An economic history of England, 1066-1874

By the Same Author

A SHORT ECONOMIC HISTORY OF ENGLAND

A Short Survey of the Economic

"Development of England

and the Colonies

1874-1914

by

Charlotte M. Waters
B.A. London
formerly Head Mistress of the
County School for Girls Bromley

ND

Noel Douglas
38 Great Ormond Street , London^ W.C. 1

FIRST PUBLISHED IN MCMXXVI
MADE & PRINTED IN GREAT BRITAIN
BY THE WHITEFRIARS PRESS, LTD
LONDON AND
TONBRIDGE

PREFACE

The object of this little book is to give those interested a state-
ment, based on a short survey of their origin, of the economic
problems that face the men of the twentieth century. The fifty
fears before the War are treated in some detail, and each subject
s prefaced by a rapid sketch of the earlier development, sufficient,
t is hoped, to make clear the situation in 1874.

The selection of that date has been made, because it was the
noment when the rapidly changing society of the nineteenth
:entury became comparatively static, or, at any rate, it was the
3oint at which the course of history for the next fifty years was
letermined and set. The close of the Franco- German War of
[870 marks the new departure, a redealing of the cards politically
ind a definite entry of the whole of Europe on the path of industrial
md commercial expansion, along which England had already
;ome fifty years' start.

Some knowledge of this economic basis of our modern history
»eems to me very necessary to every educated man and woman,
3ut it is not easy for busy people to obtain it from the multiplicity
ind great detail of its literature. My attempt at condensation is
offered with considerable diffidence, for the mass of material is
/ast and my skill very limited ; what I conceive to be a great need
ibr something of the kind is my only excuse.

CHARLOTTE M. WATERS.

To my Friend
MARJORY PEASE, J. P.,
to whom this book owes its existence.

. CONTENTS

ChapUr Page

I. Introductory vii

II. Agriculture ....... 23

III. Our Chief Industries 43

IV. Organised Labour and the Growth of Capitalism 58

V. State Control ; Factory Legislation and the

Poor Law 81

VI. Imperialism and the Scramble for Markets . 96

VI I. Communications and the Movement of Trade.

Banking and Exchange . . . . 133

VIII. Taxation. Changes in Economic Theory and

Outlook 151

Bibliography . . . . . . . 173

Index 175

Vll

A SHORT SURVEY OF THE ECONOMIC

DEVELOPMENT OF ENGLAND AND

THE COLONIES 1874-19 14

CHAPTER I

INTRODUCTORY

Before one can survey in any detail the economic development
of the British Empire during the past fifty years, or any part of
them, it is necessary to have some knowledge of earlier conditions
and history. All societies are rooted deeply in the past, and this
is particularly so in England, where the most profound revolutions
have from time to time been wrought without absolute fracture of
the existing system, and have continued and carried with them
whole branches of the original growth. Maitland warned his
students that no one could understand modern English land law
unless he had grasped the reforming measures of Edward I., and
any study of present-day conditions and problems is incomplete
without some acquaintance with the history of our land since
Domesday.

In the Middle Ages — that is to say, between the eleventh and the
fifteenth centuries — English land was held by a system of feudal
tenure and cultivated on a basis of communal agriculture. No
land was held by absolute right ; all paid rent to some one ; in the
final event all land was the King's. The rents paid took many
forms, the highest and most honourable in esteem being military
service, the lowest villein work. Between these extremes lay
many grades, often overlapping. There was the money rent of
the freeman, the service rent of the sokman, who was yet free, the
heavier service rent of the villein, who was a serf, but one by no
means devoid of rights. Each held his land by definite rent of
money and service, from the holder of many manors to the villein
with half a virgate. Failure to pay might mean ejection. No

9

io ECONOMIC DEVELOPMENT OF ENGLAND

man was free from a lord. No man either was free of his under-
lings ; arbitrary power of displacement was by custom, if not in
law denied ; the villein's tenure was not certain, but custom and
his lord's need of his services gave him fair security. Gradually,
as the years rolled by, the closeness of the system relaxed. Great
lords won rights from the King, as the barons did in Magna Carta,
sokmen and the richer villeins bought out their service rents and
substituted money ones, and by the end of the fifteenth century
money rather than service was the link between lord and peasant.
The system of cultivation, too, had changed. In the twelfth
century the village cultivated its fields in strips of half and whole
acres, sharing ploughs and oxen, each man in turn ; while the
lord's land was worked by the rent services of his villeins. A
three-field system was general in mid and south England, with a
rotation of wheat, barley and fallow. The system was not
universal : the South-west, Kent, and the North had different
histories and different methods, but the three-field system was
the type. By 1500 had come a great change : service rents had
to a great extent ceased, the villeins had obtained a large measure
of freedom, many of the open fields with their individual strips
and common cultivation had disappeared, sheep had replaced corn
over large areas, and the capitalist investor in land had appeared
on the scene. The great lords had thrown off many of their
feudal rents ; military service was no longer demanded, since
professional men-at-arms had replaced the feudal host. Still
more important, a large proportion of the nobles was dead in the
Wars of the Roses ; those who remained regarded the land as
their own property and free tenure had become absolute owner-
ship. The villein had acquired legal rights against his lord, and
his tenure, now called copyhold, could be defended in the courts.
With this absolute ownership came the change in agriculture.
The growth of manufactures had produced a large demand for
wool, and the impoverished noble and the nouveau riche of the
early sixteenth century turned their attention to its production.
Hence enclosures (arbitrary enclosing of common lands), dis-
placement of agricultural labourers and the appearance of the
unemployed. Throughout the sixteenth century the agricultural
revolution went on ; first the turning of arable land to pasture
referred to above ; then this was stayed by the demand of the grow-

INTRODUCTORY n

ing towns, especially London, for corn, and the introduction of
new foods, especially vegetables, to meet the rising standard of
life of the people. By 1600 the changes were nearly over, and the
body of the feudal system nearly dead, though its spirit lingered
yet ; many communal fields remained, but individual ownership
was quite as common and was very much more productive. The
unemployed problem had been partly dealt with by the Poor Law
of 1 60 1 ; partly it had solved itself in the increasing commercial
and industrial activity of the nation. In 1660 the great landowners
threw off the last shackles of feudalism by transferring what
remained of their rents to the whole nation in the form of new
customs and excise ; henceforth they were absolute owners of the
land that had once been the property of the nation.

For another hundred years the tenure of English land and its
cultivation remained much the same. There were many great
landowners ; there was a large body of " yeomen " — freehold
working farmers, who themselves, with their families and a few
hired labourers, tilled the land they owned ; there were copy-
holders, descendants of the old villeins, whose tenure, though
legally different, was not greatly different in practice from freehold.
Added to these categories were tenant farmers, holding by lease
or at will from the great landowners, and lastly, a considerable
body of hired labourers, often younger sons of the smaller farmers
and freeholders, who were able in some numbers to save and
become farmers in their turn. The feudal spirit survived, and
the lord of the manor was still the centre of village life ; but the
farmers were quietly comfortable according to the standards of
the time, and the early eighteenth century was probably a period
in which the country labourer was better fed and, relatively to his
neighbours, better housed than at any time in our history.

With 1760 came a change ; the land was getting impoverished,
new and improved methods of farming were introduced, the old
routine of wheat, barley, fallow was broken by the introduction of
roots, and " Turnip Townsend " was perhaps responsible for as
great a revolution as Watt and his steam-kettle. The change of
methods brought about a demand for a much-needed change of
system. The open fields, with intermingled strips, suitable to
days when a complete plough-team was beyond the dreams of
any but the rich lord, were very unfitted for experiment and

12 ECONOMIC DEVELOPMENT OF ENGLAND

development. None could advance beyond his neighbour, and
one lazy or stupid farmer could stultify all the efforts of his
neighbours by letting his undrained and unweeded strip con-
taminate theirs. Besides, all the village had pasture rights over
the arable fields after August 17th, and no work was possible till
the winter ploughing began. The village herds could not be
improved when all ran wild together on the waste or the stubble,
and, unless winter fodder could be secured, most beasts had to be
killed by November. When a few enlightened landowners had
shown what could be done on enclosed lands, both in increasing
produce and improving stock, a cry arose for general enclosures.
For the whole story of this revolution you must go to histories
of the period ; here we can only note the result. In 1750 half
England at least was covered with open fields, worked on much
the same system as in the thirteenth century ; by 1850 they had
almost disappeared from the land, which had assumed its present
appearance of small hedged fields, in which each farmer farmed
according to his own desires, limited only by the conditions
inserted in his lease. His success depended entirely on his own
intelligence and industry and the amount of enlightened self-
interest displayed by his landlord.

But beneath this seemingly simple change lay a catastrophic
revolution. Gone were most of the 600,000 freeholders of the
seventeenth century ; gone the labourer landholder, who com-
bined working for wages with a freehold or copyhold holding of
a cottage and an acre or two of land ; gone the landless labourer's
cow and geese, who picked up a precarious living on the commons
and wastes, and offended the scientific cultivator's eye by their
miserable form and appearance. In their place were tenant
farmers farming large farms, from 100 to 200 acres, paying high
rents and employing much capital. The labourer's wages had
sunk to a mere pittance, and were now unsupplemented by the
produce of either garden or rights of common ; there had been
a huge drift to the towns. The produce of the country had
greatly increased, farming was scientific, highly productive, and
provided high rents for the landowners. But village life was
stagnant, and the hired labourers were degraded by miserable
feeding and disgraceful housing to a standard of life lower, rela-
tively, to the rest of the nation than had ever been known in

INTRODUCTORY 13

England. From 1850 to 1870 was the golden age of English
farming ; landowners and farmers alike made fortunes ; the land
produced greatly, capital and science being both brought to bear,
and in all branches, except dairying, farming reached its highest
point. But the labourers shared in none of this ; unenfranchised,
too isolated to join in the new movements of the industrial work-
men to combine, placed by tied cottages at the mercy of their
masters, the farmers, they were helpless to make even an effort.
The drift to the towns continued.

Industrial organisation is much later in history than that of the
land, and it is never quite so fundamental. Whole civilisations
have risen and waned in which the organisation of industry, apart
from agriculture, has been either very simple or non-existent.
In England the early village communities can hardly be said to
have possessed any. A few craftsmen in wood and iron supplied
to each village its simple needs ; hardly anything was obtained
from outside. A smith worked up iron into ploughs and spades
and spears, the market a few miles off supplied the few crocks
necessary in an age of fingers and wooden platters, while clothes
were the work of the women in their homes from the fleece to
the finished garment. But by the twelfth century towns were
common, and with them came a greater division of labour,
and butchers, leather workers, armourers, vintners, carpenters,
masons, weavers, tailors, and others appeared in bands. Copying
the proceedings of the shopkeepers and merchants, to which we
shall refer later, the craftsmen organised themselves into gilds,
which remained the special feature of the towns till the end of the
sixteenth century. These gilds were composed of all the men of
each craft, masters and workmen alike, and in the early stages the
masters were merely the proficients of the craft, a status to which
all might eventually aspire. The gilds were recruited by means
of apprentices, to whom the masters were bound to teach the
" mystery," and all members were strictly confined by rules made
to ensure good workmanship, fair charges and no competition.
The gild was conceived as a brotherhood, and all members were
expected to assist their fellows. They acted as friendly societies,
insured their members against poverty, sickness and death, and
all their functions were sealed by religious oaths and observances.
The false dealer was penalised, and a rigid inspection into the

i4 ECONOMIC DEVELOPMENT OF ENGLAND

quality of the work turned out was maintained. The gild held
a monopoly of the craft ; no one outside its membership could
practise.

At first the gilds were simple and democratic ; in small towns
they could never be large bodies, but by the fifteenth century
many abuses had arrived. The government of the gilds had
fallen into the hands of the wealthier members, who used
their position to further their own interests, and the growing
luxury of the age had made it necessary in many trades to possess
considerable capital before setting up as a master. Consequently,
the ex-apprentice found himself a journeyman not for a few years,
but for life, and the small bodies that controlled the gilds made
matters worse by a policy of exclusiveness, which, by raising the
entrance fees, made it still harder to rise from journeyman to
master. Throughout the sixteenth century two battles raged :
one between the journeymen and the masters — i.e., labour and
capital — and the other between the masters of the gilds and out-
siders who tried to set up business without joining the gilds.
In the war between the journeymen and the masters the latter
may claim the victory, though it was tempered by occasional
defections of the workmen, who, especially in London, moved
outside the city walls and formed gilds of their own. These in
turn usually became as exclusive and reactionary as their former
masters. In the battle with outsiders, the gilds, though supported
by the Government, were defeated ; the growth of population
made migration to the suburbs, and even, in industrial areas like
Norfolk, to the villages possible, and outside the corporate
boroughs men were free to work as they pleased independently
of the gilds. Much of the gilds' wealth went in the Reformation,
when Edward VI. 's rapacious counsellors seized their charitable
funds in the name of religion. By the eighteenth century they
were little more than picturesque historic survivals.

But the decline of the gilds made little difference in the actual
work of the industries. These were still organised on the plan
that is known as the " domestic system." The essential feature
in this is that the craftsman works in his own home, assisted by
his wife and family, and possibly by one or two apprentices or
journeymen. In textile work he might have two or three looms,
not more ; in other industries his tools were hand-tools entirely.

INTRODUCTORY 15

Spinning was done by the women in every cottage, and the yarn
sold to some travelling merchant ; the finishing trades were more
in the hands of capitalists, but even here few masters employed
many workmen. In a craftsman's home agriculture went on
side by side with his other work ; and a cow, a garden, fowls and
geese helped to feed his family for perhaps half the year. As
long as no machinery more complicated than a hand-loom was
used this was the best way, and the cheapest. A few early
attempts at mass production had been made, and Jack of Newbury,
in the fifteenth century, is said to have made a fortune on a system
of factory organisation. But in 1750 England as a whole was
still a land of villages ; her manufactures were made in the village
houses, and stone cottages with large rooms capable of holding
two or three looms can be found still in all the manufacturing
areas of the seventeenth century.

At the end of the eighteenth century came a change. In 1767
Hargreaves invented his spinning-jenny, by which one man
could do the work of ten women, and then came Arkwright's
water-frame and Crompton's mule. Both of these required power
to work them, and many of the new mills settled by running
water, which turned the wheel that ran the frames. But when
Watt had found a means of using compressed steam, first to pump
and then to turn a wheel, the age of steam began. Within fifty
years — that is, within the lifetime of a single man — the textile
industries quitted the cottage homes and were collected in factories,
where a dozen and then a hundred mules or looms could be
worked at once and yards of cloth made where only inches had
been before. Cotton took the lead, being a new industry and less
hampered by survivals of old gild regulations, but wool and silk
followed in due course. The demand for machinery involved a
demand for coal and for newer and better processes of smelting
and working iron. With the new wealth thus created, badly
distributed as it was among the few rather than the many, came
the demand for luxuries, and new industries sprang up to meet it.
By 1850 " domestic industry " was dead or dying fast ; most of
our needs outside food were being provided from factories run
by a few men, in which half the nation, men, women and children,
laboured in darkness and filth almost from the cradle to the grave.

Such was the " industrial revolution " of the early nineteenth

16 ECONOMIC DEVELOPMENT OF ENGLAND

century. It produced enormous quantities of material, gave
great wealth to some, and increased material comfort to the whole
middle class, but turned the craftsman into a machine-minder,
and the sturdy, and perhaps stupid, country labourer into the
undersized, anaemic and sharp dweller of our hideous towns. It
brought to the human race much material advance, and much
that is hopeful for future times ; but, owing to the greed and
shortsightedness of the few, it brought also a train of evils which,
since 1850, the nation has tried, spasmodically, to annul, so far
with indifferent success.

And just as the industry of the Middle Ages was strictly regu-
lated, so was commerce. At first trade was very local ; a small
market town served an area of some six miles radius, with occa-
sional help from travelling hawkers and the great annual fairs.
All was strictly controlled, markets were privileges granted by
local magnates, fairs belonged to great lords or to the King. The
early traders formed merchant gilds, which strictly regulated the
procedure of their members, and at the same time prevented any
competition from outside their body. Prices were not left to the
law of supply and demand ; the Middle Ages believed in adjust
price " for everything and penalised those who tried to evade it.
Up to the fourteenth century almost our only exports were raw
wool and hides, our imports wine and luxuries. But with the
increasing wealth of the nation came a demand for other things.
Edward III. revived the woollen manufacture, and by the end of
the fifteenth century undyed woollen cloth had largely replaced
raw wool as an export. The corn trade was also straitly regulated
by royal officials, both as to price and movement.

With the sixteenth century came expansion. The centre of
world trade shifted westward, and by the end of the century the
Atlantic rather than the Mediterranean became the centre of
commercial interest. Eastern trade came, not by Venice and
Genoa, but by the Cape and Lisbon, and English merchants were
seizing from the German and Flemish Hanses the trade of the
narrow seas. For trade on this scale more was required than the
resources of one or two great merchants, or the one or two ships
of small ones. Free competition was threatened in the numbers
turning to so lucrative a trade, and free competition did not
commend itself to the men of that time. So the great feature of

INTRODUCTORY 17

the sixteenth and seventeenth centuries was the regulated company,
whose members, though trading each on his own capital, followed
certain regulations laid down for all, maintained on barbarous
shores a system of mutual protection, and fiercely fought any
" interloper " who dared to trade outside their membership.
Joint-stock companies were not usually approved, though the
great East India Company was of that kind.

Throughout the three centuries 1500 to 1800 foreign trade
worked in shackles, probably necessary at first, later a severe
handicap. A theory was accepted, since known as the Mercantilist
Theory, that trade with any country should aim at selling more to
that country than you bought from it. Hence, gold would flow
to England and her wealth increase. The idea probably arose
from the very obvious advantage that the possession of gold gave
a nation in the wars of a generation that fought mainly with
mercenaries. In any case, it became an accepted axiom, and in
the eighteenth century the trade with Portugal was thought to
be more valuable than that with France, because the former took
more of our goods than we of hers, while France took little of our
cloth and sent us her wines, her finished goods and her objects
of luxury in great quantities. And since gold was so valuable
for war, it was an indirect source of power, and trade came to be
regarded as subservient to the claims of political national greatness.
The successful wars of the eighteenth century — very largely, as
far as England was concerned, wars for overseas markets — strained
this system to the utmost. Merchants were increasingly impatient
of Government interference and regulation, and claimed that by
free trading they could greatly increase the national well-being.
When the industrial revolution turned us into the world's work-
shop, and English textiles and English iron goods were in demand
from the ends of the earth, Government control seemed a short-
sighted, hampering nuisance with little equivalent advantage.

The battle eventually joined over the Corn Duties, but before
that enlightened statesmen, like Pitt and Huskisson, had been
modifying trade regulations and lowering customs. The Naviga-
tion Acts were modified and then repealed in 1849, and commercial
treaties arranged to encourage trade in all directions. But the
citadel of the mercantilist system was the land, for even as late
as 1830, the landed interest controlled the Government. Heavy

E.D.E. B

18 ECONOMIC DEVELOPMENT OF ENGLAND

duties on imported corn had followed the peace of 1815, lest the
drop from war prices should ruin landlord and farmer alike. By
a sliding scale they tried to keep prices stable, a plan that had been
working for over 200 years. But the standard price aimed at was
high, bread was dear, and competition had driven down the
workers' wages to starvation point. The manufacturers declared
more money wages impossible, and urged that, if food were
cheaper, real wages would rise and England could continue to
undersell all competitors in the world market. The farmers
maintained that to let corn in free would ruin them. But in
1846 it was done, the Corn Laws were abolished and practically
free import allowed. The farmers were not ruined, because
prices did not drop greatly, and the fear that they would drove
landlords and farmers alike to an expenditure of capital and energy
that for twenty years proved very remunerative. From 1853 to
1870 was the golden age of English farming. Free Trade did
not, at the time, do what the manufacturers hoped in increasing
real wages, but it made London the exchange port and England
the centre of the world's trade. By 1874 England held the
pre-eminence, both for manufacture and trade, of the nations of
the world. Her ships were on every sea ; half the world's ships
were built in her yards ; she had led the way in wood and iron
construction, in sail and steam. She had invented and pioneered
the steam locomotive, had found capital to open up and civilise
distant lands, and, lastly, had sent her sons to occupy the ends of
the earth. On a basis of unlimited competition and unshackled
individualism she had in a century created more material wealth
than the world had hitherto known. That she had also revolution-
ised her social structure, had degraded her workers to be the slaves
of the machine, had made possible vast aggregations of wealth in
the hands of the few, and adopted the worship of material success,
was discerned dimly by the few and unheeded by the mass. The
hero of the age was " A Man of Property."

Great, however, as were the changes wrought by factory
production and the displacement of our peasantry, the changes
due to new methods of transit were probably greater, and without
them the others would have been robbed of half their effect.
From the going of the Romans to the eighteenth century the chief
conveyer of goods by land had been the pack-horse — slow, limited

INTRODUCTORY 19

in capacity and expensive. The first effort at something better
was an attempt to improve the roads, steadily neglected for 1,400
years, and the early nineteenth century was a time of great improve-
ment. From 1820 to 1836 the great coaching roads saw a vast
extension of traffic. Rather earlier had come the canal system,
which linked up our rivers and made water transit possible for
heavy goods. Since the days of Henry VIII. our ships had been
carefully fostered by Government, and Englishmen were among
the most daring and successful sailors in the world.

Still, none of this was new ; roads and ships and canals all had
their origins far back before the dawn of history. All educated
men knew that they were older than the oldest nation. It is
difficult for us properly to appreciate how steam transit seemed
to our grandfathers. It halved and quartered distances ; it
multiplied almost without limit the amount of goods that could
be shifted from one place to another ; it lengthened life by
halving time. The rush and fury of the new power greatly
impressed the men and women of the 'forties. Elizabeth Barrett
expressed the feeling of her contemporaries when she wrote :

" From the fire and the water we drive out the steam,
With a rush and a roar and the speed of a dream !
And the car without horses, the car without wings,

Roars onward and flies

On its pale iron edge,
'Neath the heat of a thought sitting still in our eyes.'

And they were right, the world of steamships and railways is a
world of a new kind, a world that is one, and with its parts much
too close together to dare to risk disunity. By 1874 all the new
inventions, to us such commonplaces, were in being ; in England
the railway was almost as we know it, the telegram common,
though still a little startling in its yellow envelope to people in
country places ; the biggest steamship before 1907 had been built,
iron had replaced wood, and steel was about to replace iron.
During the forty years to come the only really new thing was the
telephone, though both flight and wireless telegraphy were in
sight by 1914. The world of 1874 was essentially a modern
world based on machine production, a landless proletariat of
wage-earners, capitalist enterprise and free competition — a world
inconceivable to the men of a century earlier.

B 2

20 ECONOMIC DEVELOPMENT OF ENGLAND

It is time to look at the conscious theory that had gradually been
formed from all these changes. Since the days of Athens'
greatness certainly — probably, if we could know, for many
thousand years before that — there have existed men who have
asked for theories of government, rules for social morality, an
order based on reason for all the common life of men. In the
world of economics these theories have been many and varied.
The economics of the ancient Mediterranean civilisation were
based on slave labour, and beyond the few who challenged the
morality of that basis there was little to think and theorise about.
Among the free there might, from time to time, be struggles,
such as those between the great and little landholder in Italy, or
between a rising commercial class and an aristocracy entrenched
on the land. But where the foundation was universally the labour
of absolute slaves, the economic system was bound to fall into one
mould. The feudal system of the Middle Ages was different.
Economically there is a great difference between the slave and the
serf — between a man who has no more claims than an animal and
a man who has a few but certain rights that it is dangerous to
invade. The owning of serfs carries with it duties as well as
rights, duties that public opinion will enforce. The feudal system
probably grew out of the need for safety ; its conscious object was
stability. It was right and best that each should know and keep
his own peculiar place in the edifice, and the Church added its
approval in terms of a providential ordering of things . The Church
itself was ordered in similar fashion, tempered by its practice of
the career open to talent. Each grade had its fitting standard of
life ; stability depended on discouraging attempts to alter it.

Into this system of a landed aristocracy, supported by a gradu-
ated arrangement of dependents, commerce gradually worked a
breach. At first men bought and sold to make a living ; gradually
the possibility of making more proved too alluring to be resisted ;
it was not long before the profit maker appeared in the market.
He was not welcomed by any class, but was in time recruited
from all. Public opinion, led by the Church, greatly limited his
activities. It was considered wrong to ask more than the " just
price," to make more than a fair living. Above all, to ask profit
for a loan of money, which entailed no work, was conduct un-
worthy of a Christian. Usury was left, in theory at least, to the

INTRODUCTORY 21

Jews, though we may note that banking on the scale of the Bardi
and the Medici was considered quite honourable. Gradually
the breach widened ; trading cities like Venice, Florence and
Milan showed an advance in civilisation, in manners, in luxury
that became the envy of the feudal North. Even in the heart of
feudal territory, along the Rhine, the Rhone and the Seine, great
cities grew, whose raison d'etre was world-wide commerce. But
with commerce on the great scale, usury laws, laws against makers
of " corners " and " rings " became useless, and theory rapidly
followed fact. By the sixteenth century popular morality had so
changed that most modern commercial transactions would have
been winked at, if not praised, and trade and nationalism had
joined hands and justified each other ; merchant adventurers and
the Royal Navy, often indistinguishable, advanced side by side
for the " greatness " of the nation. Commerce was still strictly
regulated, but the belief that the accumulation of riches in one
man's hand was bad had gone, and the increasing wealth of the
few was accepted as the wealth of the nation ; to get riches, far
from being unworthy of a Christian, came gradually to be looked
on as man's primary object.

But all was not settled when it was agreed that the nation's
first duty was to retain or get wealth and power ; the important
point arose, how ? The most obvious form of wealth was gold,
and for two centuries at least the belief held that the nation that
had most gold had most power. In a time of constant war there
was a good deal of truth in this ; the need for easily convertible
wealth was dominant. With gold one could buy ships and men
and arms ; without it, not even stored granaries and bursting
warehouses availed to meet urgent needs. Gold being therefore
power, such trade as brought gold to the land was considered most
desirable. No one saw that trade was a universal and not a
local thing, and gold, except for its ease in conversion, no more
valuable than any other product. So treaties were made and
customs levied with the idea of directing trade into channels
thought desirable and diverting it from others, and efforts were
made to use it as an instrument, not so much for increasing the
material comfort of the nation as its political power.

By the end of the eighteenth century this mercantilist system,
as it was called, was getting discredited. As early as 1776 Adam

22 ECONOMIC DEVELOPMENT OF ENGLAND

Smith had delivered in his " Wealth of Nations " a smashing
attack on its assumptions, and the introduction of machine industry,
with its demand for foreign markets, made the old restrictions
intolerable. The belief grew up that, if only trade and industry
were left alone, with free competition, natural law would bring
prosperity to all. Each industry would find the place, the men,
and the market that were best suited to it, where it could produce
most largely, most rapidly and most cheaply, and the whole
world would benefit. Any attempt to produce in the wrong place
would be defeated, for the product would be more costly, and
would therefore find no market. Labour was looked on as raw
material that also would flow to the place where it was wanted ;
if it was too abundant in one industry its price would be lowered,
and immediately some of it would move on to a better market,
and the price of that left would rise. If at any time labour was
scarce, its price would rise, immediately fresh labour would flow
in and the price would fall. The law of supply and demand,
left to itself, would produce a natural order and justice to all.
This doctrine of laisser-faire dominated the nineteenth century,
and in its name England embarked on Free Trade, unregulated
industry, and the order of the jungle. It produced great aggregate
wealth and a grossly unjust sharing of it, a business morality that
proclaimed itself the civiliser of backward nations and justified
the proverb of caveat emptor, a conscience that gave largely out
of its great possessions while it ignored the theft from the labourer
that had produced them. The creed of laisser-faire reached its
climax in the 'fifties ; the Corn Laws had gone in 1846, and every
fresh budget saw a lowering of tariffs. But even before its final
triumph, some of the evils inherent in it had become so scandalous
that the possessing classes were forced to go back on it, and already
in 1833 had begun our long series of Factory Acts, protecting the
worker from the more outrageous forms of exploitation ; and
there were not wanting voices of power denouncing the iniquity
of current theory and practice and proclaiming the fact that
what injures one inevitably injures all. The workers, too, were
recovering from the helpless misery that had marked the tran-
sition period, and the 'fifties also saw the birth of modern Trade
Unionism. As yet a few only doubted the current faiths ; many
were willing to mitigate the evils they sustained.

CHAPTER II

AGRICULTURE

The Decline of Agriculture and its Partial Recovery. — The

tide of agricultural prosperity in England had reached its height
in the middle 'sixties ; till 1875 it slacked, and then definitely
ebbed. There had been an inflation of prices during the Franco-
Prussian War of 1870, and shortsighted landowners had in many
cases raised rents. When the war boom died down, not only
agricultural, but also industrial capitalists were slow to realise
the moment for retrenchment, with the usual results of over-
production, followed by dwindling markets. The workless
operatives ceased to buy beyond the barest needs of subsistence,
and the home market quickly followed the collapse of the foreign,
for the new methods of transit made the world practically one.
The expected fall of prices had not followed the repeal of the Corn
Laws in 1846, and for nearly thirty years the force of free com-
petition seemed in abeyance. The more scientific agriculture
embarked on in anticipation of it appeared to supply a large part
of the nation's needs, and foreign competition seemed not yet
ready to seize the opportunity for free entrance. But in 1873
there was an industrial collapse in the United States, which then
consisted almost entirely of States east of the Mississippi.
Industrial failure east of the Alleghanies drove men west in search
of livelihood, and quickly the corn grown on the virgin soils of
the middle west was pouring into the markets of Europe. At
the moment English farmers were facing a succession of evil
seasons as well as diminishing markets, and the produce of English
wheat lands fell in 1879 to 15-J bushels the acre. A shortage
should at least have implied rising prices, which might have
partially saved the farmers ; to their amazement no such rise
occurred. American wheat, grown on lands of illimitable extent,
needing no enrichment for many years to come, on soil so deep
that not a stone could be found to throw at a wild beast, poured

23

24 ECONOMIC DEVELOPMENT OF ENGLAND

into English markets at a price no higher than the English farmers'.
Here, indeed, was a new situation. For a time the landlord
refused to see it, and the farmer struggled in vain against a rent
it was no longer possible to pay. And he had only just been
forced to pay his labourers more, too. What was to be done ?
Unfortunately, our system of land tenure compelled him to
economise in the one place where it was possible, and where it
was most disastrous ; he cut down his labour power and " so
began the starvation of English land." 1 He had some excuse ; a
* succession of bad seasons culminated in the summer of 1879,
when 3,000,000 sheep were lost by rot, and in 1 880-1 came one
of the severest winters known. By 1881, 5,000,000 sheep had
perished, and foot-and-mouth disease and pleuro-pneumonia
duly reappeared among the cattle.

English agriculture was faced with an entirely new problem,
which at first concerned mainly the corn lands. No amount of
high farming could force our land to produce corn as cheaply per
bushel as America could deliver it across the sea. An English
acre might produce double that of one in Illinois, but it did so
at a cost of manure and labour that was prohibitive, even with the
expense of 5,000 miles of transit on the other side. Once the
situation was grasped the conversion of corn land to meadows or
to market gardening went on apace, though in the transition much
land went out of cultivation altogether, and reverted to rough
pasture. Between 1880 and 1884 the rents of England dropped
some five and a half millions. It was time, though alone it was
not enough. For some years land that could not pay under grain
could make a profit on stock ; the low price of grain that was
ruining one farmer at least kept down the expenses of the other
who bred stock. But not for long. Meat from America and
Canada began to appear in the English markets by 1885, followed
after 1890 by frozen mutton from New Zealand, and chilled beef
from Argentina ; imports of cheese, butter and wool increased
as well. For if English farmers and landlords could not change
their methods to meet the new conditions of a world market,
other nations could and did. " Whilst the changing world
conditions in cereal farming made the Dane alter his land system,
educate its farmers and farmers' sons in every phase of agricultural

1 Hasbach, " History of the English Agricultural Labourer," p. 291.

AGRICULTURE 25

economy, and use co-operative methods of production, collection,
and transport, our agricultural community lived under the same
old land laws, the same old game laws, exacting railway rates, and
an almost entire lack of agricultural schools and colleges and
demonstration farms." x

In 1893 a Royal Commission reported on the agricultural
depression. It showed that the value of produce had diminished
by one-half, and while the cost of production was certainly no
less — for the farmer had lost his best workers by emigration and
paid the same price for inferior work — much corn land had
disappeared and could not be restored. Certain farmers had,
however, weathered the storm and indicated possible ways to
future recovery. First, men with ample capital, with well-
equipped farms, had paid their way even on heavy soils, and small
occupiers employing no labour but their own had struggled
through. Market gardening, fruit growing and milk producing
had been proved to pay. It was on these lines that improvements
were worked out in the next twelve years. Corn crops lessened,
and dairying, market gardening, pasture farming, flower growing
and poultry keeping took their place. On the drained fenlands
of the east thousands of acres of potatoes and of bulbs replaced
the waving corn, and Lincolnshire farmers became men of financial
power. Fruit growing became a scientific and capitalist venture,
and fenced fields of fruit trees in straight rows replaced the
picturesque beauty of ancient orchards where sheep and pigs
played havoc with the bark of fifty-year-old trees. With the
margin of profit smaller, men began to look to details and to
welcome scientific information. In dairy farming especially the
improvement was marked ; stock-breeding societies and pedigree
books became general, fresh breeds were evolved, and even the
beginning of a scientifically pure milk production appeared.
Pasture lands received as much attention as had hitherto been
bestowed on arable, and new manures were studied and adopted.
The use of basic slag, the refuse of iron furnaces ground to powder
as fine as meal, dates from 1883.

The most remarkable advance of the period was undoubtedly
in the application of science to farming. Geology and chemistry
developed branches purely devoted to agriculture. New biological

1 F. E. Green, " History of the English Agricultural Labourer," p. 102.J

26 ECONOMIC DEVELOPMENT OF ENGLAND

theories of heredity came to the aid of stock-breeders, and new
strains of plants were created immune from disease or possessing
desirable attributes, such as early maturity or heavier yield. Even
electricity was harnessed to increasing growth. The fight
against disease in animals made almost as much progress as in
men, while the study of insect pests and remedies for them
greatly reduced the average loss of the farmer.

The necessity of reducing the cost of production gave an
impetus to the use of machinery. The chief introduction has
been that of the reaper and binder, since 1880, and all the various
long-established implements have been improved and made more
efficient. Oil engines became an adjunct to the equipment, and
wire and corrugated iron, if they did not add to the beauty,
certainly increased the efficiency of many a farm. Since 1880
the milk separator has become common, though the milking
machine has taken little hold in this country ; it is troublesome
to keep clean, and where labour is cheap, as in England, has few
advantages. The extension of dairy farming is shown by the
shrinking of the corn lands of England and Wales from 8,500,000
to 5,750,000 acres between 1871 and 1901, and by the increase
of permanent pasture from 11,000,000 to 15,000,000 acres.

By 1906 the revolution in English farming was fairly complete,
and from then to 1914 financial prosperity returned to it. It is
now necessary to inquire whether this renewed vigour belonged
alike to all classes of the agricultural community.

The Condition of the Labourer. — How did the lean years at
the end of the nineteenth century affect the wage-earner ? He
had gained nothing in the " golden " years. How came he out
of the time of storm ? For a brief interval in 1872 the prospects
of the agricultural worker had brightened. A wave of Trade
Unionism had swept the country and reached even the rural
labourer. Led by Joseph Arch, a labourer who was fortunate
enough to own a freehold cottage, from which he could not be
ejected, the labourers formed a Union with 5,000 members and
sixty-four branches. The farmers were taken by surprise, and
agreed to raise wages by sums ranging from is. 6d. to 4s. a week.
The workers asked for 16s. a week and an eleven-hour day. The
Union, however, was too ambitious ; it set out with too many
objects, loaded itself with benefit schemes insufficiently thought

AGRICULTURE 27

out, and began agitating against the existing land laws and against
tithes. When the farmers and landowners had recovered from
the first shock they swiftly rallied, met strikes by lock-outs, and
eventually wore down the resources of the National Union. In
1874, after distributing over £20,000 in strike pay, it was defeated,
and soon after declined to a mere handful of members. Disunion
among the workers hastened the end. For a time wages had
risen, but they decreased again, and, as we have seen, waning
prosperity was met by the farmers by cutting down the number
of labourers employed. Corn lands fell to pasture, work became
scarce or irregular, and, in spite of very great emigration, the
demand for labour was less than the supply. By 1887 wages were
back nearly as low as in 1871 and prices of most necessaries were
higher ; real wages had seriously declined.

Simmons, the secretary of the Kent and Sussex Agricultural
and General Labourers' Union, stated in evidence before the
Commission of 1881 that it was his opinion that, of the three
classes hit by agricultural depression,

" the landlord suffers least . . . that the farmer suffers most,
but that he feels his suffering less than the labourer. To the
labourer it is a question really of less food ; to the farmer it is
not absolutely a question of bread — it is comforts or no com-
forts."

Under the stress of unemployment and low wages the Union
rapidly went to pieces ; in 1877 it still had 55,000 members, by
1881 these had dropped to 15,000, and in 1887 only 4,254 remained.
The increased use of machinery was another factor in the decline.
In 1884 the rural labourer obtained the franchise, but it was long
before he learned to use it in his own interest, even if he has yet
done so. For the next fifteen years, at any rate, he remained the
shuttlecock of the two traditional parties — courted at election time
by promises of help, never remembered after, not indeed intended
to be remembered. The town worker had found the Union
without the vote but a blunted weapon ; the rural worker was to
prove that the vote without the Union was a useless toy.

The disappearance of the cheap labour of women and children
from the fields — the latter due to the Education Acts of 1870-6 —
helped to lower the standard of farming, already injured by the

/

28 ECONOMIC DEVELOPMENT OF ENGLAND

emigration of the best workers, for it became too costly to clean
the land as had been done in the period of prosperity.

In 1890 the revival of Unionism in the towns spread to the
country. The dockers' strike 1 had shown the danger to the
urban workers of the mass of unorganised and potentially " black-
leg " labour in the surrounding fields, and new Unions combining
agricultural with general labourers were formed. The old policy
of a big national centralised Union was abandoned, and small
district Unions in direct touch with their executive were preferred.
Friendly benefits, which had ruined the old Unions, because
adopted without any actuarial basis and often on wildly generous
scales, were discarded. By 1894 nine of these new agricultural
Unions existed, somewhat precariously. During the same year
the societies for advocating the " Single tax " 2 and for the
nationalisation of the land sent their red and yellow vans into
hundreds of villages, organising Unions or preaching their solution
of the workers' difficulties.

In 1893 appeared another Government Report, which Hasbach
summarises as follows : —

(a) The position of the agricultural labourer in the south had
somewhat improved since 1867, though it was still unsatisfactory.

(b) In the north, where conditions were superior, there had been
no change.

(c) Money wages had increased and employment was, on the
whole, more regular. Wages ranged from 10s. in Wiltshire to
185. in Lancashire and Cumberland, with 13s. 6d. as average.
Harvest wages had decreased owing to use of machinery.

