^tatc O^oUegc of l^gticulture 
 
 3^t (JntneU ImuetaitH 
 
 atliara. N. ^. 
 
HB 17i_7f5'^"*"''""'«™"y Library 
 ^"lllSim.™Si,?.«'"9 3" unorthodox at 
 
Cornell University 
 Library 
 
 The original of tiiis book 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/cu31924014027894 
 
ECONOMIC HERESIES 
 
ECONOMIC HEEESIES 
 
 BEING AN UNORTHODOX ATTEMPT TO 
 
 APPEECIATE THE ECONOMIC 
 
 PROBLEMS PRESENTED BY 
 
 "THINGS AS THEY ARE." 
 
 BY 
 
 SIR NATHANIEL NATHAN 
 
 I'OEMERLY ATTORNBY-GEKERAL IN TEIKIDAD 
 
 BOSTON & NEW YOKE 
 
 HOUGHTON MIFFLIN COMPANY 
 1909 
 

 ^.r^r'^/ 
 
PREFACE 
 
 I HAD proposed to borrow for the title of this book Mr. Kipling's 
 phrase which it is too late to remove from the headings. It 
 seemed that by the use of these words I could most aptly indicate 
 the real purpose of these chapters, which is to endeavour to oppose 
 an analysis and appreciation of the actual reality of the working of 
 the economic processes of civilization, " Things as they are " ; in 
 the first place, to the abstract conception of " Things as they have 
 been imagined to be" by the theoretical economists of the nine- 
 teenth century ; and then, again, to the Utopian ideals of " Things 
 as they ought to be," as preached by the Socialists of the twentieth. 
 
 At the last moment I have been apprised that the title pro- 
 posed was appropriated by a lady who wrote under it in 1903 
 a work describing her missionary experiences, and it has been 
 deemed more courteous and more expedient to find an alternative 
 title ; and as these chapters are informed with a somewhat 
 sceptical spirit, the present title has been adopted for the cover 
 and title-page. 
 
 My heresy consists in agreeing with the Socialists that the 
 formulae deduced by orthodox economists are inadequate to 
 afford a satisfactory explanation of the observed phenomena of 
 civilization on its economic side, and that the efforts of society 
 to bring about a better state of things must not be hampered 
 by an unquestioning acquiescence in a body of dogma deduced 
 from imperfect observation of some of the facts attending a 
 bygone and rudimentary stage in the economic history of the 
 world. But I differ entirely from them when they seek to erect 
 into a new creed of Collectivism a conflicting set of doctrines 
 equally dogmatic and still more devoid of the foundation of 
 actual observation and experience. 
 
 I have attempted to show that all economic phenomena what- 
 ever are essentially ephemeral and subject to a vast multiplicity 
 of causes, themselves ever changing and varying from time to 
 time and from place to place ; and that therefore this is a branch 
 of knowledge in respect of which general axioms and first 
 principles cannot be accurately or 'implicitly applied, and must 
 only be accepted provisionally and guardedly. 
 
vi PKEPAGE 
 
 On the other hand, my attitude towards the professors of the 
 more modern school of social therapeutics, while not unsympa- 
 thetic, is equally distrustful ; for reasons which will be found fully 
 indicated in Chapters XVIII. — XXI. inclusive, and which it is 
 unnecessary to anticipate. 
 
 But the world realizes more and more every day that all its 
 •component societies are compelled to face the necessity of dealing 
 with a series of problems, on the successful solution of which 
 depends the progress of their civilization ; which consists in the 
 amelioration of the conditions of life in each society and in each 
 of its constituent classes. 
 
 Moreover, it is getting clearer day by day, that the solution has 
 to be undertaken by each society or nation for itself, and that the 
 progress of general civilization depends on the application of no 
 universal specific for all mankind, but must be attained as the 
 result and outcome of the separate more or less conflicting efforts 
 •of all, each for itself. For each nation must work and strive for 
 its own salvation independently of the interests of " humanity at 
 large." On the other hand, no effort of any one of the nations 
 «an be without its own series of results both immediate and 
 indirect on the welfare and progress of the others. That is the 
 statement of the world problem in its widest aspect. 
 
 My justification for publishing this book is that it attempts 
 the presentation in a form as untechnical as possible, of the 
 actual facts of modern economic phenomena as they are really 
 seen and known to exist, from a completely impartial, and as 
 Emerson called it " unpolarized " point of view, but with the 
 purpose of suggesting thoughts which may help in the solution of 
 these actual and practical questions in so far as they concern 
 the welfare of the people of my own country. 
 
 In attempting this, I have declined to take for granted any 
 so-called "principle" of the "political economy" of the last 
 century ; a science which a thoughtful writer * has aptly charac- 
 terised as " a mass of ideas that has now not so much been 
 examined and refuted, as slipped away imperceptibly from its 
 hold upon the minds of men." 
 
 The reasons of the decline of the authority of that system of 
 thought are not far to seek. Its abstract deductions, true for 
 the most part, as far as they go, in respect of certain sets of the 
 tendencies underlying economic phenomena, were presented with 
 
 * H. G. Wells in " New Worlds for Old." 
 
PEEFACE vii 
 
 an overbearing dogmatism as an infallible code of "laws" of 
 universal application, in obedience to which can be ascertained 
 and predicted for all time the true sequence and interdependence 
 of all economic phenomena whatever. The professors of the 
 science still claim, though with a daily diminishing acquiescence, 
 that their scanty abstract formulas suffice to enable them to 
 analyse the immensely complex concrete facts of modern economic 
 experience ; and this claim is being daily and palpably refuted 
 by the perverse refusal of facts to conform to their theories. It 
 is not that many of the tendencies which they (for the most 
 part truly) discerned and erected into determining " laws " were 
 not fairly accurately stated ; but that it is obvious in these days, 
 that these were but a fragment of the many causes at work on 
 human wills and actions ; that other and unnoted tendencies are 
 everywhere in conflict with them ; and that events are and must 
 be the result of the action of all together, on the economic 
 structure of the whole world. 
 
 So it comes about that in respect of the most instant and 
 momentous controversies of the day in this country, especially 
 those indicated by the words " Free Trade " and " Tariff Eeform " 
 and " Individualism " and " Socialism," which are in truth but so 
 many special statements of the one overwhelming problem of work- 
 lessness and poverty, disputants recognise no common authority ; 
 and deftly manipulated statistics afford but scanty assistance. 
 
 I have ventured to think that something may be achieved by 
 an attempt to restate the facts as they are, from the point of 
 view of a person starting with no conscious prepossession in 
 favour of either side in any of the controversies, but desirous 
 of reasoning the whole matter out for' himself. Assuredly there 
 are many others equally desirous of forming impartial judg- 
 ments on these immensely vital questions, and it is to these that 
 I venture to address myself. Dogmatists and heated partizans 
 wUl find nothing in the book that will not be distasteful to them. 
 
 To a person who has been absent from England for many 
 years, political prejudices and economic orthodoxies appeal but 
 feebly. And it will be seen that to either side of these great con- 
 troversies, the solution of which is apparently the main political 
 task of this country in the present century, I can give but a 
 hesitating and uncertain assent. In many respects the adherents 
 of each seem to me alternately right and wrong. And while on 
 balance, the conclusions of expediency appear as indicated in the 
 
viii PEBFACE 
 
 ninth and following chapters respectively, there is assuredly no 
 room for anything like a passionate or intolerant partizanship in 
 respect of any of them. 
 
 These more vital chapters unfortunately have had to he pre- 
 ceded by the earlier part of the book, which aims at stating the 
 realities of things as they are and as they are known to he. For 
 it is only by means of such a survey that it is possible to arrive at 
 any insight into the real conditions of the problems which have 
 to be solved. For the inevitable consequent dulness of the 
 earlier chapters therefore I express regret, but do not apologize. 
 
 Keference is made in places to appropriate passages in " text- 
 books," not at all by way of authority, but simply as directing 
 attention to what has been written in respect of each subject by 
 the doctors of the orthodox " political economy." 
 
 At their best the chapters can only claim the place of a 
 preliminary sketch ; a series of rudimentary prolegomena. But 
 it by no means follows that they are unconnected with each 
 other ; for above all things I have tried to bring out the con- 
 clusion that the entire series of economic phenomena is intri- 
 cately interdependent ; so much so that it is impossible to isolate 
 any one from any other aspect of the economic workings of 
 society. And the general drift of the whole work is that these, 
 on the whole, are equally interwoven with political and ethical 
 considerations, and from the point of view of practical expediency 
 cannot be dissociated from them. 
 
 The essentially rudimentary and preliminary character of this 
 book renders it inadvisable to load it with any but passing and 
 incidental references to statistical data — figures which import 
 their own peculiar danger of deception, arising from the inveterate 
 fallacy of enumerating together in one column things and facts 
 essentially and generically different and incommensurable. Such 
 figures as have been given, however, have been very carefully 
 verified. 
 
 The book has taken thirteen months to write; which will 
 account for certain very recent developments being spoken of 
 with anticipation in the earlier chapters, and referred to in the 
 later as having actually occurred, 
 
 NATHANIEL NATHAN. 
 
 St. Jambs' Coubt, 
 9iA February, 1909. 
 
CONTENTS 
 
 CHAP. P40B 
 I. PRELIMINARY . . . . . .1 
 
 II. WEALTH AND MEANS ... . . .18 
 
 III. WEALTH AND MEANS {continued) ; CAPITAL, PROPERTY VALUE, 
 
 PRICE ... . . .... 33 
 
 IV. WEALTH PRODUCTION. MINERAL ... . .50 
 V. WEALTH PRODUCTION (continued). ANIMAL AND VEGETABLE PEO- 
 
 DtrcTs . 69 
 
 VI. WEALTH PRODUCTION [continued). MANUFACTURING INDUSTRY . 89 
 
 VII. WEALTH DISTRIBUTION AND MEANS PRODUCTION. COMMERCE . 118 
 
 VIII. MEANS DISTRIBUTION. FINANCE . . ... 134 
 
 IX. LAND AND RENT . . 151 
 
 X. WORK AND WAGES . ... . . 168 
 
 XI. WOEKLBSSNBSS . . . 187 
 
 xn. THE STATE AND THE MAN . . ... 209 
 
 xm. TAXATION (direct) ... . . 230 
 
 XIV. TAXATION (diebct) (continued) 248 
 
 XV. TAXATION (iNDIRECl) . .... 268 
 
 XVI. FREE TRADE AND PROTECTION . , 287 
 
 XVII. ALTRUISM . . . . . 321 
 
 XVIII. SOCIALISM. PART I. — COLLECTIVISM . . . . 338 
 
 XIX. SOCIALISM. PART II. — LAND NATIONALIZATION . . 367 
 
 XX. SOCIALISM. PART III. — QUASI-SOCIALISM . . . 383 
 
 XXI. PSEUDO-SOCIALISM . . ... 402 
 
 INDEX . . 411 
 
 b 
 
ECONOMIC HERESIES 
 
 CHAPTER I 
 
 PEBLIMINARY 
 
 The first essential of inductive science is paroimony of axiom. 
 Nothing should be assumed except what is on the one hand either 
 of the nature of a truly identical proposition, i.e., involved in the 
 wording of its definitions ; or on the other, in itself capable of 
 demonstration ; a proposition the proof of which in the par- 
 ticular treatise would inconveniently cumber it with considera- 
 tions alien to its direct purpose ; and which must, when necessary, 
 be assumed, but only provisionally. 
 
 It is to this extent that it is proposed to assume one axiom 
 or postulate, and one only, which is that the continuance and 
 progress of the complex and intricate process of development 
 of human institutions to which has been given the general 
 name of " civilization " is in itself desirable in the interests of 
 mankind, in preference to any retrogression towards the simpler 
 mode of existence known as "barbarism." This position has 
 not been universally admitted. Indeed one writer * has distin- 
 guished himself by categorically denying it ; while a latent and 
 less plainly expressed antagonism to civilization lies behind 
 much of the doctrine of a series of thinkers of the particular 
 psychical diathesis known as "romantic," from Rousseau to 
 Ruskin. But for the purpose of economics, the assumption of 
 the beneficence of civilization is inevitable. For this is essen- 
 tially a scientific study of civilization in its material aspect, and 
 would be futile, were it not assumed that the investigation 
 conduces to a better knowledge of something useful to mankind. 
 It is on this assumption only that it is worth while to ascertain 
 
 • Edward Carpenter, " Civilization : Its Cause and Cure." 
 T.A. B 
 
2 THINGS AS THEY AEE 
 
 on what material foundations civilization rests, and by what 
 means its progress may be furthered and its permanence assured. 
 
 By no means exclusively (for ethical and religious conceptions 
 are still more fundamental), but on its material and economic 
 side, civilization depends on the development of the processes of 
 production and distribution of what is commonly called "Wealth," 
 the observed sequences of which are the subject-matter of the 
 science of economics. Other and more vital human developments 
 must concur to produce a beneficial civilization. And it is an 
 open question whether the industrial civilization of to-day, based 
 entirely on economic and commercial considerations, recognizing 
 nothing but what has been termed the " cash nexus " between 
 men striving against each other for individual enrichment, is the 
 best. Many forms of civilization of varying completeness have 
 succeeded each other on the surface of the planet. And indeed 
 several actually now co-exist, in some of which a far less degree 
 of beneficence and importance is ascribed to the virtues of com- 
 petitive evolution than in others.* 
 
 Enough has been quoted to indicate that there is something 
 to be said in support of the thesis that the Western civilization 
 of the twentieth century is not without its weak points. Anyhow 
 it seems that ours is not the only conceivable model on which 
 man can build institutions by means of which to escape from 
 savagery. The demonstration that some organization of society 
 is desirable cannot here be undertaken ; therefore it is that for 
 
 * As dealing with this point the writer ventures to quote a passage from a booklet 
 published in New York in 1904, "Letters from a Chinese Official." The author, 
 Mr. Lowes Dickinson, who is not by any means a Chinese person, almost verbally 
 reproduces, in a telling form, certain arguments which in Tientsin in 1907 were 
 enunciated to the present writer by a well-known Chinese gentleman, formerly an 
 official of the Imperial Government, who had had occasion to visit England a year 
 or so previously. Mr. Dickinson advances, in the assumed guise of an " ex-man- 
 darin," considerations tending to a conclusion much opposed to the "industrialism 
 of the West," which he represents his " Chinese official " as contemptuously 
 depreciating. 
 
 " Our civihzation is the oldest in the world. It does not follow that it is the best ; 
 but neither, 1 submit, does it follow that it is the worst. On the contrary, such 
 antiquity is at any rate a. proof that our institutions have guaranteed to us a 
 stability for which we search in vain among the nations of Europe. But not only 
 is OUT civilization stable, it also embodies, as we think, a moral order ; while in 
 yours we detect only an economic chaos. Whether your religion is better than ours, 
 I do not at present dispute ; but it is certain that it has less influence on your 
 society. You profess Ciiristianity, but your civilization has never been Christian ; 
 whereas ours is Confucian through and through. But to say that it is Confucian is 
 to say that it is moral, or at least (for I do not wish to beg the question) that moral 
 relations are those which it primarily contemplates ; whereas with you (so it seems 
 to us) economic considerations come first, and upon these you endeavour afterward 
 to graft as much morality as they will admit." 
 
c. I.] PRELIMINAEY 8 
 
 the purpose of these chapters it has to be provisionally assumed 
 that some sort of civilization is in itself preferable to barbarism. 
 But of no form can it be true that it is capable of being attained 
 without the material foundation of the institution of "property," * 
 which derives from the processes of the production and distribu- 
 tion of wealth. This material foundation it is which is the 
 subject of the study of the economist. 
 
 It does not appear necessary to start with any more precise 
 definition of that which is to be sought for in economics ; it will 
 be time enough to construct a definite teleology and seek know- 
 ledge of the objects to be sought and the means to attain them 
 when some analysis of facts has been worked out and there has 
 been deduced therefrom an intelligible body of sane doctrine. 
 One of the preliminary questions which suggest themselves to a 
 completely detached and impartial observer is whether in truth 
 this has hitherto been done. The suggestion of the writer is 
 that it has not. 
 
 The progress of the science up to now has been retarded by 
 the great preponderance of d priori doctrine over the results of 
 analysis. Men have started from the enunciation of "general 
 principles" evolved from their own conceptions of what is 
 " right " and " just " and " expedient " and " in the interests of 
 mankind." In other words, they assume what they undertake to 
 prove. The history of thought in the domains of ethics juris- 
 prudence metaphysics and economics during the seventeenth 
 and eighteenth and a great part of the nineteenth century, is 
 a record of the rise and fall of successive " systems of 
 philosophy," having little in common with each other but the 
 dominant characteristic of being all equally based on an insuffi- 
 cient ascertainment and analysis of fact. Copiously supplied 
 with " first principles," and destitute of the essential element 
 of scientific observation, these four " sciences," all saturated 
 with benevolence, have accomplished very little that has proved 
 effective towards the development of civilization or the ameliora- 
 tion of the lot of man. 
 
 Till Austin arose and swept them together into the rubbish 
 heap, " natural law," " the law of nature," "the law of nations," 
 " the rights of man," " le contrat social," and the rest of the 
 ambitious phantom general conceptions evolved by publicists 
 and professors from their inner consciousness dominated the 
 
 * See^o*^, p. 36. 
 
 B 2 
 
4 THINGS AS THEY AEE 
 
 entire field of jurisprudence. Austin made a new departure. 
 Analysis, the study of the actual institutions of actual nations, 
 of comparative law, of the records of ancient codes, of the 
 working and results of actual legislation, and of concrete and 
 actual phenomena of the present and the past, have taken 
 the place of mystic d priori speculation ; a true science of 
 jurisprudence has arisen. For the sanification of "political 
 economy" no Austin has appeared, if one may be permitted to 
 say so while appreciating to the full the splendid work of 
 Herbert Spencer. Economics have been and still are dominated 
 by " first principles " and abstract generalizations therefrom. 
 
 The catchword invented by Bentham, " the greatest happiness 
 of the greatest number," and the system of thought derived 
 from its application, and christened " utilitarianism," presented 
 themselves to English thinkers of the early nineteenth century 
 in the light almost of a revelation, founding as it were a religion 
 of obligation, and affording a sort of dogmatic basis for the 
 study of economics. True to the principle of parcimony of 
 assumption, the writer prefers to abstain from adopting this or 
 any other d priori formula, either as an axiom or as a practical 
 criterion of the beneficence of any particular institution law 
 effort or tendency. Not but that the test of the fitness of any of 
 these for the amelioration of the lot of mankind in general 
 would be a very good one, were it only possible to apply it ; but 
 simply because it is one incapable of practical application. It is 
 freely conceded that this motto of utilitarianism is distinctly 
 on the side of good. It is not an empty phrase like the 
 " Liberty, Equality, and Fraternity " which the late Sir J. P. 
 Stephen so mercilessly dissected. It has this at least to 
 recommend it, that it affirms the fundamental truth of the 
 solidarity of mankind, and the duty of man to act in accordance 
 with the dictates of benevolence and seek the good of his fellow- 
 creatures. It lays down the guiding principles of brotherhood 
 and human interdependence, which actually form the true 
 justification of civilization. But there is no need to cumber a 
 science with any unnecessary affirmation of general truth, least 
 of all with one the form of affirmance of which has no specific 
 meaning or practical applicability whatever. Neither Bentham 
 nor any of his disciples have suggested how to estimate 
 "happiness," how to compute the "greatest number," what 
 degree of "happiness of the greatest number" is to be deemed 
 
c. I.] PEELIMINAEY 5 
 
 so relatively desirable as to outbalance the more poignant 
 unhappiness of the smaller, whether the " greater number " 
 means the greater number of mankind actually existing in the 
 world or any particular part of it, and whether these are to be 
 computed at a given moment, or the notion is to be stretched to 
 include posterity, and, if so, to how remote a degree. The 
 " greatest happiness " is a purely subjective notion of the 
 thinker ; an idea of what in his judgment " ought " to make men 
 happy ; and there has never been any attempt at a relative 
 estimation of the various elements of happiness, material, 
 corporeal, mental, ethical, sesthetic, and religious, or of the 
 degree in which each of these enters or ought to be deemed to 
 enter into the general conception of felicity. As a foundation 
 for anything approaching a quantitative analysis, therefore, 
 Bentham's criterion is futile to the point of absurdity. But it is 
 on this as the main fundamental doctrine that the " political 
 economy " of the nineteenth century was built up. As a general 
 enunciation of the principle of benevolence, it is less telling and 
 specious than the " Liberty, Equality, and Fraternity " aforesaid ; 
 and assuredly it is less impressive and effectual than the fine direct 
 old-fashioned Hebrew injunction, " and thou shalt love thy neigh- 
 bour as thyself." But such as it is, this sententious enunciation 
 of a vague sentimental benevolence has been adopted as the 
 keynote of an abstract science applied to an imaginary world. 
 
 "Political Economy" has been decried as a "dismal" science 
 profiting no man. And of what Mr. Bagehot calls the "English 
 political economy"* of the nineteenth century this reproach is not 
 without its foundation. This is due to the unfortunate fact that 
 Mill, the great writer and brilliant thinker who popularized and 
 for English readers practically created the science of economics, 
 unfortunately inherited this Benthamese religion, together with 
 a mental constitution incorrigibly " endogenous " in its nature. 
 Mill did not originate the doctrine by any means. His task was 
 to make attractive and intelligible the dry abstractions which 
 Eicardo had evolved from his conception of the fundamental 
 doctrines of Adam Smith. The direct successor of an illus- 
 trious line of d priori thinkers, commencing with Hobbes and 
 passing through Locke, Condillac, and Eousseau to Bentham 
 and his own father in the early days of the nineteenth century. 
 Mill in his " logic " theoretically followed Bacon (perhaps, aa 
 
 * Walter Bagehot, "Economic Stutjies," c, I., p. 20, 
 
6 THINGS AS THEY AEE 
 
 Mr. Bagehot has pointed out, a little too far), and in his " Logic " 
 recognized to the full the necessity of ascertainment, analysis, 
 and induction as the foundation of knowledge. But he failed 
 in practice to faithfully follow the inductive method which in 
 theory he had so incisively insisted on. And indeed, at that 
 time, actual observation, the groundwork for accurate induction, 
 was hardly accessible for the purposes of economics. For 
 nothing had ever been done towards the initial ascertainment of 
 social phenomena. Like his predecessor Ricardo, Mill sought 
 to construct a science, which of all branches of knowledge is the 
 most absolutely dependent on the accurate appreciation of con- 
 crete and complex fact, by analysing conceptions in place of 
 phenomena, and working out a series of abstract theorems from 
 his own brilliant powers of reasoning, as if economics were a 
 branch of mathematics of which he was occupied in writing the 
 " Euclid's Elements." This great effort of constructive thought 
 contains, it is true, references and illustrations drawn from what 
 Mill could gather from the newspapers of the day and from an 
 occasional pamphlet, with regard to such economic processes 
 and phenomena as in those days of rudimentary industry and 
 commerce were of common knowledge ; but these were used by 
 way of illustration only, and incidentally. His reasonings and 
 conclusions are abstract and general throughout. 
 
 Eicardo well knew one particular detail of the natural 
 history and evolution of Means (the main subject-matter of 
 economics), the operation of acquisitiveness, which to him as a 
 stockjobber naturally presented itself as the most potent of 
 human motives. His conception of the real world honestly was, 
 that it was peopled with inhabitants all of whom were inces- 
 santly occupied in making money by buying from and selling 
 to each other, and who thought of nothing else. And he naturally 
 deduced his conceptions of the laws affecting " Wealth " from 
 what he had learned on the Stock Exchange, and reasoning from 
 his own limited experience of the financial processes of a par- 
 ticular country at a particular time, and the workings of the 
 acquisitiveness of mankind with which he was so familiar, found 
 it easy to generalize, and contrived to persuade himself of the 
 actual truth of many abstract propositions, among others the 
 theory of the "Wages Fund," the most disastrous economic 
 falsehood that has ever obtained. This at first imposed upon 
 Mill, who, in the first edition of his work, gravely argued out the 
 
c. I.] PEELIMINAEY 7 
 
 economic thesis from Ricardo's notion that a definitely fixed and 
 inelastic sum of money or its equivalent in actual commodities 
 existed in each country, out of which in that country (conceived 
 of for the purpose of simplicity as protected by an insurmount- 
 able wall against all influences from other countries) all " wages " 
 had to be found. From this it seemed to follow that there must 
 therefore, always, and in all the world (for the world in his way 
 of putting it was a mere aggregate, not a combination, of the 
 different countries in it), be an unlimited competition among the 
 workers for sustenance out of that fund, or rather in each country 
 out of its own particular " wages fund," because of the increasing 
 number of would-be participants in each and the limitation of 
 each to its own fund. These participants again, the reverend 
 Mr. Malthus in his turn conceived of as tending to "increase in 
 geometrical progression," whereas the fund was only capable 
 of being increased " arithmetically," and was therefore in due 
 course bound everywhere to become always insufficient. But 
 the brilliant mind of Mr. Bagehot just avoided this trap.* 
 The result of the combination of these two notions was the idea 
 that the greater the population engaged in production, the less 
 must be the share of each unit in the product, and that the 
 population must necessarily increase everywhere progressively 
 and indefinitely (which is quite untrue) and must also every- 
 where be exclusively " engaged in production " ; (which is still 
 further from the truth). Therefore it seemed to the " political 
 economy " of the nineteenth century, which founded itself on 
 the triple authority of Malthus, Eicardo, and Mill, that the 
 greater the production in any branch of industry, the less would 
 be th^price paid as the wages of labour of each man engaged in 
 that branch, and the less the relative share of the total " wealth " 
 that each individual so engaged would be able to appropriate. 
 
 This idea is what to this day lies behind the blind efforts of 
 labour to increase wages by a "limitation of production" — as 
 suicidal a tendency as has ever been witnessed in operation. 
 Though eventually he saw through and hesitatingly abandoned 
 his insistence on these theories. Mill did not actually appreciate 
 the need that their falsity involved of reconstructing his own 
 system. He never fully realized how mistaken they all were, or 
 how disastrous they must be if accepted by mankind, and did not 
 see any necessity for authoritatively refuting them. Of all men, 
 
 * " Economic Studies," Malthus, p. X81. 
 
8 THINGS AS THEY ARE 
 
 that task was left to the CoUectivist, Henry George, who effec- 
 tually triturated the nonsense,* but whose sounder conceptions 
 in their turn were (as will be shown hereafter) falsified by 
 another mistake of premature generalization. But still the dregs 
 of the doctrine continue to tinge and falsify thought, and it is 
 identified in the general mind with what is commonly supposed 
 to be the teaching of " political economy " and the outcome 
 of " utilitarianism " ; " dismal," therefore, in the extreme. 
 And economics as a branch of knowledge has thus suffered 
 more than anything from the exceptional intellectual gifts of 
 its most illustrious exponent. For the notion of the "Wages 
 Fund " and its inevitable corollary, which is that wages tend 
 always to fall to the level of the minimum necessary for the bare 
 subsistence of the millions of wage-earners, has been assimilated 
 by the humbler classes and exploited to its fullest extent by 
 those whose calling it is to trade on the hatreds of humanity. 
 
 With regard to another and, in its way, yet more fundamental 
 thesis, the " theory of rent " is an almost equally unfortunate 
 overstatement of insufficient induction which seems to have been 
 handed on by Smith through Ricardo to Mill, and strenuously 
 insisted on by himt — the over insistence, that is, on a law 
 essentially true because it really is an identical proposition ; the 
 difficulty has arisen from the definition of rent itself. The " law 
 of rent," which has been hailed as an almost divine revelation, 
 but is just the simple truism that the owner of land gets the 
 produce thereof less what it costs to cultivate it, or, put more 
 pedantically, that the measure of rent is the difference in pro- 
 ductivity of a given piece of land over and above the "least 
 productive" land.t is by no means a fallacy like the ''Wages 
 Fund " theory; it is true as a tendency and in the long run, and 
 its emphatic enunciation was once upon a time necessary to 
 afford a correct insight into the nature of things as they were. 
 But the run is a very long one. If for " a country " you substitute 
 "the entire available surface of the planet," and if the sum total 
 of the relative advantages to be derived from the occupation of 
 the different parts of that surface (about as difficult a matter to 
 analyse as can well be imagined) be looked at as the true criterion 
 of comparative desirability, the theory is inexpugnably true. 
 
 * " Progi-ess and Poverty," Book II., pp. 91 — 150. 
 
 t " Principles of Political Economy," Chap. XXI., § 3 ; Chap. XII , 8 2 
 
 t See ^osi!, Chap. IX., p. 160. 
 
c. I.] PEELIMINAEY 9 
 
 But, like the inspired dogma of Bentham, it is a theoretical 
 criterion hopelessly inapplicable to the actual realities of things, 
 indicating a true tendency, but affording no sort of insight into 
 the degree in which that tendency has a practical effect in any 
 particular instance. The countless reasons other than fertility 
 for desiring the occupation of surface area in any locality are 
 honestly and purposely put on one side by Mill in a premature 
 endeavour to grasp at the enunciation of a general and universal 
 rule. When he comes to his conclusion, he loses sight of the 
 admittedly provisional and imperfect way in which the premisses 
 have been limited, and of the fact that he has been really 
 thinking of the agricultural productiveness of this or that county 
 of England, while endeavouring to lay down rules which, if true, 
 have to be suf&cient to determine the relative desirability and 
 therefore " value " and " rent " of all land the world over. 
 
 No doubt, if all the land in all the world could be subjected 
 to an exhaustive analysis of its relative capacity in all respects 
 for all the purposes for which surface space can be utilized, the 
 " law " of rent would be absolutely and concretely true, and its 
 application would (if it were possible accurately to estimate the 
 essential conditions) furnish us with a criterion of rent, which is 
 and always must be productiveness less cost of production ; for, 
 in the abstract, the so-called law is but a specific restatement 
 applicable to land of the incontrovertible truth that value is but 
 another name for desirability.* But, seeing that in all these 
 respects human knowledge is even now in a most rudimentary 
 stage, and was, when Mill wrote, practically mere nescience, and 
 particularly, that the world is still many ages off the epoch when 
 the progressive settlement and appropriation of its surface will 
 have been so far completed, that the action of supply and demand 
 will be fully applicable to space, and commence to have its 
 ultimate normal efficiency ; the concrete knowledge to be ascer- 
 tained from the "law of diminishing returns " becomes a mere 
 local and temporary experience, interesting to the company of a 
 market ordinary in an English country town, but in respect of 
 the world in general, and therefore of the world phenomena of 
 the production and distribution of Wealth (which is what is pro- 
 duced from land by labour), a mere enunciation of one out of 
 many sets of antecedents and sequences, not enabling one to 
 predict how far that one of many tendencies will be effective in 
 
 * See post, p. 161. 
 
10 THINGS AS THEY ARE 
 
 controlling results, what will be its quantitative potency in 
 determining the fluctuating movements in land values and the 
 price of the hire of land which take place in the world. In spite 
 of Mr. Malthus and Mr. Mill, even in this one tiny country of 
 England there have been with a continuous increase of population 
 successive increases and decreases in rent since the days when 
 the theory was first propounded ex cathedra, and this fact 
 affords a notable illustration of the prematureness of the con- 
 clusions of abstract political economy. These conclusions have 
 not yet been brought into touch with actual concrete fact, and 
 their most authoritative exponents have allowed themselves to 
 be misled by doctrines — the above enumerated two in particular, 
 and many others as well — which are not practically applicable. 
 
 Economics without the analysis of actual phenomena, meta- 
 physics without psychology, ethics without religion; — in these 
 three abstract futilities, it is vain to imagine that the average 
 human mind, eager for real knowledge and indifferent to abstract 
 demonstration, can feel a living interest. The ascertainment of 
 fact makes no requirement on the intelligence of the student of 
 pure mathematics; but in any other branch of knowledge the 
 theory evolved from within is an inept ingenuity, and affords no 
 light by which to illumine the way of the seeker. The " dismal- 
 ness " of economics which is a consequence of this sterility is 
 due in great degree also to the unfortunate coincidence that 
 many of these abstract theories, especially those mentioned 
 above, have a dreary outlook. They appear to warrant an 
 absolute pessimism, the pessimism of Malthus, of Marx, and the 
 " Nihilists " — the despairing belief in the progressive degrada- 
 tion of the great mass of mankind, to escape which, if the view 
 were well-founded, resort should be had to desperate remedies, 
 revolution and carnage if necessary. 
 
 Human misery is real and sad and dismal enough in all 
 conscience. So far as we are at present able to see, all the 
 wisdom of the legislator, all the co-operation of the philan- 
 thropist, struggle with but a glimmer of success in the effort to 
 diminish it. There is reason to hope that it is slowly yielding 
 to these, and that though much remains to be achieved, the 
 foundations of a better state of things are being gradually built 
 up. But to contemplate the steady and inevitable increase of 
 misery under the pressure of a constantly growing population, 
 ever competing for employment at an ever diminishing return 
 
c. I.] PEELIMINARY 11 
 
 for its labour ; tlie depopulation of the country and the terrible 
 congestion of the city ; the apparent tendency to the concentra- 
 tion of the material necessities and means of existence in fewer 
 and fewer hands and in larger and larger wealth-masses ; with 
 its apparent correlative, the increasing luxury of the few, and the 
 increasing misery of the many ; in short, an apparent future of 
 the general pauperization of the bulk of mankind, and the 
 corruption and enervation of the few who emerge ; — this is an 
 intolerable vision. But it is the seemingly logical corollary of 
 the two most striking doctrines of the " orthodox " political 
 economy ; and it is this above all which has made the science 
 which is popularly supposed to warrant these terrible conclusions 
 a " dismal " one. 
 
 And who shall dare to condemn, if these doctrines be true, 
 those who passionately advocate extreme empirical or visionary 
 remedies, even if they appear " confiscatory " or revolutionary ? 
 They point to the accepted conclusions of " political economy " 
 as their justification. This despairing view originated long ago 
 with those who first brought what has been called "romanticism" 
 and " sentimentalism " to the task of social analysis, long before 
 Eicardo formulated for them his apparent justification of their 
 position. Impatience of the pedantries the corruptions and the 
 intolerances of the eighteenth century in Prance moved the 
 sentimental enthusiast Eousseau to his epoch-making revolt 
 against what he imagined to be the world-civilization, but which 
 was a mere temporary phenomenon of ignorance, evil govern- 
 ment, aristocratic insolence, and the imperfect arrangements of 
 society in a particular stage of growth in Western Europe. His 
 passionate cry for what he supposed to be a reversion to the 
 primitive simplicity of " natural man " was raised without any 
 manner of knowledge of what " natural man," i.e., the real 
 savage "homo," was, did, or suffered; and the sentimentalists 
 yearned for a " return " to an imaginary state of things the 
 like of which never existed and never will exist on the surface of 
 the planet. All this was not pessimism, but a sort of impatient 
 inverted optimism. Eousseau had crowds of followers in his 
 crusade against the artificiality of the eighteenth century in 
 Western Europe, which he imagined to be the essential condition 
 of modern civilization. The " natural man," possessed of all the 
 virtues and " sensibilities," and shown decorously attired in a 
 becoming garment of well-curried and artistically tailored furs, 
 
12 THINGS AS THEY AEE 
 
 the graceful centre of a well-trimmed landscape d la Watteau, 
 became the fashion of the day, and cut a brave figure on the 
 stage of literature, philosophy, and, oddly enough, of economics. 
 And inasmuch as, for close on a century, neither actual observa- 
 tion of existing varieties of humanity in the early stages of 
 civilization,' nor research among the buried remains of primitive 
 man, nor any real patient investigation of any sort was so much 
 as dreamed of, as a method of ascertaining fact ; it was deemed 
 the legitimate prerogative of each philosopher jurist moralist 
 and economist, to invent for himself his own " natural man," 
 and indue him with such mental, moral, and economic virtues 
 habits and qualities, as were necessary to support the particular 
 thesis which the author favoured in his own particular branch 
 of knowledge. In all such reasonings the unexpressed major 
 premiss of each syllogism was, always, " whatever I think that 
 the ' natural ' man did, was wise and virtuous and right and 
 divinely appointed, and it is the duty of all mankind to follow 
 his example." 
 
 What the sentimentalist really finds fault with in civilization is 
 that it has not yet arrived at its perfection. This is all impatient 
 and discontented optimism, the impassioned revolt of the soul of 
 man against the agony of the martyrdom of his fellow-creatures. 
 It is a noble attitude of mind, when compared, for example, 
 either with the fatuous optimism of Candide, to whom " all 
 is for best in the best possible of worlds," or with the very 
 analogous mode of thought that has its outcome in the cynically 
 impotent catchword " laissez-faire," the doctrine which delibe- 
 rately refuses to direct the organized forces of society to effect the 
 amelioration of the lot of the citizen, for fear of impeding the 
 action of some supposed beneficent process of evolution which 
 the fanatical " evolutionist " imagines must, if uninterfered with, 
 make for a better condition of existence. But not any more than 
 either of these is it in any sort of relation to actual truth. 
 
 The intellect of Mill grasped, as he thought, the apparently 
 obvious and simple potentialities of the nascent manufacturing 
 industry of his day, which appeared to be mainly concentrated 
 in certain parts of Britain alone. And tacitly, in those days, 
 that part of the United Kingdom was complacently looked upon 
 as the heaven-ordained eternal focus of manufacturing produc- 
 tion for the civilized world. Now Mill did wonders, with the 
 scanty materials at his command, in investigating the process of 
 
c. I.] PEELIMINAEY 13 
 
 the production of what he was fond of calling " commodities " ; 
 and to Eicardo and him we owe the formulation of the elementary 
 theoretical economics of industry, founded on the thoughts of 
 Adam Smith. Later economists for the most part contented 
 themselves with reproducing these arguments, slightly modernized 
 in form, but not materially modified in substance, and very com- 
 placently pointing out some of the more obvious of their mistakes. 
 But now it is obvious even to the mere reader of newspapers, that 
 the rudimentary conceptions of 1845 are not capable of solving 
 the problems which confronted Bagehot in 1875, and are 
 hopelessly incapable of grappling with the still more involved 
 phenomena of 1907. 
 
 The emerging consideration from even the most cursory survey 
 of the actual sources and actual production of commodities is 
 this : that while communities still continue " national " by 
 locality and language and sentiment and laws, and think of them- 
 selves, and rightly, as distinct and to some extent conflicting or 
 at best competing entities, each cherishing its own mode of life, 
 its own language and apparatus of thought, its own form of 
 government, its own fit and proper selection of industries, its 
 own laws and customs and social institutions ; the processes of 
 production and distribution have entirely outstepped the limits 
 of empires. " Wealth " — that part of the wealth of man which 
 consists of actual "commodities " — still more that accumulation 
 of power for which (see next chapter) the writer proposes to adopt 
 the word " Means " ; — both are in truth independent of locality 
 and nationality. " Wealth " is an object of world-wide produc- 
 tion and dissemination, without regard to the geographical limits 
 of the country where one ingredient or another, or one finished 
 commodity or another, has its origin, or to the nation or locality 
 either of the people who originally produced or who will even- 
 tually absorb its results or appropriate the profits of its production. 
 Instead of a little Lancashire turning out calico by the million 
 on million of yards for the consumption of Europe, Asia, Africa, 
 and America — that little Lancashire which the good Mr. Cobden 
 pictured to himself as destined ever to progress in relative import- 
 ance owing to the heaven-sent and perpetual inability of the rest 
 of the globe ever to produce the like — we now find every spot on 
 the face of the world setting up its spinning-mills and its 
 weaving-sheds, wherever it thinks the requirements of a market 
 indicate the probability of a modest and reasonable profit. In 
 
14 THINGS AS THEY AEE 
 
 like manner, wool was once looked on as the God-given monopoly 
 of the soil of England. The man who would have dreamed in 
 those days of questioning the divinely appointed justice and 
 propriety of this arrangement, or the permanence or efficiency 
 of the elaborate statutory precautions of the seventeenth century 
 against interference with this British birthright of monopoly, 
 would have fared ill at the hands of his patriotic fellow-country- 
 men ; and in the happy days when Queen Victoria was a bride 
 the same exclusively national and patriotic method of regarding 
 national economic products obtained in every department of a 
 puny and rudimentary organization of industry. Libraries 
 could be written, if any one cared to undertake the labour, to 
 illustrate the completeness of the revolution which modern con- 
 ditions of production and transport have revealed to the minds 
 of those who think for themselves on economic phenomena. 
 
 Among these many new truths, one stands out clearly^and that 
 is, that, less by reason of any default or want of acuteness in 
 the pioneers of the nascent science, than as a necessary conse- 
 quence of the evolution and adoption of productive and commer- 
 cial processes undreamt of in their day, and of a complete 
 internationalization of industry and wealth-production, to them 
 inconceivable ; their conceptions of the actualities of economics 
 are no longer in correspondence with fact, nor their deductions 
 adequate to explain actual phenomena ; and therefore that this 
 chapter of the science of economics has to be rewritten from the 
 beginning. "What is needed for this twentieth century is to 
 restate the conditions, and re-analyse them, in view of the actual 
 ascertained concrete phenomena of civilization which are now, 
 for the first time, emerging within our ken, and now for the 
 first time analysis will have to be made quantitative, compre- 
 hending something of an ascertainment of the comparative 
 values and weights of the many opposed tendencies actually 
 at work in each case. When the actual facts in relation to 
 the real economic process come to be thought out, real con- 
 clusions as to the antecedents and sequences observable and 
 the relations between them, what are commonly called their 
 " laws," may hereafter be deduced ; and then it may be that some 
 escape will appear both from the impatience of Utopian optimism 
 and from the pessimistic conclusions which follow the applica- 
 tion of mathematical deduction to the imaginary premisses of 
 an abstract political economy. The following chapters form an 
 
c. I.] PRELIMINARY 15 
 
 attempt to restate some of the actual facts known and observed, 
 real phenomena of the production, distribution, and accumu- 
 lation of what is commonly and unscientifically termed "Wealth," 
 so as to give ground for arriving at a saner and more practical 
 conclusion, and for cherishing hopes for the gradual solution of 
 the undoubtedly formidable problems of civilization, which shall 
 not require as a condition of regeneration the destruction and 
 abandonment of all that has been achieved. 
 
 And these considerations and problems are inevitably 
 approached by the present writer from the national British 
 point of view; not that the conclusions of a general science 
 can differ in different lands — to be true at all they must be 
 true universally — and though in each locality their application 
 is subject to local conditions, they cannot differ in principle, or 
 even essentially, in practical application. In 1876 the late 
 Mr. Bagehot * wrote of " English political economy " as a 
 science in itself, deriving its validity from the completer 
 analysis here than elsewhere of phenomena which were more 
 observable in this country, and therefore here better appreciated. 
 It seemed to him then, that the conclusions and the practice of 
 other nations could be comparatively disregarded, as being the 
 outcome of a retarded and immature economic intelligence, 
 informed by an incomplete experience, and obscured by the 
 survival of obsolete and unscientific notions. That great 
 thinker would not thus have expressed himself in 1907. The 
 short interval of time since he wrote has witnessed the linking 
 up of all the economic and financial centres of the world by 
 instantaneous intercommunication. The industrial, commercial, 
 and financial organizations of 1850 could have been with truth 
 spoken of as essentially " English." In 1876 Mr. Bagehot, 
 inaccurately, but with a certain degree of justification, could 
 describe them as having attained their complete development 
 only in this country, and being absent or comparatively rudi- 
 mentary elsewhere, t But all these are now clearly recognized, 
 even by the ordinary " man in the street," as no longer national 
 but international. For they are now common to the whole 
 civilized world, and equally operative throughout. The twentieth 
 
 • " Economic Studies," pp. 1—27. 
 
 f So much so that banking and discount, the two mainsprings of commerce and 
 finance, he regarded as really British institutions to be considered from a purely 
 British point of view according; to doctrines beyond the grasp of other people. 
 Ibid., " The Postulates of Political Economy," pp. 80 and 81 also p. 91. 
 
16 THINGS AS THEY AEE 
 
 century sees the local organizations of industry and trade all 
 simultaneously at work on practically the same principles and 
 ■with the same effects in Paris, Berlin, and St. Petersburg, in 
 Eangoon, Shanghai, and Yokohama, in New York, San Francisco, 
 and Buenos Ayres, and Johannesburg, precisely as in London ; 
 not independently of each other, or even operating on different 
 principles or with varying results, but forming actually integral 
 interdependent parts of one great automatic international 
 organism. Each constituent part and the country in which it 
 works vibrates instantaneously in response to each occurrence, 
 movement, and oscillation in every other. 
 
 In Mr. Bagehot's sense it is no longer possible to think of 
 an " English political economy," any more than of a " French 
 mathematics," or a " German chemistry," or an " American 
 F,stronomy." Not only the institutions and experiences, but 
 the accepted theories, customs, and beliefs of every commercial 
 centre in the world have to be taken into account before it is 
 possible to formulate any sort of accurate presentation of the 
 economic phenomena observable in any one country, or any 
 deduction whatever as to the effects on the welfare of any 
 community of any given series of economic antecedents either 
 within its own borders or elsewhere in the world. In short, 
 economic problems have inevitably to be everywhere considered 
 from an international point of view. 
 
 But, nevertheless, it is legitimate to think of their solution 
 mainly in respect of their effect on the welfare of one's own 
 country. We are for the most part (the writer assuredly is) so 
 constituted as instinctively to seek the advantage and welfare of 
 our own country and those of our own nation, caring little in 
 comparison for the fate of other peoples, except in so far as our 
 own prosperity is bound up with theirs. A cosmopolitan humani- 
 tarianism has and ought to have its sentimental attractiveness : 
 certainly it is more reasonable and beneficent than an attitude of 
 unreasoning, narrow-minded hostility to alien people. But the 
 " brotherhood of humanity " is a doctrine which, though some 
 day or another it may be ready for a more complete assimilation, 
 seems as yet to the ordinary Englishman one the propaganda of 
 which it were better to postpone till the brotherhood of Britons is 
 more satisfactorily recognized in the United Kingdom. So long 
 as ranks and classes and sects continue to cherish antagonisms 
 and hatreds and intolerances towards each other within our 
 
c. I.] PEELIMINAEY 17 
 
 own borders, as they undoubtedly do, it seems premature to 
 indulge in aspirations for the solidarity of mankind. And so 
 long as other nations continue to strain their energies to the 
 utmost in the attempt to deprive our own people of the oppor- 
 tujiities of economic success, and naturally keep on endeavouring 
 appropriating in competition with us the wealth of the world, 
 evincing no notable fastidiousness with regard to the weapons of 
 the conflict, the main concern of our " enlightened self-interest " 
 will continue to be the concentration of our endeavours on 
 the effort to hold our own against them, not prompted by 
 hostility, but by the instinct of self-preservation. 
 
 In this sense there is room and to spare for a true " English 
 political economy " ; a practical constructive science, to be 
 directed to the ascertainment and adoption of such measures 
 as may best subserve our own national interests. To that end 
 it were well to bring to bear some sound analysis of " things 
 as they are" the world over; for it is from this that must be 
 built up the fabric of knowledge of what concerns the national 
 salvation, deriving its science from no modernized restatement 
 of what has been laid down by ancient venerated professors, but 
 seeking guidance from the real general experience of mankind, 
 and from what may be gathered from the observable trend and 
 bearing of the whole world's economic institutions, of which our 
 own are but a fragmentary and subordinate organization. 
 
 T.A. 
 
CHAPTEE II 
 
 WEALTH AND MEANS 
 
 Just as parcimony of axiom is a fundamental necessity for 
 any inductive science, so is there an equally indispensable 
 requisite of accuracy and utility, which is adequacy of defini- 
 tion — i.e., such care in the guarding of the words to be made use 
 of as shall sufficiently ensure terms against becoming vehicles 
 of fallacy. It is imperative to define exactly the actual meaning 
 of every word that is to be used as a term of art, and to 
 endeavour to eliminate the variety of subtle connotations 
 associated with each, the influence of which tends to falsify 
 thought by the importation of tacit meanings, generally bring- 
 ing prejudice into action in place of logic. As Emerson puts 
 it, " The first thing necessary is to depolarize our expres- 
 sions." The fallacy of the "undistributed middle " or ambiguous 
 general term obtrudes itself more persistently in Economics 
 than in any other department of human thought except Ethics 
 and Theology. The words " happiness," " wealth," " value," 
 "capital," "labour," "productive," "law," " utility," for instance, 
 and above all the seemingly innocent term " average," are 
 inexhaustible mines of economic fallacy. They denote different 
 ideas to different minds, and from moment to moment even to 
 the same mind, and often in the same sentence. And as for 
 their tacit connotations, these are still more subtle and elusive. 
 It would be of immense advantage to accuracy if all this coinage 
 could be called in and obliterated, and fresh tokens issued from 
 the mint of language to replace it with a virgin currency of less 
 ambiguous connotation. 
 
 In the course of these chapters the writer has been compelled 
 to fashion one new word,* for which he apologizes by anticipation. 
 But every man who seeks to express ideas on Economics differs 
 in this respect from metaphysicians, whose privilege, from Plato's 
 days to those of Hegel and Schopenhauer, it has ever been that 
 each should fashion for himself his own special technology. 
 
 * Page 46, post. 
 
c. II.] WEALTH AND MEANS 19 
 
 Economists who desire that their conclusions should issue in 
 the direction of an effective influence on general public opinion 
 are constrained to make use of words which denote familiar 
 meanings. For they must, to effect anything of value, appeal to 
 the ordinary man of the world ; and the influence which any 
 man can hope to exert by writing, even in the plainest and most 
 popular language, concerning this practical and vitally important 
 sort of knowledge, to the acquisition of which men are so gene- 
 rally averse to apply themselves, would dwindle to nothing were he 
 to attempt to coin for himself a new-fangled language of doubtful 
 Grseco-Latin parentage.* He has no choice but to adopt the 
 current phraseology of his time and age, however soiled with the 
 stains of ancient and greasy fallacy. 
 
 Bagehot says, " The necessity of a science like Political 
 Economy is that it must borrow its words from common life, 
 and therefore from a source where they are not used accu- 
 rately." + But when he goes on to say "that they cannot 
 be used accurately," the present writer ventures to express 
 his dissent. They can, and they must. It is not true that 
 they are " so few that if you tie them down to one meaning they 
 are not enough for your purpose." If anything, our English 
 speech is over-copious in its supply of delicately shaded semi- 
 synonyms. " The varying of our definitions as we want, just as 
 we say let X Y Z mean now this now that in different problems," I 
 though it may have been, as he says, " the practice of the clearest 
 and most effective writers," is an evil practice having a result 
 fatal to accuracy. No writer was ever clearer or more effective 
 than Mill, but a whole chapter could be filled with instances in 
 which he allowed the words in which he reasoned to vary, and 
 thus, by insensibly changing his definitions as he moved from 
 problem to problem, to impair the soundness of the general con- 
 clusions which he derived when he came to piece the outcome of 
 his problems together into a connected whole. It may well be 
 that by adopting a contrary method a writer's style must 
 "grow cumbrous"; that is. less mischievous than inaccuracy 
 of result ; and surely it ought to be possible to avoid the " falling 
 back into other senses of words used in a particular sense " 
 
 * Bagehot, " Economic Studies : The Postulates of Political Economy," p. 64 
 et sec[. 
 
 t nid., p. 64. 
 X Ibid., p. 66. 
 
 2 
 
20 THINGS AS THEY AEE 
 
 without inventing new terms like the metaphysicians, and 
 without wearying the reader with "repetitions of a specially 
 prepared complex combination of words to denote each idea." 
 At any rate this is the method which the present writer is 
 trying to pursue throughout these chapters. 
 
 A practical definition of Economics is that it is the science 
 collating the phenomena attendant on the production and dis- 
 tribution of "Wealth," and deducing therefrom their natural 
 sequences, what are termed their " laws." The use of the 
 expression "law" to denote the supposed nexus between each 
 set of antecedents and its observed sequences is admittedly 
 unscientific and conduces to fallacy. But it has been sanctioned 
 by immemorial custom, and forms part of the thinking apparatus 
 of mankind. 
 
 It is desirable therefore to define accurately, in the first place, 
 the meaning to be attached to the word " Wealth." In common 
 acceptation it is used as synonymous with " Eiches." But it will 
 be seen that " Eiches " denotes the idea of a combination of two 
 sets of things which cannot be classed together. In these 
 chapters the word " Wealth " (if it were not for the uncouth- 
 ness of Mill's favourite expression, " Commodities," that would 
 have been substituted and the word "Wealth" have been 
 discarded altogether, which might have been the better course) 
 means the aggregate of desirable material things susceptible of 
 appropriation, excluding money (the reasons for which exclusion 
 will be explained), and also excluding land, which, as in due 
 course will be shown, is sui generis, a desirable thing susceptible 
 of appropriation, but which, although in many respects it obeys 
 the same laws as commodities, is yet essentially different in 
 origin and nature, and which must be considered by itself (see 
 Chap. IX. hereafter). 
 
 One school of writers assert Wealth to be the sum total of 
 " things created by labour " — " labour " being another word satu- 
 rated with controversial connotation, only to be admitted to 
 scientific use after being itself thoroughly disinfected. For the 
 present, it is preferred to reject that definition ; to what extent it 
 is true, will be considered hereafter (Chap. X.). As will in due 
 course be seen, though the intervention of human energy in some 
 form and to some extent is indispensable to the production of all 
 " Wealth," which is what men set themselves to derive from land ; 
 the degree in which that energy is embodied in wealth and 
 
c. II.] WEALTH AND MEANS 21 
 
 originates value, which is wealth's essence, varies indefinitely 
 in respect of all commodities ; enters into some to so small an 
 extent as to be practically negligible, while others derive almost 
 all their value from the direct labour that has gone to produce 
 them ; and others again owe the greater part of their value to 
 the results of bygone labour to which recourse has been had in 
 the making of them. 
 
 By far the larger volume and value, however, of what is in the 
 common and popular language called "Wealth" belongs to a 
 different order and nature to "commodities" altogether; it 
 consists, that is to say, in the first place of money, which is 
 essentially the measure of the right to call for and command 
 commodities ; and next of certain other rights in claims to and 
 anticipations of future benefit from the commodities which have 
 been already produced, and from others expected to be hereafter 
 produced ; of confidence, that is to say, in its own convertibility 
 into commodities existing and hereafter to exist. To denote the 
 total of the riches of the individual, which are built up to some 
 small extent of the actual " commodities " in his possession at a 
 given moment, but in a far greater degree of his expectation of 
 being able to participate in those existing and to exist in the 
 world, it is proposed in these chapters to make use of the common 
 word Means. 
 
 Now in the Means of each man is included in the first place 
 his money. To class this as " Wealth " is a mere confusion of 
 ideas, a blunder similar to that which the accountant of the Bank of 
 England would commit, if in his accounts he were to credit the 
 Bank equally with the value of the gold in the vaults and with 
 the amount represented by the bank-notes in the drawers of the 
 cashier printed to represent that gold and available for issue. It 
 is to confuse together the thing itself and that which denotes it, 
 represents it, and is the measure of its value. 
 
 The wealth of the world at a given moment is one thing. It 
 includes all that there is corporeally existing in the world at that 
 moment (other than its land) which is capable of being appro- 
 priated for use and of satisfying the needs of man. This alone 
 is Wealth, a thing constantly being created, consumed, and 
 reproduced, consisting entirely of commodities. Indeed there 
 is in itself, and can be, nothing else intrinsically desirable by 
 mankind and capable of appropriation but commodities and the 
 use of the land from which the are derived. Now all this 
 
22 THINGS AS THEY AEE 
 
 wealth is appropriated — the " property " of some individual or 
 collection of individuals. Each morsel has its owner, from the 
 moment when it is first extracted from the earth to that when it 
 is ultimately consumed, and each is incessantly passing from the 
 ownership of one man to that of another. While in the posses- 
 sion of each in turn it becomes his " property " and forms one 
 part of his Means. 
 
 Such are his " goods and chattels," his clothing and provisions, 
 his machinery, his physical tools and contrivances of production. 
 But in a modern civilized country there is much appropriated by 
 him over and above that of which his actual wealth consists. He 
 has not only all his existing commodities or true wealth, but also, 
 and especially, his power to obtain commodities, existent or future. 
 And the most elementary of all the fallacies of Economics, or 
 rather of ignorance of Economics, is that confusion which has 
 arisen from the inveterate trick of applying indiscriminately the 
 one word " Wealth " to denote first the wealth of the world, 
 which consists entirely of commodities, and then that greater 
 part of what belongs to each individual, his Means, which is the 
 evidence of his power to obtain them. Having consummated 
 this confusion, the sciolist next proceeds to reason as if this one 
 word always denoted the same idea. Even accurate thinkers 
 have repeatedly fallen into what, when carefully analysed, will 
 be seen to be in reality the same error. They have a trick of 
 speaking in this way of the "Wealth of the world" as being a 
 total of the sum of the " shares of wealth " possessed by indi- 
 vidual men. This is in itself inaccurate ; but the main error is 
 that of confounding Wealth with Means. 
 
 That part of a man's Means which consists of his commodities, 
 though important, it is not proposed to deal with otherwise than 
 in its aspect as a part of the "Wealth of the world." It is not 
 for a moment to be lost sight of, but in these chapters the 
 expression "Means" will be used specifically to denote the 
 man's power to obtain commodities (that is to say, his money), 
 his opportunity of producing them, which includes land, and 
 therefore also his power to obtain money (that is to say, his 
 securities for money, which are to money what money is to 
 commodities), and the whole of the accumulation of varying 
 evidences of his title to participate in wealth. Par from the 
 accumulation of these Means by an individual adding anything 
 to the wealth of the world, the money and investments of each 
 
c. II.] WEALTH AND MEANS 23 
 
 man are pro tanto a subtraction from it, evidencing as they do 
 his right to appropriate it as against other men, to abstract it 
 from the total stock available for the benefit of mankind. 
 
 "Money" is the most obvious and familiar form outside of 
 true Wealth in which Means are embodied. It needs but little 
 comment. The coins of gold (silver money may be disregarded 
 for the moment), still more the pieces of paper on which are 
 printed promises to give and pay money, are tokens contrived 
 to pass from hand to hand for the primary purpose of enabling 
 men to convert means into commodities and vice versd at will. 
 
 Except in so far as gold happens to be in itself a metallic 
 substance susceptible of a certain amount of actual economic use, 
 and therefore of some sort of value apart from its utility for 
 purposes of coinage, the additional extraction from the earth of 
 this substance adds no more to the sum total of commodities or 
 economic Wealth than does the additional printing of bank- 
 notes ; and though the person who is fortunate enough to 
 acquire a store of either of these kinds of tokens, whether by 
 digging or by cheating, by processes of trade or speculation, 
 or by successful forgery, thereby adds to the Means at his 
 own command, and so becomes what people call "wealthier"; 
 neither an increased production of gold, nor any additional 
 activity of the printing-presses which are used for the emission 
 of promissory notes and documents of title to money, adds to 
 the sum total of commodities in the world, nor increases the 
 total volume of Wealth in the slightest degree. Nor does it 
 affect the relative desirability inter se of commodities, what is 
 called their " value," an attribute which it is proposed to 
 examine in the next chapter. Similarly, no redistribution of the 
 money or securities for money existent in the world has an 
 immediate direct effect on the total of wealth, though indirectly 
 it affects its production most powerfully. Shuffle and rethrow 
 the counters as you will, they remain counters still, and apart 
 from the real things which they represent. That is to say, the 
 sum total of commodities existing will not be directly affected. 
 Their mode of distribution will be altered, but any aggregate 
 deficiency of one or redundance of another will be as before. 
 
 Apart from certain classes of things (some of them of great 
 importance) the supply of which is restricted either permanently or 
 temporarily so that they are normally " dear," because incapable 
 of being produced at will, it will in due course be seen that with 
 
24 THINGS AS THEY AEE 
 
 respect to the great bulk of commodities there can, except locally 
 and momentarily (whUe the normal processes of industry continue), 
 be as a matter of fact no permanent deficiency in the aggregate 
 supply of the majority of ordinary commodities, and that there 
 will ultimately be no redundancy, except also momentarily and 
 locally. For these are the things of which the world's produc- 
 tion adapts itself by commerce automatically to the effectual, 
 which is the commercial, demand of the world.* As mere 
 need, which is uncommercial, i.e., which has no effectual power, 
 no supply can be commercially produced to respond to it. Its 
 satisfaction is a function of benevolence, the most effective 
 application of which, however, is not the mere distribution of 
 alms, however judicious and beneficent, but rather the devising 
 of the organization and institutions best calculated to enable 
 impotent need to transform itself into effectual, i.e. commercial, 
 demand by the extension of earning power to the class from 
 which mendicancy or crime would otherwise be recruited. | 
 
 Means are essentially (as will be seen in Chaps. III. and VIII.) 
 mental and subjective embodiments of the anticipation of power, 
 incarnations of confidence — in the first place, and essentially, of 
 confidence in the permanence and stability of civilization, in the 
 sanity and justice of human law, in the efficiency of the action 
 of the State in enforcing it in general, and especially in the 
 prepotence of that fundamental doctrine of ethics and juris- 
 prudence which enforce the fulfilment of obligation and the 
 observance of contract. 
 
 The next point |to note about Wealth and Means is their 
 " internationality." The common identification of Wealth with 
 Means is responsible for one somewhat fallacious conception, 
 which is that of " nationality " as an attribute of Wealth. The 
 expression " the Wealth of a nation " or " the Wealth of nations," 
 however sanctified by the fact that it was chosen by the greatest 
 of all economists as the title to be given to his greatest work, is 
 in itself a name of fallacy. The expression " the Wealth of a 
 nation " is a rhetorical figure of speech, dangerous to employ for 
 a scientific purpose, and the use of which in unskilled hands 
 leads to great possibility of error. Were it not for the reverence 
 we all feel for the great name of Adam Smith, one would be 
 tempted to say it should be discarded from economics and 
 
 * Post, p. 175. 
 t Post, p. 334. 
 
c. IL] WEALTH AND MEANS 25 
 
 relegated to its proper place in the vocabulary of popular 
 politics. When people talk of the " Wealth of a nation " they 
 are incessantly " ringing the changes " on three entirely distiuct 
 and incommensurable conceptions — 
 
 (a) The quantity of commodities existent in a given country. 
 
 (b) The sum total of the means of those who are conceived of 
 as being citizens of the nation of that country. 
 
 (c) The entirety of the property of that particular corporate 
 impersonation of the power and authority of the nation which 
 is called the "State" or the "Government," but which is by 
 no means identical with the nation from an economic point of 
 view. 
 
 In addition to these inherent ambiguities, the expression the 
 " Wealth of a nation " brings one face to face with the identical 
 series of difficulties which in the last chapter were indicated as 
 attaching to the use of Bentham's formula " the greatest number." 
 What in the region of economics is meant by a " nation "? For 
 political and ethnological purposes the word has its plain and 
 obvious signification. It denotes the abstract entity of the 
 totality of a number of people inhabiting the same political sub- 
 division of the earth's surface, living under the same govern- 
 ment or combination of governments, under the same general 
 system of law, and more or less having the same language and 
 animated with the sentiments of a common origin and a common 
 destiny ; and the idea also essentially connotes futurity and con- 
 tinuity by the progressive inclusion of future generations in the 
 total conception. As a matter of fact, this entire catalogue of 
 attributes can be applied in its fulness to comparatively few of 
 the geographical divisions of the planet and their inhabitants ; 
 in the greatest degree to homogeneous States like France, 
 Portugal, and the Scandinavian kingdoms; in some respects 
 to China, certainly to the Japanese Empire, and more or less, 
 to some extent, to all nations, even including such an intricate 
 heterogeneous conception as that of the " British Empire." 
 
 But if we take even one of the most homogeneous and self- 
 contained of all these, for instance France, it will be perceived 
 that any accurate conception of such a " nation " as an entity 
 capable of possessing either "Wealth" or "Means" is one that it 
 is impossible to form. For what is the " nation " to mean from 
 the point of view of the economist ? Is it the sum total of the 
 individuals at any time resident in a given pountry ? Does it 
 
26 THINGS AS THEY AEE 
 
 include strangers more or less permanently domiciled there, or the 
 subject races of a vast African dominion, or such of its citizens 
 as may be pursuing their avocations in colonies or in foreign 
 parts, or fellow-countrymen like the colonists in Lower Canada 
 or Mauritius, who, happening to be politically subject to another 
 power, yet identify themselves with their ancestry and look to 
 France as the home of their sympathies? Above all, is our 
 economic conception of the "nation" to limit itself to the existing 
 population, or must it include, and, if so, to what extent and in 
 what ascertainable manner and to what degree of remoteness, 
 citizens hereafter to be born into it ? From a political point of 
 view it is necessary to conceive of the complex and fluctuating 
 entity denoted by the word " nation " by excluding these con- 
 siderations. But when the word is attempted to be used in the 
 analysis of economic process, its vagueness renders it useless. 
 For one cannot in this regard analyse the processes of either the 
 production and distribution of Wealth or the accumulation of 
 Means (from the point of view of whichever of these two legiti- 
 mate significations the " wealthiness " of the "nation" is to be 
 regarded) when either the nationality of the producers or pos- 
 sessors, or the momentary localization of the constituent parts, has 
 to be taken into consideration. The first and most salient attri- 
 bute of "Wealth" is its infinite exchangeability and absolutely 
 international character. 
 
 The contents of the wine cellars of Eeims or Bordeaux, the silks 
 and the velvets stored in the warehouses of Lyons, the cotton 
 fabrics in Eoubaix and Lille, the iron and steel wares of Creusot, 
 the ornaments and wearing apparel in Paris, are things resting 
 for the moment in particular places in the hands of producers or 
 dealers in France, on their way to permeate the markets of the 
 world. To-day they are part of the Wealth of France ; to-morrow 
 they wUl form a portion of the objects of desirability susceptible 
 of possession to be found in London, Vladivostok, San Francisco, 
 Johannesburg, or Eio de Janeiro, there to form a part of the 
 "Wealth" of another nation, and of the Means belonging to 
 another set of individuals; while the equivalent for them, 
 that which has become from day to day due to Frenchmen in 
 exchange for such things, originally theirs, as are being utilized 
 elsewhere, will in the first place be seen to consist of other com- 
 modities which commerce has substituted — iron from Sweden, 
 copper from Siberia, wheat from Odessa, leather from the 
 
c. II.] WEALTH AND MEANS 27 
 
 Argentine, machinery from Pennsylvania — the whole sum total 
 of commodities of foreign origin required for momentary use and 
 consumption in Prance. These in like manner have been ever 
 changing locality and ownership while finding their way to 
 utilization in France. As for that surplus of value to which it 
 has been agreed to give the name "profit" — what remains over 
 after the satisfaction of the subsistence of the labourer and the 
 claims of the process of reproduction of commodities (which Marx 
 has demonstrated to be the primary function of industry) — this 
 " profit " has been transmuted in whole or in part in the very 
 making. 
 
 Into what ? Into promises to pay, issued by the Governments 
 of England or Egypt, or by the municipalities of Saigon or of 
 Wellington in New Zealand ; into shares of the future produc- 
 tiveness of the railways between Vienna and Milan, or Cape 
 Town and Cairo ; into rights to participate in the future profits 
 of extracting diamonds at Kimberley, or copper or gold in Peru ; 
 into shares in ships, sailing under the Norwegian or British flag ; 
 into chances in a lottery at Hamburg, or wagers on the swiftness 
 of a horse entered for the Prix de Paris ; into all sorts of chances 
 and promises and evidences of promises ; into some of the myriad 
 forms of confidence which go to constitute Means. Now to what 
 "nation" are to be attributed the enterprises, the hopes, the 
 expectations represented by any of these forms into which the 
 surplus means of the individual Frenchman have been for the 
 moment transmuted ? To what nationality can they be said at 
 any moment to belong ? And many enterprises in which both 
 Wealth and Means are employed are still more inextricably cosmo- 
 politan ; so much so that it defies analysis to indicate to what 
 nationality of people the means or wealth employed in them can 
 be attributed in preference to any other, blending as they do 
 with the streams flowing from and to many countries at once, 
 and appertaining on the whole to none exclusively of any other. 
 Did space not forbid, striking examples of this truth could be 
 instanced, which will readily occur to the mind of every reader 
 of newspapers. And, indeed, such embodiments of Wealth and 
 Means might almost be said to be the rule rather than the 
 exception with respect to what is owned by " companies " as 
 distinguished from individuals. For these acknowledge no 
 nationality in their shareholders, or in the distribution of their 
 gains. In this aspect, where does the "nation" come in? 
 
28 THINGS AS THEY AEE 
 
 What is its function in the incalculable, intricate, evanescent, and 
 yet ever reappearing sequence of phenomena ? 
 
 And there inevitably emerges from this consideration this 
 general result, namely, that the essential characteristic of the 
 entire process of wealth production and distribution is inter- 
 nationality, and that the same principle holds good in an 
 intensified degree, when means are regarded. 
 
 Capital, investments, each and all of the multiform incarna- 
 tions of individual opulence, will be seen to exhibit still more 
 immediate and incessant changes of ownership and locality. 
 They are susceptible of momentary fluctuations of value, and 
 by reason of this, incessantly stream from one point of the world 
 to another, in yet more ready obedience to the momentary 
 impulses of demand and supply, induced by local wants and the 
 opportunity of supplying them, by local scarcities and congestions 
 of capital or of cash, by temporary diminutions of confidence in 
 one centre, or exceptional sanguineness of commercial and indus- 
 trial adventure in another ; while as to each of the component 
 " securities " out of which means are heaped up, there is a 
 bewildering multiplicity of minor currents of momentary value 
 which cause each to obey a set of impulses peculiar to itself, the 
 study and appreciation of which is the function of finance. And 
 the measure of all values, the money of which all are special 
 expressions, is also all the while gyrating and nutating on 
 another and independent orbit of its own, in response to the 
 alternate appreciation and depreciation of gold. In all this 
 perplexingly intricate conception one thing is clear, and that is 
 that the " nation " as such has no place at all. The prime 
 factors of the equation are the individual and the world. 
 
 The " State," on the other hand, is a term denoting a true 
 entity potent in the economic process. By the " State " one 
 means the governing power or co-ordination of governing powers 
 which control and determine the legislation and administration 
 of a given country ; and whether this takes the form of a central 
 government or of a correlated hierarchy of local and municipal 
 authorities is immaterial. The State is an actual tangible cor- 
 porate entity capable of acquiring Wealth and of disposing of 
 Means. In one aspect it is an aggregate of governing persons. 
 But by the "Wealth" or "Means" of the State is denoted an 
 entirely different set of conceptions from what people imagine 
 themselves to mean when they talk of " the Wealth of the nation." 
 
c. II.] WEALTH AND MEANS 29 
 
 The State is not the collective term for the total of the individuals 
 of the nation. It is a trustee for certain purposes for the nation 
 present and future. As such trustee it is constantly appropriating 
 a certain definite portion of Means, convertible into the actual 
 commodities needed and obtained from moment to moment, 
 and used for the purposes of administration. The State possesses 
 itself of this by the instrumentality of " taxation," and expends 
 it in diverse ways, in the maintenance of the material fabric of 
 civilization, in appropriate organizations for the protection of 
 citizens, for the provision of many instruments of public con- 
 venience, and for purposes of education and even amusement 
 and health ; for the enforcement of law and order, the mainten- 
 ance of national means of offence and defence, and the due 
 establishment of the machinery of government. 
 
 Most important element of all, the State has arrogated to 
 itself borrowing powers. In exercise of these it issues, at its 
 pleasure, varying forms of certificates of national or municipal 
 obligation to pay hereafter, chargeable on the anticipated future 
 earnings of its citizens. " At its pleasure," because it can make 
 laws binding everything but itself : no law could be framed that 
 could effectually regulate beforehand the exercise of the national 
 will so as to preclude any subsequently formed settled contrary 
 intention of the same State. 
 
 The acquisition of the certificates of State obligation is one of 
 the most important among the many purposes to which finance 
 appropriates the Means arising to industry by exchange from 
 what remains over of the Wealth produced after the need of 
 reproduction is satisfied — what is called "Profit." The process 
 is designated " investment," and " investments " embody the 
 main part of the "Means" of civilized mankind; and of this 
 consists in the hands of individuals the bulk of that part of 
 Means which is termed " Capital." 
 
 Each State, as contradistinguished from the nation, becomes 
 thus a dynamic force in the process of the production and 
 distribution of Means, having power to influence economic 
 phenomena throughout the world, not only within its own 
 borders, but by virtue of the exchangeability of Wealth and also 
 of Means, beyond them ; whether by deliberate corporate action, 
 or unintentionally by the undesigned consequences of its inter- 
 vention. The State is by no means the only source of economic 
 " investment. ' ' The " capitalist " and the commercial corporation, 
 
30 THINGS AS THEY AEB 
 
 men and aggregates of men, compete with and surpass States 
 in the exercise of this same power of enchaining posterity. 
 The industry of mankind, existing and to come, is always in 
 process of being mortgaged by the issue of promissory notes 
 payable by succeeding generations. This aspect of the subject 
 is reserved for subsequent consideration and analysis. 
 
 These more or less confident anticipations of future benefit, 
 from whatever source to be derived, constitute the form of 
 " investment " of the great bulk of the Means of men, and by 
 these means is provided that " capital " which is a necessary 
 ingredient of the industrial process. The false reasoning that 
 all Means are part of the " Wealth of the world " induces the 
 majority of mankind to regard the creation of such " invest- 
 ments " with equanimity. One paradoxical writer boldly claimed 
 merit for a certain municipality that happened for a time to 
 distinguish itself by a particularly active participation in this 
 process of the heaping up of indebtedness, on the frank ground 
 that the emission of securities is in itself the " creation of 
 wealth." * At the same moment it happened that certain of 
 his comrades were occupying themselves in vigorously incul- 
 cating by speech and writing on those more numerous classes 
 on whose shoulders and those of their children the satisfaction 
 of these same claims must rest, the paramount right and duty 
 of insisting on the repudiation of all public debt whatever, as 
 a necessary step towards the equalization of the conditions of 
 human life and the realization of the vision of the time when 
 " there shall be no more poor, because there will be no more 
 rich." Into the comparative validity of these rather conflicting 
 conceptions of what is demanded by the consideration of the 
 "greatest happiness of the greatest number" it is proposed to 
 enter in subsequent chapters. 
 
 The consideration of Wealth and Means would be incomplete 
 without a short reference to that mental human attribute by 
 virtue of which they are brought into existence. 
 
 Acquisitiveness is the economic human motive, the determin- 
 ing antecedent of human intention in producing and acquiring. 
 It is denoted by a variety of names, varying according to the 
 
 ■* Mr. G. B. Shaw. "The investor prefers the corporation with the largest 
 municipal debt exactly as he prefers the insurance company with the largest 
 capital. And he is quite right. Municipal expenditure in trading is productive 
 expenditure; its debts are only the capital with which it operates." "The 
 Commonsense of Municipal Trading," p. 3 ; see also p. 101. 
 
c. II.] WEALTH AND MEANS 31 
 
 controversial connotations of praise or blame desired to be 
 expressed. Under the aliases "avarice," "greed," "rapacity,"' 
 " dishonesty," it is treated as a subject for denunciation ; when 
 it is desired to commend it, it becomes " prudence," " economy," 
 " self-denial," and " thrift," under which last name it is worshipped 
 by the utilitarians with a profuse connotation of eulogy, and looked 
 at somewhat askance as a motive of doubtful beneficence by the 
 opposite school of thinkers.* What is true about it is that 
 without the intervention of the speculative and acquisitive 
 instincts of man Means would not be accumulated or industry 
 undertaken or wealth produced on an economic and commercial 
 scale. And therefore the moralists who sit in judgment on 
 industry and commerce cannot legitimately complain that those 
 who practise and carry out these processes exhibit in their 
 course " les defauts de leurs qualites." The "rigging" of 
 markets, the " cornering " of stock, the " fettering " of produc- 
 tion, whether by workers labouring under the false notion of a 
 wages fund, or by capitalists eager to prop up the prices of a 
 falling industry ; the false rumours of scarcity, the tamperings 
 with official reports, the manifold devices by which the speculator 
 and the " promoter " contrive without labour to appropriate to 
 themselves the earnings of their fellow-creatures ; these and the 
 other time-honoured developments of the commercial system, so 
 much of which consists in the selling of that which the seller 
 has not, and the buying of that for which the purchaser is 
 unable to pay — all these point to no particular moral defect, but 
 are simply manifestations of acquisitiveness, of the activity of 
 mankind in the acquisition of Means, "recte si possint." 
 
 Acquisitiveness aims not at the heaping up of commodities, 
 as a squirrel collects nuts, but at the obtaining of that for which 
 commodities are exchangeable — money. The immediate object 
 of each acquirer is the appropriation of a greater share of the 
 Means in the world — a bigger claim on the Wealth produced in it : 
 and the results of the impulse are industrial production, com- 
 mercial distribution, and financial activity. These are the three 
 forms in which it manifests itself as a factor in the material process 
 of civilization. Much has been written by metaphysicians in 
 demonstration and refutation of the thesis that" self-preservation," 
 
 * See a very pithy indictment of " thrift " by Mr. G. B. Shaw (" The Common- 
 sense of Municipal Trading," Chap. X., pp. 96 — 97), by no means without its solid 
 justification. 
 
32 THINGS AS THEY AEE 
 
 or " self-interest," as it is called, is the universal and only- 
 conceivable human motive. This is a truism, meaning the 
 obvious truth that the human being is so constituted that he 
 cannot step out of his own individuality. It is a metaphysical 
 assertion which has to be entirely disregarded in economics, 
 except in so far as it expresses a law of thought which has been 
 overlooked by the would-be constructors of society on a collective 
 basis, who postulate a revolution of human intention, such that 
 the egoistic passion for self-preservation should be miraculously 
 transmuted into a desire for the general well-being of that 
 society of which the individual for the moment forms a part. 
 
