Chapter XIV: Front Matter (14)

We contend, then, that neither to restrain the efflux of gold, nor to guard against the over-issue of bank-notes, is legislative interference warranted. If Government will promptly execute the law against all defaulters, the self-interest of bankers and traders will do the rest: such evils as would still result from mercantile dishonesties and imprudences, being evils which legal regulation may augment but cannot prevent. Let the Bank of England, in common with every other bank, simply consult its own safety and its own profits; and there will result just as much check as should be put, on the efflux of gold or the circulation of paper; and the only check that can be put on the doings of speculators. Whatever leads to unusual draughts on the resources of banks, immediately causes a rise in the rate of discount—a rise dictated both by the wish to make increased profits, and the wish to avoid a dangerous decrease of resources. This raised rate of discount prevents the demand from being so great as it would else have been—alike checks undue expansion of the note-circulation; stops speculators from making further engagements; and, if gold is being exported, diminishes the profit of exportation. Successive rises successively increase these effects; until, eventually, none will give the rate of discount asked, save those in peril of stopping payment; the increase of the credit-currency ceases; and the efflux of gold, if it is going on, is arrested by the home-demand out-balancing the foreign demand. And if, in times of great pressure, and under the temptation of high discounts, banks allow their circulation to expand to {347} a somewhat dangerous extent, the course is justified by the necessities. As shown at the outset, the process is one by which banks, on the deposit of good securities, loan their credit to traders who but for loans would be bankrupt. And that banks should run some risks to save hosts of solvent men from inevitable ruin, few will deny. Moreover, during a crisis which thus runs its natural course, there will really occur that purification of the mercantile world which many think can be effected only by some Act-of-Parliament ordeal. Under the circumstances described, men who have adequate securities to offer will get bank-accommodation; but those who, having traded without capital or beyond their means, have not, will be denied it, and will fail. Under a free system the good will be sifted from the bad; whereas the existing restrictions on bank-accommodation, tend to destroy good and bad together.

Thus it is not true that there need special regulations to prevent the inconvertibility and depreciation of notes. It is not true that, but for legislative supervision, bankers would let gold drain out of the country to an undue extent. It is not true that these “currency theorists” have discovered a place at which the body-politic would bleed to death but for a State-styptic.

* * * * *

What else we have to say on the general question, may best be joined with some commentaries on provincial and joint-stock banking, to which let us now turn.

Government, to preserve the Bank of England-monopoly, having enacted that no partnership exceeding six persons should become bankers; and the Bank of England having refused to establish branches in the provinces; it happened, during the latter half of the last century, when the industrial progress was rapid and banks much needed, that numerous private traders, shopkeepers and others, began to issue notes payable on demand. And when, of the four {348} hundred small banks which had thus grown up in less than fifty years, a great number gave way under the first pressure—when, on several subsequent occasions, like results occurred—when in Ireland, where the Bank of Ireland-monopoly had been similarly guaranteed, it happened that out of fifty private provincial banks, forty became bankrupt—and when, finally, it grew notorious that in Scotland, where there had been no law limiting the number of partners, a whole century had passed with scarcely a single bank-failure; legislators at once decided to abolish the restriction which had entailed such mischiefs. Having, to use Mr. Mill’s words, “actually made the formation of safe banking-establishments a punishable offence”—having, for one hundred and twenty years, maintained a law which first caused great inconvenience and then extensive ruin, time after time repeated—Government, in 1826, conceded the liberty of joint-stock banking: a liberty which the good easy public, not distinguishing between a right done and a wrong undone, regarded as a great boon!

But the liberty was not without conditions. Having previously, in anxiety for its _protégé_, the Bank of England, been reckless of the banking-security of the community at large, the State, like a repentant sinner rushing into asceticism, all at once became extremely solicitous on this point; and determined to put guarantees of its own devising, in place of the natural guarantee of mercantile judgment. To intending bank-shareholders it said—“You shall not unite on such publicly-understood conditions as you think fit, and get such confidence as will naturally come to you on those conditions.” And to the public it said—“You shall not put trust in this or that association in proportion as, from the character of its members and constitution, you judge it to be worthy of trust.” But to both it said—“You shall the one give, and the other receive, my infallible safeguards.”

And now what have been the results? Every one knows {349} that these safeguards have proved anything but infallible. Every one knows that these banks with State-constitutions have been especially characterized by instability. Every one knows that credulous citizens, with a faith in legislation which endless disappointments fail to diminish, have trusted implicitly in these law-devised securities; and, not exercising their own judgments, have been led into ruinous undertakings. The evils of substituting artificial guarantees for natural ones, which the clear-sighted long ago discerned, have, by the late catastrophes, been made conspicuous to all.

