GUILDS, TRADE AND AGRICULTURE • • • ARTHUR J. PENTY "^ ?tate aJnllege of Agttcultuw At (]}arncU IniucrBttg 3tJfara, Jf. !g. Cornell University Library HD 6474.P6 Guilds, trade and agriculture, ■3-i-924 013 954 163 The original of tliis bool< is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924013954163 GUILDS, TRADE AND AGRICULTURE Br THE SAME AUTHOR The Restoration of the Guild System Old Worlds for New A Guildsman's Interpretation of History Etc. GUILDS, TRADE AND AGRICULTURE ARTHUR J. PENTY g>R.UJMft-'VR.OUJe'\a LONDON: GEORGE ALLEN & UNWIN LTD. RUSKIN HOUSE, 40 MUSEUM STREET, W.C. i GUILDS, TRADE AND AGRICULTURE THE NEED OF A SOCIAL THEORY Whatever differences of opinion may exist as to the best way of facing the problem confronting society, a general consensus is growing up that the present order is doomed. It 'is agreed that things are going from bad to worse, and that it is only a matter of time — a few years at the most — before the great crisis will arrive that will deter- mine whether England is to go the way of Russia and Central Europe — to anarchy and barbarism — or to be reconstructed on some co-operative or communal basis. Which of these two ways things will go depends upon our action in the immediate future. If we allow ourselves to drift, then in a few years' time we shall arrive at the state of affairs we know by the name of Bolshevism. For " Bolshevism is the last resort of desperate starving men " ;' and ' In this country Bolshevism is the last resort of dis- illusionized social theorists. 11 12 GUILDS, TRADE AND AGRICULTURE starvation is at the end of our story, as we shall begin to understand more clearly when the reasons for the present impasse are understood. From this fate there is no possible means of escape, except by boldly facing the problem that con- fronts us and resolutely taking in ■ hand the reconstruction of society from its very foundations upwards. Nothing less than that is any use at all. For it is the foundations that are giving way. And so, unless we act while yet there is time, there can be no saving of our civilization. Meanwhile the difficulty that confronts reformers and statesmen alike is to know how to act. All their lives they have lived on certain phrases and shibboleths, and in a very literal sense taken no thought of the morrow. They have tajiked about progress and emancipation and our glorious civili- zation, which, in spite of defects, they have never failed to remind us is superior to any civilization of the past. And now Nemesis is overtaking us. A few years of war and our glorious civilization is seen to be crumbling and our statesmeti and reformers are entirely at a loss to explain how such a thing could possibly happen, for they lack any comprehension of the problem of our society as a whole. They have for so long been con- cerned with the secondary things in society and have so persistently neglected the discussion of primary and fundamental principles, that they are without the mental equipment Which a great crisis demands. Evidence of their lack of grip on reality is forthcoming on every hand, Men who know what THE NEED OF A SOCIAL THEORY 13 they want go straight ahead. They act with promptitude and decision. But -in these days, if one were to judge only by appearance, one would say that the great idea iti politics is to wait until you are pushed, and then to yield with a becoming dignity. But of course that is only appearance. The real explanation is that our statesmen and politicians have lost their way, and they are without a compass to guide them. In other words they have become opportunists because they have lost their faith, and they have lost their faith because the social theories upon which they relied have become untenable. Before the war the gospel of economic individualism that had been the faith of the nineteenth century was already discredited, while collectivism, which sought to take its place, was proving unworkable in practice. But the war has completed the destruc- tion of these beliefs, and in consequence their adherents flounder about, attempting first this and then that in the hope that by some unex- pected turn of events a path will be open to them. But it all avails nothing. For without a belief they lack conviction ; and this prevents them from acting with unity of purpose or continuity of effort in any direction. Among the thousand and one things that claim their immediate atten- tion they are unable to distinguish those which are of primary and fundamental importance from those that are secondary. So when by chance they stumble upon something which if persisted in would give results, they lack the determination to go forward, and the moment they come up 14 GUILDS, TRADE AND AGRICULTURE against some obstacle they turn round and run. So it will be until we can establish a social theory that will give such an explanation of the facts as will guide them. For there is no such thing as a purely practical problem, inasmuch as behind every practical question is to be found a theoretical one. Now the underlying cause of the collapse since the war of "all social and economic theories that had secured any widespread organized support is that one and all of them took our industrial system for granted as a thing of permanence and stability. This is just as true of Socialist as of capitalist economics, inasmuch as all Socialist theories pre- supposed that a time would come when the workers would be able to take over capitalist industry as a going concern. The consequence is that Socialist and Labour leaders are as much perplexed as capitalists themselves at the sight of the system crumbling to pieces. The possibility of this dissolution had never occurred to them, and they have no idea how to stop it. And this is no wonder. For their belief in the permanence of industrial organization was so absolute that it led them to reject all ideas that were incompatible with the industrial system ; and as all ideas of a fundamental nature inevitably came into collision with the industrial system it meant in practice that they refused to recognize any fundamental ideas whatsoever, so they are consequently left stranded without an idea that -has any relevance to the present situation. The Bolsheviks alone are not disillusionized ; and they are not dis- THE NEED OF A SOCIAL THEORY 15 ilhisionized because in spite of their economic formulae their faith is in the class war. So firm are they in their belief that things will naturally right themselves once the workers attain to power, that they actually discourage speculation regarding the future as something that diverts energy from their central object of attaining power. Recognizing, then, that the collapse of existing economic theories is due to the fact that they accepted industrialism as a thing of permanence and stability, it follows that any new social theory adequate to the situation must be based upon principles that are antipathetic to industrialism. Such principles are, I believe, to be deduced from the informal philosophy of the SociaUst movement which is to be distinguished from its formal and official theories. The formal theories of Sociahsm based upon the permanence of industriaUsm are now happily discredited for ever. But the informal philosophy of the movement stands unimpaired, for it is based upon something far more funda- mental than any economic theory — ^the permanent needs of human nature. On its negative side it is a moral revolt against capitalism ; on the positive side it rests upon the affirmation of the principles of brotherhood, mutual aid, fellowship, the common life. These are the things that the Socialist movement finally stands for ; and they grow by reaction. In proportion as existing society becomes more hopeless, more corrupt, more unstable, men will tend to take refuge in idealism ; and this idealism the informal philosophy of the Socialist philosophy supplies. Such people have hitherto 16 GUILDS, TRADE AND AGRICULTURE T accepted the economic theories of Socialism as convenient formulae to give shape to their moral protests. But intellectual comprehension among them was rare, inasmuch as most of them swallowed the theories without tasting them. When they do taste them, they spew them out. The deduction to be made from all this is that Socialism is finally a moral rather than an economic movement. It is because of this that it has gathered strength in spite of the discrediting of its successive theories. It is this that we must build upon. Our aim should be to bring economic theory into a direct relationship with this informal moral philosophy, to dig as it were a channel in which its whole strength may flow instead of being wasted in the sands of contradictory beliefs and impossible doctrines. n ON WAGES AND FOREIGN TRADE In the preceding chapter I urged the necessity of a social theory that would bring economics into a direct relationship with the informal Socialist philosophy with its ideas of brotherhood, mutual aid, fellowship