 These propose, in effect, compulsorily to substitute the instincts 
 of the bee and the ant for those that have been hitherto known 
 to actuate Man ; and they find their initial and insuperable 
 difficulty in the perverse incapacity of the human mind to 
 assimilate the conception. In the struggle to induce mankind to 
 accept " collectivity " as a preferable alternative motive to indi- 
 vidual acquisitiveness, they have found themselves constrained 
 to appeal to acquisitiveness itself in the very egoistic form of 
 envy. Their practical method is to incite their hearers to action 
 by a description of the iniquity of the excessive Means of the more 
 opulent classes, and of the satisfaction that each individual has 
 to expect for his own acquisitiveness, by bringing about a 
 radical process of redistribution. This aspect of collectivism will 
 be dealt with hereafter.* 
 
 In the examples given in Chaps. IV. — VII. inclusive it is pro- 
 posed to note, with respect to each of the products selected as 
 typical of the action of the " laws " regulating the production of 
 Wealth, their effects on the " value " and " price " of each com- 
 modity; results which control distribution. So that before 
 entering into the detailed analysis of special economic processes, 
 which it has been thought advisable to attempt for the reasons 
 indicated at the commencement of Chap. IV., it is necessary to 
 devote a short chapter to the consideration of the precise ideas 
 underlying these and certain other general terms applicable to 
 all Wealth, and in common use in discussing its characteristics. 
 
 * Beepost, Chap. XXI., p. 402, 
 
CHAPTEE III 
 
 WEALTH AND MEANS (continued) 
 Capital, Property, Value, and Price. 
 
 Involved in the conception of Wealth and Means are the 
 ideas or attributes denoted by the above four words. By 
 " Capital," as has been already indicated, is denoted Means 
 under a particular aspect. The word " Property " is used to 
 indicate the degree of appropriation of Wealth and of the 
 embodiments of Means. " Value," it will be seen, is a synonym 
 for desirability, and " Price " is the measure of Value expressed in 
 money. In reality an accurate definition of these four terms 
 will be found sufficient to dispose of many dialectical conflicts 
 which have accumulated around them, and, incidentally, of the 
 great bulk of economic fallacies ; and therefore it is desirable 
 to devote this chapter to a closer analysis of the ideas involved 
 in their use. 
 
 " Capital " is a word the use of which has become perilous, 
 on account of the connotations of eulogy and vituperation with 
 which it has become saturated. It is an elusive and ambiguous 
 expression ; and though for convenience the word may be found 
 here and there in the following pages by way of illustration or 
 to suit the exigencies of a sentence, care has been taken to avoid 
 employing it for any vitally logical purpose. For a charming 
 example of what it is not, a passage from Bastiat may usefully 
 be referred to.* He confused the commodities on which a part 
 of it is momentarily embodied, " fixed capital," as Adam Smith 
 called it, with capital generally, and the same confusion pervades 
 the idea of the modern collectivists, who imagine that by seizing 
 on these fixed things they will succeed in appropriating to the 
 
 * " Qa'est-oe done que le eapital 1 II se compose de trois choses : 1° des 
 mat&iaux ... 2° des instruments ... 3° des provisions . . . Sans ces choses, le 
 travail de I'homme serait ingrat et k peu prfes nul, et cependant ces choses ont elles- 
 memes exig^ un long travail, surtout k I'origiue. Voilk pourquoi on attache un 
 grand prix k les possfeder, et c'est aussi la raison pour laquelle il est parfaitement 
 legitime de les dohanger et vendre, d'en tirer avantage si on les met en oeuvre, d'eu 
 tirer une remuneration si on les prete." Bastiat, " Capital et Eente," Chap. III. 
 
 T.A. D 
 
84 THINGS AS THEY AEE 
 
 State the means of producing wealth. In fact the term is a 
 coUoquiahsm, meaning one thing or another according to the 
 context, and importing no precise denotation of significance. 
 
 When a man actually employs a portion of the Means at his 
 disposal which he can exchange into Wealth, with the purpose 
 of producing to himself profit or interest, he calls that portion 
 his " Capital " : the word is then correlative to " income," 
 which is what he gets or expects to get periodically out of its 
 employment. Thus if he buys premises or machinery in order 
 to manufacture, these commodities embody a part of the Means 
 which he calls his " Capital," and these and similar embodi- 
 ments in Wealth constitute the primary and most obvious 
 signification of the term. It is this particular fragment of 
 Means out of which, at the moment, the " colleetivists " are most 
 anxious to expropriate the owner, in order that all production 
 may become a function of the State.* These gentlemen conceive 
 that, when once they have laid hands on the particular com- 
 modities which at any given time are being actually employed in 
 Wealth production, the process will " go of itself," and the State 
 be enabled permanently to carry it on. Nothing can be further 
 from the truth. The individual Man knows much better. Com- 
 modities are all essentially quite perishable (as will be seen 
 hereafter, p. 58), houses and machinery as assuredly as bread 
 and butter ; and a man's conception of his own " Capital " is 
 something much larger and more comprehensive, comprising far 
 more than the sum total of the material appliances existing and 
 progressively to be acquired, by the use of which he contem- 
 plates the continuing and indefinite profitable application of his 
 energies. He reckons in, in his Capital, " ipse, domi, nummos 
 quando contemplatur in area," not only the commodities he has 
 got, or expects to get, but so much of the Means appertaining to 
 him as at any moment he expects he may be disposed in the 
 future to exchange into commodities and devote to his purpose, 
 and therefore, as possible " capital," all his money, his stocks and 
 shares and securities ; and when in a sanguine and optimistic 
 mood he is impelled mentally to throw in personal attributes, 
 his experience, his mental energy, his good character, and his 
 acquired skill : all that he is or has, or will or hopes to be or 
 have, he considers at times as being so much power, by aid of 
 which he hopes to satisfy his passion of acquisitiveness ; and all 
 * See " Fabian Tract " No, U. " English Progress towards Democracy." 
 
c. III.] WEALTH AND MEANS 85 
 
 this he describes to himself as his " capital." So much of it as 
 is needed as the instrument of further acquisition he expects he 
 will devote to the purpose, in whatever form it may happen for 
 the moment to be embodied. A collector of jewels or works of 
 art looks upon even these as embodiments of " capital," though, 
 except in the hands of a dealer, they are essentially incapable of 
 producing profit. For, when the need arises, they will be, he 
 trusts, susceptible of being exchanged back again into more fluid 
 Means, and though the unproductive things themselves can earn 
 nothing, into whosever hands they fall ; the Means for which 
 they can be exchanged by their temporary possessor will as far 
 as he is concerned (though they themselves will ever remain 
 infructuous Wealth) be, he believes, employed in the spinning 
 of cotton cloths or carrying of passengers and goods, or the 
 breeding of pigs for profit. " Capital," therefore, for the expres- 
 sion in itself accurately denotes nothing, is a word used to signify 
 such indeterminate parts of the Means and power of the indi- 
 vidual as from moment to moment he may be disposed to put 
 to the service of any of the methods he may think fit to employ 
 to acquire profit. And this is an entirely indeterminate and 
 vague and fluid conception, expanding from moment to moment 
 under the impulse of acquisitiveness and the stimulation of 
 confidence, contracting under the influence of timidity and 
 mistrust of security, corresponding to no fixed measure of 
 quantity, and characterized by no scientifically analysable deter- 
 mination of quality. The extent of the Means of each man is 
 just a superior limit to which his " capital " will never rise ; 
 the inferior limit is determined by the degree of his acquisitive- 
 ness, the opportunities that he has of exercising it, and his 
 confidence in the security of the employment. Between these 
 two limits, in the case of each individual, his " capital " fluc- 
 tuates from day to day under the impulse of his individual will. 
 And what is true of the individual is equally true of the collec- 
 tion of individuals in the nation and the world. 
 
 " Capital," is a mere word signifying on the whole the degree 
 and extent to which, in any nation or in the world, mankind is 
 willing to devote for the moment its available Means to the 
 satisfaction of its instinct of acquisition. It varies, therefore, 
 from place to place and from moment to moment under a 
 multiplicity of impulses, and can no more be considered in the 
 light of a calculable and verifiable thing than any other of the 
 
 D 2 
 
36 THINGS AS THEY AEE 
 
 myriad manifestations of the human will. Therefore, whatever 
 counters we use in this attempt to construct anew the science 
 of the economics of reality, let us beware of juggling with this 
 one. Assuredly its use can lead to nothing beyond fallacy and 
 confusion. You can use it, if you choose, to denote those things 
 and commodities which have, so to say, been already irretrievably 
 devoted to profit-making purposes : machinery, buildings, ships, 
 railway works, and so forth, what Adam Smith called " fixed 
 Capital " ; and the total of things so devoted for the moment 
 mounts up to an imposing figure, it is true, when expressed in 
 terms of money. But all this is a mere perishable shred, when 
 compared with all that is needed to continue and prosecute the 
 labour of production, and without free recourse to which the 
 economic process must as inevitably come to a standstill, as a 
 watch when its springs run down. " Capital " in the abstract 
 and general sense of the term is all that which is and must be 
 employed to keep the machine moving, and its limit is the sum 
 total of Means in the world, incessantly flowing from one country 
 to another, from one employment to another, whenever and 
 whithersoever the acquisitiveness of mankind for the moment 
 shall choose to direct it. And this is incalculable and defies 
 analysis ; it is not infinite, but it is indefinite, and the use of any 
 term connoting indefiniteness is forbidden to scientific thought. 
 
 Against the incautious use of another term of common use it is 
 necessary to warn the reader, and that is the word " Property " 
 — a still more vague and unscientific colloquialism. Wealth 
 has been above described as consisting of all desirable objects 
 susceptible of appropriation ; that is to say, it must possess the 
 two characteristics of value and of being appropriated ; but the 
 mode and extent of the appropriation will be seen on considera- 
 tion to vary indefinitely according to the nature of the object, the 
 use to which it can be put, and above all the force and direction 
 of the laws and customs which regulate and sanction in each 
 country the extent to and in which it is permitted ; for property 
 is a creation of municipal law. The loaf of bread is the 
 " property " of the head of the family, and each successive slice the 
 " property" of the child into whose platter it has been put ; and 
 the sanction which safeguards it is the smack that awaits the 
 child that would filch the slice from its younger brother or sister. 
 Here is complete dominion, absolute "property." A square 
 mile of land is something, not wealth, but an opportunity of 
 
c. III.] WEALTH AND MEANS 37 
 
 getting wealth, which (see hereafter Chap. IX.) can only be an 
 object of property in a feeble and momentary degree, the rights 
 in which entirely depend for their recognition and validity on the 
 laws and regulations of the country in which it is situated ; a 
 thing in which no human being can conceivably possess more 
 than a temporary and qualified usufruct, his power and mode of 
 enforcing which is a mere matter of custom and convention, 
 liable to be altered at any moment at the will of whoever it is 
 that disposes of the ultimate force of the State — the force by 
 which society is held together and which creates " property." And 
 between these extremes lie the infinitely varied characteristics 
 of all sorts of " property " in all sorts of things. 
 
 Greed knows no limit to its yearning to appropriate. The light 
 and heat of the sun, the purity of the atmosphere, the force of 
 the wind, will all in turn be turned into " property " if human 
 acquisitiveness can compass their appropriation. Nay, in some 
 form tentative efforts have in fact been made to exclude mankind 
 from the free enjoyment of these, in the interest of privilege. 
 " Property " is a word denoting the extent to which and the degree 
 in which society (which is force) chooses to recognize and enforce 
 the rights of a temporary possessor. Temporary, because of all 
 modes of property one characteristic is obvious, that it cannot 
 possibly endure beyond the life of the proprietor. He takes 
 with him into the next world neither his loaf nor his acre. It 
 may be that somebody survives him, to whom it is thought 
 desirable to accord the whole or some proportion of the right of 
 appropriating that which once was his ; and it may be also that 
 this right has been in the majority of modern States too lightly 
 and lavishly accorded, and that the time is at hand when greater 
 restrictions will have to be put on the facilities now given to 
 fantastic persons to select capriciously objects of posthumous 
 benevolence. For the purposes of the present chapter these 
 considerations are premature. Eeference to them has been 
 introduced for the purpose of directing the mind of the reader in 
 advance to ultimate conclusions to which he will be invited to 
 assent. What concerns us now is the vagueness and variability 
 which in the very nature of things are inextricable from the 
 notion of " property." The idea denoted by the word, and still 
 more the conceptions connoted by it, vary to such a degree as to 
 unfit it for use as an implement of scientific thought. It really 
 means only the degree of appropriation of wealth or of means. 
 
38 THINGS AS THEY AEE 
 
 as the case may be, in which from time to time society thinks fit 
 to acquiesce ; a degree varying with each variation in the concep- 
 tions of those who wield the forces of society and determine the 
 purposes to which they shall be applied. For the purpose of 
 denoting things in general, "Wealth " and " Means " regarded 
 as objects of possession, one may use the term "property " like 
 the word " Capital," as a collective description apposite to either. 
 But nothing beyond a certain literary amenity is to be gained by 
 the adoption of a multiplicity of words to denote one and the 
 same thing, and accordingly the writer proposes to conduct the 
 examination of his subject to the close, not without making use 
 of these two words, but without relying on either as a foundation 
 of any serious reasoning. To keep this in mind they shall be 
 invested with the commas of quotation. 
 
 Apart entirely from the consideration of the nature or origin 
 of the things of which Wealth and Means consist, is the charac- 
 teristic by virtue of which they exist, which is Value. While these 
 conceptions of Wealth and Means are fundamentally intricate 
 with those of " Property and Capital," so also they are involved 
 with that of Value, which is desirability. Value is subjective. It 
 is the measure of desire, of the human motive for acquisition ; it 
 is inherent in the mind which conceives it and not in the object 
 of which it is conceived. 
 
 By the term the " value " of a commodity we mean its 
 comparative desirability at the moment of contemplation as 
 compared with other commodities. It varies from moment to 
 moment, tending to increase with the demand for the commodity 
 in the world, and decrease with the power of industry to supply 
 that demand. One of the many conditions regulating supply is 
 the " cost of production." In the " long run " (though the run 
 is in some cases apt to be a very long one) human energy will 
 withdraw from the task of producing a commodity so little 
 desirable that the reward of producing it is inadequate to give a 
 sufficient return for that cost. So that in the ultimate result the 
 cost of production is the bottom limit (as it were, the lower 
 asymptote of the curve) of value, which, except accidentally and 
 exceptionally and under the pressure of what will be hereafter 
 denominated " mononesis," or the tyranny of the consumer. Value 
 never quite reaches down to. The cost of production (which 
 includes cost of raw material, cost of labour, and cost of the 
 necessary use or hire of " Capital " and of the other means by 
 
c. III.] WEALTH AND MEANS 39 
 
 which labour is applied to production from the raw material) is 
 the lower limit, towards which the value of the thing produced 
 tends to fall. Comparatively few commodities have as yet exhi- 
 bited the effect of that tendency in anything like a marked 
 degree, because a counter tendency is always in waiting ready to 
 neutralize its operation, as a limitation of demand ultimately 
 brings about a corresponding diminution of supply down to the 
 point at which the latter is brought to correspond with the former, 
 and when this tendency has had its operation, value tends to 
 rise again. On the other hand, there is no ascertainable upper 
 limit to value. No one would venture to predict the value, as 
 measured by price, of any individual article which cannot be 
 reproduced — a fine example, for instance, of the art of Velasquez 
 or Cellini, a Venus of Phidias, or the green diamond of Dresden. 
 The " value " of such a thing is limited only by the concupiscence 
 and means of would-be acquirers. In a comparatively smaller 
 degree, this entire independence of the cost of production is also 
 exhibited temporarily by many articles of general demand of 
 which the supply is for the time being inadequate, subjects of 
 monopoly, the tyranny of the producer. At the moment of 
 writing (October, 1907), india-rubber is one of these commo- 
 dities, the price in the year 1907 working out at something 
 like three times the money cost of putting the commodity on the 
 market, tending, however, to drop with great velocity.* Here a 
 contrary process is observable ; the limitation of supply enforces 
 by high price a limitation of demand and prevents the latter from 
 attaining its normal expansion, so that the value does not attain 
 an inordinate maximum ; while the excessive value acts as a 
 stimulant to supply and induces an increase of production in all 
 but those exceptional cases where the rarity or inaccessibility of 
 the raw material or some other exceptionally potent cause 
 imposes for 'a time, or (as in the case of the aesthetic treasures 
 above referred to) for all time, an insurmountable obstacle. This 
 for example, up to the present, seems to be the case with radium, 
 the most desirable of all commodities. 
 
 The idea of permanent or " intrinsic " value as attaching to 
 anything, is simply unthinkable nonsense, the quality being 
 solely and entirely relative, essentially comparative, and alto- 
 gether subjective. Value resides not in the object of which it is 
 
 * Since these lines were first penned there has occurred a fall of about 30% 
 in the price of this particular thing (July, 1908). 
 
40 THINGS AS THEY AEE 
 
 predicated, but in the minds of those who may happen to desire 
 it, and of those others who having it desire to convert it into 
 money. It is made up of a series of the beliefs and wishes of 
 mankind in reahty very intricate. The desire that men feel for 
 any commodity is measured by their need of it, by their beliefs 
 in its capacity to satisfy their needs, and as to the probable 
 facility of obtaining it, and in the permanence of the institutions 
 under which they may hope to enjoy its use ; by their concep- 
 tion of the needs and desires of other human beings who are 
 or may be their competitors for its acquisition, and the other 
 people who have such things and will have to sell them, and by 
 still more recondite and elusive considerations, all inextricably 
 mixed.* The proof of the pudding may be in the eating, but 
 the value of the pudding as it lies on the counter of the cook- 
 shop, is mainly the belief of the purchaser in its toothsomeness 
 and nutritiousness ; and this again is made up of his experience 
 of the taste of previous puddings, of what he observes of its 
 colour and odour of the particular pudding offered, of his con- 
 fidence in his own judgment, and what he knows of the 
 reputation of the vendor ; and then come in, as ingredients of 
 value, what he can get a similar dainty for at other shops, his 
 own desire to acquire the thing, (depending on the state of his 
 appetite, and his belief in the capacity of his own digestive 
 powers,) while the readiness of the baker to hand over his 
 pudding depends on a similar result of complex motives and 
 considerations. And, mutatis vmtandis, the same thing is true 
 of the value of a quarter of wheat, a locomotive engine, a fine 
 example of Sevres china, a share in the stock of the Bank of 
 England, or a horse entered for the "Derby." 
 
 Value may be extinguished entirely or temporarily by a 
 cessation of the utility of that of which it is predicated. It is 
 constantly being altered by some alteration of the needs or 
 caprices of this or that section of mankind. It may after a 
 period of diminution or even apparent exhaustion revive by 
 some veering of the wind of human fancy, by some unforeseen 
 failure of a necessary ingredient of production, or by any other 
 of the indefinite number of causes which are constantly and 
 everywhere influencing values, which are spoken of generally 
 and inaccurately as " demand and supply " ; or, speaking more 
 
 * See this point admirably explained by Mr. Bagehot, " Economic Studies," III., 
 p. 132. 
 
c. III.] WEALTH AND MEANS 41 
 
 accurately, the effectual aggregate need for things on the one 
 hand and the available power of satisfying that need on the 
 other. These tend to vary together, the increase of each in its 
 turn stimulating the other, and the diminution of either tending 
 correspondingly to lessen the other. They are therefore not to 
 be looked on as opposed forces, but as correlated factors. 
 
 As pointed out in the last chapter, a demand is not to be 
 conceived of as equivalent entirely to need or desirability, for it 
 is only economically effective in so far as it possesses the power 
 to procure its own satisfaction commercially. Mere poverty and 
 destitution do not create commercial demand, great as their 
 need is for commodities, any more than the physical possibilities 
 of production create supply. Both are equally limited by the 
 commercial aspect.* Economically they mean that demand and 
 that supply which are commercially effective, the one by being 
 translated into money price, the other limited by possibility of 
 remunerative production. It is in their local and temporary 
 attributes that these two factors of value exercise their potency 
 in determining economic results ; and in accordance with these 
 values exercise their effects by stimulating or retarding production 
 and consumption alike. 
 
 Commerce is the process by which the values of a commodity 
 in a given country or district are perpetually adjusting them- 
 selves in the direction of what may be called average world- 
 values, and by which the place and time fluctuations are, so to 
 say, discounted by appreciation of the sequences exhibited 
 contemporaneously in different places, and successively at 
 different times. As applied to Means, the specific commercial 
 function of acquisitiveness takes the form of Finance, which 
 plays, relatively to commerce, the part which that does to 
 industry, directing its operations as commerce itself controls 
 those of industry, and adjusting in like manner the ultimate 
 value of the constituent parts of Means precisely as ^commerce 
 adjusts that of the several specific varieties of commodities. 
 
 The ultimate value of a thing, the asymptote, so to say, of the 
 curve of its progression in desirability ; the line towards which 
 it tends to approximate as a sequence of this progressive adjust- 
 ment of commercial action, must itself be conceived of as a 
 curve and not as a straight line. This curve is determined by 
 an equation into which many factors enter, but one of these 
 
 * Adam Smith, " Wealth of Nations," Book I. Chap. VII. 
 
42 THINGS AS THEY AEE 
 
 emerges as prepotent, that is to say, the belief as to the ultimate 
 potential capacit}' of supply to cope with demand as the process 
 of adjustment works itself out; in other words, it depends on 
 whether in " the long run " mankind believes (for it must 
 always be borne in mind that it is not what a thing is, that 
 determines its desirability, but what mankind conceives it to be) 
 that the commodity is one capable of production adequate to the 
 needs for it. 
 
 So long as, to use the common mathematical symbol, D >■ S, 
 value tends to rise towards a line limited only by human needs 
 and desires. Where, on the contrary, the believed capacity of 
 production is greater than the estimated absorptiveness of 
 demand, or S > D, then in the " long run " the value of a 
 commodity tends to fall in the direction of the estimated cost of 
 production on a commercial basis. This to a certain extent, 
 and within certain bounds, is the dominant factor of the 
 adequacy of " supply " to cope with " demand." 
 
 One leading ingredient of the cost of production of a given 
 commodity is undoubtedly the amount of human energy requisite 
 to produce. There is a theory, insisted on with a particular pur- 
 pose, that the average amount of "labour" required to produce 
 a given article is the sole ultimate determinant factor in value, 
 and that, therefore, all Wealth produced and producible depends 
 for its value, and therefore for its essential quality of Wealth, 
 simply on the " average " amount of labour expended. Adam 
 Smith is the parent of this theory, but Marx was its great 
 exponent,* for it is the base from which he attacks " Capital." 
 He deliberately shuts his eyes to every determinant factor other 
 than the amount of labour expended in production. For 
 " labour," which is a polarised word, connoting much class pre- 
 judice, it is as well to substitute the neutral expression, " energy," 
 the elements constituting which will be investigated hereafter. 
 
 As a fact, but little practical results attend the investigation 
 of the more general conceptions of value, demand, supply, or 
 cost of production from an abstract point of view. The utmost 
 that this can lead to is that all these alike are subject to certain 
 ultimate tendencies. To what extent they are obeying and will 
 obey those tendencies, and how far and for how long they are 
 
 * " Capital," Vol. I., Chap. I., p. 5 (Eng. trans.). See also J. S. Mill, " Principles 
 o£ Political Economy," Book III., Chap. IV., § 1, and Chap. VI., § 1 ; Marshall, 
 ' Principles of Economics," Book VII., Chap. XII. 
 
c. III.] WEALTH AND MEANS 43 
 
 likely to be subject to others unnoted, are matters of conjecture. 
 And in truth the ultimate abstract result, the universal general 
 " law," is not of great importance. For its generalization is far 
 away in an uncertain distant future ; and what concern us more 
 immediately are the more realizable intermediate phenomena. 
 
 Accident and industrial vicissitudes, commercial action, "finan- 
 cial crises " (which are in truth only local or general symptoms of 
 lack of confidence), the unpredictable results of State interference 
 and regulation, and of the workings of trade and labour organiza- 
 tions, each actuated by motives of what they suppose to be in the 
 interests of the particular classes which they respectively repre- 
 sent, but all co-operating unconsciously against the consumer : 
 all these causes are constantly at work, influencing and altering 
 the determination of local values in every country in the 
 world, from the conception of which, as a whole, the idea of 
 " ultimate " or " average " value has to be generalized through 
 space and time. And in the present rudimentary state of human 
 knowledge of phenomena it is entirely premature to lay down any 
 particular relation of antecedent and sequence whatever as a 
 " law," determining value, to the exclusion of other influences, 
 in respect of any one thing or class of things; especially in 
 respect of that entirely subjective conception of confidence which 
 creates the " values " of securities. 
 
 The task of a sane science of economics therefore, (quite as 
 abstruse as the thinking apparatus of Man is competent to per- 
 form,) is modestly to note the phenomena actually exhibited by 
 values in space and time, what may be called "local and 
 temporary " causes and effects. For the " average value " of 
 a thing nowhere exactly obtains except by mere accidental 
 coincidence. It is not an absurd notion like " intrinsic " value, 
 but an unrealized one, an idealized conception ; the real value of 
 an actual concrete thing is determined in a particular place and 
 at a particular time, and not by generalizing conceptions inde- 
 pendently of space and time, not by an idealized and average 
 conception of the total capacities of supply and demand in the 
 world, or even of the average cost of production in the world ; 
 but by present instances afforded by concrete cases. 
 
 When a famine occurs in some province of India (that is to 
 say over the greater part of that country on the average in two 
 years out of every seven), the portentous local increase in the 
 " values " of food products indicates nothing even of the state 
 
44 THINGS AS THEY AEE 
 
 of food production throughout the Indian Empire. Famine 
 scarcities may occur in one province concurrently with abun- 
 dance in another, simply by reason of the imperfection and 
 inadequacy of transport and distribution ; for in such places and 
 times, commerce unaided is unequal to the task of adjusting supply 
 to demand, and even the potent machinery of an energetic 
 central government fails to avert famine and disease and a 
 terrible local enhancement of value and price. And so, in 
 respect of every commodity in turn, the surface of the Wealth- 
 ocean incessantly undulates under the stress of local and 
 temporary winds and currents, abnormal temporary demand 
 at one place and time, over-supply at another, producing storms 
 and waves that quite obliterate the horizon of ultimate "average" 
 value ; and it is in these troubled waters, still further vexed by a 
 constantly flowing and ebbing tide of the " value " of gold, that 
 industry commerce and finance have to spread their nets and 
 bait their hooks and drag their trawls, while the economist sits 
 on dry land and complacently notes the " great labour " of the 
 fishermen. It comes to this : that no accurate conception can 
 be formed of the influences determining Wealth production or 
 Means accumulation, except by observing in respect of each 
 department of commerce and each instance of the working of 
 finance the actual processes going on around us in various parts 
 of the world. When these have been investigated and analysed 
 sufficiently, there may or may not be some material from which 
 may be inferred " laws," but these assuredly will never be 
 ascertained by any introspective analysis of conceptions. 
 
 When one comes to the term " price," one's feet at last touch 
 firm ground. That denotes a concrete function of the abstract 
 variant value, which is its local and momentary expression as 
 measured in money. It is so entirely insusceptible of generaliza- 
 tion that even the a priori economists have not been able to 
 produce any plausible so-called "law" affecting price. It varies 
 directly with value, it is true. But it has no exact or deter- 
 minable correspondence with it, because it varies also with 
 another quite independent variant, which is the value of gold as 
 a commodity ; and this depends, again, entirely on the supply of the 
 metal available as coinage for the momentary requirements of 
 commerce and finance in the particular place in respect of which 
 the price is fixed. And this, again, varies with the supply of, 
 and demand for, gold in the world in general. For in respect 
 
c. III.] WEALTH AND MEANS 45 
 
 of this one thing, gold, the demand is infinite, if such a word 
 can properly be used of anything mundane the subject of human 
 activity. At any rate, there is no ascertainable limit to the 
 demand. 
 
 Yet, as the material is practically indestructible, and the 
 supply keeps steadily increasing, alternate periods occur through- 
 out which the supply available for coining into money is either 
 pushed to a point beyond the general commercial requirement, 
 or the reverse occurs, and gold is not to hand sufficient to be 
 coined into the total amount of money that is required ; and as a 
 natural result, then, the range of prices in general, irrespective 
 altogether of values, tends upwards or downwards as the case 
 may be. If more money is coined than is wanted, more of it is 
 asked for as the price of a pair of shoes or a quarter of wheat, 
 irrespective of the relative values inter se, or as compared with 
 other commodities, of shoes or wheat. But a general enhancement 
 or diminution of prices from this cause has no relation to the values 
 of the articles the price of which is so enhanced or diminished, 
 for these are concerned only with their relative desirabilities, 
 which depend on the aggregate beliefs and wishes of men. 
 
 Both as regards Value and Price, however, there is a set of 
 antecedents which exercise a supereminent determining influence, 
 and which requires for its adequate appreciation a special para- 
 graph. By the term " monopoly " is denoted the evil of the undue 
 advantage gained by producers when they succeed in holding 
 the consumers at their mercy. There is no need to enlarge on 
 this ; it has been denounced as the capital economic crime in the 
 accepted canon by the entire apostolic succession of the pro- 
 fessors. Whether fostered by exclusive privilege granted by the 
 State, cherished by the concealment of secret process, or brought 
 about by other insidious devices of the producers themselves, 
 whether accidentally evolved by the natural scarcity of the 
 opportunity of production, or arising naturally from an enhance- 
 ment of demand beyond the power of the world for the moment 
 to satisfy it, scarcity involves the determination of the curve 
 of value upwards towards its superior limit above referred to — 
 that of need. Under the pressure of " monopoly," in which 
 term it will be found convenient to include all these manifesta- 
 tions of desire in excess of supply — dearness, in fact, — price 
 tends upwards to the point where the cost of satisfying the 
 desire becomes too great to incur, and from that point a 
 
46 THINGS AS THEY AEB 
 
 restriction of demand sets in to redress the balance. This leads to 
 wastefulness in production, to the morbid aggrandisement of the 
 producer or set of producers of the thing subjected to the mono- 
 poly, to the corresponding impoverishment and oppression of 
 those who need and consume that thing. 
 
 But it is passing strange that the inspired people who so 
 eloquently describe all these evils, and denounce " monopoly," 
 have not hitherto been able to perceive that industry is apt, 
 under the influence of a similar unrestricted competition of 
 producers, to be subjected to a corresponding reverse set of 
 dangers of oppression and corruption from the undue pre- 
 ponderance of the economic power of the consumer, just as the 
 consumer is oppressed by the unrestricted avidity of the 
 "monopolist," when he in his turn acquires the upper hand. 
 
 Here one catches a glimpse of a fairly deep truth, which seems 
 to forbid unquestioning acquiescence in the proposition which 
 lies as a foundation under the whole edifice of Free Trade dogma 
 — the affirmation of the beneficence of "unrestricted compe- 
 tition." The "Free Trade" minority in America have raised 
 their protest against the " oppression " and " corruption" which 
 have, they say, resulted in the United States from the 
 " monopoly " of producers, fortified behind the entrenchments 
 of a fiscal system devised to secure to home production the 
 exclusive opportunity of supplying home consumption; and 
 their British co-religionists (for, after all, this belief is of the 
 nature of a religion) concur in their protests, and deprecate, as 
 tending to "monopoly," every proposal for import duties in the 
 United Kingdom. Both are right, but both ignore the evil of 
 the vicious counter-extreme. To denominate this it is, that the 
 writer has to employ his one new word. He permits himself to 
 coin a Greek word of doubtful classicality, to designate this 
 undue preponderance of the power of the consumer, which is 
 the exact antithesis of that " monopoleia," which is the unfair 
 prepotence of the producer. It is just as oppressive to the 
 producer to be put under the heel of the consumer by a 
 " Mononesis," * or exclusive power of purchasing, as it is to 
 the consumer to be at the mercy of the producer by reason 
 of a " monopoly," or exclusive power of seUing. And 
 whether the power of "mononesis" is exerted by an individual 
 purchaser or a particular set of purchasers, or by a chief 
 
 * yiovZyijSis from m6vos and i>v4oi](ri. 
 
c. Ill] WEALTH AND MEANS 47 
 
 purchasing nation as against the competing producing nations, 
 makes no difference in its oppressive results, any more than 
 whether monopoly has its contrary effect in favour of or against 
 an individual consumer or producer, or a collective set or nation 
 of producers or consumers. From the one arise the oppressions 
 of the extortionate price and the inordinate profit ; from the 
 other the misery of the starving wage, and the indirect 
 corruption of an irresistible parasitism.* Mononesis, less 
 consciously acquisitive, and therefore less obviously to be held 
 up to execration than the much-decried "monopoly," is in truth 
 the same iniquity inverted ; it is equally selfish and pitiless ; and 
 though belauded instead of reprobated by the orthodox pedantry, 
 equally mischievous to the community which is afflicted by it, 
 and equally valuable to that which can secure to itself its benefit 
 and escape its burthen. The true economic polity is that which 
 aims at the suppression within the national borders of the over- 
 dearness of the unduly restricted, and the over-cheapness of the 
 superabundant supply, equally and impartially. 
 
 The case of sugar in the West Indies supplies an instance of 
 the protracted operation of this enforced "production at a sacri- 
 fice." The only effectual markets for the commodity are England 
 and North America, since, for the protection of the appliances 
 for the extraction of sugar from beet, a brass wall of exclusion 
 has been erected against this commodity in all the countries of 
 continental Europe. And North America has also her native 
 industry to protect, and absorbs but sparingly and grudgingly the 
 minimum necessary quantity to supply the surplus demand of 
 the great union. Over and over again the industry has been at 
 the very point of extinction, and at one moment, in 1902, the 
 British people were compelled to intervene with a dole, to ward 
 off a sudden catastrophe of collapse from their West Indian 
 fellow-subjects and customers. How long the struggle may con- 
 tinue no man can say, but the end of the industry is obvious to 
 every person who has, like the writer, studied the conditions of 
 the problem on the spot. In such a case, who but the producer, 
 as long as he continues to produce (that is, to exist at all), bears 
 the weight of any importation duty which the British Govern- 
 ment may think fit to impose on the article : the producer, not 
 only in one, but (by virtue of the effect on world-values) in all 
 producing countries alike which compete for the British market ? 
 • See jparf, Chap. XVII., p. 331. 
 
48 THINGS AS THEY ABE 
 
 The fact that sugar can be purchased in London or Glasgow at 
 prices varying between one-half and one-third of the retailing 
 price in the very centres of production points to the counter- 
 effect on the country of consumption. Now theorists dismiss 
 such an instance with a contemptuous shrug, on the ground that 
 this is a mere "evanescent" phase of the "struggle for 
 existence " among producers, which will end in the " survival of 
 the fittest," and the disappearance of the industry, to the 
 eventual benefit of all mankind. Be it so ; but then pray remem- 
 ber, that in dealing with all human affairs we are handling essen- 
 tially the temporary and evanescent only. The permanent and 
 universal are figments of the imagination of the theorist, never 
 have existed and never can exist. The present phase of European 
 civilization itself, whatever possible alternative organization of 
 society is destined to replace it, must sooner or later come to the 
 inevitable transformation which will attend the exhaustion of 
 the coal supply of Europe ; and the initial blunder of economic 
 science lies in imagining that it is within its power to deal with 
 the eternal and universal, instead of that with which it is really 
 concerned, the temporary and particular. 
 
 From time to time one or another of the products of the 
 world's industry enters into the category of " cheap " things, the 
 production of which is oppressed by the mononesis of inadequate 
 demand ; and the redressing of the balance involves a slow agony 
 of readjustment by the gradual extirpation of the industry of the 
 producers. And tUl the adjustment is complete the consumers 
 of such things continue to enjoy the blessing of " buying in the 
 cheapest market." The reverse process of the gradual mitigation 
 of the monopoly of producers by competition, the " political econo- 
 mists " have made us quite familiar with. Self-interest no doubt 
 points to the desirability of each nation acquiring for itself as 
 against the others the advantages both of a monopoly of the 
 things it produces and a mononesis of the things it consumes, as 
 far as it can. In other words, they all hope that the evils instead 
 of being evanescent, as they are, should be permanent ; but that 
 it should be themselves who will continue to be " buying in the 
 cheapest " and " selling in the dearest " market; for in that way 
 they think they can permanently secure the greatest appropria- 
 tion among themselves of the Means of the world, if such a thing 
 be only possible. No philosopher was needed to enunciate so 
 obvious a truism. And indeed it requires no immense insight 
 
c. III.] WEALTH AND MEANS 49 
 
 to detect the counter-verity, which in truth is by far the more 
 important to observe. For in a country such as ours, it must 
 be borne in mind that in volume and importance internal trade 
 (by how much no one can say) immensely transcends that which 
 is external, and which is expressed in the accurate figures of 
 Board of Trade returns. And therefore while the " buying in the 
 cheapest market " mainly oppresses those of our own people who 
 produce the things we need, the " selling in the dearest " means 
 the extortion of an extreme price from our own consumers, who 
 all need by far the greater part of the things we produce. From 
 this point of view therefore, the dogma becomes a gospel of 
 mutual extortion. 
 
 Waiting to be stated until there has arisen a true statistic of 
 wealth-production lies a series unsolved and unattempted 
 theorems of the future. These will indicate quantitatively the 
 essential interrelations between Wealth and those other parts 
 of Means which consist respectively of the "Money" which 
 represents it and the securities which embody the claims on it. 
 
 And from these there will in due course emerge further 
 corollaries explaining the phenomena of values and the commerce 
 and finance to which they give rise, with an accuracy and 
 certainty at present impossible. 
 
 With the statement of these theorems Economics will for the 
 first time enter in the phase of an accurate science, in place of 
 being, as now, a tentative enquiry into evanescent phenomena, 
 connected with each other by " laws " which we suspect but 
 cannot verify. 
 
 T.A, 
 
CHAPTER IV 
 
 instances of wealth pkoduction 
 
 (Mineral) 
 
 In the present and five immediately succeeding chapters it is 
 proposed to present a series of examples of the actual processes of 
 Wealth production and Means distribution, chosen mainly with a 
 view of exemplifying in each the action of one or more of the 
 general " laws " regulating all, but the operation of each of 
 which is more strikingly exhibited by one or another process in 
 particular. Each in turn is used, so to say, as a peg on which 
 to hang an exemplification of the action of one or another of the 
 manifold tendencies which influence the economic process. To 
 effect such an analysis exhaustively, so as to exhibit all branches 
 of industry and commerce ; above all quantitatively, that is, by 
 analysing and ascertaining the comparative potency of the 
 several determinant influences, would be a task far surpassing 
 the powers of any one man. Something will be attained, how- 
 ever, by a selection, incomplete and inexhaustive, but honestly 
 representative of the bulk. The necessity for undertaking this 
 task of the juxtaposition and comparison of varying processes of 
 Wealth production in various parts of the world may not be at 
 first apparent. It is far less simple and striking, and lends 
 itself less to picturesqueness of treatment, than a portrayal of 
 the demeanour of the imaginary neolithic John bartering with 
 James a bag of barley for a bundle of rabbit skins, which is a 
 sample of the illustrations of the a priori economist; but the im- 
 partial consideration of things as they are affords a better starting- 
 point from which to ascertain true sequences of actual phenomena 
 than a picturesque presentation of what Mr. Mill imagined once 
 took place. In effect, the writer proposes to attack the con- 
 sideration of the economics of reality from a direction diametri- 
 cally opposite to that from which those authors have started who 
 evolved the economics of theory : from examples of the actual 
 concrete complex fact, instead of imaginary applications of 
 
c. IV.J INSTANCES OP WEALTH PEODUCTION 51 
 
 abstract and simple " doctrine." The instances are intended as 
 sources of knowledge, rather than illustrations of principle, and 
 have their value only in so far as they are accurately and 
 adequately descriptive of actual fact. By a process of comparison 
 of actual concrete instances, it will be, it is hoped, possible to 
 obtain an insight into the diverse and in some instances 
 apparently contradictory tendencies that exhibit themselves in 
 the different constituent parts of the sum total of phenomena ; 
 in Wealth, the conditions of its production, the manner of its 
 employment and the mode of its distribution. 
 
 It is proposed in the first place to deal with the concrete 
 phenomena of the production of actual tangible commodities : 
 material objects of utUity susceptible of possession (excluding 
 land and money), which, and which alone, fundamentally con- 
 stitute the real Wealth of the world. Then, to show the methods 
 of creation and appropriation and the conditions of existence and 
 persistence of the accumulation of Means in the hands of its 
 possessors. 
 
 (A) Led by chance or guided by the conclusions of the geologist, 
 some men in Pennsylvania or Borneo, or by the shores of the 
 Caspian Sea, drive an iron tube into the earth at a particular 
 spot by means of a common mechanical contrivance. They tap 
 a huge natural reservoir of petroleum which spurts up through 
 the tube. A pipe-line brings the fluid to a reservoir or to a 
 wharf, and the human energy involved in the production is thus 
 limited, after the borehole is once sunk, to the providing, sinking, 
 and placing of the necessary tubing, the occasional turning of a 
 tap to fill the vessels to contain the oil, and the provision and 
 working of the transporting machinery needed to distribute the 
 product. The result, almost without the intervention of human 
 energy, is a supply of wealth which for copious bounty immensely 
 transcends the greatest return of the most productive coal-mine. 
 This instance has been chosen as the first, by reason of its great 
 simplicity, of the infinitesimal part in the resultant product 
 that can be claimed by human energy, and of the comparatively 
 slight share in the merit which even " Capital " can arrogate to 
 itself. The substance is yielded direct from the stores of Nature ; 
 almost undiminished in volume, its resultant wealth is poured into 
 the laps of those who have been fortunate enough to have been 
 permitted by a sleeping State to appropriate to themselves 
 the sources of supply afforded by Nature. The crude substance 
 
 B 2 
 
52 THINGS AS THEY ARE 
 
 certainly undergoes a simple and inexpensive process of treatment 
 by heat, by means of which the constituent hydrocarbons are 
 separated according to their specific gravity and the varying 
 temperatures at which they volatilize ; but the cost of effecting 
 this separation and rendering the constituents marketable is a 
 mere negligible minimum compared with the value of the sum 
 of the product, each and every sub-variety of which is an article 
 of worldwide and apparently insatiable demand. From these 
 antecedents spring two noteworthy sequences. The first is, that 
 being practically all profit, the process of production of oil has 
 proved itself the most potent of all industrial instruments for 
 the accumulation of Means. 
 
 It provides a volume of enrichment which up to the present 
 day has been equalled by no other mode of industry the world has 
 ever seen ; and which has given rise to industrial and financial 
 developments on a correspondingly gigantic scale. The resultant 
 profits accumulate with such rapidity, that they have created for 
 their absorption a correspondingly accelerated process of the 
 multiplication of methods of " investment," swollen bevond the 
 real opportunities of industry, and therefore unwholesome in their 
 result, and giving rise to formidable evils. The persons who 
 dispose of this co-acervation of means are those by whom and 
 for whom fresh contrivances for the enchainment of future 
 industry are unceasingly being invented; and it maj' not be 
 superfluous to add, that it is precisely in these contrivances that 
 corruption and falsehood, the fabrication of delusive enterprises 
 and similar abuses, find their easiest and most convenient 
 breeding-place. It is the sudden pouring into the lap of the 
 twentieth century of this form of potential energy, accumulated 
 throughout incalculable ages of the bygone history of the planet, 
 which has created this morbid activity of economic and financial 
 process, the far-reaching effects of which have yet to be analysed, 
 if they do not prove to defy analysis altogether. And the 
 apparent contrast between excessive means and abject poverty, 
 which is so potent a factor of the discontent and unrest of society, 
 has been intensified by no cause more potent than the contem- 
 plation by the indigent of the huge power thus wielded by the 
 temporary possessors of Means so acquired. 
 
 Another point which emerges from the consideration of this 
 mode of Wealth production, is the essential exhaustibility both 
 of Wealth and of Means. If a geologist were possessed of the 
 
c. IV.] INSTANCES OF WEALTH PEODUOTION 53 
 
 necessary data, he could estimate to a nicety the actual cubic 
 contents of every deposit of mineral-oil throughout the world. 
 The supply can never be replaced, and at any given rate of 
 utilization the moment of complete exhaustion could be predicted. 
 This characteristic, of course, mineral-oil shares with coal ; but 
 while the latter is a substance susceptible of only comparatively 
 slow and laborious extraction, oil spurts from its hole spon- 
 taneously under the pressure of the superincumbent mass of the 
 earth, and the process of its exhaustion is proportionately more 
 accelerated. When this is consummated, what the future is to 
 be of the various industries which have sprung up like mush- 
 rooms under its stimulation, it is bewildering to contemplate. 
 Here, however, it is sufficient to note the fact of this charac- 
 teristic, specially appertaining to this form of industry. In a far 
 lesser degree, it is more or less applicable to all forms in turn, 
 and to the sum-total of the results of all. 
 
 Wealth, Means, Capital, Profit, above all Value, the mainspring 
 and index of Economics, all share in the mortality of human 
 institutions. When one form of production dies away, another 
 may or may not arise to take its place ; but none is immortal or 
 perpetual. " Es ist dafiir gesorgt, dass die Baume nicht in den 
 Himmel wachsen," which is a true "law of Nature." 
 
 (B) In Glamorganshire, or in China, or Westphalia, or in 
 New South Wales, lies, so many hundred feet beneath the 
 surface, a stratum of coal, another reservoir, by no means 
 inexhaustible, of the stored-up energy of the sun exerted in 
 bygone aeons in the production of life. The share of Man in 
 rendering the contents of each mine available for the needs of 
 mankind, and therefore an object of value and element of Wealth, 
 consists in digging the pits, devising means of severing the coal 
 from the seam, and transporting it in the required quantities to 
 the places where it can be utilized, and in the carrying out by 
 machinery and by the labour of Man. and animals the means so 
 devised. It is by no means necessary to consider in this aspect 
 any conflicting claims to meritorious service put forth to the 
 " right " to participate in the results of the value so obtained, 
 by the State or country within whose borders, or by the 
 " owner " of the plot of land under which the coal-seam is 
 situated, by the mining-company or capitalist who has "leased" 
 the coal, by the respective staffs of workmen and superintendents 
 who have assisted in producing the mining and transporting 
 
54 THINGS AS THEY AEE 
 
 machinery, by the ponies and horses that expend their life-force 
 underground in dragging the stuff about, by the organizations 
 that in their turn undertake the complex task of trans- 
 porting the extracted substance to the various consumers, 
 or by the infinite other agencies whose products have had 
 to be resorted to in order to sustain those engaged in these 
 multifarious branches of the application of energy throughout 
 the world, and provide the various sets of appliances by the 
 aid of which the work is done. All this, the special thesis of 
 the dreamer Marx, will be glanced at in its proper place. 
 
 But the result of these infinitely varied operations on this 
 substance created by Nature, is the production by Man of a 
 definite and measurable quantity of Wealth and his accumulation 
 of a less measurable mass of Means. Further on it will be 
 necessary to consider what becomes of all this ; for the present 
 the fact of its production is all that has to be noted. But the 
 main purpose for which the production of this particular sub- 
 stance has been cited is to call attention to attributes that it 
 presents in common with many other industries, but in an 
 exceptionally prominent degree. First of all, like petroleum, it 
 possesses, whether in a given country or in the world generally, 
 in a special degree the attribute of exhaustibility. It is true 
 that neither gold nor silver nor other metals, nor even stone, are 
 unlimited in quantity, nor for the matter of that, is the capacity 
 of the earth for producing organic things such as wheat or 
 cotton. But the coal was stored at a particular epoch of the 
 world's growth, and underlies the surface only at definite spots 
 ascertainable to geological science. The need for it, as far as 
 we can see, is likely to be permanent and progressive, the 
 potential supply limited and transitory only — certain, as regards 
 some countries, to cease, not in remote ages, but within a 
 measurable and comparatively short term of years. Jevons'* 
 
 • 
 
 * Jevons, " The Coal Question," Chap. XII., p. 241. The following figures are 
 given in the Report of the Coal Commission, 1905. Calculated available resources 
 proved 100,000 million tons ; present annual output, 230 million tons ; increase of 
 output, 2J% per annum, rising now, however, to i% per annum, i.e., doubling 
 itself every 25 years with acclerating velocity. Prediction of the duration of the 
 supply therefore practically impossible ; but judging from the fact that in a period 
 of extreme trade depression in Europe when the export of every other commodity 
 from the United Kingdom shows a heavy decrease, the export of coal continues to 
 increase, it is difficult to accept the conclusion of the Commissioners that " it is 
 improbable that the present rate of increase can long continue." And note that, 
 given the requisite stimulus of demand, the sinliing of new pits to accelerate the 
 output is a step of mere financial detail, which will be assuredly resorted to. 
 
c. IV.] INSTANCES OF WEALTH PEODUCTION 55 
 
 computation made in the early seventies, according to which 
 the coal of Britain was to be practically exhausted within the 
 lifetime of many now living,- was founded on incomplete geo- 
 logical ascertainment, but his conclusions of principle are inex- 
 pugnable. The respite from the accomplishment of his prediction 
 is but a momentary one ; and, for instance, he would be a bold 
 man who would undertake to predict that after the expira- 
 tion of 150 years from the present, a single ton of coal 
 could be commercially extracted from the rocks underlying 
 British soil. As regards the rest of Europe, it appears probable 
 that the supply is relatively still more restricted and of con- 
 siderably inferior quality. In other parts of the world the 
 substance presents itself far more copiously, it is true, and over 
 wider areas. To these countries will eventually be transferred 
 the industries depending on coal, probably most in northern 
 China and the slopes of the Alleghany mountains. But in all 
 lands it appears that there is, comparatively speaking, a mere 
 span of time between the present and the moment of exhaustion. 
 
 Now though Wealth on the whole is absolutely cosmopolitan, 
 the purpose of the writer* is to appreciate the processes of 
 its production, the workings out of the problems of Economics, 
 mainly as they affect his own country. The industrial con- 
 ditions of Shantung or Pennsylvania concern him not in 
 the least, except in so far as they react on Yorkshire and 
 Lancashire and the other counties of our Britain. For us, 
 for our industrial purposes, coal is the main source of our 
 mechanical energy and the indispensable means of our future 
 industrial productivity, claims on which, held throughout the 
 world, but mainly by ourselves, form what may be called the 
 British contribution to the aggregate of the Means of men. 
 
 It becomes, then, a matter for reflection what steps can be 
 taken in this country for the conservation of this energy for the 
 benefit of future generations of its inhabitants. The steadily 
 increasing demand for British coal to facilitate industrial work 
 in other parts of the world is a claim to exploit the Wealth- 
 resources of a people of one nationality for the purpose of 
 enhancing the production by other peoples of commodities 
 intended for competition with the products of that country, 
 and for lowering the values obtainable, and the remuneration 
 for their workers therein ; and if the interests of the whole of 
 
 • Ante, p. 16. 
 
56 THINGS AS THEY AEE 
 
 the people were really at the heart of those who aspire to be 
 called its statesmen, these considerations would override those 
 of their popularity with the comparatively small section of the 
 citizens concerned in producing and exporting coal, and prompt 
 a devising of means by which the transference to other countries 
 of this life-blood of industry could be not only checked but 
 prohibited. Placed beneath the land appropriated by indi- 
 viduals, coal ought to be, and would be had our forefathers 
 only known, the "property" of the State; though in days when 
 the importance of mineral resources was unrealized this property 
 was allowed to be lightly given away. Whatever may be one's 
 opinion as to the " nationalization " of the surface of the 
 land, there is much to be said in favour of the resumption of 
 State control over the minerals underlying it, which many 
 States have been too wise to part with ; and it may well be, 
 that in regard to this source of Wealth, the supreme law of 
 public well-being will some day have to be enforced, even to 
 the overriding to some extent of the secondary obligation of 
 the sanctity of individual property ; and State control reassumed 
 for the express object of minimising output. 
 
 One more consideration from the contemplation of the circum- 
 stances attending coal-mining deserves notice ; and that is the 
 somewhat paradoxical apparent exception which coal fortunately 
 affords to the general observed sequence, that supply tends to 
 accommodate itself to demand, and that therefore on the whole, 
 and in the long run, it is apt to equalize it, and that therefore 
 the value of an article tends to approximate towards its average 
 cost of production. If the real human being were, as Eicardo 
 imagined him to be, a generalized stockjobber, a mere embodi- 
 ment of sheer acquisitiveness, the constantly increasing demand 
 for coal would tend to lead to a greater and greater number of 
 persons engaging themselves in the production of it, and for 
 longer and longer hours, till the supply kept pace with the 
 demand, and the temporary value of coal in comparison with 
 other products dwindled into a function of the comparative cost 
 of production ; for, for the moment at any rate, and speaking 
 only from year to year, the supply underground, though the 
 exact reverse of inexhaustible, is indefinitely extensible. But a 
 coal-miner is that which Eicardo had no conception of — a real 
 human being. His labour is a painful and unpleasant one, his 
 life one to which it requires long apprenticeship to reconcile him. 
 
c. IV.] INSTANCES OP WEALTH PRODUCTION 57 
 
 full of dangers physical endurance and laborious toil, amid sur- 
 roundings and in circumstances which would make it almost 
 intolerable to the bulk of mankind. Not only therefore, does he 
 justly claim a higher rate of remuneration for his services than 
 the mere physical expenditure of his force would otherwise entitle 
 him to, but also far more leisure — as much as he can afford to 
 himself by reason of those wages; and he prefers to "play," as 
 it is termed in the north, for as many days in the week as the 
 wages earned in the other days put it in his power to do. So it 
 occurs paradoxically, that in respect of this thing, the sequence 
 of increased demand is diminished production, because wages 
 rise with the price of the commodity, and the miner is not only 
 able to enforce a rise of wages with each enhancement of price, 
 but certain so to use his increased wage as to lessen the number 
 of days in which he is earning, instead of increasing the amount 
 of his output. The result of this habit of mind of the coal-miner 
 in Yorkshire and South Wales, for example, is that a rise in price 
 tends to increase itself automatically, so long as the enhanced 
 demand consequent on " briskness of trade " as it is called, con- 
 tinues to induce it. It begins to fall as the general volume of 
 trade slackens, and then he sets to work to dig more if he has 
 the chance. His prosperity in good times is exaggerated, as is 
 his adversity in bad times, by the circumstances of his exceptional 
 employment. The consideration of the coal-mining industry 
 would not be complete without referring to these exceptional 
 peculiarities. 
 
 (C) ,It is proposed now to pass to another example. This is a 
 South African one. It illustrates so many economic phenomena 
 and indicates the action of so many antecedents that although it 
 will be worth while to consider it at some length, the entire 
 sequences of its exceptional phenomena cannot be exhaustively 
 discussed within convenient limits. Diamond-mines have been 
 discovered at several spots beneath the surface of the earth. At 
 the moment, the main effective source of supply lies under the 
 Veldt, somewhere about the borders of Cape Colony and the 
 Transvaal. The substance which the mines yield is for the 
 moment of great desirability when compared with any other. 
 This value, it is true, is but a transient phenomenon of human 
 vanity and caprice ; the stuff itself has no desirability beyond the 
 personal adornment of women ; and even for that purpose, is 
 very slightly superior to easily-fabricated imitations. But so 
 
58 THINGS AS THEY AEE 
 
 long as certain dealers in the article can contrive to regulate the 
 annual output of the African production, as no rival source of 
 supply comes to hand elsewhere, as the receptivity of American 
 • ladies for little bits of this material remains unsaturated ; so long 
 ■will this form of carbon continue to maintain its character of 
 " Wealth " and its gigantic relative desirability. The Diamond 
 exemplifies strikingly and paradoxically (seeing that the material 
 itself is probably the most indestructible of known substances) 
 that evanescent and perishable nature of all Wealth, which, it will 
 be seen, is in the long run* its healthiest and best characteristic. 
 At any moment the day may arrive when the financial engineers 
 of the mining companies, either by reason of continued fresh 
 discoveries of mines, or for any one of a score of other reasons, 
 lose " control of the market." Sooner or later the day must come 
 when the apparently inexhaustible demand will have been satis- 
 fied, a day which will be accelerated if it should occur that a 
 period of financial distress should impel the possessors of these 
 things to attempt generally to " put them on the market " ; and 
 on the day after either of these inevitable things has happened 
 (for there will even afterwards continue some incentive to the 
 "owners" of mines to expend the tiny minimum of labour 
 involved in a continued but unceasingly depreciating production) 
 there will occur such a preponderance of supply that the " value " 
 of diamonds will have disappeared like the precious objects of 
 the vision of Alnaschar, and millions on millions of " values " 
 will have as completely vanished from the face of the world as if 
 they had never existed. A commodity for which there is no 
 demand "is matter in the wrong place," as Lord Palmerston 
 once aptly described dirt. And how diamonds may tend to 
 become dirt is abundantly obvious. For that which sustains the 
 demand for them is just their preciousness and imaginary rarity ; 
 confidence, that is, that the supply will permanently continue 
 inadequate to the demand : a confidence which must inevitably 
 sooner or later prove misplaced. No man will buy a diamond 
 at a price beyond that of a similar lump of rock crystal or garnet, 
 unless he has confidence that in the future he will be able at will, 
 if the desire or the need arises, to exchange it at a somewhat 
 similar price for some other morsel of Wealth. A diamond, like 
 a rare picture, is looked upon by its possessor as so much dor- 
 mant Means put by, available to be converted into an active form 
 
 * See post, p. 146. 
 
civ.] INSTANCES OP WEALTH PEODUCTION 59 
 
 of wealth when need arises. No man will keep a piece of stone 
 which to-day may be convertible for two-thirds of its original 
 price, if he considers that to-morrow it bids fair to be worth but 
 one-third, and the day after but one-thirtieth. It follows there- 
 fore that even while the " last arrived " of the millionaires is in 
 the very act of choosing the tiara which is to adorn the brows of 
 his wife, some hitch will have occurred in the arrangements for 
 the control of the output in the Transvaal, or the first consign- 
 ment of stones from Patagonia will have arrived in Amsterdam, 
 or a crisis will have dethroned a handful of the financial 
 " Kings " of New York. And then suddenly the obvious truth 
 will be realized, that the potential supply of the commodity in 
 the world is more than equal to satisfy the probable demand. 
 From that moment the " value " must begin to drop towards 
 the average prospective cost of the labour of production, which is 
 comparatively minute ; not the cost of making the mine, but 
 just what it is going to cost to continue to dig in it. What will 
 then happen will be what in the elegant and expressive language 
 of "Wall Street " is called "slump " in diamonds. As by the 
 waving of a wand, a monopoly will have been converted into a 
 mononesis. And this " slump " must differ toto ccelo from an 
 ordinary commercial decline in prices — even from the remarkable 
 one, for instance, which the year 1907 witnessed in respect 
 of copper, the price of which at the moment this line is being 
 penned has fallen close on fifty per cent, in two months by a 
 perfectly wholesome and natural market process not essentially 
 dissimilar to that above indicated. But the " slump " in diamonds 
 will be differentiated by its exaggerated intensity, its still greater 
 rapidity of incidence and, above all, by its comparative irretriev- 
 ability. Diamonds are not, like copper, a material susceptible of 
 almost indefinite utilization in scores of arts and industrial 
 processes, and not only capable but economically certain of a 
 recovery in value by the enhancement of the consumption and 
 demand that in the natural course of things must follow on the 
 cheapening of the commodity and the industrial re-adjustment 
 of the demand to the supply. And here comes the cream of the 
 paradox. It is precisely because of the durability of the diamond, 
 a consequence of its indestructibility, because it is incapable of 
 being utilized in the industrial process, in other words consumed, 
 that the wealth arising from its production and the dormant 
 means incident to its possession have this evanescent and 
 
60 THINGS AS THEY AEE 
 
 momentary character. While the demand continues, the wealth 
 accruing to the producers will continue to accumulate, and 
 the surplus over cost of production will become Means. In due 
 time the balance will be redressed. The then possessors of 
 diamonds, the then shareholders in diamond-mining companies, 
 will realize the worthlessness of the Means they have imagined 
 themselves to be permanently in possession of ; with one accord 
 they will flock to market to sell, and Means, the amount of which 
 will not have been increased, but only temporarily transferred 
 by their activity, will leave diamond-producing alone, and transfer 
 itself to some other mode and object of production. As a 
 sequence of the cessation of the employment of capital in the 
 extraction of diamonds from the earth, it is conceivable that 
 in the course of time this form of industry may ultimately revive 
 for a period, and give rise to a fresh temporary " creation " of 
 Means, again in due course to disappear. "E da capo." 
 
 (D) Bulk for bulk, the most startling example, the most colossal 
 value of all conceivable commodities, is that displayed by the 
 substance known as radium. If a few pounds avoirdupois could 
 be successfully produced, and came into the hands of competent 
 skilled persons for scientific application, the Wealth and Means 
 attainable by its employment might conceivably make the 
 millions of an oil magnate or a " diamond king " shrink into 
 nothing by comparison ; and the potential energy evolved from 
 it would reach figures of force and value that it staggers the 
 human intellect to contemplate. But given the requisite appa- 
 ratus, the procuring of which would be a matter of comparatively 
 trifling expenditure, and a sufficient supply of pitch-blende or 
 some other rock containing the metal, there is no conceivable 
 reason why Madame Curie with five or six fairly skilled chemical 
 assistants and a few artisan servitors, the value of the labour of 
 whose expended energy might amount possibly to even so much 
 as £100 per annum apiece, should not, by the use of carefully- 
 devised and intelligently-constructed apparatus for manipulating, 
 storing, and transporting so potent an agent, make industrially 
 available an amount of wealth of infinitely greater potentiality 
 of energy, and therefore of value, than any comparable bulk of 
 any other commodity of the world. Here the source of the Wealth 
 is the rock, in which by some mysteriously obscure chemical 
 reaction far away in the aeons when the planet was first 
 congealing into form from the nebula of its origin, Nature 
 
civ.] INSTANCES OP WEALTH PEODUCTION 61 
 
 incorporated the element (if it is an element). The actual human 
 energy concerned in production is so relatively infinitesimal as to 
 be insusceptible of comparative valuation ; and though the mental 
 achievements involved in conceiving and the dexterity needed in 
 superintending the difficult and delicate process of the extraction 
 may be very great, still it would in the given case be more than 
 adequately rewarded by the concession of but a trifling propor- 
 tion of the enormous wealth produced by its means, if merit were 
 ever to become the real method by which the distribution of 
 profit is determined. 
 
 (E) The earth in the Malay Peninsula, and in certain of the 
 islands which lie to the south-east of it, is, at depths from the sur- 
 face varying from ten to thirty or forty feet, coated with a layer of 
 " cassiterite," which is a very easily reducible chemical modifica- 
 tion of the metallic element tin. The industry involved in the 
 process of the extraction and utilization of this substance is of 
 the simplest conceivable character. Measured by the standard 
 of wage at which Chinese coolies will gladly supply the human 
 labour, there is probably no substance except petroleum which is 
 capable of being removed and prepared and offered for use at a 
 so trifling expenditure of human energy as " drift " tin. And 
 though, compared with other metallic substances, the area of the 
 globe which furnishes the supply of the raw material is singularly 
 restricted, yet but little of that area has as yet been practically 
 exploited, and many times more diggings can be located in it 
 than are at present in operation. The ingenuity and mechanical 
 contrivance needed for its extraction are probably less in propor- 
 tion to its bulk than in the case of any other commodity except 
 petroleum. Tin is a metal used in industry, in such a manner 
 that it is not susceptible of being retrieved after being utilized : 
 it is quite consumable. There is no store of tin already produced 
 which, like scrap-iron or objects made of copper, can be put 
 through the furnace and re-cast into ingots, for its economic use 
 is mainly that of being rolled into exceedingly thin sheets for the 
 covering of what is known as tin plate ; and once so utilized it 
 is irrecoverable. The mode of production of the metal consists 
 simply in removing the superposed clay, scraping up the layer 
 of cassiterite with the rudest appliances, and passing it through 
 the moderate heat of a very simple furnace to be cast into ingots. 
 In respect to the simplicity of its preparation, in fact, tin only 
 yields to platinum, which has not yet been discovered in chemical 
 
62 THINGS AS THEY ARE 
 
 combination at all. For how long, and for what reason, under 
 these circumstances is metallic tin to remain a substance com- 
 manding, weight for weight, twice the price of copper ? This 
 appears at first sight a difficult problem to solve, but in reality 
 the explanation involves no particular mystery, and presents no 
 exception to the general rule of supply and demand. The value 
 of every commodity is momentary, changeable, evanescent, in 
 truth subjective only. In the case of tin it maintains its level 
 from a variety of local conditions affecting the spots whence it is 
 obtained, which are perfectly well understood there, though it is 
 not possible to indicate them within convenient limits in a book 
 like the present. Chief among them is what may be termed the 
 irresponsiveness to stimulus ; * the economic vis inertice, which is 
 the sluggishness, in some instances most obstinate, with which 
 both capital and labour adapt themselves to fresh conditions. 
 The digging of drift tin is a disagreeable employment which only 
 the unfastidious Chinese care to undertake, and even of these it 
 has not yet been found practicable to increase the supply to the 
 extent needed to cope with the demand. And it is for the 
 present, and will for years remain, the true policy of the govern- 
 ments concerned rather to restrict than encourage production 
 for reasons which it is unnecessary to explain. In the mean- 
 time tin is Wealth, and a very important source of Means. And 
 the special characteristics of its production, above noted, are to 
 some extent shared by other commodities, and indicate some of 
 the many conditions under which industrial production has to 
 be carried on throughout the world's area. 
 
 (F) With iron begin the rudiments of modern civilization. 
 Our earliest historical glimpse of Greek history shows us the 
 metal as a rare and precious gift, quite beyond the reach of 
 common need, and imported from the land of the]" Chalybes " as 
 a precious article of commerce. Though iron ore is among the 
 most widely-spread of the mineral constituents of the earth, it is 
 one of those which demand the greatest proportion both of 
 natural and human energy for the production of its metallic 
 ingredient, iron (in which term is included the special chemical 
 modification known as steel). 
 
 The literature of the iron industry would fill many a library. 
 The facts of it are accessible to all who can understand the 
 language in which they are described, and to repeat any of them 
 
 ♦ Bagehot, " Economic Studies," No. III., Part II., p. 153. 
 
c. IV.] INSTANCES OF WEALTH PRODUCTION 63 
 
 would be a superfluous impertinence. Dealing for the moment 
 only with the crude products, iron and steel, in ingots and bars, 
 it is sufficient to say that they constitute a commodity of prime 
 importance ; for they are that out of which must be constructed 
 the great bulk of tools, implements, machinery, and appliances 
 which are the indispensable elements of production and dis- 
 tribution. Now of iron, it will be observed that there is no 
 conceivable limit to the facility of producing it in any required 
 quantity, and that therefore its actual cost of production and 
 therefore capacity of supply relative to demand, determine to a 
 great extent its value and price, which are therefore in the main 
 a function of the number of units of labour value that go to 
 produce the unit of supply. 
 
 In respect of this commodity, therefore, the dictum of Adam 
 Smith approaches the certainty of an axiom. Allowance being 
 made for causes of variation, it is approximately true of iron that 
 when subjected to analysis its exchangeable value will be found 
 a function of the extent to which human energy in its various 
 combinations has built up in the past and will have to be employed 
 to build up in the future, the organizations devoted to produc- 
 tion ; in the past, because the co-operation of an indefinitely back- 
 reaching succession of industries has had to be availed of ; in the 
 future, because it is not the cost at which a thing has been produced 
 which determines its price, but the cost at which it is expected to 
 be possible to replace the thing when consumed. The cheapen- 
 ing of products by improved methods of production, or new 
 facilities of manufacture ; the effects arising from scarcity or 
 increased cost, take place retrospectively, so to say, as soon as 
 the new condition manifests itself. The price of iron in a given 
 country, or in the world (for this and the things made of it are 
 among the most cosmopolitan of all products), must, because of 
 its universal necessity in processes of manufacture, seriously 
 influence the prices of all other commodities. But as to what 
 extent quantitatively in any particular case — still more in general 
 — it is impossible to afford any light. The analysis is far too 
 intricate for human ingenuity. 
 
 Iron and coal are economically considered the chief instru- 
 ments of human production. In the earlier part of the nineteenth 
 century they were imagined to be products the monopoly of 
 which had been assigned by Providence to certain portions of the 
 little island of Great Britain. Now it turns out that Nature was 
 
64 THINGS AS THEY AEE 
 
 more generous and less exclusively British in its purposes and in 
 its original conception of adapting the planet to the use of man- 
 kind than had been supposed. But we are still struggling with 
 some of the effects of what is known as the "Manchester school" 
 of economics, which founded its optimistic doctrine of " Laissez 
 faire " (so closely allied to Anarchism, if one could only see it) on 
 the tacit assumption that " Providence intended " all manufac- 
 turing industry to be a special prerogative of the British nation, 
 and of Lancashire in particular, and that that intention would 
 be obediently carried out in the world in scBcula sceculorum, if 
 only the sacred purposes of Nature were left to work themselves 
 out without the interference of any legislation or regulation by 
 any State whatsoever, and unrestricted opportunity were given 
 to human acquisitiveness to fulfil throughout the world its 
 appointed function of buying in the cheapest market, which 
 would for ever be Manchester. 
 
 (G) The consideration of the phenomena attendant on the 
 production of Gold is a necessary step in the appreciation of 
 economic fact, and it is indispensable to reckon with it in any 
 attempt to analyse financial commercial and industrial process. 
 The chief use of the metal is one which eliminates by far the 
 greater part of it after it has become so applied, from the 
 category of "Wealth," in the sense of its then remaining a 
 commodity to be counted as part of the Wealth of the world ; 
 it is physically transmuted into Money, which is Means, not 
 Wealth. The circumstances of its production are entirely within 
 common knowledge. The fascination of romance attaches to 
 stories of the sudden discoveries of " pockets " of this material 
 in the form of alluvial deposit. Another set of equally interest- 
 ing notions and a prodigious amount of speculation and of that 
 dishonesty which is its inevitable concomitant, attach to the more 
 modern forms of industry involved in Gold production from veins 
 in the quartz in which the metal was left congealed in the early 
 days of the planet. We are concerned neither with the adven- 
 tures of gold-seekers nor with the flotation of companies nor 
 the devices of Johannesburg, but with the economic facts atten- 
 dant on production. 
 
 In contrast with Iron, which either the caprice or some 
 mysterious foresight of Nature has placed in the soil of every 
 land, and very generally in proximity to centres of population ; 
 and with coal, which is to be found in all those parts of the earth 
 
civ.] INSTANCES OF WEALTH PEODUCTION 65 
 
 where a particular section of the secondary geological epoch is 
 accessible within certain limits of vertical depth, Gold has been 
 in modern times discovered always in localities remote from 
 centres of population for the time being. It may be that this is 
 the consequence of the deposits nearer the Mediterranean, which 
 was the centre of the civilization of the earliest times, having 
 become exhausted by early and unrecorded exploration; for 
 history does not go back to a time when the acquisition of Gold 
 was not a ruling avidity of mankind. All forms of mining 
 industry share the attributes of unpleasantness and hardship ; 
 and there is great similarity between the operations of tin-mining 
 and gold -mining, both conducted either by following veins or 
 lodes in rock of the primary epoch, or by grubbing in its detritus by 
 the labour of those to whom the magnitude of the reward suffices 
 to overcome the deterrent hardship and unpleasantness. And to 
 a great extent this labour is recruited among what we are pleased 
 to call " inferior races," i.e., people of different complexions to 
 ourselves, habituated to a lower standard of comfort or a higher 
 one of endurance, Asiatic and African people. But in mining 
 for Gold, which is followed in the veins to formidable and 
 inconvenient depths beneath the surface, a very elaborate and 
 scientific application of human knowledge and a considerable 
 expenditure of means in various forms is essential. Much 
 special and elaborate apparatus, mechanical and chemical, is 
 also required for the extraction out of the rock of its metallic 
 constituents, which are often very " stubborn," as it is called, 
 and the presence of which is measurable by the pennyweight 
 per ton, and of which a proportion of so much as half a pound 
 troy to the ton in any spot confers on the fortunate proprietors 
 of the mine, to quote Dr. Johnson, " potentialities of opulence 
 beyond the dreams of avarice." 
 
 No commodity can be conceived of which possesses the 
 unthinkable attribute of intrinsic value. But Gold has this 
 distinction among all things, that in consequence of its main 
 use, it possesses, alone among commodities, an intrinsic price ; 
 that is to say, every pound Troy " is worth," within a few pence 
 one way or the other, £,i.& 16s., or 468 yen, or 936 marks, or 
 1,170 francs, as the case may be, in England, Japan, Germany 
 or France, and will continue (just so long as Gold is used as the 
 standard material for money) exchangeable at will in any of these 
 countries into the bits of coin made out of it ; these in turn 
 
 T.A. F 
 
66 THINGS AS THEY AEE 
 
 being convertible into any desired product of industry or claim 
 on the products of industry that the owners of them require, 
 precisely to the amount in value so represented. If Gold 
 were demonetized, it would become like silver, a commodity 
 like another, capable of use in certain arts and processes of 
 minor importance, such as jewellery and ornamentation, 
 dentistry, and to some extent for chemical purposes, but its 
 " value " would then be regulated like that of other commodities, 
 exactly by its relative desirability for such uses ; and then the 
 quest for it would be limited to the procuring of the amount 
 necessary to supply the demand of mankind for these limited 
 purposes ; or, more probably, would cease altogether, for abun- 
 dant stores of the material already extracted would then be 
 available, more than sufficient to supply these uses for an 
 indefinite time, the thing being indestructible. 
 
 (H) It would be disrespectful to a dethroned monarch to 
 omit a short reference to Silver, Gold's sister noble metal " in 
 reduced circumstances." One may congratulate oneself that the 
 inexpressibly weary controversy with which the dreaded word 
 " bi-metallism " was once associated is a nightmare of the past. 
 It is but a short time since this thesis appeared to subtend an 
 arc of the mental horizon of economics as great as that which at 
 the moment of writing is occupied by its momentary successor 
 on the stage, " collectivism." In these days of the rapid punc- 
 turing of balloons, there is, outside of lunatic asylums, " none so 
 poor to do reverence" to Silver. Yet " silver prices " survive as 
 an instrument of potency in determining values costs of produc- 
 tion and possibilities of supply and local demand, not only in the 
 Far East, where in one great empire the silver standard of 
 currency still obtains, but in the world generally, as the result 
 of their effects on values production and commerce, in so far as 
 the products of the East and the commodities imported into 
 eastern lands enter into the world competition, and are deter- 
 mining factors of commercial values. Fortunately for the sanity 
 of economics, the efficiency of this variant is disappearing, one 
 may almost say hourly, and for the purposes of practical 
 economic prognosis, Silver, though it shares with bronze nickel 
 and small pieces of paper the distinction of being commonly used 
 as a material on which to impress or imprint characters denoting 
 conventional monetary values for the convenient purpose of 
 passing as small change, has come, or will almost immediately 
 
c. IV.] INSTANCES OF WEALTH PEODUCTION 67 
 
 come, to be regarded as a mere commodity, side by side with its 
 twin-brother Lead. 
 
 Silver and lead occupy towards each other the curious relation 
 that each in its turn is a by-product of the industry mainly 
 directed to the object of producing the other. Almost invariably 
 they are found in juxtaposition in the same ore, and for com- 
 mercial purposes have to be separated from each other by a 
 special process of divorcement. In fact, one is led to suspect an 
 obscure elemental identity somewhat akin to that which has 
 apparently been established between radium and helium. In a 
 lead mine you have to eliminate the silver, and in a silver mine 
 the lead, so that the one cannot be produced without the corre- 
 sponding production of the other, and the effect of this is to induce 
 in respect of these two metals a curious deviation from the 
 general rule that the production of any commodity tends on the 
 whole to adjust itself to the commercial demand. They suggest 
 the astronomical phenomenon of a twin star like " Algol " (which 
 a more popular than accurate authoress once called a "planet") : 
 the darker twin periodically obscuring the brighter one. What 
 is known as a " high-grade " silver mine it will always be worth 
 while to work, because the demand for the material is very 
 extended, and capable of further extension with the progress of 
 art and industry. A "low-grade" silver mine may contain ore 
 which, though admixed with lead, holds it in such small propor- 
 tions as to be insusceptible of profitable extraction, and then 
 that mine will be "shut down" till the demand for silver as a 
 commodity is enhanced. On the other hand, many " high- 
 grade " lead mines contain silver in such considerable quantities 
 that though silver may continue to depreciate in the markets of 
 the world, it must continue to be produced from them as an 
 incidental by-product of the lead industry. With regard either 
 to the values or the production of these metals there is nothing 
 further to be said of interest to the economist. But in respect 
 of price, both exhibit, it may be noted, a more or less barometric 
 indication of the local and temporary abundance or scarcity of 
 gold. Probably no one of the other commodities of the world 
 reflects this with such instantaneous responsiveness as silver, 
 which of the two materials is the less in volume but more 
 abundantly obtainable in proportion to the demand for it, and 
 less susceptible of being absorbed by the larger processes of 
 industry. The price of silver oscillates, therefore, with the 
 
 F 2 
 
68 THINGS AS THEY ARE 
 
 greater rapidity inversely to the need for gold coin, and afifords 
 to the spectator an example of a self-recording micrometer of 
 financial pressure. 
 
 With these examples it is necessary to take leave of those 
 simple processes of Wealth-production which are concerned in 
 the genesis of that part of Wealth which derives directly from 
 the bowels of the earth. 
 
