Economic interpretation of history

THE ECONOMIC INTERPRETATION
OF HISTORY.

BY THE SAME AUTHOR.

SIX CENTURIES OF WORK AND WAGES.
The History of English Labor (1250-1883).
Octavo, pp. 591 $3.00

11 The authdr supports his argument by so many strong con-
siderations, that he is entitled to the patient study of all who are
interested in economic subjects." — N. Y. Commercial Adver-
tiser.

M The volume that lies before us is certainly the most import-
ant work issued by an English economist since the publication
of Tooke's great work on prices and Mill's r6sum6 of English
political economy." — N. Y. Herald.

The Economic
Interpretation of History

{LECTURES DELIVERED IN
WORCESTER COLLEGE HALL, OXFORD, 1887-8)

K

BY

JAMES E; THOROLD ROGERS

PROFESSOR OF POLITICAL ECONOMY IN THE UNIVERSITY OF OXFORD AND

OF ECONOMIC SCIENCE AND STATISTICS, KING'S COLLEGE, LONDON,

AUTHOR OF "SIX CENTURIES OF WORK AND WAGES,'*

"A HISTORY OF AGRICULTURE AND PRICES IN

ENGLAND," ETC.

NEW YORK
G. P. PUTNAM'S SONS

LONDON : T. FISHER UN WIN

MDCCCLXXXVIII

Digitized by the Internet Archive

in 2007 with funding from

Microsoft Corporation

http://www.archive.org/details/economicinterpreOOrogeuoft

PKEFACE.

The lectures contained in this volume were delivered in the hall of
the author's College (Worcester, Oxford) in his capacity as lecturer
in Political Economy to that Society. They were open to all
members of the university, and were very numerously attended.
I mention this, because, being printed as they were read, the fact
may explain or excuse the various local allusions which they con-
tain, and the occasional repetitions of statement which will be
found in them. The business of a lecturer is to teach as best he
can.

I should be the last person to deny that there are economical
generalities which are as universal in their application as they are
true. Such, for example, are those which affirm that the indi-
vidual has an inalienable right to lay out his money, or the pro-
duce of his labour to the best advantage, and that any interference
with that right is an abuse of power, for which no valid excuse
whatever has been, or can be, alleged. In other words, there is no
answer to the claim of free exchange. Of course I am well aware
that an answer has been attempted, and that civil government con-
stantly invades the right. The invasion is brigandage under the
forms of law. Other illustrations can be given, as that the police
of society must always regulate the trade in instruments of credit,
that certain services are part of the function of government, that
the satisfaction of contracts, under an equitable interpretation,
must be guaranteed, that the only honest rule in taxation is
equality of sacrifice, with what such a rule implies or involves, and
so on. It is very likely that in practice government violates these
economical principles, and gives more or less plausible reasons for

vi PEE FACE.

its misconduct. Anil as wrongs done by government have an endur-
ing effect, it is difficult, if not impossible, to interpret any problem
in political economy, without taking into account those historical
circumstances of which the present problem is frequently the result,
and occasionally to examine the present political situation. In brief,
any theory of political economy which does not take facts into ac-
count is pretty sure to land the student in practical fallacies of the
grossest, and in the hands of ignorant, but influential people, of the
most mischievous kind. I could quote these fallacies by the dozen.
Some have been over and over again refuted ; otl ers still possess
vitality. Some are slowly losing their hold, especially in practical
politics, which is becoming every day more economical. Many of
these errors die hard, especially when they assume the form of a
vested interest ; sometimes they are maintained as part of the con-
tinuity of policy ; sometimes they are defended by bold and baseless
assertions. In time, they become the subjects of parliamentary
compromise, at last they are swept away and repudiated. Any
student of the economical laws which can be found in the historical
statute book, will constantly find that the wisdom of one genera-
tion is the folly of another.

Many years ago I began to suspect that much of the political
economy which was currently in authority was a collection of
logomachies, which had but little relation to the facts of social life.
Accident, and some rare local opportunities, led me to study these
facts in the social life of our forefathers, facts of which the existence
was entirely unsuspected. I began to collect materials, chiefly in the
form of prices, and at first of the necessaries of life. But I soon
widened my research, and included in my inquiry everything
which would inform me as to the social condition of Englishmen,
six centuries ago and onwards. Gradually, I came to see how
Englishmen lived through these ages, and to learn, what, perhaps,
I can never tell fully, the continuous history of social life in this
country, up to nearly recent times, or at least till that time in
which the modern conditions of our experience had been almost
stereotyped. By this study, I began to discover that much which
popular economists believe to be natural is highly artificial ; that
what they call laws are too often hasty, inconsiderate, and in-
accurate inductions j and that much which they consider to be

PREFACE. vii

demonstrably irrefutable is demonstrably false. I have often had
to conclude that the best-intentioned thinkers and writers have
been supremely mischievous, and that in attempting to frame a
system, they have wrecked all system. It must, I think, be
admitted that political economy is in a bad way : its authority is
repudiated, its conclusions are assailed, its arguments are com
pared to the dissertations held in Milton's Limbo, its practical
suggestions are conceived to be not much better than those of the
philosophers in Laputa, and one of its authorities, as I myself
heard, was contemptuously advised to betake himself to Saturn.
Now all this is very sad. The books which seemed to be wise are
often compared to those curious volumes of which the converts at
Ephesus made a holocaust. And the criticism is just.

The distrust in ordinary political economy has been loudly ex-
pressed by working men. And, to speak truth, one need not wonder
at it. The labour question has been discussed by many economists
with a haughty loftiness which is very irritating. The economist,
it is true, informs them, that all wealth is the product of labour,
that wealth is labour stored in desirable objects, that capital is the
result of saved labour, and is being extended and multiplied by the
energies of labour. Then he turns round, and rates these workmen
for their improvidence, their recklessness, their incontinence in
foolishly increasing their numbers, and hints that we should be all
the better off if they left us in their thousands, while there are
many thousands of well-off people whose absence from us would be
a vast gain. I have never read in any of the numerous works which
political economists, have written, any attempt to trace the
historical causes of this painful spectacle, or to discover whether or
no persistent wrong doing has not been the dominant cause of Eng-
lish pauperism. The attempts which workmen have made to better
their condition have been traduced, or ignored, or made the subject
of warnings as to the effects which they will induce on the wage
fund, this wage fund, after all, being a phantasm, a logomachy. In
the United States the case is worse. A writer will publish a book
on wages, and deliberately ignore the effect of the American tariff
on the real wages of workers. If he knows anything at all of what
he is writing about, and is not merely writing for office, he should
be aware that no fertile customs revenue can come from anything

viii PREFACE.

but the expenditure of the poor, and should not need that Mr.
Washbourne, the late Minister of the Union at Paris, should tell
him, that smuggling is an all-devouring passion with the wealthy
American, and the corruption of revenue officers the constant
machinery for the practice.

Two things have discredited political economy — the one is its
traditional disregard for facts ; the other, its strangling itself with
definitions. The economist has borrowed his terms from common
life. Now, unless the words one uses are strictly limited in mean-
ing, as those are which express geometrical forms, or chemical
compounds, no word, and for the matter of that no definition of
the word, ordinarily covers what the man who uses the word intends
by it. He gives, may be, a definition of the thing or thought, and
succeeding writers who inherit his word begin to expand or vary it,
not taking counsel with the facts, but only with their own experiences
or impressions. Now word-splitting and definition -extending is a
most agreeable occupation. It does not require knowledge. It is
sufficient to be acute. Persons can spin out their definitions from
their inner consciousness by the dozen, aye, and catch the unwary
in the web. But, above all things, the economist claims to be
practical. He is engaged, as he tells you, in the analysis of social
man, from a particular point of view. This view is especially the
function of government and the state. If his conclusions are taken
rightly, they are, or should be, the basis of Parliamentary and
Administrative action. But it is appalling to think of what the
consequences would have been, if some so-called economical verities
had been translated into law. It is grievous enough to note what
the consequences have been, when some of these rash inferences
have been accepted as guides in statesmanship. I have attempted
to illustrate what I mean in these lectures.

The lawyer gives an arbitrary meaning to words or phrases,
and will not suffer these meanings to be traversed. Unless he
did so, the practice of law would be an impossible chaos. It
does not signify to him that a conveyance to a man and his heirs
was meant to give two estates. He insists that in his language
it only gives one, in the first place, probably, for Biblical reasons.
The same fact applies to the meaning which it assigns to
words implying certain commercial instruments. Mr. Justice

PREFACE. ix

Byles defines the legal meaning of a bill of exchange, and his defi-
nition is accepted as conclusive, as regards drawer, acceptor, and
negotiators. It is no use to wrangle whether the judge's definition
is capable of amendment. It is sufficient that the interpretation is
fixed, beyond cavil or dispute. But there are subjects of the pro-
foundest human interest in which no such final authority is
accepted. These have been strangled by dogmas, definitions,
logomachies, till the spirit of the whole matter evaporates in airy
metaphysics. Now in the midst of this idle and unprofitable strife
of tongues, it is not wonderful that there are people who think that
the Gallios ought not to be censured for indifference. But where
authority is not allowed to define words, the wrangle as to their
meaning is perennial.

My treatment, then, of my subject is as follows. You have a
number of social or economical facts, many of them containing
problems of a serious and urgent character. So serious are they that
many persons — an increasingly large number of persons — demand,
if no other solution is to be given, that society must be recon-
structed on new lines, as Frankenstein made his man, or monster.
To meet these people with the law of supply and demand, to point
out to them the bliss of unrestricted competition, and to rebuke
them with the Malthusian law of population, the Ricardian theory
of rent, and the margin of unproductive cultivation, is to present
them with logomachies which they resent They believe that
economists are uttering optimism to order. In a vague way, they
are under the impression that the greater part of the misery which
they see is the direct product of laws, enacted and maintained in
the interest of particular classes. And, on the whole, they are in
the right. Most of the problems which vex society have an his-
torical origin, sometimes a present cause, though more rarely.

Now I made it my business in these lectures, as I have done in
others, since I have been restored to an office of which I was de-
prived because I traced certain social mischiefs to their origin,
twenty years ago, to examine into and expound the history of social
facts. Of course I am almost entirely the authority for the facts
which I cite, with one notable exception, i.e., the economical laws
in the Statute Book. These laws are not to be found in the volumes
which go by the name of the statutes at large, for when the law has

Z PBEFACE.

been repealed, or become obsolete, or was temporary only, it is
dropped out of these collections, and very few lawyers know anything
of the history of law. They are to be found only in the collection
which was published at the beginning of the century, and was
continued to the accession of the House of Hanover. These lec-
tures, then, are mainly founded on the facts which are collected in
my history of prices, and I presume that even the most arrogant of
the metaphysical economists will allow that the facts of social life
go for something in the solution of economical questions. If he
does not, I will leave him, like the poet in Horace, to his mad-
ness.

My reader will find that I occasionally refer to the experiences
which I gained when I was in the House of Commons. Many of
my audience were young men, to whom this kind of position is
likely to be an early object of ambition. Now I am not one of
those who deprecate party strife. I know that rightly taken, party
is the perpetual struggle of good against evil, and I have a tolerably
clear instinct, fortifiedinto conviction, of where the evil always is with
which the good battles. But the experience of Parliamentary life,
to him who will learn, teaches one how just but angry discontent is
baffled, of how one must wait for opportunities in order to undo
wrong-doing, and how, under the name of compromises, one has to
accept half for whole truths. And besides, the sphere of political
action is so vast and so complicated, the forms of our Constitution
give so enormous a power to the Administration, and all administra-
tions are so enamoured of the possible, instead of the true, that no
more instructive education can be given one than to watch
and take part in the battle of Parliamentary forces. To the his-
torical economist, the lesson is invaluable. I think I have almost
exhausted the lesson in my own person, or at least to my own
capacity.

It is no doubt more profitable to an economist to be an optimist or
an alarmist, to dilate on the numbers and the wages of the working
classes with one, to predict the exhaustion of coal with another, and
to dwell on the margin of cultivation with a third. But the pro-
gress of the working classes is exceedingly unsatisfactory, and has
been enormously exaggerated by those who have written on it ;
while the exhaustion of coal and the margin of cultivation are scares,

PBEFACE. ad

which, I think, I have generally disposed of in these pages. Bnt, in
point of fact, these economists have generally been fairly well-to-do
people, who have only had a lofty sympathy with those who struggle
for a living. And the worst of it is, that they are so profoundly
ignorant of the social facts on which they profess to be dogmatic.
A man will chatter over the margin of cultivation who does not
know a field of wheat from a field of barley ; of the exhaustion of
coal deposits when he does not know their extent, and is not aware
of the economies of their use ; of the condition of workmen, when
he is entirely unacquainted with the fact that they were cruelly
oppressed up to recent times. I or political economy like this I
have, and I trust I always shall have, the heartiest contempt.

Of course a resolute determination to look into and substantiate
the causes which have so mightily hindered the economic progress of
my countrymen is unpopular with the least deserving and least
valuable, but often most powerful, classes of the community. I had
some time ago to demand of the chivalrous Lord Iddesleigh, that
he should substantiate a charge of communism which he made
against me, by reference to anything which I had said or written in
favour of a violent reconstruction of society. He was constrained
to admit that he had found, and could find nothing, and politely
congratulated me on not being associated with such a platform.
But I have constantly noticed that men who are entirely devoid of
any sense of political and social justice are fond of charging their
critics with sinister designs against property and order. So I am
told that some of the frantic advocates of violent reconstruction
allege that I am a socialist without knowing it. But I know very
well what is the issue, the natural, just, and inevitable issue, of all
attempts to cure wrong-doing by violence, and to meet the misdeeds
of government by a propaganda of anarchy.

The strength of communism lies in the misconduct of admini-
strations, the sustentation of odious and unjust privilege, and the
support of what are called vested interests, i.e., what is in the main
an indefensible position or an indefensible claim to economic
existence. I have pointed out what is the nature of some among
these grave social evils in the following pages, and though I cannot
foresee that the English people will be induced to accept the
theories of those who would recast society by the forcible appro-

xii PBEFACE.

priation of land and capital, yet it is quite reasonable to predict that
they who have hitherto taken an unfair advantage of their position
and their influence, may hereafter get less than justice from in-
structed discontent. The policy which puts all local taxation on
occupiers, which allows the owners of mansions and parks to be
judges of their own contributions to taxation, the rapine which con-
fiscates improvements under the pretence of free contracts, will
sooner or later be met with a reversal which will be far from agree-
able to those who profit by present conditions. In nothing is this
more visible than in agriculture, where the confiscation of the
tenants' capital has been followed by the destruction of British
agriculture, and as yet by ignorant discontent. But it is clear that
the control of the landowner's power in the disposition of his rights
is imminent, that it is nearly completed in Ireland, that it is mak-
ing great progress in other parts of Great Britain, and that it is
rapidly coming within the range of practical politics. The joint
ownership of landlord and tenant, in which the interest of the
former is to be fixed, that of the latter is to be improvable, is
already advocated by persons of no mean influence. The Agricultural
Holdings Act is an instalment, a compromise, the complement of
which is not far distant. The claim made to the unearned incre-
ment is met by the demand that this very increment should be the
object of exceptional taxation, and the demand is daily becoming
more minatory and coherent. Englishmen are beginning to see
that their domestic troubles are mostly of their own making, and
when they learn the causes, they will be wholesale in their remedial
measures.

Political economy, rightly taken, i3 the interpretation of all social
conditions. It is justly distrusted if it is suspected of being a de-
fence of abuses. In the theory as to how wealth is distributed, the
true centre of all economical inquiries, the suspicion that it
deliberately advocates an unjust distribution, hopelessly discredits
it. And when men despair of equity, the just rights of those who
have strained those rights are in danger. I cannot agree with Mr.
George, but I am amazed to find how popular his theory is. It is
entirely the outcome of economical fallacies, hitherto treated as
indisputable trutli3. The unearned and, according to Mr. George,
the entirely undeserved increment is the key to the passionate and

PBEFACE. xiii

seductive proposals of " Progress and Poverty." Now the impulses
bred by this remarkable book are not met by definitions and logo-
machies. They may be explained away in great part by historical
facts, and by the accurate analysis of present conditions. But they
never will be as long as people cling to Ricardo, and to obsolete
theories of an analogous kind. 'The instincts of men revolt against
a doctrine which teaches that a limited class of property holders is
to take an increased toll on the earnings of capital and labour ; that
there is no escape from this bondage ; and that the more intelligent
and acute labour becomes, the more heavy will be the tribute which
the idle and worthless can exact from society. There is no more
mischievous person living than a rapacious landlord, who uses to
the full all the powers which existing law gives him. But, on the
other hand, there is no more useful and deserving person than a wise
and just landlord, who respects his neighbour's true rights, while
he preserves his own. Unluckily the former are common, the latter
are rare. The contrast may be extended into other forms of pro-
perty and other callings ; and the result is, that the doctrine of
laissezfaire is on its trial. In some quarters, the verdict has been
already given.

These lectures were compiled in 1887, though some were
delivered in the early part of 1888. I mention this in order to
designate the date to which some allusions in the text refer.

Oxford,

June, 1888.

CONTENTS.

i.

PAGE
THE ECONOMIC SIDE OP HISTORY # . # # 1 '

II.

LEGISLATION ON LABOUR ASH ITS EFFECTS • « .28

IIL

THE CULTIVATION OF LAND BY OWNERS AND 00CUPD3RS . . 46

rv.

THE SOCIAL EFFECT OF RELIGIOUS MOVEMENTS . • .69

V.

DIPLOMACY AND TRADE . . • • * . 92

VI.

THE CHARACTER OF EARLY TAXATION . » « • 115

VII.
THE DISTRIBUTION OF WEALTH IN ENGLAND AT DIFFERENT

EPOCHS . . • . . . 188

xvi CONTENTS.

THE HISTORY OF AGRICULTURAL RENTS IN ENGLAND i . 1G0

IX.

METALLIC CURRENCIES , . . a • .183

PAPER CURRENCIES m - • • o

205

XI.
THE ORIGIN AND PROGRESS OF ENGLISH PAUPERISM * ♦ 227

XII.
HISTORICAL EFFECTS OF HIGH AND LOW PRICES . o • 249

XIII.
DOMESTIC MANUFACTURES . . o o • 272

XIV.
THE GUILD AND APPRENTICE SYSTEM . , , ,295

XV.

THE RISE AND PROGRESS OF THE COLONIAL TRADE 0 ,818

XVI.

LAISSEZ FAIRE : ITS ORIGIN AND HISTORY , e .841

XVII.
THE HISTORY OF THE PROTECTIONIST MOVEMENT IN ENGLAND 865

XVIII.
THE INTERPRETATION OF EXPORT AND IMPORT TABLES . . 889

CONTENTS. xvii

XIX.

PAGE

THE ESTATE OP THE GROWN, AND THE DOCTRINE OF RESUMPTION 412

XX.
PUBLIC DEBTS ....... 434

XXI.

THE THEORY OP MODERN TAXATION . . . .456

• XXII.

THE OBJECT AND CHARACTER OF LOCAL TAXATION IN ENGLAND 479

XXIII.
THE POLICY OF GOVERNMENT IN UNDERTAKING SERVICE AND

SUPPLY ..... « 501

INDEX « • * * t * • 525

EKRATA.

Page 13 line 14 from bottom, for friend read view.

„ 13 „ 17 n for were read was.

„ 15 „ 16 „ for three read these.

„ 17 „ 17 for labour, capital read labourer capitalist.

„ 25 „ 3 for Lowland read Lombard.

„ 60 „ 10 from bottom, for rescue read reserve.

„ 71 „ 5 ,, for Canosa read Canossa.

„ 73 ,, 14 /or heighth read height.

„ 74 „ 12 after tenets, " of " omitted.

„ 154 „ 17 for fours read four.

,,172 „ 13 for persons read parcels.

,,218 „ 11 for depends read depend.

„ 221 „ 16 for even read every.

„ 284 „ 14 " of " omitted at end of line.

,,284 „ 16 for Kitchen read Kitchin.

„ 293 ,, 7 for was read were.

„ 303 „ 4 from bottom, for work read week.

,,309 „ 13 „ after supplied insert «« and".

„ 349 „ 14 at end of line " of " omitted.

„ 462 „ 6 from bottom, after distributed, insert " it ".

„ 480 „ 11 „ for waged read raged.

THE ECONOMIC
INTERPRETATION OF HISTORY.

THE ECONOMIC SIDE OP HISTORY.

Narrow views on history and political economy — The abundance of
materials — The philosophy of history — Speculative political
economy — The political influence of English ivool — 1272-1603,
and the conquest of Egypt by the Turks, illustrations of the aid
given to history by economical facts — Early English institutions in
parishes and towns — Self-government in the villages — Famines —
Labour and capital : their several functions — Incidents of labour
and capital — The wages of labour and the profits of capital iden-
tical in principle — The Great Plague of 1349, and the insurrection
of 1381.

In nearly all histories, and in nearly all political economy, the col-
lection and interpretation of economical facts, by which I mean
such records as illustrate social life and the distribution of wealth
at different epochs of the history of mankind, have been habitually
neglected. But the neglect renders history inaccurate or at least
imperfect, political economy a mere mental effort, perhaps a mis-
chievous illusion. Every historian will tell you that no history is

2

2 TIIE ECONOMIC SIDE OF BISTORT.

worth preserving which does not at once illustrate the progress of a
race, or a permanent influence. So a political economist who does
not, in his estimate of present industrial forces or agents, take into
account the circumstances which have created or modified these
forces would, except by a miracle, assuredly blunder in his in-
ferences. History, which does not attempt to distinguish the relative
importance of facts, and does not inquire how any contemporaneous
set of facts can be pressed into the interpretation, is a mere disordered
and imperfect dictionary. Political economy, when it disdains the
correction of evidence, is a crude metaphysic, which gives a very
artificial and erroneous account of actual life. I hope to be able to
illustrate these positions by numerous instances.

I have said that nearly all history, and nearly all political
economy, is in this condition. But the barest annals recognize
some of these facts, even when they fail to interpret them. Every
historian, for instance, notices the great plague of the fourteenth
century. He observes that the English kings, in their attempts on
France, invariably strove to get the Netherlands on their side. He
records the fact that there was a formidable insurrection in England
in the last quarter of the fourteenth century, an embittered civil war
in the fifteenth, a serious weakening of English reputation in the
sixteenth. But these historians have never attempted to discover
whether any economical facts contributed powerfully to these
events. So entirely was the seventeenth century absorbed in the
great struggle of that time, that it has simply left unrecorded all
facts of an economical character, which in any other country, even
the rudest, would have arrested attention. The political history of
this century has been written over and over again. Its social or
economical history has been entirely neglected. To the study of
this aspect of history I have given the best years of my life. I
hope in these lectures to introduce you to some of the facts and
some of the inferences which I have collected, and I think I shall
be able to show that very often the cause of great political events
and great social movements is economical, and has hitherto been
undetected.

By far the largest amount of the materials which I have collected
for my purpose are from documents which have probably never been
read after the immediate object for which they were compiled was

VIEWS ON HISTORY AND POLITICAL ECONOMY. 3

satisfied. Farming accounts, elaborate accounts of buildings and
the materials purchased for their erection, with the labour paid for,
have been examined, audited, and laid aside. It may be asked, Why
were such documents preserved at all after their use was over ? The
answer is that, up to recent times, the facts which they recite might
be useful as evidence of property. Two generations ago a title to
land might be impugned or defended by evidence adduced on either
side for six centuries and a half, and, therefore, all proof of title
might be valuable. "We owe the vast mass of records preserved in
public and private collections to a barbarous rule of law. It is
likely that what prudence first dictated became a habit, and all
papers and documents were preserved because it was necessary to
treasure some.

I do not make my charges against the historian and economist
without reason. At the latter end of the eleventh century a most
remarkable document was compiled, a survey of nearly all England.
It is rightly deemed to be one of the choicest antiquarian and
historical treasures which the nation possesses. It has long since
been printed. It has frequently been examined for antiquarian
purposes. But it has never been analysed. My friend, Professor
Freeman, has published a very copious history of the Norman Con-
quest. He has, I do not doubt, collected every scrap of history, in
the common meaning of the word, which could be procured from
every source, domestic and foreign, and commented on them with a
fulness which is almost overwhelming. But he has made little use
of Domesday Book, which, after the skeleton of facts is arranged,
contains far more genuine living material than all his other au-
thorities.

Due weight has been given by some writers to the habits and life
of primitive communities. But it is to be regretted that more atten-
tion has not been bestowed on their later development. The evidence
on this, in the court rolls of manors, is exceedingly abundant in
England. These documents are remarkably illustrative of village life
and of the surviving relics of the communal system, and especially
of that local self-government which has, perhaps, been disadvan-
tageously superseded by the later expedients of justices and quarter
sessions. But I should have learnt little of the life which our
ancestors lived centuries ago, of the mutual liabilities of the villagers,

4 THE ECONOMIC SIDE OF IIISTORY.

of their local courts, and their very effectual administration of justice,
civil and criminal, if I had not read these manor rolls by hundreds.
Mr. Hallam once regretted that we could not recall the life of a
single medieval village. But the means for doing so exists in
abundance, and the student of these documents must have a dull
imagination indeed if he cannot picture to himself the life of an
Englishman in the days of the Plantagenets from his cradle to his
grave, realize all the persons with whom he was necessarily brought
in contact, and give their weight to all the elements of the little
society in which he lived.

Again, the materials for the history of administration of govern-
ment and of finance are exceedingly abundant, but have been very
inadequately pressed into the service of the historian. England has
an enormous wealth of diplomatic instruments ; not perhaps so
copious as the great collection of Muratori, or the monumental work
of Dumont, but still of remarkable fulness. The mass of financial
records is absolutely prodigious, for the pipe rolls exist in an unbroken
series from the days of the first Plantagenet king down to the fifth
of the Hanoverian house. But they are hardly explored. Their
volume would, I admit, daunt the boldest student. But there should
be nothing to prevent the historian from examining the rolls of
Parliament. I venture on asserting that if he did so, he could
sweep away many ancient delusions as to persons and events, delu-
sions which seem to be permanently imbedded in the popular
histories.

I do not deny, I gladly acknowledge, that the solid study of his-
tory has made considerable progress. The narrative is no longer
merely one of war and peace, of royal genealogies, of unrelated
dates, of those annals about which the adage was uttered that happy
is the nation which has no history. History has begun to include
the study of constitutional antiquities, though even here there is too
strong a tendency to anticipate a late development in early begin-
nings, and to lay too much stress on doubtful meanings. History,
again, has begun to recognize the progress of jurisprudence, though
it has rarely recognized the economical conditions to which the
development of jurisprudence was due. It has touched lightly, very
lightly, on social history, on the condition of the people, on the vary-
ing fortunes of land and labour, and on the circumstances under

ABUNDANCE OF MATERIALS. 5

which industries have been naturalized and developed amongst us.
The seventeenth century is an age of intellectual and political
giants, who carried on a long and unbroken warfare. It will always
be studied. It is the favourite topic or theme of writers. But as it
has been hitherto written, it is nothing but the record of their
drama, the estimate of their characters, who were the agents of this
colossal strife. To me the century has another and a very different
aspect — the history of the people, whose fortunes have hitherto been
passed over in silence.

In one direction, indeed, history has made great strides. I refer
to that philosophy which seeks to interpret the characters and
motives of statesmen and of princes, when princes were statesmen.
It is almost needless to say that such writers, according to the
vigour of their powers, are constantly open to the charge of partisan-
ship or paradox. The historian may be honestly convinced that he
is drawing a f.iithful picture of the men and their times, and he
may be as faithful as he believes he is. But the more vigorous his
imagination is, the better stored and more orderly it is, the more
liable he is to the charge of overcolouring his picture, perhaps to
the risk of its life. Latterly I have been engaged in an inquiry into
the early years of the Bank of England, as I discovered some un-
known and unexpected information as to the fluctuations in the
price of its stock. I had to go for a few years, with the limited pur-
pose of illustrating the fortunes of the Bank, over the same ground
which Macaulay had traversed, and to use some of the same au-
thorities which he used. My inquiry was simply into a new and
great commercial adventure, not into the complicated problem of
Bevolution politics. As in duty bound, I bore testimony, for I had
proof before me, to the cautious fairness of the historian. But a
friend of mine, a very eminent statesman, demurred to my eulogy.
" The vast colouring power of his fancy," he said, " was against his
accuracy."

In the philosophy of history it is difficult to avoid partisanship ;
impossible, I believe, to escape the imputation of it. The volcano
may be extinct, the crust of the lava may be crossed by the way-
farer, but deep in the crevices of the cooling mass there may remain
a dull red glow. The criticism of great men in past times is sure to
be interpreted as implying analogies in the present. The dispute

6 THE ECONOMIC SIDE OF HISTORY.

about the virtues and vices of Mary Stuart is not yet hushed. The
reputation of Penn is still angrily defended. There are honest
apologists for "Wentworth, for Laud, for Shaftesbury. Some of you
know that Mr. Gardiner has latterly shown not a little skill in exhibit-
ing the first two of these historical personages in a new light, and even
of suggesting a fresh aspect to the great Parliamentary struggle. I
cannot, indeed, quite accept the ingenious inferences of this able
writer. I do not want indeed to be told that Wentworth was not a
mere adventurer. I do not take my estimate of him from Baillie
or Clarendon. I do not want to be told that Laud was not a mere
driveller. I do not get my opinion of him from the coarse invec-
tives of Prynne or the coarse eulogies of Heylin. Nor has Mr.
Christie removed my suspicions, well-founded suspicions I believe,
as to the motives and character of Shaftesbury. Still, it is some-
thing that in the days of the second Charles a man could have held
office under the Crown without becoming portentously and indispu-
tably wicked. I could multiply these illustrations. I will only add
that, as great historians of the philosophic school can hardly escape
the imputation of partisanship, so the meaner masters of the craft
almost invariably fall into transparent paradox and grotesque
exaggeration. There is a further stage, in which an attempt is
made to draw a likeness, and the failure is complete. I cannot
accept Lord Stanhope's portrait of anybody.

The student of history who attempts the less ambitious but more
laborious task of economical interpretation occupies a safer, a more
unchallengeable position. If I can point out to you that the price
of wheat rose frequently, in the first half of the seventeenth cen-
tury, to 55s. and more a quarter, and that the peasant's wages were
forcibly kept down, by the best expedient that the administration
could devise, to less than sixpence a day, I am not concerned at
he criticism of those who would deny that this was oppression.
If I can show you that agricultural land let a generation ago at ten
times the amount which it let at in the same first half of the seven-
teenth century, I shall not be deterred by a legion of Ricardos, into
expressing the gravest doubts as to whether that eminent person
gave an exhaustive account of the rent of land. Such corrections
of popular political economy have constantly come before me.
The political economist of the later school has thoroughly carried

THE PHILOSOPHY OF HISTORY. 7

out in his own person the economical law which he sees to be at
the bottom of all industrial progress ; that of obtaining the largest
possible result at the least possible cost of labour. He has, there-
fore, rarely been at the pains of verifying his conclusions by the
evidence of facts. He has, therefore, constantly exalted into the
domain of natural law, what is after all, and at the best, a very
dubious tendency, and may be a perfectly baseless hypothesis. His
conclusions have been rejected by workmen, and flouted by statesmen.
The former have accused him of partisanship, the latter of unreality.
He is not infrequently inconsistent with himself and his own theory.
In one page he insists on the intrinsic wisdom of free competition,
in another he accords the privilege of protection to young and rising
communities. One of the less judicious of these writers may
advocate, nay, has advocated, a regulated issue of notes under one
set of circumstances, and counselled the discretionary issue of
paper money at another, when the latter situation was wholly
indefensible. Men have written about the "law of diminishing
returns," without having given a moment's attention to the practice
of agriculture, and getting a fraction of the experience which may
be derived from witnessing that practice, and have rated the
British workman for improvidence and recklessness, without having
troubled themselves to discover the very traceable historical causes
which have induced that character on him. Perhaps the most
remarkable Nemesis which has come on the speculative economist
is that the definition of Population by Malthus, and the definition
of Eent by Kicardo, have been made the keystone to Mr. Henry
George's theory, under which he demands the confiscation of Eent
in the interests of Population.

The truth, when the economist has tested, and as far as possible
verified his inferences or hypothesis by the evidence of facts, he
may be able to predict. His predictions may be exceedingly
accurate, and may be exceedingly alarming. He may show, for
example, by a study of the conditions under which agricultural rent
has been developed and increased in this country, that a revival of
agricultural rent, unless the conditions of occupancy are wholly
altered, either by the spontaneous and reawakened intelligence of
the landowners, or by the operation of law, in the probable absence
of such intelligence, is not only unlikely, but that matters will go

8 THE ECONOMIC SIDE OF HISTORY.

m

on from bad to worse, without any visible hope of recovery. The
economist has satisfied his function when he has justified his pre-
diction. Then begins the position of the statesman, whose duty it
is to say, and that speedily and peremptorily, " What you say and
prove will happen, must not happen, but law must be invoked, if
obstinacy and stupidity requires its intervention." The student of
the conditions of health alleges, and with perfect truth, that given
such and such circumstance, disease and loss of life are inevitable.
The statesman gives effect to his demonstration by passing sanitary
laws, and enforcing their satisfaction.

The wise habit of developing inferences from evidence has been
cultivated by at least one modern writer. The range of Mr. Giffen's
speculations is not wide, and in some investigations which he has
made, he has not, I am confident, gone far enough back in his
researches. But in those which bear on monetary science and trade,
his method leaves nothing to be desired, and the student, who
is anxious to go beyond the common chatter of text-books and
manuals, will learn more and better political economy from Mr.
Giffen's essays than he would if he browsed for ever on the thorns
and thistles of abstract political economy. I commend, in par-
ticular, to your notice, the essays contained in the second series.

I will now proceed to show by way of illustration how
economical facts lend themselves to the interpretation of history. I
stated just now that the Plantagenet kings always used Flanders
as the fulcrum from which to make their attacks on France, and
that our Edward IIL and Henry V. sedulously cultivated the
friendship of the Flemings and their rulers. The means which
they employed to further these diplomatic ends, was the free or
restrained exportation of English wool. From the thirteenth to
the sixteenth century, " wool was king." A quarter of a century
ago, the seceding states of the American Union avowed that "cotton
was king," and that a stint of this necessary material of British
industry would assuredly effect a diplomatic revolution in England,
enforce the acknowledgment of Southern independence, and con-
strain the inhabitants of the United Kingdom to reconsider their
hatred of slavery. The cessation of a cotton supply induced great
misery, but, for reasons which will appear further on, the partisans
of the South erred in their reckoning.

THE POLITICAL INFLUENCE OF ENGLISH WOOL. 9

England was the only wool-producing country in Europe. To
some extent, this remarkable industrial phenomenon is due to its
climate and soil, though some parts of England are, and have been
for centuries, more fitted for this product than others. In a
petition to parliament presented in 1454, it is suggested that certain
kinds of wool, forty-four in number, should not be exported, except
at the prices named in the schedule. These prices range from 260s.
the sack, the value assigned to a certain kind of Hereford wool, to
52s., that assigned to Suffolk produce. These are, beyond doubt,
to use a modern phrase, brands well known in the wool trade of the
time. More than a century before this time, permission was given
to export wool in certain quantities at certain prices, the prices not
being quite so high as those in the schedule of 1454. It is possible
that the object of the petition was to encourage the English cloth
trade, it is equally probable that it was intended, had the prayer
been granted, to force the Flemings into active co-operation with
those designs on France which had been so disastrously disap-
pointed the year before, when Shrewsbury had been defeated and
slain at Chatillon. 4

The practical monopoly which the English possessed of the wool
supply was less due to the climate and soil of England, than it was
to the maintenance of order in the kingdom. For a long time,
every one in England, from the king to the serf, was an agriculturist.
After the landowners had been constrained to give up arable
farming, they still remained sheep masters, produced wool and sold
it. Now when, owing to the diffusion or distribution of property,
every one is interested in maintaining the rights of property, there
is very little temptation given to theft or violence, and every incli-
nation to detect and punish it. Hence Englishmen could keep
sheep, the most defenceless of agricultural animals. Every one
who knows anything about the state of "Western Europe from the
thirteenth to the seventeenth century, knows that the husbandman
did not keep sheep, for they would have certainly been plundered
of them by the nobles and their retainers if they had. The king's
peace was the protection of the sheep master.

England then had a monopoly of wooL The monopoly was so
complete, and the demand for the produce so urgent, that the
English Parliaments were able to grant an export duty on wool

10 THE ECONOMIC SIDE OF UISTORT.

equal to more than the market value of the produce without
diminishing its price. In other words, the export duty was paid by
the foreign consumer, a financial success which every government
has desired, which many governments have tried, and in which all,
with this English exception, have failed. The reason is, that in
order that an export duty should be paid by the foreign consumer,
four conditions, very rarely satisfied, have to be in existence : 1. The
article must be a necessary of life. 2. There must be absolutely
no other source of supply, except the country from which it is
derived. 8. There must be no substitute for the article in question.
4. There must be no appreciable economy possible in the use of it.
These conditions were satisfied in the case of English wool during
the period that it was so powerful a diplomatic force. During the
course of my economic studies, I have not seen them satisfied in
any other commodity whatever, and I submit that this aspect of
the relation of England to Flanders and its rulers, is incomparably
more instructive than the pedigree of the Dukes of Burgundy, or
the barren account of military operations on the French frontier of
the Low Countries. The best wool in England was worth 20s.
a tod in the fifteenth century, i.e., about four quarters of wheat.
Three centuries later, when other prices had risen from nine to
twelve times, English wool of excellent quality was sold at less
than half the sum which it had been appraised at in the period
which I have taken for illustration.

I will take another example by way of proving to you how much
the interpretation of history gains by the study of economic facts.
In the twelfth and thirteenth centuries there were numerous and
well-frequented .routes from the markets of Hindostan to the
Western world, and for the conveyance of that Eastern produce
which was so greatly desired as a seasoning to the coarse and often
unwholesome diet of our forefathers. The principal ports to which
this produce was conveyed were Seleucia (latterly called Licia) in
the Levant, to Trebizond on the Black Sea, and to Alexandria.
From these ports this Eastern produce was collected mainly by the
Venetian and Genoese traders, and conveyed over the passes of the
Alps to the Upper Danube and the Bhine. Here it was a source of
great wealth to the cities which were planted on these waterways,
from Ratisbon and Nurenberg, to Burges and Antwerp. The stream

THE CONQUEST OF EGYPT BY THE TUBES. 11

of commerce was not deep or broad, but it was singularly fertilizing,
and every one who has any knowledge of the only history worth
knowing, knows how important these cities were in the later
Middle Ages.

In course of time, all but one of these routes had been blocked
by the savages who desolated Central Asia, and still desolate it ;
the most hateful and mischievous of these races being still en-
camped in what was once the most prosperous part of the world,
Greece and Asia Minor, and keeping it in hopeless savagery. It
was, therefore, the object of the most enterprising of the "Western
nations to get, if possible, in the rear of these destructive brigands,
by discovering a long sea passage to Hindostan. All Eastern trade
depended on the Egyptian road being kept open, and this remaining
road was early threatened. The beginning of this discovery was
the work of a Portuguese prince. The expedition of Columbus was
an attempt to discover a passage to India over the Western sea. By
a curious coincidence, the Cape Passage was doubled, and the New
World was discovered, almost simultaneously.

These discoveries were made none too soon. Selim I. (1512-20),
the Sultan of Turkey, conquered Mesopotamia and the holy towns
of Arabia and annexed Egypt during his brief reign. This con-
quest blocked the only remaining road which the Old World knew.
The thriving manufactures of Alexandria were at once destroyed.
Egypt ceased to be the highway from Hindostan. Selim had all
the energy of the race to which he belonged, and more than all of
its vices. I discovered that some cause must be at work which had
been hitherto unsuspected, in the sudden and enormous rise of price
in all Eastern products, at the close of the first quarter of the six-
teenth century, and found that it must have come from the conquest
of Egypt.

The river of commerce was speedily dried up. The cities which
had thriven on it were gradually ruined, at least in so far as this
source of their wealth was concerned. The Nile became flumen
epotum Medo in a commercial sense, and the trade of the Danube
and the Ehine ceased. The Italian cities fell into rapid decay. The
German nobles, who had got themselves incorporated among the
burghers of the free cities, were impoverished, and betook themselves
to the obvious expedient of reimbursing their losses by the pillage

12 THE ECONOMIC SIDE OF HISTORY.

of their tenants. Then came the Peasants' War, its ferocious inci-
dents, its cruel suppression, and the development oi those wild sects
which disfigured and arrested the German Reformation. The battle
of the Pyramids, in which Selim gained the Sultanate of Egypt for
the Osmanli Turks, brought loss and misery into thousands of homes
where the event had never been heard of. It is such facts as these
which the economic interpretation of history illustrates and expounds.
I shall have occasion in the course of these lectures, to supply you
with a multitude of examples as significant as these two which I
have quoted. I am not, I hope, too much absorbed in the study
which I have pursued for so many years, as to overvalue the facts
which I have discovered and marshalled. But I am convinced that
to omit or neglect these economical facts is to make the study of
history barren, and its annals unreal "With every effort that can
be given to it, the narrative of the historian can never be much
more than an imperfect or suggestive sketch. We may get the
chronology correct, the sequence of events exact, the details of cam-
paigns precise, the changes of frontier reasonably accurate, but may
still be far off from the controlling motives of public action, may be
entirely in the dark as to the real causes of events. Nor shall we
be greatly helped by the more or less successful criticism of the
career and purposes of public men. During the great drama of the
wars of religion, we may make a more or less intelligent estimate
of Philip II. and William of Orange, of Henry of Navarre and
Elizabeth of England, of Maurice, Barneveldt, Richelieu, Bucking-
ham, of the English Puritans, of Laud and Strafford, of Eliot, Pym,
Hampden, Falkland, Cromwell, of Ferdinand of Styria, Maximilian
of Bavaria, Gustavus Adolphus, and Wallenstein ; but we shall never,
with all our pains, obviate the revision of our judgments. But when
we have economical facts of great and far-reaching import to guide
us, we can arrive at conclusions which cannot be modified, because
they cannot be disputed. I shall not pretend to say that I have
discovered the meaning of many among the facts which I have
collected. It has been always my opinion, an opinion which I
have constantly avowed, that my researches will very possibly yield
in other hands more than I have been able to infer, and will serve
to illustrate and interpret the past and present to a greater extent
than I have been or shall be able to effect.

EARLY ENGLISH INSTITUTIONS. 13

I mentioned in an early part of this lecture, that Hallam had
lamented the disappearance of the annals of the poor, the recovery
of which would throw so much light on the past. This excellent,
laborious, and conscientious writer, whose works are more profitably
studied than others of more antiquarian pretensions, derived all his
information from printed books. His powers of inference and his-
torical construction were therefore limited by his materials, and
none of the writers which he consulted, with the exception of Madox,
had drawn information from original documents. Madox, too,
appears to have consulted very little beyond some of the Pipe rolls,
and those cursorily. There were printed authorities, such as Fitz^
herbert's treatises, from which Hallam might have gathered much.

Some English institutions have had a most tenacious existence.
It has been observed that the vestry or parish meeting is in direct
succession from the assembly of freemen in the Teutonic mark.
The system of grand and petty juries had their beginning in the
presentments of the minor courts, and the levy of fines, sometimes
of the highest penalties, on offenders. The penalties of treason are
copied from the punishments inflicted on offenders against the
sanctity of the mark and its boundaries. The peculiar position of
the steward or seneschal of the manor, when he sat on the judgment
seat were similar to, and a precedent for, the circuits and authority
of the judges of assize. The perambulation of the boundaries and
the attendance of the boys at this ceremony seems to be the survival
of the friend of frank pledge and registration in the decenna. The
taxing rolls of the Plantagenets, in which the owners of all personal
property in the several parishes are named, would with a little care
serve as a census of the parishes at the time when the assessors
visited the inhabitants.

The parish held from thirty to one hundred inhabitants or more.
It contained one or two lords of manors, for sometimes the parish
was divided among two or more overlords. This lord was frequently
non-resident, and only visited his domain and tenants occasionally.
The most important functionary was the rector or parson, practically
the head man of the village, and when the lord or steward were not
holding court, the permanent chairman of the village gatherings.
If his tithes had not been appropriated by some monastery, his
income derived from these and from offerings and dues, ordinary

14 THE ECONOMIC SIDE OF HISTORY.

and extraordinary, was for the time considerable, and it was common
for him to select, educate, train, and send to the university some
bright and intelligent village lad, even though he might be of
servile birth, in order that he might become a priest. In the same
way, without regard to his origin, an ambitious and courageous
youth might enter the king's army; and the former might become a
learned doctor and bishop, as Grostete became, the latter a captain
and knight, as Sale did, both having been of mean birth.

The houses of the villagers, built of wattles, smeared inside and
out with mud or clay, were crowded near the church, in the street
of the settlement, though there were in large parishes, outlying
homesteads. In all cases the church was the common hall of the
parish, and a fortress in time of danger, occupying the site of the
stockade which had been built when the first settlers occupied the
ground. In the body of the church were frequently stored produce,
corn and wooL Here too, I believe, the common feasts of the
parish were held, till such time as the proceeds from the local guild
enabled the people to erect their own guild-house. The only houses
of any pretension in the village were the lord's, the parson's, and
the miller's, who by prescription took toll of all the inhabitants, who
were bound to grind at his mill, who is a busy, and according to
current report, not an over-scrupulous personage in his dealings
with his fellow villagers.

Most of the villagers held land as freeholders under fixed rents,
and copyholders under no less fixed services. The arable land was
in open fields, strips of which, divided by balks on which the grass
was left growing, were, in greater or less quantity, the property of
the lord, the parson, and the tenants. When the scanty harvest
was gathered, the arable land became for a time common pasture.
Beside these fields were the commons, the lord's waste, and the
lord's wood, the latter being generally on the village bounds. Some
of the villagers had only cottages with curtilages, and were the
hired labourers in husbandry ; though the small farmer, when his
work on his small holding was done, was ready to better himself by
taking work. All, as I have said, paid rent, in money, in kind, or in
labour; but in the historical period, the labour, rents, and ultimately
the rents in kind were always commutable for money, the money
equivalent being always less than the ordinary rate of wages.

SELF-GOVEBNMENT IN THE VILLAGE. 15

Beyond their agricultural labours, the villagers met informally in
council, under the presidency of the rector, and formally at the
times, generally three times a year, when the lord's courts were
held. In these courts they were trained in habits of self-govern-
ment, some presenting offenders, some sitting as a jury of com-
purgators. For in early times, at least, it seems that no stranger
could be harboured in the settlement, a breach of the rule beyond
a certain time being punishable with a fine. Most villages of any
size had an annual fair. Then there were markets and fairs in
other towns. The earliest writer on English husbandry, Walter de
Henley, allows several days for periodical visits to these places of
business and pleasure. Few parishes were probably without guild
lands from which the aged and the poor were nourished, till, on the
plea that they were devoted to superstitous uses, they were stolen,
under an Act of Parliament, by Protector Somerset.

The surroundings of these villagers' houses were unclean and
unwholesome, just as they are near an Irish cottier's house in our
own time, and it was the lord's interest to encourage the drain from
the cottager's middens over his own meadows, which generally lay
near the village stream. Perhaps the life of a mediaeval Englishman
was less uneventful than that of the modern peasant. He had to
get all that he wanted, beyond what he procured by his own labour,
for himself and his family, at three periodical fairs, or less ad-
vantageously at the shops of the few and small towns which he was
able to frequent. Here he sold his surplus produce, in order to pay
his dues, and to get what he needed for farm and homestead.
Apart from these periodical absences from home, he learnt the news
from the numerous itinerant priests who constantly visited the
villages. In later times, if he sympathized with Wiklif and his
poor priests, he would take counsel with these migratory preachers,
confide in them his troubles and discontents, and even concert with
them the means of armed resistance, resistance which once nearly
shook England to its foundations.

The essence of contracts for the occupation of land, if these
ancient tenures could be called contracts, was that the liabilities of
the tenant should be fixed and unchangeable. This idea of a fixed
rent in an estate of inheritance pervaded all relations of landlord
and vassal. It affected the subsidies granted to the Crawn, the

16 THE ECONOMIC SIDE OF BISTORT.

county valuations of which appear to have been unchanged from
the days of the Plantagenets to the days of the Stuarts. So with
the fee farm rents paid by freeholders, the labour, and subsequently
the commuted rents paid by the copyholders. The principle that a
tax should be unchanged was adopted in William III. land tax,
an assessment which has never been revised after the lapse of nearly
two centuries. So in arguing in the House of Commons, in 1881,
in favour of a produce rent in Ireland, which the expectants of the
unearned increment refused to accept, I ventured on predicting that
an arbitrated money rent, that which the House of Commons ulti-
mately adopted, would never be raised, but might be diminished.
Time has shown that my prediction is verified.

I believe, indeed, that under ordinary circumstances the means
of life were more abundant during the Middle Ages than they are
under our modern experience. There was, I am convinced, no
extreme poverty. His dues paid, the small farmer's property and
profits were as secure as the landlord's domain. In this the condi-
tion of the English peasant was in marked contrast to the lot of the
French roturier and the Teutonic bauer. There was but a small
surplus population quartered on the products of the soil. The
labour of the husbandman was not constrained, as in later times,
to support a mass of idlers and consumers. But in other respects
his condition was far less satisfactory. His diet, owing to the lack
of winter food and nearly all vegetables, was unwholesome during
half the year, when he was constrained to live on salt provisions.
Leprosy and scurvy were common diseases in mediaeval England.
In the fourteenth century it is probable that life was healthier in
the towns than it was in the country. In the seventeenth these
conditions were reversed. In healthy seasons the death rate in
London was 41 \ per thousand, in unhealthy times the deaths were
double the births. In this same century, the deaths in country
places were calculated at 29 in the thousand.

England suffered from occasional famines. Of these by far the
most formidable were the harvest failures of 1315, 131G, and 1321,
when incessant rain in summer destroyed the crop, as incessant
rain always does. It would seem that at this time there must have
been a considerable loss of human life. This is told us, indeed, by
the chroniclers of the age, but there is a stronger proof than their

FAMINES. LABOUR AND CAPITAL. 17

narrative supplies, for the rate of wages rose 10 per cent, after the
occurrence of the calamity. In this case, and in the far graver
events which followed on the pestilence of 1349, the greatest
increase was effected in what was previously the worst paid kind of
labour, as, for instance, threshing oats and women's labour, for it
is a law of prices which I have constantly verified by an examina-
tion of facts that, whenever a scarcity occurs in any necessary agent
or product, the rise among the severally related forms of the service
or product is always greatest in that which had hitherto been the
lowest. Thus, in materials, when a scarcity occurred a quarter of a
century ago in cotton, Surat produce rose vastly more than Sea
Island did. Thus, after the plague to which I have just referred,
the rise in the cost of threshing wheat was 33 per cent., of oats
88 per cent., while women's labour was paid double or treble its
old prices.

It may assist us in illustrating the facts which will perpetually
occur in dealing with economic history, if I state briefly what are
the relations of the labour and the capital. Wealth is of two kinds,
passive or unproductive, and active or productive, the former being
constantly and regularly a reserve on which the latter may draw
This double function of wealth explains the rapidity with which in
times of exalted demand wealth is readily turned into the active
form, profits increase, workmen are employed, and finally wages
rise. Mr. Mill has alleged, and no doubt has puzzled you greatly
by the allegation, that demand for commodities is not a demand for
labour, a statement which contravenes all experience. Mr. Mill's
error, and an error he acknowledged this famous paradox to be in the
later years of his life, arose from his believing that wealth destined
to active uses was at any given time a fixed quantity, just as at any
given time a balance at a banker's is. But, in point of fact, the
wealth available at any given time for the purpose of affording con-
tinuity to industry is a very indefinite quantity, is capable of
great and sudden extension, especially in the form of loanable
wealth.

The function of capital is to secure the continuous employment
of labour, and as far as possible to equalise prices and profits. The
labourer lends his labour for a week or a fortnight, or longer, to the
employer, and it is easy to conceive, when a turnover is rapid, that

8

18 THE ECONOMIC SIDE OF HISTORY.

the employer Las secured his profit long before he repays his work-
men for the advance which the latter has made to him. In the
great majority of cases, however, the profit of the employer is post-
poned till long after he has repaid his workman. But the principal
service which the employer does is to give the labourer the prospect
of continuous employment, and as the division of employments is
developed, and human labour is aided, or perhaps displaced, by
costly machinery, the expediency of finding continuous employment
for labour is stimulated by the knowledge that the cessation of
employment would be a rapidly growing loss. Again, it is the
business of the capitalist employer to maintain as far as possible an
equal money value or price. The most violent fluctuations of price
occur when the producer is constrained to sell at the discretion or
demand of the buyer. But the capitalist dealer withholds his goods
from the market until such time as he can command his price, and
the shrewdest producer or dealer, the man who in the long run
commands the best service, and gains the largest profits, is he
who can anticipate with the greatest accuracy the demand of the
market.

I refer to these facts, in which what I am stating will not be
found to differ materially from the views entertained by most
economists, because, at the present time, the crudest ideas are
afloat about the relations of labour and capital, in which the
functions of the latter are vilified, and a violent competition is
proposed between the state on the one hand, that is, all who have
no property, and the private capitalist on the other. The experi-
ment of the state, or rather the taxpayer, finding competitive
capital has been tried. It was the theory of Elizabeth's last
poor law, and it failed disastrously, to the condign misery of the
workman, a misery prolonged for centuries, as I hope to show.
Nothing is gained by exaggerating the benefits which capital
confers. Nothing will be gained by depreciating its real services.
It has been shrewdly observed that capital and labour are like the
two blades of a pair of scissors, powerless apart, but apt to their
function when properly fitted.

Now all economists agree, that profits in the general sense are made
up of three elements, interests on advances, whether made from his
property by the capitalist agent, or supplemented by loans from

INCIDENTS AND LABOUB AND CAPITAL. * 19

those who, being unable to employ their own wealth, are willing for
a consideration to lend it to others. The rate of interest is high
when loan capital is scarce, low when loan capital is abundant.
But it is always a measurable quantity. A second element is risk,
a quantity which cannot be measured, for if it were measureable it
would cease to be risk, but must be estimated. It varies exceed-
ingly in different callings. It is probably greatest in the case of
the agriculturist, particularly if his principal culture is exposed to
numerous unforeseen accidents. I mention this mainly to show how
serious an element risk is, in the tender of an agricultural rent. In
the course of these lectures I shall be able to give numerous illus-
trations from economical history of the disturbance which this
contingency has caused. The third is the labour of superintendence;
the time, toil, anxiety, skill which the capitalist employer must
give to the details of his business. To these one may add a fourth,
which is, perhaps, only a modification of the second, the inevitable
wear of implements, and the rapidity with which machinery becomes
obsolete or comparatively inefficient. Now it will be plain that, in
the language of logicians, the first two elements of profit are objec-
tive, i.e., they are external to the agent, and determined by condi-
tions which the agent cannot control. The third, his own labour,
is subjective, and it is plain that on this his real profits depend.
Our analysis, therefore, shows that the capitalist employer is a
labourer, and that his remuneration depends entirely on the
efficiency of his labour. Whether or no he gets too much in the
distribution of the gross value is another question, but the more
necessary workmen make him, by being as much as possible unlike
him, the greater will be his share.

Now let us turn to the recipient of wages, the labourer or work-
man strictly so called. The Greek philosophers, by a happy
generalization, called him ifixj/vxov opyavov, a living machine, and the
phrase is far more significant to us than it was to them, for they
degraded labour by permitting slavery. The labourer in our days
is a machine which has been constructed at no little cost; but far
more important than the cost is the aptitude, whether it be heredi-
tary or imitative, with which the civilized man grapples with
industrial avocations. You have all of you seen many of those
wonders of mediaeval art, the great cathedrals and churches of this

20 THE ECONOMIC SIDE OF IIISTORY.

country, indeed of Western Europe. In most cases, the architects
of these marvellous works are unknown, for the very sufficient
reason that they were designed by workmen. The mason or
carpenter who can draw out his plot, i.e., furnish the design of the
structure which his hands set up, is mentioned over and over again
in our early Statute Book. Familiar as I am with agriculture, I am
constantly amazed at the numerous accomplishments of a first-class
farm-hand, who is most fit by the multiplication of his employ-
ments, as the artizan or factory hand is by their division. He will
draw a furrow across a hundred-acre field with a precision of an
artist, and prove the correctness of his eye, by the completeness
with which he finishes the field. To make a serviceable ditch with
its proper inclination is no slight feat. To build and thatch a rick
squarely, to trim a hedge neatly, to reap and mow evenly require
much practice and skill. The shears which the shepherd plies are
rude instruments, but in practised hands they do their work deftly.
A good farm-hand generally knows as much practical husbandry as
his employer, and is as skilful in the treatment of cattle as a farrier.
On such training as this interest has to be paid, as surely as on the
property or loans of the employer. The form it takes is in sufficient
income for the industrial education of his successors, and the
fortunes of a country will decline if the successor is not forthcom-
ing, or if folly drives him away from his native soil.

The element of risk, the inevitable wear, and the ultimate extinc-
tion, of this living instrument are manifest enough. His remunera-
tion must cover this contingent charge, or it must be covered at the
expense of others. The machinery of the English poor law enables
the employer, who reaps the profit of the workman's labour, to
transfer to the shoulders of all occupiers the insurance of the
labourers' risk. To be sure, with commendable forethought, the
•best workmen, either through benefit societies or labour partnerships,
seek to effect their own insurance. In the Middle Ages they did it
through their guilds, purchasing lands and houses all over England
for charitable service to their own order. Unluckily for them, as
the piety of the age considered prayers for the dead to be a charity,
these guild lands were confiscated on the plea that the use was
superstitious, and people wonder that workmen became improvident.
The London guilds made ransom, with the result that the charitable

LAEOUB WAGES AND CAPITAL PROFITS IDENTICAL. 21

and social funds which were given by traders and artisans have been
appropriated by those who are in no other sense their successors.

The costs of training and the risks of the calling are, as in tbe
case of the employer, objective charges ; the remuneration for work
actually done is subjective. So that we come to the conclusion,
that the wages of the employer and of the workmen are generically
identical and only specifically different. The question between the
two parties engaged in the joint product is, what is the share which
each party shall receive, the cost of materials being deducted in the
residual distribution. Here, of course, the problem is insoluble
as long as each is the interpreter of his own value. In old days the
distribution was determined by an oppressive authority, the resistance
to which was naturally unreasoning violence. Gradually both
parties began to see that the question was arguable, and they fre-
quently had recourse to arbitration. We are beginning to hope
that masters' unions and labour partnerships will ere long settle
their differences by some self-acting machinery.

Now I have referred to these elementary economical principles,
not only because a right conception of them is essential towards
the interpretation of all economical problems, but because, in these
lectures on the economical interpretation of English history, I shall
have frequent occasion to show how the industrial partnership and
the subsequent distribution of the product have been warped from
their natural bias by legislative violence.

Five or six centuries ago, the industry of English life was very
simple. Three-fourths of the people were husbandmen, cultivating
their small farms. There was always, it seems, a certain number of
agricultural labourers, who sought work in the villages. It is clear
that during the harvest all but the very few men of leisure were
engaged in field labour, for the rule against strangers was relaxed
in the case of the harvest man. Employers purchased materials,
iron, steel, lead, lime, stone, timber, which the craftsmen worked
up, as they do in Hindostan now. When it was possible, piece-
work was the rule. It is highly probable, nay, almost certain, that
even the artisans were during parts of the year husbandmen. I have
seen frequent evidence of the fact.

Suddenly a great plague, the like of which was not recorded,
attacked Europe almost simultaneously. Like most plagues, it was

22 TEE ECONOMIC SIDE OF BISTORT.

much more deadly at first than it was subsequently, though it held
its own in England for more than three centuries. It probably
killed a third of the population. The wages of labour were instantly
doubled, and the ruin of the great proprietors seemed imminent. The
profits of capitalist agriculture sank from 20 per cent, to near zero.
Now, the great proprietor saw no harm in a high price for what he
had to sell, but deemed that a high price in what he had to buy was
a grievous wrong. So he made use of the constitution — that is, of
the Administration and Parliament — in order to secure or recover
his fortunes, It is true that the means by which unfair or impossible
contracts were enforced was not brought to the perfection which we
witness in modern times, and for a long time the employers of
labour were baffled.

The fact is, a new criticism of existing institutions had been
encouraged. The riches and the immunities of the monastic
orders caused much dissatisfaction. Why should not the opulent
monks be made to pay a large share of taxation ? Why should the
Pope be allowed to levy toll and tribute in England ? These dis-
contents found frequent expression, and the radical reformer and
his emissaries were welcomed and caressed in high places. But in
course of time, the same bold theorists began to examine into the
moral title of all property, to declare that lordship was founded in
grace, that is, on deserts, and to dispute all other claims to ownership.
They even declared that useful labour was more valuable than
birth, and rhymed on the relative antiquity of honest work and
gentle blood. They became the mouthpiece, the agents, the
organizers of the peasantry, and they managed their function with
secrecy and efficiency, At last, out of a clear sky, in June, 1381,
the storm burst, and England was in insurrection simultaneously
from Southampton to Scarborough. The insurrection was quelled,
the leaders were executed, the teaching which was once so popular
was branded as heresy, and the secular arm was constrained to
support the clergy, but lately so unpopular, with fire and faggot.
But the solid victory remained for nearly three centuries with the
peasants, till at last a combination of circumstances reversed the
situation, and the employers became the masters of the field. It is
to the history of this long battle that I intend on the next occasion
to invite your attention.

XL

LEGISLATION ON LABOUB AND ITS EFFECTS.

The effects of the Great Plague — Begulation of prices by authority
customary when there were labour prices — The first Statute of
Labourers — Successive Statutes of Labourers — The appeal of the
workmen to Domesday — The events of 1381 — Legislation of Henry
IV., V., VI. — Guilds of artificers — Henry VII. and Henry VIII. —
Habits of the latter — His issue of base money — The position of
Elizabeth — The Elizabethan Statute of Labourers — The objects
of the statute — Indirect resources of labourers — Wages actually
paid — Assessments more generous under the Commonwealth.

It is inevitable, in a series of lectures like the present, where far-
reaching and present effects are traced to distant causes, that one
should seem discursive when one strives to be connected. The war-
fare of capital and labour in England has been more prolonged than
any other historical struggle. Dynastic wars, wars of religion, wars
on behalf of the balance of power, wars for supremacy in commerce
have been, as you well know, waged in Europe for lengthened
periods. But none has been so lasting as that between employer
and labourer. None has hitherto been so obscure. The history of
the contest is to be extracted from the Statute Book, in laws long
since repealed or modified, or become obsolete, in laws which no
modern edition of the statutes at large reprints. I doubt
whether they exist in any other printed form than in the numerous
folio volumes in which all, or nearly all, the English laws ever
enacted were published, by authority of Parliament, in extenso, but
are found, I believe, only in the greatest of our public libraries.

24 LEGISLATION ON LABOUE AND ITS EFFECTS.

These laws, however, would be only indefinite, incoherent, and
more or less effectual explosions of wrath and discontent, were it
not for the contemporaneous evidence of wages actually paid, evi-
dence which I have been able to supply, having long been an
assiduous and solitary worker in this field of research. The law
and the facts illustrate each other. But I must say, with some
regret, that the inferences which I am constrained to draw,
inferences which are genuine and irrefutable history, have not
increased my reverence for the machinery by which the social state
of England has been developed. There is, I must confess, a sordid
side to the most energetic efforts of collective, I do not say
individual, patriotism, and the student of the economical history of
England has to prepare himself for painful experiences, even during
the most heroic ages of our political history. At the same time,
men are not to be blamed for taking advantage of what law accords
them. It is to their credit that, in course of time, they became
more merciful than the law, as I have found that they constantly
were. They never, to be sure, when they made the machinery of
their discipline, and what they called law and order, more searching
and more severe, declared that they had created no new crime, when
their principal and successful effort was to render it impossible, by
studiously demoralizing the agents of law, to distinguish between
innocence and guilt.

I have referred, in the last lecture, to the magnitude of the
calamity known as the Plague, and more recently, it seems, as the
Black Death. Before this event, and the consequences which
ensued from it, these consequences having been almost immediate,
every one, from the king to the serf, cultivated land for his own
profit. It is impossible to conceive any social condition which
would be so certain to breed a reverence for law and property as one
in which every person was possessed of property, which, unless pro-
perty were respected, was so open to marauders as agricultural pro-
duce was. I have no doubt that the singular respect for property
in agricultural produce which so distinguished Englishmen in the
fourteenth century, and, for the matter of that, onwards, and the
honour in which husbandry was held, had a good deal to do with
the formation of the \ early English character among all classes.
Even hi the severest time — I can give the negative testimony of my

TEE EFFECTS OF THE GBEAT PLAGUE. 25

own inquiries — it was rare indeed that farm produce was stolen. I
do not mean to say that, outside the jurisdiction of the local courts,
the foreign trader, the Lowland exchanger, or even the Pope's
emissary, could traverse the king's highway in complete safety. I
will not even assert that abbots and priors were always able to con-
vey their cash and valuables without risk of Eobin Hoods. But
the insurance on the conveyance of money is very low when it is
put into the hands, as it often is, of the common carrier, and I
have never found the record of a loss from robbers in the many
thousand collegiate and monastic accounts which I have read.
Englishmen were very prone to defend their rights, real or supposed,
by insurrection, and even to depose bad or weak kings, and change
the succession, but they rarely broke the king's peace. Even during
the civil wars of the fifceenth and seventeenth centuries there was
little marauding. In 1461, the Northern army of Margaret took to
pillaging, and Edward was instantly called to the throne. In the
Parliamentary war, 1642-5, the Royalists of the west showed an
imperfect appreciation of the rights of property, and they had to
meet the resistance of the clubmen.

On the other hand, it was the custom of the age to regulate
prices by authority. The assize of bread and beer is so old that it is
undated. For centuries afterwards local authorities were empowered
to fix prices. The Vice-Chancellor of Oxford, in the seventeenth
century, put out his list of maximum prices for meat, poultry, and
wine, and even of the fares on the new stage coaches. The law
did not affect to regulate the prices of wheat and malt. Such a
function was beyond the power of the legislator, and, it must be
added, against his interests. But the law regulated the price at
which wheat could be turned into bread and malt into beer. The
Statute Book is full of regulations as to the price of meat and cloth-
ing. Nor does it seem that these regulations caused discontent.
It was probably considered an advantage that certain services
regularly needed should be put under a local police, which should
see that statutable prices were not exceeded. Not a little of the
criminal business transacted at the manor court is that of present-
ments and fines in the case of the baker and brewer and the
fraudulent miller, who have broken the assize or cheated the
tenants. The landowners, then, were not attempting to enforce

26 LEGISLATION ON LABOUR AND ITS EFFECTS.

an absolute novelty when they demanded and obtained the Statute
of Labourers.

In the first instance the king addressed a proclamation to "William
the Primate, as the urgency was great, ordering that workmen
should labour at the old wages. This act of the king's is a curious
illustration of the situation. Death, the new death, or as the
Scotch called it, though only for a time, the foul death of the
English, had been busy with the Church, and Edward had offered
the see of Canterbury to William Edyndon, the predecessor of
William of Wykeham in the see of Winchester, and Edyndon had
declined it. The ultimate occupant was Simon Islip. Parliament
was at once summoned, and the first Statute of Labourers, 23 Ed.
III., was enacted.

The preamble of the Act recites the fact and the effects of the
Pestilence, the straits to which masters were put by the consequent
scarcity of servants, who will not work except at excessive wages.
It then provides that every person under sixty years of age who
does not live by merchandise, exercises no craft, who has no means
of his own, or proper land for his occupation in tillage, and who is
not serving any particular master, shall be bound to serve in hus-
bandry, whoever may require him, at the wages customary in the
twentieth year of the king's reign. Lords who have bond-men and
bond-tenants have a prior claim to their services — a proof that when
the dues were paid which were annexed to such persons' holding,
they were free to work for whom they pleased. Any two men could
denounce the person who refused to work to the sheriff, who could
imprison him. To use a modern phrase, "if a servant in hus-
bandry struck work," he should be imprisoned, and the employment
of such a person after his liberation should involve the same penalty
on the employer. If higher than customary wages were taken, a
penalty of double the amount given and received should be in-
flicted, the process being taken in the Lord's court. But if the lord
himself gives more than the law allows, he is to be prosecuted in
the county wapentake, tithing, or other court, and treble penalties
are to be inflicted on him. Artificers, many kinds being named, and
a general clause including all others being added, are also to expect
the wages of 1846. Then comes a clause declaring that provisions
shall be sold at reasonable rates, under penalties, the administration

THE FIBST STATUTE OF LABOUBEBS. 27

of this part of the law being put into the hands of mayors and
bailiffs in the several cities and towns, and no gift is to be made to
beggars who can work, under pain of imprisonment. The Act is to
be published by archbishops and bishops in all churches of their
several dioceses, and the parochial clergy are bidden to see that the
law is enforcec1.

The legislation of 1 349 was a total failure. It is probably the
case that the reference to the Lord's court, in which a formal pre-
sentment of offenders had to be made first, and the cases to be tried
by a jury next, was the cause of the ill-success of the legislation.
There arose a custom of entering the amount of the labourer's
demand in the account, then running it through with a pen and
substituting the statutory amount. The bailiffs kept the letter of
the statute, but paid the higher wages.

In 1350-1, 25 Ed. III., Parliament, with the assent of prelates,
earls, barons, and other great men, descants on the malice of ser-
vants, asserts that they pay no respect to the older statute, and
refuse to work except at double or treble wages. New provisions
are therefore enacted. The money wages of all kinds of workmen,
servants in husbandry, and artisans, are fixed at certain rates, as
long as wheat is under 6s. 8d. a quarter. The jurisdiction of offences
is transferred from the Lord's court to the justices, who are to meet
for the purpose of hearing and adjudicating on offences at least four
times a year, and are empowered to inflict forty days' imprisonment
for the first offence, three months for the second, six for the third,
as well as levying the fines of the first statute, the penalties to go
to the exchequer. Servants flying from county to county were to
be arrested. Contemporary writers assure us that this became a
common practice, workmen no doubt seeking those localities in
which labour was most required, and developing an organization for
information and action. In fact, we are told that associations
exactly like those of modern trade unions were entered into, the
members subscribing for purposes of defence and for paying such
fines as might be imposed. In a subsequent statute, 25 Ed. III.
cap. 7, provision was made for paying the fines and estreats into
the exchequer.

The Act was again a failure. If we can infer from the next legis-
lation, the ill-success of the measure was due to the fines being

28 LEGISLATION ON LABOVB AND ITS EFFECTS.

payable to the Crown. There was and there remained a scarcity of
workmen. The void was not satisfactorily filled by imprisoning
the obstinate, and the aggrieved person, the employer, was not
particularly active in levying fines which should go to the king.
Besides, the landowners soon despaired of carrying on the old
system of cultivation with their own stock, under bailiffs, and
rapidly devised a new relation between themselves and their
lords, the stock and land lease, under which the landowner let his
stock with the land for a time to a tenant farmer. Under 31 Ed.
III. statute 1, caps. 2 and 7, the fines enacted for breaches of the
statute were to go to the lords, and London, the Cinque Ports, and
all other franchises were brought under the general law.

The office of justice of the peace was remodelled by an Act of 34
Ed. III. The fine on the recalcitrant labourer was abolished, for
the action of the lord was now superseded. But imprisonment was
to remain, and the offence was to be no longer bailable. Artisans
are to be included in the new legislation. Wages are to be by the
day, not the week, but persons may contract in gross for work to be
done. Then the statute throws a curious light on the organizations
which artisans had entered into, when it declares that the " alliances,
covines, congregations, chapters, ordinances, and oaths made or to
be made by masons and carpenters shall be void and annulled."
The freemason of our day may detect in these associations the
germ of his ledge, the economist may allow this view, but sees in
them the trades union of the fourteenth century. The policy of the
labourers is further illustrated by a clause in the Act, under which
fugitive labourers, by whom must be meant other than serfs, since
these could always be reclaimed, were to be outlawed, and branded
with the letter F. Furthermore, mayors and bailiffs are constrained
to deliver up all fugitive labourers, under a penalty of £10 to the
king and a hundred shillings to the aggrieved party. By the 36 Ed.
III. cap. 8, domestic chaplains are brought under the Statute of
Labourers, and their wages are fixed. Five marks, £3 6s. 8d., were
declared to be a sufficient stipend for such persons. By 42 Ed. III.
it is ordered that the Statute of Labourers should be enforced by the
justices.

The reign of Richard II. gives us fresh information as to the
courbe of the struggle. " Villains," the preamble says, " withdraw

SUCCESSIVE STATUTES OF LABOURERS. 29

their services and customs from their lords, by the comfort and
procurement of others, their counsellors, maintainers, and abettors,
■which have taken hire and profit of the said villains and land-
tenants, by colour of certain exemplifications made out of Domes-
day, and affirm that they are discharged, and will suffer no distress.
Hereupon they gather themselves in great routs, and argue by such
a confederacy that every one shall resist their lords by force." The
justices are to take cognizance of such practices, imprison the
offenders, and inflict fines to king and lord on the counsellors of
such persons. This is an Act of the 1 Eic. ; in the next year the
Statute of Labourers is confirmed.

This remarkable preamble refers no doubt to the company of poor
priests, whom Wiklif had appointed, and who were the channel by
which communications were kept up among the disaffected serfs. It
is clear, too, that they had taken and paid for legal advice, and that
the purport of this advice was, that according to the most ancient
and venerable authority, Domesday, the satisfaction of the legal
obligations of the tenant in villenage was a bar to the claim of any
further service on the part of the lord, and especially to that part
of the Statute of Labourers which gave a prior claim, at the old
rates, of the serfs extra services, to the lord on whom he depended.

It is not a little singular that the administration and Parliament
were entirely in the dark about the danger which was menacing
them. The preamble of this statute supplied me, more than twenty
years ago, with the key to Tyler's and Littlestreet's insurrection in
1381. The lords had attempted to make claims on the serfs, and
were indeed backed by Parliament, which would have practically
enlarged the liability of their tenures. They had claimed the old
labour rents, which had long been commuted for money payments,
so long that no memory went back to the more ancient custom, and
had demanded further sacrifices from them. There was no villenage
in Kent, but Tyler, of Dartford, had made common cause with the
workmen, and probably had far more ambitious ends than the
removal of social grievances. It appears, too, that some of the
nobles, notably Montacute, Earl of Salisbury, were in sympathy
with the insurgents, and we know that some of the city aldermen
favoured them. The ostensible object of the insurrection was the
total abolition of all the incidents of villenage.

30 LEGISLATION ON LABOUB AND ITS EFFECTS.

The story of Tyler's insurrection is told with sufficient details in
all the ordinary history books, and those of modern date have
accepted in silence the proof that I published more than twenty
years ago as to the causes and consequences of the insurrection. The
late Mr. Tom Taylor told me that when he discovered the real facts
of the case, as I had narrated them, he was exceedingly struck with
the situation, and that he meditated writing an historical drama on
the subject. In point of fact, the whole political and social consti-
tution of England was imperilled, and there was great reason in
what the young king told his mother, after the events of Smithfield,
that he had lost and recovered his crown on that day.

Notwithstanding the harsh language to the discomfited rebels,
which the chroniclers put into the young king's mouth, it is clear
that he wished to concede to .the demands of the serfs. He con-
sulted Parliament as to whether he should give effect to the charters
of manumission which he had granted, and when Parliament indig-
nantly refused, as it often does to this day refuse to listen to wise
counsel, the judges, I am persuaded at the king's instance, gave the
most favourable constructions possible on these servile tenures, and
protected the serf from arbitrary action. Eichard himself, too,
refused to bind the yoke more strictly, and when Parliament peti-
tioned that the sons of serfs should be declared incompetent of holy
orders, he flatly and peremptorily rejected their petition. He had
no mind to provoke the risks of another Mile-end or Smithfield.
Henceforth the characteristics of tenure in villenage and serfdom
became slighter and more indistinct, though faint traces of personal
disability can be detected as late as the sixteenth century. Tenure
by villenage is rapidly called tenure by copy, and any discredit
attaching to the tenant of bare lands is speedily lost in the land-
hunger of the fifteenth century, when copyholds were purchased by
nobles and knights.

General pardons were speedily issued, at first to those who had
been guilty of illegalities in suppressing the insurrection ; next to
the insurgents themselves, though a long list of exceptions is pub-
lished, the majority being Londoners. In one case the insurgents
of Edmundsbury were pardoned, but were constrained to plead
their pardon and give security to the Abbot of Bury. You will find
the narrative of the serfs' acts and claims in "VValsingham, and the

TEE EVENTS OF 1381. 31

expedients which the reluctant abbot adopted in order to elude the
insurgents. There is however an Act of this reign, 9 Eic. II. cap. 2,
under which provision is made, that if villains and niefs (female
serfs) bring fictitious suits against their lord, he is not to be fore-
barred by answering at law. By the ancient custom, if a lord
pleaded against a serf of his own in a court of law, he admitted by
implication the serfs manumission, and was held to have enfran-
chised him.

I have given this slight sketch of the events of 1381, because the
gradual emancipation of the serfs, dating unquestionably and pro-
ceeding progressively from the great Insurrection, must have had
its effect in strengthening the hands of all labourers in resistance to
these interested statutes. The free labourers had made common
cause with their meaner fellow-countrymen, and were now rein-
forced by those whom they had Helped to emancipate. Fortunately
for human progress, there are, and we trust there always will be,
many, who being in no appreciable peril themselves at the hands of
those who wield power selfishly or claim rights injuriously, by the
aid of their dependents and tlieir sycophants, undertake the cause
of the oppressed, and gain victories in which they win no spoil.
Beyond doubt, even in that day, there were many men who, having
freedom and rights themselves, thought it their duty to aid those
whose freedom was imperilled and whose rights were assailed.

It was not to be imagined, because king and Parliament relaxed
the feudal lord's grasp on the serl, that they were likely to yield
without further efforts to the claims of the labourer. The statute
12 Ric. II. cap. 4, while it re-enacts the original Act oi Edward,
introduces some new provisions into the law. Alleging that " ser-
vants and labourers will not, nor ior a long time would serve
without outrageous and excessive hire," it proceeds to fix the wages
of those servants in husbandry who were lodged and boarded by
their employers. But it also introduces a passport system. It
enacts that servants going from one employment to another hiring
shall carry letters testimonial from their late employer, puts the
obligation to carry passports on pilgrims and beggars, punishes
those who are without such letters of credit with the stocks, and
those who forge them with imprisonment, at the discretion of the
justices. It also provides that such persons as have been engaged

32 LEGISLATION ON LABOUR AND ITS EFFECTS.

in husbandry up to twelve years of age shall be incapable of being
apprenticed to trades or handicrafts, and declares their indentures
void. It compels artisans to labour in the fields at harvest time,
and puts increasing fines on those who give or receive more than
the legal rates.

The 4 Hen. IY. cap. 14 prescribes that labourers should be hired
by the day and not by the week, that they should not be paid for
holidays, nor for the eves of feasts, and that they who quit work at
noon should be paid for only half a day. The Act puts a penalty of
20s. on the labourer who takes more than the statutory payment.
It is remarkable that in 1408 Henry pays four carpenters at Windsor
sixpence a day for 365 days in the year. But the statute, as I have
proved conclusively, was kept by neither king nor subject.

Under 7 Hen. IV. cap. 17, re-enacting the Statute of Labourers,
Henry gave an answer to a petition presented by Parliament, to the
effect that no person should be allowed to bind his or her son
apprentice, unless he had 40s. a year in land or rent, an income
from land, which up to recent times would have represented at
least £80 a year. The draftsman of the petition, after stating that
there was great scarcity of labour owing to the practice of appren-
ticeship, enacts that the limit should be 20s. a year, and puts a
penalty of 100s. on any person who takes such an apprentice, any
person being permitted to inform against offenders. But the Act
allows parents to put their sons or daughters to school at their
discretion.

By 2 Hen. V. cap. 4 the Statute of Labourers is again confirmed,
and order is taken that it should be exemplified and sent to the
sheriffs for publication in the county court. A new clause is added
under which workmen and employers may be examined on oath, as
to wages given or received, and a further power is given to the
justices of issuing writs for the reclamation of fugitive labourers.
By a further Act of the same reign (4 Hen. V.) the penalties for re-
ceiving excessive wages are hereafter to be levied from the receivers
only.

Legislation on the wages of labour is abundant and inoperative
during the next reign, the long minority of Henry VI. In the
second year, the Statute of Labourers is re-enacted, and a new clause
added, one which was hereafter to bear such evil fruit, that the

LEGISLATION OF TEE HENBIES. 83

justices in quarter sessions should be empowered to regulate the
rate of wages. But the Act was temporary. In the next year,
3 Hen. VI. cap. 1, the confederacies and yearly congregations of
masons in general chapters and assemblies are forbidden, and the
punishment of fine and ransom and imprisonment denounced against
offenders.

By 6 Hen. VI. cap. 8 the labour statutes of Richard are re-
enacted, and the clause permitting the justices of peace to fix the
rate of wages re-enacted and enlarged. The justices in every county
and the mayor in every city and town are to make proclamation
every Easter and Michaelmas fixing how much each workman or
artificer is to have, with or without food, and these proclamations
are to have the force of statutes. But the statute is again temporary.
It is re-enacted by 8 Hen. VI., and is to endure " till the king hath
otherwise declared his will in Parliament." By 11 Hen. VI. the
Statute of Apprenticeship is again enacted, but London is exempted
from the 20s. a year clause, by which " the Londoners are grievously
vexed and infuriated."

By 15 Hen. VI. cap. 6 the guilds of artificers and other labourers
are attacked. It is stated that " guilds interpret their own charters
for their own profit, and to the damage of others." The new law
enacts that hereafter all letters patent and charters of guilds shall be
registered before the justices of the peace in counties and the chief
governors of towns. A penalty of £10 is to be inflicted on every
ordinance which is not in accordance with the charters. You will
notice that county or village guilds must have been numerous, or
they would not have been made the subject of legislation and in-
spection. By 18 Hen. VI. cap. 11 the qualification of the justice
is raised to £20 a year in land.

By the 23 Hen. VI. cap. 12, the law provides that a servant
shall give notice to his employer that he intends to leave his service,
" so as to let him provide a new one." The Act also gives a schedule
of wages, in which the rates now become customary are all but
acknowledged. It also declares that hirings in husbandry shall be
for a year certain. There is no legislation on the subject of labour
during the reigns of Edward IV. and Richard III. The labourers
had won the day. In Henry VII.'s reign the rule about the quali-
fication of apprenticeship is rescinded in the case of Norwich by

4

84 LEGISLATION ON LABOUR AND ITS EFFECTS.

11 Hen. VII. cap. 11 ; and by cap. 22 of the same year, a schedule
of wages is given, which, considering the cheapness of the time, is
exceedingly liberal. At no time in English history have the earn-
ings of labourers, interpreted by their purchasing power, been so
considerable as those which this Act acknowledges. But the day is
twelve hours from March to September, from daybreak till night for
the rest of the year. It is certain that fifty years before the labour-
day was one of eight hours only, and the wages paid were far in
excess of what was the statutable rate at the time.

There is but little legislation of labour during the reign of Henry
VIII. His Acts remit the penalties on employers who give higher
wages than the statute allows, and re-enact the rates which his
father's law had prescribed. By 7 Hen. VIII. cap. 5, labourers in
London are exempted from the Statute of Labourers, and by 28 Hen.
VIII. cap. 5, no corporation or company was allowed to restrain
apprentices when their time was up from trade, or to exact more
than such legal fees for their freedom as were permitted under
existing laws.
a I am sensible that the recital which I have made of these ancient
laws is dry and dull. But you cannot study the history of any
civilized country to any profit without taking note of its laws, still
less that of England, in which the course of legislation seems to be
so much a matter of compromise and immediate expediency, but in
which it is therefore more immediately connected with its history,
least of all in the economical interpretation of history, where law
is to the social state what chronology and geography are to the
political estimate of a nation. During all this time the mass of
English labourers, by no means claiming more than the reasonable
reward for their services, were thriving under their guilds and trade
unions, the peasants gradually acquiring land, and becoming the
numerous small freeholders of the first half of the seventeenth
century, the artisans the master hands in their craft, contractors in
the same period for considerable works, planning the solid and hand-
some structures in what is known of the Perpendicular style, and
withal working with their own hands on the buildings which their
shrewdness and experience had planned. It is true that at the very
best age of the workman a ruin was impending, the causes of which
I have been able to collect, and shall now proceed to expound.

HENBY VIII., HIS HABITS. 35

Daring the whole of English history, there never was a sovereign
so outrageously and wantonly extravagant as Henry. He inherited
an enormous fortune from his thrifty father, as fortunes in the
sixteenth century went, 'and dissipated it speedily. His wars and
alliances in which subsidized the needy Emperor of Germany, and
was baffled and foiled in all which he undertook cost him much,
but his expenditure during time of peace was prodigious. He had
twenty or thirty palaces, on all of which pulling down and building
was perpetually going on, in which an army of workmen, often by
night and day, on Sundays and on the highest festivals of his
Church, were incessantly employed. The cost of his establishments
was enormous. He seemed to have an idea that it was splendid
and safe to entertain his nobles, and he made them quarter them-
selves on his numerous palaces. The establishment of Mary, till
he disowned her, of the infant Elizabeth, of the infant Edward was
each more costly than the whole annual charge of his father's living,
as the extant wardrobe books testify. He built huge ships which
would not sail, huge palaces which were the whims of the hour, and
were soon left to decay. If he could have got at it, he would have
spent all the private wealth of all his subjects, and he made every
effort to get at it. Whatever he procured, borrowed, raised was
soon like the bag of gold which Bunyan, in his vision, saw poured
into the lap of Passion. He was popular in a way, for wasteful
people generally are, even when they waste what does not belong to
them.

The smaller monasteries went, and he soon came to an end of
their accumulations. The larger ones he spared, declaring them to
be the seats of piety and religion. He pledged himself that the
spoil of the monasteries given him, he would ask his people for no
more taxes, not even for necessary wars. Soon the greater monas-
teries went. I believe that, foreseeing the storm, the monks had
granted long leases of the lands, so that much of his plunder was
reversionary. But the accumulated treasures of ages came into his
clutches. A long array of waggons carried off the gold, silver, and
precious stones, which for nearly four centuries had accumulated
round the shrine of Becket. This shrine was no doubt the richest
in England, perhaps in Christendom. But there were others more
ancient and nearly as wealthy, at Winchester, at Westminster, at a

36 LEGISLATION ON LABOUR AND ITS EFFECTS.

hundred sacred places. It is exceedingly probable that the accumu-
lations of these holy places were, as bullion, equal to all the money
in circulation at the time. It vanished like snow in summer.
Nothing stayed with him apparently for a longer time than he
could hurl it away. The lands of the monasteries were said to
have been a third of the English soil.

After these exploits he seems to have hardly dared to ask his
people for money. But there still remained a way in which he
could most effectually attack their pockets. He began to issue base
money, at first with very little alloy beyond what had been cus-
tomary. He soon became shameless, for his mint kept issuing
baser and baser coins. He is the only English sovereign who has
ever committed this peculiarly mean and treacherous crime, for
Charles only thought of it. I reckon the continuance of this vile
practice under his son as his act, for he had the credit of breeding
and bringing up the infamous knaves whom he appointed as his
son's guardians. At last, when the wretch was sinking into his
grave, worn out by his vices and debaucheries at a comparatively
early age, bloated and shamefully diseased, he bethought himself
of robbing the labourers and artisans, by confiscating their guild
lands. He would have confiscated all the property of the universi-
ties had he lived, but fortunately Mr. Froude's patriot king died,
the Vitellius and Nero of English history.

The mischief begun by Henry was continued by the guardians
of his son. It is impossible to speak with too much contempt of
the crew whom Henry left to watch over and advise the young
prince. Bad men, especially bad men to whom the interests of
nations are entrusted, make their instruments worse. The chief
of the gang was Somerset, who soon got rid of his brother Seymour
at Tower Hill. Somerset completed the confiscation of the guild
lands which Henry contemplated. By a political law that in such
a time the greatest villain gets the mastery, Northumberland got
Somerset out of the way, and for a time seemed master. He was
on the point of dismembering England and creating for himself a
principality or kingdom north of the Trent when Edward died ; the
angry and impoverished labourers rallied to Mary Tudor, and
Northumberland fell. On the scaffold he added one more vice to
his catalogue, for he pretended to repent. But he was so bad a

THE POVEETY OF ELIZABETH. 37

man that it may be doubted whether hypocrisy could have made
him worse.

When Elizabeth came to the throne both sovereign and people
were miserably poor. The base money had driven the working
classes to beggary, and England, once the most powerful of Western
States, was of little more account in the policy of Europe than a
petty German princedom was. The queen's first task and first duty
was to reform the currency. But she could not afford to make good
her father's and brother's dishonesty. It would have cost her five
years of her revenue. The details of Henry's crime, and the details
of Elizabeth's remedy, I must postpone till I deal with the question
of metallic currencies in England. It was necessary that I should
say as much as I have said in order that we may have light where-
with to follow the fortunes of the English labourer. His guild
lands, the benefit societies of the Middle Ages, which systematically
relieved destitution, were stolen by the greedy leader of the new
aristocracy, he had suffered eighteen years' experience of a debased
currency, prices rose 150 per cent., and the wages of labour were
almost stationary. Wages do not rise with prices. To assert that
they do, or will, is either ignorance or dishonesty. During the few
years which followed on the great American Civil War, and a crew
of sharpers, among other dishonest actions, had insisted on, and for
a time maintained, an inconvertible paper currency, the condition
of workmen in the United States was very distressful. But it was
not so bad as the condition of the working classes was in England
after the great queen's accession in 1558. There were people at
that time who wished to continue the circulation of base money, as
they made a large profit on discounting it. In the American case
an Englishman, seated as an economist in an academical office, was
tempted, because his vanity was flattered, to defend the practice of
the Wall Street junto of soft money gamblers. In the days of the
English base money, Sir Thomas Gresham, financial agent of the
English court at Antwerp, formulated the law which has sub-
sequently gone by his name, that if two kinds of money declared
by authority to be of equal value, but discovered in the course of
trade to be of unequal value, are put into circulation simultaneously,
the over- valued money will speedily drive that which is under- valued
out of circulation.

88 LEGISLATION ON LABOUB AND ITS EFFECTS.

After reforming the currency, Elizabeth and her advisers passed
a new Statute of Labourers. In the Statute Book it is known as
6 Eliz. cap. 4. It began by repealing all the statutes which had
regulated labour since 23 Edward III., over two centuries before.
It then took all that was most stringent from the statutes which
I have already referred to, and put them into a comprehensive
enactment, which was hereafter to regulate the relations of em-
ployer and labourer. I do not indeed believe that Elizabeth and
her counsellors' intended to deal unjustly by the workmen ; some
indeed of the clauses of the Act are intended for the working man's
protection, but the mischief of the Act was in the machinery by
which it would be carried out, and in the terribly depressed condi-
tion of the labourer. He was handed over to the mercy of his
employer at a time when he was utterly incapable of resisting the
grossest tyranny. The Government of the day probably remem-
bered the uprisings of Tyler and Cade, certainly that of Ket, and
they determined to make use of an instrument, the justices in
quarter sessions, who would be able to check any discontent, even
the discontent of despair, and might be trusted, if necessary, to
starve the people into submission. We shall see how completely
success attended their efforts.

In certain employments servants were to be hired by the year.
Every unmarried person under the age of 30, and not having 40s.
a year of his own, nor otherwise employed, was compellable to
serve at a yearly hiring in the craft to which he was brought up.
You will note here that the limit of private income, the old franchise
of Henry VI.'s law, suggests that the framers of the statute are of
opinion thai the old prices would recur, and that calling a coin a
shilling, when it only contained about the third of a shilling, would
enable it to buy as much as when it was three times its present
weight. The servant hired for a year could not be dismissed except
upon cause allowed by two justices, nor at the end of the year with-
out a quarter's notice. Next, all persons between the ages of 15
and 60, and not otherwise employed or apprenticed, were made
liable to serve in husbandry. Masters unduly dismissing their
servants were to be fined 40s., and servants unlawfully quitting
their. employment were to be imprisoned. Servants were not to
quit city or parish without a testimonial, if they do so they are to

THE ELIZABETHAN STATUTE OF LABOUBEBS. 39

be imprisoned, and if they have a forged testimonial they are to be
whipped. Masters taking a servant without a testimonial are to be
fined £5. The hours of labour are defined, as in earlier laws, at
twelve hours a day during the summer months, and from daybreak
to night in the winter. Absence from work is to be punished with
a fine of a penny an hour. A strike is to be visited with a month's
imprisonment and a fine of £5, a sum which appears to be a blow
against what might be surviving of the old trade unions.

The justices are to hold a rating sessions (they generally held it
a little after Easter), in which they are to fix the rate of wages in
all employmonts, summer and winter, by day or year, with board
or without board. These rates are to be certified in Chancery,
approved by the Privy Council, and proclaimed by the sheriff, who
is to call attention to the penalties in the Act. The justices are to
be paid 5s. a day for their attendance, and those who are absent
from the rating sessions are to be fined £10. The penalty on giving
higher wages than the scale is £5 and ten days' imprisonment, on
the receiver twenty-one days, the contract being declared void.
"Workmen assaulting a master are to be imprisoned for a year or
more. Artificers may be compelled to do harvest work.

Workmen are allowed to migrate from county to county in
harvest time. Women between twelve and forty years old, if
single, can be compelled to work by the year, week, or day, at the
option of the hirer, and certain persons are allowed to take appren-
tices in husbandry. Householders in towns may take apprentices
for seven years terms, and each may have two, if they be children
of artificers, and an artisan may have as an apprentice the son of a
person who has no land. The apprenticeship must be for seven
years, under a penalty of 40s. a month for all the period short
of this time. But merchants are not to take apprentices, except
from parents having 40s. a year in freehold land, and in certain
specified callings, notably in the trade of woollen cloth weaving,
unless they possess a freehold of £3 a year. One journeyman must
be hired with every three apprentices, and if more than three are
indentured, one journeyman to each additional apprentice. But
persons refusing to be apprenticed are to be imprisoned. Runaways
are to be imprisoned.

The justices are to inquire periodically into the execution of the

40 LEGISLATION ON LABOUE AND ITS EFFECTS.

Act, and to revise their rates according to the cheapness or dearness
of the necessaries of life. The Act further recognizes the common
informer, who is to have half the penalties, the other half going
to the Crown. Thirty-three years later the Act was amended. The
liabilities of the Act were extended to weavers, the justices were
empowered to issue their rates in divisions of the shires, and the
rates are to be published by the sheriff, but the obligation of cer-
tifying them to the Privy Council through Chancery is abrogated.
They are henceforth to be presented by the Custo Eotulorum. As
was commonly the custom at that time, the Act was temporary,
but was constantly renewed in the last chapter of the Parliamentary
roll. Thus it was re-enacted in 1601 and 1603. t» all, between
23 Edward I. and 1 James, thirty-seven Labour Acts were passed
by Parliament.

The justices soon set to work. The first assessment extant is
dated June 7, 1563, and is for the county of Eutland. The original
is in the great collection of Elizabeth's proclamations, a volume
that certainly belonged to Burghley and his son Eobert Cecil, after-
wards Earl of Salisbury. This assessment was, I make no doubt,
to be a guide for counties south of the Trent, as one of 1595, and
also printed in the same collection, is for those which are north of
the Trent. Altogether I have found thirteen of these assessments
between the years 1563 and 1725. I believe that they were dis-
continued during the eighteenth century, not because the law was
neglected, but because the assessment had effectually done the work
for which it was designed, the labourer's wages being now reduced
to a bare subsistence.

The object of this celebrated or infamous statute was threefold —
(1) to break up the combinations of labourers, (2) to supply the
adequate machinery of control, and (3) by limiting the right of
apprenticeship, to make the peasant labourer the residuum of all
other labour, or, in other words, to forcibly increase the supply. The
courts of law, if the justices were slow to act, could be quite relied
on for enforcing the statute, for the most prejudiced lawyer cannot
deny that the Stuart judges were, with some exceptions, timid,
servile, and cruel Attempts have been made to argue that the
Stuart kings wished to rule strictly by law. But their apologists
forget that law is no abstract proposition, but a highly practical

THE OBJECTS OF THE STATUTE. 41

condition of social life, and that procedure is as much law as
the penalties which a statute enacts, and the rights which law
professes to guarantee. To keep to the letter of the law and corrupt
its procedure, is a far greater treason against law and freedom than
it is to enact a law of Draconian severity. Now the Stuarts made
the judge's patent run during the pleasure of the Crown, and gave
the judge abundant warnings that they would be ejected from office
if their rulings or interpretations of law displeased authority. It
was from this point of view, I venture to affirm the true one, that
the answer of the aged Serjeant Maynard was made to William IIL
" You must have outlived all the lawyers," said the king. " Yes,
sir," he replied, " and if your Majesty had not come hither, I should
have outlived all the law." But the Stuarts did not repeal laws,
they only perverted their administration by the hands of wicked
judges. They did not even punish Chief Justice Vaughan for
affirming the immunity of juries. At last the judges got freeholds
in their offices, and became incomparably more honest.

The justices in quarter sessions took no note, as the statute
instructed them, of "the cheapness or dearness of provisions."
Their object was to get labour at starvation wages, and they did
their best to effect their object. The law gave them the power, and
provided no appeal from their decision. It may be said that the
framers of the statute imagined that the magistrates could adopt a
sliding scale, like that which was evidently contemplated under 25
Edward III., and as evidently was before the mind of Parliament when
it framed its own scales in the fifteenth century, particularly in 1495.

Some time since, in a work of mine, entitled, " Six Centuries of
Labour and Wages," my information as to the amount of wages paid
and the price of food having been far less copious than it now is,
I was able to show that while the Act of 1495. enabled an artisan,
in prices of that time, to procure a certain amount of food and drink
with a fortnight's labour, at the rates of the statute, and an agri-
cultural labourer to obtain the same with three weeks' labour, the
justices' assessment rarely enabled the peasant to obtain the same
quantities with a whole year's labour, and would sometimes have
required two years' incessant labour. For it must be remembered
that though the law pressed hardly on the artisan, it was intended
to press far more hardly on the peasant, cheap agricultural labour,

42 LEGISLATION ON LABOUR AND ITS EFFECTS.

in the absence of any notable, as I shall show hereafter, any possible
improvement in the art of agriculture, being, as was seen clearly
enough, the best means by which, concurrently with a high price
of produce, agricultural rents could be raised.

Now the researches which I have made subsequently to the
the publication of my work, have abundantly confirmed the
inferences which I drew as to the intention of the quarter sessions
assessments. I have discovered more of these documents than were
before me a few years' ago, and have been able to trace the conse-
quences of the system. It is true that in some particulars the
position of the peasant was not so bad as it now is. He was rarely
without his patch of land. The Allotments Act of 31 Elizabeth cap.
7, under which an attempt was made to check the growing evil of
building cottages without curtilages, which provided that no cottage
should hereafter be built, unless four acres of land were attached to,
for the peasant to work on his own account, and forbad under
penalties that more than one family should inhabit the same tene-
ment, is, to my mind, conclusive as to what had been a practice, and
that the practice had been recently abandoned. I can trace the
continuity of this practice and its beneficial effects during the early
part of the eighteenth century. In the latter half of this century,
the Act was repealed. Its duration was a hindrance t© the fashion
of enclosures then so prevalent.

Again, beyond the plot which he held in severalty, the peasant
had more or less extensive rights of common. The common, even
if it did not afford herbage for his cow, was a run for his poultry,
and assured him the occasional fowl in the pot. "When the system of
enclosures was in full vigour, people commented on the very different
treatment received by the man who stole the goose from the common
?nd the man who stole the common from the goose. The gradual
appropriation of these indirect advantages, however much the policy
of enclosures may have increased the productiveness of agriculture,
was an insensible aggravation of the peasant's lot, and a cause of
increasing distress to him.

Again, as there were large tracts of open and swampy country,
the England of two and more centuries ago swarmed with wild
animals. From the earliest times of which we read, some of these
animals were protected for private amusement or consumption,

INDIBECT BESOUBCES OF LAB0UBEB8. 43

as stags and deer, hares and wild boars. In later times,
especially in James the First's reign, game laws, restraining the
practice of sporting, on the plea that the practice of fowling and
snaring made the labourers idle, were enacted. But it is certain that
the laws were inoperative. I have examined many accounts of the
sixteenth and seventeenth centuries, which register the domestic ex-
penditure of several noblemen of rank and fortune, and of corpora-
tions. The amount of game, winged and ground, which is bought,
especially in winter, is prodigious. Many purchases are made of
birds which are not, I believe generally found on tables now. But
if the sole right of netting and fowling had been reserved, as the
statute of James prescribes, these items could not have appeared
in the accounts. They were doubtlessly supplied by the small farmers
and peasantry. Now, what they sold at the great house, they might
have consumed themselves.

These advantages which one discovers by studying the social
legislation and habits of the time, existed to an equal or a greater
extent in the time of the first Tudor sovereign. It is the gradual
deprivation of them, without any compensation beyond the conces-
sion of a bare subsistence which marks the economical history of
the poor as the centuries pass on. It is, I think, most probable
that the practice of the quarter sessions assessment ceased in the
south of England at the close of the seventeenth century, and in the
north at the beginning of the eighteenth. It would be strange if
the practice was continued, while agricultural history, now getting
full of comments on the situation, is entirely silent on the subject.
But, m fact, the justices had done their work. They had made low
wages, famine wages, traditional, and these wages, insufficient by
themselves, were supplemented from the poor rate.

"We have an account or return of the poor rates, actually
collected and expended in every English county, at the end of
Charles the Second's reign. Its heaviest incidence is in the
counties south of the Trent. The sum, to our modern experi-
ence, is hardly a tenth of that now raised and expended
in England and Wales. But this gives an inadequate idea
of its character. It is in amount more than a third of the
whole revenue in time of peace. If the money expended for
the relief of the poor in the present day stood in the

44 LEGISLATION ON LABOUR AND ITS EFFECTS.

ratio to the public expenditure, interest on debt being not
reckoned in the revenue, it would reach nearly twenty millions.
In fact, the estimate which Gregory King makes of an agricul-
tural labourer's income at the end of the seventeenth century,
and I know from actual payments made and wages earned, that
King's estimate is pretty accurate, the income had invariably
to be supplemented from the poor rate. It is true that King
exhibits his inference in a curious way. He makes out that
the landowners and officials alone contribute to the annual
increase of wealth, because they got the largest share, and save
some of it, but that the whole class of labourers are, from the
character of their incomes, a burden on the national resources,
though he was not blind to the fact that they made all the
wealth.

But there are two facts on which comment should be made.
The rate of wages actually paid to workmen is always higher than
that prescribed by the justices. I cannot say, indeed, that the
wages which I have registered were paid for (say) fifty weeks in
the year, but neither is it certain that the quarter sessions rates
by the day are. Now I will take eight different kinds of labour at
weekly rates, and strike an average oi the eight from the justices'
assessments, and another from the wages which I have registered
are actually paid to the different kinds of workmen, five being
artisans, and three unskilled and agricultural. The average of the
justices' eight is 5s. Id. a week, between 1593 and 1684. The average
actually paid over the same period, and from the same years in
which the rate is published is 6s. 6d. The employer was more
merciful than the magistrate.

The other fact is that the assessments were far more generous
during the Commonwealth than they are tinder the monarchy,
whether we take the period before that form of government was
affirmed or after it. Even under these circumstances the assess-
ment is below the wages actually paid, though not much, only
4£d. in 1651 and 2£d. in 1655. After the Restoration the
magistrates go back to the old scale, and prescribe 8s. a week less
than was actually paid. The Puritans were perhaps stern men,
but they had some sense of duty. The Cavaliers were perhaps
polished, but appear to have had no virtue except what they

WAGES ACTUALLY PAID. 45

called loyalty. I think if I had been a peasant in the seventeenth
century, I should have preferred the Puritan.

In 1825, the whole of the labour laws were swept away, chiefly
by the agency of the late Mr. Joseph Hume. The early Statute
Book is full of legislation on labour. There is no word in Hansard
of any debate whatever on the abolition of the system. The
statute of Elizabeth was obsolete, because it had done its work,
and had permanently degraded the peasant. Thenceforward the
whole subject was remitted to the common law, and to the
dangerous interpretations which judges have given of what they
are pleased to call constructive conspiracy, the most elastic instru-
ment of tyranny which can be devised.

IIL

THE CULTIVATION OF LAND BY OWNERS AND OCCUPIERS.

The consequence of agricultural success — The Duke of Argyll's
illustration of rent — The history of progress — The errors of
theory — The history of agricultural produce — The accuracy of
ancient accounts — Gregory King's law of prices — English famines —
Agriculture in the seventeenth and eighteenth centuries — The
survey of Gamlingay — Common fields — Pasture — Commons —
The regular clergy and agriculture — Primogeniture — The land
and stock lease — Development of new tenancies, terms of years,
life, and on rack-rent.

The development and progress of agriculture is the first and
most convincing proof that a particular race can rise above
barbarism. It is true that the practice of agriculture is com-
patible with and may be characteristic of an unprogressive stage,
one in which civilization is early and strangely arrested. But such
an arrested growth can almost always be explained by the presence
of definite causes, which it costs the publicist little trouble to
detect and expound.

1. The success of agriculture measures the numbers of any
given community who, in the absence of foreign importation, can
be maintained on the soil When foreign importation is free and
copious, the whole trading world must be taken as one community,
and the rule will be found to apply with equal accuracy. We in
England do not produce, perhaps could not produce enough food

THE CONSEQUENCE OF AGBICULTUBAL SUCCESS. 47

from the land, wherewith to feed all its inhabitants, though this
inability, for reasons which will be given further on, is disputable.
But as it is we draw our supplies from various parts of the world,
not a little of that which we import being in liquidation of
liabilities which foreign nations or our own colonies have con-
tracted with their English creditors. If by any ill-advised act we
should check the imports of these countries, we should ruin them,
or, what is more probable, compel them to repudiate their debts.
It is infinitely more dangerous for a free trade country to reverse
its policy, than it is for one which is protectionist to abandon that.
To fall into a vice is mischievous, to abandon a vice is, economically,
progressive.

2. The success of agriculture measures the extent to which other
industries than agriculture can subsist, or generally other persons
besides agriculturists can live. The husbandman, at least in the
early stages of his craft, when he is not forced to occupy barren
land, on which he can perhaps by unremitting toil induce fertility,
can even with the rudest implements produce more than is
sufficient for the wants of himself and his household. It is
inevitably the case, as he is the most defenceless of all workmen,
that either on pretence of defending him, or by taking ransom
from him for abstaining from robbing him, he will have to pay
toll to armed persons who constitute themselves his superiors.
His labours, with more reason, supply the maintenance of
those whose industry affords him more convenient means for
carrying on his calling, or relieve him from undertaking bye-
employments when the labour of the fields is over or is for a time
suspended. The success of his industry is therefore of profound
interest to all, especially when the home supply is the entire or
principal source of maintenance to the inhabitants of any country.
Even when it is not, the interest in successful agriculture
should still be keen, for the agriculture of a country is the chief
home market of a country, and the trade with one's own fellow
countrymen is the safest and least risky trade of all. Everything
therefore, be it law, practice, or custom, which discourages
agriculture or checks its development, is a public nuisance, however
venerable the law, practice, or custom may be. There has been,
and there is, considerable discouragement put on agriculture, and

48 THE CULTIVATION OF LAND

it is the duty of statesmen, without delay, to remove, or at least
to mitigate, the causes of this discouragement.

3. The success of agriculture is the measure of rent. Rent is
undoubtedly the payment made for the use of a natural instru-
ment, the use of which is necessary to human society — the
effectual and successful use of which is of profound interest to
human society. The Duke of Argyll, a great, perhaps an over-
confident eulogist of landowners, has compared the hire of
agricultural land to the hire of a musical instrument. The com-
parison is ingenious and not inaccurate, but I do not think that the
Duke saw the full force of his comparison. Perhaps if he had, he
would not have quoted it. Let us admit that the hire of a piece of
land is like the hire of a Straduarius violin. In the hands of most
of us, certainly in my hands, the rent I would give for the violin
would not be a penny a year ; I could make no profitable music by
it. But in the hands of Herr Joachim, the rent of such an
instrument might be worth many pounds a year, for he could dis-
course most excellent music by it. And this is just the case with
land. It needs the skill, experience, education, intelligence of the
occupier. This has been till recent times, is in some parts of the
United Kingdom, of the highest capacity and efficiency. I have
studied the agriculture of Europe on the spot over the greater part
of its western countries, that of America from the seaboard to the
Rocky Mountains, and northward to the Great Lakes. I have
never seen any husbandman equal to the English farmer. But I
shall have occasion hereafter to dwell on this at more length and
with more precision, when I handle the economic history of rent.
At present I need only say that rent is the result of two forces.
Ordinary economists have generally dwelt on only the first of them.
The one is the natural powers of the soil, sometimes called
original and indestructible, foolishly so, because one hardly can tell
what are the original powers, and no one can allege what are
indestructible, except it be such as certainly do not contribute to
fertility. The other, and the vastly more important one, is the
acquired capacity or skill of the tenant — the power, to revert to
the Duke's illustration, of playing with effect on the violin. Unfor-
tunately, the acquired capacity and skill of the tenant are very
destructible, and have been destroyed.

BENT. THE HISTORY OF PROGRESS. 49

Economists tell us, inter alia, that they busy themselves with the
laws which regulate or govern the production of wealth ; though
when they deal with details they display the grossest ignorance about
the production of the most necessary and important of human
products, those of agriculture. The laws which primarily govern
the production of wealth are laws of nature, and by discovering
them, following and using them, human industry confers utility on
matter. Some are obvious and simple. No husbandman sows corn in
midsummer, expecting to reap in midwinter. The earliest artisans,
miners, metallurgists knew certain natural laws, attention to which
was essential to their industry. But some natural laws have only
been arrived at by long observation, by profound study, by cautious
research. The shortening of a voyage out and home from an
English port to one in Hindostan and back again, from two years
to four months, is the result of an infinite study of natural laws —
some gathered on the ocean itself, some in the workshop, some
in the laboratory, some, and these not the least, in the mathe-
matician's study. Wrought iron cost in money of the four-
teenth century £12 a ton. Twelve is generally a fair multiple
for prices of that time, taking one thing with another, when we
compare them with modern experience. Why has iron fallen in
price from £144 to £4, but by the discovery and adaptation of
natural laws ?

The production of wealth, then, is the selection and adoption ol
natural laws, through the agency of human intelligence, which is
progressive. We cannot tell what are the limits of human intelli-
gence and consequently of its power. We are amazed at what it
has done, and cannot guess what it may do. To have predicted a
century ago, that a power would convey passengers over roads at
the rate of sixty miles an hour, would have seemed as absurd as
the nocturnal and aerial voyage of Borak. To have predicted that
the most delicate colours would be procured from coal tar, and
flavours and essences from the same material, would have been
deemed the talk of a Bedlamite. There are no doubt arid and
unprofitable statements constantly made, such as that men will
never travel as fast as light, or in organic chemistry make synthesis
as easy as analysis. There is no subject on which impossibilities
have been predicted with more unfortunate assurance by economists

5

50 THE CULTIVATION OF LAND.

as those on production, and especially on agricultural production
and its congeners.

We, who have to read those books in which the speculative element
obscures the practical side of political economy, are treated to many
alarmist predictions about the margin of cultivation, the law of
diminishing returns, and the exhaustion of fertility, and this
constantly by people who are profoundly ignorant of the practical
side of that on which they dogmatize. But no one except in a
general way has ever discovered the margin of cultivation, has ever
seen the law of diminishing returns in operation, or has witnessed
the exhaustion of fertility. It is because they know nothing about
the facts that they are so strangely and, at times, so mischievously
confident. As yet we know that wheat will not grow on a granite
rock, though if this rock be disintegrated it makes the most fertile
of soils, and that you could not on grounds of physical space and
botanical conditions grow 150 bushels of wheat to the acre, and
that you can by an indefinite number of croppings of a certain kind
extinguish and annul the indestructible powers of the soil, but no
one ever saw these results. Unfortunately the reputation of those
who talk and write nonsense, sometimes induces most mischievous
fallacies of practice on the mind of those who do not see through
the nonsense, and great hostility to the professors and teachers of
a science which men of the world, who have to interpret the system,
declare to be unpractical and intolerable verbiage.

I do not indeed purpose, in this lecture, to deal with the econo-
mical history of rent. The treatment of this most important fact,
in what economists call the laws which govern the distribution of
wealth, will be reserved for a subsequent occasion, for I hope that
we shall be able, as I go on with these several subjects, to proceed
from what I may call the general treatment of economical history
to those concrete cases, in the true interpretation of which such
serious consequences are involved, and such necessary appeals are
made to the interposition of law. For as the laws which govern
the distribution of wealth, by which an economist means the share
which each person in the great industrial partnership receives, are
merely or mainly of human origin, it is plainly part of the functions
of the statesman to remedy any injustice which may be traced to
this adventitious origin, to determine what contracts should be

THE EBROBS OF THEORY. 51

permitted, and the extent to which contracts, which may be condi-
tionally permitted, shall be practically enforced.

This much I ought to say here. Rent, as Adam Smith did not
see, and he may well be pardoned for not seeing it, is not a cause of
value, but a consequent of value. It is because agricultural and
analogous produce fetches more in the market than it cost to pro-
duce, outlay and average profit considered, that rent, i.e., economical
rent, arises. Hence, if we admit, as we must by the fact that every
producer seeks to obtain the maximum result with the least possible
expenditure of nervous and muscular energy, personal or supple-
mentary as the case may be — and economical labour is not in itself
a desirable thing — it necessarily follows that the ideal of the econo-
mist would be a state of things in which the produce necessary for
human life could be obtained so regularly, so readily, and with so
little labour, and consequently so cheaply, that no rent could arise.
I cannot dispute the claim of the landowner to the rent which he
receives. I think that the theory which would deprive him of it by
law is unjust and odious. I hold that to have bought him out,
when Mr. Mill first ventilated the doctrine of the unearned incre-
ment would have been ruinous, as I insisted to that distinguished
person that it would have been when he advocated it ; and as for
the nationalization of land, by which I suppose is meant the violent
acquisition of it by the State, I must have a far better idea of any
human administration than I have ever been able to form, before I
hesitate to conclude that such an expedient would be the beginning
of a series of perpetual and nefarious jobs. Land was nationalized
under the Eoman Republic, and we all know what became of it, and
of the Roman Republic too.

If I have made myself at all clear you will conclude that the
fortunes and history of English agriculture are the key to the
interpretation of the gravest social questions which have arisen in
English economical history, probably of the present situation,
possibly of difficulties in the near future. For it cannot be too often
remembered and inculcated that we, in the present day, are not only
the descendants of an ancient nation, with a long and connected
history, but that we inherit the consequences of the folly as well as
of the wisdom of our ancestry, and are what we are by virtue of
causes which have had an historical beginning, and in some cases

52 TEE CULTIVATION OF LAND.

an enduring influence. Not only is this the case, but the analyst
economic history soon discovers that effects endure after causes
have, to all appearance, wholly passed away ; and that he is con-
strained, if he makes an adequate interpretation of the present
situation, to modify the ancient maxim, Cessante causa, cessat efectus.
In my last lecture I illustrated this fact very fully by showing that
the quarter sessions assessments had an enduring influence on the
conditions of labour long after they were disused and forgotten. In
the course of this inquiry we shall have cumulative evidence of the
same facts, or of facts similar to them.

Now there are certain historical facts which have had from time
to time great influence on the progress of English agriculture.
Such, to take some of its principal, are the great change in the
occupancy of land after the middle of the fourteenth century, on
which I have already made certain comments, the singular exhibi-
tion of agricultural prosperity in the fifteenth, the change of owner-
ship after the dissolution of the monasteries, and the great extension
of sheep-farming in the sixteenth, the development of rack-renting
in the seventeenth, and the enclosures and experimental husbandry
of the eighteenth. I do not know whether I shall have opportunity
on the present occasion to refer to the remarkable reaction of the
nineteenth, and in particular to the existing condition of agriculture.
I shall have to make reference to most of these facts in my lecture of
to-day, and perhaps the best and most obvious way in which to
make them clear is to give you the information which I have been
able to collect as to the rate of production at different epochs of
agricultural history.

Now in 1833-6, by which I mean on this occasion, four years,
though the document contains part of six years, Merton College in
Oxford had a return made to the fellows of the seed sown, and the
produce threshed on ten of their estates, all these lands being in their
own hands, cultivated by their own capital, and under the superin-
tendence of their own bailiffs. Wheat is not grown on all the
estates in every one of the four years, but it is so generally, that I
am sure the omission points to a fallow. The largest breadths are
sown the best land. Now the average produce in cheap, that
is, abundant, years, as all these years are, is nine bushels of wheat
and fifteen of barley, the seed being two bushels of the former and

THE HISTORY OF AGRICULTURAL PRODUCE. 53

four of the latter grain. This produce is therefore in excess of the
average, and the oldest writer on English agriculture, Walter
de Henley, expressly states that, unless the farmer reaps full six
bushels an acre, he is cultivating at a loss, giving reasons for his
estimate. This series of four years' produce precedes the great
change in occupancy which I referred to as occurring in the middle
of the fourteenth century, and as consequent on the plague.

The next account of production to which I invite your attention
is one of after the middle of the fifteenth century. It is at Adisham,
in Kent, between Canterbury and Dover, and presumably therefore
a favourable specimen of agriculture. Here the produce of wheat
is twelve bushels, of barley sixteen, of peas and vetches eight, and
of oats twenty. The year is abundant, and prices are below the
average. In 1655 Hartlib tells us that the average production of
wheat was from twelve to sixteen bushels an acre, but Gregory
King, about 1693, says that the produce for all kinds of grain was
not more than a dozen bushels. I think that King has given a more
correct estimate than Hartlib has, whose experience was to some
extent of the new agriculture. In the early part of the eighteenth
century the rate all round was certainly twenty bushels, and perhaps
a little more.

Now from these and similar facts, for I am only giving you a
specimen, I concluded that the average wheat produce of England and
Wales, from the accession of Edward III. to the end of the sixteenth
century, could not have been more than two and a half millions of
quarters, and that the population was as numerous as the quarters,
for in those days wheaten bread was the food of the people all
through England, and there was little else that could be used in
substitution for it, since winter roots were unknown. This in-
ference of mine was practically confirmed by one of the poll taxes
of the fourteenth century, which is virtually a census, and gives
the same amount, and by an actual census of certain hundreds of
Kent in the sixteenth century, where the same conclusion, when
a contrast is made with the present population, is distinctly
arrived at.

I have already mentioned that the distribution of land was very
general, most persons holding a little farm, and the poorest a decent
curtilage. Evidence of the distribution of land is derived from about

54 THE CULTIVATION OF LAND.

1257, and continuously onwards. It cannot be by accident that in
the numerous accounts of private estates, none are found before this
period, and that they are abundant after it. The custom of keeping
accounts of agriculture and of manor rolls must have commenced
about the period of strong political disaffection, and, I may add, of
generally low prices. The lord ordinarily owned about half the
estate or manor ; but it is from his bailiffs accounts only that I
have been able to collect any evidence. The records of no peasant's
holding have survived, even if any account was taken of them. But
beyond question such persons, having before them the method on
which the lord cultivated his estate, profited by his example, by his
successes and failures. In many ways the landowners of the
thirteenth, and the first half of the fourteenth centuries must have
been the instructors of the poorer cultivators, just as in a more
recent and stirring time the best English landowners, and they
were then many, instructed English tenant farmers in the new
agriculture.

Nothing can be more carefully and more exhaustively drawn
than the bailiff's account. He made rough notes of his receipts and
expenditure, and from these notes, which occasionally survive, the
audit was based and the roll engrossed. It is almost always in
Latin, and the writing was certainly the work of the mendicant
clergy. But it is absurd to imagine that the bailiff would have
rendered his account in an unknown tongue. The English bailiff,
generally a small farmer, often a serf, must have been at least
bi-lingual. Everything is accounted for, all receipts, including
those from the manor court, all rents and all produce. The acreage
sown, the seed required for the purpose, the live and dead stock on
the farm are carefully noted, even to an egg, a peck of tail corn, or
a chicken, all losses are given, all allowances recorded, and the
audit completed, and the quittance admitted ; and then the bailiff
began in the same methodical way to register for his next year's
balance-sheet. If two consecutive years of these accounts are
preserved, one can easily discover what the rate of production was
from the previous cultivation.

Now at this time the English people lived on the produce of their
own country. There might have been occasionally imports of grain
from the Baltic seaboard, and there are occasions, late in the middle

THE ACCUBACY OF ANCIENT ACCOUNTS. 55

period, in which notice is taken of such trade, from which, by the%
way, came that peculiar measure, the last or double ton, traceable
as a local measure in the Eastern counties to the early part of the
eighteenth century at least. The administration was alive to the
expediency of prohibiting the export of corn to foreign countries
when the home supplies were short. Thus in 1438-9, the only
famine of the fifteenth century, when Parliament petitioned for a
relaxation of the restraints on inland water carriage, the petition
was rejected, on the plea that the Government were convinced
that the concession would be interpreted as a license of ex-
portation.

You are perhaps acquainted with Gregory King's law of prices,
one of the most important generalizations in statistics, and applic-
able to all values whatever. King applies it to the harvest only,
and states that a defect in produce raises prices in a different ratio
from that which characterizes the dearth. Thus, a defect of —

1 tenth raises the prices above the common rate 3 tenths

2 tenths „ „ „ 8 tenths

3 tenths „ „ „ 1*6 tenths

4 tenths „ „ „ 2*8 tenths

5 tenths „ „ „ 4-5 tenths*

This rule operates in depressing as well as in exalting prices, and is
not thought of in times of high and low prices as it should be. It
applies to all articles in demand, but the depression is more marked
in the case of over-supply in articles of voluntary use, and the
exaltation more marked in the case of under-supply in articles of
necessary use. Hence the particular phenomenon which King
wished to comment on, the effects of scarcity, are more visible in
the principal grain than in any other. Nor must it be inferred
that King has gathered his ratio of increase from an actual survey
of facts. He merely means to imply that the rise will be in some-
thing like this proportion. I cannot, indeed, linger on this subject,
for I have made it the subject of a special lecture to be given here-
after, but I may mention here that a small margin of excess and
defect will produce results which are entirely disproportionate to the
amount of excess or defect. Of course, too, when the population'
* Davenant, ii. 224.

66 THE CULTIVATION OF LAND.

is relatively dense, in comparison with the success of agriculture,
scarcity may be of frequent recurrence. We shall find that it was
so in the seventeenth century, and between 1795 and 1819. In both
these periods the population increased rapidly, by virtue of well-
ascertained causes, and in both there were severe and continued
famines.

A register of prices, and especially of prices dated through the
year, the highest prices being generally those of May, when the
harvest of the previous autumn was getting scanty, and the prospects
of the coming harvest were uncertain, is nearly equal in exactness to
a meteorological register, and is even more suggestive. Taking the
agricultural year from Michaelmas to Michaelmas, the only way in
which agricultural produce can be annually isolated and satisfactorily
examined, it will always be found that when there is an anticipation
of a defective harvest, the ordinary high prices of May is gradually
enhanced, and if the anticipation is verified, prices go on increasing
up to the ensuing May, when the same estimate of probabilities is
made, with analogous results, the price rising if they are unfavour-
able, falling if they are satisfactory.

The severest famine ever experienced in England was that of the
two consecutive years of 1315 and 1316. In both these years the
famine was occasioned by excessive wet and defective solar heat, the
com hardly ripening in the ear. These causes have always produced
dearth in England. Our ancestors always cut their corn high on the
stalk, and generally used the sickle for all kinds of grain. They had
good reason for the practice. By cutting high they could reap and
carry their produce in nearly all weathers, and tbey could dry it with
comparative ease. They avoided cutting weeds with their wheat,
and under a system of fallows without root crops their land inevit-
ably became foul, and they could, and did, cut the stubble at their
leisure, and use the straw, unbruised by threshing, for fodder and
thatching.

In 1315, the price at harvest time is high, but not excessive. It
rapidly rises to four or five times its ordinary value by May, and
hardly drops in July and August. In the next year it is scarcely
ever below three times its ordinary price, and rises, not indeed to the
extreme famine rates of the previous year, but to even four times its
usual price. Nor does the hope of the ensuing harvest come till late.

ENGLISH FAMINES. 57

The weather must have changed for the better in the month of July
or August, and happier times followed. The greatest scarcity of
modern times, and the highest recorded price of wheat, is in
December, 1800, when it was rather more than double that which
had at that time become customary. In 1315, it reached more than
the highest estimate of increase, which is suggested in Gregory
King's table given above. Scarcities, or famines, almost as serious
occurred, for only single years, in 1321, 1351, and 1369. There
was only one year of great scarcity during the fifteenth century, that
of 1438, already referred to. In the sixteenth the dear years were
1527, 1550 and 1551, 1554, 1555 and 1556, when the base money
was in circulation, and worst of all in 1595 and 1596, when the
privation was nearly as severe as it was 280 years before. Now we
may be quite certain that the same cause was at work in all these
cases, excessive rain and deficient solar heat in summer. There is
a curious confirmation of these inferences in the price of salt. A bad
harvest is always a dear year for salt, either immediately or subse-
quently. The reason is that all the salt consumed in England, and
it was a real necessary of life, as for half the year people lived on
salted provisions, was obtained by solar evaporation only. The price
of salt is therefore an indirect register of the amount of solar heat in
any given year.

The interpretation of the facts in the seventeenth century is far
from easy. In no period of previously recorded history was scarcity
so recurrent and so prolonged. But though public affairs were of
such absorbing interest, very little note is taken in contemporary
authors of the terrible straits to which the working classes were
reduced. I should weary you if I gave you a list of all the famine
years. But sometimes they continued for a lengthened period. The
five years, 1646-1651 inclusive, were of unbroken dearth; the
middle year, 1648, being, as is usually the case, the worst. A simi-
larly calamitous period occurs in the four years 1658-1661, the last
year being in this case the worst, not only of this epoch, but of the
whole century. Lastly come the seven years of scarcity, as they
were called at the end of the century, 1692-98 inclusive.

Now during the seventeenth century, the population was certainly
doubled. The cause of this was partly immigration from France,
Flanders, and Germany, of refugees from the wars of religion and

58 THE CULTIVATION OF LAND.

persecution, partly the great development of the woollen industry,
mostly the settlement of England north of the Trent, which began
after the union of the two Crowns, and the peace of the Border. By
the end of the century, as we know from the hearth tax, the north
of England was nearly as populous as the south, though it was
far poorer and more backward. Now there can be no doubt that
owing to this last cause the area of cultivation was extended, though
it is certain that the agriculture was rude. The invariable comment
of writers on agriculture in the seventeenth century proves that the
farmer was grievously rackrented (low, as I shall show in a later
lecture, as the rents were, according to our modern experience), and
was therefore at once impoverished and deterred from making im-
provements. It is true that the labouring peasant suffered even
more severely than the farmer, for the landowners knew well enough
that if they could compel cheap labour, they could raise their rents,
and they acted steadily on that conviction in their assessments. As
I have already stated, the justices during the commonwealth raised
the wages in their assessments quite 50 per cent., and though their
successors after the Restoration tried to revert to the old rates,
employers paid the new. It is satisfactory to discover that during
the great part of the period between the Restoration and the second
Revolution, the price of wheat was low.

In the first half of the eighteenth century, except for two years,
the prices of all the necessaries of life were even lower than they had
been in the seventeenth, but this was due to the praiseworthy and
patriotic energies of the great landowners, who betook themselves
generally to the new agriculture, and encouraged the tenants by
their own example to follow. A vast amount of land was enclosed,
partly what had been open fields, partly what had been common,
and there is no doubt that the bounty granted on exported corn had
its effect. In point of fact the bounty stimulated the least objection-
able kind of gaming, gambling for the bounty, by endeavouring to
increase the produce. But after the foolish and obstinate war with
the American plantations, and still more during the prolonged Con-
tinental war, comes an era of wild finance, of enormous debt, of
oppressive indirect taxation, never profitable unless it attacks the
consumption of the poor, and the abandonment of landlord culti-
vation. But I shall have occasion to deal with this subject

THE CHABACTEB OF ENGLISH AGBICULTUBE. 59

more exactly when hereafter I handle the history of agricultural
rents.

The system under which land was cultivated was one of very re-
mote antiquity, was possibly prehistoric. It has not become entirely
extinct till very recent times, for I have myself seen it still in opera-
tion in Warwickshire and elsewhere. No doubt closes and meadows,
usually the private estate or demesne of the lord, were in existence
in very early times. But the land of the parish or manor, these
closes or meadows excepted, was generally distributed as follows.
There were a number of large common fields, in which each owner
Or occupier had a certain number of furrows more or less frequently
repeated. Between each set of furrows ran an uncultivated balk, a
foot or so in breadth, which formed a boundary or landmark, and for
some time of the year a pasture. The distribution and arrangement
of such a common field is described with sufficient accuracy by Fitz-
herbert in his treatise on surveying, published in the first quarter of
the sixteenth century.

But you will understand the system better, after you have inspected
the volume which I have by me, and will send round for your in-
spection. This is an exact copy of a survey (the original is still in
existence) made of the parish of Gamlingay in Cambridgeshire in 1603,
by one Thomas Langdon, and for which Merton College, to whom the
original and copy belong, paid him £12, stating, with justice, that he
had most beautifully drawn it. It certainly is not only the most
ancient survey which I have seen, but by far the most exact and
elegant. Gamlingay is a large parish on the western boundary of
Cambridgeshire. It contains 3,755 acres, and has been partly in the
possession of Merton College by gift of the founder from the begin-
ning of that college. It is a curious coincidence, that the earliest
endowed college in Oxford, and the latest endowed college in
Cambridge, Merton here, and Downing there, are interested in
Gamlingay.

The college had two manors in the parish, one which goes by the
name of Mertonage, the other by that of Avenells. The enclosures,
meadows, and woods belonging to the college by its possession of
these two manors amount to a little over 816 acres. There was a
third manor in the parish, that of Woodberry, which had belonged
to the Abbot of Saltreye. The college is the principal lord, but

60 THE CULTIVATION OF LAND.

there are other considerable proprietors — as the Queen ; Captain
Merton, Clare Hall, in Cambridge ; the Vicar of Waresley, in
Hunts ; the parish of Waresley ; and a Mr. St. George. With the
family of this last-named proprietor the college had ancient quarrels,
for they went to law with a William St. George, of Gamlingay, in
1344 and 1345, and spent no inconsiderable sum of money in these
years with the view or plea of expediting justice, and according to
modern notions in a very suspicious manner. This survey was
drawn up in order that it might be produced in court, and a note in
the original is to the effect that it was put in as evidence in a suit
for realty.

You will notice that each one of these fields is divided into very
numerous strips, and that the dimensions of each with the name of
the owner or occupier are duly given. You will see that there are
some thousands of these strips. Langdon's survey gives thirty-four
houses in the village, and the population in 1601, would, therefore,
be from a hundred and fifty to a hundred and seventy persons. At
present the inhabitants are over two thousand, and the increase is
in accordance with what I have suggested was the population of
England in the sixteenth century.

The cultivation of the common fields was necessarily that of two
grain crops and a fallow. Even if the art of cultivating roots and
artificial grasses, already practised in Holland had been known, it
could not have been practised on the open fields, for after the har-
vest was gathered, all the sheep and cattle of the parish were turned
into the fields to feed on the balks and what they could pick up
among the stubbles. In this case the owner of several or private
pastures had a great advantage, for he could send his cattle into the
common field with those of the other occupiers, and rescue the
aftermath at least, or rowens as it is sometimes called, of his own
meadows, till the common field was eaten bare. No doubt a great
deal of injustice was done by the enclosures of the eighteenth
century, but the new agriculture would have been impossible without
them, and the new system was the making of English agriculture,
and, when Sir J. Sinclair carried it further north, of the Scottish.

The owners or occupiers of these common fields had other advan-
tages in the commons of pasture and the lord's woods. These
commons of pasture seem to have been, in early times, almost uni-

COMMON FIELDS. CI

versal. They were, it would appear, that part of the settlement
which was least convenient for the plough, least accessible, and least
defensible. A modern English village, with its street and its church,
and its very few outlying houses, is a distinct survival of the
earliest occupation. In my native place in the Meonwaras I have no
manner of doubt that many of the village houses have been sites for
habitation during a dozen centuries, and that homesteads in the
parish but away from the street are comparatively modern occupan-
cies. Now in this common of pasture, there was generally no
stint. When the stint of pasture was the rule, it was either because
the common was of limited extent, or was merely the same thing
as saying that the tenant of a small holding could not have, and
therefore should not have, an excess of beasts or sheep on the
common pasture. The case of the lord's woods, and the pannage
of pigs was a different affair. This was only a qualified right on the
part of the tenants. They had no right to send their hogs under
the common swineherd, except under payment, but I am sure
that every tenant who paid pannage, generally a half-penny an
animal, had the right to send them into the wood, to browse on the
acorns or beech mast. This at least I have gathered from the manor
accounts, where ths fines on defaulters are recorded, but no charge
of trespass made.

I have already referred to the enormous, the prohibitive price of
iron. The plough was rude, though if one can trust the earliest
writers on husbandry, an acre a day was a moderate amount for a
first ploughing. But the ground, I suspect, was only scratched. Deep
ploughing was a thing of the remote future. The peasant farmer,
even in the sixteenth century, could not afford an iron harrow. The
teeth of this implement when he used it, especially when the ground
was stony, were oaken pins carefully dried and hardened at the fire.
The cart was generally supplied with solid wheels, bored out of a
tree trunk, for iron was too dear for tires, even after the cost had
been considerably reduced, for I have found such wheels well into
the sixteenth century, when iron was half the price at which it was
purchased in the fourteenth.

