country would, I believe, be really injured
by such a determination. I hope, also, that whenever
the blockaded country proves victorious, it will insist on
an ample war indemnity.
The duty of avoiding unnecessary slaughter of bel-
ligerents is pretty generally recognized by civilized
countries in the more serious branches of warfare. The
slaughter of wounded men, prisoners, and others who
are incapable of resisting, is universally condemned
and rarely resorted to, while few generals will recklessly
expose their own men. Sometimes, indeed, a consider-
able sacrifice of life at a particular juncture proves a
saving of life afterwards, and may even prove the
turning-point of a campaign. Much must here be left
* It should be added, however, that much foreign capital, and especially
EngHsh capital, is invested in railways and other public works in almost
every country. We could hardly destroy any of these works without injury to
ourselves and to neutrals, even though the enemy should be the greatest suf-
ferers. Again, most countries hold a good deal of English and other foreign
capital on loan. If we succeeded in impoverishing such a country, the stability
of these loans would be endangered, and we should bear our own share of the
resulting loss. For these, among other reasons, property should never be
destroyed without some important strategic object.
War, 259
to the discretion of the general, but a nation should
abstain from appointing a commander of known cal-
lousness in this respect. Civil war, however, is still
frequently made an exception to the prevailing prac-
tice of civilized nations. For this exception there
is no reason whatever. Our fellow-countrymen are,
as a rule, entitled to more indulgence than strangers;
and while armies may, at the bidding of a despot or
dictator, engage in the most causeless of foreign wars,
large bodies of citizens hardly ever rise in arms with-
out strong reasons for so doing. And severity has as
little effect on stamping out the seeds of insurrection as
it has in preventing a renewal of foreign warfare. There
is probably no instance of a formidable civil war ending in
the complete subjection of one party, which was followed
by less severity to the vanquished than the recent contest
in the United States, and there probably is no instance in
which the contest is less likely to be renewed. In Hun-
gary, on the other hand, where the insurgents were
severely punished, the Emperor of Austria could only
regain the allegiance of his subjects by granting them
the greater portion of the rights, the deprivation of
which had driven them into revolt ; and even this
might have proved insufficient were it not that the war
was commenced before he ascended the throne, and that
his youth and inexperience at the time led the people
to attribute the severities in question to his advisers,
rather than to the Emperor himself. The case of Ire-
land is in some respects similar to that of Hungary ;
but though a much longer period has elapsed since the
S 2
26o War,
last considerable rebellion and the suppression of the
Irish Parliament, the concessions of England can hardly
be said to have produced a general feeling of loyalty
among the Irish people. In many quarters England is
still looked upon as an enemy, and her concessions are
regarded as the result of timidity on her part, or else as
the product of the competition of English political par-
ties for the Irish vote. And the opinion is now becom-
ing prevalent that England will ultimately abandon
her friends to the tender mercies of her enemies in
Ireland as well as in South Africa, provided that a suf-
ficient amount of pressure is brought to bear. It should
be stated, however, that this condition of things by no
means dates from the Rebellion of 1798, or from the
Union Act of 1800. Ireland is, in fact, the most con-
spicuous example of the evils resulting from the system
of warfare which, in a somewhat modified form, Mr.
Fawcett advocated. The Irish people were made to feel
the full horrors of war on every possible occasion, and
the result has been that their hatred (I speak of the
native Irish, not the descendants of recent English and
Scotch settlers) of the English race still continues,
though all reasonable cause for it has long since disap-
peared. This hatred is working evil to England already,
and ere long it is not unlikely that the balance of politi-
cal power in the Kingdom will depend on an Irish party
which, unless heavily bribed, will always range itself
on the side which it believes to be most disadvantageous
to England. * England's difficulty is Ireland's oppor-
tunity'; and Ireland will not forego her opportunity,
War, 261
even on the concession of local self-government. She
will insist on having a voice in the Imperial Legislature
also, and that voice (so far as the majority of votes is
concerned) will still be raised in favour of the enemies
of England whoever they may be.* How to put an end
to this state of things is a problem well worthy of the
consideration of English statesmen ; but under the pre-
sent system of government by party, no one seems
disposd to attend to it for any other purpose than that
of making political capital out of it. Our party leaders
buy the Irish vote if they can. If they cannot, they
appeal to the English people for support, on account of
the firmness with which they have sustained the cause
of law and order in Ireland, and resisted unreasonable
popular agitation.
