THE LIBRARY

OF

THE UNIVERSITY

OF CALIFORNIA

LOS ANGELES

TRADE AND THE
NATIONAL IDEAL

TRADE AND THE
NATIONAL IDEAL

BY M. H. G. GOLDIE

'Tis not antiquity nor author
That makes truth Truth.

HUDIBRAS.

LONDON
JOHN MURRAY, ALBEMARLE STREET, W.

1911

PRINTED BY

HAZELL, WATSON AND VINEY, LD.,

LONDON AND AYLESBURY,

NOTE

: Almost all the figures in this book are
L either quoted or deduced from the sta-
tistical returns of the Board of Trade.

I M. H. G. G.

4C2184

CONTENTS

CHAPTER

I. THE NATIONAL IDEAL . . . .

II. THE CHANGES NEEDED . . . .

III. ON CAPITAL

IV. THE EMPLOYMENT OF CAPITAL

V. FOREIGN TRADING THEN AND NOW .

VI. HOME TRADE AND FOREIGN TRADE .

VII. HOME TRADE AND FOREIGN TRADE {coft-

VIII.

ON TAXATION .

.

.

IX.

EMPLOYERS

AND

WORKMEN

.

X.

EMPLOYERS

AND

WORKMEN

{continued) .

XI.

A REVIVAL

OF AGRICULTURE .

INDEX

• *

PAGK
I

lO

27

42

59
67

80
89
108
126
145
155

vu

TRADE AND THE
NATIONAL IDEAL

CHAPTER I

THE NATIONAL IDEAL

It will conduce to simplicity and clearness to
give here an enunciation of the propositions to
be examined in this book. They are as follows :

First proposition. — It should be the ideal of the
nation to have the finest population possible —
physically, socially, and morally. The chief
work of the nation — agriculture and manufacture
— should be so carried on as not to impede
• ogress towards the ideal. This implies full
and suitable employment for all the people.

Second proposition. — To provide employment
for all, the following changes are necessary in
Great Britain :

1. Universal military service, by which the
defence of the nation will be at the same time
provided for.

2. An Aliens Act, of searching character,
strictly administered.

3. A Small Holdings Act, by which the revival
of agriculture will also be assisted.

Third proposition. — To provide employment, a

2 THE NATIONAL IDEAL

very careful reform of the tariff will probably be
required in due course. For the clearer under-
standing of this proposition, certain preliminaries
are necessary.

Proposition A. — The productive national capital
is the total national capacity to increase values,
and thus produce all articles necessary to the
nation. The productive capital of a member of
the nation may be his total capacity to increase
values, and thus produce some article or articles,
or parts of them ; or it may be the total value of
his investments ; or it may partake of both kinds.

Proposition B. — Capital of higher value is
created by the destruction of capital of lower
value : this is the true employment of capital.
Capital is also in certain ways sent abroad. It
is also misemployed.

Fourth proposition. — The conditions under which
the foreign trade of Great Britain is now con-
ducted are absolutely different from the conditions
under which that trade was conducted sixty to
a hundred years ago.

Fifth proposition. — If trade were everywhere
free, the foreign trade of Great Britain, under
modern conditions, would in some cases give
more employment than an equal home trade, and
in other cases it would give less employment.

Sixth proposition. — In face of high foreign tariffs.
Great Britain's home trade gives more employ-
ment than an equal foreign trade. Therefore
Great Britain needs tariff reform. This cannot
be arranged until complete statistics of the home
trade have been collected and published.

NATIONAL IDEAL EXPLAINED 3

Seventh proposition. — The necessary revenue
should be raised so as to encourage the true
employment of capital, and to impede as little as
possible the march to the ideal.

Eighth proposition. — To carry out its part suc-
cessfully, the Government requires the willing aid
of the employers and workmen. This aid will
not be effective unless the present somewhat
hostile feelings are converted into harmony be-
tween employers and workmen. The sources
of this hostility are to be found in the history of
the human race. A remedy seems possible.

Ninth proposition. — The employers and workmen
whose aid is required are especially those on
the land. Therefore a revival of agriculture is
essential to Great Britain.

First proposition. — (1) It should be the ideal of
the nation to have the finest population possible,
physically, socially, and morally.

It is not necessary to prove this part of the
first proposition : its meaning has only to be
clearly stated to command immediate assent.
The meaning of the physical ideal is, that the
men and women of the nation should have good
sound health, and the power to endure ; not
to be compelled to give in easily, nor to be soon
exhausted by holding on ; in a word, not, as so
many without real excuse are now, back-achers
for a little digging, heart-breakers for a little
marching.

Thus the men and women would be able to
do a real day's work in their respective spheres,

4 THE NATIONAL IDEAL

without the strain that prematurely ages. There
is nothing better for man, there is nothing more
truly enjoyable, than a sound day's work, ade-
quately paid for, provided the other conditions of
life are as they should be.

Infirm folks there must always be, and others
who, partly owing to past conditions, partly
owing to present conditions, can never have
good health, who are perhaps consumptive, or
worse. There must always be, too, a number of
people who, by the great cleverness of physicians,
have been just plucked from death, and are handi-
capped for the greater part of their lives.

Therefore it is all the more necessary that the
status of those who are not physically handi-
capped should be always closely studied, that
they should never be allowed to drift and be
the sport of fate. For their own sake, for the
sake of their children, and still more for the
sake of the nation, as many men and women as
possible should be at work where the air is
purest, and have their dwelling-place where the
sanitation is perfect.

Important as this is to adults, to those who
are younger it is still more important. All young
men should be obliged to live where the sanitary
conditions are most carefully watched, and should
at the same time be so treated that the obligation
should become as welcome to them as the advan-
tages to their physical growth are obvious.

The social ideal is an accompaniment of the
physical ideal, and means that improvement
should ever be worked for in the relations

SOCIAL AND MORAL IDEALS 5

between man and man. The time has long gone
by when a man could carry on any general kind
of work by himself alone ; there is certainly no
trade or calling, there is no profession, except
perhaps one, where a man executes more than
a little part of a great whole. Therefore, as
far as possible, all work should be harmonious
work ; that is the ideal. What then is harmoni-
ous work ?

Harmonious work does not mean blind work :
on the contrary, it is desirable, for plain reasons,
that into all work should be put as much thought
as the work, always quicker, better, more cleverly
done, by men able and willing to think, is capable
of taking. Therefore harmonious work is the
product of workmen whose minds are accustomed
to discipline. When men who have attained this
mental stage work together for an employer who
understands, the social ideal is coming nearer.

The moral ideal is the complement of the social
and the physical. It is necessary to the nation
that its men should be good husbands, good
fathers, and good workmen. The underlying
idea here is that of justice to all alike, including
justice, but no more than justice, to one's self.
Is not this so? To treat the wife well, so that
she can make a real home ; to treat the children
well, so that they ma}'' grow up rightly ; to work
like a man : to do these things is to deal out
justice to all. Morals are manners. To do unto
others as you would that they should do unto
you, this is only a part of manners, though it is
very well. The justice that will not do evil unto

6 THE NATIONAL IDEAL

another is not thinking of self; it is recognising
a right. Nevertheless, where there is no wrong-
doing to others, though there need be no thought
of self, though there be a recognition of right,
there is always right-doing to one's self.

It will be found, in " Krieg und Sieg," that in
the war of 1870 the German leaders laid stress
on the morality of their men, considering them
to start with an initial advantage, great enough
to presage victory over others less moral. There,
too, if we examine well, the underlying idea is
that of justice to all. Men who live so as not to
hurt others practise self-denial, and so grant to
their own minds and bodies the right to be strong
and good. In all contests, whether in the field
of battle or in the workshop, an army of dis-
ciplined, morally superior men will defeat an
army of rogues.

(2) The chief work of the nation — agriculture
and manufacture — should be so carried on as not
to impede progress toward the ideal.

Life in general, not excluding the national life,
has more phases than one. When the planet
Venus is showing herself to the earth in one
phase she is showing herself to the planet Mars
in quite another phase. The life of a man is in
his work and his home, but at the same time
what he does is of national importance ; for the
total national profit is the result of the work of
all the little units ; and that the national life may
move in a certain direction, all the combined
efforts of the workers must be made in that
direction. But the chief occupations of workers

CHIEF WORK OF THE NATION 7

are agriculture and manufacture. So that to
say the combined efforts of the workers must
be made in a certain direction, is to say that
agriculture and manufacture must be so carried
on as to admit of advance in that direction ;
the total effort must carry forward these occu-
pations so as not to impede progress toward the
ideal.

It matters not then if we watch a nation as a
whole struggling, it may be half blindly, yet
efficiently, towards an ideal ; or if we watch
the agriculture and manufacture of that nation,
wisely, quietly, and successfully conducted — we
are watching two phases of the same thing.
The ideal is of course only an ideal, and perhaps
to the average workman means at present abso-
lutely nothing. But it may come to mean some-
thing to those who guide the destinies of the
nation ; and if so, then the higher the ideal the
better for the nation. A low-pitched ideal calls
no one forward. The ideal placed before the
Boy Scouts is a high ideal, so high that some
people think it absurd. It is not absurd, even
though only a scout here and a scout there can
come near it : for the moment upward striving
ceases, the road is downward.

The general proposition is, then, that whether
workers know or do not know anything about the
ideal, the conditions in which they live and work
should be such that they can continue healthy
and thoroughly well able to work; and that
they should be men who have become accus-
tomed to discipline, and therefore able to con-

8 THE NATIONAL IDEAL

centrate their thoughts on the work they are
doing with the object of devising improvements
in method.

There is nothing strange in the notion of
men so giving the best of their minds to their
work that, conditions being suitable, they make
discoveries of vast importance. Nearly one
hundred and fifty years ago James Watt, work-
ing with his thoughts concentrated on the repair
of a Newcomen's model steam engine, discovered
or invented the separate condenser.

Henceforward in this book we shall attend to
agriculture and manufacture as the chief occu-
pations of the workers. If they are going
forward rightly, the nation is going forward
rightly, and the workers themselves are apply-
ing a sufficient degree of energy in the proper
direction.

(3) This implies full and suitable employment
for all the people.

The march must be badly conducted if numbers
fall out because they cannot keep up. How
much worse must it be if numbers never join
because there is nothing for them to do ?
Should there be a dearth of workers, if the
work to be done is more than all the workers
of the nation can manage, there is a remedy.
The men being all trained to work with head
as well as hands, from among them, at such a
crisis, will emerge those who, intelligent as
James Watt, will hit on abbreviating processes ;
and the workers, with such help, will overtake
the work to be done; or, if the paucity of labour

FULL EMPLOYMENT FOR ALL 9

arise from the hardness of the conditions, the
conditions can be changed.

But if there be too many labourers for the
work to be done, then a part, an indispensable
part, of the national capital is lying idle, and
there must be something radically wrong about
the methods used by the nation. Where there
is paucity of labour, then, too, indispensable
national capital is forced to be idle ; but that
capital is the capital required to set labour-capital
to work, and, as said, there are ways in which
labour-capital can apply itself to diminish the
evil, or by which the conditions of labour can
be improved. But if the capital lying idle be
the labour-capital itself, then it is the system
itself that is wrong, the mode of applying the
capital that sets labour-capital to work, the
method of trading.

In this inquiry we shall find that Great Britain
is face to face with the ills that arise from the
enforced idleness of labour-capital, and with
those that arise from labour conditions that have
become impossible.

CHAPTER II

THE CHANGES NEEDED

Second Proposition. — To provide employment for
all, the following changes are necessary in Great
Britain :

I. Universal military service, by which the
defence of the nation will be at the same time
provided for.

In every country defence against external foes
is, and must be, undertaken by the Government
of that country. As long as general human
nature continues to be pretty much as it now
is, the improvement of any one population does
not render it immune from attack by other
populations, unless it is itself so strongly organ-
ised for defence as to be unassailable with real
hope of success. Almost all European govern-
ments endeavour to carry out this object by
training the mass of the male population to the
use of arms, and by organising a certain pro-
portion for immediate action. The Government
of Great Britain is, and always has been, an
exception : not attempting, since the days of
the Tudors, to train to the use of arms more
than a small portion of the people, compelling

UNIVERSAL MILITARY SERVICE ii

no one to move a finger for the defence of his
country, except by means of the press-gang, which,
however, has now long been abolished, and Great
Britain seeks always to man her fleet, and to
settle every national quarrel, with the help of
volunteers.

It can be clearly demonstrated, to any one re-
quiring such demonstration, that to be trained to
the use of arms, and to practise for the necessary
period, all the bodily movements implied by such
training immensely improve the physique of
any one so trained. Such training does not, as
so man}'' ordinary occupations do, harden one
set of sinews, put muscle on one particular limb,
and relax all other sinews and limbs : it improves
the whole body, without and within, often mak-
ing, of what were under-sized, round-shouldered
lads, fine, healthy, vigorous men.

A nation where such training is universal is
taking a distinct step, even if it should never
have to fight a single battle against a foe, towards
making its population the finest possible physi-
cally.

Something towards such an end might perhaps
be done by establishing gymnasia all over the
country, in all its towns. But by that means
nothing would be done towards the defence of
the country : universal military service achieves
both ends in a stroke.

But we are supposing a nation, besides wish-
ing to do its utmost to improve the physique of
its population, to desire also the greatest possible
degree of social improvement, that is, in the

12 THE CHANGES NEEDED

relations between man and man. The defence
of a country does not depend merely on the
physique of its inhabitants, not even on their
skill in the use of arms, taken by itself. It
depends also on the spirit that urges them for-
ward, and on the way in which they have been
trained to act together ; on their patriotism and
their discipline. When men are thus trained
together on a thoroughly sound system, avowedly
for the defence of their country, patriotism is
one of the keynotes of that training, and dis-
cipline is the other.

Discipline is a very different thing from simple
obedience ; if it were otherwise there need be
no such word as discipline. But indeed this
very word, discipline, implies that it includes
something, even a great deal, that is to be
learned. He who is learning discipline is a
disciple ; and it is the great feature of true
discipline, when it has been thoroughly learned,
that no man in the squad, or the company, or
the battalion, acts as though he were the only
one man. Each unit goes forward in relation
to other units. A thoroughly disciplined soldier,
working with disciplined soldiers, relies abso-
lutely on the courage, the knowledge, the inten-
tions of the men on his right and left : he has
come to rely on these as if by instinct, and
he similarly relies on the man in front, his
leader, and on the men behind him, his supports.

It cannot but be that well-disciplined men,
highly patriotic men, must, in their subsequent
industrial life, be worth far more to a nation

UNIVERSAL MILITARY SERVICE 13

than men who see no outlook but that of their
own little selves, and care for no object but
that of their own immediate profit.

And finally, a nation should wish to improve
morally. If it do not so wish, it will not
improve morally : on the contrary, it will grow
less moral, for it certainly cannot stand still.
Whatever may be the effect on morals of
soldiering, in a nation of civilians protected by
volunteers, it seems certain that one great moral
improvement might very well be originated by
the adoption of universal military service ; and
that is a desire for justice in all human dealings,
springing up from observation of practical justice
illustrated by the general obligation to perform
a great national duty. Not that this improvement
has necessarily followed in those countries where
military service is now universal, but that it should
follow in a country where freedom approaches
reality, and where such service, hitherto un-
known, can be conducted on right principles.

When the defence of a nation is so organised
that the majority of the people of that nation
make no sacrifice whatever of time and means
in the service of their country, there must be
gross injustice ; and such injustice comes, in
that country, to be looked upon as a necessary
phase of the national life, as almost a kind of
justice. A certain number of men who care a
little more than others for their country, in whom
a sense of national claim is not yet wholly dead,
come forward to be trained : a certain number of
employers who are like-minded consent to lose

14 THE CHANGES NEEDED

the services of their men, and to do the best
that can be done for a time without them. Those
who are selfish reap the monetary advantage,
those who are more patriotic, or less selfish, sub-
mit to the handicap.

All this injustice would be put an end to by
universal military service ; and the idea that all
men, being citizens of one country, should equally
do their duty, would permeate all candid minds.
There are hosts of men who would not by this,
nor by any other means, be prevented trying
to take advantage of others ; but if evil cannot
be extirpated it may be diminished ; and the
spread of the idea of justice is a means toward
the great end.

The idea of justice contains the notion of a
right. Men do often claim as their right that
which encroaches on the right of another. The
great right that every citizen can and should
claim is the right to be a full citizen. No one
is exercising the right of a full citizen who shirks
his patriotic duty in order to snatch what he can.

This is not the whole matter. Besides being
very good for a nation, universal military service
may be so organised as to be much more efficient
for defence than any form of voluntary service.
For where all serve equally there is no injustice
in keeping men actively serving much longer than
would be possible where some bear the burden
from which the majority shy away.

Nor need universal service necessarily involve
a nation in expenditure higher than that required
for the maintenance of regulars and volunteers.

UNIVERSAL MILITARY SERVICE 15

The expense of a year of universal service must
not be compared with that of a year of voluntary
service, at a time when there are no alarms of
war : that would be quite misleading. To make
a comparison that is fair, to the latter expense
must be added a share of the cost of the panics
it causes from time to time, a share of the cost
of building a number of ships of war, and of
suddenly calling to arms and training, when the
cost of such sudden and wholesale training is
enormous, a host of men who have never served
a day in earnest. It must be remembered that,
where service is voluntary, men must be in-
duced to serve, and, if they are to enter the
regular army, must be propitiated by high pay
and expensive keep. Where all serve no such
inducements are offered ; the whole army is
national and regular, and a comparatively small
total of foreign service pay replaces a great total
of propitiatory pay.

Finally, universal service has an important
effect on unemployment ; and it is reasonable to
ask which is preferable — to pay large sums that
a number of men who cannot find work may
not altogether starve, or to expend those sums
in training youths for the great service of their
country, and at the same time fitting them in
the best way for the subsequent work of their
lives : that is, to give the youth of the nation
what is, at their time of life, the employment
they most want, and to divert from aimless wan-
dering the unemployed who would replace, as
far as needed, the youths called up for service.

i6 THE CHANGES NEEDED

It is not the duty of any Government to force
an important change on an unprepared people ;
and for the change impHed by universal military
service the British people have not yet been
prepared. It is the duty of Government to lead
the way, to prepare the people, to lay before
the nation the whole case, to show that universal
service will benefit chiefly the workmen of the
nation. It is they who will grow stronger,
physically, socially, and morally, who will be
enabled to do more and better work, whose value
will increase, and who will therefore have more
capital at their command. Of two employers,
one of whom was stronger, more moral than the
other, it might be the latter who had most
brains of the kind required, and grew rich the
faster. It is to the workmen the Government
should address itself; it is by them the change
should be demanded.

The argument is sometimes used that universal
service, taking away from industrial life, as it
always does, a large number of men, must neces-
sarily handicap a nation in its industrial progress.
There is no reason to suppose that this is a real
necessity : on the contrary, it is more probable
that universal service, seeing what it does for
men, is a hastener, not a retarder, of industrial
progress. Experience seems to show this.

We do not now permit boys under a certain age
to set to work. Why ? Because their bodies are
not yet hardy enough to bear the strain of work,
because their ignorance is still so great, they
can do no good work. Let this idea be carried

ALIENS ACT 17

farther. The youths who are trained in a system
of universal service are made far more hardy
than they would otherwise have been ; they have
acquired knowledge of the best kind ; they are
well moulded for work. Thus the time occupied
in training is afterwards far more than made up ;
the work done is of better quality, and it is
done more quickly.

This universal service, then, is very important ;
because, when elaborated by a great military
organiser, it puts the defence of the nation on
a sound footing : when thoroughly carried out
it trains the whole youth of the nation to arms,
and for their subsequent work ; it replaces in-
justice to many by justice to all, and it gives
employment, more valuable at that particular
time than any other, to the men under training,
and re-employment to a number of others now
in great difficulties.

2. An Aliens Act, of searching character, strictly
administered.

Universal military service, taken alone, might,
in one important respect, prove disappointing.
Other measures are necessary that the greater
measure may succeed. The first of these is a
thorough Aliens Act, administered without flinch-
ing. After a man has served his country for the
stipulated time, as a sailor or soldier, his return
to work at his trade or his apprenticeship, as
the case may be, should be simply like walking
through an open door. It would be rather
awkward if in such circumstances a considerable
number of men found their places already taken

i8 THE CHANGES NEEDED

by foreigners. In the absence of a sufficiently
drastic Aliens Act, fully put in force, this is
what would certainly happen.

There is a second reason for an Aliens Act,
and this reason is such that no time should be
lost before passing the Act and enforcing its
full powers. At the present time young men
in numbers are leaving the country at one side,
while foreigners, too many of them undesirable,
are entering at the other side. The young men
now leaving Great Britain are the very men she
ought to keep, the foreigners now entering Great
Britain are the very men she ought to keep out.
She will have to do so in order to make universal
service a success.

Such an Aliens Act should have two leaves.
On one should be shown what sum a foreigner
who wishes to enter Great Britain must first pay
down ; and that sum should be large enough to
insure that none will enter but really good work-
men, men who will not take low wages, and who
are so accustomed to a certain degree of comfort
that they will spend nearly the whole of their
wages where they work. Such men, driven from
their own country by persecution, have been
known, in the distant past, to bring good fortune
to the country of their adoption : they brought
their own capital, which remained in the country
of their adoption : they sent nothing out of it.
But Great Britain at this moment is facing a
crisis : she is forced in these hard, striving days
to fix a very strict limit even to these importa-
tions.

ALIENS ACT 19

On the second leaf should be shown what
each foreign workman whose condition appears
unsatisfactory must pay for the privilege of
remaining in Great Britain, and that amount
should be sufficient to insure the country against
its present depletion of capital, arising from the
remittance abroad of foreign workmen's savings.
Suppose each such workman to remit abroad
periodically every farthing he could scrape up,
he might send abroad annually, in spite of his
low wages, living as he does in disgusting slums,
quite a considerable sum. The number of such
workmen in Great Britain being large, an im-
portant sum in this way most probably goes
annually abroad, and it goes in the form of
exports, including gold, for which no imports
are received in exchange. Our exports are thus
constantly swollen by this depletion of British
capital ; and for this there never is and never
can be any return. The men who oust our own
workmen, or prevent their return to work, injure
the country likewise by taking away its capital.
Moreover, men who receive little, and desire to
save all they can of that little, spend but little ;
such men, therefore, do little themselves towards
creating a demand for commodities, and they
prevent others from doing so.

The duty of Government in this matter is
sufficiently clear ; it is to act decisively and
without delay.

