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 10 1.

 
 THE INDUSTRIAL AND COMMERCIAL 
 HISTORY OF ENGLAND 
 
 VOLUME 1.
 
 THE REFORMER'S BOOKSHELF. 
 
 Large Crown 8vo, cloth, 3s. 6d. each. 
 
 1. The English Peasant: His Past and Present. By Kichard Heath. 
 
 2. The Labour Movement. By L. T. Hobhocse, M.A. Preface by R. 
 
 15. H.AI.D.ANE, M.P. 
 
 3 & 4. Sixty Years of an Agitator's Life : The TliiicI and Cheaper 
 Editiwn of (>KO. Jacob Holyoake's Autobiography 2 vols. With 
 Portrait by Waltef* Sickert. 
 
 5&6. Bamford's Passages in the Life of a Radical. Edited, and 
 with an Introduction, by Hexky Dixckley (" Verax";. 2 vols. 
 
 7. The House ■ of Lords : A Retrospect and a Forecast. By T. A. 
 
 Sl'ALDlXt;. 
 
 8. Titled Corruption : The Sordid Origin of some Irish Peerages. By 
 
 J. G. SuiiT .MacNeill, M.P. 
 
 9 & 10. The Economic Interpretation of History : Lectures on Politic.^l 
 Economy and its History, delivered at O.xtord, 1887-1888. By Prof. 
 Thoroi.D Rogers. Third Edition. 2 vols. 
 
 n & 12. The Industrial and Commercial History of England: Lectures 
 delivered to the University of Oxford. By Prof. Thorold ROGERS. 
 Second Edition. Edited by his Son, Arthur G. L. Rogers. 2 vols. 
 
 13. Nihilism as it Is. Being Stepxiak's Pamphlet Translated by E. L. 
 VovxiCH. .-md Kei.ix Volkhovsky's " Claims of the Russian Liberals." 
 With an Introduction by Dr. Spexce W.vrsox. 
 
 14 & 15. Charles Bradlaugh: A Record of His Life and Work. Bv His 
 Dauj.ihter. Hyi-athia liRADLAfGH BOXXER. With an Account of His 
 Parli.iinentary Struggle, His Politics, and His Attitude to Religion, by 
 John- M. Roi'sEinsox. 2 vols. Third and Cheaper Edition. 
 
 16 & 17. The Inner Life of the House of Commons. By Wn.LiAM 
 White. Edited by W. Hale WiiiTE. With an Introduction bv 
 Justin McCarthy, M.P. 2 vols.
 
 The Industrial and Commercial 
 History of England 
 
 {LECTURES DELIVERED TO THE UNIVERSITY OF 
 
 OXFORD) 
 
 \ 
 
 BY 
 
 JAMES E. THOROLD ROGERS 
 
 PROFESSOR OF POLITICAL ECONOMY IN THE UNIVEKSITY OF OXFORD AND 
 OF ECONOMIC SCIENCE AND STATISTICS, KING'S COLLEGE, LONDON 
 
 EDITED BY HIS SON, 
 
 ARTHUR G. L. ROGERS 
 
 VOLUME I 
 THIRD IMPRESSION 
 
 Xon&on 
 T. FISHER UN WIN 
 
 PATERNOSTER SQUARE 
 
 MDCCCXCVIII
 
 [All rights reserved.]
 
 PREFACE. 
 
 The discourses in the present volume, which contains almost all 
 the hitherto unpublished comments on the Economic History 
 of England delivered in public by my father, were originally 
 given in the form of lectures in the University of Oxford. 
 They were given in the hall of Worcester College in the autumn 
 of 1888, and the spring of 1889. Although it had been his 
 intention to publish these lectures some day in the form of a 
 book, they were found at his death in the same form as they were 
 composed originally, with the addition of a few pencil notes alone. 
 For, in accordance with a very common practice, he considered it 
 advisable to repeat these two courses before they were finally 
 committed to print. There is always a certain weighty sense of 
 responsibility attached to the work of editing the writings of 
 another. But this feeling is accentuated when the text is 
 not in the condition which the author would have considered 
 final. It would have impaired the value of the book had it 
 been given to the world exactly as it stood, because it was so full 
 of those local and personal allusions, with which my father used 
 to illustrate his arguments, that though the interest might have 
 been increased for a certain class of readers, the point would often 
 have been missed by others. There are passages in the MS. 
 which I am sure my father would not have kept in his proofs. 
 But, on the other hand, it is out of place in an editor to alter 
 the text of his author, if there is any possibility of the reader 
 thereby misinterpreting the meaning, or getting any false impres- 
 sion. And yet I am conscious that there are instances where the 
 progress of economic research, or the march of history, has dis-
 
 vi PREFACE. 
 
 proved theories which three years ago were accepted by my father 
 in common with nearly every other man and woman in England. 
 The theory of the causes and methods of the immigration of agricul- 
 tural labourers to London, as held by everybody in 1889, is recog- 
 nized nowto be incorrect, though soquiet has been the progress of the 
 new theory that few people quite realize how diametrically opposed 
 their ideas on the subject were some years ago to what they are 
 now. I should like to be able to omit the antiquated theory from 
 its place in the chapter on immigration, but it is so woven into 
 the rest of the chapter that it was difficult to pick out one thread 
 without unraveling the whole piece. For the same reason the 
 lectures are printed exactly in the order in which they were 
 delivered, although it is obvious that there is no special connec- 
 tion between some of them, and though from a mere perusal of 
 the titles a different order might appear at first more suitable. 
 
 But this, after all, is the less important, as these lectures, like 
 those published under the title of " The Economic Interpretation 
 of History," aimed rather at expounding the methods used by my 
 father in his studies than at announcing new facts, or enunciating 
 new theories. The six volumes on the " History of Prices " 
 contain the extracts from the original authorities he had con- 
 sulted, and his deductions from them on the economic and social 
 condition of the English people during the greater part of their 
 history. The " Six Centuries of Work and Wages " contain the 
 epitome of his longer work, not only in a more popular form, but 
 also with some direct reference to more political aspect of events. 
 But though I have heard my father say that he believed that by 
 a careful study of the facts published in his " History of Prices," 
 future students would be able to contribute more information to 
 the economic history of the Middle Ages than even he had done, 
 he confined his original research during the last years of his life 
 to the Completion of his great work. For I believe he considered 
 it more important to impress his method on students of history 
 and economics than to add more to our fund of information. At 
 the present time by far the greater number of persons interested 
 in economics have no part in either of the two great Universities. 
 Those members of the University who care for the subject have 
 little time to spare from other studies, while little more than
 
 PREFACE. vii 
 
 an acquaintance with the main theories of the older economists 
 is sufficient for the schools. Let the Professor of Political 
 Economy teach what he will, even the undergraduates who seek 
 honours in the history school, soon drop away. In this way it 
 came about that the5e lectures were attended by an extremely 
 small audience. Had the Professor of Political Economy given 
 these lectures in some industrial centre, hundreds of workmen 
 would, I believe, have paid to listen to them. But in the home 
 of learning, some dozen men of educarion attended lectures 
 thrown open, free, to every member of the University. 
 
 If any apology were needed for the publication of this book, 
 this alone would sufHce. A. G. L. R.
 
 CONTENTS. 
 
 I. 
 
 THE DEVELOPMENT OF INDUSTRIAL SKILL IN ENGLAND I 
 
 II. 
 
 THE CONDITIONS OF ECONOMIC PROGRESS . . .22 
 
 III. 
 
 THE PROGRESS OF ENGLISH POPULATION AND THE CAUSES 
 
 THEREOF. . . . . . -44 
 
 IV. 
 
 THE DEVELOPMENT OF CREDIT AGENCIES . . ' 5^ 
 
 V. 
 
 THE DEVELOPMENT OF TRANSIT . . . .89 
 
 VI. 
 
 THF. ECONOMIC HISTORY OF CHARTERED TRADE COMPANIES . II3
 
 X CONTENTS. 
 
 vir. 
 
 THE JOINT-STOCK PRINCIPLE IN CAPITAL . . . I38 
 
 VIII. 
 
 THE JOINT-STOCK PRINCIPLE IN LABOUR . . . 162 
 
 SECOND COURSE. 
 
 I. 
 
 THE ECONOMIC DOCTRINE OF WASTE .... 184 
 
 II. 
 THE THEORY OF ECONOMIC RENT .... 205 
 
 III. 
 CONTRACTS FOR THE USE OF LAND . . , .226 
 
 IV. 
 
 LARGE AND SMALL HOLDINGS .... 248 
 
 V. 
 
 MOVEMENTS OF LABOUR. — I. EMIGRATION . . , 270
 
 INDUSTRIAL AND COMMERCIAL 
 HISTORY OF ENGLAND. 
 
 THE DEVELOPMENT OF INDUSTRIAL SKILL 
 IN ENGLAND. 
 
 Chauvinism in History — Blunders of economists and amateurs — Back- 
 wardness of industry in Mediceval England— Exclusiveness of the 
 I English — Foreign influence — Fallacy of the sole market — Arkwright 
 \ — American and Continental Wars gave increased opportunities 
 to English trade — Effect of Protection abroad on international 
 trade. 
 
 It is a common-place with many recent writers to indulge in 
 what I may be allowed to call industrial Chauvinism. The habit, 
 however, of uttering in the treatment of economical questions 
 what is called in the political relations subsisting between different 
 communities, " our country, right or wrong," is not patriotism, 
 except in that sordid aspect of it which Johnson defined, but is 
 constantly a pestilent, economical heresy, in which private advan- 
 tage is affirmed to be a public benefit. I know no danger which 
 
 2
 
 2 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 economical progress runs, which is more persistent and more 
 menacing, than the maintenance or even the insinuation of this 
 doctrine is. It is the key to those protectionist fallacies under 
 which the sustentation of particular interests is made a national 
 policy, and the mass of mankind is constrained to suffer in order 
 that a few may be enriched. It is the ground on which the 
 worst vices of our land system are defended, and British agri- 
 culture is in ruins. It has not a little to do in this country with 
 the clamour of the unemployed, and the wild schemes which are 
 promulgated about the reconstruction of society. Nor is this vice 
 confined to selfish agitators, like the Fair Trade people, or to in- 
 terested sycophants, who try to gain popularity by defending 
 abuses, or to the numerous adventurers who seek to get a hearing 
 by flattering social and economical vices. Some of you may 
 remember how vigorously Bentham dealt with the optimism of 
 Blackstone, and his defence of the mass of chicanery to which 
 law pleading had been degraded. In political economy much 
 of this mischievous nonsense was written by MacCulloch, whose 
 general arrogance was in curious and instinctive contrast with 
 his habitual servility towards certain persons and certain interests. 
 But the maintenance of economic truth is a very serious and 
 urgent duty. As time goes on practical politics become increas- 
 ingly the solution of economic problems, and they who wilfully 
 or ignorantly mislead nations, or pander to the inherent vices of 
 administrations, are among the worst enemies of mankind ; just 
 as, on the other hand, the wise economist, who does not allow 
 himself to be swayed by prejudice, or mere partisanship, or 
 authority, is a true benefactor. 
 
 Now the present position of Great Britain — I wish I could 
 say the United Kingdom — is set out very clearly in a work which 
 I have more than once commended to you, the second volume of 
 Mr. Giffen's essays. It is true that this very able analyst of 
 economical facts was engaged when he wrote this work in contro- 
 verting some unfounded and invidious statements, which had 
 been promulgated by ignorance or selfishness. It was not, it 
 appears, his immediate business to point out what are the weak 
 parts of our social or industrial system, but to show that certain 
 allegations were baseless or false. Nor do I intend in the present
 
 THE DEVELOPMENT OF INDUSTRIAL SKILL. 3 
 
 lecture to deal with that part of this important subject, for I 
 purpose to reserve what has to be said on this topic to my next 
 lecture. It is sufficient on this occasion to say that an analysis 
 of the existing facts, which Mr. Giffen has, in my judgment, 
 successfully carried out, is the best preparation which the student 
 of political economy, in the best sense of the terms, can get for 
 grappling with the solution of those most important problems 
 which Adam Smith happily grouped, under the phrase " The 
 Wealth of Nations." This great writer does not speak of classes, 
 nor of our country. He intends to be comprehensive as regards 
 the whole community, and cosmopolitan as regards other civilized 
 nations, which have entered into the reciprocal relations of 
 trade. 
 
 The purpose which is before me in my present lecture is one 
 which is almost entirely historical. I shall try to show you, 
 beginning with the earliest times of which we have industrial 
 evidence, what were the relations in which England, and at a 
 subsequent period Great Britain, stood to other communities. I 
 shall show to the best of my power what were the causes which 
 induced the remarkable backwardness of this country in the 
 industrial arts, and what were the causes which quite recently 
 brought about this extraordinary development in this country 
 and in Southern Scotland — in which, by the way, the progress 
 was even more recent, but has been proportionately more rapid 
 In this account of the country, I shall deal with agricultural as 
 well as manufacturing progress, but shall not enter in detail into 
 the development of the carrying trade, since I have reserved this 
 for a special lecture. And perhaps there is hardly any part of 
 political economy which is more indebted to the study of historical 
 and social facts than that which traces the progress of a nation 
 in the arts of life. Much, indeed, which the writers of the 
 principal text-books have said about the production of wealth, 
 with which part of economical analysis you will see that I am 
 at present concerned, is accurate, though even here some of the 
 gravest errors have been committed, partly because the analysis 
 has been incomplete, partly because facts have been disre 
 garded. Thus, for example, the theory of the " distribution of 
 employments" — a phrase very properly substituted by Mr. Gibbon
 
 4 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 Wakefield in place of Adam Smith's "division of labour" — has 
 been very fully stated, though even here, nothing is said of the 
 employments in which the distribution is best efTected, of those 
 in which it is not efTected at all, and, most important of all, the 
 consequences of the process on the respective wages which work- 
 men and employers earn, the latter as superintending the manual 
 dexterity of the former. 
 
 Nothing is more marked in the economical history of Western 
 Europe than the mischief which the pirates of Scandinavia did 
 to England, Ireland, and the northern coast of France from the 
 beginning of the ninth to the end of the eleventh centuries. At 
 the conclusion of this period these raids completely cease, and the 
 very district from which these ravages originated becomes shortly 
 afterwards the seat of a powerful commercial association, under 
 the name of the Hanseatic League. It is plain that the impulse 
 which led to this union was one of mutual defence against vio- 
 lence, especially that of sea robbers, and that the trading towns 
 which entered into the alliance collected a common fund for the 
 purpose of securing a common safety. But it is constantly the 
 case, especially during the period in which nearly all our informa- 
 tion is derived from monastic chronicles, that no notice is taken 
 of institutions till they are in their full vigour, and then very 
 uncritical accounts are given as to the origin of such established 
 facts. Thus it has been suggested that this famous League was 
 derived from a confederation of the Rhenish towns, against the 
 robber barons, the ruins of whose strongholds top nearly every 
 hill on the banks of the Lower Rhine. But the traffic of the 
 Rhine was eminently of Italian and Eastern produce, while that 
 which the Ilanse towns defended was particularly that of the 
 southern and eastern shores of the Baltic, and of Scandinavia, 
 especially its eastern coasts, from which most important produce 
 was derived in mediaeval trade. I have little doubt that the 
 league of the Hanse towns had an earlier origin, that its first 
 business was to root out the relics of those habits of piracy, 
 which had been the scourge of Western Europe for nearly 
 three centuries, and that the first notices of the League were 
 made after it had long been active. 
 
 Now with th-^ exception of Domesday Book, there is no trust-
 
 THE DEVELOPMENT OF INDUSTRIAL SKILL. 5 
 
 worthy and continuous economical evidence in England till after 
 the middle of the thirteenth century, when this League was cer- 
 tainly in full vigour. After this period, indeed, the evidence is 
 exact and copious, and the student of social life in England has 
 abundant materials for the discovery of what that social life was. 
 Many of you are aware that I have given many years and much 
 labour to the collection of this evidence. I have fondly hoped 
 that the students of these materials would ere this have made 
 some profitable use of them. But just as the righteous souls of 
 Mr. Skeat and Dr. Murray are perpetually vexed by the absurdi- 
 ties of many who attempt philology, so in my poor way I have 
 been astonished and amazed at the ignorance, presumption, and 
 conceit of many, perhaps most, of those who have written on 
 social England, who mistake that to which they refer, and draw 
 grotesque inferences from their inner consciousness. Sometimes 
 they think they have made a discovery, when the find is a 
 common-place to an economic historian, and cackle through a 
 volume or two of print, as a hen does, who, seeming to think 
 that laying an egg is an occurrence of the rarest importance, takes 
 care it should be duly advertised, and carefully reviewed. 
 
 The reign of Henry III. is one of great social importance in 
 English life. I will not say that society was organized during 
 the long and, on the whole, peaceful life of this king, for I am 
 persuaded that habits and practices long precede their discovery 
 by constitutional antiquaries. But after the first half of the 
 thirteenth century we get the evidence. I am sure that the dis- 
 cipline of the manor court and the parish meeting long preceded 
 the engrossing of the rolls on which the proceedings of the former 
 assembly are recited. I am confident that formal gatherings, 
 convened by the authority of the crown, which bargained grants 
 for rights, and criticized the administration, are historically older 
 than the records of the Rolls of Parliament, and the notices 
 which antiquaries have collected. But, in the nature of things, 
 conscientious collectors of facts inevitably give a principal value 
 to the date of that which they have discovered. Most properly 
 the editor of the Ncav English Dictionary takes chronological 
 note of the earliest usage of a word. But he would never 
 Venture on asserting that the word was not used, was not even
 
 6 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 familiar before his date, unless he could define the circumstances 
 under which it was borrowed or loaned. 
 
 Now let us look at the condition of England just at the time 
 of that famous Parliament which Simon de Montfort collected 
 in this city, 630 years ago, not a hundred yards from the place 
 in which I am speaking. At that time there was only one 
 corporation in Oxford, the University. Not a college was 
 founded, though the University was trustee for some small funds 
 which it distributed among masters, and finally relinquished to 
 University College, a corporation whose real existence is 150 
 years later than the original gift was. For just as there are 
 people who pretend that their family came over with William 
 the Norman, and just as there are, as there were in the days of 
 St. Paul, lying genealogists who encourage similar delusions, so 
 there have been people who have alleged that the University 
 and a respectable society in High Street were founded by King 
 Alfred. Cambridge, nothing daunted, affirmed that it dated its 
 origin from Edward the Elder. 
 
 There were two elementary soriil units, the parish and the 
 manor. Generally they were conterminous, but it was not infre- 
 quently the case that one parish contained two or more manors, 
 with different owners and with separate jurisdictions. The head 
 of the parish was the parson ; of the manor, the seneschal or 
 steward. It seems clear that the parish gathering had certain 
 powers of taxation, the two bodies who always existed in the 
 manor, the court baron, which dealt with rights of property, and 
 the court leet which convicted of offences, being the prototypes 
 of the Courts of Common Pleas and the King's Bench. Offenders 
 were presented by one jury and tried by another, just as the 
 grand and petty juries act now. 
 
 The principal feature of the parish and manor was their com- 
 plete isolation. There w6re hundred courts, probably rape and 
 riding courts, and shire courts. But their action fell early into 
 decay, probably because they had little business to do. Long 
 after they had ceased to be active agents the manor courts sur- 
 vived. But within parish or manor no strangers were permitted 
 to reside. The harbouring them was an offence, and was 
 punished by fine. The people in these primitive and isolated 
 
 ,
 
 THE DEVELOPMENT OF INDUSTRIAL SKILL. 7 
 
 settlements took no thought of what lay beyond their borders. 
 Within the boundary the peace was kept, and this by a very 
 effective police. Outside it, on the no man's law, or in the 
 King's forest, such a phenomenon was by no means universal. 
 Jew, Lombard, foreign merchant, nay, even a travelling abbot, 
 was not at all safe beyond the boundary. There is a curious 
 account in the Rolls of Parliament, and in the petition of Isabel 
 Tresham, widow of the great Speaker of 1450, of the manner in 
 which a gentleman of estate travelled in those days on the 
 king's highway, of the escort which he took, the road he drove, 
 and the perils which he ran. But I am sure that in the troubled 
 times which followed on Tresham's murder, property was not 
 insecure within the boundaries of a parish or manor. It was a 
 large parish which had over fifty inhabitants, a large town which 
 had over 5,000. 
 
 Now exactly the same facts which characterized a parish 
 characterized a town. The town, to be sure, generally bought 
 the privilege of electing its own magistrates. It created its own 
 guilds or companies, the charters of these institutions being long 
 subsequent to their foundation. The rule of these corporations 
 was exclusiveness. But I imagine that London was more ready 
 lo admit strangers, chiefly through apprenticeship, than the 
 other towns were. Thus the two Chicheles, brothers of the 
 archbishop who founded All Souls, were the sons of a tailor 
 at Higham Ferrers. It is curious that with such an ancestry 
 this college should have a generation ago affected aristocratic 
 exclusiveness. The two Cannyngs, one of them Mayor of 
 London in 1456, the other a rich merchant who built St. Mary, 
 Redcliffe, were Bristol men by birth. But for every reason the 
 cities and towns did not encourage the migration of country folk 
 to within their liberties. And I believe the settlements of 
 strangers in London, as the Italian merchants or money dealers 
 of Lombard Street, and the merchants of the Hanse near the 
 Tower, were there rather by royal grace than by city favour. 
 On the whole, about four-fifths of the English people were 
 country or upland folk, and the residue dwelt for the most part 
 in towns. 
 
 There is reason to believe that England exported a considerable
 
 8 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 quantity of corn, especially from the eastern counties to the 
 Flemish towns, and it is certain that the whole of England 
 largely exported wool. It was perfectly well known, if the 
 manufacture of woollen cloths could only be established in England, 
 that great advantages would follow, and the English kings were 
 eager enough to encourage this development, though with very 
 indifferent success. They strove to get weavers from Flanders, 
 even after they were infected with those heresies, z>., dissent from 
 established churches, which in some mysterious way always seem to 
 have been rife among a manufacturing population. They exercised 
 a police, immediate or delegated, over such manufactures as 
 existed, and even tried the effects of prohibition, under the only 
 effectual form of those days, a sumptuary law. It was in vain. 
 There was indeed a woollen and linen manufacture in Norfolk, 
 owing, I conclude, to its commercial intercourse with Flanders, 
 though the county has the worst climate in England for woven 
 fabrics, for which a moist atmosphere is all important. 
 
 On the south of the German Ocean were the thriving cities of 
 Flanders, any one of which produced more and better cloth than 
 all England did, having indeed the monopoly of these fabrics. Now 
 the estimable people who have studied commercial geography 
 will tell you a great deal about the present condition of great 
 commercial depots ; but they seldom, perhaps never, know why 
 these places have become trading centres, and as rarely why they 
 have, in some cases, ceased to be. And yet, to the historical 
 economist, the circumstances which brought about the rise and 
 fall of Ghent and Bruges are plain and instructive. 
 
 The trade in Eastern produce, especially after the caravan routes 
 over Central Asia were blocked by the savages which are still 
 encamped in Asia Minor, Syria, and Northern Greece, centred at 
 Venice and Genoa. The wants of Western Europe were supplied 
 by the carriage of these goods, with the produce of Italy herself, 
 over the passes of the Alps to the upper stream of the Danube 
 and the Rhine. Thence they were conveyed to the Flemish 
 cities, especially to Bruges, and distributed over the west, par- 
 ticularly to France and England. Now trade, just as happened in 
 Holland two or three centuries later, developed manufacturing 
 skill. The cities grew under trade, the population increased, and
 
 THE DEVELOPMENT OF INDUSTRIAL SKILL. 9 
 
 those who could be spared from trade produced merchandize. 
 The downfall of this trade was due to two causes, almost con- 
 current. The one was the conquest of Egypt in 1517, and the 
 consequent block of the only remaining overland route from the 
 East ; the other was the Spanish Inquisition, begun by Charles V., 
 and carried out by Philip and Alva. 
 
 Now it will be plain that this remarkable isolation of English 
 life was a great obstacle to the development of manufacturing 
 enterprise. In early days all the industries were of the villages 
 in the eastern counties. One can see this, at the end of the 
 thirteenth century, in the bailiff's accounts of Bigod's Norfolk 
 estates. The principal seats of the woollen and linen industries 
 were in villages, which grew indeed, but were never gifted with 
 municipal rights, or even with parliamentary representation, 
 and that at times when trumpery hamlets were made freely into 
 boroughs, frequently it appears for political reasons. To be sure, 
 Avhen the greatest manufacture of these boroughs commenced, at 
 or near the middle of the fifteenth century, the eastern counties 
 were firmly attached to the policy of the House of York, and by 
 consequence to its pretensions. 
 
 It is highly probable that the remarkable monopoly which 
 England possessed, from the thirteenth century till the sixteenth, 
 may have had a discouraging effect on English manufactures. 
 England, as I have said, was emphatically a rural nation, generally 
 occupied in husbandry. It produced an article of universal 
 demand, and could control its supply. So completely was it the 
 master of this market, that it could, though Parliament imposed a 
 duty of from 100 to 150 per cent, and even more, on wool, without 
 depressing the price at home, or calling another producer into 
 existence. But so great a margin rendered the business of wool 
 producing an exceedingly lucrative one. The landowner or yeoman 
 could win a greater profit from his sheep than from any other 
 agricultural operation. People were quite alive to the fact that 
 a given quantity of wool spun and woven into cloth was worth 
 weight for weight, many times more than the raw material. But 
 you will find that communities which derive great profit from 
 certain callings are slow to enter on new paths, and, if they do 
 enter on them, are slow to improve them. Poverty, not want,
 
 lo INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 as the advocate of this abstraction argues in the Plutus, is the 
 stimulant to the discovery or adaptation of the arts of life, and 
 during the period on which I am dwelling, from 1260 to 1540, 
 poverty was a distant risk in England. 
 
 Something, too, must be ascribed to the singular backwardness 
 of the English people, on which, indeed, I have already com- 
 mented, curiously varied by extraordinary and unexpected out- 
 bursts of political anger. Poor as the progress was, which was 
 made in the textile industries of the eastern counties, for the 
 best cloth always came from Flanders, I am persuaded that 
 even this progress would not have been made but for the constant 
 immigration of Flemings into Eastern England. I have frequently 
 seen lists of inhabitants, tenants or owners in villages, which were 
 within the eastern counties, half of whose names were Teutonic. I 
 am sure, had I been at the pains of examining the taxing rolls of the 
 eastern counties, still preserved abundantly in the Record Office, 
 that I should have been able to supply cumulative evidence of the 
 fact to which I call attention. But the organization which in the 
 Flemish towns rendered it possible to produce the most finished 
 fabrics was wanting to England. The guild of the Englishman 
 was narrow, exclusive, local, and was not fitted to bring about 
 results which had become habitual in Flanders. Besides, it is by 
 no means easy to develop a new manufacture, even when the 
 national conditions are present. Of course in those early times, 
 the effectual discouragement of foreign imports was out of the 
 question, and the government wisely imposed only very moderate 
 customs duties. 
 
 There are two national products of England the supply of 
 which was inexhaustible as far as the raw material went, the one 
 of which was in the highest degree significant. These are iron 
 and salt. But the domestic produce of iron in England was 
 scanty and of inferior quality, the country depending for what it 
 wanted on Northern Spain and Sweden. The price, too, was 
 prodigiously high. During the fourteenth century iron in mass 
 was worth in money of the time £^ a ton. Now twelve is a very 
 reasonable multiplier on the whole of the fourteenth-century prices. 
 It needs no great acuteness to see what would be the effect on" 
 agriculture, and for the matter of that on any industry, if at the
 
 THE DEVELOPMENT OF INDUSTRIAL SKILL. n 
 
 present time iron were ;^io8 the ton. So again the national 
 deposits of salt in Worcestershire and Cheshire are enormous. 
 The Romans had certainly made use of the Worcestershire beds. 
 But the art had been lost, and the English were so completely 
 dependent on French supply, that the unrestrained export of 
 salt from France was over and over again stipulated for in 
 diplomatic instruments, and was supposed to be so essential to 
 England, that the restraint of its export was suggested as a 
 military tactic. Its use was essential to the fisheries, and if 
 England could have supplied the Dutch and Flemings with a 
 manufactured product, its monopoly would have been nearly as 
 important as that of wool was. It was not till the end of the 
 seventeenth century that the process of refining rock salt was 
 rediscovered. 
 
 Again the art of making brick was lost. There was plenty of 
 Roman brick to be seen in Southern England, and the English 
 did make tiles from an early period ; but they did not make 
 brick till the latter part of the fifteenth century, and then they 
 borrowed the revived art from the Flemings, as usual. A few 
 years ago, in one of the Kensington exhibitions, visitors were 
 shown a mediaeval London house. It was built of brick. But I 
 am sure that at the time which that house was supposed to 
 represent brick-making was unknown in England, and no bricks 
 were used for house-building in London. The ordinary English 
 house was a timber frame, on which, within and without, oaken 
 laths were nailed, and covered with a strong plaster of lime, small 
 sifted stones, and hair. After the rediscovery of brick- making, 
 this material was, and for a long time remained, exceedingly dear. 
 
 There is, however, evidence that England possessed early, and 
 long continued to possess, a considerable mercantile marine. The 
 fact is referred to by Frederic Barbarossa in the twelfth, and is 
 allowed by the French herald-at-arms in the fifteenth, century. 
 It appears that it v/as chiefly employed in the Baltic trade, and with 
 that of Western France and Spain. But it made none of those 
 discoveries which opened up two new worlds at the latter end of 
 the fifteenth century. These were the outcome of Portuguese and 
 Spanish enterprise. Very likely the timid and penurious habits 
 of the first Tudor king may have been a discouragement, but we
 
 12 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 are expressly told that English ships did not venture into the 
 Mediterranean, when they might easily have chastised the 
 Barbary and Algerine pirates, and have done great service to 
 Christendom. Not indeed that there was lack of enterprise in 
 their own seas. Early in the fifteenth century the Bristol 
 fishermen, by the aid of the mariners' compass, reached the 
 fishing grounds of Iceland, by the Hebrides and the western coast 
 of Scotland. 
 
 After the miserable and ruinous reigns of Henry VIH., Edward 
 and Mary Tudor, even the mercantile marine of England shrank 
 into insignificance. An attempt partially successful was made to 
 reach Russia by the north, and Chaloner discovered the White 
 Sea and Archangel, as the port is now called, in the reign of 
 Edward. But for practical purposes the discovery was premature 
 and abortive. There is no period in English history in which the 
 English were poorer and more unenterprising than during the last 
 fifty years of the sixteenth and the first forty of the seventeenth 
 centuries. I am not forgetting the exploits of Drake and 
 Frobisher, Raleigh and Hawkins. But these worthies were no 
 better than pirates, and, a century later, would have been hanged 
 at Execution Dock, as Captain Kidd was most righteously. Of 
 course public approbation went with these old sea dogs, whom 
 Plymouth has recently been eulogizing. It did long afterwards. 
 Blackburn, sometime Archbishop of York (1724-43), is said to 
 have been a buccaneer in his youth, and this long after the days 
 of Kidd. It may not have been true, but it was freely stated 
 during the lifetime of the archbishop, and I have never found out, 
 though I have read a great deal of eighteenth-century literature, 
 that the archbi.shop resented the charge. It was not, in point of 
 fact, easy in those days, to draw the line between the missionary 
 and the pirate. 
 
 The beginnings of English progress were those of the East 
 India trade, on which I hope to comment hereafter. These 
 beginnings were very small and precarious. The Dutch East 
 India Company had eight times the capital of the English. The 
 Dutch were more enterprizing, more intelligent, and being bent, 
 like the English, on securing a sole market, were more successful. 
 There is a famous passage in Clarendon's History, which is highly
 
 THE DEVELOPMENT OF INDUSTRIAL SKILL. 13 
 
 characteristic of that writer's mendacity. He says, speaking of 
 the dissolution of 1629 : "There quickly followed it, so excellent 
 a composure throughout the whole kingdom, that the like peace 
 and plenty and universal tranquillity for ten years were never 
 enjoyed by any nation," and " from the dissolution of the Parlia- 
 ment in the fourth year to the beginning of this Parliament [i 640], 
 which was above twelve years, this kingdom and all his Majesty's 
 dominions enjoyed the greatest calm and the fullest measure of 
 felicity, that any people in any age, for so long time together have 
 ever been blessed with, to the wonder and envy of all other parts 
 of Christendom." ' Now Clarendon may have had in his memory 
 the condition of Germany during the worst period of the Thirty 
 Years' War. I am ready to admit that England was better off 
 than that unhappy country was, of which despotism and bigotry 
 had made havoc. But it has been my business to study the social 
 condition of England during those eleven or twelve )'ears, and I 
 am sure, that with the exception of the long Continental war, at 
 the end of the last and the beginning of the present century, there 
 was no period of recorded history in which the lot of the mass of 
 Englishmen was more degraded, more miserable, and more hopeless. 
 The price of food was generally above the average of the century, 
 and in one year, 1630, was that of an appalling famine. The wages 
 of labour, stinted by the quarter sessions' regulations of the magi- 
 strates, were miserably insufficient. The first necessaries of life, 
 food and clothing, were dearer than they now are, and the wages 
 of the labourer were not more than a third of that paid in the 
 poorest agricultural districts. Of course. Clarendon thought that 
 he could utter the false generalities without the risk of detection, 
 and alleges that the despotism which he resisted in his better and 
 earlier days was the golden age of England. You will remember 
 that his famous work was unpublished till the accession of Anne, 
 when it was deemed to have a high political value. 
 
 The first movement of English industrial and trade activity was 
 made during the Protectorate of Cromwell. The commercial 
 policy of this remarkable man, undertaken according to the 
 reputed wisdom of the time, was to cripple all possible rivals and 
 to secure a sole market for England, or rather Great Britain. It 
 
 ' Page 122, vol. i. Oxford University Press edition of 1839.
 
 14 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 was at this time that the American plantations made great 
 progress, that the East India Company began to obtain enormous 
 dividends, and that generally the mercantile marine of England 
 was revived, strengthened, and extended. *' The base mechanic 
 fellow," as the exiled Stuart called him, developed a system, again 
 I say in accordance with the wisdom of the age, which even the 
 restored Stuart could not wholly destroy. From the Protectorate 
 too dates the opulence of London, which even plague and fire 
 could not subvert. The heirs of the Puritans gained that wealth 
 which. gave stability to the second Revolution, because it found 
 the new Constitution the necessary supplies. 
 
 The most marked features in the industry of the later part of 
 the seventeenth century were the discovery of the processes by 
 which iron, cast and wrought, could be reduced, and the revival 
 of the art by which rock salt could be refined. Iron and glass of 
 the best quality for the time were largely manufactured in Sussex ; 
 cast iron, with many of the uses to which this cheap material 
 could be put, became a considerable industry at Dudley. Still 
 wrought iron was more than twice as dear as rolled lead, ;^36 6s. 
 8d. a ton ; while lead was only £i(> 7s., and the multiplier at this 
 time being two, in modern money ^^72 13s. 4d. and £-^2 14s. It was 
 only when great improvements were made in reducing iron ores, 
 and puddling the best produce, that machinery such as Arkwright, 
 Watt, and Crompton invented would become possible. 
 
 Now simultaneously with the improvement in these processes, 
 perhaps in consequence of them, came the new agriculture, and 
 with it a great development of British industry and prosperity, for 
 cheap iron is a prodigious boon to husbandry, and successful agri- 
 culture is the healthiest stimulant to manufacturing enterprize. 
 The lamentable condition of British agriculture at the present 
 time has its effects, and those serious enough, on all the other 
 industries of the kingdom, effects so serious that, if private wisdom 
 is not early enough to the rescue, legislation must obviate the 
 efforts of stupid obstinacy. The new agriculture became a 
 universal pursuit, and in some quarters remained a passion till 
 about forty years ago. For nearly a century England was a great 
 corn exporting country. In course of time English agriculture 
 became the object of foreign imitation ; for Arthur Young bear^
 
 THE DEVELOPMENT OF INDUSTRIAL SKILL. 15 
 
 witness to the enthusiasm with which he, the student and 
 annalist of the new system, was v/elcomed in France and else- 
 where. I say English, for no such rapid progress marked the 
 agriculture of the northern part of the island. The fact is, the 
 Scottish lease, which the Duke of Argyll lauds as the quintessence 
 of wisdom and justice, was imder its old conditions a very effectual 
 bar to agricultural progress. Greatly as I respect the Duke's 
 abilities, for I value them almost as highly as he does himself, T 
 am constrained to accept the evidence of Sir John Sinclair as to 
 what that most able and useful man saw, in preference to the 
 Duke's ideal. But perhaps you may have read that there were 
 very respectable persons, a couple of generations ago, who thought 
 the imreformed parliament a perfect, almost a heavenly, instrument 
 of government and administration. But one must go out of the 
 world of action if one is to be frightened by paradoxes. There are 
 times in which they sprout as plentifully as weeds do in wet 
 summers, or pictures do for Burlington House, or patents do 
 under the recent law. 
 
 I have on a previous occasion set down not a little of the 
 progress made in Great Britain (that of Ireland was rigidly re- 
 pressed by prohibitive laws) to the peace of Paris in 1763. Nor do 
 I swerve from the position which I laid down, that the effects of 
 that most important political event were a prodigious stimulant to 
 every kind of British enterprize. Chatham had at last succeeded 
 in procuring for Great Britain that which every one taught and 
 believed to be the Eldorado of commerce and manufactures — a sole 
 market. In support of this, Spain and Portugal had alleged that 
 the bulls of Borgia were an integral part of international law. 
 In despite of them, to some extent under their colour, Holland 
 had striven for a sole market, and England had been her rival. 
 Even the Emperor of Germany had imagined that he could, by 
 the Ostend Company, claim, if not the whole, at least a solid share 
 of this great market. But the true rival of England was France. 
 Yet on the conclusion of peace, England rose, according to the 
 theory of the age, the sole winner in the game. France was 
 expelled from India, and practically from North America, while 
 England became, as she has remained, the sole colonizing nation. 
 In these later days, we may know that the sole-market theory,
 
 i6 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 whatever may be said of Greater Britain, is an illusion, that it was 
 rent to pieces within a dozen years after it was affirmed and 
 engrossed, and that the whole of Western Europe, though unable 
 to procure it for themselves, strove successfully against the 
 monopoly which the Seven Years' War aimed at, gained, and 
 seemed to have secured. 
 
 There are occasions in the history of nations, especially in their 
 economical history, when delusions are as stimulating as realities. 
 Now here was more than was hoped for. I do not wonder that 
 the English rose to the occasion. The prospect of profit seemed 
 to be instant and prodigious. At the time, however, Great 
 Britain had only one or two successful manufactures. She had at 
 last distanced every rival in the woollen trade, and had held this 
 position for more than half a century ; for I have noticed that 
 towards the close of the seventeenth century, the fine cloths of 
 Spain had given place in the market to those of Holland, and at 
 the beginning of the eighteenth the Dutch goods had been super- 
 seded by English. North of the Humber and the Mersey, textile 
 manufactures went apace. They had the better part of the New 
 World to supply, and under the colonial system they were alone 
 entitled to supply it. Now no one doubts the benefit rf a sole 
 market, if it comes spontaneously, and as a result of the superior 
 excellence of the article manufactured. If we could undersell, or 
 much better, appropriate by the goodness of our products, foreign 
 markets, in a fair and free competition, no rational person would 
 doubt that we had satisfied the highest conditions of production 
 and trade. It was, of course, different when the market was the 
 result of military successes. It was artificial, and therefore 
 precarious. 
 
 The pioneers of this new development were our own country- 
 men. Like the philosophy of Tarsus in the days of Strabo, and 
 the youth of St. Paul, it was entirely of home growth. For the 
 first, or nearly the first, time in our economical history, we were 
 not indebted to foreigners for our improvements, to immigrants 
 from other countries for our new departure. There is an 
 instructive, and I believe accurate, story told about Arkwright. 
 This successful manufacturer was originally a barber and wig- 
 maker at Bolton in Lancashire. Some twenty years ago I came
 
 THE DEVELOPMENT OF INDUSTRIAL SKILL. 17 
 
 across some of his business cards, printed while he plied this craft, 
 and I gave them to the Bodleian Library, for you know that we 
 ought to carefully preserve all the earliest records we can find of 
 our merchant princes, and while Sir Bernard Banke traces them 
 to Battle Abbey Rolls, we, whose business it is to find how intelli- 
 gence and industry rise to eminence and opulence, should point 
 our economical moral with the record of this early career. In his 
 later days, Arkwright offered the British Government to incur a 
 lai:;ge share of the expenses incurred in the Continental War, on 
 condition that his patents were confirmed to him, ?>.,his spinning 
 made his own monopoly indefinitely. I do not know why his 
 offer was rejected. Pitt, who committed enormous financial 
 crimes, was at his wit's end for money ; but I presume that the 
 other spinners would not support him any longer if he excluded 
 them from the prospect, just as the landowners refused to condone 
 his foreign policy if he inflicted legacy duties on them. They 
 bore with equanimity the taxes levied on labour and profits, and 
 you may conclude why. But a tax on rents was not to be thought 
 of. 
 
 Now my informant was my late friend Sir Thomas Bazley, 
 himself a Bolton cotton spinner. When Arkwright had almost 
 perfected his first power loom, which you probably know meant a 
 process by which the process of the old hand loom could be 
 almost indefinitely multiplied, he found that the yarn as it was 
 delivered through the rollers had an awkward, a fatal trick of 
 curling back. He puzzled over this serious obstacle. At last he 
 took the local blacksmith, who made his early machines, into 
 counsel, and the man, one Strutt, told him that he thought he 
 could cure it. Arkwright asked him his terms. Ten years' 
 partnership and equal profits, was the reply. This was too much 
 for Arkwright, who, like Naaman of old, turned and went away in 
 a rage. But still the yarn curled, and dashed his hopes. At last 
 he reluctantly yielded to the blacksmith. Then occurred another 
 scene. The blacksmith insisted that the deed of partnership 
 should be executed and enrolled. Arkwright stormed, and I 
 regret to say, swore violently. But the local Vulcan was firm. 
 When the deed was signed, the blacksmith went behind the 
 rollers, and apparently rubbed one of them with his hand. 
 
 3
 
 i8 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 Instantly the yarn was delivered as was wished, and the astonished 
 and enraged Arkwright found that his new partner had only 
 rubbed one of the rollers with a piece of chalk, in other words, 
 proved that one of them should have a different surface from the 
 other. The execrations of the enraged manufacturer were unspeak- 
 able. But the compact held, and in the end the blacksmith 
 became Lord Belper. 
 
 I tell you this story, in which I trust I have anticipated the 
 excellent Mr. Smiles, in order to illustrate how active the 
 minds of English inventors in the north were during the period 
 which followed on the peace of Paris, when a new world was 
 opened to the energy of the British shopkeeper and merchant. 
 All the invention, to be sure, was centred in the district which lies 
 between the Trent and the Tay, and progressed very unequally in 
 that region ; for the hand-loom weavers were by no means friendly 
 to these discoveries, and took energetic means in order to wreck 
 the new system. The manufacturers were even with them, and 
 by help of Parliament hanged the frame-breakers by the score. 
 I regret to say that the progress of British manufacture and 
 trade was as destructive of human life as many battles have 
 been. 
 
 Before twelve years had well passed, the doctrine of the sole 
 market received a fatal shock, a cotip de grace, in the war of 
 American Independence. Most people dwell on the successful 
 struggle of a principle which that war is said to have represented, 
 that taxation without representation is tyranny. The English 
 Parliament never so understood it, for they taxed abundantly, 
 while they were in no sense representative. To the economist, it is, 
 as it surely was, a struggle against the claim of a sole market, in 
 which not America only, but United Europe, forced the British 
 hand. Of course I am willing to admit that the economical con- 
 sequences of this war are far less striking than the political. But 
 they are more real and enduring, and in the end, as I shall show 
 you, played the English game. Out of the American struggle 
 came the French Revolution and the Continental war. But out 
 of it also came the total impoverishment of Europe, and the 
 indirect concession of a sole market to Great Britain. Had the 
 United Kingdom kept out of the struggle, the indirect sole
 
 THE DEVELOPMENT OF INDUSTRIAL SKILL. 19 
 
 market could have come with no 600 millions of debt at the back 
 of it, no beggared and demoralized people among us, and perhaps 
 a few less heroes. 
 
 The reverses of the American war were a terrible disappointment. 
 All seemed to be lost. But when great progress has been made 
 in the industrial arts — and unprecedented progress had been made 
 between 1763 and 1775 — the occupants of a threatened position 
 do not relinquish their advantages without a struggle. For as 
 soon as great capitals are invested in callings, and the profit of 
 these investments is threatened, the most vigorous efforts are made 
 to avert the disaster. Not to go on, to stand still, is more ruinous 
 than working for a diminished gain, or shrunken profits. The 
 stimulus to invention, that is to economy, grows keener and 
 keener, as the risk of loss is anticipated, and the latter end of the 
 eighteenth century was one of singular activity. Unhappily 
 there was one direction which it took, I mean the enforced labour 
 of the young. Wages were always low in the north, and Arthur 
 Young is an unconscious witness of how inadequate they were in 
 the district from which this new wealth was coming. As years 
 went on, matters became worse ; legislation on behalf of children, 
 under the name of Factory Acts, was urgently demanded, and 
 owing to the unfortunate party patronage which it received was 
 as vehemently resisted. Much good came out of the struggle, 
 disfigured as it was by rancour and mendacity. The Factory Acts 
 were passed, and the manufacturers retaliated, by enforcing the 
 repeal of the Corn Laws, and by insisting on the concession of 
 Free Trade. So great good came out of passions which were of 
 ignoble origin. 
 
 But before these results were arrived at, British manufacture 
 was established on a firm basis, by the misfortune or folly of the 
 other European States. None of us, in this day, can realize the 
 horror and rage with which the events of 1792 and 1793 were 
 witnessed by the European courts. Philosophers had welcomed 
 the French Revolution, statesmen had applauded it, and it was 
 believed at first that the propaganda of the Rights of Man, 
 would obtain a patient and probably a favourable hearing. But 
 the welcome was speedily followed by execration. Western 
 Europe threw itself in anger on France, and after a short season
 
 20 INDUSIRIAL AND COMMERCIAL HISTORY. 
 
 of doubt, was beaten back, overrun, trampled on. England was 
 the only country which was not invaded, defeated, and held to 
 ransom, and there was a time when it was within this risk. Now 
 war means waste, and when nations have not only to bear their own 
 waste, but to submit to an enemy's waste, and pay ransom in 
 money and men to the conqueror, that community which has only 
 its own waste to pay for is at a prodigious advantage. The 
 Berlin and Milan decrees, prohibiting the importation of British 
 goods into any country under French control, and denouncing the 
 penalties of piracy against shippers who infringed the order, were 
 entirely nugatory. It was proved that, during the time which it 
 might be supposed that they would be effective, Napoleon's 
 soldiers marched to Moscow in clothing purchased from English 
 manufacturers. 
 
 The exhaustion of Europe after the peace of 1815, left the 
 British people — I seek to avoid offending Scottish sensitiveness, 
 by using English, and am obliged to use a far absurder ethnic 
 name — as completely the masters of a sole market, as if they had 
 conquered it for themselves. The Continental war had absolutely 
 arrested all continental progress. All the while England was 
 making fresh way in the newer sciences, such as chemistry was, 
 and her rivals were of the future. Of course English trade was 
 crippled by an absurd tariff", and an abominable fiscal system, the 
 first due to the imbecility of such men as Vansittart and Stan- 
 hope, the second to the insatiable greed of the landed interest. 
 
 The relaxation of the tariff" system in England, cautiously 
 undertaken by Huskisson and others, suspended or blundered about 
 by the Whigs and finally eff"ected by Peel, showed what British 
 industry could do when it was freed from these trammels. For 
 instance, very speedily after the abolition of the duty on printed 
 calicos, the price of the finished article fell to less than the duty 
 per yard previously imposed on it. Had not other European 
 nations been more irretrievably depressed by the Continental war, 
 the United Kingdom would have suflTered grievously by the foolish 
 pranks of those who handled the finances. I should think that 
 if any single thing would cure the innocent and simple from 
 trusting in administrations, and prove to such persons that they 
 should be severely criticized, the history of the revenue and
 
 THE DEVELOPMENT OF INDUSTRIAL SKILL, i\ 
 
 fiscal expedients during the deplorable epoch from 1790 to 1825 
 would, if wisely studied, be effectual. 
 
 Events which have occurred in the course of the last fifty years 
 in Europe and the United States, during which the former had 
 to some extent recovered from its losses, and the latter had made 
 great progress, but its career was interrupted by the Civil War, 
 made for the British producer. The European wars have been 
 rarely prolonged, but they have been sufficiently destructive, and 
 this country was invited to repair the waste. The development 
 of the United States led to the extensive loan of British capital, 
 and the loans as usual were satisfied by British produce. The 
 enormous waste of the four years' civil war was made up, despite 
 a foolish and mischievous tariff, by British products, for the 
 repair of the losses created so enormous a demand, that the barrier 
 of the tariff, intended to be prohibitive was easily overleaped, and 
 for ten or fifteen years after that war, British manufacture and 
 trade proceeded, as was said at the time, by leaps and bounds. 
 
 Even though Europe has profited by peace during two-thirds 
 of a generation, I see no reason to think that British industry and 
 invention are losing their hold on the world's progress, or that, as 
 was the case some centuries ago, our people have to be taught by 
 foreigners. On the contrary, the German has not got beyond the 
 position of an imitator, and not an over honest one either. The 
 United States have made no great discoveries. And so with the 
 rest of the nations. Nor is the cause far to seek. These political 
 communities had deliberately adopted protection. Governments 
 have been too weak or too dishonest to be sensible, and are con- 
 sequently crippling the intelligence of those whose affairs they 
 administer, by pandering to the foolish, dangerous, and wholly 
 unjust dictum, that private interests are public benefits.
 
 II. 
 
 THE CONDITIONS OF ECONOMIC PROGRESS. 
 
 Faults of early economists — Importance of study of distribution of wealth 
 — Shortsif^htedness of some economists as to inventions and value of 
 labour — Division of employ7nents — Skill of agricultural labourers — 
 Agricultural inventions — Babbage on Adam Stnith — Effect of divi- 
 sion of employments on continuity of labour — Causes of tlu growth 
 and decay of nations chiefly econo7nic. 
 
 I SHALL be engaged this morning in discussing some of the 
 earliest common-places of political economy, positions which 
 though constantly found to be far from exhaustive, are as far as 
 they go accurate. For the conditions of economic progress are 
 very much the same as the analysis of the production of wealth. 
 I have on previous occasions pointed out how grave an error I 
 think it is, to make this part of the analysis precede that of the 
 distribution of wealth, for this latter is the true centre of all 
 economic inquiry. But tradition goes a great distance with most 
 people, and there was an honest reason for this confusion of 
 order. I am not, indeed, quite clear that the excellent people who 
 were responsible for the confusion, as I deem it, either foresaw the 
 consequence, or imagined that the process which they adopted 
 would give force to the very mischief which they strove to ex- 
 pound and condemn. But when people begin to discuss and 
 enlarge upon the processes by which wealth is produced, they are
 
 THE CONDITIONS OF ECONOMIC PROGRESS. 23 
 
 apt to confuse the people who get wealth, a very unimportant, 
 and occasionally a very noxious social element, with those who 
 make wealth, that class on whose exertions not only the progress, 
 but the very existence of society depends. And here, again, I 
 must protest, that the better and more estimable a man is, the more 
 incumbent is it on the honest inquirer to search into and expose 
 such economical errors as he may be led into. You may forgive 
 a man who makes a false estimate of another man. But a writer 
 who gives a false view of a social problem must be dealt with on 
 Aristotle's principle — Plato and I, he implies rather than says, 
 are friends, but it is righteous to set truth above Plato and his 
 theories. 
 
 Now the authors of the method of political economy, in which 
 the production of wealth is dealt with antecedently to the distri- 
 bution of products, were the French economists or physiocrats. 
 These excellent men were struck with the stupid hindrances 
 which the French Government put on important industries, and 
 the preposterous favour which it showed to others which were, 
 at least comparatively, trivial. The habits of the time were 
 unfavourable to any criticism as to the way in which France was 
 plundered by a licentious court, and by the vile aristocracy and 
 clergy which were dominant and rapacious. As is the case with 
 many men in many ages, it was necessary to be silent on some 
 scandals, if they were to have any hope of remedying others. 
 In France, as you know, the inevitable temporizing of the econo- 
 mists on the burning question of the distribution of wealth, led to 
 the cataclysm in which the good and the evil were swept into a 
 common destruction. Du Barry with Lavoisier ; the harlots with 
 the philosophers. Let us hope that our history may not be dis- 
 figured by any similar catastrophe. We cannot predict, least of 
 all about the English nation, which has not infrequently in its 
 history, exhibited a stubborn ferocity which has startled those 
 complacent people who have been the objects of it. 
 
 Nature, says Mr. Mill, gives human beings materials and 
 powers. Both these terms are of enormously wide signification. 
 Of course man cannot make matter. All that he can do is to 
 induce utility in it — utility being employed in the very wide sense 
 of that which is agreeable as well as that which is necessary. But
 
 24 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 man has first to discover the properties of the different kinds of 
 matter, and next the way in which he can appropriate those pro- 
 perties most rapidly and most efficiently to his service. The 
 properties of matter and the forces, powers, laws of nature, are as 
 nothing till they are distinguished and utilized. There have been 
 ages, it appears, when those qualities of certain kinds of matter 
 which are now familiar to all of us, were utterly unknown. There 
 will be, I do not doubt, discoveries made in the near or remote 
 future, to which our present mastery over nature will seem 
 to be the very infancy of discovery. Now there is nothing on 
 which economists have been so apt to err, as in the limits which 
 they have confidently put on man's powers over nature. Had 
 they known how slowly, even with every apparent stimulus before 
 them, nations which had extraordinary natural advantages, as for 
 example our own people, have utilized them, and had they also 
 known how other nations,with apparently every natural disadvantage 
 to grapple with, have from time to time distanced those who had 
 apparently far greater opportunities ; they would, I think, have 
 spoken a little less confidently on the limits of industrial develop- 
 ment in mankind. Speculative economists are apt to confound 
 present impossibilities with permanent impossibilities. They who 
 know ever so slightly what has been the course of human invention are 
 aware of how often the impossibility of one age has been the easy 
 process of another. We have no reason to doubt that the same expe- 
 rience will be vouchsafed to future generations. We do not, in short, 
 know all the materials ; we are still farther from knowing all the 
 powers. We do know that the materials are utilized, and the 
 powers discovered by labour, and that to such results the idlers 
 contribute nothing. We also know that any given society can 
 maintain only a limited number of idlers, and that these idlers 
 constitute the redundancy of population, the true growth of 
 numbers beyond the means of subsistence — the difficulty of the 
 present, and the danger of the future. 
 
 The appropriation, then, of materials, and the discovery and 
 adaptation of powers, natural laws, qualities or properties of matter 
 to human utility is the result of labour. The labour, even when 
 exercised on what seems to be the most ordinary routine, must be 
 intelligent. There is infinitely more distance between a savage
 
 THE CONDITIONS OF ECONOMIC PROGRESS. 25 
 
 and the least skilled labourer — I am using a common-place term 
 — than there is between that least skilled labourer and the most 
 competent and active manager, inventor, and employer. You cannot 
 extemporize labour, that is, you cannot call effective industry 
 into existence by mere demand. It is quite possible to lose what 
 cannot be recalled or recovered, and when people talk glibly of the 
 emigration of the working classes, it is difficult to be patient 
 with them. There are thousands whom we could far better spare 
 than competent agricultural hands and skilful artizans. I do not 
 accept Mr. George's position, that there cannot be a redundancy 
 of genuine workers, but I can so far go with him as to recognize 
 that there may be, and is, a redundancy of people who think 
 themselves very ornamental and very superior. 
 
 I defer to a later part of this lecture the exposition of what 
 efficient labour is, and how it can be secured, maintained, and 
 continued. I know no economic problem which is more impor- 
 tant than this, none in which more serious practical blunders have 
 been made by shallow metaphysicians. The education of workmen, 
 the instruction of such persons in the conditions of their calling, 
 and in particular in those conditions under which they can get 
 the best possible remuneration for good work, are topics of the 
 highest public interest. I am often amused, till I get irritated, at 
 the self-satisfied way in which certain persons, whose very live- 
 lihood, and all that they enjoy, depends on the continuity and 
 efficiency of labour, lecture those whose industry is so all impor- 
 tant, threaten them, seek to cajole and frighten them alternately, 
 and imagine that their chatter is not detested and resented. For 
 one cannot get out of this situation, that all wealth is the product 
 of labour, and that the livelihood of all depends on the efficiency 
 of labour. Nay more, the part which capital plays, important as 
 it is in securing the continuity of labour, and comparative 
 uniformity in the value of its products, is small indeed by the 
 service which labour does to mankind. Many of the most familiar 
 functions of capital have been dispensed with in the past history 
 of races, which have made no small figure in the arts of life, and 
 could, perhaps with little inconvenience, be dispensed with again. 
 
 One of the earliest phenomena in progress of human societies is 
 that which Adam Smith called the "division of labour." It appears
 
 26 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 that this great writer was the first person who called attention to 
 the importance of this fact of social life. At least I have not 
 found that the French economists gave prominence to it. But, as 
 Gibbon Wakefield long ago pointed out, the expression is very 
 ambiguous, for the most complete division of labour is exhi- 
 bited by those persons and classes who least of all come under 
 Smith's principle and his illustrations, and for the sake of 
 clearness, the phrase should be altered into the "division of employ- 
 ments." Nor are the details of Smith's illustrations, and indeed 
 of those who have followed him, exhaustive. Nor has it been 
 pointed out with sufficient clearness how this division of employ- 
 ments has been developed ; what are the industries of which 
 it is specially characteristic, and what are the consequences 
 of its development. For in some branches of human industry 
 it is hardly developed at all. In some, at least in Smith's sense, 
 it cannot be. But the analysis of human industry is very imper- 
 fect, unless we first discuss the origin and limits of the division 
 of employments. 
 
 Even the rudest agriculture produces, as I have more than 
 once stated, more than is sufficient for the wants of the husband- 
 man, unless indeed, as is the case in some parts of Ireland, the 
 narrowness of the holding is the result of certain well-defined 
 causes. Some of you are perhaps aware that these small tenancies 
 were originally manufactured freeholds for life, the motive for 
 which came to an end at the time of Catholic Emancipation, 
 when the Irish freehold franchise was abolished by law, and the 
 life tenancies, having served their purpose, were not renewed. 
 Now unless the landowner contrives to appropriate all but the 
 bare maintenance of the occupier and his family, the excess of 
 produce over necessary wants gives the producer the opportunity 
 of transferring part of the labour which he previously had to 
 give to another who is willing to undertake it, in exchange for 
 a portion of the agricultural produce. In the early days of Eng- 
 lish agriculture, the husbandman is bidden by those who write 
 about his condition to supply himself as far as possible with the 
 necessary tools and impltments of his calling. But very early he 
 must have needed the labour of others in order to carry on his 
 own calling. We may be sure that the smith, the carpenter, and
 
 THE CONDITIONS OF ECONOMIC PROGRESS. 27 
 
 probably the wheelwright had their callings separate from but 
 related to that of the husbandman. It is indeed almost certain 
 that the art of smelting and working metals preceded that of the 
 agriculturist. Now this is the first and the earliest form of the 
 division of employments, and in more recent times it has been 
 quite as phenomenally developed as that which Adam Smith 
 described, and that which he illustrated. There are in our time 
 many occupations, the products of which are in demand, which 
 are in no other sense divided, and in which no progressive partner- 
 ship, the characteristic of Smith's phenomena, can be developed. 
 This is obviously the case with the higher works of art, in 
 which the conception and execution are entirely the work of one 
 person. But it would be absurd to deny that the prosecution of 
 such callings illustrates the division of employments. There is 
 indeed no surer mark of progressive civilization than the multipli- 
 cation of such agents. It may indeed be unfortunate that the 
 services of some such persons as obviously come under the defini- 
 tion should be in demand at all ; but they exist and do that which 
 they are engaged upon, because the labour of those who procure 
 food can and does maintain them, and persons can be found who 
 will pay them for their services. 
 
 It is noteworthy that when these employments were few they 
 were carried to remarkable perfection. Now in England and 
 France the art of architecture was carried to perfection, at a 
 comparatively rude age ; in Flanders, architecture and pictorial 
 illumination. We know of English architecture that it was not, 
 except rarely, the work of persons who were specially trained to 
 plan buildings, but of artisans, of masons and carpenters. I know 
 nothing so good as their work in modern times, so faultless in its 
 proportions, so solid, so workmanlike. These workmen are im- 
 measurably superior to modern architects, and the custom went 
 on late. Wadham College was entirely designed by a mason, who 
 had twenty shillings a week for his services, who worked with 
 trowel as well as planned. And so with regard to the miniatures. 
 We have many of these illustrated MSS. Other great libraries 
 have as many or more. But only a fragment of these works has 
 survived to our time. Books of devotion are inevitably worn out 
 as a rule. And it is no use to say that the design and execution
 
 28 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 of these works were entrusted to men with whom time was no 
 object. One may well doubt the statement. The illuminator was 
 hired to do the work, and no man works longer for his reward 
 than he thinks necessary. Besides, no wealth of time will make 
 up for defects of artistic skill, and it is the artistic skill which 
 characterizes these remarkable products of a bygone time. And 
 one knows how extraordinary was the fertility of some among the 
 earlier artists. 
 
 I stated above that the division of employments belongs to only 
 some industries, and to others scarcely at all, except in that 
 broader sense, which belongs to the origines of civilized and settled 
 society. The most marked illustration, to take a common and 
 familiar industry, is that of what is known as a first-class farm 
 hand. Such a person has indeed a distinct occupation, and there- 
 fore comes under that elementary division of employments which 
 is characteristic of the earliest social condition, and is increasingly 
 exhibited as human societies become more complex and thereupon 
 more civilized. But his vocation once chosen, or forced upon 
 him, as was the practice when he was made the residuum of all 
 other kinds of labour, his value depends on the number of those 
 operations which he can perform well. Let us consider these 
 functions separately. I will assume that his work is not super- 
 seded by machinery, as it cannot be entirely in several important 
 avocations. He must be a good ploughman, ?>., he must not 
 only draw a straight furrow, a work which requires an extra- 
 ordinary education of the eye, but he must be well acquainted 
 with, and be alive to, the powers of the team which draws his 
 plough. In this latter capacity he is a good deal of a farrier, for 
 however negligent employers may be, careless of the human 
 beings who work for them, it is a plain loss to ill-use or over- 
 strain a horse. He must then know how to drain superfluous 
 moisture off arable land, and give a long ditch that decline which 
 is essential to its efficiency. This has always struck me, who was 
 in my youth familiar with agricultural operations, as a work of 
 no little art. The other preliminary operations of husbandry are 
 less difficult. But in old days, before drilling seed came into 
 fashion, the operation of hand-sowing, with the object it had 
 before it, that of giving exactly the amount of seed which the 
 
 I
 
 THE CONDITIONS OF ECONOMIC PROGRESS. 29 
 
 soil would bear, required a good deal of skill, and in those times 
 was generally carried out by the farmer himself, or by his most 
 trusty hind. 
 
 On a well-tilled farm the plough is hardly ever laid aside. It 
 was not six hundred years ago, and it is not. now. The earliest 
 writer on English husbandry defines a carucate — and I suppose he 
 knew more about the quantity than the wiseacres do who guess 
 at it periodically in " Notes and Queries " — as the amount of land 
 which a team of horses or oxen with their proper appliances could 
 work on three hundred days in the year. But especially in small 
 farming, say of from fifty to one hundred acres, a distribution of 
 land which has been most unhappily too generally superseded, the 
 good farm hand has to betake himself to other avocations. He 
 will in due course mow, make, carry, and stack hay, and thatch 
 the rick when he has built it. There is some difficulty in building 
 a quadrangular rick, the base of which is less than the super- 
 structure, so that it should be regular in shape, not top-heavy, 
 and so fashioned as to take the minimum amount of thatch 
 consistent with its being water-tight. Similar operations are, or 
 were, carried out in the corn harvest, and in constructing corn- 
 ricks. One of the operations which he did with great success in 
 which machinery has almost superseded him was that of threshing, 
 so as to get out the whole corn and bruise the straw as little as 
 possible. Then there is no little art in plashing and trimming 
 hedges, so as to make the growth even and to obviate gaps. 
 And though in large farming the tending of sheep was always 
 entrusted to separate hands, you will find that a first-class farm 
 hand can undertake this part of the husbandman's business, if 
 necessary. Of course there is beside the work of the farmyard, 
 the poultry, the piggeries, and some of the rough work of the 
 dairy. These accomplishments the farm hand has to acquire, 
 and to acquire efficiently. You will see, then, that his industry is 
 a marked exception to that division of employments on which 
 Smith insisted as a dominant factor in the progress of human 
 societies. The division belongs, however, to only a limited, and 
 in point of importance, subordinate class of labour. The earliest, 
 most necessary, and most interesting of the industries is little 
 beholden to it.
 
 30 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 Now I have pointed out and illustrated this fact at length, 
 partly because it is important to accurately analyse what is said 
 about labour and its incidents, partly because I do not remember 
 to have seen that the particulars on which I have dwelt have 
 been accurately expounded by popular writers, partly, and much 
 more, in order to point out to you how valuable is the industrial 
 element which I have described. I do not here dwell on the 
 political consequences which follow on the forced and ungracious 
 expatriation of those who possess or have inherited this cumulative 
 skill ; but it is within my right and my duty to enlarge on 
 the economical consequences of the loss, and the probable sub- 
 stitution for these persons of a less enterprizing or more supple 
 class, who will most inadequately fill their places. The economic 
 progress of society is assuredly not aided by the exit, voluntary 
 or involuntary, of those who are economically the most valuable 
 agents in it. Swift, no doubt, exaggerated when he makes his 
 patriot being of Brobdingnag allege that the person who made 
 two blades of grass grow where one grew before was worth all the 
 politicians in existence. But a little less sweeping assertion is 
 true. And when I say this I am far from endorsing what some 
 economists have alleged about what they are pleased to call certain 
 forms of unproductive consumption. I hold, and I have taught 
 here, that any kind of labour which aids in relieving the strain of 
 life and work is productive, and that that only is unproductive 
 which is selfish and mischievous, and in no sense aids the general 
 energies of society. And here I may add that, in my opinion, 
 it is difficult to account for the rapidity and completeness with 
 which these processes have been learned, except on the principle 
 of hereditary aptitude, an expression which I conceive is more 
 accurate than Galton's hereditary genius, of which, indeed, no 
 evidence has yet been forthcoming. 
 
 In manufacture, on the other hand, the principle of the division 
 of employments has been very manifest, and much has been 
 assigned to it by all who have written on it. Here, however, I 
 must make a caution. It is generally imagined that infinitely 
 more progress has been made in manufacturing industry than in 
 agricultural. In some cases this is no doubt the case. But im- 
 provements in manufacture are constantly made per salticm^ and 
 
 1
 
 THE CONDITIONS OF ECONOMIC PROGRESS. 31 
 
 attract attention by their suddenness. Those in agriculture are 
 insensible, partly because the process itself is slow and gradual, 
 partly because it is more gradually adopted. It took a hundred 
 years to naturalize turnip culture in England, nearly as long to 
 diffuse the principle of artificial selection in cattle, sheep, pigs, and 
 poultry. It will, perhaps, take nearly as long to make the 
 practice of ensilage common ; but I think I could show you, did 
 occasion permit, abundant illustrations of the manner in which 
 agriculture has progressed. 
 
 It has been suggested that there would be an advantage in 
 illustrating the division of employments or labour by speaking of 
 it as co-operation, and Mr. Gibbon Wakefield, an ingenious com- 
 mentator on the earlier part of Smith's work, has recommended 
 the word co-operation, a term which, in his day, had not been so 
 entirely appropriated as it has in ours. For, says Mr. Gibbon 
 Wakefield, co-operation is of two kinds, simple and compound, 
 both of importance in an economical analysis, the latter sense 
 being that especially which illustrates the division of employ- 
 ments, and he further observes that there is a notable economy 
 in simple co-operation. Two horses, he says in illustration, will 
 draw more than double what one will, as will two sailors working 
 at a windlass, and the like. In compound co-operation each agent 
 is employed on one function only, in the satisfaction of which he 
 acquires extraordinary aptitude and skill. 
 
 Now Adam Smith, in discussing his own position, discovers 
 certain advantages in the process. First, " it occasions," he says, 
 " a proportionate increase of the productive powers of labour," or, 
 in other words, " it increases the dexterity of every particular 
 workman ; " in the next, " it saves time which is commonly lost in 
 passing from one species of work to another ; " and in the third 
 place, it suggests the " iiivention of labour-saving and labour- 
 easing machines." 
 
 Two additions were made to Smith's theory by my late friend 
 Mr. Babbage, and communicated to me a good many years ago. 
 The one is, that in any operation which leads to a manufactured 
 utility there are, however skilful persons may become, different 
 degrees of skill in the operation. Let us take those of the 
 processes of pinmaking in Smith's day. Let one be setting on
 
 32 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 the head, another grinding the point, a third sorting them into 
 papers or boxes. The first requires more skill than the second, 
 the second much more than the third. But if one person did all 
 three, the commonest labour would be paid at the rate of the 
 most skilful. Now the division of employments renders a 
 graduated scale of pay possible, such a scale being proportioned to 
 the difficulty or easiness of the operation. Now all economies in 
 production are real improvements analogous to labour-saving 
 machines. Mr. Babbage told me that though he had originated 
 as far as he knew this criticism, he subsequently found something 
 very like it in the writings of an Italian economist, who had also 
 examined Smith's theory. 
 
 The other addition which my friend claimed to have made to 
 the exposition made by Smith was that the subdivision of employ- 
 ments and the consequent efficiency of labour depended on the 
 width of the market. If, therefore, economists are right in 
 assigning so important a function in manufacture to the division 
 of employments, it is plain that everything which widens the 
 market is an advantage, everything which cripples or curtails it 
 is an evil. Of course the width of the market must be ascer- 
 tained, and with it the power which the producer has to supply 
 the market. But this knowledge can only be acquired when ti-ade 
 is free, for any attempt to impede the knowledge as to whether a 
 community can compete against any other community precludes 
 the possibility of learning whether we can employ our oppor- 
 tunities to the best advantage. The principle of the division oi 
 employments then, taken with the conditions by which it is 
 surrounded, is an unanswerable argument in favour of free trade 
 for ourselves, whatever other nations may do, for in this Avay we 
 get the best and most solid information as to how we may supply 
 the market, and how we may thereupon make it increasingly 
 wide. 
 
 Now what is the effect of the division of employments on the 
 workman, and his power of earning wages ? At first sight it 
 would seem that to tie him down to a single operation must be 
 not only to make him ineffective for all other, but to make his 
 calling eminently precarious. Thus we are told that fifty different 
 artisans are engaged in making the different parts of a watch, and
 
 THE CONDITIONS OF ECONOMIC PROGRESS. 33 
 
 all perform operations entirely different from the final act of 
 putting all the parts together. Is not then each of these fifty 
 men rendered useless for any other operation whatever, and is not 
 therefore his special efficiency an injury to him ? But in ;point of 
 fact, his position is not unlike that of the instrument in the pro- 
 duction of which he is co-operating with forty-nine others. If 
 watches are to be made, you can no more leave him out of the 
 collective process than you can leave the part which he makes out 
 of the watch. If it be absent the instrument is useless. If he be 
 absent, by parity of reasoning, the whole process is arrested. His 
 apparent weakness is therefore his real strength. To produce, you 
 cannot do without him. It is very probable that in the days of 
 the earlier watchmakers, when the same person finished the watch 
 from wheels and spring to case, the occupation of a skilled 
 workman was more precarious and more capricious than it 
 now is, when he is the master only of the fiftieth part of the 
 collective craft. 
 
 I do not doubt, then, that the division of employments has 
 strengthened the position of the workman by making his calling 
 more necessary, and his occupation more steady. Nor are facts 
 wanting to confirm what I have said. There has been in recent 
 years an undoubted depression of manufacturing and agricultural 
 profit. But the loss to the workman has been far greatest in those 
 operations where the division of employments is least dominant, 
 in agricultural as opposed to manufacturing callings. I do not 
 doubt indeed, that the stint of labour in husbandry is a mischief, 
 perhaps a folly. In old days it used to be thought that a farm 
 hand to every twenty acres was good husbandry. If I am rightly 
 informed, the employment is now one in thirty or forty. The 
 Irish are wiser. Irish farmers who cultivate what in that country 
 would be called large farms, z>., from 200 to 300 acres, have told 
 me, when I have asked them, that they can do nothing on their 
 system except with a man to every ten acres, and this though they 
 are extensive purchasers of modern machinery. 
 
 The manufacturer, however, has given far more serious, or at 
 any rate, far more obvious pledges to fortune. Nine cases out of 
 ten it is a less evil to go on than to stop. If he curtails his 
 output he loses on his machinery which lies partly idle, on his 
 
 .4
 
 34 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 plant and buildings. As the husbandman who is slovenly or 
 stingy in cultivating his fields soon finds them become like the 
 garden of the sluggard, though he has the knack of blaming every 
 one but himself for the catastrophe ; so the manufacturer sees that 
 to diminish the effective use of his machinery is to invite some- 
 thing worse than loss of profit. But the workmen in a factory where 
 the division of employments is fully carried out — and where is it 
 not ? — are an organization which cannot be allowed to be idle or 
 to be dispersed any more than the machinery itself can be 
 permitted the suspension of its activity. On the whole, it seems 
 to me, that the division of employments has had a decidedly 
 beneficial effect on the status of the workman. 
 
 I have dealt at some length with this elementary part of the 
 production of wealth, and by implication with one of the 
 conditions of economic progress, in order to show to you that 
 in handling these theories we must pursue them, in the light of 
 facts, to their ultimate consequences, as well as see whether the 
 initial analysis is complete. 
 