It is no doubt true that the person who causes a civil
war commits a great crime, and merits severe punish-
ment ; but is not the same thing true of the person who
causes any war ? And again, who is it that causes the
outbreak ? The king and his advisers, I believe, in the
great majority of instances. Civil war is like schism in
* Yet some politicians are so anxious to purchase the Irish vote for the
time being, that they decline to apply the principle of population to the repre-
sentation of the three portions of the Kingdom. That principle would be
unduly favourable to Ireland, inasmuch as her population is steadily decreas-
ing, while those of England and Scotland are steadily advancing. It is likewise
unduly favourable to her because her people do not possess the same qualifi-
cations for the calm and deliberate exercise of the franchise which the English
and Scotch people possess, and because she contributes less than her proper
proportion (as measured by population) to the public revenue, which it is the
duty of the Legislature to assess and distribute. But though the population
principle is thus unduly favourable to Ireland, it would seem that it is not
favourable enough for the intended purchasers of the Irish vote.
262 War.
the Church. The seceders are abused, anathematized,
and perhaps put to death ; but the cause of the secession is
generally to be found in the obstinacy and bigotry of the
rulers of the original body, who are the real schismatics
— the authors of schism — in the case. No single in-
dividual could induce a large number of the people to
rise in arms against a Government which was doing no
wrong. Before every insurrection which attains serious
proportions there must be a wide-spread feeling of dis-
satisfaction, and for this dissatisfaction there is always
a reason. It may no doubt be a bad reason. In the
American civil war the cause seems to have been that
after their long unbroken rule, the Democrats could not,
with complacency, see the government of the country
pass from their hands into those of the Republicans ; and
the former majority, which had been converted into a
minority, fought for the power which it could no longer
retain by the constitutional methods hitherto adopted.*
And if party feeling should continue to become more
intense in this country, the time may come when, after
a long unbroken rule, the Liberals will fight rather than
suffer the Conservatives to take advantage of the final
turn of the tide.f But the cause of civil war is always
* Or rather the Southern Democrats did so. The Northern Democrats,
for the most part, adhered to the Constitution.
t This was written before the late riots in Birmingham, which seem to
indicate that the period in question may not be very remote. The doubtful
chance of returning a Conservative for the city proved sufficient to produce a
riot of formidable dimensions, with apparently some very discreditable con-
comitants. So much for freedom of speech and freedom of election in any
place where a * tyrant majority ' has once been established. Had this tyrant
majority been Conservative, the result would probably have been the same in
case of a Liberal invasion.
TVar, 263
to be found in some widely-extended feeling — some
sentiment which, if not felt by the majority, at all events
is felt by a large minority, and which always has some
rational grounds. This sentiment will not be extin-
guished by massacres, executions, confiscations, banish-
ments, or other pains and penalties. Queen Mary could
not kill all the heretics in England, nor could Philip kill
all the heretics in the NetheHands ; and in both coun-
tries the oppressed heretics ultimately became the
dominant party. The cruel suppression of Wallace's re-
volt in Scotland was followed by the victories of Bruce,
and produced an animosity between the English and
Scotch which lasted long afterwards. Small bodies of
reformers or fanatics may be stamped out by such
methods ; but where their system was one calculated to
gain a hold on the public mind, some one else is pretty
certain, ere long, to revive it ; and where this is not the
case, it could equally have been extinguished by less
violent means. What did the slaveholders of the
Southern States gain by the execution of John Brown
and his few brave, but somewhat fanatical, followers at
Harper's Ferry ? Brown became a popular hero, and
the object at which he aimed was effected almost before
he was cold in his grave.
