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diff --git a/.gitattributes b/.gitattributes new file mode 100644 index 0000000..6833f05 --- /dev/null +++ b/.gitattributes @@ -0,0 +1,3 @@ +* text=auto +*.txt text +*.md text diff --git a/8436-8.txt b/8436-8.txt new file mode 100644 index 0000000..77b2482 --- /dev/null +++ b/8436-8.txt @@ -0,0 +1,2344 @@ +Project Gutenberg's Speculations from Political Economy, by C. B. Clarke + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Speculations from Political Economy + +Author: C. B. Clarke + + +Release Date: July, 2005 [EBook #8436] +This file was first posted on July 10, 2003 +Last Updated: May 12, 2013 + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK SPECULATIONS *** + + + + +Produced by John Hagerson, Jonathan Ingram, and the Online +Distributed Proofreading Team + + + + + + + + +SPECULATIONS FROM POLITICAL ECONOMY + +By C. B. Clarke, F.R.S. + + + + +INTRODUCTION + + +The following nine articles are "Speculations," by no means altogether +recommendations. They are _from_ Political Economy, i.e. they have +nearly all of them been suggested by considering mere propositions of +Political Economy. Some of them are old, or given me by friends: some +are, I believe, new: these many persons will set aside as unpractical +or impracticable, as that is the approved word by which people indicate +that an idea is new to them. The topics of the nine articles have been +largely taken from those now under political discussion, but they can +hardly be called ephemeral; and, though they do not form a treatise, +they will hardly be called disconnected. As they are speculations, no +trouble has been taken to work out suggestions in detail, or give the +"shillings and pence" correctly. + + + +CONTENTS + +1. EFFICIENCY OF LABOUR + +2. RECIPROCITY AND RETALIATION + +3. UNIVERSAL FREE TRADE + +4. THE RANSOM OF THE LAND + +5. MAKING THE MOST OF OUR LAND + +6. FREE TRADE IN RAILWAYS + +7. REFORM IN LAND LAW + +8. EQUALISING OF TAXATION + +9. WEALTH OF THE NATION + + + + +SPECULATIONS _FROM POLITICAL ECONOMY_ + + + + +1. EFFICIENCY OF LABOUR. + +Political economists have not overlooked efficiency of labour: they have +underestimated its importance in the opinion of Edward Wilson, who has +supplied me with the examples and arguments that follow and who has +verbally given me leave to publish as much as I like. + +The English workman, especially in a country town of moderate size, +regards capital as unlimited, employment ("work") as limited. A wall six +feet high is to be built along the length of a certain garden: if one +bricklayer is employed, the fewer bricks he lays daily the more days' +employment he will get; if several bricklayers are employed, the fewer +bricks one lays daily the more employment is left for the others. It +thus appears that the more inefficient the labourer is, the better for +himself, his fellow-handicraftsmen, and for "labour" in general: the +more money is drawn from the capitalist. + +There is a grain of truth in this view with respect to petty unavoidable +repairs in a narrow locality: but the capital spent on such is as a +drop in the ocean compared with that embarked in a single large work. +Consider the case of the London Building Trade, as practised in the +suburbs on all sides of London. The London bricklayers thoroughly +believe that it is their interest to be inefficient: it is said that +they have a rule that no bricklayer shall ever lay a brick with the +right hand; they have also a rule against "chasing," i.e. that no +bricklayer, whatever his skill, shall lay more than a certain number of +bricks a day; they believe that if the bricklayer laid a larger number +of bricks he would get no more pay for a harder day's work, while the +"work" would afford employment to a smaller number of labourers. Look +however a little further. The speculative builders round London compete +against each other, so that they carry on their trade on ordinary trade +profits. Such a builder is building streets, house after house, each +house costing him £800, and selling for £1000 say; and this, after +paying his interest at the bank, etc., pays him about 10 to 15 per cent +on his own capital embarked. Suppose now that the bricklayers increase +their inefficiency either by a trade rule or by a combination to shorten +the hours of labour. The cost of each house is increased £50 to him: +nothing in the new bricklaying rules or rates affects the purchasers; +the builder estimates that his profits will fall to 5 to 8 per cent on +his capital. He does not care to pursue so risky a business at this rate +of profit; he determines to contract operations. When he goes to his +bank, a branch of one of the gigantic London joint-stock banks, at the +end of the quarter, the manager of the branch comes forward as usual +ready to continue the bank advances; but the builder says simply, "The +building trade is not so good as it was," and declines. The increased +cost of bricklaying has affected all other speculative builders in much +the same way; the consequence is that "gold" accumulates in the branch +banks. The secretaries and managers of the great joint-stock banks do +not let their capital idly accumulate; they buy New Zealand 6 per cents, +or transfer to Frankfort or New York the capital that, but for the rise +in cost of bricklaying, would have gone to the London bricklayers. + +In this case it is easy to see that the quantity of work to be done is +not limited. Should the cost of building diminish but a little, the +rate of profit of the builders on their _own_ capital (in many cases not +one-tenth of the capital they employ) will run up to 20 or 30 per cent, +or even more; and at even a 20 per cent profit the bricklayers would +find that a perfect rage for building would set in. Every speculative +builder in the trade would strain his credit to the utmost, and take up +every £100 from his bank that he could induce the bank manager to let +him have. + +A second illustration. Forty years ago, on our farm in the south of +England, two men with flails used to begin threshing wheat in the long +barn about 1st November, and used to thresh till 1st April. They +got eight shillings a week with us, but in adjoining counties +seven shillings (and even six) were winter wages. Now the steam +threshing-machine will empty that long barn in two short days' work. +It takes half a dozen men to do the work, and they get about fifteen +shillings a week, though their labour is much shorter and easier than +that of the old flail men. At the same time our farmers now are much +poorer men than they were forty years ago: they have less capital, +they have made for many years past a low rate of profit, and they are +frequently themselves complaining that they cannot afford to pay their +labourers well, and inferring that they should get Protection back +again in some shape or other. The labourers on their part imagine very +generally that their increased wages for less work are due to Mr. Arch +and agitation; that the employers of labour will never pay more than is +wrested from them (this is in large measure true); and that employers +must pay whatever agitators are strong enough to demand (this is wholly +erroneous). + +In this case it is evident on the surface that the labourers who thresh +with the steam-thresher are more efficient than the flail-men: their +labour is worth the half-a-crown a day to the employer, and therefore +the employer, however poor, can afford to pay it as he receives it back +with a profit. On the other hand, if the flail-men were raised from +the dead, no farmer would now pay them even eight shillings a week for +threshing; their labour would not be worth even that. + +One illustration more. Thirty years ago there were few more wretched +trades than the shoemakers of Northampton. Wages were low, the labour +was severe, the social condition of the workmen was necessarily low +also. The sewing-machine, with some special adaptations to make it sew +leather, increased about sixfold the bootmaking power of a workman. It +is needless to say that the Northampton shoemakers met the introduction +of this machine with the fiercest opposition: they said five-sixths of +their number must be thrown out of employment. The struggle was won by +the machine (as in other cases); shoemakers' wages have ruled 50 to +100 per cent higher ever since, at the same time that the shoemaking +population has largely increased; and the social comforts and character +of the workpeople have improved vastly too. This is an example that has +always puzzled the workmen themselves; but it requires no explanation +after what has been said about the efficiency of labour. The puzzle to +the shoemakers is what becomes of the additional boots and shoes made. +They do not reflect that, even of a necessary of life, only a certain +quantity is used at a certain price. Nothing is more necessary in +London, especially in winter, than coal; but, when coal some years ago +went up to 40s. a ton in London, it was marvellous how people in all +ranks managed to reduce their consumption of coal. Much more in the case +of boots, which will bear the cost of export to remote countries, did +the demand increase as the price fell. A fall of 10 per cent only in the +price of boots would cause every wholesale boot exporter to export on +the largest scale. No doubt the invention of a self-acting machine +which should turn out 1000 pairs of boots an hour at a nominal cost +of workmanship per pair would reduce the shoemakers of Northampton to +idleness and starvation. But in practice it has rarely happened that any +machine has been introduced in any trade that has thus completely choked +the increased demand. It has happened often that the workmen who could +only work the old way, and were not able to take up the new machine, +have been reduced to starvation. Even then, after this generation has +passed away, the new machine-workers have been better off than their +predecessors. + +Employers of labour cannot pay as wages more than the labour is worth: +no organisation or rules will make them. But employers may pay a good +deal less than the labour is worth, and often have done so. However +great their profits, there is, according to J. S. Mill, always a tacit +understanding among all employers of labour to pay the minimum the +labourers can be induced to accept. It is only by combination that the +labourers can get the full value of their efficiency. Here Mr. Arch +comes in: I have little doubt that the flail-threshers might, under a +well-managed large trade combination, have got nine shillings a week +instead of eight shillings forty years ago. + +But every rise in wages gained by the workmen, unless springing from +or in conjunction with an increase in efficiency, will tell against +themselves; it must increase the price of the article, whether houses, +wheat, or boots; this must diminish the demand for the article, and this +must throw some of the workmen out of employ. + +It is difficult to find an example of price of wages which presents +any difficulty of explanation when we apply to it the consideration +of efficiency. If bricklayers were to offer to exert themselves to the +utmost, and do in eight hours the same amount and quality of work they +now do in nine, the speculative builders would doubtless be willing to +give the same wages for eight hours' work that they now give for nine. +In case the labourers by increase in their efficiency are able to get +higher wages, the choice will (in general) lie with them how much of +the increase they take in increased money wages, how much they take in +shortened hours of labour. We thus see how, in an uncivilised community, +owing to the inefficiency of their labour, their whole time and energies +are expended on their hunting, or otherwise providing bare subsistence. +The greater skill of our civilised labourers, working with machines +provided by our science, and profiting by our fixed capital (as our +railway tunnels and embankments), is vastly more efficient: it ensures +the labourers a certainty and regularity of food which the savage does +not enjoy, and provides him a certain margin of leisure beyond what the +inefficient savage labourer can count upon; it also provides the whole +surplus production out of which the intellectual and leisure classes are +supported. + +It is to be noted that an increase of efficiency in any industry (and +very largely in the case of industries producing generally essential +utilities) raises real wages in all other industries, and this, whether +the particular trade gains (as we have seen it nearly always do) +or loses, as is conceivable, though rarely occurring. Thus, if the +introduction of a boot-sewing machine lowers the price of boots 50 +per cent, this can have no effect in lowering the money wages of farm +labourers; and, as a matter of fact, the fall in cost of boots has +sensibly improved the position of farm labourers. In the same way the +superior efficiency of carriers by railway over the old road carriers +has diminished the cost of coal and all articles (the bulky ones most +sensibly) in all parts of England. There thus arises the instructive +result that handicrafts in which there has been no improvement in the +last forty years have obtained a rise of real wages (amounting in some +cases to 50 per cent) by the improvements in efficiency in all the +trades around them. + +To sum up: No man in ordinary business will give a price for anything +that he intends to sell again unless he expects to profit by selling +it again. No capitalist will pay a workman to make a table unless he +expects to sell the table for a sum somewhat exceeding the cost of the +wood and the workman's labour. It follows directly that the one grand +object of the workman, both as an individual, a trade, and a class, +should be to improve the efficiency of his labour. He may gain something +by combination and higgling for the turn of the market, but the limit to +what he can get is the value of his labour to his employer. + +In order to attain this improved efficiency the most important +practical aid is piecework. This has done much even in agriculture: the +turnip-hoer by the acre earns more, while he does his work at his own +time with more comfort to himself than the old day-labourer. What +is more important, the men who by head and hand are superior at +turnip-hoeing are able to do the work cheaper than ordinary labourers, +and turnip-hoeing thus falls entirely to the most efficient hoers, whose +efficiency thus again gets constantly improved. There is no doubt to me +that, if the London bricklayers would arrange to work by contract, they +would soon obtain more wages without being compelled (as they imagine +would be the case) to work more severely or longer hours to gain +those wages. If they were more efficient, nothing could prevent the +competition of employers soon giving extra wages for extra value of +work. + +But it may, finally, be urged that there is surely such a thing as +over-production. If there is an over-production of boots, trade is flat, +the wholesale dealers find they are making no profit, they stop their +purchases, the workmen are thrown out of employ on a large scale. To +this the reply is that there is almost a necessary alternation of up and +down in every particular trade, whether the efficiency of the workmen +is high or low. If trade is good, the large dealers will extend their +purchases, and very commonly rather over-extend their purchases: a +reaction follows, and _vice versa_ when trade is bad. + +But it must be recollected over-production in all trades at once is +impossible: capital is now not buried in pots by our great joint-stock +banks; if one trade is at standstill the capital is carried to the most +remunerative use that the experienced bank secretaries can discover. +If agriculture is, as we have lately seen it, in a depressed state for +years, inasmuch as wheat is "over-produced" in America till the price in +England falls to 36s. per quarter (and less), at which it hardly pays +to produce it in England; this of itself implies an enormous spur to all +other industries--the real cost of labour has in them fallen (for +the labourer will not be able to keep to himself the whole benefit of +cheapened food)--the rate of profit in all other industries has risen +(_pro tanto_). If we ever do arrive at a state when all the desires are +fully satisfied--when there is over-production in all industries--we +shall have general reduction in the hours of labour: "efficiency" will +take that form. + + + + +2. RECIPROCITY AND RETALIATION. + +The wealth of England is the sum of the wealth of each individual in +England. An individual may have £10,000 in England, £5000 invested in +Australia. We may reckon his wealth in England either as including or +excluding the £5000, which he could transfer (probably very speedily) to +England in gold if he desired it tangibly. Whichever way we reckon his +wealth and that of other individuals, we shall in like manner in the +sum get the wealth of England: it will be in one case the wealth in +England-in the other case the wealth in England plus the lien which +residents in England have on other countries in the world. + +In parallel manner the effective capital of England, which can be +brought into the wages fund, must be the sum of the capital of all the +individuals. + +These two self-evident truths are capable of many applications: we +see directly from them that the National Debt, so far as it is held by +residents in England, neither diminishes the national wealth nor affects +the wages fund. We see also directly that any exchange between an +Englishman and a foreigner which gives a profit to the Englishman gives +an equal profit to the English nation. + +When a merchant buys 1000 quarters of wheat from America and pays in +gold, he does so to make a profit for himself; but he cannot make a +profit for himself without making an equal profit for the nation. The +exchange of the wheat for gold is profitable to both seller and buyer; +otherwise the bargain would not be struck. A value is added to the wheat +by its being brought from Minnesota (where it is wanted, as all good +things are wanted) to London, where it is much more wanted, and this +increased value is greater than the cost of moving the wheat from +Minnesota to London; this excess is the profit on the exchange which +the buyer and seller divide between them. The exact shares in which they +divide the profit between them depend on some of the most complicated +considerations in the science of political economy. Indeed, political +economy can no more work out a case in figures, even when every +circumstance is given, than political economy can tell in pounds +sterling what should be the rent of a given farm. But the point required +for our present purpose is easy and certain,--unless the English buyer +got _some_ share in the profit he would not give his gold for the wheat. + +The great principle of Free Trade is that in this, and in all similar +cases, the individual shall be left to make what profit he can; that his +dealings with foreigners shall be interfered with by Government in no +way; that he shall not be checked in his operations by import duties, +bounties on exports, staples, or any other of the numerous obsolete +interferences in the statute-book. The principle is that each individual +can manage his own trade better than Government can manage it for him; +that, therefore, Government shall let any individual do his best in +trade his own way, knowing that whatever profit an individual makes in +foreign trade is an equal national profit. + +It may be shortly stated that in the old Protectionist theory, destroyed +by Adam Smith, gold was considered to be wealth. Hence, if an individual +bought foreign wheat for gold, the English suffered a national loss of +wealth, and the foreign nation made a national gain. It is unnecessary +to occupy space in refuting this (to us absurd) idea, as no refutation +can be more satisfactory than Adam Smith's own. + +If I profit on the transaction of buying 1000 quarters of wheat for +gold, I do so irrespectively of all other exchanges by others. Whether +the firm next door to me has succeeded in selling to a Boston house +£2000 worth of Sheffield cutlery or no is a matter entirely beside +my bargain. My profit will depend practically on the movements in the +English corn trade: a small rise in the price of wheat at Mark Lane +between the date of my purchasing by cable the wheat in America and my +selling it at Mark Lane, may give me a large profit, or _vice versa_. +But my exchange of gold for the wheat is a separate transaction of +itself: it stands entirely on its own bottom. + +It is perfectly true that if my neighbour in Threadneedle Street does +succeed in selling £2000 worth of cutlery to the New Englander, there is +another distinct national profit to England and to America. [Footnote: +I am assuming for simplicity throughout that every exchange made by +private merchants in this foreign trade is a successful speculation; if +in any particular speculation a merchant loses, his country loses the +same amount. As foreign trade, on the whole, is an enormous national +profit, I am justified in sinking the particular cases of loss. It may +be said, "But perhaps all your exchange of gold for wheat is a national +loss": it is evident that when the trade takes this form the merchants +who import foreign corn stop their operations instantly; in practice +they stop them with prescient instinct.] But whether he succeeds +in making a bargain or not, I object to being interfered with by +Government, and prevented making my own little profit. If my neighbour +is practically deprived of his profitable bargain by Government action +on the part of the Americans--if they are Protectionists and believe +that gold is the only National Wealth, and put a heavy duty on +cutlery--if by doing this they prevent an exchange profitable to both +nations--they stop TWO merchants from a profitable stroke of business. +Whether they injure the English merchant or the Bostonian would-be +purchaser of cutlery MOST is (as above explained) very difficult to +prove in any well-ascertained instance, but it is quite certain that the +interference of the American import duty causes a loss to each merchant +and to each nation. + +Where now is Reciprocity and where Retaliation? We can no doubt say to +the Americans, "As you have injured us in the matter of cutlery, so will +we injure you by putting a duty on wheat." But it is merely cutting off +one's nose to spite one's face. In the exchange of gold for wheat the +division of the profit on one transaction is uncertain, but in the long +run it is probably about equal between the English and the American +merchants, i.e. between the English and the American nations. (I am +not overlooking the fact that the ultimate benefit to England is cheap +bread; but it is unnecessary in the present argument to follow the food +down the throats of the consumers: the wheat is really worth to the corn +merchants what they can get for it from the consumers.) We cannot stop +the corn trade with America by a duty (or diminish it) without as great +a loss to ourselves (probably a greater) than to them; the retaliation +in putting a duty on corn because the Americans put a duty on cutlery +would be (with our lights) mere spite: it would be as though a farmer +who took one sample of wheat to market and one of barley, should meet a +factor who offered him his price for the wheat, but would not spring to +his price for the barley, and the farmer should thereupon sulkily carry +both his samples home again. + +The ideas of Reciprocity and Retaliation are pure relics of the old +Protectionist commercial theory, viz. that there is always a national +loss in parting with gold--that the foreign trade can only be profitable +to England so long as the value of the exports exceeds that of the +imports, so that a continual accumulation of gold may go on. + +Now, first, we may meet this with the abstract scientific argument that +there is no character by which gold can be diagnosed as wealth from +steel or broadcloth. Our merchant who buys wheat for gold could buy from +the Americans wheat for cutlery or wheat for broadcloth. The reason he +gives gold for the wheat is merely because he makes a better profit by +giving gold than by giving anything else in exchange for the wheat. The +nation therefore gets a better profit that way too. + +Descending a little from this abstract argument, our opponent says, +"If you go on buying wheat for gold, and cannot sell your cutlery and +broadcloth out of the country for gold, you _must_ run out of gold." +But the fact has been proved by many years' experience not so to be: for +many years our imports have been some £150,000,000 sterling more than +our exports, while our stock of gold in the Bank of England (and the +gold in circulation) remain the same from year to year. This is one +of those many things (like the supply of meat to London) which +will regulate itself perfectly and insensibly (without any violent +disturbances in trade or the money market) if Government will only leave +the matter entirely alone. If our stock of gold is at all short our +merchants give a little less per quarter for American wheat; the +trade is checked; the sensibility of the market--the experience of our +corn-traders--is such that the balance is preserved with very slight +oscillations. The refusal of the Americans (enforced by an import duty) +to purchase our cutlery, etc., _does_ partially check the reflux of gold +to this country, and does lower sensibly the price which the Americans +get for their wheat from us. Errors in political economy avenge +themselves--often fearfully--on their perpetrators. But our objector +will still want to have explained to him where the £150,000,000 sterling +required in England annually comes from. It is not essential to, or +indeed any part of, my present argument to explain this; but I will +anticipate matters so far as to say shortly here that this £150,000,000 +is, roughly speaking, the interest on English capital invested in +foreign countries paid in cash to the owners resident in England--it is +equivalent to an annual tribute. + +Professor Henry Fawcett's _Lectures on Free Trade_ is a sound and +admirable book: it is occupied a good deal with the practical question +why so few foreign nations have adopted Free Trade, and how such foreign +nations are to be converted to the orthodox creed of Adam Smith. But, as +I think, unfortunately Professor Fawcett has in that book used the words +Reciprocity and Retaliation pretty freely. Their mere use is enough to +fortify a French or American Protectionist in his present policy; he +naturally says, "The English Free-traders themselves admit that we are +making money out of them: we take their gold for our wine and wheat; we +refuse to give our gold for their cutlery and broadcloth: those English +have now to come to us whining for Reciprocity; as to their Retaliation +we are not alarmed--we know they _must_ have wheat and _will_ have +wine." I would wish to expunge the words Reciprocity and Retaliation +from the subject, as being words merely suggestive of false views. But +the most fatal course to the adoption of a Free Trade policy by foreign +nations has been our plan of humbling, begging (and indirectly giving a +consideration for) Commercial Treaties. Such a course is enough to (and +does) counterbalance with foreign nations all our theoretical writings +about Free Trade. We go to France and say, "We will let in your wines at +a lower duty provided you do us the favour and give us the advantage of +lowering your duties on English manufactures." I cannot conceive any way +of putting the matter more strongly calculated to convince the French +that we believe we lose by purchasing their wines and gain by selling +them our manufactures. + +It appears to me that if we wish to convince Europe and America of the +truth of Free Trade (as understood by our political economists), our +proper course is to adopt Free Trade ourselves FULLY (if the principle +is good for wheat it is good for tea--I shall return to this), and then +to say to foreigners, "See how we prosper under Free Trade." If the +Americans continue to maintain Protectionist duties on our manufactures, +our line of conduct is not to offer to pay them indirectly to relax +those duties, but to say, "You are losing more by your duties than we +are; the proof of the pudding is in the eating." If I believe, as I do, +that the Americans are gaining less wealth under Protection than they +would under Free Trade, I cannot imagine any plan less likely to convert +them to my views than my going to them and saying, "We will give you +£5,000,000 sterling (or some valued political advantage) if you +will alter your mistaken policy." If this course did not confirm the +Americans in the very deepest suspicions that Protection is really +advantageous to them, and that we in our inmost heart think so too, my +ideas of human nature are altogether at fault. But every foreign debate, +whether in France, Germany, or America, on Free Trade, convinces me +that I am not mistaken in the effect which I attribute to our prayers to +every foreign nation to grant us a Commercial Treaty. + + + + +3. UNIVERSAL FREE TRADE. + +Wheat is now admitted to England free of duty. Tea pays a duty of about +£4,000,000 sterling a year. This is called a duty for revenue, not for +protection. Tea is an article of universal consumption; the tax on it is +open to the objections against a poll tax or hearth tax, viz. that by it +many a poor old woman is taxed as heavily as far richer people; indeed, +owing to the poor consuming the lower-priced teas, they are by the +present duty taxed at a higher rate than those who can afford the more +expensive teas. + +The reply in defence of these anomalies is, "We have to raise £4,000,000 +sterling by a duty on something; on whatever we put it, it will no doubt +be bad." Granting, however, this for a moment, the onus lies on the +defender of the existing tariff to prove that it is better to raise +the £4,000,000 required from tea than from wheat, or than to raise +£2,000,000 from tea, £2,000,000 from wheat. Mr. Raban, a leading +tea-planter in Assam, has observed that if the duty on tea was replaced +by one on wheat to raise the same gross amount, the pressure on the +English poor would be less; while an encouragement would thus be given +both to tea-planting in India and to agriculture in England. I adduce +this case of the duty on tea merely to bring out strongly the fact that +Free Trade in wheat is not universal Free Trade. I do not recommend that +the duty on tea should be replaced by other duties: I am going to raise +the question whether it should not be replaced by direct taxation. + +In the case of tea, the duty can hardly be said to be "protective," +except so far as by raising the cost of tea it impels English drinkers +to have more free recourse than they otherwise would to other drinks; +but in a large number of cases a duty operates both as a revenue and +as a protective duty. It is a curious fact that the fanners, after +unanimously struggling FOR the duty on wheat because it was a protective +duty, subsequently unanimously struggled for thirty years AGAINST the +malt tax (involving a duty on barley) because it was a revenue duty. As +soon, however, as the malt duty was repealed, they discovered that it +had been a protective duty; barley fell in price (malting samples) about +l2s. a quarter, and has never recovered, nor does any farmer now suppose +it ever will. This is rather a complex case, because on the abolition +of the malt tax an equal tax (in gross amount) was put on beer; and it +might be supposed at first sight that this would not affect the price +of barley. It has in several ways: Firstly, Many brewers now brew common +beer with one-third malt, two-thirds molasses, cane sugar, etc. The tax +being on the beer, Government no longer cares whether it is brewed from +malt or from rubbish, and the consumers grow soon accustomed to the +lowered taste of malt in their beer; Secondly, The admission of foreign +malt and barley without duty has quickened the importation by removing +those restraints and interferences which hamper trade out of all +proportion to their expressed amounts in pounds, shillings, and pence. + +In order to establish a Universal Free Trade and to make every port in +England a free port, it would be necessary to raise by direct taxation +about £40,000,000 annually, because the excise on beer, etc., would +have to be abandoned with the Customs duties. We will consider the +possibility of raising this £40,000,000 by direct taxation before we +dilate on the advantages which would follow Universal Free Trade. + +Ricardo, at the end of his masterly consideration of the effect of +taxation variously levied, comes to the general conclusion that the +best tax is that which is least in amount. Adam Smith and the older +economists held that one test which a well-devised tax had to satisfy +was that it should take the money from the taxpayer insensibly, +indirectly. Now, all taxes that thus insensibly drain the taxpayers +invariably take more in gross from them than reaches the Government. To +raise £40,000,000 by customs and excise costs about £3,000,000; so +that the people have to pay £43,000,000, while the Government gets +£40,000,000. In direct taxes, as income taxes, property rates, the cost +of collection is very small--about two-pence in the pound. In public +as in private business it is much more economic to look payments in the +face and make them with our eyes open than to let the money slip away +in driblets. Moreover, modern politicians think, in opposition to Adam +Smith, that it has a good moral effect on the body politic to be made +to feel exactly what taxes they pay, so that they cannot help knowing +whenever taxation is increased. + +A serious objection to indirect taxation is that it always falls with +unfair weight on the poor, as in the case of tea duties stated above. +It may be urged that the existing duties are (except tea) nearly all on +luxuries, as beer, spirits, tobacco. But the English have drunk beer for +many hundred years; the taste for beer is largely fixed by inheritance; +beer as supplying sustenance in a form that _rapidly_ assists exhausted +nature is, to very many at least, as much a necessary of life as tea is. +Whether we believe tobacco to be injurious or not, we have no right to +impose on an article so very largely consumed a duty which amounts to +taxing the poor out of proportion to the rich. + +If all the indirect taxes are removed, the poor (at least down to those +earning £1 a week and upwards) must be made to contribute to direct +taxes. It may be urged against Universal Free Trade that the poor are +so ignorant that they would sooner pay sixteen-pence a week in taxes +indirectly than eightpence directly. This might prove a fatal objection +to carrying out Universal Free Trade at the first attempt; but one of +the objects to be gained by direct taxation is the education of the +people. It may also be urged that the whole political power being now in +the hands of the masses, they are so selfish and unjust that if taxation +is made a plain matter they will put all taxation on the rich and +refuse to pay anything themselves. The reply to this is, If this is your +estimate of the understanding and morality of the masses, you should not +have put the whole political power in their hands. + +We are only attempting at present to show that the £40,000,000 sterling +(to replace duties and those parts of the excise which hang on duties) +_could_ be raised by direct taxation: we are not attempting to show +the best way it could be raised by direct taxation; it will be seen +hereafter that a portion of it might perhaps be better raised by a +National Property Rate. + +The £40,000,000 would be raised by an income tax of sixteen-pence in the +pound--(I am underestimating safely--about a shilling in the pound would +raise it really),--carried down to £156 a year without any reductions; +while incomes of £1 a week paid eightpence weekly, and incomes of £2 a +week paid twelvepence weekly. In the Crimean War the nation endured an +income tax of sixteen-pence in the pound; it is certain that the nation +is richer now, and better able to bear such a rate. + +But this is not the strength of the argument. In the Crimean War England +endured sixteen-pence in the pound _extra_, in addition to all existing +taxes (some of which were raised too), and the capital thus taken from +the people was destroyed (much of it) or dissipated in the Crimea. But +the sixteen-pence in the pound here suggested would be in lieu of an +equal amount of taxes taken off (it would be rather less in amount than +the taxes taken off): the nation therefore, would not feel it at all, +though individuals would feel it in different ways. A poor man would +have eightpence a week deducted from his wages, but he would get his +beer at three-fifths the present price, his tea at two-thirds the +present price, etc. He would soon feel that he gained by the change. The +rich would find that they lost; but that loss would, I believe, be made +up to them over and over again. + +First, I believe it is impossible to realise the effect on our trade of +having London, Liverpool, etc., free ports. We possess at present half +the ocean trade of the world: with our ports free, we should get a yet +larger share of the world's trade, and secure it permanently. That is to +say, we should certainly keep it until other nations adopted Universal +Free Trade. + +Secondly, The fall in the price of tea, beer, etc., would be more than +the amount of the tax remitted: the freedom of universal manufacture +without any Government interference, the liberty to land tea without +delay, and put it into the market without having to advance the duty, +would cause at once a great activity in the trades, and at the same time +a fall in price. By diminishing the need for middle-men the quality of +the beer, tea, etc., would be raised, and adulteration diminished. + +Thirdly, The fall in the price of tea and beer would bring down +the price of all competing drinks: it would at first diminish the +consumption of competing drinks. The cheapening the price of some of +the prime necessaries of life would be to some extent divided between +capital and labour. As in the case of wheat, the labourer would be made +better off, while the profits of capital would be raised. A general and +permanent improvement in all trades would result, except possibly in +those of the tea-dealer and brewer--but I do not think they would lose. +I see no end to the developments from Universal Free Trade: we can only +gain some idea of what they would be by tracing as far as we may what +the results of Free Trade in one article--wheat--have been; and in doing +this we must recollect that before 1846 the quantity of wheat imported +was trifling compared with the present importation. + +To this scheme of direct taxation Edward Wilson objects, "Taxation +should fall on expenditure, not on income." It is true that our object +must always be to encourage accumulation, and discourage destruction +of capital (expenditure). Practically, it does not appear that a heavy +income tax diminishes the taste for accumulation in England: it does +increase the tendency of large capitalists to invest their capital out +of England, so as to avoid the State charges on capital in England. +But the capital in England and the quantity of English capital invested +abroad are already so enormous that the "tendency" of an increased +income tax may be disregarded. Lastly, it may be objected, Would the +sixteen-pence income tax levied as you propose (or nearly so) raise +£40,000,000? At the time of the Crimean War each penny in the pound +income tax brought in a million sterling. At the present time, each +penny in the pound income tax brings in nearer two millions sterling, +but the productiveness of the tax is much interfered with by the large +remissions now allowed, and subtractions which take effect just where +the contributors to the tax are most numerous, say from £100 to £300 +a year. I therefore reckon that, without remissions, the tax of +sixteen-pence in the pound down to £156 a year would produce about +£30,000,000, and that the tax down to £52 a year would about produce +the rest. The _total_ income that income tax is now levied on is nearly +£600,000,000. We need not be surprised at the productiveness of the +income tax. A man of £10,000 a year pays tax on that. But he has a +steward on £300 a year, he is worth to his firm of lawyers £100 a year, +and so on: these pay income tax on the £300 and the £100 over again. +When the income tax is carried down to incomes on £1 a week, the +tax will be levied on the same income over and over again. Even a +spendthrift with £10,000 a year usually scatters more than he actually +destroys. + +Lastly, It has not been overlooked that there is an income tax now: and +if the whole proceeds of the sixteen-pence income tax were used to +fill up the deficiency in customs and excise, then we have to make up a +deficiency equal to the present proceeds of the income tax. This +might be done (to start with) by the National Property Rate now to be +suggested. But the expectation is, that with Universal Free Trade, and +the tremendous stimulus thereby given to commerce and manufacture, the +National Income would rise with a bound, and that in two or three years +a much lower rate than sixteen-pence income tax in the pound would +supply the amount of all the indirect taxes abandoned. + + + + +4. THE RANSOM OF THE LAND. + +Many people see quite clearly that, the population of England being +25,000,000, the next baby born has a right to one twenty-fifth-millionth +part of the area of England in soil of average fertility. The +arrangements of society by which the laud is partitioned among a limited +class, and the complicated rights sanctioned by law in one plot of +land, are considered of no validity as against the natural right of the +new-born baby. I do not see this theory to be self-evident: on the other +hand the supporters of it always give it as fundamental, axiomatic; they +no doubt presume rightly that the land is limited, and that if one man +holds more than his arithmetical share, he must push out somebody +else from his arithmetical share: while a man who keeps a hundred +pocket-knives does not perceptibly hinder other people having numerous +pocket-knives. Still I do not see how this consideration weighs against +Lord Derby's title to his lands, if the body politic has determined that +on the whole it is best for the community that land should not be held +equally by all, and sanctions by law Lord Derby's monopoly of a large +area. On the theory of the natural right of every infant born to its +arithmetical share, the monopolisers of land are liable to a perpetually +recurring ransom: this can only practically be carried out by a special +National Rate on Real Property (_i.e._ Land, with the houses, mines, +etc., inseparably attached to it), which must be in addition to such +taxes as income tax, succession duty, etc., which land already suffers +equally with trades, professions, offices, and personalty. The local +rates in England exceed £25,000,000 annually; and the ratepayers perhaps +reckon this a large enough ransom. I should remark in passing that one +man with 1000 acres of land does not dispossess any more babies of their +rights than do ten men with 100 acres each. The ransom therefore must +be a strictly level rate: to put a higher rate on large holders, or to +despoil large holders of a portion of their landed property, will be to +work the ransom unfairly. It hence will follow that any heavy ransom is +now impracticable. Of late years some farms have gone out of cultivation +because they will not pay the tithe, land tax, and rates already on +them: to put any heavy ransom on the land would at once throw large +areas in England out of cultivation. + +The question of the ransom, therefore, is not so all-important as has +been considered; the rates at present being £25,000,000, it might be +possible to levy an additional national rate of £5,000,000 to keep down +the perpetually upspringing rights of new-born infants, without throwing +land out of cultivation to any sensible extent. The whole question +will lie thus between a total rate of £25,000,000 and £30,000,000. I +am about, however, as a corollary to this subject, to suggest a way of +forming a National Rate Book which probably would not materially alter +the present rating, but which would alter entirely the taking of land +for public purposes, and would effectuate all that is good in the phrase +the Nationalisation of Land. + +This phrase is liberally used but rarely defined. Different orators +appear to have quite different ideas as to what it means; and when they +explain what they suppose it to mean, they generally prove that, in the +way they understand it, it would be serious national damage. + +It is unnecessary to observe that landlords now (omitting individual +exceptions and idiosyncrasies) expend their best endeavours in getting +the best rent they can for their land. They have no prejudices in favour +of farms of a particular size; a landlord of a farm of 1000 acres would +let it directly in five-acre plots if he could get