When commencing this article we had intended to dwell on this point. For though the mode of business which brought about these joint-stock-bank failures was, for weeks after their occurrence, time after time clearly described; yet nowhere did we see drawn the obvious corollary. Though in three separate City-articles of _The Times_, it was explained that, “relying upon the ultimate liability of large bodies of infatuated shareholders, the discount houses supply these banks with unlimited means, looking not to the character of the bills sent up, but simply to the security afforded by the Bank endorsement;” yet, in none of them was it pointed out that, but for the law of unlimited liability, this reckless trading would not have gone on. More recently, however, this truth has been duly recognized, alike in Parliament and in the Press; and it is therefore needless further to elucidate it. We will simply add that as, if there had been no law of unlimited liability, the London houses would not have discounted these bad bills; and as, in that case, these provincial joint-stock-banks could not have given these enormous credits to insolvent speculators; and as, if they had not done this, they would not have been ruined; it follows, inevitably, that these joint-stock-bank failures have been _law-produced disasters_.

A measure for further increasing the safety of the provincial public, was that which limited the circulation of provincial bank-notes. At the same time that it established {350} a sliding-scale for the issues of the Bank of England, the Act of 1844 fixed the maximum circulation of every provincial bank-of-issue; and forbad any further banks-of-issue. We have not space to discuss at length the effects of this restriction; which must have fallen rather hardly on those especially-careful bankers who had, during the twelve weeks preceding the 27th April, 1844, narrowed their issues to meet any incidental contingencies; while it gave a perennial license to such as had been incautious during that period. All which we can notice is, that this rigorous limitation of provincial issues to a low maximum (and a low maximum was purposely fixed) effectually prevents those local expansions of bank-note circulation which, as we have shown, _ought_ to take place in periods of commercial difficulty. And further, that by transferring all local demands to the Bank of England, as the only place from which extra accommodation can be had, the tendency is to concentrate a pressure which would else be diffused, and so to create panic.

Saying nothing more, however, respecting the impolicy of the measure, let us mark its futility. As a means of preserving the convertibility of the provincial bank-note, it is useless unless it acts as some safeguard against bank-failures; and that it does not do this is demonstrable. While it diminishes the likelihood of failures caused by over-issue of notes, it increases the likelihood of failures from other causes. For what will be done by a provincial banker whose issues are restricted by the Act of 1844, to a level lower than that to which he would otherwise have let them rise? If he would, but for the law, have issued more notes than he now does—if his reserve is greater than, in his judgment, is needful for the security of his notes; is it not clear that he will simply extend his operations in other directions? Will not the excess of his available capital be to him a warrant either for entering into larger speculations himself, or for allowing his customers to draw on {351} him beyond the limit he would else have fixed? If, in the absence of restriction, his rashness would have led him to risk bankruptcy by over-issue, will it not now equally lead him to risk bankruptcy by over-banking? And is not the one kind of bankruptcy as fatal to the convertibility of notes as the other?

Nay, the case is even worse. There is reason to believe that bankers are tempted into greater dangers under this protective system. They can and will hypothecate their capital in ways less direct than by notes; and may very likely be led, by the unobtrusiveness of the process, to commit themselves more than they would else do. A trader, applying to his banker in times of commercial difficulty, will often be met by the reply—“I cannot make you any direct advances, having already loaned as much as I can spare; but knowing you to be a safe man I will lend you my name. Here is my acceptance for the sum you require: they will discount it for you in London.” Now, as loans thus made do not entail the same immediate responsibilities as when made in notes (seeing that they are neither at once payable, nor do they add to the dangers of a possible run), a banker is under a temptation to extend his liabilities in this way further than he would have done, had not law forced him to discover a new channel through which to give credit.

And does not the evidence that has lately transpired go to show that these roundabout ways of giving credit _do_ take the place of the interdicted ways; and that they _are_ more dangerous than the interdicted ways? Is it not notorious that dangerous forms of paper-currency have had an unexampled development since the Act of 1844? Do not the newspapers and the debates give daily proofs of this? And is not the process of causation obvious?

Indeed it might have been known, _a priori_, that such a result was sure to take place. It has been shown {352} conclusively that, when uninterfered with, the amount of note-circulation at any given time, is determined by the amount of trade going on—the quantity of payments that are being made. It has been repeatedly testified before committees, that when any local banker contracts his issues, he simply causes an equivalent increase in the issues of neighbouring bankers. And in past times it has been more than once complained, that when from prudential motives the Bank of England withdrew part of its notes, the provincial bankers immediately multiplied their notes to a proportionate extent. Well, is it not manifest that this inverse variation, which holds between one class of bank-notes and another, also holds between bank-notes and other forms of paper-currency? Will it not happen that just as diminishing the note-circulation of one bank, merely adds to the note-circulation of other banks; so, an artificial restriction on the circulation of bank-notes in general, will simply cause an increased circulation of some substituted kind of promise-to-pay? And is not this substituted kind, in virtue of its novelty and irregularity, likely to be a more unsafe kind? See, then, the predicament. Over all the bills of exchange, cheques, etc., which constitute nine-tenths of the paper-currency of the kingdom, the State exercises, and can exercise, no control. And the limit it puts on the remaining tenth vitiates the other nine-tenths, by causing an abnormal growth of new forms of credit, which experience proves to be especially dangerous.