 Nothing is more puzzling to the analyst of economical facts 
 than the question as to how certain sites, famous for progress and 
 opulence, secured this position for themselves. What site, for 
 example, would have seemed more unpromising than that of 
 Venice, built as it is on a heap of barren islets in a lagoon of the 
 Adriatic ? But for centuries it was a prosperous city, for a long 
 time it filled a very conspicuous place in the annals of Europe. 
 It is easy to say that it contrived to appropriate all that came 
 from that remarkable movement known as the Crusades, and that 
 till the beginning of the sixteenth century it was the principal 
 entrepot of Eastern commerce. But how was it that other Italian 
 cities, to all appearance equally well situated, failed in the com- 
 petition ? It certainly kept out of the factions which divided 
 Italy, and treated Pope and Emperor with equal indifference. It 
 certainly kept out of European complications, as Genoa did not. 
 The only explanation which I can give here is, that at a very 
 early part of its commercial career, and long before any of its 
 possible rivals did, it developed to a singular extent the 
 machinery of trade. And again, is anything more remarkable in 
 history, than the unrivalled progress of Holland under what seen^
 
 THE CONDITIONS OF ECONOMIC PROGRESS. 35 
 
 to have been the greatest disadvantages ? Beyond its fisheries, 
 when the War of Independence broke out, it had no manufactures 
 to speak of and Httle trade. At the end of that war, and at the 
 date of the twelve years' truce in 1609, it was, and remained for 
 near a century and a half, the foremost trading manufacturing and 
 agricultural country in Europe, the teacher of nearly everything 
 to other communities. 
 
 Again, it is not easy to assign its place to national character, or 
 the prevalence of courageous opinion. Perhaps after Holland, 
 there is no country which made such rapid progress as those parts 
 of France did where the Calvinists or Huguenots were in the 
 ascendency. These men were the principal cause why, in despite 
 of an execrable government, France became populous and wealthy 
 in the seventeenth century. The men whom Louis XIV. tried to 
 destroy and at last expelled were the true founders of that 
 wealth, and that discipline which gave him so marked an ascend- 
 ency during the last quarter of that century. But the speculative 
 opinions of the Huguenots did not differ materially from those 
 which were prevalent in the eastern counties of England ; and 
 these men certainly, whatever their general merits were, did not 
 produce such an effect on English life and English industry as the 
 French Huguenots did in France. It is very likely that national 
 character depends on circumstances for its development, but it is 
 by no means easy to determine what these circumstances are. 
 The obvious reason in the case of the Dutch is that the very odds 
 against which they struggled, and their almost constant success on 
 sea, as soon as they ventured beyond Europe, gave their daring a 
 promise, and that the position which the Huguenots occupied by 
 the treaty or edict of Nantes made them a garrison within France 
 itself, always circumspect and always enterprising. 
 
 No doubt the government of the country, and in particular the 
 relations of that government to economic conditions have to be 
 taken into account in analysing the causes which lead to progress. 
 Governments are almost invariably arbitrary as far as they dare, 
 conceited as to their abilities and their acts, until they are criticized 
 and exposed, and always ready to prolong their existence by base 
 and mischievous alliances. In a well-ordered ^md progressive 
 community it is wisdom to limit the functions of an administration
 
 36 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 to the narrowest powers, to be perpetually vigilant over them, and 
 in particular to watch narrowly and critically the conduct of what 
 are called permanent officials, who are apt to do great mischief by 
 mere love of ease and impatience at all intelligent labour. The 
 government or administration of a country is a necessity, for 
 anarchy is nearly as great an evil as a thoroughly bad government, 
 but all authority should be put under the perpetual obligation of 
 proving, as Aristotle said the public speaker should prove, its 
 patriotism, its intelligence, and its devotion to public duty. It is 
 too much to expect these conditions of perfection from any ad- 
 ministration, but it is right always to demand them, it is wise to 
 exact as much evidence of them as one can, and it is, or it may be, 
 vital to depose an administration which violates them perpetually 
 and fatally. Let me illustrate what I mean by the history of that 
 ancient civilization which prevailed in Mediterranean Europe 
 from the age of Pericles till the establishment of the Roman 
 Empire, and thenceforward to the fall of the western part of it. 
 The vices Avhich created the empire and destroyed it were all 
 economical. I am not sure that we in modern times can decently 
 charge the Roman people with the lust of conquest, for till a very 
 recent date, most of the European monarchies would be throwing 
 stones from glass houses. But unless the whole of the early 
 history of the Roman Empire is a romance, the warriors of 
 republican Rome were a militia of hardy and frugal husbandmen, 
 whose first energies were turned to the defence of their own 
 holdings. From this the transition to a conquering race, and by 
 a slowly developed wisdom, in which law appears to have been 
 the most powerful factor, an assimilating race, was natural and 
 easy. It is a common-place to say, that the ties which bound 
 them to their subjects must have been strong, even after merciless 
 wars, for Hannibal to have made the very natural mistake, that if 
 they were defeated in the open field, their unwilling subjects 
 would revolt. It is true that they learned the lesson of political 
 assimilation slowly, and after the committal of many errors. But 
 they learnt it. 
 
 From the earliest annals or hints of the condition of Rome facts 
 appear, which nothing but the stupid credulity of scepticism 
 could doubt. It may be that there is no solid history of Rome
 
 THE CONDITIONS OF ECONOMIC PROGRESS. 37 
 
 till late in its annals. But no one could have invented the 
 statement, that the peasant farmers bore the brunt of these early 
 wars, and that the aristocracy of Rome appropriated the spoils. 
 For my part I no more doubt the reality of the grievance aimed 
 at by the Licinian rogations, than I do the subsequent efforts of 
 the Gracchi. The aristocracy of Rome, as aristocracies always 
 have done, used their fellow countrymen for battle and divided 
 the spoils among themselves. The ruinous and debasing custom 
 of slavery aided the Roman chivalry in appropriating and securing 
 the plunder, and the constant admission of new men through the 
 channels of office into the existing aristocracy, enabled those who 
 had used the forms of the constitution to appropriate the conquests 
 of the State, to keep a firm grip on what they had seized. For 
 you shoiild remember that the estates of the great nobles of Rome 
 were in theory the property of the State, of which they were in 
 law the precarious tenants, as the early fiefs of Western Europe 
 were. But the people who talk of making the State a universal 
 landlord, have I suspect very little information as to what that 
 means and has been. 
 
 Evil however as the age was in which Rome was dispossessing 
 the native Italians, it was as nothing to what happened when the 
 same aristocracy entered upon and administered the prodigious 
 empires of Alexander's generals and successors. Northern Greece, 
 Asia Minor, Syria, Egypt, were crowded with rich and populous 
 cities which, many of them, held the accumulations of ages, the 
 sacred and venerated treasures of uncounted generations. Even 
 those conquests which were made over races with whom Alexander 
 never came in contact, supplied enormous plunder. The gold 
 which Ccesar collected in Gaul is said to have suddenly and 
 permanently doubled prices. Now on this enormous and helpless 
 wealth the Roman aristocracy, once hardy, thrifty, and temperate, 
 was let loose. They became in a generation monsters of licen- 
 tiousness, extravagance, and greed. The whole machinery of the 
 Roman government played into their hands, and the well-meant 
 restraints on their actions were entirely ineffectual. I can conceive 
 notliing more horrible than the riot and cruelty which prc\'ailed 
 during the last half century of the Republic. The virtuous 
 Brutus, as Adam Smith says, expected Cicero to secure him 48
 
 38 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 per cent for his advances to the provincials, and was highly 
 indignant that his friend the great orator should have fixed it at 
 twelve. 
 
 Had it not been for the empire, enormous and disastrous evil as 
 a military despotism is, the Roman aristocracy would have made 
 a desert of ancient civilization four centuries before it actually 
 happened. The empire delayed it. It was something that there 
 was only one and not fifty tyrants at work at once. Of course the 
 Roman aristocracy never forgave the empire, and most of the 
 writers of the time, even Tacitus, seem to have had a sentimental 
 feeling that the world was the worse for the change, talked of 
 Brutus and Cassius as the last of the Romans, and dreamed that 
 some pious and liberal emperor would in the end restore the 
 republic. But the ruin though postponed was inevitable. All 
 industry and progress was devoured by the gigantic armies which 
 the empire made a necessity. And the singular fact strikes one 
 that during this long domination, this incessant watchfulness 
 against the savages which were surging on the frontier, Rome 
 made no progress in the art of war. But industry and invention 
 were stifled by slavery. The educated classes were discouraged 
 from labours, which were degraded. Even agriculture, the universal 
 art of the Roman in early times, ceased to be prosecuted by free 
 men, and Virgil's Corycian old man was a pious myth. We do 
 not know very much of the fiscal system of the Roman Empire, 
 but we can learn enough to see that the provinces were slowly 
 drained of all their resources in order^that the military system of 
 the empire might be maintained. At last the cataclysm came, 
 and we get the narrative of the barbarism which overspread 
 Western Europe in the earliest chroniclers. 
 
 What I have just said, are, I fear you will think, the mere 
 common-places of ancient history. I told the story briefly in order 
 to point out that the primary causes of the catastrophe were 
 economic. Let me take other cases from the history of our own 
 country. I have pointed out how the evil government of our 
 Henry VHI. inflicted injuries on English progress, from which it 
 did not recover for more than a century, and how the brief pros- 
 perity of the Commonwealth time was followed by a scandalous 
 and ruinous reaction. Out of that reaction two new forces were
 
 THE CONDITIONS OF ECONOMIC PROGRESS. 39 
 
 developed, the aristocracy and the restored Church. It became an 
 article of religious and political faith to denounce the reign of 
 Cromwell, and the wrangle of the sects ; and from the Restoration 
 to the second Revolution, the Dissenters were in evil case. 
 When the Revolution of 1688 arrived, however, these persecuted 
 men were very rich, very strong, and very safe in London, for in 
 old days, English kings who desired to be absolute were very shy 
 of provoking the city. English Nonconformity founded the Bank, 
 lent money to Parliament, and discounted the income from the 
 new taxes. They became indispensable, entirely while the War of 
 the Spanish Succession was being waged, and, as was gradually 
 discovered, while the country was at peace. 
 
 The war was no doubt unpopular, the general who gained glory 
 and wealth in it more unpopular, and the administration at home 
 was discredited. At last in 17 10 the opportunity came. The 
 reactionary party declared that the Church was in danger, and the 
 people, ?>., the electors believed them. The real motive of St. 
 John, the most restless of the party, was to restore the Stuarts. 
 In this he was aided by Atterbury, probably by Ormonde. There 
 was, I believe, hardly any epoch in English history in which the 
 constitution as settled at the Revolution was in more peril than in 
 the autumn of 17 10, when the elections were practically over, and 
 Swift coming to London, on what was an ecclesiastical errand to 
 all appearance, turned over to Harley and St. John — ratted is the 
 later word — and savagely attacked his former friends. Bank 
 stock fell from 130 to 95 in a few weeks, and the stock of the 
 East India Company to nearly the same amount, though the 
 dividend on the former was regularly 7, on the latter 10 per 
 cent. The reason for this panic was, the general belief that the 
 restoration of the Stuarts would be followed by the repudiation of 
 the whole public debt. But the destruction of public credit at this 
 crisis would have been the instant arrest of all manufacture and 
 trade, of the new agriculture which was being commenced, and of 
 that promise from which so much was developed in the eighteenth 
 century. To my mind the history of the price of Bank stock 
 during the three months from October i, 17 10, to January i, 171 1, 
 is more significant than those speculations on the character of 
 public men during the negotiations which led to the Peace of
 
 40 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 Utrecht, on which some philosophers of history have been so 
 vohiminous. 
 
 There are two directions of economic progress, on which much 
 stress has been laid in recent years, and in which much has been 
 done. I allude to the development of sanitary measures, using the 
 expression in the broadest sense, and including in it the restraint 
 of children's labour ; the other is the system, slowly and in some 
 directions inadequately carried out, of national, or primary 
 education. The latter of these processes purposes to increase the 
 efficiency of labour, the former to prolong it. By the latter, if the 
 methods are rightly taken, the natural and acquired capacities of 
 the workman are widened and strengthened ; by the former, much 
 of the waste of human life, a far more formidable fact than some 
 persons are apt to recognize, is obviated, and what is perhaps in 
 some degree an advantage to the w^ell off, and a motive for action, 
 their risks are also diminished, for no exclusiveness will be an 
 effectual barrier against infection. Dives may neglect Lazarus, 
 but Lazarus has a way of unintentionally avenging himself. Now 
 in both these directions of social reform, my old friend Edwin 
 Chudwick — you can guess how old he must be Avhen I tell you 
 that Cobbett railed at him more than half a century ago — has 
 been energetic and unwearied. I owe him a good deal, for he 
 pointed out to me, many years ago, what was the economic basis 
 of his doctrine. 
 
 At the time when Mr. Chadwick commenced his labours some 
 little improvements had been made in London, but hardly any- 
 thing elsewhere. A few generations before his time a river rushed 
 down the space between Fleet Street and Ludgate Hill, swollen 
 with indescribable abominations. Two similar streams, less in 
 volume, but equally filthy, crossed the Strand. The Thames was 
 nearly as bad as the Fleet Ditch, and remained so till comparatively 
 recent times. The whole of London, especially the City, was 
 polluted by the dead and the living. Small-pox and typhus were 
 perpetual epidemics. The deaths in London were greatly in excess 
 of the births. It took a great deal of trouble to clear away these 
 evils, for it was asserted that some of them were vested interests. 
 Now the only genuine vested interest is that due to a man or 
 class of men who have distinctly done the public a service, under 
 
 1
 
 THE CONDITIONS OF ECONOMIC PROGRESS. 41 
 
 an intelligible contract, the payment for which cannot in justice 
 or equity be decently refused. Compensation for a vested interest 
 is equivalent to the payment of a contract debt, when the creditor's 
 property has been used or consumed by the debtor. A false vested 
 interest is a demand that a nuisance, a social crime, or a wrong, 
 shall not be extinguished without paying the wrong-doer. It is 
 astonishing how confidently nuisance and mischief-makers allege 
 that they have a vested interest. 
 
 During the last fifty years London has been turned from one of 
 the unhealthiest to one of the healthiest cities in the world. The 
 progress by which country towns and villages have been purified is 
 more recent, and the machinery by which sanitary reform is 
 enforced is far from satisfactory or complete. 
 
 The development of sanitary regulations, though perhaps an 
 invasion of laissez faire^ has greatly prolonged the eflficiency of 
 labour, though much remains to be done, especially in regard to 
 the dwellings of the poor in towns and villages. Now one of the 
 remedies, I strongly believe, is the restriction of the Act of 
 Elizabeth of 1589, under which four acres of land were to be 
 annexed to the cottages of labourers in husbandry, and over- 
 crowding was prohibited under severe penalties. 
 
 The education of the children of the poor is insisted on, in 
 order to ensure the greater efficiency of labour. It does not 
 necessarily improve the morals, or mcrease the prudence of those 
 who receive it. It does not necessarily better their fortunes, for it 
 does not follow that men will earn higher wages because they have 
 gone through the work of a primary school and have passed a 
 particular standard. The knowledge which improves wages is not 
 learned in a school. I doubt whether it will be imparted under 
 any system of technical education which has yet been formulated. 
 It is learned from workmen as it was learned in the best days of 
 the old apprenticeship. No smattering of physics, no study of 
 elementary scientific manuals will give that which, for want of a 
 better word, I call productive knack or handiness. Nor do I 
 believe that effective technical training will be a characteristic of 
 artizans and husbandmen until they themselves insist on acquiring 
 it. I know nothing which should prevent a shrewd, thrifty, and 
 observant mechanic or peasant from being entirely equal, as he
 
 42 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 was in the Middle Ages, to the abilities of his employer. But he 
 will never achieve the arts of life in a primary school. These he 
 must gather by actual contact with materials. There is reason 
 also to believe that workmen are not particularly ready to 
 embrace the offer of that technical education which is made them. 
 They are, not a few, under the impression that the expedient 
 is intended to secure the employer better work, but with no 
 improvement in the workmen's wages. The struggle between 
 employers and workmen has been so prolonged, and the lan- 
 guage which some of the former use about their hands is so 
 bitter and unfair, that there is good cause for distrust on the 
 part of the latter, however unfortunate distrust may be in its 
 consequences. 
 
 Now it seems clear to me that a system which constrains a 
 workman to pay for what is not, and is not intended to be, for his 
 personal benefit, is as irrational and unjust as it would be to compel 
 a man at his proper cost to improve another man's property. 
 National education is similar in nature to national defence. 
 Suppose, as is the theory of the law, we were to call on all adult 
 males to undergo military drill, and be enrolled in the militia. 
 With what justice could the State call upon them to do this 
 at their own expense, or rather, not only to find the time for their 
 military instruction, but to pay their drill-sergeants and other 
 officers for teaching them their exercises. To increase the 
 efficiency of the national defences is plainly more in the interests 
 of those who have much property than it is to those who have 
 little, and to a great extent are discouraged from having any. To 
 increase the efficiency of labour is for the benefit of employers, 
 certainly in the first instance, probably in continuity. It surely is 
 the duty of those who own property, and especially capital, to 
 find the means for defraying primary education. And if the 
 efficiency of labour is increased every consumer derives a benefit 
 from the result. 
 
 I have only dealt with a few of the conditions of economic j 
 progress. Rut they are by far the most important. They are, in 
 so far as I have discovered them at present, industrial skill or | 
 aptitude, in connection with which I have given you a full, and I 
 could fain hope, an exhaustive account of the division of employ-
 
 THE CONDITIONS OF ECONOMIC PROGRESS. 43 
 
 merits, wise and just government, in order to secure which 
 perpetual vigilance and active criticism are necessary, together 
 with those processes which, as I have said, have for their object 
 the prolonged efficiency of labour and its increased efficiency.
 
 III. 
 
 THE PROGRESS OF ENGLISH POPULATION AND THE 
 CAUSES THEREOF. 
 
 Population of En<^land in the fourteenth^ fifteenth, and sixteenth centuries 
 — The coal supply— The poll-tax of 1377 — Population of chief 
 to7ijns — Population of Kentish Hundreds — Survey of Gamlingay 
 and Romney — Growth of trade in the seventeenth century — Sole 
 tnarket — Godwin and Malthus — Theories of Malthus and George 
 examined — Redundancy of certain classes of society. 
 
 Ok recent years, there has been, I must admit, some disposition 
 exhibited on the part of certain writers of what a generous critic 
 calls history, to make some use of facts other than those which 
 are customary or traditional, in what they write and publish, 
 and I presume, sell. In the same way there is some inclination 
 on the part of certain economists to blind evidence with their 
 metaphysics, and to inquire hesitatingly and tentatively with the 
 high priest, Are these things so ? I cannot say, however, that as 
 yet the results have been satisfactory. Men are exceedingly un- 
 willing, after they have grown up in an atmosphere of theory, to 
 surrender themselves, their conclusions, their prejudices, their 
 preconceived opinions to the guidance of facts, and patiently sub- 
 mit to the result towards which the facts lead them. Nor is it 
 easy for persons who think that they ought to speak and to write 
 books, to interpret related figures, or even to understand the terms
 
 THE PROGRESS OF ENGLISH POPULA TION. 45 
 
 which they use ; and thereupon they boldly commit themselves 
 to inferences for which there is no shadow of proof. And in this 
 process they are constantly assisted and encouraged by kindly 
 critics, to the mass of whom, beyond the invaluable assistance 
 accorded by Haydn's " Dictionary of Dates," all facts of more than 
 ten years' old are in the dark ages, and sometimes, I fear, facts of 
 ten days' old. Now in what frame of mind do many such people 
 treat the economical side of history ? 
 
 They sit down to a writing table with a preconceived notion, to 
 which they cling desperately, as, for example, that the fifteenth 
 century was a period of unparalleled suffering for the mass of the 
 English people. Where they got the notion they cannot tell you, 
 and do not tell you. It may have been gathered in the first place 
 from Mrs. Markham or Mr. Collier, or, as is more probable, it is a 
 bodiless expansion of their own minds. In its inception, there is 
 nothing to support it, nothing even to excuse it. But it is a con- 
 dition in speculative history, that you must get something which 
 seems like evidence. Sheer dogmatism will not do, except when 
 bimetallism or fair trade are talked about. Authorities must be 
 had, and will be interpreted in a non-natural or transcendental 
 sense. It is sometimes possible to get a seeming proof from an 
 earlier time, and in that self-forgetfulness of those who passion- 
 ately adhere to a theory, to transfer them to the time of which 
 the author is writing, and the opinion which he wishes to expound. 
 There are some authorities which cannot be so easily got over. 
 There the author misreads, misunderstands, or misquotes. Some- 
 times he boldly denies their relevance, frequently he ignores them. 
 The writer finds no intention too rash to deter him. I have 
 known such persons quote authorities in what I trust is an un- 
 known tongue to them ; the true meaning of whose language is 
 a flat contradiction to the inferences which they draw. So misled 
 are such people by the habit of preconceived opinion, that by 
 some strange fatuity they constantly find proofs where there is 
 nothing but refutation. And it is curious that men, otherwise 
 honourable, diligent, and well-informed, will distort the plainest 
 facts in order to defend their hypothesis. There are writers of 
 history who are like '* scientific witnesses," advocates and partisans 
 when they should be searchers after truth.
 
 46 INDUSTRIAL AND COMMERCIAL HISIORY. 
 
 Now as long as the writer confines his own speculations, and 
 what he calls his proofs, to his own consciousness, and his study 
 table, no person whatever has a right to take offence. If he 
 printed his opinions for private circulation only, as some men do 
 their genealogies, he has not taken the public into his confidence, 
 and cannot be accused of deceiving them by personal fictions. 
 But he ought to pause before he publishes. He could be at once 
 wise and merciful if he committed his MS. to the flames. 
 Better things to be sure have perished in this way, when authors 
 have been rightly fastidious. There is a serious responsibility in 
 the utterance of economic opinion. 
 
 Now I am principally led to these observations by what has 
 happened to the subject which I am treating to-day. The wildest 
 guesses have been confidently made about the population of 
 England say in the fourteenth century, about the size of the 
 towns, about the losses from famine, pestilence, and war. 
 
 Now my contention is that during the fourteenth, fifteenth, and 
 sixteenth centuries the population of England and Wales was 
 almost stationary, and amounted to between two and a quarter 
 and two and a half millions. I have three grounds for my state- 
 ment. The first is derived from the average product of agri- 
 culture ; the second from a return made in 1377, of the number of 
 persons liable to a poll-tax then imposed, a document printed and 
 analysed some century ago in the " Archaeologia " ; the third from an 
 actual census taken from certain hundreds in Kent in the reign of 
 Henry VHI. I shall be able to add a fourth, from the houses 
 contained in the various surveys taken of the All Souls estate in 
 Warden Hoveden's time, i.e.^ towards the end of the sixteenth 
 century. Some of you may remember that I showed you a 
 survey made of Gamlingay parish in Cambridgeshire by one 
 Langdon. The same surveyor and another, named Gierke, were 
 employed by All Souls, and both did their work for All Souls, as 
 well as Langdon did for the single Merton estate, which he 
 mapped and planned. 
 
 Now I conclude, from most unquestionable data, that five 
 hundred years ago, the average rate of production from seed sown, 
 in wheat, which was then, even more than recently, the staple 
 food of the people, was only four times. I have seen returns of
 
 THE PROGRESS OF ENGLISH POPULATION. 47 
 
 what was actually reaped from a measured quantity of seed sown, 
 in cheap, i.e.^ abundant, years, and have verified my inference a 
 thousand times. At present the average return from two bushels 
 of seed to the acre, the quantity allowed five centuries ago, is fifteen 
 times. But a greater ratio of seed was consumed then, and it is 
 doubtful whether as much land was vmder cultivation then as is 
 now. Now a few years since it was reckoned that the present 
 English produce would feed fifteen millions. But five centuries 
 ago, the land under wheat cultivation and bearing a crop, could 
 not have fed more than two and a half millions. From this must 
 be deducted seed, and this may perhaps be compensated by the 
 small admixture of rye or some other grain, which, under the 
 name of maslin or meslyn, was the food of farm servants. I say 
 small, for the breadth of rye sown was very narrow. It must be 
 remembered, too, that in giving a quarter of wheat per head of 
 population, I am very moderate. There were no winter roots, 
 potatoes, turnips, parsnips, carrots, five hundred years ago in 
 England. The monks who dined on parsnips and similar roots, 
 existed in the imagination of figurative historians and novelists 
 only. Historians, you know, will be picturesque. When Macaulay 
 talks of the Irishman of 1692 longing to go back to his potato 
 patch, he speaks of a thing which was not, just as he does when 
 he talks of the oaks of Magdalene, and a host of other details 
 which make up a picture, in which nothing is wanting but facts. 
 Now Macaulay was accurate in a thousand particulars, but this 
 habit of disregarding little facts in detail has made some people 
 doubt his accuracy in greater matters. If I had no other proof 
 than that of the average production of wheat in favourable years, 
 on which I happen to be specially well informed, when I write or 
 speak about the facts of five centuries ago, I should be convinced, 
 that England and Wales did not and could not maintain more 
 than two and a half million souls at that time. 
 
 Now in 1377 Parliament gave the old king, Edward III., in the 
 last year of his reign, a poll-tax of fourpence a head, on all lay 
 persons over fourteen years of age, none but known, ?>., registered 
 beggars, being exempted. Beneficed clergymen paid a shilling, 
 all other ecclesiastics, except the mendicant friars, fourpence. 
 Durham and Chester, Wales and Monmouth, not being repre-
 
 48 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 sented in Parliament, were not taxed by Parliament. The account 
 of the proceeds gives the number of those liable to the tax in 
 forty-two towns. Now if we add a third to the number of those 
 assessed, in order to include the children under fourteen, a very 
 liberal calculation for childhood in the Middle Ages, when the 
 risks of life were far greater, we get 168,720 for the population of 
 the forty-two towns, and 1,207,722 for the other thirty-eight 
 English counties. Durham and Chester may be taken at S^jO^Sj 
 Wales with Monmouth at 131,040. Now add one-third to the 
 country population and you get 1,853,127, or with the town popu- 
 lation 2,021,847. There still remain the ecclesiastics and the 
 mendicants. Take them at 162,153, and the population comes 
 out at 2,184,000, or less than two and a quarter millions. 
 
 But I cannot yet relieve you of the figures in this instructive 
 return. The largest town of course is London. Perhaps it was 
 healthier than it was in the seventeenth century, when the deaths 
 greatly exceeded the births. With a third added to its taxable 
 population, it had 35,000 inhabitants. The next city is York, 
 with near 11,000. Bristol has about 9,500, Coventry a little 
 above 7,000, Norwich near 6,000, Lincoln about 5,000. No other 
 English town had over 5,000 inhabitants, though thirty-six more 
 are separately assessed, and returned. In Bedford, Surrey, Dorset, 
 Westmoreland, Rutland, Cornwall, Berks, Hunts, Bucks, and 
 Lancashire, no town whatever was thought worthy of a separate 
 return, though they sent many members to the Parliament which 
 granted the tax. England at this time, and for many a year after 
 this date, was essentially rural, and not a little of its economical 
 history is bound up and derived from the country life, which its 
 inhabitants lived for centuries. Besides, though England possessed 
 fortresses and walled towns up to the civil war of the seventeenth 
 century, these were not constructed on scientific lines. There was 
 not an English town which had been protected by such engineer- 
 ing defences as were erected in plenty in Holland, Flanders, and 
 the eastern frontier of France. It would seem from several Acts 
 of Parliament that many towns were falling into decay during 
 the reign of Henry VIII. , a fact which has elicited some very 
 grotesque reasoning from Mr. Froude, in his sketch of his patriot 
 king.
 
 THE PROGRESS OF ENGLISH POPULATION. 49 
 
 Now a good many years ago, I found in the Public Record 
 ( JlFice among a mass of miscellaneous papers of Henry VIII.'s 
 icign, an enumeration of the population contained in nine 
 Kentish hundreds, on the eastern side of the county, and an 
 account of the stock of grain possessed by the inhabitants. Kent 
 was, in the first half of the sixteenth century, a decidedly prosperous 
 part of England, and these hundreds are in the most fertile 
 agricultural district of the county. They contained no large 
 town at that time, and contain none now. They are excellent 
 specimens of what was the richest and most settled part of agri- 
 cultural England at the time. Now the population of the 
 hundreds is 14,813. In 1861 the population was 88,080, or almost 
 exactly six times as much as it was more than three centuries 
 before. Now this proportion almost precisely corresponds with 
 that which I just now stated was derived from the rate of agri- 
 cultural production and the poll-tax of 1377. I conclude therefore 
 that for upwards of two centuries, just as there had been no 
 improvement in the art of agriculture, so there was no increase in 
 the population. 
 
 Now I have long been convinced, for what I may call analytical 
 reasons, that no material increase of the English population took 
 place during the last half of the sixteenth century. I use the 
 expression material increase advisedly. I make no doubt that 
 there was during Elizabeth's reign a considerable immigration of 
 Flemings, chiefly traders, occasionally manufacturers, and that 
 these generally settled in the towns, where alone foreigners 
 could act in concert, perhaps to be safe from hostility and wrong, 
 for the country folk in England had in those days, and to much 
 more recent times, no love for strangers, and they were not even 
 cordially welcomed in the towns. But we know that the woollen 
 manufactures, localized in Norwich and Colchester respectively, that 
 of say and that of baize were brought hither from Flanders. So 
 important was the baize manufacture of Colchester, as a coarse 
 cloth especially fitted for the clothing of working men, tliat the 
 price of baize is constantly quoted through the early part of the 
 eighteenth century as typical of woollen goods. But I am per- 
 suaded that these manufactures of foreign origin did not often 
 spread into the country places. 
 
 5
 
 50 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 Recently, however, and from a wholly unexpected source, I 
 have been able to arrive at the same conclusion synthetically, aiul 
 for reasons very similar to those which enabled me to determine 
 on the population during the first half of the sixteenth centur\ . 
 Some of you may remember that I showed you a survey of the 
 parish of Gamlingay, in Cambridgeshire, chiefly with the object 
 of illustrating the system of cultivation in common fields. This 
 survey was drawn for the purpose of assisting the college in a law- 
 suit which it had with a family named St. George, between which 
 family and the college, as I know from the Merton archives, there 
 had been litigation for centuries. Now in this survey every house 
 is marked and can be counted, though one has to take care that 
 one does not include outhouses in the number of habitations. 
 At the same time All Souls College entered upon a much more 
 extensive system of surveys. There was a domestic reason for 
 the action. The College, in which one Hoveden, a man of 
 considerable energy and character, was Warden, was very per- 
 sistently importuned by Elizabeth to grant certain highly 
 beneficial leases to one or more of her courtiers. Elizabeth, like 
 many other excellent and energetic persons, was exceedingly prone 
 to provide if possible for her dependents at other people's expense. 
 She endowed her treasurer Cecil, whom we know as Burleigh, at 
 the cost of the See of Peterborough ; her Chancellor, Hatton, at 
 the charge of the Bishop, ?>., the See of Ely ; and similarly 
 impoverished the endowments of Exeter and Chichester by the 
 same process and with the same ends. The Colleges at Oxford 
 and Cambridge did not escape, and partly for policy, occasionally 
 on compulsion, granted highly beneficial leases to the Cecils and 
 other people, who no doubt did much public service, but were to a 
 great extent rewarded at the cost of private corporations. 
 
 Hoveden appears to have been firm, and to have saved All 
 Souls from temporary, perhaps from permanent, spoliation. In 
 order that the College too might have on record a careful and 
 accurate description of its estates, he employed Langdon and 
 another surveyor named Clerke to map out the College estates 
 to scale, generally sixteen feet to the mile. Now. as before, the 
 houses in the several parishes are marked, and the collection, in 
 five folio volumes, still preserved in the Library, is of great interest •
 
 THE PROGRESS OF ENGLISH POPULA TION. 51 
 
 and value. Now taking seven of these parishes or properties, and 
 including Gamlingay as an eighth in the list, and assigning four 
 and a half persons to each house— in these days of overcrowding 
 the census gives only five and a half to a house — the population 
 of the eight parishes (all of which were rural twenty-seven years 
 ago, for I still take the census of 1 861) there were 280 houses in all, 
 and therefore 1,250 inhabitants. At the census of 1861 there were 
 8,281 inhabitants, that is more than six and a half times as many 
 people as there were at the close of the sixteenth century, for the 
 survey takes about a dozen years to finish. Now this you will see 
 is a rather less ratio than that of the Kentish hundreds in the 
 reign of Elizabeth's father. One of the surveys, I regret to say, 
 baffled me. It is that of Romney Marsh and its parishes and 
 towns. But the scale was too small. Still, I counted only four 
 houses in Old Romney and thirty-seven in the new town. The 
 population was therefore 186. But in 1861 the population of 
 Old Romney was 151, in place of 18 ; of New Romney 1,062, 
 in place of 168. Here, then, the increase is over seven times. 
 This kind of evidence, I submit, is overwhelming, and satisfies 
 every condition of proof. 
 
 Now it is certain that at the end of the seventeenth century 
 the population is more than double that which I have calculated 
 was in England at the conclusion of the sixteenth. Here, again, 
 we have several proofs. Macaulay has referred to three of them. 
 First, that based on the hearth-tax returns of 1690. The second 
 is an estimate made for William III. of the religious sects in 
 England. The third is a recent estimate by Mr, Finlaison, 
 derived from examining the old registers of baptisms, marriages, 
 and burials. To these then we may add that derived from the 
 produce of grain. In average years, taking into account the 
 enclosures which had been made, I have no doubt that double the 
 amount of corn was reaped that had been a century before, though 
 I am pretty sure that, especially in the north, the people had been 
 forced to subsist on inferior grain. So naturally does this increase 
 of production seem to have been the dominant cause, that at first 
 I concluded that the growth of agriculture was the sole reason 
 why the population increased. But I became convinced as I 
 extended my researches, that though something has to be assigned
 
 52 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 to this cause, it was far from being the sole origin of the increase. 
 The frequcMit comments made on the unsatisfactory character of 
 English husbandry are proofs that the growth of agricultural skill 
 had been local and spasmodic. 
 
 The most dominant cause, I do not doubt, was the general 
 pacification of the Border and the settlement of the northern 
 counties by weavers. I discovered when I examined the returns 
 of the hearth ta.\ which were given for the several English 
 counties, that, Middlesex and Surrey excepted, the population of 
 the north was as dense as that of the south, and that several of 
 these northern counties had a more numerous population to the 
 square mile than those of the southern counties had. It is true 
 the contribution to taxation which the northern counties made 
 was a good deal less than that exacted from the south. But this 
 inequality was a subject of frequent complaint. And again the 
 charge for maintaining the northern poor was far less to the 
 acreage than that incurred in the south. This was, however, 
 I believe, due to the fact that during the civil war the population 
 pressed into the associated counties. The poor law, too, as we see 
 from the magistrates' assessments, was more severely administered 
 in the north. But, above all, it was during the seventeenth cen- 
 tury that weaving, especially woollen weaving, generally migrated 
 to the north, or grew there rapidly. The anonymous author of 
 "The Interest of Scotland," writing in 1732, speaks of the great 
 growth of woollen manufactures in Yorkshire, and of linen and 
 of similar fabrics in Lancashire. 
 
 During the eighteenth century population was again nearly 
 doubled. The cause was threefold — the growth of the towns, in 
 many cases owing to the immigration of the banished Huguenots, 
 a body of settlers who were, and continued to be, of the greatest 
 value to the English nation ; the extension of the new agri- 
 culture, and, I must add, however unjust was the distribution, 
 the numerous enclosures made ; and the rapid growth of invention 
 of mechanical skill and of trade. On an earlier occasion I have 
 described to my audience, how this progress was aided by the 
 singular success of British warfare during the Seven Years' War, 
 and the sole market which we obtained as a result of that struggle. 
 It was indeed a brief ascendency, and the sole market was shattered
 
 THE PROGRESS OF ENGLISH POPULATION. 53 
 
 by the War of American Independence. But we got a great 
 start ; the attitude taken by France during that war was speedily 
 turned against itself, and the success of British manufacture was, 
 at any rate, if not permanently assured, greatly aided. 
 
 At first sight, the acquisition of a sole market seems like that 
 limited protection in young countries which Mill has incautiously, 
 and, as I think, for wholly insufficient reasons, commended. But 
 the difference between the two is fundamental. The acquisition of 
 a sole market gives the possessor of it the opportunity, with entire 
 competition among his fellows, and therefore with every stimulant 
 to invention and thereby labour-saving and profit-making expe- 
 dients, to hinder foreign rivals from entering on the market which 
 has been won for the trader. The adoption of protection does not, 
 and by the very terms of its existence cannot, aid in procuring a 
 foreign market, but, on the contrary, excludes the protected indvistry 
 from that foreign market, unless the protected manufacturer sells at 
 a loss on production, that is, at the expense of the consumers in his 
 own protected market. It is possible that American calicoes and 
 German iron occasionally compete against our products in neutral 
 markets. But I am certain that, in the very nature of things, the 
 trade could not be carried on, unless the American and German 
 consumer paid the expenses of the trial. It is also clear that the 
 power of competition by dealers who work under protection is 
 very narrow ; for if the trade grew to any dimensions, the burden 
 on the domestic market would be at once intolerable, and traced 
 to its true causes. 
 
 Of course, I hold that the sole market was a blunder, and that 
 Chatham in seeking to obtain it was chasing an ignis fatuus. 
 But like many unwise economical acts, it had a defence and a 
 plausible one. English statesmen saw that Spain had clung pas- 
 sionately to the monopolies which the Bull of Borgia, pontiff 
 and profligate, had conferred on her, and had done all in her power 
 to exclude the British trader from the New World. They had 
 seen that the Dutch, the teachers of Europe in maritime enter- 
 prise and successful trade, had with De Witt believed that the 
 " true interest of Holland was to maintain her trade monopolies." 
 Now statesmen are rarely wiser than the times in which they live. 
 They are apt to say that what they do not foresee and are not
 
 54 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 ready for does not come within the range of practical politics. I 
 do not find fault with them for their hesitation. They have to 
 consider what they can do, and they know that what they can do 
 will be certainly criticized adversely, even by those who if they 
 were in office would imitate them exactly, and claim originality 
 for the imitation. And then the market was won. It seemed 
 the height of Quixotry to vindicate the freedom of the seas and 
 the freedom of the market for those who had taken no part in the 
 struggle. And then sliding inevitably into the pernicious doctrine 
 that private advantage is a public benefit, they complacently put 
 the cost of acquisition on one set of shoulders, extracting the 
 charge from other people's pockets, and coolly, and almost with 
 conscious virtue, shovelled the gains of the acquisition into their 
 own. 
 
 As population grew towards the close of the eighteenth century 
 so it sank deeper and deeper into misery. In Gregory King's time 
 the workmen who, even in these remote times, were seen to be in 
 some shadowy way the sole creators of wealth, were, notwith- 
 standing, declared by that acute reasoner to be a burden on the 
 wealth of the country, because without assistance from the poor 
 rate, the wages paid them were insufficient for their support. 
 Their lot was lightened greatly during the first sixty or seventy 
 years of the eighteenth century, for the new agriculture procured 
 abundance, and, as is always the case, wages rose during those cheap 
 times. But at the end of the century their misery was as marked 
 as their earlier and temporary affluence. It became necessary, so 
 insufficient was the pittance which was paid them, to quarter 
 them permanently on the rates under the allowance system. But 
 no one seems to have dreamed of the machinery which had 
 beggared them. Sir Frederic Eden, with the most appalling 
 facts before him, wrote the history of ' the poor, collected the 
 justices' assessments as far as he could, and calmly surveyed the 
 surface, not giving the slightest heed to the manifest causes of the 
 situation. 
 
 I have done my best to make people better informed. The 
 misery of the poor was the deliberate act of the legislature, of 
 the justices' assessments, of the enclosures, the appropriation of 
 commons, and the determination, as Mr. Mill has said, on the
 
 THE PROGRESS Ov ENGLISH POPULATION. 55 
 
 part of the landowners to appropriate everything, even the air we 
 breathe, if it could only be brought about. Nor is it wonderful 
 that population increased under this misery. Misery is a far more 
 powerful incentive to population than a check to it, as Adam 
 Smith saw, and Malthus did not. In the interest, as they fondly 
 believed, of rent, the English legislature, composed of landowners, 
 by statute, had utterly impoverished and pauperized the British 
 labourer. Now, the eighteenth century was an eminently sceptical 
 age, and had become entirely unheroic. It was, among other 
 things, blindly and blunderingly, I must admit, with the great 
 exception of Adam Smith, groping after economical verities, and 
 men often mistook their own just indignation for the discovery of 
 remedial measures. Of this school was Godwin, and an illustration 
 of it is his " Political Justice." 
 
 Godwin, like many other persons of his age, was struck by the 
 miserable condition to which labour was reduced, and the un- 
 deserved hardships which it underwent. He had witnessed with 
 keen interest, as nearly every honest man had, notably Arthur 
 Young, the uprising of the workers against the shameful oppression 
 of the old French regime. Great things were hoped from the 
 events of 1789, and there was but little sympathy with the old 
 noblesse when in the autumn of that year, the uprising of the 
 peasants took place. The well-wishers to human progress were 
 terribly disappointed, when the September massacres came, the 
 Directory and the Terror. But the brutalities of the French 
 Revolution were the outcome, the inevitable outcome of long 
 centuries of evil doing. They were exasperated by the conscious- 
 ness that the rest of Europe was either conspiring against France, 
 or being leagued for the purpose of armed intervention. Recent 
 discoveries among French archives have proved that Pitt, while 
 he still professed amity to France, was secretly supplying her 
 domestic enemies with funds. Perhaps we shall at some future 
 time learn how it was that the splendid services of Burke were 
 rewarded, and how it was that that eminent personage suddenly 
 became a considerable landowner, for the history of Burke's 
 fortunes is one of the mysteries of that epoch. 
 
 Now Godwin erred in treating the subject which he undertook 
 in the way in which all persons at that time erred. He discussed
 
 56 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 the situation on the lines of abstract principles, on lines which the 
 House of Commons calls academical, and I have been accustomed to 
 describe as metaphysical. This method of handling social questions 
 is, I venture on asserting, always nugatory. I will not say that noth- 
 ing besides talk came out of the reasonings of Rousseau, for I am 
 pretty clear that a great deal of mischievous and in the end dis- 
 astrous action came from it. And the reason is plain. Such a line 
 of argument as Rousseau brought into fashion, and Paine with 
 Godwin introduced to Englishmen, has no result but one, against 
 which every habit and every interest is always, and I believe 
 rightly, arrayed. It aims at nothing short of the reconstruction 
 of society, of an entire social revolution. Unless all history is 
 studied in vain, attempts after this ideal involve discomfiture and 
 discredit, or ruin. The worst enemy of human progress, often I 
 allow the unconscious enemy, is the man who works for a social 
 revolution, to be accomplished by violent or even Parliamentary 
 means. But you cannot, to use the schoolmen's phrase, discover 
 a materia prima in social life. You cannot arrest its action, while 
 you submit to a remodling. The only thing which wise men will 
 attempt to do is to remove manifest and provable wrongs, which 
 under the guise of law have crept into the social state, and have 
 distorted it. Had Godwin betaken himself to a discovery of the 
 causes which had brought about the deplorable condition of the 
 English workman, at the time in which he and Eden were 
 simultaneously writing, he would have given a very different com- 
 plexion to the controversy between him and Malthus. As it was, 
 he saved Malthus the trouble of inquiring into the sufficiency of 
 the causes, and gave him the opportunity of bringing forward a 
 theory which was utterly irrelevant to the subject, but was, for 
 sufficient reasons, entirely acceptable to those who wished to find a 
 satisfactory solution of the situation. Now the explanation which 
 Malthus gave was highly satisfactory. It has been accepted by most 
 economists with some slight modifications. It is the backbone of the 
 political economy of Ricardo, of the elder and of the younger Mill. 
 It has seemed to prove that the misery of the poor is inevitable, 
 not to say providential, and has blinded people to the true laws of 
 population, and the occasional or permanent phenomena of its 
 redimdancy. I cannot say that on the present occasion I can give
 
 THE PROGRESS OF ENGLISH POPULATION. 57 
 
 an exhaustive examination of the principles which Malthus 
 enunciated, and economists have generally accepted, any more than 
 I can give within the limits imposed on me, a similar examination 
 of Mr. George's counter-hypothesis; but I trust that I shall be able 
 to make a few general principles clear to you. Ricardo and Mill 
 or Malthus are the parents of German socialism, in the pages of 
 Marx and Lassalle. 
 
 Malthus was an estimable and excellent man. He was really 
 struck as profoundly as Godwin and others were with the deplor- 
 able spectacle of many people starving and all workmen miserable, 
 in a population of less than ten million persons, for so the unions 
 revealed the facts in 1801. But he did not grapple with the social 
 causes of the phenomena. He tried to find their origin in certain 
 natural laws. So much exception must be taken to his theory 
 that a careful analysis shows it to be well-nigh worthless, so 
 numerous are the objections even from his own point of view 
 which might be taken to his theory. I may add that Malthus 
 was professor of Political Economy at Haileybury, and apart from 
 controversy, there was some reason in his attempt to grapple 
 with a question which is always of interest in Hindostan, even at 
 the time when he wrote, when the popvilation was hardly a third 
 of what it now is. 
 
 Malthus began by assuming from the analogy of other forms 
 of animal, and he might have added of vegetable, life, that there 
 is a struggle for existence, and thus he was the indirect author 
 of the familiar doctrine known to economists as the margin of 
 cultivation theory. Up to this line of the means of existence 
 population always tends to press, increasing till it becomes 
 perilously near it. He did not say the means of comfortable 
 existence, and perhaps the state of things which he lived in, and 
 witnessed, would scarcely have suggested the gloss. The boundary 
 would be inevitably and incessantly overpassed were it not for 
 those correctives which he called vice, misery, and voluntary 
 restraint, the last factor being subsequently altered into moral 
 restraint, perhaps out of deference to his professional position, 
 for Malthus was a clergyman. 
 
 Now here appeared to be an explanation sufficient, perhaps 
 exhaustive, of the situation. It was inexpressibly soothing to those
 
 58 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 who had brought about the situation, for it seemed to show that 
 nature not man was the cause of it, that it was the result of an 
 inexorable natural law, and in no sense the result of positive and 
 partial legislation. It gave, I grant, great annoyance to some 
 ardent philanthropists, who coupled the name of Malthus witli 
 those of some other unpleasant entities. But none of the good 
 man's critics took the pains to study the statute book, and discuss the 
 origin of what have been called rights, and I am constrained to de- 
 scribe as wrongs. The doctrine that in countries which are fully 
 settled, a phrase which by the way has no meaning, population is 
 always pressing on the means of subsistence, was accepted as indis- 
 putable, and that consequently the misery of labour is of its own 
 creation. So satisfied was Malthus of his teaching, and so satisfied 
 were his disciples, I am bound to say, with it, that the economist 
 went so far as to recommend, in order to assist his positive checks, 
 as he called the first two, distinguishing them from the preventive 
 check as he called the last, that all legal relief to destitution should 
 be at once and peremptorily put an end to. I do not think that 
 he came to the conclusion that the processes which he described 
 resulted in the survival of the fittest. That would have been too 
 ironical. He only took into account simple numbers, and a 
 hypothetical limit to the means of existence. 
 
 Now it must I think be admitted that there are such marked 
 differences between the human race and the inferior animals as we 
 call them, that it is unphilosophical and unnatural to consider 
 them parallel or even analogous, when we consider social facts. 
 In the first place, the nonage of the human offspring is remark- 
 ably extended. Other animals equal in bulk to him come to 
 maturity and independence at an early age. Man often needs a 
 period of from fifteen to twenty times as long. The increase 
 cannot then be as rapid, is foreseen and felt. Whether it precedes 
 or follows on the increased means of subsistence, is a matter we 
 shall see further on. Again the very nature of his life and its 
 conditions enforces a prescience of the circumstances which 
 surround it. Such a forethought is manifest in the customs of 
 the lowest savages. It is greatly intensified among races, for we 
 can only speak generally, in which the standard of subsistence is a 
 high one. So far is it from being the case, as Malthus thought,
 
 THE PROGRESS OF ENGLISH POPULATION. 59 
 
 entirely on abstract grounds, that misery checks population, that 
 it is perhaps the most powerful stimulant to it, quite apart from 
 the provision on which Malthus laid so much stress, the legal 
 relief from destitution. The fact is abundantly illustrated by the 
 social history of Ireland. Up to 1845-6 Ireland had no poor law. 
 But the misery of Ireland was excessive, and is witnessed to by 
 writers like Swift and Arthur Young. At the outbreak of the 
 potato disease in the autumn of 1845 the population of the island 
 was over eight millions, most of them dependent on a single 
 means of subsistence, and that the cheapest, lowest, and most 
 perishable. Now though nothing so terrible as the famine of 
 1845 had ever occurred in Irish social history, famine was endemic 
 in Ireland. The people were miserably oppressed and therefore 
 reckless. It is very difficult to get at any information about fertile 
 and infertile families. We know something about noble families, 
 and how they die out in the male line. We know a little about 
 the singular fecundity of the criminal classes, for inquirers have 
 been startled at the numerous descendants of thieves. We know, 
 too, that hardly any persons of great literary acquirements, es- 
 pecially those who have been distinguished for imaginative gifts, 
 have left descendants in the fourth generation. Perhaps in time 
 to come, a law will be discovered on this phenomenon, and the fact 
 that a poet has left a long line of descendants will be more fatal to 
 his reputation than any assaults of any number of critics. 
 
 Now let us turn to the facts of English social history. From 
 the earliest times the staple food of the English people has been 
 wheaten bread. Wheat is the costliest, and on the whole the most 
 precarious of our corn crops. Now I consider a famine to be a 
 scarcity in which the price of wheat rises to more than twice its 
 average price, a dearth when the additional price is from one half 
 the ordinary price to double. I should add to this that the 
 contingency is increased when the law tampers with wages, as it 
 did successfully in 1563 and onwards. Now I have in my 
 possession a record of every harvest in England since 1259, i.e.^ for 
 628 years. The resultant inferences are, to be sure, affected by 
 the free-trade measure of 1846, though it took a much longer time 
 than people foresaw, or even now understand, to create a corn 
 trade. Now in the last forty-two years of the thirteenth century
 
 6o INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 there was no famine. There was in the fourteenth, in 1315, 131(1, 
 1 32 1, and 1369, for in these years wheat was more than double tlic 
 average price, and once was five times above it. Then people as 
 we are expressly told perished from hunger. In the fifteenth 
 century there was only one year of famine, 1438, and only one year 
 of dearth, 1482. In the sixteenth there was a year of famine in 
 1527, and after Henry had committed the enormous crime of 
 issuing base money, famine was endemic. But the most dismal 
 record is that of the seventeenth century, when severe dearths, 
 consequent on deficient harvests were endured by the English, 
 Hartlib, an excellent observer, saying that people in numbers 
 died of starvation. Among these evil years, too numerous to 
 burden you with, the worst was 1661. I don't know whether in 
 those days, the newspapers, such as they were, had adopted the 
 phrase of the king's Aveather, though there is plenty of adulation 
 in them. For the first sixty or seventy years of the eighteenth 
 century, there were on the whole abundant crops, a result greatly 
 to be attributed to the new agriculture. But the famine of 1709 
 in France — we suffered seriously in England — did more to break 
 down the French arms than the victories of Marlborough did, and 
 you may perhaps remember that the last of his great fights, Mal- 
 plaquet, was not much of a victory, and this occurred in that 
 disastrous year 1709, after the hope of the harvest was well-nigh 
 destroyed in Western Europe. People who write about history 
 and dilate on the philosophy of prominent characters, are ex- 
 ceedingly apt to neglect that which is, after all, true history, the 
 indisputable facts of social life. I am willing to admit the judgment 
 of the first Napoleon, that Marlborough was about the greatest 
 military genius which the world has produced, the more willingly 
 because I do not pretend to be a judge. His greatness has cost us 
 dear. But I always feel myself on safer ground, when I find that 
 opinion is fortified by facts, and philosophy gives a place to 
 intelligible statistics. Of course people may handle statistics 
 foolishly. But you will find as you live that many persons arrive 
 at conclusions and judgments for which they would be incompetent 
 to discover premises. The habit however gives a kind of variety 
 to human life. 
 
 The most disastrous period however through which population
 
 THE PROGRESS OF ENGLISH POPULATION. 6i 
 
 passed was that which intervened between the close of the 
 eighteenth century and the first twenty years of the nineteenth. 
 Then, as Malthus was writing, famine raged. But it was artificial. 
 The harvests were bad, but the laws forbad the importation of 
 food. It seems to me, that almost the only human trait in Pitt's 
 career, the heaven-born minister you will remember with his 
 admirers, was his forcing, by rather questionable means in 1800, 
 grain ships which might be driven into English harbours, to 
 discharge their cargoes there. In those days we exercised the 
 right of search, and we did it with a witness. But, unluckily, 
 expedients of this kind are temporary, and the experience of them 
 acts as a deterrent. 
 
 Vice and misery, then, the preventive checks of the theory which 
 Malthus announced, are not found to be preventive of all. Thieves 
 are inconveniently prolific ; so are the miserable. Nor is it likely 
 that moral restraint is likely to operate on such people. The 
 former class entirely repudiate it by the very circumstances of 
 their calling. The latter do not entertain it, for despair knows no 
 control. And the curious thing about the whole business was 
 this, that while Malthus with the best intentions was consoling 
 the oppressors of the poor, with the assertion that the poor, though 
 the sole workers of wealth, were the sole cause also of their own 
 calamities, he did not take the smallest pains to investigate eco- 
 nomical causes. But the fact is, that Malthus was a metaphysical 
 economist, and the only prediction which you can make about the 
 conclusions of a metaphysical economist, is that he is almost 
 certain to be in the wrong. 
 
 Mr. George in his attack on Malthus, and by implication on 
 Mr. Mill's endorsement of this famous theory, points to the fact 
 that densely- peopled countries are always, absolutely and relatively, 
 the most opulent. And he further points to the fact that in early 
 and scantily settled countries, such as some among the Western 
 States of the Union, while all can secure abundance, there are few 
 that can live at leisure. And he adds, truly enough, that this 
 result is not due to the mere accumulation of wealth, understanding 
 by this those forms of it which assist in the continuity of present 
 labour, for that these are very destructible, and have on the whole 
 a very brief existence. And he concludes rather incautiously that
 
 62 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 mere numbers make wealth, without examining sufficiently what 
 are the conditions on which numbers make wealth. 
 
 The result depends on the efficiency of labour, the astonishing 
 growth of skill in manipulating materials which progressive 
 societies exhibit. One form of this is no doubt the division of 
 employments to which I have already adverted in an earlier 
 lecture. But the dexterity which makes wealth rapidly is ex- 
 hibited in all labour, in that which does not admit of division as 
 well as that which does. But it is exceedingly difficult to estimate 
 industry and its efficiency at different epochs of economical history. 
 Closely as I have followed and studied it, I got a very scanty 
 conception of it, and need in order to get any conception of it at 
 all, to constantly refer myself to related prices. Now in modern 
 estimates over a necessarily narrow range, the results of researches 
 such as those of Dawson, Newmarch, and Jevons, very capable 
 persons indeed, are by no means satisfactory, after they have been 
 at great pains to develop and accentuate what they call index 
 numbers, that is, money values of the principal necessaries and 
 conveniences of life. I am perpetually asked to interpret for 
 inquirers what is the value of money five, four, three, two, one 
 centuries ago, and after I have been at great pains to explain the 
 facts, I have generally found that I had sown my seed on the 
 highway. 
 
 Two conditions, the efficiency of labour being postulated, make 
 the risks of general over-population among the industrial classes 
 remote. The one is the establishment of a high standard of living, 
 the other is perfect freedom on the part of the workmen to 
 interpret the terms under which they will accept employment. 
 There is no risk that they will destroy the contingencies of their 
 industry. No combination of English working men has ever 
 attempted to improve the capitalist employer out of existence, and 
 I see no likelihood that they will ever fall under so gross and 
 suicidal a delusion. Of course they have never attained to the 
 conditions which I have referred to. There are still laws in 
 existence which permit certain persons to take excessive toll on 
 industry, even to imperil its efficiency, and these are frequently 
 tailed rights. The combination or association of workmen is still 
 partial and imperfect, and when the union men meet they are apt,
 
 THE PROGRESS OF ENGLISH POPULATION. 63 
 
 like all the rest of us, to run after the red herrings of logomachy. 
 I wish that people would not, following an evil example, talk so 
 much about the rights of men. They would find ample room for 
 their energies, if they grappled with the wrongs. Law, I repeat, 
 can do little positive good. Its highest and best efforts are those 
 in which it puts a stop to evil. 
 
 I cannot agree, then, with the reasoning by which Mr. George 
 attacks the Malthusian theory. He alleges that it contravenes the 
 facts, but he does not analyze the facts, any more than Malthus 
 does, when he commented upon what people sometimes call good 
 old England. That it was old I have no inclination to deny. 
 But to call it good is an abuse of language. It is surprising, 
 however, to note how soon practices, exceedingly bad and inju- 
 rious, become poetical, and the property of the romancer. The 
 epoch of Malthus's theory is the very worst, the most cruel, 
 heartless, and discreditable in the annals of England. It is 
 wonderful enough that the British race ever recovered from it. 
 But every day which makes us more remote in spirit and character 
 from it, and much remains to be done, removes further back the 
 risks of over-population. 
 
 But though I do not think that we need be much alarmed at 
 Mr. Malthus and his theory, yet it must be conceded that partial 
 or local or special over-population is a recurrent risk, and some- 
 times a very serious one. Human societies cannot without danger 
 maintain more than a certain quantity of idlers, or in the language 
 of economists, unproductive consumers. Nor should it, I think, 
 allow these people to consider and vaunt themselves, to use Mr. 
 Disraeli's phrase, as superior persons. They always will if they 
 can, for this is the best defence which they can allege for their 
 existence. I seem to remember having read that the Jewish rabbis 
 invariably insisted that every member of the race, from prince to 
 peasant, should have a calling, and that to leave a man without a 
 calling is to make him a thief, that is to incur the risk of his 
 becoming a Bedaween or a brigand. I have heard the same thing 
 said of the Turks. I may be wrong, but it appears that the 
 wholesome rule has become obsolete, regrettably so. 
 
 The redundant population of the fifteenth century, otherwise 
 so prosperous, was that of the younger sons. They joined the
 
 64 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 forces in that horrible vendetta which raged from the year 1455 to 
 1485, and as they extinguished themselves for a time, they extin- 
 guished or suspended with their own existence, no loss, all but the 
 forms of the English constitution. The place-hunters of the 
 Restoration and the second Revolution were exceedingly redun- 
 dant. For there is no service which should be rewarded except 
 that which deserves to be rewarded, just as there is no true vested 
 interest but that the public benefit and profit of which can be 
 conclusively demonstrated. 
 
 The people who prey on society are always redundant. Most 
 people admit this of the criminal classes. They who, by mis- 
 fortune and incapacity, are a burden on the public charity, are 
 redundant, superfluous, but should be gently and kindly dealt 
 with. I wish I could find out about the unemployed. I have 
 never arrived at more than the fringe of information, and that 
 had been in unexpected quarters. It is a little suspicious that the 
 phenomenon reappears very speedily after the sporting season is 
 over. It would be, I am sure, well if inquiries were made about 
 the status and origin of these unfortunates. They seem to present 
 the phenomena of over-population, and if I can believe Mr. Peek, 
 who has had exceptional opportunities for learning the facts, " the 
 workless, the thriftless, and the worthless," are a sorry lot, for 
 whom there is little hope, a mere army of utterly unproductive 
 consumers. 
 
 I cannot, indeed, pretend to particularize classes here. I can 
 only refer to them historically, as Juvenal advises, those who are 
 buried by the Latin and Flaminian Ways. But so far I agree with 
 Mr. George. I could witness, I will say no more, with extreme 
 complacency, the emigration of many superior persons. For the 
 risk of over-population does not reside in skill and industry, but 
 in the proportion which those bear to skill and industry who do 
 nothing. They have been described with appalling frankness, as 
 they who toil not, neither do they spin. In the abstract I suppose 
 one may class these as redundant. But I am fortunately exempt 
 in this place, from designating them in the concrete. I do not 
 pretend to indicate where we should search for the residuum, but 
 I am sure that we are none the stronger for keeping that, and 
 losing the most useful of our people.
 
 IV. 
 
 THE DEVELOPMENT OF CREDIT AGENCIES. 
 
 Antiquity of Credit Agencies and Commercial Law — Effect of credit on 
 wealth and prices — The career of the South Sea Scheme — The South 
 American craze of 1825 — The railway mania of 1847 — The rise in 
 agrictdtural rents, 1860-70 — Causes and duration of inflations and 
 panics. 
 
 When I addressed an audience last year in this hall, I dealt among 
 other subjects with paper currencies, and I strove to give a general 
 and exact account of the process by which banking was carried on 
 in remote and in recent times. Now a banker is a credit agent, 
 the most important and significant of agents in transactions 
 involving credit. His calling requires him to exhibit two 
 qualities, caution and integrity. The development of the former 
 is a very long and arduous business, though time and attention 
 have enabled the banker to guide his method by a few principles. 
 They were stated, I believe, for the first time, with frank, and 
 almost amusing simplicity, by the late Mr. Gilbert. Bankers are 
 exceedingly tolerant of theory. Some of them have been con- 
 spicuous and influential theorists, and the disputes among them 
 about the principles of their craft have been prolonged, acute, and 
 highly controversial. The school of Lord Overstone, Mr. Norman, 
 and Col, Torrens is entirely opposed to that of Mr. Tooke and 
 
 6
 
 66 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 Mr. Ncwmarch. The reasonings of the former satisfied Sir Robert 
 Peel, and were accepted in the Act of 1844. But there are 
 economists, and I enrol myself in the number, who accept, like 
 Cato, the opinions of the vanquished party. I know nothing in 
 the whole range of monetary science so acute and so conclusive as 
 the arguments of Mr. Tooke are, none which were more speedily 
 confirmed by facts. But Mr. Tooke was a careful student of 
 evidence, and though a study of evidence will not always keep 
 a man right, if he happens to be a dolt, it is a miracle if the 
 shrewdest man, who has no evidence, does not go wrong. 
 
 But the theories which the banker listens to patiently never 
 come within the range of his practice. The most voluminous 
 and the most confident writer will not make him turn aside from 
 his traditions. I remember hearing the late Lord Overstone say, 
 that genius was a dangerous gift to a banker. He ought, the 
 noble lord continued, to be emphatically common-place, to be 
 Avedded to a beaten track. There were, he continued, occasional 
 anxieties in a banker's career, when he must needs — the metaphor 
 was his — oil the machine. But ordinarily it should be automatic. 
 But it would be an error to conceive that pains and care, even a 
 foresight akin to genius, were not needed in order to perfect the 
 machine. If the Bank of England of to-day were to do what the 
 Bank did in 1697, in 1710, and in 1720, not to trouble you at 
 present with more instances, it would rapidly lose the confidence 
 which it so justly possesses. The mechanism which the directors 
 preside over in Threadneedle Street is the perfection of trained 
 and traditional skill, and the managers are almost as automatic 
 an engine as the Mint is, or as some tell us the pork factories 
 of Chicago are, where a live pig enters at one door, and emerges 
 through various machines from another as pickled and packed 
 pork. So I heard at Chicago, though I had not the curiosity to 
 inspect the process. 
 
 Credit agencies existed in countries, all the annals of which have 
 been lost, even in countries which did not possess a coinage. The 
 succession of Babylonian monarchs is at best a list of obscure and 
 disputable names, but antiquaries have discovered the strong 
 rooms of bankers whose business was probably arrested in that 
 capture of the city which Herodotus describes with such vigour,
 
 THE DEVELOPMENT OF CREDIT AGENCIES. 67 
 
 and I must add, imagination. There must have been credit 
 agencies between countries, all of whose memorials have perished. 
 It is certain that such agencies existed between Tyre, Carthage, 
 and Cadiz. Polybius has preserved in one of his ancient treaties 
 between early Rome, royal or republican is not clear, not only 
 the evidence of credit agencies, but a provision for enforcing con- 
 tracts. So entirely were these agencies familiar to the Greek mind, 
 that Aristotle employs the name of the instrument to signify a 
 moral process. In that strange country, where it seems every 
 Teutonic or Aryan settlement (I do not quite know what word is in 
 fashion now) was early hardened into an autonomous and pugna- 
 cious municipality, which could hardly conceive, and very rarely 
 develope a collective sentiment, trade, and with it credit, which 
 always comes with trade, were exceedingly active. To exclude a 
 neighbour from trade in any market was an act of war resented as 
 an international offence. But though we know that it must have 
 existed, we know but little of Greek mercantile law. I have 
 designed indeed to make it, if I can collect materials enough, the 
 subject of a special lecture hereafter. I do not doubt, to quote a 
 similar instance, that many wise Greeks deplored the disunion of 
 Hellas, and foresaw that in time some monarchy would consume 
 it in detail. But I never read but one practical suggestion in 
 favour of a common Greek purpose, and that, oddly enough, is in 
 the Lysistrate of Aristophanes. When the Romans gave them 
 freedom it was too late, for the freedom of Greece was really 
 intended to be an act of literary gratitude, and the failure was 
 expressed, in one case at least, by a proverb too coarse for 
 translation. 
 
 All-important as it is, to civilization and international comity, 
 credit is a matter of slow growth, and needs for its development 
 the powerful protection of municipal law. I am not an adept or, 
 in the least degree a judge, of the sufficiency which is said to 
 reside in Mr. Darwin's speculations or proofs as to the origin of 
 species. I can only admire the patience and integrity— a matter 
 needed to men of science — with which he worked out his theories. 
 But there is yet a field open for investigation in analyzing the 
 origin of what I may perhaps call social morality. For many 
 wrong things may be done by they're Quirituim, which cannot be
 
 68 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 permitted by the/w^ gentium. The autocrat, whose power seems 
 boundless, is a stranger out of his own country. He is like his 
 own money, which is mere bullion when it leaves his borders. 
 There is no sovereign who seems to be more absolute than the 
 Tzar of Russia. But in matters of international business he has 
 to conform as absolutely to the rules and regulations, to the 
 caprices and suspicions of the Stock Exchange, as the pettiest 
 state has. I do not pretend to have a great admiration for Stock 
 Exchange people, but their action, and the rules by which they 
 bind themselves and others, are the best illustrations, which I know 
 of international morality. 
 
 The machinery by which contracts are enforced, and credit is 
 sustained, is exhibited in the old law of debt. In any country, it 
 has been exceedingly, and, I presume, necessarily severe during 
 the earlier days of credit. Lawgivers, like Draco and the 
 Decemvirs, the authorities of the Pandects, and our Edward I. 
 and Henry VUI., were, I am sure, convinced that the strict main- 
 tenance of commercial contracts was a condition precedent to 
 all trade. The ancient Roman was probably, when he dared, 
 a stubborn cheat. I have little doubt that there were many 
 Athenian gentlemen, like Strepsiades in the " Clouds," who had 
 an invincible repugnance to refunding what they had borrowed. 
 The vigorous law of statute merchant and statute staple was 
 Edward's remedy against commercial fraud. The legislation of 
 Henry VHI., under which entails were forfeited for bankruptcy, 
 was no doubt deemed necessary. Compare our own old law on 
 contract debts with the far milder process under which distraint 
 was the very precarious and only remedy for default in paying 
 the landlord's rent, and one will see how differently the two were 
 viewed. There is a striking passage in Fitzherbert, where he 
 compares the remedies against breach of contract with failure to 
 meet the landlord's dues. In course of time these severe laws 
 have been mitigated, only, I conclude, because in the general 
 growth of commercial morality they had become superfluous. 
 Their modern analogue is a bankruptcy law, and curiously enough, 
 the least protected creditor of ancient times, the landlord, is the 
 most protected now. 
 
 Commercial law, that is, the law which protects, and intends tq
 
 THE DEVELOPMENT OF CREDIT AGENCIES. 69 
 
 preserve credit if possible, is of most ancient origin. It was 
 coexistent with the municipal or local law of Rome and Greece. 
 As you are probably aware, the civil law had an historical begin- 
 ning, was gradually consolidated, and at last codified under the 
 authority of Justinian. Our own common law, though its 
 origines are lost in barbarism, was, by the peculiarities of its 
 details, the simple work of a half-savage race. These early codes 
 were collected by Balue and the Grimms, and are a rugged but 
 interesting study. But commercial law transcends them all in 
 antiquity. Its beginnings are lost in the unrecorded past. But 
 it has had an unbroken continuity, for it could not be dispensed 
 with. The intercourse of civilized man, even of imperfectly 
 civilized man, has been continuous, and the obligatory usages of 
 such an intercourse are necessarily continuous too. The code of 
 Carthage and Rhodes has been transferred from the civil law into 
 our common law. 
 
 I have promised myself, at some future time, to read you a 
 lecture on the Italian trading towns of the early Middle Ages. No 
 country has ever been so overrun by savages as Italy has. No 
 country has ever so humanized its victors. Goth and Lombard, 
 Saracen, German, Frenchman, Spaniard, have occupied and 
 ravaged it. But the invaders have never destroyed its muni- 
 cipalities. Some, like Venice, maintained themselves against all 
 comers. And the annals of Genoa, Pisa, and Florence, are nearly 
 as distinct and brilliant. At last Italy became divided as Greece 
 was, and remained till recently, as Napoleon called it, a geogra- 
 phical expression. 
 
 I know no writer who is more laborious and more copious than 
 Muratori. He puts to shame our puny collections. He is even 
 more industrious than our Prynne was. His materials for Italian 
 history can never be exhausted. Their amount is appalling. I 
 am mainly concerned for the present with one, his " Antiquitates 
 Medii Oevi." I owe a good many facts to it in connection with my 
 researches into ancient currencies, and the relative value of the 
 two precious metals. But to those who read it carefully, there 
 comes out the commercial life and the commercial law, i.e.^ the 
 protection of credit in those dark times, and from these volumes 
 I have gathered my proof as to the continuity of commercial law.
 
 ^o INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 I learned from Muratori what I concluded must be the meaning 
 of the commercial treaty between Rome and Carthage, which is 
 preserved by Polybius. The great work of this writer contains 
 many thousands of treaties, conceding, defining, and guaranteeing 
 the rights of merchants as creditors between the numerous trading 
 cities of Italy. For as soon as ever trade ceases to be mere barter, 
 the function of credit commences, the employment of money as a 
 means of exchange, when the money is not intended to take the 
 place of mere merchandise or bullion, a limited and elementary 
 form of credit arises, for the money currency of a foreign state 
 may be accepted in exchange on the faith that the issuing country 
 will duly honour that which it has put into circulation. The fact 
 that in the modern bullion trade, the currency of a country when 
 it leaves the country of its origin, becomes bullion, may obscure 
 certain primitive understandings as to the pledge implied in a 
 currency. 
 
 Now credit is the power which a person, or a state, has of attract- 
 ing to him or itself wealth, either in the passive or active form 
 from other persons or other communities, under the condition 
 that the loan or advance will be liquidated by the virtual borrower. 
 In fact, the loans or credits obtained by mercantile persons precede 
 historically those procured by non-traders, and both kinds of 
 advances precede the credits obtained by nations or governments. 
 Let us take as an instance of the first class commercial bills, of the 
 second bank-notes, of the third government loans. The origin of 
 commercial bills is lost in the darkness of antiquity. The begin- 
 nings of bank-notes, either in the form with which we are familiar, 
 commences with the origin of the Bank of Genoa, or of England ; 
 or in the form of warrants pledging the recipient or his assignee to 
 the restoration of the actual moneys deposited, with the foundation 
 of the Banks at Venice, Amsterdam, and Hamburgh. But the 
 development of national or government credit is of far more 
 recent growth, and is hardly two centuries old. That govern- 
 ments issued and discounted their own acceptances and acknow- 
 ledgments of indebtedness, and so anticipated their own resources 
 or revenues, from very early times, is true enough. Philip of 
 Spain did so with Genoa. Earlier still our third Edward did so 
 with the Florentine bankers, the guardians of Edward VI. with
 
 THE DEVELOPMENT OF CREDIT AGENCIES. 71 
 
 the Antwerp bankers, and most of the sovereigns made default. 
 As late as the War of the Spanish Succession, as we learn from 
 Peterborough's despatches, English government bills were nego- 
 tiated at Genoa for the Spanish campaigns ; and the commercial 
 notes of newspapers and other similar publications, quote notes of 
 exchange between Great Britian and divers foreign countries. 
 Then, again, credit is internal as well as external, is inevitably 
 developed between the members of a community as well as 
 between members of different communities from very early times. 
 In our own experience, the liquidation of what are called ready- 
 money transactions is constantly based on credit. If we buy goods 
 and pay for them over the counter with notes, the trader accepts 
 the exchange, because he is confident of the solvency of the 
 issuing banker ; if we pay for them by our cheques, the transaction 
 is theoretically completed, because he can rely on the solvency of 
 the drawer, though, of course, it is not practically completed as 
 far as purchasers are concerned till the cheque is honoured. 
 Even then, nine cases out of ten, or ninety-nine out of a hundred, 
 the recipient of the cheque makes it the means of developing 
 another form of credit, in the form of a balance at his own 
 bankers. 
 
 As human societies have been educated in functions of credit, 
 and see daily how all-pervading and significant they are, it has 
 been natural to assign to credit qualities and powers which it is 
 far from universally possessing, to say nothing of others which it 
 does not possess at all. It is really part of the mechanism by 
 which wealth is mobilized, even in its most stationary forms. 
 Take, for example, the old forms of obligation conveyed under a 
 statute merchant or a statute staple, and the recognition of such 
 pledges as exceptional, by the law of Edward I. A landowner 
 sought to procure funds for the prosecution of a commercial 
 venture. The law allowed him for this end to pledge his land and 
 his personal liberty, before the chief officer of a trading or a staple 
 town. He raised a loan on this security and traded. It is plain 
 that he was transmuting during the period of the loan, the passive 
 wealth which he possessed in his estate into the active wealth of 
 another person. He was creating no new wealth, though the fact 
 that he was about to do so lies at the bottom of his transaction.
 