a better (and equally +certain) gross rent by so doing. "Nationalisation" is often taken to +mean that Government is to buy land and let it out in small plots. But +apart from expense of Government management and objections to Government +interference, we may safely assume that there would be a national loss +by this procedure: the private owner would discover very quickly if he +could make a profit by letting his farms piecemeal. + +All Government interference can do to improve the produce of the land is +to abolish all restrictive laws, and to make the general tenure of land +such that every piece of land shall fall into the hands of that man who +is able to make the most of it. The National Rate Book now suggested is +designed to accomplish this end. We will subsequently consider how +it might assist public companies. As the suggested way of getting a +National Rate Book is at first sight rather startling, I would premise +that it is no rash invention of mine; it worked admirably in Attica--as +see Demosthenes or Boeckh. + +To make the National Rate Book, each landowner values (with the +magistrate) his land at what price he pleases; the State has the right +to buy the land at any time at that price, plus 33-1/3 per cent for +compulsory purchase. The magistrate sees that each separate house, farm, +and plot is valued separately. No person need prove his title; any man +can value any piece of land, and need not prove himself to be owner, +tenant, or agent; but any piece of land valued by no one would be +claimed as public property. + +A man who valued himself unfairly low would not be bought out at once +and dispossessed by Government, unless it happened that during that year +his land was taken up by Government or by a railway company for some +public purpose. The regular course of business would be as follows:--An +owner A would put his house and curtilage in the Rate Book at £1200. The +sycophant B would come to the magistrate, offer £1600 for the property, +and lodge the £1600 with the magistrate. The magistrate then, without +divulging the name of the sycophant, would write to A either to rate his +house at £1600 (paying a fine for so doing), or to take £1600 for it. +If he took the £1600, B would get the property, and Government the +increased rate. If A preferred raising his rateable value to £1600, B +would get the fine, Government would get the increased rate. + +_The utmost pressure put upon any owner under this system would be that, +if he would not pay rates on x pounds for his property, he would lie +obliged to take x pounds for the property._ + +The 33-1/3 per cent for compulsory purchase is illusory, and I have only +put it in the statement of the scheme to meet an objection which I know +to be common (and equally illusory). It is clear that if I know I am +going to get 33-1/3 per cent for compulsory purchase, whether from +Government or a secret sycophant, I shall proportionately undervalue my +property. Thus if I estimate the real value of my house and curtilage at +£1200, and feel that I do not care if I sell at that price, I shall put +it down in the Rate Book at £900. This applies to all owners, so that +the allowance for compulsory sale would only artificially depreciate by +one-fourth all the rateable values put down in the magistrate's book. + +I have not stopped to cumber the statement of this simple plan by adding +the details necessary to meet severance of a farm by a railway company, +etc. The provisions to meet complicated tenures, etc., would run much +the same as in the Lands Clauses Consolidation Act. + +It will be at once seen that this form of Rate Book would really +nationalise the land by bringing each piece into the hands of him who +could make most out of it. If I saw my way to use a piece of laud so +that it should be worth £1000 to me, and if on looking into the Rate +Book I saw that the present owner only considered it worth £600 to him, +I should at once lodge my £900 with the magistrate. A few owners would +really feel as Naboth. They could indulge this feeling by putting a very +high rateable value on their property. The high rates they would thus +have to pay would be the due ransom of the land; but in general every +piece of land would pass into the hands of him who could make most of +it. There would spring up, as in Attica, a large class of professional +sycophants. By their incessant operations, properties small and great +would be continually passing from the slothful and the old-fashioned +to the enterprising and modern-educated. No nationalisation of the land +could get so much out of it or conduce so highly to progress as the +National Rate Book. We should have companies and adventurers buying up +all sorts of pieces of land, just as formerly they speculated in taking +up land for mining in Cornwall. We should see an extraordinary activity +in the employment of capital in England. + +For all public improvements, as a new street or a Government military +station, a few minutes with the map and Rate Book would show the +Government officer or engineer the best route or plot to take, and would +also show him the exact cost of the land for the scheme. There would be +no law expenses, no prolonged fights, no juries, no arbitrations. + +Wastes, downs, heaths, bogs, would be rated very low. It would be in the +power of Government to take up largely and at small cost large areas +of Surrey heaths, etc., to provide air and recreation ground for +an evergrowing metropolis. In this manner, too, public commons and +quasi-public commons might be secured to the public all over England: a +public-spirited town-council or a local Kyrle Society would have a wide +field and an immense stimulus for action. + +I have not stopped to rebut the common (but mistaken) idea that burdens +on the land (being in gross not more than the rackrent) affect the +cultivation. Partners have long drunk at market dinners "Confusion to +the black slug that devours the English farmer." How is it that these +farmers did not (do not) see that there are tithe-free farms (and some +tithe-free parishes) in England, and that the tenants of such farms get +no advantage by being tithe-free? + +As I explain elsewhere, a tenant with several years of his lease to +run is (economically considered) a part landowner: if the tithe were +suddenly abolished, tenants with leases would get relief as well as +their landlords. So if a new tax or rate is laid on land (and made +payable by the tenant), all tenants with leases will have to pay such +tax or rate out of their own pocket so long as their lease lasts; +afterwards it will fall wholly on the landlords. + +It is repeated now, in nearly every country newspaper, that the English +farmer cannot compete with the American grower because of the burdens on +the land of England. I will not write out (I cannot improve) Ricardo's +proof that rent does not enter into price. The "burdens" on land are +really first charges on the rackrent and do not affect a year-to-year +tenant at all. When a farmer meditates taking a farm he asks not merely +what is the rent: he inquires what is the tithe, what the average amount +of the rates (and is that likely to increase or diminish during the next +seven years); the intending tenant only wants to know what sum in all +he will have to pay for the farm; whether any of this payment is called +tithe or not, or whether some of it is quit-rent, or whether he is to +pay the land tax for his landlord's convenience,--about all this he +cares nothing; they are mere questions of names to him. + + + + +5. MAKING THE MOST OF OUR LAND. + +John S. Mill, following W. T. Thornton, advocated a system of petty +proprietors against the English system of large farms with hired +labourers. Figures were quoted to show the splendid produce got by petty +proprietors in France and elsewhere--as the result, however, of infinite +toil. The petty proprietors were, moreover, shown to be much better +off than our hired labourers; and the magic of property combined with +independence was represented as having produced a superior class. +These things may have been so, at least in some cases and particular +countries, at the date (before 1846) when J. S. Mill originally put +forward these views. The liberal, and radical writers on political +economy and sociology still follow (most of them) on the same side, +which has become in a manner historically the liberal side. There is +much against it. + +First, Production on the large scale is cheaper than on the small; this +is as true of agriculture as of other industries. The large farmer +has one fixed and one movable steam-engine of his own; he has his own +drills, threshing and winnowing machines, reaping and mowing machines. +The petty proprietor may hire these, but at a dear rate, and few of them +can work to any advantage on his small patches of corn. The large farmer +has large fields; he saves area as against the petty proprietors; he has +fewer headlands and fences, harbouring weeds and stopping the sun and +air. The large farmer can work corn and sheep together; one shepherd and +his boy will look after 500 ewes. You may travel 200 miles by rail in +France and not see two flocks of sheep. Sheep-farming is seen all the +world over to be an industry that pays on the large scale; and the want +of it injures the corn produce of the French petty proprietor. Louis +Napoleon sent Lavergne to make a report on English farming; the +substance of his report is, that were France farmed on the English +system by English farmers, the corn produce would be four or five times +what it is now; leaving sheep out of the question. + +The advocates of peasant-proprietorship, at least the better informed +ones, do not now suppose that a peasant receiving a few acres out of a +large English average farm (and capital to make a start) could make +a subsistence out of it. They believe that peasant-proprietors could +maintain themselves on small plots of rich land in and close to towns, +working as market-gardeners or cowkeepers rather than as farmers. + +This narrows down the peasant-proprietor theory vastly in its practical +application; it remains hardly a national question. But I have been +astonished to see in the neighbourhood of London of late years the large +"gentleman" market-gardeners steadily displacing the smaller and all the +single-handed men. The subject is so important that I will take one of +two instances in detail. I have seen a gentleman market-gardener, eight +miles or so from Covent Garden, growing strawberries, several acres in +each patch. He had young men (a separate staff) out at daybreak to +keep the birds off. The small gardener, growing a few long beds of +strawberries, is ruined by the birds, whether he lets them eat or goes +into the expense and labour of netting. The gentleman has his own large +spring-vans waiting; these vans are fitted for fruit, and as the pickers +gather the strawberries they deliver them in small and frequent parcels +to the packers. The moment the first van is laden it starts at +three miles per hour and travels to Covent Garden itself, where the +strawberries are delivered to the fruit-dealer, who buys them wholesale +of the gentleman-gardener. The small grower has to get his strawberries +to the local railway station, and to arrange to get them from the London +terminus to market; his trouble and expense are considerable; but, more +important still, his strawberries do not come into the hands of the +wholesale dealer in the "condition" that the large grower's do. This +large grower admitted that he was paying £12 an acre per annum for some +of his land; he added, "My labour per acre, and even my manure per acre, +costs so much that I do not think about a few pounds rent more or less." +These gentleman-gardeners are on the average better educated than the +small market-gardeners; they travel about the country, gather hints, +and pick up new good varieties of strawberries, etc. From their scale of +operations and varied sorts of strawberries they can, even in rough +wet weather or in drought, always supply to their wholesale dealer +some fruit. In fine, they beat the small grower at every point; +they undersell him at Covent Garden; they outbid him for desirable +garden-land within reach of London. It may be said that in growing plain +vegetables the small gardener would not be at such a disadvantage. I +will reply (without detailing all my observations) that I have seen the +same gentleman-gardener growing a two-acre plot of early radishes, and +that he completely spoilt early radishes for all the small gardeners. + +The advocates of peasant-proprietors have thought cowkeeping hopeful +for small men. In my experience dairies of fifty or sixty cows have an +enormous advantage; they can have perfectly designed dairies; they have +enough cream to make butter daily throughout the year (which saves much +trouble, loss, and occasionally inferior butter); they can maintain +approximately a uniform supply. In short, they beat, undersell, and +displace the small cowkeepers wherever the large dairy is moderately +well managed. + +The cottager or peasant-proprietor has, I believe, an advantage in +poultry of all kinds. When poultry are kept in very large numbers +they are more liable to disease, and the diseases are more +disastrous--sweeping off the whole large stock. Fowl and egg farming is +one of the most successful, perhaps the most successful point with the +French peasant-proprietors. To make birdfarming successful the proper +plan is to keep a moderate number of as many birds as possible--fowls, +"galeenies," ducks, geese, turkeys, large pigeons--and to go in for +eggs as well as fowls. I have not seen peasant-proprietors in +England attempting this, which seems to me one of the most hopeful of +experiments for them. + +The second point urged by Mill, and still by some, is that +peasant-proprietors are better off than English labourers. With the +present price of agricultural labour in England this seems to be +very generally not the case; the French peasant-proprietors and the +agricultural lower classes in Germany are (with small exceptions) now +worse off than the English farm-labourer; they work very much harder +and they get less to eat. The economic truth doubtless is that the +hired labourer may or may not be better off than the peasant-proprietor, +according to circumstances; and circumstances in England just now are in +favour of the hired labourer. + +Then as to independence, it may fairly be questioned whether a good +agricultural workman, now practically liberated from the Law of +Settlement, and who can command a fair wage anywhere, is not really more +independent than a French peasant absolutely tied to a three-acre plot +for life. + +The real difference between the advocates of the nationalisation of +the land and the Conservatives is this. The Conservative says, "Leave +everything to its natural course, and let us have no Government +interference. If the peasant-proprietor really can maintain himself +while paying as high a rent as the ordinary farmer, we shall soon +have plenty of them." Or, the Conservative has no objection to +a philanthropist starting a few picked peasant-proprietors as an +experiment. But he objects to starting any gigantic new scheme of +working the land, except as a matter of business; he objects to +Government philanthropy, which means giving away other people's money. + +Our farm-labourers, as a rule, know nothing of gardening, and few of +them can command £10 capital. I have sometimes looked round to select a +picked man, and wondered whether, if I put him in a selected five-acre +plot near a town, and also lent him the £200 or so capital requisite to +give him a chance, this picked agricultural labourer would succeed; +and I have inclined to think he would not succeed. I need not therefore +express any opinion as to what would happen if Government were to take +10,000 or 100,000 farm-labourers, advance them £200 each, and place them +in five-acre or ten-acre plots: there would be a tremendous bill to pay, +and the plan of peasant-proprietors would be put aside for many a day. +If the plan is to be successful it must be introduced gradually and in a +business manner, _i.e._ what does not pay must not be persisted in. + +The plan, now frequently put forward, that Government is to employ all +men out of work to reclaim and bring into cultivation waste lands, is +liable to additional objections. Who is to fix the wages, the hours of +labour, and the tale of work for the Government labourers? If these were +fixed as the advocates of the plan wish them fixed, Government would +soon have all the labourers of the country in its employ. If, on the +other hand, these were fixed below the market rate, Government would +only have such labour as the Poor-Law Unions now have, and which they +find hardly worth employing. + +Leaving this (practically grave) difficulty aside, if a heath or a moor +is now uncultivated it is because nobody sees how it can be profitably +brought into cultivation; it can always at a sufficient outlay be +reclaimed, but that will not be done unless it is calculated that the +rent of the land when reclaimed will pay the interest on the whole +expense of reclamation, and something besides. If Government reclaims +land that private persons cannot reclaim with profit, we may be sure +that Government will suffer a considerable loss. This must be provided +out of taxes: are the promoters of reclamation of wastes by Government +prepared for this? + +The wastes of England are the only land left the public. Elsewhere the +public can only walk along a pavement or a high road. The good land is +all pretty well in cultivation; and the best of what is left can give +but a moderate profit on reclamation, while its enclosure, under Act +of Parliament, deprives the public of it for ever. Hence Professor H. +Fawcett, throughout his parliamentary career, put his veto with great +success on all enclosure schemes. It is possible that there might be +a profit on the enclosure of Epping Forest: who will now support that +reclamation? + +It is very desirable that wealthy private philanthropic individuals and +wealthy private philosophic societies, should try experiments in small +farming, market-gardening, co-operative farming, reclamation of wastes, +etc. There is no hindrance to their so doing: they can readily hire as +many farms as they please at cheap rents, and subdivide them, and put in +picked labourers with an advance of capital. But that Government should +embark in uncertain speculations of this kind is quite another thing. + +The safe general principle, whether in the sale of horses, the letting +of houses, or the letting of land, is that Government should not +interfere; or, to speak more correctly, Government interference should +only interfere to prevent restrictive covenants and to ensure Free +Trade, so that every article (land included) may pass without restraint +into the hands of the man to whom it is worth most. The greater the +individual profit the greater the national profit. Under a section +headed "Law," below, I will say something about the removal of entail, +etc.--a dry but important branch of the question. The National Property +Rate, with the aid of sycophants, would remove many obstructions. + +There has been much controversy and several Parliamentary Acts +concerning the regulation of bargains between landlord and tenant. How +a tenant or a landlord can be injured in such a bargain is impossible +to understand, except in so far as a man is injured who gives £30 for +a horse worth only £20. Will Parliament interfere to protect such +horse-purchasers? The matter has been obscured by omitting to notice +that a tenant with a long lease at a fixed rent possesses a share +(often the larger share) of the "landlord interest," in the language of +political economy. As a simple example: A tenant took, say in 1850, +a Scotch farm on a Scotch lease absolute of nineteen years, at £500 a +year. Within two or three years of his so taking it the rise in wool, +potatoes, and other things, caused the value of the farm to rise to £600 +a year, and this increased value lasted the whole of his lease and +some time after. Now, treating the increase of value of £100 a year as +permanent (as it was very soon regarded both by landlord and tenant), +it is clear that this £100 a year for the period of the lease (say +seventeen years to run) went to the tenant, not to the landlord; and the +first seventeen years of an annuity in fee is worth more than all the +rest. + +It is evident that on a seven years' (absolute) lease the tenant would +similarly get a good share (not the larger share) in all the improvement +in value that occurred during his lease. Up to ten or twelve years ago +the value of land had been rising very steadily in the South of England +for near half a century. Rents were pushed up very generally at the +termination of every lease, though noblemen, great county gentlemen, the +Church, and the Universities, as a rule, never raised the rent on an old +tenant; but they could raise the rent all the more by a jump when a new +man came in. During all these years the tenant-farmers complained rarely +of their leases, though they were often subject to covenant nuisances +about cropping, selling off the farm, game, and incoming for the new +tenant. + +But during the last ten years the process is reversed. A farmer took a +farm for £500 a year for seven years in the south of England, and before +the lease had run half out the farm was not worth £400 (and in many +cases not £300). Here the tenant suffered a heavy loss. When in former +years he got a gain he never proposed to allow his landlord 15 per +cent extra rent. But now that the drop in value of such farms has taken +place, and probably will not proceed further, a tenant who takes a +new lease requires no Act of Parliament to protect him: he can protect +himself. By the date the Abolition of the Game Laws (a wrong but +intelligible phrase) was carried, the farmers in the South of England +were in a position not to take any benefit under that Act, but to +covenant for all the game and sporting on their farms for themselves. So +as to the Act regulating the leases between tenant and landlord, where +they chose to avail themselves of it, the tenant now can generally get +more favourable terms outside the provisions of the Act. Farms are so +down, tenants so scarce, that landlords have to give way on all minor +points. Wherever Government interference operates at all, it is almost +sure to operate harmfully. Consider for a moment the case of "incoming." +Formerly, by the "custom of the country" south of London, the incoming +tenant paid for two years' dressing for the corn crops, north of London +he paid the outgoing tenant only for one year's dressing, by the custom +of the country too. The question practically only amounted to increasing +by 5 per cent the capital necessary to take the farm south of London. +Now what can be gained by Government interference in such a matter as +this, in which each farmer and land-agent was in general in favour of +the "custom" he had grown up under? + +A prevalent idea is that the land is not highly farmed enough, and +that the land of England might be made to yield much more, and that +Government is to cause this to be done. It is most unfortunate to raise +this theory at the moment when land is "down," i.e. when produce is +cheap, labour expensive. Every farmer knows that the only way to meet +these conditions is to farm "lower." In a south country farm the farmer +will sow much less corn, and try to keep more sheep. In the Western +States of America, where produce is very cheap, labour very dear, the +"lowness" of the farming is always abused by the English traveller +(who thus shows that he knows nothing about either farming or political +economy). A farmer, twenty-five years ago, took a very large and fine +corn farm: it had been worked on the five-course system, i.e. three +white crops in five years; the farmer made a careful calculation whether +a four-course husbandry, i.e. two white crops in four years, would not +be more profitable; it appeared to come to exactly the same thing. At +this juncture a rise of a shilling a week in wages took place; this gave +a clear advantage to the four-course, and the farm was at once worked +round to the four course shift. In this simple case a small rise in +wages brought about a considerable diminution in gross produce, while +the loss to the farmer was small. The remarks in this section have been +directed to the case, common in the South of England, where there has +been within the last twelve years a fall of rent from 25 to 50 per cent. +In pasture farms, in rich land, and in potato farms (wherein you can +keep one-sixth the land in potatoes), the fall in rent has been much +less--sometimes inappreciable. + +But, some person may urge, if Government interferes, and compels the +farmer to farm higher than he wishes to himself, the gross produce +will be more, and the employment for labourers will be at the same time +better. True, and this is the quintessence of Protection. The whole +point of Free Trade is to allow capital to be employed where it is most +profitable: high farming is only to be preferred (both for individual +and nation) to low when it is the more profitable. Capital that cannot +be employed to ordinary trade profit on the land must be transferred to +other industries where it will earn the ordinary rate of trade profit; +or, if there is no trade yielding such profit ready to absorb it in +England, the capital must go to the United States or New Zealand and +earn an increased profit. As to the labourers, they must follow the +capital; or they may starve in England leaving few progeny, while the +well-fed labourers of the Western States of America and New Zealand +leave large families: this will do instead of emigration. + +It is to be noted that great improvements in farming, especially in +machinery, have been effected in the last thirty years, largely by the +operation of the All England and County Agricultural Societies. I +note further that the people who abuse the farmers for bad farming +and clamour for Government interference to promote high farming, +conspicuously refrain from supporting these agricultural societies. + + + + +6. FREE TRADE IN RAILWAYS. + +Government might monopolise the retailing of tea in England. At present, +in a country town like Exeter or Canterbury, there may be fifty +grocers selling tea. In their competition they lay out a good deal in +advertisement and handsome shop fronts in the most expensive streets; +they keep (the fifty between them) many more hands than are necessary +to retail the tea. All this outlay has to come out of the consumer. +Government would buy pure tea first-hand in large quantities cheap; a +few trustworthy highly-paid officials would test it, value it, and see +it done up in sealed packages of sizes from 16 lbs. down to 2 oz.: these +might be sold in an odd room attached to the Post Office in each town +and village. There can be little doubt but that a saving in capital +and labour would thus be effected, while the public would get the tea +cheaper and purer than at present. The 2 oz. purchaser, in particular, +would pay a good deal less for 2 oz. of real tea than she pays now for 2 +oz. of rubbish. + +Or,--Government might hand over the tea-retailing of Canterbury and five +miles round to a company as a monopoly: the state of things would be +something like what we experience in the large stores now: the public +would get their tea probably cheaper (quality considered) than at +present; the company would make a large profit on their capital. If +Government sanctioned two tea-retailing companies at Canterbury, these +would probably make a less rate of profit: though, after the first heat +of fight was over, they would probably agree to sell the same tea at the +same (profitable) rates, and the consumers would gain little out of so +restricted a competition. If a new company were to apply for a private +Act to enable them to retail tea at Canterbury, the old company would +show Parliament that themselves sufficed to satisfy the requirements of +the public. + +The case of tea is a very specious one. By Government taking to itself +each branch of business in succession till all was in Government hands +we should arrive at Communism. For each successive interference of +Government a reason from economy can generally be found: as in the case +of telegraphs, so in the case of tea. The real objection to Government +monopolising the retail of tea is, that so long as we live under a +system of competition we had better stick to that plan altogether. At +every turn of our present struggling system there is waste; but the +ultimate effect of competition is to reduce the waste to a minimum. In +the extreme case of tea it is pretty clear that the system of stores +will, when fully developed, give the public all or nearly all they might +hope to get from Government retailing, and at the same time will reduce +the loss by competition among tea-retailers. + +But there is one industry, one branch of the public service, which +should be the very last to be monopolised or restricted by Government, +viz., the carrying of passengers and goods from one place to another, +especially carrying by railway; and yet this particular industry is +hampered by law and restricted by monopolies above all others--as I +suppose, most unnecessarily; but I will take a few cases in detail +before arguing from the general principle of Free Trade. + +There is one railway from London to Brighton: there are two railways +from London to Exeter. There are fewer quick trains daily from London to +Brighton than from London to Exeter. There are third-class carriages +at a penny a mile on all the quick trains from Waterloo to Exeter: from +London to Brighton the only penny a mile train starts at an inconvenient +hour and travels exceedingly slow. The Brighton charge express fares on +every convenient quick train they run; the South-Western have no express +fares at all. The South-Western third-class carriages are padded, and as +comfortable as the first; the Brighton third-class carriages are bare, +very long, and run so badly that the shaking, the rattling of glass, and +the draughts, keep everybody (who can possibly afford it) out of them. + +Naturally there have been numerous schemes for a second railway from +London to Brighton in the course of the last twenty-five years. The +present railway company has (they are not to blame for it) opposed each +scheme tooth and nail. They have shown that they themselves satisfy the +requirements of the public, and at the same time do not make a very high +dividend. If a new grocer required an Act of Parliament to set up as +a tea-retailer in Canterbury, could not all the existing tea-retailers +there prove most triumphantly that an additional grocer was not wanted, +and that their own profits were reasonable? It is not too much to +say that the greater part of the evidence admitted by Parliamentary +Committees against proposed new railways is foolery: without wasting +time on it, the Parliamentary Committee might assume as proved that no +monopolist trader wants a competitor. But the only safety for the public +is in competition. In railway competition the public always profit: if +the two companies agree to run at the same fares, the public gain +in number and speed of trains, better carriages, and attentive +consideration of their comfort. Moreover, in the case of two railways +between London and Exeter, or between London and Brighton, the two +lines only meet (not then quite) at the two termini; and the public is +accommodated at all the new intermediate stations where there was no +station at all before. + +The North-Western Railway was many years ago opposing a directly +competing scheme. They brought before the Parliamentary Committee the +late Mr. Horne, whom they justly credited with ability enough to throw +dust in the eyes of almost any Parliamentary five. Mr Home's evidence +was: "I understand railway traffic as well as anybody; the public are +deluded in thinking they would gain by competition: the two companies +might fight for a week or two, then they would more wisely agree, and +put up their fares above the present North-Western fares, till they had +recouped themselves out of the public all they had lost by their fight." +This did very well for the Parliamentary Committee; but it is a fallacy. +At present the North-Western Railway, though empowered by law to +charge three-pence a mile first-class, charge twopence a mile only: +why?--because twopence a mile they find to be on the whole the most +paying rate. Ergo, after the fight with their directly competing brother +was over, they would settle down to twopence a mile again. The public +could not lose by the competition; they might gain. All experience shows +that they invariably do gain. + +In France, Government has restricted the construction of railways very +greatly, and protected the monopoly of each existing company closely. +The mileage of railway open in France, in proportion to area and +population, is very small in comparison with that in England. Moreover, +the French lines are worked by quasi-Government officials, whose object +is to avoid work, and still more to avoid responsibility, and who will +not make the slightest effort to accommodate the public: they do not +wish the trade at their station increased. Under this system the traffic +on the French railways is low; especially when we consider how little +each is interfered with by other lines, and what a broad band of country +it has to drain. + +The immense progress made by England since 1846, as compared with the +progress of France or of Germany, is often attributed _solely_ to Free +Trade. I believe Free Trade has done much for us: but I am sure that +our railway superiority (to France, Germany, etc.) has done much also. +Probably no one who has not _resided_ some time in a French town (say a +station on a main railway 150 miles from Paris as the least favourable +case for my argument) can realise the enormous disadvantage by loss +of time that a French business man is under, as compared with the +Englishman. To get some necessary manufactured article from Paris is +a matter of days; during which his machinery may all stand still. The +communication with Paris, however, is where the Frenchman suffers least: +the number of trains is so small, and the slowness of all (but the +express) is such that the "local" traffic is nothing: unless a man +intends to go a good many miles he would ride or even walk rather than +go by train. He does not mind getting up at 2 a.m. to go to Paris; but +he will not get up at that hour to go six or eight miles, especially if +he is given no choice as to the hour at which he must return. + +But the usual remark about the French railways is, "See how much better +they manage these things in France. While our railway companies are all +spending their money in fighting and in competition, and pay dividends +of 4 or 5 per cent, the French railways have their routes settled by +Government engineers, and pay 8 or 10 per cent." I am going to propose +a plan for stopping all company fighting in England for ever: but--as to +the dividend--it can only mean that, like any other Government monopoly, +the French public are being made to pay more for travelling than they +need. + +As regards the interest of the public, the rate of dividend paid by a +great railway company is of very small importance. For many years the +South-Western Company paid double the dividend the Great Western did. +How did this affect the work each did for the public--the conveyance of +passengers and goods? Many common highways have been made by parishes +and landowners combined for the public convenience; the capital so laid +out paid no direct interest (the road was a highway, not a turnpike): +how does this case differ from a railway that pays no dividend on the +original stock? If the railway carried me from Exeter to London in five +hours for thirteen shillings, what does it matter to me whether +the company pays 2-1/2 per cent or 6-1/2 per cent to its original +shareholders? In a very few small and special cases we have seen a +railway line not pay for the working, and be closed. In a few other +cases, where the dividend paid is less than 4-1/2 per cent, it is +possible that the utility of the line to the public is less than the +loss of the shareholders in a non-paying investment. I say this is a +possible and conceivable case--in some very short lines or in some very +thinly inhabited districts. Such cases I believe rare. Not rarely the +initial cost of the line has been seriously increased by promotion, +legal and parliamentary expenses, enormous sums extorted for land, +severance, etc.; if these expenses can be done away with, these cases of +railways constructed at a loss _on the whole_ to the nation may be made +fewer still. + +The way in which the railway monopoly, the monopoly of the great +companies, has grown up is noteworthy. To enable a company to take +the land of a private man compulsorily a private Act of Parliament was +necessary. The Parliamentary Committees then said, We will not enable +you to dispossess forcibly private owners of their land for "a public +purpose" unless you further shew that this includes a public advantage. +Private owners were of course let in to show cause against a new +railway; they always talked like Naboth (the Parliamentary Committees +must have been wearied by the continual references to Naboth), but the +genuine private owners sold themselves at the last minute; after they +had pushed the company up to the highest bid, they well knew that this +was above what they could get in the after arbitration, and "closed," +withdrawing their opposition the last day in the Committee room. The +opposition company, besides the grounds of insufficient need for a new +line, etc., always supports and comforts the opposing landowners: but +the great resource of the opposing company is to hire a landowner to +oppose, especially a local attorney or agent who owns land proposed to +be taken by the new line. Such an attorney, employed professionally by +the opposing company, cannot be bought off at any price; he is a real +Naboth, and in his character of a dispossessed landowner he will +fight for the company every point that they cannot decently fight for +themselves. + +Opposing a railway bill in Parliament has thus become an art; so much +so, that no independent small line can be made unless they can get the +support of one (at least) of the great companies that are supposed +to occupy the area. The lines made (economically often) by the great +companies themselves are not primarily designed for the accommodation of +the public, but for the private purposes of the great company; sometimes +they are made merely to diddle another great company. + +It is well to compare the law regarding making a new railway with that +for making a new main-drain in the fens. In the latter case the new +drain company receives extraordinary powers and may put a rate on the +land benefited. In the case of a railway passing through a farm, the +common estimate is that it adds a shilling an acre value to the rent of +the farm; if there is a station on the farm it often adds much more +to the agricultural value. Landlords are up to this: a landlord +triumphantly told me, "I got £7000 from that company for cutting me up; +but I would have given them £14,000 to cut me up more." (In this case, +however, building value came in.) But the disgraceful squabbling of +companies, who "sell" any owner without scruple when they come to terms +among themselves, has disgusted landlords from actively supporting +railway schemes. + +A great deal of the opposition between rival companies has been from +their point of view an error, as they have subsequently discovered for +themselves. When the Great Western Company first opened their station +at Basingstoke there was war between them and the South-Western, who +thought all their London West-End passengers would transfer themselves +to the Great Western at Basingstoke in order to avoid a cab drive from +Waterloo to Paddington. Some passengers do so transfer themselves. But +_via_ Basingstoke a fine trade sprang up between the south of England +and the Oxford and Leamington route, which far more than compensated +the South-Western Company for the London passengers they lost at +Basingstoke. So in a very few years there was peace at Basingstoke, and +a through-carriage daily from Birkenhead to Southampton. I think it +is impossible to estimate how much one railway company profits by the +facilities afforded by all the surrounding companies. The loss at a +limited number of competing termini is seen; the gain in the local and +cross-country traffic is not. + +I propose Free Trade in Railways. I mean that any person or company +shall be free to make a railway wherever they please. They will have, +before commencing the line, to lodge with the Board of Trade the cost of +the land they take as valued in the National Rate Book, with the 30 +per cent for compulsory purchase. They will not have to lodge the money +where they have come to terms with the owner; and the Board of Trade +will allow them to construct the line in reasonable sections. Having +lodged their money, the company (or private speculator) will only have +to go to work under the (amended) Lands Clauses Consolidation Act. + +If this scheme were sanctioned we should have in the course of the +next twenty years, _as I estimate_, £100,000,000 additional invested in +England profitably--not under Government pressure, but by business men +to get interest. Even where the new lines paid little interest we should +get the accommodation of the public. We should have no big village +without its railway; and we should have a great extension of private +sidings. On the eastern half of England we might get a great number of +narrow gauge steam trams running along the present trunk roads. (Suppose +a steam tram from London to York by the Royston route, going through +all the towns, running trams an hour apart all day, going eight miles an +hour through the towns, sixteen or twenty miles an hour in the country, +taking up and setting down everywhere, would it not pay?) + +The only objection to Free Trade in railways is that it would injure the +existing railway monopoly. Under this principle no monopoly ever would +have been or ever will be put down. But I believe the existing great +companies would very generally gain by Free Trade in railways. + +For, first, few new railways would be in direct competition with the +old. The old lines have level roads; they can run quicker and with less +wear and tear than the new ones, which would generally have steeper +gradients. The new Free Trade lines would be in the main a network in +the interstices of the present lines. By this the existing companies +would gain enormously; they would be the trunk lines which the network +would feed. It is true that there would soon be a second line to +Brighton; the present Brighton Company would possibly pay as good a +dividend then as they do now. But if they did not, it would only show +how they tax the public now as well as hinder trade. I am not bound to +show that the monopolists would profit by Free Trade; I deny that +the monopolists have any vested interest in their monopoly, or that +Parliament, i.e. the nation, has made any covenant with them that their +monopoly shall never be invaded. + +I have suggested three great changes: (1) Perfect Free Trade at all our +ports; (2) The exploitation of the land through the National Rate Book +machinery; (3) Free Trade in Railways. Of these the last is clearly +advisable, nor is there anything (in my opinion) to be urged on the +other side. At the same time it is not less important than either of +the two other suggestions. But the three would work best together--each +aiding and reacting on the other; they would thus provide "progress" +(which means comfort to all classes) in England for at least two +generations of men. If there was no National Rate Book, the new railways +would have to pay exorbitantly for the land they took up under the +existing arbitration system; they would be relieved merely from the +parliamentary opposition of other companies and of private individuals. +The private owner must be deprived of his present privilege of +parliamentary opposition, which gives him the power to extort an +exorbitant price for his land--because a company can always oppose in +the garb of some private owner whom they have hired. + +A less but important branch of this reform is the narrowing of +Government interference under pretence of protecting the public. Great +expenses are thus thrown on railway companies. The companies cannot, +therefore, charge increased fares, but such expenses diminish the number +of new railway schemes brought forward. Nor do Government rules protect +the public so well as the old plan (abolished by Chief-Justice Cockburn) +of making the railway company pay for killing or injuring people. Now, +after a great railway smash, the company comes forward and shows that +there was no negligence on their part; that in the signals, breaks, +etc., they had satisfied all the Board of Trade regulations, and +the injured passengers can get nothing. The real way to protect the +passengers is to allow the company to make their