The cattle on these farms were small and stunted by the priva-
tions of the winter. There was no attempt to improve breeds. Cows
are a good deal cheaper than oxen, bulls a good deal cheaper than

62 THE CULTIVATION OF LAND.

cows. Nor does there seem to have been any attempt of a general
kind to improve the breeds of sheep. I have found some dear rams,
but they are quite exceptional. There was to be sure temptation
enough. Certain wools from the neighbourhood of Leominster were
eight times dearer than wool from Suffolk. Even as late as the play
of Friar Bacon and Friar Bungay, Leominster wool is quoted as
superlative. In 1734 Lord Lovell only gets 8d. a pound, or 7s. a tod,
for Norfolk wool. It is true that at this time, the old monopoly of
English wool had passed away. But in the fourteenth century wool
was often three times the nominal price of Lord Lovell's sales. The
fact is there was no winter feed, and unless the farmer can keep his
live stock continually in condition, it is idle to talk of breeds, or to
make any attempt to perpetuate or select them. I do not believe
that, on the average, any material increase was made in the market-
able ox, between the fourteenth and the eighteenth centuries, and
but little in the size of the marketable sheep.

In the agricultural economy of the Middle Ages, the regular clergy
were of no little importance and value. The Benedictines, apart
from their learning, were the great agents in making such improve-
ments in husbandry as the age could effect, the Cistercians in sheep-
breeding and wool dealing. It is quite possible that in early times,
the fatal gift of wealth had demoralized the earlier orders, as ap-
parently the habit of simulated poverty did the Franciscans and
Dominicans. But the social civilization of England would have
been greatly retarded had it not been for the efforts and the labours
of the regular clergy. Thousands of acres were reclaimed by the
industrious monks, and estates of great value, acquired in later times
by the favourites and accomplices of Henry VIII. were turned from
desert into garden by the ancient orders. They continued up to
the Dissolution to be indulgent landlords, partly, perhaps, because
they had become unpopular, and retained the stock and land lease,
out of which the tenant had become enriched and independent, after
the landowner was constrained or induced to abandon it. They
were the principal agents in keeping the roads in repair, for as their
estates were scattered, and their rents were taken in kind, or valued
in money and taken in kind, it was an object with them to make
access to the monastery easy and safe. It is certain that after the
Dissolution roads got out of repair, though I do not think that even

THE BEGULAB CLEBGY AND AGBICULTUBE. 03

the king's highway was in so scandalous a condition in the reign of
Elizabeth, as it was two centuries afterwards in the reign of George
III.

You will of course understand that in the age which I have
attempted to describe, and in describing which I have accumulated
and condensed a vast mass of unquestionable facts, the rate of pro-
duction was small, the conditions of health unsatisfactory, and the
duration of life short. But, on the whole, there were none of those
extremes of poverty and wealth which have excited the astonish-
ment of philanthropists, and are now exciting the indignation of
workmen. The age, it is true, had its discontents, and these dis-
contents were expressed forcibly and in a startling manner. But of
poverty which perishes unheeded, of a willingness to do honest work
and a lack of opportunity, there was little or none. The essence of
life in England during the days of the Plantagenets and Tudors was
that every one knew his neighbour, and that every one was his
brother's keeper. My studies lead, me to conclude, that though there
was hardship in this life, the hardship was a common lot, and that
there was hope, more hope than superficial historians have conceived
possible, and perhaps more variety than there is in the peasant's
lot in our time.

Perhaps it may be well to say a little on the effect which the
English system of agriculture induced on the social system of the
country, and especially on the landowners. I have already stated,
that where everybody was an husbandman, everybody was interested
in keeping the peace, and making everybody else keep it. It is true
that the law of primogeniture had been long a settled principle in
the jurisprudence of the common law. But in the fourteenth cen-
tury the stock on a well- tilled farm, and every landowner tilled his
land, and on the whole tilled it according to the best knowledge of
the time, the stock of a farm was worth at least three times that of
the fee simple, as, unless some wisdom supervenes, it seems likely
soon to be in our days, for land was constantly sold at six, eight,
and twelve years' purchase, with sixpence an acre rent. But though
the land went to the eldest son, the personal estate went to all the
children equally, or was made the subject of a will. William the
Norman had, for administrative purposes, enforced the concentra-
tion of land on the representative of a family against the half-

64 THE CULTIVATION OF LAND.

conquered and discontented English ; for equally politic reasons, he
had striven to scatter the estates of the nobles, so as to make him
powerful against them, but he had not attempted to induce the law
of entail on personal property. He was too shrewd to do so, and
his successors shared his intelligence.

For some centuries, then, the younger son of a great estate was
unknown. He shared in the stock, and I have little doubt that the
motive of the famous statute which did away with subinfeudation
was to facilitate the independent acquisitions of the younger son, to
enable him to purchase without dependency on his elder brother.
The king had no objection, for it multiplied his chances of escheat.
The entail, though chronologically earlier, was economically later,
for it is clear to me, from the documents which I have examined,
that entails were not general, at least on large estates, till the civil
wars of the fifteenth century, and not common even then.

After the great plague, and still more notably after the French
war had endured for a generation or two, the younger son becomes
a social inconvenience. The landowners, now landlords who let
their land at a rent, were the sole inheritors. The younger sons
sought their fortunes in the church and in the army. The cadets
of noble families appear among the bishops, and men, sometimes
not of noble birth, rose to knighthood and nobility through the
army, for not a few of our oldest titles were won by military adven-
turers. Some of these warriors became large purchasers, as
Fastolfe in the fifteenth century. Some, like Cromwell, Henry
VI.'s treasurer, rose to rank by the Administration. But these were
lucky people, the select of the fittest, or unfittest, as the case might
be. The less fortunate became, as an only resource, military par-
tisans, and were the stimulators and victims of the so-called war of
succession in the fifteenth century. It was really a faction fight, in
which the Yorkist party strove to reform the Government, and the
Lancastrian to appropriate the spoils.

When the great plague, and the consequent dearness of labour
made landlord cultivation impossible, the landowners established
the stock and land lease. It was probably borrowed from monastic
usage. The monasteries were wealthy, and were obliged to be ready
to hold themselves at ransom. The inmates were under vows of
poverty, the abbot was, if I can judge from his table and his per-

THE STOCK AND LAND LEASE. 65

sonal expenditure, of which I have seen much, under no such
restraint. But he husbanded the goods of the monastery, and
among them its savings. Some who had been reckless in their
expenditure were degraded or displaced, occasionally bringing ruin
on the establishment whose affairs they administered. To abbots
who wished to invest the property of the monastery safely and
profitably, especially at a crisis like that of 1349, the stock and land
lease offered great attractions.

In the stock and land lease, the owner of the soil, who had pre-
viously been its cultivator, let a farm, furnished with seed corn,
and stock, live and dead, to a tenant for a term, the condition
being that the tenant should, at the end of the term, deliver the
stock scheduled to him, in good condition, or pay the money at
which they were valued when the lease commenced. The valua-
tion is generally low, and when I first came across this kind of lease
I thought that the landowner let his tenant only the inferior articles
on his own farm. But on inspecting the items, I came to the con-
clusion that the low valuation was employed partly to attract
tenants, partly to cover a very serious risk, which I subsequently found
that landlords regularly incurred, that of compensating their tenants
for losses by disease among their cattle and sheep, certainly the
latter, when the loss was above a particular percentage, all below
falling on the tenant. The value of the live stock is, of course, the
principal item in the valuation, wbich is always writteji out annually
on the bailiff's roll. I have found, too, that under this system, the
landlord, if no exceptional loss occurred, did nearly as well as on the
old system of landlord cultivation.

The stock and land lease generally prevailed for about seventy
years after the owner had put it into operation on his own estate.
Thus Merton College let most of its land on this principle, shortly
after the Great Plague, and continued it to about the end of the first
quarter in the fifteenth century. New College carried on farming
on its own account, at least on some of its estates, up to the
end of the first quarter of the fifteenth century, and continued
the lease till the end of the century. But the monasteries
had it in operation up to the time of the Dissolution, and a
considerable part of the assets of these institutions in the time of
Edward VI. consisted of stock let to tenants for various terms.

6

66 THE CULTIVATION OF LAND.

Now I am disposed to believe that the landowners would not have
abandoned the system, from which they got so good an income,
voluntarily, and that this kind of lease was dropped by the tenant,
who accumulated, during the prosperity of the fifteenth century,
the means for buying stock for themselves, and even land. On the
other hand, the monasteries would have offered easier terms as time
went on. It is, of course, also possible that the armed factions of
the fifteenth century were in want of money, and therefore made
advantageous sales of stock to their tenants ; or that their tenants,
taking advantage of the purchase clauses in the lease, elected to
forfeit the prices, rather than restore the stock.

The system of landlord cultivation, though it became rare, did
not entirely disappear. The monasteries generally had one or two
farms in their own hands, near to them, from which they drew sup-
plies. In these cases, it was the invariable practice of the bailiff to
debit them, and take credit to himself for the sales which he effected
with his own employers. Thus Battle Abbey held two estates in
their own hands, one at Appledrum, the other at Lullington hi
Sussex, produce from which was regularly sent to the monastery.
The great convent of Sion, too, retained Isleworth in their hands for
similar purposes. It is pretty clear that, till they were squeezed
out of it by the first Lord Bedford, the abbot and monks of West-
minster held their estate of Convent Garden, north of the Strand,
and now the London property of the Bussells, for the same pur-
pose. Again, Fastolfe, the well-known military adventurer of the
war in France, of the fifteenth century, cultivated an extensive
barley estate in Norfolk, and traded largely in malt with the Low
Countries. Waynflete, the Bishop of Winchester and founder of
Magdalene College, was made Fastolfe's executor, and contrived to
divert a portion of the estate which the deviser intended for other
charitable purposes to the college which he was founding. I sus-
pect that the transaction was very suspicious, for this pious founder
was truly described by his contemporaries as nefarius iste episcopus.
But for all this, he has had the best of it with posterity.

The next stage is the lease for terms of years. But the peculiar
character of this lease, especially in the fifteenth century, is, I think,
a proof that the position of the tenants is improving, and that the
accumulation of occupancies in their hands was gradual. Most of

DEVELOPMENT OF LAND TENANCIES. 67

the tenancies are of numerous parcels, the lease of each parcel
being determinable at different years. Sometimes a tenant will
have a dozen of them, spread over as many years. This kind of
tenancy must have made distraint for rent very difficult, when there
was nothing but cattle to distrain on. I cannot but think that the
other forms of action by which rent was recoverable were expe-
dients adopted in order to obviate the difficulty of distraining on
land which was held under many grants.

Tenancies for life were, no doubt, not infrequent. When, about
the middle of the fifteenth century, Franks, the Master of the Kolls,
devised a thousand pounds to Oriel College, the existing body of
fellows, with commendable self-denial, purchased the reversion of an
estate in Berkshire, held by a man and his wife, for the term of
their natural lives. The man died soon after the purchase ; the
widow was disagreeably vivacious. The college made all sorts of
offers to her, temporal and spiritual; for the fellows of Oriel, before
the Eeformation, had a very active and successful trade in religious
offices. But the widow was inexorable, and the college had to wait
for her demise. If I remember rightly, she lived till near the end
of the century, probably outlived all the purchasers.

The last was the tenancy at will, or at rack-rent. Up to the
beginuing of the seventeenth century there was little chance of such
a rent, and the casual or irregular gains of the overlord were chiefly
derived from practising sharp manor custom on his copyholders and
freeholders, as Fitzherbert broadly intimates, a form of oppression
which Norden's treatise on surveying, published early in the seven
teenth century, reluctantly allowed to have been charged frequently
against his principals. But it is during the seventeenth century
that rack-renting and rent-raising became so general as to arouse
indignant remonstrance at the hands of nearly every person who
writes on seventeenth- century agriculture, the special complaint
being that it discourages all progress. But into the particulars of
this stage I shall enter when I treat, in a subsequent lecture, of the
economical history of rent.

To this occasion, also, I must defer what I should, had time per-
mitted, have commented on in this lecture — the remarkable de-
velopment of English agriculture during the eighteenth century.
It is almost worthy of separate treatment. But in these outlines I

68 THE CULTIVATION OF LAND.

am seeking to give those leading features of economical history
which have been so conspicuous in our own country. The par-
ticulars, though of profound economical significance, rather belong
to that history of English agriculture which I have been the first
to discuss and expound.

IV.

THE SOCIAL EFFECT OF EELIQIOUS MOVEMENTS.

Europe after the fall of the Western Empire — The Church and the
monasteries the only hope of civilization, especially the Bene-
dictines— The three parties in the English Church, official, national,
andpapal — The situation in Wiklif's days— His Summa Theologies,
and its purpose — The poor priests and the peasantry — The con-
ditions of religious movements — The teaching of Pecoh — The
sects of the Reformation — The Independents and the Revolution
of 1688— The movement of the Wesley s — The ancient prosperity of
Norfolk.

You will of course anticipate that in dealing with the subject before
me to-day, " The Social Effect of Keligious Movements in English
History," I do not pretend to discuss the religious tenets which have
from time to time been inculcated by those who have been prominent
actors in these stirring events. There may, indeed, be a few particu-
lars which I must deal with, in order to elucidate my estimate of the
results which have from time to time been brought about in thb
social and economical history of England, by religious impulses.
I am indeed disposed to believe, that however much a later habit of
mind has repudiated what was once thought necessary and true, the
promulgation and acceptance of such tenets, the defence of them,
and even as we may now think the enormous crimes perpetuated in
order to enforce them, were acts of good faith, and were honestly
believed essential to the safety of society. The historian who com-
ments on the violence of Hildebrand, on the cruelties of Dominic,
on the arrogance of Innocent, on the migration to Avignon, on the
epoch of the Councils, on the causes of the German and the

70 THE SOCIAL EFFECT OF RELIGIOUS MOVEMENTS.

Genevan Keformation, on the rise of Loyola, on the religious wars
which endured from 1550 to near a century later, on the last great
outrage on our modem notions, the expulsion of the Huguenots,
and the Penal Code of Ireland, may justly point out that infinite
mischief has arisen from the policy which these circumstances
indicate, but he errs as mischievously, if he thinks that the designs
of those who promoted them were consciously dishonest.

I have always regretted that in this place the authorized in-
structor in ecclesiastical history rarely travels beyond the first four
centuries of our era, and as far as I can learn, rarely gives a satis-
factory exposition of what occurred in that time. For up at least
to the fifteenth century, the development of theological dogma and
discipline is a continuous process, every stage of which bears upon
the history of the age; the reaction from which, begun in this
country, and carried thence to Eastern Europe, culminated at last
in the schools of Luther and Calvin. I cannot see, in short, how
men can understand the Reformation, unless they understand what
it resisted, what it attempted to reform, what were the compromises
to which it was constrained to submit, and why it was so con-
strained. The attack and defence of the old creed and practice in-
volve the profoundest political, moral, and social effects, and the
interpretation of these effects is obscured rather than assisted by
limiting one's inquiry to the faith, the discipline, and the practice of
the Early Church.

The administration of the Eoman Empire made iotal havoc of
ancient civilization. The ruin would have been earlier but for the
Empire, but it was inevitable that the Empire should bring the
ruin. In this universal chaos two powers survived — the Church and a
few municipalities. But the latter were weak, and almost exhausted ;
the former had to be concentrated, and to claim large authority, in
order that it might continue to exist as a social force. The ceno-
bite and industrial life which the Church assumed were necessary
towards the revival of civilization. The Teutonic irruption adopted
the vices of the later Empire without inheriting its discipline and
subordination. It was essentially lawless in the fact that it did
not acquiesce in any central and legal authority. It rapidly de-
generated even from ancestral custom. The picture of the early
Frankish monarchies, given by Gregory of Tours, and less clearly by

EUROPE AFTER THE FALL OF THE WESTERN EMPIRE. 71

Fredegarius, is sufficient to show how early and how complete the
anarchy was.

There was for many a century only one Power which could make
head against this recurrent chaos, for the empire of Charles the
Great, carefully organized as it was, had as brief a duration, and
became as utterly chaotic as the Frankish monarchy which it superr
seded. This was an orderly community, having a universal rule
and a guiding centre, which was loyal to the source of its own
authority, and yet could be kept wholesome, even if the source
became depraved. Such was the great Benedictine order, which
preserved the relics of ancient literature and ancient law, restored
agriculture, was an asylum against lawlessness, monarchical or
aristocratic, and was able to survive the scandalous profligacy which
characterized the Papacy in the tenth century, and even to be a
great agent in the reformation of it, under Hildebrand. The
philosophy of history proves that the monastic orders were the
centre and the life of a reviving civilization. Though I confess that
I cannot see in the " Monks of the West" all that Montalembert
saw, I can discern that we owe to their example that habits of law
the dignity of labour, the promotion of education, and the record of
history, were not lost during the six centuries of their early career.
Nor do I wonder that, from the point of view of the public interest,
apart from the strength which it gave the central power, all
ecclesiastical authority favoured the cenobite at the expense of
the regular clergy. Had the influence of Odo and Dunstan been
enduring, Saxon England would have probably held its own against
foreign invaders.

The policy of William the Norman was to establish an indepen-
dent Church, ruled by his nominees. But he was resolute and
successful in checking foreign ecclesiastical aggression, however
defensible it might be in theory in the hands of a reformer such as
Gregory VII. was. William was a very different person from Henry
IV. of Germany, and never needed to go an inch on the road to
Canosa. It is singular, but an illustration of what I have been
saying, that during the nineteen years in which William's grandson
was king, though lawlessness was everywhere, more monasteries
were founded than in any other reign. But evil as were the
times of Stephen, they developed a set of circumstances which

72 THE SOCIAL EFFECT OF BELIGIOUS MOVEMENTS.

were rapidly made manifest during the more vigorous reign of
his successor.

From the time of Henry II. and onwards to the Eeformation in
England, three sections, or, as the ancients would have called them,
schools, are always visible in the English Church. The first is the
official section, which I may call by a prolepsis the Erastian party,
which maintained the authority of the executive, and could always be
depended on by the king. These men were generally the principal
officials of the exchequer, the ancient description of which, first
prmted by Madox, purports to be written at the dictation of one of
them. To this party belonged most of the bishops in Becket's
time, and the clerical chancellors and treasurers of succeeding
centuries.

The second is what I may call the national section or Anglican.
To this belonged such men as Becket, Langton, and Grostete.
They were especially characteristic of the sixteenth century, in the
person of such men as Gardiner, who, if the tenets of the old faith
were left unimpaired, were perfectly willing to sanction and assist
Henry in freeing himself from the authority of the Papacy. It is
a striking fact, and one rarely referred to, even by ecclesiastical
historians, that Gardiner and Bonner resisted and protested against
the rescissory Act of Mary Tudor's reign, under which ali Acts of
Parliament denying the authority of the Koman See were abrogated
in a lump at the instance of Cardinal Pole.

The i;iird was the Papal or Ultramontane party. As a rule,
this party was chiefly found in the monasteries, and at last ex-
clusively. The origin of the regular orders was Papal, or if this
were doubtful, the privileges and exemptions which the monasteries
enjoyed were of Papal origin and Papal grant. Theye was^nothing
which the monks desired more than exemption from episcopal
discipline, and there was nothing which the bishops resented and
resisted more than these exemptions. There is an amusing illus-
tration of conflicting opinion in Matthew Paris. He is, unlike most
monks, strongly Anglican in his sentiments, and criticises un-
sparingly the king for his impolitic action, and the Pope for playing
on Henry's weakness. In so far, therefore, as Grostete resisted the
Papal nominations, he is a credit, in the eyes of Paris, to the English
Church and the episcopate; in so far as he strove to extend

TEE THREE PARTIES IN TEE ENGLISH CHURCE. 73

episcopal discipline over the monasteries in his diocese, he was an
enemy to the Church, and to be condemned.

Sometimes, as in the fifteenth century, the Anglican party was
almost absorbed in the official, when hardly a bishop was found in
his diocese, but most often were in attendance on the Court. Some-
times the secular clergy made common cause with the regular, as
when they all concurred in getting from Boniface the Eighth, the
famous Bull, Clericis laicos, and thereafter were entirely reduced to
submission by the king. But I am disposed to believe that the
secular clergy would have made little stir, had the movement of the
fourteenth century anticipated, as it was close upon doing, the
Dissolution of the sixteenth. The older orders had become wealthy
and negligent, and though the two orders of begging friars were at
the heighth of their reputation in the thirteenth century, it is plain
that they became unpopular in the fourteenth, not perhaps by the
direct possession of wealth, from which the rules of their order ex-
cluded them, but by the trusts which were created on their behalf,
on the enjoyment of which they entered, as freely and fully as
those of the other and older orders did on their endowments. In
the fifteenth century the pious and learned Gascoigne has not a
good word to say for any of them, but counsels their suppression*

It was necessary for me to give this sketch of the state of the
clergy, regular and secular, in England, up to at least the middle of
the fourteenth century, because one cannot, without it, explain the
force and persistence of that singular movement which bfegan, as
usual, at Oxford in the fourteenth century. I am referring, of
course, to the political, polemical, and social career of Wiklif. It ia
not a little remarkable that all the great religious movements in
England^ from the earliest to the latest, had their origin in Oxford.
Some of the earliest intimations which we get of the existence of a
university or of schools of teaching in this place is the narrative of
the discovery made of some heretics at Oxford in Henry the Second's
reign, who were expelled and outlawed from Oxford, and perished
because no one dared to shelter them. The University of Oxford,
when under the influence of Grostete, appears to have welcomed the
begging friars, of whom the Bishop of Lincoln had so high an
opinion. In the next century the opinions of Wiklif were developed
here. In the following century Pecok, the premature advocate 0

74 TEE SOCIAL EFFECT OF BELIGIOVS MOVEMENTS.

Bationalism, was an Oxford man ; and at the end of the century,
the revival of letters in England, distinctly associated with Church
Eeform, but with an unaltered creed, in the hands of Erasmus, Colet,
and More. The splendid schemes of Wolsey, intended to give effect
to this reform, but rendered abortive by his sudden disgrace, were to
have been carried out at Oxford. After the reformation was accom-
plished, the Puritan movement under Sampson, and the literary
one under Laurence, were commenced in Elizabeth's reign. Later
on it is the home of the Laudian reaction. In the eighteenth
century it originated a movementj by the action of the brothers
Wesley, which has had well-nigh as wide and lasting an influence
as that of Wiklif, and simultaneously developed the deistical tenets
Toland and Tindal, which were certainly not as obscure and unim-
portant as some have made them. Lastly, it was the origin and
centre of the Anglican movement, which, however it has been
criticised, has affected the action, if not the ritual, of those churches
which have declared the strongest antagonism to it. The cause of
this singular phenomenon was probably, for the most part, the extra-
ordinary privileges and exemptions which the University enjoyed.
It was certainly self-governed, and its authority over its own students
was declared to be independent of bishop and pope. Many, too,
believed that the course of its studies, under which the most sacred
questions were customarily attacked and defended, lent no little aid
to the sceptical tone which characterized the writings and conversa-
tion of its members.

In 1305, Philip le Bel, who had quarrelled with Boniface VIII.,
contrived, after the short reign of the successor of Boniface, to secure
the election of a pope who would be entirely devoted to the French
king's interests. This was the Archbishop of Bordeaux, who took
the name of Clement V., and migrated to Avignon. Hid successors,
up to the epoch of the great Schism in 1378, were all Frenchmen,
and all resident at Avignon. This was not, indeed, part of the
French king's possessions, but it was hemmed in by them. Now
during the last thirty-five years of this period, Edward III. was a
claimant of the French throne, under a title which many jurists, and
French jurists too, thought valid, and the Avignon Pope was very
generally deemed to be the English enemy, using his spiritual power
for the purpose of aiding and abetting the French usurper. Attacks,

THE SITUATION IN WIKLIF'S DAYS. 75

therefore, on the authority of the Pope were likely to be tolerated, if
not welcomed.

The regular revenues of the Eoman see were impoverished or
suspended during the Babylonish captivity, as the residence at
Avignon was described, and the pontiffs cast about for some new
sources of extraordinary revenue. They brought causes to the Papal
courts of law, for I have discovered and published the details of
some among them, original and appellate, where the delay was great
and the costs excessive. The fees paid to lawyers, all licensed by
the Pope for a round sum paid down, were for the times very high.
They created places for life, in consideration of present payment,
and quartered such people upon their spiritual subjects in order to
secure the income promised. One of them invented the doctrine of
firstfruits, under which he reserved to himself the first year's
revenue of all benefices in Christendom. But the greatest grievance
of all was the habit which the Pope got into of putting his nominees
into vacant benefices, without regard to the rights of patrons, and
even, by what were called letters of provision, nominating persons in
expectancy or succession to these benefices, before they were vacant.
The vast sums obtained by these means were transmitted to Avignon
by bills drawn on Flemish merchants, who traded with the English
sheepmasters, and the English public indignantly insisted that the
Pope regularly extorted on one plea or another as~much money out
of England as the king's own revenue came to. It seems, too, that
other nations used to laugh at the patience with which England
allowed itself to be plundered. And when we add to this the real
or reputed leaning of the French Popes to the French king's cause,
it is plain that there were all the elements of a pretty quarrel in
existence. I suspect, had the English Companies caught the Pope,
they would have treated him as harshly during the war as Nogaret
did Boniface VIII.

Wiklif is supposed to have been born at a Yorkshire village of
that name in or about the year 1324. His collateral relations are
said to have dwelt there, some generations after the Keformation,
and to have remained staunch adherents of the old faith. The day
of his death is certainly known, the last day of the year 1384. I
suspect his birth was at an earlier date than that ordinarily alleged.
He was educated at Oxford, where is not known. He was certainly

76 THE SOCIAL EFFECT OF BELIGIOUS MOVEMENTS.

a fellow of Merton, and probably master of Balliol. He was an ex-
ceedingly popular person at Oxford, where he received from the
University the title of Doctor Evangelicus.

In imitation of Aquinas, perhaps with the purpose of superseding
him among his Oxford pupils, Wiklif, before his political career
began, wrote his Summa Theologiae, under the title of "De Dominio
civili." Some of the tenets promulgated in this work were familiarly
quoted, notably his famous maxim that Dominion is founded in
Grace. I felt convinced many years ago that he meant by this that
all human authority was conditioned by the worthiness of the person
exercising it, and that proved unworthiness was a valid reason for
withdrawing one's allegiance. I can well imagine that as long as
this was supposed to refer only to the French Pope at Avignon, who
was making incessant claims on England and English benefices,
the language might pass unchallenged, and be even acceptable.
But when, in course of time, the tenet was applied to authorities
nearer home, it excited at first a reasonable alarm, and ultimately
undisguised hostility.

This work of Wiklif s was long supposed to be lost. Most of his
writings have perished, for after his memory was condemned at the
Council of Constance, some thirty years after his death, and his
bones dug out of his grave at Lutterworth and burnt, diligent search
was made for his writings, and those which were found were
destroyed. Still, as late as 1458, books of Wiklif s were bought at
Oxford, and for high prices too, for Oxford University in the fifteenth
century was reputed to be full of Lollards. But the original work
has latterly been found at Vienna, and has been partly published.
Many of his works, it is well known, were taken to Bohemia by
some Oxford students, where they were eagerly studied by the sect
who were afterwards known as the Hussites. After the battle of the
White Mountain in 1G20, the Hussite books were captured and
carried to Vienna, where they probably owe their preservation to
neglect.

I have read what has been published of this treatise, and I confess
that Wiklifs style is not attractive. It is involved, full of iteration,
and is disappointing from the frequent hesitation, not to say evasions,
of the author in stating the conclusion which he evidently has in his
mind. But I could not doubt that even at this early part of his

WIKLIF'S SUMMA THEOLOGIZE. 77

career, he had intended to imply, by his famous adage, the interpre-
tation which I set on it. Wiklif s doctrine on property and its
rights is obscurely but unmistakably communistic. But the imme-
diate application of his doctrine is to the Church and the monastic
foundations in particular, then reckoned to have absorbed one-third
of the land of England. Now these tenets would not be unpopular
in Oxford, where the majority of the members detested the monks,
and put every possible academical disability on them. Nor would
they be unacceptable to public men, who were impatient of the
continual costs of the French war, and were anxious to make Church
property contribute far more largely to public purposes than it was
wont to do. Wiklif gained the friendship of John of Gaunt, Salis-
bury, and Pembroke.

The opinions of Wiklif, as yet to all appearance only political,
gained him public employment. In July, 1374, he was sent in
company with several other English ecclesiastics to negotiate with
Gregory XI. on the practice of Papal provisions. The meeting was
at Bruges, and was apparently successful. Most of the negotiators
were provided for with preferment, and Wiklif was presented to the
living of Lutterworth, where he died. But hostile as he became to
the Pope and finally to the Pope's doctrines, he remained strongly
Anglican in his sympathies. In the book which I have referred to,
his special admiration is reserved for Becket and Grosette, and he
particularly recommends the former for refusing to acquiesce in the
constitutions of Clarendon, and particularly the last, which pro-
hibited the ordination of villains' sons without the assent of their
lords, for Wiklif strongly argued against the naturalness of civil
inequality.

But shortly after his return from Bruges, Wiklif took the im-
portant step of making provision for the dissemination of his tenets,
which became more anti-papal and sceptical as time went on. The
expedient seemed simple enough, and justified by numerous
precedents. He founded a new order of poor priests, in imitation,
it would seem, of the mendicant friars, who had now become
entirely unpopular with the reforming party. These priests were
to preach Wiklifs social and theological doctrines, to spend their
lives among the poor, and especially the upland folk, as the
peasants were called, to be clad in russet, i.e., coarse undyed brown

78 THE SOCIAL EFFECT OF BELIGIOVS MOVEMENTS,

wool, and to be constantly moving from place to place. Their
religious character and migratory habits disarmed suspicion, and no
one guessed, perhaps Wiklif least of all himself, what dangerous
emissaries they soon became. They seized with avidity on that
tenet which I have referred to, the unnaturalness of civil
inequality, and disseminated it everywhere. They were under no
central authority, were responsible to no chief, abbot, or general,
but were simply held to teach evangelical doctrine, which, if the
superiors of the peasants had heard them, would have filled such
people with horror. It appears that they acted as treasurers to the
common fund which the workmen collected, and to have had pass-
words and a jargon of their own. By their agency the action
of the peasants was concerted from the north to the south of
England.

Now let us briefly glance at the condition of England during the
early years of Kichard II. The war with France was languishing ;
the king was a child, but married to Anne of Bohemia, who was
reputed for many a year afterwards to be a firm favourer of
Wiklif s doctrines. People were tired of the war, not im-
poverished by it. The labourers were generally prosperous. The
higher wages which they had struggled for, and at last obtained,
were sufficient not only for them to live in such plenty as would
leave them enough to subscribe to their common fund, but even to
save from. There was a considerable growth of manufactures in
the eastern counties, owing to the immigration of the Flemings,
and these woollen manufactures were spreading over the east, south,
and west of England. These people eagerly embraced the doctrine
of the poor priests, who taught them the tenets of religious
equality and natural freedom, and pressed into their service the
lessons of the Old Testament, in which they alleged that the true
polity of a religious nation was described with the fidelity and truth
of inspiration. Nothing could be more invigorating than the Old
Testament story, where kings were made to bow before the inspired
prophet and teacher, who when kings were remiss was zealous even
to slaying. Wiklif had, among his other labours, translated the
Bible from the Vulgate version into English, and his book became
the teaching of thousands, and a treasure to those who could
acquire it.

TEE POOB PBIESTS AND TEE PEASANTBY. 79

While the peasantry were being stimulated by this new doctrine,
and fortified in their judgments by the examples of the Old
Testament, especially those culled from the heroic age, when every
one did that which was right in his own eyes, the lords strove to
make their burdens heavier, to revive the long-commuted right of
predial servitude. Here, we may be sure, the peasants were told of
the young Rehoboam, surrounded by foolish counsellors as that
foolish king was, and despising the wiser counsellors of his father,
the Salisburys and the Pembrokes. To your tents, 0 Israel! Then
came the rising, and the slaying of the priest who was over the
tribute, the victories of the Bridge, the interview at Mile End, and
the tragedy at Smithfield.

I need not tell you the history of the insurrection of 1381 its
collapse, and the practical success oi the peasantry in the struggle.
The insurrection seemed to be suppressed, but its ends were
obtained. The leaders of the people were attainted and executed.
Two hundred and eighty-five are mentioned by name in the Act of
Parliament, four of them being beneficed clergymen in Suffolk ;
but the final stroke was given to the system of serfage. The nobles
were frightened, and deserted the cause of the peasants ; the poor
priests were proscribed. But they were welcomed and hidden by
the Norfolk weavers. One of them. William White, who was said
to have been sent forth by Wiklif himself, seemed to have a
charmed life. Incessantly hunted, he continued to elude his
pursuers. At last, in his old age. in 1427. he was caught, and
burnt with two others, his companions, in the Lollards' pit, outside
the Bishop's Gate at Norwich, and on the other side of the
Wansum.

In European history, discontent with existing religious institu-
tions, and the acceptance of heresy on speculative topics, have
always been characteristic of manufacturing regions. It was the
case in Toulouse in Southern France, in Flanders, in Eastern
England. The French Huguenots were the manufacturers and
merchants of that country in the seventeenth century, and when
they were expelled, carried with them their skill and their
capital. Only Italy is an exception, and Italy profited so greatly
by the Papacy that it was not disposed to quarrel with the institu-
tion, though it had no love for the representative of it. The

80 THE SOCIAL EFFECT OF RELIGIOUS MOVEMENTS.

Lollard was no doubt like the Puritan of two centuries later, sour,
reserved, opinionative, and stiff. But he saved money, all the more
because he did not care to spend on priest or monk, friar or
pardoner. He sometimes played savage tricks on objects of
popular worship. He cut down crosses, burnt images, and gave
scurrilous names to sainted and holy persons. He might have
taken part in the murder of Bishop de Moleyns at Portsmouth in
1450, and of Bishop Aiscough in the same year at Edyndon.
Lollardy in Eastern England was apparently suppressed, but by no
means extirpated. The Lollards of the fifteenth eagerly embraced
the Keformation of the sixteenth century, and were the most
frequent victims of the reaction. They aided the Yorkist party
from sheer hatred to the persecuting Lancastrians, and when the
Yorkist was victorious they had for a time peace in their dwellings.
As time went on, they swelled the ranks of Cromwell's Ironsides.
The latest historian of Norfolk country life dwells on the distrust
which the East Anglian peasant has for parochial clergymen.

In the researches which I 4iave made into the economical con-
dition of England for the last six centuries, and in the numerous
facts which I have accumulated, I have constantly noticed that
religious movements have had social effects under two definite con-
ditions. The evidence on the subject is so cumulative, the facts
are so clear, and the inference so obvious, that what I have
to say on v the subject appears to me to be a measure of the
success with which a religious revival or propaganda may be
anticipated.

In the first place, the effort of the missionary must needs be
directed to the material as well as the moral amelioration of the
persons or classes which are to be the subject of the mission If
the teacher is suspected of being mainly the agent of the civil
power, of intending to assist the present status, of supporting the
purpose of the magistrate, the success of an institution, or the
policy of a form of government, he will be distrusted and will lail.
A Court preacher may encourage partisans, may stimulate a
persecuting spirit, may rouse that which is already in sympathy
with him, but will not gain new followers. But in al historical
religions, however much they may have been subsequently
corrupted by priestcraft and statecraft, the preacher has held

THE CONDITIONS OF BELIGIOUS MOVEMENTS. 81

out hopes to his hearers that he will better them. This is the
secret of the success which attended the teachings of Zoroaster
and Buddha, of early Christianity and early Islam. They take
advantage of existing discontent, and preach freedom, the loosening
of chains, the opening of prisons, and the natural equality of man,
the manifest duty of the secular ruler. They always allege, though
in varied phrase, that dominion is founded on grace. They may
counsel indifference or even obedience to the secular ruler, but they
always propose compensation for this concession. The constant
reproach against the Anglican Church, I do not say justly, is that
it is the creature of compromise, constituted and maintained by the
secular power and in the interests of the secular power only. This
is what Selden meant when he commented cynically on the con-
tempt with which the public looked at the downfall of the episcopal
clergy in the seventeenth century. " It," people said, " is a mere
instrument created by ecclesiastics, courtiers, and king, and»_is
intended for secular uses." What English clergyman has a
thousandth part of the influence possessed by the Irish parish
priest, and freely conceded to him ? The Lollard teachers, the
Bible men, the known men, as their password went, strove to enlist
the converts to their new creed by profound sympathy and ready
aid to them in their old struggles.

The next fact is, that it is in vain to attempt a social revolution,
a material improvement in the condition of those whom the teacher
approaches, except in times when prosperity or at least some degree
of comfort is general. I am speaking of new agencies, not of
those which are long-standing and as long trusted. In the history
of the world, I know nothing so unwearied and so sedulous as the
labour of the Irish priests has been, from the dark days of the
Penal Code to this last time, in which the Irish are beginning to
believe that the eastern sea will bring them justice in place of
oppression. I am thinking of and referring to a different set of
facts. The mission of the poor priests would have had no audience
in an age of despair and misery. The forces of society make short
and easy work of the outbreaks which despair occasionally instigates.
The insurrection of the Jacquerie in France in the fourteenth
century, of the peasants in Germany in the sixteenth, were futile
struggles, full of ferocity and reprisals, but completely repressed,

7

82 THE SOCIAL EFFECT OF EELIOIOUS MOVEMENTS.

the population sinking back into greater misery than that was which
they strove to shake off. The peasants' war in England was an
outcome of the time in which wages were high, and prices were
low. The peasant of that age was better off than his father or
grandfather, and had the prospect of seeing his children better off
than himself. They claimed at Mile End to be free, themselves,
their heirs, and their lands, and to be no more bond, nor so
reputed. There is no good in preaching social equality to the
indigent and destitute, to the man who asks for bread or work.
Men combine and organize when they are not obliged to be con-
stantly anxious about their daily bread ; when that is lacking or
uncertain, their worst language, heaven help them, is that of
impotent menace. The message of Wiklifs priests would have
seemed a mockery to the destitute. It was because they had some-
thing to lose, much to lose, that they resolved on striking a blow
to gain more. It was, I believe, from the consciousness of how
dangerous fairly prosperous men are, that the English administra-
tion, its first burst of wrath over, treated the peasants so gently,
and silently granted their demands.

The peasant of the fourteenth century struck a blow for freedom
in the fashion which noblemen and merchants had taught him or
his fathers over and over again, against John and Henry and the
second Edward; as they were soon going to show him against
the king round whom they now rallied, and in whose company
on that Smithfield day was the young cousin who was to depose,
perhaps to murder him. He struck a blow, and he won. His
descendants through the long night of the last half of the
sixteenth and the seventeenth centuries were to sink deeper and
deeper by the operation of well-devised machinations into the
apathy of despair, from which many of them have not even yet
risen. The peasant of the nineteenth century has neither the
spirit or the hope which called together the Men of Kent, of the
East, of the North, in 1881. The times indeed are changed ;
other instruments are employed now than those which were
customary when making war on the king was believed to be the
right of the aggrieved subject. The struggle is more civil, the
victory is more humane. But the man who works will always
have to struggle for his own against the man who spends, and

TEE TEACHING OF PECOE. 83

needs all his energy, for his rival is an organization, and he is too
apt to be a mob.

A strange wave came over the fifteenth century, its wonderful
prosperity, and the incredible ferocity and bloodthirstiness of its
nobles, in the rationalism of Bishop Pecok. His work, the archa-
isms of style and fact excepted, reads to me like the apologetic
latitudinarianism of the eighteenth century, or the sweet reasonable-
ness of the nineteenth. " Our lot has fallen in pleasant places,
why disturb us ? You may be right, but it is quite as likely that
you are in the wrong, and you must not be vexatious and dogmatic.
To quarrel over religion is foolish, to attack established forms and
practices is impertinent. Whenever a man finds an occupation
which suits him, he is quite as probably doing God and man service
as you think that he is not." I know nothing stranger than the
sight of this bishop, born long before his time, preaching the
gospel of indifference just at the beginning of a furious, a bloody,
an implacable civil war, in which the nobles of the age were to
tear each other to pieces, the ecclesiastics of the age were all to be
siding with the victorious party, as one side or the other was
uppermost, and all were hurrying down the rapids to the Niagara of
Henry VIII.

The teaching of Pecok was proscribed, as the teaching of Wiklif
was, by the pious, unworldly founder of Eton and King's College,
Cambridge. Henry VI., during his whole life, was incapable of
forming a judgment, and the clauses of his statutes in which
the heretical bishop and the heretical preacher were impartially
condemned were suggested by some adviser of the poor king. But
the two systems were in violent contrast. On the one side were the
secret teachers of Norwich weavers and small farmers, inculcating
vigilance, thrift, secrecy, contempt for ecclesiastical pretension, con-
centration on the business of life, but with a high ideal of personal
religion. On the other was the well-to-do bishop, apologizing for
his easy and well-to-do brethren, intreating his English reading audi-
ence to let well alone, and enjoy the benefits which a wise Providence
and a beneficent constitution had bestowed on them. Out of the
teaching of the Lollard priests was to come in the fulness of time,
the stern Puritanism which piled up wealth and wrath ; out of the
teaching of the others, which was in reality a reflection from the

84 THE SOCIAL EFFECT OF BELIGIOUS MOVEMENTS.

practice and purposes of the Anglican Church in his day, of time-
serving, greed, and suppleness, was to come the horrible chaos of the
civil war of succession, the ruin of English prosperity, the enormous
waste anfl crimes of Henry's administration, and the hopeless
beggary of the English peasant.

The English Reformation, such as it was, owed very little to the
clerical caitiffs who waited on Henry's caprices. All its strength
was due to the secret Lollardy which seemed to be extinguished,
and was so active. It was in the eastern counties that Lollardy
was the popular religion, that the Reformation of Edward's time
flourished, that the martyrs of Mary's time came, that the resistance
to Elizabeth's compromise was organized, that the Puritan move-
ment, the Independent movement, was consolidated, that the regi-
ments of the New Model, the Ironsides were trained, that Marston
Moor and Naseby, Dunbar and "Worcester were won.

The Puritan movement was essentially and originally one of the
middle classes, of the traders in the towns, of the farmers in the
country. The confusion and loss which followed on the debasement
of the currency by Henry, and the restoration under Elizabeth,
when the money was to be taken by tale instead of weight, and
prices consequently rose, affected principally the landowners who
lived by rent, and the labourers who lived by wages. The former were
stinted, because the social and economical situation was as yet a bar
to competitive rents, and the latter were finally impoverished by the
quarter sessions assessments. But the inconvenience was lightest to
the small farmer, who cultivated his field or the portion of the
common field which he held at a low fixed rent, whether his estate
was one of inheritance or on a renewable term, and who lived, in the
main, on the produce of his own field and his own hands. To such
persons, money prices are of less significance than they are to any
other class, for but little of their produce is really exchanged for
money. And if, as is highly probable, the weaving of coarse
woollens and linens was a bye-industry in the small farmer's house
(it certainly was in more considerable mansions, such as those of
Shuttleworth, in Gawthorp Hall, and Lord Pembroke's at Worksop),
the profit on the weaving would make up for the exalted price which
was required for implements and materials, just as in Ulster, when
linen weaving was a universal domestic industry, the peasant

THE SECTS OF THE BEFOBMATION. 85

farmer, as long as he could pay his rent out of his weaving, was
generally indifferent to its amount. But I am sure that the labourer
and artisan had no interest, as they had no part in the marvellous
drama of the seventeenth century, when the war between the
prerogative and the people began with Cecil's book of rates, and
ended with the second Revolution of 1688.

The stir of the first Eevolution in 1642 brought into existence,
perhaps in many cases only brought into prominence, a number of
new sects, the most important of which were the Quakers and the
Independents. The former, in the end, generally settled in the
country and betook themselves to agriculture, the latter aggregated
in the towns. The Society of Friends, quiet, self-restrained, pains-
taking, and parsimonious, who cut away from their lives all super-
fluous and some innocent enjoyments, became the most enterprising
of farmers, and had not a little to do with the success of the new
agriculture in the eighteenth century, when their harmless and
unobtrusive lives, perhaps the success of their industry, caused them
to be generally respected. Some of the best agricultural reports in
Young's collections are the work of Quaker farmers. But in the
end, resistance to the payment of tithes, which seems, at first, to
have been a pious opinion, subsequently exalted into a religious
dogma, was found incompatible with a pursuit for which the Friends
were peculiarly fitted. It appears that the abandonment of agri-
culture as a calling by the Quakers, took place generally in the
early part of the present century.

The Independent movement had a far more important economical
history. The Independents, as the reader of English history knows,
were the Republican party of the seventeenth century. The
Presbyterians were moderately royalist, the Cavaliers vehemently
royalist, the clergy were eager to avenge their losses in the civil
war, and the labourers apathetic and indifferent. The Presby-
terians were tolerated in consideration of the services they did at
the Restoration, were even endowed to a small extent, or allowed
to be endowed. They are now represented by the small and scattered
Unitarian congregations in out-of-the-way villages, and by a more
numerous and compact sect in the North of England. Independency
became the religion of the large towns, especially of London. The
sect, of course, was the most hateful to the restored monarchy and

86 TEE SOCIAL EFFECT OF RELIGIOUS MOVEMENTS.

the restored Church. Had it been possible, they would have been
visited with the utmost severity of the Clarendon persecuting Acts.
But these sectaries rapidly grew rich, and out of the trade which
flourished exceedingly in the last quarter of the seventeenth century,
they became the moneyed interest of London. No doubt Charles
would have gladly pillaged them, as he pillaged his own adherents
in 1672, when he shut up the exchequer. But the boundless extrava-
gance of his Court always kept him poor, and he had no mind, as he
said, to go on his travels again, as I am pretty certain he would, had
he lived much longer, as he assuredly would if he had attempted his
father's pranks of illegal taxation. The Independent sect of the
city of London gave stability, because it gave money, to the second
Revolution. It gave its money on loan, in a business-like way, and
it took security, as is the custom of merchants. The Presbyterians
of the first Revolution gave their money freely to the Parliamentary
cause. Now the creation of the Public debt gave a diffused interest
to the New Settlement.

The Independents were the principal founders of the Bank of
England. Among the first directors were Abney, the patron of
Dr. Watts, three of the Houblons, who had originally been Flemish
exiles, and were firm adherents of Calvin's discipline, and a host of
other names who can be identified with London Nonconformity. To
do business, State business, with such persons, and to visit them
with penalties for their creed and discipline was an absurdity.
Toleration was the necessary outcome of the new finance, as it
was of the new political system. The landed interest hated them,
but their hatred was impotent. Once they tried to ruin the Bank
with a scheme of their own, the collapse of which made them more
furious and helpless. The sons of Zeruiah, as the High Church
clergy confessed, were too strong for them.

There was still an institution which was almost entirely in the
hands of the monied Tories who had, I believe, finally parted com-
pany with the Stuarts, but who hated the Whigs and the Dissenters.
Under a charter from Elizabeth, the East India Company had
grown from small beginnings to what was then a mighty trade.
Their stock often sold four or five times its nominal value, when
profits were high. But Parliament had affirmed that it alone was
empowered to confer monopolies of trade. The old Company saw

THE INDEPENDENTS AND THE BEVOLUTION. 87

the ground cut from under their feet, after they had spent in vain
large sums in bribing members of the House of Commons, among
them the Speaker, and the members of the House of Lords. In
1692, its stock reached 158 ; in 1696, it fell to 38.

The "Whigs determined on constructing a new and rival East India
Company, the stock of which was readily and rapidly subscribed by
the London Dissenters. It soon shot well ahead of the old society,
though, strange to say, the old company bettered itself considerably
during the period of rivalry, which only lasted a few years. Perhaps
they distributed their dividends honestly instead of using their profits
for the sake of political corruption. In the autumn of 1703, just
before England had taken decided action in the war of the Spanish
succession, the stock of the old company was at 134, of the new
at 219.

The traditions of the Eevolutionary period, and the attitude of the
city men towards Nonconformity and the principles of 1688, re^
mained active during the eighteenth century. Wilkes was a Non-
conformist, and no great credit to any sect. The city took up his
defence, sheltered him from pursuit, baffled the House of Commons
in their attempt to protect their debates from publication, forced
Bute out of office, and administered bold rebukes to the king him-
self, after making very offensive demonstrations against his mother.

In a minor degree, the principal business in the other large towns
was in the hands of the same theological and political party, and
not a little of the remarkable material progress which characterized
the eighteenth century was due to these agencies. Mr. Gladstone
has disputed the accuracy of the picture which Macaulay drew of
the beggarly and sordid condition of the clergy in the seventeenth
and early part of the eighteenth centuries. I can only say that my
researches entirely confirm the historian's description. Their in-
fluences lay through the traditions of the Parliamentary war, with
the country landowners and those of their tenants who deferred to
them. I do not think that the Squires Westerns honoured the
Church in the person of Parson Trulliber, as neither of them were
any great credit to the country party and the Church, but they voted
together, and I am old enough to remember country clergymen of
whom Parson Trulliber was hardly a caricature. The grievances of
a standing army, a public debt, and the land tax, were till the great

88 THE SOCIAL EFFECT OF RELIGIOUS MOVEMENTS.

rise in prices, rents, and tithes at the end of the eighteenth century,
sufficient to weld together the political interests of Church and
land.

The [Revolution of 1688 would, I believe, have been followed by
a reaction, possibly a restoration of the Stuarts, had it not been for
monied Whigs of the great towns, and especially of London. The
public men of the period were corrupt, were always looking out for
questionable official gain, and the first two kings of the house of
Hanover were not respected and were not respectable. Now the
country party would probably have been as bad as the "Whigs if they
had had the chance, and the Whigs, who in one shape or the other
were in office from the accession of the first till the death of the
second George, were not likely to attack the most solid supporters
which their party had. So the occasional Conformity and the
growth of Schism acts soon went, and though the disability of the
Dissenter remained, as long as he did not present a qualification
the enforcement of which was a public scandal, means were found
by which the clergy, for a solid consideration, gave their testimony
that the requisite appearance and participation had been satisfac-
torily fulfilled, when the person who promised it had not entered the
church.

The movement which the brothers Wesley began and carried out
was chiefly among the labouring classes. It is well known that
Wesley intended to merely introduce a reform among reputed mem-
bers of the Church of England, and that the intolerance of those
who were offended at his tacit rebuke of their sloth and indifference
drove him reluctantly from his purpose. But I am strongly con-
vinced that Wesley, who laboured with so much success and effected
so powerful an organization in the eighteenth century, would have
wasted his labour in the seventeenth. During the first half of the
eighteenth century, and indeed further on, prices were far lower than
in the previous century, wages rose slightly, but were only slightly
raised, and it is clear that most labourers were small occupiers as
well, perhaps under the Act of 1589. There was therefore in the
comparative plenty of the time an opening for a religious movement
among the poor, and Wesley was equal to the occasion. It survived
the terrible period of the Continental war, when nearly all the taxa-
tion of the country, so universal were the excise and customs, fell

THE MOVEMENT OF THE WESLEY 8. 89

on the poor earnings of the working classes, for it is a maxim in
finance that there is no tax so productive as that which is collected
from universal consumption. At the present time the protective
taxes on clothing levied in the United States are easily evaded by
the rich, the profits of the manufacturer are extracted from the
consumption of those who cannot go abroad to buy.

I do not doubt that the remarkable progress of the working
classes in the fourteenth, fifteenth, and first half of the sixteenth
centuries were intimately connected with the destructive criticism
which Wiklif and his followers brought to bear on the established
creed and its representatives. All outward show of the opinions
which these sectaries entertained was repressed, particularly during
the Lancastrian epoch. But they were understood to be still
secretly cherished. Pecok, the defender of the existing order of
things, examines and attacks the tenets which seemed to have been
uprooted. This attack betrays a suspicion that the unseen in opinion
is not always unfelt. I do not doubt then that the views oi the
early reformers were still prevalent among the weavers and farmers
of Norfolk. It is possible to extirpate a religion. Calvinism was
destroyed in Flanders and Spain, almost entirely in France, to a
great extent in Southern Germany. But the process was effected
by an elaborate system of espionage, and the relentless punishment
of the accused offenders. In the same way Bomanism was extir-
pated in Scandinavia, and by expedients as harsh and severe. Cruel
and violent as our laws on religion have been, they have not been,
and, unless the character of the English were entirely altered, could
not have been, effective. The High Commission Court was a very
poor equivalent of the Spanish Inquisition.

The opulence of Norfolk during the epoch of Lollardy and the
textile manufactures is shown in the assessments it paid. The soil
of Norfolk is not particularly fertile, being mostly light. Much ol
its present acreage is reclaimed from the sea by gradual accretion j
much of its existing surface is covered with water, and was covered
to a still greater extent five centuries ago. But when the wool tax
was levied in 1341, ttie taxation of Norfolk to the acre, London for
the moment being taken out of Middlesex, was higher than that oi
any English county, and second to Middlesex with London. Next
to it comes Oxford, probably the most fertile of the English counties,

90 THE SOCIAL EFFECT OF EELIGIOUS MOVEMENTS.

as it has so much natural pasture, and so little waste. In 1875
when another assessment is made, the rate per acre is slightly higher
in Oxford than it is in Norfolk, but these two counties are greatly
richer than any other. Now there was hardly any part of England
which suffered so severely by the plagues of the fourteenth century
as Norfolk did. In 1453, and again in 1503, it occupies the same
position, a little below Oxfordshire, but far above any other county.
These are the only assessments which I have found in the pre-
Eeformation period. Part of the decline is no doubt due to the
extension of the woollen manufacture over other parts of England,
for the assessments are of a fixed grant, and are therefore relative.
The growing wealth of a county heretofore backward would reduce
the contingent of another, which had not indeed declined, but had
not increased as the other had in the interval.

It cannot, I think, be doubted that the continuous position of
Norfolk during the space of more than a century and a half,
between the first and last of these assessments, was due to the
habits which the religious and social tenets of the Lollards infused
into the minds of those weavers and farmers. Many of them were of
Flemish descent, indeed in catalogues of persons which I have found
in the eastern counties, I have been struck with the frequency of
distinct Teutonic names. They kept up a close intercourse with
Flanders. They could not do much in the way of wool. Their
produce was not deemed worthy of a price. But that from Suffolk
is the cheapest in the kingdom, and probably the worst. But they
exported their barley largely to the Low Countries, and received in
return the hop, which they appear to have been the first to use,
nearly a century before it became general in England, and recovered
the art of making brick, which had been lost in England since the
days of the Komans. This progressive skill, in which they out-
stripped the rest of the country, was due to special causes, and, in
my judgment, it was due to their religion.

I have nowhere discovered, to my great regret, any assessment
between 1503 and 1636, when the charge of ship money was im-
posed. Norfolk is now ranked as the twenty-fifth of the counties.
It is seventh in 1641 and 1649, eighteenth in 1660, twelfth in
1672, nineteenth in 1695. But in the only two assessments which
I have seen of towns, in 1641 and 1649, Norwich is the second

THE ANCIENT PBOSPEBITY OF NOBFOLK. 91

city of the kingdom. No doubt part of this change is due to the
migration of its industries, as the revival at the time of the Parlia-
mentary war is to the development of a new industry in the county.
In the days of Lollardy it prospered greatly, but when, in spirit
if not in name, the principles which Wiklif taught were accepted
by the Anglican Church, and Wiklif was styled the morning star
of the Eeformation, the special prosperity of Norfolk had passed
away. But, for a long time, a " weaver " was the familiar synonym
for a heretic.

V.

DIPLOMACY AND TRADE.

Copiousness of diplomatic literature — The effect of the intercourse of
nations — Fallacies about money, and its place in commerce — Ex-
ports and imports — How does a nation spend more than it earns —
Proof of such a state of things — Early trade of England, zhe
Hanseatic League — Trade with Flanders and elsewhere — Routes
from the East — The discovery of the New World, the Cape Passage,
and the conquest of Egypt by the Turks — Inherent errors in
the Dutch trade — The Intercursus Magnus — Commercial treaties —
1. That of Mr. Methuen. 2. That of Mr. Eden. 8. That of Mr.
Cobden,

It will be obvious to you that I can treat this vast subject only in
outline. There is very little printed literature which is more copious
than that which deals with diplomacy and trade. The great work
of Dumont proposes to give up to the middle of the eighteenth century,
the various treaties, political and commercial, which have been
negotiated between the different states of Europe. The numerous
volumes of Rymer, historiographer to Charles II., are a selection from
the public papers which are preserved in the national archives. But
neither of these authors is as copious as Muratori, whose volumes
are a repertory of the infinitely various relations which subsisted
from time to time between the numerous Italian cities. The col-
lection of Muratori is not only interesting to the student of modern
history, but is valuable as it enshrines in it many scattered pieces
of information about ancient commercial law, the most ancient and
continuous of all law, for it is probable that this branch of inter-
national custom and comity reaches back to the time when the Rome

EFFECT OF THE INTEBCOUBSE OF NATIONS. 93

of the kings and the early republic made treaties with Carthage an<L
the other colonies of Tyre.

The economical benefits of trade, and of that understanding
between nations which leads to the exchange of products, which
protects merchants and merchandize, and gives temporarily to the
foreigner, under more or less easy conditions, the opportunities of
commerce, are obvious and trite. The distribution of products to
the greatest possible reciprocal advantage is the first and most
enduring stimulant to trade. In all acts of exchange the buyer has
the strongest inducement to get what he most needs, and in com-
merce both parties buy and both parties sell. Trade is again the
most efficient instructor as to the natural benefits of soil, climate,
and material, and it teaches this with the greatest rapidity and
accuracy. The greatest service which unimpeded trade does to a
community which has accepted it, is that it informs the people, who
desire to exchange their products, what are the best kinds of material
on which to exercise their industry, and develop that utility which
is the sole end of economical labour. Hence it supplies the answer
to the important problem — Has the industry in which a country is
engaged been determined on in the most productive direction, does
it produce the greatest possible results with the least possible ex-
penditure of force ? Hence it acts as a stimulant for the discovery
of labour-saving instruments, and of cost-saving processes, for any
waste is labour needlessly and unprofitably expended. It leads to
the discovery of natural resources, as in this country coal, salt, and
iron, the last two of which, before certain discoveries were made,
were imported into this country. In the fifteenth century it was
supposed that if the exportation of French salt was prohibited
or even hindered, a most powerful instrument for checking English
progress, or crippling England's domestic life, would be put into
operation.

Trade, again, is an effective means for the development of inter-
national morality, for the sense of reciprocal benefit teaches the
reality of reciprocal rights, and the recognition of rights in the
people of a foreign country is obviously a means by which people
are instructed in that sense of justice and the satisfaction of obliga-
tions which is the earliest, and, it would seem, the most difficult
lesson of civilization. The difficulty there is in inculcating the force

94 DIPLOMACY AND TBADE.

of reciprocal obligations appears to me to be the reason why, in the
early ages of jurisprudence, the law enforcing contracts has con-
stantly been so severe, that in course of time the severity imperils
the very foundations of society itself, and it becomes necessary to
modify the ancient code by enacting a law of usury, in which relief
is given to the debtor, and in modern times, by what is equivalent
in its effects and virtually in its principle, a law of bankruptcy or a
revision of contracts. The international morality which has been
induced by trade in course of time develops that which is called
international law, i.e., international comity, the force of which is
public opinion and the censure of other nations, an expedient by
which, it may be hoped, as these forces become more effectual, war
may become itself an anachronism. Perhaps in past times, the
English people, by insisting on extravagant rights on the high
seas, have been the greatest hindrance to the development of inter-
national comity ; but of late years, and apparently from conviction,
we ourselves have been among the foremost to suggest that the
barbarisms of ancient warfare shall be discarded by international
consent.

Few nations are so barbarous as not to recognize the importance
of trade. But as that which they sell is by the very act of exchange
that which they desire less than that which they receive, they are
naturally most interested in exports. Another circumstance, how-
ever, has led to a further anxiety to increase exports, the motive of
which is more obscure.

It is clear that to a person engaged in trade, the mere retention
of money is not desirable. There is no reason to believe that by
holding it he will gain an advantage, for by the very terms of its
use as a means of exchange, it varies least of all in value within
measureable time. Except, then, as it gives a sense of security
against unforeseen emergencies, a risk, on the hypothesis that the
trader is solvent, which is progressively diminished in civilized com-
munities, to hoard is to lose. As the machinery of trade becomes
more complicated or, to be more accurate, to be more nicely adjusted,
movements of specie from country to country, or from merchant to
merchant, become rarer, and the transmission of the precious metals
ceases to be the business of the trader, for the function of adjusting
the wants of the money market, either for internal circulation or for

FALLACIES ABOUT MONEY. 95

the purpose of the foreign exchanges becomes the special office of
the bullion dealer. This view of the entirely secondary functions of
money in trade, and of its being to the dealer a mere temporary in-
strument to be got rid of as soon as possible in trade, if profit is to
be made, was seen very early in the history of economic literature ;
for it is stated clearly enough in a treatise by Nicholas Oresme,
Bishop of Lisieux, in the fourteenth century. Money is a convenient,
the only convenient measure of exchange value ; it has a temporary
convenience in effecting certain exchanges, but the trader retains it
in his possession for the shortest possible time. In brief, he takes
it, only to get rid of it.

The case is entirely different with a government, particularly with
a government in the time at which Oresme wrote. Here, and for
the reason given above, as a reserve against unforeseen emergencies,
the acquisition of money, the creation of a treasure, the value of a
hoard, were instant and obvious. In the nature of things a govern-
ment produces nothing, gets no profits. It may be in the highest
degree necessary and useful, but in the nature of things, it exists
only to spend. It knew, at least in the time of which I am writing,
that the strongest power was that which had or could get most
money. Centuries after Oresme, Louis XIV., when he was pressed
by the reverses of unsuccessful war, consoled himself by saying,
" After all, it is the last pistole that wins." In the sixteenth cen-
tury, all Europe was aghast at the designs of Philip II. of Spain.
He had the great mines of the New World, or at least levied a heavy
tax on their produce. He seemed to be possessed of inexhaustible
riches. He was baffled, beaten, made bankrupt by the Dutch, in
whose country there was not an ounce of natural gold or silver, who
got all their money by trade, except when they occasionally captured
their enemy's treasure fleet, and were rapidly becoming the richest
nation of Europe, when Philip had ruined Spain and brought down
the Genoese traders, on his declaring himself bankrupt.

European governments interpreted the interests of their subjects
by the view which they took of their own interests. Merchants
knew then as they know now, that money has a temporary use only
to the individual. But the government, seeing the permanent use
of money to itself, strove to make it permanent in the community
whose affairs they administered. So they devised the doctrine of

96 DIPLOMACY AND TBADE.

the balance of bargain, which Adam Smith afterwards called the
mercantile system, insisted that in cash transaction with foreign
merchants, there should be a balance payable to the English dealer,
limited transactions in certain important English products to towns
which they called staple towns, and appointed a great officer, whom
they called the King's Exchanger, who should see in his own person,
or by deputy, that this desirable balance was secured.

Of course they did not succeed. In the existing state of the
police of the ports, they might as well have tried to keep in the
wind, or to limit a falling shower to English soil. Bigger things
than money are smuggled, and when the merchants knew that they
could only carry their business on by getting rid of the money they
had received, and the balance of bargain too, why they got rid of
both. If the royal policy had been successful, there would have
been a general rise of prices. There would have been more money
in the country than was wanted, and to get rid of what they did
not want, they would have had to give more of it for goods. But no
rise of prices, on that I can speak confidently, ensued ; the money
flowed out to where it was wanted, like rivers to the sea, as Oresme
said, and the King's Exchanger with his attendants was a mere
cumber in the business of life.

But what no merchant would admit for himself, he affirmed for
the whole country. The balance of trade, the balance of bargain,
the mercantile system became a trouble for centuries, and when this
country was fast becoming the first commercial centre of the world,
honest people tortured themselves about the excess of imports over
exports, said that England was going to ruin, and that we were
all spending more than we were earning. I am afraid that the
amount of exports were cooked, in order to comfort these worthy
dreamers.

The exports of a country always pay for its imports. If they did
not, the importing country would be contracting debts, and the debt
would be taken in lieu of imports. It is always possible to discover
whether a country is spending more than it pays for. If it does, it
begins to export securities. A country may very wisely spend more
than it pays for. It may very necessarily spend more than it
pays for. But it must always pay for its imports in goods or
securities, and there are plenty of people who can detect the opera-

EXPORTS AND IMPORTS. 97

tion when it takes place. But the operation is not always plain to
the unpractised observer, and I am afraid that latterly, some persons,
who know a little, have, for reasons of their own, practised on the ill-
informed. When a country is not borrowing and has a fair share in
the carrying trade, an honest return of the money value of goods
exported and imported, always shows an excess in value of imports
over exports. I am assuming, of course, that the trade is exclusively
between country and country, and that there is no roundabout
settlement through a third country.

The reason is obvious. In trade, we value what we receive at
more than what we give, or there would be no profit. This is the
case with every country. A Frenchman values English coals more
than he does French wines, and the Englishman values French
wines more than he does English coals. If each did not, there
would be no trade ; the Frenchman had better keep his wine, the
Englishman his coals. Then the wine and the coals have to be
carried. If the Englishman does both journeys, the value of the
coals in France is more by the freight, the value of wine in England
also more by the freight. In England, the coal is valued less the
carriage, and the wine more the carriage, and what may be a very
profitable transaction may seem to those who do not understand the
figures a very losing transaction.

Now let us take a step further. Let us analyse what occurs every
day. An English vessel takes cloth to Hamburgh, carries leather
thence to Bordeaux, and takes wine to England. The only thing
which appears in the exports and imports are the cloth and the wine.
But the two articles bear the three freights, and, as far as they are
concerned, the imports again seem ruinously above the exports. In
the fifteenth century people understood the machinery of trade
better than some do now, for they saw what the profit was which
the English mercantile marine gained by the carrying trade, and
in France especially wished to check it by a sharp Navigation Act.
But the power of kings, and even of parliaments, is no match for
the instincts of trade.

Under the ordinary conditions of trade, then, merchants do not
find it to their interest to further the designs of Government in
securing a treasure, or even an available surplus or over-supply of
money. However honest the Government is in the management

8

98 DIPLOMACY AND TBADE.

of its mint, and very few European Governments have been even
decently honest in this direction, but, on the contrary, most flag-
rantly dishonest, merchants will not keep more money than they
want, wiU not sell, if they can help it, at a disadvantage, which,
being put into the language of the custom house returns, will
always make their imports exceed in value their exports. If they
do not do so, they get no profits. There are to be sure persons
when prices are low, and profits are low, who play on the credulity
oi those who do not understand the ordinary course of business,
because they know that, if they could alter the course of English
trade, they would for a time get higher prices and higher profits,
and pay lower wages, but the dishonesty of their purpose is trans-
parent.

The interpretation of trade is more difficult still when in a
country like our own, an enormous and incredible mass of foreign
and colonial securities is held by British investors. I am confi-
dently assured, by those who know the facts well, that at least two
thousand millions sterling of such securities are held in Great
Britain, and ear-marked on the Stock Exchange. We in Eng-
land hold all or nearly all the Colonial securities, the Indian Debt,
and so large a mass of foreign debt, that no large purchase can
be made of such foreign debt on any but the London Stock Ex-
change. Now interest must be paid on such liabilities, and of
course, in accordance with the rule laid down before, the ordinary
way in which such an amount of interest is paid, as is implied in
the above-stated indebtedness, is by goods, the amount or value of
which makes the aggregate of imports appear to be vastly in excess
of the aggregate of exports. To ignorant persons these figures
appear very alarming, and dishonest persons play on the alarms of
the ignorant. In fact, the annual interest which the borrowers
contract to pay is expressed in the currency of the United Kingdom,
or in the currency of the borrowing state and community, and in
theory such debtors are bound to pay in money. In practice,
however, they pay in goods, generally in raw materials, or in
articles which our climate will not allow to be produced, or
not to be produced in so useful a form. Hence a country like
our own, to whom other countries are largely indebted, always
gets its raw materials, and some other articles, at the cheapest

HOW DOES A NATION SPEND MORE THAN IT EARNS? 99

rates possible, a great advantage to capitalist, labourer, and
consumer.

There is one infallible test by which we may discover whether a
country is spending more than it earns. It begins, as private in-
dividuals do, to contract debts, and the proof that it is contracting
debt is given incontestably in the export of securities. It may be
wise to contract debts, when, for example, a colony borrows money
for the purpose of constructing beneficial railways at a rate of
interest lower than that at which it can borrow at home. It may
borrow of necessity, as when a country, which still has su fficient
resources to meet the interest on its loans, is constrained by the
charges of war, or any other expenditure on which the loan is
wholly destroyed and consumed, to borrow from its neighbours. It
may borrow foolishly, as when a country, not yet able to take
advantage of its natural resources, borrows to construct railways,
which will remain so long unproductive that it would have been
better to have gone without them. When it borrows it exports
securities and takes goods in exchange. In theory, the lender lends
money ; in fact, he lends manufactures, as rails, carriages, and
similar products. If the country which borrows and takes goods
puts a tax on the goods it takes, it has to pay a higher price for
them ; if the country which receives interest puts a heavy tax on
the only articles in which the debtor country can pay, it may make
such a country incapable of paying at all Lastly, il a country
wants to borrow, and will not take the goods of the lender at all, it
must pay the interest in its own products, and at increasingly lower
prices than it would have sold them at if it allowed trade to be
more free. No doubt the debtor may repudiate, but that is fatal
to his reputation as a borrower, for they who can lend never forgive
a bankrupt state. But as long as he keeps good faith, the debtor
is at the mercy of the creditor who can always elect how he
will be paid. A state which holds many debts in its own hands
has always a greater command over international money than a
state which has few or none, and moreover is in debt to its
neighbours.

I give you this sketch of international trade, of exports and im-
ports, and their meaning, because some foolish or dishonest persons
are trying to turn figures, which really prove the existence of a

100 DIPLOMACY AND TBADE.

profitable trade, into evidence that this country is declining, and
should reverse its trade policy. It is very likely that such people
are as uninfluential as they are shallow. It is, however, to the
purpose to show that if we did reverse our policy, we should inflict
incredible injuries on ourselves, as manufacturers and consumers,
and should bring those who have lent their money to foreign coun-
eries, and especially to our colonies, within measurable distance
of the risk of repudiation and the total loss of their property.
People who try to keep our goods out of their market no doubt
do us an injury, but they do themselves more. If we were to
retaliate, and seek to exclude those materials in which alone
they can pay their way, we might ruin them, we should cer-
tainly damage ourselves, and we should very probably give a
shock to public credit which it would not recover for a century
or more.

The earliest trade of England was with the Baltic and the Low
Countries. For more than two centuries, and to a greater or less
extent for three, England had important possessions on the south-
west coast of France, from which she exported wine and salt, the
former of which could not be produced in England to any advantage,
and the latter, at the time, not nearly so cheaply and so well. The
principal districts with which England traded in early times were
the towns of the Hanseatic League, with the Flemish cities (then
the principal region of textile manufactures, and the carriers of
Eastern produce;, and the duchy of Guienne.

The Hanseatic League was a combination of free cities on the
shores of the Baltic and the German Ocean, who associated together
for the purpose of defending commerce from marauders. It is
probable that to their efforts Western Europe owes the extinction
of that piracy on the ocean, and those piratical settlements on land,
which were the scourge of Western Europe for centuries. It appears
that for a time at least the seat of the administration, such as it
was, of the Hanseatic League was Bergen, in Norway. Their
treasury was said to have been at Wisby, in the isle of Gottland.
A branch of the association was early and long settled in London,
itself a principal member of the League, under the name of the
alderman and merchants of the Steelyard, in a place near the Tower.
It is tt be regretted that the history of the League has not been

TEE EANSEAT1C LEAGUE. 101

better written. The works of Werdenhagen, Mallet, Schlozer, and
Lappenburg, are very poor productions.

Many charters, thirty-five have been collected, were granted to
the Hanseatic League between 1235, when I have found the first,
to 1567, the last. In 1578 Elizabeth abolished the League as far
as England was concerned. Most of the cities were overpowered
and absorbed by the rising monarchies of Northern and Eastern
Europe, and at last the League was represented by Hamburgh,
Lubeck, and Bremen only. Their position as a trading association
is most marked during the fifteenth century, during which twenty-
one out of the charters above recorded were given. The character
of the trade carried on by the Hanse towns with England is, I
conclude, designated in that part of the " Libel of English Policy "
which deals with what the author calls the Danske trade. It
appears that England was supplied with furs, cloth, feathers, occa-
sionally wheat and rye, iron, tar, glass, wax, and other products
of a similar character. There was a time in which it seems that
even the produce of the farthest East was conveyed by land car-
riage across Asia, through the Baltic towns ; and that fragments of
ancient porcelain found occasionally in the extreme West, are relics
of trade which is now entirely extinct and forgotten.

The trade with the Flemings began early and was of the highest
importance to England and the Low Countries till Flanders was
ruined by the Spanish war and the Spanish Inquisition. The
Flemish cities grew wealthy from the woollen and linen trade, from
the former especially, the whole raw material of which came from
England. Hence friendly relations with England were of the
highest importance to Flanders, and the English monarchs, while
they engaged in their attempt to conquer France for thePlantagenets,
saw the necessity of having Flanders or its rulers as their ally.
This fact explains the friendship of Edward III. with Arteveldt, of
the alliance of Henry V. with the Duke of Burgundy, who had now,
by marriages and usurpations, obtained nearly the whole of the
Low Countries, the Yorkist alliance with Charles the Bold, and the
Intercursus Magnus of Henry VII. The inheritance of the
house of Burgundy has made what we now call Belgium the
battle-ground of Western Europe, from the days of Philip the
Second to those of the Continental war. Its commercial sig-

102 DIPLOMACY AND TBADE.

nificance has passed away, its political importance is still great,
and it is believed to be in no small degree the key to the Western
situation.

The woollen produce of Flanders, with the various kinds of silk-
workers and linen manufacturers, were the occupation of most of its
towns. It was so densely peopled, that, like Holland a century later,
it was unable to support its own people from the produce of its soil,
and imported large quantities of wheat and barley, the latter notably
from the eastern counties of England. It was the mart of Eastern
produce, which came to it by a route which I shall presently
describe. Spices and foreign fruits were articles greatly in demand,
and were purchased chiefly at Bruges. We shall see hereafter how
this part of the Flemish trade was effectually destroyed. In
Flanders, too, and especially in Antwerp, was carried on an active
trade in bills of exchange, those instruments of credit by which, as
was alleged, the wealth of England was poured by a thousand
channels into the Papal treasury, and England was impoverished
by spiritual tributes. During the whole of this period there were
bickerings and occasional disputes, for the Flemings were turbulent
by nature and by reason of their municipal privileges, and the rulers
of England and Flanders frequently sacrificed commercial benefits
to political jealousies and interests. As I have said, the trade
between England and Guienne and its port of Bordeaux was chiefly
in wine and salt, and these two articles were abundant and cheap as
long as the political connection between England and Guienne lasted.
As is well known, in 1450, France had recovered the whole of her sea-
board from the English. It appears that the French king tried to in-
troduce his fiscal system among the Gascons ; it is known that they
rebelled, that they were succoured by the English under Talbot,
Earl of Shrewsbury, and that the Earl and his son were defeated
and slain at the battle of Chatillon. With this victory, all the
ancient possessions of the Plantagenet kings except Calais were lost.
But long after all idea of attempting their recovery was given up, it
was a common practice for the English sovereigns to stipulate for the
free export of wine and salt from France.

The Baltic, the Flemish towns, and the French seaboard were
the limits of English maritime enterprise up to near the end of the
fifteenth century. But towards the close of this period the Spanish

TRADE WITH FL-ANDERS AND ELSEWHERE. 103

kings of Aragon and Castile, now united, had achieved the conquest
of all the Moorish Principalities in the South. Hence the English
passed along the Portuguese and Spanish coast, and traded as far
as the quay of Seville. They do not appear for some time to have
entered the Mediterranean, still less to have ventured on exploring
the regions which Henry of Portugal had visited. Hence there was
some colour for the Bull of Borgia, under which all the world to the
west of the Atlantic was bestowed upon Spain, all the east on
Portugal. But the English penetrated to the north. The fishing
grounds near Iceland had long been visited by the Yorkshire navi-
gators. In the fifteenth century the Bristol merchants, trusting
to the mariner's compass, reached the same goal through the
Hebrides.

An Act of 32 Henry VIII. cap. 14, reciting an earlier Act of his
father, attempts to regulate the trade of England with those parts
of Europe where England had commercial relations. Even in early
times its position was good. A debate between two heralds-at-arms,
written in the fifteenth century and published lately by a French
antiquarian society, confesses, on the part of the French patriot, that
the mercantile marine of England was large and active, and allows
that England has a great geographical position for trade with the
Baltic provinces and South-western Europe, but charges the
English with piracy on French, Spanish, Danish, and Scottish
vessels, asserts that they wish to appropriate the trade of the world,
dwells on the supreme importance of French products to English
trade and consumption, and threatens the culprits with the penalties
and police of a stringent Navigation Act. From internal evidence,
it is plain that this treatise must have been written after the capture
of Bordeaux in 1453, and before the death of Charles VI. in 1461
The admission as to the character of the English mercantile marine
is, to my judgment, more trustworthy than the stories which are
told about the maritime decay of England in the fifteenth century,
and the gibes of the Flemings on the downfall of English supremacy
on the seas.

The English attempted to reach Russia from the north, indeed,
at that time, the sixteenth century, Russia had no accessible
European port. One of the ships reached what was afterwards
called Archangel in 1555, and the embassy had an interview with

104 DIPLOMACY AND TBADE.

Ivan the Terrible — 1538-1584. It seemed that prosperous trade
would be developed between Astrachan and Archangel. But after
the death of Ivan, and the disturbed reign of his successor, came
a period of confusion and revolution, and the enterprise of the
English adventurers was arrested. It was not till after the middle
of the sixteenth century that English vessels entered the Mediter-
ranean. Even then for a long time the trade was capricious and
disappointing. The Turk could destroy, but could not renew, still
less create a trade. He has turned the fairest part of the earth's
surface into a howling wilderness, and as long as he is permitted
to exist, there is no hope of renovation. It is upon his exploits that
the history of Central and Western Europe turns, that the old
centres of trade were abandoned, or fell into decay, and that a
new course was discovered in which the energy of the Western
nations could enter.

The first definite or accurate information which we get as to the
course of trade from the east to the west, is in the work of Sanuto
the Venetian, in an address or remonstrance laid before one of the
Avignon Popes, John XXI., in 1321, and published in a collection
entitled Secreta Fidelium Crucis. How Sanuto can have imagined
that any interest beyond his own would have been entertained by
this most rapacious and sordid of the French Popes we are not told,
but probably Pope John was to him only a channel through which
he could advertise to the mercantile world what were the perils to
which, in his opinion, the traffic to the East was nearing. Con-
certed action in Western Europe was hopeless. The experience of
the Crusades had proved how frail a bond enthusiasm was, and the
failure of Louis IX. might have assured "the most sanguine of men,
one would have thought, that the day was past in which armed
intervention would revive foreign trade.

According to this author, the ancient depot of Eastern, i.e., of
Indian produce was Bagdad, and it would seem that this view was
confirmed by the evidence given in the writings of early travellers,
and of romances, as long as Bagdad was under the rule of the
Abassid Caliphs, and was practically the centre of Islam. But in
course of time, Central Asia was overrun by divers barbarian hordes,
and the routes of the caravans were interrupted. Two of these are
known to Sanuto by memory. The one passed from Bagdad over

EOUTES FBOM THE EAST. 105

the plains of Mesopotamia and Syria to Licia, the ancient Seleucia,
and the produce by this land route was purchased and distributed
by the principal maritime cities of Italy — Venice, Genoa, Pisa, and
Florence. It appears that this, the earliest and shortest route, was
early attacked by the savages who crowded down into Central Asia
from the Great Plateau, which lies between the eastern side of the
Caspian and the Chinese Empire, irruptions of whom destroyed what
remained of the ancient civilization in the great plains, and made all
transit too dangerous to be possible. A second caravan route, also
starting from Bagdad, followed the Tigris to its sources in Armenia
and Azerbijan, and going along the road which had been explored
for the first time in history by the memorable Ten Thousand,
reached the same point which they did at Trebizond or Trepezus.
This was the more difficult, but the safer route, though perilous
enough, and traversed conveniently only during the summer. But
this route had also been interrupted, though while it lasted it was
welcome to the Italian cities, and especially to Venice, who had
several factories in the Black Sea.

Now Sanuto tells us that Eastern produce was collected at two
ports in the great peninsula of its origin, which he calls Mahabar
and Cambeth, and thence had generally been shipped to certain
ports on the Persian Gulf and the river, the Tigris. A smaller
portion was sent to Aden, for transit through Egypt. In conse-
quence of the circumstances referred to above, Aden had become the
only port, and the Egyptian the only route. From Aden he says
there was a nine days' journey across the desert to Chus, as he calls
it, on the Nile. Thence it went by the river for fifteen days to
Babylon, a name which the mediaeval writers gave to Cairo. From
Cairo it went by canal to Alexandria, whence it was shipped to
Europe, after being taxed up to a third of its value by the Sultan.
The cost of the articles was greatly enhanced, and the quality greatly
deteriorated by this mingled sea and land passage, and by frequent
transhipments. Even under existing circumstances, some persons
braved the perils of the old routes, and brought small parcels of
these precious goods by the Asiatic road to the Mediterranean. If
they escaped robbers their gain was great, for the articles were
always in much better condition.

The spices of the East were exchanged at Alexandria for

106 DIPLOMACY AND TBADE.

European produce. The articles most in demand were the metals,
among which Sanuto enumerates quicksilver, wood and pitch, coral
and amber, and the shrewd Venetian gives the taxes levied on imports,
6f per cent, on gold, 4| to 3£ on silver, and from 25 to 20 on other
metals and other products. Egypt was not a country of varied
products. It depended entirely on foreign countries for metals,
for timber, and many familiar conveniences of life. The writer,
therefore, concludes that if all commercial intercourse with Egypt
were forbidden, and a sufficiently large navy could be collected in
order to meet the possible effects of the Sultan's resentment, that
potentate would be obliged to revise his tariff, and the old routes
from Bagdad to Licia and Antioch might be revived.

The remonstrances of Sanuto were ineffectual, and the trade with
the East was carried by the Egyptian route only. But it is clear
from the fall in prices during the fifteenth century, that the Sultan
must have seen that it was wise not to press too grievously on the
trade which was so important to his dominions. Pepper, the most
important and familiar of these Eastern condiments, was generally
procurable at a low price during this century, and a local manu-
facture of sugar at Alexandria made this article so cheap, that at
the beginning of the sixteenth century it was little more than an
eighth of the price at which it stood at the beginning of the
fifteenth.

Now stories as to the occupation of a wide and fertile region in the
Far West, curious and novel products of which were cast by the
great ocean wave, which we now know as the Gulf Stream, on the
western coasts of the country, were rife. The voyages and discoveries
of Henry of Portugal, more than a generation before, fired the
imagination of mariners, and one of them, who was convinced that
there was a western passage to the Indies, importuned every Court
in Europe to supply him with the means of discovery. Unsuccessful
with one after another, Columbus found a patron in Isabella of
Castile, and discovered the New World in 1492. The Portuguese
monarch was not much behind the Queen of Castile. In 1497, Vasco
di Gama doubled the Cape, and the waterway to India was made out.
In 1496 occurred the voyage of Sebastian Cabot from Bristol, and
the discovery of Newfoundland. But for many a long day England
left the field of enterprise to the Spaniard and the Portuguese. The

THE DISCOVERY OF THE NEW WORLD, ETC. 107

first Tudor king was too thrifty, the second too lavish for any real
enterprise, and when the second was dead there was nothing left for
a time on which enterprise could be founded.

The discoveries of Spain and Portugal were not undertaken a day
too soon. At the beginning of the sixteenth century Selim, the
most able and the most savage of the Turkish Sultans, overran
Mesopotamia, got possession of the holy places, with the title of
Caliph for his family and descendants, and in 1516 conquered Egypt
at the battle of the Pyramids. Selim was the incarnation of all
Turkish energy at its best, and all Turkish vices at their worst. The
trade of Alexandria was destroyed, the route with the east broken,
and the protracted impoverishment of the Nile valley commenced,
an impoverishment which will never cease until the Turk is expelled
from Egypt. The produce of the East, not yet procured in sufficient
plenty by the long sea voyage, rose to famine prices, the Italian,
the South German, and the Rhenish cities were impoverished, and
for a long time the Flemish marts were deserted.

During the sixteenth century Spain was conquering kingdoms
and collecting treasure in the New World, kingdoms to be depopulated
and degraded as the Turk had done by the Old World, where he set
his foot, treasures to be rapidly wasted in impossible projects.
Portugal was engaged in planting factories, in extending its influence
over some of the Spice Islands, and in conquering others, both
nations acting under the authority of Borgia's Bull. In course of
time England and Northern Europe generally revolted from the Pope,
and the wars of religion began, and lasted near a century, from the
revolt of the Netherlands to the peace of Westphalia. Slowly, and
as soon as they felt strong enough for the enterprise, these northern
people began to doubt the authority of Borgia's Bull.

If we call men by their proper names, Drake and his associates in
enterprise or discovery were pirates, constantly and avowedly
engaged in plundering the trade of a monarch with whom England
was nominally at peace, but greatly at variance. I do not doubt the
ultimate usefulness of Drake's career, but for a long time English
rovers had a very bad reputation, and were actually of the character
which the French herald-at-arms ascribed to the whole English
nation more than a century before. The usefulness consisted perhaps
in encouragement to English enterprise, and the proof of English

108 DIPLOMACY AND TBADE.

courage. It was probably of great military value and significance
in the coming struggle with Spain, but the candid inquirer into men
and acts is constrained to set down the exploits of Drake in the
same class of transactions with those for which Captain Kidd and
his comrades were hanged at Execution Dock, little more than a
century after the naval hero of the Plymouth Hoe ended his
career.

The charter of the East India Company was granted on the last
day of the sixteenth century, December 81, 1600. The principal
person among the new adventurers was Clifford, Earl of Cumber-
land, an old buccaneer, which was for a time the polite equivalent
of a pirate. The practice of buccaneering, especially among the
Spanish possessions in the New World, was long a favourite field of
energy. Paterson, the reputed founder of the Bank of England,
is sometimes said to have been a missionary in the Antilles, some-
times described as a pirate, and it has been suggested that he was
probably both by turns. Long after Paterson, an English clergy-
man, who rose to be Archbishop of York, is said to have pursued
the lucrative and invigorating calling of a buccaneer in his earlier
days. So it was said of Archbisjiop Blackburn in his lifetime, and
I never heard that this dignified prelate resented, much less refuted,
this charge against him. The East India trade was tainted in
its beginnings by the vices of those who followed it, and not a little
of the trouble which the commerce of England incurred in the East,
quarrels with the Dutch, high-handed proceedings at Amboyna, and
the like, is to be explained by the lawless and piratical character of
those who founded British commerce in the Eastern seas, and began
the Eastern Empire.

The Dutch East India Company was founded in 1603, with a
capital at least eight times as large as that of its English rival.
Soon indeed the objects of the English company became different
from those of the Dutch. The English strove to establish themselves
on those parts of Hindostan which were not occupied by the Portu-
guese, from 1580 to 1640. Subjects of the Spanish crown, the
Dutch sought to secure a monopoly of the spice islands, and par-
ticularly of those where the clove grew. Now such a policy included
a good deal of costly fighting, and the Dutch merchant vessels were
as much men-of-war as traders. There have been few objects on

INHEBENT EBBOBS IN THE DUTCH TBADE. 109

which more blood has been shed than on the exclusive right to sell
cloves. Two centuries and a half ago they were the most valued of
spices, and according to the notions which people then had of trade,
the action of the Dutch was thought to be consummately prudent
and patriotic, though very irritating to other nations. But the
objects of the Dutch in achieving their cardinal policy, to procure a
monopoly of produce in the East, and a monopoly of markets in the
West, loaded the Dutch East India Company with debt, and brought
down in the ruin of that great trading corporation, another trading
corporation, the great Bank of Amsterdam, which had been for
more than a century and a half the commercial centre of the civilized
world. The exposition of the situation and the exposure of the error
are so easy, and the lesson drawn is so striking, that I am bound to
explain it.

The object of a prudent trader is to keep prices up to profits, i.e.,
to sell at such an advantage as will give him on his transactions the
profit which he anticipated when he made his purchase or manu-
factured his goods. But the object of the prudent trader is likewise
to enlarge his market, to increase the area or number of his customers,
and to effect this he will sacrifice a portion of his possible profits,
for he knows that if business is procured it is apt to prove permanent,
and that it is better to have fifty transactions at 5 per cent, within
the same time than to have five at 10, since the proportion between
the two is as 250 to 50. In the competition of traders this practice
is what modern experience has inculcated. But when the producer
neglects to increase the number of his customers, and increases the
expenses of production, he is on the road to ruin, and may be so
without knowing it.

Now this last policy was that of the Dutch. They kept up prices
and so limited consumption. They strained every nerve, exhausted
their credit in the effort to keep by main force other traders out of
the field, experience proving that the only way in which one can
check competition is by lowering prices. In the expectation of get-
ting one large profit on each transaction they succeeded in making
a small profit or even a loss on their whole transactions put together,
for it cost more to protect a designedly narrow trade than it would
to establish and render permanent an intentionally wide one. In
brief, they narrowed their market and so narrowed their profits.

110 DIPLOMACY AND TBADE.

The folly of the Dutch is the folly of many a tradesman, who, in
order to get rapid profits out of high prices, discourages custom.

The late Mr. MacCulloch, whose opinions on economical subjects
were never of much consequence, and are now of none, hazarded an
opinion which could have easily been refuted from the figures which
he used to collect and pretended to handle. It was that the low rate
of interest in Holland was due to the heavy taxation of the country.
But if taxes diminish the amount of loanable capital they cause the
rate of interest to rise. If they stimulate in their expenditure new
kinds of industry, they raise the interest on advances in other kinds
of industry. Nothing is more familiar than the depression of
existing stocks, in other words, the exaltation of the rate of interest,
when new loans of large amount are brought out. That which
lowers the rate of interest is the accumulation of savings at a faster
rate than the opportunities of investment present themselves. Now
this was precisely what happened in Holland. The Dutch were a
very saving people, who deliberately, but through ignorance of the
true principles of trade, narrowed the opportunity for the invest-
ment of Dutch capital. Hence the rate of interest in Holland sank
to 2 per cent., and this at a time when the East India Company
was borrowing desperately from the Bank of Amsterdam. I do not
say that English merchants were wiser than Dutch traders were,
but they did not get the opportunity for such extravagant blundering.
What they would have done if they had got the Dutch monopoly it
is idle to forecast.

There was no great struggle between England and Holland in
India, though the two peoples have fought there. There was
between England and France during the Seven Years' War, the most
disastrous struggle in which France was ever engaged, according to
the opinions then entertained. For all the wars in Europe, from
the peace of Utrecht to the outbreak of the great Continental war,
were waged on behalf of monopolies of commerce, or, to be more
accurate, monopolies of market, for success meant the exclusion of
the beaten nation from the markets now secured by the victorious
rival. At the end of the Seven Years' War France was stripped of
nearly every colony she possessed. At the beginning of it she was
the rival of England in North America and in India. At the end of
it she' had scarce a foothold in either. In less than twenty years

THE INTEBCUBSUS MAGNUS. Ill

after the Seven Years' War was over, England had lost her most
important colonies, and people thought that her place among nations
was gone. In the end the loss proved to her how unwise it is to
make war in order to secure a monopoly of markets.

The Intercursus Magnus of 1496 is the first, and, on the whole, the
most instructive type of these numerous commercial treaties which
have been negotiated from that to recent times. Henry VII. had a
political motive in it to check Yorkist intrigues in the Low Countries.
He was shrewd enough to know that when you make it the interest
of a nation to discourage foreign adventurers, who seek to make
their asylum the home in which to hatch plots, you are more
secure from such people than you would be if you disregarded such
interests. The first clause of this famous treaty conceded free trade,
provided a license or passport was produced ; the second allowed
ships to be armed though engaged in trade ; the third allowed a free
fishery in waters claimed by the English. By the fourth clause no
pirate or privateer was allowed access to the harbours of either
nation ; and by the fifth, refuge from storm or war was permitted
to merchant vessels. By the sixth enemies' goods were prohibited
access ; and by the seventh the law of wreck was greatly improved.
By the eighth Flemish merchants were permitted to reside in Eng-
lish, English in Flemish towns; and provision is made that the levy
of customs should be made without damage to the goods liable.
There was to be no compulsory sale of goods, and security might
be given for debt by the tenth and eleventh clauses. By the twelfth
the barbarous custom of reprisals is abandoned, and legal process
substituted for it, with, of course, the assurance that the decisions
would be respected. And, lastly, the trade in foreign bullion was
declared free.

The liberality and wisdom of these agreements, many of them
anticipating by nearly four centuries what civilized nations have
professed to agree on as rules for future practice, are sufficiently
surprising. They lasted unfortunately no longer than the agree-
ment was itself of importance to the contracting parties. In less
than a century the granddaughter of Henry, and the great-grand-
son of Maximilian were to be in bitterest feud, and every one of
these principles was cast to the winds. But the Intercursus was a
monument and a protest . a monument of monetary wisdom, and

112 DIPLOMACY AND TRADE.

a protest against the infinite barbarism with which the wars of
religion threatened the world. It deserves the praise which the
more enlightened men of that and succeeding ages bestowed
on it.

I have mentioned more than once that the wars of the eighteenth
century were mainly wars for the monopoly of markets. The
treaties partook of the same nature, and the most significant and
typical of them is the Methuen treaty, negotiated in 1703, between
England and Portugal. In the great war of the Spanish succession,
it was of importance to the allies to get the accession of Portugal,
and there were reasons why the Kings of Portugal should take that
side. In the first place, the dynasty was only sixty years old, and
the result of a successful revolt from Spain on behalf of a pretender
of doubtful legitimacy. We may be certain that the hereditary
rights of the crown of Spain were not forgotten. In the next, it gave
the guarantee of the allied powers to the Portuguese succession.
In the next, it secured the Portuguese East Indies from Dutch
aggression, possibly from Dutch intrigues, for Holland was profoundly
interested in the war of the Spanish succession, since it involved the
Dutch frontier. Now it was possible to found a treaty on the basis
of reciprocal monopoly markets. England was to exclude French
wine, and take Portuguese. Portugal was to give a free market to
English woollens. But the discontent of those who had to give up
claret and take to port found loud expression. It seems that the
English Government imagined that by prohibiting French imports
they would cripple French resources. So hereafter French wine
was not found in the books of the customs. But in some way or
other, it got to the cellars of the consumers. I would not decry
patriotism, but I am convinced that it is not always superior to
opportunities, especially when the opportunity is very obvious, and
the patriotism is expensive and distasteful. The Methuen treaty
remained a type of commercial diplomacy up to nearly the end of
the eighteenth century.

After the close of the American War, a new form of commercial
treaty was set on foot, that of reciprocal customs, and a clause under
which the contracting parties were included under the most favoured
nation advantages. Such a treaty was that negotiated by Mr. Eden
between Great Britain and France in 178G. It was, to be sure, to

METHVEh'S, EDEN'S, AND COBDEN'S TREATIES. 113

be of short duration, for its life was even briefer than that of the
Intercursus Magnus near three centuries before. But it was eagerly-
accepted, and the fashion spread. A treaty of the same kind was
set on foot between France and Kussia, and soon afterwards between
the United States and Prussia. In a short time Europe would have
been armed with a network of treaties, and these, so fondly do
people believe in the spread of humanity and civilization among
statesmen and kings, were supposed to be a guarantee of inter-
national peace. But within eight years after Mr. Eden's labours,
the French Revolution had broken forth. France precipitated
herself on astonished and unprepared Europe, and statesmen and
kings were tumbling about altogether.

The treaty of 1786 was tl*3 model of the treaty negotiated between
France and Great Britain in 1861. This was carried out by my
friend Mr. Cobden. Himself an advocate of free trade in its broadest
sense, as the true economical interest of nations, and being entirely
and most lucidly in the right in his convictions, he was not un-
willing to accept a part of what he would have gladly claimed in
its entirety. Nor was he discouraged by his natural distrust of the
very singular person who went by the name of Napoleon III. He
told me that he should have been, had he been a Frenchman, in
constant opposition to that man's government. But he saw no
reason why he should not, being an Englishman, avail himself of
an authority which, as he believed, would do good to English and
French trade, and assist English and French amity. Some persons,
being doctrinaire free traders, objected to the negotiation of half
truths. But until, all men being wise, every man sees how hollow
and unsatisfactory political and social compromises are, compromises
must be made. The sphere of the speculative economist is one
which the practical man might envy, were not the practical man
constrained to act. Men who have lived for years, as he lived, as I
have lived, in an atmosphere of compromises, learn that such a neces-
sity is rarely logically, perhaps rarely morally, justifiable. It seldom
occurs to any one, even in a long public life, to assist in a final
change, one from which there can be no progress, and can be no
retrogression. I cannot say that the treaty of 1861 was the best
arrangement conceivable, but I am convinced that it was the best
arrangement possible. And though nine years afterwards came the

9

114 DIPLOMACY AND TBADE.

furious storm which swept the French emperor from the place which
lie had so grossly abused, I am sure that the treaty of 1861 had
its place in lightening the enormous calamities which overtook
France, calamities to which a less elastic nation might have suc-
cumbed, in which a less hopeful nation might have despaired.

VI.

THE CHAKACTEE OF EAKLY TAXATION.

Turgors canons of taxation — The first the most important — Adam
Smith's word, "enjoy" under the protection of the State — The king's
estate — The consent of the taxpayers always necessary — The growth
of parliamentary power — Customs on a large scale impossible —
Graduated income taxes — The assessment of Tandridge in 1600 —
The subsidy and its frequency in war times — Taxes on towns —
Tallages — The income taxes of 1435 and 1450 — The houses of
Lancaster and York — Grants by the Commons, origin of the
custom — The grants of 1453 and 1503 — The growth of the Com-
mons— CeciVs book of rates — The ship money.

The history of English taxation in early times is totally unlike
anything in modern experience. It was exceptional, not regular,
was the hardest task which the monarch and his advisers could
undergo, and frequently provoked the bitterest resentments and
outbreaks. At the same time, the annals of parliamentary finance
are full of the strangest precedents, of procedure which would be
thought impossible now, of Acts which modern traditions would call
violent invasions of property, of sacrifices willingly made by certain
classes, which these classes have at least been long unused to, of
expedients which, unluckily for the financier, have entirely passed
away, as human societies have grown more alike, or as special
advantages, once entirely local, have been diffused over the world.
Of course, the economical principles which regulate or interpret
taxation were the same then as now, and these principles should be
before us.

The famous canons of taxation which Adam Smith borrowed
from Turgot, are four in number. Taxation should be equal, on

116 THE CHARACTER OF EARLY TAXATION.

which presently. It should be certain, not capricious; should be
taken at a time when it is most conveniently paid ; and should be
collected as economically as possible. It is clear that the last three
canons are only subordinate forms of the first. An uncertain tax
is plainly unequal. If a tax is levied on A from which he cannot
escape, and the same tax on B from which he can escape, it is
uncertain or capricious. For example, a succession duty levied on
the natural heirs of a man who is not rich, cannot be evaded, for
the present owner cannot sacrifice as long as he lives his mainten-
ance from his property. But a succession duty levied on a man
who is very rich may be evaded, for he may make, and often does
make, a donatio inter vivos, and may still leave ample means for his
own wants. Again, a tax on property is always certain, a tax on in-
comes is always uncertain. Instances could be multiplied without
taking one's examples from mere rapine, such as Adam Smith
probably had before his mind when he framed his second canon.
Of course where this kind of uncertainty prevails, society has
degenerated into brigandage.

Again, inconvenient times of payment are an element of inequality.
When in the old epoch of the customs duties, the full tax was paid
on the imported article when it reached the port, and the article was,
it may be of necessary, but of uncertain demand, the dealer had to
recover his outlay on the tax, and the purchaser had to pay for the
delay of the market, Without giving a decision here on the merits
of indirect as opposed to direct taxation, it is obvious that to in-
tervene the shortest possible time between the levy of the tax by
the dealer, and its payment by the purchaser or consumer, is a
benefit, and therefore its reverse is an injury. But injuries are
always unequal. To make the taxpayer contribute more than a
sufficient cost for collection is certain to be an inequality, for even
the most righteous schemes of taxation will press more heavily on
some individuals than others, and an expensive collection augments
the burden.

If the last three canons of taxation are only illustrations of the
first, it is obviously on the criticism of the first canon that a clear
view of the subject can be obtained. But the language of Adam
Smith, like the language of Turgot, is exceedingly, perhaps in-
evitably, ambiguous. It is the misfortune of political economy, a

TVBGOTS CANONS OF TAXATION. 117

misfortune which seems special to it, that no ordinary language
supplies it with a sufficiently correct nomenclature, and that defi-
nitions of words, apparently plain enough, are essential in order to
a true interpretation and conception of the ideas which they are
intended to convey. Thus the four cardinal words in this science
or philosophy — production, distribution, exchange, consumption —
popular and obvious as they seem, require careful limitation, if one
would obviate contradiction.

The words in Smith's canon are as follows : " The subjects of
eVery state ought to contribute towards the support of the govern-
ment, as nearly as possible, in proportion to their respective
abilities ; that is, in proportion to the revenue which they respec-
tively enjoy under the protection of the state." And Smith goes
on to compare the place of the contributories to that of the joint
tenants in a great estate, and I cannot but think obscures rather
than explains his meaning. For it is plain that, if any of these
tenants receives no more than is necessary for his bare maintenance,
he cannot, without perishing, contribute anything. Now such a
state of things, as I shall show when I come to deal with pauperism,
has been artificially brought about in English economical history.
It may be that in the distribution of the joint products, he has been
violently or fraudulently deprived of a portion of that which is justly
due to him, but it is clear that he cannot contribute.

It has always seemed to me that the critical word in the above
canon is "enjoy." To have used the word "receive" would be open
to the fatal objection which I have just referred to. You cannot
tax what a man must spend without destroying his industry or him,
and by "must spend," Imeanthe quantity which is absolutely essen-
tial to his labour or his life, and from which no deductions can be
made. In order to be taxed, every one must have something beyond
this bare margin. But what a person need not spend, he can save
or enjoy. I should certainly prefer, instead of enjoy, to see the ex-
pression " can save " in the definition, for I am sure it would have
relieved the ambiguity of the canon, and, which is more important,
have made clear some important fallacies in the practice of finance,
which one may despair of seeing corrected in practice, but which
should be constantly exposed and refuted. Besides, a man may en-
joy, in the mere physical sense, that which he is obliged to spend,

118 TEE OEAEACTEB OF EABLY TAXATION.

and, perhaps, the less he has which he must spend, the keener ia
his enjoyment in spending it. The bread of a labouring man is
sweet, but it may be absolutely necessary for his life.

I have referred to these facts because they are of necessary rela-
tion to all systems of taxation, early and recent, though so great is
the power of administrations in our time, and so slight is the check
which can be put on them, that resentment at expenditure or anger
at improvident taxation are not found to be checks, while gross and
palpable unfairness in the imposition of taxes provokes little com-
ment beyond impotent indignation. There is no tax so unfair as
the English income tax. It adds to the sense of unfairness when
one knows that half of it is imposed in order to relieve landowners
of liabilities and expenditure without which their property
would have no value at all, which, till recent times, have always
been paid by them ; while in the assessments of their own mansions
to rates, income tax, and succession duty, they are most iniquitously
exempt.

The aggregate of taxation, except that which is levied for local
purposes, is considered, however appropriated, as a grant to the
Crown. This is a tradition from the earliest times, when the grant
to the king was supplementary to the ordinary revenue from the
king's estate. For it is in the interpretation of what the king's
estate was, that not a little of the social history of our forefathers is
contained. It was because he did not live on his estate, and satisfy
the high duties of his office from the proceeds of that estate, that
discontent was openly expressed ; that in many cases discontent
grew into insurrection, and to the deposition of kings, so that the
English, from their constant and loudly expressed dislike to this
form of misgovernment, so unintelligible to foreigners, got the name
of the disloyal nation. The feeling was not extinct till after the
Revolution, when a check was put on William III.'s grants, and
Davenant wrote on the doctrine of Resumptions.

The king's estate was the great mass of property, scattered over
England, which went by the name of terra regis, of ancient demesne,
an estate described and valued in Domesday. The English people,
including Norman baron, franklin, and burgher, expected that, ex-
cept in .times of extraordinary pressure, this estate, with its numerous
incidents, should suffice for the adequate maintenance of the king's

THE KING'S ESTATE, 119

dignity, of his own forces or guards, unless their service was due by
tenure, of his household, of his judges, of the officials connected
with the exchequer, of, in short, the whole machinery of civil
government. No doubt, because the clergy were the only literary
or educated class, or at least nearly so, the officials were generally
drawn from the clerical order, but as the king was the principal
patron of benefices, and had a commanding influence in election to
the higher dignities of the Church, the convenience of selecting
officials from the clergy, and of rewarding them with preferment,
was obvious and economical. Besides the profits of his estates, which
the king cultivated by his bailiffs, just as the nobles and the corpora-
tions did, the king had divers other casual advantages, as aids, reliefs,
escheats, and forfeitures — the character of which can easily be
gathered from ordinary books on the practice of early English law.
Besides this, the king had small customs on exports and imports,
fee farm rents from the towns which were directly subordinated to
him, and as soon as the courts of law were developed from the
machinery of the exchequer, fees of courts, and fines on offenders.
From this revenue the king was supposed to guarantee the peace,
to protect the narrow seas, and to*provide for such other charges as
were the duties of his dignity.

But he expected and obtained, on extraordinary occasions, extra-
ordinary or exceptional assistance from his people. He claimed,
beyond the obligation imposed on all free men of serving in the
militia at their own charges, the personal attendance of all his
tenants in chivalry for a definite time, a service which was early
commuted for a money payment when the service was foreign. This
commutation, which is said to have been suggested by Becket, had
most important results. The concession of it was the origin of that
remarkable English army, which did such exploits on foreign mili-
tias in the fourteenth and fifteenth centuries, and was undoubtedly
the reminiscence on which Cromwell founded and developed his
New Model. It contained also, by implication and in course of time,
the principle of parliamentary grants, for it is obvious, that if the
king could at his will determine the occasions on which his tenants
should ransom their personal service, he could speedily have been
able to perpetuate a discretionary tax on all his subjects.

The king appears to have exercised this discretion without res-

120 TEE CHARACTER OF EARLY TAXATION.

traint on his own demesnes, and the towns which were in his own
hand, or, in the language of the time, could tallage them. But even
here it is plain that a limit had to be put on extortion ; and that
the patience of the burghers could not with safety be too sorely
tried. It was part of the theory of that relation of ranks and
classes, which is called still, for want of a better phrase, the feudal
system, that while duties were reciprocal, dues were fixed. As soon as
ever contemporary economic history can be constructed from con,
temporaneous documents, we find that all liabilities, from those of
the serf to those of the noble, were fixed and definite ; that they
were registered in instruments which had authority, and could not
safely be strained. The type of these enrolled liabilities was
Domesday, from which we are told, in the laws of the time, the serfs
of the last quarter of the fourteenth century deduced legal arguments
in favour of their own freedom.

The duty of the dependant owner appears to have been practically
unlimited in a case of great emergency. All the chroniclers of
Richard I.'s reign bear testimony to the crushing weight which the
country had to endure when the king was ransomed from his Ger-
man captivity. Nor, throughout its history, did the people or the
Parliament refuse to bear chaises for vindicating the honour, enfor-
cing the rights, maintaining the estates, or protecting the person of
the king.

I have not space or inclination to go through those obscure hints
which are given us as to the restraint of arbitrary taxation during
the times of the early Plantagenet kings. They are collected and
commented on, with more or less ingenuity and accuracy, by con-
stitutional antiquaries, whose conclusions as to the meaning of the
facts or hints which they find are derived from evidence of very
various value. In my opinion the consent of the taxpayer to
extraordinary grants had to be obtained at all times, and the framers
of the Great Charter were not putting new limitations on the power
of the Crown when they drew up the memorable clauses in that
ancient instrument, but were simply affirming what was customary
or notorious. I am satisfied and convinced that discretionary taxa-
tion by the king was utterly alien to the genius of such institutions
as were established by the Teutonic Fetters of Saxon England, and
were merely changed in name by the Norman adventurers. I am

THE CONSENT OF THE TAXPAYER NECESSARY. 121

persuaded that a more or less formal appeal, but generally an
effective appeal, was made to popular consent before and after the
days of the Great Charters of John and Henry.

Of course the most characteristic and significant of these appeals
was after the unlucky, the fatuous attempt to procure the kingdom
of Sicily for Henry's second son, Edmond. This brings out what
must have been the practice, the occasional convention of taxpayers
through their proctors, representatives, or agents, for the purpose
of making and assessing grants. Substituted service, guarantees,
vicarious responsibility, were of the essence of early English social
life. The principle of suretyship or transferred liability was pre-
sent in every village. The jury of compurgators is one illustration,
and of the most significant kind. The liability of a host for his
stranger guests was another. The system of giving vicarious security
for debts is a third. The old law of collective attornment is a fourth.
The representative theory was at the bottom of much in village
life, and must have been familiar. We may be sure that the early
custom of appointing numerous assessors for the award of parlia-
mentary grants was in succession from practices antecedent to the
formal and regular summons of these assemblies, which in their
particular form were characteristic of the constitutional history of
England.

The experiment of Simon de Montfort, in 1258, has always ap-
peared to me to be an attempt on the part of this remarkable man
to commit by their proxies or representatives whatever English sym-
pathizers he could get in support of his policy. He must have
known that the alliance which he had formed was a rope of sand,
united solely by indignation at existing discontents, and not entirely
trustworthy for that. The dissent and revolt of those who were asso-
ciated with him, and the rapid change in his position, from apparently
overwhelming strength to hopeless weakness and defeat in detail,
must have been in part anticipated by the shrewd and sagacious
head of the Barons' War. It would have seemed that henceforward
the very name of a representative assembly would have been odious
to royal ears, and perhaps the period of over thirty years which
elapsed between the summons of De Montfort's Parliament and the
first recorded of Edward may be due to this dislike.

Edward was far too sagacious a person, however, to be affected by

122 THE CHABACTEE OF EARLY TAXATION.

names. He was engaged in a great project ; one which, so far as
part of his purposes is concerned, was frustrated — the complete
subjugation of Wales and Scotland. The former he may be said
to have effected, in the latter he failed. Of course his purpose was
to annex Scotland south of the Tay, or perhaps east of the line now
traversed by the Caledonian canal. It has always seemed to me
that the frequency with which he styled himself, or allowed himself
to be styled, Edward III. was intended to indicate that he con-
ceived himself heir to the pretensions of the Anglo-Saxon kings.
He saw that, in the great necessity which he had for extraordinary
grants, that it was desirable that there should be a fair and search-
ing assessment of taxable property when these grants were made,
and that a formal assent, with a careful appointment of assessors,
would obviate discontent. His plan was a novel one. The chattels
of every one, free and serf, were assessed ; generously, I am con-
vinced, for I have compared valuations with actual prices, the
record of these valuations existing in the public archives to a con-
siderable extent, and when they are complete being a virtual register
of lay householders. It was a subordinate, but not an unimportant
part in the new system that the representatives were encouraged to
present petitions, and to assent to the legislative designs of the
sovereign. That Edward cared much less for the assent of his
parliaments than he did for their usefulness as assessors is, to my
mind, proved very conclusively by the expedient which he used to
make the clergy submit to him, when they refused him grants and
appealed to the Bull Clericis laicos, which they had procured from
Boniface VIII. ' Never was victory more complete.

Nothing is more remarkable than the progress of the power which
Parliament assumed between the first summons of the House of
Commons in 1291, and the Statute of York thirty years later. But
the result was inevitable. The occasions on which grants were de-
manded were criticised, petitions were presented, grievances were
discussed, and redress claimed, and finally the statute to which I
have referred, enacted that no valid Act of the legislature could be
affirmed, except with the consent of the two Houses. The Statute
of York was, to be sure, announced at the instance of the king,
who wished to declare on authority that the sentence on the
Despensers was illegal. But the form was of great constitutional

TEE GROWTH OF PARLIAMENTARY POWERS. 123

importance, and its significance is suggested by the universal tran-
scription of it in the legal handy-books of the period, several of
which I have examined.

Now, by the necessity of things, nearly all ancient taxation was
direct. It would have been impossible, had the trade of the coun-
try been far greater than it was, to have collected customs of any
significant amount on exports and imports, even if the principle of
the staple towns, on which I have something to say hereafter, had
been recognized. Southern England, then the most settled and
best cultivated part of the island, swarms with natural harbours ;
harbours safe and accessible to the light craft of the time. Any
attempt to levy solid duties would have been defeated. Centuries
after the time of the first Edward, when the population was at
least double the number that it was at the end of the thirteenth
century, it was admitted that heavy duties were impossible. In
the arithmetic of the customs, said Swift, two and two do not
make four. In the eighteenth century the costs of collecting indirect
taxation in Scotland were in excess of the product collected, for
every Scotchman who could smuggled or connived at smuggling.
The relations of Dirk Hatteraick and Ellangowan in Scott's novel
are historical, as most of Scott's pictures of local life during the
times of his memory and his experience are. The pious and
patriotic Scotchman, who identified the loss of claret with the loss
of the Scottish Parliament, felt that the best way to denounce the
" sad and sorrowful union," as well as the most agreeable and
economical, was to defraud the revenue of Great Britain. I am
half a Scot myself, and can realize the pleasure derived from the
combination of patriotism and good business. In the nineteenth
century, when the fiscal system of England was designed to protect
and foster home industries, smuggling was an organization, with
its own capital and its own warehouses — its operations being pro-
tected by the sympathy of the gentry and the farmers. I was
brought up in a Hampshire village, which in my childhood was
familiar with and shared in the successes of the contraband trade.
A wiser system of finance in England has generally improved the
smuggler off. But I very much doubt whether he is extinct in
remote parts of the United Kingdom.

Now direct taxation is always irritating, and is always more

124 THE CHABACTEB OF EARLY TAXATION.

unequal than indirect. It exacts equal ransom from unequal
means. Two persons with the same amount of property are
unequally taxed, if the one has a wide margin over the necessary
charges of his household and the other a narrow one. In modern
England this unfairness is characteristic of all direct taxation. One
man lays out £100,000 on a house, surrounds it with a park, and
accumulates amenities about it. It is quite certain that under the
Act of William IV., the assessment Act, he will neither in local
taxation as an occupier, or in income tax as an owner, or in house
duty as a householder, or in succession duty as a devisor, pay more
than a quarter per cent, of its annual value to local and imperial
taxation ; while another man, who has laid out £1000 on his house,
will have to pay in proportion twenty times as much on his occu-
pancy and ownership. And then good easy people are astonished
at socialist talk, and at projects for the appropriation of the un-
earned increment, and at doubts — freely enough expressed — as to
whether the machinery of Parliament and the Constitution are
not employed, under the well-known economical fact, that the laws
which regulate the distribution of wealth are of human institution
only — to make the rich richer, and the poor poorer.

To do them justice, our ancestors in England were free from these
sordid and dishonest practices. They recognized that a graduated
property tax was just and right, even in the Upper House ; and
they acted on the conviction, as I shall take occasion to show. In
the poll tax which was levied in 1377, the Duke of Lancaster was
rated at 520 times the payment of the peasant. In 1435 and 1450,
a graduated income tax was levied at the rate of 2 J per cent, on
small incomes, of 10 per cent, on large. And the same principle
regulated local taxation a century and a half later. In March,
1600 — I am referring to the original MS. preserved in the Bodleian
library (Rawlinson Papers, C. 642) — a committee of the inhabi-
tants of Tandridge, in Surrey, a village near the borders of Kent,
met to survey and assess the parish for a rate for the relief of the
poor, for maimed soldiers, for the Surrey prisons and hospital, and
for a composition in lieu of purveyance. The unit is a penny per
acre, the acreage of the parish being returned at 2,391. Now the
justices of the peace agree and rule that the rate should be paid only
once a year by occupants under ten acres, not more than twice by

QBADUATED INCOME TAXES. 125

occupants under thirty acres, and that all further charges, if
required, should be borne by those who have over thirty acres — in
this case, fourteen occupiers out of fifty-five. But the magistrates
add this significant clause : " Provided always that our intent and
meaning is that those who, be owners and men of ability and have
little occupying, shall be charged according to their ability by the
justices' discretion towards the relief of the poor, notwithstanding
the said rates aforesaid." It is a common practice with country
gentlemen to demand that rich men with a small occupancy should
be rated on their means. Let the country gentlemen begin with
an honest rating of their own mansions and parks, as the country
gentlemen of 1600 did.

The distrust felt at extraordinary grants was therefore very keen,
when the proposal was made at a time of no particular emergency.
Hence the public looked on royal favourites with great dislike, because
they knew that the impoverishment of the Crown would be a plea
for grants. This explains the disfavour with which, in Henry III.'s
reign, the people, nobles, burghers, and peasants alike looked on
the aggrandisement of his half-brothers and his wife's relations by
the king. There was mixed with this feeling a little of the dis-
like which Englishmen have felt to such foreigners as get a footing
in England, and presume to meddle with its public business, either
by the front or back stairs. So the English hated Gaveston and
the Despensers in Edward II.'s time, though the latter belonged
to the ranks of the Norman English. So in the days of Edward's
great-grandson the people rose against De Vere, and, later on,
against the obscurer favourites which Eichard honoured. The
extreme favour which was shown to the Poles and Beauforts had a
good deal to do with the feeling which led to the deposition of the
house of Lancaster. The riches of the Seymours and the Dudleys
roused even the Lollards of Norfolk against the Beformation, for
they were collected from public plunder. Buckingham was the
beginning of that political opposition to Charles, which ended with
the tragedy of Whitehall ; and I am convinced that if the second
Charles had lived much longer, he would, like his brother, have
been driven out of England. The gravest error in policy which
"William committed was his incomprehensible fondness — I speak
the opinion of the time — for Bentinck and Keppel, and the enor-

126 THE CHARACTER OF EABLY TAXATION.

mous grants which were heaped on the former, making him, from
the status of an inferior Dutch noble, one of the richest men in
England. It was in order to give effect to the public feeling enter-
tained about these scandals, that Davenant tried to revive the old
doctrine of Eesumptions.

The theory that the Crown could not be permitted to impoverish
the king's estate was universally entertained through the Middle
Ages, and far down into modern history. The statutory restraint,
it is true, was enacted when the Crown had little left to give, and
Parliament, by appropriating the civil list, and leaving the sove-
reign a moderate allowance for the privy purse, intended that it
should give nothing. The principle of the Revolution was that the
Crown should be, even for the private expenditure of the sovereign,
entirely dependent on Parliament. This principle was formally
abandoned in 1850 ; on which occasion Lord Brougham made a
remarkable protest, in which the constitutional theory was very
forcibly stated, and the inferences from a violation of it were very
plainly predicted.

Edward I. saw very clearly that arbitrary taxation, even if
it were possible, was less likely to be fruitful than taxation by
consent. His maxim, it is said, was that what concerned all
should be shared by all ; and he certainly intended to tax all, for,
as I have said, his taxing bills amount to a census of families. But
when the grants were agreed to, there intervened that inveterate
determination or custom of the English to grant only a fixed
quantity and distribute it rateably. It is said that a subsidy, as
tlie parliamentary grant came to be called, was originally £100,000.
In Elizabeth's time it had sunk to £50,000 or less. The fact is,
remissions were made, additions could not be made. Some of these
remissions appear to be personal, for petitions were constantly
made to the Crown praying for exemptions ; the general answer to
such petitions being, it appears, a reference to an inquisition, tech-
nically called ad quod damnum — the question being to what extent
would the revenue of the Crown suffer by such a concession. In
the fifteenth century, too, a custom grew up of remitting the opera-
tion of the subsidy in the case of certain towns or villages which,
for a more or less permanent reason, were incapacitated from con-
tributing. So it seems that the Universities of Oxford and Cam-

THE SUBSIDY, AND ITS FREQUENCY IN WAR TIMES. 12?

bridge, and the college sites therein, with the two ancient schools
of Winchester and Eton, were exempt from the local assessment,
though it does not appear that their estates were.

During the long wars of succession between England and France,
continued, except in the reigns of Eichard II. and Henry IV. for
a hundred years, these parliamentary grants were incessant. Even
during the reign of Henry IV., when there were only civil dis-
turbances to deal with, the king was constantly appealing to
Parliament for assistance, and was constantly constrained in con-
sequence, to listen to very unwelcome counsel. Many of these are
to be found in the rolls of Parliament. But for the fourteenth
century, I am sure the rolls of Parliament are defective. There
are parliaments, of whose proceedings no record is preserved.
There are grants of taxes, for which no existing document gives
authority. I have found them, however, among its items of ex-
penditure duly entered in the bailiff's account, and such an entry
is conclusive as to the fact, especially when the document adds
that it was a grant to the king. The memory of the employer or
lord was certainly to be trusted at the annual audit.

Now all these taxes were property taxes. The assessment was
made by numerous commissioners, in order that the valuation
might be taken at as simultaneous a time as possible. The
farmer's stock and crops were not taxed, but what had been stored
and was for sale became liable, his corn, for instance, and wool
in the barn. The landowner's rent and value was taxed. The
stock-in-trade of the dealer, never, I suspect, any great matter,
was taxed, as were also the household goods of the poorest as well as
the richest. It appears that personal apparel was not valued. I
have examined many of these assessments, and I speak from
memory, but confidently, when I say that the valuation was from
80 to 40 per cent, below the value of the goods appraised. It
would have, I think, been dangerous to have exacted the tax from
the full value.

The taxes levied on the towns were peculiar. They had been
held in a certain sense to be the property of the king, or under his
immediate lordship, or to have stood in the same relation to some
secular or ecclesiastical chief. For example, the town of Oxford
was under the Crown, the town of Bury was under the great Abbo

128 THE CHABACTEB OF EABLY TAXATION.

of St. Edmund. These personages granted charters, or confirmed
privileges for a sum of money down, and for an annual rent or
farm, w«hich went by the name of the firma burgi, and was like
other charges, fixed and unalterable. Hence the grant of the fee-
farm rent of a town was a common benefaction of king or lord.
The fee-farm rent of Oxford was in early times constituted a gift
to the almshouses of St. Bartholomew in Cowley Marsh. Edward
II. transferred it to Oriel College, with the lands and house of the
bedesmen, on condition that the fellows should maintain these
mendicants. The fee-farm rent of Scarborough was granted by
Edward III. to the King's Hall of Cambridge, a foundation now
fused into Trinity College as part of its endowment. And in the
same way licenses to found guilds in towns, especially in London,
were granted for a consideration. Privileges of all sorts, the right
to manage their own affairs, to appoint their own judges, to be
lords over their own manor, were bought, and often re-bought, on
confirmation. One of our colleges here, Magdalene, paid a con-
siderable sum on the accession of Henry VIII. for a renewal or
confirmation of its charter. In short, there is no ancient right of
special jurisprudence, or property, or license, which has not in
time past, we may be sure, been paid for, the times considered,
handsomely.

But beyond this annual, or occasional, or recurrent liability, the
towns in early times were liable to what were called tallages.
That the feudal superior had the power to claim a contribution
from the towns dependent on him, as often as he pleased, or to
what extent he pleased, is not to be believed, for it would be
equivalent to the surrender of all the townsfolks' goods. But that
application was made for an exceptional but fixed contribution from
time to time, which the town had some discretion in refusing or
evading, is certain. At last, in an indirect way, at the conclusion
of the thirteenth century, Edward formally renounced the claim of
tallage, or was reputed to have done so, and though, I believe,
antiquaries have found traces of the usage at a later time, the last
attempt being in 1332, it became settled custom that such grants
could be made by Parliament only. Ten years before, in 1322, the
last scutage was levied. In point of fact the free will of the
grantor was always a presumption, and sometimes a reality. Thus

TAXES ON TOWNS. TALLAGES. 129

in 1255 the Londoners refused to submit to a tallage, and though
they afterwards yielded, the resistance had a serious meaning, as the
king learnt at Lewes.

Just as in country districts, villages, hundreds, and shires, the
assessment was made by commissioners appointed in the grant,
who, as I have found occasionally, were bribed to show considera-
tion to the contributories, so in towns the local authorities
distributed the assessment or tallage. On the ground that this
assessment was levied unfairly on the poorer citizens, Fitzozbert or
Long Beard in Richard the First's reign appears to have headed a
party and resisted the authorities. He lost his life. But, on the
whole, I conceive that the taxation was equitable. I should have
certainly found some record of dissatisfaction had it not been just,
as I conclude from the almost total silence of the accounts up to
the great change in the value of money, that the ancient right of
purveyance and pre-emption was not used harshly and dishonestly
by the king's officers.

The long war with France induced the king's officials to bethink
themselves of other sources of revenue, besides the ordinary
subsidies. But as I have already stated, unless the places of
export and import were strictly defined, as they ultimately were by
the staple towns, it was impossible to collect any certain or regular
revenue from articles of merchandise. Hence the first efforts in the
direction of taxation on purely English products were rather in the
nature of the excise than a customs duty. Such, for example, was
the tax of 40s. a sack on wool in 1297, and the levy of nearly
21,000 sacks in 1341, the proportion of which, down to quarters
of pounds of the article, was distributed by Parliament over the
several counties, and as I know from the records of estates on
which no sheep were kept, was payable in money at a fixed rate
per sack. Such were the poll taxes which began in 1377, and
were continued till after the Revolution.

But after the establishment of Calais as the staple town for the
sale of wool, or at least as the port of delivery, the financiers of
the fifteenth century began to discover that this article could
become a fruitful source of occasional revenue. The English
people, and with reason, believed, on grounds which I have stated
in an earlier lecture, that the foreign consumer would pay the tax,

10

130 THE CHABACTEE OF EABLY TAXATION.

Besides, they were under an impression, probably a premature
impression, that the export duty would materially assist the home
manufacture of woollen goods. Hence over and over again, during
the second war of succession with France, taxes of 100 per cent,
are laid on wool and wool-fells, and borne without difficulty, while
it was soon found that exported hides would only bear a slight
duty. The English had a practical monopoly of wool, but no
such advantage in hides and leather.

In the same epoch, very remarkable income taxes are levied
on those who possessed fixed sources of personal revenue, the
legislature never dreaming of putting such a tax on precarious
incomes. The first of these, as far as the rolls of Parliament
instruct us, was in 1435. The immediate occasion of the impost
is to provide for the king's debts, which had increased to an
enormous amount (the king was about fourteen years old) and
represent the plunder which went on during his minority. The
tax was graduated, 6d. or 2J per cent, on incomes from fixed
sources between £5 and £100 a year; 8d. or 3-33 per cent, on
incomes between £100 and £400 a year, and 2s. or 10 per cent.
on all incomes in excess of £400 a year. In 1450, when the
French possessions were practically lost, another income tax was
imposed in which the taxable unit was taken lower. Between
20s. and £20 of income, the rate is a 2J per cent. ; between £20
and £200, 5 per cent. ; and on all incomes above £200 a year, 10
per cent. In both cases, the excess of income over £400 and
£200 is only chargeable to the higher rate. These taxes are not
indeed without precedent. In 1382, the " landowners " put a tax
on themselves only on the plea " of the poverty of the country ; "
and in 1404 a special tax of 5 per cent, was granted by the lords
temporal, for themselves, their ladies, and others who had over
500 marks a year. In the reign of Henry VIH., income taxes
levied on earnings were imposed. These were disappointing, for
the taxes yielded less than a third of what was expected, and in the
next year, when the tax was reimposed, it was even more unfruitful.
I have found no further attempt to impose a general income tax
till the time of the younger Pitt.

It is clear that the financiers of the fifteenth century consciously,
but by a just instinct, had adopted that principle in practice, which

THE INCOME TAXES OF 1435 AND 1450, 131

Turgot and Adam Smith formulated in the first of the received
canons of taxation. There was an apology for Pitt's income tax,
in the desperate straits to which this person was reduced in 1799.
In his plan the tax of 10 per cent, was levied on incomes of
.2200 a year and upwards and varying rates on incomes below
£200 up to £60. I cannot but think that he had in his mind
Tresham's budget of 1450. Addington, who repealed Pitt's income
tax during the short peace of Amiens, re-imposed it within a year,
and did away with the graduated character of it. It was abolished
impatiently at the end of the war, with ignorant impatience, as the
financiers who liked the impost said. In 1842 it was reimposed
by Peel, and as a condition to those fiscal reforms, which have in
themselves enormously increased the revenue, and has continued
ever since. At present, as I pointed out in a motion on direct
taxation, which I carried by a substantial majority on March 23,
1886, nearly half the receipts of the income tax are appropriated to
relieve landowners from the ancient and traditional liabilities which
were chargeable directly or indirectly on their estates, the outlay on
which is essential, in order that these estates should have any
economical value whatever. The contribution of these taxes in
relief of landowners is about as just as it would be to levy a tax
from the public in order to manure or drain a landowner's fields.

Peel's plea for reimposing this detestable and intrinsically
iniquitous tax, as formulated by Mr. Gladstone, was to the efiect
that the remission of taxation conceded in 1842 and onwards was
a saving to the taxpayer, and should therefore be met with a
corresponding sacrifice on the part of those whose spending income
was increased by the remissions. But, in the first place, Peel's
principal remissions, omitting a host of grotesque customs duties
which produced next to nothing, were oi excises on domestic manu-
factures— the effect of which was exceedingly injurious to workmen
and employers, but the remission of which was an almost un-
appreciable benefit to consumers. Besides, the customs and excise
on articles generally consumed was for a long time hardly reduced,
was even heightened on some so-called luxuries, and the rapid
increase of revenue, while it made up for all anticipated loss on
the remission, is a sufficient answer to the plea on which the tax
was imposed. To have permanently justified it, it was necessary

132 THE CHARACTER OF EABLY TAXATION.

to show that it really was no bar to the increase of income, and
there is cumulative and unfortunately increasing evidence that no
such proof can be alleged. It is no doubt a particularly easy
expedient in the hands of a stupid financier, who is able, without
intelligence or even thought, to oppress with ease the most helpless
class in the country, those who live on precarious incomes, and
have no opportunity whatever, as traders have, of transferring the
tax from themselves to others, their customers.

The house of York made application to Parliament for very few
grants. The malignant sycophants, who wrote under the Tudor
sovereigns, tried to blacken Edward's character, and shallow
historians, who repeat commonplaces, have made Edward
rapacious, sensual, and cruel. I can only say that the rolls of
Parliament, during his reign, are full of petitions from Lancastrian
nobles and gentry, praying for the removal of their attainders, and
that the prayer is always granted, though not a few of these
suppliants deserted and made war on him in 1470-1. It is true
that he invented a new impost, and perhaps a disagreeable one,
in the extension, I can hardly say the invention, of benevolences.
No doubt, though these were nominally loans, they were virtually
gifts, which the fashion of the age, and the fashion of two centuries
later, did not make it sordid for the king and his ministers to
follow. Benevolences were really special income taxes on wealthy
persons, and the principle of them was exactly followed in the
earliest poor laws, till it was found that free giving was less pro-
ductive than compulsion. As I have said already, the fifteenth
century was familiar with the principle of graduated property
taxes. Ptichard III. abandoned the practice of benevolences.
Henry VII. revived the practice, and by 11 Henry VII. cap. 10
made the promise a recoverable liability.

The origin of the custom, now part of settled constitutional
usage, under which money grants originate in the House of
Commons only, a practice which has been adopted in all civilized
communities, even when the Upper House is elective, is exceedingly
obscure. It was not finally settled in England till the time of the
Pensionary Parliament, and then was the result of a drawn battle
between the Lords and Commons, under which the Lords re-
tained their appellate jurisdiction, and gave judgments which

GBANTS BY THE COMMONS. ORIGIN OF THE CUSTOM. 133

excited the wonder and contempt of the lawyers, who refused to
report, or be bound by these precedents, and the Commons were
admitted sub silentio to have the sole right of originating and
altering money bills, though the Lords, a very questionable
usurpation, claimed the right of rejecting them. I will venture to
put before you my interpretation of the custom. It seems to me
to be the inevitable outcome of the constitution of the two Houses.
It is almost needless to say that the circumstances do not apply
to modern legislative assemblies, between which and the two
English houses, there is only an external resemblance.

The old House of Lords, I speak of that which sat before the
Reformation, and even for nearly a century after that event, was
a very shifting and uncertain body. In theory, it was the king's
council, his advisers, whose presence he could claim at his
pleasure as their duty, whose absence or neglect he could and did
construe as disaffection, or even rebellion. So intrinsic was this
doctrine to the constitution of the Lords, that Henry VIII., who
had his own reasons for compelling the attendances of all whom
he wished to keep in hand, invented the system of proxies, which
was originally a guarantee of each by some of his own order,
temporal peers by temporal, spiritual by spiritual peers. Then
the summons to sit was issued irregularly and capriciously. In
the Plantagenet period, the composition of no two sessions is alike,
and glad enough was a peer who escaped a writ of summons. The
spiritual peers too far exceeded the possible temporal peers, and
they were taxed in a different house, and on different principles.
It was only till the time of Charles I. that the peers claimed a
writ of summons as of right, or rather, in the cases of Arundel and
Bristol, the liberation of two of their number from prison. Charles,
who had no mind to quarrel with both houses at once, tacitly
conceded their claim to a writ. Now in this assembly the king
was always supposed to be present, and very often actually was.
Could so incongruous, shifting, incompetent an assembly, where
two-thirds of the sitting members could have no judgment in the
taxing of laymen, and all would find the discussion of the king's
necessities intolerable in his presence, undertake money bills?
And if they did, with what colour could the consent of the tax-
payer be alleged for their schemes ?