and the common life. Recent events have brought into a new prominence the antagonism that exists between the head and the heart of Socialism. During the war wages wtere raised to keep pace with the increasing cost of living. Nowadays, when prices are falling, the demand is made by employers that a corresponding reduction shall be made in wages. Behind this demand is».the contention of employers that foreign trade cannot be restored and unemployment lessened while costs of production in this country remain as high as at present. The more reasonable trade unionists are disposed to accept this view on the assumption that the employers are wUling to accept a corre- sponding reduction in profits. But the extremists refuse to accept any lowering of existing standards of wages without a struggle. Now, from the point of view of formal Socialist 2 17 18 GUILDS, TRADE AND AGRICULTURE theory, the extremists who refuse to consider a reduction in wages are in the right. If the rela- tions of Capital and Labour are the mechanical ones postulated of Socialist theory the workers are justified in demanding that they shall enjoy a permanent increase in wages. Nor can there be any doubt whatsoever that they are ultimately in the right. If it was possible in the fifteenth century for the town worker to be paid a wage that worked out six or seven .times the cost of his board and the agricultural worker two-thirds of this amount," it is on the face of things extra- ordinary that with our enormously increased productivity it should yet be impossible to pay the workers a wage which covers little more than bare necessities. Yet a close examination reveals the fact that the present system of industry is so wasteful and built up on a basis so false that it cannot be made to pay the wages that the workers are theoretically justified in demanding. It is apparent that the increases cannot come in the particular way Labour expects or by their ' The wages of the artisan during the period to which I refer (the fifteenth century) were generally, and through the year, about 6d. per day. Those of the agricultural labourers were about 4d. I am referring to ordinary artisans and ordinary workers. ... It is plain the day was one of eight hours. . . . Sometimes the labourer is paid for every day in the year, though it is certain he did not work on Sundays and principal holidays. Very often the labourer is fed. In this case, the cost of main- tenance is put down at from 6d. to 8d. a week. Food was so abundant and cheap that it was sometimes thrown in with the wages {Six Centuries of Worh and Wages, by J. E. Thorold Rogers, pp. 327-8). ON WAGES AND FOREIGN TRADE 19 particular methods. It is not in the nature of things. Industry as it exists to-day in our great industrial centres is dependent upon foreign trade, and so long as it is so dependent it will be necessary to compete. Except, therefore, where we enjoy some monopoly or other artificial advantage, we shall only be able to compete successfully by producing as cheaply as possible, and that involves lower wages than were paid during the war. There is no getting away from this. If we are to remain an industrial competing nation, the workers must be prepared to accept such wages as will enable our manufacturers to compete successfully. » If they are not satisfied with so little — and there is no reason why they should be — the present system must be changed. It is here we come to the popular Socialist fallacy. The present system is not changed merely by changing its ownership, since if the workers succeeded in getting possession of industry to-morrow they would be subject to the same ' What I say here must not be interpreted as giving any countenance to the indiscriminate reduction of wages that has begun to take place since these words were written. Where high wages are demonstrably the cause of stagna- tion in an industry, as in many cases there is every reason to believe they are, they must be reduced to get the machine going again. But it seems that the original idea of taldng something off the highest wages corresponding to the lowering of the cost of living is being used as an excuse for reducing the wages of the lowest paid workers, because such workers, being unorganized, are defenceless. Not only is this inhuman, but it is uneconomic. The fallacy involved in such reductions is exposed in the concluding paragraph of the next chapter. 20 GUILDS, TRADE AND AGRICULTURE economic laws to which employers are subjects to-day, and they would be compelled to act much in the same way because they would be required to run the same machine. But if we wish to change the system we must recognize the necessity for industry to become as far as po^ible inde- pendent of foreign markets. This involves the revival -of agriculture, for only by such means can the home markets be restored. In so far as industry could depend upon the home markets, we should be able to exercise control over the conditions of industry, and real fimdamental changes in the position of the workers could be introduced. But it is vain to suppose that any such change can be introduced so lo&g as industry rests on the economic quicksand of foreign markets. It becomes apparent therefore that if the position of the workers is to be improved they must take longer views. There is no such thing as " Socialism now." But there is such a thing as Socialism in ten years' time if the workers could be persuaded to follow a consistent policy- over such a period of time. The troubjik is that the workears, as indeed most people 4n every class, think of the social problem in the terms of their own jobs. The engineer wants absolution in the terms of engineering ; the bootmaker in the terms of boots ; the clerk in the terms of clerking. It is natural, perhaps, but none the less impossible, for it dis- regards the action of those world-wide economic forces which dominate all nations in proportion as they become dependent upon foreign trade. I said that if the position of the workers is to ON WAGES AND FOREIGN TRADE 21 be improved they must take longer views. It is clear that modem industrial activities are essen- tially transitory in their nature. Quite apart from the war, it is manifest that sooner or later the situation that exists to-day must have arisen, for the existing arrangement whereby goods are produced at one end of the earth and food at the other does not possess within itself the elements of permanence. It owes its existence to many things, but by far the most important to the fact that we were the first to employ machinery in production. This virtual monopoly that we had for so long encouraged the growth of cross- distribution. But it is uneconomic and therefore cannot last, for it is apparent that other things being equal, it must be cheaper to produce goods near the markets than at a distance from them. An arrangement may be uneconomic, but custom and inertia will combine to perpetuate it long after the circumstances which brought it into existence have disappeared. The war woke up many of our former customers to this fact. Before the war they were content to produce food and raw materials, and relied upon us in the main for their manufactured goods. During the war we could not supply their wants, and they took to manufacturing all kinds of things for them- selves. As these manufactures are carried on near to where the raw materials are found or produced, it is manifest that we cannot hope to recover these markets. They must gradually slip from our hands. We cannot expect to export in the future such large quantities of manufac- 22 GUILDS, TRADE AND AGRICULTURE tured goods to Australia, Canada, South America and elsewhere as hitherto. Meanwhile, in order to finance the war, we disposed of most of our foreign investments. The result of it all is that our industries will be unable to provide work for such numbers as hitherto. Not being able to sell goods to the food-producing nations, we shall soon be without the money to pay for the food we must import to keep our population alive — ^a fact that is brought home to us by the constant falling of the rate of exchange. It appears therefore that though the reversal of our Russian policy, the complete removal of blockades and the provision of credits for the restoration of European trade would relieve the unemployed problem, it cannot hope to solve it, since a wider view of the situation leads to the conclusion that such relief can only be temporary. The renewal of trade facilities with Russia and Central Europe might relieve the congested state of the home market, but it will not provide us with the wherewithal to buy food, because Europe has no food to give us in exchange for our goods. If food is to be obtained, we must give something in exchange to the countries which produce it or we must produce it for ourselves. And as those countries upon which we have been accustomed to rely for a supply of food are beginning to produce their industrial wares for themselves, it