own arrangements, and +to compel them to pay heavily for killing and maiming passengers. This +is quite defensible in theory, as in the case of manslaughter by an +individual we give him some punishment out of our civilised respect +for human life, though he may have been little to blame. Great cost is +thrown on railway companies (i.e. much injury is done the public) by +standing orders (cast-iron orders) about gradients, etc. The company's +solicitors order the company's engineer to comply with standing orders +at all costs rather than introduce any special clause. The consequence +is that we see much money spent and a most inconvenient level-crossing +placed at the entrance to some large town, where a steep gradient for +two hundred yards on a straight piece of road (to which there is no +objection) would have avoided all difficulty. The responsibility in all +such cases should be thrown on the company, and Government interference +abolished. + + + + +7. REFORM IN LAND LAW. + +The transfer of stock in the name of two trustees in the funds is +done in a few minutes at small expense. The transfer of land in South +Australia is done in a few minutes at small expense at the Government +registry. The transfer of land in England requires an uncertain time +and cost--usually some weeks, and 5 per cent on the purchase money; +sometimes months, and 10 to 25 per cent on the purchase money. It +is equally expensive and slow in the register counties of York and +Middlesex. The Acts of Brougham, Bethell, Cairns, to facilitate transfer +have not materially reduced the evil. In many cases, however much the +land may be wanted for public or other purposes, the lawyers tell +you that no title can be made without a private Act of Parliament--so +effectually has the land been tied up. + +The common idea is that this peculiar difficulty, delay, and cost in +the transfer of land arise from the law of inheritance and the legal +machinery of entail; but stock in the funds can be virtually entailed +and made to "follow the estate," and yet this stock can be transferred +just as readily as any other stock. + +The explanation is known to every lawyer; but I have met with more than +one Member of Parliament who, though blatant about entail, understood no +more about the matter than a chimney-sweep. + +The point is that, under English law, the trusts in the case of stock +attach to the trustees, not to the stock; in the case of land, the +trusts attach to the land itself as well as to the trustees. Hence, when +I purchase stock of trustees I need not trouble about how they apply the +purchase money; in the case of land I have to go into the whole title. + +A simple illustration. I provide for a daughter £300 a year by putting +£10,000 in the hands of two trustees in the funds. Should the trustees +prove rascals, sell the stock, and decamp with the money, my daughter +will lose everything; the purchaser from the trustees can hold the stock +clear of all charges or liability. But if I provide for my daughter by +charging an estate with £300 a year for her, then however wrongfully +that estate may be sold, mortgaged, or otherwise dealt with, she gets +safely her £300 a year. If the bank B has advanced money on mortgage on +that estate, not knowing the existence of the charge of £300 a year for +my daughter's benefit, the law simply says to the bank, "It was your +business to know; you should have completely investigated the title +before you advanced your money." + +It follows, therefore, that if, with a Government Land Registry Office +(say one for each county), you required the purchaser only to get in the +legal estate, _i.e._ holding him not responsible for the trusts or +the application of the purchase money, then land could be transferred +exactly as money in the funds is now, in spite of all the complications +of our law (or rather custom) of entail. + +The law of entail in England (so called) is not what the popular orators +suppose. The eldest son inherits really; that is, if there be no will, +no settlement, or other disposition of the property. But there nearly +always is. It is a very rare thing for the heir-at-law to take land +(except some very small pieces) by the law of inheritance. As to entail, +it is practically carried out by a continued system of surrender +and re-settlement--a device of lawyers which is, in its historical +development, an evasion (rather than a part) of the law. Nevertheless, +I think it is a matter of importance that the shackles which fetter land +should be loosened, and that the present powers of owners to tie up +land legally should be very much curtailed. It is a sad proof of the +way riches cling to the heart of man even when he is leaving this world, +that, whatever powers of tying up land are sanctioned, an owner will +usually exert them to the uttermost. He is leaving his property, but he +will keep a hold on it fifty years after he is dead if he can. He will, +after exhausting his powers in life interests, leave the residuum to +an unborn child "in strict tail-male so far as the rules of law will +permit;" and he will stick in a springing use to effect that, if his +greatnephew, the Rev. George, should ever from an Anglican become a +pervert to Roman Catholicism, he shall take no benefit under the will. + +Now the fact is that all tying up is to the detriment of the public. No +man can provide for all contingencies. Indeed he can see so little a +way ahead that in a few years it frequently happens that all the careful +provisions of the will are working exactly as the testator would have +desired them not to work. Land tied up is always worth less to the +owner because it is tied up; and we have seen that the interest of the +commonwealth is the sum of the interests of all its component members. +When you tell me that an estate is now of small value to its life-owner +and unget-at-able for any public purposes, in consequence of a will made +by a man who died twenty years ago, it appears to me that you shew me +convincingly that we have not Free Trade in land. + +I would propose that, either by will, settlement, or other instrument, +an owner should be able to give any number of life interests, and +nothing more; all trusts being placed outside the law. The first +objection will be that if the powers of owners are so restricted, the +desire for the ownership of land will be lessened: the value of all the +land in England will fall. This might be so, I admit, to some extent; +and it would favour the employ of the land for agricultural profit. + +The next objection is that it would become necessary to give land (and +money) directly to women without the intervention of trustees: that +women do not understand business and require to be taken care of. My +reply is that they always will require to be taken care of unless they +are entrusted with the management of their own affairs. The loss to the +nation, the expenses, the sacrifice of time and labour in trusteeships, +have now assumed gigantic proportions. If women were given their own +property to manage, some would (at first) fool it away: we know what +high interest, adventurers, unprincipled persons, etc., can effect. But +each woman defrauded or stripped of her property to starve would be +a warning to all the rest: in a few years women would manage their +property just as well as men. I believe they would manage it better. +A smaller percentage of women would gamble on the Stock Exchange, the +Mining Exchange, Austrian and Spanish lotteries, and horse-races; and +a much smaller percentage of women would embark in desperate "business" +speculations, heavy purchases of foreign produce, etc. + +It should be noted that in cutting down the powers of owners to legally +tie up, I do not interfere with honourable trusteeships of any kind not +enforceable by law or in equity. Such exist now, and more largely than +is generally supposed. The absolute devises and bequests to friends (not +relatives) are often on private (not expressed) trust to provide for +illegitimate children or numerous other purposes which a man may not +wish to parade to his family. + + + + +8. EQUALISING OF TAXATION. + +There has been no readjustment of the land tax for very many years. It +is a property rate, and originally was rateably levied at four shillings +in the pound. By the small increase in value of some land, the large +increase in value of other land, since the days of Queen Anne, it has +now become unequal in the highest degree. The farm A, gross rental £100 +a year, has a land tax of £5 a year; the suburban estate B, gross rental +£1000 a year, has a land tax of £2:l0s. a year. The land tax assessors +were sworn in annually (twenty years ago, and may be still) to assess +the tax equally, but it was perfectly understood that the tax was to be +collected every year on the old long-standing assessment. + +Suppose that the estates A and B above were reassessed, and that the +land tax on A was put 15s. per annum, that on B £6:15s. a year. Land +tax can be redeemed at about thirty years' purchase. The effect of the +readjustment would have been to take about £120 from the owner of B and +give it in a lump sum to the owner of A. It is probable that the present +owners of both A and B (or predecessors under whom they claim) had +purchased the estates A and B after the land tax had become fixed on +them, and the amount of land tax would then have been fully considered +in the price paid. + +We see thus that in the case of the land tax, as we saw above of the +tithe, and as is also the case in any tax permanently on, a disturbance +of the existing taxation is inequitable. This point is so much +misunderstood that I will give one more illustration. + +I am purchasing an estate, intending to farm it myself. There are 400 +acres of land, and I reckon the land worth 30s. an acre. I am willing +to give twenty-five years' purchase. I find the tithe is £100 a year. I +therefore propose to give twenty-five times £500 = £12,500 for the land. +But before the bargain is completed I find that the tithe is £150 a +year. I at once sink my bid to twenty-five times £450 = £11,250, and buy +the estate at that price. The next year some financier "equalises" the +tithe, and my tithe is reduced to £100. Is it not clear that, by the +equalisation, I pocket £1250, and somebody else loses it? + +New taxes when imposed should be "equal," as far as can be arranged. +When a legacy duty was imposed, it would have been just to impose a +succession duty also. But, after the legacy duty had been imposed twenty +years with no succession duty, it was similarly inequitable to put on a +succession duty; for quantities of land had been bought in the interval +of twenty years at a slightly higher price than if there had been no +legacy duty, because there was no succession duty. + +The proposal for "equalising" taxes is usually put forward in order to +get a somewhat larger gross income from the taxes equalised, or as a +political cry. Nothing can be more absurd than the cry that the land is +over-burdened in comparison with other property. There is no comparison +in the case. Some land being tithe free, some land tax free, some nearly +rate free, those persons who do not trouble themselves to master the +political economy may yet be satisfied that the "burdens" of the land +affect neither the farmer, the labourer, nor the produce of the farm; +the burdens fall _wholly_ on the landlord (a farmer with a lease being, +as above shown, a part landlord). The efforts of some Conservative +orators for the last twenty-five years to prove the contrary are +erroneous in the reasoning; or I should say, much of the "reasoning" +does not hang together at all. Without formally refuting these efforts, +I repeat that they are fully refuted in the result. + +It is therefore that I have insisted above that, in order to carry out +the proposed ransom of the land, a new Property Rate, separate from +and in addition to all other taxes, is necessary. Though the manner of +levying a National Property Rate which I have proposed lends itself very +nicely to getting in such an extra tax, it is not at all on that ground +that I have suggested the new manner of levy. The object of the new +manner of levy and the sycophants is to get every piece of land in the +country into the hands of that man who can make most of it; including +herein as an important item the cheap and easy acquisition of land +required for Government, public and commercial (railway, etc.) +enterprises. + +In any great reform of our whole system of taxation a disturbance of +existing interests must take place. Though I would not disturb existing +interests for the sake of mere equalisation or official beauty of work, +I would not let the fear of disturbing private interests stand in the +way of any real or important reform. The introduction of Universal +Free Trade and the abolition of all duties would be accompanied by a +disturbance; but, as far as I can see, no one would lose, while many +would gain enormously. + +On the same ground of equality of new taxation I should propose to +replace the amount now levied in duties mainly by an income tax. That +is a perfectly level tax; the idea that temporary incomes ought to pay a +lower rate is fallacious. We are all agreed to tax the poor at a _lower_ +rate; we have now a section of advanced Radicals proposing to tax the +rich at a higher rate. One present candidate for Parliament is even +willing to tax people of £100,000 a year and upwards at nineteen +shillings in the pound. This of course, or anything approaching it, is +unpractical. But I have suggested above, as a rough plan in accordance +with the existing one, eight-pence a week on incomes of £1 a week, +twelvepence a week on incomes of £2 a week, sixteen-pence a week on +incomes of £3 a week and upwards. The question may very fairly be +raised, Why stop this process at £3? why not continue the series and +develop it into a mathematical law? This might be done more easily with +a sixpenny income tax than a heavy one. To tax earnings and savings +(that is an income tax) instead of expenditure can only be carried a +certain way; if the tax is large enough to diminish saving and promote +living up to one's income, and at the same time to send capital abroad, +its effects would be serious. For a particular and noble purpose I have +suggested sixteen-pence in the pound (which we bore without serious +inconvenience in the Russian war); I should imagine twenty to +twenty-four pence in the pound about the maximum that could be imposed +for any purpose--such as the prevention of hostile invasion. It must +be noted that more than the maximum bearable cannot be put on large +incomes, £100,000 a year, etc., any more than on small ones. Indeed it +is rather the contrary; for persons with large incomes are usually the +very people who already invest largely abroad, and who could (and would) +transfer their capital rapidly out of the country if they were subjected +to anything like confiscation. + +Instead therefore of proceeding _upwards_ in our income tax +sliding-scale we must proceed downwards. Taking sixteen-pence in the +pound as the maximum rate we can impose on the big fish, the problem +will be, What is the highest income to which you will allow any +remission from the maximum rate? I think those having above £150 a +year possess more than the necessaries for healthful existence; looking +therefore to the equity and productiveness of the tax, I suggested +remission to those earning less than £3 a week. + + + + +9. WEALTH OF THE NATION. + +The Wealth of Nations is a well-considered title. The economists +anterior to Adam Smith conceived England as surrounded by a barrier +impassable to property and money except by trade. In trade there was +an exchange apparently on equal terms; but the old economists saw a +difference in nature between imports and exports; when wool was sold +to Flanders gold was received, and remained somewhere in the nation; +it formed the national purchasing power, and could hire mercenaries or +otherwise command foreign labour and productions. Inversely, when we +imported wine or tea, we had to part with a portion of our national +purchasing power, while the wine and tea went down our throats, leaving +nothing in its place. It appeared clear that for any increase in +national wealth the value of the exports must exceed that of the +imports. Every well-prepared boy can now show in ten minutes' scribbling +in a Government examination the ridiculous folly of the old economists; +but several of them were experienced London merchants, and perhaps were +not the complete idiots they are now triumphantly shown to be. If they +had been asked whether wool was a part of the national wealth they +might have returned an answer that their modern detractors are not quite +prepared for. + +Adam Smith and his followers, and still more closely Ricardo, divided +their Political Economy into two parts: in the first they consider the +wealth of the nation without the "complication" of foreign trade, _i.e._ +they, in fact, contemplate no money or goods as going out or coming +in whatever. They then in separate chapters, forming a big appendix, +consider the effects of Foreign Trade as a series of exchanges. They +do not discuss even the payment of a lump sum of gold to a victorious +nation. Senior, in his _Handbook of Political Economy_, has considered, +first, the economy of the world conceived as a solitary, island of +small size in a world-covered sea; secondly, he treats foreign trade +by conceiving two such islands. There is no better way of treating +Political Economy than this; and it is well for the beginner to conceive +the solitary island with fifty (or a limited number of) families only +on it, and work through the ordinary theorems (with figures) in this +restricted case. Whatever is true of the fifty families in a small +island must be true for 5,000,000 families in a big island. + +The facilities of modern communications have caused most countries to +differ in their circumstances materially from the conditions assumed by +Adam Smith and his successors as axioms. In the case of England, +owing to its numerous wealthy colonies, gigantic foreign trade, and +consequently world-over-spread capital, the circumstances are so +completely altered that many results of the grammar of Political Economy +no longer apply even in the rough to England. If Adam Smith had been +asked what would happen to England if the imports for one year exceeded +the exports by £150,000,000 sterling, he would have given the same +answer as his predecessors, who reckoned wealth in gold and silver, or +more probably he would have declined answer, pronouncing such a state +of things an impossible conception. It is now as difficult to treat +politico-economically the wealth of the nation as the wealth of +Warwickshire--a difficulty that Adam Smith would have shrunk from. + +It is true that every abstract proposition concerning rent, capital, +and wages now (and always) holds true for the whole world; but, so +conceived, the propositions give no practical result. These things do +not lesson the value of the science of Political Economy, Mr. Ranken +or Dr. Pole would estimate very highly the value of a knowledge of +elementary mechanics to the humblest engineer, though such elementary +mechanics might not extend to the consideration of friction, etc., and +might not be applicable to any bridge or steam-engine. + +Of this £150,000,000 that is now annually remitted to England, not +in the way of exchange, some small portion is transferred by wealthy +Australians returning to settle in England for purchase of houses, etc., +in England; but by far the greater portion is the interest of capital +owned by men resident in England, but invested abroad: it may be shortly +termed tribute. This is mainly invested in the Colonies and India; New +Zealand and Australia taking large shares. There is also much English +capital invested in Continental railways, etc.; but it is noteworthy +how capital (as well as commerce) follows the flag. The English capital +invested in the United States is absolutely large, but relatively (to +that invested in Canada, etc.) very small. It is certain that if the +United States were under Queen Victoria the amount of English capital +invested there would be far greater than at present. + +As far as England is concerned this £150,000,000 a year is a tribute +paid her by the rest of the world. New Zealand or South Australia may +take up a million sterling in London (because they get the loan placed +there at 5 or 6 per cent, while the local rate of interest in Australia +is far higher) in order to make a railway which perhaps pays the local +Government as much as the interest of the money they give to England. +Still, the capital being once fixed in Australia while (by hypothesis) +the stock is held in England, the result is equivalent to a tribute. + +All Liberal stump-orators now agree in telling the agricultural +population that their improved position is due to Free Trade (in wheat), +and that therefore they should vote for the Liberals. Nothing is done +more confidently in politics and history than the settling the causes of +events, or predicting what would have been the course of events had +some result been different, as, for instance, had the separation of the +United States from England not occurred. The truth is that in politics +causes are many; they act and react on each other in their operations; +and to say exactly how much is due to one cause, or how much that cause +acting alone would have effected, is impossible. To get some judgment +how much of the present prosperity of the agricultural labourers +(admitted on all sides as compared with their position in 1846) is +due to free importation of wheat alone, let us (merely as a scientific +artifice) imagine that a regular sliding-scale duty on wheat were put +on now, bringing wheat to 48s. a quarter permanently. What would be the +effect on the agricultural population? We may suppose that the produce +of the duty, were it five or eight millions, or any other sum, was +employed in remitting the duties on tea or other productions generally +consumed by agricultural labourers. The placing of wheat at 48s. a +quarter permanently would at once recall a good deal of capital to the +land, it would carry out further the margin of cultivation, and at the +same time cause a higher farming of that within the non-existing margin; +in both ways it would raise the demand for agricultural labour, and +would raise wages. + +On the whole, I incline to think that a sliding-scale duty on wheat +up to 48s. a quarter would not perceptibly alter the position of the +agricultural labourer, or might possibly improve it: it would lower the +wages and diminish the profits of capital in other trades. This is not +(as before explained) a fair way of arguing the question; because it +is impossible to calculate the indirect effects of Free Trade in wheat, +which ultimately came round to benefit the agricultural labourer. + +But considering how the efficiency of the agricultural labourer has been +improved by improved machines since 1846, it is hardly possible to doubt +that the agricultural labourer is much more indebted to the engineers +than to the Corn Law League for his improved position. Under "machines" +too may be included railway communications: also let us not forget +how much the agricultural labourer owes, not only to drills and +mowing-machines, but to boot-sewing machines, improved tea-ships, etc. + +If we look to the general increase of wealth in England since 1846, the +first thing that strikes us is the increase in the tribute, which is +about thrice what it was. This increase is largely imperial, i.e. due to +colonisation, annexation, etc. But here again we must not overlook +the reaction of causes on each other: our Free Trade in corn, our +improvements in machinery and ships, have so largely contributed to +spread our empire that it becomes impossible to disentangle the separate +work, or indeed to speak of any one cause as a simple element: the +causes all act together. + +England is the most comfortable country in the world for a rich man to +live in, and consequently rich men congregate there; or, if they +travel, keep a headquarters there. In this way we have congregated a +disproportionate population in England. It may be argued that it would +be a healthier economic state if the exports and imports balanced, and +if the population of England was no larger than the country itself could +grow wheat for, _at a price not exceeding 40s. a quarter_. However that +may be, the important point for the working men of England to mark +is, that every loss of rich men resident, every loss of tribute, +every reduction of the wage-fund, every pressure on the population to +emigrate, everything that leads in the direction of a self-supporting +England, means immediate pressure on the poor, with reduction of wages. +That is the only way emigration could be by natural law enforced. It is +the poor, the labouring population, who are so hugely interested in the +empire. Of all the follies taught to the labouring man the most foolish +is the doctrine that the empire abroad is maintained to provide incomes +for the rich, at the cost of the taxes paid for wars by the poor. It +matters comparatively little to the rich whether they live at Florence +or Dresden four or eight months in the year, whether the population of +England is to be maintained stationary, to increase at its present rate +of increase, or to be squeezed down to half its present number: but it +matters vitally to the poor. Whether, ultimately, after our empire is +gone and the population of England is stationary at fifteen millions +say, the poor in England would be better off than now is a very +difficult question, concerning which doctors differ; but it is +absolutely certain that during the Banting process, in the reduction of +the population down to that fifteen millions by a process of starvation +and emigration, continued for two generations of men, the poor would +have to go through experiences altogether novel. It is a thing that +would revolutionise England; and in spite of the superior education +of our labourers might lead to a break up of society. Starvation and +bankruptcy make any and every man a Radical if not a Communist. + +To keep the poor comfortable for the present and for many years +immediately in front of us, we require a continual increase in the +wealth laid out in England annually in the purchase of labour. The +growth of the empire, the profitable investment of capital in foreign +countries (whereof the interest is paid and consumed in England), is one +great resource: the profitable investment of capital in England itself +is the other great, probably safer, resource. To effect this we require +every acre of land to fall into the hand of the man (or company) who can +make most of it: we require a Universal Free Trade that shall render +our hold on the commerce of the world secure until all nations adopt +Universal Free Trade (when we shall gain so much in other ways that we +shall be able to afford to share our monopoly with others); we require +the removal of all restraints on railways, tramways, electric lights, +etc., that hamper or prevent the employment of capital in England (in +other words, that send English capital abroad). Finally, underlying the +whole, and as the prime cause that shall induce capitalists to employ +their capital in England rather than to send it abroad, we require the +labour of every working man to be in the highest degree efficient: this +retards the fall of the natural rate of profits to a minimum, and the +attainment of the stationary state. Whatever ideal beauty has been +discovered in the stationary state by J. S. Mill, it is pretty clear +that England is not approaching it. It is as difficult for us to stand +still as it is impossible to go back; and our only (third) course open +(for the present and for many years to come) is to progress. + + + + + + + + + +End of the Project Gutenberg EBook of Speculations from Political Economy, by +C. B. 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B. Clarke, F.r.s. + </title> + <style type="text/css" xml:space="preserve"> + + body { margin:5%; background:#faebd0; text-align:justify} + P { text-indent: 1em; margin-top: .25em; margin-bottom: .25em; } + H1,H2,H3,H4,H5,H6 { text-align: center; margin-left: 15%; margin-right: 15%; } + hr { width: 50%; text-align: center;} + .foot { margin-left: 20%; margin-right: 20%; text-align: justify; text-indent: -3em; font-size: 90%; } + blockquote {font-size: 97%; font-style: italic; margin-left: 10%; margin-right: 10%;} + .mynote {background-color: #DDE; color: #000; padding: .5em; margin-left: 10%; margin-right: 10%; font-family: sans-serif; font-size: 95%;} + .toc { margin-left: 10%; margin-bottom: .75em;} + .toc2 { margin-left: 20%;} + div.fig { display:block; margin:0 auto; text-align:center; } + div.middle { margin-left: 20%; margin-right: 20%; text-align: justify; } + .figleft {float: left; margin-left: 0%; margin-right: 1%;} + .figright {float: right; margin-right: 0%; margin-left: 1%;} + .pagenum {display:inline; font-size: 70%; font-style:normal; + margin: 0; padding: 0; position: absolute; right: 1%; + text-align: right;} + .side { float: right; font-size: 75%; width: 25%; padding-left: 0.8em; + border-left: dashed thin; margin-left: 0.8em; text-align: left; + text-indent: 0; font-weight: bold; font-style: italic; + font-weight: bold; color: black; background: #eeeeee; border: solid 1px;} + pre { font-style: italic; font-size: 90%; margin-left: 10%;} + +</style> + </head> + <body> + + +<pre> + +Project Gutenberg's Speculations from Political Economy, by C. B. Clarke + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Speculations from Political Economy + +Author: C. B. Clarke + + +Release Date: July, 2005 [EBook #8436] +This file was first posted on July 10, 2003 +Last Updated: May 12, 2013 + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK SPECULATIONS *** + + + + +Text file produced by John Hagerson, Jonathan Ingram, and the Online +Distributed Proofreading Team + +HTML file produced by David Widger + + + + +</pre> + + <div style="height: 8em;"> + <br /><br /><br /><br /><br /><br /><br /><br /> + </div> + <h1> + SPECULATIONS FROM POLITICAL ECONOMY + </h1> + <p> + <br /> + </p> + <h2> + By C. B. Clarke, F.R.S. + </h2> + <p> + <br /><br /> + </p> + <hr /> + <p> + <a name="link2H_INTR" id="link2H_INTR"> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h2> + INTRODUCTION + </h2> + <p> + The following nine articles are "Speculations," by no means altogether + recommendations. They are <i>from</i> Political Economy, i.e. they have + nearly all of them been suggested by considering mere propositions of + Political Economy. Some of them are old, or given me by friends: some are, + I believe, new: these many persons will set aside as unpractical or + impracticable, as that is the approved word by which people indicate that + an idea is new to them. The topics of the nine articles have been largely + taken from those now under political discussion, but they can hardly be + called ephemeral; and, though they do not form a treatise, they will + hardly be called disconnected. As they are speculations, no trouble has + been taken to work out suggestions in detail, or give the "shillings and + pence" correctly. + </p> + <p> + <br /><br /> + </p> + <hr /> + <p> + <br /><br /> + </p> + <p> + <b>CONTENTS</b> + </p> + <p class="toc"> + <a href="#link2H_INTR"> INTRODUCTION </a> + </p> + <p> + <br /> + </p> + <p class="toc"> + <a href="#link2H_4_0002"> <b>SPECULATIONS <i>FROM POLITICAL ECONOMY</i></b> + </a> + </p> + <p class="toc"> + <a href="#link2H_4_0003"> 1. EFFICIENCY OF LABOUR. </a> + </p> + <p class="toc"> + <a href="#link2H_4_0004"> 2. RECIPROCITY AND RETALIATION. </a> + </p> + <p class="toc"> + <a href="#link2H_4_0005"> 3. UNIVERSAL FREE TRADE. </a> + </p> + <p class="toc"> + <a href="#link2H_4_0006"> 4. THE RANSOM OF THE LAND. </a> + </p> + <p class="toc"> + <a href="#link2H_4_0007"> 5. MAKING THE MOST OF OUR LAND. </a> + </p> + <p class="toc"> + <a href="#link2H_4_0008"> 6. FREE TRADE IN RAILWAYS. </a> + </p> + <p class="toc"> + <a href="#link2H_4_0009"> 7. REFORM IN LAND LAW. </a> + </p> + <p class="toc"> + <a href="#link2H_4_0010"> 8. EQUALISING OF TAXATION. </a> + </p> + <p class="toc"> + <a href="#link2H_4_0011"> 9. WEALTH OF THE NATION. </a> + </p> + <p> + <br /><br /> + </p> + <hr /> + <p> + <a name="link2H_4_0002" id="link2H_4_0002"> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h1> + SPECULATIONS <i>FROM POLITICAL ECONOMY</i> + </h1> + <p> + <br /><br /> + </p> + <hr /> + <p> + <a name="link2H_4_0003" id="link2H_4_0003"> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h2> + 1. EFFICIENCY OF LABOUR. + </h2> + <p> + Political economists have not overlooked efficiency of labour: they have + underestimated its importance in the opinion of Edward Wilson, who has + supplied me with the examples and arguments that follow and who has + verbally given me leave to publish as much as I like. + </p> + <p> + The English workman, especially in a country town of moderate size, + regards capital as unlimited, employment ("work") as limited. A wall six + feet high is to be built along the length of a certain garden: if one + bricklayer is employed, the fewer bricks he lays daily the more days' + employment he will get; if several bricklayers are employed, the fewer + bricks one lays daily the more employment is left for the others. It thus + appears that the more inefficient the labourer is, the better for himself, + his fellow-handicraftsmen, and for "labour" in general: the more money is + drawn from the capitalist. + </p> + <p> + There is a grain of truth in this view with respect to petty unavoidable + repairs in a narrow locality: but the capital spent on such is as a drop + in the ocean compared with that embarked in a single large work. Consider + the case of the London Building Trade, as practised in the suburbs on all + sides of London. The London bricklayers thoroughly believe that it is + their interest to be inefficient: it is said that they have a rule that no + bricklayer shall ever lay a brick with the right hand; they have also a + rule against "chasing," i.e. that no bricklayer, whatever his skill, shall + lay more than a certain number of bricks a day; they believe that if the + bricklayer laid a larger number of bricks he would get no more pay for a + harder day's work, while the "work" would afford employment to a smaller + number of labourers. Look however a little further. The speculative + builders round London compete against each other, so that they carry on + their trade on ordinary trade profits. Such a builder is building streets, + house after house, each house costing him £800, and selling for £1000 say; + and this, after paying his interest at the bank, etc., pays him about 10 + to 15 per cent on his own capital embarked. Suppose now that the + bricklayers increase their inefficiency either by a trade rule or by a + combination to shorten the hours of labour. The cost of each house is + increased £50 to him: nothing in the new bricklaying rules or rates + affects the purchasers; the builder estimates that his profits will fall + to 5 to 8 per cent on his capital. He does not care to pursue so risky a + business at this rate of profit; he determines to contract operations. + When he goes to his bank, a branch of one of the gigantic London + joint-stock banks, at the end of the quarter, the manager of the branch + comes forward as usual ready to continue the bank advances; but the + builder says simply, "The building trade is not so good as it was," and + declines. The increased cost of bricklaying has affected all other + speculative builders in much the same way; the consequence is that "gold" + accumulates in the branch banks. The secretaries and managers of the great + joint-stock banks do not let their capital idly accumulate; they buy New + Zealand 6 per cents, or transfer to Frankfort or New York the capital + that, but for the rise in cost of bricklaying, would have gone to the + London bricklayers. + </p> + <p> + In this case it is easy to see that the quantity of work to be done is not + limited. Should the cost of building diminish but a little, the rate of + profit of the builders on their <i>own</i> capital (in many cases not + one-tenth of the capital they employ) will run up to 20 or 30 per cent, or + even more; and at even a 20 per cent profit the bricklayers would find + that a perfect rage for building would set in. Every speculative builder + in the trade would strain his credit to the utmost, and take up every £100 + from his bank that he could induce the bank manager to let him have. + </p> + <p> + A second illustration. Forty years ago, on our farm in the south of + England, two men with flails used to begin threshing wheat in the long + barn about 1st November, and used to thresh till 1st April. They got eight + shillings a week with us, but in adjoining counties seven shillings (and + even six) were winter wages. Now the steam threshing-machine will empty + that long barn in two short days' work. It takes half a dozen men to do + the work, and they get about fifteen shillings a week, though their labour + is much shorter and easier than that of the old flail men. At the same + time our farmers now are much poorer men than they were forty years ago: + they have less capital, they have made for many years past a low rate of + profit, and they are frequently themselves complaining that they cannot + afford to pay their labourers well, and inferring that they should get + Protection back again in some shape or other. The labourers on their part + imagine very generally that their increased wages for less work are due to + Mr. Arch and agitation; that the employers of labour will never pay more + than is wrested from them (this is in large measure true); and that + employers must pay whatever agitators are strong enough to demand (this is + wholly erroneous). + </p> + <p> + In this case it is evident on the surface that the labourers who thresh + with the steam-thresher are more efficient than the flail-men: their + labour is worth the half-a-crown a day to the employer, and therefore the + employer, however poor, can afford to pay it as he receives it back with a + profit. On the other hand, if the flail-men were raised from the dead, no + farmer would now pay them even eight shillings a week for threshing; their + labour would not be worth even that. + </p> + <p> + One illustration more. Thirty years ago there were few more wretched + trades than the shoemakers of Northampton. Wages were low, the labour was + severe, the social condition of the workmen was necessarily low also. The + sewing-machine, with some special adaptations to make it sew leather, + increased about sixfold the bootmaking power of a workman. It is needless + to say that the Northampton shoemakers met the introduction of this + machine with the fiercest opposition: they said five-sixths of their + number must be thrown out of employment. The struggle was won by the + machine (as in other cases); shoemakers' wages have ruled 50 to 100 per + cent higher ever since, at the same time that the shoemaking population + has largely increased; and the social comforts and character of the + workpeople have improved vastly too. This is an example that has always + puzzled the workmen themselves; but it requires no explanation after what + has been said about the efficiency of labour. The puzzle to the shoemakers + is what becomes of the additional boots and shoes made. They do not + reflect that, even of a necessary of life, only a certain quantity is used + at a certain price. Nothing is more necessary in London, especially in + winter, than coal; but, when coal some years ago went up to 40s. a ton in + London, it was marvellous how people in all ranks managed to reduce their + consumption of coal. Much more in the case of boots, which will bear the + cost of export to remote countries, did the demand increase as the price + fell. A fall of 10 per cent only in the price of boots would cause every + wholesale boot exporter to export on the largest scale. No doubt the + invention of a self-acting machine which should turn out 1000 pairs of + boots an hour at a nominal cost of workmanship per pair would reduce the + shoemakers of Northampton to idleness and starvation. But in practice it + has rarely happened that any machine has been introduced in any trade that + has thus completely choked the increased demand. It has happened often + that the workmen who could only work the old way, and were not able to + take up the new machine, have been reduced to starvation. Even then, after + this generation has passed away, the new machine-workers have been better + off than their predecessors. + </p> + <p> + Employers of labour cannot pay as wages more than the labour is worth: no + organisation or rules will make them. But employers may pay a good deal + less than the labour is worth, and often have done so. However great their + profits, there is, according to J. S. Mill, always a tacit understanding + among all employers of labour to pay the minimum the labourers can be + induced to accept. It is only by combination that the labourers can get + the full value of their efficiency. Here Mr. Arch comes in: I have little + doubt that the flail-threshers might, under a well-managed large trade + combination, have got nine shillings a week instead of eight shillings + forty years ago. + </p> + <p> + But every rise in wages gained by the workmen, unless springing from or in + conjunction with an increase in efficiency, will tell against themselves; + it must increase the price of the article, whether houses, wheat, or + boots; this must diminish the demand for the article, and this must throw + some of the workmen out of employ. + </p> + <p> + It is difficult to find an example of price of wages which presents any + difficulty of explanation when we apply to it the consideration of + efficiency. If bricklayers were to offer to exert themselves to the + utmost, and do in eight hours the same amount and quality of work they now + do in nine, the speculative builders would doubtless be willing to give + the same wages for eight hours' work that they now give for nine. In case + the labourers by increase in their efficiency are able to get higher + wages, the choice will (in general) lie with them how much of the increase + they take in increased money wages, how much they take in shortened hours + of labour. We thus see how, in an uncivilised community, owing to the + inefficiency of their labour, their whole time and energies are expended + on their hunting, or otherwise providing bare subsistence. The greater + skill of our civilised labourers, working with machines provided by our + science, and profiting by our fixed capital (as our railway tunnels and + embankments), is vastly more efficient: it ensures the labourers a + certainty and regularity of food which the savage does not enjoy, and + provides him a certain margin of leisure beyond what the inefficient + savage labourer can count upon; it also provides the whole surplus + production out of which the intellectual and leisure classes are + supported. + </p> + <p> + It is to be noted that an increase of efficiency in any industry (and very + largely in the case of industries producing generally essential utilities) + raises real wages in all other industries, and this, whether the + particular trade gains (as we have seen it nearly always do) or loses, as + is conceivable, though rarely occurring. Thus, if the introduction of a + boot-sewing machine lowers the price of boots 50 per cent, this can have + no effect in lowering the money wages of farm labourers; and, as a matter + of fact, the fall in cost of boots has sensibly improved the position of + farm labourers. In the same way the superior efficiency of carriers by + railway over the old road carriers has diminished the cost of coal and all + articles (the bulky ones most sensibly) in all parts of England. There + thus arises the instructive result that handicrafts in which there has + been no improvement in the last forty years have obtained a rise of real + wages (amounting in some cases to 50 per cent) by the improvements in + efficiency in all the trades around them. + </p> + <p> + To sum up: No man in ordinary business will give a price for anything that + he intends to sell again unless he expects to profit by selling it again. + No capitalist will pay a workman to make a table unless he expects to sell + the table for a sum somewhat exceeding the cost of the wood and the + workman's labour. It follows directly that the one grand object of the + workman, both as an individual, a trade, and a class, should be to improve + the efficiency of his labour. He may gain something by combination and + higgling for the turn of the market, but the limit to what he can get is + the value of his labour to his employer. + </p> + <p> + In order to attain this improved efficiency the most important practical + aid is piecework. This has done much even in agriculture: the turnip-hoer + by the acre earns more, while he does his work at his own time with more + comfort to himself than the old day-labourer. What is more important, the + men who by head and hand are superior at turnip-hoeing are able to do the + work cheaper than ordinary labourers, and