CHAPTER V 
 
 INSTANCES OF WEALTH PRODUCTION (continued) 
 
 Animal and Vegetable Products 
 
 (I) Meat, fish, hides and leather, furs, feathers, wool, silk, 
 dairy produce, and a great number of other substances may all 
 be classed for the purposes of economics as objects resulting 
 from the primeval occupations of mankind, the hunting and the 
 pastoral. All have this quality in common, that in them both 
 the quantities of human energy and of human capital requiring 
 to be expended relatively to the value of the product are com- 
 paratively slight, and the " cost of production " and the " average 
 labour involved in production " intervene to a minimum extent 
 in determining values. They are direct products of the repro- 
 ductiveness of animal life, made available for human needs with 
 the minimum expenditure of the energy of Man ; in which the 
 intervention of natural forces attains its maximum effectiveness 
 and the share of mankind is shown at its minimum. In respect 
 of some of these things, notably wool and silk, it is true that 
 they are eventually made available for use by intricate manu- 
 facturing processes, and the ultimate products partake of tbe 
 special characteristics that are later on to be noticed with respect 
 to "Manufactures," especially as to the participation in the 
 creation of their ultimate value, of Means embodied in the 
 "Capital" of specialized machinery, and of energy in that of 
 an extensive organization of labour and superintendence. And 
 their values are determined according to another set of "laws " 
 superimposed on those observable in respect of the origin of the 
 "raw material," which only enters as one factor in the result. 
 Apart from this, animal products, looked upon as commodities, 
 whether for actual consumption as food or for use as raw 
 materials available for manufacture, are noticeable for the small 
 degree in which the ingredient of human energy, either in the 
 shape of work or in the stored form " Capital," concurs in their 
 production. As to the quantitative extent which this group of 
 
70 THINGS AS THEY AEE 
 
 commodities counts for in the sum total of the " Wealth of the 
 world," it is difficult to hazard a guess. In the older days of 
 communities known to history, and indeed in the actual condition 
 of life of some of the more backward " unsophisticated " races of 
 to-day, such as the Bantus of Africa, they formed and form the 
 main body of "Wealth"; as witness the use to this day of the 
 words "pecunia" and its derivative "pecuniary" to denote 
 money and that which appertains to it. There is no need in 
 respect to this group of articles to follow in detail any of the 
 immensely varied and interesting processes of production. To 
 do so would be a waste of time from the economic, though vastly 
 interesting from the anthropological point of view, a resume of 
 such of the existing human economic processes as are survivals 
 of the days when hunting and pastoral pursuits were the chief 
 forms of the industry of Man. 
 
 With regard to their character as Wealth, some of these 
 products exhibit in a marked degree the characteristic of perish- 
 ableness. They are produced from moment to moment to satisfy 
 the momentary commercial requirements of humanity, that is to 
 say, its " purchasing " power. In no department of industry do 
 demand and supply so directly and instantaneously affect each 
 other, as in some; supply stimulating demand by increased facility 
 and cheapness of acquisition, and demand directly expanding and 
 inducing supply, by the increased encouragement to produce. 
 In respect of such things, for example, as animal food in any 
 form, an over-supply is obviously insusceptible of value ; for 
 nobody wants it commercially, though many pine unavailingly 
 for a greater gratuitous supply. With regard to certain of the 
 vegetable products, on the other hand, they are, as will be seen, 
 signally sluggish in their response to the influence of shifting 
 values. 
 
 Circumstances are in some cases such, that the production 
 can be arrested automatically and almost instantaneously as the 
 demand slackens, and accelerated with almost as great rapidity as 
 it becomes enhanced.* The pitiful processions of pigs to Chicago 
 can be retarded and accelerated at will by telegraph at any point, 
 inasmuch as bacon in the potential form does not deteriorate 
 rapidly. Of no other group of commodities can this be predicated 
 quite to the same extent. And the consequence of this is that, 
 
 * This is not true of iish or " game," the prices of which accordingly oscillate at 
 the market with phenomenal rapidity. 
 
c. v.] INSTANCES OF WEALTH PRODUCTION 71 
 
 relatively to wheat, which is less perishable and the cultivation 
 and yield of which throughout the world is dependent upon a 
 greater variety of natural and artificial causes, slower in opera- 
 tion, the animal constituents of human food are, as regards 
 value and price, less susceptible of variation beyond what is due 
 to local accidental fluctuations of a few days' or hours' duration. 
 Their " prices," judged on the average of months and of years, 
 are equally sensitive with those of other commodities to the rise 
 and fall consequent on the greater or less production of gold in 
 the world; but their average relative values are comparatively 
 far more stable. 
 
 (J) As a type of the commodities produced by agricultural 
 industry, it will be most convenient in the first instance to deal with 
 Wheat. With regard to the value of this product, the first and 
 most striking characteristic is its absolute internationality. The 
 stream and tide of the main staple food of Man flows from various 
 parts to the principal centres of consumption, with a volume and 
 force comparable with the great equatorial and polar currents of 
 the sea. In Europe the production on the whole is and must be 
 increasingly inadequate to the demand, most obviously so in 
 Britain, which grows about one-seventh of the weight required 
 for its own consumption. In the great wheat countries of North 
 and South America and Australia the supply must continue for 
 a long time in excess ; and the main streams from these countries 
 converge somewhere in the neighbourhood of the parts of Europe 
 bordering on the Channel and the North Sea. This is the track 
 of the flow at the present moment ; hereafter in due course other 
 routes will develop themselves and other channels be opened. 
 
 The relative proportions in which human energy and the forces 
 of Nature co-operate in the production of this article it would be 
 hard indeed to determine quantitatively. The material is one 
 which appears in the market in the state most completely un- 
 modified from that in which it is produced from the hand of 
 Nature. Nor is the process of production one in which human 
 energy intervenes beyond a very limited extent indeed. Wheat 
 is not, like the banana — another important article of food — a 
 practically spontaneous gift of Nature which demands no industry 
 of Man, beyond the simple clearing and occasional rough-weeding 
 of a fertile land in a tropical country and the " dibbling " in of 
 a row of suckers ; and of which three-fourths of the price to the 
 consumer represents the cost and profit of transportation and 
 
72 THINGS AS THEY ARE 
 
 distribution. But when we come to compare Wheat with any 
 product of what is termed " manufacturing industry," we perceive 
 how modest in comparison is the claim of the hand of Man to 
 merit. A thousand acres in a western province of Canada, already 
 cleared by Nature for the most part, are enclosed by a rude fence. 
 Apart from the trivial labour of a few farm hands, human energy 
 concurs in the production mainly in the concrete form of the 
 implements, the production of the machine-maker, which are 
 used for ploughing, sowing, reaping, threshing, harrowing, and 
 winnowing. Man is but the tender and servant of these 
 machines, and these form part of the " Capital " of the farmer, 
 commodities which he has acquired by purchase out of that 
 portion of his means which he has devoted to processes of pro- 
 duction. Modern controversy invites us to examine, and dissect, 
 so to say, this " Capital " again into its constituents. The 
 polemics of " collectivism " keep on propounding the riddle: to 
 which agent, capital, or energy, are we to attribute the result in 
 each case, and in what proportions ? And if to capital, of what 
 does that capital consist beyond labour ?* This favourite thesis 
 of the a priori school of economists seems to the inquirer into 
 actual phenomena an extremely futile enigma. But he is 
 challenged to its solution by the claim put forward by contro- 
 versialists that all " Wealth " is the " creation " of " labour," and 
 " ought " to be divided entirely among those engaged in its pro- 
 duction. A fair concrete instance by which to test the validity 
 of this abstract chain of reasoning is afforded by the part 
 which " Capital " in the form of machinery plays in the produc- 
 tion of Wheat. The farmer buys his machines from the manu- 
 facturer, he in his turn obtains his materials from the mines 
 and from the woods, and his own tools from the cutler, by 
 purchase at what may or may not have been an adequate price, 
 but certainly at a price regulated by contract and presumably 
 satisfactory to the producer ; and if there is any meaning in 
 words, they are the " property " of the purchaser. The producer 
 has turned out his machines partly by the employment of other 
 machinery which he in his turn has acquired by his capital, and 
 partly by use of a certain amount of skilled and unskilled labour, 
 which may or may not have been satisfactorily remunerated. 
 But this, too, has been bought and hired according to a scheme of 
 
 * Mill, " Principles of Political Economy," Book I., Chap. V., S 4. See also 
 Pook I., Chap. IV., § 1 
 
c. v.] INSTANCES OP WEALTH PRODUCTION 73 
 
 price and wage agreed upon ; and if there is any meaning in the 
 word " property" the result of that labour is equally his property, 
 to be dealt with as he thinks fit ; and in exchange for the Means 
 of the farmer all these in their turn have been ultimately appro- 
 priated by him and form the effectual instruments by means of 
 which he intends to set to work to assist the sun to extract 
 the Wheat from the soil of the Prairie. Now, dealing with the 
 very extreme " coUectivist " thesis that "property" should 
 be abolished altogether, and wealth divided entirely among its 
 producers, according, not to their means of purchasing it (because 
 they are to have no " Means," " Means " being but another word 
 for the Capital which is to be abolished), but to their needs ; to 
 whose needs " ought" to be apportioned 50,000 or so quarters of 
 wheat which the sun acting on a particular patch of land has 
 yielded to the hands of the man who has undertaken the duty of 
 growing and marketing ? Are they to go to him and his two or 
 three hired labourers, to those who have produced the clothes 
 they have worn and the food they have eaten while they were 
 waiting for the corn, to the machine-maker, or to those who 
 have worked for the cutler, the iron-founder, and the coal-mining 
 company, or the dealer in timber through whose agency he in 
 his turn has obtained the requisites for his production ; or are we 
 to go on for ever resolving capital into labour backward and 
 backward again to the beginning of time ? or is the actual share 
 of each human agent in the production to be ignored, and the 
 product taken by force from the farmer and poured into a 
 Canadian treasury to be distributed among Canadians ; or why 
 not into a world-reservoir for the benefit of the human race ; and 
 when or how it is to be dealt with ? And how is the farmer 
 going to be compelled to recommence his labour when the long 
 hard winter has passed by? Obviously he and his men have 
 had for their sustenance and clothing to avail themselves of 
 labour and materials produced throughout the world from a 
 variety of sources and with an intricacy of origin which sur- 
 passes the wit of man even to conceive. Should the producers 
 of each in their turn have no part in the largesse ? Will not, 
 therefore, an international council of distribution have to be 
 called in for the apportionment, and to determine to what 
 individuals and what country any given product of industry is 
 to be attributed and how distributed ? And who is to stand forth 
 and give a receipt for the share of bygone generations of men. 
 
74 THINGS AS THEY AEE 
 
 from the beginning, who have all in their time contributed to 
 this very production, and then died long before the result of 
 their energy has become available ? 
 
 What is true of Wheat is so nearly true of the rest of the cereal 
 products that nothing instructive can be gained by enumerating 
 seriatim the cases of their production. In each and all the main 
 productive energy is that of the sun exerted on the soil; and 
 Nature and circumstance impose in respect of each and all the 
 same bounds to any rapid increase of supply to cope with an 
 increasing demand. Nor is it possible (as is the case with many 
 of the products of the animal world and to a greater degree still 
 with manufactured articles) rapidly to enhance or arrest supply 
 so as to accommodate it to a temporarily increased or restricted 
 demand; for the productive agency must go on producing or 
 perish. Consequently cereal food-stuffs tend to vary more 
 persistently and for longer periods, in respect of value, than is 
 the case with the majority of commodities ; they are in a high 
 degree, that is, irresponsive to the more immediate economical 
 stimulus or retardation of supply and demand, So it naturally 
 comes about that they form the illustration of the economic 
 process most favoured by politicians ; who never weary of draw- 
 ing deductions of the well-being of this class or that, of the cost 
 of living, the adequacy of wages, and various social topics of 
 importance, by telling illustrations drawn mainly from the 
 " prices " of wheat and bread at such and such places, such and 
 such times, and under such and such conditions actual or 
 imaginary. And all these are incurably fallacious ; for they seek 
 to establish results by the use of an impressive and popular 
 standard, which is in itself exceptionally fluctuating, and of the 
 result of varying factors the relative potency of which it is 
 impossible to determine. 
 
 Bad and good seasons, the opening up of one source of supply 
 or the shutting down of another, alterations in facilities of 
 transport and in the distribution and in the local urgencies of 
 consumption and demand, these and scores of other antecedents 
 combine to affect the price of wheat and bread in any particular 
 set of markets, not only to a degree beyond that of most other 
 commodities, but in a manner considerably more permanent in 
 its result ; and none of such adventitious and temporary causes 
 ever meet with recognition on the part of those who wish to 
 ascribe the temporary rise or fall in price of this particular 
 
c. v.] INSTANCES OP WEALTH PEODUCTION 75 
 
 commodity entirely to some political measure which they have 
 carried or unsuccessfully opposed, or which they advocate or 
 reject ; or to some particular law or institution which they aim 
 at persuading people to assist them in establishing or overturn- 
 ing. The price of wheat accordingly is a favourite plaything of 
 the suffrage-seeking politician ; the " big and little loaf," his 
 most cherished symbol and illustration of economic soundness, 
 the most delusive and economically valueless criterion imaginable. 
 Another point should be glanced at before commencing the 
 consideration of another industry, and that is the interesting 
 contradiction which all cereal products afford to the notion that 
 value essentially and inevitably conforms to the " cost of pro- 
 duction."* "When Mr. Mill emitted this theory, had he, for 
 example, considered two very important articles of food, wheat 
 and rye, one of which per given weight has permanently main- 
 tained the value of rather more than twice that of the other ? 
 For both are cultivated by exactly the same methods and involve 
 exactly the same amount of labour in their production. Did the 
 excellent Mr. Marxt when he laid down the almost identical 
 proposition that the value of every commodity is a mere measure 
 of the amount of the "labour required" "on the average" to 
 produce it, ever realize what occurs in the case of the two main 
 staple articles of food, wheat and rice ? No one who has observed 
 the processes of rice-culture in Southern and Eastern Asia will 
 have failed to note that for the production of a given weight of 
 rice, eight or nine times the amount of direct human labour not 
 only has gone, but is needed, than goes to the same weight of 
 wheat. Every rice-patch is artificially created by an intricate 
 and immensely laborious system of irrigation which expands the 
 valleys upwards to the crests of the hills, applying itself to 
 accurately and laboriously levelled tiny patches of ground in the 
 little area of each man's holding, patch by patch, rill by rill, and 
 hour by hour. Every blade of the plant is inserted by hand into 
 the precise spot in each of the little fifty-foot trays of accurately 
 levelled mud into which each man's patch of cultivation is divided, 
 and in which it is to grow and ripen. Year in and year out the 
 Javanese peasant his wife and children may be seen stooping 
 over the same little patch, incessantly labouring. But the price 
 
 * Mil], "Principlea of Political Economy," Book III., Chap. VI., § 1. See also 
 Eicardo, " Principles of Political Economy and Taxation," Chap. I., § 1. 
 t " Capital," Vol. I., pp. 0, 7. 
 
76 THINGS AS THEY ARE 
 
 and value of rice in the market of the world is about one- 
 half that of wheat, which is practically all sown wholesale by 
 machinery in a few days of the Spring, and reaped by machinery 
 in a few days of the Autumn, and left to Nature for the rest of 
 the year. 
 
 (K) Few applications of energy have excited more attention or 
 given rise to more acute controversy than the production of 
 sugar; and of late years especially, the vicissitudes of this 
 industry have claimed in particular not only the attention of 
 thinkers and the intervention of the State, but even the 
 activities of diplomacy. Sugar can be produced at will from the 
 cane in tropical and the beet in temperate climates ; that is to 
 say, the area of land fit for cultivation is, relatively to the 
 demand, everywhere practically unlimited. But the methods of 
 production are exceptionally expensive, to a degree greatly 
 exceeding that of any other staple vegetable-product whatever. 
 This affects supply. As to demand, it is believed that this 
 potentially is susceptible of almost indefinite increase. Phy- 
 sicians say that the world consumes far too little sugar for its 
 general health, and economists have not failed to note that popula- 
 tions are exceedingly ready to respond by an increased consumption 
 to any increased cheapness and facility of production. But sugar 
 is a substance which happens to be, even at the lowest price which 
 it has reached, particularly valuable in comparison to its bulk ; 
 and possibly for that reason has been selected by the State 
 as a commodity specially pointed out for taxation, generally to 
 the extent of a proportion of its value more excessive than is the 
 case with regard to any other products, except tobacco and 
 alcohol. The result has been that the industry has been con- 
 stantly subjected to a variety of State interferences entirely 
 outside the scope of spontaneously arising industrial vicissitudes ; 
 and this has brought upon people engaged in it a series of 
 experiences probably more perplexing and difficult to meet than 
 has been the case with any other known industry, with the 
 possible exception of that which concerns itself with the fermen- 
 tation and distillation of alcoholic drink. At no time since the 
 abolition of slavery in British possessions has sugar been left to 
 work out its destiny for itself under the operation of the ordinary 
 laws of supply and demand ; it has constantly been artificially 
 encouraged in one form, penalized in another, and the condi- 
 tions of its production and distribution unceasingly meddled 
 
c. v.] INSTANCES OF WEALTH PRODUCTION 77 
 
 with by the action of the State ; it has been the sport and 
 plaything of financiers and statesmen and politicians ; but the 
 material agricultural and industrial processes involved are worth 
 noting as indicating outside of these complicated and potent 
 external disturbing influences some special features. 
 
 In the first place, a peculiarity of the process is, that it 
 is fatal to arrest it from the moment when the beet-root is 
 hoed up or the sugar-cane is cut, till the finished product is 
 turned out. The " saccharine " deteriorates in the root or stem 
 with such immense rapidity by the chemical reaction known as 
 "reversion," that the agricultural and manufacturing operations 
 must be carried on if not on the same spot, at least within a few 
 minutes' distance from each other ; and however skilful and 
 competent, no person can engage in the agricultural part of the 
 production without either he himself has, or some immediate 
 neighbour can put at his disposal within a very few hours of the 
 reaping of the crop, the complicated machinery needed for the 
 extraction of the sugar. An immense initial expenditure of 
 capital is, therefore, a pre-requisite for the industry. Not only 
 that, but the work to be done by that machinery is so severe 
 that the material appliances wear out and become useless within 
 a relatively short period of their acquisition, and yearly renewals 
 on a large scale must of necessity be provided out of yearly 
 gross profits, for the " capital account " has to be closed at a 
 very early period. The constant demand on means is carried 
 still further, for there is keen competition in production, and 
 great ingenuity is expended in the discovery of new contrivances 
 both for extraction and crystallization, and it is indispensable 
 to the manufacturer desirous of keeping his place in the com- 
 mercial organization, that he should avail himself immediately of 
 the cheapest and most improved form of appliances, and he 
 cannot afford to wait to replace his machinery till it has worn 
 out. Long before that it has become obsolete. Improvements 
 have to be effected from year to year. If there be added to 
 these deterrent considerations the fact above adverted to, that 
 the value of the product is being constantly and unexpectedly 
 interfered with by State action, generally prompted by every 
 conceivable consideration other than the interest of the pro- 
 ducer, the conclusion will be arrived at, that the outlook for 
 those whose capital is irretrievably embarked in the industry is 
 not altogether one which they can regard with complacency. 
 
78 THINGS AS THEY AEE 
 
 With regard to sugar produced from the cane, there is the 
 further dif&culty that the agricultural process is one which 
 persons of European origin cannot endure. It is so exhausting 
 and painful that, except under the pressure of great necessity 
 (as in Barbados), in the desuetude of the compelling inducement 
 of the impending lash, the West Indian negro refuses it ; and in 
 Demerara and the Antilles, Asiatics have to be imported by the 
 shipload, and distributed annually in gangs among the planters ; 
 and even when they have arrived, they must be constrained to 
 perform the contractual obligation of their service for a term, by 
 stringent laws and the employment of an army of agents, 
 inspectors, and policemen. (By how great an interval all this 
 differentiates from slavery the impartial critic would find it 
 hard to discriminate.) The cost of all this organization cannot 
 be borne by the " planters," and under various pretexts has 
 necessarily to be defrayed by the State out of taxation. Thus 
 the growing and making of sugar affords the first example of 
 what Mr. Sidney Webb has happily defined as a " parasitic " 
 industry* : an industry, that is, which depends for the possi- 
 bility of its continuance on the contributions of persons outside 
 of it. Nor is this parasitism confined to the tropics. The 
 European producer, no less than his West Indian competitor, is 
 the object of the care of the State and the recipient of solid 
 subvention from State resources. For a variety of reasons, 
 many of them of weight, the governments of countries in 
 Europe which produce sugar have found it expedient to foster 
 and "protect" that particular form of industry above every 
 other ; especially by the general imposition of import-duties 
 avowedly so adjusted as to exclude from the markets of those 
 countries all possible competition from without ; and again, 
 until quite recently in some countries, and even to the present 
 moment in others, the cultivation and manufacture have been 
 and still are encouraged in addition by liberal appropriations of 
 State funds in the form of " bounties on production." As to the 
 wisdom and convenience of such arrangements, the authorities 
 of each State, even if not the best judges, are undoubtedly the 
 most competent to appreciate the practical arguments ; and the 
 result, of course, is that prices within these countries are 
 artificially raised, and the general demand of the world corre- 
 spondingly diminished. A momentary truce has led to a 
 * " Industrial Democracy," Part III., Chap. III. D. 
 
c. v.] INSTANCES OF WEALTH PKODUCTION 79 
 
 diminution in some countries of these forms of very expensive 
 competitive stimulation, by which the European sugar industry 
 has been thus brought to feed at the trencher of the State. But 
 the whole phenomenon presents an example of parasitism pure 
 and unadulterated; the worst feature of which is that it is 
 probably futile. For it may be pretty confidently predicted that 
 " in the long run " it will prove unavailing against the superior 
 productive capacity ot other centres of production. 
 
 Now, with regard to industries which are termed " parasitic," 
 it may be noted that the term, though apt enough, is designedly 
 an opprobrious one. Mr. Webb used it for the express purpose 
 of exciting public disapproval of certain modes of exploiting the 
 necessities of the poor by employing labour at inadequate wages, 
 against which he was engaged in protesting ; and in endeavour- 
 ing to enlist public sympathy in a laudable if rather unpromising 
 struggle, artificially to " protect " labour, and invoke the direct 
 action of the State against the prosecution of industries that can 
 only flourish on an insufficient wage-scale. " Parasitism " is in 
 truth an unsavoury but apparently inevitable concomitant of 
 "Free Trade" when this encourages mononesis, and pants for 
 its " cheapest market." 
 
 It is impossible to depolarise the expression "parasitic"; yet 
 most difficult to substitute some equally applicable term, clear of 
 condemnatory connotation. In itself, in sober truth, an industry 
 is neither the better nor the worse for being " parasitic," i.e., 
 subscribed to, in its effects on the general welfare. The sub- 
 scribers themselves are best able to judge whether their subscrip- 
 tions should be continued ; and the good or ill effect of the sub- 
 scription is by no means so easy to predicate in general as Mr. 
 Webb found it when he invited the British public to a seat by 
 him on the bench when he sate in judgment on the particular 
 case of the" sweaters " in the east of London.* 
 
 Indeed, all forms of " Protection " are, like those of " Free 
 Trade," essentially " parasitic." There is no need at this point 
 to pronounce definitely for or against a "protective" policy, 
 
 * As to " parasitism," in very truth we are all parasites alike — that is the universal 
 law of life ; that each order and class of beings exists on the others, and that each 
 grade and sub-class of each order is dependent on each of the others forlthe possibility 
 of its existence : 
 
 " So, naturalists observe, a flea 
 Hath smaller fleas that on him prey ; 
 And these have smaller still, to bite 'em. 
 And so proceed ad injinitwti." 
 
80 THINGS AS THEY AEE 
 
 which though it obviously lends itself to much iniquity, has 
 commanded the adherence of the all but unanimous consensus 
 of civilized peoples in all countries of the world, and at almost 
 every stage of their modern development. Even that affords no 
 suiScient indication of its desirability or the reverse. Nor is 
 anything good or bad of " Protection " to be predicated from 
 the fact that, like its rival " Free Trade," it is in certain aspects 
 equally " parasitic." As will be seen hereafter, the balance, 
 of the writer's opinion inclines in favour of a " protective " 
 policy. But the arguments pro and con. are closely balanced, 
 and there is no room for intolerant dogmatism on either 
 side. The examination of the whole matter is reserved for 
 Chap. XVI. 
 
 (L) The next sample to be taken is from another process of 
 tropical agriculture pursued under circumstances which are in 
 most respects as diametrically opposite to those of sugar-produc- 
 tion as it is possible to conceive. Several natural families and 
 orders of plants growing in the tropics of America, Africa, and 
 the Malay Archipelago possess in their sap the quality of harden- 
 ing into the plastic and elastic substances known as india-rubber 
 and gutta-percha. Since the early days of the nineteenth 
 century the elasticity of this substance, and afterwards its 
 exceeding plasticity, its property of resistance to electric conduc- 
 tion and its aptness for many industrial processes, have prompted 
 much exploration and enterprise with a view to collecting it by 
 tapping the wild trees ; and great hardships have been borne and 
 privations endured by the explorers ; for the trees grow amidst 
 trackless forests and swamps, and the clumps of them are 
 separated by great distances most difficult to traverse ; but this 
 primitive industry, carried on with the assistance of no capital 
 beyond what is necessary for the provision beforehand of food 
 and clothing for the explorers, has greatly extended under the 
 stimulus of the constantly increasing industrial demand. And 
 the inevitable development has followed, which of course is the 
 substitution (as the field of extraction) of convenient plots of 
 cultivated land in more civilized and accessible places, where the 
 soil and climate enable the cultivation to be carried on. This 
 new " rubber-planting " industry has been simultaneously 
 brought into operation in many parts of the world, the earliest 
 plantations having been formed in the mainland of the Malay 
 Peninsula behind Penang. The capital to be expended is so 
 
c. v.] INSTANCES OP WEALTH PEODUCTION 81 
 
 small, comparatively to the immediate value of the product, as 
 to be relatively all but inappreciable as a factor. 
 
 The cultivation of the Hevea Braziliensis, as the "Para" 
 rubber-tree is botanically named, is a singularly simple affair ; 
 comparable in this respect with that of the banana, mentioned 
 above. The tree is a hardy one, not yet known to be subject to 
 the attacks of any insect or fungoid pests, growing lustily, and 
 only requiring sufficient space, light, warmth and moisture to 
 bear in from five to ten years ; and the collection of the "latex " 
 or juice, though needing some little skill, is a simple operation, 
 involving neither machinery nor any special ingenuity of work 
 In due course it will be found that even in the countries where 
 rubber-trees grow wild, it will be a cheaper and easier operation 
 to sow the seed at convenient spots and plant the trees in places 
 accessible and provided with roads leading to central places from 
 which they can be easily exported, than to continue to organize 
 expeditions of collectors (" conuqueros," they are locally called in 
 Brazil), through the vast trackless forests and swamps of the 
 Upper Amazon and the head-waters of the Orinoco and the 
 Congo. So that it comes about that eventually, when the 
 processes of stimulation of supply by demand, and vice versa, have 
 worked out (and they are now rapidly doing so) the price of the 
 product, which now is momentarily raised to a point something 
 like 200 per cent, above the average present cost of production 
 and marketing, will steadily fall towards the ideal level predicted 
 by Mill and Kicardo for all commodities whatever ; that is to 
 say, towards the average normal cost of production, or, as Herr 
 Marx and Mr. Bell Eobertson put it, " to the minimum at which 
 it will be worth while to producers to produce."* This point 
 has not actually yet been reached by any commodity, and 
 probably never will, even by this. But an approximation to it 
 will and must be exhibited by india-rubber within a compara- 
 tively limited number of years, and then will ensue a series of 
 fluctuations almost exactly predictable, as one source of supply 
 after another ceases to become commercially available, in conse- 
 quence of the cost of exploiting it tending to equal the price in 
 the world's market, which expresses the general demand. At the 
 moment of writing (November, 1907) the stuff fetches a trifle 
 over 6s. per pound in the European markets. The cost of 
 marketing it from the wilds of the Upper Amazon may be taken 
 
 • " The Slavery of Labour," Chap. II. 
 T.A. Q 
 
82 THINGS AS THEY ABE 
 
 at something like 2s. lOd. per pound. It can be turned out in 
 Province Wellesley at present at about 2s. ; in the wild countries 
 of the Congo, by free recourse to mutilation and torture by the 
 agents of the beneficent master of the country, at about the same 
 figure, and in the young plantations throughout the tropical 
 countries and islands of Southern Asia, at figures varying down 
 to a minimum of Is. Ad., which is approximately the normal cost 
 in Java, which has a teeming population of very industrious 
 people, well under control, and able to subsist at very small 
 cost. Nowhere is there any lack either of suitable land or 
 sufficient skill, and the small capital actually required to start 
 associations companies and syndicates can easily be found, even 
 when capital is scarce, though the comparatively large nominal 
 capitals involved indicate a mode of " dilution " depending more 
 or less on the degree of acquisitiveness of the " promoters." 
 
 The result of all is, that the supply must continue to be 
 increased from year to year, as the plantations ripen and are 
 extended ; and there is no impeding cause whatever which can be 
 noted as tending to check the increase till supply becomes adequate 
 to the demand. The demand, in its turn, will, it is expected, prove 
 capable of extension under the stimulus of the continual cheapen- 
 ing of the commodity. Sanguine planters love to dream of a 
 time when the streets of London and New York will have to be 
 paved with the juice of the Hevea Braziliensis ; and their only 
 apprehension is that the synthetic chemist may step in, and find 
 a way of making india-rubber from sawdust or coal-tar or maize, 
 as he has already made indigo ; as he may possibly crystallize 
 diamonds. Unless and until this happens, the vicissitudes of 
 this particular industry may be predicted almost mathematically. 
 At a given point, production from the wild forest will be aban- 
 doned ; and that will have an effect analogous to what occurred 
 when the lower grade silver mines of Montana were suddenly 
 closed down; it will cause a temporary rallying of price, still 
 further stimulating production, which in its turn will lead again 
 to a fall in price, till the time when the slave-drivers of the Congo 
 will find their energy insufficiently lucrative ; and gradually, as 
 organized cultivation becomes the only source, while it expands 
 to the full measure of the demand of industrial manufacture, one 
 after another of the less favourably circumstanced cultivated areas 
 will drop out of the competition, until a comparative equilibrium 
 of value and price has been obtained at some figure essentially 
 
c. v.] INSTANCES OF WEALTH PEODUCTION 83 
 
 represented by a price in slight excess over that arrived at 
 by arithmetical computation of the number of units of labour- 
 value needed to produce the pound or ton of india-rubber, at the 
 standard wage in the country or countries able to supply the 
 cheapest labour. How long a time it will take before that point 
 of equilibrium is reached, and what precise valuations are in the 
 meantime to be looked for, are details of commercial anticipa- 
 tion outside the purview of the economist, and interesting mainly 
 to the speculator in shares. 
 
 Now this prospective analysis of values has been pursued at 
 length because it is essentially true, mutatis mutandis, of a whole 
 category of industries, india-rubber being a mere example, the 
 one which exhibits the tendencies in the simplest form. The 
 tendency that values have to approximate to the cost of pro- 
 duction, though far from being universal, or worthy of being 
 termed a " law " of value, is incident to all those industries which 
 possess the characteristic of indefinitely extensible capacity of 
 production. Just as gravitation tends always to bring together 
 bodies in space with an attraction varying directly as the mass 
 and inversely as the square of the distance, so certain commodi- 
 ties are subject to this mathematically predictable impulse 
 towards the levels of value determined by cost of production, but 
 obey a multitude of other impulses as well ; so that in the broad 
 result, just as the earth continues to revolve in its orbit though 
 subject to the constant impulse to rush into the sun, so industry 
 pursues its course determined not by any one tendency, but by the 
 resultant of many varying attractions which simultaneously 
 operate on values. 
 
 (M) For many ages cotton fibre was deemed a providentially- 
 appointed monopoly of certain districts of sub-tropical North 
 America. And to this day, some superiority either of the specific 
 variety of the bush grown along the southern parts of the 
 Atlantic and Caribbean sea-boards of the United States, or some 
 locally-acquired faculty of cultivation or manipulation, has 
 preserved for the product of this region a degree of desirability 
 which is indicated by its enhanced price as compared with the 
 staples of Egypt or India, for example. This superiority is 
 momentary only, as has already proved to be the case with 
 wool; for State authorities are organizing experiments over 
 most of the warm countries of the globe; and these efforts 
 Providence seems to indicate no purpose of frustrating for the 
 
 a 2 
 
84 THINGS AS THEY ARE 
 
 purpose of flattering the national aspirations of any particular 
 country. Cotton, as regards methods of production, is inter- 
 mediate between sugar and india-rubber, the cultivation being 
 less difficult and the manipulation less delicate, and the labour 
 of cultivation and harvesting involved less than in the case of 
 the former and greater than in that of the latter. No object is 
 to be gained by dwelling at any length on the process. It is in 
 the influences that have attended the values of the product that 
 the interest of the economist concentrates itself; and just as 
 sugar is a representative instance of the prodigious disturbance 
 that the action of the State can occasion to an industry, so 
 cotton stands out as an example of a product, the value of which 
 has been the most subject to manipulation at the hands of 
 private individuals and their aggregates, speculators, market 
 operators and " trusts." The tolerant eye of the economist 
 notes with indifference the influence of greed on commercial and 
 industrial activity. It so happens that the arts of greed have 
 reached a high development among the citizens of the splendid 
 country which has hitherto occupied the chief place in the world 
 in the production of cotton ; and by their means values and 
 prices have been continually disturbed from day to day and 
 from hour to hour throughout the world ; and this has imposed 
 loss on all those who in the course of a more directly productive 
 industry have to make use of the product round which these 
 devices of acquisitiveness have accumulated. This is noted 
 specially with cotton. But the operation of the same causes 
 more or less attends the production of all commodities. All 
 participate in the necessity for commercial dealing, and the 
 standard of obligation in commerce is different to that which 
 would be deduced from the more austere considerations of pure 
 ethics. Even the sacred duty of buying in the cheapest and 
 selling in the dearest market, which Mr. Eicardo assumed to be 
 the economic duty of Man,* as in its exercise he found Man's 
 most divine privilege; even this paramount obligation has to 
 yield to the special contrivances of commerce. 
 
 The subject has been introduced for the purpose of exempli- 
 fying the multiplicity of ingredients that go to make up the 
 phenomena of supply and demand and of value and price ; and 
 has incidentally indicated how far the world is yet distant from 
 
 * See " Principles o£ Political Economy and Taxation," Chap. XXII. ; cf. also 
 Adam Smith, " Wealth of Nations," Book IV., Chap. III., p. 12. 
 
c. v.] INSTANCES OP WEALTH PRODUCTION 85 
 
 the actual realization of the dream that value is the mere 
 expression of the amount and quality of labour needed to 
 produce a commodity, and price a concrete realization of value 
 representing a fixed minimum proportion of money over and 
 above the actual cost of production. 
 
 (N) To illustrate another set of incidents attending the 
 production of Wealth of vegetable origin it may be useful to turn 
 to another article of tropical growth — Cocoa. In manner of 
 cultivation it closely resembles india-rubber, and indeed in some 
 parts planters grow the two side by side. There is a serious 
 difference in their results. It seems that the same quality which 
 fits vegetable products of certain defined sorts for use as food for 
 Man and animals, renders the plants producing them particularly 
 open to the attacks of other organisms, which uninvited feed 
 upon their essence — insect plagues, fungoid growths, and the 
 mysterious intermediate saprophytic microbe organisms classed 
 as •' bacteria." Wheat, potatoes, fresh fruit, the vine in France, 
 the coffee plant in Ceylon, are a few instances to illustrate this 
 apparently general rule ; while those plants the produce of which 
 is used industrially otherwise than for food are comparatively 
 exempt from liability to be fed upon in this way; and in 
 connection with them one hears but little of blight, rust, oidium, 
 hemileia, phylloxera, and similar pests. The cacao tree, whose 
 kernels possess the quality of nutritiousness in an exceptional 
 degree, is one of those the most subject to attacks of this order, 
 and is also, as regards its bearing, the most sensitive to slight 
 local variations of climate and weather. It resembles in this 
 respect the apple and the plum, which may be abounding in one 
 county of England in a year in which the produce may be 
 nothing in another. The plant is economically cultivated round 
 the southern and western shores of the Caribbean Sea and the 
 Gulf of Mexico, and in many regions of tropical Africa, and 
 some quantities also are produced in Brazil and in Ceylon and 
 Southern India. And so it happens, therefore, that while the 
 average production of the world continues fairly constant, or 
 rather steadily increases under the stimulation of a steady 
 demand, there is a very varied productiveness in the different 
 regions in which the cultivation is carried on. Here comes in 
 that element of chance or gambling in which lies the " sporting " 
 attractiveness of production, and which is exhibited nowhere so 
 conspicuously, by the way, as among the potato-growers in 
 
86 THINGS AS THEY AEE 
 
 Lincolnshire, whose expense of tillage in some years exceeds the 
 gross value per acre of their crop, while in other years the 
 profits are correspondingly enhanced. In a lesser degree the 
 same characteristic is exhibited by cocoa, which has been 
 selected as an example simply for the purpose of illustrating the 
 absolute internationality of Wealth and its production, and the 
 impossibility of generalizing as to it by concentrating the atten- 
 tion on any one locality or country, or considering only the 
 circumstances or motives of or results to any particular set of 
 individual producers. Cocoa, like potatoes or apples, continues 
 to be produced in the world to a fairly steady amount and at a 
 steady average cost, and to fetch a price determined entirely by 
 conditions of the average world-demand and supply, which has 
 no relation at all to the circumstances affecting any particular 
 country of its origin, and very little to the average cost of 
 production. The planter in any particular locality might, and 
 probably would, be ruined by two or three bad years in succession. 
 That eventuality he thoroughly realizes, and yet is content to 
 take his chance and prosecute this hazardous industry. In 
 short, industry is, as it were, itself a form of capital, that hope 
 on which it is founded being essentially one of the Protean 
 incarnations of confidence. 
 
 It is proposed to note very shortly two strikingly opposed 
 examples of vegetable products, one of which exhibits the 
 characteristics attendant on monopoly : the unlimited demand, 
 together with a very limited supply ; while the other shows an 
 example of mononesis : the indefinitely increasable supply 
 gradually extending by cheapness an originally very limited 
 demand. These two products, so to say, are dearnesa and 
 cheapness incarnate. It so happens that both of them are used 
 for purposes which strict ethics might reprobate ; but this is 
 irrelevant to the subject of inquiry. " Lucri bonus est odor " is 
 a saying which the moralist properly repudiates, but in which 
 the economist has to learn to acquiesce. To him all possible 
 industries which go to increase the sum total of desirable com- 
 modities are wealth-producing, and have equally to be reckoned 
 with, whether it is virtuous or wicked of mankind to desire the 
 wealth produced by their means. 
 
 (0) The first is quite a tiny and insignificant industry. In 
 the mountains of Manchuria grows wild the plant known as 
 " ginseng " ; and a little band of explorers devote themselves to 
 
c. v.] INSTANCES OF WEALTH PEODUCTION 87 
 
 hunting for it. It does not appear to have been discovered else- 
 where in the world ; and either it refuses to grow under cultiva- 
 tion, or, what is more likely, the fraternity of hunters have 
 taken care that no man should acquire the seed. The writer's 
 informant suspected that they themselves have some means of 
 inducing the plant to grow. They are a trades union, as deter- 
 mined in their purpose and effective in their methods as the 
 Sheffield scissor-grinders of the early sixties; a close corporation, 
 bound by laws of their own, which among the wildernesses where 
 they roam are enforced by irresistible sanctions ; and no man 
 may engage in the quest but a member of the fraternity. Among 
 them there is no competition to work for lower wage ; for " black- 
 legs " all rapidly die ; nor to produce nor vend. Each single 
 plant becomes the property of its discoverer, who watches it and 
 tends it to maturity, quite secure against his right being invaded 
 by any of his fellows. The competition is entirely among the 
 customers. The thing is believed in China to possess certain 
 restorative and stimulating properties, which there is no need to 
 specify ; and Chinese gentlemen outbid each other greedily for 
 morsels of the coveted substance. Probably enough, these 
 magical properties of ginseng exist in the imagination only. 
 But (and this exemplifies the characteristic attaching to value, 
 which in Chap. III. was indicated as economically the most 
 important of all) whether this be so or not is immaterial. For 
 value depends not on what is intrinsic in the object, but entirely 
 on what men believe it to be. It is a mere expression of the 
 desire to possess. There is no limit to the desire to possess 
 ginseng, and therefore no limit to its value or price, other than 
 such as may be imposed on the means and avidity of those 
 desiring it. Therefore the utility, the cost of production, and 
 the " average labour required to produce," are all of them as 
 much and as little elements of the value of this particular drug 
 as they are of the splendours of the Aurora Borealis. And there 
 are many other commodities in the world in like case ; and the 
 total of their values enters into the Wealth of the world to an 
 extent which would greatly surprise the utilitarian philosopher. 
 For these comprise all the things of which the available supply 
 cannot possibly suffice to satisfy the commercial demand. 
 
 (P) The cassava tuber yields glucose, the prime raw material 
 of adulteration. This amylaceous substance is very easily 
 prepared, is quite innocuous, and, except in respect of a slight 
 
88 THINGS AS THEY AEE 
 
 fetidity noticeable only by acute palates, practically tasteless ; 
 and the supply is potentially illimitable. The cassava is the 
 easiest to grow of all tropical plants, and is to be had with a 
 minimum of labour and appliances wherever on the globe is heat 
 and moisture sufficient. We western Europeans drink it in our 
 spirits and beer (especially that brewed in Germany), eat it in 
 our jam puddings, wear it in our shirts and cotton materials, and 
 unconsciously use it in very many other shapes which we do not 
 suspect; for it is being found out that its applicability ranges 
 over a wide field, and the manufacturers who provide it for our 
 unconscious use are modest people, who avail themselves of it 
 unostentatiously. The supply easily responds to the demand, 
 and the exportation from the Eastern Archipelago increases 
 yearly, so that glucose is a very cheap article, the most serious 
 part of its cost, like that of the banana, being the expense of 
 transportation. And it gets steadily cheaper as the increasing 
 demand increasingly stimulates the supply. The value, there- 
 fore, tends ever to be determined by the belief of vendors and 
 purchasers as to the cost of production, for the demand can never 
 reach the potential supply. The lesson and example afforded by 
 these two typical and extreme instances indicate an important 
 and far-reaching sequence of fact — what Mill would have called 
 a " law," more or less applicable to every commodity, and 
 therefore to all Wealth, and one can almost deduce from it the 
 true law of values, which is, that they are the degree of the 
 relative desirabilities of the things of which they are predicated. 
 
CHAPTER VI 
 
 INSTANCES OF WEALTH PRODUCTION (continued) 
 
 Manufactures 
 
 It is not proposed to extend the analysis of specific industry 
 by examining in any detail the gigantic multiplicity of examples 
 afforded by industrial manufacture. Quantitatively, these enter, 
 of course, to a very large extent indeed (though by no means in 
 so great a preponderance as has been unconsciously pictured to 
 themselves by writers belonging to a country concerned mainly 
 with manufacturing process) into the sum total of the Wealth of 
 the world. When Mr. Cobden spoke of Wealth in its relation to 
 the industry of the working man, there was always sub- 
 consciously present to his mind the conception of the cotton 
 mill in Manchester, with its crowds of specialized operatives. A 
 severe exclusiveness of that which is foreign and unfamiliar 
 pervades the conceptions of almost all of the writers who have 
 entered the field of economics since Adam Smith, who alone 
 among them all rose to an adequate idea of the generality of 
 production. To Bastiat, the ideal working man is the Norman 
 peasant in the field or the Burgundian vigneron, and probably if 
 an economist has arisen in Japan his conception of industry will 
 be found to be essentially the varied activity of Osaka, ever busy 
 with the skilful imitation of the products of other nations and 
 the simulation of their trade marks. To those thinking amidst 
 the phenomena of industrial life in Western Europe, processes of 
 manufacture, while they afford the most familiar and most easily 
 observed of all concrete examples of industry, have also the 
 attraction of presenting in a concrete form the phenomena of the 
 specialization of industry, the differentiation of workers, and the 
 action and reaction inter se of complex economic antecedents and 
 sequences — in short, of the mass of enigmas presented for 
 solution by the Sphinx of civilization. On the answers to these 
 depend, not the continued existence of the human race, but the 
 persistence of its civilization. From the point of view of the 
 
90 THINGS AS THEY AEE 
 
 economist, it is on the working out of the organization of industry 
 that the Kfe of the world and of each country in it must 
 ultimately depend, and the consciousness of this subtends by far 
 the greatest arc of his mental horizon. 
 
 Now, all forms of manufacturing industry have this in 
 common: that they postulate the application of means to a 
 formidable extent. The regulated supply of raw material, of 
 the inanimate power of heat, of the necessary wages from which 
 to provide food and clothing for a complex organization of labour 
 which cannot possibly wait for its reward till the product is 
 marketed ; these are primarily necessary — also the organization 
 of commerce and society must be such as to afford perpetual free 
 access to that part of Means which is susceptible of use in pro- 
 duction ; and in particular, possibilities for that potential form 
 of capital known as credit, another of the many incarnations of 
 confidence. The neolithic John and James were innocent of 
 these complex necessities. But they all are conditions precedent 
 to the establishment and the prosecution of modern industrial 
 production. Mr. Henry George pictured to himself the possi- 
 biUty of an association of workmen commencing to manufacture 
 and successfully undertaking industrial business without 
 " capital." So also Mr. Marx, who cherished a vision of a similar 
 elimination of the obnoxious element ; and his followers are at this 
 moment (1907) engaged in the propaganda of the same article of 
 faith, all shouting together in a chorus of unanimity, " Delendse 
 sunt opes." Their proposed modus operandi is a touching 
 instance of the simplicity of the process of self-deception in 
 sincere and thoroughly benevolent and honourable enthusiasts. 
 " Collectivist " not only in respect of George's favourite abomina- 
 tion, private property in land, but as to all things, they imagine 
 a set of working men essentially individualistic, but all working 
 with a view to collective as distinguished from individualistic 
 profit, who are possessed of the necessary skill, and all engaged in 
 the process of manufacturing something. The typical concrete 
 instance given was the simplest of all manufactures, the building 
 of houses. The tools and appliances, the bricks and mortar and 
 scaffolding, were not to be found by " capital " at all ; they were 
 to be obtained by the issue of credit notes, to be compulsorily 
 accepted as provisional payment by the brickmakers, the cement 
 manufacturers, the dealers in planks and boards, the butchers 
 and bakers, and mercers and grocers. Thus would the collectivist, 
 
c.VL] INSTANCES OF WEALTH PEODUCTION 91 
 
 ■without " capital," supply the materials and tools, and feed and 
 clothe and house the workmen until these were in a position to 
 sell the houses they have made, redeem their obligations, and 
 divide amongst themselves the balance of the proceeds — the 
 simplest imaginable example of the beauty and justice of 
 co-operation. So, therefore, similarly, with the making of 
 shoes, calico, and pianofortes and bicycles. All must be carried 
 on co-operatively, and " capitalism " banished from the universe, 
 though Means are to continue to be earned and divided among 
 the co-operators. What on earth the supposed credit notes are, 
 or can conceivably be, but voluntary or compulsory levyings on 
 the capital of other people, these people never stop to reflect. 
 Nay, the credit notes themselves, what they could be while yet 
 in the hands of the brickmaker or the butcher, but a part of the 
 " capital " of either, it is still more difficult to conceive : the 
 things themselves must, like other forms of investment of Means, 
 be an expression of anticipation or confidence, depending entirely 
 for their realization on the existence of the equivalent amount 
 of Means in the hands of future purchasers of houses, and of 
 the degree of confidence in future security which these latter 
 have to feel before they will be content to offer it in exchange for 
 the particular products of any particular co-operative industry 
 which it is proposed to embark upon by this device. 
 
 These notes of the imagination, when you analyse their 
 real nature, will be seen to be a sort of credit on credit, confidence 
 raised to its second power, the actual " creation " of capital, 
 throughout all industrial enterprise ; and that, too, in the most 
 inconvenient and cumbrous form financially conceivable. The 
 issue of an enormous multiplicity of bank notes like unto these, 
 if of a somewhat more elaborate and better reasoned character, 
 are the suggested alternatives for the use of capital. By 
 employing the words " credit," " expectation," " certainty," 
 they think they escape apparent reliance on the hated element 
 of production called "capital"; but, boiled down to their 
 essentials, all these turn out to be transparent contrivances for 
 utilizing the capital of other people against the will of the 
 possessors, destroying confidence and checking the manifestation 
 of that form of the acquisitiveness of mankind worshipped by the 
 utilitarian under the name of " thrift." For in all manufacturing 
 industry the prime pre-requisite is Capital — the accumulated 
 result of what utilitarians dilate upon as the supreme human 
 
92 THINGS AS THEY AEE 
 
 virtue, " thrift," but what really is the natural result of the accu- 
 mulation of profits above and beyond the claims of reproduction ; 
 and whether these have been painfully accumulated by the self- 
 denial of the parcimonious hard-working man, or carelessly 
 left to accumulate by an opulent person possessed of means 
 in excess of what he is able conveniently to expend in the grati- 
 fication of his own appetites, may be a subject of concern to 
 the student of ethics ; but certainly is irrelevant to the follower 
 of economics. 
 
 For manufacture, space is the first need, a place whereon to 
 erect the material fabric of industry. For a subsequent chapter 
 are reserved all economic considerations affecting the ownership 
 and use of land, in respect of which the writer entertains 
 opinions not entirely dissimilar to those of Mr. Henry George, 
 though the methods he would pursue to free land from the 
 perpetuity of individual possession are immensely different to 
 that of the " gradual absorption by taxation " which Mr. George 
 advocates. Next to space comes housing. The erection of the 
 mill has to precede the introduction of the machinery ; but these 
 two primary requisites have to be provided by the outlay of 
 Capital ; which has to be the Capital of the organizer or master 
 or the company or partnership embarking in the industry or 
 what they are able to borrow. Then in their due sequence come 
 machinery, raw material, driving power, and human energy. 
 The constituents of this last will be analysed in a later chapter. 
 But with all the pre-requisites provided to perfection, the enter- 
 prise must be unproductive and will shortly perish of itself, 
 unless directed and informed by commercial wisdom. The 
 prescience of commercial antecedent and sequence, the power of 
 adapting the product to the market for which it is destined, and 
 of commanding the necessary access to the machinery of 
 distribution — all these are, so to say, the post-requisites. The 
 initial pre-requisites and the equally necessary subsequent 
 requisites, are the pocket, the arms and the brain, and in a 
 civilized community even these by themselves will not suffice ; 
 for there needs above and beyond all these the constant co- 
 operation of similar developments of human power in other 
 branches of production and in the essential facilities of trans- 
 portation and distribution, and the concurrence of a similarly 
 organized capacity for production (and therefore also of Means 
 and of their power of absorption) in other nations throughout the 
 
cVI.] INSTANCES OP WEALTH PRODUCTION 93 
 
 world. Nothing impresses the mind with the essentially world- 
 character and internationality of Wealth so forcibly as the 
 contemplation of manufacturing industry in its commercial 
 aspect. All instances point the same moral, and every depart- 
 ment possesses its own history and literature, copiously illustrating 
 this truth. 
 
 It is infinitely more difficult to attain to anything like accuracy 
 in the exemplification of manufacturing callings than to glance, 
 as in the last two chapters, at the comparatively simple industries 
 of the direct production of foodstuffs and raw material, which 
 are more directly the gifts of Nature. It is proposed to com- 
 mence the scanty enumeration with perhaps the simplest of 
 industries — linen. For this happens to be a convenient peg on 
 which to hang the consideration of a particular set of causes 
 which operate throughout the domain of manufacture, and 
 reference to which must be made once for all. 
 
 (Q) Flax is the object of by far the earliest of all forms of 
 cultivation of fibre. It seems almost as old as wheat itself. 
 After many ages during which it was the sole source of vegetable 
 textile material, hemp appeared, and then eventually jute and 
 cotton, in the seventeenth century. Since then there have been 
 partially successful attempts to supplement the list by bringing 
 in the phormium tenax of New Zealand, various species of agave 
 from Mexico, and one or two of the tough grasses. Flax is the 
 crop of Biblical times, and of long before. It is found in the 
 form of linen wound round the mummies of the earliest epochs 
 in Egypt. Relatively speaking, the process of manufacture has 
 undergone very little essential change. It has been extended, 
 and made more intricate, and linen is now woven into more 
 elaborate designs than in early days, by the adoption of Jacquard 
 looms ; but essentially it remains a thing of the spindle, the 
 shuttle, the web and the woof, as it was in the beginning — not 
 really as complex, say, as the production of ingot-iron from 
 the ore. Among manufactures, linen stands out as that which 
 probably in relation to the bulk and value of the product needs 
 the least inanimate power — coal, oil, or the gravitation of water ; 
 on the other hand, it consumes a great deal of human skill, 
 through the intervention of specialized mechanical contrivances ; 
 though the sorting and distributing of the fibre, one of the 
 peculiar complexities of the woollen industry, is a less prominent 
 feature of the preparation of flaxen yarn. The flax spinner, like 
 
94 THINGS AS THEY ARE 
 
 the wool spinner and cotton yarn maker, prefers if possible to 
 conduct his operations by means of water power. The weaving 
 industry, though it has its lesser special characteristics, affords 
 no noticeable economic peculiarity distinguishing it from the 
 manufacture of other cloths. There is nothing else worth 
 noting ; but the conditions affecting supply, demand, and value 
 are somewhat different in each of the textiles. In the first 
 place, in the case of flax the raw material is obtainable from so 
 many countries in the world, by a cultivation so uniformly 
 carried on, and subject to influences so steady in their operation, 
 that there is, on the whole, little or no variation in supply over 
 long periods ; in this it shows a striking contrast to cotton, the 
 cultivation of which is only now beginning to average itself by 
 spreading adequately. Flax-growing has long been so organized 
 as to adjust itself automatically, and without alternations of 
 extremes of value, to demand. This in its turn is also of a 
 particularly regular nature. It tends to increase a little with 
 the means of consumers, and diminish with their impoverish- 
 ment ; but these also tend to equalize themselves when taken in 
 the average and over the surface of the earth, for the people in 
 one part get enriched as those in another are impoverished. 
 Prosperity in the Argentine may wax as that in Japan is on the 
 wane, and vice versd. The people of all flax-producing countries 
 but one take great care that the home-demand should be 
 exclusively supplied by home-production, believing, rightly or 
 wrongly, that the aifording of the maximum of employment to 
 home industry, and the contentment and the amelioration of the 
 lot of the home worker, is a paramount duty cast upon those 
 responsible for the administration of State institutions and the 
 working of the machinery of politics. But in respect of the 
 linen industry, the politician has been comparatively innocuous. 
 The countries which do not produce linen cover a large part of 
 the globe, and in the markets of these, naturally enough, the 
 producing countries compete with each other, and the race is 
 pretty generally with the swiftest. 
 
 On the whole, the demand, like the supply, is a steady one. 
 Though in the world-market prices all bob up and down in 
 respect of this as of every other commodity on the surface of the 
 ebb and flow of gold ; the comparative desirability of linen — its 
 value — is probably the most steady among all. In this respect 
 linen cloth offers a marked contrast to wheat ; and if it were not 
 
c. VI.] INSTANCES OF WEALTH PRODUCTION 95 
 
 that its discussion would afford so little room for political and 
 class excitement, the price of linen would be chosen in preference 
 to that of wheat, and probably of any other product of industry, 
 for the purpose of popularly illustrating the working out of the 
 antecedents and consequences determining values, prices, profits 
 and wages. But though the dissemination of impartial and 
 accurate views of economics is an object of the economist, it is 
 hardly the purpose with which speakers address public meetings 
 or pamphleteers issue partisan booklets. 
 
 With regard to the distribution of profit, and the vexed 
 question of the adequacy of the share attributed to human 
 energy, the linen manufacture in all its stages would seem to 
 offer almost a crucial example by which to test the validity of 
 conflicting theories. There is probably no one of the many 
 forms of the industry of mankind so little subject to disturbing 
 influences from without. It is not necessarily the volume and 
 magnitude of an industry which best fits it to afford a practical 
 test of truth. It is its freedom from disturbing influences. 
 
 Neither in Poland, Belgium, Ireland nor Yorkshire do we hear 
 harrowing tales of distress, unemployment, over-working, of 
 under-payment of the operatives engaged in producing linen 
 yarn and linen cloth. There may be forms of " sweating " in 
 European countries, there is assuredly parasitism, because the 
 home-industry is strictly "protected" in each; and even that 
 form of parasitism which Mr. Webb denounces so forcibly, the 
 employment of women and children to supplement the wages of 
 husband and father for insufficient remuneration, prevails pretty 
 generally. No doubt, occasionally there may be hard times, 
 certainly there are junctures when the rate of profit tends down- 
 wards. But it is very significant that no one has ever heard of 
 a general distress among workers in the linen industry, or wide 
 commercial disaster among those whose capital is engaged in its 
 prosecution — which are catastrophes in which, according to one 
 set of theories, the doom of overworked and underpaid humanity 
 ought long ago to have consummated itself in universal general 
 misery, among people engaged in an industry which for so many 
 centuries has been exposed to the unrestricted play of the pitiless 
 forces of demand and supply. 
 
 If it were possible to work out and evaluate the sum total of 
 energy expended per unit (say the thousand yards of linen cloth) 
 on the average, and taking into consideration, of course, that 
 
96 THINGS AS THEY AEE 
 
 labour of the past which has gone to provide for the satisfaction 
 of the series of pre-requisites enumerated on p. 92, the actual 
 share of efficiency in production attributable to the particular 
 set of persons directly engaged in the actual production of the 
 commodity itself would, it is true, not be a large one. The 
 builders of the mill, the makers of the machinery, the staff of 
 the coal-producers and distributors who have supplied the power 
 expended in the production of pre-requisites through genera- 
 tions, the myriads of other commercial organizers and operatives 
 whose co-operation throughout indefinite years backward has 
 been necessary in order that one unit of cloth may be turned 
 out this year in Belfast, would, if each man had his mathe- 
 matically-ascertained due ascribed to him, outweigh by far the 
 title of the manufacturer and his immediate human subordinates 
 to share in the proceeds of the industry. And in fact they do ; 
 for the measure of the quantitative reward of these pre-requisite 
 elements of production is afforded by the fact that labour absorbs 
 but so much, and profit but so much, of the price for which the 
 linen is exchanged, the vast bulk of the sum total received 
 from the world for linen going to the material "cost of pro- 
 duction," which includes, among other things, the acquisition 
 of all the pre-requisite indispensable things. Apart from the 
 personal wages of skill, the return to the " capitalist " is not 
 a particularly lucrative one, as evidenced by the fact that manu- 
 facturing associations of solid credit and possessing responsible 
 names on their list of directors, find in normal times no difficulty 
 whatever in issuing " debentures," paying on an average from 
 five to six per cent, per annum on the money advanced, which 
 in general will work out on the average at a trifle over one per 
 cent, on the value of the annual gross product. The extreme 
 enemies of Capital consider this excessive, but what we have 
 in view is rather the principle than the details. " Capital," as 
 such, they have no objection to. Their enemy is the abstract 
 " capitalism," the precise meaning of which term of obloquy will 
 be discussed in a later chapter. They seek means by which the 
 pre-requisite ingredients may be obtained in some other manner 
 and without offering any counter-consideration to the prior 
 appropriator. But their success in the quest, it will be seen, is 
 not a contingency to be seriously reckoned with. And, pro- 
 visionally, it is proposed to assume that " Capital," as such — 
 that is to say, the Means devoted to production — is entitled, 
 
c. VI.] INSTANCES OF WEALTH PEODUCTION 97 
 
 irrespective of the reward to the adventurer for his risk and 
 commercial direction, to an adequate return in the form of a 
 reasonable percentage,* calculated on the amount of it used or 
 borrowed. That leaves from 98 to 99 per cent, of the total 
 equivalent of price of the commodities produced to be divided 
 between raw material, profit, salaries and wages — a proportion 
 which in itself does not bear out the thesis that the direct 
 claim of Capital shows sign of weighing down and oppressing 
 the industrial world ; at the same time, this aspect of things 
 does not invalidate the conclusion drawn elsewhere that the over- 
 capitalization of enterprise is a serious source of danger which 
 has to be taken into account and guarded against. 
 
 The other textile industries are analogous in most respects to 
 the one chosen as an example. Broadly, they resemble it in the 
 fact that the manufacturing process is a double one, of spinning 
 fibre into yarn and weaving yarn into cloth, the yarn being in 
 itself a marketable commodity, subject to fluctuations of value 
 according to the supply produced by the spinner and the demand 
 induced by the needs of the weavers for the intermediate raw 
 material. At any one moment yarns may be rising in value, 
 and cloth depreciating, just as ingot-steel may be on the rising 
 and cutlery on the falling grade of prices, or vice versa. But in 
 the long run and on the whole, the finished article and the inter- 
 mediate product must tend to rise or fall in value together ; and 
 the economist has to disregard local and temporary commercial 
 fluctuations, except in so far as the vicissitudes which they 
 induce form a factor affecting the well-being of the industrial 
 classes. Each of the other textiles exhibits, in one form or 
 another, special characteristics, incident to the origin of the fibre, 
 the circumstances of manufacture, and the use of the product. 
 
 * Mr. Henry George (" Progress and Poverty," Book III., Chap. III.) has exer- 
 cised his ingenuity in endeavouring to find an ethical justification for paying 
 interest on capital that shall distinguish it from bis favourite abomination, rent, 
 this latter appearing to him the capital crime of modern civilization. He derives the 
 justification of interest from the fact that Nature herself giveth the increase in 
 certain productive processes, and therefore the man who contributes the Capital by 
 which her productiveness is utilized has a moral claim to participate in the result 
 All this is excellent fooling. The practical justification of interest, as of rent, 
 being simply that the one, like the other, is the bribe necessary to induce the possessor 
 of land or capital to allow his property to be employed to assist the energy of the 
 man who has need of it. Whether it is right that any man should be allowed to 
 possess either may for the moment be treated as an open question ; but the attempt 
 to establish a distinction between the morality of the respective bribes is amusing 
 in the highest degree. Like all importations of ethics into economics, it leads to 
 bewilderment, 
 
 T.A. H 
 
98 THINGS AS THEY ARE 
 
 (R) Silk, for example, is more or less of a luxury,* the product 
 being in requisition mainly among those whom it is the fashion 
 to stigmatize as the " unproductive " or " non-producing " 
 classes. It will be seen how essentially futile and meaningless 
 is this classification, and how impossible it is to found the 
 ascertainment of scientific truth on controversies entered into 
 with the object of promoting class hatred. The spinning and 
 weaving of silk is, in truth, just as much or as little an instance 
 of the " production of wealth " as that of calico, and the pro- 
 cesses of the one employ labour much in the same methods and 
 much with the same result, from the point of view of the econo- 
 mist, as the other. The value of the product is relatively greater if 
 comparison be made of the number of units of labour needed for 
 the production of a given unit of silk than in any other depart- 
 ment of textile industry. The action of the State happens, in 
 the country in which this is written, to have extirpated this 
 particular industry, in obedience to the supreme command, " Thou 
 shalt buy in the cheapest market." And this form of employ- 
 ment is no longer open to capitalists or workmen in the United 
 Kingdom ; and such incidents of production as are peculiar to it 
 must be studied mainly in France, Italy, Switzerland, Austria, 
 China, and Japan. It is a very ancient industry, the conditions 
 of which, like those of linen making, have long since adjusted 
 themselves to the phenomena of supply and demand. The sub- 
 stitution of the power loom and its Jacquard adjustment, for the 
 hand loom and the primitive devices by which patterns of design 
 and colour were once produced, has popularized and made more 
 generally accessible the fabrics of silk and velvet, by no means to 
 the improvement of the quality or enhancement in beauty or 
 value of the products. There is more fluctuation in demand, 
 according to the relative prosperity of the classes consuming, 
 and less adaptability of supply, because of the highly specialized 
 qualifications of those engaged in the industry, who, like the 
 agricultural producers of wheat, have to go on producing or 
 perish. Therefore, in Lyons and in Milan " hard times " and 
 lack of employment a,ffect the workers occasionally with more 
 severity than in Barnsley or Belfast. But there is no evidence 
 of any progressive impoverishment of workers, except in the 
 special cases in which the industry of one centre is being extir- 
 pated by the competition of others. Milan, in particular, presents 
 
 • Mill, " Principles of Political Economy," Book I. 
 
c. VI.] INSTANCES OF WEALTH PRODUCTION 99 
 
 an appearance of deep-lying prosperity exceptional among Italian 
 cities ; and though extreme " socialist " doctrines are in favour 
 with the operatives, these appear to rise rather from the love of 
 excitement and addiction to talk characteristic of an impression- 
 able race than from any actual misery or bitterly-felt insufficiency 
 of the means of existence. 
 
 (S) With regard to woollen products, we are in a position to 
 study details at home. The raw material is luckily producible 
 now in such adequate quantities, and obtainable from such a 
 variety of competing sources, as to afford supply to an extent 
 practically unlimited, and facilitate production to the utmost. 
 The area of the globe on which it can be raised is identical with 
 that of wheat, even somewhat more extended ; because sheep 
 thrive best in countries such as Patagonia, in which the soil is 
 too shallow or the summer temperature too low for economic 
 wheat cultivation. The demand for the finished product is 
 almost co-extensive with civilization, and increases steadily with 
 the increase of the means of acquisition. Neither the productive 
 nor the purchasing power of the world shows any sign of 
 exhaustion in the tendency to increase. As to the reward for 
 labour, that also appears, in contemptuous disregard of the con- 
 clusions of political economy, gradually to improve. The writer 
 has had personal opportunity of observing the dwellings and 
 surroundings of people employed in the English centres of wool- 
 production. Better or better kept homes, fi,ner or better 
 nourished children, a more sturdy, manly, self-reliant population, 
 than can be observed around Bradford and Huddersfield it would 
 be difficult to imagine. They offer an amazing, (^ontrast to the 
 miserable conditions of life in South London, and (odd paradox, 
 not by any means difficult to explain) nowhere in the United 
 Kingdom have the extreme adherents of the doctrines of Collec- 
 tivism found stouter supporters.* With , the vicissitudes of the 
 wool exchange, the yarn market, the commercial operations of 
 the various centres of production and agencies of distribution, 
 there is no need to concern ourselves. There is this to be said 
 about the wool industry, that the cost of machinery — that is to 
 say, the share of capital — enters into the process to a greater 
 degree than with silk or linen. Every stage must commercially 
 be carried on by means of the most modern and most elaborate 
 appliances, because the product is a singularly international one, 
 
 * See p. 404, post. 
 
 H 2 
 
100 THINGS AS THEY AEE 
 
 exposed to strenuous competition at every step ; and under pain 
 of going under, the manufacturer has to keep abreast of the 
 ingenuity and energy of his rivals in other countries. In this 
 respect woollen cloth and " worsteds " exhibit a certain simi- 
 larity to sugar ; the pressure of competing supply, however, not 
 intensifying into oppressiveness, but stimulating only. Also, 
 this industry is marked as one of the few which, in the United 
 Kingdom, have been more supported by the external than the 
 domestic market, and the well-being of those engaged in the 
 industry is therefore particularly bound up with commercial 
 phenomena in the countries which absorb the product. There- 
 fore, in respect of few departments of industry are there more 
 embarrassing and prolonged vicissitudes of good and evil fortune. 
 " Pourtant 9a marche toujours." 
 
 (T) The point to be specially noted with respect to the 
 processes of the manufacture of cotton fabrics is the extreme 
 importance which attaches to two factors, one of which, the 
 preponderant necessity of pre-requisite capital in the form of 
 special machinery, has already been sufficiently dealt with while 
 considering other industries. The other salient peculiarity is 
 the specialization of industry ; what Mill called " the sub-division 
 of labour." At each stage of the process of production, to tend 
 each category of machine — nay, each of the different parts of the 
 same machine — an army of specialized workers has to be enlisted 
 and trained ; and for the economic success of the process as a 
 whole, it is necessary bo to adjust this, that each section performs 
 its due share, and to each is attributed its normal proportion and 
 duty of service. The praise of " the sub-division of labour," the 
 appropriate pseans over the increase of general productiveness 
 which it facilitates, atid of the " wealth " which it produces, have 
 been adequately sung by Stuart Mill.* It is the reverse of the 
 picture, the appreciation of the difficulties and the dangers atten- 
 dant on this differentiation of workers into increasingly specialized 
 employment, that rather claims attention in the twentieth 
 century, t While the perfecting of machinery has been evolved to 
 a point at which, as the brain of the inventor seems almost to 
 animate the iron cogs and cams and arms and levers, so the brain of 
 the operative has become concentrated on, so to say, a mechanical 
 attention; on the slow acquisition of a habit of inducing the 
 
 * " Principles of Political Economy," Book I., Chap. VIII., §§ 4 and 5. 
 t See post, p. )a7. 
 
c. VI.] INSTANCES OF WEALTH PEODUCTION 101 
 
 arms and the fingers constantly and subconsciously to repeat 
 rhythmically certain specified and unvarying movements so as 
 to synchronize exactly with the motions of the machine, Inven- 
 tion has humanized the machine and mechanicalized the human 
 being that controls it. This specialization of faculty and 
 function seems inevitable, and its bearing on the most vital 
 and central of all questions of economics, the well-being of the 
 working-class, is obvious. For the specialized human machine 
 exists and performs its function only as an adjunct and accessory 
 of the specialized iron and steel machine to which it is bound. 
 And this is the true slavery of humanity, not the preconceived 
 imaginary pressure of the labouring class down to the " level of 
 bare subsistence,"* which, on the whole, never has occurred and 
 never will occur, and as regards the mass of skilled workers is 
 a mere spectre evolved from the inner consciousness of theorists 
 unacquainted with fact. 
 
 The vicissitudes of the cotton operatives furnish a striking 
 commentary on the doctrine of Eicardo and Mill, t that labour, 
 like capital, "transfers itself" from unremunerative to remunera- 
 tive employment, just as a perfect fluid flows everywhere with a 
 constant pressure in the line of the least resistance. The cotton 
 operative is exactly as capable of transferring himself to another 
 occupation, when wages become insufficient or employment scarce 
 in his own, as the loom will be to perform the functions of the 
 ploughshare, when in due course of time the exhaustion of the 
 coal supply brings about the replacement by agriculture of a 
 moribund manufacturing industry. This is the fact of industry, 
 as distinguished from the theory. The operative can only 
 thus respecialize himself as the loom can be turned into the 
 ploughshare ; that is by perishing and being recast, by the death 
 of the individual and the painful respecialization of a succeeding 
 generation. Theory disregards, in its abstract generalizations, 
 the " coefficient of friction " in the mechanism of labour. In 
 the case of the specialized operative this coefficient means the 
 starvation, disaster, and death of the individual. It is precisely, 
 therefore, on the minimization of the friction attendant on the 
 
 * See Professor Marshall on the contention of many German socialists that this 
 " iron law " must operate inexorably in any " individualistic " community and the 
 persistency with which they claim Eicardo as the enunciator of it. (Marshall, 
 " Principles of Economics," Book VI., Chap. II., § 2, pp. 575, 576.) 
 
 t Eicardo, " Principles of Political Economy and Tajcation," Chap. VII., § 47 ; 
 Mill, "Principles of Political Economy," Book I,, Chap, V„ § 9, and Book II., 
 Chap. XV., § 4. 
 
102 THINGS AS THEY ARE 
 
 transfer of industry that economics, if it is to be worthy of a 
 place as a practical science, is bound above all other things to 
 concentrate its attention. This friction it would seem is best 
 eliminated and counteracted in any given country by the con- 
 servation of employment for the specialized worker, by ensuring 
 an adequate supply of raw material and a strict parcimony in 
 the extraction of coal ; by extending to the utmost of its power 
 the commercial conditions favourable to the preservation of the 
 demand; by cheapening the facilities of supply, and by State 
 effort directed generally to enable each industrial process in 
 each country to be carried on with profit and in confidence. By 
 a wise combination of these essential precautions it may be 
 possible for the State and for the thinkers and organizers in any 
 (iountry to sustain its industry by rendering it subject to con- 
 ditions so constant and so to be depended upon as to minimize 
 the chances of temporary insufficient employment, and postpone 
 to the furthest possible hour the occasion of the final crisis. 
 
 And yet the while, the eye of the statesman has to be kept on 
 the more remote future, and he has to prepare the institutions of 
 the nation for the inevitable day when a wholesale transfer of 
 industry will be forced on a manufacturing country by the 
 exhaustion of its supply of motive power. Cotton fabrics have 
 been selected as a convenient example for the illustration of 
 these points, inasmuch as the manufacture exhibits these con- 
 ditions in a marked degree ; but except in respect of the group 
 of industries known collectively as the " building trades," which 
 are subject to quite another set of sequences and dangers of 
 their own, and have to be dealt with on another set of principles 
 altogether, the essential factors are common to all processes of 
 manufacture. This, therefore, is the chief enigma propounded 
 by the Sphinx of modern civilization. It has to be answered, or 
 the civilization will perish, and with it the wealth and means 
 which are but its results as they are but one of its factors. The 
 cotton industry of Britain has had its full share of crises since 
 the days of Arkwright, and there seem to be in operation a series 
 of antecedents bearing within them the germs of consequences 
 calculated to produce further vicissitudes. At one time the 
 cessation for a period of the supply of raw material, incident on 
 the events of the American Civil War, affected the fate of the 
 people of Lancashire. How nobly their privations were borne is 
 a matter of history. Since those days a succession of artificially 
 
c. VL] INSTANCES OF WEALTH PEODUCTION 103 
 
 created commercial scarcities, brought about by the acquisitiveness 
 of those who control and manipulate the sources of production 
 of the raw material mentioned on page 84, have operated 
 almost unceasingly. The production of the raw material is now 
 emancipating itself from this sordid and ignoble tyranny by the 
 acclimatization of the plant in countries less subject to abuses of 
 commercialism. Certain influences connected with the deprecia- 
 tion of silver have contributed their quota to the long list of 
 antecedents the sequences of which have affected the welfare of 
 those engaged in production. The exclusion of the products of 
 any one country from the markets of the world brought about 
 by the regulations of the tariffs of others is a progressive 
 development and sequence of the national effort of each country 
 to preserve its own markets for its own producers, which is in 
 full operation and likely to become more and more effective as 
 each country in succession legitimately develops the employment 
 of its own industry to satisfy its own requirements of consump- 
 tion and the commercial demand of the rest of the world. All 
 these influences are measurable, and to some extent susceptible 
 of counteraction. The one which in any country seems inexorably 
 to tend towards the extinction of its power to produce is the 
 exhaustion of the reserve of inanimate power that resides in the 
 stores of coal and mineral oil underlying its surface. As soon 
 as an industry is reduced to importing these, its days of com- 
 petitive production are over, and that proportion of Means and 
 human energy belonging to its inhabitants which is concerned in 
 the production of goods for consumption in foreign countries will 
 have to betake itself to " more lucrative employment " in some 
 other industry, with all the results which in fact accompany and 
 follow the process of readjustment so complacently described by 
 the theorists. 
 
 (U) The economist best performs his function when he 
 abstains from meddling with the province of the moralist and 
 from the use of all terms indicating approbation or the reverse. 
 What are opprobriously described as "intoxicating" drinks form 
 a subject so saturated with controversy that the main difficulty in 
 dealing with it arises from the lack of an adequately " depolar- 
 ized " vocabulary. Among the sober Latin races wine is a mere 
 article of food ; and in modern days, in countries that do not 
 produce the grape, it may be looked upon rather in the light of 
 a more or less unnecessary luxury than an instrument of a 
 
104 THINGS AS THEY ARE 
 
 reprehensible and repulsive vice. Beer and spirits, on the other 
 hand, are undoubtedly used to a great extent to satisfy a set of 
 human cravings, the excessive indulgence in which by the 
 individual, or as a national habit, is prejudicial to the well-being 
 of either man or nation, and the entire extirpation of which, if 
 possible, is the aim, and one might almost say the religion, of a 
 numerous body of benevolent people. But to the economist, the 
 interest attaching to the forms of industry concerned in producing 
 these commodities arises from two altogether different aspects. 
 One of these has been already noticed in respect of sugar ; that is, 
 the peculiar way in which both products lend themselves to State 
 interference by way of taxation and regulation. The other aspect, 
 and the one to illustrate which it has been thought specially 
 desirable to analyse the phenomena of their production and use, 
 introduces us to a new series of problems : those involved in the 
 conception that industries classify themselves into " productive " 
 and " unproductive." * Whatever may be said for beer and 
 whiskey, their best friends will not maintain that they are liquids 
 the use of which sensibly furthers general productivity. 
 
 There is a subtle connotation of approbation and blame 
 attached to the words " productive " and " unproductive " which 
 has tinged the discussion and lent a certain ethical flavour to 
 it, not altogether conducive to clear thinking. The question is 
 worth thinking out afresh and impartially. For the purposes of 
 the mere physical capacity for use in such manner as to further 
 continued production, no commodity, indeed no individual morsel 
 of any commodity, can be regarded as "productive" except in 
 so far as it is utilized in fact in the process of production — that 
 is to say, which does not go either to furnish the material on 
 which or the sustenance of those by whom the act of produc- 
 tion is to be performed. And the conception to have com- 
 pleteness involves a far more complex and infinitely prospective 
 analysis. It has to be carried forward and forward ad infinitum. 
 Of a given quarter of wheat, those grains only (if there is any 
 justification for such an analysis) are susceptible of being classed 
 as "productive " which, when ground into flour and made into 
 bread, will go to build up the frames of men engaged in " pro- 
 ductive " labour ; and again, only such proportion even of that 
 part is truly to be reckoned "productive " which in its turn is 
 to be devoted to the legitimate needs of productivity, and not 
 
 * Mill, " Principles of Political Economy," Book I., Chaps. III. and IV. 
 
c.VI.] INSTANCES OP WEALTH PEODUCTION 105 
 
 wasted by the producers themselves in luxury ; and so ad infinitum. 
 "Whatever, at ever so renaote a stage, goes to facilitate anything 
 but the continued production of necessary commodities has 
 therefore to be ruled out, as either immediately or ultimately 
 " unproductive." Now, how much of that quarter of wheat is 
 productive and how much is unproductive in the true sense is 
 thus a riddle the very stating of which convicts all the cant of 
 commendation attaching to the word " productive " of absurdity, 
 as simply solemn balderdash. The analysis is ludicrously impos- 
 sible qualitatively, and quantitatively unthinkable. And this is the 
 futile consideration to which " political economy " has devoted a 
 succession of infinitely wearying disquisitions. It is obvious, on 
 reflection, that " productivity " and the rest of it are character- 
 istics the true sequences of which are to be sought in another 
 direction altogether. Marx * has pointed out that it is an 
 unvarying concomitant of all industry that, in the first place, it 
 always reproduces the equivalent of the Means and work con- 
 sumed in production. There is no mystery at all about this. 
 The consumption of a thing produces a lack — which is a demand ; 
 and supply adapts itself to the demand automatically, and first of 
 all reproduces the articles to meet that demand. There is a still 
 further simplification of the aspect of this phenomenon, a direct 
 sequence of supply and demand, which will be dealt with in a 
 subsequent chapter. The illustration of the quarter of wheat, 
 from which are produced the loaves of bread that will be con- 
 sumed indifferently by the worker and the idler, the policeman 
 and the thief, the statesman, the soldier, the artist, the professional 
 billiard player and the promoter of sham companies, epitomizes 
 the entirety of what is produced by human industry : the Wealth 
 of the world. It is impossible to discriminate between those 
 portions which are consumed for purposes of which the utili- 
 tarian approves and those that go to uses which he scorns as 
 " unproductive," and therefore not tending to what he con- 
 ceives of as the summum honwm — " the greatest happiness of the 
 greatest number." Man is a Wealth producing and Wealth con- 
 suming animal. It is in that aspect that the economist deals 
 with him. He is a thousand other things besides ; his functions 
 and conduct in respect to which have to be the study of other 
 students, applying other methods and judging by other criteria. 
 The mistake which each specialist in turn makes is that of 
 
 * " Capital," Part I., Chap. XXIII., and Chap. XXIV., § 1. 
 