Some people do not like the idea of such an
Act, because Great Britain is a free country, free
to all, to enter or go away as they please. This

20 THE CHANGES NEEDED

must be a tradition from the old slave days,
when a slave became a free man the moment his
foot touched British soil. But that belongs to
the past. We should certainly, without an Act,
keep out of our country now men suffering from
any fearful disease ; and why ? Not from any
dislike to the foreigners as such, but because
we do not intend our own people to suffer
and die owing to the introduction of such dis-
ease : we cannot afford it. Nor can we, with
so many men standing idle, afford to have our
workmen under-sold at their trades and still
kept idle.

There is also a sentimental feeling that Great
Britain must never be inhospitable. It is purely
sentiment, and in the circumstances unwise
sentiment. When a question arises between
employing our own fellow-citizens at their wages,
or foreign workmen at lower wages, it is the
positive duty of Government to take the steps
necessary to defend their own people ; and that
would hold good, even if foreign workmen did
no other harm but keep our own men idle ; but
they harm Great Britain in other ways, by
depleting her of capital, and by reducing the
demand for commodities.

As has been said, really good workmen in
reasonable numbers no one would object to, on
certain terms. There are such workmen, now
in Great Britain, employed on work of more
than average utility, agricultural work, such as
the making of butter. If it were possible to
carry on such work remuneratively, and put food-

ALIENS ACT 21

products on the market at reasonable prices, only
by using foreign workmen as directors, it would
be better to continue employing foreign directors
than to lose the food-products.

But there are alternatives. Suppose a country
to possess large quantities of iron ore of a grade
so low that, do what she will, she cannot extract
iron economically. And suppose her to have a
neighbour who has found out the secret of
making low-grade iron ores pay well. The
former country can send to the latter a number
of intelligent workmen, commissioned to seek
employment, to learn thoroughly the best methods
of treating low-grade ores, and then to return
with the object of starting a new and great
industry in their native land.

There is a country, not far from our shores,
in which excellent dairy products are prepared
by the farmers. There is, or was a few years
ago, in that country, a staff of trained inspectors,
whose mission it is to visit, for a fixed fee, any
farm on application. By this means the farmer
learns in what respects his methods differ from
the latest approved methods, as taught in the
institution whence the inspectors are sent out.
The farmer is thus enabled to correct his errors
and bring his methods up to date.

Either alternative is at the disposal of Great
Britain.

There are reasons for a real Aliens Act, quite
apart from those here given, but they are not
directly connected with universal military service,
nor with the national industries. The present

22 THE CHANGES NEEDED

apology for an Aliens Act is useless for any pur-
pose whatever.

3. A Small Holdings Act, by which the revival
of agriculture will also be assisted.

When the advantage to themselves of universal
military service has been explained to the people,
it is to be presumed they will decide in its favour.
Great Britain must still, in that case, maintain a
long-service imperial force, though not on the
scale of the present regular army. Men com-
pleting service in such a force would naturally
receive pensions, but they would not be able to
live entirely on such pensions, and therefore
would have to work. Such men might find, as
indeed they do at present, some difficulty in
reverting to work at any trade, however un-
skilled the men of that trade had need to be.
It is a crying evil, at the present time, that such
numbers of our discharged soldiers and, to a
less extent, sailors, find it almost impossible to
get work. Universal service, properly organised,
would bring that evil within bounds, but, in the
a:bsence of a further Act, the evil would still
exist. That Act is an Act for the provision of
small holdings, on which long-service men,
having suitable qualifications, might be settled.

The idea of small holdings is no new one.
There is, indeed, now a private organisation
pushing this scheme ; and there have been laws
authorising the placing of men on small hold-
ings, and men have been so placed, but some-
times with a conspicuous want of success. Small
holdings must end in failure where certain

SMALL HOLDINGS 23

important points are not attended to, and, so
far, these points have not always received the
attention they require.

In the first place, the nature of the land chosen
is of extreme importance. What could a settler
do on a cold, damp clay ? What could he do
on a soil so light that a single dry summer might
sweep away all the profits he had ever made ?
The only soil suited for small holdings is a good,
fertile soil, the choice of which is a matter for
men of knowledge.

Secondly, the situation of a small holding is
of equal importance. It may seem incredible,
but is stated to be a fact, that existing, or lately
existing, small holdings have been abandoned
because they gave no possible market for pro-
duce. The holdings of the future must be within
easy reach of a certain and sufficient market,
and where fertilisers can be readily obtained.

Third, the men themselves must be suitable
men. The class of men who now leave the
land and emigrate would do very well on small
holdings, if their locations were correct. No-
thing in Western Canada more surprises than the
way men work on land of their own, even men
who by no means do as much as they might
when working for some one else. It is because
they have a prospect before them, and hope is
in their hearts. The same would apply to suit-
able pensioners placed on well-chosen holdings
in Great Britain. Such men, always working
hard, always producing, would continually in-
crease the capital of the nation in that particular

24 THE CHANGES NEEDED

form of capital of which the nation has most
need — food raised within its borders.

The fourth need is the establishment of land
banks, to make advances to the settlers on the
security of the land, for all necessary preliminary
outlay, and for the maintenance of the settlers
and their families until the holdings become
profitable. It is not clear that such banks need
depend on Government where the holdings are,
as they should be, the property of the settlers. In
Western Canada privately owned banks do a
large business of this nature. That the business
is profitable is shown by the continual increase
in the number of branches opened ; that the
farmers benefit is showm by the steady growth
of Canadian agricultural prosperity.

It would be difficult even to guess what per-
centage of discharged long-service sailors and
soldiers would have the requisite ability to work
profitably on small holdings. That many of
them would be able to do so, there is no ques-
tion. That many of them would not, there is
also no question ; yet it is to be hoped that the
number of pensioners thus furnished with a
good opportunity of settling would be at least
important.

For these men, just as for all discharged
sailors and soldiers, of whatever length of ser-
vice, it is essential that work should always be
at once available ; and therefore a subsidiary
scheme would be required for all the long-service
men unable to .manage small holdings. There
are many people who think that, to meet these

SMALL HOLDINGS 25

cases, a certain proportion of employment should
be reserved by Government and the great trans-
portation companies. It would be a wise move-
ment ; it would change a state of affairs of which
no nation could be proud, and would make
volunteering for the foreign service force much
more popular.

The provision of a partial remedy for the evils
attending want of employment for discharged
sailors and soldiers is not, however, the chief
object of a Small Holdings Act. The chief object
of that Act is to assist in the desired revival of
agriculture, than which nothing can be of greater
moment ; first, as an aid to the Aliens Act, in
keeping some of the most able-bodied of British
workmen at home, instead of letting that ex-
ceedingly valuable capital quit the country ; and
second, as a means of increasing the production
of food in the United Kingdom.

If it be desired to have the finest possible
population physically, it is surely wrong to aid
in sending out of the country the very best men :
yet there are many agencies trying to do that.
Work on the land, under really suitable con-
ditions, is still the very finest occupation for
able-bodied men. It does not seem to be con-
sidered so in Great Britain, although it is so
in other parts of the Empire. Why is this ?
Is not the answer perfectly plain ? Men on
farms, in Great Britain, have had to work under
certain conditions ; in other parts of the Empire
they work under very different conditions.

There can be no question that the more food

26 THE CHANGES NEEDED

Great Britain herself produces, the smaller the
risk of panic and unnecessary suffering in case
she had to wage war. The men who can get
most value out of the ground are therefore the
men she wants : the nation would do well to
offer inducements to these men to stick to her
and do their best.

Against these arguments the simple objection
might be raised that they all recommend inter-
ference by Government, and that interference by
Government, in matters touching the liberty of
the subject, is subversive of freedom. The
Government of the day, of whatever party it
may happen to be, is set up by the people
themselves for distinct purposes. There is no
interference with freedom if the elect of the
people seek to draw public opinion one way :
it is constantly being done, without objection
raised, as far as the lights of Government and
its advisers penetrate. The time seems to
have come when the state of affairs demands
the exchange of the old inefficient lights for
modern, wide-sweeping search-lights.

CHAPTER III

ON CAPITAL

Third proposition. — To provide employment, a
very careful reform of the tariff will probably be
required in due course. For the clearer under-
standing of this proposition certain preliminaries
are necessary.

Proposition A. — The productive national capital
is the total national capacity to increase values,
and thus produce all articles necessary to the
nation. The productive capital of a member of
the nation may be his total capacity to increase
values, and thus produce some article or articles,
or parts of them ; or it may be the total value of
his investments ; or it may partake of both kinds.

There are different ways of dividing capital
into classes. Thus, it might be described as
reproductive and non-reproductive. The food of
the workman is reproductive capital ; the capital
which has become tobacco is non-reproductive.
But as it is only desired to understand what use-
ful capital really is, and not to compose absolutely
exhaustive definitions, the number of classes may
be limited to three : labour-capital, the capital
that sets labour to work, and invested capital.

27

28 ON CAPITAL

The capital of an artisan or workman is his
health, strength, and skill. These may be ex-
changed for food, clothing, lodging, and some
leisure and amusement ; the object of the ex-
change, which is made through the medium ol
wages, being to restore a capital very quickly
exhausted. A workman's tools are also his
capital. As long as the artisan works in his own
country, these parts of his capital are truly and
absolutely part of the capital of his own country.

In many countries the returns of savings
banks show that some workmen have small
amounts of money invested. It probably so
seldom happens that any part of the workman's
capital is invested in a foreign country, that it
may be considered as, upon the whole, part of
the national capital, unless it is invested in a
Government loan. The principal of a Govern-
ment loan must be regarded as expended and
gone, leaving, however, the interest as part of
the capital of the investor and ol the nation.

A horse has health, strength, and a small
measure of skill : has a horse, then, capital ?
No ; a horse is owned ; and what would other-
wise have been its capital is a part of the
capital of its owner. When, therefore, it is said
that a certain person has so many horses, it is
implied that he has, in those horses, a definite
amount of capital, which is really a number of
qualities, such as, swiftness, endurance, strength,
beauty, and docility, giving an exchangeable
value to those animals.

In the old da3^s, when there were slaves, the

WORKMEN'S CAPITAL 29

slave-owner had their health, strength, and skill
as a part of his own capital. A free man is not
owned ; he has his own capital ; that capital is
not part of the capital of any other owner, but
it is a most important part of the capital of
the country in which the free man works.

This capital of the artisan is a type, therefore,
of the class of capital which is called labour-
capital. And it is perceived to consist chiefly of
labour-capital, the property of the artisan and
of the nation, and possibly of invested capital,
which in this case is generally also the property
of the artisan and a part of the national capital.

It should be added that artisans subscribe from
their savings to unions and friendly societies,
and sometimes to co-operative stores. The funds
of these institutions may be partly invested in
such a way as not to form a part of the national
capital.

We come next to the employer of labour. He
may be a farmer, a manufacturer, a shipbuilder,
a mine- or railway-owner, a shopkeeper, a builder,
— any one who so organises labour and materials
as to produce articles, move articles from one
place to another, or distribute articles, necessary
for use at home or abroad. The producer of
articles, or the mover or distributor of articles,
has first of all, as capital, his trained power of
organisation. He has also something to sell.
This may be a stack of corn, a cargo of piece
goods, a package of cutlery, a power of haulage,
or groceries, or ironmongery for retail. All these
are capital, part of the capital of the employer

30 ON CAPITAL

used to set labour to work, and, at the same
time, part of the national capital. Then the
employer has also his share of the means of
creating that something to sell, or of providing
the necessaries for moving or selling it. That
also is capital, and may be machinery, shelter,
engines, trucks, shops, fittings, and so forth.
That capital, too, is part of the capital of the
employer, and of the country in which his work
is carried on.

An employer must also have a goodwill ; that
is, his business must be a going concern, or it
is ineffective. A goodwill always costs a lot
of trouble and outlay to build up ; sometimes
it is partly the result of great expenditure in
advertising. It cannot by itself be exchanged,
but it adds considerably to the exchangeable value
of the business of which it is a part. Therefore
to the employer it is capital. It is also, in a
similar sense, capital to the State. Suppose an
employer to have done but little towards working
up a goodwill ; then he does a little business
instead of a great business. The greater the
business done by the whole of the employers in
a State, the greater the business of the State as
a whole. Therefore if some of the employers do
but little business, there is a diminution of the
business of the State as a whole. But though
some employers may in this way be making much
less profit than they might do, it does not follow
that the loss to the State is always exactly
equal to theirs. For it may happen that all the
workmen, in the particular trade concerned, are

EMPLOYERS' CAPITAL 31

employed, so that no more are available till
properly trained ; or the market for goods of
the kind produced in that trade may for the
moment be well stocked. Thus the State is
already doing, in that particular line, all it, for
the present, can, however much the business of
certain employers falls short. That is, while the
defect of capital to these employers is great and
present, the loss to the State is rather prospective
than immediate.

Finally, every employer must have, or should
have, a reserve, which is also necessarily a part
of his capital, but not necessarily a part of the
capital of the State. This part of his capital
an employer may invest where he likes ; and
accordingly a British employer may be a part
owner of the securities of France or Russia ; he
may own part of a French railway, or of a
Russian oil-well, or of a Chinese coal-pit ; and
such capital is no part of the capital of Great
Britain.

The capital of the employer, then, is a type of
that class of capital which is required to set
labour to work. It is composed partly of capital
of that class and partly of invested capital. All
three forms are clearly necessary for carrying
on the industrial work of the nation ; no one
form is of any use without the others. There
is, however, this difference in application : the
capital of the workmen must be their own ; no
one else can use it, and nothing can be produced
without it. Nothing can be produced without
the other forms of capital, but in theory it is

32 ON CAPITAL

immaterial who owns those forms of capital, a
private individual, a family, a small company, a
great company, or the State. In practice this
is not exactly so, ownership by the State very
seldom giving results equal to other ownerships.

The capital of the employer is perceived to be
also national capital, with the exception of his
invested capital, which may be partly national
capital or wholly so, or may not be national
capital at all.

It is to be observed before closing this detailed
examination of the nature of capital, that how-
ever little skill a working man may have, he
must have capability in some direction, for he
has otherwise nothing to sell. Farm labourers,
navvies, hodmen, all have some skill, differing in
kind and in degree. To some workmen their
strength is chiefly of importance : draymen, coal-
heavers, porters would have little to exchange
for wages if they were physically weak. Clerks,
on the other hand, depend on their skill, as in
speaking or writing foreign languages, or in
making out business letters from notes, or in
keeping books of accounts ; and in many instances
they add to these another valuable qualification,
that of trustworthiness.

Other workers, besides these, are lawyers,
doctors, government officials, actors, musicians,
and many more, whose capital it is not necessary
to consider separately. Briefly, in the case of
all workers, capital is of one kind or another :
it is either health, strength, and skill, or it con-
sists of invested savings or acquirings. In some

LANDOWNERS 33

cases, as in that of the artisan, the former capital
is that of the workman himself and generally of
the State also. In other cases, as in that of the
actor, this capital is that of the worker himself,
but not that of the State directly, but only in-
directly ; since, when it is employed, it helps to
bring about the quicker restoration of the similar
form of capital, temporarily exhausted by the
workman, and, in the case of the employer, of
that part of his capital which depends on his
individual powers. The latter capital, that is,
invested savings, may or may not be a part of
the national capital. It never is so if invested in
a foreign country, and it is not so if invested
in a home government loan ; though the interest
in these cases, if brought home, becomes a part
of the national capital.

The landowner may or may not be an employer
of labour, in the industrial sense, because his
land may be let to tenants, who become the
employers. To the landowner his land and the
buildings on it are a part of his capital. The
productive land is also part of the capital of the
State : the buildings on it are in part capital of
the State and partly not. The great house in
which the landowner lives is not a part of the
capital of the State, but the farmsteads and the
cottages in which the labourers live are neces-
sarily a part of that capital, since they form an
indispensable adjunct to the productive land.

Like the employer, the landowner has usually
a larger or smaller amount of invested capital.
Such investments may be in home securities or
3

34 ON CAPITAL

in foreign securities. In the latter case they
form no part of the national capital, though here,
as elsewhere, the interest, when paid and brought
home, does form part of the national capital. In
the former case, provided they are not merely
a portion of a State debt, the investments are a
part of the national capital.

There are many persons who derive their
whole income from invested capital. Some of
these have their capital invested entirely at home,
others have both home and foreign investments,
and some, no doubt, have almost the whole of
their capital invested abroad. All these persons,
as a matter of course, employ domestic labour,
but they are not employers in the industrial
sense. Those who have all their capital invested
abroad bring into the country in which they
live the interest on their principal, and add a
portion thereof to the national capital. The other
portion, which defrays their necessary expendi-
ture, though it may appear to give employment, is
an addition to the national capital only in so far
as that employment creates a demand for com-
modities.

It is thus quite clear that there is a vast
difference between national capital and collected
individual capital, and hence it was necessary,
in stating Proposition A, to divide it into two
parts. This difference is twofold. In the first
place, the total national capital is not by any
means the same as the total capital of the in-
dividual members of the nation. In the second
place, the mobility of national capital is not

PRIVATE CAPITAL 35

nearly so great as the mobility of the capital
of an individual. So often do people speak of
national capital when, in reality, they are think-
ing of capital belonging to individual members
of the nation ; and so important and interesting
is the difference between national and individual
or private capital, that a few sentences will be
devoted to it.

A great railway system consists of land, per-
manent way, rolling stock, stopping and collect-
ing stations, stores, and a built-up business.
That business is the transfer from place to place
of passengers and goods ; it is for that transfer
business the railway system exists ; all its stock,
all its lines are devoted to that business — a
business which in that special district can be
carried on, and is continuously carried on, only
by that particular railway system in the country
in which it exists. This system is therefore a
part of the national capital which cannot be
moved out of the country where it is.

Let us suppose two such railway systems, one
in Great Britain, one in Argentina ; each system
forming a part of the national capital of Great
Britain and Argentina respectively, each system
doing its work of transportation in its own
country, and each system fixed in its own country
and not capable of being moved from it.

Let us suppose each railway system to be the
property of a company. Then each shareholder
owns some definite part of his railway, and that
part of the railway is his capital, or a portion
of his capital. But a shareholder may cease to

36 ON CAPITAL

be a member of his company ; he may part with
his holding, he may sell it to some one else.
With the proceeds of the sale the shareholder
may do as he pleases : he may buy something
else, and that something may be abroad. Sup-
pose a shareholder of the British railway to
take these steps ; then, so far as we have
carried the process, though the capital of the
shareholder has partly gone abroad, British
national capital has remained untouched, for the
British railway is still where it was, carrying
on its work in the same way, having simply
exchanged one part-owner for another.

Suppose now that the proceeds of the sale of
British railway stocks are used to purchase
shares of the Argentine railway. Then the
Argentine railway has likewise partly changed
owners ; but the railway itself is as before ; as
far as its railway is concerned, the national capital
of Argentina remains unaltered : a foreigner has
brought his own capital into the country, but the
total national capital of Argentina is not thereby
necessarily increased by one penny.

British subjects hold enormous quantities of
foreign stocks and shares, and these are con-
stantly changing owners, the deals being mostly
carried out in the London Stock Exchange.
When a shareholder of a British railway parts
with his holding, he nearly always sells it to
a fellow-subject : when the shareholder, with the
proceeds, acquires a holding in a foreign railway,
such as a railway in Argentina, he buys that
holding, in ninety-nine cases out of a hundred,

PRIVATE CAPITAL 37

from some other British subject. The different
transactions, in most cases, take place in London,
and the capitals of the nations concerned are in
no wise altered.

Yet the capital of the individual has, in these
cases, certainly moved its location. In the case
supposed — the purchase, namely, of Argentine
railway stock by a former shareholder in a
British railway stock — if a great drought occurred
in Argentina, the failure to receive a dividend
would soon convince an investor that, though he
bought his Argentine stock in London, his capital
was really and truly gone abroad.

Suppose that instead of one seller of the shares
of a certain railway system there were simultane-
ously many sellers. Then, it is well known, the
price of those railway shares will fall, the latest
sellers will obtain low prices, and for the time
shareholders who refrain from selling possess
less capital than they did before. But the rail-
way system is the same as before ; its power to
transfer people and goods remains unaltered. As
national capital the system has the same value
it had before, though to the shareholders the
capital value of the system is not the same as
it was.

As a national asset the capital value of British
railways is upon the whole little different to-day
from what it was ten or twelve years ago. But
to the shareholders the capital value of those
railways is very different from what it was. For
ten pounds the shareholder had twelve years
ago, he probably now has not seven. Yet the
3*

402181

38 ON CAPITAL

transportation work done is as great and as
valuable as it was, and the dividends paid are
pretty nearly as good.

It is easy to say why the national capital is,
as a rule, not altered by the movements of the
capital of individuals, though, of course, it some-
times is. The foreign stocks and shares now
so largely bought, when British subjects send
their capital abroad, do not represent British
capital now going abroad : they represent British
capital that went abroad, as it did in immense
quantities, in past years ; and of course capital
that goes abroad goes only once, in the form
of exports.

The difference between national and personal
capital is aptly illustrated by money itself. To
any individual citizen a banknote or a cheque is
the same as capital, provided the note was issued
by a sound bank, or the cheque is signed by a
man of means. As far as the State is concerned,
neither banknote nor cheque are capital. Both
are mere promises to pay in money on demand.
When the demand is met capital is merely
transferred from one pocket to another ; the State
is neither richer nor poorer for the transaction ;
yet the individual who receives payment certainly
is so.

Money, like any other commodity, is capital,
but is national capital only when in the form
of gold.

To sum up broadly the nature of the national
capital : it consists, first, of all the skill-capital
of its workers, so long as they continue to work

NATURE OF CAPITAL 39

in their own country ; next of the capital used in
employing such workmen, and of the stocks
ready for the workmen, or finished by the work-
men and awaiting removal. It therefore includes
all exports, as long as these are goods awaiting
removal. When these exports have been re-
moved they cease to be national capital, and
therefore exports always diminish the national
capital. Next, national capital consists of the
land used in cultivation or for grazing, and of
the necessary buildings thereon ; and of all flocks
and herds, and the produce of the soil. Then
it includes all the means of transferring such
capital from one place to another, and, in the
case of some States, of the ships that convey
such capital away from the country, or fetch
it from abroad. Lastly, it includes the means
of retailing and distributing such capital in larger
or smaller quantities. Therefore in the national
capital are to be included all imports, for these,
as soon as they are landed, become goods await-
ing retail and distribution in larger or smaller
quantities. Therefore by imports from abroad
the national capital is very largely increased.

To sum up broadly the nature of the capital
of individuals : it is of two kinds, a power, and
property or investment in land or in securities.
The power must always necessarily be where
the individual is : the property or investment
may be at home, and in that case is some part
of the national capital described in the last
paragraph ; or the investment may be abroad, and
is in that case not a part of the national capital.