Thus, all which the State does when it exceeds its true duty is to hinder, to disturb, to corrupt. As already pointed out, the quantity of credit men will give each other, is determined by natural causes, moral and physical—their average characters, their temporary states of feeling, their circumstances. If the Government forbids one mode of giving credit, they will find another, and probably a worse. Be the degree of mutual trust prudent {353} or imprudent, it must take its course. The attempt to restrict it by law is nothing but a repetition of the old story of keeping out the sea with a fork.

And now mark that were it not for these worse than futile State-safeguards, there might grow up certain natural safeguards, which would really put a check on undue credit and abnormal speculation. Were it not for the attempts to insure security by law, it is very possible that, under our high-pressure system of business, banks would compete with each other in respect of the degree of security they offered—would endeavour to outdo each other in the obtainment of a legitimate public confidence. Consider the position of a new joint-stock-bank with limited liability, and unchecked by legal regulations. It can do nothing until it has gained the general good opinion. In the way of this there stand great difficulties. Its constitution is untried, and is sure to be looked upon by the trading world with considerable distrust. The field is already occupied by old banks with established connexions and reputations. Out of a constituency satisfied with the present accommodation, it has to obtain supporters for a system which is apparently less safe than the old. How shall it do this? Evidently it must find some unusual mode of assuring the community of its trustworthiness. And out of a number of new banks so circumstanced, it is not too much to suppose that ultimately one would hit on some mode. It might be, for instance, that such a bank would give to all who held deposits over £1000 the liberty of inspecting its books—of ascertaining from time to time its liabilities and its investments. Already this plan is frequently adopted by private traders, as a means of assuring those who lend money to them; and this extension of it might naturally take place under the pressure of competition. We have put the question to a gentleman who has had long and successful experience, as manager of a joint-stock-bank, and his reply is, that some such course would very probably be adopted: adding that, {354} under this arrangement, a depositor would practically become a partner with limited liability.

Were a system of this kind to establish itself, it would form a double check to unhealthy trading. Consciousness that its rashness would become known to its chief clients, would prevent the bank-management from being rash; and consciousness that his credit would be damaged when his large debt to the bank was whispered, would prevent the speculator from contracting so large a debt. Both lender and borrower would be restrained from reckless enterprize. Very little inspection would suffice to effect this end. One or two cautious depositors would be enough; seeing that the mere expectation of immediate disclosure, in case of misconduct, would mostly keep in order all those concerned.

Should it however be contended, as by some it may, that this safeguard would be of no avail—should it be alleged that, having in their own hands the means of safety, citizens would not use them, but would still put blind faith in directors, and give unlimited trust to respectable names; then we reply that they would deserve whatever bad consequences fell on them. If they did not take advantage of the proffered guarantee, the penalty be on their own heads. We have no patience with the mawkish philanthropy which would ward-off the punishment of stupidity. The ultimate result of shielding men from the effects of folly, is to fill the world with fools.

* * * * *

A few words in conclusion respecting the attitude of our opponents. Leaving joint-stock-bank legislation, on which the eyes of the public are happily becoming opened; and returning to the Bank-Charter, with its theory of currency-regulation; we have to charge its supporters with gross, if not wilful, misrepresentation. Their established policy is to speak of all antagonism as identified with adhesion to the vulgarest fallacies. They daily present, as the only alternatives, their own dogma or some wild doctrine too {355} absurd to be argued. “Side with us or choose anarchy,” is the substance of their homilies.

To speak specifically:—They boldly assert, in the first place, that they are the upholders of “principle;” and on all opposition they seek to fasten the title of “empiricism.” Now we are at a loss to see what there is “empirical” in the position, that a bank-note-circulation will regulate itself in the same way that the circulation of other paper-currency does. It seems to us anything but “empirical,” to say that the natural check of prospective bankruptcy, which restrains the trader from issuing too many promises-to-pay at given dates, will similarly restrain the banker from issuing too many promises-to-pay on demand. We take him to be the very opposite of an “empiric,” who holds that people’s characters and circumstances determine the quantity of credit-memoranda in circulation; and that the monetary disorders which their imperfect characters and changing circumstances occasionally entail, can be exacerbated, but cannot be prevented, by State-nostrums. On the other hand, we do not see in virtue of what “principle” it is, that the contract expressed on the face of a bank-note must be dealt with differently from any other contract. We cannot understand the “principle” which requires the State to control the business of bankers, so that they may not make engagements they cannot fulfil, but which does _not_ require the State to do the like with other traders. To us it is a very incomprehensible “principle” which permits the Bank of England to issue £14,000,000 on the credit of the State; but which is broken if the State-credit is mortgaged beyond this—a “principle” which implies that £14,000,000 of notes may be issued without gold to meet them, but insists on rigorous precautions for the convertibility of every pound more. We are curious to learn how it was inferred from this “principle” that the average note-circulation of each provincial bank, during certain twelve weeks in 1844, was exactly the {356} note-circulation which its capital justified. So far from discerning a “principle,” it seems to us that both the idea and its applications are as empirical as they can well be.