106 THINGS AS THEY AEE 
 
 keeping too exclusively in view the aspect of humanity with which 
 it is his particular province to deal, and ignoring all others. 
 
 To return to the brewer and the distiller. They supply certain 
 common needs and desires of mankind, which, whether we 
 deplore them or justify them on other grounds, must assuredly 
 be placed in the category of " unproductiveness " defined by the 
 utilitarian ; and not only that, but minister to a considerable 
 extent to " vices " ; a characteristic which they share with the 
 producers of many other commodities destined for food, if those 
 physicians are right who ascribe at least equally unhealthy 
 results to over-indulgence in the sensuality of over-eating as 
 those which attend the slightly more repulsive habit of over- 
 drinking. But the mental and moral unhealthiness which 
 comes from drink intoxication is a peculiarly cogent reason, 
 which leads moralists not only to concur in condemning the 
 excess, but even to look unfavourably on the otherwise innocent 
 or even beneficent use of alcohol for purposes of food. The 
 Church in Mahomedan and the State in some European 
 countries has recognized this peculiar facility of abuse, and 
 met the danger in different ways. The State has in some 
 countries imposed very strict limitations and conditions on the 
 production and distribution of alcohol in the form of beer and 
 spirits. These limitations and conditions have got inextricably 
 involved with fiscal regulations, and in the United Kingdom the 
 two utterly distinct objects of public order and public revenue 
 are being simultaneously pursued by a confusing intricacy of 
 legislation, in which it is difficult to determine which of the two 
 objects is aimed at in any particular clause. This is a matter 
 for the legislator ; the economist is only concerned with it in 
 so far as it affects the conditions of production and the free 
 action of demand on supply. As to the processes themselves 
 there is nothing to note, beyond the fact that fermentation 
 (a biological reaction producing chemical modification) is the 
 indispensable condition of the production of alcohol, distillation 
 being only the application of heat to separate the volatile ingre- 
 dient. And fermentation and distillation are processes which 
 lend themselves with peculiar facility to that substitution of a 
 cheaper for a more expensive material which is called adulteration, 
 and in respect to no industry is there so steady a demand for 
 glucose ; while other and more stimulating adulterants are mixed 
 with beer to some extent, with the effect of making it more 
 
c.YI.] INSTANCES OF WEALTH PEODUCTION 107 
 
 attractive to those who resort to it for getting drunk, and also 
 of making it more deleterious. 
 
 The actual cost of production, apart from charges imposed 
 by State interference, is very small in comparison with what 
 may be taken as the normal " value " ; that is to say, the part 
 of the actual price which can be attributed to the relative desira- 
 bility of the product, apart from that due to the artificial 
 limitation of supply occasioned by State exaction levied on 
 the processes of manufacture and distribution. The organiza- 
 tion of the industry has itself been the subject of experiments 
 in various directions, which in some countries have entirely 
 obscured the economic phenomena attending it. Being a very 
 profitable one, and one actually needing much State supervision, 
 the expedient has been hit on in countries such as Sweden and 
 Eussia, in which distilled alcohol in particular enters largely 
 into the life of the population, of reserving it as a State or 
 municipal monopoly. This has been done for reasons entirely 
 outside of those which actuate " collectivism " in advocating the 
 State absorption of other industries. The manufacture of alcohol 
 affords the first concrete instance of State production and dis- 
 tribution. It would therefore deserve careful study, if it were 
 not that the circumstances are entirely peculiar and exceptional, 
 so that what could be gathered from their consideration would 
 have no value for application to other industries. Relatively 
 to the value of the product the human energy involved in pro- 
 duction is exceptionally small, and that which concerns itself 
 with distribution, though larger, is not a determining constituent 
 item of value or price. These do not appreciably vary with the 
 amount of labour involved in producing or distributing, and 
 only slightly with cost of materials. But the influence of demand 
 and supply does not fail to exert its normal potency, though in 
 other ways the main factors in value of beer and spirits, at any 
 rate, are the influences exercised by them on the habits and 
 tastes of individuals, and on them by the conditions imposed 
 by the State. 
 
 (V) The hands and feet of civilization, the mechanical agents 
 of the production and distribution of all things, are of iron and 
 steel. The thousand industries by which the metal iron is 
 fashioned into the ultimate form of machinery, tools, and the 
 other appliances by means of which mankind works in producing 
 and distributing, are of the greatest importance, affecting as they 
 
108 THINGS AS THEY ARE 
 
 do the materially vital elements of all wealth. But these are so 
 diverse, so varying in their methods and circumstances, that it 
 is all but impossible to select any one which presents economic 
 features identical with any other. It is one of those cases in 
 which the mere attempt to instance particulars is in itself mis- 
 leading. In some — for example, the rolling of steel into rails — 
 the main constituent of value is the cost of production of the 
 raw material ; in others, such as the manufacture of the more 
 delicate instruments of the machinist and the fitter, the price of 
 highly-skilled human energy; in others, again, such as those 
 of the ordinary machine maker, the manufacturer of locomotives, 
 of bicycles, and agricultural machinery, a main ingredient is the 
 cost of the implements resorted to in their turn to produce. No 
 generalization can be attempted which will effectively express 
 anything like a summary of the proportions in which capital, 
 motive power, and human energy, skilled and unskilled, respec- 
 tively contribute to the ultimate result. Nor even is it possible 
 to correctly generalize with respect to these products, as to 
 supply and demand, the constituent elements of value. The 
 raw material is, as we have seen, practically inexhaustible, 
 though the process of obtaining it and rendering it available is 
 in itself a complicated and laborious one. Its value, therefore, 
 may fairly be taken to vary directly with the average cost of 
 the labour involved in its production, though it varies also with 
 other variants as well. The values, as determined by the demand 
 for and supply of the finished products of the several industries, 
 resemble each other only in one general characteristic, and that 
 is the momentary and ephemeral nature both of the wealth they 
 create and of its desirability. Almost as soon as the demand 
 for some particular machine becomes world-wide, the thing 
 itself begins to become obsolete. It is always in the act of 
 being superseded by fresh invention either entirely different, or 
 so dissimilar as to need the readaptation both of the plant for 
 producing it and of the special skill of its producers. 
 
 When dealing with iron and steel we deal incidentally with the 
 associated ordinary metallic substances, brass, bronze, and the 
 other metals and alloys required for the particular parts of 
 machinery and utensils for which iron and steel happen not to 
 be suitable. They do not vary from steel in the mode of 
 their use or the manner of their adaptation. It is desirable to 
 take one concrete instance, but with the proviso that it is 
 
c. VI.] INSTANCES OF WEALTH PRODUCTION 109 
 
 representative only of itself. It is proposed first to consider 
 the comparatively simple industry of the implement maker. 
 
 In this the two most important elements of productiveness 
 are the pre-requisite of applied contrivance and the requi- 
 site of mechanical aptitude and commercial desirability. The 
 price of raw material enters of course to some degree into 
 the ultimate capacity of supply, and therefore into value. The 
 cost of the energy needed for production is, as with all 
 other manufactures, an ingredient of cost, but does not absorb 
 beyond a modest share of the product or even account for the 
 main determining element of value. Metal castings are the 
 form in which the material is mainly applied, and casting is a 
 delicate and special process employing highly-skilled and highly- 
 paid labour ; but that which determines the commercial success 
 or failure of any enterprise belonging to this section of industry 
 is above all adaptability of the implements produced for these 
 purposes, and of the mind of the designer or contriver, to com- 
 mercial requirements throughout the world. These, again, are 
 determined by the varying agricultural and other processes, to 
 assist in which the machines are required. In this business 
 knowledge is pre-eminently power, and the reward of that 
 ingredient of energy which is adaptability and constructive 
 skill absorbs an exceptionally large portion of the gross profit, 
 which is the surplus over actual expenditure in production. 
 
 By an arrangement of international comity and law adopted 
 by the majority of those civilized States whose citizens are 
 engaged in manufacture, the reward of this skill takes the 
 form of a right of monopoly ; and by convention of the several 
 States, arrangements are made for the international recognition 
 and observance of these monopolies, subject to special conditions 
 in each State, but on the whole reasonably uniform. In no 
 other way is it found practicable in any country to arrange for 
 that reward of the inventor which is the mainspring of inven- 
 tion; and there is nothing which so signally illustrates the 
 international character of all wealth and all means as the 
 convention by which, in a greater or less degree, and subject to 
 varying prescribed formalities and compliance with local require- 
 ments of municipal law, each State has undertaken with its 
 fellows thus to recognize and satisfy the claims of inventors 
 throughout the world. The makers of machines pay toll — in 
 some cases heavy toll — to each of an army of contrivers, who 
 
no THINGS AS THEY AKE 
 
 have devoted themselves throughout the world to the perfecting 
 of machinery in respect to the special department of industry 
 for the needs of which they cater; and the specialization of 
 energy which at one end of the process is displayed by the 
 special susceptibility of the nerves and muscles of the individual 
 labourer manifests itself at the other end in the specialized 
 ingenuity of contrivers and "patentees," as they are called, in 
 producing designs for machinery to be applied to the thousands 
 of sorts of special processes of manufacture. And specialization 
 goes beyond this even, in the way of the sub-division of inven- 
 tive energy. The printing-press, the steam-engine, the loom, 
 the furnace, the sewing-machine, the dynamo, the telegraphic 
 apparatus, and hundreds of other contrivances of each division 
 of production, are each, so to say, the centre of a solar system 
 of its own, round which revolve planetary industries, the 
 specialized inventors of which work, each in his own sub-division, 
 each almost unconscious of the existence and independently of 
 the orbit of the other, and each depending for his reward on 
 some special fragment of this necessary privilege of monopoly ; 
 while the commercial co-ordination of these separate streams of 
 effort into the channels indicated by the world's demand is a 
 similarly specialized organization of distribution, needing its 
 own specialized knowledge and its own qualifications of adapt- 
 ability. Some new process, for example, for extracting sugar is 
 hit upon by an inventor, or a combination of two or more 
 inventors, in France or Germany. Finance steps in and 
 "forms a company" and "subscribes its capital," and sets in 
 motion the sweet uses of advertisement, another highly 
 specialized industry of its own, the proficients in which levy 
 their special side-toll at the gate of monopoly. A company or 
 " syndicate " is formed to acquire " patent rights " in all 
 countries of the world and exploit the resultant monopolies. 
 And the " patent company," by a process of germination, gives 
 rise to local branches, which, detached from the stem, take root 
 where they are planted. And all this brings in the function of 
 another most important and lucrative set of special workers. 
 Next happens the institution of special factories for the produc- 
 tion of the new contrivance, and then the commercial specialist 
 is set to work to induce the people engaged in sugar agriculture to 
 avail themselves of the new machinery. This is the function 
 of the specialized commercial traveller. And then in due course 
 
c. VI.] INSTANCES OF WEALTH PEODUCTION 111 
 
 one comes to consider, when analysing values, the effectiveness 
 of the machine ; and, again, in what manner its adoption sets 
 in action a new set of special influences on the values of the 
 thing it produces, and therefore on prices, processes, agricultural 
 conditions, commercial reactions throughout the world. What 
 an amazing contrast to our friends John and James, with their 
 bag of barley and their bundle of rabbit-skins, from the con- 
 ception of whose motives and gestures in the primitive barter 
 places of the neolithic world the political economy of the nine- 
 teenth century complacently deduced the laws which regulate 
 the Wealth of the World and the essential characteristics of 
 human action in the region of Economics ! The production of 
 all machinery is in its essentials influenced by the causes herein 
 noticed, which affect the industry in common with others. 
 
 (W) A more complex instance still is afforded by the con- 
 templation of the industry of shipbuilding. A ship is a floating 
 universe of contrivances subordinated to the purpose of trans- 
 portation. It would be interesting, if it were possible, to analyse 
 quantitatively the processes that have to concur before a com- 
 modity such as either the latest development of the Transatlantic 
 liner, or a supreme engine of destruction in the form of the 
 last devised battleship, can be brought into being as an object 
 fit for its purpose and ready to enter upon the performance of 
 its functions. But an examination of the immense concurrence 
 of industrial processes concerned would be rather by way of 
 being a rhetorical exercise of the imagination than a contri- 
 bution to economic thought. In truth, it would be the history 
 of the individual machine raised, as it were, to a high power, 
 complicating itself as a contrivance for combining contrivances. 
 
 There is one very notable peculiarity of shipbuilding as a 
 manufacturing process, which is the prodigious influence 
 exercised over it by the action of the State and its sub-organiza- 
 tion the Municipality. This disturbing element, which enters 
 more or less as an ingredient into the conditions of productivity 
 in all branches of industry carried on in civilized countries, 
 influences the production of ships in several special distinct 
 ways. 
 
 Each State, for example, has its own ideal of certain essential 
 conditions of safety, below which it conceives it to be its duty to 
 prevent a ship being sent forth from its ports. Probably, at 
 the moment, the United Kingdom compels a somewhat more 
 
Ii2 THINGS AS THEY AEE 
 
 vigorously enforced altruism from its shipbuilders and shipowners, 
 in the way of care for the safety of mariners and passengers, 
 than the average of States ; while the kingdom of Norway is 
 probably the least exacting in this respect. Those who travel 
 from one to another of the ports of the world become familiar 
 with the physiognomy of the nationality of a ship presented by 
 the obvious indications of the greater or less imperativeness of 
 the different State requirements concerning such attributes as 
 stability, solidity, the regulation of deck-cargoes, and the locating 
 of the load-line. According to the different standards of com- 
 mercial morality enforced by the States are the consequences on 
 local demand and supply, on the conditions of local production, 
 and the employment of local labour. Certain classes of com- 
 mercial traffic are practically relegated to vessels produced and 
 sailed subject to the laws of the least exacting State. Men are 
 always to be found driven by poverty to consent to run any risk, 
 but the cheapness of their lives does not conduce to the efficiency 
 of their labour ; and the surface of the sea is strewn with floating 
 wrecks recruited for the most part from the shipyards of the 
 countries least insistent on the observance of conditions of safety. 
 But there is a commercial demand for such inferior commodities, 
 which cannot be satisfied by producers in those countries which 
 insist on conditions of greater safety, for the transport of the 
 rougher and less perishable sorts of merchandise the main 
 ingredient in the cost of which is the expense of transportation, 
 such as lumber, ore, rough salt, coals, guano and nitrate in bulk, 
 and so forth. To convey these profitably, recourse must neces- 
 sarily be had to the cheaper and less nice instruments of 
 transportation produced in countries the Governments of which 
 are less squeamish as to the conditions determining the safety 
 and wholesomeness of the lives of their mariners. And there is 
 therefore an important commercial demand in respect of ships, 
 as of many other commodities, for the worse product in pre- 
 ference to the better, and an advantage in keeping down the average 
 cost of production and the average efficiency of the product. 
 
 One other and important particular in which the interference 
 of the State influences and controls production may as well be 
 noted in reference to shipbuilding as to any other manufacturing 
 industry, though all are subject to it more or less ; and that is the 
 influence of taxation on supply. This point will be more advan- 
 tageously considered in relation to the subjects of rent and 
 
c. VI.] INSTANCES OP WEALTH PEODUCTION US 
 
 taxation. It is sufficient here to indicate the general truth that 
 it is to no purpose that the governing powers of a nation 
 industriously strike off the so-called " shackles " forged by 
 indirect taxation with the one hand, if with the other, by means of 
 rates and other contrivances, they keep on increasing from day to 
 day the burden of direct taxation. Industry pays its toll in some 
 shape or another to either indifferently, as it subscribes to the 
 expenses of government. But controversialists alternately ignore 
 the interests of the " consumer " and the " producer," persist- 
 ently refusing to recognize the extent to which these are one 
 and the same person in different aspects. When an excessive 
 weight of taxation is clapped upon the back of the consumer (as 
 in Britain, where duties on food and tobacco amount to 30s. 
 per head, as against 15s. in Germany and 17s. in the United 
 States), we are bidden assume that this exaction does not " affect 
 production." And the taxation which bears most heavily upon 
 industry is singled out by one school for particular commenda- 
 tion ;* precisely that which is the first indispensable pre-requisite 
 of all production, space wherein to produce. The over-taxation 
 of this kills the industry of shipbuilding, f 
 
 (X) The exemplification of industries would be incomplete 
 without reference to the simple branch which in its various 
 aspects is collectively spoken of as the "building trades." A 
 house is a commodity, like any other, subject as respects value to 
 the influences of cost of production, supply and demand. It is 
 even possibly removable from place to place, but only by the 
 employment of so specialized and difficult an apparatus that 
 commercially a house must be regarded as fixed to the land on 
 which it is constructed. Therefore from the economic point of 
 view it " goes with the land," and its position in space is the 
 main determining element in its desirability. Like a ship, a 
 building is a combination of contrivances ; but though each con- 
 trivance is the product of specialized skill, the putting of them 
 together is especially the task of unskilled and unspecialized 
 labour. There does not seem to have been any deepseated 
 revolution in the way of putting bricks and stones together since 
 the days of the building of Pithom and Eameses. It may be 
 that the clumsy and laborious contrivances of the mason and the 
 
 * Paper on food taxation by S. Eosenbaum, read before Statistical Society 
 May 19, 1908. 
 t See the development of this thesis, post, p. 255. 
 
 T.A. I 
 
114 THINGS AS THEY AEE 
 
 bricklayer will eventually be superseded by some more scientific 
 method of moving and fixing materials, but as yet we have not 
 practically progressed much beyond the pre-historic devices of 
 the hod, the trowel, and the ladder. The carpenter and joiner 
 mainly works by machinery in countries where wood is abundant 
 and water-power available, and exports his product ready fitted. 
 Those who apply the hundreds of other processes the products of 
 which are needed for the completion of a dwelling-place, a mill 
 or a factory, produce each in their own locality, and their pro- 
 ducts are transported to the place where the building is erected. 
 
 The energy of the builder concerns itself with the acquisition in 
 the markets of the world of these special pre-requisites, and there 
 putting them into place by his organization of labour on the spot, 
 and this labour has the peculiarity of being recruited from among 
 the ranks of the most unskilled. In every respect the industry 
 is the antithesis of that of the maker of machinery, who casts 
 and forges his own parts by the use of highly specialized and 
 skilled energy, under stress of the need of constantly developing 
 and competitive powers of contrivance of other manufacturers in 
 the world. The causes that determine values in relation to the 
 products of the building industry it will be more convenient to 
 analyse when dealing with land, with which its product becomes 
 incorporated when completed and brought to market. 
 
 The other aspects from which it is desirable to regard building 
 trades are concerned mainly with the nature and organization 
 of the human energy involved. The circumstances of the trade 
 of building involve that when once a spot of ground has been 
 reserved for the industry of a particular set of workmen to 
 exercise their craft upon, under the superintendence of a particular 
 employer, the demand created by the particular opportunity is 
 exhausted. This differentiates building from all other industries. 
 Agriculture is equally localized in its operation, but its product 
 knows neither locality nor monopoly ; it falls into the stream of 
 Wealth without distinction of origin or purpose. Each building, 
 on the other hand, becomes a thing in itself, containing its own 
 peculiar aptitude for possession and utilization, exchangeable but 
 not interchangeable, whether it assumes the form of the Cathedral 
 of Cologne or a row of workmen's tenements at Walthamstow. 
 But it is in respect to the influence exerted by labour combina- 
 tions that the building trades exhibit their most interesting 
 economical aspect. It must always be remembered that the 
 
c. VI.] INSTANCES OF WEALTH PEODUCTION 115 
 
 combinations of workmen among themselves to enforce their claims 
 and cope with the potent counter-influence of capital are not only 
 good in themselves, but an absolutely indispensable condition of 
 healthy economic process. Without their influence the energy 
 of production would be a mere bond-slave to the acquisitiveness 
 of the capitalist. 
 
 But their essential beneficence must not be held to sanctify 
 all their methods. Capital grovelling at the feet of Labour 
 presents an object lesson equally pitiable with Labour cowering 
 under the lash of hunger wielded by Capital. And when the 
 object aimed at by labour organization runs counter to the 
 general well-being of a community, the factor has to be noted 
 exactly as much as the counter-instances of the over-exploitation 
 of human energy that is apt under the stress of mononesis to 
 follow the excess of acquisitiveness on the part of the employer. 
 Where labour is highly skilled and specialized, its supply is com- 
 paratively limited, and those who direct and advise its demands 
 wisely content themselves with comparatively innocuous prescrip- 
 tions. The skilled engineer or fitter can take care of himself 
 and has little need for a special code of cunning devices to pro- 
 tect himself from the greed of the capitalist. But in proportion 
 as the degree of the skill of the workman decreases, so increases 
 his liability to be ousted from employment and limited in his 
 reward by the competition of entirely unskilled labour from 
 without his trade. It is not in politics alone that Sardou's 
 famous simile is true, when he compared in "Eabagas" the 
 struggles of political life to a crowd inside and outside the door 
 of a building, those outside ever pushing and clamouring for 
 admittance, those inside straining to exclude them, the door ever 
 and anon yielding a little to the pressure from without, and 
 admitting a few of the foremost besiegers, who, immediately on 
 obtaining entrance, turn round and reinforce the army inside, 
 and add their efforts to help exclude their whilom associates. 
 This is what is going on unceasingly in the industrial world. 
 Those inside dub those outside "blacklegs," and against them 
 any ferocity is permissible in the struggle for self-preservation. 
 The moralist may deplore, but the economist has to acquiesce in 
 this inevitable jealous tendency of associated labour. It is a 
 part of the struggle for existence inevitably carried on in one 
 form or another throughout the world from the beginning of 
 time, neither to be approved nor condemned, but impartially 
 
 I 2 
 
116 THINGS AS THEY AEE 
 
 studied in its effects. In the building trade the ultimate result 
 is the restriction of productivity which is supply, relative to 
 demand, and the consequent artificial enhancement of the 
 general cost of living in countries in which this mode of limiting 
 production is resorted to. The ultimate victims of the " trade 
 rules" of the bricklayers and their labourers are their fellow 
 workmen in other employments ; nothing strikes the impartial 
 observer of the conditions of life among the poorest classes more 
 than the inordinately disproportionate excess of the rents these 
 have to pay for the poor tenements in which they have to live, 
 as compared with the total of their means of livelihood. The 
 brain of the Utopian teems with schemes to counteract the ten- 
 dency to aggravation of this source of human suffering. It may 
 be that none would prove more ultimately effective than an 
 intelligent effort to cleanse the minds of workmen from the lurk- 
 ing superstition that has outlived the general scientific repudiation 
 of Eicardo's theory of the " wage fund." It is this mischievous 
 falsehood which lies at the bottom of all the futile regulations 
 prescribing how many bricks shall be laid in an hour, and with 
 which hand the trowel is to be used or the brick lifted, how much 
 shall be carried in each hod, and in what manner the mortar 
 shall be so spread as to ensure the maximum pay for the mini- 
 mum result. To the mind of the bricklayer and his labourer, 
 each little employer has his own little wage fund which bounds the 
 horizon of the self-interest of his employed. It is the exploita- 
 tion of this particular morsel of the " Wages Fund " which seems 
 to them to call for the combination of their organized efforts in 
 the supposed interest of their class, by each man limiting his 
 own productiveness so that he and his fellows can contrive to 
 make their product as dear as possible. The opposed and broader 
 conception that as by productive effort they succeed in cheapen- 
 ing the results of their labour so the effectual demand for the 
 product will be enhanced, and that this in its turn must neces- 
 sarily tend to increase the value and price and bring about a 
 higher rate of wages, is unfortunately beyond their conception 
 in this country. But in America their comrades, no less tena- 
 cious of their legitimate claims, have assimilated the wider truth, 
 and 'their leaders do their best to encourage rather than restrict 
 the productivity of the individual worker, so as to give the fullest 
 possible scope to the public demand. To a greater or less degree, 
 this mistaken conception of self-interest pervades industrialism 
 
e. VI.] INSTANCES OF WEALTH PEODUCTION 117 
 
 in Europe over its whole extent. Each labour-saving and 
 production-cheapening device in turn is the occasion for some 
 fresh manifestation of hostility on the part of the manual worker, 
 and they cannot free themselves from the superstition that the true 
 interest of the workman is bound up with the costliness of what 
 he is producing. This is one of the reasons why in the race for 
 economic predominance and the struggle for the supremacy of 
 neutral markets the Old World is in process of being outstripped 
 by the New, at the same time that the labourer in the United 
 States has attained a condition of independence and a standard 
 of comfort in life which his European comrade regards with an 
 angry and unintelligent envy ; and the capitalist and employer 
 reckons his profits by the millions of dollars while the British 
 or German master has to think in thousands of pounds. 
 
 Here the limitations of space and time compel the relinquish- 
 ment of the examination of concrete industrial process. The 
 ascertainment of fact, if there is any validity in the conception 
 of the true function of Economics entertained by the writer, is 
 the only source of knowledge accessible to the thinker. " All 
 the rest is leather and prunella"; but until an exhaustive 
 encyclopaedia of industry elaborated by true statistics has been 
 compiled on these lines, the science of Economics must remain 
 rudimentary and tentative only. Meanwhile the utmost that can 
 be done is to assist mankind in realizing its own ignorance, 
 incidentally dealing with some of the theories which that 
 ignorance has built up for itself out of the introspective con- 
 templation of its own mistaken conceptions. 
 
CHAPTER VII 
 
 wealth distribution and means production 
 
 Commerce 
 
 To attempt to analyse the multifarious special operations of 
 trade, even to the limited extent followed in the foregoing 
 chapters with respect to industrial and manufacturing produc- 
 tion, would be a task transcending both the powers of the writer 
 and the limits which it is convenient to set to the present intro- 
 ductory work; nor, for the correct appreciation of essentially 
 determinant economic facts, does it seem that such a method of 
 treatment is really needed. For however specialized or localized 
 on the one hand, however generalized and far-reaching on the 
 other they may be, all commercial transactions whatever follow 
 one and the same law and are subject to precisely identical 
 influences of causation. Commerce may be looked at in two 
 lights : on the one hand as an automatic process in the equaliza- 
 tion of values, from place to place, and from time to time, by the 
 distribution of commodities from places where they have less 
 value to other places where they are expected to have more : on 
 the other hand it has also to be regarded as the world process of 
 the alternative transmutation of commodities into Means and Means 
 into commodities ; the incessant " buying and selling " of com- 
 modities and the machinery of their transportation. Trade is an 
 integral part of production ; for this includes the energy utilized 
 in distribution. And the industries are inseparable ; for what is 
 wanted is the thing in the place where it is to be used ; and the 
 process of its production is incomplete till it reaches the hands 
 of the consumer. That part of it which moves the material at 
 any stage or the finished product from one place to another is 
 commerce. For this, as for the industrial part of production, 
 acquisitiveness is the motive; acquisitiveness of a specialized 
 order, developing along the line of the correct estimation of 
 differences of value, and induced by the hope of acquiring profit 
 by taking advantage of them; by shifting things and money 
 
c. VII.] COMMERCE 119 
 
 from one place to another, by choosing the proper future moment 
 in which to buy or sell the results of labour. Now this power of 
 estimation is essentially a function of the individual or of the 
 organization of individuals. The State not only can do nothing 
 by way of exercising it, but must do nothing. It is a trustee, 
 essentially incapable of being moved by self-interest. The 
 nation may have interests, the State is only capable of duties. 
 
 This moving to and fro of things in obedience to the dealer's 
 conception of the wants of mankind is a world-process, tending 
 to the equalization of world-values. There are subsidiary minor 
 currents set up within the boundaries of each country, adjusting 
 and directing local supply to meet local demand from place to 
 place within the country ; from the market of production to the 
 market of consumption. But these must be ignored from the 
 economic point of view, which must in this respect be essentially 
 international ; and though their estimation is a vital process in 
 the domestic economic life of each country and of each locality, in 
 what concerns the commercial function of the collective nation they 
 take no share. The energy of each nation finds employment in 
 the setting of them in motion, but that is energy produced and 
 consumed at home, and only capable of exercising influence on 
 the commerce of the particular country as a unit in comparison 
 with other units, by virtue of such profit as its people engaged in 
 this part of its industry are able to appropriate to themselves ; 
 which forms a part of the Means of the people of the country. 
 The world over, the function of commerce is essentially the 
 perpetual transformation of Means into Wealth, which is produc- 
 tion ; and the retransformation of Wealth into Means, which is 
 consumption ; any attempt to treat of commerce as a regulated 
 process of " barter " or " exchange of commodities " inter se, 
 simply facilitated by the employment of money as a sort of 
 denotation of market values, issues in fallacy and confusion. 
 
 A country mainly concerned in production fulfils the functions 
 of employing its Means in absorbing the raw materials of the 
 world necessary to supply its industries, and working them up by 
 human energy; and of re-exporting so much of the product as is in 
 excess of its internal requirements ; the distribution and exporta- 
 tion of the balance being simply a part of the process of production 
 at the place in which the product is ultimately marketed. What 
 each country sends out, therefore, from foreign things will equal 
 in value what has been brought in to produce it from, plus 
 
120 THINGS AS THEY AEE 
 
 what is added to it by manufacture, and minus the value of that 
 part of the product which is absorbed at home ; and in the 
 additional value conferred by manufacture must be reckoned, of 
 course, the value conferred by the transportation of goods by the 
 enterprise of that country to the foreign market. In the same 
 manner, also, what is made and sent away from materials pro- 
 duced at home acquires its value, and earns its exchange in Means. 
 And most things are made partly from materials imported and 
 partly from indigenous stuff and by the aid of other things made 
 at home. Take a concrete instance. Assume an amount, say 
 £20,000,000 worth, of cotton fibre imported into England in a 
 given year, which is worked up in Lancashire by the use of 
 English coal, machinery, other materials, and energy into, say, 
 £70,000,000 worth of cotton cloth ; of this seventy millions of 
 cotton stuff, take twenty for home consumption ; fifty go 
 abroad. To the fifty there comes to be added in value the 
 reward of English enterprise in organizing the means of its 
 transportation to Valparaiso, or Odessa, or Shanghai, and this, 
 maybe, represents another million or two ; which is the 
 cost, plus profit, of that particular employment of British 
 energy. There is then, therefore, set a-going a current of 
 goods outwards and value inwards to the extent of, say, 
 £32,000,000 on balance pro tanto, in favour of British industry. 
 If this were the sole external function and business of Britain, 
 and everything else used here were produced in the country, the 
 values of the world would therefore tend continually to concen- 
 trate themselves year by year on this country to that amount. 
 In one sense the rest of the world would be annually paying in 
 this thirty-two millions somehow in values, whether in money or 
 credit or goods or securities is immaterial ; because each and all 
 of these are in normal times mutually interchangeable. 
 
 Some part of the debt to us will have been paid by 
 means of the original twenty millions of raw cotton sent in ; 
 as to the balance of thirty-two, which the world would owe in 
 respect of the issuing fifty-two, why, that would come in the 
 shape of other values, whether in gold, or in goods, or 
 promises to pay, or securities, or the mechanical services of 
 transportation to England, and in what proportion of each is 
 entirely irrelevant to the question. For what is wanted in 
 England is the value and price wherewith to add to the 
 Means of the English. And this is the whole story and 
 
c. VIL] COMMERCE 121 
 
 analysis of all the commerce of all the world, when " boiled 
 down," as they say, to its simplest elementary expression. But 
 the actual process of commercial enterprise is of course infinitely 
 more intricate ; complicated, that is to say, not only by the 
 immense variety of enterprises within each country, but still 
 further by the action and counteraction of all countries on each 
 other, each with its own cosmos of industries, all of which 
 depend on the markets of the world. The process differs toto 
 ceelo from the primitive " barter," which is the obtaining of 
 goods for goods. The producer requires in exchange, not goods, 
 but Means, whether to be expended in goods at the moment or in 
 ten years' time, or to be embodied in the acquisition of the right 
 to acquire future means by investment ; but the purposes to 
 which these Means are intended to be devoted by the man who 
 acquires have nothing to do with the results to him of his 
 industry of production. He also requires other goods in 
 exchange for his own Means ; but that, as Mr. Eudyard Kipling 
 would say, is " another story." His demand and production 
 alike are determined by demand, which is the readiness of the 
 Means of other people to transform itself into his goods, and by 
 " supply," which is the correlative faculty, not of himself only, 
 but of all who are engaged, of supplying that demand in com- 
 petition with other producers elsewhere of similar things ; and 
 by no other consideration whatever. 
 
 The commerce of a country is made up of the multifarious 
 aggregate of these transactions in all conceivable branches of 
 industry, acting and reacting on the similar network of organiza- 
 tions throughout the world. But in respect of each molecule 
 of the world's trade, the acting force or motive is one and the 
 same everywhere, which is demand ; and no other motive is so 
 much as imaginable. The means of each purchaser are sus- 
 ceptible of increment by his trade, no doubt ; and the more he 
 can profitably produce and supply, the greater his capacity pro 
 tanto to absorb those things which he may desire and which 
 other people have the power of producing. But his need and 
 desire for any particular class of goods or for the goods of any 
 particular nation does not necessarily augment with his power to 
 purchase, nor can he have any particular impulse to acquire 
 goods from country A rather than country B, simply because he 
 happens to have sold goods to country A rather than to country B. 
 That would be absurd. Why should he ? The machine-maker 
 
122 THINGS AS THEY AEE 
 
 in Yorkshire owes no gratitude and is under no servitude to 
 Sweden either because his iron comes from Sweden, or because 
 he has sold patent ploughs to Swedish customers ; and if he 
 wants lucifer matches, he will buy English, or Swedish, or 
 Japanese indifferently, according as they best suit his require- 
 ments. All are paid for in the same way, out of the same fund, 
 and indifferently; by the acceptance of drafts drawn in Stockholm, 
 London, or Yokohama, as the case may be. For all the means 
 of the world are equally at the service of commerce, ready to be 
 drawn from in obedience to any and every current of value 
 setting in from any one spot to any other on its surface. A very 
 small proportion of commercial transactions is begun and com- 
 pleted between the country of original production and that of 
 ultimate destination. Such a thing may occur, but in general 
 the total balance only of the values of the entirety of its trans- 
 actions reaches the finance of one country; and from what 
 particular point of the world's ocean each rill of the total current 
 arrives is as insusceptible of analytic discrimination as would be 
 the identification of the particular spot on the surface of the 
 ocean from which was drawn the particle of vapour which, incor- 
 porated in a particular cloud, has wafted through the air, till 
 carried on the south-west wind it has been deposited at a given 
 moment and at a given spot as snow on the bosom of the great 
 glacier of Norway. The cloth weaver of Bradford exports stuff 
 which finds a market at Hankow. He does not get tea or silk 
 from China in exchange, nor necessarily does England as a whole, 
 for at the moment it may be that England has a fancy to buy its 
 tea in Colombo or Calcutta or its silk from Italy, and no more 
 cloth will go to Hankow because more tea has been drunk in 
 Bradford. The producer gets his value in the form of the 
 acceptance of a bill of exchange, probably by the London agent 
 of the Hankow warehouseman, or it may be that the consumer 
 has paid beforehand by cheque of the man who buys the cloth in 
 London to export it to Hankow. In what form does the value 
 come back from Hankow to redeem this promise and liability ? 
 Well, Hankow has sent silk to San Francisco or tea to Kiakhta ; 
 and by devious ways, equivalent values dribble in to London from 
 New York or St. Petersburg in any one of a thousand forms ; 
 some part of a cotton shipment from Charleston, some debentures 
 of the Pennsylvania Bail way Company, or shares in the Amalga- 
 mated Copper Company, a bill drawn against a shipment of 
 
c. VII.] COMMEECE 123 
 
 bristles from Eiga to Hull, or against a bale of carpets from 
 Smyrna to Marseilles. Some part comes in goods, some in 
 promises, some in investments, something in the services of 
 transportation, some trifling part even in the form of gold ; and 
 commerce accepts this all indifferently, and concerns itself not 
 with the country of origin but only with the adequacy of value. 
 And this illustration of the complex working of things as they are 
 errs immensely on the side of simplicity. In reality the com- 
 plexity of the mass of transactions is more complicated than this a 
 hundredfold, and no sane man would essay the task of analysing 
 the transactions of a single day, in any one market of any 
 one of the commercial centres of the world ; and to generalize 
 about it is mere fatuity. By the side of this complexity, the 
 complicated accountancies of the bankers' clearing house assume 
 the aspect of mere arithmetical simplicity. 
 
 In this view, which is the concrete and the actual one, what 
 place is there for the dogmatisms of the economist about the 
 relation between exports and imports? The good old fallacy of 
 the mercantile theory of the " balance of trade," the infantile 
 notion that there is something essentially disadvantageous in the 
 process of turning means into goods, and that therefore a country 
 is on the road to ruin when, on balance, its imports exceed its 
 exports, was effectually disposed of by Adam Smith* more than 
 a century ago. And yet this " mercantile theory" continues to 
 parade itself even into the twentieth century under very thin 
 disguise in the platform speeches and polemic pamphlets of the 
 ardent " Protectionist." Somewhat in this guise : " Look at the 
 money we pay to Germany. What have the Germans done for 
 us, that we should buy pickles from them, when we can get them 
 so much better in Soho Square ? " That is the gravamen of the 
 Protectionist reproach, and, as will be shown in a later chapter, 
 it is not altogether devoid of a certain modicum of force, when 
 looked at from an entirely different standpoint. The answer 
 that we do not buy German pickles because we love the Germans, 
 but because we like their pickles, is not entirely exhaustive of 
 the merits of the case ; but of this hereafter. In this chapter 
 one is dealing not with the arguments for Protection, but with 
 the economic facts of commerce. But then, what is to be said 
 
 * "Wealth of Nations," Book IV., Chap. I. ; also Mill, " Principles of Political 
 Economy," Preliminary Kemarks ; Cairnes, " Political Economy," Part III., 
 Chap. IX., § 2. 
 
124 THINGS AS THEY AEE 
 
 in defence of the counter-falsehood of the Free Trader * — the 
 canonical fallacy of the Cobden Club — that the demand for the 
 goods produced in a given country, and, therefore, the oppor- 
 tunity for the employment of its labour, depends for its existence 
 on the power of that country to absorb the goods of other 
 nations, so that the export trade is a function of and dependent 
 upon the import trade, and that every measure that tends to 
 discourage importation must ipso facto be condemned as 
 impeding production ? This thesis may be conveniently stated 
 in the words of an authorized exponent of " orthodox " ecoiiomio 
 thought. Quotation is made by preference not from the sacred 
 canon of dignified professorial text-books, but from an ephemeral 
 controversial pamphlet issued in 1879 by Mr. Augustus Mon- 
 gredien called " Free Trade and English Commerce," addressed 
 urbi et orbi—ioi the conversion of the man in the street from 
 the impious errors of "Protection." It is always the most 
 instructive course to note the words in which doctrine appeals in 
 popular form to the uninstructed mind. That is the dynamic 
 manifestation of truth and untruth in action. The quotations 
 are verbatim ; selected not for the purpose of taking sides in the 
 " Protectionist " controversy, but simply to show to what extent 
 the veracities are capable of being deflected under the stress of 
 popular polemics, t 
 
 • Mill, " Principles of Political Economy," Book V., Chap. X., § 1, and Book III., 
 Chap. XVIII. ; Cairnes, " Some Principles of Political Economy," Part III., Chap. 
 III., § 5. See also Eicardo, " Principles of Political Economy and Taxation," 
 Chap. XXII. 
 
 ■|- (1) That balances due by one country to another are paid directly or indirectly 
 in commodities, and not in specie, unless occasionally and to an insignificant 
 extent. 
 
 (2) That consequently for every export of goods that is not sent to pay a 
 previous debt there must be an import of goods to the same amount ; and vice 
 i:ers&, for every import of goods that is not received in liquidation of previous debts 
 there must be an export of goods to the same amount. 
 
 (3) That all artificial limitation of imports necessarily limits exports to the same 
 extent. 
 
 P. 9. " If it is not specie that we receive in return for our exports, or that we 
 send in return for our exports, there is no alternative but to conclude that they pay 
 for each other. In the case of national indemnities, subsidies, loans, interest on 
 loans and foreign investments, these are paid for by the export of goods without 
 any return for them. But as far as commercial dealings go, it is utterly impossible 
 to export goods without importing goods to the same amount, and tice versa." 
 
 P. 11. " AU are agreed as to the great advantage it is to a country to export 
 largely, only it must not be overlooked that those exports must be paid for in 
 goods, since, as we have seen, specie is not used for that purpose (except sometimes 
 provisionally and to a fractional extent). If therefore you import little, you can 
 only export little. If you want to export much you must import much. Tou 
 cannot curtail your hete noir, imports, without curtailing to just the same extent 
 your pet, exports. For every hundred pounds' worth o£ foreign articles which, by 
 
c. VII.] CQMMEECE 125 
 
 Instances of the uncommendable iteration of this weird 
 esoteric dogma could be multiplied indefinitely by further 
 quotations from the booklet in question ; and the thesis seems 
 to have captivated the mind of the more austere text- writers as 
 if it were a divine revelation which it is impiety to reject. 
 Mr. Mongredien tells his readers that to reject this revelation is 
 to fly in the face of the consensus of scientific opinion throughout 
 the world. Only two out of fifty great authorities, he says, have 
 favoured the idea of Protection, and as to these two, why, there 
 is something wrong in their intellects. This may be so. 
 
 In the meantime, if the cause of Free Trade rests on the 
 interdependence of exports and imports, the eternal verities are 
 indeed in parlous state ; for if the " mercantile theory " is not 
 capable of a better refutation than this, why then it is true, after 
 all, from beginning to end. 
 
 But the whole thing is nonsense. The purchasing power of 
 a country depends on the Means of the people of that country. 
 In whatever form those Means are incorporated, the people of 
 that country can exchange them for such goods as they require. 
 The enhancement of these Means depends on many condi- 
 tions, one of which undoubtedly is the profitable prosecution 
 of manufacture and trade in that country. Another and more 
 potent one for the moment, though losing its potency if not 
 continually reinforced, is the accumulation of investments by 
 the people of the country. For not only are these exchange- 
 able, but productive ; and in any country the annual produce of 
 each fresh investment can be employed pro tanto year by year 
 to replace so much of its means as has during the year to be 
 
 prohibition or by prohibitory duties, yoa preyent coming into your country, you 
 prevent one hundred pounds' worth of your own articles of production from going 
 abroad. It cannot be repeated too often, because it is at the very root of the 
 question, that to restrict imports is (by the inexorable law of logical sequence) to 
 restrict exports to the same extent, and therefore to that extent to restrict foreign 
 trade." 
 
 P. 15. " Practically all interchange of commodities is barter, and money is merely 
 a common standard by which to measure their relative values." 
 
 P. 26. " The plausible cry under which this mischievous policy [Protection] is 
 usually inaugurated [He .'] is, ' Do not let us pay the foreigner for what we can 
 produce ourselves I ' The answer is obvious : ' You do not pay the foreigner for his 
 goods in the sense you mean it, that is, in money. Imports are paid for by exports, 
 not in bullion.' " 
 
 P. 39. " But beyond the amount of such debt payments, it is an incontrovertible 
 fact that for every hundred pounds' worth exported, a country must receive back 
 one hundred pounds' worth of foreign commodities. [!] If yon determine on only 
 importing fifty pounds' worth of foreign commodities, you must be content with 
 only exporting fifty pounds' worth of your own production." 
 
126 THINGS AS THEY AEE 
 
 transferred to other countries in return for goods or other values 
 imported. Transactions of import and export are in no respect 
 whatever analogous to barter. The goods you export to country 
 A are not necessarily replaced or compensated by any imports 
 from country A. They may or may not be compensated by goods 
 from other sources, and the comparative equivalence of such 
 compensation depends on an intricate co-operation of a multi- 
 farious variety of causes, operating in all the countries in the 
 world, which determines whence and to what extent the com- 
 pensation goes ; whether it takes the form of goods, of gold, of 
 services, or of securities. 
 
 Gentlemen like Mr. Mongredien are reduced to avail them- 
 selves of such statements as the following, in support of the 
 position that what one country owes another must be paid by 
 the exportation of goods. " Germany," he says, " for example, 
 exacted something like two hundred millions of pounds of war 
 indemnity from France.* How was that paid?" he asks. 
 Only a trifle went in bullion, therefore the rest must have 
 been paid in goods. (!) It does not occur to him to consider 
 what like the practical concrete phenomenon would be in any 
 country in the world if it really had to export in payment of 
 debt, in the course of a year or two, two hundred million pounds 
 worth of goods, in addition to the normal strain on its productive 
 resources, or how possibly so much could have been exported 
 from France in the given time without imprinting indelible 
 records of its transit through the custom houses of the world. 
 He does not think it necessary to inquire, as a matter of fact, 
 what the record of the export of goods from Prance actually 
 shows through the period over which indemnity was spread, or 
 whether it exhibited (for it did not) any marked excess over the 
 normal export of the country in the days before the war. He 
 assumes that the value must have been paid in goods " because 
 so little was paid in money." Why, there is not a stockbroker's 
 office boy in the City of London who could not have taught him 
 better than that. The money was paid by drafts on financial 
 centres in the world, and by an organized co-operation of finance, 
 and in due course the debts thus created were gradually satisfied, 
 in part no doubt from values of the proceeds of exportation, but 
 
 * As to the truth of this audacious statement, see Bagehot, " Economic Studies : 
 The Postulates of Political Economy," p. 90. Bagehot understood what he was 
 writing about. 
 
c. VII.] COMMERCE 127 
 
 in far greater part by the direct transfer to other countries of 
 securities held in France, and of evidence of French indebtedness. 
 And this obvious and notorious fact, of which not even a member 
 of the Cobden Club has a right to be ignorant, is unrecognized 
 in the strife of economic polemics simply because it upsets the 
 whole sacred theory. The truth is, that the imports of every 
 country are paid for by transfers of value and not otherwise, 
 just as its exports are similarly counterbalanced. And what the 
 values paid and received will eventually consist of and what 
 they represent are matters determined by the circumstance of 
 each paying and receiving country. Britain, for example, 
 imports in value (year 1907 trade return), say, six hundred and 
 forty six millions of pounds worth of goods,* of which ninety-two 
 millions are merely in transit or re-exported immediately. 
 Against the effective net import of five hundred and fifty-four 
 millions, goods are exported to the amount of four hundred and 
 twenty-six millions, leaving, in round numbers, one hundred 
 and thirty millions of pounds worth of imports needed, in addition 
 to the total production of the country itself, to satisfy its annual 
 appetite. Now the internal productiveness is prodigious, but 
 impossible to estimate, and these returns therefore in no way 
 suffice to give any idea at all of what is the total annual demand 
 for all commodities in the United Kingdom, what is the measure 
 of its appetite, or — what comes to the same thing — what is its 
 inherent mercantile potency of demand. For it is the " effectual 
 demand " of a country which creates its power among the markets 
 of the world ; supply takes care of itself. Were one to adopt 
 mathematical symbolisms it would be an interesting exercise of 
 ingenuity to formulate the correct equation to indicate the inter- 
 dependence on the one hand of its total effective demand, and 
 on the other of its productive and purchasing capacity. For the 
 relation of the two variables must apparently be in the nature of 
 a fairly direct function. In the interests of general intelligibility 
 it has been determined to avoid recourse to mathematical 
 symbolisms in these chapters, which are but introductory to 
 what the writer hopes may eventually be adopted as a neutral 
 and scientific method of regarding actual phenomena. If they 
 are of any value as indicating a scientific basis for economic 
 thought, mathematical denotations and quantitative analysis of 
 
 * The exact figures for 1907 are £645,807,942. Our exports for the same period 
 were £517,977,167. 
 
128 THINGS AS THEY AEE 
 
 statistical material will gradually be worked out by somebody of 
 greater analytical skill than the writer. To return to the trade 
 returns for 1907 and the inferences they warrant ; the total 
 balance discrepancy of something like 23 per cent, by which 
 British imports normally exceed exports is by no means any 
 indication of weakness or deficiency of power. On the con- 
 trary, it indicates that the nation consumes the equivalent in 
 value of all that it produces, plus a further one hundred and 
 thirty-four millions' worth of commodities which it is called 
 upon to acquire by transmuting its means into foreign goods. 
 And here is this further pregnant fact : that this process of 
 the annual expenditure of means has hitherto gone on year by 
 year not only without any impoverishment of the country, but 
 side by side with a continued accumulation in excess, evidenced 
 significantly by the continual enhancement from year to year of 
 the productiveness of the income-tax at each penny in the 
 pound. " Pourvu seulement que cela dure." 
 
 The Free Trade people are absolutely right, it therefore seems, 
 when they point out that the preponderance of import is the 
 mark' of a prosperous and progressive country and that it is in 
 that way that its potency is exhibited.* And yet, for all that, 
 there is a certain shred of veracity still adhering to the remains 
 of the discredited foolish mercantile theory of the " balance of 
 trade " ; simply because it follows that it is by increasing the 
 productivity of the nation itself, and so increasing both the 
 exports and that proportion of its wants which can be satisfied 
 by its own effort, that this surplus of annual power, this excess 
 of the productiveness of means over the annual requirements of 
 consumption, can best be preserved and increased. And here 
 Protectionists score by a better intuitive appreciation of truth 
 over their opponents. The preponderance of import is an 
 invaluable indication of the commercial potency by which it 
 becomes possible to import without weakening the importing 
 community ; but it is not in itself an element of strength, but 
 rather in the nature of a force tending towards exhaustion, 
 which according to them it should be one of the aims of financial 
 statesmanship to control and put limitations to. But what- 
 ever else these figures teach us, one thing is obvious : and 
 that is that they effectually dispose of the grotesque notion 
 that commerce is equivalent to a process of barter of goods for 
 
 * Caimes, " Some Principles of Political Economy," Part III., Chap. III., § 5. 
 
c. VII.] COMMEECE 129 
 
 goods ; for if it were, the figures of imports and exports would 
 approximate in every country ; which they do not. 
 
 It will be seen from Chaps. XI. and XII. that the main practical 
 problem of economics is a national one ; and ancipitous ; not 
 only how to add to the available means of the people of a nation, 
 but more especially how to ensure that those means should most 
 advantageously be distributed among that people. There are 
 many other problems which equally demand solution, and these 
 will be duly noted in their place. But this is the central problem 
 of the whole ; the answers to the others are comparatively 
 matters of domestic detail : while this needs for its solution 
 the application of the national power acting not only within its 
 own borders, by the perfecting of its own institutions but to 
 some extent also, it may be, externally to itself, imposing itself 
 as an influence determining the actions of the people of other 
 countries. 
 
 One of the methods by which the collective well-being of the 
 people of a country may most clearly be subserved appears to be 
 the extension of the opportunity of profitable employment for 
 industry. What energy is not employed is faculty wasted, what 
 is employed unprofitably is exertion wasted; neither adds to 
 the general well-being. It will be seen in due course that in all 
 progressive countries the capacity for production is under 
 normal circumstances fully adequate to supply all possible 
 demand, and tends to increase year by year with each successive 
 perfecting of the appliances and contrivances of industry. There- 
 fore what is needed is the enhancement of the opportunity of 
 profit in production — the extension of the commercial demand 
 both within the country and without. It is because they appre- 
 ciate this truth, and set themselves to the attempt to tackle the 
 problem from this point of view, that the Protectionist people, in 
 spite of the many unsound reasonings which they, like their 
 opponents, are apt to have recourse to under the stress of public 
 controversy, are developing a power in the country. This parti- 
 cular controversy will be dealt with in a later chapter. 
 
 A more vital and fundamental question lies behind it which has 
 not yet emerged into the region of politics, though speculative 
 thought has begun to hover round it, which is this : is it, after 
 all, to be desired in the true interests of a nation that despite the 
 annual drain of Means for the satisfaction of its material require- 
 ments of commodities, the net annual accumulation of Means 
 
 T.A. K 
 
130 THINGS AS THEY ARE 
 
 by its people should continue to increase progressively and 
 indefinitely ?* And if not, how to set bounds to it without undue 
 discouragement of adventure ? For Means demand investments, 
 and investments must take the form of an enslaving of future 
 productiveness and enchaining of posterity, t Now, in so far 
 as the process of the devising of fresh means of investment 
 manifests itself in some enterprise essentially remunerative in 
 itself, tending, that is, to augment the total earning power of 
 the community, each successive embodiment of Means in fresh 
 enterprise tends to create the power to provide for its own 
 remuneration. 
 
 But it is not every enterprise that is justified by its promoters 
 as certainly productive of profitable return in itself, which really 
 adds to the net productivity of the country in which it is to 
 operate. One hundred million pounds may be taken from the 
 year's accumulation and laid out in the construction of a new 
 railway. The railway in itself may "pay " and provide the interest 
 and dividend anticipated by its promoters ; but that fact does not 
 necessarily make it truly productive. How much of its apparent 
 remunerativeness truly constitutes an addition to the resources of 
 the country, is quite another matter. Something will no doubt 
 be added to the general net productiveness by the provision of a 
 more convenient machine of transport ; but the main part of the 
 anticipated remunerativeness will amount to a mere re-distribu- 
 tion, an abstraction of the earnings which would otherwise be 
 divided among owners of other pre-existing railways already 
 serving not quite so conveniently between the same points. So 
 a municipality may borrow money to construct tramways to 
 diminish the traffic on railways, or a new factory or new dis- 
 tributing retail magazine may be started with a big capital to 
 try and divert public custom in competition with existing 
 industrial and commercial organizations. But each such "new" 
 investment clamours for its own remuneration, and those 
 interested in each work their hardest to obtain their own 
 " profits," and the energy of the country is set to work to find 
 them all, in addition to what it is already paying in the form of 
 dividends and interest and "profits," all more or less to the 
 collective impoverishment. And here comes the further and 
 
 * W. H. Mallook, " Critical Examination of Socialism," Chap. XIV., p. 249. See 
 also Chap. IX., p. 125. 
 t Ante, p. 29. 
 
c. VII.] COMMEECE 131 
 
 still deeper question — What good does the mass of the com- 
 munity really derive from this progressive coacervation of means 
 in the hands of the capitalists ? These are two vital questions, 
 the consideration of which must be reserved for a more concrete 
 and statistical analysis than is within the powers of the present 
 writer. But it is desirable to advert to them here, in order to 
 warn against the insidious infection of that vulgar megalomania 
 which takes it for granted that all evolution is essentially bene- 
 ficial, and things are necessarily the better, the bigger they grow. 
 It is not sane to assume that everything which appears to tend to 
 the collective enrichment, in reality subserves the interests of 
 the people as a whole. 
 
 For the present purpose it is necessary to advert once more* 
 to the consideration of the great inequality between the values 
 of imports and of exports in a progressive and prosperous 
 country, occasioned by its need of goods in excess of the values 
 which it is capable of materially producing within its own 
 borders. There is a "balance of trade," as it is called, against that 
 country of so much in each year. This balance, of course, is not 
 paid in gold : the movements of gold follow laws of their own 
 independent of the currents either of goods or means ; laws 
 which operate with great exactitude to supply the demand for 
 currency, leaving in each country through which the stream 
 passes such proportion of its bulk as is just sufficient to make 
 good the consumption in industrial process and in the attrition 
 and waste of coinage. According to the orthodox dogma, seeing 
 that the United Kingdom imports, say, on balance, a matter of 
 a hundred and thirty million pounds' worth of goods yearly, it 
 should at any rate in each year thus capacitate itself to export 
 additional goods to the same amount wherewith to conduct 
 the " barter." But nothing of the kind takes place ; nor is it, 
 on the other hand, scientifically true that what is over is taken, 
 so to say, in payment of a " great debt " owing to England from 
 other countries, in the ordinary sense of debt. Nothing of the 
 sort. On balance between countries of the incomes of their 
 respective investments with each other, a considerable sum 
 is no doubt due to investors in the United Kingdom, for 
 instance ; and this is paid by the transference of values and 
 utilized by the British in the same manner ; but to nothing 
 at all approaching so stupendous a sum as, for instance, one 
 
 • See ante, p. 121. 
 
 E 2 
 
132 THINGS AS THEY AEE 
 
 hundred and thirty millions of pounds. What is true is, that the 
 people of England possess an immense mass of invested means, 
 invested in their own country, and in every other country under 
 the sun, constituting not a " debt " in the sense of money 
 payable, but a claim on futurity to participate annually in the 
 profits and the taxations of their own and of every other country ; 
 that these are productive of income, the surplus of which will 
 in due course reincarnate itself as new capital; and that the 
 British profits of industry and commerce in each year, together 
 with the whole of this mass of investment and its yearly produce, 
 are being constantly transmuted partly into goods and partly 
 into the acquisition of fresh embodiments of means ; and the 
 mercantile and financial organisms of the world are always 
 facilitating a continual transformation of these means into 
 commodities, destined for each country in turn, just to the 
 extent to which there happens to be commercial need of those 
 commodities in that country, and no further ; no, not if any 
 country should follow orthodox precepts and strive to the utmost 
 to extend its power of exportation by inflating its own imports 
 to any degree imaginable. You may inflate your imports to the 
 point of explosion, but you will not thereby succeed in exporting 
 an additional pennyworth. 
 
 And the same thing is going on more or less in every country 
 of the world alike at the same moment, and the resulting 
 current of values directs itself in obedience to this law and 
 no other ; while what form tbese values may take depends 
 entirely on the demand in each place for this or that embodi- 
 ment of value. Increases in the trades of export and import 
 are, it is true, generally concomitant with each other ; but it 
 is mere assumption unverified by any ascertained fact, to 
 regard either as a determining cause of the other. They are 
 both affected by the same set of ultimate causes, and it is 
 by virtue of this that their general concomitance is mani- 
 fested. To represent either as a causative factor of the 
 other, is gratuitous assumption. The greater prosperity which 
 in one direction manifests itself as a larger consuming power, 
 undoubtedly has a simultaneous effect, working through a 
 chain of altogether different causes, in enhancing the power 
 of production ; and in that way it may be said that the same 
 cause which leads to greater importation of goods will normally 
 also tend to pave the way to an increased power of exportation. 
 
c. VII.] COMMEECE 133 
 
 But increased exporting power is ineffectual by itself ; it needs 
 imperatively, before it can manifest itself in action, the stimulus 
 of external commercial demand ; and that in its turn is a com- 
 pound function of the needs, the means, the preferences and 
 conveniences and the fiscal regulations of the people of other 
 countries to whose markets it is desired to export. It is a 
 function of nothing else in the world besides. So much for the 
 mysterious and esoteric doctrine that the power of the country 
 to produce and export depends in any way on the capacity of 
 that country for absorbing importation. Examined by the light 
 of actual ascertained fact, the whole notion turns out to be sheer 
 pedantic nonsense. 
 
CHAPTER VIII 
 
 means-distribution 
 Finance.* 
 
 The specific function of finance is the distribution and utiliza- 
 tion of Means, just as the task of commerce is the physical 
 distribution of commodities. Incidentally, what has to be 
 observed of the process of the accumulation of Means has been 
 already indicated. They originate with the accumulation of that 
 surplus or profit of the economic process which is left over after 
 reproducing the value of the necessary cost of production ; the 
 surplus of wages after providing for the existence of the producer, 
 the surplus of income after the satisfaction of the needs of the 
 consumer, the immediate fruit of the instinct of acquisitiveness. 
 And it is noteworthy in what different degrees this instinct 
 operates on the actions of different races of men under different 
 
 * This chapter is but a fragment. There is no justification for ofiering anew a 
 detailed analysis of the institutions of finance and their working ; for the more 
 important part of the subject has been all but exhausted by Bagehot in his 
 " Lombard Street," with an accuracy and insight which the present writer could 
 not presume to attempt to rival. It has been therefore thought superfluous to 
 pretend to add anything here with respect to the essential functions of finance, 
 which are "banking" and "discount." The sister-locality, " Capel Court," has 
 also its historians and investigators, and the exercise of its functions comes in for 
 much more minute and detailed observation and description daily at the hands of 
 the financial authorities of the Press. But these notices and descriptions are lacking 
 in the authority of thoughtful and detached estimation which gives to Bagehot's 
 work its great value. On this part of the subject, therefore, the writer has felt 
 justified in submitting a few considerations from his own point of view. But in 
 neither aspect is it claimed that the chapter is more than a mere sketch and 
 rdsumi. The real purpose of this work lies in another region ; it is the attainment 
 of some means of dispassionate judgment in respect of existing perplexed contro- 
 versies on the vital subjects dealt with specifically in Chaps. XII. to XXI. here- 
 after. To the elucidation of these the study of the phenomena of modern finance is 
 by no means alien. But it is mainly uncontroversial, and has not been the play- 
 thing of the dogmatic political economy of the nineteenth century, which has 
 obscured the issues on these other subjects, and the doctrines of which the writer 
 is endeavouring to relegate to their proper place as abstract speculations not in 
 touch with reality. Indeed much of the study of finance lends itself appropriately 
 and legitimately to the method of abstraction. So that from Ricardo onwards, the 
 economists when they have touched on purely financial subjects, as distinguished 
 from the other more intricate and complex questions afiecting industrial and com- 
 mercial life, have been sane and thoughtful and masters of their subject. And 
 there is but little to take exception to in this part of their conclusions, for in the 
 region of finance the human being may accurately be looked upon as an embodiment 
 of pure acquisitiveness, 
 
c. VIII.] FINANCE 135 
 
 circumstancos. It has been said that the Scotsman, the Hebrew, 
 the Hindoo and the Chinese, secrete " capital " as the bee 
 secretes honey. Of certain other races it is undoubtedly true 
 that they are essentially " fruges consumere nati." The ideal 
 beatitude of the African is the minimum of labour. The Malay 
 lounges gracefully along the slopes of his valleys, a disinterested 
 and unparticipating spectator of the toil with which the Scotch- 
 man, the Chinaman, and the Kling are strenuously exploiting 
 the resources of his country ; and there are others nearer home, 
 whose ideal of employment and scheme of life lie mainly in the 
 seats round the billiard-table, the enclosures of the football 
 ground, or the coverts of the wood. These, too, have their 
 appointed place in the universe, humble as it may be. The 
 economic aspect of life is not the only one ; the defects and the 
 vices of mankind have their appointed function in the general 
 scheme of evolution. But for the economist, the vital process is 
 economy ; and civilization from his point of view is but another 
 name for the development of humanity in the plane of the pro- 
 duction and accumulation and employment of Means. The 
 fallacy involved in refusing to ascribe " productivity " to any 
 profit-making activity which does not in itself conduce to the 
 material production of " Wealth " which is commodities has 
 already been made evident.* Each reward-bearing activity of 
 every sort gives rise to Means, out of which, from moment to 
 moment, is set apart a varying proportion which serves as 
 " Capital " in the continued production of Wealth. 
 
 In this chapter it is proposed to deal with the forms which 
 Means assume, the modes in which they are stored, with their 
 embodiments, so to say, and their transformations, on all of which 
 their potency as a requisite of productiveness will be seen to 
 depend. And in the first instance the main characteristic of 
 Means is their immediate exchangeability by the contrivances of 
 finance. And the exchangeable value of each embodiment of 
 them consists simply of the confidence that at the will of the 
 possessor they will be susceptible of being exchanged from any 
 one form to any other, or into commodities. A man may elect, 
 for the gratification of his aesthetic instincts or of the petty pride 
 of possession, to embody them in the acquisition of the most 
 infructuous of objects — jewellery, rare pictures, expensive porce- 
 lain, artistic articles of furniture, unreadable books, or even 
 
 * Ante, p. 105. See also pod, p. 172. 
 
186 THINGS AS THEY AEE 
 
 obliterated postage-stamps ; in those forms they are in his hands 
 still Means, dormant for the moment, but having value in his eyes 
 as potentially available for the process of production, so long as 
 they continue exchangeable : so long, that is, as his belief remains 
 true, that at the required moment he will be able to appeal to 
 the aesthetic acquisitiveness of some brother-collector, who will 
 be willing to exchange for them their equivalent in money or 
 active Means. In themselves they are not wealth-producing, 
 and lie apart, as it were, from the economic plane. When their 
 desirability becomes extinct, then the Means devoted to their 
 acquisition will have disappeared, having been a form of confidence 
 in their exchangeability. 
 
 Money may be looked on as Means in the act of being exchanged 
 for commodities ; and similarly its value is essentially the measure 
 of the confidence of men in its purchasing power. In a beleaguered 
 city threatened with famine, money becomes singularly valueless 
 as measured by its power to obtain the necessaries of life ; and 
 among a shipwrecked crew on a desert island, a cask of golden 
 sovereigns would be offered in vain for one box of lucifer- 
 jnatches. But the main embodiment of Means in the twentieth 
 century is neither in commodities, nor cash, nor artistic treasures. 
 They consist of promises to pay. 
 
 When Eicardo wrote, the emission of such promises was prac- 
 tically a monopoly of the sovereign powers of one or two civilized 
 States, and their value was measured entirely and exclusively by 
 the momentary confidence of man in the power and willingness 
 of the respective States to perform their obligations. In one or 
 two nations " charters of incorporation " had been granted to 
 favoured aggregates of individuals, conferring upon these a per- 
 petual succession, and the power, by their corporate name, to 
 participate in this sovereign right of incurring indebtedness. The 
 Governor and Company of the Bank of England, the Honourable 
 the East India Company, the " Company of Adventurers of the 
 New Eiver," were early English examples of this devolution of the 
 attributes of sovereignty ; and their privileges were shared by 
 other less fortunate corporations, such as the " Worshipful Com- 
 pany of the South Seas," and the French " Society for the 
 Exploitation of the Eiches of the Mississippi." The " value " 
 of the shares, and of the promises to pay of these, sound and 
 unsound alike, was always the degree of men's confidence, well or 
 ill placed, that these incorporated bodies would be permanently 
 
c. VIII.] FINANCE 137 
 
 able and willing to fulfil the obligations which they had under- 
 taken. The dawning of modern finance occurred within the 
 memory of middle-aged men, when the first Limited Liability 
 Act in England, and the almost simultaneous acceptance in other 
 European States of similar legislation began to encourage a form 
 of partnership or association in which the liability of the indivi- 
 dual associate was confined to his subscription of a definite sum 
 of money paid or to be paid. The effect of this new departure 
 of legislation was to endow all these associations or companies, 
 without any special charter, with a general power of contracting 
 in their corporate names and binding their successors to the 
 discharge of their obligations. The facilities afforded by this 
 current of modern legislation were promptly taken advantage of 
 by the possessors of Means, both in acquiring shares of prospecr 
 tive profit involving no corresponding personal liability in case 
 of loss, and in lending and borrowing money on the security of 
 the shares, bonds, and mortgages, and other forms of charge 
 upon those prospective profits. And this process of " capitaliza- 
 tion" was rapidly extended to hanking enterprise, insurance, 
 and trusts, which are companies of companies, companies formed 
 to hold shares in other companies, financial agencies raised to 
 the second power and designed to extend to finance itself the 
 functions which finance fulfils towards ordinary enterprise. 
 
 In the last place there emerged into prominence in the middle 
 of the nineteenth century a fresh devolution of the sovereign 
 power of getting into debt, embodied in the permission of the 
 State to the municipal authorities which are its local under- 
 satraps, to assume liabilities charged on the security of their 
 future powers of taxation. The " capital " subscribed and 
 employed in the acquisition of all these promises in which 
 Means become embodied, is solid and real enough. The benefit 
 to be derived from them, a matter entirely of expectation and 
 confidence, more or less solidly well-founded, but still at any 
 moment at best but a notional anticipation. What, for instance, 
 should be taken as the true value of any morsel of confidence, 
 momently embodied in the inscription in favour of its proprietor 
 of the record of his proprietorship, in the archives relating to 
 the "public funds " of the United Kingdom, or of the Eepublic 
 of Columbia, in stock of the Bank of England or of the defunct 
 City of Glasgow Bank, in shares of the New Eiver Company, or 
 of the " New-bonanza Wild-kat Mine " of Central Borneo, as the 
 
138 THINGS AS THEY AEE 
 
 case may be? This has no relation whatever to the "face 
 value" or ostensible money which each originally represented, 
 nor to the cost, effort, or " abstinence " involved in acquiring the 
 Means with which the respective claims have been purchased. 
 Cost of production does not even pretend to have anything to 
 say to it, the value of each consisting, as it does, just of the 
 momentary demand for it, founded on the confidence or expecta- 
 tion of would-be purchasers and would-be sellers alike in the future 
 productivity and permanence of each adventure. " Capital " is 
 confidence. 
 
 But the process of " investment " is far more intricate than 
 appears from this rudimentary statement of the manner in which 
 its manifestations originate. The river of Means is in truth a 
 network of reservoirs. Precisely as Man for the most part 
 hoards money and not commodities, so finance deals in the main 
 in securities rather than money, though as part of its function it 
 assumes charge of the importation and exportation of coin and 
 bullion. It is a world-organism which fulfils its functions in the 
 exercise of that power over securities which securities exert over 
 money, and money over commodities. Banks, insurance com- 
 panies, financial companies and " trusts," the apparatus of the 
 Stock Exchanges and the Clearing Houses, are some among the 
 many reservoirs, channels, locks, and sluices, which subserve the 
 purpose of storing and regulating the flow of means and thereby 
 the distribution of Wealth throughout the world. Every drop and 
 molecule of the fluid of Means has its individual " owner," but the 
 stream along which all are swept is controlled by agencies trans- 
 cending the will and power and engineering skill of the indi- 
 vidual possessor. The insurance company is a reservoir of means 
 stored for the purposes of foresight and thrift, primarily devised 
 as a method for the equalization of chances of survivorship, and 
 the discounting of the hidden vicissitudes of mortality. But 
 it is far more than this. It is a vast engine by which the rain- 
 drops of individual savings are collected and employed for profit ; 
 and quite outside of the purposes of the individual savers, it 
 subserves complex processes of the irrigation of industry by 
 capital in the field of enterprise. The bank is primarily an 
 institution for the collecting and storing of cash, but the cash 
 which it is hourly collecting does not lie for a moment in its tills, 
 beyond the tiny amount needed to provide from hour to hour the 
 anticipated normal withdrawals by depositors. The bulk craves 
 
c. VIII.] FINANCE 139 
 
 for utilization by investment in confidence incorporated in 
 promises to pay ; and is so employed in discounting bills of 
 exchange and in loans unceasingly resorted to by enterprises of 
 production and speculation in the hands of the army of borrowers, 
 who jostle at the doors the army of depositors who have brought 
 in the cash which these others are for ever taking away to 
 employ. The investment company, or " financial trust," is a 
 collector and connoisseur of securities, exercising banking 
 functions by way of selecting for the utilization of its means 
 certain sets or groups of chances in which its directors take an 
 interest, and as often as not owes its origin to a premeditated 
 intention to secure "Capital " for a particular enterprise or set of 
 enterprises. The Stock Exchanges were originally established to 
 supply the need of a market for the dealings of those who desire 
 to acquire or part with securities in the legitimate process of 
 investment or realization. Their primary and ostensible function 
 is the perfecting of the fluidity of Means ; but their " quotation 
 prices " in reality serve in the main as counters in the game of 
 acquisitiveness, which is speculation. The rules of the game 
 are familiar enough, the gaming-tables are set out in every city, 
 the winning numbers inscribed automatically on thousands of 
 " tapes " spinning forth their length in every club, hotel, and 
 place of public resort throughout the world of civilization. All 
 mankind is invited to the table to come and outwit each other at 
 the game, but the man with the rake, the financier, plays against 
 them all, and in the long run accumulates all the profits. 
 " Quelquefois c'est rouge qui perd, et quelquefois c'est noir, mais 
 Blanc gagne toujours." 
 
 At this game a favourite diversion of the speculator is a sort 
 of martingale or sorites of purchasing. It consists of heaping 
 securities on the backs of each other in this wise : The player, 
 say, has a thousand pounds. He invests it in that amount of 
 stock — say of some government. A, in the prosperity of which 
 and its fidelity to obligation he has confidence. His money 
 now has become " stock." Presently it occurs to him to antici- 
 pate improvement in the value of some other concern, say com- 
 pany B. He has not another £1,000 to invest, but his banker 
 will lend him £850 on the "stock"; and then he purchases 
 that amount in B " shares." And in the same way he becomes 
 successively the legal possessor of £600 worth of C debentures, 
 £450 nominal D bonds, 300 E scrip, £200 F certificates, and so to 
 
140 THINGS AS THEY AEE 
 
 the end of his little tether ; and the bits of paper representing these 
 respective values all go into the safe of the bank to the credit of 
 his account, while against them are entered the debits representing 
 the amounts he has paid for each, and the interest and commis- 
 sion thereon. In this way the man's £1,000 apparently swells 
 till it stands for, say, £3,000, while all the time, in reality, he is 
 a mere machine employed by the bank to select its own invest- 
 ments at his risk. If the machine does not act properly in all its 
 selections, or if some financial peril or " scarcity of capital " arises 
 and depreciates prices all round, then the house of cards is forth- 
 with toppled over, " values " come tumbling down with a run, the 
 bank races with its own customer to the nearest Stock Exchange 
 to realize the insecure " security," meeting at the door the crowds 
 of other bankers and their customers intent on the same errand. 
 The banker " burns his fingers " a little, and for a moment, and 
 the customer is exterminated. Nor is this all. The values of the 
 unspeculative owners of A, B, C, D, and the rest of them are 
 simultaneously affected by this heaping up of speculation of which 
 they are innocent, the confidence in their ventures diminishes, 
 and "values " come down with a run. So that the next morn- 
 ing the world takes its breakfast under the depressing conscious- 
 ness that such and such a percentage of its total " Means " has 
 miraculously vanished overnight into thin air by the consequent 
 depreciation of its value. In truth, the Means of men are but a 
 function of value, which in itself is but a manifestation of confi- 
 dence, and resides not in the object but in the minds and motives 
 and beliefs of its possessors : truly it is of " such stuff as dreams 
 are made of." A collapse of values in the Exchange of one 
 country reacts instantaneously in every mart and centre of the 
 world. At seven in the morning of a given day in San Francisco 
 are reproduced the fluctuations of value that will have been 
 already originated at noon of the same day in New York, and' 
 these in their turn shall be but the echo and reflection of those 
 that will have already happened at four in the same evening in 
 London, at midnight of the next day in Bombay, and of what 
 has already occurred the morning after in Melbourne. 
 
 If Wealth, which is commodities, is international and world-wide 
 in its character and values, so ten times more so are Means in the 
 shape of investment. No adequate purpose would be subserved 
 by enumeration of the action of the many other organisms which 
 go to make up the sum total of the world's financial apparatus, 
 
c. VIIL] FINANCE 141 
 
 in the way that it has been found desirable to particularize and 
 enumerate under letters of the alphabet some of the industrial 
 organizations whieh concern themselves with the production of 
 " Wealth " properly so called. For these other instruments do 
 not go to produce wealth, their function is really the distribution 
 of Means. 
 
 One very notable exercise of the financial function is that which 
 busies itself in the promotion and financing of joint stock enter- 
 prise. A " company," in so far as it is an association of persons 
 concerned in the production of commodities, but steps into the 
 place that would otherwise be filled by an individual capitalist. 
 Its productive powers may in some instances and some respects 
 be enhanced by reason of the more copiously available supply of 
 pre-requisite Capital obtainable by association ; on the other hand, 
 its efficiency tends to be diminished by the lack of individual 
 skill, commercial insight and adaptability — three qualities in 
 respect of which the element of individuality is but poorly 
 replaced by the mediocrity of a board of directors, and the 
 lukewarm zeal of a timid and too numerous cohort of paid 
 servants, compares unfavourably with the greater devotion 
 inspired in those who serve individuals and are actuated by the 
 hope of personal advancement to an eventual share in mastership,* 
 while the liability to some sorts of corruptions is pro- 
 digiously enhanced. A company may advantageously be formed 
 to prosecute on well-known lines certain enterprises of produc- 
 tion or others of service in a familiar and well-trodden path, but 
 never rivals the genius and enterprise of the skilled individual, 
 either in striking out a new road to success through the jungle 
 of an unaccustomed country, or in conducting the struggle 
 against the competitive individualism of foreign competition. 
 
 Like the Capital and the " liability, " the reward and incen- 
 tive of an industrial company are strictly "limited," and so there- 
 fore is also the measure of its success. But it is not so much 
 in the aspect of their mediocre efficiency that these incorporations 
 of Means-owners claim the attention of the student of economics, 
 as in respect of the exercise of their function of emitting in the 
 form of shares and debentures the certificates and evidences of 
 claim in which means are "invested" — what has been above 
 
 * See a very trenchant passage on this point by a well-known French publicist, 
 M. Victor B^rard, "British Imperialism and Commercial Supremacy,'' translated 
 by H. W. Foskett (Longmans, 1906). 
 