4e ON CAPITAL

In all these sources or conditions of capital,
there is one characteristic the presence of which
is essential, and that is the execution of work,
to increase the value of some article by turning
it into another, or by moving some article into
a new place where it is more useful. In the
case of the workman this is self-evident ; as
when he is converting a piece of iron into a
horse-shoe ; or is putting the shoe on a horse's
hoof, where it is still more valuable ; or when
he is planting potatoes, which will yield tenfold ;
or grinding wheat into flour, or baking flour
into bread ; or doing work of some kind to
fashion raw material into a finished and valuable
article.

This also holds good in the case of an employer.
All his operations, whether as farmer, ship-
builder, or organiser of any kind, are directed
to produce articles of greater value, using his
own capital and the labour of workmen as the
means. In the case of lines of transport the
characteristic is easy to trace. Coal at the pit's
mouth is worth so much ; moved to London it is
worth more, by the amount of capital spent in
the removal. The distributor of articles in detail
buys large quantities to suit the convenience of
employers, and sells in retail to suit the wants
of his customers ; and in doing this he has to
expend labour-capital and that capital which sets
labour to work.

The same characteristic is to be found in all
the operations of the farmer : it is only by work
done on the land that it is made fit for cultivation ;

CAPITAL DEFINED 41

it is only by sowing wheat that more abundant
wheat can be reaped ; it is only by tending and
feeding flocks and herds that they gain in value.

The same characteristic is to be found in the
work of every one who is so occupied as to
benefit, by his work, the national industries.
A doctor, for instance, may be employed in help-
ing sick workers to recover their health, and with
it their lost capital. If these workers are em-
ployed industrially, the doctor, though he does
not himself directly raise values, enables others
to do so.

The characteristic is also found in imports.
For imports are goods that have been moved
from one place to another, and have thus had
their value increased, as the value of coal in
London is greater than its value at the pit's
mouth ; and they are goods awaiting distribution,
after which they are still more valuable.

Thus we reach the conclusions that :

The productive national capital is the total
national capacity to increase values, and thus
produce all articles necessary to the nation.

The productive capital of a member of the
nation may be his total capacity to increase
values, and thus produce some article, or articles,
or parts of them ; or it may be the total value of
his investments ; or it may partake of both kinds.

CHAPTER IV

THE EMPLOYMENT OF CAPITAL

Proposition B. — Capital of higher value is created
by the destruction of capital of lower value : this
is the true employment of capital. Capital is also
in certain ways sent abroad. It is also mis-
employed.

From the definition of capital in Proposition A,
the proper method of employing it, from the
industrial point of view, immediately follows.
It should be so employed as to increase to the
utmost the national capacity for enhancing values,
and thus producing all articles necessary for the
nation.

Then comes the question, how the national
capacity in the required direction is to be in-
creased. It is the very same thing as increasing
capital itself; and to increase capital there is only
one legitimate way, all other roads ending in
nothing.

Whatever tales be spread about to raise the
prices of stocks and shares, or to sink them
to a paying level for purchasers, these manoeuvres
do not touch, and never can touch, the capital
itself. The shares of a particular gold mine may

42

DESTRUCTION OF CAPITAL 43

be selling at two hundred pounds apiece one day,
the next day wild rumours may have sunk the
price to five shillings ; in the following month it
may be up again to ten pounds. Men gain and
men lose by this ; but capital does not ; for it is
the stuff got out of the mine, sent to market, and
sold, that forms the capital-value of the mine. If
capital is to be increased it can only be in one
way, by the destruction of capital. This is easily
explained.

A farmer has in store a stock of wheat which
forms a part of his capital. He desires to grow
wheat which shall form a part of his capital at
the succeeding harvest. He therefore withdraws
from his present stock of wheat a portion, which
he puts into the ground. He has thus re-
duced his present capital ; in other words, he
has destroyed capital to that extent ; but the
result is an increased capital at the following
harvest. The capital value of a forest of Douglas
pines in British Columbia is not perhaps very
great. Whatever it be, that capital is destroyed
when the trees are cut down and lie idle on the
ground ; the forest has ceased to be. When the
pines have been floated to the sawmills, and cut
up into lumber, a new capital has been created,
and that capital is very much greater than the
capital destroyed, when the original forest was
cut down. When this lumber has been delivered
to traders, and sold by them to farmers and other
builders, it is immediately set upon by a swarm
of carpenters and destroyed as lumber. The
capital represented by the lumber has been

44 THE EMPLOYMENT OF CAPITAL

destroyed, but a new capital appears in the
shops, houses, farmsteads, and other buildings
required by the community.

In this account many intermediate steps have,
for the sake of simplicity, been omitted. Only
three capitals are here shown as destroyed, and
only three new capitals as created. If we took
account of all the labour that is expended in
the various processes, and of all the food and
other articles consumed by that labour, the
number of capitals destroyed and created would
appear to be much greater than actually
indicated.

In order to see clearly what happens when
work is done, let us suppose the case of a British
artisan working in a factory. He attends to his
work, we may imagine, almost continuously from
morning till evening ; and at the end of the day
he is tired and unable to work any longer : he
has for the time expended all his expendible
capital. His skill, which is a part of his capital,
is not expended in the same sense ; but he cannot,
owing to the weariness of his limbs, his eyes, and
his faculties, any longer apply it. It is therefore,
in a particular sense, destroyed for the time, as
anything may be held for the time destroyed
which is no longer available for the one use to
which it can be put. Therefore, in the useful,
operative sense, the capital of the artisan has
now been destroyed. Until he has had food and
rest for his body, and change of occupation for
his mind, he can do no more. But the food con-
sumed by the artisan is itself capital, and this also

DESTRUCTION OF CAPITAL 45

has been destroyed. It is true that the artisan
has also, to some slight extent, worn out his
clothing, and has incurred liabilities for house-
rent and the keep of his family. These may be
considered included in the term " food," and need
not be again referred to. In addition to these
two capitals the artisan has destroyed a third.
Stuff from the store of the employer, and forming
a part of his capital, has been handed over to the
artisan. The artisan has, with others, done work
on that stuff, and has destroyed it, as capital of
one kind, by converting it into capital of another
kind.

Thus, in the course of a day's work the artisan
destroys three capitals : his own capital, his food,
and some raw material. But these three capitals
are replaced by three others. First, the artisan
has made a new article of greater value than the
stuff destroyed : that is, in the words of Proposi-
tion A, he has helped to " increase values."
Second, the artisan has restored his own strength
and skill. His strength has again become what
it was before ; however little his skill is in-
creased in the course of a day, it is for a
considerable time always slowly increasing, and
such increase is due to his work on the capital
he has destroyed. Third, the artisan receives for
his work a certain amount of wages. A part of
his wages he gives to the retailers of goods, in
exchange for food. Thus the baker, the grocer,
the butcher, the coal merchant, and others receive
money, with which to replace in their stocks the
food destroyed by the artisan. And as they buy

46 THE EMPLOYMENT OF CAPITAL

wholesale what they then retail, their destroyed
capital is replaced by a capital of greater value.

Like the artisan, the manufacturing employer
uses up and replaces three capitals. Although
the employer does not himself execute work in
the manner of the artisan, he is continually
having his stock of one kind destroyed as capital,
and changed into other more valuable articles,
by means of his workmen. And though he does
not exhaust his own strength, he does, though
slowly, wear out his machines ; and these repre-
sent an important part of his capital. He re-
places them from time to time by more effective
machines, and he sometimes does so though the
old machines are not yet worn out.

The manufacturing employer uses up also his
share of food and clothing in the same manner
as the artisan ; and he also uses up coal and oil
for his machines, by which he depletes the stocks
of the coal merchant and the oil merchant. These
then replace their destroyed stocks to their own
advantage, just as the baker and the butcher and
the tailor and the draper replace theirs.

Thus we might go the round of the various
descriptions of employers, and find them con-
stantly engaged in destroying their stocks of
articles of different kinds and replacing those
articles by others of enhanced value. The same
general principle is at work all through — one
article, chiefly raw material, losing its identity
in giving birth, by work done on it, to another
of greater value.

Such an employer is the farmer. Suppose a

DESTRUCTION OF CAPITAL 47

farmer to intend growing a crop of wheat. He
first has to apply a quantity of labour to the
land ; he has to use machines on it, worked by
horses or steam, and he has to cart out and
spread manure. It is evident that he is here
expending capital, or, as we say, destroying it,
because capital expended cannot be used again
until restored by the destruction of fresh capital.
The farmer, in this instance, has expended
labour-wages, wear or hire of machines, horse-
food, cost of manure, and so forth. Next he has
to sow the seed itself, and to reap the crop and
put it into ricks. These operations also all imply
the using up of capital. He cannot sell fat cattle
in the market without growing and preparing
food for them, just as he grew and reaped his
wheat-crop : here too he uses up capital. If
agricultural operations be considered, it will be
found that the destruction and reappearing of
capital, in more valuable forms, are incessant,
and that in each case the appearance of capital
in the higher form has invariably followed the
destruction of capital in a lower form.

When we come to the transporting agencies
the case is equally plain. When a quantity of
goods removed in railway-trucks from one place
arrive at another place, certain capitals have been
consumed. These capitals are coal, oil, grease,
and other railway stores ; the labour of engine-
drivers, stokers, guards, and porters ; the wear
and tear of the rolling-stock and of the line itself.
But the articles moved are always more valuable
at the end of the journey than they were at its

48 THE EMPLOYMENT OF CAPITAL

beginning, and thus a new capital is created to
take the place of the old.

It is not necessary to repeat here what has
been said of the replacement of stocks of food
consumed. The wear and tear of the rolling
stock and of the line give employment to fresh
sets of workmen, and these replace capital in the
same manner as the artisan who works for a
manufacturing employer.

Even the distributors who retail goods in small
parcels proceed on similar lines. Buying goods
wholesale, they give in exchange for them some
portion of their credit at their bank. To any
individual trader his credit at a bank is a part
of his individual capital : in parting with that
credit he, as far as his business is concerned,
destroys a part of his capital. The goods he
has bought replace the destroyed capital by a
new capital. He sells these goods in retail ; this
is his work, the occupation of his life : and he
so does this that, when he sends the proceeds
to his bank, his credit there has become greater
than it was before. In other words, he has
replaced a smaller capital by a greater capital.
But he does so only after an interval, and in
consequence of work done by him. He then
again reduces his credit by purchasing fresh
goods wholesale; and this time he is able to
obtain a greater quantity than before : or, what
comes to the same thing, if he acquires at each
deal only the same quantity of fresh goods, he
can make the exchange of. credit for goods at
shorter and shorter intervals. Thus, wherever

BANKS 49

we take the distributor amid his transactions,
he is always either destroying his banking
credit, which is a part of his own capital, and
replacing it by goods, or he is sending out his
goods for consumption and replacing them by
restoring his credit on an ever-growing scale.

As an illustration of what we may call the
subsidiary industrial branches, we may take the
banker. Banks have many resources, but here
it is only necessary to describe, as an instance
of their utility, one that is simple and familiar.
Banks are largely employed in making advances,
on the security of land, to farmers, as is done in
Western Canada. In making these advances a
bank no more directly increases the capacity of
the State to enhance values, and thus produce
articles necessary to that State, than does a doctor
when he cures a sick workman. But indirectly
the bank certainly does so. Without such an
advance a settler who has acquired land, even at
a nominal cost, would be unable to pay for the
lumber to build shelter for himself, his animals,
and his corn ; nor could he pay for his live stock,
nor for his agricultural implements.

Granted a sufficient credit at a reasonable rate
of interest by a bank, he can pay for all these
things, and he can gradually discharge his debt
to the bank as his crops come in. It is to the
'interest of the nation that good men should settle
on the land and get to work advantageously,
because they then undoubtedly increase the
wealth of the State in the manner required.
Therefore it is to the interest of the State to
4

so THE EMPLOYMENT OF CAPITAL

have such banks. The farmer, as has been
shown, increases capital by destroying capital.
The banks, by their timely advances, enable the
farmers to do this. Therefore, though they do
not follow the general rule directly, they enable
others to do so, and thus do so themselves
indirectly.

A question might here be very fairly put. It
has been said that, by work done upon it, raw
material becomes the finished article of capital
value greater than that of the raw material ; but
that there may be this increase in value work
must be done. That work is an expenditure of
capital, the capital of the workman ; therefore to
produce the increased capital, represented by the
finished article, two capitals are used up, that of
the workman and that represented by the raw
material. Why then is there said to be a real
increase of capital ? This is quite a fair question,
and the answer is interesting.

The capital of a workman has ten thousand
lives : it dies in the evening, but by morning it
is again in full vigour. Thus any profit arising
from the workman's daily outturn must be multi-
plied by at least ten thousand to get the total
profit on his work. There is that profit. The
workman does a great deal more than support
himself and his family. That more is represented
by the wear and tear of mill and machinery, the
cost of coal, gas, oil, and the general profits of
the trade, which go into several pockets. Thus
it is clear that the capital value of the finished
article represents a true increase, and that

WORK AND PROFIT 51

increase, after paying for everything consumed,
remains as the profit earned by the undertaking.

The workman in the factory or mill really
does much more than support himself and his
family, but the workman in fertile soils and good
climates, where land is cheap and markets not
too distant, can do more still. Growers of
wheat working in co-operation and using modern
machinery to the fullest extent can each, under
favourable circumstances of soil and weather,
easily raise in one year forty thousand pounds
weight of good wheat, or enough food for one
hundred persons of all ages for a year. The
same men could also attend to live stock, and
thus actually feed far more than one hundred
persons a head. Growers of potatoes, owing to
the fact that far more labour is required for that
crop than for grain crops, could not feed nearly
so many people per head of workmen.

If, then, capital rapidly increases when it is
employed in converting raw material, or by the
farmer in raising crops and live stock, it might
be supposed it would always be so employed.
But it is not, some being employed otherwise,
and some misemployed. The capital said to be
employed otherwise goes abroad in the case of
Great Britain,

In two ways capital goes abroad, for which it
is not possible to give figures ; therefore, as
regards these two ways, it can only be said
that the capital taken out of the country by
emigrants is partly balanced by that brought
into the country by foreign workmen, and that

52 THE EMPLOYMENT OF CAPITAL

the capital taken abroad by British subjects,
who travel for amusement and instruction, is
balanced — perhaps over-balanced — by capital
brought into the country by foreign travellers.

The bulk of capital going abroad does so in
the form of exports in exchange for imports.
But Great Britain can get in no other way some
part of the food she requires and much of her
raw material. This therefore is ordinary trade.
But it is not ordinary trade that sends abroad
the savings of foreign workmen, for this is an
abstraction of capital without return in imports.
It often happens that loans are issued by foreign
countries, or by foreign undertakings, such as
railways or rubber companies. A glance at the
Stock Exchange lists of securities shows how
enormous must have been, for years past, the
amount of British capital sent abroad in response
to such issues. In such cases there is, however,
usually, though by no means always, an immediate
return of capital, in the form of interest or divi-
dend ; and there is, or ought to be, always an
ultimate return of the sum originally lent, by the
operation of sinking funds.

Such amounts, both interest and principal,
come back in the form of imports, including gold,
which is itself sometimes an import, and some-
times an export.

Sometimes savings, or the balances of income
over expenditure, are sent abroad. It might be
shown, by following out a long sequence of
buyings and sellings of stocks and shares, that
though, when any one seljs a horne security an^

CAPITAL SENT ABROAD 53

buys a foreign security, there is very seldom
any movement of national capital, yet, when the
foreign security is purchased out of savings, there
is a movement of capital, national as well as that
of an individual — a movement from the home
country to that foreign country in which is
situated some one of the links in the chain of
buyings and sellings.

Lastly, in order to avoid the protective duties
levied by foreign States, or for some other reason,
capital is sometimes sent abroad to start manu-
facturing or other works. There is no return of
this capital as principal, and it is therefore so far
a loss of national capital : but in this case, as in
all cases where the owners of foreign capital
reside at home, there is a partial return in the
form of interest or dividend.

Can Great Britain at present afford to send
capital abroad in this manner ? As a result of
capital sent abroad in former years, she now
receives annually food and raw material to the
value of ;^ 1 5 5,000,000, for which she is not obliged
to send out exports in payment. Ought she to
be now sending out more capital, in order to
increase the annual receipts of food and raw
material ? This is a problem she has to solve.
In the meantime she has much labour-capital
standing idle, which points to a deficiency of
that form of capital which sets labour to work ;
and it is this latter form of capital which is being
sent abroad in the ways just pointed out.

Capital is also misemployed, and the result is
waste, which is indeed a very serious matter.

4*

54 THE EMPLOYMENT OF CAPITAL

At the head of all forms of waste must be
put that caused by drinking. It is unnecessary
for any sound man to drink intoxicating liquor.
The farmers of Western Canada are a numerous
body, drawn from different countries and of
various ages : they work for long hours and very
hard. In many of their houses liquor is never
to be found, for they consume chiefly tea and
coffee. When they go on business to the town
they may indulge in a glass of beer. If a large
number of men can live thus — and it is believed
they do — intoxicating liquor cannot be really a
necessity of existence. The money spent on it
is absolutely wasted, and what is almost worse,
owing to the physical and moral deterioration
of men who drink much, the work the}'' do must
be of an inferior description. Is it not to the
interest of the employer to put a stop to this ?
Well, he probably argues that a man who falls
behind may be discharged and give way to a
man who has not fallen behind. It is clear this
is a serious loss to the nation.

A few years ago there were about nine millions
of families in the British Isles. The mere revenue
from beer and spirits was then more than thirty-
one millions of pounds : so that, on an average,
each family contributed in a year about ^3 los.
But the cost of the beer and spirits consumed
was, to those who drank them, three or four
times the amount of the tax. So that the families
of men who made a habit of drinking, a very
great number, must have spent, on an average,
from a tenth to an eighth of their wages in drink.

WASTE 55

Every penny of this expenditure was devoted,
not to increasing the national capital, but to
preventing its increase.

But drinking is only a part of the evil. A
second great cause of waste is the bad work
done by inefficient labour and incompetent or
fraudulent employers. It would not be easy to
give an idea of the proportions reached by this
kind of waste, but consideration will show that
it is enormous. Every bit of work so done that
it must be done again is waste. We know on
good authority that whole trades have been
lost owing to adulteration. Many an inspecting
officer could tell us of buildings almost pulled
down and reconstructed, owing to attempts to
use indifferent material.

A third and great cause of waste is the strikes
now so common, not in Great Britain only, but
all over the world. They are one of the results
of the want of harmony between employers
and their workmen — harmony not only seldom
attained but rarely striven for.

The artisan, however well he does his work,
once he has finished it has no further interest
in what he has done. He may put all his skill,
all his thought, all his strength into his day's
work, and then he never sees the result again.
He may hear that the mill he works at has
turned out in the year so many bales of goods,
but he hears little more. A bricklayer is perhaps
a little better off, for he, at any rate, may always
see the building on which he was engaged ; and
a farm-labourer is better off still, for he sees

56 THE EMPLOYMENT OF CAPITAL

not only the crops he helped to cultivate, but
the results obtained partly by his own efforts.
But though the merit of work done must always
very greatly depend on the workman's interest
in what he does, to none of these men — the
artisan, the bricklayer, the farm-labourer — is
that interest made the one important matter.
The amount of wages received is a thing of
much greater importance.

The employer pays a certain amount of wages
for work done, and after those wages are paid
he is not further greatly interested in the men
to whom he paid them. Yet these men differ
immeasurably among themselves, as men do
everywhere. What would mean starvation to
an Englishman is superfluity to a Chinaman; a
weekly sum that would place one English family
in comfortable circumstances would leave another
partly starving. An employer of a large number
of hands does not know which of his workmen
have the biggest appetites, which have the largest
families, which have the worst managing wives.
He simply pays the same amount of money for
the same amount of work of the same kind.
The man who receives wages sufficient to enable
him to obtain for himself and his family enough
food, clothing, and shelter; to layby in some form
or other a reserve against illness ; to keep his
mind free from anxiety, and suitably occupied
during his leisure — such a man has an induce-
ment to be steady in conduct, and industrious
while at work, even though he lacks the supreme
interest not due to wages. A man who has only

STRIKES 57

a grimy home amid hideous surroundings, and
hears more clamour for additional food than
thanksgiving after meals — such a man has no
such inducement, and is likely to make his cir-
cumstances even worse by drowning his unhappi-
ness in drink.

When men work for employers, disagreements
often arise, and then the want of harmony, of
a common object, makes itself felt ; it becomes
difficult to bring about a settlement, and there
follows a lock-out or a strike. In either case,
for a longer or shorter period, the capital of
the employers and workmen lies idle, and this
is a cause of waste — a tremendous cause, now
that the most trivial differences lead to great
strikes, and the more serious because the stop-
page of work of one kind often compels men of
other trades to lie idle, however little they
may wish it.

A fourth cause of waste is carelessness. The
destruction of a building by fire is nearly always
preventible, the loss of a ship at sea is so in
most cases. Such losses, though by some con-
sidered good for trade, are really waste. A
factory, or warehouse, or farmstead burnt down,
or a ship lost at sea, or railway stock destroyed
in a collision — these must be replaced, and this
for a time gives unexpected employment to a
number of men. But these men ought not to
be so employed ; they are really misemployed,
just in the same way as men doing over again
work that was badly done are misemployed.

I^astly, a kind of waste arises from the neces-

58 THE EMPLOYMENT OF CAPITAL

sity for natural defence. The defence itself is
not, in the present condition of mankind, a waste
of resources, any more than a police force is a
waste of resources. But in this country defence
is wastefully provided for. When we find a
minister, as soon as he takes office, undoing the
work of his predecessor, when we hear him
continually explaining what the errors of his
predecessor were, we need not get behind the
curtain to learn that there is waste. Or when
we see that our neighbours get for ten shillings
what with us runs into pounds, we cannot but
feel that if we knew more we should know more
about waste.

How, then, should these forms of waste be dealt
with ? To speak only of the first and worst
form— to take away by force from steady, indus-
trious artisans their dinner glass of beer would be
to inflict a hardship. To destroy a gigantic trade,
such as brewing has grown to be, would be to
inflict a far greater hardship, considering merely
that thus a whole host of honest workers would
be made wageless, a host containing numbers of
people who have never tasted alcoholic liquor.
But that is what always comes of superficial
remedies.

What is wanted is to get at the real seat of
a national disease. How are we to do it? Only
by in some way altering the working and living
conditions of those who at present have not a
sufficient inducement to drink less intoxicating
liquor than they now do.