follows that the only way to meet the situation is to take measures to produce as much food as possible for ourselves by the revival of agriculture. By no other means can the balance of exchange be ON WAGES AND FOREIGN TEADE 23 restored. Agriculture is fundamental, since the price of food determines the cost of everything else. If therefore we neglect to revive agriculture, we shall be exploited by the countries who do produce food, and this, by raising the price of our manufactures, will in turn increase our difficulties in competing in other markets. It is insufficiently recognized that during the war the agricultural populations all over the world have befen becoming rich while the industrial ones have become poor. It is not improbable therefore that capitalism, declining in the towns, may rehabilitate itself through agriculture. It certainly will do so unless Socialists are very much more wide awake than they have hitherto been. Though at the moment the change which we are required to make will be difficult and incon- venient to the people affected, it will, if taken in hand with resolution, prove undoubtedly to be a blessing, for our society is top heavy, and the revival of agricultiure is a movement in the direction of a return to the normal. But even with agri- culture revived it is questionable whether we shall in the long run be able to support our present population. In so far as this is true, there is only one remedy, and that is emigration. And here the real trouble begins. Emigration has so often been advocated as an excuse for postponing reforms at home that a natural and justifiable suspicion attaches to any one who advocates it, as Mr. Lloyd George found out recently when he suggested it as a remedy for unemployment. But it was not only with critics at home that he 24 GUILDS, TRADE AND AGRICULTURE had to contend. Tlie Domiiiions themselves lost no time in announcing that they had unemployed problems of their own and therefore could not assume Tesponsibility for ours. And there the matter was allowed to drop. Nevertheless I am persuaded that emigration is a necessary part of the solution of our problem, and by one means or another it must be rendered practicable. That England, having sold her foreign investments and lost her oversea markets, cannot hope even with agriculture revived to support her present popu- lation is demonstrable beyond doubt. But that our Dominions, with their vast empty spaces of fertile land that can produce the food and supply the raw materials of industry, cannot find room for our surplus population is a paradox — a. paradox moreover that needs to be explained, since it is impossible to deny that such is the situation in our colonies to-day. It suggests the question : Why does our economic system produce such contradictory results ? What is it that has got such a strangle-hold upon all modern industrial nations ? Ill THE TYRANNY OF BIG BUSINESS I CONCLUDED the last chapter by asking what it was in the economic system of industrial nations that had got such a strangle-hold upon them. The usual answer is of course to ascribe the general paralysis to the economic reactions that followed the war. In the immediate sense this is partially true. But of itself it is an insufficient explanation, for it is evident that the disease existed and was rapidly developing before the war. Let ■ us therefore begin our inquiry by focusing our attention upon a most evident symptom and consider the widespread tyranny of big business. The success of these large organi- zations has been so dazzling that they have almost succeeded in silencing critics as to the ultimate validity of their activities. They have claimed to be the last word in efficiency, and to be justified as evidence of the survival of the fittest. For most people this has been a sufficient -apology, and they have inquired no further. But we are unwilling to accept them at their own valuation, since we are persuaded that in them and their methods the immediate cause of the paralysis that is overtaking industry is to be discovered. 25 26 GUILDS, TRADE AND AGRICULTURE It will not be denied that expansion is to our industrial system the breath of life. So long as the system could continue expanding, it worked in spite of its shortcomings and injustices. But our economic system is so fearfully and wonder- fully made that it cannot remain stationary. Once the limit of expansion is reached, contraction sets in, and with it all manner of internal com- plications begin to make their appearance. The honour of placing a limit to this process of expan- sion belongs to large financial and industrial organizations which have overreached themselves. So keen have they been on making money that they have ignored all other considerations, and for a generation they have been at work under- mining the very foundations on which their prosperity ultimately rested. The changed position of the pioneer since big business got under way wiU bring this point home. The pioneer is the advance guard of civilization. He goes out into uninhabited places, he clears the land, and it is by means of his conquests that the area of civiliza- tion is extended. That he should continue his work is necessary for the continuance of our civilization ; for, as I have already said, expansion is to it the breath of life. And how has big business treated the pioneer ? The answer is, it has simply strangled him. The pioneer is isolated. He is dependent upon dealers for his supplies and for the marketing of his produce. In the old days of colonial expansion there were many such com- peting dealers, and this fact ensured him favourable terms ; but a time came when big business got THE TYRANNY OF BIG BUSINESS 27 the upper hand. And then things changed. The pioneer found himself at the mercy of some trust or syndicate that was in a position to bleed him white and did not hesitate to do so. When news was noised abroad of the treatment to which those who went on the land in the colonies were subjected, no new men ventured. They no longer went forth with the proverbial half a crown in their pockets to embark upon some new enterprise with a feeling of assurance and confidence. For they began to realize that they had not a dog's chance of success. It was thus that the initiative and enterprise that made our colonies was strangled. The age of expansion came to an end and our colonies began to develop their own unemployed problems. That is why nowadays they have no place for the emigrant. Contraction has set in. A generation ago it was the custom to belaud these large organizations ; to assume that because they were successful they represented a higher form of industrial organization ; and, on the grounds of the necessities of social evolution, to condone the immorality of their methods as in- evitable in a time of transition. It was supposed that by suppressing competition they were laying the foundations of the communal civilization of the future, and that when their great work of amedgamation and centrahzation was completed they would pass into the hands of the people. To-day we realize that this was a vain delusion. We no longer justify them as the fittest to survive. We have begun to ask the question as to whether they can survive at all. For they have been too 28 GUILDS, TRADE AND AGRICULTURE short-sighted to make any provision for the future. Systems of organizations that have en- dured in the past were alwa37s csareful to see that a ladder existed whereby the coming generation could rise step by step until they reached the summit of their callings. By such means these organizaticms renewed themselves. With sufch an eye to the future the Mediaeval Guilds jealously guarded the position of the apprentice. Appren- ticeship was " an integral element in the con- stitution of the craft goilds, because in no other way was it possible to ensure the permanency of practice and continuity of tradition whereby alone the regulations of the guilds for honourable dealing and sound workmanship could be carried on from generation to gaieration."' And this principle was not only understood by the craftsmen, but it was understood by the merchants in the past who, we read, were accustomed to sneer at the East India Company because it could not." breed up " merchants of initiative and independence. And this feeling against joint-stock enterprises continued until the middle of last century, when it yielded at last to the force of circumstances consequent upon the industrial revolution, and the principle of limited liability became admitted in law.' The evil inherent in joint-stock companies was not fatal to them at first, since befcore the acknow- ' An intioducticm to the Economic History of England, by E. Lipson, pp. 282-3,. « See chapter on Limited LiabiUty Compaiiies in my A Guildman's Interfretation of History. THE TYRANNY OP BIG BUSINESS 29 ledgment of the principle of limited liability in law they were few and far between, and so it became possible for them to