The duty of preserving the lives of soldiers from
other dangers than those of the battle is generally ac-
knowledged, but it is very frequently neglected. Red-
tape-ism, peculation, jobbery, want of proper foresight,
ignorance, and indolence, have hurried more soldiers
to an untimely grave than the shot and steel of the
264 War.
enemy. Persons guilty of these defaults should be
severely punished. The Ministers to whom any portion
of the conduct of the war is entrusted should have a
practical knowledge of military matters. Jobbery should
be made, if not a criminal offence, a ground for ex-
cluding the jobber from all official employments in
future.* Contracts should not be taken at the lowest
figure, or from unknown men, but from men of wealth
and reputation, who should be strictly bound to their
fulfilment; and the Minister who shirked any impor-
tant preparation with a view of saving expense, on the
chance that it might not be ultimately required, should
receive his final dismissal. England, as the wealthiest
nation in the world, with an army proportionately much
smaller than that of any of her neighbours, should not
merely expect, but insist, that everything should be in
apple-pie order at the opening of the campaign — that
the sick-lists of her army should be kept at the low^est
possible figure, and that the general should never be
impeded in his plans for want of provisions, ammuni-
tion, or means of transport. Yet few countries have
proved themselves more deficient in this respect than
England. Pounds, shillings, and pence, are usually
a matter of more importance to an English Minister
than to any other public financier, not because money
* I do not think there would be any great difficulty in detecting and prov-
ing jobbery where it existed. Evidence might be taken on oath before a
public Commission as to the qualifications and testimonials of the person who
had been appointed to some important post, of those of the other applicants,
and of the means taken to procure applications from qualified persons ; also
as to any reasons for the appointment other than the qualifications of the
selected individual.
War. 265
is more difficult to raise, but because he is liable to be
questioned more closely about it. In carrying on war
with civilized countries we have hitherto usually sup-
plied a comparatively small force, which operated only
in conjunction with our allies ; so that though the gaps
in its ranks were proportionally large, it was not diffi-
cult to fill them up. And the courage and endurance
of the British soldier often brought us victoriously
through difficulties that few others would have sur-
mounted. But this is now changed. We are less likely
to fight in the company of allies than before, and if
we again embark in an European war, we must place
larger armies in the field. The improvements in the
manufacture of firearms have rendered the hand-to-hand
struggle, in which we excelled, of less importance in
warfare, and I think there is no doubt that our troops
have also deteriorated. This may be in part the con-
sequence of the short service system; but another cause,
I believe, is the growth of the urban and manufacturing
population, from the lowest portion of which most of
our recruits seem to be drawn. These men are, I be-
lieve, inferior to the rural population in health, strength,
and spirit. I do not believe that those who lost the
fights of Maiwand, Isandlwana, Laing's Nek, and Ma-
juba Hill, would have conquered at Waterloo, Sobraon,
or Inkermann. Most Englishmen are brave enough ;
but our present troops must be brought into battle in
good condition, and their endurance in the battle-field
must not be too severely tested, if we mean them to
come out victorious. It will not do to keep them with-
out food from morning till night, waiting during a part
266 War.
of the time for ammunition or artillery to reply to the
enemy's fire, without the old resource of a bayonet-
charge. Whatever may be required should be in rea-
diness. It is better to waste money and stores than to
sacrifice men, and jeopardize the success of the cam-
paign. Men suffering from cold, starvation, and disease,
cannot be expected to present a bold front to the enemy.
Even in the Crimea they could hardly have done so but
for the strength of their position, and the miserable
plight of the Russians.
The sacrifice of lives or even property in proceedings
which cannot affect the result of the campaign, or the
terms of peace, is evidently unjustifiable ; but it is by no
means uncommon. No doubt a good deal of strategy
is often displayed in holding a larger force in check, and
preventing it from striking at a really vital quarter-
But there is often a good deal of bloodshed which cannot
be brought under this head. During the Crimean War
(as it has been termed) the Allied fleets in the Chinese
waters attacked the Russian fort of Petropaulovski,
situated at the eastern extremity of the Russian posses-
sions in Asia. I have no doubt that the Allied com-
manders in the Crimea never counselled this proceeding,
or even heard that it was in contemplation. The attack
was repulsed ; but does anyone imagine that the final
treaty of peace would have differed by a single word if
it had succeeded (unless perhaps by a provision that the
Allies should give back the fort of Petropaulovski to
Russia) ? Or suppose we had captured the fort and
kept it on the conclusion of peace, what would we have
gained ? Again, how was our victory at Bomarsund
War. 267
more profitable to us than our defeat at Petropaulovski ?
What, indeed, was the value of all our naval operations
in the Baltic ? We injured Russia, it may be said. We
did so to a certain extent, and to a smaller extent we
injured ourselves ; but what did we or anyone else gain ?
Who would now be the better or the worse if the fort
at Bomarsund w^as still in the exact condition in which
Sir Charles Napier found it ?