 72 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 He was simply displacing it, mobilizing it, giving it a new effi- 
 ciency. He might, indeed, have lost by the transaction, and 
 forfeited his estate. The security which he offered is ex hypo- 
 thesis unimpaired, but the wealth which he secured by the pledge 
 is lost. 
 
 Some people allege that credit creates new wealth. It does so 
 no more than bank-notes make more money. What it does is to 
 utilize, to mobilize wealth, and make it more efficient. I remem- 
 ber to have heard that, when an enthusiastic advocate of the 
 functions of credit was dwelling on its creative powers in the 
 House of Commons, the late Sir Robert Peel congratulated him 
 on his eloquence and his mastery over one theory of the currency, 
 but added, not perhaps without some tinge of personal sarcasm, 
 that he would sooner have the orator's money than his credit. 
 And Peel had done the country an infinite service by insisting on 
 the restoration of genuine credit, on the resumption of cash pay- 
 ments, in opposition to those who wish to develope the currency. 
 When by proper exercise and diet, to use an illustration, you 
 bring human strength to its fullest efficiency in an individual 
 body, you do not make two bodies. And so, when by judicious 
 substitutes, in the form of commercial obligations, the fullest effi- 
 ciency is given to the monetary resources of a country, you do not 
 make another mass of money. If you did, the more instruments 
 of credit you made, the more you pile up indebtedness, the more 
 property do you create. You might as well allege, as a very 
 active and enthusiastic, not to say positive, writer appears to assert, 
 that if you had a thousand pounds, and owed a thousand pounds, 
 you were worth two thousand pounds. To my mind you are 
 worth just nothing under such circumstances. 
 
 There is an obvious question which it is not easy or accurate to 
 answer with a yes or no, which is, does credit affect prices ? Now 
 no doubt price is due to demand. Articles rise in price, because 
 the demand appears to fall short of the supply, and fall in price, 
 because the supply seems immediately or prospectively to exceed 
 the demand. How the possession of credit may enable one person 
 who determines on producing an article an opportunity of com- 
 peting against another, who will go without it if the other gets it. 
 But here the credit does not raise the price which the purchaser
 
 THE DEVELOPMENT Ot CREDIT AGENCIES. 73 
 
 gives, it simply, and for the time, enables the purchaser to satisfy 
 his demand. Sooner or later, generally very soon, it will be found 
 that the purchaser has used his credit temporarily, and that he 
 must give value for his acquisition. He has merely anticipated 
 for a brief space what the article was worth. 
 
 Take, again, a commercial speculation. Persons will strain 
 their powers and their credit among their powers, in purchasing 
 a commodity, cotton, copper, tin, the supply of which they think 
 that they can estimate, the demand for which they assume that 
 they can interpret. They are simply engaged, if their calculations 
 are sound, in anticipating that which is sure to arise, and in 
 appropriating that exaltation of price which others have not been 
 acute enough to foresee. In such a case, credit is not raising 
 prices, it is merely enabling an individual to take early advantage 
 of an inevitable rise. Hence, speculations of this kind are looked 
 on with much leniency. They are supposed, and with much show 
 of reason, to stimulate supply. It is also alleged that if they are 
 mistaken they bring their Nemesis with them, and that no trader, 
 or combination of traders, is strong enough to exercise more than 
 a very temporary control over the market. Whether, indeed, the 
 law or the custom of mercantile transactions is not over lenient to 
 speculative failures, is a question of considerable gravity. Whether 
 it is possible for combination to produce a monopoly, for a mono- 
 poly to defy competition, and for monopoly to exact an over-heavy 
 charge, not for intelligent apprehension, but by the sheer force of 
 what may be called a commercial conspiracy, is a question which 
 is by no means easily answered. The law does contemplate such 
 possibilities, as, for example, in the costs of railway transit, and take 
 precautions against them, in the just interests of consumers. It 
 has done so in the case of certain labourers, whose demands, with 
 the alternative of the cessation of work, might paralyze society at 
 a crisis, and therefore insists on the continuity of contracts made 
 by such persons. It seems easy to conclude that such action is 
 just. Under a voluntary system of enlistment, men may refuse 
 or accept the pay and prospects of the public service. But for an 
 army to strike for higher pay, at the commencement of a cam- 
 paign or an engagement, would be fatal, and could not be enter- 
 tained. But the sudden abandonment of a calling where
 
 74 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 continuity was essential to the well-being of society, as, for 
 example, some years since of the gas stokers in London, was treated 
 as an offence. 
 
 Of course if a government deliberately permits or creates a 
 monopoly in any necessary article, it enables — nay stimulates — 
 the producer to create an artificial price. Such is the case with 
 the English land system, which, in towns at least, affords an 
 artificial price to the owner of extensive areas, by creating what 
 is virtually, to use commercial slang, a land ring. I do not affirm 
 that the particulars of our land system which produce this result 
 were designed to bring it about. It is sufficient that they do, and 
 that they are directly responsible for some of the worst conditions, 
 at any rate in past time, which have affected the housing of the 
 poor in large towns. Nor is it just that unoccupied houses and 
 areas should be exempt from local charges. The State is under 
 no obligation to assist such owners in finding tenants at artificial 
 rents, as it virtually does by excusing them from their liabilities 
 during the period of non-user. 
 
 Protection to producers, always to certain producers, for if it 
 were extended all round it would assuredly defeat itself, is again 
 one of the means by which prices are artificially heightened. No 
 one should be forced to sell at the optional price of a purchaser, 
 for it is clear that such a rule would be spoliation, and a fatal 
 discouragement to industry. But by parity of reason, nobody 
 should be forced to buy at the optional price of the vendor, for 
 such a practice is just as much spoliation, nay, impudent plunder, 
 and that of the most feeble and helpless. And so it has come to 
 pass, and that quite naturally, that in the United States, where 
 protection is maintained by terrorism where possible, and by the 
 most barefaced falsehoods where it is not, the protected capitalist 
 detects in all combinations of workmen in all discontent at wages, 
 a danger to his monopoly, which he must remorselessly persecute. 
 I know few things in the modern history of labour and capital 
 more startling than the machinery employed to terrorize workmen 
 among the ironmasters of Pennsylvania, and recorded in the 
 published documents of that state. 
 
 But scarcity interpreted by dealers or speculators, advantages 
 permitted by governments, and protective laws forced on com-
 
 THE DEVELOPMENT OF CREDIT AGENCIES. 75 
 
 munities by selfish and powerful interests, are the principal causes, 
 if not the only causes of exalted prices. Of course I am leaving 
 out of consideration the permanent cause of high and low prices, 
 the cheapness or dearness of the metal which forms the standard of 
 economy. But in these three causes credit is concerned with the 
 first only as an independent factor, and that only partially or tem- 
 porarily. To deny that credit has any effect whatever on prices 
 is to contradict experience. But it is very easy and very obvious 
 to exaggerate the effect. And if it be employed to stave off a 
 serious fall it is simply undertaking the common functions of 
 capital with this difference, that the capitalist has only his own 
 counsel to take, while the man who sustains his operations by 
 credit has to take, as he sometimes finds to his cost and disap- 
 pointment, counsel with others. 
 
 There are occasions under which very extensive credit operations 
 may be entered on, in which, however, no effect whatever is 
 traceable on real prices, that is, the price of the necessaries of life. 
 I will illustrate this by a brief history of the great South Sea 
 Bubble of 1720, an economical phenomenon which is not entirely 
 without parallel in the history of other countries, and indeed of 
 our own. But it has never been exhibited in such proportion 
 since. I have some special opportunities for commenting on it, 
 for I have recently gleaned from the copious collection of news- 
 papers during that period, which is contained in the Bodleian 
 Library, a daily register of the price of stock in the South Sea 
 Fund from the beginning of the process, during the time of its 
 inflation, and at the crisis of its rapid and complete collapse. 
 Most historians who have commented on it have very imper- 
 fectly understood the facts. The nearest analogues to it are the 
 speculations entered into at the rise of the Republics in Central 
 and Southern America in 1825 and the railway mania in 1847. 
 
 Now in the early years of George I. the public debt, contracted 
 during the wars of the English and Spanish successions, was held 
 in a very different way from that in which it now is. This debt, 
 of course, represented the credit of the nation in Parliament. 
 Much of it constituted the stock of the Bank of England, the 
 East India Company, and, above all, the South Sea Company, 
 which, after 1713, had secured as part of their bargain the trade
 
 76 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 in negro slaves with the Spanish Plantations, under what is known 
 in history as the Assiento treaty. Not a little of the debt was in 
 annuities granted for life or terms of years. Some was a floatinp; 
 debt renewed in the form of Exchequer bills, and generally pui 
 into circulation through the Bank. Now in itself the system was 
 cumbrous and wasteful. Wealth had been rapidly growing 
 through the trade of London, and no doubt while Walpole was 
 still in the Ministry he had ventilated those projects of his fur 
 consolidating the public debt which he was in after years to 
 mature. But Walpole had been ejected from office in 1717, and 
 was succeeded by Stanhope, who gave way to Sunderland, under 
 whom were Aislabie, Chancellor of the Exchequer, and Craggs, 
 Secretary of State. 
 
 Now in order to effect this change, it seemed obvious that one 
 or the other of the great chartered companies, the Bank of 
 England or the South Sea Company, should undertake the com- 
 mission. The East India Company was out of the question. Now 
 the Bank regularly paid its shareholders 8 per cent., the South Sea 6, 
 and the ordinary price of the two stocks was 140 to 150 for the 
 Bank, 105 to no for the South Sea. The two companies bid for 
 the bargain, and the South Sea offered to transact the affair for 
 less than the Bank thought prudent. It is doubtful whether | 
 it was wise to allow a trading or banking company to ingraft so ' 
 enormous a stock on its capital as more than thirty millions 
 additional, and imperfect as the knowledge of finance was at 
 the time, I think it very doubtful whether, had Walpole been in 
 office, he would have lent himself to the negotiation. For the 
 business was exceedingly complicated by the vast quantity of debt 
 which was secured to annuitants, and it would certainly be unsuc- 
 cessful unless the annuitants were persuaded to accept the value of 
 their interest in some stock or the other, or cash could be found 
 to pay them off at a fair valuation. 
 
 Now how was the South Sea Company to effect this result. 
 They had a trade, it is true, which the Spanish Government strove 
 to curtail within the narrowest limits, the South Sea Company to 
 expand. One would have thought, after the experience of the 
 Mississippi scheme in France the year before, that the prospects 
 of the American trade would have been seriously discounted.
 
 THE DEVELOPMENT OF CREDIT AGENCIES. 77 
 
 B'lt the collapse in France was set down to Louis' bank, not to the 
 trading scheme, the shares of which, as I see from the papers of 
 the time, still bore a respectable price. It was then upon pledges 
 as to the enormously profitable character of this speculation and 
 really meagre trade, that the prornoters and directors of the scheme 
 proposed to build up success. The stock rose during the negotia- 
 tions and advanced rapidly when they were completed. Nor were 
 the English capitalists and speculators alone tempted. The stock 
 was purchased largely in Holland. 
 
 The Government promised the company 5 per cent, for a time, 
 to be reduced after the lapse of a few years to 4 per cent., no 
 particularly tempting offer at a time when the ordinary rate was 
 from 5 to 6. The Directorate, to be sure, contained many con- 
 siderable names in the mercantile world of London, and four 
 members of Parliament. The King was the governor. The 
 papers discussed, or at least expounded the scheme, which 
 promised enormous dividends, and a considerable number of 
 annuitants were induced to take stock in the company in exchange 
 for their bargains. As far as the Government went, the transfer 
 of its liabilities was on paper only, but some annuitants, and these 
 represented a considerable sum, elected to be paid off. How was 
 the money to be raised in order to sustain the credit of the 
 company, for you see that the operation was entirely one of credit, 
 or of confidence in the management of those who undertook the 
 operation ? It is true that some of the papers, rarely at that time 
 supplying their readers with anything but mere news, doubted the 
 success of the scheme, and warned the public. But as is clear 
 from the fluctuations of the stock, many persons realized their 
 gains, and it soon became known that this and that man had 
 achieved a fortune by his speculations. It was when the stock 
 had risen from 123^, its price on December 3, 1719, to 310 on 
 April 1st, the highest of the day, that the directors took the step 
 of endorsing by their own action the public craze. 
 
 On April 14th they offered new stock to subscribers at 300, the 
 amount being 2\ millions nominal, and the payment being spread 
 over a considerable time. Next, on April 21st, they announced a 
 dividend of 10 per cent, for the half-year, to be paid in stock at 
 par, this being, you will see, at the rate of 60 per cent, per
 
 78 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 annum on the original stock. On April 29th they issued a fresh 
 million of stock at 400, the payments being distributed over a 
 longer period than the first issue was. But it was three weeks — 
 I am writing with the daily register of prices before me — before 
 the public rose to this price, though on June 1st the highest price 
 was 755. On June i6th the directors issued new stock for the 
 third time, and in the same manner. This time the amount was 
 five millions, and the price was ^1,000 for every 100 subscribed. 
 On June 25th the highest price was reached, 1,060. In order to 
 assist subscribers, the directors offered to lend ten millions of their 
 own capital on the security of their own stock, and, I presume, at 
 the prices which they had themselves fixed. That price, as was 
 stated subsequently, was calculated to exceed the whole selling 
 value of all the land in the kingdom. 
 
 Now most of the history books which you read will tell you 
 that the great Bubble collapsed immediately after the company, 
 on August 1 6th, began to prosecute the unlicensed projectors who 
 were trying, and, it is said, with much success, to attract some of 
 the gains of those fortunate gamblers who had cleared out of the 
 project when prices were at the highest. But the register of prices 
 contradicts this. The stock continued high all through August, 
 in which month the whole of the first new issue was paid up. It 
 was not, to be sure, at the height at which it stood on June 25th, 
 but the highest price on the last of August was 810. In Sep- 
 tember the fall began, the fluctuations being exceedingly violent. 
 Thus (jn September 30th prices ranged from 190 to 320. On the 
 8th of September the directors issued a notice that they would 
 pledge themselves to pay a dividend of 30 per cent, for the year 
 1720, and 50 per cent, for the next twelve years, and this in 
 money. I presume that some stockholders trusted to this promise, 
 for the stock does not fall below 500 till September 17th. 
 
 From this time the collapse was rapid and complete. The 
 directors had some hopes that the Bank would come to the rescue, 
 and the Bank showed some inclination to do so. But apparently, 
 in order to back up the pledge of September 8th, the directors 
 stood out for assistance on far too favourable terms, with the 
 result that no assistance of an effectual kind could be rendered 
 them The South Sea Company had a security, a good security,
 
 THE DEVELOPMENT OF CREDIT AGENCIES. 79 
 
 one that remained good for more than a century after this famous 
 year, but it was not worth anything like that value which 
 the directors gave it. Parliament was obliged to intervene. 
 Walpole, the only person able, as it seemed, to grapple with the 
 situation, was recalled to office. The fraudulent Chancellor of the 
 Exchequer, Aislabie, who survived the catastrophe, for Secretary 
 Craggs was expelled the House, the last member of a Cabinet 
 who has been expelled — I cannot say the last who deserved to 
 be — and a Bill was brought in and carried, which to some extent 
 compensated the dupes of the Bubble out of the private fortunes 
 and illgotten gains of the projectors. The process which Walpole 
 adopted (he had greatly increased his own fortune by buying and 
 selling judiciously) is part of general English history, and except 
 in one particular I need not comment on it. There is, I believe, 
 no other instance in our history in which a fraud has been 
 punished by an ex post facto law, for the attempt to punish 
 Buncombe in 1698 for forging Exchequer Bills was defeated by a 
 single vote in the Lords, and the Lords have been very properly 
 commended for their action, for it needs a very strong case indeed 
 to justify an ex post facto law, and there is no justification for an 
 ex post facto administration of law. 
 
 Gibbon, the historian, was the grandson of a man who had 
 been a Commissioner of Customs, and a director of the South Sea 
 Company during its inflation. He was one of the victims of the 
 Parliament. He had acquired a fortune of ^60,000, and he was 
 stripped of it, a single thousand being left him, says his 
 biographer, though Parliament assigned him _^io,ooo. His 
 son, the father of the historian, who sat in Parliament, was, as 
 we may well anticipate, a bitter enemy of Walpole, and the 
 grandson has commented with great severity, and with the great 
 resources of language at his command, on the measures which 
 Parliament took. The ordinary comment on the transaction 
 which you will see in the common histories is the tradition 01' 
 Gibbon's discontent. We need not be surprised at the anger oi 
 a man whose family was reduced from affluence to comparatively 
 narrow means by such a process as Walpole took, but he is hardly 
 a disinterested commentator. If Parliament acted with severity, 
 it discriminated between the offenders.
 
 8o INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 I cannot but think that the doctrine which was laid down by 
 Macaulay that no ex post facto legislation is permissible, with all 
 deference to so great, wise, and just a man, savours of paradox. 
 I cannot think, that a stupendous, impudent, and distinctive fraud 
 should go unpunished, because the legislature has not yet antici- 
 pated the possibility of the offence. Nor do I think the doctrine 
 to be constitutional. We have provided in our history, and have 
 used against offenders whom no existing penalties would have 
 reached, the mechanism of impeachment. The mechanism is, I 
 allow, clumsy, absurd, and, in these days, impracticable, for who 
 would dream of summoning a jury of 500 persons or more, few 
 of them having had even the training of a juryman, to decide on 
 the guilt of a great criminal. It is one thing to say that impeach- 
 ment has become practically obsolete. It is another thing to say 
 that what it implies should be abandoned without an attempt to 
 refer it to a court which, being properly constituted, should 
 command public respect. But in the absence of such a court, 
 great offences would either pass unpunished or must be met by 
 Acts of Pains and Penalties. In 1720 Walpole resorted to 
 Parliament in order to punish the South Sea directors. In 172 1 
 he employed the same enginery against Atterbury, whose published 
 correspondence shows that he, sworn as Lord of Parliament and 
 bishop to the existing government, was plotting against the 
 institutions to which he had pledged his allegiance and owed his 
 rank and place. And if it be alleged that a wicked minister or 
 administration has violated the constitution and committed crimes 
 against public liberty, it is, I think, dangerous to that constitution 
 and its liberties if he is to go unpunished because the quibbles of 
 law decline to bring him within the reach of a punishable offence, 
 and that he is sufficiently chastised if he be excluded from office. 
 It is not by a doctrine like this that the liberties of this country 
 have been won ; and if such a doctrine is to be accepted as final, 
 there is danger that those liberties, common to all, may not 
 be maintained. 
 
 Now during the whole period of inflation, though credit, baseless 
 I admit, had been apparently increased ten times at least, prices 
 (the record lies before me) were entirely unchanged. The pur- 
 chasing power of the country, according to the theory of some
 
 THE DEVELOPMENT OF CREDIT AGENCIES. 8i 
 
 economists had been increased tenfold, and according to all analogy, 
 prices should have been powerfully affected. But, in fact, the 
 wealth of the country remained as it was. Property changed 
 hands. Many were ruined, many were enriched, but the aggregate 
 of riches, some waste considered and accounted for, remained 
 unaltered. No doubt the distress was very general. It always is 
 when credit is inflated by folly and temporarily destroyed by 
 inevitable panic. People often wonder at the rapid recovery from 
 monetary disasters. The true explanation is that what is lost is 
 impersonal ; individual, not collective. There may be a serious 
 strain, there is for a time a formidable collapse. But what is 
 substantial is not gone, and will soon recover its efficiency. 
 
 You will then agree with me, that the proper interpretation of 
 credit is derived, as is common with economical phenomena, from 
 negative inductions. But to frame negative inductions you require 
 facts, as much as you do in affirmative inductions. Men learn 
 what they can do, by discovering, occasionally after a painful and 
 dangerous experience, what they cannot do. The lesson people 
 have to learn extends through all human action, from the highest 
 efforts of political and social agencies to the ordinary business of 
 every-day life. But I am sure that this cannot ever be learned in 
 an arm-chair, at a study table, and with nothing but metaphysics 
 to guide one. 
 
 The British nation is the only civilized community, and the 
 criticism does not of course extend to uncivilized communities, 
 which has kept unbroken, undeviating faith with its public and 
 private creditors. There have been, it is true, temptations and 
 tempters, both plausible enough, but they have not been listened 
 to with effect. There have been occasions on which, relying on 
 this honest sensitiveness, rogues have attempted and with success 
 to palm indefensible claims on the British public, under the guise 
 of vested interests. I told you on a previous occasion what is the 
 only vested interest which an economist can allow. But I suppose 
 that it is better in the long run, to be stupid and honest, than to 
 run the risk of being called clever and unscrupulous. But if one 
 is honest, one need not be stupid, and one may discover that one 
 is encouraging knaves, if one listens with over-much compliance to 
 their claims. There is and there cannot be any other definition of 
 
 7
 
 82 INDUSTRIAL AND COMMERCIAL HISTORY. I 
 
 a vested interest than honest compensation for an unquestionable 
 pubHc service, when that service has been done, with a full 
 understanding between the doer of the service and the public that 
 compensation may be due. 
 
 The best illustration which can be given from English com- 
 mercial life of a just appreciation of the functions of credit, and a 
 wise regulation of its concession, is the conduct of the Bank of 
 England, an institution now near two centuries old. I do not say 
 that this institution, alone among similar establishments for 
 unblemished good faith, has never committed errors. It has 
 committed grave errors, as its best advocates would admit. But 
 its errors are those of good faith, and therefore have never been 
 fatal. And now its manipulation of commercial credit is almost 
 as automatic as its issues are under the Act of 1844. Its action has 
 been criticized, as the action of all great social instruments is. 
 But experience has proved that it is wiser than its critics. To my 
 mind its relations to the finance of government are infinitely more 
 valuable and more honest than that of any department of state. 
 It has enjoyed no considerable pecuniary reward. To a great 
 extent it protects against risk those who have been its rivals, and 
 divides profits which do not equal the half of those corporations 
 which would look to it for succour, if their own indiscretion led 
 them into a trap. For it cannot be disputed that the Bank is the 
 centre and pivot of British credit. 
 
 One cannot look with similar confidence on some of these 
 institutions of credit. The evil may be of difficult cure, for Lord 
 Thring, the draftsman for many years of Government Bills, and 
 in particular of the Limited Liability Acts, assured me the other 
 da}', that he knew of no process which could sccvn^e a bona-fide audit 
 of accounts. And of course it is obvious, that no accountant 
 could vouch for the goodness of all the commercial Bills, i.e.^ 
 instruments of credit, which being discounted by a bank, are held 
 in its portfolio. The danger, I imagine, to these institutions of credit 
 lies in the inclination to suppress or qualify a loss, but the indis- 
 creet exposure of it would have an injurious effect on deposits. But, 
 on the other hand, commercial espionage has become almost a fine 
 art. For a guinea a year, you can learn atdiscretion and in confidence, 
 everything about the commercial character of your neighbours.
 
 THE DEVELOPMENT OF CREDIT AGENCIES. 83 
 
 The second great commercial craze, over a hundred years after 
 the great battle, was the epoch of loans in 1825, particularly to 
 I he Spanish republics of the New World. The occasion of Canning's 
 celebrated platitude, a far more serious piece of rhodomontade 
 than the friend of humanity's address to the needy knife-grinder. 
 The English capitalists, and their number is legion, their wisdom 
 being occasionally not higher than the swine into which the 
 li.gion entered, lent to these emancipated peoples, and the eman- 
 u[iated peoples took their money with genuine Spanish dignity. 
 The fact is, they did not know how to use it. Their old masters 
 had carefully excluded them from every function of government, 
 and they had to learn the very rudiments of a civil polity, and 
 among other things the philosophy of credit. So the English 
 capitalist lost the money, and the Spanish republican lost not 
 credit, which he never had, but the contingency of credit. It is 
 not a little instructive that the same region gave occasion to the 
 Bubble of 1720, and that of 1825. 
 
 The railway mania of 1847 was the most anxious, and at the 
 same time the most pardonable, of these crazes. Almost suddenly 
 a means of land transit was perfected, which gave indefinite, 
 because unknown, opportunities of hope. There was no mistake 
 about the fact, the error lay in ignorance as to the conditions under 
 which the fact could become a practical reality. I cannot discover 
 trustworthy evidence for the amount which individvials had sub- 
 scribed for, or for the amount of their losses, but the effects were 
 nearly as disastrous as those which we can read of as to the 
 collapse of the South Sea Scheme in 1720. 
 
 Of course the greater part of commercial business carried on, 
 even in these periods of inflation, is prudent and honest. With the 
 mass of people engaged in trade there is no abuse of credit, for 
 otherwise general business would become impossible. But there 
 is always a risk with individuals. Men, says Adam Smith, 
 habitually overrate their own good fortune and intelligence. If 
 they did not, bookmakers at races, and speculating jobbers on 
 Stock Exchanges could not make fortunes by their craft. If they 
 can succeed in impressing the notion that they are farseeing 
 and fortunate on the holders of loanable capital, that is, extend 
 their credit, they may overshoot the mark. Somebody must have
 
 84 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 trusted men who become bankrupt, and have trusted them un- 
 wisely. Occasionally people have acquired a character for honest 
 dealing and solvency which is wholly undeserved. Many years 
 ago, I suffered a severe prospective loss by the failure of Paul's 
 Bank. Sir John Paul had been insolvent all his life, but by an 
 ostentation of profound religious conviction, he continued to 
 hoodwink a number of people, and to persistently rob them. In 
 our own time similar tactics were adopted by the Greenways, with 
 the same success and the same results. 
 
 Occasionally, the phenomena of a serious collapse of credit, 
 which, did it occur in ordinary business, would create a panic, 
 arises from an improvident extension of credit to a particular class 
 of traders. From the end of the Crimean War, to the final 
 adjustment of Europe after the Franco-German War, the rent of 
 English land was greatly exalted. I have referred to it before. 
 It is derivable of course, from the income-tax returns of farmers' 
 rents. It amounted to 26^ per cent, in twenty years, and I have 
 quoted these figures in order to substantiate other inferences. Now 
 during this period of inflation, banks in agricultural districts made 
 very free advances to farmers. It seemed obvious that men who 
 could compete for occupancy so freely and so boldly, must have a 
 wide margin to meet liabilities. At last, as we all know, the crisis 
 came, and rents began to fall and farmers to be bankrupts. In 
 two years, 10 per cent, of the British farmers, taking the Bank- 
 ruptcy returns and the census together, were swept away by 
 failure. Now at this time I was going to town with a well-known 
 London banker, and in conversation I suggested that the country 
 bankers had made great losses by farming failures. "On the 
 contrary," said he, " they have been the principal agents in the 
 collapse of the farming interest and the depression of rents. They 
 had, as you seem to see, made very large advances to the farming 
 class. But they began to be alarmed for their security. The 
 landlord, they knew, was protected, come what might, by the law 
 of distraint. But the banker had only a second or deferred 
 security. So they began to call in their advances, and precipi- 
 tated the ruin which was perhaps impending." Now, bankers' 
 advances are obviously a form of credit. But it is quite certain 
 that the staunchest advocate of our land system, and the most
 
 THE DEVELOPMENT OF CREDIT AGENCIES. 85 
 
 energetic defender of the landowner's rights, would not allow these 
 sentiments and sympathies to warp his judgment, when he got 
 into his bank, turned over his ledger, and noted the ominous 
 growth of his farming customers' liabilities. 
 
 There are occasions when the acuteness of a trader or a class 
 of traders in the same commodity leads them to anticipate a 
 scarcity, and that rise in prices which follows on a scarcity. Such 
 persons strain their credit to get a command of the market, and 
 sometimes succeed. But they more frequently fail, and for 
 the reason which I have quoted from Adam Smith. But their 
 failure may involve great losses to those who have unwisely assisted 
 them. Such was the case with the great leather failures some 
 twenty years ago. It is the fashion — I believe the use of the word 
 is transatlantic — to call these transactions rings or corners. Some- 
 times, again, persons have divided great gain from the operation 
 of an economical law, which I believe that I was the first person 
 to announce a quarter of a century ago. I noticed in collecting 
 prices that when there was a scarcity in an article of prime 
 necessity, the rise in price is always greatest in the commoner or 
 cheaper kinds of the article. The cause is plain enough. The 
 stint in the article causes a greater demand for inferior kinds. 
 Now I have known persons who have greatly prospered by dealing 
 on such occasions in what had previously been cheap goods. I 
 do not think that they formulated the law, but they got hold of 
 the fact. 
 
 More fortunate still is the person who by divination or private 
 information gets information that a change is meditated in the 
 customs. Some time ago the Government reduced the tea duties by 
 6d. in the pound. The intended change came to the knowledge of a 
 dealer in Mincing Lane. How the knowledge was obtained was 
 never, I believe, publicly divulged. Suspicion, however, fell on a 
 prominent official, who suddenly and completely escaped from 
 known embarrassments. Theinnocent or guilty recipient of the in- 
 telligence at once strained his capital '(a large one) and his credit, 
 which naturally stood high, in the purchase of tea. He knew that 
 the lessening of the duty would be followed by a rise in price. 
 Suppose that 2d. in the sixpence went to the dealer, and the 
 public saved the 4d. It would not be difficult for a large and
 
 J>6 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 powerful operator to make ^100,000 by this safe operation, and, I 
 must add, it might be expedient to pay handsomely for the sole 
 information. The result of this reputed transaction with the 
 official, and real speculation of the tea dealer, was to introduce 
 a custom into administrations, under which the particulars of the 
 Budget are made known to the Cabinet only the night before the 
 Budget is introduced into the House of Commons. The story 
 which I have told you was given to me as an explanation of this 
 singular, and sometimes inconvenient, practice — inconvenient 
 because our coldness and over-timidity in finance are found 
 embarrassing to parties. But nothing under ordinary circum- 
 stances can exceed the anxieties with which traders seek to 
 anticipate the financial measures of the Government. 
 
 Sometimes, indeed, a general collapse of ordinary credit ensues, 
 and this almost unexpectedly. This state of things has been called 
 a panic or a crisis, and is rarely or never foreseen. Now, I have 
 already referred to two of these by name only, i.e.^ the panics of 
 1825 and 1847. In both cases the catastrophe was due to a sudden 
 distrust of commercial credit, particularly of the country banks ; 
 for on both occasions, when credit was almost universally shaken, 
 the reputation of the Bank remained intact. But the acutest men 
 of business were very much divided in opinion as to the causes 
 which had really brought about the calamity, and still more 
 divided as to the cause of its cessation. A panic rarely lasts long. 
 In 1825, according to Mr. Tooke, an eye-witness of the circum- 
 stances, its endurance was three weeks only. In 1847 the same 
 acute observer declares that there were two panics, one in April, 
 the other in October, and each of somewhat longer duration. 
 
 The true cause, I conclude, of a credit panic is the close inter- 
 lacing of monetary interests. If Ucalegon's house catches fire, 
 his neighbours are in extreme risk of the conflagration extending. 
 The incaution of one banking house has led to its failure, and 
 similar incaution is ascribed to other houses which have been 
 cautious. But, as it is the essence of banking that it puts its 
 credit into circulation, distrust induced on that credit leads to a 
 demand for that which it represents, and in the crisis of 1825 it is 
 admitted that the form which the demand took was gold for internal 
 use. Fortunately the public was entirely convinced of the sound-
 
 THE DEVELOPMENT OE CREDIT AGENCIES. 87 
 
 ness of the Bank of England, and was ready not only to take its 
 notes, but to exchange the gold which it had drawn out, through 
 the bankers in which it had distrusted, for the notes of the Bank. 
 Thus, when a London bank failed on December 8th, there at once 
 arose a run on the other London banks on the two following days. 
 But these banks were prepared, and the alarm subsided. On the 
 1 2th, however, another London bank failed, and the run re-com- 
 menced. On this occasion the Bank of England began a practice 
 which before it had steadily refused to adopt — that of lending 
 money on its own or on Government stocks. But during the 
 intensity of the crisis, the Bank made free loans of its own 
 notes, and humoured the panic so effectually that it reduced its 
 own stock of coin and bullion to little over a million, to as low 
 an amount as the cover stood in the memorable 1797. But the 
 Bank knew that the gold coin was in the country, and that, the 
 trouble over, it would rapidly return. For, though credit was 
 suspended, and it was impossible without serious loss to turn 
 securities into cash, the property and the securities were there, 
 and the Bank was able to fortify the credit of others by an 
 enormous advance of its own notes on security. It is note- 
 worthy that during this period the Bank raised its rate of interest 
 only once from 4 to 5 per cent., and, indeed, for the first century 
 and a quarter of its career its rate of discount was generally 
 invariable. 
 
 Three years before the trouble of 1847, Sir Robert Peel, then 
 at the height of his reputation — well-deserved, indeed — and 
 leading a large and united party, passed the Act under which the 
 Bank of England is still regulated. I cannot enter here on the 
 criticism of that Act. It is perhaps the strongest meat in all 
 economics, and requires the most energetic digestion. I do not 
 as yet venture on discussing the provisions of a statute on which 
 more has been written adversely and eulogistically than on any 
 other Act of legislation. It is sufficient to say that while its advo- 
 cates declare it to be the quintessence of monetary wisdom, the 
 most acute and dispassionate of its critics says that it is the " most 
 wanton, ill-advised, pedantic, and rash piece of legislation which 
 ever came within his observation." The Act has been frequently 
 suspended, and under circumstances where it was meant to be
 
 88 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 operativ'e, and it has been imitated by no other civihzed com- 
 munity. 
 
 The Bank is constrained to curtail its issues, and thus to contract 
 it accommodation, its own reputation remaining intact, at the very 
 time when its assistance is most wanted. Hence, when the strin- 
 gency has been at its height, the law has been suspended, and the 
 Bank empowered to make an excess of issue. The Bank, of 
 course, cannot, and should not, support those who are provably 
 insolvent, as it never has knowingly done through its long history. 
 Its function is to help at a period of unreasoning and unreasonable 
 distrust those who are solvent. And the proof that the suspension 
 of the Act is imperative, as well as discreet, is in the fact, invariably 
 recurrent, that the panic ceases as soon as the Bank is allowed a 
 discretionary issue. In the interval, much undeserved hardship 
 has occurred, not in the cost of accommodation, for this is com- 
 paratively trivial and temporary, but in the stint of accommodation 
 when this has been urgently needed. 
 
 A good deal of metaphysics has been written about credit. I 
 have only glanced at this method of treating the subject in the 
 present lecture. The true theory of the subject has not only 
 been obscured by them, but by the wrongheadedness of many, 
 some great names, who would not admit that their inductions 
 were erroneous and one-sided, and by misconception as to what 
 credit will do. You will be safe, in my opinion, if you recognize 
 it as the mobilization of capital with a view to increasing its 
 efficiency, and that it tends to make that fluid and elastic which 
 is naturally rigid and unyielding.
 
 V. 
 
 THE DEVELOPMENT OF TRANSIT. 
 
 Development of 7narine transit in ancient and mediceval a^cs — T/ic 
 discovery of America and the Cape Passage — Rise of Dutch trade — • 
 Rivalry of the English — Hindrance to the development of English 
 shipping — Progress under free trade — MilVs pessimism refuted by 
 experience — Modern econojnies in the cost of transit. 
 
 The annals of no country illustrate more conclusively what trade 
 will do for a community than those of Holland. It was not till it 
 began to assert its independence, or, at least, to affirm that it had 
 chartered liberties, which it was not competent for its Count to 
 revoke at his pleasure, though this Count happened to be King of 
 Spain and Portugal and lord of the East and the West, that 
 it possessed either trade or manufactures to any notable extent. 
 These were centred in the great cities of Flanders— Bruges, Ghent, 
 Antwerp, and a hundred more. It was in those towns that the 
 clothing of the west of Europe was manufactured, at least, all but 
 home-spun, and it was from Bruges that the spices of the East 
 were distributed over the same region. Antwerp, of course, by 
 the relative pre-eminence of its trade, was also the city where 
 the commercial bills of the same district were negotiated and dis- 
 counted, for in the fifteenth and the first half of the sixteenth 
 centuries Antwerp, always considerable for its connection with the
 
 90 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 Hanseatic League and the Baltic trade, was appropriating much of 
 the commerce which Venice and Genoa had formerly enjoyed. 
 The Eastern commerce of Bruges was seriously crippled by the 
 conquest of Egypt in the first quarter of the sixteenth century, 
 and the consequent block of the Alexandrian trade, and Flanders 
 was, as you all know, ruined by Alva, the Spanish Inquisition, and 
 the wars of religion. But the ruin of Flanders was the making of 
 Holland. It would not even under the circumstances have been 
 made had it not been for the character of its people. But in 
 estimating the progress of nations you must always take circum- 
 stances into consideration. Men are not, as fools and poltroons 
 say, the creatures of circumstances, but it sometimes happens that 
 very obscure or unrecorded causes have had much to do with per- 
 sonal, local, and even national prosperity. I do not think that 
 Holland would have been so great if Flanders, after it had lost its 
 ancient spirit, had not ceased to be the commercial rival of its 
 would-be liberator. But I shall have occasion to refer to the place 
 which Holland took in the history of trade transit as I deal with 
 my present subject. 
 
 The trade of ancient civilization was, with one exception — that 
 of Carthage — bounded by the shores of the Mediterranean, and we 
 infer that the Phoenicians passed through the pillars of Hercules 
 into the Atlantic, rather than possess proof of it. But the trade, 
 and by implication the transit of goods from city to city, was 
 bounded within narrow limits. Athens was the most enterprizing 
 of the Greek cities in the East, and there is not much evidence 
 that Athenian vessels went beyond Byzantium in ordinary trade. 
 In the Western Mediterranean Marsilia was the principal centre 
 of trade, but there is reason to believe that its principal business 
 was done with the Gallic tribes of the interior, and that through 
 this port the Phcenicians derived their tin by an overland passage 
 through Gaul and the short sea route of the English Channel. 
 In the absence of evidence one cannot affirm or deny that they 
 passed up by the coast of Spain, ventured on the Bay of Biscay, 
 and thence kept along the coast of Gaul to Western Britain. The 
 Cornishmen believe that they did, and I was told that there still 
 remain evidences of Phanician moorings in the numerous creeks 
 of Falmouth Harbour. There are some people to whom the
 
 THE DEVELOPMENT OF TRANSIT. 91 
 
 t\idence of Cade's follower, that the bricks are alive to this day to 
 show it, is conclusive. That tin was procured is certain, that it 
 came from Western Britain is nearly certain, though tin is found 
 in the Iberian peninsula, but history is silent as to the route by 
 which it came. 
 
 The English race, particularly in the south, early developed a 
 marine. But there are charges, not perhaps entirely unfounded, 
 til at these sailors were more given to freebooting than to trade. 
 Ouite apart from any differences between the two countries, which 
 were indeed from after the middle of the eleventh up to near the 
 middle of the fifteenth, with no doubt a considerable interruption 
 in the thirteenth, under one sovereign, the mariners of Northern 
 France and those of Southern England carried on incessant war- 
 fare with each other. Now piracy to be successful requires that 
 some attention should be given to the arts of shipbuilding and 
 navigation, for it is of importance to the pirate that he should 
 escape with his booty. There is some evidence in the stories of 
 sea fights, as that of Eustace the monk, with the Cinque Ports in 
 12 17, and that of the fleet which our Edward III. collected, prin- 
 cipally from the southern ports, in order to the battle of Sluys, 
 that the English in these early days handled their barks shrewdly. 
 But the English hardly ventured out of their own channel, except 
 on the eastern side of the island, where they went in quest of fish, 
 all along the Scottish coast, and probably as far as Iceland. 
 
 Towards the middle of the fifteenth century the Bristol fish curers 
 determined to attempt the western route to the Iceland cod 
 fisheries. The author of the " Libel of English Policy," who, as 
 I have been told by the present librarian of the British Museum, 
 was almost certainly Adam du Molyns, Bishop of Chichester, mur- 
 dered or lynched, for he seems to have had a kind of rough trial 
 at Portsmouth, early in 1450, says that in his day this expedition 
 was first attempted by the use of the mariners' compass. I have 
 little doubt that this successful venture was the principal stimulus 
 to Bristol enterprise, and I doubt not that it was out of the riches 
 gained in this and similar voyages that Cannyng made the wealth, 
 the dedication of a portion of which remains visible to this day in 
 the beautiful church of St. Mary, Redcliffe. To my mind it would 
 be well if the students of commercial geography, instead of merely
 
 92 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 announcing the present conditions and statistics of commercial 
 centres, were to search a little into the causes which led to certain 
 localities becoming commercial centres. 
 
 Certain evidence, however, survives that in early times attempts 
 were made to explore that mysterious ocean which lay outside the 
 Mediterranean. Herodotus tells us of a Persian who was forced in 
 expiation of an offence to explore, and makes a statement as to 
 what the traveller saw, which is at least a proof that some mariner 
 must have crossed the equator and sailed into the southern hemi- 
 sphere. There is the voyage of Hanno the Carthaginian, and 
 Scylax, and there is still preserved to us the narrative of the 
 expedition which Nearchus made down the Indus and into the 
 Arabian Sea. But the geography of antiquity is very vague, and 
 like its navigation gets very little beyond the basin of the Medi- 
 terranean. Strabo, the most voluminous writer on ancient geo- 
 graphy, and if you can read Greek, a most agreeable author, for he 
 fills his descriptions with the most curious facts and statements, 
 takes Homer as his principal authority. But one of the most 
 remarkable facts in ancient civilization is its rapid and amazing 
 development in art, and its early ascent in everything else. Oi 
 course the Greeks filled this unknown region of ocean with 
 mysterious continents and islands, some submerged, others far and 
 happily removed from the incessant aggressions and turmoils of 
 ancient life. 
 
 These ancient stories and legends no doubt led to the enterprize 
 of Henry, Prince of Portugal, the grandson of our John of Gaunt, 
 who, in the middle of the fifteenth century, ventured on the un- 
 known sea, and explored the coast of Northern Africa. Thence- 
 forward maritime enterprize became a tradition at the Portuguese 
 court, which fortified itself by a bull of Roderic Borgia, also 
 Alexander VI., in which the full sovereignty of all possessions 
 discovered in the eastern side of the great ocean was conferred on 
 Portugal. The example was contagious, and Isabella of Castile 
 supplied the ships and funds for the voyage of Columbus. The 
 doubling of the Cape and the discovery of Hispaniola were effected 
 almost at the same time. Our Henry VII. stood aloof from the 
 enterprize. But the Bristol merchants discovered Newfoundland, 
 the nearest part of America to Europe.
 
 THE DEVELOPMENT OF TRANSIT. 93 
 
 The Cape passage and the sea route to India were not dis- 
 covered a day too soon. In 15 15, the Turkish scourge fell on 
 Egypt, nearly destroyed it, and blocked the only remaining land 
 route to the East. I know no historical event which has brought 
 about more signal and more enduring changes than the conquest 
 of Egypt by Selim I. But nothing has been more entirely ignored 
 by our paste and scissors historians than this event and its conse- 
 quences. I have dwelt on them before ; I have pointed out that 
 they are the key to many a European problem in the first quarter 
 of the sixteenth century. I need not dwell on them here, and 
 only refer to them in order to show how powerful a stimulus 
 necessity was to the development of the sea route to India and 
 the improvement of the transit trade. 
 
 Now at the time when Borgia issued his Bulls Western Europe 
 still believed in the Pope, though his doings and those of his 
 family were inconsistent, to say the least, with his function and 
 profession. I believe that an attempt has been made to whitewash 
 his daughter Lucretia. I am not sure whether something of the 
 same kind has not been done for his son Caesar, and even for the 
 Pope himself. But these are the customary pranks of the philo- 
 sophy of history. After possession had followed on the Bulls, the 
 occupants were, or seemed, too strong for dispossession, and, to say 
 the truth, the Spanish soldier of the sixteenth century was a very 
 formidable person when he was properly led and paid with fair 
 regularity. It was a long time before any of the European nations 
 ventured to dispute the ownership of the New and the Old World 
 as enjoyed by Spain and Portugal respectively. 
 
 Now this bears upon my subject, the development of the art 
 of transit. Provided a vessel was seaworthy, speed was no object 
 to these monopolists. They had virtually, at least as far as 
 Portugal went, the sole market of the Eastern world and its 
 most desirable products. Their vessels were huge unwieldy 
 structures ; but apart from their knowledge of gunpowder and 
 its uses, which was formidable as a terror, if for little else, their 
 visits were to peoples which were not seafaring, or, at most, 
 familiar with nothing better than a canoe. So the Portuguese 
 fairly established themselves in the Spice Islands, and had factories 
 on the western coast of India. When it was too late, the Turks
 
 94 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 tried in their clumsy and barbarous fashion to restore the trade 
 which they had ruined. But the land route to Aleppo had no 
 chance against the long sea voyage, slow and capricious as it 
 was. 
 
 The English were still a seafaring people. They seemed to 
 have frequented the Baltic. But during the reign of Henry VIII. 
 they did not go further south than Seville. Their first distant 
 venture — I omit that of the voyage to Newfoundland — was an 
 attempt made under Sir Hugh Willoughby in the reign of Edward 
 VI. to discover a north-east passage along the Arctic Sea and the 
 coast. Sir H. Willoughby with two of his crews was caught and 
 perished in the Arctic winter, the third reached what we now 
 know as Archangel, and established our first commercial relations 
 with Russia. They did not attempt to navigate the Mediter- 
 ranean till towards the end of the sixteenth century, and then 
 they had but little success in that region, for the Levant Company 
 which Elizabeth chartered was a failure to the adventurers, and 
 a loss to the Crown. 
 
 Now to carry on distant navigation with safety it is necessary 
 to know several things. The Portuguese had learned something 
 about the trade winds, the peculiarities of the Southern and 
 Indian Oceans, and had surveyed, and in a rude way constructed 
 charts of these seas. These were, however. State secrets, like an 
 Emperor's diary. It was in the last degree important to get at 
 them, to copy them, and to put copies of them into safe hands 
 in Europe. Now there was war between Spain and Holland, of 
 which I shall say a little hereafter, but till Philip II. succeeded 
 to the Portuguese throne, peace between Holland and Portugal. 
 If Philip had not succeeded to this new kingdom and its vast 
 possessions it is difficult to imderstand how Holland could have 
 got a foothold on the Spice Islands. The necessary information 
 was procured for them by one Linschoten, a Dutchman. 
 
 I know nothing in the romance of history more curious than 
 this man's career. I never read but of one other Dutchman 
 whose fortunes were so romantic. I refer to that of Ripperda 
 in the eighteenth century. But that person was not so respectable, 
 and he ended in failure. Linschoten had taken up his residence 
 in Portugal. He got into the service of the Aichbishop of Goa,
 
 THE DEVELOPMENT CF TRANSJT. 95 
 
 and accompanied him to the Portuguese settlement in the western 
 coast of Hindostan. Here he began to collect all the important 
 evidence which he could put together, the mystery of the trade 
 winds, the geography of the Eastern Archipelago, where the 
 most important of the Portuguese factories were, the botany of 
 the district, the navigation of the channels, and the character of 
 the natives. Finally, he got hold of the maps which the Portuguese 
 had drawn, copied which could be procured, and carefully secreted 
 them. During the long period of his eastern residence, Portugal, 
 with its dependencies passed into the hands of the King of Spain, 
 and Linschoten, though he had to work with still more secrecy 
 and care, had the satisfaction of knowing that he was not only 
 engaged in instructing his countrymen, provided he could get 
 back with his treasures, in the way to enrich themselves, but was 
 countermining against the national enemy. He must have had 
 rare gifts of dissimulation. At last he completed his research, 
 contrived to quit his patron's service without suspicion, and 
 returned to Holland. Here he speedily published his " New 
 Map of the Indies," to which our own Shakespeare makes 
 reference, and instructed his countrymen in the new field of 
 adventure which he had informed them of. He must have let 
 them know how readily their quicker and more easily managed 
 craft could grapple with the great clumsy galleons in which Spain 
 carried on its trade. 
 
 But before Linschoten's maps were published Dutchmen and 
 Englishmen had successfully achieved the circumnavigation of 
 the world, and so solved a problem which was insoluble to the 
 earlier geographers. The English expedition was effected by 
 Drake. This resolute and able navigator was by no means in- 
 different to accidental opportunities. Whatever Philip's secret 
 intentions were, however well they were divined by Walsinghara 
 and disclosed to Elizabeth, there is no reason to believe that the 
 Plymouth sailor was made acquainted with them. Drake, how- 
 ever, takes matters into his own hands. He had personal reasons 
 for dislike to Spain and its government ; but, I imagine, that if 
 no such reasons had existed, he would have harried Spanish 
 commerce. In plain English, Drake had all the instincts of a 
 pirate, the best opportunities, and the fullest inclination to avail
 
 96 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 himself of them. One cannot defend his action, but it was 
 eminently useful. Out of his great voyage he learnt how to 
 attack tlie Spanish fleet in Cadiz, and to deal with the Armada. 
 For in those days, and after so long a decline in the naval enter- 
 prize of England, after the disgust which had come over every- 
 thing, owing to the action of Henry, his son's guardians, and his 
 elder daughter, it was necessary that the seaman should be 
 schooled into confidence. The story about Drake and the game 
 of bowls at the Hoo may be a fiction, but it must have been a 
 verisimilitude. 
 
 Now, you will see that, in order to effect the settlement of their 
 factories in the East, and to overawe such potentates as might 
 be disposed to resist them, and to conquer the native races of 
 America, it was sufficient that the two powers of Spain and 
 Portugal should have seaworthy vessels, and should make some 
 study of navigation. The races with whom they came in contact 
 were not seafaring, except to a trivial extent, and were wholly 
 unacquainted with the means of modern warfare. Nor was time 
 a matter of serious consideration to these earlier traders ; they 
 obtained a monopoly of the articles in which they designed to 
 traffic, for any other route was cut off when they began their 
 career ; and when the Turks tried, as I have told you they did, to 
 revive the overland traffic, they found, as other people besides 
 Turks have found, that it is much easier to destroy than to revive. 
 The produce of the East when it reached Europe was sold at ten 
 times the price which it cost in the country of its origin, and, 
 even then, was cheaper and better than the produce which was 
 carried by land. Besides, in aid of this monopoly, long after 
 certain European races had ceased to respect the Pope and his 
 Bulls, the power of Spain was very formidable in the eyes of 
 Western Europe. There was a real and a rational dread of 
 Philip II. a century later, and there was the same dread of Louis 
 XIV. A century further on and the career of French conquest 
 began, and Europe, with no little reason, was greatly afraid of 
 Napoleon. Experience in all these cases dispelled the alarm. 
 The Dutch, after a severe struggle, disposed of Philip II. The 
 English and Dutch a century later disposed of Louis XIV. The 
 career of Napoleon was first arrested by Russia, then by uprisen
 
 THE DEVELOPMENT OF TRANSIT. 97 
 
 Germany, and finally this country took a conspicuous and resolute 
 attitude with that remarkable individual, whom our fathers and 
 grandfathers were fond of calling the Corsican tyrant. Now I 
 mention these obvious and trite particulars, the common-places 
 of history manuals, because we should remember, that inter- 
 national scares, though frequently discreditable to poltroonery, 
 are real states of mind with some people, and have to be taken 
 account of, in the economic interpretation of history. It needs 
 iio little courage to confront a general scare, and the nation or 
 state which does it, when the scare is at its height, exhibits a 
 courage which may be called almost desperate. 
 
 Now this was what the Dutch did. Aided by Linschoten's 
 information, and made confident by their success at sea, for the 
 battle of Dutch independence was mainly fought at sea, the 
 Hollanders determined to essay the Indian Seas and the Indian 
 Archipelago. But to do this they needed : (i) the requisite 
 knowledge of navigation ; (2) greater skill in ship-building, 
 especially in view of the fact that a trading vessel was originally 
 also a vessel of war ; and (3) confidence. The Dutch were a very 
 curious people in their wars. They fought the King of Spain 
 to the death, and they traded with him and his subjects all the 
 time. Trade, free trade with the whole world was essential to their 
 very existence. In the seventeenth and the first two years of the 
 eighteenth century they hated and dreaded Louis XIV. a great deal 
 more than they had Philip II. in the sixteenth, but they could not 
 understand why the English should insist during the War of 
 the Spanish Succession on a cessation of all trade with France. 
 They yielded to English demands in 1703, but with a very ill 
 grace, and I suspect that their deference was mainly outward show. 
 I am sure it was in England. French brandy and French silks, 
 although prohibited, were plentifully purchased. The London 
 traders, though heartily attached to the Revolution and the 
 Protestant succession, were great dealers in smuggled French 
 goods, and all the effect of the policy which our people thought 
 wise in those days was, that the goods came in and the govern- 
 ment did not get the customs on them. It is exceedingly 
 difficult to baffle the smu!?;g]er v/hen the sympathies of the public 
 are with his calling, and I am old enough to remember when 
 those sympathies were active and friendly. 
 
 8
 
 98 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 Now the Dutch entirely contrived to satisfy those conditions of 
 which I have spoken. They routed, captured, sunk Spanish war 
 vessels which were three times their tonnage, and carried three 
 times their weight of guns. And the peculiarity of this warfare 
 was that they inflicted these losses without incurring any notable 
 injury themselves. The details of Dutch history are full of 
 these extraordinary exploits. The Dutch became as formidable on 
 sea as the Northmen and the Danes, and the Hanseatic League 
 curbed the Northmen and Danes much more eflFectually, I 
 suspect, than their conversion to Christianity tamed them. The 
 profession of Christianity, I fear, has not deterred nations from 
 piracy and buccaneering and privateering, and aggressive, unjust 
 wars. 
 
 That the Dutch built the best ships of the age, knew the art 
 of navigation better than any one else did, and improved that 
 art by the most careful and elaborate processes, is proved by the 
 fact that within fifty years after their independence was acknow- 
 ledged they became the carriers of the civilized world. Dutch 
 vessels, manned by Dutchmen, were in every port of Europe. 
 Now the art of navigation has been built up more slowly than 
 any of the economic arts. It has laid all kinds of human know- 
 ledge under contribution. Its first requisites are a knowledge, as 
 far as the sea is concerned, of physical geography. For centuries 
 it has been compiling observations, in the days of sailing vessels 
 more important than now, of ocean winds and ocean currents. 
 Then it enlisted the services of the mechanician, the astronomer, 
 the chemist, for the art of preserving ships from decay and the 
 attacks of numerous sea enemies, has been a vast stimulus to the 
 discovery of practical results. Galileo, using his new telescope, 
 discovered the satellites of Jupiter, and forthwith laid the founda- 
 tion of an entirely new art of navigation. But it was in Holland 
 that this art took its first new steps, and the mariners of England 
 went to Amsterdam to get the new dex'ices for swift and safe 
 navigation. 
 
 Like any other European state, the Dutch aimed at securing a 
 sole market. We were no wiser than they. To make Great 
 Britain and Ireland and the British Colonies free ports for the 
 world was a theory which only a few wise, and therefore dis-
 
 THE DEVELOPMENT OF TRANSIT. 99 
 
 credited, people elaborated. I only remember one statesman who 
 held this opinion in the eighteenth century, and that was Henry 
 Fox. Now Henry Fox was a man whom everybody disliked. 
 He was believed to be the most corrupt and greedy man con- 
 ceivable in a very corrupt and greedy age, and I don't think that 
 this character, a pretty just estimate, assisted the force of his 
 opinions. And you must not imagine that this foolish delusion — 
 a sole market — is defunct. The French, though they have not 
 succeeded very well in their efforts, are under this illusion. So 
 are their rivals and enemies, the Germans. It appears, however, 
 that their project of establishing African factories is not par- 
 ticularly promising. In old days, our own Chatham was fully 
 pursuaded of the prudence of this kind of policy, and certainly 
 seemed to have secured its accomplishment by the Seven Years' 
 War. I have my suspicion that his strange conduct towards its 
 conclusion was due to his being at his wits' end to see how the 
 interest on the loans contracted during that war could be 
 provided for. His successors certainly did not, and made matters 
 worse. But I do not intend to investigate Chatham's motives and 
 manners. They are part of the philosophy of history, a branch 
 of human speculation to which I never took kindly. 
 
 A sole market, as you will easily anticipate, is a form of pro- 
 tection, and it has the inherent vice which characterizes all forms 
 of protection, that it makes the object of it slow and stupid. To 
 give a man a secure market is to shorten his faculties and weaken 
 his powers. I do not doubt that if the Dutch had secured, as they 
 seemed likely to secure, a sole market in the Eastern seas, they 
 would never had been, despite their free-trade theories in Holland, 
 the carriers of the world. We have got an old proverb, certainly 
 as old as the Greek world, for the extension of it in detail is the 
 substance of a good part of the Plutus of Aristophanes, " that 
 necessity is the mother of invention." Take away the necessity 
 and the invention goes Avith it, is the argument of the Greek 
 poet, and it is true from that time to this. 
 
 Now the necessity came from English rivalry. However much 
 they might have desired it themselves, and they fought long 
 and desperately for it, they had no mind to see another nation 
 affirm and secure it. The Dutch were for two centuries the
 
 loo INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 English allies, and very useful allies the English found them. 
 But it was another thing to give way to their pretensions and 
 abandon one's own. So the English became the ill friends of 
 Holland in the Eastern Archipelago, and there were awkward 
 doings there — doings long remembered and made the politic plea 
 for hard bargaining. But this rivalry put the Dutch on their 
 mettle. They fought against their competitors in the approved 
 mode, but they fought against them by invention and sharpened 
 wits. You will remember that when Peter the Great determined 
 on giving his people practical instruction in the arts of life he 
 undertook to learn them himself, and go through the only practical 
 course which there is of technical learning. So he went as a ship's 
 carpenter to Amsterdam, and worked in the yards with his own 
 hands. He came, it is true, to England, and inhabited Evelyn's 
 house, much to that excellent man's subsequent disgust ; for Mus- 
 covite habits, even in the highest ranks, were decidedly and 
 permanently repulsive ; but he learnt his craft in Holland. 
 
 I shall deal with the two East India Companies in a later 
 lecture, merely stating here that the Dutch Association was 
 conceived and carried out on a far greater scale than that of 
 England, and that the Dutch were traders as well as conquerors, 
 while our people, if we can take the first chairman of the East 
 India Company as a specimen, I mean Clifford Lord Sunderland, 
 were scarcely conquerors and decidedly buccaneers. But the 
 process of rivalry, peaceful or piratical as the case may be, was too 
 slow for the passions of the British merchants, and Cromwell 
 indulged them with the Navigation Act, another form of protec- 
 tion, under which trade to England or its dependencies was limited 
 to English-built ships, manned by a large majority of English 
 sailors. They did not absolutely exclude all foreign sailors ; that 
 would have been suicidal, as they still had a good deal to learn 
 from them. The Navigation Act was the most foolish piece of 
 Cromwell's whole legislation, and was therefore, very naturally, the 
 only part which was re-enacted after the Restoration. There is 
 a characteristic flavour of baseness in the re-enactment, for it was 
 aimed at the Dutch, who had befriended, sheltered, and assisted 
 Charles during his exile. Charles must have relished it. 
 
 The Navigation Act, like every other form of protection, in-
 
 THE DEVELOPMENT OF TRANSIT. loi 
 
 jured the Dutch, but did not benefit England. It diminished, as 
 far as this country was concerned, the carrying trade of the 
 Dutch, but it is an exaggeration to say that it ruined it. It 
 merely made it more effective in other quarters. The ultimate 
 decline of the Dutch carrying trade was due to totally different 
 causes. The States permitted themselves to be involved in 
 European wars in which they had absolutely no concern, notably 
 that of the Austrian succession, mainly that they might secure 
 their sole market by getting rid of the Ostend Company, and by 
 incurring, for the same visionary end, enormous and ruinous 
 charges in the Eastern Archipelago. And as for us, under the 
 Navigation Act and the merry monarch, merry as Nero was, the 
 Dutch burnt the fleet in the Medway and insulted London. Aftet 
 Charles, with the perfidy of his race, garnished by levity of his 
 own, declared unprovoked and sudden war on Holland in 1672. 
 Human beings have reverenced strange rulers, but the endurance 
 of Charles II. is a puzzle to me. And yet the newspapers kept 
 up the farce of applauding him till the beginning of Hanoverian 
 epoch, when some of them, to the disgust of the Highflyers and 
 Perkinites, as they called the adherents of the exiled dynasty, 
 began to draw conclusions. At the present time, I should think 
 that even his descendants would hardly respect his memory. 
 
 As I have mentioned to my hearers more than once before, the 
 two great efforts of persons engaged in commercial intercourse 
 between nations are to lessen the cost of production, and to lessen 
 the cost of transit. Of course, if one were to succeed in getting 
 a sole market from which all rivalry is shut out, these impulses 
 are greatly attenuated. Trade regulations of a protective charac- 
 ter, like a conventional currency, instantly cease over the boun- 
 daries of local or municipal law. You may injure your neighbours 
 by such expedients in the home market, but you are powerless in 
 neutral markets. Here competition has its own way, and the 
 protected producer has to hold his own if he can, and this is 
 rarely his fortune against the genuine free trader. But there 
 is only one way in which the protected producer can, and then 
 only to a limited extent, undersell his free-trade rival. This is to 
 put the charge of his experiment on the wretched people who are 
 constrained to deal with him, either by cbarcing higher prices on
 
 I02 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 genuine articles, or equal prices on fraudulent and inferior articles. 
 For what is the need of protection if in international and com- 
 petitive commerce you can sell your own products as cheaply, the 
 quality being equal, as your rivals can? But the experiment can 
 only be on a limited scale. If it were on a large scale, the 
 domestic burden would become intolerable, attract notice, and 
 except under an autocratic government, or among an entirely 
 deluded and besotted people, would be removed. 
 
 Even during the period in which the craze of the sole market 
 was crippling invention, and generally checking the development 
 of the industrial arts, the British Government was alive to the 
 necessity of improving the art of navigation. It offered substan- 
 tial rewards for the discovery of the longitude, and for the im- 
 provement of marine timepieces or chronometers. But the British 
 Parliament, absurdly jealous as it was of a standing army, never 
 manifested any jealousy of the navy. The navy was not, indeed, 
 in a very satisfactory condition, if the description which Smollett 
 gives of the king's ships in *' Roderick Random " is in any sense 
 a correct portrait. But crimped or pressed as the sailors were, 
 brutally ill-used as they were by the despots who ruled them, 
 they would fight. Even the captains were very rarely guilty of 
 cowardice. I can only recall the case of Benbow's captains to 
 memory, as manifestly guilty of poltroonery ; and it is not quite 
 clear that in 1702, some of these captains had not taken bribes 
 from Louis XIV., for that most Christian monarch was perfectly 
 ready to corrupt any one with his money. Now in order to 
 maintain the naval supremacy of England, it was necessary that 
 her navy should be furnished with every appliance which could 
 assist rapid navigation, quick evolution, and safety. Read the 
 account of any of the great naval battles of England, from that 
 of Cape Passaro onwards, and you will find that success was ex- 
 pected from the adoption at sea of the one great rule of land 
 warfare — that of breaking the enemy's line, and destroying him 
 in detail. 
 
 There does not, however, seem to have been much improvement 
 in the navigation of the mercantile marine, except the adoption for 
 reasons of economy and safety, of those expedients which the Admi- 
 ralty had secured for the armed marine. Hence, when war broke
 
 THE DEVELOPMENT OF TRANSIT. 103 
 
 out, the danger which merchant vessels ran from privateers was 
 very great. The exploits of these rovers who, during the war of 
 American Independence materially assisted the issue, are still 
 remembered. To build quick sailing ships, manned with a 
 resolute crew, and provided with a few well-managed guns, was 
 forced upon the colonists, and was soon a marked success. I 
 imagine that the superior skill of the Americans in building 
 racing yachts is in succession from those privateering times. 
 
 But, in fact, the art of navigation in England was blighted by 
 its surroundings, the sole-market theory, the differential system, 
 the monopoly of the great chartered companies, of which I hope 
 to speak hereafter, and the Navigation Act. Under the two forms 
 of the first of these we obtained war materials at a higher cost, on 
 the plea that in this manner we fostered the colonial lumber trade. 
 Under the second British trade among the general body of English 
 shipowners was excluded from that part of the world which had 
 been assigned to the chartered companies, one of which, the East 
 India, had continued to get the China tea trade into its hands to 
 the great injury of the English consumer, and for the matter of 
 that to the customs revenue. By the third the material for ship- 
 building, as then practised, was rendered artificially dear. I can 
 well remember what an impulse the tea trade took when the virtual 
 monopoly of the old company was put an end to, and how the 
 price rapidly fell. 
 
 It is only when you take cases and follow them out that you can 
 detect the disaster which a protective policy induces on industry. 
 It excludes its objects from light and knowledge. The progress of 
 English agriculture was rapid while the corn laws were, owing to 
 good crops aad abundant supplies, inoperative. In the woollen, 
 the cotton, the iron trade, the impetus given by the possibility of 
 foreign competition has removed the actuality of that competition. 
 I cannot, of course, allege that domestic competition has not cut 
 down profits, as is the case in the salt and soda ash trade. I have 
 heard that a similar competition has reduced the profits of colliery 
 owners, though here the situation is by no means so simple as the}' 
 who say they smart under it contend. Similar allegations are 
 made about the iron trade, and it is gravely suggested that the 
 whole supply of these articles, perhaps only among others, shall
 
 I04 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 be regulated and the price fixed by a syndicate, association, or 
 gigantic company, which shall reproduce some of the phenomena 
 of what the Americans call a ring or corner. 
 
 But the power of regulating prices possessed by producers is 
 very narrow. It is always open to competition on the part of 
 those who have not taken part in the association, who vould 
 assuredly, if the prospect were open to them, make a rush for the 
 extra profits which such an association is intended to guarantee. 
 And if this takes place, and a fresh supply is added to that which 
 the promoters of the scheme allege is already excessive, the expe- 
 dient becomes nugatory, and the latter end is worse than the 
 beginning. I have never yet heard, in modern times at least, of 
 one man or any association of men, being able to dictate the 
 terms under which a free industry shall be carried on, and a price 
 secured to the regulated produce. Of course, if the State confers 
 a monopoly by patent, the price can be secured to the patentee, 
 being that at which he is able to undersell successfully all pro- 
 duces under a common and old process. But the monopoly 
 granted by protection does not affect an exalted profi:. As long 
 as the Government does not go to the length of protecting indi- 
 vidual producers, and allows the area which it fences for the 
 industry to be open to all, the inevitable tendency of profits to an 
 equality will do its work. I very much doubt whether the profits 
 obtained by the New England cotton spinners and woollen weavers, 
 and the reputed gains of the Pennsylvanian iron masters are due 
 to the aid which the Government gives them by a protective tariff. 
 The population of the United States increases at an enormous 
 rate, mainly by immigration. There is consequently an ever- 
 increasing body of local consumers, whom the cost of freight and 
 the habit of the market, bind to the domestic producer. And if 
 there be any truth in the complaints made about the cotton and 
 woollen trades, domestic competition has reduced profits in New 
 England as fully as in the old country ; and as far the pauper 
 labour of Europe, in contrast with the high wages of the States, 
 an examination of the statistics laboriously and most conscien- 
 tiously compiled and printed by the States and the Federal 
 Government, as to the wages of labour and even the numbers of 
 the unemployed, the description of the tenement houses, and the
 
 THE DEVELOPMENT OF TRANSIT. 105 
 
 narrative of the terrorism exercised by the Pennsylvanian iron 
 masters over their hands under the black-Ust system, prove that 
 the United States are not the paradise of labour which interested 
 knaves allege that they are, and that not a little of the confidence 
 expressed by the advocates of the present system in its efficacy 
 and usefulness is, when it comes to be examined, no better than 
 bounce. 
 
 When this country boldly and definitely adopted free-trade 
 principles the doctrine of the chartered monopoly had become 
 obsolete, or nearly so. But there still remained the differential 
 duty on colonial products and the Navigation Act. We were told, 
 of course, when we urged that sugar or timber, whatever their 
 origin was, should be put on the same level of duty payment or 
 freedom, that we were about to sacrifice our colonies their alle- 
 giance, and whatever there was that could be called Imperial in 
 their relations to us. But the shrewd men of the day were not 
 frightened. Some of them remembered the fact that when the 
 American plantations obtained their independence they were 
 better customers by far of English manufactures than they had 
 been when they were in the bonds of a colonial system. But, in 
 fact, the interests which were saved by the differential duties on 
 sugar were not the free labourers of the sugar colonies, but the 
 planters. Half and more than half the present trouble in Jamaica 
 is due to the fact that, certainly up to three or four years ago, when 
 I verified the fact for use in debate, the planters were levying 
 export duties on sugar and import duties on food, and resolutely 
 refusing, as is their wont, to pay anything towards the expenses of 
 government by a direct land tax on their property. The lumber 
 trade of Canada was similarly in the hands of certain squatters, 
 who got, or thought they got, an advantage out of the differential 
 duties. The interests of labour are never advantaged by protec- 
 tion, and, from the nature of things, those of capital only slightly 
 and temporarily. Those of land are only benefited in so far as 
 the produce is a necessary of life, and high prices induce fools to 
 think, that they can pay high rents accoraingly. 
 
 But when we proceeded to assail the Navigation Act there was 
 indeed a hubbub. We were charged with betraying the national 
 defences by destroying the calling of seafaring men. We were
 
 io6 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 bidden to hesitate before we attacked that system to which 
 England and Great Britain owed its greatness, which had been 
 beheved to be the safeguard of the nation from the days of 
 Cromwell to the days of Canning, and had been eulogized by 
 every statesman of patriotism and sense. But some of us even in 
 that day had read a little of history and knew that the Navigation 
 Act, for everything but spiteful and malicious ends, was an illu- 
 sion. We had heard of the Dutch fleet in the Medway, and of its 
 exploits despite the Navigation Act, and we knew enough political 
 economy at the time to allege with abundant evidence our argu- 
 ment that protected interests never thrive, and that they cannot 
 thrive. So the Navigation Act went the way of the other forms 
 of protection, and one thing at least is certain that the mercantile 
 marine of this country is. by no means ruined. What the condi- 
 tion of the armed marine is I cannot guess. The admirals tell us, 
 despite the enormous expenditure on it, that it is inadequate, un- 
 seaworthy, and incapable of the national defence. If this were an 
 accurate account of the situation, and I, for my part, have long 
 given up any belief in the assertions of experts, an inquiry into 
 the system ought to be conducted under the forms and with the 
 objects of a criminal investigation. 
 
 We have thrown open the ports of all our possessions over 
 which we retain the power of control to the mercantile marine of 
 every nation which possesses a ship. They are liable to just the 
 same charges as, and no more than, British vessels are. The 
 market is free and the carrier is free. With but little time and 
 expense, as I have been told by great shipowners, the mercantile 
 marine could be very effectively armour clad. For we do under 
 this carrying trade, and on a free system, two-thirds of the freight 
 of the world. British yards (for governments, whatever they may 
 do with private interests by protective laws and regulations, will 
 never allow themselves to spend more for what they want than 
 they can help) are supplying the armour clads of foreign powers. 
 A generation or two ago the exportation of a machine, and of the 
 materials which might be used for warfare, and even the emigia- 
 tion of an artisan to a foreign and possibly hostile country, was a 
 grave offence and severely punishable. 
 
 Nearly all the other foreign nations and the United States have
 
 THE DEVELOPMENT OF TRANSIT. 107 
 
 clung to navigation laws. They adhere to that which we have 
 deliberately abandoned, the evidence of what has followed from 
 our abandonment being manifest. At one time the United States 
 promised to be our rivals in ocean-carrying vessels. Seduced by 
 the persuasions, or frightened by the threats of Mr. Morrill and his 
 foU :rwers, they have enacted Navigation laws, and their mercantile 
 niTtrine is a thing of the past. What a satire on "trimuphant 
 democracy " it is when the things which the American people 
 were assured were for their health have been to them an occasion 
 of falling, when an industry which was to be fostered into great- 
 ness by a well-defined process is extirpated by it ! 
 
 Protection, as I have told you, is of no avail when it comes into 
 collision with foreign competition. The subtlest arts of your Bis- 
 marcks and your Blaines, and the other economic quacks who have 
 pretended to regulate production and trade on behalf of municipal 
 or local interests are, outside the limits of the country whose 
 affairs, to the misfortune of their patients, they are allowed to 
 administer, of no significance. And I shall be exceedingly sur- 
 prised if the profits of Tonquin trade and Madagascar trade on the 
 one hand, of New Guinea and Zanzibar on the other, are i per 
 cent, of the cost to which France and Germany will be put to 
 acquire them. 
 
 There are, however, one or two facts connected with the 
 development of freight which I must dwell on for a few minutes. 
 I think it will be clear to you without further detail that we owe 
 the remarkable pre-eminence of our mercantile marine to the fact 
 that the process of producing and using it has been entirely un- 
 shackled, and that we have utterly repudiated those illusions to 
 which other nations cling. I do not deny that the operation of 
 these illusions is injurious to us, as well as mischievous to the 
 victims of them. Hindrances to trade add to the cost of freight, 
 and whatever adds to the cost of freight induces an artificial 
 sterility on the trade of those articles which are produced and 
 shipped under the greatest disadvantage. And though in what I 
 have said I have dwelt mainly on the mercantile marine, the same 
 facts hold good in railway transit. The development of the British 
 railway system, in many directions exceedingly premature and 
 foolish, was the immediate outcome of Sir R. Peel's free-trade
 
 io8 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 policy. And here I may observe that the principal inventions 
 which have lowered the cost of railway freight are of British 
 origin. How great and how beneficial those inventions are I shall 
 be able to point out. For it is free trade which gives invention 
 full play, protection deadens and stupefies it. 
 