CHAPTER V

FOREIGN TRADING THEN AND NOW

Discussion is now resumed of the third proposi-
tion, respecting the probable necessity of a careful
reform of the tariff. The conduct of this dis-
cussion becomes easier when the third proposi-
tion is replaced by three further propositions.

Fourth proposition. — The conditions under which
the foreign trade of Great Britain is now con-
ducted are absolutely different from the conditions
under which the trade was conducted sixty to
a hundred years ago.

The great industrial object of the nation is
to keep its labour-capital fully and wisely em-
ployed,- by means of a due proportion of the
capital that sets labour to work and of invest-
ment capital ; investment capital being partly the
capital that sets labour to work, but arranged
for easy transfer from owner to owner, in the
form of stocks and shares, and partly what was
once the capital that sets labour to work, but
is, for the most part, in that capacity, now
dissipated, and is represented by the credit of
different nations, corporations, etc., or promise,
more or less reliable, to pay periodically to the

59

6o FOREIGN TRADING THEN AND NOW

creditors — or investors as they are called —
stipulated sums as interest.

We now wish to see in what environment this
was possible many years ago, when the foreign
trade of Great Britain enjoyed its first great
outburst, and what exactly the environment
is now.

The trade of every nation is composed of two
parts, the home trade and the foreign trade.
Every nation pays at least some attention to
the home trade ; the timie, indeed, has now arrived
when, with the exception of Great Britain, the
nations have established such measures as they
have found possible to protect their home trade
from foreign interference.

But Great Britain differs from all other nations
in two respects. First, she cannot now, do what
she will, feed herself as other nations can ; nor
can she, as they very largely do, supply herself
with raw materials for her industries, in many
branches. She imports annually food and raw
materials to the value of ^155,000,000, for which
she sends out no exports ; but in addition she
imports annually food and raw materials to the
value of ;^307 ,000,000, all purchased by means of
exports or by services performed.

Second, Great Britain became by circumstances,
and has continued to be by habit, a free-trading
country, and a very great foreign trader, a greater
foreign trader than other nations more populous
than herself.

One hundred years ago Great Britain was in
the midst of the greatest war of her history.

WAR AND TRADE 6i

During the man}'' years it lasted several invasions
of the country were attempted, with little success ;
so that, except by the depredations of the press-
gang, and the appalling prices of food, the people
knew little about the war, and pursued their or-
dinary avocations as usual. All through Europe
the state of affairs was very different. Scarce
any country then escaped being ravaged from
end to end, by armies that lived on the people,
making war support war. Germany, Austria,
Italy, Spain, and Portugal were then for years
the scenes of almost incessant warfare, to support
which France was almost drained of men.

It may be said that the revolutionary and
Napoleonic wars lasted over twenty years. But
these wars did not overtake peoples who were
accustomed to profound peace, and to the ways
and arts of peace. On the contrary, the whole of
Europe, Great Britain excepted, had been for
more than a century engaged chiefly in war, one
war following another in such quick succession
that no one country. Great Britain excepted, had
ever any real chance of establishing great manu-
facturing industries. Great Britain was the
exception, because during all that time she
escaped any interference with her manufacturing
industries, and may indeed be said almost to
have escaped the tread of hostile feet. She took
her chance.

Some years later, not so many years ago as
time is measured in the world's history, there
was still not a very big outer trade world. North
America was little more than the home of a few

62 FOREIGN TRADING THEN AND NOW

thin colonies, some independent, not much more
than filling the mere outer fringe of the vast
continent : South America for the trader scarcely
even existed ; nor did Australia, nor New Zealand,
nor South Africa. The map of Europe was very
different then from the map of Europe now.
What are now very powerful nations had then
no national existence, and all the continent was
so riddled by long-continued war, and so trodden
down under the heel of the conqueror, that it
still contained little of the means of manufacture,
little sign of manufacture, little inclination for
manufacture. Great Britain alone continued in
a position to carry on undisturbed the manu-
facture of goods, and it so happened that just
then invention enabled her to manufacture them
in great quantities. In addition to this. Great
Britain had become, not only the great manu-
facturing country, but also mistress of the seas.
The materials she required, the goods she sent
out in exchange for them, were carried to and
fro mostly in her own ships ; and in those days
British ships were manned wholly and invariably
by British crews. These were sailing ships, one
and all; there were no ocean tramps at that
time. It seems, to us who live now, almost
another world rather than a phase of this : Great
Britain the world's mill, the world's mart, the
world's carrier : the rest of the nations barely
recovering from their wounds ; the land with
only just the means of conveying goods at a
snail's pace from town to town ; the sea with
nothing living upon it, except ships with sails

THE CHANGED CONDITIONS 63

taking sometimes half a year to get from port
to port. Is it very wonderful that in such a
world, at such a time, Great Britain became
enamoured of her foreign trade, that she poured
forth goods in such quantities, of all the kinds
then wanted in the world, that, after flooding
her own markets, she had a profusion available
to send abroad, in exchange for her raw
materials ? But now all is changed.

In place of a few seaboard colonies there is
now, across the North Atlantic, a mighty nation
of ninety millions of people, and there is a
great Dominion fast becoming, if not already, a
nation. In South America, where there was so
lately nothing, there are populous, busy republics,
served by thousands of miles of railways, carry-
ing the enormous produce of an almost unlimited
area. Australia and New Zealand have now
large populations of busy workers ; Japan has
become a great trading country ; Europe itself
is now a prodigious swarm of producers, from
north to south, from east to west. The sea is
common property. A voyage that once required
six months is accomplished now in a month ; the
passage across the wild Atlantic, that was once
a question of fearful weeks, is now a simple
matter of days. Where once only one flag
ventured are now the flags of all nations ; you
may coast along many a foreign shore, and
perhaps the only British flag you may see,
where there are many flags, is the flag at the
stern of your ship.

Let us glance at the tables giving the tonnage

64 FOREIGN TRADING THEN AND NOW

of modern shipping. In the year 1907 British
shipping amounted to eleven and a half millions
of tons. The shipping of other nations, excluding
the United States of North America, amounted
to a somewhat greater tonnage. The States are
reported as having, in addition, some six millions
of tons, but most of this tonnage is used coast-
wise, or on the great lakes. Thus, the British
share of the world's tonnage is now less than
one half; only ten years earlier that share was
much more than one half; for of a total of
seventeen million tons, excluding, as before, the
United States, Great Britain claimed nine millions.

In a similar way, if we examine the tables of
foreign trade, we shall find that in the year 1897
the British share of that trade, imports and
exports, was a little over one-fourth. Eleven
years later, in 1908, the British share was no
longer one-fourth, it had sunk to two-ninths.

The British foreign trade and shipping, once
supreme, have relatively much shrunk in im-
portance, because the conditions now surround-
ing that trade are totally different from the
conditions surrounding it seventy or eighty years
ago, when the foreign trade became first the
really important trade of the United Kingdom.
Trade has not only somewhat shifted its point
of application ; it has changed its methods. The
trade traveller is now everywhere. Even Japan
has its emissaries in the United States, charged
to ascertain on the spot, and report to the firms
they represent, the style of their specialities most
likely to suit the American taste. Every country

CHANGED METHODS 65

sends out such travellers, speaking many lan-
guages, to study ever}'' possible market ; and
thus the manufacturing firm in one country is
enabled to deal directly with its correspondents
in another. These travellers, accomplished, well-
informed men, are everywhere, moving to and
fro by the steamers of all lines. To journey
and become acquainted with them is now almost
part of a liberal education.

But the travellers do not manage it all. There
is besides now the modern art of advertising.
There is perhaps no country that does not now
push its wares in this manner.

And there are also general exhibitions, held
now here, now there, by means of which the
actual work done in different countries is brought
under the view of possible foreign purchasers.
First invented, if one may say so, by Great
Britain herself about sixty years ago, they are
now universal.

There is now an enormous world trade. In
the eleven years from 1897 to 1908, that trade
increased over 50 per cent. In that interval the
foreign trade of Great Britain did not increase
nearly so much. So changed are the general
conditions.

In the home trade there is a falling off. Great
Britain is no longer filling her own markets with
the goods she can make herself. So much is
known from the Board of Trade returns.

The greater the trade of the world the more
customers there must be. Unfortunately, the
Board of Trade returns show that, although the
5

66 FOREIGN TRADING THEN AND NOW

number of customers rapidly increases, the British
share of these customers is not, relatively to
the total, as great as it used to be. Foreign
countries are therefore, in their foreign trade,
going ahead faster than Great Britain is, in spite
of the tremendous start she had. She no longer
fills her own markets with her goods, and in the
foreign trade she does not keep pace with her
neighbours.

CHAPTER VI

HOME TRADE AND FOREIGN TRADE

Fifth proposition. — If trade were everywhere
free, the foreign trade of Great Britain, under
modern conditions, would in some cases give
more employment than an equal home trade,
and in other cases it would give less employ-
ment.

The total trade of a country is the sum of its
home trade and its foreign trade. What this
amounts to, in the case of Great Britain, nobody
knows. Therefore it might seem impossible to
give an exact comparison between the employing
powers of the two trades. But it is not so. We
have to determine, taking the same quantity of
commodities in both cases, which form of trade
sets in motion and keeps going the greater
amount of labour-capital, together with the proper
proportion of the capital that sets labour to work.
And this can be done.

The foreign trade consists, of course, of imports
and exports. What then is an import ? It began
life as an export. The export of one country
becomes the import of another. In the mean-
time the export has had done on it a certain

67

68 HOME TRADE AND FOREIGN TRADE

amount of work; that is, a certain amount of
capital is destroyed, in order to carry the export
to its destination and make it an import. That
capital is the labour and food of the crew of a
ship or of a goods train, the wear and tear of
the means of transit, the coal and stores con-
sumed, the profit of the owner of that means of
transit, and, in the case of the ship, the dues,
lighting and harbour, which are a mode of con-
verting capital into revenue.

Therefore an import is an export to the value
of which is added that of a certain amount of
used-up capital. In other words, an import is
always more valuable than the corresponding
export by the amount of capital used up in trans-
porting it. It also follows that, in quantity, the
exports of the world become, not precisely in
any one year, but in the long run, the imports
of the world, less an allowance for losses on the
way by wreck and fire.

Just as a truck of coal is more valuable in
London than at the pit's mouth, by the capital
consumed on the road, so it is that an export
becomes a more valuable import. Hence we
might expect that the imports of any country
would always be worth more than its exports.
If, however, we consult the statistical tables of
the Board of Trade, we shall find that this is
not the case. There are countries the imports of
which are always, year after year, worth more
than their exports, which is exactly what we
should expect. But there are other countries
the imports of which are seldom or never as

IMPORTS AND EXPORTS 69

valuable as their exports, which seems to be
opposed to the rule just stated.

In order to explain this apparent discrepancy,
we shall here give in tabular form a few examples
of countries which show imports of value exceed-
ing that of their exports : countries in the trade
of which the ordinary rule appears to be illus-
trated. And it will appear from the table to be
given that, in the case of these countries, not
only does the usual rule seem to be followed,
but it is habitually and almost without exception
followed year after year.

TABLE No. I
Examples of Countries the Imports of which show a

VALUE greater THAN THAT OF THEIR EXPORTS

{In millions of potmds)

Year 1894. 1899. 1904. 1908.

£. £ £ £

UNITED Kingdom 1 1!"?^'-^^ 35o 420 481 513
(.Exports 216 264 301 377

German Empire j i,"^?"--'^ '97 274 318 377
(Exports 148 210 261 315

I Imports 154 181 180 236

(Exports 123 166 178 202

5 Imports 44 60 yj 117

1 Exports 41 57 64 69

iports 121 159 200 2:

cports 93 131 165 li

France
Italy .
Holland
Belgium

5 Imports 121 159 200 223

"(Exports 93 131 165 184

f Imports 63 90 III 133

■ X Exports 52 yj 87 loo

As regards the intermediate years, from 1894 to 1908, there is
only one occasion on which the rule appears to be broken. In
the year 1905 the exports of France are given at ^194,676,000;
in that year the value of her imports is given at ^^191, 156,000.

r*

70 HOME TRADE AND FOREIGN TRADE

In the following table are examples of countries
which, though not quite habitually, export to
value exceeding that of their imports :

TABLE No. II

Examples of Countries the Imports of which show a
value less than that of their exports

{In millions of pounds)
Year 1894. 1899. 1904. 1908.

United States 5 Imports 133 143 205 246
OF America (Exports 181 251 299 382

Mexico .
Argentina
Russia .

C Imports 6 10 16 23

\ Exports 9 14 18 25

( Imports 19 23 37 55
(E

Exports 20 37 53 73

(Imports 56 69 69 ^9 1 (1007)
(Exports 67 66 106 lll)^^ '^

British India \ Jf P°^^^ f 68 loi 106
(Exports 65 81 120 103

New Zealand j l!"P°^^^ 7 9 '3 i7

(Exports 9 12 15 16

There are three instances in this table in which
the value of the exports falls below that of the
imports; namely, in 1899 Russia, and in 1908
British India and New Zealand. To these three
instances must be added one which occurred in
an intermediate year. Circumstances must often
occur which affect temporarily the value of im-
ports and exports. Thus, war increases the
imports of a country engaged ; famine increases
the imports, and at the same time diminishes the
exports, of a country concerned.

The following table deals with the exports of

EXPORTS

71

certain countries, and shows in each case the per-
centages of the principal articles exported under
three heads: ist, Food and Rough Produce; 2nd,
Raw Materials ; 3rd, Manufactured Articles.

TABLE No. Ill

Principal Articles Exported in 1904 by certain
Countries

{In millions of pounds)

Food

and Rough Raw M

anufactured

Produce.

Materials.

Articles.

£

£

£

I. United Kingdom .

6-4

10-9

827

2. Germany ....

87

138

77-5

3. France

12-3

19-2

68-5

4. Italy

i8-3

50-9

30-8 ,

5. Holland ....

36-1

177

462

6. Belgium ....

169

35-5

47-6

7. United States of America

64-6

112

24-2

8. Russia

74-5

hi

144

9. Mexico . . . . )
10. Argentina ... 1

Almost

wholly agricultural.

II. British India

Mostly

agricultural.

12. New Zealand

Agricultural and mineral.

The first six countries in this list are

the same as

those in-

eluded in Table No. I. ; the others are included in Table No. II.

A glance at the table will show that the
countries of Table No. I., that is, those which
import to higher value, do not export much
food, timber, and such natural produce, but
export largely manufactured and half-wrought
goods; while the countries of Table No. II., that
is, those which export largely, depend chiefly in
trade on their agricultural and mineral products.

72 HOME TRADE AND FOREIGN TRADE

This is an important feature of the explanation
we are about to give.

We may be perfectly sure that in reality the
trade of the countries, like those in Table No. II.,
which export largely, in ordinary foreign trade
follows the usual rule, that imports must in value
exceed exports. The exports of these countries
must, therefore, include supplementary exports
to which there are no imports corresponding.
What, then, becomes of these exports ? They
must, like all other exports, become imports
somewhere. And they do so. They are re-
ceived as imports by countries like those in
Table No. I. It follows, therefore, that the
imports shown in Table No. I. are excessive,
just as the exports shown in Table No. II. are
excessive. These exports which become imports,
as all exports must, represent debts paid by one
set of countries to another set ; debts for services
performed, such as carrying goods from one
country to another ; and debts for interest and
dividends due on bonds, railway stocks, and
similar loans, previously raised in the creditor
countries, for the use of the debtor countries.

It is therefore not at all difficult to understand
how it is that a country which imports very
largely may still go on and prosper. The
ordinary imports must exceed the exports in
value, because the former contain in their value
the cost of carriage, which the latter do not.
The imports to which there are no correspond-
ing exports, being payments of amounts due, go
to swell the national capital year after year.

EXPORTS IN EXCESS 73

It is not perhaps quite so easy to see how
countries can go on year after year exporting
more than they import and not become beggared.
Great manufacturing countries could not do it,
unless they were at the same time, like the
United States, very largely agricultural. In
such countries wages are too high, and, what is
very important, land commands rent. But, as
Table No. III. shows, the countries that export
largely are agricultural ; and the cost of produc-
tion in such countries is, all things considered,
comparatively small. A little grain brings forth
an abundance ; animals worth little at first
become most valuable food, their own food
being meantime the growing grass. Nature
here takes the place of labour ; the labour
required does not cost much, and rent is, if
payable, trifling. The consequence is that agri-
cultural countries have at their disposal an
enormous amount of stuff, all saleable at the
rates of the world's markets, though it has cost
the countries themselves but little. This stuff
is available to pay, first, for the imports, and
then, secondly, the amounts due to other
countries for services performed, such as trans-
port, and the interest on loans and stocks so
largely held abroad.

Let it now be supposed that two countries,
separated by a stretch of sea, and possessing
no shipping of their own, trade together without
levying any duty on their imports. Then the
exports of each country become the imports
of the other ; and the value assigned to the

74 HOME TRADE AND FOREIGN TRADE

imports, in each case, is that of the correspond-
ing exports, with the cost of shipping transport
added. But as, in this case, the cost of shipping
transport has to be paid over to a third country,
the remaining value of the imports, after paying
the cost of transport, is just the same as the
value of the exports. Each country appears
neither to gain nor lose by the trade. For
though all sorts of ups and downs occur, and
some merchants make far better bargains than
others, it may be supposed that, on the average,
goods of a certain value sent from one country
will cause goods of about equal value to be sent
from the other.

If, in such a trade, neither country gains nor
loses, where is the profit of that trade ? It is
already in the goods when they become exports.
Viewing the transaction by itself, it is just as
profitable to the manufacturer to make goods
that are to go abroad as to make goods that are
to be sold at home.

But we must not view the transaction quite by
itself. Each trade deal is one of a number of
deals, and the more rapidly the deals succeed
each other, the quicker the profits come in, and
therefore the more labour these profits can set
to work. Some ports are near together, and
then there is little loss of time in the foreign as
compared with the home trade, but other ports
are widely separated and, even now, when the
means of communication of all kinds are so
greatly improved, there is comparative delay in
the completion of orders. In these cases the

FREE TRADING 75

home trade has an advantage over the foreign
trade in increasing capital, and therefore of
finding employment. However much the use of
the telegraph, even in making payments, abridges
the loss of time, it does not prevent that loss.

As soon as labour employment is increased the
demand for commodities increases. When men
are long out of work they naturally have to do
with very little accommodation : as soon as they
again draw wages, they must be once more
properly fed and clad. This increased employ-
ment then gives rise to the employment of a fresh
lot of men, and thus has a cumulative effect.

When a foreign trade transaction takes place
between two countries, each of which has some
peculiar facility in producing certain commodities,
then the foreign trade in these articles brings in
more capital and therefore gives more employ-
ment than a home trade of similar magnitude.
Suppose one country to make a hundred bales
of shirts at the same expense as eighty boxes of
mirrors ; and suppose another country to make
only eighty bales of shirts at that expense, but
to make a hundred boxes of mirrors at the same
expense. Then if the former country, ceasing
to make mirrors, made instead a hundred bales
of shirts, she could get for these shirts a hundred
boxes of mirrors, instead of the eighty boxes she
could herself produce. This exchange would
bring in more capital, set more labour to work,
than home trade of equal magnitude, and thus
give the foreign trade an advantage over the
home trade ; this advantage holds good in all

76 HOME TRADE AND FOREIGN TRADE

those cases where the gain in capital brought in
is not overbalanced by the transport expenses
and loss due to delay, owing to the distance apart
of the countries trading.

In the early days of manufacture this, no doubt,
formed an important feature of trade ; and would
do so still if manufacturing countries had not
gained so much knowledge by experience. Most
highly civilised modern nations can now make
anything they require for themselves as cheaply
as other nations could do it for them, once the
raw material is obtained. Even from Great
Britain superiority in manufacturing goods has
mostly passed away.

Let it next be supposed that, of the two countries
trading together oversea, one has a certain amount
of shipping. Then to that extent that country is
not compelled to pay out for the transport of her
goods. If she has sufficient shipping for the
complete transport of her goods, then she pays
out nothing for that transport ; she employs her
own ships and stores, uses the labour of her own
sailors, and keeps for herself the whole of that
transport charge. Thus, supposing trade still
free on both sides, the country with shipping
gains not only the profits of the transaction, but
also the transport charge : she is able to find
employment for a number of men as sailors.

This advantage is not inherent in the foreign
trade ; it is inherent in the possession of shipping.
If sufficiently well-paid employment were found
for all her shipping, in the trade between one
foreign country and another, a country with

GREAT BRITAIN'S FOREIGN TRADE 77

shipping might not employ any of it in her
own foreign trade. But when sufficient of this
carrying trade is not to be had, then a country
with shipping will, when trade is everywhere
free, gain capital and therefore be able to give
more employment by having a foreign trade,
where she carries for herself, than by having a
home trade of that magnitude. This advantage
is due, first, to the possession of shipping and
consequent employment of sailors : and second,
to the accompanying shipbuilding trade, and
consequent employment of shipwrights. The
demand for commodities due to these men must
be considerable.

We must now particularly examine the case of
Great Britain, whose circumstances are peculiar
to herself. They are peculiar in this, that Great
Britain must have, whatever her wishes may be,
a very great foreign trade, for she has to import
the greater part of her food and nearly the whole
of her raw material. We can divide therefore
her foreign trade into two parts, the first part
consisting of her absolutely necessary foreign
trade in food and raw materials, the second part
consisting of her foreign trade in manufactured
goods, most of which she could make herself if
she wished.

In 1909 British imports under the headings
food, drink, and tobacco amounted to ^254,319,383,
and under the headings raw materials and articles
mainly unmanufactured, to ;^2 20, 145,496, while
the import of manufactured articles amounted to
;^ 1 47, 67 1, 094. Let the total of the imports be

78 HOME TRADE AND FOREIGN TRADE

represented by the number loo ; then the food
and raw materials will together be represented
by 76, and manufactures by 24.

In the same year the number of British sailors
employed in the foreign trade was about 128,000;
the number of foreign sailors employed in British
foreign trading ships was about 30,000 ; and of
lascars 44,000. If the total number of sailors be
represented by 100, the British sailors will be
represented by 63, the foreign sailors by 15, and
the lascars by 22. Some of these men are em-
ployed in ships trading in the East, and it is not
possible to state exactly how many, nor in what
proportions, British, foreign, and lascars. Those
ships are known, however, to be largely manned
by lascars ; the proportional figures given are,
nevertheless, probably accurate enough. A cer-
tain proportion of foreign produce is brought
to Great Britain in foreign ships. But here also
the Board of Trade returns do not enable us
to apportion the different classes of produce
between British and foreign ships. Therefore
we must be content to apply the proportional
figures given for the classes of imports only, to
the different classes of sailors in British ships,
and treat exports as return cargoes.