This leads me to suggest another rule which rather
belongs to treaties of peace than to war, viz., that the
victors should not take advantage of a peculiar combina-
tion of circumstances to impose severe and dishonour-
able terms upon a powerful adversary. Such terms, from
the very nature of the case, cannot be permanent, and
such a peace lays the basis of another war. When the
Russian army, foiled at Silistria and threatened by the
Austrians, retired from the Turkish territory, there can
be little doubt that peace might have been concluded
on fair and reasonable terms. But it was not every day
that England, France, Turkey, and Sardinia, could be
found united against a common enemy, and it was de-
termined (somewhat on Mr. Fawcett's principles) to give
Russia a severe lesson, which might deter her from
future aggression on the Turks.* The Allies tried this
plan, accordingly, at a great sacrifice of men and money,
* Or rather, I believe, which might remove mit of the path of the French
Emperor one of his great military rivals in Europe. In this he succeeded
partially ; and he then tried the same plan on another military rival with the
same partial success. There remained a third mihtary rival to be crushed be-
fore French ascendancy was complete. The Emperor tried it, and we know
the result. The first Napoleon lowered the pride of Austria and Prussia, but
268 M'ar.
and for the time they succeeded. But diplomacy soon
made large breaches in their Treaty, and then the sword
of Skobeleff, of Gourko, and of Melikoff cut it to frag-
ments. A British Minister brought us back ' Peace
with Honour,' by accepting terms which would proba-
bly have satisfied the Emperor Nicholas when Silistria
seemed on the point of falling into his hands, and when
he thought he could reckon on the gratitude of Austria.
And the leader of the other great English political party,
who had been a Cabinet Minister during the Crimean
War, blamed Lord Beaconsfield, not for permitting his
Treaty to be torn up, but for endeavouring to save the
smallest fragment of it. Twenty-five thousand British
soldiers had been sent to their graves in order to pro-
cure a document which one of those who sent them
there would have burned to the last spark. We had,
moreover, added one hundred millions to our national
debt, and the only result of our labours which was left at
the end of a quarter of a century consisted of the names
of Alma, Balaklava, and Inkermann. Prudence itself
might well recommend moderation in victory. But the
present century affords a more startling illustration of
the same fact — Prussia after the battle of Jena, and
Prussia after the battle of Sedan.
In carrying on war with semi-civilized or barbarous
races these rules of warfare must occasionally be varied.
Russia crushed him. His successor lowered the pride of Russia and Austria*
but Prussia crushed him. The two Napoleons had no such guiding idea as
the Unity of Germany, which fired the ambition of Bismarck. They merely
sought the military ascendancy of France— or rather of themselves as Em-
perors of France — and they had their reward.
War. 269
In the first place, all the able-bodied men of the tribe
are frequently belligerents, and they sometimes will not
cease fighting, or at least trying to damage the enemy,
when wounded or otherwise rendered incapable of effec-
tive resistance. Possibly, however, the reason why a
wounded Arab or Zulu still attempts to kill or injure
the British soldier is that, from his experience of savage
warfare, he expects no mercy ; and if satisfied that we
carried on war after a different fashion, he would quietly
lay aside his weapons. Our own wounded would, no doubt,
act in the same manner if they expected no quarter from
a victorious enemy. Unless the object is to exterminate
a savage tribe, simply killing them in numbers does no
good whatever. They are too well accustomed to see
massacres on a large scale in their own wars (or even
when no war is in progress) to be much influenced by
another scene of the same kind. And this obser-
vation is applicable to the majority of semi-barbarous
races also. The famous Governor Yeh probably ex-
ecuted as many men in a month at Canton as the
French killed in their late operations at Foochow, and
this without exciting any open ebullition of discontent.
The French attack has been compared to a battue, and
it probably had as much effect on the Chinese as the
battue has on the pheasants that are not under fire ;
while our Gallic neighbours might repeat the operation
every day in the year without seriously diminishing the
number of fighting men which China could put into the
field. A sudden and startling destruction of men may
produce an effect on savages ; such, for instance, as that
270 War.
caused by the explosion of a mine, or by a cavalry charge,
or artillery fire at close range, where cavalry and artil-
lery were previously unknown ; but mere butchery is as
objectionable in wars against savages as in wars against
civilized nations. Owing to their familiarity with it, less
hatred and resentment may be produced by it among
savages, but the deterrent effects are weaker in a still
greater proportion. No one would probably advocate
killing the women and children of savage races, but it is
sometimes done directly, and more frequently indirectly.
This should be put a stop to. We should give the natives
an example of superior humanity, as well as of superior
skill, and show them that warfare may be carried on
effectively without resorting to the barbarous methods
which they have hitherto practised. If we mean to es-
tablish ourselves permanently in an uncivilized country
without exterminating the natives, we must make them
contented with our rule ; and excessive slaughter and
damage to property at the outset will place serious
obstacles in the way of rendering them contented
subjects afterwards.