142 THINGS AS THEY AEE 
 
 called the "enchainment of posterity." Now a striking 
 characteristic of the exercise of this power is extravagance and 
 wastefulness, and the opportunity it affords to finance to 
 exercise an illicit individualism of acquisitiveness at the expense 
 of shareholders ; and especially by way of financial adulteration 
 by the process known as " over-capitalization." Take a concrete 
 instance, which throws a light on certain of the operations of 
 finance not altogether without a sinister aspect. Some railway 
 has to be made or extended, some new process or patented 
 monopoly, or some other concern already working has to be 
 exploited by the erection or purchase of factories and the 
 establishment of a commercial organization to stimulate demand 
 and direct distribution. For the purpose of production on the 
 proposed scale, say £100,000 is needed for the installation of the 
 factory, another ^620,000 for of&ces and the initial arrangements 
 of a staff, and perhaps £50,000 for " working capital," which 
 means the provision out of Means of sundry pre-requisites 
 mainly for the sustenance of labour in advance of the time when 
 the process is fully started and the product commences to 
 reproduce its materials and earn its profit. Now this makes up 
 a sum of, say, £170,000 " capital," that is really needed and 
 must be used for the necessary establishment of the industry. 
 If a private individual had to find those funds he would deem 
 himself to have attained his ends very fully by providing 
 £100,000 in cash, and borrowing the balance at interest from his 
 bank or by mortgage of his land and buildings or machinery, or 
 by pledging his personal credit. But let the professional 
 " promoter of companies " take a hand in the transaction, and 
 the operation is transformed altogether. He deals in no fractions. 
 His £170,000 is immediately changed into £200,000, and this 
 will be too little to start the concern on a basis of sufficient financial 
 attractiveness. The financier scorns to see his name appended 
 to the prospectus of a concern of a penurious and fractional 
 an aspect, nor will £200,000 be sufficient for what he is wont 
 to consider the legitimate initial outlay on such a business. 
 Eegistered offices sufficiently prominent and attractive, a certain 
 pomp and circumstance of opulent installation, well drafted 
 '.' memorandum " and " articles " of association, emanating from 
 an " eminent " firm of solicitors, a resplendent set of books, 
 imposing safes, all the profuse documents of preliminary 
 expense — that is to say, the toll taken by lawyers and special 
 
c. VIII.] FINANCE 148 
 
 framers of advertisements, something to allot for the "commis- 
 sions " of the speculators who effect the " under-writing " (a 
 familiar device for paying financiers to influence the " public " to 
 subscribe), and inevitably a generous profusion of expensive 
 advertisements, without which a certain coldness would be 
 manifested towards the new venture by the " highly influential " 
 Press whose profits arise from their insertion ; all these have 
 to be provided. And then comes the provision of qualifica- 
 tions in shares for well-groomed gentlemen with titles, whose 
 ornamental co-operation in the ostensible direction is calcu- 
 lated to stimulate the confidence of the judicious investor, and 
 who are not to be hired for nothing. The expenses of all these 
 things may combine to raise the " necessary " capital of the 
 embryo company to £250,000 at least even in the hands of the 
 more scrupulously upright among " promoters." In England, 
 as a rule, this represents about the proportion between what is 
 needed and what is used ; and the shareholders of a " company " 
 which confines itself to these more avowable means of command- 
 ing financial success, may reckon themselves fortunate ; this is, so 
 to say, the comparatively "anhydrous" form of company organi- 
 zation, containing only what may be compared to the normal 
 " water of crystallization " of a basic salt. 
 
 In another country and in some cases water is added far more 
 freely; the £170,000 of the penurious individual capitalist, which, 
 has turned into the £250,000 of " indifferent honest " financial 
 rectitude, becomes there three or four or even five hundred 
 thousand, when provision has been made for satisfying the 
 cupidity of those who seek somewhat less avowable opportunities 
 of acquiring affluence, and pride themselves on " getting in on 
 the ground floor." * 
 
 In the breezier and more open atmosphere of the great nation 
 of the West, where the exigencies of the law are less meticulous, 
 and the doctrine of " Laissez faire " is pushed to a great extreme 
 as regards solvency and good faith, and where there is little or 
 no real intention on the part of those who control the municipal 
 law to exercise any real control, there are less impediments to 
 the acquisitiveness of financiers. Two at least of the smaller 
 Atlantic States of the Union lay themselves out, by means of 
 an ostentatious laxity of regulation, for the patronage of the 
 
 * Upton Sinclair, " The Industrial Republic," Chaps. IV. and V. ; also Chap. VI., 
 p. 186 ; see also Wells, "New Worlds for Old," Chap. VII., § 3. 
 
144 THINGS AS THEY AEB 
 
 more unscrupulous among the swashbucklers of finance. From 
 within their tolerant borders issue prospectuses and documents 
 of companies and trusts and combinations of companies and 
 trusts, ambitious enough (if only they were not so fortunately 
 short-lived) to absorb the entire available Means of the world in 
 the gulf of their acquisitiveness, and which impose no effectual 
 check on the rapacity of those who conduct them. Such a one, 
 by no means comparatively large, was contrived about twelve 
 years before these words were written, which was a splendid 
 "combine" of about twenty "companies," of which only one 
 possessed any solid assets at all, and those were of quite a modest 
 and temporary character; but this universal trust issued its 
 shares broadcast from the accommodating Alsatia of New Jersey 
 and laid under contribution many innocent shareholders. 
 Whether in truth there were any capital subscribed at all, the 
 liquidators experienced great difficulty in discovering, while 
 apparently the assets of the greater part of the subsidiary associa- 
 tions consisted of hopes of obtaining contracts by persuasive 
 inducements to be exercised on the individual cupidities of 
 municipal councillors in certain cities of the " States." 
 
 Once a concern has in the Free Eepublic reached its inevitable 
 goal of liquidation, the affair is forgotten, and the promoters will 
 have acquired and lost several imaginary " fortunes " in other 
 ventures, before even public attention is directed to their exploits. 
 But what emerges from the contemplation of the whole process 
 is its sterility, and the purely imaginary character of the Means 
 which for a moment it is imagined to originate. A certain out- 
 ward luxuriousness of living and apparel is part of the necessary 
 apparatus by means of which the financier of that sort plays the 
 game, and counts really for nothing; nor do the figures of 
 fortunes in imaginary millions of dollars imputed to the success- 
 ful "bosses" of finance. All is merely what in the technology 
 of another favourite national game of chance is known as "bluff." 
 Boil the facts down to their essentials, and what turns out to be 
 the real truth ? The expensive gentleman who provides Gargaur 
 tuan feasts at Sherry's, and swaggers about bravely in a coat of 
 sables, turns out a knight of industry " like another," his elabo- 
 rate apparatus of luxury just a means of advertisement. He him- 
 self would be content to live quite as happily on the five dollars 
 a day with which he probably commenced his career, and with 
 which he will deem himself fortunate if he is left to conclude it. 
 
c. VIII.] FINANCE 145 
 
 His fortune of tens of millions of dollars is a mere figment of the 
 imagination ; it has never existed and has never been capable of 
 existing except on paper, and if at any moment it occurred that 
 he was under the necessity of realizing it, the effort would prove 
 futile, because the essence of the juggle consists in keeping all 
 the balls of investment in the air together, and not allowing any 
 one to drop to the ground of realization. Once you drive him to 
 realize, his values disappear like magic. Out of nothing his 
 means have arisen, into nothing they must disappear. He at 
 least has never attained the beatitude of making two blades of 
 grass grow where one grew before, nor desires to ; the world 
 has apparently gained nothing by his exertions and assuredly 
 will lose nothing by his eventual disappearance. 
 
 Much of what has been above stated has purposely been written 
 plainly, and with the purpose of indicating the dangers and abuses 
 of that sort of cupidity which finds its most lucrative opportunity 
 in the manipulation of Means for gain, which is finance ; this 
 has evolved the complex organization of a calling of intense 
 astuteness, that of the dexterous exploitation by ingenuity 
 of the general human instincts, credulity and greed. It is not 
 by any means intended to suggest either that those engaged in 
 the operations of finance are as a body exceptionally unscrupu- 
 lous, or that their main function is not beneficent. Indeed, the 
 very contrary is the truth ; it is indispensable to the evolution of 
 society. Civilization requires as a necessity for the production 
 of wealth a fluidity of means which can only be attained by the 
 development of the ingenious and subtle contrivances of finance. 
 
 Among human institutions, those of finance and of charity 
 are distinguished by being specially subject to be preyed upon 
 in different ways by the parasitisms of imposture and dishonesty ; 
 but this undoubted fact involves no more discredit on the upright 
 financier than on the sincere philanthropist. And it happens 
 that in many instances these two parts are played by one and 
 the same person. Many instances will occur to the mind of the 
 reader, of individual men and great business houses (especially, 
 be it said, in London) who are as proverbial for their munificent 
 activity in works of benevolence as for their wealth and financial 
 rectitude, many of whom habitually tax themselves joyfully for 
 the relief of misery to a much greater amount than the State 
 could succeed in appropriating their means by compulsory taxa- 
 tion for all its purposes together. And not the least of the 
 
 T.A. L 
 
146 THINGS AS THEY AEE 
 
 services which an individualistic finance renders to the community 
 is that of the creation of splendid funds which (to the great extent 
 indicated hereafter in the chapter on altruism),* thus become 
 available in helpfulness to those who work for benevolent purpose. 
 
 As for those others, those of the more predacious kind, it may 
 be observed that the vulture, though an obscene fowl, has its 
 appointed function in the economy of Nature. And so, strange 
 as it may appear, even the parasitic abuses of finance seem to 
 fulfil without any conscious purpose of their agents to benefit 
 anyone but their own sinister selves, a certain beneficent 
 appointed function. They bring into action, as it were, a 
 natural salutary corrective, in checking the tendency to an 
 over-accumulation of Means, which unless so limited might 
 disturb the balance between the productiveness of future energy, 
 and those claims on it which are being heaped up by present 
 acquisitiveness. To write with any sort of confidence of the 
 effect of this tendency and of the extent to which the check is 
 needed to operate, would be, in the absence of sufficient statistical 
 data, an absurd presumption. But some rudimentary statistical 
 facts might be adduced which seem to indicate that the notion is 
 not entirely fantastic. 
 
 The figures of the following abstracts of Eeturns of the 
 British Board of Trade must be accepted with great caution 
 and are obviously and necessarily imperfect, and to some extent 
 misleading. What proportion of the new ventures annually 
 registered get beyond the stage of registration ; how much of 
 the nominal capital which in each year the promoters invite 
 the possessors of Means to devote to the acquisition of future 
 profit really is so applied, is not directly indicated ; but the fact 
 remains, that in the United Kingdom alone during the last 
 ten years, new profit-promising businesses have been instituted 
 and carried at any rate beyond the merely preliminary stage, 
 at an average rate of 5,000 per annum, with an average annual 
 addition of capital of 180 millions of pounds. Simultaneously 
 the other financial centres of the world are busy emitting similar 
 paper offers to the capitalist to invest his means in similar new 
 enterprises year by year to an extent on the whole much 
 greater. In these also, or those of them which pass into the 
 stage of actual working, the British investor participates to a 
 great but unascertainable extent ; while on the other hand the 
 
 * Chap. XVII. 
 
c. VIII.] 
 
 FINANCE 
 
 147 
 
 foreign contribution towards similar British institutions is very 
 restricted ; — practically negligible. 
 
 Year. 
 
 Number of new 
 Companies 
 Registered, 
 
 Total Nominal 
 
 Capital considered as Paid-up, 
 
 
 Capital. 
 
 including Vendors' Shares. 
 
 1897 
 
 5157 
 
 291,117,559 
 
 133,726,451 
 
 1898 
 
 5073 
 
 272,287,690 
 
 137,056,247 
 
 1899 
 
 4882 
 
 245,939,676 
 
 117,712,609 
 
 1900 
 
 4864 
 
 221,827,934 
 
 102,125,141 
 
 1901 
 
 3365 
 
 144,760,333 
 
 59,999,742 
 
 1902 
 
 385H 
 
 156,983,861 
 
 43,607,153 
 
 1903 
 
 4002 
 
 126,606,015 
 
 49,634,848 
 
 1901 
 
 3769 
 
 92,526,143 
 
 30.696,997 
 
 1905 
 
 4265 
 
 119,17H,333 
 
 88,878,482 
 
 1H06 
 
 4776 
 
 136,738,948 
 
 43,264,021 
 
 Meanwhile there is of course an annual mortality of these 
 enterprises. Old companies die out, new ones are stillborn or 
 survive birth but a few days. But the rate of this mortality is 
 entirely incapable of accurate estimation.* The next table deals 
 only with those enterprises in the United Kingdom the annual 
 extinction of which is brought about by way of a compulsory pro- 
 cess, or for regulating which the formal intervention of legal 
 tribunals is found necessary. Financial stillbirths, which account 
 for the majority of the corpses, are not followed by inquests as a 
 rule, and therefore have no official record, and are not important ; 
 but there are many other cases in which undertakings are wound 
 up, where the interests of creditors and contributors require no 
 legal protection, and where, therefore, disappearance of "com- 
 panies" leaves no officially recognized trace. The following 
 columns therefore have no real relation to the preceding ones, the 
 proportions in which the respective noted and unnoted classes of 
 cases occur having no necessary relation to each other. Inter- 
 ments occur, so to say, in private burial grounds, where all 
 parties consent to avoid the ostentatious expense of a public 
 funeral, and the "voluntary liquidation" is carried through "on 
 the quiet," without the " supervision of the court." In what way 
 and in what proportions similar processes of dissolution are 
 brought about in the case of foreign companies, it is altogether 
 impossible to indicate. The following entirely inconclusive and 
 
 * Nor is its signification. Many apparent deaths are mere processes tQ t^^e 
 legalisation of resurrections. 
 
 L 2 
 
148 
 
 THINGS AS THEY ARE 
 
 inadequate table therefore can only be treated as a record of 
 certain company deaths of a particular class in England and 
 Wales. But even from that point of view it is not without 
 interest. 
 
 
 Number of Companies 
 
 
 
 
 wound up by Order of the 
 
 
 
 Year. 
 
 Court, and furnishing a 
 Statement of Affairs 
 (England and Wales). 
 
 Assets. 
 
 Liabilities. 
 
 
 
 £ 
 
 £ 
 
 1897 
 
 99 
 
 987,226 
 
 836,273 
 
 1898 
 
 123 
 
 1,343,968 
 
 1,230,321 
 
 1899 
 
 102 
 
 1,282,060 
 
 1,205,500 
 
 1900 
 
 109 
 
 1,252,880 
 
 1,423,578 
 
 1901 
 
 104 
 
 9,030,087 
 
 4,720,549 
 
 1902 
 
 104 
 
 1,298,475 
 
 1,752,944 
 
 1903 
 
 79 
 
 899,696 
 
 987,801 
 
 1904 
 
 94 
 
 1,182,119 
 
 1,324,425 
 
 1905 
 
 83 
 
 1,102,621 
 
 1,236,161 
 
 1906 
 
 109 
 
 1,276,187 
 
 1,364,200 
 
 Note as an interesting feature the apparently abnormal figure 
 for the year 1901. This is neither a misprint nor a miscalcula- 
 tion ; it is the particular indication during the decade in question 
 of the prevalence in that year of the recurring element of panic, 
 or "financial crisis," an epidemic which occurs at irregular 
 intervals, the laws determining which are so obscure that some 
 writers have been tempted to seek a fantastic ultimate cause 
 in the mysterious recurrence of sunspots. As a matter of 
 fact, the merest accident provokes at uncertain intervals in the 
 world's finance system an acute attack of that failure of confidence 
 which an admirable writer has aptly compared to a " systole" of 
 the circulatory system. " Depression " — loss of remunerativeness 
 of enterprise, failure of confidence, the ruin of companies and of 
 individuals — may arise from wars, apprehensions of war, revolu- 
 tions, the fear of hasty socialistic legislation, a famine in India, 
 or, as in the case of a recent American panic (from the after-effects 
 of which the United States are at this moment — November, 1908 
 — beginning to recover and which has induced a sympathetic 
 depression in the finance and industry of Europe), even such an 
 event as a great fire in a great city. Thus the whole of the 
 financial trouble of 1907 — 8 throughout the world is indubitably 
 traceable to the conflagration in San Francisco in 1906. It may 
 be noted in proof of the irregular recurrence and unpredictable 
 
c. YIII.] 
 
 FINANCE 
 
 149 
 
 severity of these " crises " that in the year 1892 — 3 there occurred 
 a still greater volume of " company " mortality in England, to be 
 followed by a period of amelioration reaching down again past 
 the time of minimum disturbance in the prosperous year 1897 to 
 the disastrous 1907. 
 
 Some glimpse of the total working out in the United King- 
 dom of the continuous process of the genesis and extinction of 
 " companies " may be gathered from a third table, which is 
 comparatively authentic and to be depended upon, and the results 
 of this are well worthy of consideration. It indicates the existing 
 mass of British companies and the nominal amount of the 
 Means embodied in them. 
 
 Tear. 
 
 No. of Registered 
 Co.-s in U. K. 
 
 Paid-up Capital. 
 
 1897 
 
 23,728 
 
 1,285,042,021 
 
 1898 
 
 25,267 
 
 1,383,593,162 
 
 1899 
 
 27,969 
 
 1,512,098,098 
 
 1900 
 
 29,730 
 
 1,622,641.406 
 
 1901 
 
 31,429 
 
 1,725,940,512 
 
 1902 
 
 33,259 
 
 1,805,141,165 
 
 1903 
 
 35,965 
 
 1,849,455,005 
 
 1904 
 
 37,287 
 
 1,899,648,675 
 
 1905 
 
 39,616 
 
 1,954,337,135 
 
 1906 
 
 40,995 
 
 2,003,392,001 
 
 Here we find a steady progression for the past ten years of 
 existing companies in the United Kingdom, presumably carrying 
 on business ; living organisms of association. The total shows 
 an average net addition during the ten years, of two thousand 
 companies per annum, with a paid-up capital increasing in each 
 year by an average of £86,000,000 ; an increment at the annual 
 rate of 8 per cent, in the United Kingdom alone, constituting 
 not merely speculative and nominal, but in the main actual 
 and effective additions, not by any means to the " wealth of 
 the world," but to the totality of the claims on its future 
 productiveness. 
 
 To what extent these claims will be satisfied, and to what 
 extent they indicate a mere salutary spilth and wastage of super- 
 abundant means, no man can tell who has not before him the 
 results of the separate analyses of the balance sheets and profit 
 and loss accounts of each individual among the forty thousand 
 companies in existence at the end of 1907 in the United Kingdom 
 
150 THINGS AS THEY ARE 
 
 alone ; while to judge of the finance of the world, its rate of 
 expansion, its threatening possibilities of the future and its 
 intricate and gigantic reactions in the present, from the imperfect 
 presentation of the fragmentary development in one and by no 
 means the greatest of its many financial centres, involves a 
 power of appreciating things as they are, which would transcend 
 the conceptions of Bagehot in 1875, by almost as much as these 
 exceeded in volume and intricacy the rudimentary notions of 
 Mill in 1850, when finance had attained to a stage of development 
 little more than embryonic, and international finance, as now 
 understood, was an idea almost unknown. 
 
 In respect of " company finance" New York not London may 
 be looked on as the true world's centre. The nominal volume of 
 transactions in the United States transcends that which is con- 
 summated in Britain ; possibly in all Europe. But it is impos- 
 sible to estimate to what extent this consists of real as opposed 
 to factitious transactions. 
 
 There is sham buying and selling everywhere. But this on 
 the whole tends to decrease in Europe ; while in " Wall Street" 
 the proportion of the daily dealings which represents any real 
 investment or realization of Means progressively diminishes. 
 
CHAPTEE IX 
 
 LAND AND RENT 
 
 Space is the one constant amidst the phantasmagoria of 
 variants, the one concrete and permanent thing, containing the 
 ever shifting and varying fluid ocean of " Wealth " and " Means " 
 and "Energy." Economically considered, space is land ; which 
 while partaking of the characteristics both of Wealth and of 
 Means must be confounded with neither. It is a " commodity," 
 in so far as it is a " desirable object susceptible of appropriation." 
 It is Means, apart from commodity, in so far as it comprises all 
 possibility of productiveness. But those who would for a moment 
 for purposes of deduction class land with either the one or the 
 other, are digging for themselves a deep pit of fallacy. Therefore 
 it needs a chapter to itself ; and though much of what has to be 
 said of it has already been said in dealing with commodities and 
 with means, and need not be said again ; great care has to be 
 taken not to apply as a matter of course to land, any of the 
 deductions which may derive from the consideration of the facts 
 of Wealth or of Means. In the first place, land is national and 
 not international. Each morsel of space has its momentary 
 possessor, who can transfer it to another but never remove it, 
 and whose possession is a temporary usufruct and never a com- 
 plete dominion ; but the real permanent owner of every spot of 
 land in a country is the nation, as distinguished from the State. 
 The State is in respect of this ownership the national trustee, 
 bound to administer its trust in the interest of the people of the 
 country and their successors. 
 
 Theoretically, land is the dearest of all things, for the demand 
 for it has no ultimate limit, while the supply is absolutely fixed 
 and constant, and it is this aspect of its ultimate value which 
 gave rise to the over-hasty generalization expressed in Mill's 
 "law of diminishing returns." Practically, and looked at in its 
 world-aspect, land fluctuates in value according to locality, so 
 that while 200,000 acres in the interior of Africa may be pur- 
 chased from a native potentate (generally with a very imperfect 
 
152 THINGS AS THEY AEE 
 
 title, by the way) at the price of a ease of trade rum, a gramo- 
 phone, and a second-hand cocked hat; fifty feet frontage in 
 Cornhill or Broadway are for the moment exchangeable at so 
 many thousand dollars a foot. Eventually, it may be, the 
 African dominion will prove the more valuable and expensive 
 of the two, and space will be at a discount amidst the ignoble 
 ruins of the skyscrapers in what was once New York. But the 
 essential aspect in which it is necessary to consider the appro- 
 priation of space is the national one. 
 
 The word " property," as has been pointed out, is a fallacious 
 and objectionable one,* and it is well to avoid its use where 
 possible. The notion of " property " is so complex and artificial 
 a creation of municipal law, that one has to beware of applying 
 the word in respect of any object of value, for fear of being 
 drawn into some false syllogism. But in dealing with land, it 
 is impossible to avoid the use of the term " property," for it is 
 the degree of appropriation of the land, not the land itself, which 
 is the thing that is the object of value. 
 
 Space itself cannot be "property," any more than time, or 
 the sun, or the atmosphere, or Newton's law of gravitation. 
 What we really mean when we talk of " land," is that fragment 
 of the utility of a spot in space which is for the moment suscep- 
 tible of appropriation ; the temporary right to cultivate it, to dig 
 in it for its contents, to erect buildings on it, and to exclude 
 one's fellow-creatures from entering it or otherwise interfering 
 with its use or occupation. This only is what we mean by 
 " property " in land. When we talk of the " value " or " price " 
 of land, we really mean only the desirability of acquiring these 
 temporary rights. The land itself is a perpetuity, which is 
 beyond the reach of the acquisitiveness of the ephemeral 
 individual. 
 
 This temporary right to appropriate the use of land emanates 
 from the State, and, need being sufficient, the revocation of any 
 right so conferred becomes the prerogative and may at any 
 moment become the duty of the State. And in the exercise of 
 this prerogative the State cannot be controlled, because being 
 in itself the source of law, it is essentially superior to all law. 
 If any individuals set themselves to use any rights they have 
 acquired over land in a manner menacing danger to the fabric 
 of the State, they must necessarily be brushed aside with as 
 
 * Ante, p. 36, 
 
c. IX.] LAND AND RENT 153 
 
 little compunction as so many flies on a window-pane — the 
 welfare of the people being the supreme criterion. A story 
 runs in newspapers, of some industrious and far-sighted German 
 gentleman, who is reported to have managed to acquire the 
 right to fell the greater part of the forests of the United 
 States of America. When the proper time comes, that gentle- 
 man will be displaced by legislation as gently and unresistingly 
 as the owner of an estate in England who would wish to forbid 
 the running of a necessary railway line between two centres of 
 population over land which he wishes to reserve for his private 
 pleasure. The State cannot afford to endanger public in defer- 
 ence to private interests, though it often finds its aims deflected 
 by the necessity for conciliating the selfishness or prejudices of 
 classes, which are after all only private interests writ large. In 
 this way it is that economics become " political " economy. 
 
 Mill * accurately expounds the truth that it is impossible to 
 organize industry except on the basis of the individual " owner- 
 ship " of land. " S'il n'y avait pas un propri^taire, il faudrait 
 en inventor un." And according to him, the first thing to be 
 done in founding a State, is to create plenty of landlords. Mr. 
 Henry George persuades himself of the opposite conclusion. He 
 finds the great crime of society in the appropriation of land, and 
 the first duty of the State in the prompt exercise of its powers of 
 resumption, and his method is progressively and not too gently 
 to " tax all land-owners out of existence.",! The truth lies mid- 
 way between these views. The ultimate dominion over the land 
 of a country tnust and does rest with the State, but its use, in the 
 main, can only prove beneficial and profitable if confided to the 
 individual possessor. For the economic utilization of space, 
 individual acquisitiveness is the only adequate motive ; and this 
 will not apply itself to the task save under the stimulus of a 
 sufficiently secure inducement of prospective gain. Communal 
 cultivation has everywhere given way to individualistic appropria- 
 tion for this reason, and this only, that in respect of agricultural 
 production, land is a mere workshop — the area on which man 
 manipulates the heat of the sun, the chemical properties of the 
 earth, the element of moisture, the supply of the proper fertilizers 
 and the application of energy, so as to bring forth his crops. 
 
 * Mill, " Principles o£ Political Economy," Book II., Chap. II., § 5 ; Fawcett, 
 " Principles of Political Economy," Book II., Chap. II. 
 t George, " Progress and Poverty," Book VIII., Chap. II. 
 
154 THINGS AS THEY AEE 
 
 And to yield a profitable return to the individual or to the State, 
 cultivation must be " intensive." The most must be made of 
 the land by increasing the fertility of each plot. The public 
 interest postulates a progressive improvement of the soil itself 
 under the hand of the cultivator, which it is futile to expect the 
 community as a whole to accomplish, and still more impossible 
 to ask of the mere temporary possessor between one crop and 
 another ; and therefore Mill is within certain bounds right in 
 saying it is necessary to " invent a proprietor," for the same 
 reason applies to every patch of land in the world, except those 
 actually occupied for State purposes of convenience or service, or 
 which are too infertile or inconvenient for any sort of use, such 
 as the desert of Gobi or the shores of the polar oceans. 
 
 In every case the question is, what period and what extent of 
 alienation are necessary and convenient for the State to permit, 
 and what conditions it is desirable to impose with regard to their 
 temporary delegation by the State to individuals, and by one 
 individual to another. Primitive Europe knew nothing of the 
 permanent alienation of land.* Even temporary individual 
 appropriation was not countenanced beyond the short periods 
 needed for the cultivation of a crop or a limited succession of 
 crops. Land was in the hands of the commune, f which allotted 
 each strip to different cultivators in turn, equalizing between 
 them the opportunities of profit as best it could, by arranging 
 that the man who had a good strip in one year, should have his 
 fortune balanced by having to take charge of an inferior piece in 
 the next ; while for pastoral purposes, the unenclosed common 
 lands were administered by the community according to such 
 conditions as they found best suited to the common welfare. 
 Days were fixed upon which such cattle and sheep as were pre- 
 scribed, could be turned by their owners on to such and such 
 portions of the common ground, just as happens to this day in 
 highly advanced communities such as those of Switzerland and 
 Norway. The woods of the commune in like manner were, and 
 are, jealously guarded for the benefit of the whole people, each 
 man to this day in many Swiss cantons having his prescribed 
 right of obtaining fuel and timber, which he may not exceed, and 
 
 * Pollock, " Land Laws," p. 12 ; Williams, " Real Property,'' p. 18. 
 
 f Maine, " Village Communities," Lecture III. ; VinogradofE, " Villainage in 
 England," Introduction, pp. 26, 27. See also Canon Isaac Taylor, " Domesday 
 Survivals " (p. 50 of " Domesday Studies "). 
 
c. IX.] LAND AND EENT 155 
 
 which he exercises to a prescribed extent, in the woods of the 
 commune to which he belongs. The complex apparatus of 
 feudality gradually supplanted in Western Europe the com- 
 munistic conception of collective ownership which still obtains 
 in Eussia. But the " lord " was no more, in the eyes of feudal 
 law, the owner of the land than was his villein. Doomsday 
 Book did not record of the Saxon lords of the eleventh century 
 that they " owned " any land, but that they " held them of the 
 king " as their feudal inferiors held of them. What the king 
 had given, he was apt to take away, and the very right to inherit 
 property in land and the liberty of testamentary disposition of it 
 were comparatively late developments of individualism,* wrested 
 from the State, (it may be far too completely for the general 
 welfare,) by the force at the command of the " barons " ; and then 
 only subject to a whole series of limitations and " services." 
 Even in the twentieth century in England, the grotesque and 
 empty pageantry of the " court manor " and the " copyhold 
 tenure" survive as an obsolete symbol deriving from the 
 historical evolution of land ownership from the commune to 
 the feudal superior and from him to the individual proprietor, 
 and in some manors the lands held of the lord " by copy of 
 court-roll " are not even yet entirely freed from the service 
 which was the initial condition of all "tenure." But away at 
 the back of the whole conception, a dormant irresistible power, 
 lies the State, which has created the law in accordance with 
 which every owner of everything exercises his right and trans- 
 mits his privileges. The most legitimate of all manifestations 
 of State action is that by virtue of which, in case of necessity, 
 the people of a country must in the ultimate resort stand ready 
 to prescribe the uses to which the land of the country is to be 
 put. Thus in Australia, the most modern of all States, and by 
 no means the least enlightened, the first necessity was felt to be 
 a general secretion of Wealth and Means ; and the readiest way 
 of getting the human insect to secrete the honey, was to offer to 
 it the flowers for free collection ; so, wisely, magnificent pastur- 
 ages were offered with both hands to enterprising graziers to 
 utilize in pasturage, that occupation which above all facilitates 
 the accumulation of Wealth with the least human effort and in 
 the shortest time. The right of pasturage was given away by 
 
 * Austin, "Lectures on Jurisprudence," Part III., Lecture LII. ; Nicholson, 
 " Principles of Political Economy," Vol. I., Chap. VI., § 1. 
 
156 THINGS AS THEY AEE 
 
 the tens of thousands of acres, and the fortunate recipients of 
 the bounty forthwith imagined themselves to be a feudal aristo- 
 cracy with " inalienable " rights over land, and now, naturally, 
 they and their children go about the world dethroned potentates 
 denouncing as " confiscation " the speedily required re-arrange- 
 ments of proprietorship which the further developments of the 
 young community in a very few years made an absolutely 
 inevitable necessity, as soon as their task of " making fortunes " 
 for the State to draw upon had been accomplished. Or take a 
 British instance. Some wealthy gentleman enters a Highland 
 Scotch county ; his ideal of existence is to be an amateur butcher 
 and poulterer and fisherman. He expends his Means in 
 acquiring what the land agent tells him are inexpugnable 
 "sporting" rights over great stretches of hill and "forest" 
 (so named from the absence of trees) from which he proceeds 
 as completely as possible to exterminate all the two-legged 
 inhabitants that have not wings wherewith to rise to be shot 
 at in " sportsmanlike " fashion. It becomes necessary when 
 population begins to press on means of subsistence, more or less 
 to interfere with the pleasures of this blameless gentleman, and 
 a very unwelcome necessity it is, because the process of expro- 
 priation of Means in any form gives an unpleasant shock to the 
 general confidence in the sanctity of contract, in the fulfilment 
 of obligation, and in the security of "property" of all other 
 descriptions. It is difficult to convince such a so-called " owner " 
 of land, that what he has acquired must have been always 
 necessarily subject to the implied condition that it might have 
 to be resumed by the State which sanctioned its alienation ; and 
 the word " confiscation " sends a thrill of alarm through every 
 possessor of property of every description, and not unreasonably ; 
 for the " thin end of the wedge " is a delicate but formidable 
 tool, and so perilous is every operation of State interference with 
 proprietary right, that an absolutely inevitable measure for the 
 re-population of a Eoss-shire deer-forest, for example, seems to 
 produce tremors of apprehension in the marts where confidence 
 is brought to market, which are all so many sensitive seismo- 
 graphs indicating with exaggerated movement each impetus 
 everywhere towards " Collectivity " or " Socialism " throughout 
 the world. 
 
 But George was right when he pointed out that in this respect 
 land is a thing by itself, inasmuch as it is that in which and by 
 
c. IX.] LAND AND EENT 157 
 
 which people have to live and move and have their being, and 
 that therefore in the last resort, its occupation must necessarily 
 be subject to the will of the community, which has never relin- 
 quished the right to control it. " Capital " in other forms (for the 
 right to occupy land is an embodiment of Means as well as a 
 commodity) is (except at the moment of transmission from the 
 owner to his successors*) by its nature practically immune from 
 " confiscation," at any rate unless and until its absorption is 
 unanimously resolved upon by the entire population of the world 
 at once. " Augel che credevi in tua mano, dischiusa I'ale, e 
 s'envolo." As you stretch forth your hand to seize it, it takes 
 unto itself wings and flies away. At the first serious muttering 
 of a real storm in England, for example, all stocks and all shares 
 and all the debentures and all the securities emitted from English 
 sources will shrink in value to nothingness, because the absence 
 of confidence destroys their value and they become "depreciated," 
 while all removable sorts of means, all monetary and foreign 
 securities will disappear by telegraph and by post. And all the 
 gold will follow by express train, and the " capitalists " will not 
 have waited to dispose of their more cumbrous effects by auction, 
 but have followed their possessions to less enlightened shores. 
 Trains will not be quick enough, nor steamers sufficient, to 
 expedite the exodus of " movable " Capital and its possessors. 
 But land has no such immunity from capture, and that fact has 
 its own effect on value in the countries of less settled security. 
 Here we have another pretty paradox ; that which is apparently 
 the most permanent, the most immovable, the least imaginary, 
 the most tangible of all conceivable possessions, is in truth the 
 most fugitive and perilous, because the most at the mercy of 
 interference and spoliation. The land of a country is the one 
 thing in it that is absolutely and always under the feet of power. 
 For subsequent chapters is reserved a general consideration of 
 the taxation of land. It is an intricate subject, made doubly 
 difficult by having become saturated with prejudice and envy, 
 and the counter-excitements of resentment and disdain. But as 
 to the general exercise of the power of the State, which is its 
 " right," it has to be admitted that the State is compelled in 
 case of need to resume land and expropriate owners. Also it 
 has, if need arises, to increase taxation on all things and its 
 demands upon profit and upon Means. But in the exercise of 
 
 * Seej>ost, p. 380. 
 
158 THINGS AS THEY AEE 
 
 these powers any discrimination between owners of property of 
 different sorts on the ground either of the particular form which 
 their embodiment assumes, or on that of personal merit, or of 
 your likes and dislikes as between classes of owners, is not 
 economics but iniquity. The ethical element does enter for 
 something into the conception of taxation, which is partial, and 
 still more into that of expropriation which is total, "confiscation," 
 as the indignant Means-owner calls it, when not accompanied 
 with generous compensation. When, and on what conditions, 
 and under the stress of what necessity " ought " the State to 
 exercise its power of resumption ? If such an adjective could be 
 predicated of such a noun, one would say the problem is one of 
 political morality ; but to express the idea of morality in the 
 language either of economics or of politics, is a difficult and 
 delicate task. Prudence dictates the most sparing possible 
 resort to the disturbance of " property," every step in which is 
 perilous to confidence ; for the loss of confidence spells universal 
 impoverishment involving the annihilation of Means. But is 
 there not, beyond and above mere expediency, some supreme 
 principle of justice under the guidance of which the State can 
 proceed in its dealings with the individual ? The reluctant 
 answer must be, that human justice is the creation of the State, 
 and that Astrsea has not yet come back from heaven, while 
 Themis, her poor finite human locum-tenens, is blinded, and gropes 
 helplessly along. 
 
 "Law," "right," "equity," are conceptions of the infinite 
 and the absolute ; they are essentially metaphysical ideas — none 
 the less real for that, one hopes ; but the halting and relative 
 approximations to them on earth are but expressions of the will 
 of the State, guided by fleeting and temporary conceptions of 
 utility, with perhaps some bewildered imperfect aiming at 
 "justice" thrown in. The famous definition of justice by 
 Ulpian fails as a practical guide. " Perpetua voluntas suum 
 cuique tribuendi ' ; be it so ; but what on earth can any human 
 being cherish as " suum," beyond so much mastery and control 
 over things, as human customs. State-made law, and a general 
 notion of the public convenience and utility have concurred to 
 induce power to acquiesce in and protect ? Grotius strove to 
 evolve a conception of that which is right in itself, by diligent 
 collection of the principles of jurisprudence common to the 
 notions and customs embodied in the laws of all countries. 
 
c. IX.] LAND AND EENT 159 
 
 These, he imagined, must in some mysterious way express a 
 general criterion of essential right and wrong — the "natural 
 law," the " law of nature," the " law of nations." Then came 
 Austin, who demonstrated how baseless this conception, how 
 entirely human justice in each State derives from local and 
 temporary notions and a sense of that which is expedient. In 
 the last resort it comes to this, therefore : that as regards 
 property in land, which of all the varieties of property is the 
 most entirely the creation of the State, and which at the same 
 time is the only sort of property which is always completely at 
 its mercy, no general rule of "justice" can be invoked by 
 which power can guide its own exercise. It is all very well to 
 say that State action must not be " capricious " or " vindictive," 
 must not " defeat reasonable individual hopes and expectations 
 of permanence," must " have regard for vested interests " 
 (whatever that may mean), must prudently abstain from causing 
 " alarm to the sensitive confidence of owners of property in 
 general," " must refrain from violent confiscation," must "have 
 regard to the interests of the individual." All these are general 
 expressions of benevolence, fallacious criteria of expediency, 
 vague considerations of collective "enlightened self-interest." 
 When all is said, we are as far as ever from having obtained a 
 definite and practical rule of action. It is disappointing, but 
 inevitable, that there one has to leave the problem, to be 
 worked out by each State and generation for itself, on the 
 responsibility that is involved in the observed sequence of things, 
 that when a State makes a blunder in the use of its prerogative, 
 that State and its successors and those in its power have to pay 
 the penalty. " Quicquid delirant reges, plectuntur Achivi." 
 
 At present it is necessary to turn from this to another main 
 aspect of property in land, that which concerns itself with the 
 relations between the temporary proprietor or " landlord," and 
 the still more temporary person to whom he finds it convenient 
 to delegate his right to exclusive possession — the "tenant," and 
 this leads to that favourite subject of contemplation which is 
 rent. So far as an interest in land has to be recognized as a 
 commodity, it must be capable of being sold or hired, or its value 
 will disappear. 
 
 If the temporary right to occupy space is to take its proper 
 place as " property," be it in never so qualified a degree, the 
 conditions attaching by contract to the delegation of that righ^ 
 
160 THINGS AS THEY AEE 
 
 must also inevitably be deemed entitled to State sanction and 
 enforcement, just in the same way as the law enforces respect 
 for contractual obligation in the case of other kinds of property. 
 And so it comes about that (except in the case of one particular 
 island) the governments of civilized States throughout the world 
 recognize a duty of enforcing in favour of the proprietors of 
 "land" and "rent" the same degree of protection which it is 
 found desirable to extend to those possessed of money or pig-iron 
 or watches or any other description of " property." 
 
 Now much solemn disquisition has been expended by philo- 
 sophers in defining very mathematically and precisely the laws 
 supposed to regulate rent, which is in effect the money-price 
 of the hire of the right to occupy space. If one may say 
 so, this theorem has been allowed to subtend an arc of the 
 economic horizon wide out of all proportion to its real import- 
 ance. The thing is simple enough, and the truth about it 
 may as well be stated once for all without any reference to the 
 more ponderous classical authorities whose lucubrations he has 
 epitomized, in the words of Henry George. A certain confusion 
 is implied in looking upon rent as something specially to be 
 considered in respect of land devoted to agricultural purposes 
 and ignoring hirings of space for other purposes. But in other 
 respects, though George took care to define "rent" so as to 
 lead up to his own pet ultimate conclusion of the necessity for 
 the confiscation of all property in land whatever ; his definition 
 is reasonably accurate : — " The ownership of a natural agent of 
 production will give the power of appropriating so much of the 
 wealth produced by the exertion of labour and capital upon it as 
 exceeds the return which the same application of labour and 
 capital could secure in the least productive occupation in which 
 they freely engage."* And the present writer would paraphrase 
 this as follows : — " By virtue of his ownership of land the owner 
 " necessarily acquires so much of the profit arising from the 
 " use of that land, as exceeds what could be produced (after 
 " providing for the satisfaction of the claims of the exertion and 
 " expense of production) by using the least useful land, whether 
 " in the same or any other way." But get rid of the subtle con- 
 fusion between Wealth and Means, and it will be seen that such 
 enunciation of sententious truisms is of no particular value 
 in acquiring knowledge. Eicardo put his definition more shortly 
 
 * " Progress and Poverty," Book III., Chap, II. 
 
c. IX.] LAND AND EENT 161 
 
 but far less correctly. " The rent of land is determined by [a 
 fine fountain of fallacy these two innocent words !] the excess of 
 its produce over that which the same application can secure from 
 the least productive land in use." This was both inaccurate and 
 clumsily worded. The words " the same application " if they 
 mean " for the same purpose" involve fallacy; while if they 
 are intended to mean "with the same expenditure of energy" 
 they introduce a foreign and irrelevant consideration. The 
 same piece of land may produce a profit of fifty pounds a year 
 in the ordinary cultivation of wheat, and so forth, a hundred a 
 year if planted with strawberries and cabbages and asparagus, a 
 hundred and fifty if used to house and fatten stock for slaughter- 
 ing, two hundred if let for a golf link or a racecourse, and 
 possibly five hundred if taken up on lease, to be covered with 
 houses. What will be the " normal rent " of that land ? Does 
 it not after all come back to the old truth: that rent is an 
 expression of value, and like all values is not inherent in the 
 thing itself, but depends on the wills and purposes and beliefs of 
 the men who bargain about it ? 
 
 The landlord is bargaining about his bit of land and what his 
 tenant is to pay ; he is not going to trouble himself to consider 
 what may be the " excess of produce over what the same 
 application " (in the sense of the application of the particular 
 use to which the particular tenant purposes to put the land) 
 which a tenant is likely to obtain over and above what the 
 same man or any other would be able to get by using for the 
 same purpose " the least productive land in use " (however that 
 abstract notion may be capable of ascertainment in fact). " The 
 same application " has nothing to do with the result. 
 
 It is simpler and quite as instructive therefore to omit the 
 consideration of the hypothetical " least productive land " alto- 
 gether, and simply to say, " the rent of a piece of land is the 
 " measure of its desirability, as expressed in the periodical price 
 "to be paid to the owner by the occupier for the continuance of 
 "his occupation," and there to leave all the sterile logomachy; 
 in this simple form the proposition will be seen at once to be a 
 mere identical one, and its enunciation, though perfectly true, 
 to be no achievement of discovery, and to add nothing to know- 
 ledge, any more than any other pompous truism. 
 
 Eent is the measure in money of what the tenant is willing 
 to pay and the landlord is content to receive ; the tenant 
 
 T.A. - M 
 
162 THINGS AS THEY AEE 
 
 will offer to pay what profit he expects to make, less so much of 
 it as he believes he will be able to retain for himself after his 
 actual labour is remunerated and his outlay is returned ; the 
 landlord is content to receive what he believes any other person 
 would be prepared to pay him for the land, irrespective of what 
 sort of use that person may propose to put it to. And rent, like 
 any other price, is fixed by the haggling of the market. It is 
 just the same with the rent of land as with the price of the 
 pudding in the cookshop, the real value of which will only be 
 proved in the eating thereof ; and there is an end of the matter. 
 But a fertile source of error has to be guarded against. Putting 
 on one side instances such as are afforded by Italy and Southern 
 Prance where the landlord and the tenant are partners and 
 specifically share the material produce of the land — a state of 
 things which issues in an entirely different set of economic 
 results and has no applicability whatever to this country ; it will 
 be seen that rent is always paid in money; which is, out of 
 Means. Whether the Means are what the tenant has got in 
 exchange for the produce of the land or elsewhere is immaterial. 
 The amount of cash due is the same, whatever relative proportion 
 of the crop or specific amount of money's worth of it has been 
 sold to produce it, and whatever the cost at which the crop has 
 been raised, or the price at which it may have been sold. The 
 sum being fixed, and these other things varying from day to day 
 and place to place, it follows that rent is not by any means a 
 constant function of productivity, or even a fixed burthen on the 
 producer. Its pressure varies with every movement of values, 
 prices and productiveness, because always nominally the same. 
 Also the notion of productivity, though a potent determinant of 
 value, and therefore indirectly necessary to take into considera- 
 tion in adjusting the price of the hire of space, does not directly 
 enter into the computation. In an old-settled country at any 
 rate, rent arises only in part from the values attributable to the 
 land itself ; that is from surface area, locality, fertility, and the 
 mineral ingredients of the soil. It is affected greatly by that 
 favourite subject of interest to the land nationalizers and the 
 unearned-increment-mongers, the value imparted by density of 
 population. And still more vitally by the incorporation into 
 land of labour and Means to an extent indefinitely varying in 
 proportion to the total " value " according to the history of what 
 the labour of the past has added to contribute to the desirability 
 
c. IX.] LAND AND EENT 163 
 
 of the present, in respect of each individual morsel. The very 
 contour and nature of land will in some cases have been 
 "created" (if such a word may ever be used), by bygone 
 labour ; as in the case of the polders of the Zuyder Zee and the 
 similar reclamation in the bit of English country which is known 
 as the " Level of Hatfield Chase " or the coast lands of Surinam 
 and British Guiana. Sterile mountain crags have been through 
 ages transformed into fertile valleys by the scientific application 
 of irrigation in India, Ceylon and Java, and every field and 
 enclosure in Britain has attained its existing desirability as the 
 result of the continuous application through the ages of the skill 
 and labour of drainage, enclosure, and the transportation of soil, 
 and of the very working and cultivation of land itself. And when 
 one turns from agricultural land to the contemplation of that 
 part of the surface which is either utilized in manufacturing 
 industry or commerce, or forms a prime necessity of life in its 
 use as shelter and home for men, the incorporation of labour 
 and material assumes a preponderance of proportion so great 
 that the value of the space and surface in its natural state 
 becomes a mere negligible element of the value of the "land" in 
 comparison with what has been implanted in it by the addition 
 of the energy and means of successive generations of possessors. 
 It is in respect of the entirety thus brought into existence that 
 rent is claimed or paid : it arises, that is to say, on the whole as 
 much from " Capital," in which expression is included all the 
 result of the past labour which Means has hired, as from the 
 primary attributes of the land itself. And in what proportion 
 these ingredients have concurred, though it is conceivably 
 possible to analyze it in each particular instance, no generalized 
 conception is so much as thinkable. 
 
 In the actual world land is beyond and above all thus so 
 inextricably involved with Means, that in the concrete the 
 accurate way of regarding rent must ultimately be seen to be 
 simply that of the return from or inducement for the application 
 of Means. Henry George to the contrary notwithstanding, the 
 landlord is a capitalist like another, and his rent in the last 
 resort is just interest. By virtue of the interchangeability of all 
 wealth and all Means whatever, land in settled countries has in fact 
 become an embodiment of Means ever exchangeable in the hands 
 of each possessor for o her Means in any other form ; the less a 
 country is subject to civilized law and dominion, the less this is 
 
 M 2 
 
164 THINGS AS THEY ARE 
 
 true. So that where, as for example in Ireland, the State is 
 unable or unwilling to support " property " by the application of 
 its ultimate sanction, which is force, the " value " of " property " 
 tends to depreciate together with the possibility of its effective 
 appropriation. 
 
 Therefore, logically, the ultra-collectivist reasons accurately 
 when he rejects Henry George's discrimination between rent 
 and what he calls " profits," by the use of which word he tries 
 to confuse two distinct things : the one being the interest pay- 
 able for the use of means ; the other, the special wage or 
 remuneration of the over-workman in employing and directing 
 the under-workmen. This point is dealt with in its proper place. 
 For the present purpose it is sufficient to say that rent, though 
 arising in part from the appropriation of space, works itself out 
 in reality as the return due to that embodiment of means which 
 has busied itself with the acquisition and hiring out of the com- 
 plex necessity which we call " land," and which is in truth built 
 up in varying degrees of space, natural force, and labour, distri- 
 buted in locality. 
 
 Essentially diverse in their origin and intrinsic nature, in the 
 result "land" and its "rent" stand on precisely the same 
 footing as capital and its interest, and what is true of the one 
 becomes economically true of the other. 
 
 That rent is the price indicating the annual commercial value 
 of the right to occupy a given space is clear enough. That the 
 amount tends in every case to approximate towards the profit 
 derivable from the occupation is, as a general principle, also 
 more or less clear, though in each individual instance many 
 other considerations intervene to determine it — in other words, 
 there is an undoubted theoretical foundation for Mill's law of 
 diminishing returns. 
 
 But as is above pointed out,* this so-called "law" is, as a 
 matter of fact, but the statement of an ultimate tendency, never 
 more than approximately true, and constantly counteracted by 
 many other tendencies ; one which except for limited times and 
 in limited spaces in one or two countries only in the whole 
 world, has never been observed in accurate actual operation. 
 Since Mill wrote, for instance, agricultural rents in England rose 
 to a figure far beyond anything that could be described as the 
 increase in the relative productiveness of land " over and beyond 
 
 * Anie,!^. 8. 
 
c. IX.] LAND AND EENT 165 
 
 that of the least productive land in cultivation." This sudden rise, 
 apparently exemplifying the action of his "law," was due in the 
 main to two entirely independent temporary concurrent causes — 
 the more obvious being the unprecedented temporary deprecia- 
 tion of gold between the years 1850 and 1870, consequent on 
 discoveries in California and Australia, and the other the defec- 
 tive nature of the arrangements for the transport throughout 
 the world of competing cereal products — the monopolistic 
 influence of inadequate transportation ; while on the contrary, 
 in the last three decades of the nineteenth century, rents fell 
 again with still greater rapidity, contemptuously disregarding the 
 doctrine of " diminishing returns," as gold began to appreciate 
 again, under the pressure of a constantly increasing demand, 
 and the railways of North and South America, India arid the 
 Argentine country began pouring wheat into Mark Lane with 
 the regularity of clockwork. Many acute judges predict for 
 agricultural rents in Britain a fresh rise in the second decade of 
 the twentieth century, to follow fresh factors of demand and 
 supply ; all which tends to show that the philosopher in his 
 armchair knows very little of things as they are ; in this instance 
 of the real processes and conditions of world production. 
 
 The question often arises in the United Kingdom, to what extent 
 our municipal law is justified in according to the landlord the 
 exceptional privilege of " distress for rent," the right to be plain- 
 tiff, judge, sheriff, and policeman in the same cause as against 
 his tenant, by satisfying his claim for himself (at his own peril 
 of wrong) out of what he may find on the land when the rent is 
 overdue. However this may work out with respect to agricultural 
 land, however, it, or something like it, must necessarily be 
 tolerated with regard to land used for housing accommodation, 
 especially that of the poorer classes ; for in its absence, dwellings 
 would not be provided, and the worker could not find shelter for 
 his head without buying a place in which to lay it. And in this 
 conjunction, it must be borne in mind that what is recoverable 
 nominally as rent for space comprises in reality a most complex 
 and costly apparatus of provision : building, repairs, the supply 
 of water and the appliances of sanitation, and above all the 
 satisfaction of the claims of a very heavy taxation. The State, 
 which compels the landlord to collect and pay over the taxes of 
 his tenant, cannot escape from investing him with a summary 
 method of recouping himself. Nothing strikes those who busy 
 
166 THINGS AS THEY AEE 
 
 themselves with the details of philanthropic endeavour, more 
 forcibly or sadly than the disproportionate excess of the cost of 
 housing over that of the other indispensable needs of life of the 
 poorer classes. A row of tenements in a poor neighbourhood 
 shall be run up for, say, £1,000, including the cost of buying the 
 land. It shall be occupied by forty families whose earnings 
 average 25s. per week, — the gross rental of the whole shall be 
 i£ll a week, or roughly iG575 in the year, close to 60 per cent. ; 
 and this is not all ; with reasonably enlightened methods of 
 building, and something like conscientious industry on the part 
 of the operatives engaged in it* the i£l,000 could have been 
 brought down to, say, j£750, and the 60 per cent, would rise 
 to 85 ; and yet the builder and the owner themselves will be 
 but just struggling poor men barely able to keep their mouths 
 above water. This is no fancy portrait, it is a reproduction of 
 the experiences of a society that concerns itself with the housing 
 of the poor, gathered from the wide field of the county of London. 
 And one of the concrete urgent problems of the twentieth century 
 is how to rearrange and lighten this apparently inevitable and 
 almost intolerable burden of humanity in great cities. 
 
 One thing is certain, and that is, that if it were not for the 
 " power of distress " rents would be doubled, and yet the scanty 
 profits of the owner still further decreased. In like manner senti- 
 mentalists deplore the cruelty and " injustice " of that custom of 
 " imprisonment for debt " which in England is exercised by those 
 courts, the most important of all in reality, which have to compel 
 the payments of the debts of the poorer classes. This humani- 
 tarian sentimentality is indulged in, in complete ignorance of the 
 truth, quite familiar to those who know the facts, that it is precisely 
 this power of " commitment" which, exactly like the right to dis- 
 train, stands between the more destitute classes and actual physical 
 starvation ; so far apart are the humane conceptions of the senti- 
 mental philosopher from the concrete sordid realities of existence ! 
 
 Of rent values there is nothing further to be said. Like all 
 other values, they express ultimately the desirability of the 
 commodity. In some respects and under some circumstances 
 the occupation of space turns out to be the dearest commodity 
 in existence, as being that which is absolutely indispensable to 
 all mankind, and of which it is inconceivable that there should 
 be an indefinite increase of the possibilities of supply. And this 
 
 * See p. 16. 
 
c. IX.] LAND AND EENT 167 
 
 is one of the aspects of the many-sided enigma which the Sphinx 
 of modern civilization keeps propounding to its victims. More 
 than mere economic thought is needed for its solution; con- 
 structive effort. And hitherto the tentative strivings of the 
 philanthropist have attained but a sorry measure of success. 
 The clearing away of rookeries and insanitary areas in the large 
 cities of Europe has rather tended to intensify than alleviate the 
 hardships of the humble ; municipalities have had, perforce, to 
 erect in their place expensive buildings designed for commercial 
 occupation by quite other classes, driving the expropriated 
 inhabitants to congest themselves in other and less convenient 
 districts of the same cities, lessening instead of increasing the 
 space available for their habitation, and compelling the creation 
 of fresh " insanitary areas " in outer rings less susceptible of 
 efficient inspection, and less accessible from the regions where 
 employment is to be found. Philanthropic trusts abound, which 
 direct their energies to the provision of housing space, to some 
 extent available to accommodate some parts of the annual rein- 
 forcement of the army of workers recruited from the rural dis- 
 tricts, who keep on adding to the competitive congestion of the 
 town. But their efforts do not as yet seem to have attained 
 force sufficient to cope with the necessity. Sooner or later the 
 active interference of the State will assume the cogency of a 
 measure of self-preservation. Great constructive efforts of 
 statesmanship will then for a moment, perforce supplant as 
 subjects of importance the claims of rival sets of politicians for 
 public favour and employment ; and eventually something will 
 be attempted in the imperative interest of society, beyond the 
 immediate purview of personal ambition. Here " State socialism " 
 has in very truth a legitimate field of effort. Those things which 
 concern profit are the domain of individualism : every attempt 
 made by the State to meddle with these always has, and always 
 will, spell incompetency and disaster. But higher far and deeper 
 and infinitely more vital than any form of acquisitiveness or 
 commercialism lie the real foundations of civilization, outside 
 and beyond the sordid realm of the "cheapest market." The 
 raising of humanity will never be accomplished on the plane of 
 profit and loss. A concerted intelligence of mankind, directed 
 by true constructive statesmanship, must apply itself to that 
 task, aided and informed by the experience and wisdom of an 
 unsentimental and practical philanthropy. 
 
CHAPTEE X 
 
 WOEK AND WAGES 
 
 The entirety of material things is created by Nature, and the 
 energy of Man is concerned only in their production, in the 
 literal sense of that word ; the bringing forward of material and 
 preparing it for use. The energy of man severs and moves 
 materials in the mass, rearranges their molecules and fibres, 
 which is manufacture, and re-combines their atoms by chemical 
 and metallurgical process ; and this is the limit of his possible 
 effect on the material of the world he lives in. That part of his 
 energy which is concerned with these processes is spoken of in 
 economics as " labour," which prepares all things and creates 
 none. But human energy is by no means exclusively concerned 
 with the processes of wealth production. This is but one of its 
 many functions, and in no community affords employment to 
 more than a certain proportion of the citizens. Others set 
 themselves to work to acquire their means by other application 
 of their energies. 
 
 It has occurred to an Austrian professor* to devote himself to 
 an elaborate calculation of the proportion of humanity engaged 
 in the work of producing commodities. He presents his results 
 in a statement of the "average " number of hours and minutes per 
 day (allowing three hundred working days in the year) which 
 each male person in his own country, between the ages of sixteen 
 and fifty would have to work, on the supposition that such adult 
 male labour had to produce all the commodities which that 
 country actually does produce, and that none of this part of the 
 population of Austria-Hungary were excused from bearing their' 
 share in the- duty of " making things." He brings out the 
 result as follows : If you include " luxuries " among the things 
 to be produced, each male over sixteen and under fifty would 
 have to work two hours and twelve minutes for 300 days 
 a year in producing them. But if you exclude all things not 
 
 * Hen- Theodor Hertzka. 
 
c. X.] WOEK AND WAGES 169 
 
 immediately needed to keep going the productive process, the 
 labour involved would be reduced to something under one 
 hour. 
 
 This of course proceeds on the rather generous assumption 
 that the specialization of industry counts for nothing in the 
 productivity of labour, and that the priest, the jockey and the 
 street loafer will be able to manufacture commodities as 
 effectually and economically as the trained artizan. From the 
 point of view of the present writer there is' no particular fault to 
 be found with that assumption. He is prepared to accept the 
 worthy professor's calculations as founded on genuine statistical 
 data, and possibly as accurate to boot, the weak point of the 
 pedantic statist being seldom inaccuracy of calculation, but 
 invariably lack of common sense. It does not appear necessary 
 to attempt to investigate the validity of these conclusions, 
 because, except in one respect it is quite plain that the result 
 must be irrelevant to any conclusion of sane economics. It is 
 hardly even worth while to note that the industrious Herr leaves 
 out of his reckoning all computation of the extent to which the 
 energy of the past (not of Austria-Hungary alone, but of the 
 whole world) is built into the results of the present industry of 
 the Dual Empire; and that in that country, as elsewhere, 
 economic wealth production would be impossible without it. As 
 to this point the reader is referred to the analysis of wheat 
 growing in Canada.* 
 
 The complete futility of the entire thesis stares one in the face 
 for quite another and still more obvious reason, which is simply 
 that the ascertainment of the average daily duration of the 
 day's work per adult working male of the entire population 
 varies indefinitely with the circumstances of each country and 
 the nature of its industry ; so much so that the problem is quite 
 incapable of being worked out on British "national" lines.t 
 For what is true of one country has no necessary application to 
 the circumstances of another, and the " average " energy needed 
 for one organization of labour cannot be judged of by collecting 
 data from the statistics of another. 
 
 This is so plain a statement of truth that one almost apologises 
 for wasting space in exemplifying it. Conceive, for example, of 
 a community whose wealth and means are derived from 
 
 * Ante, pp. 72, 73. 
 
 + Ante, p. 16. See also poet 180. 
 
170 THINGS AS THEY AEE 
 
 petroleum ; say the oil wells of Baku bring forth the main 
 wealth of a possible republic of Transcaucasia. Now, so long as 
 oil flows at Baku the wealth derived from the labour of making 
 it available will continue exchangeable into means by commerce 
 and thus bring to the happy Transcaucasians all the other things 
 in the world which they may desire. And it is quite clear that 
 in Transcaucasia the normal average duration of the daily exer- 
 tion of the male adult will be excessively minute. In fact, if you 
 carefully omit to count in as " labour of production " what has 
 gone to the past, sinking of existing wells, the building of existing 
 tanks, and the manufacture and provision of the iron pipes and 
 steel machines that some infamous "capitalist" has already 
 brought to Baku to subserve his own nefarious ends, you will be 
 able to reckon somewhere about an average day's work of three 
 or four seconds per adult male Transcaueasian. And the main 
 exertion of the population (rather a heavy one if the borders of 
 the republic go back far into the mountains) will consist in their 
 expenditure of time and energy in travelling to and from Baku 
 to " put in " their four seconds apiece per diem. Or take an 
 existing concrete instance, the " work " of the vaqueros of the 
 Argentine. In certain States of this prosperous federation, the 
 main wealth-producing industry is that of a handful of "gauchos" 
 who, under the superintendence of some haciendero, ride about 
 on horses and look at the cattle browsing on the plains. Here 
 the cattle themselves do the real " work," that of turning grass 
 into beef and hides and tallow, the horse does the rest, and the 
 occasional man sits by on his back and watches. Possibly the 
 average daily labour-time might run into anything up to five 
 minutes per diem per adult male under fifty years of age. The 
 exact duration of each man's task would come to depend on the 
 number of beggars and speculators and local politicians who 
 could be caught and drafted into the " industrial " army before 
 they escaped over the Andes from even this much honest toil 
 into Chile or Peru. 
 
 Now, to complete the picture, take, on the other hand, a rice- 
 growing country, Aracan or Java. Here the whole working 
 time of the adult male population will be insufficient to make 
 and tend the canals, to build up the fields and tend the water- 
 buffaloes by whose work they are prepared for the crop, to 
 manage the intricate irrigation, to sow the seed patches and 
 dibble the blades of grass from them into the tiny enclosures, to 
 
c. X.] WOEK AND WAGES 171 
 
 reap and market tlie crop. There needs, in addition, the 
 constant concurrence in their toil of the women-folk and the 
 children. The "daily adult male average" time might run to 
 twenty-five hours. 
 
 Every man knows, though some choose to pretend not to, that 
 the conditions of every sort of employment of energy in the 
 world vary thus from those of every other ; that the industrial 
 life of each country is made up in varying proportions of a 
 whole series of industries thus varying, some of greater and 
 some of less required intensity of present application, which in 
 some co-operates with more and in some with less past labour, 
 with more and with less of the direct spontaneous creativeness 
 of natural causes. And it is plain therefore that no general or 
 permanent conclusion whatever can be drawn, even as to any 
 one country, and far less as to the world in general, as to 
 the average amount of labour needed to produce a given amount 
 of wealth. What the " average adult male time " may be in 
 Scotland will give you no knowledge of the conditions applicable 
 in Sicily, or either an experience of any value in determining the 
 figures for Japan or New Zealand. And every thinking man 
 knows also that it is not by a calculation for each country that 
 the result can be worked out, for the production of wealth is a 
 world-wide process, apportioned among the nations by many 
 causes, chief among which is the world value from moment to 
 moment of the commodities producible in each ; and that it is 
 this value which keeps on ever afresh determining whether or 
 not any of these commodities shall be produced in each, and to 
 what extent, and how great a proportion of the energy of the 
 population of each shall be directed to the production. 
 
 So it turns out that all this laborious and pretentious calcula- 
 tion of hours and minutes is a sheer waste of ingenuity, the 
 result of it having no appreciable value for scientific purpose, 
 though capable of being paraded to produce a certain amount of 
 ignorant prejudice in favour of the set of " socialistic " theories 
 to aid in the propagation of which it was entered upon. For the 
 purpose of arriving at any true knowledge of things as they are 
 it has as much relevancy as a volume of chess problems, and as 
 a contribution to human well-being it is far less valuable and 
 amusing. 
 
 Yet one truth emerges from this otherwise futile thesis, which 
 is that " productive " labour can not in the progressive and more 
 
172 THINGS AS THEY AEE 
 
 intricately diversified countries, be availed of for the employment 
 of more than a certain comparatively small proportion of the 
 population, profitable production being limited by commercial 
 demand, without which it is a waste of energy. 
 
 But in fact no distinction can, from an economic point of 
 view, be drawn between " productive " and " unproductive " 
 industry. Those, for instance, of the manufacturing operative 
 or agriculturist on the one hand, and those, on the other, of the 
 statesman, the soldier, the author, the lawyer, the surgeon, the 
 comedian, the mother and housewife, or, for the matter of that, 
 the harlot. All are labourers alike, ministering to the thousand 
 needs of humanity, some more some less urgent, some prompted 
 by the higher and some by the lower appetite, some more some 
 less meritorious, but all, together with thousands of other 
 varieties of " unproductive " folk, aiding to make up in its 
 entirety the existence, such as it is, of the complex organism 
 called society. 
 
 The wages of all alike are drawn from the same reservoir of 
 Means ; the excess, if any, of the remuneration of each over the 
 cost of his sustenance is "profit" in his hands, and, as such, 
 percolates imperceptibly back into the reservoir from which it 
 was first drawn, and may in turn become " capital " again, or 
 may not. Nothing is wasted, except always that which goes to 
 produce commodities or furnish services for which there is no 
 commercial demand. Over-production is sheer loss, and 
 infinitely mischievous to boot; and the world's effectual demand 
 for commodities being not a constant but a definite total, nothing 
 is more obviously true than that the world's effectual productivity 
 as also that of each country within it is inexorably limited 
 thereby. In the world there is only room for a certain and 
 definite sum of production at any moment. And any attempt 
 to exceed this in any one country can only succeed by depriving 
 the people of some other country of their market. This is the 
 A B C of commercialism, the aspect in which it is least favourably 
 viewed by the so-called " unprogressive " nations. 
 
 "Work" is a term really co-extensive with human energy, and 
 " wages " with its reward. It is as ridiculous for any one class 
 of workmen to arrogate to itself the monopoly of the term " work," 
 which includes the expenditure of energy by all classes, as for 
 the word " wages " to be perverted into a description of the 
 reward of one class rather than the others of the workers. 
 
C.X.J WOEK AND WAGES 173 
 
 Henry George, among the great services which he has rendered 
 to economics in that splendidly conceived but sadly disappointing 
 ■work, " Progress and Poverty," can claim the merit of being the 
 first fully to appreciate and explain the reality of things in 
 respect of wages. He demonstrates that all "Wealth," by which 
 he expresses that which the writer prefers to call all "Means," 
 necessarily divides itself between what goes to wages, interest 
 and rent respectively. No other logical division is so much as 
 thinkable.* George it was who first showed the essential 
 identity of the profit of the employer and the wage of the work- 
 man. His purpose was to deprecate the insatiable absorptive- 
 ness of the "landlord" and demonstrate that by way of abolishing 
 " rent," and freeing the worker from its pressure, it would be 
 
 • "Land, Labour and, Capital are the factors of production. The term Land 
 includes all natural opportunities or forces ; the term Labour, all human exertion, 
 and the term Capital all Wealth used to produce more wealth. In returns to these 
 three factors is the whole produce distributed. That part which goes to landowners 
 as payment for the use of natural opportunities is called rent ; that part which con- 
 stitutes the reward of human exertions is called wages ; and that part which con- 
 stitutes the return for the use of capital is called interest. These terms mutually 
 exclude each other. The income of any individual may be made up from any one, 
 two, or all three of these sources, but in the effort to discover the laws of distribution 
 we must keep these separate" (Henry George, " Progress and Poverty," Book III., 
 Chap. I.) For examples of inaccurate thinking on this point the reader is referred to 
 Eicardo, Mill, Marshall, etc. Mill, for instance, nowhere lays down a clear and 
 complete theory of distribution. Pieced together from different parts of his 
 " Principles," it amounts to the following : " The industrial community may be 
 considered as divided into landowners, capitalists and productive labourers. Each 
 of these classes as such obtains a share of the produce " (Book II.. Chap. III., § 1). 
 " The land is the principal of the natural agents which are capable of being appro- 
 priated, and the consideration paid for its use is called rent " (Book II., Chap. XVI., 
 § 1). " The wages of the labourer are the remuneration of labour " (Book II., 
 Chap. XV., § 1). " The share of the capitalist [is] the profits of capital. . . . The 
 gross profits from capital . . . must afford a sufficient reward for abstinence, 
 indemnity for risk, and remuneration for the labour and skill required for super- 
 intendence, and the three parts into which profit may be considered as resolving 
 itself may be described respectively as interest, insurance and wages of superin- 
 tendence" (Book II., Chap. XV., § 1). Rieardo is much less explicit, but the 
 same confusion of thought underlies his use of the ambiguous term profit, in which 
 he apparently includes wages of superintendence, concentrating his attention on the 
 field rather than the factory. He put it thus : " The produce of the earth ... is 
 divided amongst three classes of the community, namely the proprietor of the land, 
 the owner of the stock or capital necessary for its cultivation, and the labourers 
 by whose industry it is cultivated . . . under the names rent, profit and wages " 
 ("Principles of Political Economy and Taxation," Preface). Marshall definitely 
 follows Mill in including wages of superintendence in the return to capital. " What 
 remains of profits after deducting inteiest or capital at the current rate (allowing 
 where necessary for insurance) may be called earnings of undertaking or manage- 
 ment" ("Principles of Political Economy," Book II., Chap. IV., s. 7). See also 
 Cairnes, who, however, had a somewhat clearer perception of the truth. " Our 
 analysis then of cost of production resolves it into three principal elements . . . 
 labour, abstinence and risk, the first borne by the labourer in that enlarged sense of 
 the term in which labour includes all who take a personal part in the business 
 of production ; the second by the capitalist ; the third falling upon labour and 
 capitalist alike " ("Political Economy," Chap. III.). 
 
174 THINGS AS THEY AEE 
 
 quite the best thing to keep it going under another name as 
 " taxation ; " and in proving this odd conclusion Mr. George, 
 as will hereafter be pointed out (Chap. XIX.), was signally 
 unsuccessful. But the reasoning leading up to the enunciation 
 of his theorem is a masterpiece of insight and accuracy. It was 
 Bagehot who most incisively and convincingly analyzed the 
 actual energy of the individual employer as an agent of produc- 
 tion, a demonstration which has been pointed out by others,* 
 but by none so clearly and forcibly. The immediate result of 
 human energy so divided and so applied is Wealth, which by 
 virtue of its exchangeability gives rise to Means ; but it is fallacious 
 to estimate the economic results of the application of energy by 
 its efficiency in the production of material things, without giving 
 equal weight to the Means-production of those services which are 
 not directly and materially " productive " of wealth. 
 
 The pedant conceives for himself out of his inner consciousness 
 an imaginary world, busied exclusively with producing com- 
 modities " quand meme," and even if to excess, still " produc- 
 tively and beneficially" ; for. to his short-sighted mind whatever 
 is produced is "Wealth," and whatever is "Wealth," he imagines 
 must make for weal. But in truth Life and not accumulation is 
 the real aim and object of humanity. Production is but one of 
 many ways to that end, effective only in so far as it avails to 
 satisfy the craving of Means, which is money, to transmute itself 
 into Wealth, which is commodities. Commercial demand, that 
 is to say, is the determining influence on productive supply. 
 Commerce controls industry. 
 
 Apart from those exceptional commodities which are essentially 
 
 * E.g. Nicholson, " Most of the crude fallacies of socialism arise from neglecting 
 the higher forms of labour, including that of the management of capital " fBook II., 
 Chap. XIII., § 9). But see Bagehot 's " Postulates of Political Economy in Economic 
 Studies," 2nd ed., pp. 68 — 71. "Employment" in any large trade implies an 
 " employer." The capitalist is the motive power in modern production, in the 
 "great commerce." He settles what goods shall be made, and what not ; what 
 brought to market, and what not. He is the general of the army ; he fixes on the 
 plan of operations, organizes its means, and superintends its execution. If he does 
 this well, the business succeeds and continues ; if he does it ill, the business fails 
 and ceases. . . . And I am careful to dwell on this, though it is so obvious, and 
 though no man of business would think.it worth mentioning, because books forget 
 it — because the writers of books are not familiar with it. They are taken with the 
 conspicuousness of the working classes ; they hear them say : " It is we who made 
 Birmingham, we who made Manchester," but you might as well say " it was the 
 ' compositors ' who made the Times newspaper," etc. The whole passage is worthy 
 of being learnt by heart as a model of accurate thinking and picturesque expression 
 combined, but note the strange confusion between " interest on capital " and 
 "wages of superintendence." 
 
c. X.] WOEK AND WAGES 176 
 
 dear, of which the available supply is, or rather is believed to be 
 permanently inadequate ; the power of supply only waits on the 
 opportunity of the "effectual demand."* Almost before the 
 latter begins to manifest itself in operation, the former has already 
 expanded to the full extent of the probable opportunity ; and so 
 ready is Means to employ itself for profit in production, so amply 
 are the appliances of production at hand and available through- 
 out the world, that in respect of the majority of articles a 
 mononesis begins to set in almost as soon as the increased need 
 of consumption has fully manifested itself. The eloquent and 
 charming literary exercise by Mr. Wells t presents a very pictur- 
 esque instance of the hopeless confusion between Wealth and 
 Means which enables a perfectly honest writer in perfect good 
 faith, to misunderstand in this respect what really takes place 
 in the regulation of values in obedience to this inexorable law. 
 The truth was told in his pithy way by Adam Smith, long 
 long ago, and put in the fewest possible words ; he pointed out, 
 once for all, that "you can only increase the opportunity of 
 work, by increasing the commercial demand for that which work 
 produces." 
 
 It is convenient, however, while keeping this fundamental 
 truth steadily in view, to concentrate our attention on the con- 
 sideration of the " work" of those engaged in the production of 
 commodities from materials, because it is among these that are 
 most clearly manifested the essential phenomena of all forms of 
 human energy. It is in this way permissible to the economist 
 provisionally to envisage all labour as "productive," and in 
 dealing with wages, to draw his main conclusions from the 
 
 * The guiding fallacy of the collectivist rests itself on a resolute ignoring of this 
 essential sequence of things. " We manufacture more than we can use, you say. 
 Unless we can sell the balance to the Chinamen some of our factories must close 
 down, and then some of our people would starve. But why, I ask, cannot our own 
 starving people have the things that go abroad— some of aU the food that goes abroad, 
 for instance " (Upton Sinclair, " Industrial Republic," p. 86). " In every direction 
 the direct tendency of advancing civilization is to increase the power of human 
 labour to satisfy human desires — to extirpate poverty and to banish want and the 
 fear of want. All the things in which progress consists . . . have for their direct 
 and natural result the improvement of the material . . . condition of all within 
 their influence. . . . But labour cannot reap the benefits which advancing civiliza- 
 tion thus brings" (Henry George, " Progress and Poverty," Book V., Chap. II.). 
 
 t " Here on the one hand ... are people badly, uncomfortably, painfully shod 
 in old boots, rotten boots, sham boots ; and on the other great stretches of land in 
 the world, with unlimited possibilities of cattle and leather, and great numbers of 
 people who, either through wealth or trade disorder, are doing no work. And our 
 question is : " Why cannot the latter set to work, and make and distribute boots ? " 
 (" This Misery of Boots," by H. G. Wells : Fabian Society Tract). 
 
176 THINGS AS THEY AEE 
 
 phenomena of industrial production, never forgetting that this is 
 but one of many functions of human energy and source of Means. 
 
 The Capital and Means of the majority of individual workers 
 mainly consist of their own energy and power.* Their wealth, the 
 things themselves which they consume and use, come to them day 
 by day as the produce of their wages, which they hire out their 
 energy for, and on the adequacy and constancy of their wages 
 depends their material welfare. In patriarchal and feudal times, 
 when the intermediate organization of the family, or the clan, 
 merged the individual and obscured the faint and rudimentary 
 conception of the nation, adequacy of wage was replaced by the 
 obligation of the head of the family or the chief of the clan to pro- 
 vide from the collective resources of which they were the trustees, 
 the necessary means for the sustenance of the individual and the 
 perpetuation of the race. To effect a resuscitation of this rudi- 
 mentary organization of industry many popular obscurantists 
 keep urging society to return to a " State-socialism," as they call 
 it ; the notion being to substitute the State and the muncipality 
 as the source of all wages, for the individual employer, thus afford- 
 ing a sufficiency of employment and at an adequate remuneration 
 for all men : an aspiration which is as likely to be realized as the 
 the reviving of the vegetation of the carboniferous epoch. 
 
 In those patriarchal times the workman worked " for the love 
 of his craft," and the artist created by virtue of his " devotion to 
 art." And of a truth, under such conditions the actual work 
 turned out, though scanty in volume, attained a perfection of 
 craftsmanship and an artistic merit unapproachable under the 
 modern conditions of "industrialism." The sentimentalist from 
 one point of view, and the art connoisseur from another, unite 
 in deploring, no doubt with reason but assuredly without avail, 
 the results of the disappearance of those pristine conceptions of 
 obligation, and their replacement by the sordid modern "nexus 
 of cash payment " on the basis of value and price. And when 
 a writer who chances to be both sentimentalist and art critic at 
 once wanders innocently into the maze of economics, his jeremiads 
 are apt to be comically poignant. But the lamentations of a 
 regiment of Euskins will be powerless to arrest the inevitable 
 industrialization of civilization, unless, indeed, they could induce 
 mankind to retrace their steps and re-embrace Feudalism, or, 
 as the pseudo Chinese writer mentioned in the Introduction 
 
 * Ante, p. 34, 
 
c. X.] WOEK AND WAGES 177 
 
 would prefer, revert to the family as the unit of humanity, and 
 eliminate the individual. Therefore, the urgent questions which 
 economics must handle in respect of " labour " are always the 
 " means of employment " and the " rate of wages " ; things being 
 what they are, in these lies the main factor of human well- 
 being — the concrete expression of what concerns the " greatest 
 happiness of the greatest number." 
 