If we do that we have the following figures :
British imports, food and raw material, 76 of
the total ; manufactured goods, '24 ; British sailors
■63 of the total, lascars '22. Therefore the food
and raw material imported into Great Britain
are sufficient to keep all the British sailors
employed.

SHIPBUILDING INDUSTRY 79

Nor is it clear that the shipbuilding industry
would really suffer if the import of manufactured
goods into Great Britain were reduced in quan-
tity. As that import fell off, the import of raw
material required for the manufacture of goods
at home replacing those no longer imported
would require the same number of ships as
before, for raw material is at least as heavy
as the goods made from it.

It appears certain then that, if Great Britain
chose to cease the importing of most of the
manufactured articles on her import list, she
would still have as much employment as she
has now for British sailors, and she would also
still be able to keep going her great shipbuild-
ing industry. But this is because she already
has, and always must have, the foreign trade,
which, to a country with shipping, gives more
employment than a home trade of the same
magnitude.

Thus, if trade were free, the home trade would
in some cases be more advantageous, and in
others less advantageous, than the foreign trade.

CHAPTER VII

HOME TRADE AND FOREIGN TRADE {conthmed)

Sixth proposition. — In face of high foreign tariffs,
Great Britain's home trade gives more employ-
ment than an equal foreign trade. Therefore
Great Britain needs tariff reform. This cannot
be arranged until complete statistics of the home
trade have been collected and published.

There is no country without a tariff. Great
Britain, the country that most fully practises free-
trading, has a tariff. And, strange to say, the
duties in this case are levied, not on articles
Great Britain makes freely herself, but on articles
of food, drink, and tobacco, none of which she
produces herself, and none of which, with the
possible exception of sugar, she ever can pro-
duce.

Other countries, even British countries, impose
high duties on almost everything, in many cases
with the obvious intention of protecting as
effectively as possible their own home trade.
The question now to be considered is, who pays
the high duties to which British goods sent
abroad are everywhere liable ? It has been
publicly said and written by high authorities,

So

PAYMENT OF DUTY 8i

and it is widely believed that ultimately, in every
case where a duty is levied, the consumer pays
that duty. The conditions of trade now are so
different from what they were formerly, and the
extent of the world's trade is so great compared
with what it was, even a hundred years ago,
that it is time to reconsider some of the doctrines
that long ago were reasonable enough.

If the consumer always pays the whole duty
on a commodity, the producer pays nothing, no
producers ever pay any duty. If the consumers
of a particular commodity in Canada pay the
whole duty levied on that commodity, the
producers of that commodity, no matter who
they are, pay no part of the duty. What matter
then if 50 per cent, be levied on the productions
of one country, and only 25 per cent, on the
productions of another? The consumer pays.
There can be no advantage in any so-called
preference given to one country over another.
Why, then, is so much made of the preference
granted by Canada to Great Britain ?

All nations do what they can to secure for
themselves by commercial treaties the most-
favoured-nation clause. What is that favour ?
The reduction of duties. Why is that a favour,
of what use is it, if the consumers are going
to pay the duty ?

A few years ago Great Britain levied a duty
on wheat. Some householders think they then
paid more for their bread, others aver they did
not, and both may be true and correct opinions.
The price of wheat may vary very much without
6

82 HOME TRADE AND FOREIGN TRADE

making much difference in the price of bread
anywhere, and less in one place than in another.
It is not duties the consumer need nowadays
fear, so much as combination against him by
retailers. Since commodities are so widely and
largely produced, though easy enough to over-
load a market it is not so easy to shorten supply ;
competition is too keen. Suppose the supply of
any article to be in excess of the demand, the
price falls : if supply falls short of demand,
the price rises. If the price fall low enough,
the producer, by reason of the low price he
gets, pays the duty, if there be one. This must
particularly apply to articles depending for their
quantity on the productive power of nature and
on weather conditions.

It is not known what results follow the
operations of the manufacturer ; but it is believed
that if all the figures, instead of being kept
secret, were published for the world to see, it
would be found that the manufacturers of Great
Britain pay away considerable amounts out of
their profits, in the form of a duty on the goods
they send abroad, not perhaps directly, but in
consequence of the low prices they are compelled
to accept. And further, it is strongly suspected
that these prices often reduce the scale of profits
to a very low level, and sometimes even spell
a loss.

Now, it is quite clear that whenever, to secure
a deal, a low price is accepted, and profits are
correspondingly reduced, the manufacturer loses
capital ; he remains with less capital to reinvest

TARIFF REFORM S3

in his business, he does not employ labour as
freely as he would do if his profits were greater.
Therefore, when trade is no longer free, a factor
is introduced that tells very heavily against the
foreign trade, when compared with the home
trade, as an employer of labour.

What then is the remedy ? Whether justly
or unjustly, the British manufacturer has the
character, outside Great Britain, of being very
difficult to move from his own line of business
and his own methods. It would be, perhaps,
natural if men whose predecessors were for three
generations cocks of the foreign trade-walk
hesitated to change either the line or the method ;
and therefore it is almost certain it will not be
sufficient to offer to employers all the arguments
and persuasions that invite to reinstating the
home trade. It will come to a stronger measure,
the partial closing of the door against foreign
manufactured goods. That implies a reform of
the tariff; there seems to be no other way.

Tariff Reform, as it would be a very serious
matter, cannot be introduced until the people of
Great Britain are quite ready for it and desire
the introduction. As to this necessary delay
there need, however, be no anxiety ; for a reform
of the tariff cannot be prepared, cannot be drawn
up in the absence of full information about the
home trade. The only way in which that in-
formation can be obtained is by the collection
and periodical publication of detailed home-trade
statistics, exactly as is now done in the case of
the foreign trade.

84 HOME TRADE AND FOREIGN TRADE

It has been argued that if a country manu-
factures certain articles, and levies a duty on
those articles when sent to her by a foreign
country, her own people, as consumers, not only
pay that duty, but also find the prices of their
own goods raised against them by the amount of
the duty.

Suppose that Great Britain manufactured
^100,000,000 worth of piece goods for home con-
sumption, and that at the same time, in spite
of a duty levied, ;!{^i,ooo worth of foreign piece
goods were imported. It is not to be supposed
such an import as against such a home con-
sumption would have any effect on the price
of the goods. But suppose ^^"40,000,000 worth of
piece goods were manufactured in Great Britain,
and ;i^6o,ooo,ooo worth were imported ; then no
doubt the foreign supply would seriously affect
prices in Great Britain. There must then be
some percentage, in the case of each kind of
manufactured article, below which an import
produces no effect on home prices, and would
not do so if a duty were levied. There must
also be some percentage of import, at which a
duty levied would begin to cause a rise in prices
to the customer. Without full and detailed
statistics of all home production of manufactured
goods, these percentages would have no meaning.
To give them a meaning the total home pro-
duction of each article must be known. Then
the Minister drawing up the tariff list would be
able to tell on what articles he might levy a duty
without danger to the consumer, and on what

HOME TRADE STATISTICS 85

articles, owing to the certainty of a serious rise
in prices, no duty should be levied.

Railway traffic returns, published every week,
might appear to give information as to the state
of the home trade; but those returns do not
disclose to what extent the goods carried belong
to the home trade and to what extent to the
foreign trade, nor could anything be learned
from the returns respecting the production of
manufactured articles.

In a similar way, although a bad state of the
labour market signifies that the home trade is
also in a bad state, from such an indication no
details of production can be inferred.

A rise in prices is a probable accompaniment
of an improvement in the home trade ; but some-
times prices rise though there is no improvement
in trade. Large discoveries of gold would cause
a general rise of prices, owing to the consequent
reduced buying power of money.

The careful details of imports, shown in the
Board of Trade statistics of foreign trade, might
also appear to indicate where the home market is
ill-stocked. So they do, but they do not show
what the total production of each article by
British manufacturers amounts to year by year.
There is, therefore, only one way of obtaining
the required information — by the good offices of
the Board of Trade.

Certain statistics of home production are pub-
lished from time to time, but these, though
interesting, are of no use to the tariff reformer,
for they give only some details, and do not show
6*

86 HOME TRADE AND FOREIGN TRADE

the one production of each article it is necessary
to Icnow, the total production. In the meantime,
owing to the action of Government, in publishing
accounts of British foreign trade only, attention
is fixed on that trade, as if it were the sole
criterion of trade success or failure, and were
bound to be, for all time, the one great trade
of the United Kingdom. That is the trade that
is written about and discussed. Sometimes it is
the exports that are enlarged on in a boastful
spirit, as though Great Britain were still supply-
ing the world with all it needs, which she is very
far from doing in these days. Seldom is the
home trade mentioned ; few people know any-
thing about it ; attention is hardly ever drawn to
it, much less fixed on it.

In her foreign trade Great Britain is relatively
losing ground, as is proved in statistical tables
of the Board of Trade, If steps be not taken
at once to enlighten public opinion as to the
state of the home trade, to fix public attention on
its progress, and to obtain for the preparation of
a tariff list the information required, all action
may come too late. So momentous is this, it
must be repeated. To report in detail on only
a part of the trade of the country, to leave out of
sight, comparatively unnoticed, another and great
part of the trade, is to direct exclusive attention
to the part reported on, to lead every one to
the conclusion that the part reported on is the
only part that matters, that the part not noticed
is of no consequence.

Statistics of foreign trade are very easily pro-

HOME TRADE STATISTICS 87

cured. The quantities and values of all goods
entering or leaving port, or crossing a frontier,
are reported exactly and as a matter of course.
The compilation of full tables from these detailed
reports is neither an expensive nor a difficult
matter : it demands only a fair amount of patience.

To obtain full details of the home trade might
certainly cost more ; but thoughts of such ex-
pense as this should not weigh for a moment.
Lighthouses are costly to build and to maintain ;
the marine surveys necessary, when channels are
to be buoyed, are costly. But who grudges such
outlay when he is reminded of the loss by ship-
wreck it prevents ?

To obtain these details in full might at first
need tact and good management. We have
already certain details of home production. The
Agricultural Board gives information respecting
the production of grains and other crops, and
as to the quantities of live stock in the United
Kingdom ; the Fishery Board reports on the
quantities of fish landed; and the amount of coal
produced is published. The census of produc-
tion adds further details. Why should not these
arrangements be co-ordinated so as to cover
effectively the whole home trade ; and why
should not this co-ordination and collection of
details be put in hand at once ?

It is possible that some manufacturers might
strongly object to impart any information re-
specting the outturn of their mills. But would
such objections infer wisdom ? These details are
not required for publication ; such details never

88 HOME TRADE AND FOREIGN TRADE

are published. All that is wanted is a complete
compilation for each article, such as we have in
the case of the production of coal. No one, from
that compilation, would be able to say what
amount of coal was produced at any particular
colliery.

It is believed that if the matter were taken in
hand by the right men, in the right way, all diffi-
culties would vanish ; the compilation might then
be quickly made, and the preparation of a tariff
proceeded with.

CHAPTER VIII

ON TAXATION

Seventh proposition. — The necessary revenue
should be raised so as to encourage the true
employment of capital, and to impede as little
as possible the march to the ideal.

In Great Britain, at the present time, the sum
required as revenue may be called, without
exaggeration, enormous. No doubt of the out-
lay a good deal might be spared ; but even if
Government were able to detect and prevent
much waste, even if it were possible to forgo ex-
penditure on items of no real national importance,
still for Government purposes it would be neces-
sary to raise a great revenue.

Supposing then a nation to strive after the
attainment of the true ideal — the movement of
the people towards the highest possible condition,
physically, socially, and morally — on what prin-
ciples would that nation, by means of Govern-
ment action, raise the revenue required to meet
expenditure?

The answer to this question follows at once,
when the meaning of revenue is admitted. The
revenue of the nation is simply a certain amount

89

90 ON TAXATION

of the national capital withdrawn from individual
use and set aside for national purposes. Really,
therefore, there is only one principle on which
revenue should be raised by Government, and
that is the withdrawal from individual use of
only such capital as can be withdrawn with the
least hindrance to national industries.

As nothing is more common than to hear
certain taxes or duties condemned for the reason
that the nation, in raising money by such taxes
or duties, is living on its capital, it is necessary
to give some proof of the above propositions.

A nation must live on its capital ; it has nothing
else to live on. The nation financially differs
greatly from the individual owner : it has its
capital, and only its capital, in one simple form ;
it makes no distinction between principal and
interest ; it has neither the one nor the other.
Great Britain does, it is true, possess certain
canal shares ; and such a possession is like that
of an individual : it comprises principal and in-
terest. But that particular possession is a mere
accident; it is a rare exception to a rule other-
wise general. It is, in spite of that exception,
safe and correct to say that nations have only
capital in one simple form, and take their revenue
from that, as its only possible source.

The individual has also only his capital; but
he has it in two forms, principal and interest-
The principal yields, and keeps on yielding,
interest to him who spends no more than that
interest. He who spends more than the interest
gradually uses up the principal as well. To

LIVING ON CAPITAL 91

speak disapprovingly of such a man is perhaps
allowable, but to do so for the reason that he
is living on his capital is misleading. Every man
lives on his capital, and must do so; but this
man is living on the yielding part of his capital,
the principal. Of course it would not matter
what particular terms we used, so long as we
all used the same terms for the same ideas, and
clearly understood each other's meaning. That
really does matter; we must understand the
underlying facts in every case. In this case that
principal gives birth to interest, as the sown
wheat gives birth to the harvest wheat; and
that both principal and interest are capital, as
both the sown wheat and the harvest wheat are
capital.

It is useful here, the matter being of the utmost
importance to any one who would understand
these questions, to insert, as a sort of note, the
possible objection that this allocation of capital
seems to contradict the general assertion that
capital is produced only by the destruction of
capital. There is no other way. What makes
an import more valuable than an export? It
is the expenditure of the capital of the ship-
owner and of his men, in carrying that import
from one country to another, in converting an
export into an import. So it is with principal and
interest. If the principal, when not encroached
on, continues to produce interest, how is it that,
both principal and interest being capital, the
principal is not destroyed ? But it is. The
principal is annually destroyed, and reappears

92 ON TAXATION

as principal and interest. If we think the matter
out, the general rule holds good here as else-
where. For this principal is in reality some
part of a living form of industry, or of a loan
which has been raised by the directorate of
such an industry or by a national Government.
All industrial profits are made by the destruc-
tion of capital and the birth of fresh capital.
Interest is merely a part of such industrial
profits. In simple words, then, principal appears
to live because it is continually replaced.

Speaking generally, an old Government loan,
though it may be occasionally represented by a
living industry, such as a national railway, is
usually only so much promise to pay interest
annually, the amount originally borrowed being
long gone in various directions. The interest,
when paid, is obtained by duties and taxes.
These come out of profits and savings, and are
the consequence, therefore, of the creation of
capital by the destruction of capital in the
ordinary way.

For whatever purpose it is required, all the
revenue obtained by Government is obtained
in one way, by annexing capital. Let us suppose
an income-tax is levied : that is an annexation
of capital. If a man, out of an income of a
thousand pounds a year, spend eight hundred
pounds, he would naturally reinvest, so as to
increase his principal, the balance of two
hundred pounds. If a part of this, instead of
being reinvested, be paid over to the tax-
gatherer, then that payment is made from

ANNEXING CAPITAL 93

capital ; it is made from that part of capital
which would otherwise have become principal.
Or let us suppose a duty to be levied on tea.
Then either the consumer must pay for his tea
an increased price per pound, or the producer
must be content to lower his price per pound.
In either case the duty is paid from capital.
For if the consumer pay more for his tea, he to
that extent has a less amount for reinvestment.
If the planter obtain a lower price for his tea,
his profits are reduced, and he has less money
to reinvest, or less with which to improve his
factory or his plantation ; so that either way he
loses capital. Finally, suppose a Government
to raise a revenue by means of death duties.
In that case the Government annexes capital,
but only in the same way as it does by an
income-tax or by a duty on tea. Some men,
to meet the death duties, reduce their annual
expenditure, and so save the heirs. But the
meaning of this procedure is that annually a
certain sum is reinvested and becomes principal ;
and this principal is the capital the Govern-
ment ultimately annexes. Other men care less
about their heirs, who consequently receive a
diminished capital in the form of principal, the
Government having annexed the balance.

It is this mode of annexing principal which
seems to many complainants to imply a living
by the nation on its capital, in an objectionable
sense. But if we are to be at all accurate in our
mode of thinking and expressing our thoughts —
and the more frequently we discuss such matters

94 ON TAXATION

with our friends the more truly necessary we
shall find such accuracy to be — it is not in the
consumption of capital by Government that we
should see objectionable courses, for the Govern-
ment must consume capital, having no alternative;
it is the discrimination, or want of discrimination,
in choosing the particular capital to be used up,
that is properly criticised.

We have spoken of the nation necessarily
using its capital for its expenses, and of annexing
capital, that is, the capital of individuals, for
that purpose. Both propositions are correct, but
it occasionally happens that the capital annexed
is not that of a citizen of the nation ; as when
a foreign company has to find the duty on their
goods sent to the nation levying the duty. The
payment of such a duty is sometimes disguised ;
the price obtained by the seller in such a case
falls, and in that manner the duty is paid.

As regards discrimination in choosing the
capital to be annexed, suppose that at a par-
ticular time, in a certain country, there were a
shortage of rolling-stock, so that the agricultural
produce of the country, instead of being all
rapidly moved to the great markets, was largely
left stored in granaries ; and suppose at this time
unusually good prices from abroad might be had
for such produce. At such a time manufac-
turers of rolling-stock would not only v^7ork their
hardest, they would also put into their business
all the capital they made in the form of profits.
Any great failure, at such a time, to attend to
these points would, as a result, bring about loss

DEATH DUTIES 95

and injury to the nation's chief industry, its
agriculture. Or, if at that time large sums were
extracted from such manufacturers in the form
of death duties, or in any other way, for the use
of Government or other purpose, then equally
there would result loss and injury to the nation's
chief industry. That is, the action of Govern-
ment at this crisis would have an effect on trade,
as bad as the neglect of the manufacturers to rise
to a great occasion.

But such an extraction of capital might be
made at the same time for the use of Govern-
ment, from quite another set of persons, without
doing the trade of the nation any particular
harm. There are persons in every State who
are great art collectors, filling their houses with
specimens, and even building palaces to contain
their treasures. All the capital expended in
acquiring such of these treasures as come from
abroad, as they very largely do, is lost to the
nation for the time being, and remains a loss,
unless the treasures are ultimately dispersed, and
either return abroad or become public property.
Death duties levied at high rates on such an
art-collecting family would no doubt be severely
felt, particularly if the levy led to a partial dis-
persal of the collection ; but on the national
industry the levy would have no effect at all.

No conceivable tax or duty, then, is peculiar
as causing a nation to live on its capital, death
duties no more so than a duty on tea or wine.
There are cases where heavy death duties may
happen to cause great loss to the nation ; there

96 ON TAXATION

are occasions where such duties cause little or
no loss to the nation. Upon the whole, they
must, like all other duties and taxes, with certain
exceptions to which reference will be made, im-
pede the national progress ; but such obstruction
is in the nature of the case, and is not to be
deplored where the duties of government are
thoroughly well carried out; for without good
government a nation would quickly drop from
bad to worse.

For the purpose of raising a revenue, capital
may be placed in three classes. In the first class
we must put such capital as may be partly
annexed by Government, with little or no dis-
advantage to the industrial progress of the nation.
In the second class we must put such capital as
cannot in any part be annexed without the
gravest disadvantage to the industrial progress
of the nation. It is necessary to have a third
class, because there is so much capital that can-
not be, even in part, annexed without causing
some palpable industrial disturbance, but with-
out any such disturbance as would amount to
the great disadvantage following annexations of
capital of the second class.

In the chapter on the employment of capital
an attempt was made to show that waste is an
enormous consumer of capital, probably a far
more enormous consumer than Government itself,
which indeed is, necessarily, owing to the con-
stitution of mankind, an administrator of partly
wasted funds.

One of the most wasteful things that men can

DUTY ON LIQUOR 97

do is to pour down their throats excessive
quantities of liquor, liquor which, taken soberly,
is not really absolutely necessary, taken in ex-
cess is injurious, and a causer of bad work and
much mental and physical suffering. There was
a time — and it is not so very long ago — when the
British nation was a nation of ale-drinkers ; at
every meal people of all, even the most tender,
ages drank ale. But they had their excuse ; for
drinking water in those days, partly owing, it
is true, to the carelessness and untidy habits of
the ale-drinkers themselves, was bad and often
poisonous. But now the village pump has long
been condemned ; farm wells, which had for ages
been local soak pits, need no longer be resorted
to; there is good and safe water in plenty for
every one. If any one drinks strong drink now,
it is not on compulsion : it is because he chooses
to do so. Strong drink is one of the forms
taken by capital; the capital from which it comes,
by which it is made, like all other forms of
capital, must be destroyed, that this new and
greater capital may be produced. This happens ;
but the new and greater capital is one of those
forms that then reproduce no further, and in
this particular case the cul-de-sac is often a very
noisome ending.

Here, then, is a capital that may certainly be
placed in the first class. Revenue obtained by
duties on liquor, whether wine, spirits, malt
liquor, liqueurs, or other stimulating beverages,
is a revenue under the first class of capitals.
For many years in the United Kingdom this
7

98 ON TAXATION

particular form of revenue has been tapped, and
upon the whole the population is now more
sober than formerly. A day may come when
there is no longer a revenue to be thus gathered,
but it must be, indeed, a distant day; years
many must pass before mankind has thoroughly
dried out, or washed out, or taxed out the crav-
ing inherited through one hundred generations
from ancestors who found out, as the people of
every barbarous race, of every lonely island,
have found out — though they have found out little
else — that from some form or other of vegeta-
tion could be made a stupefying drink, by which,
when enough was swallowed, came forgetfulness,
senselessness, oblivion.

To many people it appears axiomatic that all
luxuries and most amusements should be reckoned
as representing capital of the first class, and
should be taxed accordingly ; open letters to
chancellors of the exchequer sometimes advocate
this course. One form of luxury is at present
very heavily taxed. Tobacco smoking is, no
doubt, a luxury — perhaps the greatest luxury as
yet discovered. It is conveniently taxed because
a great revenue results, and every one knows pre-
cisely what he pays, and can, by moderating his
enjoyment, keep the payment as low as he
chooses. The duty is likewise easily collected.
Tobacco may therefore be looked upon as repre-
senting capital of the first class. Tobacco smok-
ing is a sedative, and, as such, indulged in
moderation, probably does no harm ; but it does
harm when the practice is begun in 3'outh,

DUTIES ON LUXURIES 99

or is indulged to excess, and therefore even a
high duty has its merits. Just as liquor drinking
is a disappearance of capital that never repro-
duces, so also is tobacco smoking.