(d) Women and children's labour had greatly decreased, and
with it the family income.

(e) The hours of work were shorter and agreements between
the farmer and the worker more definite.

(/) The exodus from the land continued.

The great obstacle to improvement in the conditions of the
agricultural labourer was his utter dependence on the farmer and
his resulting subservience. The effect of a century of under-
feeding and overworking was marked. In 1787 Norfolk labourers
had been singled out for their energy, quickness and honesty ; in
1892 they are quoted as being particularly badly nourished and
1 See p. 64. a See p. 168.

AGRICULTURE 29

somewhat lazy. Their wages were 12s. a week. Their depend-
ence on the farmer or the landlord was absolute ; living in a tied
cottage,1 often with no alternative employer, the labourer had to
please his master or starve. He could keep neither his wife's nor
his children's labour from the sweater ; he was forbidden often to
keep pig or poultry, or to apply for an allotment, lest he be tempted
to steal the food or the labour of his employer ; he dared not
join a Union, for dismissal and eviction might follow. Stories
humorously tragic are told by organisers, at even so late a period
as the Great War, of how while apparently addressing an empty
road they were listened to really by a small crowd hidden in the
blacksmith's shop behind them, or spoke their message to an
extended line behind a hedge, which promptly ducked to invisi-
bility on the approach of the master. In 1903 Lieut.-Colonel
Pedder could write : " Farm service is still subjugation. It yokes
and goads and brutalises. Men are still dismissed if their
acquaintances do not please their masters. Their wives, though
under no legal obligation to do so, must still go out to
field labour or ' give offence.' Opposition in politics may
involve ' a march,' as they have learnt to call a compulsory
flitting. The Parish Council gives the master abundant tests
of submission. ' I didn't know as he was agin' her,' said a
labourer of fifty-five, telling how he unadvisedly ' held up his
hand ' for a lady, who was a candidate for a seat in the village
parliament. ' But didn't he just give it to I afterwards ! '
Still as a slave before his lord represents the attitude of the farm
hand in the presence of his employer. No sheep before her
shearers was ever more dumb than the milkers and carters and
ploughmen at the village meetings to which their masters may
choose to summon them. They are cowed. It is to this that
the race have come, whom Froissart described as ' le plus perilleux
peuple qui soit au monde, et plus outrageux et orgueilleux.'
Pride is dead in their souls." 2

The temporary burst of 1890 did not last ; by 1896 Unionism
among agricultural labourers seemed more dead than ever, for the
depression of agriculture reached its nadir in 1896 and hope had
deserted the English countryside.

1 I.e., belonging to his employer and going with the job.

2 Contemporary Review, 1903.

3o ECONOMIC DEVELOPMENT OF ENGLAND

With the new century came a new movement for the scientific
investigation of poverty in all parts of the country. Charles
Booth and Seebohm Rowntree were dealing with life in the towns,
and other inquirers began to look to the villages. The results in
two of these were typical. In a village practically belonging to
the Duke of Bedford it was estimated that 34-3 per cent, of the
population had not sufficient to enable them to remain in physical
health ; if the working class alone was considered, the percentage
was 41. The Duke of Bedford's wages were 15s., those of the
other farmers 12s. to 14s. Allotments were of little use, being too
close to the Duke's game preserves, and leave had to be obtained
to keep pigs or poultry. The other village was in Wiltshire, and
had some smallholders and artisans among its inhabitants. The
population, which had halved in sixty years, was 824. The
average labourer's wage was 15s. y^d., including all allowances ;
carters got as much as 16s. gd. Twenty-eight families including
144 persons earned less than enough to maintain physical
efficiency, considerably less than the cost of that supplied in
workhouses. All the ordinary labourers but one came into this
category. Besides this, thirty-seven other families only rose is.
above this margin, below which a week or two of illness or unem-
ployment immediately precipitated them.

In 1906 the ebbing tide of prosperity, as we have seen,1 turned
for the farmers, and there were even stirrings among the labourers.
The Labour Party, recently formed, was offering a new political
outlook to the worker, and Trade Unionism once more turned
towards the land. A new Union arose, since called " The
Eastern Counties Agricultural Labourers' and Small Holders'
Union," of which the driving force was George Edwards. A
salary of 135. a week for the joint labours of himself and his niece,
who did the clerical work, was all the new Union dare give.
Later two organisers were appointed at equally inadequate
payment. One of them having ventured to become a Rural
District Councillor was dismissed from his daily work, and the
Union, unable to pay him a salary, made a collection and gave
him a hawker's basket. Such were still the difficulties only
eighteen years ago.

In 1908 came the old age pensions act ; mean and niggardly

1 See p. 26.

. AGRICULTURE 31

as it was, it offered a haven to many a worn-out man and
woman before whom loomed the dread doors of the workhouse,
unless death should provide a timely escape. Five shillings a
week seems little enough to give a man after fifty to sixty years'
toil and privation, but it meant the difference between a place of
his own by his son's or daughter's fireside and the pauper ward
of a brutal Poor Law. Lest he might, however, take to luxurious
living, a kindly nation deducted from the pension any private
means he might possess over £31 10s. a year. So much for the
encouragement of the great Victorian virtue of thrift. In
191 1 the national insurance act gave the wage-earner
some slight protection in case of sickness. But, with all these
apparent improvements, the position of the agricultural labourer
was still, relatively to other workers, far below what it had been
in the eighteenth century. In 191 2 R. E. Prothero wrote :
" The peasant under the old system had a definite independent
place in the community. He commanded respect for his skill,
judgment and experience in his own industries. He was not
cut off by any distinctions in ideas, tastes or habits from the
classes above. On the contrary, each grade shaded almost
imperceptibly into the next. To-day the intermediate classes
have disappeared. Instead of the ascending scale of peasant
labourer, the blacksmith, carpenter, wheelwright and carrier, the
small farmer, the larger farmer, the yeoman occupying his own
land, and the squire, there are in many villages only two categories
— employers and employed. The gulf is wide enough. It has
been broadened by the progress of a civilisation which is more
and more based on the possession of money. All the employing
classes have moved on and upwards in wealth, in education, in
tastes, in habits, in their standard of living. Except in education,
the employed alone have stood comparatively still. The sense
of social inferiority which is thus fostered has impressed the
labourer with the feeling that he is not regarded as a member of the
community, but only as its helot. It is from this point of view
that he resents, in a half-humorous, half-sullen fashion, the
kindly efforts of well-meaning patrons to do him good, the
restrictions imposed on his occupation of his cottage, as well as
the paraphernalia of policemen, sanitary and medical inspectors,
school-attendance officers, who dragoon and shepherd him into

32 ECONOMIC DEVELOPMENT OF ENGLAND

being sober, law-abiding, clean, healthy and considerate of the
future of his children. To his mind, it is all part of the treatment
meted out to a being who is regarded as belonging to an inferior
race." 1

In 1913-14 came a stirring of the waters. A strike in south-west
Lancashire over the area which supplied market-garden and farm
produce for the towns of Liverpool, Warrington, St. Helens,
Wigan, and Southport was partially successful. The workers
secured a general rise of 2s. a week in wages, shorter hours, and
6d. per hour overtime. It is to be noted that they were backed
by the Railwaymen and Transport Workers, and that their wages
were well above the general level, for, though they worked on poor
soil, damaged by the smoke and gases of a great industrial area,
the competition for labour of these towns forced up its price.
In both 1 91 3 and 1914 attempts to secure a minimum wage in
rural areas were made in the House. That it was needed seems
evident from the records of a Herefordshire county court, where
a farm labourer summoned for debt was shown to have a weekly
wage of us. and a cottage, less stoppages for wet days. He had
a wife and four children. The alternative remedy, proposed by
certain rich folk, that the labourer could well live on oatmeal if
only he would, shows that their mental outlook had changed little
since the eighteenth century.

In the same year the Land Inquiry Committee published its
report on the Rural Areas, some points of which may be of
interest : —

(a) Sixty per cent, of agricultural labourers received under 18s.
a week from all sources, between 20,000 and 30,000 had less than
16s., and real wages had declined since 1907. The Committee
recommended a legal minimum wage fixed by wage tribunals.

(b) One hundred and twenty thousand new cottages were
wanted at once in rural districts, and wages should be raised so
that an economic rent could be paid. It was estimated that
300,000 labourers lived in tied cottages, and the Committee
proposed that it should be illegal to let cottages to a farmer to
sublet.

(c) It was estimated that only one-sixth of the total number of
cottages had a garden of | acre or more, and it was suggested

1 Prothero, " English Farming," pp. 409-10.

AGRICULTURE 33

that more power should be given to the Parish Councils to purchase
land for allotments by compulsion.

(d) The Agricultural Holdings Act did not adequately com-
pensate for the depredations of winged game, and much good land
was used for purposes of sport. It was suggested that the tenant
farmer should be allowed to kill and take ground game and snare
and keep rabbits on his own land, and should be entitled to
compensation for damage done by anyone's game, not merely
that of his own landlord.

The year 1914 promised to be a notable one in rural annals.
At Helion Bumpstead, in north Essex, four early- Victorian
farmers objected to their men wearing Union badges and offered
them the choice between leaving the Union or dismissal and
eviction. This ridiculous lock-out developed quickly into a strike
and attracted much public attention. The men asked for ids.
a week as against the existing 13s., £8 for harvest work of four
weeks, and a weekly half-holiday ; tied cottages to be held on a
three months' tenancy. After nearly six months' dispute the
men won 15s. a week, £8 for harvest, and no victimisation. This
settlement was made on August 3rd.

While the North Essex farmers were of the mind expressed by
one of them in the words " The men have formed the Union
to rebel against their masters, and I won't have none on't," the
King, with a better appreciation of the position of " masters "
in the twentieth century, was recognising the Union and negotiat-
ing with its leaders. As a result, labourers on the Sandringham
estate were granted 16s. a week and a weekly half-holiday, and
cottages on a six months' tenancy. " The King's pay and the
King's conditions " became the worker's cry throughout Norfolk.
The demand for more leisure became insistent, and in one case
the men, offered a choice between more wages or shorter hours
chose the latter.

Throughout the first half of 191 4 strikes and rumours of strikes
filled the countryside ; Wiltshire, Herefordshire, Kent and Bed-
fordshire were not behind Norfolk. Strikes, successful on the
whole — some more some less — arose all over the country, and
a big movement for the betterment of the rural worker was
culminating in general action, when on August 4th Europe
plunged into the abyss. The men returned to work for the old

E.D.E. 0

34 ECONOMIC DEVELOPMENT OF ENGLAND

wages and on the old conditions, save those who left at once to
give their lives for the land they might not own. Once more
the work was all to do again.

Depopulation of the Countryside — Housing — Increasing
Dependence on Seaborne Food. — Perhaps the most striking and
alarming phenomenon of the last fifty years has been the exodus
from the rural areas of England. Between 1871 and 1881 over
90,000 labourers left the land, and in 1891 there were 90,000 fewer
still. From 1891 to 1901 the number of agricultural labourers
dropped some 160,000, though this was balanced to some extent by
an increase of 56,000 nurserymen and gardeners ; in the next ten
years there was a partial recovery of 35,000. But during the whole
forty years the rural workers had decreased in number by some
f per cent., while the population as a whole had risen 56 per cent.
As it is usually the best and most enterprising men and women
who have courage to make a move, it follows that the average
efficiency of those left is lower, and the cost of production rises,
especially in work where few, if any, are paid more than enough
to keep them alive.

It is doubtful whether low wages were the main cause of the
movement. The housing question was probably the determining
factor. In 1885 a Royal Commission on Housing brought out
the fact that houses for the agricultural worker could not be built
to pay. On such a wage as 10s. to 12s. a week no one could pay
a rent that would repay the builder. As a result houses simply
were not built. In 1890 a Housing of the Working Classes Act
was passed ; by 1894 eight cottages had been built. Such
cottages as existed were bad, when they were not impossible.
Two bedrooms were usually the maximum allowance ; one bed-
room was not uncommon. A single bedroom for mother,
father and seven children was not among the worst instances.
One labourer in a Suffolk village summed up the conditions of
his cottage thus : " You may shut the doors and windows close
enough, but you can't keep the cat out." Roofs in holes, through
which rain fell on the bed, holes in the walls stopped with old shirts
and rags, falling ceilings and pools on the floors whenever it rained,
were characteristic of many of the " cottage homes of England."
Even if watertight and upright, there was often no water supply
but an open ditch, and no sanitation of any kind. For a cottage

AGRICULTURE 35

in which no decent farmer would house a cow or a pig wealthy
landowners were not ashamed to exact a shilling or so per week for
rent. And however bad they might be, there was nothing else
to be had. Young men and women wanting to marry were driven
to the towns in sheer despair. Was it any wonder that mothers
with any ambition for their children urged them out of the
stagnant morass ? Not all landowners were indifferent to the
welfare of their workers ; some even overdid their benevolent
care. Beautiful cottages with gardens and every amenity of life
appeared on many a model estate, and everything possible was done
for the tenants. But it was too often done for the tenants, and
not by them. Reading-rooms, in which the papers were strictly
supervised ; clean cottages, where pig and poultry would spoil
the sylvan beauty of the scene ; public-houses that were real,
well-managed inns and where politics were a barred topic — what
more could the people want ? Surely he was a brutal and ignorant
peasant whose comment was reported : " They durn't blow their
noses at Ard'nton without the bailiff's leave." The following
description of a village in Wiltshire might be applied to other
villages all over England : —

" His lordship is lord of the manor, sole (absentee) landowner,
patron of the living, receiver of rent and tithe. Of the nearly
2,000 acres of land in the parish about 40 are glebe. The noble
owner lets the rest, together with all the cottages, to two farmers.
The two farmers, besides controlling the cultivation of all the
land in the parish, and the tenancy of practically all the cottages,
are the churchwardens and overseers of the poor and the school
managers. One of them has charge of the rate-book. Nothing
could well be simpler than this system of parish government.
The labourer who wants to work in the parish must obtain
employment on the Earl of Pembroke's land under one of the
Earl of Pembroke's two farmers, who will house him in one of the
Earl's cottages, deducting the rent from his weekly wages. He
sends his children to the ' national ' school (managed by the Earl
of Pembroke's farmers) and goes on Sunday to the church, where,
under the eyes of the two churchwardens (Lord Pembroke's
farmers again), he ' sits under ' a clergyman appointed to the
parish by the Earl of Pembroke. When he gets too old to work,
he must apply for Poor Law relief to the same two farmers.

c 2

36 ECONOMIC DEVELOPMENT OF ENGLAND

If, in spite of all these arrangements for his comfort, he is still
discontented with his lot, there is no building, not even a school-
room, in which he can meet to take counsel with his fellows,
unless he first obtains the permission of the Earl of Pembroke's
farmers." 1

His villein ancestors were hardly more enslaved than the
labourer in such a village, and the villein had at any rate greater
security in his home and livelihood. As late as 1894 a great ducal
figure in the West of England threatened to evict all his tenants
if they persisted in electing a churchwarden he disliked, though
the chosen man was a Tory and a naval officer. The Duke won.

Is it remarkable that the most spirited among the young men
and women sought freedom, even in the slums of the cities ?

And it was not only the labourer who drifted away : the artisan
was being squeezed out by machinery and machine-made tools ;
the wheelwright, the carpenter and the blacksmith, the makers
of rakes, brooms and hurdles, all found their crafts superseded by
factory-made articles. And with the better-class worker went
the gaiety, the colour, and the life from the village. The old
country customs were dying — there was none left with energy and
leisure to keep them going or find new ones. The utter dullness
of village life became more than the young could stand.

One aspect of the depopulation of the rural areas that alarmed
many was our growing dependence on seaborne food. There
were some far-sighted enough to be aware that, while on the one
hand we were taking no care to preserve or secure peace in the
world, we were at the same time drifting to a position in which
an even temporarily victorious enemy could starve us to sub-
mission. Between 1871 and 1911 the value of the principal
foods imported doubled, while the population had only risen
56 per cent. If world peace could be assured this was a matter
of no importance, but with millions of men in arms by land and
sea war was a certainty sooner or later.

State Intervention — Back to the Land.— This period in agricul-
ture, as in other branches of industry, is marked by an increasing
departure from the practice of laisser-faire. It had become
obvious even before the depression that certain things could only
be secured by the intervention of the State. In 1875 the most

1 " Among the Agricultural Labourers with the Red Vans," 1893.

AGRICULTURE 37

immediate need seemed to be to secure to the tenant the full
value of any improvements he might make. If the land was to
be used to its fullest advantage it was certain that the farmer must
be induced to put into it all the capital possible, and that he would
not do this unless at the end of his lease he could claim the value
of what was not yet used up. The effect, for example, of many
manures lasts for years ; if the farmer gave up his tenancy before
that effect was exhausted it seemed he had a fair claim for com-
pensation. The same applied to buildings which, once built,
could not be carried away. In 1875 the Government passed
an agricultural holdings act, which was more talk than
action ; but in 1883 a more stringent law was added, and
gradually by the end of our period this particular grievance of
the tenant was remedied. After the report of the 1882
commission the State bestirred itself a little. Grants in
aid of local taxation equalised the burden in some degree, and
measures were passed to protect farmers from adulterated
foodstuffs and the competition of imitation butter and cheese.
A railway and CANAL traffic ACT tried to equalise rates
of carriage on home and foreign produce. Perhaps most
important of all, definite measures were taken to prevent disease
among animals. The Report had chiefly concerned itself with the
ills of the farmer, and thought so little of the importance of the
labourer that the evidence relating to him was not published.
But there were others who held that a really flourishing agricul-
tural society must include a contented and respected labourer.
It was agreed that allotments had been on the whole successful,
and were so wherever proper conditions attended their working.
The difficulty was to get land. A movement was started to apply
to lands held by Charitable Trusts the Act of 1832, that authorised
the letting as allotments land set aside for the poor in some of
the Enclosure Acts. But neither the various trustees, nor on
appeal the Charity Commission, were inclined to fall in with
the scheme. The next step was to work for a Bill, backed first
by Sir Charles Dilke and then by Mr. Jesse Collings, which in
1882 became the extension of allotments act. It had,
however, been badly mauled in the Lords, where the final
decision as to the suitability of the land and the settlement of any
disputes were entrusted to the Charity Commission, instead ot to

38 ECONOMIC DEVELOPMENT OF ENGLAND

the county courts, as in the original Bill. The result was that
comparatively little was done, though land worth a million in
income was really available. Even where allotments were
secured, often the conditions attached nullified the advantages,
rents were often demanded in advance, and church attendance
and complete idleness on Sunday frequently imposed.

None the less there was an increasing section of the com-
munity perturbed by the state of our rural districts, and a strong
movement with the cry " Back to the land " was formed. It
was fed by two streams, one that wished to restore the small
peasant proprietor ; of this the leader had been John Stuart Mill.
The other consisted of men who believed that the elimination of
rent would serve the purpose. They based their theory on that
of Henry George,1 but the chief English exponent was the great
scientist, Alfred Russel Wallace. Disbelieving in the economic
efficiency of small properties, he advocated farms owned by the
State and rented at a moderate sum. The farmer, no longer
squeezed by a profit-making landlord, would be able to pay
his labourers properly, while the rent of the land would be a
firm basis of national finance. In 1887 another allotments
act was passed. Six parliamentary electors could request the
Sanitary Authority of a district to provide allotments, and it
might rent or buy land for the purpose, even compulsorily. But
all depended on the Sanitary Authority's good-will, and not much
progress was made.

In 1889 the ministry OF agriculture was created.

In 1890 a Parliamentary Committee reported on small holdings.
It showed that small holdings were more productive than large
ones, except for corn and sheep, owing to the greater quantity of
labour put into the soil. The chief difficulty in creating small
holdings was the reluctance of landlords to erect buildings, but
the demand for small-rented farms was general. None the less,
the Committee objected to compulsory measures for securing
land for the purpose. In 1892 a small holdings act em-
powered the County Council to acquire land, borrowing the
necessary money, and to sell or rent it to applicants. The pur-
chase might be spread over fifty years, and the holdings could
vary from 1 to 50 acres. The creation of County Councils in

1 See p. 168.

AGRICULTURE 39

1888 had done nothing for the labourer, but when in 1894
Parish Councils were set up, with power to acquire land and rent
it out as allotments up to 4 acres per applicant, much was hoped
for, and in this department the new Councils achieved a real
success. By 1907 40,000 men were holding land directly from
the Parish Council, and often, by voluntary agreement with the
landowner, more than 4 acres could be secured. As an illustration
of what could be done in this direction the proceedings of the
Parish Council of Belbroughton, in Worcestershire, may be cited.
In 1895 it t0°k a field of 18 acres and let it to thirty out-of-work
nailers ; later it added 16, then 109, and then 34 more acres. Out
of these 177 acres 112 men obtained a livelihood as market
gardeners, and employed twenty-six horses to carry their produce
to Birmingham and to plough their fields. In 191 9 this Parish
Council controlled 500 acres.

The effects of allotments are as follows : —

(a) A gross increase of 25 per cent, in the produce over ordinary
farm cultivation.

(b) Allotments hinder the fall of wages, by increasing the
demand for labour and by serving as a reserve fund against
unemployment.

In contrast to the practical failure of the Small Holdings Act,
owing mainly to the reluctance of County Councils, composed as
they are of members predominantly of the landowning class, to
put the Act in force, the allotment movement may be claimed to
have effected valuable changes and to have helped to stay the
rural exodus. Further help was given by the State in the
market gardeners' compensation act of 1 895, which enabled
a tenant to claim compensation for improvements even if effected
without the landlord's consent.

In 1896 increased care in prevention of the spread of disease
was given by requiring all foreign animals to be slaughtered at the
port of landing. Best perhaps of all, the State has supplied in
increasing value technical education on agricultural matters.
Numerous institutes of all ranks, from the University to the
Cheese School, have been founded and aided by the State in all
parts of the country. Training for practical and scientific farming
and horticulture is now comparatively easy to get. The Board of
Agriculture by free leaflets disseminates the newest scientific

40 ECONOMIC DEVELOPMENT OF ENGLAND

discoveries, and the County Councils in agricultural areas
encourage technical classes for the worker. Four Universities
have departments of forestry. The gap in all this education is
the labourer's child. Little or nothing is done for him, and he
leaves the elementary school at the earliest possible moment, not
having acquired a love for books, and with no help given him to
acquire an understanding of his daily toil. Neither for his life-
work nor for his leisure has the school prepared him, and not
until the nation is ready to double and treble its expenditure on
rural schools will the gap be filled.

Rural Problems of the Eve of the War. — There were several
problems connected with rural life that awaited solution in 1914,
and most of them still remained unsolved in 1924.

(a) Could the nation afford to allow the land of England to pro-
duce less than its possible maximum ? Continental nations with
poorer soil produced far more per acre. What was the cause of our
inferiority, and what the remedy ? Some blamed our land system,
the semi-feudal power of the owner, the clumsy legal methods of
buying and selling land ; some pointed to the ignorance and inertia
of our farming class ; some believed the remedy lay in a restored
peasant proprietorship and smaller farms. The Socialists boldly
laid hands on the sacred ark and demanded the abolition of the
landowner and of farming for profit, with the intermediate steps
of nationalising the land and the imposition of a legal minimum
wage. The only thing that all were agreed on was the need for
reform, lest the rot that ate away the welfare of Italy 2,000 years
before should ruin us also.

(b) The menace latent in our growing inability to feed our
45,000,000 with the produce of our own soil was evident to many.
Against modern weapons of war no navy, however powerful, could
guarantee, with absolute certainty, our overseas supplies. There
seemed little hope of world peace ; when the storm broke, should
we survive ?

(c) The question of nationalising the land came more and more
to the fore. Many turned to history to show that in strict theory
the land, once the nation's, had been stolen bit by bit by gradual
repudiation of the terms under which it had been held. But
the English race is sceptical of theory, and undisturbed possession
for 100 years seems to most of us sufficient title. A more hopeful

AGRICULTURE 41

attack on vested interests was made in the name of expediency.
Since all investigators found that the private ownership of land
was the principal hindrance to changes that were becoming more
and more obviously necessary, would it not be well to get rid of
it ? Since, too, under the present system land often increased
in value for social reasons and without any outlay of labour and
capital on the part of the owner — e.g., in the suburbs of great
cities — would it not be more just for the nation to acquire this
increment and use it for the good of all ? These and other points
of controversy were well to the fore in 19 14.

(d) The importance of securing a decent standard of living for
all members of the community was becoming generally recognised,
and the agricultural worker's claim was of long standing. How
was such a standard to be secured ? The one proposal that had
not so far been tried was the legally established minimum wage.
This seemed to be the only possible line of advance, but it was
still bitterly opposed by all the disciples of laisser-faire . The
workers themselves wanted also shorter hours ; in all industries
the claim of the manual worker for more leisure was making
itself heard. " What is our life if, full of care, we have no time
to stand and stare ? " It was the inevitable reaction from nine-
teenth century speeding up. The eighteenth century man might
work fourteen hours a day, but he did not do it at top speed, nor
without intervals of talk and dawdle. If " work while you work "
was to be the rule, then the worker demanded also time to play
while he played. Thus, a decent minimum wage and a legal
maximum week were the points at issue in 1914.

(e) But wages and hours were not the only factors in a decent
life, above all to the women. Housing in 1914 was already more
than a burning question. Progressive men and women all over
the country were trying to force the Rural District Councils to
fulfil their obligations and to build cottages. It was possible then
to do it without loss to the ratepayers. The Councils, made up of
farmers, publicans and an occasional squire, did not want houses ;
they preferred tied cottages which they controlled and dismal
shanties to which even the meanest and dirtiest taproom was
superior. By persistence here and there something was done — a
dozen cottages built where fifty were needed perhaps ; but onthe
whole inertia triumphed. " Leave it to private enterprise ; don't

42 ECONOMIC DEVELOPMENT OF ENGLAND

risk an increase in the rates " ; the cry prevailed, but private
enterprise found more profitable fields for its capital. Kingsley's
description of rural homes in 1847 remained largely true in 19 14.
(/) Lastly, the tyranny of " sport " prevailed still in many
districts. In 1903 Kipling had called the pheasant the " master
of many a shire " ; it remained so. Valuable land, that could
have produced much if cultivated, was used merely for the
preservation of game, foxes still raided the farmer's henroost,
and ground game played havoc with garden and allotment. This
side of the question was receiving greater attention, since it was
becoming more and more a point of controversy how far the
name of " sport " could be attached at all to the modern slaughter
of what are really tame birds. In any case, there were many
who dared to challenge the claim of the amusements of the rich
to take precedence of the nation's food.

CHAPTER III

OUR CHIEF INDUSTRIES

The four great industries of modern England are cotton, wool,
coal and iron. Of these only wool has a long history of import-
ance. All through the Middle Ages it was the only occupation
that came anywhere near agriculture in extent and value. Up
to the end of the fourteenth century we were the great wool-
exporting nation, and Flemish looms built the prosperity of the
Low Countries on English raw wool. From the fifteenth century
the form of our wool trade changed from raw material to unfinished
cloth, but it remained the backbone of our foreign commerce.
Iron we produced for our own use, but we imported a good deal ;
coal was used for heating, but not for manufacture or transit,
and not in any case far from its source ; cotton was only used in
conjunction with linen or wool.

Among the striking results of the Industrial Revolution at the
end of the eighteenth century were the displacement of wool
by cotton and the rapid increase of the demand for iron and so
for coal. But for years agriculture remained the chief occupation
of the nation, in spite of enclosures and the drift to the towns.
It was not till the change that came after 1870, already referred
to,1 that the balance of occupations showed a decline in rural
pursuits. It was not only our new dependence on seaborne
food that produced the change ; there was also the fact that
a large part of the nation was rapidly raising its standard of living,
and consequently to many food ceased to be the chief item of
expenditure. While it is true that far too many of us do not
get enough to eat, it is also true that more of us are now able to
satisfy other needs than mere hunger. These two factors — sea-
borne food and a smaller proportional demand for food of all
kinds — have combined to produce a decrease in the percentage

1 See p. 23.
43

44 ECONOMIC DEVELOPMENT OF ENGLAND

of population engaged in food production, and an increase in
industrial production and in distribution. The table given below
shows that since 1870 there has been a rapid rise in the figures of
the commercial class and a smaller but still important rise in the
industrial. In the professional class there has been an increase
in the worlds of knowledge and amusement ; art, music, exhibi-
tions, games, literature, scientific work and teaching, all attract
and find a livelihood for an increasing section of the people, but
this has been balanced by a relative decline in the clerical and legal
professions. The relative positions of commerce and industry is
accounted for by the growing productive efficiency of machinery,
by which fewer men produce more goods, while this increased
quantity of goods demands more hands for distribution. Unfortu-
nately this does not account for all the increase ; the growing
number of middlemen in all trades is disquieting ; goods often
pass through several hands, each exacting a profit that is quite
unnecessary. Thousands of people exist who merely buy to
resell goods they never handle at all ; many of them are social
parasites performing no useful function. As industry is now
organised it is difficult to get started in productive work ; capital
and credit on a large scale are needed : it is comparatively easy
to cut into the distributing business by getting hold of some one
else's.

DISTP

IBUTION

OF OCCUPATIONS

, 1871-19H

1871

1881

1891

1901

1911

Professional

684,102

647,075

926,132

972,685

1,014,220

Percentage of

3

2'5

3'2

2'9

2-8

population .

Domestic

i,633,SI4

1,803,810

1,900,328

1,994,917

2,121,717

Percentage of

7-2

71

6-5

61

5'9

population .

Commercial

815,424

980,128

1,399,735

1,858,454

2,214,031

Percentage of

36

37

4-8

5*7

61

population .

Agriculture and

Fishing

1,657,138

1,383,184

1,336,045

i,i52,495

1,260,476

Percentage of

7'3

5-2

4-6

3-5

3'4

population.

Industrial .

5,137,725

6,373,367

7,336,344

8,350,176

9,468,138

Percentage of

22*2

24-5

267

257

26-2

population.

Total population.

22,712,266

25,974,439

29,002,325

32,527,843

36,070,492

OUR CHIEF INDUSTRIES 45

Cotton. — The industry that best illustrates this modern tendency
to the increase of middlemen is that of cotton. It offers also the
most striking example of minute specialisation. The cotton
industry is peculiarly the product of the Industrial Revolution.
It was not until the invention of spinning machinery that a yarn
could be woven strong enough to act as warp, and eighteenth
century cottons had linen warp. This newness gave it a great
advantage over wool or linen in the speed with which it could
adopt the new inventions. Unhampered by custom or law, the
early cotton -spinners, men of the greatest acuteness and energy,
often sprung from the craftsman class, drove ahead the new
manufacture — over the bodies of men, women and children, it is
true — to the position of premier industry in the first industrial
nation of the world. By 1874 all the processes had been provided
with machines ; little remained to do but perfect them. Spinning,
and its accessory arts of carding and roving, warp winding,
weaving, finishing, bleaching and printing, were by then all
performed by steam-driven machinery in large factories, and,
except for an increase in ring-spinning instead of mule-spinning,
there was no great mechanical development between 1874 and
1914.

The amount of machinery required for modern textile manu-
facture may be gauged by the following sketch of the processes
involved. As soon as the raw cotton is unpacked from the bales,
in which it arrives at the mill, it is passed through machines for
removing grit and dirt. These are glorified wire cages, which
whirl round and round and drive off the dirt by centrifugal force.
Then follows a machine which is devised to drive out such cotton
as is of too short staple for the kind of yarn required ; these
machines are capable of minute adjustments. The cotton then
goes through the modern equivalent of carding, and, as finally
prepared, comes from between rollers like a fine veil of white
mist, is directed to the apex of a triangle, and comes away in cream-
white snake-like strands about i inch in diameter. These strands
are then rolled three into one and given a slight twist by another
machine and wound on bobbins, which are carried off in trucks
to the spinning-room. There dozens of ring-spinning or mule-
spinning machines are ranged in rows and worked by overhead
belts. Mule-spinning gives a perfectly round thread ; ring-

46 ECONOMIC DEVELOPMENT OF ENGLAND

spinning flattens it slightly. From the bobbins another set of
machines wind the spun yarn into hanks, which go to the dyers or
bleachers if required, and on its return the yarn is wound off
again on to the bobbins. For the weaving of patterned cloths
these bobbins are placed on huge V-shaped frames and each
thread led off, pinned and passed through its proper tooth on a
machine for winding warp, and so is wrapped, each in its proper
place, on a large drum. These drums are carried off to a sizing-
room, where the warp is unwound, passed through a bath of size,
squeezed between rollers, dried by passing over hot cylinders,
and re- wound on drums. Then comes the only survival of the
hand-worker, when each new warp is attached thread by thread
to the end of an old one. The men and their attendant girls of
fourteen or fifteen years of age work at a speed incredible to the
onlooker ; but even here the machine is replacing them, for an
American invention can pick up the two ends and tie them at the
rate of 250 knots a minute. Finally, the warp is placed on the
loom and ^he cloth woven ; the modern loom is automatic and
stops at a broken thread.

Obviously the machinery required is large and expensive, and
throughout the textile areas great machine-making businesses
have arisen to supply the need. Rochdale and Keighley are
important centres of this industry, which helps to restore the
balance of labour required — as between men and women.

The difficulties of carrying on a complex and difficult technical
process have, however, brought about two very important things.
In the first place, each manufacturer has tended to confine his
attention to one or two processes, so that few businesses both
spin and weave, while the finishing trades of bleaching and dyeing
are entirely separate. But the change has gone further than this.
Most spinning firms spin only a few kinds of yarn ; they may
specialise in very fine or medium or coarse " counts," but only
in a few of one class. Each weaver also produces usually his
special type of cloth. What is more, spinners of the same class
of yarn and weavers of the same type of cloth tend to exist in
the same district. Thus spinning is mostly carried on in South
Lancashire and weaving in the North. Bolton is the centre for
the finer yarn, Oldham for the coarser. The finer and lighter
fabrics come from Preston and Chorley ; Blackburn, Darwen and

OUR CHIEF INDUSTRIES 47

Accrington produce shirtings and cheap goods for India and
China ; Nelson and Colne made goods woven from dyed yarn.
This attention to the technical side has prevented the manufacturer
being also the distributor, to such an extent that cotton has become
the paradise of the middleman.

Let us for a moment follow a bale of raw cotton in the twentieth
century from the shores of Carolina to its final destination in,
say, India or London. It arrives at Liverpool consigned to some
broker, who has bought it from the grower or the grower's agent
in America. This broker will not sell it directly to the spinner,
but to another broker, who has connection with several spinning
firms. Sometimes it passes two or three times in this way, but
always at least once from a broker who imports to a broker who
sells to the cotton-spinning public. This second broker knows
exactly the kind of cotton required by his various clients and
buys accordingly. Raw cotton is now so graded and marked
that it can be sold without examination, though a considerable
quantity is still sold by sample. When the spinner has turned
his raw cotton into yarn, he sells the yarn to another broker, quite
a different man, for no broker in raw cotton deals in yarn, or
vice versa. This broker sells to the weaver ; sometimes he buys
and sells outright ; sometimes he merely acts as agent. The
cotton market is mainly at Liverpool, the yarn market at Man-
chester. The weaver sells his product, most often " grey cloth,"
i.e., unbleached cotton cloth, toa" merchant " or a " grey-cloth
merchant." The word " merchant " in Manchester retains its
old meaning of a foreign trader, though " grey-cloth merchant "
may mean one who supplies the home market. The " merchant '
is also known as a " shipper." Each " merchant " has his own
specialised market, usually a very narrow one. He sends the grey
cloth to be bleached or dyed and finished to suit the requirements
of his market, and on its return he sends it to a packer to be packed
for export. Packing is a skilled trade, and heavy goods are com-
pressed under huge pressure to save cargo space. Probably, if
his market is in a distant country, the merchant keeps an agent
or agents there to whom the finished goods are consigned, carefully
stamped with his trade mark and carrying the prestige of his name.

Such is the ' organisation of the most minutely subdivided
industry at present existing. Its critics point to the great number

48 ECONOMIC DEVELOPMENT OF ENGLAND

of middlemen's profits entailed and to the facility with which
speculation can upset the markets, and maintain that such
specialisation must increase the risks due to a drop in any par-
ticular market. Those engaged in the industry, on the other
hand, hold that the middlemen's profits are balanced by the
savings effected by the thorough knowledge and consequent
economies possible in dealing with only one small process, that
no man can both produce and market with effect, and that attempts
to deal in several branches or several markets are a source of risk
through insufficient knowledge. As to speculation, when ignorant
it soon defeats itself, and when expert is a cause of stability rather
than uncertainty. Most of the gamblings in " futures " are of
the nature of " hedging " to cover undue risks.

Trusts and combines have appeared in the industry, and a
good deal of it is joint stock. The conspicuous trusts are in the
sewing-cotton branch, where Coats now dominate the entire
output, and in the finishing trades of bleaching and dyeing.

Another aspect of the industry of some interest is the number
of foreigners who have settled in Manchester to act as buying
agents for their own countries. Consequently, Manchester mer-
chants keep fewer representatives abroad than the nature of their
business might suggest ; Greece, Spain, and Germany come to
buy at their doors.

The chief problem facing the principal exporting industry of
England is that of getting its raw material. The great source
of supply is America, and she each year is using an increasing
proportion of her own product ; the time may come when she
will need it all. Egypt supplies a fine long-staple cotton, nearly
as good as the " Sea-Island " kind of Carolina, but for the coarser
yarns the shorter staple of the American mainland is our chie
supply. Indian cotton is coarse and not greatly used. Develop-
ments are planned in the Soudan between the two Niles, where
it is thought cotton can be grown on irrigated land, which has the
advantage of a possible control of the water supply. Cotton
requires much sun and plenty of water at the right time ; rain
has a way of coming at the wrong. Nigeria and Uganda are also
possible areas for a large cotton supply. Cotton seeds are now
crushed for oil, which is used as salad oil and for making margarine,
and the remnant is made into oil-cake for fodder.

OUR CHIEF INDUSTRIES 49

More than any other industry cotton is localised ; 76 per cent,
of the cotton operatives of Great Britain and Ireland and 96 per
cent, of those of England live in Lancashire and a strip of North
Cheshire. Their numbers were over half a million in 1901, and
ranged from 41,000 in Blackburn and 29,000 in Bolton and
Oldham, on through thirty-six towns to Clitheroe with 3,300.
More than half are women ; only at Nelson, Colne, and Roy ton
do the men workers slightly exceed the women. The whole
area is one of the most densely populated in Europe, and, one
must add, one of the dreariest. This dreary aspect is not essential
to the manufacture, as German industrial towns have proved, and
we may hope that the twentieth century will see Lancashire even
yet a garden city, once its dwellers desire to have it so.

Wool. — Much that has been said about the cotton industry
would also apply to wool, but the latter is neither so narrowly
localised nor so minutely subdivided. This is due partly to
its slow evolution out of a domestic industry, which cotton never
was, and partly to the scattered areas that supply its raw material.