 Of course shippers may over-estimate the profits of the carrying 
 trade at any particular time. All production, every kind of industry 
 is undertaken in the hope of a market, and the hope may be dis- 
 appointed. What the general said, that he is the most accom- 
 plished commander who makes the gravest mistakes, is true of 
 every enterprise. Some callings, for reasons which I need not 
 expound to you, appears to be permanently overstocked. This is 
 said, for example, to be the case with the calling of a barrister. 
 But I take it that all industries which form part of the necessary 
 and invariable business of a civilized community are only tem- 
 porarily overstocked. I am not, I believe, over-sanguine as to the 
 future of industrial society, but I cannot share the gloomy antici- 
 pations of our earlier economists. Three or four years ago we 
 were told that British shipping was a good deal ahead of the 
 demand for freight, and that the whole interest was in imminent 
 peril of congestion. We were not indeed advised to revive in any 
 shape our old Navigation laws, but it was commonly said that 
 we ought to exercise a vigorous police over unseaworthy foreign 
 vessels who competed against our shippers, who are under Board 
 of Trade rules, in entire freedom from any restriction whatever. 
 But a glance at the tonnage of the British mercantile marine, 
 developed and growing under the police of the Board of Trade, 
 would show, and did show, that this was a grumble with very little 
 reason in it. 
 
 Some forty years ago when my late friend, Mr. Mill, first pub- 
 lished his " Political Economy," a work which he subjected to 
 very little revision during his life, he was filled with alarm at the 
 contingency that the mechanism of freight would be insufficient 
 for the supply of a growing nation like our own. At the present 
 time its development is the principal cause of alarm to home pro- 
 ducers of food, and is the perpetual topic of fair-trade predictions. 
 And this freight, be it observed, is rendered as far as the sea pass- 
 age, and to some extent the land transit as well, is made more
 
 THE DEVELOPMENT OF TRANSIT 109 
 
 jostly by protective regulations. It is plain if the British shipper 
 could earn a profit on the out-voyage as well as the home, he 
 could do either at less cost. It is also plain that if, owing to 
 restrictive regulations, the transit profits of a railway are decided 
 only from freight outwards, that the single loaded journey must 
 in the end bear the cost of the returned empty waggons. I have 
 little doubt that the exceeding cheapness of Indian wheat is not a 
 little due to the double freights which shippers earn to and from 
 that country. 
 
 Even under these circumstances the alarmist and sinister pre- 
 dictions of Mr. Mill have been signally refuted by the facts of 
 experience. There is perhaps no branch of human industry in 
 which the economy of cost has been so obviously exhibited as in 
 the supply of transit. The vessel, we will say, is made of iron. 
 It costs about a third what it used to cost to make any kind of 
 iron-work. The voyage across the Atlantic is completed in less 
 than half the time it took when Mr. Mill wrote his work, a great 
 saving in motive power and labour. The same is true — I am not 
 thinking of the Suez Canal — of voyages to and from India, China, 
 and other distant places. The process of loading and unloading 
 ships does not take a third of the time, a third of the labour, and 
 a third of the cost which it did a few years ago. Now it is as 
 foolish to predict future possibilities as it is to negative them from 
 present possibilities, but the prophet of the future has a good 
 many facts to go on, enough at least to prevent him from pro- 
 phesying stagnation, as our older writers did. 
 
 The improvements in what is called the permanent way are as 
 marked. A quarter of a century ago the rails were of wrought 
 iron, which wore out rapidly, especially at stations and sidings, 
 the weight of the carriages peeling off strips from the rails. The 
 life of those old rails was very brief. Mr. Bessemer not only dis- 
 covers the process by which to make impure and unmanageable 
 iron ore purify itself, but turn itself into steel. I do not say that 
 the modern steel rail is immortal, but its life is very enduring, and 
 you do not see where such rails are employed the strips peeling off 
 as used to be. The permanent way, again, is more solid and 
 steady. Now everything which induces oscillation on a carriage 
 is an element of wear and disintegration. I do not remember
 
 no INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 ever to have consulted a railway engineer as to the saving which 
 has been induced by these new appliances, nor do I feel it particu- 
 larly necessary that I should, for all that I need to insist on is that 
 the cost of freight is gradually, and yet greatly, diminishing, and 
 with it the extension of freight is effected. Of course nations may 
 be premature. We were in 1847. Unless they are misrepre- 
 sented, some of our colonies have been too much in a hurry, and 
 have constructed railways over ground from which there is no 
 produce to carry. 
 
 There is another direction in which human ingenuity has 
 recently been exceedingly successful. This is the carriage of 
 fresh meat in refrigerated chambers from distant regions. The 
 chemist has discovered that no change can go on in animal 
 structures if the product is kept at a temperature below a certain 
 point. The shipper has taken advantage of this information, and 
 though the trade in fresh meat is as yet only of moderate propor- 
 tions, it certainly has a considerable future before it. In point of 
 fact, the diminished cost of freight is bringing about, not indeed 
 an equality of prices, for the cost is, and will remain, considerable, 
 but an approximation to quality. The results of this process are 
 very far reaching. If they do not affect certain interests per- 
 manently, it is because such interests have not prepared them- 
 selves for the new departure which is inevitable. The cost of 
 production and the cost of freight being diminished, a fall in prices 
 is sure to follow. And it should be noted that trade speculations 
 find little or no place in the processes of production which are 
 continuous. The speculator may be under the impression that 
 some scarcity is at hand, and he takes his measures accordingly. 
 But the period during which his judgment is to be verified or 
 falsified is very brief. A few months will bring him profit or loss. 
 With the producer the case is entirely different. He too antici- 
 pates the future, but his hopes are prolonged. A set of speculators 
 in copper may cause a vast temporary elevation in price. The 
 continuous elevation of it is subject to the permanent demand for 
 it, and that is a matter of rough calculation. 
 
 In conclusion I must repeat in brief what I said last year in 
 detail. It may be new to some of you, and it is most important, 
 for there is no subject on which, consciously or unconsciously,
 
 THE DEVELOPMENT OF TRANSIT. in 
 
 more fallacies are uttered than on that which I am referring to. 
 When a community like our own is exceedingly successful in the 
 carrying trade, so successful that it entirely distances its rivals, its 
 success induces some very striking and, to ill-informed people, 
 very alarming phenomena in the balance of exports and imports. 
 Now people have taken advantage of these facts, and predict 
 calamitous consequences from what is, when properly interpreted, 
 the evidence of prosperous trade. 
 
 In the trade of every country with the rest of the world, if the 
 community is doing well, the imports are always in excess of the 
 exports, when interpreted in money values or prices. If they 
 were not — I assume that the prices are correct — the trader would 
 be making no profit. In all trade, in order to make a profit, you 
 must sell for more than you gave for the goods. And this, which 
 will be obvious to you in the course of ordinary trade, where say a 
 grocer buys ^i,ooo worth of goods and sells them for ^i,ioo, is 
 equally true if the goods are bought with goods instead of money, 
 the money value being stated. There are people who buy what 
 they cannot pay for, and there are nations which do so. In this 
 case the individual runs into debt if he can get any one to trust 
 him. But we do not give trust to nations, we demand securities, 
 and in the case which I have given securities come back in place 
 of goods, only they are not put in the public or Board of Trade 
 accounts. There are plenty of sharp people, however, who know 
 when they are coming. 
 
 But a man does not carry goods except with an expectation, 
 and in the end with the certainty, of profits. If the British 
 shipper, as is proved by his tonnage, carries two-thirds of the 
 goods which are conveyed from country to country, and certainly 
 not of the least value, he gets paid for it. But in the exports the 
 cost of carriage does not appear in the price, for the exports and 
 imports are all valued, say in London, and when the price is 
 declared the service is not yet performed, and therefore cannot be 
 charged for. But on the imports the service has been performed, 
 and therefore the cost of carriage appears in the price. A vessel 
 takes out say i,ooo tons of machinery, which is valued at ^20,000 
 in London. This has to pay the cost of freight, and the mer- 
 chant's profit, and neither of these appears in the value given.
 
 112 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 He brings back ^20,000 worth, say of sugar, so declared when it 
 leaves the place of origin ; but when it is landed in the London 
 docks the cost of freight and certain initial profits are added to the 
 money value. The difference remains with the shipper and the 
 merchant. But unless the facts are analyzed and explained, they 
 are puzzling and sometimes startling. Now this is what Mr. 
 Giffen, with much felicity of expression, calls the invisible export 
 and import. It is much less now than it was once, when freight 
 was slow and costly. But it is, and always will be, an element 
 of cost.
 
 VI. 
 
 THE ECONOMIC HISTORY OF CHARTERED TRADE 
 COMPANIES. 
 
 Antiquity of maritime laws — Reg^ulated and joint-stock companies — 
 Their origin and excuse — The East India Company — The Bank 
 of England — The South Sea Company — The variations in the price 
 of Stock — Collapse of the South Sea Company — The suppression 
 of the East India Company — The Bank Act of 184^. 
 
 There is no trace, as far as I know, and I have read with much 
 interest that vast repository of facts, the geography of Strabo, of 
 joint-stock enterprise in antiquity, still less of the policy by 
 which government attempts to develop trade by conferring a 
 monopoly upon a body of projectors or adventurers. The utmost 
 which we may be said to know was that the Island of Rhodes was 
 the first to codify international maritime law, and that from the 
 precedents collected and reduced to system by this entcrprizing 
 and prosperous seat of commerce, the commercial part of the civil 
 code was ultimately compiled, and, much more important, that of 
 the principles of international maritime law. But there is no hint 
 that the societas, or collegium mercatorum, went beyond the 
 limits of a guild. I shall have, indeed, in dealing with trade 
 companies, to examine one of the forms of these trade guild ■;. 
 

 
 114 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 Now I do not think it difficult to discover the reason why the 
 trade company remained undeveloped in antiquity. The area of 
 mercantile business was narrow. That the Carthaginians went 
 beyond the Pillars of Hercules or the Straits of Gibraltar is indis- 
 putable, for they founded factories, or colonies, in Andalusia. 
 But it is far from proved to my satisfaction that they reached the 
 British islands by sea, though they certainly from early times traf- 
 ficked in its produce. But, on the whole, antiquity made no con- 
 siderable, or at least no permanent, geographical discoveries. The 
 trade of the age was not sufficient to maintain the ancient canal 
 from the Mediterranean to the Red Sea, a waterway which was, it 
 seems, created by the Pharaohs, but suffered to fall into decay 
 after the conquest of Egypt by Persia. 
 
 As I have mentioned to you before, it was near a century before 
 the English mariners took advantage of the discoveries which had 
 been made by the Spaniards and the Portuguese. The empire of 
 Charles V., the vast dominions of Philip 11. , were a terror till the 
 resistance of the Dutch proved how entirely hollow was the power 
 of Spain. The English did reach the northern port of Russia, 
 and much was hoped from this new market. But the project 
 came to nothing after the death of Ivan the Terrible. It does 
 not appear that English vessels ventured into the Mediterranean 
 till quite the conclusion of the sixteenth century. There was 
 considerable peril in the attempt, for the Southern Mediterranean 
 swarmed with corsairs from Morocco to Tunis. Even after the 
 trade began the peril was very serious. In the first quarter of the 
 seventeenth century. Lord Craven devised certain estates to 
 trustees. Half the income was to go for the redemption of 
 English captives from the Algerine pirates, the other moiety was 
 to be divided between the two Universities to found scholarships 
 in them. It was only after Lord Exmouth destroyed the Algerine 
 pirates in i8i6, that the first moiety found no objects, and the 
 whole income of the estate was devoted to the second purpose. 
 When Noy invented or rediscovered the liability which we 
 know in history as Ship Money, the plea, during the time 
 which Clarendon says was one of unexampled prosperity, was the 
 mischief inflicted on British shipping in the English Channel by 
 the Barbary pirates. Now though Charles I. was not a very
 
 HISTORY OF CHARTERED TRADE COMPANIES. 115 
 
 truthful person, he would hardly have justified an illegal, or at 
 best an irregular impost, on a plea which, if wholly false, would 
 have easily been met by a flat denial. I have no doubt that 
 during the paradisiacal epoch of Clarendon, these rovers did 
 venture even into the English Channel. You may remember, 
 too, that the Sallee rover is a figure in the earlier pages of 
 " Robinson Crusoe," and Defoe always wrote verisimilitudes ; 
 indeed the greater part of his art consisted in publishing fictions 
 which seemed like personal experiences. 
 
 In Adam Smith's time there were two forms of chartered com- 
 panies — those which were called regulated, and those which went 
 by the name of joint stock. Of these the former were the earliest. 
 The regulated company is a system obviously derived from the 
 trading guild. In it, the trader paid a fixed fee for the license of 
 carrying on, at his personal risk, the business in his district, and 
 for the special trade, which the company undertook to protect 
 and to promote. Such were the Levant, Turkey, and, later on, 
 the Russian companies. Of these the first was an experiment 
 made by Elizabeth, towards the conclusion of her reign. The 
 great Queen strove in its grievous decadence or decay to revive 
 the mercantile marine of England, once so strong and famous. 
 Hence she conferred considerable immunities on the companies 
 which traded to the Mediterranean, remitting, in exchange for a 
 trifling annual payment, the customs on goods imported by these 
 projectors. In her lifetime the company was unprosperous, and 
 she lost the annuity as well as the customs. But the company 
 did better in the reign of James, and the imports which it made 
 were the objects of Cecil's Book of Rates, that first attempt at dis- 
 cretionary taxation, which ended so disastrously in the next reign. 
 I presume that the fund paid for the licenses was laid out in pro- 
 tection accorded to the traders, or if insuflScient for this, at least 
 for the payment of consuls at foreign ports. Some of these regu- 
 lated companies still existed in Adam Smith's time, who enume- 
 rates five of them. You will find his criticism on this practice 
 and policy in the first chapter of his fifth book. From the first 
 these companies did not maintain forts or garrisons. They did 
 support an ambassador in Turkey to some extent, and, as I have 
 said, a few consuls. But when the new African company was
 
 ii6 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 established on this principle in 1750, the associated merchants 
 were constrained, by Act of Parliament, to maintain the forts and 
 garrisons on the western coast. All these companies are, how- 
 ever, obsolete now. In the first place, the duty of maintaining 
 officials, and of building and garrisoning forts, was transferred to 
 the Exchequer; and in the next, the privilege which the companies 
 possessed of granting licenses of trade was done away with, and 
 as far as the area of their operations and monopolies extended, was 
 thrown open to all British traders. 
 
 While I think it quite true that at the time in which Smith 
 wrote, the system of regulated companies was indefensible, and 
 that this great man's criticism was justified, I am still of opinion 
 that the system was inevitable at its inception. At the time when 
 these companies were founded, when it was conceived expedient 
 to extend, if possible, British commerce, the country was practi- 
 cally destitute of a naval force. The ships which did battle with 
 the Spanish Armada were, in the main, vessels owned by private 
 persons, hastily armed with such artillery as could be supplied. 
 The Crown had a scanty and an inelastic revenue. Even in the 
 munitions of war, it had to rely on private subscriptions. I have 
 collected and printed from private accounts which I have read, at 
 the date of the Armada, what were the subscriptions and pur- 
 chases of certain private persons and corporations, how one person 
 bought powder, and another laid in a stock of arms. It was 
 therefore premature to argue that the State should defend com- 
 merce, when the State was almost too poor to defend the island 
 itself from attack. Long after the age of the Armada, the marine 
 force of England was small and of little importance, as is shown 
 by the fact referred to above, the appearance of Barbary rovers in 
 the Channel. The real founder of the modern British navy was 
 Cromwell. Had his life been prolonged — he was only fifty-eight 
 years old when he died — I do not doubt that the exploits of a 
 generation or more later, would have characterized his admini- 
 stration. The restored king, to be sure, did his best to ruin the 
 restored navy, as he did everything which he could stint in order 
 to obtain the means for his orgies. It is the one respectable trait 
 in the character of his brother, that he did his best to save the 
 relics of the navy.
 
 HISTORY OF CHARTERED TRADE COMPANIES. 117 
 
 I cannot see, then, how the defence of commerce could have 
 been at all effected, even in scanty measure, except under the 
 machinery of these regulated companies. The merchants of the 
 time were not wealthy enough for joint-stock enterprise, and even 
 had they been wealthy enovigh, I do not see how they could have 
 developed sufficient confidence in each other, for the successful 
 vindication of the joint-stock principle. I can well believe, as 
 Adam Smith alleges, that the directors or managers of these 
 regulated companies put a heavy charge for admission on those 
 who wished to obtain the commercial advantages which they had, 
 or professed to have, and squandered the receipts to their own 
 advantage and enjoyment. Such a result is, I suppose, inevitable 
 in a guild, at least it was characteristic enough of the City Com- 
 panies up to recent experience, when they have in many cases 
 offered ransom from the accumulations. And I cannot but con- 
 clude that when Parliament fixed the fines by which admission 
 to the company was secured, it was simply carrying out its old 
 policy, and merely preventing an extravagant or abusive mani- 
 pulation of the privileges. For it was not till the latter end of 
 the seventeenth century that England really had a navy, and 
 there are grievous complaints in the next century as to how the 
 captains of the king's ships abused the privilege of impressment, 
 and were a terror rather than a protection to the mercantile 
 marine. Besides, as I have often mentioned to you, it was not 
 easy in the seventeenth century to distinguish a respectable trader 
 from a buccaneer. The regulated company was, therefore, I con- 
 clude, an original necessity, and had grown obsolete and mis- 
 chievous in the time when Smith wrote. But we may dismiss 
 this form of chartered trade companies. I only conclude that as 
 an existing force or process must have an origin, so it must have a 
 motive, and although to later criticism the force is misdirected 
 and the process erroneous, or mischievous, it probably, nay, almost 
 certainly, had the justification of necessity at its earlier develop- 
 ment. And this, I am confident, is a rule of interpretation in 
 dealing with bygone conditions which we cannot safely neglect. 
 It is very likely that the origin of a custom, a rule, a law, is 
 obscured in its later manifestations by self-interest or malpractice; 
 it is even probable that it may have been bad and dishonest from
 
 Ii8 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 the beginning, but we must, if we would interpret economical 
 action, take into account the circumstances, as well as disregard 
 that ancient maxim first formulated as is certain by a knave who 
 feared detection, that one should not impute motives. But the 
 imputation of motives is the analysis of action. 
 
 The joint-stock company created by charter, and therefore 
 having to all appearance an administrative sanction, latterly sub- 
 jected to Parliament, and having, therefore, the legislative repu- 
 tation of a vested interest, is an affair of far greater significance, 
 and in the economical history of English, and, indeed, of Euro- 
 pean life, of profound and far-reaching consequence. It has done 
 temporary good, and has inflicted enormous evil. Parliament, in 
 its early forms, looked on it with grave suspicion, for it expected 
 and sometimes discovered and resented, the evils of monopoly in 
 it. You will remember, no doubt, how Elizabeth strove to 
 supplement the poverty of her exchequer, by the grant of mono- 
 polies. She encountered the respectful but energetic opposition 
 of her faithful Commons, men to whom, even in these days, we 
 owe much in the way of precedents, and she yielded with grace. 
 Her foolish and imclean successor was more obstinate, and had to 
 yield with a bad grace. For it is perfectly clear that, when 
 Elizabeth gave a monopoly to Raleigh, and James gave another 
 to Mompesson, these men were only the figure-heads to a ring, 
 just as some directors of joint-stock companies are in our days. 
 There is nothing modern in dishonesty except its forms. 
 
 The first of the joint-stock companies was that created in 1600, 
 by charter from Elizabeth, for trade to the East Indies. The 
 chairman of it was Clifford, Earl of Cumberland, an ancient buc- 
 caneer, whose portrait, hairy and hatted, is still in the Bodleian 
 gallery. It was a small affair. The country was very poor, and 
 the capital of the company was very slender. But it contained the 
 germ of the greatest and the most lasting conquest which has 
 ever been made on sea-board, that of the acquisition of Hindostan, 
 which has been, not without misgivings, translated in our own 
 time, into the Indian Empire. Never has so gigantic a result 
 been achieved from such small, such insignificant, such inadequate 
 beginnings. The first capital of the East India Company, as 
 developed in 1600, was ^^72,000, and its first voyage was in 1601.
 
 HISTORY OF CHARTERED TRADE COMPANIES. 119 
 
 The ships did not return till after the great Queen's death. 
 Shortly after this the Dutch established an East India Company, 
 with a capital of ^^600,000, with a far higher reputation, and with 
 far better appliances. 
 
 Everything which could be said of the regulated company in 
 defence of its origin, could be said with far greater force of the 
 joint-stock company. From the beginning, in this kind of mer- 
 cantile association, the adventurer could not reclaim his capital 
 from the direction, he could only dispose of it to any one who was 
 willing to buy it. His liability, it is true, was limited to the 
 amount of his subscription, but ill success might extinguish all 
 that. But the collective wealth of mercantile England at the 
 close of the sixteenth century was not equal, estimated by the 
 subscription, to the mercantile wealth of Scotland, less than a 
 hundred years after, to judge from the subscriptions to the Darien 
 scheme. The desire to obtain the gains of commercial enterprise 
 was keen enough, for they were large, well known, and easily 
 appraised. It was the capital which was lacking, not the will. 
 
 Notwithstanding its small beginnings, the East India Company 
 grew rich rapidly. The margin of profit which it was able to 
 exact from those who purchased the goods imported in the Com- 
 pany's ships was very wide, and the resultant gains were enor- 
 mous. Ten years after its foundation, James gave it a second 
 charter, which, as far as words went, was perpetual. The pro- 
 ceedings are described, though not in detail, by Mun and others, 
 who wrote in order to plead for a remission of the rate against the 
 export of specie in the case of the East India trade, urging, and 
 with reason, that unless permission were given to export silver, 
 commerce with India was impossible, and that the sale of imports 
 would secure the country a far greater balance of the precious 
 metals than the exported silver amounted to. The early trade 
 then of the Company was the first breach in that balance-of-bargain 
 theory, which Adam Smith calls the mercantile system, a system 
 which prevailed long after the days in which Mun, Child, and 
 Roger North advocated a more rational theory of trade than had 
 hitherto prevailed. 
 
 Of course the Company took sharp measures with traders 
 outside their own organization, or interlopers as they called them.
 
 I20 INDUSTRIAL AND COMMERCIAL HISTORY, 
 
 They argued, and the reasoning was very plausible : " Quite 
 independently of our chartered rights, secured to us by the 
 grants of successive monarchs, whose right to confer monopolies 
 of trade, with countries outside their own authority, has never 
 been disputed, whatever may be said about monopolies of domestic 
 trade ; we have, at our own expense, built forts and factories, 
 entered into diplomatic relations with native sovereigns, and laid 
 out much of our capital, and not a little of our legitimate gains, 
 in founding the trade which we enjoy. There may be reason in 
 controlling the regulated companies, which have not incurred 
 such outlay, and therefore have nothing to show for the fines 
 which they levy on those whom they admit to their partnership. 
 But the case is quite different with the East India Company. 
 We are engaged, no doubt on business principles, in securing for 
 the English people a part of that trade which has been succes- 
 sively the monopoly of the Portuguese, the Spaniards, and the 
 Dutch. No doubt the produce which we bring is dear. But we 
 have reduced the price. Had it not been for our efforts. English- 
 men would have had to pay whatever price the Dutchmen might 
 choose to exact. The expansion of our trade is, moreover, the 
 expansion of English enterprise. We train seamen by hundreds, 
 we have, it being necessary for our trade, an armed marine which 
 is part of the national forces, as it assuredly would be used, did 
 need arise, for the national defence. But it is impossible for us 
 to continue this system, from which we contend great public 
 advantage ensues, if any person at his pleasure can enter on the 
 fruit of our labour and expense, without contributing anything 
 whatever to either." Such was the reasoning employed. But, on 
 the other hand, the factories of the old company were few and 
 scattered. There were many parts of the Indian peninsula and 
 the islands which they had not pretended to occupy, and even do 
 business with, and it seemed to be a matter of very doubtful right 
 that they should not only exclude independent traders from visit- 
 ing their factories, but from any commercial intercourse whatever 
 with places and peoples where the company had no business 
 relations of any kind. And when they proceeded further to fine, 
 imprison, and even put to death persons whom they caught in 
 what they were pleased to call their monopoly, the defence of
 
 HISTORY OF CHARTERED TRADE COMPANIES. 121 
 
 their action and monopoly were alike untenable. They were, in 
 short, doing what no civilized community ever dreams of per- 
 mitting, establishing a paper blockade, which they could not, or 
 would not, make effectual. 
 
 It was for reasons like this that Cromwell, who was in many 
 particulars of his administration greatly in advance of his age, 
 annulled the charter of the Company in 1654, and made the trade 
 to the Indies free. Of course this action of his did not confiscate 
 their factories, or give any Englishman, and, for the matter of that, 
 Scot or Irishman, the right to use the Company's property. You 
 will remember that Cromwell bestowed all the advantages of 
 English trade on the Scotch and Irish, a privilege which did not 
 last longer than his life ; but was very fully remembered when 
 the Scottish Union was negotiated. The short interval, however, 
 during which the Eastern trade was thrown open, gave occasion 
 to that remarkable constitutional struggle between the two 
 Houses, which is known in constitutional history as Skinner's 
 case. Skinner had taken advantage of the new situation, had 
 traded to India, had purchased, as he said, an island from a native 
 prince, and had set up trade on his own account. The Company, 
 during the period in which their charter was suspended, had 
 despoiled and imprisoned him. Skinner, as you probably know, 
 appealed to the Lords, who at that time claimed original as well 
 as appellate jurisdiction, and a very pretty quarrel ensued between 
 the two Houses. The problem was an insoluble one. Skinner 
 was unquestionably wronged, but the Lords did not possess the 
 function of righting him. On the other hand, the Commons were 
 wrong in disputing his claim to compensation, and in the right in 
 affirming that he had applied to the wrong tribunal. 
 
 Charles, however, had recognized and restored the Company's 
 charter, no doubt holding that Cromwell's action was a visurpation. 
 He did more ; he gave them that part of the dowry of Catherine 
 of Braganza which consisted of Goa, and what afterwards became 
 Bombay. Her other possession, Tangier, he held till he was tired 
 of it. In consideration of these white elephants, the Parliament 
 gave her a very handsome annuity, which she lived long to enjoy. 
 But the settlement on the western coast of India was of consider- 
 able advantage to the Company, and during the reign of Charles
 
 122 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 the profits of the shareholders were very great, Child being virtu- 
 ally the autocrat of the directors. As the Company had been 
 depressed by the Puritans and reinstated by the Cavaliers, the 
 bias of the directorate was towards the Court party, which after- 
 wards developed into the Tory party, and Child entered deeply 
 into the corruption which began with the Pensionary Parliament, 
 and gathered strength after the Revolution of 1688. The directors 
 flew at high game, and were found out. They bribed Trevor the 
 Speaker, Seymour the leader of the Tory party, and the Duke of 
 Leeds, who had reached to fortune and rank by a few good acts 
 and much flagitious conduct. Trevor was expelled from the 
 House, Seymour and Leeds were discredited. They suffered the 
 penalty of being found out, and I am convinced considered them- 
 selves ill used. But the disclosure of their practices led to very 
 serious consequences to the Company, and to the affirmation of a 
 parliamentary rule of high constitutional significance. I shall 
 revert to it in a short time, for before it was aflBrmed another and 
 a far more distinguished joint-stock company was formed. 
 
 Long before the Revolution, the example of the Bank of 
 Amsterdam — its astonishing success, and the powerful influence 
 which it wielded — had suggested to English merchants the policy 
 of founding a public bank. Two projects of this kind had been 
 discussed and commended during the Protectorate, the leading 
 idea in both being that the management of the bank should be 
 entrusted to the Corporation of London, as that of Holland was to 
 the Corporation of Amsterdam. But the two municipalities were 
 very diff'erent bodies. The Corporation of London was not then 
 corrupt, I believe. But it could not resist the depravity of the 
 Restoration, and some of the most impudent and scandalous jobs 
 ever perpetrated by that institution — and they have been 
 numerous — were brought to light after the Revolution, as the 
 leases of the Conduit Meads, the maladministration of the 
 orphans' fund, and the embezzlement of the collections made in 
 aid of the Huguenot clergy. I allow that there were men of great 
 worth in the Corporation, and that for a long time the City 
 retained some flavour of that spirit which made them so energetic 
 in defence of the Long Parliament and its policy. Had they 
 possessed their ancient character, neither Charles nor his tool
 
 HISTORY OF CHARTERED TRADE COMPANIES. 123 
 
 J'-ffries could have extorted their charter from them in 1683. 
 Tliey were utterly unfit to manage an institution of credit. 
 
 On the other hand, the burghers of Amsterdam, even when the 
 power of the princes of Orange was at its highest, were a haughty, 
 self-contained republic, who looked upon the stadtholder merely 
 as a magistrate, retaining his power at their pleasure and during 
 Good behaviour. The constitution of Holland had many faults, 
 iii^t the least being the disintegration involved in the union of a 
 number of small republics, which were exceedingly apt to quarrel 
 when a common danger was abated. It was not without reason, 
 then, that people commonly said that a bank, that is, an establish- 
 ment of credit, and monarchy, z>., the restored Stuart line, were 
 incompatible. If one wished to confirm the generality by a pre- 
 rogative instance, the theft of the Goldsmiths' money by Charles 
 in 1672 was overwhelming proof, and yet Charles was popular, 
 and the Stuarts had a party. Surely loyalty to them was the 
 most incomprehensible and irrational of passions. 
 
 The Bank of England owed its origin and its charter in 1694 ^o 
 the exigencies of the Government and to a loan. The expediency 
 of a joint-stock bank, governed by a body of elected directors, each 
 with a considerable qualification, was urged by Paterson, a Scotch- 
 man, and Michael Godfrey, an Englishman, and brother of that 
 Edmund Bury Godfrey, whose mysterious death gave occasion to 
 the fictions of Oates, Dangerfield, and others. The occasion was 
 Montague's necessities. The loan was j^i, 200,000 at 8 per cent., 
 and it is highly probable that Francis, the gossiping chronicler of 
 the Bank, is accurate when he says that for a long time the 
 dividends of the Bank came from the interest paid by Government, 
 the profits of the banking business being absorbed in the manage- 
 ment. This is also my impression gathered from the prices of its 
 stock, which I am registering for a long period. But I trust that 
 on some future occasion I shall find ij possible to enter in 
 minuter detail into the fortunes of this remarkable institution 
 than I can at present. I only say now, that the price of Bank 
 stock is to a greater extent the history of England in the 
 eighteenth century than any other record, as I could show you 
 from many crucial instances. The Bank Act of 1694 was amended 
 in 1696-7, and remained in general its constitution till 1844, when 
 Peel entirely reconstructed it.
 
 124 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 Now the Acts of Parliament under which these and other joint- 
 stock companies, now entirely forgotten, were created, suggested 
 to Montague the affirmation of that principle, which had so great 
 an influence on the fortunes of joint-stock enterprise in Great 
 Britain. It was that Parliament alone could grant joint-stock 
 companies a monopoly of trade. This resolution, which William 
 was by no means disposed to resist, cut the ground from under the 
 feet of the old company. It took nothing away from them which 
 they actually possessed — their fleet, their forts, their factories, 
 their business. But it stripped them of their right of excluding 
 every one from the sole market which they had hitherto treated as 
 theirs, and gave any association which obtained the requisite 
 sanction as much right to traffic in Hindostan and the Spice 
 Islands as the original company possessed, provided the new 
 association did not intrude on absolutely occupied ground. Now 
 I have no early and authentic account of the price of India Stock 
 during its palmy days. It is doubtful whether any record subsists 
 earlier than 1692, though the archives of the Company, no doubt, 
 if they still exist, contains a register of its dividends. Now, on 
 March 30, 1692, which is my first entry, the price of East India 
 Stock was 158. On January i, 1699, when Montague had 
 launched his parliamentary company, under the name of the 
 New or English East India Company, the price was 41^^; and six 
 months before this, when the scheme of the new company was 
 being matured, it had sunk as low as 33J ; now we read that in its 
 palmy days the stock was up to 300 or 400. 
 
 But the old company did not despair, and despite the rivalry of 
 its more prosperous and younger sister, it recovered a considerable 
 position in two or three years. Of course amalgamation under 
 the Parliamentary title was sooner or later inevitable, and it came 
 in 1708. Under the new system the greater part of the Company's 
 capital, as was wholly the case with the Bank of England, was a 
 debt due from Government, on which interest was paid, at first 
 high, but greatly reduced during the long and commercially pros- 
 perous administration of Walpole. But the privilege in each 
 institution was bought dearly. The Bank and the East India 
 Company wanted a trading, not a dead capital. Besides which 
 the expectation of business profit is on an average pretty perma*
 
 HISTORY OF CHARTERED TRADE COMPANIES. 125 
 
 nent, for I imagine that though generally from 10 to 15 per cent, 
 was all that was expected in the beginning of the eighteenth 
 century, as it is at the end of the nineteenth, the rate of interest 
 on loan capital has been steadily falling since that earlier time. 
 In Montague's days the Government had to give 8 per cent, for 
 advances ; in Walpole's, forty years later, it could get it in plenty 
 at 4 per cent. Hence, on every occasion on which the Bank nego- 
 tiated a fresh loan to the public, in return for the extension of its 
 parliamentary privileges, it had to submit to worse terms. Not 
 only on its new advances, but on the old ones as well. I have no 
 doubt that not a little of the trouble into which the East India 
 Company fell at or about the time of the Seven Years' War, was 
 due to the enormous amount of its capital, which was represented 
 by advances to the Government. So after the South Sea Bubble, 
 when the Bank dividend fell from 8 per cent, to 6 per cent., and 
 the East India Company dividend from 10 per cent, to 8 per cent. 
 I should not assign this falling-off to the shock which had been 
 given to credit, but to the decreasing rate of interest which these 
 companies were forced to receive for their advances to Govern- 
 ment. 
 
 The third of the great joint-stock companies, destined speedily 
 to have a very infamous reputation and memory, was the South 
 Sea Company, founded by Harley, Lord Oxford, in 171 1. Harley, 
 it seems, was desirous of emulating the reputation of Montague, 
 by founding a gigantic trading company, and making the principal 
 part of its stock to consist of public debt. The new company 
 were to hold near nine and a half millions of the public debt, and 
 to receive 6 per cent, and _^8,ooo a year for charges of manage- 
 ment. They were to have a sole market on the east side of all 
 South America, and on the west of the whole continent. Thescheme, 
 which Oxford's friends called his masterpiece, was borrowed from 
 the Bank and English East India Company projects of Mon 
 tague. 
 
 There was in reality no new capital, no new subscription in the 
 scheme. What was really done was the consolidation of the 
 floating debt into a permanent stock, called South Sea Stock, the 
 management of which was undertaken by an association, the 
 funds being provided by the State. To be sure, a small amount
 
 126 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 of new debt, _^50o,ooo, was created ; but this was a trifling matter, 
 and was soon represented by bonds of the new company. But I 
 do not believe that the Tory administration, which came into 
 office after the election of 1710, and remained, though in a great 
 state of dissension, till near upon Anne's death in 17 14, could 
 have negotiated a general loan. In all the annals of the Bank of 
 England since 1697, I have never noticed such a panic as pre- 
 vailed at and after the election of the Tory Parliament in 17 10. 
 In November, 17 10, when the elections were over, and the 
 character of the new House of Commons could be estimated, and 
 it was known that the Lords would be swamped by the wholesale 
 creation of peerages, Bank stock, which had stood at I27f in 
 March fell to 97. Even when in 171 1 the company was created, and 
 visions of indefinite trade were dangled before the holders of the 
 new company, the price of the South Sea stock, bearing 6 per 
 cent, interest, was only 7 7 J. The third number of The Spectator., 
 containing the vision of the Bank of England, the appearance of 
 the Pretender, and the instant collapse of credit, is dated March 3, 
 17 1 1, and accurately represents, as I do not doubt, the prevalent 
 anxiety and alarm, being the only paper in that week which has a 
 strong political meaning. Early in that month Bank stock was 
 under 104, and everybody must have seen and sympathized with 
 what Addison meant when he prefigured the danger which public 
 credit was running. I am persuaded that much of the indecision 
 and procrastination which his contemporaries, and especially his 
 associates, noted and resented in Harley's character, was due to the 
 distrust which the joint-stock companies felt towards him and his 
 party. The clergy could keep shouting that the Church was in 
 danger ; the country squires could get fuddled by drinking con- 
 fusion to the Whigs in bumpers of October and bowls of punch ; 
 and mobs could easily be instigated to wreck dissenting chapels, 
 while they hiccoughed out blessings on the Church, the Queen, 
 and Dr. Sacheverel, whom his own friends held to be a vain 
 and empty coxcomb ; but there was the counterpart to these 
 triumphs, viz., the decline in the value of public securities to an 
 alarming extent. So Harley remained timid and irresolute to the 
 end of his career, fortunately for him, cut short by the fiery 
 Bolingbroke, though in the lampoons of the time, the Ox and the
 
 HISTORY OF CHARTERED TRADE COMPANIES. \7r 
 
 Bull, with the other Perkinites, as the advocates of the exile were 
 called, were warned that the other party was on the alert, and 
 would frustrate them. The stocks never entirely recovered till 
 the death of Anne, when they suddenly rose lo per cent. 
 
 Facts and figures like these appear to me to throw more light 
 on the acts of public men, and the motives which impelled and 
 controlled them, than the speculative estimates which the philo- 
 sophy of history formulates, to be torn to pieces in another 
 estimate by some other historical philosopher, and so on through 
 the ages. And it is because I see this perpetual shifting of the 
 characters, I have, I must confess, very little interest in these 
 ingenious, but entirely psychological, speculations. After all, we 
 shall never be able to collect all the facts which make up an 
 epoch. But it is infinitely better to collect what facts we 
 can than to be constantly ventilating airy hypotheses. To me 
 the fall of near 30 per cent, in 17 10, consequent on the election of 
 the Tory Parliament, and the establishment of a Tory Govern- 
 ment — these are, of course, the historic Tories, and have no 
 modern counterparts — is worth a thousand guesses at the motives of 
 Swift and Atterbury, Harley and St. John, Harcourt and Masham, 
 and the whole procession of dim shadows which pass over the 
 stage of history at this age. And similarly I am more instructed by 
 the rise of 10 per cent, at the death of Anne, than I am at the 
 picture of the Whig peers pressing into the council chamber as 
 Anne was in her last lethargy, and forcing from her almost un- 
 conscious hand the nomination of Shrewsbury to the oflSce of 
 Treasurer, and the repudiation of the Pretender and his hopes. 
 It is more to the purpose than the maledictions of Atterbury, when 
 the disappointed intriguer exclaimed, not without some unclerical 
 ejaculations, " There goes the best of causes for want of a little 
 courage." 
 
 Had the Tory party wished to carry on the War of the Spanish 
 Succession, peace was a necessity for them, for my studies of 
 finance at the time prove to me that they could hardly have raised 
 a loan. So the Treaty of Utrecht was speedily brought about, in 
 which England did not gain, beyond Gibraltar and Minorca, 
 scarcely one advantage. I must not indeed forget one, on which 
 so much turned subsequently.
 
 I20 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 When the Treaty of Utrecht was passed, a supplementary treaty 
 was entered into between Philip of Spain and the English sove- 
 reign under the name of the Assiento Treaty, by which Anne and 
 her successors were empowered to assign to such persons as they 
 might designate the right of importing in a ship annually des- 
 patched four hundred negro slaves into the Spanish colonies of the 
 New World. The Spanish settlers had nearly destroyed the 
 native population by forcing them to labour in the mines, and 
 the benevolent bishop. Las Casas, in order to save some relics of 
 the native population, had advocated the importation of negroes 
 from the African coast. The process seemed humane to the good 
 bishop, and was plainly lucrative to the planters, and the 
 alliance of benevolence and self-interest was speedily carried into 
 execution. But the Spanish mercantile marine was decayed, and 
 indeed every impulse to enterprise, as Alberoni soon discovered 
 when he tried to resuscitate Spain ; while that of England was 
 abundant, enterprising, perhaps redundant. So Anne negotiated 
 the treaty, handed over her interest to the South Sea Company, 
 began the slave trade for the English people, encouraged it in our 
 own plantations, gave in the centuries afterwards occasion to the 
 most sanguinary civil war which was ever waged, and immediately 
 promoted the instincts which led to the South Sea Bubble. The 
 South Sea Company gladly received the boon, for they had visions 
 before them of forcing and appropriating the South Sea trade, not 
 with the single ship of the Assiento Treaty, but with a fleet which 
 should range from the Oronoco to Terra del Fuego, and thence to 
 the Aleutian Archipelago through the Pacific. Why not discover 
 another Peru and another Mexico, and rival the exploits of Cortes 
 and Pizarro ? 
 
 The Whigs returned to office after the death of Anne, and were 
 the masters of the English constitution up to the accession of 
 George III., when Jacobitism, the spectre of the early eighteenth 
 century, had become a sentiment, and Hanoverian Toryism, in 
 George III.'s case without Hanover, took its place. The Hano- 
 verian sovereigns, indeed, like men who have long been in 
 possession, began to show good feeling towards the refugees, or 
 victims of the earlier days of the dynasty, to reverse attainders, 
 and restore titles and estates, especially when the estates, to the
 
 HISTORY OF CHARTERED TRADE COMPANIES. 129 
 
 habits of the time, before deer forests, hotels, and sentiment, were 
 not worth much. If I am not in error George IV. masqueraded 
 in a kilt, a habit which his great-grandfather had proscribed as 
 a heathenish costume, savouring of rebellion, and the Lowland 
 Scots, with much reason, detested as the regular garb of a thief. 
 But the Tories during the last years of Anne's reign, had left the 
 finances in confusion. I may mention here that the rising of 171 5 
 lias scarce left a trace on the price of stocks. It was to induce 
 order on the finances, and to consolidate the debt, that Stanhope, 
 a weak, well-meaning man, with some sharpers who were his 
 companions in office, notably Aislabie and Craggs, entered into 
 negotiations with the Bank of England and the South Sea Com- 
 pany with a view to engrafting the public debt on their stock. 
 The Bank of England negotiated, hesitated, made some timid 
 offers, and then wisely left the field to the younger company. 
 Fortunately for his reputation, or unfortunately for the country, 
 Walpole was out of office. 
 
 In my lecture on the development of credit I stated all that was 
 needed about the career of the South Sea Company and the mar- 
 vellous year 1720. But the collapse brought about a singular 
 result, or at least was followed by it, a general lowering of the rate 
 of interest. The long-continued peace, the growth of wealth, the 
 great prosperity of the agriculturists, and the paucity of public 
 stocks for investment, were probably the causes of this singular 
 development. The Bank dividend became habitually 6 instead 
 of 8, East India Company 8 instead of 10, and Sputh Sea stock 5 
 instead of 6. The general price of Bank stock was 127, of East 
 India Company 147, of South Sea 100, and in June, 1727, the 
 interest on every kind of Government stock was to be reduced by 
 I per cent. 
 
 The South Sea Company still undertook trade, and had a fleet, 
 but it appears that the expenses were so great that little or no 
 margin of profit was left, and ultimately this company, from 
 which so much had been expected, sank into a mere department 
 of the National Debt Office. The East India Company did carry 
 on a trade, and carried it on to a profit, for they dealt in articles 
 of familiar use to the world, and on their own terms. About the 
 beginning of the eighteenth century tea drinking began to be 
 
 10
 
 130 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 common in England, at first, of course, among the richer classes 
 in London. It appears to have been supplied by the Company. 
 Now there is no reason to believe that the price of tea in China 
 was higher in the reign of Anne than it was in the reign of 
 Victoria. But the cost of freight and the profits were enormous. 
 Bohea — I have made my notes from the accounts of rich 
 Londoners and a few country gentlemen — was at first 42s. a 
 pound, green tea 20s. It was generally the practice of purchasers 
 to buy a China teapot when they bought tea, and give a shilling 
 for it, and I do not doubt that the very numerous old melon- 
 shaped China teapots which are in existence are the relics of this 
 custom. In ten years, however, the price fell to i6s. or 14s., and 
 IDS. The earlier price may have been due to the uncertainty of 
 the market. But as long as the tea trade was included in the 
 Company's monopoly tea remained dear, and when the trade was 
 thrown open about fifty years ago the price began to fall. No- 
 thing, in short, illustrates the effect of trade monopolies such as 
 those conferred by the charters granted to trade companies, than 
 the history of tea prices. It is noteworthy that in the last quarter 
 of the century tea-drinking became common among the working 
 classes, greatly to the disgust of Arthur Young, who comments in 
 his tomes on the practice with alarm and contempt. 
 
 The creation of a gigantic empire, which early became the posi- 
 tion of the Company, and was inevitable from the time when Clive 
 began his victories to the time when Wellesley, afterwards the 
 Duke of Wellington, broke the last serious opposition to British 
 arms in India, was incompatible with the trade transactions, on 
 behalf of which the Company was first chartered, transactions 
 continued long after they had ceased to be profitable to the share- 
 holders, and were highly injurious to British consumers. The 
 difficulties of Indian finance, consequent on the seven years' war 
 which Great Britain waged chiefly in Hindostan and North 
 America, led to the expedients of Granville and North for taxing 
 the American plantations, and coercing the colonists when they 
 refused to pay the Stamp Act, and declined to purchase the Com- 
 pany's tea. The inevitable control of a company by Parliament, 
 as soon as that company was forced to rely on Parliament for 
 assistance in its difficulties, led to Fox's India Bill, the defeat
 
 HISTORY OF CHARTERED TRADE COMPANIES. 131 
 
 of the Bill, not on its merits, by the passionate intrigues of George 
 III., who wished, as long as he was sane, to substitute personal 
 government for that parliamentary system by which his family 
 had been raised from an obscure German principality to the fore- 
 most throne in Europe, and to the substitution of the younger 
 Pitt for Fox, and with this the abandonment of the principles for 
 which Chatham, Pitt's father, had contended. Then came Pitt's 
 India Bill, which differed so little from that of Fox that the 
 intrigue to which I have referred is manifest from this alone, if 
 there were not other and conclusive evidence on the subject. It 
 is said that monarchy aids in the maintenance of national unity. 
 If so the reign of George III. was an amazing failure in this direc- 
 tion, for his obstinacy led to the successful revolt of the American 
 plantations and to a new colonial policy. In our days an attempt 
 is being made to bring about a closer union between Great Britain 
 and her colonies, and the symbol of it is the Imperial Institute. 
 No one can wish more heartily than I do for the success of the 
 movement, and few, I fear, are more despondent about it ; for the 
 social system, the fiscal system, and every particular of life in the 
 colonies, is in violent contrast with what prevails in the United 
 Kingdom, and I cannot see how one can expect unity from inhar- 
 monious elements. 
 
 The Indian Mutiny led to the suppression of the East India 
 Company as an independent and imperial corporation. The 
 Company had achieved a great empire, I do not doubt of necessity, 
 for victory begets conquest. Its career was without a parallel in 
 the world's history, and though the last scenes of its existence 
 tarnished the greatness of its reputation, it is still the fact that its 
 heir entered on an inheritance which the Company had won 
 anew and reconstructed. I do not suppose that any person 
 sincerely regretted the extinction of its trade monopoly ; but there 
 are, and have been, many persons who have doubted the justise 
 and expediency of extinguishing an institution which had played 
 so conspicuous a part in the history of our race ; and though I 
 cannot in this place deal with the political exigencies which were 
 supposed to have compelled its extinction, it may well be doubted 
 whether the India Office, and the languid debate on the Indian 
 Budget, for which it is exceedingly difficult to get a House
 
 132 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 together, are the best equivalents conceivable for that Directorate 
 which exercised the most diligent and unremitting scrutiny into 
 the affairs which it had to administer. In all that I have ever 
 heard and learned the Indian Council is a farce, and the adminis- 
 tration is a despotism shared between the Indian Secretary and the 
 permanent officials. I may add that the only parallel to an 
 empire being founded b)^ a trading company even on a small scale 
 was the Bank of St. George in Genoa, which sold Corsica to 
 France. 
 
 Only one of these great chartered companies survives. This is 
 the Bank of England. The credit of the Bank grew during the 
 eighteenth century, and this mainly by two circumstances — one the 
 foundation of the Rest at the end of the first quarter of that 
 century, the other the abandonment of note issues by the London 
 bankers at varying duties after the middle of the same century. 
 The happy thought that it was expedient in order to give stability 
 to the Bank's credit to create a fund out of surplus profits, which 
 should gradually accumulate till it became a substantial sum, was 
 evidently suggested by the collapse of 1720. It was for some 
 years, however, before the directors could begin the process, and 
 more years before it assumed anything like its present proportions. 
 The country owes about fifteen millions to the Bank, and this 
 institution has saved out of its earnings, and set aside, under the 
 name of the Rest, a sum equal to more than one-fifth of its 
 capital. Of course this is profit, the property of the existing 
 owners of Bank stock, which they might, if they pleased, divide 
 among themselves. It amounts to about two and a half years 
 ordinary dividend at the present time. But the Rest is as funda- 
 mental a part of the Bank system as the law is under which it 
 lives, and the traditions under which it is managed. It is known 
 that the Bank has accumulated profits to the amount which I 
 have stated, and these accumulated profits are seen to be a further 
 element of security in the statement of its assets and liabilities. 
 It seems to me plain that the existence of the Rest is the reason 
 why, in these historic occasions, when mercantile credit has been 
 put to the severest strains, as, for instance, in 1825, the solvency 
 and power of the Bank was never doubted, and it was able to help 
 solvent persons, whose credit was shaken in the general crisis,
 
 HISTORY OF CHARTERED TRADE COMPANIES. 133 
 
 \vithout being itself affected by the general distrust. They who 
 have made a study of monetary science, in its most concrete form, 
 have always attached the highest interest to the Rest, or accumu- 
 lated and undivided profits, of the Bank. 
 
 The abandonment of their issue of notes by the London 
 bankers, led to the note issue of the metropolis being con- 
 centrated at the Bank. The notes of the Bank were not of low 
 amount, for it was late in the century that they issued them for 
 ;^5, while the £\ note, necessitated by the circumstances of the 
 time, did not appear till the suspension of cash payments after 
 1797. But the fact that the Bank became the sole source of 
 paper money in the metropolis, enabled them to enlarge their 
 issues, and thereon to increase their profits. These notes were 
 of course only issued against value, as for example trade bills 
 and securities. But they circulated as money, and for many 
 reasons were more safe and convenient than metallic money is. 
 They operated also in international trade as short dated bills of 
 exchange, and of course during their existence they were a profit- 
 bearing issue to the Bank. The average existence indeed of a 
 note of large amount is very brief, almost momentary, for the 
 Bank invariably cancels every note which is returned to it. Nor 
 is that of the smallest note, which it now puts into circulation, 
 as prolonged as we should think when we look at the date of 
 notes which are circulated in the country. But it is a sensible 
 and significant time, and during that period the Bank is making 
 profit on its issue, as it does not give them, except in exchange 
 for deposits and securities. 
 
 For exactly a century and a half, the Bank possessed the power 
 of discretionary issue, that is, the circulation of notes to those 
 who wished for them, of course in exchange for negotiable 
 securities, to any amount. It is not, of course, to be believed 
 that it did not put a practical check on its issues whenever such 
 a course was deemed expedient. But it had the power, when 
 the occasion arose, to help straitened credit, when the person 
 straitened had adequate security to offer, and it did so, at most 
 important and dangerous crises. It was at a crisis, not com- 
 mercial, but political, that the first breach was made in its 
 reputation. I am referring to the suspension of cash payments.
 
 134 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 Pitt revived the policy, which had been adopted in the War 
 of the Austrian Succession, and of the Seven Years' War, of 
 subsidizing the German emperor and knights. The practice 
 indeed may be said to have been begun earher, for WilHam III. 
 is constantly complaining of the rapacity of these personages 
 during his own war, Peterborough dwelling on the same topic 
 during the Spanish campaign, and Marlborough during his 
 experiences, though to be sure the great captain was not above 
 imitating them. But value was received for what he got, little 
 or no value from what was got by the Serene Highnesses. In 
 Pitt's day the subsidies were greater, and the results most 
 disappointing. Now, in order to pay these people, cash was 
 wanted. Pitt could and did impose what taxes he pleased 
 through a sham Parliament, but he wanted ready money. So 
 the heaven-born minister drew on the Bank till he had nearly 
 drained it of its treasure, and the Bank began to be alarmed ; 
 I presume at the likelihood of its being repaid its advances, for 
 it had made its loans, not upon securities of unquestionable value 
 and accuracy, but upon the proceeds of future and experimental 
 taxation. He determined, therefore, to direct the Bank not to 
 honour its notes, and obtained from Parliament an indemnity for 
 their action, which was intrinsically one of bankruptcy, just as he 
 could have procured from that assembly the suspension of the ten 
 commandments had he so minded. 
 
 So high, however, was the credit of the Bank, that in a very 
 short time it had collected money enough to have enabled it to 
 resume its liabilities and cash its notes. But the Government 
 had found out how useful its metallic reserves might be in the 
 war which it was carrying on, and refused to allow it to recover 
 its reputation. Still, for a long time, either because its reputation 
 still stood high, or because it limited its issues to the ascertained 
 wants of the public, the note remained at par, the indication of 
 the fact being supplied principally by the foreign exchanges. In 
 course of time, however, as the war assumed greater and greater 
 proportions, as the waste of wealth went on, and the sufferings Ox 
 everybody, except those of state jobbers and financiers, increased, 
 the Bank was tempted by the prospect of trade profit to issue its 
 notes in excess of public requirements. They did not return on
 
 HISTORY OF CHARTERED TRADE COMPANIES. 135 
 
 the Bank, for the issue was forced and inconvertible. Then came 
 the inevitable. The note was depreciated, that is, fell below the 
 c^old standard, though it had to be taken at its nominal value. 
 The opinion, and a very natural opinion it was, got abroad that 
 the Bank was deluging the country with its paper in order to get 
 a profit on the excess of issue. It was predicted that the Bank 
 would never resume cash payments, and Cobbett, who saw pretty 
 clearly what the situation was, after circulating certain letters to 
 the public in which he denounced the Bank and the Government, 
 published a periodical called the Gridiron^ in which he asserted 
 his willingness to be roasted on that implement if the Bank ever 
 honoured its liabilities. And when the time came it required all 
 the address and courage of Peel, who then did a notable service 
 to his country in saving it from following the advice of men who, 
 having been unconscious fools a few years before, were now un- 
 conscious knaves. 
 
 The memory of those twenty-two dismal years clung to the 
 great Corporation, for it was supposed to have fallen in with the 
 project under which it made its gain out of the public loss and 
 misery of the great war, the main gains of which to the British 
 nation was an enormous debt, a few costly acquisitions, and a 
 State prisoner at St. Helena. But during the period which 
 intervened between the recoinage and the resumption of cash 
 payments in 18 18, and the Bank Act of 1844, the Corporation 
 more than once did great services to public and private credit. 
 It had become the centre of the world's finance. In an eloquent 
 passage, my late friend, Mr. Cobden, describes the intense eager- 
 ness with which the announcement of the Bank's rate of discount 
 was watched for in the commercial centres of the further East. 
 It was supposed to possess in its hands the gains or losses of 
 trade, and that on the decisions which its directors came to in 
 their parlour — the language of the earliest days of the Bank are 
 still traditional with it — depended the success or failure of 
 commerce. 
 
 Peel totally changed its constitution by the Act of 1844. The 
 alteration was a subject of much controversy at the time, and 
 even now that the warfare of words has somewhat abated, and the 
 nation is ready to accept the new condition of things, the last
 
 136 INDUSTRIAL AND COMMERCIAL HISTORY. \ 
 
 word has not been said upon the subject. But the question of 
 the currency is the strong meat of economics, and it is perhaps 
 dangerous to offer it to beginners in the science, seeing how it 
 has tried the digestive powers of many who would fain be con- 
 sidered authorities. Be that as it may, it was a measure which, 
 of its kind, was as great a departure from tradition as any of 
 the Acts framed by that great statesman, and marks a new era 
 in pohtics. 
 
 The days indeed of chartered joint-stock enterprise have long 
 passed away. The South Sea Company, as a trading association, 
 had a brief and shameful career. That of the East India 
 Company was long, splendid, and unique. Both, I believe, if 
 trade was to be carried on, were necessary in their day, I do not 
 think it would have been possible in the seventeenth century to 
 have achieved trade with the East by private enterprise. Skinner 
 may have been an ill-used man, but he intended really to trade 
 under the aegis of the Company, whose monopoly for a time 
 superseded, he ventured to intrude on. Jenkins of the Ear 
 would not, I apprehend, have suffered in the service of the South 
 Sea Company. He was no doubt trading on his own account, 
 and when he had to endure, as he said, the mutilation he had 
 certainly undergone, he did not seek succour from the South Sea 
 Company, but, as he alleged, from God and his country. Of 
 course, as people at that time knew, there were divers processes 
 under which ears were lost, and the unabashed Defoe, novelist 
 and pamphleteer, was not the only earless person to be seen. 
 But the trading of these companies soon became a public scandal 
 and a public loss. Long before its dissolution. Parliament had to 
 distinguish between the East India Company as an empire and 
 as a trading concern. The monopoly of the latter became 
 intolerable. 
 
 The Bank of England, with the exception of that episode in 
 its history, on which I have commented, when it should have had 
 the firmness to resist "temptation, and to have insisted on its own 
 account, that it should give proof of its solvency, has been 
 continuously useful and honourable. Its political services, on 
 which of course I do not comment, have been as significant, as 
 profound, and as important as its economical career has been. It
 
 HISTORY OF CHARTERED TRADE COMPANIES. 137 
 
 has endured for nearly two hundred years, and it is infinitely 
 stronger than when it began its career of usefulness. It has been 
 criticized, but always with respect and confidence. To my mind, 
 the English constitution has been as much guarded and developed 
 in Grocers' Hall and Threadneedle Street as in the palace of 
 Westminster.
 
 VII. 
 
 THE JOINT-STOCK PRINCIPLE IN CAPITAL. 
 
 Origin of the guilds of the Middle Ages — The regulated companies of 
 the seventeenth and eighteenth centuries — Limited liability companies 
 of this century — Dialogue for and against the prijtciple of limited 
 liability — Industrial partnerships in Cornwall — Bankruptcy atid 
 co-operation regarded in their relation to the joint-stock principle in 
 capital. 
 
 There has been a time in the economic history of England when 
 a peculiar form of what may be called joint-stock enterprise in 
 capital prevailed universally. I am referring to the trade guilds 
 of the Middle Ages. How universal was the spirit of association 
 can be gathered from the names of the various London 
 Companies, once combined for purposes of mutual defence and 
 assistance, and constantly recognized by Parliaments and Govern- 
 ments, both for the purpose of exercising a police over the craft 
 which they represented, or for serving the State in reference to 
 certain duties or functions. It is not very clear when these 
 Companies, of which only the London guilds survive, began to 
 dissociate themselves from the craft with which they were 
 originally identified, and to admit members who had no relation 
 to what was called their mystery, beyond association with it. 
 But up to the Corporation Reform Act, it was a rule of prescrip- 
 tion, if not of law, that no person could carry on trade in a
 
 THE JOINT-STOCK PRINCIPLE IN CAPITAL. 139 
 
 corporate town unless he were a freeman of the borough, or in 
 London, unless he belonged to one of the City Companies. Even 
 now these freemen have a parliamentary franchise^ which is 
 not conditioned by residence or property. Certainly by the 
 time of the Revolution of 1688, the City Companies possessed 
 a number of members who were in no way connected with the 
 trade which they represented. 
 
 I have found no evidence that at any time of their career these 
 corporations carried on manufacture and trade with a common 
 stock, at least as regards the London Companies ; but there were 
 associations, such as the Merchant Adventurers of Bristol, which 
 seem to have done so at an early age ; however, the Companies 
 became possessed of considerable wealth. In the last volume of 
 my " History of Prices," I printed from the Rawlinson Papers a 
 fragment of the Common Council Book of London, in which the 
 loans made by the Companies to James and Charles are described, 
 security being given in land for the debt. In this way, I make 
 no doubt, the Companies obtained their Irish estates, not, I con- 
 ceive, by a round sum paid down, but by advances from time to 
 time, made to the Crown. James, though pacific, was exceedingly 
 extravagant, and Charles was constantly in debt and difficulty, 
 a fact which explains though it may not excuse much of his 
 action. 
 
 I do not, however, intend in this lecture to dwell on these asso- 
 ciations. I have done so already on an earlier occasion. It is 
 sufficient to say that these guilds, companies, or associations, may 
 be traced back to the collegia or sodalitta of the Roman Republic 
 and Empire. The aristocratic party in the State looked sus- 
 piciously on these companies, and constantly extinguished all but 
 those which, being of venerable antiquity, were ascribed to the 
 policy of Numa. The plea generally was that associations of 
 traders and artificers were collections of artisans and workmen 
 whose very existence was a degradation to the majesty of Rome. 
 Cicero in his " Offices" is very sharp upon them, alleging that the 
 retail trader, for example, can get no profit except by falsehood. 
 But there are grounds for believing that a political reason was 
 the main cause ot this hostility, and that when Clodius favoured 
 and organized them, he intended to make them the instrument of
 
 140 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 what he called democracy. The principal interest to me, how- 
 ever, in these ancient collegia^ is that they formed a characteristic 
 part of the later Roman inunicipmm^ and that from tb£?e muni- 
 cipia^ with their existing institutions, were derived the chartered 
 towns of France and England. I am only concerned at present 
 Avith those voluntary associations in England, known as partner- 
 ship and joint-stock enterprise, the latter having been recently 
 developed by very modern Acts, and constituting a most important 
 aspect of modern production and trade, the principles and practice 
 of it being sometimes very adversely criticized, and quite as 
 frequently eulogized. 
 
 Partnership, and the regulation of partnership by law, must 
 have been as early as trade and mercantile law. In English law, 
 from early to recent times, the liability of the partners, whether 
 they entered into a private arrangement, or adopted as far as 
 possible a joint-stock principle, was unlimited, each partner or 
 shareholder being responsible for all the defalcations or debts of the 
 firm or association. Now it was early seen that certain forms of 
 trade or production could not be carried on, or even exist, on this 
 principle. The stock of the Bank of England carried no liability 
 to its partners beyond the amount of each person's subscription or 
 holding, and this, I conclude, was the reason why the greater part, 
 if not the whole of the capital, beyond the freehold premises of 
 the Bank, was invested in Government securities. When, in 1816, 
 the Rest of the Bank of England amounted to near nine millions, 
 (^'ou will remember that the Rest is the difference between the 
 assets and liabilities of the Bank), that accumulated profit was 
 undoubtedly invested in securities ; and when in that year the 
 directors, with the sanction of the proprietors, added 25 per cent, 
 to the capital stock of the proprietors as a bonus, the form 
 which the new stock took was a security. Similarly, when the 
 South Sea Company was formed in i7ii,and expanded in 1719, 
 the whole of the stock was in public securities, and so far was a 
 guarantee to the subscribers, whose liability was limited to the 
 amount of their subscription or holding. 
 
 It would have been plainly impossible for the great works which 
 have been carried out by private or joint-stock enterprise in 
 England, to have been even contemplated, if the old law of part-
 
 THE JOINT-STOCK PRINCIPLE IN CAPITAL. 141 
 
 nership liability had prevailed in them. Undertakings like the 
 London Water Companies, and the railroads, would have been im- 
 practicable, if every shareholder was liable for the whole costs of 
 failure, while his gains were limited of course to his share in the 
 undertaking. The process adopted in these and analogous cases 
 was to define the undertaking and the responsibilities of the pro- 
 moters and subscribers by private Acts of Parliament, and in 
 consequence great industrial undertakings in the United Kingdom, 
 have been saddled with enormous initial costs, and under certain 
 rules of procedure with outrageous subsequent costs. Compen- 
 sation was awarded to landowners, when private property was 
 dealt with, on a prodigious scale, and some of the great railways 
 have never recovered from the pillage. When, however, as in the 
 case of some among the London Water Companies, the source of 
 supply was public property — in this case the Thames — the charges 
 put upon the projectors was trivial. In the case of the railways, 
 the result has been that the cost of carriage of passengers and goods 
 has been necessarily increased by this factitious capital, and the 
 concentration of all public business in the Westminster Parliament 
 has led to great and vmnecessary outlay. In the case of Ireland, 
 matters were far worse. In that, an agricultural country, the 
 railways were constructed on a broad-gauge system, in perfect 
 ignorance, it would seem, of what the natural conditions of the 
 country were. And then, the committees gave these trading 
 companies a grotesque maximum of profit, which the proprietors 
 have of course interpreted as a guaranteed dividend, and actually 
 claim compensation for, as a vested interest of the highest class. 
 
 These numerous partnerships with limited liability necessarily 
 went to Parliament. The English law, as law books are fond of 
 telling us, does not vest the absohitum or directum dominiuin of 
 land in any subject whatever, and perhaps it is as well that it does 
 not. But it does vest the perpetual usufruct, which differs only 
 metaphysically from the lordship which the law denies. This 
 usufruct, when honestly acquired, the law rightly confirms to the 
 owner, and as rightly insists that either Parliament itself or some 
 authority, the powers ot which are delegated by Parliament, and 
 can be revoked by the authority which gave them, should possess, 
 under a just compensation, the privilege of invading such rights
 
 142 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 of usufruct, and transferring them to others. This delegation is 
 not unknown. Urban authorities have been empowered to take 
 houses and land for street improvements, or for sanitary reasons. 
 In country towns this power is given, ab im'tto^ to the civic autho- 
 rities. In the metropolis, and under the now defunct Board of 
 Works, Parliament wisely reserved to itself the power of review- 
 ing, while accepting or rejecting the schemes which the London 
 Board prescribed. It was not always easy to keep these schemes 
 free from jobbery even in Parliament, but I do not remember any 
 case in which the House of Commons was tainted with suspicion. 
 But neither House is able to repress the enormous expense which 
 attends private bill legislation, and is virtually a denial of equity 
 to new undertakings, by the initial and unremunerative charges 
 with which it loads them. 
 
 I have referred to these facts, because I wish to point out to you 
 that the principle of limited liability is by no means the novelty 
 which some persons affect to consider it, and in itself by no means 
 deserve the injurious and invidious criticism with which it has 
 been assailed. It is old, and it has been advantageous. Of course 
 no human undertaking is exempt from the risks of failure, and it 
 is a common-place in political economy to say that there is no 
 escape from risk, except by insurance, z>., by distributing the 
 liability. People constantly tell you that you can, in these 
 modern times, insure anything. But it may be doubted whether 
 you could insure against the risks of commercial business, or to 
 be more accurate, define the conditions under which the risks can 
 be insured. For insurance is always based on averages, and I do 
 not think that any one has yet, and I do not think that any one 
 could, calculate the risks of success or failure. Nothing at one 
 time seemed more stable than canals and turnpike trusts. 
 But except in rare cases, the former have been either failures, 
 or nearly failures, and I know no case of the latter in which there 
 has not been a failure. And I do not think that even in their 
 best days, any one could have guaranteed a permanent and 
 invariable income from either. 
 
 There was in comparatively early times a good deal of joint- 
 stock enterprise. The earliest lists of Stock Exchange values 
 enumerate a large mass of securities, once thought solid, but long 
 
 I
 
 THE JOINT-STOCK PRINCIPLE IN CAPITAL. 143 
 
 since ruined and forgotten. For example, there was a lutestring 
 company, established in England soon after the Revolution, the 
 object of which was to utilize the skill of the refugee French 
 artisans, in the manufacture of silk goods. It was thought to be 
 exceedingly promising, but within twenty years it spent all its 
 capital, abandoned its business, and has long since disappeared 
 into oblivion. Again, there was a sword-blade company, which 
 was destined to a longer, but, in the end, to a not more prosperous 
 existence. A century and more ago, a sword was considered part 
 of the civil dress of a gentleman, and perhaps was drawn a little 
 too freely. The sword-blade company, after a time, disappeared. 
 In Scotland, some patriotic individuals attempted to improve the 
 Scottish linen trade, and established the British Linen Company. 
 But in a very short time, national shrewdness, which is certainly 
 as strong a Scottish characteristic as patriotism — I do not say this 
 in reproach, for I own to some Scottish blood — induced these 
 manufacturers to lay aside their design, and to turn their looms 
 and factories into a bank. But the institution still bears its 
 original name, and as a bank has had a long, honourable, and 
 useful career; for it has performed a notable part in that ingenious 
 and useful mechanism of credit, which is known as the Scotch 
 banking system, a system to which much of Scottish progress in 
 the last and the present century is admittedly due. It may be 
 briefly described as a practice which has indued the cumulative 
 responsibility of endorsed bills of exchange on the balances and 
 credits of its customers. 
 
 The whole law of partnership with its unlimited liability, how- 
 ever numerous were the partners or shareholders, unless the 
 liability was restrained by a special Act of the legislature was no 
 doubt incorporated into the practice of tlie English law from the 
 civil code. The principles and practice of the Roman law will be 
 found in the Digest, Book xvii. Tit. II. I dare say that those who 
 are engaged in the University study of law make themselves 
 familiar with the long and subtle practice by which the rules of 
 partnership were defended. I refer to them here, in order to 
 point out how great the difficulty naturally was, in reversing a 
 branch of law which had so respectable ati antiquity, and had 
 been so thoroughly engrafted on that English custom which is
 
 144 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 called common law. Even now, the question as to whether the 
 legislature has been wise in permitting the creation of joint-stock 
 companies with limited liability is disputed. Of course the 
 question is entirely an economical one. If the law is too lax, so 
 lax that it permits fraud to go unpunished — a very general com- 
 plaint — the objection, if it can be substantiated, seems to point 
 rather against certain details in the two principal acts, rather than 
 against their principle. But before one enters upon the general 
 merits of the system, it may be well to say a little of its modern 
 origin, as regards general trade. Our law of limited liability was 
 borrowed originally from a particular phase of French practice, 
 and was commended to the legislature long before it was accepted 
 as an integral part of commercial law. The hesitation was natural, 
 for I can well remember that when the legislation was initiated 
 there were many misgivings as to the consequences. 
 
 The French have a very severe bankruptcy law. It is almost 
 pedantic in its rigidity, and contains a characteristic of French 
 sentiment, which I do not reprobate, under which a descendant 
 may rehabilitate the commercial character of a deceased proge- 
 nitor. Such a process would of course be entirely alien to our 
 system of family settlements, under which the liabilities of a 
 debtor do not survive beyond his life, and that part of his personal 
 estate which may be attached by his creditors, nor do I think that 
 until a total change takes place in the devolution of English 
 property, would such a strain of integrity be welcomed in England. 
 The French law visits with serious penalties, such as travaiix 
 forces^ acts on the part of bankrupts which are treated with extra- 
 ordinary leniency by the English courts. It is held, I believe, 
 that in a manufacturing and commercial country like the United 
 Kingdom, it is better to run the risk of occasional excessive 
 speculation, than to check enterprise by severity on failure. I am 
 convinced that we carry this theory too far, and that gambling in 
 goods ought to be much more severely handled than it is. If 
 such practices are to be too readily condoned, the speculator has 
 the advantage of winning a heavy stake from the public as a con- 
 sequence of success, and of making the public pay for his failure. 
 
 The French law of limited liability is of two kinds. One is 
 when the directors and certain partners in an association for trade
 
 THE JOINT-STOCK PRINCIPLE IN CAPITAL. 145 
 
 purposes, are still liable on failure to the extent of their means, 
 while the ordinary shareholder who takes no part in the manage- 
 ment is responsible to the extent of his venture only ; the othea 
 in which the whole of the subscribers are responsible to the extent 
 of their shares only. In the United Kingdom we have adopted 
 the latter system, though in practice, the extreme vigour of the 
 courts of law upon the conduct of directors, both in the initial 
 stage of the partnership, and in its subsequent management, gives 
 the existing law not a little of the characteristics of the first system. 
 Of course this only takes place when the partnership gets into 
 court, and if all one hears is accurate, fraudulent projectors of 
 companies, and directors, too, calculate on the unlikelihood of 
 prosecution, for the suffering shareholders are naturally tmwilling, 
 even when they know what has happened, to follow up the 
 business in a law court, and, in their own language, throw good 
 money after bad. I may add that all the company law, as at 
 present existing, was drafted by Lord Thring, who was for many 
 years Parliamentary draftsman of Government Bills, and is an 
 exceedingly acute and able person. In his opinion, as I have 
 heard him say, the blemish in company law lies far more in the 
 administration of the courts, than in the principles and details of 
 the law itself. That the English judges mean well I do not 
 doubt. That they are entirely uncorrupt, and defer entirely to 
 rules of professional honour, I am ready to allow. But it does not 
 follow that they are entirely wise in the administration of the law 
 which they expound. 
 
 Now in connection with this new system of joint-stock enter- 
 prise with limited liability, the objectors argued : " The law is 
 responsible for inevitable slovenliness in the conduct of business, 
 exaggerated and unwise competition, and many of the evils of 
 depreciation. In an undertaking where the shareholder merely 
 stands upon a fixed stake, the responsibility of his subscription 
 only, not a little of the gambling spirit is aroused. But it is a 
 very serious thing for people to undertake business when they 
 stake everything which they possess, and this alone is a guarantee 
 that the undertaking will be conducted cautiously. Such a fact is 
 illustrated by the far higher reputation of a company in which 
 there is a large unpaid capital, than that of one in which the 
 
 II
 
 146 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 future responsibility of the shareholders is exhausted. Under- 
 takings which under unlimited liability have, and should have, no 
 chance of success, are constantly floated, to the injury of trade, to 
 the loss of creditors, and, a smaller matter, to the loss of those who 
 assisted in floating them, under this new system. The concession 
 of limited liability is the harvest of adventurers, who would have, 
 and ought to have, no place in honest and legitimate business. 
 In the same way, after the dupes, who have been invited to 
 speculate, are cleared out of what they have subscribed, advantage 
 is taken of some diflSculty, perhaps temporary, perhaps inherent, to 
 wind up the concern by unscrupulous attorneys and equally un- 
 scrupulous liquidators. There are legal firms in London which 
 have a scandalous notoriety for this practice. They are known by a 
 rigorous metaphor as wreckers. Besides, it constantly happens 
 that owing to a failure in such undertakings, quantities of property 
 are thrown on the market, disposed of by forced sales, at an 
 entirely inadequate price, and in this way depress the value of 
 stocks and property possessed by old-fashioned and legitimate 
 traders. You cannot deny that the tendency of profits is to an 
 equality. But it follows from this rule that if property purchased 
 at an inadequate price, falls into new hands, it tends to diminish 
 the profits of those who gauge their business and their profits, by 
 the only legitimate canon which trade afibrds, the cost of produc- 
 tion under the most favourable conditions and the most intelligent 
 supervision. 
 