134 THE CHABACTEB OF EABLY TAXATION.

The Commons, on the other hand, were from the first summoned
to make grants. They were the delegates of the towns and
counties who sent them, were instructed by their constituents
before they went, were instructed by their constituents while they
sat. As they were representative of their constituents, so their
elected Speaker was representative of them. He it was who drew
up the budgets, to use a modern phrase, and announced the grants.
His address to the Crown on his election, in which he deprecates
offence, and as the mouthpiece of the Commons, begs for the
most favourable construction of his words and acts, is a ceremonial
survival, now grotesque and out of place, of a period when those
words meant a good deal. Besides they alone, who were com-
missioned to give or withhold, could make a binding promise.
Of course, if the Lords resolved, of their own motion, to levy a tax
on their own Order, as they did in 1404, who could say them nay ?
I imagine that even now, if the Lords resolved on paying a triple
income tax, which is very unlikely, and paid it, which is still more
improbable, the House of Commons would hardly interpose its
constitutional veto. Grants originated in the House of Commons
because it is inconceivable that they could have originated any-
where else. The confirmation of Parliament of grants by Convo-
cation, and the admitted illegality of the grant without assent of
Parliament, is, I am sure, a disguised usurpation, for which a very
plausible but not very agreeable reason was found, though not
always expressed.

There are two taxes of curious significance, exceedingly interesting
for a reason which I shall give in my next lecture, but presenting
features on which I may make a brief comment here, for I am deal-
ing, as you will remember, with early taxation only. These are the
special grant in 1453, never indeed paid for reasons which will be
seen, and demanded under similar conditions which were never satis-
fied in 1472 ; and the special grant of 1503, which Henry was not
likely to forego, and indeed was calculated with scrupulous anxiety,
for he got, no doubt, to his great delight, a few pounds more than
was given him.

In 1450, Guienne was lost, Cade's rebellion broke out, and the
Parliament which was sitting at Coventry was dispersed in disorder.
In 1452, it seemed that Guienne could be recovered, for the Gascons,

THE GBANTS OF 1453 AND 1503. 135

irritated at arbitrary taxation, had revolted, and old Shrewsbury
was dispatched with a force to aid them. The Commons caught at
the chance, and gave by vote a force of 20,000 archers (the king's
advisers accepting 13,000 only) to be paid by a levy on each county,
the contingent of each county being settled by Parliament, with
wages of sixpence a day, the full day's pay of an artisan. The grant
was made in vain, for, before it could be raised, Shrewsbury and
his son were defeated and slain before Chatillon, and the war was
suddenly at an end. This tax was to be levied on the supposed
capacity of all the counties and some of the towns, all the counties
except Chester being rated. In 1472, Edward had resolved to invade
France, the protection and assistance given to Margaret being the
plea, and Parliament renewed the grant of nineteen years before.
Now this tax for the levy and support of an army was undoubtedly
inforced on all the lay population.

The tax of 1503 was a still more marked departure from ancient
usage. In this year Henry, who neglected no means of raising
money, determined on reviving two ancient aids, those payable by
feudal custom by all tenants in knight service on the occasion of the
knighting of the king's eldest son, and the marriage of the king's
eldest daughter. Margaret, to be sure, had been married to James
IV., of Scotland, some time before, and Arthur was recently dead.
No king's eldest son had been knighted during his father's lifetime
since the time of the Black Prince, more than a century and a half
ago, and Henry IV., whose eldest daughter married the Duke of
Bavaria, made no claim on that occasion. But the bereaved father
determined to console himself by taxing his subjects. Now the only
persons liable to this aid were the military tenants. With the con-
sent of Parliament it was imposed on all, tenants in chivalry,
socagers, and copyholders alike, and the king who asked for £30,000,
got £1,006 4s. 7d., more than was promised him.

With the growth of English trade the customs began to increase.
They were treated, though an ancient source of royal revenue, as a
parliamentary grant, and were always given for the sovereign's life
in his first Parliament. Elizabeth put out a new book of rates, in
which the percentages were levied on the new values or prices
which characterized the greater part of her reign. The new book
of rates which James put out at Cecil's instigation, or with his con-

136 TEE CEABACTEB OF EABLY TAXATION.

nivance, varied the amount levied as well as readjusted them to
prices. With this action began the quarrel, so well known to
historians, which ended at Whitehall nearly forty years afterwards.
It was a singular House, that of Cecil in the seventeenth century.
The first Lord Salisbury instigated the war between king and Par-
liament ; the next was a regicide in fact, for he sat in the Lords on
the memorable 30th of January ; the third was a Papist, and abetted
some of the worst acts and purposes of James II., was committed
to the Tower and only saved by the clemency of William, after the
Revolution. The elder branch became and remained obscure.

Ship money was levied on all the counties for five years, begin-
ning with 1636. The assessment was laboriously equitable, whatever
may be said about the legality of the tax, about which I presume all
historians, even those of the modern or apologetic school, are agreed.
It is well known that the impost was due to a suggestion of At-
torney-General Noy, who, fortunately for himself, a renegade and
tool, died before the tax was actually put into operation. It is said
that Noy discovered precedents in the Tower records. Of course
maritime towns and counties were bound to the defence of the sea.
The privileges of the Cinque Ports were based on this service. Mer-
cantile vessels could be pressed for the service of war ; Edward III.
made such a requisition before the victory of Sluys and the invasion
of France. But it was generally believed that the extension of the
tax to the inland counties was an after-thought, for which no prece-
dent could be alleged. But I have seen traces of the practice in the
fourteenth century. I have found a few examples where estates in
the inland counties have been taxed pro warda maris, and this im-
post can hardly be distinguished, except by the systematic adoption
of it, from Noy's famous expedient.

The great struggle of 1642 had to be waged at first with the old
finance. Parliament had from the beginning an enormous advantage.
London, which had more than half of the available wealth of the
country, that which could be drawn on for war, was resolutely and
undisguisedly on the side of Parliament, and at first the supplies
came almost exclusively from London. Against this, the plate of
the malignants (the roundheads in derision called the proceeds
thimble money) was • of little avail. But for some time only the
Beven associated eastern counties were unreservedly on the side of

THE GROWTH OF THE CUSTOMS. SHIP MONEY. 137

Parliament, though Charles could hardly be said to have had a
single county unanimously on his side. The urgency of a new
finance was manifest. The records of the war of independence in
Holland supplied a precedent and a pretext, and from this repertory
Parliament borrowed the excise. It was searching, general, and
lucrative. The method consisted in levying a tax on the purchaser
at the time of his buying any excisable article, and making the
vendor responsible for collecting it. It was, in short, a wide octroi
duty, levied at all times and places. The king and the Cavaliers
denounced it as an unheard-of tyranny, and speedily adopted it
themselves wherever they could collect it. It was denounced at the
Restoration, and made hereditary in order to enable the great land-
owners to emancipate their estates from feudal dues at the expense
of the general public.

With the excise comes the epoch of modern finance. Some of
the old expedients continued up to the Eevolution and even after it.
In one case the principle of the old taxation was continued. The
land tax of our own day is paid on the valuation of near two
centuries ago. But the equity of this valuation is very often
adversely criticized, and a revision of it is frequently demanded.

vn.

THE DISTRIBUTION OF WEALTH IN ENGLAND AT
DIFFERENT EPOCHS.

The importance of this subject in following the progress of the nation
in wealth and population — Modern estimates of local wealth —
Self-government in the village — The magnitude of the churches,
and the true inference from the fact — The richest and poorest
counties — Assessments in 1341, 1375, 1453, 1503 — The wealth of
Norfolk and Oxfordshire — The relative wealth of the towns —
Assessments in the seventeenth century — The valuations of 1660
and 1672 — The 'population of England and Wales — Homes and
hearths in 1690 — The progress of Northern England.

There is hardly any topic more interesting to the student of the
economic history of England, than that of the distribution of its
wealth at different epochs in its political and social life. There are in-
deed few questions which are more obscure, none in which positive
information on which the student can rely is more scanty and broken.
I have been engaged in the search after matter of this kind for a
good deal over a quarter of a century, and though I can, in what I
have collected, throw a considerable amount of light on certain
epochs in history, there are long intervals of extreme obscurity,
during which I have vainly sought in printed volumes and in
manuscripts for the requisite evidence. For example, I have found
nothing trustworthy on which I can depend during the long and
eventful period which begins with the reign of Henry VIII. and con-
cludes with the events which immediately preceded the civil war of
1642. I have a strong distaste, which I wish was more general
among historians, for those vague declarations as to social conditions

IMPOBTANCE OF THE SUBJECT. 139

which one reads of among contemporary historians, from monks
like Matthew Paris, to historians like Clarendon, who were, after all,
unable to supply one with any evidence on which to test their state-
ments. Clarendon, for example, speaks of the growing economical
prosperity which intervened during the eleven years in which all
parliamentary action was suspended. I am convinced from the
comparison which I have been able to make between wages, rents,
and prices, that it was a period of excessive misery among the mass
of the people and the tenants, a time in which a few might have
become rich, while the many were crushed down into hopeless and
almost permanent indigence, an age in which the sufferings of the
English nation were greater than they ever were, except during the
time of the great Continental war.

If we could arrive at precise information about the distribution of
wealth in England at different epochs of history, we should be in-
formed as to how those industries which make wealth are developed,
and the extent to which homebred or imported intelligence was able
to avail itself of the opportunities which the natural products of the
country offered, of the advantages which the climate afforded, and
of the skill with which the English people were able to utilize the
results of their agriculture, and the wealth of their minerals. We
should be able to define the localities of industry, and interpret
the ease or difficulty with which manufactures spread from their first
home into other parts of the island. We should know, in part at
least, what were the hindrances to the development of what in our
modern experience has been so abundantly exhibited, and should,
for example, be able to learn what was the efficiency of government
for internal police and for external defence ; and in particular be
able to trace the effects of legislation on the industry which it pro-
fessedly strove to foster, and the material prosperity which it was
certainly anxious to promote. And lastly, if we knew the distribu-
tion of wealth, we should be able to make a reasonable estimate as
to the amount of population in England at different periods of its
history, and even to conclude as to its distribution over the country.
I shall indeed, in the course of this lecture, exhibit and comment on
such evidence as 1 have been able to discover, and I shall, I trust, be
able to show some substantial results on the topic which I have
taken for this day's lecture.

140 THE DISTBIBUTION OF WEALTH IN ENGLAND.

Even at the present time, when statistical information is so
abundant as to be overwhelming by its magnitude, it is by no means
easy to expound the present distribution of wealth. We have
decennial returns, from the commencement of the present century,
of the population contained in the United Kingdom. But these
returns, even when tabulated, are of little use in determining the
relative prosperity or decay of particular districts. We should
generally conclude, that if population is lessening in any locality,
the relative importance of the district was declining, or if the num-
ber of the inhabitants was increasing, that its industrial activity
was increasing also. But, unfortunately, even this test is an un-
certain. Districts may have a congested, and thereupon an
impoverished, population, where a diminishing return may imply a
real progress. An increasing population may not necessarily imply
an improving social condition, or the growth of a race which is to
be successful in the economical competition of the world. Near our
own shores we have had an experience of a race which grew in
numbers indeed, but has sunk in misery ; how caused, this is not the
place or time to inquire We may have population increase, and
industry be arrested, or at least carried on under apparently un-
favourable conditions. The investigation of such social and economical
problems as are before us, even when the facts are, to all appear-
ances supplied, is full of difficulty, full of controversy, is often made
more obscure by prejudice and passion.

The two most trustworthy elements in the calculation of the
question — in what manner is wealth distributed in England at
present — are the rateable value of property, and the income tax
returns when digested and formulated. But neither of these aids
can be safely relied on. The principles on which property is rated
are neither satisfactory nor uniform. The legislature has conferred
all final authority in rating, even in the case of property in cities
and towns on the county magistrates, and the grossest partiality has
followed. Vast mansions are valued at a nominal yearly rent, on
the plea that such mansions have little or no letting value, the test
suggested by the Rating Act of William IV., and therefore these
valuations, as far as they go, are no test. Then in some places, all
property is valued at close upon its gross rental, and in some other
places at much less than its gross rental. Some kinds of property

MODEBN ESTIMATES OF LOCAL WEALTH. 141

pay an indirect rent, because the lessor of the property has a
monopoly of supply to it, and therefore can obtain a far greater
profit from the occupant than his rent suggests. Such kinds of
property again disturb one's estimates as to the distribution of
wealth, because for rating purposes every effort is made to under-
value them.

Again, the income tax returns, when digested into the several
counties, give us in modern times some idea as to how wealth is
distributed in England. But setting aside the obvious anomalies of
this impost, particularly those of the farmer's schedule, the return
of income, if it be taxed at the place of receipt, when the place of
receipt is not the same as that in which the income is earned, is
misleading. A man derives a large profit from a factory, or from
productive works in one county, and receives his profits in another.
The distribution by counties gives an erroneous idea as to the dis-
tribution of productive industry. This ambiguity is heightened in
the case of those localities where the spending class is more nume-
rous than the productive class, as is the case with London and many
other towns : still more markedly, where people who have ceased to
be producers, or never have been, and are to a great extent, not even
traders, but live on income. The population of Yorkshire or
Lancashire probably represents a larger production of wealth than
that of Middlesex or Surrey does, and yet hi the interpretation of the
problem before us, as to the distribution of wealth in England, ap-
pears to denote a lower average of industry than the district in
which income accumulated from savings is spent. It is exceedingly
difficult then, from the statistician's point of view, to decide from
any figures set before one, how to interpret the distribution of Eng-
lish wealth, even in our own day.

The difficulty was less in antiquity, but, unfortunately, we are
not in possession of information, except as I shall show inferentially.
There is indeed one ancient document, not quite exhaustive, but for
all, as far as it goes, copious and accurate, in which an account of
English society is given from the point of view which I am at pre-
sent considering. Domesday purports to give a complete statement,
for the region which it surveys, of the property which it registers.
It is intended to state with minuteness what were the resources of
every lordship, parish, and manor, the owners and inhabitants, with.

142 THE DISTBIBUTION OF WEALTH IN ENGLAND.

the civil status of all those whom it enumerates and describes.
The survey is not only particular, but unique. I do not remember
that its parallel exists in the archives of any country, and it was the
first and last effort of the kind in England. It is the more interest-
ing and remarkable, because it contrasts England at the end of the
eleventh century, with England in the middle of the same century
to the no small advantage of the latter, in what seemed to be the
good old times, those of Edward the Confessor. But Domesday Book
has never been analysed from the statistician's point of view, and
especially from that before me, the distribution of wealth in England
during those wild archaic times.

Of course, when the elements of society were far fewer, and the
relations of the people to each other were far more direct, the
solution of the problem would be, in the presence of the requisite
information, far more easy than it is now. The circle in which the
peasants and burghers lived was narrow. In his parish or manor the
former was at home among his comrades, who lived under a system
of reciprocal responsibility, and a sufficiently active administration
of customary law. Everywhere else he was a stranger, except for
his occasional participation in the action of the hundred and the
County Court. There was on the boundaries of nearly every village
a tract of no-man's land, sometimes a tract of great extent, in which
landless men lived. The traditions of outlaws living in the forest
and maintaining themselves by poaching and plunder, amenable if
they were captured, to an infinitely more severe law than that which
prevailed in the settled villages, and from whose depredations the
villagers were secure, are not only presented to us in ballads, but in
sober narratives. Such, for example, is the story told us by Matthew
Paris of the robbers of Alton, in Hampshire, who carried on their
depredations extensively on the tract of forest extending through the
middle of Hampshire to Southampton, — raids Henry the Third
found it no way easy to put down, in which many of his own house-
hold were associated. The road from Southampton was the principal
highway by which French merchants transmitted their goods, and I
think it highly probable that the ancient settlements on the Hamp-
shire rivers, though they did not, and by their customary law could
not, harbour the malefactors, were very indifferent to their doings.
Any one who has studied, even superficially, the records of Manor

SELF-GOVEBNMENT IN THE VILLAGE. 143

Courts in the fourteenth century, when the ancient jurisdiction of
the Court leet with its grand and petty jury was in full vigour, will
see how effective and how full of reciprocal checks the system was.
As the king appeared in his own courts of law by his deputy only,
so the lord of the manor did not sit in judgment himself, but by his
steward or seneschal. Before this personage, offenders were pre-
sented, for the steward could take no official notice of local offences,
except the offender were presented. If the offence was very grave,
and the court had the high jurisdiction a jury was empanelled to
try the offence. I printed myself, many years ago, an example of a
trial for a capital offence, in the manor of Holywell, the conviction
of the offender, the sentence and its execution, as late as 1337. In
this case the felon is described as a vagabond, and without chattels
of his own. As he was caught red-hand in the commission of the
theft for which he was executed, the injured party recovered his pro-
perty. When the offence was proved, the steward settled the
penalty, the fines being part of the lord's dues. Now if the official
were too severe, the jurors of the village were discouraged from pre-
senting offenders, and the lord's revenue suffered. If he were too
lax, which was not likely, as he had, on his lord's behalf, a pecu-
niary interest in the penalties, the discipline of the manor suffered.
On the whole, I believe that the justice of the old Manor Court was
more effective and more satisfactory than that which superseded it,
and in order to coerce the labourer in the matter of wages was made
very effective, the justice room of the magistrate.

In these villages, as I have already stated, the principal employ-
ment of the people was agriculture. There were, I make no doubt,
in nearly all villages, some persons who either added another calling
to that of husbandman, though few, I think, were without land
which they tilled. Such were especially the miller and the com-
mon carrier, the latter being frequently mentioned as well as the
former in the record of manorial discipline, the former generally
presented for abusing his position, the latter for negligence or fraud
as a bailee. I take it, too, that the spinning-wheel was found in
most homesteads high and low, and the hand-loom in many. The
clothing of these rustics was, as a rule, homespun. This is manifest
from the invariable assortment of wool into ordinary merchantable
wool, and locks, the latter being sold at cheap rates for domestic

144 THE DISTBIBUTION OF WEALTH IN ENGLAND.

manufacture. In early times, too, it was customary for the hus-
bandman to sow small plots of hemp and flax. In the reign of
Henry VIII., when there seemed a likelihood of this kind of agri-
culture going out of fashion, it was enforced by penalties. But
besides this domestic manufacture, spread it would seem over the
whole island, there were special manufacturers of linen and woollen
cloth. The original home of this was Norfolk, a county which had
early, continuous, and close relations with Flanders. Not a few of
these Flemings emigrated to Norfolk and settled there, the English
kings encouraging them, in the view of their skill as weavers. The
Norfolk weaving was carried on all over the county, in villages
which grew into towns, though they never obtained the advantages
of incorporation. Indeed it appears that the Norwich guilds exer-
cised a sort of jurisdiction over all Norfolk weaving, wherever it
was settled. I have no doubt that the settlement of the textile
industries in Norfolk was due to the geographical position in which
it stood to Flanders. It was not otherwise well suited to the weaving
of woollen goods, for the climate is the driest of England, and suc-
cessful woollen weaving needs a moist atmosphere and an equable
temperature. But it is certain that the density of the population
was, for the time, great in Norfolk. There is still a memory that
towns like Aylsham and Cromer were far larger and more populous
than they now are, that they owed their population to the weaving
trade, and their waste to the ravages of the great plague of 1349.
The great churches of Norfolk were often pointed to as a proof, in
an ill-informed age, that population in mediaeval England must have
been far greater than was generally supposed. But, in fact, the
church of the parish was, at least as far as the nave was concerned,
the parish hall, where meetings were held, and often where valuable
agricultural produce, such as wool, was stored. The idea that a
church was a sacred place, in which after Divine service was over,
no business was to be transacted, is not older than the movement
which Laud instigated. Here in Oxford, St. Mary's Church was
till the time of that prelate, the convocation house of the University,
in which academical meetings were held, decrees conferred, lectures
given, disputations carried on, and indeed all the secular business of
the University was transacted.

The English midland counties, the eastern counties, and one of

THE BICHEST AND POOBEST COUNTIES. 145

the southern, Kent, were the richest parts of England. They con-
tain the largest amount of natural pasture and of easily worked arable
land. The western counties, the counties on the Welsh marches,
and the northern were the poorest, and of these, as a rule, and
invariably in the earlier times, Devon and Cornwall, Yorkshire,
especially the North and West Ridings, and particularly Lancashire,
Westmoreland, Northumberland, and Cumberland. They were
naturally backward and remained backward, the poverty of the district
being aggravated by the incessant wars on the Scottish, and for a
while on the Welsh, border. It is true that York was a very consider-
able city, occasionally taking second rank after London. But the rest
of England, north of the Humber, was backward, scantily peopled,
and insecure. It contained rich and well-garrisoned monasteries,
and fortified castles. But the towns were very small. Manchester and
Liverpool were really no bigger than fair-sized villages. The West
Kiding of Yorkshire was little else besides barren moors on the
hills, and sluggish morasses in the valleys. In order to check
marauders, short and sharp justice was done, of which the Halifax
Maiden is a specimen. The practices of those rude northern men
were distasteful to their southern countrymen, for when, after Wake-
field battle, Margaret, in the early part of the year 1461, led her
army from the north into the South of England, she could not keep
them from pillaging, and the excesses of these freebooters rapidly
brought about the deposition of the house of Lancaster. As late as
the end of the seventeenth century, it is said that the northern
counties were overlightly taxed, under the new system of finance
which the government of the Revolution, the war of English suc-
cession, the public debt, and the responsibility of Parliament
made necessary.

The principal, perhaps the only, source from which one may
gather information as to the distribution of wealth in England
is the assessments which have been made of the several counties
at different periods of English history, when Parliament accorded
a special tax. Direct taxes, especially during war, and under
the names of tenths and fifteenths were frequently granted.
But the tax was a fixed quantity, which was not altered, except
that sometimes a remission was granted to certain towns
and villages which had suffered from some great calamity, or

11

146 THE DISTBIBUTION OF WEALTH IN ENGLAND.

had fallen into permanent decay. Hence, however accurate
the first imposition of the tax was, and however just its original
distribution, it is no more, as time goes on, significant of the
condition of England from our present point of view, than the
Land Tax of 1693, which has similarly remained unaltered, is of
the distributed wealth of modern England. The occasions on which
assessments are given, which do indicate such a distribution, are
comparatively few ; and after long search, continued for years, I have
been unable to find a valuation for the latter part of the sixteenth
and the first quarter of the seventeenth century, a period in which
great economical changes occurred in England, in the dissolution of
the monasteries and the consequent changes of tenure which fol-
lowed, and in the influx of bullion from the New World. I have
however found eleven assessments of the whole or nearly the whole
country, the majority of them having been taken in the seventeenth
century. What I have found are exceedingly suggestive. I will
state in detail what were the circumstances under which the grant
was conceded, and the assessment made.

In 1341, afew years before the Great Plague produced such serious
effects on Europe, and in particular on England, our Edward III.,
who had formulated his claim to the French throne, against the
house of Valois, applied to his parliament for an extraordinary
grant, and Parliament granted him a subsidy in wool, distributing
the tax up to quarters of pounds, over the several counties, two
excepted, Durham and Chester, which were under a special adminis-
tration. Four cities or towns are separately assessed, London,
Newcastle-on-Tyne, Bristol, and York, and their quotas are in the
order which I have given. From numerous entries in accounts of
the time, I find that the payment was not necessarily made in kind,
but was constantly paid in money, the roll of Parliament from which
I have extracted my facts, being silent as to the value to be assigned
to the sack. I have taken the average price of wool at the time,
£4: the sack, and shown what was the sum of money under this
hypothesis at which the counties are severally assessed. This
enables me, taking the present average of the counties, to indicate
how many acres in each county go to a pound sterling of taxation,
and I have employed the same process in all the other assessments.

In 1375, when the Great Plague had induced all the social and

ASSESSMENTS IN 1341, 1375, 1453, 1503. 147

economical effects which were derived from it, when the machinery
which Wiklif had devised was in full operation, and the peasants
were perfecting that organization which was to exhibit its formidable
power in the revolt of 1381 ; Edward, now sinking into premature
decay, and having lost nearly all his conquests, and even his
hereditary possessions in Guienne, appealed to his Parliament for
an extraordinary grant. Parliament gave him a fixed sum of
money, and, as before, assessed its contribution on every one of the
counties, and on five cities and towns, London, Bristol, York,
"Kingston -on -Hill, and Bath.

In 1453, after the loss of all those English possessions in France,
which had been gained by the second war of succession, the Gascons
had revolted, and pledged themselves to restore the English king's
authority in Aquitaine. The old Earl of Shrewsbury and his son
were sent to assist them, and an appeal was then made to Parlia-
ment. The Commons determined on granting a considerable army of
English archers, and send it to Talbot's assistance. They agreed to
pay these archers sixpence a day for six months, and again distributed
the number of archers among the English counties. On this occa-
sion they assessed Durham, and ten cities or towns — London, York,
Norwich, Bristol, Coventry, Newcastle-on-Tyne, Hull, Lincoln,
Southampton, and Nottingham. The force was never raised, and
the tax was never paid, for Talbot's expedition came to ruin almost
before the grant was even made. Nineteen years later, the
Commons made the same offer to Edward IV., but on conditions
which also were never fulfilled..

In 1503 Henry VII. claimed from his Parliament the payment of
the ancient aid for knighting his eldest son, and marrying his eldest
daughter. This aid was really leviable only on the king's tenants-
in-chief; but it had not been claimed for more than a century and a
half, and I have not found that it was claimed after 1503, during
the period in which this feudal liability continued. Henry claimed
it from the whole nation, and a fourth assessment was made. On this
occasion seventeen cities or towns were separately assessed — London,
Bristol, York, Lincoln, Gloucester, Norwich, Shrewsbury, Oxford,
Salisbury, Coventry, Hull, Canterbury, Southampton, Nottingham,
Worcester, Southwark, and Bath. It is probable that in this assess-
ment all the towns which were deemed considerable enough to be

148 THE DISTBIBUTION OF WEALTH IN ENGLAND.

specially rated were taken, and that in this list we practically have
all the larger towns. On other occasions it seems that those only
were assessed which were what is called counties of towns, that is,
towns which had a considerable area of country included in their
bounds, who had more extensive jurisdiction than other corpora-
tions possessed, and to whom the justices of assize had a special
commission.

Now these four assessments taken before the Dissolution, and the
fall in the value of money, indicate, during the space of 163 years,
when considerable social changes had taken place, what was the
relative wealth, according to the judgment of persons interested in
acting fairly, of the several English counties and some few cities
and towns. Of course it does not follow that the wealth of a
county was materially lessened because it goes down in the list.
It may be that the resources of some other county have been more
extensively developed during the interval. Again there are occas-
sional hints given us as to the falling off in the contingent which
the several localities paid, due to temporary, perhaps to permanent,
causes. I see no reason, then, why we should not entirely rely on
these estimates, or doubt either the good faith or capacity of those
who made the valuations. It will be expedient to deal generally
with these assessments, and then to point out what particular or
noteworthy facts there are in each.

Of course the assessment of Middlesex with London is greatly in
excess of that imposed on any other county. Without London,
Middlesex does not occupy a very high place, and London up to the
middle of the sixteenth century was almost entirely confined within
its ancient walls, where it had a considerable number of gardens
and open spaces. Indeed, a very large part of the City estate of our
day is derived from spaces now built over, of which the City autho-
rities possessed the freehold; the most considerable space which the
City possesses to the west of London having been a grant made to
them for establishing reservoirs, which occupied the site which lies
just west of St. James's Street. The population of London was
certainly under 50,000 persons, but the people who lived in London,
and carried on trade and manufactures there, were far more wealthy
than the merchants and craftsmen of other cities. Without London,
Middlesex ranges from the third to the ninth.

THE WEALTH OF NORFOLK AND OXFORDSHIRE. 149

In the first assessment, Norfolk has the second place, and is
separated by a considerable interval from the next county, which is
that of Oxford. But in the second, third, and fourth Oxford is
second, though the interval between the two counties is not con-
siderable. Now, beyond question, the supremacy of Norfolk was
due to her local manufactures, in which the county remained
superior to any other English county during the period before me.
Norfolk is not, agriculturally speaking, a rich county. In 1860,
under Schedule A of the income tax it stood twenty-fifth out of
thirty-seven counties, those, namely, which were valued under the
assessment of 1341. In our day, its ancient industry has almost
entirely migrated. At the same date Oxford was seventeenth, and
if we exclude the two manufacturing and trading counties from the
comparison, the seventh, and if we add Kent, which is greatly
suburban, and not a little manufacturing and trading, sixth.

The explanation of the position occupied by Oxford is not difficult.
In the first place, it had but little waste land within its area, com-
pared with many other counties. In the next, it has a considerable
amount of fertile arable land, some of its corn land being of
remarkable excellence. But the true explanation of its early agri-
cultural wealth is in the large amount of natural pasture it possesses
in the northern and north-western part of the county from the city of
Oxford onwards. Now pasture in the Middle Ages, and indeed down
to the time when winter roots and artificial grasses were generally
cultivated, bore a very high relative rent. In the period before us
this rent was between eight and twelve to one compared with arable.
There is no reason to believe that the hay crops produced in the
wide stretches of pasture on the Upper Thames, the Evenlode, the
Windrush, and other streams of North-west Oxfordshire were less
five hundred years ago than they are now, and I can vouch for it,
that the demand for pasture, in economical language, was far more
urgent than it is in recent times. The next five counties are gene-
rally Bedford, Kent, Berks, Rutland, and Cambridge. But some-
times Kent falls out of the series, and the place is taken by
Hunts.

In the first assessment Lancashire is the poorest English county,
afterwards Cumberland occupies that place, and Lancashire gets up
only above it and Northumberland. The assessment of the West

150 THE DISTBIBUTION OF WEALTH IN ENGLAND.

Riding of York is also very low. The valuation of Oxfordshire is
about ten times as high, acre for acre, as the three poor counties
are, and its assessment is nearly double that of the whole West
Riding of York, rather more than half the area of the whole of that
great county. The low assessment of Stafford shows how little the
mineral resources of that county were known in early times.
Devonshire, too, is one of the poorest counties. The centres of
modern English opulence were then wild barren regions, inhabited
by a rude race. The Mersey was a silent estuary, the Irwell a
mountain stream. The hills and valleys of the West Riding, now
active with a thousand industries, had a little trade in cloth at Brad-
ford and Leeds, and a rude manufacture of steel weapons at
Sheffield. For the greater part of that which is produced there
now, and travels over the known world, the England of the
fourteenth and fifteenth centuries depended on the Baltic provinces,
Flanders, and Spain.

In 1341, the contribution of London to the wool tax was less than
a fourth of that at which Norfolk was assessed. In 1453 it contri-
buted more than Norfolk to the charge of the archers. But in the
first half of the fifteenth century the city of London made remark-
able progress. The " Libel of English Policy " is proof as to how its
trade had grown, the relics, still surviving from the Great Fire, of the
City Companies' archives show how considerable had become,
relatively speaking, the wealth of the. London traders. Most of these
people had, it is true, risen from comparative poverty to wealth. But
Walworth and Whittington in the fourteenth, the Chicheles and Can-
nyngs in the fifteenth, are illustrations of the rapidity with which
successful trade earned wealth in those early times. In 1453 the con-
tribution of London is three times that of Oxfordshira In 1503 the
contingent of Oxfordshire is nearly twice as much as that of London.
But in this year great part of London was burned to the ground, a
fact which shows why the falling off took place and that the assess-
ment was equitable. London and Norfolk, too, were very severely
visited by the sweating sickness. Bristol was the third city in
1341, the second in 1375, the fourth in 1453, and the second again
in 1503, while Norwich falls from the third place in 1453 to the
sixth in 1503. In the last year Gloucester is the fifth in order,
But there is no doubt that these ports of the Avon and Severn were

THE TOWNS AND THE WEAVING DISTRICTS. 151

early and actively engaged in the traffic with Spain and Portugal,
if they did not venture on following up Cabot's discoveries of 1497,
he having sailed from Bristol. But it should be remembered that
the cloth and linen manufacture was of the county, and not of the
city.

Between 1503 and 1636 I have been unable to find a single
assessment. I greatly regret the lack of information, and I despair
of any discovery in future. Now the facts which would have to be
considered with the assessments, were any such forthcoming, are
the dissolution of the monasteries, the decay of the towns, the stint
of agriculture, the extension of sheep farming, the growth of the
native woollen manufacture, the debasement and degradation of the
currency, the wars of religion, the prostration of Flanders, the
immigration of the Flemish weavers, and the rise and consolidation
of the Dutch Republic. In the later part of the time occurs the
most disastrous epoch of the Thirty Years' War, and the utter im-
poverishment of Germany. Now some of these foreign and domestic
events are admitted to have greatly affected the distribution of wealth
in England, and all must have done so, though no information is
given us. Among local events, the insurrection of Ket in Norfolk
had, we are told, the most disastrous effects on that county's pros-
perity, though I believe that already it had been discovered that the
eastern counties were not, by reason of their climate, the best
district in England in which to produce textile fabrics. Even in
the fifteenth century cloth-weaving on a considerable scale was
pursued in small towns and villages. Fastolfe bought cloth for years
together for his soldiers at Castle Combe, Dorset. Bishop Fitz-
james, warden of Merton at the end of the century, bought for his
fellows and himself at Norton Mandeville in Essex.

The ship money valuation of 1636 was said to have been
studiously equitable, and to have been made the basis of similar
assessments in later times. Charles and his advisers were not
willing to add injustice to illegality, though it must be admitted that
some of the assessments were not a little puzzling. Norfolk, which,
133 years earlier, had occupied the third place, was sunk to the
twenty-fifth ; Oxford, which was formerly second to Middlesex, is now
seventeenth. Cambridge, which was always among the first eight,
is now twenty-third. The first eight are now Middlesex, Herts, Beds,

152 THE DISTRIBUTION OF WEALTH IN ENGLAND.

Bucks, Nortlihants, Berks, Leicester, and Hunts, of which only
three were in the first rank before ; Middlesex increasiug rather
than diminishing its contingent. The reason is to be found, I
believe, in the departure of manufactures from Norfolk, and owing
to the exalted price of wheat, the great importance of arable farming
over pasture. The poorest county is Cumberland, then Lancashire,
then Westmoreland, next Durham with Northumberland. Middle-
sex is assessed in amount at 141 times per acre more than Cumber-
land, and nearly as much over Lancashire.

The next assessment is the distribution of £400,000 over the
counties and towns of England and Wales (no Welsh town is
separately assessed) for the purpose of suppressing the Irish re-
bellion. The vote is taken in 1641. I do not pretend to account
for the extraordinary items in this assessment. Devon is, it seems,
most unfairly treated, being rated in the sixth place among the
contributory counties. Norfolk, which five years before was the
twenty-fifth, is now the sixth ; Kent, formerly the fourteenth, is
here the fourth ; Suffolk, previously tenth, is now third ; and
Surrey, once eighteenth, is now second. On the other hand, Rut-
land goes from the eleventh place to the twenty-fourth ; North Hants,
from the fifth to the twenty- sixth ; Leicester, from the seventh to
the twenty-eighth. The poorer counties remain in nearly the same
order, only Lancashire rises from the thirty-ninth to the thirty-fifth
place. I cannot but think that this was a hasty, and therefore a
capricious, assessment. I do not think it was designedly unfair, for
Parliament put heavy burdens on some of the comities which were
strongly on their side.

Similar to this is the assessment of March 25, 1649. This was
a levy of £90.000 a month for six months, for the purpose of pay-
ing the forces. It was admitted to be the best valuation which could
be made under the circumstances, but that it should last for six
months only during which time a searching and careful valuation
would be made. This removes some of the inequalities of the
assessment made eight years before. Devon is put in the twelfth
place ; Essex raised from the ninth to the fourth ; Cambridge, from
the tenth to the sixth ; Surrey, from the second to the tenth ;
Sussex goes from the twenty-third to the ninth place. This last
change is due, I think, to the fact, that at this time the Sussex iron

ASSESSMENTS IN TEE SEVENTEENTH CENTUBY. 153

works were at the height of their activity and prosperity. But the
furnaces soon exhausted the wood, and though iron was manufac-
tured in the county up to the beginning of the eighteenth century,
the industry was a declining one.

On December 25, 1649, Parliament published its new assessment.
This, as I have said, was taken with great care, and appears to
have been generally followed in 1672. In this assessment Suffolk
still holds the second place, though its assessment is a little more
than a tenth of that put upon Middlesex, the third place being that
of Surrey. The other five are Herts, Kent, Essex, Bedford, and
Rutland. It appears that, partly owing to the fact that the eastern
and home counties were not adversely affected by the war, which
was now practically over, partly because the relations between
England and the Continent, especially Holland, were for a time
increasingly with the eastern counties ; partly because there was
a revival of the woollen industry in Essex, Eastern England was
found to have greater resources than before. Norfolk is ninth, and
is followed by Cambridge. But Sussex sinks from the third to the
twenty-fourth place. It should be added that the difference of
assessment per acre is very slight in the first fifteen after Middle-
sex. The relation of the poorer counties suffers scarcely any change.
Altogether the valuation appears to be scrupulously fair. The towns
under this new valuation are in the following order — London,
Norwich, South wark, a proof that London wealth was flowing into
Surrey, Bristol, Gloucester (the trade of the Severn towns was
growing), Coventry, Chester, Southampton, Hull, Haverfordwest,
Newcastle-on-Tyne, and Poole. The Northumbrian town had suf-
fered severely during the occupation of the Scots. For a time its
coal trade was almost suspended.

In 1657 an assessment of £6,000 a month was levied on Scot-
land, £9,000 a month on Ireland, these countries being added to
England by the Act of 1654, and being entitled to send repre-
sentatives to Westminster. Every burgh in Scotland is assessed ;
from Edinburgh at £334 12s. a month to New Galloway with 10s.
In Ireland only one city, Dublin, is separately assessed. If this
assessment be a just one, which there is no reason to doubt, Dublin
was the second city in the British Islands. It is rated at more than
twice the amount at which Edinburgh is put, and Edinburgh is

154 THE DISTRIBUTION OF WEALTH IN ENGLAND.

more than three times as wealthy as Dundee, the second Scottish
town, Glasgow being the third.

On Nov. 8, 16C0, Parliament recognized the impossibility of
reviving the old feudal liabilities, but they were in a difficulty as to
how to provide for the deficiency in the royal revenue. No one
seems to have been struck with the obvious equity of distributing the
reputed income of the Crown from these sources, £100,000, over the
estates which were liable to it. At last, as is well known, landlords
emancipated their estates by the hereditary excise, i.e., at the cost of
consumers in towns, for the excise only applied to the public brewer.
In the interval, however, they projected a plan of distributing it
over all real estate in the form of a land tax, and made a valuation
which was levied on the ship money assessment, and indeed was
almost a reproduction of that project. But the scheme was dropped,
because it was manifest that they whose estates had never been
liable to the impost, viz., the socagers and copyholders, would not
tamely submit to what at that time would have been a tax of about
4|d. in the pound, and it was not expedient at that crisis to make
any representatives of the landed interest, even those who had
collected their estates by the fortune of war in Oliver's time, dis-
satisfied with the Restoration. There was a great deal of cautious
steering to be done in the fours years which followed the re-establish-
ment of monarchy, and, as we all know, Clarendon was sacrificed
because he was prudent, and Charles was selfish.

Though the assessment of 1660 is professedly founded on
that of 1636, it differs from it in some important particulars, and
therefore seems to be almost an independent valuation. The second
county is Suffolk, as in 1649 ; the third is Bedfordshire, the fourth
Kent, the next Hertfordshire, the sixth Essex, the seventh Rutland,
the eighth Sussex. But of these Kent is fourteenth in 1636, Essex
fifteenth, Rutland eleventh, Sussex twenty-ninth. Between the
second and seventh, there is not to be seen a very marked difference;
or, at least, not one which is serious, in short, it is about the dif-
ference between the second and seventh in 1636, close upon 20
per cent. The contingent of Middlesex is again not quite so high
as in previous valuations. Perhaps it was felt too absurd to rate
the City of London strictly to a feudal obligation.

In 1672, by vote of February 4th, a million and a quarter was

THE VALUATIONS OF 1660 AND 1672. 155

granted to Charles to assist him in the utterly unprovoked and
nefarious war which he waged on the Dutch. After he had got the
grant, he stole the goldsmith's money. The tax, in accordance with
the tradition of the Commonwealth period, was raised by monthly
contributions on the counties, including Durham and Cheshire, and
on nine cities and towns. In this assessment, Middlesex, apart from
London, is the largest contributor in proportion to its acreage, a
proof that London had spread far beyond the City walls. Next
comes Suffolk, but Surrey is close upon it. The next five are Herts,
Kent, Bedford, Essex, and Somerset. Middlesex, apart from Lon-
don, is assessed at three times the amount per acre of the nearest
county. The contribution of the City of London, despite the plague
and the fire, is considerably above any other county, for the con-
tingent of Yorkshire, the largest in area, though in the rate per
acre it is near the bottom, is £1,600 less than that of London.
Bristol is now the second city in the kingdom, for it has got pos-
session of the plantation trade, but Norwich is not far behind it.
Exeter, Worcester, Gloucester, Haverfordwest, Lichfield, and Poole
are also separately assessed.

Here again there are considerable changes. Surrey is third, the
place it had in 1649. Somerset, which was fourteenth in 1649, is
eighth now, a change which is, I make no doubt, due to the spread
of the cloth industry in the west, and especially in this county.
Essex was sixth, and now seventh, being but little behind the
county which precedes it. The baize industry had become an
important manufacture at Colchester. Norfolk occupies the twelfth
instead of the ninth place. Generally, however, it seems that the
advantages which were secured for the eastern counties by the fact
that they hardly suffered in the civil wars still remain. The asso-
ciated counties still remain the most wealthy. The poorer counties,
as far as the assessment goes, are very little changed, but Wales is
getting relatively poorer, or which is the same thing, the other
counties are gradually making head. Though their place is nearly
the same the contribution of the poorest among them is increasing.

These facts are brought out still more plainly in the last assess-
ment which I have to deal, that of the 4s. in the pound land
tax, as granted by Parliament. This was to produce nearly two
millions, of which Middlesex and London contributed nearly a

156 THE DISTBIBUTION OF WEALTH IN ENGLAND.

sixth. This tax, though granted by the authority of Parliament,
was not assessed by the commissioners appointed in Parliament, and
the distribution of the sum was left to the local authorities. It is
therefore said, and with some colour for the statement, that those
who favoured the Eevolution put their contribution at a true valua-
tion, those who affected Jacobite and nonjuring sympathies put
theirs at a low estimate. The tax was unaltered in amount till,
nearly a hundred years after its first imposition, it was made per-
petual by the younger Pitt, and the basis of a financial operation.
In the original return the cities and towns are included in the
schedule printed in Pitt's Act, for the valuations are given in extenso,
and I remember that the valuation of the city of Oxford, then
strongly Whiggish was, in comparison with other towns, remarkably
high ; and that of the colleges, which were undoubtedly Jacobite,
though not markedly nonjuring, as this mamier of expressing their
convictions would have involved pecuniary losses, was as markedly
low. The university and colleges of this ancient city have been
very faithful to reactionary principles, and perfectly willing to profit
by their occasional ascendency, but they have been exceedingly
unwilling to make any sacrifice on behalf of them, when such
principles have been under a cloud. When there were hopes that
the Stuarts would be restored, half the beneficiaries, ecclesiastical
and academical, were in correspondence with St. Germain, but they
took every oath required by the usurping powers, satisfied their
consciences, and kept their preferments. Atterbury and Jane,
Smalridge and the rest, were no doubt anxious not to deprive the
local world of letters of their presence.

In the assessment of 1693 Surrey takes the second place, and at
a considerable interval above Hertford, the third. Oxford, which
was rated fifteenth in 1672, is eighth in 1693. Bucks is the fourth,
Bedford the fifth, Berks the sixth, and Essex the seventh. Somerset
has gone from the eighth place to the thirteenth, Kent from the fifth
to the ninth. Suffolk was second in 1672, and is tenth now. Other
changes, equally startling, are to be found, and a survey of the facts
suggests that the old charge of partiality is made out. On the whole,
however, there is a greater approach to equal rating. The dis-
crepancy between the proportion to the acre in the midland and
southern counties is not so marked. Salop, for instance, is thirty-

TEE POPULATION OF ENGLAND AND WALES. 157

second, York thirty-third. But the rate per acre in Suffolk is not
double that of Shropshire, and not treble that of York. In 1672
the contribution of York, then thirty-second, is a good deal less
than a third of the Suffolk tax by the acre.

Many years ago I stated it as my opinion, and gave my reasons,
that the population of England and Wales, from the beginning of
recorded economical history to the end of the sixteenth century, was
never in excess of two and a half millions, and was often less. At
the end of the seventeenth century it was from five to five and a
half millions. I will proceed to point out to you how these figures
are arrived at.

Every logician and every economist will allow that if you arrive,
from different premises or data, at the same conclusion, it is cumu-
lative testimony, and the probability of your conclusion being correct
is as high as any evidence of fact can make it. Now I arrived at my
conclusion as to the population of England and Wales during this
long period by three processes. The first was derived from the rate
of production. The average production of wheat from cultivated
land was eight bushels an acre, and I came to the conclusion that
the possible average wheat-growing acreage of the country was three
millions. Now I knew that a quarter of wheat every year for every
person, especially at a time when other vegetable products fit for
human food were unknown, was a fair allowance. Then deducting
one-sixth for seed, I got my two and a half millions, as the maximum
population, with a high probability, as the allowance for seed is
rather short, that two and a quarter is the more correct figure. Next
I took the figures in the poll tax of 1377. The tax-paying popula-
tion can be calculated at a little above one and a half millions. Now
adding a third for the children, for the tax is exigible on persons
above fourteen only, and making a liberal allowance for ecclesiastics
and mendicants, no less than a little over 162,000, they being also
exempt, you again get two and a half millions. In the third place,
I compared an actual census of a certain district in Kent, taken in
the sixteenth century, with the census of the same district in 1861,
and found that it was almost exactly a sixth of the later number.
The district contained no large towns then and contains none now.
Again, I found that one-sixth of the population of 1861 gave me, by
comparison with the total population of Englaud, exactly the same

158 THE DISTRIBUTION OF WEALTH IN ENGLAND.

result for the whole, viz., two and a half millions. I was a good
deal criticised when I made my calculations by the first method.
But long experience has taught me that no time is so entirely lost
as that consumed in controversy with disputants who have no facts,
but only convictions.

Now at the end of the seventeenth century there are similar kinds
of indirect evidence to guide us. The wheat -growing area is extended,
for the price was very high, so high as to stimulate agricultural pro-
duction to the utmost. The produce is now said to be thirteen
bushels, but it was no longer exclusively the food of the people, for
rye, barley, and oats were occasionally substituted for it. I inferred
that, making proper deductions for seed, the soil would, though with
an inferior diet, maintain five millions. Next, we have a return
under the hearth tax of the number of houses and hearths in the
several English counties and in Wales, in 1690. Allowing a little
more than four to a family this gives a little over five millions. An
estimate of the various religious sects gives under five and a quarter
millions. And in recent times a calculation by an actuary of the
possible population, from baptisms, marriages, and burials, gives
under five and a quarter millions. Here, again, the evidence is cumu-
lative, and I think conclusive.

Two other facts may be briefly commented on in conclusion. I
have referred to the hearth books of 1690. This return gave the
number of houses in each county and the number of hearths in each
county; for certain houses, rented at no more than 20s. a year, were
exempt from the tax. Now the most sparsely-peopled counties are,
as might be expected, Westmoreland and Cumberland ; the most
densely Middlesex and Surrey. In the first two the acreage to each
house is 70*55 and 63*66 acres. In Middlesex and Surrey the same
analysis gives 1*819 acres and 11*79 acres. It is easy to see, then,
why Middlesex yielded so much to taxation on an assessment of
property. But I was exceedingly struck when I worked out the
figures at the comparative density of the northern population as far
as houses go, and the meanness of the buildings as far as hearths
go. The population of Durham and Northumberland, taking the
facts of the acres to the house, is denser than that of Dorset, Lin-
colnshire, Sussex, and Hampshire ; the proportion of hearths to the
house is a good deal less than that of any other county. There are

HOUSES AND HEARTHS IN 1690. 159

more houses in Lancashire, taking the same proportion, than in
Berkshire, Cambridge, Cheshire, Derby, Devon, Essex, Hunts,
Notts, Rutland, and several others. And the same facts are visible
with certain other northern counties, though in all it is plain that
the standard of comfort was much lower. For instance, there are
twice as many hearths to a house in Devon and Dorset than there
are in Durham.

The growth of population must have therefore been most rapid in
the north during the seventeenth century. Two causes contributed
to this : the pacification of the Scottish border and the growth oi
textile industries in the north, if indeed one can separate the causes.
On the latter of these I shall have to comment m a later lecture.

The other point to which I may make a very brief reference — for
this, too, will be the subject of another lecture — is the incidence of
the poor rate in the several counties at the end of Charles II. 's reign.
A return of this impost is given by contemporary writers. Of course
it is highest to the acreage in Middlesex, being nearly £1 to every
three acres. It is high in the old manufacturing county of Norfolk.
It is high in some of those counties which had most peace during
the civil war. But it is disproportionately low in the northern
counties, and in those which lie on the line of the Parliamentary
conflict with Charles I. I conclude that much of the population
during the troubles migrated to the more peaceful and settled dis-
tricts. There is no doubt that the inhabitants of the north were
more penurious, more habituated to low wages, and to a lower
standard of living, more given to bye-industries. It was no doubt
in order to check this migration that the law of parochial settlement
was enacted. In course of time the exigencies of a growing manu-
facture led to the practical repeal of this law of settlement in the
manufacturing districts, and the growing industries of the north
relieved, a century later, the congested population of those southern
counties which were now falling behind in the distribution of wealth
and population.

vm.

THE HISTOBY OP AGKICULTUKAL BENTS IN ENGLAND.

The discussion as to the origin of rent — The " indestructible qualities "
of the soil — Selden and tithes — Interest, wages, and rent — The
landowners and labour in history — Civilization and government —
Early agriculture in England — The rent of meadow-land — Rentals —
The landlord' 8 duties — The New College {Oxford) house property in
the fifteenth century — Landlord cultivation and its effects — Compe-
tition rents, late in coming — The law of distress, competitive and
famine rents — The seventeenth century rents — Bye-industries —
The landowners of the eighteenth century — Arthur Young's com~
ments — Lord LovelVs agriculture — The rise of rents — Wool and
stock prices — The colleges of Oxford and Cambridge.

Nothing has exercised the ingenuity of economists more than the
analysis of rent has. The position of rent and its relation to industry
and taxation were problems which occupied the attention of the
physiocrats ; of the teachers (in so far as he was taught by any one) of
our Adam Smith, and very curious and wild conclusions were arrived
at by some of those excellent thinkers. Smith gave his own account
of rent, and a slip which he made in his analysis, under the circum-
stances a somewhat pardonable one for a man who lived in the days
of corn laws and bounties, that rent enters into the price of commo-
dities instead of being a product of them, and of another exceedingly
important factor, which the critics uu accountably overlooked, was
duly commented on. The theory of Smith was amended by Eicardo,
and his definition of the origin and increment of rent received,
for very sufficient reasons, a most thankful acceptance. The merits
of Eicardo in making or announcing his discovery were challenged

THE DISCUSSION AS TO THE ORIGIN OF BENT. 161

by MacCulloch, wlio divided the original honours between a Mr. West
and a Mr. Anderson and, with excusable patriotism, claimed priority
for the Scotchman. The doctrine of Kicardo, with many riders, such
as the law of diminishing returns, the margin of cultivation, the
land that pays no rent, and the like, has been accepted, and forms
the staple of most dissertations on political economy. I am con-
strained to conclude that there is little credit to be got for the re-
puted discovery ; that it is partly a truism, partly a fallacy, and that
its acceptance as a sufficient analysis of rent is one of the peculiar
hindrances which obstruct the way when we have to solve a present
difficulty of no common magnitude. British agriculture has fallen
during the last eight years on evil days. Its decline, and with it the
decline of the home trade, is a most formidable fact. Its restora-
tion, in some form or other, is a matter of urgent interest. But
nothing tends to retard that restoration more than false notions as
to the nature of rent.

In dealing with this controversy, and in dealing with it in my
own way, under the light of economical history, but with constant
reference to the demonstrable, almost axiomatic, principles of
economic science, I can claim some special advantages. I am the
only person who has examined rents historically. I have studied
the history of the same estate 3 in some cases for more than six
centuries, estates the " indestructible powers " of which, to use
Bicardo's expression, have not varied during that long period, the
rents of which, however, compared with any other value, which
is measurable* by money, have been subjected to considerable, to
astonishing changes. I can state, with perfect certainty, what
this land produced in corn six centuries ago, and I can also state
what it produced at different periods between that remote starting-
point and the present time. I know that while the value of its
corn produce has risen in money units or symbols about eight
times since my investigation began, the rent, in the same units
or symbols has risen eighty times. I may believe a great deal in
" the indestructible powers of the soil," though I should be very
credulous if I held that the fertility of any soil was indestructible,
as I think every practical agriculturist would be, too. But I am
sure that something else is wanting besides these powers to account
for so striking an elevation. I find, too, that while so remarkable

12

1G2 HISTOBY OF AGBICULTUBAL BENTS IN ENGLAND.

a price has been paid for the license of using arable land, nothing
near so disproportionate a rise of price is discernible in the rent of
of natural pasture, which never has been, and never could be,
under arable crops, and which therefore approaches the indes-
tructible more nearly than any land which is under the plough. I
shall try in the course of this lecture to point out the circumstances
which have brought about the change. Mr. Henry George has
accepted Eicardo's theory, and inferred from it to the confiscation
of all rent by the State. I repudiate Eicardo's theory, and dissent
from Mr. George's conclusions, for reasons which I hope to give
hereafter. But it is not a little remarkable that a theory which
assigns a providential origin of rent should be pressed into the ser-
vice of the theorist who wishes to annul it ; while the inference
which I draw from the facts of the case, and in which I give the
historical events which have developed it, is that it would be not
only a blunder and an injustice, but an amazing folly, to accept Mr.
George's conclusion. There is a parallel to my position. The
clergy in the time of James I., perhaps some of the clergy in the
days of Victoria, believed in the Divine origin of tithes. Selden
believed that the origin was human, and proved his point. The
clergy were very angry, and got Selden put into prison for his
pains, a contingency which is not entirely remote, if one presses
too strongly the truly conventional origin of rent in our day.
But when, a few years afterwards, the Divine right of the clergy
was repudiated for a time, and the tithes seemed likely to go with
the Divine right, the clergy gladly embraced the inferior title which
Selden proved was theirs. The moral can be easily gathered. I
am no more an enemy of rent than I am of any other natural
result. But I decline to give it a transcendental authority or to
imagine that, like every other part of the theory which economists
call the distribution of wealth, it is other than a human institution,
recognized because, within proper limits and under intelligible con-
ditions, it has a human utility.

Economists are perfectly correct in saying that the common
product of capital, labour, and land is distributed among the three
several agents or partners as interest, wages, and rent. By wages
I mean, as I have previously explained, the labour of the capitalist
as well as the labour of the workman, for no logical distinction

SELDENAND TITHES. INTEREST, WAGES, AND BENT. 163

can be drawn between the wages of superintendence and the wages
of manual labour ; for both to be effective, imply what physiologists
call nervous and muscular waste. The orcler in which the distri-
bution is effected is that labour is paid first. The payment of
labour is essential to industrial life, and both interest and capital will
be lost if the necessary claims of labour are not met, while rent could
not accrue. In this partnership, the economist says, except these
abide in the ship you cannot be saved. Labour paid, I do not say
satisfied, interest is paid, and this being presumably a contract
quantity, little need be said about it. Last comes rent. In com-
mon language, interest on capital appears to be paid first. That
it is not is proved by the fact that no one would be silly enough
to lend on a security which brings in no revenue, unless it was
clear that the advent of the revenue is very near. For the sake of
brevity, I will call interest A, wages B, and rent C ; and I must
remind you that the laws which govern the distribution of wealth
are mainly of human institution.

It is a common-place in practical politics that they who own
the land of a country make its laws. The statement, of course, is
at best a strong tendency. In a country like our own, where
tradition and habit, to say nothing of positive institutions, have
long deferred to the judgment of landowners, the common-place
has been, till recently, an admitted verity. There are symptoms
that the sentiment is losing its force, but no one who has the
smallest knowledge of social history in England can doubt that it
was once overwhelmingly strong. Now it is in human nature that
when, in the distribution of wealth, human institutions accord
extraordinary authority to the recipients of rent, they frill use their
advantages to the full, and be indignant with those who dispute
the justice of these advantages. I will venture on illustrating my
position from my own case. I have very strong opinions on the
relations of landlord and tenant in Ireland, and have expressed
them, I trust with moderation, before a more august assembly than
that which is hearing me to-day. But I will candidly own that, if
I possessed a reputed £30,000 a year in Irish rents, I should
find it exceedingly hard to reconcile my opinions with my
interests. In the absence of passion and self-interest, says the
English moralist, men are disposed to be just towards each other.

164 HISTOBY OF AGEICULTUBAL BENTS IN ENGLAND.

In the course of English economical history C has striven, and
with no little success, to use the force of law in order to better
himself at the expense of B. In a former lecture I gave you an
elaborate, almost an exhaustive, account of the various labour
statutes. These were attempts to make the laws of human
institution available for an unequal distribution of wealth. I shall
have to point out in the course of this lecture how contemporary
writers accuse C of extending the same operation over B in another
capacity, i.e., as a tenant farmer. I should exhaust the time at
my disposal if I were to show you how C has contrived to mulct
B all round, especially in local taxation and in the transference of
local taxation to imperial taxes. I shall have to show you how,
during the seventeenth century, when 0 was very much in the
ascendency, he did a good many things which have been very
severely criticised since, and that I have discovered other practices
of his with the same object. He did not, for the reasons which I
have given, that interest is a contract price, succeed quite so well
with A. But usury laws and the equity of redemption in a
mortgage, when it is foreclosed by non-payment of interest, are
illustrations of the same inclinations. It was because he noticed
such facts as these that Adam Smith called rent a tax, and because
he saw that the avowed object of many laws existing in his time
was to raise the rent of land through the machinery of prices, that
he considered, and not without colour of reason, that rent entered
into prices.

A country is not civilized or safe unless it accepts and obeys a
central administration, whose first business it is to aggregate all
the force wbich is necessary for the protection of society from
external and internal foes. England for a long time after the Con-
quest needed such a central authority. In their efforts to con-
solidate France, the French kings were always thwarted by their
nobles and aided by their other subjects. Even the American
Republic finds itself constrained to strengthen the Federal adminis-
tration at the expense of State rights. But there is always a
danger that the forces of government, the action of Parliaments,
the power of law, may be made more injurious to a community
than foreign and domestic foes are. Ancient civilization was
wholly destroyed by the administration of the Roman Republic

CIVILIZATION AND GOVERNMENT. 165

and Empire. Bad Governments ruined Spain; bad Governments
nearly ruined Italy. It may be well feared that even now many
European Governments are doing the work of Frankenstein,
creating monsters whom they cannot control. The reason has
been that Governments have used their powers, which they call
the Constitution, not as a public trust, to be faithfully executed for
the public good, but as agents for their owh gain. We in Eng-
land have had copious and continuous experience of this breach of
trust. The people of Ireland have had no other experience. The
historian of social life, who knows that effects do not cease when
the causes are removed, is therefore engaged in seeking out past
causes for present distresses, and may be seem to shallow persons
to be needlessly indignant with bygone misdeeds, and to be unduly
alarmed, when he urges that you cannot trust human nature to
legislate from the point of view of its own interests.

Now the capital fact in the history of rent is that agriculture,
however rude the industry may be, can always produce more than
is necessary for the husbandman's maintenance and that of his
family. I find that in early English agriculture, as in modern, a
workman to twenty acres is a liberal allowance of labour. Give
the labourer five persons to his family, and assign a third of the
land to the supply of human food, the other two-thirds to fodder
and the maintenance of cattle, and let the produce be a quarter
to an acre, and he will grow seven quarters of food for the con-
sumption of five persons. But five quarters are sufficient for
them. The remaining two over and above will supply seed and
rent. I leave out, for the sake of simplicity, the same set of facts for
the remaining two-thirds. Now, historically, it was on this overplus
that the ancient lord laid his hands, and called it rent, and Adam
Smith was again justified in calling rent a tax.

An ideal state of society is one in which there is no rent at all,
in which land is so fertile and so abundant in its produce that the
price which the produce commands would be only sufficient to
pay interest, recoup outlay and secure wages. Rent is of no interest
whatever to any one but the landowner. If it were extinguished
by natural causes, no one but he need lament. But this state of
things never exists. If the ownership of land remains in private
hands, and it would be an evil time should it cease to be in private

166 HISTORY OF AGRICULTURAL RENTS IN ENGLAND.

hands, the inexorable law which limits profits to an average on the
calling would develop rent. On the hypothesis that capital and
skill are ready for agriculture, people will pay for an agricultural
advantage which secures profits above the average. Even if
agricultural land were indefinite in quantity and indefinite in
fertility, some would be in an economical sense more fertile than
other land; say by proximity to the market only, and the
lessened charge of freight. So far Ricardo is right, but thus much
was known in the days of the Egyptian and Babylonian kings.
Rent is not sacred, but it is natural. Friction is not sacred, but
it is natural. One would be glad to see friction reduced to a
minimum, but it would remain a very appreciable quantity. And
if in the economy of human society, the cost of production and
the cost of freight are so diminished, that we are a little nearer
the ideal state than we were twenty years ago, it would be as
rational for us to mourn as it would be to persist in going by a
canal or a high road when a railway is ready for our use. I may
be sorry for the man who has put his capital into a canal, or has
lent his money to road trustees, when the tolls cease to pay the
interest, but only in the way that I am sorry for any one who has
suffered reverses of fortune. But if the two parties alleged that
the canal and road were sacred, and that I must use them and pay
for them, my compassion soon gives way to resentment.

Of course I do not mean to imply that English land will not
hereafter pay a rent, that the corn fields of Western America and
Northern India have rendered its cultivation unprofitable and im-
possible; but I am sure that the present, or rather the traditionary
system of landlord and tenant has broken down, and that a new
departure must be sought. English agriculture has faced in time
past far more formidable difficulties than it has to face now, and
has overcome them. But I am entirely convinced that if land-
owners, and they who counsel landowners, do not take the pains
to understand the situation, and prepare themselves for the future,
with fresh knowledge, a new policy, and a new departure, the
outlook as time goes on, will be progressively more gloomy. Nor
will any return to agricultural protection, an entirely hopeless wish
on the part of some politicians and their dupes, relieve the state of
things which is now induced on husbandry.

EARLY DAYS OF ENGLISH AGRICULTURE. 167

From the earliest period of recorded agriculture, by which I
mean of such accounts as give us an insight into the occupation
of land till some time after the middle of the sixteenth century,
i.e., for fully three centuries, the rent of agricultural land remains
unaltered at from 6d. to 8d. an acre. This is the rate paid by
tenants on lease, by socagers or free agricultural occupiers, with
fixity of tenure, and invariable rents under a superior lord and
serfs, whom the pedantry of the lawbooks described as holding at
the will of the lord; whom the records of Manor Courts show to have
had a permanent holding, though with certain disagreeable and
precarious incidents. I shall take occasion to show in a future
lecture how unchangeable the families were in a manor or parish,
what significant economical consequences flowed from this fact,
and in particular how it checked the development of certain
tendencies for centuries. It seriously affected also the creation of
competitive rents, and suggested to the inhabitants of a parish,
that while it was not easy to import a stranger into the number of
those who lived on the manor, it was in the last degree improper
for one occupier to overbid another, and that the traditionary rent
was as much as the landowner had a right to expect. In course of
time one of the ways in which the landowner tried to raise rents
in the face of rising prices was by the fines on admission or
renewal. There is evidence, too, that they strove at the beginning
of the seventeenth century to exact increasing fines from their free
and customary tenants, to take advantage of any neglect or default
in order to raise the old rents against the freeholders, and to greatly
increase the dues on copyholders when they succeeded to their
holdings, or made a conveyance by surrender.

The rent of meadow land was far higher. Many years ago, I
collected the rents paid for those parts of Holywell parish, in
Oxford, which lie near the Cherwell, i.e., the low lying ground
which extends from the northern extremity of the university park
to the boundary of Magdalene College, on the west bank of the
Cherwell, for twenty-four years, between 1295 and 1388. The
practice was to let the first cutting for the making of hay, and to
make the aftermath or rowens, called rewannum in the accounts,
the occasional subject of a second letting. The maximum price which
I have registered of the first letting is 9s., the maximum of the second

168 HISTOBY OF AGBICULTUBAL BENTS IN ENGLAND.

2s. 8d. an acre, generally it may be taken at 6s. for the first, Is. 6d.
for the second, or 7s. 6d. an acre for meadow land all the year
through. Similar cases have been discovered in the fifteenth and
sixteenth centuries. The explanation is easy. Natural pasture
was let at far higher rates than arable, partly because there was no
cost of cultivation, or a trifling cost, and partly because winter
forage was so scarce. In the seventeenth century the rent of arable
land varied from 8s. 6d. to 6s. an acre. I have here, and can show
you, three illustrations of what I have said. This volume is a list of
all the rents paid on the Coke estate at Holkham, between 1629,
when the great Chief Justice retired early from active political and
forensic life, and 1706, when the estates were in the hands of one
of his descendants. During the whole of this period there is very
little change in the rent, which from some twenty large holdings
which I have taken is a little under 6s. an acre. This volume has
been lent me by the present Lord Leicester.

The second of these rentals was procured for me by Lord John
Manners. It contains the rentals of the Belvoir estate up to 1692,
and afterwards. The land comprised in this rental is very well
known to me. The average rent is 8s. 6d. before 1692, and about
8s. lOd. for a time after 1692. The noble family of Manners has
been traditionally indulgent to their tenants, and the lettings on the
Belvoir estates are very low, though the quality of the land is good.
The third is a rental of certain lands possessed by Pierrepont, Earl
of Kingston, in 1689. This rental comes from the Pepys Papers in
the Rawlinson Collection. I do not know why Pepys had the list.
This Earl of Kingston died in 1690, and was succeeded by his
brother, who afterwards became Marquis of Dorchester and Duke of
Kingston. The rental of this estate is apparently very high, but
a considerable part of it, more than half, is pasture and meadow,
which still bore a relatively high price to arable. Only two small
tenancies are entirely arable, and in these, including a house in
each case, the rent is 6s. 8d. an acre. On the whole, I believe
that fairly good arable land was about 4s. 6d. an acre during
the seventeenth century, and that there was a special reason,
to which I shall presently refer, for the high rate of the Coke
lettings.

From the very earliest times in English life, rural and urban,

RENTALS. TEE LANDLORD'S DUTIES. 160

the landowner or house-owner, being the ground landlord, effected
all permanent improvements and did all repairs. The buildings
had been originally erected at his expense, and were maintained by
him after he ceased to cultivate the land himself, and procured
tenants, first on a stock and land lease, then on an ordinary tenancy
for years or at will In letting agricultural land, the landowner of
the fifteenth century even insured his tenant against extraordinary
losses. Thus New College let one of its estates in Wilts, and
covenanted to indemnify its tenant in case more than 10 per cent,
of his sheep died in the course of the year, for the whole excess.
The risk was not slight. In two consecutive years, 1447 and 1448,
the college paid for 73 and 116 sheep on this single farm. In 1500,
Magdalene College, which pursued the same system, paid for no less
than 607 sheep to its tenants. The liabilities of the landowner
were by tradition very heavy, and he was expected to make them
good. The law of clerical dilapidations is a survival of a custom or
practice which was once universal. Even in later times, this
liability of the landowner to do repairs and effect all permanent
improvements was so characteristic of English tenancies that they
are distinguished as being under the English system. A totally
different practice prevailed till recently in Scotland, and still pre-
vails in Ireland, where it is the almost invariable rule that all
buildings and permanent improvements have been effected at the
instance of the tenant, a practice which has given rise to the
recognition by Parliament of a joint ownership between landlord
and tenant in Ireland, under the name of tenant right.

This English tradition is curiously illustrated from the records
of house property in towns during the fifteenth century. New
College possessed in 1453, house property to the annual value of
£58 Is. Id., from which fixed charges amounting to £12 lis 7d.,
and payable to divers persons, chiefly ecclesiastics, were deducted.
Its net income would therefore appear to be £45 9s. 6d. But the
expenditure on the tenements is very large. Every repair is paid
for, even to signs for inns, the well buckets and rope, and
latchets and locks for doors. What with these expenses, and with
void tenements, the college only gets £3 5s. clear for the year.
The possession of house property in towns during the fifteenth
century, and for more than two and a half centuries afterwards,

170 HISTORY OF AGIUCULTUBAL BENTS IN ENGLAND.

was very unlike what it is at the present time, when town rents
have been singularly swollen.

But before I deal with the further rise in rents, it is well to refer
briefly to the system of agriculture in England to the end of the
seventeenth century. I have already dwelt on it, but I must
remind you here of a few particulars. The economist who deals
with facts is constantly constrained to cite his facts, to repeat
his facts, because they serve to illustrate various results in the
economy of society.

You will remember that for a long time, certainly for a century,
perhaps for longer, the landowner was also a cultivator, owning a
considerable capital, interested in the adequate cultivation of the
soil, and, being possessed of property which might easily be stolen,
convinced that it was necessary to keep the peace. I am sure
that for the latter result, the existing machinery was effective.
In the very numerous accounts, many thousands, that I have read,
it is very rarely indeed that any loss by theft is recorded, any dread
of possible theft expressed, even in times of famine. The educa-
tion of the English people in the principle of respect for property was
very effective. It is true that everybody had property, and there-
fore everybody was interested against thieves and pilferers, and in
respect for personal rights. I believe that the custom adopted by
landowners of cultivating their own estates grew up during the
long, peaceful, prosperous reign of Henry III., and the complaints
against his government, the criticism on his policy, and, in the end,
the armed resistance to it and him arose from the fact that
England made great material progress during the first sixty years
of the thirteenth century. To this Matthew Paris, one of the
few chroniclers who is able to interpret social phenomena, bears
witness.

The agriculture of the time was rude, and the produce scanty.
But the best agriculture was undoubtedly that of the landowners,
and their bailiffs. They could show the smaller tenants all they
knew, and in their way could make experiments. Now one of the
most costly of these experiments was their marling of land. It
was a costly process, for the expense was constantly equal to the
fee simple of the land, as I know from the charges incurred in the
undertaking. Marl is an earth partly calcareous, partly argillaceous

LANDLOBD CULTIVATION. COMPETITIVE BENTS. 171

which is of great service to stiff and to thin soils, breaking the one
and giving substance to the other. " It mends any kind of land,"
says a writer on husbandry in the early sixteenth century. It
is curious that when the new agriculture of the eighteenth
century was adopted, the most enterprising of the landowners
revived the policy of the thirteenth and fourteenth. I am dis-
posed to believe also that these ancient landowning agriculturists
sometimes strove to improve the breed of sheep, a matter of
supreme importance when wool was so dear, produce was so
accurately estimated, and local breeds were of such various
value. This is, I think, proved by the high prices, prices beyond
parallel, occasionally given for rams. When landlord cultiva-
tion ceased, marling was abandoned, it was too costly for the
risk, and sheep-breeding suffered at least some deterioration.
I have already explained the cause why landlord cultivation was
abandoned, and the stock and land lease adopted. The social results
which followed were many and various.

There is no trace of competition rents during the whole of the
fifteenth century, nor do I think that they come into practical
existence during the sixteenth. There is evidence however that
eviction or famine rents, or compulsory exaltations of rent under the
threat of eviction, or by colour of law, were practised in the
sixteenth century. Fitzherbert, who wrote in the early part of
Henry VIII's. reign, and Latimer, who preached his sermons
towards the end of it, and up to the middle of the century, speak,
the one on the peril which the improving husbandman fears from
a rapacious landlord ; the other on the contrast between the tenure
of his own father's holding, and that of the occupier who has
succeeded him, and is being ruinously rackrented. The complaints
of the husbandman in Stafford's pamphlet published in the last
quarter of the same century, suggest a similar grievance. But
in all cases, the complaint is that the tenant is overcharged by the
landowner, or made to pay rent on his own improvements. This
could only be operative under threat of eviction and loss, and
though in the simple husbandry of the times eviction had no
such serious meaning as it now has, it was still seen, apart from
competition, to be a powerful means of extorting rent. I do
not doubt, too, that the Act of 1576, under which the universities

172 HISTOBY OF AGBICULTUBAL BENTJ3 IN ENGLAND.

and colleges, with the two historic schools of Winchester and
Eton, were empowered or rather constrained, to take a third of
their rents in kind, or in kind turned into money, was intended
to assist their corporations to procure, in an indirect way, some
of the advantages of a competitive rent.

No one, who knows anything about early economical history,
can doubt that rent was originally, and for centuries, a tax,
imposed by the strong on the weak, in consideration of a real or
pretended protection of the tenant. The invariable and fixed
character of the tax seems to me to prove this, and the fact that
no attempt was made to alter the fixed rent, except by open or
disguised violence or fraud is to me conclusive. Nay, the terms on
which precarious or terminable holdings were granted appears to
me to be strong collateral evidence, for I do not find that the
rent per acre varied very much from the old customary rates.
Indeed it could not well be, for at the end of the sixteenth century,
I inferred from prices that land would bear but a slight increase
of rent, and, after making my calculations, I found that I was
almost exactly correct, by the register of rent actually paid for the
holding, whose possible rent I was estimating.

And here I may observe that the remedy of the landlord, for
an overdue rent, by distress, was very imperfect. By the law, the
rent issued out of the tenure, and upon this tenure only could
the landowner distrain. Hence, if he lost count of the tenure (an
easy thing under the system of open fields, where each occupier
had in succession only a few persons, as I showed you in the
Gamlingay survey), he could not venture on distraint for fear of
trespass. I have constantly found in the fifteenth century
accounts, that rents, though recorded for near a century, are
declared to be irrecoverable, because the bailiff did not know on
what land to distrain. Hence the law of distress, to the ultimate
injury of the agriculturist, was supplemented, by the action of debt
and the action of covenant being grafted on them, and the
insidious principle that rent is a secured debt, avoidable by no
length of time was retained in connection with these new
methods of recovery. Now there is no doubt that of late years,
the difficulties of the farmer were seriously enhanced by the law
of distress, which by giving priority to the landlord's claim,

COMPETITIVE AND FAMINE BE NT 8. 173

his principal creditor, weakened his credit elsewhere, and notably
with the country bankers, who began in a declining or unprosperous
market to be alarmed about their security.

No human skill can draw the line between a competitive and a
famine rent. In theory, a competitive rent is one in which the
farmer is not only perfectly free to occupy or leave alone, but is
able to extricate his capital from his holding as readily as he can
transfer a balance from one banker to another, or his savings from
one public security to another. Unfortunately most political
economists, misled by their abstract method and habitual
disregard for facts, treat the movements of capital as all equally
fluid or nearly so. A competitive rent, in the economical sense of
the word, only exists for a moment, even under the most favourable
times. Undoubtedly at the moment of the contract for occupancy,
the intending tenant may seem to be entirely able to take it or
leave it alone. I say may seem, for it is perhaps necessary for him
to continue his calling, because to abandon it is to abandon the
means of a livelihood, and he is therefore no more a free agent in
the contract than a purchaser is in a besieged and straitened
town. But the moment that he has agreed to the contract, and
entered on his occupancy, his freedom ceases. He cannot, with-
out serious loss, extricate himself from his holding, for no man
can withdraw intact agricultural capital from a farm. I set down
the loss at 10 per cent., but my friend, Sir James Caird, who is
certainly better informed as to the economical position of the
British farmer than any man whom I ever met, says that it should
be at least 15. Now it is on this certainty that rapacious
landowners and their mischief-making agents have screwed up
rents, and reduced agriculture to its present distressful condition,
a condition from which as yet I see no escape. Let me put the
facts in a concrete form. A man has taken a farm of five hundred
acres, at £500 a year, and brings on it, the quantity necessary for
first-class husbandry, a capital of £5,000, or one-third of its selling
value at the best of times. Now let us imagine that his landlord
determines to raise his rent to 22s. 6d. an acre, and gives him
notice to agree to this or quit. His loss by migration will be at
least £500, or according to Sir James Caird £750 at least, and the
better agriculturist he is, the surer is his loss. This he knows,

174 HISTOBY OF AGBICULTUBAL BENTS IN ENGLAND.

and if it had been the habit of a farmer to keep accounts, he
would have seen the meaning of the alternative, for I am assuming
that the sums I named are the maxima from which agricultural
profit can be expected. But as he does not he argues thus : " If I
go I shall lose from £'500 to £750 down ; if I stay at the increased
rent I shall have to pay £62 10s. more. I'll risk it, prices may
improve, I can save a bit one way or the other, and make both
ends meet." Had he kept accounts he could at once have seen
that he is losing his capital as surely as if he had quitted his
holding.

No just landlord ever exacts a strictly competitive rent from his
tenant, and recent experience proves that no wise landlord will
exact what no just landlord will. It is the business of a landowner
to learn what rent land will bear, how to adjust it to the market,
and it is no excuse to allege that foolish tenants have offered him
rents which they could not possibly pay. A sensible banker, if a
borrower offers him 15 per cent, for a loan, could have no better
reason than the offer for declining the advance without a moment's
hesitation.

The rents of the seventeenth century, small as they seem to us,
began with competition rents which rapidly slid into famine rents,
by which I mean rents which leave the occupiers with a bare main-
tenance, without the power of either improving or saving. The
earliest writer on husbandry in the seventeenth century admits the
fact of competition rents, defends the lord's action in taking what
is offered him, and treats the farmer's remonstrances with ill-dis-
guised contempt. One would think in reading this author's argu-
ments, that one was hearing the mischievous chatter of the modern
surveyor. The agricultural writers of the seventeenth century
point out in vain how lucrative is the new agriculture of Holland
and Flanders, how easy it is to follow it, how deplorably backward
in all that makes his art is the English husbandman, and then
passionately denounce the ill-judged rapacity of the landlord.
Their rents to be sure were poor enough, but as the position of the
tenant was precarious, they were more than the cultivator could
bear, and an absolute bar to agricultural progress. At the end of the
century, Gregory King, who makes an estimate of incomes which
is, I am persuaded, on the whole correct, while he credits a bishop

BYE-INDUSTBIES. 175

with the largest power of saving out of his official income, viz.,
£400 a year from £1,300, assigns the least capacity of saving to the
farmer, for he credits him with a saving power of only 25s. a year
out of an income of £42 10s.

There was, however, in some parts of England, notably in the
eastern counties, in the west and north, a bye-industry of suf-
ficient importance as to make the tenant-farmer comparatively
indifferent to accretions of rent. This was the linen and woollen
industry, carried on, I am persuaded, in most farmhouses in
certain districts of England, the products being collected and pur-
chased by travelling agents. Such, almost if not quite within living
memory, were the woollen, particularly the flannel, industry of
some parts of Lancashire and Yorkshire. Such was a generation
ago the universal practice of Ulster, and I have recently been told
by those who can well remember the universality of the practice,
that the small farmers of Northern Ireland were comparatively
indifferent to the magnitude of their rents, out of all proportion as
I know to the value of their holdings, if their spinning-wheels and
looms produced enough to pay the spring and autumn gale. When,
however, the larger manufactories extinguished in part (for the
industry is still carried on) domestic weaving, the rent to which
the peasant was indifferent became a famine rent, and absolutely
unbearable.

Every civilized community in Europe has found it necessary in
one way or other to regulate the relations of landlord and tenant,
and to save the latter from the capricious and ruinous rapacity of
the former. In France it was effected at the Revolution, and with
terrible suddenness in the autumn of 1789. In Germany, Stein
and Hardenberg saw that a change was imperative after the
humiliation of Jena. In Holland it was a later reform, as it was
in Scandinavia. In Denmark, which forty years ago was as miser-
able and as turbulent as Ireland, it was the benevolent work of
Bishop Monrad, the enlightened minister who had to bear the brunt
of the scandalously unjust Schleswig-Holstein War. In Russia, it
was the work of the late emperor. I do not say that in every case,
the reform was done in the best way, but I am assured that the
reform had to be done.

In the early part of the eighteenth century, the rent of agricul-

176 HISTORY OF AGRICULTURAL RENTS IN ENGLAND.

tural land, according to Jethro Tull, one of the earliest advocates,
from the evidence of his own practice and experience of the new
agriculture, was on an average of 7s. an acre. At the beginning
of the last quarter, according to Arthur Young, who traversed the
greater part of England, it was a little below 10s. The rise was
the work of the landowners, was entirely deserved, and is most
instructive. The average price of wheat during the seventeenth
century was 41s. a quarter. It was a good deal less in the first
half of the eighteenth, and rents were doubled. Other agricultural
prices were not higher, some were as people would say now-a-days
ruinously low, for wool was only 3d. a pound for a considerable
period, i.e., at a less nominal price that it often was in the fourteenth
and fifteenth centuries. The rise in rent during the eighteenth
century proves that rent depends in a slight degree on the natural
powers of the soil, and to a limited extent, these natural powers
being easily exhaustible, and a great deal on the acquired capacity
of the cultivator — this cause of rent depending on the general dif-
fusion of agricultural skill. In short, to use a logical expression,
which is, I doubt not, familiar to most of you, what in Kicardo's
definition of rent is made objective; to those who know anything
whatever of the history of agriculture, is subjective.

I do not imagine that the singular and ail-but universal passion
for practical agriculture, which seems to have taken possession of
the country gentlemen of England during the eighteenth century,
had in view the improvement of the tenants' experience. " The
farming tribe," says Arthur Young, when writing about the later
manifestations of the fashion, "is made up of all ranks, from
a duke to an apprentice." In some classes of society, as I well
remember, the passion for farming had not passed away in my
youth. It was, I make no doubt, an intelligent appreciation of
the profit which might be made of the new agriculture. It is not
unlikely that the country gentleman, seeing how rapidly the new
aristocracy of trade was growing in wealth and influence, deter-
mined to see whether they could rival the men whom they despised
and disliked. The English aristocracy of the eighteenth century
was peculiarly infected with the pride of rank. I have been amused
at one scheme of the Lords. They planned the foundation of an
academy for their own order, to be established by Act of Parlia-

LORD LOVELL'S AGBICULTUKE. 177

merit, and maintained at the public expense, but closed to any but
the noble, and twice referred the scheme to a select committee-
Now there was very little to be got out of Walpole, and still less
out of Newcastle. So they very wisely and usefully betook them-
selves to agriculture. " There have been," says Young, "more
experiments, more discoveries, and more general good sense dis-
played within these ten years in agricultural pursuits than in a
hundred preceding years." He might, had he taken in the second
quarter of the eighteenth century, have said, with perfect accuracy,
than in all recorded history. M And," he adds, " if this noble spirit
continues, we shall soon see husbandry in perfection, and built
upon as just and philosophical principles" — his comparison is
whimsical enough for his time — " as the art of medicine."

It is invidious and unfair, when one comments on the singularly
useful career of the English landowners during the eighteenth cen-
tury to dwell exclusively on the view of their personal interest. That
they intended to better themselves is probable, but they did the
highest public service, in throwing themselves with such enthusiasm
into that noble art which possesses such peculiar attractions to those
who have prudently practised it. Least of all would I complain
that their gains were large, and that they took pride in the business
on which they entered with such zeal. Lord Lovell, whose
farming-book I have in my hand, lent me by his public- spirited
descendant and heir, the present Lord Leicester, was one of the
earliest and certainly one of the most comprehensive of the new
" farming tribe." He grew corn, he was the butcher of the neigh-
bourhood, and did not disdain to supply his noble neighbours and
take their money. He is the maltster, the brick- burner, the lime-
burner to the district. He superintends the whole farm, checks
all the accounts, examines every item, and after making a reason-
able deduction from his profits for his rent, paying his workmen
lSKully for the time, and making considerable and expensive
improvements on the estate, by marling a portion of it, declares a
profit of over 36 per cent, on his first year's expenditure.

We may be sure that there was a good deal of talk in North
Norfolk about the noble lord's experiments. The gossip of the
time is not recorded, but we may be certain that the men of the
old school shook their heads, imagined that Lord Lovell had gone

13

178 EISTOBY OF AGBICULTUBAL RENTS IN ENGLAND.

crazy, spoke of the turnip-fields as his folly, and wondered what
he thought could be got by the new-fangled grasses. And we may
be sure that the bailiff who, when the scheme was first begun,
wagged his head with the wisest of the farmers, but perhaps held
his peace when the year's profit was declared, bragged of the work
that had been done, and took some of the credit to himself. For
you may have noticed that the incredulous are generally the first
to welcome success, and to deny that they ever suffered from incre-
dulity. The commonest of all fabulists is the man that tells you
that he all along believed matters would come right, though your
ears may still be deafened by his lugubrious predictions of failure.

The farmers saw and slowly followed the new system. It is
true that fifty years later, there was much slovenliness in practice,
and, above all things, as Arthur Young complains, " one cannot
get the farmers to keep accounts." I have often thought how
delighted this excellent and judicious person would have been
could he have seen, inspected, and have read a bailiff's account of
the fourteenth century, with its exhaustive recital of particulars
and careful balancing of receipt and expenditure. Of course the
rise of rents, though by no means considerable at first, ensued, and
most justly. No men had more fairly earned the bettering of their
improved position than the English landowners had earned theirs
in the eighteenth century.

There were still serious impediments to the new agriculture.
The custom of open fields, on which it was impossible to practise it,
was general, and the enclosure of such fields, by which I do not
mean the appropriation of the common lands, was exceedingly
costly, dilatory, and uncertain. Many of these enclosures were
effected, however, in the eighteenth century. Others, infinitely less
excusable, were the work of the nineteenth, the plea being the
increase of arable culture, an argument as germane as that of
the man who picks your pocket on the plea that he can make a
more profitable use of your money than you can. I have myself
seen common fields in Warwickshire, but I presume that the system
is now completely extinct, though I believe lammas lands, in which
there was private property in the soil from Lady Day to Michael-
mas, and general property for the other six months of the year,
subsist.

THE BISE OF BENTS. WOOL AND STOCK PBICES. 179

The rents of 3s. 6d. an acre in 1692 rose to 36s. 8d. in 1854.
Agriculture was still progressive, the cost of materials was greatly
reduced, while the cost of production (in agriculture the proportion
of cost to the market value of the produce) was greatly diminished,
the price of products being exceedingly high, and the rate of wages
being disgracefully and dishonestly low. Hardly a year passed
without the trial of some new experiment. I well remember an old
acquaintance, who came out of Wiltshire into Hampshire, a sheep
drover, who had saved a little money, and hired a small farm, with
a good deal of down in his holding. He ploughed the downs, burnt
the turf, manured the ground well, sowed turnips and oats succes-
sively, knowing that chalk is a sponge which holds and gives back
all it receives, kept accounts, made a fortune, and died a wealthy
banker and landowner.

There are one or two points in this history of rent, which 1 will
employ the rest of my time in commenting on. I have mentioned
more than once that the price of wool was exceedingly high in the
Middle Ages. But there is no trace of a rise in rent being conse-
quent on a rise in the price of wool, though wool is eminently an
agricultural produce. But the operation of those laws which
determine rent is far less operative over that capital of the farmer
which can be transferred with little loss from one locality to another
than it is over that which, from necessity, must be committed to
the soil Diffused skill in cattle-breeding and sheep-raising can be
far less easily mulcted by rent agencies than diffused skill in growing
crops. The principal lever in the elevation of rents has been the
loss consequent upon dispossession. This is the real " unearned in-
crement." No doubt, to let a man hold land at much less rent than
the land will bear, as Arthur Young constantly complains, is to en-
courage indolence ; and among the indirect benefits which have come
from rackrenting, as an offset to its fatal injuries is, that up to a
certain point it calls forth energy, forethought, and thrift. Of
course it may bring discontent and despair. But within a certain
limit it equalizes unequal opportunities. But, on the other hand,
cattle- and sheep-raising are matters of personal rather than of
general skill, and it is clear that in the Middle Ages, as sometimes in
our time, the operation was exceedingly hazardous. In the absence
of winter roots, and the stint of hay, a dry summer followed by a

180 HISTOBY OF AGBICULTUBAL BENTS IN ENGLAND.

hard winter would have had very serious effects on the sheep
master. In the same way, the rent of land, let to so capricious and
risky a produce as the hop is, bears no proportion to the occasional
gains, and the invariable hopes of the hop grower.

I thought that I could have detected the rent of land through the
reserved rents and fines of the colleges in Oxford and Cambridge,
and in the estates of Winchester and Eton Colleges. But after much
pains taken, I found that my research was disappointing. These
corporations for a long time were in great peril. Had Henry lived
longer, he would have devoured them. The bishops of Elizabeth's
reign were plundered by her nobles, with the Queen's connivance.
The Cecils took no little ransom from the see of Peterborough.
Exeter was reduced from a rich to a poor bishopric by the western
nobility. Every one knows the story of Hatton and the Bishop of
Ely, and Elizabeth's threats. At last the Queen, perhaps at the
instance of Parliament, came to the rescue of the prelates and
passed the disabling statute.

The Colleges had much reason to be alarmed. Though I do not
find that they lost their estates, they became exceedingly poor after
the Reformation and the rise in prices. I can hardly see a change
in their revenue when everything became trebled in price. The fact
is these corporations leased their lands on very beneficial terms to
great men. Cecil and Derby took estates at one half their annual
value from King's College. Similar leases were granted by the
Oxford corporations. The Crown came to the rescue with the Act of
1576, the Reserved Corn Rents Act, and the Colleges began to exact
fines on renewals, at first timidly and always ignorantly. They were
put to great straits as time went on to find out what their property
was worth, and to fine accordingly, though under the mark when
they did know. They never got its value, and the lessees made
great profits from the difference between their own rents and that
of the under-tenants.

Arable rents have risen, in the course of the last two and three
quarter centuries, in many cases, eighty times, while wheat has risen
eight times. Pasture has risen about ten times. Now if there be
such a thing as the indestructible powers of the soil, it is more
characteristic of pasture, which cannot profitably be ploughed up,
than of anything else. But the cause of the first elevation, as I

COLLEGE BENTS, OXFORD AND CAMBRIDGE. 181

hope I have now sufficiently pointed out, is diffused agricultural
skill, and competition for business profits. This is not indeed the
cause of all rent, for, as I have said, there is a famine rent, under
which the landowner by familiar processes takes from the cultivator
of the soil all but a bare subsistence. During the seventeenth century
the English farmer had experience of a famine rent. For the last
eight years, it has been renewed. The Irish farmer, who isinnine cases
out of ten a labourer paid in land, has had no other experience than
that of a famine rent. The Nemesis has come in both countries,
and even the nineteen years lease, which the Duke of Argyll thinks
the quintessence of human wisdom, gilded by the most perfect
justice, is discredited. When will people learn that high prices do
not make high rents, that folly may destroy what it can never re-
cover, and that the best way to extinguish all human interest in rent
is to deny that it is a matter of human institution, while it is the
result of an intelligence possessed by the occupier and not by the
landowner, except under peculiar circumstances, and is in no sense
divine or providential ?

One of the ways in which the owners of land have striven to main-
tain artificial rents has been, first, by starving the peasant, next by
putting the cost of his necessary maintenance on other people. I have
already described to you how this system was developed. It has
been most disastrous to those who devised and carried it out. I
don't know whether the farmer and landowner will ever find out
that low wages do not mean cheap labour ; but it is a common-place
even with economists of the stupid school, and a truth which they
hava been able to grasp, for they learnt so much from Adam
Smith. But that their misery was to be an ever-increasing cause
of rent, was left for the genius of a London stockbroker to
enunciate, for the economists and country gentlemen to accept,
and to be refuted by facts. More than twenty years ago I pointed
out the nature of the problem and its inevitable solution. I suffered
the ordinary fate of those who are more far-sighted than the people
among whom they live — no great feat here. I might perhaps, if time
permitted, discuss with you what must be the rent of the future,
for that of the past is vanishing, and for reasons which you might
gather, and probably will, from what I have said. Or I might fortify
myself with the example of a great man of my youth, the late Six

182 HISTORY OF AGRICULTURAL RENTS IN ENGLAND.

Robert Peel, and decline to commit myself to a prediction and a
remedy till I am called in. This, however, is perfectly certain —
the landowners of the eighteenth century made the British farmer
the best agriculturist in the world ; the landowners of the nine-
teenth have beggared him.

METALLIC CUEEENCIES.

Early English money — The marh and the pound — Changes in the
weight of the penny — Silver produced in England — The King's
Exchanger — The ratios of silver and gold — Causes affecting these
ratios — Bimetallism^Gresham's Law — Payments made by weight
not by tale — Reasons proving this — The debasement by Henry VIII.
— The foreign exchanges — The recoinage in 1696 — The suspension
of cash payments — Seigniorages on coins — The efficiency of the
currency — Currency kept for two objects, internal and foreign
trade.

The subject on which I am to lecture to-day is rather technical.
It can only be understood when some figures are mastered, and
there are some figures, as I shall show in the course of what I
have to say, which would be wholly deceptive, if they were not
explained away. The right apprehension of what the English
currency was is absolutely essential towards the interpretation of
money values in the economical history of England, and the
interpretation of that economical history gives meaning and
vitality to constitutional and political events, transforming them
from disconnected and unrelated annals into a cohesive and con-
tinuous vitality. I hope that the laborious antiquaries who dig
out what they call the facts of the English constitution, and edit
the opinions which they discover, will take no offence at what I
say. Their work has a high value, because it is the collection of
materials, and without materials, no man, except a metaphysician,
can build. But there is really nothing constructive in constitu-
tional and political history. The proof lies in the fact that the

184 METALLIC CUEBKNCIBS.

most ingenious theories are liable to destructive criticism, even
when propounded by men of real genius.

Those Teutonic nations which were never brought under the
direct influence of the Roman administration had a unit of
money which they called the mark. Those parts of Western
Europe which were brought under the direct administration of
Rome had a unit which they called the pound, livre, lire. Some-
times, as in England, the two systems were used in calculations,
and in early times quantities were expressed in marks almost as
frequently as they were in pounds. From a very early date the
mark was reckoned at two-thirds of the pound. Neither the
pound or the mark was ever coined. They were simply money of
account. Moreover, the only currency employed in circulation for
a long time was silver, and in. many countries silver remained the
only currency till very recently. In some communities, gold has
been substituted for silver. In some, paper has taken the place of
silver. In England, the pound of silver, called the Tower or
Saxon pound, contained 5,400 grains. In 1527, Henry VIIL
substituted the Troy for the Tower pound, containing 5,760
grains. The penny then contained 22J grains of the older, 24
grains of the later pound. The fineness of the standard was, in
theory, 11*1 pure silver and *9 alloy ; and the king's officers at
the exchequer took care that the money paid should be up to
the standard of fineness, as we learn from that very ancient
financial treatise " The Dialogue on the Exchequer," first printed
by Madox.

Nobody knows in what nation or in what place, the capital
invention of the coin was made — whether it was in Greece, or
Sicily, or Italy, where, by the way, the ancient currency was
copper, a metal more frequently found native in a pure state
than any, excepting gold. We know that there were countries far
advanced in civilization which had no coins. There were none in
Egypt, in Assyria, in Babylonia, in the old Phoenician colonies ; for
coins are sure to be lost now and then, and are exceedingly indes-
tructible. None have been found in the ruins of these countries,
and yet it appears, from recent research, that Babylonia had an
elaborate system of banking, and all the machinery of transferring
balances from one account to another. In the same way, though

EABLY ENGLISH MONEY. 185

there is a small currency in China, there is no silver coinage ; for
it is said that Mexican dollars, which serve, or did serve, to liquidate
balances, are melted into ingots when they get into the native
merchants' hands, these ingots being stamped with the trade mark
of the merchant who casts and re-issues them. Such, probably,
were the means by which exchaDges were made in eai 'ly times, and
among those nations which never adopted a money currency.
Some measure of value is needful for business of a rudimentary
kind, but we see, from the example of these ancient peoples, that
great progress can be made without coined money.

I need not trouble you with the common-places which you will
find in all books on political economy, as to the motives which
have induced nations to adopt the use of gold und silver coins.
The economists have interpreted these functions with great pre-
cision and clearness. It is not wonderful that they have, for many
of them who have written on the subject have been engaged in
what is called the money market, or have been familiar with those
who have been so engaged. I have thought it my duty to speak
with exceeding plainness about the Eicardian theory of rent,
because I hold it to be so exceedingly incorrect, and so trans-
cendently mischievous, since it encourages men to hope for
impossibilities. But on money and banking, on currency questions
generally, and especially on the most abstruse of them, Bicardo's
authority is of the highest character. Here he was in his element,
for he was an exceedingly acute stock-jobber, in the days when a
prosperous stock-jobber was almost a strategist, as you may learn,
if you like, from biographies about successful people in this calling.
Eude and comparatively savage races imitated currencies. I know
nothing more ingenious and more conclusive than the manner in
which Mr. Evans, the numismatologist, has traced the British
gold coinage, which is tolerably abundant in collections, to the
imitation of a Macedonian stater of one of the later Temenid
kings.

If you take up books in which the English currency is treated,
you will find the following statement of facts. The original
standard of weight in the silver penny may be taken at 3. In
1299, Edward I. reduced it to 2-871 ; in 1344 Edward III. reduced
it to 2-622, in 1346 to 2-583, and in 1353 to 2325. In 1412,

186 METALLIC CUBRENCIES.

Henry IV. lessened it to 1-937; and in 1464 Edward IV. to 1-55.
In 1527, Henry VIII. brought it down to 1*378, and in 1543 to
1*163. In 1560, after the restoration of the currency by Elizabeth,
it is at 1'033, and in 1601, she brought it to exactly one-third of
the weight it stood at 303 years before. I am obliged to supply
you with these details because they are essential to my criticism on
the inference which is drawn from them. In one particular they
are exact. The proportionate weights of what is called the silver
penny correspond to these registered mutations. I have, long ago,
put this fact to the test, by weighing clean and unworn coins in
chemical scales. I hope that I shall be able to prove to you that I
threw away my time and trouble.

Now silver, up to the great change in money values, was pro-
duced largely in England. The commonest ore in which silver is
found is galena, the native suphuret of lead, in which ore it is said
to be always present, though some is even now too poor to bear the
cost of refining, and much must have been then, when the refiners'
art was rude. In the various works which I have read on the
early trade of England, and in the statistics regulating that trade,
I have never met with imports of lead. I have no doubt that
England supplied France, and not a little of Western Europe with
this metal, which was comparatively cheap, and greatly used for
church roofing. The greater part of the silver of Western Europe
was also, I believe, derived from England, despite the restraints
put by statute on its exportation. If there be any truth in the
constantly recurring story about the enormous and incessant
exactions of Papal avarice in England, not a little of it went to
Rome and Avignon, and then again to Rome. If we give credit to
the complaints, for even the monks, generally friendly to the Pope,
make them, the overflow of money to the Pope's court, in the
palmy days, was annually equal to the royal revenue. But the
English did not become impoverished by the efflux. Lead, the
ore of silver, falls in price during the fifteenth century, and there
is no reason to believe that the art of metallurgy was improved,
and at that time, it was rather dangerous to have a scientific
reputation, for experiment was liable to be confounded with
sorcery, the most deadiy charge that could be made against
any one.

SILVER PRODUCED IN ENGLAND. 187

For reasons which are explained elsewhere, the Government of
England made strenuous efforts to prevent the exportation of
silver, and I am quite sure that the payments made to the Pope
and his court, turned public feeling against the supremacy of
the Eoman Pontiff, and hastened the breach of the sixteenth
century. Perhaps, had the Pope been acquainted with monetary
science, in so far as it is understood by every one now, and had
grappled with the economic heresy which treats it as the only
wealth, he might have mitigated the feeling. But more than any
sovereign of the Middle Ages, the Pope spent wealth.

The opinion of English statesmen was, that in order to secure
and retain abundant wealth, it was necessary that on every article
exported, a balance in specie should be paid to the English dealer.
The Government, therefore, limited the market for certain impor-
tant English exports to certain towns, called staple towns, of which
Calais, for wool, the principal and most valuable of English
exports, was the chief. But as the merchants might prefer their
own profits to the theory of the administration, a high officer of
state, called the King's Exchanger, was appointed, whose duty it
was, by himself or deputy, to see that a balance of money was
paid on each transaction. The first of these officials was De la
Pole, in the time of Edward III., the ancestor of those Earls and
Dukes of Suffolk who had so tragic a history in the fifteenth
century. This official foolery went on till the time of Charles I.,
who appointed Kich, Earl of Holland, to the office. But the
London merchants, from whom Charles was perpetually borrowing
money, resented the absurdity, declared that the patent was
illegal, at Selden's instance, and induced Charles to revoke it. I
speak of the policy as it deserves, but there are people in our own
day, who might know belter, who are foolish or dishonest enough
to allege that the character of our trade proves that gold and silver
are leaving us. In form, the prohibition on the exportation of
gold and silver coin continued till 1816. It had a curious effect.
People were allowed to export gold in bars, foreign coin, and
bullion, the produce of foreign coin, and an oath had to be taken,
that exported bars were of this character. People were hired to
swear that they were, and sworn- off gold, as it was called, was
worth three halfpence an ounce more than other gold was, which

188 METALLIC CURRENCIES.

had not been subjected to the ceremony. You will see that
three halfpence an ounce was the bullion dealer's payment for
perjury.

Of course the operation of tbe King's Exchanger was nugatory.
Very much more bulky things than silver were easily sent out of
and into the country, at a time when ships were small, harbours
numerous and easy of access, and prevention impossible. The
merchant of the fourteenth and fifteenth centuries, and for many
a century afterwards, did not want to keep useless money by him,
especially when he saw that there was a profit in getting rid of it.
So he laughed at the staple and the exchanger with perfect im-
punity. Had the operation been effectual, it would have heightened
prices, because money would have been in excess. But during the
time when this machinery was at work, especially in the fifteenth
century, prices were falling all round, a fact of which I shall be
able to make notable use by and by. It is, however, possible
that the prohibition may have been treated as a risk, and have
thereupon increased the cost of discounting bills. At any rate,
I am convinced that in later times such was the effect of
the law.

I have said that silver was for a long time the only currency.
There is a story, told by the annalists and repeated by Euding, that
in 1257, Henry III. issued a gold coinage at the rate of 10 to 1, but
that the London citizens resented the practice, and that the king
took it back at the proportion proclaimed, exchanging it however
into silver at a charge of 2| per cent. But the reality of this issue
has been doubted. No specimen has ever been found of the coin,
and it is probable that Henry only intended to give currency to
some foreign gold coins. In 1262, Henry bought some gold florins
and byzants for the purpose of making plate, at from 9 and 10
to 1. Thirty years Jater, Edward I. purchases a considerable
quantity of gold, for the purpose of gilding parts of the crosses
which he set up in memory of his queen, Eleanor of Castile. Here
the proportion is a little over 12£ to 1. In 1345, Edward III.
issued gold coins in the proportion of 18$ to 1. According to Lord
Liverpool, in his " Coins of the Kealm" (a work which I have
heard was actually composed by Ending), during the fifteenth and
sixteenth centuries the proportion fell to between 10£ and 11-8 to 1.

THE BATIOS OF SILVER AND GOLD. 189

In the seventeenth the ratio was 15 to 1. At the resumption
of cash payments, the rate was recoginzed as 15| to 1 ; but
silver as a legal tender was demonetized. At the present time it is
about 22 to 1.

The ratio of gold to silver, costeris paribus, depends on their
use in currency. Many years ago, I was a good deal struck with
the rapid rise in the relative value of gold in 1296, over that in
1262. But an examination of Muratori's invaluable antiquities
explained it. During the last quarter of the thirteenth century,
and through the greater part of the fourteenth, numerous Italian
cities adopted a gold currency. Their trade was with the East,
where gold currencies were customary. A demand for the metal
occurred, and the price of necessity rose. This gold currency
was even more general in the fourteenth century. For example,
that of Avignon, then the seat of the Popes, was gol(\ and people
who brought silver to the curia, as I have shown, had to pay
handsomely on the exchange. I have myself little direct evidence
as to the causes which depressed the value of gold in the fifteenth
and sixteenth centuries. Of course the relations of Europe with
the East were greatly modified as the Eastern empire decayed,
and finally fell, and the old roads over Central Asia were effectually
blocked.

When the new money came in from the West, the ratio of 15 to 1
was established. The ratio was not free from serious fluctuations,
which some of the bimetallists have not sufficiently studied, when
they dwell so complacently on its steadiness in some of their pub-
lications. At one time gold was found to be overvalued, and silver
disappeared ; at another silver, and gold disappeared, so that finan-
cial operations were resorted to in order to restore the equilibrium.
In 1853, M. Chevallier thought that silver would disappear from
France, owing to the gold discoveries in Australia and California,
and Mr. Cobden translated his book. After the war of 1870, Ger-
many determined on establishing a gold currency, and a few years
afterwards Italy followed her example. Instantly commenced a
fall in the price of silver, which has continued since. The States
of the Latin Union diminished their silver issues at their respective
mints, and the fall became more rapid. If Austria and Kussia had
retired their paper currencies the downward movement might

190 METALLIC CUBBENCIES.

have been hi part, if not in whole, arrested. If China were to
adopt a silver currency for her enormous and populous empire, the
ratio would be totally altered. There are rumours that such a
scheme is contemplated. I will venture on predicting that what I
have said would be rapidly fulfilled if the scheme takes effect.

It is impossible to say to what extent a government may regulate
its internal currency as long as that currency is unaffected by the
foreign exchanges, which treat coin as mere metal, as soon as it
becomes what Adam Smith calls the money of the great mercantile
republic. It is said that the paper currency of Russia circulates at
its nominal value, though in the exchange it is only half the value
of the silver rouble, and the silver rouble suffers from its own de-
preciation. But with the outer world Russia deals in gold only.
It claims all its import duties in gold ; it makes what foreign pur-
chases it needs in gold. So with India. I have been told that the
purchasing power of the rupee is not diminished in the peninsula.
But the relations of England to India, as a creditor country, are
gold relations. The pensions of its civil and military retired
officers are indeed paid in silver, and have to bear the loss of the
exchange. But its external debt is a gold-bearing debt.

Some time ago I had an opportunity of talking with Mr. Fre-
mantle, the Master or Deputy- Master of the Mint. I asked him
whether, with so prodigious a seignorage on the English silver
coins, now over 30 per cent, above their gold value, there was in
his opinion any private coining of genuine silver money. He told me
that the Mint authorities had naturally had their attention directed
to the risk. But they had found no evidence of the practice. The
machinery for coining genuine money would be expensive, the
manufacture of dies would hardly escape notice, and if these diffi-
culties were surmounted, that of getting rid of any amount worth
the risk would arise. The movements of metals, especially of
coins, are well known, and any interruption in their ordinary flow
would be suspicious. If in our day the alchemist could realize his
dream of transmutation, he would find it difficult to get rid of his
produce. Let me illustrate what I mean. Perhaps the University
Press requires about £200 a week in silver money for wages. The
efflux and influx of this silver money is as well known and provided
for as a Great Western train. Conceive, for a moment, that the

BIMETALLISM. GBESHAMS LAW. 191

local operation suddenly ceased, and the Press went on paying
wages as usual, no one knowing where it got its silver coin from.
The mystery would be soon followed by suspicion, the suspicion
would be followed by inquiry, and the Mint would discover the
origin of the new process. I am convinced that the authorities of
this department would have a quicker scent after such an affair
than the Ordnance had after the origin of the flexible bayonets and
the fragile swords.

I may, on a future occasion, find it in my power to deal with
the question of bimetallism, i.e., of the simultaneous legal tender of
two different metallic currencies. The subject is exercising a good
deal of ingenuity at present, and though I have not heard that any
person of eminence in monetary science or finance, or even in the
bullion trade, has declared his adhesion to the theory, it is sup-
ported by names respectable enough for consideration. It is due
to such persons that the theory should not be put off in an obiter
dictum. But thus much is certain. It is necessary, before an
opinion is formed on the subject, which is entitled to serious dis-
cussion ; first, that much more should be known of the historical
ratios of the two metals than has hitherto been collected ; next,
that a careful estimate should be formed of what are the real
forces of a government, which is invited to give an artificial value
to any of its coins ; and next, if it be found necessary, as most
advocates of bimetallism confess, that there should be not an
understanding only, but a binding agreement among civilized
countries, as to the limits on the issue of an overvalued currency,
what is the machinery by which they expect that the agreement
will be enforced. I will not, however, on this occasion, pursue
the subject further.

Now reverting to the statements which I made in the early part
of this lecture, the gradual degradation of the penny in weight be-
tween 1297 and 1C00, most people who have dealt with prices
imagine that payments are made by tale, and that these prices, in
so far as details were known to them, accommodated themselves to
the new and degraded coinage, that of course, in accordance with
Gresham's law, that an overvalued and an underrated currency
never circulate simultaneously in a country, but that the un-
dervalued ones instantly disappear, immediately on the appearance

192 METALLIC CUBBENCIES.

of the new and degraded coins, the better currency being hoarded
or exported. This was Adam Smith's opinion. He thought
that during the fifteenth century silver was gradually getting
dearer, and that prices, without let or complaint, at once accom-
modated themselves to the new and lighter coin. Now Smith had
scarcely any information on prices. All that had been published
in his day was Bishop Fleetwood's " Chronicon Preciosum."
Fleetwood had been a fellow of Eton, and in his day was fond of
studying finance. He had a reputation, and a fellow of All Souls,
who had a private estate of over £5 a year (the limit which the
founder allowed to his fellows), and was therefore threatened with
a declaration that his fellowship was vacant, consulted Fleetwood
as to what should in equity be the interpretation of £5 in Henry
the Sixth's time, according to prices in the reign of Anne. Fleet-
wood answered this case of conscience by collecting what informa-
tion he could procure, or thought necessary for the contrast, and
published his results. For a long time his book was the only
authority on the subject, and the Eton wheat and malt prices were
frequently referred to in Parliament and by authors, such as Adam
Smith, who printed them. The work, as far as the fellow of All
Souls was concerned, was published in vain. The fellows, as I
learn from Hearne's Diary, rightly declared his place vacant. The
discovery was a shock to me, as I had to give up, among the
" Worthies of All Souls," what I had imagined was a conscientious
worthy. But as for Fleetwood's facts, I can allege that I have
printed more information on prices for any one year, than can be
found in the whole of Fleetwood's collection.

Now let us take one century, the fifteenth. According to the
table which I gave you, in 1412, Henry IV. took a sixth part
away from the silver pennies which he issued, as compared with
those put into circulation by Edward III. in 1358. In 1464,
Edward IV. takes away a fifth of what was contained in the
penny of Henry IV., and these are part of a series of changes
which at the last date had reduced the penny to almost exactly
half of its ancient weight. But no material change of prices
takes place in England for the 280 years during which the re-
ductions in weight were made. No change, which is still more
remarkable takes place in the years which follow the change.

PAYMENTS MADE BY WEIGHT, NOT TALE. 193

Between 1410 and 1414 inclusive, prices of corn are singularly
uniform, between 1462 and 1467 inclusive, they are nearly as
uniform. Twopence are taken out of the shilling on the first
occasion, nearly 2^-d. on the second, but prices remain low. The
prescience which could have made such a reduction and could
have foreseen that no effect would have been induced on prices,
would be simply miraculous.

But the patience of the people would have been even more
remarkable. Not a single complaint is uttered as to these acts
of the administration. Heury made the change when he was
peculiarly unpopular ; Edward, when he had just obtained his
kingdom, and had to employ all his energies in baffling the
intrigues of a discontented and beaten faction. The purchasing
power of money did not, it is true, change for English goods.
Neither did it for foreign, on which the exchanges would be
certain to operate. But every one who knew anything about it, i.e.,
all who took money (for it was a period when money scales were part
of the furniture of all houses), must have known that within 52
years 4|d. worth of silver had been taken out of every shilling.
It was an epoch of fixed rents and of fixed dues. There was
hardly an estate from which one or more pensions did not issue,
Agricultural rents from tenants at will or on lease were practically
fixed. Taxes, tenths and fifteenths, were fixed amounts. It is
not credible that the king, his lords, the whole body of land-
owners, the recipients of fixed incomes rising from land, would
have acquiesced without a murmur in an operation which reduced
those incomes nearly 40 per cent. The old money too did not
disappear. No one says it did, and in the eighteenth century,
writers on the exchanges inform us, that coins of the Plantagenet
kings often came into their hands.

The English people were by no means patient, especially when
their pockets were affected. They hated favourites, who got hold
of the king's money, with exceeding bitterness, and when the
king was incurably bent on impoverishing himself they were very
apt to depose him, and acquiesce in his rapid disappearance. All
our early revolutions, I do not see why we should not even include
the later, have had a financial or economical reason at the basis
of them. The revolt of Tyler, the insurrection of Cade, the rising

14

194 METALLIC CUBBENCIES.

of Ket, in the fourteenth, fifteenth, and sixteenth centuries, to
say nothing about the Pilgrimage of Grace, can be connected with
financial and social discontent. I suspect that the affair of 1688
was quite as much associated with economics as it was with
religious discontent. The philosophy of history is far too apt to
neglect the former cause. But the philosopher has the excuse of
ignorance, and the advantage of imagination.

I felt convinced, then, that the view commonly taken of these
successive degradations of the currency was an erroneous one,
and could not possibly be accepted. To be true, they who
manipulated the mint must have been preternaturally wise, or
preternaturally foolish, and though the English race is not
naturally quick or inventive, it is not incapable of discovering and
avenging a grievance. Now the conclusion which I arrived at,
and that many years ago, was that payments were made by
weight, and not as now by tale, that whatever was the weight of
the pieces issued by the Mint, a man who covenanted to receive
or pay a pound of silver, for goods, services, or dues, received 5,400
grains up to 1527, and 5,760 afterwards, and that this system
lasted from the earliest records down to the restoration of the
currency under Elizabeth. On no other hypothesis could the
facts be interpreted, and the question before me was, how could
the hypothesis be verified ?

1. The history of general prices entirely agrees with this
hypothesis. They are nearly unchanged for 280 years, if the
whole space be taken, though they are affected for a time by such
events as the great plagues of 1348 and 1361, when the value of
an article is mainly due to the labour expended on it. Now, wheat
for the first 140 years is 5s. 10fd. a quarter, i.e., from 1261 to 1400,
and 5s. llfd. for the next 140 years from 1401 to 1540. On the
other hand, certain prices, notably those of foreign produce and
foreign goods, decline rather than increase, especially toward the
conclusion of the fifteenth century. Now it is certain that there
is no traceable economy in the cost of production, and no dis-
coverable reduction in the cost of freight. And again, English
wool is rather lowered than heightened in price, though there
is no evidence whatever that any foreign country competed
against English wool, or indeed could have competed against it.

BEASONS PBOVING THE ABOVE. 195

2. The price of silver plate. This is very extensively pur-
chased. The purchase of plate, in point of fact, was a very
common kind of hoarding. The cost of shaping it was low, and
the article was readily pledged or sold. The purchase money
is constantly expressed in pounds, ounces, and pennyweights,
the raw silver or finished goods being plainly weighed in the
scale against coins of all sorts and sizes. Now when the coins
in 1462 had been reduced, according to the tale theory, to a little
over half what they stood at in the earlier ages, Oriel College, in
1493, bought 33f ounces of silver plate, some of which was gilt,
at 2s. 9 ^d. an ounce, a price entirely impossible by a tale payment,
for the pence and farthing fairly represent the cost of workman-
ship and gilding. I might multiply evidence of this kind, for I
have it in abundance, and it all points to the conclusion which
I have arrived at.

3. In 1462 gold was bought at 30s. the ounce, the ratio according
to Euding between the two metals being as 11 2 to 1 at the time.
Such a price is intelligible if the estimate is taken by weight,
quite inconsistent with the facts if it is taken by tale.

4. We are expressly told that the principal loss of the base
money which was put into circulation between 1543 and 1553
inclusive, and remained in circulation for near twenty years, fell
on those who lived by wages. The merchant could weigh it
and test it, indeed could not carry on his business unless he did,
and perhaps gain an advantage by his knowledge. But as the
issues were of very various degrees of baseness, the man who
received his wages, even by weight, would find that one piece
went further than another, owing to its being less alloyed, and that
another was almost a dead loss.

5. The record of the restoration by Elizabeth is conclusive
The amount of base money which Henry and his son's guardians
put into circulation wai 631,950 lbs. in weight. The currency
value was £638,115, the difference being no doubt seignorage, or
a charge for coining, to defray mint expenses. The amount of
silver in it was 244,416 lbs. indicating a debasement of near 60 per
cent. But out of this silver Elizabeth coined by tale £733,248.
She said she lost by the process, though there seems a balance
to hir advantage of £95,133. Whether she spoke the liter*

196 METALLIC CUBRENCIES.

truth is a question, which some persons who have studied
Elizabeth's utterances might very confidently answer. But she
had to refine the wretched stuff, and the separation of copper
from silver was in that day by no means an easy business, and
we know that the adulteration was copper, from stories of the
time. Then there was the charge of coining and the seignorage.
It is said that the slag was intractable, and was employed to mend
the roads.

6. There is no reason to believe that the Spanish occupation
of Mexico and the discovery of Potosi were followed by any
notable influx of silver into England. It is only by the foreign
exchanges, i.e., by trade, that these exchanges can operate, and in
the sixteenth century English trade was exceedingly curtailed.
Now the rise in the price of commodities between the date at
which the currency was reformed, and the period at which the
new silver unquestionably began to modify English prices, is
exactly, or almost exactly, the difference between the old or Tower
pound with the old prices by weight, and the new prices 2*75 to
1. When the reform was over Elizabeth was evidently aghast
at the consequences. She could not afford to make good the
fraud committed in her father's and brother's reign. To have
done so would have cost her at least six years of her average
income, an impossible sacrifice, for in strict justice, the bank-
ruptcy of the exchequer was more thorough than at any period
of English history. She did bethink herself of a plan. A pro-
clamation was drafted (or copy of it is in existence in the great
collection of her proclamations) reducing the tale value of the
new coins 50 per cent. But it was never issued, I presume
because she was advised that it was sure to be misinterpreted.

I may seem to have spent too much time and given too many
proofs of my hypothesis. But the issue before me is considerable.
On the truth of my hypothesis, entirely verified as I think it is,
depends the rational . interpretation of English prices, and the
significance of the first departure from them after 1563. How
significant prices are in the economical interpretation of history is,
I trust, by this time fully clear to you. It is because currency is
practically unchanged in English history, except at one important
epoch, that it is possible to construct an intelligible history of

THE DEBASEMENT BY HENRY VIII. 197

prices in England. In other European countries despotism has
played fast and loose with the currency. The pound was the unit
in France as well as in England. The late currency of Elizabeth
reduced it to a third of its ancient and traditional value. The
French livre is, now under the name of the franc, l-72nd
part of its original value. In Scotland, which was a despotism
tempered with assassination during the reigns of the earlier
Stuarts, it sank to a twentieth. But I think it would have been
dangerous had any English monarch played the pranks which
John the Good, as they called him, in France did. The English
people have been slow to move or to be roused. It is exceedingly
difficult to determine when they are roused. But history proves
with great frequency how dangerous they are when the unexpected
occurs.

The debasement of the currency was only deliberately committed
once. The patriot king, after squandering all that he could get
hold of, after ruining his people, after pledging himself that if they
gave him the monasteries he would ask his Parliaments for no more
grants, ordinary and extraordinary, began to debase the currency.
Mr. Froude, the apologist of this monster, the type of the
philosophic historian, and at present the advocate of the Liberty
and Property Defence League, has described this transaction as of
the nature of a loan. How obliged coiners and smashers must be
to him for so courteous a description of their calling ! Most of
us are accustomed to consider the coiner of base money as a
peculiarly scoundrelly criminal, because the success of his calling
depends mainly on his being able to cheat the poor. Except by
the magnitude of his crime, Henry is on a level with the meanest
of knaves. The crime is heightened by the fact that it is the first
duty of a ruler to keep the currency up to standard. Such men
as our Henry the Eighth, and such men as Ernest of Saxe Coburg,
who was, I believe, the last European sovereign who issued base
money, and repudiated it, ought to be gibbeted in history.

At first the increase of debasement was not large. The standard
is 111 in 12. The issue of 1543 was 10 in 12. In 1545' it became
only 6 in 12. In 1646 it was 4 in 12, two-thirds being alloy. In
1549 Somerset, Edward's guardian, put out an issue of 6 in 12,
and in 1551 one of 3 in 12. This was virtually the last issue of

198 METALLIC CUBBENCIES.

base money. The credit of the country was entirely gone, and
Greshatn, the king's agent at Antwerp, plainly told the Court that
such was the fact, formulating at the time that law which I have
quoted to you, which is known by his name, that if two currencies
of unequal value, but declared by authority to be of equal value,
circulate together, the undervalued coin is sure to disappear. Two
issues, one nearly up to sterling, the other quite, were coined in
1552 and 1553, not for circulation in England, but for the Ant-
werp exchange. Mary would have restored the currency, but all
her energies were occupied in restoring the old religion. She died,
the day of her death being long kept as a holiday, under the decent
pretext of its being the date of her sister's accession, and Elizabeth
restored the currency. Since that time it has never been debased,
though Charles I. was with difficulty restrained from this crime,
for which he had, probably from the constitution of his moral
nature, a strange hankering, for Charles would have rather cheated
his subjects than have oppressed them, for this is the meaning of
the defence made for him, that after having packed the court and
terrorised the judges, he preferred to proceed by the letter of the
law.

Now I have alluded to the effect of the foreign exchanges. When
countries trade with each other, it is the obvious interest of mer-
chants to buy as well as to sell, because under such circumstancss
they make a double profit But commercial transactions — I am
taking them in their very simplest form— rarely exactly balance
goods against goods. There is a difference. Now, from early
times, these differences have been expressed in bills of exchange,
i.e., orders on the person who owes, to pay at a more or less
deferred date, whatever difference is due and accepted by him.
From very early times it has been found profitable for certain per-
sons to trade in these bills or orders or acceptances, and traders
have found it convenient to recognize such intermediaries. If such
brokers of bills find it expedient to take money for the bill when
due they will do so, but like merchants, they generally find it
expedient to take bills against bills, because there is a double
profit on the transactions. Now it is by these instruments that
money is distributed among different countries which have trade
relations, because at times it is more expedient to take money than

THE FOREIGN EXCHANGES. 199

to take bills. It is always, for example, expedient to take money
from a country which obtains from its own mines a greater supply
of the precious metal than it needs for its own domestic use,
because such metals are cheaper there than they are in any other
place.

Now in early times the operation of the foreign exchanges was
very marked in England. Our forefathers had two kinds of
produce — the one a monopoly, wool ; the other, a most important
produce, silver. It is plain that the principal place at which Eng-
lish produce, bills for England and bills on E ngland were negotiated
was Antwerp. But after it became dearer to get silver from Eng-
lish mines than elsewhere this trade declined. After the Flemish
trading cities were ruined, the trade in wool declined. After the
rise in prices occurred, unaccompanied by a rise in wages, profits,
and rent, the power of purchasing foreign goods declined. I have
no doubt that in Elizabeth's reign the foreign trade of England,
and by implication the movements of the currency, were not a
fifth what they were a century before. Everybody was distressed
who had fixed or quasi-fixed incomes, for the state of rural society
in England was such that there was little chance for competitive
rents. The Oxford and Cambridge Colleges were terribly dis-
tressed. They cut down their chapel services, for all that may be
said about Elizabeth's advertisements, to the meanest forms.
They ceased to buy books. They abandoned wine for small beer,
with occasional draughts of a more generous malt liquor. The varied
and more unctuous feasts of two or three generations before were
exchanged for plain beef and mutton, with rations of salt fish.
The spice box was locked up, except on gaudies. Their diet and
life would have rejoiced a protectionist or fair trader, for it was
strictly that of Horace's Sabine. But it must be doubted whether
the protectionist or fair trader would have been jubilant with their
experiences. Some small relief was given to the colleges by the
Act of 1576, under which a third of their rents was to be paid in
corn, at the best price of the day.

In the seventeenth century prices rapidly rose, and the mint
began to coin gold extensively, mainly, I suspect, for foreign trade.
Rents at last began to rise, but only as a consequence of prices,
i.e., on the principle of Ricardo. Payments were made by tale,

200 METALLIC CUBEENCIES.

and at last a new trouble came. Towards the end of the century
it was found that the dimensions of the coin were shrinking, that
the silver money, a very clumsy product of the mint, was worn
and clipped. Every day it was getting worse, and for a long time
people puzzled themselves with the cause. Some said it was the
Jews, and that Oliver the Usurper had, among his many crimes,
allowed the Hebrew race to settle in England. Some said it was
the goldsmiths, the commercial progenitors of our London private
bankers, probably because they made money very fast. All agreed
that, whosoever began the mischief, it was continued by starving
wretches, who made a trade by selling the clippings. The men
were hanged and the women burned by dozens. But these
remedies were ineffectual. Half-crowns were clipped into shillings,
shillings into sixpences, and sixpences were rapidly becoming
spangles, before Parliament, which always will try punishment
before it tries remedies, resolved on re-coining and reforming the
currency.

There arose a great struggle. An attempt was made to degrade
the currency, to put ninepennyworth of silver into a coin and call
it a shilling. There were people in that day who thought, as there
are people in our time who think, that the name of a shilling would
be same as the fact of a shilling. But fortunately, Montague, then
Chancellor of the Exchequer, had two invincible allies in the
Oxford Locke and the Cambridge Newton, for the two Universities
at that time possessed, and to some extent encouraged, men of
proved capacity. So the new milled coin, which it was all but im-
possible to mutilate, was issued in full weight and fineness. It
was a costly piece of honesty, for the charge was equal to two
years of the ordinary revenue in time of peace. Perhaps had the
charge been exactly anticipated, it would have been too much for
the virtue of the nation, and the arguments of Locke and Newton.
As it was, never was expenditure more wisely incurred. It main-
tained public faith, and it afforded an invaluable precedent.

Since the re-coinage at the end of the seventeenth century, the
country has always kept up the standard of its metallic currency,
and has incurred the charge of wear. It has found it possible to
do this without so much hanging and burning as was thought
expedient in olden days. But it has had to protect itself in an in-

THE EECOINAGE OF 1696. 201

direct way. It first of all made silver a legal tender up to £40
only, and subsequently up to 40s. only. It then very much over-
valued silver, making it a token coin for internal circulation only,
and, as I have said, for small amounts only. It has done the same
with its copper and bronze coinage. This was in 1816. But
before that time it had not thought of large payments in copper,
and made no provision against them. When Lord Cochrane was
degraded and fined £1,000 for an offence of which he was after-
wards declared innocent, his admirers subscribed the amount of the
fine in penny pieces, took them to the Bank of England, and ob-
tained a note in exchange. With this Lord Cochrane paid the
fine, having written an explanation of the facts on the back of the
note, and some reflections on the Government of the day. The
note was paid into the Bank, and is now preserve 1 as one of the
curiosities.

In 1797 the country was engaged in a very costly war. Pitt, who
hired the European monarchs in succession, and made very
unsuccessful bargains, was draining every sovereign out of the
country to pay these people with. The Bank could find no more
money, and Pitt determined to establish a forced paper currency by
making Bank of England notes a legal tender. The nature and
consequences of this action will be treated of in my next lecture.
Of course gold was hoarded, and disappeared from ordinary
currency, for Gresham's law came into full force. This state of
things went on till the war was over, and longer. Then Peel, who
had evidently studied the precedent of 1697, determined on re-
storing the metallic currency. But there were many people then,
like the people one hundred and twenty years before, who thought
that the name of a sovereign would carry the fact of a sovereign,
and wanted to reduce the weight of the pound. It was, I am sure,
during the debates on that subject that Peel thought out that
famous question of his, which he put in the House of Commons,
and with which he so utterly puzzled his audience. The question
was, What is a pound ? The answer, I am giving you my own,
and I don't think a better can be given, is 113^-g- grains of pure
gold in a coin. Depend on it, when you hear people talk nonsense,
you can often dispose of them by asking them for a definition of
the leading words they use.

202 METALLIC CUBHENCIES.

Almost all nations but ourselves levy a seignorage on gold, i.e.,
a small charge for coining. Now directly a coin leaves the country
of its origin it becomes bullion, a piece of metal, it is true, of
accredited weight and fineness, but only a piece of metal. Hence
we never see foreign coins circulating in England. In the seven-
teenth and eighteenth centuries they circulated almost as freely
as English gold coins, and ordinary Englishmen knew all about
pistoles and gold crowns, moidores and gold ducats. Of course
coinage is a manufacture, and the convenience of the product is
such that it will bear the cost of manufacture. We might put a
charge on the process, but we do not, and there must be an ad-
vantage in the practice. As it is, English sovereigns circulate all
over Europe, and people are glad to take them, for as the English
people pay all the cost of wear, the foreigner can safely take,
circulate, and in their legitimate use, wear them down, with the
certainty that he will suffer no loss. It is plainly very arguable
whether this policy is a wise one, i.e., whether we gain or lose more
by our liberality. Certainly, when our gold coin gets worn, and
it is terribly worn now, more than half the sovereigns, and more
than two-thirds the half-sovereigns, being below the legal weight,
people will discuss the seignorage question. But it always ends
in the public purse bearing the loss. To be sure we have a great
fund for the purpose. There is an enormous profit made on the
circulation of the silver and bronze currency, and in my opinion, as
I have said elsewhere, the profits on this subsidiary currency
ought to be a separate account at the Bank of England, held or
invested against the contingency of making good the light gold.

An eminent friend of mine, Mr. Gladstone, once asked me
whether I thought currency or love had made most maniacs. I
told him that I had often been in a difficulty about his question,
and in my mind it could be coupled with a third cause of lunacy,
the interpretation of unfilled prophecies. I trust in what I have
said to-day that I have not unsettled any of your intellects. At
the conclusion of this lecture, I must however say a word or two
more about two very significant and important facts : first, the two
kinds of currency ; and second, the effect of foreign indebtedness
on trade and the exchanges.

Every country has two kinds of currency. One of those kinds is of

SEIGNORAGES ON COINS. 203

very large amount, though the amount greatly varies in different
countries. It is that which is needed for internal trade, the money
which we carry about with us, as we waut to use it, that which is
employed by traders and manufacturers in their business, and that
which is kept by bankers for the purpose of honouring cheques
drawn on them, and for the convenience of their customers. No
one knows what the amount is, for the issues of the mint are no
guide, since the sovereigns may go out of the country ; we know in
a rough manner, how much the silver and bronze is, but only in a
rough manner, because no one knows how much of the silver has
been sent back in a more or less worn condition to the mint. But
estimates have been made that there is in the United Kingdom
one hundred millions of gold in circulation, thirty millions of
silver, and ten millions of bronze. The last two, for the reasons I
have given, are rough guesses, but the third is based upon a
principle.

Economists have got an excellent phrase, u The efficiency of the
currency." But like many of their forms, even the best of them,
it requires explanation. By the efficiency of the currency is not
meant the number of economical operations a piece of money
satisfies, that is, the number of times in which it passes from
hand to hand, for currency may be efficient without being visible ;
but the number of transactions which a given quantity of the
precious metals will sustain in the aggregate. In England these
transactions are very large, larger than, perhaps, in any country.
But the quantity of gold needed for them is smaller than in any
country of its size. In France it is reckoned that there are three
hundred millions sterling of gold in circulation ; in Germany as
much. But it does not by any means follow that these countries
are richer than England.

The other kind of currency is that needed to secure the
equilibrium of the foreign exchanges. This is known to a single
sovereign, for it is to all intents and purposes in the Bank of
England, and an account of it is published every Friday. It is
part of what Smith calls the money of the great mercantile re-
public, and it flows in and out of the country with perfect fluidity,
as it is wanted here or elsewhere. If we want to get it, the Bank
of England raises the rate of discount. This operation makes it

204 METALLIC CUBBENCIES.

more profitable to send gold here than to send bills, and the gold
comes. Sometimes a country is in great straits for this money.
Then it sells securities, of course at a comparative loss, and gets
gold for them. It is possible that its securities may be at such
a discount, that it cannot negotiate them. In such a case it must
wait.

The other point is the effect of foreign indebtedness on trade and
the exchanges. England is a prodigious creditor on other countries.
The sum which other nations owe English people, by whom I
mean the whole United Kingdom, is incredibly large. The interest
on these debts is expressed in gold, payable in gold ; of course it is
paid in goods. But the fact that this indebtedness exists is an
enormous strength in the control of the foreign exchanges. What
it is on the trade of the country, on its imports, and on the in-
ferences to be drawn from the facts, I shall show you hereafter, I
hope. But the right to be paid in gold cannot but be an enormous
lever. It must greatly increase the force of a rise in the rate of
discount. I have good reason to believe, from conversations and
correspondence which I have had with some friecds of mine in the
Bank parlour, that they are not as yet cognizant of the force which
that engine possesses, which is virtually in their hands, as the
agents of British trade. To people who study the mechanism of
economic operations, who avoid metaphysics, and cling to facts,
there constantly arise before their view, novelties in action which
are profound and far-reaching. I am sometimes, as an economist,
glad that the forms of our constitution make changes slow. One
chafes at blunders in practice, one chafes at delays in the remedial
process of legislation ; but perhaps, on the whole, it is better to be
too slow than too fast, even when we are exposing an error, or
pointing out the inevitable consequences of a political crime. Of
course I refer to economical errors and economical crimes. The
history of England supplies us with illustrations in plenty of both.

X.

PAPER CURRENCIES.

Ancient barJilng — The Jeivs of Asia Minor — Practices precede the
mention of them — The Bank of Venice — The Bank of Genoa —
The Bank of Amsterdam — Early English hanking — The beginning
of the Bank of England — The relations of the Bank to Govern-
ment— The powers of a Bank over note issues — The Land Bank
of 1696 — Exchequer Bills — The first hundred years of the Bank —
The crisis of 1797— Sir Bobert PeeVs Act of 1844— The country
banks of issue.

It appears, from abundant evidence, that substitutes for money,
convertible into money at the discretion of the person who, holding
them, was entitled to negotiate them, preceded the invention of
coined money. I have used the widest expression possible when I
say substitutes for money. In the great and prolonged controversy
which has arisen on this subject, and has not perhaps been con-
cluded by any propositions which command universal assent, much
debate has arisen as to what substitutes for money are to be accepted
as performiDg equally effective functions in the world of commerce
and exchange. The debate or dispute is due in great measure to
the views which have been taken as to the State regulation of sub-
sidiary currencies, and to the reasons which have been alleged for
such an interference with free action in such matters. If the regu-
lation of all such substitutes is to be assigned to the State, it will
be plain to you, in the course of this inquiry, that the action of the
State would seriously incommode commerce, while, if the regula-
tion is to be applied to some forms of substitution only, many of the
arguments which have been alleged as conclusively proving the
necessity of legislative supervision will be invalidated, though some,

206 PAPER CURRENCIES.

in my opinion quite as forcible, will remain unimpaired in their
cogency.