Still more astounding, however, is the assumption of these “currency-theorists,” that their doctrines are those of Free-trade. In the Legislature, Lord Overstone, and in the press, the _Saturday Review_, have, among others, asserted this. To call that a Free-trade measure, which has the avowed object of restricting certain voluntary acts of exchange, appears so manifest a contradiction in terms that it is scarcely credible it should be made. The whole system of currency-legislation is restrictionist from beginning to end: equally in spirit and detail. Is that a Free-trade regulation which has all along forbidden banks of issue within sixty-five miles of London? Is that Free-trade which enacts that none but such as have now the State-warrant, shall henceforth give promises-to-pay on demand? Is that Free-trade which at a certain point steps in between the banker and his customer, and puts a veto on any further exchange of credit-documents? We wonder what would be said by two merchants, the one about to draw a bill on the other in return for goods sold, who should be stopped by a State-officer with the remark that, having examined the buyer’s ledger, he was of opinion that ready as the seller might be to take the bill, it would be unsafe for him to do so; and that the law, in pursuance of the principles of Free-trade, negatived the transaction! Yet for the promise-to-pay in six months, it needs but to substitute a promise-to-pay on demand, and the case becomes substantially that of banker and customer.

It is true that the “currency-theorists” have a colourable excuse in the fact, that among their opponents are the advocates of various visionary schemes, and propounders of regulations quite as protectionist in spirit as their own. It is true that there are some who contend for inconvertible “labour-notes;” and others who argue that, in times of {357} commercial pressure, banks should not raise their rates of discount. But is this any justification for recklessly stigmatizing all antagonism as coming from these classes, in the face of the fact that the Bank-Act has been protested against by the highest authorities in political economy? Do not the defenders of the “currency-principle” know that among their opponents are Mr. Thornton, long known as an able writer on currency-questions; Mr. Tooke and Mr. Newmarch, famed for their laborious and exhaustive researches respecting currency and prices; Mr. Fullarton, whose “Regulation of Currencies” is a standard work; Mr. Macleod, whose just-issued book displays the endless injustices and stupidities of our monetary history; Mr. James Wilson, M.P., who, in detailed knowledge of commerce, currency, and banking, is probably unrivalled; and Mr. John Stuart Mill, who both as logician and economist, stands in the first rank? Do they not know that the alleged distinction between bank-notes and other credit-documents, which forms the professed basis of the Bank-Act (and for which Sir R. Peel could quote only the one poor authority of Lord Liverpool) is denied, not only by the gentlemen above named, but also by Mr. Huskisson, Professor Storch, Dr. Travers Twiss, and the distinguished French Professors, M. Joseph Garnier and M. Michel Chevalier?[36] Do they not know, in short, that both the profoundest thinkers and the most patient inquirers are against them? If they do not know this, it is time they studied the subject on which they write with such an air of authority. If they do know it, a little more respect for their opponents would not be unbecoming.

[36] See Mr. Tooke’s “Bank Charter Act of 1844,” etc.

{358}

PARLIAMENTARY REFORM: THE DANGERS AND THE SAFEGUARDS.

[_First published in_ The Westminster Review _for April 1860_.]

Thirty years ago, the dread of impending evils agitated not a few breasts throughout England. Instinctive fear of change, justified as it seemed by outbursts of popular violence, conjured up visions of the anarchy which would follow the passing of a Reform Bill. In scattered farm-houses there was chronic terror, lest those newly endowed with political power should in some way filch all the profits obtained by rearing cattle and growing corn. The occupants of halls and manors spoke of ten-pound householders almost as though they formed an army of spoilers, threatening to overrun and devastate the property of landholders. Among townspeople there were some who interpreted the abolition of old corruptions into the establishment of mob-government; which they thought equivalent to spoliation. And even in Parliament, such alarms found occasional utterance: as, for instance, through the mouth of Sir Robert Inglis, who hinted that the national debt would not improbably be repudiated if the proposed measure became law.

There may perhaps be a few who regard the now pending change in the representation with similar dread—who think {359} that artizans and others of their grade are prepared, when the power is given to them, to lay hands on property. We presume, however, that such irrational alarmists form but a small percentage of the nation. Not only throughout the Liberal party, but among the Conservatives, there exists a much fairer estimate of the popular character than is implied by anticipations of so gloomy a kind. Many of the upper and middle classes are conscious of the fact that, if critically compared, the average conduct of the wealthy would not be found to differ very widely in rectitude from that of the poor. Making due allowance for differences in the kinds and degrees of temptations to which they are exposed, the respective grades of society are tolerably uniform in their morals. That disregard of the rights of property which, among the people at large, shows itself in the direct form of petty thefts, shows itself among their richer neighbours in various indirect forms, which are scarcely less flagitious and often much more detrimental to fellow-citizens. Traders, wholesale and retail, commit countless dishonesties, ranging from adulteration and short measure up to fraudulent bankruptcy—dishonesties of which we sketched out some of the ramifications in a late article on “The Morals of Trade.” The trickeries of the turf; the bribery of electors; the non-payment of tradesmen’s bills; the jobbing in railway-shares; the obtainment of exorbitant prices for land from railway-companies; the corruption that attends the getting of private bills through Parliament—these, and other such illustrations, show that the unconscientiousness of the upper class, manifested though it is in different forms, is not less than that of the lower class: bears as great a ratio to the size of the class, and, if traced to its ultimate results, produces evils as great if not greater.