 " Nor is this all. As profits tend to an equality, so does the 
 interest of capital. In those undertakings with limited liability, 
 the subscriber has no reason to expect, and as a rule, cannot get 
 for his shares more than the average rate of interest plus a further 
 amount to represent his risk, in so far as it can be calculated. It 
 is notorious that in investments such as railways, the average rate 
 of dividend, calculated in the price of the companies' stocks, and 
 spread in the shape of admitted earnings over the whole of these 
 undertakings is not more than the interest on Government securi- 
 ties. It is less notorious, but equally true, that the same result 
 would be found to ensue if a capitalist invested largely on the faith 
 of circulars in joint-stock companies. The occasional large profit, 
 always heralded and constantly exaggerated, may fall into the hands
 
 THE JOINT-STOCK PRINCIPLE IN CAPITAL. 147 
 
 of a successful gambler, but depend on it, it is fully counter- 
 balanced by unacknowledged or concealed losses. In brief, the 
 system of joint-stock enterprise, with limited liability, does not 
 differ materially from those State lotteries, which every respectable 
 Government, struck with the mischief which they caused, has put 
 down." — " I remember," said one of the critics of these acts to me, 
 himself a director of the Bank of England, " that when I wanted a 
 secretary an applicant called on me. I asked him for his qualifi- 
 cation, and he told me, mentioning the name of a person who was 
 notorious, I might almost say infamous, for his association with 
 these new undertakings ; that he had been for years engaged in 
 collecting out of the books of the Bank of England, the great 
 railway companies, and similar undertakings, the list of whose 
 shareholders is accessible to all comers, the names of all clergymen, 
 retired military and naval officers, barristers, and lawyers, who had 
 _^200 and upwards in the undertakings." Such persons were plied 
 with circulars, because it was known that if they could be induced 
 to take stock in proportion to their holding they would be good 
 for the calls. My friend did not engage that clerk. — " Besides, does 
 not the importunity with which these circulars are pressed on you 
 suggest suspicion that the announcements of the future are over- 
 florid, even if one had not the evidence of failure to confirm the 
 suspicion ? 
 
 " It is perfectly true that certain great undertakings would have 
 been impossible but for the principle of limited liability. But it 
 is not difficult to define those branches of business in which the 
 permission should be given without making that permission 
 universal. In undertakings which no individual and no partner- 
 ship could contract for and complete, but one of supreme public 
 utility, the rule may be allowed. Here, too, you have something 
 enduring to show for your money. Grant that the railway com- 
 panies have received too little profit for their outlay, the London 
 Water Companies too much, they have at least made and worked a 
 permanent way, and created the supply. It is quite a different 
 thing to allow the principle to be adopted and carried out in 
 buying and selling, in which a turn of the market may induce a 
 total loss, and a total loss considerable injury to creditors and 
 legitimate traders. The old law may have been severe, but it
 
 148 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 contained wholesome checks. The new law is exceedingly lax, 
 and has practically no checks at all." 
 
 I have heard persons argue against joint-stock enterprise, with 
 limited liability on the above grounds. Of course there is a 
 rejoinder to them. " You run the risk," people answer, " of 
 suffering from the failures and blemishes of a system, inseparable 
 from all human undertakings, to the whole class of similar under- 
 takings. Before you can come to so sweeping a conclusion you 
 should have, what the logicians call, a prerogative instance, and 
 show that what you can allege in some cases only, inevitably runs 
 through all examples of the same species. But this cannot be 
 asserted, either from the facts of the case, or from anticipations as 
 to the future. There is a great deal of business carried on under 
 the Coinpanies' Acts. Most of it is carried on satisfactorily, 
 smoothly, discreetly. We may be sure that if failure was abnormally 
 conspicuous in such undertakings, they would receive nearly as 
 sharp a check as prohibition or a reversion to the old system 
 would be. Let us admit that some projectors are rogues, and 
 some shareholders are dupes. Let us grant that unscrupulous 
 people get up these undertakings and unscrupulous sharks wreck 
 them. It does not seem to us that this is a valid reason for pro- 
 hibiting them, but does seem a good ground for amending the 
 law and stopping the game, the gains, and the frauds of these 
 people. It might be a little expensive to undertake the State 
 prosecution of a few among these adventurers ; but the money in 
 the end would be cheaply laid out, for it would deter people from 
 these practices. It is, we believe, the duty of the legislature, when 
 it provides that certain powers should be given, to see that these 
 powers are not abused, and made the mechanism by which dis- 
 honest persons may prey on society. 
 
 " It is not clear that the old mechanism provided against the 
 evils which you dread. A person under unlimited liability may 
 be more reckless than one who has his risks defined. He knows 
 that everything will be gone if he fails, fortune, reputation, credit, 
 and he strains every chance, nay, simulates every gesture of 
 solvency, when he is fairly conscious that any reasonable chance 
 is gone, and that he is hopelessly insolvent. Under the law of 
 unlimited liability you cannot demand that he shall submit the
 
 THE JOINT-STOCK PRINCIPLE IN CAPITAL. 149 
 
 state of his affairs, not only to all interested in his doings and his 
 solvency, but to all comers. But you do this, as far as human 
 power can publish the result of an independent audit, under 
 limited liability. We are aware that balance sheets may be 
 fraudulent, and that an independent audit is in most cases a 
 condition which cannot be absolutely satisfied. Indeed some of 
 the most scandalous frauds which have been perpetrated in times 
 recent and in times comparatively remote, are imitations of 
 genuine solvency, perpetrated by traders under unlimited liability. 
 Sir John Dean Paul, the head of a banking firm whose failure 
 caused great loss and dismay about thirty years ago, swore that his 
 father's personal estate was worth, if I remember rightly, £\ 50,000, 
 by his father's dying advice, when it was not worth sixpence, but a 
 good deal less than sixpence. The Greenways, of Leamington, 
 when they became bankrupt, confessed that they began business 
 about the time of Paul's failure, with a capital of ^600, and on 
 the faith of their previous reputation, kept up a local note circula- 
 tion of ^^30,000 on it. Now it does not seem easy to see how they 
 could have done this under the limited liability Acts. Nor indeed 
 is joint-stock enterprise, conducted under unlimited liability, free 
 from the risks of a disastrous crash. The Glasgow Bank was 
 directed by men of eff'usive, perhaps ostentatious, piety, and of 
 reputed wealth. Its collapse brought ruin to a thousand homes, 
 a ruin more disastrous than a bombardment. Instances of the 
 same kind could be multiplied. Now before you infer generally 
 to the peculiar risks which ensue from the doctrine of limited 
 liability, you must show that the older system is free from these 
 risks. But it is clear that you cannot let us confine ourselves to 
 banking houses. They went down by dozens, by hundreds at the 
 close of the eighteenth century. The great panic of 1825 was 
 principally caused by the failure of banks. The disaster which 
 came on after the Overend and Gurney business, shook the 
 financial world of London to its centre. Now in all these cases 
 the principle of unlimited liability was dominant, and the creditors 
 of the unfortunate undertakings got very little consolation from 
 the unlimited liability of their debtors when they found out that 
 their resources were virtually exhausted before the crash came. 
 " It is perfectly true tliat an undertaking in which a large amount
 
 ISO INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 of capital is uncalled, even when the liability is limited, is in a 
 better position, as far as credit is concerned, than another is in which 
 there is none left to call. But the affairs of every trading company 
 are liable to temporary strains. Uncalled capital is not the best 
 security to offer for advances, but it is a security which no bank 
 which does regular business with the company would, up to a 
 certain point, hesitate to accept. But a private undertaking, with 
 unlimited liability, and with no complete evidence as to the 
 solidity of its assets, has not this to offer. Now the proof that the 
 facts are as is stated is seen in those joint-stock banks, which, in 
 addition to their six-monthly balance sheets, have a large amount 
 of uncalled capital, when they all, or nearly all, a year or so ago 
 registered themselves anew under limited liability. Their deposits 
 have not fallen off, their business has not declined, though they 
 have certainly diminished the security which they offered to their 
 creditors. This uncalled share capital too is as nothing to the 
 liabilities which they have incurred, and have, I do not doubt, 
 amply covered. It does not seem, therefore, that in this, the most 
 critical instance of joint-stock enterprise, considering the enormous 
 interests which are involved in success and failure, that the 
 customers of these banks felt any alarm at the limitation of the 
 shareholders' risks. 
 
 " There is one pan oi vour case against the new law, which is 
 we may admit, at leas*, apparently made out. It would appear 
 that joint-stock entei prise in trade and production does tend to 
 assimilate the rate of profit to the rate of interest, and that the 
 cost of direction being satisfied, and the charges of hired manage- 
 ment being paid, with perhaps a little margin for risk, shareholders 
 are satisfied with less dividends than a trader expects in his busi- 
 ness. It may be admitted too that the second or third purchaser 
 of an uncompleted undertaking, which has gone through the 
 hands of one or two liquidators, may make a good, and if a good, 
 a rare bargain ; for if such failures characterized joint-stock enter- 
 prise, a very effectual and rapid check would be put on it. I am 
 disposed to think that the best and most frequent purchases of 
 this kind have been made by railways of branch lines, which have 
 certainly been bought for next to nothing, and have been turned 
 into paying sections when they are manipulated by the trunk 
 lines in the general interest.
 
 THE JOINT-STOCK PRINCIPLE IN CAPITAL. 151 
 
 *' But there is an answer to even this part of the objection. In 
 the first place, the supervision of a board and hired servants is 
 never so effective as the master's eye. I have heard traders over 
 and over again assert that they have nothing to fear from co- 
 operative stores, and I suspect that the principal outcry against 
 them is from those London traders, whose connection suggests to 
 them, or constrains them to, the expediency of giving credit. 
 The more courageous traders allege that the store cannot buy so 
 well as they do, sell so well as they do, and effect economies as 
 well as they do. They might cite instances. Some years ago a 
 co-operative store was started under the name of the Universities 
 Co-operative Association. It had large premises in a convenient, 
 and it may be supposed not over-expensive, part of London, and it 
 received large support, in capital and custom, from the clients 
 which it expected to attract. It very rapidly collapsed in com- 
 plete ruin, for the management from the beginning was as bad as 
 it could be. And it does not by any means follow that if a man 
 opens a shop he has good grounds for expecting an assured custom. 
 It is quite possible to overstock a district with retail traders. It 
 is highly probable that among people of that class the phenomena 
 of over-population are more frequently manifested than in any 
 other class of industrial agents, with perhaps the exception of 
 barristers. Besides, it is quite clear that traders in a good way of 
 business are seldom content with one shop. Many of them have 
 a dozen, sometimes in half a dozen towns. Now it is impossible, 
 except they are like Sir Boyle Roche's famous bird, that they can 
 be in two places at once, and a fortiori in a dozen. It is plain, 
 then, that in these subordinate places of retail selling — the modern, 
 and I suppose polite, fashion is to drop the word shop and call 
 them establishments, even nonconformist tradesmen using the 
 objectionable word — the owner must delegate his functions and 
 incur the very risk which, as he alleges, has such a compensative 
 power in that joint-stock shop. 
 
 " It would appear, then, from these considerations, that the prin- 
 ciple of limited liability does not deserve the sweeping criticism 
 which is constantly uttered about it. It would seem that it is 
 really less likely to be reckless than that person, or set of persons, 
 who carry on business with unlimited liability, and that the law
 
 152 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 has put hindrances to this danger. It is probable, too, that bank- 
 ruptcy has a larger effect in the lowering of prices than joint- 
 stock trading has, for individuals who are in fear for the future 
 will buy desperately, and sell desperately, and if they have suffi- 
 cient shrewdness will escape the snare of the bankruptcy law. 
 And in this reply nothing has been done but to meet objections. 
 The benefits of the new law have to be shown." 
 
 I have given you this sketch of the situation, and of the attack 
 and defence on the joint-stock principle in capital at some length, 
 the defence naturally at greater length, since the defence is in the 
 nature of things more elaborate than the attack, because it seems 
 to me that nothing is more useful to the student of social pro- 
 blems than to exhibit the case in what I may call a debate. Nor 
 do I think I need make an apology for adopting what you may 
 perhaps consider a parliamentary manner, in putting the case 
 before you, and in arguing for and against a principle or practice. 
 For though much time is wasted in the House of Commons in 
 discussions on foregone conclusions, there are subjects on which 
 parties are indifferent, to use an excellent word in its earliest and 
 best sense, and really do discuss a question from both sides. 
 And you will find it excellent practice in economic and social 
 questions to consider both sides of the case, and to see what can 
 be said from either aspect. You will find it more profitable to 
 deal with the facts of actual life, than like the Roman youth to 
 handle the philosophy of history, and like Juvenal, in his under- 
 graduate days, " give counsel to Sulla, as to his retirement into 
 private life, in search of sound sleep." 
 
 I do not think it can be doubted that the recent Joint-stock 
 Companies Act has had a great effect on industrial activity in 
 England. It is true that many of those who have entered upon 
 this system of manufacture and business, have been restive, 
 impatient, and in these latter days, minatory about royalties. 
 Now of course you know that land and its incidents have always 
 been considered the undoubted and peculiar field for the econo- 
 mist. The lawyer is merely an agent in dealing with it. The 
 statesman, when he ceases to be a partisan, arbitrates on it ; but 
 the economist considers that he is justified in analyzing the origin 
 of its ownership, the causes and effects of its rent, and all the
 
 THE JOINT-STOCK PRINCIPLE IN CAPITAL. 153 
 
 accidents of its owner's tenure. Now when the Royal Commission 
 on the Depression of Trade was sitting, witness after witness, and 
 among them some of the most extensive joint-stock miners and 
 smelters, gave evidence as to the depressing effect of royalties, 
 alleged to be excessive in this country upon mining operations. 
 They treated the phenomena as natural and inevitable, but as a 
 serious hindrance to the industry which they represented, even 
 under the modern conditions of limited liability. And I see now 
 that many persons are alleging that, as in France, Belgium, and 
 Spain, all minerals are the property of the State, so they should 
 be declared in the United Kingdom. I have constantly pointed 
 out to you that rights abused are sure to suggest communism and 
 violent reconstruction. 
 
 I have recently been studying the mining district in Cornwall, 
 and particularly that narrow district in which the copper and tin 
 deposits are found and raised. Here mining is carried on, under 
 the unhmited liability system, and with very singular results. 
 The products sought for are copper and tin, the former generally 
 lying near the surface, the latter in the deeper veins, though 
 habits of observation, no doubt hereditary, guide the adventurer 
 in mining to anticipations which are generally realized, though 
 the realization often leads to formidable losses in quantity. The 
 metal, I mean, may be there, but in insufficient amount. But 
 mining for these metals is plainly a local passion. The lucky 
 man may make a great fortune, though I suspect if all were put 
 together, and an average drawn, it would be found that losses 
 overrun profits, especially under the system. And not only is the 
 distribution of these minerals exceedingly capricious, but the 
 market price is liable to great fluctuations. A few years ago, 
 copper was, as the phrase goes, a drug. Within the last year its 
 price is trebled. Tin again was not much more than £(^0 a ton, 
 a year ago, and now it is ;^I35, or was when I was there a month 
 since (1889). These fluctuations greatly stimulate the spirit of 
 enterprise, or as people are apt to say, gambling with the future. 
 And it is curious to notice how naturally these people witness the 
 decay or destruction of fortune in the case of those who are 
 persistent, and persistently unlucky. There was a gentleman 
 there, who had lost, I was told, _^8o,ooo by these ventures, and
 
 154 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 his neighbours evinced no surprise. He was buoyant, jubilant 
 and now thought he had at last come to his luck. 
 
 Cornwall is a county in which the rights or claims of the 
 landowners are carried to an extent which I have never found 
 paralleled elsewhere, though I have seen some curious instances 
 of them in Ireland. Not only is every inch of common land 
 appropriated, but the streams, and in many cases the 
 harbours, have been usurped into private property. It is 
 impossible, so I was told, to purchase a freehold, and the only 
 occupancy is an exceedingly severe one. Landowners will not 
 grant a lease for years for house building, but concede only a 
 building lease on lives, by which their prospects of appropriating 
 the occupier's outlay are greatly accelerated. I have had instances 
 quoted to me, in which a building has fallen back, through the 
 ill-luck of the lessee, and the unexpected falling of the lives, into 
 the hands of the landowner at the end of twelve years. Now many 
 of these miners emigrate for a time to Colorado, or the Trans- 
 vaal, or Australia, get heavy wages, save, and by that indestruc- 
 tible instinct, which seems to be inveterate in the Celtic race — 
 Irish, Gaelic, Welsh, Breton, Cornish — retiy^n to the place, as 
 Shakespeare says, where they were kindled. They are the apt 
 victims of the landlords, and after they have built their houses 
 on these conditions, they venture the residue on a mining lease, 
 generally in joint-stock, and all but invariably on unlimited 
 liability. The spectacle of all but universal ill-success makes 
 them reckless, perhaps patient. 
 
 The mining leases are generally for short terms, say twenty 
 years or less. The adventurer has to pay a rent, and a royalty, 
 varying from one-tenth to a twenty-fifth of the produce, not the 
 profits, and beyond sinking a shaft, has to set up adequate 
 machinery for pumping and ventilating the mine. Of course he 
 is responsible for the term, and his plant follows the judge-made 
 rule, ciijiis est solum, ejus est usque ad ccelum, and for the per- 
 centage of the produce, at whatever cost it is acquired. If, as 
 sometimes happens, his venture is successful, he may make a good 
 thing of it during his lease. The landowner is, as you will see, 
 entirely protected, for in addition to his term, he has the hold of 
 unlimited liability, and he can hardly ever be persuaded to accept
 
 THE JOINT-STOCK PRINCIPLE IN CAPITAL. 155 
 
 the more modern arrangement. If the venture succeeds, he can 
 raise his fine, his rent, his proportion of the produce, so as to 
 squeeze as much as possible out of the occupier. When the lease 
 is drawing to a close, the negotiations are long and anxious. 
 The occupying tenant has only one resource. He can spoil the 
 mine, by obliterating the signs of the deposits, and by flood- 
 ing it. Cornwall is full of springs, and the latter process is 
 secured by neglect. I can conceive no system which is more 
 mischievous, more rapacious, and more certain to stimulate to 
 the highest extent, the gambling spirit in industry. Mining is 
 more speculative than any other industry, and does not need 
 incentives. 
 
 The calling of the miner is dangerous. Though the risks of 
 the collier are absent from his labour, unless the air is constantly 
 renewed, it gets foul, the workman digs and blasts in the wet, and 
 in deep mines works in a suffocating heat. Many men are maimed 
 and especially blinded by the explosions. A miner attired for his 
 underground journey — I saw them by hundreds — is a strange, 
 hardly a human object, if he were not so lively and cheerful. 
 His wages are no great temptation, rarely exceeding i8s. a 
 week. Now notice how complete an answer it is to those people 
 who go about telling these workmen that if prices rise wages 
 rise. Within twelve months the price of tin has risen about 120 
 per cent., and wages have not risen a penny. The fact is, the 
 miners are not yet enrolled in trade unions. And yet, strange 
 enough, so general is the dislike to the ground landlords, that the 
 employers, unlike their practice in other places, are particularly 
 anxious that the men should enter into their labour partnerships, 
 because they conclude that in this way only they shall be able to 
 modify the extortionate terms, as they allege, under which they 
 take their leases, and renew them. 
 
 The concession of the Acts permitting limited liability has been 
 followed by a great extension of the system, both in manufacture 
 and trading. No doubt advantage has been taken of the law to 
 put out artful and florid prospects of the benefit which those will 
 obtain who trust their money to the venture. But though it 
 comes in a different form, it may be doubted whether there is as 
 much deception practised in joint-stock enterprise as there is in
 
 IS6 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 private trading. The loss, to be sure, is limited, but the loss is 
 total. I never heard of any assets being recovered from a liquida- 
 tor. But unless we are greatly misinformed, the assets of a bank- % 
 rupt are never entirely recovered by his creditors, and if so, such 
 a person is virtually trading under limited liability, for all the 
 technicalities which law may allege. And in proof of this I may 
 cite the extraordinary success which has attended one of these 
 companies, the Assets Realization Company, the principle of which 
 is to offer the creditors a percentage in the pound on their debts, 
 and to undertake the realization of the estate by the company. 
 Besides, the severity of the law against a defaulting debtor is as 
 nothing" to the severity of the law, as the courts expound it, with 
 a negligent director, even though he may be proved to have 
 derived no advantage from his superintendence, and even to have 
 incurred considerable loss by his negligence. Lord Thring, when 
 the subject was discussed with considerable fulness at the London 
 Political Economy Club, the members of which are not prima 
 facte^ presumably interested in the success of the new system, 
 dwelt with great severity on the harshness with which law treats 
 unintentional breaches of company law, as compared with its 
 attitude towards bankrupts. For, in fact, company law is one of 
 the most difficult branches of commercial law, as I am informed 
 by those who are more or less familiar with it, and is full of con- 
 tradictions, traps, and pitfalls. 
 
 But to pass from this subject. The most interesting, significant, 
 and important departure in the new system is the development 
 of co-operative trade, and subsequently co-operative production 
 among the artisan classes and factory hands. The narrative of 
 this movement has been told in a simple, and yet exhaustive, 
 manner by Mr. Holyoake. Its beginnings in Rochdale were 
 watched with great interest by my distinguished friends Mr. 
 Cobden and Mr. Bright, who augured great moral good from the 
 experiment. Its progress has been noted and commended by such 
 excellent persons as Mr. Thomas Hughes, Mr. Vansittart Neale, 
 and others. But it may be doubted whether the acutest persons, 
 who witnessed the beginning of the movement, could have fore- 
 seen the social and economical effects of the extension of co- 
 operation, i.e.^ virtually a working-men's partnership under limited
 
 THE JOINT-STOCK PRINCIPLE IN CAPITAL. 157 
 
 liability, on those who undertook the function. It began in an 
 attempt to achieve two things — a ready-money business among 
 factory hands, these being a class naturally prone to run into 
 debt in small shops; and to secure genuine articles of consumption, 
 for it is not surprising that the small shops are not over-scrupulous 
 in the quality of the articles which they sell, as poverty enforces 
 cheapness. The movement, the history of which I do not pretend 
 to narrate, adopted a singular rule at its commencement, which I 
 believe it has generally continued. It did not undersell the 
 ordinary trader, but fixed its prices at ordinary rates. Probably 
 it did not wish to provoke enmity. Certainly, working men are 
 not enamoured of competition. But I conceive that the ruling 
 motive in the practice which was adopted was to assist the factory 
 hands in the habit of saving, by an almost unconscious process, 
 for the managers divided the profits of the business among its 
 customers, in proportion to the amount of purchases made at the 
 common shop. It was in this way that the capital was increased, 
 for the societies were always ready to receive these savings and to 
 reinvest them. 
 
 The step from shopkeeping to production or manufacture was 
 taken, though cautiously and slowly. It was especially adopted 
 at Oldham in the cotton manufacture, and at Leicester in the 
 stocking trade. I have not followed the numerical increase of 
 these undertakings, though I know that it has been large. 
 Now it is said, and that by persons strongly disposed to criticize 
 these ventures, that in the competition of business the co-opera- 
 tive factory, after getting rid of some initial errors, natural 
 enough, has been able to hold its own against the private 
 manufacturing firms. The principal initial errors were in dis- 
 covering that in a factory order and obedience were absolutely 
 necessary, that though the workman was a proprietor, sometimes 
 for his class a considerable proprietor of stock, he must not bring 
 the impulses of an owner into his work, but must behave just as 
 though he were as he was originally, and still is, as far as the 
 manufacture is concerned, entirely a factory hand. The other 
 difficulty or error was, that after recognizing the necessity of a 
 manager or superintendent, and of obedience to his directions, to 
 see thgt one must pay for skill. It was hard to induce the
 
 158 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 shareholders to beHeve that management, as long as it is necessary, 
 must be paid for, and, to be efficient, must be paid for well. Of 
 course, as soon as ever the associated workmen are one and all 
 competent to undertake the work of management, the rarity of 
 managerial ability has ceased, and with it the necessity of hiring 
 and paying for it. This has not, it seems, come yet, though it will 
 come in the future. Those whom I have consulted on co-opera- 
 tive manufacture assure me that the principal cause of their success 
 is the rigid prosecution of small economies in management, and 
 the careful elimination of waste. The danger, I have also been 
 told, which they run, is in the magnitude of the capital forced, so 
 to speak, on them, in accordance with their rule, always to accept 
 and utilize workmen's savings. 
 
 These, however, though interesting incidents in the calling of 
 co-operative production, are by no means the most important or 
 suggestive to the economist. The least agreeable fact which one 
 sees in the modern history of labour, a result distinctly traceable 
 to past wrongs, deliberately inflicted and continued upon work- 
 men, is the tendency which such persons have to live from hand 
 to mouth, and even to decline work, when a limited number of 
 days in the week secures to the workman his maintenance and 
 small enjoyments, though a more prolonged industry would, in 
 prudent hands, have a margin over. Now, as a spontaneous and 
 organized effort, the movement for an eight-hours day has my 
 entire sympathy. I am persuaded that employers of labour would 
 get, on the hypothesis that the labourer really exercised his skill 
 and energy on an eight-hours day, more out of such a limitation 
 than they do for longer labour. I utterly discredit and disbelieve 
 the shallow and interested utterances of some people that English 
 labour runs serious risk of rivalry by the long hours of the French 
 and German artisan. Given equal conditions, I would defy any 
 person to substantiate by facts what has become an exceedingly 
 common, and to use the mildest language, an exceedingly reckless 
 averment. But I entirely disbelieve in the notion, too commonly 
 entertained by the indolent and impatient, that the common boon 
 should be achieved by the action of the legislature. I have con- 
 stantly stated that attempts on the part of the law to do positive 
 good generally result in the incidence of more positive evil. The
 
 THE JOINT-STOCK PRINCIPLE IN CA PITA L. 1 59 
 
 artisans of the Middle Ages got an eight-hours day by their own 
 combinations, and maintained it till a series of great crimes com- 
 mitted against labour and the public good by kings and parlia- 
 ments, left the workmen helpless, because disunited. 
 
 Co-operative production is a powerful educating force in what 
 working men need to be taught most thoroughly, community of 
 purpose. Getting, as they must get under the system of the 
 division of employments, a familiar insight into the harmony of 
 interests in the business of their life, they learn that they are 
 strong when united, weak when divided. I have been told that 
 in co-operative production, the disputes which arise between 
 capital and labour are all but unknown, and that the union of the 
 two functions in the same person gives a rapid and successful 
 lesson in the true relations of the parties. Now, when the hos- 
 tility to capital ceases, it is very difficult for persons to accept 
 crude notions about the duty or necessity of nationalizing capital. 
 But everything which instructs people in the fact that all legiti- 
 mate interests are at harmony is a lesson of no little value. There 
 is, and there will be, till the causes are removed, no little dis- 
 content at existing practices and privileges which appear to give 
 unreasonable and unwarrantable advantages to certain interests. 
 
 I have already commented on the fact that Mr. George, while 
 his enmity to rent is thorough, his anticipations as to its extinc- 
 tion are sanguine, and his predictions as to the boon which his 
 process will confer on labour are, to say the least, confident, has no 
 antipathy to capital. He has witnessed, as he believes, with indig- 
 nation, the rapid growth of wealth among those who have got 
 hold of the land, but he does not detect a similarly spontaneous 
 development of wealth in those who are technically said to possess 
 capital. But I have been told that there are persons in the 
 United States who look on the manner in which the wealth of the 
 Vanderbilts has grown, to take the most obvious instance, with the 
 liveliest alarm and with but a little indignation. Some part of the 
 process, if I may infer from a narrative of the family, recently 
 published, and on the side of admiration, would, I think, in the 
 United Kingdom, have been met with very effectual checks. But, 
 except in so far as it comes from the possession of land, I do not 
 remember that Mr. George denounces the gains of these mil-
 
 i6o INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 lionaires. Here, at least, you have a type of socialism 
 which is not led into the theory of nationalizing capital and 
 establishing employment for all by the agency of a government 
 office. 
 
 I take it that the demand for the reconstruction of society, by a 
 violent modification of its present conditions, has few attractions 
 to those who labour on the co-operative principle. These people, 
 in so far as they demand reforms, generally go in the direction of 
 giving more ease to the materials and forces which human in- 
 dustry utilizes and clothes with utility. They may, for example, 
 conclude that much that characterizes our land system is wrong, 
 and allege that it handicaps industry in the effort to confer excep- 
 tional advantages on individuals. They do not think that you 
 will mobilize capital by frightening it, or that the accumulation of 
 wealth is assisted by insecurity. But they see also that capital and 
 labour may be starved by injudicious and unfair restraints on the 
 universal instrument or material of all capital and labour — land. 
 
 One of the most pleasing features in the history of co-operative 
 production is that the competition of working-men producers has 
 not, after perhaps a brief interval, provoked the jealousy of 
 capitalist producers. Some years ago I happened to be residing at 
 Leicester for a few hours in the house of a local manufacturer. 
 Now I knew that in this town co-operative production had com- 
 pletely established itself, and I inquired cautiously of my host in 
 what position those workers stood. To my surprise I found him 
 extremely friendly to the movement, for he had come to the conclu- 
 sion that the success of these undertakings was sure to bring about 
 harmony between employers and workmen, since even those who 
 had not taken part in the undertaking saw what were the con- 
 ditions under which successful industry could, and indeed must, 
 be carried on. And he went on to say that an association of co- 
 operative stocking weavers, knowing that he was friendly to their 
 system, called upon him with a request that he would assist their 
 comparative inexperience by an inspection of their books and 
 their works, for that they were sure that they had missed one or 
 more of the conditions of successful business. He complied and 
 advised them, in what direction I do not exactly remember, but he 
 asserted, with complete success. Now, such confidence on the
 
 THE JOINT-STOCK PRINCIPLE OF CAPITAL. i6i 
 
 part of the workmen, and alacrity on the part of the capitahst, 
 strike me as particularly commendable and hopeful. 
 
 I know no phenomenon of industry which is a more charac- 
 teristic fact to modern experience than the recent development of 
 the joint-stock principle in capital. I could give you numerous 
 instances of social benefits and social economies which could never 
 have come into existence but for this modern force. I am quite 
 convinced that in extensive districts in Great Britain it has been of 
 great advantage to workmen and industry. It is true that it has 
 not yet got much beyond manufacture. But there is reason to 
 believe that it will in time be introduced into agriculture, and in 
 this way solve many difficult and serious social problems.
 
 vni. 
 
 THE JOINT-STOCK PRINCIPLE IN LABOUR. 
 
 7'r<rde unions — The regulated company as n trade jmion — Must the law 
 always be obeyed? — An appeal to history— Jusification of trade 
 unions — History of English trade unions to 1563 — Uniojts compared 
 ■with syndicates — EJ)cct of increased wages on prices in the coal and 
 match trades. 
 
 You will probably anticipate that, by this heading to my lecture 
 of to-day, I intend to refer to those organizations by which men, 
 working through or under the direction of a capitalist employer, 
 by their own action seek to better their position, both by increas- 
 ing their wages and by rendering as far as possible that increase 
 stable, if not permanent. The title which working men give 
 these organizations, at least in modern times, is that of trade 
 unions, a term which is, I believe, quite late, though in the lan- 
 guage of their several crafts the word trade is assumed in a 
 technical sense, as denoting any kind of skilled labour, the plying 
 of which has generally been preceded by an apprenticeship, at 
 least till recent times. This usage of the word trade is, I do not 
 doubt, ancient, and that the more recent sense which is given to 
 it is long subsequent to that which prevailed in earlier times. I 
 understand by this organization also one which seeks to achieve its 
 ends by peaceful means, which collects its members by voluntary
 
 THE JOINT-STOCK PRINCIPLE IN LABOUR. 163 
 
 action, which does not attempt to use violence towards those who 
 decline association with the purposes of the combination, however 
 keenly the members may feel that the outsiders are getting an 
 advantage from the sacrifices and energy of those who enter the 
 association, and does not attempt any other process but persuasion 
 with those who may be, consciously or unconsciously, baffling the 
 objects which the association has before it. The only remedies 
 which the organization has at its disposal are a refusal to work 
 on the terms offered, and, if they are strong enough to do so, a 
 refusal to work with those who do not enter into the association 
 and compete with them simultaneously for employment. But, of 
 course, the occasions of discontent may be numerous, and a recent 
 publication of the labour bureau in the state of New York gives 
 very many details as to the motives which have led to strikes in 
 that state. Among others, one of the most frequent is the im- 
 pression that employers and managers have dealt unfairly with 
 individual workmen, the discipline of the association demanding 
 that the combination may be wronged by the ill usage of a 
 member. Practically, indeed, the combination of workmen has 
 only one remedy, known familiarly as a strike. 
 
 The action of workmen in these combinations is economically 
 identical with those mercantile associations which, under the 
 name of regulated companies, were at one time no small favourites 
 with the legislature, though Parliament was constantly on the 
 watch to prevent their being turned into oppressive monopolies. 
 They also closely resemble those trading companies which still 
 survive, though under very altered conditions, in the city of 
 London. In both these associations there was a common fund 
 collected from the subscriptions of those who entered on the 
 union and shared its privileges. But the object of this fund was 
 to defend the privileges of the company against interlopers. 
 Neither the regulated company nor the City company had a joint- 
 stock capital for trading, but simply a common fund for defence. 
 In just the same way one of the most ancient payments 
 made by the members of the university of all degrees was 
 collected for the purpose of defending the privileges of the 
 university when they might happen to be attacked. It was a 
 capitation tax, in short. When tlic first commission sat on the
 
 i64 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 Universities, now about forty 3'ears as^o, this word greatly exercised 
 the members of the commission. Till they published their report 
 I did not know what was their difficulty, though had I learned of 
 it I could have explained it to them. In brief, the University of 
 Oxford was a trade union which constrained all those who claimed 
 admission to its privileges to subscribe for the defence of those 
 privileges. So, again, the City companies claimed to impose fines 
 on those of their members who did what in their judgment was 
 unneighbourly or unfair to other members. I have quoted a case 
 which I was able to extract from the archives of the Grocers' 
 Company, in which a very substantial fine was imposed on two 
 of the fraternity for what would, I suppose, be called in Ireland 
 shop grabbing, in this case offering a higher rent for a tenement 
 than the occupier was paying. 
 
 English law or custom has sanctioned penalties inflicted by 
 corporations or quasi-corporations on persons who are guilty of 
 unprofessional conduct. The benchers of an inn may disbar a 
 counsel for misbehaviour. The medical council can take away 
 his status from a practitioner, and recently has done so in the 
 case of a person who published an obnoxious book. The arch- 
 bishop of a province can deprive a bishop under his jurisdiction 
 for an ecclesiastical offence. The precedents are not numerous, 
 but they are decisive. Pecok, Bishop of Chichester, was thus 
 deprived by Bourchier in 1457. Watson, Bishop of St. Davids, 
 was suspended in 1694 by Tillotson, and deprived in 1699 by 
 Tenison ; and in the present century an Irish bishop was similarly 
 deprived by the Primate of All Ireland. It is by no means an 
 uncommon practice with professional men and traders to decline 
 intercourse with such members of the several callings, as decline 
 to be bound by an etiquette or rule. We have no doubt got a 
 new word in " boycott," but the word covers a very ancient, 
 time-honoured, and recognized practice. Perhaps in the course 
 of the investigation with which I am concerned to-day, we may be 
 able to discover why a practice which has been deemed necessary 
 and therefore harmless in certain directions, has excited so much 
 horror and indignation in others. 
 
 Of all the questions which puzzle practical men, politicians, and 
 even economists, none is greater than that of the extent to which
 
 THE JOINT-STOCK PRINCIPLE IN LABOUR. 165 
 
 an existing law is to be obeyed. The moralist, and the man in 
 possession, to whom the existing law is a private, perhaps an 
 unfair advantage, answer that the obedience should be accorded, 
 the former with some hesitation, the latter, as might be expected, 
 with no hesitation whatever. It is alleged that obedience to the 
 law is of more importance to civil society, than the wrongs are 
 which exist in the law, and are resisted in it. There are some 
 occasions in which good persons, in these days, affirm that resistance 
 is always indefensible. Such, for example, was the defiance of the 
 persecuting statutes in the days of Henry VIII. and Mary Tudor. 
 We have put up monuments to those who broke these laws. I 
 do not think that many persons in our time would seriously 
 condemn those Irish Catholics who evaded the consequences of 
 Chancellor Brodrick's penal code. For law is not only liable to 
 be mistaken, but is exceedingly apt to be designedly unfair. If it 
 escapes from these pitfalls, it runs a further risk in a judge's 
 interpretation, which may be pedantic and wrong-headed. I 
 could enumerate many deep-seated social evils, which have been 
 entirely originated by judicial dicta, such as, ciijiis est sohim, ejus 
 est usque ad ccelum, the foundation of the system under which the 
 ground landlord has been able to plunder the occupier. We have 
 been lately reading of a suburban householder, who has stood a 
 siege, and apparently gained a victory, because the tithe-owner of 
 the parish demanded payment from him of the whole tithe which 
 issued from the land, of which he merely occupied a small portion. 
 Depend on it, he relied on some absurd construction put on the 
 law of tithes in Westminster Hall. But the householder who 
 withstood the tithe-owner had the sympathy of those who heard 
 of his plan of campaign, and the congratulations of those who, 
 knowing him personally, saw that in the end the siege was raised. 
 Of course there are stronger cases. If oaths and declarations of 
 law meant anything, no monarch's position seemed more secure 
 than that of James II. His exclamation on receiving the bishops' 
 memorable petition appears to me, on looking at what Par- 
 liament and the Church had inculcated, natural, and even 
 necessary. It was he alleged a standard of rebellion. Within six 
 months he was deserted and repudiated by nearly all his subjects. 
 It seems to me that they broke the law, but I cannot assert that
 
 i66 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 they went wrong in doing so. On the contrary, I am constrained 
 to conclude that they would have done more wrong in obeying it. 
 And you will remember that during the reign of James, the judges 
 were on his side, with scarcely an exception, and with hardly any 
 misgivings. Perhaps they thought that the fate of Tresilian was 
 an obsolete risk. 
 
 The case is rendered still more difficult when you deal with 
 criminal law, in which the judge must await and abide by the 
 decision of a jury. In early times, the jury were the witnesses to 
 the facts, and declared evidence on oath. If they gave under 
 these circumstances a false verdict, they were obviously guilty of 
 perjury, and justly suffered the penalties of an attaint, as the 
 process for chastising a dishonest and perjured jury of the old time 
 was called. In course of time, how is by no means clear, the jury 
 became judges of evidence which was laid before them, and ceased 
 to tender it themselves. The authorities strove to render them 
 liable to the old law, as during Mary Tudor's time, in the 
 Throgmorton case. The last attempt to make a jury liable for a 
 verdict, was in Penn the Quaker's case, in Charles II. 's time, when 
 the jury virtually acquitted Penn in the teeth of the evidence. On 
 that occasion Chief Justice Vaughan as we all know, affirmed the 
 immunity of juries, and now all that a dissatisfied judge can do is 
 to rate the twelve gentlemen soundly for going against his ruling. 
 In this, I venture on thinking that he oversteps his province. 
 Even in laying down the law, he is an adviser and not an 
 authority, though he is exceedingly apt to put on the airs of 
 authority. 
 
 After the Revolution of 1688, the law became atrociously severe. 
 No doubt as wealth increased, people in high places became con- 
 vinced that it must be secured by penalties from depredators. 
 There was every motive for this conclusion, except the evidence of 
 experience, and that other evidence which is still more important, 
 the analysis of the causes which make crimes frequent. I really 
 believe from reading the papers of the early Georgian epoch, that 
 more people in England perished on the gallows than were killed 
 in Marlborough's campaigns. Monday was the principal day in 
 London, and gangs of wretches were carted to Tyburn, amidst I 
 fear the sympathies of the spectators. There arose among certain
 
 THE JOINT-STOCK PRINCIPLE IN LABOUR. 167 
 
 men of fashion, a horrible appetite for these spectacles. George 
 Selwyn the wit never missed an execution. But the number 
 which was condemned and executed was only a portion of those 
 offenders against whom the law denounced capital punishment. 
 If one examines the calendars of provincial crime in towns like 
 Reading and Oxford — and these calendars are frequently printed 
 in the papers — neither of which towns had more than five thousand 
 inhabitants in the days of the first two Georges, he would be 
 amazed at the numbers which were raked together for the assizes. 
 But the juries were more merciful than the law. They refused to 
 find more than a low value on goods stolen, when the law inflicted 
 the penalty of death on stealing over thirteen-pence halfpenny — 
 the price of a box of pills — from a dwelling-house. In con- 
 sequence, the administration of the criminal law became exceed- 
 ingly uncertain, and crime was stimulated rather than checked by 
 severity on paper. But it took a long time for Parliament to see 
 that its ferocious penalties defeated their own ends, and it required 
 all the energy of Romilly and Mackintosh to get the necessary 
 alteration in our criminal law. It is very hard to induce a British 
 Parliament to see that remedies are more deterrent than penalties. 
 The forgery of Bank notes and Exchequer Bills was made a 
 capital felony. In other offences of the same kind, e.g.^i wills and 
 deeds, the offender was left to the statute of Elizabeth which 
 prescribed the pillory, mutilation, and branding, penalties which I 
 have seen were inflicted as late as 1731. In course of time, juries 
 again refused to convict, though the clearest evidence was brought 
 before them, and at last, the bankers who had procured the capital 
 sentence in the first case, petitioned Parliament for a modification 
 of the penalties, on the plea that the practice of juries was giving 
 an immunity to crime. Now looking at the result which ensued 
 from this refusal of juries to convict, viz., the amendment of the 
 criminal law, at once in the direction of humanity, and the 
 diminution of crime, it is not, you will see, quite easy to allege 
 that unconditional obedience to municipal law is an imperative 
 duty. I am ready enough to admit that the alternative is very 
 serious, and to some high-handed resolute persons is exceedingly 
 irritating, but one must be blind to some of the best-known facts 
 in the social history of our country, perhaps in its polilicul history,
 
 i68 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 if one fails to discern tiiat there have been occasions in which 
 resistance to authority has had more beneficial effects than obedi- 
 ence to it. And moreover it may be fairly alleged, that the blame 
 rests more with those who have indirectly compelled the violation, 
 than it does with those who have vindicated an irregular but 
 necessary justice against an unwise, oppressive, and it may be even 
 a dishonest law. 
 
 I am conscious that this is a very long preface to a lecture on 
 the joint-stock principle in labour, />., a dissertation on the 
 history of trade unions or labour partnerships and their econo- 
 mical defence. But I have no doubt that in what I have to say, 
 you will see that the sketch which I have given you is relevant to 
 the development of a system, whose future bids fair to assume far 
 greater proportions than it hitherto has, whose influence in the 
 distribution of wealth will probably be exceedingly effective. It 
 is prudent to see what these labour associations can do, should do, 
 cannot do, and should not do, when we are taking account of a 
 social force which has long been suppressed, long distrusted, but is 
 slowly, as I believe, surely being educated into a just interpre- 
 tation of what, to use a phrase of the workmen, are the rights of 
 labour. Let us first look at the history of these associations, and 
 then give an economic analysis of them. It is not a little remark- 
 able that they are generally ignored by writers on economic 
 subjects or of economic systems, though I cannot but think that 
 this practice, though authors may have the abundant defence of 
 ignorance, is very unwise and very irritating. 
 
 The distinction made between the work of an artisan and of a 
 farm hand is, in my judgment, as unphilosophical and as mis- 
 leading as the contrast which some people heedlessly make between 
 the agricultural, the manufacturing, and trading interests. Not 
 only is it true that all legitimate interests are in harmony, and are 
 reciprocally beneficial, but it should never be forgotten, that the 
 wanton injury of our industrial interest — and by wanton I mean a 
 removable injury induced by custom or law — is an injury by 
 implication to all other interests. If the husbandman suffers by 
 rapacity and ignorance, the home manufacture suffers. He finds 
 a poor instead of a prosperous customer, and the cost of filling up 
 the void of agricultural produce, requires more energy and more
 
 THE JOINT-STOCK PRINCIPLE TN LABOUR. 169 
 
 sacrifice. If the trader, and I am assuming that his presence is 
 natural, and not artificial, and is therefore necessary, is crippled 
 and tampered in the work of distributing goods, if his calling 
 is made precarious by exactions, by unfair taxation or unjust 
 assessments, or by unnatural charges for freight, I am convinced 
 that the agriculturist and the manufacturer get a worse market 
 for their produce. Of course the trader may, nay, frequently does, 
 overstock his own market, and several men are trying to share 
 work which wovild be better, more cheaply, and more profitably 
 done by fewer hands. For there is a form of overcrowding in 
 employments which nothing can obviate, unless we ruled, which 
 would be a reactionary, unwise, and unsatisfactory step, that the 
 number of persons engaged in a calling should be limited to the 
 wants of the market. In past times, and indeed in recent times, 
 attempts have been made to effect these results, but with con- 
 sequences which do not suggest or encourage imitation. All 
 legitimate interests, then, are at harmony, and, as the French 
 economists said with perfect truth, it can never be to the interest of 
 one class or calling to oppress any other class or calling. By this 
 of course they meant, men who are of use. Idlers, profligates, 
 criminals are, by the very terms of their being, noxious, intrusive, 
 and should be checked, suppressed, or if you like oppressed. 
 
 Now a workman has something to sell. This is his labour. 
 Society cannot exist without him, for the prolonged cessation of 
 his industry would be ruinous to all. His labour, too, is of 
 necessity intelligent, i.e.^ capable of effecting that to the supply of 
 which he has been trained, a notable outlay being made in order 
 to secure this training. It should be always remembered too that, 
 especially in modern times, when population is dense, and employ- 
 ments are greatly divided, the workman who proffers his labour 
 has rarely any other means than the sale of that which he offers. 
 He cannot, if he fails of employment, betake himself to other 
 avocations, a fact too frequently lost sight of when people are dis- 
 cussing labour and its claims. In some cases, when this absence of 
 any alternative is put before him, he is not to blame for the result, 
 but the wrongheadedness, the perversity, the malignity of those 
 who have been able to materially modify his lot. He has also the 
 most perishable of all articles which can be offered for sale. A
 
 I70 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 day lost, when he wishes for work, and is willing to undertake it, 
 is lost irrecoverably. A trader who has goods in his shop may 
 decline to sell, and may be wise, for he may be able to secure his 
 price by waiting. In the practice of law, the sale of goods by a 
 shopkeeper at less than they cost him is a suspicious, a punishable 
 offence. The workman is, therefore, when he offers his labour, 
 under a peculiar urgency. Of all people living he is most of all 
 constrained to sell. For not only is it a permanent loss if he does 
 not sell, but his article, unlike any other article offered, must be 
 kept out of the market at a double cost, the cost of wasted time 
 and, more serious still, maintenance, as long as the sale is uncom- 
 pleted. There is no industrial agency to which a bye or second 
 opportunity is more needed than it is to the workman, none whose 
 situation has been more aggravated, in comparatively modern 
 times, by his being cut off from that second calling. His power 
 of holding out till he gets better terms is seriously curtailed at 
 the present time, if it be compared with the situation in earlier 
 ages. 
 
 I have stated that in those earlier times agriculture was the 
 alternative which most artisans had, and I mean by this agricul- 
 ture on the workman's own holding. In my researches into the 
 history of English labour I have constantly noted that artisans, 
 employed say in building a college or a church, were also owners 
 in husbandry. When the Fellows of Merton were building the 
 tower of the church, in the fifteenth century, they bought hay and 
 straw from the foreman of their works. So did Dorothy Wadham 
 in the seventeenth century. In Lord Lovell's account of his 
 farming operations, early in the eighteenth century, he deals 
 largely with his own workmen. The records, of course, of peasant 
 and artisan husbandry have perished, and they only, who have 
 read extensively in other accounts, and have a keen eye for social 
 facts and phenomena, will detect these relations. And these facts 
 explain why an artisan's wages are always so much higher in 
 London than elsewhere. Here, to be sure, he was more certain of 
 employment. But here he was also debarred from bye industries. 
 And here, too, one may notice that the day wages of the workmen 
 in harvest time are generally quite up to those of artisans, for 
 artisans were constantly engaged in harvest work, nay by divers
 
 THE JOINT-STOCK PRINCIPLE IN LABOUR. 171 
 
 statutes, were compellable to serve in the harvest field. But they 
 would have resented this obligation if their ordinary wages had 
 been lessened, and they inevitably dragged up the wages of the 
 ordinary labourers in husbandry during this important season. 
 
 I have often commented on the extreme harshness with which 
 the magistrates in quarter sessions interpreted the Labourers' Act 
 of 1563. The law, to be sure, gave them an opportunity of 
 wrongdoing, and put no check on their action, and if the law 
 enables people to do injustice, law and right may become very 
 wide apart. But, in commenting on the history of labour, and 
 particularly on the oppression to which it was subjected, I have 
 never forgotten, or omitted to state, that he had many indirect 
 advantages, which were as yet his legal rights. He could turn his 
 cow, or few sheep, and, at least, his geese, into the common pas- 
 ture, which generally belonged to him as surely, though, as events 
 proved, not as securely as it did to the lord. The payment for the 
 pannage of pigs in the lord's wood, which was nearly if not quite 
 as much his right as the use of the common, was small and cus- 
 tomary. But, besides, he had the right of snaring wild animals on 
 the common pasture or waste. I have collected overwhelming 
 evidence of the fact from the purchases of game in the sixteenth 
 and seventeenth centuries by Lords Spencer, Pembroke, and 
 others, and by corporations such as Winchester and Eton Col- 
 leges. If the animals, including all game but deer and hare, had 
 been captured on their own land, the landlords need not have paid 
 for them, if on the land of others, their purchase encouraged 
 trespass. They must have, therefore, been procured from regions 
 over which the peasantry had as much right as the lord. When 
 Markham published his treatise, " Hunger's Prevention, or the 
 whole art of Fowling," he gives no hint that game was reserved 
 for the richer classes. When a statute prohibiting the practice 
 was passed in the reign of James I., the right of the peasant is not 
 disputed, but the reputed effect on his diligence and usefulness is 
 recited. Now what the peasant sold, he might better his own 
 provisions with. In our day, no doubt, a poacher is not only a 
 very offensive phenomenon to the game preserver, but a disreput- 
 able and evil personage. But, for all that, he represents the free 
 exercise of an ancient right, which the law has never ventured lo
 
 172 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 entirely repudiate, and cannot as long as it does not recognize 
 that property in wild animals which it does in their domestic 
 varieties. 
 
 But, besides, the peasant generally possessed, though probably 
 in later times only on a precarious tenancy, a small plot of land, 
 which he cultivated with his own hands, as a bye industry. The 
 Allotments Act of 1589 was, I am certain, an attempt to check 
 the restraint of labourers in husbandry to a cottage and wages, as 
 well as a well-meaning attempt to check pauperism and over- 
 crowding. It endured till 1773, when it was repealed on the plea 
 that it checked enclosures. Now the benefit of such tenures, as a 
 bye industry, as supplementary to wages, and as a check to agri- 
 cultural pauperism is, in my experience, very great. In my native 
 place, where it prevailed in a shrunken form, it almost extinguished 
 destitution. Its advantage is that the peasant can subsist to a 
 great extent on the produce of his small holding. When Mr. 
 Clare Read, according to Dr. Jessopp, said that no labourer in 
 Norfolk would take five acres of land on the ordinary tenure of a 
 farmer, he was, of course, thinking of the farmer as a salesman. 
 But the farmer, as a consumer of his own produce, is a very dif- 
 ferent person from a trader in produce. But the whole question 
 of peasant farming deserves separate treatment. 
 
 In Ulster the process, as I found when I carefully examined its 
 agriculture a year ago, was reversed. There the bye industry was 
 domestic spinning and weaving. A generation ago, as I was told 
 by those who had been brought up under the system, every little 
 farmhouse had its spinning-wheel and hand-loom. The peasant 
 farmers grew the flax, and carried it through all the processes into 
 strong coarse home-spun, generally producing two pieces a year. 
 Now, as long as the sale of such a domestic produce paid the rent, 
 they were indifterent as to whether the rent was high or low. 
 Even now, I was told, the industry was by no means extinct, 
 though it was far from general. As a consequence, the rents 
 which could be easily paid under the old system became impos- 
 sible under the new. And yet, so negligent are those who under- 
 take the administration of affairs in getting necessary information, 
 that I have never heard that this most important fact has ever 
 been taken into account in the interpretation of the Irish land
 
 THE JOINT-STOCK PRINCIPLE IN LABOUR. 173 
 
 question. My late valued friend, Mr. Fawcctt, was not a profound 
 nor a learned economist. But he was an exceedingly acute, 
 sympathetic, and observant person, and I well remember his 
 insisting with great emphasis to me on the superficial way in 
 which economists dwelt on industrial changes. He asserted, and 
 with great truth, that one of the most powerful causes of poverty 
 was the fact that traditional avocations constantly become obsolete, 
 and that the change presses invariably, and with great severity, on 
 those who have been practically ousted from their old calling. 
 
 It is important, in order to really understand the position of 
 labour, to note the progressive disadvantages to which it has been 
 subjected. But there are, we must not forget, countervailing 
 advantages, especially in new callings, and in those in which the 
 division of employments has made the greatest way. As time has 
 progressed, the organization of the workmen under the circum- 
 stances referred to, has become indispensable to the capitalist. 
 The machine of human industry has become as complicated as the 
 mechanism which the workman superintends and guides. The 
 gradation of labour has been effected, but with the result that all 
 the factors are collectively and individually essential to the due and 
 easy working of the organization. Workmen have, I suspect, seen 
 this more clearly than employers have, but none too clearly. The 
 apparent weakness of the workers' position has been discovered to 
 be one of great, but hidden strength. I conclude that much of 
 the continuity of occupation in times when business profits are 
 reduced is due to the fact that it would be a greater loss to stop 
 than to continue, and I imagine that the consciousness of this 
 inherent and increasing weakness in modern industries, which are 
 carried on in a vast scale, has had a powerful effect in bringing 
 about a better understanding as to the relations of workmen and 
 their employers. In older and less complicated times the employ- 
 ment of labour in such callings as were carried on, so to speak, under 
 the principle of the division of employment, was far more optional 
 than it now is. I cannot say that the discoveries of mechanical 
 and engineering science have enslaved capital to labour, but I am 
 pretty certain that they have made the harmony of the two factors 
 more necessary, more obvious, and more inevitable, and more 
 speedy.
 
 174 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 But I must proceed to the historical facts with which, as usual, 
 I design to illustrate my treatment of the subject. Nothing threw 
 so novel a light to me, at least, as the social condition of England 
 in the Middle Ages, if modern pedantry will permit me to use this 
 convenient phrase, as the universality of labour combinations. 
 They came, I do not doubt, in the first instance, from the inter- 
 laced interests of all who resided in the same social microcosm, the 
 parish and manor, and from the early practice of creating benefit 
 societies out of the surplus of the charges made for religious oflSces. 
 The main of these permanent donations probably Avent to the 
 monasteries. But the secular clergy, who had no great love for 
 the monks, competed for the employment which these endow- 
 ments gave, and even, when the function was not permanent, but 
 temporary, there is evidence, which I have discovered, of a com- 
 petition for the office. The surplus, if any, and it is pretty certain 
 that there nearly always was a surplus, went to the guild or asso- 
 ciation of workmen, which, in country places, would have chiefly 
 consisted of labourers in husbandry. In the course of centuries 
 especially in a time when purchases of small parcels of land were 
 common, and custom supplied cheap evidence of ownership, these 
 accumulations became considerable, and beyond question, Avere the 
 fund from which destitution was relieved. And although the life 
 of the individual was ordinarily bounded by the parish or manor 
 in which he resided, there were occasions on which the peasant 
 was introduced to a wider world. We know that there was a 
 gradation of courts from that of the parish to that of the county, 
 and that there were opportunities afforded for concerted action, 
 and we need not be surprised that the preamble of the statute, in 
 which the franchise was limited or restrained in 1432, complains 
 of the excessive and outrageous number of persons who congre- 
 gated to, and took part in, the election of knights of the shire. 
 Thus the gatherings at fairs were an exceedingly important agency 
 for the development of common purposes. Walter de Henley, writ- 
 ing in the middle of the thirteenth century, assigns a good many 
 days a year to these gatherings, which were indeed the principal 
 markets of the time. In Oxford I have traced the usage of the 
 Wednesday and Saturday market days almost to the time in 
 which Walter de Henley was writing, and I know from the bailiff
 
 THE JOINT-STOCK PRINCIPLE IN LA BO UR. 1 7 5 
 
 rolls that the farmers frequented these markets for the purpose of 
 buying and selling. In fact, I am disposed to believe that there 
 was more intercourse between the peasantry of different parishes 
 six hundred years ago than there now is, and therefore more 
 opportunities for concerted action. 
 
 But, besides, the people were brought greatly into contact with 
 the migratory clergy. It was a tenet with these people that the 
 priest who was bound to an order was a more efficacious inter- 
 cessor than one who had been merely associated with parochial 
 duties, and was therefore called a secular clerk, with some little 
 contempt. Gascoigne, in the fifteenth century, complains greatly 
 of the effects induced by this tenet. Now for some time, perhaps 
 not more than a century and a half, this opinion gained credence, 
 especially in relation to the two orders of mendicant friars, the 
 Dominicans and Franciscans. It is true that later on Wiklif and 
 the Lollards denounced them. But their migratory practices 
 continued till the Reformation, when, especially in the " Suppli- 
 cation of the Beggars," a calculation is made as to the sums of 
 money which the friars annually collected from the people. In 
 other words, the occasional appearance of those personages in 
 villages must have been familiar, and it would seem that public 
 opinion was not unfavourable to their migrations. I cannot 
 indeed say that they constituted a channel of communication 
 between the workmen in different districts. The institution of 
 Wiklii's poor priests seems to suggest that in this bold reformer's 
 eyes a new agency was necessary. This he supplied, and armed with 
 the far-reaching tenet, that dominion is founded on grace, which, 
 interpreted by himself in his lately recovered treatise, means that 
 deference to authority is based on the worthiness of him wlio 
 exercises the authority. Now this is a gloss which subjects all 
 institutions to searching, perhaps to destructive, criticism. 
 
 Social institutions, like constitutional precedents, generally be- 
 come known to us by some strain which brings the fact into 
 prominence, the practice, though no record be taken of it, k)ng 
 preceding the record of its activity. The first intimation which 
 I have found of labour combinations is in Kingston, and this in 
 connection with the events of 1350 and of 1381. But I am 
 convinced that it would be an error to conclude that these asso-
 
 176 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 ciations had no earlier existence. In London they were probably 
 as old at least as the time of Longbeard, in the days of Richard I. 
 It is certain that the City guilds were in existence as more or less 
 irregular associations long before the earliest charters which they 
 possess. But prominence is given them in the earliest struggles 
 between employers and workmen. A grotesque antiquity is given 
 to that modern association, which under the name of freemasonry 
 is, I believe, justly associated with nothing but high feeding and 
 benevolence. The student of social forces discovers its origin in 
 those congregations, chapels, and conventions of free masons, against 
 which the Lancastrian kings denounced the penalties of felony. 
 The form of the institution, as far as an outsider can judge, has 
 greatly changed. No doubt the modern craft is as unlike the 
 proscribed association of the Middle Ages as a City company in 
 its modern shape is to the artisans and shopkeepers who founded 
 the worshipful guilds of mercers and goldsmiths, tailors and 
 grocers, fishmongers and haberdashers, and I know not what. 
 
 The industrial life of England down to the Reformation, es- 
 pecially that carried out by Somerset, was one especially of trade 
 combinations. The system was so powerful and so universal that 
 the legislature was wholly unable to grapple with it. It broke 
 down under a set of circumstances which I have often described, 
 and was rapidly extirpated, under these new conditions, by the 
 law of 1563. From that date to 1825 the trades anion was 
 efTectualiy proscribed, and I am persuaded that the memory of 
 the ancient system, once so universal and so vigorous, had 
 entirely passed away, till at last an antiquarian economist, as I 
 suppose I may call myself, rediscovered it, and traced it back to 
 its early activity and efficiency. I will not say that what I found 
 out entirely changed my views as to those relations of labour and 
 capital which I have found in the earlier economists, but I gained 
 an insight into bygone conditions, in which a substantial deference 
 to the claims of labour was, as I found, not incompatible with 
 general and even national prosperity. The conclusions at which 
 I arrived were by no means weakened, as I followed up the 
 consequences of the Act of 1563, and traced the growing misery 
 of the workman from the middle of the sixteenth century down 
 to almost recent experience, long after the repeal of the old labour
 
 THE JOINT-STOCK PRINCIPLE IN LABOUR. 177 
 
 statutes, when the workman was left to the tender mercies of the 
 judge-made law of conspiracy. 
 
 A trade union is really an industrial partnership, or if you will, 
 the adaptation of the joint-stock principle to labour. In ordinary 
 joint-stock action as recognized, protected, and adjudicated on by 
 law, the owner of property pledges his means in part or in whole 
 to the undertaking which attracts him. To external appearance 
 the member of a trade union, which is only recognized by law, 
 and rather grudgingly recognized, does not in the same way 
 pledge property or capital. Yet he does not possess that in any 
 notable degree, which the shareholder in a joint-stock enterprise, 
 by the very terms of his engagement, does pledge. But he enters 
 into similar, perhaps more onerous obligations, because more 
 searching and unquestioned liabilities with the only thing which 
 he has to sell or dispose of, his labour. Unlike the holder of 
 joint stock, the law does not bind him to his obligations, and he 
 can withdraw from the association at his pleasure. His combi- 
 nation or partnership more nearly resembles the old regulated 
 company than it does anything else, with this difference, that the 
 workman's association is, while not banned by the law, unable to 
 invoke the law in order to give effect to its purposes. 
 
 The object of a trade union is to steady and if possible to 
 increase the share in the price of the produce which the workman 
 receives. I have frequently stated that the true, and in reality 
 the most beneficial, function of capital is that of securing the 
 continuity of industry, and as far as possible an anticipated level 
 of price. The first of these functions is the permanent service 
 which capital does to society ; the second is a necessary condition 
 in the long run to the industrial prosperity of the individual, it 
 is not infrequently the case that by general misconception the 
 capitalist may pursue a calling with little profit. This has been, 
 I believe, the fact to a great extent with the lessees of collieries up 
 to very recent times, and I believe that I have on other occasions 
 pointed out the historical origin of this unprofitable competition. 
 I cannot see in what particular the function and the action of 
 those who engage in these labour associations differ from the 
 policy of the capitalist employer. He knows that to sell his 
 produce below its cost is to invite ruin, and he is justly charged 
 
 13
 
 178 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 with rashness if he enters on an undertaking without foreseeing 
 or at least guarding against the risk. The workman is as laudably 
 anxious not to sell the only thing which he has to sell at a less 
 price than that at which he can reasonably afford to offer it, and 
 this by every economical analysis should contain a notable margin 
 over his maintenance. The capitalist employer is blamed if he 
 sells at a price which does not give him back his outlay and a 
 profit. The workman, on the other hand, was once coerced, then 
 severely chidden, and even now meets with very sinister criticism, 
 if he attempts to do that which it is proper wisdom and fore- 
 thought in his employer to achieve. And if an exalted price is the 
 consequence, it is not honest and it is not just, for reasons which 
 I shall state further on, to put all this on the workman. For I 
 shall be able to give you evidence from what is, I believe, a com- 
 petent and really disinterested source about the analysis of exalted 
 prices, and show you (i) that the enhanced price precedes the 
 increase of wages, and that (2) the increase is but a moderate 
 fraction of the enhanced price. 
 
 There must be some reason why a process which is, as I 
 contend, identical in the case of employer and workman, is looked 
 on with approval in the case of the former, with disfavour in 
 the case of the latter. Part of this feeling, I do not doubt, is 
 the tradition of the old times, in which the law denied the work- 
 man anything but a bare maintenance. Nor do I doubt that the 
 language of economists of the middle school, by which I wish to 
 distinguish Adam Smith from his successors, and the latter from 
 what I would fain hope are fuller and truer exponents of social 
 forces, has had not a little to do with the sentiment. Mr. Mill no 
 doubt developed the wage fund as part of the argument by which 
 he sought to prove that unproductive consumption or waste was 
 in no sense a benefit to society. But there are parts of his great 
 work in which he betrays a faint bias towards what once was 
 current opinion, as when, for example, he lays it down, that an 
 improvement m the wages of workmen can only be attained at 
 the expense of profits. Of course this statement is incorrect. It 
 may be, and perhaps sometimes is, obtained at the expense of the 
 consumer, though generally as a consequent of the consumer's 
 expense being enhanced before the workman's wages are. It may
 
 THE JOINT-STOCK PRINCIPLE IN LABOUR. 179 
 
 be met, as it commonly is, by a diminished cost of production, by 
 labour-saving appliances, and similar economies. For I conclude, 
 and I believe with perfect correctness, that the loss of profits is 
 much more due to the competition of capitalists than it ever has 
 been or ever will be by the demands of workmen ! Even now, 
 however, the salt syndicate of Cheshire is looked on with far 
 greater favour than a trade union of miners or engineers. And 
 yet, unless I am greatly mistaken, very large fortunes have been 
 made by men who have been engaged in these salt works under 
 the old regime of sharp competition, though the beginnings of 
 such successful people have been very humble. 
 
 The feeling, instinct, alarm, aversion, or whatever else we may 
 call the sentiment which is unfriendly to trade combinations, from 
 which the most dispassionate persons are not free, which it requires 
 much robust and exhaustive knowledge of the facts to rid oneself, 
 is, I believe, due to the consciousness, that the progress of society 
 depends a good deal more on the continuity of labour than it does 
 on the continuity of capital. In human societies the means of 
 life is annual produce. On the perpetual supply of this depends 
 the existence of every one, of the workman, I grant, himself among 
 others. It seems as though this Samson, however blind he may 
 be to his true powers, however bound he may be in the prison- 
 house of poverty, can pull down, if he exerted himself, the temple 
 of Dagon on himself indeed, but on the lords of Philistia also. 
 And in a way Mr. George has, I think, seen how much society 
 depends on labour, perhaps how much society loses by the expa- 
 triation of labour, and how strong society is, when labour is 
 orderly and contented. We see the fact in minor matters. Some 
 years ago, a strike of the cabdrivers paralyzed that part of the 
 business men of London, to whom rapid locomotion was a matter 
 of money, besides inflicting much inconvenience on travellers and 
 railways. On another occasion a strike of stokers in the London 
 gasworks seemed likely to hand over the metropolis an easy prey 
 to the predatory classes. Only the other day, when there was 
 threatened an extensive strike of the colliers, the papers were full 
 of sinister predictions as to the paralysis of British industry which 
 would follow on the action of the workmen, and with some adroit- 
 ness the workmen were bidden to reflect on the distress which
 
 i8o INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 they would assuredly bring on those of iheir fellow-labourers, 
 millions in number, to whom an adequate supply of coal was a 
 prime necessity. You will remember that the rise in price, some 
 two or three shillings a ton preceded the action of the workmen. 
 That rise was witnessed with complacency, perhaps with con- 
 gratulation. But the attitude of the colliers gave occasion to 
 general and undisguised alarm. Fortunately, and at least to a 
 great extent, the alarm was brief, for the worfcmen secured their 
 advance. 
 
 Now I thought it very much to the purpose to write to my 
 friend Mr. Burt, who has been for many years in the House of 
 Commons as Member for Morpeth, who is intimately acquainted 
 with all colliery topics, and whose moderation and judgment has 
 won him the esteem of all persons from all parties ; and to ask 
 him the plain question, what increment does the lo per cent, 
 added to the workmen's wages induce on the price of coal ? His 
 letter is before me, and entirely carries out my anticipations. I 
 will read you that part of it which bears on my question. " The 
 prices for coal-getting vary very much in every district, and 
 almost in every mine. It is therefore difficult to say how much lo 
 per cent, advance in the wages of the miners will put on the price 
 of a ton of coal. I see that Mr. Pickard stated it at twopence a ton. 
 The employers, on the other hand, contend that this would only 
 apply to the actual coal-getters, and that when other classes of 
 labour are included the amount will be nearer fourpence a ton. 
 I have just been talking to a large Derbyshire coal-owner, who 
 sets the amount at fourpence a ton. My opinion is that three- 
 pence per ton Avill cover the extra cost. It is important to bear 
 in mind {a) that the advance, so far, has only been in a portion of 
 the mining districts, including less than half of the persons 
 employed ; and (h) that the demand for increase of pay followed, 
 and did not precede, the increase in the price of coal." If these 
 statements are accurate, and they bear, in my opinion, all the 
 conditions of accuracy about them, I think that you will agree in my 
 conclusion that an increase of lo per cent, in the colliers' wages, 
 an increase which may probably be well met, and more than met, 
 by economies in production, is not a very serious burden on the 
 consumer, to be in need of the article for domestic use, or for the
 
 THE JOINT-STOCK PRINCIPLE IN LABOUR. i8i 
 
 generation of force. And if it be said that the dealer must com- 
 pensate himself for the enhanced price, the answer is obvious. I 
 buy coal from the London exchange, and pay ready money to a 
 middleman, who gives a three or six months' bill to the producer. 
 In just the same way a bookseller thinks he makes you a grand 
 offer in taking off threepence in the shilling on books, when he 
 gets fourpence allowed, and while you pay him over the counter, 
 he claims six months' credit from the publisher. The middleman 
 in England is very rapacious, very plausible, and generally very 
 ignorant. I confess I never saw much merit in the process by 
 which some eminent people have got rich, z>., by buying at eight- 
 pence and selling at a shilling. 
 
 A good deal of attention has been directed of late to the pro- 
 cesses adopted by what are called sweaters, z>., middlemen who 
 prey on the ignorance and misery of poor workmen. Now 
 recently the case of the match girls, earning from seven to eight 
 shillings a week, has been handled. Near twenty years ago Mr. 
 Lowe, then Chancellor of the Exchequer, proposed to tax matches ; 
 I fancy sometimes because he wanted to puzzle people with the 
 motto of his projected stamp, ex luce Incellum. On that occasion 
 Messrs. Bryant and May marshalled their workwomen, got them 
 to go in procession to Westminster Hall, and extinguished the 
 project by a judicious mixture of pathos and ridicule. But this 
 estimable firm got all the profit of the demonstration. A few 
 months ago Mrs. Besant called attention to the wretched earnings 
 of these people, and an attempt at making their condition better 
 known was made by some of our University people at Toynbee 
 Hall. The London Trades Council also lent their authority to 
 arbitration. After a good deal of fencing the firm yielded, and I 
 am glad to hear that now the wages of the match girls are more 
 than doubled, and that they are able to lead respectable lives. But 
 I don't think that matches are dearer and profits are less. The 
 new departure only required a little management and tact. Some 
 people, however, seem to have a peculiar pleasure in making their 
 workmen beggarly and keeping them so. 
 
 I do not indeed assert that all the improvement in the condition 
 of workmen has come from the establishment of labour partner- 
 ships, but I do not know any other cause for a phenomenon, in
 
 i82 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 which, imperfect as it yet is, I feel a strong satisfaction. The 
 Amalgamated Society of Engineers is an association which fought 
 with determination for its ends, enrolled nearly all the artisans 
 which come under the definition of engineers, and, after a pro- 
 longed struggle, succeeded in all they claimed. For as time goes 
 on the strike, which is the last expedient in this social warfare, 
 becomes rarer. They are far commoner in the United States than 
 with us, and far bitterer, as the Government returns show. For 
 the possibility of such an expedient becomes ultimately as great 
 a deterrent to unfair advantage as the reality of it, and arbitration 
 is seen to be a far more rational expedient than a quarrel. In 
 many cases already a sliding scale, based on the two elements of 
 cost and price, is adopted. Of course the cost is that which is 
 general in the calling. No one can by any action intercept the 
 reduction of cost which comes from the improvement in a process 
 as long as the producer is guaranteed by a patent. For, as I have 
 stated to you before, the benefit of improvement to the workman 
 and the consumer comes slowly, to the rent receiver last of all, and 
 only when the new process is diffused. When that happens he gets 
 his turn, and, as some people think, gets far more than he deserves. 
 I have already stated in another lecture, and must here restate, 
 for economical facts are manysided, and therefore illustrate various 
 economical principles, that I never saw a district in which the 
 absence of all labour partnerships have so markedly an injurious 
 effect on the wages of labour as in the Cornish mining district. 
 The wages of workmen in this district are, I believe, taking the 
 calling and all its dangers into account, lower than in any other 
 English industry. Trade unions are entirely unknown, and the 
 workmen, though massed together, are oppressed in detail. The 
 industry they represent is one of singular significance, for the 
 economical importance of the metal which they chiefly produce, tin, 
 is great and permanent. It is at any rate clear that organization 
 among the workmen would secure far better terms to them than they 
 now get, and probably would lead to economies in the separation 
 and reduction of the metal, the process now being excessively rude 
 and wasteful, and the industry being carried on under conditions 
 so noxious that nothing but the oppression of the miners could 
 render them possible and continuous.
 
 THE JOINT-STOCK PRINCIPLE IN LABOUR. 183 
 
 There is no fear that working men will abuse the strength 
 which they obtain by their labour partnerships by the adoption 
 of the joint-stock principle to their own industry. They are 
 always doing battle at a great disadvantage, for their powers of 
 waiting are, by the circumstances of the case, necessarily limited. 
 Besides they understand, I am convinced, what are the true 
 functions of capital far better than that economist who constantly 
 dogmatizes on it without the possession of the facts ; or even than 
 the employer, whose natural impulse is to magnify his own 
 importance ; or than the public, which is constantly twisted by 
 shallow newspaper sophistries, the constant outcome of arrogance, 
 conceit, and sycophancy. I confess that I am struck, and con- 
 stantly have been, at the patience with which, to all appearance, 
 working men hear or read the calumnies which are uttered about 
 them, and the sinister predictions with which their efforts to better 
 themselves and their fellows are met. 
 