There are many forms of luxury that cannot so
well be taxed, for the purpose of raising revenue.
Undoubtedly a considerable amount of capital is
locked up in the form of clothing, jewellery,
pictures, and so forth — capital that reproduces
no more. As far as the principle already cited
goes, there is nothing financially wrong in taxing
so as to annex a portion of such non-reproductive
capital ; but it is seldom expedient to do so
directly, owing to the expense of collection and
the comparative smallness of the yield. The
death duties take in, at intervals of time, a
sufficiently large proportion of revenue from
such luxuries ; and in other cases licences, such
as gun and motor-car licences, are quite a suffi-
cient levy.

There would be a great disadvantage, not
altogether to the industrial progress of a nation,
but to many of its people, in pressing too far
taxes on certain luxuries. If, for instance, a gun
licence were made so expensive as to be pro-
hibitive, a large number of men would be made
idle, and, owing to the nature of their emplo}''-
ment, it would be long before they found other
occupation : perhaps many of them might never
again be as they were. It is not sound legislation
that throws suddenly a noteworthy amount of
labour on the market. The destruction of capital
in one form may thus be made to cease, the

loo ON TAXATION

conversion of active capital into partially non-
productive capital, as happens in the gun trade,
comes to an end. But another capital is, in this
sudden corrective process, rendered non-pro-
ductive, the capital of the workman deprived
of work. As these workmen must still consume
some amount of capital in the form of food, but
yield nothing in exchange, there is a loss to the
State : for men who can afford so little do not set
in motion that amount of work which is neces-
sary to keep busy workmen supplied with com-
modities.

It is unnecessary to remark on the profits of
the postal and telegraph services, as such profits
are made by performing certain duties, which
those whom they benefit have of course to pay
for. Enough has been already said about income-
tax, including land taxes and house taxes ; death
duties and legacy duties ; also about licences,
to which may be added receipt and other stamps.
So long as these are reasonable in amount they
do not specially contravene the correct principles
of taxation. Revenue, though not to be raised
wherever it can be had, must still be raised where
it can be had without oppression ; therefore, all
those who can best afford to pay, must do so
to a fair and reasonable amount, and without
being put to unnecessary inconvenience.

Capital of the third class is in three grades.
In the first grade of the third class are all those
articles which come nearest to capital of the first
class ; that is to say, articles which Great Britain
can herself produce in any quantity necessary,

DUTY ON MANUFACTURES loi

first, to fill her own markets, and second, to send
abroad in exchange for that part of the food and
raw material she needs for her use, and must pay
for ; and for the few wholly manufactured goods,
in making which foreign nations still retain
some advantage over her. These are principally
manufactured goods.

In the second grade are articles which Great
Britain can and does produce herself, but not
in the quantities she requires for her own use :
and it is characteristic that these articles are
produced abroad in very great quantities, over
wide areas in all parts of the earth. Such are
wheat, oats, timber, hides, and wool.

In the third grade are the articles of the third
class which come nearest to capital of the second
class, and are also articles which Great Britain
does not and cannot produce herself It is
characteristic that these articles, though produced
in very many parts of the earth, are not pro-
duced in great quantities. Such are certain food
products, as tea, coffee, sugar, and cocoa, which
may or may not be considered necessities accord-
ing to the point of view of the consumer.

A revenue can certainly be raised by levying
duties on foreign goods of the first grade. The
United States of America, Russia, Germany, and
most other countries do actually, at this present
time, raise some part of their revenues in this
way. They do this in spite of the fact that their
tariffs are very high, so high as to be intended
for prohibition.

The objections to tariffs which, however high,
7*

I02 ON TAXATION

do not keep out more than a proportion of foreign
goods of each kind are manifest.

In the first place, smuggling becomes a business
on a large scale, and an expensive staff is neces-
sary to check it, sometimes without more than
partial success, because to take the smuggler in
his iniquity is often difficult. Smuggling may
be done in two ways : by the running of goods
and by bribery. To prevent the former it is
necessary to put every one entering a country
to the greatest inconvenience. The latter mode
is not easily dealt with : if positive printed state-
ments be correct, it goes on very largely.
Therefore, when calculating what revenue may
be expected from a tariff, allowance must be
made on a considerable scale for loss by
smuggling.

In the second place, the country sending goods
to another country may not always pay the
import duty on these goods. Sometimes it pays
all, sometimes it pays a part, sometimes it pays
none, according to the skill with which the tariff
list of the importing country is made up. Where
the quantity of an article sent into another
country is small, compared with the quantity of
that article produced in the importing country,
the price of the article in the importing country
would not be affected, and the duty would not
be paid by the importing country. It is believed
that British manufacturers have now to pay the
duties on certain goods they send into the United
States of America. If, in any particular case, the
import of an article were important in quantity,

DUTY ON WHEAT 103

relatively to the home production, then the
readjustment of prices would probably cause
the whole or a part of the duty to fall on the
consumer, according to the greater or less rela-
tive importance of the quantity of the article
imported.

The second grade of commodities includes
articles of food, of which wheat may be taken
as an example. The foreign wheat supply of
Great Britain is drawn from eight great areas,
scattered over five continents, in which there
is never wide-spread failure, but sometimes a
partially reduced supply, owing to drought, storm,
or locusts, in one or the other area. It is not
the farmer, but nature that controls the situation.
It would therefore be hopeless and useless for
any person or syndicate to try and arrange what
the world's wheat crop in any year is to be,
since no one knows a month beforehand what
that month will bring about in the way of
wholesale natural losses. What is observed then
is never any attempt to reduce the world's area
under wheat, but, on the contrary, a steady
annual increase of that area.

If we watch proceedings in any one area, we
shall find that the farmer never knows, till he
threshes, what yield he has. All may look well,
and then, in five minutes, the farmer may be
" hailed out," losing his whole crop ; or, a sudden
night-fall of the thermometer may, at a particular
stage, lower the value of the crop two or three
grades. It is natural, under such circumstances,
for the farmer to do the best he can for himself,

I04 ON TAXATION

growing as much wheat as he can, selling all
he can for the best price he can get. Sometimes
a well-to-do farmer may hold on, hoping for
a better price, but he has a doubtful proposition.

Others besides farmers are engaged in the
wheat trade ; but long study of the conditions
of that great trade leads to the conclusion that
such dealers cannot control nature. In a late
market review it is shown that the price of wheat
in Winnipeg suddenly rose zh cents the bushel,
because of French buying and a reported lower
estimate of the crop in Argentina. Such reports
are unreliable, crops often recovering unex-
pectedly. On the same page of the review it
is stated a fall in the price of wheat took place
last year (1910), because it was found the Western
Canadian crop was not as poor as had been
reported.

A syndicate with great resources might raise
for a time or lower the price of wheat. The
greater the population of a country, the higher
its interest in keeping the price of wheat as
steady as possible. To the United States of
America, with ninety millions of people, to
Germany with sixty millions, to France and
Great Britain each with forty millions, the matter
is most important. It seems by no means im-
possible, if these nations were agreed, to legislate
so as to make "corners " in wheat illegal.

If that were done, a sliding duty, with a low
maximum, on wheat imported into Great Britain
would not, it is thought, hurt the retailer;
because, with the duty at a maximum, the supply

DUTY ON TEA 105

would be abundant and the price low ; that is,
the producer would pay the duty. .To farmers
sending wheat to Great Britain this would mean
the difference between a high price for a moderate
crop and a lower price for a great crop, on so
much as Great Britain imports of that crop.

The retailer is mentioned rather than the con-
sumer, because the price of British wheat is not
an index of the price of bread to the consumer.
In May 1909 British wheat was nearly 42 shillings
the quarter, in October 1909 about 31 shillings,
and in July 1910 about 33 shillings. In May 1909
bread sold, in the South of England, at 6lci. the
quartern, in October 1909 at 6d., and in July 1910
at 5|<f., at which price it was still sold in Febru-
ary 191 1, though in London 6^d. was quoted.

On the articles of the third grade a revenue is
raised. Tea is an example. The bulk of the tea
imported by Great Britain comes from British
India and Ceylon. The duty is s^- the pound.
Tea is put on the steamer at Colombo at ^\d. the
pound on an average. Dividends paid vary, but
about 12^ per cent, seems a fair allowance on
most estates. A third more than this is supposed
to be made as profit, but kept back for improve-
ments to the plantations, machinery, and so forth.
Therefore the value of the tea free on board
comes to about 4^(/. the pound. Freight is a very
small item on a pound of tea, so that, allowing
for all expenses and plantation profits, there
cannot well have been more than sixpence the
pound paid out on the tea when it comes under
the hammer.

io6 ON TAXATION

It is the general belief that the consumer of
tea pays the whole of the duty. But we might
possibly find, if we had the whole of the facts
accurately before us, that the planter pays a part
of the duty, and the consumer the remainder.

The price paid by the consumer contains the
cost of transport and delivery to himself, retailer's
profits (a very considerable item), cost of trans-
port to retailer's warehouse, unpacking and
repacking, the London expenses, the total cost
up to London {6d. the pound), and the duty.
Estimating these items as best we can, it seems
probable that if the whole of the duty were
taken off, the planter would get more for his
tea.

Some years ago the planters, it was understood
owing to dissatisfaction with their share of the
profits, introduced rows of rubber trees between
the lines of tea plants. The production of tea
is, in consequence, now beginning to fall off, and
a rise in the price of tea is expected. Formerly,
Great Britain offered the one market for British
Indian and Ceylon teas : this is not now the
case. Whatever part of the duty on tea is now
paid by the consumer, it is likely he will presently
have to pay the whole of it ; and if they are right
who think he does now pay the whole of it, then
he will presently have to pay a high price as well.

Articles of this grade are therefore not suitable
for high duties.

No duty can ever be levied economically on
capital of the second class. Raw cotton cannot
be grown in Great Britain : it is grown in British

DUTY ON COTTON 107

India and Egypt, but about four-fifths of the total
comes from the United States of America. A
duty levied by Great Britain on raw cotton would
raise the cost of all cotton goods both for home
consumption and for export, without increasing
the quantities. This would affect one-fourth of
Great Britain's total exports.

The United States do not entirely depend on
Great Britain as a market for raw cotton. The
States use themselves an enormous amount of
their own raw cotton ; other countries, excluding
Great Britain, already use of raw cotton more
than half as much again as Great Britain imports.

To levy a duty, small or great, on raw cotton
would be the worst possible economy.

CHAPTER IX

EMPLOYERS AND WORKMEN

Eighth proposition. — To carry out its part suc-
cessfully, the Government requires the willing
aid of the employers and workmen. This aid
will not be effective unless the present some-
what hostile feelings are converted into harmony
between employers and workmen. The sources
of this hostility are to be found in the history of
the human race. A remedy seems possible.

If the great national industrial forces are hostile
or indifferent to schemes of progress, the work of
government cannot be done. Far from being
able to carry out a reform against the wishes of
those forces, it is necessary to the Government,
Government actually requires, that the reform
should be strongly desired. The result is much
the same if the possessors of either form of the
two great national capitals, labour-capital and
the capital that sets labour to work, are hostile
or indifferent. Hence it follows that, to carry
out its part successfully, the Government requires
the willing aid of the employers and workmen.
To obtain the required result, it is necessary,
therefore, that employers and workmen should

STRIKES log

act harmoniously, that they should recognise
the common object, realise that nothing can be
achieved by hostility, and that the problem before
them is a great problem, demanding early solution
by the removal of misunderstanding, and the
substitution of a true aim for insufficient aims.

It is scarcely necessary to prove, for it is
patent to all, and is, besides, the subject of
common talk, that, all the world over, the rela-
tions between employers and workmen are most
unsatisfactory. It is almost impossible now to
take up a daily newspaper without hearing of a
strike somewhere or other. Yesterday it was in
France, to-day it is in some province of America,
both these coming on the top of other strikes in
England and Wales. Strikes are not confined
to any particular people, they are on all scales,
and they do not occur under one form of govern-
ment much more frequently than under another.
The German Empire has lately been troubled
with strikes on a large scale ; not long ago
France, one of the great republics, was threat-
ened with an almost unparalleled strike ; in
the United States of America, the great sister
republic, strikes seem to be always occurring.
Canada, though not a republic, is a country
enjoying nearly complete freedom, and yet here
we have seen huge railway strikes, tramway
strikes, lumber strikes, and coal strikes. In the
British Isles, a limited monarchy, if there were
a temple of Janus, open only during strikes, its
doors would be but rarely shut.

Nor do the v/orkmen of any one trade assume

no EMPLOYERS AND WORKMEN

pre-eminence in the world-wide conflict. Some-
times the men of a particular colliery lay down
their tools, sometimes all the pits in a whole
district are idle. Sometimes it is the cotton-
spinners who strike, sometimes the boiler-makers,
sometimes the bakers. It may be the electric
lights of Paris that are put out, it may be the
dockyard hands that refuse to work, it may be
a whole railway system that is disorganised, it
may be the vineyards that are deserted. It is
impossible to predict with certainty where the
next heavy blow is likeliest to fall.

Now, a small strike here and there occasionally,
soon ending in an adjustment of differences,
might not indicate anything seriously wrong
with the system of work pursued. But strikes
are very far from being small and occasional,
and differences are very far from being rapidly
and easily adjusted. It is becoming more and
more difficult to control strikes in such a way
that their apparent causes are quietly removed,
and their recurrence rendered unlikely for some
time to come. For which there are two reasons :
that the apparent causes are seldom the real
causes, and that the desire for peace is seldom
a general and genuine feeling. It is this that
makes strikes an index of the relations, bad
and not improving, between employers and
workmen.

It is believed that this state of affairs may be
traced to two causes originating very far back
in the history of mankind.

A true history of morals has yet to be written.

HISTORY OF MORALS iii

It is Carlyle who tells us that the history of
mankind is at bottom the history of its greatest
men. If we had such histories accurately written,
and knew how to read them judiciously, it might
serve ; but we have them onl};- in part, or written
in such form as to serve only as numerous
quarries, in which the coming historian may hew
out materials for his work — a final work on the
progress of the morals of mankind. If there
is as yet no sign of such a work — and there is
none — we still do know enough to enable us to
construct a certain number of scenes and pictures
which may serve to show how mankind has made
the advance from barbarism to civilisation, along
one of the many lines of progress. Here, in this
particular case, two or three such sketches will
suffice.

Savages, long ago, like those of to-day, had
their simple moral codes. Certain acts were
held by them disgraceful, other acts highly
meritorious. We know, from unimpeachable
evidence, that there are now savages who would
not thievishly touch, nor allow others to touch,
goods committed to their charge ; and these same
men will set forth, and be honoured for doing
so, to find a victim in some neighbouring, not
unfriendly, tribe, and fight with him for no
reason but to cut off and bring back his head
in triumph. And what, as a rule, has been the
behaviour of such savages, through all time, to
those they held as immeasurably inferior to them-
selves— their women ? Most brutal. From the
beginning of things, so far as any tradition exists,

112 EMPLOYERS AND WORKMEN

it seems as though there always had been that
line of division between those truly powerful
and those confessedly weak, the powerful
taking from the weak all they could squeeze
out of them, and shirking no savagery in the
process.

It is, of course, a wide leap from the world
of ancient savages to the world of the Roman
Empire ; but it serves here to make it. The
physical remains of that empire show that, in
many respects, a high level of civilisation, in its
luxurious aspect, had then been reached. There
are signs, still to be seen in unearthed Pompeii,
of life rivalling in comfort the life of to-day : the
private bath, for instance, with its system of hot-
and cold-water pipes, is almost the same as our
own. But there are quite other signs. Over his
wife and family the Roman of the Empire had
the power of life and death. He could, and often
did, sell his wife to another man for money. It
is recorded of one well-known Roman that he
not only sold his wife for money, but afterwards
tried to buy her back again. But it was not
chiefly in his domestic affairs that the Roman
showed his native barbarity : that he showed in
his relations with his slaves. For Rome was a
slave-holding empire ; and that is here the moral
fact of prime importance. Not that the Romans
were the first to institute slavery : savage races
deal now largely in slaves, and probably always
did so. The Roman Empire was the first world-
wide power holding slaves, of which we know a
good deal historically.

HISTORY OF MORALS 113

Here it is that we first see, so clearly as to
realise it, a plain line of demarcation between
one set of men and another set : the one set
holding all the authority, forcing the other set
to do all kinds of hard work, and doing with
that inferior order exactly as the will approved.
To the Romans the possession of slaves was
deeply important ; to mankind in general that
sanctioned custom was to become still more
important.

If we glance at the state of Europe in the
Middle Ages, we again find two, and only two,
quite distinct classes of men. In the real upper
class were the nobility and the immediate re-
tainers— possessing, ordering, fighting — men of
real mental and active physical power, of great
skill at arms, and taking full advantage of their
quite unquestioned position. In the lower class
were the thralls — the hewers of wood, the culti-
vators, the herdsmen of swine — allowed to work
hard and live, not necessarily miserable, but abso-
lutely in the hands of their lords, to be done
unto as those lords might choose. The slaves of
Rome had become the thralls of the Middle Ages.
It is possible that in those times, when com-
munications were not merely bad but scarcely
existed except for the well mounted, when educa-
tion was wanting and books unknown, might
was necessarily right ; and these hard, dangerous
days had to be lived through much as they
were. The fact remains that until gunpowder
was invented, printing discovered, and the uses
to which iron can be put full}^ realised, the

114 EMPLOYERS AND WORKMEN

bulk of the working men were simply slaves.
In Russia they remained so until quite modern
times.

A hundred years ago England had long been
a free country. Every man in England was then,
in a certain degree, a free man ; that is, he was
as free as it was possible for him to be under
the British laws of those days. The Poor Law
of the time ordered that any man quitting the
parish to which he belonged should be sent back
to that parish, to work if he could. A man thus
treated was not a free man, as we now understand
freedom

Descriptions of the life and condition of British
workmen during the early part of last century
have been given by several writers ; among
whom were three whose writings are now
standard works. Strangely enough, these three
writers were women ; but they were women of
great capacity and powers of observation and
expression, and they wrote of matters they had
studied at the places where they dwelt. Mrs.
Gaskell did for Manchester what Charlotte Bronte
did for Yorkshire, and George Eliot for Middle
England. The pictures drawn by these writers
show employers standing apart, determined to
carry out their plans of business without inter-
ference from anybody, and not perhaps very
anxious about the welfare of those who had to
work for them ; and they show working men,
also standing apart, sometimes banded together,
sometimes disunited, generally in their hearts
rebellious, and always struggling against what

HISTORY OF MORALS 115

they, at all events, thought injustice, oppression,
and wrong.

It is not our object to examine here on which
side really lay the injustice and the wrong, but
to point out that we seem to see here a hard
division into two distinct classes, just as there
was at the beginning, when men first handled
men. Once on a time there were the all-powerful
Roman and his slaves ; then came the, if possible,
still more powerful baron and his thralls ; then,
after many discoveries and inventions had helped
to modify institutions and soften manners, the
strong employer and the workmen, free in name,
free in many ways, yet hemmed in and circum-
scribed in other ways — a division still, though a
changed and softened division, between two sets
of men, and the child by descent of the old
division. No one would pretend that the work-
men of to-day are hemmed in and circumscribed
as they were a hundred years ago ; but the old
tradition has been handed on from generation to
generation, and is still a sufficiently living power
to keep going a sense of difference, almost of war-
fare, between the one set of men and the other.

We come now to the second phase of an
historic struggle. Not warfare this against the
employer, but against work itself.

Long ago, when man was a hunter, and had to
kill and cook his own game, it was a part of his
business to fashion and sharpen his own weapons,
and to attend to the wants of his horse, if he had
one. He divided labour chiefly in one way, and
that with his squaw, to whom fell the duties

iVS EMPLOYERS AND WORKMEN

of tending the children and roughly cultivating
the soil, for the sake of a little grain and a few
coarse vegetables.

As population thickened, the principle of
division of labour came to be, not only practised,
but understood, as a mere necessity of life. Thus,
in process of time came, with ever fast growing
numbers, the great mercantile struggle, to obtain
success in which it became essential to still
further subdivide labour ; until now at last there
is scarcely any work in the factory or the mill
which is other than, in appearance, an aimless,
objectless, uninteresting fraction of some far-
distant whole of multiple parts, of which the
workman probably never thinks. Many years
ago, when all things that can be made with tools,
and even the tools themselves, were fashioned
by human hands, division of labour was
practised, of such fineness that already the work
of manufacture had become extremely mono-
tonous : this still goes on, but for human hands
have been substituted to a large extent ingenious
machines. These machines do the work, but it
is necessary to watch and guide them, and to do
this one thing all day, and day after day : so the
monotony is there just the same, and perhaps
is even intensified. Now the point is that there
is no going back to primitive days ; there is no
way in which to produce all that is required
except by division of labour of the first degree.
And that being so, as long as work is carried
on exactly as it now is, that fine division of labour
must continue to carry with it its inevitable

DIVISION OF LABOUR 117

consequence — the feeling of dull monotony, which
is a prolific seed-bed for discontent and readiness
to strike.

It is this feeling of perpetual discontent that
prevents employers and workmen converting
their traditional opposition into harmonious
action.

In support of these statements we shall bring
forward evidence, tending to show that where
there is division of labour, but not practised
to any degree of fineness, there is not the atmo-
sphere of discontent that seems inevitable where
work has become monotonous.

The first witness to be called is from a village
of British India. The inhabitants of an Indian
village divide labour so carefully that the
boundary between one trade and another is
perfectly clear, and so strictly drawn that no
man would dream of ever crossing that boundary.
The son of a village carpenter is always himself
a carpenter, not by choice, but by national
custom. In the same way, the son of a village
blacksmith always himself becomes a blacksmith.
Thus certain families in the village are composed
of and contain all the carpenters ; certain other
families are composed of and contain all the
blacksmiths. It is the same throughout. The
coppersmiths are solely coppersmiths, the water-
men always watermen. The cultivators of the
soil work at that business only ; the men whose
trade it is to take to the road and drive animals
never do anything else. And so the division
is simple and clear : it is almost a religion.

ii8 EMPLOYERS AND WORKMEN

Those who know this village life often speak
of hardship, but never of discontent. Nor can
it be truly said that the genuine village people
are lazy. He who passes that way at evening
will see the village elders settling village affairs,
under a great peepul tree, but he will find the
able-bodied hard at work, and these will continue
to work on as long as they are able to see.
Suppose the carpenters of a large village to have
in hand the construction of a number of carts ;
then no doubt if one set of men made the naves
of wheels and nothing else, another set the felloes
and nothing else, a third set of men the spokes,
while other carpenters were limited to the pole,
and others to a particular part of the body of the
cart, then interest in the day's labour would be
reduced to nothing ; and if this were the practice,
not of a day or a week, but of a life, then no
doubt there would creep in weariness and dis-
content, from which the workmen in the villages
are now free ; and are thus free because they are
not deprived of a real interest in their work ;
they can see always, when it is reached, the
whole result of their varying labours, the com-
pletion of a design, the consequence of thinking
while they are working, instead of working
along numbly without thought.