And if the facts prove that in uprightness of intentions there is little to choose between one class of the community and another, an extension of the franchise cannot rationally {360} be opposed on the ground that property would be directly endangered. There is no more reason to suppose that the mass of artizans and labourers would use political power with conscious injustice to their richer neighbours, than there is reason to suppose that their richer neighbours now consciously commit legal injustices against artizans and labourers.

* * * * *

What, then, is the danger to be apprehended? If land, and houses, and railways, and funds, and property of all other kinds, would be held with no less security than now, why need there be any fears that the franchise would be misused? What are the misuses of it which are rationally to be anticipated?

The ways in which those to be endowed with political power are likely to abuse it, may be inferred from the ways in which political power has been abused by those who have possessed it.

What general trait has characterized the rule of the classes hitherto dominant? These classes have not habitually sought their own _direct_ advantage at the expense of other classes; but their measures have nevertheless frequently been such as were _indirectly_ advantageous to themselves. Voluntary self-sacrifice has been the exception. The rule has been so to legislate as to preserve private interests from injury; whether public interests were injured or not. Though, in equity, a landlord has no greater claim on a defaulting tenant than any other creditor; yet landlords, having formed the majority of the legislature, have made laws giving them power to recover rent in anticipation of other creditors. Though the duties payable to government on the transfer of property to heirs and legatees, might justly have been made to fall more heavily on the wealthy than on the comparatively poor, and on real property rather than on personal property; yet the reverse arrangement was enacted and long maintained, and is even still partially in force. Rights of presentation to places in the Church, {361} obtained however completely in violation of the spirit of the law, are yet tenaciously defended, with little or no regard to the welfare of those for whom the Church ostensibly exists. Were it not accounted for by the bias of personal interests, it would be impossible to explain the fact that, on the question of protection to agriculture, the landed classes and their dependents were ranged against the other classes: the same evidence being open to both. And if there needs a still stronger illustration, we have it in the opposition made to the repeal of the Corn-Laws by the established clergy. Though, by their office, preachers of justice and mercy—though constantly occupied in condemning selfishness and holding up a supreme example of self-sacrifice; yet so swayed were they by those temporal interests which they thought endangered, that they offered to this proposed change an almost uniform resistance. Out of some ten thousand _ex officio_ friends of the poor and needy, there was but one (the Rev. Thomas Spencer), who took an active part in abolishing this tax imposed on the people’s bread for the maintenance of landlords’ rents.

Such are a few of the ways in which, in modern times, those who have the power seek their own benefit at the expense of the rest. It is in analogous ways that we must expect any section of the community which may be made predominant by a political change, to sacrifice the welfare of other sections to its own. While we do not see reason to think that the lower classes are intrinsically less conscientious than the upper classes, we do not see reason to think that they are more conscientious. Holding, as we do, that in each society and in each age, the morality is, on the average, the same throughout all ranks; it seems to us clear that if the rich, when they have the opportunity, make laws which unduly favour themselves, the poor, if their power was in excess, will do the like in similar ways and to a similar extent. Without knowingly enacting injustice, they will be unconsciously biased by personal {362} considerations; and our legislation will err as much in a new direction as it has hitherto done in the old.

This abstract conclusion we shall find confirmed on contemplating the feelings and opinions current among artizans and labourers. What the working classes now wish done, indicates what they would be likely to do, if a reform in the representation made them preponderate. Judging from their prevailing sentiments, they would doubtless do, or aid in doing, many things which it is desirable to have done. Such a question as that of Church-rates would have been settled long ago had the franchise been wider. Any great increase of popular influence, would go far to rectify the present inequitable relation of the established religious sect to the rest of the community. And other remnants of class-legislation would be swept away. But besides ideas likely to eventuate in changes which we should regard as beneficial, the working classes entertain ideas that could not be realized without gross injustice to other classes and ultimate injury to themselves. There is among them a prevailing enmity towards capitalists. The fallacy that machinery acts to their damage, is still widely spread, both among rural labourers and the inhabitants of towns. And they show a wish, not only to dictate how long per day men shall work, but to regulate all the relations between employers and employed. Let us briefly consider the evidence of this.