 The trade union is a peculiar product of English social life. It 
 can be traced back to the dawn of economic history in this 
 country. It was proscribed for nearly five centuries, at first 
 ineffectually, at last with complete success. But the memory of 
 the association never quite died out. At last the old laws were 
 considered obsolete, as at least to be quite superfluous in the light 
 of the judge-made law of conspiracy. When they were permitted 
 as far as the law allowed, it must be conceded that the revival was 
 attended by not a few scandals, as, for example, those revealed at 
 Sheffield. I set these down partly to the passionate manner in 
 which they had been proscribed, partly to the conspiracy laws, 
 partly to the national ignorance and impatience of those who had 
 won a boon, and did not know how to use it. At last the legis- 
 lature became wise, and undeterred by the revelations made by 
 Broadhead and his associates, gave these partnerships a must 
 generous recognition, though even now it is half-hearted.
 
 SECOND COURSE 
 I. 
 
 THE ECONOMIC DOCTRINE OF WASTE. 
 
 Popularity of wasteful persons explained — Policy of Colbert — Theories of 
 the Physiocrats ; their effect on the French Revolution — Turgot and 
 Adam Stnith — " Unproductive labour " — Quesnai — Mill — Waste oj 
 labour^ of healthy of machinery, in agriculture — Scientific waste — 
 Political waste — Gastronomic waste. 
 
 Every one admits that waste is an economic evil, and, in certain 
 well-understood cases, a moral offence, though not always a punish- 
 able one, for the theory of law in our days is that a mischief done 
 by one man must be provably injurious to some other particular 
 person before it can conveniently be brought within the restraint 
 of law. An individual may ruin his health, waste his resources, 
 disable himself from earning his own livelihood, and thus plant 
 himself on the public charity of the Poor Laws, without, in the 
 process, bringing himself within the reach of any civil penalty. 
 He may, even indirectly, induce the greatest wrongs on the 
 innocent and helpless members of his own household without 
 running the risk of punishment. He may go a great way in 
 putting direct wrongs on them, and those of a serious kind, with 
 but little peril. The motive for this leniency, I suppose, is the 
 disinclination which people feel towards enlarging the operations 
 of positive law, because they have too good reason to distrust its
 
 THE ECONOMIC DOCTRINE OF WASTE. 185 
 
 administration, and an unwillingness to restrain individual liberty, 
 when the offences of the individual affect himself and his own 
 family only. Besides, it may be hoped that self-restraint and 
 shame will be correctives in the individual's own case, natural 
 affection and duty for the relations in which he stands to his own 
 family. 
 
 Perhaps, again, the State hesitates on punishing or checking 
 economic waste, because administrations are and have been them- 
 selves the greatest offenders in this direction. Adam Smith had 
 good reason in contrasting the impertinence of sumptuary laws 
 with the wanton and lavish expenditure of those who enacted such 
 regulations. Nations, he alleged, are never ruined by their own 
 expenditure, their peril comes from the governments which under- 
 take their affairs, and manage them wastefully or ruinously. The 
 gieat economist might have appealed to overwhelming evidence 
 in support of this contention. Mighty empires, possessed of no 
 little art and much civilization, have passed away into nothing- 
 ness because the government of the country was evil. That 
 culture with which all university students are supposed to be more 
 or less familiar became a wreck, entirely owing to the vices of its 
 government, though the ruin of the Roman Empire was not so 
 complete as that of the races which inhabited Central and Western 
 Asia. 
 
 Wasteful people are, however, generally popular. The most 
 selfish enjoyments are seldom entirely personal. A spendthrift 
 can rarely so arrange matters as that no other person can make 
 gain of his extravagance. It is true that society at large does not 
 profit by him so much as it does from the action of his thrifty neigh- 
 bour. But in the spendthrift's case the advantage which the few 
 gain is sensible, in that of the man who saves from su])erlhiitics 
 the benefit is larger, but hidden. Henry VII. was the most 
 covetous and thrifty of the English kings. His son was the most 
 exacting and the most extravagant. The English people were 
 singularly prosperous during the reign of the father. They were 
 impoverished, whole classes of them beggared, by the action of the 
 son. But I have no doubt that in their several times the par- 
 simony of the father was unpopular, the prodigality of the son 
 was acceptable. The waste of Henry was the means by which a
 
 i86 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 new nobility was created, and the king found favour in the eyes 
 of those to whom he cast contemptuously some of his spoils. 
 Charles II. was probably the most flagitious person who ever 
 ruled in England. But he was certainly popular. His brother 
 James, whose life was far more decorous, appears to have been 
 always disliked. And what applies to kings applies to private 
 men. There are incessant apologies made for the reckless and 
 unthrifty, even when their practices have been selfish and vicious. 
 In my youth the biographies and exploits of these wastrels were 
 popular books. I do not know whether the taste survives, though 
 the success of a recent publication seems to imply that it does. 
 It would be quite in human nature if it did. But setting aside 
 these sympathies, if we share them, it will, I hope, be possible to 
 discover in what economic waste or unproductive consumption 
 consists. The expression, in the latter form, has an historic origin, 
 and not a little of the difficulty which has been traditional in the 
 interpretation of it, is due to the arbitrary sense, as I think, in 
 which it was first employed and subsequently justified, a sense 
 which, as it seems to me, is misleading, both in Adam Smith and 
 in Mill. 
 
 The policy of Colbert, under which subventions or bounties 
 were given to articles in which Frenchmen have shown con- 
 spicuous taste and elegant fancy, was not only supposed to have 
 made France, and especially Paris, the centre of the world of 
 fashion, but to have created such a taste for French goods as 
 secured them a ready market wherever any tendency to refinement 
 prevailed. It cannot, I think, be doubted that the very effective 
 patronage of the fine arts, which the policy of Colbert bestowed 
 on them, conferred no little advantage on the court of Louis XIV., 
 and indirectly aided in no slight degree that predominating 
 influence which the French acquired at the close of the seventeenth 
 century. Of course the circumstances were exceedingly favour- 
 able. France was nearly the only European or continental state 
 which emerged from the terrible Thirty Years' War with no loss, 
 and with considerable gain, not only in its internal resources, but 
 by the extension of its frontier. England was for a short time under 
 the military rule of a successful adventurer, whom Mazarin assid- 
 uously courted and conciliated. But after his death, on his 59th
 
 THE ECONOMIC DOCTRINE OF WASTE. 187 
 
 birthday, the government was for near a quarter of a century in 
 the hands of a cynical voluptuary, and in the scandalous and 
 corrupt camarilla which he gathered about him. You may learn 
 what Paris was to the rest of the world in the numerous memoirs 
 of the time, and a reflection of some of its worst features in 
 England, in the literature of our own country, for instance, in the 
 memoirs of Grammont. The policy of Colbert was so identified 
 with the age of Louis XIV., that even when it had ceased to fulfil 
 the purposes of its projectors it remained an ideal from which 
 France was loath to part. It is not a little remarkable that the 
 principal agents in this new industrial departure were the Hugue- 
 nots, whom in his later years the French king banished. 
 
 Now about the middle of the eighteenth century, when every- 
 thing in France was sacrificed to those State-supported industries, 
 a class of writers arose who were really, though with many errors, 
 the founders of the modern science or philosophy of political 
 economy, and supplied Adam Smith, during his residence in 
 France, with not a few of the principles which are found in his 
 capital work, " The Wealth of Nations." The fiscal system of 
 France was the most vicious conceivable. The taxes were in the 
 last degree oppressive, and the mode of collecting them increased 
 the oppression. There was not even trade between the old Parlia- 
 ment provinces of France, and the people in one district might be 
 starving while those in another might be impoverished, in conse- 
 quence of a ruinous, because artificially unsaleable, plenty. In 
 particular, the estates of the nobles and the Church were exempt 
 from taxation, while the tenure of the peasant was made liable to 
 arbitrary inaction, to say nothing of the feudal dues which were 
 squeezed from his poverty under the old regtyne. Unhaj)pily the 
 economists, as the new sect of philosophers was called, preached 
 in the desert, and the wrongs of the French peasants were terribly 
 avenged by the Revolution and the Terror. Arthur Young 
 describes the early days of the Great Change, not without a secret 
 sympathy with those who retaliated in the latter end of i78q, on 
 the nobility which had so long oppressed them. I know no one 
 who has stated the situation more exactly, and predicted its out- 
 come more accurately than Smollett did in his letter of March 23, 
 1765, and the thirty-sixth in the collection. But Smollett was
 
 i88 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 one of the keenest observers in the eighteenth century. I cannot 
 recommend his history or his poetry, but his novels are excellent 
 pictures of eighteenth-century life, and his letters are full of 
 information. 
 
 Now the economists discovered and announced one economical 
 truth of the greatest importance. It is that the existence of every 
 class of persons, artisans, in the ordinary sense of the word, men 
 of leisure, men of science, men of religion, men engaged in war- 
 fare and in the arts, and the dependents and domestics of these 
 people, depended on the extent to which the products of agricul- 
 ture were in excess of what was needed for the maintenance of the 
 agriculturist, and for the continuity of his calling. On this foun- 
 dation, as they saw clearly, rested the whole of the social structure. 
 If it failed, the whole which was above it vanished into nothing- 
 ness. It was plain, then, that what impoverished the peasant 
 threatened mischief to the nation, and I need not say that in the 
 existing state of trade and transport, almost the sole reliance for 
 everything beyond the maintenance of the peasant lay in the 
 efficiency of the peasant's labour and the abundance of his ciops. 
 To these men, therefore, agriculture .was as sacred as it was to 
 Cato and to Cicero. Perhaps the views which they entertained were 
 as cordially acknowledged by the public men at the time, who had 
 as abstract a respect for agriculture as Cicero had, and as practical 
 a dislike to any change which could alone make agriculture effec- 
 tive. Unfortunately, too, the Economists of the eighteenth century, 
 after grasping this and a few co-ordinate economical truths, 
 wandered off, as economists have always been apt to do, into 
 metaphysics. 
 
 The agricultural system of the French Economists is expounded 
 and criticized by Adam Smith in the ninth chapter of his fourth 
 book. I do not know whether, in this age ot experimental study, 
 you are advised to read Adam Smith, or are counselled to master 
 authors who know but little of the errors committed in past times, 
 and have but little insight into the errors of the time or the 
 country in which they live. But I can assure you that in my 
 opinion, whatever that may be worth, Adam Smith is much more 
 frequently in the right than his commentators and critics are, and 
 that, in particular, he had the advantageof a justand unprejudiced
 
 THE ECONOMIC DOCTRINE OF WASTE. 189 
 
 judgment, to say nothing of an entirely fearless candour, at a time 
 when it was difficult to form a sound opinion and dangerous to 
 utter it. The true economist, until Utopia is reached and settled 
 is, I fear, always destined to the duty of aggression. We have 
 made great progress in this country, but we are far from having 
 realized all the causes which induce the wealth of nations, not to 
 say that to which we belong. At one time it is necessary to do 
 battle with a mischievous privilege, which is sheltered by tradition 
 and self-interest, at another to combat an anarchical theory, which 
 under the pretence, perhaps with the intention, of righting social 
 wrongs, would effectually, if it were adopted, reach society itself. 
 
 Now the Economists recognized that the agriculturists needed 
 two kinds of forms of capital, which they called original {primitive) 
 and annual {annueUe)^ these terms corresponding to what are 
 familiar to you as the fixed and circulating forms of capital, 
 but would be better divided, or at least be more suggestive, if they 
 were called permanent and recurrent. They also saw, that occa- 
 sionally the proprietor, when the occupier was a tenant on a rent, 
 expended capital on permanent improvements, essential or con- 
 tributory to agricultural success. They insisted that these two 
 kinds of agricultural capital must be kept sacred from all exactions, 
 and that only when they were thus secured, would it be possible, 
 without future and serious loss, to pay rent, taxes, or dues. All 
 this is perfectly true, as true in this year as it was more than four 
 generations ago, when these French Economists were writing ; 
 and you may depend on it, the violation, even though it may be 
 unconscious, of these conditions of successful agriculture, is as 
 disastrous now as it was then. 
 
 These agriculturists thus secured in the continuity of their in- 
 dustry, Turgot, the most systematic writer of the school, called 
 productive, and everyone else, without exception, from the highest 
 to the lowest, from the king on his throne to the lackey, whom 
 you know no doubt from your knowledge of the French plays of 
 the time, existed, like the slaves of the Roman comedy, only to be 
 caned, kicked, and pommelled, he declared to be sterile. Into this 
 vast and all-absorbing economic limbo every one went, the church- 
 man, the lawyer, the doctor, the courtier, the landowner (except 
 in so far as he made agricultural improvements only), the merchant,
 
 igo INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 the trader, the artisan, the darhngs of Colbert, and the darlings of 
 Louis Dieudonne, even the philosophers, and among them even 
 Turgot and his allies in the economic analysis, the statesman, the 
 professors at the Sorbonne, and the Encyclopaedists, their rivals, 
 Voltaire, Rousseau, et id genus omne. No one escaped. They were 
 all, with the exception of the roturiers, and the improving land- 
 owners, swept into the barathrum of the sterile, into the gloomy 
 and discredited army of unproductive consumers. Consumers 
 they certainly were, for did they not exist, some of them only too 
 well? 
 
 Smith did not fail to attack these unpalatable metaphysics. It 
 was a startling utterance, when all the people who considered 
 themselves the best of Frenchmen, and thereupon the best people 
 in the world, were branded with economical sterility. It was 
 turning the tables with a witness. Now, beyond doubt, the 
 reasoning, such as it was, had a lasting effect, for part of it was 
 exceedingly true, and the class, which had hitherto been considered 
 the natural victims of society, was now shown to be, on the con- 
 trary, the saviours of society. I have no doubt that the reasonings 
 of the Economists had more influence in that movement of 1789, 
 than all the wit of Voltaire, all the political philosophy of 
 Rousseau, and all the scepticism of Diderot and the Encyclo- 
 paedists. It should be observed, too, that the Economists rightly 
 divined that the evidence of a progressive agriculture, progressive 
 because protected from rapine, was to be detected in the national 
 development of rent. An improving and a considerate landowner 
 had his reward. He was to be honoured as one of the productive 
 classes, and he was on the road to a justly improving rent. 
 
 Adam Smith states, with commendable gravity, the residue of 
 Turgot's theory. Artificers and manufacturers, the especial 
 objects of Colbert's case, were in Turgot's eyes wholly barren and 
 unproductive. Their labour merely produces that which they 
 have consumed in their calling and in their maintenance. They 
 add nothing to the sum of annual wealth, for even the profit 
 which they and their employers divide is simply extracted through 
 the demands of another sterile person, of that which might be 
 employed for a further productive end. The cultivator of the soil 
 cannot but feel as he consumes the produce of his labour, that he
 
 THE ECONOMIC DOCTRINE OF WASTE. 191 
 
 is increasing the national resources, and therefore the wealth, of 
 his country. The merchant and artificer can only effect this 
 desirable end by parsimony and privation, and even then they are 
 only securing, in the distribution of those products, in the pro- 
 duction of which the agriculturist is the only beneficent agent, a 
 certain share to themselves. " They are employed and maintained 
 altogether at the expense of the proprietors and the cultivators, 
 who pay their wages and provide their profits." The outside that 
 can be alleged on their behalf is, that by their industry and 
 dexterity, they do that neatly and quickly which those productive 
 agents, if left to themselves, would do clumsily and slowly. Hence 
 the two parties have reciprocal interests. Let the cultivator leave 
 the artisan and his employer alone, and he will get whatever he 
 wants more cheaply. Let the unproductive class leave the pro- 
 ductive alone, for the more prosperous and energetic his labour is, 
 the more margin is there in his hands with which to employ 
 artisan, maimfacturer, and merchant. It follows then, the 
 Economists concluded, that the only adjustment of all interests, 
 both between the members of any one community and between 
 all communities, will be found in perfect freedom of trade, 
 domestic and foreign. Quesnai, one of Turgot's associates in 
 this new social philosophy, was a physician, and illustrated his 
 theory of the social state by ingenious parallels drawn from the 
 orderly regimen, which keeps the physical organization of men in 
 a healthy condition. 
 
 Of course the work of the artisan, the manufacturer, and the 
 merchant contributes in no slight degree to the efficiency of the 
 husbandman's industry. The progress which agriculture has 
 made from the earliest record of its energies, by which it produces 
 three times its old acreage at one-fourth the relative cost, and over 
 three times a wider area, is due to the fact that the instruments 
 furnished by the artisan have increased the efficiency of the 
 agriculturist thirty or forty-fold. There has been an unseen, but 
 a virtual partnership between the two classes, a reciprocity of 
 services, none the less real because it has not been formulated. 
 It is true that at the time when the Economists wrote, the 
 economies of invention were in their infancy. But they were 
 already visible, not perhaps as nmch in France as in England, for,
 
 192 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 as I have said, the principal stimulants of Colbert were applied 
 not to the industrial arts of life, but to those which ministered to 
 mere luxury, or fashion in fobs and wigs, china and tapestry. But 
 in the nature of things, even when wealth is largely accumulated, 
 the number of artisans and manufacturers who minister merely to 
 the enjoyments of the richer spending classes, at home and abroad, 
 is small. We shall see presently what this expenditure means. 
 
 In dealing with the sweeping conclusion to which the Econo- 
 mists came, as to the unproductive character of the labour 
 exercised by artisans, manufacturers, and merchants. Smith does 
 not attempt to analyse the relation in which by far the largest 
 number of the functionaries stand to the community in general, 
 to its essential resources, and to the agriculturist in particular. 
 He recognizes the superior productiveness of the agricultural class, 
 though he claims for the others that they do produce, that they 
 replace at least that which they consume, and pro tanto therefore 
 are no loss to society, as domestic servants are, and that as far as 
 the increase of national wealth goes, this altogether depends on 
 parsimony, an economic virtue from which hardly any individual, 
 whatever be his place in the distribution of wealth, should be 
 exempt. And it is singular that in the analysis of those factors 
 which produce national wealth, he does not go more fully into the 
 case which was constantly before his experience, and constantly 
 appealed to by him, as the means for illustrating his conclusions. 
 This was Holland. 
 
 It was a common-place with those who studied social questions 
 nearly a century before the time of Adam Smith, to refer to the 
 Dutch Republic and its economical history, as the best illustration 
 conceivable of the benefits which successful trade confers on a 
 community. Holland was intrinsically a poor country. It was 
 stated, frequently and familiarly, that the grain produce of Holland 
 would not keep all its inhabitants for a single month out of the 
 whole twelve. It had no timber, no stone for its public and 
 private buildings. And yet there was no country in which grain 
 was more abundant than it was in Holland, and more at a uniform 
 price. The wharves of Holland were crowded with a produce 
 which was not of Dutch origin. The dockyards of England and 
 France purchased their timber at Amsterdam, as is proved by the
 
 THE ECONOMIC DOCTRINE OF WASTE. 193 
 
 correspondence of Pepys with Houblon, now preserved in the 
 Bodleian library. From the same place came the most valuable 
 kinds of marble. In nearly all commodities Holland . gave the 
 price, and it did so because its towns had a free market, to which 
 all the world resorted, for such a condition of things only can make 
 the regular quotation of trade prices permanently useful to dealers. 
 The Dutch, I admit, were manufacturers, in some articles the 
 successful manufacturing rivals of England ; but their principal 
 source of wealth, of that wealth, abundance of good products, on 
 which alone the capacity for any other industry can be based, was 
 to be traced to trade, and the policy of free trade. They got their 
 live stock from the Danish peninsula, says Smith, and "their corn 
 from almost all the different countries of Europe." Now it is a 
 sheer paradox to say that those callings, which secured plenty to 
 the Dutch consumer, and an ever-increasing wealth to the Dutch 
 burghers, could be exhibitions of unproductive consumption. To 
 make such an assertion is to indulge in the most barren form of 
 metaphysics, to dispute or disdain the evidence of facts, because 
 they do not square with an hypothesis. 
 
 As has often occurred in the history of economic science, the 
 extravagant conclusions at which the Economists arrived were in 
 great part due to the mischievous practices which they combated. 
 In jvist the same way, the excessive harshness of the doctrine of 
 laissez faire was a reaction against the incessant and vexatious 
 meddlesomeness of governments. It is very often thought to be 
 necessary, or at least expedient, to prove men and their practices 
 to be nmch more in the wrong than they really are, in order to 
 provoke that criticism which corrects the mischief which they 
 actually do. The Economists found the agriculturist degraded 
 and harassed. So they did not so much exaggerate his social 
 value, as they unduly depreciated the social value of every one else, 
 in order that they might get him some little consideration, and 
 ensure him some justice. By adroitly showing that it was the 
 interest of the rent receiver to take some thought of the person who 
 earned rent, a hint which from time to time landowners have been 
 slow to take, they got a few of his most notorious and indefensible 
 grievances redressed. They got the term extended during which 
 the grant of a lease would be valid against a future proprietor, by 
 
 14
 
 194 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 descent or purchase. They procured that the restraint of traffic 
 in agricultural produce between province and province should be 
 abrogated, and that freedom of export should be granted. 
 Naturally they overrated the value of their own labours, the 
 thoroughness of their own reforms. The elder Mirabeau, dwell- 
 ing on the services of M. Quesnai, contrasts to its advantage the 
 Economical Talk, as the conclusions of the Economists were 
 called, with the capital discoveries of writing and the use of 
 money. A few years later, however, and nearly every one was 
 agreed that these reforms were insufficient ; and in the autumn of 
 1789 the Tiers Etat, by a stroke of the pen, destroyed the whole 
 system on which the cultivator stood to the rent receiver. The 
 best account of this situation, after the French feudal dues were 
 extinguished, is to be found in Arthur Young's French tour, for 
 he witnessed the violence of the reaction. 
 
 Mr. Mill, in the third chapter of his first book, appears to 
 conclude that the expression " unproductive labour " is so common 
 as to have become classical, or in other words, to have taken so 
 solid a hold on the minds of those who study economical topics, 
 that it cannot, even at the risk of offence, be dispensed with. 
 The most obvious restriction of the word " productive " is to those 
 who are agents in producing material wealth, by which is, I 
 suppose, meant, such tangible and visible products as satisfy some 
 intelligible, even if it be an unintelligent demand, and are there- 
 fore, however unwisely, perhaps mischievously, possessed of 
 merchantable value, and therefore classed as utilities. It would be 
 easy to discover examples, among unquestionable utilities, from 
 the merchantable point of view, which a brief inquiry would 
 declare mischievous, or odious, and even criminal, and though I 
 am far from saying that the economist should be guided by moral 
 or political considerations in either his formulas or in his infer- 
 ences, I am nevertheless entirely sure that his inquiries cover the 
 same ground which is occupied by the moralist and the statesman. 
 To carry on his investigations from his own point of view is 
 doubtlessly essential to the completeness of his theory, but what 
 he calls wasteful is in the end what the student of ethics calls 
 immoral, and what the politician, who is worthy of the name, 
 desires to check by such expedients as his experience of men, of
 
 THE ECONOMIC DOCTRINE OF WASTE. 195 
 
 administration, and of legislation, instructs him in, or suggests to 
 him. 
 
 After having said that by productive labour must be meant 
 *' those kinds of enertia which produce utilities embodied in 
 material objects," Mr. Mill is not, I think, consistent with his own 
 definition. He instantly says that he " shall avail himself to the 
 full extent of the restricted application, and shall not refuse the 
 appellation ' productive ' to labour which yields no material 
 product as its direct result, provided that an increase of material 
 products is its ultimate consequence." He gives as illustrations, 
 the acquisition of manufacturing skill — I presume as much in the 
 teacher as in the agent — and the officers of government, " because 
 without them material wealth, in anything like its present abun- 
 dance, could not exist." He says that these are " indirectly or 
 mediately productive, and his test of such agents is that they 
 leave the community richer in material products than they found 
 it, that they increase, or tend to increase, material wealth." He 
 then proceeds to illustrate his theory, by saying that the labour of 
 saving a man's life is not productive, unless the man saved pro- 
 duces more than he consumes ; that the work of the missionary 
 is not productive, though he credits such persons with the best 
 intentions ; that the more " a nation expends in keeping agricul- 
 turists and manufacturers at work, the more it will have for every 
 other purpose, and the more clergymen, &c., it keeps, the less it will 
 have." He admits that unproductive labour may be as useful as 
 productive, it may be more useful, even in point of permanent 
 advantage, or again it may be absolute waste ; and he concludes 
 " that the services of the labourers," such as he enumerates, " if 
 useful, were obtained at a sacrifice to the world of a portion of 
 material wealth ; if useless, all that these labourers consumed was 
 waste." 
 
 The door which Mr. Mill opens, when he concedes that labour 
 may be called productive when *' an increase of material products 
 is its ultimate consequence," is exceedingly wide. It is difficult to 
 see what, under certain circumstances, can be excluded from this 
 class of operations. We may assume that the ideal state of the 
 specially productive labourer, be he labourer with skilled hands, 
 or employer with skilled head, is one in which every muscular and
 
 196 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 every nervous energy is kept in the most efficient and vigorous 
 condition. If that agriculturist, as Swift said, with excusable 
 exaggeration, is worth more than all the statesmen in existence, 
 who makes two blades of grass grow where one grew before, surely 
 a man or an agency which makes the workman able to do in an 
 hour what might have taken him two, without this assistance, is 
 as productive a person as the typical agriculturist of Swift's 
 patriotic and gigantic king. But what, and how many, are the 
 agents which effect this result ? The teacher of method to child- 
 hood and youth do so; the person who inculcates good manners, 
 orderliness, and obedience, do so; and here is room for the clergy- 
 man and missionary, whatever phrase he gives to his work; the 
 physician who saves strength and health does so. The science 
 which shortens processes, and the economist who teaches the true 
 relation of capital and labour do so. But this is by no means all. 
 Breaks in the continuity of labour are necessary, innocent recrea- 
 tion is necessary, adequate exercise is necessary, even a periodical 
 cessation of all labour is necessary, in order that labour shall be 
 as efficient as possible. The most hopeful student in the Univer- 
 sities is not the youth who mopes, and is, I believe, described here 
 and elsewhere by suggestive names, but the young man who is 
 active and athletic, who judiciously divides his time between 
 recreation and study. But what is true of intellectual labour is 
 true of physical labour, if indeed you can, except in thought, 
 separate the act of mind from any productive or efficient labour 
 whatever. Take away rest, recreation, innocent pleasure, and 
 you will assuredly sacrifice efficiency. Of course all these relaxa- 
 tions may become pursuits. If they are pursued for their own 
 sake only, they may be nearly as harmful to the efficiency as 
 their total absence is. Or they may be pursued professionally, 
 for judicious recreation must be taught, just as taste must be 
 educated. I cannot deny to the musician, to the artist, to the 
 actor, and even to the singer, his place in Mr. Mill's definition, if 
 the consequence of such agencies is to make the producer of 
 material wealth more efficient. I am disposed to admit that the 
 skill of the cricketer, the football player, the oarsman, may bestow 
 as substantial a contribution even to merely mechanical processes, 
 in their degree and manner, as those othei educational and pre-
 
 THE ECONOMIC DOCTRINE OF WASTE. 197 
 
 servative agencies do. For the efficiency and the due continuity 
 of industrial energies is, and always has been, a very complicated 
 business, to the completion of which, relative as that completion 
 still is, many agencies have contributed, towards which many new 
 agencies have to be found out, and frequently are found out by 
 people who are merely drawing inferences from observation. 
 The restraint of children's labour, the introduction of the half- 
 time system, the discovery of the fact that short hours of work 
 are constantly cheaper in the end than long hours, may be, and 
 as I think, have been, as economically useful as the inventions 
 of steam power and spinning machinery. What we are in search 
 of, indeed, is not unproductive consumption, which is, I hope I 
 have made clear, a mere metaphysical phrase, but waste, which 
 is the great economical evil, which the economist detects, if he 
 has the skill to do so, and criticizes, if he has the adequate 
 courage for his utterances. This waste arises from many causes, 
 some inevitable, some excusable, some corrigible, some entirely 
 and wholly indefensible, some justly punishable by the action of 
 government. Let us look at a few of these separately. 
 
 There is a kind of waste which belongs in some form or another 
 to all organic energy, and to every substitute for organic energy. 
 This, in the latter, is friction; in the former, the gradual weakening 
 of vital powers; and, I should add, the variable period of nonage, 
 which precedes the fullest manifestation of vital power. In 
 every human being, in every animal which has been pressed into 
 the service of man, a certain time must elapse before the agent 
 can be useful. Human skill has been engaged in shortening this 
 time, and great progress has been made in selecting and maturing 
 animals which serve for human food, and in selecting and 
 strengthening those who are employed in substitution for human 
 labour. But in human labour, where the development of mental 
 is more important than that of mere physical strength, though 
 the latter cannot be lost sight of, the process of securing the 
 maximum of utility, is found on economical grounds to be 
 bettered by retarding rather than hastening it. Two or three 
 generations ago, human beings were put to work in extreme youth, 
 to the manifest injury of economical utility; what seemed to be 
 industrial activity was found to be economical waste, and better
 
 198 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 counsels prevail in our time. So again sanitary science has greatly 
 contributed to economy in human energy. We cannot escape the 
 cost of nonage, we cannot obviate the certainty of ultimate decay; 
 but we may greatly prolong the period of full activity, and by 
 implication of economical utility. Two centuries ago the deaths 
 in London, chiefly by infectious diseases, were greatly in excess of 
 the births, sometimes, during periods of special unhealthiness, 
 were double the number. At present the average death-rate by 
 the thousand is not half what it was at the time of the second 
 Revolution. During this time the waste was chiefly of child life, 
 where the loss is total. But it was very considerable in adult life, 
 where it is real but partial. Even at the present time the skill 
 of man is unable to obviate the whole of this waste. But it has 
 been reduced within more manageable limits. There is a waste 
 of this kind on which I must comment. It is the maintenance 
 of those who cannot possibly become industrial agents at all, or 
 cannot recover the industrial capacity which they have lost. 
 Such are congenital idiots, incurable lunatics, and the entirely 
 disabled destitute. But here, when the economist shows that 
 their existence is sheer waste, the moralist and the statesman 
 rightly assert that they shall be, and ought to be, a charge on 
 society, because humanity is better than economy, and public or 
 private charity should not be entirely sacrificed to public or 
 private thrift. 
 
 In those mechanical appliances which are substitutes for 
 human labour, friction is waste. Now the victory of mechanical 
 science over friction cannot by the nature of things ever be com- 
 plete. The most carefully adjusted, and the most cautiously 
 protected machinery will wear, though the wear may be so infini- 
 tesimal that the eflSciency of the mechanism may be very pro- 
 longed. Certain buildings, especially those which are buried in 
 the earth, are very enduring. The Roman forum, and the low- 
 lying ground, known still as the Velabrum of Rome, are still 
 drained by the cloaca, which was constructed in prehistoric times, 
 and probably will be drained by the same agency in the most 
 distant future. But other works of human skill have a far 
 briefer industrial existence. Machinery wears out by natural 
 causes. It is superseded by improvements, and the wear as well
 
 THE ECONOMIC DOCTRINE OF WASTE. 199 
 
 as the supervision are economical waste. Perhaps the fact that 
 the duration of the best among these substitutes has but a Hmited 
 existence is a powerful stimulant to invention and improvement. 
 The value of machinery, buildings, &c., in the assets of a trader 
 or manufacturer, is, or should always be, annually lessened by a 
 sinking fund, and the life of the instrument should be recognized 
 to be brief. There is inevitable waste in a metallic currency. At 
 times, as in 1562 and 1698, this waste has brought about a finan- 
 cial crisis. Now it is the business of the private producer, and 
 the business of an intelligent government, to anticipate and inter- 
 pret as far as possible inevitable waste, and as far as each can, to 
 reduce or narrow the amount. Invention and improvement have 
 done this to a remarkable degree in private enterprise. I am 
 afraid that I cannot bestow the same commendation on all the acts 
 of any administration, whatever its complexion has been. 
 
 There is another direction in which physical, and especially 
 chemical, research has obviated waste. You have, no doubt, often 
 heard of these processes, of how the cost of materials in familiar 
 use has been amazingly reduced, of how bye-products in particular 
 industries, as, for example, in the manufacture of coal gas, and in 
 the purification of rock salt, have been turned from being mere 
 waste into valuable economical products. Similar inventions 
 have attended the art of agriculture, the art of navigation, and a 
 thousand other sciences. As I told you at the beginning of these 
 lectures, we know that there is a limit beyond which human 
 invention and adaptation cannot go; but there is no knowledge of 
 what that limit is, and what arc the victories still reserved for 
 .scientific research. 
 
 Is the rent of land, that is, toll taken for the user of the soil, 
 and the license charge for exercising agricultural skill, apart from 
 the outlay of the owner, waste ? My hypothesis, you will see, 
 assumes that the legal owner contributes nothing to the mechanism 
 of industry, that he simply extracts from the demand of the 
 occupier as much of increased value from outlay, as is in excess 
 of replaced capital, personal maintenance, and reasonable profits. 
 The problem must be faced, for it is of no avail to meet sceptics 
 by simply asserting the right of property in a natural but limited 
 aarent or instrument. Now I think the economist must admit
 
 200 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 that rent, as I have described it, is waste. But it is a factor to 
 which, given perfect freedom of supply, and just rights to the 
 occupier, no person can have any higher title than the legal owner. 
 He has bought it, and has a natural claim to whatever innocent 
 use he can make of his property. The cultivator has no right to 
 it. The State has no right to it, whatever it may have had in 
 time past, for if one begins to challenge the justice of past engage- 
 ments knowingly entered into and sanctioned, all society would 
 be in confusion, credit would fail, property would be soon made 
 msecure, and every motive to labour, and to save, beyond the 
 vague, and, I am sure, weak stimulus of social duty, would be 
 extinguished. I may entertain a very sincere respect for the 
 intentions of those who wish to employ the force of government 
 in order to entirely reconstruct society, and to annul all the 
 motives which, at any rate, have hitherto made notable progress, 
 in bettering the general condition of social man. But I may be 
 pardoned for resisting, to the best of my judgment, a practical 
 trial of so astounding an experiment. Respect for a speculative 
 theory is very different from respect for a practical proposition. 
 I am so ignorant of physics, that I hear with equanimity the 
 news that you and I are descended from a brainless and long- 
 tailed aquatic animal. But I have no inclination to plunge into 
 the mid depths of ocean, in the search after my long-lost kinsfolk. 
 The pedigree may be ancient. It is not flattering ; though what 
 is this to truth, especially to physical truth, which is to be our 
 future guide, in opinion ; never, I sincerely hope, in practice. 
 
 Some waste is excusable. Of this kind, the waste of experi- 
 ment is most excusable, the most beneficent, the most instructive. 
 There is no department of human knowledge in which it does 
 not occur. There is no department of human action in which it 
 is not inevitable. You must risk waste, in order to secure any- 
 thing ; from Christianity down to joint-stock enterprise and 
 limited liability. Your chance is very wide, from crucifixion, 
 through plank beds, down to a composition with creditors, to say 
 nothing of despairing and therefore merciful creditors. Humanum 
 est errare^ and all our race, except women, who never err, are 
 merciful to the erroneous. All progress is due to experiment, 
 and will be. The waste, the unpioductive consumption, is a
 
 THE ECONOMIC DOCTRINE OF WASTE. 201 
 
 blunder to the metaphysician, is a hope to the economist. Let 
 us never despise experiment. It may answer, if we deal with 
 ants and bees, and the origins of the human race. It is 
 dangerous, if you challenge vested interests. But youth, and 
 especially Oxford youth, is very considerate of those interests. It 
 has a proper respect for age, even for disreputable age. It is 
 impossible for me not to appreciate the sympathy of what, I 
 trust, is reputable in any case. I do not, however, see why we 
 should be considerate of institutions. In my mind, it is the best 
 education to criticize them. 
 
 There is, however, one kind of waste, generally conceived to be 
 excusable, but of which the recent history is most inexcusable, 
 and the most dishonest. I am referring to the premature de- 
 velopment of industrial undertakings. In the United Kingdom 
 such things have happened, but we can bear them. In our 
 colonies they bid fair to ruin the fairest hopes. I think tliat I 
 can easily illustrate what I mean. 
 
 Let us conceive a German Jew (I have no objection to origin 
 or race, and think that what is objectionable in either, if it exists, 
 is kept alive by an intolerance), who, having kept a grogshop at 
 Ballarat in the gold-digging times, and having dealt profitably 
 with the miners, and deleteriously with their health, transfers his 
 gains to a neighbouring colony. He is the smartest of the smart, 
 and makes it his business to ingratiate himself with the people, 
 few and busy, who are seeking to acquire a rapid fortune in their 
 new home. Now there is one direction in which such people 
 can be readily influenced. This is to dwell with emphasis and 
 enthusiasm on the illimitable but undeveloped resources of the 
 new country, and to suggest the immediate and extensive 
 development of new harbours, docks, and railroads, the capital 
 being borrowed in the United Kingdom, and the income assured 
 from the earnings of these public works, and further covered by 
 protective customs duties. The colonists are invited to discount 
 their future expectations, and to load themselves with debt, while 
 the country of their origin is met, after advancing the loan, with 
 the grateful tribute of a hostile tariff. As a reward for his services 
 in making the colony stagger under a debt, which might have 
 been incurred fifty years hence with advantage, but under present
 
 202 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 circumstances will cripple the country for more than fifty years to 
 come, and for having carried as its inevitable consequence a Pro- 
 tective tariff injurious to colonial progress and unfriendly to the 
 country which has guaranteed, often at great expense, the infancy 
 of the colony, this worthless and ignorant adventurer is rewarded 
 with the dignity of a knighthood in the Order of St. 
 Michael and St. George. I know no greater evil that has be- 
 fallen the British colonies than the habit they have of listening 
 to those who dwell on the boundless and undeveloped resources 
 of the colony. Undeveloped resources are not resources at all. 
 They are like the strength or the intellect of a child, and to 
 anticipate them, by treating them as actual when they are only 
 hypothetically potential, is as profound an act of folly, as it is 
 for a private individual to launch into limitless expenditure in 
 the hope that at some future time he may come into a fortune. 
 Most of our colonies have succumbed to these temptations, and 
 some of them are already half ruined. Pessimum gemis inimi- 
 corum laiidentcSy says Tacitus. Mr. Mill has touched on this 
 form of waste. 
 
 Rest and recreation are not waste. Neither is the moderate 
 indulgence in refined pleasures. We cannot always trace the 
 extent to which industrial energies are invigorated by these 
 relaxations, but we may generally conclude that as long as they 
 are invigorated, the expenditure is economically defensible. On 
 the other hand, indulgences which do not and cannot have this 
 effect are waste. So is also the employment of unnecessary 
 intermediaries. In the early days of economic science, when 
 laissez faire was so supreme, that it had almost adopted the 
 maxim that whatever is is best, the defence of these multiplied 
 intermediaries who get but do not make wealth, was taken for 
 granted. In the latter days of unchecked competition, which you 
 will remember always goes on between nations, however much 
 it may be denounced in the domestic life of a people, the useful- 
 ness of these people is increasingly challenged. It is being seen 
 that many of them are mere waste, and we are told on many sides 
 that the true producer and his ultimate customer are seriously 
 mulcted by the number of hands, each claiming a commission 
 though which the produce passes before it reaches its destination.
 
 THE ECONOMIC DOCTRINE OF WASTE. 203 
 
 Attempts are being made, with what success I do not yet know, 
 to bring producer and consumer into more immediate relations, 
 and thereupon to ehminate the middle man ; and we are assured 
 that the recovery of manufacturing and even of agricultural 
 profits, would be possible if the machinery of production and 
 consumption were simplified. In the meantime, all needless inter- 
 mediaries are waste. All processes which are foisted on business 
 relations, such as complicated documents on the transfer of 
 property, are waste. Every device which in the course of inter- 
 national competition straitens national energies is waste. Now 
 such waste is corrigible, and while it is the interest of private 
 persons to get rid of superfluous intermediaries, it is the duty of 
 government to remove needless burdens from the processes of 
 business. I need not detain you with punishable waste. It will 
 be perfectly obvious. Crime and vice are in the highest degree 
 waste. Some of these mischiefs are to be checked by the severity 
 of law. Some are best coerced by the exercise of local authority. 
 Some may perhaps be discouraged by public sentiment, and an 
 improved social tone. 
 
 Only one other topic remains which I may briefly refer to. To 
 what extent is the expenditure of the rich the employment of 
 the poor ? The banquets of the Mansion House and the Halls 
 of the Companies have repeatedly been defended on the plea that 
 these dinners give employment. Of course they do. But to 
 whom ? Measured by price, it takes as much labour to grow a 
 hothouse pine as it does to produce two quarters of wheat, a 
 sheep and a half, or some equally large products of what is con- 
 fessedly useful. Now the maintenance of those who provide 
 luxuries must be obtained from that source of occupation which 
 economists call the common fund of industrial capital. The more 
 there are of such producers and consumers as purvey for these 
 City banquets the less there will be for others who are engaged in 
 the homelier but more important avocations. Now I do not 
 doubt that in the analysis of industry you have already discovered 
 that voluntary consumption is a powerful stimulus to invention 
 and improvement, and that extreme simplicity of life to a some- 
 what unprogressive condition of things. Even religious orders, 
 bound by vows of poverty, have devoted themselves to the manu-
 
 204 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 facture of costly and excellent liqueurs, and the monks of La 
 Trappe, the Chartreuse, and the Benedictines have allowed them- 
 selves to be in touch with the City gourmand. But the expendi- 
 ture of the rich is not in itself the employment of the poor. It 
 is the stint of their employment. It will be plain that if the 
 capital which is devoted to the supply of luxuries were diverted 
 into the employment of those who supply necessaries and common 
 comforts, that the demand for labour would increase and the wages 
 of labour would be enhanced. But the luxury of the rich may be 
 perhaps defended without being excused or economically justified. 
 It is the outcome in the main of industrial eflSciency. When the 
 efficiency of labour is low, there is little opportunity for such 
 expenditure as I have referred to, because there is but little margin 
 for the production of anything beyond necessary use. The 
 possibility of that luxury is due to the fact that economical waste 
 has been greatly obviated in other directions, and Mr. Mill is in the 
 right when he says that the existence of such expenditure is a 
 proof that the community has much to spare from its necessities, 
 while he regrets that the surplus is distributed with " prodigious 
 inequality," that " the objects to which great part of it is devoted 
 are of little worth, and that the large share of it falls to the lot 
 of persons who render no equivalent service in return." This 
 is rather adverse criticism on those who bid us recognize the 
 intrinsic benevolence of their expenditure, and I am afraid that 
 the criticism cannot be conveniently rebutted.
 
 IL 
 
 THE THEORY OF ECONOMIC RENT. 
 
 Extreme opinions on the question of rent — Limited ownership of the soil 
 in England — History of the rise of rent in arable and pasture lands ^ 
 and in building sites — The Ricardian doctrine of rent — Mill and the 
 unearned increment — Henry George's ''^Progress and Poverty''^ — A 
 defence of rent. 
 
 You are no doubt aware that in recent years the right of private 
 ownership in land has been very vigorously, and very generally, 
 attacked, sometimes with every consideration for existing interests, 
 though under the apologetic plea that it would do more harm to 
 society to disregard those interests than it would be advantageous 
 to extinguish them, on the ground that they were in their 
 beginnings mere usurpations. In the case of an able and very 
 sympathetic writer, whose treatment of the subject has, I suspect, 
 won him more followers, or admirers, than the solidity of his 
 reasoning justifies, the immediate and total confiscation of 
 all rent is asserted to be not only just, but necessary, in all the 
 interests of society. Now in treating this topic I avoid a 
 cognate, but different subject, the regulation of rent, and the 
 other question, the distribution of land — a topic which opens 
 up a large number of interesting relations. In brief, I 
 purpose to deal with land in its varied aspects, and with
 
 2o6 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 the theory of vested interests. You will anticipate that these 
 several subjects are very closely related, though it is necessary, for 
 reasons of time, to handle them separately. 
 
 Not only have the right of ownership in land, and the reputed 
 interests which are connected with it, been energetically assailed 
 by Mr. Mill and by Mr. George, but there are very active associa- 
 tions which, covertly as I think, aim at least at a part of the 
 object which Mr. George has advocated with so much warmth. I 
 have found advocates of the last writer's theories in very unex- 
 pected places. Very respectable politicians are insisting on the 
 exceptional taxation of ground rents, and on the compulsory 
 enfranchisement of leaseholds. Now to exceptionally tax one kind 
 of property on the plea, correct or incorrect, that it is the creation 
 of other agencies than those which are exhibited by the person 
 who obtains the advantage, does not differ, except in degree, from 
 the total and sweeping confiscation of Mr. George. The milder 
 proposal of enfranchising leaseholds is not indeed so sweeping, 
 and, as I think, not so disputable in principle, but it is intended to 
 extinguish those advantages which the lessor is supposed to be 
 likely to acquire at the extinction of the lease, and to secure to the 
 lessee or the occupier, as the case may be, the improvements 
 which he has himself eflFected. In brief, there is a very Avide- 
 spread conviction that the position of the landowner in the United 
 Kingdom is a violation of natural justice, and this quite apart 
 from the consideration of real or reputed wrongdoing on the part 
 of this class in certain districts of the United Kingdom. The right 
 of ownership in land is, in the minds of many, perhaps by an 
 increasing number, by no means so sacred and indisputable as it 
 was conceived to be thirty or forty years ago. I shall try to point 
 out in the course of this lecture what have been the grounds on 
 which these opinions have been developed ; what is the econo- 
 mical authority for the theory from which they have been unques- 
 tionably derived ; what is the economical value of that theory, 
 and how far, in case it can be shown to be untenable, is the attack 
 on the ownership of private property in land possessed of, or 
 destitute of, any economical force. 
 
 Now it cannot be doubted, if the language of those who wrote 
 in early ages on the common law of England has any force what-
 
 THE THEOR V OF ECONOMIC RENT. 207 
 
 ever, that in theory the largest rights of the private owner of 
 land were very limited and qualified. The doctrine that no sub- 
 ject has the " absolutum et directum dominium " of land, that the 
 Crown was the paramount owner, with the consequences of escheat 
 and forfeiture, positions affirmed when the power of alienation was 
 scanty and indirect, are not the mere verbiage of lawyers, borrowed 
 from the formularies of mediaeval logic. Nor are they principles 
 intended to serve the police of government, by being a deterrent 
 to oflFenders against the King's peace and dignity. They must, I 
 think, be taken to mean that when the principles of the common 
 law were affirmed, the ownership of land was qualified and limited, 
 that the King's Council, and later on the King's Parliament, 
 could alter and perhaps extinguish it, and that however unpopular 
 and dangerous it might be to strain the rights of the Crown in 
 Council or in Parliament, the existence of those rights could not 
 be gainsaid. Perhaps one of the most striking illustrations of acts 
 of Parliament enshrining this principle is to be seen in the disso- 
 lution of the monasteries, where the rights of founders to the 
 reversion of their grants, implied, if not expressed, in the charters 
 of foundation, and held to be real less than a century before, were 
 entirely ignored in the concession to Henry VIII. 
 
 I have in an earlier lecture pointed out how entirely dissatisfied 
 the public was when the official estate of the Crown was diminished 
 by large or unwise alienations, and how important a part was 
 played in the politics of countries by the doctrine of resumptions, 
 even up to the middle of the eighteenth century, and the passage 
 of the Nullum Tempus Act in 1768. But the doctrine that 
 private ownership could, and should, be superseded, with or with- 
 out compensation in real or reputed public interests, could be 
 illustrated by a thousand examples in our social history. The 
 largest instance in comparatively modern times of such parlia- 
 mentary action is that contained in the first clause of the Statute 
 of Frauds, under which occupiers who had no documentary 
 evidence on which to support their interests, even though those 
 interests were freehold, were declared to be tenants at will. I 
 know that my position has been disputed by men who will look 
 at the seventeenth century and its action with the eyes of 
 the nineteenth, but I have discovered alnindant proof in the
 
 2o8 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 rentals of colleges that my interpretation of this famous act is 
 correct. 
 
 The doctrine that the ownership of the land is limited, and that 
 by the common law, at least, a man may not in the case of land, 
 as the Duke of Newcastle thought, " do what he wills with his 
 own," is no mere antiquarian utterance. It has been appealed to 
 by those who have attacked the ownership of land, as it is com- 
 monly understood, not indeed as a principal, but as a powerful 
 subsidiary argument. What that principal argument is I proceed 
 to state. 
 
 The owner of land has not only, it has been imagined, exacted 
 in the first place a price for occupancy, under the name of rent, 
 but has made the claim without according any consideration to 
 the tenant. From this point of view Adam Smith believed that 
 rent was originally a tax, imposed by the stronger on the weaker. 
 Now it is certain that even the rudest agriculture produces more 
 than is necessary for the occupier's subsistence, the replacement of 
 his outlay, and even provision against risk, and that therefore this 
 surplus can be exacted by the over-lord. Nor is it quite correct 
 to say that the payment was made without any equivalent. The 
 history of English agriculture refutes such an inference, and it is 
 with English agriculture, and its economic situation, that I am 
 concerned. The English landowner of the thirteenth and four- 
 teenth centuries did two things for the savage tenant. He guaran- 
 teed the King's peace, that is the continuity of the farmer's industry 
 free from the risks of brigandage, and he taught him by his own 
 example and practice the best system of agriculture Avhich the age 
 could develop. In the age when rent seems most like a tax, 
 because it was to all intents a fixed and maximum charge, i.e.^ from 
 the middle of the thirteenth to the middle of the sixteenth century, 
 the English landowner, whatever his faults, was concerned in 
 keeping the peace, and securing the farmer in the continuity of 
 his calling. From the middle of the sixteenth till the middle of 
 the seventeenth rackrenting of a very harsh kind occurred, and 
 with very disastrous effects. Another system prevailed during the 
 greater part of the eighteenth century. At the end of it the rack- 
 renting was revived, and occasionally with great severity, till the 
 close of the Continental War. For a time the farmer had little to
 
 THE THEORY OF ECONOMIC RENT. 209 
 
 complain of, except well-meant but blundering efforts to secure 
 him in his new position till after the repeal of the Corn Laws. 
 Then the rackrenting recommenced, and continued till more than 
 ten years ago ; then the whole system collapsed in a common 
 ruin, and to the amazement of those who had been ignorantly 
 concerned in it. 
 
 Now the history of rent is not a little striking. Good arable 
 land was let in the fourteenth century at 6d. an acre. I have 
 never found a higher price. In the seventeenth it rose generally 
 to 4s. 6d. an acre, not without grievous complaint. During the 
 eighteenth it rose to 7s. in the first quarter, to los. in the last. In 
 the nineteenth, up to the middle of the century, it rose to about 
 35s., and during the twenty years, 1853-1872, on an average 26^ 
 per cent. more. Since 1879 the reaction has been rapid, and I 
 think that I can point out its cause. My authority, for the last 
 time, is Mr. James Howard, of Bedford, who has made the land 
 question in Great Britain his peculiar study, and can be entirely 
 relied on. The rise in the rent of pasture land is far less consider- 
 able. The low-lying meadows on the Cherwell, partly enclosed in 
 the Parks, partly continued as you go down the principal stream 
 of the Cherwell on the right, let in 1309 at 9s. 6d. an acre. I 
 doubt whether they fetched more than £\ to j[^\ los. when the 
 University bought the land. The rent of arable land, therefore, 
 till the time of the present troubles, rose eighty-eight times, that 
 of pasture nine times. 1 must ask you to attend to these figures, 
 for much depends on them. 
 
 But the rise in the rent of arable land is as nothing to the rise 
 in the rent of building land, and building sites in growing and 
 thriving towns. \x\ the early period to which I have referred, 
 such land was worth little more than arable. London was by far 
 the most densely peopled and busy place in the kingdom, but it 
 was full of gardens and waste places. But unless I were to put 
 before you numerous instances, you could not realize the growth 
 of the rents derived from town sites. Some few years ago I was 
 informed by a zealous inquirer into departmental abuses, that a 
 site had been let in Cockspur Street by the Woods and Forests, 
 i.e.^ Crown land, by private arrangement. My informant scented 
 a job, and wanted me to ask a question. But prudent men do not 
 
 15
 
 2IO INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 ask a question if they can get at the facts. So I went to the 
 Woods and Forests office in Whitehall and inquired. I found 
 that a forty years' lease at £/^o a year had just expired, one granted 
 say in 1845, and that the land was now re-let at ;^8oo a year 
 ground rent. I did not ask. the question, for whatever else the 
 Commissioners had done, they had certainly not neglected the 
 interests of the office. But the rise of twenty times in forty years 
 is as nothing to the rise from the time when Cockspur Street was 
 a field with cow-sheds on it, and fine ladies went into the Mall and 
 drank curds and whey. In the seventeenth century the site was 
 probably worth about two-thirds of a farthing, or the i •1440th of 
 a pound sterling. You may make your calculation as to its growth 
 in value since. 
 
 Now I daresay that no one who has undertaken to criticize 
 adversely modern rents, has provided himself with such facts as I 
 have given. Arable land has risen in rent eighty-eight times, 
 pasture nine, and building sites incalculably, for I think it probable 
 that the Cockspur Street site is not more than a tenth the ground 
 rent of a similar site near the Royal Exchange. A good many 
 years ago, I have been told, a working goldsmith, whose home 
 was not the pleasantest, left the freehold site of his shop in Lom- 
 bard Street to the Goldsmiths Company, in memory of the cheer- 
 ful evenings which he spent at the livery, and with the intention 
 of bettering their potations. The modern rent — Glyn's Bank 
 occupies the site — would give, I was told, all the worshipful people 
 among the goldsmiths a bath of Tokay. In a vague way these 
 things are known. My informant was a very considerable econo- 
 mist, a bank manager, and a goldsmith. Of course he thought it 
 a creditable bequest, and an exceedingly natural result. He was, 
 I think I shall show, right in the latter inference. 
 
 But how does all this show to the general public ? I will try 
 to state the case as it appears to them, and the inferences that they 
 naturally draw from the facts. And I venture on anticipating 
 that no case could be quoted which more thoroughly illustrates 
 what I have always striven to put before you, the wisdom of com- 
 pletely examining all the bearings of an economical theory, than 
 this rent question does. For to anticipate what I shall hope to 
 prove presently, the most dangerous, the most mischievous
 
 THE THEORY OF ECONOMIC RENT. 211 
 
 theories of social reconstruction have been based on the miscon- 
 ception of rent, and to these theories the most honoured teachers 
 of pohtical economy have rashly, and I believe unconsciously, lent 
 themselves. But political economy is the last science in which 
 you can allow dogmatism or authority, and I may add metaphysics, 
 or sentiment. 
 
 Now to a large, and, I believe, an increasing number of persons 
 the recipient of rent appears as a person whose income is increas- 
 ing spontaneously, without labour or merits of his own. " He 
 toils not," in the words of an eminent statesmen, " neither does 
 he spin." The labours of others are engaged in continually 
 pouring wealth into his pockets. Unfortunately for his reputa- 
 tion, he is continually engaged in shirking his obvious duties, 
 putting on others, by his influence in the legislature, the cost and 
 the business of improving his estate, and of making, perforce, every 
 occupier an altruist, as the modern plilosophers say. " Here is a 
 natural estate," such people allege, " which neither God nor 
 nature nor man can have seriously intended to give over to these 
 people. In the whole range of economic facts and principles, the 
 fundamental condition of which is labour of head or educated 
 hand, this fortunate person attains an ever-increasing share with- 
 out outlay on his own part. He is the sole inheritor of other 
 men's toils. To him they pay tribute ; to him they are enslaved ; 
 by his permission they exercise the industries under which they 
 live and he thrives. His share in the distribution of wealth is not 
 only inordinate, but it is indispensable. We will not inquire too 
 curiously or too insidiously into the question of how his ancestors 
 obtained it. But we have a right to criticize the process by which 
 its occupant has grown to such gigantic dimensions. We are 
 justified in emancipating ourselves from the onerous conditions of 
 occupancy, of resuming what a past generation never intended to 
 give, and had no right to give even if they had intended it." 
 
 "Let us consider," they go on to say, "to what this strained 
 and unnatural assertion of ownership of land is tending. If it is 
 to be unchecked, allowed, conceded, the whole of society will 
 rapidly become tenant at will to a few persons, who will exercise 
 their usurpation remorselessly. We are in the condition, rapidly 
 becoming worse, of a city in an eternal state of siege, in which the
 
 212 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 struggle for the means of existence is yearly becoming sharper, the 
 competition more fierce, in Avhich we allow the unfittest, the do- 
 nothings, to survive at the expense of those who are engaged in 
 the great work of national defence. These people have got hold 
 of a necessary of life, the land, as Bishop Hatto, in the German 
 story, got hold of the granaries. These people exact a famine 
 price for their usurped possessions, and by the operation of well- 
 known economical laws, exact the severest terms from the poor, 
 from those who are least able to withstand them. In vain does a 
 statesman attempt fiscal reforms. The benefit is intercepted and 
 goes into the coffers of all-devouring rent. A tax is remitted ; 
 but the landlord claps it on the rent before the relief is sensible. 
 His power of exaction is unlimited. Now it is clear that in a 
 besieged town no person would concede that the owners of the 
 necessaries of life should be allowed to extort anything from 
 the necessities of a straitened population, least of all the non- 
 combatants or non-workers from the workers or combatants, 
 for the very existence of society being in danger, the rights of 
 private property are at least to be suspended by those upon 
 whose good-will and forbearance alone private property only has 
 relied. Besides, do not all economists, wise and unwise, hard and 
 considerate, agree that the laws regulating the distribution of 
 wealth are of human institution only, created by society, main- 
 tained by society, and, by implication, within the discretion of 
 society, to modify, alter, and even to subvert ? " 
 
 I do not think that I am in the least degree exaggerating the 
 language used by those who express their discontent at modern 
 rents, or parodying the arguments by which they support their 
 criticism on it. The number of such persons, and the urgency of 
 their dissatisfaction, is increasing, and I cannot allow that the force 
 of their attack is very satisfactorily met by the ordinary arguments 
 alleged in favour of the existing system. I do not think that much 
 can be made out of the implied guarantees of government, a 
 favourite defence for a number of indefensible interests, nor is there 
 much more truth in the allegation that landowners have been the 
 improvers of their estates. In the great majority of cases, and in 
 the most conspicuous examples of exalted rents, the very reverse 
 is the fact, for the initial and induced value has been entirely the
 
 THE THEORY OF ECONOMIC RENT. 213 
 
 work of the occupier. Besides, landowners and their ordinary 
 advocates speak of improvements as though they were indes- 
 tructible, or perennial at least. Nothing can be more inaccurate, 
 for nothing is more fleeting, unless under the condition of 
 constant repair and replacement, than an agricultural improve- 
 ment. At the very moment that it is finished it begins to 
 deteriorate, and constant vigilance is needed in order to pre- 
 vent the deterioration from becoming rapid. One of the worst 
 and most stubborn facts in the present doctrine of agricultural 
 land, is the certainty that large outlay will be needed in order to 
 restore it to a cultivable condition. When men are idle, nature, 
 against which the agriculturist is always battling, whose co- 
 operation he can only secure by constant checks, is increasing 
 the difficulty which renewed industry will have to meet. It is 
 better, I am persuaded, to rest the case of the rent received on 
 its own merits, not on his merits, for an exploded defence is worse 
 than no defence at all. 
 
 The case against the rent receiver is heightened by the popular 
 Ricardian doctrine. I have been sometimes puzzled as to whether 
 this very considerable writer and thinker intended by the promul- 
 gation of his theory to frighten men into curtailing rent, by point- 
 ing out that, like the Cyclops, it would devour even Ulysses at 
 last, or whether he intended to give a sound and philosophical 
 exposition of its origin. If the former was his motive it certainly 
 succeeded, for the compulsory appropriation of the unearned in- 
 crement, which was Mr. Mill's project, and the wholesale confis- 
 cation of rent, which is the proposal of Mr. George, are avowedly 
 based on the Ricardian doctrine, and, I must confess, if it were 
 true, that it is very difficult, on principle, to refute either one or 
 the other of these extreme suggestions. But let us take the other 
 side of the question, and see whether it is true. 
 
 We may conveniently dismiss that part of the Ricardian theory 
 which discovers the different fertility of soils, and that which as- 
 sumes the enforced application of capital to inferior soils, under the 
 pressure of population. The former was known in the days of 
 Sesostris and Nebuchadnezzar, both of whom understood the 
 difference between the irrigated valleys of the Nile and the 
 Euphrates on the one hand, and the waterless sands on the
 
 214 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 border of the fertile district. The latter is historically false, and 
 for a reason which I hope to make easily clear. Fertility is not 
 only a relative term, but in many cases a progressive discovery. 
 In agriculture, as in other arts, the waste of one generation, of one 
 condition of experience, is the wealth of another condition, another 
 generation. The history of the industrial arts is full of instances 
 of the utilization of waste products, sometimes so considerable 
 that the principal end of an earlier process becomes subsidiary, 
 and even unimportant, in another state. No better illustration can 
 be given than what can be gathered from the manufacture of gas 
 and coal tar on the one hand, and soda ash on the other. 
 
 Again, no one begins a new undertaking with the prospect, 
 nay, as Ricardo says, with the certainty, of scantier remuneration. 
 He always does it in the hope, perhaps the assured prospect, of a 
 higher remuneration. This is the rule of practice in manufacture; 
 it has been the rule in agriculture. The so-called inferior soil in 
 relation to its produce has been found less costly to work, or has 
 had some other attractions than other land which has been longer 
 in cultivation, and has thus, in an economical sense, become, ex- 
 perimentally at least, more fertile. Now that this has been the 
 history of occupancy, I can say with confidence, perhaps with 
 authority, for I have studied the annals of agriculture with no 
 little care, and have come to the conclusion not only that facts 
 are more valuable than theories, but that all true economical 
 theories are, have been, and must be, inductions from facts. It 
 was from facts that Ricardo derived his most valuable inductions 
 as to the financial consequences of an inconvertible paper, and 
 it was on baseless and extravagant theories that two silly people, 
 Vansittart and Lord Stanhope, attempted to assail him, and, if 
 parliamentary majorities are to be considered of any worth, assailed 
 him successfully. 
 
 The cardinal error in Ricardo's theory is that rent is derived 
 from the price of agricultural products. One quotation from his 
 theory is conclusive as to this being his view. He alleges that 
 the only check to progressively increasing rents is improvements 
 in the process of agriculture ; and in this he is followed by Mill. 
 Now, as a matter of fact, the only cause of improved rent is im- 
 provement in agricultural processes. All the increase in agricul-
 
 THE THEORY OF ECONOMIC RENT. 215 
 
 tural rent from 3s. 6d. an acre, at which the Belvoir estates stood in 
 1689, to 36s. 8d., at which they stood in 1853, is due to improvements 
 in agriculture, or, to put the matter into economical phrase, to 
 more profit at less cost. Rent is the outcome of profits, not prices. 
 In the days of 3s. 6d. an acre wheat was, on an average, dearer than it 
 now is. In the days when £^0 a year was given for the Cockspur 
 Street site, business profits could bear no higher rent. Now they 
 have increased so much that the new lessee sees it to his advantage 
 to give ^800 a year. And just the same cause is operative in the 
 rents paid for places of business in Central London. I do not, indeed, 
 allege that all rents have so harmless an origin. I must, as I have 
 said, ^stpone this part of my subject to another lecture, when I 
 deal with the regulation of rent. At present I am only concerned 
 with its scientific origin. And though I cannot just yet point out 
 to you how great is the difference and how grave are the con- 
 sequences which are involved in the acceptance of either theory, I 
 may at least claim that the distinction I make is neither merely anti- 
 quarian nor merely philosophical. It is of the highest significance 
 in the practice of life. If rent is the outcome of price only, the rent 
 receiver may be looked on, naturally, as a public enemy ; if it be 
 the outcome of profit only, it is the interest of the rent receiver 
 to be as anxious about the occupier's profit as he is about his (d\s\\ 
 rent, for with that profit, as he has latterly learned, his rent will 
 rise, and without that profit his rent will tend to zero. I know 
 that he has not learned more than the fact, for he still prates 
 about the unearned increment, and sometimes dreams that he can 
 reclaim protection, and, more foolish still, that his rents would rise 
 if he could get protection. 
 
 Fully convinced that the Ricardian hypothesis as to the origin 
 of rent was correct, Mr. Mill strove to secure it for the public, or 
 at least all its future increment. Now he was far too just a man, 
 and far too scrupulous about the rights of property, to counsel 
 the confiscation of that which he believed was the product of 
 scarcity. He certainly held that population had pressed on the 
 means of subsistence, and that in this matter at least the gain ol 
 the few was derived from the stint of the many. He also believed, 
 as was natural from his principles, that the growth of rent was 
 inevitable and progressive, and, as is usual with economists who
 
 2i6 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 do not study facts, he concluded that the present conditions of 
 human industry and supply were permanent, that it was idle to 
 anticipate that the cost of freight would be materially reduced, 
 and that foreign and distant places would ever come into compe- 
 tition with the home producer. For, as I have often stated, one 
 of the most inveterate vices in merely speculative political economy, 
 is that of believing that the present is the limit of the future, and 
 that in dealing with human industry you may predict existing 
 restraints as enduring hindrances. But they who study the facts 
 contained in the history of human industry are much less con- 
 fident about what he has named the elastic band. 
 
 There was more reason on Mr. Mill's side, in his sinister antici- 
 pations as to future supply, than in many other, but similar, 
 predictions. For assuredly there are no commodities which have 
 more of that natural protection which is implied in cost of freight 
 and the use of intermediaries than agricultural produce of all kinds 
 has. Mr. Atkinson gives the cost of freight from the Western 
 States of the Union to Liverpool at lis. a quarter, even under 
 present conditions of exceedingly, some say ruinously, low freights. 
 Mr. David Wells, one of the acutest of American economists, and 
 for that reason ostracised by his protectionist fellow-countrymen, 
 puts it at 9s. from Chicago. Now fairly good wheat-growing land 
 in England, under proper cultivation, ought to produce four 
 quarters, or thirty-two bushels, an acre. Every acre, then, of such 
 land has in natural protection from 44s. to 36s. an acre, an in- 
 direct assistance to farmer and landowner which no other producer 
 enjoys to anything like the same amount. There must be some 
 deeper reason than mere prices to account for the declaration 
 constantly made by British farmers that they cannot cultivate 
 land to advantage, when the American producer is so heavily 
 handicapped in the competition of supply. Perhaps in the course 
 of our analysis we shall be able to come on the cause. You will 
 see at a glance that the remedy is not artificial protection. Those 
 of us who are old enough, now not many, to remember the days 
 of the old Corn Laws, can well recall how incessant, during the ex- 
 istence of the system, was the cry of agricultural distress. It is not 
 found in the end, depend on it, that exceptional profits come from 
 robbing one's neighbours, or indeed that economical intolerance is 
 economical wisdom. 
 
 1
 
 THE THEORY OF ECONOMIC RENT. 217 
 
 Mr. Mill proposed to buy out the landowners, and so secure the 
 unearned increment to the nation. I did not at that time indeed 
 anticipate that the unearned increment might turn out to be an 
 unexpected decrement, but 1 had a strong opinion that it was an 
 hypothesis which might very well be baseless. Of course, if I 
 pretended to be wise after the event, I could show how grave an 
 error would have been committed if, fifteen or twenty years ago, 
 the state had been induced to give consols value for the existing 
 interests of the landowners, and how certain it is that the intoler- 
 able, the ruinous bargain would have been repudiated, especially 
 if Parliament, as is its wont, had added 10 per cent, to the price 
 as compensation for disturbance. But though I did not foresee 
 what has happened, I should have anticipated its possibility had 
 I known then as much about the history of agricultural rents as I 
 know now. 
 
 My objection to the scheme was that, even if it could be proved 
 to be economically advantageous, it would be politically unwise. 
 Had it been carried out, and had the rent of land continued to 
 rise so highly that the liabilities created by the legislation would 
 have been met, with the probable compensation, and the official 
 costs of managing the great national estate been annually cleared, 
 I should still think, or have thought, that the experiment was a 
 huge mistake. A landowner, even the most greedy and covetous 
 of landowners, is, after all, a human being, who would rather be on 
 good than on ill terms with his neighbours, is open in a hundred 
 ways to pressure, and does not dare to outrage public opinion. 
 But in the nature of things, an office has no such feelings. Clerks 
 and surveyors would have far less scruple in selling a man up 
 than the most resolute of landlords. I offer no opinion about the 
 resistance made in Wales to the incidence of the tithe averages. 
 Of course there is a radical difference between a tithe, even under 
 the name of a rent-charge, and a rent. For the tithe rent-charge 
 is leviable on produce, whereas, as I have said, ultimately, if not 
 immediately, a rent is derivable from profits which are in excess 
 of the ordinary rate of profit in agriculture, or in analogous call- 
 ings. The extraordinary profits of the cultivator may disappear, 
 he may even be working at less than the normal profit, though, 
 if the conditions of agriculture are satisfied, this is unlikely, even
 
 2iS INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 if it be not impossible. If, however, it did occur, rent would ulti- 
 mately disappear altogether. But the tithe rent-charge would 
 not. If the destruction of profit were due to scarcity, i.e.^ bad 
 seasons, and prices rose without advantage to the cultivator, the 
 tithe rent-charge would rise with them, and production which 
 could not pay a rent would still be liable to tithe, and to an in- 
 creased tithe. The incidence and the effect of tithe are not 
 altered, though they were modified by the great commutation 
 made more than fifty years ago. 
 
 Now in this struggle with the Welsh farmers the clergy and 
 the lay impropriators have been infinitely more considerate than 
 the Ecclesiastical Commissioners are. The loss to the former, 
 especially to the clergy, was far more serious than it could be to 
 the Commission, which possesses, in addition to vast estates in fee, 
 an enormous accumulated fund in consols. But the Commis- 
 sioners — I am not criticizing them, but only referring to the obvious 
 animus of an official organization — have not only demanded the 
 assistance of the police, and the forces, in order to effectually 
 distrain ; but have actually aggregated a further squadron of 
 emergency men — in other words, have vindicated their rights of 
 property by the levy of a private army. The process, I presume, 
 is legal, but it is strangely novel, and, in my humble judgment, 
 dangerous. But what the Ecclesiastical Commission has done with 
 the Welsh tithe rent-charge, a land office would infallibly do with 
 the tenants of the State. I would rather treat with the most 
 greedy private owner than I would with the most considerate of 
 officials. You may baffle the former, you may decline to treat 
 with him if his claims are exorbitant ; but with the State as the 
 universal landowner, from whom you cannot escape, who can 
 exact what terms he pleases from your necessities, and will exact 
 them in order to justify the bargain and to get a reputation for 
 shrewdness, the tyranny would be insupportable. I do not dwell 
 on the enormous cost which would be involved in the establish- 
 ment of an office with such universal duties. 
 
 Besides, all governments, even the strongest, are weak, corrupt, 
 and incitably committed to favouritism. Owning but a very 
 limited estate, the Woods and Forests have from time to time per- 
 petrated enormous jobs. Governments depend on influence, and
 
 THE THEORY OF ECONOMIC RENT. 219 
 
 somehow or other, even under the most jealous scrutiny, influence 
 is paid for. What shall we say of the economical prescience which 
 would, in pursuit of a hypothetical and doubtful advantage, 
 create a central monopoly, turn the landowner, who, after all, 
 knows he has duties, however unwise he may be in the perform- 
 ance of them, into the recipient of a quarterly payment at the 
 Bank of England, with the full freedom of transferring his 
 claim to all and sundry, and substituting in his place a govern- 
 ment office. An economist and a politician may have very strong 
 opinions about landowners, but for my part I should think an 
 economist worthy of the order of the strait jacket if he gravely 
 wished to substitute a government office for them. 
 
 So much for the proposal of Mr. Mill. Mr. George, as you 
 know, goes far beyond him. He would not, indeed, substitute 
 a government office for the landowner, but he would appropriate 
 any scrap of value in the soil, other than that which labour has 
 provably induced upon it, without mercy, without compensation, 
 by the simple operation of taxing it up to its full value, or, as 
 economists say, its fertility. It is no matter to him that one 
 man has invested the savings of a life in agricultural or building 
 land, another in houses put on land, or in any form of labour 
 produced wealth. With Mr. George the former should be con- 
 fiscated, the latter should be respected. Everything, he alleges, 
 which the individual makes, is, and should be, his own ; every- 
 thing which is due to the bounty of nature is common property, 
 or rather the property of the taxpayers. Mr. George sweeps away 
 all difficulties of detail, neither good or easily soluble. It is 
 enough to say that we do not claim bygone receipts from these 
 anomalous and undeserving owners. The whole of taxation is to 
 be derived from the fertility of land. Then will come, he tells us, 
 the milleniuni of labour. 
 
 The social philosophy of Mr. George diffi:;rs greatly from that 
 sour and malignant talk which characterizes most of those 
 writings of continental socialists with which I have felt bound 
 to be more or less familiar. I have read the book with not a 
 little pleasure. It is very human. It is very possible that the 
 author has more disciples and devoted followers on this side the 
 Atlantic than he has in his own country. I have met hundreds 
 of people to whom it is a complete economic gospel.
 
 220 INDUSTRIAL AND COMMERCIAL HISTORY, 
 
 The great charm of " Progress and Poverty " is in the author's 
 profound sympathy with the sorrows of labour and the dominant 
 sincerity of his convictions. Most American economists are 
 cowardly and dishonest. They discuss the labour question and 
 invariably decline to examine into the effects of the American 
 tariff on wages. 
 