In such cases we are often placed in difficulties by
the conduct of European settlers. They covet the lands
or the cattle of the natives, and either endeavour to
take them by force — thus leading to a collision — or else
try to involve the natives in a quarrel which will end in
war and confiscation. We must, no doubt, protect the lives
of settlers against the unprovoked attacks of the natives,
and also maintain the former in their fairly-acquired
property ; but all rapacity on their part should be sternly
War, 271
discouraged. When settlers commit crimes we should
show the natives that there is a power that can and will
inflict punishment, and thus render it unnecessary for
them to take the law into their own hands.* The
greatest care should be taken to prevent those who
have provoked a quarrel with the natives from gaining
anything by it, and I think it would be reasonable to
make them contribute towards the expenses of the mili-
tary and police, whose presence is required for their
protection. Cattle-stealing seems to be a recognized
military operation in South Africa. The object appears
to be to reduce the natives to starvation, and thus to
submission. This is rather more than an indirect
method of making war on women and children, for
they will undoubtedly be the greatest sufferers by the
famine which is thus produced. When submission fol-
lows, moreover, the stolen goods are not restored, nor I
believe is anything done to alleviate the famine. The
cattle, indeed, have been already disposed of on terms
which afford a profit to the settlers, and as the latter
usually gain in the matter of land also, they have thus
the strongest motives for provoking a new quarrel with
the natives, and obtaining a new division of the spoil.
The advancement of the latter in civilization is thus re-
tarded, and the prospect of converting the natives to Chris-
tianity diminished. Indeed, the settlers have no wish to
* And if this requires any modification of our home system of administer-
ing justice, we should make this modification. If, for instance, the class which
suppHes jurors sympathizes with the criminals, we should modify our system of
trial by jury, in order to obtain justice. Substance should always be preferred
to form.
2 72 War,
see them improved in either respect. The progress of
the natives in civilization and religion would make them
more dangerous adversaries in war, and would render
the English people more disposed to sympathize with
them ; and to the English people the settlers still look
for the men and money required to secure to them their
ill-gotten gains. The promotion of civilization among
the natives who are subject to our rule, or under
our protection, is the great remedy for the * small
wars,' from which England is hardly ever free ; and
these wars, when necessary, should be conducted in
such a manner as to promote, rather than to retard,
the progress of civilization, morality, and religion.
How can we expect to teach honesty and regard
for property to tribes whom we have just been
plundering under the pretext of warfare, and with
whom we should never have gone to war if there
was no plunder to be had ? Nor are these observa-
tions applicable to South Africa only. Unless the
great Russian Empire breaks to pieces from some in-
ternal convulsion, the Czar will sooner or later endeavour
to wrest from us our possessions in India. What chance
would we have of retaining these, if, when the invader
reached the frontier, the people of India still entertained
the same sentiments towards us that they did at the
outbreak of the mutiny in 1857? Nor did the mode
of suppressing that outbreak tend to insure us the aid
of the natives against Russia in case of an invasion.
We have since then, however, had an opportunity of
trying to gain their good-will, and this opportunity
War. 273
will, no doubt, be extended for some years longer. On
the manner in which we make use of it, the future of
India — and, to a considerable extent, that of England —
will probably depend. Two hundred millions of loyal
subjects, fairly advanced in civilization, would be. an
adequate defence against any expedition which Russia
could send against us.
Clemency in victory, however, is a different thing
from confessed weakness or submission to defeat. Peace
concluded with a semi-civilized people like the Boers,
when the victory rested with them, could hardly have
led to any other results than those which have followed it
— the violation of treaty-obligations, the punishment of
the natives who were friendly to us, and insults offered to
our own people, culminating in the murder of an English
officer and lawless violence and rapacity on every hand.