I stated in my last lecture that modern research has shown that
the Babylonian bankers employed instruments of commerce which
were, to all intents and purposes, substituted currencies. The private
orations of the great Greek pleaders are full of information as to
the existence of bankers in the Greek cities, and of the circulation
of bills of exchange between such bankers as were in correspondence
with each other, and had understandings, as to the negotiation of
such instruments. No doubt then, as now, liabilities were ex-
pressed in money, either by weight or tale, and in theory the
debtor, on completing the transaction in which he was engaged,
was under the obligation in theory to provide at Athens or iEgina,
at Corinth, at Carthage, at Tyre, or wherever else he purchased,
the coins or bullion in which he expressed his debt. But in practice,
and from early times, even times of prehistoric trade, the practice
was different. The purchaser had his debtors, to take the simplest
form of these transactions, at the city where he had bought, and
had previously sold. He transfers his debtor's liability to his creditor.
From this it is only a step to transfer a liability in another trading
centre, with which that in which he deals has commercial corres-
pondence. When the next step is taken, and particular persons
make it their business to bring together these debts, to negotiate
them, and to balance them, the chain is complete, and the system
under which trade is carried on in our day, and was carried out in
the remotest ages of trade, is completed. Delay, risk, trouble are
avoided, and you are well aware, I trust, that in every economical
operation, they who are engaged in it do their best to avoid to the
utmost all unnecessary cost and risk. We may be sure, then, that
the use of letters of credit, of bills of exchange, of commercial
transfers from account to account, are as old as commercial civili-
zation is, and far transcend in antiquity all surviving records. The
origin of the intercourse between Tyre, Carthage, and Cadiz or
Gades, is lost to history. But it certainly existed in fact, and in
the form which I have sketched. It is not remarkable that the
record has been lost. Commercial transactions lose their interest
as soon as they are balanced ; and, in fact, it is only owing to a
peculiarly barbarous tradition, I can hardly call it a principle, of

ANCIENT BANKING. 207

the English courts of law, which endured to less than two genera-
tions ago, that England possesses so extraordinarily large a record
of bygone business transactions. I am alluding to the old rules
which regulated or defined title by prescription. If economists lay
down principles to which they claim assent, they must allege that
they come under the rule, quod semper, quod ubique, quod omnibus.
But the facts which confirm these utterances have to be sought,
and are not always easily found.

Cicero's oration in defence of Flaccus, who was accused of extor-
tion in Asia, gives incidentally some hints as to the movements of
specie, under the agency, as is obvious, of Jewish bankers or bullion
dealers. It appears that Flaccus interfered with their business by
prohibiting the exportation of specie from Asia Minor, and that the
prosecution laid great weight on the praetor's misconduct. Of
course we do not know from the apologist what was the precise
action of the praetor, beyond inhibition and confiscation. It is
pretty certain that the charge made, that the golcl was to be sent
to Jerusalem, is an exaggeration, and that Cicero is trying to evade
the issue by appealing to Eoman contempt for foreign rites. But
he, no doubt, states the fact when he alleges that these movements
of specie were carried on by the Jews, nearly sixty years before our
era, not only in Italy, but in every province of the empire, and that
to interfere with these transactions was to provoke powerful enemies,
not, I conceive, so much among the Jews, but among those who
recognized the advantage of this bullion trade. In the nature of
things these transfers must have been assisted by commercial in-
struments.

The Greeks called a banker, TpainliT^Q ; the Romans, argentarius ;
and there are numerous references in Greek and Latin authors to
the trade and customs of these persons. After the conquest of Egypt
they were particularly numerous at Alexandria, then the most im-
portant commercial city of the Old World, and, it would seem, the
centre of such trade with the remoter East as was carried on in
those distant times. But with the violent destruction of the old
civilization, and the reduction of nearly all Europe to barbarism,
the old system is forgotten, and reappears, as might be expected,
in Italy, as one discovers in the exceedingly copious records of
Muratori. At some later period I hope to explain to you in some

208 PAPER CUBBENCIES.

detail what was the position of the Italian city in the early Middle
Ages. My information will come principally from the author to
whom I have referred. I have little doubt that this commercial
system, undoubtedly in a very shrunken form, survived in Southern
Italy the incursions of Saracen and Norman, and that it may be
possible to trace the commercial law of the remotest ages in the
records of those trading cities. But at present I must confine
myself to the development of modern banking, i.e., the trade in
substituted currencies. You will understand that a substituted
currency is one which is made to perform the functions of money
for a longer or shorter period. Its agency may be momentary or
prolonged. Its conversion into money may be immediate, or be
deferred.

Individual enterprise, in matters of business, almost invariably
precedes partnership business ; partnership business precedes joint-
stock enterprise. Joint stock precedes State enterprise. But the
beginnings of all enterprise are generally obscure, and almost in-
variably unrecorded, for, as I said just now, the interest in a com-
mercial transaction expires with its completion. Hence we may be
sure that when action like that on which I am commenting attracted
the attention of the contemporary annalist, it had long been pre-
paring, and possibly long in action. Besides, a successful process
is a trade secret, or a source of personal profit. If, as some persons
suggest, perhaps with an imperfect acquaintance with human nature,
the State is so successfully manipulated, that competition is pro-
scribed, you may be pretty certain that competition will reappear
under the mask of secrecy. I am well aware that men are misled
by names, but we economists, and with reason, distrust all names,
and, while we are in possession of our wits, refer ourselves to things.
Again, as society is rude, violence is a recurrent risk, and success is
doubtful, imitation is slow. You will find, especially in monetary
science, and particularly in that branch of it which I am handling
this morning, that the wisest and most useful conclusion?, fortified
by abundant experience, are very slowly adopted by other nations
than those who have tried and proved them. Had I time, I could
point out to you how many instances can be found, in the economi-
cal history of nations, in which one State has progressed rapidly,
and others have gazed on them with amazement, imagining that

THE BANK OF VENICE. 209

there is something preternatural in their doings ; and, again, how
many instances there are in which they who know what is best to
be done for their fellow-countrymen, appeal in vain to these facts,
which cannot be discerned by those who are blinded by the twin
forces of ignorance and science. To the votaries of these obstruc-
tive forces, secrecy is opposed. You will therefore understand
that, when I give you« an early date for an economic practice, I
give you the date of observation, not that of origin.

With this caution, then, I may say that the State Bank of Venice,
the earliest of these modern institutions, was founded in 1171. This
was during the time when Pope Alexander IIL was engaged in a
perpetual quarrel with Barbarossa, and the two Italian factions of
Guelfs and Ghibellines were being consolidated. Now Venice, which
cared nothing for Pope or Emperor, except in so far as it could get
advantage from either, had at this time almost a monopoly of trade
with the East. Other nations had fought the Crusades, and founded
the kingdom of Jerusalem, but Venice traded with Christian and
paynim. The city grew rich and powerful, and you will often find
that when people are rich and powerful, their orthodoxy, and even
their morals, are not weighed with exceeding scruple. At this time
many hard things were said of the Venetians, but everybody, espe-
cially those who had need of their services, financial or diplomatic,
had dealings with the Venetians. They took all currencies that
came to them in course of business, and they secured a profit on
all the business they did. I should weary you if I gave you a tithe
of the names which belonged to the coins then congregated at
Venice. They were more numerous than the nationalities, for the
style or effigy of many a forgotten monarch, from Bactria to Mauri-
tania, from the caliphs of Spain to the dukes of Moscow, were in
the Venetian treasury.

Venice took, sorted, valued, and discounted them all. An ex-
perience of the gain derived from these processes led them to the
discovery of giving a ticket to depositors who were waiting for
purchases or sales. It is not wise to carry much money about with
one, even in these days, it was less wise in those days. Very soon
the ticket, really a warrant, implying that the depositor had a right
to the coins specified or endorsed on the document given to the
depositor, was found to be as good as cash, even better, for it was

15

210 PAPER CURRENCIES.

y

a better security. Very soon the Venetian note bore an agio or
premium, and a bank of deposit was formed. Very soon the bank,
to encourage deposits, gave privileges to its customers, or, which is
the same thing, put disabilities on those who were not its customers,
as, for example, they declined to permit bills of exchange to be
negotiated or discounted, except at their bank, or stayed process
against the acceptor of the bill, that is, the person liable, until his
bill was protested, that is, the non-fulfilment of his obligation was
sworn before a notary public, that is, one of their own licensed
officials. The Queen of the Adriatic soon learnt how to give
stability to its own institutions, and to suggest instability on those
which were not its own. But I need not follow the fortunes of the
Bank of Venice.

We get on more solidly chronological ground when we come to
the Bank of Genoa, founded in 1407. At this time, the Western
world, or rather the potentates of Western Europe, were near on
reducing the Pope, who had so long terrified them, to the condition
of a nominee, holding office during pleasure, nominally of a general
council, really of themselves — for laymen sat in the councils of the
early fifteenth century. The scheme failed, for reasons on which I
need not dwell here. To some extent the Pope recovered his own,
though never to such an extent as to make an anti-pope a
practicable expedient. But the power of the kings increased.
It was just the time in which a bank on the Western Coast
of Italy had good prospects of business, and the Genoese char-
tered a company for the purpose, gave it immediate privileges,
and gradually increased these privileges. At last the Bank
of Genoa became an imperium in imperio, which made conquests
of its own, and negotiated independently with foreign Powers.
It existed as a shadow down to the end of the eighteenth
century.

The Bank of Genoa was not one of deposit. It did not purport
to secure to the depositor the exact moneys which it had put into
the Bank, earmarked, so to say, for him. It took his money, gave
him an acknowledgment in the shape of a note, which was
transferred from hand to hand, pledged' its credit that it would
repay him on demand, and traded or made acquisitions with its own
capital and that of its customers. Through the fifteenth and sixteenth

THE BANK OF GENOA. 211

centuries the Bank of St. George was and remained a very thriving
undertaking. The trade with the East through Alexandria was very
prosperous during the fifteenth. The Western Mediterranean, to all
appearance, became exceedingly rich and powerful during the six-
teenth. The gift of Borgia seemed inexhaustible, and when, under a
succession by marriage, Philip II. got possession of Portugal,
with its vast Indian possessions and their illimitable resources,
Philip and the Inquisition seemed destined to dominate in Europe,
and become the masters of the human race. To discount the
bills of so rich a potentate as Philip seemed to be good business.
Spinola told the Genoese it was, and the Bank and the merchants
competed for Philip's paper. I know nothing which would interest
me more than to discover the rates at which they discounted it.
They were probably high, at least Philip said so, when he
repudiated his debts in 1596, ruined the Bank, ruined the
merchants, and left Spinola as best he could to finish the siege of
Ostend. In war, especially in a war which supports itself, every-
body but the warrior may be ruined. This unequal arrangement
still subsists.

Philip, as we all know, was impoverished, and with him the
country which he misgoverned, by his attempt to subjugate the
Dutch. The resistance of Holland was infinitely more significant
than the resistance of Athens more than 2000 years before. The
collapse of Philip was far more complete than the collapse of
Xerxes, for it took near fifty years of his and his son's reign, and
was of infinite value in training the Hollanders. Towards the
very end of the struggle the Dutch determined on establishing a
bank. They did not, in 1609, take the precedent of Genoa, for its
experiences were not encouraging. They also established a bank
of deposit on the model of the old Venetian bank, and shortly
afterwards, Hamburg, the only Hanse town which retained its old
prosperity, followed the Dutch example. It will be remembered
that at this time Amsterdam was the Exchange of Europe, as
Venice had been during the time of the Crusades. It rose by its
own heroism and strength, and on the ruin of Antwerp : I regret to
say that England, which owes more to the Hollanders than it does to
any other race, never ceased intriguing till it ruined Holland and
the Bank. The process was aided by Dutch unwisdom. The Dutch,

212 PAPER CURRENCIES.

for reasons into which I cannot now enter (though the burgomasters
of Amsterdam and its council took oath annually that the treasure
was intact, and were confirmed by the evidence of 1672, when the
De Witts were murdered, and there was a run on the Bank, but
the treasure was found intact), borrowed the capital in the succeed-
ing century for the Dutch East India Company. "When the French
invaded Holland in 1795, and perhaps expected the reward of
patriots in the cellars of the Bank, they were found empty.
But Adam Smith, when he wrote his " Wealth of Nations,''
thought that an account of the Bank of Amsterdam was more
interesting than that of the Bank of England, and got Mr.
Hope, a Dutchman of Hebrew descent, and ancestor to some
distinguished English Churchmen, to give him a " digression "
on it.

Private banking preceded, as usual, joint-stock banking in
England. In the seventeenth century the wealth of England was
centred in London. The goldsmiths, members of the most
opulent and enterprising of the City Companies, who had lent
much to Charles, became wealthier under the Protectorate than
under the monarchy. Cromwell's government was strong, and
strong governments seem to be safe, while safe governments
attract the wealth of the timid. Already during Cromwell's reign
the project of a Corporation bank was mooted, and the Bank of
Amsterdam was the obvious model. But corporations in a
republic are much more secure than corporations under a
monarchy. During the Protectorate the London Corporation was
respectable, and remained respectable for a century or more after
the Protectorate. But, as the surrender of the Charters proved, it
was not safe. The opponents of the Bank of England were never
tired of saying that a public bank and monarchy were in-
compatible. They certainly were if the monarch was a Stuart.
With these people nothing was sacred, nothing safe. In 1638
Charles I. stole the money in the Mint, £204,000. In 1672,
Charles II. stole the money in the Exchequer, £1,328,526. The
father paid the money back, for he found that it would be unwise
to keep it. The son, who, Kochester said, never did a wise
thing, neither paid principal nor interest. In such times,
and under such kings, it would have been as unsafe to estab-

THE BANK OF AMSTERDAM. ENGLISH BANKING. 213

lish a bank as it would have been to entrust the Exchequer to
FaLtaff. The only chance for a bank was a revolution. It came
in 1688.

No doubt the project of founding a joint-stock bank in London
was in every one's mind as soon as the Government was settled,
and James was driven from Ireland. But the projectors of the
institution might well have hesitated. The business of banking,
and that a very lucrative business, was in the hands of wealthy
men, who had a common interest in keeping it. The bankers,
then called goldsmiths, took the money of such among their
customers as wished to find a safe place of deposit — no easy
discovery, for after the Bestoration London swarmed with
footpads and highwaymen — and gave acknowledgments of the
deposit in the shape of notes. These notes passed freely from
hand to hand, were indeed a favourite instrument of business and
trade, as they were portable, were easily traced, and, if they fell
into wrong hands, could at least be stopped, and very probably
recovered. The goldsmiths soon discovered that they could issue
notes, the amount of which was far in excess of the money which
they ordinarily held, if the issuer was known to be solvent, and
could thus carry on a business by their own credit. This peculiarity
of the new system was perfectly well known and recognized at the
time, as may be gathered from contemporary pamphlets. But
besides the profit derivable from these issues of credit, which
fulfilled to the goldsmith and the trader all the functions of money,
these persons derived a very great profit from the discount of
foreign bills. The exchange between England and Holland was
subject to very violent fluctuations, fluctuations which seem
incredible to modern experience, as they are without parallel in
recent times. But two centuries ago, the chances of exceptional
profit, especially in foreign articles, was very great. "Within a few
months such an article might rise to a price treble that at which it
ordinarily stood, and though the trader might be certain that it would
not fall below a certain rate, the speculation in a rising market, if
the trader had money or credit, was generally safe, and might
assure a gigantic profit. With such prospects, the trader might
endure complacently such a rate of exchange on his bills as would
be ruinous to his modern successor. For example, the chief

214 PAPEE CURRENCIES.

supply of saltpetre was from the East Indies. Its price was open
to great changes, as the demand of war, or the safe return of the
East India ships were announced. It more than doubled in price
in a week. Now the trader who knew what ships were afloat
might reasonably calculate on his profits for a time, and might, if
he were quick, get a monopoly of the market. It was by such
bargains that the great fortunes of this period were made.

The exigencies of the Government were the opportunities of
those who were projecting the Bank, and Montague, who had
ulterior motives in encouraging the projectors, was quite ready for
negotiations in 1694. "William had determined if possible to rival
the victory of La Hogue by a land campaign, and had planned the
siege of Namur. But the expenses of the war were great. The
country gentlemen had granted the land tax, then a great sacrifice.
Montague raised a million by a lottery, and gave a charter to an in-
corporation of bankers, on consideration of a loan, to be raised within
a brief time, of £1,200,000 at 7 per cent. The whole was subscribed
in a few days. The new incorporation received deposits and issued
notes, in imitation of their rivals, the goldsmiths. They expected
to pay their dividends from the interest paid by Government, from
the profits of their own issues, acting as money, from the employ-
ment within safe lines of their customers' deposits, and from the
discount of bills. In short, they strove to get hold of the gold-
smiths' business, and they had to expect, and did experience, the
goldsmiths' enmity. This is not the occasion on which to deal with
the early struggles and rapid success of the Bank of England. I
have told the story of its first nine years in a volume recently pub-
lished, the occasion of which was my discovery of a price list of
Bank Stock, printed weekly in Houghton's Collections. The Bodleian
Library has a perfect copy of this remarkable periodical. The
British Museum, as I found from a recent inquiry, has only an im-
perfect copy. I suspected that the National Library was, in this
particular, not so well off as we are, from the slighting manner in
which Macaulay treats Houghton's labours. It would have been of
great value to the historian if he had seen the Bodleian copy.

The peculiarity of the government of the Bank of England, from
its inception and for many years after its business commenced, was
that the management was entirely in the hands of Whigs and Dis-

TEE BEGINNING OF THE BANK OF ENGLAND. 215

senters.Sir John Houblon, the first Governor, two of his brothers
being in the direction, was the descendant of a Flemish refugee,
who had fled to England from Alva's persecution. From the
correspondence of Pepys, preserved in our library in the Kawlin-
son Collection, it is clear that Houblon was a general, but especially
a timber merchant, for though Pepys chiefly writes to him about
ship stores, he gets him to perform certain commissions, chiefly in
dress, for Mrs. Pepys, the lady whom he appears to have treated
with great consideration, though he writes of her with much dis-
paragement. Holland, though it grew no timber, was the principal
mart for this produce, and like genuine traders, the most patriotic
Hollander thought no scorn of selling materials of war to Philip of
Spain and Louis of France. They believed, and quite correctly,
that they could sell them the goods, and maintain war on a portion
of the profits. We did the same by the first Napoleon during the
great Continental war, and with the same results. Napoleon put
impediments in the way of procuring stores for his own troops, and
thereupon secured a higher rate of profit for the English manu-
facturer and merchant. There are several other names, manifestly
of French or Flemish origin, in the first list of directors. Now,
though the days of active persecution were past, disabilities were
put on Nonconformists, and humiliations were inflicted. In conse-
quence, the London Dissenters became a virtual corporation, which
acted with a common purpose, had reciprocal sympathies, and gave
mutual aid. Macaulay, you may remember, has shown how much
better were the prospects in the professions and in trade of those
who stood in with Nonconformity. The Nonconformist minister
exercised far more influence than the Anglican divine did, the
Nonconformist trader was more sure of help and consideration from
his wealthier co-religionists than the shopkeeper did who affected
Episcopal ministrations. This is always the result of persecution,
when it does not go to extremes. It unites its objects into an
organization.

The directors, too, were Whigs, not of the school which made
alliances with their opponents in order to keep office, as the Whigs
of 1710 did, or maintained a sulky opposition to their old leaders
as the Whigs of 1730 did, but downright faithful adherents to the
principles of 1688. The critics of the Act of 1694, under which the

216 PAPER CURRENCIES.

Bank of England was first constituted, provided, fortunately for the
institution, that the advances that might be made to Government,
beyond, as it appears, such ordinary banking facilities as were
accorded to all customers, should have the sanction of Parliament,
the violation of such a regulation being visited with a heavy fine.
Hence the Bank could always plead inability to make large
advances by the terms of the Act under which the Bank existed.
When, in 1797, Pitt nearly ruined the Bank and its credit by exces-
sive demands on its specie, under the form of advances on public
securities already created by parliamentary grants, he strained the
principle of the Bank Acts, if he did not violate the letter.

The political relations of the Bank of England to the Government,
as soon as ever, under its second charter, it had conferred on it a
virtual monopoly of joint-stock banking, were of singular impor-
tance in the development of the parliamentary system which was
formulated in 1688. There was only the form of a representative
assembly ; the duly elected members were outnumbered by those
returned from the close boroughs. But the Bank of England be-
came the financial agent of the Government, and in no slight degree
its financial master. It was, indeed, from time to time, compelled
to accept disadvantageous terms, on the renewal of its charter at
successive periods, for it overvalued its power of issue, and the
advantage which its apparent monopoly gave ; but the Bank directors
knew that the Government of the day could not break with it, or
dispense with its services. The fortunes of the Bank were bound
up with he fortunes of the Act of Settlement, and there was no
fear that a correspondent of the Stuarts would be found in the
Bank \ arlour. It thus wielded a silent, secret, but most effective
authcrity. Addison illustrated, in one of his cleverest " visions,"
how the Bank of England was identified with English credit. The
Bank negotiated all the loans of the eighteenth century, and was
the agency by which the good faith of Government was assured.

From the very first, the Bank possessed and exercised the power
of discretionary issue. Its note was not, and never purported to
be, a warrant entitling the holder to recover the exact and literal
value received, the very same coins which had been deposited, and
were originally made the security for the note. It always professed
to trade with the customers' money, only engaging to refund to

THE RELATIONS OF THE BANK TO GOVERNMENT. 217

these customers at their discretion, the cash which had been
entrusted to it. It had, of course, to learn within what limits it
could use its customers' balances, and more difficult still, to deter-
mine the extent to which it could, when required, make advances
from these balances on public securities, actual or prospective.
Its notes, too, were of large denominations, and were therefore
generally employed, if not almost entirely, in mercantile transac-
tions, especially in the transmission of credits, operating as short
dated bills of exchange.

Now I have told you that no country ever retains a larger amount
of metallic currency than it finds necessary for the transaction of
its proper business. The private individual takes money to spend
or to hoard or to invest, in some interest or profit-bearing security.
If it is spent or invested, it passes away from the individual to those
whose interests, say, as traders, is to make money yield as rapid a
profit as possible. If it is hoarded, it is withdrawn altogether from
circulation, and as long as it remains in this form, it is virtually
extinguished as an economical agent. Now what is true of a
metallic currency, is true of a substitutive or subsidiary currency.
No man keeps more of it than he wants, and society collectively
circulates no more than it wants. To keep it needlessly is to incur
a superfluous risk to the ordinary holder, to decline the chance of
profit to the manufacturer or trader. The ingenuity of modern
society is turned in all directions towards making its metallic cur-
rency as efficient as possible, and it strives with equal assiduity to
make its paper currency as efficient as possible. It follows, there-
fore, that bankers cannot put more paper money into circulation than
the public need. If they make an excess of issue, the excess comes
back instantly to themselves, as the parties responsible for the
engagement which the note implies. Again, if the community
requires more paper currency than the banks are able or willing to
give, either by legal restraint or by caution, the community will
discover some paper substitute, which it will employ in lieu of notes.
Thus, fifty years ago, bills drawn by the Manchester house of Jones
Loyd and Co., on the London house of Jones Loyd and Co., per-
formed all the functions of a note currency in Lancashire, and
brought no small profit to the ingenious firm, of which the head
was the late Lord Overstone.

218 PAPEB CURRENCIES.

It is sometimes alleged that paper currency has as effective an
influence over prices as a metallic currency is admitted to have.
But this is an error. Gold and silver influence prices when they
are adopted as co-ordinate currencies in proportion to the cost at
which they are acquired, the cost of acquisition being also affected
by the cost of their production, when that cost conforms to the
ordinary conditions under which industry is carried on. But neither
cost of acquisition nor cost of production affect, to any sensible
degree, the value of a note. Notes are the representatives, the
reputed equivalents of metallic money, and their acceptance and
circulation at the full value of what they represent, depends on
the conviction that they can be changed into money at the pleasure
or convenience of the holder. If they cannot be so converted,
and still keep up their full credit, as happened during the first
eight or ten years of the Bank restriction of 1797, it is due to
the fact that the public knows them to be amply covered, and
therefore agrees to use them as currency at their full nominal
value. If such an issue is in excess, or is not sufficiently
covered, the note is sure to be discounted, as happened during
part of the last ten years in which the restriction endured.

But it is said, by virtue of discretionary power of issuing notes,
a bank can practically coin money, and so by supplying an excess
of money give occasion to wild speculation. This is a confusion
between money, paper and metallic, and credit. If a bank could
coin metallic money, it could as soon create an excess as it could
by issuing notes. It would do nothing by such an act. If the
money were in excess it could go out of the country, if the notes
were, they would come back to the bank which issued them. No
power can make any people take and circulate more money than
they want. Of course I do not mean that bankers should be
allowed to circulate what paper they please. Every bank which
circulates paper, nay, every bank which takes deposits and trades,
should be constrained to prove, by an independent audit, that their
assets entirely cover their liabilities, and the surplus of assets over
liabilities, on the faith of which their customers deal with them,
and other than their customers take their notes, should be as
accurately expressed and published. The failure of the Greenways'
Bank exhibits the difference between a real and sham audit. I

THE POWERS OF A BANK OVER NOTE ISSUES. 219

will tell you before I conclude this lecture why a sham audit was
permitted under the Act of 1844.

Banks can assist a rash speculation by granting indiscreet credit,
though there is less likelihood that they will do so than other
traders will, for it is a fundamental rule in banking to deal with
easily convertible securities only. Thus a bank will discount a
three months bill having known names on it, because the security
is short; it will not advance money, if it be wise, on the mortgage of
real estate, however ample the security is, because the term is
indefinite, or in banker's language, a mortgage is a dead security.
But banks may be deceived by fraudulent bills, or may be under
the impression that the return will be quick, when it turns out to
be delayed, or they may give credit to those whom they believe to
be solvent, when they are not so. Credit may then raise prices,
but it does so only because it is believed to be money, or to have
money behind it. Generally, however, if not universally, the
rising market precedes the indiscreet grant of credit, for the
prospect of exceptional profit must needs go before the attempt to
gain it. I do not deal with the cases in which credit is continued,
after it is shown to be undeserved or incautious, wThere I mean the
banker thinks that he can by timely help recover what is in danger.
The effort is seldom successful, and is technically called throwing
good money after bad. Nor do I deal with fraudulent banking on
the part of the banker. This is a crime, 'hough it is not punished
always as it deserves to be. I am speaking of business carried on
by honourable and prudent men.

Neither note issues nor credits can be based on anything but
money, or upon securities convertible into money with the least
conceivable delay. Suppose, for example, that a bank has liabilities
in the shape of customers' balances, and notes to the extent of a
million. It should have one-third of its liabilities ready at hand,
in the shape of money, of Bank of England notes, or of deposits
similar to those of its customers in the Bank of England or at
call. It may have another third in Government stocks, on which
it can borrow if it needs, or sell. It may have advanced the
residue on commercial bills, which in a strait, are also negotiable
though not as speedily or as safely as the securities which I have
referred to. It ought, besides, to have its own property and its

220 PAPEB CUBBENCIES.

own reserves. I have given you only a sketch of what a bank
might do with wisdom. But there are occasions on which it
might as wisely vary the distribution of its assets, and in the
interpretation of these occasions, but always with the knowledge
that it must secure itself, the practical judgment of the banker
resides. At this stage, I must leave the economical view of the
subject, in connection with which are many problems, and return
to the historical particulars before me.

The Charter of the Bank of England was issued on July 24, 1G94.
It began its business about the middle of the August following.
During the first two years of its existence, when its charter was
incomplete, it was subjected to three very serious strains. These
were the state of the currency, the project of the land bank, and
the straits to which it was put by unwisely advancing too much of
its cash on Government securities. The first of these difficulties
was met slowly, and, as far as the Bank was concerned, grudgingly,
by the recoinage ; the third by an exposure of the Bank's affairs in
Parliament, by the evidence afforded by its solvency, and by the
wisdom which for a hundred years guarded against the recurrence
of the risk. On December 4, 1G96, the issues of the Bank were
£1,657,996 10s. 6d., and its cash in hand was only £35,664 Is. lOd.
It had practically lent this disproportionate sum to Government by
anticipating the payment of taxes, an act of incaution which,
unless its banking business were to be given up altogether, nothing
but prudence could save it from. The second of these causes, the
temporary rivalry of the land bank, requires a somewhat longer
comment. The land bank is an illustration of the error into which
human societies are apt to fall.

If I have made myself at all clear, you will have seen that a
paper currency will be accepted and used as money only on the
understanding that it may he cha\iged into money at the pleasure
of the person who holds it. It may be the case, and it constantly
is the case, that the actual amount of paper money in circulation
is greatly in excess of the known gold which is held to meet it,
though it never in a well-ordered community with a convertible
paper currency nearly equals the amount of gold which is actually
circulating in the country. If, however, one includes in the paper
currency, the cheques and bills and other instruments of credit,

THE LAND BANK OF 1696. 221

mature and immature, the paper put into circulation in a com-
mercial country is greatly in excess of the gold which is reputed
to cover it. But this makes no one uneasy. The extent to which
metallic money is made to support other instruments of credit
indicates the efficiency of the currency, and the extent to which
gold is demanded for notes is a calculable average, more interesting
to the bullion dealer and the bill discounter than to the ordinary
Englishman, who is satisfied that he can get what he wants in the
way of money as he wishes. In short, additions to the stock of
gold in domestic circulation are temporary, dependent on easily
ascertained causes, and therefore anticipated. But though the
power to get gold may not be exercised, the power must be recog-
nized and must be respected.

Now from seeing how great a mass of business may be done with
but little metallic money, people begin to conclude that one can do
without it at all, and can substitute in the place of it even interest-
bearing security, such as a public fund, or a highly desirable kind
of property, such as recently was land, for the rent of land from
the beginning of the seventeenth to the last quarter of the nine-
teenth had been regularly rising in amount. " Why not then,"
persons argue, issue notes on the security of Consols, or on the
land of the country? The security is indisputable, the pledge
stable, the basis of the security bears a revenue, while gold, do
what we will, yields in itself no revenue, and, as you economists
say, eludes all efforts to forcibly detain it. Surely stocks or land
are a better security. Do not your own bankers invest their
balances in stocks, rather than accumulate barren money ? "

To this the answer, and the sufficient answer, is, that people will
take and circulate notes because they know that they can get gold
for them. For a £5 Bank of England note I can get five
sovereigns, when I want to get them. If instead of five sovereigns,
I am offered by the bank which issues the note £5 worth of stock,
or land, what I receive in exchange is of no use to me unless I
sell it, and so take upon my shoulders a second transaction,
certainly of a troublesome, possibly of a risky, character. After
the example of Master Dumbleton, I like not the security, and no
one — unless he were a conscious or unconscious swindler, and Sir
John Falstaff, I fear, was intended to represent the former class of

222 PAPEB CUBBENCIES.

adventurers — would press it on me. As to the land bank of 1696,
the scheme possessed every blunder which crazy heads could
have invented, and it would not have had currency for a
day, had not the country gentlemen and Tories, who hated the
Whigs and the Dissenters, imagined that they could get money
easily, and ruin the psalm-singing, snivelling, Puritan usurers
of Grocer's Hall, which was then the habitation of the Bank of
England.

In the darkest hour of the Bank of England, in the spring of
1696, when the Tories were pressing forward the land bank, and
were prematurely glorying in the certain success of a swindle,
Montague contrived to procure a power to issue on behalf of the
Government what were virtually bills of exchange, bearing a fixed
rate of interest, and secured upon anticipated revenue, and
redeemable at a given date. These are called Exchequer bills, and
they remain to this day as a Treasury expedient with which to
keep a balance in the Treasury by their circulation. It was, and
is, in their capacity of bills of exchange, that they are first-class
banking securities. In this manner they perform the functions of
currency, render that whose functions they perform more efficient,
but do not affect prices.

For a hundred years the Bank of England performed notable
functions. I cannot follow them in this lecture, which is only
intended to give an outline of the principles on which banking is
carried on, and, according to my custom, to illustrate what I have
to say by historical parallels. During this century, it became the
centre of trade and credit, was- to successive Governments a
permanent ministry of finance of an invaluable kind, and was an
adviser; sometimes an ineffectual adviser of prudent counsels.
Of course it made mistakes, but it gained wisdom for the future,
and accumulated that prudence, invaluable in public business,
which comes from practical experience. As long as the Bank
adheres to its traditions, it is of no consequence to know what are
the present politics of its directors. It holds a place which is not
above party, for party is the eternal struggle between good and evil,
but apart from party, because there is no doubt, to use a logical
expression, about either its major or minor premises. But the
Bank of England is the glory of the Revolution Whigs of the better

THE CBISIS OF 1797. 223

school, and not of them only, but of their best type, the London
Dissenters of that period.

Close upon a hundred years after its first great crisis came the
second. I am referring to the events of February 10, 1797. The
Bank had made prodigious loans to Government, for the younger
Pitt was straining every nerve to keep up, at the expense of
England, the policy which he thought proper to adopt in 1793.
I have, to be sure, very strong opinions about that policy. His con-
temporaries, especially those whom he favoured, called him a
heaven-born minister. I am afraid that I must assign his place of
origin to a lower region, for it would be a strange heaven in which
his policy would be acceptable. Again, Pitt anticipated taxes,
which, in that epoch of most atrocious finance, he was imposing,
and on the date given, or rather on February 26th, the floating loan
to Government was £7,586,445, and the cash in the Bank's hands
£1,272,000. We were engaged in subsidising the German prince-
lets. I will not touch here on the policy which was deemed
necessary, the suspension of cash payments, the order in Council
that the Bank of England be ordered to forbear any cash in
payment of its notes. This needs a lecture of its own, to be
postponed. At present it is more important that you should learn
the principles. We shall have hereafter to criticise the par-
ticulars. As the old logicians used to say, we are dealing with the
analytics now, we shall have to handle the topics hereafter.

No subject was more hotly debated during the suspension of cash
payments, in effect enduring for twenty-two years, than the policy
of the Government and the Bank. The latter would and could have
resumed cash payments easily during the epoch of suspension,
but the Government believed that they had an important engine in
the paper currency, which they must keep in their hands. Mean-
while, gold disappeared, was hoarded, held by the Bank and
exported. The only circulation was one-pound notes, worn silver
and copper. The advocates of an honest currency were thought
to be disaffected, as the Wall Street gamblers in American soft
money tried to urge that the advocates of good money were.
Foiled in this calumny, they got a well-known Oxford professor
to lecture in New York on the lofty patriotism which swindled
manufacturers and workmen. America is a very free country.

224 PAPER CUBBENCIES.

Some of its public men, and with impunity, make free with the ten
commandments, and seek for the approval of political economy.
When they did me the honour of approaching me, I gave them no
compliments. The advocates of an honest currency got the
Bullion Committee appointed in 1810. The Committee reported,
what Mr. Vansittart — perhaps, after Dashwood, the most absurd
Chancellor of the Exchequer who ever filled the office, I do not
touch more recent examples — neglected. Lord King insisted on
his tenants paying in gold. His son, my late friend Mr. Locke
King, told me that he did this because one of his tenants was a
Bank director. Then came Vansittart's motion that the bank-note
had not fallen in value, but gold had risen, the climax of financial
folly; and Lord Stanhope's motion of July, 1811, making it illegal
to pay or receive gold at less than its nominal value, the climax
of financial injustice. I only touch briefly on that which I hope
to treat in detail hereafter.

I must in the same manner, and on this occasion, only deal
superficially with the famous Act of 1844. Sir Eobert Peel was
under the impression, gathered, not unnaturally, from the action
of the Bank during the suspension, that bankers could issue
excessive numbers of their notes, and thereby stimulate rash
speculation. Perhaps they can, under an inconvertible currency ;
but even here the infallible barometer of the discount to which
the note is subjected, leaves even this an arguable question. Now
he could deal with the issues of the Bank of England. The
London bankers had long since abandoned the issue of notes, and
had invented, to the great advantages of commerce, and monetary
transactions, the system of cheques. Peel therefore resolved,
acting mainly on the advice of Mr. Jones Loyd, afterwards Lord
Overstone, Colonel Torrens, and Mr. Norman, to alter the constitu-
tion of the Bank of England — Lord Overstone having made the
main of his fortune by a process which he now urged should be
illegal. He divided the Bank of England. The issue department
he refounded on the principle of a bank of deposit, taking away
from the directors the power of discretionary issues, and making
the number or value of existing bank notes an automatic quantity,
partly based on public securities, partly on bullion in the Bank
cellars. He left the Bank to carry on its banking business at its

PEEUS ACT OF 1844. THE COUNTEY BANKS. 225

own discretion. He ordered that a weekly balance sheet of the
Bank's financial position should be published, and in this, I think,
he acted wisely; for all financial knowledge, if the account be not
cooked, is of high practical value. He permitted, in case country
banks abandoned their business or failed, that the Bank of
England should be entitled to add their issues to its own.

The expedient, as a means for checking what Peel deprecated,
failed. Within a year or two after his Act, he had to authorise an
excess of issue on the authority of the Administration, and get a
bill of indemnity for his action. This has happened since, time
and again, and the periodical suspension of a law seems to me to
be the most serious criticism which can be brought against its
efficacy. Of course the ingenuity of finance can always baffle the
most peremptory enactments, and in spite of Peel's Act, perhaps
in consequence of it, the development of the system of paper
substitutes has been rapid and remarkable. But I have not space
or time on this occasion to prosecute an inquiry, either into the
Act itself or into the remedies which have been suggested for its
amendment. I ought, however, here to say, that though I think
meanly of Ricardo's theory of rent, conclude that his speculations
on value are metaphysical rather than practical, and see great
difficulties in accepting his canons on over-production or what were
called general gluts, his authority on all matters of monetary
science is of the highest. Here, like the Juno of Virgil, he was at
home and master.

A few words on the country banks. Peel limited their issues to
their average amounts at the date of his Acts, and prohibited new
country banks from issuing at all. But he took no steps to secure
evidence of their solvency, insisted on no independent audit of
their assets and liabilities. The fact is, the country bankers were
the social and political despots of the small boroughs, and in Peel's
day these small boroughs were the supports of his party. To
have affronted the country bankers, to have exacted pledges of
integrity from them, would have been to imperil the maintenance
of Conservative principles among those who aided the party at
Westminster. Whether after its disruption by the adoption of
free trade principles in 1846, Peel, had he returned to office, would
have amended the Act of 1844, in the direction which I have

16

226 PAPER CURRENCIES.

indicated, is a problem which his premature death in 1850 has
made insoluble. In this direction of monetary reform no successor
of Peel has gone, though I have reason to know that changes have
been contemplated, and perhaps, too, not in the remote future.
Perhaps, also, a recent and flagrant failure will stimulate the reform.
It cannot come too soon.

XL

THE ORIGIN AND PROGRESS OP ENGLISH PAUPERISM.

All economic utility a resultant of cost — The power of human energy
over nature indefinite — Present and manifest impossibilities illus-
trated— The coal famine of 1873 — Possibilities of production to the
acre — The saving of labour and cost — The recipients of profits —
The position of rent — The wisdom of the rent-receiver — The causes
why wages were depressed — The magistrates in Quarter Sessions —
The Acts for the relief of the poor — The defence of such Acts —
Parochial settlement — The close and open parish — The eighteenth
century — Arthur Young's comments — The Speenhamland Act —
The origin of the New Poor Law, and its effects.

I may I trust assume that you know and realize that the produc-
tion of wealth, i.e., the bestowal of utility on matter, by
intelligent labour, is limited only by the laws of nature, by which
I mean hindrances of a physical character put upon the process by
which those utilities are induced. Some of these hindrances are
obvious. To give motion we must incur cost. You cannot put the
human machine in motion, or any of those substitutes for human
labour which ingenuity has developed, without expenditure, the
expenditure of that which has been acquired by previous labour.
Even those natural forces which man has pressed into his service,
the force of running or falling water, of the winds and the tides,
are of no avail, unless man appropriates them by mechanism,
which represents the expenditure of previous labour. So again,
however much you may diminish its effects, you cannot overcome
friction entirely, especially in its most obvious form, the resistance
of air to artificial motion. But, on the other hand, though we

228 ORIGIN AND PROGRESS OF ENGLISH PAUPERISM.

know that there are limits to the power of man in the application
or adaptation of natural forces, we do not know and cannot tell
what those limits are. Every year discoveries are made which set
those limits further back, inventions which make that easy and
familiar which at an earlier time seemed impracticable and
impossible.

Now before I go further with the subject which I am treating
to-day, I may say that nothing is more barren, arid, and meta-
physical, than the discussion as to which is prior in existence,
capital or labour, and the collection of inferences to which you
must expect a very easy reply. All capital, like all wealth, is the
product of previous labour, and it may be readily conceded that all
capital, however rude its form, or simple its kind, must have been
a resultant from a previous satisfaction of natural necessities, and
from an intelligent consciousness that the labour of creating it
would shorten or expedite future labours. But though this is the
obvious and logical account of the origin of capital, and may be,
to some extent, illustrated from the practice of savage races, to
draw a conclusion from it, that economical labour can be considered
independently of economical capital, is to confound a primitive
cause with a modern effect. If I have made myself at all plain,
I have already shown how capital and labour in what we have to
consider an organized and progressive society are interlaced, how
they are remunerated, and to some extent how far the more
influential, and politically more powerful, of the two factors
has been able to oppress the other. But to discuss the origin of
primeval capital is a logomachy ; and to infer, as some have done,
that the analysis of its origin is to give a commanding position to
the claims of labour, is a sophism, which will hinder instead
of helping the true interests and the ultimate improvement of
those who are popularly said to work for wages. And similarly,
it is easy to exaggerate the functions of capital, and as it is easy so
it is a common practice.

I have said that the limit of restraint imposed on human
energies by what are known as the laws of nature is constantly
being pushed back. But political economists have frequently
assumed that the limit has been reached, and that it will be driven
back by no new discovery or utilization of force. This disposition

PBESENT AND MANIFEST IMPOSSIBILITIES. 229

to look on human skill as having exhausted its powers, and there-
fore to indulge in economical pessimism is frequently found in the
works of the most approved writers. Let me take some utterances
of Mr. Mill, and in taking these I do not by any means exhaust
his sinister predictions. Mr. Mill has accepted, with all its gloomy
riders, the doctrine which has been called the law of diminishing
returns ; he distressed himself with Mr. Jevons' inquiry into the
probable exhaustion of the English coal-beds, and the con-
sequences to English industry and English life, when we were at
once deprived of motive power and warmth, inferring from it
especially, that it was necessary at once to set about clearing
away the public debt, since hereafter we should be certainly unable
to do so ; and in his investigations into population, and the reputed
causes of its redundancy, he concluded that the field of foreign
supply was very narrow, and would soon be exhausted. Now in
these three alarms he confounded a present impossibility, the
interpretation of which is subjective, and should be founded
on facts, with a manifest impossibility, afforded by the inex-
pugnable resistance of natural law, which is objective.

Now I will grant that it is a manifest impossibility to grow 800
bushels of corn to an acre of land, or 7£ tons of grain food
for man and animals, or, at any rate such a rate of production
is inconceivable, the best present average being, say, l£ tons
or 48 bushels. I can more readily admit that we shall not be
able to convey goods and passengers over a railroad at the velocity
of a cannon-ball, during the first few seconds of its progress',
or that, granted that Mr. Jevons was accurate in his estimate of
the coal-fields, of the rate of production, of the rate of consump-
tion, and that he was also right in postulating that no economy in
consumption, and no substitution of any other force, was possible,
the future exhaustion of coal supply in Great Britain was a
calculable problem. I will admit that, when Mr. Mill wrote, the
cost of freight by rail and steam vessel was so high per ton mile,
that it must have materially curtailed the possibility of supply from
distant regions. But in all these cases a present impossibility, as
it seemed, was found out to be no manifest impossibility, that
it was a subjective, not an objective hindrance, and that the real
limit was not rightly taken.

230 ORIGIN AND PROGRESS OF ENGLISH PAUPERISM.

It was, when this acute and excellent person wrote, conceived to
be impracticable to reduce haulage charges below a certain cost,
and the speed of transit below a certain time rate. That an
express train should be able to go easily and safely at the rate of
seventy miles an hour or more, that the cost of repairing the
permanent way should be reduced to a third in amount, and that
material for the rails of the future should be almost indestructible,
and that such economies of fuel could be affected that the same
force could be elicited, or a superior product attained by a third of
the consumption of fuel or less, was not anticipated. No one can
blame a writer on such subjects for not foreseeing the results of
modern invention and skill ; but, on the other hand, no one
can praise him for assuming that the present conditions were
permanent. The elastic band of which he speaks is far less rigid
than he imagined, as time has proved.

The real occurrence of something like a coal famine, shortly
after Mr. Jevons' predictions were uttered, and were endorsed
by Mr. Mill, seemed to give reality to the forecast. In reality
there was a sudden demand for fuel power, owing mainly to the
demand which arose for restoring the waste of a peculiarly
destructive war between France and Germany, and the consequent
stimulus which the void occasioned to the British manufacturer,
who then occupied the field of supply. The price of coal rose
rapidly, and every one who had property, or thought he had
property in coal, hastened to take advantage of it. My friend the
late Professor Phillips told me that from 500 to 1000 square
miles of new coal-fields were discovered. Nearly double the number
of coal-pits were set to work, and the production of the article
has never recovered from the inflation. I remember that, three or
four years ago, I pat on a committee for sixteen days, listening to
the arguments for and against sixteen miles of new railway, which
was to pass over one of the Yorkshire coal-fields. Every landowner
but one, whose land it was intended to pass over, was favourable to
the project, and we passed the Bill, though with some modifications.
The Lords, however, threw it out. Now I asked one of the land-
owners who wished to get the Bill, Mr. James Lowther, why they
set so much store by it, seeing that no part of the district was
more than 2J miles from an existing railway ; and he told mc,

PBODUCTIVENESS TO TEE ACBE. 231

I do not doubt with perfect accuracy, that such was the com-
petition, that the difference of profit and loss on working lay
in those 2£ miles of haulage. I shall show presently to what course
part of the fall in price is due. But the facts are an instructive
comment on Mr. Jevons' prediction and Mr. Mill's alarm.

There is no doubt a limit in the production of corn to the acre,
but no one has discovered what the limit is. It may be that the
increase, as the Rieardians say, can only be obtained at a greater
relative cost, though I very much doubt whether such a fact has
ever been registered. But I am sure that no one has yet discovered
what is the maximum producible of particular crops, under favour-
able conditions. The sewage farm of Croydon is an area of 600
acres, a light and not otherwise fertile gravel. But being irrigated
by the drainage, the fertilizing powers of which it completely
exhausts, and discharges as pure water, it will grow for ten
months in the year an average monthly crop of rye grass at
the rate of seven tons to the acre. After a time the sewage is shut
off from some portions and oats sown on the land. Of these
the land commonly yields a good 100 bushels to the acre. It
may be retorted that this produce is exceptional. I will give you
an instance in ordinary cultivation. A iriend of mine, who had a
large London establishment, bought a country seat, with fifty
acres of land about it. It was like the Croydon farm, a light
gravel, which readily took and gave back what fertility could be
bestowed on it. My friend kept a very large quantity of stock.
In the autumn of one year I witnessed the preparation of one of
his fields. He trenched it, every four feet, with trenches two
or three feet deep, filled the trenches with good manure, and
levelled the ground. In the spring he sowed the land with rye
grass and vetches. The growth was so rank, that when I went to
see it as it was being fed by sheep, it almost reached to the top of
the hat of a man who was six feet high, and the ground grew more
than twenty tons to the acre of green food. He told me that
the husbandry paid him well. The same kind of reasoning
will apply to Sutton's culture at Reading, and I could give you
instances of ordinary farming of a very excellent kind, with similar
results.
Similar illustrations may be given about the cost of freight.

232 ORIGIN AND PROGRESS OF ENGLISH PAUPERISM.

I should think that at present, notwithstanding the hindrances
which protective regulations have put on international trade,
freights by rail or sea do not cost more than a fifth of that at
which they stood when Mill wrote. The ship is built more cheaply,
sails more safely and more quickly, consumes less coal, requires
fewer hands, and is laded or unladen far more rapidly than it was
a few years ago. The low cost of freight is alleged by Mr. David
Wells, one of the ablest American writers on economical subjects,
to be the principal cause in the fall of market prices for heavy
goods, no doubt a matter of severe competition to the British
farmer, but of infinite interest to the British consumer, and not a
little to the manufacturers, to whom cheap material is a benefit of
the first importance. Now a diminished cost of freight is a lessened
charge, and though profits may seem to fall, chiefly in relation to
the estimate made of fixed capital, and the interest which it is
calculated to bear, the prices of manufactured goods do not
tend to fall in the same proportion that the price of the material
falls.

Now these results are brought about by two motives, which are
the inevitable outcome of free competition. People have a habit
of saying that competition lowers prices. If it does so, in the
manner that I am about to describe, the lessening of price is
never equal to the lessening of cost, and lowered price may after
all mean increased profit. Over and over again people have found
that fortunes have been rapidly made because prices have been
lowered, while profits have been heightened. These two motives
are — (1) The motive to save labour ; (2) The motive to save cost.
Thus when mechanism is employed in place of labour, labour is
saved. "When the force needed to bring about a result is lessened,
or the time interposed between the process and the profit is
shortened, there is a saving of cost. It does not follow that the
wages of labour are reduced, because the cost of labour is lessened.
On the contrary, it is generally, perhaps invariably, found, that if
the efficiency of labour is increased, the wages of labour are
bettered ; for, first, profits are increased, and there arises a com-
petition for the profit-making agent ; and next, efficiency is a
kind of fertility, nay, the best kind, perhaps the only kind of
fertility, and therefore has to be paid for. It by no means follows

THE SAVING OF LABOUR AND COST. 233

that when competition drives down profits, the wages of skilled
labourers are also lessened. Their number cannot be suddenly
increased, and when competition is keen, under the conditions of
modern manufacture, the demand for their services may be
heightened as long as it is a demand.

So again with the saving of cost. All processes of invention,
as opposed to the discovery of new powers in substitution of labour,
save cost. In Siemens' furnace, for instance, greater efficiency is
obtained and with less expenditure of fuel. In Bessemer's process
for the manufacture of steel, the material is made to purify itself,
by the combustion of injurious admixtures. The substitution of the
hot for the cold blast, and a thousand other examples may be given
of the saving of cost, and hundreds of people, engaged in
engineering and similar callings, are constantly busy in striving to
get greater results at less cost. Now it is probable that new
machinery and even saving of cost may shorten, even extinguish,
employment. Economists cannot get themselves, it seems, out of
the pernicious habit of treating all forms of capital and labour as
equally mobile, because they always have in their mind balances
at a bank, which can be readily transferred, and accountants who
can do as well in a merchant's office as at a banker's. Hand-loom
weavers were ruined by the power-loom. Domestic industries have
been extinguished by manufactures. No doubt railroads injured
coach builders, as they did canals and turnpike roads. Nor must
we conclude that it is a good thing to dispense exceedingly with human
labour, any more than it is with human employments. Perhaps a
better rent is got for land as deer forest than for land as occupation
ground for cottars. But unless the gains of the individual are
to override every other consideration, it is a very arguable question
whether the state should permit such a kind of occupancy as
drives out man. The defence, and it is generally in the long run,
a good defence for invention and substituted forces, is that in a very
short time labour is merely displaced, occupation is really increased,
and the conveniences of life are multiplied and cheapened. But in
a deer forest, only the first of three ends is achieved. I hope that
I have sufficiently illustrated my statement, that while Production
is limited by law and nature, the limit is not easily discoverable,
and the power of adapting the processes of industry to these law3,

234 OBIQIN AND PBOGBESS OF ENGLISH PAUPERISM.

is and will remain unknown, and I thought it best, in discussing
the subject of English pauperism, to preface what I had to say
by a short account of the relations of labour and capital to pro-
duction ; for it is in the earlier stages of invention and improved
production in England, delayed in a singular manner in this
country, that the worst and the most lamentable exhibitions of
English pauperism were made manifest, and at last became
intolerable, after having been long scandalous.

Even though they make them too rigid, economists are agreed
that the laws of production are laws of nature, those of the dis-
tribution of wealth of human institution, wholly or mainly. By
distribution is meant that part of the gross product which is
received by each of the contributors to the partnership. By
saying that the laws of distribution are of human institution only,
economists intend, not that products are of necessity arbitrarily
assigned to each of the agents, but that the whole product being in
the power of man in society, they could be distributed (not indeed
to the total exclusion of one among the contributories, for in that case
the others would perish) according to the discretion of those forces
which are and must exist in order to constitute a society, in such
proportions as those who undertake, usurp, or are intrusted with
the administration of society may determine. These parties are
four — the recipient of interest, the superintendent of labour, the
labourers ordinarily so-called, and the recipient of rent. For
reasons already stated, the second and third of these are
analytically one, though in the distribution of the product, the
second may be able to secure great advantages over the third.
Again the first and second may merge in the same person. The
superintendent of labour may be a capitalist employer, who is
indebted to no one for a particle of the capital which he employs in
his calling. In general, however, and especially in modern times,
a great amount of business is carried on with borrowed capital.

Now in point of fact, if credit is maintained, interest is secured,
and seems to be first paid out of profits or products. But it must
be paid after labour, whether it be that of the superintendent or
workman, is at least kept alive. In short, interest on advances or
loans is due to an anticipation that labour will be productive
enough, after it has been kept going, to leave enough to satisfy the

THE OBDEB OF PAYMENT. 235

lender. This is equally true if the capital is actually borrowed,
or introduced into the calling by the superintendent of workmen.
If such a satisfaction is not accorded, the loan rapidly passes from
the active into the passive form of wealth, is hoarded instead of being
lent. If the insecurity of compensation is so great that people
who have wealth will not lend it, the disposition to hoard will be
intensified, and the reason is that the motive for saving is the pro-
vision against emergencies, and that this feeling is stronger and
more enduring than saving for the sake of profit on loans. It is a
mistake with many economists to say that saving is due to the
desire of profit. If people could get no profit or but a small profit
or interest, they could still save, perhaps save all the more, for it
is found necessary, with prudent people, to save for the sake of
security, and we may be sure that people saved and hoarded with the
greatest energy, before they could find the people whom they could
trust as borrowers ; and similarly, a very low rate of interest stimu-
lates saving.

Now it is generally said that the last of the whole four to be
paid is the recipient of rent. And this, when in a society the
distribution is effected by competition only, is certainly the case.
Rent, it is alleged, cannot arise till the others are satisfied or at
least paid. Hence it is said, and with general correctness, that
rent does not enter into price, and Adam Smith was adversely
criticised for saying that it did, for it was alleged that rent was the
result of price. This is true, even in those cases which some
economists have been inclined to except, as the rent of factories
and shops. Now setting aside the payment made for the building,
which is no more really a rent than payment made for the use of
machinery or tools is, however great the rent of sites or ground
rents may be, we shall be quite safe in assuming, that there is an
advantage, technically called a fertility, in particular sites, which
induces the person who hires the ground to give more for it than
he would for a piece which has less advantage or attraction. Rent
is paid for fertility, that is for qualities which enable the occupier
to pay more out of his produce than is sufficient to pay interest,
wages, and profits.

But though Adam Smith's statement was not economically
sound, it was not historically incorrect. Undoubtedly in the

236 OEIOIN AND PBOGBESS OF ENGLISH PAUPERISM.

earlier stages of this and other societies, rent was a tax, levied by
downright force, either without the pretence of an equivalent, or
as the representative of reciprocal advantage, as defence, and
payment for administration, or as mere blackmail, the rent
receiver, in consideration, refraining from plunder. And this is, I
think, the origin of the old law of distress, under which, when
the tenant failed to pay his rent, the landlord, or overlord, was
entitled to seize his chattels on that part of his holding from which
the rent issued. I have often found that rents in old accounts are
put under bad debts, because the lord's agent " did not know on
what land to distrain."

Hence you will observe that an economic rent might totally dis-
appear, and no one but the former recipient of rent be any the worse,
but every one also all the better. Bent is no matter of concern to
any one but the landowner, just as any other kind of revenue-bearing
property is, which becomes obsolete and unprofitable, as a canal no
longer used. If the earth brought forth so abundantly and so
readily for those who consumed its products, that the price realized
for the sale of agricultural produce was only sufficient to pay th
cost of cultivation, of collection, and of exchange, there would be no
place for rent. In an ideal state of plenty there would be no
economic rent. I say ideal, for in experience even the most fertile
countries pay rents. If land were all equally fertile, as long as
demand raised the price of farm produce above cost and exchange,
there would be rent, though MacCulloch, who was a demented
Kicardian, said it would not. But, on the other hand, everything
which tends to diminish rent by plenty and cheapness approaches
in its degree that ideal condition in which land is so fertile and so
abundant that there is no place for rent. Of course they who have
hitherto received rent fancy that when it falls or is reduced, the
country is going to ruin, but they who buy agricultural produce
know better. No doubt, if I were a great recipient of rent, I should
find it difficult to reconcile my interests with my convictions ; as it is,
I can afford to be an entirely dispassionate economist.

You will observe that I do not quarrel with rent. I find no fault
with it, and I would not interfere with it, unless under certain
circumstances, which I shall, I trust, make plain to you. It is not,
however, a sacred right, but the result of certain natural facts, as

THE POSITION OF BENT. 237

natural as labour, waste, and friction are. It comes out of the
limitation of human happiness as a doctor's fees do out of the
limitation of human health, Still less would I counsel either its
confiscation as Mr. George does, or its compulsory purchase as Mr.
Mill did. The former policy I think would be an injustice, the
latter would be a folly, or, to be more strictly economical, an unwise
bargain. If we had bought the English landlords out, more than
fifteen years ago, when Mr. Mill was insisting on the unearned
increment, every one who knows anything about present English
rents, would agree with me in thinking it a most incautious pro-
ceeding. It is true that the landowners treated Mr. Mill's proposal
as one of confiscation. Their opinions are probably altered now.
But they cling to the Eicardian theory that high prices cause high
rents, and are still expecting the unearned increment. In my
opinion it is as much vanished as the feudal system is. But the
reduced cost of freight is not the only cause of their declining pros-
perity, as I have already shown. And here I may observe that
there is one advantage which the condition of a person who is at
once owner and cultivator possesses, and yet has escaped the notice
of economists, that he is to some extent removed from the risk of
one or more of those artificial laws which regulate the distribution
of wealth. He is not so much affected by high and low prices as
the rent receiver is, for he lives on the labour of his own hands,
for the greater part of his expenditure.

Now as I have already told you, interest always tends to diminish
as wealth increases, on the presumption that men are honest in
their contracts. The reason is that on the desire of accumulation
for the sake of safety comes at a subsequent stage a desire of
accumulation for the sake of income, the principal remaining intact.
Now if laws such as usury laws meddle with the latter and later
tendency, they may tend to drive the latter into the former impulse,
and so raise the rate of interest, while their object has been to
lower it. One great service among many which Bentham did was to
point out what usury laws were doing. At last they were abolished.
It was seen to be inexpedient in the interest of borrowers, and
ultimately in the interest of lenders to regulate the rate of interest
by law, to make the laws of human institution meddle with loans.
At the same time, it is clear that if money contracts are rigidly en-

238 OBIGIN AND PBOGRESS OF ENGLISH PAUPERISM.

forced, a bankruptcy law, to include all debtors, becomes necessary.
The usury laws cut down the interest of the loan, the bankruptcy,
the principal. But though in my opinion there is no economic diffe-
rence between a usury and a bankruptcy law, for both are regulations
of free contracts, there is a great practical difference. In the usury
law the state regulates the contract, by a theoretically rigid rule.
In the bankruptcy law equity regulates the contract, and by a
variable rule. Besides in the bankruptcy law, the creditor blames
himself ; under usury laws, the creditor blames the law.

Now it is quite possible for human societies, acting on the rule
that the distribution of wealth is of human institution only, to
seriously curtail rent. There is already a school, which diligently
teaches that rent is a fraud, an extortion, a misappropriation of the
wealth which labour has created. It is not improbable, as the real
origin of rent becomes better known, that these opinions, however
unjust, unfair, destructive, may grow in intensity and work evil ;
for landowners in England are not conciliatory, claim very unjust
privileges, and having made tneir gain out of the industry of society,
strain every effort to further plunder the society to which they
owe so much. They talk of the burdens on land, which are light,
and should be heavy, for a spontaneous growth of wealth, to the
origin and increase of which the fortunate owner has contributed
nothing, is a peculiarly just subject of taxation, and not as it is in
the United Kingdom, a peculiarly favoured subject of exemption.
But except in the protection of some occupiers from outrageous
pillage, the state has not used its powers over rent, or the receiver
thereof.

It has been found disastrous to meddle in the interest of the
rent receiver with interest and profits. With interest it has not
meddled directly, though the mortgagor is treated with more
consideration than any other debtor is, for he has to bear no such
loss as an ordinary debtor does, if his pledge is depreciated, and is
assisted by what is called the equity of redemption, in case he
makes default in his payments, and his pledge is forfeited. But
that form of interest and profit which is anticipated from the
employment of farmer's capital is, and long has been, at the mercy
of the rent receiver, as I have already shown you, and it is because
the profits, interest, and capital of the farmer have been absorbed

TEE POSITION OF THE RENT-RECEIVEB. 239

by aggressive rents, for some of the consequences of which the
farmer is responsible, that the present unfortunate state of agri-
culture, the present depression of trade, and in particular the serious
stagnation of the home market are due. True to their instincts, the
landowners are seeking to retrieve the consequences of their own
action, and their own selfishness, by demanding further sacrifices
from the general public, the relief of themselves from their just
liabilities, and the imposition of food taxes on the general public.
I have a strong conviction that if they are not wise in time, their
latter end will be worse than their present state.

It has been possible and easy for the legislature to employ its
powers in the distribution of wealth in the direction of lessening
the share of the recipient of wages by positive enactments, and for
it to lessen both profits and wages in the interest of rent. It has
been possible for the legislature to deceive the recipient of profits
so entirely by plausible statements, as to make him an accomplice
in the oppression of the workman, and in the end to devote his own
energies and powers to the oppression of himself. "When forty
years ago, the mass of Englishmen threw off the old restrictive
laws which were intended to promote the artificial exaltation of
rent, they had become alive to the iniquity of the system ; now it
seems some of the people are apparently being gulled by the
sophisms from which their fathers freed themselves. They seem
to think too that they can persuade the workmen that artificially
high prices, i.e., prices which stint supply, will make better wages,
and give more employment. This state of things will lower wages
absolutely and relatively, and stint employment.

Now I have told you how, for 200 years and more, the representa-
tives of rent tried to depress wages by force of law, in the interests
of rent and failed. So complete was the failure that in 1495, the
legislature enacted that scale of wages for which the workmen had
contended, and so left them in the possession of the situation. The
workman had his trade union and benefit society in the guild to
which he belonged, an institution which I shall attempt to describe
hereafter. The condition of the country was eminently one of small
holdings. In a Surrey village, Tandridge, some of the history of
which I shall often refer to, there were, in 1600, forty-nine
owners or occupiers, whose average holding is nineteen and a half

240 OBIGIN AND PBOGRESS OF ENGLISH PAUPERISM.

acres, and I have no doubt that such holdings continued for more
than a century longer. A peasant who has land is in a much better
position to make an independent contract for his labour than one
who is landless. The landowners and farmers know this. They
have contrived to dispossess the peasants of all interest in the soil,
and they do their best to keep them landless now. In an earlier
lecture I gave you an account of the numerous Acts of legislation
by which the landowners in Parliament strove to depress the
labourer's condition, but in vain. I am now dealing with the
circumstances which secured their success, and followed on it.

Now the circumstances which led to this total rout and subjection
of the workmen were, first, the deluge of base money. The amount
of this was equal to the average coinage of gold and silver for any
seven years during Elizabeth's reign, and was almost certainly
equal to any ten years' coinage of her father's reign. When base
money is put into circulation by rulers, the heaviest loss, nearly
the whole loss, falls on the poor. This is what makes the crime of
the smasher so peculiarly infamous. Then came the confiscation
of the guild lands, and the loss of all the benefit society's funds, an
act of embezzlement of which Somerset was guilty, who added the
crime of hypocrisy to that of robbery, for his plea was that the
endowments were devoted to superstitious ends. Next comes the
inevitable rise in prices. Now if labour was as free as the winds, it
cannot made head against heightened prices, a fact which I make
no doubt Fair Traders know perfectly well, when they seek to delude
working-men with the falsehood that high prices bring high wages.
Provisions rose 2f times ; that is, 16-6 shillings after the change
went no further than 6s. did before, and wages remained nearly
unchanged. Finally, came the statute 5 Elizabeth cap. 4, under
which the labourer's and artizan's wages were fixed by Quarter
Sessions assessments, severe penalties being denounced against those
who took more or gave more than the justices allowed.

This famous Act, which consummated the degradation of the
poor, made pauperism inevitable, and misery universal, was really
no new legislation. The Act repealed all the old statutes of
labourers, and re-enacted all the provisions of those Acts. It did
not provide any new machinery, for the administration of the old
laws had been in the hands of the justices for nearly the whole 200

TEE CAUSES WHY WAGES WERE DEPRESSED. 241

years, and sometimes the right of making the assessment. What
it did was to seize the opportunity, when the workmen were help-
less, to consolidate all the old statutes, to draw up rigid rules of
apprenticeship, so as to make agricultural the residuum of all
labour, to enact exhaustive penalties, and to leave no loophole
through which workmen could escape, so as to better themselves
in the struggle with their employers. The English Statute Book
contains many atrocious Acts, most of them with hypocritical pre-
ambles. This Act of Elizabeth is, in my judgment, the most
infamous of them, for it was levelled against every right of the
poor, even of the poor to live, and entirely in the interest of rent.

The magistrates duly met, and issued their schedules of wages.
I have discovered thirteen of them, and perhaps, hereafter, more
will be found. They invariably prescribe wages which I am sure,
from the evidence of prices, would not, even if the peasant had
continuous employment, find bread for him and his household. It
was inevitable that he should be driven on private or public charity,
on the alms of the generous, or on taxes levied for his maintenance
on all occupiers. It is some satisfaction to find that, despite these
penalties, the wages actually paid were a good deal above the
justices' assessments. Employers were more generous than the
"little tyrants of the fields.'' Thus out of seven assessments
between 1593 and 1684, the average allowances for eight kinds of
labourers and artisans, three of the former and five of the latter,
were 3s. 0£d.f 3s. 0£d., 4s. Ofd., 5s. 3d., 7s. Ofd., 7s. ll£d., 5s. 3d.
a week. The average of wages actually paid was 5s. 4£d., 5s. 2jd.,
5s. 5£d., 5s. 9d., 7s. 5d., 8s. l£d., and 8s. 3d. It should be noted that
the highest assessments were made during the Commonwealth, and
that an attempt was made to reduce wages after the Kestoration.
The labourers, as far as the will went, were better off under the
rule of the saints than they were under that of the sinners.

Legislation for the relief of the poor, at first by voluntary con-
tributions, began with the year 1541. Between this date and 1601
inclusive, when the famous and permanent statute of Elizabeth was
enacted, there were twelve Acts of Parliament passed with the
distinct object of providing relief against destitution. These Acts,
which are a very instructive study for the economical history of
England, can be found in the contemporary issues, a complete set

17

242 OBIGIN AND PB0GBES8 OF ENGLISH PAUPERISM.

of which is excessively rare — our copy in Bodley being to some
extent defective — and in the folio reprint — copies of which, the
volumes extending from the earliest times to the conclusion of
Anne's reign, were sent by the express authority of Parliament to
the college libraries of Oxford and Cambridge. In ordinary col-
lections of these statutes, they are omitted as repealed or obsolete.

Now it was at first believed that private benevolence would fill up
the void in wages which bad government had made. But private
benevolence can never grapple with a national calamity, even if it is
very active "When, moreover, the head of the state is rapacious, lying,
extravagant, reckless, and dishonest, ordinary human nature, espe-
cially when it is severely pinched by the exhibition of these vices on
a gigantic scale, is more apt to loyally imitate them than to remedy
the mischiefs which they have ocasioned. Still it is possible that
Henry and his son's guardians fancied that private charity would
fill the void. The " Supplication of the Beggars M calculates that the
alms given to the begging friars amounted to £45,333 6s. 8d.
annually, and if people would give so much to the professors and
teachers of a creed which the king had dispossessed and proscribed,
surely they would give as much to misery and poverty. But it has
been constantly found that men will give to what they believe to be
a religion far more freely than they will to what they know to be
want, and perhaps with reason ; for it is very difficult to distinguish
between want and fraud, between real distress and simulated
poverty. It is certain that the anticipation was disappointed.

These statutes were of various character. At first they only
claimed voluntary gifts, collections in churches, made at first in
Midsummer, afterwards more prudently postponed to Christmas.
Very soon the appeal for voluntary aid was followed by exhortations
to the richer folk to give of their abundance. Soon the caitiff who
would not give was to be delated to the bishop, who was to exhort
him. In Mary's reign, obstinate covetousness thus reported was,
it seems, to be considered a suspicion of heresy, and inquiries were
to be made Very soon compulsion followed. The rich but
covetous man, who remained obdurate, was to be sent to gaol, and
an assessment levied on his goods. Finally, a general assessment
was ordered.

I have been fortunate enough to recover, and have printed one

THE ACTS FOB THE BELIEF OF THE POOB. 243

of these assessments. It is a rate levied on the parish of Tandridge,
for the relief of the poor and of maimed soldiers, besides other
objects, such as the maintenance of prisons and hospitals. The
unit of assessment is a penny an acre, and the justices direct that
only one rate a year shall be levied on owners and occupiers of
under ten acres, twice a year on those above ten and below thirty,
all additional assessments, if required, being paid by those who had
over thirty acres. The system was therefore one of graduated
taxation. But the rate provides that if the occupier has little land,
but a good house, he shall not be exempted from a tax which is not
to be too heavy on the poorer tenants.

The fact that laws for the relief of the poor were enacted after
the Dissolution of the monasteries has led some writers to connect
them with this event. Others have pointed out, perhaps to relieve
the Keformation from these odious features, that poverty, for which
the state was anxious, existed before this action of Henry. J dare
say that the Dissolution aggravated the evil. It is possible that
sheep -farming, rent-raising, and attempts to aggregate farms may
have increased the mischief. But I am entirely convinced that the
four causes given above are amply sufficient to account for it.

The Act of 1601 was at first temporary only, being enacted from
Parliament to Parliament, and therefore regularly included in the
continuance Acts. But there is no reason to believe that the legis-
lature from the first ever thought that the system of legal relief
could be abandoned. It was impossible, with the experience of
prices constantly rising, and with the system of justices' assess-
ments in full operation, to contemplate the diminution of destitution
as within the range of a probability. In course of time, the doctrine
began to take root, that as the poor, when in want, lived from the
land, they could not be wronged, if they were deprived of every
other interest in the land, as, for example, commonable rights
of pasture. The song which, while it bade the rustic "hang
sorrow and cast away care," also declares that the parish "was
bound to find them," is much more the abandonment of despair
than an outcome of contented thankfulness. The Act of Elizabeth,
rendered perpetual at the Restoration, was substantially the law
for the relief of the poor till 1835.

I do not know that there can be alleged an economical defence

244 OBIGIN AND PBOGBESS OF ENGLISH PAUFEMISM.

for the relief of destitution. It does not seem to me that Mr.
Mill's argument, that the individual man is not responsible for his
own existence, makes a very strong case for the responsibility of
those who are no more concerned in such a person's existence than
he is, nor do I think, if we could conceive a state of things in
which the maintenance of the destitute became an intolerable bur-
den, that the argument would be cogent. Assume a contingency
in which the struggle for existence leaves no margin for those who
work, and I do not think that men would elect to starve themselves
on behalf of those who do not or cannot work. But defective as
the economical defence of the legal relief of distribution is, the
moral and political defence of the practice is, I think, over-
whelmingly strong. The loss which every solvent ratepayer bears
in relieving others is cheaply purchased by the law which prevents
the hardness and indifference which would ensue if one were
familiar with the sight of unrelieved distress. The cultivation of
that habit of mind, under which, in spite of one's being compelled
to make a sacrifice in order to effect the result, men are indignant
at the poor perishing for lack of bread, is of no little social value.
The struggle after comparative abundance, or the competition of
those engaged in the struggle, is studied by the economist, who
discusses its conditions and its issues. But the moralist is glad
when the struggle is suspended, or some of its fruits are aban-
doned, in order that those who fail in the effort may live. So too,
the politician or statesman, who wishes that the mechanism of that
society, whose affairs he administers, may move with the least
friction, knows that the despair of those who are famishing, though
he may be able to curb its outbreaks, is a discredit always, and may
become a danger. Here, however, one's concessions cease.

The necessity of the English Poor Law can be traced distinctly
back to the crimes of rulers and their agents. I do not say that if
those four catses which I have recounted had been absent, destitu-
tion would never have ensued ; but I am certain that it would have
been more manageable, the police which legal relief must in the
end administer would have been less harsh, and the relief itself
more gently given and more gratefully received. In a vague way,
the poor know that they have been robbed by the great in past
time, and are stinted now. Nor can any defence be alleged for the

PABOCHIAL SETTLEMENT. 245

manner in which the rate is distributed. The gain of a Poor Law,
that is, the fact that relief is a harsh form of insuring labour
against sickness, old age, and incapacity, and therefore operates
in reducing wages, is on the side of employers. The maintenance
of the poor is laid on occupiers. No doubt, the fact that the small
occupiers do not employ labour, and therefore are not so justly
chargeable with its relief, accounts for the system of a graduated
rate, which, from the example of Tandridge, evidently prevailed in
the early days of the English Poor Laws. And, above all things, it
is scandalous in the highest degree, that great mansions and parks
should be now rated at nominal sums, and by people who are
personally interested in obtaining exemptions from contribution.
This gross unfairness is dangerous as well as dishonest, for there
is no little risk, when these practices are not only seen, but under-
stood, that there will be an effort after differential taxation in that
direction which will invert the present process.

At the Kestoration the law of parochial settlement was enacted.
Mischievous and selfish as the Act was, it was, I make no doubt,
thought urgent by the heavy incidence of the poor rate in the
wealthier counties, and justified as a return, in a sense, to the old
practice of parochial responsibility. It produced in the end, a
special evil, now fortunately historical, of the close and open parish
— the former being one in which the whole parochial area belonged
to one person, who could expel from its borders those who might
be chargeable, and might therefore get his destitute labourers
supported at the charge of others ; and the latter, one in which,
owing to a plurality of proprietors, such a policy was not possible.
This evil, remedied in part by Gilbert's Act, passed more than a
century ago, under which a number of urban parishes could, for
the purposes of relief, be included in one, was cautiously and at
last completely altered under the New Poor Law. I can well
remember the whimsical indignation displayed by some of these
close proprietors when they were made to take their share in the
common burden. I lost the friendship of one or two among them
owing to my zeal for this reform, and bore the loss with patience.

Just before the Eevolution, a return, preserved by Davenant, was
made of the poor rate in the several English counties. I will not
trouble you with the details. It is sufficient to say that the poor

245-OBIGIN AND PBOGBESS OF ENGLISH PAUPEBISM.

rate was much heavier in the midland, eastern, and southern
counties, than it was in those north of the Trent, though from the
returns of the hearth tax, an official document, it appears that
the North was, on the whole, as densely peopled as the South,
though far more backward in the conveniences of life. Again the
poor rate, relatively speaking, was exceedingly heavy. For the
time at which it was taken, it was about half the revenue of the
Crown in time of peace, a proportion which no later statistics have
ever disclosed, even at the time when it was over eight millions,
just before the change in the law. Again, the bonds of the
parochial settlement was made more strict after the Revolution
than they were before. The great change which settled the Con-
stitution brought no amendment to the peasant's lot. But, in
point of fact, the seventeenth century was one of almost unbroken
misery to the workman. At the conclusion of it, Gregory King
sets down all the labourers as a class which contributes nothing to
the annual savings, and the farmer as contributing next to
nothing. During this century the population doubled, and in the
eighteenth was again doubled.

Arthur Young notices with dismay and anger that, though the
wages of workmen had risen considerably at the date of his tours
as contrasted with those of a generation before, poor rates had
notably increased likewise, and he ascribes the disagreeable
phenomenon to the increase of tea drinking. It was due to a far
less recondite cause, one, however, which he would not have liked
to admit, for it would have been a shock to a system which he
greatly admired. The growth of the poor rate, despite the increase
of agricultural wages from about 7s. 6d. a week to 9s., taking the
harvest gains in, was due to the enclosures, the consequent exclu-
sion of the poor from small agriculture, and to the curtailment of
bye-industries. It was these bye-industries which kept rates low,
and even wages low in the North. Besides, enclosures went on far
more rapidly in the South than they did in the North, as Young
indirectly testifies, and as the agricultural returns of his own
department prove. The poor became more straitened even when
prices had not seriously risen, because they were more and more
divorced from the soil. At last the law of Elizabeth annexing four
acres of land to every cottage, and prohibiting overcrowding was

ARTHUR YOUNG'S COMMENTS. 247

repealed. It was a great boon to the peasant, but it was a hind-
rance to enclosures. He has not yet recovered it.

The first half of the eighteenth century, owing to the prevalence
and success of the new agriculture was one of great plenty, high
profits, low prices, and increasing wages. I have no evidence on
the subject of poor rates, but I conclude from Young's contrasts,
that they were stationary or declining. The next quarter was not
unprosperous ; the last was one of high prices, low wages, and
unparalleled suffering. The distresses of the poor attracted
attention, and Sir Frederic Eden essayed their history. For his
own time it is valuable, for the near part useful, for the remoter
past his work is worthless, for he had no information, and he does
not appear even to have studied the Statute Book. Eents rose
rapidly, and the farmers began to grumble at the justices' assess-
ments as too generous to the poor. Acts of Parliament were
passed, restraining the use of barley in beer, restraining the
excessive bolting of the bran from wheat, the king had bran
loaves served on his table, and the princesses wondered that people
would starve, while cake could be got. " I would sooner," said one
of these innocent creatures, " eat bread and cheese than starve."

The magistrates of Berkshire, appalled at the magnitude of the
calamity, and at their wits' end to devise a remedy, at the close of
the century devised a new mode of relief, which, from the place
of their meeting, got the name of the Speenbamland Act. They
were encouraged in their course by an interpretation which they put
on two Acts of Parliament, 9 Geo. I. cap. 7, and 22 Geo. III.
cap. 83. They assumed a certain sum, according to the price of
wheat, which would, they conceived, support a man, his wife and
one child, and that they declared to be the minimum earnings.
In the case of a man whose family was more numerous, they
despaired of obtaining increased wages from the employer, so they
added the necessary sum from the rates. This was known as the
allowance system, and was greatly condemned by the more zealous
Malthusians as a premium on population, or as they sometimes
said, incontinence. No one was struck at the outrageous injustice
of making those occupiers who did not employ labour pay tlie
wages, often half the wages, of those who did employ labour.
Shortly after its adoption, Mr. Whitbread tried to give legal

248 OBIGIN AND PB0GBES8 OF ENGLISH PAUPERISM.

authority to the practice, but it does not seem that it was ever
invested with this dignity. It prevailed till the new Poor Law
was passed, and so mechanical was it, that I remember two cases in
my own native place of provident and furtive day labourers, who
saved up the price of a small farm from their allowances.

At last the system became intolerable. The rates in the open
parishes were eating up the whole rent, and the landowner's device
was rapidly becoming the landowner's ruin. A new system was
tried by Mr. Nicholls and Mr. Lowe, at Bingham and Southwell,
and its success suggested the new Poor Law, which the Whigs,
guided by the metaphysical economists, carried. It was necessary,
but the process of change was inverted. It should have followed,
not preceded, the reform or abolition of the Corn Laws. But the
Whigs thought that the landed interest would be ruined if the
people had cheap food, and naturally preferred the former to the
latter interest. Curiously enough, Mr. Villiers' return of wages,
some few years afterwards, when he was at the Poor Law Board,
showed that wages in the aggregate had risen rather more than
poor rates had decreased. By this time the right persons were
paying them.

The apparently selfish policy of the party which carried the new
Poor Law led to the establishment of Chartism. It was of no
little service in its early days to the Conservative party in the
North, and even in its decadence it is of service to that party now.
It coupled political reforms with a socialist or quasi-socialist eco-
nomical platform. Some of these economical purposes were good,
as, for example, the Factory Acts, and there is little doubt that this
beneficent change was greatly aided by the working men who
followed Oastler and O'Connor. These people, however, were so
unintelligent that they resisted the repeal of the Corn Laws, on the
plea that free trade would lower wages. Even now, it is said that
not a few of them believe that a period of high prices, created
artificially, would heighten them. You at least are not likely to fall
into this delusion, for the whole consensus of facts proves the
reverse.

XIL
HISTORICAL EFFECTS OF HIGH AND LOW PEICES.

Gregory King's law — The foundation of the laws regulating prices —
Causes which depress and raise prices — The scarcity or plenty of
gold and silver — Lessened cost of production — Lessened cost of
freight — The produce of silver in England — Foreign silver and
gold procured by trade — The effect of plagues on prices — The
younger son and the civil war — The literature of the seventeenth
century — Shakspere and Dryden — The inventions of the eighteenth
century — The authors of the new agriculture, and Arthur Young —
The services of Sir John Sinclair to Scottish agricultwre — High
prices cannot of themselves recover high rents.

When I was drawing up the list of lectures which I purposed to
give in the present term, I very much hesitated before I concluded
to put down that which forms my subject to-day. The range of the
subject is very great, the facts are very copious and very intricate,
the subject from the historical point of view is as yet so utterly
unknown, and the evidence is so remote and so near, that I might
well despair of giving you a clear and connected outline of the
elements from which to make economical inductions and historical
interpretations. But, on the other hand, the topic is of such great
and general importance, the issues which it raises are of such pro-
found significance, the interests of which it treats are so varied and
so vital, and the future which it seeks to penetrate by the evidence
of the past is so immediate, so full of menace and withal so
obscure, that if I am able to throw any light on the situation, I
should be lacking in that courage which one who has special
knowledge ought to show, if he thicks he can elucidate a grave

250 EISTOBICAL EFFECTS OF HIGH AND LOW PRICES.

social problem. As on other occasions, I shall attempt, by way of
preface to what I have to say, to state concisely and as clearly as I
can what are the principles on which high and low prices depend,
or, in other words, the laws and causes which induce them, and in
what manner these causes which should be dominant are modified
01 obscured by other causes and conditions, the true force or
influence of which must be, if possible, weighed and distributed.
And here I may observe : (1) That there is no part of political
economy in which the metaphysical or psychological method which
you get up in your text-books is more misleading and delusive
than it is on this subject, where t&e only safe course is to collect
and estimate facts ; and (2) that variations of high and low prices,
which a century or more ago would have excited little attention,
and caused little alarm, in our day, when production and trade are
so sensitive and so complicated, rouse the gravest apprehensions
and exercise the attention of the most laborious and acute investi-
gators into economical phenomena and economical agencies.

Now there is one law of prices which you must know and under-
stand before you can make the least progress in interpreting the
simplest problem. It is known to some economists, I do not say
all, for it is mos-t unaccountably neglected or obscured in most
treatises on the subject, as Gregory King's law. Gregory King
was Lancaster Herald in the latter part of the seventeenth century.
Struck, as I do not doubt, with the extraordinary fluctuations of
price, particularly in the price of wheat, which characterized the
seventeenth century, and being a man of really statistical mind —
that is, one able not only to collect figures, but to interpret related
figures — he stated it in this form, and you will remember that I
have often referred to it: —

" We take it, a defect in the harvest may raise the price of corn
in the following proportions : —

Defect. Above the common rate.

1 tenth raises the price 3 tenths

2 tenths „ „ 8 tenths

3 tenths „ „ 16 tenths

4 tenths „ „ 28 tenths

6 teuths ,, „ 45 tenths:"

LAWS BEGULATING PBICES. 251

and from this King draws some highly practical conclusions from
the free trade practices of the Dutch. It will he observed that
King merely takes the price of corn, and that though he gives the
proportion in an arithmetical form, he intends to imply no more
than a principle, which experience may modify. Let me try to
draw out in the form of an economical rule or rules, the important
canon of prices which was suggested two centuries ago, as I have
seen it verified in the long research which I have given to the
subject. ,

1. The price of any article in demand, but at present in defect,
rises in price by a different ratio from that indicated by the ascer-
tained amount of the deficiency ; and e converso, the price of any
article in demand, but at present in excess, falls in price by a
different ratio from that indicated by the ascertained amount of the
over- supply. By the expression " ascertained amount," I do not
intend that the quantity shall be exactly measured. It is sufficient
for the illustration of the first rule that it should be a sufficiently
apprehended fact.

2. The operation of the above law is always most dominant in
articles of prime necessity, in which no notable economy can be
made without suffering on the part of the people when supply is
short, and no notable increase of consumption can be expected when
the quantity is in excess of supply. If the article is relatively
perishable, the phenomena increase in intensity on either side.
This law or rule is not unlike Mr. Mill's principal law of values,
but is more comprehensive.

3. If in the scarcity or excessive plenty which prevails, as the
case may be, there are several kinds of the same article, which
ordinarily stand in a certain ratio to each other, and can be used
interchangeably, the rise of price is greatest, in the event of
a scarcity, in what has been heretofore the cheapest form, and
conversely in a time of oversupply the greatest fall is in what has
hitherto been the dearest. This rule will require a little explana-
tion. Eoughly speaking, under ordinary circumstances wheat,
barley, and oats stand in the ratio of 100, 73, and 50. Now in
times of scarcity 73 and 50 will rise more than 100 does, and if
there be a fall in prices owing to excessive supply 100 will fall more
than 73 and 50 do. This rule is of the greatest importance in

252 HISTORICAL EFFECTS OF HIGH AND LOW PEICES.

practice, and in a rough manner is seen, though none too clearly,
by practical men of business.

4. If the articles in question are more or less of voluntary or
optional demand, and the supply be in excess, prices tend to fall to
money values which come very near the margin indicated by the
present cost of production ; but if the demand be in excess, profits
rise considerably, and production and trade are active. I state this
law, which is accurate enough when other prices are nominal, but
is apt to be powerfully affected under the pressure of such excep-
tional circumstances as I shall have to refer to hereafter. If the
use is entirely voluntary the phenomena are intensified; if the
option is exercised in the direction of a practicable economy of
use, they are less powerfully exhibited.

5. High prices in articles of necessary use consequent upon
scarcity, natural or artificial, diminish the purchasing power of
wages, and do not increase the amount of employment. High
prices consequent on demand in voluntary articles which can be
increased indefinitely increase profits and increase wages. Low
prices in articles of voluntary use do not, especially when labour
or employment is greatly distributed, lower wages, so long as the
producer does not or cannot diminish the output. If the demand
for labour is urgent, and the supply is scarce, King's law applies to
labour as fully as to any commodity. The working of this law is
exceedingly obscure, but very real ; but I hope to be able to illus-
trate it clearly in the course of this lecture, at least in its most
salient points. For the moment, take the law in its briefest form.
High prices do not make high wages.

Now these are the principal, I will not say the only, but the
most practical of the laws, rules, or canons, which may be deduced
from King's statement, which in the form of a question, is, accord-
ing to his figures, as follows : Why is it that a deficiency of food, to
the extent of one half an average supply, raises the price of the
actual supply nine times over the average price ? I will candidly
say that I have never recorded such a rise ; the highest I have
noted was in the year 1315, five times for wheat. But as I have
already stated, Gregory King's proportion, though undoubtedly
sound in principle, is hypothetical in form. I am indebted to King
for the principle of the general law governing prices ; the canons

CAUSES WHICH DEPRESS OR RAISE PRICES. 253

which I have given you are inductions from my own researches,
inductions which I intend to the best of my power to illustrate.

But I must now proceed to the next part of my economical
inquiry. Three causes, apart from those laws which I have already
given tend to depress or raise prices ; one in the course of econo-
mical history to raise them, two others to depress them. The
depressing causes have never overtaken the exalting cause, except
in some significant cases, and every effort, as I shall try to show,
is made to prevent so entire a change in relative values as such a
result would effect. If it did take place universally, it is difficult
to see how society would accommodate itself to the obligations
which it has created or has suffered to be created on its behalf. It
is a minor, but only a minor matter, that it would effect an entire
social revolution, because it would seriously affect all who have
depreciable property, i.e., working capital and land, and as inevit-
ably better those who have that property in which a fixed rate of
interest is paid for advances, the fund and debenture holder, i.e.,
the man to whom the earnings of the nation, and the earnings of
industrial companies, are pledged at a given rate of interest.

The three causes are (1) the plenty and scarcity of gold and
silver ; for the last 300 years, the elevating cause of prices. The
two others are (2) diminished cost of production ; (3) diminished
cost of freight. These causes are dominant, but I must warn you
that there are other agencies behind them, which I shall have to
expound, which are also depressing causes of prices. If we are
able to grasp the five general laws of prices which I have given
above, which you will see are exponents of immediate phenomena,
and the three causes which are operative over permanent, or at
least continuous, phenomena, we shall be on the way to interpret
the facts, past and present, which I have to lay before you. You
will remember, too, that the laws and causes are disparate, but
co-ordinate. The laws which I have quoted, in so far as they have
had materials to work on and opportunity for activity, have affected
prices, or money values, and, in the absence of money, exchange
values from the days of the Pharaohs to the days of the Coburgs.
But the causes have been especially dominant during the last two
centuries. Society may, by an accession of barbarism, entirely lose
the fine arts. But if the civilization of antiquity had been equally

254 HISTORICAL EFFECTS OF HIGH AND LOW PRICES.

interested in the industrial arts, it is doubtful whether civilization
would have been lost, as it was lost, for at least twelve centuries.
The protection which the industrial arts give society is so great that
all the savages collected by Jinghis Khan, Tamerlane, and the
Osmanli Turks together would have been annihilateckby two or three
squadrons of modern infantry and a modern park of artillery. But
the civilization of antiquity accepted the fatal custom of slavery ;
and the process of invention, of adapting natural laws to the
economy of human labour in production, never made progress for
lack of motive.

When I speak of the plenty and scarcity of gold and silver, I am
referring to the case of either of these metals being legal tender to
any amount, that is, compulsorily acceptable in liquidation of con-
tracts, to the exclusion of the other ; or, which is an exceedingly
rare case, adjusted in value to each other by so exact a proportion,
that the recipient of the sum is indifferent whether he receives the
one or the other. Now this equivalence may be discovered and
affirmed as a commercial fact, or it may be to some extent the
creation of law. In order to make this clear, I will illustrate it
from the annals of the English currency.

In 1257, it is said that Henry IIL issued a gold currency in the
proportion of 10 to 1, and that on the remonstrance of the
London citizens, he took it back at a discount of 2£ per cent., or at
9f to 1. In 12G2, he bought gold for making into plate at 9£ to 1.
Thirty years later Edward, his son, bought gold ingots at 12£ to 1,
the object being to decorate the crosses which he set up in memory
of his wife Eleanor of Castile. During the fourteenth, fifteenth,
and sixteenth centuries, when a gold coinage was circulating in
England, the ratio varied from about 10 J- to llf. In the
seventeenth century it was about 15 to 1, and the ratio was
liable to considerable fluctuations. In the eighteenth it was
overvalued, and as a consequence silver, the undervalued cur-
rency, disappeared. The ratio was altered, and a limit put to
the legal tender of silver. In 1819 the market rate was 15£
to 1, at which it was undervalued, and gold disappeared from
France. To meet the difficulty, the Latin Union was formed,
and the issue was regulated. But the Californian and Australian
gold discoveries led to the overvaluation of gold, and silver began

THE SCARCITY OB PLENTY OF GOLD AND SILVER. 255

to disappear. Recently silver has been demonetised, except for
change in Germany, Italy, the United States, and France, the last
two practically, though not theoretically. The present ratio is
nearly 22 £ to 1.

These alterations of proportion are wholly due to the use of
gold as currency. The rise in thirty years from 9| to 12 J- was
due, as I pointed out long ago, to the adoption of a gold cur-
rency by the Italian cities. But out of Italy a gold currency was
unimportant up to the seventeenth century, when the American
supplies came. The present fall is due to the cessation of silver
coinages. If Austria and Russia were to retire their forced paper
currencies, and adopt a legal tender silver currency, and if China
were to issue a silver currency, the price of silver would rise,
if not to its old proportion, to something very much nearer it
than it is likely to be unless such expedients be adopted. If you
leave off using any article hitherto in demand, either by finding a
cheaper substitute for it, or by discontinuing it in whole or part,
my first law of prices at once applies. Now the Governments of
Germany and Italy adopted a dearer substitute for silver, and lost
a great deal by the operation; the former a considerable part of the
indemnity which it extorted from France after the war of 1870.

The other two diminishing causes of prices were very slow in
coming into operation. There is very little evidence that in any
department of human industry improvements in the process of pro-
duction diminishing cost are traceable; for centuries, abundant evi-
dence shows that no such improvements were made. I will mention
two instances in which distinct progress was made and is traceable
in diminishing prices. These, the most marked examples which I
have seen, are paper and glass. There is not, I believe, any in-
formation in existence as to what improvements were made, and
where they were made. But when prices begin to rise, the money
value of these two articles is either stationary or sinks. It is certain
that the demand did not fall off, and when prices were rising all
round, the fact that any alteration in the price of these two articles
was in the direction of cheapness, is a proof which no direct testi-
mony would strengthen, that the phenomenon is due to diminished
cost of production.

Diminished cost is exhibited in several ways. 1. It may be that

256 HISTORICAL EFFECTS OF HIQH AND LOW PBICES.

less time is required in order to bring the thing into a merchant-
able condition, for the saving of time is a saving of interest, risk,
and profit. Thus in the breeding and management of animals, the
agriculturist whose skill shortens the period to one-third in which
stock is brought to market, gains at first the whole profit of his
economy, till the skill being diffused among all farmers, his advan-
tage is absorbed in rent. 2. It may be that what has hitherto
been intractable by any known laws of nature is found to yield on
the discovery of a new law to which it is amenable. Such was the
case with those iron ores which contained phosphorus, arsenic,
and sulphur, and were of no economical value till the discovery of
Bessemer's process. In general nothing has been more noteworthy
than the economy of what has been conceived up to recent periods
to be mere waste. 8. It may be that the economy is in the process.
At present, by the improvement of furnaces, a ton, say of pig iron,
requires not more than a third of the coal or coke it required
twenty years ago in order to make it merchantable. 4. It may be
in the manipulation of the product. It is not easy to define raw
materials. Under certain circumstances, what seem to be finished
goods are raw materials for another product, if they are required
in order to achieve a further economic result. Clothing in a wax-
work exhibition are raw materials ; to most of us they are finished
goods which have a final and no ulterior economic use. But the
processes by which products are handled for one stage or the other
of a merchantable article, are the subject of incessant improvement
and modification.. Now in all these four forms of diminished cost,
and I am far from having exhausted them, no appreciable develop-
ment has been or could be traceable till comparatively recent
times.

Improvement and economy in the cost of freight is also a matter
of very recent experience. When, after the year 1G00, the English
East India Company was formed, it took more than two years to
double the Cape, to collect a cargo of goods, and to return. At
the present time the journey backwards and forwards is achieved
in two months. But it is not only accomplished in one-twelfth the
time, but with much greater safety, and with less than a twelfth of
the relative cost. Means too have been invented by which the
market may be foreseen and anticipated, balances due from either

LESSENED COST OF FBEIGHT. 257

side, constantly in old times transmitted at great risk and cost, are
written off against each other and by monetary communications.
Navigation, once a knack, is now an art; the astronomer, the
meteorologist, the physicist, have been pressed into the service of
trade, and the man who at first sight is merely a student of know-
ledge for the sake of it, is constantly discovering and arranging
facts, which the economist who interprets results, instead of being
engaged in barren speculations, discovers to have played their
part in reducing the cost of production and exchange. For, as I
have said more than once, though the power of man to appropriate
the forces of nature is necessarily limited, no one knows, and no
one ever will know, what those Kmits are.

Now I must admit that much of what I have just now said is
part of the commonplaces of industrial history, of which you may
read much, and that with gush, in the pages of Mr. Smiles and
such people. But though I do not purpose to trouble you with the
statistics of what I may call the saving of waste and friction, it will
be clear that what I have dwelt on has its past in that machinery
of production and trade, the concrete illustration of which is high
and low prices, the interpretation of which is the object I have
before me.

When the facts come before them and are examined and ad-
mitted, the first impulse, even in those who should be better in-
formed, is to assign high and low prices to the excess and defect
of the precious metals. In an age when no substitutes for money
had been discovered, and no efficiency of the precious metals in the
operation of exchange had been dreamed of, the plenty or scarcity
of money had a far more direct effect on prices than it has in more
recent times. There is no doubt that one rise in prices, for
example, was effected between 1541 and 1582, and another between
1583 and 1642, and a third of far smaller significance between 1643
and 1702. But it is as certain that the first modification was due
to the currency and certain peculiar facts connected with it ; the
second was due to the influx of the precious metals, and, speaking
generally, to that alone ; while the third was of a much more com-
plicated character, and can be referred only doubtfully and slightly,
to currency influences at all.

A country which does not produce the precious metals itself

18

258 HISTOBICAL EFFECTS OF HIGH AND LOW PEICE8.

procures them by the operations of foreign trade. Now England,
till the rise in prices at the beginning of the seventeenth century,
when it is unquestionable that the supplies came from the New
World, supplied itself with silver, as I told you in a previous lecture ;
for silver is rarely found in Europe, except in conjunction with
lead, and the English did not, if we can trust the accounts given
of its trade, import lead at all, but, on the contrary, was a source
of supply to the west of Europe. From this lead it extracted its
silver, and I have no doubt whatever that from this country
Western Europe, and in particular France and the Low Countries,
procured the main of their supplies. The superficial gold supplies
of the British Islands, large probably in pre-historic times, espe-
cially in Ireland, where the use of gold ornaments was very general,
as the collections of the Eoyal Irish Academy show, were long ex-
hausted, although Adam de Moleyns says that Ireland still produced
gold of the finest quality. The circulation of gold was, however,
trivial, and remained trivial till the seventeenth century, all Euro-
pean countries using a silver currency. Some even used a billon
or mixed metal local currency, an abomination which circulated up
to fifteen years ago in Germany and Switzerland. The gold cur-
rencies of Italy in the thirteenth and fourteenth centuries were
chiefly, if not entirely, drawn from Byzantine reserves.

I purposely, at this stage, entirely ignore the effect of paper cur-
rencies : such as existed, at the epoch when the cheapness of money
affected prices, were local, and were limited to the operations of mer-
chants. It was not till after the Bestoration that the circulation
of goldsmiths' notes was general, and then was only general in
London. The denomination of the notes was high, and remained
high. So little profit, indeed, was derived from them by private
bankers, the successors of the London goldsmiths, that at a doubtful
period in the middle of the eighteenth century these bankers retired
their notes, as, in effect, since 1844, private bankers who retained the
right of issue have nearly retired theirs also. To all practical pur-
poses, then, the circulation of the public was, and remained, metallic,
from the earliest date of recorded economical history down to the
great event which I referred to in an earlier lecture, the suspension
of cash payments, when a perfectly new departure was made.

England, then, from early times down to the beginning of the

THE PRODUCE OF SILVER IN ENGLAND. 259

seventeenth century, could and did rely on its own resources for its
own supplies of currency, and though, as I have stated, a restraint
was put on the exportation of the precious metals, it is obvious
that if it were the interests of the merchant to export, there was
no machinery in existence which could hinder him. Now up to
the incidence of the Great Plague the average price of lead for the
previous ninety years was 53s. 3d. the fother, after the plague, for fifty
years, it was 128s. 4d. But during the next one hundred and forty
years it is 73s. 9d., and the price is declining during the early part of
the sixteenth century. Now cheap lead implies a more abundant
supply of silver, and, of course, if a foreign market was ready to
take off an excess of produce, it would do so without prices being
heightened, as they would have been heightened had the silver, as
the law intended, found no exit from England. There was, beyond
question then, for the evidence of prices is conclusive on the sub-
ject, a regular outflow of English silver into Western Europe, till
the new source of supply from Mexico and Peru made the cost of
English silver too considerable for its profitable extraction, at least
for a time.

Now the value of the precious metals at the place of their origin
depends on the cost of production, just as the value of everything
else does. It is presumed that people will not undergo the severe
and dangerous work of mining unless they get the compensation
which is anticipated by all industrial agents. But here we should
remember that another principle comes in. Those callings in which
exceptional profits are a characteristic, i.e., profits depend greatly
on chance, are exceptionally attractive. The more tickets, says
Adam Smith, a man takes in a lottery, the more certain is he to
lose. But the fact that one man has drawn a great prize in a lottery
attracts many who certainly will not; for, says the same acute
author, people always think their own good fortune and their own
abilities at least equal to that of their neighbours. A longer ex-
perience of mankind than most of you have has convinced me that
Smith's observation is sagacious and accurate, and you need not
think yourselves cynical if you hold the same opinion. Now this
gambling spirit operates powerfully in mining.

But in countries which do not produce the precious metals, the
value depends on the cost of acquisition, i.e., on the cost of the

260 EISTOBICAL EFFECTS OF HIGH AND LOW PRICES.

commodity against which they are exchanged. Of course in no
exchange can you separate the cost of acquisition from the cost of
production, but in the exchange of goods against gold and silver
the cost of acquisition is more obvious than that of production.
Now the difference between the cost at which the article is pro-
duced may be low, and its exchange value may be high. The
cost at which Philip II. procured the precious metals in his Plate
fleet was low, for they were procured by a tax on the mine adven-
turers, who were permitted to wear out the native population by
compulsory labour. In so far as the Dutch and English appro-
priated these treasures by privateering, the cost of acquisition was
comparatively low. But they were chiefly exchanged against goods
purchased or procured by the Amsterdam merchants in Cadiz and
Seville. Except, then, in so far as the English traded with
Holland or Spain, no portion of the treasures of the New World
would have entered into English currencies. Still, from the
beginning of the seventeenth century, the English have imported
gold and silver bullion, and have done it by their trade. The
home supply of silver became insignificant. Now it is plain that
the country which procures the precious metals with the greatest
ease can always obtain them in the greatest plenty, and, if nothing
intervenes to obviate such a result, will, in so far as prices are
affected by the precious metals, exhibit the highest average prices,
at least in articles of unrestrained import.

But there is a cause which checks the likelihood of a high level
of prices in a country whose trade gives it a great control over
the supplies of gold and silver which are produced and exist. This
is the amount of foreign debt which is held by the exchanging or
importing country. If a country, say England, has made great
loans to other countries, it has generally created the loans by
exports, and when lending is brisk, the export trade is active.
But it receives the interest on its loans by imports, especially of
raw material, and when the indebtedness is heavy, the debtor
country is forced to press the produce by which it liquidates its
liabilities on the importing or creditor country. The effect of this
operation may be to induce the phenomenon of continual over-
snpply, and with it the excessive cheapening of materials. This
result is aggravated if the debtor and exporting country adopts

FOREIGN SILVER AND GOLD GOVERNED BY TRADE. 2G1

a protective tariff, for by this policy it curtails its own power of
exchange, and is constrained in order to meet its obligations to
force on the market a larger amount of its own goods. I mention
this here because it has its effect, as I shall show, on the circula-
tion of money. It is of greater significance still when one considers
its effect on the progress of young countries.

No country takes more money than it needs for purposes of
circulation, and for the due support of its paper substitutes. It is
quite likely that it knows with so much exactness that the want
can be supplied at discretion, that the banks can leave the adjust-
ment of currency to circulation to the bullion merchant, who
watches the ebb and flow of international money with the intelli-
gence and acuteness which come from experience. But the function
of the bullion dealer is after all that of a middle man only, and the
circumstances must be provided before the middle man can inter-
vene. Now I cannot but think that a country which has not only
an active trade, but is an extensive creditor of other countries, has,
by virtue of the latter position, a far larger power over international
money than one which is not in this position, and that it was, in
the first place, the magnitude of its trade, and, in the next, the
enormous amount of foreign debt which it holds, which made, and
will continue to make, London the monetary centre of the world,
and able, with the least possible rise in the rate of discount, to
attack the store of international money most effectually.

I have now, I trust, stated with sufficient distinctness the laws
which govern prices, and have indicated how universal they are.
They are, you will understand, those which affect temporary
exaltations and depressions, as scarcity and plenty characterize
supply. The causes of high and low prices are permanent in their
character, and may have a long, perhaps an enduring, effect on
societies. I cannot indeed attempt, nor would you be able to bear,
a minute inquiry into, the total aggregate of causes which induce a
period of high and low prices, still less could one assign its precise
effect to each in this aggregate. No one can perhaps do much
more than guess at the force which each of these many causes has.
It is sufficient if the man of business can foresee them with suffi-
cient accuracy for business purposes. I shall, during the rest of
this lecture, deal with some high and low prices in their relations

262 HISTORICAL EFFECTS OF HIGH AND LOW PRICES.

to labour and rent, including in labour the true profits of tlie
capitalist employer, as well as the earnings of workmen. I
assume that you entirely understand the meaning of economic
capital, that it is wealth loaned for productive purposes, and re-
ceiving interest, as has been happily explained, as the wages of
abstinence.

Nothing strikes the student of prices more than the fact that,
taking an average, that is, excluding the occasional manifestations
of the laws governing prices, prices are so uniform, that is, the
causes governing prices are so unchanged. This uniformity endures
from the first recorded account of continuous sales and purchases
till about the 31st of Henry VIII., a date which is not arbitrary,
and very convenient, because it precedes the debasement of the
currency, and it follows the dissolution of the larger monasteries.
The period which I have dealt with is 280 years. Now in the first
140 the price of wheat is 5s. lOf d. a quarter ; in the second 140,
5s. llfd. I referred also to the price of lead. In the first 140
years it is 90s. 9|d. the t'other ; in the second, 104s. 4£d. Similar
illustrations could be given from other commodities. The causes
which determine prices, and have so enormous an influence in our
time were practically unaltered in intensity for centuries of early
English life.

But the laws affecting prices are illustrated to the full. Except
in 1315, 1816, 1321, 1438, and 1527, there are no years of famine
during the whole 280 years, that is, a year in which the price of
wheat rose to double the average price. It is true that the famine of
the first three years was excessively severe, was without parallel in
any recorded period of English history. We may, perhaps, dis-
regard the stories told by the chronicler monks, who dwell on the
strange viands which the famishing people devoured, but there is
one proof of the calamity which is conclusive to the student who
' investigates prices. It is that the price of labour rose permanently
10 per cent, after this visitation, evidence that the number of
labourers was lessened, and that the survivors took advantage of it.
In 1438, when the scarcity was also very great, stringent measures
were taken to prevent the exportation of food, and even water-
carriage in the interior of the country was prohibited, from a
fear lest an opportunity should be given of shipping corn abroad.

THE EFFECT OF PLAGUES ON PRICES. 263

The most notable fact m the history of the fourteenth centnry is
the Great Plague of 1349, which reappeared in 1361, and was
epidemic in England afterwards certainly till 1665. It probably
at its first visitation destroyed a third of the people. Our fore-
fathers, I regret to say, were astonishingly dirty in their habits.
The nations of Europe were in no country over cleanly at the
time, but even the Spaniards in the train of Philip II. commented
on the extreme sluttishness of the English. These English, they
said, live like pigs, but they fare as well as the king. Long after
the plague began they had not changed their habits. Even in the
eighteenth century London was polluted by the dead and the living.
A broad, open river of filth passed through London at the bottom
of Ludgate Hill, and two minor abominations ran across the Strand
under rickety bridges. Long after the eighteenth century set in a
particularly frowsy market was held between the Bank of England
and what is now the Mansion House. In wet weather the streets
were ankle-deep in pestiferous mud, and in dry weather in pesti-
ferous dust. Sometimes the burials in London were double the
christenings. "When the plague was burnt out in 1666, it was suc-
ceeded by spotted fever, i.e., typhus, and smallpox. In moderately
healthy years the death rate was forty-one to the thousand. The
population of London was only kept up by constant immigration.

Hardly any event in English economical history has been so full
of results as the plague of 1349 was. It emancipated the serf, and
it demoralized the Church. It gave occasion to the teaching of
Wiklif, and assured the Keformation. Had it not been for the in-
surrection of 1381, and the identification of Lollardy with sedition
and rebellion, the separation from Rome would have occurred in
the fifteenth century. The tie which bound Western Europe to
the Papacy was very slender at the Council of Constance, when
John XXIII. was deposed and Martin V. elected. But the English
rulers dreaded the Lollards, and remained orthodox and uneasy.
The pious Gascoigne is civil to the Pope, indignant with his court,
especially contemptuous of the English bishops, and quite ready
for the dissolution of the monasteries. He was close upon Lollardy
without knowing it.

The first cause of this change was the laws of prices as I have
given them you operating upon labour. Labour is always in demand,

2G4 HISTORICAL EFFECTS OF HIGH AND LOW PRICES.

and the supply fell short of the demand suddenly. If one-third of
the population perished, and this represented one-fifth of the
adults in the country, for the disease was far more deadly in the
towns, Gregory King's illustration would nearly double the price.
Now this is what happened, and illustrates my first law. The
wages of women and children rose far more than those of adult-
males. This illustrates my third law.

During the fifteenth century famine occurs as I have said in one
year only, and there is little record of pestilence. The chroniclers
and farmers telT us of years when there is no fruit, of summers
dry and wet, but no mention of sickness occurs till 1477, '8 and '9.
In 1485 came the sweating sickness, a disease due to unclean
habits, which seems to have generally affected well-to-do persons
in towns, such as London aldermen. But there was a social
disease in the fifteenth century which produced grave results.
This was the appearance, at a most difficult time in English
political and social life, of the younger son. The Church was
exceedingly corrupt. The monasteries were dens of greedy and
voluptuous monks, the artisans all given to Lollardy, and the
nobles with dozens of vendettas everywhere. The peasant farmers,
who were exceedingly prosperous, appear to have taken no side in
the struggle.

As long as the great landowners cultivated their own estates,
there was an abundance of personal property, with which to
portion the younger son. When the stock and land lease followed,
there were still funds for this purpose. But about the middle of
the fifteenth century the farmers either purchased or had their own
stock, and took the land without borrowed stoek. Not a few bought
small estates, and land ran up from ten to twenty years' purchase.
In the land hunger of the century nobles and knights even purchased
copyholds, and became by the common law serfs. When they
could do so, they asserted that part of Wiklifs doctrine for them-
selves which affirmed the injustice of civil inequality, and forced
the revision of the liabilities of those base tenures. I found, years
ago, a most curious illustration of this practice, in the compulsion
which Sir Ealph Cotiller and other Gloucestershire gentlemen,
tenants of the manor of Cheltenham, put on the abbess of Sion,
its lady. The younger son became exceeding poor. As long as

TEE YOUNGER SON AND THE CIVIL WAR. 265

the war with France lasted he could find employment, and if he
were fortunate and thrifty, fortune. But loot seldom sticks. The
war was over in France. It soon began in England. The country
was full of soldiers of fortune, and they went on fighting, as chance
occurred, from St. Albans to Bos worth, thirty years of pitched
battles and guerilla warfare. Edward and his judges knew what
they were about when they devised a plan for breaking entails.
Only the relics of the factions, some five thousand on each side,
fought at Bosworth. The rest had left their bones on wastes and
moors.

The downfall of England under Henry VIII. was due to
economical causes. Perhaps if one examines his Pipe Bolls, one
could find out how he squandered his own and his people's money.
I know that he had twenty palaces or more, the whims of the
hour, in each of which the establishment maintained was more
costly than the whole expense of his thrifty father. He dissipated
his father's hoards, the taxes he wrung from his people, the for-
feitures he got from his nobles, whom he cunningly played off
against each other, the old and the new, the lands of the monas-
teries, the spoils of the monasteries, the loans he raised which
Parliament excused his paying, and then took to issuing base
money. The patriot king of Mr. Froude appears to me, who
know a good deal of his goings on, to be the very worst monarch
who ever reigned.

I told you in my last lecture of the economical causes which
brought about English pauperism, and I need not recapitulate
them here. The operation of law shut the English workman
as completely out of the laws, and the causes which regulate prices,
as he would have been if he had been made a chattel, a plantation
slave. To him, you may be sure, the great drama of the
seventeenth century, so noble as it seems to me in its beginning,
so outrageously base at its conclusion, had no meaning or interest.
I dismiss this part of English history for the time with only one
comment which you will, I think, find accurate. In the first half
of the century you will seldom find the worst men base. In the
last half of the century the best men are rarely anything but base.
And what is true of the politicians is true of the men of letters.
Shakespere seems to me to be like his own Prospero. Dryden

266 HISTOBICAL EFFECTS OF HIGH AND LOW PBICES.

remodelled his play in the spirit of Caliban, who, though a beast,
is a poetical beast.

In the seventeenth century, to confine myself to the merely
economical aspect of the situation, for I might say a good deal
more, occurs an exaltation of prices on the grandest scale. It is
due to one cause only, the inundation of American bullion through
the machinery of trade, the depressing causes, lessened cost of pro-
duction and diminished cost of freight, being too trivial to check
the rise. And besides this dominant cause, there are manifesta-
tions from time to time of the laws which govern prices through
prolonged periods. The severe plagues of 1803, 1625, and 1665,
appear to have had no compensative power, though in each of
the first two years more than a fifth of the London population
perished, and in the last at least a fourth. It is always very hard
for wages to keep up with prices, however freely labourers are
allowed to use their own discretion in combination, and the effort
would have been impracticable in the seventeenth century.
Wheat rose 209 per cent, over the comparatively high prices of the
first half of Elizabeth's reign, meat 184 ; while labour up to 1642
rose only 32 per cent., and for the whole period, owing entirely to
the rise during the Commonwealth, 100 per cent. Women's
labour, in accordance with my third rule, rose only 15 per cent.,
and as a rule prices go up, each decade of years, till after the
Restoration, after which there was some little decline.

During this period, too, there are severe and prolonged dearths.
The first is for three years, 1595-7 inclusive. 1608 and 1630 are
years of famine. In the five years, 1646-1650 there was con-
tinuous scarcity. In 1661 wheat rose to 100s. a quarter, a price
unheard of, and never paralleled till the close of the eighteenth
century, and the seven years, 1692-1698 were compared to those
Egyptian experiences in which the lean kine devoured the fat
kine, and were as ill-favoured after their meal as they were before.
The seventeenth century fastened pauperism on the English
labourer, and this is his only inheritance in the strife of that time.

The seventeenth century was an epoch of high prices, due
entirely to the cheapening of metallic money, and unrelieved in
any notable degree by the other two causes. The first half of the
eighteenth century was an epoch of low prices, due almost entirely

THE INVENTIONS Oi THE EIGHTEENTH CENTURY. 267

to the operation of the second cause which I gave you, economy in
the cost of production; though the other economy, cost of transit,
was carried on with great success by the construction of canals,
improvements in the art of ship-building, in the invention of the
chronometer, and the practical settlement of the longitude question.
The eighteenth century multiplied the primitive spinning-wheel
and hand-loom, by the inventions of Arkwright and Crompton,
and a hundred others, and supplied the requisite motive power to
these complicated machines by the capital inventions of Watt I
could go through a whole host of these inventions, but it would be
superfluous. They have employed the leisure of Mr. Smiles, and
the leisure of Mr. Smiles was very respectably employed. There
was, however, one particular direction in which progress was made,
and to which I must recur. I alluded to it before when I treated
the economic history of rent, and I am told that my audience
was surprised that I spoke so well of landowners. Would that
the public spirit and great usefulness of the landowners in the
eighteenth century had been as hereditary as their estates and
titles are !

During the seventeenth century the landlords strove to get all
the rent they could out of their tenants. To the utmost of their
power they forced famine wages on the labourer. To the utmost
of their power they used the legislature in order to secure famine
prices from the consumer. As far as they could they levied famine
rents from their tenants. The historical evidence on this subject is
cumulative and abundant. In consequence, agriculture, despite
the teaching of those who saw how Holland and Flanders were
thriving, was stagnant in England. A few freeholders tried
experiments and succeeded, but they were too poor to produce any
effect, even if the farmers had been able to imitate them. " The
bane of husbandry," says writer after writer on the subject, " is
uncertainty. Men will not improve if their rent is raised on their
own improvements." Gregory King, in the curious and, on the
whole as I believe, accurate account, which he gives of the saving
power possessed by different classes of society, credits the bishops
with the largest power of annual accumulations, the tenant farmers
with the least ; for he sets the former down as capable of saving
£100 a year out of an average income of £1,300, and the latter

268 EISTOBICAL EFFECTS OF HIGH AND LOW PRICES.

with a power of saving twenty-five shillings a year out of an
income of £42 10s.

The landowners of the eighteenth century took an entirely new
departure. They no doubt raised their rents when they could.
Jethro Tull, who wrote on agriculture early in the second quarter of
the century, puts the average rent at 7s. Arthur Young, who
wrote towards the end of the third quarter, at a little below 10s.
an acre. They deserved every penny they got, for they themselves
made the increase possible. Arthur Young blames them for not
raising their rents more generally. But Arthur Young knew that
the security of the tenant was essential to the success of agri-
culture. His admiration for experimenting and improving land-
lords is as great as mine. Only those landowners who know how
to manage their own property as well as a good farmer does can
understand what rent land will bear, and what capital it needs.
They were the adopters of the new agriculture in England.

Curiously enough the movement began in Norfolk, which has
indeed been, in the economical history of England, the original
home of most of those early improvements to which the England
of the past owes so much. It is not easy to say who was the first
pioneer, whether it was Lord Townshend of Eaynham, or Mr.
Coke of Holkham. I understand that the farming accounts of
Lord Townshend are perfect, and I hope soon to see them. The
present Lord Leicester has sent me some of those drawn up for
his distinguished ancestor, Lord Lovell. The family of Coke,
descended from the great Chief Justice, has done continuous service
to British agriculture from the beginning of the eighteenth cen-
tury. 0 si sic omnes ! It is not impossible that the stories as to
the jealousy of the Norfolk landowners at Walpole, may mean that
they were led to prefer a country life to a political one. It is very
likely that the long period of peace and progress which came after
the treaty of Utrecht may have dissuaded men from taking part in
political struggles. I am myself disposed to believe that the
motive for the new agriculture was enlightened self-interest.
The relations of the eastern counties with Holland and Flanders
had long been intimate, and the new system was near a century
old in these countries.
As I have told you, the new system consisted in getting rid of

THE AUTHORS OF THE NEW AGRICULTURE. 2G9

bare fallows and poor pastures, by root crops, and artificial grass
crops. The turnips were carefully hoed two or three times, and by this
means the ground was cleared of weeds. They were fed off by sheep,
and by this means the land was adequately dressed for a subsequent
crop of corn. The corn crop, if of barley or oats, was followed by
a crop of clover, trefoil, lucerne, or rye grass, sown with the grain,
and left after harvest to form a fodder crop for the next year.
Occasionally a crop of rape and vetches was mixed with rye grass,
for which it is impossible to overmanure fields. In Arthur Young's
time, these experimental landlords could be counted by hundreds,
and that shrewd and honest observer, who was subsequently put at
the head of a board of agriculture, since most unwisely allowed to
be starved into non-existence, is enraptured at the general worship
of the plough. If the landowner is a genuine agriculturist, Young
visits his house, measures his reception rooms, describes the
pictures in the mansion and the views in the park. If he is not
an improving landlord, I don't think that the possession of the
finest Carlo Dolce (for which painter Young entertains, as I think,
an unreasoning admiration) would have persuaded him to darken
that man's doors. Years after he published his tours, Arthur
Young visited France and Italy, and gave the best account which
has ever been written of what happened when the peasants were
suddenly liberated from their feudal dues and local tyrannies in the
autumn of 1789. Amid the crash of the historical French families
and the omens of the coming Committee of Public Safety, the
Mountain, and the Terror, Young is glad when he can get the
landowners to accept his toast of " The Plough."

It is a commonplace to say that nothing teaches like example.
The landowners of the eighteenth century did what the English
landowners had not done since the fourteenth, cultivated some of
their own property, and showed their tenants how successful, how
profitable, such agriculture would be. They soon doubled their
corn produce. They soon trebled their general produce. They
invented or adopted agricultural machines, and bettered the tra-
ditionary tools of the peasant and farmer. They revived, in
short, under better auspices, the merits of the fourteenth-century
landowner, which had naturally, after an interval of nearly five
centuries, been forgotten, and were first recovered and proclaimed

270 HISTORICAL EFFECTS OF HIGH AND LOW PRICES.

by myself. They were gradually imitated by the farmers, and
rents inevitably rose, for though the capacity of the soil has its
importance in agriculture, its success depends incomparably more
in the diffused skill of the cultivator. Towards the close of the
century, Sir John Sinclair, an ardent disciple of Young, carried the
new process into Scotland, grafted it on the nine teen-years lease,
and the worst system of agriculture that existed in Europe, and did
more good to Scotland than all the Campbells that ever have been
born and admired themselves.

There was to be sure a peculiar stimulus to agriculture in
England, but it was a stimulus which was slow in operatiug.
The Government of 1660 imposed heavy protective duties on
foreign grain, permitting imports only when corn had reached a
famine price, a price which it never reached except in 1661. The
Government of 1688 added a bounty on exportation. But the
effect of this bounty does not seem to have been felt for thirty
years. When it became a motive it was only a gambling one, a
chance for the farmer or landowner. But I have little doubt, from
the eulogy which Young gives the bounty, that it did operate as a
stimulant to agricultural operations later on.

The cheap prices of the eighteenth century were undoubtedly a
great boon to the peasant. His wages rather rose than fell. The
harvest payment, as may have been expected from the great
increase of produce, was much higher than it was in the seven-
teenth century, for there was, as you will anticipate, a great
demand for his labour at the time. But the price of produce was
very low, lower than it had been in the seventeenth century, by a
considerable percentage. Now as I mentioned to you at first, high
prices of produce are by no means followed by high rates of wage*,
nor are low prices of produce by low wages, if the cheapness is
induced by a diminished cost of production, or what is the same
thing, greater production at equal cost. In 1731-2, when wheal
was 20s. a quarter, barley lis., and oats 9s. 6d., Lord Lovell reports
as the result of the new agriculture that his profits on his outlay
are more than 36 per cent. Of course, as soon as this was under-
stood and the new system learned, the rent of the landlord rose,
for rents depend only in a slight and temporary degree on natural
fertility, which may be soon exhausted, and in a large and
overwhelming degree on the skill of the cultivator.

THE SEBVICES OF SIB JOHN SINCLAIB. 271

High prices will not make high rents, if the skill is undeveloped.
Nor will they if the skill is lost. If wheat rose in England to 50s.
a quarter, and other kinds of grain proportionately, economic rent
would not increase in any notable degree, unless the skill and
capital of the existing generation of agriculturists were induced to
compete for occupancy. The rise in prices might arrest the bank-
ruptcy of some who are struggling under their self-imposed
burdens, but it would not recall, of necessity, a single sovereign to
the soil, or set in motion a single competitive farmer. People
are amazed that land of good average fertility is gone out of
cultivation, that there is no inquiry for it, and under the old
system there seems likely to be no inquiry, even though it be
offered at nominal rents, on long leases, and with discretionary
tillage. It is not that it could not be cultivated with a profit
under such conditions, provided capital and skill were forthcoming,
but it is that capital and skill have been extinguished by the rents
which kept rising from 1852 to 1873. Landowners who want to
let land are crying in the desert. The economical conditions are
intelligible enough to those who understand economic laws and
economic causes. The conditions of agriculture in England are
at least equal to those of the United States, the freight from
which, as I learn from the authority of American public reports is
at least, in these times of cheap transport, 9s. a quarter, or about
one-seventh of a penny per ton per mile. The soil of the United
Kingdom is better, the climate better, the possibilities of high farming
better ; for all root crops must be housed in autumn in the United
States, and carefully kept from the severe frosts of the country.
The insect plagues of the United Kingdom are as nothing by the side
of those which afflict farmers in the United States. But land in
England is going out of cultivation. I hope that I have explained
the reason. The remedy is one on the exposition of which I have
much inclination, but no time to enter. It is quite certain that it
does not reside in the artificial restoration of high prices.

XIII.

DOMESTIC MANUFACTUKES.

"The numerous early conquests of England — The advantages of the
island's natural position — Slowness of England in the arts, in-
dustrial and other — The skill of the agriculturist — The iron and
salt works — Brick -making — Paper — Textile industries — The size
of the. English farms — The insulated character of English life —
3Che density of the Flemish population — The ruin of continental
industry — The development of English industry in manufacture
and agriculture — The condition of Europe in 1763 — The theory of
a sole market — The effect of modern wars,

England is not inhabited by a naturally inventive nation. We read
a good deal in certain books which, while purporting to give us an
account of our race, have uttered a thousand plausible flatteries,
intended to be soothing to our insular feelings, and to assist our
industrial Chauvinism, about the greatness and progressive power
of the Anglo-Saxon people. Some of these authors, if they get to
learn it, find that the Anglo-Saxon race had not unity enough to
protect England against invasions like their own, and had to
succumb to Danish rovers, much more rapidly and hopelessly than
the British races yielded to them. Then they talk of " the Making
of England," and treat us to generalities as to how the Norman
invader, who made even shorter work of the English than the Dane
did, induced upon the English race those habits of law and order
which have made us the envy of nations. But the barons of the
Conquest exterminated each other in Stephen's reign, and the
Plantagenet conquest is as real as the Norman, which it followed.
I am almost weary of the philosophy of history. It is become to me

THE NUMEROUS EARLY CONQUESTS OF ENGLAND. 273

as unreal as alchemy and astrology or metaphysics. You who, for
inscrutable reasons, have to get up so-called history, and be
examined in it, will, I trust, find it wise to learn what I am con-
vinced, as time goes on, you will find it even wiser to forget. Law
and order ! We have deposed more kings than any other European
race, and, excepting Kussia, have murdered more, or, at any rate,
have acquiesced in their deposition and murder.

The English race, I must confess, who am the descendant of
centuries of English life, and that of the wildest, for I come of a
Northumbrian stock, with a judicious admixture of other nationali-
ties, invented very few things in the mechanical senf e. It contributed
but little, of its own effort, to that progress which lessens cost by
invention, by the adaptation of natural laws to the process which
manipulates matter and turns it into utility. The English had
greater advantages of position than Flanders had. They were fairly
free from foreign attack. Their nobles were glad to turn their
swords into reaping-hooks. The peace was kept at home, and
every one was interested in keeping it. The temptation to shear
sheep, with a perpetual market for the produce, was great. Now
the peace cannot be kept, unle3s every one tries to keep it, they who
could afford to break it with impunity most of all. Besides, they
are certainly most competent for national defence, who can spare
for foreign aggression. For a hundred years our kings, with the
sympathies of the people, strove to conquer France. Once they
almost dismembered it ; once they almost conquered it. If Henry V.
had not died at Vincennes, when he was under forty years of age,
what might not have happened ?

The Flemings were the weavers of Europe. It is a considerable
business to clothe the world, and the Flemings undertook the busi-
ness with great success. That we learnt all our knowledge of
weaving from the Flemings is certain, but we were the slowest of
pupils. Even in the Middle Ages it was seen that a piece of cloth
was worth at least eight times as much as the wool is from which
it had been spun and woven, and that, if we could catch the art, the
wool which bore an export duty of 100 per cent., with ease,
i.e., without depreciation, would have borne in the shape of cloth,
a far higher duty, and, in the absence of duty, a far higher profit.
We had extraordinary advantages of climate, but we either did not

19

274 DOMESTIC MANUF AC TUBES.

understand them, or made no use of them. As I have told you
before, I do not detect any progress in the arts of invention, under
which the process of production was cheapened, for centuries,
except in two arts, paper and glass-making. I do not know whence
these arts were derived, and how they were improved. But I
am sure that they were both of foreign origin, and that their
levelopment in England was not due to native ability or to native
enterprise.

Painting, I hope it may be said without offence, is the most
mechanical of the fine arts. Were it not mechanical, I am sure
that over three hundred men and women of genius 'could not be
painting, with much acceptance, at once. It is the only one of the
fine arts which procur.es the fortunate possessor the two great boons
of fame and fortune — the fame perhaps evanescent, though not as
evanescent as that of an author, the fortune perhaps permanent.
Genius in mediaeval England was, I grant, very poorly paid. We
do not know, except in rare cases, who were the builders of our
great cathedrals, and for a very good reason, because they were
generally working men, at slightly better wages than their fellows.
Even as late as the seventeenth century, Dorothy Wadliam paid a
pound a week to her architect, who built fifty times better than his
descendant in the craft, who gets fifty times more. Men used the
skill of those people for building stately tombs, with decorative
imagery. The monument of Cardinal Beaufort is a great work of
art. I am sure that the effigy is a perfect likeness. I have often
looked at it in Winchester Cathedral with much interest, not only
as a noble specimen of fifteenth-century art, probably Flemish, but
as the effigy of nearly the last great clerical statesman of the Middle
Ages.

There are no English painters till the eighteenth century. There
are no portraits of Englishmen till the sixteenth. Had they ever
existed, they could not all have been totally lost. During the
fifteenth century Flanders was teeming with art, and Italy had
carried it to perfection. At last came Holbein and his school.
Then there was a flying visit of Kubens, who painted the apotheosis
of the first Duke of Bucks of the house of Villiers. I am glad that
no Englishman was competent to perform the degrading function.
Then comes Vandyke for a more lengthened period. After him

SLOWNESS OF ENGLAND IN THE ABTS. 275

there is Lely and his pupils, who drew portraits on speculation, in
hopes that the sitters (I do not touch on their character) would
buy. I have read through the list of portraits of this kind which
he had on his hands at the time of his decease. They would furnish
a Grosvenor Street gallery. Then comes Kneller. The eighteenth
century, which is in England the great epoch of inventive activity,
sees the beginnings of purely English art.

I have referred to this because it illustrates my position by a
subject with which all Englishmen are now supposed to be familiar ;
occasionally, I fear, more familiar than informed. I know nothing
which has pained me more, who have an honest pride of race, than
to feel how great a debt in every department of art, science, philo-
sophy, invention, we owe to foreign immigrants and foreign teachers.
Even now, I fear, a Teutonic certificate of proficiency is worth more
to men than any evidence of ability which they can procure from
their fellow-countrymen. Even what we fondly hoped was our own
is being demanded by other races. I have heard that Shakspere
can be claimed for the Welsh race, Milton and Chaucer for the
French; for the philologers, having settled the origins of lan-
guage for the next six months, and given us a professor or reader
for each epoch, divert themselves with the race derivation of our
names.

There is no doubt an intimate connection between art and utility,
for art is an exponent of utility in its best sense, and the homeliest
conveniences may be subordinated to art. Now the economist is on
the look-out for the processes by which any invention has served
utility, and he knows that art and utility equally study fitness, the
best adaptation of means to ends. From my, perhaps vulgar, point
of view, a straight drawn furrow in a fifty-acre field is as much a
work of art as the curves which Xeuxis and Parrhasius drew, or
Hogarth's line of Beauty is. Perhaps, horresco referens, it is nearly,
if not quite, as difficult of perfect acquisition as the efforts of the
artist are. The other efforts of a skilled husbandman are artistic,
though they seem to be mechanical. A closed or open drain is to
be made on or round agricultural land. The fall, we will say, is
one foot in a hundred. It needs a very practised eye to so regulate
the declivity of the ditch as to secure that the flow should be even,
and no part be waterlogged. I could multiply illustrations from the

276 DOMESTIC MANUFACTURES.

husbandman's craft by which I could, as I think, prove that his art
is of a high order ; that, if genius consists in a rapid and an almost
intuitive adaptation of means to ends, the English peasant has his
genius ; and that we Englishmen could better afford to lose a good
many people of far higher social consideration than we can to part
with the peasantry.

In the department of agriculture, the Englishman of the four-
teenth and fifteenth centuries was superior to the husbandman in
every part of the world. In the eighteenth and nineteenth cen-
turies he recovered his pre-eminence in this particular. In the last
two centuries he has made great progress in the arts of life. My
object in the present lecture is to trace the progress, and to suggest
an explanation of the delay which occurred in accepting and adapt-
ing the inventions of foreign nations, and in making progress in
invention ourselves. But, in the first place, taking, say, the end of
the thirteenth century, let us consider what was the state of the
industrial arts in England at that time.

The one article which the mediaeval husbandman desired more
than anything else was cheap iron. In those early days farmers
kept accounts, and, therefore, were well acquainted with their posi-
tion, their profits, and their losses. In our days they do not keep
accounts, and have therefore easily and insensibly glided into ruin.
Now in these bailiffs' accounts nothing is more common than the
apology for the great charge which the bailiff had to incur in the
purchase of iron, owing to the dryness of the season. There was
reason for the complaint. A hundredweight of iron in mass before
the Great Plague cost as much as six bushels of wheat ; after it,
more than twelve bushels. The husbandman was therefore warned
that, if his land was strong, he must be very sparing in the use of
iron. Abundantly as iron ore is diffused in England, so abundantly
that, till recently, we almost supplied the world, the art of working
it was almost unknown, and the English farmer, to a great extent,
depended for this necessary material of husbandry on Biscay and
Sweden. I have indeed found some few traces of iron production
in England, but they are few indeed and unimportant. Now, if
iron be scanty and dear, husbandry suffers. The ploughing is
shallow, the pulverization of the clods imperfect, and the efficient
drainage of land is prevented. I see no natural reason why the

IBON AND SALT WOBKS. 277

Swede and the Biscayan should have so entirely surpassed the
Englishman in the art of making merchantable iron. I am aware
that Swedish and Biscayan ores are remarkably free from those
admixtures which spoil the result, admixtures which no ancient
skill could get rid of. But the Sussex and North Lancashire ores
are not inferior to these, or only slightly inferior, and were cer-
tainly, had the requisite skill been present in England, abundant
and obvious.