The manufacture of woollen cloth is the oldest of English
industries ; in the early Middle Ages most people's clothes were
spun and woven by women in their own homes, often with wool
from their own sheep. The fleece was scoured, the wool sepa-
rated, carded and spun at home ; every woman was a spinster.
Hundreds of cottages had their looms ; all better-class housewives
could weave, and ladies of rank wove more beautifully, but not
less industriously, than others. Gradually as wealth increased
came the demand for cloths of special fineness or colour, and the
looms of Flemish gildsmen worked up English wool and returned
it as the finest cloth. Edward III. made a determined effort to
develop the craft of weaving in England, inviting over foreign
craftsmen to teach his subjects, and by the end of the fifteenth
century the main export of England was undyed cloth, not wool.
During the sixteenth century there was a fresh development ; an
influx of refugees from the Continent, wisely encouraged by the
Government, taught English weavers the finer mysteries of their
art, and English cloth began to rival the best from Continental
looms. Down to the time of the Industrial Revolution it remained
our premier industry. Its evolution from a domestic to a factory
industry was much slower than that of cotton — partly because it

E.D.E. D

5o ECONOMIC DEVELOPMENT OF ENGLAND

was hampered by restrictions, partly that it already existed
scattered over a large area, and took, therefore, longer to concen-
trate. Not till after 1840 was wool carding, combing and spinning
done entirely by machinery, and even in 1854 hand-looms were
still at work in considerable numbers. The woollen manufacture,
unlike the cotton, drew its raw material from English farms,
nearly all our coarse wool being so supplied, only fine, long wools
being imported from Silesia and Spain. It is since 1874 that the
enormous demand for overseas raw wool has come, though its
import was increasing during the previous forty years. Nowadays
the bulk of our raw wool comes from the Southern Hemisphere —
Australia, New Zealand, South America, and South Africa.
England still produces wool — in 191 2 as much as 180,000,000 lbs.,
all grown close to the manufacturing centres. This English
wool does not fetch the price of Australian, mainly because
English farmers, working on a smaller scale, cannot sort, classify
and guarantee their wool, as the Australian squatter does, and they
steadily refuse, by co-operation and businesslike partnerships,
to do by joint action what is impossible singlehanded. Where
such methods have been tried, English wool holds its own in
the London market — for London, though 200 miles from the
manufacturing district, is still the scene of the great wool sales,
though much is now sold and bought in Sydney and other
Australian ports. Science and climate have combined to produce
in the Australian merino the finest wool-bearing animal known,
and the businesslike methods of the Australian sheep-farmer,
backed by an enlightened Government, secure to the purchaser
at Sydney a certainty of choice that makes it worth while to keep
agents there. On an Australian sheep-run, where bands of
shearers, working with electric clipping-machines, can shear 100
sheep per day per man, the fleece is immediately separated into
four parts, according to its length and fineness. Great care is
taken to avoid dirt and bits of string and other foreign matter
getting in, and a station with a reputation for classification com-
mands a high price. Some big stations are beginning to scour their
own wool to save the freight on dirt and oil. England no longer
buys the bulk of Australian wool, for it is France and America
that demand the finest wools. English manufacture is concerned
mainly with the heavier and coarser woollens, and draws its

OUR CHIEF INDUSTRIES 51

supplies largely from South Africa and South America and from
home.

England has a considerable export trade in " tops," i.e., wool
prepared for spinning by combing. These were sent, up to 1874,
to Germany, Russia, Italy, and Belgium. Yarns are both exported
and imported, for Continental firms often make yarns different
from ours, but of use for our cloths. The cloth merchant both
exports and imports ; if the former, he often, as in the cotton
trade, buys cloth " in the grey " and has it dyed and finished to
suit his market. There are, therefore, middlemen in wool as in
cotton, but not quite so many and by no means so universally.
Many manufacturers deal direct with the wholesalers, without
an intermediate agent ; some even have a retail trade, or carry
it still further and sell their cloth made up into suits and
costumes.

As to specialisation in process, there is a difference between
the worsted and the woollen branches. Most woollen manu-
facturers undertake all the processes from raw wool to finished
cloth. Worsted is rarely spun and woven by the same firm.
The processes are much as they were in the Middle Ages, only
with appropriate machinery for each. Sorting, scouring, carding
and combing, oiling, spinning, sizing, placing the warp on the
loom, weaving, dyeing and finishing, all go on with many exten-
sions and variations. For our dyes we have had to go to Germany,
where scientific research has for years been devoted to their
development, and even nine years after 1914 English dyers are
still unable to find adequate substitutes.

As a centre of the woollen trade Bradford takes the place that
Manchester does in cotton, but it has more serious rivals, and the
whole industry lacks the concentration of the Lancashire area.
There still survive outlying areas, like Stroud in Gloucestershire
and Bradford-on-Avon in Wiltshire, making their own specialities.
There is even a little industrial town on Dartmoor that depends
for its existence on a mill making coarse woollen cloths. Kidder-
minster still makes carpets, though not " Kidderminsters." Within
the West Riding the tendency for towns to specialise shows
itself as in Lancashire, but has not gone so far. Bradford makes
11 tops " and dyes ; Huddersfield is noted for its fine cloths ;
Dewsbury and its neighbours for " shoddy." This last is a

d z

52 ECONOMIC DEVELOPMENT OF ENGLAND

cloth made from wool got from old cloth, tailors' clippings and
old clothes, which are torn to pieces, cleansed and re-spun.

Coal — Coal had been mined in England from early times and
used for heating, but the workings had mostly been shallow, and
often in outcrops only. The discovery in 1735 of a means of
using it for iron smelting gave a great impetus to the demand
for it, and deeper and more dangerous mines became common.
The difficulty of carrying off the water of these deep mines was
the immediate occasion for the invention of the steam-engine for
pumping, which, adapted to rotatory motion, became the basis
of a new era. Up to 1874 England supplied the bulk of the
world's coal ; after that date, though the demand for it continued
and increased, the United States rapidly overtook it and reached
the first place in world production. In 1905 the United States
produced 350 million tons, the United Kingdom 236 million,
Germany came third with 170 million, and France fourth with
35 million. In 1913, out of a total production in Great Britain
of 287 million tons, some 73 million were exported. Our chief
coalfields are in South Wales, the Midlands (South Lancashire,
Yorkshire, Nottinghamshire, Staffordshire and Flint), North-
umberland and Durham, the Forest of Dean, the Upper Bristol
Avon (Radstock), and lately in Kent.

The production of coal has always been a source of anxiety to
those who regard with any care the welfare of their fellows. In
the early nineteenth century the condition of miners and their
families was such as to be incredible, were it not so well authenti-
cated. Ignorant, brutal, pariahs to rich and poor alike, they
lived apart a life of horror. Not till after 1815 was it customary
to hold inquests on miners killed in the mines ; precautions
against accidents were almost non-existent and the mines almost
unventilated. The Report of a Commission in 1842 shocked the
nation into drastic legislation, and the work of women and of
children under ten was totally forbidden underground. Gradually
humanity won its slow triumphs, and a code of regulations was
formed that preserved the miner from the grossest of his dangers
and introduced some decency into his existence. The work of
Trade Unions did more, and things are far better than they were
in 1850. But the condition of the mining industry is still unsatis-
factory and its workers increasingly restless. In spite of develop-

OUR CHIEF INDUSTRIES 53

ments in coal-cutting machinery, run by compressed-air engines
or by electric motors, in mechanical transit underground, and
considerably increased legal protection for the workers, it remains
a very dangerous occupation and a badly organised industry.
This is largely due to the great variation in value of the coal and
the conditions of its working, together with great subdivision
of property. There are altogether some 3,000 collieries and
1,500 boards of directors. Coal seams are thin or thick, rich or
poor, and the return for a given expenditure of labour and capital
varies greatly. Wages in any district are determined by what
the poorest mine can bear ; the advantages of a rich seam mostly
go into the pockets of the royalty owners and the colliery com-
panies. Besides this, the old traditions of great profits make even
those colliery owners who can afford it slow to expend un-
remunerative capital on the welfare of the workers. Miner's
nystagmus, a terrible form of eye disease, is still more pre-
valent than it need be owing to refusal to instal electric light
in place of oil lamps. The housing in mining districts is the
worst in the kingdom ; thousands of houses have only two rooms,
often with seven or eight inmates including several adults. It
has been stated that houses condemned after the cholera epidemic
of 1840 as unfit for habitation are still occupied and even grossly
overcrowded. The accidents reported are still a scandal ; the
average death rate is over 1,000 a year, or nearly four a day, and
there are on an average 517 casualties per day. The law has
been strengthened to protect the men, but the number of the
Inspectorate is inadequate. The chief legislation has been : —
1 88 1. Act to facilitate the election of checkweighers,1 which
also gave power to the Home Secretary to investigate
the cause of any accident, and secured to relatives of a
man killed the right to attend the inquest.
1887. A great Consolidation Act, covering the Rules and Regu-
lations for the Control of Mines up to that date. It
specially strengthened the provision of periodical in-
spections of a mine by practical miners at the work-
men's expense.

1 Men appointed and paid by their fellows to check the weighing by the
management of the amount of coal hewn, on the basis of which weight the men
are paid.

54 ECONOMIC DEVELOPMENT OF ENGLAND

1894. An Act which forbad an employer to make it a condition
of employment that a certain man should not be elected
as checkweigher.

1896. Act controlling the kind of explosives to be used in
blasting.

1900. Act raising the minimum age of boys allowed under-
ground from twelve to thirteen.

1908. Act limiting the shift to eight hours below ground, but
allowing overtime of one hour on sixty days in the year.

191 1. Another Consolidating Coal Mines Regulation Act.

The chief problems that now face the mining industry are
these : —

(a) Shall the royalty owners be expropriated without com-
pensation ?

(b) How is the present wasteful division of ownership to be
remedied ? Much coal is wasted by the necessity of leaving walls
between the mines of different owners.

(c) How is the waste due to bad management to be avoided ?

(d) Is it possible to reduce the number and profits of the
middlemen ? There are at present 28,000 coal merchants.

(e) How can we obtain coal from pits that cannot be worked
at a profit, and yet whose coal is needed ?

The only answer would seem to be consolidation, but whether
in a gigantic coal trust or under some form of nationalisation is
hotly disputed. The miners since 1914 have put forward a
definite scheme of national ownership, combined with control of
the industry by joint committees of workers and consumers, by
which they hope to make bad pits pay for good ones, to equalise
wages in the different districts and to increase the total output.
At the same time they would make the possibility of decent
conditions of living for the miner a first charge on the industry.
So far this has been rejected by the Government, but it has
received the general approval of a majority of a Royal Com-
mission. But in 1 914 the miners were only at the beginning of
this campaign.

Iron. — Iron ore has been worked in Britain since the days of
the Romans. For centuries it was smelted in charcoal furnaces,
and the chief sources of supply were in Sussex, where the great
forests of the Weald were gradually depleted for its manufacture.

OUR CHIEF INDUSTRIES 55

As the trees disappeared and the ore became exhausted the
industry moved to the Forest of Dean, in Gloucestershire, and
then gradually north and east to the Midlands and westward to
South Wales. In 1735 the Darbys discovered a method of coking
coal so that it could replace wood-charcoal as fuel, and imme-
diately the manufacture increased, and at the same time gave the
impetus to coal mining already referred to. The last charcoal
furnace in Sussex was blown out in 1827. The new textile and
pumping machinery produced a great demand for iron in all its
forms, and blast furnaces soon turned the pleasant lanes of
Warwickshire and Staffordshire into a " black country." The
advent of railways after 1830 made further demands, and the
technical advance of the iron industry was rapid.

The chief advances made after Darby's invention were : —

The steam-engine was applied to drive the blast of the smelting
furnaces. This enabled coal to be used for getting the carbon
out of the iron and saved much labour and waste.

The Hot-blast, invented in 1828 by J. B. Nicolson, enormously
reduced the amount of fuel required in the furnace, and enabled
raw coal to be used instead of coke. In Scotland the production
of pig-iron trebled between 1830 and 1840 as a result.

In 1840 Heath made the first improvement in steel by adding
manganese to crucible steel and so making it easier to weld.
This made possible the use of British ore instead of kinds specially
imported.

In 1845 J. P. Budd used the waste gases of the furnaces to fire
stoves which heated the blast.

After 1850 came the opening up of the Cleveland district,
which had the triple advantage of an easily melted, though not
rich, ore, the proximity of Durham coke (the best in the world),
and of the sea for export.

From 1855 to 1870 there were very rapid developments, chiefly
in the direction of substituting steel for iron in large-scale erec-
tions. In 1856 henry Bessemer invented his method of making
steel on a large scale ; previously it could only be made in small
crucibles. By introducing air into fluid cast iron in large con-
tainers, called converters, he produced such heat as to drive out
all carbon, and could then add the correct calculated amount for
the kind of steel required. (Steel is iron containing a certain

56 ECONOMIC DEVELOPMENT OF ENGLAND

definite percentage of carbon, i.e., between 0-5 and 1*5.) The
result of this invention was the use of steel for such things as
boiler plates, railway lines, and then for ships. In 1867 Siemens
invented a method of making steel direct from pig-iron and ore,
and the process, known as the open-hearth process, is still in use.

The result of all these inventions was the rapid replacement of
iron by steel. A technical writer in 1864 expresses grave doubts
as to the success of steel ships, but a few years later they were
superseding iron ones.

Since 1875 there has only been one invention affecting funda-
mentally the manufacture of steel. Both the Bessemer and the
Siemens were acid processes, and so not suitable for use with
phosphoric ores. The great bulk of iron ore, however, con-
tains some phosphorus ; in many kinds there is a considerable
quantity. In 1878 two cousins, Sidney Gilchrist thomas, a
police-court clerk who studied metallurgy in his spare time,
and percy carlyle gilchrist, whose profession it was, suc-
ceeded in devising a means for dealing with phosphoric ores.
Their plan was to add quicklime during the process to combine
with the silicon and phosphorus, and to have a basic instead of an
acid lining to the converter. This lining is made of dolomite,
a magnesian limestone, ground to powder and mixed with dry
tar. This basic process was applied eventually to both the
Bessemer and the Siemens inventions, and large quantities of
basic steel of low carbon, called mild steel, are now produced
from phosphoric ores. The basic process produces more slag
than the acid process, and hence the converters are larger, being
now often 15 feet high or more. The Bessemer basic process
requires the presence of much phosphorus, by the oxidation of
which the temperature is kept up ; the Siemens basic process
can deal with less phosphoric iron, since the heat here is supplied
by gas ignition.

The two chief developments in modern times are on the lines
of elimination of waste and the application of machinery, especially
electric. The gas from the blast furnaces, which once escaped
into the air and was lost, is now used in several ways. It heats
the stoves through which the air blast passes to be heated before
entering the furnace, it generates power by means of gas-engines
and dynamos, melts steel in the steel foundry, and distils tar and

OUR CHIEF INDUSTRIES 57

ammonia. The tar makes oil gas and carbolates for disinfecting.
In 1890 no less than 5,000 tons of ammonium sulphate was
collected from the ironworks of Great Britain. For a long time
little use was made of the slag ; some of the harder kinds were
used for road metal and for making breakwaters and ballast for
railways. Slag- wool was manufactured for non-conducting, non-
inflammatory packing. But the great mass was thrown on to
waste heaps or carried out to sea. More recently it has been
made into cement or bricks or flagstones. The basic slag from
steel making has found another use. Being heavily laden with
phosphoric acid, it is an excellent fertiliser of the soil, if made
soluble. For this purpose it is ground as fine as flour and sold
to farmers to scatter on fields.

Perhaps the most unexpected thing about a large modern
steel-works is the amount of machinery in use. Sheds contain-
ing gas-engines and dynamos on a scale large enough to supply
power to a small town ; locomotives and railway trucks running
in every direction ; overhead cranes with long arms and fingers
picking up white-hot ingots and swinging them through space ;
ladles with tons of liquid steel passing to and fro on rails ; rolling
mills that roll out an ingot a square foot in section to a long bar
a mere inch or so thick, while huge scissors and saws cut it into
lengths as if it were wax ; machine-worked shovels that feed great
furnaces ; not to mention funicular railways lifting several tons
of coke and ore and limestone 100 feet in air to feed the great
blast furnaces, that roar out a 20-foot flame of white-hot gases as
the worker opens them to take in the new load. Hydraulic power,
steam and electricity are all enlisted in the service of steel making.

On the other hand, it is interesting to note that the making of
crucible steel for tools and cutlery goes on still in Sheffield by
processes little altered since the days of Huntsman.

Other modern experiments are in the direction of producing
steels having special properties by introducing varying quantities
of chromium, nickel, manganese, tungsten, molybdenum,
vanadium, etc. Steel has almost entirely replaced cast iron,
but wrought iron is still made, being unsurpassed for certain
purposes owing to its fibrous structure. It costs more to make
than mild steel. Further developments are certain to take place
as the demands of air travel increase in variety and quantity.

CHAPTER IV

ORGANISED LABOUR AND THE GROWTH OF CAPITALISM

It has been said that the world of 1874 was essentially a modern
world, as those who were adult before the Great War knew
modern life. But there were differences. The period round
1 874 may in a sense be described as the close of one era and the
birth of another ; before that date the predominant capitalism
had one form ; from that date it begins to assume another.
Before 1875 Trade Unionism was on sufferance ; after that date
it stood legally adult, a fully-forged weapon for the liberation of
the worker. Most of the technical advances in our industries
had been achieved — men began to turn their attention to problems
of further organisation. Lastly, England's long start as an
industrial nation was over. France had already made headway ;
Germany was about to enter the race ; the United States was soon
to challenge her in her own field of coal and iron, and to outdo
her both in them and in the new product, mineral oil.

The period before 1870 saw the final triumphs of the principle
of unhampered competition ; after that date there arose various
challenges to the system. In the first place, a new generation
was arising that wished to enjoy the results of its fathers' labours
rather than to pile riches on riches by continual strife. Increas-
ingly, both for capital and labour, it was recognised that
unrestricted competition brought neither " the greatest good to
the greatest number," nor even a secure success to the enter-
prising individual. On all sides arose complaints of " cut-
throat competition," of foreign " dumping " and of " blackleg "
labour. The results came in the early part of the twentieth
century with " Trusts " l on the one hand and the " closed
shop " 2 on the other ; both would have outraged the feelings

1 See p. 76.

a The name given to the ideal condition of an industry that employs none but
Trade Unionists. It has not so far been realised, except for single works.

58

ORGANISED LABOUR AND CAPITALISM 59

of the men of the 'fifties and 'sixties. Before 1870 individualism
was generally regarded as the only possible system ; State inter-
ference was deprecated and reduced to the minimum that philan-
thropy would tolerate : with the next forty years came a great
extension of State control. All things in 1870 must be provided,
and would be provided by private enterprise, working under the
law of supply and demand — this was the mid- Victorian creed ;
but as the century drew to a close municipalities took to providing
themselves with all kinds of services — trams, water, gas, electric
power, houses ; collective enterprise became common.

During the forty years of our period the total wealth of the
nation grew. Some suspected that with this increased wealth went
increasing inequality of distribution — that the rich were getting
richer and a large number of the poor benefiting not at all. As
the war cloud gathered over Europe the stage was being set for
a violent struggle between those who had too much and those who
had too little. The bursting of the storm postponed the battle,
but greatly embittered the combatants.

Trade Unionism is a product of the Industrial Revolution,
though societies of the early eighteenth century have been claimed
as such. The tradition of English industries had been a regulation
of work and wages, first by the gilds and then by the magistrates.
Both methods had fallen into disuse in many trades and districts,
but when the pressure of the new strongly competitive system
drove down wages the workers turned to the Government to
save them by the old control. Attempts to set the law in motion
on these lines failed, and finally resulted in 1:813 in the total repeal
of all Acts empowering magistrates to fix wages. Combinations
to better their conditions were constantly formed and extensive
strikes often carried on, but until 1824 all such societies came
under the ban of common law and were declared illegal. Conse-
quently Trade Unions before that date were ephemeral, weak,
and easily beaten. The workers were faced not merely with
common law, but even with deterrent Acts of Parliament, passed
in 1799 during the panic produced by the French Revolution and
known as the Combination Laws. Under them it was a criminal
offence for even a few workmen to make a concerted request for
a higher wage. They were repealed in 1824-5, Dut trie workers
were still greatly handicapped. After a sudden outburst of

60 ECONOMIC DEVELOPMENT OF ENGLAND

energy in 1832-4, they found themselves badly beaten by falling
trade and the difficulties of combination among men living on
or near the starvation line. The early leaders, fired by the
Utopian dreams of Robert Owen and the early Socialists, had
expected a new heaven on earth produced almost in a moment,
and had aroused expectations that could only lead to disappoint-
ment, so that, disgusted with the fruits of industrial agitations,
the bulk of the workers turned to Chartism and remedy by
Parliament. Such Trade Unions as survived into the 'forties
did not officially embrace Chartism, but most of the active mem-
bers were Chartists.

With the failure of Chartism in 1842, a new era begins. A fresh
set of leaders arose, who saw that the journey to economic freedom
for the worker must necessarily be long and that it was essential
to do one thing at a time. So they concentrated on working for
the removal of the chief legal and industrial disabilities. Above
all they aimed at establishing the moderation and reasonableness
of the workers' claims. They discouraged strikes, encouraged
education, employed every legal resource to resist oppression,
and created a force of full-time officials thoroughly experienced
in industrial conditions and possibilities. From 1850 a new type
of Trade Union appeared, the members of which were skilled
workers, and which, by a process of amalgamation, aimed at
enrolling all the men of the craft in the country. Such were
the Amalgamated Society of Engineers (1851) and the Amalgamated
Society of Carpenters (i860). They added to a strong trade
policy a number of Friendly Benefits, and all branches were
controlled by a powerful Central Executive. From i860 to 1871
the whole movement was controlled by a group of men, who have
been called a Junta , of whom William Allen, of the Engineers,
and Robert Applegarth, of the Carpenters, were the chief. They
were extremely cautious in industrial policy, but concentrated
all their force on political reform. Their great achievement
was the passing, in 1867, of the master and servant act, by
which the old injustice of making a breach of contract by
the employee a criminal act, while the master was only liable to
be mulcted in civil damages, was repealed. In 1871 the funds
of the Trade Unions were secured by law against attack ; but
while the trade union act definitely established them as legal

ORGANISED LABOUR AND CAPITALISM 61

bodies, the criminal law amendment act at the same time
made strikes impossible by making the most peaceful picketing
illegal. Four years later a great wave of Trade Unionism
throughout the country forced a Conservative Government to
repeal this Act, and two other Acts put the Trade Unions
beyond the reach of the common law of conspiracy. It was
this employers and workmen act of 1 875 that established
modern Trade Unionism. While the leaders of the great craft
Unions were thus laying the political foundations for future
work, the two great industrial Unions of the Miners and the
Cotton Operatives were achieving industrial victories. In i860
and 1872 mines regulation ACTS were passed, while the cotton
workers had won a great battle on piece-work rates, and in 1875
secured a 56^-hour week.

Thus by 1875 trie organised workers of the country were on
the crest of a wave of victory both political and industrial. Both
sides of the movement then tended to rest on their oars. The
great Trade Unions of skilled workers were faced with a bad drop
in national prosperity, and it seemed best to husband their resources
and wait till the tide flowed once more. The long struggle in
the political field had turned the minds of the national leaders
away from industrial action and had also induced in them a some-
what middle-class outlook and acceptance of current economic
faiths. Besides, industrial problems had a way of splitting the
ranks of the workers by sectional interests and so weakening their
force in the political field. The one point still to be won in
that field, and which alone interested the leaders of the Trade
Union Congress, was the question of employers' liability.
Since 1837 the worker injured in the course of his employment
suffered from a serious disability. A passenger in a railway
smash had a claim for compensation against the company ; an
employee, in all cases where the accident was due to a fellow-
workman, had none. A signalman's error might cost the company
thousands of pounds in compensation to the travellers ; not a
penny piece would go to the crippled guard or driver. In vain
did the Unions get Employers' Liability Bills introduced year
after year ; not till 1880 was the duty of a company in the matter
even partially recognised. Then the number of railway accidents
to employees fell from 1 in 75 to 1 in 195. But, by a judge's

62 ECONOMIC DEVELOPMENT OF ENGLAND

decision, employers and workmen could contract out by mutual
agreement, and the battle had to be fought again. Finally, in
1896, by the workmen's compensation act, compensation was
compulsory in all cases, whether due to the employer's fault or not.
But if the recognised leaders were failing to lead, there was
plenty of unrest among the rank and file. Throughout the
'eighties new ideas were pressing on the public on all sides.
While the leaders still clung to laisser-faire and the dismal science,
the rank and file were being permeated by Socialist ideas. In
1880 Henry George had published " Progress and Poverty," l
and the idea of rent as a cheating of the worker spread through the
land. This theory fell easily into line with the more properly
Socialist ideas of Karl Marx,2 which, after 1881, were eagerly
spread by the Socialist Party. For, whatever the value of such
theories, the facts were before the worker's eyes. Obviously
his chances of rising above a mere subsistence wage into master-
ship and money- making were yearly becoming less. Equally
surely the unskilled labourer was sinking in greater numbers
even below the line of that subsistence. Only the disciples of
Marx offered him any reasonable explanation of these facts ; they
alone indicated a path out of the morass. According to them,
industry managed for private profit necessarily entailed these
evils ; industry organised for public needs could alone abolish
them. So said Hyndman and Morris and others, and those who
believed them increased in numbers. The facts, too, were
increasingly shocking as they became known. In 1886 Charles
Booth, a great merchant and shipowner, started a statistical
inquiry, the disclosures of which horrified the nation. Instead
of refuting the allegations of the Socialist and the " agitator " as
to the misery of the less skilled workers, it proved them true.
" In the wealthiest and most productive city in the world, Charles
Booth, after an exhaustive census, was driven to the conclusion
that a million and a quarter persons fell habitually below his
' poverty line.' Thirty- two per cent, of the whole population
of London were found to be living in a state of chronic poverty
. . . incompatible with physical health and industrial efficiency." 3

1 See p. 168.

2 See p. 162.

3 Webb, " History of Trade Unionism," p. 381.

ORGANISED LABOUR AND CAPITALISM 63

In 1888 the Committee on Sweating proved conclusively that
neither Trade Unions nor a democratic franchise, nor Free Trade,
had solved the industrial problem. The worker was still at the
mercy of commercial gamblers and the slum landlord. Since
neither political power nor organised union availed, the workmen
turned increasingly towards Socialism. In 1886 a fruitless
prosecution of the leaders — Hyndman, Burns, Champion, and
Williams — for sedition gave advertisement to the movement and
in 1887 an attempt by the police to prohibit meetings led to a riot
in Trafalgar Square and the imprisonment of John Burns and
Cunninghame Graham.

But Socialism was not only capturing the unskilled labourer,
for whom " scientific unionism " did so little — it lured also the
younger men within the skilled Unions. In the Trade Union
Congress itself, as early as 1879, Adam Weiler, a friend of Marx,
had moved a resolution in favour of Land Nationalisation, and in
1888 he carried it in the teeth of the Executive. He also led a
movement for an eight-hour day. Again, in spite of the leaders'
non-progressive attitude over the International Congress of
Workers, they were forced to call one in London in 1888, and a
majority of the delegates chosen held Socialist views. Among
them were John Burns, Tom Mann, Keir Hardie, and Mrs.
Besant. But for a foolish personal attack on the old leaders,
which rallied to these the sympathies of many, the Trade Union
Congress would probably have renewed its life with Socialist
fire. As it was, the fresh impetus came from outside.

In July, 1888, the treatment of girls in the match trade roused
the indignation of Mrs. Besant, and a fiery article by her inspired
the girls to revolt. With no funds and no organisation, 672 of
them came out on strike, but public opinion was excited by
strenuous effort ; £400 was subscribed, and after a fortnight the
employers were shamed by public obloquy into making some
concessions. This was a new thing — the girls had won, not by
their strength, but by their weakness ; if public sympathy could
be gained, there was hope for the most oppressed. At the moment
Burns, Mann, Tillett and William Thorne were organising the
gasworkers, and in August, 1889, these suddenly demanded a
reduction of hours from twelve to eight. The directors gave way
and conceded the demand without a struggle. The gain has

64 ECONOMIC DEVELOPMENT OF ENGLAND

remained to this day, with the exception of the South Metro-
politan Gas Company, who a few months later forced their
workers back to the twelve-hour shift, and by bribing them with
a profit-sharing scheme broke up the Union.

Almost at the same moment as the Gasworkers, the Dock
Labourers broke out in a demand for 6d. an hour, the abolition of
sub-contract and piece-work, extra pay for overtime, and a
minimum spell of four hours. In three days 10,000 labourers left
work, the powerful Unions of the Stevedores (more skilled work-
men) joined, and for four weeks the traffic of the world's biggest
port ceased. Public sympathy was roused and a subscription
of £48,736 gave Burns the funds, not only for strike pay to the
Unionists, but to the loafers who might have replaced them.
Such pressure was too much for the dock directors, and the men's
demands were almost entirely conceded. Australian workers had
contributed £30,000.

The immediate result of these three strikes was the enrolment
of large numbers of unskilled -workers in Unions, while the
ranks of already organised labour increased by 200,000. The
triumph of the new movement came in 1890, when the Trade
Union Congress supported the Eight Hours Bill and passed sixty
other resolutions, of which forty-five were Socialist in tendency
and called for State interference.

Meanwhile, the form of English Socialism was changing.
The Fabian Society was founded in 1883, and the leaders were
leaving Marx and advocating constitutional collectivism. A
determined effort was made to permeate local government bodies
and to advocate municipal enterprises for the use of the people.
There is a marked contrast between the old Socialism of 1833-4
and the new. Then the path of constitutional reform was blocked
by an oligarchic Government, both in the towns and in Parlia-
ment. In 1890 it was possible to use a new democratic organisa-
tion for the establishment of Socialist ideas ; political pressure
took the place of Utopian schemes.

The startling success of 1890 could hardly be permanent.
By 1892 trade was declining, and many of the gains of the good
years had to be given up. But the permanent results were not
small. They lay chiefly in the new spirit that had arisen. Trade
Unionism no longer confined itself to a selfish exclusiveness.

ORGANISED LABOUR AND CAPITALISM 65

The aristocratic Unions of skilled workers either threw open their
doors to the unskilled of their industry or busied themselves in
helping them to organise separately. Specially striking was the
change towards women. Their Unions were no longer snubbed,
but welcomed to Congress, and in some cases even the men's
Unions were thrown open to them. The increased feeling of
solidarity led to better international relations — the horizon was
widening.

Let us for a moment survey the scene in 1892. Among the
skilled workers the Cotton Spinners were enrolled in Unions
almost to a man, as were the Boilermakers in the iron shipbuilding
ports. Eighty per cent, of the Miners were organised, and
among the Dublin Coopers, the Midland Flint-glass Makers, the
Nottingham Lace Makers and the Yorkshire Glass-bottle Workers
non-unionism had ceased to be. While this was the state of
affairs at one end, at the other organisation was at its earliest
beginnings. Labourers of all kinds were almost untouched ; out
of 200,000 Railway Workers only 48,000 were in Unions, these
mostly guards and drivers. Tramway and Omnibus Workers,
Warehousemen and Porters were still without defence. But
from 1892 to 1 9 10 there was steady growth, and after 1910 a
great increase, which extended to new trades and to women.

Since 1875 there had been considerable change in the relative
predominance of the industries. This was due to the growth
of the new Unions rather than to the decline of the old. The
Cotton Operatives became absorbed in the technicalities of their
own trade and took less interest in general labour questions. In
1893 they secured, after a twenty weeks' strike, the Brooklands
Agreement regulating their pay, and in 1908 a fresh one advan-
tageous to the operatives. They are a powerful Union and one
very valuable to the general movement, because they have success-
fully stood for equal piece rates to men and women, and a standard
wage rate not to be lowered by any excuse of inferior workers or
machines. They also desire the greatest improvement in
machinery provided their standard of life is not thereby depressed.
The Building Trades, once foremost in the Trade Union world,
have lost that position, partly owing to decline in the numbers
engaged in the trade (actually less in 191 1 than in 1901), partly
from sectional disputes. The latter cause has held back the

E.D.E. B

66 ECONOMIC DEVELOPMENT OF ENGLAND

Engineering and Metal Unions, while the Boilermakers and Ship-
wrights by amalgamation and the adoption of a uniform national
policy have increased in numbers and strength. The Steel
Smelters, established in 1886 and most efficiently led, have gone
steadily forward.

The older Unions have been replaced in the front ranks by the
rapidly rising Miners and Railwaymen, who, with the Transport
Workers, could, if they would, dominate the Labour movement.
To them must be added the Unions of General Workers, whose
progress since 1890 has been remarkable, so that in 1920 they
formed 30 per cent, of the whole Trade Union membership, and
were contributing notable leaders to Labour. The women
workers, too, of whom 100,000 were organised in 1890, had
doubled their numbers by 1907. The National Insurance Act,

191 1, by allowing Trade Unions to administer the insurance
funds, gave an impetus to the formation of new and the enlarge-
ment of old ones — e.g., the Workers' Union between 191 1 and
1913 rose from 5,000 to 91,000.

Other tendencies of the time have been the growth of
" industrial federation," whereby the policy of the whole industry
can be unified and controlled, and the increase of Unions among
the brain workers. An example of the first was the National
Transport Federation, which in 191 1 won the great Dockers'
Strike, though it proved not strong enough to prevent the em-
ployers breaking their agreement the following year. In 19 14
the Triple Industrial Alliance of Miners, Railwaymen and Trans-
port Workers was formed — a failure eventually, but a significant
beginning. Among the workers by brain we may note the
Association of Shop Assistants, which developed rapidly after

191 2, and the Railway Clerks, established 1897, who in 1914 num-
bered 30,000 (it includes Inspectors and Stationmasters). There
is a Bank Officers' Guild and a Guild of Law Court Officials.
The National Union of Teachers, established 1890, has over
100,000 members, and even the professional organisations of
Secondary and University Teachers have been more and more
forced into the Trade Union policy of maintaining a standard of
life. Societies with purely Trade Union aims have arisen among
doctors, actors, and journalists. Most numerous of all are the
Unions of the employees of the national and local Governments,

ORGANISED LABOUR AND CAPITALISM 67

though police and prison officials are, as yet, denied the right to
join a Trade Union.

Something must be told of the story of the Miners and the
Railwaymen, though more than an outline is impossible. During
the 'eighties there was a movement among the numerous district
associations of miners to federate, and in 1888 the Miners'
Federation of Great Britain was formed. It was small in numbers,
but possessed of great driving force. In 1893 tnev won a prac-
tical recognition of a minimum wage, and in 1908, when the
Northumberland and Durham Union came in and the Federation
rose to 600,000 members, they carried an Eight Hours Bill and
in 191 1 improvements in Mine Regulation. The great strike of
1912, led by Robert Smillie, of nearly a million miners lasted over
a month and was closed by a Government compromise. The
point at issue was the inequality of piece-work payments due to
the varying ease or difficulty of the hewer's work, according to
to the sort of place he had to work in. The miners wanted the
assurance of a daily minimum wage, however bad the place was,
and consequently however little coal was won. The Govern-
ment passed an Act giving district, not national, minima, these
to be decided by district committees of owners and workmen.
It pleased neither party, but the Federation agreed to give it a
trial, and found that something had been gained. The claim of
the Miners' Federation is for a unifying of the industry, so that rich
mines pay for poor ones, and that the miner's wage shall be based
not on what the poorest mine can afford, which plan gives an undue
profit to the rich mines, but on what the industry as a whole can
provide. The owners still refuse to deal with the Federation on
any national basis, so the Miners demand that the State shall
own the mines as a single unit. The point is still at issue.

The Railwaymen 's story holds points of wider and more
general interest, for it was they who bore the brunt of the Taff
Vale Decision and the Osborne Judgment. The growth of unionism
among the railway employees was slow. No lasting Trade
Union was established till 1871, and in 1892 not one in seven
of the men were in any Union at all. In 1890 the Amalgamated
Society of Railway Servants tried to get up a campaign for shorter
hours, without much effect, though a Select Committee of the
House of Commons in 1891-2 showed up the scandal and the

E 2

68 ECONOMIC DEVELOPMENT OF ENGLAND

Board of Trade was given powers to remedy it, of which it made
no use. Nine years later they did inquire how often men worked
for more than twelve hours at a stretch (sixteen was not unknown).
The Railway Directors denied the men's right to combine, and in
1896 the L. & N. W. R. tried to dismiss men who had joined the
Union. This gave an impetus to the Amalgamated Society, and
a simultaneous demand was made on all the Companies for
improvements for all grades of workers. The men asked for a
ten-hour day, overtime pay, and an increase in wages of 2s. a week.
The Directors of all the Companies except the N. E. R. refused
even to consider the request. It took nearly ten years of steady
organising work before they got a hearing.

Meanwhile a spasmodic strike on the Taff Vale Railway in
South Wales had created a crisis. The Society endorsed the
strike and the Railway Company sued it for loss caused by the
alleged unlawful acts of its officers in picketing. To the utter
amazement of all concerned, and apparently in direct contradiction
of the Trade Union Acts of 1871-6, the judges in 1902 declared
the Union responsible as if it were a corporate body. This
decision cost the Railwaymen £23,000 and the South Wales
Miners £50,000, and practically made all strikes impossible.
It is noteworthy that no English employers took advantage of
the decision ; that the Welsh did so may go some way to account
for the present bitterness in Welsh labour disputes. Four years'
agitation was necessary to secure, by the trade disputes
act of 1906, the return to the position of 1876. Actually the
workers secured more, and Trade Unions now occupy a privileged
position of immunity.

In 1907 the Railwaymen took up their demands of 1896, and the
Companies steadily refused to recognise the Union. A national
strike was imminent when the Government interfered and per-
suaded both sides to accept an elaborate scheme of Conciliation
Boards. Though the Boards proved far from satisfactory, this
did represent a move forward for the Union. The Companies
were forced to recognise and deal with it, in practice if not in
theory. The men set to work to use the Boards to improve their
position, and truly there was need. For a statistical inquiry
showed that 38 per cent, of the men received 20s. a week or under,
and 49-8 per cent, between 215. and 305., while the hours were

ORGANISED LABOUR AND CAPITALISM 69

atrocious. Progress was very slow ; the Companies developed
every kind of obstructionist tactics, and even evasion. Meanwhile
the Union's energies were being largely taken up by the Osborne
Case,1 and not till 191 1 was it free to make a strong stand for
better conditions. A strike was declared, 200,000 men stopped
work, and the Government replied by an overwhelming display
of force. The men held out, and at last the Cabinet forced the
Companies to let their managers meet the men's representatives
and terms were made — viz., reinstatement of all strikers, immediate
consideration of all grievances by the Conciliation Boards, and a
Royal Commission to inquire into them. In 1912 the threat of
another strike forced the Companies to agree to modifications in
the Conciliation Boards.

In 191 3 the four principal Unions of manual railway workers
amalgamated as the National Union of Railwaymen. This
" New Model " aims at including all the workers in the industry.
It has an elaborate constitution on district bases and vests a great
deal of power in the Central Executive. In 1914 they began to
demand Nationalisation of the Railways, together with control
by the workers.