After a severe defeat of the Boers, the Transvaal might,
perhaps, have been left its independence, with adequate
provisions for the protection of the natives. As it is, we
shall probably be compelled to reannex it at a great
expenditure of blood and treasure, and with an inter-
mediate history which no Englishman (outside of the
Cabinet) can regard without shame. We fell into a
similar error in Egypt, though fortunately for us a
less serious one. After crushing the forces of Osman
Digna in two successive battles, we abandoned the whole
fruits of our victories, and retired without even conclud-
ing a treaty. If our object had been to restore the con-
fidence of the natives in their defeated general, and to
withdraw it from ourselves, we could hardly have adopted
2 74 War.
a better method. The lieutenant of the Mahdi could
point to the captured towns still in his possession, and
the besieged towns still unrelieved. The English troops
had killed more of his men than the Egyptians had
done, and he had killed fewer of theirs in return ; but
for all other purposes it was merely Baker Pasha's
expedition over again. It was not Rescue and Retire,
but Retire without rescuing.*
Another rule which ought to be observed in this kind
of warfare is not to set natives fighting against each
other; and if we do employ native auxiliaries to re-
quire them to carry on the war according to civilized
methods. The employment of native allies on every
possible occasion, and the permission of plunder and
slaughter by them, may save money and European lives,
but it is not the way to obtain civilized, contented, and
loyal subjects ; nor is it a course to which a civilized
and moral (to say nothing of a religious) nation should
give its sanction. If we would use our best exertions
to bring about an amicable settlement of the differences
between different native tribes or chieftains, and if,
whenever we brought native auxiliaries to aid us in
dur wars, we required them to observe the same rules
of warfare with ourselves, we would effect a good deal
* Blunders of this character are not peculiar to any Government or any
political party. I have merely selected those which are freshest in the pubHc
mind, and the ill-effects of which are probably still in part future. Both in
Egypt and South Africa there are symptoms of improvement in our policy
since the text was written, but as regards the former I may say that I have
no faith in epigrammatic policies of any kind. A really good policy in com-
plicated cases can seldom, if ever, be comprised in an epigram. I fear we have
not yet learned to distinguish between orator}^ and statesmanship.
War. 275
towards the promotion of civilization among them. And
I think it would be desirable at the close of every * little
war/ as it has been termed, to have a public inquiry
into the manner in which the campaign had been con-
ducted, and the sufferings inflicted on the natives. Sworn
evidence on this point before a Commission of Inquiry
would effect much more than the reports of name-
less newspaper correspondents — though probably the
presence even of the latter has tended to humanise the
system of warfare adopted. Few officers would wish to
be named in the report of such a Commission as having
contributed, either actively or by connivance, to the
slaughter of non-belligerents, or the production of a
famine in the invaded country. Indeed I think every
war might be usefully followed by a public inquiry as
to the conduct of the parties engaged in it, by which
means the shortcomings of contractors. Government
officials, &c., might be brought to light, and the general
and his principal officers might not impossibly be re-
lieved from unjust censures on the part of the public. A
competent and impartial Commission might be difficult
to procure, but the publication of the evidence would
probably accomplish more than the report. I think it
may be safely predicted that the modes adopted in sup-
pressing the last outbreak in Jamaica will not again be
resorted to, though no punishment was inflicted on the
Governor except that of quietly placing him on the shelf.
Had our proceedings elsewhere obtained the same publi-
city, the results might also have proved of permanent use.
No doubt war cannot be waged in kid gloves ; but if the
2 76 War.
English people or any other civilized nation goes to
war, it ought to know exactly what its emissaries are
doing, and if it finds that more suffering is being in-
flicted on others than it desires to inflict, it should stay
their hands accordingly. No one would advocate tor-
ture in our prisons on condition that it was to be inflicted
in private, and that the sufferer was bound to secrecy, so
that the public would not be troubled with heart-rend-
ing accounts of the severity of the infliction. But it is
pretty much the same thing to enter upon a distant war
with semi-civilized races with no accurate information
as to the proceedings taken against them (except so far
as they are of a purely strategic character), or of the
amount of suffering inflicted thereby, and to pass lightly
over the accounts of these sufferings which reach us,
on the ground that they are furnished by ill-informed,
prejudiced, incompetent, and irresponsible persons. Our
* little wars ' would, I believe, be carried on with much
greater regard to humanity, and with more benefit to
this country (I do not say with more benefit to certain
rapacious settlers) if accurate reports of what has been
done were, in all cases, laid before the public as soon as
possible after the operations ; and Commissioners might,
I think, often be usefully attached to our expeditions
with the object of keeping the public accurately informed
by a responsible official of matters not coming within
the ordinary scope of the commanding officer's de-
spatches.
War. 277
Note on Government by Party in relation to
Foreign Policy.