renew their organization, wherever it was defective, by recruiting from outside their ranks. But once they become general, the evil inherent in them rapidly devel- oped ; for it soon became apparent that the divorce of ownership from management upon which they were based brought into existence horizontal and class divisions between those in their employ ; and this spread disaffection every- where. For men began to find that their future depended less on themselves than on the attitude of their immediate superiors towards them. In the higher ranks, these circumstances led to those jealousies and feuds by which all large organiza- tions are distracted. In the lower ones it led to apathy and indifference ; for when large organiza- tions took away liberty from the individual they took away from him all living interest in his work. The effect of it all has been the destruction of the sense of responsibility. This results in a loss of efficiency. Expenses go up and up, and there seems to be no stopping them. Recourse is had to amalgamations. But it is all of no avail ; for the soul has gone out of the body and there is no restoring it. There is no restoring the morale of these large organizations, because they have succeeded in destrojdng confidence and goodwill everywhere by the short-sightedness of their policy. For not only are limited companies responsible for the flood of commercial dishonesty and legalized fraud 30 GUILDS, TRADE AND AGRICULTURE that have simply overwhelmed modern society, but under their aegis Labour has become more and more embittered. It is widely recognized nowadays that the mass of men have no dis- position to do any more work than they can help. This is in the main due to these large organizations which lead men to feel that not they but others are going to profit by their labour. So long as competence was rewarded and honour appreciated there was an incentive for men to work. If they became efiicient they might get on to their own feet, and the presence of a number of men with such ambitions in industry gave a certain moral tone to it that reacted upon others. But when, owing to the spread of limited companies, all such hopes were definitely removed ; when technical ability, however great, went unrecognized and unrewarded, and proficiency in any department of industry incurred the jealousy of " duds " in high places, demoralization set in. All the old incentives were gone, and no one was left to set a standard. The suppressed impulses of men whose ambitions were thwarted turned into de- structive channels. The rising generation, feeling themselves the defenceless victims of exploitation, are in open rebellion. They refuse any longer to make profits for others, and this refusal is accom- panied by a spirit that is anything but conciliatory. There is, I am persuaded, a close connection between the spread of Bolshevism and the ex- ploitation of the young. The hopeless position in which they find themselves, without prospects of any kind, is largely responsible for their uncom- THE TYRANNY OF BIG BUSINESS 31 promising temper and a certain impatience and ruthlessness that disregards circumstances. It is insufficiently recognized that Bolshevism here is in no small degree a rising of the younger generation against the old. Can we wonder ? While on the one hand big business finds itself threatened by the disaffection of the workers, on the other it is perplexed by the contradictions of its own finance. The faith of financiers has hitherto been placed in reducing the costs of production. It was assumed that any reduction of costs would be automatically followed by an increase of demand. But is this so ? Such a policy is no doubt a sound business proposition from the point of view of the individual capitalist who is anxious to find ways and means of increasing his market. But it has obvious limitations when applied generally. To the individual capitalist bent on increasing his market it matters nothing how the costs of production are reduced. But when generally applied it makes all the difference in the world whether such reductions are effected by improved methods of production or by lowering wages. For the latter method, by reducing pur- chasing power, undermines demand. We see therefore that demand does not depend ultimately upon a reduction of costs, but on the distribution of wealth. In so far therefore as big business sets about to centralize wealth it undermines demand. But again, in so far as increased pro- duction is necessary to maintain its financial stability, there is necessitated an increased demand. We see then that to seek to centralize wealth and 32 GUILDS, TRADE AND AGRICULTURE to increase production is to travel in opposite directions at tiie sktae time ; for while centralization of wealth tends to undermine demand, increased production presupposes increased demand. Can we wonder that a deadlock has overtaken in- dustry ? The immediate cause may be the war, but it is clear that the problem is far more funda- mental, and that the deadlock would have arrived quite apart from the war. Like political despots our commercial magnates are beginning to find that the successes of despotism exhaust its re- sources and mortgage its future. IV ON INVESTING AND SPENDING Considering the anti-climax in which big business is seen to be ending, the question arises : What is it that has impelled it on such a fatal course ? With the individuals immediately concerned, love of money, power and personal ambition has doubtless been the mainspring of their activity. But it is a mistake to attribute too much to purely personal influences, inasmuch as such men are the instruments rather than the cause of develop- ments. Their freedom of choice can be exercised only within certain well-defined limits. Those limits are determined by the current ideas and practice of finance, to which all their activities must have reference. To understand therefore the cause of the deadlock that is overtaking industry, we must inquire into those prindples of finance which are accepted by all who engage in commercial activities. In this connection it may be held that there is a sense in which it is true to say that the City has been the victim of a false economic philosophy. For though the principles of that philosophy have on the whole followed and justified economic 3 33 34 GUILDS, TRADE AND AGRICULTURE practice rather than directed it, yet there can be little doubt that commercial men would not have embarked upon their latter-day enterprises with such abandon and self-confidence had they not believed that they were supported by the thought of the age. And indeed, apart from Ruskin and his followers, who were comparatively few in number, the thought of the age did on the whole, until a few years before the war, support the City in its doings. CoUectivists objected to the pro- ceeds of industry going into the pockets of a few, but they accepted the principles governing City finance. They did not perceive that apart from the way the earnings of industry were distributed there was anything fundamentally wrong in these principles of finance. Yet that there must be something very fundamentally wrong needs no demonstration to-day. Big business is too mani- festly breaking down to be able to justify itself any longer. Ultimately of course what is wrong is the modern philosophy of life, with its worship of wealth — its belief that the acquisition of money precedes the attainment of all other good things in this universe. But to change these values (and they must be changed) is the work of time, and we are unfortunately faced with immediate issues, the legacy of generations of false philosophy. To deal with them it is necesSary to know the proximate cause of things, and the proximate cause of the activities of big business is un- doubtedly the theory of investments as popularly understood. That theory" teaches that money is ON INVESTING AND SPENDING 35 never so usefully employed as when it is invested in some productive enterprise, and it recognizes no limit to the possibility of such investments. Nearly all people with money accept this theory as a truth that is axiomatic, and consider them- selves as doing a positive service to the community when they reinvest any spare money they may have for further increase instead of spending it in some way or other. For, as they are accustomed to say, money so invested provides employment. This is the philosophy of the rich to-day. If we went back a couple of generations to the old Tory school we should find that they believed it was not the investing but the spending of money that gave employment. Though neither of these conflicting philosophies is ultimately true, the old Tory idea is infinitely nearer the truth than the current one ; while as a practical working philosophy for the rich there is simply no comparison between the two. For whereas money spent does return into general circulation, the effect of investing and reinvesting surplus money is in the