turnip-hoeing thus falls + entirely to the most efficient hoers, whose efficiency thus again gets + constantly improved. There is no doubt to me that, if the London + bricklayers would arrange to work by contract, they would soon obtain more + wages without being compelled (as they imagine would be the case) to work + more severely or longer hours to gain those wages. If they were more + efficient, nothing could prevent the competition of employers soon giving + extra wages for extra value of work. + </p> + <p> + But it may, finally, be urged that there is surely such a thing as + over-production. If there is an over-production of boots, trade is flat, + the wholesale dealers find they are making no profit, they stop their + purchases, the workmen are thrown out of employ on a large scale. To this + the reply is that there is almost a necessary alternation of up and down + in every particular trade, whether the efficiency of the workmen is high + or low. If trade is good, the large dealers will extend their purchases, + and very commonly rather over-extend their purchases: a reaction follows, + and <i>vice versa</i> when trade is bad. + </p> + <p> + But it must be recollected over-production in all trades at once is + impossible: capital is now not buried in pots by our great joint-stock + banks; if one trade is at standstill the capital is carried to the most + remunerative use that the experienced bank secretaries can discover. If + agriculture is, as we have lately seen it, in a depressed state for years, + inasmuch as wheat is "over-produced" in America till the price in England + falls to 36s. per quarter (and less), at which it hardly pays to produce + it in England; this of itself implies an enormous spur to all other + industries—the real cost of labour has in them fallen (for the + labourer will not be able to keep to himself the whole benefit of + cheapened food)—the rate of profit in all other industries has risen + (<i>pro tanto</i>). If we ever do arrive at a state when all the desires + are fully satisfied—when there is over-production in all industries—we + shall have general reduction in the hours of labour: "efficiency" will + take that form. + </p> + <p> + <br /><br /> + </p> + <hr /> + <p> + <a name="link2H_4_0004" id="link2H_4_0004"> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h2> + 2. RECIPROCITY AND RETALIATION. + </h2> + <p> + The wealth of England is the sum of the wealth of each individual in + England. An individual may have £10,000 in England, £5000 invested in + Australia. We may reckon his wealth in England either as including or + excluding the £5000, which he could transfer (probably very speedily) to + England in gold if he desired it tangibly. Whichever way we reckon his + wealth and that of other individuals, we shall in like manner in the sum + get the wealth of England: it will be in one case the wealth in England-in + the other case the wealth in England plus the lien which residents in + England have on other countries in the world. + </p> + <p> + In parallel manner the effective capital of England, which can be brought + into the wages fund, must be the sum of the capital of all the + individuals. + </p> + <p> + These two self-evident truths are capable of many applications: we see + directly from them that the National Debt, so far as it is held by + residents in England, neither diminishes the national wealth nor affects + the wages fund. We see also directly that any exchange between an + Englishman and a foreigner which gives a profit to the Englishman gives an + equal profit to the English nation. + </p> + <p> + When a merchant buys 1000 quarters of wheat from America and pays in gold, + he does so to make a profit for himself; but he cannot make a profit for + himself without making an equal profit for the nation. The exchange of the + wheat for gold is profitable to both seller and buyer; otherwise the + bargain would not be struck. A value is added to the wheat by its being + brought from Minnesota (where it is wanted, as all good things are wanted) + to London, where it is much more wanted, and this increased value is + greater than the cost of moving the wheat from Minnesota to London; this + excess is the profit on the exchange which the buyer and seller divide + between them. The exact shares in which they divide the profit between + them depend on some of the most complicated considerations in the science + of political economy. Indeed, political economy can no more work out a + case in figures, even when every circumstance is given, than political + economy can tell in pounds sterling what should be the rent of a given + farm. But the point required for our present purpose is easy and certain,—unless + the English buyer got <i>some</i> share in the profit he would not give + his gold for the wheat. + </p> + <p> + The great principle of Free Trade is that in this, and in all similar + cases, the individual shall be left to make what profit he can; that his + dealings with foreigners shall be interfered with by Government in no way; + that he shall not be checked in his operations by import duties, bounties + on exports, staples, or any other of the numerous obsolete interferences + in the statute-book. The principle is that each individual can manage his + own trade better than Government can manage it for him; that, therefore, + Government shall let any individual do his best in trade his own way, + knowing that whatever profit an individual makes in foreign trade is an + equal national profit. + </p> + <p> + It may be shortly stated that in the old Protectionist theory, destroyed + by Adam Smith, gold was considered to be wealth. Hence, if an individual + bought foreign wheat for gold, the English suffered a national loss of + wealth, and the foreign nation made a national gain. It is unnecessary to + occupy space in refuting this (to us absurd) idea, as no refutation can be + more satisfactory than Adam Smith's own. + </p> + <p> + If I profit on the transaction of buying 1000 quarters of wheat for gold, + I do so irrespectively of all other exchanges by others. Whether the firm + next door to me has succeeded in selling to a Boston house £2000 worth of + Sheffield cutlery or no is a matter entirely beside my bargain. My profit + will depend practically on the movements in the English corn trade: a + small rise in the price of wheat at Mark Lane between the date of my + purchasing by cable the wheat in America and my selling it at Mark Lane, + may give me a large profit, or <i>vice versa</i>. But my exchange of gold + for the wheat is a separate transaction of itself: it stands entirely on + its own bottom. + </p> + <p> + It is perfectly true that if my neighbour in Threadneedle Street does + succeed in selling £2000 worth of cutlery to the New Englander, there is + another distinct national profit to England and to America. [Footnote: I + am assuming for simplicity throughout that every exchange made by private + merchants in this foreign trade is a successful speculation; if in any + particular speculation a merchant loses, his country loses the same + amount. As foreign trade, on the whole, is an enormous national profit, I + am justified in sinking the particular cases of loss. It may be said, "But + perhaps all your exchange of gold for wheat is a national loss": it is + evident that when the trade takes this form the merchants who import + foreign corn stop their operations instantly; in practice they stop them + with prescient instinct.] But whether he succeeds in making a bargain or + not, I object to being interfered with by Government, and prevented making + my own little profit. If my neighbour is practically deprived of his + profitable bargain by Government action on the part of the Americans—if + they are Protectionists and believe that gold is the only National Wealth, + and put a heavy duty on cutlery—if by doing this they prevent an + exchange profitable to both nations—they stop TWO merchants from a + profitable stroke of business. Whether they injure the English merchant or + the Bostonian would-be purchaser of cutlery MOST is (as above explained) + very difficult to prove in any well-ascertained instance, but it is quite + certain that the interference of the American import duty causes a loss to + each merchant and to each nation. + </p> + <p> + Where now is Reciprocity and where Retaliation? We can no doubt say to the + Americans, "As you have injured us in the matter of cutlery, so will we + injure you by putting a duty on wheat." But it is merely cutting off one's + nose to spite one's face. In the exchange of gold for wheat the division + of the profit on one transaction is uncertain, but in the long run it is + probably about equal between the English and the American merchants, i.e. + between the English and the American nations. (I am not overlooking the + fact that the ultimate benefit to England is cheap bread; but it is + unnecessary in the present argument to follow the food down the throats of + the consumers: the wheat is really worth to the corn merchants what they + can get for it from the consumers.) We cannot stop the corn trade with + America by a duty (or diminish it) without as great a loss to ourselves + (probably a greater) than to them; the retaliation in putting a duty on + corn because the Americans put a duty on cutlery would be (with our + lights) mere spite: it would be as though a farmer who took one sample of + wheat to market and one of barley, should meet a factor who offered him + his price for the wheat, but would not spring to his price for the barley, + and the farmer should thereupon sulkily carry both his samples home again. + </p> + <p> + The ideas of Reciprocity and Retaliation are pure relics of the old + Protectionist commercial theory, viz. that there is always a national loss + in parting with gold—that the foreign trade can only be profitable + to England so long as the value of the exports exceeds that of the + imports, so that a continual accumulation of gold may go on. + </p> + <p> + Now, first, we may meet this with the abstract scientific argument that + there is no character by which gold can be diagnosed as wealth from steel + or broadcloth. Our merchant who buys wheat for gold could buy from the + Americans wheat for cutlery or wheat for broadcloth. The reason he gives + gold for the wheat is merely because he makes a better profit by giving + gold than by giving anything else in exchange for the wheat. The nation + therefore gets a better profit that way too. + </p> + <p> + Descending a little from this abstract argument, our opponent says, "If + you go on buying wheat for gold, and cannot sell your cutlery and + broadcloth out of the country for gold, you <i>must</i> run out of gold." + But the fact has been proved by many years' experience not so to be: for + many years our imports have been some £150,000,000 sterling more than our + exports, while our stock of gold in the Bank of England (and the gold in + circulation) remain the same from year to year. This is one of those many + things (like the supply of meat to London) which will regulate itself + perfectly and insensibly (without any violent disturbances in trade or the + money market) if Government will only leave the matter entirely alone. If + our stock of gold is at all short our merchants give a little less per + quarter for American wheat; the trade is checked; the sensibility of the + market—the experience of our corn-traders—is such that the + balance is preserved with very slight oscillations. The refusal of the + Americans (enforced by an import duty) to purchase our cutlery, etc., <i>does</i> + partially check the reflux of gold to this country, and does lower + sensibly the price which the Americans get for their wheat from us. Errors + in political economy avenge themselves—often fearfully—on + their perpetrators. But our objector will still want to have explained to + him where the £150,000,000 sterling required in England annually comes + from. It is not essential to, or indeed any part of, my present argument + to explain this; but I will anticipate matters so far as to say shortly + here that this £150,000,000 is, roughly speaking, the interest on English + capital invested in foreign countries paid in cash to the owners resident + in England—it is equivalent to an annual tribute. + </p> + <p> + Professor Henry Fawcett's <i>Lectures on Free Trade</i> is a sound and + admirable book: it is occupied a good deal with the practical question why + so few foreign nations have adopted Free Trade, and how such foreign + nations are to be converted to the orthodox creed of Adam Smith. But, as I + think, unfortunately Professor Fawcett has in that book used the words + Reciprocity and Retaliation pretty freely. Their mere use is enough to + fortify a French or American Protectionist in his present policy; he + naturally says, "The English Free-traders themselves admit that we are + making money out of them: we take their gold for our wine and wheat; we + refuse to give our gold for their cutlery and broadcloth: those English + have now to come to us whining for Reciprocity; as to their Retaliation we + are not alarmed—we know they <i>must</i> have wheat and <i>will</i> + have wine." I would wish to expunge the words Reciprocity and Retaliation + from the subject, as being words merely suggestive of false views. But the + most fatal course to the adoption of a Free Trade policy by foreign + nations has been our plan of humbling, begging (and indirectly giving a + consideration for) Commercial Treaties. Such a course is enough to (and + does) counterbalance with foreign nations all our theoretical writings + about Free Trade. We go to France and say, "We will let in your wines at a + lower duty provided you do us the favour and give us the advantage of + lowering your duties on English manufactures." I cannot conceive any way + of putting the matter more strongly calculated to convince the French that + we believe we lose by purchasing their wines and gain by selling them our + manufactures. + </p> + <p> + It appears to me that if we wish to convince Europe and America of the + truth of Free Trade (as understood by our political economists), our + proper course is to adopt Free Trade ourselves FULLY (if the principle is + good for wheat it is good for tea—I shall return to this), and then + to say to foreigners, "See how we prosper under Free Trade." If the + Americans continue to maintain Protectionist duties on our manufactures, + our line of conduct is not to offer to pay them indirectly to relax those + duties, but to say, "You are losing more by your duties than we are; the + proof of the pudding is in the eating." If I believe, as I do, that the + Americans are gaining less wealth under Protection than they would under + Free Trade, I cannot imagine any plan less likely to convert them to my + views than my going to them and saying, "We will give you £5,000,000 + sterling (or some valued political advantage) if you will alter your + mistaken policy." If this course did not confirm the Americans in the very + deepest suspicions that Protection is really advantageous to them, and + that we in our inmost heart think so too, my ideas of human nature are + altogether at fault. But every foreign debate, whether in France, Germany, + or America, on Free Trade, convinces me that I am not mistaken in the + effect which I attribute to our prayers to every foreign nation to grant + us a Commercial Treaty. + </p> + <p> + <br /><br /> + </p> + <hr /> + <p> + <a name="link2H_4_0005" id="link2H_4_0005"> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h2> + 3. UNIVERSAL FREE TRADE. + </h2> + <p> + Wheat is now admitted to England free of duty. Tea pays a duty of about + £4,000,000 sterling a year. This is called a duty for revenue, not for + protection. Tea is an article of universal consumption; the tax on it is + open to the objections against a poll tax or hearth tax, viz. that by it + many a poor old woman is taxed as heavily as far richer people; indeed, + owing to the poor consuming the lower-priced teas, they are by the present + duty taxed at a higher rate than those who can afford the more expensive + teas. + </p> + <p> + The reply in defence of these anomalies is, "We have to raise £4,000,000 + sterling by a duty on something; on whatever we put it, it will no doubt + be bad." Granting, however, this for a moment, the onus lies on the + defender of the existing tariff to prove that it is better to raise the + £4,000,000 required from tea than from wheat, or than to raise £2,000,000 + from tea, £2,000,000 from wheat. Mr. Raban, a leading tea-planter in + Assam, has observed that if the duty on tea was replaced by one on wheat + to raise the same gross amount, the pressure on the English poor would be + less; while an encouragement would thus be given both to tea-planting in + India and to agriculture in England. I adduce this case of the duty on tea + merely to bring out strongly the fact that Free Trade in wheat is not + universal Free Trade. I do not recommend that the duty on tea should be + replaced by other duties: I am going to raise the question whether it + should not be replaced by direct taxation. + </p> + <p> + In the case of tea, the duty can hardly be said to be "protective," except + so far as by raising the cost of tea it impels English drinkers to have + more free recourse than they otherwise would to other drinks; but in a + large number of cases a duty operates both as a revenue and as a + protective duty. It is a curious fact that the fanners, after unanimously + struggling FOR the duty on wheat because it was a protective duty, + subsequently unanimously struggled for thirty years AGAINST the malt tax + (involving a duty on barley) because it was a revenue duty. As soon, + however, as the malt duty was repealed, they discovered that it had been a + protective duty; barley fell in price (malting samples) about l2s. a + quarter, and has never recovered, nor does any farmer now suppose it ever + will. This is rather a complex case, because on the abolition of the malt + tax an equal tax (in gross amount) was put on beer; and it might be + supposed at first sight that this would not affect the price of barley. It + has in several ways: Firstly, Many brewers now brew common beer with + one-third malt, two-thirds molasses, cane sugar, etc. The tax being on the + beer, Government no longer cares whether it is brewed from malt or from + rubbish, and the consumers grow soon accustomed to the lowered taste of + malt in their beer; Secondly, The admission of foreign malt and barley + without duty has quickened the importation by removing those restraints + and interferences which hamper trade out of all proportion to their + expressed amounts in pounds, shillings, and pence. + </p> + <p> + In order to establish a Universal Free Trade and to make every port in + England a free port, it would be necessary to raise by direct taxation + about £40,000,000 annually, because the excise on beer, etc., would have + to be abandoned with the Customs duties. We will consider the possibility + of raising this £40,000,000 by direct taxation before we dilate on the + advantages which would follow Universal Free Trade. + </p> + <p> + Ricardo, at the end of his masterly consideration of the effect of + taxation variously levied, comes to the general conclusion that the best + tax is that which is least in amount. Adam Smith and the older economists + held that one test which a well-devised tax had to satisfy was that it + should take the money from the taxpayer insensibly, indirectly. Now, all + taxes that thus insensibly drain the taxpayers invariably take more in + gross from them than reaches the Government. To raise £40,000,000 by + customs and excise costs about £3,000,000; so that the people have to pay + £43,000,000, while the Government gets £40,000,000. In direct taxes, as + income taxes, property rates, the cost of collection is very small—about + two-pence in the pound. In public as in private business it is much more + economic to look payments in the face and make them with our eyes open + than to let the money slip away in driblets. Moreover, modern politicians + think, in opposition to Adam Smith, that it has a good moral effect on the + body politic to be made to feel exactly what taxes they pay, so that they + cannot help knowing whenever taxation is increased. + </p> + <p> + A serious objection to indirect taxation is that it always falls with + unfair weight on the poor, as in the case of tea duties stated above. It + may be urged that the existing duties are (except tea) nearly all on + luxuries, as beer, spirits, tobacco. But the English have drunk beer for + many hundred years; the taste for beer is largely fixed by inheritance; + beer as supplying sustenance in a form that <i>rapidly</i> assists + exhausted nature is, to very many at least, as much a necessary of life as + tea is. Whether we believe tobacco to be injurious or not, we have no + right to impose on an article so very largely consumed a duty which + amounts to taxing the poor out of proportion to the rich. + </p> + <p> + If all the indirect taxes are removed, the poor (at least down to those + earning £1 a week and upwards) must be made to contribute to direct taxes. + It may be urged against Universal Free Trade that the poor are so ignorant + that they would sooner pay sixteen-pence a week in taxes indirectly than + eightpence directly. This might prove a fatal objection to carrying out + Universal Free Trade at the first attempt; but one of the objects to be + gained by direct taxation is the education of the people. It may also be + urged that the whole political power being now in the hands of the masses, + they are so selfish and unjust that if taxation is made a plain matter + they will put all taxation on the rich and refuse to pay anything + themselves. The reply to this is, If this is your estimate of the + understanding and morality of the masses, you should not have put the + whole political power in their hands. + </p> + <p> + We are only attempting at present to show that the £40,000,000 sterling + (to replace duties and those parts of the excise which hang on duties) <i>could</i> + be raised by direct taxation: we are not attempting to show the best way + it could be raised by direct taxation; it will be seen hereafter that a + portion of it might perhaps be better raised by a National Property Rate. + </p> + <p> + The £40,000,000 would be raised by an income tax of sixteen-pence in the + pound—(I am underestimating safely—about a shilling in the + pound would raise it really),—carried down to £156 a year without + any reductions; while incomes of £1 a week paid eightpence weekly, and + incomes of £2 a week paid twelvepence weekly. In the Crimean War the + nation endured an income tax of sixteen-pence in the pound; it is certain + that the nation is richer now, and better able to bear such a rate. + </p> + <p> + But this is not the strength of the argument. In the Crimean War England + endured sixteen-pence in the pound <i>extra</i>, in addition to all + existing taxes (some of which were raised too), and the capital thus taken + from the people was destroyed (much of it) or dissipated in the Crimea. + But the sixteen-pence in the pound here suggested would be in lieu of an + equal amount of taxes taken off (it would be rather less in amount than + the taxes taken off): the nation therefore, would not feel it at all, + though individuals would feel it in different ways. A poor man would have + eightpence a week deducted from his wages, but he would get his beer at + three-fifths the present price, his tea at two-thirds the present price, + etc. He would soon feel that he gained by the change. The rich would find + that they lost; but that loss would, I believe, be made up to them over + and over again. + </p> + <p> + First, I believe it is impossible to realise the effect on our trade of + having London, Liverpool, etc., free ports. We possess at present half the + ocean trade of the world: with our ports free, we should get a yet larger + share of the world's trade, and secure it permanently. That is to say, we + should certainly keep it until other nations adopted Universal Free Trade. + </p> + <p> + Secondly, The fall in the price of tea, beer, etc., would be more than the + amount of the tax remitted: the freedom of universal manufacture without + any Government interference, the liberty to land tea without delay, and + put it into the market without having to advance the duty, would cause at + once a great activity in the trades, and at the same time a fall in price. + By diminishing the need for middle-men the quality of the beer, tea, etc., + would be raised, and adulteration diminished. + </p> + <p> + Thirdly, The fall in the price of tea and beer would bring down the price + of all competing drinks: it would at first diminish the consumption of + competing drinks. The cheapening the price of some of the prime + necessaries of life would be to some extent divided between capital and + labour. As in the case of wheat, the labourer would be made better off, + while the profits of capital would be raised. A general and permanent + improvement in all trades would result, except possibly in those of the + tea-dealer and brewer—but I do not think they would lose. I see no + end to the developments from Universal Free Trade: we can only gain some + idea of what they would be by tracing as far as we may what the results of + Free Trade in one article—wheat—have been; and in doing this + we must recollect that before 1846 the quantity of wheat imported was + trifling compared with the present importation. + </p> + <p> + To this scheme of direct taxation Edward Wilson objects, "Taxation should + fall on expenditure, not on income." It is true that our object must + always be to encourage accumulation, and discourage destruction of capital + (expenditure). Practically, it does not appear that a heavy income tax + diminishes the taste for accumulation in England: it does increase the + tendency of large capitalists to invest their capital out of England, so + as to avoid the State charges on capital in England. But the capital in + England and the quantity of English capital invested abroad are already so + enormous that the "tendency" of an increased income tax may be + disregarded. Lastly, it may be objected, Would the sixteen-pence income + tax levied as you propose (or nearly so) raise £40,000,000? At the time of + the Crimean War each penny in the pound income tax brought in a million + sterling. At the present time, each penny in the pound income tax brings + in nearer two millions sterling, but the productiveness of the tax is much + interfered with by the large remissions now allowed, and subtractions + which take effect just where the contributors to the tax are most + numerous, say from £100 to £300 a year. I therefore reckon that, without + remissions, the tax of sixteen-pence in the pound down to £156 a year + would produce about £30,000,000, and that the tax down to £52 a year would + about produce the rest. The <i>total</i> income that income tax is now + levied on is nearly £600,000,000. We need not be surprised at the + productiveness of the income tax. A man of £10,000 a year pays tax on + that. But he has a steward on £300 a year, he is worth to his firm of + lawyers £100 a year, and so on: these pay income tax on the £300 and the + £100 over again. When the income tax is carried down to incomes on £1 a + week, the tax will be levied on the same income over and over again. Even + a spendthrift with £10,000 a year usually scatters more than he actually + destroys. + </p> + <p> + Lastly, It has not been overlooked that there is an income tax now: and if + the whole proceeds of the sixteen-pence income tax were used to fill up + the deficiency in customs and excise, then we have to make up a deficiency + equal to the present proceeds of the income tax. This might be done (to + start with) by the National Property Rate now to be suggested. But the + expectation is, that with Universal Free Trade, and the tremendous + stimulus thereby given to commerce and manufacture, the National Income + would rise with a bound, and that in two or three years a much lower rate + than sixteen-pence income tax in the pound would supply the amount of all + the indirect taxes abandoned. + </p> + <p> + <br /><br /> + </p> + <hr /> + <p> + <a name="link2H_4_0006" id="link2H_4_0006"> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h2> + 4. THE RANSOM OF THE LAND. + </h2> + <p> + Many people see quite clearly that, the population of England being + 25,000,000, the next baby born has a right to one twenty-fifth-millionth + part of the area of England in soil of average fertility. The arrangements + of society by which the laud is partitioned among a limited class, and the + complicated rights sanctioned by law in one plot of land, are considered + of no validity as against the natural right of the new-born baby. I do not + see this theory to be self-evident: on the other hand the supporters of it + always give it as fundamental, axiomatic; they no doubt presume rightly + that the land is limited, and that if one man holds more than his + arithmetical share, he must push out somebody else from his arithmetical + share: while a man who keeps a hundred pocket-knives does not perceptibly + hinder other people having numerous pocket-knives. Still I do not see how + this consideration weighs against Lord Derby's title to his lands, if the + body politic has determined that on the whole it is best for the community + that land should not be held equally by all, and sanctions by law Lord + Derby's monopoly of a large area. On the theory of the natural right of + every infant born to its arithmetical share, the monopolisers of land are + liable to a perpetually recurring ransom: this can only practically be + carried out by a special National Rate on Real Property (<i>i.e.</i> Land, + with the houses, mines, etc., inseparably attached to it), which must be + in addition to such taxes as income tax, succession duty, etc., which land + already suffers equally with trades, professions, offices, and personalty. + The local rates in England exceed £25,000,000 annually; and the ratepayers + perhaps reckon this a large enough ransom. I should remark in passing that + one man with 1000 acres of land does not dispossess any more babies of + their rights than do ten men with 100 acres each. The ransom therefore + must be a strictly level rate: to put a higher rate on large holders, or + to despoil large holders of a portion of their landed property, will be to + work the ransom unfairly. It hence will follow that any heavy ransom is + now impracticable. Of late years some farms have gone out of cultivation + because they will not pay the tithe, land tax, and rates already on them: + to put any heavy ransom on the land would at once throw large areas in + England out of cultivation. + </p> + <p> + The question of the ransom, therefore, is not so all-important as has been + considered; the rates at present being £25,000,000, it might be possible + to levy an additional national rate of £5,000,000 to keep down the + perpetually upspringing rights of new-born infants, without throwing land + out of cultivation to any sensible extent. The whole question will lie + thus between a total rate of £25,000,000 and £30,000,000. I am about, + however, as a corollary to this subject, to suggest a way of forming a + National Rate Book which probably would not materially alter the present + rating, but which would alter entirely the taking of land for public + purposes, and would effectuate all that is good in the phrase the + Nationalisation of Land. + </p> + <p> + This phrase is liberally used but rarely defined. Different orators appear + to have quite different ideas as to what it means; and when they explain + what they suppose it to mean, they generally prove that, in the way they + understand it, it would be serious national damage. + </p> + <p> + It is unnecessary to observe that landlords now (omitting individual + exceptions and idiosyncrasies) expend their best endeavours in getting the + best rent they can for their land. They have no prejudices in favour of + farms of a particular size; a landlord of a farm of 1000 acres would let + it directly in five-acre plots if he could get a better (and equally + certain) gross rent by so doing. "Nationalisation" is often taken to mean + that Government is to buy land and let it out in small plots. But apart + from expense of Government management and objections to Government + interference, we may safely assume that there would be a national loss by + this procedure: the private owner would discover very quickly if he could + make a profit by letting his farms piecemeal. + </p> + <p> + All Government interference can do to improve the produce of the land is + to abolish all restrictive laws, and to make the general tenure of land + such that every piece of land shall fall into the hands of that man who is + able to make the most of it. The National Rate Book now suggested is + designed to accomplish this end. We will subsequently consider how it + might assist public companies. As the suggested way of getting a National + Rate Book is at first sight rather startling, I would premise that it is + no rash invention of mine; it worked admirably in Attica—as see + Demosthenes or Boeckh. + </p> + <p> + To make the National Rate Book, each landowner values (with the + magistrate) his land at what price he pleases; the State has the right to + buy the land at any time at that price, plus 33-1/3 per cent for + compulsory purchase. The magistrate sees that each separate house, farm, + and plot is valued separately. No person need prove his title; any man can + value any piece of land, and need not prove himself to be owner, tenant, + or agent; but any piece of land valued by no one would be claimed as + public property. + </p> + <p> + A man who valued himself unfairly low would not be bought out at once and + dispossessed by Government, unless it happened that during that year his + land was taken up by Government or by a railway company for some public + purpose. The regular course of business would be as follows:—An + owner A would put his house and curtilage in the Rate Book at £1200. The + sycophant B would come to the magistrate, offer £1600 for the property, + and lodge the £1600 with the magistrate. The magistrate then, without + divulging the name of the sycophant, would write to A either to rate his + house at £1600 (paying a fine for so doing), or to take £1600 for it. If + he took the £1600, B would get the property, and Government the increased + rate. If A preferred raising his rateable value to £1600, B would get the + fine, Government would get the increased rate. + </p> + <p> + <i>The utmost pressure put upon any owner under this system would be that, + if he would not pay rates on x pounds for his property, he would lie + obliged to take x pounds for the property.</i> + </p> + <p> + The 33-1/3 per cent for compulsory purchase is illusory, and I have only + put it in the statement of the scheme to meet an objection which I know to + be common (and equally illusory). It is clear that if I know I am going to + get 33-1/3 per cent for compulsory purchase, whether from Government or a + secret sycophant, I shall proportionately undervalue my property. Thus if + I estimate the real value of my house and curtilage at £1200, and feel + that I do not care if I sell at that price, I shall put it down in the + Rate Book at £900. This applies to all owners, so that the allowance for + compulsory sale would only artificially depreciate by one-fourth all the + rateable values put down in the magistrate's book. + </p> + <p> + I have not stopped to cumber the statement of this simple plan by adding + the details necessary to meet severance of a farm by a railway company, + etc. The provisions to meet complicated tenures, etc., would run much the + same as in the Lands Clauses Consolidation Act. + </p> + <p> + It will be at once seen that this form of Rate Book would really + nationalise the land by bringing each piece into the hands of him who + could make most out of it. If I saw my way to use a piece of laud so that + it should be worth £1000 to me, and if on looking into the Rate Book I saw + that the present owner only considered it worth £600 to him, I should at + once lodge my £900 with the magistrate. A few owners would really feel as + Naboth. They could indulge this feeling by putting a very high rateable + value on their property. The high rates they would thus have to pay would + be the due ransom of the land; but in general every piece of land would + pass into the hands of him who could make most of it. There would spring + up, as in Attica, a large class of professional sycophants. By their + incessant operations, properties small and great would be continually + passing from the slothful and the old-fashioned to the enterprising and + modern-educated. No nationalisation of the land could get so much out of + it or conduce so highly to progress as the National Rate Book. We should + have companies and adventurers buying up all sorts of pieces of land, just + as formerly they speculated in taking up land for mining in Cornwall. We + should see an extraordinary activity in the employment of capital in + England. + </p> + <p> + For all public improvements, as a new street or a Government military + station, a few minutes with the map and Rate Book would show the + Government officer or engineer the best route or plot to take, and would + also show him the exact cost of the land for the scheme. There would be no + law expenses, no prolonged fights, no juries, no arbitrations. + </p> + <p> + Wastes, downs, heaths, bogs, would be rated very low. It would be in the + power of Government to take up largely and at small cost large areas of + Surrey heaths, etc., to provide air and recreation ground for an + evergrowing metropolis. In this manner, too, public commons and + quasi-public commons might be secured to the public all over England: a + public-spirited town-council or a local Kyrle Society would have a wide + field and an immense stimulus for action. + </p> + <p> + I have not stopped to rebut the common (but mistaken) idea that burdens on + the land (being in gross not more than the rackrent) affect the + cultivation. Partners have long drunk at market dinners "Confusion to the + black slug that devours the English farmer." How is it that these farmers + did not (do not) see that there are tithe-free farms (and some tithe-free + parishes) in England, and that the tenants of such farms get no advantage + by being tithe-free? + </p> + <p> + As I explain elsewhere, a tenant with several years of his lease to run is + (economically considered) a part landowner: if the tithe were suddenly + abolished, tenants with leases would get relief as well as their + landlords. So if a new tax or rate is laid on land (and made payable by + the tenant), all tenants with leases will have to pay such tax or rate out + of their own pocket so long as their lease lasts; afterwards it will fall + wholly on the landlords. + </p> + <p> + It is repeated now, in nearly every country newspaper, that the English + farmer cannot compete with the American grower because of the burdens on + the land of England. I will not write out (I cannot improve) Ricardo's + proof that rent does not enter into price. The "burdens" on land are + really first charges on the rackrent and do not affect a year-to-year + tenant at all. When a farmer meditates taking a farm he asks not merely + what is the rent: he inquires what is the tithe, what the average amount + of the rates (and is that likely to increase or diminish during the next + seven years); the intending tenant only wants to know what sum in all he + will have to pay for the farm; whether any of this payment is called tithe + or not, or whether some of it is quit-rent, or whether he is to pay the + land tax for his landlord's convenience,—about all this he cares + nothing; they are mere questions of names to him. + </p> + <p> + <br /><br /> + </p> + <hr /> + <p> + <a name="link2H_4_0007" id="link2H_4_0007"> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h2> + 5. MAKING THE MOST OF OUR LAND. + </h2> + <p> + John S. Mill, following W. T. Thornton, advocated a system of petty + proprietors against the English system of large farms with hired + labourers. Figures were quoted to show the splendid produce got by petty + proprietors in France and elsewhere—as the result, however, of + infinite toil. The petty proprietors were, moreover, shown to be much + better off than our hired labourers; and the magic of property combined + with independence was represented as having produced a superior class. + These things may have been so, at least in some cases and particular + countries, at the date (before 1846) when J. S. Mill originally put + forward these views. The liberal, and radical writers on political economy + and sociology still follow (most of them) on the same side, which has + become in a manner historically the liberal side. There is much against + it. + </p> + <p> + First, Production on the large scale is cheaper than on the small; this is + as true of agriculture as of other industries. The large farmer has one + fixed and one movable steam-engine of his own; he has his own drills, + threshing and winnowing machines, reaping and mowing machines. The petty + proprietor may hire these, but at a dear rate, and few of them can work to + any advantage on his small patches of corn. The large farmer has large + fields; he saves area as against the petty proprietors; he has fewer + headlands and fences, harbouring weeds and stopping the sun and air. The + large farmer can work corn and sheep together; one shepherd and his boy + will look after 500 ewes. You may travel 200 miles by rail in France and + not see two flocks of sheep. Sheep-farming is seen all the world over to + be an industry that pays on the large scale; and the want of it injures + the corn produce of the French petty proprietor. Louis Napoleon sent + Lavergne to make a report on English farming; the substance of his report + is, that were France farmed on the English system by English farmers, the + corn produce would be four or five times what it is now; leaving sheep out + of the question. + </p> + <p> + The advocates of peasant-proprietorship, at least the better informed + ones, do not now suppose that a peasant receiving a few acres out of a + large English average farm (and capital to make a start) could make a + subsistence out of it. They believe that peasant-proprietors could + maintain themselves on small plots of rich land in and close to towns, + working as market-gardeners or cowkeepers rather than as farmers. + </p> + <p> + This narrows down the peasant-proprietor theory vastly in its practical + application; it remains hardly a national question. But I have been + astonished to see in the neighbourhood of London of late years the large + "gentleman" market-gardeners steadily displacing the smaller and all the + single-handed men. The subject is so important that I will take one of two + instances in detail. I have seen a gentleman market-gardener, eight miles + or so from Covent Garden, growing strawberries, several acres in each + patch. He had young men (a separate staff) out at daybreak to keep the + birds off. The small gardener, growing a few long beds of strawberries, is + ruined by the birds, whether he lets them eat or goes into the expense and + labour of netting. The gentleman has his own large spring-vans waiting; + these vans are fitted for fruit, and as the pickers gather the + strawberries they deliver them in small and frequent parcels to the + packers. The moment the first van is laden it starts at three miles per + hour and travels to Covent Garden itself, where the strawberries are + delivered to the fruit-dealer, who buys them wholesale of the + gentleman-gardener. The small grower has to get his strawberries to the + local railway station, and to arrange to get them from the London terminus + to market; his trouble and expense are considerable; but, more important + still, his strawberries do not come into the hands of the wholesale dealer + in the "condition" that the large grower's do. This large grower admitted + that he was paying £12 an acre per annum for some of his land; he added, + "My labour per acre, and even my manure per acre, costs so much that I do + not think about a few pounds rent more or less." These gentleman-gardeners + are on the average better educated than the small market-gardeners; they + travel about the country, gather hints, and pick up new good varieties of + strawberries, etc. From their scale of operations and varied sorts of + strawberries they can, even in rough wet weather or in drought, always + supply to their wholesale dealer some fruit. In fine, they beat the small + grower at every point; they undersell him at Covent Garden; they outbid + him for desirable garden-land within reach of London. It may be said that + in growing plain vegetables the small gardener would not be at such a + disadvantage. I will reply (without detailing all my observations) that I + have seen the same gentleman-gardener growing a two-acre plot of early + radishes, and that he completely spoilt early radishes for all the small + gardeners. + </p> + <p> + The advocates of peasant-proprietors have thought cowkeeping hopeful for + small men. In my experience dairies of fifty or sixty cows have an + enormous advantage; they can have perfectly designed dairies; they have + enough cream to make butter daily throughout the year (which saves much + trouble, loss, and occasionally inferior butter); they can maintain + approximately a uniform supply. In short, they beat, undersell, and + displace the small cowkeepers wherever the large dairy is moderately well + managed. + </p> + <p> + The cottager or peasant-proprietor has, I believe, an advantage in poultry + of all kinds. When poultry are kept in very large numbers they are more + liable to disease, and the diseases are more disastrous—sweeping off + the whole large stock. Fowl and egg farming is one of the most successful, + perhaps the most successful point with the French peasant-proprietors. To + make birdfarming successful the proper plan is to keep a moderate number + of as many birds as possible—fowls, "galeenies," ducks, geese, + turkeys, large pigeons—and to go in for eggs as well as fowls. I + have not seen peasant-proprietors in England attempting this, which seems + to me one of the most hopeful of experiments for them. + </p> + <p> + The second point urged by Mill, and still by some, is that + peasant-proprietors are better off than English labourers. With the + present price of agricultural labour in England this seems to be very + generally not the case; the French peasant-proprietors and the + agricultural lower classes in Germany are (with small exceptions) now + worse off than the English farm-labourer; they work very much harder and + they get less to eat. The economic truth doubtless is that the hired + labourer may or may not be better off than the peasant-proprietor, + according to circumstances; and circumstances in England just now are in + favour of the hired labourer. + </p> + <p> + Then as to independence, it may fairly be questioned whether a good + agricultural workman, now practically liberated from the Law of + Settlement, and who can command a fair wage anywhere, is not really more + independent than a French peasant absolutely tied to a three-acre plot for + life. + </p> + <p> + The real difference between the advocates of the nationalisation of the + land and the Conservatives is this. The Conservative says, "Leave + everything to its natural course, and let us have no Government + interference. If the peasant-proprietor really can maintain himself while + paying as high a rent as the ordinary farmer, we shall soon have plenty of + them." Or, the Conservative has no objection to a philanthropist starting + a few picked peasant-proprietors as an experiment. But he objects to + starting any gigantic new scheme of working the land, except as a matter + of business; he objects to Government philanthropy, which means giving + away other people's money. + </p> + <p> + Our farm-labourers, as a rule, know nothing of gardening, and few of them + can command £10 capital. I have sometimes looked round to select a picked + man, and wondered whether, if I put him in a selected five-acre plot near + a town, and also lent him the £200 or so capital requisite to give him a + chance, this picked agricultural labourer would succeed; and I have + inclined to think he would not succeed. I need not therefore express any + opinion as to what would happen if Government were to take 10,000 or + 100,000 farm-labourers, advance them £200 each, and place them in + five-acre or ten-acre plots: there would be a tremendous bill to pay, and + the plan of peasant-proprietors would be put aside for many a day. If the + plan is to be successful it must be introduced gradually and in a business + manner, <i>i.e.