The osborne judgment, referred to above, calls for a
little more explanation. In 1908 Osborne, a member of the
Amalgamated Society of Railway Servants, financed by interested
parties, disputed at law the right of the Society to use any of its
funds for political purposes ; the action was carried through to
the House of Lords and Osborne won. The decision (1909) of
a majority of the Law Lords made it illegal for a Trade Union,
even by unanimous desire of all its members, to devote any of its
money to political purposes. Further still, they declared, the
Union could not legally do anything that was not specifically
mentioned in the Act of 1876. This cut out all educational work,
all participation in municipal administration, all association for
common purposes, such as Trades Councils ; and even the Trade
Union Congress became illegal. The Unions were thrown back
on pure collective bargaining and the strike. We may note that
Lord James of Hereford, who had had a hand in passing the
Act of 1876, dissented from this part of the judgment. It took
four years to get this decision set aside by Parliament, though the

Sec below.

70 ECONOMIC DEVELOPMENT OF ENGLAND

discontent was so great that the Government was forced in 191 1
to bring in a Bill for payment of Members of Parliament to the
extent of £400 a year, to relieve themselves of the charge that our
democracy was a myth, since working men could not enter
Parliament now the Trade Unions were prevented from paying
them a salary. In 191 3 a Trade Union Act was passed authorising
a majority of the members to include in their objects any lawful
purpose whatever and to spend money on it. A clause enacted
that payments for a political purpose must be made out of a special
political fund, and any member could claim exemption from
payment of that special part of his subscription. This clause
also covers money spent on supporting a newspaper if its object
is political.

trades councils have increased since 1890, and their local
influence is considerable. Their political work is also growing.
They form a link between the Labour Party and the Co-
operatives.

The trade union congress has hardly advanced with
the times. In 1894 the Parliamentary Committee revised the
standing orders in the direction of narrowness, excluded the
Trades Councils, made obligatory the " vote by card," and
expelled all members except salaried officials or men actually
working at their craft. Politically the Labour Party has replaced
it ; industrially it does little.

the labour party. — This is an outcome of Trade Unionism,
and so fitly comes in here. As early as 1887 Keir Hardie
urged the formation of a separate political party distinct
from the Liberals, but he made no impression on the Trade
Union Congress. Hardie himself fought Mid- Lanark in that
year as an Independent and polled 619 votes. In 1892 he was
returned for West Ham, the first independent Labour Member,
though fourteen other working men sat, chiefly as Liberals.
In 1893 Hardie founded the Independent Labour Party, which
in 1895 put up twenty-eight candidates, all unsuccessful. In
1899 the rank and file of the Trade Union Congress forced the
Parliamentary Committee to appoint a Committee jointly with the
Independent Labour Party, the Fabian Society, and the Social
Democratic Federation to draw up a scheme for increasing the
number of Labour M.P.'s. The Committee formed a Labour

ORGANISED LABOUR AND CAPITALISM 71

Representation Committee, of which Ramsay MacDonald was
secretary. By 1904 it had returned three members to the House.
In the General Election of 1906 fifty Labour Candidates took the
field and twenty-nine were successful ; these promptly formed a
Labour Party. By 191 3 it had a membership of nearly two
millions ; the miner M.P.'s had left the Liberals and joined it in
1910.

The Evolution of Capitalism, — For a few centuries after the
break up of the Roman Empire the capitalist almost vanished
from Northern Europe. In England he may be said not to have
reappeared till the fourteenth century. In that century we find
merchants selling from their own looms as many as 1,000 cloths
a year, obviously not entirely the work of their own hands. We
also find English merchants financing Edward III. in his French
wars, after his repudiation of his debts to the Florentine Bardi
had put an end to his Continental borrowings. In the fifteenth
century the number of rich men setting others to work, though
still small, was increasing. Richard Whittington was not a myth,
whatever may be said of his cat, and William Canynge, merchant
of Bristol, entertained Edward IV. in more than regal style.
These men, however, were excrescences on the mediaeval system
and quite as incompatible with any effective gild system as they
were with a truly feudal one. But the sixteenth century was
different ; it was an age of brilliant individuals, an age when the
horizon of the world lifted and offered unlimited possibilities to
the adventurous. The increase of capitalists was rapid. They
are most evident in history among merchants, but they were quite
as numerous in industry, especially in the great wool manufacture ;
the Lavenhams of Suffolk could marry into the peerage. The
peerage itself was recruited from the city by Tudor sovereigns,
who, indeed, were themselves by no means free from bourgeois
blood. The great merchant companies of the days of Elizabeth
and James were groups of capitalists trading under very strict
regulations and aiming at holding a monopoly of their own par-
ticular trade. Throughout the seventeenth and eighteenth
centuries the system grew slowly, but could never be dominant
so long as the bulk of the nation were landowners and the industries
simply hand industries. In the towns the capitalist oligarchies
obtained control ; in the countryside a strong landowning

72 ECONOMIC DEVELOPMENT OF ENGLAND

aristocracy and a sturdy peasantry successfully withstood
them.

With the enclosures and the resulting depopulation of the rural
areas, synchronising with the change to machine and consequently
factory industry, the power of the capitalist grew rapidly. In
the first place, it was easy in those early days to become a capitalist ;
most of the early makers of fortunes were men sprung from the
ranks of the manual workers. They could begin with one or two
spinning- frames turned by water in a ramshackle shed, and,
provided they were prepared to live hardly and to spare neither
themselves nor the wretched children they exploited, could create
large manufacturing businesses in a few years. By 1840 the
balance of power had shifted from the land to trade and industry,
and as between the two last was tending to dip in favour of the
latter. Manchester threatened to dominate London.

The businesses of the early nineteenth century were small,
usually run by one man who was both capitalist and entrepreneur.
He supplied capital and brains as well as unlimited hard work.
Joint-stock companies with idle shareholders were almost un-
known, and indeed, until the passing of the Limited Liability Act
in 1855, were too risky for average people. This accounts for the
very strong feeling of the time, not yet entirely disposed of, that
the capitalist was the keystone of the whole structure, and as such
it was necessary to ensure him ample reward. After 1850 the
size of businesses grew rapidly ; between the years 1856 and
1885, while the number of factories did not rise 20 per cent., their
size rose 50 per cent, and the total output doubled.

With the increasing complexity of machinery came also a shift
in the proportion of capital required to be locked up in machinery
compared to that required for current expenses, especially labour.
This had a social effect, for where initial expense in plant is great
there is no hope for the small capitalist, still less for the thrifty
manual worker. The ease with which large capital could be raised
for joint-stock enterprises and their comparative safety after
1855 made these eventually the typical association, and after
1870 we find even businesses run by individuals, or small groups,
increasingly incorporating themselves as Limited Liability
Companies. This has brought about a change in the relationship
of employers and employed. There is less human contact, less

ORGANISED LABOUR AND CAPITALISM 73

play for human feeling, both for good and evil. Large joint-stock
businesses are run by salaried officials, themselves only the
servants of an abstraction — the interest of the shareholders.

But the great outstanding feature of modern times is the
tendency of almost all business organisations to increase in size.
This tendency is stronger in some businesses than others, and we
may spend a few minutes looking at the factors that influence
the result. The chief are : —

(a) There is a saving in buying raw materials in large quantities
and in marketing the manufactured article in bulk.

(b) The best modern machinery only pays if used on a large
scale.

(c) There is economy in performing minor subsidiary processes
within the same walls.

(d) Up to a certain point there is a saving in management
expenses.

(e) There is economy of space, and consequently of rent.

(/) The profitable utilisation of waste is only possible on a
large scale.

(g) A large-scale business gives greater opportunity for experi-
ment, and, since even a small economy in a process may mean
a large saving when multiplied by the figure of a large output,
there is greater inducement to experiment in this direction.

(h) There may be economy in advertising and travelling
agents.

(1) Large businesses have more power to obtain the sole use of
patents than small ones.

(j) Large firms can often depress wages when they become the
sole or even the largest employer of labour in the district.

(k) Large concerns can secure better credit facilities.

There are, however, cases where small businesses have the
advantage, such as those —

(a) Where the raw material is irregular and troublesome to
handle, or where it is costly and requires careful handling— e.g.,
jewel-setting, first-class dressmaking, and other luxury trades.
In agriculture, where soil and climate vary, personal skill still
plays a big part, and the limit of effective size is soon reached in
Europe.

(jS) Where the element of art and special craft-skill is great—

74 ECONOMIC DEVELOPMENT OF ENGLAND

e.g., the best kind of photography, clock-making, cabinet-making,
saddlery, or the minor metal trades.

(y) Repairing work is often done best by small jobbing men —
e.g., builders, plumbers, carpenters.

It is fairly clear that in any country and under given conditions
there is a maximum size to which each class of business tends to
grow if left to itself in a competitive system. Legal control or a
monopoly will, of course, alter this size. In determining for any
one business where this limit lies the chief factor is the limit of
administrative economy.

This question of enlarging the unit of industry has been greatly
affected by the rapid growth of transport facilities, which has
extended markets. A market is an area within which a number
of businesses compete. In the Middle Ages, except for luxuries
and the one great export of wool, such markets were local and
confined to a very small area. Steam transport not only extended
them in distance, but also in time, since durability is a determining
factor. An example of this is found in the fruit trade of Australia
and the Cape, which now finds a market in Europe, and has grown
with the demand of the market thus opened to it by quick transit.
This extension of market, sometimes to world limits, has greatly
increased competition, often, of course, in a wasteful way, and
competition of the keenest kind can only be sustained by businesses
with large resources. When all the little firms have retired from
the battle hopeless, several big ones will be left, each struggling
to best the other by cutting profits. At last the margin of profit
becomes so narrow and the danger so great that some sort of
arrangement is inevitable, and hence arise trusts and com-
bines and cartels and all the varying forms of the modern
attempt to get away from competition to a monopolistic control.
In England this movement began a little before 1890, though as
early as 1877 we find six Scottish whisky firms combining to
maintain prices, and in 1884 a fixing of freights by agreement
between the several firms in the China shipping trade, together
with a system of rebates to merchants who used only single or
allied firms for their goods. When the Mogul Line broke away
and resumed competition, rates fell from 60s. to 25s. a ton. In
1890 the Birmingham Alliance was formed among the makers of
iron bedsteads and the smaller metal trades. The members

ORGANISED LABOUR AND CAPITALISM 75

adopted a fixed price list at which all agreed to sell. They came
to terms with the Trade Unions and employed only Union
labour. They got rid of rivals by underselling them wherever
their market was, till these either fell out of the trade or joined
the Alliance. They, too, had a system of rebates to customers.
The Alliance lasted ten years, but broke eventually, owing to
disloyal members and to outside competition which they failed to
remove.

The chief forms of these combinations are to be found in the
three great industrial nations, cartels in Germany, pools
and trusts in America, and combines in England. Of the
first the best example is that of the coal trade. The cartel is a
company formed to sell the products of several firms, and its
shares are held by these firms. The cartel determines the price
at which the coal shall be bought from the mineowners and also
that at which it shall be sold in different markets, according as
there is competition or not. The cartel arranges what proportion
of the total production each mining firm shall contribute. The
object is to limit production and keep prices high. Where there
is no competition, the cartel will raise prices ; where competition
is strong, the price is lowered, even to the extent of making no
profit. In practice it has not been found possible to keep produc-
tion down to the limit of the home market with high prices, so
the extra product is turned to an export trade in which competition
lowers the profits considerably, sometimes to a negative value.
But as far as the home market is concerned the cartel aims at a
limited product with high profit. Before 1900 there were 345
cartels in Germany.

The pool is an agreement between manufacturers to keep up
prices by limiting production, and in this it resembles the cartel,
but its method is different. An expert accountant is employed :
each manufacturer in the pool informs him as to the average
quantity he produces ; from this the accountant calculates what
fraction of the entire trade of the pool each contributes, and
henceforth the manufacture is confined to this fraction. If his
production exceeds his assigned quantity, he pays into the pool
an agreed percentage of his excess ; if he has produced less than
his assignment, he draws from the pool an agreed percentage of
his deficit. The pool usually fixes the selling price for all

76 ECONOMIC DEVELOPMENT OF ENGLAND

members. By this means competition is avoided and the industry
tends to become stereotyped.

trusts, whose home is America, may be defined as " com-
binations of capital which are operated as business units and
which exercise a substantial control of the market."1 They are
closer combinations than cartels, and may take several forms : —

(a) When all or most of the stock of combining businesses is
transferred to trustees with full control — e.g., the Standard Oil
Trust.

(b) When the trust purchases a controlling share in other
companies — e.g., the Northern Securities Company, formed to
buy up a controlling share of the stock of four great railway
companies and run them as one.

(c) When several businesses completely amalgamate — e.g., two
or more great shipping lines, such as the Union and Castle.

(d) When a company is formed for the sole purpose of buying
up completely several businesses in the same or allied trades —
e.g., The United States Steel Corporation.

It is generally considered that if a trust controls 80 per cent,
of the output of an industry it controls the market.

British combines are most often amalgamations, though
pools are also known. The earliest, having a definite monopoly
as their object, were the Salt Union (1888) and the United Alkali
Company (1891). They failed owing to foreign competition.
Messrs. Coats began amalgamating in 1890, and now control
practically the world market in sewing-cotton. There are two
ways in which these combinations or consolidations are arranged —
they may be vertical or horizontal. A horizontal combination
consists of several businesses of the same kind, and usually at
the same stage of manufacture, so that the market of the par-
ticular article is controlled — e.g., tobacco or iron bedsteads. But
the same process can go on vertically, as when a railroad buys
up steel works or coal mines to supply it with its material, or a
newspaper amalgamation owns paper mills, or a brewery combine
buys up all the publichouses in the district. The extent of such
combinations in Britain is not easily known. " What is notable
among British consolidations and associations is not their rarity

1 J. A. Hobson, " The Evolution of Capital," p. 186.

ORGANISED LABOUR AND CAPITALISM 77

or weakness so much as their unobtrusiveness." x The cartel
has not appeared in England, but the pool exists, as does the com-
plete trust amalgamation. These appear in iron, steel, mining,
chemical, soap and cotton industries ; in railways, theatres and
newspapers. The most " trusted " of all British industries is
brewing, based on licences which give local monopolies. Other
forms of the same thing are " honourable understandings " as
to prices, output and division of business, common among retail
dealers in a locality— e.g., coal merchants and milkmen. Associa-
tions are also formed for controlling contract tenders, whereby
the profit is shared and the lowest tender kept high. The growth
of multiple shops marks the same movement, and we shall see
later 2 how it dominates the world of shipping and finance.
The Report of. the Committee on Trusts gives some interesting
facts as to their prevalence in Great Britain. It compiles a list,
not complete, of thirty-five combinations in the iron and steel
industry, and states that in the matter of iron castings used in
building houses the combine controls 90 per cent, of the total
industry, all the galvanised sheet iron and four-fifths of the metal
bedstead firms. Two great consolidations produce most of the
chemicals made in this country ; the electric industries, soap,
tobacco, wallpapers, salt, cement and textiles are also fields of
consolidations. In the building trade 25 per cent, of the materials
is subject to full control, and 33 per cent, is partially controlled.
The boot and shoe trade is managed by the makers of the necessary
machines, and the system makes it impossible for a manager to
break away. It is true that several of our large industries are
still fiercely competitive, but the Committee reports : " We are
satisfied that Trade Combinations and Combines are rapidly
increasing in this country, and may within no distant period
exercise a paramount control over all important branches of
British trade." 3

Combinations of the kind we have been discussing naturally
have all the advantages of size, and to these they add those of
monopoly. The chief claimed for them are : —

(a) If profits are kept high, and not cut by competition, there

1 " Report of Committee on Trusts," 1919, Cd. 9236, p. 17.

2 See pp. 137 et seq.

a " Report of Committee on Trusts," 19191 P- *«•

78 ECONOMIC DEVELOPMENT OF ENGLAND

is a margin that can be used to improve organisation or buy fresh
plant.

(b) That there is a shifting of competition from price to quality,
since when prices are fixed competing firms can only attract trade
by improving the quality of their goods. This, of course, does not
apply to complete monopolistic amalgamations, nor to pools
where output is limited.

(c) A " trusted " industry can capture foreign markets by using
its high home profits to sell abroad at little or no profit, and so
drive out competitors. This is called " dumping " when the
foreigner does it to us, " British enterprise " when we do it to
the foreigner.

The dangers of great monopolies, on the other hand, are : —

(a) Loss of initiative from lack of competition as driving
force.

(b) The difficulty of challenging a monopoly once established.

(c) The undue raising of prices.

(d) Restriction of output, which makes the world poorer than
it need be.

These dangers are often declared to be small, if not imaginary ;
but the Committee on Trusts probably expressed the feeling of
most consumers where it reported : " We are unable to share
the optimism of those representatives of associations who were
of opinion that under no circumstance was there any possibility
of their operations leading to excessive prices or to the detriment
of the public."

What checks are there on this movement towards monopoly ?
There are a few of limited effectiveness. Co-operative Societies
form rivals that cannot be bought out, and in a Free Trade
country foreign competition is some safeguard. Trade Unions
are no help, however much they may dislike big combines as
sources of capitalistic power. Indeed, they are a potential added
danger, for a conspiracy of the Trust and the Trade Union against
the consumer to raise wages and prices to the utmost limit might
leave the victimised consumer helpless. Of proposed checks,
not yet in existence, the chief are national ownership of the
industry and competition by public bodies. The former would
be a monopoly, but its gains would be distributed among the
whole nation ; the latter, provided it was wisely managed, would

ORGANISED LABOUR AND CAPITALISM 79

probably act effectively, if it could be kept free from " graft "
and from illicit manipulation by big business.

One more result of these great combinations requires notice.
Where industry falls under one unified management, it is necessary
to find openings for investment of the profits made by it in some
other direction, and the wider the trust the narrower the outside
field. Hence, trusts are apt to bring in their train a very undesir-
able commercial imperialism. The financial class, to which fall
most of the profits of big business, accumulates money that it does
not want to consume, and, since the home market is not thereby
increased and the need for fresh capital does not arise there, looks
abroad for opportunities of investment. The story of South
Africa since 1885 is one of the best instances of this result.

Lastly, we must note the growth of international combinations.
These usually agree that each contracting party shall keep its
home market and share the foreign ones between them. There
were, before 19 14, such international associations of Steel Rail
Makers (Germany, Belgium, Great Britain, France, America,
Spain), which worked badly for Great Britain ; of Aniline Oil
Producers (England and Germany) ; of Glass Bottle Makers
(the United Kingdom, Germany, Austria, Holland, Norway,
Sweden and Denmark), which secured the British markets to
British firms. The story of the British- American Tobacco
Company, which is said to control the markets of the world, is
perhaps worth telling in detail. By 1901 the American Tobacco
Company dominated the industry of manufactured tobacco in
the United States, and had a large export trade in cigarettes.
To challenge the market of Great Britain the American combine
bought at a cost of £1,000,000 the firm of Ogden's, Limited. To
fight the American invaders the English manufacturing firms,
the chief of which was W. D. and H. O. Wills, formed the Imperial
Tobacco Company, and for a year a war of cut-throat competition
was waged between the two combines. Each finding victory
impossible, they decided to combine forces and formed a company,
of which the Americans held two-thirds and the British one-third
of the stock. This company was to exploit the markets of the
world, while the original companies kept their home markets of
the United States and the United Kingdom. The new company,
called the British- American Tobacco Company, thereupon set

80 ECONOMIC DEVELOPMENT OF ENGLAND

out to gain a monopoly of all other markets, and have largely
succeeded. There is practically no competition left in the
tobacco trade, and the consumer must pay the price fixed by the
Trust or go without.

Co-operation. — It will perhaps be well to give some account
of the growth of co-operation among consumers, since many rely
on this to fight the great combines that threaten the world.
Modern co-operative stores date from 1844, when the " Rochdale
Pioneers " opened a store in Toad Lane to supply themselves
with clothes, food, etc. From this initial venture and on its
model have come the numerous " Co-ops." of our provincial
towns, especially prosperous in the North. The principle is to
supply members with goods they need at nearly cost price — this
is done by charging current prices, but at the end of the year
distributing profits proportionally to all members according to
the amount of their buying. This sharing out of profits has a
double purpose, for not only does it result in goods being secured
at cost price, but it is indirectly a sort of forced saving, and the
dividend plays a large part in the Christmas finances of many
households.

Naturally it was discovered that further savings could be
secured by Co-operative Societies producing their own goods,
and in 1863 the Co-operative Wholesale Society was formed.
Its shareholders are not individuals, but the retail Co-operative
Societies, and it acts partly as a merchant buying for them on a
large scale, and so saving money, and partly as manufacturer of
goods for them. The first productive establishment was the
Crumpsall Biscuit Works, started in 1873, and the C.W.S. now
has factories in such widely separated places as Denmark and
Australia. It has also become a banking and insurance concern.
By 1906 British retail Co-operative Stores had a capital of
£27,000,000 and had given £83,000 to various education projects.

CHAPTER V

STATE CONTROL, FACTORY LEGISLATION AND THE POOR LAW

The first Factory Act that had any effect in mitigating the
evils brought about by the rapid changes of the Industrial Revolu-
tion was passed in 1833. Up till then no effective provision had
been made for securing that the restraining legislation should be
carried out, but in 1833 Government inspectors for that purpose
were appointed, and in the next forty years much was achieved
in mitigating the evils under which women and children worked ;
though nothing was directly done for men, they secured shorter
hours indirectly, since without the women and children many
of the works had to close. The man to whom most of the legisla-
tion was due was Lord Ashley, afterwards Earl of Shaftesbury,
who devoted his life to the cause.

Indirectly the regulation of factory life brought about universal
education, for when Victorian England ordered that its working
children should attend school at least part time, it discovered
there were almost no schools to attend. In 1842 the Report
of the Commission of the Employment of Women and Children
in Mines and Collieries caused such consternation that their
employment underground was absolutely forbidden. It is true
" children " did not yet include boys over ten.

In 1844 came the first Act to protect women in factories ;
that of 1833 was concerned only with children and young persons
under eighteen. Its aim was chiefly to secure the carrying out
of the law by strengthening the position of the inspectorate. It
also inaugurated the " half-time " system, by which children
must attend school part time. The age for entering a factory
was, however, reduced from nine to eight.

In 1847 came a ten hours act (actually ten and a half
for women), but it was largely evaded till 1850, when further
legislation procured its general observance.

A Commission of 1861, sitting for five years, brought to light

li.D.E. 81 v

82 ECONOMIC DEVELOPMENT OF ENGLAND

many evils, such as those of the pottery and match trades, where
lead poisoning and " phossy-jaw " took terrible toll of human life.
In 1864 the first attempt was made to deal with a home industry,
and in 1867 the control of this kind of work was greatly extended
by the workshops regulation act. In 1874 the ten and a
half hours were reduced to ten and the age limit for children's
employment raised to nine and in 1875 to ten.

By this time the Factory Code was in a condition of considerable
confusion. Hours had been reduced in many industries to ten
daily ; children were freed from factory labour up to ten years of
age. Something had been done to help the outworker and the
helpless women, but the legislation had been piecemeal, often
little more than a temporary expedient. In 1876 a Commission
was appointed to consolidate the Factory and Workshop Acts,
and this was followed by the factory act of 1878. By
this Act workshops and non-textile factories were brought under
the same rules (textile factories had already secured shorter hours
than others), but a certain retrograde movement in dealing with
women's work was shown by the exemption from some of the
more valuable regulations of women's workshops in which no
children or young persons were employed. Also the regulations
as to a ten-and-a-half-hour day for women in workshops were
rendered useless by allowing them to be spread over the period
6 a.m. to 9 p.m.

It will be well to call attention here to the progress made in
the limitation of hours during the past forty years by the action
of enlightened employers. As the knowledge of hygiene de-
veloped, it became evident to thinking men that to work with
tired employees was bad business as well as bad citizenship. As
more and more capital was invested in fixed machinery, output
per hour became a more important question, and it soon proved
to be best business to work shorter hours at full speed than long
ones with tired, and consequently slow and inaccurate, workers.
By the end of the century many factories worked only eight
hours a day, or at least forty-eight hours a week.

The progress of factory legislation after 1878 will best be
followed under certain headings, showing the change in outlook
of the nation. One of the most notable examples of State inter-
ference with the doctrine of laisser-faire was due to the increasing

STATE CONTROL, FACTORY LEGISLATION, ETC. 83

dangers of industrial life. Legislation regulating dangerous
trades grows rapidly as we near the end of our period. In
1878 children and young persons were excluded from certain
branches of white lead and other manufactures. This was the
first effective enactment in the interest of health in such industries.
After 1883 white lead factories could only exist if they complied
with certain definite rules as to ventilation, lavatory accommoda-
tion, baths for women with hot and cold water, proper rooms for
meals, overalls and respirators, and a sufficient supply of acidu-
lated drink. The amount of detail deemed necessary in the
regulations marks a great change from the pious but futile aspira-
tions of early Factory Acts. In 1891 a big step forward was made
in allowing the Home Office to draw up rules for any trade it
deemed dangerous or injurious, and in 1895 this power was
extended to men's factories, a notable change of policy. In
1 90 1 an act was passed applying the Factory Acts to any
place, even a home, where a dangerous trade was carried on.
From then onwards real progress was made. Since 1896 doctors
had been compelled to notify to the factory inspectors all
cases of certain industrial diseases — e.g., lead, phosphorus and
arsenic poisoning. This was the first fruit of the new women
factory inspectors. Continued progress was made in tighten-
ing up the regulations as to excessive damp and dust in
factories, such as in flax-carding rooms, where the average length
of life was 16-8 years of work, and most workers were dead at
thirty. Though china-scouring had been pilloried by the Royal
Commission of 1841 for its fatal effect on the women who did it,
nothing was done for fifty-seven years. In 1878 the inspectors
found that the death rate among women so employed was fifteen
times that of other women in the same town. In ten years, by
more stringent administration as to ventilation, the mortality
was reduced by one-half. Lead poisoning has been energetically
followed up, for it has a way of appearing in all sorts of different
industries besides pottery, such as electric accumulators, india-
rubber, file-cutting, enamelling of metals or glass, tinning of
hollow-ware, heading of dyed yarn ; by degrees women and
children were either excluded from the industries or protected
by rules. A remarkable code of Pottery Regulations was enacted
in 1913. The prevention of anthrax in various trades is still

r 2

84 ECONOMIC DEVELOPMENT OF ENGLAND

engaging the attention of the inspectorate. An Act of 1908
absolutely forbad the making or selling of matches containing
the terrible white phosphorus, with its horrible risks. A growing
public opinion that industries that maim or kill the worker are
not tolerable among civilised nations marks the beginning of the
twentieth century.

A more widely spread evil has demanded the attention of the
Legislature. In 1888 the Lords appointed a Commission to
investigate cases of gross underpayment of the wage-earner,
usually called sweating. The investigation showed that such
system of underpayment was not socially economical or useful,
but a drag on industry, forcing down the prices and so leaving
the better firms no margin for development and experiment.
In 1 89 1 an Act was passed that all occupiers of factories and
workshops must keep lists of their outside workers and the places
where they are employed, and such lists must be open to factory
and sanitary inspectors ; by a second Act in 1895 the lists must be
sent to the inspectors, and after 1901 also to the District Council.
These were attempts to deal with the sweaters' dens, but even as
attempts they failed to touch the worst kind of underpayment,
where the employees were the man's own family — this in spite
of the pertinent inquiry of one Member of Parliament, why if a
man chooses to employ in a workshop " his sisters and his cousins
and his aunts," he should be allowed to poison them with foul
air and bad drains. In 1891, 1895, and 1901 attempts were made
to help the exploited worker by ordering that each employer
must have in writing particulars as to the rate of wages. This
is known as the " Particulars Clause." All this regulation was
experimental and not very effective. In 1900 Sir Charles Dilke
tried to obtain a system of Wages Boards, but failed. In 1906 an
exhibition of sweated work and workers was organised by the
Daily News, which staried the public and produced from the
Government a Select Committee to consider the matter. After
two years' deliberation the Committee reported in favour of
Wage Regulation, and stated that it was as legitimate to establish
by law a minimum standard of wages as of sanitation or work
hours. They declared that if a trade will not yield an income
" sufficient to enable those who earn it to secure at any rate the
necessaries of life ... it is a parasitic trade, and it is contrary

STATE CONTROL, FACTORY LEGISLATION, ETC. 85

to the general well-being that it should continue." * This is a
big change in attitude from that of 1888, when a keen supporter of
Factory Acts could wonder whether " it was or would long be
possible for a manufacturing country like this to maintain its
labouring population at a fair standard of decency or living without
endangering the interests of its great manufacturing industries." a
The result of the report was the wages boards act of 1909.
By this, in certain selected trades, equal numbers of employers
and employed were appointed by the Board of Trade from
names submitted to them on both sides, together with some
other members not more in number than one-third of the repre-
sentative ones. Women were eligible, and one woman was
essential where most of the employed were women. These
Boards were to fix minimum wages for the industry. Four
trades were first scheduled — chain-making, box-making, lace
mending and finishing, and the making of ready-made clothes.
In the first of these wages were raised from 5s. to us. ^d.
for a week of fifty-four hours. No evil consequences to the trade
ensued. In 191 3 half a dozen other trades were scheduled and
Wages Boards appointed in them.

One of the most difficult trades to deal with proved to be
laundries. This industry by 1895 had only half developed
from the domestic to the factory state, and great opposition was
made to its regulation. In France and Germany laundries had
been under the same regulations as factories for fifteen years, but
insuperable difficulties were supposed to exist in England. An
Act was passed in 1895 which made sixty hours a normal week,
but in times of pressure this could be extended to sixty-six.
To meet the supposed needs of incapable housewives much
latitude was allowed, and the sixty-six hours could be compressed
into five days, and might even on a single day last from 8 a.m. to
11.30 p.m. But enlightened employers, ably backed by the
women factory inspectors, succeeded at last in 1907 in securing
proper legislation. Laundries were put under the ordinary
Factory Acts, though special overtime was still allowed. This
Act also placed laundries and workshops in charitable institutions
under the same regulations and inspection as others.

1 Select Committee on Home Work, 1908, p. xiv.

2 Lord Dunraven in the House of Lords, February 28th, 1888.

86 ECONOMIC DEVELOPMENT OF ENGLAND

Throughout the period, but especially after 1890, Acts
or Orders in Council to better the lot of women and
children became increasingly strict. In 1891 the lowest age
for child labour was raised to eleven, and regulations were
made as to the employment of women before and after childbirth.
These were, and still are, largely evaded, the poverty of the women
driving them back to work at all risks. In 1901 an Inter- depart-
mental Committee exposed a mass of evil employment of children
in work untouched by Factory Acts, in street trading, in agricul-
ture, and in all kinds of casual labour. They estimated that
200,000 children were so employed, 22,000 of whom were
under ten, and 500 under eight. The employment of
children ACT of 1903 followed, prohibiting their employ-
ment between 9 p.m. and 6 a.m., or in any injurious occupation,
or in street trading under eleven years of age, and local authorities
were given powers to pass bye-laws regulating child employment.

The magnitude of the employment of children and young
persons is shown by the following figures for the first decade of
the twentieth century. There were in factories and workshops
over 1,000,000 persons under eighteen years of age, of whom
approximately 460,000 were under sixteen. Of these latter
37,000 were half-timers, and the colossal waste of this evil system
went on till 1922.

One feature of labour regulation that is likely to extend in
the future is the international. It is being increasingly
recognised that regulations to be effective in the modern world
must aim at some uniformity between nations. International
Labour Conventions were called in 1890 and 1906. In 1900
an International Association for Labour Legislation was founded ;
it holds biennial conferences, and does much to spread informa-
tion, and to encourage all nations to come into line with the most
advanced.

Factory Inspection — The first factory inspectors were
appointed in 1833, and their numbers gradually increased, and
their powers rapidly. To the able work of these Civil Servants
much of the improvement in the conditions of industrial life is
due. From the first their quarterly reports have supplied a basis
of reliable fact presented by unbiassed officials for legislators to
work on. Gradually it became evident that if the law was to

STATE CONTROL, FACTORY LEGISLATION, ETC. 87

accomplish anything in restraining greedy men from grossly
exploiting their fellows the Acts passed must be detailed, specific
and drastic. It was due to their reports that protection was
extended from children to young persons, and from young
persons to women, and eventually even to men. In 1844 the
power of magistrates to interfere with the inspectors was removed,
and the Secretary of State made all regulations under the Acts.

During the last forty years the growth of the Civil Service
has been one of the most notable features of the time. Whatever
may be thought about this increase in general, there is no question
as to its indispensability in the administration of the Factory
Acts. The staff had been increased in 1864, but the Act of 1867
tried to avoid a further enlargement by transferring the control of
workshops, as distinct from factories, to the local sanitary
authorities. The plan failed, largely owing to the unwillingness
of the local Councils to interfere with their fellow townsmen.
For many years after 1871 the inspectorate had more work than
they could perform properly. In 1893 the growing power of
organised labour secured the appointment of some working men
as assistant inspectors, and at the same time a beginning was
made in the use of women in this capacity. They were first
appointed by twos and threes for special pieces of investigation,
and did most valuable work. By 1914 their number had risen
to twenty-one. The growing need for them is obvious from the
following figures : in 1896 there were in the United Kingdom
144,000 factories and workshops, in which 1,403,568 women and
girls and 2,699,917 men and boys were employed. By 1914
the number of women and girls so employed was nearly 2,000,000.
For the past twenty-five years women have formed round about
one-third of the factory workers.

Some of the abuses shown up by inspection may be noted ;
not all of them are yet ended : —

(a) Overwork of young growing boys and girls : e.g., a child of
fourteen legally employed from early morning till 11 p.m. in
cleaning and preparing workrooms, running errands to match
silks and ribbons, and generally doing the work of a young appren-
tice, cooking meals, including supper, and doing the general
work of the house. The law allowed her work as an apprentice,
and took no notice of her added labour as general servant.

88 ECONOMIC DEVELOPMENT OF ENGLAND

The lifting of heavy weights by women and children was
common. In tinplate works and the hollow- ware trade girls of
thirteen to seventeen were found carrying weights of from
30 to in lbs. in the ordinary course of work. In the potteries
thirteen-year-old boys carried great lumps of clay totally beyond
their strength. Loads of sharp-edged tin plates weighing over
100 lbs. were carried by girls of fourteen. A boy of fourteen,
who himself weighed 77 lbs., was found carrying 69 lbs. of clay
to a moulder, and a boy of thirteen struggling up a steep flight of
stairs with 78 lbs. After 1903 children under fourteen were
protected from this particular tyranny. Girls and women
suffered in the same way in many textile factories.

(b) The disastrous effect of systematic overtime. Such hours
as the following were legal in 191 2 in a fancy stationery factory :
from 8 a.m. to 10 p.m. on three days a week, 8 a.m. to 8 p.m. on
two days, and 8 a.m. to 4 p.m. on Saturdays. Always and con-
tinuously the inspectors fought the half-time system, now at last
abolished in 1922.

(c) Occasional brutality. As the inspectors, and especially the
women, came to be known and trusted, complaints against
individual foremen or masters were more frequently made, and
investigated. Usually the mere discovery by the inspector
effected improvements.

(d) Unhealthy conditions, especially bad ventilation, undue
cold or overheating. Workgirls, after a wet and snowy walk
were sometimes put to work in unheated rooms, while unventilated
underground rooms with engines working and artificial light
burning all day would touch the other extreme of discomfort and
danger.

Perhaps the best work of all done by the inspectors was the
raising of the standard of the best employers and the more
enlightened local authorities. Often these only needed to be
told what to do, and then they did it gladly ; others required only
the assurance that the same requirements would be exacted from
all their rivals. This was particularly the case in questions dealing
with the health and comfort of women workers. It is on record
that at least one factory owner, impressed by the value of even an
occasional visit from a trained observer, appointed a woman on
his staff to watch permanently against abuses, and to see that

STATE CONTROL, FACTORY LEGISLATION, ETC. 89

proper regulations were carried out. Even where employers
had not such ideals of their responsibility, the inspectors could
often shame them into decency without the need to threaten legal
action.

Lastly, the reports of the inspectors on dangerous trades has
led to scientific investigation as to possibilities of prevention,
often with success. Such action has reduced the reported cases
of lead poisoning from over 1,000 in 1900 to 230 in 1921, and
made the life of the workers in fish curing more tolerable, by
discovering and enforcing suitable early treatment for the sores
produced by constant immersion in brine.

Poor Relief. — The care of the poor as a function of the central
Government dates from 1601. During the Middle Ages the
Church was responsible, and charity was universal, and a highly
esteemed virtue. One-third of the tithes was regarded as due to
the poor of the parish, the monasteries practised an open-handed
hospitality, and the rich gave alms in the name of religion.
Towards the end of that period, about the fifteenth century,
some of the municipalities began to assume the duty, especially
towards the sick and aged. Unemployment, in the modern sense
of the existence of people willing to work for whom no profitable
occupation can be found, hardly existed. There was doubtless
a number of idle vagabonds who did not work, and who lived
parasitically on society, but their number does not seem to have
been more than society was willing to support for the good of
its soul.

Towards the end of the fifteenth century came a new pheno-
menon ; all over Europe appeared large numbers of men for whose
work there was apparently no call. The chief cause was the break-
up of the feudal organisations, and the establishment of centralised
Governments that refused to tolerate private war. This released
a large number of men-at-arms who despised ordinary work, and
were indeed unfit for it. Then soon after came a general rise in
prices, due to an influx of silver from the New World, and
consequently much poverty and distress. In England the
situation was made much worse by the turning of arable fields to
pasture to meet the new demand for wool, and the climax was
reached when in 1540 the centres of charity, the monasteries,
disappeared from the land. Throughout the sixteenth century

9o ECONOMIC DEVELOPMENT OF ENGLAND

the problem, both of the impotent poor and the rogue and vaga-
bond, troubled the paternal Tudor despotism. After many
experiments, at last in 1597 and 1601 a great Code of Poor Relief
was drawn up and imposed on all local authorities. Its main
principles were : (i.) Maintenance for the sick and aged at the
cost of the district ; (ii.) Training for the orphan ; (iii.) Work
for those willing to work, to be found by the overseers ; (iv.)
Punishment of the tramp and the idler. Up to the outbreak of
the Civil War this great Code seems to have been carried out,
and to have effected its purpose. Its success depended on the
ceaseless vigilance of the Privy Council in keeping the local
authorities, i.e., the Justices of the Peace and the Overseers, up
to the mark. After 1660 there was more trouble ; the Civil War
had left the inevitable trail of unemployables, the Government
was weak and corrupt; and abuses were rife. In 1662 a Law of
Settlement was passed, which, whatever its intentions, had the
result of preventing men from leaving a place where there was no
work in search of one where there was. In 1723 the practice of
the Poor Law was tightened considerably, and all through the
century the condition of the pauper suffered from the general
corruption of the age — he was usually at the mercy of a contractor
who hired him from the overseers.