long run to withdraw it from circulation, much in the same way as if it were hoarded. Nay, it is actually worse than if it were hoarded. Hoarded money may undermine demand, but it does not increase supply, whereas when reinvestment proceeds beyond a certain point it increases supply and undermines demand at the same time. It is apparent that in a society in which economic conditions were stable a balance between demand and supply would be maintained. The money made by trade would be spent, and in this way 36 GUILDS, TRADE AND AGRICULTURE it would return into general circulation. Thus a reciprocal relationship would be maintained be- tween demand and supply. In former times money was spent upon such things as architecture, the patronage of arts and letters, the endowment of religion, education, charitable institutions, and such-like ways. Expenditure upon such things stimulated demand and created employment, while it tended to bridge the gulf between rich and poor. The only defence that is ever made for the existence of a wealthy class in society is that but for their expenditure in such ways our great monuments of architecture, educational and other endowments would never have come into existence. I am not quite sure how far this is true. But it is manifest that when the rich did dispose of their wealth in such public ways they were in a position that could be defended on the grounds of expediency if not of equity. But what defence can be put up for the rich to-day who have so completely lost all idea of function as to be unwilling to spend at all except upon themselves ; who fail to support charitable insti- tutions ; who are so inaccessible to culture as to neglect the patronage of arts and letters ; who so lack confidence in their own judgment as to be unable to patronize the crafts of to-day and take refuge in antiques ; who are unwilling to spend money uprai architecture, nay, who can only be persuaded to buy pictures when assured they are good investments — ^in a word, who have no idea what to do with their surplus wealth except to reinvest it for further increase, that is to use ON INVESTING AND SPENDING 37 it for the purpose of undermining the economic system that permits them to Uve such useless existences. But perhaps they know best ! This is no exaggeration. The misuse of surplus wealth by the rich upsets the balance between demand and supply. And this is productive of wa,ste. For when more money is invested in any industry than is required for its proper conduct, the pressure of competition is increased ; for any increase in the pressure of competition means that money that should be spent is invested to increase supply ; and this increases the selling costs by encouraging the growth of the number of middlemen who levy toll upon industry, while it increases the expenditure on advertise- ments and other overhead charges. Thus we see it transfers labour from useful to useless work. Further, it encourages the over-capitalization of industry by burdening industry with a dead load of watered capital. These things react to raise the price of commodities on the one hand and to demoralize production on the other. For in the effort to produce dividends on this watered capital all moral scruples are thrown overboard. Thus we see there is a direct connection between the perpetual reinvestment of surplus money for further increase and the unscrupulous methods of big business. Once an industry has experienced a boom on the Stock Exchange, its doom is sealed. It becomes grossly over-capitalized, and every kind of dirty trick and smart practice is resorted to in the attempt to produce dividends on the watered capital. Attempts are invariably made 38 GUILDS, TRADE AND AGRICULTURE to squeeze more out of labour. The disaffection of labour to-day is in no small measure the reaction against this kind of thing. In former times the rich appeared to have some notion that there was such a thing as a limit to the possibilities of compound interest. But after the introduction of machinery the possibilities of making money increased so enormously as to remove from their minds any sense of limitations. In demanding that all money shall bear com- pound interest, finance is committed to an abso- lutely impossible principle ; as must be apparent to any one who reflects on the famous arithmetical calculation that a halfpenny put out to five per cent, compound interest on the first day of the Christian era would by now amount to more money than the earth could contain. This calcu- lation clearly demonstrates that there is such a thing as a limit to the possibilities of compound interest ; yet what we call " sound finance " to-day proceeds upon the assumption that there is no limit. In consequence, it invests and reinvests surplus wealth and loads industry with a burden it cannot bear. For if wages were reduced to the lowest figure capable of keeping body and soul together and prices raised to the highest limit, productive industry could not be made to yield the returns which the conventional system of invested funds now requires. Can we wonder that capitalism is breaking down ? ON PRODUCING MORE AND CONSUMING LESS The development of foreign trade was a primary cause in leading the rich to abandon their habit of spending their surplus wealth in public ways and to invest and reinvest it for the purpose of further increase. The discovery of America and the sea route to India transferred prosperity from the Hanseatic and other inland towns to seaports and countries with a good seaboard. The change was very profitable to English mer- chants, who began to secure a larger share of the commerce of the world. Moreover, it stimulated British industries, and the rich began to find increasing opportunities for profitable investment. These cha'nges were accompanied by certain changes in economic thought. In the seventeenth century there arose the Mercai^tiJ^i school of economists whose central idea Was to increase the wealth of the nation by foreign tr^de ; and as a means towards this end they tjailght that the rule to follow was "to sell more to'^rai^ers yearly than we consume of theirs in value." Trinslated into the terms of industry this doctrine becomes 38 40 GUILDS, TRADE AND AGRICULTURE that of " producing more and consuming less." By following this advice, money was made, and in the terms of cash men became wealthy. But unfortunately this was not the only consequence, for this policy brought into existence the problem of surplus production. This surplus was in the first instance deliberately created in order to take advantage of the opportunities of making money that the exploitation of distant markets afforded. But after machinery was invented, it became the plague of our society, for surplus goods increased so enormously in volume that it became a matter of life and death with us to find markets in which to dispose of our goods. For, as a consequence of this money-making policy our society has become economically so constituted that we cannot live merely by producing what we need, but must produce all manner of unnecessary things in order that we may have the money to buy the necessary things, of which we produce too little. But the evil does not end with ourselves. In the long run, this policy defeats its own ends. It is obviously impossible as a world policy because all the nations cannot be increasing their production and decreasing their consumption at the same time. The thing is simply impossible. Hence it came about that once the employment of machinery began to give us an unfair advantage in exchange, one nation after another was drawn into the whirlpool of industrial production. And in pro- portion a5,this* Came a;botit we were driven further and fiirth^r(afJehi in tjieisearch for markets, until a day came at last "When piere were no new markets PRODUCING MORE, CONSUMING LESS 41 left to exploit. When that point was reached torapetition became fiercer and fiercer, until the breaking-point arrived and war was precipitated. The crisis came in Germany. Immediately it is to be traced to the Balkan War, which closed the Balkan markets to her, and to the fact that after the Agadir crisis in 191 1 the French capi- talists withdrew their loans from Germany, and these things combined to bring the German financial system into a state of bankruptcy ; for this system, built upon an inverted pyramid of credit, could not for long bear the strain of adverse conditions. But the ultimate reason why the crisis made its appearance first in Germany was undoubtedly due to the fact that more than any other nation she had forced the pace of com- petition. In the fifteen years before the war Germany had quadrupled her output. The rate of productivity, due to never-slackening energy, technique and scientific development, was far out- stripping the rate of demand, and there was no stopping, for production was no longer controlled by demand but by plant. In consequence, a day came when all the world that would take