</i> what does not pay must not be persisted in. + </p> + <p> + The plan, now frequently put forward, that Government is to employ all men + out of work to reclaim and bring into cultivation waste lands, is liable + to additional objections. Who is to fix the wages, the hours of labour, + and the tale of work for the Government labourers? If these were fixed as + the advocates of the plan wish them fixed, Government would soon have all + the labourers of the country in its employ. If, on the other hand, these + were fixed below the market rate, Government would only have such labour + as the Poor-Law Unions now have, and which they find hardly worth + employing. + </p> + <p> + Leaving this (practically grave) difficulty aside, if a heath or a moor is + now uncultivated it is because nobody sees how it can be profitably + brought into cultivation; it can always at a sufficient outlay be + reclaimed, but that will not be done unless it is calculated that the rent + of the land when reclaimed will pay the interest on the whole expense of + reclamation, and something besides. If Government reclaims land that + private persons cannot reclaim with profit, we may be sure that Government + will suffer a considerable loss. This must be provided out of taxes: are + the promoters of reclamation of wastes by Government prepared for this? + </p> + <p> + The wastes of England are the only land left the public. Elsewhere the + public can only walk along a pavement or a high road. The good land is all + pretty well in cultivation; and the best of what is left can give but a + moderate profit on reclamation, while its enclosure, under Act of + Parliament, deprives the public of it for ever. Hence Professor H. + Fawcett, throughout his parliamentary career, put his veto with great + success on all enclosure schemes. It is possible that there might be a + profit on the enclosure of Epping Forest: who will now support that + reclamation? + </p> + <p> + It is very desirable that wealthy private philanthropic individuals and + wealthy private philosophic societies, should try experiments in small + farming, market-gardening, co-operative farming, reclamation of wastes, + etc. There is no hindrance to their so doing: they can readily hire as + many farms as they please at cheap rents, and subdivide them, and put in + picked labourers with an advance of capital. But that Government should + embark in uncertain speculations of this kind is quite another thing. + </p> + <p> + The safe general principle, whether in the sale of horses, the letting of + houses, or the letting of land, is that Government should not interfere; + or, to speak more correctly, Government interference should only interfere + to prevent restrictive covenants and to ensure Free Trade, so that every + article (land included) may pass without restraint into the hands of the + man to whom it is worth most. The greater the individual profit the + greater the national profit. Under a section headed "Law," below, I will + say something about the removal of entail, etc.—a dry but important + branch of the question. The National Property Rate, with the aid of + sycophants, would remove many obstructions. + </p> + <p> + There has been much controversy and several Parliamentary Acts concerning + the regulation of bargains between landlord and tenant. How a tenant or a + landlord can be injured in such a bargain is impossible to understand, + except in so far as a man is injured who gives £30 for a horse worth only + £20. Will Parliament interfere to protect such horse-purchasers? The + matter has been obscured by omitting to notice that a tenant with a long + lease at a fixed rent possesses a share (often the larger share) of the + "landlord interest," in the language of political economy. As a simple + example: A tenant took, say in 1850, a Scotch farm on a Scotch lease + absolute of nineteen years, at £500 a year. Within two or three years of + his so taking it the rise in wool, potatoes, and other things, caused the + value of the farm to rise to £600 a year, and this increased value lasted + the whole of his lease and some time after. Now, treating the increase of + value of £100 a year as permanent (as it was very soon regarded both by + landlord and tenant), it is clear that this £100 a year for the period of + the lease (say seventeen years to run) went to the tenant, not to the + landlord; and the first seventeen years of an annuity in fee is worth more + than all the rest. + </p> + <p> + It is evident that on a seven years' (absolute) lease the tenant would + similarly get a good share (not the larger share) in all the improvement + in value that occurred during his lease. Up to ten or twelve years ago the + value of land had been rising very steadily in the South of England for + near half a century. Rents were pushed up very generally at the + termination of every lease, though noblemen, great county gentlemen, the + Church, and the Universities, as a rule, never raised the rent on an old + tenant; but they could raise the rent all the more by a jump when a new + man came in. During all these years the tenant-farmers complained rarely + of their leases, though they were often subject to covenant nuisances + about cropping, selling off the farm, game, and incoming for the new + tenant. + </p> + <p> + But during the last ten years the process is reversed. A farmer took a + farm for £500 a year for seven years in the south of England, and before + the lease had run half out the farm was not worth £400 (and in many cases + not £300). Here the tenant suffered a heavy loss. When in former years he + got a gain he never proposed to allow his landlord 15 per cent extra rent. + But now that the drop in value of such farms has taken place, and probably + will not proceed further, a tenant who takes a new lease requires no Act + of Parliament to protect him: he can protect himself. By the date the + Abolition of the Game Laws (a wrong but intelligible phrase) was carried, + the farmers in the South of England were in a position not to take any + benefit under that Act, but to covenant for all the game and sporting on + their farms for themselves. So as to the Act regulating the leases between + tenant and landlord, where they chose to avail themselves of it, the + tenant now can generally get more favourable terms outside the provisions + of the Act. Farms are so down, tenants so scarce, that landlords have to + give way on all minor points. Wherever Government interference operates at + all, it is almost sure to operate harmfully. Consider for a moment the + case of "incoming." Formerly, by the "custom of the country" south of + London, the incoming tenant paid for two years' dressing for the corn + crops, north of London he paid the outgoing tenant only for one year's + dressing, by the custom of the country too. The question practically only + amounted to increasing by 5 per cent the capital necessary to take the + farm south of London. Now what can be gained by Government interference in + such a matter as this, in which each farmer and land-agent was in general + in favour of the "custom" he had grown up under? + </p> + <p> + A prevalent idea is that the land is not highly farmed enough, and that + the land of England might be made to yield much more, and that Government + is to cause this to be done. It is most unfortunate to raise this theory + at the moment when land is "down," i.e. when produce is cheap, labour + expensive. Every farmer knows that the only way to meet these conditions + is to farm "lower." In a south country farm the farmer will sow much less + corn, and try to keep more sheep. In the Western States of America, where + produce is very cheap, labour very dear, the "lowness" of the farming is + always abused by the English traveller (who thus shows that he knows + nothing about either farming or political economy). A farmer, twenty-five + years ago, took a very large and fine corn farm: it had been worked on the + five-course system, i.e. three white crops in five years; the farmer made + a careful calculation whether a four-course husbandry, i.e. two white + crops in four years, would not be more profitable; it appeared to come to + exactly the same thing. At this juncture a rise of a shilling a week in + wages took place; this gave a clear advantage to the four-course, and the + farm was at once worked round to the four course shift. In this simple + case a small rise in wages brought about a considerable diminution in + gross produce, while the loss to the farmer was small. The remarks in this + section have been directed to the case, common in the South of England, + where there has been within the last twelve years a fall of rent from 25 + to 50 per cent. In pasture farms, in rich land, and in potato farms + (wherein you can keep one-sixth the land in potatoes), the fall in rent + has been much less—sometimes inappreciable. + </p> + <p> + But, some person may urge, if Government interferes, and compels the + farmer to farm higher than he wishes to himself, the gross produce will be + more, and the employment for labourers will be at the same time better. + True, and this is the quintessence of Protection. The whole point of Free + Trade is to allow capital to be employed where it is most profitable: high + farming is only to be preferred (both for individual and nation) to low + when it is the more profitable. Capital that cannot be employed to + ordinary trade profit on the land must be transferred to other industries + where it will earn the ordinary rate of trade profit; or, if there is no + trade yielding such profit ready to absorb it in England, the capital must + go to the United States or New Zealand and earn an increased profit. As to + the labourers, they must follow the capital; or they may starve in England + leaving few progeny, while the well-fed labourers of the Western States of + America and New Zealand leave large families: this will do instead of + emigration. + </p> + <p> + It is to be noted that great improvements in farming, especially in + machinery, have been effected in the last thirty years, largely by the + operation of the All England and County Agricultural Societies. I note + further that the people who abuse the farmers for bad farming and clamour + for Government interference to promote high farming, conspicuously refrain + from supporting these agricultural societies. + </p> + <p> + <br /><br /> + </p> + <hr /> + <p> + <a name="link2H_4_0008" id="link2H_4_0008"> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h2> + 6. FREE TRADE IN RAILWAYS. + </h2> + <p> + Government might monopolise the retailing of tea in England. At present, + in a country town like Exeter or Canterbury, there may be fifty grocers + selling tea. In their competition they lay out a good deal in + advertisement and handsome shop fronts in the most expensive streets; they + keep (the fifty between them) many more hands than are necessary to retail + the tea. All this outlay has to come out of the consumer. Government would + buy pure tea first-hand in large quantities cheap; a few trustworthy + highly-paid officials would test it, value it, and see it done up in + sealed packages of sizes from 16 lbs. down to 2 oz.: these might be sold + in an odd room attached to the Post Office in each town and village. There + can be little doubt but that a saving in capital and labour would thus be + effected, while the public would get the tea cheaper and purer than at + present. The 2 oz. purchaser, in particular, would pay a good deal less + for 2 oz. of real tea than she pays now for 2 oz. of rubbish. + </p> + <p> + Or,—Government might hand over the tea-retailing of Canterbury and + five miles round to a company as a monopoly: the state of things would be + something like what we experience in the large stores now: the public + would get their tea probably cheaper (quality considered) than at present; + the company would make a large profit on their capital. If Government + sanctioned two tea-retailing companies at Canterbury, these would probably + make a less rate of profit: though, after the first heat of fight was + over, they would probably agree to sell the same tea at the same + (profitable) rates, and the consumers would gain little out of so + restricted a competition. If a new company were to apply for a private Act + to enable them to retail tea at Canterbury, the old company would show + Parliament that themselves sufficed to satisfy the requirements of the + public. + </p> + <p> + The case of tea is a very specious one. By Government taking to itself + each branch of business in succession till all was in Government hands we + should arrive at Communism. For each successive interference of Government + a reason from economy can generally be found: as in the case of + telegraphs, so in the case of tea. The real objection to Government + monopolising the retail of tea is, that so long as we live under a system + of competition we had better stick to that plan altogether. At every turn + of our present struggling system there is waste; but the ultimate effect + of competition is to reduce the waste to a minimum. In the extreme case of + tea it is pretty clear that the system of stores will, when fully + developed, give the public all or nearly all they might hope to get from + Government retailing, and at the same time will reduce the loss by + competition among tea-retailers. + </p> + <p> + But there is one industry, one branch of the public service, which should + be the very last to be monopolised or restricted by Government, viz., the + carrying of passengers and goods from one place to another, especially + carrying by railway; and yet this particular industry is hampered by law + and restricted by monopolies above all others—as I suppose, most + unnecessarily; but I will take a few cases in detail before arguing from + the general principle of Free Trade. + </p> + <p> + There is one railway from London to Brighton: there are two railways from + London to Exeter. There are fewer quick trains daily from London to + Brighton than from London to Exeter. There are third-class carriages at a + penny a mile on all the quick trains from Waterloo to Exeter: from London + to Brighton the only penny a mile train starts at an inconvenient hour and + travels exceedingly slow. The Brighton charge express fares on every + convenient quick train they run; the South-Western have no express fares + at all. The South-Western third-class carriages are padded, and as + comfortable as the first; the Brighton third-class carriages are bare, + very long, and run so badly that the shaking, the rattling of glass, and + the draughts, keep everybody (who can possibly afford it) out of them. + </p> + <p> + Naturally there have been numerous schemes for a second railway from + London to Brighton in the course of the last twenty-five years. The + present railway company has (they are not to blame for it) opposed each + scheme tooth and nail. They have shown that they themselves satisfy the + requirements of the public, and at the same time do not make a very high + dividend. If a new grocer required an Act of Parliament to set up as a + tea-retailer in Canterbury, could not all the existing tea-retailers there + prove most triumphantly that an additional grocer was not wanted, and that + their own profits were reasonable? It is not too much to say that the + greater part of the evidence admitted by Parliamentary Committees against + proposed new railways is foolery: without wasting time on it, the + Parliamentary Committee might assume as proved that no monopolist trader + wants a competitor. But the only safety for the public is in competition. + In railway competition the public always profit: if the two companies + agree to run at the same fares, the public gain in number and speed of + trains, better carriages, and attentive consideration of their comfort. + Moreover, in the case of two railways between London and Exeter, or + between London and Brighton, the two lines only meet (not then quite) at + the two termini; and the public is accommodated at all the new + intermediate stations where there was no station at all before. + </p> + <p> + The North-Western Railway was many years ago opposing a directly competing + scheme. They brought before the Parliamentary Committee the late Mr. + Horne, whom they justly credited with ability enough to throw dust in the + eyes of almost any Parliamentary five. Mr Home's evidence was: "I + understand railway traffic as well as anybody; the public are deluded in + thinking they would gain by competition: the two companies might fight for + a week or two, then they would more wisely agree, and put up their fares + above the present North-Western fares, till they had recouped themselves + out of the public all they had lost by their fight." This did very well + for the Parliamentary Committee; but it is a fallacy. At present the + North-Western Railway, though empowered by law to charge three-pence a + mile first-class, charge twopence a mile only: why?—because twopence + a mile they find to be on the whole the most paying rate. Ergo, after the + fight with their directly competing brother was over, they would settle + down to twopence a mile again. The public could not lose by the + competition; they might gain. All experience shows that they invariably do + gain. + </p> + <p> + In France, Government has restricted the construction of railways very + greatly, and protected the monopoly of each existing company closely. The + mileage of railway open in France, in proportion to area and population, + is very small in comparison with that in England. Moreover, the French + lines are worked by quasi-Government officials, whose object is to avoid + work, and still more to avoid responsibility, and who will not make the + slightest effort to accommodate the public: they do not wish the trade at + their station increased. Under this system the traffic on the French + railways is low; especially when we consider how little each is interfered + with by other lines, and what a broad band of country it has to drain. + </p> + <p> + The immense progress made by England since 1846, as compared with the + progress of France or of Germany, is often attributed <i>solely</i> to + Free Trade. I believe Free Trade has done much for us: but I am sure that + our railway superiority (to France, Germany, etc.) has done much also. + Probably no one who has not <i>resided</i> some time in a French town (say + a station on a main railway 150 miles from Paris as the least favourable + case for my argument) can realise the enormous disadvantage by loss of + time that a French business man is under, as compared with the Englishman. + To get some necessary manufactured article from Paris is a matter of days; + during which his machinery may all stand still. The communication with + Paris, however, is where the Frenchman suffers least: the number of trains + is so small, and the slowness of all (but the express) is such that the + "local" traffic is nothing: unless a man intends to go a good many miles + he would ride or even walk rather than go by train. He does not mind + getting up at 2 a.m. to go to Paris; but he will not get up at that hour + to go six or eight miles, especially if he is given no choice as to the + hour at which he must return. + </p> + <p> + But the usual remark about the French railways is, "See how much better + they manage these things in France. While our railway companies are all + spending their money in fighting and in competition, and pay dividends of + 4 or 5 per cent, the French railways have their routes settled by + Government engineers, and pay 8 or 10 per cent." I am going to propose a + plan for stopping all company fighting in England for ever: but—as + to the dividend—it can only mean that, like any other Government + monopoly, the French public are being made to pay more for travelling than + they need. + </p> + <p> + As regards the interest of the public, the rate of dividend paid by a + great railway company is of very small importance. For many years the + South-Western Company paid double the dividend the Great Western did. How + did this affect the work each did for the public—the conveyance of + passengers and goods? Many common highways have been made by parishes and + landowners combined for the public convenience; the capital so laid out + paid no direct interest (the road was a highway, not a turnpike): how does + this case differ from a railway that pays no dividend on the original + stock? If the railway carried me from Exeter to London in five hours for + thirteen shillings, what does it matter to me whether the company pays + 2-1/2 per cent or 6-1/2 per cent to its original shareholders? In a very + few small and special cases we have seen a railway line not pay for the + working, and be closed. In a few other cases, where the dividend paid is + less than 4-1/2 per cent, it is possible that the utility of the line to + the public is less than the loss of the shareholders in a non-paying + investment. I say this is a possible and conceivable case—in some + very short lines or in some very thinly inhabited districts. Such cases I + believe rare. Not rarely the initial cost of the line has been seriously + increased by promotion, legal and parliamentary expenses, enormous sums + extorted for land, severance, etc.; if these expenses can be done away + with, these cases of railways constructed at a loss <i>on the whole</i> to + the nation may be made fewer still. + </p> + <p> + The way in which the railway monopoly, the monopoly of the great + companies, has grown up is noteworthy. To enable a company to take the + land of a private man compulsorily a private Act of Parliament was + necessary. The Parliamentary Committees then said, We will not enable you + to dispossess forcibly private owners of their land for "a public purpose" + unless you further shew that this includes a public advantage. Private + owners were of course let in to show cause against a new railway; they + always talked like Naboth (the Parliamentary Committees must have been + wearied by the continual references to Naboth), but the genuine private + owners sold themselves at the last minute; after they had pushed the + company up to the highest bid, they well knew that this was above what + they could get in the after arbitration, and "closed," withdrawing their + opposition the last day in the Committee room. The opposition company, + besides the grounds of insufficient need for a new line, etc., always + supports and comforts the opposing landowners: but the great resource of + the opposing company is to hire a landowner to oppose, especially a local + attorney or agent who owns land proposed to be taken by the new line. Such + an attorney, employed professionally by the opposing company, cannot be + bought off at any price; he is a real Naboth, and in his character of a + dispossessed landowner he will fight for the company every point that they + cannot decently fight for themselves. + </p> + <p> + Opposing a railway bill in Parliament has thus become an art; so much so, + that no independent small line can be made unless they can get the support + of one (at least) of the great companies that are supposed to occupy the + area. The lines made (economically often) by the great companies + themselves are not primarily designed for the accommodation of the public, + but for the private purposes of the great company; sometimes they are made + merely to diddle another great company. + </p> + <p> + It is well to compare the law regarding making a new railway with that for + making a new main-drain in the fens. In the latter case the new drain + company receives extraordinary powers and may put a rate on the land + benefited. In the case of a railway passing through a farm, the common + estimate is that it adds a shilling an acre value to the rent of the farm; + if there is a station on the farm it often adds much more to the + agricultural value. Landlords are up to this: a landlord triumphantly told + me, "I got £7000 from that company for cutting me up; but I would have + given them £14,000 to cut me up more." (In this case, however, building + value came in.) But the disgraceful squabbling of companies, who "sell" + any owner without scruple when they come to terms among themselves, has + disgusted landlords from actively supporting railway schemes. + </p> + <p> + A great deal of the opposition between rival companies has been from their + point of view an error, as they have subsequently discovered for + themselves. When the Great Western Company first opened their station at + Basingstoke there was war between them and the South-Western, who thought + all their London West-End passengers would transfer themselves to the + Great Western at Basingstoke in order to avoid a cab drive from Waterloo + to Paddington. Some passengers do so transfer themselves. But <i>via</i> + Basingstoke a fine trade sprang up between the south of England and the + Oxford and Leamington route, which far more than compensated the + South-Western Company for the London passengers they lost at Basingstoke. + So in a very few years there was peace at Basingstoke, and a + through-carriage daily from Birkenhead to Southampton. I think it is + impossible to estimate how much one railway company profits by the + facilities afforded by all the surrounding companies. The loss at a + limited number of competing termini is seen; the gain in the local and + cross-country traffic is not. + </p> + <p> + I propose Free Trade in Railways. I mean that any person or company shall + be free to make a railway wherever they please. They will have, before + commencing the line, to lodge with the Board of Trade the cost of the land + they take as valued in the National Rate Book, with the 30 per cent for + compulsory purchase. They will not have to lodge the money where they have + come to terms with the owner; and the Board of Trade will allow them to + construct the line in reasonable sections. Having lodged their money, the + company (or private speculator) will only have to go to work under the + (amended) Lands Clauses Consolidation Act. + </p> + <p> + If this scheme were sanctioned we should have in the course of the next + twenty years, <i>as I estimate</i>, £100,000,000 additional invested in + England profitably—not under Government pressure, but by business + men to get interest. Even where the new lines paid little interest we + should get the accommodation of the public. We should have no big village + without its railway; and we should have a great extension of private + sidings. On the eastern half of England we might get a great number of + narrow gauge steam trams running along the present trunk roads. (Suppose a + steam tram from London to York by the Royston route, going through all the + towns, running trams an hour apart all day, going eight miles an hour + through the towns, sixteen or twenty miles an hour in the country, taking + up and setting down everywhere, would it not pay?) + </p> + <p> + The only objection to Free Trade in railways is that it would injure the + existing railway monopoly. Under this principle no monopoly ever would + have been or ever will be put down. But I believe the existing great + companies would very generally gain by Free Trade in railways. + </p> + <p> + For, first, few new railways would be in direct competition with the old. + The old lines have level roads; they can run quicker and with less wear + and tear than the new ones, which would generally have steeper gradients. + The new Free Trade lines would be in the main a network in the interstices + of the present lines. By this the existing companies would gain + enormously; they would be the trunk lines which the network would feed. It + is true that there would soon be a second line to Brighton; the present + Brighton Company would possibly pay as good a dividend then as they do + now. But if they did not, it would only show how they tax the public now + as well as hinder trade. I am not bound to show that the monopolists would + profit by Free Trade; I deny that the monopolists have any vested interest + in their monopoly, or that Parliament, i.e. the nation, has made any + covenant with them that their monopoly shall never be invaded. + </p> + <p> + I have suggested three great changes: (1) Perfect Free Trade at all our + ports; (2) The exploitation of the land through the National Rate Book + machinery; (3) Free Trade in Railways. Of these the last is clearly + advisable, nor is there anything (in my opinion) to be urged on the other + side. At the same time it is not less important than either of the two + other suggestions. But the three would work best together—each + aiding and reacting on the other; they would thus provide "progress" + (which means comfort to all classes) in England for at least two + generations of men. If there was no National Rate Book, the new railways + would have to pay exorbitantly for the land they took up under the + existing arbitration system; they would be relieved merely from the + parliamentary opposition of other companies and of private individuals. + The private owner must be deprived of his present privilege of + parliamentary opposition, which gives him the power to extort an + exorbitant price for his land—because a company can always oppose in + the garb of some private owner whom they have hired. + </p> + <p> + A less but important branch of this reform is the narrowing of Government + interference under pretence of protecting the public. Great expenses are + thus thrown on railway companies. The companies cannot, therefore, charge + increased fares, but such expenses diminish the number of new railway + schemes brought forward. Nor do Government rules protect the public so + well as the old plan (abolished by Chief-Justice Cockburn) of making the + railway company pay for killing or injuring people. Now, after a great + railway smash, the company comes forward and shows that there was no + negligence on their part; that in the signals, breaks, etc., they had + satisfied all the Board of Trade regulations, and the injured passengers + can get nothing. The real way to protect the passengers is to allow the + company to make their own arrangements, and to compel them to pay heavily + for killing and maiming passengers. This is quite defensible in theory, as + in the case of manslaughter by an individual we give him some punishment + out of our civilised respect for human life, though he may have been + little to blame. Great cost is thrown on railway companies (i.e. much + injury is done the public) by standing orders (cast-iron orders) about + gradients, etc. The company's solicitors order the company's engineer to + comply with standing orders at all costs rather than introduce any special + clause. The consequence is that we see much money spent and a most + inconvenient level-crossing placed at the entrance to some large town, + where a steep gradient for two hundred yards on a straight piece of road + (to which there is no objection) would have avoided all difficulty. The + responsibility in all such cases should be thrown on the company, and + Government interference abolished. + </p> + <p> + <br /><br /> + </p> + <hr /> + <p> + <a name="link2H_4_0009" id="link2H_4_0009"> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h2> + 7. REFORM IN LAND LAW. + </h2> + <p> + The transfer of stock in the name of two trustees in the funds is done in + a few minutes at small expense. The transfer of land in South Australia is + done in a few minutes at small expense at the Government registry. The + transfer of land in England requires an uncertain time and cost—usually + some weeks, and 5 per cent on the purchase money; sometimes months, and 10 + to 25 per cent on the purchase money. It is equally expensive and slow in + the register counties of York and Middlesex. The Acts of Brougham, + Bethell, Cairns, to facilitate transfer have not materially reduced the + evil. In many cases, however much the land may be wanted for public or + other purposes, the lawyers tell you that no title can be made without a + private Act of Parliament—so effectually has the land been tied up. + </p> + <p> + The common idea is that this peculiar difficulty, delay, and cost in the + transfer of land arise from the law of inheritance and the legal machinery + of entail; but stock in the funds can be virtually entailed and made to + "follow the estate," and yet this stock can be transferred just as readily + as any other stock. + </p> + <p> + The explanation is known to every lawyer; but I have met with more than + one Member of Parliament who, though blatant about entail, understood no + more about the matter than a chimney-sweep. + </p> + <p> + The point is that, under English law, the trusts in the case of stock + attach to the trustees, not to the stock; in the case of land, the trusts + attach to the land itself as well as to the trustees. Hence, when I + purchase stock of trustees I need not trouble about how they apply the + purchase money; in the case of land I have to go into the whole title. + </p> + <p> + A simple illustration. I provide for a daughter £300 a year by putting + £10,000 in the hands of two trustees in the funds. Should the trustees + prove rascals, sell the stock, and decamp with the money, my daughter will + lose everything; the purchaser from the trustees can hold the stock clear + of all charges or liability. But if I provide for my daughter by charging + an estate with £300 a year for her, then however wrongfully that estate + may be sold, mortgaged, or otherwise dealt with, she gets safely her £300 + a year. If the bank B has advanced money on mortgage on that estate, not + knowing the existence of the charge of £300 a year for my daughter's + benefit, the law simply says to the bank, "It was your business to know; + you should have completely investigated the title before you advanced your + money." + </p> + <p> + It follows, therefore, that if, with a Government Land Registry Office + (say one for each county), you required the purchaser only to get in the + legal estate, <i>i.e.</i> holding him not responsible for the trusts or + the application of the purchase money, then land could be transferred + exactly as money in the funds is now, in spite of all the complications of + our law (or rather custom) of entail. + </p> + <p> + The law of entail in England (so called) is not what the popular orators + suppose. The eldest son inherits really; that is, if there be no will, no + settlement, or other disposition of the property. But there nearly always + is. It is a very rare thing for the heir-at-law to take land (except some + very small pieces) by the law of inheritance. As to entail, it is + practically carried out by a continued system of surrender and + re-settlement—a device of lawyers which is, in its historical + development, an evasion (rather than a part) of the law. Nevertheless, I + think it is a matter of importance that the shackles which fetter land + should be loosened, and that the present powers of owners to tie up land + legally should be very much curtailed. It is a sad proof of the way riches + cling to the heart of man even when he is leaving this world, that, + whatever powers of tying up land are sanctioned, an owner will usually + exert them to the uttermost. He is leaving his property, but he will keep + a hold on it fifty years after he is dead if he can. He will, after + exhausting his powers in life interests, leave the residuum to an unborn + child "in strict tail-male so far as the rules of law will permit;" and he + will stick in a springing use to effect that, if his greatnephew, the Rev. + George, should ever from an Anglican become a pervert to Roman + Catholicism, he shall take no benefit under the will. + </p> + <p> + Now the fact is that all tying up is to the detriment of the public. No + man can provide for all contingencies. Indeed he can see so little a way + ahead that in a few years it frequently happens that all the careful + provisions of the will are working exactly as the testator would have + desired them not to work. Land tied up is always worth less to the owner + because it is tied up; and we have seen that the interest of the + commonwealth is the sum of the interests of all its component members. + When you tell me that an estate is now of small value to its life-owner + and unget-at-able for any public purposes, in consequence of a will made + by a man who died twenty years ago, it appears to me that you shew me + convincingly that we have not Free Trade in land. + </p> + <p> + I would propose that, either by will, settlement, or other instrument, an + owner should be able to give any number of life interests, and nothing + more; all trusts being placed outside the law. The first objection will be + that if the powers of owners are so restricted, the desire for the + ownership of land will be lessened: the value of all the land in England + will fall. This might be so, I admit, to some extent; and it would favour + the employ of the land for agricultural profit. + </p> + <p> + The next objection is that it would become necessary to give land (and + money) directly to women without the intervention of trustees: that women + do not understand business and require to be taken care of. My reply is + that they always will require to be taken care of unless they are + entrusted with the management of their own affairs. The loss to the + nation, the expenses, the sacrifice of time and labour in trusteeships, + have now assumed gigantic proportions. If women were given their own + property to manage, some would (at first) fool it away: we know what high + interest, adventurers, unprincipled persons, etc., can effect. But each + woman defrauded or stripped of her property to starve would be a warning + to all the rest: in a few years women would manage their property just as + well as men. I believe they would manage it better. A smaller percentage + of women would gamble on the Stock Exchange, the Mining Exchange, Austrian + and Spanish lotteries, and horse-races; and a much smaller percentage of + women would embark in desperate "business" speculations, heavy purchases + of foreign produce, etc. + </p> + <p> + It should be noted that in cutting down the powers of owners to legally + tie up, I do not interfere with honourable trusteeships of any kind not + enforceable by law or in equity. Such exist now, and more largely than is + generally supposed. The absolute devises and bequests to friends (not + relatives) are often on private (not expressed) trust to provide for + illegitimate children or numerous other purposes which a man may not wish + to parade to his family. + </p> + <p> + <br /><br /> + </p> + <hr /> + <p> + <a name="link2H_4_0010" id="link2H_4_0010"> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h2> + 8. EQUALISING OF TAXATION. + </h2> + <p> + There has been no readjustment of the land tax for very many years. It is + a property rate, and originally was rateably levied at four shillings in + the pound. By the small increase in value of some land, the large increase + in value of other land, since the days of Queen Anne, it has now become + unequal in the highest degree. The farm A, gross rental £100 a year, has a + land tax of £5 a year; the suburban estate B, gross rental £1000 a year, + has a land tax of £2:l0s. a year. The land tax assessors were sworn in + annually (twenty years ago, and may be still) to assess the tax equally, + but it was perfectly understood that the tax was to be collected every + year on the old long-standing assessment. + </p> + <p> + Suppose that the estates A and B above were reassessed, and that the land + tax on A was put 15s. per annum, that on B £6:15s. a year. Land tax can be + redeemed at about thirty years' purchase. The effect of the readjustment + would have been to take about £120 from the owner of B and give it in a + lump sum to the owner of A. It is probable that the present owners of both + A and B (or predecessors under whom they claim) had purchased the estates + A and B after the land tax had become fixed on them, and the amount of + land tax would then have been fully considered in the price paid. + </p> + <p> + We see thus that in the case of the land tax, as we saw above of the + tithe, and as is also the case in any tax permanently on, a disturbance of + the existing taxation is inequitable. This point is so much misunderstood + that I will give one more illustration. + </p> + <p> + I am purchasing an estate, intending to farm it myself. There are 400 + acres of land, and I reckon the land worth 30s. an acre. I am willing to + give twenty-five years' purchase. I find the tithe is £100 a year. I + therefore propose to give twenty-five times £500 = £12,500 for the land. + But before the bargain is completed I find that the tithe is £150 a year. + I at once sink my bid to twenty-five times £450 = £11,250, and buy the + estate at that price. The next year some financier "equalises" the tithe, + and my tithe is reduced to £100. Is it not clear that, by the + equalisation, I pocket £1250, and somebody else loses it? + </p> + <p> + New taxes when imposed should be "equal," as far as can be arranged. When + a legacy duty was imposed, it would have been just to impose a succession + duty also. But, after the legacy duty had been imposed twenty years with + no succession duty, it was similarly inequitable to put on a succession + duty; for quantities of land had been bought in the interval of twenty + years at a slightly higher price than if there had been no legacy duty, + because there was no succession duty. + </p> + <p> + The proposal for "equalising" taxes is usually put forward in order to get + a somewhat larger gross income from the taxes equalised, or as a political + cry. Nothing can be more absurd than the cry that the land is + over-burdened in comparison with other property. There is no comparison in + the case. Some land being tithe free, some land tax free, some nearly rate + free, those persons who do not trouble themselves to master the political + economy may yet be satisfied that the "burdens" of the land affect neither + the farmer, the labourer, nor the produce of the farm; the burdens fall <i>wholly</i> + on the landlord (a farmer with a lease being, as above shown, a part + landlord). The efforts of some Conservative orators for the last + twenty-five years to prove the contrary are erroneous in the reasoning; or + I should say, much of the "reasoning" does not hang together at all. + Without formally refuting these efforts, I repeat that they are fully + refuted in the result. + </p> + <p> + It is therefore that I have insisted above that, in order to carry out the + proposed ransom of the land, a new Property Rate, separate from and in + addition to all other taxes, is necessary. Though the manner of levying a + National Property Rate which I have proposed lends itself very nicely to + getting in such an extra tax, it is not at all on that ground that I have + suggested the new manner of levy. The object of the new manner of levy and + the sycophants is to get every piece of land in the country into the hands + of that man who can make most of it; including herein as an important item + the cheap and easy acquisition of land required for Government, public and + commercial (railway, etc.) enterprises. + </p> + <p> + In any great reform of our whole system of taxation a disturbance of + existing interests must take place. Though I would not disturb existing + interests for the sake of mere equalisation or official beauty of work, I + would not let the fear of disturbing private interests stand in the way of + any real or important reform. The introduction of Universal Free Trade and + the abolition of all duties would be accompanied by a disturbance; but, as + far as I can see, no one would lose, while many would gain enormously. + </p> + <p> + On the same ground of equality of new taxation I should propose to replace + the amount now levied in duties mainly by an income tax. That is a + perfectly level tax; the idea that temporary incomes ought to pay a lower + rate is fallacious. We are all agreed to tax the poor at a <i>lower</i> + rate; we have now a section of advanced Radicals proposing to tax the rich + at a higher rate. One present candidate for Parliament is even willing to + tax people of £100,000 a year and upwards at nineteen shillings in the + pound. This of course, or anything approaching it, is unpractical. But I + have suggested above, as a rough plan in accordance with the existing one, + eight-pence a week on incomes of £1 a week, twelvepence a week on incomes + of £2 a week, sixteen-pence a week on incomes of £3 a week and upwards. + The question may very fairly be raised, Why stop this process at £3? why + not continue the series and develop it into a mathematical law? This might + be done more easily with a sixpenny income tax than a heavy one. To tax + earnings and savings (that is an income tax) instead of expenditure can + only be carried a certain way; if the tax is large enough to diminish + saving and promote living up to one's income, and at the same time to send + capital abroad, its effects would be serious. For a particular and noble + purpose I have suggested sixteen-pence in the pound (which we bore without + serious inconvenience in the Russian war); I should imagine twenty to + twenty-four pence in the pound about the maximum that could be imposed for + any purpose—such as the prevention of hostile invasion. It must be + noted that more than the maximum bearable cannot be put on large incomes, + £100,000 a year, etc., any more than on small ones. Indeed it is rather + the contrary; for persons with large incomes are usually the very people + who already invest largely abroad, and who could (and would) transfer + their capital rapidly out of the country if they were subjected to + anything like confiscation. + </p> + <p> + Instead therefore of proceeding <i>upwards</i> in our income tax + sliding-scale we must proceed downwards. Taking sixteen-pence in the pound + as the maximum rate we can impose on the big fish, the problem will be, + What is the highest income to which you will allow any remission from the + maximum rate? I think those having above £150 a year possess more than the + necessaries for healthful existence; looking therefore to the equity and + productiveness of the tax, I suggested remission to those earning less + than £3 a week. + </p> + <p> + <br /><br /> + </p> + <hr /> + <p> + <a name="link2H_4_0011" id="link2H_4_0011"> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h2> + 9. WEALTH OF THE NATION. + </h2> + <p> + The Wealth of Nations is a well-considered title. The economists anterior + to Adam Smith conceived England as surrounded by a barrier impassable to + property and money except by trade. In trade there was an exchange + apparently on equal terms; but the old economists saw a difference in + nature between imports and exports; when wool was sold to Flanders gold + was received, and remained somewhere in the nation; it formed the national + purchasing power, and could hire mercenaries or otherwise command foreign + labour and productions. Inversely, when we imported wine or tea, we had to + part with a portion of our national purchasing power, while the wine and + tea went down our throats, leaving nothing in its place. It appeared clear + that for any increase in national wealth the value of the exports must + exceed that of the imports. Every well-prepared boy can now show in ten + minutes' scribbling in a Government examination the ridiculous folly of + the old economists; but several of them were experienced London merchants, + and perhaps were not the complete idiots they are now triumphantly shown + to be. If they had been asked whether wool was a part of the national + wealth they might have returned an answer that their modern detractors are + not quite prepared for. + </p> + <p> + Adam Smith and his followers, and still more closely Ricardo, divided + their Political Economy into two parts: in the first they consider the + wealth of the nation without the "complication" of foreign trade, <i>i.e.