The evils of government by party are so numerous that
I doubt whether, on the whole, its advantages or its
disadvantages preponderate. But in reference to our
foreign policy, and more especially when barbarous or
semi-barbarous races are concerned, its effects have, of
recent years, been most disastrous. With such races a
steady and consistent policy, even if in some respects
objectionable, is far preferable to a policy which changes
from day to day with the exigencies of party. But the
two political maxims which seem to be at present acted
upon by the Opposition are, first — Find fault with every-
thing that your political opponents do while in power ;
and secondly — Throw every obstacle in the way of carry-
ing out their projects with effect (and if you succeed in
defeating them, take credit to yourself for predicting
their defeat), while the corresponding Ministerial max-
ims are, first — Reverse the policy of your predecessors
on every possible occasion ; and, secondly — When your
policy fails, allege that they left affairs in such a con-
dition that failure was inevitable ; to which may, per-
haps, be added a third maxim, viz. When your blunders
are beginning to excite public indignation, allege that
the outcry is all the result of party spirit, and a mere
device for drawing away the attention of the public from
the important measures of home legislation which you
have in hand. When a Minister's majority is small,
however, there is some limit to the extent to which he
278 War.
can sacrifice British interests abroad to party interests
at home. When the alienation of a few followers may
turn the scale he must proceed with caution, but it
would seem that a majority of 100 or 150, instead ot
rendering him strong, renders him reckless. In the pre-
sent state of party organization, no amount of blunder-
ing at a distance from home will convert that majority
into a minority before the next General Election — by
which time he will probably have concocted some
Election Cry more likely to catch the ear of the populace
than anything relating to our dependencies in Africa or
India. * It is a far cry to Loch Awe,' says the Scotch
adage, but it is a farther cry to Zululand or to the terri-
tory ol the Bechuanas — especially if there is no official
or thoroughly-reliable report of the real state of aff"airs
to refer to. The Minister, of course, takes good care
that there is no such report until the General Election
is over ; and then his majority will not desert him even
if the report is adverse. Party politics are, in fact, fast
degenerating into political trickery — the object being
to hoodwink the nation until it has returned pledged
representatives whom it cannot afterwards displace.*
* This political demoralization is very wide-spread. Neither political party
feels any scruple in depriving of the franchise persons who are entitled to it
under the existing law, or in obtaining it for persons who are not entitled. In-
deed they often boast of their success in establishing claims and objections when
they know perfectly well that many of the claims are shams and many of the
objections unfounded, if the person objected to could only spare the time to
attend and displace them. It is not long since the writer of this essay was
objected to by the agents of both political parties, and as he did not attend, both
probably scored one for the service of a notice for which there was no ground
whatever.
War. 279
Members of Parliament, when once returned, do not
represent their constituencies. They are mere tools in
the hands of some local organization consisting of
extreme party men, who continue to dictate to their
member when the majority of the electors have
espoused the opposite side. When a General Election
has given a Minister a large majority, he can almost
always secure a majority on a particular question by
simply threatening to resign in case he is defeated.* If
the question is not regarded as one of very great impor-
tance and party feeling runs high, the Ministry may
thus escape censure, when three-fourths of their own
supporters and all their opponents are satisfied that
they are in the wrong. Were this not so, I believe the
uninterrupted series of blunders which we have com-
mitted in South Africa during the last ten years would
have been impossible. The annexation of the Transvaal
may have been a mistake ; the Zulu war and the terms
of settlement in which it ended were undoubted errors ;
but nothing but the extreme anxiety of the new Admini-
stration to undo everything that their predecessors had
done, can account for what followed. In this policy they
have succeeded with a vengeance. Even the memory
of the Conservative errors is likely to be effaced by the
gigantic blunders of the Liberals. We have sold our
* Not that this threat alone, perhaps, would have much eiFect, for if the
majority is large enough it is evident that, after a resignation, he must almost
immediately return to power again. But then there may be a Dissolution, at
which every one who voted against the Minister will be denounced as a traitor,
and will probably lose his seat. The member, therefore, either votes against
his convictions or does not vote at all.
28o War,
birthright in South Africa to the Boers without even
getting a mess of pottage in return. When they smote
us on the one cheek we quietly turned to them the other.
It may be safely asserted that no English Minister would
have adopted such a policy with any other object than
that of discrediting the policy of his predecessors, nor
would he have ventured to carry it out had his majority
been a narrow one. But the present Administration
has overshot the mark, and its conduct will, in all pro-
bability, restore the credit of the Beaconsfield policy as
a whole instead of leading the public to discriminate
between its merits and its defects. It is Cromwell and
Charles the Second over again. The former nearly
swept the seas clear of the Dutch, and the latter re-
versed his policy until the citizens of London heard the
sound of the enemy's cannon. Had the Loyalists not
been so strong as they were, the monarch's reign would
have been a short one.