German- made goods was choked to the lips. Economic difficulties appeared, and then the Prussian doctrine of force spread with alarming rapidity. War was decided upon for the purpose of relieving the pressure of competition by forcing goods upon other markets, and to cheapen production by getting control of additional sources of raw material. Hence the demand for colonial expan- sion, the destruction of the towns and industries 42 GUILDS, TRADE AND AGRICULTURE of Belgium and Northern France, and the whole- sale destruction of shipping by the submarine campaign. They all had one object in view : to relieve the pressure of competition and to get more elbow-room for German industries. The idea of relieving the pressure of competition by such commercial sabotage was not a new one. It had been employed by Rome when she destroyed Carthage and Corinth and the vineyards and olive groves in Gaul out of commercial rivalry. The Germans, who copied the methods of the Romans in so many ways, followed them also here. Had Germany succeeded in bringing the war to an early conclusion, it is possible that this policy would have been successful to the extent of giving her industries a temporary relief from the pressure of competition. But instead of being terminated in a few months as she had intended, the war dragged on for over four years, and this exhausted the economic resources of Europe. When the Armistice was signed there was a world shortage of the necessaries of life and it became necessary, if Europe was not to disintegrate economically, that efforts should be made to resume at once normal trade relationships. But unfortunately the Big Four into whose hands arrangements for Peace had fallen, were not, as Mr. Keynes has told us, interested in economics. What they were interested in was military guarantees against a renewal of hostilities, territorial questions and indemnities. And so it came about that the realities of the economic situation, the urgency of which permitted no delay, were entirely disre- PRODUCING MORE, CONSUMING LESS 43 garded. For while on the one hand the Peace terms ignored the fact that the war had left Ger- many in a state of economic exhaustion, and that therefore she could only pay indemnities on the assumption that she experienced a trade revival ; on the other hand the huge figures at which the indemnities were fixed, and the continuance of the blockade, by interfering with the operations of normal economic forces, precluded the possi- bility of any such revival. Meanwhile, unmindful that the war had been precipitated by the fact that the industrial system had reached its maximum of expansion, the doctrine was preached in this country that salva- tion was to be found in a policy of maximum production. That the world shortage of the necessaries of life demanded that efforts should be made to make good the deficiency, no one will be found to deny, for in many directions making good the deficiency was a race against time. But the advocates of a policy of maximum pro- duction were as little concerned as the Peace Conference with the realities of the economic situation. They were not interested in the in- creased production of food, or finally in any other form of necessary production, but in finding ways and means of repaying the War Loan without resort to a capital levy. And this is where they went astray. For not only was Labour alienated inasmuch as it saw in this policy an attempt to shift the burden of war taxation on to the shoulders of the producers, but it led its advocates to demand the increased production of everything and any- 44 GUILDS, TRADE AND AGRICULTURE thing regardless of the fact that the policy of the Peace Conference both in regard to Russia and to Central Europe was to close their markets to us, and that during the war other nations deprived of their accustomed supplies from us had taken to manufacturing for themselves. The result has been what various writers on economics foresaw — that indiscriminate production was followed by a glut, and the unemployed are on our streets. To add to the public bewilderment, the cry has gone up of late that the needs of national economy demand that we consume less ; and the average man is a little concerned to know what is meant when he is urged to produce more and to consume less. The answer is that, absurd and contra- dictory as it sounds, it is nevertheless the principle upon which our glorious civilization has been built. It is a principle with four hundred years of history to support it, but at last the limits of industrial expansion necessary to its continuance have been reached. For, as I have said before, our economic system must either be expanding or contracting. And as it so happens that as the age of expansion has come to an end, the age of con- traction naturally follows. The Government, im- pervious to arguments, has at length had to yield to the force of facts. It has ceased to admonish all and sundry to increase their production, and the word has gone round to reduce production and ration employmeilt, and for each man to work fewer hours ; for the opinion in the commercial world to-day is that less production rather than more is the remedy for "our present difficulties. PRODUCING MORE, CONSUMING LESS 45 Though there may probably be temporary revivals of trade, the process of contraction now definitely inaugurated will, I am persuaded, con- tinue. For just as hitherto the normal trend of affairs was, in spite of recurring depressions, from expansion to expansion, so now when the tide has turned the normal trend will be from con- traction to contraction — a tendency that can only be checked by a complete change in the spirit and conduct of industry such as is involved in return to fundamentals. This truth is vaguely apprehended to-day, though at the moment men are at a loss to know how to translate it into the terms of actuality. But now when disillusionment has overtaken society there is a prospect that right reasoning may prevail and a path be found. Let us try to discover it. VI FIXED PRICES VERSUS SPECULATION We have seen that the existing system of industry and finance is rapidly reaching a deadlock. What is to be done in the circumstances ? The first thing to do is to effect such repairs of the old machine as will enable it to run a httle longer in order to gain time to build the new one, which we must have in running order before the existing machine breaks down completely. For such a purpose such measures as the reversal of our Russian policy, the removal of all blockades, and the provision of credits for the renewal of trade with Central Europe are indispensable. It will be unnecessary for me to do more than mention them, as steps towards their fulfilment have already been taken. But it is necessary to insist that though these measures may bring relief by enabling our merchants to dispose of their surplus stocks, yet the relief would only be temporary, inasmuch as if the Continental nations get on their feet again they will begin to compete with us in other markets. If on the contrary they do not recover their industrial position but relapse into more primitive conditions, they will not 46 FIXED PRICES VERSUS SPECULATION 47 have sufficient surplus to enable them to buy our manufactures. If these facts were clearly recognized and the necessary measures taken in hand, then we should have nothing to fear. But the danger is that the moment any improve- ment in trade is felt we shall stop thinking and pursue the silly old game, comforting ourselves with the illusion that the dislocation of trade was due entirely to the war, and that there is nothing organically wrong with the industrial system. The truth, however, must be faced. We are in an economic cul-de-sac, and there is but one path of escape ; and that is to get back somehow to the primary realities of life. It must be recognized that we are up against the consequences of centuries of injustice, usury, and Machiavellian- ism in politics and business, and that there is finally no escape except to return to the principles af justice, honesty and fair deeding, upon which all civilizations rest. Reduced to its simplest terms, the change necessary to enable society to escape from the deadlock that is threatening industry is con- veniently expressed in the well-known formula : — " the substitution of production for profit by production for use " ; and the first step in that direction will be taken when we begin to estabUsh a system of fixed prices throughout industry. For though the Just Price rather than the fixed price is the ideal to be attained, yet it can only be realized by stages. The fixed price therefore is to be regarded as a step towards the Just Price, 48 GUILDS, TRADE AND AGRICULTURE because the people will never be satisfied with a fixed price that is not a Just Price. The difference between a fixed price and the Just Price almost explains itself. Fixed prices are those that are uniform and are not determined by competition ; but such