It may seem strange to you that I should name another product
as one which England possessed in great natural abundance, but
did not possess the skill to utilize. This is salt. But 500 years
ago salt was a most important article in the economy of life. For
half the year, owing to the absence of winter fodder, the mass of
the English people lived on salted meat. On St. Martin's Day,
November 11th, the mediaeval farmer considered seriously what was
his live stock, and what was his store of hay and straw. It was
certain that he had not enough to keep his cattle and sheep through
the winter, though he kept as many as he could, and poor enough
their condition became before the spring grass was ready. What
he saw that he could not possibly keep, he slew, and devoted to the
powdering tub. Into this went beef and mutton for winter food ;
and salted mutton would be, I should think, detestable. Now for
all this salt was required. Our ancestors were unable to use the
abundant deposits of Worcestershire and Cheshire, which now form
the material from which soda ash is manufactured for the civilized
world. They quarried the rock salt, but did not know how to refine
it. The Bomans did, and evidences of their rock salt mines are
still found. It is only towards the end of the seventeenth century
that salt was procured from these natural deposits. As far as
home supply went, they depended upon the produce of salterns or
wyches on the sea coast. But the product, often described as black
and grey, was sufficiently uninviting. The greater part, and the
best of their supply came from South-western France.

I have mentioned the domestic use of salt. There was as im-
portant a commercial use in the cod and herring fishery. The
discipline, perhaps the policy, of the Koman Church, prescribed a
fish diet for a considerable part of the year. To those who did not
possess ponds or stews, salt cod, salt herring, salt salmon, salt

27» DOMESTIC MANUFACTUBES.

sturgeon, salt eels, were an important article of diet. Now the
fisheries of Yarmouth Roads were always considerable. So were
the different kinds of cod obtained from the shoals of the German
Ocean, the Scotch coast, and the coast of Iceland. Most of this
fishing was in the hands of the eastern towns, till in the fifteenth
century the Bristol merchants, by the aid of the mariner's compass,
sailed through the tempestuous seas of the Scottish Archipelago,
and reached the Iceland fisheries. For a successful fishery, cheap
and abundant salt was needed. Then they had rivals. The
Flemings were bold fishermen. They nicknamed their political
parties by the names of the cod, and the hooks which caught the
fish. A Fleming or Hollander (the distinction was then only geo-
graphical) discovered a new way with which to cure herrings, and
great wealth accrued to the Low Countries. So honoured was this
local fish-curer, that Charles V., who let his Netherland subjects
know, rather too frequently, how highly he valued the wealth which
they accumulated, ordered mass to be said at the man's tomb, and
himself attended the ceremony. A generation later, and the fisher-
men of Holland, the Beggars of the Sea, began the foundation of
the Dutch Bepublic by the capture of Brill. The Dutch fishermen
manned the ships which went out for discovery, for trade, and for
the capture of the Spanish treasure fleets, for the exploits of
Linschoten and Heemskirk, and a thousand other heroes. A gene-
ration later, and a pretty quarrel, fortunately only on paper, sprung
up between our Selden and the Dutch Grotius, in reference to the
use of the high seas on the eastern side of England, in which
Selden was in the wrong and Grotius in the right. At that time,
however, Selden was desirous of being on good terms with James
I., and such a desire was an effectual check to an author being in
the right.

But the English, with abundant coal, sea and pit, as they dis-
tinguished the Newcastle and inland beds, and with vast treasures
of salt which they quarried for a few fancy purposes, did not take
any step for two centuries in the direction of producing that upon
which so much depended. If they had made the salt, they might
have obtained enormous profits by leaving the fishery to the Dutch,
and supplying them with cheap material for curing.

Another art of great value, long practised in Roman Britain, of

BBICK-MAKING. 279

which indeed plenty of evidence remains now, but of which much
more existed five or six centuries ago, was the art of brick-making
and brick-burning. It had been entirely lost. Not a single brick,
I believe, was made in England between the fifth and the fifteenth
centuries. There are some brick buildings of an earlier age. as the
church of St. Pancras at Canterbury, and the church in Dover
Castle. But the former was built from the ruins of a Roman basi-
lica, given to St. Augustine for the new worship, and is the most
ancient site of that new worship in England. The church of Dover
was built of brick, brought, I do not doubt, in ballast from the
Baltic, from Liibeck or Bremen. Brick, however, as every one can
see, was common enough, from the Netherlands to the Baltic pro-
vinces of Russia, for centuries before it was reintroduced into
England. It seems amazing, that what English people from London
or elsewhere must have seen everywhere in the region with whose
commerce they were so familiar, should not have been early manu-
factured in England, especially as tiles were made abundantly.
Building stone, though common enough in some places, and gene-
rally available for churches and castles, is not by any means
distributed over England. As late as the beginning of the seven-
teenth century, the improvement of the Thames navigation between
Burcot pier, near Dorchester, to Oxford — between which points the
river was crossed by impassable or unnavigable shallows — was de-
clared urgent in Acts of James I., in order that Oxford stone should
be conveniently carried to London. Brick earth is much more
widely distributed than stone. But it was not employed for what
is now so obvious a use.

The first purchase of brick which I have noticed is at Cambridge,
in 1449. In 1453 I have found it in London. In 1461 it occurs
at Oxford, where it was, and remained for two centuries, very dear.
I conceive that the art was copied from the practice of the Flemings.
Before the fifteenth century was over, brick became the common
material for building in the eastern counties. In the sixteenth, it
was generally used in London, and along the Lower Thames. It was
the favourite material of Henry VIII., whose mania for building was
excessive, and who made use of it, I have no doubt, because it was
so costly. Certainly the brick of the sixteenth century was admirably
made. It was almost a work of art in itself. I have seen arches with

280 DOMESTIC MANUFACTUBES.

very fiat crowns, built in the early part of the sixteenth century,
which, though they are now the substratum of ruins, and covered
with rubbish and earth, are as sound as when they were set up. Our
ancestors were slowk o adopt, still more slow in invention ; but when
they had adopted a& invention, they did their work well. In our
time matters are painfully reversed. But the modern tradesman,
whose raison d'etre is to use the skill which he possesses, and you do
not, to supply you with genuine articles, generally employs what
abilities he has in cheating you. I have given you the economical
defence of his existence, and its too frequent perversion.

The curious thing is besides, that other branches of the great
Teutonic race were distinguished in past times for capital inventions.
It is a dispute where paper was first made from linen rags. The
earliest piece which I have seen, and certainly the rudest in manu-
facture, for a fair-sized fragment of the original rag is still in the
structure, is under the date 1335. It is a bill for spices, no doubt
bought at the London shop of some Bruges merchant. But it is
more than two centuries aftei this that the English are credited
with having attempted the manufacture of paper. It is said that
Bishop Thirlby, the last abbot, and the first and last bishop of
Westminster, induced one Bemigius, a German, to set up a paper mill
in or near London, at or about the middle of the sixteenth century.
It seems that the project failed, for a poem, published in 1588, which
contains a eulogy upon one Spillman, a German, and court jeweller
to Elizabeth, who was successful in his undertaking at Dartford,
states that he was the first tp introduce the industry in England.
Unless I am mistaken the Dartford paper mills are still well at work.

The great invention of printing was the work of the Khenish
Germans, and it appears at Mainz. It was introduced, as we know,
into England by Caxton, about thirty years later. He learnt
the art in the Netherlands. His successors in the art, such as
Wynkyn de "VVorde, were foreigners, or taught by foreigners. The
principal printer of Henry VIII.'s reign is Berthollet, whose name
may be taken to designate his origin. Nor do I think* that it made
much progress in England. It seems to me rather to deteriorate
during the sixteenth century ; the type to become more clumsy and
coarse, and the impression less clear. In these industrial arts then,
which I have taken as illustrations only, I think I have made out

PAPEB. TEXTILE INDUSTBIES. 281

that the English were not an inventive people, and that they did
not even readily adopt what other people had long invented. I will
now attempt to show what they did do, to venture on some explana-
tion of their exceedingly slow and imperfect progress, and to give
my solution of the movement which began at the end of the seven-
teenth, and became characteristic, traditional, and progressive in
the eighteenth, and onwards. The causes will be principally seen
to be social and political. You cannot, of course, separate, except
in thought, and then only with no little risk of confusion, economi-
cal from social and political facts. Fortunately, though some of
the social and political forces are enduring, their origin is so far
archaic, that they need not frighten the most sensitive member of
the Liberty and Property Defence League.

Now there always were textile industries in England. There was
probably hardly a home without a spinning wheel, hardly a manor
without half a dozen hand-looms. The spindle side, if it be not one
of those modern affectations, of which philological pedants produce
many, is equivalent to maternal descent, and the universal occupa-
tion of unmarried women is enshrined in the generic term of spinster.
These domestic industries were general, at least to the middle of the
eighteenth century. They were inevitable in early times, partly
from the habits of the people, partly for a cause to which I shall
presently refer. But I am thinking of local industries in which
the persons engaged depended for the whole, or for the main, of
their livelihood, for I am convinced that generally they who engaged
in handicrafts had some land. The market was too precarious for
them to rely entirely on such an industry. I have often found
that head masons and other artisans, clerks and weavers, are
cultivating land for themselves, or occasionally employed in field
work. The Statutes of Labourers allege that artisans are compellable
to serve in harvest. In the long vacation lawyers and students were
remitted to husbandry. "When Parliament is dismissed or pro-
rogued, the session being over, the Commons are sent back to their
fields, the Lords to their pleasures, as the royal message, with un-
conscious irony, often counsels.

As I have said many times, the principal seat of the textile
industries was Norfolk. The county was in close commuuication
with the Low Countries The small craft of the time went across

282 DOMESTIC MANUFACTUBES.

to the eastern coast, and hugged the shore, the German Ocean
being generally calm, to the port of Norwich, but especially to
Lynn and Blakeney. The characteristic of the former town was
that it was villa mercatorum. Through the Norfolk rivers came the
merchandise which was sold at the great fair of Stourbridge, near
Cambridge, the principal mart, while it lasted, of Eastern England,
and even of all the southern counties. The purchasers of cloth
and linen do not often designate the origin of their purchases.
But Aylsham linen is not infrequently named, a strong woollen
stuff for leggings from Worsted, and cloth generally from Norfolk.
It is more than probable that linen cloth which went by foreign
names, such as Holland, was from early times of English
manufacture, as it is sometimes expressly said to be. Sometimes
linen and cloth are said to be of Irish origin, and it is plain from
the accounts of Roger Bigod at the end of the thirteenth century,
who having married one of Strongbow's co-heiresses, had large pos-
sessions in Ireland, that a flourishing manufacture of cloth was
carried on at Carlo w.

Eicher people bought linen from Liege, and generally from
Flanders. In course of time, much linen so designated is
purchased by corporations. But the custom of traders, when
foreign goods are a fashion, to call domestic goods by foreign
names, in order to invite the custom of ignorant purchasers, is
beyond doubt as old as the Middle Ages. The boots which our
modern ladies purchase as French are generally manufactured in
North London, sent out to Paris, stamped or labelled with the
names of French houses, and reimported into England as French
goods. Put into this class of imports, they rouse the alarms of
Fair Traders, and are quoted as illustrations of one-sided Free
Trade. I have often had to point out this among other such
cases. But I sat for some years for a leather-manufacturing con-
stituency. So with cloth. The purchases of great people were
of the finest Flemish cloth. They obtained velvet and silk goods
from Genoa and Venice, though there was a silk manufacture
in London in the fifteenth century, carried on by women, who
complain of the rivalry and frauds of the Lombard merchants,
and are protected by an Act of 1454.

There were two metals, important products of this island,

THE SIZE OF THE ENGLISH TOWNS. 28S

which were produced for Western Europe. They were lead and
tin. The former was mined certainly in Derbyshire, and probably
elsewhere, and was, I am sure, abundantly exported. The other,
a Cornish product, was subject to a royalty paid to the Earl or
Duke of Cornwall. The whole district, in so far as it produced
tin, was subject to a local jurisdiction, that of the Stannary Court,
and the product was sold at a staple town, Bodmin generally.

Now I imagine that the manifest check to invention, and the
adaptation of manufactures in England, which were prosperous and
progressive abroad, was the generally agricultural character of
England. It contained one large city, London, which had between
30,000 and 40,000 inhabitants. York, the capital of the north,
came next with 11,000 ; Bristol had about 9,500 ; Coventry about
7,000; Norwich 6,000; Lincoln about 5,000. No other English
town had above 5,000 inhabitants. In the poll tax of 1377, no
town in the counties of Bedford, Surrey, Dorset, "Westmoreland,
Rutland, Cornwall, Berks, Herts, Hunts, Bucks, and Lancashire
was deemed worthy of a particular enumeration. The population
of forty-two towns is given, and the proportion of county to town
population in the last quarter of the fourteenth century is nearly
fourteen to one. Such a proportion is indicative of the urban
population which the whole country could employ and provide for
either in manufacture or trade. In Colchester, seventy-two years
before the poll tax, there were about 2,000 inhabitants, of whom 140
were householders, designated as manufacturers and traders. In
1377 it had 4,432, but the eastern towns were very prosperous
during the fourteenth and fifteenth centuries.

Parish life was exceedingly insulated. The custom of registering
the native born children in the manor roll, of excluding strangers, or
making their host answerable for them after a brief visit, and of
the local administration of justice, must have tended to keep tho
villages very much apart. In my native village in Hampshire,
even as late as my personal memory, the peasantry expressed an
open and hearty contempt for the peasantry of the two neighbour-
ing villages. For the inhabitants of one, they had nearly as much
dislike as the Southern French had for the Cagots. It was said
that none of them had ever intermarried with the despised race.
Up to comparatively recent times, no road passed through this

284 DOMESTIC MANUFACTUBES.

village, but merely skirted it. There was a theory, and I believe
one -with some foundation, that the inhabitants were descended
from the ancient Britons, whom the Jute settlers — it was in the
heart of the Meonwaras — had failed to drive out of the morasses.

Such insularity was unfavourable to invention or progress in the
industrial arts. These villagers to be sure went to fairs, got rid
of their wool in neighbouring markets, perhaps some of their corn,
and their surplus stock of sheep and cattle, quite as frequently to
migratory purchasers as in regular markets. Eton and Winchester,
and some of the colleges of Oxford and Cambridge, went far afield
in the fifteenth and sixteenth centuries for supplies. The un-
certainty of the home market discouraged invention if it did not
prevent the formation of special industries. The busiest time of
the producer's or dealer's year was at the great fairs, such as that
St. Giles, Winchester, and Stourbridge. In the former of these,
as my friend Dean Kitchen has shown, by the words of the
Charter which he has published, all business in Winchester and
Southampton was suspended for three weeks, and the Mayor and
Corporation of the city of Winchester was superseded by the
bishop's officials during the same period. Of course the traders
rented booths on the hill, and probably did more business in the
three weeks than in the rest of the year.

The true function of capital, as I have stated more than once,
is to keep labour in continuous action, and to make prices as
uniform as possible. Now the motive to invention is a saving of
labour, and the stimulus to the saving of labour, is the prospect
of a wider or more active market. The peasant would no
doubt have been glad to get some of the things which he did
not make himself at a cheaper rate. But the producer could
not anticipate his wants, or guess that he could better his market
by cheapening his wares. Hence, when the price of manufactured
articles was doubled by the calamity of the plague, there was
less motive than ever for economizing the cost of production, and
lowering the prices, when the contingency of a lessened amount of
producers had induced the effect of raising it. Invention is
stimulated by a widening market, checked by a narrowing one.
JK Now let us compare England with Flanders, when at the height
of its commercial and manufacturing prosperity, i.e., during the

THE DENSITY OF THE FLEMISH POPULATION. 285

reign of Charles the Bold (1467-1477). The sea-board was
studded with large, fortified, and wealthy cities, who were possessed
of great municipal privileges, for which they were always willing
to fight, and whose burghers were the manufacturers of Europe.
The trade with the East, in so far as its products were accessible
to Western Europe, was centred at Bruges, the exchange of Europe,
and the negotiation of mercantile bills at Antwerp. The difference
between a given weight of wool, and a piece of cloth manufactured
from the wool, was eightfold, and of this produce, as far as
foreign trade went, Flanders had the monopoly. The country was
so densely peopled that it could not be maintained on its own
produce. It imported barley largely from Norfolk, and I know
that two of the great Norfolk families, Fastolfe and Cromwell,
grew rich by this traffic in grain. The Flemings therefore had a
market, a market which was constantly expanding, as long as
they could get raw material for their looms and customers for their
produce. It was impossible to exclude them from this market by
protective duties, for harbours were many, ships were of light
draught, and a preventive service was out of the question. When
two centuries after these events, Colbert tried to stimulate the
manufactures of France, he saw that a subvention might be
effectual, but prohibitive duties impracticable.

The progress of invention in Flanders was slight, and to our
experience trivial. But at the time it was very real. It chiefly
lay in the extension and multiplication of industries, in the perfec-
tion of products, not in the economy of the process, though the
development of special skill and aptitude, with what it invariably
implies, a division of employments, is a real economy and a virtual
invention. The Flemings developed the art of the wool-comber, i.e.,
the process by which the better and finer parts of the fleece are
separated, the first and most important step in the manufacture of
fine goods, one which English inventors have since carried almost
if not quite to perfection. I remember some years ago, telling my
late friend, Mr. W. E. Forster, when on a visit to me, that the
cloth of the fourteenth century (I might have said on Shakspere's
authority) was coarse and full of hairs. He asked me on what
ground I said this, as he, a woollen manufacturer, would be glad
to know. So I carried him off to the lodge at New College,

286 DOMESTIC MANUFACTUBES.

where the warden preserves William of Wykeham's mitre case
and valise, and bade him take note of the stuff with which it was
lined in proof of my statement. He then saw why in Shak-
spere's time winter garments had to be lined. I have come across
many historical and economical inductions which are worse
founded than mine was. A man in an English winter might as well
have dressed himself with a hurdle as with English woollen cloth.

Although I believe that the manufacture of English cloth for
home use and for exportation was only of the commoner or coarse
kind, it soon spread from Norfolk. It gets to Wiltshire and Dorset
in the fifteenth century, as I know from purchases. In course of
time, it is made the subject of legislative enactment, mainly, if we
can trust the preamble of Acts, to prevent fraud and the cozening
of customers. These Acts of Parliament instruct us as to the
extension of the industry to the north. It probably always
existed in Yorkshire, for Leeds and Bradford have from ancient
times been marts of northern produce. Here, as we know from
evidence which is almost modern, these textile industries were
especially home products, which were collected by factors from the
houses of the weavers.

Flanders was ruined by the wars of religion. Thousands of its
weavers became emigrants. They came to England and France,
especially after 1567. But the stream was incessant during the
rule of Alva, Parma, and the Archdukes. The Exchange of
Antwerp was transferred to Amsterdam. The trade with the
East, by which the cities of the Ehine and Bruges had been en-
riched, was destroyed by the capture of Egypt in 1516, and by the
Cape Passage route to India. But though Flanders was desolated,
England made little industrial progress in the sixteenth century,
and only began to wake up in the middle of the seventeenth. The
same cause was at work as before. In the sixteenth century the
rivalry of Flanders was annihilated, in the seventeenth that of
Germany.

I have never yet heard that any of the numerously laborious
and learned Germans have been at the pains to give us an account
of the economic condition of Germany, from the Rhine to the Elbe,
and from the German Ocean to the Alps, when the horrible Thirty
Years War broke out. We are told what were the causes of that

TEE RUIN OF CONTINENTAL INDUSTRIES. 287

war — the bigotry of Ferdinand, the ambition of the House of
Austria, the sudden outburst and the sudden collapse of the
Bohemian revolt, and the folly which, instead of uniting Lutheran
and Calvinist against a common foe, led them to quarrel and be
destroyed in detail. We know also what were the insidious purposes
of France, matured by Henry IV., put into practice by Eichelieu,
and persisted in till the collapse of France in the war of 1870.
But what I have always desired to know is, what Germany was
before 1619. "We know only too well what it was after 1648, and
how, when weariness had brought peace, after every one of those
who had taken part in the beginning of the war was in his grave,
Germany was wholly ruined, thrown back in the progress of nations
for two centuries, and reduced to being little better than a geo-
graphical expression.

England was in the midst of her own troubles, and the laws of
Political Economy, or at any rate those of economical progress, are
as silent during warfare as those of the constitution are. The first
half of the seventeenth century was a miserable time for the
English people, however crowded it may have been by great men,
and stirring events. If the Commonwealth did not bring peace, if
the time was not ripe for the Government which Cromwell would
have established, great prosperity followed the cessation of the war.
The lot of the labourer was lightened, for wages rose 50 per cent.
The policy of English conquest and trade, that of assuring a sole
market for the manufacturer and merchant, though vicious, was
disguised by a success which was not due to the policy. England
became, during the reign of the Protector, again one of the first
European Powers, which it had ceased to be since the miserable
reign of Henry VIII.

About the middle of the seventeenth century, or a little later,
Dud Dudley, a base cadet of the house of Dudley, discovered new
processes for smelting iron with pit coal. Cast iron, Dudley's product,
was known in the days of Elizabeth, but Dudley's inventions gave
it a high commercial value. At about the same time, or a little
earlier, the forests of the Sussex "Wealden were utilized for the
manufacture of iron and glass. Of course, to modern notions,
the process was very wasteful and very destructive, for within a
generation Sussex was cleared of its woods, and the industries

288 DOMESTIC MANUFACTURES.

decayed for want of fuel. But from this time forth, the depen-
dence of England on foreign iron masters ceased. At the end of
the century, England, by the welcome she gave to the French
Huguenots, went a great way towards appropriating the silk in-
dustry of France, though not permanently, and much further
towards neutralizing the projects of Colbert. The art of refining
rock salt was rediscovered, and England began to export what she
had previously procured from abroad. But the capital fact of the
seventeenth century, in the last half of it, was the development of
the East India trade ; with the home production of articles which
should be exchanged against Eastern goods, the great development
of the cloth trade, and with it the supersession of Spanish cloth
imports. England having now improved her manufactures, the
growth of the Colonial trade, notably with the Southern American
plantations, and with those of the Leeward islands which belonged
to England, especially Jamaica and Barbadoes followed.

England had now learned how suitable her climate was for the
manufacture of woollen and linen cloth, to which in time was to
be added cotton. Davenant states that Bishop Burnet, in a con-
versation which he had with him, informed him that good woollen
and linen yarns could be profitably and perfectly spun in a moist
and equable climate only, while silk goods could only be brought
to perfection in a clear and dry atmosphere. Now this is perfectly
true. There is no country in the world where so much finish can
be given to woollen and similar goods as can be in England, by
what I may call entirely natural processes. The migrations of the
woollen trade are illustrations of the truth of Burnet's remark. It
went from Norfolk, the driest county of the island, to the west,
where the rainfall is often double that of the east, and excellent
goods are still produced there. But in time, it migrated to the
north, for there the climate is as equable, and the motive power
of coal is cheaper and more ready. I regret that I must add, that
Davenant quotes the bishop's information in order to urge the
forcible destruction of the Irish woollen industry, since Ireland,
with an equally convenient climate, might rival English trade.
Then affirming the selfish maxim, Lucrum cessans est damnum
emergens, he urged with success the extinction of one among the
many Irish industries which the English Parliament exterminated.

THE DEVELOPMENT OF ENGLISH INDUSTRY. 289

The eighteenth century, however, is that in which more than in
any other, invention or adaptation made rapid progress. Its
beginning is marked by the acceptance of the new agriculture, a
subject on which I have frequently commented, and at some
length, for it is one of the most interesting and instructive facts in
economical history. But it was not as a discovery original. The
new agriculture had been practised for a century in Holland and
Flanders. Its success is constantly commented on by agricultural
writers of the seventeenth century, who are never tired of re-
proaching the English with their slothful and backward agri-
culture, and I am forced to say, of giving distasteful reasons for the
fact. We are told by these writers, that all the choicer vegetables,
common enough as we should think them now, came from Holland,
and that a gentleman's or farmer's garden, let alone his fields, did
not supply him with the commonest. They tell us also, how, in
Brabant,' to use Arthur Young's phrase, sand had been turned into
gold, by liberal and just covenants between landlord and tenant,
and by securing to the tenants the bond fide improvements which
they had made. Among the many benefits which Holland has
conferred on civilization, that of improved agriculture is not the
least. Perhaps in time to come, and ere it be too late, we may
take another lesson from Holland, and copy her land system. If
we do, I can confidently promise the landowner in the United
Kingdom a return to at least a large cantle of his old prosperity.
But as I have been often obliged to affirm, the two greatest
obstacles to human progress are the prejudice of ignorance and the
bigotry of science.

The last half of the eighteenth century was the great epoch of
mechanical invention in England, or, as I ought now to say, Great
Britain, for Scotland contributed her full share in the discoveries
and adaptations of Watt. And here I cannot but think, that the
greatest of national gifts, if it be diffused, the power I mean of
adapting means to ends, had now become hereditary in our
countrymen. Captain Galton has used an unlucky phrase, in my
opinion, when he writes about the heredity of genius, and illus-
trates his opinion by facts drawn from the heredity of logical
powers. With us economists, all the phenomena, which, from our
judgment, seem to contribute to industrial skill are pressed into

20

290 DOMESTIC MANUFACTUBES.

our service. It is plain that the spread of education in our gene-
ration develops an aptitude for education in a succeeding gene-
ration. The children of a man whose logical faculties have been
cultivated disclose a readiness in applying their faculties to
similar results which appears to be cumulative. The fact is con-
stantly noticeable, and is, I think, most hopeful. I speak, of course,
of education under proper conditions. The sprightliest mind may
be demoralized and degraded by silly examinations and sillier
examiners. The English people, I will not go nearer home, seem
to have gone mad over examinations. I remember that my friend,
Sir W. Harcourt, told me that an excellent female domestic at the
Treasury was- constantly in danger of losing her place, and her
employers her services, because she could not come up to the Civil
Service standard in decimal fractions. Examinations may be
necessary, but we need not, like the f< gentle Sicambrian" Clovis,
adore them.

Still, I cannot but think that the political condition of Europe
counts for something in the situation, though I admit that the
Briton of the eighteenth century had thrown off, at least in some
quarters, his hereditary stupidity, while he retained his dogged
industry. The civilized world had adopted the policy of endeavour-
ing to secure by force of arms a sole market, as, under altered
circumstances, France and Germany are trying to secure now — the
one in the swamps of Tonquin, and in the malaria of Madagascar ;
the other in the waterless desert of Angra Pequena, and in the
beerless desert of North New Guinea. But when every one thought
the policy wise, the winner in the game had his advantages. Now
let us look at the condition of Europe at and after the Peace
of Paris in 1763. As we Englishmen are still paying interest on
the bill which we ran up then, and disavow the policy now, it may
be well to examine the positive gain.

France, our nearest neighbour, was stripped of nearly every-
thing. A little before she had a menacing position in India, a
more menacing one in North America. She had a preponderating
influence in the southern half of the Indian peninsula, and held
the strings of an intrigue in the north-east portion. In 17G3, she
was left with Pondicherry. In North America she held Louisiana
and Lower Canada, and was constructing a chain of fortresses

THE CONDITION OF EUEOPE IN 1763. 291

from the south to the north. Nothing could have been more
cleverly strategic that her plan, as I noticed ir several places when
I traversed a considerable part of the country which she intended
to occupy. Unfortunately for France, she had in Louis XV. a
king who, while living the life of our Charles II., affected the
policy of Louis XIV. The Seven Years' War really created the
union of the American plantations, and gave them the means for
the War of Independence.

Spain counted for nothing, and all Scandinavia for next to
nothing. Germany was again torn to pieces by war ; now by a
dynastic struggle, as a century before by a religious war. Holland
had been finally ruined by the house of Orange in the person of
William V. The Italian States seemed past hope. England alone
came out with the universal empire of a sole market. Captain
Cook was discovering and annexing in the Pacific and Australia,
and England had at last a chance of winning a greater empire of
trade than the Bull of Borgia had given Portugal and Spain to-
gether. At that time, it would have cost but little to have annexed
the Spanish colonies, and for the elder Pitt to have exclaimed, on
behalf of the British Parliament, " Uterque Poenus serviat uni."

Now look at the opportunity for the manufacturers who had the
chance of supplying a sole market. The seaboard of North
America, from Nova Scotia to the borders of Florida was theirs.
India was theirs, and without their permission no one could land
cargo, or take cargo thence. The supply of this market so largely,
so suddenly extended, was in the hands of English manufacturers
and merchants, and the economy of production, i.e., of inventions
in aid of or in substitution of human labour was the obvious and
ready road to wealth. No wonder that the abilities of Arkwright,
Crompton, and Watt, were called into active exercise. And
though in a short time the reverse of the Treaty of Paris was at
hand, and the acknowledgment of American independence was to
cut off half, and that the most hopeful half, of the sole market,
the English were equal to the occasion. They discovered that a
sole market was, after all, by no means so absolute a good as they
imagined, and they began to build up a new colonial empire, more
vast than that which they had lost, under a new and far truer
maxim, that trade follows the flag.

292 DOMESTIC MANUFACTUBES.

Besides, the temporary stimulus which the sole-market theory
had afforded British invention was made permanent by the natural
effort which producers who have embarked their capital in in-
dustrial avocations make to arrest the risk, even though it may
prove an imaginary risk, of decline. Nations which have made no
progress in the industrial arts are slow to move and apathetic.
Nations which have made progress are exceedingly unwilling to
lose ground. Again, the circumstances in which Europe was
placed, effectually staved off competition. It seemed that the
stars in their courses were fighting against the industrial rivals of
this country.

A few short years, and the great continental war broke out.
Every throne in Europe was shaken, even in countries which were
not invaded. The French overran Europe from the harbour of
Gibraltar to the city of Moscow. In the eighteen years con-
tinental war there was no leisure for the arts of peace, for the
growth of industry. But England early gained the mastery at
sea, only checked by the folly of the short war with the United
States, and became the workshop of Europe. Napoleon, that idol
of idiots, fancied that he could destroy the English factories by the
Berlin and Milan decrees, and being a clever Italian of the fifteenth-
century type, that depicted by Machiavelli, denounced the penalties
of piracy against all English vessels which entered continental
ports with English merchandise. When he marched to Moscow in
1812, his soldiers were clothed with the produce of Yorkshire
looms, i.e., he found that the exigencies of war, from one point of
view, had to override the exigencies of war from another point of
view.

The peace of Europe, from the Battle of Waterloo to the
Crimean War, interrupted only by a few transient struggles, was
the peace of languor. During this period the European nations
were recovering from the losses which they had suffered for
eighteen years of unbroken bloodshed and waste. The epoch was
characterized by the capital invention of steam transit on rail-
roads, the accomplishment of which was again due to English
invention, and was suggested by the obvious advantage of cheapen-
ing freight, one of those economies in production on which I have
already commented. It was English, because in England only, so

TEE EFFECT OF MODEBN WABS. 293

great was the prostration of the Continent, was the accumulation
of capital, and its expenditure on productive works of deferred
profit, possible.

The wars which have followed have been brief, for the Crimean
was the longest European war, the civil war in America the most
prolonged. But though they have been generally brief, they have
been exceedingly destructive. It is too early to determine or even
to guess at the effect which they have induced on the resources of
the states which have waged them. The utmost we can at present
follow is the economical efforts which they have induced on industry
and trade, especially on that of the United Kingdom. Now England
was very little affected by the Crimean War, except hi one direc-
tion. Up to the time in which hostilities began with Eussia, the corn
trade with that country was of great significance to the belligerents, so
significant that when war was declared, Odessa was not blockaded
till the corn fleet was dispatched; and nothing was left to blockade.
But indirectly this war had, followed as it was by a still more
significant struggle, a singular effect on values. It caused, and by
a chain of circumstances assisted, that remarkable increase of
agricultural rent (26| per cent, between 1854 and 1879) which has
been a prime factor in the agricultural ruin of to-day. The
Eussian corn trade never recovered the collapse of the Crimean
"War, and it naturally took time to develop it elsewhere, and in the
interval high grain prices prevailed, and stimulated an agricultural
system which had been carried to perfection, except in one direc-
tion, the accurate keeping of farmers' accounts. I do not find that
the Indian Mutiny, which followed the Crimean War, had much
effect on English manufactures and trade. Had it happened at
the present time, it would have had far different effects, for the
wheat exports of India, which have unquestionably brought about
that over- supply of which my first rule, given you last week,
affords the interpretation, was at that time non-existent.

But the process was interrupted by the four years' civil war in
America. No war was ever so costly and so destructive. The debt
contracted by the North was enormous, the waste of life prodigious,
the destruction of property incalculable, the arrest of development
total When the war was over, the demand for European,
especially for English products, was urgent, so urgent that it

294 DOMESTIC MANUFACTUBES.

easily overleaped the barrier of what was intended to be a pro-
hibitive tariff, carried through the American Congress by Mr.
Morrill, as the price, it may be feared, of that gentleman's
allegiance, a tariff which rendered the restoration of waste ex-
ceedingly costly, and the redemption of the Federal Debt exceedingly
easy. The waste replaced, there began the development of the
North-west corn lands, and the exportation of their produce to the
United Kingdom.

Then came short but sanguinary European wars. They were all
wars for frontier, like the Crimean and American wars. There
was the war undertaken by Prussia and Austria together, for the
sake of pillaging Denmark, and completing the German frontier on
the Baltic and the German Ocean. The quarrel over the spoils
between the two brigands came briefly after, and the delimitation
of Austria, which suffered a further delimitation in Northern Italy.
These wars were short and costly, and what is to our purpose,
arrested industrial rivalry. Lastly came the Franco-German War,
the latest, perhaps the last, struggle after the success of the policy
of Henry IV. and Kichelieu. It is difficult to say whether the pay-
ment of the indemnity was a greater loss to France than its receipt
was to Germany. Why I may be perhaps hereafter able to
explain.

Since then there has been generally peace ; but such a peace !
An armed peace, if prolonged, is more destructive of economical
prosperity than, open warfare for a time. I do not see that the
industrial position of England is threatened. The German and
Belgian are to some extent inventive, the former especially in
chemistry and its products. But they are much more disposed to
imitation. Friends of mine have been obliged to treat persistently
intrusive Teutons, who desire to pirate their processes, to the mill-
pond of dye-works, from which the unwilling bather issues an
altered man. But the victories of piracy are limited. At present
all nations but our own effectually block the impulse to invention
by protective duties, for the earliest and most persistent effect of
protection is to disable the nation which adopts it from the just
interpretation of its own faculties.

XIV.

THE GUILD AND APPRENTICE SYSTEM.

The organization of parish or manor — Of towns — The guilds of
London and elsewhere — Apprenticeships, criticized by Adam Smith
— Motives for the system — The wages of artisans — The property of
the guilds — Combinations of workmen hardly taken into the scheme
of economists — Economical fallacies generally contain some truth —
Mr. MilVs wage fund — Associations of capital or of labour — The
trade union a partnership — The emancipation of trade unions —
The trade union a remedy against socialism*

Organization was the essence of early English life. In the country
every man belonged to a parish or manor, and, to use a modern
phrase, had a stake in it. The landless man was an outlaw, a
thief, a brigand. He lurked on the no-man's land, on the border
of the settlement, in the outlying woods. He may not have been
a very unpopular person, when he plundered Jew or Lombard, or
even an abbot, particularly if he were one of those foreigners whom
the Pope planted in an English benefice, or who got the reward of
service under the king, or was the object of royal favour. But
the landless man was otherwise included in no organized or regu-
lated parish or manor, he was outside the universal system of
English life, not in the Middle Ages only, but long afterwards. The
English peasant for many a long day, even up to recent times,
looked askance at a stranger or foreigner, as they sometimes called
him, when he was imported into the parish. The law of parochial
settlement, selfish as its motive was, and mischievous as its results
were, was, in principle, an appeal to ancient and deep-seated
traditions.

296 THE GUILD AND APPRENTICE SYSTEM.

Forms which are obsolete and unintelligible, and now abrogated,
had a great significance in old times. It appears that the consent
of the settlement was necessary for the introduction of a new
tenant or purchaser under the lord. It is certain that the lord
could not transfer his rights to a stranger unless with the assent
of the tenants. This practice, from which was developed the legal
ceremony of attornment, survived in some particulars to the
eighteenth century, when, having long ceased to have any practical
importance, and being found to hinder the free conveyance of land,
attornment was wholly abolished by statute. I am disposed to
believe that the action of the homage, the view of frank pledge,
was, from what I have gleaned in manor rolls, an active force,
that it formed in some particulars a consultative council for the
lord, and that its advice or assent was convenient, sometimes even
necessary.

The development of a homogeneous England from these
curiously separate units was not so easy a matter. It was early
attempted. The doctrine of allegiance to a central authority,
which, if we can trust constitutional antiquaries, was enforced as
early as the days of Cnut, may have gone for something, but I
suspect that the promissory oaths of the tenth century were not
found to be more binding than those of the eighteenth, when a
considerable Parliamentary party, with Shippon at their head, took
the oath of allegiance to the Hanoverian king, and assured the
exiled family of their unfaltering devotion to the Stuart. If ibe
courts of the hundred and the shire had any real vitality, and but
little is known of their working, they would help to take tbe
peasant out of the narrow surroundings of his immediate home,
and suggest a wider field of action than that with which he was so
familiar.

It seems that the chief agency by which some sense of nationality
was developed was the administration of justice. The assize of
the migratory judges executed the criminal law in directions
which the local jurisdiction, however large its powers were, could
not reach, and the civil side determined rights of property in
matters where the local authority had no jurisdiction at all, and,
besides, gave publicity and force to its decisions. How important
these decisions were conceived to be is proved by the care with

THE OEGANIZATION OF PAEI8H OB MANOB. 297

which these judgments were reported and preserved. The student
of family history finds the greater part of his information in the
record of judicial, or at least of fiscal, proceedings. Again the
institution of the new system of direct taxation, after an assess-
ment, following on a Parliamentary grant, aided in the develop-
ment of common purposes. "We are told that in consequence of
the statute of 1406, by which all suitors in the County Court and
others were declared to be the electors of knights of the shire,
" outrageous and excessive numbers of people, and of small sub-
stance," had chosen them ; and therefore, in 1430, the forty-shilling
freehold was declared to be the franchise, further limited, two
years later, by an amendment that the freehold must be in the
same county. So widespread an interest must have tended to
take the peasant out of the narrow surroundings of his ordinary
life. But the parochial feeling remained strong long after this
time. Again it is probable that the institution of the justice of the
peace, and the statutory increase of his power, which, though
local, was not necessarily identified with those traditional
boundaries, had a further effect. At any rate, it straitened, and
finally extinguished, the local jurisdictions. I refer to these facts
because, though the old associations were weakened, they were far
from being lost. In some particulars they were even strengthened,
as I hope to show.

The organization of the towns, though the urban population was
small by the side of the rural, was strict. The object of the town
was to get a charter of incorporation, which should give the town
local authority, and the administration of justice, if not of the highest,
in considerable degree, by the elected officials of the city. Or the urban
population sought to confirm and enlarge charters already given.
Now all these concessions cost money, and the money was contri-
buted by those who were to enjoy the new or extended privilege.
But it was not to be expected that they who had purchased their
own urban rights would freely admit strangers to the advantages
which they had bought. It is true that, in theory, the town
could admit strangers, even serfs from distant places, and after a
time could protect such persons in the freedom which had been
granted them. But neither policy nor self-interest could be con-
sulted by making the town an asylum. From evidence which I

298 THE GUILD AND APPBENTICE SYSTEM.

have collected as to the payment of head money or chivage by non-
resident serfs, I conclude that such persons did not conceive them-
selves to be enfranchised by mere residence, though it is not
unlikely that if it were strong enough the town would resent the
attempt to seize a person of servile origin after it had determined
on adopting him, and he had become rich.

The principle of association and organization was extended to
the two universities. It is not known when either of these was
planted, or when they received their first charters. The students
at Oxford are mentioned in the reign of Henry II. in the chronicle
of Brakelond, who narrates the good offices of his hero, Abbot
Samson, in settling some difficulties which had occurred among
them and the city authorities. In the early part of the thirteenth
century Oxford is organized; in the days, for instance, when
Grostete was the leader of its philosophy and other studies. In
a list of towns, written in the handwriting of Henry III.'s reign,
the schools of Oxford are mentioned as a distinctive feature of that
town. I do not intend to draw a negative inference when I men-
tion that Cambridge is also noted, but only as being distinguished
for its eels. These two ancient institutions, when they come
before us, are self-governing corporations, having a ruler, a law,
and judges of their own, holding property, real and personal,
admitting persons to their franchises, and banishing them, and are
entirely independent of the municipalities in which they were
situate. In course of time the urban authorities of Oxford town
are subordinated to the university, and it was the boast of the
academical corporations that they were entirely exempt from any
secular or spiritual authority. The privileges they possessed were
confirmed by charters, and long after the history of these corpora-
tions began they had the distinction, alone, 1 believe, among
analogous institutions, of being confirmed by Act of Parliament.
England was, in short, filled with associations, customary, chartered,
and, in these two cases, formally legalized.

The principle of association was, however, extended beyond
these country, urban, and academical units. The members of
crafts or trades organized themselves, enacted their own bye-laws,
regulated their own business or merchandise, and finally were
incorporated, in some cases by charter, and in a few were appointed

TEE GUILDS OF LONDON AND ELSEWHERE. 299

the machinery for enforcing legislative Acts; as, for instance, the
weaving trade generally, by a special corporation created under one
of numerous police Acts of trade, for the whole county of Norfolk.
In London, which early became pre-eminent for its wealth, these
trade associations or companies were incorporated by charter,
though long after they had been fully in operation as private com-
binations. The charters, I believe, date from the fourteenth century,
but I have been told that the site of the Goldsmiths' Hall has been
in the possession of the craft from before the Conquest. Many of
them were accorded considerable duties. The London goldsmiths
were very early consulted in what is called the trial of the pyx,
that is, the verdict that the officers of the mint had satisfied the
indenture under which they were entrusted with the coinage. The
Merchant Tailors were called on to pass the cloth which was pur-
chased for the king's army. The Grocers were directed by Acts of
Parliament to see " to the proper garbling of spices." A search
into the Statute Book would no doubt result in the discovery of
many such obligations, and an examination into the archives of
those City Companies whose records survived the Fire, and have
been preserved, would give, perhaps, much confirmation as to the
part which the companies played in the police of trade. They
assumed, or were permitted to make, bye-laws, and some curious
illustrations of their practice have been published. Thus, for
instance, in the fifteenth century, the Grocers' Company levied a
fine of £10 on two members of the fellowship for the offence of
taking a fellow livery-man's house, by offering to pay a higher
rent than the occupier was paying, against such an occupier and
fellow Grocer's will. Half the fine went to the fraternity, and
"half to him that is thus put out of his house." The Act of 15
Henry VI. directs that the ordinances of these associations shall
be certified and registered by the justices of the peace, or the chief
magistrate of cities and towns, under a penalty of £10 for neglect.
This enactment indicates how universal these combinations were,
not in the town only, but in the country.

The whole country, and not alone the towns, possessed these
organizations. The masons had, under the rule of the heads of
their craft, the freemasons, and so had the carpenters. Under
34 Edward III. cap. 9, " alliances and covines of masons and

300 THE GUILD AND APPBENTICE SYSTEM.

carpenters, with their congregations, chapters, ordinances, and
oaths, made or to be made, were rendered void and annulled."
Some of these words seem like the technicalities adopted by their
reputed successors, the modern freemason. Later on these associa-
tions were declared to be felonious. The combinations of the artisans
were imitated by the peasant labourers, and we are told that, to
use modern language, all labourers during the last quarter of the
fourteenth century were united into very effective trade unions.
But it is quite clear that, to ensure unity of purpose and efficiency
in action, some sacrifice was required on the part of applicants for
admission into these organizations. Besides, in their struggle with
the capitalist and the law, they had need of a common purse, and
we are told that subscriptions were actually collected by the upland
folk, to pay the fines of such among their number as might be con-
victed, and generally in order to mature and carry out the line of
defence or campaign which they might undertake in this social
warfare.

This process was apprenticeship, a practice unknown to antiquity,
and apparently not accepted in all the countries of modern Europe.
This expedient, adopted, I do not doubt, in the first case, from
motives of police, is adversely criticised by Adam Smith, who holds
that it raises the wages of the persons who go through this period
of deferred wages. He also believes that it hinders the free circu-
lation of labour, because it disables those who have not passed
through this preliminary training from undertaking an employment
which is, so to speak, fenced against them. But he does not dwell
long on its effect on the wages of labour, for it is open to doubt,
whether in the end the calling which is necessarily preceded by
apprenticeship is necessarily better remunerated than one which is
not. For if it be supposed to have advantages, due to the post-
ponement of the wage earning period, either the remuneration
when the wages are earned owes its amount to the delay which has
been interposed, in which case the matter is in equilibria, and we
must search further for the effects, as it stimulates competition for
the higher earnings, in which case the wages are depressed by an
excess of supply, or the employment is rendered precarious, and the
aggregate earnings are equalized by breaks in the occupation. In
reality, however, the economical significance of apprenticeship is

APPBENTICESHIPS. 301

part of a far larger question ; the particular causes which raise or
depress wages, or affect the value of that which the workman offers
for sale, apart from the general laws which induce high and low
prices. Let us first, however, look at the history of apprentice-
ship.

There can be no doubt that the origin of the practise is to be
traced to the motive which I have already given, a desire to secure
to the purchasers of trade privileges the benefits which the existing
generation and their predecessors in title have secured. In fact, the
practice of apprenticeship long precedes any statutable enactment
enforcing it on craftsmen. Early intimations of it are given by
Madox, and, indeed, the indirect adoption of the system in the
liberal professions at an early date is to my mind proof that these pro-
fessions copied the existing and older practice of artisans and trades-
men. It is, I think, open to doubt whether all craftsmen were
apprenticed in times early and late. The existence of a class of
masons who are called free, or master, and a similar order among
carpenters, for I have often seen them thus designated, appears to
me to indicate that the practice was not universal. The frequent
attempt made in the Statute Book to compel apprenticeship implies,
I conclude, that the rule was frequently disregarded. Undoubtedly
the wages of artisans are higher than those of agricultural labourers
at all periods in English history, but this may not necessarily be due
to apprenticeship ; it may be the result of broken or uncertain
employment, or of bye-industries.

The period of apprenticeship was almost invariably seven years,
perhaps from the precedent of Jacob. The limit of time was occa-
sionally fixed by statute law, the regulation in the professions was
a bye-law of the corporation which admitted the qualified person
at the end of his training. Thus, originally, seven years inter-
posed between the student's entry at an inn of court and his call-
ing to the bar, seven years were demanded for the training of the
attorney, seven years' study for admission to the privileges of the
University. I do not find that any material advantage of a calcu-
lable kind was presented by the licensing body when the course
was over. Up to the end of the seventeenth century the earnings
of barristers and solicitors as attorneys were very small, and the
remuneration of a clerk, i.e., of a graduate, was no better than

302 THE GUILD AND APPEENTICE SYSTEM.

that of an artisan. Quite apart from the pressure which charac-
terizes professions in later times, all that the licensing bodies did
was to give the privilege of pleading to the barrister, of acting as
the agent of another to the attorney, and of teaching what he had
himself been taught to the graduate.

One of three motives may have been present to the minds of
those who by the custom of their calling were in the habit of im-
posing the prior condition of apprenticeship on those who would be
their fellows in the future. They might have contemplated the ex-
pediency of making those who entered into a more or less privileged
order, pay for the privilege to which they succeeded. They might
have designed to narrow the field of competition within their own
calling, by putting impediments in the way of those who might elect
to follow it. They might have had before them the expediency of
maintaining a high standard of proficiency in their craft. The
economist who is naturally disposed to interpret such a regulation
from the point of view which marks the relation of wages to profits
and prices, may be tempted to dwell more exclusively on the second
of these motives. But I am sure that the first and third were pre-
sent to the minds of the artisans of old times. Whether the second
of these motives was a successful one, and, in case it did influence
the advocates of tne apprenticeship system, is capable of being sus-
tained, is to be determined by the fact of what the apprenticed
person actually earned.

The trade of early England was not only small, but precarious.
The smallness of the towns, to which allusion has already been
made, is a proof of this. The feeling, therefore, which a trader or
manufacturer would entertain towards his company and its members
must have been akin to that which in later times was felt by the
licensees of regulated companies of commerce. It is not just, they
would argue, that they who create and insure trade at considerable
initial expense should be exposed to the rivalry of those who are
striving to enter on the fruit of our labours, without making any
contribution towards the outlay which was essential to the existence
of the trade at all. Or to take a more modern parallel, it must
have been like the feeling which an artisan, who has belonged to a
trade union all his life, who has made, in consequence, continual
sacrifices for it, and who consequently believes, rightly or wrongly,

HE WAGES OF ARTISANS. 303

that his expenditure has raised wages, entertains towards another
artisan, who will make no sacrifices, will incur no unpopularity
with employers, but is not above reaping the benefit of his fellows'
disinterested action.

It is quite true that the wages of first-rate artisans were in the
Middle Ages 50 per cent, above those of agricultural or peasant
labourers. But the artisan was migratory when he earned so much.
The common mason and the common carpenter got, as a rule, no
more for their labour than would compensate them for precarious
or broken employment. Now a migratory artisan was put to much
greater cost for his maintenance than a labourer would be, whose
home was stationary. This was discerned, early and late, by the
fact that workmen who were pressed for the king's service, no un-
common event, were always provided, in addition to their wages,
with journey money. Let me illustrate my position. A founder
resolves on building a college or monastery, and the former was not
infrequently founded in the fifteenth century. Workmen are to be
got from all quarters, master builders and master carpenters from
remote places. Such men have to leave their homes and families,
and to have for a time, in their humble way, a double establish-
ment. It is impossible to conceive, quite apart from apprentice-
ship, that they would be content to work at wages which did not
exceed the earnings of a residential workman, upon whom no extra
charges were put, or if such a remuneration were not paid them,
that a constant supply of artisans would be forthcoming. I think
that these are sufficient causes for the comparative elevation of
artisan's wages, without having recourse to the theory that they
were designedly raised by apprenticeship. Further, it seems to me,
that the far greater elevation of artisan's wages in London points
to analogous facts. There was much more expectation of work in
the city, but, on the other hand, the cost of living was much higher
than in the country, and even in small towns. But at the same time
I can assure my hearers that a mason in Oxford 440 years ago was
paid relatively better wages than he is paid in London for a fifty-six
hours' work at present. The fifteenth-century workman worked for
only an eight hours day.

One may well wish that one could recall the discussions which
took place at " the chapters and congregations of masons and car-

304 TEE GUILD AND APPBENTICE SYSTEM.

penters when tinder their alliances and covines, they made ordi-
nances and took oaths," when they excited the wrath of Parliament
in 1861, the year of the second plague. It was the time at which
Decorated architecture, having'been brought to perfection, was on
the eve of giving way to the more florid and less attractive Perpen-
dicular. The greater part of the handsome churches and conven-
tual buildings of that age were the work of the artisans themselves,
who "could draw their own plot." It needed no common or brief
training to enable the mason to himself design these structures
from the foundation to the roof, and then resign his work to an
equally skilful carpenter. These working men were the teachers,
the models of those architects who copy their labours in our days,
and often make a sad bungle of the imitation. In a time when men
could not be spared for the otiose function of a designer, who very
often knows little or nothing of the materials with which he has to
deal, but the design came from the artisan, we may depend on it,
that a seven-years apprenticeship was no long period for the youth
to learn his craft in, and become the rival in the new style of
these great builders who had raised the structures of a previous
century.

I am speaking, you will observe, of the work of artisans, five
centuries ago. A study of the conditions under which they lived
and worked, many of their works being still before us, convinces
me that, whatever may be said against apprenticeship in time
present, it was a necessary condition for the art and labour of the
past. It is quite possible that a practice may have outlived its
usefulness, and though there was a time when it was requisite,
that time has been followed by another, when it has become super-
fluous or even mischievous. What I wish you to notice is, that
when we project ourselves into a bygone age, we cannot conclude
invariably with those, who, however far-sighted and shrewd they
are, are unable to realize, from lack of facts, these remote
conditions. It is a common and a dangerous error to interpret the
past by the present. It is a true and necessary philosophy to
interpret the present by the past, and I have some satisfaction in
knowing, that whatever be the worth of my own comment — judge
it as you will — I have provided the means by which others after
me will be able to realize for themselves the bygone, but by no

THE PEOPEBTY OF THE GUILDS. 305

means exhausted conditions of past industrial life. And I may
mention as part of these facts, that Acts of Parliament not infre-
quently provide for the apprenticeship of labourers in hasbandry,
meaning by this, I am sure, those higher agricultural operations
which require special knack and acuteness, and formed the
qualifications of the first-class farm-hand, whom our ancestors
were wont to describe as a bailiff in husbandry, who directed all
operations, and could do everything which he directed. These
apprenticeships, Sir John Sinclair informs us, survived in the
West to the present century.

I must, however, say a little here about the guilds, town and
country, at a time when they were in their prime and were actually
the institutions which they proposed to be. In the first place, they
were well-nigh universal, though they were unchartered and
informal. Their property was derived from grants or charges on
land or houses, made for the purpose of securing the continuance
of a religious office, much appreciated and exceedingly common in
the period of English social history, which precedes the Keforma-
tion, prayers or masses for the dead. From what I have seen there
was scarcely an estate on which some such liability was not
created. One college in Oxford, Oriel, was much engaged in the
business of negotiating the price at which masses could be secured,
and the register of the College contains evidence of the strictly
commercial character of these negotiations, the College fulfilling
its part of the bargain in the large chancel, large for this special
object, of St. Mary's Church. Almost all the house property in
Oxford possessed by the pre-Eeformation Colleges is due to this
source, the bargain, especially when the mass was an obit or a
perpetual ceremony, being that the land or tenement was conveyed
to the contracting party, subject to this obligation. It seems, so
thoroughly was the custom engrained in the religious life of the
English, that these grants for definite religious offices were not
liable to the ordinary law of mortmain. To have refused per-
mission that such engagements should be made would have shocked
the sentiment of the time too seriously. In the New College
rental of Oxford tenements, six such payments are reserved for
divers monasteries, and it is quite certain that most of the other
property was held under similar obligations.

21

306 THE GUILD AND APPRENTICE SYSTEM.

Now this is a type of the guild lands held in town and country
by chartered or unchartered associations. The ancient tenements,
which are still the property of the London Companies, were
originally burdened with masses for the donors. In the country,
the parochial clergy, or the migratory clergy, undertook the service
of these chantries, which were ranged along the side walls of the
aisles of churches, and the establishment of a mass or chantry
priest, at a fixed stipend, in a church with which he had no other
relation, was a common form of endowment. The residue, if any,
of the revenue derivable from these tenements, was made the
common property of the guild, and as the continuity of the service
was the great object of its establishment, the donor, like the
modern trustee of a life income, took care that there should be a
surplus from the foundation. The land or house was let, and the
guild consented to find the ministration which formed the motive
of the grant. Besides these sources of income, the nucleus of
very substantial advantages, the association levied small fees from
the members, inflicted fines on offending members of the guild,
and so secured a common purse.

I have referred to this at some length, because the guild lands
were a very important economical fact in the social condition of
early England. The guilds were the benefit societies of the time,
from which impoverished members could be and were aided. It
was an age, as I have told you, in which the keeping of accounts
was common and familiar. Beyond question, the treasurers of the
village guild rendered as accurate an annual statement to the
members of the fraternity, as a bailiff or collector did to the lord.
If there was a surplus over the annual expenditure, it went to the
purposes of an annual or more frequent feast. The banquets of the
City of London Companies, now enjoyed by persons who have not
the remotest connection with the purposes of these Companies,
are a survival of mediaeval guild life. So are the parish feasts,
whose origin Blomfield discovered in collecting materials for his
county history of Norfolk, whose compulsory impoverishment
he comments on with some indignation. It is quite certain
that the town and country guilds obviated pauperism in the
Middle Ages, assisted in steadying the price of labour, and
formed a permanent centre for those associations which fulfilled

COMBINATIONS OF WOBKMEN. 307

the function, that in more recent times trade unions have striven
to satisfy.

It is not a little remarkable that the combinations of workmen
for the purpose of bettering their condition, such combinations
being known popularly as trade unions, though, for reasons which
I shall give, I prefer to call them labour partnerships, have
attracted so little attention from professed economists. Their
ancient history had long been lost, and has only recently been
re-discovered. This may account for much. In Smith's time,
they were suppressed, being under the ban of the law, and if they
subsisted at all, existed only as secret societies. When Ricardo
became a classic, they were still illegal, and the literary descendants
of Ricardo, the two Mills, father and son, preserve a complete
silence on this organisation. Mr. Fawcett, as was inevitable in a
man brought face to face with practical questions, during a long
Parliamentary experience, at last dealt with the topic. But as he
had a very scanty array of statistical facts, his account is not
analytical, and is far from being exhaustive or satisfactory. It is
very hard for a man, who has gone on to middle age in the
twilight, to accept evidence which alters his impressions. I do
not say this of my friend, Mr. Fawcett, whose mind, to the last
days of his life, too early closed, was singularly receptive of new
information.

One, out of the calamities which afflict political economy, is the
constantly recurrent phenomenon, that all or nearly all its fallacies
are partially true. There is some truth in the mercantile theory,
in the balance of trade theory, in the protectionist theory, in the
Ricardian theory of rent, in the bimetallic theory of currency, in
the fair trade revival, in the doctrine of reciprocal liberty, even in
the Liberty and Property Defence League. It is so in history. There
is some value in a mere arrangement of facts in chronological
order, without any indication of sequence or connection. There is
some value in what is called constitutional history, i.e., the dis-
covery in documents, and the partial analysis of the machinery of
administration and legislation, at various epochs of English
history, though the principle or practice has been in existence,
certainly for some time, possibly for a long time, before its activity
is announced, as the record in which the fact is preserved was

308 THE GUILD AND APPEENTICE SYSTEM.

composed, when a multitude of analogous records have perished.
There is some value in what is called the philosophy of history,
i.e., the analysis of the motives which have influenced considerable
persons, and of the power such persons have had in moulding the
destiny of nations, though here a pernicious habit of paradox has
been indulged, under which, for instance, Henry VIII. is made to
appear a patriot king; Elizabeth, a capricious woman without a
policy ; Mary Stuart, a virtuous and ill-used princess ; and so on,
through the ages. Of course these whims have no vitality beyond
the popularity of the writer, but they are immeasurably wearisome.
I hope that I may, in the course of such lectures as these, deal
with most of these half-truths in political economy, and unless I
am mistaken, I shall incidentally show, out of solid and unmis-
takable economical facts, how baseless are many of the conclusions
which pass current as constitutional principles, or historical
philosophy.

Now, the particular half-truth which arrested Mill in his analysis
of the labour question, quite apart from the total ignorance under
which he suffered in reference to the history of labour and wages,
was the wage fund theory. This, like the law of diminishing
returns, is, as I have told you, the transference of a theoretical
hypothesis into the sphere of an actual condition of fact, and
thence to an economical law. It is quite true that in theory, and
at a given point of time, could we conceive that the industrial
machine was in equilibrio, the amount of capital destined to
reimburse the workman for the labour which he has advanced, or
lent to the employer, is an exact quantity. Now, Mill thought that
this theoretical quantity was, in the ceaseless activity of human
industry, an actual quantity, that it was inelastic and incapable
of increase, not only at an incommensurable point, but in a
measurable space of time. This is the meaning of his celebrated
paradox, for it is no better, that demand for commodities is not a
demand for labour, a position on which he insists with unwonted
pertinacity, I had almost said, passion. I have already pointed out
to you that a demand for commodities is a demand for labour, that
even the comparative slackness of demand for commodities, by no
means involves a slackness in the demand for labour, and that the
manner in which an urgent demand for commodities is met, is by

MB. MILL'S WAGE FUND. 309

turning wealth from its passive condition as an accumulation into
its active condition as capital, loanable by the employer or self-
supplied. I could easily anticipate the satisfaction with which
many persons engaged in production would respond to the demand
for commodities, and the rapidity with which the demand for labour
would arise.

But, as Mill had committed himself to endorsing the fallacy of
the wage fund, he was driven to certain logical inferences from it.
If the sum destined for the wages of labour was an inexorably fixed
quantity, incapable of accretion by any human means, it follows
that a demand for commodities only means the diversion of labour
from one to another calling ; one of the curious delusions which
political economists fall into when, having derived their notions of
capital from bankers' balances, they assume an equal mobility for
all industrial agencies. Does, however, any man of practical expe-
rience imagine that an urgent demand for cotton cloth will draw
on the reserve of agricultural labour, or that if, for example, more
persons are employed, or the same persons employed more con-
tinuously in weaving cotton, this will have any effect whatever on
the employment or wages of farm hands ? But, to be even partially
true, the wage fund theory would require that each calling should
have its own wage fund, on which the wage fund of other callings
cannot trench. If, however, each calling has its own separate wage
fund, the demand for the commodities produced by that calling will
inevitably create a demand for labour, by which commodities can
alone be supplied, the addition of capital, provided it be forth-
coming, as it always is in saving or settled countries, and the
transference of a part of the fund of passive wealth into the agency
of active wealth. I venture upon saying that, if I were to ask any
practical man of business, in any of our great or, for the matter of
that, small centres of industry, as to the process by which an ex-
ceptional demand would be met, he would tell me that I had put
into words the result of his experiences.

Now the consequence of Mr. Mill's theory, at present, I believe,
dropped by the economists of his school, is, that if any combination
of workmen succeed under any circumstances, under which there is
an urgent demand for their labour, in getting better wages for their
work, or even in case they get these higher wages by the sponta-

310 THE GUILD AND APPBENTICE SYSTEM.

neous offers of competing employers, they are, by bettering their
own lot, worsening the lot of other labourers, whose share in the
fixed quantity is pro tanto diminished. The doctrine of the wage
fund, enforced by the high authority and the sterling character of
Mr. Mill, has been made a perpetual weapon of attack against the
labour partnerships of working men. These men have been in-
formed, very superfluously, because very erroneously, that the efforts
which they are making to better their condition are against the
laws of political economy, and are assured, as they are assured
under the Eicardian law of rent, that the wages of labour are low
and inelastic by a natural, or even providential, arrangement. It
is no wonder that they resent such interested nonsense. It is to be
regretted that they are apt to repudiate economic science altogether,
and even utter : " If political economy is against us, we are against
political economy."

The ordinary teaching of political economy admits that all wealth
is produced by labour, but it rarely tries to point out how one of
the producers can secure the benefit of his own product. It treats
of the manner in which wealth is originated, but it generally post-
pones the analysis of the process by which it is distributed. It is
attracted mainly by the agencies under which wealth is accumu-
lated, as a general does military force, and it is more concerned
with its concentration than it is with the process of its partition.
Most writers on political economy have been persons in easy cir-
cumstances, or have been intimates of those who are in easy cir-
cumstances. They have witnessed, with interested or sympathetic
satisfaction, the growth of wealth in the class to which they belong,
or with which they nave been familiar. In their eyes the poverty
of industry has been a puzzle, a nuisance, a problem, a social crime.
They have every sympathy with the man who wins and saves, no
matter how, but they have not been very considerate for the man
who works. They lecture the poor on their improvidence, their reck-
lessness, on the waste of their habits. But I have never read any
of their works in which they have raised the question as to whether
these traits in the character of workmen, assuming them to be true,
are not historically traceable to some manipulation of the processes
by which wealth is distributed, processes which they candidly and
truly inform you are of human institution only.

ASSOCIATIONS OF CAPITAL OB OF L ABOVE. 311

Now I am one of those persons who believe that, on the
hypothesis of perfect freedom in all innocent action, the agency
of the State should be limited to the protection of the weak against
the strong, and I have never, in vote or speech, swerved from that
principle. As I deprecate the unnecessary interference of the State
on behalf of the workman, so I deprecate the action of the State in
permitting restricted devises, remainders, or reversions to the re-
puted heads of private families. But if the law permits or sanctions
anti-social privilege, the community must expect a socialist propa-
ganda. If, by its enactments, the State permits people to be pro-
tected against the consequence of their own vices in one class of
life by the mechanism of settlements, it must not wonder at another
class demanding an eight-hours day from the legislature, or at some
people talking loosely about the nationalization of land. One eco-
nomic fallacy, if it be discerned that it is conceded to in order to
subserve a special interest, is sure to beget another, which would,
if it could, and may perhaps hereafter, deal unfairly with that pro-
tected or bolstered interest. In the fifteenth century workmen had
an eight-hours day, probably by their own concerted action, assu-
redly to the advantage of employers. I hope hereafter to state what
is, in my opinion, the economic defence of a restraint on laissezfaire
in some directions.

"When men put their capitals together in any direction, neither
society nor political economists have a word to say against them.
The defence of such associations is obvious, their utility unquestion-
able, their necessity in some cases indisputable. No fortune, how-
ever vast, could have constructed the North- Western Bail way, the
Suez Canal, or even a fleet of ocean-going steam-vessels. These
are undertakings the risks of which would be too great for private
capital, the profits too remote, even if the individual could supply
the funds. The bias of the present age is continually towards the
joint-stock principle, i.e., the aggregation of small capitals into
industrial avocations. There is no little reason to believe that the
development of this tendency has had a considerable effect on the
depression of prices, because people interpret the profits of capital
by the cost of acquiring that from which their profit is derived, not
by the accumulated cost of that which they have purchased. Very
possibly, the business or undertaking which has been turned into a

312 THE GUILD AND APPBENTICE SYSTEM.

joint-stock enterprise is weighted at its inception by an excessive
price. In course of time it is found to be unworkable at that
price, and the undertaking is wound up, and reconstructed with a
diminished capital. This process may go on again, till the ultimate
possessors have procured it at far less than its intrinsic value.
Under such circumstances, as prices are modified by the competition
of capitalists, the undertaking of the same kind which has not
undergone this process is at a disadvantage in the competition
against that which has, and can therefore afford to undersell. It
is true, underselling does not tend to go further than is necessary
in order to get a sound footing, and to displace rivals ; but, as com-
petition increases and becomes sharper, the process by which the
footing is gained and rivals are displaced is more prolonged and
more costly. But it is plain that the agency whose capital is small
in proportion to its expected or possible profits is at an advantage
in the struggle.

But in the experience of life, and under the traditions of society,
if in a commercial undertaking, the capital of which is collected by
these small contributions, the business is carried on with integrity,
or, at least, with success, if demand is interpreted clearly, and
supply is regulated shrewdly, so as to secure the largest possible
profit to the undertakers, to use Smith's excellent word, not only is
the business welcomed as legitimate, but the managers or agents of
it are applauded. If it be greatly successful, the promoters are de-
scribed, by no purposed adulation, as merchant princes, pioneers of
industry, creators of public wealth, benefactors of their country,
and guarantors of its permanent progress. They are presumed to
be peculiarly fit for offices and titles of honour, to merit places in
Parliament, occasionally to be even qualified for the transmission
of hereditary fortune, rank, and authority. It may be discovered
on analysis that they have made no wealth, but have simply
gotten it, or that their profits are extorted from the small earnings
and the prolonged labours of the downtrodden and helpless. What
matter ? the wealth is won, and they who witness the riches which
have been acquired take no thought of the process by which they
have been aggregated. Perhaps it is impossible and unjust to blame
that which society permits, or, it may be, cannot of its own force
prevent. For if the State guarantees employment and wages, it

THE TBADE UNION A PARTNEBSHIP. 813

can be only to some applicants, and to these, so far Mill is right,
it will give employment and wages at the cost of others, for the
State has no means of its own, and must get its funds by taxation
or loan. But a loan is only deferred and disguised taxation. If all
men who are ready to work are to be provided with occupation by
the State, you must not only get it for carpenters and masons,
peasants and unskilled labourers, but clients for a lawyer, patients
for a doctor, and, vox horrenda, a congregation for a preacher.
There was a time, between 1558 and 1688, when the last provision
was thought to be the province of the State, but, at the latter date,
the State became wiser or more considerate, and passed a Toleration
Act.

Now in a trade union or labour partnership the workmen do pre-
cisely that which the promoters of joint-stock enterprise undertake.
The latter are individually too poor for the enterprise ; collectively
they are rich enough. They are too weak alone ; they are strong enough
in union or combination. The sacrifice of the present to the future,
however assured the future may be, is too serious for the individual,
it is obvious to the corporation. The association may be called into
being in order to perform a great service. Perhaps no greater ser-
vice was ever performed by a joint- stock company than that of the
Bank of England to England and the nation in 1694 and 1695.
The richest patriot would have shrunk from the self-devotion which
was necessary in that eventful year, when the capture of Namur
gave promise that the English might be on land what they had two
years before showed themselves on sea at La Hogue.

The workman has only one thing to sell, the skill of his hands.
This commodity, to use economic terms, is exceedingly perishable.
If it be unsupported by its necessary supply, it rapidly deteriorates.
Labour, unlike other finished articles in demand, cannot be kept
out of the market without prodigious loss to the owner. Fortu-
nately for the possessor, could he only make a universal joint -stock
company comprising the capitals of all workmen within the same
craft, his existence and work is so necessary that he could, on the
hypothesis given above, dictate his own price to his employer. He
will never claim, to be sure, a price which will destroy his employ-
ment by destroying his employer's remuneration. The mere fact
that he could diminish this, and perhaps prevent the growth of

314 TEE GUILD AND APPRENTICE SYSTEM.

rent, is the key to the prolonged struggle which I have often
referred to, in which the workmen were for two centuries a
victorious, and for three a defeated, class. The combination which
in capital was considered beneficent, in labour was treated as
felony, and even when the felony was extinguished by abrogating
the labour statutes, was left to the elastic interpretation of the
common law doctrine of conspiracy, if there be a common law
doctrine of anything.

Up to 1825, all labour partnerships were proscribed. Now it
would not be in human nature, that action, which had been
passionately suppressed for centuries, should not be conceived of
immense importance to those who had suddenly recovered the
liberty of association. The concession of free action is a great
acquisition, even if people are puzzled with the unaccustomed
boon, and make an unprofitable and erroneous, perhaps even a
criminal, use of it. The blame of so ill a use lies much more at
the door of those who have, for their own ends, refused the liberty
of spontaneous action than it does at the door of those who abuse
what they have recovered. The natural inclination to exaggerate
the importance of what they had won, was heightened in the work-
man's mind by the new steps which were taken to indirectly annul
the gift, by bringing these associations under the law of conspiracy,
by refusing to allow their partnerships the protection accorded to
benefit societies, and by permitting the secretaries of such associa-
tions to embezzle their funds with impunity. Even now the move-
ment, instead of being welcomed, as a virtual exposition of the
joint- stock principle as applied to labour, and therefore as just and
as innocent as any analogous institution among capitalists for the
furtherance of manufacture and trade, is looked on with suspicion
and dislike, constantly misrepresented, and as far as possible
thwarted.

Every calling, especially those which are professional, always has
its own code of honour. There are offences against the unwritten
code of these callings which are punished by the members of these
callings with the connivance, perhaps with the approval of the
public. Is that wrong per se in working men which is right in
medical and legal practitioners ? If a physician or surgeon is guilty
of unprofessional conduct, his fellows decline to serve with him, as

THE EMANCIPATION OF TBADE UNIONS. 315

far as possible exclude him from their society, or even exclude him
from practice. Misconduct at the bar is occasionally punished
with a formal deprivation of a barrister's privilege. It is possible
that the reference of a solicitor's conduct to the Incorporated Law
Society's action has not been a complete success, and that it would
be better superseded by a court of honour which should take cogni-
zance of misconduct which now passes unchallenged. I see no
reason why a similar rule of action should not be adopted by arti-
sans, and acknowledged by employers. It might make better and
more trustworthy workmen ; for the machinery of such a censorship
would certainly increase the self-respect of those who were sub-
jected to it.

The machinery of a strike, the war of the workmen, is seldom
successful. It is generally adopted at the least advantageous time,
that in which the demand for labour is diminishing, and therefore,
when the workman is most in the power of the employer. But
this cannot be made a reproach to the workman. It rather implies
that he does not make use. of his lost opportunity, a strike in the
midst of a rising market. The workman appears to let the market
do its own work when the demand is in his favour, and when
profits are exceptionally high, to look for only a small part of the
increased advantage. Of course when he does get exceptional
wages in a time of exceptional profits, calumny is busy about him,
and grotesque fables are circulated about the way in which he
expends his enhanced earnings. If the men were unforgiving they
would treasure up the memory of these libels.

In recent times, intelligent employers have begun to see that
what economists, who understand facts, defend as the right or the
workmen, has its advantages from the point of view of the master.
The practice adopted in many trades, where a unit of value can
be easily taken and understood, is to make that unit the basis of
a sliding scale. I have been told by persons engaged in the iron
trades that the system of a sliding scale works welL I can well
believe it, because it assists in settling what is always of interest
to the producer, the anticipation of price. As I have often stated,
the anticipation of a price is the problem before the capitalist
producer, the regulation of market values, the one desideratum of
those who engage in productive industry. Besides, the profits of

316 THE GUILD AND APPBENTICE SYSTEM.

the capitalist and the remuneration of the labourer are both forms
of wages, the question between the two being merely a settlement
as to the share due to each. I tried, of course in vain, to introduce
the principle into the Irish Land Act of 1881.

Mr. Mill was in error when he believed that an increase of wages
can only be procured at the expense of profits, an error the more
remarkable, when one remembers that he detected or endorsed the
economical principle that high wages did not necessarily mean dear
labour, or low wages cheap labour. No doubt if higher wages were
paid while the efficiency of the labour is not increased there would
be an immediate and apparent loss to the employer. But it may be
recouped out of rent, which may diminish, or it may be refunded
by the consumer. The latter condition of things prevailed during
the first half of the seventeenth century, as I have shown you.
But in the last half, when the wages of labour rose 50 per
cent., wages did not suffer nor profits either. If the labour becomes
more efficient, it is certain that the enhanced advantage will
remain with the employer long before it reaches the workman. So
it was in the first half of the eighteenth century, when profits were
high, prices low, and labour wages were very slightly altered.

The full concession of freedom in the formation of labour part-
nerships is a remedy, and one of the best remedies against those
socialist movements which demand the intervention of Parliament
on behalf of the labourers' employment. In countries where the
Government manages its subjects too much, socialism in a more
or less menacing form prevails. There are ominous signs that in
countries where protectionist theories are adopted, there is spring-
ing up a movement under which the immigration of labour, how-
ever sparsely peopled the country may be, is threatened with
regulation or even prohibition. This is the talk in the United
States, and in the Australian colonies. It seems that the predic-
tions and pledges of protectionist statesmen have been falsified by
facts. Wages have not increased so rapidly as profits. The rich
are getting richer, the poor poorer. Again and again it has been
proved that high prices do not make high wages. But in England,
though here there is just cause for discontent, the doctrine that
the State should find employment and fix wages has made but
little way. In England no producer is assisted to a price, and

THE TBADE UNION A BEMEDY AGAINST SOCIALISM. 317

therefore no workman has a plea that he himself should be. Be-
sides, there is a widespread belief that workmen, if the whole
order had only public spirit and would consent to combined action,
coupled with prudent counsel, have their fortunes very much in
their own hands. Only they feel that it is not a little hard that the
best of their order have borne the brunt of the struggle, while others
whom they have materially assisted, refuse to enter into the asso-
ciation, and take unfair advantage. The utmost, however, that
they would see restored is the system of apprenticeship, and the
excuse that they make for this demand, is not that it will assist in
raising the rate of wages, but that it will secure the efficiency of
the workman.

-V XV.

THE EISE AND PKOGRESS OF THE COLONIAL TEADE.

Early English commerce — The discoveries of Portugal and Spain —
The English buccaneers — The American plantations — The sole-
marhet theory — Wars of conquest, of religion, of trade — The Irish
manufactures — The colonial system — The duties on colonial timber
and sugar — Enumerated and unenumerated goods — The doctrine
of the flag — Colonies of conquest and of settlement — Canada and
the Cape — The surrender to the colonists — The tie which binds the
Colonies — Loans by Great Britain.

I pointed out to you, in an earlier lecture, that the English nation
was not for many years, not for many centuries, an inventive
people, and that it was slow to adopt the discoveries of other nations.
I sought to show you, what in my judgment was the original cause
of this singular backwardness, and what were the causes which
brought about the surprising and, apparently, enduring energy of
the eighteenth century. And though, in the judgment of all those
whose judgment is worth anything, the policy which created the
opportunity was an erroneous one, and was certain to bear its own
Nemesis with it, it is the duty of the historical economist, to take
measure of facts which have had their effect on the destinies of
nations. I do not imagine that the elder Pitt thought much of the
effect which would be induced on the industrial capacity of the
English when he entered on the Seven Years' War, and saw realized
his dream of a mercantile empire at its conclusion, or anticipated
that the very efforts which he had made would assuredly be,
whether the English Government were foolish or neutral, the
stimulus to colonial independence. In the same way the Govern-

EABLY ENGLISH COMMEBCE. 319

ment of Louis XVI., in their anxiety to retaliate on the English
people, for the sacrifices which they had to make at the Peace of
Paris, never dreamed that when they were assisting the American
plantations to independence, they were making the French revolu-
tion an inevitable consequence, and with it the destruction of the
ancient monarchy a proximate result.

As the English were slow to invent, so they were slow in
maritime enterprise. Their kings had for near four centuries,
considerable transmarine possessions, and these possessions were
lost, recovered, lost again, recovered again, and finally passed away
from them with great facility. Other peoples and other kings have
held distant possessions for much longer periods. The inheritance
of che house of Burgundy remained with the elder branch of the
house of Austria from the last quarter of the fifteenth century to the
first quarter of the eighteenth, and with the younger branch from
that date till a century later. In conquests, the English seemed
destined to win, but unable to keep. The explanation of this is
to be found in the traits of the English political character, on
which indeed I have very decided opinions. But they are not
economical, and I will not detain you with a dissertation on our
national characteristics.

In commerce, as I have already said, for many centuries, the
mercantile marine of the English, though considerable enough to
excite the envy, and stir the gall of our neighbours, was by no
means venturesome. The account given of it at the beginning of
the fifteenth century confines it to the Baltic and the French coast as
far as Bayonne, though some ships may have coasted Biscay, and
even reached Lisbon. In the middle of the century it seems that
the limits of its trade were not extended, for the French critic
notes, after charging the English with piracy in the narrow seas,
that with all their marine they were not at the pains to put down
the Barbary and Algerine pirates. Only two capital discoveries
were made by the English in the fifteenth century. At the com-
mencement of it, the Bristol merchants, by the aid of the mariner's
compass, reached Iceland by the eastern route ; at the end of it
another Bristol adventurer discovered Newfoundland. But we hear
nothing more of the former exploit, and we know that no results
ensued from the discovery of Sebastian Cabot in 1497. In the reign

320 RISE AND PROGRESS OF THE COLONIAL TRADE.

of Henry VIII., as we learn from a statute regulating the cost of
freight, English vessels ventured a little farther, to the crane of
Seville. But they did not enter the Mediterranean, or give any
presage whatever of that bold maritime enterprise which was to
characterize them in the latter part of the sixteenth century. Till
the time of the great captains or buccaneers of Elizabeth's reign,
their only new venture was the unlucky voyage of Willoughby
round the coast of Norway and Sweden, when one ship reached
Archangel.

But during this period of strange inaction or hesitancy, great
discoveries were made. Long before the Bulls of Borgia were
granted to Portugal and Castille, Prince Henry of Portugal had dis-
covered the Canary and Cape Verd islands, and had coasted along
the north-western shore of Africa. The spirit of enterprise was
kept up by Portugal through the fifteenth century, at the conclusion
of which, in 1497, the Cape was doubled, and the foundation was
begun of the Portuguese settlements in Asia, both on the Indian
Peninsula and in the Eastern Archipelago. Spain discovered the
New World and speedily got possession of Central America, and
the Pacific coast of the Andes. While English voyagers had hardly
trusted themselves out of sight of land, other nations had crossed
the oceans and founded empires or factories. Like the early settle-
ments of all European nations, the ultimate object of these
conquests or occupations was the creation of a sole market, a right
guarded jealously and angrily, as we know from the issue of the
Darien expedition. After the Treaty of Utrecht, the subordinate
agreement, known as the Assiento treaty, the commencement of
the English slave trade, the proximate cause of the South Sea
Bubble, and the occasion of a short war with Spain, was the con-
cession of a very limited right of trade with the Spanish plantations.
The Spaniards governed their colonies in a peculiar manner. No
one was permitted to have a share in their administration, unless
he were a native Spaniard, sent out for the purpose. Men born,
though of the purest Spanish blood, in these settlements, were per-
petually disabled from all share in the government of the colony.
It is no wonder that the Spanish colonies revolted. The wonder
was, when Canning, as he said prematurely, called in the New World,
in order to redress the balance of the Old, that the revolt had not

THE DISCOVEBIES OF POBTUGAL AND SPAIN. 321

occurred long before. No human ingenuity could have suggested
a worse government than that of the Spanish colonies. The ad-
ministration of Spain itself was bad enough, but it was wisdom
compared with the other.

This lack of commercial enterprise in England was, I do not
doubt, due to the cause which I have before commented on. Eng-
land produced next to nothing for foreign trade, and had therefore
nothing to traffic with. Its industries, such as they were, were for
itself, with a small overplus of coarse goods for its neighbours. This
appears to me to be indicated by the maritime enterprise which
characterizes the latter part of the sixteenth century. The great
captains of the age, Drake, Frobisher, Hawkins, Raleigh, were
buccaneers or pirates, on the look out, not for opportunities of trade,
or for the foundation of colonies, but for plunder, or at best for
gold. They plundered the Spanish and Portuguese ships on the
high seas, intercepted the Plate fleet, and did mischief in the
Spanish ports. One of them visited Labrador, and struck with the
masses of bright crystal on the coast, conceived that the stone must
contain gold, and shipped it to England. Kaleigh was fired by the
example of Cortes, and dreamed of an American city, which like
the ancient and forgotten buildings of the giant kings before Noah,
were composed of gold, silver, and precious stones, which he called
Eldorado. Undoubtedly the enterprise of Elizabeth's later years
was supremely useful, but the taint of the original buccaneering
clung to it, till the English people, somewhat late in the day,
checked it by hanging Kidd and his comrades at Execution dock.
But by the time of William III. English trade had become important
enough to turn buccaneering from an heroic virtue into a crime
which had to be suppressed.

The English Government has never colonized, except with con-
victs. English settlements had the inestimable advantage of being
spontaneous, or, at least, of having owed more to the neglect of
the mother country than to its interference. Practically the first
settlement of Englishmen on the western shore of North America,
was due to the emigration of the Puritans who fled from the
ritual and discipline of Laud, for the first settlement of Virginia was
a total failure, though the name survived. The places where these
colonists landed are now great and wealthy cities, united into a

22

322 BISE AND PBOGBESS OF THE COLONIAL TBADE.

gigantic confederation. But when they were first settled, the
colonists had to contend with an inhospitable climate, a barren soil,
and the enmity of shrewd, active, and bloodthirsty savages. I never
saw land so utterly uninviting as that of the Atlantic sea-board from
Maine to New Jersey, and yet I have examined the agriculture of
the North German plains. The country I speak of is not only in-
fertile, but subject to tropical heat in summer, and Arctic cold in
winter. It is infested by tormenting and destructive insects, the
latter a periodical plague. It had one perennial source of plenty if
not of wealth as yet, in its fisheries.

The American plantations readily acquiesced in the English
Commonwealth. They fell in as readily with the Eestoration. The
capture of New Amsterdam from the Dutch, and its new name,
taken from the Duke of York, gave the English settlements a sea-
board from Maine to the Carolinas, for New Jersey followed the
fortunes of New York. The settlers had penetrated very little
inland, when the Calverts founded Maryland, and Penn the Quaker
the great state which goes by his name. These later plantations
were settled at the expense of English adventurers, who had the
hereditary government of the colony, ultimately bought up by the
British Government, when the trade of the colony was worth con-
trolling. The early history of these settlements has been occupy-
ing the attention of Mr. Doyle, of All Souls. The first of these to
attract the attention of the English Government from the point of
view before English merchants and statesmen who wished to
conciliate English merchants, I mean the establishment and
maintenance of a sole market, were the Southern Plantations, and
in particular Virginia, one of whose products rapidly procured a
European reputation and a European market.

This product was tobacco. Europe gave the sugar cane and
the cotton plant to the New World, and received from it maize,
tobacco, and the potato. Tobacco smoking, as all the world
knows, was common enough in England during the early part of
the seventeenth century, to excite the ire and stimulate the
literary activity of the unwashed Jamea It appears to have
been cultivated in the midland counties, and particularly in
Gloucestershire. Under the new tariff of the Eestoration, the
manuscript of which — one of the few volumes which survived the

THE AMEBIC AN PLANTATIONS. 323

fire in which the old Palace of Westminster was destroyed — is
preserved in the House of Commons Library, signed by Sir Harbottle
Grimston the Speaker, tobacco was subjected to a customs duty, and
the English cultivation of it was forbidden. Then recourse was had
to Spanish tobacco, but this was very dear, 10s. to 12s. a pound.
Soon the cultivation made great way in Virginia, where it was
easily raised and cured, and from which it could be sold cheaply.
In a few years, Virginia expelled Spanish tobacco from the
English market. For a time the two kinds were mixed. Soon,
however, only colonial tobacco was imported. A few years later
and the produce of the British colonies supplied the world. It
became the basis of a new fiscal system, a compact between Eng-
land and her American colonies, and was pressed into the service
of that commercial scheme which was thought to be the highest
wisdom . This was the sole-market theory.

The doctrine that the commercial prosperity of a country
depends on the creation, maintenance, and extension of a sole
market for its products and for its supplies, was prevalent from
the discovery of the New World and the Cape Passage down to the
war of American Independence. This was the principal object of
Borgia's Bulls. This was what animated the Dutch, in their
successful, in the end too successful, struggle, after a monopoly
of the Spice islands. This was the motive which led to the
charters of the Russian Company, the Levant Company, the
East India Company, the Turkey Company, the Hudson's Bay
Company, in England. The theory was organized in the colonial
system, which Adam Smith examined, attacked, and as far as argu-
ment could go, demolished in his great work. But the dream of a
sole market is still possessing the Germans and the French. The
insane passion for this costly and ruinous monopoly has led to
the raid on Tonquin, and the scandalous and unjustifiable attack on
Madagascar, by the latter, to the protectorate of Zanzibar, the
settlement on Angra Pequena, and the occupation of North New
Guinea by the former. How long the experiment will be per-
sisted in I cannot guess. Nations and governments are seldom
willing to confess themselves to have been in the wrong, and,
indeed, nations have little opportunity for giving effect to their
regrets, as long as their rulers are impenitent, and do not per-

324 RISE AND PROGRESS OF THE COLONIAL TRADE.

sonally suffer for their errors. But this I can predict with
coinidence. For every pound's worth which these peoples buy
and sell in their conquests and occupations, they will have to
pay another pound out of German and French taxes in order to
maintain and secure the sole market, even if they get off as
cheaply as that. I know pretty well what our colonies of conquest
have cost us, and still cost us. These colonies of conquest
were all made with the object of a sole market, and we have in
return from the people whom we have created, protected, and
maintained at an enormous cost, the grateful acknowledgment of
hostile tariffs.

The early wars of Europe were wars of conquest. Such
were our wars with France. Such was the extension of
North-eastern Germany by the Teutonic knights at the ex-
pense of the Slaves of old Prussia and Lithuania, and of the
Hanseatic League. After them came the wars of religion, from
the outbreak of the Insurrection in the Low Countries, and the
civil wars in France, down to the Peace of Westphalia in the
middle of the seventeenth century. From that day to our own,
European wars have been waged on behalf of the balance of
power, the principal mischief-maker in the contest being France.
The English, the French, and the Dutch were the competitors in
the wars for a sole market. But Holland was practically ruined
at the peace of Aix-la-Chapelle, and France was stripped, as I
have told you, of her colonies at the peace of Paris, and England
became not only the principal maritime, but the principal
manufacturing and mercantile country in the world. As regards
English trade, however, though India was an outlet to some
extent for English goods, its trade was in the hands of a chartered
company, whom the Seven Years' War had left in serious straits.
The most important sole market which Great Britain had
acquired by her wars was the sea-board of North America. To
support the finances of the chartered company, the British
Parliament determined on taxing the inhabitants of her sole
market, and the result as you know was the war of American
Independence, and with it the explosion of the theory which I am
about to describe.

The colonial or sole-market system was based on a strict recip-

WARS OF CONQUEST, OF RELIGION, OF TRADE. 325

rocity. The English Government admitted colonial produce into
the English markets at differential duties, or prohibited the produce
of foreign nations and foreign colonies altogether. The Colonies
were not only the customers of English manufacturers only,
to the absolute exclusion of foreign manufactures, but were
prohibited from undertaking those manufactures themselves.
The English Government adopted with their colonies the policy
which they adopted with Irish manufactures, which they also
prohibited, but with this difference, that they disabled the Irish
from having any trade whatever with England, with the Colonies,
and with foreign countries. They wished to extinguish, with one
exception, every Irish product, and to constitute themselves the
sole manufacturers and shopkeepers for the Irish. They allowed
only the linen manufacture of Ulster. The Irish were to be, with
this exception, agriculturists only, but they were to be disabled
from selling their agricultural produce in England, or elsewhere.
They were practically denied the right of trade. I need hardly
inform you, that under these conditions, the position of the
peasantry, subject through Poynings' Act to the English Privy
Council, and constrained to pay rack-rents to landowners who were
frequently absentees, was that of a race which is constrained
to pay tribute, under the most disadvantageous terms. The
commercial relations of England and Ireland, from shortly after
the Kestoration to the acknowledgment of the independence of
the Irish Parliament, were in the last degree oppressive to the
latter. It was the doctrine of the sole market in its most
exaggerated form.

To external appearance the relations of the colonial system were
reciprocal and beneficial. There are certain minds to which
this reciprocity is even now exceedingly attractive, and unless we
are wrongly informed, there are not only individuals but a party
which would seek to restore this ancient condition of things — not
indeed in its full force, for to that there are grave existing
difficulties, not to say vigorous counter theories in the protective
laws of most of our colonies, but with as much reciprocity as
possible. They would confer, for example, special advantages
on the settlers in our colonies for their products, while they are
straining every effort to exclude our products, and are even

326 RISE AND PROGRESS OF TEE COLONIAL TBADE.

arguing that the time is come when our workmen should be
excluded from settling among them, except on the payment of
a heavy customs duty. I take it, if a butcher was constrained
by positive law to deal with that grocer only whom he sup-
plied with meat, and the grocer to deal with that butcher
only whom he supplied with groceries, the ingenuity of man
could not devise a more certain process for getting inferior meat
and adulterated groceries. But if the butcher were prohibited
by law from buying the other dealer's groceries, and the grocer
was still constrained to buy the butcher's meat, it is pretty certain
that the meat would get worse and worse till it eventually became
carrion.

A brief reflection will show how futile, how mischievous, such
an arrangement must have been. A reciprocity of advantage in
reality implies a reciprocity of loss. For if the benefit exists in a
voluntarily reciprocal trade, it will be appreciated and appropriated,
and needs no law to secure it. But the law, it is said, will instruct
persons in the benefit which they would not otherwise recognize.
This affirms that they who frame the law know better than those who
engage in the business what their true interest is in trade. But
such a shrewdness on the part of law-makers has never been
discovered yet and never wilL The men who make laws on trade
matters either possess the necessary knowledge of the subject
themselves, by having engaged in the trade, or they borrow
their knowledge from the people who have more experience than
the law-makers possess. Now the man who has the knowledge, or
the man who imparts the knowledge, invariably, if he is dis-
interested, and does not want to turn the machinery of law to his
private advantage, legislates or advises legislation for the purpose
of protecting or rather facilitating, and not for creating trade.
In other words, he advises that men should find out for themselves
where or how to do business, and that the law should be em-
ployed only to diminish the risk or cost of the business after it is
formed, or to assist in the due satisfaction of contracts after they
have been entered into.

That stage of the colonial trade in which the use of Virginian
tobacco superseded that of the Spanish product was a spontaneous
and natural advantage to both parties. The colonial system, as it

THE COLONIAL SYSTEM. 327

was developed later on, did not create and would not have expedited
this trade. It is true that in those early days the Navigation
Act, originally intended to interfere with the carrying trade of the
Dutch, led to the freight of Virginian tobacco being a British
monopoly, as far as the ports of Great Britain were concerned.
But freight is one thing, trade profit another. The Dutch shippers
could not carry, except under penal charges, goods into British
ports. But Dutch traders did deal with colonial produce, and very
extensively too. Nay, the existence of a sole right of carrying
freight, if no restraint is put on shippers, might make it better
worth while for the trader to use the services of a foreign carrier
than to use those of the carriers of his own people. This is the
case at the present time. The British shippers carry goods at a
cheaper rate than any other nation does. Some people say at
ruinously low rates. Let us assume, for the sake of argument,
that this country has procured the carrying trade of the world
because it conveys goods at 10 per cent, less than other nations
do, or perhaps can, and further that, one thing wifch another (the
figures are used for illustration only), the cost of freight is 10 per
cent, all round of the value of goods delivered at their ports of des-
tination. Is it reasonable to conclude that a trader, whose motive
to economical action is expectant profit, will sacrifice so great
an advantage as is implied in these figures for sentimental reasons ?
The effect of the Navigation laws may be profitably studied in the
history of the English marine from the Restoration to the Revolu-
tion.

Towards the latter end of the eighteenth century, American
cotton came into the English market. The story of a consignment of
some bales to the house of a Liverpool produce broker, Mr. Rathbone,
is often quoted by those who scribble books on the romance of trade.
The produce was at first neglected. It was afterwards taken up,
and out of that original consignment, little more than a century
ago, has been developed the prodigious cotton industry of the
North of England and Southern Scotland. The trade was in its
infancy at the end of the century, though it was making great
profits to those who worked up the material. In the debates on
the Irish union, Sir Robert Peel, the father of the great minister,
demurred to the roseate picture which Pitt and his followers drew,

328 BISE AND PBOGBESS OF THE COLONIAL TBADE.

of what Ireland would become after the Union ; for the cotton
spinner of Bury expressed his alarms at the future rivalry of the
Irish. Now no rational person would believe that the use of
cotton as a raw material would have been facilitated by the
colonial system, then, as far as the American colonists were
concerned, abrogated by the fortune of war, more than it was by
a rational self-interest, when the utility of the material were
discovered.

The colonial system, under which advantages were secured to
the colonial producer by giving him a preferred market in Great
Britain, while the colonist was debarred from engaging in manu-
factures, was a selfish one on the part of the English merchants
and manufacturers. It gave the colonist a sole market, it is true.
But it does not follow that a sole market is a high market. On
the contrary, it is probable that the offer of a sole market is
intended to secure a low market. The Virginian planter sent the
whole of his tobacco to England. The English trader re-exported
it to other countries, say Holland or Germany. It may be pre-
sumed that he made a profit on the original consignment, and on
the re-exportation, or he would not have undertaken the business.
In such a case the Dutch or German consumer paid more than he
need have paid had he dealt first hand with the Virginian planter,
and by parity of reasoning, the Virginian planter received less, for
the difference between the English imported price, and the Dutch or
German re-exportation price, would on every hypothesis of trade,
have been shared between the planter and the foreign purchaser.
You will observe, too, that the reciprocal business was limited to
objects, on the colonial side, which England could not produce ; and,
on the English side, to manufactures which the foreign nations
could have produced as well as the manufacturer, who got a sole
market for his wares. So inveterate and widespread was the
delusion, however, as to the benefits of a sole market, that it does
not appear that the colonist resented an arrangement under which
he got all the losses and the British manufacturer and merchant
all the gains of this regulated monopoly. For he was blinded to
the true meaning of the relation by the differential duty put on
goods like his, but produced on colonial soil.

In course of time these differential duties became to the residual

TEE TIMBEB AND SUGAE DUTIES. 329

British colonies after 1782 an apparent advantage, to the English
consumer a real loss. About forty years ago, there were two
articles of colonial produce on which the differential duties were
serious. These were Canadian timber and "West India sugar.
Other countries could supply us with timber of better quality and
at cheaper rates than Canada did, for of course, by putting an extra
duty on foreign timber, we were giving the Canadian lumberers a
price. However, at last the differential duties went with the other
tariff reforms, not without warnings that Canada would be disaffected
if her lumberers were disabled from rifling our pockets. The sugar
duties were defended on different grounds. The English nation
had abolished slavery in the sugar colonies of this country, and
had compensated the owners of the slaves. But other sugar-pro-
ducing countries, as Cuba and Brazil, had not followed our example.
When the movement began for the abolition of the differential
duty, there arose a cry, " How can the English, who have abolished
slavery, purchase sugar produced in those unchristian countries
which still maintain this institution ? " Now in my opinion,
slavery is detestable. I agree with Wesley, who said that it was
the sum of all human villainies, and said that before Granville
Sharpe and the elder Wilberforce began their crusade against it.
But it is also ruinous to the country which adopts and maintains
it, and I am quite certain that its economical disadvantages far out-
weigh any economical profit which can be gotten from it. But I
am also certain that when a man appeals to my piety and my
Christianity in order that he may keep some business advantage,
he is a very dangerous man to do business with, a suspicious
character. This maxim was well illustrated during the controversy
on slave-grown sugar. It was found that some of the loudest
humanitarians in Jamaica and Barbadoes had been in the habit of
importing slave-grown sugar from Brazil and Cuba, and exporting
it to England as genuine free-soil produce. You may be surprised
to hear it, but it is a proof how completely phrases take possession
of men, when such phrases indicate their material interests, and
how little evidence does, for though they were detected they were
not silenced.

Most of the American colonies were constituted under charters,
given to the projectors and founders of these plantations. Now it

330 BISE AND PEOQBESS OF THE COLONIAL TRADE.

was clear that such rights as were possessed by these founders and
their representatives, checked the growth of the colony, and
materially interfered with the development of the system which
seemed so wise and profitable. Hence Parliament, twice in the
early part of the eighteenth century, was invited to pass a Bill,
under which the rights of the proprietors should be purchased,
and the old charters should determine. There was a good deal
of opposition shown to this scheme by the representatives of the
various families in whose interests the charters were granted. On
the first occasion, during the reign of Anne, the Bill was decisively
rejected on the second reading. It was again brought in at the
beginning of George I's. reign (1715) was then read a second time,
and was referred to a select committee, which did not report, and
the Bill disappeared. I found among the Parliamentary papers of
Mr. Hammond, sometime member for Huntingdon, a number of
memorials, similar to those now circulated among members, con-
taining reasons against the proposal. They were not known in
America, to which country I sent copies of the originals. Ulti-
mately these rights were purchased, when they had become
considerably enhanced. It is part of the irony of history that the
British taxpayer is, or was recently, paying a perpetual pension to
the heirs of William Penn, for the surrender of this personage's
right in Pennsylvania.

The colonial system did not preclude the plantations from
sending, under the strict conditions of the Navigation Act, certain
kinds of produce to other countries than England. These were
called non-enumerated commodities, the principal being corn, timber,
salted provisions, fish, sugar, and rum. There was a reason for
this, which was to be found in the fiscal system of England. We
did not want colonial corn, for there were duties on corn, levied in
the interest of the landlords, nor colonial timber, salted meat and
salted fibh, for the home produce of these articles were similarly
assisted. Sugar and rum were allowed to be exported, for the
owners of the plantations in the Leeward isles were chiefly absentee
English proprietors, who had already a monopoly of English
supply, and were powerful enough in Parliament to get an extended
market elsewhere. But in 1769, just before the troubles broke out
with the American plantations, an Act was passed, disabling the

ENUMEBATED AND UNENUMEBATED GOODS. 331

colonists from sending even the non-enumerated commodities to
any country north of Cape Finisterre, in Northern Spain. The
object of this restraint, was to prevent a trade even in these
articles with countries which had any manufacturers, lest the
colonists should find out that they could buy goods cheaper than in
England.

The enumerated goods, and there was a long list of them, could
be exported to Great Britain only. They consisted, as Adam
Smith says, of what could not be produced in this country, and
what could be produced in great quantity in the Colonies. But
the colonial manufactures were either forbidden altogether, or
their exportation and importation within the Colonies were bur-
dened with such excessive duties, as practically to confine the
manufacture, if it existed, to a scanty home supply. Steel mills
and all manufactories for working iron were prohibited in
America, trade between the different settlements was forbidden,
if the trade was in a local manufacture, in fact, not a horse-
shoe or a nail could be forged in the whole of the transatlantic
colonies. "When, therefore, the War of Independence broke out,
the American colonists were agriculturists only. Had it been
possible to blockade all the ports, the insurgents would soon have
been unarmed, for they could of themselves have provided no
munitions of war. Hence the revolt of the plantations was <m
interruption to British trade, and a signal to other nations that
they might now enter on a commerce from which they had hitherto
been rigidly excluded. This, I am persuaded, had as much to do
with the assistance given to the United States by many European \
Governments, as any desire to avenge the reverses of 1763.

The acknowledgment of American independence was supposed to
herald the downfall of the commercial greatness of England. When
Gibbon declined to meet Franklin, on the ground that he would
hold no intercourse with a rebel, the American replied that if
the historian had the leisure, he would be willing to supply him
with materials for a new narrative, of the decline and fall of the
British Empire. He was merely expressing a common opinion.
But though England had to abandon the colonial system, and never
afterwards ventured to levy taxes by her Parliament on the smallest
and weakest of her dependencies, she began to build up a new

382 RISE AND PROGRESS OF THE COLONIAL TRADE.

colonial empire. She occupied successively all those parts of the
"world in which European races can thrive and increase, and, whether
in the courso of time she will retain them or not, as nominally
dependent on the centre of Great Britain, it is certain that at
no remote date the English-speaking races will he more numerous
than any other people. The relations which have subsisted between
England and her still associated colonies is the topic with which I
shall conclude this lecture. As before, I shall deal with the
economical relations only, but in fact the political relations have
now become entirely economical, for no reasonable person doubts
that if the English colonies were decidedly convinced that the
interests of the colony made independence seem desirable, no
military attempt would be made to retain the political depen-
dence of the settlement. They are to be united to us by the tie of
self-interest only, and self-interest is an economical tie.

I mentioned in an earlier lecture that the doctrine of the sole
market was succeeded by the doctrine of the flag. The old phrase
was— conquest first and law afterwards make trade, a position sadly
interfered with by interlopers, buccaneers, and smugglers. The
newer phrase was occupation by the sword, or by prior settlement,
with the careful management of the colony, with the first process
well in view, but with the hope that custom, tradition, and the
careful nursing of all which wanted nursing, would carry the pre-
eminence of the flag. England now held her colonies. As long as
the colonies wanted nursing, as they wanted or thought they wanted
it forty years ago, this policy fostered the growth of the British race
in distant parts, its extension, and as was hoped, its consolidation.
I am speaking of what I noticed (for I was early schooled in these
matters, a good while ago), and of what I criticized, not without
much obloquy. To a sensible man, convinced that he has no pre-
judices, but only facts before him, which he is bound to interpret,
obloquy, especially from a daily or weekly paper, is cackle. I only
regret that men whom I have worked with more years ago than I now
care to count, seem to be deterred from the logical conclusions of
their principles, and even from the facts which illustrate those
principles, by utterly unfounded alarms. But the saddest thing
in the whole of my experience, is the spectacle of that worst form of
senility, the dread of seeing that come which one has laboured for,

THE DOCTRINE OF TEE FLAG. 333

and the consequent exhibition in maturer life — the epoch of the
manifestation differs — of that in which the best qualities of one's
youth are changed into the worst qualities of one's age.

The doctrine of the flag, when put into the dry language of
economists, is that habit, old ties, family, social, political, will
correct the narrow and selfish interests which the hot race for
wealth in new settlements engenders. These habits and ties are
greatly aided by local weakness, and I am sorry to say, the local
weakness is too often made a plea for other aid. This is illustrated
by the historical relations which have existed between this country
and the British colonies of conquest, as opposed to the British
colonies of spontaneous settlement. Of the former kind are the
colonies of Canada and the Cape of Good Hope ; of the latter,
Australia and New Zealand. It will be obvious that a colony of
conquest is likely to contain disaffected inhabitants, or ill-affected
neighbours, and to be, consequently, a perpetual drain on the
material resources of the country which holds it. The possession of
such a colony was, as I have often said, due, in the first place, to the
desire of procuring a sole market ; in the next, to the belief that
identity of race or habit would maintain close commercial relations ;
and perhaps in our time, the connection is fostered because a kind
of national pride is supposed to be assisted by the maintenance cf
a large number of dependencies. Phrases such as " the sun never
sets on the British Empire," "Greater Britain," "the English-
speaking race bids fair to be the most widely extended of any, and
the English language the universal speech of commerce and civilisa-
tion," are illustrations of the sentiment to which appeals are made.
I am far from deprecating these appeals, but they should not be so
uttered as to give the impression that this country is prepared to
make every sacrifice for the sake of maintaining a mere similitude
of empire.

The colonies of conquest have been terribly expensive to this
country. In order to destroy the design which the French had
devised of connecting their settlement of Louisiana with their
settlement in Lower Canada, the English during the Seven Years'
War, conquered the latter and annexed it. In dealing with the
French Canadians, then and subsequently, the British Government
allowed them to retain their local laws, and their ecclesiastical

334 BISE AND PBOGBESS OF THE COLONIAL TBADE.

system, and to become pro tanto, an imperium in imperio. The
Eoman Catholic Church in Canada is, under these arrangements,
probably the wealthiest church establishment in the world, and
possesses powers, guaranteed by law, over the population, which
have been rescinded elsewhere, as inconsistent with the due
supremacy of civil government. I do not mention this to criticize
or impugn the arrangement, but merely to show how commercial
considerations in a bygone age, and in deference to what is now an
exploded opinion, modified military and civil relations. In the War
of American Independence, French Canada remained faithful to its
new masters, and though the good sense of the American people has
led them ultimately into fairly friendly relations with Canada, an
enormous expense, spread overmorethan a century, hasbeen incurred
in preserving this dependency from political risks. Even now there
is a long-standing and menacing quarrel about certain fishery
monopolies claimed by the Dominion, and, on the other hand,
a strong party has been formed, with the object of putting an
end to the war of tariffs, and the costs of a custom-house police
along a mere geometrical frontier, by establishing a zollvcrein be-
tween Canada and the States. The English Parliament has spent
hundreds of millions in maintaining the political independence of
Canada, and in guaranteeing its frontier. The issue is that having
adopted a strongly Protectionist tariff, which is really war in
disguise on the country which defends it, Canada is seeking to
contract a close trade alliance with an equally Protectionist
neighbour, on the ground that the war of tariffs between itself and
its neighbour has become intolerable.

Another colony, that of the Cape, was wrested from the Dutch,
during the great continental war. The intrigues of the British
Parliament, partly stimulated by trade jealousy, partly by the
family alliances of the Hanoverian sovereigns with the utterly
degenerate and disreputable family of Orange, had ruined the Dutch,
had divided the people into the bitterest factions, and had induced
for a time the Dutch people to look on the French occupation in the
early days of the French Revolution as an unmixed boon. But
in ridding themselves of the wretched William V., they became a
prey first to the rapacious patriots of the French Republic, and
next to the family of Bonaparte, for Napoleon speedily carried out the

COLONIES OF CONQUEST AND OF SETTLEMENT, 335

policy of Henry IV. and Richelieu. The Dutch possessions, there-
fore, at the Cape and in the Indian Ocean, became a prey to the
British navy. It is very likely, I cannot dispute it, nor do I attempt
to judge it, that the policy was not only timely, and of great strategic
importance, but had, at least temporarily, an economical and com-
mercial defence. The policy of Napoleon was to exclude England
from the commerce of Europe, the retaliatory policy of England was
to exclude France and all who were under the influence of France
from the rest of the world, and the English were far more successful
than the French. They even made a short war on the United
States in furtherance of this policy, one of the last of the prolonged
wars of commerce. At the peace of 1815, England restored the
Dutch possessions in the East, but retained the Cape, and asserted
British supremacy in South Africa.

Since 1815, we have hardly been at peace with the native races.
The English settlers were long outnumbered by the Dutch, are,
I believe, now. It became a maxim of policy to support, by military
expenditure and by aggressive and defensive wars, the due influence
of the colonists of English descent. I could show you that all the
profits of the Cape trade, enjoyed of course by those who trade at
the Cape, are not and never can be equal to the interest on the
capital which has been spent by the British Parliament on the
progress and defence of the Cape Colony. Even now, after having
had a war with the Dutch settlers, who have erected an independent
Dutch republic, we are threatened with another Dutch republic,
which is to occupy the lands at present in the possession of a
native tribe, whom we have taken under our protection. I am not
concerned here with the imperial interests which are contained in
this policy, but it is indisputable that our economical interests are
not furthered by our political action.

About twenty-five years ago, Mr. Goldwin Smith and myself
called public attention to the cost of the British Colonies. Half the
English army was being kept in them, at the cost of the British
exchequer, and to the profit of colonial tradesmen. Every particle
of British spirit was absent from the colonial character. Traders were
making money fast, planning Protectionist tariffs in order to enable
them to make money faster, and calling on the British exchequer
to relieve them from all risks at the expense of the British taxpayer.

336 BISE AND PBOGBESS OF THE COLONIAL TRADE.

We thought the relation one-sided, and said so very plainly. We were
soundly rated for our presumption by the British imperialists, and
by the colonial squatters, many of whom were beginning to return
to England with fortunes rapidly acquired under the system. But
our views were taken up, and the situation rapidly improved. The
colonists recognized that if they were part of an empire, they had
duties of self-defence, and a further duty in the direction of general
defence, and at the present time I do not know that there is a
British regiment in colonial quarters. Whether we are making
a better use of these regiments at present, I do not care to inquire.
I am sure that the moral tone of the Colonies has improved, and
that our controversy was justified. At that time, however, Mr.
Goldwin Smith and I were credited with a design of breaking up
the unity of the British Empire, and had to pay the usual penalties
for premature wisdom.

The British Colonies were for a long time governed from Downing
Street, and by the permanent officials of the Colonial Office. They
had a nominal system of Parliamentary and responsib!e govern-
ment, but were subjected to a thousand checks. Discontent
naturally followed, and discontent gradually ripened to rebellion.
As you will find happening over and over again in English
history, the rebellion was chastised in the open field, the leaders
tried, convicted, and sentenced to the penalties of high treason.
The next act in the drama was to pardon them, and surrender to
their demands, to surrender, in fact, more than they asked. An
attempt had been made to secure a provision for the English
establishment, in order to keep it on a level with the rich and
guaranteed establishment of the French Catholics. But an attack
was made on the clergy reserves, and the Colonial Office yielded.
The rebels of the Canadian rebellion rose to high political office in
their country, and were finally decorated with the distinction of
knighthood. I played a little part in the slaughter of the fatted
calf for those political prodigals, for I got the University of Oxford
to make them Doctors of Law. We have not as yet united the
other customary substantive to our honorary degrees.

When the British Parliament or, to be more correct, the Colonial
Office (for it is very hard to keep a House for a colonial question),
entirely surrendered to the colonial demand for free institutions,

THE SUBRENDER TO THE COLONISTS. 337

responsible governments, and entire relief from the Colonial Office
veto, a surrender was made of two principles, for the maintenance
of which at least some struggle should have been made. In the
United Kingdom, the Crown, i.e., the executive, is still the reversioner
to all land, and until land is declared to have a private owner, is
the absolute owner of all unassigned land. This was surrendered
to the colony, and the colonists in Parliament are entitled to make
what regulations they please for its sale, grant, or distribution. I
do not say that they have used the power unwisely. In some
particulars, I am strongly of opinion, from what I have seen, and
from what I have heard and read, the American Congress would
have done well had they followed colonial practice, especially that
which Mr. Gibbon Wakefield instituted, under which a high mini-
mum price was fixed for public lands. The scheme was abandoned,
but left a habit behind if. On the other hand, the Federal
Government at Washington has never surrendered its rights over
the public land to the States, however much it may have consulted
their interests or wishes.

The second part of this total change of front is the discretion
of levying what tariff the Colony pleases. In the history of English
politics, as I have had to show you more times than once from
1381 onwards, uncompromising resistance has been constantly
followed by unconditional surrender. In 1772, the inhabitants of
the American planta' ions would willingly have contributed to the
imperial exchequer. They knew perfectly well that they had been
the principal gainers at the Peace of Paris, and that debts had been
piled up by Great Britain to an extent beyond previous experience,
and as was believed, beyond the capacity of the British taxpayer.
They were perfectly willing to have taken their share in the charge,
but they claimed that it should come from their own action, not
from the autocratic will of the British Parliament, or, to be more
correct, for the unreformed Parliament was a legislative farce,
from the British administration, acting as such administrations
have constantly acted, with high-handed, unconstitutional, and
disastrous pride. When it became necessary to throw this policy
aside, they threw aside with it a perfectly sound principle, that in
the common defence of mother country or colony, the colony should
by its own action, pay its own contribution. Under existing circum-

23

338 RISE AND PROGRESS OF THE COLONIAL TRADE.

stances, the Colonies having very properly refused to allow us to tax
them, we have permitted the Colonies to tax us. Over and over
again, for instance at the Cape, the local government has
undertaken a war, in which it rarely had justice, and never the
means for carrying on the war in its own hands, and having
compromised us, have called on us to pay for what they have done.
It is impossible to conceive any system more demoralizing to the
colony and more unfair to ourselves, than to incur responsibilities,
and put on the shoulders of others the obligation of meeting them.

After the Colonial Office had perpetually meddled with the
Colonial Governments, and irritated them beyond description, they
entirely gave in, and made no stand on a single point. I remember
that, as a chief justice of the Cape told me, in the old days of the
Colonial Office, a retired general demanded of the Cape represen-
tatives that they should provide from the taxes salaries for a
number of archdeacons. The chief justice said that he was
himself a Presbyterian, and being unacquainted with the special
functions of an archdeacon, asked the governor for information as
to their place and duties. All that he got from the old soldier was,
11 Archdeacons, sir, there were archdeacons in the time of Abraham."
The chief justice was obliged to be satisfied with this assertion as
to the continuity of history, which, from its modern aspect, my
friend Mr. Freeman assures us, begins with the call of Abraham.
But when the Colonial Office at last had to give, like Lear, they
gave all, and England has been used by her prosperous offspring,
almost as ill as the mythical king was by his daughters. I cannot
see that the English Government, when it conceded the entire
political freedom of the Colonies, and their right to raise a revenue
and spend it at their discretion, should not have contracted with
them that the revenue should be raised for the purposes of govern-
ment, and not for that of local protection, since a protective tariff
is to all intents and purposes an act of war.

" The rulers of Great Britain," says Adam Smith, in the conclud-
ing sentences of his great work, "have for more than a century
past, amused the people with the imagination that they possessed
a great empire on the west side of the Atlantic." Smith is speaking
of the American plantations, then in the first struggles of the War
ol Independence. u This empire, however, has hitherto existed in

THE TIE WHICH BINDS THE COLONIES. 339

imagination only. It has hitherto been, not an empire, but the
project of an empire ; not a gold mine, but a project of a gold
mine ; a project which has cost, which continues to cost, and
which, if pursued in the same way as it has been hitherto, is likely
to cost immense expense, without being likely to bring any profit ;
for the effects of the monopoly of the colony trade, it has been
shoflm, are, to the great body of the people, mere loss instead of
profit." There is, as Adam Smith saw, a cheap investment to be
made in popular delusions. I know no safer speculation. If the
opinion of such men prevails, quite irrespective of their personal
efforts, they have taken a part in the nation's salvation, and deserve
reward. If their advocacy is seen to be untenable, and is expended
on a discredited cause, they trust that their personal obscurity will
secure them forgetfulness, or that they may rely on a vested in-
terest. I have lived for forty years among such people, and for
as long with others who understand them. The hardest work of
my life has been to save them from contempt.

There is however one tie between England and her Colonies, of
which even Adam Smith, despite his far-sighted sagacity, did not
dream. I am no judge of loyalty, of attachment to a central crown
and empire, in the place which I hold before you. I only pretend,
as an economist, to judge matters of business. We are tied to the
Colonies by a bond, strong as adamant, as long as we are wise and
they are prudent, but weak as a rope of sand, if we are unwise,
and they become desperate, or perhaps become self-contained.
They owe us a great deal of money. I do not mean money which
the nation has spent in its collective capacity. That is gone with
last year's snow, but with money which is registered and stocks
which are negotiated on the Exchange. The Stock Exchange is the
weakest in one sense, the most powerful force conceivable in
another. It can be wronged by a repudiation of obligations
created by it, and due to it, and it is unable to avenge its injuries
directly. It cannot immediately punish its defaulting debtors, or
enlist its own Government on its own side. This policy is now
abandoned. It was tried, I believe, for the last time in Mexico,
twenty years ago, and in Egypt ten. But it is not the business of
the State to collect debts due to the subjects of the State. So far,
then, the Stock Exchange is weak.

340 BISE AND PBOGBESS OF TEE COLONIAL TBADE.

But from another aspect it is strong. It is unforgiving to
defaulting communities. Now most, perhaps all, communities
want at some time or the other to borrow. They will seek in vain
if they have made default in past time. A taint clings to them
even if they make good past breaches of faith, even if they appear
likely to commit such a breach, or put themselves into a position
of being able to commit the offence. Thus a sharp lesson was
taught the defaulting States of the American Union when they
repudiated their obligations to their foreign creditors, and I do not
suppose that a defaulting State would get what is technically called
a quotation on the Stock Exchange, until it had satisfied its ancient
creditors, principal and interest. The same experience has come
to diverse transatlantic Governments, and to Turkey. A short time
ago, and it was well-nigh coming to Egypt. There is always some
danger of repudiation if the stock is held exclusively by foreigners,
as is the case with Russia, or if the loans are dangerously near the
possible margin of the borrowing country's powers, or if the loans
even for public works of a remunerative character are suspected to
be premature.

Now the interest on this money is paid in goods. It is no doubt
a strain to pay, and only large natural profits render the payment
possible, even when the profits are derived from distinctly remune-
rative undertakings, as railways and dues. But if we were to
decline to receive goods from them, or burden the exportation of
such goods with heavy import duties, or even light ones, we may
make that impossible which is already difficult, and the fair traders
might find, if they can persuade a majority of their fellow country-
men, that they have broken the bond between the Colonies and the
mother country, and have ruined their investing and too trusting
fellow countrymen in the process. By natural profits, I mean the
exceptional bounty which new settlers are able to appropriate.

XVI.

LAISSEZ FAIBE : ITS ORIGIN AND HISTORY.

Man a wolf to his neighbour — The weakness of the social unit — The
principle of contracts and their enforcement — The ideal of govern-
ment— Its disappointing attitude — Half truths in politics and poli-
tical economy — The economists of France — The publication of " The
Wealth of Nations " — Gradual reforms — Laissez faire no panacea
— The case of the working classes, of railways — The Factory Acts —
Lord Shaftesbury and the children in agricultural service — Edu-
cation, primary, and the present system — Land and the tenant —
Bestraints on bankers — Adulteration — Technical education —
Sanitary restraints.

" Homo homini lupus" said Plautus, perhaps Demophilus, from whom
he borrowed the Asinaria. This is the comment in which the
historical relations of man to man have been, in the practice of
life, and by the observation of publicists, condensed. You will
notice that the aphorism is universal. It is not directed against
the selfish spirit of competition, or the arid cynicism of the meta-
physical economist, or the tyranny of capital, or the aggressions of
labour ; but against the dangers of civil society, the risks which
communities and individuals incur from fraud or force, or a combi-
nation of both. It applies to monarchs who, like Philip II. or
Louis XIV., or Napoleon, aimed at Universal Empire, and to Vikings,
pirates, buccaneers, and heroes generally. It is equally true of
criminals who pursue gain, and of statesmen who pursue glory,
generally, it must be confessed, with an eye to the purely criminal
motive. Even the instinct of domestic duty, the education in the

342 LAISSEZ FAIBE : ITS OBIGIN AND HISTORY.

sacredness of family ties, is no efficient guarantee against predatory
impulses. "The price of liberty," said Mr. Mill, »«ie eternal
vigilance." But it is true of everything else which is worth keep-
ing, and therefore worth stealing, or otherwise appropriating. The
economist, who takes no notice of the selfishness with which aggres-
sive rulers and statesmen cover their action, is constrained to
identify, too often, the hero with the burglar, the minister of religion
with the buccaneer. In point of fact, the two who have in past
times accepted the alternate occupation, have also, with a clear
knowledge of the fact, been mentioned with eulogy in their own
generation, and have had the benefit of some contemporary
Smiles.

The weakness of the social unit, however strong he is when
matched with any one of his fellows, however shrewd he may be at
a bargain, however successful he may be in the conduct of business,
is so marked, and so readily confessed by himself, that every one
admits the necessity of a government which shall protect the weak
against the strong, which shall punish the violence of foreign and
domestic foes to the best of its ability, which shall arbitrate equit-
ably between contending interests, whether the contest is one of
general principles or of particular details, which shall chastise the
highest offender as well as the lowest, and shall be entirely impartial.
Above all things, this government has to abstain from allowing its
powers to be utilized for particular interests, and against the general
good. Even when it has, to the best of its judgment, formulated a
law, it should remember the maxim, summumjus summa injuria , and
modify in practice the generality which it sanctions. It is perfectly
true that unless contracts are enforced, society becomes a chaos of
universal distrust. It is plain that men are very slow to learn the
obligation of paying what is due, especially when the article or ser-
vice which is conceded, on the understanding that the price must
be refunded, and profit or interest paid, has served its immediate
turn. This insensibility to the obligation of a just debt, occasionally
exhibited in our own experience, is, I do not doubt, the explanation
of the excessive severity with which contracts are enforced under
the codes of an early civilization, the Draconian legislation and the
laws of the Twelve Tables. To be sure, in time, it is found neces-
sary to relax the rigour, and to modify the contract, occasionally to

THE WEAKNESS OF THE SOCIAL UNIT. 843

rescind it. But no rational person ever doubts that the law should,
as a rule, enforce contracts. So convinced was the great analytical
philosopher, Aristotle, that the centre of civil government is the
satisfaction of contracts, that he makes even crimes to be involuntary
contracts, in which the State should compensate the injured party
at the expense of the criminal.

The State, then, is bound to enforce contracts. But it is also
entitled, indeed is equally bound, to declare what contracts it will
enforce. In all civilized societies, for instance, it refuses to recog-
nize contracts under which one of the parties agrees to sell himself,
or members of his family who are in his power, as a slave or slaves.
We treat the traffic in human beings as piracy, and punish it as
such, or profess to do so. Again, a contract based on a criminal
proceeding is not only void, but punishable. An arrangement
by which a burglar engaged to sell his plunder to a tradesman
would not only be avoided ab initio, but, if detected, would bring
thief and receiver under equal penalties. "Where a contract is based
on an immoral consideration, it is also void. Contracts which are
shown to come under what is called the restraint of trade are void-
able. Contracts which create perpetuities are said to be contrary
to legal policy, though the practice of courts has not been consis-
tent. In many cases, certain contracts are declared illegal. Thus
a landlord cannot include income tax in rent, cannot compel his
tenant to preserve ground game, cannot determine a tenancy arbi-
trarily.

In the same manner the State modifies contracts, or interprets
them equitably. Nothing can be more complete than the transfer
of a mortgagor's estate, when he fails to fulfil the conditions of re-
paying money lent, and interest due, to the mortgagee. But the
law, from the time of Chancellor Ellesmere, in James I. 's reign, has
stepped in, and secures the mortgagor his equity of redemption.
Eecently, the usury laws have been entirely abolished. But the
law relieves a borrower, who is in expectancy of a life interest in
land, from an oppressive or usurious debt. Unfortunately these acts
of equity or generosity are limited to certain favoured classes. The
interest of the Irish tenant, though declared his own in law, is not
secured to him after eviction on the non-payment of rent, though
its market value may be greatly in excess of the rent due. A dis-

344 LAISSEZ FAIBE : ITS ORIGIN AND HISTORY.

tinguished statesman has latterly shown himself to be very ill-
informed on this subject. But distinguished statesmen are very apt
to be ill-informed in particulars. They should be criticized with
much consideration, for foolish folk insist on their being omniscient,
and with the natural consequences.

In brief, the State must protect the weak against the strong, not
only by national defences on sea and land, by police against domes-
tic violence, by the mechanism of criminal justice against some
offenders, and by the agency of civil justice against torts ; but by
what is almost as important, by just legislation, and by just interpre-
tation of that legislation. The American Constitution even protects
its citizens against legislation which is asserted to be just, for the
Supreme Court can, on appeal, reverse and annul an act of the
Federal Legislature which it declares to be unconstitutional. In an
ideal State, the legislature, the administration, aud the courts would
unite in enforcing what the highest human intelligence could
declare to be absolute equity. The duty of the State is admirably
expressed in the oath of the Manx judges that the deemster,
as they call him, will decide as evenly between parties as
the backbone lies in a herring. These honest islanders
gathered their similitude from the fisheries which form their
staple industry, and were assured that the reminder would be
perennial.

Unfortunately, the absolute fulfilment of these great public duties
is an ideal. No one has ever seen a set of human institutions which
have been entirely just, in which no undue advantage was given to
any class, trade, or calling, in which public burdens are evenly dis-
tributed, in which complete fairness has been the rule. It has over
and over again been admitted that a change which has been de-
manded is intrinsically just, but that interests have grown up about
irregular and indefensible practices, which it would be highly in-
jurious to annul or even to frighten. Persons have even held, and
economists among them— I do not challenge their conclusion — that
in course of time an initial wrong becomes a subsequent right, which
must not be questioned. I shall, in a subsequent lecture, illustrate
what I mean, when I deal with the subject of Crown lands, and the
ancient practice of resumption. It has been even alleged that con-
tinuous wrongs on others become in time the rights of the wrong-

THE IDEAL OF GOVERNMENT. 345

doer. The late Lord Palmerston had a favourite adage, that tenant
right was landlord wrong, though the maturer conscience of the
British Parliament, shortly after Palmerston's death, determined,
in 1870, at least to modify this position. So in 1820. Lord Liver-
pool declared that he entirely and cordially concurred with every
principle and every sentiment in the Merchants' Petition. But he
could hold out no prospect of great or immediate alteration, because,
as he alleged among the reasons, " So many vested interests had
grown up in the country, which he imagined would be imperilled "
by accepting and acting on the principles of the petition. The
objection is a very old one, for it was adduced by Demetrius in the
theatre of Ephesus. The majority of the House of Commons
shouted their sympathy with the worthy silversmith of the nine-
teenth century.

The fact is, the practice of parliaments and governments has
differed widely from what each would admit to be the raison d'etre
of their existence. All the forces of government have been diverted
from time to time towards the sustentation of particular interests,
and not a few of them are still diverted, so hard is it to reconcile the
conflicting claims of conscience and self-interest, of the public good
and private advantage. I always treat the arguments of those who,
being interested, sometimes greatly interested parties, defend what
my convictions and my experience prove to me to be indefensible,
with patience and consideration, for I know nothing more diffi-
cult than to get a person, all of whose interests He in one direction,
to accept the disagreeable necessity of examining facts, and finally
of going in a just direction. I should, had I lived in old days, have,
in this frame of mind, excused the bias of those ruined landlords
who devised the labour statutes; of those adventurous spirits who
claimed trade monopolies ; of the restored royalists who created our
present land system ; of the merchants in the last century, who,
essaying that enormous novelty to the English people, mechanical
invention, demanded that their venture should be guaranteed by
protection ; of those patriotic persons, who, having founded the
Bank of England, and restored the finances of the country at a
most critical time, claimed, and obtained, the benefit of that cur-
rency law, in accordance with which the second charter of the Bank
of England was granted. There were plausible arguments for each

346 LAISSEZ FAIEE : ITS OBIQIN AND HISTOBY.

of these departures from true and just principles. There were
people, when these concessions were made, who recognized that
the good which the favoured objects of this legislation secured
was infinitesimal, even to them, was in some cases even ruinous,
and that the evil which they inflicted on the rest of the people was
great and permanent. Had I known what I know, I should have
resisted the proposal in each and every case as a disinterested person,
and should, no doubt, have incurred much obloquy. But I do not
think it can justly be inferred that a man is deliberately dishonest be-
cause he cannot see the public interest as clearly as he can see his
own. If his own interest in the end is to be superseded, one may
leave him the privilege of protest, and the utterance of discontent,
with a hope that matters will not turn out as serious as the subjects
of the change anticipate.

The fact is, there is a plausible argument which may be alleged
for many of the most serious errors which governments have
incurred, and many of the most serious injuries which they have
unwittingly inflicted. Half or partial truths are the bane, the
ignesfatui of political life, and by implication of political economy.
It has been for many years my practice to point out that most of
the economic errors or fallacies into which people fall have a
certain basis of truth in them. Whatever they may effect in the
end, they are not in the beginning mere impudent brigandage.
The most selfish of rulers, the last Henry and the second Charles,
did not seriously design the dishonour and ruin of the unhappy
country which they governed. The sordid managers of the Re-
formation, the sordid patriots of the Revolution, did not want to
do mischief, though they could not help doing it. Somerset plun-
dered the poor, but perhaps he thought that a purer faith was
a full compensation for their losses. Leeds and Seymour, Maccles-
field and Walpole, and a host of others robbed the taxpayer and
enriched themselves, but perhaps concluded that their gains were
a cheap price for the inestimable boon of the Revolution and the
Hanoverian succession. In most men, especially in those who
must be trusted, good and evil are strangely mixed, and they are
themselves very often entirely unconscious of the mixture. Clive,
you will remember, amassed an enormous fortune in India at an
early age, and within a few years. He afterwards declared, perhaps

HALF TBUTHS. THE ECONOMISTS OF FBANCE. 347

with perfect sincerity, certainly with a proud consciousness, that
he was amazed at his own moderation.

Now towards the end of the first half of the eighteenth century
a body of Frenchmen, who called themselves Economists, or
Physiocrats, struck with the infinite misery to which France had
been reduced, partly from the expedients of Colbert, partly by the
extravagant wars of Louis XIV., the more extravagant misconduct
and profligacy of the Regency, and of Louis XV., determined on
examining into the causes of wealth and poverty, of waste and
beggary, especially in France, where the contrast was violent.
The eighteenth century, as you are doubtless aware, was one in
which people were beginning to inquire into the foundations of
authority, and of the power which authority claimed as its due.
The bitterness of religious feuds had worn itself out. It is true
that after a scandalous youth and middle age Louis XIV. became
devot in his later years, and signalized his piety by persecuting the
Huguenots, expelling them from France, and rooting out the
Camisards. But all pretence to propriety, and all, or nearly all,
the homage of bigotry, passed away with the regency of the Duke
of Orleans and the administration of Dubois. In England tolera-
tion was followed by apathy, apathy by inquiry, inquiry by scep-
ticism. The Puritans of the first Revolution became the Unitarians
of the early eighteenth century, the fierce Churchmen of the
Restoration the Latitudinarian divines of the first Georgian era.
The ancient orthodoxy was conceived to be disaffected, and perhaps
Bolingbroke, who was above all an intriguer, wished to show that
a man could be a Tory, even a Jacobite, and withal a freethinker.
In France the very foundations of society were discussed. There,
topics long reputed too sacred for handling were freely and scep-
tically criticized. During the long and peaceful administration
of Fleury, the Court became more scandalous, France more adven-
turous, the merchants and manufacturers richer, and the peasantry
more beggarly. The economists, with many errors in principle
and detail, were thorough. They did not quarrel with the Govern-
ment ; but they severely criticized what I may call the control of
French industry, and especially agriculture by the administra-
tion. They concluded that private and personal interests, as long
as they were innocent, were judged of better by the individual than

348 LAISSEZ FAIBE : ITS OBIGIN AND- HISTORY.

they can be by the State, that if men were left free to work, free
to bargain, free to trade, the result would be that in the choice of
industry the fittest, to use a modern phrase, would be selected, and
that the country would prosper much more under competition than
it had done under regulation. In a word, they affirmed that laissez
faire should be the rule of an economic society. Smith, who was
travelling in France as tutor to the young Duke of Buccleuch, the
descendant of Monmouth and of the considerable heiress to whom
Monmouth was married, said, " I was attracted by three philo-
sophers, and influential people they were — Turgot, Quesnai, and
the elder Mirabeau;" and after his return to England composed, to
a great extent on their principles, " The Wealth of Nations."

It was a great advantage to the Economists that their doctrines
were accepted as sound in the abstract, however difficult it might
be to allow them in practice. It is quite probable that the greatest
profligate living would admit privately that the Ten Command-
ments are excellent in the abstract, the Sermon on the Mount an
admirable exhibition of theoretical virtue, but that vested in-
terests compel the hearer of them to limit his acceptance within
the bounds of respectful admiration. The tenets of the French
Economists were listened to with speculative acquiescence, but
Pompadour and Du Barry prevented their acceptance in state-
craft. They were out of the range of practical politics. By and
by came the cataclysm, in which everything was submerged in a
common ruin, the residue of the Economists, of the Encyclo-
paedists, of the dilettante statesmen, of the financiers and the
harlots, king and church.

The English version, or rather comment of Adam Smith on this
new departure, was the beginning of a new era. The publication
of the great work was delayed, as I have recently discovered, by
some negotiations which were undertaken by Pulteney with the
East India directors to get Smith an office in the Bengal Council.
They failed, and to their failure we owe the publication of " The
Wealth of Nations," which would never have seen the light had he
obtained the appointment. Mickle, who translated the "Lusiad" of
Camoens, and dedicated it to the company, thought it would suit
his patrons if he reviled Adam Smith, who reflects rather plainly
on the East India Company's trade policy. But the opinions of

THE WEALTH OF NATIONS. GBADUAL BEFOBMS. 349

the author gained him the respect of the younger Pitt who, after
ousting Fox on an India Bill, brought in nearly the same measure
himself, and gave a striking and early example of that policy with
which expectant statesmen rail at measures when they are in
opposition, and adopt them when they are in office. For a time
it seemed that Pitt would not only accept the theory, but put in
practice the tenets which Adam Smith inculcated. But the French
Revolution came, and Pitt, after a struggle, threw in his lot with
the emigres and the Bourbons and the affrighted herd of kings
and kinglets. He died of chagrin, having at his death-bed the
affectionate sympathy of his king and the spiritual consolations
and offices of his bishop, one Tomline.