With the period of enclosures and the exploitation of the
factories, the problem of the unemployed suddenly again became
formidable. With the outbreak of war in 1794 the condition of
the workers became desperate. A short-sighted policy, known
as the Speenhamland system, was adopted, by which the poor
rate was used to supplement wages. This resulted in the poor
farmer, who did not employ much labour, paying part of the wages
for the large farmer who employed many hands. It also demoral-
ised both employer and employed. The employer became
entirely unscrupulous in grinding down wages, knowing that,
if he paid as low as 45. a week, the rates would add the other 3s.
to prevent the man starving ; the employed labourer became
utterly reckless, since he could never expect to earn more than a
bare subsistence, and he got more for every child he recklessly
brought into the world.

Thus the demoralisation of the very poor grew so great that
any remedy seemed justified. Unfortunately the crisis came at

STATE CONTROL, FACTORY LEGISLATION, ETC. 91

a moment when doctrines of laisser-faire were almost universally
accepted. There was a strong school of economists who held that
if no provision were made for the poor, there would soon cease
to be any poor. The great thing was to make pauperism more
unpleasant than work. It was difficult, since in 1830 the pauper
could hardly be fed or housed worse than the labourer and yet
be kept alive. So the plan of attaching what was really a penal
side to the granting of relief was adopted. They called it disci-
pline, but frankly admitted that its object was to make life in the
workhouse so intolerable as to force a man to endure almost
anything rather than enter it. At the same time they aimed at
stopping all outdoor relief to the able bodied. On these lines
the great Poor Law Act of 1834 was framed, and it is still in force.
It laid down as a principle that the condition of the pauper must
be " less eligible " than that of the lowest paid worker. There
was probably no deliberate intention to include in these hardships
the old, the sick, and the children, but the growth of general
mixed workhouses prevented any real discrimination. It is
impossible to combine in one establishment a disciplinary system
for work-shies, a hospital, a school, and a refuge for the aged.
But it satisfied the people of the Victorian era, it made poverty a
crime, and it certainly lessened the poor rate. It also forced the
farmer at least to pay a wage of bare subsistence. What it meant
in horror and suffering to the better class poor will never be
known ; some shadow of it may be seen in the writings of Dickens
and others, and in the loathing and fear of the whole system
throughout the land on the part of the wage-earning class.

As the Poor Law was in 1870, so it continued up to 1914,
but during the last twenty years of this period no existing
administration received more destructive criticism. The rapid
growth of unemployment made the optimistic theories of the
laisser-faire school impossible, the growth of humanitarian feeling
produced a reaction against the " scientific " treatment of human
beings in categories. The advent of women to Boards of
Guardians strengthened this revolt, and all these factors combined
to create a public spirit demanding reform. In 1894 the historian
of the Poor Law was already complaining of the " reactionary '
proposal to rescue the aged from the general mixed workhouse
by the grant of small old-age pensions ; by 1908 the " reaction '

92 ECONOMIC DEVELOPMENT OF ENGLAND

had materialised at the hands of a Liberal Government, the
old age pension act of that year secured to men and
women over seventy the sum of 55. a week for life. It was little
enough, but it saved many an old couple from the dreaded
" House," though its limitation to those whose total resources
did not exceed £31 10s. a year was hardly an encouragement to
thrift. But the aged were not the only sufferers under the law,
the case of pauper children had long been a scandal, whilst
attempts to " deter " the vagrant were known to have broken
down consistently. In 1909 a royal commission was
appointed to investigate the whole administration. Its two
Reports form probably a record in the detail and power of their
survey of the whole matter. That of the majority which proposed
reform was immediately overshadowed by the brilliance and
constructive ability of the minority. This Minority Report,
signed by two Labour leaders and a prospective bishop, was
largely the work of the fourth signatory, Mrs. Sidney Webb.
It now holds the field for the basis for all future dealings with
poor relief. A large part of it consists of vivid descriptions of
the present condition of Poor Law administration. There is a
direct central attack on the general mixed workhouse, for, in spite
of persistent efforts since 1866 of the Central Authority to secure
classification and segregation, there were still, in 1909, 15,000
children living under these bad conditions, in contact with the
depraved, the drunken, and the dissolute ; babies in nurseries
tended by feeble-minded girls or women far gone in senile decay ;
babies who never left the nursery, where the air and the smell
were foul and sickening, for who could carry sixty infants up and
down three flights of stairs to the courtyard ? In spite, again, of
pressure from the Central Authority, it is shown that thousands
of sick and helpless men and women lie neglected, without proper
medical or nursing care, in the hands of paupers or untrained and
overworked nurses, and inadequately remunerated doctors.

The number of mental defectives in the ordinary wards of a
general workhouse is estimated at over 60,000, many of them
young and growing up without any attempt to train their limited
faculties, or to help them to a possible life, they are left a nuisance
to themselves and an offence to other inmates. As to the aged,
three policies of relief are described, the most prevalent being

STATE CONTROL, FACTORY LEGISLATION, ETC. 93

one of inadequate outdoor relief — 2s. or 2s. 6d. a week — and if
the recipient has no other resources and so cannot exist on such a
sum, the general mixed workhouse is his only refuge. This is
the system in nine-tenths of the Unions of England and Wales.
The second policy is to refuse all outdoor relief, make the work-
house as unpleasant as possible, and see that all " deserving '
cases are helped by voluntary charity. The third policy, and the
one advocated by the Central Authority, of giving sufficient
outdoor relief or else maintenance in comfortable quarters apart
from the general workhouse, has not been adopted by many
Guardians. Where adopted, the results are good. In Scotland
it is general.

The Report also deals with the Law of Settlement, under
which, in spite of many modifications and exemptions, some
12,000 persons are still deported annually, often against their will,
from one Union to another, at a cost of not far short of £100,000
a year, for which expense " each Union succeeds in getting rid
of some paupers at the cost of having others thrust upon it."

Turning to the able-bodied, the Report describes the desperate
condition under present Poor Law practice of the widow with
young children. Outdoor relief is usually granted her to the
extent of is. or is. 6d. a week for each child, often nothing for
herself. The condition of such children is often worse than even
that of those living in the workhouse, who are fed and clothed,
even if mentally and morally poisoned. Should the mother die,
the children may, however, be boarded out and a payment of
4*. or 5s. a week made for them, or sent to a Poor Law school
at a cost of 125. to 215. a week each. No Guardians pay the widow
with young children enough to enable her to rear them in efficiency
and decency. As to the able-bodied man, whether a temporary
" unemployed " or a habitual vagrant, his treatment at the hands
of the Poor Law is mainly a matter of chance, and ranges " between
the two extremes of a mere pretence of work, with a good meal,
a bed in a common lodging-house, and a few halfpence in money
on the one hand, and on the other painful penal labour upon
relief physiologically insufficient to make good the wear and
tear involved." x Attempts at a really deterrent rtgime for all
able-bodied men and women paupers, tried at Poplar in 1871, at
1 Minority Report of Poor Law Commission, Pt. II.

94 ECONOMIC DEVELOPMENT OF ENGLAND

Kensington in 1882, and in Birmingham in 1880, had failed,
except in the sense of keeping decent men and women from
applying for relief, however dire their need. The regime was
worse than that of the prisons, and the Birmingham Report
states that out of ten inmates sent to such test houses only one
arrived. Those who did venture in often preferred risking prison
to carrying out the tasks set, until the magistrates refused to
convict. But, as the writers of the Report point out, to rid the
workhouse of the able-bodied loafer is not to rid society of him ;
it may only make him a greater social incubus. As to the vagrant,
the 638 casual wards dotted about the country are resorted to
nightly by numbers varying from 7,000 to 17,000, representatives
of a total army " on tramp " estimated to range with the season
from 30,000 to 80,000 individuals.

In face of all these failures of the system, the writers of the

Minority Report recommend a complete break-up of the whole

Poor Law organisation, the abolition of any one authority dealing

with " destitution," and the transference of the varied classes,

who become or may become destitute, to appropriate bodies

already dealing with more prosperous members of these classes.

This transference has in a way already begun ; in 1905 the

unemployed workmen act created District Committees to

deal with unemployment ; in 1907 the medical inspection

of schoolchildren, to be followed by clinics for treatment, was

imposed as a duty on the Local Education Authority, and in

the same year arrangements for feeding hungry children became

part of the business of the same body ; municipal hospitals for

all kinds of infectious disease are common throughout the country,

some exist for surgical and other cases, and provision is often

made for tuberculosis patients, all this being possible under the

Public Health Acts ; vaccination is obtainable free, the free

distribution- of the anti-toxin for diphtheria is common, and

several Public Health Authorities run cleansing stations, subscribe

to dispensaries, or provide means of home nursing. It is therefore

proposed that the present Poor Law Authorities should cease to

exist, and their duties be transferred to the County and Borough

Councils, working through their various Committees. Thus all

pauper children of school age would be dealt with by the Local

Education Authority under the supervision of the Board of

STATE CONTROL, FACTORY LEGISLATION, ETC. 95

Education ; the care of the sick, the incapacitated, and the infant
would pass to the Local Health Authorities ; the aged would
become pensioners for whom the Local Pensions Committee
would be responsible. For the mentally defective of every grade
it is proposed to create a new Local Committee out of the existing
Asylums Committee. For the most difficult problem of the able-
bodied, the writers of the Report hold that only a national solution
is possible, and that only a national body can hope to deal with
unemployment and its causes. Such a body would have to deal
with the abolition of child labour, the creation of an efficient
system of Labour Exchanges, with insurance against unemploy-
ment, with emigration and immigration, and scientific statistics.
It would also arrange for certain public works, such as afforestation,
coast protection and land reclamation to be carried out at market
prices, and in the ordinary way, but spread over long periods, and
put in hand or slackened off as the fall or rise of trade increased
or lessened unemployment. For any residuum of able-bodied
unemployed men and women that might remain after all these
schemes were in efficient working order, they recommend full
maintenance, provided the recipient is willing to be trained into
greater efficiency, with no stigma of pauperism attached. For
widows with children there should be provided a sufficient
income to rear their children in decency and health, and that a
minimum standard in these matters should be demanded of them.
This Report created considerable controversy in the five years
that remained, before the war temporarily solved the problem of
the unemployed and their destitute wives and children, only to
revive it in fiercer form two years after the Peace. The whole
question of poverty and destitution is the most serious of modern
times, and the next attempt to deal with it will probably be on
the lines indicated above. Possibly some later generation may
decide to prevent it.

CHAPTER VI

IMPERIALISM AND THE SCRAMBLE FOR MARKETS

We have seen that about 1870 England led the world as an
industrial nation, and relatively to others had reached its highest
point. It also held the leading position in commerce and in
colonial expansion, but here its zenith was still far off.

English foreign trade, apart from the export of wool and the
import of wine, reached importance first towards the end of the
Middle Ages. It was carefully fostered by Henry VII. and
encouraged by all the Tudors, and the Merchant Adventurers
of the late fifteenth and the sixteenth centuries penetrated to all
parts of Europe, with ships armed for all eventualities. From
1560 onwards they began to go farther afield and to dispute the
right of Spain and Portugal to a monopoly of trade in all the new
lands of the world. Throughout the seventeenth century English
trade expanded, and, while the power of Spain declined, the
English fought the Dutch for the carrying trade of Europe. In
the eighteenth century, France and England were at death grips
for the control of the markets of the East and of the West, and
our colonial Empire was the prize of battle. In 1763 we held
the New World from Baffin's Straits to Georgia with an unlimited
western boundary, and in the East it had been settled that India
was to be the spoil of England and not of France. We quickly
lost the more important part of the New World, because our
rulers had not vision enough to see the right path, but in another
fifty years we had added another continent to our Empire and
begun our adventures in Africa. Meanwhile, our trade was
hampered by most of the old shackles — Navigation Acts that
forced our Colonies to trade only by way of England and in English
ships, duties on everything that entered the country, protection
of English industries of a kind that cared nothing for the well-
being of other parts of the Empire, and prevented Irish woollens
and Irish cattle from competing in English markets. With the

96

IMPERIALISM AND SCRAMBLE FOR MARKETS 97

close of the Napoleonic Wars came the fight to remove these
hindrances, and in 1846 the battle was won ; by 1870 English
trade was free, London the exchange port of the world, and
English commerce advancing in all directions.

At the same date we were the rulers of the largest colonial
Empire in the world, and had made considerable progress in
learning how to govern it. Canada (in 1847), Newfoundland,
Australia and New Zealand (in 1855-6), had achieved responsible
self-government, and by 1872 Cape Colony joined the fully
enfranchised colonies. In India something of the lesson of the
Mutiny of 1857 had been learned, and an era of just and level
administration by an efficient, though alien, Civil Service had
begun. There was still much to do ; the condition of no part
of the Empire was really satisfactory, and the prevailing opinion
of the England of the 'sixties was that Colonies were an expensive
nuisance, certain some day to drop away, and meanwhile a source
of danger as exposed to attack. Our starting date of 1874 marks
a change of attitude, for, with the increasing need of markets for
our ever-growing productions, of outlets for a too rapidly accumu-
lating capital, of more and more raw material, especially such as
grows in tropical lands, came a desire to link together under our
control still greater portions of the earth's surface. Hence arose
an imperialistic movement, and a scramble for markets between
the white nations of the world. The number and power of our
rivals rapidly increased, and there was much unnecessary alarm
because of it. The rival that struck our imagination most was
Germany, for, since the Thirty Years' War, she had lost her
mediaeval predominance in trade and she had the handicap of a
short and inferior coast line. But railways gave her her chance,
her unification in one nation after 1870 the power to use it. The
iron of Lorraine could easily be joined to the coal of Westphalia
with the help of the new form of traction ; railways broke down
the barrier of the Alps and threw open to her the trade of Italy
and the Mediterranean. Russia, hitherto blocked by ice in her
ports for more than half the year, could send her produce through
Europe by rail, and eventually to the Far East as well, while the
great corn areas of her plains became the source of her wealth.
At the same time a new great nation was growing behind the
Alleghanies, and by 1890 the Industrial Revolution was Striking

E.D.E. G

98 ECONOMIC DEVELOPMENT OF ENGLAND

the little towns of the Middle West, as a century earlier it had
fallen on the rural townships of Yorkshire and Lancashire.

Faced with these rivals, England looked round to strengthen
her commercial defences ; she saw her daughter nations potentially
or actually rich in much she needed, and a movement arose to
make with them a self-sufficing Empire. It was difficult to
link strongly Protectionist Colonies with a passionately Free
Trade Mother Country, though attempts were made, as we shall
see. By 1895, when Joseph Chamberlain took over the Colonial
Office, there were many ready to follow him away from Free
Trade. For competition seemed very threatening. America, in
particular, was seizing our South American coal market, and her
iron and steel manufacturers were rushing far ahead of ours.
Germany was devoting much attention to the same thing, and
the English Government bought guns from Krupp. Chamberlain
conceived the idea of a self-sufficing Empire defended by an
Imperial Zollverein. His dreams of a closer political union
were shattered at the 1902 Imperial Conference, when it was
evident that the Colonies were not ready for such a move, and in
1903 he embarked on his campaign to revive Protection, so that
we could start giving preferences to the Colonies, " even at some
sacrifice." He failed to convince the people that they could
safely accept higher food prices in the assurance that Protection
would give more work. They retorted with figures of unemploy-
ment in Protectionist Germany and America. The lure of
" retaliation " also failed, and the retort that the exclusion of
Continental bounty-fed sugar only damaged the jam trade seemed
conclusive, if true. The arguments swung to and fro. Free
traders asked how we were to give preference to Australia when
her exports to us were nearly all raw material ; Tariff Reformers
urged that safety demanded an imperial food supply, opponents
declared that it could not be done, and pointed to our Argentine
meat imports, and to the fact that 70 per cent, of our wheat supply
came from outside the Empire ; Tariff Reformers prophesied
that unless something were done we should lose our colonial
markets and eventually our Colonies. In 1906 the Liberals
gained power, and in 1907 the Liberal Government refused, at
the Imperial Conference, to discuss any question of taxing food.
Another change that occurred in this period was the reduction

IMPERIALISM AND SCRAMBLE FOR MARKETS 99

of our transhipment trade. Up to 1870 London had been the
great entrepot of the world ; rapid transport made this less
necessary. Cargoes could be dropped easily en route at convenient
places and railways swiftly carried them inland.

Railways altered also the lines of our colonial expansion. In
the eighteenth century and up to 1850 the profitable trade lands
were on the coast or were islands ; railways made the great
interior areas equally valuable. In Africa, Britain especially has
developed inland, so that her possessions lie on the map a long
red stripe almost down the middle of the continent, with sea-exits
to the south and east, but with a seaboard otherwise held by rival
nations. Very different this from 1763, when there was a violent
controversy as to the retention of Canada or of Guadeloupe and
Martinique after the Seven Years' War.

With the growing international rivalry came the search for
new markets and the scramble for such of the world's surface
as was not yet fully occupied. This is best shown in the story
of Africa told below. There was danger in this expansion,
though perhaps a danger we could not, at this date, easily avoid.
It was pointed out in 1899 by Sir Henry Campbell Bannerman,
when he urged " the danger of this expansiveness is that it with-
draws the energies and enterprise of our countrymen from markets
which they used to control ... in the vain pursuit of a will-o'-
the-wisp of a market which does not and may not exist for years
to come." Dangerous or not, the expansion was made ; how
far it was responsible for the catastrophe of 1914 only posterity
can decide.

A word must be said about the curious revival of Chartered
Companies, by which much of the work was done. They differed
from the old Companies, by having no monopoly of trade. Their
advantages and disadvantages have been the subject of much
controversy. On the one hand it is claimed that they did pioneer
work that it would have been costly and even impossible for the
Government to undertake ; that they occupied territory which
might have been taken by some other nation to the exclusion of
British trade ; that, their work done, they stepped aside and the
nation acquired the results of their labours. Against them it is
urged that their almost irresponsible powers (they raised troops.
made treaties, and waged native wars) always ended in involving

«- 2

ioo ECONOMIC DEVELOPMENT OF ENGLAND

the Imperial Government in some disaster or other, embroiled
it with other nations and cost it expensive expeditions. In all
cases they were eventually bought out by the Government.
The chief ones were : The British North Borneo (1881), The
Royal Niger (1886), The British East Africa (1888), and The
British South Africa (1889).

Such was the general outline of colonial development up to
19 1 4 ; we must now look at the Colonies as individual States.

Canada. — The earliest part to be occupied by Europeans
was Newfoundland, whither came in the sixteenth century
French and English fishing fleets, with temporary sojourns on
the coast. The island was definitely acknowledged as English
in 1 71 3, but there was little law and order before 1791, and the
rule of might flourished among the 700 fishing smacks of the two
nations, while the Devonshire merchants who controlled the trade
steadily objected to any sort of justice or order being established.
After 1 81 3 grants of lands were officially made to settlers, and in
1832 they obtained a Legislature.

Hudson's Bay Territory had also been ceded to England by
the Treaty of Utrecht. But the land between this area and
Newfoundland, along the banks of the St. Lawrence, had been
both discovered and colonised by the French. Farmers had
settled all along the river, which was the only highway, each
with a small frontage and an indefinite stretch inland. French
law and its system of seigneuries were imported entire, but under
the conditions of a new country they shed most of their feudal
tyranny, and the tenants, with security of tenure and few or no
corvees, were satisfied to keep it. The colony had been kept
strictly Catholic, no Huguenot being admitted. As a result of
the Seven Years' War, which, as far as the English and French
were concerned, was a war for overseas markets, the dream of a
great French colonial empire in the West had vanished, and in
1763 the whole of North America between the Mississippi and
the Atlantic, together with Canada and Cape Breton Isle, was
acknowledged to be English. Thanks to the tact and good sense
of the early Governors, who left the French colonists their laws
and customs, the attempt of the revolting Colonies of New England
to lure these to an alliance failed, and it was to Canada that
American " loyalists " migrated after 1783. The American War

IMPERIALISM AND SCRAMBLE FOR MARKETS 101

of 1812 raged along the border, but the Canadians held out,
though by this time the difficulties between the two sets of
colonists, one British and Protestant, the other French and
Catholic, had become acute. English Governors sent out were
often ignorant and tactless, and discontent on the part of the
Canadians grew. Their grievances were many. The Assembly
had the right to withhold money, but could not control its expendi-
ture ; in Upper Canada (Ontario) the power had got into the
hands of a few families, and the reservation of a seventh of the
land for the clergy became a grievance, since it was often undeve-
loped and a hindrance to others. Papineau in French Canada
and Mackenzie in Ontario led revolts, which failed, but called
forth an investigation by the Home Government. The Earl of
Durham was sent out in 1838 as High Commissioner, with Buller
as official and Gibbon Wakefield as unofficial assistants. He
recommended the union of the two Canadas and the granting of
responsible government. The former was carried out by Charles
Poulett Thomson, afterwards Lord Sydenham, in 1839-41, and
the latter fully established by Lord Elgin in 1847. In 1846
another crisis had arisen. England adopted Free Trade, and the
preference we had previously given to Canadian products lapsed,
while the Navigation Laws were still in force. Consequently,
Canada competed on equal terms with the world, but in a market
restricted to the United Kingdom. A movement for union with
the United States was the result, but this was checked in 1849
by the repeal of the Navigation Laws, and in 1854 Lord Elgin
made a reciprocity treaty between Canada and the United States.
In the years that followed progress towards democracy was made ;
the clergy reserves were transferred to the municipalities for
educational purposes, and the seigneurial system abolished. In
1867 the British North America Act established the dominion
of Canada, which included Upper and Lower Canada, Nova
Scotia and New Brunswick. In 1870 Canada purchased the
North-West Territory from the Hudson's Bay Company and the
Colony on the Red River was made into the province of Manitoba.
In 1871 British Columbia entered the Dominion. In 1859
Canada had made the final assertion of independence in her own
affairs by adopting a protective tariff, in spite of protest from the
Colonial Office. In 1872 the boundary line between Canada and

102 ECONOMIC DEVELOPMENT OF ENGLAND

the United States, which in 1818 and 1846 had been fixed by
agreement, was finally completed after arbitration by the German
Emperor.

Thus in the early 'seventies the greater part of the occupied
territory of Canada was united under a Dominion Government ;
she had established a protective tariff, and it was by no means
certain that her eventual destiny did not lie with the United
States rather than with England. But British Columbia had
stipulated, when she joined the Dominion, that a trans-continental
railway should be built to link her up with the older provinces.
After a good deal of dissension and delay the Canadian Pacific
Railway Company began the enterprise. The Government gave
it a subsidy of £5,000,000 and 25,000,000 acres of land, together
with all the completed bits of railways, worth at least another
£5,000,000. This, however, proved insufficient, and more help
was given before the railway was finally complete in 1885. This
railway was one of the determining factors in sending Canadian
trade east and west instead of north and south.

Meanwhile unjust treatment, by the Government, of the half-
breeds round about Manitoba caused another and the last rising
in Canada. The leader was the old rebel hero, Louis Riel, but
it was suppressed by Canadian volunteers without help from the
British Army. Riel was captured and hanged.

During the 'eighties there had been much talk of complete
commercial union with the United States, but the majority
became increasingly in favour of uniting more firmly with the
mother country, and in 1897 the Canadian Government gave its
first preferential tariff to England, reducing the duties on British
goods to 12^ per cent, below those of other countries. Later
this preference was raised to 33^ per cent. The more far-seeing
of Canadian statesmen realised that linking to the United States
would eventually mean absorption in them, while a bond with
England, 3,000 miles or so away, had a far better chance of com-
bining mutual defence with mutual independence.

Since 1900 the growth of the Dominion has been rapid. The
great wheat areas of the north-west have replaced the trackless
prairie, and in 1905 two new provinces were added — Saskatchewan
and Alberta. In five years, 1901-6, the population of the prairie
provinces and Manitoba nearly doubled, i.e., it rose from 419,000

IMPERIALISM AND SCRAMBLE FOR MARKETS 103

to 808,000. The Government set about providing experimental
farms and agricultural colleges ; cheese factories and creameries,
and other forms of co-operative farming are spreading in Ontario
and Quebec ; fruit-growing is extending in Ontario, Nova Scotia,
and British Columbia. Farmers usually own their farms, which
are of moderate size, 50-200 acres. On the prairies the average
farm is 240 acres. One of the chief industries of the Dominion
is the lumber trade, for the forests are still extensive, though they
have been shamefully wasted. A new trade in wood pulp for
paper making has arisen, and saw mills have increased, so that
most of the export is sawn wood. Half the lumber export goes
to the United States, the rest to Britain. Coal is found in Nova
Scotia and Vancouver, iron to the north of Lake Superior, gold
in Nova Scotia, British Columbia and the Yukon ; in the last
the discovery is as recent as 1897. Silver, nickel and most other
minerals have also been found, and some petroleum wells. Fish
and furs are still very valuable exports. Canada is only at the
beginning of its. history, though it is the oldest of the great white
daughter States. In some ways it has kept more closely to British
precedents than the others, and politically has advanced no
further. For our more original offspring we must go further
afield.

Newfoundland has persisted in remaining outside the Dominion ;
it exports fish and their products such as oil, as well as iron and
wood pulp. In 1905 the fisheries provided 68 per cent, of her
exports. Newfoundland is the halfway house for the Anglo-
American cable.

India, — The story of our adventure in India is a long one, and
is the most remarkable instance of the unpremeditated nature of
our Empire. It began in 1600 with the formation of the East
India Company, a Regulated Company formed to trade with
India, China, and the islands of the Pacific. For the safety of
its agents it secured a few fortified places on the Indian coast,
the earliest being Surat, in 1609, and Madras, in 1639. Gradually
it ousted the Dutch, who in turn drove the English out of the
Malay Archipelago, and for over 100 years shared with the French
and the Portuguese the lucrative trade of the East.

The first step towards Empire was taken by the French by
one of those makers of Empire, the despair or the glory oi their

104 ECONOMIC DEVELOPMENT OF ENGLAND

compatriots, according to their point of view. Joseph Dupleix,
Governor of the French Settlements, dreamed dreams of a French
Empire in the East, and set about realising them by intervening
in the quarrels of the native chiefs. It was a good time for his
purpose, for the death of Aurungzeb in 1707 had been followed
by the break-up of the Mogul's Empire, the rise of the Mahratta
chiefs and general anarchy. The details do not matter ; he might
have won but for two things, the British command of the sea and
the appearance on the scene of his own English counterpart,
Robert Clive. The tragic story of England's doings in India
between 1750 and 1830 fortunately has not to be told here ; we
need merely mark the results. By 1805 the East India Company
controlled on behalf of the English Government, directly or
indirectly, all India south and east of a line from Baroda to Delhi,
except Nepaul and Bhotan, though a wedge of nominally indepen-
dent Mahratta chiefs occupied the basins of the Nerbudda and
the Mahanadi. By 1835 we were already considering the dangers
of a hostile Afghanistan and edging into Burmah.

The East India Company had not, however, been left in
absolute control all this while, for the English Government
was more than a little doubtful of the power of that body to control
the imperialism of its officials. In 1773 Lord North's Regulating-
Act, while it left the Company in full control of the territories it
had bought, stolen or occupied, asserted the full dominion of
Parliament over all British subjects and appointed a Council to
exercise some control over the Governor. In 1784 Pitt's India
Act limited the control of the Company and forbad further
annexations, declaring that " to pursue schemes of conquest and
extension of dominion are measures repugnant to the wish, the
honour and policy of the nation." When Lord Wellesley assumed
the Governorship in 1798, his seven years' rule was one long
contradiction of the order, with the result stated above. Mean-
while the trading character of the East India Company had been
disappearing ; in 1813 the only Indian monopoly left was tea,
and in 1833 it had lost that of the China trade. At the same date
an Act deprived it of all trading character and described its mem-
bers as " Trustees for the Crown of the United Kingdom."

In 1839 came the first Afghan War and the appearance of the
Russian bogey ; this brought about the annexations of Scind in

IMPERIALISM AND SCRAMBLE FOR MARKETS 105

1839, and of the Punjab in 1849. The career of Dalhousie,
1848-56, was marked by considerable extensions of our rule,
based on the " doctrine of lapse," by which he claimed for British
rule certain native States left without a direct heir, denying the
Indian custom of adoption. Besides States thus acquired, he
also annexed Lower Burmah and Oudh, for reasons whose
adequacy is the subject of debate. In 1853 Disraeli indicted the
Company's government as productive of " constant wars, con-
stant deficits, no education, few public works, and maladministra-
tions of justice."1 With 1857 came the Mutiny and the end of
the East India Company. Since 1858 the Government of India
has been vested in a Secretary of State, assisted by a Council.
The doctrine of lapse was repudiated, and later extensions, up
to 1870, were small and chiefly on the north-west border for
defensive purposes. The old covenanted service of the East
India Company developed into the Government bureaucracy,
known as the Indian Civil Service. In 1833 an Act had declared
that neither race nor religion should debar from the service, and
in 1853 nomination had been abolished and replaced by com-
petition open to all British subjects, including natives of India — in
theory. Since 1861 there has been a definite restriction in the
employment of natives, and in practice all higher posts remained
in the hands of Englishmen. In 1908 only 107 posts out of
1,370 carrying a salary of over £800 were occupied by Indians.

After 1874 the two developments in India that call for attention
are, first, the wars and annexations on the north-west and north-
east, due to fear of other European powers encroaching on our
domain ; and, secondly, the beginnings of a machine industrialism
grafted on an ancient economy of village industries.

In 1878 there was a war with Afghanistan, the real object of
which was to say " hands off " to Russia, who was the bogey of
the last twenty years of the nineteenth century as Germany of
the first twenty of the twentieth. In 1885 we annexed Upper
Burmah to keep out France. In 1893 the boundary between
British India and Afghanistan was fixed, and in 1895 in the
Chitral, and in 1897 against the Afridis we spent men and money
to make the border tribes respect it. Finally, in 1907, came an
Anglo-Russian convention, which declared Afghanistan outside

1 Page, " Commerce and Industry," p. 216.

106 ECONOMIC DEVELOPMENT OF ENGLAND

the Russian sphere of influence, and recognised a British interest
in South Persia, where there is much oil. Meanwhile, in 1896,
Central Siam had been neutralised to prevent a clash between
us and the French, who were in Cochin China, and in 1904 we
made an agreement with Tibet and China that no foreign power
should intervene in Tibet.

While thus securing its frontiers the Government of India
paid some attention to internal development. By 1905 there
were 210 cotton mills in India, 70 per cent, of them in Bombay,
while thirty-nine jute mills appeared in Calcutta. Unfortunately,
little attention was paid to our own terrible history of the intro-
duction of machine industry, and child labour and long hours
characterise the new movement in India also. There have also
developed in India breweries and railway workshops, while tea-
growing has increased rapidly. Fifty years ago England drank
China tea ; now it is a luxury for the rich, and the cheaper,
rougher teas of India and Ceylon have replaced it. Coal, iron
and gold are the chief mineral products, while petroleum and
rubies come from Burmah. The result of all this is seen in the
seaborne trade, which has quadrupled since 1858, and India is
second on the lists of Great Britain's markets. From India come
raw cotton, raw jute, raw hides and skins, opium, tobacco, seeds
and grain ; its imports are manufactured goods, principally
cotton.

Such a development would be impossible without railways ;
there were in 1906 some 32,000 miles, all controlled by the
Government. With canals and forests they yield a revenue of
£5,000,000. The railways pay on the average 5 per cent, on the
capital outlay.

India has always been a land liable to famine, owing to the
uncertainty of the rainfall, and the English Government has so
far only succeeded in partially mitigating it. As late as 1896 a
famine cost 5,000,000 lives above the normal death rate, and
lowered the birth rate by 2,000,000 ; this in spite of £8,000,000
sterling spent on relief. In the next fifteen years famine came
three times, and in 1900 cholera followed. The chief hope of
remedy lies in irrigation, and a considerable length of irrigation
canals has been built ; but the country is so vast — twenty times
the size of Great Britain — that even thousands of miles of channels

IMPERIALISM AND SCRAMBLE FOR MARKETS 107

only deal with a fractional area. The forests are administered
by the State and produce a large revenue.

On the assumption that development of its material resources
is a good thing for a people, considerable praise must be given to
the work of Englishmen in India ; unfortunately, there is little
to be said for it on the intellectual side. Small effort has been
made to provide education for any but the few capable of its
higher branches and with money to pay for it. Seven out of
eight children never enter a school, four out of five villages possess
no school to be entered ; 90 per cent, of the men and 99 per cent,
of the women cannot read or write. It has seemed better to the
powers that be to guard the frontiers than to train the mind.

South Africa. — The Cape was first discovered in 1487, and in
1652 the Dutch East India Trading Company had put a trading
station there on the route to India. In 1657 a few free settlers
were allowed. Immediately the question of labour came to the
fore. The natives were either Bushmen or Hottentots, the
former being the earliest known inhabitants. Both were in the
pastoral stage, agriculture was unknown, and there was no military
organisation. Neither could be induced to do hard work, so
the Dutch settlers imported negro and Malay slaves. In 1685
there was an influx of French Protestant refugees. It was some
time before the colonists, moving east and north, met the great
Bantu tribes, Kaffirs, Zulus, etc., who, unlike the Hottentots,
declined to be killed off, either by arms or disease. The Colony
was very restless and not very prosperous, but in 1795 it was
captured by the English and ceded to Britain in 18 14-15. At
first we ruled it on the Dutch system, but in 1834 it became a
Crown Colony. The freeing of the slaves in that year caused
great discontent among the Dutch burghers, and in 1836 a section
of them determined to move inland beyond British control.
They particularly objected to the tolerance of natives too near
their frontier, and in this they had some reason, though their
own treatment of the black man was such as to make him more
turbulent. So they moved north into the lands which had been
depopulated by the Zulus and formed two states, the Orange
Free State, south of the River Vaal, and the South African Republic
north of it. A year earlier, in 1835, settlers in Natal had asked for
recognition by the Home Government, but it was refused, and

108 ECONOMIC DEVELOPMENT OF ENGLAND

in 1840 they, too, formed a Republic. However, in 1844 Natal
was annexed, and in 1847 British Kaffraria was formed. In
1850-53 came the " Great Native Rebellion " of Kaffirs and
Hottentots, and in 1853 Cape Colony was given representative
government. The English colonists opposed the full advance to
responsible government, fearing the Dutch majority, and it was
not till 1872 that they ventured to accept it. Meanwhile, English
policy had been playing fast and loose with the burghers of the
Great Trek. In 1848 England annexed the Orange Free State,
in 1852 she recognised the Transvaal as independent, and in
1854 abandoned the Orange Free State. In 1856 Natal was made
a Colony separate from the Cape, and in i860 the racial problems
were increased by the introduction there of Indian coolies. In
1865 ostrich farming was added to the industries of the Colony,
and in 1867 the diamond rush began, which led to the annexation
of Basutoland and Griqualand West in 1871. Kimberley dates
from 1870. Gold had been known for some years to exist in
various districts, but the Boers had made prospecting illegal,
rightly foreseeing the result of admitting thousands of new settlers
to their primitive pastoral existence. In 1868, however, the
finances of their Republic were so bad that they reversed their
policy, and during the 'seventies several goldfields were opened
up. The real gold era did not begin till after 1880. Copper,
tin and coal mines were also worked at this time, but the main
industries were agricultural and pastoral. Horses, cattle, sheep,
goats and ostriches were bred. The sheep were grown mainly
for wool, and merinos were preferred.

In South Africa political and economical history are inextricably
mixed. For the best part of a century it has been a battlefield
for rival races, rival moralities, rival views of what constitutes
the good in life. And this battle has gone on against a background
of native races, too backward yet to mix happily with the invaders,
not primitive enough nor decadent enough to vanish in the clash
with the bringers of a more complex order. Perhaps we may
sum up the situation by saying that in South Africa the seven-
teenth and the nineteenth centuries fought it out, in the presence
of an overwhelming audience of an early iron age, which was at
the same time a constant danger to both the warring centuries.

In 1874 the recalcitrant Dutch burghers seemed to have effec-

IMPERIALISM AND SCRAMBLE FOR MARKETS 109

tually established their independence in their northern wilds, but
all was not well with them. Financial stress had already forced
them to admit to their borders the gold-seeking element that
could only be a danger to their peaceful pastoral existence ; the
nineteenth century was encroaching on the seventeenth. In
1877 a fresh danger arose ; the Transvaal burghers were in
danger of being exterminated by the Zulus, and Great Britain
stepped in and annexed the Colony. Two years later, Cetewayo,
the Zulu king, was overthrown and the danger at an end, but
Great Britain did not keep some of her promises with regard to
the autonomy of the Colony and the Transvaal Boers revolted.
They defeated the British troops at Majuba Hill in 1881, and the
recognition of the Transvaal as an independent Republic under
British suzerainty followed. This withdrawal on the part of
Britain came on the eve of a great expansive movement, which
culminated in a general scramble for the whole African continent
between the great European Powers. Consequently the policy
was almost certain to be reversed eventually, and the certainty
became absolute when the great gold reef of the Witwatersrand
was opened up in 1884. A vast influx of nineteenth-century men
followed, and rapidly became a cancer in the body politic of the
seventeenth-century Boers. On its side the nineteenth century
disputed the right of a handful of farmers to keep a rich territory
to themselves, or to tax and repress the enlightened energy of
modern capital. Cecil Rhodes, the most prominent Englishman
in Cape politics, a man with vast visions of a great African Empire
for England, strove on the one hand to reconcile Dutch and
English, and at the same time to develop a purely English region
to the north, a territory now called Rhodesia. His difficulties
were increased by the presence, wherever gold or diamonds
appeared, of groups of international capitalists, to whom politics
were merely a useful card in the game of beggar-my-neighbour.
South Africa was rapidly becoming the home of trusts. By 1888
the De Beers Company controlled the diamond output, which was
duly regulated in the interest of high prices. The inevitable
clash between the capitalists of the Rand and the obstinacy of
Paul Kruger, the President of the Boer Republic, was anticipated,
and for a time postponed, by the Jameson Raid of 1895, but four
years later the seventeenth century made its last stand, and for

no ECONOMIC DEVELOPMENT OF ENGLAND

three years held the nineteenth at bay. By the Peace of Vereeniging
in 1902 the war ended, in the admission of the Boers that they
could not indefinitely fight the Empire, and on the other part
by a promise of early and complete self-government. This
promise was fulfilled in 1907 and 1908, and was followed in 1909
by the Union of all the Colonies of South Africa south of the
Limpopo. Owing largely to the statesmanship of the two Boer
generals, Botha and Smuts, the Union has become a reality and
the self-government real. The Union has still to solve the
problem of the black natives, for here the whites are faced
with an overwhelming and increasing number of backward but
advancing peoples ; that is, indeed, the problem of all Africa.

Meanwhile the produce of the country grows. The chief
items are gold, diamonds, copper, tin and coal, horses, cattle,
sheep, goats and ostriches. There is a large wool export, and
that of fruit is increasing ; wine has been made and exported
since early days.

Australia. — It is pleasant to turn from the home of racial
squabbles and established trusts to the two most purely English
of our Colonies, where a democratic franchise has produced
results at times startling to European conservatism. Australia
and New Zealand have been throughout the last fifty years the
scene of a most interesting series of experiments on the lines of
State Socialism.