 From these vices Mr. George is free. He is full of courage, and 
 he never disparages ; indeed, so convinced is he, he never thinks 
 of an opponent. He appears to have counted the cost of his 
 social heterodoxy, and to be resigned to it. He is not, when his 
 pen is out of his hand, a competent controversialist. In conver- 
 sation — I speak from meeting him — he can no more reason than 
 the founder of a modern religion does. He can be baffled by the 
 shallowest sophistries, as I have seen him baffled, when he hap- 
 pened to be in the right. The fact is, his political economy is a 
 creed. He learned it in the struggle with the furious climate 
 and the malignant soil of New England. He believed in it all the 
 more when he cast his lot among the Californian miners. He 
 was convinced of it when he saw the dens in which the workmen 
 of American cities pay for less than the decencies of life. But 
 the kernel of his theory is to be found in the generalities of two 
 English economists, Malthus and Ricardo. The conclusions of 
 the former are crude, and those of the latter — I am speaking of 
 the rent theory only — false. Mr. George repudiates all that 
 Malthus wrote, the germ of birth in his population theory, and 
 is not, I think, very far wrong in the disparaging estimate which 
 he makes of that person's abilities. But he accepts Mr. Ricardo's 
 theory, concludes that the writer has discovered in it the key to 
 all human misery, and credits parliaments and governments, 
 either ignorantly or intentionally, with the machinery by which 
 labour is degraded and beggared. I need hardly say that a man 
 who has a warm and sturdy sympathy with the class from which 
 he sprang is not likely to be nice about remedies when he is 
 convinced of the origin of disease. Opinion, like action, I need 
 hardly tell you, owes much to its surroundings. Of course, even 
 so honest a man as Mr. George is, is not to be excused by^his 
 character when he is in the wrong. 
 
 Mr. George believes that " rent is the result of price. A number
 
 THE THEORY OF ECONOMIC RENT. 221 
 
 of men, no matter how, have gained possession of the soil in civi- 
 lized countries, and exact a merciless toll from industry. As long 
 as this system continues the tolls obtained from the monopoly 
 grow, and inevitably absorb all but the bare subsistence of the 
 labourer. Soon they will grind down the legitimate profit of 
 capital to the same beggarly condition, and the favoured idler 
 will appropriate all wealth to himself. There is, to be sure, a 
 remedy. No human authority has a right to give away, in per- 
 petuity, what belongs to society itself, and is essential to the 
 existence of society. The property which the people possess is 
 the mere creation of law. It is not necessary that the law should 
 have been dishonest ; it is enough that it is mistaken. The 
 wisdom of the American constitution has declared that even the 
 laws which Congress passes may be revised and annulled by the 
 Supreme Court. The analysis of the social economist proves that 
 the recognition by the State of the sacredness of rent was a mis- 
 take. The law of rent, formulated by Ricardo, proves that it is a 
 danger. It is the sole and sufficient cause why the only producers 
 of wealth, the capitalist and the labourer, toil all night and take 
 nothing. Away with it." And Mr. George gets as angry, and I 
 may say as loftily angry, as a Hebrew prophet. He has his 
 followers, and as long as people err about rent he will find his 
 following become a faith, perhaps a crusade. 
 
 It seems but a little change to-day. You are wholly wrong. 
 Rent is not the outcome of price, but of profit. I was told the 
 other day that this dictum of mine strengthened George's posi- 
 tion, and made it almost unassailable. Let us sec. 
 
 If rents are the outcome of prices it is difficult to avoid the 
 conclusion that the landowner is, potentially at least, the public 
 enemy, who is to thrive on the misery of his fellow-countrymen, 
 whose gains are to be curtailed by sharp legislation, who is to be 
 reduced from mischief-making to impotence, in pursuance of the 
 inalienable right of every society to protect itself from ruin. If 
 circumstances lend, or seem to lend, themselves to such a result, 
 if landowners have, under a mistaken interpretation of their rights 
 and powers, acted as though they could take all from the occupier 
 beyond the bare means of life, it is clear that intervention is 
 inevitable, as it has recently been asserted to be, on principles, for
 
 222 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 errors in judgment, fostered by mistaken conceptions of econo- 
 mical relations, may as much need correction by law as deliberate 
 wrongdoing. If, in short, rent is the outcome of prices, the 
 landowner need consider no person's interest but his own, and 
 claim from the State, till the State becomes enlightened and 
 indignant, the literal fulfilment of all contracts which he has 
 imposed upon the unprotected and helpless occupier. Now I am 
 well aware that there is a widespread opinion to the effect that 
 this power of unlimited inaction exists, and that nothing but 
 generosity or fear checks its exercise. I have often been told that 
 no change in our system of local taxation, under which all charges 
 are put on occupiers, will lighten the lot of such persons at all, 
 for that the landowner can at once levy an increased rent fully up 
 to the remission. The statement, indeed, betrays a total ignor- 
 ance as to the principles which govern the incidence and shifting 
 of taxation, but the opinion on which it is founded is dangerous, 
 because it infers that the position of the landowner is inevitably 
 anti-social and out of harmony with all other interests. 
 
 But if it be true that rent is the outcome of profits, and the 
 history of agricultural rent, and even of ground or building rent, 
 is absolutely conclusive on this point, when the economic basis of 
 rent is examined, and irregularities of individual or collective 
 action are checked, as I hope to show that they must be checked, 
 the Avhole aspect of the situation changes. The landowner takes 
 his place in the general harmony of social interests. If his present 
 and future interests are to be and remain unimpaired, he is pro- 
 foundly interested in the prosperity of the occupier, because in the 
 success of those who occupy the soil, in which he has ownership, 
 lies the continuity of present, and the prospect of future, rent. He 
 has to consider the advantage of others if he has a care for his own 
 advantage. The sufficiency of his tenant's capital, and vigilant 
 care that that capital may be undiminished by any act of the rent 
 receiver, are subjects on which, in his true interest, he should be 
 nearly as anxious as the tenant himself ; for if the landlord's rent 
 absorbs the tenant's capital, the rent verges, as we now know, to 
 extinction. And, beyond doubt, the present condition of British 
 agriculture is due to the absorption of agricultural capital by 
 exorbitant or exhaustive rents, rents which no profits would bear.
 
 THE THEORY OF ECONOMIC RENT. 223 
 
 The process by which this result has been brought about is per- 
 fectly familiar to those who have studied modern agriculture, and 
 has been expounded by such authorities as Sir James Caird, Mr. 
 James Howard, and Mr. Bear, among others. Nor will a revival 
 of agriculture be possible until landowners as a body reverse their 
 policy, and study how to assist the accumulation of agricultural 
 capital by honest contracts with their tenants, as assiduously as too 
 many of them in time past have been induced, to their own ulti- 
 mate ruin, to reduce and appropriate it. 
 
 Rent, then, is all that remains over the average rate of profit 
 derivable from various industries when every other claim is satisfied. 
 Exceptional rates of profit derived from exceptional abilities em- 
 ployed in various industries cannot, until they are diffused (and 
 some of them never can be) among all the competitors in each 
 industry, are not and cannot be, attacked by rent. This is true 
 of agriculture, as it is of manufacture, of trade, of professional 
 capacity. The ingenuity of no landowner can tax the abilities of 
 exceptional inventive power, of exceptional business intelligence, 
 of exceptional professional skill, fertilities as real, as solid, as sub- 
 stantial as any unearned increment or national fertility. To be 
 more correct, we should call it discovered and utilized fertility in 
 land. And, for my part, if one exceptional advantage, discovered 
 and appropriated by an individual, is to be made the subject of 
 legal confiscation, I cannot see why the fertilities of human inven- 
 tion and perseverance should not be subjected logically to the same 
 absorption. Where, indeed, the capacity is so diffused as to be 
 universally acquired, it is possible, under favourable conditions, 
 that the rent receiver may come in for his share. He can obtain 
 it with safety only when every other interest is satisfied. 
 
 I do not think rents are more sacred than any other kind of pro- 
 perty. If a buyer has made a bad speculation in land, I do not see 
 that he has any more claim to the consideration of society than the 
 purchaser of railway stock, which pays no dividend, or of canal 
 shares and turnpike trusts, obsolete or nearly obsolete forms of 
 property. The State is no more called on to guarantee rents than 
 it is to guarantee dividends. On the contrary, it is perfectly jus- 
 tified in regulating the price demanded for the use of a natural 
 or artificial monopoly. It is no answer to the statement that land
 
 224 INDUSTRIAL AND COMMERCIAL HISTORY 
 
 is a natural monopoly to say that abundance of it is always in the 
 market, any more than it is an answer to the demand that the 
 monopoly of transit practically enjoyed by railways is, due regard 
 being had to existing and indeed permanent interests to be regu- 
 lated by law, met by saying that railway stock is freely and abun- 
 dantly sold on the Stock Exchange. When Selden attacked the 
 theory that tithes were a divine institution, the clergy had him put 
 in prison for his pains. A few years later the Long Parliament 
 began to attack the human institution of tithes, and the clergy 
 took to quoting Selden's book as an authority on behalf of their 
 interests. 
 
 But though I do not believe that rent is more sacred than any 
 other kind of property, and hold that it is, and must be, more pecu- 
 liarly under State control, unless good sense obviates the necessity 
 of State control, a result greatly to be desired, I cannot see how 
 it is less real and less entitled to the protection of the State than 
 any other kind of income-yielding investment is. Let us assume, 
 and this is a large assumption, that the growth of rent has been 
 entirely spontaneous. I happen to know that much is due to the 
 untiring energies of the landowners in the eighteenth century, not 
 as some foolish people say, to their outlay on permanent improve- 
 ments, but to their diligent study of the art of agriculture, and to 
 the proofs which they afforded to the tenant farmer that the new 
 system was profitable. But let us admit that it is spontaneous, as 
 it must be conceded that the rent of most building sites unques- 
 tionably is. 
 
 To whom should it go ? It cannot, by the general law which 
 governs profits, that other conditions being equal, the tendency of 
 profits is to an equality, remain with the occupier. His profit 
 satisfied, the residual value of what he produces is property. If 
 this is to be treated as his own he becomes, pro tanto^ a second 
 landlord, and has that which he can sell, still retaining his business 
 profits. I cannot see how it can be made out to belong to him. 
 He has no more created it than the landowner has. Had he 
 created it, a strong case of ownership could be made out on his 
 behalf. But by the terms of the hypothesis he has been in no 
 sense its author. It should belong to the State say Mr. Mill and Mr. 
 George. But is all exceptional fertility to be appropriated by the
 
 THE THEORY OF ECONOMIC RENT. 225 
 
 S'ate? If so, how can you separate the capacity of land, the dis- 
 covery and adaptation uf which is the result of human intelligence, 
 from any other capacity which gives a new utility and a new 
 value to matter ? Is it likely that human intelligence and inven- 
 tion will be stimulated, nay, even continued, if over every effort 
 after industrial improvement the State is to step in and claim the 
 ownership of the resultant value. I have never been able to dis- 
 cover any one who has a better title than the existing owner, of 
 course under equitable and intelligible conditions. 
 
 Perhaps some of you have read the story of Frankenstein. The 
 style of the narrative belongs to a past age, and to one of the most 
 unpleasing periods of English writing. But the obvious inference 
 of this story is highly instructive. It describes the results which 
 ensue to those who undertake the reconstruction of society. 
 
 lb
 
 III. 
 
 CONTRACTS FOR THE USE OF LAND. 
 
 The excessive rise in agricultural rents — Two bad arguments — Con- 
 solidation of farms— Decli7ie in agricultural enterprise— Irish rack- 
 rents— Comparison of English and Irish land systems— Judicial rents 
 — Tenant right — Recent legislation for the United Kingdom — Lord 
 Leicester's lease. 
 
 I HAVE, I trust, pointed out to you, in my last lecture, what is the 
 true theory of economic rent ; that it is the resultant of an 
 excess of profits over that which satisfies the industrial agent in 
 agriculture, and that it has been, when natural and spontaneous, 
 developed entirely from the progress of improvement in the art of 
 agriculture. So far is it from being the case, as Mr. Ricardo and 
 Mr. Mill have alleged, that improvements in the art arrest rent, 
 that the fact is, these improvements have been the sole cause of 
 natural or economic rent. That this is the truth will be manifest 
 to those who have given themselves any trouble to analyse the 
 causes which have, historically, developed rent. I can discover, 
 beyond the inevitable errors which ensue from the metaphysical 
 treatment of economical topics, nothing which could have led 
 these eminent writers into so mischievous and delusive a theory 
 except the fact that, as long as an agricultural improvement is the 
 sole property of an individual, the exceptional profits which he
 
 CONTRACTS FOR THE USE OF LAND. 227 
 
 derives from his exceptional skill cannot, except under an operation 
 which I shall presently describe, and then perhaps only to a 
 limited extent, be appropriated by the landowner under whom he 
 holds. When, in the eighteenth century. Smith and Bakewell 
 made the capital discovery, in the herds of cattle and sheep, that 
 the selection of such stock as laid on meat rapidly, and at the least 
 cost, which came to maturity early, and in the hands of the dealer 
 had the least possible amount of bone and offal, was, or would be, 
 of great profit to the farmer, no landlord, till their skill and 
 system of selection became the common property of all farmers, 
 could appropriate a penny of their exceptional profits. Similarly, 
 though in a less degree, purely agricultural improvements remain 
 the advantage of agriculturists till the knowledge or skill is 
 diffused. When they do become diffused they are the subject, 
 sooner or later, of economic rent, and economic rent is that excess 
 of value over average profit, which comes and always has come from 
 solid agricultural improvement. As I have several times told you, 
 this rent, entirely legitimate as I take it, was in the eighteenth 
 century almost wholly the outcome of the energy and success with 
 which many English landowners adopted the new agriculture, 
 which had been long practised in Holland and Flanders, and 
 instructed the tenants by the fortunate results of the landowners' 
 experiments. 
 
 You will not, however, be slow to anticipate that the settlement, 
 by the action of the landowner, of a genuine economic rent 
 demands, on the part of such a landowner or his agent, a thorough 
 acquaintance with the conditions under which alone agriculture 
 can be successfully and permanently carried on. Every man who 
 has anything to hire out, or lend, must understand the business of 
 those who become tenants or borrow. There is an adage that 
 excessive interest implies a bad security, and similarly the offer of 
 a rent from a perfectly free agent, which every well-informed hus- 
 bandman should know to be impossible without trenching on 
 profits, and ultimately on capital, should be treated as suspicious 
 and declined. It is no use for a landowner to say, " My tenant 
 offered me a rent which I knew the land could not bear, but that is 
 his lookout " ; just as it is no use for a banker to say, " My customer 
 offered me interest on a loan, which I know will leave him loss
 
 228 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 instead of profit in his business." A banker who makes reckless 
 loans at high interest has no one but himself to blame if his 
 advances are lost. A landowner who ;lets land at impossible rents 
 will have no one but himself to thank if his land is at last thrown 
 on his hands in bad condition, if he finds it ultimately impossible, 
 the process of unwise letting having gone on extensively, to let his 
 land at all, except on ruinous terms, and even if he drags down all 
 rent, that of the prudent and foolish landowner alike, by his unwise 
 acceptance of impossible rents. It is not always prudent to accept 
 an attractive offer in the letting of land, any more than in the 
 investment of savings. 
 
 But, it may be asked, why has this widespread misconception 
 of the situation arisen ? You evidently intend to imply that, up 
 till recently, landowners have accepted rents which a proper ex- 
 perience or knowledge of the facts would have led them to decline. 
 If they have been lacking in such experience or knowledge, they 
 have employed agents or surveyors, whose business it is to inter- 
 pret what land could bear, or what tenants with adequate capital 
 could reasonably offer. In the most defensible cases, that is, in 
 those where the extra rent has been pressed on the owner or his 
 agent by competing tenants, there was one natural cause for an 
 error in judgment. It is that, up to about 1874, the rent of agri- 
 cultural land has been steadily rising. In the twenty years which 
 preceded 1874, ^^ ^ve know from the income-tax returns of farmers' 
 rents, the increase was actually 26^ per cent., and there is reason 
 to believe that, during this period, the area of purely agricultural 
 land has diminished rather than increased, partly owing to the 
 extension of market gardening, partly owing to the growth of 
 towns. Now, such an increase explains, perhaps justifies, the 
 acceptance of rents which in the end the tenant has found it 
 impossible to pay. The calamities which have overtaken the 
 tenant and the landowner might be well disguised under such a 
 competitive increase, which is, after all, in accord, to a very great 
 extent, with economic history. But this statement neither explains 
 the real origin of the situation, nor the causes which have led to 
 the present crisis. Too much rent has been paid, and has been 
 paid, not out of profits, but out of capital ; and this absorption of 
 capital by rent must have been either the outcome of ignorance or
 
 CONTRACTS FOR THE USE OF LAND. 229 
 
 of compulsion, or of both. An examination of the circumstances 
 will prove that both these agencies, if one can call ignorance an 
 agent, have been at work with rents, and that these have been 
 far more powerful factors in the result than foreign competition 
 and low prices, and even than the disasters of 1879, which merely 
 gave the final blow to the old system. 
 
 A man who carries on any business, especially one like agricul- 
 ture, which is open to peculiar risks of climate and market, and 
 does not keep accurate accounts, invites ruin. The risk is no doubt 
 lessened when he is to a considerable extent the consumer of his 
 own products. But the British farmer, as a rule, does not in these 
 latter days keep accounts. In the thirteenth and fourteenth 
 centuries such accounts were kept with the most scrupulous 
 accuracy and minuteness, and the consumption of produce on the 
 farm was debited as exactly to the gross receipts of agriculture 
 as the purchases were. So much for the agriculture of England 
 five or six centuries ago. In the eighteenth century, Arthur 
 Young's tours are full of illustrations as to how landowners and 
 farmers could and did take stock annually of their position, and 
 carefully interpreted the gains and losses of the year, or the special 
 crop. But in the present day, a bankrupt farmer is rarely found 
 to have kept an intelligent account of his income and his outgoings. 
 Under such circumstances, it is not wonderful that his capital slowly 
 and insensibly melted away, that his personal expenditure was 
 unreasonable, that he neglected small economies and small profits, 
 that he wasted his substance without knowing it, and that his 
 scale of expense was out of all proportion to his capital and its 
 reasonable profits. For a man may be an excellent and accom- 
 plished agriculturist, but be a very bad man of business, and no 
 man can be a worse man of business than he is who utterly 
 neglects a balance sheet of income and expenditure, of profits and 
 losses. 
 
 Perhaps the imprudence of the British farmer was greatly 
 stimulated by a fashion which grew up thirty or forty years ago, 
 of consolidating small farms, and building homesteads, which were 
 oiiFof all proportion to the possible capital and income of the 
 occupying tenant. It used, before the agricultural trouble came 
 on, to be commonly said that land was a luxury which none but
 
 230 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 rich people could indulge in, that it only paid 2, or, at best, 
 3 per cent, as an investment, and so on. Land was, and, to a 
 great extent, is still, an investment which gives more social con- 
 sideration and influence than any other kind of property does, and 
 such advantages tend to heighten the price of that to which they 
 are attached. Land in England, too, is peculiarly free from burdens. 
 It pays no probate duty, and a modified succession duty. It is, 
 unlike land in other European countries, liable to only a nominal 
 tax for revenue purposes. The charges which are essential to its 
 having anything but a prairie value are paid by occupiers, and 
 not by owners. Even the tithe, which was commuted fifty years 
 ago at a reduction of 25 per cent to the titheowner, in considera- 
 tion of the benefits which this personage would obtain by the 
 substitution of a rent-charge in place of feudal tithe, was shifted 
 from the landlord to the occupier. In recent years, too, ancient 
 charges on land have received subventions from imperial taxation. 
 Now, it stands to reason that a property which is so peculiarly 
 favoured should under ordinary circumstances bear an exalted 
 price in the market. 
 
 The second argument, confidently and, it seems to me, ignorantly 
 or sophistically alleged, that land pays a low rate of interest on the 
 outlay or purchase money, is easily disposed of. People, indeed, do 
 not say so now. But it will be plain that a security which, till re- 
 cently, has steadily risen in value, and might probably be reasonably 
 expected to continually rise in value, will bear a price in which the 
 expectations of the future are included. If one capitalist in the days 
 of Queen Anne, invested his savings, amounting to ;^ioo,ooo, in 
 the public funds, and another purchased to the same amount land, 
 each would probably have received some ;^6,ooo a year by his 
 investment. But if the same property is held at the present day, 
 each by the descendant of those ancestors, the former would be 
 receiving ^2,500 a year, the other ;^6o,ooo. It is true that in 
 Anne's age so great a rise in the rent was not anticipated. Had 
 it been, it would have appeared in the price, as the vendor or 
 purchaser anticipated the character and period of the rise. But 
 it was in the knowledge of men at that time that in little more 
 than a hundred years rents had risen twelve times, and it was 
 quite reasonable to conclude that they would continue to rise,
 
 CONTRACTS FOR THE USE OF LAND. 231 
 
 however uncertain the process and the period might be to which 
 they would owe their rise, at which the rise could be realized. 
 Now, that such a rise was, till recently, anticipated is plain from 
 Mr. Mill's theory of the unearned increment, and more plain from 
 the passionateness with which this expectation was avowed when 
 the English and Irish Agricultural Holdings Acts were being dis- 
 cussed in Committee. I am disposed to believe that not a few 
 persons regret that they adhered so vehemently to what is, after 
 all, a doubtful hypothesis. 
 
 The consolidation of small farms into one or a few of large 
 size was an act of very doubtful wisdom. In the nature of things 
 there is always more competition for moderate-sized holdings than 
 for large ones, for there are always more agricultural capitalists of 
 moderate than of large means. But the temptation to reduce the 
 cost of repairs on many homesteads, after the obligation of these 
 repairs, consequent on the practice of rackrenting became general, 
 by substituting a few new ones in their place, was very strong, and 
 there was a fashion for large farms, not very prudently encouraged 
 by agents. But much more injudicious was the erection of farm 
 buildings, which were out of all proportion to the capital and 
 income of the tenant. There is no greater temptation to extra- 
 vagance than the occupation of a house whose dimensions, quite 
 apart from the rent, are beyond the means of the tenant. I have 
 known many five-hundred-acre farms on which, at the best of 
 times, the tenant has no more than ^5,000 of capital, from which 
 he could not expect a profit of more than 10 per cent, at the 
 best, who has had a house built for him which suggests, encourages, 
 induces an expenditure of ^T 1,000 a year. My friend Lord Ducie 
 informed me a few years ago that one of the greatest troubles 
 which he had with his Oxfordshire estate was in the sumptuous 
 homesteads which his father-in-law had built to five-hundrcd-acre 
 farms. Unless I am strangely misinformeo, the principal cause of 
 the trouble into which one of our colleges has recently fallen, a 
 trouble which induced it to solicit a temporary relief from Con- 
 vocation, was due to a similar error in judgment. It may be also 
 affecting others, but I have reason to believe that I am quite 
 accurate in this case, for when the consolidation and rebuilding 
 was going on, I expressed my doubts to the Bursar of the time, as
 
 232 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 to whether his course of action Avas politic. And I am pretty 
 confident that at the present time — and I could cite many facts 
 in support of my statement — small farmers have done better, and 
 will do better than large ones, and, if for no other reason, because 
 the supervision and personal labour which the former have given 
 to their holdings, are still a considerable part of the capital outlay 
 which they make on the land. 
 
 I am far from exonerating the farmer from his share in the 
 catastrophe which has happened. Had he kept proper accounts, 
 he could never have offered such competitive rents as he did 
 offer, he never could have endured the process which I am about 
 to describe. Had he duly informed himself of his position, he 
 never would have lived in the lavish style which was too custom- 
 ary with his class fifteen or twenty years ago, and would never 
 have neglected certain branches of his calling which he has most 
 unwisely dropped. Above all, he could never have been gulled 
 by imaginary remedies or have striven after vain expedients. In 
 many cases, the men who have ruined him have fooled him. At 
 one time they bid him dream that the Legislature will provide for 
 his distresses, by taxing everybody else's food ; at another, they 
 encourage him in his demand that the local taxation, which 
 should in part at least be borne by the landlord, must be put on 
 the shoulders of the general public, and that he is to be eased at 
 every one else's cost. But such men, undertaking to advise the 
 farmer, never have the candour to say what is the truth. " We 
 have ruined, have beggared you by impossible rents ; we have 
 practised on your ignorance and want of arithmetical knowledge 
 and method, to slily extort from you what you could not possibly 
 pay without trenching on your capital. We have, in our own 
 persons, put before you an example of wanton extravagance of 
 mischievous, and not over-honest waste ; and we have bidden 
 you, on one pretext or the other, to imitate us as far as you can in 
 our follies and our vices." They do not say this, but they con- 
 stantly allege that they are the farmers' friends, when they are, 
 and have been, his most secret and persistent enemies. 
 
 The process by which this mischief has been induced is very 
 simple and intelligible. I have mentioned it already in an earlier 
 lecture, but I must recapitulate, perhaps expand, my statement
 
 CONTRACTS FOR THE USE OF LAND. 233 
 
 here, because it is the key to the topic which I am handling 
 to-day — the Regulation of Rents. Under the ordinary tenure of 
 agricultural land, the dispossession of a tenant involves an inevi- 
 table loss of capital. I have been accustomed to put this at 10 per 
 cent. Sir J. Caird states that it is 15 per cent. Now, if a tenant 
 has the full capital which is needed for adequate cultivation, he 
 will have £10 an acre on or in the land. Let his tenancy be one 
 of 500 acres, and his rent X5°0) the figures being merely hypo- 
 thetical. Now, in this case dispossession would mean a loss, how- 
 ever negligent or however careful he may be in keeping accounts, 
 of ;^5oo on my figures, of £7$^ O" ^ir James Caird's. Two 
 shillings and sixpence an acre more rent, though it is an increase 
 of 12^ per cent., and might eventually be more ruinous than the 
 loss I have referred to, does not, to men who are slovenly or 
 negligent in keeping accounts, seem so considerable as a 10 per 
 cent, loss at once and at a stroke. Now, I never met any fair 
 or honest person, who knew what the relations of landlord and 
 tenant have been, till the recent breakdown of the system, who 
 hesitated to admit that the single and sufficient cause why the 
 tenant's capital has been extinguished, is the payment of rent out 
 of capital imder the process which I have described, and the 
 threat of dispossession if the advance was not conceded, though 
 the practice has been defended on the ground that till recently 
 others would take the land, if the tenant gave it up ; and that the 
 owner was justified in exacting a competition rent to the full. 
 But many things are justified which in practice turn out to be 
 exceedingly foolish, and of the follies none is worse than the per- 
 manent ruin of an interest for the sake of a temporary gain. 
 
 Of course, if the tenant has made beyond the ordinary outlay of 
 a skilful farmer, an outlay which involves irrecoverable loss on dis- 
 possession, a further expenditure on improvements of a more or 
 less permanent character, he is still more open to aggression, and 
 still more open to serious loss by the compulsory and penal 
 exaltation of his rent during the period of his tenancy. Now 
 they who study the accounts which Arthur Young gives of the 
 new agriculture in England, just at the close of the third quarter 
 of the eighteenth century, will find that he constantly comments 
 on the courage and enterprise of certain tenant fanners in his day,
 
 234 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 who, relying on the equity of their landlords, ventured on heavy 
 and serious charges for the improvement of their tenancies. But 
 up to the last quarter of the eighteenth century, landowners knew 
 their business, and would no more have thought of curtailing their 
 tenants' capital by a penal rise of rent than they would of plun- 
 dering his barn, carrying off his haystacks, or appropriating his 
 sheep. Towards the conclusion of the century, when a worse and 
 a more ignorant spirit sprang up, one hears a very different story. 
 The agricultural reports sent to Young's Board of Agriculture 
 from the various counties are full of complaints as to arbitrary 
 rent-raising on the part of landlords, and the serious detriment 
 which the practice was to the tenant-farmers' capital, and the 
 adequate cultivation of the soil. Now, I am convinced that if the 
 true doctrine of rent had thus been inculcated, viz., that rent is the 
 outcome of agricultural profit, and not of agricultural prices, the 
 unfair and suicidal practice which I have described would never 
 have become customary among landlords. 
 
 I have stated before, and I repeat it, that for skill in manipu- 
 lating land, the British farmer has no compeer. In parts of 
 Normandy, in Belgium, and in the Rhenish Palatinate, there are 
 agriculturists who nearly rival him, but their agriculture suffers 
 from the capital defect of live stock as a rule. But the British 
 agriculturist hardly goes beyond the ciiliura annua. The soil 
 of New England is exceedingly sterile as a rule, but the hedges 
 are full of peach trees. The fruit trees on the Bavarian and 
 Norman farms and by the Belgian homesteads are abundant. 
 But you do not see them in the United Kingdom, for the farmer 
 fears that if he plants he will have to pay an enhanced rent on his 
 own improvements. Fruit culture in England would soon dis- 
 pense with the nine millions or thereabouts which we are annually 
 paying for the imported fruit which we could easily grow our- 
 selves, if the farmers were protected against uncertain rent. And 
 what may be noticed in England, is still more marked in Ireland. 
 When I was examining last autumn (1887) the agricultural con- 
 dition of Ulster, and I did so with no common care, I was struck 
 with the all but total absence of all fruit trees about the home- 
 steads, and the exceeding badness of the few apples which appeared 
 in the markets. They dared not cultivate what would be instantly
 
 CONTRACTS FOR THE USE OF LAND. 235 
 
 made a plea for exalted rents, and though to some extent the 
 Irish tenant is protected by the law against arbitrary rent raising, 
 bad and timid habits have been formed, and cannot be easily 
 shaken off. I was struck in reading one or two of the excellent 
 handbooks put out by the Irish Education Board, works which 
 would be well in the hands of some of our smaller farmers, how 
 uniformly silent these manuals are about fruit raising. But I 
 shall have a little to say about Ulster land presently. 
 
 Now I mentioned above that the rise of farmers' rents during 
 the twenty years 1854-73, was 26^ per cent., and that this figure 
 is arrived at by comparing the assessment of agricultural tenancies, 
 in this case the rents returned at the two dates, and it should be 
 noticed that this return does not include market gardens and 
 nurseries. But it must not be imagined that this increase of rent 
 has been identical in amount under all landlords. I know many 
 considerable landowners who have assured me that the rent of 
 their estates has never been raised during the whole of the above- 
 mentioned term. There are I am glad to say many landowners, 
 especially in England, who have recognized the principle that the 
 tenant must make a reasonable profit before he can pay rent at 
 all, and have steadily worked on this principle, in all their rela- 
 tions with their tenants. They have also been proof against the 
 temptation to accept an impossible rent from an unwise competing 
 tenant, being well assured that such a policy is suicidal in the end. 
 But the people who have taken advantage of the situation, and 
 have unduly and disastrously raised their rents, have not only 
 ruined themselves, but have seriously crippled their innocent 
 neighbours. When the catastrophe and crash came in 1870 and 
 1880, over 14 per cent, of the farmers became bankrupt, and all 
 were panic-stricken. Now, under such circumstances, the com- 
 petition for farms was suddenly arrested, and of course farmers are 
 like other men, they offer less and less, as the turn of the 
 market is in their favour. I do not doubt, if the British farmer 
 could have escaped from the loss to which I referred above, and if 
 he had the same facility of turning his capacity and his capital to 
 other callings, the surrender of holdings would have been far 
 more considerable. As it is, the wise and just landowner is 
 punished for the vices of the unjust and unwise landlord, and
 
 236 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 some of the former have been unmeasured in their condemnation 
 of some among the latter. 
 
 A short time ago, a very able, but uncertain, statesman, after 
 warning the British landowners that they would have at an early 
 date to ransom their estates, compared them to the lilies of Scrip- 
 ture, " which toil not, neither do they spin." The word "ransom" 
 110 doubt has an ugly sound, for it suggests successful brigandage, 
 and the recovery of liberty and goods only under duress and 
 compulsory payments. But the word may have a harmless sense. 
 Every one who pays taxes may, by no violent stretch of imagina- 
 tion, be said to ransom the residue by surrendering a part of his 
 substance. Now there should be no objection to a landowner 
 paying his legitimate share of taxation, and there is good reason 
 to allege that at present he escapes from this contribution, and 
 that he has used his exceptional position, not only to evade his just 
 liabilities, but to put not a few of his admitted liabilities on the 
 shoulders of other people. To speak of ransom, then, may be an 
 unpleasant form of giving a warning, that at some time or other, 
 perhaps at no remote time, there will be a readjustment of these 
 permanent liabilities. 
 
 But I entirely demur to the exactness of the scriptural meta- 
 phor. There has been a pretty mischievous activity in many 
 quarters during those fatal twenty years to which I have alluded, the 
 outcome of which has been wholly disastrous. Agents and sur- 
 veyors have taught some landowners how to appropriate their 
 tenants' capital, by insidious and gradual elevations of what were 
 at the best of times full rack-rents, and the landowners have 
 eagerly applied the lesson. The lilies of the field do not, I believe, 
 appropriate more than can be extracted from intelligent and care- 
 ful husbandry. The proper metaphor should have been some 
 noxious and spreading weed, which cannot be eradicated, and 
 finally starve the useful plants. There are persons to be found, 
 and to be found in plenty, unhappily, for whom the lilies of the 
 Held is far too exaggerated a compliment. 
 
 And on the other hand, there are landowners, who labour in 
 the management of their estates as sedulously and as wisely as 
 a merchant or a manufacturer, who give unremitting attention 
 to business, and in their own line are as well informed as any of 
 
 I
 
 CONTRACTS FOR THE USE OF LAND. 237 
 
 those whom Mr. George allows to have made out a claim to the 
 property which they have superintended and de\cloped. There 
 are too few such persons, but they do exist, and are not only a 
 boon to those with whom they have to deal, but an example, 
 vinhappily not followed, to their more mischievous fellows. I 
 could quote instances which are within my own knowledge, but the 
 selection, like that of their contraries, would be invidious. But 
 this I can say, that were all their fellows like them, the legislative 
 regulation of rents would have been, and would remain, unnecessary, 
 the depression of agriculture would never have occurred, the pre- 
 sent sacrifices ofrent receivers would never have been had to be made, 
 and the inevitable consequences which ensue, from the stagnation 
 of the most widespread, the most ancient, the most highly perfected, 
 and the most valuable of our home industries would not have 
 been the painful experience which it is at the present time. 
 
 The evil of which I complain in Great Britain, the arbitrary and 
 constant exaltation of rack-rents without any consideration of the 
 farmer's profits, has been exhibited with even greater plainness in 
 Ireland, and has demanded a still more searching control from the 
 legislature, a control which has been, owing to the ignorance of 
 the British Parliament as to the Irish situation, too often capricious 
 and unreal. I took myself, as a private member, a very active 
 interest in the Land Act of 188 1, but though I had travelled much 
 in Ireland, and had studied its agriculture, particularly in the 
 middle and south of the island, many things escaped my notice, 
 with which I have since become familiar. Now I have been, 
 from my youth up, familiar with land and agriculture. I have 
 studied it since, by ocular survey over no little part of the 
 civilized world. I venture on asserting that, if I viewed it 
 at the proper time, any honest surveyor and I should not differ 
 materially as to the letting value of a farm. With this kind of 
 experience, in 1887, I went through the greater part of Ulster, 
 excepting the County of Donegal, which is practically the same, 
 with some disadvantages of its own, as the barren and con- 
 gested west of the whole island. I came to the conclusion 
 that average arable land in Ulster was worth about two-thinls 
 of average arable land in England, that for ever\- pound an 
 English farmer should pay, an Irisli tenant shoulil pay 13s. 4d.
 
 238 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 But I found the Irish rent, even after the Commissioners' reductions, 
 was double the average Enghsh rent. I arrived independently 
 at this conclusion, and I found it is confirmed by other observers. 
 
 Now I am willing enough to admit that it is a serious thing 
 to interfere in contracts between persons who are prima facie 
 competent to enter into them. The satisfaction of contracts, like 
 the creation of them, is an early, difficult, and necessary part of that 
 education which civilization seeks to achieve. So all important 
 is it, that in the early codes of civilized peoples, the fulfilment 
 of contracts was guaranteed with extreme severity, with such 
 severity, that the working of the law was found to imperil the 
 very society which it was intended to conserve. In course of 
 time, it became necessary to affirm that as the forces of society 
 were invited to enforce contracts, it was competent for society, 
 speaking through its laws, to determine what contracts it would 
 enforce, and to what extent it would enforce those contracts which 
 it recognized. I should weary you with the details of this rule 
 of practice. It is sufficient to say that what I have stated is 
 fundamental to the laws of debt and bankruptcy in our own and 
 in all civilized countries. 
 
 Now if every landowner was ready to recognize that the cul- 
 tivator of the soil had a right not only to his existence from 
 that on which he bestows his labour and capital, but to reasonable 
 profits from his calling, and if the policy of all landowners had 
 been that of those wise and just men whose names I might quote, 
 whom I always refer to with the sincerest admiration, there would 
 be no need for the legal regulation of rents. But the practice of 
 many has been different and has been disastrous. If the con- 
 sequences of this practice had been that of ordinary trade, we 
 might leave the parties alone to the maxim of caveat emptor. 
 But it is in the essence of all contracts, that the parties should 
 be on equal terms, and in the tenancy of agricultural land, 
 however numerous other callings are, and however wide is the 
 choice offered to industrial agents, the tenant is from the very 
 beginning of his holding particularly exposed to a compulsory 
 exaltation of his rent, with the alternative of a severe pecu- 
 niary loss, unless he yields. Nor is this a complaint of yesterday 
 You will find it alleged, always with indignation, and fre
 
 CONTRACTS FOR THE USE OF LAND. 239 
 
 quently with a demand for remedial legislation from the days 
 of Fitzherbert in the beginning of the sixteenth century, to our 
 own time, late in the nineteenth. And besides, apart from the 
 wrong done to the individual, the injury done to society by the 
 appropriation and destruction of agricultural capital is so serious, 
 that nothing but a powerful interest, and a widespread delusion 
 as to the real nature of rent, could have prevented, long since, 
 inquiry into the true relations of landlord and tenant, and a radical 
 change in them, consequent on the interference of law. Nor am 
 I dealing with a mere economical or political abstraction. What 
 I have said was essential has been recognized and acted on in most 
 civilized countries, and must be in all at last. The settlement 
 by law of the relations of landlord and tenant has been adopted 
 in the Scandinavian kingdoms, in Germany, in Holland, in 
 France, though in the latter, I admit, with much suddenness 
 and violence, as you may read, if you come across the volume, 
 with much vividness of description, in Arthur Young's French 
 and Italian tours in the year 1789. A similar reform or modi- 
 fication of long-standing rights was effected in Russia by the late 
 emperor, perhaps, was too long delayed. Now wherever the 
 reform was thorough, and coupled with certain intelligible condi- 
 tions, it has proved eminently successful. 
 
 The legislation of the British Parliament has been of one kind 
 in Ireland, of another in Great Britain. It must be admitted that 
 the cases of the two countries are very different. In Ireland 
 agriculture is almost the sole occupation of the people, and the 
 cultivation of Irish land, as a rule, is by small holdings. The 
 circumstances which have led, and that in comparatively recent 
 times, to the consolidation of farms, have not been present in 
 Ireland. In Great Britain, at least in that part of the island to 
 the south of the Caledonian Canal, there have been infinite 
 varieties of occupation and industry, though these began to be 
 developed after the middle of the eighteenth century, when the 
 country commenced that remarkable, but long delayed, industrial 
 career which has since characterized it. Such new callings depicted 
 the agricultural population by attracting its members into these 
 enterprises. Besides, the experimental agriculture of the eighteenth 
 century needed, or seemed to need, a considerable area for its
 
 240 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 development. It was, or seemed to be, wise to put farms together 
 in order that the new system shotdd have full play. It must be 
 remembered, too, that the improvement in the art was in its 
 beginning entirely, and in its progress mainly the work of the 
 landowners themselves. It is not, indeed, true, as some persons 
 have confidently alleged, that the permanent improvements of 
 land, as homestead building, systematic drainage, and the like, 
 was entirely the work of the landowners. What they did was to 
 prove by their own example that a bold and experimental agri- 
 culture v/as possible. The agricultural reports returned to Arthur 
 Young at the end of the eighteenth century, and the work of 
 Sir John Sinclair, prove conclusively that in many, very many 
 cases, these permanent improvements were the work of tenants on 
 terms of years, and at moderate rents, and even under annual 
 tenancies, with an honourable understanding. In course of time, 
 when the first great elevation of rents had been effected, i.e.^ 
 between 1780 and 18 10, the principle that the landowner should 
 be answerable for permanent improvements, and the tenant only 
 for good husbandry, the latter often very absurdly restricted, pre- 
 vailed, and so rapidly does the memory of an earlier state of 
 things pass away, that the division of capital investment in land 
 is now always spoken of as though it was an ancient and tradi- 
 tional arrangement. In point of fact, at various times in English 
 agricultural history, the relations of landlord and tenant have 
 been very different. After the great convulsion of the fourteenth 
 century, as I have more than once mentioned, the policy of the 
 landowners was to induce the tenant to accept a land-and-stock 
 lease, a fact which I first discovered ; and in order to encourage 
 the practice, the landowner insured his tenant against excessive 
 losses of stock by disease, and as I have also discovered and 
 shown, the guarantee very often proved to be a very serious loss. 
 In the eighteenth century, the form which the stimulus to the 
 new agriculture took, and the outlay of the tenant's capital on 
 permanent improvements was a long lease on easy terms, and 
 practical guarantees given to an improving tenant, against dis- 
 possession, and the inordinate raising of rent. Of course, when 
 the dear times of the thirty years to which I have alluded came, 
 the improvement had been effected, and the exaltation of rents 
 ensued as a thinq; of course
 
 CONTRACTS FOR THE USE OF LAND. 241 
 
 Now no such thing happened in Ireland. The EngHsh system 
 of agriculture, as it was practised in the thirteenth and fourteenth 
 centuries, was introduced into the early English Pale, for Roger 
 Bigod of Edward I.'s time married one of the co-heiresses of 
 Strongbovv, and cultivated his Irish estates on the English model. 
 These estates were principally in Wexford — Mr, Bagnall, in his 
 early history of Ireland, has given what appears to me to be an 
 accurate map of Bigod's estate in Wexford and elsewhere — and 
 the bailiff's accounts are preserved among the rest of the Bigod 
 Rolls in the Record Office. But, as every one knows, the Irish 
 encroached on the Pale, and the early Anglo-Irish settlers readily 
 imitated Irish customs and habits, so readily that the English 
 Parliament denounced capital penalties against the adoption of 
 the Irish dress and customs by the English settlers. I have no 
 doubt that by the time that Henry VIII. attempted the reconquest 
 of Ireland, the greater part of the English Pale had practically 
 become Irish again. 
 
 Now you are probably aware that the ancient Irish land license 
 was a peculiar holding in which several estates were only of a 
 temporary character, a change in the occupancy occurring with 
 every change in the numbers of the sept which constituted the 
 joint settlement. Much such a system, according to Mr. Mackenzie 
 Wallace, prevails in the Russian mir, where the headman of the 
 village undertakes to distribute the common land, and has to 
 meet a good deal of resistance and remonstrance from those who 
 are invited to take more of this land than they feel disposed to 
 accept, and with it some definite responsibilities. The system of 
 Irish gavelkind had been denounced as hostile to all improve- 
 ment, but at the time in which it was formally pronounced to be 
 invalid and illegal by the Irish Bench in 1610, and at the instance 
 of Sir John Davis, no agricultural improvement had been made, 
 not in Ireland only, but in England, for centuries. The motive 
 which induced the decision of law, to which I have referred, was 
 unquestionably that of securing to the new grantees after O'Neill's 
 and Tyrone's rebellion, a mure profitable lordship than the 
 ancient custom could have afforded them. During the seven- 
 teenth century these grantees put on the Irish tenants as far as 
 possible the severest exactions which the law ecu Id enforce, and 
 
 17
 
 242 INDUSTRIAL AND COMMERCIAL HISTORY 
 
 their position would suggest. The condition to which the Irish 
 tenant was reduced explains the ferocious, but abortive, uprisings 
 of 1642 and 1689. 
 
 The improving English landowner of the eighteenth century 
 never appeared in Ireland. He never appeared in Scotland till 
 long after he had finished his beneficent work in England. Swift 
 described the condition of the Irish farmer in the first half of the 
 eighteenth century with considerable plainness, and I well remem- 
 ber quoting passages from his works in the House of Commons 
 during the passage of the Irish Act of 1881, which my audience 
 imagined were taken from some recent writer. Towards the end 
 of the same century, Arthur Young uttered a similarly indignant 
 protest against the condition of the Irish tenant, the oppression 
 and servitude under which he lived, and the extortion to which 
 he was subjected. He was under none of that influence of which 
 his English fellow-subject had experience. He had always been a 
 peasant farmer, or cottier, and towards the close of the eighteenth 
 century, he was encouraged in subdividing his holding, because 
 in this way votes were multiplied for the landlord. The congestion 
 of the Irish mountain districts was the deliberate work of the 
 landowners, and was not due to the recklessness and improvidence 
 of the Irish peasant, as some ill-informed or malignant writers 
 have said. Added to this, every local industry, except the linen- 
 weaving of Ulster, was carefully uprooted by the English Parlia- 
 ment. The system began with the evil days which followed on 
 the Restoration, and was pursued steadily up to the period of 
 Grattan's Parliament, by which time almost the memory of these 
 local industries had disappeared. At the time of the Union, Sir 
 Robert Peel, father of the great minister, and a prosperous cotton- 
 spinner at Bury, expressed his alarm that the inestimable blessings 
 of the Union might have a drawback, in the possible rivalry of 
 the Irish with the Lancashire cotton-spinners. 
 
 Now the extinction of every industry in a country, except 
 agriculture (and the English Parliament intended to make the 
 Irish farmer dependent on English manufacturers for everything 
 he needed), puts a precarious tenant into the worst possible posi- 
 tion as against his landlord. He is tied to a calling from which 
 there is no escape, and to which there is no alternative. He must
 
 CONTRACTS FOR THE USE OF LAND. 243 
 
 take land on any terms, or starve. The situation was so intoler- 
 able to the Scotch settlers of Ulster, that they not only began the 
 Irish exodus to the New World, but furnished the most stubborn 
 and resolute of the volunteers to whom the English Government 
 yielded in 1782. But the Union added to the troubles of the 
 Irish farmer in that he was thereafter constrained to pay rent in 
 increasing quantities to increasingly absentee landowners. These 
 people saw in England how English rents had grown. They did 
 not see how thoroughly the English landowners had deserved the 
 increase, and they very naturally, though with no deserts, claimed 
 to be equally fortunate. Now the late Mr. MacCulloch, who I do 
 not remember to have written anything wise, defended the rents 
 of absentee proprietors. He did not see, perhaps could not see, 
 how such a system operates. Its eflfect is exactly that of a tribute. 
 Now if a victorious general or state can impose a tribute, and the 
 subject country can pay it, it can do so only by offering more of 
 its produce at a less price or profit, in order to cover the balance 
 of its indebtedness, in short, do just as I have described to you 
 in the position of a country whose debt is extensively held out 
 of its own borders. It may be constrained to trench on its 
 capital, in order to meet its liabilities, and become impoverished, 
 without the satisfaction of feeling that it has the smallest equiva- 
 lent for its fragments, or the poor consolation that it has resisted, 
 and been forced to succumb. 
 
 A custom, however, sprang up in Ulster, and in the first place 
 on the estates of the London Companies, whose property had 
 been gradually, and by no means suddenly acquired in consider- 
 ation of advances which those companies had made in order to 
 meet the pressing wants of the first two Stuart kings. It may 
 have been policy, it may have been generosity, which induced 
 these companies to permit the growth of tenant right, and to set 
 the fashion in Ulster. I am disposed to think, from what I know 
 of these companies in the seventeenth and eighteenth centuries, 
 when they were what they professed to be, organizations ot trade, 
 that the latter motive was dominant, though they might have 
 also thought that they were strengthening the l^otestant interest. 
 This tenant right, as you are probably aware, became a market 
 able commodity, and was the subject of much wonder, owing to
 
 244 INDUSTRIAL AND COMMERCIAL HISTORY, 
 
 its being sold at such high rates, even though under rack-rents, 
 which were constantly increased. But, in fact, the tenant right 
 was the price of security against external competition, and the 
 growing feeling that it was morally due to the sitting or present 
 tenant explains in great measure the tenacity with which the 
 Irish cottier has resented any attempt to make his holding the 
 subject of competition among strangers. I have been recently 
 informed that the value of tenant right under the judicial rents is 
 declining. 
 
 Now Parliament attempted, though in no serious fashion, to 
 deal with this subject, Irish rack-rents, in the Parliament of 1868. 
 It is a curious illustration of the imperfect acquaintance which 
 English politicians have of the Irish land system, that under the 
 Encumbered Estates Act, a Parliamentary title was actually given 
 to purchasers of the traditional tenant right of Ulster. The 
 legislation of 1881 recognized the joint ownership of landlord 
 and tenant, and created a body of commissioners whose duty it 
 should be to fix judicial rents. In the nature of things, as I 
 ventured on pointing out, these rents would inevitably be, like 
 the fee-farm rents of the Middle Ages, incapable of future 
 exaltation, and in order to obviate the risk of their future 
 depression — a contingency which, in spite of my very imperfect 
 acquaintance at that time with the actual rents paid before the 
 Act, and to be paid after the judicial rent was settled, I saw to 
 be highly probable — I suggested that the principle of the rent- 
 charge should be adopted, and that rents should rise and fall wilii 
 the price of produce, the averages being taken over short periods.- 
 But at that time, and perhaps still, the mischievous belief that 
 rent was due to the price of products irrespective of profits, and 
 that the unearned increment which had been experienced so long 
 was destined to be continuous was still too strong for my pro- 
 posal that the share of the landlord should be adjusted by the 
 money value of the peasant's produce. Now precisely what I 
 foresaw is come. The rent was made an inelastic money quantity, 
 and, justly or unjustly, the tenants asserted that the valuation 
 was fixed at too high a rate, and that they could not pay it. 
 
 I do not here pretend to enter into the very vexed and thorny 
 question of these valuations, still less into the expedients by which
 
 CONTRACTS FOR THE USE OF LAND. 245 
 
 Irish tenants have recently combined to defeat, or at least to lower 
 them. But I may state, and I think with entire accuracy, that a 
 peasant holding will, proportionately to its magnitude, always pay 
 a higher rent to the acre than a large farm. The reason is two- 
 fold. In the first place, assuming that the occupier does his best, 
 he is more alive to small economies in cultivation than the larger 
 tenant is, and therefore acre for acre, gets a larger produce, to say 
 nothing of the fact that the actual amount of capital which the 
 tenant expends in labour as well as dressing is proportionately 
 greater than that laid out by the larger farmer. In the next 
 place, the proportion of produce which the small tenant consumes 
 from his holding is much greater than that which the larger one 
 does. On this he saves all the intermediate expenses of carriage, 
 markets, and agents. I shall try to form an estimate of these 
 savings in my next lecture, and I think that I shall be able to give 
 you some striking and conclusive evidence on the subject. Now 
 whether the valuation is too high or not, it cannot be denied that 
 Parliament in regulating the relations of landlord and tenant in 
 Ireland, and to some extent in the Scottish highlands, has made 
 a new departure of a most significant kind, and by implication 
 has condemned in a most emphatic way the principle of com- 
 petitive rents. One cannot infer that such legislation is final and 
 will not be extended. 
 
 In regard to English and Scottish holdings, the Legislature has 
 been far less thorough. It has to a limited extent modified as 
 regards land under the plough the ancient legal maxim ctijns est 
 sohim^ ejus est usque ad coeliun, for it has recognized the tenants' 
 property in a limited number of improvements of a more or less 
 permanent kind, and decreed compensation for them, in the event 
 of dispossession. By an Act of Parliament of 1874, the right was 
 recognized in form, but the landlord was allowed to contract him- 
 self out of his liabilities, a permissive clause which led, in my 
 opinion, to the most disastrous results. It would have been better 
 to have offered nothing at all than to have offered an illusory 
 guarantee, especially as well-nigh every landowner availed himseli 
 of the permissive clause. But during the passage of the second 
 Act, there were many of us who thought that I ho most deserving 
 kind of tenant, whom we agreed to call the sitting tenant, tliat
 
 246 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 is the person whose occupation was continuous and continued, and 
 who was therefore presumably the most competent agriculturist, 
 was entirely unprotected by legislation, since the compensation 
 for an exhausted improvement was claimable only when the 
 tenancy was determined, while no security was given against a 
 penal rise of rent, in the case of a tenant who improved and 
 held on ; that, in short, such a tenant might still be compellable to 
 pay an enhanced rent on his own improvements. But our con- 
 tention was too novel, perhaps too premature, to secure 
 consideration, and since that time very serious and very unex- 
 pected incidents have occurred. There has been a panic among 
 landowners and tenants, and unless very marked and substantial 
 concessions are made as to the form of occupancy, I cannot 
 foresee any amendment in the situation. 
 
 Of course it is difficult to revive confidence, especially in a 
 class which is very backward and suspicious. It is difficult to 
 recall capital to an industry in which it has been destroyed. It 
 is difficult to suggest with any hope of success, to a class which 
 is peculiarly tenacious of traditionary practices, any new depar- 
 ture, even within their own industry. Thus we are told that 
 farmers are unwilling to take leases, even on favourable terms, 
 and with great licenses of cultivation. Again, it is too clear 
 that in the rapid accumulation of English capital there is very 
 little inclination to embark any of this capital in husbandry. 
 Again, we cannot get farmers to adopt the Swiss, Danish, and 
 American system of co-operative cheese and butter making, to 
 attempt fruit culture and market gardening on a sufficiently 
 extended scale, or even to resort to careful poultry breeding and 
 feeding. For example, one of my friends, Lord Sudely, has with 
 singular success undertaken fruit culture and fruit preserving on 
 a very extensive scale. But I do not hear from him that his 
 success has stimulated imitation, even in those counties where 
 no extraordinary tithe is alleged to be a fatal bar to horticultural 
 experiment. 
 
 I must, however, bring this lecture to a close. In conclusion, 
 I may invite your attention to Lord Leicester's lease, as I have 
 heard it described. The family of Coke has been distinguished 
 for more than a century and a half for the zeal and perseverance
 
 CONTRACTS FOR THE USE OF LAND. 247 
 
 with which it has followed up agricultural improvements, and for 
 the entirely successful and satisfactory relations which it has 
 established between the landlord and his tenants. Now I am 
 told that the principles of Lord Leicester's lease are as follows. 
 The tenant takes a lease for, say, twenty-one years, entire discretion 
 being given him as to the course of cultivation, and as to sales 
 from the land. At the conclusion of a part of the term, the 
 duration of the lease is extended at the pleasure of the tenant, 
 the basis of the new rent being taken from an average of agri- 
 cultural prices at or about the time of the renewal, so that the 
 rent is continually adjusted, for though prices do not determine 
 profits, they aid usefully in interpreting them. As I have been 
 told, during the term the tenant is allowed a discretion in cul- 
 tivating his land and selling his produce, but if he elects to run 
 his lease out he is very properly put under restrictions during 
 the last three years of his holding. I am told that the system has 
 (operated to the satisfaction of all parties, nor do I doubt that Lord 
 Leicester deals very generously and wisely with his tenants when 
 they undertake permanent improvements of an obvious kind. 
 Now this lease, the particulars of which, as far as my memory 
 goes, I heard from my friend, Mr. James Howard, embodies every- 
 tliing which, in concert with some of my colleagues in the House 
 of Commons, I strove in vain to urge upon Parliament, when 
 the Agricultural Holdings Act was in Committee. But the 
 failures of some people are the successes of others, and I do not 
 doubt that in course of time its natural complement will be added 
 to English and Scotch legislation. But even then, I fear, for 
 reasons already given, the recovery will be slow. The British 
 farmer is more given to illusions than any of his countrymen. 
 Next to him is the ordinary landowner. But this may be con- 
 fidently alleged, that in matters of high public interest the 
 obligation on Parliament to revise and regulate contracts is 
 measured by the stupidity and wrongdoing of those who enter 
 into and make them.
 
 IV. 
 LARGE AND SMALL HOLDINGS. 
 
 Latifundia Italics — Bipod's estate — The enclosures of the sixteenth century 
 — The introduction of the new agriculture — Arthur Young — Scottish 
 farming — The Allotments Act of 1589 — The energy of stnall land- 
 holders — Foreign experience — Poor Law and allotments — The 
 Conacre — Modern experiments in allotments and co-operative farm- 
 ing — Summing up. 
 
 I KNOW no expression in the whole range of economic history 
 and economic criticism, which has been more misunderstood and 
 misapphed than the famous utterance of Phny (" Nat. Hist." 
 xviii. 7. 3), " Latifundia perdidere ItaHam, jam rus at provincias." 
 Tlais statement has been interpreted to mean that the wreck of 
 ancient agriculture in Italy, to those who admitted the truth, 
 " verum confitentibus," was due to the great estates of the Roman 
 nobles, and that the evil was spreading to the provinces. To be 
 sure, Pliny gives some colour to the popular interpretation by 
 saying that six persons " possessed " half the province of Africa, 
 when Nero put them to death. But in fact, Pliny is not thinking 
 of ownership here, but of occupancies in which the free cultivator 
 of antiquity is crowded out, and agriculture on a large scale was 
 carried on by slaves, of which he justly says, " Coli rura 
 ab ergastulis pessimum est." Pliny was advocating a system of 
 small farms, and even of what we should call peasant proprietors,
 
 LARGE AND SMALL HOLDINGS. 249 
 
 for he rightly saw that large holdings were ill-cultivated, that 
 agriculture on a large scale is wasteful, and that the expatriation 
 or extinction of an agricultural population is a national loss. And 
 he goes on to tell a story that in old days one C. Furius 
 Cresinus, a freedman, obtained such great crops from his small 
 farm in contrast with those reaped by those of his neighbours, 
 who had very large ones, that he was charged with bewitching 
 their fields, before the sedile. Put on his trial, he could 
 think of no better defence before the tribes than bringing into 
 court his labourers, strong, well-fed, and well-clothed, his stout 
 oxen, his improved implements of husbandry. Then we are told 
 that he said, " This is the witchcraft I use, Romans ; but I cannot 
 bring into court and show you my careful study, my pains, my 
 toils." As might have been expected, he was unanimously 
 acquitted. And Pliny observes, agriculture consists not in ex- 
 penditure, but in judicious labour. And hence the ancients said 
 that the master's eye was the best dressing a farm can get, 
 or, as another alleged, " Agrum fronte oportat colere, non occi- 
 pitio." You must till your ground with your forehead, not with 
 the back of your head, in which nature puts no eyes, and no 
 useful brains. In dealing with the question as to the dis- 
 tribution of land, one must distinguish between what people are 
 exceedingly apt to confuse — large ownership and large occupancy. 
 Now England has always been a country of large owners. The 
 consideration under which the ownership was acquired will not 
 in many cases, bear examination. It was often dishonest, violent, 
 discreditable. Estates have been obtained and accumulated from 
 the days of the Conqueror to the days of the Georges — oflen 
 in Great Britain, oftener in Ireland — by expedients which de- 
 served a very different recompense. They have been extended 
 and protected by artifices which any respectable lawyer would 
 declare to be nefarious and contrary to public policy. They have 
 been encumbered with charges, till the nominal owner is not only 
 disabled from performing his natural duty by his estate, but is 
 become a mere annuitant, who postures as a great proprietor. 
 Now, I believe that there is nothing more demoralizing than for a 
 person to be driven into an affectation of wealth, when he is in 
 secret driven into the mean aiul furtive tricks of poverty. I am
 
 2 so INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 convinced that not a little of the trouble into which British 
 agriculture has been brought, the process of which I described in 
 my last lecture, is due to the devices which bankrupt landowners 
 have adopted to keep up the semblance of wealth when they were 
 reduced to dire shifts, sometimes by their own misconduct, some- 
 times by the misconduct of those whose debts they have inherited 
 along with a nominal property. A man who is reputed to have 
 ;^ 1 00,000 in consols but has pledged _^90,coo of it to his 
 creditors and has spent the proceeds, is possessed in reality of only 
 a modest competence. But the person who has the same nominal 
 estate in land, but whose debts and mortgages have absorbed 
 ninety per cent, of the capital value of his estate, is in a worse 
 condition, especially if he fancies himself bound to air the pre- 
 tence of being unencumbered. 
 
 It is probable that in the thirteenth century great estates were 
 fewer, and were even larger than they now are. With some 
 exceptions, where accumulation has been the policy of a family, 
 a policy which has very often proved disastrous, I think it as 
 likely that in the eighteenth century they were generally as large 
 as they now are. In one year, 1292, I have counted on Roger 
 Bigod's Norfolk and vSuffolk estates, thirty-four manors on 
 which this Earl of Norfolk was cultivating land. Besides these 
 he had most likely other properties where he was not carrying on 
 agriculture on his own account, and he also had a considerable 
 Irish estate, which he was cultivating in the English fashion to a 
 great extent. But it by no means follows that the mere fragments 
 of his numerous accounts, which have survived the risks of six 
 centuries and are now safe in the Record Office, represent the 
 whole of the great estate which he surrendered to the king after 
 his quarrel with his brother John, and thereby defeated his 
 brother's title to his estate and dignity. Similar facts might be 
 alleged as to the estates of the Earl of Gloucester, although at 
 that time the machinery for direct alienation was by no means 
 easy to work. There was, however, a very effective process of 
 indirect alienation, in the practice of subinfeudation, which was 
 possible after the statute of Quia emptorcs provided certain 
 forms and conditions were carefully observed. 
 
 Now the ownership of land is one thing, its distribution is a
 
 LARGE AND SMALL HOLDINGS. 251 
 
 totally different thing ; and if wc take into account the number of 
 persons who had an absolute fixity of tenure under various kinds 
 of rent in the thirteenth century, there never was a time in 
 English history in which land was practicall}^ so subdivided, or, in 
 an economical sense so distributed, as in that period and onwards. 
 And the reason is not far to seek. Agriculture in England then, 
 as is the case with agriculture in Ireland now, was the principal 
 occupation of the whole nation. The landless man was a 
 dangerous character then, one on whom his neighbours had no hold, 
 a probable outlaw and brigand. He was as much suspected by the 
 landowners and occupiers as a weaver in the fourteenth century 
 was by the clergy, when a weaver was deemed to be a synonym 
 for a Lollard or a heretic. Every one held land, not the peasant 
 farmer only, but the day labourer ; and far into the eighteenth 
 century when landlord cultivation revived, the great proprietor 
 relied largely for his labour on the small farmers about him. 
 Even the artisans held land, as I have found from such building 
 accounts of those early ages as have been preserved. I very 
 much doubt, indeed, whether out of the great towns, any artisan, 
 or for the matter of that, any trader could have safely calculated 
 on continuous business in his calling. 
 
 Now, as I have stated more than once, at two well-defined 
 periods of English economical history, the great landowners 
 conferred incalculable benefits on English industry. These 
 periods are from about 1260 to 1350, and from about 1730 to 
 1780. I do not say that the process was entirely lost after those 
 dates, but it was seriously interrupted, in the first case by the 
 great plague, in the second by the enormous exaltation of agri- 
 cultural prices at the conclusion of the eighteenth century. But 
 during each epoch as much of the lesson as could be taught was 
 taught. The English farmer learned from the experimental 
 landlord, as for example, Bigod, how to cultivate his land accord- 
 ing to the best lights of the time. He applied the teaching 
 thoroughly, he was exceedingly thriving during the great war of 
 succession in the fifteenth century, and out of his prosperity aro.se 
 that great body of moderate freeholders who were so strangely 
 numerous in the beginning of the seventeenth century, and were 
 absorbed so strangely at its conclusion.
 
 252 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 The fourteenth and fifteenth centuries, though the rate of 
 production from land was small, were eminently a period of small 
 occupiers and owners. It was a common practice, at a time when 
 currency was scarce, to pay workmen with occupancies more or 
 less permanent, just as it was common up to the potato famine of 
 1846 to pay Irish labourers by conacre, ?>., a plot of prepared 
 potato ground. I do not, indeed, mean to imply that the Irish 
 labourer was as well treated in the nineteenth as the English 
 labourer was in the fifteenth century, but merely to point out 
 that a similar cause led to a similar expedient. To be sure the 
 small holding of these by-gone times differed in one particular of 
 great im,portance from the small holding of later experience. The 
 peasant farmer of the earlier age had the advantage of abundant 
 common pasture. It would have been impossible, in the existing 
 state of the art of agriculture, for short farming to have been 
 practised, except under the condition of abundant common of 
 pasture. Hence any attempt to curtail this right, and to enclose 
 common of pasture gave rise to the most violent discontents. We 
 are expressly told that the formidable insurrection of Ket in Edward 
 VI. 's reign, the turbulence of which cost Norwich its prosperity, 
 the suppression of which, on mild terms, cost Somerset his life, 
 was expressly due to an authorized and arbitrary enclosures. You 
 may read ho\y a fifteenth-century farm was managed in Latimer's 
 sermons, where he describes his father's tenancy, and the occupa- 
 tions of those who were engaged on the land. You may find it 
 in the thirty-first sermon. It is most delightfully bucolic. 
 
 It must not be believed that landlord cultivation quite died out, 
 and with it the example of enterprise and educated intelligence. 
 I have found sufficient evidence to prove its continuity, not 
 sufficient, unluckily, to infer as to its character. Thus Battle 
 Abbey, up to the Dissolution, kept the farms in its own hands. 
 Sion kept one. It seems, too, till the home farm of Westminster 
 Abbey (now known as the Coven t Garden Estate) was wrested 
 from it by Henry, in order to endow the newly bestowed rank of 
 the Earl of Bedford, was similarly cultivated. But after the 
 Reformation I have found some examples of landlord cultivation. 
 Cranfield, afterwards Earl of Middlesex, and Financial Minister of 
 James I., cultivated his Essex estate. So did D'Ewes, the
 
 LARGE AND SMALL HOLDINGS. 253 
 
 Parliamentary Puritan, his in Suffolk. It may be that records of 
 such practice are still existent in old muniment rooms. But in 
 the nature of things, the interest in such old accounts was very 
 transient. " Etiam perierunt ruiiicie." After the chaos and orgie of 
 the Restoration, all agricultural industry becomes obscure. Even 
 the literature of the art retrogrades. Worlidgc, the authority 
 of the time, is not such a valuable authority as Hartlib. 
 
 Gregory King estimates that in his time there were 310,000 
 small freeholders and farmers. He gives a little under sixty-eight 
 acres of arable and pasture to each family, or a little over twenty- 
 nine acres arable. It would appear, then, that at the close of the 
 seventeenth century, the average size of a holding did not differ 
 materially from that which I hav^e found it stand at in the fifteenth 
 century, and that England was, and remained, a country of small 
 occupiers well into the eighteenth century. The proportion of 
 pasture to arable in this estimate is entirely in accordance with 
 the state of agriciiUiire at the time, for winter roots were 
 practically unknown, and artificial grasses very exceptionally 
 cultivated. Hence there was no real rotation of crops, and 
 little winter feed beyond hay and straw. Nor could a beneficial 
 change, I truly admit, have been expected from these small 
 occupiers. Low as the rents were, they were .severe rack-rents, 
 paid with difficulty and the subject of incessant complaint. As I 
 have mentioned before, Gregory King credits the English farmer 
 with the least possible power of saving from his meagre income. 
 I suspect, however, that as he was the principal consumer of his 
 own produce, his comlition was more comfortable than King 
 makes out. 
 
 I do not as yet know, perhaps I shall never exactly fiiul mit, 
 where the new agriculture was first seriously taken up and by 
 whom. It was certainly not known in 1721, the date of Mor- 
 timer's Essays on Agriculture, for he knows nothing ot it. It 
 certainly was known in 1730, for Lord Lovell, siibscc|ui. ntly tin; 
 first Lord Leicester of the Coke family, practised it. 1 1 was 
 known to Tall in 1 73 1, for lie describes it, and ilwelK on its 
 advantages. But, again, it is not clear whether he or Lord 
 Townshend of Raynham, began it. At any rate it was adopted 
 on a large scale in Norfolk, the original home of many a great
 
 254 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 economical development in England, and of many other develop- 
 ments besides, for it is impossible to limit the direction in which 
 an active intelligence runs when it once takes root. Unfortunately 
 it is possible to destroy a local intelligence, and to blot out the 
 memory of its existence. I could illustrate this extinction of local 
 spirit and local character by many instances. There are foolish 
 and shallow people who talk of their fellow creatures as though 
 they were in a process of continual progress. But this may be in 
 one of as marked retrogression. The theory of continual pro- 
 gress is, I believe, a Teutonic fancy ; I trust for the sake of the 
 race that it is a Teutonic reality. The German people has not yet 
 recovered from the Thirty Years' War. They had a great lee- 
 way to make up after it, and have not been always wisely guided 
 in the path of progress which has been laid out for them. 
 
 The chief feature of the new agriculture was the change which 
 it made in the rotation of crops, in the substitution of roots, 
 especially the turnip for bare fallows, in the careful hoeing and 
 weeding of the root crop, and in the fertilization of the soil by the 
 feeding the root crop by sheep. Not a single stage of this process 
 had to be omitted. There were unhoed and unweeded turnip 
 crops in Lord Lovell's time, and fifty years after, during the 
 travels of Arthur Young. These rubbishy crops were fed by 
 sheep, who got little good from them, and the land less. Jn 
 Youncr's days the system of bare fallows was not extinct, and 
 over and over again he denounces the folly of the farmer in 
 language which is not philosophic. But after a few years, and in 
 his later works, for this excellent person had, fortunately, a long 
 period of literary activity and of practical usefulness, the changes 
 which he desired came, not indeed always as he would have 
 wished them, and the English farmer became the model, perhaps 
 the envy of other nations. I know nothing fresher and more 
 genuine than the way in which this honest and serviceable man, 
 wherever he may be, in Irish country houses or Irish hovels, 
 amonor English squires or English farmers, in the hotels of Paris, 
 in the country seats, in the roturier's homestead, among the nobles 
 of Italy and the meteycr, after listening to Italian operas, and 
 (Trowing fervid over the genius of the dramatist, Alfieri, who ran 
 away with the wife of the young Pretender, loses no opportunity.
 
 LARGE AND SMALL HOLDINGS. 255 
 
 and carefully chronicles his opportunity of proposing the British 
 tnast of " Speed the Plough." 
 
 Now it is certain that this passion for experimental agriculture, 
 of which Young was the annalist and the economist, did great, 
 incalculable service to the art. It is satisfactory to note that 
 Young was everywhere recognized as the pioneer of the new 
 system, a praise which, though he was by no means a braggart, 
 he does not disclaim. And though I believe that a great variety 
 of motives induced the landowners of the day to take this new 
 departure, and that all their motives were not of the highest, as 
 indeed a very slight study of eighteenth-century literature would 
 prove, it would be invidious to disparage or vilify the public good 
 which they effected. They certainly doubled the produce from 
 the same area of corn-growing crops, they kept the land in 
 constant activity and in constant heart, and this without pressing 
 unduly on their tenants. They gave the farmers time to learn, 
 and they did learn. In point of fact, the indisposition of these 
 experimental and improving landlords to raise the rents of their 
 sluggish tenants, rouses the wrath of Young, who constantly avers 
 in his tomes, that the new agriculture will never make due progress 
 till it was stimulated by a genuine rack-rent, by which he means 
 a rack-rent which will force the farmer to make the profit which 
 can be made by agriculture. The process by which the tenant 
 farmers' capital is drained away by successive and invidious 
 additions to a rent which is already full, would have roused his 
 sharpest wrath. The man who looked with a forgiving eye on 
 the events which occurred in France during the autumn of 1780 
 was not likely to have looked favourably on a grasping English 
 landowner, who has striven to save himself from the consequences 
 of his own extravagance and profligacy byslily and surreptitiously 
 appropriating his tenant's capital. But the process of improve- 
 ment, even under these favourable conditions, went on slowly. 
 Haste, who wrote on agriculture just after the peace of Paris, 
 busies himself with discussing the motives which make the 
 English farmer so unaccountably slow in accepting these demon- 
 strable improvements. But great progress was made between 
 1763 and 1800. 
 
 The progress of Scottish agriculture was much slower and inuJi
 
 256 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 later. For an agricultural tenant to camp on a landowner's 
 estate for eighteen years, to bring his stock and labourers with 
 him, to build for this term his homestead and shelters, and at the 
 end of the term to entirely clear out, with all his belongings and 
 all his followers, and migrate to some other locality, does not 
 appear to me to promise good husbandry. On the contrary, it 
 seems to account for the exceeding prevalence of gipsy hordes 
 among an otherwise shrewd population, and to explain the 
 sympathy with which these wanderers were viewed. In fact, 
 the system worked detestably. You can read of its worst forms 
 in Hugh Miller's reminiscences, especially when he speaks of the 
 obstinacy with which the Scottish farmers would tie the ploughs 
 to the tails of their horses, and in the despairing efforts of Mr. 
 Triptolemus Yellowby in Scott's *' Pirate." The real author of 
 Scottish agriculture was Sir John Sinclair. 
 
 That the small occupier profited by the experiences which he 
 gathered from experimental agriculture on the new system, is, I 
 think, clear by the cessation of their complaints against rack- 
 renting, common and bitter enough in the seventeenth century, 
 when, as I have told you, the average rent of arable land was 
 4s. 6d. an acre at most, and the rise of rents, within seventy years, 
 without, I repeat, these complaints, to more than double the rate 
 at which they previously stood. For the first seventy years too 
 of the eighteenth century the price of some kinds of farm produce, 
 e.g.^ meat, was stationary, that of butter and cheese rose very 
 slightly, that of wool sensibly, even greatly declined, while the 
 average price of grain was considerably below that at which it 
 stood in the previous century. On the other hand, the price of 
 agricultural labour rose, a proof, if any were needed, that the rate 
 of wages rises and falls with the price of food, only when the 
 labourer is getting the wages of a slave, as indeed he did after 
 these latter days were over. The rents of the eighteenth century, 
 for at least the first three quarters of it, were genuine economic 
 rents, t'.e.^ they were paid by the excess of agricultural profits over 
 normal or average rates of profit. 
 