This is not the occasion on which to go through the history of
the long delay which attended the acceptance of the principle
laissez faire. It reappeared, as I have told you, in the Merchants'
Petition, was accepted in the abstract by Liverpool, and cautiously
adopted in the concrete by Huskisson and Canning. The trade
in bullion and the foreign exchanges were relieved from vexatious
restrictions, while the national honour was maintained unimpaired
in the integrity of the currency. Next the laws regulating labour
were swept away. Next an inroad was made on the taxation of
raw materials, and on some peculiarly vexatious excises. As time
went on, trade was freed from monopolies. Then the most
grotesque tariff conceivable was greatly altered. Then the most
important of all raw material, food, was liberated from selfish
attempts to regulate its price in the interest of landowners. The
shreds of colonial preference went shortly afterwards. All but one
of the materials of human labour, land, have been made free.
This is still stifled by protective regulations. But the system is
breaking down from its own inherent perversity, folly, and mis-
chief. Laissez faire became triumphant, and this in little more
than a quarter of a century. I can well remember the last struggle
against it. The advocates of the old system were first very con-
temptuous, next very angry, then very ill-tempered, and lastly,
very ill-mannered. But the bravest act, and that which disarmed
opposition more than anything else, was the resolution taken to
break the weapon with which the victory was won. The League
which enforced the repeal of the Corn Laws was dissolved as soon

350 LAISSEZ FAIRS : ITS ORIGIN AND HISTORY.

as the Legislature had swept those acts from the Statute
Book.

But complete as this victory was, it was soon found that lausez
/aire was not a panacea for all social mischiefs. Much of the evil
which afflicts society is due to causes whose effects survive and are
profoundly noxious long after the cause has ceased to be operative,
and even has been forgotten. The maxim, Cessante causa cessat
effectus, is only partly true in the physical world, where the energy of
a transient cause may have permanent effects. The desolation of parts
of Calabria have been prolonged since the earthquake of 1782 to our
own day. In the political, the economical, the moral world, effects
long survive causes. The prolonged survival of effects is the centre
of Mr. Darwin's theory. The publicist affirms that precedents are
valid long after their occasion has passed away. The historian,
philosopher, constitutional or romantic, white, grey, and black,
is fond of tracing present phenomena to ancient beginnings, even
if he refrains from connecting British institutions with the call of
Abraham. The laws regulating wages, the justices' assessment,
and parochial settlement, the old Poor Law, the new Poor Law, the
Corn Laws, have left marks on labour for which the doctrine and
practice of laissezfaire is no detergent, even though it were adver-
tised as copiously as the soaps of our day are. You cannot, like
the adventurer in the Greek comedy, take the nation and by some
magic bath restore it from decrepitude, disease, vice, dirt, drunken-
ness, and ignorance, to manliness, health, virtue, self-respect,
sobriety, knowledge, forethought, and wisdom by a mere wash.
Some of us who have essayed remedial measures have found that
we have not in the schoolmen's phrase, materia prima to deal with.
Our progenitors in the art of legislation have left us their failures
to remedy, as well as our own work to do. We have to clear away
the effects of old wrong-doing. Half of our legislation, more than
half, is remedial, not of what is the genuine present, but of the
historical, the inveterate past. It is only when you learn the past
that you cease to be impatient at the present. If you would do
well in your interpretation you must not be deterred by the long
chain of causes, for every discovery aids your remedy.

Laissezfaire, then, is no more than natural justice postulating the
absolute and entire freedom of all contracting parties, in which all

LAISSEZ FAIBE NO PANACEA. 351

the agents are fairly equal in their competency to interpret their
own interests, and give effect to their interpretation, being of
course constantly corrected by other interests, which they equit-
ably balance against their own. I need hardly say, that, at the
best of times, it is as ideal as the legislative and administrative
body which we heard of just now. It is almost as superfluous to
point out that, if it existed, it would so curtail the functions of the
legislature, that we might leave all debates to the two front benches,
who might discuss those questions which Milton referred to Limbo,
and Swift to the grimy philosophers of Laputa. The chance of
mending society by laissez /aire, is as rare as the capture of the
golden bough. Is it entirely without a meaning, when Virgil tells
us that the lucky acquisition only gives us an introduction to Proser-
pine ? And yet there is a select body of speculative philosophers, with
Lord Wemyss at their head, who seem to be as far away from the
facts as their president was, when he tilted at the Eglinton tourna-
ment, and dreamed of a revival of chivalry, which I fear, and I
have read the private accounts of the chevaliers — was the most
pretentious of shams.

As laissez /aire cannot do all, it will be well to point Out where it
totally fails, and always must fail before we come to more debat-
able ground. And here I may say that so enthusiastic have been
some advocates of the doctrine, that they would have applied it
without discrimination to every economical fact. Thus Malthus
would have extinguished all relief to destitution, Newmarch all
diplomacy on trade, While Mr. Herbert Spencer carries the doctrine
of individualism so far that I remember him lamenting the exces-
sive police protection which the law accords, as he thought, to tho
average Englishman. I need hardly say that these are idola
specus, the speculations of an armchair and easy circumstances.

In the first place, then, as you will anticipate, the application of
the doctrine laissez f aire, laissez allerf is impracticable in cases where
the present situation is directly traceable to the action of that govern-
ment or administration which has been permitted or encouraged to
commit the mischief. No question is, indeed, more difficult in the
whole range of the ethics of social life than the modern doctrine of
vested interests. It is obvious that if we were to extend the
principles which some persons have laid down, that we must per-

852 LAISSEZ FAIRE : ITS ORIGIN AND HISTORY.

Bist, even in the near prospect of national ruin, in continuing what
"we have once allowed. If Charles II., for example, had given the
son of Louisa Querouaille, French prostitute and spy, the whole
revenue of the Crown, we should be obliged to go on paying the
proceeds to the Duke of Eichmond. If it be true that the bounty
and the Corn Laws, as many contended, were as much the inherit-
ance of the English landowner as his acres were, no reforms could
have been permitted. If, on the other hand, maintenance out of
the rates were, as was alleged, the absolute right of the British
labourer, in consideration of his having been ousted, without com-
pensation, from his commonable rights in the land, occupiers
would have been bound to keep paupers until they became
paupers themselves. No reform in our social system could be
possible if full play were given to the doctrine of vested interests.
Fortunately, as yet, the claim is seriously affirmed, some few
cases excepted, in the case of life interests only, and in some of
these only, such being, as a rule, intrinsically the least defensible.
But I shall have to return to this subject in another lecture.

The most marked of these cases in which laissez /aire breaks down
is in the case of the working classes. I have pointed out to you,
from the indisputable facts of economical history, that the beggary
of the working classes was the direct and deliberate work of the legis-
lature, and that it is excessively difficult to retrieve the fortunes of
these people by the principle of free competition, and by their own
collective efforts. But the utmost freedom should be given to those
efforts, the fullest sympathy should be accorded to them, the
kindliest criticism should be given to their errors and failures, and,
beyond all, they should be allowed to witness no class privileges,
bestowed and fenced for their more fortunate fellow countrymen,
in the struggle of life. The strength of socialism is the injustice of
government, it is weakened by every act of equity, and becomes an
extinct or at least dormant force, when all rights are respected.
I have a great aversion to legislation on behalf of adult labour,
except, of course, when, as in the Employers Liability Act, the
abominable doctrine of common employment, a mere fiction of
judges, had to be extinguished. But I entertain this aversion, not
because I hold that the legislature may not be bound to compen-
sate in the present for wrongs in the past, but because I am

THE CASE OF THE WORKING CLASSES. 353

convinced that concerted action is a far more remedial measure
than legislative restitution. In the fifteenth century, and in the
teeth of restraining statutes, the workmen secured an eight-hours
day. I am sure that an eight-hours day is worth more to the
employer than a ten-hours day, is cheaper at the same money.
But I would far rather that the workmen got it by their own
combinations, and by their own exertion, than by a gift of the
legislature.

There are some services the price of which must be controlled.
A railway, for instance, has over a given district a monopoly of
conveyance for passengers and goods conferred upon it by the
legislature. It is true that Parliament never surrenders, and I
trust never will surrender, the right of permitting competition.
But in practice it declares against competition, when it permits im-
perilled companies to appear by counsel against new projects. It
does this for two reasons. In the first place, it is quite alive to the
famous dictum of the younger Stephenson, that where combination
is possible, competition fails ; and it next knows, in the light of this
fact, that if it permits unnecessary rivalry, its still more important
right, that of regulating rates and fares, is in periL It is to be"
presumed that the railway, having been permitted to come into
existence for the profit of its shareholders, has a right to make
profit. But if it is to share a limited profit with a rival, it must,
in all likelihood, both in the stage of competition and in that
of combination, make less profit. But less profit can be supple-
mented only by less cost, or by slower and scantier accommo-
dation, or by higher rates. The first will be shared by all the
competitors, the latter are achieved by the inconvenience and cost
of the customer.

When, in 1886, the Railway Rates Bill came before the House of
Commons, and, in my opinion, the projected changes, passionately,
but not over wisely, demanded by landowners and manufacturers,
seemed to me to be likely to injure the railway projectors first,
and would infallibly in the end react on the public, I spoke in
the House as follows : " The carriage of goods and passengers
should first pay ttie unprofitable costs or working expenses, and,
secondly, should yield a profit on the traffic. If the freight of the
former did not cover cost, the shareholders must suffer, or the

24

854 LAISSEZ FAIEE : ITS OBIGIN AND HISTORY.

conveyance of the latter must be rendered dearer. But much of
the travelling on railways is voluntary, and an excessive fare
would check business. Now if profits were seriously curtailed,
one cannot expect that railway proprietors can carry goods at
a loss, or at no remuneration. You are then," I argued, "in a
vicious circle. You have a right to regulate rates and fares, but
you must do so with a view of leaving a margin of profit. Your
clients wish to save some of the costs of freight. But if you have
established a set of conditions under which you cannot seriously
reduce cost without extinguishing profit, you will assuredly
find in the end, that you were better off under the old system
than you will be under the new." The Government expected that
I should move the rejection of the Bill. As it was sure not to pass,
I thought this action superfluous. But I am quite convinced that
legislation is necessary. Perhaps some compensation should be
made to railways in view of the great value which they have given all
land, and to some, enormous value, and this at the expense of those
who have been benefited by no outlay of their own, and sometimes
after preposterous compensation for disturbance. It is not unfair to
fix the price at which a monopoly of service shall be accorded, but
this restraint should precede the grant of the monopoly, and be very
cautiously exercised afterwards. If you fix the price, or better still,
require the agent to fix the price, and abide by it at his peril, and
leave the person to undertake the service or leave it alone, you do no
wroHg. A cabman is not wronged when his mileage price is fixed,
nor is any other person who is granted a monopoly, actual or regu-
lated, for he can take the calling or leave it alone. It is quite a
different thing when you have instigated the producer to invest his
capital in the undertaking.

There are, or have been, some occupations, the result of evil laws
or customs, the outcome of bygone wrongs, which have been pro-
hibited ; and, in particular, the premature employment of children
and of women in some severe and degrading callings. These were the
outcome of the past restraints on labour. It is very rarely that I find
in the earlier accounts which I have inspected entries of children's or
women's labour in the fields. "When the detestable assessments of
the justices were legal they became common. When machinery
began to supersede human labour, and adult strength was no longer

THE FACTORY ACTS AND LORD SHAFTESBURY. 355

so necessary, they became commoner. At last the practice became
intolerable, and it was attacked by the earlier factory legislation.
Since that time, to the dissatisfaction of the laissez /aire people, the
legislation has been extended, and there is strong reason to believe
that greater restraint will be put on certain very continuous employ-
ments. When I served on Sir John Lubbock's committee, I was
surprised to find that the greatest amount of overwork was exacted
in the wholesale City warehouses, which close to appearance with or
shortly after daylight, but sometimes continue with closed doors to
very late hours.

The argument for the Factory Acts was that the children were in
the power of their parents, and eked out miserable earnings by their
premature toil, that it entirely prevented education, and that it
weakened the vital powers of the child. It was further alleged, and
truly, that this labour was not advantageous in the end, that long
hours, apart from other considerations, were a loss, and that
employers did not know their own interest when they exacted them.
The workmen passionately demanded the Factory Act, possibly
because they foresaw that their own wages would be bettered if the
labour of children were prohibited; and in my opinion justly and
rationally demanded them. The employers resisted, and angrily
too. They were offended, perhaps reasonably, at being told that
they did not understand their true interests and their own business.
They looked on the onslaught as a direct attack on their own
calling, and with justice, for the employment of children in agricul-
tural labour was not similarly restrained. Now the agricultural
gangs of the eastern counties were worse than any labour in the
factories. They were defended by Mr. Clare Read, among others,
on the old plea that cheap labour was required in order to enable
farmers to pay rents. They were exposed, denounced, and finally
extinguished by a Norfolk clergyman, at his own personal risk, but
to his great honour.

I once asked my friend, the late Lord Shaftesbury, why he did
not extend the sphere of his Acts to the agricultural children, as
well as to the young people in the factories, for that he must have
known that the work of a child in the fields, ill-fed, poorly clothed,
and exposed to the worst weather in the worst time of the year was
to the full as physically injurious as premature labour in the heated

356 LAISSEZ FAIBE : ITS OBIGIN AND HISTORY.

atmosphere of a factory. He told me that he well knew the evil,
hut was powerless to meet it ; that if in the struggle he had
engaged, he had at once enlisted the hostility of the manufacturers,
the farmers, and the landowners, he should be incapable of doing
anything at all, and that if he procured the liberation of one class
of children, time would ensure the emancipation of the rest. Lord
Shaftesbury was a courageous and persevering man, as you know,
and his answer showed how well he knew what are the difficulties of
practical politics. People blame compromises, when they do not
know how rarely it is possible to get anything else. Nor do men
ordinarily see that all guaranteed interests are of suspicious justice,
and that just or not, they inevitably invite attack.

Again, it may be plausibly argued, that the bestowal of education
on a child by a parent is as natural a duty, in the light of civiliza-
tion, as that of food, clothing, and shelter. But the question is
not solved so simply. Most parents do bestow one kind of educa-
tion on their children, that by which such children hereafter get
their living. The children of the peasant generally follow their
father's calling, and if he be an expert farm-hand, readily and
rapidly learn the many and varied accomplishments which every
person experienced in agriculture knows to be included in such an
expression. The children of mechanics also generally, indeed
obviously, grow up to the same pursuit, unless ability and oppor-
tunity combine to raise either out of an hereditary calling. In
point of fact, occupations are more hereditary than people imagine,
and I suspect, Mr. Galton, in dealing with hereditary genius, has
confounded hereditary occupation with it, for I should think that
the son of a judge, or the son of a bishop, has more chance of
becoming eminent in the law or the church (and Mr. Galton seems
to think that success is genius) than the son of another man who
had neither influence or patronage in either profession. So again
with special learning, .the acquisition of which has a market value,
because the communication of it to others, by speech or writing, has
a price. I need hardly tell you that there is scarcely a single
endowment in public schools or in either of the universities, given
by benefactors in England up to the end of the last century
which was not intended for the poor, the beneficiaries of which
were to be carefully selected all over the country, and transferred

EDUCATION, PBIMABY. 857

for higher education to Oxford or Cambridge. The grantees of
the monastic lands were put under the condition of endowing
schools with part of that which they received, in order that the
education conferred by the monasteries, much more general than
modern ignorance imagines, might not be lost, and the pious
founder is generally only paying a debt, which he seldom pays
fairly. Now all these endowments are appropriated by the rich.
The reason is plain, the higher education came to have a mer-
chantable value.

The case is wholly different with primary education, or the
ordinary education of the poor. In the main this is elementary.
Now if every working man, without exception, were taught up to
the standard required, say, for passing the Oxford or Cambridge
"little-go," it would not make any difference to the wages which
such a person would earn. Add what you please to the capacity of
all industrial agents, in the way of physical and intellectual power,
and you will add nothing to the wage-earning power, as long as no
individual is differentiated by the instruction. It is possible that
the educated workman will do his work better, more briefly, more
efficiently. This will be obviously to the advantage of the em-
ployer. It is only when he employs his acquired intelligence in
his own calling, and makes it by combination the means of exacting
better terms from his employers, that his acquisitions are a source
of profit to him. Now this I suspect the workman knows as well
as I do. I am bound to have a theoretical knowledge of the fact,
he is led to have a practical knowledge of it. The gain of his
child's education is not personal, it is national. The individual is
not better off by virtue of a universal and compulsory education,
except very indirectly ; the nation is all the better off, because a
well-taught race is cceteris paribus, stronger in the competition of
nations, where laissez /aire is supreme, than an ill-taught one is. I
say, cceteris paribus, for the best educated race may be crippled by
unwise financial legislation. Bismarck's protectionist policy is
rapidly neutralizing all the efforts of North German education.

Now the peasant or artisan is first bidden to dispense with the
the earnings of his child, pitiful and paltry to us, but notable to
the men who can often only live by stint, to whom spare diet is
a habit. Next, for the sake of the state, the nation, he is bidden,

358 LAISSEZ FAIBE : ITS ORIGIN AND HISTORY.

out of the clipped earnings of the family, to have his child taught,
Then out of our ridiculous system, of which I believe Mr. Lowe,
examination mad, was the author, the poor child is crammed in
order that he may earn grants for the school by his answers to
the inspector. I can conceive no more rational contempt and dis-
gust than that which peasant and artisan must feel for this precious
scheme. I know no system which is better adapted to defeat its
own ends, none in which a shallow pedantry is more ridiculous and
more transparent. The education of the poor ought to be free, it
ought to be inspected, as it is in the United States, by a committee
of competent persons, who attend to the master's tests and, if
needful, apply their own. I have no doubt that if the change were
made, the teaching would be more solid, the learning more attrac-
tive, and the selection for a higher grade more satisfactory than it
is under our preposterous system of extortion, cram, examination,
and grant.

There is another case or two which I must briefly refer to, in
order to illustrate what I have said as to the limits of laissez /aire.
The doctrine is become an exceedingly useful one to the strong,
an argument for the oppression of the weak. Under the English
land system certain families — all I grant if they could do so, a state
of things manifestly impossible — are permitted to settle land.
They are protected against their own errors, vices, misfortunes,
by the machinery of an estate for life, with remainder in tail.
Land is limited in quantity, while population, i.e., of the customers
for land grows. The landowner is further assisted. All local taxes
are paid by his tenants, and his own charges are put at an absurdly
low amount. If his land is not let, it ceases to pay local taxes.
Land was formerly, till recently, liable to certain charges, which
are now to a great extent put on the general revenue, i.e., on the
income-tax payers; for Chancellors of the Exchequer are threatened
with revolt if they venture on taxing the succession of real estate
as personal estate is taxed. Everything is done which the law can
do indirectly to save the great estates, and not infrequently they
are further secured from dispersion by private Acts of Parlia-
ment. In other words, the law of England does its very best to
make the landowners a ring, as it is technically called in trade,
to curtail the trade in land, and to give the man who is to sell

LAND AND THE TENANT. 359

the use of land an overwhelming advantage in all contracts for
its use.

It is inevitable under these circumstances, that the tenant will
either be outrageously fleeced, or that the law must regulate con-
tracts for the use of land. We have done so, imperfectly enough, in
Ireland. We have done so still more imperfectly, only tentatively,
and with a serious failure of common justice in England, for we
permit a landowner to raise a rent arbitrarily against a sitting
tenant, and so allow him to confiscate his tenant's capital. At first
sight, a contract for the use of land seems to be an excellent, an
unimpeachable field for the principle of laissez /aire. It is only so
in appearance, as every civilized government has discovered, and
ours must, it may be hoped, before it is too late. For we may be
perfectly sure that as time goes on, for every advantage which the
existing law gives the landowners, an equivalent will be exacted by
the tenant from the law of the future. People complain querulously
that the tendency of recent legislation is socialistic, and most of all
they complain whose position and the advantages of whose position
are distinctly anti- social. The tenant, in brief, when he makes a
contract for the use of land, except in so far as he is constrained
to carry on his occupation in a market which is rigged, is momen-
tarily a free agent. But immediately on his completing the con-
tract he ceases to be a free agent, and is at the mercy of the land-
owner, to whom the law gives an exceptional power in many ways.
The abuse of this power is sure, sooner or later, to bring retaliation.
The existence of the power is in itself a terror. We may be sure
that when those who elect legislators learn what they can do, they
will retaliate. Laissez /aire when it can be most excused, or most
defended, postulates equality of conditions in order that it may
affirm equality of contracting power.

The English law has condemned truck, ie., the right of an
employer to pay his workmen in goods, or in orders on particular
shops. At first sight the practice seems justifiable. Money is only
a pledge of purchases to come, of goods to be acquired, consumed,
or turned to further use and profit. The employer may be able by
the command of his capital, and by the fact of his custom, to
secure the greatest advantages to the workmen in quality, in cheap-
ness, in variety. He may inculcate upon them the excellent prac-

360 LAISSEZ FAIBE : ITS ORIGIN AND HISTORY.

tice of not running into debt, by insisting that his tallies shall
square with their consumption. But, on the other hand, the
employer may, and the temptation is exceedingly strong to do so,
make a further profit out of the retail transaction. He may argue
that, as he gives the shopkeeper a large custom and a safe trade,
he has a right to some of the advantages which the shopkeeper
calls his good-will, and may find that his investment in the tally
shop is as good as that which he makes in his business. And as
the dealer is made to pay for his business, he may reimburse
himself by selling inferior goods, by giving short weight and
measure, and by making use of his professional skill for the pur-
pose of cheating his customers with impunity, since he has a sole
and secure market. You will see at once that the evils of the
system counterbalance the advantages. I heard the other day of
most ingenious scheme of truck, which perhaps does not come
under the Truck Acts. A large employer of labour pays his work-
men every fortnight in tickets. These tickets are, to all intents
and purposes, equivalent to checks drawn on his bankers, the pay-
ment of which is deferred. They are known to be equivalent to
a deposit at the bank, and to be therefore well covered. The
employer makes no conditions as to the place in which they are
negotiated, except finally at the bank. The tradesman takes them
for goods and gives change, or exchanges them for money, probably
at par, as he can make up the loss, if any, out of the custom which
he gets. At the end of the third week the employer sends a clerk
round and exchanges them for cash. In this way, for I am told his
sole reason is that which I am about to state, he gets into his hands
the capital of his workmen's labour for three weeks in advance.

For a long time the legislature permitted private individuals, or
partners, the number being limited, in consideration of the privileges
accorded to the Bank of England to trade in money, to take
deposits, and to issue notes payable on demand or deferred, without
giving any security by an independent audit as to their solvency.
It gives, for reasons now historical, very many of these powers no*r.
I referred io these reasons when in one of my lectures I treated of
paper currencies. Now such a trust ought to be reposed in no
person whatever, for it has been justly said : " Free trade in bank-
ing is free trade in swindling." Look at the latest exposition of

BESTBAINTS ON BANKERS. 361

the system. Messrs. Greenway, a quarter of a century ago, as one
of the partners said under examination, had with a note issue,
limited to £30,000, a capital of a little over £600. They had as
much moral right to carry on a bank under such circumstances as
a street sweeper has. But they put a face on it. They lived hand-
somely on the property of their customers, took an important political
position with the property of their customers, traded and speculated
with the property of their customers, and failed for a quarter of
a million or more a few weeks ago. They published balance-sheets,
they simulated solvency as well as virtue and patriotism, maintained
the sacred rights of property, and abode by the cause of law and
order. But their debts were returned as assets in their balance-
sheets, the notes which they put into circulation on faith in their
virtue were in innocent hands, and the indignant and defrauded
gentlemanlike party in the district had the poor consolation of
hearing their bankers' confessions, and burning the confessors forth-
with in effigy. It is not an invasion of laisscz /aire, you will
probably conclude, to insist on an independent audit of the assets
of private banks. Had it been taken twenty-five years ago, the trio
might have remained poor, but have aLo remained honest.

There are some other invasions of the principle of laissez /aire
which are admittedly, some which are probably, some which are
doubtfully, defensible ; some which are entirely and absolutely in-
defensible. I have a little to say on the former, I must reserve the
latter to a later lecture. You will always remember that every in-
vasion of economical liberty is on its trial, that those who maintain
the right of free action are merely on their defence, and that just
cause has to be shown by those who allege that private right should
be suspended or curtailed. And here I may observe that private
right postulates that the individual is not by his conduct undeserv-
ing of ordinary rights. I will illustrate what I mean by an action
of my own. When the Criminal Law Amendment Act was in com-
mittee I got inserted among other, I venture to think necessary,
amendments, a clause by which a criminal parent should be dis-
abled from exercising parental rights, though he still remained
liable to parental responsibilities. I had, in my experience of the
action of certain criminals, reason for an amendment, which the
House of Commons accepted.

362 LAISSEZ FAIBE : ITS ORIGIN AND HISTORY.

Now you will probably agree with me that laws punishing the
adulteration of goods are just. I have already explained to you
what are the economical relations of trader and purchaser, and if I
am right, you will admit that the customer has a right to expect
truth from the dealer. If I buy bread I mean to get bread, not
stones, perhaps not potatoes mashed. If I buy meat I want meat,
not carrion. And, to quote a recent and much-debated topic, if I
buy butter I do not mean to buy butterine. So with a thousand
articles. There are, I know, people in high position who have
defended these tricks of trade, on the somewhat feeble ground that
purchasers prefer adulterated articles. I very much doubt the truth
of this statement. That people will be smart in shoddy who cannot
afford to be smart in cloth, I know to be a fact. That a dandy
whose means are small will adorn his breast with Abyssinian gold
when he cannot buy sterling is a fact, and may be a lesson, by
disappointing a pickpocket. But I doubt whether any one is willing
to pay the price of a genuine article for what he knows to be a
sham. And this is what adulteration means to make him do.
Besides, ha nuga in seria ducunt. Army contractors have been
known to ruin a campaign by frauds. I have heard it said that
the collapse of the French armies in 1870 was due as much to the
frauds of the contractors as it was to the superior discipline of
Germany. We, too, had our experiences in the Crimea and Egypt.
It is only recently that we have heard of flexible bayonets and
brittle swords. It may be wise to turn a bayonet into a reaping-
hook, but it is not satisfactory to find it turning itself into one.
Depend on it the principle of laissez /aire will not justify adultera-
tion, and should not be cited to condone trade frauds.

Should the State be at the expense of the higher education, and
particularly of that which is called technical ? There is a con-
siderable amount of fallacies uttered about the latter term. I hold
that a well-regulated apprenticeship, such as in practice I under-
stand engineers in England have to go through, is a good, almost
a perfect, technical education. Such is the system prevailing, for
I have witnessed the process, in the American technological colleges,
where the teacher, sometimes only a skilled workman, watches the
pupils' efforts, and gradually imparts to him the requisite knack.
Such, as I have told you, was the mediaeval apprenticeship in the

ADULTERATION. TECHNICAL EDUCATION. 863

art of architecture and agriculture. Now if everybody is to be
taught this in his degree, the State may, for reasons given above,
be called on to pay it. If a few are to have the benefit, the State
may perhaps start the institution, as they did at Boston, perhaps
pay part of the management, but the pupils ought to supply the
means for its continuity. So with grants to universities. I never
could see what claims the Scotch universities had on a Parlia-
mentary grant. From the Tay to the border, Scotland is as rich
as any part of the United Kingdom. The English universities,
from the oldest to the most recent, have been founded by private
munificence, and are largely supported by the taxation of their
members. I am pretty sure the Scottish will not be as long as
Parliament gives them money. Myself, by a moiety a Scotchman,
I am assured that we are the better for their appearance here, where
they no longer say, tenui meditamur avena. But it might be argued
that Scottish wealth should of its abundance give to Scottish
learning in Scottish universities.

More disputable still is the obligation, in the reputed interest of
the laws of health and of public safety, to compel vaccination and
to insist on the notification of infectious disease. I know that I
am treading here on dangerous ground, on the fire, as Horace says,
which lies below deceitful cinders. Medical and sanitary science
say Yes ; but there is a strenuous, perhaps an uneducated, oppo-
sition, which says No. I have been in my past experiences, when
I was losing my health in the public service, to regain it by
losing my seat in my own, put to great straits in debating and
acting on this question. Much opposition is irrational, but, strange
to say, I have found that you do not always abate it by calling it
irrational, or even by proving to your own satisfaction that it is
perfectly fatuous. On the other hand, much science is bigoted and
intolerant, and I have found that eminent men of science have much
of the temper of an inquisitor when you are slow to accept their
conclusions. Besides, they are occasionally contradictory, and are
not free, even in the pure ether of their minds, from the passion
of advocacy. I have been in my time amused, and finally shocked,
at the conflict of scientific witnesses, even in matters which
appeared to be demonstrable. And when the doctors disagree,
and even quarrel, laissez /aire is pretty certain to re-assert itself. •

3G4 LAISSEZ FAIRE : ITS ORIGIN AND HISTORY.

There are subjects on which it is constantly alleged that the
principle of laissez /aire should be suspended or rejected, which
are, in my opinion, no way to be dealt with on such lines. But I
shall be dealing with the history of the Protectionist movement in
my next lecture.

xvn.

THE HISTOBY OF THE PROTECTIONIST MOVEMENT IN

ENGLAND.

The revival of the Protectionist cry — The aim of Protection a higher
price — The means, heavy import duties — The object of the pro-
ducer an increasingly wide market — Protection gives him a narrower
one — The effect of Protection on prices and labour — Protection and
rent — The early protective laws — The Pensionary Parliament —
The policy of retaliation — The futility of retaliation — Protection
in Europe and militarism — Protection in the United States, and
in the British colonies — Mr. Mill's defence of Protection ex-
amined.

It is difficult to approach the subject on which I purpose to lecture
this morning without a definition, and yet the definition of Pro-
tection, owing to the vague language of those who advocate this
unquestionable interference with laissez f 'aire (in what appears to be,
under all or any circumstances, the most violent invasion of human
liberty conceivable, short of slavery), renders it very difficult to
realize, and thereafter to grapple with, what its advocates intend.
Again, the very shifting ground taken by those who advocate a
reversal of the policy which this country adopted above forty years
ago, the singular abstention from the body of those who are claim-
ing a change of any persons who are acquainted with the principles
of business, the entire absence of any one from their ranks, who
can be, by the wildest stretch of imagination, supposed competent
to form a judgment on the subject, is extremely puzzling. The
leader of this new movement is a gentleman who, before he sat
in Parliament, was a superior officer in the criminal detective de-

366 THE PROTECTIONIST MOVEMENT IN ENGLAND.

partment. Mr. Howard Vincent is probably a very capable judge
of details, and I daresay was an accomplished person in his own
line. I am told that he has exercised, from his own past experience,
a power by which he knows every person in his constituency — a
rather questionable honour for them. All I know about him is,
that before he came in Parliament, he got the Home Office to pro-
pound a Bill which would have made every pawnbroker a prima
facie criminal ; a Bill which I effectually extinguished ; and when
he got into Parliament, he took on himself to move a grant for a
very deserving object. You are perhaps aware that it is contrary
to Parliamentary rule for any one but a Minister to ask Parliament
for a grant.

As, however, Mr. Howard Vincent has been among us, and has
got his associates to vote for a return to Protection, and has re-
solved to revive a controversy which we all thought dead and buried,
he therefore should be met. I purpose in the next two lectures —
on this and next Monday's — to deal with the history of Protection
up to 1846, when it received, as it deserved, its coup de grace here,
on its continuance, perhaps its extension in foreign countries and
some of our colonies ; and, in the next place, to show you how you
must interpret the tables of exports and imports, in other words,
the foreign trade of England, so as to give reality to the figures
which appear in the small annual Blue-book known as the Statis-
tical Abstract. The widespread, but at the same time extraordinary,
delusion which possesses many nations on the subject of Protec-
tion, is almost as much an ethical as it is an economical portent.
In the United States it is a widespread opinion, especially in New
England and Pennsylvania, and I am informed that a New England
or Pennsylvanian free-trader is almost a caput lupinum, a man whom
Mr. Howard Vincent, in his old capacity, would have had to take
care of, or, in technical language, to want. But in the earlier and
more pious days of New England there was a similar horror of
Quakers and witches, and the sceptic as to the supernatural wicked-
ness of these two imaginary malefactors ran the risk of a probable
tarring and feathering, and a possible hanging.

Now in our search after a definition we must always remember
that Protection is a password. When the expression is complete
it means Protection to native industry. Industry means work, and

THE REVIVAL OF THE PROTECTIONIST CRY. 367

native industry must be that of the British workman and the capi-
talist, in so far as he is a workman. But in early times, and for
the matter of that in later, as far as England was concerned, it
always meant, not a workman, who was not in the least thought
of, but a merchant and a landowner — one of whom was conceived
to be the indirect means of manning the British navy, and must
therefore be indulged with a sole market, and a monopoly of freight ;
the other, the recipient of rent, who is not, in that capacity at least,
industrious, but is merely living, without reproach, in my opinion,
as long as his receipts of rent are fair, on the industry of others, or
as he has been profanely described by an eminent and versatile
statesman, of the class " which toil not, neither do they
spin."

Now it is easy to discover what Protection does to real industry,
i.e. j to the labour of the workman with educated hands, and to
the labour of the capitalist superintendent with educated head,
respectively, either by an economical analysis, or by a historical
retrospect. "We shall be able to show what, from the condi-
tions of industry and the interchange of industrial products, must
be the effect produced on the two forms of industry by restraint
in that particular direction which Protection implies, and we shall
be able to show, from the indisputable evidence of facts, what it
always has been. There are parts of the economic theory in which
the relation of the parts is so obvious, so intimate, and so inevitable,
that they may be proved apart from facts, just as there are rela-
tions of numbers and plane figures which can be proved to exist
without the concrete objects which illustrate those numbers, and
the actual surfaces whose relations are capable of a practical test.
But for all that, the abstract is always the better for the concrete,
the principle for the fact which demonstrates the principle, the
major premiss for the minor, the universal for the particular, the
inductions of reason, for the inductions of experience. What I
propose to show is, that, taking society at large, a policy of Pro-
tection could not benefit industry, and has not ever benefited
industry, meaning by industry those on whom society depends for
its existence and the continuity of its existence. I do not say
that some individuals may not be temporarily benefited by Protec-
tion, A thief is temporarily benefited by stealing a watch, but

368 THE PEOTECTIONIST MOVEMENT IN ENGLAND.

we do not on that account give a legal status to the pickpocket,
except in the dock. A swindler is temporarily benefited by success-
fully forging a check. But we do not on that account condone
forgery. Unless Mr. Howard Vincent has entirely abandoned all
sympathy with his ancient calling, he must admit that we must
consider the general good of society, and not individual ad-
vantage.

And now to deal with the analysis of these relations. No one
will deny that what Protection aims at is to secure, by the opera-
tion of law, a higher price for certain articles which are produced,
or presumably could be produced, in the country which is invited
to adopt such a fiscal change as would heighten the price. The
object of Protection is to make articles dearer, more inaccessible,
or at any rate, to demand from the purchaser a greater sacrifice
than he would have to make, if no protective taxes were imposed.
If any one gains, it is clear that the purchaser of the article must
suffer. In the next place, to make the protection of any use at
all for the objects which it is intended to serve, it must be imposed
on articles of general consumption, that is, on those which the
poor must consume, and cannot evade by going to the place of
their origin and getting them there. For example, the American
people put a tax on the price of foreign wool and foreign cloth,
for the sake of compensating the farmers, who could not export
a pound of American wool, as no rational spinner would buy it,
and for protecting the industry of the native spinners and weavers.
The late message of the President of the United States to Congress,
says that no objection can be made to taxing luxuries. To this I
might answer, What is a luxury ? and I think it would puzzle a
dozen Presidents to give an answer. But the fact is, the system
does not tax high-class goods or rich consumers. I have crossed
the Atlantic four times, and coming and going, I have always met
people of American descent, highly patriotic citizens, who declare
that their country is superior to the rest of creation, and that their
institutions are as free and enlightened as themselves are, who
reckon that they will pay the price of their passage-ticket by the
difference at which they will buy stores at Poole's in Savile Row,
as compared with the price they will give in Broadway. I do not
mention this to advertise Mr. Poole, who is, I am told, an excellent,

THE AIMS OF PROTECTION A HIGHER PRICE. 369

but rather expensive tailor, but to show that they who admire
Protection, and defend it, are always eager to escape from it when
it comes home to their own pockets ; that what they take to their
bosoms and their hearts in the case of the labourer, the tradesman,
and the farmer in the States, they reject and evade, when it touches
a far less vital part of their own surroundings. Protection to be
of avail must be got out of the belly and back of the great mass
of consumers. There is no use in trying to protect the industry
of those who produce articles of voluntary use. You must impose
it for the advantage of those who produce articles of necessary use.
The reason lies in the two words. Consumers will stint or forego
articles of voluntary use, but they cannot those of necessary use.
I know and foresee that there is a similar difficulty about " articles
of voluntary use," that there is about " luxuries." It is hard to
define either. It is less hard to define " voluntary use " than it
is luxury. But you will see how, even though undefined, these
words make for what I am engaged on, the effect of production
on industry.

Again, there is no use in putting on small protective duties.
Every country has a natural protective duty in the cost of freight.
In some cases it is so heavy as to be prohibitive. For example,
no one would dream of importing bricks or draining tiles from
America or India. Even in an article like wheat, the cost of
freight from Chicago to London, freights being ruinously low, is
9s. a quarter. Now wheat land is ill cultivated in England which
does not produce thirty-two bushels or four quarters to an acre. But
36s. is a very large natural protection to the British farmer for an
acre's produce. I could multiply instances and tire you with them.
Whether I should convince a fair-trader is another matter, if the
instances were infinite and all cogent. If we keep in mind, then,
that protective taxes, in order to be effectual, must be of articles
necessarily used, and that they must be pretty large in order to
have the desired and reputed effect of aiding native industry, we
shall not find it difficult to conclude that the tax must be put
on what men, women, and children must all use, especially the
poor, and that the tax must be, in commercial language, stiff.
A small tax, too small to assist native industry, would be of no
use, except to the Chancellor of the Exchequer, and to those who

870 THE PEOTECTIONIST MOVEMENT IN ENGLAND.

profit by taxes, and I presume that Mr. Howard Vincent does not
want to merely increase taxes. In my opinion the distribution
of the taxes already levied, might well be put under the view of
a financial director of criminal investigation, with considerable
advantage to public morality and to the taxpayer's pocket.

Again the advocate of a policy which is the reverse of that which
has been adopted in this country for the last forty years assures
us, in solemn and prophetic language, that his expedient will
heighten profits and wages. He dilates on the land which has
gone out of cultivation, on the numbers of the unemployed, on the
stint of profits, on the decline of wages. But an inquiry has
latterly shown that the land which has gone out of some sort
of tillage or the other, is less than -00006 of the area of England
and Wales, a very low fraction. Mr. Goschen, who is not a friend
of Mr. Howard Vincent (he would belie his own income-tax returns
if he did not admit it), shows that profits, especially in incomes
between £1000 and £150 a year are increasing. The savings-
bank returns are also increasing, the average of each depositor
being rather lessened. And I should like to know a little about
the statistics of the unemployed. They are not yet forthcoming,
except in so far as I obtained a Parliamentary return of the Oxford
aud Cambridge professors. I do not much care for vague state-
ments, especially when there is a suspicion about the motives
of the vagueness. For many years, in the infancy of my researches
into English agriculture, I used to examine the reports of each
year's harvest in the Mark Lane Gazette. I dare say that I noted
^hemfor near twenty years. The report invariably stated that
the harvest was below an average. Now as such a statement,
annually repeated, constitutes an arithmetical impossibility, I
ceased to study the Mark Lane Gazette. Do not imagine that I
learned nothing from the statement. The Mark Lane Express was
a farmer's paper, and I saw that the farmers were playing at hide-
and-seek with the landlords, and that the newspaper was assisting
them in the game. You will frequently find, as you live, and get
shrewd in interpreting the second or secret meaning of what people
say, that even fictions may be instructive.

Everybody produces in the expectation of a market Sometimes
he produces more than the market will take off his hands, by mis-

PEODUCEBS DESIBE A WIDE MABKET. 371

calculation or even by necessity. He may find that he cannot sell all
he makes, and yet, for reasons familiar to men of business, must go
on making, storing goods, employing labour. He does so in hopes
that the market will sooner or later lift his stock, and in the inter-
val he tries to induce economies on production, to lessen cost, and
if he can, to lower the charge of freight. He seeks above all things
to sell, sometimes by improving the produce, sometimes by elimina-
ting middle men, sometimes by lessening some of his profit. There
is nothing which he dreads more than the risk of selling less, fof
he has, we must suppose, extensive buildings to keep in repair, ex-
pensive machinery to keep going, skilled hands to keep together.
The estimate that he makes of his business is based on the width of
the market, and his hopes that it may get wider. My late friend,
Mr. Babbage, long ago pointed out to me that the division of employ-
ments, which all economists are agreed is the most potent agency
in the diminution of cost in production, is principally aided by the
width of the market. As he is longing for a wider market, and
chafing most naturally at the artificial restraints which foreign
countries, encouraged by metaphysical economists, have put on his
market, Mr. Howard Vincent comes to him, and offers him a still
narrower market, as a priceless boon ; for, to every man out of
Bedlam, a higher price means a narrower market. There must
be something seductive in a proposal which at first sight offers
him a certain loss, in place of a possible gain.

But the fair-trader is not an absolute fool. He recognizes the
difficulty which I have referred to above, the tendency of goods in
these days of competition, of cutting prices, of imperilled, perhaps
of lessened, profits, to accumulate. He sees how serious a hindrance
hostile tariffs are to the British producer, and he dwells on the
inconvenience and wrong. He probably does not know that the
folly of British governments has made these hostile tariffs possible,
folly committed years after the free-trade policy was affirmed. Now
he says, "Levy a customs duty onforeign imports, and you will raise
prices, increase your profits, and give employment." It is just pos-
sible that the possesser of these accumulated goods might, if such a
policy were adopted, sell what he cannot sell now, though this is
far from certain. But what becomes of the continuity of industry
then and afterwards ?

372 THE PROTECTIONIST MOVEMENT IN ENGLAND.

I have told you that it is no use protecting by taxes what people
may decline to use. The serviceable or, to be more accurate, effec-
tual protection is of what they must use — food, clothing, cheap
luxuries. And the new school is candid. They want to tax food,
alleging the decline of British agriculture, which mainly means the
diminution of rents, though, as I shall show you presently, raising
corn to 60s a quarter would not necessarily raise rents. They
want to make a raid on the cupboard and the wardrobe of the
poor. But to sell agricultural and manufacturing produce at arti-
ficially high rates is not to give employment. It is not to secure
profit, for price does not guarantee one or the other. In the seven-
teenth century wheat was at an average 41s. a quarter, rent 4s. 6d.
an acre, wages of agricultural labour at first 4s., and after the
Commonwealth was established 6s. a week; artisans 6s. and 8s.
After protective duties were levied on corn with a view of improv-
ing rents, with the pretence of stimulating agriculture, the police
of labour, the justices in Quarter Sessions, strove to bring back the
two kinds of labour to the old prices. They never told the work-
men, who had no votes then, that Protection would increase wages,
nor the tenant farmer, who was also politically voiceless, that high
prices would keep up farmers' profits. They were too contemptuous
of these interests to be sophistical.

Let us now suppose that the new fiscal policy is accepted, that
taxes are put on imported food in order to assist agricultural
industry ; taxes on cotton, woollen, and linen goods, in order to
assist textile industry ; and similar imposts for similar ends im-
posed on other products reputed to be manufactures, on products
of industry, and not raw materials, though, of course, without
giving a definition of this puzzling expression, and which is really
an intermediate product — wool and flax, are as much a product of
industry as cloth and linen are, and cloth and linen are raw mate-
rials to the tailor and shirt-maker. At once the stint begins. The
labouring man gets a single loaf where he got a loaf and a half ; a
single boot where he got a pair of boots ; a coat once in two years
when he used to get it every year. He has of course, for the bread
must be got, even less power to buy a pair of boots, especially at
the enhanced price, and the coat than ever. Now the leather dealer
during the artificial inflation, has perhaps sold his stock of leather,

EFFECT OF PBOTECTION ON PBICES AND LABOUB. 373

the shoemaker his stock of boots, the cloth weaver his stock of cloth.
All want to be busy, but the market is gone, or so shrunken, that
there remains only half the old occupation for the employer and the
labourer. The army of the unemployed is doubled at a stroke, and
it is fortunate if the teacher of this new gospel, in which a possible
temporary gain is followed by a certain permanent loss, is not in-
vited again to assume his ancient functions as a director of criminal
investigation. For it is certain that if prices were trebled, and
three men were taking the wages of one man, the employer will
give no more wages than he need, be he farmer, manufacturer, shoe-
maker, tailor, builder, or indeed any one of the multitudinous
traders or employers who figure in the census. A workman does
not get wages because a trader informs him chat he will get them,
but because his labour is needed, since tnere are people ready to
buy or use what his labour produces. Employment is not of spon-
taneous growth, but is the result of definite and intelligible impulses.
Take away or curtail the impulses, and you do not stimulate employ-
ment. You might as well say, if you closed up your window
shutters in broad daylight, you would have light in your dwellings,
by some spontaneous action, independent of yourself. You would
have to put up with a candle or a lamp, to pay for it, and therefore
have less to buy other things with. But worse would come. You
would in human industry have destroyed its continuity, have
brought into irretrievable confusion the complicated, but, on the
whole, beneficent agencies of modern society, and have effectually
beggared the labourer and the capitalist employer.

There is one occasion, and one only, on which high prices will
induce higher wages. This is when there is an urgent demand for
something of which the supply is short. This generally happens
after there has been some great destruction of the products of wealth
or some prolonged suspension of ordinary industrial action. Such is
ordinarily the result of a great war, in which much property is anni-
hilated, workmen have been employed in mutual slaughter or in pro-
viding the means of mutual slaughter, but — the condition is all impor-
tant— the recuperative power of the nation or state is not seriously
impaired. Such a state of things ensued, for example, after the
civil war in America, and after the Franco-German struggle. It did
not ensue after the Thirty Years' War, after the war of the Spanish

374 TEE PBOTECTIONIST MOVEMENT IN ENGLAND.

succession, after the great Continental War, for the principal com-
batants were absolutely exhausted after the struggle. But when
such high prices prevail, protection is entirely superfluous. Native
industry has its own way, and does not need to be guided or fos-
tered. To offer protection at such a time as this, would be like
offering a strong and healthy man a pair of crutches. The offer or
suggestion of protection comes when trade is dull, stocks are accu-
mulated, profits are imperilled, and quacks talk. The acceptance
of it would make trade more dull, stocks more unsaleable, and
profits go out of the category of peril into the actuality of extinction.
It would be a small consolation for quacks to be silenced.

I have told you that exalted prices of agricultural products, due
to artificial causes, would not raise rents. They would enable
sitting farmers to get rid of their stocks, and even enable them to
pay existing rents. But they would not recover rents. For rent
is the resultant of two forces, of which one has been dwelt on
disastrously as the sole cause of rent ; the other, to which the
greater part of rent is due, has been studiously ignored. The
former is, the natural powers of the soil, judiciously used and
renovated. This source of rent was known to Pharaoh and
Nebuchadnezzar. It is commented on very properly by Herodotus,
when he describes Egypt and Mesopotamia. The latter is agri-
cultural skill, which is the capacity of the tenant. This may be
shortened, even destroyed. You can no more extemporise capitalist
farmers by artificial prices than you can, as the polite but dilatory
Frenchman thought an astronomer could, encore an eclipse. A
destroyed interest is more difficult to revive than it is to create one.
The agricultural landowners of the eighteenth century created
British agriculture. The horseracing landowners of the nine-
teenth century have destroyed it. And of all the mean things
which mischief-makers can do, none is more mean than to claim
that the rest of mankind should meekly set to work to pay them
for the mischief which they have done. It is possible that the
injury which has been done to British agriculture is not so serious
after all, as people who are smarting with the consequences of
their own folly would have us believe. But of the fall of British
rents there is no doubt. Of the recovery of them there is the
gravest doubt, for the source of them is seriously impaired. But if

PROTECTION AND BENT. 375

the capitalist employer has, in great degree, disappeared from
agriculture, what is the prospect of agricultural wages rising under
artificially enhanced rents ? Will the farmer give Hodge, from
spontaneous good nature, a shilling a week more for his work, when
he can get Hodges in plenty, because the price of corn Is doubled ?
Why, at the end of the eighteenth century, when farmers were
getting 150s. a quarter for wheat, agricultural wages were at 7s. a
week (you may read of them in Sir Frederic Eden's " History of
the Poor ") and farmers were grumbling because they had to pay
so much.

The old free-traders of forty or fifty years ago used to say that
all Protection meant robbing somebody else. The expression was
plain spoken, homespun, perhaps coarse, but it was very accurate.
The object of protection is to enhance prices. Prices are what a
man has to pay, for it is no use to enhance a price which no one
will give. But to make me or any one else pay more for what I
must have than I need pay, and to put this compulsion on me in
the interest of the third party, which is most falsely called native
industry, is as violent an invasion of my personal liberty as I can
easily conceive. I do not object that prices are heightened against
me, in order to provide funds for the administration of public
affairs, for internal and external defence, for the proper dignity of
the collectivity, which we call the United Kingdom or the empire,
though every one has the right, a right too rarely exercised, of
criticizing taxation and expenditure. But I object very strongly
to being called on to pay for one man's profits and another man's
rent, especially when I have grave doubts whether profits or rent
will be improved by these means, and I am quite sure they ought
not to be, if they could. It is bad enough to be plundered for the
best of causes, but to be plundered for the worst is more than
irritating. I might wince if my own savings, or my own harmless
enjoyments were curtailed in order to increase the wages of em-
ployed or unemployed workmen, though I might bear the calamity
with equanimity, but to have them curtailed when I am quite
certain that the process will only make the condition of labourers
worse is a good deal more than a grievance.

But it is time, especially as part of this subject is postponed
till the following lecture, that I should say something about the

376 THE PROTECTIONIST MOVEMENT IN ENGLAND.

history of that fiscal policy which was exploded some forty years
ago. And here I may observe, that the assault which Adam Smith
made on the Protectionist policy of his time was chiefly directed
against the mercantile theories of his time, and not very notably
against the landowners. "The mean and malignant sophisms
which he denounces were put out by the trading interest, who were
then the advocates of the sole-market theory, " the sneaking arts
of an underling tradesman," has only to be quoted to show its aim.
He was under the impression that the landowner was, on the
whole, high-minded and patriotic, a little too fond perhaps of
artificially cheapening labour, and possessed of an income, the
origin of which would not be well defended, after an economical
analysis, but one, who, on the whole, used his position honestly
and fairly. He was very much in the right. The great land-
owners were still engaged in the highly serviceable work of teach-
ing agriculture. Their rents were by no means extortionate.
Arthur Young, who has no words too strong for the absentee and
grasping Irish landowner, blames the excessive leniency of the
English j for though he held that a tenant farmer ought to have
adequate security, he also held, and with considerable reason, that
a fair rent was a stimulus to progressive agriculture.

A search into the early statutes would lead the student to the
discovery of many laws which were intended to assist new de-
partures in English industry. Our early kings and early parlia-
ments were really anxious to assist in the development of new
energies, and in the improvement of old ones. They encouraged
Flemings to settle in England, though curiously enough the craft
of the weaver (textor) was long a synonym for the depraved
appetite of a heretic, of one who hungered after novelties of faith,
or as the weavers themselves said, after the earlier gospel. The
Plantagenet kings, early and late, faced this risk, if haply they
might improve English textile industry. But owing, as I believe,
to the unparalleled backwardness of the English intelligence, the
expectation was baffled. Of course the prohibition of foreign
goods was more intended to discourage than to prevent their
importation. The administration must have been aware that it
could not stop smuggling. Hints occur over and over again in
accounts, that the officers of customs were by no means uncorrupt,

TEE EARLY PROTECTIVE LAWS. 377

and that a judicious present was not without its effect. Infinitely
more effectual than the preventive service of the ports were the
sumptuary laws. People who broke these laws went about with
the evidence of their offence on them. But the clothing which a
noble alone was allowed to wear was not an English product, and
therefore did not call for protection.

Protective laws in England have been of two kinds — those which
controlled the importation of foreign food in the interest of the
landowners, and those which taxed or prohibited the introduction
of foreign manufactures, in the interest of dealers or merchants,
and to some extent of manufacturers. The early policy of the
English Parliament was to favour imports of food and to check
exports. The Government had a reasonable anxiety that foreign
countries should be encouraged to make up the occasional defi-
ciencies of English harvests, and wished to preclude loss in bad
years by checking exportation. Thus in 1438, the only serious
scarcity of the fifteenth century, the administration actually forbad
the inland water carriage of corn, on the ground that occasion would
be taken if it were once on shipboard to export it. In dear times,
corn ships, putting under stress of weather into English harbours,
were bound to dispose of the whole or part of their cargo in English
markets. The laws against forestalling and regrating, *.*., buying
corn on the way to market, and selling corn in the market at
which it was bought for a higher price, were really due to a desire
on the part of the Government, to secure, as far as possible, plenty
for the consumer.

The first really important legislative Act, the object of which was
to raise rents at the expense of the consumer, and in the interest
of the rent-receiver was that of the Pensionary Parliament of
Charles IL I have referred to it before, and pointed out that it
was a failure, for shortly after the passing of the Act occur a series,
on the whole, of very cheap years, and as we learn from the
literature of the age, there followed loud laments about agricultural
distress, this being, historically, the landlords' name for cheap food.
After the Revolution the legislature granted a bounty on the
exportation of corn, an expedient which was intended to heighten
prices. As the new agriculture was developed, it had an opposite
effect. It stimulated production, for it was a premium on which

378 THE PBOTECTIONIST MOVEMENT IN ENGLAND.

the producer could speculate, and for which he would sow a larger
breadth. Exactly the same complaint is now being made in those
countries which give a bounty on beet-root sugar. The producers
are urged into producing more than the market needs, by the
chance of getting this premium on production. I doubt whether
the English refiners, who are constantly clamouring about the
bounty, have suffered so much as the continental farmers have,
who are supposed to be benefited by it. The favours of Govern-
ment are like the box of Pandora, with this important difference,
that they rarely leave hope at the bottom. During the greater part
of the eighteenth century the Corn Laws were inoperative, the
bounty, as far as the consumer was concerned, was innoxious. I
shall revert to the later history of these Corn Laws hereafter.

The growing importance of the American colonies, to the fiscal
theory of which I referred in a lecture of last term, and the
development of the sole-market project, led to the whole system of
manufacturing protection. But it is plain, from Adam Smith's
language, that the most odious part of this system was not the
manufactures which it forced on the colonists, but the restraint of
trade which the traders insisted on and extended, under successive
amendments of the Colonial Trade Acts. One thing proves this
incontestably. The American colonists smarted exceedingly under
the losses, I may say the atrocities, of the War of Independence.
But they were better customers of England after the war was over
than they were before. To be sure, the English were becoming
the weavers of the world. Their trade grew and their fortunes
with the growth. Now such people do not want protection. They
do not care for it. They would prefer free trade, because they get
a profit on both exports and imports. They were jealous of one
place only. They feared the rivalry of one country only. This
was Ireland, and they destroyed her manufactures piecemeal. Is
it not written in the English and even in the Irish Statute Book up
to 1782 ? "With this exception, the English manufacturers are, on
the whole, free-traders during these early years. At last they
became all but unanimous, enthusiastic on the subject.

The case was very different with the landowners. Land, thanks
to the experimental cultivation of the eighteenth century, was
exceedingly well tilled at the end of that century. The evidence

THE POLICY OF EETALIATION. 879

on this subject is conclusive and abundant, as one can see by
studying the country reports sent to Arthur Young, as Secretary of
the Agricultural Board. But the landowner, as a rule, ceased to be
a cultivator. Kents rose rapidly, partly owing to the generally
diffused skill of the farmers, partly to the extremely high prices of
corn, partly to the forced paper currency. Population increased in
numbers and in misery. The determination to keep up rents, by
keeping up a high price of corn, became a passion as keen as that
which is said is the appetite of a tiger who has tasted human flesh.
I lived in my youth through the time of this fury. On one side
of my household I consorted with the free-traders. On the other,
I consorted with protectionists, and heard the maledictions of both
parties. It was a battle of giants. They who were in the fray
were of very different stature and thews from the fair-traders. It
is superfluous to pursue the subject further on this occasion. In
my next lecture I shall hope to deal with what has happened to
English manufacture and trade since 1846. But there are matters
connected with the practice of other nations, referred to with
admiration by some writers and speakers, with the analysis of
which I may fittingly occupy the rest of the time which I may
claim of you.

The pleas on which a reversal, more or less complete, of our
present policy has been advocated, as far as England is concerned,
are chiefly based on the expediency of retaliation. Foreign
countries have excluded the goods of our production from their
markets. Our own colonies have done so with even greater strin-
gency. There is just so much reason in this, because these
colonists are generally producers of nothing as far as we are
concerned, except undeniably raw material, such, say as wool and
wheat, and other countries are producers of manufactures which
they want to sell ; and therefore, to adopt a policy entirely exclu-
sive, would destroy their own export trade, or at least force it into
roundabout and less profitable channels. Now these people argue,
and they are supported by a most erroneous and mischievous
utterance of Mr. J. S. Mill, that retaliatory tariffs are real
remedies against prohibitive or protectionist tariffs. " Let us
then," they say, " give these people a taste of their own doctrine.
Let us handicap them in our own country and in those countries

380 THE PEOTECTIONIST MOVEMENT IN ENGLAND.

in which the administration is still the master, for instance, in
India and the Crown colonies."

But there is a difficulty at the very beginning. The worst
offenders against us are our own kinsfolk, whom we have defended
in their infancy at our cost, and who retort on us by repudiating
all the products of our industry but our money. It is certain that
any attempt to retaliate upon them would be resented, and that the
result of the attempt would be, that the Imperial Institute and all
that it symbolizes would be shattered. It Great Britain wants to
keep such a hold as it has on Greater Britain, it must submit to
Greater Britain's £ aancial petulance. Hence the project of retali-
ation excludes the British colonies from the scheme, or revives the
old differential theory of the Colonial Empire, without securing any
compensatory restrictions. We are to buy of our colonies only, or,
on advantageous terms to them ; are to consent to other nations
buying of them as freely as we do, and those other nations permit;
and are to bear, on the hypothesis of retaliation, greater injuries
from them, with patience, serenity, and persistent consideration for
the greatness of the empire, whatever affronts they put on our
trade. Talk about one-sided free trade. That may be a calamity.
I do not dispute, but I do not exaggerate the inconvenience. But
one-sided retaliation is a most pitiful absurdity.

But Mr. Mill is wholly in the wrong. Betaliatory duties never
did and never will avail. They are essentially personal. They
are easily met by trans-shipment. Let us, for instance, meet — the
figures are a mere hypothesis — a bounty of 10 per cent, on French
refined sugar by a " countervailing duty." The French refiner
will forthwith ship his sugar to Bergen or Christiania. No sugar
is, I believe, produced from beet-root in Sweden or Norway. It is
thence trans-shipped to Hull. Now no country has ever in its fiscal
system been able to grapple with the origin of goods. It would
not be the duty, inclination, or interest of the port authorities of the
Swedish kingdom to assist us in tracing the origin of goods, and
they would assuredly resent custom-house detectives prowling
about the waters over which they have jurisdiction. Besides,
retaliation has the inconvenience of admitting that the offender is
in the right. Again, nations have never been known to revise their
tariff laws by reason of force majeure, and I doubt whether the

THE FUTILITY OF RETALIATION. 381

strongest nation could coerce the weakest in this way. Again, the
smuggler is sure to reappear in the interest of the consumer, and
with his sympathy and covert assistance. But most powerful of
all is the argument that a community which adopts a protective
system deliberately or unconsciously puts itself under a commercial
disadvantage. Every country wants to sell something, even if it
determines on buying nothing. The more completely it carries out
the latter resolve, the worse price does it make for what it wants to
sell, the more of its goods must it offer in order to make any
market at all, since, for example, it; loads itself with a double
freight in order to effect a single transaction. If it took nothing
but money, as Russia is striving to do, it would in addition, sooner
or later, depreciate by over-supply the only article which it will
accept in exchange. The country, on the other hand, which takes
its produce, gets what it buys on the easiest terms, or as Mr.
Mill says, by a happy inspiration, in marked contrast to much
which he has written on the subject of international trade, though
here he does not specify the cause, it gets articles more cheaply
than they are procurable in the country of their origin. But to
retaliate would be to lose this advantage. We do not, it is true,
sell as much as we could under the present system. But we buy
much cheaper. Retaliate, and you sell no more, and buy on far
worse terms. And as much of what is sold is raw material, in the
strictest sense of the word, which Great Britain keeps or re-exports,
to heighten the price of what you buy would be to straiten supply,
to check manufacture, and to diminish the demand for labour, and
with it wages. Even agriculture, which is always demanding Pro-
tection, and has lately affirmed it with naked selfishness, is blind
to its own interests. For a wise agriculture is that which busies
itself with its own best products. Let us conceive this to be stock-
raising. But a plentiful supply of cheap food for stock more than
compensates for the low price of the food itself, in so far as it is
produced at home.

I shall, however, I hope, in my next lecture dispose of most of
those allegations which are made for the purpose of suggesting
retaliatory measures, as I deal with details. In this lecture I am
concerned with principles. I cannot see what right any producer
has, or any landowner for the matter of that, to pretend to strike

382 THE PROTECTIONIST MOVEMENT IN ENGLAND.

at another and wound me. One of the commonest and, I may
add, one of the most impudent of fallacies is that a private interest
is a public duty. If in the competition of foreign agricultural pro-
duce, all the agricultural rent of England were to disappear, what
is that to the mass of Englishmen ? We might have to deplore the
loss of a class of men whose existence has been characterized by
lofty probity, by patriotic aims, and by unselfish devotion to the
common good, by the unvarying exhibition of public and private
virtue, by an elevating example of refined culture, of ennobling
pursuits, of passionate devotion to a lofty ideal, of a long record of
just and painstaking service, of an order so self-restrained and
faultless that no scandal has attached, early or late, to any of its
members during its historical career. But, beyond doubt, abun-
dance for those who work is better than full rents to those who
merely afford us a shining example. And if, as I have said, wheat
land is protected by the cost of freight, to the extent at least of
36s. an acre, there is something wrong in English agriculture
which no duty on corn, Mr. Chaplin's proposal, will remedy.

Europe is, I admit, increasingly protectionist. It is also in-
creasingly military. I am not clear that the waste of its
resources in one direction should make us admire it, still less
follow its example, when it wastes its resources in another direc-
tion. It is an open secret that the finances of nearly every
European Power are strained to the uttermost, and that the
margin between solvent and bankrupt exchequers is perilously
narrow. When governments are in straits for money, they may
make loans, claim a part of their subjects' property under a
direct tax on their means, or levy new customs duties. There is
a limit to the first process, though where the limit is is hard
to say, for the fact of its being reached lies in the vast region
of the unexpected, and the limit is ruin or repudiation. The
second is always unsafe, and generally unprofitable. It is especi-
ally unsafe now, for it greatly resembles the most offensive, and
to the well to do, unpopular demands of communism. Besides
the wealth which would be most conveniently attacked can seldom be
attached. When it is imperilled, it can satisfy the Scythian's
conditions of passing imperceptibly through earth, air, and
water, and so escape the Scythian's arrows. The most resolute

PROTECTION IN EUROPE. 383

and Bismarckian of financiers would think once, twice, or thrice
before he came to quarters with owners of Stock Exchange secu-
rities and bankers' balances in his own country. There must be
some warning of the intended effort, and then cantabit vacuus.

There is always in reserve a new tax on consumption. This was
nearly the whole of English finance during the terrible struggle of
the Continental War. The person who pays is helpless. He is
offered the alternative of abstinence, often the power of consuming
at a cheaper rate, an inferior home product. The payment is
almost insensible. The custom-house officer, it is true, cuts a
large slice from the loaf, weakens the coffee, lessens the supply in
the sugar basin, makes a great hole in the habiliments, and so
forth ; but he is invisible, and this is some consolation. And then
the manufacturer is to be consoled by the most agreeable combination
which can be offered him, patriotism plus profit, Taxes on food
are to be levied in aid of the farmer, and compensatory duties are
accorded to everybody, in consideration of these taxes on food.
The people are assured that they are independent of foreign nations,
and under all there is increasing misery, decreasing wages, increas-
ing discontent, increasing repression, socialism of the most menacing
kind, and an utter distrust in the providential functions of govern-
ment. The result is not encouraging. Everybody is to be benefited,
and everybody is dissatisfied, impoverished, and discontented. From
the Ural mountains to Gibraltar, Europe is seething with social
volcanoes.

The history of Protection in the States of the American Union is
entirely different. The people, though high-spirited, proud of their
country and their institutions, and resolutely determined to permit
no meddling with the northern half of the New World, are not dis-
posed to keep on foot a large army or formidable navy. They have
no mind to interfere in European politics, or ape, as they say, the
inevitable folly and extravagance of monarchical institutions, but
they are quite resolved that no one of these powers shall interfere
with them. They have, therefore, no urgent necessity for excep-
tional taxation, no excuse for an impolitic and vexatious fiscal
system. But they are none the less the victims of sophistry,
supported, it cannot be denied, by corruption and even by terrorism.
The American people pretend to be the freest nation in the world,

-384 THE PBOTECTIONIST MOVEMENT IN ENGLAND.

and they permit themselves to be fleeced and plundered by a few
interests, which dictated their own terms at a supreme crisis of the
national history, and found spokesmen and agents when the country
was aghast at the political perfidy which was visible everywhere.
The protectionist tariff of Mr. Morrill was in great part, as I have
heard alleged by eminent American statesmen, the price paid for
the allegiance of the manufacturing East. I have been told this so
unanimously and so uniformly that I cannot doubt it. I do not
conceive that these persons put, as the phrase goes, into black and
white the terms of the treaty, but many men half consciously act
on what they would be ashamed to openly avow.

There were, of course, other reasons given. The American
financiers copied the precedent of the War of Independence, and
raised their loans by a floating debt, which was funded as a paper
currency. This is, of course, a most extravagant way of creating
a debt, because it creates an over-issue of inconvertible paper,
depreciates the stock in which the debt is ultimately founded, and
necessitates in the end the concession of a prodigious premium
to the virtual lenders of the fund, the public which circulates the
notes. The greenback finally was quoted at over 250, gold being at
100. No more wasteful way of creating a debt could, I think, have
been devised than that adopted by United States Treasury. The
evil too of a forced paper currency long survived the occasion of
its issue, and numerous and shameful advantages were taken of the
situation by Wall Street gamblers, to the infinite misery of the
American working classes. The fact is now confirmed by the record
of prices.

Now how was the people to be reconciled to a tariff, which, in the
nature of things, and in accordance with the inevitable conditions
of indirect taxation, must press with far greater severity on the
pocr than on the rich ? The people was instructed that, under this
policy, the country would be self-contained, and independent of
foreign supply (though America has borrowed more in Europe
than any other country), that this policy was certain to lead to the
development of all kinds of industry, and would exhibit the varied
and versatile character of American genius, while without it, the
people would be limited to a few common pursuits, that prosperous
America, the paradise of labour, would, under a free market, bo

PBOTECTION IN TEE UNITED STATES. 385

handicapped by cheap foreign labour, by the famished slaves of
European despotism. It was necessary therefore that the better-off
workmen should be protected by protecting the employers' profits,
as though employers paid wages in proportion to their profits, and
not in proportion to the bargains which they could force upon
workmen. I remember telling my friend, Mr. Cyrus Field, when
the new tariff was passed, that before many years were over,
America would be visited with an anarchic and socialist trades
union, and the experiences at Pittsburgh and Chicago, the knights
of labour, and the followers of Mr. George, are a justification of
my prediction. The system, which has been enforced, over and
over again, by American economists and statesmen, has been
maintained by terrorism, for honest men have had to choose
between reticence on free trade and the threat of social and com-
mercial excommunication ; while corruption, not only that known
as lobbying, under which the manipulation of members of congress
has been made a fine art, but lavish and equally corrupting expen-
diture on harbours and ports, canals and the like, has been freely
practised, the excessive receipts of the treasury being freely em-
ployed in order to demoralize localities. At last, though even now
the President has not felt strong or bold enough to utter the
word, the whole question of Protection and Free Trade is made
an issue to the American Eepublic.

The action of the British Colonial Governments, who have gene-
rally adopted a Protectionist trade policy, is based on different
grounds. The advocates of the system have sometimes stated,
what does form an apology, though not a good one, for high custom
duties, that in a thinly peopled country it is difficult, if not impos-
sible, to collect direct taxes, especially from the mass of the people,
or to levy countervailing excises, and that therefore the only
remaining source of revenue is considerable customs. But if it be
hard to levy an excise, because the power of collecting it is scanty,
and the law might be evaded, it is hard to see how smuggling is
to be checked. Then the fallacy, so often exposed in these lectures
that high prices make high wages, has been industriously dissemi-
nated and insisted on. This can only happen when prices are
naturally raised in a free market, when the situation tends to in-
crease the demand for labour. It does not happen, when the rise

26

386 TEE PBOTECTIONIST MOVEMENT IN ENGLAND.

is artificially induced, because the demand for labour is not in-
creased, but if anything diminished. But their chief reliance is on
a famous passage in Mr. Mill's " Political Economy."

I am referring to a statement which will be found in book v.
chap, x., of this classical work. Mr. Mill, after stating it to be
" the only case in which, on mere principles of political economy,
protecting duties may be defensible, is when they are imposed tem-
porarily (especially in a young and rising nation), in hopes of
naturalizing a foreign industry, in itself perfectly suitable to the
circumstances of the country. The superiority of one country over
another in a branch of production often arises only from having
begun it sooner. There may be no inherent advantage on one
part, or disadvantage on the other, but only a present superiority
of acquired skill and experience. But it cannot be expected, that
individuals should, at their own risk, or rather to their certain loss,
introduce a new manufacture, and bear the burden of carrying it
on, until the producers have been educated up to the level of those
with whom the processes are traditional A protecting duty con-
tinued for a reasonable time will be sometimes the least incon-
venient mode in which the nation can tax itself for the support of
such an experiment. But the protection should be confined to
cases in which there is good ground of assurance that the industry
which it fosters will after a time be able to dispense with it ; nor
should the domestic producers ever be allowed to expect that it will
be continued to them beyond the time necessary for a fair trial of
what they are capable of producing." Perhaps there is no passage
in any work which exhibits so much ignorance of human nature,
and so much ignorance of facts.

I don't quite know what Mr. Mill means by "mere" political
economy, a term which I emphasize. What is called political
economy is true or false. If it is " mere," it is of no validity or
force. But to pass this by. In every young and rising nation there
are a number of capacities, which are as yet undeveloped, perhaps
unknown. The best way to make them known and develop them
is to let them come to the front spontaneously. The best way to
leave them unknown, and to develop them unhealthily, is to allow
Government, at the instance of individual, and probably mistaken
self-interest, to give them assistance out of people's pockets. Be-

MB. MILL'S DEFENCE OF PBOTECTION EXAMINED'. 387

sides, in what does the suitableness consist ? Is it in the circum-
stances of the country, or in the superiority, as the passage seems
to imply, of acquired skill and experience, which is the capacity of
the applicant for this qualified protection ? If the former, the cir-
cumstances will soon assert themselves ; if the latter, is the appli-
cant to be the judge of his own skill and experience, and inform
the Government, or how is the Government to put him to the test?
Sum it as one will, the situation is one in which the conditions
cannot be satisfied. On the other hand, every country has in
nearly every industry the enormous protective duty of the cost of
freight. Nor is the passage in which the writer cannot expect that
" people should at their risk or rather to their certain loss " initiate
a calling, to the purpose. Mr. Mill has evidently in his mind the
East India Company. That as a trading association was a failure,
as Mr. Mill lived to see. But there was this apology for the pro-
tection accorded to the East India Company, that the basis of
operations was ten thousand or more miles of£ In that of the pro-
tected young country the disadvantage of distance counts against
its rivals. And why should the nation tax itself for the support of
the experiment ? Why undergo a certain loss in order to force a
confessedly unprofitable industry ?

Who is to give the assurance that the industry which is fostered
will be able after a time to dispense with the protection ? Not the
applicant certainly. He never did and never will assure the country.
On the contrary, he will tell those who have been rash enough to
give him his head, "that the action of the Government has given
him," as Lord Liverpool said, " * a vested interest,' that the shock to
the industry would be fatal, that workmen would be discharged and
ruined, capital would be lost, and the latter end would be worse
than the beginning. You might have refused us a trial, if you
pleased. It is base, cruel, dishonest, to induce us to start this in-
dustry and then desert us. We may have erred in believing that a
short time would set us on our feet, but is our error to be expiated
by our ruin ? We are the creation of the State in its wisdom, do
not let us be the victims of its caprice. Mr. Mill saw the necessity
for creating us, he could not have foreseen or contemplated the ex-
pediency of destroying us." Had I lived in a country where the
State, in deference to Mr. Mill, had protected me, I think I should

388 THE PEOTECTIONIST MOVEMENT IN ENGLAND.

reason in this way, when I was threatened with the withdrawal
of the protection.

What too is a fair trial ? Is it in the judgment of the domestic
producers, or of the Government, or of a court of law ? It may be
pleaded with justice that the circumstances precluded a fair trial.
The origin of the industry was an unnatural stimulus, and you have
no right to expect a healthy life. By constituting the State as the
judge of the occasion on which an industry may be protected, you
deprive the person who prosecutes the industry of learning what are
the only natural conditions on which he may practice his industry
with success. You blind him, and ultimately insist on his exer-
cising the function of sight. The fact is the whole passage is
metaphysics, mere political economy, very bad metaphysics, and no
political economy at all.

XVIII.

THE INTERPRETATION OF EXPORT AND IMPORT TABLES.

The present subject dull and difficult, but important — Alarms about
exports and imports — Causes of the decline of nations — Effects
of debts on exports and imports — Effects of the cost of freight —
Customs and bonded warehouses — Walpole's scheme — Re-exports
and their effects — The United States, and the figures of its trade
with the United Kingdom — The trade of France — The business
of warehousemen — Fallacies derived from comparative figures —
Alarmist fallacies — The case of leather, and the lecturer's analysis
of the trade.

You may naturally anticipate that, in dealing with the topic which
forms the subject of my lecture this morning, I am inviting you to
consider the most unattractive and dreary of social facts. Here,
you may say, are the relations of political communities condensed
into a set of figures, which may interest merchants, financiers,
statesmen, politicians, because they are obliged to get up their
subject, or at least pretend to have got it up. But it must be
possible to learn the economical relations in which divers peoples
stand to each other, the principles and practice of exchange, the
mutual interdependence of different countries, without demanding
that one should analyze the national ledger, and to see how
exports and imports are balanced against each other. The
information is for the expert, not for the student of economical
forces. There is, I cannot deny it, some ground for these objec-
tions. But there are far stronger reasons why I ask you, if not
to undertake the criticism of a particular set of figures, such as,
for instance, the Blue-book which is before me, the Statistical

390 INTEBPBETATION OF EXPORT AND IMPORT TABLES.

Abstract for 1885 ; at least to understand, in order to refute or be
proof against the popular fallacies which are frequently uttered
about such statements, what, in this concrete form of the volume
of foreign trade which this country undertakes, are the facts and
principles which must be before you in order to understand any
such publication. For, after all, in these figures, and in the
interpretation of them, lies the very essence of practical
economics. Here is the picture in little of British activity, in so
far as it is concentrated in the United Kingdom, and has within a
couple of generations become the most extensive creditor of foreign
communities that has ever been known, and thereby has become
the centre of trade transactions with the world.

I once asked a Parliamentary friend of mine, Lord Eothschild,
whether certain speculative stocks were not held extensively on two
of the most active of the foreign bourses, Paris and Berlin, and I
instanced Egyptians and Suez Canal shares. He told me that in
his opinion, by far the largest part of these stocks were held in the
United Kingdom. I asked him how he came to the conclusion,
and he replied, that if an extensive order was given to purchase
in either of these securities in Berlin or Frankfort or Paris, say
£100,000, no broker in these cities would undertake the com-
mission at a price, for some hours, that is, till he had telegraphed
to London, and received a reply. I was a good deal struck with his
statement, and admitted that there was great force in it. But it
does not seem to me to be a quite conclusive inference. The fact
seems to me to point quite as much to what I have already referred
to, that as Great Britain is a centre to which merchantable goods
are transmitted, and in which they are purchased, so, even if a
stock were not procurable in plenty on the London Exchange, it
would be highly expedient to get a price from thence, because a
price in a central mart is the best price which can be got any-
where, and because, for reasons which I will give you later on, the
London Exchange has a power of attracting both goods and
securities to an extent and rapidity which is possessed by no other
analogous institution.

The exports and imports of England, then, after 1706, of Great
Britain, and since 1800, of the United Kingdom, have been an
object of great curiosity, and not a little concern to economists and

ALARMS ABOUT EXPORTS AND IMPORTS. 391

statesmen, the latter having learned from the former, very slowly
and with great hesitation, what is the interpretation whioh should
be given to them. Now from the very first it was seen that the
exports must pay for the imports, though in early times, under the
theory of the balance of bargain, and by the machinery of the
king's exchanger, persistent attempts were made to secure that this
country should deiive a money profit on the aggregate of the
country's commercial transactions. I described to you in an earlier
lecture on metallic currencies how futile the attempt was, and
how it was inevitably baffled in the interests of trade. But though
every merchant saw that as far as he was concerned, the vital
object was to get a balance of profit, and quite a subordinate and
temporary matter to secure a balance of cash, the dread that we
should be drained of all our money by an adverse balance of
trade, as it was conceived to be, affected merchants collectively,
and led, after the old mechanism was abandoned, governments to
adopt, and merchants to sanction, various expedients for securing
that to the mass of trade which individual traders saw would
be mischievous or injurious in each individual trade. It is, as it
was, and I fear as it will be, very hard to induce people to see
that what their experience has proved to be prudent in their own
case, is prudent for the whole country ; and it appears that this
is as inveterate an error as the far more mischievous fallacy,
that on which I have already commented, and shall often need
to comment, that a private advantage should be assisted by
government help at the expense of the great body of the
nation.

As long as the trade of England was confined to the Baltic
and the French coast, and subsequently extended to Seville, no
serious attempt was made to examine the real principles which
underlie the balance of trade doctrine. I have little doubt that
the reason lies in the individual evasion of that which was still
conceived to be collectively sound. But with the development of
the trade with the East the difficulty at once arose. It was plain,
and could not be denied, that the export of silver was essential to
any trade at all with the East Indies. India has been engaged
for centuries in importing silver, this not being a produce of the
peninsula. Besides there was nothing produced in England which

392 INTERPRETATION OF EXPORT AND IMPORT TABLES.

could be exchanged against the coveted produce of the East. It was
necessary that permission should be given to export silver, and the
concession was justified on the ground that the exchange of Eastern
produce would bring back into the country far more silver than the
ships took away. But this argument would be equally valid in
favour of permitting the free circulation of money between all
countries which trade together, for trade is undertaken with a
view to profit ; and money is the instrument by which trade is
measured, and just as in a progressive community no more money
is kept than is necessary for the wants of commerce, internal and
external, so no country which is not declining ever finds itself at
a loss to procure all the money which it needs for its mercantile
transactions. But though the government of the seventeenth and
eighteenth centuries were ready to allow the minor premiss in
their syllogism when India was in their minds, they shrunk from
acsepting the major premiss, and from allowing the consequences
of permitting mercantile money to be fluid, a principle of trade
which Oresme saw to be fundamental as early as the fourteenth
century, and Roger North in the seventeenth. And so people
went on speculating on imports and exports, and wondering when
the collapse would come, which was evidently impending as long
as the country imported more in return than it exported. The
shrewdest men were alarmed at the risks of an adverse balance of
trade, and no doubt many of the protective laws on the English
Statute Book were enacted originally, not so much for the purpose
of sustaining particular interests at the public cost, or the public
loss, but in order to obviate what they honestly thought to be an
impending danger. It may be doubted whether the alarm at a
depletion of money is even now an extinct delusion. Of late years
I would fain hope ignorantly, the old doctrine of the balance of
trade has, it appears, taken possession of some people's minds, or
what is called their minds.

A nation, like an individual, can spend more than it earns. It
often does so, through the action of its government, in this case,
collectively. It cannot do so, by the whole number of its people,
distributively, else it would exhaust itself. If some people in a
community are wasteful, others who are not wasteful get the pro-
duct of their waste. I do not mean to say that a nation may not

CAUSES OF THE DECLINE OF NATIONS. 393

decline from opulence to poverty, even to nothingness. Many
parts of the earth were once occupied by rich and industrious
peoples which are now wholly waste. Such a decline may come
from the effect of a destructive conquest, of long and ruinous wars.
But in almost all cases, the ruin of a race is the fault of its govern-
ment. The exigencies of society, perhaps its weakness, compel
nations to have governments. Men should be eternally on the
watch against them as Mr. Mill argues. Nations will not ruin
themselves, said Adam Smith, but governments may ruin them.
If a nation through this agency spends more than it can earn, it
inevitably begins to decline, and if the process goes on too far the
nation is exhausted and perishes. This happened, it appears, with
whole districts of the Eoman Empire. The military government
of Rome spent the resources of its subjects, and wide parts of the
world became desolate. I will not say that spectacles of this kind
will never be seen again, of nations perishing by the vices of those
who administer its affairs. But such a consummation is not dis-
played in the exports and imports of a people, for the very signifi-
cant reason that the process I have referred to leaves the mise-
rable community nothing wherewith to traffic, every energy
remaining being devoted towards the mere sustentation of life in a
declining population. In modern times, the malevolence of a
government rarely goes further than to arrest the natural progress of
a people.

There are occasions in which a government spends, not more
than perhaps its people could pay, but more than it is politic to
exact. In such a case it borrows. It may borrow, as has been
done in England, from its own people, that is, from those whom in
theory it might tax, but does not think it would be wise or just to
put to such sacrifices. Or it may borrow from other people, where
there are large stocks of accumulated capital in existence, the
owners of which can be induced to part with their property on con-
dition of the borrowing government paying interest on the loan.
Governments may borrow for the purpose of carrying on a war, or
of defending themselves against aggression. The government
generally asserts that it is the latter motive which influences it,
when every one sees that it is the former. Whether their subjects
or citizens see it or not, governments generally, almost invariably,

394 INTEBPBETATION OF EXPOBT AND IMPOBT TABLES.

avow it so persistently or savagely, that their subjects are brought
to agree with them. Or they may — as is constantly done in new and
thriving communities, where there is plenty of use for all the capital
which the country has, with a good profit — borrow in order to
develop the public works which are a great assistance to the
employment of such capital as they do possess. In such countries,
to borrow from their own people would be to cripple themselves,
and to procure what they want on far less advantageous terms than
they may, if their credit is good and the security stable, in other
countries. This is the way in which most of our colonies have
borrowed of us for their public works, railways, docks, harbours,
and the like. Now it will be plain that in all these cases, the future
earnings of the people are pledged to pay interest on the past out-
lay of the government. I say earnings, for we know by this time,
that all wealth is the product of capital and labour, though in the
distribution of that which is earned, others besides the capitalist
and labourer are sure to share. Such is the origin of public debts.
You will see that they are represented by very different present facts.
In most cases and in old countries, there is nothing to show for the
debt, in the shaj>e of property. In some, especially in new coun-
tries, there may be very solid and valuable assets, the value of
which may be increasing. But in every case the country which
holds the debt is supposed to obtain interest on it. The amount of
foreign debt held in England is enormous. In Stock Exchange
securities there are said to be two thousand millions, known or
ticketed as English property. But this by no means exhausts the
debts owed to people who live or accumulate in the United Kingdom.
English capital has gone over the whole world. English houses of
business are settled in most countries, and the profits due from them
are part of the indebtedness, which has to be annually paid. You
will see, then, that every year a vast amount of cash or property
has to be imported into England to pay the annual charge of
foreign debt held here.

Now let us see how this affects imports and exports. There is,
we may be sure, quite apart from the operations which I have
described, a certain amount of trade going on between England and
another country, say, for instance, cloth of English make to
Australia, wool of Australian growth to England. If this were the

EFFECTS OF DEBTS ON EXPOBTS AND IMPOBTS. 395

only business going on, these two articles would infallibly, what-
ever the figures may allege, of which presently, balance each
other, i.e., the English cloth and the Australian wool are an equation,
for otherwise trade is inconceivable. But the effect of these borrow-
ings and payments of interest creates an apparent confusion. The
loan is not paid in money, but in goods ; for it is to the interest
of both parties that it should take the latter form, since both the
producer and exporter and the consumer and importer get a profit
from the transaction. Now if many such loans are made in a short
space of time, the volume of exports is greatly increased, the pro-
duction of the exporting country is greatly stimulated, and trade is
exceedingly active. Such, for example, were the exports of England
to America after the Civil War, and to France after the Franco-
German war, when, as was said by Mr. Gladstone, trade progressed
by leaps and bounds. Goods went out and debts came back, for
whenever the expenditure of a country exceeds its production, it
takes goods and export securities. Now the goods appear in the
exports, the securities do not appear in the imports. Hence the
appearances are all on the side of the country whose trade has been
so stimulated. Y/hen you look below the surface, you will find, as
I have shown you, that the country has been giving away its
property, for pieces of paper on which the indebtedness of the other
country is expressed. These securities are of course transferred
from those who received them in payment of their goods to those
who accept them as investments.

But in course of time, especially in the case of a country which
goes on lending, as this country has done for a long series of years,
the interest payable on these loans exceeds all the new loans which
are made in any one year. Thus if the rate of interest on the loans
I spoke of is 4 per cent., the annual interest is 80 millions, and
to this we may add 20 millions more for profit on investments
which do not pass through the Stock Exchange. Now 100
millions sterling would be a vast sum to lend every year. Sup-
pose the loans cease, because the colonists and foreigners do not
want to borrow any more, or our people do not feel inclined to
lend. The valuing of what I may call natural exports and imports
remains unchanged, but the latter is swollen by the compulsory
imports which are sent to this country in payment of interest, for,

39G INTEEPBETATION OF EXPORT AND IMPORT TABLES.

as before, the payment is not made in money, but in goods. To
find fault with its appearance in what people call the national
balance sheet of industry and trade, is to find fault with the debtors
of the country for paying the interest on their debt which they
agreed to pay, and to adopt any means which would put a hin-
drance or a stopper on these exports is to provoke the debtor into
repudiating his debt, because the creditor country has thought
proper to make it difficult for him to pay it. "Wherever any country
is a large foreign creditor, and the dividends on the debt which it
holds are paid punctually by its creditors, its imports will greatly
exceed its exports, for these exceptional imports represent the divi-
dends which it has to receive. The quantity of imports is heigh-
tened if the dividends are due from non-productive debts, for here
the imports are of the profits only made on the goods sent, whereas
when the dividends come from productive debts, the profit paid on
the investment in the borrowing country is included in the payment,
and may or does represent the whole value of the goods. You will
see, therefore, that a vast excess of imports over exports does not
mean that the country is spending more than it receives, but
just the contrary, receiving more than it spends, and receiving
it, as I shall take occasion to show, in the most advantageous
manner.

There are, to be sure, occasions, I have already stated what they
are, in which a country is spending more than it earns or produces.
But the evidence of this is always being made clear to those quick-
witted people whose business it is to explain the movements of
Stock Exchange property. Such a country exports securities, or,
as some people say, throws them on the market, where they do not
generally experience very favourable treatment, for the operation
is invariably followed by a fall in their market value. Now, it is
perfectly certain that English holders are not doing this. There
is plenty of loanable money in England, rather too much, as people
desiring to invest will pathetically tell you, when they can only
get a low rate on sound investments. For though the rate of
discount and the rate of interest are not influenced by the same
causes, they are parts of the same aggregate, and what persistently
affects the one is sure, in the long run, to affect the other. Be-
sides, if there were a strong desire to part with some of these in-

EFFECTS OF THE COST OF FBEIGET. 397

vestments, and to thereupon export them, they would be exported
in exchange for other investments which are more sound or other-
wise more attractive.

But there is a further fact below these returns of exports and im-
ports which cannot be exhibited, but must be recognized. When an
article is imported into London its value is declared, and I will as-
sume, for the sake of argument, accurately declared, at the port of
entry. "When an article is exported from London its Value is de-
clared at the port of exit. Now, in the first case, the import, its cost
of carriage or freight, is included. But in the other, the export,
the cost of freight is not included, for it is not yet defrayed.
Hence the value of the imports is always increased by freight, that
of exports lessened, as far as freight is concerned. The freight
must be included in the import, for it is part of the cost. But in
the export, it is expected that the market of destination will pay
the cost, and in the end it does so, else the trade would not be
worth having. This addition to values is called by Mr. Giffen,
very felicitously, the invisible export and import. In an earlier
lecture, I took a hypothetical figure, 10 per cent, all round, as
representing the cost of freight. I find that it has recently been
calculated, by different persons, of high eminence in such esti-
mates, at from 11 to 15 per cent. Now, in interpreting the
relation of exports and imports, this addition to value which
does not appear, except on analysis, is of great significance, and
must be reckoned. If it represented foreign shipping, or freight
earned by foreigners, it would still appear in the article which has
been shipped, but the profit contained in the price would be ap-
propriated by foreign capitalists. As it is, the shipping owned by
British capitalists is 70 per cent, of that engaged in the carry-
ing trade, despite foreign Navigation Acts, and is therefore a British
asset in the volume of exports and imports, not the less real because
it is invisible.

But there is a further item in the account which needs explana-
tion. I have already stated, that owing to its free- trade policy,
this country, excepting some half-dozen items, is a free port.
Owing to its prodigious mercantile operations, it is the market
which gives the price, and the market that gives the price attracts
the dealer. But if the dealer is attracted the commodity dealt in

398 INTEBPEETATION OF EXPORT AND IMPORT TABLES.

is attracted. Furthermore, even in those articles which are liable
to duty, the system of bonding warehouses is so perfect and so
easy, that the United Kingdom, even for duty paying and excise-
able articles, is virtually a free port. I ought perhaps, however,
as you cannot be supposed to be conversant with the mechanism
of trade, to say a little about the warehousing system.

In old times, all goods imported and exported equally paid cus-
toms. The system probably arose from the theory, that the king
by virtue of his position as commander-in-chief of the national
forces was under the duty of defending the narrow seas, and,
indeed, English commerce wherever it went. In time, the cus-
toms became part of the private revenue of the Crown, and the
duty of maritime defence was imposed on the Cinque Ports, then
on the whole mercantile marine of the kingdom, and by ship-money
on the inland counties. The reason for this extended impost was
plausible, and had the tax possessed a lawful origin, conclusive ;
for if a country is to have any trade at all, there must be a police
of the seas. So clearly is this recognized, that there is no part of
the law of nations more indisputable than the dictum that piracy
is an offence, not only against the person who is plundered, but
against civilization in general, every state by the law of nations
being entitled to attack, capture, and punish pirates on the high
seas. But the English were very slow to accept a principle which
accorded ill with their practice. As I have often stated, our early
maritime heroes were all pirates, and even after the government
determined on putting down the practice, and actually hanged a
number of adventurers who became a scandal to it, mainly because
they had originally been sent out by government, and had been
old-fashioned enough to strain their commission ; even after this, I
say, a preliminary apprenticeship in this lucrative and invigorating
business was no bar to the subsequent employment of a buccaneer,
who had abandoned his special calling, in Church and State.

It was very difficult to get rid of customs on exports. Nations,
like individuals, overrate their own importance, and the import-
ance of their own doings, and are apt to conclude that when a
foreign trader wishes to do business, he represents a foreign neces-
sity, instead of a prospect of making a profit. Besides, there had
been a time, long remembered, in which the demand was a ne-

CUSTOMS AND BONDED WABEHOUSES. 899

cessity, and England could carry on a war with a wool tax, which
the consuming country paid. Nothing is harder to persuade cer-
tain governments than that they do themselves mischief by levying
export duties. Again, it was the object of government to naturalize
manufactures in England. They saw clearly enough that a dozen
pounds of cloth was worth several times over a dozen pounds of
wool, and a prohibitive duty on the export of wool seemed the best
way of stimulating the home manufacture of cloth. An export
duty, therefore, seemed to be a form of patriotism, and it is almost
impossible to reckon up the list of crimes and follies which have
been committed under the plea of patriotism. And, lastly, it was,
and had been, from the earliest times, a branch of the revenue. Now,
it is true that the management of the revenue has been under-
taken by the Parliament. But the fiction of the king's taxes seemed
to imply a kind of property in these imposts, and more reasonably,
it was seen that if one branch of revenue be remitted, another, and
a new tax, must be put in its place.

Walpole, George the Second's great finance minister for nearly a
quarter of a century, saw that if he could establish a system, under
which foreign duty-paying goods could be put under lock and key,
and, for the matter of that, exciseable home products as well, the
duty and excise being paid only when the articles were taken out
for consumption, he would save the pockets of the consumers of
goods in Great Britain, and do a great deal towards making this
country a free port for all produce, for he contemplated allowing
these foreign goods to go out free of customs. But Walpole, like
other statesmen of very comprehensive views, had a good many
enemies, who were discontented with his ascendancy, and when he
propounded his new Excise and Customs Bill, these enemies found
their opportunity. They wanted a pretext for humbling him, and
if he had brought forward the Ten Commandments, they would have
tried to raise an outcry against them. The great London mer-
chants were under the impression that if the warehousing system
were permitted, persons of small capitals would become their rivals
in business, as they would be relieved of the necessity of paying
duties at the moment of importation, and could, therefore, carry
on business with less cash. Walpole, who loved office more than
he did financial good sense, when the retention of the one and the

400 INTERPRETATION OF EXPORT AND IMPORT TABLES.

exhibition of the other, were incompatible, yielded to the clamour.
In the same way the younger Pitt sacrificed financial justice to
office, when he yielded to the country gentlemen on the legacy
duties. Perhaps statesmen may be pardoned for considering them-
selves to be a necessity. It is not in human nature to resist the
flattery which assures them that they are.

I have no doubt that had Walpole's project succeeded, his
policy would have been identified with the rapid progress of
English commerce. Like every financial expedient of the time,
the idea of bonding goods was derived from the practice of the
Dutch, in the days of their commercial prosperity. But by
this time the Prussian and the British monarchy were doing
their very best to ruin Dutch trade, Dutch credit, and Dutch
finance. At last they succeeded, to the disgrace of both countries.
But even if the scheme had been adopted, people were still so
stupid that they believed that the only prosperous trade was one in
which the visible sum of exports exceeded in value the visible sum
of imports, i.e., that people are prospering when they give more in
value than they receive. There are such people in existence even
now. Mr. Giffen, in his excellent essays on finance, states that
he read an alarmist calculation in which the writer, having counted
up the difference between exports and imports for twenty years,
came to the conclusion that the English nation had run into debt
with foreigners to the extent of 1,000 millions, and that ruin was
imminent. The writer was not aware, of course, that during this
time England had been constantly lending, and not borrowing, and
that, were this terrible process of debt going on, there would have
been daily evidence of it on the Stock Exchange. You are now
aware that if a community has credit enough to get into debt, and
cannot pay in goods, it pays by the export of securities, i.e., by
pledges to liquidate indebtedness at a future date. We in England
have, however, been constantly importing securities.

Now a considerable quantity of what we import we export again.
This country has become, for reasons which I hope that I have
made plain, a great entrepot for foreign products, particularly for
raw materials, by which I mean such products as are not available
for consumption. For instance, we export an enormous amount
of cotton to other countries, apart from what we consume our-

RE-EXPOBTS AND THEIR EFFECTS. 401

selves. A trader will deal in anything from which he can get a
profit, and naturally seeks the market in which he knows that
prices are most exactly defined, and from which, therefore, he can
best anticipate his profit. This was the case at Amsterdam two
centuries ago; it is the case with London now, and not only
London, but with many other great centres of trade in the United
Kingdom. Besides, not a little of the imports are absorbed in
that invisible reservoir of the mercantile marine — ships want
stores, provisions, and a njimber of other conveniences. It is
reckoned that the annual cost of a vessel is about £13 12s. per ton
of freight capacity, and Mr. Giffen reckons that the mercantile
marine of this country earns some 80 millions annually by
freights. This sum is added to the value of the imports, but is
not discerned in the exports. It appears in them when they are
landed at their destination.

It will now be convenient to illustrate What I have said by a few
figures, extracted from a single year of trade. I will take the year
1885, the return for which happens to be before me. The imports
for this year are valued at £376,967,955. The exports of produce,
British and Irish, are valued in this year at £213,044,500. There-
exports of foreign and colonial produce for the same year are
valued at £58,359,194. So there appears to be £318,608,761,
bought with £213,044,500, and there remains £105,564,261 to be
accounted for. But you will see that, in the first place, one must
take from the imports all the cost of freight. At 18 per cent,
this leaves £56,558,418, with which to explain the interest on debts
held in the United Kingdom, and due annually from foreign
countries.

I do not pretend to say that I have given you an exact analysis
of the figures which were presented to Parliament and the public
as illustrating the foreign trade of Great Britain in 1885, the
returns of which is over 590 millions, for the values are only
declared. They rest entirely on the authority of the importers,
and as our customs duties are not ad valorem, there is no motive
for the importer to understate this value, but, on the contrary,
there are motives for exaggerating it. For example, some years
ago there was a very active trade between this country and
Hamburgh, in shipments of sherry from that port. I do not

27

402 INTEBPBETATION OF EXPORT AND IMPORT TABLES.

know whether the trade still exists, but the attention of the Custom
House was called to this strange trans-shipment of Spanish wine
from a port in the German Ocean. Further inquiry led to the dis-
covery that, whatever the origin of the liquid might be, it was not
Spain, and, in brief, the article was manufactured at Hamburgh,
from materials in which the grape was not included. Now if the
imitative and enterprising Teuton who hoped to find a market for
this abomination among the too-confiding Britons entered his
product, as he was obliged to do, he would certainly give a value
to the article which the facts would not justify, and experience
would not confirm. I give one instance ; I might cite many. But,
on the other hand, there is every motive for not exaggerating the
value of the exports, for under the protective tariffs of foreign
countries ad valorem taxes are general, I had almost said universal ;
and in accordance with this system, and in order to prevent under-
valuations, Custom HouSe officers, for example, in the United
States, are empowered in the case of goods imported, on which an
ad valorem duty is imposed, to elect, if they should see fit, to
purchase the article at the owner's valuation.

Again the imports are those of a year from January 1st to
December 31st. But it by no means follows that they represent
consumable commodities within that year. There are stocks of
goods which do not deteriorate with keeping, some which improve
by time, some which ultimately represent, when they are ex-
changed, a different value from that which was declared at the
port of entry. This may arise from an over-estimate of that which
the dealer has to sell. This over-estimate may be in the thing
itself, or in the turn of the market. In short, the estimate of
imports is far more liable to exaggeration in value than that of
exports is. This is particularly the case with raw materials, of
which, as is inevitable, a very large proportion of the imports is
composed. Besides, you will see that the debtor country is much
more obliged to sell than the creditor country is obliged to buy. I
should be very much surprised, supposing one compared the
declared value of imports with the prices current of the articles so
valued, if it were not found that these registers of business done
would show less figures than are given as their value. Such an
examination would be very laborious, and to me, at least, who

THE UNITED STATES FIGUBES. 403

know the facts, would be superfluous. It is sufficient for us to
know that these elements of dubiety do exist, and why they
exist.

The country which has the largest exports is the United States.
To the United Kingdom, in 1885, it exported in value nearly 87
millions, and imported in value 31 millions. In some years the
discrepancy is far more considerable. Now for not a little of this
produce the United Kingdom is only a temporary port, the
commodities purchased being trans-shipped and distributed by
traders in this country, and by foreign visitors to our markets.
The commodities which we receive from the States are chiefly raw
materials, strictly so called, and among them cotton, corn, and
preserved provisions, for food is the raw material of labour.
Comparatively few manufactured articles, and those mainly of
cheap and ordinary construction, reach us from them. Now how
is this discrepancy explained ? But before proceeding to this, I
should observe that it is the custom in America, as would be
natural under ad valorem duties, to value the articles at the port of
departure, and not at their arrival. Hence the American imports
do not, like ours, imply, but disclaim the cost of carriage, and
therefore, as a question of balance, the 31 millions should be in-
creased by this item. The United States do not tax freight. But
to give the solution of these figures, on the lines which I have
already indicated, and by the facts of the case. In the first place,
the citizens of the United States annually expend a large sum of
money in travelling abroad. There is a considerable American
colony constantly resident in Europe, and drawing on the States
for their expenditure. There is, every year, a perfect host of
migratory Americans in Europe, and especially in the United
Kingdom, looking up the old country. It is reckoned that the ex-
penditure of such persons is not less than from 10 millions to 15
millions in excess of what Europeans expend in travelling about
America. Then, as is the case with new and growing countries,
there is a prodigious amount of interest due from the States to
British investors, and one may also add a vast amount of money
annually sent by the American Irish to their kinsfolk in Ireland
itself. In every country which progresses rapidly, which adopts
expensive means for expediting intercourse between distant parts

404 INTERPRETATION OF EXPORT AND IMPORT TABLES.

of the same political union, and does so wisely, if it can afford it,
enormous debts are necessarily and indeed advantageously incurred.
It is said that America has reduced her indebtedness abroad.
Undoubtedly she has as regards her public debt, which under the
banking system of the country is made the basis of the paper
issues, and is therefore held by bankers only in the States, but the
loans created in the United Kingdom and held here are enormous.
If we take these two particulars into consideration, we can easily
see how a difference of 50 millions is accounted for, by the
expenditure of foreign travel and the payment of interest on
loans.

Such evidence as is forthcoming on the position of France leads
to the conclusion that the people not only save, but in some degree
invest in foreign securities, not indeed to the extent which they
seem to indicate by their protestations, but sufficiently for my
inference. But the curious fact about the French balance-sheet is
the singular oscillation which there is in the exports and imports
of the country. From 1862 to 1865 inclusive, the exports were
greatly in excess of the imports ; from 1866 to 1871 the reverse
phenomenon was exhibited ; in 1872 and 1873 the exports were
again in excess ; and since that year the ordinary course of trade
has been exhibited, under which the imports exceed the exports.
But the difference is slight. In the first place, the shipping of
France is very small, for it is only in tonnage a fifteenth of the
British amount. But no country which depends for its carrying
trade on other nations can show a large margin of imports over
exports, unless indeed it is an extensive creditor of other nations.
But I must not weary you with details ; my object is to show you
what are the principles which you must have before you in inter-
preting export and import tables, and what are the grounds on
which you will hesitate before you accept superficial interpretations.
I will, for the rest of this lecture, point out what are the errors
into which people are apt to tall, who for no worse motive than
alarm, err in interpreting the facts, and a few practical inferences
from the facts.

In an earlier part of this lecture I mentioned that the system of
bonded warehouses had a considerable significance in making the
United Kingdom a free port or market. A bonded warehouse belongs

THE TRADE OF FBANCE. 405

to an individual, to partners, or to a company. The owner or owners
store goods which are liable to duties at a rent, and are under
government inspection. The keys of the warehouses are distributed
among the owners and the government officials, so as to make a
simultaneous visit of the owners and the revenue officer necessary
when goods liable to duty go out. I know that the system works
well, that there is neither smuggling nor pilfering from these ware-
houses, in which the government license is a notable addition to
the value of the premises. Nowa few years ago, at the end of a
session, the government introduced what is technically called an
omnibus Bill, one which makes amendments in existing statutes,
mainly in procedure, a.<*d at the instance of the departments. Now
I have, I hope not uncharitably, a profound distrust of the per-
manent officials in London, in Edinburgh, and even in Dublin, and
I always examined omnibus Bills. I soon found out that there
were certain alterations introduced into the bonding system which
would infallibly destroy the property of these warehousemen, so
as at least to discourage them from housing dutiable goods. I
warned them of their danger. They were no political friends of
mine, I must confess. But I became the Good Samaritan, and
took care of them. I do not say that they did me a wrong,
but I am sure that I did them a service, for I compelled the
Treasury to throw overboard its subordinates in name, its masters
in fact.

I have indeed adverted to some of these errors, the misconcep-
tion as to the place which freight bears in declared values ; the
necessity there is, if the figures are accurate, for recognizing that,
if profit is to follow trade, the exports must ordinarily be below the
imports ; and the importance of allowing in the imports what is due
to the liquidation of interest on debt. But there are other fallacies
into which the indiscreet manipulation of figures may lead one.
We may think, for instance, that because a country is always
exporting much more than its imports, tbat it may be engaged in
a losing trade, or that because the volume of exports and imports is
a higher percentage in one country than another, that the progress
of the former country is more rapid than that of the latter. Or,
again, we may be confronted with the fact that, in appearance at
least, we are losing part of our supremacy in manufactures, and

406 INTERPRETATION OF EXPORT AND IMPORT TABLES.

therefore run th« risk of a decline in our industrial eminence ; we
may be pressed by the citation of details ; we may even find some
paltry and easily-interpreted fact made the ground on which to
urge national action or a fundamental fiscal change.

Let us eliminate from the declared value of exports and imports
that which is to be ascribed in the latter to the liquidation of
interest on debt, that which must be assigned to the cost of freight,
that which has to be deducted in consequence of a different custom,
due to traditional as well as fiscal reasons, in the valuations
assigned to goods in different countries, and let us also discount
the motives which might lead people in England, for instance, to
heighten the value of that which they import, on paper at least,
whatever may ensue on the market when they sell. To these we
may add, as disturbing causes, the inclination which people have
to make a sacrifice in order to gain a footing. Traders know that
a large business on a small profit is better than a small business on
a large profit. I have been told that the great business which Mr.
Whitely has established makes only 5 per cent, on a turnover of a
million. Now part of the machinery by which people make busi-
ness, in the hope of establishing a wide connection, and of associat-
ing the habit of customers or the fashion of the public with their
undertakings, is to incur a certain present loss, with a view to
future gain, for example, to advertise extensively, to pay large
rents for the opportunity of display, and the like. I have heard, on
the best authority, that Bradford light woollens were being sup-
planted by French articles, because the Bradford manufacturers
clung tenaciously to obsolete fashions and materials. Now, in such
a case, a Protectionist country has a peculiar advantage, for the
producers of such a country can press the sale of their goods at an
apparent loss, and reimburse themselves by heightening prices,
and lowering wages, at the expense of the consumer and the work-
men in the country where they carry on their manufacturing
operations.

After all these deductions are made from the aggregate of imports,
every country which has by course of time become fully settled,
and in which a variety of operations are naturally and necessarily
— not artificially — carried on, will exhibit an excess of imports.
The difference is due, a fair return being made of prices, to the

FALLACIES DEBIVED FROM COMPARATIVE FIGURES. 407

profit which the traders make in their business. Let me illustrate
what I mean in common life. A trader, say a grocer, carries on
his business with his own capital, on his own premises, and with-
out the assistance of a loan, directly or indirectly, from any one.
He exports his capital. It passes away from him in the purchase
of goods. He imports the goods. But in the nature of things,
the goods which he buys as a trader figure in his mind, if they
do not in his books, at a higher rate than that which they cost
him, else he would be carrying on his business at no profit, but a
loss. He intends in the very nature of things that his imports
shall be worth more than his exports, and the higher he can make
their value, the more is the profit which he contemplates and, I will
assume, achieves. Now this illustrates the position of the exports
and imports in the balance-sheet of a nation which really trades.
The imports are bought with the exports, the transaction, as far
as the nation goes, being complete. If the former did not exceed
the latter in reputed, and in real as well as reputed, value, the
balance-sheet would show no profits, and the shareholders in the
concern would have reason to be greatly alarmed. The profit is of
course increased if the exporting country is obliged, whatever
price may be realized, to sell to the importing country, as is the
case with all debtor countries.

People sometimes point to the rapid growth of other countries as
a proof that our own trade is declining. For example, the imports
of the United States have increased during the last forty years by
700 per cent., and the exports between 500 and 600. But in the
United Kingdom the exports have increased during the same period
335 per cent., the imports (for the last twenty-six, since before this
date there was no computed or declared values given) 186 per cent.
Here, then, they may say, you have a Protectionist country pro-
gressing at a more rapid rate than a free country does. Of course
concurrent facts are not necessarily causes, and causes are rarely
single and simple. But you will notice that the United States is a
country of almost indefinite expansibility, and of rapid growth.
One of its imports, that of adult and trained immigrants, is never
reckoned in its statistics, but would be in an economical analysis,
under-estimated at 100 millions pounds a year, this coming from the
old world. "With this mass of potential wealth annually put into

408 INTEBPBETATION OF EXPOBT AND IMPORT TABLES.

activity in that country, the growth of trade is inevitable. But it
is recent, and is nothing as yet like ours. Forty years ago it was
small, less than ours at the beginning of the century. Even now
it imports 150 millions as compared with 400 of the United
Kingdom, and exports 170 millions, chiefly raw material, as compared
with 223 millions. In fact, the United Kingdom has appropriated one-
third of the whole world's trade. Now it will be plain to you that if a
man starts in business with £1,000, and at the end of ten years has
a capital of £10,000, his percentage of increase is greater than that
of another who ten years ago had £100,000 and now has £200,000.
But no person would doubt which of the two was the more opulent,
and which was doing the largest business.

The last subject in connection with these statistics of exports and
imports which time allows me to deal with, has an historical
interest with me, for I was constantly obliged to expound the facts
during my Parliamentary connection with a very large constituency,
which was also a vast manufacturing one. People are very apt to
forget that London is not only the largest trading city in the world,
but that it possesses the most numerous and varied manufactures.
Now among the industries which I represented, the greatest was
leather, and some of my constituents constantly took counsel with
me as to the alarming imports of leather. But before I deal with
this matter, I must remind you that raw material, in the language
of economists, is any product of human labour or skill, which is
destined to be further manipulated by human labour and skill, the
further operation being a fresh, and, in some cases, a very large
addition to its value. Thus leather to a tanner is finished goods, to
a saddler and shoemaker raw material. Now, if a tanner cannot
supply leather enough in quantity and quality to keep saddlers and
shoemakers at work, it is to my mind hard to keep such men out of
work till the tanners can come up to their demands in these two
articles, and quite as hard to keep people without boots and shoes
while the master tanners are getting an unnatural profit out of the
public want.

Now, we are often told that some article in which we hoped we
should have pretty well a sole market is being imported into
England. When you hear these statements, you may fairly ask,
not with a view to disparaging your informant's veracity, but for the

ALABMIST FALLACIES. 409

sake of accurate information, Is it true ? And it is very often found
not to be. A short time ago it was said that a large area of British
land, formerly occupied for agriculture was now unoccupied. On
inquiry it was found that the proportion of unoccupied land to
occupied stood in the proportion of -00006 to unity. But when
people are anxious to establish a position, especially when they
think that, if they succeed, they will be rescued from an alarming
or an adverse situation, it is amazing how vigorous their imagina-
tion is, and how eagerly they enlist irrelevant facts, and even
entirely baseless fictions, into their cause. Again, we are told that
large quantities of manufactured iron from Belgium is being
imported into England. But when I searched in the expanded
volume of exports and imports, the fact was not mentioned. If the
import did take place, it was too trivial even for a large volume of
details. I heard the other day of a man who was alleging that £100
worth of Belgian glass was imported into England, where it can be
produced 5 per cent, cheaper than in this country. But is it true ?
I am sure that the carriage would be close upon 5 per cent, of its
value, for glass is a hazardous article, and if the figures are as
stated, the English and Belgian producer can cry quits. But
granted that it is true. There is, I admit, a good deal of foreign
glass brought into England, much for trans-shipment, on which the
English trader makes a profit. I do not see that the profit should
cease till such time as English glassmakers and workmen can or
will fill up the void which prohibition would cause. Besides, it was
a raw material, wanted for something, and among other matters
certainly for glazier's work. Is the glazier to be kept idle because
the glass-blower will not supply him with what he prima facie wants?
We have become no doubt a very clever people, having been, as
I have told you and proved to you, for generations, for centuries, as
far as invention and adaptation went, about the stupidest and
slowest race in Christendom. But we cannot as yet do everything
better than our neighbours. In some cases the climate is against
us ; in some cases, you will I am sure pardon me, our want of
capacity. The English climate disables us for weaving and dyeing
silk as they can in Southern Europe, and therefore we wisely
import silk goods, giving employment by this means to tailors, and
dressmakers, and the like. We have not the taste of the French in

410 INTEBPBETATION OF EXPOET AND IMPOET TABLES.

knick-knacks. We cannot rival the Italians in ornamental and
coloured glass. The result is visible even within our own limits.
For generations the Barnsley damask weavers have been trying to
rival the Scotch and Irish in table linen, and Barnsley is a good
deal behind Dunfermline and Belfast. But there is no knowledge
more valuable to man, I state, than the knowledge of what you can
do best.

I may further illustrate what I have said by that leather manu-
facture in which I have an historical interest. There was a great
deal of leather imported into England in 1885, over 5f millions in
value ; and a little over 4 millions worth of leather and leather
goods exported. Now, not a little of this leather, l£ millions, is re-
exported, so that in reality the balance apparently against us is
£500,000, no serious matter in such extensive transactions. Now
when I came to inquire into the matter, I found that a very large
portion of this leather was partially tanned hides. The material
was in such a condition that it was not available for manufacturing
use, but the partial tanning made the article more manageable and
more merchantable than raw or salted hides could be. Hence this
competition against English labour turned out to be in reality a
partial preparation for the higher and more perfect skill of the
English workman, and, as a distinguished but very ignorant
politician has said, a blessing in disguise. Further research into
this leather business disclosed to me that there was only a small
part of the whole import, which for some reason or the other was
not, and, as yet, could not be manufactured in England. It was a
produce of Pomerania, and I am glad that a branch of the Teutonic
race has invented something besides metaphysics and testimonials.
Now, I cannot see why, if people want shoes, or boots, or gloves
made of Pomeranian leather, English makers of these useful articles
should be disabled from manufacturing them, and English cus-
tomers from buying them, especially when English tanners cannot
supply the article. Again, I found that it was a common custom
for French dealers to buy and export boots and shoes of Clerkenwell
and Southwark manufacture, and having stamped them in France
with the name and trademark of well-known French firms, to re-
export them to England as genuine Paris goods for our highly
intelligent West End men and women.

THE CASE OF LEATHER, 411

I have, I hope, pointed out to you some of the uses which can be
made of exports and imports, some of the errors into which a
superficial study of them may lead disinterested inquirers, and some
of the fallacies which are, consciously or unconsciously, derived
from them by interested parties. The latter-named class we must
constantly expect. Painters and poets, says the Eoman Horace, ckim
much for the efforts of their imaginations. So, I assure you, do
Protectionists.

XIX.

THE ESTATE OF THE CROWN, AND THE DOCTRINE OP
RESUMPTION.

The earliest liabilities of the Crown estate — The Icing an extensive
agriculturist — The causes of the risings against John, Henry III.,
Edward II. — Provision for younger sons by wealthy marriages —
The alien priories — The impoverishment of the Crown during
Henry VI.'' s minority — The partisan feuds of the fifteenth
century — The practice of 'parliamentary attainders — The poverty
of Edward VI., of Mary and Elizabeth— The groivth of the revenue
under James — The grants of Charles II. ~ Davenant on Resumptions,
and his line of argument — The action of William III. — His want
of judgment — The act of Anne — The present estate — The ancient
interest in the subject obsolete.

In the early ages of English history, the estate of the Crown was an
object of great interest to the politics of the time. A cursory in-
spection of Domesday will show how large it was in the Conqueror's
time, and how considerable it was in that of the Confessor. It con-
tained many manors and estates, many towns and rentals of towns,
besides large and almost indefinite rights of a casual or extraordinary
kind. The ting's land revenue was very great, many times in excess
of that possessed by his richest fellow adventurers and subjects.
But the estate of the Conqueror was not acquired without a stubborn
resistance. The waste of England after the Conquest, and by rea-
son of it, has not, I believe, yet been estimated from that remarkable
survey which the compilers of Domesday set in order as a monument
to succeeding times. The author of "The Dialogue on the Exchequer,"
says, that the Conquest was a wholesale and righteous confiscation,

EARLIEST LIABILITIES OF THE CROWN ESTATE. 413

but lie writes in the interest of those who had succeeded to the
inheritance of the older English stock, and did not procure this
inheritance without an effort.

The estate of the Crown was, however, liable to serious charges.
It maintained the king's household, the officials of his household,
and the officials of the exchequer. It bore the charges of justice,
of such police as the king exercised, no trifling matter among and
over nobles, who held that their title to the lands which they had
won was as good as that of the tanner's grandson was to the throne,
and were reported to have expressed themselves to that effect. It
was charged as far as we can make out with the cost of such an
army, or guards, as the king collected; the liability to service, except
in the case of invasion, being disputed and disputable. It needed
a good deal of vigour to keep the new nobility in check, and it was
thought politic to use considerable severity when their uprisings were
anticipated or suppressed. I believe I am right in saying, that at
the accession of Henry II., most of the nobles of the Conquest had
been extirpated. A good many people say now, that their families
came here with the Conqueror. I believe that similarity of name,
how acquired one cannot tell, is commonly alleged to be evidence of
lineage. But I imagine that the descent of the English people, high
and low, is as confused as that of the Jews, whose pedigrees
Nehemiah vainly tried to investigate. But throughout this dark
period the estate of the Crown is a substantial fact, for the record
of it, from the date of the second conquest, that of Henry II., is
contained in that remarkable series of documents known as the Pipe
Bolls.

The English sovereign was not only expected to maintain his
state, his establishment, and his authority, from the estate of the
Crown, but to make provision for his descendants from the same
source. Hence in the earliest times you will find that the king,
without creating or intending to create independent principalities
for his children, gave them parts of his dominions. Henry II. as-
sociated his eldest son with him in the kingdom, and got into such
trouble by it that he did not, on the young Henry's death, repeat
the experiment with Richard. But Richard got Guienne ; Geoffrey,
Brittany, then a dependency on Normandy ; while John, who had
his first nickname from his landlessness, was made Lord of Ireland.

414 THE ESTATE OF TEE CBOWN.

In this reign, too, the fashion began of wedding the cadets of the
royal house to wealthy heiresses, for Henry wished to make a pro-
vision for John by betrothing him to the heiress of Gloucester. We
shall see in course of time how general this custom became, and how
much the royal house intermarried with the English nobles. It is
said that the custom of the Crown, in addressing all lords who are
of and above the degree of earl as cousin, originated at a time when
the statement was very much one of fact.

Land then, and charges upon land, were the principal source of
revenue in the king's estate. Where the king possessed manors, he
cultivated them by the agency of his own bailiffs, just as the other
proprietors did, and like them was anxious to see that the peace
was kept, not only in consideration of his own authority as head of
the State, but as a producer of corn, stock, and wool. This re-
markable habit of early English life — in which all classes, from the
king to the peasant, were interested in the successful pursuit of agri-
culture, a habit resumed on a large scale, and with most excellent
results, in the eighteenth century — was, I am persuaded, the chief rea-
son why social order was so well maintained in England, and outrages
on property so rarely recorded. At two periods, then, of English eco-
nomical history, very remote from each other, the propertied classes in
land did a great service to agriculture. In the thirteenth and four-
teenth, centuries they were the cause why, alone among European
nationsythe English were great breeders of stock, especially sheep, and
therefore became the sole source of wool, the selection of which, as the
schedule of 1454 in the Rolls of Parliament informs us, had already
become precise and varied. In the eighteenth century, though here
they mainly imitated the Dutch, they again took up with progressive
and experimental agriculture, and carried, the art of husbandry in
England to perfection. They did not do the like in Scot1 and or
Ireland. Besides, during this long interval;4' though nothing new
was developed, nothing old was forgotten. During the long period
which intervenes between the earliest authentic records of the older
English agriculture, i.e., from the middle of the thirteenth century
down to the beginning of the seventeenth, land and its products
were well-nig*^ the only source of wealth, and by far the largest
part of the population wa's'^ra^aged in cultivating the soil regularly,
while the residue were occasionally occupied in the same employ-

TEE KING- AN EXTENSIVE AGBICULTUBIST. 415

ment. So universal an occupation was not only due to the fact
that land was, according to our experience, scantily productive, but
also to its very general distribution. Every one, as I have often in-
formed you, owned or occupied land, even in the towns. Most of the
manorial rentals show that this was the case in the country. Hints
and allusions make it clear that, in a less degree, the same fact
characterized the towns, and it appears that the singular county of
the town, in which a large adjacent area was reckoned in the town
— as, for example, the whole county of Middlesex with London, a
district of near 3000 acres in the City of York, and similarly large
suburbs to Coventry, Southampton, and the like — are, so to speak,
survivals of an ancient association of rural with urban life, the
peasantry of these country towns being reckoned with the burgesses.

Now it is manifest that, between the periods alluded to, there is
no trace of economic or competitive rent. That in the sixteenth
century, the rights of the landlord were strained, there is evidence
in the works of contemporary writers. Hence the rent which was
exacted was a customary payment, a fixed due, and I hold it to have
been an historical truth, which later researches of my own have
entirely confirmed, that rent was, as Adam Smith sagaciously re-
cognized, a tax. In later times, it became a product of competition,
circumstances having altered. But Smith was more in the right
than his critics were, who imported into past usages the facts of
present action, the common error of ill-informed persons, who have
no faculty of discerning what must have preceded present habit.
It was also a peculiarity in these tenures that the tax was un-
alterable in itself. It might be indirectly enhanced, and this
indirect exaltation by a fine on succession might be a grievance, or
when the tenancy was a lease, renewable by corporation or in-
dividual a progressive fine, but the old rent of collegiate or
corporate property is a survival, or was till recently, of universal
custom.

Now I have referred to this in order to show that the main
source of the Crown's ordinary revenue was fixed dues and rents
arising from land, and that this revenue was inelastic, what was
paid in the third generation of the Plantagenets being identical in
amount with that which was paid in the second generation of the
Tudors. I have, in an earlier lecture, pointed out the negative

416 THE ESTATE OF THE CROWN.

significance of this custom in refuting the common idea as to the
effect of reputed changes in the currency, and I have shown that
the real change forced on Elizabeth by her father's action, which
she was too poor to practically revoke, led to the competitive rent
of the seventeenth century. If no encroachment occurred on the
Crown estate, its income might be computed with fair accuracy.
It is true that after the rise in wages in the middle of the four-
teenth century the Crown, like every other great proprietor, was
very seriously hit, and had constantly to appeal, apart from the
necessities of the first great war with France, for extraordinary
grants to Parliament, a practice which became even more marked
during the short, obscure, and, to the interpreter of fiscal and
economical action, difficult reign of Henry IV.

As soon, then, as the system of extraordinary grants in Parliament
became the means for assisting the extraordinary necessities of the
Crown, the importance of the Crown estate in the eyes of the tax-
payer, and the necessity of preserving it intact, becomes manifest.
During the reigns of John and Henry HI., when the greater part
of the Crown estate on the Continent was lost, discontent was
general and energetic. Nothing, I believe, but the opportune death
of the father saved the son from deposition, and he subsequently
only escaped deposition by the judicious and patent good faith of
Edward I. With insufficient means, John had attempted to main-
tain an enlisted army, officered by foreigners, on English soil, and
had strained the rights of the Crown in doing so. Henry had
similarly not only impoverished himself by nepotism, but had
engaged in a wild political speculation, with still more insufficient
means, and had aroused the profoundest discontent with his policy
throughout the kingdom. He had conferred a large and important
estate of the Crown on his brothers, he had given much to his
half-brothers and his wife's relations, and had finally bestowed
another large royal estate on his second son. The earldom of
Cornwall was soon re-united to the estate of the Crown, and was
thenceforward destined to a special purpose. More than a century
later, the estate of Edmond reverted to the Crown, and was, with a
similar policy, preserved intact. From the time of Edward I. the
custom becomes general to match the younger sons of the king to
the heireases of great riefs, so as, I believe, to prevent for the

DISCONTENTS WITH JOHN, HENRY, EDWARD II. *I7

future any notable alienation of the Crown estates by way of
appanage, for it was impossible to prevent dangerous intrigues on
the part of cadets of the royal house, as was the case with Lancas-
ter in Edward II. 's reign, with John of Gaunt in the time of Edward
III., with Gloucester in that of Richard II., and with Humphrey
of Gloucester in that of Henry VI.

The first serious outbreak consequent upon discontents, which
led to entire distrust in the king and his court, and were caused, I
believe, by the indiscreet impoverishment of the Crown on behalf
of favourites, was the action of the opposition faction in the case of
Gaveston first, and the Despensers afterwards. The petulance of
Gaveston, and the arrogance of the younger Despenser, would have
hardly led to such serious issues had not the public felt that they
were running the risk of making up the void which was caused by
the lavish way in which these people were enriched at the expense
of the Crown. The counter revolution of the palace which, shortly
after Edward's deposition, overthrew Mortimer, was similarly
instigated by the extensive appropriations of Isabella's favourite,
and the re-appearance of an offence which was punished so
effectually in a previous reign.

Edward III. provided generally for his sons by marriages with
heiresses, and it is not improbable that the constant dying out
of royal stocks may have been due to the prevalence of this custom.
Thus his eldest son, Edward, married the heiress of Kent ; his
second, Lionel, the heiress of the De Burghs, the owners of Ulster ;
his third, the heiress of the house of Lancaster. I cannot but
detect in this an anxiety to provide for a numerous family from
other sources than the Crown estate. It was better, said the critic
of the times of Henry VI., that the king should have married from
among his own people, than to have brought a furious foreign
woman into the royal house who added nothing to its wealth, but
impoverished it. Again the discontent felt at the promotion and
enrichment of De Vere by Richard II. and the extravagance of his
household, as in the days of his great-grandfather, led in the end to
the revolution of 1399, as former practices of the same kind did to
that of 1327.

But it was in the fifteenth century that the great impoverishment
of the Crown estate began. Henry IV., who had married an heiress

28

418 TEE ESTATE OF THE CBOWN.

of the house of Bohun, merged the honour of Lancaster, with its
very widespread possessions, in the estate of the Crown, though it
was kept, and has thenceforward been kept, distinct from the rest
of the Crown estate. But Henry was incessantly in difficulties.
He had troublesome wars, disturbances in Wales which he failed
to overcome, civil war with the Percies and their adherents, with
whom he was more successful. But these troubles do not seem to
me to account for the singular straits to which this monarch
was reduced, straits which had no parallel in any other reign.
The age was, no doubt, lavish and extravagant to excess among
the upper classes, as contemporary testimony avers. I can
account for the fact only m this way. Henry had to provide for
a numerous family, and the hereditary revenue of the Crown was
inadequate for this and for his other expenses. The language of
his Parliaments seems to indicate that the charges of his house-
hold were more than ordinarily great.

His son added to the estate of the Crown the lands of the alien
priories. Some of these he sold, others remained for a consider-
able time in the hands of the Exchequer. I have never been able
to discover the extent of this addition to the Crown lands, and we
only know the destination of two parcels of this considerable
dissolution. Some were bought by Chichele for his two Oxford
colleges, and the foundation at Higham Ferrers. Much more
was long afterwards devoted to the foundation and enlargement of
the great house of Sion, and to the creation of Eton and of King's
College, Cambridge. But these would have absorbed only a por-
tion of the funds. Of course Henry's French war necessitated
considerable extraordinary grants.

It was during the reign of Henry VI that the Crown estate was
reduced to the lowest point. No doubt the costs of the French
war were great, and the acquisitions which were made in France
were not profitable. But other causes were at work during the
young king's childhood, though his reign was always a minority.
Now* the report presented to Parliament, when the king was
between eleven and twelve years old, on October 18, 1483, is to the
effect that the revenue had fallen to little more than £(J,000 a year,
exclusive of the Duchy of Lancaster. The principal items of expendi-
ture were the household at Windsor, £13,678 ; annuities to the mem-

THE ESTATE UNDER TEE HOUSE OF LANCASTER. 419

bers of the royal family, £11,152 ; the government of the Marches
and Ireland,£10,899,Calais,£ll,913. The total charges are £56,878,
or £47,877 in excess of the income. There were outstanding debts
to the amount of £164,815, besides liabilities for which securities
were held. Of course much of the Crown estate was permanently
or temporarily alienated, and it is plain that, besides the cadets of
the royal house, many of the nobility had quartered themselves on
the revenue. The treasurer, Lord Cromwell, who died some years
after, perhaps the richest subject in England, had no doubt assisted
at the spoliation. He became a violent Yorkist before his death.

There can be no doubt that this wholesale plunder of the Crown
estate, and the resentments of those who were excluded from the
spoil, developed and kept alive the atrocious feuds of the fifteenth
century. The civil war, which lasted for over thirty years, from
the skirmish of St. Albans to the battle of Bosworth, was essentially
one of partisans. The people took little part in it, except in so far
as the Lollards of the eastern counties preferred the Yorkist to the
Lancastrian faction ; for the latter was the persecuting party, while
the former appears to have been tolerant. But nearly all the
nobles, except perhaps some on the Scottish border — where, however,
the Percies were violently Lancastrian — took part in the struggle.

They undoubtedly obtained their partisans from those soldiers
of fortune whom the cessation of the long war with France had
sent back to England. And they seem to have worn each other
out, for at Bosworth the forces on either side appear to have been
insignificant. Now the proof that this civil war did not affect the
mass of the English people is to be found in the singularly pro-
gressive condition of England during the fifteenth century, and the
total absence of complaint during the murderous strife that was
going on about any loss or disturbance from these military events.
You will observe, too, that the war of succession was eminently one
of pitched battles, not of sieges ; and it is curious that during the
heat of the struggle the strong castellated mansion of an earlier
date gives way to the embattled house, which, though possessed of
some slight defences, was by no means such a stronghold as the
feudal castle was.

The war of the family succession gives occasion to those
numerous acts of attainder, confiscation, and resumption, which

420 THE ESTATE OF THE CEOWN.

were perhaps intended to obviate the perpetual inheritances which
had been created under entails and uses. The practice of employ-
ing Parliament as the means by which malcontents in high rank
might be effectually crushed, began with the Coventry Parliament
of 1459, when Margaret resolved on the wholesale attainder of the
entire Yorkist party. This, it is true, did not take effect ; for the
acts of this Parliament were revoked in the following year. But
the precedent was not forgotten. It was repeated in 1461, after
Edward's accession ; and in 1471, after he had finally subdued the
Lancastrians at Barnet and Tewkesbury. It was revived after
Bos worth, after Henry had determined to assert that he was
de jure and de facto king, the day before the battle. The Crown
frequently extended its estate from this time forth by forfeitures.

If there be any truth whatever in the common statement as to
the real estate possessed by the monasteries, the addition made to
the Crown estate by the Dissolution was enormous. It was said that
Henry entered into the possession of one-third the area of England.
It is certain that he promised, if this grant were made him, that he
would ask his people for no further taxes. It is equally certain
that he broke his word. It is quite as certain that the whole of
what he appropriated disappeared in a marvellously short time, and
that before he died he was reduced to the greatest straits, and
resorted to the most disgraceful frauds in order to extricate himself.
It has been said that the monks foresaw the storm, granted long
leases, and invented the fine on beneficial holdings ; and there is
historical colour for this allegation. But the accumulated treasures
in plate and jewels, possessed by the more famous and frequented
monasteries, must have been enormous ; and the trials of abbots
and others for embezzling the monastic treasure, the diligent
search made by the king's agents for it, and the extreme rarity of
any discovery in later times of a hidden hoard, prove, I think, that
the whole, or nearly the whole, must have been surrendered. I am
of course aware that Henry made prodigious grants. The houses
of the Beformation owe most of their wealth to their share in the
plunder. But this share was but a fraction. Besides, the nobles
whom he proscribed and ruined, could have almost afforded suf-
ficient provision for those whom he created and left

After this epoch the hereditary estate of the Crown was greatly

THE TUDOR PERIOD. 421

wasted. The infancy of Edward VI. was like the infancy of
Henry VI., except that the later child-king was remarkably pre-
cocious. But the guardians wasted and appropriated much that
Henry had not lived long enough to spend, and the young king's
sisters — Mary and Elizabeth — were both exceedingly poor. Eliza-
beth was forced to supply the wants of the few courtiers whom she
enriched from other sources than those of the Crown lands ; and it
is well known that some rich bishoprics were turned into very poor
ones, in order to satisfy the claims of her favourites. Elizabeth
insisted on the government of the Church by bishops, but she had
no objection to compensating their spiritual dignity by shortening
their temporal resources. It is a more disputable question whether
she intended, or hoped to compel, an ornate ritual. It is perfectly
certain that it was not enforced, whatever opinions have been
recently expressed as to the fact. Had it been, I should certainly
have been able to trace it in the college accounts.

The indirect revenue of the Crown was stationary during the
reign of Elizabeth ; it began to grow rapidly under James. That
very absurd person chafed at Parliament most unwisely ; for it was
the means by which discontent evaporated in complaint. In the
times of the Plantagenets, the favour shown to Carr *md Villiers
would have been resented as effectually as that exhibited against
Gaveston and the Despensers. But Parliament became a mouth-
piece through which popular indigo ation found a vent. James,
however, discovered sources of revenue which his predecessors never
dreamed of. Not content with straining the feudal rights of the
Crown, he openly sold hereditary honours, instituting a new order
— entrance to which was purchasable for a round sum. But, in
fact, the interest which was anciently felt in the Crown estate was
lessened by the graver question — which was not set at rest till
civil war decided it — the right of the Crown to revise and increase
the ancient customs which it had collected at the ports. The
strife, which begun with Cecil's " Book of Bates," was only ended
at the Whitehall tragedy. James appears, from the transactions
between him and the City of London, to have died greatly in debt.
It appears that the Irish estates of the City Companies were gradu-
ally acquired, and that some, at least, of them were taken in lieu of
advances in the reign of Charles.

422 THE ESTATE OF TEE CBOWN.

During the time in which he had quarrelled with Parliament,
Charles attempted to enlarge the estate of the Crown by inquiring
into the boundaries of the royal forests. The exemption of the
Crown's title from any prescription is probably a very early maxim
of law. It certainly found favour with Charles, who, we are told,
wished to govern in entire accordance with law. But this laudable
aspiration was, in the eyes of his contemporaries, marred by his
coercing the judges, and subjecting juries to the old law or custom
of attaint. I am not sure that a naked despotism is not better, as
I am sure it is much more honest, than an affectation of legality
from which all true legality is carefully weeded out. To supersede
law is a manlier course than to use the forms of law as a cloak for
absolutism. At any rate, Charles created against himself a party
of aggrieved peers. I know nothing in the irony of history more
striking than the fact that the son of the first Lord Salisbury of
the house of Cecil took part, as he virtually did by sitting among
the Lords on the memorable 30th of January, in the execution of
the son of that king, whom the first Lord Salisbury instigated to
quarrel with his Parliament, by doing what that Parliament con-
ceived to be illegal and constantly resented.