</i> + they, in fact, contemplate no money or goods as going out or coming in + whatever. They then in separate chapters, forming a big appendix, consider + the effects of Foreign Trade as a series of exchanges. They do not discuss + even the payment of a lump sum of gold to a victorious nation. Senior, in + his <i>Handbook of Political Economy</i>, has considered, first, the + economy of the world conceived as a solitary, island of small size in a + world-covered sea; secondly, he treats foreign trade by conceiving two + such islands. There is no better way of treating Political Economy than + this; and it is well for the beginner to conceive the solitary island with + fifty (or a limited number of) families only on it, and work through the + ordinary theorems (with figures) in this restricted case. Whatever is true + of the fifty families in a small island must be true for 5,000,000 + families in a big island. + </p> + <p> + The facilities of modern communications have caused most countries to + differ in their circumstances materially from the conditions assumed by + Adam Smith and his successors as axioms. In the case of England, owing to + its numerous wealthy colonies, gigantic foreign trade, and consequently + world-over-spread capital, the circumstances are so completely altered + that many results of the grammar of Political Economy no longer apply even + in the rough to England. If Adam Smith had been asked what would happen to + England if the imports for one year exceeded the exports by £150,000,000 + sterling, he would have given the same answer as his predecessors, who + reckoned wealth in gold and silver, or more probably he would have + declined answer, pronouncing such a state of things an impossible + conception. It is now as difficult to treat politico-economically the + wealth of the nation as the wealth of Warwickshire—a difficulty that + Adam Smith would have shrunk from. + </p> + <p> + It is true that every abstract proposition concerning rent, capital, and + wages now (and always) holds true for the whole world; but, so conceived, + the propositions give no practical result. These things do not lesson the + value of the science of Political Economy, Mr. Ranken or Dr. Pole would + estimate very highly the value of a knowledge of elementary mechanics to + the humblest engineer, though such elementary mechanics might not extend + to the consideration of friction, etc., and might not be applicable to any + bridge or steam-engine. + </p> + <p> + Of this £150,000,000 that is now annually remitted to England, not in the + way of exchange, some small portion is transferred by wealthy Australians + returning to settle in England for purchase of houses, etc., in England; + but by far the greater portion is the interest of capital owned by men + resident in England, but invested abroad: it may be shortly termed + tribute. This is mainly invested in the Colonies and India; New Zealand + and Australia taking large shares. There is also much English capital + invested in Continental railways, etc.; but it is noteworthy how capital + (as well as commerce) follows the flag. The English capital invested in + the United States is absolutely large, but relatively (to that invested in + Canada, etc.) very small. It is certain that if the United States were + under Queen Victoria the amount of English capital invested there would be + far greater than at present. + </p> + <p> + As far as England is concerned this £150,000,000 a year is a tribute paid + her by the rest of the world. New Zealand or South Australia may take up a + million sterling in London (because they get the loan placed there at 5 or + 6 per cent, while the local rate of interest in Australia is far higher) + in order to make a railway which perhaps pays the local Government as much + as the interest of the money they give to England. Still, the capital + being once fixed in Australia while (by hypothesis) the stock is held in + England, the result is equivalent to a tribute. + </p> + <p> + All Liberal stump-orators now agree in telling the agricultural population + that their improved position is due to Free Trade (in wheat), and that + therefore they should vote for the Liberals. Nothing is done more + confidently in politics and history than the settling the causes of + events, or predicting what would have been the course of events had some + result been different, as, for instance, had the separation of the United + States from England not occurred. The truth is that in politics causes are + many; they act and react on each other in their operations; and to say + exactly how much is due to one cause, or how much that cause acting alone + would have effected, is impossible. To get some judgment how much of the + present prosperity of the agricultural labourers (admitted on all sides as + compared with their position in 1846) is due to free importation of wheat + alone, let us (merely as a scientific artifice) imagine that a regular + sliding-scale duty on wheat were put on now, bringing wheat to 48s. a + quarter permanently. What would be the effect on the agricultural + population? We may suppose that the produce of the duty, were it five or + eight millions, or any other sum, was employed in remitting the duties on + tea or other productions generally consumed by agricultural labourers. The + placing of wheat at 48s. a quarter permanently would at once recall a good + deal of capital to the land, it would carry out further the margin of + cultivation, and at the same time cause a higher farming of that within + the non-existing margin; in both ways it would raise the demand for + agricultural labour, and would raise wages. + </p> + <p> + On the whole, I incline to think that a sliding-scale duty on wheat up to + 48s. a quarter would not perceptibly alter the position of the + agricultural labourer, or might possibly improve it: it would lower the + wages and diminish the profits of capital in other trades. This is not (as + before explained) a fair way of arguing the question; because it is + impossible to calculate the indirect effects of Free Trade in wheat, which + ultimately came round to benefit the agricultural labourer. + </p> + <p> + But considering how the efficiency of the agricultural labourer has been + improved by improved machines since 1846, it is hardly possible to doubt + that the agricultural labourer is much more indebted to the engineers than + to the Corn Law League for his improved position. Under "machines" too may + be included railway communications: also let us not forget how much the + agricultural labourer owes, not only to drills and mowing-machines, but to + boot-sewing machines, improved tea-ships, etc. + </p> + <p> + If we look to the general increase of wealth in England since 1846, the + first thing that strikes us is the increase in the tribute, which is about + thrice what it was. This increase is largely imperial, i.e. due to + colonisation, annexation, etc. But here again we must not overlook the + reaction of causes on each other: our Free Trade in corn, our improvements + in machinery and ships, have so largely contributed to spread our empire + that it becomes impossible to disentangle the separate work, or indeed to + speak of any one cause as a simple element: the causes all act together. + </p> + <p> + England is the most comfortable country in the world for a rich man to + live in, and consequently rich men congregate there; or, if they travel, + keep a headquarters there. In this way we have congregated a + disproportionate population in England. It may be argued that it would be + a healthier economic state if the exports and imports balanced, and if the + population of England was no larger than the country itself could grow + wheat for, <i>at a price not exceeding 40s. a quarter</i>. However that + may be, the important point for the working men of England to mark is, + that every loss of rich men resident, every loss of tribute, every + reduction of the wage-fund, every pressure on the population to emigrate, + everything that leads in the direction of a self-supporting England, means + immediate pressure on the poor, with reduction of wages. That is the only + way emigration could be by natural law enforced. It is the poor, the + labouring population, who are so hugely interested in the empire. Of all + the follies taught to the labouring man the most foolish is the doctrine + that the empire abroad is maintained to provide incomes for the rich, at + the cost of the taxes paid for wars by the poor. It matters comparatively + little to the rich whether they live at Florence or Dresden four or eight + months in the year, whether the population of England is to be maintained + stationary, to increase at its present rate of increase, or to be squeezed + down to half its present number: but it matters vitally to the poor. + Whether, ultimately, after our empire is gone and the population of + England is stationary at fifteen millions say, the poor in England would + be better off than now is a very difficult question, concerning which + doctors differ; but it is absolutely certain that during the Banting + process, in the reduction of the population down to that fifteen millions + by a process of starvation and emigration, continued for two generations + of men, the poor would have to go through experiences altogether novel. It + is a thing that would revolutionise England; and in spite of the superior + education of our labourers might lead to a break up of society. Starvation + and bankruptcy make any and every man a Radical if not a Communist. + </p> + <p> + To keep the poor comfortable for the present and for many years + immediately in front of us, we require a continual increase in the wealth + laid out in England annually in the purchase of labour. The growth of the + empire, the profitable investment of capital in foreign countries (whereof + the interest is paid and consumed in England), is one great resource: the + profitable investment of capital in England itself is the other great, + probably safer, resource. To effect this we require every acre of land to + fall into the hand of the man (or company) who can make most of it: we + require a Universal Free Trade that shall render our hold on the commerce + of the world secure until all nations adopt Universal Free Trade (when we + shall gain so much in other ways that we shall be able to afford to share + our monopoly with others); we require the removal of all restraints on + railways, tramways, electric lights, etc., that hamper or prevent the + employment of capital in England (in other words, that send English + capital abroad). Finally, underlying the whole, and as the prime cause + that shall induce capitalists to employ their capital in England rather + than to send it abroad, we require the labour of every working man to be + in the highest degree efficient: this retards the fall of the natural rate + of profits to a minimum, and the attainment of the stationary state. + Whatever ideal beauty has been discovered in the stationary state by J. S. + Mill, it is pretty clear that England is not approaching it. It is as + difficult for us to stand still as it is impossible to go back; and our + only (third) course open (for the present and for many years to come) is + to progress. + </p> + <div style="height: 6em;"> + <br /><br /><br /><br /><br /><br /> + </div> + + + + + + + +<pre> + + + + + +End of the Project Gutenberg EBook of Speculations from Political Economy, by +C. B. 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B. Clarke + + +Release Date: July, 2005 [EBook #8436] +This file was first posted on July 10, 2003 +Last Updated: May 12, 2013 + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK SPECULATIONS *** + + + + +Produced by John Hagerson, Jonathan Ingram, and the Online +Distributed Proofreading Team + + + + + + + + +SPECULATIONS FROM POLITICAL ECONOMY + +By C. B. Clarke, F.R.S. + + + + +INTRODUCTION + + +The following nine articles are "Speculations," by no means altogether +recommendations. They are _from_ Political Economy, i.e. they have +nearly all of them been suggested by considering mere propositions of +Political Economy. Some of them are old, or given me by friends: some +are, I believe, new: these many persons will set aside as unpractical +or impracticable, as that is the approved word by which people indicate +that an idea is new to them. The topics of the nine articles have been +largely taken from those now under political discussion, but they can +hardly be called ephemeral; and, though they do not form a treatise, +they will hardly be called disconnected. As they are speculations, no +trouble has been taken to work out suggestions in detail, or give the +"shillings and pence" correctly. + + + +CONTENTS + +1. EFFICIENCY OF LABOUR + +2. RECIPROCITY AND RETALIATION + +3. UNIVERSAL FREE TRADE + +4. THE RANSOM OF THE LAND + +5. MAKING THE MOST OF OUR LAND + +6. FREE TRADE IN RAILWAYS + +7. REFORM IN LAND LAW + +8. EQUALISING OF TAXATION + +9. WEALTH OF THE NATION + + + + +SPECULATIONS _FROM POLITICAL ECONOMY_ + + + + +1. EFFICIENCY OF LABOUR. + +Political economists have not overlooked efficiency of labour: they have +underestimated its importance in the opinion of Edward Wilson, who has +supplied me with the examples and arguments that follow and who has +verbally given me leave to publish as much as I like. + +The English workman, especially in a country town of moderate size, +regards capital as unlimited, employment ("work") as limited. A wall six +feet high is to be built along the length of a certain garden: if one +bricklayer is employed, the fewer bricks he lays daily the more days' +employment he will get; if several bricklayers are employed, the fewer +bricks one lays daily the more employment is left for the others. It +thus appears that the more inefficient the labourer is, the better for +himself, his fellow-handicraftsmen, and for "labour" in general: the +more money is drawn from the capitalist. + +There is a grain of truth in this view with respect to petty unavoidable +repairs in a narrow locality: but the capital spent on such is as a +drop in the ocean compared with that embarked in a single large work. +Consider the case of the London Building Trade, as practised in the +suburbs on all sides of London. The London bricklayers thoroughly +believe that it is their interest to be inefficient: it is said that +they have a rule that no bricklayer shall ever lay a brick with the +right hand; they have also a rule against "chasing," i.e. that no +bricklayer, whatever his skill, shall lay more than a certain number of +bricks a day; they believe that if the bricklayer laid a larger number +of bricks he would get no more pay for a harder day's work, while the +"work" would afford employment to a smaller number of labourers. Look +however a little further. The speculative builders round London compete +against each other, so that they carry on their trade on ordinary trade +profits. Such a builder is building streets, house after house, each +house costing him L800, and selling for L1000 say; and this, after +paying his interest at the bank, etc., pays him about 10 to 15 per cent +on his own capital embarked. Suppose now that the bricklayers increase +their inefficiency either by a trade rule or by a combination to shorten +the hours of labour. The cost of each house is increased L50 to him: +nothing in the new bricklaying rules or rates affects the purchasers; +the builder estimates that his profits will fall to 5 to 8 per cent on +his capital. He does not care to pursue so risky a business at this rate +of profit; he determines to contract operations. When he goes to his +bank, a branch of one of the gigantic London joint-stock banks, at the +end of the quarter, the manager of the branch comes forward as usual +ready to continue the bank advances; but the builder says simply, "The +building trade is not so good as it was," and declines. The increased +cost of bricklaying has affected all other speculative builders in much +the same way; the consequence is that "gold" accumulates in the branch +banks. The secretaries and managers of the great joint-stock banks do +not let their capital idly accumulate; they buy New Zealand 6 per cents, +or transfer to Frankfort or New York the capital that, but for the rise +in cost of bricklaying, would have gone to the London bricklayers. + +In this case it is easy to see that the quantity of work to be done is +not limited. Should the cost of building diminish but a little, the +rate of profit of the builders on their _own_ capital (in many cases not +one-tenth of the capital they employ) will run up to 20 or 30 per cent, +or even more; and at even a 20 per cent profit the bricklayers would +find that a perfect rage for building would set in. Every speculative +builder in the trade would strain his credit to the utmost, and take up +every L100 from his bank that he could induce the bank manager to let +him have. + +A second illustration. Forty years ago, on our farm in the south of +England, two men with flails used to begin threshing wheat in the long +barn about 1st November, and used to thresh till 1st April. They +got eight shillings a week with us, but in adjoining counties +seven shillings (and even six) were winter wages. Now the steam +threshing-machine will empty that long barn in two short days' work. +It takes half a dozen men to do the work, and they get about fifteen +shillings a week, though their labour is much shorter and easier than +that of the old flail men. At the same time our farmers now are much +poorer men than they were forty years ago: they have less capital, +they have made for many years past a low rate of profit, and they are +frequently themselves complaining that they cannot afford to pay their +labourers well, and inferring that they should get Protection back +again in some shape or other. The labourers on their part imagine very +generally that their increased wages for less work are due to Mr. Arch +and agitation; that the employers of labour will never pay more than is +wrested from them (this is in large measure true); and that employers +must pay whatever agitators are strong enough to demand (this is wholly +erroneous). + +In this case it is evident on the surface that the labourers who thresh +with the steam-thresher are more efficient than the flail-men: their +labour is worth the half-a-crown a day to the employer, and therefore +the employer, however poor, can afford to pay it as he receives it back +with a profit. On the other hand, if the flail-men were raised from +the dead, no farmer would now pay them even eight shillings a week for +threshing; their labour would not be worth even that. + +One illustration more. Thirty years ago there were few more wretched +trades than the shoemakers of Northampton. Wages were low, the labour +was severe, the social condition of the workmen was necessarily low +also. The sewing-machine, with some special adaptations to make it sew +leather, increased about sixfold the bootmaking power of a workman. It +is needless to say that the Northampton shoemakers met the introduction +of this machine with the fiercest opposition: they said five-sixths of +their number must be thrown out of employment. The struggle was won by +the machine (as in other cases); shoemakers' wages have ruled 50 to +100 per cent higher ever since, at the same time that the shoemaking +population has largely increased; and the social comforts and character +of the workpeople have improved vastly too. This is an example that has +always puzzled the workmen themselves; but it requires no explanation +after what has been said about the efficiency of labour. The puzzle to +the shoemakers is what becomes of the additional boots and shoes made. +They do not reflect that, even of a necessary of life, only a certain +quantity is used at a certain price. Nothing is more necessary in +London, especially in winter, than coal; but, when coal some years ago +went up to 40s. a ton in London, it was marvellous how people in all +ranks managed to reduce their consumption of coal. Much more in the case +of boots, which will bear the cost of export to remote countries, did +the demand increase as the price fell. A fall of 10 per cent only in the +price of boots would cause every wholesale boot exporter to export on +the largest scale. No doubt the invention of a self-acting machine +which should turn out 1000 pairs of boots an hour at a nominal cost +of workmanship per pair would reduce the shoemakers of Northampton to +idleness and starvation. But in practice it has rarely happened that any +machine has been introduced in any trade that has thus completely choked +the increased demand. It has happened often that the workmen who could +only work the old way, and were not able to take up the new machine, +have been reduced to starvation. Even then, after this generation has +passed away, the new machine-workers have been better off than their +predecessors. + +Employers of labour cannot pay as wages more than the labour is worth: +no organisation or rules will make them. But employers may pay a good +deal less than the labour is worth, and often have done so. However +great their profits, there is, according to J. S. Mill, always a tacit +understanding among all employers of labour to pay the minimum the +labourers can be induced to accept. It is only by combination that the +labourers can get the full value of their efficiency. Here Mr. Arch +comes in: I have little doubt that the flail-threshers might, under a +well-managed large trade combination, have got nine shillings a week +instead of eight shillings forty years ago. + +But every rise in wages gained by the workmen, unless springing from +or in conjunction with an increase in efficiency, will tell against +themselves; it must increase the price of the article, whether houses, +wheat, or boots; this must diminish the demand for the article, and this +must throw some of the workmen out of employ. + +It is difficult to find an example of price of wages which presents +any difficulty of explanation when we apply to it the consideration +of efficiency. If bricklayers were to offer to exert themselves to the +utmost, and do in eight hours the same amount and quality of work they +now do in nine, the speculative builders would doubtless be willing to +give the same wages for eight hours' work that they now give for nine. +In case the labourers by increase in their efficiency are able to get +higher wages, the choice will (in general) lie with them how much of +the increase they take in increased money wages, how much they take in +shortened hours of labour. We thus see how, in an uncivilised community, +owing to the inefficiency of their labour, their whole time and energies +are expended on their hunting, or otherwise providing bare subsistence. +The greater skill of our civilised labourers, working with machines +provided by our science, and profiting by our fixed capital (as our +railway tunnels and embankments), is vastly more efficient: it ensures +the labourers a certainty and regularity of food which the savage does +not enjoy, and provides him a certain margin of leisure beyond what the +inefficient savage labourer can count upon; it also provides the whole +surplus production out of which the intellectual and leisure classes are +supported. + +It is to be noted that an increase of efficiency in any industry (and +very largely in the case of industries producing generally essential +utilities) raises real wages in all other industries, and this, whether +the particular trade gains (as we have seen it nearly always do) +or loses, as is conceivable, though rarely occurring. Thus, if the +introduction of a boot-sewing machine lowers the price of boots 50 +per cent, this can have no effect in lowering the money wages of farm +labourers; and, as a matter of fact, the fall in cost of boots has +sensibly improved the position of farm labourers. In the same way the +superior efficiency of carriers by railway over the old road carriers +has diminished the cost of coal and all articles (the bulky ones most +sensibly) in all parts of England. There thus arises the instructive +result that handicrafts in which there has been no improvement in the +last forty years have obtained a rise of real wages (amounting in some +cases to 50 per cent) by the improvements in efficiency in all the +trades around them. + +To sum up: No man in ordinary business will give a price for anything +that he intends to sell again unless he expects to profit by selling +it again. No capitalist will pay a workman to make a table unless he +expects to sell the table for a sum somewhat exceeding the cost of the +wood and the workman's labour. It follows directly that the one grand +object of the workman, both as an individual, a trade, and a class, +should be to improve the efficiency of his labour. He may gain something +by combination and higgling for the turn of the market, but the limit to +what he can get is the value of his labour to his employer. + +In order to attain this improved efficiency the most important +practical aid is piecework. This has done much even in agriculture: the +turnip-hoer by the acre earns more, while he does his work at his own +time with more comfort to himself than the old day-labourer. What +is more important, the men who by head and hand are superior at +turnip-hoeing are able to do the work cheaper than ordinary labourers, +and turnip-hoeing thus falls entirely to the most efficient hoers, whose +efficiency thus again gets constantly improved. There is no doubt to me +that, if the London bricklayers would arrange to work by contract, they +would soon obtain more wages without being compelled (as they imagine +would be the case) to work more severely or longer hours to gain +those wages. If they were more efficient, nothing could prevent the +competition of employers soon giving extra wages for extra value of +work. + +But it may, finally, be urged that there is surely such a thing as +over-production. If there is an over-production of boots, trade is flat, +the wholesale dealers find they are making no profit, they stop their +purchases, the workmen are thrown out of employ on a large scale. To +this the reply is that there is almost a necessary alternation of up and +down in every particular trade, whether the efficiency of the workmen +is high or low. If trade is good, the large dealers will extend their +purchases, and very commonly rather over-extend their purchases: a +reaction follows, and _vice versa_ when trade is bad. + +But it must be recollected over-production in all trades at once is +impossible: capital is now not buried in pots by our great joint-stock +banks; if one trade is at standstill the capital is carried to the most +remunerative use that the experienced bank secretaries can discover. +If agriculture is, as we have lately seen it, in a depressed state for +years, inasmuch as wheat is "over-produced" in America till the price in +England falls to 36s. per quarter (and less), at which it hardly pays +to produce it in England; this of itself implies an enormous spur to all +other industries--the real cost of labour has in them fallen (for +the labourer will not be able to keep to himself the whole benefit of +cheapened food)--the rate of profit in all other industries has risen +(_pro tanto_). If we ever do arrive at a state when all the desires are +fully satisfied--when there is over-production in all industries--we +shall have general reduction in the hours of labour: "efficiency" will +take that form. + + + + +2. RECIPROCITY AND RETALIATION. + +The wealth of England is the sum of the wealth of each individual in +England. An individual may have L10,000 in England, L5000 invested in +Australia. We may reckon his wealth in England either as including or +excluding the L5000, which he could transfer (probably very speedily) to +England in gold if he desired it tangibly. Whichever way we reckon his +wealth and that of other individuals, we shall in like manner in the +sum get the wealth of England: it will be in one case the wealth in +England-in the other case the wealth in England plus the lien which +residents in England have on other countries in the world. + +In parallel manner the effective capital of England, which can be +brought into the wages fund, must be the sum of the capital of all the +individuals. + +These two self-evident truths are capable of many applications: we +see directly from them that the National Debt, so far as it is held by +residents in England, neither diminishes the national wealth nor affects +the wages fund. We see also directly that any exchange between an +Englishman and a foreigner which gives a profit to the Englishman gives +an equal profit to the English nation. + +When a merchant buys 1000 quarters of wheat from America and pays in +gold, he does so to make a profit for himself; but he cannot make a +profit for himself without making an equal profit for the nation. The +exchange of the wheat for gold is profitable to both seller and buyer; +otherwise the bargain would not be struck. A value is added to the wheat +by its being brought from Minnesota (where it is wanted, as all good +things are wanted) to London, where it is much more wanted, and this +increased value is greater than the cost of moving the wheat from +Minnesota to London; this excess is the profit on the exchange which +the buyer and seller divide between them. The exact shares in which they +divide the profit between them depend on some of the most complicated +considerations in the science of political economy. Indeed, political +economy can no more work out a case in figures, even when every +circumstance is given, than political economy can tell in pounds +sterling what should be the rent of a given farm. But the point required +for our present purpose is easy and certain,--unless the English buyer +got _some_ share in the profit he would not give his gold for the wheat. + +The great principle of Free Trade is that in this, and in all similar +cases, the individual shall be left to make what profit he can; that his +dealings with foreigners shall be interfered with by Government in no +way; that he shall not be checked in his operations by import duties, +bounties on exports, staples, or any other of the numerous obsolete +interferences in the statute-book. The principle is that each individual +can manage his own trade better than Government can manage it for him; +that, therefore, Government shall let any individual do his best in +trade his own way, knowing that whatever profit an individual makes in +foreign trade is an equal national profit. + +It may be shortly stated that in the old Protectionist theory, destroyed +by Adam Smith, gold was considered to be wealth. Hence, if an individual +bought foreign wheat for gold, the English suffered a national loss of +wealth, and the foreign nation made a national gain. It is unnecessary +to occupy space in refuting this (to us absurd) idea, as no refutation +can be more satisfactory than Adam Smith's own. + +If I profit on the transaction of buying 1000 quarters of wheat for +gold, I do so irrespectively of all other exchanges by others. Whether +the firm next door to me has succeeded in selling to a Boston house +L2000 worth of Sheffield cutlery or no is a matter entirely beside +my bargain. My profit will depend practically on the movements in the +English corn trade: a small rise in the price of wheat at Mark Lane +between the date of my purchasing by cable the wheat in America and my +selling it at Mark Lane, may give me a large profit, or _vice versa_. +But my exchange of gold for the wheat is a separate transaction of +itself: it stands entirely on its own bottom. + +It is perfectly true that if my neighbour in Threadneedle Street does +succeed in selling L2000 worth of cutlery to the New Englander, there is +another distinct national profit to England and to America. [Footnote: +I am assuming for simplicity throughout that every exchange made by +private merchants in this foreign trade is a successful speculation; if +in any particular speculation a merchant loses, his country loses the +same amount. As foreign trade, on the whole, is an enormous national +profit, I am justified in sinking the particular cases of loss. It may +be said, "But perhaps all your exchange of gold for wheat is a national +loss": it is evident that when the trade takes this form the merchants +who import foreign corn stop their operations instantly; in practice +they stop them with prescient instinct.] But whether he succeeds +in making a bargain or not, I object to being interfered with by +Government, and prevented making my own little profit. If my neighbour +is practically deprived of his profitable bargain by Government action +on the part of the Americans--if they are Protectionists and believe +that gold is the only National Wealth, and put a heavy duty on +cutlery--if by doing this they prevent an exchange profitable to both +nations--they stop TWO merchants from a profitable stroke of business. +Whether they injure the English merchant or the Bostonian would-be +purchaser of cutlery MOST is (as above explained) very difficult to +prove in any well-ascertained instance, but it is quite certain that the +interference of the American import duty causes a loss to each merchant +and to each nation. + +Where now is Reciprocity and where Retaliation? We can no doubt say to +the Americans, "As you have injured us in the matter of cutlery, so will +we injure you by putting a duty on wheat." But it is merely cutting off +one's nose to spite one's face. In the exchange of gold for wheat the +division of the profit on one transaction is uncertain, but in the long +run it is probably about equal between the English and the American +merchants, i.e. between the English and the American nations. (I am +not overlooking the fact that the ultimate benefit to England is cheap +bread; but it is unnecessary in the present argument to follow the food +down the throats of the consumers: the wheat is really worth to the corn +merchants what they can get for it from the consumers.) We cannot stop +the corn trade with America by a duty (or diminish it) without as great +a loss to ourselves (probably a greater) than to them; the retaliation +in putting a duty on corn because the Americans put a duty on cutlery +would be (with our lights) mere spite: it would be as though a farmer +who took one sample of wheat to market and one of barley, should meet a +factor who offered him his price for the wheat, but would not spring to +his price for the barley, and the farmer should thereupon sulkily carry +both his samples home again. + +The ideas of Reciprocity and Retaliation are pure relics of the old +Protectionist commercial theory, viz. that there is always a national +loss in parting with gold--that the foreign trade can only be profitable +to England so long as the value of the exports exceeds that of the +imports, so that a continual accumulation of gold may go on. + +Now, first, we may meet this with the abstract scientific argument that +there is no character by which gold can be diagnosed as wealth from +steel or broadcloth. Our merchant who buys wheat for gold could buy from +the Americans wheat for cutlery or wheat for broadcloth. The reason he +gives gold for the wheat is merely because he makes a better profit by +giving gold than by giving anything else in exchange for the wheat. The +nation therefore gets a better profit that way too. + +Descending a little from this abstract argument, our opponent says, +"If you go on buying wheat for gold, and cannot sell your cutlery and +broadcloth out of the country for gold, you _must_ run out of gold." +But the fact has been proved by many years' experience not so to be: for +many years our imports have been some L150,000,000 sterling more than +our exports, while our stock of gold in the Bank of England (and the +gold in circulation) remain the same from year to year. This is one +of those many things (like the supply of meat to London) which +will regulate itself perfectly and insensibly (without any violent +disturbances in trade or the money market) if Government will only leave +the matter entirely alone. If our stock of gold is at all short our +merchants give a little less per quarter for American wheat; the +trade is checked; the sensibility of the market--the experience of our +corn-traders--is such that the balance is preserved with very slight +oscillations. The refusal of the Americans (enforced by an import duty) +to purchase our cutlery, etc., _does_ partially check the reflux of gold +to this country, and does lower sensibly the price which the Americans +get for their wheat from us. Errors in political economy avenge +themselves--often fearfully--on their perpetrators. But our objector +will still want to have explained to him where the L150,000,000 sterling +required in England annually comes from. It is not essential to, or +indeed any part of, my present argument to explain this; but I will +anticipate matters so far as to say shortly here that this L150,000,000 +is, roughly speaking, the interest on English capital invested in +foreign countries paid in cash to the owners resident in England--it is +equivalent to an annual tribute. + +Professor Henry Fawcett's _Lectures on Free Trade_ is a sound and +admirable book: it is occupied a good deal with the practical question +why so few foreign nations have adopted Free Trade, and how such foreign +nations are to be converted to the orthodox creed of Adam Smith. But, as +I think, unfortunately Professor Fawcett has in that book used the words +Reciprocity and Retaliation pretty freely. Their mere use is enough to +fortify a French or American Protectionist in his present policy; he +naturally says, "The English Free-traders themselves admit that we are +making money out of them: we take their gold for our wine and wheat; we +refuse to give our gold for their cutlery and broadcloth: those English +have now to come to us whining for Reciprocity; as to their Retaliation +we are not alarmed--we know they _must_ have wheat and _will_ have +wine." I would wish to expunge the words Reciprocity and Retaliation +from the subject, as being words merely suggestive of false views. But +the most fatal course to the adoption of a Free Trade policy by foreign +nations has been our plan of humbling, begging (and indirectly giving a +consideration for) Commercial Treaties. Such a course is enough to (and +does) counterbalance with foreign nations all our theoretical writings +about Free Trade. We go to France and say, "We will let in your wines at +a lower duty provided you do us the favour and give us the advantage of +lowering your duties on English manufactures." I cannot conceive any way +of putting the matter more strongly calculated to convince the French +that we believe we lose by purchasing their wines and gain by selling +them our manufactures. + +It appears to me that if we wish to convince Europe and America of the +truth of Free Trade (as understood by our political economists), our +proper course is to adopt Free Trade ourselves FULLY (if the principle +is good for wheat it is