 There were two facts, however, connected with the agricultural 
 system of the eighteenth century on which I m\ist dwell for a short 
 time. In the year 1589 Elizabeth's government passed an Act,
 
 LARGE AND SMALL HOLDINGS. 257 
 
 under which four acres of land were to be annexed to every new 
 labourer's cottage which was built, and crowding in cottages was 
 prohibited, by inflicting very substantial penalties on owners who 
 permitted more than one family to inhabit the same tenement. 
 This statute, I am persuaded, was one of the many expedients 
 which Elizabeth or her advisers adopted with the hope of staving 
 off what at last became inevitable, the Poor Law of 1601. The Act 
 did not annex these plots to existing cottages, and the preamble 
 of the Act, like the preambles of most Acts of which I have had 
 experience, is misleading, for I assure you that these preambles 
 contain more of what I will venture on describing as Parliamentary 
 hypocrisy than any documents extant, even the most florid circulars 
 of a new gold mine. But as time went on, the Act was operative. 
 As population increased it became a substantial obligation, and at 
 last, for a reason which I shall immediately give, a substantial 
 grievance, which Parliament removed by abrogating the Act early 
 in George III.'s reign. But while it lasted it was a palliative, and, 
 I have little doubt, a substantial palliative to pauperism, especially 
 during the cheap times and higher wages which prevailed for 
 nearly three-quarters of the eighteenth century. 
 
 The grievance which was felt arose from the custom of en- 
 closures. As I have stated, enclosures of land were practised early. 
 There is a justification for some of them in very ancient statutes, 
 with which I need not trouble you. But in the reign of Anne 
 enclosures began by private Acts of Parliament, and the volumes 
 of these private Acts, of which we possess a large, but I believe 
 not an exhaustive series in the Bodleian, are crowded with these 
 Acts. Now, under what became a stereotyped system of enclosure, 
 it was not difficult to enclose common fields and common of pas- 
 ture, as some said at the time, to "steal the common from the 
 goose," but it was difficult to deal with these small holdings 
 annexed to cottages. They were often added by independent 
 owners, who would stand out for their terms before they yielded. 
 Arthur Young complains bitterly of the hindrance which these 
 cottage holdings put in the way of his favourite enclosures, and, 
 sympathetic as he generally is with everybody who cultivates 
 land, great and small, I think that he is a little hard on the 
 peasant, who enjoyed this substantial addition to his wages. So 
 
 IS
 
 258 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 the Act of Elizabeth was repealed. Perhaps it is new to some of 
 you, that the doctrine of three acres and a cow — for near two 
 centuries four — attached to the labourer's cottage, has so respectable 
 an antiquity as an Act of Elizabeth, a date which precedes the 
 creation of any existing dukedom and most peerages. 
 
 The consolidation of small farms and the creation of large 
 holdings is comparatively recent. It had scarcely begun a century 
 ago It began with the entire concurrence of the tenant farmer. 
 For a period the time was passed away in which the farmer, in his 
 bitterness at rack-rents and their discouraging effect on him, if he 
 ventured on bold cultivation, used to mutter : 
 
 " He that havocks may sit, 
 He that improves must flit," 
 
 a saying which was current up to the middle of the eighteenth 
 century, and meant that a man who racked his land coukl stay, 
 while he who cultivated it well would have his rent raised upon 
 him, and be made to pay interest on his improvements, or go. In 
 those days they went. Their descendants have stayed, and have 
 been ruined. Rents were raised on prices, and agricultural dis- 
 tress, even when the artificial famine was created during the great 
 Continental War, was an incessant complaint. 
 
 The excuse or defence of consolidation was the opportunity 
 which it gave of developing improvements on a large scale. It 
 was alleged, and with considerable show of reason, that experi- 
 mental agriculture could not be carried on, except on a large scale 
 and with abundant capital, that labour-saving machines could not 
 be purchased and applied, and that the economies of invention 
 could not be adapted to agriculture, unless an adequate area were 
 given for their use. Another reason, not generally avowed, but 
 certainly effectual, aided in bringing about the change. It was 
 plain that the regular and permanent charges put on the landlord 
 by custom, and generally borne by him, would be lessened. It 
 stands to reason, that if three farms of one hundred acres each 
 could be turned into one of three hundred, far less outlay would 
 be required in buildings and repairs, and this was felt more sensibly, 
 when, under the miserable fiscal system of the United Kingdom, 
 any article which could be used in any of the industrial arts was,
 
 LARGE AND SMALL HOLDINGS. 259 
 
 visited by heavy excises. But there was another motive. The 
 custom which had hitherto been so common among large land- 
 owners, of carrying on experimental agriculture on part of their 
 own estates, and with their own capital, was beginning to decline. 
 This becomes clear from Young's reports, and the condensation 
 of their results with the addition of more recent experience given 
 by Sir John Sinclair. 
 
 I cannot see that the possession of land in very large quantities 
 by very few persons is in itself injurious to agriculture, or to agri- 
 cultural progress. The balance of evidence, gathered from the 
 experiences of the thirteenth and eighteenth centuries, would 
 induce one to bcliev^e that in England, at least, it has not been 
 harmful, but the reverse. I cannot, then, merely considering the 
 condition of agriculture, share those alarms and echo that indig- 
 nation which arc customary with many who have analysed the 
 New Domesday. It may be, and in some particulars is, I think, a 
 bad thing, that comparatively few people have an interest in the 
 land of the country, for reasons which I hope to give. I am sure 
 that it is a bad thing that families are protected from the conse- 
 quence of their own vices by settlements of land, and that it is a 
 worse thing, when profligacy has brought ruin, that such persons 
 as have put themselves into so evil a plight should be further 
 assisted by Private Acts of Parliament settling their estates, and 
 thus invoking the aid of the Legislature to do that which every 
 sound lawyer, every rational economist, and every practical states- 
 man knows to be intrinsically indefensible under the best circum- 
 stances, and is wholly without apology in the worst. It is very 
 injurious to the public interest again that a man sliould have the 
 nominal ownership of land when, by reason of his enilxurassments, 
 he cannot possibly do his duty by it, and satisfy Mr. Hrununond's 
 famous dictum, that property has its duties as well as its rights. 
 We want a short and thorough remedy for the grave inconvenience 
 of bankrupt landowners, to whose practices much of the trouble 
 which has overtaken agriculture may be traced, by whose attitude 
 the Legislature has had forced upon it the odious but inevitable 
 duty of arbitrating between landlord and tenant, and revising con- 
 tracts for the use of land. P>ut a wise and prudent landowner, 
 who understands his own duties, and recognizes the right of his
 
 26o INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 tenants, is in my judgment one of the most useful of Englishmen, 
 'and I do not grudge if he be the owner of half a million acres, or 
 rejoice if he be reduced to not a hundredth part of that quantity. 
 If all landowners had been like him we should have had no agri- 
 cultural trouble, no waste of agricultural capital, and none of that 
 widespread distrust which incontestably at this time paralyses the 
 efforts of those who would reconstruct the system of a bitter past. 
 Undoubtedly, too, it is easier to deal, when remedial measures are 
 urgent, with a few than it is with many, and it will be easier still, 
 when some of the nonsense which the worst landowners habitually 
 utter is exposed and repudiated ; and I reiterate, without fear of 
 contradiction, that there is no person who gives more honest and 
 intelligent labour to his calling, and his livelihood which is his 
 rent, than a wise and prudent landowner does. And whatever my 
 opinion maybe worth it is, at least, disinterested, for my ownership 
 of English land amounts to less than an acre of it. 
 
 That it would be well for social reasons if land were distributed 
 among a larger number of persons I readily allow. In the first 
 place, the present system is invidious. In the next, it is very ex- 
 tensively abused. Now, I believe that the principal strength of 
 communism, the danger which is menacing all society, is in the 
 badness or unwisdom of governments, in the maintenance of unfair 
 and irritating privileges, and the use of the force of legislation in 
 order to confer exceptional advantages on certain classes. Men 
 who are dissatisfied with the machinery which they think they 
 have created, or could at least control, are very apt to become 
 anarchical. They are still more apt Avhen they despair of its jus- 
 tice. Now the particular form of injustice which is at present 
 most keenly felt is that the English law and, till recently in a still 
 more marked degree, the Irish law, allows the landlord to con- 
 fiscate his tenant's property, under an antiquated maxim of law, 
 which was not just when it was enunciated, and is now flagrantly 
 unfair. Thus it seems to me that a system of perpetual ground 
 rents, such as under the name of chief prevails in the North of 
 England, and of feu in Scotland, should become the only legal 
 lease. I am persuaded that the hope of agricultural restoration in 
 England and Scotland is vain until a similar security is afforded 
 to the agriculturist. Now a qualified or limited ownership, in
 
 LARGE AND SMALL HOLDINGS. 261 
 
 which the capital rule is preserved, that the hmittd owner is secure 
 ill his own outlay, effects all the good results of a greater distribu- 
 tion of property, the most satisfactory result being that the more 
 people there are in a country who are interested in its prosperity, 
 the more solid and substantial is the resistance which they make to 
 those, who with the best intentions, perhaps, would reconstruct 
 I iciety. 
 " The magic of property," says Arthur Young, " turns sand into 
 gold. Put a man into a precarious possession," he continues, " and 
 he will turn a garden into a desert ; put him into a state in which he 
 can securely anticipate the fruit of his own labours, and he will 
 turn a desert into a garden." The only powers of the soil, as he 
 saw, which are of any value, are eminently destructible, and can 
 be destroyed in a very short time. The indestructible qualities 
 of land are those which make it infertile. If they are wholly in- 
 destructible, the land is absolutely barren. A granite rock, a 
 mountain moor, a peasant's holding in Donegal or Galway possess, 
 I regret to say, the indestructible powers of the soil, while the hop 
 lands of Farnham and Kent, the corn of Gowrie and the Lothians 
 have qualities which have been induced by intelligence, and may 
 be extinguished by the absence of that quality, even though the 
 modern Banquo smiles on them, and points to them as his. What 
 Young was thinking of was the improved and guaranteed lease of 
 Flanders, a system of tenure which more than two centuries ago 
 English writers on husbandry pointed to as the model for imitation. 
 By this lease the barren heather of Brabant has been turned into a 
 fertile garden. The process was exceedingly simple. The tenant 
 took a holding say of a hundred acres at a rent for twenty years. 
 The rent was no doubt higher than that which was procurable 
 for the land before he entered on it, for hope raises rent, just as 
 despair at fair dealing depresses it. The tenant was to cultivate 
 it as he pleased, and as he could, and was guaranted the difference 
 at the conclusion of the term between the developed vahie of the 
 land and its original rent. In other words, the uncann d iiien- 
 ment, which is really the tenant's property, was secund in limi, 
 instead of being appropriated by the person who has in rcjuityno 
 colourable right to it. The Brabant fanners and the Brabant 
 landowners had too much sense to be gulled by t lie nonsense whit h
 
 262 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 socialists have talked about indestructible fertility. Of course, at 
 the end of the term, if the owner saw proper he resumed possession, 
 and either cultivated the improved holding himself, or made terms 
 with the old tenant, or procured a new one. And I repeat there 
 was a value in the term, analogous to that which the tenant 
 farmer acquired in Ulster, a value which I have been accustomed 
 to call the price of security. 
 
 Now, setting aside the personal reasons which may have sug- 
 gested and brought about the consolidation or aggregation of 
 farms, it may be worth while to inquire whether the benefits which 
 are ordinarily alleged to come from large holdings are not unreal, 
 exaggerated, and unduly claimed for them? In the first place, it 
 is not infrequently the case that in past times, perhaps in present, 
 tenants have been disposed to apply for holdings, to the adequate 
 cultivation of which their capital was entirely insufficient. In my 
 youth, and in my own native place, where there was not for a long 
 time a single tenant farmer, I have seen an analogous evil, with its 
 natural results. I mean the purchase of land with borrowed 
 money, and its cultivation with insufficient means. I well remem- 
 ber one of these yeomen, the nominal owner of near a thousand 
 acres, who was, according to the lights of the time, a capable agri- 
 culturist, who was thrifty, almost penurious, but who died a poorer 
 man than he was when he inherited a more modest estate. He 
 had bought, borrowed the greater part of the purchase money, 
 and carried on his agriculture with a stinted and insufficient 
 capital. I imagine that this has been markedly the characteristic 
 during the last twenty years with the tenants who have taken 
 land at competition rents. But I should have thought that if 
 there was one thing which a prudent landowner might insist on 
 knowing, and on which he would be affirmatively advised by an 
 honest agent or surveyor, it would be the amount of capital which 
 an intending tenant proposed expending on his holding. That 
 this knowledge was not obtained, or if obtained was not com- 
 municated by the agents to the owners, is plain from the informa- 
 tion which I received from one of the largest agents in this 
 district, ten or twelve years ago, that the average capital to the 
 acre, possessed by the tenants of the estates which he administered, 
 was not more than £^, when efficient agriculture requires ^lo.
 
 LARGE AND SMALL HOLDINGS. 263 
 
 It is by no means certain, even if the tenants of large holdings 
 cm purchase improved machinery, that smaller ones, as is pre- 
 Litned, will do without them. More than twenty years ago, in my 
 lirst Irish agricultural tour, I met my friend Mr., now SirBernhard 
 Samuelson, at a Limerick hotel. Some of you may know that 
 he is, among other things, an agricultural implement maker. Now 
 lie told me that on that day he had learned from his Limerick 
 ;i';cnt that between forty and fifty of the Limerick farmers, not 
 Diieof whom held over forty acres of arable land, had boucht 
 1 eaping machines. The arable land in the valley of the Shannon 
 is rich, and yields great crops to good cultivation, but I should 
 think it probable that few English tenant farmers on such holdings 
 would have purchased such expensive machinery. Besides, it is 
 quite possible for small tenants, when they are clearly convinced 
 that the new process is an economy, to hire machines or to pur- 
 chase them on co-operative principles. When the practice o 
 drilling had by no means superseded that of broad-cast sowing, it 
 was common, as I know, for persons to own drills, and let them 
 out, or do the work for farmers. And drilling is an operation 
 now near two centuries old. 
 
 It should always be remembered, too, that, acre for acre, a small 
 occupier, if one considers only his labour and that of his family, 
 expends more capital on his holding than a large one does. The 
 tenant of a ten-acre farm in the better parts of Ireland constantly 
 gives his own labour and that of his family for the whole or the 
 greater part of the year to his land, with the effect that the culti- 
 vation is almost that of a garden. Beyond the manure which he 
 collects from his stock, he constantly puts many loads to the acre 
 of peat and lime, or, in some parts, limestone, and will) the best 
 effects. It is true, that most of his capital is in his labour, and 
 there are persons who, believing that the economy of labour is the 
 end of agriculture, censure such unremitting toil as he bestows. 
 But I cannot believe that the true end of agriculture is to get a 
 scanty crop at a cheap rate. If I did, a western wheat larm in 
 Iowa, where the cultivator, never appearing excejit at seed time 
 and harvest, gets some twelve bushels an acre from the prairie, 
 would be the perfection of agriculture. No doubt it is an economical 
 benefit to get any result with the least possibh- expenditure, hut we
 
 264 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 must not forget that the result is to be the largest possible. Now, 
 if we can trust the agricultural education books put out by the 
 Irish Society, it is possible for a peasant and his family to live 
 plentifully from the produce of, not only a ten-acre farm, but fn^n 
 one of five only. To judge from the columns of questions and 
 answers on agricultural topics, which are found in every Irish 
 paper, even those which popular opinion in England conceives to 
 be entirely and strongly political, the Irish peasant is exceedingly 
 anxious to get the best and most recent agricultural information 
 supplied to him. 
 
 The policy which has consolidated farms is by no means an 
 unmixed advantage. The object of a landlord is, I presume, to let 
 his land. But it seems obvious that the competition for large 
 farms, even in the most stirring times, must be less than the com- 
 petition for those of more moderate size. Some years ago the 
 bursar of one of our colleges began the system of consolidation. 
 I put the question to him whether he could be quite so sure of his 
 tenants under the large-farm system. He iwas confident, and I 
 was incredulous. It would have been well, as I have been told, 
 for the corporation whose affairs he administered, if he had par- 
 taken of my doubts, for I am assured that the experiment has 
 been a costly, almost a ruinous, failure. 
 
 There is one feature in moderate farming which is often lost 
 sight of. This is the value of a farmer's own labour. When it 
 is given, and the farmer's own hands are always busy with the 
 work of his farm, I reckon that his own labour on a hundred-acre, 
 or a hundred-and-fifty-acre tenancy is worth at least j^ioo a year. 
 That of his hands may not be worth to him more than a third as 
 much, but there is all the difference between working for one's 
 own profit, and for that of another. I have been informed by 
 several considerable landowners that there is far less distress and 
 depression among small farmers than there has been among those 
 who cultivate large holdings, and far less reduction of rent. I 
 have already stated, and I must repeat it, that some part of this 
 is due to the fact that the proportion of produce which a small 
 farmer consumes for himself and his family is far greater than 
 that which a large holder consumes, and that this portion of his 
 earnings is hardly mulcted at all by the middle-man. Resides he
 
 LARGE AND SMALL HOLLJINGS. 265 
 
 has a more practical knowlcdoc of what land is worth and capable 
 of than a large fanner has, to say nothing of a multitude of small 
 economies which his neighbour is too negligent or slothful to take 
 advantage of — in the dairy, the poultry yard, and the garden. 
 
 There is a good deal of literature about small farming, by 
 which I do not mean labourers' allotments, on which I shall 
 have a word to say presently, A good many years ago, Mr. 
 Samuel Laing gave an exceedingly instructive account about 
 peasant farming in Norway. Mr. Thornton, in his plea for 
 peasant proprietors, incorporated with his own notes of Channel 
 Island farming, what had been written on the subject at the date 
 of his publication, some thirty years ago. Mr. Mill discovered 
 and expatiated on some of the indirect advantages which accrued 
 from the system, and gave the weight of his authority in favour 
 of it. Many persons have commented on the remarkable 
 efficiency of peasant farming in Belgium, from which country, as 
 I was recently informed, the longest and finest flax fibre is 
 regularly imported, to be manipulated at Belfast, and re-exported 
 as yarn. The small farming of Holland and Denmark has also 
 been favourably noticed. I have drawn similar conclusions from 
 the Rhenish Palatinate and Bavaria. Very recently, Mr. Samuel 
 Hoare has examined and reported on the small farms ol 
 Denmark. But, on the other hand, M. le Play, and recently 
 Lady Verney, have commented adversely on French peasant 
 farming, mostly as I think from the supposed moral elTect which 
 small estates held by poor and struggling cultivatt)rs have on 
 their owners and occupiers. The evidence, differences t)f race, 
 or as I prefer to conclude, differences in the history of their 
 calling, appears to be on the whole conclusive as to the social and 
 economical value of the small system. It is difficult to say what 
 would be its effect if induced on English agricultural life, for of 
 course I am thinking of farms no larger than twenty or thirty 
 acres, mainly, if not entirely, cultivated by the labour of the 
 occupier or owner. They who have commented on the syMem in 
 England have always insisted that it is more advisable to sell 
 land and rent, than to buy and work it, and point to the gradual 
 extinction of small owners, the low rate of interest on land, and 
 sometimes unwisely enough insist that land \^ tb>- luxury of the
 
 266 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 rich. But if the land of the small owners, when bought, goes 
 into a settlement, the gradual extinction is explained. The 
 reasoning invariably compares land as an investment, and land 
 as an instrument, two widely different things ; and as regards the 
 low rate of interest on land, that I have already disposed of. For 
 the rest, at the present time, very many people find that land i:. 
 anything but a luxury. 
 
 In some of these countries which have been referred to, what 
 is called peasant proprietorship is in reality market gardening. 
 This is particularly the case in the Channel and the Scilly Islands, 
 where the mildness of the climate brings the produce into an 
 early market, where it can be disposed of at high prices. To 
 some extent this is the case in Belgium, to a larger in parts of 
 France. But this is not peasant agriculture in our sense of the 
 word. But I think that, on the whole, Mr. Mill has not exagge- 
 rated the moral education of peasant agriculture, especially when 
 it has the constant experience of larger holdings, and the way in 
 which they are cultivated, though I think he has set too much 
 store on the Malthusian checks which he has detected in them. 
 
 In recent times considerable interest, a little action, and not a 
 little unreasonable, perhaps interested, ridicule has been expended 
 on agricultural labourers' allotments. A couple of generations 
 ago, allotments formed part of the regular system of Poor Law 
 relief and management, and just as with the Irish conacre, these 
 allotments were given in lieu of wages, were a kind of agricultural 
 truck system. After the old Poor Law was modified, every part of 
 the older system was attacked almost with ferocity, and the new 
 system was administered with almost brutal severity. Perhaps 
 there has been no lesson which Guardians and the Central Board 
 in London were so slow to learn, as that it was possible to carry 
 out the law with humanity, in deserving cases even with generosity, 
 and even to effect a reduction in the cost of parochial main- 
 tenance. The allotments soon went. The philosophers de- 
 nounced them, sometimes because they were cultivated with the 
 spade, and the farmers were glad to get rid of what they thought 
 was apt to make the poor too independent. Recently the practice 
 has been revived on entirely practical, and by no means on 
 sentimental grounds, by svich highly-intelligent and well-informed
 
 LARGE AND SMALL HOLDINGS. 267 
 
 landowners as Lord Tollemache, and a little legislation of a timid 
 and tentative character has been enacted. 
 
 The principal advantages of a decently sized allotment — I 
 should prefer myself the Elizabethan four-acre plot — are 
 twofold. In the first case, it gives the peasant an interest in that 
 form of property which he best understands, and tends to keep 
 alive in him that very various knowledge which a good farm 
 hand always used to possess. In this way it discourages that 
 restlessness and discontent which is now driving him into towns, 
 to swell the numbers of the unemployed. If he held such a plot 
 as I have indicated, and was guaranteed his improvements in it, 
 as the larger farmer is, or should be, I do not doubt that he 
 would not only cultivate it with assiduity and care, but that he 
 would rapidly develop that respect for other people's properly 
 which his forefathers had, and he is reputed to have lost. The 
 other reason is, that his labour is of singular value to him. I 
 have often been told by labouring men, who have owned two or 
 three acres or more of land, and have cultivated it with their 
 own hands, that the produce of every day's work which they gave 
 has been worth los. to them, not to sell, but for the maintenance 
 of their families. My friend Mr. Tuckwell, who has carried out 
 the system with the greatest success and acceptance on his own 
 living of Stockton near Rugby, makes the more modest estimate 
 of 7s. 6d. a day. In point of fact, these allotments of a 
 reasonable size are the best form of savings bank to an 
 agricultural labourer, and in my opinion should be as warmly 
 encouraged as the benefit society and the clolhing club are. Not 
 does such a small tenure indispose the (jccupier from working for 
 hire on other people's land. Many of Mr, Tuckwell's tenants arc- 
 labourers at the gasworks in the neighbourhood, and art- 
 certainly not irregular in attending to their normal calling. I 
 understand, too, that the farmers are no longer alarmed at the 
 probable independence of the labourers, for ihey find that being 
 better fed, they are more worth their wages, and are by no mians 
 averse to improving their incomes. Bui (lure, are and always 
 will be, I presume, prophets of evil, who predict all sorts of 
 mischief when a little generosity and practical good sense are 
 allowed their way. Now I. for my part, never cared much for
 
 2^s /yni'STK/.iL AA'D commj-:kc/.il history. 
 
 uninspired prophecv, and in what I have boon able to do, never 
 allowed invself to be deterred by it. 
 
 More ambitious than the modest system of allotments, the 
 benefits of whieh would. I am sure, be great, is the attempt to 
 introduee the principles of co-operation into agriculture. One of 
 these co-operative farms has been, I believe, in existence for some 
 time at Arsington ; another owed its existence a very few years 
 ago to Mr. Bolton King, and is not far from Leamington ; a third 
 is being carried on on an estate in the Berkshire hills, which is 
 the generous gift of Lord Wantage. A few years ago — I believe 
 in 1S85 — I Avas invited to attend a meeting in the Westminster 
 Palace Hotel, at which the policy of co-operative farming was 
 advocated, and the gift of Lord Wantage was announced. I have 
 not had the opportunity of examining any of these farms, and of 
 forming a judgment on the character of the undertaking in each 
 or in any case. I see indeed no reason why co-operative produc- 
 tion in agriculture with what it involves, should not be even more 
 successful than co-operative production in cotton-spinning and 
 stocking-weaving, though of course reasonable proximity to a 
 niarket is very important for the sale of agricultural products, 
 and the enterprise may be unduly weighted at its inception by the 
 bad condition of the estate on which the experiment is made ; 
 for, as Young says, you cannot gi\c too much for good land, and | 
 too little for bad, and of all kinds of bad land, that land has the 
 worst reputation, the cultivation of which has been abandoned j 
 because it has been badly cultivated. This, some of you may 
 remember, is Virgil's agricultural desert and despair. 
 
 I should conclude, however, that the greatest benefit derivable 
 from a tenancy like this, at least till the land has been 
 thoroughly and efficiently cultivated, would lie in the extent to 
 which the labourers on it can be maintained on the spot from 
 their o\ati produce. The workmen on such a farm should obtain 
 to the full the benefits which come from a well-tilled allotment, 
 and the profit which the farmer secures by his own labour, the 
 banquet of Horace's Sabine husbandman, whom Appius of the 
 Roman Stock Exchange envied, but declined to imitate, professing 
 perhaps to instruct him in the indestructible powers of the soil. 
 I d'^ not indeed doubt that such farmers mav in the end do well
 
 LARGE AND SMALL HOLDINGS. 269 
 
 a- dealers, do better than the ordinary tenant farmer has done ; 
 ' : in the beginning it seems to me that it is more important for 
 m to subsist on the land, than to be too eager in celling 
 > produce. But I must venture no farther in discussing an 
 t voeriment, the process of which I have not \ntnessed. 
 
 To sum up. While I am entirely indifferent as an economist 
 to extended and extensive ownership, when the estate is unen- 
 cumbered and is judiciously managed, I am quite i)ersuaded that 
 a greatly divided occupancy, under which the tenant, whether 
 Hitting or sitting, is secured in his improvements and protected 
 against any rise of rent whatever on his own outlav, is the best 
 hope for the revival of British agriculture. This country is 
 overflowing with capital. Never in its history has it witnessed 
 so low a rate of interest o\\ investments. The outflow is in 
 every direction, colonies, where one can obtain b or 7 per cent, 
 on first -class mortgages, and banking overdrafts are charged 
 at the rate of q or 10 per cent., as a normal and natural 
 interests, are borrowing on their Government securities at as low 
 a rate as the British ^Government could raise consols. The annual 
 waste of improvident investments is, I am sure, equal to the 
 revenue of many a European state. But agriculture langiiishes. 
 We are importing more and more every day, not only of grain, 
 but of minor agricultural products — eggs, poultry, fruit. The 
 natural protection atTorded to the products of British agriculture 
 by the cost of ocean freight and land transit, is greater than it is 
 to any product whatever except coal and siMue mineral ores. 
 The soil has been in past times cultivated to perfection. The 
 skilled British agriculturist has no rival in the civili/ed wiuKi. 
 But the agricultural capital has vanished, and no jiart of the 
 great store flows in tt) fill up the void. For this state of things 
 there is and can be but one reason : and that reason is distrust.
 
 V. 
 
 MOVEMENTS OF LABOUR. 
 
 I. EMIGRATION. 
 
 The mii^ruf/on of barbarians — English emigration to Ireland — I 'ir- 
 ginia — New England — Emigration of the Scotch Highlanders to 
 Canada— Irish emigration ^-The convict colonies— Australia — The 
 economic aspect of emigration — E?nigration of the ** unemployed'^ — 
 American troubles — Colonial loans — Emigration of skilled ivoi k- 
 nien, 
 
 I AM using the words Emigration and Immigration in the two 
 lectures which I design to dehver on the Movements of Labour, 
 in a limited, perhaps in an arbitrary sense. Even if the new- 
 comers settle in a perfectly uninhabited district, such as were the 
 islands of Mauritius and St. Helena, emigration and immigration 
 are only two aspects of the same process, and involve certain 
 results. I intend, therefore, to imply in the former of these words 
 the efllux of population into more or less settled countries, as for 
 instance that from Great Britain into the northern part of the 
 American continent, limiting myself on the present occasion to 
 movements on the part of our own countrymen in the United 
 Kingdom ; and by the latter movements on the part of foreigners, 
 in the first place, and to some extent of British and Irish subjects 
 to divers districts of the United Kingdom, You will anticipate 
 that these movements, in so far as they are historically traceable, 
 have had marked economic effects. Again I have used the word
 
 MO VE ATE NTS OE LA 7iO UR. 27 1 
 
 "labour" designedly. I am not at present concerned with 
 piratical movements, such as those of Saxons, Danes, or Normans. 
 Nor do 1 intend to refer, except slightly, to those few colonies of 
 conquest which the British nation has acquired and possesses, 
 meaning by colonies of conquest those in which the ascendency 
 of an earlier civilized occupancy has been superseded, as in Lower 
 Canada, in the state of New York, and at the Cape ; nor again to 
 that slight and entirely superficial occupancy by officials and a 
 few capitalists, which has been established in tropical regions, 
 notably the so-called Indian Empire. I say slight and superficial ; 
 for I am informed by those who study the origins of the Aryan 
 race, and assign a different, primeval seat nearly every six 
 months, that the present favourite is the shores of the Baltic. It 
 may be the case that in those ancient times on which this in- 
 structive speculation is expended, the inhabitants of those almost 
 Arctic regions were able to accommodate themselves to the Indian 
 climate. But the immigrants of a more favourable zone are not 
 capable of such adaptations. It is said, and is not, I believe, 
 contradicted, that in those days at least, the children of Anglo- 
 Indian parents, such children being brought up in India to 
 puberty, are, if married, invariably childless. If this be the fact, 
 and it is capable of every disproof and verification, British India 
 cannot be colonized by persons of British descent. 
 
 Nor do I deal with the tempting subject of those great move- 
 ments of populations which followed on the decline of the military 
 Empire of the West, the occupation of Spain by the (ioths, of 
 Gaul by the Franks, of Roman Britain by divers Teutonic tribes, 
 of Italy by the numerous races which descended on it, of the 
 Eastern Empire by the Slavs in what was once Northern Tinkey, 
 and now, happily, rent from it, or of the later movtintiits of the 
 Turkish hordes in Asia Minor, Syria, and r:astern Flurope. The 
 economical consequences of these movements were prodigious. 
 They entirely changed the face of that part of the workl in which 
 they occurred. In Western and Central Europe these events 
 have, though very slowly, led to the formation of powerful states, 
 possessing a high degree of civilization, in thi- south-east and w. 
 the basin of the Mediterranean, they have substituted a revolting 
 savagery for diffused opulence, great intelKctual progress, and a
 
 272 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 remarkable, but peculiar civilization. There were, as you are 
 probably aware, great and prosperous kingdoms in the plains of 
 Mesopotamia, and in Central Asia from prehistoric antiquity till 
 the days of Mohammedan conquests, and even afterwards. In 
 the time of the earlier Roman Empire the three principal seats 
 of learning or education were — I give them in the contemporary 
 writer's order of excellence — Tarsus, Alexandria, and Athens. 
 Northern Africa, from the border of Egypt to the Straits of 
 Gibraltar, was studded with numerous cities, whose record has 
 perished, whose palaces are now for the most part tenanted by 
 savages. 
 
 Many of these movements, though comparatively late in 
 recorded history, are really prehistoric. We know more about 
 the invasion of the Cimri and Teutones, about a century before 
 our era, than we do of the battle of Soissons and the defeat of 
 Syagrius, in the fifth century after that era. We know a little, 
 but only a little, from the work of Bede as to the Teutonic 
 conquest of Britain. The settlement of Northern France by 
 Scandinavian rovers is very imperfectly narrated. I conclude 
 that, where it was possible, the movements of the tribes was very 
 like what Coesar describes in the case of the Helvetii, and what 
 occurred in the centre of Asia Minor at the early immigration of 
 the Gallic tribes, into what was afterwards Galatia. In more 
 modern times we learn something about the movements of 
 Tamerlane, of Ginghis Khan, of the conquest of Northern Hindo- 
 stan, and of the Tartar or Mongol empire in Russia. I refer to 
 these facts briefly, in order to show that there were movements 
 of races, the effect of which has had a vast and enduring influence 
 on the communities which have been subject to them, an influence 
 which might justly claim the attention of the economist. For the 
 genuine student of economics as well as of political history must 
 search into the past for the interpretation of the present, if he is 
 to save himself from barren logomachies. It would be of great 
 interest and value to dwell on the economical consequences to 
 Europe of these great movements, and on the results which have, 
 in so far as they are traceable, been brought about by this fusion 
 of races. 
 
 People predict that in a century hence the English tongue will
 
 MOVEMENTS OF LABOUR. 273 
 
 be the language of the civihzed world, an English-speaking race, 
 how collected is very conjectural, will be the dominant force of 
 the future. For the English is by no means assimilative. We 
 have taken our colours from immigrants, but we have only, except 
 within the limits of administrative law and language, given a 
 colour to those with whom we have associated ourselves. No 
 nation in Europe has ever had such power in assimilating foreign 
 elements to itself as the French has. Its occupation of the dis- 
 trict about Metz dates from the early part of the sixteenth century, 
 of the part of the Flemish frontier from the later half of the 
 seventeenth, its acquisition of Alsace, Lorraine, and the Strasburg 
 district from the conclusion of the same century. But whatever 
 may be said about the economical loss which has followed on the 
 restoration of Alsace and Lorraine to Germany, in many minds of 
 the inhabitants there is, I think, no doubt, though it is well 
 known that these Teutonic parts of later France were per]ictuallv 
 ridiculed by France proper, and not very generously used in 
 French wars, that they were very completely assimilated. The 
 provinces were, I believe, sincerely attached to the French con- 
 nection, and were greatly discontented at their severance from 
 what they had come to consider their country. But our efforts 
 in this direction have been exceedingly unsuccessful. We had to 
 make a complete, and under the circumstances a far from credit- 
 able, surrender to the Canadian-French some half century ago ; 
 our relations with the Dutch inhabitants of the Cape have been 
 strained, and by no means indicative of hopeful statesniaii^hi]) ; 
 and there is a country ever nearer to us, in which the dominant 
 or superior race has had to console itself with the subjcclive con- 
 viction of its own superiority. I should be led into I lie iloin.iiii 
 of practical politics if I gave you my reasons for this conspicuous 
 failure, in which, I regret, we stand almost alone among those 
 nations which may be fairly called progressive. There is, indecil, 
 one race kindred to us, which is even more incapable of assimila- 
 tion than ourselves. This is the North German i)eoi)le, and 
 perhaps you may discover in their characteristics what makes our 
 work, with far larger opportunities and far wiiler exiKMcnces, so 
 difficult and disappointing to us. 
 
 With one exception, English emigration is very late. I lie 
 
 19
 
 274 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 exception is that of Ireland. I trust that in time Mr. Bagwell 
 will find it to the purpose to continue his inquiry into the relations 
 of the English pale to the Irish race, for I have rarely read any 
 work which casts more light on the early English settlement in 
 Ireland than Mr. Bagwell's history does. To me it came with 
 peculiar interest, as I had already discovered and briefly com- 
 mented on, more than a quarter of a century ago, what was the 
 condition of the Anglo-Irish pale, in my examination of the Bigotl 
 accounts. Bigod, Earl of Norfolk, had married one of the co- 
 heiresses of Stongbow, had acquired a considerable estate by this 
 marriage in South-east Ireland, and had evidently introduced into 
 his part of the island the English system of land tenure, with its 
 grants on fixed and invariable rents, and its practice of assisting 
 manufactures, fairs, and markets by relieving them of arbitrary 
 exactions. I am convinced, from what I gathered from Bigod 's 
 system, that if the action of the English pale had been traditional 
 with the successors of those earlier settlers, Irish trouble would not 
 have been perennial. But the prospect was soon clouded. The 
 most unfortunate invasion of Edward Bruce, the more unfortunate 
 trust which the Irish reposed in this adventurer, his defeat and 
 death, and the final destruction of the Irish levies at Athenry were 
 the beginnings of a new and disastrous epoch. You many re- 
 member that the Battle of Athenry, a place some ten or a dozen 
 miles from Galway, occurred in the same year as the Scottish 
 victory at Bannockburn. The late Dr. Arnold was wont to say 
 that Bannockburn was the making of Scotland and Athenry the 
 ruin of Ireland. Like most generalities, neither statement was 
 correct. But Athenry was the beginning of a new Irish policy, 
 the mischief of which the Plantagenet sovereigns foresaw, thougli 
 owing to the passion which filled them for the conquest of France, 
 they were impotent to check. 
 
 I do not intend to lead you through the history of English emigra- 
 tion to Ireland. It was almost extirpated at the end of the four- 
 teenth century, when Richard II. tried to restore the English 
 pale, and gave occasion thereby to a successful revolt against him 
 in England. It might perhaps have been restored, and with the 
 goodwill of the Irish, by Richard, Duke of York, in the middle 
 of the fifteenth century, had not the danger in Avhich Richard 
 
 I
 
 MOVEMENTS OF LABOUR. 275 
 
 stood, or thought he stood, compelled him to return to England, 
 and to make a final struggle against Margaret of Anjou. It was 
 one of the greatest faults in the reign of Edward IV. that he did 
 not make use of his father's popularity for the settlement of 
 Ireland. How attached the Irish were to his family is seen in 
 the assistance which they gave to pretenders in the reign of Henry 
 VII. The situation determined Henry on adopting a special 
 policy in Ireland, the type of which was Poynings Act. Thence- 
 forward the emigration of Englishmen to Ireland was the settle- 
 ment of adventurers on confiscated estates. The rebellion of the 
 Geraldines and the revolt of O'Neill in the sixteenth century, 
 with the consequent attainders, in which the rights of the pro- 
 scribed nobles were treated as identical with those of an English 
 traitor, led to enormous changes of property and the extinction 
 of the tribesmen's interests. James distributed Ulster, the for- 
 feiture of O'Neills, mainly among Scotchmen, though he sold 
 much to the wealthier City Companies. Then came the uprising 
 of 1 64 1, its suppression by Cromwell, all the more harsh, because 
 the Parliament had discovered the negotiations of Charles through 
 Glamorgan ; the uneasy period of the Restoration ; the ujirising of 
 1689, its Parhament, and its retaliatory confiscations; the Battle of 
 the Boyne; the capture of Limerick byGinkell ; the fresh confisca- 
 tions and the Penal Code, drawn up from beginning to end, by 
 Chancellor Brodrick, who was made a peer for his pains. There 
 is, I believe, no country in Europe, the confiscation of the land in 
 which has been so often repeated as in Ireland. There is none in 
 which the memory of these transactions is so lasting, none in 
 which the assimilation of races has been rendered so hopeless. 
 The earliest experiences of emigration by the English have ht vn 
 by no means encouraging. The emigration from Ireland is by no 
 means to be dissociated from this policy and those events, and is 
 part of economical history, and that of no litlK- significance. 
 
 An attempt was made by Raleigh to found a colony in North 
 America. But RaUigh never conceived anything higher than a 
 buccaneering expedition, in which an empire like those of Cortes 
 and Pizarro were to be discovered and conquered. I !e did not dis- 
 cover in Virginia, as he named his settlement, in honour of the 
 great Queen, the El Dorado ofliis expcctat ions ; but tribes . ,| cunning
 
 276 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 and ferocious savages, from whom a conquest would extort nothing. 
 Here there was neither Mexico nor Peru. So Raleigh's settlement 
 came to naught, to be revived at a far later period, and his failure 
 was remembered against him at a subsequent part of his career. 
 
 The first genuine emigration of Englishmen was that of the 
 Puritans to New England. It was the emigration of discontent at 
 the institutions of the home country, as not a little of our emigra- 
 tion has regularly been. The British constitution and our social 
 institutions are probably very noble ; but, oddly enough, despite 
 the assurances of De Lolme and Mr. Justice Blackstone, the 
 English race has been by no means satisfied with them. In old 
 days, they used to rebel and depose unpopular sovereigns ; in latter 
 days, they have fled from unappreciated benefits. They failed to 
 recognize the comprehension of Elizabeth, and they entirely re- 
 sented the change of front, when James abandoned the tenets of 
 the Synod of Dort, and surrendered himself to those of Laud, An- 
 drews, Overall, and the Divine right of kings party. Now, whatever 
 may be thought of the wisdom of Laud and his supporters, I am 
 inclined to think that the new school was more genial and easy 
 than the old discipline of the Episcopal Calvinists. But the 
 Puritans of Laud's time, while they were indignant at being 
 coerced into conformity, and persecuted, were even more indignant 
 at the fact that those who differed from them were not coerced 
 into conformity, and severely put down, or even extirpated. 
 Dissent from the manifest will of God, as announced in the 
 Scriptures, was the most heinous of crimes. This was their major 
 premiss, even more emphatically than it was with their opponents. 
 They then supplied the minor premiss, that they alone were in the 
 right in affirming, what was the manifest will of God, and the 
 syllogism was complete ; and what was more important when the 
 opportunity came, it supplied an infallible guide in practical 
 politics. 
 
 Some of these men fled to the New World, and founded the 
 New England colonies. The Dutch with similar tenets, but with 
 greater latitude of toleration, had founded there colonies too, in 
 immediate proximity to New England, and no doubt sympathized 
 with the voluntary exiles. Some stayed behind, and in due 
 course manipulated the situation. Some of them, it is said, wished
 
 MO VEJMEN'l 6 Ot LABOUR. 277 
 
 to go, but were prevented. If the story is true, that the intended 
 emigration of Hampden and Cromwell was prevented by an Order 
 in Council at the instance of Laud, the king and his adviser were 
 creating their own Nemesis. The early history of the Puritan 
 colonies is by no means encouraging. They had their bickerings 
 even in the midst of their dangers. They had by no means cast ofi" 
 the persecuting spirit. They shudderingly belin'ed in witchcraft, 
 and they abhorred Anabaptists and Quakers, visiting all with severe, 
 even with capital, penalties. No doubt the Quakers of Fox's day 
 were very offensive and intrusive people. When men are not 
 content in believing in their superior sanctity, but take every oppor- 
 tunity they can to affront the religious convictions of others, to call 
 them men of sin, dumb dogs, and heap on them similar compli- 
 ments, offence is naturally taken. The Anabaptists, too, were 
 supposed to have immoral proclivities, and to be prone to Com- 
 munism. So there was a justification, at least in minds of most 
 New Englanders, for the severities with which these sectaries were 
 treated. 
 
 The whole of the New World, from the Pacific to the Atlantic, 
 from the territory of Alaska to Cape Horn, was included in Borgia's 
 Bull and Borgia's Grant. It is true that, in ancient times, the 
 Scandinavians had in some fashion settled Greenland ; for we are 
 told that the ruin of that region was due to an Arctic cataclysm, 
 which was contemporaneous with the Black Death. But though 
 nominally the overlords of the whole continent, the Spaniards 
 contented themselves with Central America, especially on its 
 western side. Here they found weak races, plentiful plunder, rich 
 mines, and a docile people who could be worked to death in those 
 mines. How bitterly and energetically they resented all intrusion 
 on their conquests is seen in the issue of the unfortunate Daricn 
 expedition in 1698, and the war of 1739 undertaken in the interests 
 of the South Sea trade, and the excesses of the Guarda Costas. But 
 Spain never seriously attempted to colonize the eastern coast ot 
 North America, nor indeed that of South America ; it was not at- 
 tractive. The district which lies between the St. Lawrence and the 
 Hudson was not favourable to buccaneers. It contains noble 
 harbours and great rivers ; but the soil, on the whole, is barren, and 
 the climate extreme, both in winter and summer. I'Ik- nihabitants
 
 2/8 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 were active, treacherous, and bloodthirsty savages, from whom the 
 victor could get no spoils, the vanquished could expect no mercy. 
 The last echoes of the theory of Rousseau, that the savage was more 
 commendable than the civilized man, are I suppose to be found in 
 Cooper's Red Indian novels. The grave of Uncas, the chief of the 
 Mohegans, is still shown at Norwich in Connecticut, for the 
 meeting-place of the Six Nations was in the meadows which lie by 
 the river of that American town. But Uncas, though he was on 
 good terms with the I^uritan settlers, was a savage. I was shown 
 the monument which marks the place where this noble of the 
 woods slew the chief of the Nassagansets and devoured him after- 
 wards, as far as he could. 
 
 New York, originally New Amsterdam, was settled by the Dutch ; 
 New Jersey by the Dutch and Swedes. They fell to England in 
 the first Dutch war after the Restoration. But before and after 
 this event, colonies were planted on the eastern coast in a fashion 
 characteristic of the time, when regulated and joint-stock companies 
 were the fashion. Charters were granted to wealthy adventurers, 
 who found the means for settling the district which they selected. 
 Thus the Calserts, themselves Roman Catholics, founded the 
 Catholic state of Baltimore — though, to the credit of the founder, 
 toleration became the law of that state, or, rather, religious equality 
 from the first. Similarly, Penn was the founder of Philadelphia, 
 and of the great state which goes by his name. This form of 
 colony led to the system of proprietary rights, under which con- 
 siderable administrative power was secured to the representatives 
 of the founders. Early in the eighteenth century an attempt was 
 twice made in Parliament to extinguish these rights, and twice 
 failed. At last, when the Colonial system was developed, and the 
 regulation of the Colonial trade was deemed to be of the highest 
 importance to British trade. Parliament purchased these rights at 
 'he expense of the British taxpayer, and vested the family ap- 
 pointments in the Crown. We are still paying a large annual 
 sum to the heirs of William Penn, of the Duke of Schomberg, and 
 Pultency Earl of Bath. It is surprising to see how singularly vital 
 those families arc who are possessed of perpetual pensions. I have 
 no doubt that, had Parliament granted a perpetual pension to the 
 heirs general of Melchizedec or Sennacherib, claimants on the
 
 MOVEMENTS OF LABOUR. 279 
 
 nation's bounty would still be forthcoming. One would like to 
 know what is the evidence that satisfies the Treasury that its 
 liabilities are enduring. 
 
 During the eighteenth century there were two sources of 
 \oluntary immigration, if one can call the process by so honest 
 ■ I name. The first was from the Scottish Highlands, the other 
 was from the Irish Protestants. When, after the events of 1745-6, 
 tlie British Parliament determined to abolish the heritable juris- 
 dictions in Scotland, and so put an end to the system which 
 onstantly menaced the peace, Parliament paid these savage chiefs 
 compensation for the loss of that which they ought not in any 
 civilized community to have possessed at all. I know nothing in 
 social history to match the ingratitude with which these chieftains 
 rewarded the clansmen over whom they had ruled. As soon as 
 the men were free they were found to be superfluous, and the 
 Highland clearings began, to be continued to our time. The 
 practice has been defended on the double ground of the rights of 
 property and laissez faire. The Scotch judges deciilcd that the 
 clansmen had no rights, and certainly up to the end of the 
 eighteenth century a Scotch judge was a \eritable successor to 
 Jefferies and Scroggs, for there was hardly a lord of session whom 
 we should not call infamous, and with perfect propriety. But 1 
 have yet to learn that property in land is to be measured by rights 
 only, or that laissez faire can be allowed to be dominant in every 
 relation of life, even when the relation is voluntary and necessary. 
 Many of these Highlanders emigrated to Canada. When 1 was 
 in the Dominion, I came across, in the neighbourhood of Montreal, 
 villages, all the inhabitants of which had Highland names. Hut 
 they all spoke French, and no other tongue, and were all stur(l\- 
 Roman Catholics. On inquiry I found that they were emigrant 
 clansmen, who got their wives among the h'rench Canadians, then- 
 descendants adopting the speech and religion of lli<ir MK'tlurs. I 
 believe that, after the later clearings, Canada was the regh.n to 
 which the expatriated clansmen went. It is a commonplace to >ay 
 that England is not popular uilh the Celtic populations of the 
 New World. The peoj)le would have been preternaturally forgiving 
 if it had been. For. in the nature of things, the dislike which 
 those feel who think tliemselves wronged l)y p'-i^ons and itistitu-
 
 28o INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 tions towards those who have injured them gets transferred to the 
 people who are supposed in a vague way to be responsible for the 
 vices of governments and the maladministration of law. 
 
 The Irish emigration of the last century was of a different kind. 
 It was from one point of view as voluntary as that of the Puritan 
 settlers of New England. After the capture of Limerick in 1690, 
 and the total rout of the Irish party, the policy of the victors was 
 to extirpate the Irish religion, or at least to confine it to the 
 peasantry, and to transfer all the power of government which the 
 Irish executive had to the Protestant minority, and even to a 
 section of this, the adherents of the Episcopal Church. Now so 
 keen was the hatred and dread which the whole Protestant 
 population of Ireland entertained towards the Catholics that the 
 Protestant dissenters acquiesced in their own entire exclusion from 
 all political power and the disabilities which the policy of what was 
 called by its authors Protestant ascendency put on them. But in 
 course of time, when the alarm had died away, the disability was 
 felt to be galling, and thousands of the Protestant Irish emigrated 
 to the English Plantations in America, where religious opinion 
 had ceased to be a bar to civil rights. At last, as is well known, 
 the most strenuous advocates of the constitution of 1782 were the 
 disabled Protestants of Ulster, who were the founders of the 
 volunteer movement. 
 
 The British Government has only founded colonies of convicts. 
 In the first instance, it is true, these convicts were merely of 
 political origin, though they were none the less reduced to slavery. 
 Cromwell sold hundreds or thousands of his baffled' political 
 enemies into the plantations of the New World. I do not know 
 whether any genealogist has traced the descendants of these 
 involuntary exiles and settlers. After the Restoration and 
 Revolution capital penalties inflicted by the sanguinary criminal 
 code of the time were constantly commuted, even at the pleasure 
 of the offender, into exile, the destination of the criminal being 
 the plantations, wliilher apparently they went as free settlers. I 
 have not found any evidence that the American plantations 
 resented the intrusion of these emigrants. But after the dis- 
 coveries of Captain Cook, synchronous with the progress of the 
 American War of Independence, Australia was settled, and made
 
 MOVEMENTS OF LABOUR. 281 
 
 the more or less permanent abode of those offenders wln.ni it 
 became intolerable to allow at home. In course of time voluntary 
 emigrants began to settle in that great island, and very speedily, 
 with very good reason, expressed the loudest discontent at the 
 intrusion of this undesirable element into colonial life. In the 
 end, though within living memory, the practice was abandoned, 
 and the English Government has engaged to deal with its own 
 criminal population at home. Some of you may remember the 
 very lively alarm with which the inhabitants of Queensland met 
 a project of the French Government, by which it was proposed 
 that offenders of a certain class, and that the worst, should be 
 transported to a penal settlement which the Australian population 
 considered to be too near their borders. 
 
 By far the largest part of the emigrants from the United 
 Kingdom make straight for the United States. This country 
 is the nearest, the widest, and, on the whole, the most attractive. 
 It is said that many of those who emigrate to Canada ultimately 
 settle in the States, for Canada, owing to the length and severity 
 of the winter, can never be densely peopled. In the United Stales 
 the emigrant finds institutions near enous^h in character to his 
 own, perhaps with the most objectionable jjarts of tlie earlier 
 experience taken away from these institutions. The Government 
 of the Union interposes a considerable lime, too, between the 
 immigration of the new-comer and his admission to political 
 rights, so that he is not in the first instance distracted by 
 unfamiliar cries. The United States, too, have an altraclion on 
 which I shall have to comment later on, in the civil eciuality of 
 all its citizens. The American Union recognizes no herediiary 
 rank. It does not even allow its citizens to accept a personal 
 decoration. It has no knights of St. Michael and St. George. 
 The only distinctions which it recognizes are those of military or 
 militia rank, and sensible people who have seen real service, unless 
 they are in the army and navy of the Union, generally drop lhe.se 
 distinctions. It also allows the courtesv title of hoiionral>le not 
 only to those who are actual numb, rs .,1 ilu- legislatures slate and 
 federal, and to the principal state ollicials, but recognizes the 
 retention of the title after the person who has been entitled to it 
 by service goes out of Congress or out ot ..flicc. My experience of
 
 282 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 the United States induces mc to conclude that Americans, though 
 they do not abuse it, value this equahty. You never see a servile 
 American, and rarely meet one who is insolent. 
 
 The occupation of Australasia by voluntary emigration has 
 been comparatively slow. Distance no doubt counts for some- 
 thing as a check. Nor do the Colonial governments hold out the 
 same attractions to individual settlers as the United States and 
 Canada do, or did, to agriculturists. There is a tendency, to 
 which these districts lend themselves, towards cattle and sheep 
 farming on a large scale rather than to corn growing and small 
 occupancy. And, though I am aware that the Colonial govern- 
 ments give only a limited usufruct of pasture, yet it is not very 
 easy to reverse a policy and eject an occupant after he has been 
 long in possession ; and, if I am not misinformed in the accoimts 
 which reach me, there is not a little discontent expressed at the 
 privileges of the squatters. Now I do not understand how this 
 discontent can arise, unless some alarm or dissatisfaction was felt 
 at the duration of the holding. Cattle and sheep farmers, too, 
 who have written on their experiences after their return to the 
 United Kingilom, have expressed themselves very contemptuously 
 about the townsfolk and the colonial democracy. The tone, 
 moreover, of those who have returned, and hav^e settled in the old 
 country, in reference to social questions at home, suggests that 
 they are by no means in sympathy with the institutions under 
 which their wealth has been accumulated. But, on the whole, 
 the vast majority ot the emigrants have selected a permanent 
 home for themselves and their descendants, and constantly have 
 relatives and friends in the old country, whom they attract to the 
 new. Perhaps, too, the British colonies of voluntary settlement 
 contain a far larger proportion of colonists of British origin than 
 the United States have, who have attracted a vast number of 
 Germans and Scandinavians, so large a number indeed that Mr. 
 Walker, who had undertaken the census once or twice, told me 
 that the German settlers were rapidly outnumbering the Irish. 
 
 But it is time that I should quit the historical, and deal with 
 the present economical aspect of British emigration. And first, 
 what is the principal factor which stimulates emigration ? Is it 
 discontent, or is it a spontaneous enterprise ? Or is it due to the
 
 MOVEMENTS Ot LAHOUR. 283 
 
 excessive growth of population? The latter, I think, needs only 
 to be mentioned in order to be dismissed. No doubt if all the 
 British emigrants who have left were still here with us, the 
 country would be, to use a modern phrase, congested. But, in 
 the first place, voluntary emigration is not of the really surplus 
 population, except in the most superficial sense, and in the next 
 the growth of the resident population is far greater in amount 
 than the most liberal estimates of emigration are. The population, 
 in brief, which has grown and not emigrated, is far larger than 
 that is which has adopted this expedient. 
 
 Discontent is felt at the social or political institutions of the 
 country from which the emigration proceeds. It appears that the 
 earlier movements from England were not stimulated by the 
 former cause of discontent. There is no reason to believe that 
 the settlement of New England was due to dissatisfaction enter- 
 tained towards the social system of the mother country. The 
 Puritan fathers were not by way of being levellers. That they 
 treated all those who were associated for the purpose of the new 
 settlement with consideration, and recognized the equality of all 
 conditions with greater fulness than could be expectetl in the old 
 country, is obvious, and must be explained on the ground that the 
 necessity of common defence constrained the acknowledgment of 
 fairly equal rights. In the original settlement of Connecticut the 
 organization of the colony contemplated and practised the assign 
 ment of an adequate occupation to all those families who threw in 
 their lot with the colony. I mention this because the Connecticut 
 settlement contrived to keep on good terms with the native tribes, 
 whose headquarters were in the neighbourhood of Norwich, the 
 principal town in the early history of the state, and were therefore 
 more secure against Indian raids than some others were. But tin- 
 settlers were neither disloyal to the home government, nor dis- 
 posed to modify the social laws which llun ruled in England. 
 The English constitution, as they understood it at the lime, w;i>^ 
 not distasteful to them. The Lords were a powerless body, and 
 remained powerless till the Restoration, v. lun they made attempts 
 and with considerable success, to vindicate an authority for them- 
 selves which their ancestors in the days of the Tudors and early 
 Stuarts would never have dared to claim. The 1 V m^e of Commons
 
 284 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 was in their eyes the perpetual check to arbitrary power, and .i 
 proper model for imitation, not as they afterwards found it, or 
 believed that they found it, a selfish and oppressive oligarchy. 
 
 Their discontent was with the administration. They believed 
 that the ecclesiastical favourites of the Crown were bent on re- 
 versing the tenets on which the true Reformation was founded 
 The administration of Elizabeth, though it was harsh and 
 oppressive, inclined to the discipline of Geneva, and whatever it 
 might do at home, by no means repudiated fellowship with the 
 numerous sects of the Reformation. For a time the Stuart policy 
 was in accord with the Synod of Dort and the discipline of Abbot. 
 But a new party made itself acceptable in the end to James, not 
 so much it appears by reason of its ecclesiastical theories, as by its 
 profound deference to the royal authority and prerogative. The 
 school of Andrews and Laud exalted the royal office above all 
 criticism, and in return James and Charles permitted the repre- 
 sentatives of the school to put their theories of Church govern- 
 ment into practice. It was against these theories that the Puritans 
 revolted, from this administration that some of them fled. And 
 as might be expected, when they emigrated and settled in 
 Massachusetts Bay, they claimed authority for themselves and 
 their organization, and denied it to those who dissented from them. 
 But in the nature of things they did not detect danger to their 
 political system in nonconformity, as the English administrations 
 did, but an affront to their religious organization. New England 
 became, therefore, a place of refuge to those Englishmen to whom 
 the repressive legislation of the Stuarts, helped by the hatred of 
 the country party towards the memories of the Protectorate, 
 became intolerable. For it is noteworthy that hostility to the 
 principles of the Great Rebellion, as it was called, long survived 
 the existence of the political and ecclesiastical tenets which gave 
 occasion to it. 
 
 The eighteenth century was an age of scepticism, for in it 
 principles of government in Church and State were freely dis- 
 cussed, and, as is generally the case, the most strenuous advocates 
 of administrative authority were most contemptuous towards 
 ecclesiastical pretensions. I do not know that the situation has 
 been better ilescribed by any one than by Swift. " I have ob-
 
 MOVEMENT,^ Ot LABOUR. 285 
 
 served," he says, " willi what insolence and Iiautrhtiness sonic 
 1 irds ot the High Cliurch party treated all ckrgymin, what^-o- 
 cver, though this was sufficiently recompensed bv their prMfessions 
 of zeal to the Church, and I had likewise observed how the Whig 
 lords took an entirely contrary measure ; treated the persons of 
 particular clergymen with great courtesy, but showed much ill- 
 will and contempt for the order in general." Now what Swift had 
 noted at the time when Anne, in 1 7 10, made the changes in her 
 ministry which seemed so ominously dangerous, characterized the 
 policy of those two historical parties during the whole century, 
 and may be even noted now. But during this century the rights 
 of property, especially of landed property, were strained to the 
 uttermost, and the former cause of discontent, and with it of 
 emigration, became dominant, being especially powerful, as might 
 be expected, in Ireland, where it operated first on thi- Protestant 
 population of Ulster, and later on, in a still more marked manner, 
 on the Catholic population of the other three provinces. I shall 
 attempt to point out later on in this lecture what are the con- 
 sequences of this emigration of discontent in the relations of the 
 colony to the country of its origin, provided the memory of the 
 causes is kept alive. 
 
 The voluntary emigration of colonists who are merely anxious 
 to better themselves in their own way of life is of far more 
 recent date. It has been in the largest degree to the United 
 States. Men who are resolved to trying whether they can meml 
 their fortunes by emigration, are troubled by no scruples of loyally 
 tf)wards their place of birth, and as we all know, the judge ina»le 
 dictum, " Nemo potest exerere ])atriam," broke down hopek-ssly in 
 practice before it was repealed in fact. Now nearness to jilaces 
 which are equally desirable as settlements in other respects is 
 naturally a determining cause of choice. But the readiness with 
 which political and social institutions accommodate themselves as 
 conditions to the intending emigrant is even more attractive. 
 The settler in the American Union at once, and permanently, 
 escapes from the range of privileged classes and privilegeil 
 institutions. I will not assert that he gains more social freed.. jn. 
 I am disposed to believe that he finds that the authority of custom 
 is quite as rigorous and inciui^itnrial as thai <>( pn\iKgr is,
 
 286 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 especially when privilege being challenged and criticized, is con- 
 strained to content itself with protests against these innovations, 
 and predictions as to their consequences. But he is liberated 
 from all appearance of them, and becomes a more ardent advocate 
 of the system which he has adopted than they are who have been 
 born to the situation. 
 
 The emigration to our colonies of occupation, as opposed to 
 the colonies of conquest was seriously crippled in the early days 
 of the colony, by the support which the home government gave 
 to land jobbing by privileged companies or associations on a large 
 scale. The rights claimed in Upper Canada by these adventurers 
 were not only a hindrance to emigration, but a powerful cause of 
 that discontent which found its issue in the rebellion of Lower 
 Canada. Similar associations were formed in Australia and New 
 Zealand, and men otherwise respectable, practised expedients for 
 their personal advantage which were highly injurious to emigra- 
 tion. In course of time the system entirely broke down. The 
 Colony declined to submit its fortunes to these non-resident pro- 
 prietors, or permit its energies to be cramped by them. After a 
 struggle, the Colonial Office surrendered the whole disposition of 
 Colonial land to Colonial administration, and with it all dependence 
 (Ml the central government, or mother country, and association 
 with it for any practical purpose. With much more reason, 
 Colonial governments have resented or resisted any attempt to 
 make them the receptacle of the criminal, or even of the pauper 
 classes of the Old World. The United States Government searches 
 very effectually into the motives and the resources of those who 
 design to settle within its borders, and apparently designs an 
 emigration tax of $5. It cannot to be sure exclude all undesirable 
 immigrants, though it has adopted very successful restraints on 
 Mongol immigration, for some reasons among others, which 
 cannot be very conveniently explained. But it has, or professes 
 to have, not a little trouble with some of those whose coming it 
 does not check. It used to be said that the Irish emigration was 
 distasteful to it. Latterly it has had to deal somewhat rigorously 
 with German Socialism. And perhaps there is no little political 
 difficulty created for every possible administration which may be 
 formed in the American Union from the antipathies which 

 
 MOVEMENTS OF LABOUR. 2S7 
 
 European emigrants feel towards the governments whieli tliey 
 liavc abandoned. 
 
 Irishmen fly from the Irish land system ; Germans from the 
 conscription and from the incessantmeddlesomeness of the German 
 Government. They carry with them an intense and wrathful 
 animosity, which seeks itsown occasions of vexing the inslilutiuns 
 which they have repudiated. Now these facts have of course 
 their political causes, and are open to political criticism. With 
 these, as an economist, I have nothing to do. But it would be 
 idle to doubt that the sentiments to which I refer have their effect 
 on the economical relations which subsist between the emigrant 
 and the countries which he has repudiated and has adopted. It 
 is, of course, too, that trade is but little affected by international 
 enmities. The dealer is indifferent to the origin of that in which 
 he trades. But the politician is not so indifferent, even if, as is 
 not invariably the case, he docs not condescend to the common 
 tricks of his calling. Now it cannot, I think, be doubted that 
 much of the appeal to American patriotism which is notoriously 
 uttered on behalf of American protection is founded on the 
 enduring animosities which have been nurtured for a century in 
 the minds of Americans, and are readily caught at by emigrants, 
 who have grievances of their own to avenge or to ventilate. 
 Men who have experience of affairs know that international trailc 
 smooths away asperities, and with equal clearness, they who wisli 
 to keep up international asperities know that the vitality of such 
 sentiments is assisted by hindrances put on international trade. 
 
 In most of our Colonies, as I have shown to you befori-, tin- 
 administration has borrowed largely from the savings of British 
 wealth. To borrow in the colony would have been ruinous am! 
 slow. In order to develop the country, as the jjroiess is called, it 
 has been found expedient to appeal to British capitalists, and to 
 offer a Government guarantee for advances on piihllL works. The 
 appeal has been greatly successful. The Colonirs havr horrowid 
 at low rates, sometimes over-hastily and unwisely, and liave giviii 
 an emphatic negative to the diclum of that past generation i.l 
 economists, which alleged that there is a close relation between 
 the interest of public securities and the discount on mercantile 
 securities, a rule which is true only "hni the loans aic niadu- in
 
 288 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 the same market and substantially from the same fund ; and not 
 even always true, under these conditions, as is plain from the price 
 of American Government securities, and the ordinary rate of 
 bankers' discounts and loans on mortgage in the union. But it 
 is probable that British capitalists have lent more money to 
 American projectors than they have to Colonial Governments, and 
 that, not only without the shadow of a guarantee, but under the 
 worst system conceivable. Of this system, our Canadian colonists 
 have shown themselves accomplished imitators, and I doubt 
 whether the most thoroughly watered of the American railways 
 has been manipulated more scandalously than the Grand Trunk ol 
 Canada has been, or been supported by British investors more 
 unwisely. 
 
 I am ready enough to admit, then, that most of our Colonies 
 have entered into obligations which require on their part the 
 continuance of friendly, even of deferential relations, on the part 
 of the settlers, for they may be trusted to see how all-important 
 is the maintenance of their public credit. They wish, as recent 
 experience informs us, to give these securities so high a sanction, 
 as to allow the investment of trusts in them, the trustee being 
 indemnified I presume, if, by any untoward accident, the value 
 of the security should seriously decline. But I very much doubt 
 whether this enforced amity and deference would be strong 
 enough to resist an antipathy. The refusal of the Queensland 
 Government, one which more than any other Australian colony, 
 relies on the Colonial Office for the support of its foreign policy, 
 and its relations to the Colonial experiments of Germany and 
 France, to accept as its governor a nominee of the Colonial 
 Office is sufficiently ominous. It is perfectly well known that this 
 refusal was based on a dislike to the antecedents of the nominee, 
 expressed pretty loudly to the government in possession, and the 
 Opposition in expectancy. It is also plain from which of the 
 nationalities contained in the Colony that opposition sprang, and 
 the whole facts show that the social system, and the domestic 
 policy of the mother country, are examined with a keen, per- 
 haps an unfriendly interest, by those who are able to make an 
 administration reflect their views. Now I have referred to this 
 case, not to utter any judgment on either social system or
 
 MOVEMENTS OF LABOUR. 289 
 
 policy, but to illustrate what I said before. But in the interpre- 
 tation of the relations which subsist between emigrants and the 
 country of their origin, an important element in the anticipation 
 of economical harmony exists, and has to be duly estimated in 
 the emigration of discontent. 
 
 It seems at first sight that all emigration must relieve the excess 
 of population. It is plain that they who remain are all the fewer 
 by reason of those who go. But the facts do not admit of so easy 
 a solution. It is necessary first to determine in what direction the 
 excess of population is to be discovered and relieved. In the next, 
 it is a question ot great importance to decide whether, however 
 much the individual is benefited by emigration, the community is 
 not Aveakened. But the interpretation of the first question is one 
 which requires a knowledge as to what are and what are not the 
 industrial forces of society ; of the second, what is the proportion 
 in which the various industrial agents in a community must stand 
 to each other, in order to bring about a due harmony of interests ? 
 Now it would not be possible, except after a very exhaustive search 
 into the facts of each case, to arrive at definite conclusions on the 
 subject. The most which we can do at present is to enunciate 
 some general principles and to examine a few crucial instances. 
 
 We shall not now need to be told that the industrial progress of 
 a country depends upon an adequate supply of competent labour, 
 and upon a similarly adequate supply of industrial cajiital. In 
 each, especially in the latter, there is always a margin over, on 
 which a draft can be made for occasions of extraordinary demand. 
 Hence all accumulations of capital employed for foreign invest- 
 ment are not, except very indirectly, and as subsidiary to ex- 
 change, elements of national wealth. Again, the industry which 
 strengthens and remunerates all is that which leaves the narrowest 
 margin of idlers or parasites, or, in economic language, of waste 
 producers in the economic census. Nations are not richer, as Mr. 
 Mill insists, by what they spend, but by what they save, meaning 
 by spend, what is consumed without any addition, direct or in- 
 direct, to the productive resources of a community. Furthermore, 
 as these non-industrial classes increase, and the share which they 
 appropriate from the annual produce of capital and labour becomes 
 greater, the more unsatisfactory does the condition of the bulk of 
 
 20
 
 290 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 really industrial agents become. I have thought it necessary indeed 
 to protest against the narrow metaphysics which seeks to define 
 unproductive labour and its inevitable concomitant consumption, 
 and have included under productive labourers all who contribute 
 direct or indirectly, but provably to the industrial energies of 
 economic existence. It may be, for instance, ignorance on my 
 part, but I cannot discover the slightest or smallest economic 
 advantage from horse racing, and its indirect mischiefs are of the 
 gravest and most menacing kind. It will not therefore be difficult 
 to discover in what quarters we should seek for the excess of 
 population, which emigration would conveniently carry off. But 
 this excess is what other communities, who might welcome emi- 
 grants, would not have at any price, or could not maintain, even 
 if such persons were willing to go. In new, progressive, and, as 
 far as individuals are concerned, wealthy communities, there is no 
 place for any unproductive persons, and only for certain productive 
 ones. They who encourage emigration to our colonies tell us very 
 plainly whom they want, and whom they do not want ; and it is 
 plain, they do not want those whom we could well spare, and they 
 do want those whom we can ill afford to spare. In effect, they do 
 no want to obtain the unemployed, but the employed, at least, in 
 certain well-defined directions. The more precise they are, the 
 more exactly do they claim from the countries of emigration the 
 very persons who are most useful to the country of their origin. 
 
 A community, then, is none the better for losing its ablest, most 
 energetic, and most enterprising workers, however much they may 
 be bettered by the change. Our forefathers saw this when under 
 the old labour statutes, repealed in 1825, they sternly prohibited 
 the emigration of artisans and skilled workmen. , In these times 
 of course they cannot be detained against their will. But there is 
 no small reason in detaining them with their will. It is impossible 
 that any rational and thinking person should conclude that an 
 emigration which carries all the best stocks and all the best work- 
 men off, and leaves the idler, the tramp, the pauper, the shiftless, 
 the worthless, and the criminal behind, is a benefit to a commu- 
 nity which is continually depleted of its best hands, and is com- 
 pelled to witness and put up with an increasingly valueless 
 residuum. I have never pretended to look with satisfaction on
 
 MOVEMENTS OF LABOUR. 291 
 
 the emigration of the best British workmen, and the retention of 
 the least valuable element in our social system. I do not know 
 whether the wisdom of Parliament will hereafter strive to make 
 their native country the most attractive home to the best hands 
 which we possess ; but I am quite sure that it would be worth 
 while to try the experiment, and equally sure that it has not been 
 attempted as yet. 
 
 There is, however, yet another consideration. The material 
 progress of a country depends on the harmony, and, if I may use 
 the expression, the equation of all interests, the most obvious test 
 of the success being found in the prosperity of the home trade. 
 If obstacles are removed, the harmony and equation are developed 
 spontaneously. If a great injury, owing to selfishness, folly, and 
 indifference on the part of a government, is inflicted on a capital 
 industry, the effect will be manifested in a depression of the home 
 trade. I do not doubt that nine-tenths of the trouble which has 
 been endemic in Great Britain during the last nine years or there- 
 abouts, is due to the calamities which have overtaken British 
 agriculture, calamities which will not be cured by the attempt to 
 establish artificial prices, but by an entire remodelling of the 
 mischievous law of landlord and tenant, under which the owner 
 is enabled to appropriate the occupiers' property or improvements. 
 If contracts had been entered into wisely and justly, the state 
 would have no need to interfere. But until we repudiate the 
 judge-made dictum, " cujus est solum, ejus est usque ad caelum," 
 and according to the latest gloss, "usque ad centrum terr:c," there 
 is no hope of agricultural restoration. Sooner or later, the Inmii 
 fide^ manifest, and accessible improvements of an occupier will 
 have to be recognized as his property, the reality and permanence 
 of which no contract, other than that of bargain and sale, should 
 be allowed to negative. All civil communities have recognized 
 that there are contracts which must not be enforced, and the 
 contract for the occupancy of land, in which the owner of the soil 
 is empowered to plunder the tenant at the completion of his 
 occupancy, is one of those contracts. It is, I .submit, e.xpedicnt 
 to render the country of their birth attractive to the best elements 
 in British industry, and I can conceive nothing which renders it 
 more unattractive than to inform, in the most practical way, these
 
 292 INDUSTRIAL AND COMMERCIAL HISTORY. 
 
 people that they are tenants at will, under an arrangement in 
 which they are sure to lose. 
 
 To all appearance the most obvious case in which emigration 
 would be a benefit is the relief of those congested agricultural 
 districts of Ireland, in which the holdings are so small, that even 
 on the smallest rent the occupier finds it difficult, with the most 
 unsparing industry, to get an adequate subsistence from his 
 tenancy. I have seen such tenancies by hundreds, and I can 
 allege, that there is no more baseless calumny than that which 
 charges the Irish cottier with laziness or unwillingness to work. 
 But it is not a light thing to expatriate a man, especially in a 
 country where the passionate devotion of the inhabitant to his 
 native soil is as real as it is inexplicable to the ordinary observer. 
 It is not a wise thing to expatriate him, when he nourishes, even in 
 the midst of an infinitely better condition of things, a deep and 
 abiding animosity against the government which has exiled him, 
 and the race which has condoned the injury. His feeling may be 
 irrational, but it is very clear and very lasting. Now the true 
 statesman does not seek to force his remedies on the unwilling ; 
 he studies their case, and soothes them instead of irritating them. 
 Hence it has been suggested, and as I think with wisdom, that a 
 system of migration cautiously encouraged, and, under the circum- 
 stances, safeguarded in Ireland, would be a better remedy than 
 emigration. No one can say that, with a population which is not 
 more than half what it was forty years ago, Ireland is over densely 
 peopled. Nor do I doubt that in time, and under conditions of 
 hope, and perhaps of consideration, the industries which were 
 violently suppressed in Ireland more than a century ago will be 
 revived and flourished. It was noted, at the time of the union, 
 that Ireland was singularly well adapted by nature for the cloth 
 industry. I know that it is far easier to destroy than to renew, 
 but of all the silly calumnies which can be uttered, none is more 
 silly than that of denying to a race, which has contrived to main- 
 tain its vitality, the power of recuperating its industries.
 
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