prices may be anything but just, as many fixed prices during the war were anything but just. A Just Price would bear a certain definite relationship to the cost of production, measured in labour units. It would mean that some things would-be sold for more and other things for less than at present. In the case of a few useful and necessary things it might mean that they would be sold for more than at present, because useful labour is invariably underpaid ; while it so happens that they are often sold by retail dealers with httle or no profit in order to attract customers, and provide oppor- tunities for selling other goods, generally useless and unnecessary things, that carry a handsome profit. It will be necessary therefore, if pro- duction for profit is to give way to production for use, to readjust all such selling prices so that the price in each case may correspond to the actual cost of production, since until prices are so adjusted no change in the motive of industry is possible. For with prices determined by com- petition the producer must think primarily in the terms of profits if he is to remain solvent. In all kinds of ways the present system of prices is demoralizing. Some years ago when I had some experience of the furniture trade, I made the interesting discovery that it stereot5^ed FIXED PRICES VERSUS SPECULATION 49 the forms of design. It came about this way. Profits were put on certain things and not on others. Certain things in general demand, such as chests of drawers, bureaus, chairs and small tables were sold without profit, while other things such as dining tables^ bookcases, sideboards, heavy curtains and carpets carried good profits. Simpler kinds of furniture were sold at cost price and sham ornamental pieces at exorbit^ant ones. A designer therefore, in the employ of the furnishing houses, could only exercise his fancy within certain narrow limits. The furniture had to be elaborate, and the curtains had to be heavy or there would be no profits. He might know that some other arrangement would be infinitely more effective, but he was not allowed to carry it out, for in that case the public would not be prepared to pay a price that would give a working profit, though to provide such a profit it might only post half of what the sham elaborate design cost. The public would not think they were getting value for money, and therefore would refuse to buy. This illustration may serve to show how unjust prices stranjefle creative work. They have strangled the effort to revive dfesign and handi- craft ; for when conditions obtain which will not allow men to do things in the way they know they should be done, they lose interest in their wotk and begin to think only of profits. No doubt many who have had experience of other trades could add their testimony of the peculiar effect unjust prices have had. But in general it may be said that the effect of unjust 4 50 GUILDS, TRADE AND AGRICULTURE prices is to transfer labour from useful to useless work, with its corollary that useful work is nearly always badly paid. The result is that men insensibly learn that it is easier and more honour- able to live by exploiting labour for profit or by trafficking or by money-lending, or by speculating, or by some parasitic art — by any means in fact except by doing work which is useful and desirable for the purposes of human life. It is thus that occupations have come to be esteemed in proportion as they win money, afford comfort and leisure, and confer individual power and distinction. The effect of it all is to produce social demoralization. It exalts false social values ; this in turns corrupts everything else, for it encourages lying and fraud of every kind, and ends by creating an atmosphere of social lies so dense that few people know where they are. Divorced from all useful work they have no final test of truth. In consequence they become cMssatisfied, they are at the mercy of every fashion of opinion, and finally like the builders of Babel they end in a confusion of tongues, no man being able to make himself intelligible to any one else. Thus we see that unfixed and unjust prices divert energy from production to speculation. It will remciin impossible for people to be interested in the ultimate social utility of anything they do so long as the price they are to get for their labour is settled by competition. The reason why the commercial motive is for the most part absent among professional men is precisely because the price of their services is fixed ; and it will tend to FIXED PEICBS VERSUS SPECULATION 5> disappear from industry once prices are fixed. The professional man is able to put his best into his work because he has not to worry about how much he has to receive for his services, and it will be the same in industry when the same conditions obtain. Uncertainty as to price dislocates industry in every direction, and has handed production over to the speculator with consequences that are grossly demoralizing. It is only possible for a man to plan ahead if he knows where he stands. The farmer, for instance, must plan four years ahead. He must arrange for a rotation of crops. If he knows he can dispose of his produce at a certain definite fixed price he can concentrate all his attention upon getting the best out of his land. He can go ahead. But if uncertainty as to price surrounds him on every side he will not produce on such a large scale, for he will need to keep a greater reserve of capital 'in case of need. Moreover he will have to be for ever thinking about prices, of when and where to sell, and this will prevent him from making the best use of his land. There is no greater illusion than to suppose that the motive of profit stimulates efiiciency. Only love of work can do that, and nothing detracts from love of work so much as economic uncertainty. I am convinced that the decline of quality in production is due far less to avarice than to the demoralization that accompanies such uncertainty. Further, the determination of prices by com- petition leads inevitably to injustice. In the event of a shortage the producer exploits the 52 GUILDS, TRADE AND AGRICULTURE consumer ; in the event of a surplus the consumer exploits the producer. The producer may be ruined as EngUsh farmers were in the years 18^9-90. This ruin has reacted to make living increasingly expensive for everybody. It is thus that unfixed prices leads to unrest among the workers by introducing an element of uncertainty into the real value of wages. It leads moreover to disaffection all round. The consumer is in- dignant when he is exploited hy the producer, and the producer when rained becomes a centre of discontent. On the other hand the producer who has profited by the system hardens his heart towards the rest of the community because he beUeves that they would have done the same as he has done if they had had the chance. He therefore resents criticism as a personal injustice. It is thus that competition in prices ends in the promotion of class hatred — of enmity between the haves and pe have-nots. Then again unfixed prices lead to economic instability. Before the war, because we were living upon the moral capitgJ of centuries of tradition and stability, the danger inherent in allowing prices to be determined by competititm was apparent only to a few, though as a matter of fact economic conditions every year became more unstable. But during the war, when restrain- ing influences were removed, profiteering became rampant and what hitherto had only been apparent to a few was seen by the many. It was seen that no society could endure that allowed prices to be fixed in this way, inasmuch as it could only end FIXED PRICES VERSUS SPBCUXiATION 53 by shaking to pieces the economic system itself. Hence it was that, faced with this peril, the Govern- ment sought to limit by means of fixed prices the profits that could be made by any manufacturer or middleman. After the war, the Government brought in the Profiteering Act to enable it to contirtue to exercise -the power of fixing maximum \ prices of articles in general use, which fixing had during the war been done under D.O.R.A. Its operation, however, was liniited to six months, and since its expiration there has been a return to the system of competitive prices for such articles, and prices have begun to fall. Some of the con- trols, however, that deal with the price of food and raw material still remain. They exist inde- pendently of this Act. It can occasion no surprise that measures that interfered so much with the ways of business should be unpopular in the commercial world. The business man has the conviction that what is in his personal interest is necessarily in the interests of the community, since as society lives by commerce he assumes that anything that interferes with the liberty of commerce can be in the interests of nobody. Moreover, to him speculation is the soul of business, and as any extension of fixed prices over industry woitld put an end to