 Now, all labour must be regarded in its double aspect — the 
 labour of the people in the nation, and that of the world. All 
 forms of "Wealth," it has been shown, and all forms of 
 "Means" or " Capital," except that which is embodied in land, 
 are absolutely international, their average and ultimate values 
 determined by world causes independent of nationality. And 
 though their actual and concrete prices vary with circumstances 
 and places and times, these too approximate more or less to an 
 expression of average world value. So it is also with the value 
 of labour ; but what the labourer is immediately concerned with 
 is not its value, but its price ; for that is the expression of 
 what it shall avail him at the time of his work. Varying, as 
 all prices do, with local supply and demand, and local apprecia- 
 tion and depreciation of gold, the price of labour tends, though 
 very slowly (and so the more advanced thinkers among the 
 workers themselves begin to perceive), in the long run in the 
 direction of a world-wide equalization. It is to no purpose that 
 the cotton operatives of Manchester would associate themselves 
 in absolutely proper and sound endeavours to obtain for them- 
 selves and their class a greater proportion of the profits of 
 spinning, weaving, and printing in that centre, if their comrades 
 in France, or Germany, or Austria are engaged in producing the 
 same stuff at a rate of wage which enables the manufacturers of 
 these countries to undersell; their efforts must in such case 
 ultimately be self-defeating, inducing diminished general demand 
 for their wares, and lessening their opportunity of employment. 
 The same inevitable result attends every effort of the sort in 
 every branch of industry in every country, except those few 
 round which a local accidental monopoly has for the moment 
 thrown its protective arm, and these are becoming fewer in every 
 country of the world simultaneously. Therefore it follows that 
 in every country, sooner or later, and for the most part sooner, 
 a concerted and concentrated effort of the wealth-producing 
 classes will necessarily tend to assert itself in one of two 
 
 T.A. N 
 
178 THINGS AS THEY AEE 
 
 antagonistic directions — that of what is' called national " Pro- 
 tection " on the one hand, or the " internationalization " of wage 
 conditions on the other. If Manchester is being undersold by 
 Eoubaix either in the London market or that of Buenos Ayres, 
 sooner or later Manchester will seek relief in one of two ways — 
 either by building a wall of protection round England, or by 
 endeavouring to persuade Eoubaix to combine and increase its 
 scale of wages, so that the cost of production there may rise to 
 equal that of Manchester, and that both may " start fair " in 
 their competition to control the markets of the Eiver Plate ; until 
 such time as the development of a similar industry in the 
 Argentine, and the efforts of producers in that country to protect 
 their industry, will have shut the markets of Buenos Ayres 
 against Manchester and Eoubaix alike. And then these two 
 centres will join in endeavouring to induce the operatives in 
 Argentine mills to demand higher wages from their employers 
 so as to "give a chance " to their European competitors. 
 
 What the Lancashire Free Trader is capable of in the way of 
 efforts directed towards a pitiless Protective policy trying to 
 impose the burthen of an oppressive monopoly abroad, was 
 signally exhibited when Bombay entered the lists of competitive 
 production of cotton-stuffs. The capitalists and labouring 
 classes of Western India asked for no protection, and were 
 willing to open their markets to their Western competitors, 
 the import duties of India being imposed absolutely for 
 revenue purposes. But the capitalists and workmen of Lanca- 
 shire with one voice insisted, that against the wishes of the 
 people of India and its Government, the interests of the Indian 
 producers and consumers alike should be subordinated to those 
 of their British fellow-subjects, and the Indian Government 
 should be compelled to levy an excise duty on the Indian product, 
 equivalent to the revenue import tax to which, in common with 
 other commodities, the Indian fiscal system found it convenient 
 to subject importations of cotton manufacture. This tyranny of 
 monopoly was exercised in the name of free trade. And in like 
 manner, if the thing were not obviously beyond its power, the 
 Imperial Government would at this moment be subjected to 
 urgent pressure of voting power, to exercise the same oppression 
 on the self-governing people of Canada, Australia, and South 
 Africa, and would find some specious pretext on "free trade" 
 principles for obeying the selfish mandate of its electorate. 
 
c. X.] WORK AND WAGES 179 
 
 So, to fit the boot on the other leg, when the Chinese pro- 
 hibited what they considered the mischievous habit of smoking 
 opium among their people, and to that end forbade its intro- 
 duction into China, and confiscated the stocks of it accumulated 
 in defiance of the imperial edict in the warehouses of the 
 " Bund " at Canton, the Government of India, in the interest of 
 its revenue from opium, induced the British nation to wage war 
 upon China, and to compel the Government of that country to 
 continue to permit the vice which they had determined to 
 eradicate from among their people — probably as wicked an act 
 as any civilized Government in the world ever committed. To 
 this day, again. West Africa is being deluged with infamous 
 alcohol, the product in the main of German and Dutch dis- 
 tilleries ; and the honest attempts of the local Governments to 
 protect the negro races under their care from deterioration by 
 this means are thwarted in the interests of sacred commerce, 
 the while all sorts of attempts are being made by lessening the 
 opportunities of indulgence to compel the " workman " at home 
 to abstinence. No doubt it would be found that were the 
 Imperial Government minded to attempt any interference with 
 the African drink trade, some gentle diplomatic pressure would 
 be exerted in London by some representative of a friendly Power, 
 to induce the Foreign 0£&ce to promise that Colonial Govern- 
 ments should abstain from too stringent a suppression of vice. 
 It comes to this, that in the realm of commercialism the prepotent 
 motive is sheer cynical selfishness. " Principle " stands for 
 • nothing ; or rather is adopted as a sort of hypocritical cloak 
 for acquisitiveness, and greed is saturated with hypocrisy. 
 
 Thus it is that so long as the producer thinks that his material 
 interests will be furthered by unrestricted importation, he is a 
 convinced adherent of the " principle " of Free Trade ; when 
 he finds that his employment depends upon the exclusion of 
 foreign competition, he will be an equally enthusiastic convert to 
 the "principle" of Protection, and clamour that his servants, 
 the people who make believe to " govern " him, should faithfully 
 carry out their duty of preserving to the utmost the opportunity 
 of employment for the " workers " of the nation, more especially 
 for those who are concerned in his own trade. And into the 
 merits of these competing principles, neither of which is a 
 principle at all, for both alike are mere assertions of 
 empirical expediency, it is proposed to enter in a later chapter. 
 
 N 2 
 
180 THINGS AS THEY ARE 
 
 The "internationalization" of labour, the equalization 
 throughout the world of rates and wages and conditions of 
 employment, is in itself a legitimate aspiration on the part of 
 those who live by their work ; but the realization of the vision 
 must for centuries be attended with difficulties apparently 
 insuperable. How, for example, enforce upon the rice-feeding 
 abstinent Hindoo that he should claim a rate of wages equivalent 
 to that needed by the beef -eating and beer-drinking Englishman ? 
 Or on the dogged untiring acquisitiveness of the miner of Northern 
 China, the free and somewhat expensive standard of life and the 
 politic restrictions of working hours that are preferred by his 
 brethren in Pennsylvania or Northumberland ? And so on 
 thioughout the whole cycle of productivity. You can make war, 
 or threaten to make war, on a government, to compel it to adopt 
 or abandon measures of State which affect the self-interest 
 of an influential section of your " constituents " ; but how do 
 you propose to impose your will on the subjects of such a 
 government, in the matter of the wages or conditions of labour 
 which such subjects think fitting to acquiesce in, in obedience to 
 what they deem to be their own self-interest ? 
 
 Just as the ultimate persuasive force of a government lies in 
 cannon and warships, so the ultimate arguments of associa- 
 tions of men must be terror — backed by force when necessary. 
 Nothing less will suffice to deflect the collective deliberate will of 
 a population; and so it comes about that the "international" 
 association, which was started with the entirely laudable and 
 benevolent object of promoting the common interests of the 
 working classes throughout the world, has everywhere been con- 
 strained to pursue its aims by unavowable means, and to share the 
 use of the bomb of the anarchist and the train-wrecking apparatus 
 of the railway robber. And indeed the physical details of every 
 conflict between Labour and Capital are full of terrible hardships 
 and evil ; and in noting this no partisanship is aimed at. Strife 
 is strife and essentially cruel; and in warfare all things are 
 permitted. Hypocrisy is resorted to freely on both sides, so as 
 to placate the readers of newspapers, and avoid exciting the 
 hysterical antagonism of sentimentalists. A " strike " is decreed, 
 often enough absolutely justifiable and necessary, sometimes 
 neither ; or a " lock-out," equally dictated by the real or apparent 
 necessity of self-defence. This is war, which when it breaks out 
 becomes a contest of physical endurance of violence and of 
 
c. X.] WOEK AND WAGES 181 
 
 threats. In the United Kingdom the majority of electors have 
 demanded and obtained the right to resort to terror and violence 
 under the guise of what is described to the sentimentalists as 
 " peaceful picketing " — of the peacefulness of which its victims 
 are best able to judge. The police stand by in a bewildered 
 attitude, as it were, completely unable to discriminate between 
 the "persuasion " that is a legitimate weapon, and the "breach 
 of the peace " which it is their normal function to prevent and 
 punish. Nor do the spectators understand much more of the ethics 
 and conventional hypocrisies underlying this paradoxical but quite 
 inevitable legalization in the twentieth century, of the " right 
 of private warfare " which is supposed to have been finally 
 abolished in the fifteenth. Far be it from the writer to 
 indicate what he does not in the least feel — any sort of dis- 
 position to take sides in this ever-impending conflict ; though 
 human sympathy must always be with the sufferers, the women 
 and children. His task is to analyse things as they are, and 
 present them stripped of their conventional cloaks of hypocrisy. 
 If a "trades union" is to attain its purpose, it must be by 
 exercising compulsion. It is committed to a double conflict, 
 with " Capital " in its front, and the host of unemployment in its 
 rear, and has to control also the recalcitrants in its own ranks, 
 and stimulate the courage and endurance of its own hunger- 
 pinched army. And people keep pretending that this can be 
 accomplished by " enlightened discussion " and the exercise of 
 the pacific arts of persuasion ! The " liberty of the subject " is 
 a sacred right. But rights are apt to be suspended in time of 
 war. And you cannot recognize a " right" to organize a com- 
 bination to strike for better terms, without conceding the power 
 of infringing the conflicting supposed "right" of every man to 
 contract for himself and seek his own livelihood uncontrolled by 
 the will of his fellows. As regards the international organiza- 
 tion of workers, the impartial way of stating the case is that the 
 time is not yet in sight when it can hope to achieve its ends 
 effectually, whether by recourse to normal and peaceful or to 
 cruder and more violent methods. Not until the leadership 
 of a movement has passed out of the hands of the visionary 
 theorist into those of the practical and informed man of business 
 and administrator, can its purposes be efficiently attained. And 
 the era has not by many years arrived when a sufficient know- 
 ledge of the real inwardness of industrial phenomena will have 
 
182 THINGS AS THEY AEE 
 
 informed those who aspire to direct this benevolent movement 
 towards the general amelioration of the lot of workers through- 
 out the world. For the main part they are visionary and 
 ignorant agitators. 
 
 It is far otherwise with organizations more modestly local and 
 restricted in their aims and purposes, those which aspire to the 
 organization of the self-directing efforts of workers within the 
 confines of each nation. Of course, the essential distinction in 
 this regard between the nation and the world, is that whereas in 
 the world the sum of possible and profitable employment for 
 workers is relatively speaking constant, and cannot be added to 
 except in so far as it is capable of gradual stimulation by the 
 enhancement of the world's demand ; within the bounds of 
 each country, the opportunity of work is susceptible of indefinite 
 increase, though this must always be at the expense of the oppor- 
 tunities of the workers of other countries. So it comes about that 
 side by side with the infructuous efforts of the " internationalist," 
 inspired by a conception of ultimate abstract truth, but in 
 practice impotent to bring forth anything beyond declamation 
 and " revolutions," there operate in irreconcilable antagonism 
 to them the practical and definite efforts of " national " unions of 
 workers, directing their energies to the bettering of the lot of 
 their own members within the confines of their own country, and 
 necessarily to the correlative disadvantage of their comrades in 
 other lands ; and in truth it seems that it is by following the 
 paths of these competing practical national organizations that 
 the efforts of the workers are most likely to meet with success. 
 
 Within each nation the mechanism of the hierarchy of trades 
 unions takes its place as a normal and necessary organization. 
 No sane man, however devoted to the " interests of Capital," 
 would desire to see its efficiency or power impaired ; for it is the 
 bulwark of the interests of the many against the acquisitiveness 
 of the few. Of course this like all other human institutions has 
 its faults and shortcomings, its shortsighted fallacies, its regret- 
 table methods, its own collective excesses of acquisitiveness ; but 
 all these find their appropriate Nemesis in due course, in the 
 impoverishment of the class, and the diminution of the power 
 and industry of the nation. For the workers in every trade and 
 in every country exhibit an almost automatic alacrity in seizing 
 every opportunity of increased employment afforded by the 
 commercial blunders of their rivals in other lands. The 
 
e. X.J WOEK AND WAGES 183 
 
 instance of the ship-builders cited above * is typical of what 
 must of necessity occur in respect of every industry of every 
 country in turn, when a wrong impulse is given to associated 
 effort. Where in any country those of any craft have for the 
 moment succeeded in arrogating to themselves more than the 
 commercially practicable share of the profits of any branch of 
 enterprise, then and there immediately and inevitably, the 
 employment of that craft is lessened in that country, and trans- 
 ferred to rival centres of production. It is the consciousness of 
 this inexorable law of compensation which has inspired the 
 visionary efforts of the internationalist to strive to eliminate the 
 world's competition, and impose a universal scale of wage in 
 every craft. But the gradual appreciation of this same elemen- 
 tary truth tends likewise more and more to modify and regulate 
 the efforts of those who direct the policies of the " trade 
 organizations " within each country. To them it is becoming 
 increasingly evident that the Capital and the Labour of each 
 nation cannot rightly be looked on as mutually antagonistic, 
 inasmuch as they are engaged in an unconscious but indissoluble 
 alliance offensive and defensive against the competitive efforts of 
 the Capital and Labour of rival countries : and that the national 
 welfare, which after all means the well-being of themselves and 
 of their brethren of other trades whom they know and between 
 whom and themselves lies the closest bond of sympathy and 
 common interest, is only capable of being enhanced by the 
 consolidation and co-ordination of the forces of their alliance. 
 This result it is becoming the aim of the real leading minds of 
 the armies of Capital and Labour alike to bring about in each 
 country. For that nation which the best succeeds in formulat- 
 ing treaties between its hosts of providers of Means and of 
 Energy is destined to the lead of the industrial world. From 
 which it seems that in every country the secret of predominance 
 lies in two methods, co-operation and conciliation.! 
 
 It is obvious, that the welfare of a nation ultimately depends 
 on its success in appropriating to itself as great a proportion 
 as possible of the world's opportunity of employment alike 
 for the Capital and the Labour that form the Means and 
 Power of its citizens. And in this relation we have to discard 
 
 * P. 113. 
 
 t A third and still more exeellent way, Colonization, presents itself rather as a 
 remedy for workless ; see post, p. 198. 
 
184 THINGS AS THEY AEE 
 
 the limitation which in Chap. II., p. 24, had to be imposed on 
 the use of the word "nation" as indicating an entity which 
 could be conceived of as capable of possessing and owning 
 Wealth or Means. The conception of " nationality," admittedly 
 vague and indeterminate as regards the ownership of com- 
 modities and the appropriation of individual and specific 
 incarnations of Means, as there pointed out, becomes on the 
 other hand a legitimate and adequately definite idea, when 
 viewed from the standpoint of the national well-being, for that 
 concerns future generations as well as the existing one, includes 
 the interests of individuals beyond its borders, and pro tanto, 
 also of the strangers within its gates. The "Wealth" of a 
 nation is a rhetorical expression, but its power and aptitude 
 and well-being are actual and verifiable manifestations. By 
 these expressions ideas are denoted behind which is the actuality 
 of a potential force, not momentary and accidental only but 
 permanent, and almost intrinsic to each nation. Into the mis- 
 takes and fallacies, the short-sighted aims and the often unduly 
 acquisitive momentary objects of the associations of workers, it 
 is not proposed to enter at all. They have their exact correla- 
 tive in the equally temporary and short-sighted selfishnesses of 
 the individual capitalist and of aggregates of capitalists. They 
 are manifestations of human fallibility and embodiments of 
 stupidity, a formidable series of flaws in things as they are. 
 But the main hope for the future lies in their progressive 
 elimination under the influence of the gradual enlightenment 
 of both wings of the national army alike. But one fallacy 
 common to both wings is that already touched upon (see p. 7). 
 Both alike are apt to cherish the nationally suicidal policy of 
 the "limitation of production." The world as a whole effec- 
 tively limits its own production, by the operation of the law 
 indicated above (p. 175). The sum total of commodities in the 
 world can safely be left to regulate itself, for it must always, 
 except in respect of certain things, prove equal to any demand. 
 The essential element of national prosperity on the other hand 
 resides in the concentrated effort of each nation to acquire for 
 itself the facility and opportunity of appropriating as far as 
 possible a larger and larger share of the world's demand, to 
 push its productivity to the limit of commercial possibility, and 
 above all to push back that limit to its furthest possible stretch. 
 It is precisely that aspect of modern industrialism that the 
 
c. X.] WOEK AND WAGES 185 
 
 " Chinese " philosopher who has been already quoted finds the 
 most fault with. " Keep this striving of yours," he says, " from 
 invading my country ; we produce all that we consume, and 
 consume all that we produce. We ourselves are sufficient to 
 our needs, and have no manner of use for your Western com- 
 mercialism." This presentment of the case is not literally true, 
 as witness the irrepressible efflux of the yellow race into less 
 conservative and self-contained countries than their own, the 
 immense commercial activities of Shanghai and Hankow, and 
 the formidable investments of Chinese capital and eager search 
 for employment by Chinese labour among all the enterprises of 
 commercialism throughout the Eastern world, ever striving to 
 pass beyond it and compete for employment in America and 
 Europe. But it is true enough to take its place as a general 
 statement. The point is, that this is an ideal incapable of 
 realization in the other countries of the world, and before long 
 will prove equally impossible in China. 
 
 The key-note to national aspiration must always be this 
 competitive enhancement of national productivity. The ulti- 
 mate and far-reaching enigma is how far, and in what manner, 
 this tendency is susceptible of being reconciled with the other 
 more vital and more intimate elements of a true progressive 
 civilization of mankind. In a previous chapter has already 
 been indicated the mode in which the energies of industrial 
 people have evolved their special aptitudes and thus brought 
 about an enhancement of productivity by means of the speciali- 
 zation of function, a process which Mill rather ineptly called 
 " subdivision of labour " ; and in the next chapter (p. 190) are 
 noticed the less beneficent aspects in which this tendency mani- 
 fests itself in the direction of what has been referred tb as the 
 mechanicalization of the worker. 
 
 Next have to be dealt with deeper and more far-reaching 
 sequences of the consequent enhanced capacity to produce, 
 when taken in conjunction with the inevitable result of the 
 general truth of the commercial limitation of demand above 
 insisted on ; the misery of mononesis. The extent of the world's 
 demand is the commercial limitation of the possible activity of 
 supply ; and the share in the trade of supplying that demand 
 which can be claimed by the workers in any one country 
 is limited again by the industrial circumstances of that country, 
 and the aptitude of its institutions to assist instead of impeding 
 
186 THINGS AS THEY AEE 
 
 the efforts of its citizens. And success in the endeavour of 
 one country to extend its opportunity can only be attained at 
 the expense of the people of other countries. So it comes about 
 that in one country or another and from one time to another, 
 some part of mankind is "short of employment." This, 
 and all that it implies, brings mankind face to face with the 
 gravest of all the enigmas of the Sphinx : the terrible problems 
 of worklessness and poverty, which must be considered in the 
 next chapter. 
 
CHAPTEE XI 
 
 WORKLESSNESS 
 
 The more specialized the worker, the more he is at the mercy 
 of a diminution or cessation of the demand at any moment for 
 the things for the production of which he has acquired his special 
 aptitude. In some way or another a government, a municipality 
 or some philanthropic organization has in the last resort to find 
 employment for a part of the surplus unspecialized labour of 
 mere physical exertion. In India this task has necessarily come 
 to be recognized as an imperative duty of the State, by the 
 exercise of which alone, the people of vast provinces can possibly 
 be preserved from annihilation in times of famine. Whenever 
 the duty is neglected or, as in some countries, inefficiently or 
 corruptly performed, humanity for the time becomes decivilized, 
 and the human being degrades into the primeval embodiment of 
 brute hunger and fury. And in this aspect, the alleviating 
 effort of the State loses the merit of philanthropy, and embodies 
 the necessity of self-preservation. In the last resort, society is 
 constrained in its own interests to clothe the naked and feed the 
 hungry among the workers, whenever the naked and the hungry 
 are numerous enough and strong enough to help themselves to 
 those things needed to preserve their existence by force if they 
 are longer withheld. At the other end of the scale is the 
 army of unspecialized non- workers — the penniless " respectable " 
 wastrels of the upper or middle classes, and the unemployable 
 and shiftless of the poorer sort, those who having no faculty of 
 service, depend for existence on the more or less willing con- 
 tributions of their luckier kinsfolk, or the grim compassion of 
 the State. To some of them is open the industry of crime as an 
 alternative resource ; and the way of the bee with the drone not 
 being among the permitted "resources of civilization," some 
 feebler mode of parasitic existence shapes itself for others who 
 are grudgingly permitted to burden the Means of other people. 
 Another less unmeritorious host again is that of the unfit 
 
188 THINGS AS THEY AEE 
 
 or incapacitated, the superannuated, the infirm, the imbecile, 
 and the helpless. These have a legitimate claim to be kept 
 alive, inasmuch as they do not merit to be destroyed. But 
 the care of all these great necessitous armies, though a pressing 
 duty and an immense burden on the society of which they form 
 a part, hardly comes within the domain of economics. It con- 
 cerns the self-preservative necessities of the State, the active 
 benevolence of the individual alms-giver, and the philanthropic 
 effort of charitable organizations. It is a great part of the 
 universal enigma, but not that portion of it the solution of which 
 is within the province of the economist. 
 
 What he has to deal with is the misfortune of worklessness 
 arising from the economic causes of superabundant supply and 
 inadequate demand ; from what has been above desci'ibed as 
 " Mononesis." Now this is essentially a local and national 
 question, and in dealing with it, a man, be he never so humani- 
 tarian and concerned for the welfare of mankind in general, is 
 just compelled to think simply in the interests of the nation of 
 which he is a unit. The causes of worklessness may be and 
 often are to be sought in other lands, but the stress of it is upon 
 his own people, and the remedy has to be looked for at home, 
 whether it takes the shape of spontaneous individual effort, or 
 has to be sought for from State action tending to modify the 
 causes which arise within or without the country, and produce 
 perturbations in the world's economic conditions, acting to the 
 detriment of its people. 
 
 Each fresh improvement in the process of production, each 
 mechanical contrivance by which two men can accomplish the 
 work that needed the efforts of three, each permanent or tem- 
 porary diminution or shifting of demand in the world, brings 
 about inevitably in some place or other in the world a dislocation 
 of employment, inasmuch as in respect of the great majority of 
 commodities there is and must be always a power of supply 
 adequate to furnish all for which there is commercial demand. 
 Like other diseases, that of worklessness manifests itself in a 
 country in two aspects, the chronic and acute form ; and as 
 each specialized worker is by virtue of the very evolution of 
 his faculties in one trained direction less competent for employ- 
 ment in another industry requiring differentiated faculties of its 
 own ; it follows that casual unemployment tends always to 
 become more or less chronic ; which means that there is a 
 
c. XI.] WOEKLESSNESS 189 
 
 steady tendency for those thrown out of work to drift into the 
 army of unspecialized workers and become embodiments of 
 unskilled energy. Nor does this exhaust the enumeration of the 
 causes that are constantly in action to deprive the worker of his 
 means of livelihood. As age creeps on him and his hand loses 
 its deftness, his value as a machine-minder diminishes so 
 rapidly, that at a comparatively early age he finds himself forced 
 to abandon his special employment, and enter into competition 
 with the ill-paid host of the unskilled ; while too often the well- 
 meaning efforts of the State find their expression in legislative 
 conditions, always devised for the special benefit of the worker, 
 but whose uncalculated by-results often tend to injure and 
 impoverish him. For example, in England, it has been thought 
 fair to cast upon the employer the liability to compensate the 
 workman for all accidents in the course of the employment, even 
 those caused by his own awkwardness or stupidity, and in this 
 there seems a manifest " justice." But then the natural result 
 is to restrict skilled employment more or less to those whose 
 natural activity and alertness is such as to enable them best to 
 escape the risk of injury in perilous trades ; while at the same 
 time the huge expense of insuring against this liability imposes 
 in some trades a handicap on the employment of Means which 
 in the strenuous race of international competition to produce, 
 has its own danger of giving an advantage to countries less 
 solicitous for the welfare of their workers. And so again the 
 employment by individuals of "casual" labour in occasional 
 " jobs," a valuable resource of the unskilled, is by the enforce- 
 ment of this liability saddled with a comparatively prohibitory 
 risk, for accidents in the course of such "jobs" cannot be 
 similarly insured against. All State action imposing special 
 liabilities on employers has its similar perils to those in whose 
 interests it has been invoked. So it happens often that some 
 manufacturer engaged in producing some article of world utility 
 finds that the incidence of either the taxation, or the regulations, 
 or the " trades union rules " of one country impose a burden 
 which can be escaped by his substituting works in another ; and 
 thither he transfers his works speedily, and with them the 
 opportunity for employment which they afforded to the people of 
 his own country. Similarly the employer is compelled more or 
 less to transplant his organization of industry in those cases in 
 which owing to protective tariffs abroad the transference offers 
 
190 THINGS AS THEY AEE 
 
 him the only chance of securing access to the markets of the 
 protective country, which are barred by heavy duties to the 
 produce of his factory at home. In all such cases the employment 
 of industry and the use of his Means will migrate and advantage 
 foreign peoples. The ultimate profit in Means may still accrue 
 to the British employer and be received and expended at home ; 
 but the Wealth from the making of which the Means arise 
 becomes alien Wealth, and the producing of it a part of the, 
 economic process of another country ; and again, so much of 
 Means as arises from the surplus and saving of wages similarly 
 transfers itself abroad. As this begins to be fully realized, it 
 may be hoped that more caution will be exercised in devising 
 benevolent regulations to be applied to industrial effort, and 
 better care taken, so to legislate as not to drive employment 
 away from a country ; for none can afford to allow sympathetic 
 and sentimental benevolence to interfere with the possibility of 
 the successful employment of its Means within its own borders. 
 For " Capital " is a sensitive and timid thing, always tending to 
 fly to the land where it is subject to the least burden, and in its 
 flight to take with it the means of employment which enterprise 
 would otherwise provide. 
 
 It seems that in every country, and in all trades, there is a 
 certain margin by which, at normal times, the supply of skilled 
 labour exceeds the available demand for it ; and it has been too 
 hastily assumed that the effect of this excess is normally to 
 reduce wages to the bare point at which it is possible for the 
 worker to subsist and maintain his efficiency. Now with regard 
 to entirely unskilled labour this is more or less true in every 
 country — not everywhere in each country, but at those points 
 where population is congested, and hands are many, and work is 
 scarce ; and it is a truly terrible and pitiful state of things, no 
 conceivable practical remedy for which has as yet been so much 
 as suggested, except by way of the systematic deportation of the 
 surplus energy to lands willing to receive it and provide it with a 
 livelihood. And this, like iodine in medicine, is a " weakening " 
 drug needing to be jealously guarded in its use, under penalty of 
 exhausting the life-blood of the nation and reducing it to anaemic 
 commercial impotence. One thing is abundantly clear ; and that 
 is, that no attempt at a systematic " Eedistribution of Means," 
 " better distribution of Wealth " they call it, would have the 
 slightest effect as a remedy, beyond the few days needed to 
 
c. XL] WOEKLESSNESS 191 
 
 consume the commodities which would be purchased with the 
 plunder, nor would be so much as conceivably possible in any 
 country, unless the whole world agreed simultaneously to such 
 redistribution so as to prevent the stampede of Capital from 
 one place to another ; for Capital will not remain in a country 
 to be " confiscated." 
 
 With regard to the competent worker, the tendency as a fact 
 is rather to a progressive increase in the rate of his remunera- 
 tion, more or less balanced in some countries, but not in others, 
 by a correlative counter-tendency to an increase in the cost of 
 his subsistence, arising in great part from the enhanced cost of 
 production of commodities consumed by it. Thus in the United 
 Kingdom the artisan,* generally speaking, has as the result of 
 the experience of the last forty years found his wages generally 
 greater by about thirty per cent., whereas the cost of his subsis- 
 tence in all respects but that of rent has sensibly decreased. In 
 Germany a somewhat similar state of things has occurred, but 
 there, the cost of living on the whole has increased, though by 
 no means to the same relative extent. In America, according to 
 some authorities, the increase of cost of living has more than 
 swallowed up the increase of wages ; but it is doubtful whether 
 this statement is capable of verification, for it is difficult to find 
 in this regard statistics drawn up with sufficient impartiality of 
 intention to be relied upon. 
 
 While the foregoing enumeration accounts for the chronic or 
 normal tendency of the population to exhaust its means of 
 employment, the bulk of properly skilled labourers suffer from 
 acute occasions of inactivity, arising from a variety of more or 
 less accidental occasional periods of exceptional and acute depres- 
 sion. These may arise in diverse ways, most often as the result 
 of " financial " and " commercial " crises brought about by 
 unhealthy conditions of trade or speculation, t sometimes by 
 food-famine, in some notable instances by natural or artificial 
 scarcity of raw material. 
 
 In this category must also be placed the recurrent dislocations 
 occasioned by trade disputes, as to conditions of employment, and 
 
 * Mr. Bowley, in his " National Progress " (1904), Chap. I., says : " We have seen 
 that for those groups concerning which we have information average wages have 
 risen 30 % since 1881, that the average income of the population has risen 20 %, that 
 prices have fallen 8 %, and that meanwhile the regularity of employment has on the 
 whole improved." 
 
 ■j" See ante, Chap. VIII. 
 
192 THINGS AS THEY AEE 
 
 especially as to rates of wage: strikes and lock-outs, combina- 
 tions, the fratricidal and suicidal wars between Capital and 
 Labour, which, commenced in one trade, tend like the wars 
 of nations, to drag into their vortices and involve in their 
 calamities ever- widening series of apparently independent 
 industries. In almost all these cases — the acute cases — the 
 deep-seated cause of the disease is just lack of confidence 
 acting on the timidity of Means. From distrust to panic 
 is a mere step, and a morbid condition of industry, com- 
 merce, or finance, tends under the stimulus of apprehension, 
 inevitably to intensify the process of the depreciation induced by 
 the diminution of that confidence, which enters so largely into 
 the nature of that desirability of things, which is their value. 
 
 For the acute phase of the disease, Nature finds its remedy in 
 the elimination of the unfit : a cruel, though a helpful process. 
 As the unsuccessful are eliminated, and the morbid part cruelly 
 excised, a greater confidence in what is left returns, normal 
 conditions supervene, and the intricate total organism resumes 
 its normal functions. But to deal with the more chronic symptoms 
 of what may be called " constitutional" worklessness, palliatives 
 rather than a radical cure must be looked to. " Diseases " — 
 once said an eminent physician in addressing the students at a 
 hospital at the commencement of a term — " Diseases may be 
 " roughly divided into two classes : those which cure themselves, 
 " and those which we are unable to cure." And this is as true 
 of the body politic as of the microcosm of the human frame. The 
 most effectual palliative in each country seems to be by way of a 
 sustained and combined effort of each nation to increase for the 
 time the commercial world's demand — which includes as the most 
 important part its own domestic demand — for what its workers 
 can produce. And there is much truth in the reflection, that it 
 is this effort to secure an "expansion of market," which in modern 
 days has taken the place of the old unintelligent lust of dominion 
 which led to the warfares and conquests of bygone generations. 
 The strife of the future must, it seems, be the strife of competing 
 industrialisms, struggling for the mastery of the world's markets 
 to further the interests of their working populations. In such 
 a warfare, the cheapest must ultimately prevail in the neutral 
 markets of the nations which remain ready to supply them- 
 selves with commodities from any source which offers, while 
 waiting for the opportunity to establish industries of their own. 
 
c. XI.] WOEKLESSNESS 193 
 
 The dream of the coUectivist is of a state of things in which each 
 nation, limiting itself to "consume what it produces and produce 
 what it consumes," shall have abolished foreign trade altogether, 
 and, producing all the commodities that it needs by collective effort 
 within its own borders, shall distribute the product in an official 
 way among its own citizens, all of whom shall be employed in 
 producing, under the superintendence of the central government. 
 That postulates the possibility of each country being thus suffi- 
 cient unto itself; a purely imaginary and impossible state of 
 things which has not been known to exist in any country in the 
 world except peradventure some of the sequestered communities 
 of the extreme Orient, and which even in those regions is 
 now passing away. This coUectivist thesis requires, though 
 it hardly deserves, chapters to itself, and will be dealt with 
 further on. 
 
 Apart from this extreme and problematical quackery, no 
 complete solution of the enigma of worklessness has been 
 propounded. But it is admittedly possible for the Government 
 of each country, by adjustment of taxation on imports, to keep 
 for supply by its own workers an increased share in the 
 demand for the commodities they are able to produce, and in this 
 wise materially to counteract the tendency to unemployment. 
 Such measures, says the " Free Trade " school, must necessarily 
 be more than counterbalanced by a more than equivalent restric- 
 tion in the power of competing for the supply of other countries, 
 which for this purpose they habitually portray as of greater 
 volume and importance than the home demand. These are the 
 conflicting ideas that lie behind the controversy between the 
 Free Trade people and the Protectionist people ; a weary dispute, 
 disfigured by many unfounded assertions and illegitimate con- 
 clusions on both sides, into which the impartial economist is 
 reluctantly dragged, and which has accordingly to be dealt with 
 in a subsequent chapter to itself. The question is one of mere 
 expediency, and would therefore almost seem certain of solution 
 by accurate quantitative analysis, if it were only possible in 
 England to get people to discuss the topic unbiassed by political 
 prejudice, to lay aside dogmatic axioms, and to abstain by a 
 decent common consent from the use of conscious falsehoods of 
 statement and inference in the discussion. Some plan might 
 possibly be thus worked out, by resort to which the State might 
 hope to preserve for its own folk a greater proportion of their own 
 
 T.A. 
 
194 THINGS AS THEY AEE 
 
 demands, while not materially impairing their power of com- 
 peting in neutral markets. 
 
 In truth the scientific treatment of the disease of worklessness, 
 both in the aspect of recurring intervals of unemployment for 
 the skilled artizan, and in the more chronic and threatening 
 aspect of the national surplus of unskilled labour, is not by way 
 of being attainable by any patent specific. It is rather in the 
 direction of a steady, intelligent, cautious amelioration of 
 general conditions that the remedy is to be sought in this 
 country. Statesmanship must have the principal share in the 
 task of prescribing the hygiene ; of regulating the normal healthy 
 action of the State in controlling the fortunes of its citizens. 
 And an attempt will be made in the succeeding chapters to indicate 
 the limits of possible State action in this regard, and the con- 
 ditions subject to which it must necessarily be undertaken. 
 
 The economic functions of benevolent philanthropy in the 
 domain of the alleviation of unemployment are alternatively 
 under-and-over estimated. Benevolence may be regarded as a 
 practical manifestation of religious faith. So it is. It was for 
 the want of this, that the Eoman and Byzantine Empires, despite 
 their professed Christianity, were brought to nought. Properly 
 directed and co-ordinated, it has the function of increasing the 
 possibilities of commercial demand, and applying the means of 
 the wealthy to the systematic rehabilitation of the less fortunate. 
 And this also will be treated in a subsequent chapter. There 
 are but these laborious and painful modes of efi'ort available to a 
 nation. The other remedies are for the most part pretentious 
 quackery. 
 
 The analysis of the phenomena of worklessness would be 
 incomplete without more specific reference to the case of the 
 unspecialized workers — that ever-increasing army which has 
 been encouraged to reproduce its uneducated for the battle of 
 life, unfit for specialized employment, with nothing to offer in 
 exchange for its means of existence but the hire of its bare 
 physical energy. For it is among these that in the great nations 
 the terrible enigma of unemployment and poverty develops its 
 most awful cruelty. The more unintelligent the labour of the 
 human being, the more his work is capable of being superseded 
 by mechanical contrivance. The building of a quay in any one 
 port, and the erection of a crane on it, will deprive thousands of 
 lightermen and porters of the work for their thews and sinews 
 
c. XL] WOEKLESSNESS 195 
 
 for moving goods in cases and packages from ships in the 
 harbour to warehouses on shore, which is all the work for which 
 they are fitted. There will be meetings, denunciations, a riot or 
 two, a few poor people shot ; but the unrelenting progress of 
 contrivance must ultimately prevail, and the victims gradually 
 be provided for in the workhouse and in the gaol ; and the bigger 
 and more populous the nation, the more helpless becomes 
 society to deal with this mass of misery. In such States as 
 Denmark and Holland, it is found possible to circumscribe the 
 area of abject want, to deal almost adequately with individual 
 necessities, and to control perilous manifestations of the entirely 
 justified discontent of the suffering masses. In the United States 
 of America, the miserable are constantly recruiting the sinister 
 army of " crime " which is the natural revolt of Man against 
 institutions which fail to provide a tolerable existence for the 
 citizens. There, side by side with the " trusts " and " combines " 
 which form the weapon of the wealthier class of the predatory, 
 lurk the gangs and regiments of specialized criminals who 
 undermine society from below ; — train-wreckers, burglars, kid- 
 nappers, body-snatchers, blackmailers,^promoters of " bogus " 
 companies, adepts at "graft" and the like. The organism is 
 rankly outgrowing the controlling power of the organization, and 
 the administration of the police and of the criminal law are 
 unequal to the strain of protecting society. 
 
 At a certain point of misery, what we are in the habit in our 
 own interests of belauding as the " self-restraint " and " self- 
 respect " of man gives way. He leaves off desiring to be 
 " respectable " ! If the institutions under which he lives are 
 insufficient to ensure him a tolerable existence illumined by some 
 degree of hope, from a life passed in obedience to the law, he is 
 impelled to measure his force and his wits against the law, and 
 prey upon the society which he thinks, not without reason, has 
 somehow failed in its duty towards him ; and this brings about 
 the state of things in great cities the world over, which is at 
 once the great reproach of and the great menace to modern 
 civilization. This is the very kernel and essence of the great 
 enigma of life — the misery of extreme and hopeless poverty — the 
 paradoxical " survival of the unfittest." 
 
 While the skilled workman is subject in all countries to 
 occasional vicissitudes of loss of employment, it is entirely 
 untrue to pretend that his . wages tend to decrease, except 
 
 o 2 
 
196 THINGS AS THEY ARE 
 
 momentarily with seasons of decreasing profit. On the contrary, 
 almost all over the world, by the concerted efforts of the unions 
 of working men, on the whole most wise and beneficent (though 
 sometimes apt to be pushed to perilous extremes) the tendency 
 is for " profits," i.e., the wages of superintendence, to fall, and 
 " wages," i.e., the pay of the manual worker, to rise ; and this is 
 as it should be, so long as profits are not forced down to the 
 point below which Capital refuses to engage itself. But as to 
 unskilled labour, cared for by no efficient union among its 
 superabundant ranks, the law appears to be inexorable, that its 
 remuneration tends to fall, not only to the point of bare subsis- 
 tence, but unhappily below. For here steps in the scavenger, 
 the plier of the engine of sweating, the engineer of the parasitic 
 trade. It seems terrible to think that in a city like London, a 
 human being can be employed the week through for ten hours 
 a day at 4s. a week. That is the current rate of pay of unskilled 
 girls employed in tobacco factories. In this way the manu- 
 facturer exists at the expense of the benevolent, for if it were not 
 for charity and the rates, these poor children could not exist to 
 work. But then, on the other hand, without the pittance that 
 they bring to the starving home, that in its turn could not be 
 kept up. And, to complete the vicious circle of iron necessity, 
 without recourse to such labour at such remuneration, these 
 hard pressed industries themselves could not subsist ; and that 
 much relief of extreme distress would be quite cut off, were the 
 State in an impulse of sentimental indignation to attempt to 
 prohibit employers from having recourse to "sweating." 
 
 Can by some treatment this form of the general disease be 
 forced to yield to curative skill ? That is the central problem of 
 economics. A science that professes to deal with the concrete 
 becomes like its abstract counterfeit, in its turn a " dismal " 
 logomachy, once it is forced to turn a helpless back on its own 
 main problem. For each nation the solution must of needs 
 differ, but it almost seems for us of the United Kingdom, that 
 the watchword has to be " Educate and Colonize." Much 
 ado has been made in the name of " education." What people 
 generally mean by the word is that very different thing, instruc- 
 tion ; — and of this it may be that there is enough and to spare, 
 not only available to, but enforced upon every starving child, 
 whose efforts might otherwise be bent upon helping to keep 
 the wolf from the door of the squalid home. Instruction has its 
 
c. XL] WOEKLESSNESS 197 
 
 utility, but at its best it is not education or even a substitute for 
 it. One is not concerned to deny that it would be an evil thing 
 were the youth of the nation allowed by the State to grow up in 
 ignorance of the simple functions of reading and writing and the 
 reckoning of simple sums. So also and still more, is it evil that 
 the children should be brought into the world with taints of 
 hereditary disease, systematically underfed, subject to the 
 noisome influences of over-crowded hovels and bad air, the evil 
 influence and evil sights of over-crowded city life, and the sordid 
 blighting powers of misery and crime. But these have to be left 
 to philanthropy to mitigate, while the State busies itself about 
 instruction, and especially concerning the degree to which 
 persons of competing theological profession are to be allowed to 
 intermeddle with it. For education in the true sense, the fitting 
 of the young human animal for a useful and wholesome place in 
 the life of the nation, we Britons will one day begin to care, 
 when we have settled the precise dose of " Cowper-Templeism " 
 that is to be administered in the schools, and by whom. 
 
 Prom an economic point of view, this difference between 
 instruction and education is very relevant. If the boy, however 
 fully instructed, is to grow up with no better function than that 
 of lolling at the tail of a cart as it passes through a city, to see 
 that other less fortunate boys do not pilfer the packages it 
 contains, and if from that function he is promoted to carry a 
 tradesman's basket till he grows strong enough to apply for a 
 casual labourer's place at the dock-gates, it hardly seems of great 
 importance whether he should read fluently or write legibly or 
 answer correctly what is nine times seven. What is of import is 
 that he should receive such training as may afford him an 
 opportunity of exercising some better function in the body 
 politic, even to the extent of being able to think articulately for 
 himself and act intelligently in conjunction with his fellow-men ; 
 and here comes in one of the economic functions of philanthropy. 
 The " State " may instruct, may even fit and possibly qualify, 
 but the human being alone can educate. The education of the 
 slums is always available, always qualifying for the prison. 
 Dickens' " Fagin " was a real educational professor. His pupils 
 he turned out fitted to conduct their battle of life on the lines 
 marked out for them by the master mind, to a degree which the 
 board school emulates in vain. And now benevolence comes to 
 the rescue and offers to those who are willing with their means 
 
198 THINGS AS THEY AEE 
 
 to join hands and help to fight with Giant Despair, the possibility 
 of effecting something by way of the regeneration of society. 
 
 Much inflated nonsense of a rather offensive sort is uttered 
 in connection with the idea of the " British Empire." Vague 
 conceptions of dominion and power inspire the cheap patriot 
 at the contemplation of the map of the world tinted red in so 
 many big patches : but this inflated cant moves the thinking 
 sober man to pity. These great States, hoisting flags of the 
 same pattern, all with a common sentiment of national identity, 
 are all essentially independent nations, each with its own ideals, 
 its own conceptions of its interests, aims, and duties, which no 
 one of them can be asked or expected to subordinate to those 
 of the mother country or of any other member of the lightly- 
 knit federation. The slightest attempt on the part of Britain 
 to exercise control in its particular interest or in that of the 
 " Empire " over any great colony or federation of colonies in 
 matters of vital importance could merely result in the snapping 
 of the frail bond. But the union, for all that, is not merely 
 one of the flag and the identity of the national hymn. The 
 common language and the common history, identity of race and 
 mental constitution, mean much, and from an economic point 
 of view mean above all not so much any participation in an 
 exclusive commerce (though there may be something in that), 
 as a readiness of the British colonies to adopt and make room 
 for fresh colonization by incorporating fresh streams of immi- 
 grants of British descent. And it seems that it is in this still 
 open opportunity for the enfranchisement of the over-pressed 
 proletariat that lies the real significance of the idea of the 
 " British Empire." Therefore to the solution of these enigmas 
 propounded in the latter portion of this chapter, the answer has 
 to be sought in the steady co-operation of all those who can help 
 in the extension far beyond the degree as yet attained of the 
 methods offered by organizations already existing in our midst. 
 By steadfastly founding similar societies through the breadth of 
 the land, it is possible, it may be, to fit the superabundant young 
 of the more destitute classes to take their place as useful citizens 
 of those splendid countries which continue to fly the same flag 
 and to offer a welcome to those whom we are able to send forth 
 to supply their need for a greater population. No other way is 
 open, and seeing that it is the human element in education that 
 is the most valuable, this way is beyond the functions of the 
 
c. XL] WOEKLESSNESS 199 
 
 State and has to be left to the collective work and organized 
 benevolence of the Man. 
 
 It is well not to believe too much of what appears. The facts 
 of unemployment and misery are bad enough. The real sufferer 
 hides obscurely and makes but little sign. He is known to the 
 devoted workers of the organizations of mercy, but does not 
 parade in ostentatious ranks, form processions in Trafalgar 
 Square, and march scowling and cursing through quarters 
 occupied by the well-to-do. He calls no public meetings, is 
 marshalled by no socialistic fuglemen, and does not court the 
 publicity of the police-court by " obstructing thoroughfares." 
 All this is the province of the cadger, the loafer, and the unem- 
 ployable — the tools handled by the militant socialist, who can 
 always lay his hands on plenty of means to hire at good wages 
 a sufficiency of " supers," to play the part of the sufferers in the 
 annual parade of the "unemployed," the pageant of a sham 
 army of distress. Take a regiment of that army, or a company 
 of one of those regiments, and sift them man by man by the 
 agency of one of the quiet hard-working genuine organizations 
 which are beginning to spread through the country and which 
 concern themselves generally with the well-being of the truly 
 impoverished ; and the force melts away like Falstaff 's men in 
 buckram. Take a hundred of them, sift, inquire — the incurable 
 workhouse-patient, a number of gaol-customers and tramps and 
 mendicants, a goodly proportion of men in good work who have 
 joined the procession for love of a little excitement or a chance 
 of a gratuitous meal. Some have been paid to march, and some 
 have come in the hopes of a tussle in the streets in the course of 
 which the pocket of the bystander may be picked. For some 
 employment is provided, and they do not turn up to avail them- 
 selves of it ; and so forth, till, of the five score, perhaps five are 
 left who can honestly lay claim to the description of working- 
 men out of employment.* All the same these five are five too 
 many for the well-being of society. But behind the sinister mob 
 of ragamuffins, all but unrepresented in its ranks, there sits and 
 suffers the real terrible army of strugglers with fate known to the 
 workers among the poor — the real sufferers in the battle of life. 
 
 The essential and all-important problem for the United King- 
 dom is the stimulation of the demand for employment. Whether 
 
 • See A. H. Paterson, " On the Administration of Charity," republished from the 
 Times, 1908, p. 40, 
 
200 THINGS AS THEY AEE 
 
 the increased opportunity for work takes the " productive " or 
 "unproductive" form is (see last chapter) a question of less 
 moment than is popularly supposed. To the comfort of the 
 individual worker and his family it matters little whether he 
 draws his wages as a coal-miner or a valet, for the service of 
 " minding " a machine which weaves cloth, or that of carrying a 
 hod in the building of an art-palace, or " waiting" at a fashion- 
 able restaurant, or running about as a vendor of newspapers, or 
 as a bookmaker's tout, or a hawker of toys. And as among 
 " producers," whether he is making bread or bonbons, cotton 
 goods or fashionable "toques," a steam-engine or the internal 
 mechanism of a " pari-mutuel " betting machine. 
 
 One way or another, each country can provide at a given time 
 a certain totality of employment. With regard to our country, 
 the problem is how at any given moment to strive so to increase 
 our totality as to abolish or at any rate minimise worklessness. 
 
 In so far as service not directly " wealth-producing," is 
 demanded by the possessors of Means, that part of the general 
 employment tends to increase with the Means that employ it. 
 " General prosperity and security " encourage employment in so 
 far as they induce people with Means to expend instead of hoard- 
 ing them. But undoubtedly the more solid bulk of work is that 
 engaged in production, that which economists have been in the 
 mistaken habit of exclusively considering when they have directed 
 their minds to industry, but which, though far from being the 
 entire Means-making resource, is the real Wealth-creating power, 
 and forms the bulk and staple of the vital process of civilization; 
 that by which human energy transmutes itself into Means by 
 producing "Wealth" in its true sense, which is to say com- 
 modities. It is therefore on the possibilities of enhancing the 
 opportunities for the Wealth-productivity of the country, that 
 solicitude must mostly be concentrated. And this, as Adam 
 Smith clearly demonstrated, can only be effected by stimulating 
 the world's commercial demand for the things produced by the 
 people of the country ; production in excess of commercial demand 
 being mere waste both of labour and material, and in the long 
 run economically impossible. 
 
 A factitious demand for " work " may be created by embarking 
 men for a little time in some sort of uncommercial occupation 
 devised for the purpose of providing an excuse for giving them 
 wages : " relief works " and the like. And every now and then, 
 
c. XI.] WOEKLESSNESS 201 
 
 recourse has of necessity to be had to such palliative measures. 
 A primary requisite of all such schemes is that they should be 
 essentially unproductive and uncompetitive, and thus interfere 
 in no way with the normal industrial employment of actual 
 workers. Otherwise they effect nothing but a shifting of unem- 
 ployment upwards from the shoulders of the less to those of the 
 more ef&cient among the workers. And the resource of setting 
 men to work to provide unnecessary conveniences of a public 
 nature, that they may not starve, is at best a wasteful one, and 
 what is more important, a strictly limited one. There are but 
 few of these immensely unprofitable " jobs " which can be 
 invented, and these few must in fairness be reserved for seasons 
 of special stress. A community cannot go on planning parks to 
 be made and planted, and baths to be dug, and ornamental 
 embankments to be built, ad infinitum, whether at the cost of 
 current taxation, or (more vicious practice still) of loans, the 
 interest on which is to be paid out of future taxation. The 
 supply of possible relief works is soon exhausted. 
 
 The notion that each worker has a " right " to work, i.e., to 
 have work found for him by some State or municipal authority, 
 whether his work is to be of value or not, is a fallacy based upon 
 the incurable ambiguity of the word " right," which is used 
 alternatively as a synonym for "that which is lawful" and 
 "that which is expedient." The conception of this claim for 
 employment will be dealt with fully hereafter, and may for the 
 purposes of this chapter be eliminated, on the provisional assump- 
 tion that this socialistic panacea is commercially impracticable.* 
 
 There remains, therefore, only one solution of the problem 
 of unemployment, which is the stimulation of the world's 
 demand (which includes the demands of other countries and 
 that of the country itself), for what the country can produce. 
 The measure of value of those things, and the extent to which 
 the demand for them is capable of being enhanced, depend alike 
 on their desirability. And this is capable of being increased 
 only in one of two ways. The first and most obvious is by the 
 individual efforts of the producers of those things to improve 
 them by cheapness and increased utility, in competition and 
 comparison with similar things produced in other countries. 
 Such efforts, as things are, are subject to progressive counter- 
 action by the counter-efforts of the people and the governments 
 
 ' This point is dealt with in Chaps. XVIII. and XX. 
 
202 THINGS AS THEY AEE 
 
 of the other countries, to preserve to the utmost for their own 
 populations the opportunity of employment afforded by their 
 own internal purchasing power, and to fit themselves better for 
 the competition to export. This double desirability they aim 
 at by increasing import duties, which they screw up steadily 
 to meet, as each arises, every possibility of their home industries 
 suffering from the competition of goods from outside. For a 
 subsequent chapter (No. XVI.) is reserved the consideration 
 whether such a policy is suicidal, as the orthodox economists 
 insist. Certainly it seems at first sight as if it " ought " to be. 
 For to some extent it is bound to have the effect of tending to 
 increase the general cost of production, and therefore pro tanto 
 of incapacitating them in their turn from industrial competition 
 with the " Free Trade " countries in neutral markets, decreasing 
 their export trade, and therefore the opportunities of employ- 
 ment for their workers, so far as their industry produces things 
 for supplying that trade. In that chapter an attempt is made 
 to state and evaluate this among the other arguments for and 
 against " Protection." As to the ultimate decision on that con- 
 troversy an open mind must be kept. But for the purposes of 
 this chapter it is well to point out, what will not indeed be 
 denied by the most convinced " Free Trader," that whatever other 
 and evil results a reversion to a protectionist fiscal policy may 
 entail, and whatever way the balance of economic advantage 
 may be found to incline, there is an obvious possible mode of 
 increasing the home demand of each country for its own goods 
 by means of protective duties. " Protection," for instance, if 
 adopted in the United Kingdom, whether in other respects 
 disastrous or not, must clearly have the result of increasing the 
 employment of British capital and energy to the extent to which 
 it succeeds in checking the importation of competing goods. 
 And on the other hand (what may well be a further advan- 
 tage) it is equally clear that in so far as import duties do not 
 avail directly to check importation and increase employment, 
 they must create a corresponding increase of public revenue; 
 which will be available to reduce the local taxation by way of 
 " rates," which will be shown (Chap. XIV.) to be in their present 
 form the real main hindrance and handicap under which British 
 productive industry is suffering as things are ; the heaviest 
 burthen on all the industrial classes — employers and workmen 
 alike, and the most potent factor of the retardation of our 
 
c. XI.] 
 
 WOEKLESSNESS 
 
 203 
 
 !z; 
 
 o 
 o 
 
 OS 
 
 Q 
 
 *-i 
 B 
 P3 
 
 O o 
 
 M to 
 p S 
 
 o 
 
 P 
 H 
 O 
 
 E-i 
 O 
 <i 
 ci3 
 H 
 
 M 
 ■< 
 
 iJ 
 H 
 
 CO 
 
 )-i 
 H 
 <J 
 
 O 
 
 S5 
 
 
 *2 
 
 S> 
 
 to 
 
 in 
 
 N 
 
 s 
 
 00 
 
 t- 
 
 00 
 
 (M 
 
 00 
 
 
 o 
 
 cq 
 
 in 
 
 Oi 
 
 rH 
 
 
 ^ 
 
 04 
 
 i-< 
 
 (N 
 
 t- 
 
 (N 
 
 
 CO 
 
 
 1:- 
 
 H 
 
 CO 
 
 to 
 
 o 
 
 
 OJ 
 
 
 t- 
 
 t- 
 
 CO 
 
 to 
 
 o> 
 
 
 t- 
 
 s 
 
 00 
 
 
 ^ 
 
 
 rH 
 
 in 
 
 
 CO 
 
 
 oT 
 
 IS 
 
 ^ 
 
 tr^ 
 
 to" 
 
 00 
 
 to 
 
 
 lO 
 
 (N" 
 
 •^ 
 
 T>r 
 
 i" 
 
 oT 
 
 oo" 
 
 o" 
 
 
 00- 
 
 CO 
 
 b- 
 
 00 
 
 cq 
 
 C4 
 
 
 
 to 
 
 00 
 
 00 
 
 
 r^ 
 
 <N 
 
 
 IN 
 
 oo" 
 
 
 iH 
 
 lO" 
 
 
 
 oT 
 
 (N" 
 
 g- 
 
 
 s- 
 
 ©f 
 
 (N 
 
 in 
 
 o 
 
 OJ 
 
 in 
 
 
 
 C^ 
 
 
 
 
 
 
 
 
 oq 
 
 
 
 
 
 
 eq 
 
 t~i 
 
 
 S 
 
 to 
 
 5- 
 
 ■* 
 
 ^ 
 
 CO 
 
 to 
 
 64 
 
 b- 
 
 c» 
 
 CO 
 
 00 
 
 CO 
 
 
 in 
 
 o 
 
 1- 
 
 
 o 
 
 o> 
 
 o 
 
 
 b- 
 
 <N 
 
 OJ 
 
 
 eo 
 
 CO 
 
 
 eg 
 
 
 
 to 
 
 
 
 
 ■* 
 
 so 
 
 rl 
 
 
 00_ 
 
 <o 
 
 
 W 
 
 o 
 
 
 
 
 
 o 
 
 
 
 r-" 
 
 «" 
 
 cT 
 
 iO 
 
 o" 
 
 
 22 
 
 g 
 
 cT 
 
 ^'' 
 
 ^" 
 
 m" 
 
 ^" 
 
 J^ 
 
 (N 
 
 to" 
 
 ^ 
 
 to" 
 
 
 (N 
 
 
 y-\ 
 
 
 CO 
 
 N 
 
 <M 
 
 "5 
 
 
 
 
 in 
 
 
 
 oo" 
 
 
 O, 
 
 S" 
 
 
 2- 
 
 09 
 
 «1 
 
 cf 
 
 o» 
 
 CO 
 
 cT 
 
 s 
 
 s 
 
 <N 
 
 in" 
 
 c5 
 
 i" 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 £? 
 
 t- 
 
 t. 
 
 CO 
 
 (5 
 
 te 
 
 g 
 
 <N 
 
 a> 
 
 lO 
 
 ■* 
 
 o 
 
 ~g7~ 
 
 eo 
 
 
 in 
 
 o 
 
 
 jt- 
 
 t- 
 
 00 
 
 t- 
 
 ^ 
 
 c» 
 
 S„ 
 
 CO 
 
 
 o 
 
 t- 
 
 00 
 
 
 
 
 
 
 
 00 
 
 iO_ 
 
 00 
 
 
 
 lO 
 
 
 en 
 
 b^ 
 
 
 
 to 
 
 
 § 
 
 1 
 
 CD~ 
 
 =2" 
 
 ■*" 
 
 la" 
 
 « 
 
 5 
 
 CO 
 
 
 oo" 
 
 Iff 
 
 ef 
 
 
 co" 
 
 t-T 
 
 
 oT 
 
 
 
 lO 
 
 i-H 
 
 
 
 Cl 
 
 
 
 
 cS 
 
 
 
 CJ 
 
 
 
 
 i— 
 
 cq 
 
 Oi 
 
 00 
 
 
 OT 
 
 
 
 
 ■^ 
 
 
 <M 
 
 00 
 
 co^ 
 
 
 
 <3i 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 CO 
 
 s 
 
 CO 
 
 
 ■* 
 
 
 (N 
 
 to 
 
 I-l 
 
 o> 
 
 CO 
 
 oT 
 
 s 
 
 ■*" 
 
 "" 
 
 S 
 
 t 
 
 
 ^ 
 
 o 
 
 . 
 
 Ol 
 
 o 
 
 lO 
 
 „ 
 
 f-l 
 
 CO 
 
 o 
 
 eq 
 
 (N 
 
 t-l 
 
 OJ 
 
 CO 
 
 rH 
 
 in 
 
 
 CO 
 
 t- 
 
 ■* 
 
 
 b- 
 
 CO 
 
 
 00 
 
 09 
 
 
 ■* 
 
 
 5 
 
 CO 
 
 00 
 
 o 
 
 OJ 
 
 
 
 
 fO 
 
 
 co 
 
 en 
 
 
 s 
 
 
 
 eo 
 
 
 OS 
 
 i:- 
 
 
 s 
 
 o 
 
 i 
 
 w" 
 
 rH 
 
 <d" 
 
 to 
 
 o 
 
 1^ 
 
 in 
 
 t-^ 
 
 o5" 
 
 M3 
 
 ^" 
 
 05 
 
 co" 
 
 o 
 
 o" 
 
 g" 
 
 c-f 
 
 s 
 
 
 CO 
 
 t- 
 
 lO 
 
 U3 
 
 ■* 
 
 
 
 
 b- 
 
 
 
 CO 
 
 
 
 CO 
 
 <o 
 
 W3 
 
 (M 
 
 00 
 
 ■* 
 
 
 CO 
 
 CO 
 
 
 
 "*-. 
 
 00 
 
 CO 
 
 b- 
 
 
 00 
 
 '^ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 CO 
 
 s 
 
 ■^ 
 
 
 "*" 
 
 
 <n" 
 
 t^ 
 
 ^ 
 
 s 
 
 eo" 
 
 CO 
 
 s 
 
 ■*" 
 
 T)l 
 
 S 
 
 s 
 
 
 o 
 
 ^ 
 
 xa 
 
 -* 
 
 00 
 
 
 ■* 
 
 ei 
 
 00 
 
 o 
 
 in 
 
 ^ 
 
 in 
 
 CO 
 
 ^ 
 
 ■* 
 
 in 
 
 
 
 
 
 
 o 
 
 
 i:- 
 
 
 
 CO 
 
 
 in 
 
 b- 
 
 ir- 
 
 OJ 
 
 OJ 
 
 
 
 
 
 o_ 
 
 
 
 to^ 
 
 
 
 <N 
 
 
 
 <M_ 
 
 
 to 
 
 Q0_ 
 
 o. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 CO 
 
 CO 
 
 
 
 
 *a 
 
 
 o 
 
 
 
 to 
 
 
 00 
 
 1— 
 
 CO 
 
 
 
 
 (N 
 
 QD 
 
 to 
 
 
 CO 
 
 
 
 a 
 
 ^ 
 
 (M 
 
 
 
 CO 
 
 cq 
 
 
 
 o 
 
 ■*-. 
 
 <£i 
 
 JD-;_ 
 
 
 ■^ 
 
 
 s 
 
 •* 
 
 O 
 
 
 to 
 
 
 -*i 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 t- 
 
 oT 
 
 TjJ" 
 
 
 ■>*r 
 
 1 
 
 Cq 
 
 «f 
 
 CO 
 
 53 
 
 
 oj" 
 
 S 
 
 ■* 
 
 ■* 
 
 §c 
 
 t 
 
 
 ■* 
 
 ^ 
 
 CO 
 
 i- 
 
 o 
 
 a 
 
 CO 
 
 o 
 
 (M 
 
 in 
 
 in 
 
 o 
 
 Q 
 
 o> 
 
 •* 
 
 CJ 
 
 o 
 
 
 
 
 pH 
 
 irt 
 
 
 I-l 
 
 
 
 o 
 
 
 00 
 
 
 
 c? 
 
 
 
 
 
 
 CI 
 
 (N 
 
 
 :s 
 
 os_ 
 
 
 
 
 ^ 
 
 o 
 
 
 
 (M 
 
 
 
 S 
 
 s 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ei" 
 
 oT 
 
 CO 
 
 ja 
 
 co" 
 
 Ct 
 
 -*1 
 
 t- 
 
 t-T 
 
 o" 
 
 o 
 
 CO 
 
 cq" 
 
 o 
 
 
 fO 
 
 
 m 
 
 "* 
 
 CO 
 
 CO 
 
 o» 
 
 OJ 
 
 o 
 
 to 
 
 to 
 
 
 (N 
 
 ■<i< 
 
 00 
 
 
 U3 
 
 
 CO 
 
 00 
 
 O) 
 
 o 
 
 
 o 
 
 
 to 
 
 (N 
 
 o 
 
 
 in 
 
 CO 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 j>r 
 
 o 
 
 ■* 
 
 
 CO 
 
 CI 
 
 -^ 
 
 
 <s 
 
 
 oT 
 
 
 -ii<" 
 
 ■*" 
 
 r-* 
 
 CO 
 
 
 
 cq 
 
 
 
 
 
 
 
 cq 
 
 
 
 i-t 
 
 
 
 Ol 
 
 oq 
 
 
 
 
 
 
 
 _i- 
 
 
 
 
 
 
 
 
 
 
 
 ■"I 
 
 
 «o 
 
 m 
 
 en 
 
 to 
 
 1- 
 
 1 
 
 ■* 
 
 t- 
 
 CO 
 
 in 
 
 -* 
 
 o 
 
 cq 
 
 OJ 
 
 ^ 
 
 00 
 
 cq 
 
 
 o^ 
 
 
 CO 
 
 Tt< 
 
 00 
 
 
 « 
 
 o 
 
 to 
 
 IN 
 
 ir- 
 
 CO 
 
 00 
 
 ^ 
 
 Tt< 
 
 OJ 
 
 
 o 
 
 
 N 
 
 o. 
 
 00 
 
 
 to 
 
 
 CO 
 
 00 
 
 <N 
 
 rH 
 
 OJ 
 
 OJ 
 
 03, 
 
 g 
 
 s 
 
 tH 
 
 3 
 
 (m" 
 
 
 o- 
 
 ^ 
 
 d> 
 
 to 
 
 (N 
 
 
 
 
 oo" 
 
 oT 
 
 
 ■^jT 
 
 i-H 
 
 ^ 
 
 t- 
 
 
 X- 
 
 
 
 in 
 
 b- 
 
 lO 
 
 
 
 
 (M 
 
 
 g 
 
 x- 
 
 CO 
 
 
 00 
 
 
 ■*- 
 
 a 
 
 
 o 
 
 "*- 
 
 <<« 
 
 
 
 
 rH 
 
 3 
 
 cq 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 t^ 
 
 M 
 
 CO" 
 
 "■ 
 
 co" 
 
 3 
 
 S 
 
 01 
 
 irt" 
 
 ^ 
 
 s 
 
 
 00 
 
 ^ 
 
 -*" 
 
 ■*" 
 
 ^ 
 
 S 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 s 
 
 CJ 
 
 
 
 CO 
 
 o 
 
 »o 
 
 (M 
 
 
 OJ 
 
 CO 
 
 
 o 
 
 
 tH 
 
 o 
 
 o 
 
 
 CO 
 
 
 
 00 
 
 e; 
 
 <M 
 
 CO 
 
 
 
 Oi 
 
 
 00 
 
 
 OJ 
 
 t-* 
 
 t- 
 
 
 •* 
 
 
 
 
 to 
 
 ^ 
 
 
 
 
 ■^ 
 
 
 JC- 
 
 
 o. 
 
 CJ 
 
 o_ 
 
 CI 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 irf 
 
 (O 
 
 eq 
 
 CO 
 
 
 
 \a 
 
 \a 
 
 
 CI 
 
 
 to 
 
 ^" 
 
 CJ 
 
 
 oT 
 
 
 
 
 ■* 
 
 o 
 
 
 
 
 •V 
 
 r-C 
 
 
 o 
 
 to 
 
 
 
 m 
 
 
 to 
 
 
 s 
 
 o 
 
 o 
 
 i-i 
 
 o 
 
 
 
 ■* 
 
 (3)_ 
 
 
 Jr- 
 
 
 ■>J' 
 
 i^ 
 
 
 
 I-H 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 m" 
 
 00 
 
 l-l 
 
 M 
 
 
 CO 
 
 
 *"* 
 
 o" 
 
 « 
 
 ^ 
 
 
 oo" 
 
 ^ 
 
 -*" 
 
 CO 
 
 S 
 
 % 
 
 
 ■* 
 
 ^ 
 
 CO 
 
 <M 
 
 o 
 
 
 (N 
 
 ^ 
 
 OS 
 
 ■* 
 
 in 
 
 to 
 
 •* 
 
 tK 
 
 ■* 
 
 ^ 
 
 ^ 
 
 
 1:- 
 
 lO 
 
 
 
 
 
 d 
 
 
 •<* 
 
 to 
 
 
 to 
 
 
 CO 
 
 00 
 
 
 
 
 
 CD 
 
 «_ 
 
 lO 
 
 •* 
 
 
 00 
 
 OO^ 
 
 t-;. 
 
 03 
 
 ^ 
 
 o 
 
 
 °i. 
 
 
 <= 
 
 
 00 
 
 00 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Oi 
 
 Oi 
 
 
 
 to" 
 
 
 
 
 
 
 
 i>r 
 
 
 in" 
 
 
 
 o 
 
 Oi 
 
 o 
 
 
 
 o 
 
 
 
 « 
 
 o 
 
 
 in 
 
 rH 
 
 
 ■* 
 
 
 OI 
 
 OJ 
 
 °i. 
 
 t-;_ 
 
 
 
 o 
 
 
 
 iO 
 
 OJ, 
 
 
 
 00 
 
 
 
 
 J>^ 
 
 t-^ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 •^ 
 
 CO 
 
 ■^ 
 
 
 co" 
 
 
 "■ 
 
 Ift 
 
 iH 
 
 a 
 
 
 i>^ 
 
 s 
 
 ' 
 
 CO 
 
 cq 
 
 3 
 
 
 O 
 
 C> 
 
 t- 
 
 U3 
 
 ^ 
 
 
 ^ 
 
 m 
 
 (^ 
 
 to 
 
 OJ 
 
 00 
 
 00 
 
 ^ 
 
 ■^ 
 
 ^- 
 
 o 
 
 
 00 
 
 ift 
 
 b- 
 
 00 
 
 •A 
 
 
 
 jj- 
 
 S 
 
 
 
 o 
 
 t- 
 
 
 t- 
 
 o 
 
 b- 
 
 
 ai 
 
 OJ 
 
 'S> 
 
 l-J_ 
 
 '*- 
 
 
 
 co^ 
 
 00 
 
 o 
 
 
 M 
 
 
 *n 
 
 t- 
 
 tH 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 t^ 
 
 t^ 
 
 t-^ 
 
 00 
 
 
 i-T 
 
 
 CD 
 
 ■*" 
 
 lO 
 
 
 o 
 
 
 oo" 
 
 
 
 Cl 
 
 b- 
 
 o 
 
 a> 
 
 o 
 
 
 
 t- 
 
 
 tH 
 
 to 
 
 t- 
 
 
 00 
 
 
 
 
 
 to 
 
 
 
 -rjl 
 
 l~._ 
 
 t-^ 
 
 
 co 
 
 
 
 
 J> 
 
 
 
 
 i- 
 
 Oi 
 
 
 -* 
 
 oo_ 
 
 l-t 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 •vf 
 
 
 
 
 (N 
 
 
 1-1 
 
 \a 
 
 (n" 
 
 rH 
 
 
 00 
 
 o 
 
 eo 
 
 CO 
 
 o" 
 
 00 
 
 
 
 '"' 
 
 
 
 
 
 
 
 
 ei 
 
 
 
 
 
 
 cq 
 
 o 
 
 
 M • 
 
 M • 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 a 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 4^ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 o • 
 
 O ' 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 «S 
 
 «s 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 E3 
 
 Jj 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 a ' 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 S 
 
 s 
 
 o 
 
 
 
 
 
 
 
 
 
 CJ 
 
 
 1 
 
 
 
 
 
 i; 
 
 
 i 
 1 
 
 
 
 
 
 
 
 
 
 ■« 
 
 
 ■a 
 
 
 
 
 
 HI 
 
 1' 
 
 1 
 
 1 
 
 1 
 
 S 
 
 1 
 1 
 
 1 
 
 oT 
 
 1 
 
 g 
 
 1 
 
 1 
 
 1 
 S 
 
 i 
 
 
 1 
 
 1 
 
 i 
 
 1 
 
 O 
 
 1 
 
 i 
 
 .J 
 
204 
 
 THINGS AS THEY ARE 
 
 national prosperity as compared with the livelier progress of 
 countries pursuing a contrary policy. 
 
 Therefore, without prejudging the decision whether these 
 advantages would he counterbalanced by greater evils or not, it 
 is desirable to examine the list of imported manufactured 
 articles and form something like a notion of the extent to which 
 values now sent abroad in exchange for these, might under a 
 reasonably restrictive system be made available for the remunera- 
 tion of British energy and Means. Here one gets into a region 
 of fairly accurate tabulation of statistics not really subject to 
 any considerable fallacy of inaccurate classification.* 
 
 It will be seen that there was a total of over 155 millions of 
 pounds worth of such things as can be made in the United 
 Kingdom imported in 1906. Now, one may quite fairly assume — 
 in fact it is an under-estimate — that one-half of this fairly repre- 
 sents the cost of the immediate labour of production, as distin- 
 guished from raw material, and from that result of past labour 
 which provides " Capital." It may also be assumed, (still more 
 under the truth,) that it would be practicable by reasonable "pro- 
 tection " to diminish the total import of these things by only 
 one-half. Even so, an addition of close on 40 million pounds 
 per annum to the amount expended on wages in the United 
 Kingdom, suggests a mighty possible transformation of the face 
 of things, were it capable of realization. And it must not be 
 lost sight of, in addition, that each 1 per cent, of duty ad valorem 
 on that half which would continue to be imported, would thus 
 become available for public purposes to the extent of £760,000. 
 
 It is worth while to notice, in respect of this table, the 
 figures of value of the imports of the first five classes (metallic 
 manufactured goods) as contrasted with the rest of the list, of 
 which the textile and clothing and " leather goods " category 
 (lines 8, 9, 10, 11, 13) affords a fair sample. Eoughly speak- 
 ing, the proportion works out as follows for the ten years: — 
 
 
 1897. 
 
 1906. 
 
 Increase. 
 
 Per cent, 
 yearly. 
 
 Imported metallic articles 
 Lines 1, 2, 3, i, 5, value 
 
 Imported textile clothing 
 and leather goods, Lines 
 8, 9, 10, 11, 13, value ... 
 
 21,600,000 
 30,100,000 
 
 46,700,000 
 38,000,000 
 
 £25,100,000 
 £7,900,000 
 
 11'6 
 1-5 
 
 * See last page. 
 
c. XI.] WOEKLESSNESS 205 
 
 No irregular or fluctuating cause has produced this huge 
 divergency of result ; the figures in both cases have steadily 
 progressed from year to year throughout the period, indicating 
 the influence of a regular and normal set of causes. These, it 
 is true, are more or less obscure. But among them, clearly, 
 cannot be reckoned either fluctuations of gold value (which, it is 
 true, on the whole has been tending slowly downward, but very 
 slowly), or any exceptional lack of adaptability or energy of 
 British industry in the first group as distinguished from the 
 second. Is not the main cause to be sought rather in the excep- 
 tionally large degree in which " rent " of space, and, therefore 
 (with us), the burthen of " rates " enters as an ingredient into 
 the cost of production of these particular things in Britain ? 
 At first sight it is admitted that this explanation will appear 
 somewhat fanciful. But can any other be indicated anything 
 like adequate to account for the gigantic discrepancy ? It is to 
 this, a cause affecting with peculiar severity these very industries, 
 that the writer's antipathy to " rates " leads him to attribute the 
 huge extension of worklessness in this department, involved in this 
 startling increase in the values of this particular class of things 
 imported for British use. Now, all of these are things, the avail- 
 able power of home-supply of which is fully competent to satisfy 
 the home demand, were some action of the State to intervene 
 in the struggle, calculated to equalize the conditions of production. 
 The cost of transport counts for something : the eager compe- 
 tition of carrying organizations to secure the freight on the very 
 bulky foreign goods tends sensibly to afford an undesigned 
 preference to the foreign producer. Something of the increase 
 also is due to a natural expansion of the general demand arising 
 fiom the extension of these industries by recent inventions of 
 varied mechanical contrivances. But the potency of all such 
 other possible causes is measurable, and comparatively slight. 
 The main efficient cause must be sought in some other set of 
 facts, and it is difficult to suggest any adequate reason but the 
 one above indicated, and which will be found fully examined 
 further on in Chap. XIV. The immediate remedy for this 
 symptom of morbid retrogression is obvious enough ; but 
 whether that in its turn might or might not set up some still 
 more grave disorder, is one of the debateable questions dealt 
 with in Chap. XVI., and on which, for the purposes of this 
 chapter, it is necessary to reserve decision. 
 
206 THINGS AS THEY AEE 
 
 Anyhow, it will be noted that it is not any either positive or 
 relative general decline of the industries that is in question. It 
 may be that as regards some of them there has been an actual 
 increase of output, while as to those (and there are many) in 
 which there has been an actual decrease, this will in most cases 
 be found due to a great extent to the undoubted fact that many 
 countries formerly dependent on us for their supply have found 
 it possible to institute, and desirable to " protect," similar 
 undertakings of their own. This has been the case, for 
 example, with the once flourishing and now dwindling "tin 
 plate trade." To so much of the general result as is due to 
 this cause we have to resign ourselves. But of so much of 
 the consequent worklessness as is due to the supplanting of 
 the trade in things we ourselves consume by our own available 
 demand, by competing imports, the effect is controllable and pre- 
 ventible ; and to that extent the people oppressed by this par- 
 ticular mononesis are entitled to claim at the hands of the State 
 a candid and practical investigation of the ills that affect their 
 lives. And, above all things, it is necessary that this should not 
 be prejudiced by the profession of any sort of pedantic 
 "principle" of economic religion whatever. 
 
 To one prolific cause of the aggravation of worklessness in 
 Britain, it is possible to advert but briefly. The investigation 
 of it demands a volume to itself. But it is impossible to ignore 
 in this regard, the effects of the persistent and practically 
 unrestricted inflow of foreign humanity of the less desirable sort. 
 Fully to appreciate the bearing of this element of distress, a man 
 must (as the present writer happens to be) be connected with 
 one of the charitable organizations which deal with foreign 
 poverty in Britain. 
 
 An ineffectual " Aliens Act " notwithstanding, there arrives 
 weekly at our ports a steady stream of persons, numbering 
 hundreds and totalling to many thousands in the course of each 
 year, people who driven by various impulses from their native 
 countries, flock hither, augmenting the army of the unemployed, 
 and reinforcing the crowd of claimants for charitable relief. 
 The British law, which forbids dying in the streets of starvation, 
 applies equally to these as to the native citizen, and a certain 
 proportion of the immigrants are thus relegated to the poor- 
 house sooner or later after their arrival, and help swell the 
 " rates " paid by labour as part of its rent. Some few are got 
 
c. XI.] WOEKLESSNESS 207 
 
 hold of and " repatriated," but the majority just float about on the 
 surface of the sea of casual employment, and subsisting with the 
 aid of occasional doles from their fellow-countrymen, go to form 
 no small proportion of the excess in this country of those with a 
 " right to work " over the number for whom work is to hand, 
 and pervade and oppress every branch of unskilled labour. It is 
 not too much to assert that if this steady influx of alien distress 
 were rigorously excluded, the problem of chronic unemployment 
 would in time solve itself by absorption into more permanent 
 employment. The sore is kept open by the constant fresh 
 importations of this unwelcome human material. 
 