Most of the large towns in Europe can furnish
evidence that where the workman has a vital
interest in his work, though the work be of one
kind only, that work has been a mainspring of
life, and not a cause of discontent. It is but
necessary to enter some of the cathedrals and

INTEREST IN WORK 119

abbeys of England, or France, or Italy, to find,
from this point of view, a subject for earnest
reflection. In these buildings there is, in plenty,
stone tracery so lovely as to rival in beauty, in
variety, in originality, the wondrous wood-carv-
ing in the temples of Nikko. It is interesting
to think of the stonecutters who wrought there :
these men were certainly never discontented ;
they must have gloried in their work.

In a measure this is still the same. There is
a statue in Verona, on the base of which, some
years ago, an Italian stonecutter had work to
do. In the evening, when his work was over,
he, of course, quitted it ; but in no hurry, for
his thoughts were with his work. It has hap-
pened that, after quitting his work, he even
returned to it, just to get clearly in his mind
some point on which he might reflect at leisure.
It may be said that he was half an artist, and
had an artist's yearning to do better and better
work ; and that the cathedral workmen, though
just workmen, were all really artists. It does
not affect the argument.

The result appears to be just the same in the
case of workmen certainly not artistic. Let a
workman have an interest in his work, although
he is strictly limited to work of one kind, he
will not be a hater of work ; he will be con-
tented and happy. The bricklayer has to under-
take a good deal of rather monotonous work,
but sometimes he has not only to apply his skill
but to think hard. In laying ordinary courses
of bricks from the ground upwards, there is no

I20 EMPLOYERS AND WORKMEN

difficulty in what is called "breaking joint" —
that is, in keeping sufficiently separated the
vertical joints between successive layers of bricks.
But now and again, at a corner, this difficulty
occurs, and some men get over such difficulties
of their trade in one way, some in another. It
happened to the writer to come across a young
bricklayer who turned the corner in a way of
his own. Having reached his difficulty, he took
measurements ; and the same evening, having in
his leisure at home thought it out, he made a
drawing, showing how he proposed to lay each
brick ; and he took his drawing with him in the
morning and worked by it. It is impossible to
suppose that work, to that man, was monotonous
or hateful.

It is quite possible to see, by means of an
illustration, what happens when interest once
wanting is restored to work. We can see it in
the training of the British Army, we can see
the difference in value that has followed the
conversion of an army of soldiers uninformed and
indifferent to an army acquainted with its aim,
and become determined to reach it.

In the days of the great Frederick it was not
judged necessary to explain to the troops the
why and wherefore of each movement ; and, in-
deed, the men at least knew, as certainly as the
general, that they would not fire a shot, nor
hear the whistle of a bullet, until they had
arrived within a few yards of the enemy they had
seen while still far from his position. The officers,
then young, adhered to the old notion when,

INTEREST IN WORK 121

years later, it came to their turn to lead the great
divisions of the army. They adhered to it, and
taught the youths they trained simply to adhere
to it ; and these in their turn passed it on as a
sacred truth, that no one must ever know, except
a couple of trusted staff officers, the secret that
is in the general's mind.

An army thus kept in ignorance, marching
hither and thither, suffering often hardships the
need for which it does not understand, is not
the finest instrument of modern warfare. Put
an end to the ignorance of the battalion, let it
well understand its task, place before it the
meaning of the call, then it will so march and
endure, and so attend to the call rather than
to its sufferings, that it becomes worth more to
the general than two, or perhaps three, battalions
of the old style.

It is the dislike of work, which has arisen from
the absence of interest, that prevents men work-
ing steadily in agreement with employers for a
common end. If men hardly want to work at
all, except as a means of obtaining wages, of
what use to ask them to work, as they think,
harder?

It will not do to lose much time if an attempt
is to be made to give back to work the interest
it once had, and has now here and there. For
another vast change is occurring, the consequence
of widespread education and the invention of
rapid modes of communication. A generation
has now sprung up to manhood which has added
to the former leverage of the workmen's power

122 EMPLOYERS AND WORKMEN

the extra length that is due to wider knowledge,
to the power of more rapidly forming ideas,
more easily exchanging those ideas with others,
and acting more effectively in union. And if
speed is necessary, it is also more necessary
that any action taken by these men should have
a right direction, and not a wrong or doubtful
direction.

Is it not true that the workmen everywhere
have great need to be reminded of this ?

It would be impossible now to revert to
primitive times, and do away with the modern
fine division of labour : that must remain, not
merely because it is only by working thus a
nation is able to hold its own in the general com-
mercial rivalry, but because it is only by work-
ing thus that the present population of a country
can be so fed, housed, clad, and amused as
to be able to live usefully. It is impossible,
therefore, to alter the existing conditions of
modern work, and what must be done is to
introduce some entirely new condition that shall
extinguish the monotony of work and give it
interest.

This, then, is the object of the change that
has to be made. The new condition must so
act as to thrust out of sight the feeling of
monotony, and make the abiding feeling some-
thing quite different from monotony. And the
change must go farther than this. Its action
must be such that the old feeling of antagonism
between the employers and the workmen is for
ever obliterated ; and such that in tending to

COMPROMISE 123

introduce harmony where now is division, it
may hasten and not thwart the coming of the
supreme object of the nation. What possible
change is there, by which conditions so different
may be simultaneously fulfilled ? Hitherto all
that has been done has taken the form of
compromise. Men who must have known well
the workmen and their employers have spent
all their energies in advocacy of this plan.
Only lately a well-known British statesman de-
clared compromise to be the one and only remed}'.
Yet, by its very nature, compromise cannot get
far beyond the fringe of things : it tries to alter
a little here and a little there, to soothe and hush
and induce acceptance of small advantages ; or
else it is not compromise. It never really
touches, it shrinks from touching, as too danger-
ous, the true deep-seated ill.

What is compromise but a palliation ? If com-
promise be only a palliation, it must be con-
demned as not equal to what is called for now.
It tends to keep in existence the evil it just
puts a little out of sight, to simmer on in
preparation for the next palliation.

The conditions of the problem seem to be
pretty clear. It is not compromise that is
wanted ; compromise fends off change for a time,
but it leaves work just as monotonous, and men
just as discontented. It is a change that is
wanted, a change that adds one new condition
to existing conditions. Who is capable of saying
exactly what that change must be ? It is quite
possible some one will arise, to whom will appear

124 EMPLOYERS AND WORKMEN

simple what to ordinary minds is so difficult.
He may arise, though Great Britain, high as is
the average of her intellectual power, rarely
produces a mind of tremendous force, such as
a Shakespeare, a Newton, or a Chatham.

In this place a suggestion only can be made,
a suggestion of a course that might be examined
by experienced, thoroughly informed men, wil-
ling to undertake the task : men representing
not only employers and workmen, but also the
Government of the country, and those great
bodies which so largely influence the thought of
the country.

The suggestion is this : that for the present
methods of carrying on the industrial work of
the nation should be gradually substituted general
co-operation, to be then by law established, with
modifications for cases where co-operation is un-
suitable or impossible.

There are in different countries at present
practised instances of co-operation, sometimes
successful, sometimes not very successful. But
rare and piecemeal co-operation is quite useless
for the purpose in view. Suppose a business to
be run on a true co-operative basis, the workmen
receiving a certain portion of the profits, and
acquiring by this means a suitable proprietary
share of the business. What guarantee would
there be that such a business must always con-
tinue successful ? And in case of bankruptcy
what would become of the workmen's profits in-
volved in the loss ? To be effective, co-operation
must be general, and not merely voluntary ; it

WORKMEN'S PROFITS 125

must be a part of the law of the land. Then

by means of insurance, also general, and under

Government control and guarantee, the safety

of the workmen's share of the business might
be securely guarded.

CHAPTER X

EMPLOYERS AND WORKMEN {COIltmUed)

If it be granted that, instead of workmen con-
stantly striking, or thinking about striking, the
nation wants a condition of affairs that admits
of labour-capital and the capital that sets labour
to work vigorously striving to attain a common
object, then it is now to be explained in what
way general co-operation appears a possible step
towards the ultimate solution of the problem.

Limiting the explanation at present to that
large class of men whose work is extremely
monotonous, and who are not in Government
employment, we have to find to what new quality
general co-operation gives rise, a quality strong
enough and definite enough to divert the thoughts
of the workman from monotony and carry them
elsewhere ; not so as to make him forget his
work, but, on the contrary, to keep him concen-
trated on it, with a clearly defined purpose.

That new quality might be called a sense ; it
is the sense of ownership, ownership that looms
clearly on the horizon, or ownership that is
already come. There is no lack of examples
tending to show that a quite ordinary man will

126

INTEREST IN WORK 127

work very hard at almost anything, provided he
knows all the time that the result of the work
is going to be his own, and can be missed only
by some fault of his own. On a common farm
ploughing, except perhaps in a competition for
prizes, is tolerably monotonous ; yet the simple
farmer, on his little holding, will plough cheer-
fully from dawn till dark, never shirking an
atom of difficulty, and gathering up all the time
thoughts for his evening at home, thoughts con-
nected with the daily task and what he hopes
will come of it. This goes on in thousands of
homesteads, right through the Canadian autumn,
and again in the Canadian spring. It is essen-
tially a human tendency, and therefore it is
permanent. Give a nail-cutter or a riveter just
that thought, that he is bound to become an
owner, not at his cottage where he sleeps and
eats, but there where he works ; give him that
thought, that he is not doomed to live and die
in absolute sameness, and he has something to
draw him on, and the very work he is doing
becomes one of the strings that so draw him.

It is to the advantage of men thus working
that they should work hard and well, because
in doing so they are hastening the advent of
the time when automatically their condition will
change ; they are helping to make the property
that is coming to them all the greater; for they
are conspiring, as it were, to give their particular
factory or mill some advantage over other mills,
owing to the excellence and quickness of their
own work.

128 EMPLOYERS AND WORKMEN

It would be to the advantage of the men to
do a great deal more than merely to work hard
and well ; for that would increase profits only in
a simple ratio. They would desire to increase
profit at a faster ratio than that, and so magnify
their stake in a growing business. Therefore
they would find it to their advantage to keep
their best thoughts on their work, in the hope
of discovering or inventing methods of improving
the tools or machines used by them, and thus
materially cheapening or expediting the manu-
facturing processes of their own particular mill
or yard.

Such a result might perhaps be also obtained
by a system of rewards. Here it would be
obtained automatically, and would cost nothing
in rewards ; for the inventors would obtain a
reward far higher than any employer could offer.

Nothing is more important than the way in
which workmen use their leisure. Numbers of
workmen now do not exactly use it. The men
who hoped to invent would have ever before
them an object inducing them to read, to study,
to reflect ; and this would make far better men
of them ; it would improve the whole stock of
men, and still more their children and their
grandchildren.

If these supposed results are not overdrawn,
the employers would benefit equally with the
workmen. They would obtain exactly what
employers must wish to have, if it came to
them in the ordinary course. Coming in the
manner proposed, what change might be

DIFFICULTIES TO BE MET 129

expected in the relations between employers
and workmen ? In one sense these relations
would come to a summary termination, because
employers, in precisely the old sense, would no
longer exist. Organisers they would still be,
great would still remain their stake in the
business, much would they have to say to its
direction and management ; but in all these
things, except organisation, the men would
come to have some share.

Therefore the whole human hive would come
to have a basis for harmonious working, a reason
for travelling along a road leading to a common
object, with eyes looking forward, instead of
nowhere in particular. Might not then the
antagonism of the centuries die out for want
of fuel ?

Is such a scheme practically possible ? That
there would be difficulties to face is certain, and
no small ones.

In the first place, it has been widely thought,
it was once perhaps universally thought, that in
almost any undertaking of importance the best
work is done when all guidance in that work
springs from a single mind, that the organiser
of the work should be, and must be, its real
manager, however many sub-managers he might
have. To anything like multiple management
objection would once have been absolute. This
need not be so now.

The government of a nation is seldom con-
ducted by one brain. At the beginning of the
last century the men of England sighed for the
9

130 EMPLOYERS AND WORKMEN

advent of Pitt, but at that time the nation
was in dire distress. In all ordinary times the
government is by cabinet : it is so in most
countries. Armies and navies are controlled,
not by one man whose powers are unlimited,
but by many men seated at round tables. In
all countries there are at the present day vast
undertakings managed in each case by a direc-
torate ; such are important lines of railway
and of steamships, great distributing agencies,
breweries, insurance companies, collieries.

Finally, great numbers of undertakings once
entirely the property, in each case, of a single
person or of a family, have been converted into
public companies managed by a directorate. It
is true enough that, where a business is managed
by a Board, there is, there can be, only one
president or chairman, and that he may be strong
enough to rule almost absolutely. But that is
not necessarily the case. The most capable
member of a Board may be some one other than
the president ; it is quite conceivable that the
opinions, the judgment, even the tact, on any
particular Board, of a man representing the
workmen might chance to be more valuable than
these qualities in any other member of the Board.
Therefore this particular difficulty is not insuper-
able.

In the second place, the settlement of the pro-
portion of profit, in general co-operation, which
should belong to the workmen, presents a diffi-
culty ; because a fixed percentage of the profits
of one particular business would mean some-

PROFIT SHARING 131

thing different, even in the same business, taking
separate years, and something very different from
the same percentage of the profits of some other
particular business.

Let us suppose that this percentage were fixed
by law as to its minimum, then if there were a
loss or if there were no profits the men would
get simply their wages ; but if there were profits,
then the men would be legally entitled to that
minimum, and to no more. Yet the actual share
taken might on some occasions be more than
that minimum, because such greater profits, as
on those occasions came in, would be very largely
the consequence of the better work done by the
men; and to encourage such better work a greater
distribution than the legal minimum would often
be made. Companies at present give their share-
holders very often a bonus ; some do so year
after year. It would be to the interest of all
concerned in any business that the workmen
should, year after year, earn a bonus. The share
taken by workmen, in general co-operation, is
a bonus to a part of which they would have a
legal right.

At bottom it comes to this, that excellence of
work would bring in a higher bonus than in-
different work. This is opposed to all communism,
and therefore would by a certain number of men,
especially of the talking sort, be stoutly resisted :
hence the difficulty. The solution of this part of
the problem appears to be that communism ought
to be opposed, and would be opposed by a nation
which still desired and hoped to approach the

132 EMPLOYERS AND WORKMEN

high ideal, just as a healthy man fights a dis-
covered disorder. The best way of fighting
communism is to show the workmen a road that
leads to better days for those who are willing to
attend to their own interests.

In the third place, workmen would often wish
to leave one business for another, as many of
them are now constantly doing. It would be
held a grievance if difficulties, liable to be mis-
understood, were placed in the way of such
perambulations. The power to lay down his
tools whenever rebuked is a power held dear by
numbers of workmen, and they would hate to
let go that power. These men were not perhaps
originally restless, but they have become so :
they cannot endure rebuke, cannot admit they
are wrong ; probably rarely, if ever, feel they are
wrong. It is natural. The man of means can,
as a rule, well afford to admit he may be wrong,
and sometimes that he actually is wrong ; he can
try some other plan.

The man who depends entirely on his wages
cannot afford admissions ; he wants his wages ;
he must be certain he has earned them ; he is
certain; he can stand no statement to the contrary.
But though it is necessary to protect the work-
men, it is equally necessary to protect the
business ; and hence arises the third difficulty.
For to be obliged continually and suddenly to
reduce, even by small amounts, the capital of
the business, that is to take out of the business
in this way part of the profits put into it, would
be detrimental, as well as exceedingly trouble-

DIFFICULTIES TO BE MET 133

some. Therefore a means would have to be
devised of safeguarding the business, while
leaving to the workmen their undoubted right
to move on at pleasure.

There are two ways in which this might be
done. It might be made compulsory to give
adequate notice of intention to withdraw capital
from a business in this manner, and, on the ex-
piring of the notice, the shares to be priced at
their market value and bought in from the reserve
fund ; or the business might be protected against
the inconvenience by insurance, just as the shares
of the workmen are protected.

But a workman, instead of desiring to leave a
particular business, might make a habit of being
idle ; or he might often absent himself from work.
It is not the business at present of industrious
workmen to take any notice of the idle ; but that
would not be the case when the future of the
workmen as a body, and the future of the con-
cern, had become one. Therefore it is not prob-
able that the workmen who wished to succeed
would long tolerate in their midst a drone, nor
that they would share their advantages with the
habitual holiday-maker.

It is supposed by some that co-operation can
never be general, since it is inapplicable to the
case of any new undertaking. The reason as-
signed for this is that new undertakings are
competitive, and must therefore meet the deter-
mined hostility of existing undertakings in the
same line. Such large sums are required to
overcome this hostility that no new undertaking

^*

134 EMPLOYERS AND WORKMEN

could, it is said, afford to part with anything
beyond bare wages to its workmen. To put the
matter shortly, where there are no profits there
can be no percentage for workmen.

New undertakings may be divided into three
classes. First, those which are urgently and
really required, such as the railways now being
constructed in Western Canada. As works of
this class earn profits from the outset, nothing
more need be said about them. Second, those
undertakings which would succeed if a strong
monopoly were broken down. This is just one
of those cases where Government should inter-
fere, though it very seldom does. It is not in
the interest of the State that monopolies should
be allowed ; they should not be permitted to
establish themselves ; they are of the nature of
a trust, than which there is nothing more in-
jurious to the welfare of a people. It follows
that those new undertakings which might come
under this head only do so where proper pre-
cautions have not been taken by the Government
of the country. Third, those undertakings which
are not really required, or are brought into
existence prematurely. Schemes such as these,
being intended for the enrichment of individuals,
or small groups of financiers, at the expense of
the public, are objectionable ; and it would be
only proper that the inquisition into their pro-
spects should be made much more severe than
it now is.

But, after all, these difficulties, and many others,
are not nearly so great as the two to be now

DIFFICULTIES TO BE MET 135

mentioned. Employers often do now give up a
part of their profits as an expression of satisfac-
tion. It would be a very different thing to be
compelled by law to part with that much, or
even more : it would seem to the emplo3'er like
robbery of that which is absolutely his own. So
it will continue to seem until he is convinced
that, in this case, what an apparent robber ex-
tracts with the right hand from one pocket is
more than restored by the left hand to the other
pocket. Many times have directing Boards re-
sisted demands of railway workmen for higher
wages, or, what comes to the same thing, shorter
hours of work, on the ground that if such demands
were complied with dividends must be much re-
duced : a robbery of Peter to pay Paul. Yet, when
public opinion has made it necessary to comply
with those demands, the Boards have given way,
and the dividends have not ultimately suffered ;
improved methods of work having brought about
sufficient savings of material to make good the in-
creased cost of labour. So exceedingly numerous
are now the Board-directed undertakings in the
British Isles, the prospect of inducing employers
to listen to some such argument as has just been
advanced, in mitigation of what once would have
appeared downright oppression, does not seem
hopeless.

Some workmen would doubtless welcome a
scheme that changed the monotony of their work-
ing-day lives into a prospect of ownership.
Others would not see the promise, much less
any chance of its fulfilment ; among whom would

136 EMPLOYERS AND WORKMEN

be, probably, those who have become so accus-
tomed to work up to only a part of their power
that now a part of their power is all they care
to bring into play. Therefore it might be urged
that a scheme of general co-operation is full of
deceit, and is really deliberately intended to put
a division between workmen — to make them
hostile to each other, to draw the more indus-
trious to anti-socialism, and make it more difficult
for the less industrious to live. This, of course,
is not so ; the object of the suggested scheme is
to make the lot of the industrious still better, and
to try to induce the less industrious to commit
themselves to greater exertions ; and to bring
this improvement about, not by merely picking
pockets, but by so increasing the output that
profits also increase, owing largely to the greater
demand of people in an improved condition. No
doubt it will be very difficult to persuade great
numbers that the scheme is honest ; more difficult
still perhaps to persuade them that when the
status of one class improves, the status of another
class need not pari passu decline. We might just
as well argue that as the sons and daughters of
a family grow to maturity, the father and mother
must of necessity shrink into mere specks. A
nation grows greatest, in all real greatness, v/hen
the advantages of its greatness are shared by all
in their several degrees.

Workmen in Government employ, as in dock-
yards, cannot become part owners, though much
of their work is monotonous, exactly as it is in
the case of others on whom the division of labour

GOVERNMENT EMPLOY 137

presses. For them it is suggested a system of
rewards might be instituted ; a bonus to be given
for any invention resulting in an important
economy or appreciably saving time, in repairs
of ships or in construction : a smaller bonus to be
given for a perfect time-sheet with unexception-
able work. But would this lead to favouritism ?
The system is already in vogue in the navy and
the army. There, for certain qualities, a man
becomes a petty officer or a non-commissioned
officer, as the case may be, or he receives a rise
in his rate of working pay. It has never been
said that in either service the system has
worked ill.

The employer in this case being the Govern-
ment of the nation, antagonism between workmen
and employer there is none. Hence it might be
supposed unnecessary to offer any rewards at all
to dockyard hands. But there is a reason.
Suppose the work conditions of artisans else-
where to be greatly improved, then all artisans
will desire to share those work conditions, and
Government dockyards might be deserted. To
avoid so serious a result it seems necessary to
place before dockyard hands some improvement
in their own prospects. If this be done with
judgment, the nation loses nothing; for better,
quicker work is cheaply bought in exchange for
a little money, when the question at issue is the
rapidity with which a great warship can be
turned out.

There is a class of workmen, the men in the
building trades, who practise the division of

138 EMPLOYERS AND WORKMEN

labour almost exactly as it is practised by the
inhabitants of an Indian village, as described a
little farther back. The bricklayers, masons,
plasterers, carpenters, painters, and others have
their ov/n special trades, are very particular not
to trespass on others, and are jealous of any
trespass on themselves. There is little monotony
in the work of the men ; on the contrary, there
is variety ; they see its progress from day to day,
and they can see its completion and purpose.
Great numbers of these men by no means work
continuously in large establishments ; rather they
complete one job and then find a new employer,
under whom they complete another. Many of
them, on the other hand, work in threes and fours
in some small business, to which they remain
faithful ; and many wander about, taking a job
here and part of a job there, as the spirit moves
them.