During the Protectorate the incidents of the Crown estate were
neglected, or silently abrogated, though the direct taxation levied on
all landowners was searching and heavy. The estate of the Crown
became the estate of the nation, and formed part of the general
revenue. Cromwell had a modest establishment for his household
at Whitehall, though the cost of protecting his Government by a
standing army was great. At the Restoration, on the ridiculous
and technical plea, that as Cromwell had not been formally declared
king, the Act of Henry VII. did not protect his adherents, or
legalize his government, all the Acts of eighteen year3 were de-
clared void by the lawyers. But it was impossible to ignore the
custom which had held good for nearly a generation, and the feudal
dues of the Crown were extinguished at the cost of the poorest class
of people, they who were customers or consumers of articles included
under the hereditary excise. The estate of the Crown, now become
a comparatively unimportant part of the royal revenue, was left to
the discretion of the reigning sovereign, and conceived to stand on
the footing of a private estate. It is not remarkable that Charles

THE GRANTS OF CHARLES II. 423

gave so much away, the wonder is that he left any part of it for
nimself or his successor. The check on alienation was, I believe,
the consciousness that if he left himself entirely without resources
he would need to apply to Parliament, and it is plain that Charles II.
was as bent, in the latter years of his life, on dispensing with Par-
liaments as his father had been before him. Fortunately I believe,
for him, the project was fresh when his sudden death occurred.

Now during the actual reign of Charles, which lasted for near
a quarter of a century, the estate of the Crown was largely burdened
by grants to his numerous irregular offspring. He was not indif-
ferent indeed to indirect means of enriching them. The eldest be
married to the heiress of the Scotts, Earls of Buccleuch ; another
was matched with the heiress of the De Veres, an ancient and
impoverished peerage ; the youngest was married to Charles's own
kinswoman, the heiress of the Scottish house of Kichmond. But
all were provided liberally for out of the Crown estate, some from
what were conceived to be the hereditary resources of the Crown,
some from doubtful taxes anciently imposed, but imposed, it would
appear, with insufficient legality. But the^e grants in later times
were the occasion of a singular controversy, and ultimately of a
significant Parliamentary settlement, in which very ancient tra-
ditions as to the permanent alienability of the Crown estate were
affirmed, and mider strict conditions the descent of the estate was
protected. There is not, I believe, a grant of James II. from the
Crown estate, for Berwick went into exile with his father.

Now it was I believe an early doctrine, certainly as early as the
fifteenth century, that a grant of the Crown, even when the sove-
reign was only the nominal founder or donor, was valid only
during the life of the donor, or reputed founder, and could in
theory be revoked on the demise of the Crown. Thus Colleges in
Oxford and Cambridge, even though they were founded by the
license of the Crown, sought a confirmation of their charters, as
though such charters were invalid without such a confirmation from
successive sovereigns. Magdalene College, for instance, in this
University, obtained a fresh charter, and at no little cost, from
Henry VIII., though there is no evidence that the Crown gave an
acre of land to the foundation. With more reason the foundation of
King's College, Cambridge, had to pay smart money to Edward IV.,

424 THE ESTATE OF THE CBOWN.

and to redeem the legacy of Henry VII. devised for the completion
of the chapel from his magnanimous son. But the most significant
illustration of this principle is to be found in the various acts of
resumption. Here it was considered necessary to insert the colleges
of Oxford and Cambridge, and the two ancient schools of Win-
chester and Eton, among the exceptions to a general act. A
relic of this doctrine appears in the history of the judges' patents.
By the Act of Settlement the judges are irremovable, except by an
address from both Houses of Parliament. The protection is perhaps
excessive, but long experience had taught the statesmen of the
Ke volution that these people could not be kept decently honest un-
less they had a freehold given them in their offices. In our day,
perhaps, the privilege is too absolute, and well-proved partisanship,
stupidity, or ignorance, recognized to the satisfaction of either
house and affirmed, might be conveniently substituted for the double
address. But notwithstanding the Act of Settlement, it was law,
up to the accession of George -III., that the demise of the Crown
vacated the patents of the judges.

The evidence on the subject referred to was collected at the very
end of the seventeenth century with great fulness and superficial
moderation by Davenant, in his discourse on grants and resump-
tions. Davenant was a very capable pamphleteer and partisan writer
iiLa time when a pamphlet could influence a policy, certainly sustain
it. He knew well enough what were the conditions under which
party writing alone could be successful, for during the Eevolutionary
time, and for a long time afterwards, the pamphlet was the most
serviceable weapon of literary warfare. In our day, the opinions of a
politician expressed in writing are more ephemeral than his speeches.
No one cares, perhaps no one rightly cares, what was said yesterday
in a leading article. No one cares, and probably with equal justice,
at what a public man has alleged in a signed article or pamphlet
for any long time. Even the trick of searchmg into Hansard
or the files of a newspaper for public utterances in order to
found charges of inconsistency on them is stale. But nearly
two centuries ago political pamphlets were written with extreme
care, were constantly quoted, and not infrequently reprinted.
They often deserve to be, for they are the best index of contem-
porary opinion, since the writer had to catch public opinion at the

DAVENANT ON BESUMPTIONS. 425

time when he wrote, and, if he would be successful, reflect it with
fidelity. Then he had to give good reasons, historical, for matters
in which he appealed to ancient precedent, political or economical,
when he had to deal with diplomatic combinations, when he advo-
cated or insinuated a line of policy or the reversal of one. Swift's
" Thoughts on the Conduct of the Allies" did not bring about that
Parliamentary change in England which led to the treaty of Utrecht,
for the Tory party were bent on ousting the Whigs ; but it was the
best justification of their tactics that could be given. Davenant" did
not create the feeling which led to the action of Parliament in
1700, when he obliquely and inferentially challenged the grants of
"William to his Dutch favourites ; but he brought considerable learn-
ing into the controversy on the question, and gave the air of a
respectable zeal for the public service and public economy in a
controversy which was in the main partisan, though the indiscre-
tion of the administration had given a powerful lever to its
enemies.

Davenant was the son of the playwriter whom some believed
had inherited a little of Shakspere's genius and even of his blood.
He filled certain places in the office of the revenue, and was for
a time in Parliament. He was essentially a party writer on the Tory
side, and the best writer which they had in the seventeenth century.
To our habits of thought, his true picture of a modern Whig is a
gross and clumsy lampoon, but it was highly effective at the time ;
for it charged the politicians of that party with no better aim than
that of pretending to public spirit as a cloak for personal gains ;
contrasted them to their disadvantage with the Whigs of a genera-
tion or two before, for instance, the Exclusionists, and even the
framers of the Eyehouse plot, and suggested their proscription.
It was most extensively circulated by the Tory leaders, and firmly
believed to be a genuine account of such men as Somers, Halifax, ,
Burnet, and the like. So highly did Louis XIV. value this timely
lampoon, that he sent Davenant a handsome present. Davenant
repaid the bribe by entering into confidential communications with
Poussin, the French envoy, and was in his company when the
famous supper of the Blue Posts was being enjoyed. But this
event was subsequent to the essay.

The essay on Resumptions is exceedingly adroit. It dwells on

426 THE ESTATE OF THE CROWN.

the importance which had been traditionally assigned to the Crown
estate, and the discontents, insurrections, and resolutions which had
been caused by the malversation of ministers of the Crown, their
embezzlement of it in their own interests, and their corrupt com-
plicity with those whom the king had unwisely favoured. He dwells
with particular emphasis on the occasions when the reigning
monarch had quartered foreign favourites on the Crown estate, and
how uniformly the community had resented the enriching of these
adventurers. He alludes to the fact that in all impeachments of
unpopular and corrupt persons, the charge that they had enriched
themselves by the disherison of the Crown, and to the waste of the
royal revenue, had been strongly insisted on, that it was alleged in
the case of Villiers, of Strafford, whom he ingeniously asserts to have
been the victim of a section of the Court party who would screen
themselves by sacrificing him, and touches on Danby's case, a public
man still living, and one of his own party, though now under a
cloud, with an exceedingly shrewd air of candour. To the partisans
of that time and the students of this age who can read between the
lines, the oaths of the servants of the Crown, quoted at length, were
intended to charge Somers and others with corruption and perjury,
while the cases cited are made to resemble as nearly as possible
those of Bentinck, Ginkell, Eouvigny, and Keppel. Everything is
cleverly insinuated, nothing is actually alleged. Even in dealing
with the Irish forfeitures it is hinted that these ought, as the Irish
Protestants and the English public have found the funds for the
Irish campaign, to be disposed of for the benefit of the taxpayer,
and not to be distributed at the pleasure of the Crown, even among
the most deserving persons. Nothing could be more adroit and in
terms less offensive than Davenant's volume, for it amounted to these
dimensions, and nothing more serviceable to the malcontents. It
does not seem to me that Macaulay has given sufficient weight to
this remarkable essay. But he was dealing with this subject and
this epoch just at the time when fatal illness attacked him. I will
assume that you are familiar with the description which this
luminous and conscientious historian gives of the Parliamentary

struggle over the Irish forfeitures and the English grants in the

wenty-fifth chapter of his history.
In dealing with the subject of the Crown estates and William's

TEE ACTION OF WILLIAM III. 427

grants, Macaulay utters some faint censure on bis hero. Now I do
not think that in estimating William III. this eminent historian
has sufficiently recognized the position which William had occupied
as Prince of Orange, and that which the Revolution put him in as
king of England. In Holland William was the leader of a faction
against which was arrayed not a little of the administrative ability
of the Dutch nation, and nearly all its wealth. It was the mis-
fortune of the house of Orange that two of its most eminent repre-
sentatives had been strengthened or elevated to power by the judicial
murder or assassination of their best friends and benefactors.
Maurice, who in his own youth owed everything to the care and energy
of Barneveldt, brought about or permitted the atrocious execution of
that great man; and W7illiam III., who owed everything in his own
youth to the fostering care of the De Witts, was thrust to the head
of affairs after the assassination of the brothers, who had been
deceived by the matchless perfidy of William's uncle. Now the
De Witts were especially the type of the great Amsterdam merchants,
jurists, and publicists, and though the eminent services of William
to his country for the sixteen years between 1672 and 1688 effaced,
to some extent, the memory of the events which caused his rise,
and his association with the Dutch democracy, William was never
at home at Amsterdam. But in England the case was wholly dif-
ferent. He had risen to power, and to the place of an English
king, by the class which had been opposed to him in Holland, the
mercantile interests of the great trading cities. He had been found
exceedingly useful by that part of the aristocracy which had broken
with James. But the country clergy and the country gentlemen were
never reconciled to him, never really rallied to him. He entertained
towards the two parties of the Revolution about as much respect
as he had entertained towards the burgesses of Amsterdam, and
they, in so far as they had escaped from the corruptions of the
Restoration, a rare occurrence in any of the public men, could not
be expected to feel personal loyalty to a foreigner, a Dutchman,
a king, who, as they conceived, apart from his attachment to
certain persons of his own nation, was certain to postpone English
to Dutch interests.

Now Macaulay says that " in giving away the old domains of the
Crown he did only what he had a right to do, and what all his

428 THE ESTATE OF THE CROWN.

predecessors had done." But this was the whole question. It was
alleged by Davenant, and alleged with historical truth, that it was
not in the power of the Crown to grant more than a life interest in
any part of the Crown estate, and the precedents for this construc-
tion of the law were numerous and cogent. The Rolls of Parlia-
ment, the journals of the two Houses, the Statute Book itself,
looked on at that time, when precedents were of the greatest sig-
nificance, were conclusive on the subject. Of course the occasion
of the stormiest scenes, as Macaulay has shown, was not the favour
shown to Somers and Burnet — in the former of which it might be
contended with some reason that the Chancellor had been privy to
a transaction which involved his own benefit ; and the attack on
this failed, even the malcontent Whig House declining to join in
the attack. The services of Ginkell, Rouvigny, and Schomberg,
the grants to the last of these being still a charge on the exchequer,
were military, intelligible, and important ; the grants to Bentinck
and Keppel, to the former outrageously large, were made to needy
Putch nobles who had attached themselves to William, and were
at best for diplomatic services, but mainly for personal reasons.
Whatever were the merits of Bentinck, however justly he deserved
William's confidence, English people saw at that time in him only
an arrogant foreigner who, by the favour of the king, was suddenly
raised to be the equal in wealth of the first English families, and this
out of an estate the deficiencies of which would have to be supplied
by a land tax on the country gentry and by excises on the expenditure
of the poor, or on the development of trade. I may be wrong, but I
believe that, even in our own day, the ennobling and enrichment
of a personal favourite of the reigning sovereign out of any public
fund whatever, say the duchies of Lancaster and Cornwall, would
be met by an equally strong opposition, and that Parliament would
not need the precedent of 1700 in order to give effect to its dis-
content. I cannot but think that but little of the sagacity which
William possessed was needed in order to have enabled him to
foresee the dissatisfaction which would be aroused by his grants to
Bentinck.

Besides it might have been argued with great propriety that the
relations of the Crown and the revenue had been totally altered by
the Revolution. This great change had been effected, not only to

WILLIAM'S WANT OF JUDGMENT. 429

reverse the doctrines which had prevailed or had been taught, as to
the administrative and judicial usurpations of the Crown, but at
once and for ever to put a stop to equally noxious fiscal theories.
The money, the revenues, the resources of the country, however
ancient they were, however much they had hitherto been at the
disposition of the sovereign, were henceforward to be under the
control of Parliament. If, it was argued, the hereditary revenues
of the Crown were wasted prodigally and on unworthy objects, the
nation has to make the loss good. Now the English people has
never failed to assist the necessities of the Crown, and it has never
failed either to control a foreigner's greed when he has quartered
himself, in appearance on the sovereign's favour, in reality on the
public purse. And no one throughout his reign more misconceived
the new departure than William did. He thought himself entitled
to all the grants which a packed Parliament had made to James.
He thought himself at liberty to appropriate the revenue to private
purposes more largely than Charles, to the discontent even of those
who hated the memory of Cromwell. Even in the age of un-
reasoning loyalty they had endorsed the impeachments of Claren-
don and Danby, and included peculation in the charges made
against both.

Again it was not to the credit of the king and his administration
that no steps had been taken after those years of peace to deal with
the deficits and the floating debts of the war. The people, the
Parliament itself did not know what were the charges against which
they had to make a permanent provision, and ignorance naturally
exaggerated liabilities. If the Irish forfeitures could lighten this
load of debt, it was not unreasonable for people, smarting under
novel taxes, irritated at a great direct tax on land, to claim for itself
the repayment of those funds, the advance of which had made the
Irish conquest alone possible. It should have been the business of
the administration to exhibit in a distinct and clear schedule what
the liabilities of the nation were, and to take order for their liquida-
tion or funding. Even now, it is exceedingly difficult to make out
from returns presented to Parliament, what was the cost of the war
of the English succession which ended with the peace of Eyswick,
even from Postlethwayte's details.

At the beginning of Anne's reign (it should be noticed that no

430 THE ESTATE OF THE CROWN.

such steps were taken in William's as a proof that the English
Parliament was generous, perhaps just), a restraint was put by
Parliament on alienations of the estate of the Crown, by what must
be now recognized as the administration. By 1 Anne cap. 6, the
Crown was disabled from granting leases of Crown lands for more
than thirty-one years, and no renewal of the lease was allowed till
the earlier had determined. Again, it could not make grants from
the hereditary revenues of the Crown for a longer period than the
life of the sovereign. This is illustrated by the case of Churchill,
whom Ajine made Duke of Marlborough at the instant of her
accession, and on whom she at once settled for her life £5,000 a
year out of the profits of the Post Office. When Parliament met in
October, and Marlborough had been appointed commander-in-chief
of the Dutch as well as of the English forces, and had captured
some places in Flanders, though he had not as yet shown eminent
proofs of his great military abilities, the queen, no doubt at the
instigation of the duchess, sent a message to the Commons re-
questing them to settle £5,000 a year on the duke for his services
in Flanders. The Commons admitted that he had retrieved the
honour of the English nation, declining to accept the words
" maintained or advanced." But they refused to make the grant and
annex it permanently to his peerage, on the ground that " the
revenue of the Crown had been so much reduced by exorbitant
grants in the late reign,'' and carried these words, reflecting on
William's action, by an overwhelming majority.

By this time, indeed, the estate of the Crown had sunk to the
shadow of its ancient dimensions. Lessened as it had been in the
early part of the fifteenth century to some £57,000 a year, and
therefore the subject of anxious alarm to the Commons, who
demanded that a resumption of grants should forthwith take place,
it was still on a fair interpretation of rents paid in the fifteenth
century, equal to two and a quarter millions of present revenue, for
forty is a moderate multiplier of mediaeval rents into modern money.
I have no estimate of the annual value of the Crown lands at the
beginning of the eighteenth century, but 1 have no doubt from the
general rise of rents, between the restricting btatute of 1 Anne,
that it was not more than £40,000 a year by that time, and rents
having risen about ten times since that date, the present value of

THE ACT OF ANNE. TEE PRESENT ESTATE. 431

the Crown estate confirms this calculation. Of course it had
become wholly insufficient for the maintenance of those objects
to which it had been originally dedicated, and even for the royal
household, which thenceforward depended on a civil list, voted and
appropriated at the commencement of each reign.

Practically, the estate of the Crown has become part of the
national estate. It does not belong to the present royal family by
descent, for on mere grounds of hereditary right, there are many
persons more near the Stuart stock than that which was declared
after the death of the Duke of Gloucester, by Act of Parliament, to
be next in succession. The doctrine that the Crown lands belong
to the Crown is as obsolete as the doctrine would be that the
hereditary excise of the Eestoration does. These lands have been
surrendered, or rather have never been given, and the estate is
managed by and for the State, under the control of Parliament.
Even in their present form they cannot be charged or alienated,
although it must be allowed, the restraint was put on when there
was little left to save, just as in Elizabeth's reign, the disabling
statute, putting a check to the alienation of lands belonging to
ecclesiastical and academical corporations was not enacted till
many sees had been greatly impoverished by the exactions of
Elizabeth's courtiers, and with the queen's connivance.

The Act restraining the Crown from alienating the royal estate
in England did not extend to Ireland, and enormous grants of these
forfeited estates, about which so much stir was made in William's
reign, were conferred on the queen's favourites, notably on the
Seymour Conways. But, in fact, the Irish exchequer, even up to the
days of the Union, was loaded with placemen, rewarded for services
which, even in Walpole's time, the English Parliament would have
compensated very differently. Perhaps among the many Irish
grievances which existed before and after 1782, none was more
offensive to national feeling than the use which was made of the
Irish pension list, and the lavish expenditure of Irish money on
those who were fortunate enough to get a share in the distribution.
Nearly as many families were founded and enriched from this source
as from the Church lands in the days of Henry, and even the Irish
Parliament which is associated with Grattan's name, contained
persons in it, created under this system, who would not have been

432 THE ESTATE OF THE CROWN.

endured in the very worst times of English Parliamentary corrup-
tion; men who merited the indignant contempt with which Wolfe
Tone characterized the Irish House of Commons.

Two of the ancient Crown estates are still annexed to the
reigning monarch and the heir apparent, the ducbies of Lancaster
and Cornwall. They are curious survivals of the old feudal
tenures, and illustrate how strangely the possessions of the ancient
estates were scattered all over the country, for the two duchies hold
lands in most of the English counties. For example, there is a
considerable estate of the Duchy of Cornwall in Berkshire, not half
a dozen miles from Oxford. Up to recently those estates were
generally occupied under the system of beneficial leases, but these
leases have not been renewed, and in consequence no little discon-
tent has been expressed by those who had purchased on the
understanding that the traditional custom would be continued.
But in fact, as these estates are appropriated to these royal persons,
they are naturally, in their improved condition, to be taken into
account in the settlement of the civil list, and so fulfil to some
extent the purposes for which in old times the estate of the Crown
was so suspiciously watched.

I have dealt with this subject then, partly because it plays in
past history so important a part in that economic side of English
public life which deals with taxation and revenue. Its indirect
significance in the many disturbances and changes which have
occurred in the English monarchy is of the greatest. As I said
at first, revolutions in English history, the deposition of princes,
the change in the succession, the control of Parliament over the
executive, may have been brought about by a plurality of causes,
but the fiscal or economic cause dominates the whole. In one way
the shrunken importance of the Crown estate, now not as much as
the two-hundredth part of the annual revenue, has made the succes-
sion infinitely stronger. It is now exactly two centuries since
Parliament undertook to change the succession to the Crown, and
to dissociate itself from the dogma of Divine or even of hereditary
right. You will not find any two centuries of English history in
which the position of the dynasty which Parliament established
has been so unassailed as that of the House of Hanover. The
constantly recurrent cause of disaffection has been taken away.

THE ANCIENT INTEEEST OBSOLETE., 433

The personality of the sovereign, though by no means lost, is
merged in that of Parliament.

The appropriation of the Crown lands by Parliament, and the
limitations imposed by the statute of Anne, had much to do with
the gradual extinction of Parliamentary corruption. People may,
if they please, criticize the conduct of the House of Commons, its
management of business, its appetite for undertakings which it
cannot adequately deal with, its delays, its disturbances, its fac-
tions. But no critic can charge it with being corrupt, with its
members being influenced by personal advantage in their political
action, with any motive more ignoble than ambition. In this it
can be contrasted to its honour with every other Parliament, with
every other British institution, even with the University of Oxford.
In this political purity lies its enduring hold on the English people.
This reputation had its beginnings in the efforts of those who
quarrelled, however unskilfully and unduly, with William, and
anticipated by its own action, in the Act of Anne, the possible
continuance of William's errors under the rule of his feeble
successor. But the historical interest in the doctrine of resump-
tions is materially modified, if not extinguished, by the passing of
the Nullum Tempus Act in 1768 (9 George III. cap. 16). By this
Act, the Crown was disabled from resuming any grant after a lapse
of sixty years. The occasion of the Act was an attempt, on the part
of Sir John Lowther, to appropriate to himself through the interest
of his father-in-law, Lord Bute, one of the grants which William
ILL had made to Bentinck.

XX.

PUBLIC DEBTS.

Early loans — The example of the Dutch — Their finance — The origin
of their loans — The power which a government possesses of raising
loans — The United States — France — India and the Colonies —
Elements of safety and distrust — Loans in government paper —
Inconvertible paper — Taxation of dividends — The ordinary object
of loans — Permanent and terminable loans — The loans of the
devolution — The system of borrowing — The funding system, and
the arguments for and against it— The return to cash payments,
and the reasoning of those who wished to degrade the currency —
PeeVs action.

The Dutch taught European governments that part of finance
which under the name of public debts pledges the future earnings
of a people to the payment of interest on loans, and to the repay-
ment of them in course of time. Governments have often bor-
rowed money on the security of taxes. Thus bur Edward III.
raised large loans from Florentine bankers, giving them what they
no doubt thought adequate security, and broke faith with them.
It is not so long ago that the descendant and representative of one
of these houses was entertained in London, when he alluded to the
fact, though without any expression of hope that the liability
written off five centuries ago as a bad debt would be recognized by
the present generation. I mention the fact to illustrate how en-
during is the memory of repudiation. In the same way Philip II.
repudiated his debts in 1596, and nearly ruined Genoa, which had
plentifully discounted his paper. From that time the Government
of Spain has never been able to retrieve its credit. Public credit is

THE EXAMPLE OF THE DUTCH. 435

vigorous enough when the integrity of a government has been
traditionally unblemished. But it takes a long time to restore a
tarnished reputation in matters of finance, when the confidence
has been that of a foreign creditor whose most effectual criticism
of the past is a deaf ear to present applications. I shall try in the
course of this lecture to point out, not only the acts which destroy
all trust, they are fairly obvious, but also the circumstances which
excite a hardly less dangerous suspicion.

The war of Dutch independence is, to my mind, the most
striking fact in modern European history, perhaps in the history of
civilization. It begins with the capture of Brill by the Beggars of
the Sea on April 1, 1572, and ends with the practical acknowledg-
ment of Dutch Independence in 1609. It is true that before this
time William of Orange was resisting and negotiating, and no one
doubts how important was his name as a rallying cry, and his counsel
in success or in adversity. But the War of Independence was essen-
tially one of the traders and the people. The Dutch nobility were con-
stantly traitors to the cause which they had embraced, and to the
men who trusted, honoured, and rewarded them. It was unhappily
the case that two of the English commanders, Yorke and Stanley,
were even more treacherous. It is only too true that the house of
Orange has 'exhibited the most conspicuous illustration of how little
hereditary political virtue, political intelligence, and true patriotism
are. This house in its later times has clung only to the worst
J traits which disfigured some of the earlier members in the lineage.
But during the whole struggle the Dutch merchant and the Dutch
peasant were as true as steel, never discouraged, though constantly
deceived.

The debt which modern civilization owes to the Dutch cannot be
too overrated. They taught Europe the art of agriculture ; for it is
to their example that the new agriculture, which we adopted tardily
in the eighteenth century, was due. They instructed Europe in
the mystery of commercial credit, and the Bank of Amsterdam
supplied what were virtually the earliest practical lessons in mer-
cantile finance. They taught the world the whole of the scientific
navigation which it knew for centuries. They were the pioneers of
international law, of physics, of mechanical science, of a rational
medicine, of scholarship, of jurisprudence. The geographical dis-

486 PUBLIC DEBTS.

coveries of Holland were the basis of the first real maps. But above
all things, they instructed during their long struggle after inde-
pendence modern financiers in the art of taxation, for the exigencies
of their position forced them to try every expedient for the discovery
of ways and means by which the little republic could make head
against the colossal armies and, as was believed, the inexhaustible
wealth of Spain.

The Dutch did not borrow till they had exhausted every other
financial expedient. During the continuance of the Dutch excise,
and after it was made permanent, in order to secure interest on the
loans which the Eepublic found it necessary to raise, every Hollander,
from the cradle to the grave, for every act of his daily life, and
even for the voluntary and involuntary incidents of it, was taxed.
He lived under the regime of a perpetual, sleepless, searching octroi.
No nation ever bore so much in the way of taxation without flinching.
They had none of those foolish notions which possess the minds of
many modern financiers, that a government can put on customs
duties and make foreigners pay them. They were perfectly aware
that trade to be successful must be free, that however much the
Hollander might be pinched in his daily expenditure, thrift might
overcome this evil ; but that to deter the trader from bringing pro-
duce to Dutch ports was to cripple the very life of a commercial
people, and make existence impossible. And so Dutch finance was
a charge on consumption, levied at the purchase of the article, or
on the event at which the impost was due, an income tax which
dealt with all expenditure at the time in which expense was in-
curred. But trade was free, and Amsterdam with other cities were
marts from which all European merchants took their price, at
which all traders congregated. Nothing but a political education
of the most stringent kind, a deference to authority which never
was shown to power, would have induced this extraordinary people
to submit to so searching a fiscal inquisition, and yet to remain so
free from protectionist illusions. Their finance formed a precedent,
but never became an example for other communities, perhaps
because no other community has been animated by so intelligent a
patriotism at that which marked the War of Dutch Independence.
Cromwell imagined that he could graft the system on English
finance. But notwithstanding the brilliancy of that great general's

DUTCH FINANCE AND LOANS. 437

career, his action, and that of those who were with him, was too
narrow. The English people took no side in either the first or the
second English Ee volution. They had been carefully excluded
from all stake in the struggle. To them a change of dynasty was
only an exchange of masters. Even now it may be well doubted
whether many Englishmen rightly interpret the meaning of political
struggles.

When the endurance of the Dutch taxpayers of excise was
apparently exhausted, the Dutch Government took to borrowing of
their more wealthy citizens, for there was no reason to believe
that they could go out of Holland for money. If they had had
recourse to a forced loan, as a special- income-tax from the wealthy,
and the expedient had been successful, the money could have been
raised and spent. But the Dutch knew that capital may be weak,
but that it is very mobile, very agile, and that it is better to attract
capital than to discourage it. When a government borrows money
from its own subjects or citizens, it is plain that it could extort the
money, for the success of the operation proves that what it is in
quest of is present. But entirely apart from the equity of such an
expedient, it is wise to examine its policy. Now every council-
general of the Dutch states who had any sense, knew that it would
be impolitic to do so, and the Dutch councils-general were very well
acquainted with the conditions of business. It is very probable that
many among them knew that to borrow on the future industry of
the community is to incur a double burden, to diminish the present
material of industry by devoting capital to an object which would
not increase the industrial powers of the community, and by forcing
those industrial powers to pay interest on a loan which it would
take the future industrial powers of the community to pay off. But
they borrowed from their own people, and the rate at which they
borrowed proved how considerable were the resources to which
they appealed, and how judicious was the conclusion at which they
arrived.

Assuming an intelligible necessity, a government has almost
indefinite powers of borrowing from its own people, under the con-
ditions that the habit of saving is in excess of the habit of expendi-
ture among them, and that the community has a reasonable freedom
of industry accorded it. Lord Rothschild once told me that the

438 PUBLIC DEBTS.

reason why the Jews were the financiers or loan-mongers of Europe
resided in the fact that the whole race saved, every one of them
striving to accumulate half his income. M. Sylvain van der Weyer,
the Belgian minister from the date of the Belgian separation to his
death, told me that this was the secret of Belgian wealth, and the
cause of Belgian agriculture, which should almost be called horti-
culture. Every Belgian, he said, irom the Duke of Arenberg to the
peasant, tries to save half his income. Now, such a people must
either hoard and hide its savings, a custom nearly obsolete ; or buy
land with them, a practice said to hold in Belgium and rural France ;
or employ them under the joint-stock principle, in industrial under-
takings, as is witnessed in many countries ; or lend them to govern-
ment. They may, in the last form, be lent to government for
reproductive purposes, as in railways or similarly remunerative
undertakings ; or for objects remotely remunerative, as in defences,
harbours, and the like; or in war, when whatever may be the
pretext, or justification, they are for all that concerns future
industry wasted, and remain a burden.

The power, then, which a government has of borrowing from its
own people, however seriously the operation may cripple industry,
is indefinite, under the above conditions. But a government may
find it difficult or impossible to borrow from its own subjects or
citizens. They may be too poor to lend voluntarily, as is the case
with Russia ; or they may be distrustful of the government, as in
British India ; or they can better afford to borrow abroad, because
they can find a more lucrative employment for their savings at
home, as in the British colonies. In these cases, the loan is held
out of the country. Now, though it is not easy to say where the
limit of possible indebtedness in such cases is to be found, it is
certainly far narrower than it is when the government borrows of
its own subjects. The Russian government, since it came before
the European Stock Exchange, has fulfilled its engagements. It has
paid its interest scrupulously and punctually, and we may be sure
with prudential motives. But it is probable that every rouble of
that debt is held abroad, and it is certain that all of it is believed to
be. Its power of further borrowing is, therefore, doubted, and, if
we are well informed, it has striven in vain to negotiate a further
loan in the Stock Exchanges of Berlin, Paris, and Amsterdam.

THE POWER OF RAISING LOANS. 439

Lenders of money to government are neither patriots nor politicians.
The strongest assurance that the loan was wanted for a Slavonic
purpose would not get cash from the most ardent Panslavist. Still
less would a Dutchman or German, or Frenchman or Englishman
lend his money to the Kussian government for political reasons. It
is lent to get an income, and if the prospect of the income is
dubious, either because the government is incapable of bearing a
further strain, or because the resources of the country are sup-
posed to be near upon exhaustion, the applicant will visit the
Stock Exchanges in vain. Even Pitt's "patriotic loan" was a
failure.

Perhaps an indication of this possible exhaustion, not it may
be exactly formulated, but not the less real or dominant, is to be
found in the demand which follows on a war. The civil war in the
United States was prodigiously costly, perhaps more costly than any
recorded war. But the Kepublic had no difficulty in borrowing
after the war was over, even when it was being waged, much of the
stock being temporarily held in England, and only relinquished
when the States determined on making their public debt the basis
of their paper currency. Then the price of what was still irredeem-
able was forced up so high that holders found it more profitable to
sell, and now, probably, every dollar of the debt is held by the States
bankers. After the Franco-German War, great as the waste of it
was, neither of the combatants were exhausted, and France found it
easy to borrow the indemnity which it paid, and the charges of the
war which it incurred. After the war between Russia and Turkey,
both combatants were exhausted. The credit of Turkey was entirely
gone, that of Russia strained so considerably that loans became
impracticable. The test of this state of things is to be found in the
exports and imports, for war is waste, and when the militant countries
cannot relieve the waste from their own resources, they purchase
what they want by the export of securities. Now the market for
these securities was narrowed, if not extinguished. When the
younger Bismarck told me, no doubt repeating what I knew to
have been his father's criticism on the situation, that ten years ago,
the Tzar invited revolution if he did not go to war, and bankruptcy
if he did, he expressed in political language what I am trying to
give you in economical.

440 PUBLIC DEBTS.

In the government of British India, to those who look below the
surface, the fact that its debt, unproductive and productive (and by
the former I mean the costs incurred for wars, by the latter, those
expended on railways) is almost entirely held abroad, is not reassuring.
The mass of the Hindoos is poor, but there is great wealth among
some of the native merchants and professional people. A Calcutta
counsel is supposed, as I am informed, to rival his English fellow
subjects in lucrative employment. The native merchants are many
of them reputed to be rich. But India stock is generally, govern-
ment and railway alike, held in England. Some of the native
patriots complain loudly that the resources of India are diminished
by the dividends transmitted to England in consideration of the
capital invested in Indian railways. They have said as much to
me, and I have told them that there is an easy remedy for the
grievance of which they complain — they may buy the stock them-
selves. But for some reason or other, the advice does not seem
palatable. The English nation, I presume, are reputed to be the
government of India ; of course I mean by Parliament. This is a
fiction, I admit, for it is very hard to get a house together for the
Indian budget. But it is a common weakness with nations, one
from which our own is not exempt, to expect great things from
government, and to grudge the sacrifices which are necessary in
order to get the great things. Perhaps we have been in this country
historically disappointed in our expectations, and have had to make
the sacrifices.

In the British colonies, most of the loans have been for reproduc-
tive purposes. British capital has constructed most of the colonial
railways, for the colonists, even when their finance is wise, and that
is seldom, can do better with their own money than to lend it for
public works. But even here a mistake may be made by the colony.
If I were a British colonist, nothing would cause me to distrust a poli-
tical advocate more, than reference to the illimitable resources of the
colony, and to the importance of its taking an imperialist place in a
great empire. Both may be true, but the translation of either into
active business may be disastrously premature. For in new countries,
whatever may be the future capacity, predicted by the geologist or
the speculative physicist, the limit is unluckily economical, and ia
the capital, the population, the market of the settlers, and, of course,

INDIA AND THE COLONIES. PAPER LOANS. 441

its industrial skill, which, in deference to Mr. Mill's opinion, it almost
invariably takes care to cripple or stultify by Protection. But all its
debt is held out of the country, and if the impression gets abroad
that it has spent more than it can earn wherewith to pay the
interest, and that it is likely to do so, the colony's borrowing powers
will soon be arrested. There is no little reason to believe that the
policy which has been inculcated by ignorant or self-interested
people on these young settlements is already leading to serious
economical complications ; and if these precipitate events, neither
colonial borrowers nor English creditors will have reason to be
satisfied with the counsellors of a rashly progressive policy, with
their tools and with their dupes.

The safest of public debts, then, are those which are held almost
exclusively by the inhabitants of the country which issues them.
But I have not quite exhausted the elements of distrust. There
is one which governments are capable of inflicting, and subjects
are powerless to avoid. This is the issue of an inconvertible
government paper, such an expedient being adopted in order to
create an internal debt. Practically such an issue is a forced loan,
to which the poorer classes contribute more heavily than the
richer, particularly more than the mercantile classes, who know
in the course of their trade how to discount the paper, and even
to make a small profit. Now, if a government is moderate in the
issue of such a paper, the necessity which every community has
for a measure of value (coin invariably disappearing when an
inconvertible paper is put upon the country) will keep up the
internal or nominal value to a point considerably in excess of its
exchange value, the true measure of depreciation. At the present
time two European governments have a forced paper circulation,
Austria and Russia. The exchange value of the Austrian paper
florin is from 15 to 20 per cent, below the silver florin, that of the
Russian rouble not half the silver value. But we are told that
internal prices have not materially risen in either country. The
reason is not that the redemption and retirement of the paper is
anticipated, and that therefore an Austrian or Russian cherishes
a hope which the foreigner cannot be expected to entertain, or that
specie exchanges as other commodities do, for no less or no more
than the amount which the paper nominally represents, but

442 PUBLIC DEBTS.

because in their internal trade the inhabitants of these two
countries have no choice in their circulating medium. But the
fact remains that such a currency is a debt, which should be
redeemed as much as a public debt is, forms part of the govern-
ment's liabilities as much as that public debt is, and is to be
calculated, as far as possible, when there is a wish to form an
estimate of a government's solvency.

The extent to which a forced paper currency can be cir-
culated without producing its effects on internal prices
depends on the discretion of government. If it merely
displaces the metallic currency but little effect is produced,
for a slight difference will make the metal disappear. But if,
through ignorance or necessity, the issues greatly exceed the
public wants, the depreciation may be rapid, and internal prices
may be so rapidly exalted that the paper is utterly discredited.
Such was the case with the paper money of the French Kevolution,
when notes to an enormous extent were issued under the name
of assignat or mandat, were ordered to be taken at their nominal
value under the threat of capital punishment to the reluctant
trader, were withal discredited, and were finally repudiated by the
government itself. Such again were the paper moneys of the
American War of Independence, when the colonies found it impossible
to keep their pledge of redemption. In a limited sense such was
the experience of the greenbacks in the Civil War, the forced cir-
culation of which, owing to Wall Street intrigues, was carried on
long after any justification of the policy had ceased. Such was
the experience of the suspension of cash payments by the Bank
of England in 1797. Now the bank note from this date till 1819,
when the resumption took place, was in one sense a government
paper, for the non-convertibility of it was an act of government.
In another sense, it was the issue of a private corporation, for all
the profits of the transaction theoretically remained in the hands
of the Bank. For some years the note was not depreciated in ex-
change value. It is true all metallic currency had disappeared,
except worn silver. But the notes had only filled up the void
which the disappearance of gold had created. But at or about
the year 1807, the Bank directors transgressed the caution which they
had previously exercised, and issued notes in excess of the public

INCONVERTIBLE PAPER. TAXATION OF DIVIDENDS. 443

want. The consequence was that the exchange value fell, prices
correspondingly rose, and the consequences of a forced paper
circulation in a trading community made themselves exceedingly
apparent. I shall show in the course of this lecture, what were its
effects on the rapidly increasing debt of the United Kingdom.

Again, the credit of a country is affected by distrust when it
taxes the dividends which it has covenanted to pay. This breach
of faith, as it must be called, was committed by the Italian
government. To levy a tax, however light, on the dividends
payable on a public debt is, disguise it as one will, a partial re-
pudiation, differing in degree only, and not in principle, from a
total repudiation. We in England levy an income tax on dividends
of government stocks. The awkwardness of this action was
justified by Sir Kobert Peel, and since that by Mr. Gladstone,
on the ground that remissions of duty left a larger margin to
consumers, i.e., to the recipients of dividends, and that .therefore
they might be expected to make compensation. But a remission
of duty, unless the remission is very large, is not necessarily
followed by a lowering of price. It does not necessarily ensue
that, if an excise is taken off bricks and tiles, the charge for house-
rent will be lessened. No doubt, the abolition of taxes on food
would more than compensate for the imposition of an income tax.
But Peel's first tariff reforms rather benefited the trader and manu-
facturer than they did the consumer, and I shall have occasion in
a further lecture to point out what have been the fortunes and what
is the present distribution of the income tax. But the principle
on which the income tax on dividends was justified or defended
is still maintained. It is and remains a tax on consumers, for it
is not enacted on the recipients of dividends on income when
the recipients live out of the United Kingdom. The Italian
government levies it on all indiscriminately. Now this is, I
repeat, a partial confiscation or repudiation, and inevitably a cause
of distrust. On the other hand, Italy has retired her forced
paper currency.

The circumstances, then, under which a government can most
easily borrow funds, and pledge the future industry of a country
to the repayment of interest and principal are — 1. That it borrows
principally from its own subjects. 2. That it makes its loans

444 PUBLIC DEBTS.

when the country gives every guarantee, either by its saving
power, or by its progressive ability, that the burden imposed may
be met. 8. That it preserves, in its relations to its creditors,
Unimpeachable good faith. 4. That there exists in the country
a class of persons who are not only able to invest in such securities,
but for various reasons are eager to do so. 5. That the borrowing
government gives every facility for the cheap and rapid transfer
of such securities from hand to hand, so that they may be the
best possible security for temporary loans, and the most con-
venient form for temporary investments. Hence, it is not only
just to the creditor, but expedient for the government to make its
own securities exempt from all transfer taxes or duties. 6. That
if possible its loans are effected for reproductive objects.

These, then, are loans negotiated under ideal conditions. I say
ideal, for I do not believe that all the foregoing six conditions
have ever been fulfilled in any of these borrowings. Of course,
the most excusable loan conceivable is that which fulfils the last
condition. But out of the great mass of public debt which
civilized societies, and some societies which it is perhaps a more
or less extravagant compliment to call civilized, very few loans
have satisfied the last condition. Even when they have pre-
tended to satisfy it, there is often a doubtful or second purpose
in the professed object. For example, loans have often been made
for the construction of railways, for instance, in Russia and the
British colonies. But for the former, it is notorious that
military communications were the principal objects of the loan,
when the pretence was a mercantile one. For the latter, it has
been too frequently the case, that local interests have induced
or constrained colonial governments to make expenditure which
will be so remotely profitable, that the interest on the advance
will swallow up the principal before there is any prospect that
the public works will be remunerative. Occasionally the true
purposes of the colony have been sacrificed to what are called
imperial interests, a fine sounding phrase, which may mean any-
thing, and generally means nothing, but which has the support
of adventurers in the colony, and unintelligent, because ignorant,
politicians at home. Nations, like individuals, may be induced
I to launch out beyond their means, to recklessly discount the

TEE OBDINAEY OBJECT OF LOANS. 445

future, to believe, as Adam Smith says, that their fortunes or their
abilities can stand a greater strain than experience warrants. In
such cases, there is apt to be a sudden arrest, perhaps an undue
alarm, frequently the adoption of what is believed to be a recuperative
process, which may be more disastrous than the original speculation.
Unless I am greatly mistaken, the economical condition of many
of the British colonies is far from satisfactory, and to bring this
about, English statesmen have unconsciously lent themselves, and
colonial adventurers have only been too willing to further
folly.

There can be little doubt that nations, when a serious emergency
overtakes them, are justified in using every and nearly any means,
in order to avoid collapse, or even the enforced cessation of
progress. But it is open to very great doubt, whether, on many
occasions in the history of communities, the facility with which
loans have been made is not a more effectual bar to progress than
that which has seemed to an existing generation to be formidable, and
whether it has not encouraged ventures in which success is almost
as disastrous as failure. Again, it is a question of the greatest
importance as to whether a present difficulty justifies the burden-
ing of future industry, the restraint of a coming generation.
There is a commonplace with some reasoners on this subject, that
the generation to come succeeds to a splendid inheritance, which
the wisdom of a past age has protected, but, of necessity, has
burdened. But what may the future generation say about the
legitimacy of the charge ? They may retort that the charge was,
after all, a gambling debt, which the riper intelligence of a later
age has analysed and detected. Chatham imagined that in creating
a sole market for the British merchant and manufacturer, he
justified the permanent charges of the Seven Years' War. The
experience of the war of American independence, by which that
theory of a sole market was tested, in which another debt of even
greater amount was incurred, proved that the theory was as base-
less as the South Sea Bubble. Is the future to be indefinitely
pledged to the errors of the past ? And then when we remember
that all finance in inevitably based on the contributions of those who
work for wages, and cannot escape the tax-gatherers, what may
they say in the future who have no share in the inheritance?

446 PUBLIC DEBTS.

Surely the wisest course is to pay off debt as soon as can be, and
incur as little as possible in the future.

In a well-known passage, Macaulay has commented on the
alarms which bygone generations of Englishmen have expressed at
the growing magnitude of the public debt, and he has pointed out
with great cogency how the growth of wealth has been incompar-
ably more rapid than the growth of debt. But I conceive that
even in the ages when the debt was contracted, it must have been
clear that wealth grew faster than debt did, else how could the debt
have been raised ? Beyond question during the great continental war,
the debt grew with frightful, with unexampled rapidity, and wealth
grew with it. But wealth was very unequally distributed, was the
share of very few persons. Mr. Porter has shown, in his " Progress
of the People," that the costs of that great struggle, as far as
England was concerned, was borne by those who lived on wages, or
were engaged in genuine industrial callings. In those times, the
criticism of those who had to pay was unheeded. English finance
was or became, like the Dutch finance of the wars of independence,
a tax on every function of life, on all its enjoyments, on all its
necessities. But such people had to endure in silence, or at best to
murmur inarticulately for all practical purposes. I do not doubt
that had they found a \oice, and had their voice been effectual, the
policy of Pitt and his successors would have been challenged. For,
I repeat, it is a maxim in finance, that the sufferings of the nation,
when taxation is heavy, are the sufferings of the poor, that beyond
naked confiscation, or as a statesman has said, by the ransom of
their property only, can taxation really touch the rich. Now it is
an expedient which is full of danger to visibly increase the area of
taxation, if that taxation is to be effective. I challenged the
Chancellor of the Exchequer in 1886 to tell the House of Commons
what new tax he could impose without risk to himself and to his
Government, and I could get no answer from him. The days
of Vansittart are gone by.

Loans based upon imperial or local pledges, are of two kinds,
permanent or consolidated, and temporary or terminable. In the
first case, the payment of the interest is guaranteed, and the
redemption of the principal is left to the discretion or convenience
of the debtor. In the second, the payment and the redemption are

PEBMANENT AND TEEMINABLE LOANS. 447

united in the same act. Now it would be beneficial, if all loans
were of the later class, and of late years, financiers have, with some
success, planned the extinction of debt by terminable annuities.
But there are always two difficulties in the way of this desirable
policy. In the first place, only a few persons, or a few classes of
investors, look with favour on a security which is annually decreas-
ing in value. Now for actuarial reasons, to be an effective
relief, the terminable annuity must rapidly decrease in value. Then,
as I have stated, it is all important in government loans, that the
security should be readily saleable or convertible. But there are
more permanent and entirely safe investments, which bear a higher
interest than terminable annuities do, but are not immediately con-
vertible. Now the agents who are most likely to negotiate termin-
able securities are those who do not desire, as traders and bankers
do, securities which can be sold at one hour's notice, or can be
pledged to nearly their fall market value. Hence the market for
terminable securities is limited, and in order to float them, a
financier must make an actuarial loss, or offer them at less than
they are intrinsically worth. In the second place, the negotiation
of such securities, owing to the income tax, is difficult, for it will be
plain to you that if 3 per cent, is paid on a terminable annuity, it
is a heavier tax than 3 per cent, paid on a perpetual annuity.
In the former it is 8 per cent, on principal and interest, in the
latter 3 per cent, on interest only. For reasons which I hope
to make plain when I deal with modern taxation, it is by no means
easy to make the English income tax accommodate itself to this
manifestly unequal charge.

It now remains that I should give you, after having spoken at some
length on the economical principles which are involved in the
system of creating public debts, some historical facts and illustra-
tions which will illustrate what I have said.

The English public debt is almost entirely the creation and out-
come of the Revolution of 1688. It is even made a reproach of
that great event. It is, if the anticipation of future revenue can be
justified, and if the occasion on which the anticipation was made
can be defended, greatly to its reputation. Loans were probably
negotiated by despots in the days of Ninus and Sesostris. There
are notices of such transactions in the time of the Athenian and

448 PUBLIC DEBTS.

Roman republics, and these were apparently liquidated. Loans
were raised by Philip II. and Louis XIV., and were followed by
repudiation. There is this danger in a loan to a despotic govern-
ment, that its first concern is its own security, and to that it will
sacrifice the most sacred pledges by this the law of its nature. The
City of London, as I have lately shown, lent to Jame3 L and
Charles I., but took care to have security. It was in this way that
the Companies aggregated their estates in county Derry. But a loan
to a despotic Government is always a precarious loan. I cannot
tell when these people will repudiate, but that they will preserve
themselves in preference to their creditors is ultimately certain, and
will do so all the quicker if their neighbours begin to suspect their
paper.

I will readily admit, for the economical interpretation of
history has, in matters of finance, to take account of political
facts, that the Parliament of the Revolution was the travesty of a
Parliament. But behind it, and to be conciliated, was the moneyed
interest. In these Parliaments for many a year, the four members
for the City of London were of more importance than fifty times
their number from Grampound, Old Sarum, the two Looes, and
Gatton. It was in the power of these persons to keep the Govern-
ment on its feet, or to let it stagger. The London merchant of the
Eevolution and of the two wars which followed the Revolution,
those of the English and Spanish succession, exacted no heavy
price for an assistance which was invaluable. The nation had got
rid, not entirely of personal government, but of the worst features
in it, and any Parliamentary Constitution, however anomalous it was,
however much it might cherish forms which had lost their vitality,
was better than the dispensing power, and a corrupt bench of judges.
The public danger in the days of the Stuarts came so nearly home
to the people who had power, that the existence of the National
Debt was looked on as the best guarantee of the Act of Settlement,
in which the least significant part was, if we are to judge by what
was written at the time, the devolution of the Crown on the house
of Hanover. I have no doubt that the risks which were sure to be
seen in the event of the old line being restored are the key to the
indecision of Harley, and must be read between the lines in the savage
disappointment of Atterbury and Bolingbroke, when the latter

THE LOANS OF THE EEVOLUTION. 449

described his colleague and rival. You will find it quoted by
Hallam as of the old Pretender. It is really of Harley.

Most of the early loans were terminable, and special taxes, as is
now the custom in countries with little credit, were assigned to the
interest. I have told you before that the existence of the floating
debt was a scandal to "William's government or advisers, and I think
that Bentinck and Zulestein, if they were anything but diplomatists,
might have instructed Montague and Godolphiu in the expedients of
Dutch finance. In reality, the earliest part of the permanent debt
was that of the bankers, the money which nearly thirty years before
Charles the Second stole, when he conspired with Louis XIV., in
1672, against the Dutch, a debt which was funded towards the con-
clusion of William's reign, but on condition that it should be re
deemable on paying a moiety of the principal. I am disposed to
believe that the difficulty in the way of the financiers of the Kevolu-
tion was the impossibility of levying solid customs duties, in the
teeth of the Owlers and their sympathisers, and the unpopularity of
excises. The English people is said to be a highly intelligent race,
but it has a persistent habit of confusing names with things. This
illogical trick is poor testimony to its shrewdness, but statesmen, I
presume, must do the best with the material which they have to
deal with, and be excused for being slow in insisting even on neces-
sary truths.

The creation of the public debt of Great Britain in the form or, at
any rate, on the lines with which we are familiar, was the work of
those who manipulated finance in Anne's reign. The war of the
Spanish succession was the opportunity of the historic Whigs ; the
peace of Utrecht, which sacrificed, and not without reason, all the
efforts and all the expense of the war, was the work of the historic
Tories. What was achieved was the humiliation of Louis XIV., the
impoverishment of France, and the admission of England to the
lucrative but disgraceful business of importing African slaves into
the Spanish possessions in the New Wrorld, under the terms of the
Assiento treaty. The nation which imported slaves into the Spanish
possessions, under the Assiento treaty, imported them into the
American plantations and such of the Leeward Islands as belonged
to Great Britain, under the sole-market theory. The first-fruit of
the Assiento treaty was the South Sea Bubble, the last was the civil

30

450 PUBLIC DEBTS.

war between the Northern and Southern States of the American
Union, for the American people justly charge the historical English-
man with being the cause of the trouble which nearly rent the Union
in twain a quarter of a century ago. You will find, as you study
history, that economical causes have had much to do with the
events about which the philosopher of history dilates and prates
chaotically.

The new departure which Walpole undertook in dealing with the
public debt was and is one of the most significant economical events
of the eighteenth century, full as that century is of great and lasting
facts. The early debts of the country were in various forms, and
secured by different special taxes. They were sometimes permanent,
sometimes terminable. They were at all rates of interest. Now,
peace was generally maintained in Europe during the period which
intervened between the treaty of Utrecht and the War of the Austrian
succession. In this period English commerce, especially with the
American plantations, made great progress, and the country was
generally prosperous, for the new agriculture was being extended,
prices of food were low, the profits of the new system were high, and
wealth was being rapidly accumulated, not by the traders only, but
by the agricultural classes. The rate of interest fell below all pre-
vious experience, and opportunities of permanent investment were
few. Hence the price of stocks rose far above par, and the time was
ripe for a financial experiment. Walpole was paying off the public
debt rapidly, and he resolved to deal with the residue. He deter-
mined on consolidating the various debts, and consolidating the
funds from which provision was made for them. He contrived, by
the offer of payment at par, to reduce the interest on the debt, and
to unite most of the public liabilities into a common stock, since
known as consols. He was aided in his policy by the alarm which
had been expressed at the magnitude of the National Debt.

From Walpole's innovation is dated that remarkable departure in
the finance of public debt, which has been imitated by all nations
subsequently. It is plain that a borrower must, according to the
state of the market, the plenty or scarcity of money, and the solidity
of the security offered, vary the rate of interest which he proposes to
the lender, giving less or more as the circumstances are more or less
favourable. And this is the ordinary way in which interest on more

THE SYSTEM OF BOBBOWING. 451

or less permanent advances, and discount on temporary advances,
i.e., the negotiation of commercial bills are determined, the key to
the latter being supplied by the official rate of discount settled by
the Bank of England, and announced to the public. The circum-
stance which principally determines the Bank of England in fixing
this rate is the abundance or scarcity of the metallic reserve which
it possesses itself, though this is by no means the only cause of
action, as great competition for discounts, due to a real or imaginary
alarm as to the immediate future, may, apart from bullion move-
ments, necessitate or appear to necessitate a rise. Hence, the rate
of discount, i.e., of inverted interest, is subject to much greater and
more numerous fluctuations than the rate of ordinary interest.
Public stocks, as they are a peculiarly convenient form of pledge,
partake of the nature of short-dated bills and ordinary investments.
They are less liable to fluctuation than the former, more than the
latter.

A borrowing government always makes it a condition with its
creditor that the latter may not, as most creditors can, demand re-
payment of the advances which he makes, at pleasure or after notice.
The motive of this precaution is plain. A government cannot,
especially in a serious crisis of public affairs, be exposed to the risk,
in addition to its other difficulties, of a run on its exchequer, for it
does not borrow, as a trader or a banker does, of all comers at all
times. But, on the other hand, it reserves to itself the right of
paying off its creditor at its pleasure. If it has a surplus in the
treasury it can, and under recent statutes must, purchase its own
stock in the open market, where its securities are always saleable,
and extinguish as a debt that which is purchased. This rule is abso-
lute, so absolute that if, in the appropriation of supply, Parliamentary
grants are found to be in excess of departmental demands, the sur-
plus cannot be devoted to any other service, but must be applied fo
the extinction of debt. Now a supplementary estimate is, under
ordinary circumstances, bad finance, and, unless an adequate expla-
nation is given, is prima facie censurable. Hence the departments,
though under the criticism of the estimates (which is indirectly much
more effective than the outside public imagines) they strive to reduce
this quota to the lowest amount which the services are content to
accept, generally seek to have some margin over, and thus, in a

452 PUBLIC DEBTS.

normal condition of finance, stock is regularly purchased and extin-
guished every year.

Sometimes, however, "when the price of stocks is very high, or, in
other words, when a large amount of savings is seeking investment,
the government can venture on a larger operation. After carefully
sounding the market, it can exercise its right of offering the creditor
the election of having his money, a hundred paid for a hundred,
really or nominally lent, refunded in full, with the alternative of
accepting a lower rate of interest. It will be plain that it can under-
take this operation with success only when its creditor is placed in
such a position as to make him see that to accept payment in full
would be less profitable than to accept the lower rate of interest. Of
course it may give him, as an expedient, a higher nominal principal,
e.g., 105 stock at the lower rate of interest in place of 100 at the
higher, and in other ways, with which I need not trouble you. It is
also important to observe that when the public debt is held in small
parcels by great numbers of persons, as in France, the operation of
converting a debt bearing high interest to one bearing low interest
is more difficult, not, perhaps, because it produces discontent among
the holders of the debt so much as because the trouble of the
transfer may be excessive, and the cost outweigh the gain.

Now Walpole turned the greater part of the existing debt into a
4 per cent, stock. The times were favourable. But his successors
in creating future debt adopted, on the whole, the other alternative
of borrowers. They fixed the rate of interest, and varied the
amount of the principal, offering £100 consols at the price which
the public would give -for them, or financial agents would under-
write, that is, guarantee for them. The price paid for new issues of
consols has greatly varied. During part of the continental war, it
was more than once a good deal below £50, and the Government
had to give £100 stock for less than £50 cash, that is, to virtually
pay over 6 per cent, for its loan.

This proceeding, which got the name of the funding system, has
been severely criticized. From one point of view the criticism is
obvious. By taking a low rate of interest, and covenanting to
redeem at par, the Government deliberately debars itself from
cutting down the interest in the future, under the operation which
I have described. And then the critics go on to say, " The

THE FUNDING SYSTEM. 453

greater part of the public debt by no means represents the cash
that has been paid for it. Lucky fundholders, who invested at the
price of 50 or less, are receiving 6 per cent, in perpetuity, and at a
time when 3 per cent, has practically become normal. The finan-
ciers who have adopted the funding system are putting the English
people, whose savings are pledged to the payment of interest, in a
worse position than the financiers of the Revolution put them, who
did indeed pay 6 per cent., but in such a manner as left the
door open for the future reduction of interest. This door their
successors have effectually closed, for there cannot be a very clear
prospect of much reduction below 3 per cent. The nation, in brief,
is constrained to pay money which it never received, and to be
charged with a high though hidden interest in the interval."

The criticism is plausible, but there is an answer to it. " The
very circumstance," it may be said, u. which you are alleging must
have been present to the minds of those who negotiated the loan,
and to those who purchased it, or invested in it. The public
creditor knew well enough that there was little risk that his stock
would be converted, and he realized this favourable feature of the
loan in his mind, when he made his offer. He gave more than
he would have given, if he had not been assured against the risks
of a reduction. It is true that he paid £50 or less for every £100
stock. Suppose you had borrowed in a stock paying a high rate
of interest, but liable to conversion, you would have probably had
to pay, not 6 per cent, in perpetuity, but 8 per cent, or 10 per cent,
for a long time to a lender who assisted you in your necessities, but
would have assuredly had his services forgotten as soon as you,
being in funds again, could force him to acquiesce in far less
favourable terms. You have reserved to yourselves the right of
redemption at par, and you must take all the consequences of this
right, when you deal with people whom you invite to consider their
own interests, while you are considering yours." Most of the best
financiers with whom I have reasoned on this matter state the case
of the government as I have given it, and conclude that not only
did the administration borrow in the easiest, but in the cheapest
way.

This subject has not only been discussed by political economists
as a speculative question, and within that part of the subject in

454 PUBLIC DEBTS.

which they are most likely to be right, the domain of money,
finance, and the exchanges, where practical experience is always at
hand to correct the crudities of metaphysics, but it has been
debated under very plausible circumstances in the House of Com-
mons. In the prolonged and somewhat heated discussions on the
suspension of cash payments, after the absurdities of Mr. Van-
sittart and Lord Stanhope were combated, for a time with little
success, by Lord King and Mr. Horner, a question at that time
conveniently kept in the background by the government necessarily
came to the front, and was pressed by the very men who had
defended Mr. Vansittart's motion and Lord Stanhope's law. For
when the war was over, and the restoration of the currency was
demanded, these people argued as follows, forgetful of their dogma,
that u the value of the bank-note had not fallen, but that of gold had
risen ■ : " We are left, now that this just and necessary war (one of
the stock phrases of politics) is over, with an enormous, a crushing
load of debt. Prices of agricultural produce are falling, and the
agricultural interest is threatened with ruin. There is great dis-
content abroad, just discontent, which in the interest of law and
order (another stock phrase) we are obliged to repress by severe
measures, by a regrettable extension of the criminal law, happily and
adequately supplied by the vigour, bravery, and forethought of Lords
Sidmouth and Castlereagh. But we have to endure, in addition to
our misfortunes, the sight of the stock-jobbers and fundholders, who
have fattened on our misery, and are now receiving more than half
our taxes. And for what? We have put down the Corsican
usurper, and restored peace to Europe, legitimacy to its thrones.
These people not only get under our funding system at par, stock,
with a number of incidental advantages, in exchange for some £50
or less, but they paid this inadequate quota in notes which were
constantly at a discount of 80 per cent. It is intolerable, it is
unjust, that we should redeem the stock under the terms of so
monstrous and one-sided a bargain. It is enough that we should
keep faith with them when they made their advantage out of our
straits. But to pay them in full-weighted sovereigns would be
suicidal. For years past the one -pound note has been worth only
14s. 6d. We must issue sovereigns for the future at the rate at
which notes have been discounted, and the financial harpies will

THE BETUBN TO CASH PAYMENTS. PEEL'S ACTION. 455

even then get better terms than they deserve." I am not quoting
to you the language or the sentiments of Cobbett and orator Hunt,
and other misguided but honest men who denounced the war and
the paper money, and the funding system with equal and with
impartial rigour, but of nobles and statesmen in both houses.

Fortunately for the nation better counsels prevailed. The service
which Peel did British credit was almost, perhaps quite as great
as that which he did when he freed British trade. Peel seems
to me to have been the greatest of Parliamentary tacticians.
His writings, published by Cardwell, are almost childish. His
speeches are carefully prepared. But his principal power was in
debate. He was very ready, and had that rare gift of puzzling
an opponent by timely questions and timely rejoinders. Above
all things, Peel was transcendently honest. He was slow in
changing his opinion, but sure when he had changed it. A Con-
servative by instinct, he was the most dangerous of allies to un-
thinking Conservatism. In particular he knew that all his defences
might prove untenable, and that it was useless to maintain a
political fortress when a battle was fought and won in its vicinity.
It was this prescience about the real worthlessness of a reputed
safeguard which made him so much stronger than the Whigs,
whose position after 1832 seemed unassailable.

I have not time to tell you of Price's absurd sinking fund, which
took Pitt in, and increased the burdens which the nation was
already bearing, and of the more practical policy which has in
these later days, and in the hands of Peel's most capable pupil,
done so much to reduce the debt and is within reasonable dis-
tance of doing so much more. It chiefly consists in the
judicious creation of terminable annuities, in making the charge of
the debt a fixed or nearly fixed annual amount, and in gradually
lessening the principal, while it maintains the interest. For-
tunately in finance there is no party, at least just now, and the
most suspicious, angry, and determined opponents of a living
statesman's political opinions, bear testimony to his incompa-
rable skill in dealing with national finance, and especially with
the orderly liquidation of the public debt.

XXI.

THE THEOBY OF MODERN TAXATION.

The financial situation in 1688 and its difficulties, contrasted with
those of 1640 — The two Bevolutions compared — Customs and
excise — The analysis of taxation — The land tax — The prevalence
of smuggling — Walpole, his fortunes and his policy — The wars of
the eighteenth century, of the Austrian succession, and of American
Independence — The growth of debt and taxation — The taxation of
inheritances — Mr. MilVs theory — The avoidance of legacy duties
by the rich — The income tax and its history — An income tax
intrinsically unfair — Later British finance*

The second English Eevolution, as I am accustomed to call the
events of 1688, in contradistinction to the first, by which I mean
the events of 1640, was from the beginning characterized by a new
system of taxation. The new departure was, if you will, inchoate,
clumsy, blundering, experimental. It deserves these and perhaps
stronger epithets. But never were a set of men put into a moE9
difficult position than the financiers of William's reign were.
They were entirely new to the most difficult business in all finance,
to the perpetual puzzle of all inventors of taxes, which is — 1. What
will people bear without resenting the action of government ? 2.
What kind of tax is least likely to cripple industry and derange trade?
3. If taxes, which satisfy people or at least do not dissatisfy them,
are imposed, what machinery can be relied on for collecting them ?
Now at the Eevolution projectors of new taxes were swarming.
The pamphlets of the age are full of projects, submitted to the
finance minister and the public, from which a plentiful revenue is

TEE FINANCIAL SITUATION IN 1688. 457

promised, without loss or inconvenience to the persons who are to
contribute the tax. It has been my business, for several reasons, to
examine with some minuteness the vast mass of pamphlets in the
Bodleian Library, and if one could argue from the multitude of
suggestions, financial shrewdness was at the time a peculiar gift of
the English public. When one examines the proposals, one is able to
see whence Swift derived the truest and most caustic part of the
comments which he makes about the occupations of the political
philosophers of Laputa.

The situation was peculiar. One part of the finance of Crom-
well, heavy direct taxation of land, was intolerable, though it had
to come in the end. Another part of it, an octroi duty, paid under
the name of excise, by every purchaser, when he bought articles of
necessity and convenience, was odious in the last degree, both to
dealer and consumer — to the former, because it made him a respon-
sible tax-collector for the government; to the latter, because it made
the presence of the government visible in its least attractive and
conciliatory function, in every part of the business of life. It was
no doubt a relief to know that arbitrary government by king and
courtiers was at an end. It was still pleasanter to find that
ecclesiastical tyranny was checked. But as a rule, the victims of
arbitrary government are few. To the mass of men, the high-
handed violation of law and order, under the pretence of maintain-
ing law and order is rarely visible ; for, in those ages at least, the
government chastised those only who professed to be the leaders in
the popular cause, and did not organize a system of terrorism against
the whole people. I imagine that the Star Chamber and the High
Commission Court were more an object of alarm and anger to the
mass of those men who met in November, 1640, than they were to
the peasants and shopkeepers whom the Hampdens and Pyms, the
Hydes and Seldens, the Cromwells and St. Johns represented. But
in all which makes taxation vexatious Cromwell's excise was more
hateful than Charles' ship money. Besides, when people get angry,
and call the fiscal system of a country " oppression, thraldom,
and misery," it matters little to them that the charges of which
they complain are imposed by constitutional authority. It is no
doubt a great thing for a government to shape its policy under the
apparent control of a Parliament, and with its sanction. But men

458 THE THEOBY OF MODERN TAXATION.

who believe that they are oppressed by a Parliament will question its
authority, and even say that it has been recreant to its indisputable
duty and to its admitted pledges.

Again, it was perhaps no great boon to have exchanged the control
of Laud's bishops and other officials, the etcetera of the famous oath,
for a prying vexatious directory, engagement, assembly, Presby-
tery, or whatever other engine of theological control was evolved
from the Babel of sects. Men wished in some vague manner to be
free, though they were far from seeing that toleration or equality in
theological matters was the only true freedom. But they found that
they had exchanged the free and easy parson, who did not come
very willingly into Laud's schemes, for a sour and vexatious fanatic.
I do not indeed believe that the Puritan movement, except locally,
embraced the country folk. I cannot otherwise account for the
influence which the rural clergy, poor and low born as most of them
were, exercised after the Kestoration, or for the general popularity of
the Clarendon code. It must, I think, be plain that the Commonwealth
contrived to destroy its own principal agent, the organization of the
Puritans. It might have done this, and the morality of the move-
ment have survived. The mass of the English people took no
part in the hideous orgies of the Eestoration. But the politics of
the first Kevolution and the politics of the second were equally
aristocratic. You will often find in history that a leader of the
people, whom his enemies or rivals have been used to call a dema-
gogue, becomes in course of time the advocate of aristocratic
reaction, perhaps has always supported it.

The first Kevolution was not menaced by foreign intervention,
Europe was, when the contest began, entirely exhausted by the
Thirty Years' War. The French king, who was hereafter to imper-
sonate the spectre of universal empire, was a child, and the policy of
Bichelieu and Mazarin was not inclined, either by interest or
gratitude to make the cause of Charles its own. Few things, I
should conceive, would have been more ridiculous or more offensive
to Bichelieu (for Louis XIII. was a nobody in French affairs), than
the absurd and useless assistance which Charles and Buckingham
gave to Bochelle. If he and his successor entertained, as is the
custom of statesmen, no feelings of revenge, on the other hand
they could not but keep alive the heartiest contempt for the silly

TEE TWO EEVOLUTIONS C0NTBASTE1X 459

dupe of the silly Villiers. The Dutch democracy, led by the family
feeling of the Prince of Orange, showed some sympathy for the
royal cause. They harboured the murderers of Dorislaus, certain
obscure Scotch loyalists and bravos. They paid a long penalty for
their superfluous hospitality. They harboured Charles, who repaid
them of course with ingratitude and perfidy. After 1672, one
would have thought that every Dutch Calvinist, whom pre-
destination had not entirely divested of all forethought, must
have treasured up the Divine maxim, " Put not your trust in
princes."

The authors of the second Revolution had a very different state
of things to contend against. The boy of the first Revolution was
the terror of the second. The Peace of Nimeguen had left Louis
XIV. in a position which was only second to that of Napoleon after
the treaty of Tilsit, and about equal to that of his nephew after
the Italian campaign and the cession of Nice. Now Louis XTV.
had every reason to assist the Stuarts in their policy and their
pleasures, and thought no money wasted which would secure them
in both. The expulsion of James must have been a severe disap-
pointment to him, and the protection accorded to the royal exile a
somewhat hopeless expense after the Irish campaign. In that
country of long memories, Ireland, Cromwell is always named with
dread, James with contempt, though I do not think that the
Irish read Macaulay. Now in 1689 Louis was seen to be ruler
over a kingdom which, being entirely under one man's authority,
was known to be the most populous state in Europe, and believed
to be by far the richest. The financial policy of Colbert had
dazzled the nations; and the French, i.e. the France which lived on
the peasantry, were pleased at the effect. It was then that prestige,
which of course you know means a juggler's imposture, began to
describe French ascendency, and to exercise a permanent influence
over French action. In crder to understand the finance of the
Revolution, you must understand the political situation of Europe.
England had one ally bound to her to be sure by the strongest
of ties, the sense of mutual danger ; and, though England was
in this war and in the next the protector of Holland, she
made that unfortunate country pay dearly in the end for her
services.

460 THE THEOBY OF MODEBN TAXATION.

You will see, then, if I have made my inferences plain, that even
if England had possessed the most intelligent and venturous finan-
ciers in Europe, it would have been difficult to raise a new revenue.
The old excise was utterly odious, and could not be revived. There
was a new excise, a tax levied on the dealer, which experience
showed to be tolerable only because it chiefly fell on the working
classes. But it was doubtful as to how far it could be extended.
There was a quasi-personal tax, dating from the Kestoration, which
was supremely odious, the hearth money. That had to go, though
not without misgivings at the Exchequer. It was not possible, so
it seemed, to renew a land tax on the lines, or beyond the lines of
the old temporary taxes, or the projected commutation of feudal
dues. I say beyond the lines, for the hereditary excise did not
certainly yield a tenth part of what was soon found to be wanted.
Then there were customs. But, as I have often told you, even
when the English were expected to be patriotic and were warned
that the supremacy of Louis would condemn them to a diet on frogs,
and the substitution of wooden shoes for leathern, they applauded
the sentiment and traded with the smuggler of French goods. I am
not surprised. In my experience of human life I have constantly
witnessed the struggle in men, otherwise pious and honest, between
their conscience and their interest, and have recognized with un-
feigned regret that the latter has generally had the better of it.

The metaphysicians of political economy often debate as to the
grounds on which taxation is imposed. Now there is no doubt that
in early days it was argued by lawyers and divines that the prince,
like an Irish chieftain of the old days, should spend his subjects'
money at his discretion, and defend them from wrong in considera-
tion of their contributions. To be sure he interpreted, like the
aforesaid chieftain, his own duties as well as those of his subjects,
and generally to his own relief, and their disadvantage. It was
ultimately found, though only after many struggles and not a few
revolutions, that it was not safe to trust the ruler and his advisers
with the interpretation of the situation. Then it has been alleged,
by a dangerous metaphor, that the state is to be likened to a vast
property, in which each of the citizens or subjects has his share, and
that as the partners, or tenants in common of an industry or an
estate, have received their share of the produce, they should be in

THE ANALYSIS OF TAXATION. 461

duty bound to contribute to the expenses of management. But
unluckily the analyst of taxation finds that, as soon as the limits of
destitution are passed, those who get relatively least pay most
relatively to the cost3 of management, for taxation is not effective,
except it levies imposts on those articles or those practices which
the mass of the people cannot or will not do without. Then, more
plausibly, the function of the state, which has nothing of its own,
and must, it is admitted, curtail every one's enjoyments in order to
exist, performs a high and necessary service, in which the protection
and continuity of the working-man's industry is of no slight signifi-
cance. Taxation, then, is the payment rendered for service done.
The difficulty in this theory is, that one is constantly invited to
criticize the reality, even the pretence, of the service, and the people
in possession are very apt to resent the criticism. Adam Smith,
with his usual insight into human nature, and the relation of means
to ends, suggests that taxation should be merely relative to enjoy-
ments, i.e. , should not touch that which people must spend in order
to live and work. I do not know whether I have stated all the
views which are alleged. If there are more and you ask me about
them I will try to explain them ; for though the metaphysics of
political economy are well-nigh as boundless as space, they are
generally quite as shallow as a plane superficies is.

The financiers of the Revolution, then, had to find out what taxes
the people would bear. Poll taxes were levied, graduated accord-
ing to the rank or condition of life, and disappointed those who im-
posed them by the scantiness of the produce. They lasted for eight
years. A house tax increasing with the number of windows was
imposed in lieu of the hearth money, licenses to trade were granted,
and stamp duties, again in imitation of the Dutch, were imposed on
legal documents. Duties were levied on goods coming from the
East Indies and China, and from some European articles. There
was the impost of 1690, of 1692, the new duty of 1695, the French
duty of 1696, and the new subsidy of customs in the same year.
The excise on beer was increased, an excise on spirits imposed, and
another very heavy one imposed on salt. Not to weary you with
details, I may state that the finance was always experimental, and
constantly had to be abandoned, because it proved disastrous to
industry.

462 THE THEORY OF MODEBN TAXATION.

The resolution to which Parliament came soon after the Kevolu-
tion, that it alone was capable of granting a charter which could
confer a trade monopoly, a resolution which the quarrels of the
two Houses over the privileges of the East India Company had
accentuated, led to a new and most timely financial operation.
Two great companies under this new doctrine were created in the
reign of William III., the Bank of England and the New East
India Company. The payment made to the Crown, or rather the
Kevenue, for these privileges seems small to our modern experience,
but the sum of £3,200,000 which these two companies paid for their
privilege was an exceedingly important item in the finance of the
period — not less than a sixth of the war expenditure from William's
accession to the peace of Eyswick. Still more important, in the
case of the Bank of England was the fact, that in creating this
corporation, Parliament created a great financial agent whose
existence was bound up, or supposed to be bound up, with the Act of
Settlement, and, more to the purpose, was found to be the safe and
trustworthy instrument by which, in succeeding wars, loans could
be negotiated, public credit could be established on a secure basis,
and a reduction, as I told you in my last lecture, in the rate of
interest payable on public securities could be effected, during the
long and pacific administration of Walpole.

The land tax, that most distasteful of Cromwell's expedients to
the landowners, was reimposed in 1692. After a struggle with the
Commons in which the Upper House strove to eecure some advan-
tages to their own order, the Lords yielded. The system began
with a monthly assessment, strictly in the nature of a property tax.
In 1692 it was assessed at 4s. in the £, and the assessors took no
oath. In 1693 they took an oath, and the produce of the tax was
less, a practical illustration of how little value promissory oaths are.
After various expedients had been tried for making the tax more
fruitful, Parliament, in 1697, fixed the amount which should be
raised, and distributed over counties and towns acco ding to an
unalterable valuation. In theory, no doubt, the land tax of 1697
was assumed to be collected from personal property as well as
from houses and land. In practice it came to be a tax on real
estate, unchangeable not only in the amount collected, but in the
amount assessed, and thus after so long an interval from the first

THE LAND TAX. 463

assessment it became exceedingly unequal. The remission of the
tax on personal property became inevitable, for personal property
is essentially shifting. The representative of real estate is always
present or at least discoverable. The representative of personal
estate in 1697, or of his representative or alienee a century later,
is not discoverable, and to transfer a fixed tax to one who has no
relations whatever with the person who was originally rated, was
out of the question.

Two centuries ago, land or the rent of land, which had risen
without effort on the part oi the owner some twelve times in the
course of the seventeenth century, was deemed to be a peculiarly fit
subject for taxation. In the first place, it had escaped, by a Parlia-
mentary Act from its hereditary liabilities ; in the next place, these
rents, as far as legislation could effect this result, had been
peculiarly favoured by Parliament; in the third, it was supposed to
be specially bound to the new settlement ; in the fourth, a tax on it
formed, in the necessities of the state, the only escape from a
particularly vexatious excise, or a capricious, nugatory, or oppres-
sive customs duty. The land tax was beyond doubt a very dis-
agreeable impost. With an improving agriculture and with
increasing rents, it was resented in the eighteenth century by the
country party. But the Seven Years' War and the War of American
Independence rendered its permanent imposition at the highest
rate, but on the old assessment, inevitable ; and in 1798, Pitt, in
order to carry out a financial operation, during a time of singular
financial difficulty, made the land tax a perpetual, but redeemable
charge.

The war of the Spanish succession cost the British nation (for
in 1707 the Scottish Parliamentary Union was carried out) more
than 50 millions, of which 3-7ths was raised by loans. But by
this time the British financier found that the country was gradually
being accustomed to excises and customs, and that the system
could be extended. It also became the practice to grant these
customs and excises for far longer times than was originally thought
prudent, and for the obvious reason that, in this manner, greater
security would be given to the loans which were raised, and the
loans themselves could be procured on easier terms. This war
too saw the beginning of those more modern treaties of commerce,

464 THE THEORY OF MODERN TAXATION.

in which the fiscal policy of the country was made to do service on
behalf of the sole-market theory. The Methuen treaty with Portugal
was the type of that economical diplomacy which was criticized
adversely by Adam Smith. As yet, however, the taxation was of
cheap luxuries, cheap because neither excise nor customs make a
substantial revenue, unless they attack the consumption of the
poor. The duties on foreign corn existed practically on paper
only, for the new agriculture and the almost unbroken abundance
of the seasons, never paralleled except in the fifteenth century,
rendered the Corn Laws of the Restoration only a contingent terror.
The war of the Spanish succession led to several enduring taxes.
Thus taxes were put on hops, in this case imposed on the cultivator,
on soap, on paper, on printed goods, and on newspapers, besides
one on advertisements. The tax on newspapers was collected by
stamps. Now the taxes which I have enumerated were continued
up to living memory. It was conceived, perhaps with some reason,
that the newspaper tax was in effect a licensing Act. But, on the
whole, the cause of the Tory party of that time was better served
by men of letters than that of the Whigs. Swift, St. John, and
Prior are more vigorous political writers than those on the opposite
side. Defoe, it appears, was ready to take a brief from either of the
contending factions. He had accepted as his guide in literary
life the adage of Vespasian, Non diet.

The smuggler always avenges foolish and unfair customs duties.
Experience has proved that nations will endure heavy taxation,
if it be equitable, and not imposed to subserve personal interests
or political whims. The English people reluctantly substituted
port for claret, Geneva or colonial rum for French brandy, for in
the southern part of the island at least, they submitted to taxes
which were intended to weaken the hereditary enmity of France
and secure a balance of trade. But the case was different in certain
other articles. The taste for tobacco and tea was rapidly growing,
and it is said that owing to the excessive duties levied on these
articles, the taxes on them were unproductive ; the ordinary trader,
finding it impossible to compete against the smuggler, in the end
entering into regular business relations with him. In the arithmetic
of the customs, said Swift, two and two do not always make four.
It has been constantly alleged that a reduction of duties is the

THE PBEVALENCE OF SMUGGLING. 465

remedy for the smuggler. But in our time, when smuggling has
ceased to be a calling, and has become merely an occasional private
fraud, heavy enough duties are levied on certain goods of foreign
origin. But they are not discriminating or protective, and there-
fore do not deaden the moral sense of the consumer. It is, I
believe, to the adoption of free trade, and the levy of revenue
duties, excises and customs for revenue only, that we must assign
the extinction of the professional smuggler. The case is still
different in protection-ridden countries. The present tendency
in Canada towards a Zoll-verein with the United States is the
impossibility of maintaining a preventive staff along a geometrical
frontier. I do not predict confidently that the result of such a
tariff will be the annexation of Canada to the United States as
Mr. Chamberlain with much show of reason foresees. But I am
well advised that the present state of things is intolerable, that it
has been developed from causes which might have been prevented,
that these causes have been fostered by incompetent advisers of
the Crown at the Colonial Office, and that it is by no means clear
that in the existing state of affairs remedial measures are possible.
" Walpole," says his biographer and eulogist, Archdeacon Coxe,
" found the British tariff the worst in the world, and left it the
best." Mr. Coxe, like most biographers, errs on the side of
excessive praise. It may be doubted whether a biography does
its object any lasting service with posterity. No one can be
expected to feel the same interest in a subject which the author
does, and when the subject is a fellow-creature, we take up the
narrative with a natural suspicion that the portrait will be over-
charged with brilliant colour. But Walpole was a man of great
Parliamentary tact. One of his earliest exploits was in 1702.
The Tories had determined on recovering those parts of the Crown
estate which had been granted to William's friends, and they
were strong enough to carry their Bill. Walpole affected to agree
with them, but proposed to carry the resumption back to the
Restoration. Now even to the most inveterate party spirit, the
services of Somers and Montague, and even of Bentinck and
Keppel, though they might be over-rewarded, were considerable.
But it was not easy to discover the services which had been done
by the dukes of the creation of Charles — of Grafton, St. Albans,

81

466 THE THEOBY OF MODEBN TAXATION.

Richmond, and the rest. The situation was too ludicrous, and the
Bill was dropped. Fortunately for his reputation, Walpole was
out of office at the time of the South Sea Bubble, though it is said
that he materially improved his fortunes by judicious purchases
and sales of that notorious stock. He was certainly of consider-
able use in rescuing public credit from the consequences of that
gigantic swindle, in which indeed, too many of the government
were compromised.

Walpole made a great fortune in the public service. So had
Osborne, whom we know as the Duke of Leeds, and Churchill,
whom we know as the Duke of Marlborough, to say nothing of a
dozen others. This has latterly, I see, been made a reproach
against him, and it appears that one of his descendants is sensitive
on this score. Walpole would have laughed heartily at his future
critics had he foreseen the charge. " Of course," he would have
said; "but when a man undertakes public business, he intends
to better his fortunes. Wiry, do you think, do the honest gentlemen
who are about me come into this House, and pay solid cash for
getting here ? It is sufficient if a public man does honest service
to the nation, and takes a moderate commission on the function
which he performs." I do not doubt that Shippon spoke the
popular sentiment when he said, " Robin and I are two honest
men ; but he is for King George, and I am for King James." Now
Shippon had taken the oaths of allegiance and I know not what
to King George. But he did not think his integrity compromised
when he intrigued with the exiled family, though he sat in
Parliament under the condition of recognizing to the full the
house of Hanover. Promissory oaths are never worth much, but
in the first half of the eighteenth century, they were worse than
worthless.

Walpole determined on reforming the tariff in such a way as to
liberate industry from customs duties on materials, and by per-
mitting drawbacks on duty-paying goods exported. He repealed
certain taxes which grievously discouraged maritime enterprise.
He permitted, with a few exceptions, the free exportation of articles
produced or manufactured in Great Britain, thus striking off most
of the export duties. He contemplated a revision of the land tax,
about which the country gentlemen constantly complained. But

WALPOLE'S POLICY. 467

these honest people dreaded a reassessment still more, particularly
those in the west and the north, where, according to ancient
tradition, the tax was particularly light. So he had to drop his
scheme, as far as the land tax was concerned, and soon afterwards
another reform which he contemplated.

This was the establishment of bonded warehouses for duty-
paying goods. In 1711. importers of tea and coffee were permitted
to warehouse their imports. In 1723, Walpole made the process
compulsory in these articles, and found that he checked smuggling
by it. In 1733 he proposed to extend the system to wine and
tobacco, and to levy the duties under the name of excises at the
time when they were taken out of bond for consumption. The
great dealers saw rivalry to themselves in this scheme. Walpole's
enemies, and he had been so long in office that disappointment had
made him many enemies, raised up the cry that the Cromwellian
excise was to be restored, and the people were informed that this
was the beginning of a system under which everything would be
taxed inquisitorially. So there were numerous petitions, and mobs
in the Court of Bequests. In the end Walpole withdrew his Bill
and the country was pacified. Perhaps some of the opponents of
the projected measure were not so anxious to extinguish the
smuggler as Walpole was. This prudent retreat kept him nine
years longer in office.

In 1739 a war with Spain was undertaken, ostensibly in order to
avenge the wrongs which had been perpetrated on British merchants
and sailors, in defiance of the Assiento treaty, really because it was
believed that the Spanish colonies were conveniently situated for
plunder. You have no doubt heard the story of Jenkins' ears.
Simultaneous with this was the war of the Austrian succession, and
the early aggrandisement of Prussia. This war involved a quarrel
with France, and a quarrel with France another and a last expedition
in favour of the Stuarts. The war ended with the peace of Aix-la-
Chapelle in 1748. The costs of this war were met by increasing
the customs and excise, by revising the house tax, and by levying a
tax on private carriages. In consideration of the burden laid on
articles of domestic manufacture, heavy customs were imposed oh
identical foreign goods, and the country became Protectionist
without knowing it. It is true that even at that time there were

468 THE THEORY OF MODERN TAXATION.

people, like Henry Fox, who saw that it would be well for England
if the country could be made a free port ; but to effect this it would
be necessary to raise the necessary funds by a property tax on a
just system of assessment, or to levy a searching excise on internal
consumption. The landowners would not endure the former, and
the mass of the people rebelled against the latter. Additional
customs was therefore the only remedy. Fox calculated that in his
day a bona fide land tax would have yielded, at 4s. in the £, at least
four, possibly five, millions.

Peace only lasted for eight years, when the Seven Years' War was
undertaken in 1756. The economical consequences of this war, the
effect of which was to secure to Great Britain a sole market as
vast and to all appearances immeasurably more valuable than the
territories bestowed by Borgia on Spain and Portugal by his cele-
brated Bulls, have been treated of in a previous lecture. But it cost
eighty-two and a half millions, and of this sum sixty were in the
form of an addition to the public debt. The new taxes are en the
possession of plate, on cards and dice, and a license duty on
publicans. Further duties, intended as far as possible to fall on
consumption, were imposed, and an additional 5 per cent, ad-
valorem was put on articles paying customs duties. The most
important additions, however, were those made on malt, beer, and
spirits. They were borne, but the imposition of a tax on cider
and perry very nearly caused a rebellion. It was believed that
Parliament had exhausted the possible subjects of taxation, and
even the patience of the nation. So completely bewildered were
the ministry which came into office at the peace of Paris, and so
desperate seemed the condition of British finance, that Grenville
determined on taxing the Colonies by the authority of Parliament.
There seemed to be this reason in it, that the Seven Years' War had
left the British settlers the undisputed masters of the best regions
of North America. They had, to be sure, contributed liberally to the
expenses of the war, and had incurred considerable debts for the
same object. But by freeing them from all risk on the part of
France, the only power of which they now had any dread was Great
Britain.

The colonists affected to believe and with reason that the lan-
guage of Grenville's Act implied an indefinite power in the hands

THE WAB OF AMEBIC AN INDEPENDENCE. 469

of Parliament of taxing the plantations for Imperial purposes. At
the same time, they did not offer an unqualified opposition to
Grenville's scheme. They agreed to certain customs duties on
imports and exports. They had, as a matter of fact, acquiesced in
the colonial system, which, by regulating their trade, regulated
their port dues. It was to the Stamp Act that they made a
stubborn, and in the end successful, resistance. The British Parlia-
ment offered no opposition to Grenville's Stamp Act in either house,
and yet perhaps no more momentous and enduring fact has ever
occurred in history than the Stamp Act. It is the least part of it
that it led to the revolt of the Colonies. It did much more— it
stereotyped the fiscal independence of every British settlement, it
settled the principle that taxation cannot be imposed without
representation, and by a forced construction put on the facts, it
permitted the colonist to levy Protectionist duties against the home
government, and yet to embroil that very government, apart from
any act of its own, in any local and political war in which the
colony might think it proper or profitable to engage. The political
consequences of this precedent no one can confidently predict : the
economical consequences are disastrous enough to the colonists who
have voluntarily experienced them. The Stamp Act, which did not
pay for the cost of collection, was repealed in 1766, though in
repealing it Parliament was induced to assert that what it had done
was within its right. The Colonies now went a step further, and
denied the right of Parliament to impose any tax whatever on the
Colonies, whether internal or at the ports. The duty on tea,
calculated to yield £30,000 a year, was retained in the Cabinet by a
single vote, that of Lord North.

I shall not weary you by dealing with the events of the "War of
Independence, except in so far as they bear on the extension of the
British fiscal system. The greater part of the costs incurred by
this war was met by loans. The greater part of the taxes imposed
was on consumption. Now there is no doubt that wealth increased
greatly during this war. But there is no doubt also that the con-
dition of the working classes was rapidly becoming deteriorated.
The old days of plentiful harvests and low prices were over, or
perhaps the growth of population, doubled in the eighteenth
century, assisted in producing by the aid of the Corn Laws the

470 THE THEORY OF MODERN TAXATION.

terrible scarcity prices which were at hand. In 1782, the National
Debt had grown from 126 millions to 230. In order to be effectually
discontented, a people must be prosperous : when misery revolts, it
strikes blindly and is generally restrained.

In 1783 the younger Pitt came into office, and in 1784 obtained
a pliant Parliament ; how obtained will not probably be known for
sometime to come, there being a tradition that the secret materials
of history are kept back in this country for more than a century, a
pretty clear indication how discreditable those secret materials are.
Pitt's taxes were the very worst conceivable, nearly all on con-
sumption, on trade, and on manufactures. It is paraded of this
personage that he was a disciple of Adam Smith. There have
been many disciples, from Gehazi and Judas onwards, who have
misused the instruction which they have received. Pitt's finance
was a disastrous reversal of Adam Smith's maxims, even during
nine years of peace. It was to become worse and worse during the
twenty-two years of the war into which he plunged the country.

The great Continental War, in which the early endeavours of the
continental governments were made to repress the movement known
as the French Revolution, led to atrocious excesses in France itself,
the mere outcome of blind and desperate fear, to a military enthu-
siasm which overran nearly the whole of Europe, and added 622
millions to a debt which at the commencement of the war was 237$
millions. Left to itself the Revolution would have burnt out. It
might have been followed by a republic on the model of the United
States, though this is unlikely, because Federalism was a dangerous
tenet in the early days of the Revolution ; or it might have even-
tuated in a limited monarchy. The action of Europe gave occasion
to a military despotism of singular destructiveness. In one sense,
the Continental War was like the Thirty Years' War. It left the
combatants in a state of absolute exhaustion, an exhaustion so
complete that it took a generation before they could begin to recover
from the waste of war. A war may be very bloody and very
destructive. If the combatants are not exhausted it will be followed
by a great stimulus to the trade of neutrals. No better test can be
found of the financial position of a country at the close of a war,
be it long or short, than the fact that the wearied and penniless
combatants cannot, after the struggle is over, go into the markets

THE TAXATION OF INHERITANCE. 471

of the world with money or credit. ' The latest illustration of this
position is the condition of Kussia and Turkey after their latest
struggle. Poverty may not prevent war, hut it is a terrible restraint
on recovery from war.

One of Pitt's taxes (1795) was that on successions. He intended
to impose it on all kinds of property, real or personal, descending to
collaterals. It was a Dutch tax, and the Dutch had borrowed it,
according to their own interpretation, from the 5 per cent, duty,
vicesima hereditatum of the fiscal system established in the Eoman
Empire. It is said that he intended originally to include these
charges on inheritance in a single Bill. If so he changed his mind,
for he brought in two Bills — one referring to the succession of
personality, very often a merely arbitrary and technical class of
property ; the other to the succession of realty, a class similarly quite
as incapable of a rational distinction. He passed the first, he
failed to pass the second ; for the country party threatened to desert
the heaven-born minister at the ciisis. He probably knew before-
hand that they would, and hoped to obtain the acquiescence of the
possessors of personal property by showing that while they were
content to make sacrifices to save the tempest-driven ship, the land-
owners would have let the ship sink, rather than make any personal
sacrifice. At this time, I should mention that rents were rapidly
rising. But the landed interest had an excellent reason in resisting
the proposal.

A tax on inheritance has always been defended by metaphysical
economists. " The recipient of an inheritance," they allege,
" cannot be said to possess any rights to that which he acquires.
It is property gained by the industry or good fortune of another.
By the death of its possessor, who has now ceased to have any
rights among the living, it is derelict, abandoned, and virtually the
property of society. By a leniency, perhaps a culpable leniency,
human societies have generally permitted the lineal descendants of
the deceased person to enter on a possession which is not de jure
theirs. The state is entirely justified in taking a heavy toll on that
which it permits to pass. Strictly the child of a deceased ancestor
has not a higher right in his inheritance than that which public
opinion would assign as the necessary maintenance of the same
person's illegitimate offspring. * I am not consciously parodying

472 THE THEORY OF MODERN TAXATION.

Mr. Mill's argument while I am condensing it. My late friend,
however, admits the validity or sacredness of testamentary disposi-
tions. Strictly speaking, then, a person who does not or cannot
make a will (for accidents happen to the most thoughtful and
anxious) should be constrained to leave, beyond the provision
mentioned above, of a few shillings a week, his children penniless ;
while another, who is able or prudent enough "to make a testamen-
tary disposition, shall be entitled to an authoritative voice at his
own death. This reasoning seems to me very like punishing one
person for another's negligence or ill-fortune. Mr. Ricardo, on the
other hand, objected to legacy duties altogether, on the ground that
the tax hindered the accumulation of capital, as though any tax
did not hinder the accumulation of capital, and the argument could
not be alleged for doing away with taxation altogether.

It is, I presume, germane to the economist to discuss, and if pos-
sible to discover, the reasons why people save. Now the earliest and
most enduring motive for saving is a sense of the insecurity of
fortune or health, of the risks of social life, and the risks of con-
tinuous activity. A second and wholly subordinate motive is the
expectation of profit. In some morbid or exceptional minds, the
love of power which wealth confers may act as a stimulus, but this
remotely or rarely. Now every one, even the most arid economist,
allows that the habit of saving is directly and indirectly a benefit to
society, and that it should not be discouraged. I conclude also that
it will be conceded that it is not illaudable on the part of a parent
to strive that a child should not sink to a lower position than that
in which he was born and educated, that such a child should not,
on the premature death of a well-to-do parent, decline to the few
shillings a week condition. Public opinion would censure a father
who, having a considerable life interest only, made no adequate
provision for his offspring. A parent may therefore be well excused
in devising his property to his child ; the state would be severely
condemned if it confiscated this natural provision, in case the
parent had failed to make a will, and in my opinion is to be blamed
for giving such effect to a parent's will as shields the child from the
consequences of its own misconduct.

A man must be a very sturdy patriot if he will save as energeti-
cally for the state as he will for his children, and in a minor degree

MB. MILL'S THEOBY. 473

for his kindred. If the state discouraged saving by taking an over
heavy toll on inheritances, I conclude that the worst forms of un-
productive consumption would be increasingly exhibited. At present
they are reprobated. That action of the state would commend
them. It is found impossible to forbid these forms of waste, ex-
cept when they are entirely noxious, but I should think that the
possessor of wealth would prefer his own waste to the waste of the
state, and the disposition of what he has saved for his own wants,
real or artificial, to the involuntary disposition of his property by
the central authority. I do not dwell on the moral question, of
how important it is for the state to encourage family duty, and an
adequate provision for one's own, though I could conceive no more
mortal wound being given to parental feeling, than the instruction
afforded to parents, by the utterance of the law, that the moral
obligations of parents to children is, by political ethics, limited to
the few shillings a week awarded by a bench of magistrates for the
maintenance of an illegitimate child. But when political economy
becomes metaphysical, it may lead one on to anything.

There is an objection to the taxation of the inheritance of
personal property of a very serious kind. It is that it is one law for
the rich and another for the poor ; the inveterate and inexcusable
vice of levying a tax which wealthy men may evade and poorer men
must submit to. It is easy for a man with a large amount of
personal property to make a donatio inter vivos. It is a very
common thing for him to do so. I have known good men, who
would not consciously defraud any one, who have told me that they
have provided largely for their children during their lifetime out of
their abundance ; and when I have rejoined, " Then you avoid the
probate and legacy duties ? " they answer with the full conviction
that the reply is complete, " But the law allows me to do so." But
I hold that what the law does not allow you or me to do, but
allows a richer man than you or me to do, is a privilegium and
ipso facto to be condemned. Most of us, unlike King Lear, cannot
give everything, for as we get older, the first and fundamental
motive for saving becomes more apparent to us. Now I do not doubt
that the landowners in Pitt's time foresaw this advantage of the
rich owners of personal property. Their lands were visible ; under
settlements and entails, inalienable. They would certainly be

474 THE THEORY OF MODERN TAXATION.

caught, and the net was spread in vain in sight of the bird. They
were told what would happen. One of the peers, who had accumu-
lated a large personal estate in the exercise of a profession which
produces peers regularly, declared that he would never pay the
legacy duty. When age came on, he gave all his personal estate to
his eldest son, reserving to himself a life interest in the whole.
The son became a lunatic, and died. The bereaved father had to
pay probate, legacy, and intestate duty on his own property, and
died shortly afterwards of the double grief. Then the estate paid
legacy duty again.

If Pitt's finance was bad, that of his successors was worse. His
efforts, well meant I do not doubt, were full of misery for the poor.
They wore him out, and he died mox daturus progeniem vitiosiorem.
After a short interval, he was succeeded by Perceval, Perceval by
Vansittart, perhaps with the exception of Dashwood, sixty years
before, the most incompetent Chancellor of the Exchequer who
ever did mischief. Eobinson and Huskisson were incomparably
superior to him, and gradually sounder principles of finance at last
prevailed. Parliamentary reforms came, and for nine years the
"Whigs were in office. They were not successful in finance. Their
fiscal policy led to their downfall in 1841, and a new departure
began with Sir Robert Peel.

Now in 1830, Sir Henry Parnell, afterwards Lord Congleton, an
Anglo-Irishman of distinguished Parliamentary descent, for he was
son to the last Speaker of the Irish House of Commons, put out a
very significant treatise on Financial Eeform, this treatise, in fact,
being a series of experiences which he had arrived at as Chairman
of the Finance Committee of the House of Commons. He wished
to repeal all taxes on raw materials, taking the words in their
popular meaning, all taxes in which excise regulations interfered
with the course of manufacture, and to reduce the taxation of spirits
and tobacco so as to obviate smuggling. In order to fill up the
deficit created by these necessary reforms in the fiscal system of the
country, he suggested that an income and property tax should be
imposed.

The income tax was imposed by Pitt at the period of his greatest
trouble in 1799, at 10 per cent. This full rate was payable only
on incomes of £200 and upwards, was not taken at all from those

THE INCOME TAX AND ITS HISTOBY. 475

under £60, and was differential between £200 and £60. After the
peace of Amiens it was repealed, but rehnposed when war broke
out again, when it was divided into five schedules. It was payable
on all income derived from property in Great Britain, whether the
owner resided in the kingdom or not, and on all property yielding
an income in Great Britain or elsewhere. The tax yielded about
six millions, and as I know from those who had to endure it, in
addition to taxes upon every necessary or convenience of life, it
was a very severe infliction. After 1815, the country insisted on its
repeal, though Castlereagh implored Parliament not to turn its
back upon itself, a gymnastic feat which one would think im-
possible.

When Peel came into office in September, 1841, there had been a
succession of deficits. But there were about 1200 articles in the
customs tariff, some of which yielded next to nothing, so thoroughly
had past financiers racked the earth and its products for taxes. Peel
took up Parn ell's idea, determined on reforming the tariff, and
claimed as compensation for loss of revenue an income tax on the
lines of the old tax of 7d. in the £ for four years. He made some
important changes in the assessment. He allowed a total exemp-
tion on incomes up to £150, and showed considerable favour to
farmers in England and Scotland, reckoning the profits of the
former at one half, of the latter at one third the rent, a prodigious
satire on the rack-rents of the time, aided as they were by the Corn
Laws. It is not easy to see in this exemption whether Peel
intended to gratify his followers, to prepare the way for a repeal of
the Corn Laws, or to accentuate the severity of the rents then
ordiuarily payable, for it is plain that a rent could not be equitable
whicit in England was worth twice the maintenance and profits of
the tenant, and in Scotland three times.

The income tax of 1842, which has continued both in war and
peace, long after the wisdom of Peel's financial policy has been
demonstrated, was imposed in order to cover the risks of a financial
experiment. As the facts turned out, there was no reality in
the risk. Industry, liberated from more than a thousand tram-
mels, grew rapidly and successfully under the new system,
large masses of the public debt were paid off, financial operations
for the liquidation of the residue were rendered possible, and one

476 THE THEORY OF MODEBN TAXATION.

must acknowledge also that expenditure greatly increased. As time
went on, and the number of articles visited with customs and
excise were reduced to not more than 1 per cent, of those so
attacked when Peel first took the tariff in hand, the plea, of very
doubtful validity, was put forward, that the income tax was the
equivalent for a much larger remission of taxation. Of course the
statement is absolutely inaccurate, for the remissions in question
affected all incomes, and especially those which were earned in the
form of weekly wages ; while the equivalent in the income tax was
paid only by a limited class. Nor is the reasoning more valid,
which alleges that those who have an income above that level are
better able to afford the tax than those who are below it. In the
first place, all wage incomes paid weekly or at short intervals,
though in some skilled crafts they are considerably above the limit,
are practically exempt, if not legally ; and in the next, the exigen-
cies of certain callings demand outgoings from which the wage-
earning classes are exempt. A man who earns his living by reason
of his clerkly or intellectual or professional gifts cannot get it if he
is clad like an artisan, or is housed like one, though he may be seri-
ously stinted in his household. The necessary outgoings of certain
classes are a very considerable first charge on professional or quasi-
professional incomes, and no imposer of taxes ought to be able to
force such people to the manifestation of heroic poverty.

It is impossible to dispute the intrinsic inequality and unfairness
of Peel's income tax. It taxes precarious incomes at equal rates
with permanent ones. It is no answer to say, with Mr. Mill, that
the precarious income pays for a shorter time than the permanent
one does. For, first, the income tax always professes to be a
terminable expedient, and, I presume, the pledges of Parliament
ought to go for something ; and, next, the veriest tyro in analytical
economics can see that in a precarious income capital and profits
are taxed, in a permanent one profits only. Indeed, so serious is this
consideration, that one of the most inconvenient obstacles to the
extinction of debt through terminable annuities by those who could
best float them, as, for example, life insurance offices and banks, is
the obvious actuarial fact, that a numerically equal tax on permanent
and terminable incomes, is a differential tax to the disadvantage of
the latter. Again, it taxes unequal outlay at equal rates. The

AN INCOME TAX INTRINSICALLY UNFAIB. 477

winner of a professional income in a town, often in a particularly-
expensive district of a town, must needs make a greater outlay on
an obvious necessary of life, his house-rent and its incidents, no part
of which he is permitted to deduct from his earnings, than one
who, having an independent income, can elect his own place of
residence, and his own scale of expenditure. Again, though this is
a more disputable point, the family charges of one man may be
greatly in excess of those incurred by another. There are to be
sure economists who are so alarmed at the Malthusian theory, that
they seem to hold that the continuity of the human race demands
an apology, that it is a misfortune, almost a crime. But taking
the facts as they are, it cannot be doubted that a person who has
to bear these charges is, from the taxpayer's point of view, worse
off than the man who is free from them, and therefore in an equal
charge suffers more severely than his less burdened neighbour. Now
it is no answer to say that taxation is inevitably unequal. This
may be admitted, without one's conceding that a financier should
select a tax which is sure to be more unequal than any other, and to
be at no pains whatever to deal with its schedules. Least of all is
it an answer to say, that the persons to whom I refer, being per-
mitted to make their own return, are enabled to rectify the inequali-
ties of their lot. In the first place, they do not always do so ; in the
next place, that law is to be condemned which cannot be just, unless
the object of it is, put in plain English, to commit a fraud in order
to escape an injustice.

Besides, it is possible to transfer an income tax. A trader is
pretty certain, in dealing with his customers, to treat all his out-
goings, house-rent, local taxation, his own necessary maintenance,
the inevitable charges of his calling, as part of the cost of distributing
the goods in which he deals. He has every motive and every power,
all traders equally contributing the tax, to include income tax, and
even the highest contingency of it, in the initial cost of his goods.
He is practically paying a licensing duty, and he is impelled to
exact that from his customers. This result, which is obvious to
the analyst of trade profits, was curiously illustrated by the argu-
ments employed by a deputation of London traders, who some
fifteen years ago waited on Mr. Lowe, then Chancellor of the
Exchequer, to complain of the Co-operative Stores. They alleged

478 THE THEOBY OF MODEBN TAXATION.

that they could not compete in cheapness against these stores,
because the latter paid no income tax. This reasoning had no
meaning if it had not been their practice to make their customers
pay the income tax which was imposed on them as traders, and Mr.
Lowe admitted to me that it had no other.

The latest finance, then, of the British Parliament has reduced
taxable objects to a very few articles. It intends as far as
possible anl with considerable numerical success to distribute
taxation in tolerably equal moieties between those who earn less than
£100 a year, and those who earn more than £100, and very in-
genious and perfectly fair-minded analysts of taxation inform us
that this result is obtained. The former are visited with the greater
part of the indirect taxation, with by far the most of the excises
and customs still levied, and with a small amount of the stamp and
succession duties. The latter pay the income tax, the greater part
of the succession and stamp duties, the assessed taxes, and much of
such customs as are paid for those luxuries of foreign origin which
can be purchased only by fairly well to do persons. Of course,
even under these circumstances, the contribution of the poorer
classes will and must represent a greater sacrifice on their part. I
cannot see how this can be avoided, unless indirect taxation is
wholly remitted, and direct taxation substituted for it. But such
a new arrangement would be wholly impossible and intolerable,
unless a property tax were adopted in the place of an income tax,
and the liability to this tax be put on all property alike.

It is not easy to impose a new tax, and in the present condition
of public expenditure, it is not easy to remit one. I do not discuss
whether the rejection of Mr. Childers' budget in 1885 was due to
financial dislike merely. But it was a strong deterrent, and will
probably remain a strong one for some time, for the rejection of a
budget is a disagreeable surprise to any financier. Nor can it be
doubted that the financial income of the United Kingdom has shown
signs of inelasticity in some of its most important particulars. But
the general wisdom of our financial system is admitted by all whose
opinion is worth anything, and any serious attempt to alter it would
be met with opposition from many quarters where opposition might
be unexpected, but would be very decided.

xxn.

THE OBJECT AND CHAEACTEE OF LOCAL TAXATION IN

ENGLAND.

Central and local government — Causes which lead to federal systems
or discourage them — America, France, England — Ancient local
liabilities illustrated by the Tandridge rate — The growth of local
taxation modern — The poor rate — The relief of destitution justi-
fied— The maintenance of roads — Mr. Goschen's Committee — The
cost of police, of prisons, hospitals — The charge of national
education, of sanitary improvements — Local debts — Modern ex-
pedients — Local taxation subsidised — The motion of March 23,
1886.

All communities which have arrived at anything like political and
social organization have experience of two forces, one of which
draws them towards the central government, the other inclines
them towards local administration. Constitutional antiquaries, who
have searched into such evidence of the conduct of early societies
as have survived, assure us that the latter preceded the former
system, and we know that there has been an historical struggle on
the part of the former to supersede or to control the latter. The
motive of the former has been the reality or the pretence of the public
safety, which could not, it was alleged, be secured, unless the
authority and completeness of local administration were circum-
scribed. But the local administration, having all the forces of
tradition, and not a few of the conveniences of experience on its
side, while admitting that the central government must be recog-
nized and supported, insists that local autonomy provides a
machinery of self-government which is certain to be respected,

480 CHARACTER OF LOCAL TAXATION IN ENGLAND.

which is more intelligent and acute than departmental administra-
tion could be, and can be worked with greater efficiency and
economy. There are reasons in favour of centralization, there are
reasons for decentralization, and there is a sphere for the action of
both. The question as to which kind of common action shall be
referred to either function has been, and will remain, matter of
debate. But in a decision on the question is involved the settle-
ment of the most effective and least harassing form of social
government. I shall not be touching on political controversy
when I state, as most of you are well aware, that the subject
is occupying the serious attention of most English statesmen
now, and that the controversies which have been made promi-
nent in recent times, are likely, as time passes on, and experience
becomes more and more a guide to action, to become less personal
and less bitter.

Events, which in the history of nations are so remote that they
seem to be merely antiquarian, have had a great influence in
inclining communities towards centralization, or towards federalism
under a central authority or parliament. Thus in France, the
initiative, even in matters of purely local business, has been taken
away from the local authority, and has been referred to the central
government. In the United States, the doctrine that the state is
still sovereign, and that the powers of the President, his Cabinet,
the Senate, and the House of Eepresentatives of Washington,
though inalienable, are circumscribed, is constitutional, and has
been recently re-affirmed. The doctrine, it is true, suffered some
severe shocks shortly after American independence was secured, and
when the great Civil War waged a quarter of a century ago. On the
other hand, though there was evidently a design on the part of
those public men who guided the action of France in and after
1789, to found a republic on the model of the American Union,
these persons repudiated the most characteristic part of the
American system, the free but permanent union of a number of
independent states. Soon afterwards, federalism was denounced as
treason, and the suspicion of any sympathy with such a social
theory was in the highest degree dangerous. Now these differences
in the constitution of two communities were due to historical
causes.

FEDEBAL AND CENTBAL GOVEBNMENT. 481

The American plantations were voluntary settlements, in the
administration of which the English crown readily accorded a con-
siderable amount of independence. Sometimes, as in the New
England colonies, the adventurers consisted of a body of men
flying from a distasteful religious organization, not to proclaim
toleration, but to construct as rigid and despotic a government as
that which they sought to avoid. Some were conquests, as New
York and New Jersey> easily acquired from the original settlers,
and easily relinquished by the countries which founded them.
Most of them, however, were proprietary colonies, as Maryland,
Pennsylvania, Virginia, and the Carolinas, in which the representa-
tives of the founders were the hereditary administrators of the
plantation. In course of time, and after at least two abortive
efforts, the proprietary rights were extinguished, generally by
purchase, as the plantations came more and more under the
mercantile regulations of Parliament, and, within certain limits, all
became autonomous. These settlements, then, had no other
experience than that of advantage in the development of their
automony, and when they combined together for a common
purpose would naturally relinquish as little as possible of that
independence, which to the popular mind marked the growth of
their local liberties. It became necessary in the early history of
the American Union to control these State Rights, in order to
strengthen the Washington government, but the doctrine that the
association was voluntary remained, and formed the principal
justification of the Southern secession. At the present time,
under well-defined and intelligible limits, the American State
administers its own affairs, has its own Governor, Senate, House
of Representatives, imposes and collects taxes by its own authority,
and possesses large powers of administration within its own area.
In some particulars and these of awkward significance, the Supreme
Court of the United States has declared that no central authority
can control a state, particularly in incurring state debts and
repudiating or forcibly converting them.

France, however, was slowly built up, partly by conquest, partly
by the persistent assertion that the king was paramount over the
numerous princes among whom France was partitioned. In the
middle of the twelfth century, the authority of the French king

32

482 CHABACTEB OF LOCAL TAXATION IN ENGLAND.

over the great fiefs of Normandy, Guienne, and Toulouse "was in the
last degree shadowy. Our own Henry II. was the real ruler over
the sea-board of France, from the mouth of the Seine to the
Pyrenees, and the customs of this feudal kingdom recognized the
right of the vassal to make war on his lord paramount, at least till
as late as the reign of Saint Louis. The grandfather of this king
challenged, with much astuteness, and on every opportunity, the
exercise of this right. He stripped John of Normandy and
Brittany, and probably if John's mother had not been alive, when
his reputed offence had been committed, he would have appropriated
Guienne. At the end of the century he made use of the real or
imputed heresies of Provence to establish his authority firmly
in the south. But it must not be supposed that this policy was
always readily submitted to. The only enemy which the French
king seriously feared was the party of the great nobles, and those
people were quite alive to the fact that they were being subdued in
detail. Twice, by their open assistance, the English overran and
nearly partitioned France. The struggles of the sixteenth century,
between the French king, the Leaguers, and the Huguenots, were
aristocratic revolts, following on the lasS attempt, by Charles the
Bold, to dismember Eastern France. The effort after independence
on the part of the nobles was continued till the war of the Fronde.
Anything else, then, except deference and submission to the central
authority, seemed by the experience of ages to be an attempt to
lessen the dignity, and to break up the unity of the nation. It is
not wonderful, then, that the very shadow of local independence was
looked on with dismay and anger in France, and that even the
republicans of 1789, with the cry of liberty, fraternity, and
equality, gave an exceedingly qualified meaning to this historical
phrase.

The social history of England has proceeded on lines midway to
the state rights of the American republic, and the excessive
centralization of the French monarchy. In early times the right of
self-government appears to have been almost complete in every
village and town. As a measure of police and public safety, the
government of the Conquest undertook an investigation into cases
of homicide, and it would seem in this manner it quenched the
embers of that guerilla warfare which plainly, and to the infinite

FBANCE. ENGLAND. 483

injury of the country, followed on the first victory of William the
Norman. There were also severe forest laws, but these were, I
believe, exceptionally directed against brigandage, though capable
of being made exceedingly oppressive. Otherwise, however, justice
appears to have been administered by the self-appointed or spon-
taneous police of the Lord's Court, and was, as I conclude, from read-
ing many hundreds of early manor records, respected and effective.
Similar justice appears to have been administered in the towns,
when they were not chartered, the principal object of the charter
being to bring about that the administration of the affairs of the
corporation should be conducted by elected magistrates. When the
troubles with labour began after the Great Plague, the first remedy
applied was the Lord's Court. But in this the presentment was by
a jury of the inhabitants, and it is not surprising that this should
have not been found effective, considering that the jury was from
the class whom the law was trying to coerce. The labour statutes
were thenceforward administered by the justices of the peace, whose
object it was to coerce the peasants. But I have pointed these
facts out before. I refer to them now, only to show how universal
was the ancient English system of local self-government.

Now we are told that from the earliest date the resident English-
man was liable to three local obligations — the defence of the realm
in case of invasion (a liability well illustrated by the Assize of Arms),
the repair of bridges, and the maintenance of roads. But it is
singular that neither in the accounts which I have examined, and
they are many thousands in number, nor in the record of thv«
manor business, have I found any notice of a charge imposed for
these purposes. Roads there were in plenty. Bridges certainly
existed. Now it is quite clear that the roads were good, for many
years ago, when I collected evidence as to the cost of carriage over
known distances — and I may add, over roads now existing as well as
then— I was extremely surprised at the rapidity and cheapness with
which goods were conveyed, all things considered. That the
villagers repaired their own roads is, I think, obvious ; it was
unquestionably their interest to do so. That the owners of
scattered properties did so was equally in their interest. It is
wonderful to see how property even in the same parish or manor
was scattered. It is equally wonderful to see how monastic

484 CHABACTEB OF LOCAL TAXATION IN ENGLAND.

property was scattered, and how rare it was that an estate was not
loaded with some burden, which the piety or policy of the earlier
owner had imposed on his heir, or his heir's alienee. Now every-
thing which diffuses property laden with these obligations suggests
the wisdom of keeping communications open. I am quite sure that
roads in England were in far better repair in the time of Edward
the Third than they were in the time of George III. I do not say
that the ancient roads were level, macadamized, and well metalled ;
but they are infinitely better than the turnpike roads of which
Matt. Bramble, in Smollett's novel of " Humphrey Clinker," com-
plains so bitterly. My evidence, then, as to local taxation for roads
up to the sixteenth century is entirely negative.

The first local charge which I am able to trace is that levied and
distributed for the relief of the poor and other public purposes.
Now in the years 1541-1601 inclusive, twelve Acts of Parliament
were passed for the relief of the poor, the last being the famous
statute 43 Eliz. cap. 2, the basis of our poor law system for
more than two and a quarter centuries. We can read about these
Acts in any of the two Collections of Statutes at large, though as
regards one of these Collections, beginning with those printed by
order of Henry VIII., it may be doubted whether there are more
than two perfect copies in existence, perhaps not even two. Of
their administration there is even less trace. But I have been
fortunate enough to find an original illustration of an assessment
for the relief of the poor in a Surrey parish, in 1600, i.e., under the
Act 39 Eliz. cap. 8. The document is the original manuscript of
the committee of parishioners, to use a modern phrase, who in this
year were called upon to survey the parish, and to fix the contribu-
tions of the occupiers to several objects — the relief of maimed
soldiers, the hospital and prisons of Surrey, the carriage of the
Queen's household, especially of coals, for the composition for pro-
vision, for oats, &c, for the Queen's stable, for setting the poor to
work, and for the relief of the poor.

Tandridge is a Surrey village on the Kentish border. The parish
lies rather high, and is of only average fertility. Before the
Reformation it possessed a hospital, to which charity a good deal of
the parish was annexed. This foundation fell at the Dissolution
into the hands of Mr. Froude's patriot king, as indeed nearly every-

ANCIENT LOCAL LIABILITIES. 485

tiling else fell, and was, it seems, parcelled out among numerous
proprietors, probably to a great extent purchasers of the hospital
lands, and, two generations before, its tenants on beneficial leases. I
may mention that in the spring of 1600 wheat was 25s. 4d. a quarter,
and malt 13s. 4d., and beef 2d. a pound. The maimed soldiers were
allowed 2d. a week, and the charge on this account to the parish is
to be 8s. 8d. yearly, so that the parish was expected to find this
pension for fifty-two weeks in the year. Of course this was not
the whole of the soldier's pension. Double the sum is paid for the
prisons and hospital. The residue of the rate is devoted to the other
objects, and you will notice how numerous and how varied were the
regular charges imposed on land in the last year of the sixteenth
century, under the form of what we should call in modern phrase
local taxation. You will also notice that the account gives no
item for mending roads, but as the parish was charged with a pay-
ment in lieu of purveyance, and for carriages to the royal house-
hold, no doubt in this case Greenwich or Eltham, as the case may
be, the wisdom of keeping their roads in repair, as far as the custom
of the time demanded, must have been very apparent to the occu-
piers of Tandridge. It appears from the account that it cost 7s. 6d.
to convey a load of coals to the Court. The duty of the parish
was probably completed by the carriage of a single load. The fixed
annual charges of the parish were therefore 33s. 6d., and the rate
at a penny an acre, amounted to £9 12s. 7d. The people of Tand-
ridge therefore reckoned on having to spend at least £7 19s. Id. on
the relief of the poor, and the overseer is instructed to collect a
second, or more rates as soon as he had only 20s. in hand. At a
shilling a week for each destitute person, then, they reckoned that
they had permanently three persons on their hands. Taking the
land at Tandridge in 1600 as worth a shilling an acre rent, and this
is a full rent, the local rates in this Surrey parish at the end of the
sixteenth century were at least Is. 8d. in the pound.

By 22 Henry VIII. cap, 5, the justices in Quarter Sessions were
made responsible for the repair of county bridges. Now the
Parliament of 1529 sat for six years. It began by attacking
Wolsey, by taking cognizance of the abuses in the Church, and of
Henry's divorce. It passed a vast amount of legislation, established
the succession, curbed the clergy, and suppressed the smaller monas-

486 CEABACTEB OF LOCAL TAXATION IN ENGLAND.

teries. At this time it became, it seems, necessary to find some
new machinery for keeping bridges in repair, a duty which I have
no doubt had hitherto been practically fulfilled by the monastic
bodies until the dissolution was in the air. Under this Act the
magistrates in Quarter Sessions were empowered to levy a tax on all
the inhabitants, landowners or not, towards the repairs of public
bridges. In course of time the precept of the justices was made a
valid order on the overseers or receivers of poor rates. It appears
that this Act of Henry VIII. still constitutes the law on county
bridges.

In course of time, two of the local liabilities, the composition for
purveyance and the obligation to carry the fuel necessary for the
royal residence became obsolete, as did also the provision for the
pensions of soldiers, while the liability to maintain the poor, to
repair the roads, and to pay a contribution to prisons and hospitals,
remained obligations. During the seventeenth century the cost of
maintaining the poor became a growing charge, the amount of
which was very great in proportion to other liabilities, and far
heavier in relation to the ordinary revenue of the Crown than it was
in the worst and latest ages of the old Poor Law. In the latter part
of Charles II.'s reign it was returned at £665,362, according to
Davenant, or more than a third of the whole revenue in the time of
peace. It would seem, as this author mentions no deductions from
the poor rate for other local purposes, that the whole of this
amount was expended for the relief of the poor only, and for
such other ancient incidents as were imposed on the occupancy of
land.

The development of local taxation is very modern. It is partly
the outcome of larger powers given to local authorities, partly to
the spread of knowledge as to the laws of health, partly to the
convenience which there is in finding an area for taxation, the
habit of being taxed with patience being formed, partly to the oppor-
tunity which the existing system gives of imposing a charge on one
person the effects of which shall be found beneficial by another
person. It is also a remarkable feature in modern local taxation
that the person who pays nothing, but makes other people pay for
him, constantly becomes the mouthpiece of those who do pay, and
by raising the cry of peculiar burdens on land, when these burdens

THE POOB BATE. 487

are imposed on the occupier, is enabled to appear as the enlightened
and patriotic advocate of fiscal reform, when he knows that he is in
reality engaged in an attempt to further burden those whose claims
he so generously advocates.

Whatever may be said of imperial taxation, that which is levied
for local purposes is either the satisfaction of a duty or a beneficial
outlay. The invariable defence of the old Poor Law was that it was
a compensation for rights in the soil, commonable and other, of
which the peasantry were deprived under the numerous enclosure
Acts of the eighteenth and early part of the nineteenth centuries.
" We admit," such people alleged, " that the poor have from time
immemorial had common of pasture in the open fields, and the
unenclosed pasture. We allow that when the enclosure Acts were
passed, such rights were confiscated without compensation, for they
alone shared in the enclosed districts who had estates of inheritance
within the boundaries of the parish. But an adequate equivalent
has been given. The maintenance of those who have been dispos-
sessed is a first charge on our estates, the new and the old. We
must lose all our rents before the poor can want." And to do them
justice, many persons reasoned in this manner when the new Poor
Law was ventilated, and finally carried, even though the incidence
of the old law was found intolerably heavy, and in one or two
unlucky parishes, of winch much was made, the poor rate had
actually extinguished the rent.

A poor rate is inevitably a rate in aid of wages. Even when it is
refused to the able-bodied, who could have made provision against
the ordinary risks of destitution, it is very difficult for any forethought
within a working man's opportunities to make provision against
prolonged sickness, or, if he have wife and child dependent on him,
against the risks of accidental death. Nor does it seem to me pos-
sible for an ordinary working man, subsisting entirely on wages, and
having no income-yielding property on which to rely, to provide
against old age. Now, unless wages can cover, in addition to a
decent maintenance, the risks of sickness and the certainty of in-
capacity, they must be supplemented by private or public charity,
i.e., either by alms or rates. Hence it seems obvious that they who
employ labour with a view to profit, and under my hypothesis get
this labour at less than the natural rate, should alone supplement

488 CHARACTER OF LOCAL TAXATION IN ENGLAND.

the deficiency of what they pay. In a rough way this was the case
when Elizabeth's statute was enacted. Almost all persons were at
once occupiers and owners, even in the towns. The parson, besides
being an owner of tithes in kind, the collection and preparation o!
which for market required labour, was also, nine cases out of ten,
the cultivator of his own glebe, nay, in not a few benefices, had
the whole of his endowment in land. Undoubtedly owing to an
ancient belief that the tithe was originally charged with the main-
tenance of the poor, the parson was made liable to more than his
proper share of the charge. With better, though not with sufficient,
reason, it was alleged that the source of his tithe was the pro-
duct of human labour, and should be charged with the sustenance
of those whose toil had produced it. This argument became more
substantial when the tithe became more and more a toll on the
husbandman's skill, even to a greater extent than the landowner's
rent, for the rent was exigible only when the skill was diffused,
the tithe while the skill remained the peculiar property of the
cultivator.

But the levy of the poor rate on those who do not employ
labour with a view to profit, as agriculturists and manufacturers do,
or derive no advantage from the density of population, in con-
sequence of the competition for building sites, as landowners
do in towns, is in no case defensible, except on the plea of
usage. It is true that most persons who pay notable sums for
poor rates are the employers of domestic servants, taken almost
entirely from the class which is likely to require parochial relief.
But the wages of such persons are constantly equal in private
families, their board included, to the whole earnings of the agricul-
tural labourer for himself and family, and, I believe, form indirectly
not a little of the means by which such families are maintained; for
domestic servants, especially women, are peculiarly open to the
claims of their near relations. Treated then on economical grounds,
there is no justification for the present distribution of the poor rate.
They who are not, on these grounds, naturally bound to pay, in
consequence of having entered into definite profit and loss arrange-
ment with those who labour, and are thereupon economically liable
for all the charges which are essential to their due and continuous
labour, do pay, while those who entei into such relations, and

THE BELIEF OF DESTITUTION. 489

from my analysis should pay, are pro tanto relieved of their
liabilities.

I have taken the most disputable case first, for I am far from
admitting that the relief of the poor from destitution is a liability
which is merely to be measured by economical considerations and by
economical duties. They ought to be stated. But I am prepared
to admit that there are duties which are higher and more stringent
than those which an economist allows. I may allege that no man
has a right to have his want supplemented out of my abundance ;
but I may also, with perfect consistency, allege that it is my duty
to supplement it. For our duties are not to be measured by other
people's rights. They are much wider and much more personal, as
the better instincts of every man teach him. It is, I think, unfor-
tunate that Mr. Mill has based the obligation of maintaining desti-
tution on the ground that the unfortunate object of public charity
is not responsible for his own existence. The person who is
constrained by law to support him may retort with perfect justice
and absolute cogency, that he is not responsible either. It is, in
my opinion, infinitely better and more logical to base the obligation
on the general claims of humanity, on the mischievous effect induced
on the individual man when he sees unrelieved destitution, and on
the sentiment, if you will, which urges people to believe that
necessary as legal relief may be, it is better if possible, except to
the utterly undeserving, that private benevolence, or if the cause be
preventible, legal action, should obviate as far as possible the
necessity of applying for that legal relief. For destitution may be
caused by law, and therefore may be, I will not say remedied by
law, for effects in the social system endure after causes have ceased,
but repressed or obviated at its future origin. But I fear that I am
quitting the range of economical reasoning, and intruding into the
wider and more suggestive field of morals. My excuse must be
twofold — first, that one may occasionally soften the stern inferences
of the economist ; next, that I may point out to you that not every
social fact is capable of a complete exposition on economical
principles.

The poor rate used to bear the expense of roads and prisons, and,
in so far as the duty was not satisfied by compulsory service, of
police. The roads, to be sure, since 1773, were on the whole

490 CHARACTER OF LOCAL TAXATION IN ENGLAND.

maintained by tolls levied on passing vehicles, considerable excep-
tions being made in the case of agricultural carriages. It must be
allowed that some thirty years before new methods of locou.otion
were invented or applied, the trustees of these roads, animated no
doubt by motives of enlightened self-interest, mended them decently.
For some time, however, after the Act of 1773 (you may find it in
the literature of the time) the permission to levy tolls was not
made the ground for repairing the roads, but for saving the rate.
The stage coach of the eighteenth century paid heavy tolls, of
course taken out of the passengers' fares, and was not infrequently
stranded in a slough. There is a story, perhaps a legend, that at
the end of the last century the Oxford coach going to London,
and not over-laden with University professors, was absorbed in some
Serbonian bog on the old eastward road over Shotover. You have
heard of the scholar of Queen's, who choked the Shotover boar that
charged him with his Aristotle, and brought his head, no doubt, to
the Christmas festivities of that college of the plural Queens. Non
defemoribus istis, non tali auxilio must have been, if the story is true,
the despairing cry of those engulfed passengers. The story may
not have been true, but it must have been possible.

Now, it seems to me inevitable that a landowner should pay for
the creation and maintenance of roads to his estate. I dare say
they are ancient. I witnessed what I have no doubt is the history
of many an English road in my experiences in the Eocky
Mountains, experiences which I do not doubt were recognized nine-
teen or twenty centuries ago in our own country. The first track
is that of wild animals migrating for early pastures, and I may say
that I know no country in the world in which a few miles of north
and south latitude make so remarkable a difference of late and
early growth as is seen in the British Islands. The second track is
that of the savage, who utilizes the instinct, if we can use this word
in these Darwinian days, or limited logical faculties of the brute.
The third is the more or less civilized man, who, in the United
States, adopts the track of the bison, and the trail of the Ked Indian
for high-road or railway. We may be pretty sure that most of the
English roads have as ignoble an origin as that of the American, —
that the bos primigenius taught the ancient Briton, that the ancient
Briton could not conceal his secret from the Roman, and that Saxon,

THE MAINTENANCE OF BOADS. 491

Dane, and Norman were the inheritors of this traditional knowledge.
Depend upon it, the new roads, other than those of towns made
from place to place in England, during the last two centuries, are
not more than 1 per cent, of the existing roads, roads which date
from the days of savage occupancy. And if one deducts disused
roads from the total, I have my own opinion that 1 per cent, is
a very liberal estimate. Of course the various settlers, immigrants,
freebooters, brigands, the aggregate of whom is implied by Juvenal
in his word of three letters, settled in the neighbourhood of these
primeval roads. Show me a Koman villa, and I am sure that a
Boman road will be found near it. We are, some of us at least, the
heirs of a multitudinous experience.

Now, in 1773, the English landowners in Parliament, as is
natural, seeing that they were dominant, thrust the cost of main-
taining those roads, the existence of which was essential to their
rent, and the due repair of which was nearly as essential, on those
to whom the repair of the roads was even more important than its
existence, by the machinery of turnpike tolls. For a long time they
got the tolls, exempting themselves and their tenants from them,
and did not repair the roads. But as stage coaches increased, it
was seen that the fruitful contingency of tolls depended on
adequate repair ; and in some cases, even on a few miles of new
road, tutting through hills and bridging over low-lying land.
Some specimens of this later engineering may be seen on the west
and south roads leading out of this city, and a little on the east.
The two north roads, I venture on asserting, are as old as the days of
the ancient Britons. . The money for restoring, and in certain cases
for improving, these communications came from private subscribers;
and fifty years ago, a turnpike trust, though its duration was very
properly limited, because it was really the restraint of a public
right, was supposed to be an excellent investment. In course of
time the receipts from the tolls fell off, for a more rapid and cheaper
means of transit was discovered and gradually extended. The trusts
were renewed after the term was expired, but in vain ; for it was
finally discovered that the tolls payable did not cover the cost of
collection. There was nothing to be done but to refuse to renew
the trusts, to secularize the toll-houses, and to leave the landowners,
as was the case before 1773, to mend the roads which had now

492 CHABACTEE OF LOCAL TAXATION IN ENGLAND.

become in the main their interest only. In less than a century
the ancient obligation on themselves, which they had striven to
shift, and with success on the mail coaches and trade waggons, re-
verted to their own shoulders, and again became a charge on land
or on occupancy. They had learned how important an aid to the
rent of land is cheap and convenient transit. Hitherto they had
got it at other folks' cost. Now they had to provide it at their own.
The situation, as the landowners encouraged branch railways,
became worse and worse, for though the roads were not used by the
carts and coaches, and therefore presumably lasted the longer, the
contributions to the charges gradually disappeared. It became
necessary, either to pay for the maintenance themselves, or through
the tenants, or to let the roads get out of repair, or to find some
other source by which to secure a good road, and save their own
charges. They hoped for a time that a renewal of the trusts would
prove efficacious, and when they were disappointed in this, they re-
viewed their opportunities.

Now about twenty years ago, a Committee of the House of Com-
mons, of which Mr. Goschen was chairman, was nominated for the
purpose of investigating the amount, the incidence, and the equitable
distribution of local taxation. The committee was, as usual, taken
from the two traditional parties in equal moieties, except that it had
a bare majority on the side of the existing government, a rule
which is observed in the House of Commons and, perhaps, explains
the singular worthlessness of nearly all reports made by select com-
mittees. The committee took evidence as usual, and divided on a
report, drawn up as usual by the chairman. Half the committee
voted in favour of the chairman's report, half against it, and the
report was carried, as usual, by the chairman's casting vote. I may
observe that in recent times the House of Commons on matters of
high public interest steadily stultifies itself in this absurd fashion.
In consequence, as I have been constantly constrained to state in
the House, the evidence taken by the committee is almost invari-
ably of far higher value than the report issued, which purports to be
an adjudication on the evidence. It is needless to say that a report
carried by the casting vote of a chairman is of no practical force.
Mr. Goschen had nothing left for him but to issue a volume of his
own on the subject, in which the whole matter was stated with

THE COST OF POLICE. 493

great clearness, and the principles which should determine the dis-
tribution of such taxation were, from Mr. Goschen's point of view,
advocated with great cogency. He advised, in brief, that such tax-
ation should be divided between owner and occupier in equal
moieties, as is done in Scotland and generally in Ireland, though in
the latter country what is called county cess is imposed on occu-
piers only. I shall point out later on what was the effect of Mr.
Goschen's publication.