When, adding another to the countless errors which it has taught the people, the Legislature, by passing the Ten-Hours-Bill, asserted that it is the duty of the State to limit the duration of labour, there naturally arose among the working classes the desire for further ameliorations to be secured in the same way. First came the formidable strike of the Amalgamated Engineers. The rules of this body aim to restrict the supply of labour in various ways. No member is allowed to work more than a fixed number of hours per week; nor for less than a fixed rate of wages. {363} No man is admitted into the trade who has not “earned a right by probationary servitude.” There is a strict registration; which is secured by fines on any one who neglects to notify his marriage, removal, or change of service. The council decides, without appeal, on all the affairs, individual and general, of the body. How tyrannical are the regulations may be judged from the fact, that members are punished for divulging anything concerning the society’s business; for censuring one another; for vindicating the conduct of those fined, etc. And their own unity of action having been secured by these coercive measures, the Amalgamated Engineers made a prolonged effort to impose on their employers, sundry restrictions which they supposed would be beneficial to themselves. More recently, we have seen similar objects worked for by similar means during the strike of the Operative Builders. In one of their early manifestoes, this body of men contended that they had “an equal right to share with other workers, that large amount of public sympathy which is now being so widely extended in the direction of shortening the hours of labour:” thus showing at once their delusion and its source. Believing, as they had been taught by an Act of Parliament to believe, that the relation between the quantity of labour given and the wages received, is not a natural but an artificial one; they demanded that while the wages remained the same, the hours should be reduced from ten to nine. They recommended their employers so to make their future contracts, as to allow for this diminished day’s work: saying they were “so sanguine as to consider the consummation of their desire inevitable:” a polite way of hinting that their employers must succumb to the irresistible power of their organization. Referring to the threat of the master-builders to close their works, they warned them against “the responsibility of causing the public disaster” thus indicated. And when the breach finally took place, the {364} Unionists set in action the approved appliances for bringing masters to terms; and would have succeeded had it not been that their antagonists, believing that concessions would be ruinous, made a united resistance. During several previous years, master-builders had been yielding to various extravagant demands, of which those recently made were a further development. Had they assented to the diminished day’s work, and abolished systematic overtime, as they were required to do, there is no reason to suppose the dictation would have ended. Success would have presently led to still more exacting requirements; and future years would have witnessed further extensions of this mischievous meddling between capital and labour.

Perhaps the completest illustration of the industrial regulations which find favour with artizans, is supplied by the Printers’ Union. With the exception of those engaged in _The Times_ office, and in one other large establishment, the proprietors of which successfully resisted the combination, the compositors, pressmen, etc., throughout the kingdom, form a society which controls all the relations between employers and employed. There is a fixed price for setting up type—so much per thousand letters: no master can give less; no compositor being allowed by the Union to work for less. There are established rates for press-work; and established numbers less than which you cannot have printed without paying for work that is not done. The scale rises by what are called “tokens” of 250; and if but 50 copies are required, the charge is the same as for printing 250; or if 300 are wanted, payment must be made for 500. Besides regulating prices and modes of charging to their own advantage, in these and other ways, the members of the Union restrict competition by limiting the number of apprentices brought into the business. So well organized is this combination that the masters are obliged to succumb. An infraction of the rules in any {365} printing-office leads to a strike of the men; and as this is supported by the Union at large, the employer has to yield.

That in other trades artizans would, if they could, establish restrictive systems equally complete with this, we take to be sufficiently proved by their often-repeated attempts. The Tin-plate-Workers’ strike, the Coventry-Weavers’ strikes, the Engineers’ strike, the Shoemakers’ strike, the Builders’ strike, all show a most decided leaning towards a despotic regulation of trade-prices, hours, and arrangements—towards an abolition of free trade between employers and employed. Should the men engaged in our various industries succeed in their aims, each industry would be so shackled as seriously to raise the cost of production. The chief penalty would thus fall on the working classes themselves. Each producer, while protected in the exercise of his own occupation, would on every commodity he bought have to pay an extra price, consequent on the protection of other producers. In short, there would be established, under a new form, the old mischievous system of mutual taxation. And a final result would be such a diminished ability to compete with other nations as to destroy our foreign trade.

Against results like these it behoves us to guard. It becomes a grave question how far we may safely give political power to those who entertain views so erroneous respecting fundamental social relations; and who so pertinaciously struggle to enforce these erroneous views. Men who render up their private liberties to the despotic rulers of trades-unions, seem scarcely independent enough rightly to exercise political liberties. Those who so ill understand the nature of freedom, as to think that any man or body of men has a right to prevent employer and employed from making any contract they please, would almost appear to be incapacitated for the guardianship of their own freedom and that of their fellow-citizens. When their notions of rectitude are so confused, that they think it a duty to obey the arbitrary {366} commands of their union-authorities, and to abandon the right of individually disposing of their labour on their own terms—when, in conformity with this inverted sense of duty, they even risk the starvation of their families—when they call that an “odious document” which simply demands that master and man shall be free to make their own bargains—when their sense of justice is so obtuse that they are ready to bully, to deprive of work, to starve, and even to kill, members of their own class who rebel against dictation, and assert their rights to sell their labour at such rates and to such persons as they think fit—when in short they prove themselves ready to become alike slaves and tyrants, we may well pause before giving them the franchise.