 A certain well-meaning and very mischievous sentimentalism 
 lies at the foundation of much of this nuisance ; and it is about 
 time that this should be dealt with in plain words for once. The 
 effusive cant about the " Sacred right of asylum " has much to 
 answer for. Why this country alone among the lands of the 
 world (for the American people who once shared the delusion 
 have sharply repudiated it of late) should still " pride " itself 
 (so the familiar patter goes) on welcoming to " our hospitable 
 shores " any manner of ragamuf&n who chooses to describe 
 himself as having been " exiled " for " political "or " religious " 
 reasons, it is very hard to understand, except on the ground that 
 people are, as Carlyle put it, " mostly fools." 
 
 It may conceivably turn out a very wise step at some particular 
 juncture for one nation to welcome people so exiled by another — 
 thus it is said to have been, when the Huguenots were received 
 with open hands in the day of the revocation of the " Edict of 
 Nantes " and when Flemings and Hollanders fled here from the 
 ferocity of Spain. Each case must be judged on its merits. But 
 to proclaim the granting of indiscriminate asylum as a sacred 
 principle of national ethics, irrespective of circumstances, 
 savours of fatuity even inj^matters of politics. When a person 
 who is not wanted presents himself for admission, he has no 
 " rights " contrary to the interests of the people of the country, 
 and there is no conceivable duty to receive him to our injury. 
 Joseph Mazzini was doubtless a very noble man : but England 
 would not have been much the worse if she had excluded Michael 
 Bakounine; and there be those who consider that we might 
 even advantageously have dispensed with the presence of Karl 
 Marx. 
 
 As for Heine's heroes, "Krapulinski and Waschlapski" and 
 
208 THINGS AS THEY AEE 
 
 the other dingy shiftless denizens of Soho, the only people who 
 benefit by their presence among us, are the nations who have 
 got quit of them ; for our national foible of sentimentality is 
 perfectly well recognized in several European countries; and 
 not only the criminal classes themselves, but the police and 
 other authorities there who find it convenient to exile them 
 for a time, play that foolish vanity of ours " for all that it 
 is worth." And many an undesirable alien criminal, instructed 
 by the police to describe himself as a "political refugee" or 
 "proscribed schismatic," is shipped off to London at the expense 
 of his government, to partake of our noble hospitality, and 
 eventually find his way in due course to a British prison through 
 the instrumentality of the criminal courts. These facts are 
 abundantly notorious. 
 
 But the aliens who do us the most injury are decent working 
 men enough, attracted by the notion that London is paved with 
 gold — often induced to come by promises held out by British 
 employers of a certain sort, who attract them when trade is brisk 
 by offers of what appear to be high wages, and a vague promise 
 of permanent employment, to be ground down for a time by 
 means of an ingenious and complicated apparatus of " truck," 
 till they are turned off penniless and homeless when things 
 become slack. The devices of certain employers of this class, 
 people whose works are entirely shunned by British labour, 
 are familiar to our authorities, who profess to have no power 
 whatever "to interfere with the sacred "freedom of contract " by 
 which these people are deluded into a miserable slavery for a 
 short time, and then thrown helpless on the streets to swell the 
 pitiful hosts of the " unemployed," and compete desperately 
 with our own unfortunates for the precarious livelihood of un- 
 skilled and hopeless labour, and with our paupers for alms.* 
 
 * Personal experience of the writer at a charity meeting, January 27, 1909. 
 Enter unprepossessing applicant for relief, very Teutonic in appearance. Question : 
 What are you? Answer: Ein Kellner. Q. : How long in England ? Sechsmonat 
 Why did you come 1 I tink I get Turk. Did you get it ? A liddle, bei Lyons at 
 
 de Exhibition. Afterwards ? In the Hotel . Why did you leave ? De work 
 
 too hardt for me. What was the next job ? Dey gi£ me a chob mit den Onem- 
 ployed. So ; what did you get ? Twenty shillings a week. What for i To carry 
 a panner. Q. : A red banner, with " Kevolutioa " on it ? A. ; Ja wohl. 
 
CHAPTER XII 
 
 THE STATE AND THE MAN 
 
 In the course of these chapters have been incidentally 
 indicated some of the modes in which the economic life of a 
 nation is controlled and affected by the action of the State. The 
 form and semblance of the State power, the definition of the 
 authority or hierarchy in whose hands is the disposal of the force 
 which constitutes its potency are the subject-matter of " politics," 
 in the true sense of the word. They affect economics indirectly, 
 but can only be studied by the economist in respect of their 
 economic results. In those nations in which the evolution of 
 social institutions has passed through the intermediate stage in 
 which this force is concentrated in the hands of a single absolute 
 master, the determination of results is a question settled by 
 what is called a " constitution." 
 
 This is the custom or law regulating the extent to which, 
 and the machinery by which, it is contrived that the will and 
 the purpose of the governing power shall coincide with that of 
 the people of the nation, or rather of such a majority of 
 that people as, should need arise, would in the last resort be 
 able by force to impose their will upon the minority. For 
 force, or rather the consciousness of force, is the only 
 conceivable determinant of the assent of a people to such 
 measures and laws of its governing power or State as affect 
 their interests and destinies. In this force, when exerted 
 from above downwards, resides the divine "right of kings," 
 and when it takes the form of pressure upwards, it becomes 
 the equally " divine right of majorities," which is worshipped 
 in those countries which have adopted the device of appointing 
 government by election. This statement of actuality is open 
 to attack on " moral " grounds ; but since it was first enunciated 
 by Hobbes it has never been challenged by any competent 
 thinker. 
 
 T.A. P 
 
210 THINGS AS THEY AEE 
 
 Now, the political apparatus of a "constitution" consists for the 
 most part of a series of devices and conventions, by recourse to 
 which this naked elementary truth is draped and disguised, and 
 institutions of government are fitted to a nation, which are 
 practically the series of conventions by which the actual employ- 
 ment of force to compel acquiescence can be as far as possible 
 avoided. All the same, without the consciousness of force in 
 the background, ready to exert itself when necessary (a con- 
 sciousness which has to be equally present to the mind of the 
 governed as to that of the governing authority to be effective), 
 the State would be as impotent to determine the institutions 
 of its nation or the effects of their working, as the Kepublic 
 of San Marino is to influence the course of European 
 politics. 
 
 The decisions of the Nation are in " constitutional" countries 
 embodied in laws and regulations controlling, amongst other 
 things, the economic rights and actions of individuals ; whether 
 by way of directly regulating or of indirectly affecting the condi- 
 tions of industry or commerce, or of imposing taxation ; and the 
 enforcement of these laws is the duty of the State. And the 
 national will thus ultimately controls the conditions both of 
 Wealth accumulation and the distribution of Means, and that 
 continuous reciprocal interchange of Wealth into Means and vice 
 versa, in which consists the essence of trade ; and this influence 
 manifests its results not only internally but externally; the 
 nation's force, whether nakedly employed in actual warfare, or 
 manipulated in the form of threats and promises beneath the 
 glove of diplomacy, producing its effect in determining and 
 influencing the will of other nations. Therefore the " State " 
 impinges at every point not only on the economic existence of 
 its own people, but also on the economic processes of the other 
 nations of the world. The entire fabric of industry, the distribu- 
 tion of all Wealth, the accumulation of all Means, are each in 
 this manner affected at every turn by State law and regulation, 
 by the incidence of taxation, and by the action of the State in 
 exercising pressure and influence on other nations. It will 
 shortly be seen to what extent the accumulation and distribution 
 of Means depends on the manner and extent of State taxation, 
 and how this is unceasingly exerting power in determining the 
 direction of the exercise of individual acquisitiveness in industry 
 and profit-seeking. The mode of the expenditure and use of the 
 
c. XII.] THE STATE AND THE MAN 211 
 
 Means appropriated by taxation is in its turn also a factor in 
 that demand for things which goes to build up the opportunity 
 for production and the absorptiveness of consumption. Eeference 
 has already been made (p. 29*) to the importance which attaches 
 to the exercise of the State function of incurring debt and thus 
 creating the investments in which Means are embodied, 
 while a still greater influence may be exercised in this 
 respect by the regulation or more often by the insufficiency of 
 regulation of the machinery for the similar creation of 
 evidences of indebtedness by private industrial commercial 
 and financial corporations. Nor are these last set of influences 
 any more than the others, confined in their effects to the 
 citizens of the particular country in which such associations are, 
 so to say, domiciled. Each forms a mode of the employment of 
 Capital open to the whole world; so that, for instance, the 
 opportunities of fraud and oppression offered by the " company 
 laws " of the venal little State of New Jersey may be the occasion 
 of commercial and financial disturbance in the markets of London 
 or Paris or Bombay. And lastly, no less powerful, come to be 
 considered the incursions of collective or State energy into the 
 domain of benevolence ; the assumption, whether legitimate or 
 not, by the central government of a country or by its subordinate 
 municipal institutions, of the functions of the almoner, the school- 
 master, the parent, the physician and the nurse ; the mode in 
 which is fulfilled the function of providing means for the 
 sustenance of the aged and infirm, employment for the sad little 
 regiment of deserving workers who are temporarily unemployed, 
 and some sort of harmless and infructuous pretence of occupation 
 (" to keep them out of mischief " ) for the great and pitiful army of 
 the unemployable who have to be fed. Each of these subjects 
 offers matter to fill a lengthy treatise of several volumes, and the 
 whole of them together would bulk into a formidable library. 
 And it follows that in these chapters little can be attempted in 
 the way of their analysis, beyond, so to say, a sketch or synopsis 
 of those subjects which thus bear on economic results ; while any 
 work confining its scope to the consequences of the collective 
 energy of nations acting within their own limits, would be 
 incomplete without a similar analysis of the way in which the 
 action of each State influences and is influenced by the correspond- 
 ing activities of other States in the world. 
 
 * See also p. 137. 
 
 p 2 
 
212 THINGS AS THEY AEE 
 
 The economic welfare of a community depends on the condi- 
 tions of demand and opportunities of supply, not within its own 
 borders only, but throughout the commercial world ; and these 
 conditions and opportunities are being ever subjected to the 
 influence of world conditions, themselves susceptible of indefinite 
 variation under the action of each of an intricate series of 
 causes. Some of these causes are capable of being determined 
 by State action, and others operate independently and often 
 antagonistically. 
 
 The latter may be summed up in two categories : the forces of 
 Nature, and the ubiquitous and varied workings of individual 
 acquisitiveness. Things as they are, are a combined result of 
 these three forces : Nature, the State, and the Man. And this 
 result is in each nation subject to unceasing disturbance by the 
 reciprocal interaction of nations on each other. And while this 
 is the true mode of social evolution, competing schools of 
 publicists occupy themselves industriously in ascribing all effects 
 to one or the other of the three factors, and dogmatically 
 eliminating and rejecting the other two. For such is the mental 
 constitution of your theorist : he deems his work imperfect until 
 he has reduced all things to expressions of the working of the 
 one " universal cause " on which alone he concentrates his mind. 
 
 The most determined antagonist of the idea that the State 
 must be and is a chief factor in the evolution of the nation, was 
 of course that great thinker Herbert Spencer. To be unable to 
 accept his judgment on any subject connected with the science 
 of sociology, one feels to be almost a misfortune ; the first impulse 
 being to suspect oneself of incapacity. But the trend of all 
 modern thought keeps breaking away from Spencer's conclusions, 
 and leading, it may be with exaggerated impulse, in the contrary 
 direction. In almost impassioned language, Spencer pled the 
 cause of the "Man" against the "State," following Mill, who 
 put his whole soul into a passionate plea for " liberty," by which 
 he meant the circumscribing wherever possible of the authority, 
 and minimising the interference of the State. With still greater 
 vehemence the modern " socialist " on the contrary endeavours 
 to sweep the individual away, and substitute collective action, 
 both as the motive power and the appropriate machine to work 
 out the evolution of society in all its functions, and especially 
 in that of industry. While apart from both of these, floating in 
 a serene atmosphere of fatalism, are the distinguished group of 
 
c. XIL] THE STATE AND THE MAN 213 
 
 thinkers, (of whose thoughts the late Mr. Buckle was the first 
 exponent in this country,) who deride equally the theories of 
 both, and claim the ultimate deciding influence in all human 
 institutions for physical peculiarities of the configuration of the 
 surface of the earth, climatic variations, and the local phenomena 
 of scenery rainfall and fertility. In truth, Nature the State and 
 the workings of individual acquisitiveness are the three sets of 
 causes everywhere and at all times acting and re-acting on each 
 other and on their conjoint result. And our experience of the 
 history of nations being after all but short and imperfect, we 
 are still without sufficient data to be able to determine exactly to 
 which of the three factors is chiefly due each constituent of the 
 series of phenomena of which history affords us imperfect 
 glimpses, or which are now passing along the stage of the world, 
 observable in action by those who have the insight to observe. 
 
 For a later chapter is reserved the task of attempting to weigh 
 dispassionately the arguments for and against the extension by 
 the State of its sphere of action, and especially into the domain 
 of productive industry ; and it will be seen that there are involved 
 in the arguments of " Socialists " in favour of this, two fallacies, 
 — one the confusion of "Wealth" with "Means," and the other 
 the supposed antagonism between "Capital" (whatever that 
 means), and "Labour" which is the cant expression for human 
 energy. But as to Mr. Spencer's conflicting theory, it is pro- 
 posed to indicate here only what appears to be its main essential 
 error. 
 
 The recognition by Darwin and Wallace of " evolution " as 
 the normal process by which the differentiation of species and 
 varieties of the organic creation has been and is still being 
 effected, was followed by Spencer's scientific reduction of " socio- 
 logical phenomena " to instances of the working of a similar 
 law. And in this Spencer splendidly succeeded : but it seems 
 that he pushed his conclusions further than the facts warranted, 
 when he assumed that the blind impetus of evolution was neces- 
 sarily in itself beneficent. The reasoning was somewhat after 
 this fashion : "In Nature all progress is by way of the differen- 
 tiation of habits customs aptitudes and organism analogous to 
 what is observed in the biological struggle for survival in plants 
 and animals ; and this is a process making for good, because it is 
 this which is at work adapting the organism to its environment 
 and making it stronger and more efficient ; therefore above all 
 
214 THINGS AS THEY ARE 
 
 things in matters social and political take care not to interfere 
 more than is absolutely unavoidable with the free-play of the 
 natural forces which, if you allow them, are sure so to operate on 
 the wills of men, on their institutions, their circumstances, and 
 their progressive adaptability and power, as to make them the 
 most fitted for their environment, and best enable them to 
 progress." 
 
 Here we come back very close to our old friend " Candide " ; 
 for though Mr. Spencer did not explicitly echo his immortal 
 aphorism " that all is for the best in the best possible of 
 worlds " ; by implication he is an equally stalwart ultra-optimist. 
 No doubt if we restrict to the utmost the function of the State, 
 and leave the fate of Men and the nations to be determined by 
 the blind resultant of the workings of conflicting individualisms 
 on the opportunities of Nature, we shall in course of time, by the 
 operation of evolution, attain to a sort of man, and a sort of 
 organization of men, more and more fitted to fulfil the purposes of 
 individual acquisitiveness. Carlyle's " man with the muck-rake " 
 is, on this scheme, to become the supreme power in the world, 
 and a race will ultimately issue of monsters of evolved acquisi- 
 tiveness, devouring each other in strict obedience to the law of 
 self-preservation, such as are exhibited in the perfection of their 
 functions when a drop of water charged with micro-organisms is 
 magnified upon the screen of a magic lantern. 
 
 We may freely grant, therefore, that all social development is 
 essentially evolutionary, and that evolution brings about progress 
 the most readily and attains its result to the greatest perfection 
 when unhampered by legislative impediments and restrictions, 
 or by any other collective action imposing a check on each 
 individual's competition for supremacy. We can even assume, 
 that the growth of each community adapts itself most readily 
 and perfectly to the economic fitness of things, and tends best to 
 adjust itself to the economic progress of civilization, when 
 liberated from the generally ill-informed and always imperfectly 
 appreciative mastership of the State. All these things are true ; 
 but still it does not follow that such evolution is necessarily 
 in itself a beneficent process. The real human question is, 
 whether this automatic natural economic evolution along the 
 path of self-interest will really tend in its ultimate result to the 
 ultimate well-being, not of the abstraction " mankind," for 
 which the limited human intellect is incompetent to cherish any 
 
c. XII.] THE STATE AND THE MAN 215 
 
 real affection ; but of ourselves and those who will come more 
 immediately after us, those of our own country and race and 
 those akin to us, the concrete human beings of the present and 
 near future. 
 
 The Wealth of commodities, as has been pointed out, produces 
 itself as it were spontaneously under the impulse of industrial 
 enterprise, exactly to the extent measured by the commercial 
 demand ; and if produced in excess of that, is worthless, and 
 loses the essential character of Wealth, which is value. The 
 accumulation of Means by A. simply indicates its subtraction 
 from B., and nothing else. It is no addition to available Wealth 
 or even to the sum total of the Means of mankind*, and Means 
 may therefore be increased indefinitely in one part of the world, 
 by a process of heaping it up in the hands of one set of people, 
 but only at the expense of another, or at one time at the expense 
 of some other time. Therefore, so far from being a purpose to 
 be desired as good in itself, its accumulation tends in some 
 respects to evil ; proceeding and intensifying and becoming more 
 effective in one place and in the present, and therefore necessarily 
 involving somewhere, against some nations or men or classes of 
 men, possibly simultaneously, possibly in the future, an exactly 
 corresponding depletion and insufficiency. The creative force of 
 Nature itself and the energy of Man that goes with it to build up 
 Wealth production in the strict sense, are both prospectively put 
 under requisition to find satisfaction for the claims of the 
 accumulation of Means. It has been shown in Chap. IV. how 
 the stores of energy accumulated from solar heat in by-gone 
 stages of the history of the earth, are in process of exhausting 
 themselves, and for the benefit mainly of the " capitalists," those 
 who already possess more than they should, by being converted 
 into Means ; and in Chap. VIII. how in another manner Man con- 
 trives to lay hold now of as much as he can of the Wealth that 
 he expects hereafter to arise, as the result of the productive 
 labour of unborn generations. The present is ever eating the 
 past and mortgaging the future. And this, after all, is essentially 
 the evolutionary process, the intensification of which Herbert 
 Spencer stood by and applauded. "Laissez-faire," says he, 
 " All is for the best in the best possible of worlds. Let Nature 
 have her head, and she shall produce for you a race of 
 men capable ]of eating still more copiously of the past, and of 
 
 * Ante, p. 21. 
 
216 THINGS AS THEY AEE 
 
 discounting still more vigorously the future, if only the past and 
 the future will continue to be good enough to continue yielding 
 of their store " ! But how this last postulate is to be fulfilled, 
 we seek in vain to satisfy ourselves from the pages of any 
 philosopher. 
 
 Were this all the objection to this scheme of unhindered 
 evolution we should be compelled, though not without misgiving, 
 to withhold our assent from the doctrine that economic wisdom 
 lies in the way of passive acquiescence in the natural results of 
 the evolution of society. But when one considers the problem, 
 as one is bound to, from a national point of view, the peril 
 of the blind acquiescence in the fate of a nation that must 
 result from the free-play of evolutionary forces unhindered and 
 uninfluenced by the collective will, becomes in some aspects 
 terrifying. How, if a given nation turns out after all not to be 
 naturally the fittest for its social and economic function, if the 
 conditions of agriculture here, of industry there, and commerce 
 in a third part of the earth's surface, come to be such, that in 
 the struggle of competition these several nations lose ground ? 
 How, if this becomes a tendency, and intensifies itself in the 
 direction of failure and obsolescence ? Is the nation gladly to 
 accept the sentence of extinction in the interests of the abstract 
 future of "mankind" in which it is to have no part? Are no 
 efforts of the people of a nation to be opposed to such a tendency, 
 because, forsooth, it were " better for mankind in general," a 
 part of the universal beneficent scheme, that the particular 
 nation should dwindle and perish in order that a " fitter " should 
 survive ? Take a concrete example ; Germany, for instance. 
 That great and noble nation has on the whole neither the most 
 fertile soil nor the most favourable climate for agriculture among 
 the nations of the world. Her manufacturing industries are 
 carried on under circumstances many of which tend to place her 
 at a disadvantage with other nations. The situation and con- 
 figuration of her scanty coast-line are such that without vigorous 
 State effort and heavy contribution from national resources, her 
 mercantile and commercial enterprise would be carried on at an 
 obvious disadvantage as compared with those of such nations as 
 Britain, the United States, or Japan. Her mineral resources 
 are comparatively poor, when compared with those of the majority 
 of other countries, and she is so placed in the centre of a conti- 
 nent, surrounded by foreign races, none of which are altogether 
 
c. XIL] THE STATE AND THE MAN 217 
 
 sympathetic, that her people are compelled to give freely of their 
 Means and time and energy to satisfy the exigencies of self- 
 defence, thus hampering themselves in the competition to pro- 
 duce. Not only in respect of enterprise in general but of each 
 special department of enterprise, other countries are naturally 
 favoured with more generous opportunity. Certainly it cannot 
 be advanced that Germany has been so intrinsically favoured by 
 the conditions of the struggle, that the natural evolution of 
 social and economic causes there tends of itself to evolve the 
 power to produce at the lowest cost or with the greatest efficiency. 
 She is the greatest and most powerful of European nations, a 
 great and prosperous centre of industry and controller of com- 
 merce, just because of the will and energy of a magnificent 
 people guided by the unconquerable determination of a series of 
 far-seeing patriotic statesmen, resolute to mould every institution 
 and stimulate every industrial and commercial effort by the 
 compelling power of the State. If Frederick and Stein, and 
 Schamhorst and Bismarck had been disciples of "Laissez aller," 
 where would Germany have been to-day? And if a similar 
 craven pusillanimity were to seize the peoples of the United 
 Kingdom, what must be ow outlook for the future ? Therefore 
 to the student of economics it seems that while the doctrine of 
 evolution contains a true statement of certain tendencies which 
 influence the ultimate fate of nations, it is fatal to any nation 
 to be allured into an unresisting acquiescence in the blind 
 results of natural social and economic evolution, or to dispense 
 with constant strenuous efforts to control them by persistent 
 collective action. The State must if needs be save the Man, and 
 to do so must control his life. And a consciousness of this has 
 led to a tendency to the opposite extreme of thought equally falla- 
 cious ; the antagonistic thesis that the welfare of mankind is to 
 be entirely ensured by State action, and that the will of the 
 individual in every particular must be subordinated to the con- 
 trol and his destinies shaped at the discretion of an all-sufficing 
 infallible centre of authority. Surely it is somewhere between 
 the two that the way of safety must lie, and the true welfare of a 
 nation. " Mankind " sane practical men will entirely leave to 
 its own devices, and the hidden chances of a remote and 
 impredictable future. 
 
 It is as well to enumerate more specifically the modes in which 
 the organization of the State in the present phase of social 
 
218 THINGS AS THEY AEE 
 
 evolution has succeeded in moulding and controlling the twin 
 economic processes of the production of Wealth and the acquisi- 
 tion of Means. The first place must be given to the apparatus 
 of the law — the enforcement of contract, the compensation of 
 civil wrongs, and above all the compulsion of the recalcitrant 
 and the criminal. The true " contrat social " is no fantastic 
 imaginary treaty between the State and the people whom it 
 governs, but the consensus of the people of each nation and of 
 the nations between themselves, to the enforcement of obligation. 
 One is disposed rather to over- than to under- estimate the sacro- 
 sanct character of this universal obligation of fidelity. There 
 are supreme vicissitudes in the life of a nation as of a man, when 
 the inexorable necessity of self-preservation suspends the 
 operation of municipal law, when it may be that some still 
 deeper conscience may seem to justify breach of contract, the 
 infliction of wrong, even the commission of what in the normal 
 state of things would be reckoned crime. And, so far as the 
 State is concerned, it assumes the right at its discretion to make 
 its own conscience in such matters, and declare the occasions when 
 it deems itself justified in proclaiming the extra-legal dictatorship 
 of overwhelming necessity. The man, in like manner, reserves 
 to himself the supreme ultimate prerogative of deciding whether 
 he will obey or disobey the law of the State, prepared to 
 encounter the consequences of disobedience in any cause which 
 appears to him to justify the course. But putting aside these 
 exceptional and supreme occasions, the normal course of nations 
 and of men runs along the deep groove of legality. Setting 
 aside questions of crime and violence, it will be seen that the 
 collective will in this regard has expressed itself in two principles. 
 One is, that within certain limits men may contract as they 
 please, and the correlative is that, having so contracted, the law 
 which is the force of the State shall hold them to their 
 obligations. 
 
 Of course, both of these principles are subjected to many 
 series of exceptions and qualifications. But so conditioned (and 
 the conditions vary from time to time and from nation to nation) 
 they constitute the essential basis of economic security, the raw 
 material of confidence, the only possible guarantee of values, 
 and the primary indispensable condition of all civilization. 
 People exist (for the most part unhappy victims of the more 
 maleficent despotisms) who protest even against this much of 
 
c. XII.] THE STATE AND THE MAN 219 
 
 collective compulsion, and clamour for the entire dissolution of 
 society into its constituent elements. " Anarchists," who for the 
 moment have more or less allied themselves, and in the 
 uninformed popular mind are even confounded with the extreme 
 wing of the " Collectivists " ; those who, on the other hand, 
 favour the entire absorption by the State of the individuality of 
 the man in the sphere of economics, a regime of universal com- 
 pulsion. This sinister alliance has come about, probably because 
 the Anarchists, with the greater foresight, have perceived how 
 inevitably the doctrines of the ultra-socialists must bring about 
 in the long run the renunciation of all obedience, and the 
 repudiation of all law, which are what they really aim at. There 
 is no need to concern oneself with the despairing ferocities of 
 these people. Of the rest, though some seek to modify the 
 conditions of the enforcement of obligation, and others the con- 
 ception of the obligations to be enforced, sane human beings 
 concur in recognizing the enforcement of obligation in some 
 form as the main and primary function of the government of 
 mankind. 
 
 Next comes the influence of State action by way of the regula- 
 tion of industry and commerce and finance. This to some 
 extent is conscious and intentional ; but to a far greater degree 
 imforeseen and unintended, some by-result of conditions induced 
 by laws and regulations framed for one object, but operating with 
 a different and often antagonistic effect. Humanity impels you 
 to introduce into your code, for instance, elaborate precautions 
 against the over-exploitation of labour by capital. Admirable, 
 salutary, the redemption of mankind from an ignoble slavery. 
 Execrable, say economists of the Manchester school, because 
 interfering with the free operation of cause and effect, and 
 impeding the natural beneficence of the economic evolution of 
 industry and commerce. And both sets of people are right at 
 once. The result is one thing and the other at the same time. 
 For you can only legislate within the bounds of your own country, 
 and when you have compelled its acquiescence in your decrees, 
 the tendency of such enterprise as can be most profitably 
 carried on freed from your conditions, must inevitably be to 
 transfer itself to some other State which exacts less by way of 
 the protection of the worker. Whether, in the long run, the 
 people of that country will be the gainers by this transference of 
 industry and employment is quite another matter. As to this, 
 
220 THINGS AS THEY AEE 
 
 all that one can say is, that the question of degree and direction 
 is essentially one of foresight and insight ; but that there must 
 be some State regulation of individual effort is recognized on all 
 hands. Its degrees, its direction, are the responsibility of those 
 who invoke it and apply it ; and on them rests the future welfare 
 of the citizen. It is to be remembered that when they make a 
 blunder, their subjects will pay the penalty. 
 
 Next comes the huge subject of the State appropriation of the 
 Means of the man, taxation, in its multifarious aspects. The 
 next three chapters are devoted to this subject, a thorny and 
 intricate one, dealing with the most immediately potent of all the 
 modes in which the will of the collective organism exerts its 
 influence on the fate of its people, the incidence and the effect of 
 the toll it takes from them in return for the privilege of its pro- 
 tection. And this too is a department of State action effective 
 rather by virtue of its undesigned than of its purposed results ; 
 so much so, that it constantly happens that some device of 
 taxation adopted with the intention of fostering some particular 
 industry, really has the result of impeding or even destroying it ; 
 this, with reason, being one of the valid arguments which Free 
 Trade people oppose to the conceptions of " Protection." 
 
 It is simply impossible, within the necessary limits of these 
 chapters, to elaborate the idea, though some reference will be 
 made to it in Chaps. XIII. — XV. incl. Here again, scientific 
 appreciation is in its first infancy. Certain things have happened 
 in certain countries, under the influence of a certain number of 
 conditions, some of which are known, others unrecorded, many 
 not even guessed at. Therefore, if you please, the same things 
 are going to happen in another country, at another time, under 
 the impulse of a certain number of more or less identical factors 
 to those which were observed in the first case, and also of other 
 unnoticed factors which may be similar or contrary. Thus men 
 are apt to reason. But almost always the prognosis is falsified, 
 because you have ignored main factors of the problem: it 
 may be that essentially antagonistic factors, which you are 
 ignoring, will directly reverse your results. In these regards, it 
 is to be feared that statesmanship is as empirical as politics. 
 The only object of either seems to be the attainment of an 
 immediately realizable expediency, the one from the higher 
 motive of the general welfare, the other from that of a less 
 admirable striving for personal power. 
 
c. XII.] THE STATE AND THE MAN 221 
 
 The distinction between the taxation of the State and that of 
 the locality is mainly verbal. If, for certain collective purposes, 
 a proportion of my Means is demanded of me, under the sanction 
 of the general law, it matters little to me into whose hands it is 
 to be paid, and what particular authority, central or locally 
 delegated, it is which collects it, or by whom and for what par- 
 ticular purpose it is to be expended. The accident of an 
 accident, the utterly uncontemplated result of an isolated bit of 
 legislation of the days of Queen Elizabeth, imposed, for instance 
 (for the purpose of insuring to agriculturists a sufficient supply 
 of labour on the cheapest possible terms) on the people of each 
 tiny " parish " in England, the legal duty of undertaking the 
 functions of benevolence, which in pre-Eeformation days was the 
 province of the clergy in their abbeys and monasteries, working 
 on the means of men by invoking spiritual motives. For without 
 some such provision the workers would have been starved off the 
 land. It was this devolution of authority for a particular purpose 
 which gradually and almost insensibly led to the establishment 
 of local organizations of government with financial powers of 
 their own, exercising functions of administration for a great 
 variety of purposes, which, as it was expressed, were " thrown 
 on to the rates." 
 
 The writer does not by any means commit himself to the 
 absurd assertion that the municipal institutions of England 
 were the outcome of the " poor law." Of course, the essential 
 fact is that municipal organization is as old as civilization in 
 Europe, and is the primary differentiation of society from 
 which the conception of the State ultimately evolved by a 
 corresponding integration. And in fact it everywhere occurs, 
 as in England, that a contrary process sets in, and the moment 
 for this inevitably arrives as soon as the conception of the nation 
 has finished building itself up out of its constituent smaller and 
 local organizations. In England the days of the first Tudor 
 witnessed the first complete conception of England as a nation, 
 and under his successors, towards the end of the sixteenth 
 century, the reverse process of devolution set in. The State, 
 having absorbed into itself the powers which before the days of the 
 first Tudor were distributed among local chieftains, municipalities, 
 guilds, and other corporate entities, contrivances of the middle 
 ages for keeping the peace and controlling the citizen, proceeded 
 under Elizabeth gradually and necessarily to re-distribute and 
 
222 THINGS AS THEY ARE 
 
 re-devolve its authority among such of those as survived, and 
 such others as it had to create to succeed to the functions of those 
 which had passed away. And to the historian, this is the most 
 fateful and pregnant of all the ages of the history of the nation. 
 And thus it is that the ancient as well as the modern local 
 authorities have now, by devolution of power, come to participate 
 in the power of levying taxation, bit by bit, and occasion by 
 occasion, for the purpose of keeping up the increasingly complex 
 contrivances adopted from time totime for the promotion of the 
 convenience of the people. In this way have been developed the 
 existing organisms administering the modern multiplicity of 
 appliances of service, protection, and regulation. 
 
 And in the duty of directing these, the people of each little 
 locality and of each group of localities are called on to exercise 
 personal effort, govern themselves, and eventually to federate, 
 and reweave the fabric of society into a fresh network and pat- 
 tern of authorities. This " local " self-government becomes a 
 regulated orderly principle of service, essentially by delegation 
 of power from the central authority, and has its own set of 
 virtues, its own serious defects and shortcomings. The day was 
 when this outcome of " free institutions " was universally hailed 
 as a series of triumphs for " liberty," and made the subject of 
 platitudinous eulogy at municipal banquets ; we look on it now as 
 an inevitable natural phenomenon of the social organism, no more 
 to be made an object of flattery than the law of gravitation itself. 
 In one way it is welcome to all ; men reasonably prefer to govern 
 themselves rather than that some central authority should govern 
 them, even though they may have some voice in appointing that 
 central authority ; while what they still more dearly love is the 
 opportunity to govern others. By the exercise of this function 
 in the more conspicuous and important councils of government 
 man indulges his passion for power and personal distinction ; 
 while the more modest and obscure the " board " to act on which 
 he is selected, the safer and more constant his opportunity for 
 deriving pecuniary profit from the performance of his duties. 
 
 The Senate'of the United States is a more dignified and important 
 body than the Legislature of the State of Pennsylvania, and 
 this, than the municipality of Pittsburg; and the facilities for 
 personal corruption enjoyed by members of these organs of 
 State action are in inverse proportion to the dignity and import- 
 ance of the membership of each respectively. An influential 
 
c. XII.] THE STATE AND THE MAN 223 
 
 deceased member of the first august ' body is said in his lifetime 
 to have controlled the action of the second, and been the 
 absolute master and owner of the third ; and it was, says Mr. 
 Sinclair,* in this last capacity that he found the most excellent 
 opportunity of satisfying his appetite for gain. 
 
 Now the progressive extension of the machinery of govern- 
 ment is not by any means in the way of a true extension of 
 liberty. On the contrary, it is at every point a strengthening 
 of authority and a limitation on the free action of the individual, 
 an encroachment on his independence. Mr. Mill perceived this 
 fully. He points outt that all government, all constraint, is 
 essentially in the nature of an evil, submitted to by mankind in 
 preference to the greater evil of a chaotic lack of organization. 
 It is so much the lesser evil of the two, that by contrast with 
 the result of its absence it assumes the guise of a blessing. Mr. 
 Spencer strove to minimize constraint on the individual will, and 
 grudged the extension of the organized force of society to any 
 purpose beyond that of the mere enforcement of law, the pro- 
 tection of property and life, and the maintenance of order. His 
 faith in the curative virtues of evolution and the beauty of the 
 inevitable emergence of the fittest, led him to protest against each 
 fresh extension of power and of its sphere of activity, which the 
 public Will chooses to attribute to the State or the municipality. 
 " Vox clamantis in deserto." His is a way of looking at things 
 which finds no acceptance in the trend of modern thought ; 
 nevertheless towards this protesting individualism there must 
 be, and assuredly there ought to be, from time to time a series of 
 reversions of sentiment, as men come to find the chains heavier 
 and the network of authority more and more intricate. 
 
 The pessimism of the Anarchist brings him into line with 
 the optimistic individualist, and he boldly advocates the abroga- 
 tion of all authority whatever, and ultimately (Mr. E. Carpenter 
 to wit) the abandonment of the efforts of civilization as a 
 hopeless failure. 
 
 In defiance of all theory, Man goes on governing more and 
 being more governed from year to year. Even the old-fashioned 
 statesman is to be heard now and then emitting such sentiments 
 as this : — " We are all Socialists now," said Sir William Harcourt ; 
 " the only difference between us is what form our socialism is 
 
 * " Industrial Republic," Chap. V. 
 
 •j- " Essay on Liberty," Introductory Chapter, p. 17. 
 
224 THINGS AS THEY AEE 
 
 to assume." He meant by " Socialists " devisers of additional 
 institutions of government, advocates for the assumption of 
 further occasions of interference with the will of the Man, 
 makers and forgers of chains and contrivers of regulations rules 
 and " bye-laws " to compel other people to act as we ourselves 
 think most in the collective interest. There is a constant striving 
 to induce the State to derive a legislative impulse from the efforts 
 of benevolent associations of individuals, each advocating its 
 own legislative nostrum : and the passion for additional regula- 
 tion grows on people, who constantly clamour for fresh laws 
 forbidding this and that which they personally dislike. The 
 writer calls to mind a certain Earl of Mayo, who somewhere in 
 the fifties spent his life in agitating for legislative prohibition of 
 the use of tobacco. This manner of lunacy is common and 
 catching ; and it is well that here and there recalcitrants are to 
 be found, protestants against this conception of a tyrannical 
 State catholicity. 
 
 Attention has already been called to the function both of the 
 State and its delegated authorities, of contracting obligations in 
 the form of debt. The indebtedness of an individual is a mere 
 momentary affair. It is limited as to its duration and security by 
 the life and the Means of the individual. A man can get into 
 debt to the full extent to which anybody is willing to trust him ; 
 but he obviously cannot pay beyond the amount that he possesses. 
 "When his life comes to an end, or he is declared a bankrupt, his 
 property is appropriated in the first place to the satisfaction of 
 his debts, and in so far as it is insufficient his creditors will remain 
 unsatisfied. When he becomes incorporated, with " perpetual 
 succession," his liabilities pass to his successors, but again they 
 are limited (it may be far too strictly) by the terms of the 
 legalization of the incorporation, and all the world knows that 
 beyond the means of the particular society or company apart 
 from that of its constituent members, there is no fund of solvency. 
 All these forms of indebtedness, therefore, are entirely limited 
 in their incidence and duration. The acceptance of such promises 
 to pay is one of the ordinary hazards of " Commerce," their 
 permanence more or less ephemeral, and practically co-extensive 
 only with the profit-producing capacity of the enterprise for which 
 they are incurred. There are, no doubt, in some countries, 
 certain enterprises carried on by associations of private individuals 
 to provide services of which the community is by comparison 
 
c. XII.] THE STATE AND THE MAN 225 
 
 permanently compelled to avail itself for reward; and these 
 assume accordingly a relatively permanent potency of repro- 
 ductiveness ; and the confidence in such an adventure, and 
 therefore the "value" of participation in it, its shares and 
 securities, is correspondingly enhanced by the general belief in 
 the persistence of its profit-bearing attributes. Such for example, 
 one which bidding fair to continue a profitable investment 
 until such time as aerial navigation shall have been perfected to 
 supersede maritime effort, exists in the form of the enterprise of 
 the Suez Canal. So again, the great railways of a country may 
 possibly preserve their utility and productivity for quite a 
 respectable interval of time ; possibly even, in the absence of 
 some fresh invention of means of locomotion, till the country 
 relapses, its prosperity and activity decline, and fewer men desire 
 to travel or have occasion to expedite goods in it. But all private 
 ventures tend sooner or later to come to nought, and the tax any 
 one of them can lay on posterity is in every case limited by the 
 duration of the profitable utility of each. 
 
 With respect to the indebtedness of the State and its subsidiary 
 municipal organisms, however, there is no such ostensible limit 
 to the perpetuity of the incidence of its obligations. The people 
 who incur the debts pretend, as a matter of course, that their 
 descendants will hold themselves bound to go on discharging 
 them in scBCula seeculorum. Some physicists would have us 
 believe that this planet is cooling in space, and will by degrees 
 become uninhabitable. And some publicists seem to fancy that 
 the last surviving Briton shall be frozen to death in the very act 
 of paying himself the quarterly dividends on his remaining total 
 of " British Consols," and that not till then will the " national 
 liability" lapse. As a matter of fact, of course, we know full 
 well that each State will continue to discharge its obligations for 
 just as long as it continues to find that course expedient, and no 
 longer. We no longer compel solvency on nations by force or 
 threats of force. Elementary morality has begun to recoil from 
 the wickedness of employing the armed force of a nation to 
 collect by warfare from people in other nations debts due by 
 them to its citizens, who have chosen to invest their means on 
 insufficient security.* 
 
 * Though, by the way, even as late as December, 1902, the writer of these pages 
 found himself sitting as a prize-court, to dispose of the fate of the entire naval and 
 mercantile marine of the independent State of Venezuela, the shtps having been 
 
 T.A. Q 
 
226 THINGS AS THEY AEE 
 
 The uncontrolled will of each nation must determine the 
 duration of its obligations, nor can any nation continue to give 
 effect to even the most scrupulously punctilious will to pay, for 
 one instant after its power to pay has become exhausted. " Sunt 
 certi denique fines," even to the perpetuity of national obligation. 
 
 In the meantime, the heaping up of these obligations continues 
 merrily, and is one of the chief ways in which the action of the 
 State influences the economic phenomena of its citizens and of 
 the world, furnishing acquisitiveness with a most obvious and 
 powerful international means of exercising its function and 
 satisfying its desire, by recurring opportunities of " investment " 
 of profits, in the purchase of promises that futurity shall pay. 
 
 To the consideration of the State in the aspect of an engine of 
 benevolence, a special chapter must be devoted (XVII.). The 
 exercise of this function assumes economic importance in many 
 ways as a controlling influence, on the welfare of the worker, 
 and therefore on the conditions of both industrial production 
 and commercial consumption. Part of the fair and necessary 
 wage of industry consists of the necessary provision for the 
 worker at the times when his power of production is impaired by 
 the vicissitudes of illness, or the advance of age ; or when a lack 
 of the opportunity of employment may prevent him from acquir- 
 ing the means of subsistence. In some shape or another this is 
 part of the wage due to him. To what extent it is legitimate or 
 useful that the indispensable machinery to provide this should be 
 put into the hands of the State or Municipality, instead of being 
 left in those of the provident institutions of the labouring classes 
 themselves, or, on the other hand, entrusted to the benevolent 
 agency of philanthropic institutions supported by the means of 
 the more wealthy, is a wide and difficult subject, complicated by 
 considerations of many obscurely interacting tendencies. In 
 these chapters it would be impossible to develop this thesis, the 
 very rudimentary conceptions of which have been as yet most 
 inadequately formulated. But inasmuch as nothing lies nearer 
 the vital centre of a nation's being than the welfare of its 
 workers, this of all is the one problem which most urgently needs 
 
 forcibly taken possession of in the course of a little war begun for just such » pur- 
 pose by three great Powers I With a tardy sense of shame, stimulated perhaps by 
 amazed remonstrances from Washington, this war was brought to a sudden and 
 ignominious conclusion. It is pretty safe to predict that such an experience will 
 never recur in any quarter of the globe. Some little sense of decency will, it is 
 hoped, in future regulate the conduct of powerful States in this regard. 
 
cXII.] THE STATE AND THE MAN 227 
 
 that the best thinking power of the people should be devoted to 
 its solution, freed, if such a thing could be managed, from con- 
 siderations of the personal aggrandisement of this or that set of 
 politicians. " First principles," springing Minerva-like from the 
 brain of the philosopher, must also in such an investigation 
 prove calamitous, and be sternly rejected. The way of salvation 
 lies along the difficult path of statistical analysis and patient 
 observation. 
 
 There remain to be noted the economic results of State action 
 which arise from the efforts of the State as a whole to influence 
 the commercial and industrial activities of other States and their 
 populations. The handiest tool for effecting such purposes is 
 the taxation of imports. 
 
 Diplomatic negotiation is an entirely different mode of the 
 exertion of the national purpose. This, it is clear, must be based 
 on promises and threats, acting on the hopes of each community 
 to acquire for the products of its own industry access to the 
 markets of another, and the fear of being shut out from markets 
 already existing. Mr. Upton Sinclair, in his very interesting 
 book " The Industrial Eepublic," goes so far as to say that war 
 and threats of war arise entirely from economic pressure for 
 opportunities of commercial profit-making (pp. 56, 57) and on the 
 whole it is difficult to avoid the conviction that in this respect 
 he is right.* War is in itself a potent economic factor apart 
 
 * The Dean Swift (de racad^mie francaise) of the twentieth century puts this 
 apprehension in his characteristically mordant pages (Anatole France, " L'lle des 
 Pingouins," p. 177 seq.') in words which it is impossible to avoid quoting. He brings 
 his GuUiver, " Obnubile " to the great country of "New Atlantis," the greatest of 
 the democracies, and introduces him (under the guidance of an interpreter) to the 
 Senate ; where he hears the report presented of certain wars which have been success- 
 fully undertaken " pour I'ouverture des march& " against recalcitrant nationalities 
 who had refused to admit New Atlantic products on fair terms, and then — (adequate 
 translation is hopeless) : 
 
 " A ce moment, un gros homme, qui sifegeait au centre de I'Assembl^e monta la 
 tribune. 
 
 " ' Je r&lame, dit-U, une guerre centre le gouvemement de la r^publique 
 d'Emeraude, qui dispute insolemment 4 nos pores I'h^g^monie des jambons et des 
 saucissons sur tous les marches de I'univers.' 
 
 " ' Qu'est-ce que ce l^gislateur 1 ' demanda le dooteur Obnubile. 
 
 " ' C'est un marchand de cochons. ' 
 
 " ' II n'y a pas d'opposition ? ' dit le pr&ident. ' Je mets la proposition aux voix.' " 
 
 La guerre centre la r^publique d'Emeraude fut vot& k mains levies a une trfes 
 forte majority 
 
 " ' Comment ? ' dit Obnubile i, I'interprfete ; ' vous avezvot^ une guerre avec cette 
 rapidite et cette indifference I ' 
 
 " ' Oh 1 c'est une guerre sans importance, qui cofltera k peine huit milUons de 
 dollars.' 
 
 "'Etdes hommes. . . .' 
 
 " ' Les hommes sort compris dans les huit millions de dollars.' " 
 
 Q 2 
 
228 THINGS AS THEY AEE 
 
 from the ultimate results to obtain which it is resorted to. The 
 immense consumption and restricted production of a nation in a 
 state of war, sets flowing and keeps up for a long time a mighty 
 current of industrial production from other lands towards the 
 country engaged in the struggle. Mr. Sinclair expresses the 
 conviction that the war between Japan and Russia had for one 
 result the saving of American industrialism for the time being 
 from the effects of an inordinate over-production in excess of the 
 normal commercial demand, and of the sinister over-accumula- 
 tion of Means in the hands of powerful and unscrupulous specu- 
 lators ; and here too, it appears that there is sound foundation 
 for his conclusion. A time of war is the time when the belli- 
 gerent nation is working hard exchanging into commodities, not 
 only all its available means, but as much more as it can succeed 
 in persuading the capitalists of other countries to lend to it on the 
 chance of repayment out of its future earnings. And with 
 regard to the industry and commerce of the United Kingdom, 
 nothing stands out clearer in statistics than the gigantic impulse 
 which the production of Wealth and the accumulation of Means 
 here experienced as the immediate result of the Franco-German 
 war. From this point of view, in truth, there is " something in 
 the misfortunes of our friends not altogether unwelcome," and 
 this consideration will weigh, as its truth comes to be more 
 generally appreciated, with increasing force to determine the 
 general will of nations in the direction of peace. A nation's 
 engaging in warfare not only impoverishes it for the time being 
 but prospectively. War is the direct means of enhancing the 
 expansion at the expense of people engaging in it, of the 
 commercial prosperity of their industrial rivals. 
 
 But by far the greater influence that one nation can exert on 
 the welfare of another is that of competitive production. Wars 
 and treaties are made and are forgotten. The individual wills 
 which provoke them and bring them about, disappear and are 
 replaced by conflicting purposes and motives of other men and 
 by other ambitions and tendencies. There have been decisive 
 wars, but they have been rare, and Creasy's "decisive battles of 
 history" is a catalogue from which by far the greater number of 
 instances given may well be expunged, most of the military and 
 naval victories being after all only exceptional developments by 
 force, of natural causes underlying the conflicts, and which, had 
 the event of any particular battle chanced otherwise, must still 
 
c. XII.] THE STATE AND THE MAN 229 
 
 have worked out inevitably to the same ultimate result in other 
 ways. The industrial evolution of a nation is its competitive 
 force; the essential and compelling factor of its place and 
 rank among the nations — the instrument by which it affects the 
 fates of its competitors and which must ultimately determine its 
 own place and function in the economic organism of the world. 
 
CHAPTER XIII 
 
 TAXATION (direct) 
 
 The claim of the State on the means of the man is enforced 
 by taxation, and the writers of text-books draw a broad distinc- 
 tion between that which they call direct and indirect taxation. 
 It has been thought convenient to follow the accepted method of 
 treatment, and treat separately of these two aspects of one and the 
 same thing. But like all categories into which human actions 
 and institutions are artificially classed for the purpose of analysis, 
 the distinction between the two is vague and indeterminate in 
 the extreme. From one point of view it is clear that there is no 
 real difference between the two exactions, nor can the dividing 
 line be scientifically indicated by any sort of definition. The 
 contribution that is levied on a man by the State in the act of 
 buying his beer or his tobacco, for instance, is classed as "indirect" 
 taxation. When he pays it as part of the rent for the occupa- 
 tions of the space and shelter in which he and his family exist, 
 the doctors dub it " direct " taxation. In either case he con- 
 tributes it equally out of his means, feels its equally, and the 
 effect on his economic status is identical. One part of the taxa- 
 tion which he pays is collected by the central State, and is called 
 " Imperial " taxation. But for all practical purposes as far as the 
 individual is concerned, this is identical with the slightly greater 
 part which for a variety of purposes is in this country confiscated 
 from him by locally delegated embodiments of governing power, 
 and which is termed "local" taxation. Therefore we have to 
 beware, in dealing with this subject, of all generalizations, and 
 indeed what is called the " ultimate incidence " of all taxation 
 alike, Imperial and local, direct, and indirect, becomes, as will be 
 seen in the course of this and the three following chapters, a 
 question of such intricacy and doubt, that though it is easy 
 enough to indicate the people who directly pay and the authorities 
 which directly receive, it is impossible to ascertain by applying 
 any fixed set of rules at all who it is that really bears the 
 
c. XIII.] TAXATION (DIRECT) 231 
 
 burthen of any tax whatever. The utmost that can be said is that 
 there are instances (such as the income tax), in which the main 
 weight of a particular sort of taxation appears to fall directly on 
 those who contribute in the first instance — the actual payers ; 
 while there are other taxes as to which it is impossible to say at 
 whose expense in the long run they are really levied, and in what 
 proportion. The most direct tax will have its indirect effect on 
 the welfare of classes quite other than that which pays it ; and 
 the typical indirect taxation by import duties has, in spite of all 
 theory to the contrary, its own direct burthen on the particular 
 class of importers from whom it is collected in the first instance. 
 Taxation needs chapters to itself. As the network of govern- 
 ment extends and its functions multiply, so, in a more than 
 simple ratio is extended and intensified the claim which its 
 organization must necessarily enforce on the Means of the 
 people of the country. Not only must the available Wealth (in 
 the strict sense) of the citizens be in an increasing degree devoted 
 to the attainment of the purposes undertaken by the State, but 
 the direction and carrying out of those purposes has to be 
 confided to a constantly increasing army of administrators and 
 officials, whose livelihood and welfare must in like manner be 
 provided for out of taxation. The more intricate and far- 
 reaching the laws and regulations, the greater the army of judges 
 and officers, ministers, inspectors, commissioners, policemen, 
 and other persons whom you must employ to enforce them; and 
 each fresh prohibition or regulation adds to this army by calling 
 into existence a fresh staff of officials to enforce it. In like 
 manner the exigencies of national defence and offence keep on 
 calling, not only for greater expenditure on the material 
 necessities for warfare, but for the absorption temporarily or 
 permanently into the official personnel, of an increasing pro- 
 portion of the available energy of the people, and of the Means 
 that must be devoted to the reward of the energy so applied. 
 And so, again, with the increasing efforts in the direction of the 
 alleviation of poverty and distress. Not only must the Means of 
 the people of the nation be increasingly diverted to necessary 
 purposes of benevolence, but if and so far as the State elects to 
 undertake the duty, the administration of those Means must 
 be taken away from voluntary effort, and confided to a fresh 
 army of officials to be provided for out of the national resources. 
 Nor is it possible, as some people imagine it to be, to economize 
 
232 THINGS AS THEY AEE 
 
 beyond a very limited extent by starving one set of services in 
 order to expend more in the performance of the others. 
 
 In many modern States there is, outside of this direct and 
 ostensible appropriation of Means, an intricate and illicit 
 machinery of exaction, to satisfy the acquisitiveness of those 
 who are employed to govern; which is corruption, the cost of 
 the purchase of immunity for crime and vice and for the 
 infraction of regulations, of bribes to legislators, the expensive 
 corruption of the judiciary, and other great expenditure of Means 
 in pursuit of dishonesty ; all these are, so to say, so many 
 predatory fingers in the till of the national Wealth and Means. 
 Such, again, are the outcome of the exercise of opportunities for 
 ingenious embezzlement, " graft " and " boodle," as they are 
 termed in the great country which has witnessed their highest 
 perfection; such, the allocation for purposes of corruption of 
 contracts at nefariously inflated prices, a practice not unknown 
 to municipal authorities in another and less progressive land, 
 or fat bribes to those in power, exacted from favoured con- 
 cessionaries of monopoly; and the countless other forms in 
 which personal dishonesty finds its account in the exploitation 
 of the opportunities of authority. 
 
 And these, by comparison, are but petty pilferings from the 
 national store of Means ; for a much bigger engine of waste, and 
 far more disastrous in its outcome, gets a- working when bribery 
 and corruption take the form of the political demoralization of 
 classes, and when each man who seeks to participate in the 
 control and direction of the national purpose, holds out ostenta- 
 tiously as an inducement to his supporters and partisans, that 
 he is prepared to exercise the power he solicits at their hands to 
 further their local or class interests, to the detriment, if need be, 
 of the collective welfare of the bulk of the nation. And when 
 competing political parties sink to bidding for power by appeals 
 to the collective acquisitiveness of particular classes of the 
 citizens, political dishonesty of this sort becomes blatant and 
 unashamed. In the United Kingdom a candidate for Parliament 
 may be subjected to severe personal penalties for giving a glass 
 of beer to the individual elector. But he incurs not even 
 disapprobation for promising to promote special legislation, or 
 to bring pressure to bear on those who have the public purse- 
 strings under their control, to induce a profitable flow of money 
 towards his constituency, or some particular industry in it, at the 
 
c. XIII.] TAXATION (DIEECT) 233 
 
 expense of the general interests of the country. He may not 
 bribe the individual elector ; but he is allowed openly to promise 
 relief of some particular taxation which presses on a particular 
 trade in the constituency. He may offer almost anything he 
 likes with a view to corrupting his "electorate " provided they 
 believe that he will have sufficient influence to make his offer 
 good. This is the heavy price which some nations have to pay 
 for " democratic " institutions. Into this subject, it is not 
 proposed to enter further. Some day a code of political ethics 
 may be attempted, and to such a treatise these matters must 
 be relegated, though they have a grave bearing on economic 
 problems. They are a heavy item in the cost of governing. 
 
 The portion of the Means of the citizens which is directly and 
 ostensibly requisitioned by the State in the way of taxation, the 
 limits to which it is possible or expedient to push it, and the 
 comparison of the several methods by recourse to which it is 
 possible to exact it, — these are legitimate subjects of economics ; 
 and it is these with which it is proposed to deal in these three 
 chapters. 
 
 The possibilities of taxation are not very varied ; not reckoning 
 in the cruder methods of Eastern despots, who when they find a 
 subject attractively wealthy, cast him into prison and appropriate 
 his store, or such devices as the extortive dentistry said to have 
 been practised by King John, there are six known practical 
 ways in which the State can help itself to what it wants : a poll- 
 tax, an income-tax, the total or partial appropriation of land and 
 its rents, a greater or less participation in inheritance and 
 succession, all of which are modes of " direct " taxation ; and 
 the imposition of duties on the import and export of commodities, 
 or by way of internal " excise," which are called " indirect 
 taxation." And then there is the resource of State borrowing, 
 the taxation of the future, which is elsewhere considered. 
 Certain other petty devices may be made to yield a trifle and help 
 to balance the sheet, such as licence-fees, which are a sort of 
 class poll-tax, and the taxation of business transactions by 
 imposing stamp duties on the evidences of them ; a form of 
 exaction which unless limited to the smallest possible fee for 
 formal registration, is mischievous and vexatious, being a 
 hindrance to and tax upon legitimate commercial transactions. 
 Excessive taxation on the transfer of land, whether collected by 
 the State in the form of stamp duties, or sanctioned by law in 
 
284 THINGS AS THEY AEE 
 
 the shape of excessive fees to those employed to carry through 
 the simple steps needful to effectuate it, is also wasteful and 
 mischievous, taking heavy toll on transactions which ought to 
 be made as inexpensive as possible, if it is a legitimate object 
 that people should be encouraged to extend their industry to the 
 cultivation or other business occupation of the land. 
 
 Among State resources has to be reckoned in the income from 
 domains, and from investments of Means derived from bygone 
 taxation in the way of the provision of building roads and other 
 contrivances for the rendering of services of transportation and 
 the like, for availing themselves of which, members of the public 
 who benefit can justly be called upon to pay. This income of 
 State property, though derived from what has been originally 
 acquired by taxation in some form, is not in itself taxation at 
 all, and may be left out of the account. The modes above 
 indicated, practically exhaust its power to appropriate the Means 
 of its subjects. It will be convenient to deal with direct taxation 
 in this and the next chapter, leaving the difficult subject of 
 indirect taxation to be dealt with in the sixteenth. 
 
 In poll-tax are included all those exactions of Means or energy 
 levied on the individual as such, to a fixed extent irrespective of 
 the amount of his Means and his capacity to bear the burden. 
 A poll-tax is therefore essentially "unjust" and is in some 
 respects the most unscientific and oppressive of all. So much 
 so that in its naked crudity it is seldom now resorted to among 
 civilized nations in their taxation of themselves. But in more 
 or less speciously disguised forms, it enters to some extent into 
 all government systems ; especially in the continent of Europe. 
 In what other light, for instance, can be regarded the national 
 obligation of compulsory military service, without the imposition 
 of which on every able-bodied citizen within certain ages, 
 modern military powers would be unable to withstand the pres- 
 sure of the force of their rivals ? That each man owes personal 
 service for the necessary minimum of years or months to the 
 State whose organization enables him to live, appears to the 
 modern Italian or Frenchman or German so obvious a truism, 
 that the obligation of military service is one which is submitted 
 to with almost universal assent, though not quite ungrudgingly. 
 But this is nothing more nor less than a poll-tax — the appropria- 
 tion by the State of so much of the time of each citizen, which 
 would otherwise be the source to him of Means, by the use of 
 
cXIIL] TAXATION (DIRECT) 235 
 
 which he would otherwise be able to provide for his needs, and 
 at a crucial time of his existence lay the material foundation 
 for a future career. In no country is this conscription more 
 regularly enforced or more cheerfully submitted to than in 
 Switzerland — Nature's battle-ground of Europe, enclosed between 
 four great empires for which its mountains afford the obvious 
 route, across which each would, were not the Switzers resolute 
 to oppose their every man to the march, naturally advance in 
 wartime to the attack of any other. In that country therefore 
 the people feel the need of constant preparation for war as the 
 only possible method of assuring a permanent peace. 
 
 The economic working of every tax of this nature, whether 
 paid in service, or, (by way of ransom for exemption,) in Means, 
 is pro tanto to lessen the competitive productivity of the people 
 of the nation. Alone among great civilized States, the United 
 Kingdom and the American Union are free from the necessity of 
 this contribution. In the former case the freedom is purchased 
 at the price of so huge an outlay on naval defence and the 
 expensive hire of a "voluntary" army, both of which must be 
 provided from other sources of taxation, that the economic 
 potency is correspondingly crippled by its exaction, to an extent 
 almost equal to what it would have to submit to, were the obliga- 
 tion to compulsory military service substituted. Therefore it 
 seems that the productive efficiency of this nation in competition 
 with others, is in this respect balanced. One country has 
 undoubtedly reaped from its immunity from general service a 
 great productive potency. Though some thinkers consider this 
 advantage of the North American Eepublic to have been dearly 
 bought at the price of a loss of the training in practical as dis- 
 tinguished from merely sentimental patriotism which arises from 
 the exercise of this duty of a nation's youth, equally obligatory 
 on all classes of its citizens. 
 
 Modified poll-taxes of a somewhat vexatious and petty sort 
 are exacted in the United Kingdom and other European 
 communities from particular classes; payment, that is, not 
 proportioned to the gains or Means of the subject ; such as 
 licences at fixed rates for the carrying on of a particular trade 
 or occupation irrespective of its profitableness, or again, minute 
 exactions from persons possessing Means, such as the silly 
 assessed taxes on the keeping of menservants in the United 
 Kingdom, the only practical effect of which is to discourage the 
 
236 THINGS AS THEY AEE 
 
 employment of men of the poorer classes ; or again, a minute 
 tax on " armorial bearings," which penalises persons who dignify 
 themselves, whether rich or poor, by bearing devices by which 
 they love to pretend that their ancestry distinguished themselves 
 for the purpose of recognition in the field in ancient days; a 
 harmless vanity that might well be left unmeddled with, and 
 does not necessarily import either wealth or luxury, or even 
 aristocratic descent. But these have no particular economic 
 effect, and may be passed over, except as examples of a petty 
 and futile exactiveness. 
 
 A more effective form of poll-tax and probably less defensible, 
 is the simpler one which so-called " civilized " nations have a 
 way of imposing in their colonial possessions, on the less advanced 
 races subject to their sway. The compulsory labour abolished 
 in Egypt and in full operation in the Congo State is probably 
 the most reprehensible of all these ; but it was run pretty close 
 by such devices as a " hut-tax " in Sierra Leone, justified on the 
 ground that it was " beneficial " that the native subjects should 
 find themselves compelled to incur the primeval curse of labour 
 in order to find the Means to pay ! The morality of this con- 
 ception of national prerogative possesses a humorous absurdity 
 of selfishness, which it would be difficult to equal. Something of 
 the same sort has occurred in various parts of South Africa, 
 justified by similar reasoning, and the despotism of the Dutch 
 Government in the Malay Archipelago draws no inconsiderable 
 portion of the Means of Holland from the exploitation in this 
 manner of the forced labour of its far- eastern subjects.* 
 
 Income-tax is a peculiarly British institution with its own set 
 of consequences. No tax can be imposed, the incidence of which 
 is ideally just, least of all a tax on incomes. Any two men may 
 have the same nominal income ; no two can be said to be subject 
 to exactly the same necessities. The one will always have greater 
 or less need than the other, and therefore a less or greater surplus 
 to take toll from after providing for those needs. The income 
 of the one may be transitory and of another more or less 
 permanent, the Wealth obtainable for the moment by him by 
 the transmutation of Means into commodities and therefore the 
 amount left over after the physical needs of the family are 
 
 * The so-oalled " independent provinces " of southern Java, afford some examples 
 of the abuse of the corvee, which would serve to point several morals of corruption, 
 were the actual facts generally known of what goes on in the " sultanates " of Solor 
 and Djocdja. 
 
c. XIII.] TAXATION (DIKECT) 237 
 
 satisfied, constantly increasing or diminishing, and in all cases 
 unequally. 
 
 Not only the constant fluctuations of the abundance or scarcity 
 of gold and money, but many other considerations intervene, to 
 make a given sum levied from a given income at a particular 
 time from A. more or less of a burden as compared with the 
 exaction of the same sum from the same income of B. And 
 absolute equity is unattainable.* 
 
 A large question is involved in the conception of a " graduated " 
 income-tax, "adjusted so as to rise not merely in amount but in 
 scale according to the amount of income, so that Means obviously 
 in excess of reasonable requirements should contribute increasingly 
 towards the needs of the community. Professor Fawcett decided 
 against this proposal. His objection to it was that it was an un- 
 wise penalizing of success. The effect would be, according to 
 him, to check in the country that adopted it, the accumulation 
 of Means, by removing pro tanto the " incentive " to the thrift of 
 the wealthier, out of which Capital arises, which is the chief 
 necessity for economic progress. The present writer takes leave 
 to doubt if this is really so formidable an objection to the pro- 
 posed equalization of the fortunes of men as at first sight appears. 
 If there is an incentive to a given man sufficient to induce him 
 to exercise his thrift and skill so as to accumulate additional 
 Means at the rate say, of £100,000 a year, his motive to satisfy 
 by continued thrift and foresight this passion and instinct of 
 enrichment, would not be sensibly diminished by lessening the 
 ultimate reward to a reasonable extent. If the income-tax on 
 his annual surplus were so graduated as to afford him the 
 opportunity of accumulating only ninety thousand, assuredly he 
 would not therefore stop. It seems that there is a craving for 
 
 * Fawcett, " Manual of Political Economy," Book IV^ Chap. 11^ p. 543 leg. 
 Professor Fawcett, who insisted on this truth, devoted much careful arithmetic, 
 in his valuable manual of political economy, pp. 527 to 546, to the analysis of the 
 incidence of income-tax. He demonstrates that it an income-tax could be made 
 uniform in amount and permanent, there would be no injustice in taxing temporary 
 at the same rate as permanent incomes. Obviously not, because while the incidence 
 is identical for the time, the contribution of the temporary possessor wiU be 
 temporary only and that of his more fortunate brother more permanent. This 
 accurate and dispassionate author is also absolutely right in pointing out, that 
 before commencing to assess incomes for taxation it would be theoretically just to 
 subtract from each in eveiy case, even that of the wealthiest, a given average 
 annual sum to represent as nearly as possible the annual cost of necessary subsist- 
 ence ; so that if the prescribed minimum were fixed at say £200, the possessor of 
 an income of £250 would pay on £50 only, and the annual receiver of £10,000 
 would be assessed on £9,800. But this is a minute matter. 
 
238 THINGS AS THEY ARE 
 
 enrichment operating on the minds of a certain part of mankind, 
 in some manner to others irrational and mysterious, which finds a 
 grotesque satisfaction in the process of getting richer, apart from 
 any gratification which increased Means can in themselves pro- 
 cure. This passion, it seems, in the given case its victim would 
 continue to strive to indulge, even though so circumscribed by 
 taxation as only to be able to satisfy it to the extent of the annual 
 addition of a miserable sixty thousand to the heap of his Means. 
 It is not in this way that the general interests of society would 
 be appreciably endangered by any tendency to slacken accumula- 
 tion as a consequence of the imposition of a graduated charge, 
 nor is it after all so very obviously urgent that in a country 
 where Means are largely held and many rich people are, there 
 should always continue a great and increasing accumulation of 
 the Means, which after all may or not be turned at the will of 
 the possessors to reproductive purpose, and (see Chap. II., p. 35) 
 thus become a part of the vague fluctuating instrument of 
 production commonly described as " Capital." 
 
 There is no such thing as an infinite progressiveness, in any 
 country, in the power of producing Wealth (i.e., commodities 
 susceptible of value) by constantly increasing the amount of 
 Means employed in its production. The Wealth-production is 
 inexorably limited by the available present demand, just as the 
 Means accumulation, which is in the main a mere charge on 
 the Wealth-production of the future, is similarly circum- 
 scribed in its effectiveness ; depending for its realization on the 
 productivity and therefore ultimately on the demand of the 
 future. So it comes about, that but a small portion of that 
 which is, so to say, automatically " laid by " out of Means, can, 
 say in Britain, at the commencement of the twentieth century, 
 or in any similar country that has, so to say, attained to its com- 
 mercial majority, find any complete and adequate opportunity of 
 beneficial employment as " Capital " in the country itself.* The 
 
 * The solution of this problem, were the necessary statistical elements attainable 
 with anything like accuracy, would go far to resolve all those questions which con- 
 cern the power of the nation to overcome the difficulties of poverty : it would bring 
 about in fact the solution of the main social problem itself. Unfortunately here 
 statistics fail. There would be no great difficulty in roughly ascertaining the 
 pecuniary figure of the entire income of a people, for it bears a fairly constant 
 relation to the total amount raised by taxation. Lord Avebury estimates the entire 
 taxation of the United Kingdom at £260,000,000 per annum, £121,000,000 State, 
 £139,000,000 local, and there is reason for holding the entire income to be as nearly 
 as possible nine times that amount, or £2,340,000,000, but the total on the other 
 side of the account, the expenditure on life as distinguished from mere senseless 
 
c. XIII.] TAXATION (DIEECT) 239 
 
 surplus has to be spilt year by year, in buying up claims on the 
 future industry of other nations, in those futile ventures of com- 
 mercial enterprise which are called into existence annually to go 
 into liquidation in the course of the following year, to a great 
 and far more beneficial extent in works of benevolence, too often 
 wasteful and ill-organized ; while far more than should be goes 
 in foolish and wearisome but on the whole not altogether male- 
 ficent luxury, which affords remunerative employment to that 
 part of the labour of the country for which room cannot be 
 found in the ranks of " productive " industry. Much is expended 
 by no means without its own good result in amusement and the 
 satisfaction of aesthetic tastes, and by other safety-valves and 
 escape-pipes of great variety; so that somehow the excess 
 becomes innocuously absorbed, and the extreme evils of over- 
 capitalization are avoided. There is not now, and as far as one 
 can see will never be, any permanent deficiency of Means in the 
 world susceptible of being turned into Capital in any part of it ; 
 though it is clear enough, that there is manifested at times and 
 among different nations a marked reluctance on the part of the 
 possessors of Means so to convert them into " Capital " ; at which 
 times there comes about what is called a " scarcity of Capital," 
 which is simply a symptom of a lack of confidence ; a social and 
 economic ailment closely analogous to those illnesses of weakness 
 which in the human frame are classed as arising from a " defective 
 circulation of the blood." 
 
 And this leads us naturally to the consideration of what will 
 be seen to be the true objection to any exorbitant increase of 
 taxation of incomes ; especially to what is advocated by some in 
 the way of a " progressive increase of taxation." For this in 
 reality is but one instance of the difficulty of laying hold of 
 Means which has been pointed out, and which has to be steadily 
 
 extravagance and wastefulness, there is no means of estimating even approximately. 
 The difference between the two has been roughly estimated at between three and 
 four hundred million pounds per annum. It ought to be ascertainable with greater 
 accuracy, and here there is need of the ingenuity of the scientific statist, for the 
 actual surplus obviously varies greatly from year to year. Next comes the question 
 what proportion of this is on the average "invested abroad," which is still more 
 variable and difficult to average. For the year 1907 this was' stated at £70,000,000. 
 For 1908, during which year for some reason the public confidence in the stability 
 of British finance seems to have been temporarily shaten, there is no doubt that 
 the sum of British contributions to foreign investment rose to £148,000,000. Last 
 comes the vital question how much is left over capable of being taxed for public 
 purposes ; how much is somehow otherwise spilt, and ought to be collected in 
 overflow channels and turned into fresh reservoirs of State-benevolence. See 
 post, p. 349. 
 
240 THINGS AS THEY ARE 
 
 insisted on, as the real and insuperable obstacle to the 
 realization of all collectivist and communistic devices whatever. 
 This is the essential timidity and fugitiveness of all Means. 
 This quality it is which imposes the real limit to the taxation of 
 Means in the hands of its possessors. Beyond a certain point it 
 is impossible to tax them, for they will disappear, flying always 
 for employment, whether as Capital or as a part of the apparatus 
 of life, to the country in the world in which the possessors hope 
 to be subject to a lighter burden and enjoy greater security. 
 An amusing example of this truth has been afforded within the 
 few months immediately preceding the writing of this chapter 
 (February, 1908) ; certain British companies carrying on lucrative 
 industries abroad and numbering many foreigners amongst their 
 shareholders, at one time found it convenient to have offices in 
 London, whence their very large profits were distributed. And 
 the occasion was taken, rather iniquitously, to subject those 
 shareholders who were foreigners, and also their British associates, 
 to an income-tax of five per cent., on the ground of the 
 nationality and domicile of their concerns. Of course the escape 
 from this extortion was a very simple affair for them. The 
 offices were removed as soon as it was decided that the profits 
 were legally taxable here, to other centres where power is less 
 unconscientious or the needs of State-finance less urgent ; Paris 
 or Amsterdam, as the case may be. The industrial operations 
 went on as before, their profits divided among the same share- 
 holders as before ; but by a stroke of the pen so much income, 
 which had before been reckoned in as part of the income of the 
 people of the United Kingdom, thus became, without any sort of 
 transfer of shares or movement of Capital, a part of the profits 
 of France or of Holland, by a simple change of address. The 
 State was the loser by its too great greed. The people who col- 
 lect the income-tax from British shareholders have now to go 
 a-hunting with " schedules " and " returns " and other devices of 
 inquisition, as best they can, in order to dip their pipkin into 
 the buckets of the individual British participators, instead of 
 simply fixing their pipe at the source itself from which the stream 
 flows, as they did when able to assess the profits of the entire 
 undertaking domiciled in Britain. Now this process of transfer 
 is a simple one ; and it, or something more or less analogous, 
 will always keep on repeating itself at each fresh attempt to 
 clasp the unseizable. Means being essentially international and 
 
c. XIII.] TAXATION (DIEECT) 241 
 
 indefinitely interchangeable, it follows therefore that as soon as 
 exaction reaches a point considered oppressive, " Capital," the 
 enterprise and apparatus of manufacture, and Energy, its power 
 and motive, will tend to transfer themselves to the land of the most 
 profitable and secure production. So, likewise, will commerce 
 and finance, which determine the localization of industry, and 
 which unerringly direct the stream of Capital in the line of the 
 least economic resistance ; and the employment of labour must 
 likewise migrate towards the locality of minimum exaction, and 
 desert the country of oppressive taxation. If the civilized world 
 were to turn simultaneously collectivist, some new haven of rest 
 for Means would be secured in some hitherto uncivilized country, 
 which would be rapidly turned into an Alsatia for proscribed 
 " capitalism " and prosper accordingly ; while on the contrary the 
 country which first puts in practice the doctrine of the collectivist 
 (the rest of the world remaining individualist), must inevitably 
 be the first to find itself deprived of all forms of Means whatever, 
 except in the useless shape of those commodities of " fixed Capital," 
 as Adam Smith called it, which have already been irretrievably 
 devoted in it to specific employment in production, and which 
 for commercial purposes will thenceforth be valueless idle 
 machinery, tenantless mills, deserted warehouses and unsaleable 
 stock. This point is introduced here (though its real place would 
 be in Chap. XVIII.) for the purpose of emphasizing the fact that 
 there are very obvious limits to the possibilities of the imposition 
 of income-tax ; which are, those beyond which Means will refuse 
 to remain to be taxed. Therefore deeply as thoughtful men are 
 compelled to sympathize with those (among whom the writer 
 must class himself) who deplore the actual concentration of what 
 is commonly called Wealth but which consists entirely of Means, 
 in the hands of a comparative few ; and the disastrous and 
 undoubtedly correlative poverty of the many; even those who 
 long for some way to remedy the terrible inequalities of com- 
 mercialism, if it were only possible, by some appropriation by the 
 State of the unnecessary surpluses of the few to make good 
 the deficiencies of the many, have to abandon the notion of 
 forcible confiscation by taxation. So obviously is it impossible 
 to escape the conclusion that the dream is destined to disappoint- 
 ment ; or, to put it more appropriately to the purpose of the 
 present chapter, that there is an insurmountable limit somewhere 
 to the possibility of increasing the Means at the disposal of the 
 
 T.A. K 
 
242 THINGS AS THEY AEE 
 
 State for whatever purpose, either by general augmentation of 
 the percentage of contribution from income, or by any special 
 contrivance by way of a progressive enhancement according to 
 the " Wealth " of the individual contributor. 
 
 Of course there are always two ways by which the State can 
 tax the stream of Means to fill its cistern, either by seeking the 
 source or by following the rills ; and it has been found in practice, 
 that it is by far easier and more ef&cient to follow the legal 
 adage and adopt the former. Now Mr. Fawcett* has pointed out 
 unanswerably, that to make a tax on incomes progressive in rate 
 according to the amount of the fortune, this simple method of 
 collection from the source must necessarily be abandoned, and 
 each individual subjected to a rigorous inquisition into his income 
 and all its sources, similar to that which in the United Kingdom 
 he is now compelled to undergo in respect of his personal earnings 
 in a business or profession. To the efficiency of this method 
 of inquiry there is an obvious limit, as things are. Because, 
 though each man may reasonably be asked to facilitate the 
 inquisition into his personal earnings by keeping and producing 
 simple cash books of receipt, the machinery that would have to 
 be invented and the rigour with which it would have to be applied, 
 in order to compel discovery from each fund-holder, stock-holder, 
 share-holder and bond-holder of the amount of income invested 
 by him or on his behalf, would be so oppressive as to induce a 
 tendency towards the exodus of the wealthy and a withdrawal 
 from the country of their purchasing-power, and of the demand 
 which their presence thus creates, to other and less rigorous 
 climes. Mr. Fawcett has also shown, that no complication of 
 ingenious inquisition could be devised adequate to counteract the 
 infinite opportunities of deception, concealment, and evasion in 
 such cases ; and it may be added, that the engine of torture would 
 have to be applied to all men, honest and dishonest alike, and 
 become so intolerable an oppression as to be impracticable, unless 
 accompanied by a universal prohibition against the emigration of 
 the well-to-do. Practically the thing is unthinkable, and must 
 be dismissed as a mere chimera of the unpractical theorist. It 
 is not in this way that the unnecessary Means of the over-opulent 
 can be effectually taxed. 
 