At first sight it seems remarkable that Australia and New Zealand
should have remained so long outside the known world ; the
cause lay in the fact that all the fertile coast lands of the former
faced east and south, while ships travelling from the Spanish ports
of South America were blown north-west to the Philippines or
New Guinea by the prevailing winds of the South Pacific. Torres,
in 1595, must have sighted Australia and sailed right through the
strait, but he did not land. In 1606 a Dutch explorer reported
" no waterway " south of New Guinea, and so, although his
compatriots did actually discover patches of the west coast, as it
appeared barren and useless they took no further trouble beyond
calling it New Holland. In 1636 Tasman sailed to Mauritius,
struck south till he reached the belt of west winds, and then sailed
with them till he hit up against Tasmania and then New Zealand,
and returned home to Java by the north of New Guinea, missing

IMPERIALISM AND SCRAMBLE FOR MARKETS in

Australia entirely. At this date all geographers believed in a
great southern continent stretching across the Pacific, and Tasman
thought New Zealand was an outlying part of this. At the end
of the seventeenth century Dampier explored the west coast of
Australia, but the east and south remained hidden. In 1768,
after the Seven Years' War, the English Government decided to
send some of its out-of-work naval captains exploring. Among
these Lieutenant JAMES cook took a party of astronomers to
Tahiti to observe a transit of Venus, and then went on to search
for the great south continent. Sailing 1 ,700 miles south from Tahiti
he turned west and eventually met the east coast of New Zealand.
He sailed round it, and showed it to be two big islands, was blown
north, struck the south-east corner of Australia, followed the
coast north to Cape York, found he had got to New Holland, and
promptly annexed the whole land in the name of George III.
With him was a botanist, Joseph Banks, who conceived the
greatest enthusiasm for the new land and strongly urged colonisa-
tion. When the question of providing for " loyalist " emigrants
from the revolted American Colonies came up, it was proposed
to settle them on land in Australia, with convicts to solve the
labour problem. There was the usual delay and muddle, and
in the end the " loyalists "went elsewhere,1 and only the convicts
reached the new land, the first batch being sent in 1787. A
settlement was made at Sydney, and for twenty years the twin
problems of food supply and discipline were faced by the Governor.
In 1797-98 Flinders and Bass explored the south and east coasts
and round Tasmania, and after 1800 Tasmania also became a
penal settlement. In 1803 Flinders circumnavigated Australia.

In Australia the natives gave little trouble. Tribes, possibly
of Indian Dravidian stock, in a primitive stage of hunting life,
were sparsely scattered over the land. Contact with white races
soon diminished them, and they rapidly decreased in number.
The black fellows of Tasmania were of even more primitive stock,
and they were killed off by the white convicts like pestilential
animals. For themselves, possibly, their fate was fortunate, but
the loss to science, in the extermination of a people less developed
than any now extant, was considerable.

Meanwhile, in New South Wales free settlers were arriving,

1 Sec p. 100.

ii2 ECONOMIC DEVELOPMENT OF ENGLAND

and in 1804 Macarthur imported some merino sheep from the
Cape, and Australia's staple industry was founded. From
1 8 10-2 1 General Lachlan Macquarie pursued the enlightened
policy of encouraging the convicts to earn their freedom, and, to
provide them with lands, he opened up the hinterland. The
period 1825-31 saw the great explorations of Sturt in the Murray-
Darling region and a strong struggle against an unprogressive
Governor and a fight for political liberties. Some sort of order
was produced in Tasmania after 1 824, though it was order without
freedom, and attempts in 1824 t0 colonise West Australia
failed.

From 1831-46 New South Wales was controlled by two great
Governors, Richard Bourke and George Gipps ; between them
they reformed the old convict settlements, got rid of transportation
in 1840, and evolved a plan of " assisted emigration " to get out
steady settlers and young women. Meanwhile, in 1834 South
Australia was started by a band of colonists, but some bad mistakes
were made which led to land speculation, and the early years were
anarchic. George Grey (1841-45) brought about order, and from
that time South Australia continued quietly prosperous. It was
spared the problem of convict settlers. In 1836 Melbourne
was founded, and later partially controlled from Sydney. Mean-
while, a new problem arose in New South Wales ; men began
to move out of the settled parts and occupied large areas of the
interior as sheep ranges. They were known as " squatters " and
were really trespassers. But the Government did not dare to
interfere much, for the prosperity of the Colony was largely
dependent on the wool industry. Bourke went so far as to charge
j£io for a licence to trespass, and by 1846 a few hundred squatters
were spread all over the Murray- Darling basin, which had been
surveyed by Sturt and Mitchell a few years before. In 1842
New South Wales obtained self-government with a high property
qualification for the franchise, and the landed interest was supreme.
In 1846 the colonists successfully resisted an attempt by Earl
Grey to resume transportation, and secured for themselves and
for Tasmania freedom for ever from this imposition. In West
Australia alone convict settlements remained till 1868 ; this was
at the colonists' request, the labour problem seeming at the
moment otherwise insoluble. In 1851 four separate Colonies

IMPERIALISM AND SCRAMBLE FOR MARKETS 113

were recognised : New South Wales, Tasmania, South Australia
and Victoria.

But that same year of 1851 saw a change that revolutionised
the Colonies. Gold was discovered on the Macquarie River in
New South Wales, and then at Ballarat and Bendigo in Victoria.
There was an immediate rush from the towns, and labour became
scarce. Next year crowds followed from Europe and America.
This influx changed the character of the Australian people,
taking the power from the hands of the landowners and squatters
at the very time that constitutions were crystallising. As a result
they became much more democratic than anything in Europe,
though we must note at the same time that the franchise in South
Australia, where gold was not found, was the most democratic
of all, being based on adult male suffrage. In 1855 all four
States gained responsible government. In 1859 Queensland was
formed into a State.

The story of Australian exploration is not less great than that
of Africa. In 1840 Eyre had crossed from Sydney to St. Vincent
Gulf, while Leichhardt and Mitchell had opened up parts of
Queensland in 1843-44, and 1845-46. In 1848 Leichhardt tried
to cross the continent from the Darling Downs to Perth ; his
whole party disappeared and left no trace. In 1855 Gregory
discovered the Lake District, and in 1862 Sturt crossed the
continent from north to south, which Burke and Willis had done
two years before over a route further east.

Railways came slowly in Australia, and in 1870 there were
not laid 1 ,000 miles ; after 1875 there was, however, rapid progress.
The tendency in Australia to State control has not been imposed
from without, but has evolved naturally from its special needs.
A scattered population, practically of one race, soon realised that
its chief needs were such as demanded big capital, and that such
capital could only come from the combined efforts of all its
inhabitants. No man, no group of men, in Australia could find
the money to provide railways, on which the return for many
years must lie in the indirect benefit of all and not in dividends
to shareholders. Two alternatives, therefore, presented them-
selves : State enterprise or the domination of English capitalists.
The former did not terrify them, nor were they convinced of its
inevitable failure, for from the earliest beginnings of the Colony

E.D.E. '•

ii4 ECONOMIC DEVELOPMENT OF ENGLAND

men had had to turn to the Government to tide them over ever-
recurring difficulties of labour, of drought, and of famine. On
the other hand, America was already showing the danger of large
accumulations of capital in a few hands, in a country organised
as a democracy. On the whole, the Australian judged it would
be easier to control his collective self than a few swollen members
who had gathered up the reins of power. Australia was not
troubled, like South Africa, with a racial division among the
voters, nor by a native problem, which might some day have to
be solved by admitting black men to the councils of the white.
If ever a democracy was favourably placed for engaging in State
as opposed to private enterprise, here was one.

First, of course, came the land question, the progress of which
we have followed up to the semi-legalisation of the squatter's
position. After 1850 it was complicated by the rapid increase
of population due to the gold rush, and the demand for land
became constant. At first the policy was tried of giving land to
any one who would fence and improve it and live on it. A time
of violent speculation followed, land often being taken merely
with a view to forcing the squatter to buy out the holder and so
waste his capital. The land did not get occupied, and the squatter
had less money for using it as pasture. In 1885 an attempt was
made to introduce order, and in New South Wales all squatters'
runs were halved, and one-half leased to them for a term of
years ; the rest was open for selection by agriculturists. Victoria
followed, and South Australia resumed leased land at six months'
notice ; other Colonies had plenty still undistributed. By 1891
in Australia and New Zealand altogether about 125,000,000 acres
had been alienated, though only one-fifth of it was closely settled.
Of late the tendency everywhere has been to lease land rather than
to give or sell it, usually on a perpetual quit rent.

In 1858 the torrens land transfer act had arranged
for a register of all lands on transfer, and thus made buying
land a simple and easy process, not a complicated and ex-
pensive puzzle as in England. By 1888 it seemed safe to give
up State assistance to emigration, except in Queensland and West
Australia ; Victoria had ceased subsidies soon after the gold rush.
Of all State enterprises the most important were the railways ;
in 1906 some 15,000 miles had been built, for which £132,000,000

IMPERIALISM AND SCRAMBLE FOR MARKETS 115

had been borrowed ; this was nearly three-fifths of the public
debt. They pay their way, and without them the country could
not have been developed. In 1872 the stupendous achievement
of the overland telegraph from north to south through the arid
central plains linked the Colony with England by way of Java.

The land and its communications are the fundamental matters
in every State, but the Australians were not content, having
settled there, to leave economic forces to work themselves out,
either to success or disaster. They had no mind to see reproduced
unnecessarily, in a new uncrowded land, the miseries so difficult
to cure in old-established congested Europe. About 1896, people
became aware that long hours and sweated labour were far too
common. Trade Union action had secured decent conditions
for skilled men ; women, and the weaker workers generally, had
been left to the untrammelled play of " economic forces."
Australia had no tradition of laisser-faire , quite otherwise, and
each State in turn took up the matter and dealt with it drastically.
Victoria, in 1896, by its Shops and Factories Acts established
Wages Boards in certain industries and extended them in 1900.
South Australia quickly followed, and a minimum wage now
secures the workers in most trades throughout the Common-
wealth. The attempt to prevent strikes and lock-outs by com-
pulsory arbitration was an experiment initiated in the early part
of the present century. As one would expect, there is free
primary education, except in Tasmania, and no State help for
denominational schools. New South Wales has State High
Schools ; other States give scholarships to private schools. There
are four Universities.

But if Australia is to maintain a standard of decent living for
all her citizens, it is obvious that she must take precautions as to
whom she will admit among them. Hence has arisen what is
the most fixed determination of rich and poor alike, the mainten-
ance of a " White Australia." Not merely will she keep at bay
the backward dark races of Polynesia, or even the Indian coolie,
either of whom would drag down by his low standard of living
the welfare of her workers ; she is even more fiercely determined
to bar her doors to the two great yellow civilisations, whose
numbers, once admitted, might so easily dominate her own less
prolific, and, indeed, less industrious race. And, looking over

11 j

u6 ECONOMIC DEVELOPMENT OF ENGLAND

the many countries of the world, where problems arise from the
mixing of widely differing races and cultures, who dare say she is
wrong ? Those who venture to criticise point out, that in a fertile
area, which, including New Zealand, is five times the size of France,
there are less than six million inhabitants, and that in certain
parts of it field labour is almost impossible to white men. Will
Japan and China, the former now ranking as a first-class military
and naval Power, indefinitely put up with the assumption, by a
comparative handful of white men, of the right to reserve to
themselves one of the choice spots of the earth, which they do
not even effectually occupy ? That is a question to which an
answer must be found in the near future. The weak place in
the Australian defence is the Northern Territory, a fertile stretch
of land lying close to the Equator. Its cultivation by " Kanaka ':
labour — indentured men from the Melanesian islands — tried for
a time, has been stopped, and though in Queensland the use of
machinery has enabled sugar to be grown with white labour, it
cannot compete with that of Java and Fiji, where black workers
are available, and it only retains the home market by a protective
tariff.

Scattered as are the five great Australian States, it was obvious
that sooner or later some sort of Federation would be essential .
It was suggested by Sir Henry Parkes in 1889, and after ten years'
controversy the five States came to an agreement. In 1901
the commonwealth of Australia came into being. The
terms of the federation differ from those of Canada. In
the latter all powers not definitely reserved to the provinces
become functions of the Dominion ; Australia followed America,
and decreed that all powers not definitely handed over to the
central Government remained with the federating States. Pro-
vincialism is, in fact, very strong in Australia, so strong that even
the present dominant Labour Party, which stands to gain by the
change, opposes any increase in the central control. The chief
advantages gained by the Federation are : —

(a) Inter-colonial trade is relieved of customs tariffs.

(b) There is a common policy for railways, irrigation, land,
and the treatment of natives.

(c) All questions of foreign labour and of arranging trade
disputes are treated alike throughout the Commonwealth.

IMPERIALISM AND SCRAMBLE FOR MARKETS 117

(d) There is one High Court of Justice for all Australia.

(e) It is easier and cheaper for the Federation to borrow capital
in Europe and America than for the individual States.

The staple product of Australia is wool, with minerals, especially
gold, a good second. The coastal belt, reaching some 400 miles
inland, is damp enough for agriculture, and the sheep grown
there are used for mutton rather than wool ; but the " back-
blocks," stretching away to the desert centre, are the great home
of the merino sheep. The Australian climate improves wool,
and the wool of the merino sheep has become longer, softer, and
more elastic since its introduction and the weight of the fleece
increased. Twelve acres of land are needed to a sheep, and
paddocks may be forty miles round the fence. Unfortunately,
while the sheep improved the land did not. When white men
first came to Australia the rolling plains were covered with grass,
and the settlers set about " clearing " it by removing the low
scrub bushes. But Nature's equilibrium here was not the same
as in the damp, cold North, and when the bushes went there
was no screen to the winds, and rapidly the light soil blew away,
leaving nothing but hard red clay ; much of the grass has dis-
appeared and droughts are a constant enemy. For a time the
early squatters tided over crises by borrowing, one good season
paying the debt on the bad. From 1891-1902 came a run of
bad seasons and the flocks were reduced by half. English
investors drew back, banks failed, and the Colony had a bad
time. After 1906 there was recovery, and science was brought
to bear on the problem ; irrigation by artesian wells was intro-
duced, railways pushed forward, and the rivers provided with
locks for water transit and water storage. One-third of the wool
of the world is produced within the British Empire and over one-
half of that comes from Australia and New Zealand.

The chief gold-producing areas are now in West Australia,
giving more than double the quantity from Victoria. The grc.it
boon brought to Australia by its goldfields has been men. Alluvial
gold mining, unlike the reef-boring of the Rand, is a poor man's
job, asking little capital, and any news of such gold brings
thousands of immigrants.

Wheat and dairy produce supply the home market, and since
1890 there has been a surplus to export. On the east coast the

u8 ECONOMIC DEVELOPMENT OF ENGLAND

dairies are ousting both wheat and sugar-cane fields. The
farmer merely produces milk ; all the rest is done in factories,
from which the cheese and butter are loaded into the freezing
chambers of coastal steamers, and from these again to the big
boats at Sydney. All the produce is inspected and graded by
the Government before export. The frozen meat trade is not
so great in Australia as in New Zealand, and really disposes only
of surplus stock. The small merino sheep is not so popular as
mutton as are the large cross-breds of New Zealand, and the
great distances from the interior in Australia make its transport,
whether alive or dead, difficult. Up to 1891 horse breeding was
a growing industry, but since then has been stationary. Queens-
land, as we have seen, produces sugar ; fruit and wine and
hard woods are increasing exports.

The external trade of Australia is large and valuable ; estimated
per head of the population, it amounted in 19 14 to £45. The
great need of Australia is a constant supply of water, and there is
now promise of its attainment. The central plain has far below
its surface a layer of porous rock which, on the edge of the plateau,
shows an outcrop of varying breadth, sometimes seventy-five
miles. Much of the river water that flows over this outcrop is
soaked up, and, owing to a tilting of the layer, it pours down and
back westward under the plateau. Artesian wells of sufficient
depth can strike this water almost anywhere, and with it can turn
dry sheep runs into green orchards and gardens, and water great
flocks which are otherwise at the mercy of the rainfall. As man
comes to understand scientifically the way to manage these great
areas, Australia should increase its already considerable happiness
and prosperity.

One further development must be noted ; in 1907 Australia
herself took a step on the Imperial road, and is now responsible
for the government of a strip of territory in New Guinea.

New Zealand. — There were settlers in New Zealand by the
beginning of the nineteenth century, and missionaries arrived in
1 8 14. The native Maoris were a very different people from the
Australian black fellows, and while trickery and ill-treatment by
some of the settlers brought fighting and resistance, decent
treatment at the hands of others, and later by the Government,
brought peace and good feeling. Almost alone among lands of

IMPERIALISM AND SCRAMBLE FOR MARKETS 119

the British Commonwealth, New Zealand can show a fairly
contented and rapidly civilising native population.

A British resident was first appointed in 1833, but the first
party of any size arrived in 1840, sent out by the New Zealand
Land Company. They began badly by buying from Maori
chiefs for trifling trade articles land which the chiefs had no
power to sell. Maori tribal organisation held land in common,
and it belonged to the tribe and not to the chief. But the Company
claimed to have bought a million acres of land for an expenditure
of less than £9,000. At the same moment the French were
planning a settlement, and it was evident that if New Zealand
did not become British it would become French. So in 1840 it
was annexed and a treaty made with the Maoris, called the Treaty
of Waitangi. The chiefs were promised full and undisturbed
possession of their lands collectively and individually, the Crown
to have the first claim on any lands the Maoris might wish to
sell. Subsequent troubles were due to breaches of the treaty.
The New Zealand Land Company defied the treaty and set about
occupying the land out of which they had swindled the natives.
England sent out a Commissioner to determine the quarrel, but
the colonists would not wait, and the Maoris burnt the surveyor's
tents and resisted the trespass. The usual atrocities and reprisals
followed. In 1845 Captain George Grey, who had just put
South Australia on its feet, was sent as Governor. He reassured
the natives, refused, even at the command of the Colonial Office,
to repudiate the treaty, and succeeded in controlling both colonists
and Maoris. Meanwhile, in 1848, a Scotch Presbyterian settle-
ment, Otago, was made in the South Island, and in 1850 the
Canterbury district, with Christchurch as centre, was established
by Church of England colonists. From these settlements grew
the wool industry. The South Island was happy in having no
native problem. In 1853 a constitution was made arranging for
both central and provincial Governments, which division later
produced quarrels. The Maoris were not excluded from the
franchise, but few of them had the necessary property qualifica-
tion, so that practically they were unrepresented, though they
formed a majority of the population and paid half the taxes.
The same year Captain, by that time Sir George, Grey went to
South Africa, and under succeeding Governors the interests >>t

120 ECONOMIC DEVELOPMENT OF ENGLAND

the Maoris were neglected. Education lapsed and native magis-
trates were not appointed, while the worser kind of colonists
defied the law, sold the natives drink, and repudiated their
marriages with Maori women. The result was a deplorable
series of wars that dragged on from 1859-70. The Maoris
were outnumbered and outgunned by the Imperial troops, but
their fighting was heroic and their tactics difficult to counter.
Sir George Grey returned in 1861, but the breach was too wide
and the memory of past misdeeds on both sides too keen. Mean-
while, the discovery of gold in 1852, 1858 and 1861 produced a
rush to the Colony, and the population doubled in three years.
In 1865 another rich field was discovered and individual colonists
flourished, though the finances of the Colony were drained to
the uttermost by the interminable war. In 1868 the franchise
was altered, and the Maoris given four Members of their own.
Since then there have been Maori Members of the Upper House
and of the Executive Council.

In 1870 the prospects of the Colony turned the corner. The
Maori War ended, the University was founded, vote by ballot
adopted, a Government Insurance Office and Registry of Land
established, and in 1872 a Public Trustee appointed.

Even more than Australia, New Zealand has moved in the
path of State Control. In 1870 a new policy of public works
was organised. The Colony borrowed £10,000,000 for public
works and assisted emigration, and a period of great prosperity
followed. In 1877 a uniform system of education for the whole
Colony was established free, compulsory, and secular ; in 1879
triennial Parliaments were decreed and manhood suffrage.
Women's suffrage followed in 1893, and the abolition of plural
voting in 1896. Members of both Houses are paid. New
Zealand passed the first Compulsory Arbitration Act in 1895,
and Old Age Pensions were granted in 1898. Already in 1893
Local Option in the matter of alcoholic drinks was working, and
the country rapidly moved towards total prohibition. There is
a State Bank. New Zealand was also the first State to impose
graduated taxes on land and incomes. The same tendency as
in Australia towards leasing rather than selling State land is
seen, and land of large estates has been bought back and let in
smaller parcels at a 5 per cent, quit rent. There are very stringent

IMPERIALISM AND SCRAMBLE FOR MARKETS 121

Factory Acts, and the early closing of shops was one of New
Zealand's pioneer measures. In spite of, or because of, all this
State regulation, the trade of the Colony nearly doubled between
1896 and 1906. The chief exports besides wool and gold are
frozen mutton and dairy produce, both carefully fostered by the
Government, which provides cold storage at the ports ; in the
early years this was free of charge.

In 191 2 the Government established a standing Commission
for industrial investigation and then nationalised the iron industry.
It is evident that, if the future centre of the world is to be the
Pacific, rather than the Atlantic, the British-sprung portion of it
will not be behind the others in enterprise and initiative.

Other Expansions. — Such was the history of the great Colonies.
Meanwhile, we did not neglect to acquire, with an absent-minded
air, strategic points dotted about the world. In 1839 we occupied
Aden, an important point on the overland route to India, and in
1 84 1 Hong Kong was ceded by the Chinese as a guaranteed
base from which we might import the opium they wished to keep
out. In the same year Sarawak in Borneo came under the control
of an Englishman, Rajah Brooke. In 1850 the Danish settle-
ments on the Gold Coast passed to us, to be followed in 1861 by
Lagos, and in 1872 by the Dutch stations in West Africa. In
1854 we annexed the Kuria Muria Isles, and in i860 Kowloon
was demanded as a safeguard to Hong Kong. In 1874 the Fiji
Isles were occupied.

The debates in the House of Commons on this last annexation
illustrate well the divergent opinions of the time on Imperial
expansion. The situation had the usual complications of the
misdeeds, real or asserted, of lawless British subjects, for a band
of adventurers had established a system of supplying Polynesian
labour to Australia and elsewhere that was said to be slavery and
to be maintained by kidnapping. In 1873 these men had estab-
lished a Government of some kind on the islands, and the Glad-
stone Ministry had determined to recognise it. The natives and
the other white folk in Fiji asked for annexation as an alternative,
and Australia protested strongly against the recognition of a band
of lawless slave traders, for such they maintained was their
real character. The Opposition urged that Fiji desired annexa-
tion, that the islands would form a much-needed naval station,

122 ECONOMIC DEVELOPMENT OF ENGLAND

and that the natives would obtain British justice and order, instead
of being exploited by British adventurers. Gladstone replied that
the evidence of slave trading was not conclusive, and the men were
entitled to the benefit of the doubt, that by freeing our trade we had
made the acquisition of fresh territory unnecessary for our com-
merce, and he foresaw with dismay increased expenditure on the
Colonies. Another speaker doubted whether we were such excel-
lent governors that our rule abroad must be extended. In 1874,
when Disraeli returned to power, the annexation was made.

The African Scramble. — Up to about 1880 English interests in
Africa were confined to the south and a few places on the west
coast, and the general attitude towards this vast little-known
continent was a total political indifference, tempered by philan-
thropic and commercial interest in the doings of missionaries and
explorers. But about that date it became obvious that, however
indifferent English politicians might be, it was far otherwise with
Continental statesmen. The start obtained by Britain from her
priority in time in machine production and steam navigation
was about to be challenged by two, at least, of the other European
nations. By 1884 English traders on the Lower Niger, where
palm oil was becoming an important article of commerce, found
that the French, penetrating from Algeria in the north, had
established themselves securely in the Upper Niger and blocked
the way to expansion inland. In 1883 Germany, seeking her share
of the new markets for tropical produce, claimed control of a
territory east of the Niger, lying along the River Kameroon.
Obviously, some working agreement was necessary, unless the
nations were prepared to fight again and on a larger scale the wars
for overseas markets of the eighteenth century. In 1885 a
conference was held at Berlin, at the suggestion of Portugal,
when various matters were settled. Great Britain was later
allowed a protectorate over the Lower Niger area, and six years
later the British territory was extended inland to a line joining
Say, on the river, to Lake Chad. The Conference also settled
the future of the Congo basin, and created the Congo Free State,
a territory already occupied by the International African Associa-
tion, of which Leopold, King of the Belgians, was chief promoter.
Agreements were come to as to trade and the navigation of the
rivers, the suppression of slavery, and the definition of " spheres

IMPERIALISM AND SCRAMBLE FOR MARKETS 123

of influence." There was to be freedom of trade throughout the
Congo basin and eastward to the Zambesi and Mozambique.

The story of East Africa illustrates the rivalry even more forcibly.
The great lakes, Tanganyika, Albert, and Victoria, had already
been discovered, when, about 1870, we began to take an interest
in Zanzibar, occupied then by Arabs, who had settled there from
South-East Arabia some three centuries before. By 1879 there
was a cable from Zanzibar to Aden, but when in 1878 the British
India Steam Navigation Company tried to lease 1,100 miles of
coast line and a total area of 590,000 square miles from the Sultan
of Zanzibar, the British Government disallowed it. In 1885,
however, a German company secured a large part of the area, and
were backed by a charter from the Emperor ; the English Govern-
ment became alive to the existence of a new rival, and in 1886
the two European nations agreed to divide the whole between
them, and to confine the Sultan to a strip of coast ten miles wide.
In 1888 the British East Africa Company was chartered, and in
1890 we exchanged Heligoland, an island off the coast of Germany,
for the right to extend considerably the East African Protectorate,
which now included Zanzibar. France here put in a word, but
agreed to recognise our protectorate, if we, in return, recognised
hers in Madagascar. Finally, in 1891, the Sultan of Zanzibar
leased, and later sold, the last bit of his property to Italy. By
1895 the British East Africa Company had failed, and the English
Government bought up their rights for £250,000 ; an Arab
revolt was suppressed and the Protectorate administered as a
Crown Colony.

To the south a series of missionary and trading ventures,
followed by international squabbles, led to a final agreement
between England and Portugal in 1891 concerning the territory
round Nyasa. Free navigation of the Zambesi and the Shire
was secured and " spheres of influence " defined. A protectorate
was formed over the Nyasaland district and called the British
Central Africa Protectorate, and the rest was formed into North-
East and North- West Rhodesia.

A special reference is necessary to Egypt, usually coloured red
on English maps, to answer the question " What arc we doing
there ? " The average Englishman is even more ignorant on
the point than Andrew Lang pretended to be in his Letter to

124 ECONOMIC DEVELOPMENT OF ENGLAND

Herodotus. " But what they did there (as Egypt neither belongs
to Britain, nor Britain to Egypt) I know not, neither could they
tell me." The outline of the story is this. In 1875, Ismail,
Khedive of Egypt, had sold his shares in the Suez Canal to the
British Government ; in 1876, having nothing more to sell and
having wrung the last possible farthing out of his unfortunate
subjects to pay for his extravagances, he fell back on the simple
plan of repudiating his debts. Thereupon an international debt
commission was formed in the interest of the creditors, and soon
after England and France assumed control of Egyptian finance.
In 1 881 Arabi Pasha became chief Egyptian minister and set
about plans to remove these foreign bailiffs, who held up the
country for its tyrant's debts. Neither France nor England
seemed anxious at first to take up the challenge, but in 1882 the
English Fleet bombarded Alexandria, and the Khedive dismissed
Arabi, who led an armed revolt and was defeated at Tel-el-Kebir.
The creditors' rights thus established, it was natural for the troops
to be withdrawn, but England decided to leave 10,000 " as a
temporary measure," the dual control was abolished, and England
remained supreme. France was not exactly pleased ; after all,
it was the genius and money of her citizens that had built the
Suez Canal ; England was only the capitalist absorber of other
men's work. However, England had her way, the troops stayed,
the debt was a first charge on the taxes paid by the fellaheen, and
she, and she alone, was in 1904 recognised as being the proper
person to decide the time of her own withdrawal. The Egyptians
have long thought the time overdue ; the English Government
still thinks otherwise. To some extent the English occupation
has been mitigated by the carrying out of great irrigation works,
both in the Delta and at Assouan, where the great dam was
completed in 1902.

Let us take one look at the map of Africa . What do we find ?
Roughly, we may say that France and Great Britain share the
largest part ; this was the case in 1914, and since the War it is
even more marked, for the German colonies have all been taken
aWay. If we include Egypt, though we have no right to, there is a
solid block of land stretching from the Mediterranean to the Cape
directly governed by Great Britain. There is also an important
area in the west, and many islands. The French African Empire

IMPERIALISM AND SCRAMBLE FOR MARKETS 125

covers most of the western half of Africa, north of the Equator,
and stretches from Morocco, Algiers and Tunis across the Sahara
to the Gulf of Guinea. On the south-east France holds Mada-
gascar. The rest of the continent is divided between the Portu-
guese, the Italians, and the Belgians. Only two independent
bits remain — the negro republic of Liberia and the kingdom of
Abyssinia.

Railways have been such an important factor in the opening
up of Africa that they have been constructed directly by the
Government. The Bechuanaland Railway received a subsidy in
1893, so that there might be economy in administration of the
territory ; the West African railways are State-owned, for they
are essential both to peaceful trading and to warlike expeditions ;
the railway from Cairo up the Nile was strategic in origin, but
was also expected to open up the Soudan to commerce. The
Uganda Railway was State-constructed by direct labour, and is run
at a profit.

What justification can we white races offer for this ruthless
taking possession of so large a piece of the world, without con-
sideration of the wishes of the present occupiers ? It would be
exceedingly difficult to make any final judgment as to the ethics
of this newer Imperialism. One or two points are, however,
worth discussion. In the first place, all the nations of Europe
have combined to abolish the Arab slave trade. Recent converts
themselves, they have been all the more zealous in imposing
their new faith on others, and it is something to the positive side
of the account that a great authority can assure us that, though
slavery exists still in many parts of Africa, the slave trade is
almost dead, and quite dead wherever Europeans are in real
effective control.

As to our right to force ourselves into the country and impose
rules and conditions on the inhabitants, that would seem to vary
with the district. Obviously, in a world getting rather crowded
and with a fast-rising standard of comfort, it is no use claiming
that a few thousand uncivilised tribes should remain undisturbed,
scattered over a large area full of things useful to other men, but
which they neither use nor preserve. Room must be made for
the men who can employ these natural gifts. But when the
invading nations take to exploiting the backward people, forcing

126 ECONOMIC DEVELOPMENT OF ENGLAND

them to work for little or no return, tying them down to trade only
with certain monopolists and get badly swindled in the process ;
when they force on them their civilised poisons and infect them
with their civilised diseases, it is time to protest on behalf of the
oppressed. Lately in this country there has been a strong
reaction against all Imperialism, and cynical gibes are often
made at arrogant talk of the " duty " of the white races, and
especially of the Anglo-Saxon to play pedagogue to the world.
Much of this derision is deserved, for commercialism has lurked
but thinly veiled beneath the crusade. But it was not quite all
a lie ; there have been men and women who have really shouldered
the " white man's burden," and spent their all of health and life
in the service of those they ruled ; there have been moments
when nations have genuinely risen to the call to help the childish
races without hope of reward or gain. Unfortunately, such
people and such moments are not the most numerous, and the
tendency to exploit the weak and the fear inherent in commercial
rivalry have been given pride of place. It will be a great step
forward if the nations can agree to develop the resources of
tropical Africa on some mutual plan of fair division, making the
welfare of the native races a first consideration in every move.
There is this to the credit of Great Britain, that she stands for
freedom of opportunity for all alike, and that some of her aggres-
sions have been forced on her by the need to anticipate a rival
power, whose occupation would mean exclusion of others and a
rigid monopoly.

Market Rivalry. — The same competition is seen in other
places besides Africa. In the East, France still challenges
England, there is the keenest rivalry between us and the United
States in South America, while China has been cursed by constant
demands on behalf of competing nations to be allowed to exploit
her great resources and the marvellous industry of her people.
For fifty years Great Britain had practically monopolised the
Chinese trade, but after 1897 Russia in the north, Germany in
the Shantung Peninsula, France in the south, and the Japanese
wherever they could get, forced concession after concession from
a people that only asked to be let alone*. As each nation secured
something another came with a demand for an equivalent. Behind
it all was the haunting fear that the time would come when the

IMPERIALISM AND SCRAMBLE FOR MARKETS 127

dominance of the Pacific Ocean would be fought for, and the riches
and millions of China might play a decisive part. America
found herself here a very interested party. Lastly came what
was considered a fresh menace from Germany in the building
of the Bagdad Railway, with its threatened rivalry of our Eastern
seaborne trade.

Problems of Empire. — It is time to take a general view of what
such extension of Empire involves in economic problems.

(a) The need for linking the Empire into some sort of unit
was becoming obvious during the later years of the nineteenth
century. It would seem that the crying need was for its general
defence, but it soon appeared that colonial sentiment was un-
prepared for the central control implied in any measures for
joint action. At the Imperial Conference of 1902 Canada refused
even money contributions for the purpose, and both Australia
and Canada refused to set up an Imperial Reserve Force of troops.
Under the influence of Joseph Chamberlain the move towards
unity was directed into the channel of preferential trade. England
in 1900 seemed unalterably fixed in its policy of free trade and a
tariff for revenue only. The Colonies were more or less ready to
lower their customs to British goods, but it was difficult to find a
way in which some exchange favour could be made, since no
party in England could induce the poorer class to risk a rise in
the price of food, whatever counterbalancing advantages were
offered. Too well had they learnt the lesson of the earlier part
of the century. But most of the goods supplied by our Colonies
were either food or raw materials, and the manufacturers objected
just as strongly to any tax on raw produce as the workers did to
one on food. However, in 1897, England terminated all her
treaties with foreign nations that prevented her giving preference
to her own Colonies on such customs as she did impose (tea,
sugar, wines, etc.), though it risked a £77,000,000 trade to increase
a £24,000,000 one. Canada replied, as we have seen, by granting
a large preference on English goods, South Africa and New
Zealand followed in 1903, and Australia in 1908. Besides these,
inter-colonial preferences have been established, such as that
between Canada and British Guiana in 1912. Canada and New-
Zealand extend their British preferential tariff to the whole
Empire, and South Africa has special treaties with other Colonies.

i28 ECONOMIC DEVELOPMENT OF ENGLAND

We have already seen how the construction of railways has
pushed forward the boundaries of Empire ; indeed, one may
say that, as Rome consolidated her Empire with roads, Britain
has done the same with railways and steamships. A tramp
steamer taking manufactures to the Cape ships a cargo of coal at
Natal for India, where it may load up with raw material and so
home by Suez. Such a route cuts down freights by eliminating
the difficulties of finding a return cargo and the possibility of
having to charge freight on the outward-bound cargo to cover the
cost of return with empty holds. Indeed, lower freights do more
to build up trade than any tariff concessions possible. A subsidy
of £40,000 a year to a line of steamers has almost restored pros-
perity to the West Indies, by creating a great fruit market to
replace or supplement their dwindling sugar industry. Sub-
sidised mail services, both from Britain outwards and inter-
colonial, make possible speedy and accurate delivery of goods,
and " all British " cables, made with an eye on war, tend to turn
the line of commerce to our colonies rather than elsewhere. In

1898 was established the imperial penny post. In 1900
the colonial stock act, which placed such stock on the
list allowable for trust funds, lowered the rate of interest
at which colonial Governments could borrow, and saved the
Colonies and India some £10,000,000 a year, in itself a handsome
preference. In 1899 the Commercial Intelligence Branch of the
Board of Trade was opened, and in 1908 four special Trade
Commissioners for the Colonies were established, with twenty-
three local correspondents. In 191 3 the Imperial Bureau of
Entomology was founded to deal with insect pests throughout
the Empire, and the Dominions contribute to its cost. Since

1899 there have been Schools of Tropical Medicine in London
and Liverpool, and permanent research laboratories have been
established in many outlying parts of the Empire. The progress
towards making the tropics possible for white men has been
considerable.

The result of all these links has been to turn the stream of British
emigration towards our own Colonies. Between 1891 and 1900
28 per cent, of the total migration went there, by 1913 the
proportion had risen to 78 per cent.

(b) The second great problem that confronts the British

IMPERIALISM AND SCRAMBLE FOR MARKETS 129

Commonwealth is the labour question. We have discussed the
effect on labour questions of the determination to have a " white
Australia." In South Africa the question presents equally
serious, though quite different difficulties. After the South
African War it was found very difficult to secure enough black
men to work the Rand mines. The African Kaffir naturally
preferred to work only so long and so hard as would supply his
primitive needs, he saw no reason to increase his wants at the
price of increasing his work. His position was not illogical, and
he had the right to choose. As to white labour in the mines,
there was not enough available of that either, and if there had
been the owners of the mines did not intend to diminish their
dividends by paying white men's wages. So, for a time,
indentured Chinese labour was tried. There is not much to
be said for indentured labour at any time, there is nothing in its
favour if the indentured labourer does not become a colonist,
and this the Chinaman was not allowed to be. At the end of his
term he was shipped home again. After some years of trial,
the plan was given up. The same fate met the attempt to intro-
duce Melanesians into Australia.

The question of Indian immigration to our Colonies is more
complicated. In the first place, the immigrants are not all
unskilled labourers ; artisans, traders and men of education
often seek a permanent home less crowded than their native one.
There are large Indian populations in Natal and in British East
Africa, and in both places its members are bitterly discontented
with their position. They urge, and with justification, that as
they are members of the British Commonwealth there should be
no discrimination against them, and that they should not be
stigmatised by special regulations, limiting their freedom of
movement and occupation of land. In East Africa the handful
of white settlers object to Indian immigrants, who outnumber
them by two to one, having any share in government, and they
rigidly exclude them from all the high-lying land of the colony.

The problem of Japanese immigration is even more difficult ;
for while it is fairly safe, for a time, to bully China and ignore
the grievances of our own subjects, the Japanese claims equality
with the white man, and has proved it in the white man's special
field — machine industry and modern armament. For the moment

E.D.li. '

130 ECONOMIC DEVELOPMENT OF ENGLAND

Japan refrains from challenging a white Australia, and has met
British Columbia by an agreement by which, without foregoing
her claim for an open door for her people, she promises to restrict
their numbers and allow no indentured labourers to come unless
the Government of British Columbia asks for them. One of the
most pressing of the world's problems is to find an outlet for
Japanese emigration and enterprise, where her industrious
workers will not pull down by competition the standard of life
of men who cannot live, as they can, on a little rice.

(c) In considering the economic unity of the Empire we have
to face the fact that at present it cannot be said to be self-sufficing.
It may eventually become so, but. as things are, much of the food
required by our home 45 millions is drawn from outside the
Empire. Also of our total trade in 1913 only 26-2 per cent, was
with other parts of the British Commonwealth. The salient fact
about us still is that, more than any other nation, world peace and
world prosperity is essential to us. The welfare of Germany or
Russia or South America is as essential to our trade as that of
Australia or Canada. Ours is a world market, and, if Germany
is too poor to buy Brazilian coffee, Brazil becomes too poor to buy
our Manchester goods, and we may thereby become too poor to
buy Australian mutton or butter. It is probably beyond human
power now to weld our far-flung people into an economic whole,
defying the world in splendid isolation, even were the dream a
pleasant one.