The objects which artizans have long sought to achieve by their private organizations, they would, had they adequate political power, seek to achieve by public enactments. If, on points like those instanced, their convictions are so strong and their determination so great, that they will time after time submit to extreme privations in the effort to carry them; it is a reasonable expectation that these convictions, pushed with this determination, would soon be expressed in law, if those who held them had predominant power. With working men, questions concerning the regulation of labour are of the highest interest. Candidates for Parliament would be more likely to obtain their suffrages by pandering to their prejudices on such questions, than in any other way. Should it be said that no evil need be feared unless the artizan-class numerically preponderated in the constituencies; it may be rejoined that not unfrequently, where two chief political parties are nearly balanced, some other party, though much smaller, determines the election. When we bear in mind that the trades-unions throughout the kingdom number 600,000 members, and command a fund of £300,000—when we remember that these trades-unions are in the habit of aiding each other, and have even been incorporated into one national association—when we also remember that {367} their organization is very complete, and their power over their members mercilessly exercised; it seems likely that at a general election their combined action would decide the result in many towns: even though the artizans in each case formed but a moderate portion of the constituency. How influential small but combined bodies are, the Irish Members of our House of Commons prove to us; and still more clearly the Irish emigrants in America. Certainly these trade-combinations are not less perfectly organized; nor are the motives of their members less strong. Judge then how efficient their political action would be.

It is true that in county-constituencies and rural towns, the artizan class have no power; and that in the antagonism of agriculturists there would be a restraint on their projects. But, on the other hand, the artizans would, on these questions, have the sympathy of many not belonging to their own body. Numerous small shopkeepers and others who are in point of means about on their level, would go with them in their efforts to regulate the relations of capital and labour. Among the middle classes, too, there are not a few kindly-disposed men who are so ignorant of political economy as to think the artizans justified in their aims. Even among the landed class they might find supporters. We have but to recollect the antipathy shown by landowners in Parliament to the manufacturing interest, during the ten-hours’ agitation, to see that it is quite possible for country squires to join the working men in imposing restrictions unfavourable to employers. True, the angry feeling which then prompted them has in some measure died away. It is to be hoped, too, that they have gained wisdom. But still, remembering the past, we must take this contingency into account.

Here, then, is one of the dangers to which an extension of the franchise opens the door. While the fear that the rights of property may be directly interfered with, is absurd, it is a very rational fear that the rights of property may be indirectly interfered with—that, by cramping laws, {368} the capitalist may be prevented from using his money as he finds best, and the workman from selling his labour as he pleases. We are not prepared to say what widening of the representation would bring about such results. We profess neither to estimate what amount of artizan-power a £6 or a £5 borough-franchise would give; nor to determine whether the opposing powers would suffice to keep it in check. Our purpose here is simply to indicate this establishment of injurious industrial regulations, as one of the dangers to be kept in view.

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Turn we now to another danger, distinct from the foregoing though near akin to it. Next after the evils of that over-legislation which restricts the exchange of capital and labour, come the evils of that over-legislation which provides for the community, by State-agency, benefits which capital and labour should be left spontaneously to provide. And it naturally, though unfortunately, happens, that those who lean to the one kind of over-legislation, lean also to the other kind. Men leading laborious lives, relieved by little in the shape of enjoyment, give willing ears to the doctrine that the State should provide them with various positive advantages and gratifications. The much-enduring poor cannot be expected to deal very critically with those who promise them gratis pleasures. As a drowning man catches at a straw, so will one whose existence is burdensome catch at anything, no matter how unsubstantial, which holds out the slightest hope of a little happiness. We must not, therefore, blame the working-classes for being ready converts to socialistic schemes, or to a belief in “the sovereign power of political machinery.”

Not that the working-classes alone fall into these delusions. Unfortunately they are countenanced, and have been in part misled, by those above them. In Parliament and out of Parliament, well-meaning men among the upper and middle ranks, have been active apostles of these false {369} doctrines. There has ever been, and continues to be, much law-making based on the assumption, that it is the duty of the State, not simply to insure each citizen fair play in the battle of life, but to help him in fighting the battle of life: having previously taken money from his, or some one else’s, pocket to pay the cost of doing this. And we cannot glance over the papers without seeing how active are the agitations carried on out of doors in furtherance of this policy; and how they threaten to become daily more active. The doings of the Chadwick-school furnish one set of illustrations. From those of the Shaftesbury-school other illustrations may be gathered. And in the transactions of the body, absurdly self-entitled “The National Association for the Promotion of Social Science,” we find still more numerous developments of this mischievous error.

When we say that the working-classes, and more especially the artizan-classes, have strong leanings towards these Utopianisms which they have unhappily been encouraged to entertain by many who should have known better, we do not speak at random. We are not drawing an _a priori_ inference as to the doctrines likely to find favour with men in their position. Nor are we guided merely by evidence to be gathered from newspapers. We have a basis of definite fact in the proceedings of reformed municipal governments. These bodies have from year to year extended their functions; and so heavy has in some cases become the consequent local taxation, as to have caused a reaction against the political party which was responsible. Town-councils almost exclusively Whig, have of late been made comparatively Conservative, by the efforts of those richer classes who suffer most from municipal extravagance. With whom, then, has this extravagance been popular? With the poorer members of the constituencies. Candidates for town-councillorships have found no better means of obtaining the suffrages of the mass, than the advocacy of this or the other local undertaking. To {370} build baths and wash-houses at the expense of the town, has proved a popular proposal. The support of public gardens out of funds raised by local rates, has been applauded by the majority. So, too, with the establishment of free libraries, which has, of course, met with encouragement from working-men, and from those who wish to find favour with them. Should some one, taking a hint from the cheap concerts now common in our manufacturing towns, propose to supply music at the public cost, we doubt not he would be hailed as a friend of the people. And similarly with countless socialistic schemes, of which, when once commenced, there is no end.