Up to comparatively recent times, the maintenance of the peace
in town and country was imposed upon the inhabitants in turns, the
office of constable being one which an inhabitant could not decline.
Even in tbe city of London, there were constables appointed in
every ward. But in course of time, it was seen that it was im-
possible to rely on these gratuitous services. A detective force had
to be established in London. Then a regular police was instituted
by Sir E. Peel, and put under the Home Office, when its duties
were outside the city. Very soon the system of the London police
was extended to other large towns, and finally the constable of the
village or hundred was superseded by a county police, and paid ser-
vice substituted for a quasi-voluntary one. The ancient constable,
an institution alleged to be coeval with the common law and in
activity within my own memory, is now as obsolete as the court leet,
by which he was originally appointed, and whose officer he was.

Now the maintenance of the peace and the arrest of offenders,
a duty still imposed in theory on all persons, apart from the form
of the special constable's oath, is every one's interest, and if it be
delegated its cost should be defrayed by the contributions of all who
have the benefit of such services. On no pretext whatever should
this charge be defrayed by the owners of land, or by occupiers
whose liabilities are measured by the use of agricultural land. It
is entirely unfair that a farmer of 500 acres should pay this tax on
his holding. It is true that his property is in the open, and is
exposed to marauders. But it is quite possible that another
inhabitant of the same parish may have as much property in his
house as the farmer has on his land, and not be liable to a tenth of
his payments. He may have, as I shall show hereafter, much
more than the farmer has, and not be rated at near the sum.
Plainly the police rate should be defrayed by the occupier, and the

494 CHABACTEB OF LOCAL TAXATION IN ENGLAND.

most equitable way in which it should be defrayed is by a house
tax, estimated on the building value of the house. If a man
chooses to live in a house which would cost and did cost half a
million to build, he should pay on that halt million for protection
and not on a nominal sum. The maintenance of the poor then, in
equity, should be a charge on the employers of labour ; the main-
tenance of roads, by the same equity, should be defrayed at the cost
of those who own landed property. The maintenance of the peace
should be a charge on occupation, and should be calculated on the
cost which the occupier is put to in building the house in which he
thinks proper to live.

But I am far from having exhausted the charges which are
included under the general head of local taxation, charges which
are rapidly becoming a tax, the aggregate amount of which is con-
siderably in excess of the whole cost of government, exclusive of
interest on the debt, sixty years ago, charges which if continued at
the same rate bid fair to rival, at no remote period, the imperial
expenditure. Much of the outlay is, I allow, immediately or
indirectly beneficial, but unfortunately they who incur the cost are
very frequently, I may say generally, not the persons who obtain
the benefit. On the contrary, the benefit which they pay for
supplying is, inevitably and in the nature of things, the basis of a
further charge on themselves. In brief, they improve another
man's estate, and are called upon to pay a subsequent sum on the
improvements which they have effected at their own cost. Such a
result must ensue by basing all local taxation on occupancy.

One ancient tax, contributed by all occupiers and occupying
owners, as I have shown you in my analysis of the Tandridge rate,
is the charge for maintaining prisons and hospitals. Now the
detention and punishment of criminals is part of the machinery of
police. So, though in a less obvious manner, is the case of lunatics.
The lunatic is kept in custody because he has either committed a
criminal offence or is judged likely to commit one. Now the charge
of his maintenance and custody should be defrayed, as the police
rate should be defrayed, by the contributions of all occupiers, and
this because the liberty of such persons is a danger to secure
occupancy. Besides, it is a matter of local interest that the causes
of excessive local crime or excessive local lunacy should be studied,

NATIONAL EDUCATION. 495

and if possible remedied, under the stimulus of having to pay
exceptionally and sensibly for the local evil.

Recently, the state has wisely determined to insist on the com-
pulsory education of all classes. It is seen that an uneducated
people is handicapped in the industrial competition with educated
nations, and however much people may declaim against competition
within the limits of any one particular community, it is plain that
no law can prevent its operation, and that in all its force in the
industrial relations of any two communities or more, and that
consequently industrial ignorance, however caused (and a highly
educated nation can be rendered industrially ignorant by protective
laws) is a bar to economical progress and industrial competition.
Now for reasons already stated, this charge should be a national
one, for the primary education of the young does not, by the very
terms of the hypothesis, benefit the individual nearly as much as
it does the state. It might be paid entirely by the state. It
assuredly should not be paid by the magnitude of the occupancy.
It would be much better paid, as it is in the United States, by a
house or property (not income) tax, and the control of it should be
in the hands of local committees, instead of being based on foolish,
frantic, and mischievous examinations.

But by far the most formidable, and on the whole least defensible,
forms of local taxation remain. The researches of modern science
have shown that the health of a community must be considered in
the supply of pure water, and in the adequate elimination by sewage
works of unwholesome and dangerous matter. A district should
not be declared habitable, or allowed to be occupied with houses, in
which pure water is not forthcoming, and dirt is not effectually
removed. Under the same rule overcrowding should not be per-
mitted, the building of unwholesome houses should be forbidden,
and in general, the public health should be consulted. But the
restraint on overcrowding and what is called jerry building, a term
I believe imported from the other side of the Atlantic, is, like the
inspection of food, a matter of police, and should be defrayed as
other police liabilities should be.

But the supply of water and the removal of sewage are, or
ought to be, permanent charges on the owner of habitable land. By
the laws of sanitary science, and, what is more important, for the

496 CEABACTEB OF LOCAL TAXATION IN ENGLAND.

purposes of economical inquiry, building land is or should be of no
more value than ordinary agricultural land, if these conditions are
not complied with. It was from ignorance only that they were not
made obligatory by early English law. In the city of London the
supply of water reputed to be pure was imposed on the civic
authorities, and assistance was accorded to them for the purpose,
The city estate, which lies west of St. James' Street, was granted
to the Corporation in early times, in order that it should contain
reservoirs for the City supply of water, the streams formerly utilized
for the purpose at Paddington being now diverted into the Serpen-
tine. In equity then, and on economical grounds, the supply of
pure water and the removal of sewage matter should be a charge
on building land.

The greater part of the local debt, which now figures as so
serious an item in local budgets is due to these permanent improve-
ments. In most cases the debt is terminable, that is, the occupiers
are constrained to pay off principal and interest, and as I have
stated, are engaged in benefiting an estate, the owners of which
can and will make them pay interest on the improvement which
they have effected at their own cost. The same reasoning applies
to workhouses, to prisons, to county halls, and a host of other
permanent structures created out of the occupier's money for the
landowner's benefit. It is not easy to conceive a system which
more completely offends against every canon of economical equity.
If outlay is beneficial, immediately or indirectly, it ought to be
defrayed by those who secure the benefit.

But this is not all. The property which is liable to a rate is
assessed by the local authorities either in person or by deputies.
But there is an appeal from the judgment of the assessor to
Quarter Sessions. The rating Act of William IV. bids the Court
of Appeal take into account the fair letting value of premises, a
direction which is entirely equitable in nearly all cases. But it
is not equitable in the very class of cases, in which the justices
in Quarter Sessions are generally interested, viz., their own houses.
They have therefore interpreted the clause greatly in their own
favour, and county mansions, however costly their construction,
are rated at nominal sums, on the plea that their letting value is
an unknown quantity. The Quarter Sessions shrinks from the

MODEEN EXPEDIENTS. 497

logical conclusion of its own premises, which should be that they
must not be rated at all, and attempts a compromise. There is
nothing, I believe, which has excited more universal condemnation
than this evasion of an obvious duty. There is no practice more
dangerous, for the most powerful stimulant to socialism is the
conviction that the forces of government are perverted to the
interests of a particular class. When my friend Lord Wemyss
declaims against socialism at St. Stephen's in the Lords, it is only
wise to trace the circumstances to which this movement which he
stigmatises owes its origin. In England socialist opinions are
expressions of discontent at existing and indefensible practices,
not an organization directed against the very foundations of
economical progress.

Two manifestations have lately been made, indirectly attacking
the existing system of local taxation in England. One of these is the
enfranchisement of leaseholds by a compulsory process, the other
is the special taxation of ground rents. The first is intended, it
seems, to obviate the consequences which ensue from the artificial
preservation of family interests under the forms of a settlement
of land, the second is an assault on the principle which levies all
local taxation on the occupier. Now nothing excuses the former,
except it be that it purports to supply a remedy for an existing
practice which is believed to be mischievous, unless it also urges
that in a densely peopled country, everything which distributes real
estate is to be commended, everything which accumulates it is to be
discouraged. It is, however, open to some doubt whether the
strict enforcement of sanitary conditions is not a better remedy
against the owners of house property and building land, than com-
pulsory sale as a remedy against accumulation. In the United
States such accumulation is not only discouraged by public opinion,
but by the more drastic effect of levying local taxation to the full
on all lands and tenements, whether void or occupied, and by
putting this taxation entirely on the owner. But the condition of
workmen's houses in the States, to judge from the latest report in the
State of Pennsylvania, is worse than in any civilized country, and the
rents are enormous. Of course, there is much which is exceptional
in the fiscal system of America to account for this, but it also
implies that facilities for acquiring ownership, undoubtedly

33

498 CHABACTEB OF LOCAL TAXATION IN ENGLAND.

present in the States, do not inevitably lead to beneficial
results.

The special taxation of ground rents, except as a remedy to the
unfairness of levying local taxation on occupiers only, and as part
of the theory of progressive taxation, a very agreeable topic in the
economical analysis of finance, is an attempt to levy a special tax
on a special kind of fertility. Fertility, among political economists,
represents those exceptional advantages which particular pieces of
income-bearing land possess, by reason of their yielding a larger
return to the possessor than other pieces do. In ground rents
this is proximity to the market. The ground rent of a plot in
the city of London is exceptionally high, because the occupation
of it gives exceptional advantages for carrying on a profitable
business. It may be just and prudent, as Mr. Mill alleged, to levy
special taxes on accidental fertility, i.e., such fertility as is in no
sense the creation of the owner, and is due to the recognition by
others of the exceptional advantages which the site yields. But
to be just, the same liability should be extended to every kind of
exceptional and spontaneous advantage, and in the analysis of
economical fertility, it is by no means easy to determine what is
spontaneous and what is consciously acquired, even in the pos-
session of land. Purchasers may, by reason of their own acuteness,
anticipate the pressure of demand, and subsequently stimulate it.
Are they to be exceptionally taxed because they have been ex-
ceptionally acute or farseeing ?

After the publication of Mr. Groschen's work, in which the
author advocated the equal partition of local taxation between
owner and occupier, the landowners in Parliament became alarmed.
It is constantly alleged that the payment of local taxes by occupiers
is merely an indirect payment by owners, and that if the owner
paid them in the beginning, the tenant would pay them in the end.
But this contention proves too much. If it be true, no harm
would acrue to the owner if he did pay them in the beginning,
a reversal of practice to which owners show a very rational re-
pugnance. Besides, if Parliament transfers any tax from owner
or occupier to the consolidated fund, it is inevitable that pro tanto,
a present is made to the owner out of the public taxes, and no
boon whatever is bestowed on the occupier by such a lightening of

LOCAL TAXATION SUBSIDISED. 499,

local taxation, for the hypothesis is that the landowner can and
will exact all the remission in an increased rent. But such
reasoning implies that the landowner has a power of enhancing
the rent at his pleasure, a position which, if it were affirmed and
believed, would be an unanswerable argument for regulating all
rents, however voluntary in appearance, by the state. In fact, he
has no such power, as recent experience is proving, in the decline,
not of agricultural rents only, but in the slower reduction of house
rents. The value of building sites, and of houses erected on them,
is determined by the ordinary laws of value. It is subjective, i.e.,
it lies in the discretion of the occupying applicant, not objective,
i.e., in the will of the consenting owner, unless, of course, the
state assists him to some extent in fixing a monopoly price.

The parliaments of 1868 and 1874 began the transference of
considerable masses of local taxation from the occupier to the
consolidated fund. All the charges of prisons were transferred in
this way, all the charges of lunacy, and a notable amount of the
charges on roads. Those were ancient liabilities on land, and on
the profit of its use. Since the date at which this practical
answer to Mr. Goschen's suggestion was made, no new tax of
a substantial kind has been imposed ; some have been reduced,
and very urgent demands in the interest of manufacturers have
been put forward, especially for the reduction or abolition of the
taxes on gold and silver plate, and on the use of carriages, taxes
alleged to be exceedingly injurious to two British manufactures. I
have already referred to the budget of 1885 and its failure. As a
consequence, these remissions have been made entirely at the cost
of those who pay income tax; and when I investigated the subject,
and based a motion in the House of Commons on it near two years
ago, I found that half the income tax had become a subvention to
local taxation, and, according to the ordinary interpretation, to
landowners, in relief of traditional charges.

Some of the burden of local taxation, indeed of any taxation,
must rest on the person who first pays it. This is, I believe, the
case even in those excise and customs duties which, on the theory
of finance, are transferred from dealers to customers. I do not
otherwise understand the unanimously expressed grievance of the
tobacco dealers at Sir Stafford Northcote's increased tobacco tax in

500 CHARACTER OF LOCAL TAXATION IN ENGLAND.

1878, since remitted, or the equally unanimous anticipation of what
the effect of the increased beer tax in the budget of 1885 would be
on the profits of brewers. The power of transferring a tax is one of
degree. It is greatest when the person who primarily pays it bases
his calling on further relations with a body of consumers, and this
quite apart from the check to business which increased taxation has
a tendency to produce. It is least when the person who pays it
first has no further relation with customer and consumer, and
therefore has his power of transmission hindered ab initio. And so
I conclude that, if a moiety of local taxation were paid by the
owner, and the other moiety by the occupier, on the principle laid
down by Mr. Goschen, the former would almost certainly be dis-
abled from transferring his tax, and the latter would not be much
affected in all new transactions.

"With these views, and on these grounds, I made my motion in the
House of Commons on March 23, 1886, when I proposed that for the
future local taxation should, as in Scotland and Ireland, oe divided
into moieties, of which the owner should contribute one part, the
occupier another, power being given to the occupier to deduct the
owner's moiety from his rent. This motion I carried by a majority
of forty, after a prolonged debate. In less than three months, the
decision of the House of Commons was followed by a political
cataclysm. But I have no doubt as to what the solution of the
question will hereafter be, and that the precedent of 1886 will be
followed in the settlement of a system which is still exciting
increasingly grave discontents.

xxm.

THE POLICY OF GOVEENMENT IN UNDERTAKING SERVICE
AND SUPPLY.

The tendency of government to extend its functions, and its motives —
The economist and the politician — The Post Office and its manage-
ment— The purchase of the telegraphs — Jealousy at the functions
of government — The construction of railways in England — The
United States and the European continent — Arguments for and
against their acquisition by the state — Mr. Mill's scheme for
making the state a universal landlord — The practice of Parliament
in making purchases or sanctioning them — Government as a pro-
ducer— Dockyards — The defence of the system — The frauds of
contractors — Precautions against them.

There is always a disposition on the part of governments to allege
that the Administration can carry out the business of private life
and private action better than individuals can. I have illustrated
to some extent this habit of mind on the part of more ox less
permanent officials in my lecture on the limits of laissez faire.
I have given some account of the facts which bring about or justify
this tendency in the last lecture on the origin and development of
local taxation. Now the general inclination of governments to
undertake such functions is partly due to fear, partly to conceit.
There are, and will be, occasions on which administrations, justly
dreading criticism, wish, as far as possible, to keep certain processes
of action entirely in their own hands. In Europe at present nearly
all railways from the Rhine to the border of Asia owe their
initiative and their control to government. They are primarily
the mechanism for military concentration. Again, it is natural

502 TEE POLICY OF QOVEENMENT.

for an administration which represents the will or intelligence of
the central authority to affirm that the limits of its action should
be extended, that it may prudently be entrusted with details, and
be allowed to supersede, or at least to control, spontaneous efforts.
It must be allowed that the results of this meddlesomeness are not
reassuring. I have only taken one instance of the love of interfering
in a part of Europe. The consequence has been that the inevitable
errors or disappointments of government are open to destructive and
malignant criticism ; that powerful statesmen have had to oscillate
between deference to domestic discontent and deference to foreign
authority, sometimes to make friends with the red international,
sometimes with the black, sometimes with the yellow; and that
in those parts of Europe, where the initiative has been taken
incessantly, the authorities have as incessantly been met with
anarchy.

It is much better, even if they disobey it in spirit, for govern-
ments, in the letter at least, to acknowledge that they are acting
under a popular mandate. The effect is that by doing so they
obviate any criticism beyond that of having misconceived their
mission, and experience tells us that an error in generalities is more
readily pardoned than one in details. I remember some time ago
that an old general with whom I had a slight acquaintance told me
that he had been once appointed governor of a Crown colony, in which
the function which he held was coupled with that of being Lord
Chancellor, or principal judge in equity. He waited on the minister
to whom he owed his place, and expressed his doubts as to whether
a person, all whose experiences were military, could be trusted with
purely legal functions, and was assured, by being told that as long as
he gave no reasons for his legal decisions, he had no cause for alarm.
Now this is not a satire on law, but an eulogy of it, because it alleges
that equity is natural justice. But it is also of great practical
value, for as long as you let your neighbours supply reasons for
your action, you are in a far safer position than you would be if
you gave the reasons yourself. And by parity of reason, if you have
to state the grounds on which you take up a particular line of
action, the lines of action should be as few as possible. I am per-
suaded that much of the domestic trouble with which foreign
governments have to grapple is due to the fact that they have

THE ECONOMIST AND THE POLITICIAN. 503

taken so many initiatives, and have given so many disputable
reasons for their action.

Now, though an economist should abstain from the criticism of
political action, he always has to discuss social motives and
practices, to search into the causes which bring about the former,
and to predict the consequences which follow from the latter. The
economist and the politician are equally busied with human society,
but the function of the economist is limited by observation and
analysis, that of the politician is to proceed to action. Public men
have often had to do many things which economists naturally
criticize. Economists have been known to draw conclusions which
public men are constrained to disregard, or perhaps to repudiate.
Perhaps the principal use of economical inferences is that which is
derived from what I am in the habit of calling negative inductions,
under which it is shown that premises, in the first instance
seductive or attractive, have disastrous effects. Not much less
valuable are the positive inductions, by which it may be shown
that private rights, admittedly sacred up to a certain point, may, if
carried to excess, inflict serious evils on society. The earliest
economists, notably Adam Smith and his predecessors in France,
chiefly elaborated negative inductions. The best efforts of their
successors have been directed to those positive inductions which
discover the strain that will be put on society by the undue accep-
tance of private rights. You will remember that, on very high
authority, modern writers of a more rigid school, who have insisted
on the acceptance of their conclusions in practical life, have been
recommended to betake themselves to Saturn.

Now I have made this short preface to my lecture to-day in order
to point out to you that a prudent administration will be very
cautious in either directing private enterprise or in rivalling it.
The less it takes in hand, out of its legitimate sphere, of adjudicat-
ing, through the machinery of Parliament, on the best means for
reconciling contending claims, the less does it invite adverse
criticism. The function of such an equitable interpretation is
difficult enough, and the decision will constantly be challenged.
But it has to be made, even though long, and perhaps useful, delay
is occasioned by the collection of evidence. But to undertake many
more offices than that of a judge in equity on the principles of

604 THE POLICY OF GOVERNMENT.

legislation, where the parliament, with the administration, is com-
petent to take evidence and arrive at a decision, is the acceptance
of a function which needs a constant apology. Now, there are
occasions on which the apology is complete, and the public admits
that government has rightly appropriated to itself the supply of
certain services. It is much more disputable whether government
is ever wise in undertaking the economical function of production.
Almost all the evidence as to the latter action is hostile to the
practice. An examination of instances is the best means of arriving
at reasons for determining on general rules.

The supply of a service is best illustrated by the Post Office.
The origin of this institution was quite as much a measure of
police, as it was to serve a commercial convenience. It was
instituted under Cromwell's government, and the Act of the
Commonwealth which created it states that it was to be " for the
benefit of commerce, for the conveyance of government despatches,
and for the discovery of wicked and dangerous designs against the
commonwealth." The Act of 1657 was ratified at the ^Restoration,
and the Post Office soon became a notable source of royal revenue,
being early charged with pensions. The convenience of the service
was great, and it was soon made compulsory, the rates charged for
conveying letters being very high, though comparatively slight
when contrasted with the old cost of sending them by private
hand. In course of time the Post Office profits were transferred to
the general revenue. In 1840 the rate was reduced on the plea
that the distribution, and not the weight of the letter, was the
principal charge on the service. It was supposed that the revenue
under the new system would soon equal the amount'received under
the old, but this did not happen till after the lapse of a consider-
able time. Hence the experiment was deemed premature by Peel,
who foresaw that no little experimental boldness would be needed,
in order to get rid of annual deficits, and make the revenue
elastic.

The economical defence of the Post Office system is that a service
is performed by the government with a punctuality, dispatch, speed,
and certainty which could not be achieved by individuals under any
competitive system, and that in this function, at least, a state
monopoly of service is thoroughly justified. It is further alleged,

THE POST OFFICE. 505

that through this agency a cheap service is carried out indeed, but
that by the fact of the monopoly a considerable revenue is also
acquired. Now it is highly probable that a considerable part of
this contention is correct. The government was anxious to secure,
under the old system, a notable revenue. But however thoroughly
Parliament would have granted them a monopoly of collection and
distribution, it is certain that the results to the government would
have been disappointing if those ends to which I have alluded had
not been satisfied, and that the Post Office would have had in-
terloping rivals, as indeed to some extent they did have under the
old rates. But much of the success which has attended the Post
Omce in this country is due to the constant public criticism to which
its details have been subjected and its efficiency examined. This
criticism, too, came from exactly those classes whose influence any
government would have been anxious to conciliate, and unwilling to
offend. The Post Office, in short, is as much the work of the
people as it is of government, for it owes its usefulness and there-
fore its efficacy, to the constant supervision it submits to.

The peculiar position which a government occupies towards the
people whose affairs it administers has made it decline to become a
bailee, that is, to be responsible for the safe delivery of that which
it conveys. The fact is important, as it shows how cautious a
government should be in competing for a service which might be
satisfied by private hands, unless it has an exceedingly strong case
to show. Now it is part of the Common Law that a common
carrier is liable for the goods which are entrusted to his custody,
though this liability has been from time to time limited, unless
special terms are made with him for transmitting articles of
extraordinary value. But soon after the Post Office was instituted,
as early as the reign of William III., the judges decided that the
Post Office was not liable for the safe delivery of letters, and the
case has been determined again to the same effect. The reason, I
apprehend, is to be found in a well-grounded suspicion that the Post
Office would be treated more harshly by juries than common carriers
would be, and that in consequence the liability must be entirely
repudiated, because the contingency would assuredly be abused.
Even now — when the business of the Post Office has been so greatly
extended in several new directions, now that it has become banker,

506 THE POLICY OF GOVEBNMENT.

carrier, is made an annuity office, and has undertaken the trans-
mission of telegraphic messages — it still, except to a limited amount
and under certain circumstances only, declines to acknowledge
similar liabilities to those who supply analogous services.

The difficulty of a government in undertaking a public service is
further illustrated by the purchase of the telegraph companies.
The government was anxious to obtain the monopoly of oil
messages which were transmitted by electricity, and negotiated the
purchase of the various companies which had hitherto supplied the
want. The purchase money was enormous, and out of all propor-
tion to the value of what was bought. The government might
with perfect justice have entered into the field of competition itself,
and have forced its rivals to submit to more reasonable terms. So
high was the price, that Mr. Lowe, then Chancellor of the
Exchequer, told me that he was strongly disposed to throw the
whole scheme over, for that the bargain gave nearly the price of
consols for a capital and plant, which would require to be replaced
every twelve or fifteen years. No corporation would have given any
such price for that which the nation was called on to purchase.
But the government was held to the bargain and the purchase was
effected. There is no entity against which the doctrine of vested
rights and extravagant compensation for compulsory purchase is
pressed with so much energy and so much success as it is against
the Treasury ; and I may say (till recently, when I had the satis-
faction of arresting one of these attempts) with such ample, such
profuse concessions made by Parliamentary authority, when the
details are settled by a committee. " The revenue," says Lamb,
with much truth as well as humour, " is an abstract which I don't
care much about." The effect of this bargain is, that with better
facilities than any other country, telegraphic messages are dearer in
England than elsewhere, and the receipts from the service hardly
pay interest on the purchase money.

If the government then attempts to acquire the machinery of
an existing service hitherto supplied by private enterprise, it has to
pay an excessive price for the acquisition. If it attempts rivalry it
is met by the most jealous obstruction, and very effective obstruc-
tion too. Experience of Parliamentary procedure, not here only,
but in other countries as well, alone can inform people as to the

THE PUBCHASE OF THE TELEGBAPHS. 507

difficulties of remedial legislation, when such legislation alarms
existing interests. I am here particularly referring to postal notes,
and to deposits in Post Office savings banks. Now there is con-
siderable debate about the expediency of issuing a small note
circulation. The advantages are that it saves the wear of a gold
currency, and is a convenient means of transmitting small sums by
post. The objections alleged are that the system would make the
reserves of bullion so much the less, and that therefore bullion
operations through the foreign exchanges would be subject to more
frequent fluctuations ; that the tendency of such a circulation, the
paper acting as money, would tend to artificially heighten prices,
or at any rate to induce disturbances in value which would be
injurious. Another reason which I do not remember to have heard
alleged in debate, is that a power of such issues conceded to private
banks, or to banks having a power of local issue, would bring
persons within the risk of loss, who had no interest in the issuing
bank, and no means of checking its action, that, for example, in
such a case the Warwickshire working men might have been
constrained or misled into taking some of the Green ways' notes.
These difficulties do not apply to the issue of postal notes. But
the bankers in the House of Commons finally constrained the
government to levy a heavy commission on the issue, to limit the
amount of the note, and to limit the time of its legal circulation.
In the same way they put a limit on the amount of deposit which
an individual might make yearly with a post office, and the total
amount which he could hold in the form of security. It is difficult
to avoid the conclusion that they fancied that there was some
danger to bankers' deposits in the change. There are then con-
siderable difficulties when the government of the United Kingdom
undertake a competing service. It is certain either to be checked
and controlled if it takes the initiative, to be mulcted if it attempts
to purchase.

Less jealousy is shown to corporations which undertake service
or even supply. Parliament would not, I am sure, make very
satisfactory bargains upstairs for corporations seeking to purchase
compulsorily, as I very well know from my experience on com-
mittees. But generally well-managed corporations negotiate the
terms first, and come to Parliament for confirmation only. Besides,

508 TEE POLICY OF GOVEBNMENT.

if they have any local powers, they have that of competing supply,
and such a power greatly expedites negotiation. Hence it is the
practice with corporations to undertake supply. They have
generally purchased or created gas and water works. Under the
impression that the process was complete enough for economical
use, they ohtained some two or three years ago the power of
supplying the electric light. But a little reflection will show why
these services are performed more satisfactorily by corporations than
they would he by government. The administration is more close to
the people. Economies in administration and supply are more
sensibly and more immediately felt, and the machinery of local
government is far more under the control of the ratepayers than
the expenditure of a government is under the control of Parliament.
The policy which makes the existence of a Parliament depend on
the acceptance of the budget and the estimates confers, in my
opinion, powers on an administration which are not in the public
interest. I do not believe that municipal affairs could be conducted
with any continuity or certainty, if the rejection of financial
schemes by a town council was the signal of its dissolution and
re-election.

Furthermore, I do not think that the local taxation of towns
would be borne with patience, if the economies of the local
authorities were subjected too entirely to vested interests. If I
made myself at all clear to you in my last lecture, I showed you
how onerous and, on economical grounds, how indefensible many of
them are. But they have at least the semblance of self-imposed bur-
dens. To heighten them by adventitious charges would be to throw
an unwelcome light on their incidence and their equity. I am ready
enough to acknowledge the economy of the quarter sessions, on
which the advocates of the system dwell. If they added extra-
vagance to the obvious inconvenience of their administration, the
institution would long since have been revised. When they were
entrusted a century ago with the function of fixing the labourer's
wages, they found it an exceedingly unpopular thing to issue a
considerate scale.

I have dwelt on the case of the Post Office and its details at some
length, and have touched lightly on the powers which corporations
have acquired and use for the purposes of rendering supply and

THE CONSTRUCTION OF RAILWAYS. 509

service to the burgesses of municipalities, in order that I may deal
from one point of view only with another public service. I shall
reserve to a separate occasion the very important question as to the
control which the state should exercise over the means of travel and
the carriage of commodities. I purpose on the present occasion to
merely deal with that of the acquisition of railways by the state.

In England railways have been entirely constructed by private
enterprise and private capital. The projectors of these undertakings
have planned them, got government sanction for them through the
two Houses of Parliament, procured the requisite land for them,
constructed them, enlarged and extended them, and worked them
entirely at the expense of the shareholders. The nation, through
the administration and Parliament, has given or granted them
nothing whatever, but has put on them outrageous and indefensible
expenses, expenses which should have been published as preliminary
charges, in order ihat the English people might see how these pub-
lic undertakings have been fleeced. So heavy were they, that we
owe to them that railway travelling and freight are necessarily
higher here than in any other civilized country. In no other has
the whole cost been borne by private enterprise. Even in the
United States the government granted the great railways large
blocks of land on either side of the line, the subsequent sale of
which has been of great advantage, while in the United Kingdom
by a standing order of the Lords, the railways were jealously ex-
cluded from getting a single square yard beyond what was needed
for their way, sidings, and stations, so that they have often had to
pay heavily for the very fertility or adventitious value which they
have created.

In France the land was given by the state, the construction of
the line, property in which was conceded for a long term of years,
being the work of private enterprise. In Belgium, Germany, Italy,
Spain, &c, they were almost entirely constructed by the state, and
are under state control. In Russia they are entirely the work of
government, the purpose of the way being wholly military. In
British India and the Colonies they are the product of British
capital, the interest on the loan, sometimes on the working of the
railway, being guaranteed by the Government of India or the
Colonies. They are nearly all the work of the last fifty years, and

510 THE POLICY OF GOVERNMENT.

certainly in no period of the world's history has so much capital
been advanced and expended on any public works as has been laid
out on these roads.

Now, there are many persons who conclude that it would be well,
if by some gigantic operation, these undertakings became in Eng-
land the property of the state. " The operation," they say, " is
very large, but it is an operation on paper only. Railway transit,"
they say, " has so completely superseded all other modes of convey-
ing persons and goods, that it is not only a necessity, but the
public is as much in debt to the shareholders of railways, as if the
capital, estimated at its dividend-bearing value, were inscribed with
the rest of the public debt in the books of the Bank of England.
Competition of any serious kind with the great lines is out of the
question, and however much it be affirmed in theory would consti-
tute, if it were seriously thought of, much more, if it were put in
practice, a gross breach of faith. Nor is there a genuine competition
between the great lines, from which Parliament expected so much.
The companies have found out that competition at low prices is
ruinous, and have accepted the younger Stephenson's maxim that
where combination is possible, competition ceases. The directors
try to encourage traffic, cautiously, but with growing intelligence.
They put their fares as low as they can, for they know that high
fares check travelling. Their only competition against each other,
when they run from and to the same places, is that of who shall
convey passengers and goods with the greatest rapidity and
punctuality. In England the railways are all made, and the use
which can be made of railways has been exactly tested. We know
all that we want to know about them, and though improvements in
detail may be effected, these are minor matters compared with
what has been done. Their value, estimated from their earnings
and dividends, can be exactly calculated."

"The saving of cost," they go on to say, "consequent on the
acquisition of railways by the government would be enormous.
Without in the least degree curtailing the comfort or convenience
of passengers and traders, a great economy might be made in work-
ing expenses, by weeding out superfluous and competing trams.
Why in the world should a train from London to Manchester start
and arrive at exactly the same time, by the North- Western and the

STATE OWNERSHIP OF BAILBOADS. 511

Midland, and arrive at exactly the same time, each at its destina-
tion ? Again, how great would be the saving in getting rid of these
innumerable boards of directors, their fees, their right of free user
over all the lines with which their own is brought in contact. One
half or more of these officials could be disposed of, the efficiency in-
creased, and the money saved. Then again, Parliament would be
rid of the squabbling over the various Railway Bills, the partisan-
ship in the House of Commons, the unseeinly and costly struggles
upstairs, the waste of the Committees' time and temper. The time is
ripe for the conversion, the value of the property can be easily ap-
praised, and the public which, as you say, has really kept the Post
Office efficient, would have as extensive and as healthy an influence
on the railways."

No doubt a very strong case may be made out for the transaction.
But, on the other hand, " It is a very serious thing to hand over to
the administration the whole mechanism of transit. Nor for many
reasons is the case of the Post Office and that of the railways parallel.
In the conveyance of letters, distribution is everything, nearness and
distance are almost unimportant factors. In railways the latter are
all important. Then the non-liability of the Post Office as a carrier
is a minor inconvenience, but life and property would be seriously
imperilled, if the government declined, on its own account, those
liabilities which it has wisely imposed on railways, in respect oi
passengers. The railway authorities, by the threat and by the
reality of substantial damages, have been obliged in self-defence to
undertake those precautions against risk, which have made railway
travelling almost the safest business one can undertake. They
would never have done so much but for the law. Is it reasonable to
believe that a government official will be influenced by these alarms ?
Dividends are nothing to him, and the government, if he be ever so
negligent, will be pretty sure to shield him. We shall rue the day,
if in order to diminish danger and lower cost, we are hereafter called
to travel at the German rate, thwarted and badgered at every turn
with a number of insolent government nominees, who will consider
their places to be freeholds, and use us as such officials do now,
when we have experience of them. You say that competition is re-
duced to that of dispatch, punctuality, and, I may add, uniform
civility. Are we to expect these when, on undertaking a journey,

612 THE POLICY OF GOVEBNMENT.

we are reduced to Hobson's choice, and must accept what an officer
chooses to offer us ? We shall lose more than we gain by handing
over our railways to a central government office."

" Besides, experience and prudence teach us to curtail rather
than to extend the functions of government. Many of us think that
centralization has been carried a great deal too far, that Parliament
undertakes what it cannot possibly carry out, that in consequence
the administration, and especially the permanent officials, are the
Legislature, and the two Houses are becoming more and more, the
one a debating society, the other a pageant. The proposal which you
commend will enormously increase the official class, will put one of
the most important instruments of modern society into the hands
of the government, and put us under a bureaucracy with a witness.
You know, since Monk's Bill admitted them to the franchise, how
importunate, how insatiable the Civil Service is, how they com-
pete by hundreds for the least vacant place, how they grumble and
sulk about their pay and promotion when they get in. Are all our
railway officials of the future to have freehold offices, as they will
assuredly claim to have ? Every one knows what trouble there is
in dockyards, what pressure is put on government to retain useless
hands and to continue useless works. Every town in which railway
men live for the future, supposing your scheme be adopted, will be
a focus of conspiracy against the public purse. It may be doubted,
whether the economy which you expect from abolishing boards of
directors will come to much, when the whole of these new officials,
from the highest to the lowest, will be shouting for short hours and
long pay. It is very possible, perhaps, that in foreign countries offi-
cials are content with moderate salaries. Perhaps they compensate
themselves by ill manners. Our experience is different. We shall
certainly have to pay the high salaries, and are pretty certain to get
the bad manners into the bargain."

" You say that the value of these properties can be exactly calcu-
lated on the basis of their past earnings, which are on record. But
what reason is there to believe that Parliament will accept the cal-
culation as the basis of purchase ? If it does it will go against all
its traditions. It has long acted on, and can hardly refuse to con-
tinue its 10 per cent, compensation for disturbance, above the
valuer's price. It was prepared, till the theory was overset by some

THE CASE AGAINST IT% 618

of us, to take into consideration the clause in the old railway Acts, con-
tained, we believe, in all, that a company should limit its dividends to
10 per cent., as a pledge that such a maximum should be taken into
account in dealing with minimum earnings. And then where are
you to get your valuer ? Is it to be a gentleman like Mr. E. Smith,
who valued plant for us as though it were as indestructible as matter,
and wanted us to give this actuarial value, with other items for pro-
perty that was not worth 15 years' purchase at best? You have had
experience of a Parliamentary purchase in the telegraph companies,
is it likely that you will get better terms with the railway people ?
The telegraph stockholders held out for their price, and the
government gave in. Is the railway interest less strong ? The
directorate in the House of Commons is not a weak body, the pro-
prietary is an overwhelmingly strong one. Outside the House it is
not to be trifled with. According to the latest returns which have
been furnished, the proprietors of stock, shares, and debentures have
an average of £14 a year from their holdings. Of course much of
the stock is held in large masses. If the conversion is to take place
every one of these holders will be on the alert to prey on the govern-
ment, and to insist that the concession should be favourable to him.
The prosperous railways will point to their solid success, the un-
prosperous ones to their public services and to their deferred hopes.
As it is they can blame their fortunes or their directors, but
assuredly they will look to government, i.e., the taxpayer, to make
them amends for what they have lost, if the conversion is to come."
The arguments which I have given you in this sketch for and
against the purchase of railways in the United Kingdom by the
government are by no means imaginary. I have used them, I
leave you to conclude which way, over and over again, during the
time, not passed yet, in which the dissatisfaction of traders with
railway freights has been made the subject of one or two abortive
Bills, and is like to be the subject of many more. But I venture
on predicting that if government seriously inclined to the pur-
chase, and hinted that the traditionary practice of Parliament
would be followed in the valuation, the hubbub would cease as sud-
denly as the storms raised by iEolus was when Neptune put his
head above the waters. But whether the purchase would be as
satisfactory to the nation as it would be to the stock and shareholders,

34

514 THE POLICY OF GOVEBNMENT.

and whether the management would be as economical, and the
service as satisfactory to the public, is a question on which, at
present I believe, opinion decidedly inclines in one way.

Some years ago, my late friend, Mr. J. S. Mill, seriously proposed
that the State should constitute itself the universal landlord of the
British Islands. Of course, for Mr. Mill was by no means disposed
to repudiate the rights at present enjoyed by the living owners of
property, though he had very strong views about the ownership of
intestate estates, he conceived that the acquisition should be made
on the basis of an equitable purchase, in which the full value of his
interest would be given to the dispossessed owner. In the valuation
of such interests, there would be strong claims for compensation on
the ground of the disturbance of traditional associations, in the
demand for which the men who have done nothing but disgrace
their ancestral origin would be as loud advocates of a sentimental
price as those have, whose personal merit is as great as that of any
ancestor with whom their holding is associated. Now when under
the law, say for a street improvement, a tenement in which, to the
scandal of municipal or other authority, human beings have to live,
but pigs should not be housed, had to be appropriated for public
works, the owner of the abomination obtained over and above the
valuation price, never lower than the true price, 10 per cent, for
disturbance, and till recently a valuation based on the rent which
he or his sub-lessee contrived to extract from misery. I have no
doubt that Parliament, if we assume that the scheme came within
a reasonable prospect of completion, would lean to its traditions,
and that the nation, if Mr. Mill's plan had been adopted, would
have had to pay fully 20 per cent, above the existing value of
the property. I say nothing here about the wisdom or justice of
the various Irish Land Acts ; but any one who studies the claims
put forward at the landowners' conference can form an estimate
from the demands made on the part of men, who have not a shred
of Parliamentary influence left, what would be expected by those
who still have and are like to have a great deal of Parliamentary
influence.

I have no doubt as to what were the motives which induced Mr.
Mill to contemplate this gigantic operation. He knew that the rent
of all kinds of land available for human occupation, agricultural

MB. MILL AND THE LAND. 515

and other, had risen from the remotest time for which there was
any evidence in this country, and that it was rising still. He knew
that the rise of rent was due to the increase of demand for land, and
he concluded, with Eicardo, that this resulted from the pressure
of population, and the law of diminishing returns, when some of us
had begun to see that, given free trade in food, of which Mr. Mill
was a staunch advocate, the cause in the rise of rent, whatever it
might be of, was due to the expectation of increasing profit, that
hitherto trade and agricultural profits had been progressive or
seemed to be progressive, and that in consequence there was a
steady competition for occupancy. Believing, then, that rent was
increasing by reason of the increase of demand, and believing that
as population increased, the demand would be still more keen, he
treated as unimportant or less important, the continuity of trade
and agricultural profit, and the consequent necessity that capital
and skill must be attracted to these callings, and must be provided
with obvious and adequate guarantees. He never contemplated
the case of agricultural capital being destroyed by the mixed opera-
tion of the tenant's ignorance and the landlord's cupidity, and with
it the skill which makes a profit and therefore makes a rent. Now
Mr. Mill was ready, being an entirely just man, to recognize the
present value of a monopoly rent. He was under the impression
that it would go on increasing in the future, and he gave the name,
now historical in more senses than one, of the unearned increment
to this future growth. In order to secure this future increment,
he recommended its present purchase. He propounded his scheme
in London more that twenty years ago, and asked me to come and
support him. I told him that I thought him in the wrong, and he
pressed me the more to come and attack him. I did so to the best
of my power, though I did not then possess a tenth part of the
information which I have since collected as to the history and
development of rent.

One can of course be wise after the event, and every one can see
that if, more than twenty years ago, Mr. Mill's scheme had passed
into the region of practical politics, the purchase would have been
disastrous, nay ruinous, to the people of the United Kingdom, and
that probably popular discontent would have led to the bargain
being repudiated. I do not pretend to assert that I foresaw the

516 TEE POLICY OF GOVERNMENT.

fall of rents, consequent on bad harvests in England, decreasing
agricultural capital, discouraged skill, and cheap freights. I did
not, till I learned twelve years ago, how much agricultural capital had
already shrunk, foresee the inevitable issue, and then foresaw it only
in part. But more than twenty years ago, I had learned that the
Ricardian theory of rent was a metaphysical conclusion, that its
progress and even its continuity, under free trade, was due to
an intelligible but precarious set of conditions, in which the fertility
of land, the pressure of population, and the law of diminishing
returns played but an unimportant part, and that, very possibly,
the unearned increment of the future was entirely hypothetical and
probably visionary, certainly too doubtful to admit of being made
the basis of a gigantic operation.

But let us suppose that the unearned increment had gone on
increasing, that the purchase had been made on reasonable terms,
and that, on the whole, the dispossessed landowner would have been
glad, at the present time, to recover his property on the terms
of a compulsory purchase made twenty years ago. "What would
have been the situation ? The cultivation of the soil would have
exchanged a landlord, who is, after all, a human being, with
sympathy and consideration, at least at times, with some desire
to live at peace and goodwill among his neighbours, for a govern-
ment office, the servants of which, by a very natural impulse,
would manipulate the whole estate by a set of hard inelastic rules.
They would, by the very nature of their duties, be unaffected by
all sympathetic influences. Their first object would be to earn
the interest on the purchase money, and to insist on its punctual
payment, come what would. The business of the office would
be enormous, and prodigiously costly. The farmers of the state
lands would get no mercy, and as for the unearned increment,
if it had gone on even in the way that farmer's rents rose between
1858 and 1873, it would have been entirely swallowed up, in the
costs of the office. Even under the present system, the tenant
of Crown lands is by no means the most contented of farmers,
the rent of Crown lands, by no means cheaply collected. Under
the proposed scheme, the tenants would soon be in rebellion, and
the English plan of campaign would be far more minatory, than
the project which bears that name in Ireland. Even the worst

PUBCHASES BY PARLIAMENT. 517

landlord has some knowledge of his property and its capabilities,
the state landlord has no knowledge but what he pays for.

This is by no means, however, the whole case. Governments are
essentially weak, that is, they are peculiarly open to indirect
influences, and those governments which make the greatest show
of firmness, weakest of all, because to be firm with one set of
people makes it necessary to conciliate another set. For in an
administration, the law of self-preservation is exceedingly keen,
and the means which would be adopted for self-preservation, which
might be disdained by an individual, represent only a divided
responsibility in a government, to say nothing of the fact that,
under the exceeding leniency of our political system, even the crimes
of a government now go entirely unpunished. As a consequence,
the new land office would swarm with jobs. I feel convinced that
the virtue of no Parliament would resist the temptations which
would aggregate in a land office, which would be professedly the
only landowner in the kingdom, which would be managed indeed
by clerks and surveyors, but would be manipulated by the adminis-
tration. Even the Woods and Forests office has been charged
with the gravest scandals, with the offence of corrupt favouritism,
and this not in historical times only, but in very recent cases. Before
the Colonial Office surrendered the Crown lands in the Colonies
to the Colonial governments, there was evidence of the grossest
jobs perpetrated on behalf of the soundest patriots in the two
Houses, and indeed outside them, for persons in very high places
were said to have been implicated in transactions which we should
call fraudulent. The unearned increment may be a reality. I am
disposed to think it no better than a hypothesis. But be it ever
so real, we may buy gold too dear, and universal corruption with
universal discontent is too heavy a price for the unearned
increment.

I reasoned in this way twenty years ago, in opposition to my
friend's suggestion, and longer experience has not changed me.
Of course the scheme to which I referred, though I believe mis-
taken, was scrupulously honest. There is another scheme for the
nationalization of land, on which I hope to comment in a future
lecture. I only say in passing that this later scheme is not inten-
tionally dishonest. It is exceedingly startling, but it purports to

518 TEE POLICY OF GOVERNMENT.

be the resumption of a neglected right, the restoration of a system
of which negligence and cupidity have permitted the violation. As
I have more than once said, the crudest economical fallacies have
generally some truth, always much plausibility in their composi-
tion, and it is not wise or just to denounce those who astonish
us with their theories, as being brigands and anarchists. Long
experience and labour given exceptionally to the study of economical
society, have convinced me that there are reasonable causes for all
discontents, however unreasonable and nugatory are the remedies
which discontent avers to be proper, righteous, and necessary.

It still remains that I should dwell on the other aspect of govern-
ment propounded in this lecture, viz., government as a producer.
In the cases which I have already given government is supposed
to be doing a service, or is invited to do a further service, and I
have by no means criticized all the invitations. In what remains,
I shall consider government as a producer only, that is, as com-
peting against ordinary manufacturers, for the supply of govern-
ment stores, or even of the public wants. But I shall not on this
occasion deal with what is a favourite topic with some continental
socialists, the elevation of the government into the function of a
gigantic and all-embracing manufacturer, who is to appropriate
all capital, or to annihilate its private use, and distribute and
regulate all industries in the interests of labour. I have to deal on
the present occasion with a humbler function, one which has been
in part traditional from the earliest times, and is in part a sub-
sequent development for which an economical justification is
alleged. The larger question I hope to deal with hereafter.

As soon as ever grants were made in Parliament for the con-
struction of navies, the Crown began to establish navy docks and
works. These are known to have been in existence on the Thames
and Mersey for a long time, but Henry VIII. was the real founder
or restorer of the town and dock of Portsmouth, which indeed
appears to have been an arsenal and port during the time of the
Roman occupation, and probably those on the Thames and Medway.
But for a long time the work at these ports, Greenwich, Deptford, and
Portsmouth, was casual and interrupted. There was no practical
difference, except in the artillery, between a private vessel and a
man-of-war, and, in point of fact, the strongest and most important

GOVERNMENT AS A PRODUCER. 519

part of the mercantile marine were the armed ships of the East
India Company. The sovereign could therefore constantly call on
the merchant shipping for vessels of war, and it would seem that
the custom, only recently remitted, of pressing seamen in the
merchant service for the purpose of manning the navy, was a relic
of that general embargo which early tradition put on the vessels
and men in the several English ports. But as soon as ever war,
the preparations for war, and the national defence at sea became
an object of public consideration, the various dockyards were kept
in a state of constant activity. The jealousy with which for gene-
rations public men viewed, or affected to view, the army was not
felt towards the navy, and Englishmen began gradually to be
convinced, and with good reason, that to a maritime power, the
best weapon of defence was a well-appointed marine.

For a long time a royal dockyard was pretty well the only place
in which a first-rate man-of-war could be built and equipped. The
Dockyard was therefore as necessary an element in the naval
defences as the Horse Guards and the depots were to the army,
and there grew up in these institutions a permanent staff of over-
seers and workmen who claimed, with some reason or analogy, to
be an abiding part of the naval establishment. In course of
time, however, the shipbuilding firms on the Tyne and the Clyde,
especially the latter, began to have yards of a magnitude which
rivalled in completeness and efficiency the public works at the
older docks already referred to, and the newer establishments at
Chatham, Plymouth, and Devonport. Nor did the development of
the later system of armour-plated vessels carrying a few guns of
great power and projectile force tend to confine the manufacture of
war vessels to government dockyards. The shipbuilders of the
north took contracts with foreign governments, and constructed all
kinds of munitions of war for them. But the government con-
tinued to extend its manufacturing operations, to undertake, as it
did not ai first, the supply of small arms from its own factories,
and, in brief, to take into its own hands the production of all the
necessaries for the public defence.

This system, it is said, was commenced after the Crimean War,
before which time the principal supply of munitions of war was
obtained from private firms, under competitive contracts. Now the

520 THE POLICY OF GOVERNMENT.

objections to the change were, that the cost of all government
works was incomparably greater than the charges which would be
incurred by dealing with private firms, as was proved by the large
dealings of foreign states with our manufacturers ; that it loaded
the manufacture with departmental charges ; that the accounts of
expenditure returned from these factories were delusive, because they
set down nothing to interest on buildings and plant ; that it quar-
tered on the exchequer a whole heap of experimental inventors, of
whose failures we heard nothing, though the public had to pay
the cost ; that it lead inevitably to a system of favouritism, because,
it being necessary that some practical man should be put at the
head of the establishment, the selection of any one person was the
exclusion of every one else ; that in consequence foreign govern-
ments are likely to be better supplied with naval and military stores
than ourselves, because they were free to choose their market ; and
that the system discouraged rather than stimulated invention and
improvement. In short, it was argued that we were getting in-
ferior results at extravagant prices.

There has generally, too, been a financial loss and a political
inconvenience in multiplying dockyards, and in them workmen
depending on the naval department. Such localities were, it was
long alleged, seats at the disposal of the government, at least as
long as the complement of men was kept up. If, however, the
government showed any signs of a rational economy, they im-
perilled the allegiance of the constituency and lost support. It is
a danger, people alleged, to political integrity, to have a large
number of working-men electors — and most of the men even under
the old franchise were electors, whose livelihood and the continuity
of whose work depends on the lavish, and it may be unnecessary
and unwise, expenditure of public money. It is, in short, politic, for
motives of public morality and fiscal economy, to confine govern-
ment manufactures within the narrowest limits possible, to confine
government to the duties of government. If one is to make a
beginning with large and small arms, the same reasoning will apply
to clothing establishments, to boot-and-shoe making, and to every
conceivable kind of work, which is better left in private hands, and
selected by contract.

It was alleged, on the contrary, that government acts wisely in

THE DEFENCE OF THE SYSTEM. 521

producing and testing its own stores, when such serious conse-
quences depend on the skill and integrity of an examiner of
contracts, and the goodness of the article requires the highest
practical skill on the part of the official who passes it. There are
articles such as those quoted, which can be easily tested by a
moderate experience. What we manufacture requires a special
and highly educated experience. Besides we have this advantage
in producing arms and munitions ourselves. They are made on
such exact patterns, that a flaw which escapes careful scrutiny, and
can only be found out in use, is easily replaced from the stores
where all the parts are precisely alike. In matters of the greatest
importance, too, we cannot trust contractors. We cannot always
escape heedlessness ; we cannot always detect fraud. In that very
Crimean war, owing to a serious oversight in the commissariat
department, the army was brought into the greatest peril. We can
exercise much more vigilance over processes which we ourselves
superintend, than over products which are merely supplied by con-
tractors, and inspected by our own experts, for a false finish, hiding
serious flaws, may be given to goods. To avoid loss on their con-
tracts, private firms would put upon us those failures which our
more careful scrutiny rejects. Our process may be a little more ex-
pensive, but it makes up to the public in safety what it increases
in cost.

It will be seen that in all this reasoning the question in
debate is generally one of facts. It is not disputed, that in the
supply of government stores, if one can rely on the integrity,
the dispatch, the finish, the efficiency of what is supplied by public
competition, there are very considerable advantages in procuring
what a government wants by the ordinary course of trade. It is
also probable that by making themselves the source of their own
supply, the government cuts itself off from those economies and
improvements which it is invariably the aim of competitive pro-
ducers to accept and adopt. Practically the administration has
a bottomless purse, or, at worst, in the matter of the public
defences, an inexhaustible store of patience to appeal to, and
people on whom economy is not enforced, rarely seek out economi-
cal processes for themselves. Now, in manufactures, economy is all
but invariably coupled with improvement. The producer who

522 THE POLICY OF GOVERNMENT.

competes against other producers is, by the very law of his being,
not content with doing a thing cheaper. That is at best his own
look-out, and no one has reason to thank him for saving his own
expense. What he has to prove to his customers is that he turns
out a better article. So that, after all, efficiency is best promoted
by purchasing under competitive contracts, and if the public safety
is implied in efficiency, this competition, under proper restraints
and conditions is, and always -will be, the best guarantee of the
public safety.

It has always seemed to me that that part of the defence of
government manufactories, which insists on the difficulty of testing
work done, is the weakest part of their case. It implies corruption
or incompetence, or both. I will admit that it is difficult to provide
against these risks, and I must allow that our system of giving
government officials of all grades freeholds in their offices is a
practice of very questionable wisdom. I am certain that no private
trader could afford the experiment. In the government offices,
forty or fifty years ago, there were all the evils present of a close
corporation of self-elected officials. When I was a youth my father
asked a friend of his, then naval lord in the Admiralty Board, to put
me in the Navy office. He told my father that he could willingly
do so, but that my life would be a burden to me if he did, for that
the Admiralty clerks were a family party, who would endure no
outsider among them, in an estate which was divided among a few
families. So I never went, and a member of one of the families
was put in. A quarter of a century afterwards, I had the
melancholy satisfaction of getting my rival a sentence of penal
servitude. My friend, Mr. Baxter, then Secretary to the Navy, was
entirely convinced that frauds were common in the Navy contracts.
He came to Oxford, and did me the honour to consult me as to
how he might get evidence. I told him that I knew of a person
here who was very experienced in the leather trade, and that I
would get his services. My friend was so anxious about it that,
though he was a devout Scotchman, he gave, to his own amazement,
audience to the leather expert on the Sabbath. The result was, he
discovered the fraud, saved the nation a quarter of a million, while
the clerk expiated his political offence in a political livery.

I am convinced that it is well to circumscribe the functions of

FBAUDS AND PBECAUTIONS. 523

government. I am saying this not as a politician, but as an
economist. I believe that by competition and scrutiny, the former
as free as possible, the latter as rigid as possible, the country would
be better served, and the necessary expenses of the state would be
lessened. The weakness of the executive is so great, its exposure
to perfectly sincere but very dangerous advisers is so constant, that
it is best by far to confine itself to the function of a choice between
rivals. Of course, under these circumstances, the whole difficulty
lies in the inspection of contracts. In old times this used to be
done in all which the government bought, by a jury from those
city companies whose business was in early days associated with the
mystery of which they are now ignorant members. In particular,
the Merchant Taylors inspected the cloth purchased by contract
for the forces. I do not select the Taylors invidiously, but they
could hardly fulfil the function now, for I suspect that there is not
a ready-made clothier ampng them, and this, I suppose, is what is
meant by a Merchant Taylor.

But I cannot doubt that it would be possible to procure as I
procured, for mere justice between contractors and the public, a
competent body of persons who would undertake the test of all that
is bought for the public service. Assuredly such persons with such
aims would not only save the public purse, but would give a healthy
stimulus to trade. Experience teaches us that protected interests
have a sickly and costly existence. The statement is true of a
government producer, as well as of a producer protected in an
artificial price by government, for practically there is no difference
between them. It is not reasonable to expect faithful service from
an inspector of contracts, who is able and, as I know is, willing to
blackmail the contractor. Such a practice is so common, that it
forms, I am told by many manufacturers, who know about govern-
ment contractors, a sensible element in the contract price. It may
be that the act is a serious criminal offence. It is surely one which
should be obviated, if it is difficult to detect it. Our forefathers
were not always unwise in their processes. The government
established, and the traders acquiesced in, a jury of experts. They
did this, not only for purchases made on behalf of the Crown, but
for trade carried on in the interests of the public. I think we
might in a modified form, revert to their practice. It is the duty

524 TEE POLICY OF GOVEENMENT.

of a government to prevent fraud, not only when itself is the
victim, but when the people whose affairs it administers are
defrauded. The discovery of the process of detection ought not to
be difficult. I am convinced that its action would not be unpopular.

THE END.

INDEX.

Abbots, their way of living, 65
Abraham, call of, the origin of modern

history, according to some, 338
Accounts, farming, &c, cause of the

survival of, 3 ; not kept by farmers,

178
Acquisition, cost of, 260
Acts of Parliament, 23 Ed. III., 25

Ed. III., 31 Ed. III., 34 Ed. III.,

36 Ed. III., 42 Ed. III., 26-28;

1 Ric. II., 28; 9 Ric. II., 12 Ric.
II., 31; 4 Hen. IV., 7 Hen. IV.,

2 Hen. V., 4 Hen. V., 2 Hen. VI.,
32; 3 Hen. VI., 6 Hen. VI., 11
Hen. VI., 15 Hen. VI., 18 Hen. VI.,
23 Hen. VI., 33; 11 Hen. VII., 7
Hen. VIII., 28 Hen. VIH., 34; 5
Eliz., 38; 31 Eliz., 42; 32 Hen.
VIII., 103 ; 5 Eliz., its effects, 240;
collections of, 241; 9 Geo. I., 22
Geo. III., 247; 15 Hen. IV., 34
Ed. HI., 299 ; 1 Anne, 430; 9 Geo.
III., 433; 22 Hen. VIH., 485

Addington, his income tax, 131
Addison, on English credit, 216
Adisham, rate of production at, 53
Administrations, meddlesomeness and

conceit of, 501
Admiralty office, old, a narrative of,

522
Adulteration, why punishable, 362
Advertisements, Elizabeth's, not put

into practice, 199 ; loss of incurred,

to gain a footing, 406
Ad valorem taxes, their effect on export

values, 402
Agio rapidly developed on Bank notes,

210
Agricultural Board, country reports of,

379

Agricultural distress, a synonym for

cheap food, 377
Agricultural gangs, the worst kind of

child labour, 355
Agricultural skill, a work of art, 275
Agricultural system, the new, its

characteristics, 268 ; British, its

present decline, 160
Agriculture, practical, in eighteenth

century, 176
Agriculture, success of, its meaning,

46 ; importance of, 47 ; a universal

occupation, 143 ; always yields more

than the cultivator's subsistence,

165 ; character of, in early times,

170; progress of, in eighteenth

century, 177
Agriculturist, British, his capacity, 48
Aid of 1503, its distribution, 147
Aix la Chapelle, peace of, 467
Alarmist calculation, an, quoted by Mr.

Giffen, 400
Alexandria, a great centre of banking

207
Alien priories, suppression of the, 418
Allotments Act of Elizabeth, 42
Allowance system, origin of, 247
All Souls College, a fellow of, and his

conscience, 192
Alton, Hants, robbers of, 142
America, its occasional practices, 224
American citizens, practices of, in visits

to England, 368
American civil war, prolonged and

destructive, 293
American colonies, effect of the Seven

Years' War on, 468
American plantations, planters of,

their character, 329 ; federation in,

why dominant, 481
American roads, origin of, 490
Americans, their boasted freedom and

INDEX.

its reality, 383 ; travelling in Eng-
land, numbers of, and effect thereof,

403
Amsterdam, Bank of, 211; a centre

of trade once, 401; causes of Its

ruin, 109
Anglican church, Selden on the, 81
Anglican clergy, representatives of,

72
Antwerp, negotiation of bills at, 102
Apprenticeship, limit put on rights

of, 32; origin of, 300; well regu-
lated, its value, 362
Apprenticeships in husbandry, endu-
rance of, 305
Arable rents, rise of, 180
Archdeacons, antiquity of, declared by

a military Colonial governor, 338
Archers' tax of 1453, its distribution,

147
Arches, brick in Henry VIII.'s time,

280
Architects, mediaeval, why unknown,

20
Architecture, masters of, in Middle

Ages, 304
Argyll, Duke of, his illustration cl

husbandry, 48 ; his opinion about a

nineteen years' lease, 181
Aristocracy, English, pride of, in

eighteenth century, 176
Aristotle, on crimes as contracts,

343
Arkwright, inventions of, 267
Army assessment, 1649, 152
Army, English, its early origin, 119
Art, its connection with utility, 275
Artificial rents, means of procuring,

181
Artizans, mediaeval, the architects,

20 ; wages of, how to be interpreted,

303
Assets of Banks, how to be held,

219
Assiento Treaty, the, its objects,

320 ; origin of slavery in the

American colonies, 449
Audit, independent, should be exacted

from banks, 218
Avignon, secession to, and effects of,

74 ; gold currency at, 189.

B.

Babbage, Mr., on width of market,

371
Babylonian bankers, practice of, 206

Bailee, government in service, not a,
505

Bailiff's account, exactness of the,
54

Balance of bargain, doctrine of, 96

Bank Act of 1844, motives for, 224 ;
its effects, 225

Bank of England, the, founded by
the Independents, 86 ; a fortunate
disability of, its relations to govern-
ment, 216 ; condition of on Dec. 4,
1696, 220 ; its history for a century,
222 ; its services in 1694-5, 313

Banker, name of, in Greek and Latin,
207

Bankers, restraint of, 360 ; in House
of Commons, their action, 507

Banking, has existed apart from coins,
184 ; practice of, probably never
lost, 208 ; private, in England, 212 ;
in United States based on public
securities, 404

Bankruptcy laws, their economio
meaning, 238

Barley, imports of, to Netherlands,
285

Battle Abbey, its home farms, 66

Baxter, Mr., on the leather contracts,
522

Bayonets, flexible, 362

Beaufort, Cardinal, effigy of, 274

Becket, the reported inventor of scu-
tage, 119

Beet-root sugar, bounty paid pro-
ducers of, their condition, 378

"Beggars, Supplication of," estimates
alms to friars, 242

Belgian glass and iron, reputed im-
ports of , 409

Belgians, their saving habits, 438

Belvoir estate, rents of, 1692, 168

Benedictine order, services of the, 71

Benevolence, private, cannot deal with
destitution, 242

Benevolences, history of, 132

Bentham, his service on usury laws,
237

Bentinck, enrichment of, unpopular,
428

Berkshire, magistrates of, at end of
the eighteenth century, 247

Bessemer, his process for steel, 233

Bigod, Roger, his Irish estate, 282

Bimetallism, some difficulties in, 191

Biscay, source of iron, 276

Bishops, murder of two in 1450, 80 ;
pillaged by Elizabeth's courtiers,

INDEX.

527

180 ; impoverished by Elizabeth,

421
Bismarck, and his protectionist policy,

357
Blackburn, Archbishop, his earlier

career, 108
Blomfield, on village guilds, 306
Blue Posts, supper at the, 425
Board of Trade returns, analysis of, 401
Bodmin, generally the staple town of

tin, 283
Bolingbroke (St. John), his criticism

of Harley, 448
Bonded warehouses, effects of, 405 ;

Walpole's scheme of, 467
Boots, French, made in London, 282
Boots and shoes, made in England,

exported to France, &c, 410
Borgia, Bull of, 103
Borgia's Bulls, object of, and outcome

of, 323
Borrowing, when undertaken by

government, 393; from foreigners,

how limited, 438
Bosworth, combatants at, few, 419;

policy of king, after, 420
Bounty, the, of 1689, 270 ; its origin,

and the effects of, 377
Brabant, agriculture of, 289
Bradford, manufacturers of, 406
Brakelond, chronicle of, on Abbot

Samson and Oxford, 298
Bricks, art of making lost in England,

279
Bridges, repairs of, law of, 486
Brill, capture of, 278
Bristol, its rise, 150
Bristol merchants, expedition of, to

Iceland, 103
Britain, Great, a centre of prices, 390
British islands, temperature of, 490
Brougham, Lord, his protest in 1850,

126
Bruges, mission of Wiklif to, 77
Buccaneers, the English, 398
Budget, the acceptance or rejection of,

its effect on Parliament, 508
Bullion dealer, trade of the, 261
Bunyan, sketched unconsciously

Henry VHI.'s character, 35
Burcot pier, navigation of Thames

from, 279
Burdens on land, absurdity of alled-

ging, 238
Burnet, Bishop, on the English cli-
mate, 288
Bye-industries, effects of, on rent, 175

C.

Cabot, Sebastian, his voyage, 106

Cadets of the Koyal house, their dis-
affection, 417

Caird, Sir James, on losses by eviction,
173

Calais, staple town of wool, 129

Cambridge, distinguished for its eels,
298

Canada, proposals of a zollverein with
the States, 465

Canadians, French, concessions to,
333

Canning, his saying about the New
World, 320

Canterbury, St. Pancras Church at,
279

Cape Colony, acquisition of, 334

Cape trade, far less than expense in-
curred for it, 335

Capital, function of, 17 ; aggregation
of, praised in every one but work-
men, 311 ; British, in foreign invest-
ments, 394

Capital and labour, endless warfare of,
23 ; priority of, a barren question,
228

Capitalist farmers cannot be extem-
porised by artificial prices, 374

Captains, first English, buccaneers,
321

Cardwell, his publication of Peel's
writings, 455

Carlow, cloth manufactory at, 282

Cash payments, suspension of, 442

Castlereagh, Lord, his invitation to
Parliament, 475

Cattle, breeds of, 61

Cavaliers, their character, 44

Cecil, his "Book of Rates," 421

Centralization, motives for, 480, sqq.

Chamberlain, Mr. , on Canadian finan-
cial proposals, 465

Chaplin, Mr., his remedy for English
agriculture, 382

Charles I., his desire to debase the
currency, 198 ; his theory of govern-
ment, 422

Charles II., his risks in 1684, 86; his
alienation of Crown estates, mar-
riages of his illegitimate sons, 423 ;
dukes created by, 465

Charles V. says mass at a fishcurer's
tomb, 278

Charles the Bold, purposes of, 482

Charles the Great, empire of, brief, 71

528

INDEX.

Charter, Great, its restraining clauses,

120
Charters of City Companies, origin of,

299
Chartism, origin of, and bias of, 248
Chatham (Pitt), his belief in his own

policy, 445
Cheltenham, manor of, in fifteenth

century, 264
Che vallier, Mr. , on ratios of gold and

silver, 189
Chichele, his purchase of the alien

priories, 418
Childers, Mr., his budget in 1885, 478
Children's labour, restraints on, 354
China, currency in, 185 ; effects of

adopting a silver currency by, 190
Chivalry, a pretentious sham, 351
Christianity, appeals to, by traders,

suspicious, 329
Christie, Mr., on Shaftesbury, 6
Church, changes in the, 458
Church, Canadian, its powers, 334
Church, English parties in the, 72
Churches, use of, in Middle Ages, 144
Cicero, his oration for Flaccus, its

interest, 207
Cinque Ports, privileges of, 136
Cities and towns, English, population

of, in 1377, 283
City Companies, possible utilization

of, 523 ; London, duties of, 299
City (London), estate in the west, its

origin, 148
Civil war, American, result of Assiento

Treaty, 450
Clarendon, on condition of England,

139
Class privileges, danger of, 352
Clergy, poverty of in the seventeenth

and eighteenth centuries, 87
Clergy, English, victory of Edward I.

over the, 122
Clergy, regular, the services of the, 62
Clipped money, difficulty of the, and

explanations given of, 200
Cloth, Early English, coarseness of ,286
Cloth manufacture, migrations of, 286
Cloves, bloodshed for possession of, 109
Coach, stage, story of submersion of

one, 490
Coal, demand for after the Franco-
German war, 230
Colleges, estates of, 180; meagre life of

in Elizabeth's reign, 199
Colonial Office, government of colonies

by, 336 ; jobs in, 517

Colonial protection, put out of the
retaliatory theory, 380 ; defence of,
385

Cobden, Mr., his commercial treaty
with France, and his motives, 113 ;
his translation of Chevallier, 189

Cochrane, Lord, story of, 201

Coinage, invention of place of not
known, 184

Coins, all sorts of, in Venetian
treasury, 209

Coke, family of, their public services,
268

Colbert, policy of, effects of, 460

Colonial system, the, described and
criticized, 325

Colonial trade, growth of in the seven-
teenth century, 288; effects of on
trade values, 328

Colonies, of conquest, their cost, and
their practices, 324; British, after
war of American independence, 332 ;
of conquest, and of settlement, diffe-
rent character of, 333 ; present rela-
tions of, 339

Colonies, British, loans in, 440 ; diffi-
culties of, 441

Colonists, American, mainly agricul-
turists at the outbreak of the War
of Independence, 331

Columbus, his voyage, 106

Combinations of workmen, condemned
by the wage-fund theory, 309

Commercial disadvantage, inevitable
under Protection, and why, 381

Commercial law, relics of from an
early age, 208

Committees, Special, of House of
Commons, their constitution, and
futility of, 492

Common employment, an abominable
doctrine, 352

Commonwealth, more generous to
labour than monarchy, 44 ; growth
of England under and after the,
287 ; wages in time of, 372

Common, rights of, their value, 42

Company, feelings of trader towards
his, 302

Competition, effect of on prices and
profits, 232

Competition rents, long unknown, 171

Competitive and famine rents, no dis-
tinction between, 173

Compromises, necessity of, 113 ;
blamed, but inevitable, 356

Canons of taxation, Smith's four, 116

INDEX.

Concerted ac'ion, more remedial than
legislative restitution, 353

Congleton, Lord, his proposals, 474

Conqueror, people who say their
families came over with the, 413

Conquest, barons of, some extirpated,
272 ; nobles of the, some extir-
pated, 413

Conservative, Peel was, but a dangerous
ally, 455

Conspiracy, constructive, an engine of
tyranny, 45

Constituencies, in dockyards, tenden-
cies of, 520

Constitution, unfair use of the, 165

Constitution, American, powers of
Supreme Court in, 344

Consumption, taxes on, 383

Continental war, effects of, 292

Contraband trade, the, in Hampshire,
123

Contracts, enforcement of, why neces-
sary, 342 ; risks of, 523

Contracts for use of land, must be
regulated by law, and why, 359

Controversy, a practical rule in, 158

Convocation, grants of, confirmation
of, 134

Copyholds, purchases of by gentlemen,
264

Cook, Captain, his discoveries and
annexations, 291

Co-operative stores, a complaint
against, 477

Corn Law, first real, that of the Pen-
sionary Parliament, 377

Corn rents, Act of, in 1576, 199

Cornwall, Earldom of, 416

Corporations not safe bankers under de-
spotisms^^; their undertakings, 507

Corruption, in the United States, 385

Cost, saving of, effects of, 233

Cotiller, Sir Ralph, and abbess of
Sion, 264

Cotton, use of, origin of, 327

Counties, English, wealth or poverty
of, 145

Counties of towns, creation of, 415

Country banks, treatment of by Peel,

and reasons for, 225
Court favourites, dislike to, in England

through its history, 125
Court Rolls, importance of, 3
Coventry Parliament, 1459, its action,

420 •
Coxe, Archdeacon, his life of Walpole,
465

Credit, pow^r of Banks over, 219

Crimean war, indirect effects of, 293 ;
dangers in, origin of, 521

Criminal investigation, a director of,
his function, 370*

Criminal Law Amendment Act, clause
in, 361

Criticism, social, in the last quarter
of the fourteenth century, 22 ; par-
liamentary, its effect, 451

Crompton, invention of, 267

Cromwell, Lord, in the fifteenth cen-
tury, his rise, 64 ; his statement in
1438, 419

Cromwell, hisNewModel,119 ; national
bank, suggested in time of, 212 ; his
exaltation of England, 287 ; his
establishment, 422 ; his imitation
of Dutch finance, 436 ; finance of,
457

Crown, estate of, its original mag-
nitude, 412; in 1703, 430; its
present position, 431

Crown lands, rents of, 516

Croydon, sewage farm at, 231

Cultivation, system of, in open fields,
60

Cumberland, permanently the poorest
English county, 149

Currencies, continental, accounts of,203

Currency, debasement of, by Henry and
his son's guardians, 36 ; importance
of true understanding of, 183 ; de-
basement of, history of, 197; two
kinds of, efficiency of, 203 ; regula-
tion of forms of, by the State, 205 ;
gold and silver, relations of, 254 ;
restoration of, reasonings at time
of, 454

Customs, difficulty of collecting, 123

Customs duties, grant for its purpose,
398

D.

Danske trade, extent of, 101
Dartford, paper made at, 280
Davenant, on Resumptions, 118; his
return of the poor rate, 245; his-
narrative of Burnet's conversation,
288 ; his pamphlet on Resumptions,
his literary abilities, 424
Debt, liquidation of, present, 455
Debt, floating, not funded after Peace

of Ryswick, 429
Debt, permanent, oldest part of the,
449

85

530

INDEX.

Debts, colonial, effects of, 339 ; early,
their character, 450

Decentralization, motives for, 480, sqq.

Deer forest, rent of, a poor defence, 233

Delusions, popular, cheap investments
in, 339

Demagogues, frequent tendencies of,
458

Demetrius of Ephesus, his advocacy
of vested interests, 345

Departments, spending, claims of, 451

Derbyshire, production of lead in, 283

Derry, county, estates of Companies
in, 448

Despotic government, loans to, pre-
carious, 448

Destitution, economical defence of,
relief of, 244

De Witts, murder of the, 212 ; their
position in Holland, 427

Differential duties, effects of, 329

Di Gama, Vasco doubles the Cape, 106

Diminishing cost, effect of, on prices,
255

Diplomatic instruments, wealth of in
England, 4

Direct taxation, its unfairness inevit-
able, 124 ; its effect on the nation,
297

Discount, rate of, and interest, 451

Dissenters founded Bank of England,
214

Dissolution of monasteries, connected
by some with pauperism, 243

Distress, law of, 172

Distribution, laws of, human, 234

Distribution of products, order of, 163

Distribution of wealth, laws of, 50 ;
difficult to interpret at present, 141

Docks, origin of English, 518

Dockyards, development of, 519

Domesday, its importance, 3 ; its
evidence as to the distribution of
wealth, 141

Domestic servants, wages of, 488

Dominion, civil, Wiklif's treatise, criti-
cism of, 75

Dominion of Canada, fiscal policy of,
334

Donationes inter vivos, constantly prac-
tised by rich people, 473

Downs, cultivation of, in Hampshire,
179

Doyle, Mr., on early history of the
American plantations, 322

Drake the character of his expeditions,
10

Dryden, like Caliban in the re-modelled

"Tempest," 266
Dublin, valuation of, in 1657, 153
Duchies, the, of Lancaster and Corn-
wall, 432
Dudley, Dud, his invention or improve-
ment, 287
Dutch, tbe, their objects in trade, 109 ;
origin of their resources, 260; and
the family of Orange, 334; their
services to civilization, 435 ; their
sympathy with the Stuarts, and
their reward, 459
Dutch trade, character of, 327
Dutch war, assessment for 1072, 154
Dumont, his collection of treaties, 92

East Anglia does not love the clergy,
80

East Coast, Navigation of the, 282

East India Company, remodelling of,
by Parliament, 86; before Mr. Mill's
mind when he advocated a temporary
protection, 387

East India Company, Dutch, its origin,
108

East India Company, New, origin of,
462

East, trade with, first impugned the
balance of cash doctrine, 391

Eastern produce, early routes of, 10

Eastern trade, routes of, in fourteenth
century, 104

Ecclesiastical history, a limited teach-
ing of, in Oxford, 70

Economical facts, neglect of, its effects,
1

Economists, rashly predict impossi-
bilities, 50 ; French, rise of, 347 ;
politicians, their relations, 503

Eden, Mr., his treaty of 1786, 112

Eden, Sir Frederic, his work, and its
value, 247 ; on the wages of the
poor, and the discontent of the
farmers thereat, 375

Edinburgh, assessment of, in 1657,
153

Education develops hereditary powers,
290; elementary, cost of, put on
parents, 356 ; and wages, 357 ;
taxes, &c. , who should pay, 495

Edward I., projects and policy of, 122;
his theory of representation and tax-
ation, 126

Edward II., causes of his deposition, 417

INDEX.

531

Edward III., his claim to French
throne, 74; marriages of his sons,
417 ; borrowed of Florentine bankers
and repudiated, 434

Edward IV., his character misrepre-
sented, 132 ; his project of invading
France in 1472, 135

Edward VI., his guardians, and their
baseness, 36 ; reign of, waste of, by
his guardians, 421

Effects endure after causes, 52 ; do
not cease with causes, 350

Egypt, decline of, after the conquest
of Selim, 11

Eighteenth century, progress in the,
289 ; temper of, illustrated in, 347

Eight hours' day, rule of, in England,
303

Elizabeth, poverty of, and reforms of,
37 ; re-coinage by, facts of, 195 ;
proclamation of, 196 ; her restora-
tion of the currency, 416

Ellesmere, Lord (James I.), on mort-
gages, 343

Employers, paid higher wages than
magistrates' assessments allowed,
241 ; benefit by a Poor Law, 245 ;
some begin to see that Trade Unions
are useful, 315

Employment, provision of, by the
state, 313 ; stint of, effect of, 373

Enumerated and non - enumerated
goods, meaning of, 331

Enclosure Acts, compensation for, 487

Enclosures, effects of, on the poor,
246

England, distribution of wealth in,
138, sqq. ; influx of silver into, 196 ;
its wrongdoings with Holland, 211 ;
Bank of, origin of, 213 ; population
of, in North and South, 246 ; down-
fall of, under Henry VIII., 265;
development of, difficult, 296 ; has
often lost what it gained, 319 ; cannot
produce everything, 409 ; local in-
stitutions in, 482

England, Northern, its poverty, 145

English people, by no means patient,
193 ; confuses names with things, 449

English roads, origin of, 490

English, their hindrances to inter-
national comity, 94 : relations of, to
Flemings, 101 ; naturally not an in-
ventive people, 272

English trade, early character of, 100

Enjoyment, possibility of, fundamen-
tal, in taxation, 117

Enterprise, individual, partnership,
Joint Stock, 208

Equation, always effected by trade, but
in different ways, 395

Equity, rules of, in enforcing contracts,
344

Ernest of Saxe-Coburg, debasement of
currency by, 197

Europe, at once protectionist and mili-
tary, 382 ; wars in, from 1714 to 1793,
110

European history, Dutch war the most
striking fact in, 435

Errors and injuries of Government,
how far to be incurred, 346

Evans, Mr., on the early British cur-
rency, 185

Examinations, absurdity of, 290 ; pre-
sent system of, its absurdity in pri-
mary schools, 358

Exchange, free, its benefits, 93

Exchanger, King's, his function, 96 ;
origin and history of the office, 187

Exchanges, early process of, 206 ; fluc-
tuations of the, 213 ; foreign,
process of, 198

Exchequer Bills, origin of, 222

Exchequer, dialogue on the, 412

Excise, first imposition of, 137 ; the
Dutch, its universality, 436

Exhaustion, political, signs of, 439

Export duty, conditions of an, 10

Exports and imports, general theory
of, 96, sqq. ; study of, a puzzle, 390

Exports,customs on, rarely possible,398

Factory Acts, arguments for, 355
Fair trader, his case, 371
Fair traders, sophistries of, 240
Famine of 1438, petition during, 55
Famines, occasions of, in England,
16 ; the great, of the fourteenth cen-
tury, and those of the sixteenth, 56;
dates of, 262 ; in the seventeenth
century, 266
Far West, stories about, 106
Farmer, unjust to put a police rate on

holding of, 493
Farmers, bilingual, 54; imitate the

new system, 177
Farmers' rents, income tax from, 475
Farm hand, accomplishments of the,

20
Fastolfe, his trade, 66 ; his purchases,
115

INDEX.

Fawcett, Mr., on Trade Unions or
labour partnerships, 307

Federation, varied fortunes of, as a
principle, 480

Fertility, economic senses of, 166;
meaning of, with economists, 498

Feudal liabilities, assessment for 1660,
154

Fictions, occasionally instructive, 370;
pressed into arguments, 409

Field, Mr. Cyrus, the author's predic-
tion to, 385

Fifteenth century, characteristics of,
264 ; English mercantile marine in,
319

Financial motives, have often caused
revolts, 194

Fiscal system, effect of a bad, in
British industry, 372

Fish, diet on, in Middle Ages, 277

Fitzherbert, on the extortion of land-
lords, 67 ; on landlords, 171

Fitzherbert (Long-beard), his insurrec-
tion, 129

Fitzjames, his purchases, 151

Flaccus, his conduct, 207

Flanders, political relations of, to Eng-
land, cause of, 8 ; early immigrants
from, to Norfolk, 90 ; trade of, 102 ;
influence of, on Norfolk, 144; de-
scription of, 1467-77, 285 ; ruin of,
and causes of, 286

Flax, compulsory cultivation of, 144

Fleetwood, Bp., his " Chronicon Pre-
ciosum," 192

Flemings, trade of the, 101; the
weavers of Europe, 273

Florentine bankers, loans of, to Ed-
ward III., 434

Food, interpretation of wages in, 43 ;
policy of government about, in
early English times, 377

Forces, two, in government, 479

Foreign debt, effects of, 260

Forestalling and regrating, offence of,
why created, 377

Forest laws, motives for, 483

Forms, antiquity of, suggestive, 296

Forster, W. E., and early English
cloth, 285

Fox, Henry, his wish to make Eng-
land a free port, 468

France, position of, in 1763, 110 ; war
with, and grants during, 127; the
degradation of, 197; attempts to
conquer, 273 ; has coveted the
Ehine, 287; its modern colonies,

290; exports and imports of, 404;
king of, in 1640 and 1688, 458;
federalism, why unpopular in, 489

Franklin, his retort to Gibbon, 331

Franks, his gift to Oriel College, 67

Freeman, Professor, his " Norman
Conquest," 3

Free port, the United Kingdom, virtu-
ally a, 398

Free Trade can be less easily aban-
doned than Protection, 47 ; growth
of principle of, 349; a question
before the American Republic, 385

Free trader, risks of, in the United
States, 366

Freight, charges of, reduction of, 230 ;
diminished cost of, 256 ; cost of,
from America, 271 ; effects of regu-
lating by law, 327 ; cost of, a
natural protection, 369; invisible
export and import, 397 ; not taxed
by United States, 403

Fremantle, Mr. , on the risks of private
coining, 190

French, modern colonies of, 323

Friar Bacon and Friar Bungay, play
of, 62

Front benches, the two, their ideal
debates, 351

Froude, Mr., thinks Henry a patriot
king, 36 ; on the patriot king's
offences, 197

Funding system, process of, and
criticism of, 452

Galton, Captain, on heredity of genius,

289 ; on hereditary genius, 356
Game, capture of, by labourers, 42
Gamlingay, survey of, in 1603, 59 ;

small parcels of land in, 172
Gardiner, Mr., on Wentworth and

Laud, 6
Gascoigne, his opinion about the

monks, 73 ; on the Papal court, the

bishops and monasteries, 263
Gascony, conquest and revolt of, 102
Genoa, Bauk of, its history, 210 ;

loans of, repudiated by Phillip HI.,

434
George, Mr., the origin of his theory

in Malthus and liicardo, 7; on

Ricardo's theory, 162
German scholars do not seem to have

studied early economical history of

Germany, 286

INDEX.

533

Germany, troubles of, at the beginning
of seventeenth century, causes of,
12 ; her gold currency, 189 ; her
modern colonies, 290 ; wars in,
since 1860, 294 ; its modern attempt
at colonization, 323

Gibbon, his message to Franklin, 331

Giffen, Mr., value of his essays, 8 ;
his phrase about freights, 397 ; his
essays on finance, 400; on the
earnings of freight, 401

Gilbert's Act, purpose of, 245

Gladstone, Mr., on the picture of the
English clergy, drawn by Macaulay,
87 ; his defence of the income tax,
131 ; on currency and love, 202

Glass, imports of, defence of, 409

Glass-making, improvements in, 274

Gloucestershire, cultivation of tobacco
in, 322

Gold, price of and coinage of, 188;
price of, in 1462, 195 ; production
of, in Ireland, 258

Golden bough, the discovery of the,
351

Goldsmiths, the, original English
bankers, 212

Government, English, never colonized,
but with convicts, 321

Government, necessary development
of a central, 164 ; theory and prac-
tice of, 345 ; favours of, 378 ; its
powers of borrowing, 437 ; borrow-
ing, its conditions in loans, 451

Government paper, issue of, effects of,
441

Governments, desire of, for money,
95 ; often in the wrong, and always
impatient, 323 ; the principal agents
in ruining nations, 393; always
weak, and liable to influences, 517

Goschen, Mr., on income tax returns,
370 ; his committee on local taxa-
tion, 492 ; effect of his publication
on local taxation, 498

Governor, Colonial, story of, when
made a judge in equity, 502

Grant, special, of 1375, its distribution,
147

Grants, extraordinary distrust at, 125 ;
to Crown, origin of, 118 ; from
Crown, duration of, 423

Greenbacks, circulation in America,
442

Greenways Bank, failure of, 218

Greenways, Messrs., bank of, 361

Gresham, Sir Thomas, his formula,

37; the king's Antwerp agent,
198

Grimston, Sir Harbottle, his signature
to the book of customs, 323

Grocer, business of a, illustrates ex-
ports and imports, 407

Grocers' Company, fines inflicted by,
299

Grotius, his dispute with Selden, 278

Ground rents, taxation of, 497

Guienne, revolt of, and financial
measures on, 134

Guilds, rural, spoliation of, 15 ; town
and country, traits of, 305 ; endow-
ments of, 306

Half truths, danger of, illustrated,

346
Hallam, Mr., on mediaeval villages, 4 ;

his authorities, 13
Hamburgh, imports of " sherry" from,

401
Hammond, Mr., M.P. for Huntingdon,

his papers, temp. Anne and George

I., 330
Hanover, house of, stability of, 432
Hanseatio League, origin, purposes,

and fortunes of, 100
Harcourt, Sir W., on a female

domestic at the Treasury, 290
Harley, his indecision in Anne's reign,

448
Hartlib, on production in England,

53
Hearth tax, inferences from, 158
Heaven-born minister, an inaccurate

name for Pitt, 223
Heiresses, weddings of king's sons

with, 414
Hemp, compulsory cultivation of, 144
Henley, Walter de, on agricultural pro-
duce, 53
Henry II., church parties in the time

of, 72 ; his provision for his sons,

413 ; dominions of, 482
Henry III., his difficulties with the

Alton robbers, 142 ; nearly deposed,

and why, 416
Henry IV., breaks his own law at

Windsor, 32 ; his marriage and his

poverty, 418
Henry VI., his character, 83 ; marriage

of, its unpopularity, 417 ; im-
poverishment of Crown in reign of,

418

534

INDEX.

Henry VII., his claim of aids, 135

Henry VIII., his character and actions,

35; debasement of currency by,

197 ; his mania for brick buildings,

279 ; his acquisitions and his

extravagance, 420

Henry of Portugal, his discoveries, 106

"Heralds at arms," "Debate of," 103

High and low prices, causes of, often

intricate, 261
Higher or technical education at the

expense of the state, 362
Highways, condition of, 62
History, neglect of economical facts
in, 2 ; its progress and shortcomings,
4 ; constitutional and political, 183 ;
philosophy of, hollow and weari-
some, 272 ; secret materials of,
concealed and discreditable, 470
History, philosopher of, his chaotic

talk, 450
Hoarding, how passion for arises, 235
Holdings, small at Tandridge, 239
Holkham estate, rents of, 1629-1706,

168
Holland, struggle of, after indepen-
dence, its importance, 211 ; its ser-
vices and its enemies, 400 ; a Free
Trade country, 436
Holywell, Oxford, jurisdiction in manor

of, 143
Honour, codes of, in callings, 314
Hope, Mr., on the Bank of Amster-
dam, 212
Hops, a peculiarly risky crop, 180
Houblon, Sir John, first governor of

Bank of England, his origin, 215
Houghton, his collections and prices

of Bank stock, 214
House of Commons, growth of power
of, early, 122 ; taxes originate in,
origin of the custom, 132 ; its reflec-
tion on William in Anne's reign,
430 ; British, its present freedom
from corruption, 433
House of Lords, its original character,

133
Houses, acreage to, in 1690, 158
Houses of Parliament, history of, in

seventeenth century, 87
Houee taxes, grossly unequal, 494
Huguenots, the, immigration of, into

England, 288
Human institution, laws of, in what

sense used, 234 ,
Humanity, claims of, the true defence
of a poor rate, 489

Hume, Joseph, procured the repeal of

the labour statutes, 45
" Humphrey Clinker," its evidence as

to English roads, 484

I.

Idola specus, illustrations of, 351
Imperialists, British, calumnies of, 336
Imperial Institute, its peril, 380
Importers, value of imports on

authority of, 401
Import values, exaggeration of, 402
Impossibilities, present and manifest,

229
Improvements, some do not increase

rent, 179
Income Tax, the, unfair, 118 ; Pitt's,

474 ; Peel's, 475 ; unfairness of,

and incidence of, 476 ; payers of,

pay what should be local taxes,

499
Income Tax returns, not conclusive as

to the distribution of wealth, 140
Indebtedness of foreign countries to

the United Kingdom, effects of, 98 ;

foreign to England, effects of, 204
Independence, War of, its effects on

the Colonial system, 469
Independency, chief home in London,

85
Independents, the founders of the

Bank of England, 86
"Indestructible powers," an absurd

phrase, 161
India Bill, Fox and Pitt on a, 349
India, British, loans for, 440
India, struggle in, between France and

England, 110 ; value of rupee in,

190
Inductions, negative, generally the

work of economists, 503
Industries, early English character of,

321
Industry, real, what Protection does

to, 367
Industry, English, in Middle Ages,

chiefly agricultural, 21 ; early

attempt to stimulate, 376
Inheritance, national, succession to,

445 ; taxes on, defence of, examined,

471, sqq.
Institutions, human, never entirely

just, 344
Insurrection, the, of 1381, 22
Intelligence, human, progressive, but

its limits unknown, 49

INDEX.

535

Intercnrsns Magnus, policy of, 111

interest, its relation to profits, 19;
natural diminution of, 237 ; dan-
gerous to meddle with, 238 ; amount
payable on loans, 395

International currency, amount of, in
England, 203

International, the kinds of, 502

Invention, motives of, 284

Inventions of nineteenth century,
generally English, 292

"Invisible export and import," a
phrase of Mr. Giffen, 397

Ireland, assessment of, in 1657, 153 ;
landlord and tenant in, 163; pro-
duction of gold in, 258; manufac-
tures of proscribed, 325 ; manufac-
tures of destroyed, 378 ; exemption
of, from Act of 1 Anne cap. 6, 431

Irish Academy, treasures of the, 258

Irish Americans, export of money to
Ireland by, 403

Irish estates of London Companies,
their origin, 421

Irish Land Acts, the various, 514

Irish landowners, Arthur Young on,
376

Irish, opinion of, on Cromwell and
James II., 460

Irish pension list, scandalous character
of the, 431

Irish priest, the, his influence, 81

Irish rebellion, assessment for, 152

Irish tenant, interest of, made pre-
carious, 343

Irish union, the first Sir Robert Peel
on the, 327

Irish woollens, suppression of, advised
by Davenant, and why, 288

Iron, high price of, effects of, 61 ; want
of, and dearness of in early agri-
culture, 276

Italy did not quarrel with the Papacy,
and why, 79 ; revival of banking in,
207 ; its taxes on public dividends,
443

Ivan the Terrible, reign of, and rela-
tions of, with England, 104

Jacob, example of, perhaps suggested
seven years' apprenticeship, 301

James I. , no one in the right, who was
on good terms with, 278 ; his wrath
at tobacco smoking, 322 ; his absur-
dities, his expedients for money, 421

Jenkins' ears, story of, 467

Jevons, Mr., on coal measures, 229

Jews, the, interfered with by Flaccus,
207 ; pedigrees of, in the days of
Nehemiah, 413 ; thrift of the, 438

John the Good, of France, his acts,
197

John, nearly deposed, 416

Joint stock piinciple, its effect on
prices, 312

Jones Loyd and Co., bills of, 217

Judges, effect of their getting freeholds,
41 ; immovability of, 424

Justice, administration of, its value in
developing nationality, 296

Justice of peace, his function and
action, 297

Justice-room, less effective than Manor
Court, 143

Justices' assessments, number of ex-
istent, 40

Ket, insurrection of, 151
Kidd, Captain, execution of, 108 ; 321
King, Gregory, his estimate of wages,
44 ; on production in England, 53 ;
his law of prices, 55; on saving
powers of a bishop and a farmer,
175 , his law of prices, 250 ; on
power of saving, 267
King, Lord, his action in 1811, 224
King's College, Cambridge, its pay-
ments to Edward IV. and Henry
VIIL, 423
Kings, deposition and murder of by

English, 273
Kings, English, what they were
expected to do with their revenues,
413
King's estate, nature and extent of,

119
King's peace, why kept in England,

9
King's taxes, fiction of the, 399
Kingston estate, rents of, 1690, 168
Kitchin, Dean, on St. Giles' fair, Win-
chester, 284

Labour, rise of price of, 266 ; impor-
tation of into the United States, and
its value, 407

Labourers, prosperity of in the

536

INDEX.

fifteenth century, 34 ; position of in
first half of eighteenth century,
270

Labour partnerships, little noticed by
political economists, 307 ; proscribed
till 1825, 314

Labour statute of Elizabeth, provisions
Of, 38, sqq.

Labour statutes, number of, 40

Laissez faire, a principle with the
French economists, 348 ; when to be
acknowledged, 350

Lancashire, at first the poorest English
county, 149

Land Bank, the, in 1696, 222

Land, distribution of, in the mediaeval
village, 14 ; historical changes in
ownership and occupation of, 52 ;
owners of, make laws, 163; in
Colonies, surrender of to Colony,
337 ; Mr. Mill's theory on its incre-
ment, 515

Land hunger of fifteenth century, its
effects, 264

Landless man, how understood in
early England, 295

Landlords, English, repaired buildings
and insured stock, 169

Landowner, duty of, 174 ; great privi-
leges and exemptions of the, 358 ;
Adam Smith's view of the, 376 ; his
right to rent, 51 ; early, the in-
structors of the farmers, 54 ; of
eighteenth century, their action, 58 ;
the cause of agricultural trouble,
166 ; transference of liabilities of
the others, 164 ; their services to
agriculture in the eighteenth cen-
tury, 177 ; their folly and injustice,
238 ; the, of the eighteenth century,
their services, 269 ; agricultural, and
horse racing, their different actions,
374 ; action of, after Mr. Goschen's
book was published, 498

Landowners, English, their policy in
1773, 491

Land system, English, and the families
358

Land tax, assessment of, 155 ; re-im-
position of, 462; re-assessment of,
contemplated by Walpole, 466

Langdon, Thomas, his survey of Gam-
lingay, 59

Latimer on landlords, 171

Latin Union, silver issues of, 189

Law and order, interest of, a stock
phrase, 454

Law, corruption of, while keeping to

the letter, 41
Law makers, incompetence of, 326
Laws, collection of all English, 23 ;

economic, which human and which

natural, 231
Lead, relations of, to silver, 186 ; prices

of, as an index of silver prices, 259
League, Anti-Corn Law, dissolution of

the, 349
Learning, special, has a price, 356
Lease for years, its occurrence early,

66
Leaseholds, enfranchisement of, 497
Leases of Colleges, character of, 180
Leather industry, great in London,

408
Leeward Islands, proprietors of, 330
Legislature, power of, over wages and

profits, 239
Lenders of money not patriots, 439
Letters, safe delivery of, Post office

not responsible for, by law, 505
Liabilities, always fixed, 120
11 Libel of English Policy," its object

and facts, 101 ; its information, 150
Linen manufacture, special seats of,

410
Liverpool, Lord, on ratio of gold and

silver, 188 ; on merchants' petition,

345
Loanable money, plenty in England,

396
Loans, why made by colonists, 394 ;

of the Dutch, origin of, 437 ; facility

of making a serious matter, 445;

two processes of creation, 450
Local charge, first in time, poor relief,

484
Local debt, origin of, and payment of

by occupiers, 426
Local interest, causes of colonial loans,

444
Local taxation, development of mod-
ern, 486 ; two recent attacks on,

497 ; motion of author on, in 1886,

500
Locke King, on Lord King's action,

224
Locke, on the recoinage, 200
Lollard, the, his social and political

tendencies, 80
London, by far the largest town, 148 :

notes at first circulated in, princi-
pally, 258; filthiness of, and un-

healthiness of, 263; a centre of

trade, 401 ; a vast manufacturing

INDEX.

537

city, 408; financial influence of,
448

London, City of, its estate, west of St.
James, origin of, 496

Lords, the, Standing Order of, 509

Louis XIV., on the last pistole, 95;
his opinion of Davenant's abilities,
425

Louis XVI., policy of, its effects, 319

Lovell, Lord, the price of his wool,
62 ; his farming book, and his pro-
fits, 177

Lowe, Mr., and new Poor Law, 248 ;
the author of school examinations,
358 ; on the transference of income
tax by traders, 477

Lowther, Mr. Jas., on competition in
collieries, 230

Lubbock, Sir J., his Shop Hours Com-
mittee, 355

Luxuries, difficulty of defining, 368

Lynn, King's, early importance of, 282

M.

Macaulay, criticism of his history, 5 ;
on the English clergy, 87 ; probably
saw no perfect copy of Houghton,
214; on Nonconformists, 215; had
not duly weighed Davenant's essay,
426; on William III., 427; on the
public debt, 446

MacCulloch, Mr., on Dutch rates of
interest, 110 ; on the discovery of
the Eicardian theory of rent, 161 ;
his absurdity about rent, 236

Madox, his antiquities, 13 ; early in-
dications of apprenticeship in, 301

Magdalene College, Oxford, charter to
from Henry VIII., 423

Magistrates, assessments of wages by,
1593-1684, 241

" Making of England," hollowness of
the phrase, 272

Malthusian theory, some economists
on the, 477

Manor courts, jurisdiction of, effectual,
142

Mansions, rating of unfair, 140

Manufactures, prohibited in the Colo-
nies, 331 ; economy and improve-
ment simultaneous in, 521

Manufactures by Government, origin
of, 519

Manufacturing regions, generally he-
retical, 79

Manx judges, oath of, 344

Margaret of Anjou, her army, and its
effects, 25 ; her northern army in
1461, 145

Mariner's compass, use of, 278

Maritime enterprise, England slow in,
319

Mark, the, the unit of Teutonic curr-
encies, 184

Market, non-protection of and width
of, stimulants to production, 371

Markets and fairs, very distant fre-
quented, 284

Mark Lane Gazette, average crops in,
370

Marlborough, request that a pension
should be settled on, refused, 430

Marling, custom of, 170

Mary, her wish to restore the currency ;
the day of her death kept as a holi-
day, 198

Mason, wages of, in Oxford 440 years
ago, 303

Masses, endowments of, apparently
free of law of mortmain, 305

May, highest prices generally in,
56

Maynard, Serjeant, his reply to William
III., 41

Meonwaras, settlement of the, 284

Merchants and governments view
money differently, 95 ; London,
their objections to the bonding
system, 399

Merchants' petition, Lord Liverpool on,
345

Merton College, Oxford, its cultivation
in 1333-6, 52 ; its survey of Gam-
lingay, 59

Metaphysicians discuss apologies for
taxation, 460

Methuen treaty, the, in 1703, its
policy, 112

Mickle, his translation of Camoens,
he reviles Adam Smith in its notes,
348

Migrations, during civil war, probable,
159

Mill, Mr., on wage fund, 17; on the
purchase of the landowner's interest,
51; his sinister predictions, 229;
on buying out landlords, 237 ; his
defence of poor law relief, 244 ; on
wages fund, 308; on wages and
profits, 316 ; on " the price of
liberty," 342 ; on retaliatory tariffs,
379; a happy expression of, 381;
his defence of Protection in " young

538

INDEX.

and rising nations," examined, 386,
sqq. ; deference of colonists to opin-
ions of, 441 ; on taxes on inheri-
tance, 472 ; on precarious incomes,
476; his defence of the relief of
destitution, 489 ; on taxation of
accidental fertility, 498 ; on making
the state, the universal landlord,
514

Mining countries not necessarily
wealthy, 259

Mischief-makers, meanness of, 374

Moleyns, Adam de, on Irish gold, 258

Monasteries, dissolution of, their
wealth, 35 ; the, contrived the stock
and land lease, 65 , treasures of,
enormous, 420

Monastic lands, grantees of, their obli-
gations, 357; property, very scat-
tered, 484

Money, impossibility of keeping in,
96 ; circulation of, 188 ; power of a
bank to coin, a misconception, 218 :
the basis of notes and credit, 219 ;
depletion of, not yet an extinct
delusion, 392

Money, old, did not disappear, 193

Monk's Act, and civil servants, 512

Monopoly, price of, to be fixed, 354

Montacute, Earl of Salisbury, his sym-
pathy with the rebels of 1381, 29

Montague, his attitude at the Recoin-
age, 200 ; his project of the Bank of
England, 214

Montfort, Simon de, his Parliament,
and his motive, 121

Morrill, Mr., his tariff and his motives,
294 ; the price of his tariff, 384

Mortimer, overthrow of, 417

Moscow, march to, and the uniform of
French soldiers, 292

Muratori, his collection of diplomas,
4; his Antiquitates, 92; on gold
currencies, 189 ; on Italian banking,
207

Musical instrument, land bearing rent,
compared to by the Duke of Argyll,
48

N.

Napoleon, his commercial policy, 215 ;

an idol of idiots, his character, 292
Nation, benefit to, collectively, by

primary education, 357
National Debt, a guarantee of the

settlemsnt, 448

National laws, discovery and adapta-
tion of, effects of, 49

National ledger, interpretation of, 389

National pride, phrases appealing to,
333

Navigation Act, effects of, 327

Navigation, once a knack, now an art,
257

New College, Oxford, its house pro-
perty in 1453, 169 ; possesses speci-
mens of early cloth, 285

New England, soil of, uninviting, 322

Newspaper tax, imposition of, 464

Newton, Sir I., on the recoinage, 200

Nicholls, Mr., and new Poor Law, 248

Nimeguen, peace of, effects of, 460

Nobles, sons of, in the Church, 64 ;
great, intrigues of, in France, 482

Nonconformists, their cohesion and
influence, 215

Norfolk, early opulence of, 89 ; indus-
tries of, 144 ; its early position, 149

Norfolk, North, talk in, about Lord
Lovell's farming, 177

Norman, Mr., on Bank of England,
224

Northern England, rudeness and pov-
erty of, 145

North, Lord, his attitude on the
American tea duty, 469

North, Roger, on the circulation of
specie, 392

Nory, his precedents for ship money,
136

Notes, natural limitation of, issues of,
217 ; inculation of, 218 ; early de-
nominations of, high, 258; bank,
restraint of issue of, 360 ; incon-
vertible, why circulated, 441

Nullum Tempus Act, origin of, 433

O.

Oaths taken on Land Tax, 462
Obligations, local in England, 483
Obloquy, newspaper, to sensible men,

cackle, 332
Obstacles, greatest to human progress,

ignorance and science, 289
Occupancy, local taxation on, unfair,

494
Occupiers, payment of taxes by, said

to be payment by owners, 498
Official clergy, class of, 72
Old Testament, reading of, its effects,

78
Omnibus Bills, their purpose, 405

INDEX.

539

Open fields, system of, 59 ; custom of,
a hindrance to agriculture, 178

Opposition, irrational, not always met,
by calling it so, 363

Orange, house of, its degradation, 435

Oresme, Bishop of Lisieux on money,
95 ; on the circulation of specie,
392

Organization, its universality in early
English life, 295

Oriel College, its purchase of a rever-
sion, 67 ; its trade in masses, &c,
305

Outlaws, haunts of, 142

Overstone, Lord, his opinions on the
Bank, 224

Oxford city and university, assess-
ments of 1693, 156

Oxford Colleges, house property of
pre-Beformation, how procured, 305

Oxford professor, a, on American
paper currency, 37

Oxfordshire, its early relative wealth,
149

Oxford, the origin of all religious
monuments in England, illustrated,
73 ; the farm rent of, 128 ; St. Mary's
church at, its use, 144 ; roads of,
ancient and modern, 491.

Oxford town, its municipality sub-
jected to the University, 298

Painters, English school of, late, 274

Palmerston Lord, his adage rejected,
345

Papal clergy, types of, 72

Paper currency, forced, in England,
201 ; why accepted, 220

Paper issues of Austria and Russia,
effects of, 189

Paper, manufacture of, in England,
280

Paper money, issue of, in American
War, 384

Parliament, rolls of, imperfect, 127 ;
tries punishments before remedies,
200; theory and practice of, 345;
relations of to railways, 353 ; a
mouthpiece for popular indignation,
421 ; the old, a travesty, 448 ; alone
able to create a monopoly, 462 ;
claims right of taxing the Colonies,
468 ; the, of 1529, its duration and
its acts, 485 ; limitations on the
functions of, 503

Parliament, Irish, its corruption, 431

Parliamentary franchise, the, of 1406
and of 1430, 297

Parish, English, its position as a social
unit, description of, 13

Parishes, close and open, effects of
245

Parish life, exceedingly insulated, 283

Paris, Matthew, his opinions, 72 ; on
the condition of England, 139 ; on
reign of Henry III., 170

Paris, peace of, 1703, state of Europe
at, 290

Parnell, Sir H. (Lord Congleton), his
financial proposals, 474

Parochial settlement, law of, and
origin of, 245 ; law of an appeal to
old traditions, 295

Passport system of 12 Eic. II., 31

Past and present, continually muddled
by writers, 304

Pasture rents, rise of, 180

Paterson, his earlier career, 108

Patriots, Indian, their criticism on
loans, and answer to, 440

Peace, armed, what it means, 294 ;
maintenance of and charges of, on
whom it should be imposed, 493

Peace of 1815, one of languor, 292

Peasant, with land, his advantages,
240

Peasant, English, his life, 15; his
superiority to those of France and
Germany, 16; his early struggles
for freedom, his present attitude, 82

Peasant or artizan, sacrifices of, in the
education of his children, great, 357

Peasantry, outbreaks of, 81 ; organiza-
tions of, 300

Pecok, Bishop, his teaching, 83

Peel, his defence of his income tax,
131 ; his famous question, What is
a pound? 201; and Bank Act of
1844, 224 : premature death of, 226 ;
his tariff reforms, 443 : services of,
and abilities of, 455 ; financial posi-
tion on his coming to office in 1841,
475 ; on post office reform, 604

Peel, Sir Robert (the first), on Irish
trade, and the Irish Union, 327

Peer, a, his tactics with his personal
property, 474

Peers, claims of, to writ of summons,
133

Penal code, the, in Ireland, 81

Penn, William, pension to heirs of
330

540

INDEX.

Pennsylvania, workmen's houses in,
497

Penny, supposed degradation of, 185

Pepper, price of, 10<>

Pepys, his correspondence with Houb-
lon, 215

Permanent and terminable loans,
difference of, 446

Personal government, extinction of, in
England, 448

Personal property, taxes on inheritance
of, 471, sqq.

Pessimism, economical, a risk, 229

Philip II., his resources in money,
95 ; and Bank of Genoa, 211 ; origin
of his resources, 260 ; his loans in
Genoa, 434

Philip le Bel, his quarrel with Boni-
face VIII., 74

Phillips, Prof., on the extent of coal
measures, 230

Philologers, their occupations, 275

Philosophy of history, its progress and
its risks, 5 ; illustration of para-
doxes in, 308

Phrases, their power over men, 329

Piracy, why an offence which all may
punish, 398

Pitt, Elder, his objects, 318

Pitt, his income tax, 131 ; his action
in 1797, 201 ; his real breach of law
in 1797, 216; his policy, and his
relations to the Bank, 223 ; death
of, its attendant circumstances, 349 ;
his respect for Adam Smith, 349;
his "patriotic loan" a failure, 439 ;
in 1798, makes the Land Tax per-
petual, 463 ; his accession to office,
470; successors of, their finance,
474

Plague, Great, causes of, and effects of,
263

Plague, the, of 1349, its effects, 21

Plantations, American, their origin,
322

Plate, silver, price of, 195

Plautus on relations of man to man,
341

Police, modern, origin of, 493

Political economists, their practical
errors, 7 ; generally in the right on
financial questions, 454

Political economy, neglect of econo-
mical facts by, 2; illustrations of
its speculative side, 50; nearly all
the fallacies of, partially true, 307

Political nicknames in Flanders, 278

Political pamphlets, importance of two
centuries ago and onwards, 424

Poll taxes, beginning of, 129

Pomeranian leather, a special import,
410

Poole, Mr., visited by American
citizens, and why, 368

Poor, doctrine that they should live
on the land affirmed, 243 ; harshness
of political economists to, 310 ; de-
sire of fair traders to make a raid
on, 372 ; maintenance of the, a
growirg charge, 486 ; relief on, not
settled on economical grounds, 489

Poor Law, derivable from the bad acts
of government, 244 ; ancient defence
of, 487

Poor laws, between 1541 and 1601,241

Poor priests, foundation of order of, 77

Poor rate, return of, at 1685, 43 ; in-
cidence of, in 1685, 159 ; relative
amount of, in 1685, 246 ; payment
of, by those who do not employ
labour, 488 ; the distribution of, to
various objects, 489

Pope, the, expensiveness of his Court,
187

Population, amount of, in England, at
different times, 53 ; abundance of,
no necessary test of prosperity, 140
in England, calculations on, 157

Porter, on the Progress of the Nation,
446

Portsmouth, created or restored by
Henry VIII., 518

Portugal, discoveries of, 320

Postal notes, restraints on, 507

Post office, the, best illustration of
governmental work, 504

Pound, the, unit of currencies derived
from Koman system, 184

Poverty, expedients to relieve by law,
242

Precious metals, how procured in non-
producing countries, 257

Presbyterians of seventeenth century,
now Unitarians, 85

Prestige, its influence in France, 460

Price, the giver of a price attracts the
dealer, 397

Price, his sinking fund, 455

Prices, rise of, cause of, 17 ; regula-
tion of, general, 25 ; wages do not
rise with, 37 ; evidence of, as to
degeneracy of coins, 194; laws of,
251, sqq. ; causes affecting, 253 ;
rise in, historical epochs of, 257;

INDEX.

541

general uniformity of, from 12G0 to
1540, 262 ; high, occasions on which
they induce high wages, 373

Primogeniture, effect of, at first un-
important, 63

Printing, an invention of foreigners,
280

Prisons and hospitals, taxes for, 494

Private coining, little risk of, 190

Private interest, doctrine that it is a
public duty, an impudent fallacy,
382

Privileges, purchase of, 128

Proclamations, Elizabeth's, volume of,
40

Pioducer, Government, like a protec-
tion for manufactures, 523

Production, cost of, 260 ; motive of,
the expectation of a market, 370

Professional classes, wages of, small,
301

Professional incomes, taxes on, 477

Professors, Oxford and Cambridge,
statistics of, 370

Profit, the vital object to get a balance
of, 391

Profits increase more rapidly than
wages, 306

Profits, natural, in what sense used, 340

Promissory oaths, futility of, 296

Propertied classes, their services to
agriculture, 414

Property, respect for in England, gene-
ral but peculiar, 24 ; not a basis of
notes, and why, 221

Property taxes, graduated, instances of,
124 ; grants were nearly always,
127 ; of fifteenth century, cha-
racter of, 130

Proprietory rights, attempts to deal
with in Parliament, 330

Protection, to corn, given in 1660, 270;
definition of, vague and shifting ;
advocates of, 365 ; not quoted fully,
366; object of, 368; must be on
articles of necessary use, and con-
siderable, 369 ; " robbing somebody
else," 375 ; in United States, its his-
tory, 383

Protectionist countries, cries in, 316

Protectionist manufacturers, an in-
direct advantage to, 406

Protectionists employ their imagina-
tions like painters and poets, 411

Protective tariff, effects of, 261

Protectorate, taxation of landowners
during the, 422

Provisions, rise of after 1541, 240

Proxies, origin of, 133

Public characters, contradictory criti-
cism of, 6

Public Debt, English, its origin, 447

Public Debts, best conditions for crea-
ting, 443

Public schools, endowments of, appro-
priated by the rich, 355

Public service, gains in, 466

Public stocks, income tax on, a practi-
cal repudiation, 443

Purchase of land by state, effects of,
had Mr. Mill's proposal been carried,
515

Purchase of railways by the state,
arguments for and against, 510,
sqq.

Puritan movement, social character of,
84

Puritans, their character, 44 ; colonies
of, 321 ; their extent and influence,
458

Q.

Quakers, rise of the, 85
Quarter sessions, the conduct of, in
rating mansions, 496

R.

Back rents, origin of, 67

Kailway Kates Bill of 1886, author's
comments on, in Parliament, 353

Eailways, control of, necessary, 353 ;
British charges put on, 354 ; loans
for, 444 ; construction of, in Eng-
land and elsewhere, 509

Kaleigh, his Eldorado, 321

Kates," "Book of, issues of, and effects,
135

Rating Act, the, of William IV., 496

Raw material, not easy to define, and
why, 256

Real estate remained liable to land tax,
and why, 463

Reasons, wise not to give, 502

Rebellions, colonial, how met and con-
doned, 336

Recoinage by Elizabeth, facts of,
195

Reciprocity, attractions of to some
minds, 325

Re-exportation great from the United
Kingdom, 400

Reform impossible, if the doctrine of

542

INDEX.

vested interests is extended or
strained, 352

Beformation, English, its true pro-
moters, 84

Religion, extirpation of a, possible,
89 ; people give more liberally to,
than to want, 242

Religion, wars of, interpretation of
characters in, 12

Religious movements, conditions of, 80

Religious opinions honestly entertained
and enforced, 69

Remigius, a German paper-maker in
England, 280

Rent, compared to the hire of a musical
instrument, 48 ; history of defini-
tions of, 160 ; of no interest but to
the landowner, 165 ; regulation of
in Europe, 175; the last received
in distribution, 233 ; its real posi-
tion, 236 ; attacks on, 238 ; in seven-
teenth century, and comments on it,
267 ; agricultural, rise of in Eng-
land, 293 ; why considered a fit sub-
ject of taxation, 463

Rents, early, fixed and unalterable,
15; arable, ancient amount of,
167 ; pasture, ancient amount of,
167 ; do not depend on prices, 271 ;
forcible elevation of, process of, 173 ;
not so much affected by cattle and
sheep-raising, 179 ; rise of, in seven-
teenth century, 199 ; not necessarily
raised by protection, 374

Republic, Roman, nationalized land,
and with what effect, 51

Republic, Athenian and Roman, loans
negotiated by, 448

Repudiation, risks of, 340

Restoration does not always follow
reform, 350

Restoration, the ruling of lawyers at, 422

Resumption Bill, Walpole on, in 1702,
465

Retaliation, policy of, examined, 379

Revenue of Crown, fixed and inelastic,
415

Revolution, the effects of, in relation to
the Crown and its estate, 428;
financial situation of, 456

Revolution, English, of 1642, sects of,
85

Revolution, French, interruption of
commercial treaties by, 113 ; Arthur
Young on the, 269 ; paper of, 442 ;
character of, and interference with,
470

Revolutions, causes of, in English
history, 432

Rhenish cities, origin of wealth of, 10

Rhine, policy of France as regards the,
287

Ricardo, his definition of rent, 161 ;
his merits on currency questions,
185

Richard I., captivity of, its cost, 120

Richard II., state of society at begin-
ning of reign of, 78 ; and De Vere,
417

Rich, different law for, and poor,
471

Richelieu, his policy, 458

Richmond, Duke of, descent of, and
grants to, 352

Risk, its relation to profits, 19

Ritual, character of, during Elizabeth's
reign, 421

Roads, early condition of, 483 ; main-
tenance of, a just tax on land-
owners, 490

Rock salt quarried but not refined,
277

Roman Empire, survivals of, 70 ; the,
ruined its subjects, 393

Rothschild, Lord, on foreign stocks,
390

Royalists, their conduct to the peasants
in 1642-5, 25

Rubens, his apotheosis of Villiers, Duke
of Buckingham, 274

Russia, attempts of England to reach,
103 ; its use of gold, 190 Cn-

Russian corn trade, shock to, by
mean war, 293

Rymer, his diplomatic collection, 92

Salisbury, Earl of (Cecil), early history
of the family, 136, 422

Salt, price of, illustrates the price of
wheat, and why, 57 ; importance of,
277

Salted meats, general use of, 277

Samson, Abbot, his good offices at
Oxford, 298

Sanuto, work of, in 1321, 104

Saturn, limbo of some political econo-
mists, 503

Savages, irruption of, on Roman Em-
pire, why successful, 254

Savings banks, post office, restraints
on, 507

Savings, various destinations of, 438

INDEX.

543

Scarborough, fee-farm rent of, 128

Scientific witnesses, disputes of, 363

Scotch universities, .Parliamentary
grants to, indefensible, 363

Scotland, customs duties in, 123;
degradation of pound in, 197 ; assess-
ment of, in 1657, 153; wealth of
from Tay to Tweed, 363

Scott, Sir W. , his descriptions of Scot-
tish life, 123

Securities, export of, meaning of, 99 ;
export of, causes for, 396

Seignorage, practice of exacting, 202

Selden, his dissertation on tithes, 162 ;
on the King's Exchanger, 187 ; his
dispute with Grotius, 278

Selim I., his conquest of Egypt and
its effects, 11 ; his conquest of Egypt,
107

Serfs, emancipation of, the effect of,
the insurrection of 1381, 30

Servility, worst traits of, 332

Session, Parliamentary, ceremony of
closing, 281

Settlement, Act of, immunity of
judges under, 424

Seventeenth century, importance of
economical facts in, 2 ; prices and
population of, 57 ; calculation of
population in, 158; rents of, 174;
men of, 265

Seven years taken generally as a period
of qualification, 301

Seven Years' War, effect of, on Ameri-
can plantations, 291 ; fiscal effects
of, 468

Shaftesbury, Lord (the late), on the
Factory Acts, and their limited
scope, 355

Shakspeare like Prospero in the "Tem-
pest," 265 ; on winter garments, 286

Sheep, breeds of, 62 ; losses of, insured
by landlords in the fifteenth century,
169 ; keeping of, in England, 273

Sheep feed, produce of, on acre, 231

Ship money, its imposition, 136 ; as-
sessment of, 151

Shippon, his attitude, 296 ; his esti-
mate of himself and of Walpole,
466

Shotover boar, story of the, 490

Sicily, attempt to secure crown of,
121

Siemens, his furnace, 233

Silk manufacture, London, in the fif-
teenth century, 282

Silver coin, fineness of, 184

Silver greatly produced in England,
186; need of, for Eastern trade,
391

Sinclair, Sir John, his services in Scot-
land, 60, 270 ; on apprenticeships in
husbandry, 305

Sion Abbey, its home farm, 66

Sion, abbess of, pressure put on, 264 ;
foundation of abbey of, 418

Sixteenth century, scanty information
about, 151

Social and political causes not separ-
able, 281

Smiles, Mr., his books, 257

Smith, Adam, on rent, 51 ; on the
mercantile system, 96 ; borrows from
Turgot his canons of taxation, 115 ;
why he called rent a tax, 164, 165 ;
on prices and wages, 181 ; his phrase
about international money, 190 ; on
the Bank of Amsterdam, 212; his
theories of rent, 235 ; on lotteries,
259; on apprenticeship, 300; his
description of colonial manufactures,
331 ; on the Colonial Empire, 338 ;
endeavours to get him a place on
the Bengal Council, 348 ; on the
Protectionists of his day, 376; on
the Colonial Trade Acts, 378; on
nations and governments, 393 ; on
rents, economic, competitive, fixed,
415 ; on the conceit of nations and
individuals, 445 ; on taxation, 461 ;
Pitt said to be a disciple of, but how,
470

Smith, Goldwin, and the Colonies
twenty-five years ago, 335

Smollett, his novel, "Humphrey Clin-
ker," 484

Smuggler, difficulty of dealing with, at
Revolution, 461 ; difficulty of coping
with the, 464

Smuggling, cessation of, 465

Socialism, best answer to, is social
equity, 31 6 ; strength of, in what,
352 ; stimulants of, 497

Social state of England, how affected
by law, 24

Society, may lose some arts, but is safe
if it retains others, 253

Sole market, acquisition of the, and
its effects, 290

Sole-market theory, the, described, 323

South Sea Bubble, fruit of the Assiento
treaty, 449

Sovereigns, English, their continental
circulation, 202

544

INDEX.

Sovereign, the, dependence of, on

Parliament, and legislation of 1850,

126 ; Crown estate does not belong

to, 431
Spanish Colonies, Government of the,

320
Spain, trade of England with, 103;

its conquests in the New World,

107 ; discoveries of, 320 ; war with,

in 1739, 467
Speaker, his address to the Crown, 134
Speenhamland Act, its object, 247
Spillman, a German paper-maker at

Dartford, 280
Spinning, a universal occupation, 143
Spinola, and bank of Genoa, 211
Squatters, Colonial, impudence of, 336
Stafford on landlords, 171
Stamp Act, the, 468
Stanhope, Lord, his absurd motion, 224
Stanhope, Lord, his political portraits, 6
State, limits of agency of, 311 ; should

define what contracts it enforces, and

how far, 343 ; result of land being

owned by, 516
State rights in the American Union,

theory of, 481
Statesmen, duty of, in economical in-
ductions, 8 ; ignorance of and its

causes, 344
Statesmen, European, their alliances,

602
States of the Union, defaulting, lesson

given to, 340
State, the, finding capital, illusory, 18
Statute of Labourers, enacted, and its

provisions, 26
Stephenson, the younger, his dictum,

353
Stock and land lease, the, its character,

64
Stock Exchange, its weakness and its

strength, 339
Stock Exchange securities cannot be

conveniently taxed, 383
Stock, railway, distribution of, 513
Stocks, conversion, process of, 452
Stourbridge, fair of, 282
Strike, a, rarely successful, and why,

315
Stuart, kings, thefts of bankers'

money by, 212
Stuarts, their policy as to judges'

patents, 41
Subsidy, amount of, fixed, but is les-
sened, 126
Substitutes for money, early use of, 205

Success in wealth-getting honoured,

312
Successions, Pitt's tax on, examined,

471
Succession, war of /combatants in the,

64
Sugar, slave grown, objections to, and

facts as to, 329
Sumptuary laws, effectiveness of, 377
Superintendence, wages of, their profit,

19
Supplementary estimates, bad finance,

451
Supreme Court, American, decisions

of, 481
Surrender, by Colonial Office, to Colo-
nies, in what directions, 337
Suspension of cash payments, debate

on, 223
Sussex, forges and glass furnaces of,

287
Sutton's culture, character of, 231
Sweden, source of iron, 276
Swift, on the customs, 123, 464; his

political philosophers of Laputa,

457
Sworn-off gold, origin of the phrase,

187

T.

Tandridge, graduated local taxation
in, 124 ; relief of poor at, 243 ; de-
scription of, and local taxes at, 484

Tallage, the, of towns, 120

Tallages, liability to, 128

Tanning, partial, a practice in foreign
leather trade, 410

Tariff, protectionist, a war in disguise,
334 ; American, local defence of, 384 ;
reform of, in Walpole's time, 466

Tariffs, Colonial, meaning of, 337

Taxation, canons of, ambiguous, 116 ;
arbitrary, restraint of, 120 ; motion
on, by author, 131 ; various grounds
for, alleged, 460 ; present distribu-
tion of, 478

Taxation, English, early, peculiar, 115

Taxes, distribution of, a proper subject
for a director of criminal investiga-
tion, 370; imposed at Revolution, 461

Taxes, sanitary, who should pay, 495

Tax, new, difficulty of levying, 446

Tax, remains, to some extent, on those
who first pay it, 499

Tea, use of, said to have caused an in-
crease of rates, 246

INDEX.

545

Telegraph companies, scandalous pur-
chase of the, 506

Tenancy at will, origin of, late, 67

Tenant, his position to landlord, 359

Terminable annuities, effect of income
tax on, 476

Terminable securities, how affected by
income tax, 447

Terrorism in the United States, 385

Teuton, imitative and occasionally
intrusive, 294

Teutonic certificates, their value, 275

Teutonic irruption, character of, 70

Teutonic race manufactures some
thing besides metaphysics and
testimonials, 410

Textile industries, diffused in England,
281

Thimble money, origin of name of,
136

Thirlby, Bishop, his paper mill, 280

Thirty Years' War, causes and provo-
cations of, 287

Tillage, decimal fraction of land gone
out of, 370

Tin, produce of, in England, 283

Tithe, payment of rates by, its defence,
488

Tobacco, Virginian, importance of,
322 ; Spanish, cost of, 323

Tobacco tax, the, of Sir S. Northcote,
499

Tolls taken, but roads not mended,
490 ; receipts from decline, 491

Tone, Wolfe, his language about the
Irish House of Commons, 432

Tories had better writers than Whigs,
464

Tories, historic, authors of the peace
of Utrecht, 449

Torrens, Colonel, on the Bank of
England, 224

Tower pound, weight of, 184

Towns, taxation of, peculiar, 127 ;
organization of, 297 ; local taxation
of, 508

Trade, British, assistance given to
Americans due to a desire to break
up, 331

Trade follows the flag, maxim ac-
cepted, 291

Trade, its aids to international mor-
ality, 93 ; international character of,
99 ; early English, small and pre-
carious, 302 ; reciprocal, effects of,
326

Trade profits, principle of, 109

36

Traders do not desire to keep money,

94 ; prudent rule of, 406
Trades, organization of, 298
Trans-shipment, an easy evasion of

retaliating duties, 380
Treaty of 1861, character of, 113
Troy pound, weight of, 184
Truck, defence of, and condemnation

of, 359
Tull, Jethro, on rent in eighteenth

century, 176 ; on rents, 268
Turgot, his canons of taxation, 115
Turk, the, his mischievous presence,

107
Tzar, his policy ten years ago, how

determined, 439

U.

Ulster, linen weaving by peasants of,

84 ; bye-industries in, 175
Unearned increment, hope for, per-
petual, 237
Unemployed, the, statistics of, 370
United Kingdom, its proportion of the

world's trade, 408
United States, circulation of green-
backs in, 37 ; risks to agriculture in,
271 ; protection in, malignant, 366 ;
advocates of protection in, avoiding
their own case, 369 ; protection in,
its history, 383 ; exports of, and ex-
planation of, 402 ; growth of trade of,
recent, 407; building land in the,
497
Unit, social, weakness of the, 342
Universities, the incorporation of, 298
Universities and Colleges Act 1576, its

tendency, 171
Universities, English, founded by pri-
vate munificence, 363
Usury, laws regulating, 94
Usury law, abrogation of, 343
Utility, connection of art with, 275
Utrecht, treaty of, its effects on Eng-
lish trade, 320

Vaccination, compulsory, opposition

to, 363
Valuations, for taxation, Edward's, 122
Van der Weyer, M., on Belgian thrift,

438

646

INDEX.

Vansittart, Mr., on the Bullion Com-
mittee, and his motion, 224 ; his
action, 454 ; his incapacity, 474

Vegetables, garden, came from Hol-
land, 289

Venice, Bank of, and the practice of
the Bepublic, 209

Vicarious responsibility, characteristic
of English life, 121

Village guilds, endowments of, 306

Villiers, Mr. C., his return of wages,
248

Vincent, Mr. Howard, his advocacy of
protection, his earlier calling, his
action in Parliament, 366

Virginia trade, character of, 326

Volcanoes, social all over Europe,

W.

Wadham, Dorothy, her architect, 274

Wage-fund theory of Mr. Mill criti-
cized, 308

Wages, receipt of, its analogy to
profits, 19 ; do not rise with prices,
37 ; actually paid higher than that
allowed, 44; cannot keep up to
prices, 266 ; poor rate, a rate in aid
of, and why, 487

Wakefield, Gibbon, his colonial
scheme, 337

Wall Street gamblers, and soft money,
223 ; their intrigues, and the conse-
quences, 384

Walpole, his treatment of public debt,
450 ; his parliamentary powers, 465,
sqq.; his project, and his enemies,
399 ; his consolidated debt, 452

Warehousemen, London, their agency,
404

War, invariable language of govern-
ment about, 393 ; just and neces-
sary, a short phrase, 454

War of Spanish succession, cost of,
463

War of Succession, 1453-1485, charac-
teristics of, 265 ; in the fifteenth
century, its causes and character,
419

Wars, European, since 1815, very
destructive, 293 ; European, succes-
sive characteristics of, 324 ; effects
of various, 470

Warwickshire, open or common fields
in, 178

Water companies, valuation of the, in
1880, 513

Watt, importance of his invention,
267

Waynflete, founder of Magdalene Col-
lege, Oxford, his practices, 66

Wealth, kinds of, 17 ; production of,
causes of, 227 ; teaching of political
economy on, partial, 310

" Wealth of Nations," delay in the
publication of, 348

Weaver, a, synonymous with a heretic,
91 ; generally a heretic in the
Middle Ages, 376

Weight, payments by, the practice,
arguments for, 191 sqq.

Wells, David, on cost of freight, 232

Wesley, movement of, 88; on slavery,
329

Westminster monks, their home farm,
extorted by the Kussells, 66

Weymss, Lord, as a speculative poli-
tician, 351 ; on socialism at St.
Stephens, 497

Wheat and labour, prices of, inference
from, 6

Wheat, ratio of, to barley and oats,
251 ; highest relative price of, 252 ;
rise of price of, 266 ; heavy protec-
tion on, in the cost of freight, 369

Whig, modern, picture of a, a lampoon,
425

Whigs, monied, their support of the
Act of Settlement, 88 ; first directors
of Bank of England generally, 214;
and what sort of, 215 ; historic,
created the wars of Spanish succes-
sion, 449

Whitbread, Mr., his attempt to make
allowances legal, 247

Whiteley, Mr., character of his busi-
ness, 406

White, William, his history and fate,
79

William the Norman, policy of, 71

William the Primate, proclamation
addressed to, in 1349, 26

William III., his position in Holland
and in England, 427; the floating
debt a scandal to his government,
449

Wiklif, career of, 73

Wilkes, defended as a Nonconformist,
87

Willoughby, voyage of, 320

Woods and Forests, office of, charges
against, 517

INDEX.

547

Wool, American production of, 368
Woolcomber, art of, 285
Wool, English, its importance, 9
Wool taxes, the, amount of, 129
Wool tax of 1341, its distribution, 146
Working classes, laissez Jaire breaks
down in, 352 ; their position deteri-
orated after 1782, 469
Workman, what he has to sell, 313
Workmen, subjection of, causes of,
240 ; dislike those who refuse to aid
their organization, 317
Wykeham, William of, his mitre case
and valise, 286

York, house of, asks for few grants,
132

York, statute of, its importance, 122

Young, Arthur, on rent in eighteenth
century, 176 ; on increase of poor
rates, 246; on eighteenth century
agriculture, 268 ; on the early days
of the French Ee volution, 269 ; on
Irish landowners and rents, 376 ;
reports sent to, 379

Younger son, the, when he becomes a
nuisance, 64

IRIEOIElSrT

Political and Economic Publications,

WELLS (David A., LL.D., D.C.L.). Practical Economics. A

Series of Essays Respecting Certain of the Recent Economic Ex-
periences of the United States. Octavo, pp. vi. + 259 . $1 50

"Few writers are more thoroughly studied by economists, or more worthy
of study, and it long ago ceased to be necessary to speak of any thing from his
hands as ' valuable ' and 'worthy of attention.'" — Literajy World, Boston.

" They present in permanent form a mass of information about the actual
working of the protective system which nobody but Mr. Wells possesses." — N. Y.
Times.

Our Merchant Marine. How it rose, increased, became

great, declined, and decayed ; with an enquiry into the conditions

essential to its resuscitation and prosperity. Octavo, cloth, $1 00

"Ought to be studied carefully by all intelligent citizens." — Congrega-
tionalism

" Full to the brim of facts." — Standard, Syracuse.

"Cannot be brought too prominently before the public." — Argus, Albany.

Why We Trade and How We Trade ; or, An Enquiry

into the Extent to which the Existing Commercial and Fiscal

Policy of the United States Restricts the Material Prosperity and

Development of the Country. Octavo, paper . . . $0 25

"It is a good sign of the times when such pamphlets, by able writers, are
published in cheap form, so as to be accessible to all." — Baltimore Gazette.

TAUSSIG (Prof. F. W.). The Tariff History of the United
States — 1789-1888. Comprising the material contained in
" Protection to Young Industries " and " History of the Present
Tariff," together with revisions and additions needed to complete
the narrative. i2mo, cloth $1 25

" At a time when the tariff has come to occupy the forefront among politi-
cal questions, we can heartily commend this book to all political enquirers." —
Post, Washington.

' ' Can be recommended to those wishing to arrive at a comprehensive
understanding of the tariff system, as the best work of the day."— Boston Times,

G. P. PUTNAM'S SONS, New York and London.

BEOEITT

Political and Economic Publications.

SUMNER (Prof. W. G.). Lectures on the History of Pro-
tection in the United States. Octavo . . . $o 75

* There is nothing in the literature of free trade more forcible and effective
than this little book." — N. Y. Evening Post.

SCHOENHOF (J.). The Destructive Influence of the Tariff
upon Manufacture and Commerce, and the Facts and Fig-
ures Relating thereto. Octavo, cloth . . . . $0 75

'• As an argument it is absolutely conclusive." — Literary Churchman.
" We recommend the book to all who are interested in this great question
of the day." — The News and Courier, Charleston.

MOORE (J. S.). Friendly Sermons to Protectionists and
Manufacturers. Octavo, paper $0 25

Friendly Letters to American Farmers and Others.

Octavo, paper $0 25

BASTIAT (Frederic). Sophisms of Protection. With Preface
by Horace White. i2mo $1 00

" The most telling statements of the leading principles of the free-trade
theory ever published." — The Nation.

Essays on Political Economy. i2mo . . $1 25

' ' The laws of an abstruse science have never been made more clear, or
expressed more forcibly." — Cincinnati Commercial.

ROOSEVELT (Hon. Theodore). Essays on Practical Poli-
tics. Octavo, cloth $0 75

STERNE (Simon). The Constitutional History and Political

Development of the United States. Second edition, revised

with additions $1 25

" An able and instructive resume of the political history of the country.
. . . A book which every American should read. . . , Contains just
the data needed by the voter." — Rutland Standard.

G. P. PUTNAM'S SONS, New York and London.

'^^mjt^

**

University of Toronto
Library

DO NOT

REMOVE

THE

CARD

FROM

THIS

POCKET

Acme Library Card Pocket
LOWE-M ARTIN CO. LIMITED