good for tea--I shall return to this), and then +to say to foreigners, "See how we prosper under Free Trade." If the +Americans continue to maintain Protectionist duties on our manufactures, +our line of conduct is not to offer to pay them indirectly to relax +those duties, but to say, "You are losing more by your duties than we +are; the proof of the pudding is in the eating." If I believe, as I do, +that the Americans are gaining less wealth under Protection than they +would under Free Trade, I cannot imagine any plan less likely to convert +them to my views than my going to them and saying, "We will give you +L5,000,000 sterling (or some valued political advantage) if you +will alter your mistaken policy." If this course did not confirm the +Americans in the very deepest suspicions that Protection is really +advantageous to them, and that we in our inmost heart think so too, my +ideas of human nature are altogether at fault. But every foreign debate, +whether in France, Germany, or America, on Free Trade, convinces me +that I am not mistaken in the effect which I attribute to our prayers to +every foreign nation to grant us a Commercial Treaty. + + + + +3. UNIVERSAL FREE TRADE. + +Wheat is now admitted to England free of duty. Tea pays a duty of about +L4,000,000 sterling a year. This is called a duty for revenue, not for +protection. Tea is an article of universal consumption; the tax on it is +open to the objections against a poll tax or hearth tax, viz. that by it +many a poor old woman is taxed as heavily as far richer people; indeed, +owing to the poor consuming the lower-priced teas, they are by the +present duty taxed at a higher rate than those who can afford the more +expensive teas. + +The reply in defence of these anomalies is, "We have to raise L4,000,000 +sterling by a duty on something; on whatever we put it, it will no doubt +be bad." Granting, however, this for a moment, the onus lies on the +defender of the existing tariff to prove that it is better to raise +the L4,000,000 required from tea than from wheat, or than to raise +L2,000,000 from tea, L2,000,000 from wheat. Mr. Raban, a leading +tea-planter in Assam, has observed that if the duty on tea was replaced +by one on wheat to raise the same gross amount, the pressure on the +English poor would be less; while an encouragement would thus be given +both to tea-planting in India and to agriculture in England. I adduce +this case of the duty on tea merely to bring out strongly the fact that +Free Trade in wheat is not universal Free Trade. I do not recommend that +the duty on tea should be replaced by other duties: I am going to raise +the question whether it should not be replaced by direct taxation. + +In the case of tea, the duty can hardly be said to be "protective," +except so far as by raising the cost of tea it impels English drinkers +to have more free recourse than they otherwise would to other drinks; +but in a large number of cases a duty operates both as a revenue and +as a protective duty. It is a curious fact that the fanners, after +unanimously struggling FOR the duty on wheat because it was a protective +duty, subsequently unanimously struggled for thirty years AGAINST the +malt tax (involving a duty on barley) because it was a revenue duty. As +soon, however, as the malt duty was repealed, they discovered that it +had been a protective duty; barley fell in price (malting samples) about +l2s. a quarter, and has never recovered, nor does any farmer now suppose +it ever will. This is rather a complex case, because on the abolition +of the malt tax an equal tax (in gross amount) was put on beer; and it +might be supposed at first sight that this would not affect the price +of barley. It has in several ways: Firstly, Many brewers now brew common +beer with one-third malt, two-thirds molasses, cane sugar, etc. The tax +being on the beer, Government no longer cares whether it is brewed from +malt or from rubbish, and the consumers grow soon accustomed to the +lowered taste of malt in their beer; Secondly, The admission of foreign +malt and barley without duty has quickened the importation by removing +those restraints and interferences which hamper trade out of all +proportion to their expressed amounts in pounds, shillings, and pence. + +In order to establish a Universal Free Trade and to make every port in +England a free port, it would be necessary to raise by direct taxation +about L40,000,000 annually, because the excise on beer, etc., would +have to be abandoned with the Customs duties. We will consider the +possibility of raising this L40,000,000 by direct taxation before we +dilate on the advantages which would follow Universal Free Trade. + +Ricardo, at the end of his masterly consideration of the effect of +taxation variously levied, comes to the general conclusion that the +best tax is that which is least in amount. Adam Smith and the older +economists held that one test which a well-devised tax had to satisfy +was that it should take the money from the taxpayer insensibly, +indirectly. Now, all taxes that thus insensibly drain the taxpayers +invariably take more in gross from them than reaches the Government. To +raise L40,000,000 by customs and excise costs about L3,000,000; so +that the people have to pay L43,000,000, while the Government gets +L40,000,000. In direct taxes, as income taxes, property rates, the cost +of collection is very small--about two-pence in the pound. In public +as in private business it is much more economic to look payments in the +face and make them with our eyes open than to let the money slip away +in driblets. Moreover, modern politicians think, in opposition to Adam +Smith, that it has a good moral effect on the body politic to be made +to feel exactly what taxes they pay, so that they cannot help knowing +whenever taxation is increased. + +A serious objection to indirect taxation is that it always falls with +unfair weight on the poor, as in the case of tea duties stated above. +It may be urged that the existing duties are (except tea) nearly all on +luxuries, as beer, spirits, tobacco. But the English have drunk beer for +many hundred years; the taste for beer is largely fixed by inheritance; +beer as supplying sustenance in a form that _rapidly_ assists exhausted +nature is, to very many at least, as much a necessary of life as tea is. +Whether we believe tobacco to be injurious or not, we have no right to +impose on an article so very largely consumed a duty which amounts to +taxing the poor out of proportion to the rich. + +If all the indirect taxes are removed, the poor (at least down to those +earning L1 a week and upwards) must be made to contribute to direct +taxes. It may be urged against Universal Free Trade that the poor are +so ignorant that they would sooner pay sixteen-pence a week in taxes +indirectly than eightpence directly. This might prove a fatal objection +to carrying out Universal Free Trade at the first attempt; but one of +the objects to be gained by direct taxation is the education of the +people. It may also be urged that the whole political power being now in +the hands of the masses, they are so selfish and unjust that if taxation +is made a plain matter they will put all taxation on the rich and +refuse to pay anything themselves. The reply to this is, If this is your +estimate of the understanding and morality of the masses, you should not +have put the whole political power in their hands. + +We are only attempting at present to show that the L40,000,000 sterling +(to replace duties and those parts of the excise which hang on duties) +_could_ be raised by direct taxation: we are not attempting to show +the best way it could be raised by direct taxation; it will be seen +hereafter that a portion of it might perhaps be better raised by a +National Property Rate. + +The L40,000,000 would be raised by an income tax of sixteen-pence in the +pound--(I am underestimating safely--about a shilling in the pound would +raise it really),--carried down to L156 a year without any reductions; +while incomes of L1 a week paid eightpence weekly, and incomes of L2 a +week paid twelvepence weekly. In the Crimean War the nation endured an +income tax of sixteen-pence in the pound; it is certain that the nation +is richer now, and better able to bear such a rate. + +But this is not the strength of the argument. In the Crimean War England +endured sixteen-pence in the pound _extra_, in addition to all existing +taxes (some of which were raised too), and the capital thus taken from +the people was destroyed (much of it) or dissipated in the Crimea. But +the sixteen-pence in the pound here suggested would be in lieu of an +equal amount of taxes taken off (it would be rather less in amount than +the taxes taken off): the nation therefore, would not feel it at all, +though individuals would feel it in different ways. A poor man would +have eightpence a week deducted from his wages, but he would get his +beer at three-fifths the present price, his tea at two-thirds the +present price, etc. He would soon feel that he gained by the change. The +rich would find that they lost; but that loss would, I believe, be made +up to them over and over again. + +First, I believe it is impossible to realise the effect on our trade of +having London, Liverpool, etc., free ports. We possess at present half +the ocean trade of the world: with our ports free, we should get a yet +larger share of the world's trade, and secure it permanently. That is to +say, we should certainly keep it until other nations adopted Universal +Free Trade. + +Secondly, The fall in the price of tea, beer, etc., would be more than +the amount of the tax remitted: the freedom of universal manufacture +without any Government interference, the liberty to land tea without +delay, and put it into the market without having to advance the duty, +would cause at once a great activity in the trades, and at the same time +a fall in price. By diminishing the need for middle-men the quality of +the beer, tea, etc., would be raised, and adulteration diminished. + +Thirdly, The fall in the price of tea and beer would bring down +the price of all competing drinks: it would at first diminish the +consumption of competing drinks. The cheapening the price of some of +the prime necessaries of life would be to some extent divided between +capital and labour. As in the case of wheat, the labourer would be made +better off, while the profits of capital would be raised. A general and +permanent improvement in all trades would result, except possibly in +those of the tea-dealer and brewer--but I do not think they would lose. +I see no end to the developments from Universal Free Trade: we can only +gain some idea of what they would be by tracing as far as we may what +the results of Free Trade in one article--wheat--have been; and in doing +this we must recollect that before 1846 the quantity of wheat imported +was trifling compared with the present importation. + +To this scheme of direct taxation Edward Wilson objects, "Taxation +should fall on expenditure, not on income." It is true that our object +must always be to encourage accumulation, and discourage destruction +of capital (expenditure). Practically, it does not appear that a heavy +income tax diminishes the taste for accumulation in England: it does +increase the tendency of large capitalists to invest their capital out +of England, so as to avoid the State charges on capital in England. +But the capital in England and the quantity of English capital invested +abroad are already so enormous that the "tendency" of an increased +income tax may be disregarded. Lastly, it may be objected, Would the +sixteen-pence income tax levied as you propose (or nearly so) raise +L40,000,000? At the time of the Crimean War each penny in the pound +income tax brought in a million sterling. At the present time, each +penny in the pound income tax brings in nearer two millions sterling, +but the productiveness of the tax is much interfered with by the large +remissions now allowed, and subtractions which take effect just where +the contributors to the tax are most numerous, say from L100 to L300 +a year. I therefore reckon that, without remissions, the tax of +sixteen-pence in the pound down to L156 a year would produce about +L30,000,000, and that the tax down to L52 a year would about produce +the rest. The _total_ income that income tax is now levied on is nearly +L600,000,000. We need not be surprised at the productiveness of the +income tax. A man of L10,000 a year pays tax on that. But he has a +steward on L300 a year, he is worth to his firm of lawyers L100 a year, +and so on: these pay income tax on the L300 and the L100 over again. +When the income tax is carried down to incomes on L1 a week, the +tax will be levied on the same income over and over again. Even a +spendthrift with L10,000 a year usually scatters more than he actually +destroys. + +Lastly, It has not been overlooked that there is an income tax now: and +if the whole proceeds of the sixteen-pence income tax were used to +fill up the deficiency in customs and excise, then we have to make up a +deficiency equal to the present proceeds of the income tax. This +might be done (to start with) by the National Property Rate now to be +suggested. But the expectation is, that with Universal Free Trade, and +the tremendous stimulus thereby given to commerce and manufacture, the +National Income would rise with a bound, and that in two or three years +a much lower rate than sixteen-pence income tax in the pound would +supply the amount of all the indirect taxes abandoned. + + + + +4. THE RANSOM OF THE LAND. + +Many people see quite clearly that, the population of England being +25,000,000, the next baby born has a right to one twenty-fifth-millionth +part of the area of England in soil of average fertility. The +arrangements of society by which the laud is partitioned among a limited +class, and the complicated rights sanctioned by law in one plot of +land, are considered of no validity as against the natural right of the +new-born baby. I do not see this theory to be self-evident: on the other +hand the supporters of it always give it as fundamental, axiomatic; they +no doubt presume rightly that the land is limited, and that if one man +holds more than his arithmetical share, he must push out somebody +else from his arithmetical share: while a man who keeps a hundred +pocket-knives does not perceptibly hinder other people having numerous +pocket-knives. Still I do not see how this consideration weighs against +Lord Derby's title to his lands, if the body politic has determined that +on the whole it is best for the community that land should not be held +equally by all, and sanctions by law Lord Derby's monopoly of a large +area. On the theory of the natural right of every infant born to its +arithmetical share, the monopolisers of land are liable to a perpetually +recurring ransom: this can only practically be carried out by a special +National Rate on Real Property (_i.e._ Land, with the houses, mines, +etc., inseparably attached to it), which must be in addition to such +taxes as income tax, succession duty, etc., which land already suffers +equally with trades, professions, offices, and personalty. The local +rates in England exceed L25,000,000 annually; and the ratepayers perhaps +reckon this a large enough ransom. I should remark in passing that one +man with 1000 acres of land does not dispossess any more babies of their +rights than do ten men with 100 acres each. The ransom therefore must +be a strictly level rate: to put a higher rate on large holders, or to +despoil large holders of a portion of their landed property, will be to +work the ransom unfairly. It hence will follow that any heavy ransom is +now impracticable. Of late years some farms have gone out of cultivation +because they will not pay the tithe, land tax, and rates already on +them: to put any heavy ransom on the land would at once throw large +areas in England out of cultivation. + +The question of the ransom, therefore, is not so all-important as has +been considered; the rates at present being L25,000,000, it might be +possible to levy an additional national rate of L5,000,000 to keep down +the perpetually upspringing rights of new-born infants, without throwing +land out of cultivation to any sensible extent. The whole question +will lie thus between a total rate of L25,000,000 and L30,000,000. I +am about, however, as a corollary to this subject, to suggest a way of +forming a National Rate Book which probably would not materially alter +the present rating, but which would alter entirely the taking of land +for public purposes, and would effectuate all that is good in the phrase +the Nationalisation of Land. + +This phrase is liberally used but rarely defined. Different orators +appear to have quite different ideas as to what it means; and when they +explain what they suppose it to mean, they generally prove that, in the +way they understand it, it would be serious national damage. + +It is unnecessary to observe that landlords now (omitting individual +exceptions and idiosyncrasies) expend their best endeavours in getting +the best rent they can for their land. They have no prejudices in favour +of farms of a particular size; a landlord of a farm of 1000 acres would +let it directly in five-acre plots if he could get a better (and equally +certain) gross rent by so doing. "Nationalisation" is often taken to +mean that Government is to buy land and let it out in small plots. But +apart from expense of Government management and objections to Government +interference, we may safely assume that there would be a national loss +by this procedure: the private owner would discover very quickly if he +could make a profit by letting his farms piecemeal. + +All Government interference can do to improve the produce of the land is +to abolish all restrictive laws, and to make the general tenure of land +such that every piece of land shall fall into the hands of that man who +is able to make the most of it. The National Rate Book now suggested is +designed to accomplish this end. We will subsequently consider how +it might assist public companies. As the suggested way of getting a +National Rate Book is at first sight rather startling, I would premise +that it is no rash invention of mine; it worked admirably in Attica--as +see Demosthenes or Boeckh. + +To make the National Rate Book, each landowner values (with the +magistrate) his land at what price he pleases; the State has the right +to buy the land at any time at that price, plus 33-1/3 per cent for +compulsory purchase. The magistrate sees that each separate house, farm, +and plot is valued separately. No person need prove his title; any man +can value any piece of land, and need not prove himself to be owner, +tenant, or agent; but any piece of land valued by no one would be +claimed as public property. + +A man who valued himself unfairly low would not be bought out at once +and dispossessed by Government, unless it happened that during that year +his land was taken up by Government or by a railway company for some +public purpose. The regular course of business would be as follows:--An +owner A would put his house and curtilage in the Rate Book at L1200. The +sycophant B would come to the magistrate, offer L1600 for the property, +and lodge the L1600 with the magistrate. The magistrate then, without +divulging the name of the sycophant, would write to A either to rate his +house at L1600 (paying a fine for so doing), or to take L1600 for it. +If he took the L1600, B would get the property, and Government the +increased rate. If A preferred raising his rateable value to L1600, B +would get the fine, Government would get the increased rate. + +_The utmost pressure put upon any owner under this system would be that, +if he would not pay rates on x pounds for his property, he would lie +obliged to take x pounds for the property._ + +The 33-1/3 per cent for compulsory purchase is illusory, and I have only +put it in the statement of the scheme to meet an objection which I know +to be common (and equally illusory). It is clear that if I know I am +going to get 33-1/3 per cent for compulsory purchase, whether from +Government or a secret sycophant, I shall proportionately undervalue my +property. Thus if I estimate the real value of my house and curtilage at +L1200, and feel that I do not care if I sell at that price, I shall put +it down in the Rate Book at L900. This applies to all owners, so that +the allowance for compulsory sale would only artificially depreciate by +one-fourth all the rateable values put down in the magistrate's book. + +I have not stopped to cumber the statement of this simple plan by adding +the details necessary to meet severance of a farm by a railway company, +etc. The provisions to meet complicated tenures, etc., would run much +the same as in the Lands Clauses Consolidation Act. + +It will be at once seen that this form of Rate Book would really +nationalise the land by bringing each piece into the hands of him who +could make most out of it. If I saw my way to use a piece of laud so +that it should be worth L1000 to me, and if on looking into the Rate +Book I saw that the present owner only considered it worth L600 to him, +I should at once lodge my L900 with the magistrate. A few owners would +really feel as Naboth. They could indulge this feeling by putting a very +high rateable value on their property. The high rates they would thus +have to pay would be the due ransom of the land; but in general every +piece of land would pass into the hands of him who could make most of +it. There would spring up, as in Attica, a large class of professional +sycophants. By their incessant operations, properties small and great +would be continually passing from the slothful and the old-fashioned +to the enterprising and modern-educated. No nationalisation of the land +could get so much out of it or conduce so highly to progress as the +National Rate Book. We should have companies and adventurers buying up +all sorts of pieces of land, just as formerly they speculated in taking +up land for mining in Cornwall. We should see an extraordinary activity +in the employment of capital in England. + +For all public improvements, as a new street or a Government military +station, a few minutes with the map and Rate Book would show the +Government officer or engineer the best route or plot to take, and would +also show him the exact cost of the land for the scheme. There would be +no law expenses, no prolonged fights, no juries, no arbitrations. + +Wastes, downs, heaths, bogs, would be rated very low. It would be in the +power of Government to take up largely and at small cost large areas +of Surrey heaths, etc., to provide air and recreation ground for +an evergrowing metropolis. In this manner, too, public commons and +quasi-public commons might be secured to the public all over England: a +public-spirited town-council or a local Kyrle Society would have a wide +field and an immense stimulus for action. + +I have not stopped to rebut the common (but mistaken) idea that burdens +on the land (being in gross not more than the rackrent) affect the +cultivation. Partners have long drunk at market dinners "Confusion to +the black slug that devours the English farmer." How is it that these +farmers did not (do not) see that there are tithe-free farms (and some +tithe-free parishes) in England, and that the tenants of such farms get +no advantage by being tithe-free? + +As I explain elsewhere, a tenant with several years of his lease to +run is (economically considered) a part landowner: if the tithe were +suddenly abolished, tenants with leases would get relief as well as +their landlords. So if a new tax or rate is laid on land (and made +payable by the tenant), all tenants with leases will have to pay such +tax or rate out of their own pocket so long as their lease lasts; +afterwards it will fall wholly on the landlords. + +It is repeated now, in nearly every country newspaper, that the English +farmer cannot compete with the American grower because of the burdens on +the land of England. I will not write out (I cannot improve) Ricardo's +proof that rent does not enter into price. The "burdens" on land are +really first charges on the rackrent and do not affect a year-to-year +tenant at all. When a farmer meditates taking a farm he asks not merely +what is the rent: he inquires what is the tithe, what the average amount +of the rates (and is that likely to increase or diminish during the next +seven years); the intending tenant only wants to know what sum in all +he will have to pay for the farm; whether any of this payment is called +tithe or not, or whether some of it is quit-rent, or whether he is to +pay the land tax for his landlord's convenience,--about all this he +cares nothing; they are mere questions of names to him. + + + + +5. MAKING THE MOST OF OUR LAND. + +John S. Mill, following W. T. Thornton, advocated a system of petty +proprietors against the English system of large farms with hired +labourers. Figures were quoted to show the splendid produce got by petty +proprietors in France and elsewhere--as the result, however, of infinite +toil. The petty proprietors were, moreover, shown to be much better +off than our hired labourers; and the magic of property combined with +independence was represented as having produced a superior class. +These things may have been so, at least in some cases and particular +countries, at the date (before 1846) when J. S. Mill originally put +forward these views. The liberal, and radical writers on political +economy and sociology still follow (most of them) on the same side, +which has become in a manner historically the liberal side. There is +much against it. + +First, Production on the large scale is cheaper than on the small; this +is as true of agriculture as of other industries. The large farmer +has one fixed and one movable steam-engine of his own; he has his own +drills, threshing and winnowing machines, reaping and mowing machines. +The petty proprietor may hire these, but at a dear rate, and few of them +can work to any advantage on his small patches of corn. The large farmer +has large fields; he saves area as against the petty proprietors; he has +fewer headlands and fences, harbouring weeds and stopping the sun and +air. The large farmer can work corn and sheep together; one shepherd and +his boy will look after 500 ewes. You may travel 200 miles by rail in +France and not see two flocks of sheep. Sheep-farming is seen all the +world over to be an industry that pays on the large scale; and the want +of it injures the corn produce of the French petty proprietor. Louis +Napoleon sent Lavergne to make a report on English farming; the +substance of his report is, that were France farmed on the English +system by English farmers, the corn produce would be four or five times +what it is now; leaving sheep out of the question. + +The advocates of peasant-proprietorship, at least the better informed +ones, do not now suppose that a peasant receiving a few acres out of a +large English average farm (and capital to make a start) could make +a subsistence out of it. They believe that peasant-proprietors could +maintain themselves on small plots of rich land in and close to towns, +working as market-gardeners or cowkeepers rather than as farmers. + +This narrows down the peasant-proprietor theory vastly in its practical +application; it remains hardly a national question. But I have been +astonished to see in the neighbourhood of London of late years the large +"gentleman" market-gardeners steadily displacing the smaller and all the +single-handed men. The subject is so important that I will take one of +two instances in detail. I have seen a gentleman market-gardener, eight +miles or so from Covent Garden, growing strawberries, several acres in +each patch. He had young men (a separate staff) out at daybreak to +keep the birds off. The small gardener, growing a few long beds of +strawberries, is ruined by the birds, whether he lets them eat or goes +into the expense and labour of netting. The gentleman has his own large +spring-vans waiting; these vans are fitted for fruit, and as the pickers +gather the strawberries they deliver them in small and frequent parcels +to the packers. The moment the first van is laden it starts at +three miles per hour and travels to Covent Garden itself, where the +strawberries are delivered to the fruit-dealer, who buys them wholesale +of the gentleman-gardener. The small grower has to get his strawberries +to the local railway station, and to arrange to get them from the London +terminus to market; his trouble and expense are considerable; but, more +important still, his strawberries do not come into the hands of the +wholesale dealer in the "condition" that the large grower's do. This +large grower admitted that he was paying L12 an acre per annum for some +of his land; he added, "My labour per acre, and even my manure per acre, +costs so much that I do not think about a few pounds rent more or less." +These gentleman-gardeners are on the average better educated than the +small market-gardeners; they travel about the country, gather hints, +and pick up new good varieties of strawberries, etc. From their scale of +operations and varied sorts of strawberries they can, even in rough +wet weather or in drought, always supply to their wholesale dealer +some fruit. In fine, they beat the small grower at every point; +they undersell him at Covent Garden; they outbid him for desirable +garden-land within reach of London. It may be said that in growing plain +vegetables the small gardener would not be at such a disadvantage. I +will reply (without detailing all my observations) that I have seen the +same gentleman-gardener growing a two-acre plot of early radishes, and +that he completely spoilt early radishes for all the small gardeners. + +The advocates of peasant-proprietors have thought cowkeeping hopeful +for small men. In my experience dairies of fifty or sixty cows have an +enormous advantage; they can have perfectly designed dairies; they have +enough cream to make butter daily throughout the year (which saves much +trouble, loss, and occasionally inferior butter); they can maintain +approximately a uniform supply. In short, they beat, undersell, and +displace the small cowkeepers wherever the large dairy is moderately +well managed. + +The cottager or peasant-proprietor has, I believe, an advantage in +poultry of all kinds. When poultry are kept in very large numbers +they are more liable to disease, and the diseases are more +disastrous--sweeping off the whole large stock. Fowl and egg farming is +one of the most successful, perhaps the most successful point with the +French peasant-proprietors. To make birdfarming successful the proper +plan is to keep a moderate number of as many birds as possible--fowls, +"galeenies," ducks, geese, turkeys, large pigeons--and to go in for +eggs as well as fowls. I have not seen peasant-proprietors in +England attempting this, which seems to me one of the most hopeful of +experiments for them. + +The second point urged by Mill, and still by some, is that +peasant-proprietors are better off than English labourers. With the +present price of agricultural labour in England this seems to be +very generally not the case; the French peasant-proprietors and the +agricultural lower classes in Germany are (with small exceptions) now +worse off than the English farm-labourer; they work very much harder +and they get less to eat. The economic truth doubtless is that the +hired labourer may or may not be better off than the peasant-proprietor, +according to circumstances; and circumstances in England just now are in +favour of the hired labourer. + +Then as to independence, it may fairly be questioned whether a good +agricultural workman, now practically liberated from the Law of +Settlement, and who can command a fair wage anywhere, is not really more +independent than a French peasant absolutely tied to a three-acre plot +for life. + +The real difference between the advocates of the nationalisation of +the land and the Conservatives is this. The Conservative says, "Leave +everything to its natural course, and let us have no Government +interference. If the peasant-proprietor really can maintain himself +while paying as high a rent as the ordinary farmer, we shall soon +have plenty of them." Or, the Conservative has no objection to +a philanthropist starting a few picked peasant-proprietors as an +experiment. But he objects to starting any gigantic new scheme of +working the land, except as a matter of business; he objects to +Government philanthropy, which means giving away other people's money. + +Our farm-labourers, as a rule, know nothing of gardening, and few of +them can command L10 capital. I have sometimes looked round to select a +picked man, and wondered whether, if I put him in a selected five-acre +plot near a town, and also lent him the L200 or so capital requisite to +give him a chance, this picked agricultural labourer would succeed; +and I have inclined to think he would not succeed. I need not therefore +express any opinion as to what would happen if Government were to take +10,000 or 100,000 farm-labourers, advance them L200 each, and place them +in five-acre or ten-acre plots: there would be a tremendous bill to pay, +and the plan of peasant-proprietors would be put aside for many a day. +If the plan is to be successful it must be introduced gradually and in a +business manner, _i.e._ what does not pay must not be persisted in. + +The plan, now frequently put forward, that Government is to employ all +men out of work to reclaim and bring into cultivation waste lands, is +liable to additional objections. Who is to fix the wages, the hours of +labour, and the tale of work for the Government labourers? If these were +fixed as the advocates of the plan wish them fixed, Government would +soon have all the labourers of the country in its employ. If, on the +other hand, these were fixed below the market rate, Government would +only have such labour as the Poor-Law Unions now have, and which they +find hardly worth employing. + +Leaving this (practically grave) difficulty aside, if a heath or a moor +is now uncultivated it is because nobody sees how it can be profitably +brought into cultivation; it can always at a sufficient outlay be +reclaimed, but that will not be done unless it is calculated that the +rent of the land when reclaimed will pay the interest on the whole +expense of reclamation, and something besides. If Government reclaims +land that private persons cannot reclaim with profit, we may be sure +that Government will suffer a considerable loss. This must be provided +out of taxes: are the promoters of reclamation of wastes by Government +prepared for this? + +The wastes of England are the only land left the public. Elsewhere the +public can only walk along a pavement or a high road. The good land is +all pretty well in cultivation; and the best of what is left can give +but a moderate profit on reclamation, while its enclosure, under Act +of Parliament, deprives the public of it for ever. Hence Professor H. +Fawcett, throughout his parliamentary career, put his veto with great +success on all enclosure schemes. It is possible that there might be +a profit on the enclosure of Epping Forest: who will now support that +reclamation? + +It is very desirable that wealthy private philanthropic individuals and +wealthy private philosophic societies, should try experiments in small +farming, market-gardening, co-operative farming, reclamation of wastes, +etc. There is no hindrance to their so doing: they can readily hire as +many farms as they please at cheap rents, and subdivide them, and put in +picked labourers with an advance of capital. But that Government should +embark in uncertain speculations of this kind is quite another thing. + +The safe general principle, whether in the sale of horses, the letting +of houses, or the letting of land, is that Government should not +interfere; or, to speak more correctly, Government interference should +only interfere to prevent restrictive covenants and to ensure Free +Trade, so that every article (land included) may pass without restraint +into the hands of the man to whom it is worth most. The greater the +individual profit the greater the national profit. Under a section +headed "Law," below, I will say something about the removal of entail, +etc.--a dry but important branch of the question. The National Property +Rate, with the aid of sycophants, would remove many obstructions. + +There has been much controversy and several Parliamentary Acts +concerning the regulation of bargains between landlord and tenant. How +a tenant or a landlord can be injured in such a bargain is impossible +to understand, except in so far as a man is injured who gives L30 for +a horse worth only L20. Will Parliament interfere to protect such +horse-purchasers? The matter has been obscured by omitting to notice +that a tenant with a long lease at a fixed rent possesses a share +(often the larger share) of the "landlord interest," in the language of +political economy. As a simple example: A tenant took, say in 1850, +a Scotch farm on a Scotch lease absolute of nineteen years, at L500 a +year. Within two or three years of his so taking it the rise in wool, +potatoes, and other things, caused the value of the farm to rise to L600 +a year, and this increased value lasted the whole of his lease and +some time after. Now, treating the increase of value of L100 a year as +permanent (as it was very soon regarded both by landlord and tenant), +it is clear that this L100 a year for the period of the lease (say +seventeen years to run) went to the tenant, not to the landlord; and the +first seventeen years of an annuity in fee is worth more than all the +rest. + +It is evident that on a seven years' (absolute) lease the tenant would +similarly get a good share (not the larger share) in all the improvement +in value that occurred during his lease. Up to ten or twelve years ago +the value of land had been rising very steadily in the South of England +for near half a century. Rents were pushed up very generally at the +termination of every lease, though noblemen, great county gentlemen, the +Church, and the Universities, as a rule, never raised the rent on an old +tenant; but they could raise the rent all the more by a jump when a new +man came in. During all these years the tenant-farmers complained rarely +of their leases, though they were often subject to covenant nuisances +about cropping, selling off the farm, game, and incoming for the new +tenant. + +But during the last ten years the process is reversed. A farmer took a +farm for L500 a year for seven years in the south of England, and before +the lease had run half out the farm was not worth L400 (and in many +cases not L300). Here the tenant suffered a heavy loss. When in former +years he got a gain he never proposed to allow his landlord 15 per +cent extra rent. But now that the drop in value of such farms has taken +place, and probably will not proceed further, a tenant who takes a +new lease requires no Act of Parliament to protect him: he can protect +himself. By the date the Abolition of the Game Laws (a wrong but +intelligible phrase) was carried, the farmers in the South of England +were in a position not to take any benefit under that Act, but to +covenant for all the game and sporting on their farms for themselves. So +as to the Act regulating the leases between tenant and landlord, where +they chose to avail themselves of it, the tenant now can generally get +more favourable terms outside the provisions of the Act. Farms are so +down, tenants so scarce, that landlords have to give way on all minor +points. Wherever Government interference operates at all, it is almost +sure to operate harmfully. Consider for a moment the case of "incoming." +Formerly, by the "custom of the country" south of London, the incoming +tenant paid for two years' dressing for the corn crops, north of London +he paid the outgoing tenant only for one year's dressing, by the custom +of the country too. The question practically only amounted to increasing +by 5 per cent the capital necessary to take the farm south of London. +Now what can be gained by Government interference in such a matter as +this, in which each farmer and land-agent was in general in favour of +the "custom" he had grown up under? + +A prevalent idea is that the land is not highly farmed enough, and +that the land of England might be made to yield much more, and that +Government is to cause this to be done. It is most unfortunate to raise +this theory at the moment when land is "down," i.e. when produce is +cheap, labour expensive. Every farmer knows that the only way to meet +these conditions is to farm "lower." In a south country farm the farmer +will sow much less corn, and try to keep more sheep. In the Western +States of America, where produce is very cheap, labour very dear, the +"lowness" of the farming is always abused by the English traveller +(who thus shows that he knows nothing about either farming or political +economy). A farmer, twenty-five years ago, took a very large and fine +corn farm: it had been worked on the five-course system, i.e. three +white crops in five years; the farmer made a careful calculation whether +a four-course husbandry, i.e. two white crops in four years, would not +be more profitable; it appeared to come to exactly the same thing. At +this juncture a rise of a shilling a week in wages took place; this gave +a clear advantage to the four-course, and the farm was at once worked +round to the four course shift. In this simple case a small rise in +wages brought about a considerable diminution in gross produce, while +the loss to the farmer was small. The remarks in this section have been +directed to the case, common in the South of England, where there has +been within the last twelve years a fall of rent from 25 to 50 per cent. +In pasture farms, in rich land, and in potato farms (wherein you can +keep one-sixth the land in potatoes), the fall in rent has been much +less--sometimes inappreciable. + +But, some person may urge, if Government interferes, and compels the +farmer to farm higher than he wishes to himself, the gross produce +will be more, and the employment for labourers will be at the same time +better. True, and this is the quintessence of Protection. The whole +point of Free Trade is to allow capital to be employed where it is most +profitable: high farming is only to be preferred (both for individual +and nation) to low when it is the more profitable. Capital that cannot +be employed to ordinary trade profit on the land must be transferred to +other industries where it will earn the ordinary rate of trade profit; +or, if there is no trade yielding such profit ready to absorb it in +England, the capital must go to the United States or New Zealand and +earn an increased profit. As to the labourers, they must follow the +capital; or they may starve in England leaving few progeny, while the +well-fed labourers of the Western States of America and New Zealand +leave large families: this will do instead of emigration. + +It is to be noted that great improvements in farming, especially in +machinery, have been effected in the last thirty years, largely by the +operation of the All England and County Agricultural Societies. I +note further that the people who abuse the farmers for bad farming +and clamour for Government interference to promote high farming, +conspicuously refrain from supporting these agricultural societies. + + + + +6. FREE TRADE IN RAILWAYS. + +Government might monopolise the retailing of tea in England. At present, +in a country town like Exeter or Canterbury, there may be fifty +grocers selling tea. In their competition they lay out a good deal in +advertisement and handsome shop fronts in the most expensive streets; +they keep (the fifty between them) many more hands than are necessary +to retail the tea. All this outlay has to come out of the consumer. +Government would buy pure tea first-hand in large quantities cheap; a +few trustworthy highly-paid officials would test it, value it, and see +it done up in sealed packages of sizes from 16 lbs. down to 2 oz.: these +might be sold in an odd room attached to the Post Office in each town +and village. There can be little doubt but that a saving in capital +and labour would thus be effected, while the public would get the tea +cheaper and purer than at present. The 2 oz. purchaser, in particular, +would pay a good deal less for 2 oz. of real tea than she pays now for 2 +oz. of rubbish. + +Or,--Government might hand over the tea-retailing of Canterbury and five +miles round to a company as a monopoly: the state of things would be +something like what we experience in the large stores now: the public +would get their tea probably cheaper (quality considered) than at +present; the company would make a large profit on their capital. If +Government sanctioned two tea-retailing companies at Canterbury, these +would probably make a less rate of profit: though, after the first heat +of fight was over, they would probably agree to sell the same tea at the +same (profitable) rates, and the consumers would gain little out of so +restricted a competition. If a new company were to apply for a private +Act to enable them to retail tea at Canterbury, the old company would +show Parliament that themselves sufficed to satisfy the requirements of +the public. + +The case of tea is a very specious one. By Government taking to itself +each branch of business in succession till all was in Government hands +we should arrive at Communism. For each successive interference of +Government a reason from economy can generally be found: as in the case +of telegraphs, so in the case of tea. The real objection to Government +monopolising the retail of tea is, that so long as we live under a +system of competition we had better stick to that plan altogether. At +every turn of our present struggling system there is waste; but the +ultimate effect of competition is to reduce the waste to a minimum. In +the extreme case of tea it is pretty clear that the system of stores +will, when fully developed, give the public all or nearly all they might +hope to get from Government retailing, and at the same time will reduce +the loss by competition among tea-retailers. + +But there is one industry, one branch of the public service, which +should be the very last to be monopolised or restricted by Government, +viz., the carrying of passengers and goods from one place to another, +especially carrying by railway; and yet this particular industry is +hampered by law and restricted by monopolies above all others--as I +suppose, most unnecessarily; but I will take a few cases in detail +before arguing from the general principle of Free Trade. + +There is one railway from London to Brighton: there are two railways +from London to Exeter. There are fewer quick trains daily from London to +Brighton than from London to Exeter. There are third-class carriages +at a penny a mile on all the quick trains from Waterloo to Exeter: from +London to Brighton the only penny a mile train starts at an inconvenient +hour and travels exceedingly slow. The Brighton charge express fares on +every convenient quick train they run; the South-Western have no express +fares at all. The South-Western third-class carriages are padded, and as +comfortable as the first; the Brighton third-class carriages are bare, +very long, and run so badly that the shaking, the rattling of glass, and +the draughts, keep everybody (who can possibly afford it) out of them. + +Naturally there have been numerous schemes for a second railway from +London to Brighton in the course of the last twenty-five years. The +present railway company has (they are not to blame for it) opposed each +scheme tooth and nail. They have shown that they themselves satisfy the +requirements of the public, and at the same time do not make a very high +dividend. If a new grocer required an Act of Parliament to set up as +a tea-retailer in Canterbury, could not all the existing tea-retailers +there prove most triumphantly that an additional grocer was not wanted, +and that their own profits were reasonable? It is not too much to +say that the greater part of the evidence admitted by Parliamentary +Committees against proposed new railways is foolery: without wasting +time on it, the Parliamentary Committee might assume as proved that no +monopolist trader wants a competitor. But the only safety for the public +is in competition. In railway competition the public always profit: if +the two companies agree to run at the same fares, the public gain +in number and speed of trains, better carriages, and attentive +consideration of their comfort. Moreover, in the case of two railways +between London and Exeter, or between London and Brighton, the two +lines only meet (not then quite) at the two termini; and the public is +accommodated at all the new intermediate stations where there was no +station at all before. + +The North-Western Railway was many years ago opposing a directly +competing scheme. They brought before the Parliamentary Committee the +late Mr. Horne, whom they justly credited with ability enough to throw +dust in the eyes of almost any Parliamentary five. Mr Home's evidence +was: "I understand railway traffic as well as anybody; the public are +deluded in thinking they would gain by competition: the two companies +might fight for a week or two, then they would more wisely agree, and +put up their fares above the present North-Western fares, till they had +recouped themselves out of the public all they had lost by their fight." +This did very well for the Parliamentary Committee; but it is a fallacy. +At present the North-Western Railway, though empowered by law to +charge three-pence a mile first-class, charge twopence a mile only: +why?