Such being the demonstrated tendencies of municipal governments, with their extended bases of representation, is it not a fair inference that a Central Government having a base of representation much wider than the present, would manifest like tendencies? We shall see the more reason for fearing this, when we remember that those who approve of multiplied State-agencies, would generally ally themselves with those who seek for the legislative regulation of labour. The doctrines are near akin; and they are, to a considerable extent, held by the same persons. If united the two bodies would have a formidable power; and, appealed to, as they would often be, by candidates expressing agreement on both these points, they might, even though a minority, get unduly represented in the legislature. Such, at least, seems to us a further danger. Led by philanthropists having sympathies stronger than their intellects, the working-classes are very likely to employ their influence in increasing over-legislation: not only by agitating for industrial regulations, but in various other ways. What extension of franchise would make this danger a serious one, we do not pretend to say. Here, as before, we would simply indicate a probable source of mischief.

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And now what are the safeguards? Not such as we {371} believe will be adopted. To meet evils like those which threaten to follow the impending political change, the common plan is to devise special checks—minor limitations and qualifications. Not to dry up the evil at its source but to dam it out, is, in analogous cases, the usual aim. We have no faith in such methods. The only efficient safeguard lies in a change of convictions and motives. And, to work a change of this kind, there is no certain way but that of letting men directly feel the penalties which mistaken legislation brings on them. “How is this to be done?” the reader will doubtless ask. Simply by letting causes and effects stand in their natural relations. Simply by taking away those vicious arrangements which now mostly prevent men from seeing the reactions that follow legislative actions.

At present the extension of public administrations is popular, mainly because there has not been established in the minds of the people, any distinct connexion between the benefits to be gained and the expenses to be paid. Of the conveniences or gratifications secured to them by some new body of officials with a fund at its disposal, they have immediate experience; but of the way in which the costs fall on the nation, and ultimately on themselves, they have no immediate experience. Our fiscal arrangements dissociate the ideas of increased public expenditure and increased burdens on all who labour; and thus encourage the superstition that law can give gratis benefits. This is clearly the chief cause of that municipal extravagance to which we have above adverted. The working men of our towns possess public power, while most of them do not directly bear public burdens. On small houses the taxes for borough-purposes are usually paid by the landlords; and of late years, for the sake of convenience and economy, there has grown up a system of compounding with landlords of small houses even for the poor-rates chargeable to their tenants. Under this {372} arrangement, at first voluntary but now compulsory, a certain discount off the total rates due from a number of houses is allowed to the owner, in consideration of his paying the rates, and thus saving the authorities trouble and loss in collection. And he is supposed to raise his rents by the full amount of the rates charged. Thus, most municipal electors, not paying local taxes in a separate form, are not constantly reminded of the connexion between public expenditure and personal costs; and hence it happens that any outlay made for local purposes, no matter how extravagant and unreasonable, which brings to them some kind of advantage, is regarded as pure gain. If the corporation resolves, quite unnecessarily, to rebuild a town-hall, the resolution is of course approved by the majority. “It is good for trade and it costs us nothing,” is the argument which passes vaguely through their minds. If some one proposes to buy an adjoining estate and turn it into a public park, the working classes naturally give their support to the proposal; for ornamental grounds cannot but be an advantage, and though the rates may be increased that will be no affair of theirs. Thus necessarily arises a tendency to multiply public agencies and increase public outlay. It becomes an established policy with popularity-hunters to advocate new works to be executed by the town. Those who disapprove this course are in fear that their seats may be jeopardized at the next election, should they make a vigorous opposition. And thus do these local administrations inevitably lean towards abnormal developments.

No one can, we think, doubt that were the rates levied directly on all electors, a check would be given to this municipal communism. If each small occupier found that every new work undertaken by the authorities cost him so many pence extra in the pound, he would begin to consider with himself whether the advantage gained was equivalent to the price paid; and would often reach a {373} negative conclusion. It would become a question with him whether, instead of letting the local government provide him with certain remote advantages in return for certain moneys, he might not himself purchase with such moneys immediate advantages of greater worth; and, generally, he would decide that he could do this. Without saying to what extent such a restraint would act, we may safely say that it would be beneficial. Every one must admit that each inhabitant of a town ought constantly to be reminded of the relation between the work performed for him by the corporation and the sum he pays for it. No one can deny that the habitual experience of this relation would tend to keep the action of local governments within proper bounds.