It is impossible for us to occupy our proper position
in Continental politics while this process is allowed to
continue. One year we take a prominent part in the
settlement of some Continental question, and are ready
to support our demands with an excellent navy and an
army which, if not very large, is at least fully equipped
and ready for action. A few years later the same
question is again mooted ; but so far from being ready
for offensive warfare, we are not even prepared for self-
defence, and our Foreign Minister is, moreover, a political
Gallio who * cares for none of these things.' — whose only
object in fact is to discredit the policy of his prede-
War. 281
cessors. How, under such circumstances, can we exert
the same influence on the councils of the Continent with
a power that keeps its object steadily in view, and is
always in a tolerable state of preparation ? But with
the Colonies it is worse. Distant and barbarous or semi-
civilized races understand nothing of our party changes,
and the result of our tergiversation is that no one knows
on what trivial pretext war may be declared (or an in-
vasion commenced without any declaration of war), or,
on the other hand, what amount of insult and injury
may be inflicted on us without provoking any retaliation
on our part. No one knows whether we will or will not
defend our friends, and whether we will or will not
punish our enemies. We are at present acting the part
of the sleeping dog, who allows diminutive curs to carry
away bones from under his very nose with impunity.
No one knows indeed how long this will continue, or
when he may rouse up and snap; but the chance ap-
parently is that, when he does so, it will be to snap at
the wrong cur. In such a Government there can be no
confidence, and if some little fear may still exist, it is
inoperative in restraining lawless violence for the simple
reason that no one can predict on whom our vengeance
will fall — perhaps on Montsioa for transferring his alle-
giance from us to the Boers, instead of the Boers who
compelled him to do so. It may not be easy to point
out how evils of this kind could be removed ; but the
public should declare firmly that our Colonies must no
longer be converted into arenas for a political game of
battledore and shuttlecock — that as regards them at
u
2 82 War.
least, our own interests and the interests of our subjects,
whether British-born or native, should be preferred to the
interests of party, and that the statesman who fails to
bear this in mind must expect nothing but perpetual ex-
clusion from office. Law and order should be established
throughout our dominions. Our subjects and our allies
should be protected. Treaty obligations should be en-
forced, and evasions of them should receive no more
favour than open breaches ; while land pirates when
taken in the act should be hanged with as little ceremony
as sea pirates. We are under special obligations, too, to
those whom we have deprived of the means of offering
effectual resistance to these piracies — more especially if
the wars by which we rendered them powerless were un-
just. But under our present system almost any obligation
which one Administration undertakes, whether expressly
or impliedly, is disow^ned by its successor, and conse-
quently every step is sinking us deeper in the mire. We
are, in fact, doing our utmost to make the natives regard
our presence as unmixed evil, and our efforts in this
direction seem likely to be crowned ere long with com-
plete success.* Withdrawal from the worst scene of
blundering is, in fact, a suggestion that is beginning to
be thrown out as the best method of freeing us from the
* On the latest revision of the Boer Treaty, the Transvaal representatives
desired to annex Montsioa's territory. This demand our Minister manfully
resisted. The Boers yielded, and signed a treaty excluding it from their do-
minions. They then annexed it, murdering the only English official whom
they could lay hands on. The proclamation of annexation has since been
withdrawn, but apparently the Boers who took possession of Montsioa's lands
have not withdrawn. "Whether they will be compelled to withdraw, or treated
with summary justice on the spot, remains to be seen.
War. 283
consequences of our fatuity and misconduct. And, per-
haps, if we retired, France or Germany might step in.
They might do better than we have done. They could
not do worse. But nothing but the utter want of patriot-
ism and public spirit on the part of Ministers could
justify such a withdrawal. If we mean to retain them in
office at all hazards and to allow them to continue their
present course,* the sooner we withdraw the better, for
the longer we remain the greater wnll be the injury to the
natives, and the greater will be our own disgrace. But
there are very few statesmen who would not alter their
policy in deference to public opinion strongly and clearly
expressed ; and till that remedy for Ministerial blunder-
ing has been tried, we should not make a public con-
fession of our unfitness to govern, and hand over our
native subjects to the tender mercies of those who would
make them hewers of wood and drawers of water.
* Perhaps I should not say * their present course,' since Sir Charles
Warren's expedition was decided on. But what that expedition is intended
to accomplish is not yet clear.
THE END.
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