There is likewise a large class of workmen,
represented by the navvy, who scarcely practise
the division of labour, but work otherwise much
in the same fashion as the builders.

It is typical of these different trades — builders
and others — that their condition depends on the
good or bad state of trade in general, while the
good or bad state of trade in general does not
depend on them.

What the workmen we are now considering
require, therefore, is plenty of employment at
suitable wages. To bring this within their reach
it is necessary to do as much as possible for
trade in general. When Government has, by

COLLIERS 139

wise legislation, done that, it has done all that
can be done to provide for the happiness and
contentment of builders, navvies, and all the
workmen whose lot is so cast that it would be
quite impossible they should become owners or
part owners of the business where they work,
except in those rare individual instances where a
man of peculiar energy, intelligence, and thrift
succeeds in raising himself and becoming an
employer.

Just as the building trades depend on general
trade, so trade in general, and more particularly
the carrying trade, depends on the coal trade.
It is therefore important to Great Britain to keep
her colliers steadily at work. The description
of collier life in France, given by M. Zola, makes
no pleasant reading ; and the conclusion one
draws is that the labour of these men is sweated
labour. M. Zola does, however, allow that the
men love their work. Those who know British
colliers say that they too love their work ; it
is not monotonous work ; there is too much
fascination and danger in it for that. The son
of a coUier has for his chief ambition the life
of a collier; he longs to go down the pit. There
is also no doubt that colliers are sufficiently well-
instructed to make life interesting to them apart
from mining. Their homes give no idea of
comfort and very little of sanitation, but very
likely the men do not look on these matters as
of any consequence. Whether it is that the
consequence of a great coal strike being so
serious, great attention is paid to all disputes

I40 EMPLOYERS AND WORKMEN

between employers and workmen in the coal-
fields, or whether it is that the peculiar character
of the miner makes his quarrel more bitter than
those of other workmen, strikes of colliers seem,
at all events, numerous, widespread, and sternly
fought. It is worthy of consideration, therefore,
whether, since great coal strikes cause such
suffering, even in remote districts far from any
colliery, and such loss of national capital that
can be ill afforded, it would not be judicious
to give all the older and very experienced work-
men the opportunity of becoming part owners.

If all trades, including the great carrying trades,
are dependent on the activity of the colliers, no
less are all trades dependent, for their very life,
on the great carrying trades, on the services by
land, and on the services by sea. No very exact
comparison can be made between the amount
of interest furnished by one kind of work and
the amount of interest furnished by another kind.
It depends partly on the men themselves, and
particularly so in the carrying trades. Simply
because of their importance in the national in-
dustrial life, being to that life as veins and
arteries are to the body, it is suggested they
be treated exactly as it may be decided to treat
the coal trade.

So important is the case of agricultural work-
men that it is relegated to a section by itself.

It remains to consider whether, and if so, in
what way, the suggested general co-operation
requires, for its greater utility, the changes
described in the second proposition.

UNIVERSAL SERVICE 141

First we take universal service. Is it not true
that co-operation is more liicely to be successful
as the physique of the workmen is good ? And
it is precisely by universal service that this would
be brought about. So certain is this, that it
may be predicted of the work done by men
fully trained as soldiers, that in bulk and quality
it would overtop that of men not so trained, in
spite of the apparent loss of the two years or
so of civil life to the soldiers. Therefore the
extra employment gained for the men of Great
Britain, by the introduction of universal service,
would be real employment, a preparation of the
highest value for the busy life to follow.

All that has already been said of universal
service still holds good here, but with added
force. Only in an active army is discipline more
valuable than among workmen acting together,
who are about to become part owners. In their
case also, true discipline is not to be understood
as merely cheerful obedience to a command.
Where only one man is obedient, discipline is
not called upon ; discipline implies the absolute,
unconditional, hearty obedience of all : and hence
it has come to mean perfect, unquestioning reli-
ance on comrades and on leaders. Such reliance
is of vast importance where a number of men
are striving together towards a single end.
When that end is something which is to improve
the condition of all, the result of the common
effort must be such as to accumulate the additional
resources, by which alone the required improve-
ment can be effected. This can be accomplished

142 EMPLOYERS AND WORKMEN

best where the minds of all the workers are free
to study how their work can be better done,
to find processes by which work may be expe-
dited or cheapened. This implies the confidence
of one workman in another, reliance on com-
munity of feeling — which is discipline. That
discipline, in a properly trained army, has be-
come a habit.

There is also another feeling most important,
when workmen are becoming part owners where
they work, and that is a deep sense of the value
of, and necessity for, justice ; in each workman
a desire for justice, justice for the organiser and
leader, justice for fellow-workmen, and no more
than justice for himself. Where can that be
learned better than at the outset of life, when
the very idea of the service a youth gives his
country is based on the notion of justice for all
alike ? This may be an ideal, but it is by
having such ideals, and striving after them, that
nations advance.

Next we take the Aliens Act. It is, of course,
essential to the success of general co-operation
that there should be no difficulty in getting work.
An Aliens Act would contribute to this, as
already shown, and as every one perceives. It
is not necessary to repeat what has been said
in the second chapter on this point — all of it holds
good here ; but there is an important additional
point. Suppose co-operation to be general in
this country, and aliens to enter the country
freely ; then those aliens, if skilled workmen,
would largely become part owners of property

TARIFF REFORM 143

in Great Britain, and this would be most objec-
tionable, so objectionable that it would be
necessary to prevent it by Act of Parliament.
Such an Act would be itself an Aliens Act ; and
it would be far preferable to have a complete
Act, doing the greatest good, than a small measure,
doing the least possible good.

Viewed in relation to co-operation, the Small
Holdings Act becomes very important, so im-
portant that its consideration is deferred to the
next chapter.

In addition to these changes, a careful reform
of the tariff was stated, in the third proposition,
to be a probable necessity in due course. What
is the object of Tariff Reform ? It is to induce
manufacturers to fill the home market with goods
of the kind they make. A certain amount of
additional employment will be the consequence,
partly owing to the greater quickness of returns
in the home trade, and to the increased demand
for commodities set up by this increase of em-
ployment. This additional employment will be
partly the consequence of retaining at home
capital at present going abroad to pay, sometimes
the whole, sometimes a part of the duties levied
by foreign countries on goods sent to them in
exchange for their own goods.

Additional employment is exactly what is
wanted to make a scheme of co-operation suc-
cessful. As long as a number of men, capable
of doing good work, are unemployed, the scheme
is not successful.

Every Chancellor of the Exchequer has been

144 EMPLOYERS AND WORKMEN

more or less a tariff reformer ; and it is well
he should be so, as the British tariff requires
reform, even for the purpose of raising revenue
on correct principles.

The tariff can be used, no doubt, as a weapon,
for coercing some correspondents and befriending
others, but it is not part of our plan to enter on
this.

CHAPTER XI

A REVIVAL OF AGRICULTURE

Ninth proposition. — The employers and workmen
whose aid is required are especially those on
the land. Therefore a revival of agriculture is
essential to Great Britain.

Man might be defined as the animal that
presses into his service all the rest of nature.
Whether nature does more for him in agricul-
ture or manufacture is a point on which political
economists differ. There are certainly countries
in which nature does more in food production
than she does anywhere to aid the manufacturer.
But as manufacture and agriculture are both
indispensable to man, it is not perhaps important
to decide in which the greater fortunes are made.
It is more important that man gets from agriculture
what he can get in no other way. Most countries
therefore attend carefully to that industry.

In the winter of 1910-1 1 a Canadian agricultural
official lectured in America on agriculture. Wish-
ing to impress on his audience the importance of
the subject, the lecturer named some great
countries giving the most careful attention to
agriculture; but he did not mention Great Britain.
10 145

146 A REVIVAL OF AGRICULTURE

It may be said incidentally that this lecturer
was not dealing with his subject solely as a
means of creating wealth ; he dwelt much on its
importance in its effect on man's physical, social,
and moral improvement, thus taking to some
extent the view adopted in this book.

It seems rather strange then that in Great
Britain agriculture should have been suffered to
decay. A certain statesman used to say that
what prevents the success of British agriculture
is the British climate. This is a very doubtful
proposition. Each country has climatic ills of its
own, as every one knows who has seen the
oft-recurring famines and floods of the tropics,
and has witnessed the loss of crops in Canada,
due to hailstorms, drought, and frost. Great
Britain was formerly in no unsound situation
agriculturally : her climate was just the same
then as now. He who doubts this might read
Evelyn's diary : it can be bought for two shillings.

The decay of British agriculture appears to
be due to two causes — the inpouring of cheap
food, and the desertion of the land by able-
bodied labour.

When cheap food is poured into a country
the least fertile land in that country is no longer
cultivated, as it does not pay a full profit. Then,
almost at once, according to the doctrine of
Ricardo, the rent of all land falls, and there is
less employment available.

The flight from the land may have been partly
due to this cause, but there can be little doubt
it was also partly due to the conditions as to

REASONS FOR REVIVAL 147

wages, housing, and mental occupation in which
the labourers lived. They fled from the land,
and continue to fly, some to the towns, some
abroad. It was not from work they fled, for
they find harder work where they go, but it is
work under different conditions.

Cheap food must always be very necessary to
Great Britain ; no one wants to prevent that
coming in. But the flight from the land is a
disaster, because only the land can give to
a large section of the British population what
they require, if that population is to march
towards its ideal.

A revival of British agriculture is therefore
necessary, for the following reasons :

First, agricultural life shares with seafaring
life the offer of work in the pure open air.
Hitherto it has offered little else, and that is
why it has failed.

Second, although cheap food is a necessit}', it
is at the same time desirable that the amount of
food produced in Great Britain should be largely
increased, provided this can be done without any
inconvenience to the public generally.

Third, by this revival employment would be
found for a large number of men who are not,
and never can be artisans, and nevertheless are as
important a part of the population as any other.

Fourth, a large proportion of these men will
be composed of those who, after the intro-
duction of universal military service, annually
complete their period of such service, and for
whom immediate employment is essential.

148

A REVIVAL OF AGRICULTURE

Fifth, a smaller proportion of these men will
be composed of those who receive pensions on
completion of periods of long service in the navy
and in the army.

Sixth, such a revival, under certain conditions,
will greatly reduce emigration of those men
Great Britain cannot afiford to lose.

Seventh, the number of men to be dealt with
being large, to the Government, endeavouring to
introduce reforms, the willing support of the agri-
cultural industry is most important. Therefore a
revival scheme, which shall set farmers and their
men all working alongthe desired line,is necessary.

It is not needful to say more about the open-air
life : its value is apparent to those accustomed to
it, and workers in towns would perhaps willingly
revert to it, if they could do so hopefully.

In the following table are given the quantities
of food, imported and home-grown, annually con-
sumed in Great Britain, so far as shown in Board
of Trade statistics :

(Millions

of tons)

Imported.

Home grown.

Wheat .
Flour

5
1

¥

Rice

. 1
4

nil

Rice Meal

1

. T

nil

Sugar

. I|

?

Potatoes

\

3|

Onions .

£

8

?

Fish

1

T

1

Butter .

i

?

Cheese .

1
•g-

?

Bacon and Hams

1

• 4.

?

Beef, Mutton, etc.

13

2 0

?

Total a

bout

92

6i

FOOD SUPPLY 149

In addition to the above there is a consump-
tion of meat from animals slaughtered, and of
numerous minor foods and drinks. Only half the
total quantity of potatoes grown is entered as
food, the other half being presumably used as
food for swine. Assuming that the figures given
fairly represent the case, the food grown or
raised in Great Britain is about two-fifths of her
whole consumption ; that is, she now feeds
herself for nearly five months out of twelve.

The average potato crop of Great Britain is
at the rate of six tons to the acre. There is no
reason why this average should not be advanced
to eight tons. If the best kinds were planted,
the method adopted best calculated to utilise
every gleam of sunshine, and the most suitable
fertilisers used, then the general production of
eight tons to the acre is a mere question ot
labour. The whole of the potatoes thus raised
would make good food, and much-relished food,
if only cooked in the best way. Let it be sup-
posed that by this means home-grown food is
increased by one million tons. The growing
of onions being solely a matter of applying
sufficient labour in the right way, there is no
occasion for Great Britain to import a single
onion.

No vegetable is perhaps so easy to grow as
beetroot, and in no other case does the gardener
take so little risk as he does when he grows beet.
It is not supposed there is any doubt in the
minds of those who have for years grown this
root as to what Great Britain might do in the
10*

150 A REVIVAL OF AGRICULTURE

way of raising her own crops and manufacturing
beet sugar. She might add to her home-grown
foods, if she chose to grow beet, anything up to
one milHon tons a year.

The amount of wheat threshed annually in
Great Britain varies so much that it would be
rash to predict to what extent she might increase
permanently her outturn. In 1898 she produced
nearly seventy-five million bushels on 2,158,401
acres ; in 1909 she produced twelve million
bushels less on an acreage less by nearly 300,000.
The price of British wheat in 1909 was about
three shillings more per quarter than in 1898.

It is evident that Great Britain can to some
extent, at any rate, increase her product of wheat.
And so also might she increase her product of
oats, which is quite a good food cereal, though
not greatly used as such. If labour were forth-
coming, and in all cases only the best seed
were used in ground thoroughly prepared, it is
reckoned Great Britain might easily feed herself
for two hundred days in the year.

The knowledge that Great Britain had taken
measures to secure this result might very well
act as a deterrent to those anxious to make war
upon her, and hoping to gain their end by
starving her in her citadel.

Under all circumstances Great Britain is forced
to import the greater part of her raw material
and much of her food. If to the weight of food
stuffs imported be added that of imported food
for animals, about twelve million tons are brought
to Great Britain annually. The weight of raw

FOOD SUPPLY 151

material imported is roughly about twenty million
tons annually.

Therefore the addition of each million tons to
the food home-grown means a reduction of three
per cent, in the shipping to be protected during
war time. It would be easy, if Great Britain
chose, to make this reduction, by growing food
at home, at least seven and a half per cent. The
Admiralty of the day would find such a reduction
of their responsibilit}' in war time a very welcome
relief.

Any addition to home-grown food impHes a
corresponding reduction of manufactured goods
sent abroad. On the other hand, the work done
in raising the extra food will soon come to mean
an increased demand for commodities; the returns
of the extended home trade would also come more
quickly than when this part of the food-supply
was by foreign trade. Therefore in time the
falling off of manufacture v^^ould be made good.

A certain number of ships would be laid up
for a time, but it does not follow there would be
less employment for British sailors.

To what circumstances then is the revival of
British agriculture to be indebted ? Farm labour
cannot be taken back to the old conditions; it
would not go. Nor can farm labourers well
become part owners of large farms : if they be-
come owners, it must not be as part owners.

The proposal is to revive the old custom of
apprenticeship, sending as many young men as
possible to established farmers. These men to
work on the farms, carrying out all farming

152 A REVIVAL OF AGRICULTURE

operations for suitable wages, and to learn
thoroughly all they need to know, who intend to
begin farming on their own account.

Without some experience such as this, men
on small holdings would merely add to the
agricultural disasters of the times. When it can
be certified that an apprentice has thoroughly
learned all he needs to know, then he should be
placed on a small holding of his own, with access
to a local agricultural bank, whence he would
obtain the funds necessary to start him. It is
assumed that such holdings would always be so
chosen as to have the quality of soil and locality
necessary to make success possible. And the
holding must be the man's own. For his own
he will work as he never would nor could for
a landlord, least of all for Government or Local
Board as landlord.

If some such scheme as this were early put
in hand, introduced gradually and carefully, but
with the full intention of extending it to an army
of small holders, and presently universal military
service were demanded and became law, then
there would probably be but little trouble in
sending to farmers, as apprentices, the young
men just done with military service, the ap-
prenticeship scheme being then already in full
swing.

The apprentice going to a farm would, of
course, be at first of little use as a farm hand ;
but when it is remembered that, from the outset,
there is before that farm hand a future full of
hope, there is no difficulty in concluding that he

SMALL HOLDINGS 153

will not be long in becoming useful and worth
good wages.

But the conditions of living must be right.
There must be suitable accommodation and the
means of studying the whole subject of agri-
culture always at hand. Not even in a period
of probation should anything like the old dead
dullness be possible. Just as each member of a
true Army Intelligence Department would take
a part of each district in which war might be
waged, and obtain complete information of every
detail a commander would desire to know, so
here the Board of Agriculture should take dis-
trict by district in Great Britain, and find out
the possibilities and wants of each as a school for
farm apprentices and for an agricultural revival.
Some expenditure would no doubt be necessary ;
but it is difficult to conceive any way in which the
State could spend its funds more wisely, nor with
better assurance of an early and manifold return.

It is very largely to these men, as small holders,
that we should look for a heavy increase in the
national production of food of certain kinds. For
example, beet, onions, and potatoes are especially
adapted for spade labour, and therefore for pro-
duction by men who, though their individual
acreage may be small, can, by working together,
obtain a great result.

If the premises stated here and the con-
clusions drawn are in the main correct, then the
changes and undertakings to be pressed forward
are, in the order of their urgency :

154 A REVIVAL OF AGRICULTURE

The collection and publication of home trade
statistics in full — not piecemeal, upon any ac-
count— as an indispensable preliminary to a
sound scheme of Tariff Reform.

A stringent Aliens Act, drawn with careful pro-
visions for its strict and unremitted application.

Inquiry by the Board of Agriculture into the
capabilities of each county for training farm ap-
prentices and taking up of small-holdings' areas.

Preparation of the public for the proposal of
Universal Military Service and Tariff Reform.

An inquiry by Commission into the advantages
of introducing General Co-operation wherever
possible.

INDEX

Advertising, 65
Agriculture, 7, 145

— decay of, 146

— lecture on, 145

— revival, 147, 151
Aliens, emigration, 18

— instructors, 20, 21

— payments, 18

— remittances, 19

Aliens Act, co-operation, 142
objections, 19

— universal military service,

17
Apprenticeship, 151
Artisan, at work, 44

— work and protit, 50

Banks, 49
Beet crop, 149
Boy scouts, 7
Building trades, 137

Canadian references, 23, 24,
43. 49. 54. 81, 104, 109, 127,
145, 146

Capital, employers', 29

— employment of, 42

— increase of, 42

— individual, 27, 41
liow composed, 39

— invested, 34, 59

— labour, 27

— landowners', 33

— living on, 90

— loss of, trading, 82

Capital, money as, 38

— national, 27, 41 •

and individual, 34 el seq.

how composed, 38, 39

— reproductive and non-re-
productive, 27

— • sent abroad, 51

— that sets labour to work, 27

— transfers, 36

— workers, special, 3Z

— workmen's, 28
Carelessness, losses due to, 57
Carrying trades, 139, 140
Census of production, 87
Colliers, 139
Compromise, 123
Conditions, living, 153

— trade, 59, 64
Co-operation, 123, 126
Corners, food, 104
Countries exporting largely, 73

— importing largely, 72

Defence of country, 10, 14
Desertion of land, 25, 146
Discipline, 5, 12
Distributors, 48
Division of labour, 115

in building, 118

Douglas pine forest, 43
Drink, cost of, 54
Duty, cotton, raw, 106

— death, 93, 94

— liquor, 96

— luxuries, 98

155

156

INDEX

Duty, manufactures, loi

— payment, 82, 94, 102

— sliding, on wheat, 104

— tea, 93. 105
- — tobacco, 98

— wheat, 103

Education, 121

Employer, 46

Employers and bonus, 131

— and co-operation 128, 135

— and workmen, 108, 128
Employment for all, 8, 15

— of seamen, 78, 79, 151
Exhibitions, 65
Exports, 39, 67, 72

Facility, trade, special, 75
Farmer, at work, 43, 46, 47

— work and profit, 51

Food, grown and imported, 148
■ — proportion to consumption,

149
Foreign trade, 59, 73
Free trading, y^x 7^

Geographical changes, 61, 62
Goodwill ,30
Government loans, 28, 92

— workmen, 136

Great Britain, foreign trade,

60, 62, 64, 66, yy
seamen, 78

— ■ — shipping, 62, 64, 79
Gymnasia, 1 1

Harmonious work, 5, 108
History of morals, no
Home trade, 60, 74

neglected, 86

returns, 87

statistics, 85

Ideals, 3, 4, 5, 7
Idle workmen, 133
Imports, 41, 67

— as payment of debts, 53
Income-tax, 92

Increase of employment and

demand, 75
Indian village, 117
Industrial progress, 7
Insurance, 124, 133
Interest in work, 118
shown in the Army,

120
Invention in Great Britain, 62

James Watt, 8
Justice, 5, 13

Krieg und Sieg, 6

Labour-capital deficient and

excessive, 8, 9
Land banks, 24
Landowners, 33

Monotony of work, 116
Morals, history of, no
Most-favoured nation, 81

Naval responsibility, 151

Navvy, 138

New undertakings, 133

Oats crop, 150

Organisation by one mind, 129

Patriotism, 12
Potato crop, 149
Preference, 81
Pressgang, 11, 61
Principal and interest, 90
Profits, division of, 130
Proposition A, 2, 27

— B, 2, 42

— I- I, 3

— II., I, 10, 17, 22

— III., I, 27, 59

— IV., 2, 59

— v., 2, 67

— VL, 2, 80

— VII., 3, 89

— VIII., 3, 108

INDEX

157

Proposition IX.
Protection, 80

3. 145

Raw material, weight of, 151
Revenue, 89

— classified, 96, 100

Savings sent abroad, 52
Seamen, employment of, 78,

79. 151
Shipbuilding, 76, 79
Shipping and trade, 62, 64, 76
Skill of workmen, 32
Small holdings, 152
Small Holdings Act, 22
Smuggling, 102
Statistics, home trade, 85
Strikes, 55, 109

Table I., 69

— II.. 70

— Ill-, 71

Tariff reform, 83, 143
Taxation, 89

Trade conditions and methods,

64
Transporting agencies, 47

Universal military service, 1 1,

14, 141
and industrial life, 15,

16

— — — importance of, 17
unemployment, 15

Values increased by work, 40

War and trade, 61

Waste, 54

Wheat crop, 150

Wheat prices and bread, 105

Work, inefficient, 55

— profit keeping, 126
Workmen and employers, 108,

128

— quitting employment, 132

— suspicions of, 136
Workmen's capital, 28

PRINTED BY
HAZELL, WATSON AND VINEY, LD.,
LONDON AND AYLESBURY.

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