--because twopence a mile they find to be on the whole the most +paying rate. Ergo, after the fight with their directly competing brother +was over, they would settle down to twopence a mile again. The public +could not lose by the competition; they might gain. All experience shows +that they invariably do gain. + +In France, Government has restricted the construction of railways very +greatly, and protected the monopoly of each existing company closely. +The mileage of railway open in France, in proportion to area and +population, is very small in comparison with that in England. Moreover, +the French lines are worked by quasi-Government officials, whose object +is to avoid work, and still more to avoid responsibility, and who will +not make the slightest effort to accommodate the public: they do not +wish the trade at their station increased. Under this system the traffic +on the French railways is low; especially when we consider how little +each is interfered with by other lines, and what a broad band of country +it has to drain. + +The immense progress made by England since 1846, as compared with the +progress of France or of Germany, is often attributed _solely_ to Free +Trade. I believe Free Trade has done much for us: but I am sure that +our railway superiority (to France, Germany, etc.) has done much also. +Probably no one who has not _resided_ some time in a French town (say a +station on a main railway 150 miles from Paris as the least favourable +case for my argument) can realise the enormous disadvantage by loss +of time that a French business man is under, as compared with the +Englishman. To get some necessary manufactured article from Paris is +a matter of days; during which his machinery may all stand still. The +communication with Paris, however, is where the Frenchman suffers least: +the number of trains is so small, and the slowness of all (but the +express) is such that the "local" traffic is nothing: unless a man +intends to go a good many miles he would ride or even walk rather than +go by train. He does not mind getting up at 2 a.m. to go to Paris; but +he will not get up at that hour to go six or eight miles, especially if +he is given no choice as to the hour at which he must return. + +But the usual remark about the French railways is, "See how much better +they manage these things in France. While our railway companies are all +spending their money in fighting and in competition, and pay dividends +of 4 or 5 per cent, the French railways have their routes settled by +Government engineers, and pay 8 or 10 per cent." I am going to propose +a plan for stopping all company fighting in England for ever: but--as to +the dividend--it can only mean that, like any other Government monopoly, +the French public are being made to pay more for travelling than they +need. + +As regards the interest of the public, the rate of dividend paid by a +great railway company is of very small importance. For many years the +South-Western Company paid double the dividend the Great Western did. +How did this affect the work each did for the public--the conveyance of +passengers and goods? Many common highways have been made by parishes +and landowners combined for the public convenience; the capital so laid +out paid no direct interest (the road was a highway, not a turnpike): +how does this case differ from a railway that pays no dividend on the +original stock? If the railway carried me from Exeter to London in five +hours for thirteen shillings, what does it matter to me whether +the company pays 2-1/2 per cent or 6-1/2 per cent to its original +shareholders? In a very few small and special cases we have seen a +railway line not pay for the working, and be closed. In a few other +cases, where the dividend paid is less than 4-1/2 per cent, it is +possible that the utility of the line to the public is less than the +loss of the shareholders in a non-paying investment. I say this is a +possible and conceivable case--in some very short lines or in some very +thinly inhabited districts. Such cases I believe rare. Not rarely the +initial cost of the line has been seriously increased by promotion, +legal and parliamentary expenses, enormous sums extorted for land, +severance, etc.; if these expenses can be done away with, these cases of +railways constructed at a loss _on the whole_ to the nation may be made +fewer still. + +The way in which the railway monopoly, the monopoly of the great +companies, has grown up is noteworthy. To enable a company to take +the land of a private man compulsorily a private Act of Parliament was +necessary. The Parliamentary Committees then said, We will not enable +you to dispossess forcibly private owners of their land for "a public +purpose" unless you further shew that this includes a public advantage. +Private owners were of course let in to show cause against a new +railway; they always talked like Naboth (the Parliamentary Committees +must have been wearied by the continual references to Naboth), but the +genuine private owners sold themselves at the last minute; after they +had pushed the company up to the highest bid, they well knew that this +was above what they could get in the after arbitration, and "closed," +withdrawing their opposition the last day in the Committee room. The +opposition company, besides the grounds of insufficient need for a new +line, etc., always supports and comforts the opposing landowners: but +the great resource of the opposing company is to hire a landowner to +oppose, especially a local attorney or agent who owns land proposed to +be taken by the new line. Such an attorney, employed professionally by +the opposing company, cannot be bought off at any price; he is a real +Naboth, and in his character of a dispossessed landowner he will +fight for the company every point that they cannot decently fight for +themselves. + +Opposing a railway bill in Parliament has thus become an art; so much +so, that no independent small line can be made unless they can get the +support of one (at least) of the great companies that are supposed +to occupy the area. The lines made (economically often) by the great +companies themselves are not primarily designed for the accommodation of +the public, but for the private purposes of the great company; sometimes +they are made merely to diddle another great company. + +It is well to compare the law regarding making a new railway with that +for making a new main-drain in the fens. In the latter case the new +drain company receives extraordinary powers and may put a rate on the +land benefited. In the case of a railway passing through a farm, the +common estimate is that it adds a shilling an acre value to the rent of +the farm; if there is a station on the farm it often adds much more +to the agricultural value. Landlords are up to this: a landlord +triumphantly told me, "I got L7000 from that company for cutting me up; +but I would have given them L14,000 to cut me up more." (In this case, +however, building value came in.) But the disgraceful squabbling of +companies, who "sell" any owner without scruple when they come to terms +among themselves, has disgusted landlords from actively supporting +railway schemes. + +A great deal of the opposition between rival companies has been from +their point of view an error, as they have subsequently discovered for +themselves. When the Great Western Company first opened their station +at Basingstoke there was war between them and the South-Western, who +thought all their London West-End passengers would transfer themselves +to the Great Western at Basingstoke in order to avoid a cab drive from +Waterloo to Paddington. Some passengers do so transfer themselves. But +_via_ Basingstoke a fine trade sprang up between the south of England +and the Oxford and Leamington route, which far more than compensated +the South-Western Company for the London passengers they lost at +Basingstoke. So in a very few years there was peace at Basingstoke, and +a through-carriage daily from Birkenhead to Southampton. I think it +is impossible to estimate how much one railway company profits by the +facilities afforded by all the surrounding companies. The loss at a +limited number of competing termini is seen; the gain in the local and +cross-country traffic is not. + +I propose Free Trade in Railways. I mean that any person or company +shall be free to make a railway wherever they please. They will have, +before commencing the line, to lodge with the Board of Trade the cost of +the land they take as valued in the National Rate Book, with the 30 +per cent for compulsory purchase. They will not have to lodge the money +where they have come to terms with the owner; and the Board of Trade +will allow them to construct the line in reasonable sections. Having +lodged their money, the company (or private speculator) will only have +to go to work under the (amended) Lands Clauses Consolidation Act. + +If this scheme were sanctioned we should have in the course of the +next twenty years, _as I estimate_, L100,000,000 additional invested in +England profitably--not under Government pressure, but by business men +to get interest. Even where the new lines paid little interest we should +get the accommodation of the public. We should have no big village +without its railway; and we should have a great extension of private +sidings. On the eastern half of England we might get a great number of +narrow gauge steam trams running along the present trunk roads. (Suppose +a steam tram from London to York by the Royston route, going through +all the towns, running trams an hour apart all day, going eight miles an +hour through the towns, sixteen or twenty miles an hour in the country, +taking up and setting down everywhere, would it not pay?) + +The only objection to Free Trade in railways is that it would injure the +existing railway monopoly. Under this principle no monopoly ever would +have been or ever will be put down. But I believe the existing great +companies would very generally gain by Free Trade in railways. + +For, first, few new railways would be in direct competition with the +old. The old lines have level roads; they can run quicker and with less +wear and tear than the new ones, which would generally have steeper +gradients. The new Free Trade lines would be in the main a network in +the interstices of the present lines. By this the existing companies +would gain enormously; they would be the trunk lines which the network +would feed. It is true that there would soon be a second line to +Brighton; the present Brighton Company would possibly pay as good a +dividend then as they do now. But if they did not, it would only show +how they tax the public now as well as hinder trade. I am not bound to +show that the monopolists would profit by Free Trade; I deny that +the monopolists have any vested interest in their monopoly, or that +Parliament, i.e. the nation, has made any covenant with them that their +monopoly shall never be invaded. + +I have suggested three great changes: (1) Perfect Free Trade at all our +ports; (2) The exploitation of the land through the National Rate Book +machinery; (3) Free Trade in Railways. Of these the last is clearly +advisable, nor is there anything (in my opinion) to be urged on the +other side. At the same time it is not less important than either of +the two other suggestions. But the three would work best together--each +aiding and reacting on the other; they would thus provide "progress" +(which means comfort to all classes) in England for at least two +generations of men. If there was no National Rate Book, the new railways +would have to pay exorbitantly for the land they took up under the +existing arbitration system; they would be relieved merely from the +parliamentary opposition of other companies and of private individuals. +The private owner must be deprived of his present privilege of +parliamentary opposition, which gives him the power to extort an +exorbitant price for his land--because a company can always oppose in +the garb of some private owner whom they have hired. + +A less but important branch of this reform is the narrowing of +Government interference under pretence of protecting the public. Great +expenses are thus thrown on railway companies. The companies cannot, +therefore, charge increased fares, but such expenses diminish the number +of new railway schemes brought forward. Nor do Government rules protect +the public so well as the old plan (abolished by Chief-Justice Cockburn) +of making the railway company pay for killing or injuring people. Now, +after a great railway smash, the company comes forward and shows that +there was no negligence on their part; that in the signals, breaks, +etc., they had satisfied all the Board of Trade regulations, and +the injured passengers can get nothing. The real way to protect the +passengers is to allow the company to make their own arrangements, and +to compel them to pay heavily for killing and maiming passengers. This +is quite defensible in theory, as in the case of manslaughter by an +individual we give him some punishment out of our civilised respect +for human life, though he may have been little to blame. Great cost is +thrown on railway companies (i.e. much injury is done the public) by +standing orders (cast-iron orders) about gradients, etc. The company's +solicitors order the company's engineer to comply with standing orders +at all costs rather than introduce any special clause. The consequence +is that we see much money spent and a most inconvenient level-crossing +placed at the entrance to some large town, where a steep gradient for +two hundred yards on a straight piece of road (to which there is no +objection) would have avoided all difficulty. The responsibility in all +such cases should be thrown on the company, and Government interference +abolished. + + + + +7. REFORM IN LAND LAW. + +The transfer of stock in the name of two trustees in the funds is +done in a few minutes at small expense. The transfer of land in South +Australia is done in a few minutes at small expense at the Government +registry. The transfer of land in England requires an uncertain time +and cost--usually some weeks, and 5 per cent on the purchase money; +sometimes months, and 10 to 25 per cent on the purchase money. It +is equally expensive and slow in the register counties of York and +Middlesex. The Acts of Brougham, Bethell, Cairns, to facilitate transfer +have not materially reduced the evil. In many cases, however much the +land may be wanted for public or other purposes, the lawyers tell +you that no title can be made without a private Act of Parliament--so +effectually has the land been tied up. + +The common idea is that this peculiar difficulty, delay, and cost in +the transfer of land arise from the law of inheritance and the legal +machinery of entail; but stock in the funds can be virtually entailed +and made to "follow the estate," and yet this stock can be transferred +just as readily as any other stock. + +The explanation is known to every lawyer; but I have met with more than +one Member of Parliament who, though blatant about entail, understood no +more about the matter than a chimney-sweep. + +The point is that, under English law, the trusts in the case of stock +attach to the trustees, not to the stock; in the case of land, the +trusts attach to the land itself as well as to the trustees. Hence, when +I purchase stock of trustees I need not trouble about how they apply the +purchase money; in the case of land I have to go into the whole title. + +A simple illustration. I provide for a daughter L300 a year by putting +L10,000 in the hands of two trustees in the funds. Should the trustees +prove rascals, sell the stock, and decamp with the money, my daughter +will lose everything; the purchaser from the trustees can hold the stock +clear of all charges or liability. But if I provide for my daughter by +charging an estate with L300 a year for her, then however wrongfully +that estate may be sold, mortgaged, or otherwise dealt with, she gets +safely her L300 a year. If the bank B has advanced money on mortgage on +that estate, not knowing the existence of the charge of L300 a year for +my daughter's benefit, the law simply says to the bank, "It was your +business to know; you should have completely investigated the title +before you advanced your money." + +It follows, therefore, that if, with a Government Land Registry Office +(say one for each county), you required the purchaser only to get in the +legal estate, _i.e._ holding him not responsible for the trusts or +the application of the purchase money, then land could be transferred +exactly as money in the funds is now, in spite of all the complications +of our law (or rather custom) of entail. + +The law of entail in England (so called) is not what the popular orators +suppose. The eldest son inherits really; that is, if there be no will, +no settlement, or other disposition of the property. But there nearly +always is. It is a very rare thing for the heir-at-law to take land +(except some very small pieces) by the law of inheritance. As to entail, +it is practically carried out by a continued system of surrender +and re-settlement--a device of lawyers which is, in its historical +development, an evasion (rather than a part) of the law. Nevertheless, +I think it is a matter of importance that the shackles which fetter land +should be loosened, and that the present powers of owners to tie up +land legally should be very much curtailed. It is a sad proof of the +way riches cling to the heart of man even when he is leaving this world, +that, whatever powers of tying up land are sanctioned, an owner will +usually exert them to the uttermost. He is leaving his property, but he +will keep a hold on it fifty years after he is dead if he can. He will, +after exhausting his powers in life interests, leave the residuum to +an unborn child "in strict tail-male so far as the rules of law will +permit;" and he will stick in a springing use to effect that, if his +greatnephew, the Rev. George, should ever from an Anglican become a +pervert to Roman Catholicism, he shall take no benefit under the will. + +Now the fact is that all tying up is to the detriment of the public. No +man can provide for all contingencies. Indeed he can see so little a +way ahead that in a few years it frequently happens that all the careful +provisions of the will are working exactly as the testator would have +desired them not to work. Land tied up is always worth less to the +owner because it is tied up; and we have seen that the interest of the +commonwealth is the sum of the interests of all its component members. +When you tell me that an estate is now of small value to its life-owner +and unget-at-able for any public purposes, in consequence of a will made +by a man who died twenty years ago, it appears to me that you shew me +convincingly that we have not Free Trade in land. + +I would propose that, either by will, settlement, or other instrument, +an owner should be able to give any number of life interests, and +nothing more; all trusts being placed outside the law. The first +objection will be that if the powers of owners are so restricted, the +desire for the ownership of land will be lessened: the value of all the +land in England will fall. This might be so, I admit, to some extent; +and it would favour the employ of the land for agricultural profit. + +The next objection is that it would become necessary to give land (and +money) directly to women without the intervention of trustees: that +women do not understand business and require to be taken care of. My +reply is that they always will require to be taken care of unless they +are entrusted with the management of their own affairs. The loss to the +nation, the expenses, the sacrifice of time and labour in trusteeships, +have now assumed gigantic proportions. If women were given their own +property to manage, some would (at first) fool it away: we know what +high interest, adventurers, unprincipled persons, etc., can effect. But +each woman defrauded or stripped of her property to starve would be +a warning to all the rest: in a few years women would manage their +property just as well as men. I believe they would manage it better. +A smaller percentage of women would gamble on the Stock Exchange, the +Mining Exchange, Austrian and Spanish lotteries, and horse-races; and +a much smaller percentage of women would embark in desperate "business" +speculations, heavy purchases of foreign produce, etc. + +It should be noted that in cutting down the powers of owners to legally +tie up, I do not interfere with honourable trusteeships of any kind not +enforceable by law or in equity. Such exist now, and more largely than +is generally supposed. The absolute devises and bequests to friends (not +relatives) are often on private (not expressed) trust to provide for +illegitimate children or numerous other purposes which a man may not +wish to parade to his family. + + + + +8. EQUALISING OF TAXATION. + +There has been no readjustment of the land tax for very many years. It +is a property rate, and originally was rateably levied at four shillings +in the pound. By the small increase in value of some land, the large +increase in value of other land, since the days of Queen Anne, it has +now become unequal in the highest degree. The farm A, gross rental L100 +a year, has a land tax of L5 a year; the suburban estate B, gross rental +L1000 a year, has a land tax of L2:l0s. a year. The land tax assessors +were sworn in annually (twenty years ago, and may be still) to assess +the tax equally, but it was perfectly understood that the tax was to be +collected every year on the old long-standing assessment. + +Suppose that the estates A and B above were reassessed, and that the +land tax on A was put 15s. per annum, that on B L6:15s. a year. Land +tax can be redeemed at about thirty years' purchase. The effect of the +readjustment would have been to take about L120 from the owner of B and +give it in a lump sum to the owner of A. It is probable that the present +owners of both A and B (or predecessors under whom they claim) had +purchased the estates A and B after the land tax had become fixed on +them, and the amount of land tax would then have been fully considered +in the price paid. + +We see thus that in the case of the land tax, as we saw above of the +tithe, and as is also the case in any tax permanently on, a disturbance +of the existing taxation is inequitable. This point is so much +misunderstood that I will give one more illustration. + +I am purchasing an estate, intending to farm it myself. There are 400 +acres of land, and I reckon the land worth 30s. an acre. I am willing +to give twenty-five years' purchase. I find the tithe is L100 a year. I +therefore propose to give twenty-five times L500 = L12,500 for the land. +But before the bargain is completed I find that the tithe is L150 a +year. I at once sink my bid to twenty-five times L450 = L11,250, and buy +the estate at that price. The next year some financier "equalises" the +tithe, and my tithe is reduced to L100. Is it not clear that, by the +equalisation, I pocket L1250, and somebody else loses it? + +New taxes when imposed should be "equal," as far as can be arranged. +When a legacy duty was imposed, it would have been just to impose a +succession duty also. But, after the legacy duty had been imposed twenty +years with no succession duty, it was similarly inequitable to put on a +succession duty; for quantities of land had been bought in the interval +of twenty years at a slightly higher price than if there had been no +legacy duty, because there was no succession duty. + +The proposal for "equalising" taxes is usually put forward in order to +get a somewhat larger gross income from the taxes equalised, or as a +political cry. Nothing can be more absurd than the cry that the land is +over-burdened in comparison with other property. There is no comparison +in the case. Some land being tithe free, some land tax free, some nearly +rate free, those persons who do not trouble themselves to master the +political economy may yet be satisfied that the "burdens" of the land +affect neither the farmer, the labourer, nor the produce of the farm; +the burdens fall _wholly_ on the landlord (a farmer with a lease being, +as above shown, a part landlord). The efforts of some Conservative +orators for the last twenty-five years to prove the contrary are +erroneous in the reasoning; or I should say, much of the "reasoning" +does not hang together at all. Without formally refuting these efforts, +I repeat that they are fully refuted in the result. + +It is therefore that I have insisted above that, in order to carry out +the proposed ransom of the land, a new Property Rate, separate from +and in addition to all other taxes, is necessary. Though the manner of +levying a National Property Rate which I have proposed lends itself very +nicely to getting in such an extra tax, it is not at all on that ground +that I have suggested the new manner of levy. The object of the new +manner of levy and the sycophants is to get every piece of land in the +country into the hands of that man who can make most of it; including +herein as an important item the cheap and easy acquisition of land +required for Government, public and commercial (railway, etc.) +enterprises. + +In any great reform of our whole system of taxation a disturbance of +existing interests must take place. Though I would not disturb existing +interests for the sake of mere equalisation or official beauty of work, +I would not let the fear of disturbing private interests stand in the +way of any real or important reform. The introduction of Universal +Free Trade and the abolition of all duties would be accompanied by a +disturbance; but, as far as I can see, no one would lose, while many +would gain enormously. + +On the same ground of equality of new taxation I should propose to +replace the amount now levied in duties mainly by an income tax. That +is a perfectly level tax; the idea that temporary incomes ought to pay a +lower rate is fallacious. We are all agreed to tax the poor at a _lower_ +rate; we have now a section of advanced Radicals proposing to tax the +rich at a higher rate. One present candidate for Parliament is even +willing to tax people of L100,000 a year and upwards at nineteen +shillings in the pound. This of course, or anything approaching it, is +unpractical. But I have suggested above, as a rough plan in accordance +with the existing one, eight-pence a week on incomes of L1 a week, +twelvepence a week on incomes of L2 a week, sixteen-pence a week on +incomes of L3 a week and upwards. The question may very fairly be +raised, Why stop this process at L3? why not continue the series and +develop it into a mathematical law? This might be done more easily with +a sixpenny income tax than a heavy one. To tax earnings and savings +(that is an income tax) instead of expenditure can only be carried a +certain way; if the tax is large enough to diminish saving and promote +living up to one's income, and at the same time to send capital abroad, +its effects would be serious. For a particular and noble purpose I have +suggested sixteen-pence in the pound (which we bore without serious +inconvenience in the Russian war); I should imagine twenty to +twenty-four pence in the pound about the maximum that could be imposed +for any purpose--such as the prevention of hostile invasion. It must +be noted that more than the maximum bearable cannot be put on large +incomes, L100,000 a year, etc., any more than on small ones. Indeed it +is rather the contrary; for persons with large incomes are usually the +very people who already invest largely abroad, and who could (and would) +transfer their capital rapidly out of the country if they were subjected +to anything like confiscation. + +Instead therefore of proceeding _upwards_ in our income tax +sliding-scale we must proceed downwards. Taking sixteen-pence in the +pound as the maximum rate we can impose on the big fish, the problem +will be, What is the highest income to which you will allow any +remission from the maximum rate? I think those having above L150 a +year possess more than the necessaries for healthful existence; looking +therefore to the equity and productiveness of the tax, I suggested +remission to those earning less than L3 a week. + + + + +9. WEALTH OF THE NATION. + +The Wealth of Nations is a well-considered title. The economists +anterior to Adam Smith conceived England as surrounded by a barrier +impassable to property and money except by trade. In trade there was +an exchange apparently on equal terms; but the old economists saw a +difference in nature between imports and exports; when wool was sold +to Flanders gold was received, and remained somewhere in the nation; +it formed the national purchasing power, and could hire mercenaries or +otherwise command foreign labour and productions. Inversely, when we +imported wine or tea, we had to part with a portion of our national +purchasing power, while the wine and tea went down our throats, leaving +nothing in its place. It appeared clear that for any increase in +national wealth the value of the exports must exceed that of the +imports. Every well-prepared boy can now show in ten minutes' scribbling +in a Government examination the ridiculous folly of the old economists; +but several of them were experienced London merchants, and perhaps were +not the complete idiots they are now triumphantly shown to be. If they +had been asked whether wool was a part of the national wealth they +might have returned an answer that their modern detractors are not quite +prepared for. + +Adam Smith and his followers, and still more closely Ricardo, divided +their Political Economy into two parts: in the first they consider the +wealth of the nation without the "complication" of foreign trade, _i.e._ +they, in fact, contemplate no money or goods as going out or coming +in whatever. They then in separate chapters, forming a big appendix, +consider the effects of Foreign Trade as a series of exchanges. They +do not discuss even the payment of a lump sum of gold to a victorious +nation. Senior, in his _Handbook of Political Economy_, has considered, +first, the economy of the world conceived as a solitary, island of +small size in a world-covered sea; secondly, he treats foreign trade +by conceiving two such islands. There is no better way of treating +Political Economy than this; and it is well for the beginner to conceive +the solitary island with fifty (or a limited number of) families only +on it, and work through the ordinary theorems (with figures) in this +restricted case. Whatever is true of the fifty families in a small +island must be true for 5,000,000 families in a big island. + +The facilities of modern communications have caused most countries to +differ in their circumstances materially from the conditions assumed by +Adam Smith and his successors as axioms. In the case of England, +owing to its numerous wealthy colonies, gigantic foreign trade, and +consequently world-over-spread capital, the circumstances are so +completely altered that many results of the grammar of Political Economy +no longer apply even in the rough to England. If Adam Smith had been +asked what would happen to England if the imports for one year exceeded +the exports by L150,000,000 sterling, he would have given the same +answer as his predecessors, who reckoned wealth in gold and silver, or +more probably he would have declined answer, pronouncing such a state +of things an impossible conception. It is now as difficult to treat +politico-economically the wealth of the nation as the wealth of +Warwickshire--a difficulty that Adam Smith would have shrunk from. + +It is true that every abstract proposition concerning rent, capital, +and wages now (and always) holds true for the whole world; but, so +conceived, the propositions give no practical result. These things do +not lesson the value of the science of Political Economy, Mr. Ranken +or Dr. Pole would estimate very highly the value of a knowledge of +elementary mechanics to the humblest engineer, though such elementary +mechanics might not extend to the consideration of friction, etc., and +might not be applicable to any bridge or steam-engine. + +Of this L150,000,000 that is now annually remitted to England, not +in the way of exchange, some small portion is transferred by wealthy +Australians returning to settle in England for purchase of houses, etc., +in England; but by far the greater portion is the interest of capital +owned by men resident in England, but invested abroad: it may be shortly +termed tribute. This is mainly invested in the Colonies and India; New +Zealand and Australia taking large shares. There is also much English +capital invested in Continental railways, etc.; but it is noteworthy +how capital (as well as commerce) follows the flag. The English capital +invested in the United States is absolutely large, but relatively (to +that invested in Canada, etc.) very small. It is certain that if the +United States were under Queen Victoria the amount of English capital +invested there would be far greater than at present. + +As far as England is concerned this L150,000,000 a year is a tribute +paid her by the rest of the world. New Zealand or South Australia may +take up a million sterling in London (because they get the loan placed +there at 5 or 6 per cent, while the local rate of interest in Australia +is far higher) in order to make a railway which perhaps pays the local +Government as much as the interest of the money they give to England. +Still, the capital being once fixed in Australia while (by hypothesis) +the stock is held in England, the result is equivalent to a tribute. + +All Liberal stump-orators now agree in telling the agricultural +population that their improved position is due to Free Trade (in wheat), +and that therefore they should vote for the Liberals. Nothing is done +more confidently in politics and history than the settling the causes of +events, or predicting what would have been the course of events had +some result been different, as, for instance, had the separation of the +United States from England not occurred. The truth is that in politics +causes are many; they act and react on each other in their operations; +and to say exactly how much is due to one cause, or how much that cause +acting alone would have effected, is impossible. To get some judgment +how much of the present prosperity of the agricultural labourers +(admitted on all sides as compared with their position in 1846) is +due to free importation of wheat alone, let us (merely as a scientific +artifice) imagine that a regular sliding-scale duty on wheat were put +on now, bringing wheat to 48s. a quarter permanently. What would be the +effect on the agricultural population? We may suppose that the produce +of the duty, were it five or eight millions, or any other sum, was +employed in remitting the duties on tea or other productions generally +consumed by agricultural labourers. The placing of wheat at 48s. a +quarter permanently would at once recall a good deal of capital to the +land, it would carry out further the margin of cultivation, and at the +same time cause a higher farming of that within the non-existing margin; +in both ways it would raise the demand for agricultural labour, and +would raise wages. + +On the whole, I incline to think that a sliding-scale duty on wheat +up to 48s. a quarter would not perceptibly alter the position of the +agricultural labourer, or might possibly improve it: it would lower the +wages and diminish the profits of capital in other trades. This is not +(as before explained) a fair way of arguing the question; because it +is impossible to calculate the indirect effects of Free Trade in wheat, +which ultimately came round to benefit the agricultural labourer. + +But considering how the efficiency of the agricultural labourer has been +improved by improved machines since 1846, it is hardly possible to doubt +that the agricultural labourer is much more indebted to the engineers +than to the Corn Law League for his improved position. Under "machines" +too may be included railway communications: also let us not forget +how much the agricultural labourer owes, not only to drills and +mowing-machines, but to boot-sewing machines, improved tea-ships, etc. + +If we look to the general increase of wealth in England since 1846, the +first thing that strikes us is the increase in the tribute, which is +about thrice what it was. This increase is largely imperial, i.e. due to +colonisation, annexation, etc. But here again we must not overlook +the reaction of causes on each other: our Free Trade in corn, our +improvements in machinery and ships, have so largely contributed to +spread our empire that it becomes impossible to disentangle the separate +work, or indeed to speak of any one cause as a simple element: the +causes all act together. + +England is the most comfortable country in the world for a rich man to +live in, and consequently rich men congregate there; or, if they +travel, keep a headquarters there. In this way we have congregated a +disproportionate population in England. It may be argued that it would +be a healthier economic state if the exports and imports balanced, and +if the population of England was no larger than the country itself could +grow wheat for, _at a price not exceeding 40s. a quarter_. However that +may be, the important point for the working men of England to mark +is, that every loss of rich men resident, every loss of tribute, +every reduction of the wage-fund, every pressure on the population to +emigrate, everything that leads in the direction of a self-supporting +England, means immediate pressure on the poor, with reduction of wages. +That is the only way emigration could be by natural law enforced. It is +the poor, the labouring population, who are so hugely interested in the +empire. Of all the follies taught to the labouring man the most foolish +is the doctrine that the empire abroad is maintained to provide incomes +for the rich, at the cost of the taxes paid for wars by the poor. It +matters comparatively little to the rich whether they live at Florence +or Dresden four or eight months in the year, whether the population of +England is to be maintained stationary, to increase at its present rate +of increase, or to be squeezed down to half its present number: but it +matters vitally to the poor. Whether, ultimately, after our empire is +gone and the population of England is stationary at fifteen millions +say, the poor in England would be better off than now is a very +difficult question, concerning which doctors differ; but it is +absolutely certain that during the Banting process, in the reduction of +the population down to that fifteen millions by a process of starvation +and emigration, continued for two generations of men, the poor would +have to go through experiences altogether novel. It is a thing that +would revolutionise England; and in spite of the superior education +of our labourers might lead to a break up of society. Starvation and +bankruptcy make any and every man a Radical if not a Communist. + +To keep the poor comfortable for the present and for many years +immediately in front of us, we require a continual increase in the +wealth laid out in England annually in the purchase of labour. The +growth of the empire, the profitable investment of capital in foreign +countries (whereof the interest is paid and consumed in England), is one +great resource: the profitable investment of capital in England itself +is the other great, probably safer, resource. To effect this we require +every acre of land to fall into the hand of the man (or company) who can +make most of it: we require a Universal Free Trade that shall render +our hold on the commerce of the world secure until all nations adopt +Universal Free Trade (when we shall gain so much in other ways that we +shall be able to afford to share our monopoly with others); we require +the removal of all restraints on railways, tramways, electric lights, +etc., that hamper or prevent the employment of capital in England (in +other words, that send English capital abroad). Finally, underlying the +whole, and as the prime cause that shall induce capitalists to employ +their capital in England rather than to send it abroad, we require the +labour of every working man to be in the highest degree efficient: this +retards the fall of the natural rate of profits to a minimum, and the +attainment of the stationary state. Whatever ideal beauty has been +discovered in the stationary state by J. S. Mill, it is pretty clear +that England is not approaching it. It is as difficult for us to stand +still as it is impossible to go back; and our only (third) course open +(for the present and for many years to come) is to progress. + + + + + + + + + +End of the Project Gutenberg EBook of Speculations from Political Economy, by +C. B. 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