speculation he can see nothing but demoralization overtaking the world when business loses its soul. No doubt he is perfectly honest in believing this. To men who accept business operations at their face value there is no other conclusion. The question to us, however, is 54 GUILDS, TRADE AND AGRICULTURE whether the world does not want another soul quite different from the one that business affords ; whether, if the moral tone of industry is ever to be raised, business as we understand it must not go, nay, whether business itself can carry on much longer at all on its present basis. But it was not only business men who objected. Socialists and Labour men also objected. But their objection was of a different order, and was due to the fact that, having a priori ideas in their minds as to the way the millennium is to be ushered in, they look with suspicion upon any idea that has not hitherto found a place in their programme. To them the fixation of prices was nothing more than a means of satisfying popular clamour and postponing the day of substantial reform, and for this reason they never seriously considered it. Perhaps they may, when they awaken to the fact that it is an idea with potentialities in it little suspected by its promoters. But there are other and more valid objections to the Government's policy of fixed prices. Their enforcement was accompanied by vexatious and irritating interferences of all kinds. With this objection I can entirely sympathize. But I would point out that it does not invalidate the principle of fixed prices. What it does invalidate is the instrument that was used for enforcing them. That instrument was the bureaucratic machine — the system of control from without. It is clumsy and irritating, but the Government had no option but to use it, for the Guild — the system of control from within — was non-existent. And the Guild, FIXED PRICES VERSUS SPECULATION 55 as we shall see later, is the only instrument that can fix prices properly. Then there is the objection that certain things went off the market as soon as prices were fixed. This again does not invalidate the principle of fixed prices. What it does do is to demonstrate the impossibiUty of enforcing fixed prices against the- will of a trade. Here again the solution is to be found in the institution of Guilds. For a Guild would contain everybody who worked in a trade, not the few people who were in a position to exploit it, and if everybody in a trade had a voice in the matter we may be assured that they would act democratically for the good of all, and not merely in the interests of a few. Finally there is the objection of the man-in- the-street, to whom fixed prices were popular during the war when they prevented prices going higher, but who turned against them when the control prevented them falling to a lower level. This objection again is valid. But it does not invalidate the principle of fixed prices. What it does invalidate is the fixed price that is not a Just Price ; and as the fixed prices during the war were not Just Prices, it was desirable that control should be removed to enable prices to return to the normal. VII GUILDS AND THE JUST PRICE I CONCLUDED the last chapter by pointing out that the man-in-the-street does not object to the principle of a fixed price but to the fixed price that is not a Just Price. As it happens that the Ju^t Price was the central economic idea of the Middle Ages, let us pause to consider what it meant in those days. The Just Price in the Middle Ages was primarily a moral idea. By that I mean that it owed its establishment to moral rather than to economic considerations. It was the idea that between two persons bent on honest and straightforward dealing it is possiUe to arrive at something that may be regarded as a Just Price. Indeed, as a matter of fact, when this idea pervades the whole community, as it did at one time in the Middle Ages, conations are created that make it a com- paratively easy matter to translate such a principle into practice ; for under such circumstances prices remain more or less stationary, and every article acquires a traditional price. As a moral precept, the idea of the Just Price was maintained by the Church and supported by the words of 66 GUILDS AND THE JUST PRICE 57 the Gospel, " Whatsoever that men should do unto you, do ye also unto them." To buy a thing for less or sell a thing for more than its real value was considered in itself unallowable and unjust, and therefore sinful, though exceptional circumstances might sometimes make it permissible. The institution of bujdng and selling wares, it was held, was introduced for the common advantage, and this common advantage could only be main- tained if there was equal advantage to both parties. Such equality was defeated if the price which one of the parties received was more or less than the article sold was worth. Under the auspices of the Guilds, the Just Price became a fixed price. Indeed it is true to say that the Guilds were organized to maintain the Just Price. For it is only by relating the Guild regulations to this central idea that they become intelligible. To maintain the Just and Fixed Price, the Guilds had to be privileged bodies having an entire monopoly of their respective trades over the area of a particular town or city ; for it was only by the possession of a monopoly that a fixed price could be maintained, as society found to its cost when the Guilds lost their monopolies. Only thrjough the exercise of authority over its individual members could the Guild prevent profiteering in its forms of forestalling, regrating, engrossing and adulteration. Trade abuses of this kind were ruthlessly suppressed in the Middle Ages. For the first offence a member was fined ; the most severe penalty was expulsion from the Guild, which meant that a man lost the 58 GUILDS, TRADE AND AGRICULTURE privilege of following his trade in his native city. But a Just and Fixed Price cannot be maintained by moral action alone. If prices are to be fixed throughout industry, it can only be done on the assumption that a standard of quality can be upheld. As a standard of quality cannot finally be defined in the terms of law, it is necessary for the maintenance of a standard, to place authority in the hands of craftmasters a consensus of whose opinion constitutes the, final court of appeal. In order to ensure a supply of masters it is necessary to train apprentices, to regulate the size of the workshop, the hours of labour, the volume of pro- duction, and so forth ; for only when attention is given to such matters are workshop conditions created that are favourable to the production of masters. Thus we see that all the regulations — as indeed the whole hierarchy of the Guild — arise out of the primary object of maintaining the Just Price. The Just and Fixed Price when maintained by the Guilds left no room for the growth of capitalism by the manipulation of exchange currency, for it demanded that money should be restricted to its legitimate use as a medium of exchange. Unconsciously, the Mediaeval Guilds stumbled upon the solution of the problem of currency which had perplexed the lawgivers of Greece and Rome and broke up their cixaliza- tions, as in these days it is breaking up ours. The idea is a simple one — so simple in fact that one wonders how ever it came to be overlooked. GUILDS AND THE JUST PRICE 59 Currency, or in other words money, is a medium of exchange. The problem is how to restrict it to its legitimate use. So long as it is fairly and honourably used to give value for value ; so long in fact as money is used merely as a token for the exchange of goods, then a society will remain economically stable and healthy. But unfortunately such a desideratum does not follow naturally from the unrestricted freedom of exchange, that is by allowing prices to be deter- mined by the higgling of the market ; because under such circumstances there is no equality of bargaining power. The merchants and middlemen, because they speciaUze in market conditions, find themselves in a position to exploit the community by speculating in values. Standing between producers and consumers, they are in a position to levy tribute from each of them. By refusing to buy they can compel producers to sell things to them at less than their real value ; while by refusing to sell they can compel consumers to buy things from them at more than their real value ; and by pocketing the difference they become rich. The principle remains the same when the merchant becomes a manufacturer, the only difference being that the exploitation becomes then more direct. For whereas as merchant he exploits the producer indirectly by buying the product of his labour at too low a cost, in his capacity as manufacturer he exploits labour direct. All commercial operations partake of this nature. Their aim is always to defeat the ends of fair exchange by manipulating values. By so doing. 60 GUILDS, TRADE AND AGRICULTURE money is made as we say, an