(d) On the other hand, the range of products of the Empire
is very striking ; there is very little that cannot be obtained at
all within its borders, while nickel, asbestos, jute, mica, palm-oil,
palm-kernels and plantation-rubber are hardly obtained outside.
Within our borders are found 45 per cent, of the world's supply
of wool and 60 per cent, of its gold. It is one of the problems of
government what measures, if any, shall be taken to increase the
quantity of things we do produce, or to add others to the list.
One of these centres round raw cotton, of which there is a growing
world shortage. As we have seen, the United States is using an
increasing proportion of its own supply, and at the same time the
cotton boll- worm is extending its havoc among the crops. The
Uganda Railway was largely built to encourage cotton-growing
in the Soudan, and a subsidy of £10,000 a year was granted

IMPERIALISM AND SCRAMBLE FOR MARKETS 131

in 1910 to the British Cotton Growing Association for
experiment. Nigeria is said to be a very promising area for this
development. In Egypt measures were taken to supply good seed
and to fight the boll-worm, another partial justification for our
illegitimate presence in that country.

In India much scientific investigation is being applied to
agriculture, especially of tobacco, wheat, indigo, fruit, sugar, jute
and silk. Lastly, the Government has helped, though in some-
what niggardly fashion, the wonderful war waged by men of
science against disease, with the result that we now know how to
prevent yellow fever and malaria, if we will go to the trouble and
expense.

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CHAPTER VII

COMMUNICATIONS AND THE MOVEMENT OF TRADE.
BANKING AND EXCHANGE

Railways. — English railways date from the 'thirties ; the time
of their rapid extension was the 'forties. The early days were
days of chaos, for Parliament, in its zeal to prevent a monopoly,
encouraged the establishment of innumerable small companies,
whose average mileage was fifteen ! It soon became evident that
such lack of system was not only wasteful, but impossible, and
amalgamations rapidly took place, until by 1874 there had crystal-
lised out the dozen or so great companies familiar to all of us
before the recent further combinations. Up to 1874 there had
been a very determined opposition by Parliament to all attempts
of the Government to control in any way the private enterprise
of these holders of vital links in the nation's life, for the theory
of laisser-faire was almost universally accepted. The chief
interest of the next forty years lies in the gradual abandonment
of this principle, as far as railways were concerned, so much so
that by 1914 nationalisation seemed the inevitable next step.

In 1873 a public body called the Railway and Canal Com-
mission had been appointed to supervise the companies' doings,
especially in matters of amalgamations or working agreements,
to adjudicate whenever railways proposed to buy up canals, and
to decide disputes between lines. It had not enough power to be
really effective, and the railway companies ignored its orders with
impunity. There were continual complaints as to the excess of
the charges made and of the chaos in which all railway law was
lost, for up to 1888 railway rates were controlled by 900 different
Acts of Parliament. In that year the railway and canal
traffic ACT was passed, by which all companies were com-
pelled to submit within six months to the Board of Trade a schedule
of their charges, and after exhaustive examination several Acts
were passed securing certain maximum rates, that came into

133

134 ECONOMIC DEVELOPMENT OF ENGLAND

force in 1893. Some of these maxima were lower than the rates
the railways had been charging, some were higher. To recoup
themselves for loss on the former, some companies raised those
not already at the maximum. The consequent outcry caused
the passing of another railway and canal traffic act
in 1894, which forbad the railways ever to raise rates once
in use. The result is that the railways can reduce rates but not
raise them. In 1913 a fresh railway and canal traffic
act allowed rates to be raised above the 1892 level in con-
sideration of the great improvements made in the service.
These Acts had the effect of stabilising rates at a fixed point, for
experimental lowering was in practice abandoned on account of
the difficulty of raising the rates again, should the experiment
turn out a loss. Competition in rates between the companies
ceased, and their rivalry was turned to giving better conveniences
and facilities. Those who remember travelling in the 'eighties
will not regret this result.

Since 1894 the movement has been towards amalgamation, for
expenses increased and rates could not. As we have seen,
combinations among the workmen promised to force the companies
to remedy the scandal of long hours and insufficient wages, and
competition was forcing up the speed and comfort, and consequent
expense, of all services. Dividends shrank, and the only cure
lay in more economical working. In 1899 the South Eastern
and the Chatham joined up, and in 1909 it was proposed, pre-
maturely, to combine the Great Northern, the Great Eastern, and
the Great Central. Such combinations eliminated all competition,
and the question arose whether, in that case, private enterprise
could be entrusted with so essential a life line of the body politic.
The attitude of the directors towards the new demands of labour
endangered the whole nation, and the movement for nationalisation
grew. Defects, such as the 600,000 private trucks, that wander
half their time empty seeking their owners, when, if they belonged
to the company, they could take a return load ; loss of life which
might be prevented by extra outlay of capital, such as the burning
of victims in the smash of a train lit by gas instead of electricity —
these things all tended to make the railway shareholder unpopular,
and to convert many, who were not Socialists, to the idea of
running railways at least " for service and not for profit." In

TRADE— BANKING AND EXCHANGE 135

Germany, France, Russia, Switzerland and other European
countries the railways were wholly or partly owned and worked
by the State, and they were often superior to our own.

The condition in England in 1914 is thus summed up by a
recent writer : " The situation in 19 14 was that the railway workers
were demanding the reconsideration of the arrangements of 191 1,
that individual citizens felt that they were ' the helpless subjects of
huge monopolistic organisations.' The impasse was that no effec-
tive system of control had been devised ; that amalgamations had
taken place to such an extent that competition could not be trusted
to provide adequate safeguards, and that the railways could not
continue as they were with a growing wage bill and further demands
for reduction of hours, which was creating an impossible financial
situation." 1 The railway dividend was round about 4 per cent. ;
about a quarter of the capital paid over 5 per cent, and another
quarter less than 2 per cent.

Tramways and Road Traffic. — Though the first tramway (in
the modern sense) was laid in Birkenhead at the end of the 'fifties,
it was not till after 1870 that they became general. From the
first some had been owned by the Municipalities, and most
Tramway Acts allowed for their purchase by Town Councils at
the end of a term of years. This was due to public dissatisfaction
with the use which private gas and water companies had made of
their monopoly. In 1891 Huddersfield got Parliamentary per-
mission not only to own, but to manage its tramways, and after
1892 public management as well as public ownership became
common. The first electric tram system was built in Kansas
City in 1884 ; Leeds was the first English city to adopt it, in 1891.
The early systems had overhead wires ; underground conduit
and surface-contact systems came later. By 1910 there were
176 tramway undertakings owned by Local Authorities and 124
private ones. Two-thirds of the total mileage belonged to the
municipalities.

In 1885 a " safety bicycle " was invented, and the consequent
change in the habits of the people was revolutionary. Road
traffic without horses is not quite a modern invention. From
1827-35 various steam carriages were invented for road travel,

1 L. C. A. Knowlcs, " Industrial and Commercial Revolutions in I
Britain," p. 290.

136 ECONOMIC DEVELOPMENT OF ENGLAND

some of which attained a speed of 20 m.p.h. They met the most

furious opposition. For five years Sir Goldsworthy Gurney

worked, and spent £30,000, to introduce steam road carriages.

Baffled by the turnpike trusts, he succeeded in getting a Select

Committee of the House of Commons appointed in 1834, which

reported favourably, but the Bill authorising his carriages, which

passed the Commons, was thrown out by the Lords, and at that

Gurney gave it up. Traction engines were produced, however,

and increased, but in 1861 they were forced by Act of Parliament

to carry two men and limit their speed to 10 m.p.h. ; in 1865

this was cut down to four miles and a man had to walk in front

with a red flag. This was the legal position to be faced when,

after 1895, Continental engineers evolved a motor vehicle for road

work. In 1896 light motor vehicles under 3 tons in weight were

freed from the 1885 restrictions and might run up to 12 m.p.h*.

This made a place for pleasure cars, but not for the heavier

trade vehicles. In 1903 and 1904 the weight allowed was increased

to 6| tons and the speed to 20 m.p.h. By 191 o there were 124,860

registered motor cars and 86,414 motor cycles, and in that year

a Road Board was appointed.

The effect on trade of this new carrier was great, and has not
yet exhausted itself. In the first place it led to an enormous
improvement in the surface of our main roads, then the motor
delivery van greatly increased the area served by the retail shops
of the large towns and so assisted in the building up of great
businesses. The motor omnibus (the London General Com-
pany ran its last horse 'bus in 191 1) is spreading out the cities
and threatening to make the north and the south-east of England
each one vast suburb. It is helping to bring about a counter-
movement to the nineteenth century drift to the towns, not only
by allowing the workers to live farther from their place of business,
but also by letting the business detach itself from the great railway
centres. For small light goods road motor traffic, which can start
anywhere and go in any direction, is likely to replace railways.
There is therefore no longer the same need for factories to crowd
into the expensive cities, where rent and rates run up the working
costs.

One other method of transport, invented to meet the demands
of the larger cities, where spare space on the surface no longer

TRADE— BANKING AND EXCHANGE 137

exists, is the underground electric railway. The first " tube " at
a deep level was the City and South London, opened in 1890.

Air traffic hardly comes into our time limit of 1914 ; the war
gave it its real birth. It will eventually in all probability revolu-
tionise the world as much or more than the steam engine has done.

Shipping. — The change from sails to paddles and screws, and
from wooden to iron and then to steel ships, does not seem so
revolutionary as the change from horse to steam traction, perhaps
because the ship still remains fundamentally a ship — even, to
some extent, of the same shape. In European history there have
been two great moments of change in sea transit — when sails
replaced oars and when steam engines replaced sails. Until the
sixteenth century the chief theatre of sea commerce and the only
theatre of sea war was the Mediterranean, and for both purposes
in this enclosed sea oars were the chief means of propulsion, sails
but supplementary. But when the trade routes shifted to the
Atlantic, something stouter than an oared galley was necessary,
and there was a rapid development of the round ship or trading
vessel, and later of the galleon for a mixture of war and trade.

Up to the nineteenth century ships remained what we should
now consider small, 500 to 1,000 tons, only the great East India-
men reaching the latter figure. Naturally all ships were of wood.
The first vessel propelled by steam was the Charlotte Dundas in
1802 ; in 1 819 the Savannah crossed the Atlantic in twenty-nine
and a half days with supplementary steam, and the first crossing
wholly under steam was in 1838, taking fifteen days. Not till
then was steam a certain success, even for passengers and mails ;
for cargoes sailing vessels held their own for another twenty
years. From 1840 to 1850 America seriously challenged our
place as seamen, with " clipper " ships, long and narrow and of
considerable speed. We, however, caught her up and after her
Civil War (1862-5) she turned to other enterprise. Clipper
ships continued up to 1874 to bring tea from China, and later,
right on to 1900, wool from Australia.

The early steamships were of wood and were driven by paddles ;
the first all-iron vessel was Brunei's Great Britain, built at
Bristol in 1843. In 1858 the invention of the compound
engine solved the problem of how to carry enough coal for ion-
voyages, by halving the consumption.

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U.S.A. (total for lakes, rivers and seas) steamships ^—:

U.S.A (total; for lakes, rivers and seas) sailing ships =~ =

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Japan sailing ships x x x x x

TRADE— BANKING AND EXCHANGE 139

In 1870 Great Britian had the lead in shipbuilding against the
whole world, and maintained it. In 19 12 half the world's
trade was carried in British ships and two-thirds of all ships
built between 1890 and 1914 were built in Britain. The
mechanical developments were rapid and startling. In 1874
the largest ship was of some 5,500 tons, had a single screw and
compound engines, and made sixteen knots. In 1881 came the
triple-expansion engine, followed in 1894 by the quadruple-
expansion engine, and in the same year the first turbine steamer
was launched on the Tyne. The triple-expansion engine was
made possible by the use of corrugated furnaces and the substitu-
tion of mild steel for iron. In 1888 twin screws were used, and
in 1893 the twin-screw triple-expansion engined Campania was
built for a speed of twenty- two knots, and crossed the Atlantic
in five days nine hours. Then on the Atlantic route came a race
for size and speed ; by 1907 the Mauretania, of nearly 32,000
tons, 70,000 horse-power and 762 ft. long, was racing across the
Atlantic in four days ten hours at a speed of twenty-five knots.
She is run by turbines and has four screws. Her speed has not
been exceeded, though the Imperator and the Acquitania are longer
by nearly 150 ft. At these monsters, built in Hamburg and
Glasgow, in 1913 and 1914 respectively, of over 60,000 horse-
power and about 50,000 tonnage, the increase of size has so far
stayed. On other routes the size development has not been so
great. For one thing, the Suez Canal imposes a limit, and neither
speed nor luxury is so great a consideration. The tendency is
to run one class of boat, reasonably comfortable. The turbine,
as first invented, was only economical at high speeds, and was
used on the Atlantic route and for cross-Channel boats, but in
1910 the geared turbine made it useful at lower speeds. It used
less coal and oil than triple-expansion engines, reduced wear and
tear, was more reliable in rough weather and allowed increased
cargo room. It is, however, threatened with the rivalry of the
internal combustion engine, the noted Diesel engine, first used in
Russia in 1903.

The above is largely the story of the great liners, which travel
to and fro on fixed routes, timed to start and arrive to the day,
almost to the hour. But the greater number of ships are cargo
boats, generally known as " tramps." A " tramp " travels from port

140 ECONOMIC DEVELOPMENT OF ENGLAND

to port, picking up cargoes as it may. The problem of her
construction is by no means a small one. For instance, where
shall the engines be placed so that as she empties or fills with
cargo she shall balance truly ? Too much weight forward and
she is down by the head, all the weight in the middle when she
travels with empty holds, and she may strain badly as she lifts
on two waves fore and aft. Engines and fuel have complicated
marine construction more than enough. Requirements of trade
have complicated it still further. There are now ships built
with holds, insulated from changes of temperature, that bring
cargoes of perishable food in cold storage, meat, butter, eggs and
fruit ; ships that are just gigantic oil tanks ; ships that carry live
cattle over thousands of miles.

The first shipment of Australian mutton was 400 carcases in
1880. In 1900 the total import was 7,000,000, and by 1910
17,000,000. In 1914 there were 200 steamers in the trade.
The insulating is done by filling a space between the walls of the
hold and of the ship with either charcoal or silicate cotton, and
the temperature is kept down by steam-worked refrigerating
machinery. In 1 894 the total charge for slaughtering and freezing
the sheep in New Zealand, with freight, insurance and London
dues, averaged 2d. a pound.

The first specially constructed tank steamer was built in New-
castle in 1886. In 1 912 there were fifty sailing and 258 steam
ships carrying oil in bulk and 480,000 tons more in process of
construction.

What all this expansion has meant to trade can be seen from
a few freight figures. In 1868 a ton of wheat cost in carriage
from Chicago to Liverpool 65s. ; in 1884 the cost had dropped
to 245. Between 1872 and 1888 the freights for cotton and yarn
from or to India had been halved. Then came the inevitable
reaction from competition that cut the margin of profit so fine, and
the combines and shipping conferences arose as already told.1

British shipping has so far held its own almost without Govern-
ment subvention ; there are certain subsidies paid for services
rendered, such as mail carrying, and in the case of some of the
fast liners that they may be available as cruisers in time of war.
The only exception has been a loan of £2,600,000 at a very low

1 See p. 74.

TRADE— BANKING AND EXCHANGE 141

interest to the Cunard Line to enable them to build the
Mauretania and Lusitania to outrace the Kaiser Wilhelm
across the Atlantic. On the other hand, its rivals have been
aided by an elaborate bounty system, started in 1881 by France
and followed by Germany, Italy, Austria-Hungary, Japan, Russia,
Denmark, Spain, Belgium and the United States.

There has been certain progressive legislation to secure safety
and decent conditions at sea, though much remains to be done.
In 1874 a Commission was appointed to inquire into the over-
loading of ships, and it was followed by an Act compelling the
owners to make a line on the ship which would give the maximum
depth to which she would sink when fully loaded. This is the
" Plimsoll Mark," so called from the man whose insistence
secured the reform. After 1882 Lloyd's undertook the marking ;
in 1906 it was raised to allow English ships to compete with
foreign ones. Lloyd's has developed into two great institutions —
one insures ships ; the other registers, inspects and classifies
them. They are inspected every four years and after every
accident, and, if necessary, re-classed. In 1894 was Passed the
Merchant Shipping Act, securing some sort of decent treatment
and conditions to seamen and prescribing minimum accommoda-
tion ; it has been amended and improved several times since,
especially in 1906.

The Board of Trade is responsible for merchant shipping.
Among its duties are the survey of ships, their equipment and
life-saving appliances ; questions of seaworthiness, overloading
and under-manning ; the examination and certifying of officers ;
the maintenance of the laws protecting and controlling seamen ;
international conventions and code signals. A good deal of
control is exercised by Orders in Council. One great help to
seamen comes from the Meteorological Office, founded in 1854.

The Suez Canal.— This was opened in 1869. It had been built
in ten years by Lesseps, a French engineer, with French and
Egyptian money. The English Government and shipping
interests had bitterly opposed the scheme, for it closed the List
to sailing " clippers," and would force our Eastern merchants to
take to steam. For the first six years its success was doubtful.
A mixture of French management, French and Egyptian juris-
diction, Egyptian sovereignty, Turkish suzerainty, and traffic

142 ECONOMIC DEVELOPMENT OF ENGLAND

very largely British did not tend to smooth working. In 1875
the British Government bought up the Khedive's shares for
£4,000,000. Since then, whether as a result or not, the financial
success of the Canal has been great, and in 191 3 the original £20
shares were worth £220. In 1883 came a crisis, owing to com-
plaints from the users of the Canal that their needs were not
considered and the tolls extortionate. An International Com-
mission investigated, and as a result the Canal has been deepened
and straightened and widened. Sixty per cent, of the tonnage
passing through is British .

The Panama Canal is in some ways an even more remarkable
achievement, though it had the advantage of previous experience
at Suez. Its triumph was due at least as much to the man of
science as to the engineer, for the prevalence of malaria and
yellow fever baffled all attempts at construction by killing the
workers by hundreds. The discovery by Sir Ronald Ross that
malaria is carried by a certain mosquito suggested, what was
afterwards proved, that another mosquito might be the evil
agent of yellow fever. When, therefore, the Americans took
up the cutting of the Isthmus of Panama, they first set about
ridding the country around of these insects. A thorough cleansing
of every building in the neighbouring towns was instituted, and
a sprinkling of every pool with paraffin to kill off the mosquito's
young. It was made an offence to leave about any tin capable
of holding water. The result was that yellow fever disappeared
from the Canal and malaria was reduced to one-third of its
incidence. The Canal was opened in 191 5, and is bound
eventually to effect a shift in the world's trade routes.

Docks. — In London the chief addition to the docks since
1874 was made in 1886, when Tilbury Docks were opened. A
short description of the docks of London as they were in 19 14
may be of interest. They stretch from London Bridge to Tilbury,
a distance of over twenty-two miles. On the south side are the
Surrey Commercial Docks in Rotherhithe, which are centres
for timber and grain, also for bacon, cheese and general produce
from Canada. The timber is stacked either on floats in shallow
ponds or on an area of 200 acres of land ; some is under sheds.
From 21,000,000 to 37,000,000 pieces of timber are landed per
year. Grain, if it is in bulk, is discharged by pneumatic or bucket

TRADE— BANKING AND EXCHANGE 143

elevators attached to band machinery ; if in sacks, by porters.
The Surrey Docks are equipped with cold storage.

On the north side are St. Katherine's Docks, once the place
of delivery of the China tea trade, and so supplied with large
bonded warehouses. Much of the valuable or dutiable cargoes
is stored here, such as tea, indigo, wool, tortoise-shell and marble.
One of the warehouses is a scent factory, where the flower extract,
sent from Southern Europe mixed with fat, is extracted and mixed
with alcohol for export. By manufacturing " in bond " the maker
need not pay duty on the alcohol, as it is re-exported. At the
London Docks are wine vaults, whose gangways are over twenty-
eight miles in length, while thirty-two acres of warehouse flooring
house the wool, the handling of which during the wool sales six
times a year employs 1,200 hands. The fleeces of 100,000,000
sheep enter the Port of London yearly. The West India Docks
house rum, sugar, hops, grain and valuable woods. Millwall Dock
takes two-thirds of the grain entering London Port. Its central
granary has thirteen floors and machinery for handling 500 tons of
grain an hour. Below Blackwall are the Victoria and Albert Docks,
taking half of all the shipping tonnage entering, for they are the
docks for big steamers. Tilbury Docks, furthest down the river,
have two very large graving docks, 850 ft. long, from which the
12,000,000 gallons of water can be pumped in one and a half
hours. The Port of London Authority controls the river from
Teddington Lock to the mouth, a distance of seventy-four miles.

In value of the trade passing through it London must, however,
now give place to Liverpool, though this has only been so since
1 91 3. Liverpool is the great exporting centre, London the
importing, and Liverpool trade has not the variety of London.
It imports raw cotton and foodstuffs, and exports cotton, steel
and woollen goods. Its docks are a triumph of organisation and
planned development.

The third port of the United Kingdom, strange as it may seem,
is Manchester, whose place on the map suggests an inland town.
This is due to the enterprise of its leading men, who in 1S82
conceived the plan of a ship canal to bring its raw cotton close to
its factory doors. In spite of strenuous opposition from Liverpm >1
and the railway companies, it secured its Act of Parliament, and
was opened in 1894. Up to 1912 it had cost nearly £17,000,000.

144 ECONOMIC DEVELOPMENT OF ENGLAND

It is thirty-five and a half miles long, its uniform depth is 28 ft.,
and for its greater part it is 120 ft. wide at the bottom. Its largest
lock is 600 ft. by 80 ft., its smallest 150 by 30 ft., and a large
steamer of 12,500 tons can be passed through its chief lock in
eight minutes. The company owns eighty-four miles of railway,
and has water communication with fourteen large canals. Much
of the stock is held by the Corporation of Manchester. At one
point an aqueduct carries over it the Bridgwater Canal. It has
not wrested from Liverpool the import of American cotton, but
it imports much Egyptian, and it takes large deliveries of grain.
For this it has two grain elevators, each capable of storing 40,000
tons. The largest can discharge from six berths at once, and at
the rate of 900 tons an hour.

The grain is taken out of the holds by a series of buckets working
on an endless band ; these deliver the grain on to a band running
under the pavement of the quay to the elevator, where it is again
lifted in buckets to the floor required and poured into great scales,
which weigh it automatically and empty it into the bins. When
wanted it can be sacked and loaded into thirty railway waggons
and twenty carts at once.

The port also owns fifty-nine great oil tanks, and has cold storage
accommodation, in or near the docks, 2,000,000 cubic ft. in
volume. The quays at Manchester itself are six and a half miles
in length.

Cables. — An essential part in the development of world trade
has been played by the submarine cable, which came into use
after 1869. This invention was the first in that process of
annihilating time and distance which still goes on so rapidly.
Twelve main cables link Great Britain to Canada and Newfound-
land ; another joins us, via the Azores, to New York ; there are
four to Gibraltar, and thence three to West Africa and the Cape ;
Canada is linked to Bermuda, the West Indies, and South America ;
a network of cables radiates from Aden to India, to Zanzibar, to
Natal ; three thence link us to Australia, and another passes from
Vancouver to Fiji, and thence to New Zealand and Australia.

General Movement of Trade. — It will be well to take a short
general survey of the movement of trade from 1870. There
were two serious depressions, one from 1875 and the second from
1883-8, and the whole time was far from prosperous. That

TRADE— BANKING AND EXCHANGE

!45

which began in 1875 was due to the reaction from the post-war
boom of 1872 and the disturbance caused by the payment to
Germany of the French indemnity of £200,000,000 ; and through-
out the 'eighties the rivalry of other nations, already noticed, was
encroaching on our monopoly. The development of the American
Middle West, coupled with increasing quickness and cheapness
of transit, was pouring into Europe the wheat of the prairies, and

£'sin
Millions.

Imports and Exports.

mo

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1900 &CS sw

Imports

Exports ...

agriculture began its downward course. We have told the story
of the resulting move for " fair trade." One of the effects of this
rivalry was the growth of joint stock enterprises, since an investor
could thus spread his risks over several industries. Another was
the somewhat belated discovery that the relative contraction of
our trade was partly our own fault. We had extended our love
for laisser-faire to the realm of education and research as well as
of industry, and the work of our inventors had seemed to justify
such casual treatment. But other countries, Germany in par-

E.D.E.

K

146 ECONOMIC DEVELOPMENT OF ENGLAND

ticular, began to show us the difference between the casual
acceptance of the works of men of genius and the organised
effort of an intelligent nation. Other nations found it worth
while to pay men to study, to discover and to invent ; and when
by 1900 we realised that whole trades, such as the making of
aniline dyes and potato spirit and the production of beet-sugar,
had passed to the nation that believed in scientific investigation,
some small belief in education crept into the general mind. In
1902 the State first took real cognisance of secondary and higher
education, and the movement to found modern Universities,
free from the classical tradition, grew apace. 1883 saw the
University of Wales founded ; 1903 Manchester, Liverpool and
Leeds ; while Birmingham, Sheffield and Bristol followed later.
Birmingham adventurously started a Faculty of Commerce,
London a School of Economics.

We have seen the enormous increase of our food imports after
1870 ; the consequence was a great drop in prices after 1873.
We drew our food from almost every region of the world, and
the supply was almost continuous. In the case of wheat it was
entirely so. In 1905 wheat arrived at English ports from some-
where nearly every month :

In January from the American Pacific coast.
In February and March from the Argentine.
In April from Australia.
In May, June and July from India.
In July and August from America (winter-sown wheat).
In September and October from America (spring-sown) and
from Russia.

In November from Canada.1

From 1 91 0-14 there was great commercial prosperity throughout
the world.

One phenomenon of the thirty years before the war deserves
attention, the effect of the changes on retail trade. Not only
has the general tendency towards large scale organisation shown
itself there as elsewhere, but the speeding up of transport has
enormously widened the area supplied by the central shop, while
postal and telegraph facilities have almost eliminated trade in
some rural areas. Big firms in London and other great cities
1 L. C. A. Knowles, " Industrial and Commercial Revolutions," p. 202.

TRADE— BANKING AND EXCHANGE 147

supply areas of thirty or more miles radius ; a postcard overnight
will produce a delivery of food in a village twenty miles out of
London almost by return. Textile houses do a large retail trade
by post to every corner of the country, and Grimsby fish in small
basketloads finds its way to Dorset and Devon.

Banking and Exchange.— The principles of English banking
were established during the period 1844-74, and its history
since has been that of a great expansion along the lines then laid
down. The determination arrived at in 1844 gradually to limit
note issue to the Bank of England has been practically carried
out, few other banks now issuing their own notes. Besides
this the custom has grown up for all other English banks to keep
their reserves in the form of deposits in the Bank of England, and
they have thus made it the central reservoir of the flow of money
in all English markets. At the same time, as we shall presently
see, it has come to be the central regulating valve for most of the
world flow as well.

But while the banks have ceased to function as banks of issue,
their business of all other kinds has enormously increased, and
great joint-stock banks have arisen, partly by new growths and
partly and increasingly by amalgamations. Between 1877 and
1886 there were absorbed in larger concerns forty- two banks,
between 1887 and 1895 there were ninety similar cases, and from
1896 to 1907 there were 100. This tendency was already becoming
a serious menace before the war ; events since then have put the
control of English money into the hands of some half-dozen
great combines.

The great growth of banking business (in 1907 it was estimated
that the total assets of English banks amounted to some
£1,000,000,000) is, of course, the natural outcome of the great
extension of world trade. Let us see how a transaction between
New York and London is usually carried out. Suppose a Mr.
Brown in New York ships to a Mr. Jones in London a large
amount of wheat ; he does not want to wait for his money, nor
does Mr. Jones want the bother and expense of sending gold
across the Atlantic in payment. So Mr. Brown makes out an
order to Mr. Jones to pay whoever presents him with the docu-
ment, called a bill of exchange, the sum of, say, £20,000, at a date
three months hence. Mr. Brown then goes into the money

K 2

148 ECONOMIC DEVELOPMENT OF ENGLAND

market and sells this bill to a Mr. Robinson for something less
than £20,000, say for £19,750 ; he has then got his bill dis-
counted at 5 per cent. Robinson may sell it again, or perhaps he
himself is buying goods in London from Mr. Wall, which he
orders to be sent to New York. In payment he sends Brown's
bill on Jones to Wall, who presents it to Jones and gets the money.
Thus two transactions have been carried out across the ocean, and
no money has travelled beyond London. Of course, the history
of a bill of exchange is not usually so simple as this ; it may pass
through several hands, but any merchant sending goods across
the seas gets paid in this way, he sells his claim on the other
man, and, as time is taken up before actual payment can be made,
he sells it for rather less than its face value. The same plan is
adopted for sales in the same place when cash is not paid. Suppose
a farmer wants to buy some big machine and undertakes to pay
for it when he has sold his harvest ; the man who sells the machine
draws a bill on the farmer for a date three months hence, sells it
to some one at a discount, and the farmer pays the some one when
the time comes. Obviously it may be troublesome to hawk
round such a bill to find a buyer, and so two classes of people
have grown up to do the exchange, bill-brokers and bankers.
The latter are our immediate concern. Bankers' profits are
made by lending at interest the deposits of their clients, and, as
these deposits may be asked for at very short notice, ordinary
industrial or other stocks are not much use to a banker for more
than a small portion of his funds, and Government stock does not
carry high enough interest to pay him. Bills of exchange, how-
ever, can quickly be sold at need, and in any case are paid after a
short interval, and are fairly safe if made out or endorsed by
reputable traders. Hence bankers deal largely in these documents
and thereby greatly influence the money market. For money
has its market as well as any other form of human wealth, and,
indeed, a very variable one. If trade is brisk there is a great
demand for money, and its price may go up, and vice versa.
Again, if New York, over a period, sends London more goods than
London sends New York, the balance will have to be paid for in a
transfer of actual money, London merchants will have to buy
American money to pay with, the demand will raise the price,
and the American dollar will go up in value as against the English

TRADE— BANKING AND EXCHANGE 140.

pound, and M the exchange will be against us." Of course,
there are other factors that influence the rate of exchange, but
this is a simplified instance of how one important cause of variation
works.

Many causes have combined to make London the central
money market of the world, principally the large and widely
travelling English mercantile marine. Not that Berlin and
Paris and New York had not, up to 1914, important markets
of their own, but there was a convenience in London that made
it dominant. Part of this was due to the established policy of
the Bank of England of attempting to control the flow of gold
by manipulation of its rate of interest, which its central position
as holder of the reserves of the entire English banking system
enabled it to do, and part to its reputation for stability. For,
although the Bank of England is a private company in no way
guaranteed by the State, there is a very well-founded faith in the
indestructibility of its credit. " Safe as the Bank of England " is
no mere phrase. In the first place, it is the bank for the Treasury.
All taxes are paid into the Treasury account there ; all expenditure
has to come out of that account. Were the Bank to close its
doors, the finances of the State would at once be in inextricable
confusion. Besides this, the Government trusts to the reserve
of the Bank of England to cover its own emergencies, as indeed
do all the other banks. Against the 156 millions in the Post
Office Savings Bank no reserve has been built up ; should the
withdrawals at any moment exceed deposits, the Post Office
would have to draw on the Bank of England. It is obvious that
the State would have to come to the rescue if the Bank were in
difficulties, and so, though without guarantee, none the less the
Bank of England has in practice behind it the credit of the English
nation.

The changes in our currency have been more a matter of
spontaneous growth than those of our banking system. In
1874 gold, silver and banknotes, together with bills of exchange,
formed our principal currency. Gold and silver are limited by
the world's production of these metals, banknotes strictly by
action of the Bank Act, 1844. Bills of exchange have grown
with expanding trade and have no limit except the lack of need
for them. But they are only suitable for fairly big transactions.

150 ECONOMIC DEVELOPMENT OF ENGLAND

What has been the most striking advance, in England especially,
of the last fifty years, is the use of cheques. Previously only men
of substance kept banking accounts ; now almost any one with an
income of £300 a year or more keeps a current account and pays
most sums over £1 by cheques. These are simply orders to the
banker to pay money out of the drawer's account, and often the
payment only takes the form of a book transfer. If you and I
have accounts at the same bank, and I give you a cheque for £5,
the banker merely enters in my account £5 paid out and in yours
£5 paid in ; no coin passes at all. If our banks are different
there is merely a day's delay in passing the cheque through the
clearing house. This general use of cheques has greatly simplified
the currency supply, for a cheque comes into being when needed,
and goes out of existence with the close of the transaction. The
result is that cheques and bills of exchange now form the greater
part of our currency.

None the less, currency problems are still with us. The old
debates as to how far it is possible to use paper money, which
does not represent real existing gold and silver, and for which no
guarantee exists to change it for gold and silver, still go on, and are
greatly increased since the War, during which every nation but
America was forced to abandon all attempts at a gold standard,
and to live as best it could by uncovered paper. The balance of
trade took most of the gold to America, and shifted the central
money market to New York. But in 19 14 these things were
undreamed of. The world seemed very safe then, money flowed
freely wherever it was wanted, the nations seemed inextricably
linked by the million filaments of a world trade done largely on
credit ; no one seriously believed that any one would deliberately
explode the whole network, and those who pointed out the
explosive character of colossal armaments or tried to warn the
people what the breakdown of this delicate interweaving of trade
would mean in human misery were scoffed at, or ignored. Then
came August, 1914, and catastrophe immediate and irremediable
was only postponed by the authoritative abrogation of the whole
scheme of commerce by Act of the Government. The disaster
was postponed and spread over a period of years thereby, but
it was proved to the uttermost for all to see that war and modern
civilised life could not exist on the same continent.

CHAPTER VIII

TAXATION. CHANGES IN ECONOMIC THEORY AND OUTLOOK

Taxation. — In the early Middle Ages taxation for the needs
of Government was an occasional, not a normal, matter. The
theory was held that " The King should live of his own," and as
the Crown demesne was very extensive, for a long time it proved
adequate. The King's business was to govern, and his office
was sufficiently endowed for the purpose. It will be remembered
that the most prominent right claimed by the barons in 121 5
was freedom from taxation, except on certain fixed and recognised
occasions. Besides his feudal estates the King had acknowledged
rights of toll on trade, and " customs " were fully recognised.
Gradually as government became more expensive, and foreign
wars more numerous, more money was required, and the King's
needs were supplied on terms. By consent of the leading people
capital levies and taxes on income from land were exacted, and
later, when more was required, additional subsidies.

The seventeenth century established the control of the Commons
over the nation's purse and for the next 150 years the King's
income, apart from his private estate, was drawn mainly from
indirect taxes, i.e., customs and excise, and next in importance
from a tax on land. With the enormously increased expenditure
of the Revolutionary Wars came Pitt's device of an income tax,
much hated and regarded purely as a war duty. Throughout
the time the customs were levied with a Protectionist object on
the lines of the mercantilist theory. The extreme poverty and
misery that followed the Peace of 1815, aggravated by the appalling
condition of Ireland, forced a Conservative Prime Minister, in
1846, to repeal the Corn Laws, and let corn into the country tree.
Peel's action was followed up by the Liberals, who, during the
next twenty years, mainly directed by Gladstone, bit by bit
abolished the tariffs and shifted the burden of taxation so that it
was nearly evenly distributed between direct and indirect taxati

151

152 ECONOMIC DEVELOPMENT OF ENGLAND

By 1874 the doctrine was firmly established that English Chan-
cellors of the Exchequer should propose taxes for revenue only,
and not with any idea of protecting this or that home industry or
trade, or for any political purpose. Taxes on imports were strictly
confined to luxuries, and things the country itself did not produce.
The chief tax was on alcoholic drinks, and here there had to be an
excise on home-made beer to balance the duty on imported.

During the next forty years this principle, apparently so firmly
established as the foundation of English finance, successfully
withstood an attack from the commercial side, but was completely
undermined from another, and " taxation as an instrument of
social reform " became an accepted practice. The most noticeable
features of the period in financial matters were the great increase
in national expenditure, the rapid growth of direct taxation and
the objection to any increase in indirect, the establishment of
taxes graduated in accordance with the wealth of the payer, the
beginnings and rapid rise of expenditure by local authorities.

The increase of Government expenditure from some
£73,000,000 in 1874-5 to nearly £200,000,000 in 191 3-4 is a
startling fact, and demands explanation ; it is only a little less
remarkable if expressed as £2 2s. -$d. per head of the population
in 1874, and £3 11s. 8d. in 191 3, or nearly 70 per cent, increase.
There were two obvious causes ; on the one hand, the growth of
an imperialistic spirit, not merely in England, but throughout
Europe, brought about a greatly increased expenditure on the
Army and Navy, especially the latter ; on the other, a growing
social conscience, and an increasing belief in the desirability of
certain commercial services, such as postal facilities and higher
education, of municipal services, such as trams, water supplies,
roads and schools, for which grants in aid became common. If
the Conservatives wanted more ships, the Liberals demanded more
schools ; if the Conservatives paid half the farmers' rates, the
Liberals supplemented his workers' wages with Old Age Pensions
and Sick Insurance. Neither party hesitated to spend money
for what it believed to be the general welfare ; the horror of
taxation was gone.

In 1890 the first recognition of " higher education " by the
State was made when the " whisky money," a new duty on spirits,
was handed over to the County Councils, with leave to use it for

TAXATION. ECONOMIC THEORY, ETC. 153

technical education if they chose. At the same time elementary
education became free to all. The 1902 Education Act made
every kind of education a State service, not as yet free, but very
heavily subsidised. Old Age Pensions, National Insurance
against Sickness and Unemployment, and other necessary reforms,
though usually schemes on a contributory basis, still ate up huge
subsidies.

It was in 1889 that George Goschen, in his Budget speech,
indicated the opening of the controversy that was to dominate the
debates for the next seventeen years, whether it was wiser to widen
the scope of taxation by including a variety of taxes, or, as had been
the rule since Peel's time, to take every possible opportunity of
simplification. In practice, this meant more taxes on articles of
consumption, or more taxes on income and property, indirect or
direct taxation. One party feared that the taxable limit in direct
taxation might be reached, and if sudden need arose there would
be no possibility of increase ; the other feared an increase in the
cost of food to the poorer classes, and a consequent decrease in
real wages. Later came other considerations, not financial, and
the movement for Tariff Reform. In the long run the people of
England decided emphatically against " broadening the basis of
taxation," and throughout the period direct taxation has gone
steadily up and indirect relatively steadily down. The following
table gives the actual proportions : —

Direct
Indirect

1841-2

Per ceut.
27

73

1861-2

Per ceut.
38
62

1891-2 1895-6

Per cent.

44
56

Per cent.
48

52

1899-1900

Per ceut.

48
52

1905-6

Per cent.
50

1911-2

I'er ceut.

57
43

In taxation per head indirect taxes actually declined. There is
no doubt that indirect taxationdid, and does, press heavily on the
poor, and since 1897 there has been continuous agitation for its
remission. " The free breakfast-table," i.e., the abolition of the
tea and sugar duties, has become a well-known party cry. The
sugar duty dates from 1901, and has been particularly unpopular.
In the middle of the nineteenth century it was believed to be

iS4 ECONOMIC DEVELOPMENT OF ENGLAND

impossible to devise any scheme for graduated taxation that would
work. It was admitted that while a 10 per cent, tax might be a
serious drain on the resources of a man with a few hundreds a year,
it was a mere trifle to the man with £10,000, but no one dared to
propose attempting an adjustment. It was in 1889 that Goschen
ventured to lay an extra estate duty on estates worth over £10,000,
and perhaps opened the way to the more elaborate schemes of
Sir William Harcourt and his successors. In 1894 the real
attack on the accumulations of the rich began. The legacy and
succession duties were simplified, and several old estate duties
merged into one, and this one graduated according to the total
amount of the deceased person's possessions. A tax varying
from 1 per cent, for sums between £100 and £500 to 8 per cent,
on a million was imposed. This has since been raised to 15 per
cent, at the higher limit, and pro rata. The total annual receipts
from the death duties rose from £14,000,000 in 1895-6 to
£25,000,000 in 1 91 2-3. In the same Budget incomes under
£400 were allowed an abatement of £160, and from £400 to £500
one of £100. In 1907 came the first distinction between " earned "
and " unearned " income in estimating tax on incomes under
£2,000.

All these graduations have been meant to transfer the weight
of taxation to the wealthier members of the community, and to
a large extent have done so ; in spite of throw-backs since the war
the principle may be taken as established that this is just. But it
is to be noted that such legislation would have seemed mad to our
grandfathers, and is the combined outcome of a democratic
franchise, and that growth of Socialist thought which we shall
describe further on. There is a danger, often emphasised by the
more Conservative, that when the bulk of the voters pay little tax
there is no check on expenditure ; it is easy to vote taxes that you
will not have to pay yourself. It is a danger to be noted, but not
necessarily to be intimidated by.

The main development in the supply of communal services has,
however, taken place in the realm of local taxation. Such services
include Education, Water and Gas Supply, Tramways and
Houses, and there are movements that aim at greatly increasing
these. Matters of public health, such as the supply of pure milk,
the control of markets, etc., have for years been discussed as

TAXATION. ECONOMIC THEORY, ETC. 155

desirable moves forward. Some ports, e.g., Bristol, own and
manage their own docks. The amount of local taxation (usually
called " rates ") rose from £54,000,000 in 1880-1 to £169,000,000
in 191 3-4 (these figures include the poor rate) ; while the per-
manent debt incurred by local authorities had risen by 1910-1
to £629,000,000 ; within measurable distance of the £762,000,000
of the National Debt of the same year. The two sums together
amounted to £31 per head of the population. Certain national
contributions are made to aid these rates ; for roads, to allow
a reduction on agricultural land of one-half the rate, etc., these
amounted in 1913 to £22,000,000.

The above are the main features of the development of taxation
in the forty years before the war. There are also some others
of interest. Since Sir William Harcourt's Budget of 1894, taxes
have been deliberately used as a tool for Social Reform. The
remodelled death duties of that year had a double purpose, to
adjust the burden of taxation more fairly by removing the greater
burden to the wealthy, also to help modify that uneven distribution
of wealth due to the accumulation in fewer hands of large aggrega-
tions of capital that was becoming increasingly obvious. By
1 91 3 the death duties supplied £25,000,000 of revenue, or more
than one-eighth of our annual taxation. But the great year of
the new departure was 1909, which saw the revolutionary Budget
of Mr. Lloyd George. Its new features were the introduction of
the super-tax, a supplementary income tax on all incomes over
£5,000 a year, and the partial acceptance of the principle of taxing
the " unearned increment " by a levy of 20 per cent, on all increases
of site values of land whenever it changed hands, and a tax of Id.
in the pound on all site values. By these taxes it was hoped to
prevent the holding up of land necessary to the community, and
to secure for the people part of the value that accrued to land-
owners without any effort on their part. Land, perhaps bought
at £40 an acre as agricultural land, often by the mere chance of I
city's spreading towards it, or a quick railway service being supplied
to its neighbourhood, would sell for £500 an acre or more. After
1909 a small part of this £460 of unearned increment was claimed
by the community. That effective measures to reduce the
growing inequalities of possessions between man ami man were
badly needed is evident from the figures of the estate duty. The

156 ECONOMIC DEVELOPMENT OF ENGLAND

total property passing at death in 191 2-3 was £276,000,000 ; of
this one-third belonged to 292 persons, one-half to 1,300, and
two-thirds to 4,000 ; but out of 425,000 adults who died, 335,800
" had died without any property upon which it was worth
anybody's while to pay the 10s. to obtain the authority of the
Inland Revenue to deal with it legally." l

The taxes on alcoholic drinks are advocated by some as a means
of restraining the habit, by others as a highly profitable tax. It
is possible that they achieve something in the first respect, and
certain that they are effective in the second. Still, the most
remarkable fact about them is their steady diminishing. From
1900-14 the amount of wines and spirits drunk rapidly decreased ;
that of spirits nearly halved. The consumption of beer has also
declined, but not so rapidly ; in 1899 it was 32-6 gallons per head
of the population, in 1912 it was 26-8. A " penny off beer " is
always a popular cry, and " the trade " is politically strongly
organised, but the growing expenditure of the State compels the
Chancellor of the Exchequer to stick to this very fruitful source
of taxation, and a strong section of the nation regards these taxes
as socially beneficial. They are likely to remain for many
years.

But if a growing social conscience has forced the nation into
an increase of expenditure that would have seriously disturbed
the contemporaries of W. E. Gladstone, the competitive
Imperialism that began in the 'eighties brought the demand for
far greater sums to be spent in armament. From 1890 onwards
the expenditure in the Navy grew rapidly, partly in consequence
of our growing aggressive Imperialism and the scramble for
markets, partly inevitably from the increasing complexity and size
of instruments of destruction. In 1889-90 we spent £15,500,000
on the Navy, by 1902-3 the cost of the Service had more than
doubled, by 1912-3 the charge had reached £45,000,000, one-
quarter of our total revenue. Over the same period the cost of
the Army rose from £17,500,000 to £27,500,000. These were
the sums in times of nominal peace ; during the Boer War, which
added nearly £150,000,000 to the National Debt, the annual
charge of the Army rose in 190 1-2 to £94,000,000, and the
Morocco crisis of 191 1 ran that of the Navy up by some £4,000,000.

1 Mr. Lloyd George's Budget Speech, 1913.

TAXATION. ECONOMIC THEORY, ETC. 157

Altogether in twenty-five years the cost per head of the population
for total armament rose from 16s. 8d. to 31$. Sd.

There only remains to be considered the change in the amount
of the National Debt. During the century between the close
of the Napoleonic War and the outbreak of the Great War the
National Debt, left in 181 5 at £858,000,000, fluctuated about the
figure of £750,000,000, being at its lowest in 1899, when it was
£628,000,000, and, after rising in consequence of the Boer War,
it had again sunk to £651,000,000 in 1914. So the century may
claim to have paid for its own wars, and some £200,000,000 and
the interest on £600,000,000 of the former ones. Considering
the wealth that was piled up in that period, it was little enough to
have done. More than a hundred years after the quarrel is dead
we still pay interest on the loans that financed Prussia and Austria
to resist Napoleon, though our great-grandfathers paid nearly
half the cost of those wars out of annual revenue, while the men
of 1900 were content to throw on posterity nearly three-quarters
of the cost of the much smaller South African War. Of this,
£127,000,000 out of the £150,000,000 left over was paid off by

1914.

Changes in Economic Theory and Outlook. — The economic
changes of the early nineteenth century were so rapid and so
startling that men began to investigate to see if there were dis-
coverable any laws governing the changes and any means of con-
trolling their direction. Just before the industrial revolution
Adam Smith had published in 1776 his " Wealth of Nations," in
which he examined exhaustively the economic basis of society,
strongly attacked the prevailing theories of the mercantilist era,
and advocated freedom for trade and industry. His book had
enormous influence, and when the pioneers of the new industries
found themselves hampered by obsolete regulations and trading
shackles, a school of thought rapidly grew up that advocated a
doctrine of " let-alone." At the same time, the Utilitarian
philosophy of Bentham had great vogue, and men of all kinds
became convinced that the object of social arrangements should
be the greatest good to the greatest number, and that that good
would be best achieved by allowing the law of supply and demand
to work itself out unchecked. Unfortunately for the theory, the
increasingly obvious results of the new righru included not only

158 ECONOMIC DEVELOPMENT OF ENGLAND

a great increase of the nation's wealth, but a still greater increase
in the poverty and misery of the manual worker. This aspect of
the question was examined by Malthus, who discovered that
Nature declared there was no help for it, since population always
tended to outgrow subsistence, and to increase the comfort of a
proletariat was only to make it more prolific. Other writers
contributed chapters to the " dismal science," e.g., Ricardo, in
his law of rent and his wages fund, and John Stuart Mill summed
it all up in the 'fifties. The law of supply and demand was a
law as immutable as those of Newton, all State interference was
bad, though, if they could be shown to have not too dire results,
Factory Acts and the protection of children might be conceded
to philanthropy by a wealthy nation.

Meanwhile, a group of Socialists, starting with Robert Owen,
denied the truth of the whole theory, premises and superstructure.
They maintained that co-operation and not competition was the
true path to social well-being, and tried to create Communist
Utopias in a desert of individualism. They failed, but their ideas
lived on. Gradually the free play of competition was modified in
practice, though still maintained in theory, and bit by bit the
current dogmas were denied. By the end of the 'sixties the
great follower of Bentham himself, John Stuart Mill, had aban-
doned most of his earlier economics and was approaching a
Socialist outlook. When in the 'seventies he gave up the wages
fund theory it had seriously shaken popular belief in the classical
school of Political Economy, and for some time the whole science
suffered considerable discredit.

Soon after 1880 a revival of its study set in from several quarters.
At the Universities interest came from the work of Jevons at
Manchester, and Marshall at Cambridge, and a new chair of
Political Economy was founded at Edinburgh. About the same
time arose a school of historians who sought to trace the economic
rather than the political history of the nation ; the pioneers were
Thorold Rogers, Seebohm, Ashley and Cunningham. Toynbee's
" Industrial Revolution " first put together the facts of the
preceding century, and later came inquiries into the conditions of
the workers, like Booth's " London Life " and the great studies
of Sidney and Beatrice Webb. After the turn of the century,
inquiries of all kinds and short historical studies on special points

TAXATION. ECONOMIC THEORY, ETC. 159

increased rapidly. After 1890 the British Economic Association
was founded, also the Economic Journal.

But however important in the world of thought any modifica-
tions of the old theories might be, in the world of action the
importance lay with ideas more revolutionary. As M. Beer says
in his " History of British Socialism," the years between 1875 an^
1890 saw a struggle between Liberalism and Socialism for the
soul of the working class. In this fight Gladstone stood as the
great bulwark of Liberal Industrialism ; against this Liberal-
Labour combination were thrown the Social Democratic Federa-
tion of Hyndman, preaching a " class war," the Fabians trying to
apply Socialism to practical capitalist policies, and the Independent
Labour Party of Keir Hardie working to discredit the " Lib.-
Lab." compromise and to imbue the Trade Unions with Socialism.

THE SOCIAL DEMOCRATIC FEDERATION was founded in 1 88 1

by Henry Hyndman, who was a convinced follower of Karl
Marx, with a programme largely political, but containing one
proposal of a Socialistic nature — land nationalisation. It was
joined by all prominent Socialists, including William Morris,
and in 1883 extended its list of reforms. In 1885 Morris left it,
but, dominated by Hyndman, the small band threw itself into
parliamentary action. Failing here, Hyndman, Burns, Champion
and Williams led a demonstration of unemployed, which, angered
by gibes from the club windows of Pall Mall, became riotous, and
the leaders were arrested, but afterwards acquitted. A Mansion
House Fund of £75,000 for the unemployed followed. In 1887
the new Conservative Government forbad a meeting of unem-
ployed in Trafalgar Square, and the Radicals joined the Socialists
in protest. An attempt to break the police cordon led to the
arrest of John Burns and Cunninghame Graham and their
sentence of six weeks' imprisonment. This year saw the culmina-
tion of the influence of the S.D.F., which then had thirty branches.
Its weakness lay in its hesitation between two policies — reform
as a step to revolution and hostility to all change that was not
the complete one. It never quite made up its mind as to the
possibility of evolutionary rather than revolutionary Socialism.
With the rise of the New Unionism after 1890, it seemed to see its
way more clearly and advised its members to join Trade Unions,
and use their influence to spread Colleetivist ideas.

160 ECONOMIC DEVELOPMENT OF ENGLAND

Meanwhile, william morris, poet, painter and craftsman,
was influencing hundreds of minds toward the new outlook.
" What he did," says G. D. H. Cole, " was to put clearly before
the world the baseness and iniquity of industrialism, and its
polluting effect on civilisation, despite the increase of material
wealth. ... He wanted passionately that the things men had to
make should be worth making — a joy to the maker and to the user."

In 1893 came the independent labour party, the creation
of Keir Hardie, a body Socialist from the first, but differing
from the Social Democratic Federation in its belief in the
power of the Trade Union. Its main object was to convert
the Trade Unions to Socialism and away from Liberalism, to
send Socialist members to Parliament and to Municipal Bodies.
In the latter it was very successful, and by 1900 it had established
the Parliamentary Labour Party.

By that date, too, the final victory of Socialism over Liberalism
among the manual workers was no longer in doubt, though the
long list of Liberal reforms of a Socialistic character between
1906 and 1914 held back the tide for a time. But " the mentality
of the working classes is now passing from politics to economics,
and from economics to social ethics." 1 The older Socialist
claimed that labour differs from other commodities in that it
produces a surplus value ; the new lays more emphasis on the
fact that labour is the product of a human soul, from which it
cannot be separated. After 1907 came a rise of prices and a
lowering of real wages, the Socialist ferment began to rise and
the unrest became general. From 1903, too, there had been a
strong educational movement among the workers. The workers'
educational association was founded in that year, with the
object of bringing University teaching to the manual worker ;
Ruskin College at Oxford, for working men, and the Central
London College were opened. The Workers' Educational Associa-
tion has now 1,071 Trade Union Branches and Trades Councils
affiliated to it and 384 Co-operative Societies.

The general effect of Socialistic thought on the nation, outside
the actual Socialistic ranks, has been summed up thus by an
American writer : — 2

1 M. Beer, " History of British Socialism," Vol. II., p. 199.

2 Haney, " History of Economic Thought," p. 391.

TAXATION. ECONOMIC THEORY, ETC. 161

(a) The idea that social institutions are not the product of
natural law, but of historic growth and of man's dealing, has
modified the dogmatism of the classical science.

(b) There has been a change of emphasis from exchange value
to social utility.

(c) Problems of distribution rather than of production have
become prominent. The question has been raised : " What is
a just wage ? "

(d) There has been much weakening in the opposition to State
activity.

(e) It is Socialism that has brought to the fore the problem of
the " unearned increment."

(/) The general attack of capital has led to a more careful
analysis of the doctrines of Smith and Ricardo.

karl marx (181 8-1 883). — It is time to turn to the founder of
revolutionary Socialism in its modern phase and ask what this
much-discussed thinker and teacher actually said and did. Marx
was by race a Jew, born of parents who had accepted Protestant
Christianity, and who moved in high enough middle-class society
for their son, Karl, to marry into the lesser German nobility.
Such an origin does not usually lead to a life of revolt against
constituted authority, except in very strong characters by reaction.
Marx evidently was of this kind, for in 1843, at the age of twenty-
five, he had to flee to Paris when the authorities suppressed a
newspaper he was conducting. In 1848 he returned to Germany,
took part in the Revolution of that year, and when it failed fled to
London, where he lived the rest of his life. He was really a
student and a man of intellect rather than of action, though he
made for revolution even more than most thinkers. His great
book was " Das Kapital," of which the first volume appeared in
1867, and the two others after his death, in 1885 and 1894. It
is not often that Continental writers and thinkers have great
influence in England. Lassalle, a name to conjure with in
Germany in the 'sixties, was almost unknown here ; the whole
school of French Socialists were hardly to us even a name. Marx's
influence is due to his long residence here, from which he came to
know most of the advanced leaders of the time, and to the fact
that he based his theories on facts drawn from British history and
British industrial organisation. His friendship with Engela, who

E.D.E. L

i62 ECONOMIC DEVELOPMENT OF ENGLAND

had been in business in Manchester and knew English Socialism,
tended to turn his mind in the same direction. Marx's theories
may be divided into four main groups : —

(a) Surplus-Labour and Surplus- Value. — He followed the older
economists in asserting that the value of a thing was measured
by the amount of crystallised labour it contained. All workers
produce more than is required to keep them in efficient working
trim, and this surplus value the capitalist seizes. The extra hours
worked at the demand of the employer to produce this surplus
value he calls surplus labour. To increase the surplus value the
employer enforces longer hours, increases his machinery, or forces
down the cost of living ; or he may employ cheap labour (women
and children), or speed up the intensity of work. In any case, the
worker never gets the full value of his labour, and Marx maintains
that it is of the essence of the capitalist system that he should not.
Then, as labour-time alone measures value, the increase of
machinery reduces the value per commodity, and if profit is to
be maintained, production on an increasing scale is necessary.
Whence follows his second theory.

(b) The Law of Concentration of Capital. — Marx traces the
story of capital from the sixteenth century down to its modern
concentration in the hands of the few. The tendency was evident
when Marx wrote, and he foresaw it must grow stronger ; indeed,
he held that such a destiny was inherent in the system. Joint
stock companies with idle shareholders show the evil in all its
nakedness, trusts and combines even more so. To Marx " private
property " is not the right of the worker to what he has produced,
but the right of others to appropriate it to themselves. This
right, as the blocks of capital grew larger and in fewer and fewer
hands, would become a fiercer and fiercer tyranny, and finally a
fetter on production. At this point the workers would seize
control and constitute themselves the nation and would expro-
priate the capitalists. This was the inevitable social revolution,
" the dictatorship of the proletariat." Marx did not so much
advocate this revolution as prophesy it.

(c) The Class War was a necessary result of the above theses.
Wages and profits were mutually exclusive ; what one gained
the other lost. No compromise was possible, the bourgeoisie
were drones living on the workers and must be deprived of all

TAXATION. ECONOMIC THEORY, ETC. 163

power. But the victory of the worker was sure, once he became
conscious that a better system was possible.

(d) His theories were the result of minute and prolonged
historical study, which convinced him that the real history of man
had a materialistic basis. The material needs of man and his
methods of satisfying them determine his legal, political, social
and intellectual relations. " The method of producing com-
modities, speaking generally, fixed the social, political and intel-
lectual processes of life. A man's conscience has less to do with
determining his manner of life than has his manner of life with
determining the state of his conscience."1 Hence, when the
productive forces change they get out of gear with the political
and social superstructure and society enters on a revolutionary
period. But in spite of his " class war," which did indeed make
an effective rallying cry, Marx's idea of revolution was an English
rather than a French one, comparatively peaceful, possibly even
parliamentary.

Such were the theories that have profoundly modified the
outlook of every modern thinker whether he acquiesce in them
or no, and which have fired a revolutionary blaze, greater than that
of France, whose end is not yet. But Marx's real fame depends
less on the truth or falsity of his doctrines than on his encyclo-
paedic knowledge of economic facts and in his appreciation of the
movement of the working class. He was the first Socialist to
grasp the role of the proletariat, to believe that liberty could be
won by their own action alone, not bought for them or given them
by others. His modern followers have rejected his theory of
surplus value and modified the others. Though capital has
concentrated as Marx foresaw, it has at the same time — and this
he did not foresee — also spread. We have great amalgamations,
trusts, combines, which would seem to him just what he expected,
but he would have been startled to learn that shareholders of
joint-stock companies include thousands of manual workers, and
that Trade Union funds to the amount of many millions are
similarly invested. The capitalist system is less simple than it
seemed. So, too, with the class war ; modern life again is not
so simple, and a struggle between two clear-cut interests is
neither likely nor, indeed, possible. The wage-earner's inte:

1 Marx, " Kritik dcr politischcn (Ekonomio," p. 5.

1 J

164 ECONOMIC DEVELOPMENT OF ENGLAND

is not absolutely confined to wages ; collectively, if not
individually, his class is no longer, strictly speaking, a proletariat
devoid of possessions. Modern Collectivism is based on Marx,
but its revolutionary Socialism has, in England at least, tamed
down to evolutionary Socialism by Act of Parliament.

Anarchism. — To devote a paragraph to the Anarchists in a
history of England may seem at first absurd, for Anarchism has
had, in fact, few followers anywhere outside Russia and the Latin
nations. Actually, however, Anarchist thought has exercised
considerable influence on the later schools of Socialism. It owes
its foundation to two Russian aristocrats, Bakunin (1814-76)
and Prince Kropotkin. Bakunin began his career in the
Russian Army, but an experience of crushing a revolt in
Poland led to his resignation, and he spent six years in the study
of philosophy. By 1842 he had become a revolutionary, was in
Berlin and Paris, where he met Proudhon. In 1848 he took part
in the revolutions at Prague and Dresden, was arrested, twice
condemned to death, and finally handed over to Russia. He
suffered brutal imprisonment and then exile to Siberia, whence
he escaped in 1861 to London. Thence he directed revolu-
tionary activities in Switzerland, Italy and France. In 1869 he
joined the International, bringing with him a large Latin con-
tingent, quarrelled with Marx in 1872 and was expelled. He died
in 1876.

Kropotkin in his early years was interested in natural history
and geography. About 1871 he began to educate some of the
working men of St. Petersburg, was arrested and imprisoned in
the fortress of St. Peter and St. Paul. In 1876 he escaped to
England. In 1884 he was wrongfully imprisoned for three years
at Clairvaux, in France, and such was his reputation as a man of
science that not only Ernest Renan, but the Paris Academy of
Science placed their libraries at his disposal during his imprison-
ment. From 1887 to 1 917 he lived in England, and returned to
Russia on the outbreak of the Revolution.

Though Bakunin followed Marx in his schemes for organising
production in the new State and Kropotkin was a Communist,
they both held the essential idea of Anarchism, that all authority
is a denial of human right. The State is par excellence the agent
of all exploitation and oppression ; " it is a flagrant negation of

TAXATION. ECONOMIC THEORY, ETC. 1C5

humanity." Bakunin called it " the visible incarnation of
infuriated force," and " force is a permanent negation of liberty."
There should be no compulsion even of the smallest minority.
" A society of free men, perfectly autonomous, each obeying only
himself, but subservient to the authority of reason and science,
such is the ideal which the Anarchists propose, a preliminary
condition of its realisation being the overthrow of every established
authority." * The Anarchists believe that the essential thing in
humanity is its profound instinct of mutual help and reciprocal
friendship. Anarchist society, from which the tyranny of
oppression and the fear of economic distress would be removed,
would consist of a federation of free associations which every one
could enter and leave at will.

One of the most useful and effective demonstrations that we
owe to the Anarchists is that the world could, if properly organised,
double and treble its productiveness. Five hours' work a day
from all between twenty-two and forty-five would supply the
needs of the race. Kropotkin believed that in a happy community
idlers would be so few and so despised that the community could
risk giving them a minimum support. What no Anarchist
scheme has, however, allowed for is the difficulty of restraining
any group of madmen who should combine to use force ; if an
armed attempt to seize power were made, would not the com-
munity have to use compulsion against them ?

With such doctrines it is strange that Anarchism should have
attracted for a time such a large contingent of men and women
who believed in destruction as a remedy.

The belief of the leaders that a forcible destruction of all
existing authority was the first step towards freedom was probably
the cause, and that belief arose from the circumstance that these
men had been victims of a tyranny for which it was probably
true there was no remedy but forcible destruction. With Russian
Czardom no compromise was even thinkable. Consequently, the
body that believed in the possibility of men living in peace ami
order by mere mutual goodwill, attracted to itself " much that
lies on the borderland of insanity and common crime." - I I<>\\vver,
the throwing of bombs was not the essential ami permanent part

1 Gide and Rist, " A History of Economic Dm. trims,'' p. 67.

2 Bcrtrand Russell, " Roads to Freedom," p. U~ .

1 66 ECONOMIC DEVELOPMENT OF ENGLAND

of the creed, and the terrorist campaign practically ceased in
1894.

To turn from the Anarchists to The Fabians is to leave the
land of dreamers, for that of our own more temperate climate of
compromises. In 1884 a small band of some dozen young men
formed a society to study social questions and bring about social
reform. Frank Podmore invented the title from Fabius
Cunctator, who knew how to bide his time and then strike hard.
A few months after its foundation it was joined by Sidney Webb
and George Bernard Shaw, who were to give it its peculiar
characteristics. For three years their chief occupation was the
study of social phenomena and of economic theory. Throughout,
the dominating thought has been Sidney Webb's, ably assisted by
his wife, and commanding the enthusiastic service of a man of
genius to force the ears of the people. Beer compares their
influence on Socialism to that of Bentham and Mill on British
Liberalism fifty years before. The Fabians, while generally
Socialist, preached as a body no specific Socialist doctrine.
Sidney Webb saw that, since Marx wrote, conditions had changed,
and class war and revolution were no longer essential preliminaries
to the building of a Collectivist State. England was now poten-
tially a democratic State with a working class whose economic
power was increasing. All that was needed was to teach
democracy how and for what ends to use that power. Owen
had seen no way but to build a co-operative commonwealth
outside the State ; Marx judged destruction of the State a neces-
sary preliminary ; Webb proposed to examine each evil in the
light of Socialist doctrine, to consider possible remedies, and then
persuade the nation to adopt them. The business of the Fabians
was first to get knowledge and then to permeate with it the
existing machinery of government . Though Webb 's own Socialist
theory was based on an extension of the economic theory of rent,
the society as a whole bound itself to no particular theory, only to
certain practical proposals. By means of taxation, municipalisa-
tion and nationalisation, the power to exact rent in any form
must be removed from the individual and transferred to the com-
munity. In 1896 the society announced its objects to be :
" To persuade the nation to make their political constitution
thoroughly democratic, and so to socialise their industries as

TAXATION. ECONOMIC THEORY, ETC. 167

to make the livelihood of the people entirely independent of
capitalism."1

Side by side with this policy of permeation went the collection
and publication of authentic statistics and facts dealing with
present evils. Its publications have been many and various ;
nearly 200 Fabian Tracts have been put forth, with a total circula-
tion of near a million. In 191 2 it established a Research Depart-
ment. In 1908 the Fabian Women's Group was formed. The
total influence of the society, which is small in numbers, has been
great. Though its appeal has been almost entirely to the educated,
it has reached through them the organised workers, and much of
the present programme of the Labour Party is based on the work
of distinguished Fabians.

The Nationalisation of Land and the Single Tax. — Proposals
for the nationalisation at least of land did not come only from
Socialists. The question of the unearned increment of land was
not long in coming to the fore, once the extension of the great
cities began. Even in England, and, of course, more so in the
newer lands of America and the Colonies, the rapid increase in
the exchange value of land as the cities spread was startling.
Ground rents in London between 1870 and 1S95 rose by
£7,000,000; Hyde Park, bought in 1672 for £17,000, is now
worth £8,000,000. A quarter of an acre in Chicago sold in 1830
for 20 dollars, in 1836 for 25,000 dollars, and in 1894 was valued
at 1,250,000 dollars. That sums of such magnitude should go
into the pockets of people who had merely sat idly and waited
for the demand to rise was too obvious an injustice to escape-
notice. The difficulty, too, in securing agricultural land for
small holdings was great. For this state of affairs two remedies
were proposed. For the latter difficulty Alfred Russel Wallace
in 1882, and others at various times, urged that the ownership of
land should be transferred to the State, which would rent it to all
who wished. Every man should have the opportunity once in
his life of choosing a plot of 1 to 5 acres, provided he would
occupy and work it. How he was to obtain the capital Decesfl
to do so was not so obvious. The matter of unearned increment
had been considered by J. S. Mill, whose plan tor dealing with it
was for the State to annex all future increases leaving the present
1 M. Beer, " History of British Socttliim," Vol. H., p. -S4.

1 68 ECONOMIC DEVELOPMENT OF ENGLAND

holders with their present values. This would necessitate a
valuation of all land, and periodic revaluations ; there must also
be distinction between increase due to communal activity and that
due to private improvements. If the owner preferred to give
up his land, the State should buy it at its present value. In 1850
Patrick Dove, a Scottish reformer, proposed to nationalise all
rent and make it the sole tax. The real founder of the move-
ment for the " Single-Tax " was an American, henry george
(1839-97). In I^79 he published " Progress and Poverty," in
which he set out to show that the poor condition of the labourer,
in spite of the great increase of collective wealth, was due to
interception of all economic rent by the owner of the land. No
matter what progress material civilisation may make, as long as
rent is allowed for land, all increase must find its way to the
pocket of the landowner. Get rid of this rent and poverty will
cease with the inequality of wealth. For practical proposals
George put forward the suggestions that in new countries the
State should not give, but rent, the land to all who asked ; in
old countries where the land had already been given away it should
be taxed nearly up to its rental value. He argued that it was no
more unjust to expropriate landowners than slave-owners, which
latter America had recently done without compensation. Henry
George utterly repudiated Socialism ; he held individualism and
competition to be necessary for freedom ; none the less, his book
had great influence among Socialists. They did not consider it
solved the problem ; they held that other " rents " besides land
rent held up the proper distribution of wealth ; but the nationalisa-
tion of land was an important and essential first step in their
programme. Land rents might or might not be a sufficient
" single tax " to supply all the revenue needed, there were plenty
of other good reasons for nationalising other things. At the same
time, the " single tax " idea was taken up by a considerable
number of Liberal individualists. A small movement in its
direction was made by Mr. Lloyd George in his 1909 Budget, in
an attempt to tax increased land values, an attempt he later aban-
doned when a member of a Coalition Government.

The last movement we have to study is Syndicalism and its
English version, Guild Socialism. Syndicalism is a movement
practically confined to France and Italy, and represented by

TAXATION. ECONOMIC THEORY, ETC. 169

the Confederation Generate du Travail. Syndicalists have
re-emphasised the essentially proletarian character of Socialism ;
they take no interest in any but the manual worker, and repudiate
all political action. The movement grew out of disgust with the
constant failure of loyalty in men who rose to political power
by Socialist votes and then repudiated their creed. France has
suffered much from these gentry. The essential feature of
Syndicalism is organisation by bodies of producers, not by
political units. It may be described as revolutionary Trade
Unionism. Each industry is to be controlled by the workers in
it, and the power is to be won by direct action, the big weapon
being the " general strike." Syndicalism, as such, has no hold
in England, though some in Scotland, which it reached by way
of America. In the United States there is a strong body, known
as the I.W.W., the " Industrial Workers of the World," founded
in 1905 and permeated with Syndicalist methods. In America,
where the class struggle is more bitter than anywhere else in the
civilised world, the theories of class war and direct action are
bound to take greater hold. It is to be noted that while Socialism
had attacked economic problems from the point of view of an
ideal State, Syndicalism takes existing organisations, the Trade
Unions, and proposes to develop them to achieve communal
organisation.

In England, a version of Syndicalism known as guild socialism
has lately attracted much notice. Its creators were G. D. H.
Cole, A. R. Orage and S. G. Hobson, and it dates from 1912.
The scheme is as follows : the community will own the means of
production, and will rent them to bodies of workers organised as
Guilds for each industry. All workers will be members of some
Guild, and each Guild will be a democratic body controlling the
condition of its labour, and electing its own managers. A Parlia-
ment will represent the people as consumers, and the final authority
will be a joint committee, representing as to one-half the Guilds,
and as to the other the Parliament. This joint committee will
determine the rent the Guilds shall pay for their instruments of
production, and the price they shall receive for their produce.
How that price is to be distributed among the members <>t etch
Guild, whether equally or according to an estimate of the value
of each man's work, will be left to the Guild to settle.

1 7o ECONOMIC DEVELOPMENT OF ENGLAND

Whether this scheme or some other form of " Nationalisation
with democratic control " will be the final one, it is certain that
the idea contained in the phrase quoted has seized the minds of
the British workers. It is a typically British product, and bids
fair to reach eventually the stage of experiment.

Scientific Theory and its Influence on Economic Thought. —
The growth of economic theory was naturally not uninfluenced
by that profound revolution in human outlook produced by the
general acceptance of the Theory of Evolution. The only change
comparable with it was the displacement of the earth from the
centre of the universe in men's minds, and its reduction to an
insignificant fragment whirling round one of the smaller stars.
Even then it was still possible to regard man as a conquering
king of that universe, occupying for a time a specially favoured
corner of it, with all things created solely for his use, and having
no reason to exist apart from him. The new outlook started
with the publication in 1859 of Darwin's " Origin of Species,"
and was made general by the devoted exertions of Thomas
Huxley in expounding it. Gradually the idea of growth and
change as the history of all things material and spiritual became
part of the inherent thought of Europe, and in economics, as
elsewhere, it was recognised that development was the law of
progress. For a time, it is true, the emphasis invariably laid on
natural law in the new theory tended to increase an already over-
sufficient materialism, an acquiescence in " Nature red of tooth
and claw," and a transference of a doctrine of " survival of the
fittest " from Nature to the communities of men. For a long time
men were blind to what the men of science really said — that they
did not use " fittest " in any moral sense. Though the fittest
to survive in a world of physical force might be the cunning and
the strong, it by no means followed that a world of force was either
good or, indeed, inevitable. Science actually showed that even
in Nature it was not the mammoth and the dinosaur that survived,
but rather the cunning ape, and the races that sacrificed most
for their offspring. Still, for a time, science, as perverted and
popularised, seemed to support utilitarianism and laisser-faire,
though it eventually undermined their positions. What the new
thought did was to assault the innate conservatism of all men by
its emphasis on growth and development, its hint of a goal towards

TAXATION. ECONOMIC THEORY, ETC. 171

which creation moved, its hope that since man could rise from
the amceba he might yet rise to a point a little lower than the
angels. This thought, permeating all departments of human
activity, ate out the supports of the altar of the M god of things as
they are," and set men thinking how to create a decent and whole-
some way of human living. Probably history will look back on
the nineteenth century less as the era of great material progress
and expanding Imperialism than as the age when science whispered
first the hope that evolution is the law of all things.

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Chapman, S. J. The Lancashire Cotton Industry. 1904. Man-
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Webb, Sidney and Beatrice. The History of Trade Unionism. 1920.
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Committee on Trusts, Report of. 1919. Cd. 9236.

Hutchins, B. L., and Harrison, A. A History of Factory Legislation.
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Mackay, Thomas. History of the English Poor Law (1834-1898).

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INDEX

Agricultural Labourer, u, 12, 13, j George, Henry, 38, 62, 168

26,27,28,29, 30, 31,32, 33, 34, 36, Germany, 48, 49, 51,52,58,75,79,97,
37.38,39»40,4i.90 98, 105, 122, 123, 126, 127, 130,

America, 24, 47, 75, 76, 79, 9S, 137, ! 135, 141, 145

146, 150, 167, 168 j Gilds, 13, 14, 15, 59, 71

Argentine, 24, 98, 146 I Gold, 17, 21, 103, 106, 108, 109, no,

Australia, 50, 75, 97, 98, no, in, 112, j 113,117,121,130

115, 116, 117, 118, 120, 121, 127, Great Britain, 49, 52, 57, 77,79, 106,

129, 130, 146

Banking, 21, 147, 148, 149, 150
Belgium, 51, 79, 141
Burns, John, 63, 64, 159

Canada, 24, 97, 99, 100, 101, 127, 130,

146
Cartels, 74, 75, 77
Coal, 43, 52, 53, 54, 55, 75, 97, 98,

103, 106, 108, no
Combines, 74, 75, 76, 140
Co-operative Societies, 78, 80
Corn Laws, 17, 18, 22, 23, 151
Cotton, 15, 43, 45, 47, 48, 49, 51, 76,

130, 143, 144

Egypt, 48, 123, 124, 130

England, 9, 10, 12, 13, 17, 18, 23, 24,

26, 34, 35, 43, 49, 50, 51. 52, 58, 71.
74. 75. 79. 85, 89, 93, 96, 97, 98,
100, 101, 102, 104, 106, 109, 119,
123, 124, 126, 127, 135, 166, 167,
169

Fabian Society, 64, 70, 159, 166
Factory Acts, 81, 82, 83, 84, 85, 86, 87,

115, 121
Farmer, 11, 12, 13, 18, 23, 24, 25, 26,

27, 28, 29, 30, 31, 33, 35, 37, 38, 41,
42, 50, 52, 58, 79, 96, 123, 124,
125, 126, 135

109, 122, 124, 139, 144

Hardie, Keir, 63, 70, 159, 160
Hyndman, H. M., 62, 63, 159

Independent Labour Party, 70, 159,

160
India, 47, 96, 97, 103, 104, 105, 121,

128, 146
Iron, 13, 15, 17, 18, 43, 54, 55, 56, 57,

77,97,98, 103, 106
Italy, 40, 51, 123, 141

Japan, 126, 129, 130, 141

Labour Party, 30, 70, 71, 160
London, 14, 18, 47, 50, 62, 63, 72, 99,
142, 143, 146, 147, 14S, 149, 161

Marx, Karl, 62,63, 65, 159, 161, u>z,

163, 164, 166, 167
Minimum Wage, 32, 40, 41, 67,84, 115
Morris, Win., 62, 159, 160

Nationalisation, 40, 67, 69, 78, n;,
114, 120, 121, 125, 134, 154, 166,
167, 168, 169

Newfoundland, 07, 100, 103

Free Trade, 18, 22, 63, 78, 98, 101, New Zealand, 24, 50, 97, no, n 1,

127

1 14, no, 117, 1 is, 1 19, tao, 1^7

175

176

INDEX

Oil, 50, 76, 103
Owen, Robt., 60, 158

Pensions, Old Age, 31, 92, 153

Pools, 75, 76, 77, 78

Poor Law, n, 90, 91, 92, 93, 94

Railways, 19, 55, 77, 97, 99, 102, Io6»

113, 114, 128, 133, 134
Russia, 51,97, 105, 126,130, 135, 141,

164, 165

Shipping, 18, 19, 74, 76, 128, 137,

139, 140, 141
Smith, Adam, 22, 157, 161
Social Democratic Federation, 70,

159, 160
Socialism, 63, 64, 159, 160, 161, 166,

168

South Africa, 50, 79, 107, 114, 127,

129
Spain, 48, 50, 79, 96, 141
Steel, 55, 56, 57, 77, 98, 143

Tariff Reform, 98, 127, 153

Trade Unionism, 22, 26, 28, 29, 30,

33, 52, 58, 59, 60, 61, 63, 64, 65, 66,

67, 68, 69, 70, 75, 78, 115, 159, 160,

163, 169
Trades Union Congress, 61, 63, 64,

65, 69, 70
Trusts, 74, 75, 76, 78, 79, 80, 109, no

Unemployment, 89, 90, 94, 95
U.S.A., 23, 52, 58, 79, 102, 103, 126,
130, 141, 169

Wheat, 10, n, 23, 98, 117, 118, 147
Wool, 10, 16, 24, 43, 49, 50, 5i, 74, 96,
no, 117, 119, 121, 130, 143

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