 Similar considerations apply also to any financial scheme 
 based upon the idea that an income-tax can be collected at an 
 * " Manual of Political Economy," Book IV., Chap. II., p. 561. 
 
c. XIII.] TAXATION (DIEECT) 243 
 
 indefinitely increasing rate even without any discrimination of 
 percentage against the more wealthy. In times of national stress 
 and danger the exigencies of a common peril will for a year or 
 two induce those who have incomes derived from " investment " 
 to acquiesce in a temporary enhancement of their hurden. But 
 at all times the tendency of Means to escape from over-taxation, 
 whether by concealment, by devices of inscription in the names 
 of nominees or by emigration to foreign parts and the abandon- 
 ment of a fixed domicile in the country of exaction, must combine 
 to render a tax of this nature less and less proportionally pro- 
 ductive the higher the rate at which it is assessed. Every 
 additional one per cent, of contribution by way of income-tax 
 beyond a certain point (which may perhaps be indicated in the 
 United Kingdom as somewhere about the present rate of five 
 per cent.), must lessen the productiveness, so to say, of each penny 
 in the pound exacted ; and with each increase beyond such a 
 rate, a tendency must progressively occur for Means to find its 
 way of escaping amercement altogether. And it will in the 
 result be noted, that with two exceptions, every mode of taxation 
 in turn has its own insurmountable limit of productivity ; and 
 that what is true of direct taxation in this regard, becomes, by 
 the action of a different set of causes, still more obviously true of 
 that taxation of commodities which is called "indirect," and 
 which has to be dealt with further on. 
 
 Attention has been directed incidentally to that mode of direct 
 taxation of the income of the individual which assumes the form 
 of a rate levied on the annual value of his habitation. This is 
 something by way of being intermediate between a " hut-tax" and 
 an "income-tax." Inasmuch as the vast majority of human 
 beings must have some fixed shelter wherein to lay their heads, 
 they can be compelled to contribute according to their place in 
 space, and each morsel of space can be scheduled for the purpose 
 in a sort of huge scale map of taxation, from which, except for the 
 outcasts who sleep under the hedges and in the parks, there is 
 no escape for a human being. This impost therefore partakes 
 of the comprehensiveness of the hut-tax ; while in so far as it is 
 roughly proportional to the presumable Means of the inhabitant, 
 it becomes a sort of unscientifically adjusted and exceptionally 
 oppressive income-tax, levied by far the most oppressively in 
 truth on the poorest class, and admitting no exemption of 
 indigence, for it can be cast in the first place on the owner or 
 
 B 2 
 
244 THINGS AS THEY ARE 
 
 occupier, leaving it for him to recoup himself from the tenant by 
 way of rent, adjusted in amount to the rental of each house, a 
 value which is in itself a fluctuating function of demand and 
 supply. Therefore this basis of taxation is the most unscientific 
 imaginable, pressing always most severely on those who dwell in 
 the poorest and most over-crowded districts, where the demand 
 for housing is the most keen ; so that the lower down one gets 
 in the scale of comfort, the more proportionately severe the 
 burden of exaction from the citizen ; and the more numerous his 
 family, the more he has to pay. 
 
 And the impost has this additional and subtle cruelty, that 
 those subjected to it, though they pay it with increasing difficulty, 
 do not realize to whom they pay, and that the intolerable exaction 
 of the State which expresses itself in the rates they have to 
 pay, goes, not to the landlord who collects it in and with his 
 rent and pays it over, but to the municipality, which pretends to 
 be their servant, charged above all things with the care of their 
 welfare. Nor does this exhaust the list of vices inherent in this 
 mode of appropriating the State's share of the income of the 
 individual, which is so much beloved by a certain school of 
 economists ; for not only the habitations of men but their places 
 and possibilities of industry and employment are subject to the 
 same device. The industrious producer is taxed twice over. 
 Contribution is levied on the same bit of space by two engines 
 of exaction at once; by the State, in the form of " income-tax " 
 and "inhabited house duty"; and by the government of the 
 locality in the more formidable form of " rates." But this 
 really makes no difference to the sufferer, except that the latter 
 and greater part of the contribution is levied by elected 
 individuals less accessible on the whole to the deterrent in- 
 fluences of public opinion thatt State politicians, through officials 
 less constrained by " service traditions " of probity than a 
 State bureaucracy. Eates lend themselves more readily to the 
 opportunities of dishonest plunder* which render necessary the 
 employment of an army of inspectors and auditors employed 
 by central authority, to detect and circumvent the reckless 
 improvidence and the personal acquisitiveness of the delegated 
 local administrators. But in its broad results, this form of 
 taxation is equally oppressive whether employed by the central 
 or the local authorities. One of the most pressing problems of 
 
 * Aiae, p. 231 
 
c. XIII.] TAXATION (DIEECT) 245 
 
 the day in this country is how to lessen the weight of " rates " 
 on those least able to bear their burden ; above all, how to 
 struggle against the efforts to increase them that emanate from 
 those politicians who specially pose as the friends of the 
 indigent. 
 
 Now sufficient has been said * to indicate the danger of an 
 improvident creation of municipal indebtedness. Bach fresh 
 emission of these securities involves its corresponding addition 
 to the oppressive " rates " of the locality whose credit is most 
 severely pledged. Such a system may be in operation for a 
 long series of years, before the fact becomes realized that the 
 burden of indebtedness is getting beyond the paying power of 
 the locality. The interest on the debt will continue to be 
 punctually and apparently automatically paid, till the breaking- 
 point is reached, and Means have escaped to such an extent from 
 employment in the over-weighted neighbourhood, gradually, 
 insensibly, that at last there is not sufficient left on which to 
 levy. As with States, so with their subordinate municipalities. 
 No promise or mortgage is eternal ; and though every promise 
 to pay is ostensibly unconditional, nevertheless it postulates the 
 possibility of payment, and the existence of a fund out of which 
 it can be paid. It is a mere hasty generalization for any 
 organization of men to flatter themselves that because for, say, 
 fifty or even a hundred years they have continued to increase 
 in riches and show a yearly augmentation of taxable capacity, 
 therefore their solvency is subject to some eternal law of pro- 
 gressive augmentation. One can take a concrete instance from 
 a district of England with which the writer happens to be 
 familiar. A certain limited area of the Midland counties 
 overlies the empty cubic space in which was once situated a seam 
 of the finest coal, ten yards in depth ; at the present moment 
 all that is left of the huge and valuable deposit are a few 
 crumbling " ribs and pillars," already insufficient to support the 
 squalid flimsy houses which, propped up at varying angles from 
 the perpendicular and in a more or less ruined condition, 
 disgrace the surface. The inhabitants still continue to exercise 
 as best they can the most grievously underpaid of all the forms 
 of metallurgical industry, the output of which is steadily 
 decreasing and the wages for which have already reached starva- 
 tion level under the pitiless pressure of foreign competition : the 
 
 * Ante, pp. 29, 30. 
 
246 THINGS AS THEY ARE 
 
 making of wrought-iron nails and chains. Now, if in the place 
 of the sad and squalid hamlets where these industries linger, 
 there had happened to be built over what are now the chasms of 
 the ten yards coal in "Worcestershire and the adjacent parishes 
 of Staffordshire a " progressive " city dependent on such a staple 
 industry, and if its municipal authorities, in emulation of their 
 neighbour Birmingham, had borrowed and expended generous 
 sums on the provision of what at the time would have been 
 imagined to be permanently " productive " public works, and 
 thereby " created Wealth," as Mr. Shaw would put it, and 
 generously put municipal securities on the market ; from what 
 source at this moment would they be able to draw the annual 
 amount due to satisfy the claims of their creditors ? And what 
 would be true of this momentary development of a particular 
 industry dependent upon a rapidly exhaustible source of Wealth, 
 becomes more or less true in turn of each locality in every 
 country and in the world in turn. Now it is not the impoverish- 
 ment of the person who has chosen to lend his money on the 
 security of such evidences of indebtedness that the economist 
 troubles himself about : the investor of Means takes his risk 
 and has to acquiesce in his vicissitudes without lamentation. 
 The really terrible picture is that of those who suffer while the 
 process of impoverishment is drawing towards its close, and 
 who, desperately clinging to a reputation for solvency, are com- 
 pelled to struggle to provide from steadily diminishing resources 
 the increasingly oppressive payments needed to preserve their 
 "financial respectability." "The greatest happiness of the 
 greatest number " is quite a beautiful phrase, but the real 
 problem of humanity should rather be described as that of 
 finding some sort of escape from the extremes of indigence and 
 misery for the mass of the people — the least suffering for such 
 as are not past all help. 
 
 Now in this country a wise prudence is exercised by forbidding 
 the incurring of any additional municipal indebtedness without 
 State authorization ; one of the conditions of which is due pro- 
 vision for the termination of the liability. You may borrow, say, 
 for forty years, say for fifty or even sixty, but at the end of the 
 time allowed the principal must have been paid off and the 
 interest must cease. In countries where this safeguard is not 
 enforced the risk of bankruptcy becomes a certainty, the only 
 doubt being as to the precise moment when the inevitable shall 
 
c. XIII.] TAXATION (DIRECT) 247 
 
 occur ; a practical question of administration is whether even 
 under the stringent conditions enforced by British legislation, 
 sufficient care is taken against the overloading of the public 
 back ; for the opportunities for " local improvements " occur 
 with an increasing frequency, and many public works represent 
 themselves as prospectively remunerative and productive of 
 income ; which in reality* are mere devices for turning into one 
 channel a flow of Means which previously followed another, and 
 therefore add nothing to the total effective Wealth production of 
 the community ; which is what in the ultimate result has to pro- 
 vide everything. So that it occurs, even in the best guarded 
 country, that the increase of indebtedness tends to proceed at a 
 greater rate than can be secured by the provision for its pro- 
 gressive amortization. This of course is a question of detail, 
 and the only practical suggestion lies in the direction of increased 
 stringency and vigilance in the authorization of local " loans." 
 It is probably less the utility of the proposed improvement or 
 the momentary public opinion of its desirability, than the prospect 
 of the locality's remaining able to afford the interest on its cost, 
 that the inspectors who hold these inquiries should be instructed 
 most carefully to investigate. 
 
 * Ante, p. 200. 
 
CHAPTER XIV 
 
 TAXATION (dibect) (continued) 
 
 It is an interesting and vital question, to what extent it is 
 expedient for the State to exercise its power to absorb Means in 
 the act of their transmission from a deceased person to those 
 who ask to be allowed to succeed him. Now British laws in this 
 respect strike one as just and moderate in their two main 
 features— the one which imposes a progressive duty in propor- 
 tion to the remoteness of kinship of the successor to the testator 
 or intestate, and the other, that by virtue of which the percentage 
 of the inheritance claimed by the State rises in rate according to 
 the amount of the net property left by the deceased. Into qaes- 
 tions of figures and degrees it is not proposed to enter; but 
 if equality and justice are to be followed it seems that landed 
 property, which now pays a series of succession-duties of its own, 
 should contribute to the same extent as other sorts, while in 
 addition some further fine ought to be levied upon it to counter- 
 balance the exceptional advantage of the durability of land, to 
 prevent this from being a perpetuity. 
 
 It certainly appears that the British exactions on the inherit- 
 ance of Means do not err on the side of severity, and would be 
 susceptible at need of extension in certain directions without 
 incurring any imputation of harshness. In no particular is this 
 more apparent than in the laxity with which claims are admitted 
 on the property of intestate persons. A man dies intestate, for 
 instance, without direct descendants or any collateral relatives 
 whom he is likely to have known or cared for. As far as regards 
 any meritorious claim of his "next of kin" or "heir at law" 
 the properties he has left are bona vacantia. Then up jumps 
 an irrelevant person, and claims to succeed or participate, on 
 the ground forsooth that he had a common ancestor with the 
 deceased, say five generations back ! Can any more fatuous 
 absurdity be imagined than such a thing ? 
 
 If in his account of the institutions of the country of " Laputa," 
 Swift had described such a custom to a public not already inured to 
 it, the absurdity would have afforded amusement as a whimsical 
 
c. XIV.] TAXATION (DIEECT) 249 
 
 illustration of grotesque folly. Nor is the general recognition 
 of the right of foolish and capricious testation any more worthy 
 of respect than the claim of the remote kinsman's to succession 
 ab intestato — say the " right " of the fifth cousin. Some silly old 
 woman has a caprice for benefiting by her will a chance fellow- 
 passenger in a railway who had handed down her bag to her on 
 the platform and leaves him a great estate — such things have 
 been known — What conceivable reason is there for humouring 
 this whim ? A certain justification of meritorious claim should 
 be established to warrant the succession of any stranger in blood. 
 Failing which, common sense suggests the sweeping of the whole 
 property into the fiscus ; and so with every similar exhibition of 
 fatuity. The " inofi&cious testament," as the French law calls it, 
 should be simply disregarded, and in default of claim of a certain 
 degree of merit, the property should be claimed for the benefit 
 of the nation. No meritorious person ought to suffer ; but we 
 have need of the values so squandered under the sanction of a 
 silly law, for real and important purposes of State. Again ; in 
 Chap. XVIII. it will be seen what a dangerous practice it is to 
 allow a free hand to testators to endow benevolent institutions 
 without some limit of extent. This conduces at once to an 
 absurd wastefulness, by reduplication of competing institutions* ; 
 and also to a noxious form of corruption ; for a superfluous or 
 over-endowed foundation rapidly becomes encrusted with parasitic 
 growths of " jobbery." There should be a strict limit to the 
 exercise of this device of posthumous benevolence. 
 
 It may be impossible to admit to participate in pecuniary 
 benefaction only such charities as can be certified to be beneficent 
 in their action. But at any rate beyond a certain proportion of 
 his property on the whole, and beyond definite limits of amount 
 in the case of each object of bounty, no testator should be allowed 
 to deprive the State of property, to succeed to which there is no 
 individual whom he reasonably desires to benefit or who may be 
 adjudged to have a reasonably meritorious claim. The " pious 
 founder " has in the long run proved in many cases a public 
 nuisance. Spontaneous individual beneficent action in a man's 
 lifetime is the most meritorious source of income of national 
 
 * In the tiny island of Hongkong, for instance, there has been a perfect epidemic 
 of the founding of unnecessary hospitals which compete fiercely with each other for 
 the infrequent patient. Excellent and beautifully appointed palaces of disease 
 line the picturesque heights, mostly empty of patients and full of excellent doctors 
 and charming nurses. 
 
250 THINGS AS THEY AEE 
 
 benevolent institutions. But yet benevolence must increasingly 
 become a function of the State. Of the objects and purposes 
 to which testators have been allowed to devote their wealth, 
 some are actively mischievous ; more are valueless ; and others 
 in due course become obsolete.* Meanwhile other uncared-for 
 needs develop themselves and spring into prominence, entirely 
 unanticipated and unprovided for, which cry loudly for the appli- 
 cation of some such funds as those which are being wasted in 
 deference to the will of some long deceased founder. No 
 testator, however sane and well meaning, can possess the fore- 
 sight and wisdom to anticipate for all time the real necessities 
 of posterity, which may not develop for many years after his dis- 
 positions have been made, and for which the State has often 
 from absolute necessity to provide the means of affording relief : 
 a great and constantly increasing burthen, which should by 
 rights be borne precisely out of those funds which the possessors 
 of Means find no suitable personal recipient to bequeath to. 
 
 The proposals of the writer go to the following extent: — 
 (1) Without increasing taxation on the successions of husbands, 
 wives, and direct descendants, greatly to stiffen the rate on the 
 succession of collaterals ; rising to fifty per cent, at least in the 
 case of strangers not occupying the position of personal depen- 
 dants. This class may think themselves undeservedly fortunate 
 it they are allowed to succeed to anything at all. Except as a 
 sentimental concession to some principle of capricious and 
 posthumous omnipotence, there is no conceivable reason why 
 they should. 
 
 (2) A strict limit should be placed on what may be bequeathed 
 for public or charitable purposes, both as to the proportion of 
 the total property that may be so disposed of, and as to the 
 amount that may be allowed to be taken by any one institution 
 from any one estate. If a man really has greatly at heart the 
 cause of any institution he should be at liberty to benefit it in 
 his lifetime by transferring to it what he destines for it. 
 
 (3) As regards the tax on an estate as a whole, the contribution 
 of the greater and more unwieldy fortunes may be subjected to 
 some further relative increase, and the percentage on the trans- 
 mission of excessive Means can be raised to a moderate extent. 
 This operation, though, must stop short of the point at which 
 
 * Like the old institutions in London for redeeming persons sold into slavery in 
 Barbary. 
 
c. XIV.] TAXATION (DIEECT) 251 
 
 the yield of the taxation would he sensibly lessened ; the point 
 at which it would be met by the possessors evading posthumous 
 amercement by going away to die elsewhere, taking their Means 
 with them. The present scale, running up to twelve or thirteen 
 per cent, in certain cases, provides a measure of contribution 
 for excessive fortunes not quite adequate to what is reasonably 
 due ; and cases might be imagined at which even the greater 
 part of a man's unnecessary Means were better held at the 
 disposal of the Government of his country after his death.* 
 It seems that the best hope of a nation lies in the direction of 
 dissipating at the termination of each life the over-accumulation 
 of Means that the chances of enterprise have happened to heap on 
 any individual. Over-accumulation by one has as its concomitant 
 a correspondingly diminished purchasing power of the community, 
 a hindrance to the general economic welfare. It is not that the 
 Wealth of commodities, which is all the real Wealth which really 
 exists, does actually follow the Means into one hand; no hand would 
 be large enough ; but that the absence of the Means of the poorer 
 classes, which arises from their abstraction from the general fund 
 into the pockets of the particularly over- wealthy man diminishes 
 the general national power of absorbing commodities, the 
 
 * Let us take the example of the well-known American gentleman named 
 Kockefeller, who has had the misfortune to appropriate a great part of the world's 
 supply of mineral oil ; to such an extent, that his life is a burden to him because of 
 his riches, which expose him daily and hourly to the inquisitiveness of the readers 
 of the more vulgar newspapers in a country in which vulgarity is not rigidly dis- 
 countenanced. As far as is known, there is nothing to be said against the character 
 of this gentleman. Some people even make a sort of hero of him because he is very 
 rich I His family are believed to be excellent and praiseworthy citizens in every 
 way ; therefore nothing offensive to them is meant by the simple inquiry, what 
 conceivable injury could be done to them or any of them, when the good gentleman 
 departs to the place to which it will be impossible for him to transport his riches, 
 if the share of each, say, in his lamentable over-accumulation were reduced by two- 
 thirds 1 Is there any conceivable human want of any one of these excellent people 
 which he would be unable to gratify with the balance ? Or, if it happens that 
 Mr. Rockefeller cherishes an ambition of founding some gigantic and benevolent 
 public institution, by means of the opulence with which he is cursed, one is disposed 
 to ask by what right any man is to be allowed by virtue of mere wealth, to set 
 agoing in his country, at his own will, to satisfy his own propensities, however 
 excellent and well-intentioned, some gigantic institution which must profoundly 
 afiect and modify all the other institutions of his country, and through them its 
 future and its interests, it may be centuries after he has been carried to the grave ; 
 at some time when, however right-minded and wise he may have been in his life- 
 time, he will have no power to intervene to modify and adapt its statutes to the 
 requirements of the future. 
 
 " Oh I " but you say, " if you interfere with the estate or the wiU of Eockefeller 
 you will take away the ' incentive ' to future Rockefellers to foUow in his footsteps, 
 and thus impede the general accumulation of Means." The answer to which is, that 
 obviously, for the good of any country, no more desirable effect could be hoped for 
 than to discourage others from like formidable over-accumulation. 
 
252 THINGS AS THEY ARE 
 
 " market " and internal demand, and also the physical well-being 
 and contentment of the great majority of the nation. 
 
 In a progressive nation, just as the production of commodities 
 takes care of itself and is always equal to the demand, so also 
 the accumulation of Means in private hands always far and away 
 transcends the legitimate opportunity for its profitable applica- 
 tion as Capital. The real dangers are over-production and over- 
 capitalization. 
 
 There are two partial exceptions to the rule that each mode of 
 taxation is subject to a strict limit beyond which it is impossible 
 to enhance its productivity by increasing its severity. They are 
 the possession of Land and the inheritance of Means. Of both of 
 these it is within certain bounds in the power of the State to take 
 such toll as it thinks best; and the greater the proportion it 
 takes, the more amply its coffers will be filled for the moment, 
 and the better it will be able to fulfil its constantly accumulating 
 duties. That much one has to concede to the " collectivist." 
 But on the other hand impartiality must part company with him 
 when he persists in ignoring the ultimate economic result of 
 over-appropriation in respect of either class of property. 
 " Justice " is a dangerous word, importing a conception of the 
 absolute and eternal into a science essentially dealing with the 
 relative and temporary ; one which cannot safely be used with 
 anything like scientific accuracy as a criterion of the practical 
 desirability of any institution custom or law. The only safe 
 ground is expediency, and this even in the last resource is seen 
 to be at best but an expression of empirical probability. But 
 " for all that, and for all that," men must and should be swayed 
 by the conception of what is "just," even though it is impossible 
 to define justice ; and in dealing with these two quite distinct 
 opportunities of direct taxation, it is neither desirable nor possible 
 to discard the notion that there is, though we cannot properly 
 appreciate it or formulate it, a something : law, attribute, 
 virtue, or however we may put it, which is " just " ; and which, 
 therefore, we know not why, mankind in their dealings are con- 
 strained to obey. Here, as in any other of its boundaries, the 
 territory of economics marches with that of ethics. 
 
 Land lies* always at the mercy of the State ; not only can 
 it not be removed by its temporary possessor, but it cannot 
 even be exchanged or transferred except as a defenceless something 
 
 * Ante, p. 157. 
 
c. XIV.] TAXATION (DIEECT) 253 
 
 which must always remain subject to the will of the State 
 in the very act of transfer, and which can only be enjoyed to 
 such extent and in such form as it may please the State at any 
 moment to permit. And this idea lies at the back of the notion 
 of Lassalle, and of Mr. Henry George,* that the land of a 
 country is essentially the " property " of the people of the 
 country, whatever that really means ; at any rate that it forms 
 the primary source from which their collective needs must be 
 satisfied ; and that it is not only the right, but the duty of the 
 State to see that it is so employed as to minister most effectively 
 to those needs. Lassalle and his followers did not limit their 
 collectivism to land alone, but included it as an item merely, in 
 their theory of the abolition of all private property. Mr. George, 
 on the other hand, seeing the impossibility of arresting the 
 flight of Means, concentrated his advocacy on the "nationaliza- 
 tion of land," and his ideal mode of effecting that, was by 
 progressively intensifying the taxation of " land- values," as the 
 true panacea for the ills of society, till all rent has been absorbed 
 in taxation, and the landlord exterminated. And next comes 
 good Mr. Wells, and explaining how painless and beneficent this 
 euthanasia is to be, invites landowners to crowd the portals of 
 his lethal chamber. The more modern school of collectivists, 
 for the moment, tend in the opposite direction, and are disposed 
 to subordinate the "nationalization of land" as an immediate 
 purpose, and concentrate themselves on the elaboration of a 
 scheme of removing the production of Wealth from the sphere 
 of the individual to that of the State by confiscating the existing 
 material Means of production (a device, by the way, which would 
 obviously not carry them far, without a corresponding provision 
 for an unlimited supply of further "Capital" to carry on with, 
 and therefore equally postulating the confiscation of all Means). 
 To all of these theories the common sense of mankind opposes 
 the deep-seated consciousness that a human being is not an 
 insect, that the instinct of property in itself is a sound one, and 
 that humanity being what it is, collectivism is impracticable. 
 " Common sense prevails " was the cry with which the Australian 
 working-men in congress contemptuously rejected the proposal 
 to organize themselves on a communistic basis. Whether this 
 common sense is in truth just, or whether it is but a survival of 
 barbarism, is a question, the arguments in relation to which it is 
 
 * Ante, p. 156. 
 
254 THINGS AS THEY AEE 
 
 proposed to sum up in a later chapter. For the moment we are 
 concerned with the " justice" and expediency of subjecting landed 
 property to special appropriation by the State, and the extent to 
 which, and mode in which, such appropriation might, if needed, 
 most advantageously be enforced to provide for the growing 
 necessities of the nation, which at all costs must be satisfied. In 
 some countries, notably in Britain, space is the most heavily 
 taxed of all things ; and the State supposes itself to be obeying 
 some great and beneficent " law," when it piles up its claim on 
 this process of the essential ingredient of every life and industry 
 of its citizens ; on the particular requisite without which industry 
 in every form is an impossibility. It thus taps industry at its 
 source, and congratulates itself on so doing as on the per- 
 formance of some sacred economic duty, inasmuch as thereby it 
 leaves the stream untroubled in its channel. 
 
 The incidence of " local " taxation, which is in Britain almost 
 exclusively levied on space in the form of lands and buildings, 
 counts for very much in the determination of the cost of pro- 
 duction of all things. If this condition of taxation were equally 
 applicable the world over, the citizens of one country would have 
 no cause to complain that their industry was unfairly handi- 
 capped by the competition of another less severely taxed in 
 respect of space. It would simply tend to the universal enhance- 
 ment of cost of production, which would have to be reckoned 
 with by the entire industry of the world in proportion as it 
 found itself in a position to need space for its prosecution to a 
 greater extent in comparison with the volume of the product. 
 It would pi-o tanto make ships, for instance, or complicated 
 machinery, or steel rails, or cotton-cloth greater in value than 
 they otherwise would be in comparison with other commodities 
 in the world the production of which needs to be less extensively 
 " housed." But where in one country as opposed to its rivals in 
 production, space is the main subject of taxation, then the more 
 roomy industries of that country are carried on at a necessary 
 disadvantage as compared with the same processes of other 
 countries.* To bring the question down to a concrete instance, 
 there is no doubt about it, that in the United Kingdom there are 
 certain industries, of which that of ship-building is a prominent 
 example, (the work of distribution carried on by railway 
 
 * Note the significant figures relating to the importation of metallic objects of 
 manufacture, aMe, p. 204. 
 
c. XIV.] TAXATION (DIEECT) 256 
 
 companies is a still more familiar case ; but here, though, the 
 industry itself is not directly subjected to world competition,) of 
 one which suffers injury in this way. Certain industries have to fly 
 from rates to preserve their existence, not only from rates directly 
 levied by the municipality on the space in which their processes 
 are carried on, but still more from that indirect result of rating — 
 the disproportionate cost of housing-accommodation for the human 
 labour involved, which finds its expression in augmented house- 
 rent, and therefore in the necessity for - an increased wage. 
 Thus the shipwrights of the Thames* were compelled by the 
 gigantic rates levied by municipalities along its banks to demand 
 higher remuneration for their labour from their employers. 
 And these latter, under the combined pressure of wages so artifi- 
 cially enhanced, and of the direct demands of taxation on the 
 space they themselves occupied for their "works," had to betake 
 themselves to other spots less heavily taxed ; while many of the 
 processes of a great firm in the North of England have to be 
 carried on by Italian workmen on the shores of the Bay of 
 Naples, where local rating is an unknown engine of exaction, its 
 place being taken by the much more vexatious but far less 
 oppressive " dasio " or octroi. For a time such an industry of 
 special skill will still survive in a country, whose workmen have 
 acquired an hereditary aptitude, and in this way the shock is 
 deadened and the ultimate fate of the industry obscured for a 
 time after the fatal stroke has been given. But human skill and 
 labour are as essentially international in the long run, as are all 
 other requisites of production; and if the processes of the heaping 
 up of municipal indebtedness and of the exclusive satisfaction of 
 national claims by the local taxation of space are allowed to 
 progress unchecked, as the self-constituted friends of the poor 
 demand, it requires no great insight, for instance, to predict that 
 in course of time the trade of building ships for the world's 
 commerce, which has already fled from the Thames to the Clyde 
 and the Tyne, will in due course depart from this island altogether, 
 and find for itself new centres of activity in Philadelphia, Stettin 
 or Osaka, or wherever revenue is raised less oppressively. 
 
 Outside of this particular mode of exaction, there is a land-tax 
 common to a greater or less extent in all countries of the world, 
 partly in the form of an income-tax, partly as an acreage-impost, 
 or rent. This, and the " Schedule B " of the income-tax form 
 
 * Ante, p. 113. 
 
256 THINGS AS THEY ARE 
 
 at present the national participation in the income arising from 
 land ; only the balance of land-income is left as a property-right 
 of the individual. In what way, and to what extent the State can 
 provide for its needs by further expropriation of the balance will 
 be a pressing question. Adam Smith in a much- quoted passage 
 pointed out, that for taxation to be tolerable and "just" it must 
 press with no greater severity on one class of owners than another. 
 It is impossible to demonstrate the truth of this generalization, 
 though the human sentiment of justice approves and endorses it. 
 But land remains, while all other "property" passes away, and 
 therefore it is not apparently just or equitable that the State 
 should concern itself to preserve to all eternity for the benefit of 
 their successors the rights of existing owners of land, in a profit- 
 ableness and inviolability which in the nature of things, cannot 
 possibly attach to any other sort of property. Governnient 
 stocks must sooner or later become unproductive, and every 
 conceivable obligation of men or of associations of men must in 
 course of time cease to yield its profits to the successors of those 
 who have employed their Means in its purchase. Wealth, in its 
 strict sense of commodities, is entirely ephemeral and is con- 
 sumed and wasted from day to day. And Means, which are so 
 to say the abstraction of it, partake of its perishableness. On 
 what ground after all does the land-owner found a just claim to 
 any sort of exemption for his "property," as he calls it (by 
 which he means that which he has hitherto been permitted to 
 appropriate,) from the universal perishableness of things human? 
 How can we assent to the doctrine that, while all other rights of 
 mankind are passing and ephemeral, those of the possessor of 
 space shall continue to be recognized intact as they at present exist, 
 till some prodigious earthquake has destroyed the very soil and 
 surface of the spot from which they arise ? 
 
 Much has been written respecting the ultimate " incidence " of 
 taxation. A tax collected from the pocket of one class, not only 
 may, but eventually must more or less indirectly effect some 
 modification of the economic conditions of every other, the 
 interdependence of different classes being the obvious and 
 primary result of the civilization of Man. The people who 
 legislate for the collection of the revenue of the State are 
 properly exercised in the effort, mostly vain, to prevent the 
 shifting of this burthen from manifesting itself oppressively, and 
 to the detriment of the weaker. 
 
c. XIV.] TAXATION (DIEECT) 267 
 
 Thus, as Mr. Fawcett (a very safe guide) pointed out with his 
 accustomed accuracy, it must more or less occur that a tax on 
 the Means of the wealthy will react on the lives of the workers, 
 it may be by diminishing their income from wages, or more 
 probably by depriving them to some extent of the opportunity of 
 profitable employment. Any excessive strain on one link of the 
 chain of society reacts on every other, more or less, and the 
 sequence of causes and effects is too obscure and subtly connected 
 to lend itself to anything like accurate prospective analysis. But 
 some things may be fairly predicted. For instance: in a country 
 like Britain, there is no reason to suspect that the general rate 
 of wage is on the whole likely to be seriously affected by 
 reasonable claims of the State to participate in profits.* Employ- 
 ment and wages follow demand ; and so long as the claim 
 remains fractional and proportionate, demand must continue for 
 energy to be expended on profit-bearing industry, though that 
 be less profitable than it would be if freed from the toll. The 
 danger of a tendency to lessen employment by limiting the appli- 
 cation of Means as " Capital " does not apply as yet with any 
 force to a country where even a steadily diminishing rate of 
 profit yet produces annually an increment of Means out of which 
 the requisite supply of Capital can so easily be raised, if the 
 possessors choose to keep up the enterprise of profit-making. In 
 fact, the " wages-fund " bogey is the hollo west of hollow turnips. 
 On the other hand in times of depression there will, even in 
 Britain, occur occasions when enterprise may suffer, not from an 
 insufficiency of Means to prosecute it, but from a temporary 
 disinclination of possessors to devote it to the purpose ; in other 
 words from lack of confidence. This, as things are, is but an 
 ephemeral and passing " functional derangement " ; but let us 
 beware how we neglect the symptoms till the disease becomes 
 chronic and " organic." 
 
 From this point of view the effect of those imposts which 
 assume the form, not of a mere levying of a proportion of profit 
 or income, but of a comparatively fixed charge such as " rates," 
 which vary less with the productiveness of the thing rated than 
 with the necessities of the authorities of particular localities, 
 has peculiarities which it is most necessary to note. An 
 instance, only one out of thousands available, has been given, t 
 
 * George, " Progress and Poverty," Book VIII., Chap. III., pp. 368—9. 
 t Ante, p, 255. 
 
 I.A. S 
 
258 THINGS AS THEY AEE 
 
 of an industry exterminated by the over-exaction of Means in 
 this manner. Even when some dQomed trade has ceased to 
 be profitable, "rates" continue to be exacted punctually in respect 
 of the premises in which it lingers, till these are abandoned 
 and go to ruin. And with each such abandonment, such is 
 the working of the remorseless system with which Britain is 
 cursed, the neighbouring properties must necessarily be taxed 
 at a higher amount to provide for the inevitable expenditure, 
 which in its turn must be enhanced by the local distress induced 
 by cessation of employment, so that the poorer a locality 
 becomes, the higher the " poundage " of local taxation, and the 
 more heavy the burthen cast upon the class least able to 
 support it. 
 
 In respect of housing accommodation, this oppressiveness 
 assumes a still more intolerable severity. In the poorer dis- 
 tricts of great towns in England the taxes on house-property, 
 national and local combined, rise not seldom to one-half of the 
 rental. Making allowance for the greater rent at which room- 
 tenements are occupied in proportion to the rentals of the houses 
 themselves, certainly not less than one-third of what the tenants 
 pay, enures in the result to the State and the municipality, in 
 respect of public charges. As things are, a great proportion of 
 what the State needs for local expenditure comes from the pockets 
 of the poorest class. Even this would not be so intolerable, were 
 it not aggravated by the abnormally high tenement rents due to 
 the local competition of demand, which again is a consequence 
 of an under-supply, induced by the unprofitableness of the 
 position of the builder and the house- tenant. It is a singularly 
 cruel dilemma. If the " rates " were suddenly lowered, this form 
 of "investment" would at once become ^ro tanto more profitable 
 to the owner, and the economic effect of the fall would be 
 gradual and slow; and not until after a weary interval of adjust- 
 ment would the supply of house accommodation revive by the 
 building of more new houses, and a cheaper scale of rents 
 eventually formulate itself. During the weary long meantime 
 before the supply of houses will have caught up the demand for 
 them, the rentals of the tenements would not fall though rates 
 were diminished. Competition for housing must keep them up, 
 BO long as there are people prepared to pay at a high figure, 
 in excess of the housing capacity of the district in which the 
 poor folk must dwell ; and every remission of rating or taxation 
 
c.XIV.] TAXATION (DIEECT) 259 
 
 must during the interval of adjustment, benefit only the owners 
 and lessees of this class of property. 
 
 Were it possible to induce the progressive congestion of 
 population in the towns to dissipate itself, the exaggerated over- 
 proportion of rent to the rest of the cost of existence, which is by 
 far the most striking evil of the poorer classes in the town, 
 would tend to disappear by lessening demand. On the other 
 hand, could an inexorable limit be imposed on the rating power 
 of localities, then an increasing security would lead to more 
 extensive enterprise by builders, and a similar result ensue from 
 an extension of supply; but either cause must operate slowly. 
 And meanwhile nothing has really been done in either direction. 
 Men of benevolent intention meet and discuss the situation in 
 philanthropic helplessness, inclined to agitate first in the one 
 direction and then in the other. And the cruelty of the situation 
 lies in that these, the only two conceivable remedies, are mutually 
 counteractive, and that therefore no practicable step can be 
 taken to bring the one into operation, without inevitably making 
 the other to the same extent more difficult to apply. For, 
 as above pointed out,* in their essential nature demand and 
 supply are not contrary but correlated forces, and tend 
 inevitably to rise and fall together. If you lessen the first, the 
 natural tendency is to weaken the second, and vice versa. " Down 
 with the rates " and " Back to the land " are therefore watch- 
 words implying principles mutually destructive. 
 
 But even the disastrous congestion of the towns is in itself a 
 less incurable evil than the correlative depletion of the country 
 and the gradual disappearance of the rustic. Investigation has 
 demonstrated that it is this centripetal movement of the popula- 
 tion which pours into the town a steady stream of healthy 
 humanity from the country, on which vitality depends ; and that 
 when that stream begins to dwindle, the towns " where wealth 
 accumulates and men decay " must dwindle in their turn, and the 
 economic potency of the nation disappear with them. The 
 humbler of the dwellers in towns have been proved to be short- 
 lived and to tend to degenerate, needing a steady flow of fresh 
 blood from the land to keep them up. The children of those 
 who thus migrate, bred in a feverish and congested environment, 
 lose in animal vitality a power ill-compensated by more acute 
 mental development ; and those bred from them form in their 
 
 * Ante, p. 127. 
 
 g 2 
 
260 THINGS AS THEY AEE 
 
 turn a still frailer third generation. " Mox daturos progeniem 
 vitiosiorem." This is not theory, but scientifically ascertained 
 fact. And one of the vital problems of the future seems there- 
 fore to be, how to keep on rural land a sufficiently numerous and 
 strong vital population, from which without dangerous depletion 
 may be drawn the successive swarms needed to occupy the 
 industrial hive of the town. This therefore is a problem of 
 economics as well as of anthropology, and it will be seen that its 
 most potent factor is precisely the action of the State in the 
 organization of taxation and the regulation of the institutions of 
 rural districts. 
 
 By the irony of undesigned consequence, which so often turns 
 legislation intended to further it into an influence maleficent to the 
 interest protected, the sad vicissitudes of agriculture in England 
 may for the most part be traced to the Statute of Elizabeth. 
 This was adopted mainly for the object of ensuring to those 
 interested in the cultivation of the land the certainty of a 
 supply of labour at the cheapest possible rate. The unavowed 
 purpose of the original poor law and of the " law of settlement " 
 ■which was its necessary corollary, was to re-establish agricultural 
 serfdom under the specious disguise of a provision for compulsory 
 benevolence. The "law of settlement" has disappeared, and 
 the Poor Law Act has been so entirely modified by subsequent 
 legislation as to present an entirely different aspect and series of 
 economic effects, from anything which was contemplated at the 
 time of original legislation. But the inveterate habit of the 
 insufficient wage has continued to cling to agriculture over at 
 any rate the greater part of the area of South Britain, and the 
 acquiescence in the poor-house as the proper place for the aged 
 agricultural worker, the home to which in the nature of things 
 it is his blessed privilege to look forward towards the end of his 
 struggle, still survives to curse an industry which, in the nature 
 of things, should, it seems, be the most bountiful of all. 
 
 Under such a system, denying hope to labour, anything like 
 scientific intensive culture cannot be generally applied; and 
 economically it is only by the application of this that the cultiva- 
 tion of the land can take rank as an industry productive of 
 -adequate result. 
 
 By the alienation of the land for sufficiently protracted 
 periods, the incentive can be supplied for the outlay of the Means 
 'without which scientific agriculture is impossible. It must be 
 
c. XIV.] TAXATION (DIEECT) 261 
 
 confessed that hitherto the ample incentive of an ostensibly 
 " absolute and eternal " freehold has not generally evoked in 
 our country the adequate application of skill and Means to 
 agriculture, so as to conduce efficiently to a productiveness 
 anything like adequate to the opportunity which Nature has 
 afforded. Given Capital, skill and industry, reasonable manage- 
 ment, and the necessary enterprise and daring to take risks 
 and make experiments, it would be difficult to set bounds 
 to the possibilities of enhancement of agricultural production. 
 One does not need to endorse the over- generous conclusions 
 of Mr. Upton Sinclair,* founded on a work by Prince 
 Kropotkin, to appreciate the fact that agriculture in England 
 still remains backward and unscientific. It is only necessary 
 to walk through the countryside in Warwickshire or Essex, 
 or even in parts of Kent or in Devonshire, to understand 
 that a sadly poor result is being derived from a bountiful 
 opportunity of Nature ; and for this, for the depopulation of the 
 country and the overcrowding of the city, for the abject and 
 wasteful dependence of the nation for at least seven-eighths of 
 its food on the chance of supply from abroad, one cause is the 
 most responsible : which is the ineptitude of State action in the 
 domain of taxation, and especially in respect of the provisions 
 made for dealing with poverty and want, which are essentially 
 diseases affecting the nation as a whole, and which should be 
 alleviated out of the resources of the State, and not by delegating 
 the duties of relief to local authorities fit to deal only with 
 parochial exigencies. And part of the blame rests also on the 
 shoulders of the excellent class of men whose caste-instincts 
 of feudal domination determine an opposition not always 
 intelligent to any proposal that seems apt to clash with the 
 supremacy of each magnate in his own district and over " his " 
 ancestral acres ; for every proposal for extending national control 
 is open to that objection. The blind " conservatism " of a 
 "propertied" class hinders any effective improvement in the 
 conditions of land-using. 
 
 But above all we suffer from the mistaken notion on which our 
 local expenses are based. The provision of services and con- 
 veniences for the use of a .locality has to be a charge on the 
 people who dwell there: gas, water, lighting, sanitation, the 
 paving of streets, possibly even the making and repair of 
 * " Industrial Republic," pp, 88—92, 
 
262 THINGS AS THEY AEE 
 
 highways (though there is much doubt of this), and certain 
 other local services. Many of these enterprises are so remotely 
 productive that the localities cannot embark upon them in a 
 directly " commercial " spirit; the services being necessary for 
 the particular locality, the means to provide them must be 
 found by each from its own resources, irrespective of any direct 
 profit to be obtained from the enterprise. And if no better way 
 of providing for them can be invented, some charge on income 
 for these objects must be imposed on the land of each local com- 
 munity. But no excuse except the inelasticity of the collective 
 revenue of the State can be suggested for charging on the limited 
 local income the entirely national needs of the education of the 
 young of the country, the services of police, the administration 
 of law, and the relief of distress — absolutely national matters, 
 the obvious consequences of the neglect of each of which tells on 
 the welfare of the nation as a whole, and does not especially 
 concern the particular locality the authorities of which may have 
 proved themselves remiss or corrupt or unskilful in their 
 administration. 
 
 Of late years in this country steps have been taken to allocate 
 to local authorities defined proportions of State revenue in aid 
 of the always insufficient local resources, and in return, a more or 
 less defined control over these authorities has been increasingly 
 and by no means unnecessarily claimed by the central govern- 
 ment. Now this surely is a most illogical and cumbrous device. 
 England is a country of ostentatiously illogical institutions, and 
 it is the fashion to say that these work beneficially almost in 
 direct ratio to their illogicality. But with respect to agricultural 
 land and its burthens, the mischief is, that the enforcement of 
 local liability to satisfy the needs of a whole series of national 
 requirements puts on the localities a burthen that has to be met 
 by heaping taxation upon the occupation of land and buildings. 
 
 Now this not only weighs on a particular form of industry to 
 the exoneration of others ; but so heavily on that, as to impede 
 production, and depress and disperse the healthy population ; to 
 which the nation has to look for its vital replenishment. Where 
 each additional cottage put up by an owner, even each needed 
 improvement he makes in existing hovels, becomes forthwith an 
 opportunity for taxing him afresh, and to an extent dispro- 
 portionately large in comparison with the pecuniary benefit 
 which he obtains by his enterprise, things must go on in 
 
c. XIV.] TAXATION (DIEECT) 263 
 
 progressive degradation. Thus it is that the housing accommo- 
 dation of rural districts tends steadily to fall helow the needs of 
 the people. The demand is normally in excess of the supply, 
 and rents rise with it, ■while " rates " continue to rise with them 
 in direct proportion to the increasing poverty of an over-rented 
 and under-paid population, and thus prevent the provision of 
 necessary housing. People talk glibly of the " increasing 
 attractiveness " of the town with its " fuller life and greater 
 excitement " as the main determining cause of town congestion 
 and rural depopulation. No doubt there is a general centripetal 
 force at work. The leaden pressure of scanty wage, the striving 
 to escape from the inevitable goal of the workhouse, the 
 inadequacy of the normal reward held out to the aspirations of 
 the average rustic, the promptings of the gambling spirit ever 
 ready to face the unknown, and the striving to escape sordid 
 actuality — all these have their depopulating effect, but this 
 would be counteracted were it not for other more potent causes, 
 wasteful and unscientific agriculture, steadily increasing demand 
 in the way of " rates " and the intrusion of petty and incom- 
 petent local authorities into the direction of national concerns. 
 
 A local council of village tradesmen and rustic labourers 
 may be entrusted with the determination of the site of a 
 village pump or of the width of a country lane with comparative 
 safety, or (most important of all to their minds) with the decision 
 whether a scavenging contract should go to the brother of the 
 chairman or the nephew of the "vice-chair " ; and the amount 
 of mischief such people can effect is limited, and at worst 
 concerns only the immediate locality. But it is cruel to put on 
 their shoulders or those of a class but little more enlightened 
 any part of the problem of the education of the young of the 
 nation, the "keeping of the peace," and enforcement of law, 
 or the provisions for the relief of poverty and distress. 
 
 Two of the chief needs of a nation are intensified productive- 
 ness of its land, and increased numbers of the rural population. 
 And the institutions of the local government of this country are 
 so framed as to minimize our power to supply these needs. 
 And of all these institutions the most unsatisfactory details are 
 presented by our method of raising funds for local purposes by 
 the taxation of space. 
 
 It must not be lost sight of, that the whole theory of this 
 taxation is, so to say, slipping into a position of fallacy, from 
 
264 THINGS AS THEY AEE 
 
 which it appears impossible to extricate it without a readjustment 
 almost revolutionary. That a certain class of public need should 
 be satisfied exclusively by the taxation of space and of that 
 wealth and labour which has been incorporated in it, to the 
 exclusion of all other modes of embodiment of Means, is 
 glaringly inequitable as between different classes of Means- 
 owners. Even the disciples of Mr. George, who clamour for the 
 " single tax," and the State appropriation of rent, would freely 
 admit, that until their scientific readjustment of burthen is 
 adopted, there should be equality as between different classes of 
 contributors ; and that except on their own thesis that the profits 
 of the land belong to the people of the nation, the invidious 
 distinction is indefensible. Nor would they attempt to defend 
 that part of the incidence of rating which falls on buildings 
 machinery and improvements to the exclusion of such other 
 embodiments of Means as have not been incorporated with the 
 surface of land. Their claim asserts itself only as against 
 that inextricable element of the total value of " landed property " 
 which consists in the natural surface and position— " prairie 
 value" and "unearned increment" are the cant phrases;— and 
 they would admit therefore that in its present form, in which it 
 makes a special charge in addition on the wealth incorporated 
 into the land by previous labour, while allowing other and 
 similarly derived income to go free, taxation is essentially 
 unscientific and unfair. 
 
 Now the conservative apologist for things as they are takes 
 refuge in the assertion that after all, the rating of land is only a 
 device for extracting from each occupier a contribution which as 
 it is proportional to the value or desirability of the space which 
 he occupies, may, roughly speaking, be accepted as indicating 
 his capacity for bearing taxation. But this suggestion is 
 monstrously and notoriously untrue. Take the concrete case, 
 A. is, say, a manufacturer occupying a considerable space with 
 land and buildings and machinery carrying on a trade giving 
 employment to, say, a thousand workmen. Irrespective of whether 
 his trade is flourishing or losing he is " assessed," not in pro- 
 portion to his capacity to pay, which might be fairly indicated 
 by the desirability and luxury of his own home as compared with 
 the house of B. who is a professional man, or of C. who is a 
 merchant occupying a room or two as an of&ce — or of the rest 
 of the letters of the alphabet. A. is singled out to bear a 
 
c. XIV.] TAXATION (DIRECT) 265 
 
 gigantic proportion of the common burthen of convenience from 
 which he personally derives no more benefit than the rest of the 
 alphabet ; simply because his calling and that of his men happens 
 to require for its exercise a great comparative appropriation of 
 space and of that which has been affixed to and incorporated 
 with it ; here again we seem to be travelling in the island of 
 Laputa, the thing is so grotesquely and manifestly inequitable. 
 And then the workmen, the people whose wages are pressed down 
 because of A.'s inability to afford more in wages, owing to the 
 demands of local finance upon his resources, also have to pay 
 in respect of their homes, rents which are nearly doubled by 
 the same exaction. And this is the form of taxation which a 
 certain class of publicists cherish above all others and are doing 
 their best to extend and intensify. The writer, who strives hard 
 to attain to impartiality in his estimation of opposed theories, is 
 fain to confess that in respect of this subject he has failed, and 
 that to him the entire theory and practice of " rating " in the 
 United Kingdom appears saturated with injustice and iniquity. 
 
 While this is true of rating as it is, a specially iniquitous 
 proposed aggravation of the injustice finds favour with a 
 particular school of thinkers, which is the suggestion of the 
 " rating " of land- values as distinct from the value of the actual 
 occupation. According to this doctrine the duke is to be mulcted 
 in his capacity of landlord on the space he has let, besides 
 paying his own rates on the shamelessly luxuriant mansions and 
 castles in his own possession. " Why should the tenant be rated 
 when the ground landlord escapes ? " Now this really is quite a 
 decent genuine fallacy, of the rather rare variety which lies in 
 using two or three terms to denote one and the same object of 
 thought, and then reasoning as if they represented two or three 
 different things and not one. It is susceptible of being stated in 
 something very closely simulating the form of a true syllogism, 
 which would run as follows : — " All forms of property ought to 
 contribute equally and rateably to the expenses of the State, and 
 all forms of landed property equably and proportionably to the 
 burdens of the municipality. Now the ground landlord and 
 tenant are all entitled to different rights of property in a house. 
 Why should the interest of the last alone be mulcted and the 
 freeholder and the rent receiver or intermediate lessee escape ? '' 
 Of course the answer is, because in the first place no attempt is 
 made to cause all kinds of property to contribute equally ; but 
 
266 THINGS AS THEY AEE 
 
 chiefly, because it is not three different things, but three different 
 aspects of the one thing (which is the whole net rental paid 
 by the immediate occupier) which you propose to rate three 
 times over. That one thing you have already fully taxed, in 
 respect of its entire value, by rating the possessor ; who has to 
 get what contribution from the freeholder and from the inter- 
 mediate lessee as the operation of supply and demand will 
 permit. What you would levy your rate upon is the actual 
 concrete thing, the particular morsel of space, with its buildings 
 upon it. In that place exists nothing else to tax. You cannot 
 with equity assess and rate three times over a thing which con- 
 tains within its own desirability or value these three parts of the 
 manifestation of the right to it and in it, just because these 
 happen to be owned in bits and shares by three persons with 
 different " rights," i.e., expectations of benefit from it. You may 
 make any one of those three hand over to you the money which 
 you exact in respect of the one entirety. You do not thereby 
 necessarily tax him; who ultimately pays the exaction is a matter 
 for the several owners to settle between themselves ; and all the 
 legislation in the world is impotent to modify the arrangement 
 they come to. If you set to work to make the duke pay " rates " 
 on his ground rents, and the leaseholder on his annual income, 
 as well as the householder on the total annual rateable value of 
 the whole affair, while you are really rating the one thing 
 three times over instead of once, in the long run it will be 
 " supply and demand " and not your will or your conception 
 of "justice," which will determine the real incidence of your 
 taxation. If the supply of such houses is inadequate to the 
 demand, the rent must necessarily rise till the whole of your 
 triple taxation will have been paid by the householder in the 
 form of enhanced rent. And when the supply of houses of the 
 particular class becomes in excess of what is needed, then the 
 duke and the leaseholder, at first the latter, in due course the 
 former, will, whoever pays the money, in the long run bear the 
 entire brunt of your triple exaction. 
 
 The conclusion may be thus stated in the following words. 
 (1) The entire system of " rating " is founded on iniquity and 
 injustice, and needs in the public interest, especially the interests 
 of the poorer classes, to be completely recast and placed on a 
 different basis altogether. 
 
 (2) In the United Kingdom, while it is true that for the cost of 
 
c. XIV.] TAXATION (DIEECT) 267 
 
 certain local needs, local contribution is the appropriate and just 
 source of supply ; that should be so regulated as to be levied in 
 proportion to the Means and not to the needs of the contributors ; 
 be in proportion, that is, to the Means possessed by all persons 
 resident within a given administrative area, without distinction 
 of the nature or form of their investment. 
 
 (3) That the purposes for which recourse is had to local as 
 opposed to national taxation, should be strictly limited to those 
 objects which are truly of local and not of national benefit and 
 requisiteness. 
 
CHAPTEE XV 
 
 TAXATION (iNDIKECt) 
 
 It is more difficult to estimate the yield and analyse the inci- 
 dence of "indirect " than of " direct" taxation. What is levied 
 upon the importation of goods (whether at a fixed rate on each 
 variety, or by ad valorem duties), or is taken by way of " excise " 
 from goods produced by a country for consumption within its 
 own borders is the only " indirect " taxation properly so called. 
 On certain classes of things, and under certain circumstances 
 there may be in some cases also " export " duties, which though 
 apparently similar, are not really " indirect taxation " on the 
 goods at all, in the proper sense, but a mode of obtaining revenue 
 quite apart, the incidence of which falls in the main on others 
 than the subjects of the State which imposes them. It ought 
 almost to be classed in a "Budget statement" as non-tax 
 revenue. For it can only be successfully resorted to in special 
 cases in which the direct incidence of the impost can be confined 
 to the people to whom the goods are exported; cases such as 
 that of tin in the Malay States, diamonds in Cape Colony, or 
 smokeless coal in Wales, in which the exported article is one for 
 which the country has exceptional facilities of production partak- 
 ing of the nature of monopoly, so that other people requiring 
 the things have to submit to pay an additional price in the 
 nature of rent for the opportunity of participating in the use of 
 the product. Pro tanto those who are compelled to avail them- 
 selves for their industry of the contents of the land of the Malay 
 Peninsula, Cape Colony, or Glamorganshire, as the case may be, 
 can, if the thing is a necessary one of which the exporting 
 country has a monopoly, thus be compelled to pay toll to the 
 State of the producing country. 
 
 Excise-duties can be advantageously imposed only on things 
 entirely consumed at home. The burthen of these falls entirely 
 on the consumer, while only a portion of it benefits the finance 
 of the State, the other part going partly to the makers of the 
 commodities in respect of which they are imposed, to pay them 
 
cXV.] TAXATION (INDIEECT) 269 
 
 interest on what they expend in advancing the tax and wages 
 for undertaking the duty of collecting and farming it, and partly 
 to the army of State officials employed in enforcing the law and 
 seeing that the others do not cheat. Wherefore excise taxation is 
 wasteful, expensive, and signally vexatious, and led Eobert Burns 
 to give utterance to his popular sentiment " The de'il fly awa' 
 wi' th' exciseman." Excise taxation conspicuously infringes 
 Adam Smith's canon that a tax should not be vexatious and 
 irritating, and as a matter of fact it must be entirely limited to 
 such commodities as can be compelled to contribute very large 
 sums which the State cannot afford to remit: such things as 
 beer and alcohol, which are found particularly suitable subjects 
 for taxation in the interest of national finance, with a certain 
 uneconomic but probably beneficent regard also, to the " claims " 
 of national sobriety and the inculcation of " self-denial." When 
 a given thing is easy to produce in a country in any required 
 quantity, and the making of it is very profitable, an excise-tax on 
 that thing collected from those engaged in its production does 
 not entirely fall on the consumer. The competition inter se of 
 makers and distributors undoubtedly to some extent tends to 
 keep a considerable part of the burthen of taxation on the 
 shoulders of those from whom it is collected in the first instance ; 
 but by far the greater part is rapidly and automatically transferred 
 to the customer in the shape of increased price.* Here 
 mononesis sets a-going its " law of diminishing returns," till the 
 bottom level is reached, where profits attain their minimum; 
 and from that point, prices respond to the increase in or 
 decrease of " cost of production " with automatic and unerring 
 accuracy. Take for example a commodity like beer. If this 
 bore no taxation at all, and were not subject to the multi- 
 plicity of controlling and fiscal regulations imposed in this 
 country, it would follow that (the available power of supply in 
 Britain being capable of increase to a point equal to any capacity 
 of British demand), the price to the consumer must steadily fall 
 towards the point marked by the average cost of production ; 
 till mononesis exercises its full effect, and the producer and dis- 
 tributor are by the competition of their fellows reduced to 
 squeeze an exiguous profit out of skilful adulteration and cunning 
 devices of unsuspected short-measurement. But when a heavy 
 
 * See Fawcett, who maintains that the whole of, e.g., a malt tax falls on the 
 consumer. "Manual of Political Economy," Book IV., Chap. 111. 
 
270 THINGS AS THEY AEE 
 
 excise-duty is put on, this (while affording its peculiar oppor- 
 tunities of profit to those whose means enable them to advance 
 the necessary funds for the payment of duty in the first place, 
 and extinguishing the smaller producer who is not in a position 
 to farm the tax) will tend towards monopoly, and increase the 
 price to the consumer, not only by the amount of the taxation 
 itself, but beyond that, by the effect of the restriction of 
 competition. 
 
 Not only the productiveness of each tax to the State, but also 
 its incidence ; the determination of the question on whose backs, 
 the burthen ultimately has to rest, depend, in the case of each sort 
 of tax, on a number of considerations, only one part of which is 
 within the control of the State at all. And not only is this so, 
 but even the nature and duration of the successive steps and 
 shiftings by which ultimately the incidence of each tax adjusts 
 itself between producers distributors and consumers, depend on 
 the attributes of the thing, and the severity of the tax, and the 
 wills and strivings of the people you attempt to enforce it upon. 
 What will prove true of one sort of commodity is never entirely 
 true of any other, and the results as to any one thing of a given 
 scale of taxation differ in kind as well as in degree from those of 
 a different rate on the same thing, or a similar rate on some 
 apparently analogous thing. So, such generalizations as this : 
 " All taxation falls on the consumer," or as the counter-fallacy, 
 that " we can tax the foreigner by putting a duty on the importa- 
 tion of his products '' are equally unscientific and untrue. Both 
 statements more or less accurately indicate tendencies; but 
 experience alone can prove how far such tendencies are interfered 
 with by each other or by others working in contrary directions. 
 What is true of one class of commodities will not be true of 
 another, and the one or the other may even at given times under 
 different conditions be alternately true and false with respect to 
 one and the same commodity. 
 
 It is not proposed further to consider the subjects of export- 
 duties or excise-duties. The main interest for the economist 
 centres on the question of duties on the importation of goods. 
 
 Things imported into a country fall into four classes, two of 
 which may be easily eliminated. The first of the four consists 
 of goods intended for use and consumption in the country, 
 which, failing importation, could be effectively and adequately 
 supplied from the resources of the country itself by its own 
 
c. XV.] TAXATION (INDIEECT) 271 
 
 industry, and whicli it is not therefore necessary, though it may 
 be cheaper, to import. Next, things which must be imported 
 either altogether or in part ; those, that is to say, the production 
 of which within the country is either altogether impossible or 
 inevitably inadequate. A third class consists of " raw materials," 
 things really included in the first and second, but which have to 
 be considered apart as regards their susceptibility to taxation ; 
 things which coming either in a natural or partly manufactured 
 state must be admitted for the purpose of working up into goods, 
 whether such goods are needed for consumption for use in the 
 country itself or for exportation. And with regard to this class 
 also, the effect and incidence of an import-duty must vary accord- 
 ing to which of these two purposes the resultant finished thing is 
 eventually devoted to. A fourth and separate class consists of 
 things which it is found by commerce convenient to import into 
 the country as a mere market-place, to be re-exported unchanged ; 
 which do not employ the labour of the country except incidentally 
 by way of transportation and warehousing, and which a sane 
 financier would not dream of meddhng with. One and the same 
 commodity may on different occasions and under different 
 circumstances happen to fall into almost any one of these 
 classes, according to its use and destination. While it is often 
 impossible to predicate of any particular lot or parcel of goods 
 under which of the heads it will range itself ; it is clear that an 
 import duty levied on any article capable of being re-exported, 
 whether in its original shape or after further manipulation, 
 must, unless counteracted by a refund or rebate on re-exporta- 
 tion, pro tanto check commerce and the employment of energy 
 in its preparation for export. 
 
 Taxation either on goods imported and subsequently exported 
 unchanged, or on raw materials that are used in manufacture for 
 export is essentially futile and suicidal, and involves so obvious a 
 disadvantage to industrial and commercial enterprise, as to be 
 impossible. And inasmuch as many imported materials are used 
 indifferently for production for the home and foreign market, 
 and cannot be distinguished at the port of entry according to 
 what may thereafter turn out to be their destination ; and the 
 only possible way in which the home consumption of them could 
 be taxed without destroying trade would be by adopting a system 
 of rebates on exportation of the manufactured product, even the 
 most " protective " fiscal systems renounce this source of income. 
 
272 THINGS AS THEY AEE 
 
 For rebates are cumbrous and costly, and exceptionally liable 
 withal to dishonest manipulation on the part of manufacturers 
 and exporters, a fruitful source of oppression, friction and fraud. 
 So that the third class, no less than the fourth, may be ruled 
 out as practically insusceptible of indirect taxation. 
 
 This leaves as possible sources of revenue, the first and second 
 of the above-named classes only, i.e., those goods (other than 
 raw materials) consumed in the country which respectively 
 can and cannot be produced adequately to the demand from its 
 resources. They include a prodigious list of commodities, the 
 possibilities of deriving revenue from taxing which vary indefi- 
 nitely, and while what can be collected by the State at a given 
 rate of taxation on any one may to a considerable extent and 
 even for a certain time prove susceptible of prediction, the 
 permanent and ultimate results on consumption and on the 
 ultimate yield and incidence of the taxation can only be realized 
 by experience. 
 
 In general it is true that the demand tends to dwindle as the 
 rate of taxation is enhanced, but to what extent it is hard to 
 predict in respect of even any one sort of commodity, still more 
 of commodities in general ; while as to the real incidence of any 
 taxation, whether direct or indirect, the analysis is immensely 
 elusive and obscure. Each class of persons on whom any tax 
 seems to fall is ever consciously or unconsciously striving with 
 varying success to fix the load on another. How this necessarily 
 works out with regard to " rates " has already been indicated, but 
 the effect with respect to import-duties it is still more difficult to 
 follow into actuality. Sometimes the importer who pays the tax 
 succeeds in shifting it back on the producer from whom he 
 imports, more often forward on the distributors, and then, as a 
 necessity, each of these in his order struggles to collect it from 
 the one below him, and the last of them, the retail-dealer, gets 
 what he can out of his customers the consumers, sometimes even 
 extracting a profit out of the taxation itself by charging in 
 respect of it more he has to pay ; but not infrequently finding it 
 impracticable to collect in price the whole of what he has paid. 
 
 An increased sugar-duty expends its incidence in the 
 United Kingdom mainly on the producers and distributors, 
 of sugar and things made out of it, it having been found 
 that the article is one in respect of which there is difficulty 
 in their shifting the charge on to the retail customer. And 
 
c. XV.] TAXATION (INDIEECT) 273 
 
 on the other hand, tea is an article the taxation on which is so 
 heavy in its proportion to the value and bulk, that the retail 
 price to the consumer responds readily to each penny per pound 
 added to or taken off the duty. But shillings per hundredweight 
 do not translate themselves easily into pence or even farthings 
 per pound. And it generally occurs in the commercial experi- 
 ence of the haggling of intermediate markets and competition of 
 intermediate distributors, that a small increase or diminution 
 of duty dissipates its effect in the course of the process, and reaches 
 the consumer, if at all, only in the shape of some eventual and 
 imperceptibly slight fall or rise in quality or genuineness. 
 
 Nevertheless it is often true in practice, as it seems so very 
 easily demonstrable in abstract theory, that import-duty falls, 
 in one form or another, ultimately on the consumer. At the 
 first set off, indeed, a substantial import-tax translates itself into 
 retail price very perceptibly. But, as will shortly be proved, this 
 effect is for the most part a mere temporary phenomenon of re-ad- 
 justment of supply, and it must eventually vanish (as regards goods 
 of the first class) under the pressure of internal competition. In 
 other cases the tax is capable of being levied so lightly and gently 
 as to become practically imperceptible in the market of consump- 
 tion. Of course, there are many commodities consumed in a 
 country (mainly those of the second class) which may be so taxed 
 as to impose an oppressive burthen ; but there are always in 
 practice limits beyond which the rate cannot be pushed without 
 impairing its yield and thus defeating the financial object. 
 There are even certain things of absolute necessity which (like a 
 poll-tax) may be made the occasion of indefinitely oppressive 
 exaction, such for instance as salt in Italy. But such excep- 
 tional instances apart, the yield of a tax limits itself in two ways, 
 first by restriction of consumption, next (and in the first class 
 still more effectively) by the stimulation it affords to the produc- 
 tion of the untaxed supply of the country itself and the correlated 
 restriction of importation. In one or other of these modes, the 
 limit of productiveness of an import-duty will often be reached 
 at a comparatively low point of pressure. 
 
 With respect to the first class of goods, taxation, in order to 
 continue productive of revenue, must obviously be limited to such 
 a charge as will not cause importation to cease. If the duty is 
 fixed at a point which will so enhance the price of imported 
 goods in the country of importation as to enable the home 
 
 T.A. T 
 
274 THINGS AS THEY AEE 
 
 producer to offer at a lower figure and with profit his untaxed 
 goods in competition, the foreign producer after struggling awhile 
 against the mononesis, will be gradually ousted from his market, 
 and the taxation will then become "protective" and therefore 
 unproductive, as the importation tends to disappear. Not 
 entirely : for even under a " protective " tariff, certain varieties 
 of things of each class will continue to be brought in as articles 
 of fashion, caprice, or fantastic luxury. But at a point far short of 
 what is commonly called a "prohibitory " duty, the State income 
 from the taxation of such things as can be produced in the 
 requisite quantity at home diminishes with each successive 
 increment. Take such a commodity as boots and shoes for 
 example. In the United Kingdom the industry of this manufac- 
 ture is largely, and on the whole, not unprofitably carried on. 
 And yet in certain qualities and sorts a vast quantity is imported 
 from foreign countries which are able to produce a little cheaper 
 or a little better adapted to some particular part of the demand. 
 And outside of this there is a further foreign trade, which pro-' 
 vides expensive things of particular daintiness not at present 
 made here. Now it is obvious that the bulk of the demand for 
 foreign boots, for the more ordinary sorts, would under the 
 stimulus of a comparatively small import-duty be rapidly appro- 
 priated by the home manufacture. What would happen, if it 
 pleased the State to take such a step, for instance, as the imposi- 
 tion of a duty of 40s. a gross on boots and shoes, is so obvious as to 
 be capable of almost exact prediction. The first thing would be a 
 rise in price of something like sixpence a pair in boots all round. 
 Then, almost immediately, the manufacturers in England, whose 
 cost of production would remain as before, or tend rather to fall 
 with an increase of their output, would begin to try and earn as 
 much as possible of this additional profit, first by competing to 
 absorb the present demand, and then by extending and adapting 
 their plant to enable them to produce those sorts which were 
 previously produced better or more cheaply abroad. As their 
 boots came more copiously on to the home market, so the foreign 
 producers and those who make a living by importing their wares 
 would set about struggling to preserve their trade, by lowering 
 their prices in turn, in order to try and keep up the demand for 
 their things, so as to retain for themselves the economic advan- 
 tage of the " large output " which minimises in each business the 
 incidence of fixed charges. (Those who wish to hold up to 
 
cXV.] TAXATION aNDIBECT) 275 
 
 execration this very natural and in some respects somewhat 
 beneficial tendency, make use in this connection of the oppro- 
 brious epithet " dumping "). As the competition works out, the 
 home makers in their turn will bring down their prices in 
 competition with the foreigners, and with each other, till in 
 course of time the effect of the duty on the consumer's price 
 reduces itself to the zero at which it had stood before the imposi- 
 tion of the tax, and production will still be profitable, though 
 price will, in some cases by virtue of the economy of increased 
 output, fall even below the original average, and without any 
 perceptible ultimate contribution of the consumer to revenue. 
 
 But so long as the foreign maker manages to appropriate a 
 portion of the demand, so long will the tax continue to yield 
 revenue and to charge the consumer, even after the tendency to 
 lower prices has come into effect. The home maker continues 
 to enjoy his greater price only till he has succeeded (by aid of 
 the duty) in appropriating to himself the bulk of the demand. 
 As he does this, his prices must be lowered while the bulk of his 
 profit goes on increasing.* But the opportunity as well as the 
 profitableness of the foreign import must come to an end pre- 
 cisely in proportion as the stimulus to home production becomes 
 effective ; in proportion, that is, to the severity of the duty. The 
 bigger the tax in such a case, the greater, to start with, the rise 
 in price to the producer, and also the less the ultimate yield of 
 the taxation ; so that if the duty ever becomes entirely " protec- 
 tive " it ceases entirely to be productive. It is thus that in 
 respect to the whole of the first class of taxable goods, the pro- 
 ductiveness of indirect taxation has its inexorable limit ; while, 
 on the other hand, if it were possible to fix and maintain the 
 import-duty just at the point where the rise of price would not 
 be quite high enough to induce home manufacturers to undertake 
 the effort and risk of striving to appropriate the home demand 
 by increasing their production, the revenue from the duty would 
 attain and preserve the maximum of productiveness with the 
 minimum of burthen on the consumer, indeed without any 
 noticeable rise of price at all. But this most alluring perfection 
 of " fiscal policy " is in practice very hard to attain in respect of 
 any but a quite trifling proportion of the commodities belonging 
 to the first class, and it is impossible altogether except quite 
 momentarily with the second. And but little practical benefit is 
 * See Marshall, " Principles of Economics," Book V.., Chap. XII., p. 530, 
 
 T 2 
 
276 THINGS AS THEY AEE 
 
 to be hoped from so delicately adjusted a system of " scientific 
 tariff." 
 
 In practice it is impossible to predict to what extent and in 
 what proportion the mutually counteractive results of increased 
 and diminished yield of revenue, and of the correlative lesser or 
 greater rise of price and consequently of burthen on the consumer, 
 will occur as the result of the raising or lowering of indirect 
 taxation on any commodity. Each kind of goods, each special 
 variety of every kind, has its own special and particular set of 
 conditions, which even the persons whose avocation and liveli- 
 hood it is to make and deal in it are unable fully to predict. 
 Only broad and general results are capable of being anticipated, 
 and always with the uncertainty inevitably attendant on too 
 ambitious generalization. Of these the chief is this, namely: 
 that on the importation of any article capable of being produced 
 by the industry of the country of consumption, taxation must, 
 unless restricted to a mere trifling toll, as a condition of access 
 to a profitable market, increase at the outset the price of that 
 article to the consumer by at least its own amount. Next that 
 this result must, at any rate in the case of goods belonging to 
 the first class, soon begin to disappear under the influence of 
 internal competition ; and that its disappearance will be the 
 more rapid the higher the special tax that has been placed 
 on the particular article, and the greater its consequent 
 initial rise in price to the consumer. And that prices can there- 
 fore in no case be permanently affected. The rise will occur as 
 an evanescent symptom of the readjustment of the productive 
 process, and must thence tend to fall back to the point at which, 
 independently of the taxation, it will pay to produce and vend 
 the article in the country of consumption. And it follows therefore 
 that the dispute between "Free Traders " and " Tariff Eeformers " 
 as to manufactured goods, concerns a set of causes and effects, 
 the development of which (save in one very important respect 
 which is next to be noted) must be temporary and evanescent 
 only, the permanent result being confined, that is to say, to the 
 most economically important of all ; which is their effect on the 
 conditions which tend to an increased general employment of 
 labour in production within the country; on the opportunity 
 of the employment of the energy of the people. In this aspect 
 only does the controversy possess real permanent significance. 
 For the rest it assumes in the main the aspect of a problem of 
 
c. XV.] TAXATION (INDIEECT) 277 
 
 temporary finance, of the collection for a few years at most of a 
 possible flow of revenue, needed for a time it may be, to supple- 
 ment more permanent resources ; with the attendant incident 
 corollaries of a temporary increase of profit to producers, and a 
 still more temporary and incidental increased cost to consumers, 
 both of which are certain to disappear. 
 
 For what is true of boots and shoes is essentially true of hats 
 and gloves, of jam and pianofortes, of pottery and cutlery and 
 metal, of hardware and " dry goods," of glass and soap, and of 
 all manufactured articles whatever which are capable of being 
 produced in adequate quantities in the country of consumption. 
 
 But the problem of the taxation of the second class of imported 
 things, those which are not so capable of production in the 
 country of consumption, is more complex, framing itself on 
 parallel but distinct lines. These things split themselves up 
 again into two sub-classes, those which cannot be produced at all 
 in the country of consumption, and those which can only be 
 produced there in quantity insufficient to satisfy the demand. 
 Taking the United Kingdom for instance, the first would be 
 represented by such things as silk, jute, cotton fibre, india-rubber, 
 tea, coffee, and wines ; the second by wool and hides, by certain 
 metals such as iron and tin, and by the generality of food 
 products other than those exclusively obtainable from tropical 
 countries. Now as to the first sub-class — the exclusive products 
 of other climates, imported in a more or less unmanufactured 
 state, — some range themselves in the category of raw materials 
 of manufacture, such, for instance, as india-rubber and jute ; 
 while others are articles of food for consumption, which range 
 between the necessaries of life, the " raw material of labour " on 
 the one hand, and the superfluous luxuries of the wealthier 
 classes on the other. The taxation of both of these last has been 
 a favourite device of the Government of our country. We have 
 been induced to thus collect our revenue of indirect taxation, 
 by the consideration that every farthing of what is so levied 
 from the consumer (after the cost of collection is satisfied) goes 
 direct into the national till, and none of it into the pocket of 
 the producer. 
 
 It is not invariably things which cannot be produced in the 
 country but always things which are not so produced, which in 
 modern Britain have thus been made the subjects of indirect 
 taxation ; sugar, for instance, which could be produced over the 
 
278 THINGS AS THEY AEE 
 
 greater part of the United Kingdom and especially in Ireland, 
 quite as well and as cheaply as in Germany or in Java, and 
 probably to the full extent of the consumption, but which has 
 come in the United Kingdom to be a thing of prohibited growth. 
 So that for the purposes of bringing in revenue it has been 
 artificially made a commodity incapable of production, though a 
 necessity of life, and also an important raw material of 
 manufacture. The special taxation and attendant special pro- 
 hibition remains " orthodox " on Free Trade principles only so 
 long as they remain in correspondence, and work together to 
 forbid any people in the country generally from deriving any 
 Wealth or means from the possible industry of its production. 
 Such has been shown to be the case with respect to sugar ; the 
 same is true with respect to tobacco. If at any time the intro- 
 duction of the sugar-beet or the tobacco plant into the United 
 Kingdom were seriously attempted, so long as the free trade 
 philosophy retains its mastery, either import duties must 
 disappear, or a countervailing excise be forthwith imposed, in 
 deference to the austere doctrines of " Free Trade." Otherwise 
 the abomination would arise that some particular class would 
 derive benefit from the national system of taxation. 
 
 The diametrically contrary policy of all other European countries 
 has been gradually adopted with the assent of the mass of the 
 population, and no proposal would be entertained, for instance, 
 in France or Germany which could militate against the national 
 policy of extending to the utmost the productiveness of the soil 
 of the country and the employment of the people on the land. 
 Eightly or wrongly all nations recognize the absolute right of 
 each to control its own economic life in this respect according to 
 its own choice. In the reports of the proceedings of the Brussels 
 Conference on sugar duties, for example, it is interesting to note 
 the unanimity with which the delegates (including those of the 
 United Kingdom) laid down as a self-evident axiom the principle 
 of the paramount duty of each country to reserve for its own 
 subjects as far as possible a monopoly of the supply of those 
 things which the land of the country produces. One is not 
 concerned to inquire whether this is a far-seeing or short-sighted 
 policy, whether the maintenance of the population in the country 
 is in itself more desirable than its concentration in the towns, or, 
 whether (as Mr. Henry George with some justice asserts), this 
 deep-seated national purpose of other countries does not in the 
 
c, XV.] TAXATION (INDIEECT) 279 
 
 long run defeat itself by necessarily diverting the increased profits 
 of the agriculturist into the pockets of landlords in the form of 
 enhanced rent.* These are questions which each thinker 
 answers for himself in the main according to the bias of his mind 
 towards one side or the other of the controversy, and any view 
 of truth that contradicts a deep preconceived opinion assumes to 
 the partisan mind the aspect of a lie ! It cannot be true, they 
 reason, because it would controvert the sacred truths of political 
 economy. The fact remains that the settled policy of the 
 European countries, their conceptions of their own interest, 
 and the sympathies of their populations are alike imbued with 
 a spirit irreconcilably antagonistic to the doctrine of "Free 
 Trade " and passionately wedded to the opinion that it is the 
 first duty of the State to preserve to the utmost for its own 
 citizens, the utmost possible opportunity of profit out of the 
 internal commerce of supplying their own needs from their own 
 resources. 
 
 As to the many products of the second class susceptible of 
 taxation which cannot be produced in the country at all, the 
 duties levied on them fall entirely on the consumer, and the 
 yield of revenue from these goes entirely to the State. How far 
 it may be desirable to interfere with these sources of revenue is 
 therefore a question removed from the "Free Trade controversy" 
 altogether ; certainly as to those among them which are essentially 
 articles of luxury of the wealthier, there is no particular object 
 to be gained by lowering duties below the point at which the 
 yield of revenue can be preserved at the maximum amount; 
 though, of course, as soon as the duty becomes so severe as to 
 be restrictive of consumption, the yield of it begins to diminish, 
 and even for the truly benevolent purpose of guarding the 
 wealthier classes from the dangers of a too copious consumption 
 of champagne, the authorities would not increase the duty on 
 this particular article to the extent of lessening the revenue. 
 The occasionally advocated purpose of cheapening some of these 
 things to the poorer consumer seems also practically unlikely of 
 complete realization till an adequate alternative source of public 
 income or diminution of public burthens is devised. It would 
 be ungracious to impute conscious hypocrisy to those who 
 advocate (chiefly at election times) what is called a " free 
 breakfast-table." But no very serious intention of benefiting 
 
 * " Progress and Poverty," Book VI., Chap. I., § 6. 
 
280 THINGS AS THEY ARE 
 
 the humbler classes can be attributed to people who profess to 
 desire to relieve them of the farthings of the tea-duty, while 
 continuing to impose increasing pounds of exaction in the way 
 of rates on their houses. Anyhow, the taxes remain. 
 
 It is when we come to the things of the second sub-class, which 
 are largely imported from abroad, but which still are capable 
 of being supplied, and are supplied in part at home, that the 
 greatest contention prevails and the greatest difficulty exists in 
 forming an accurate conclusion. Speaking roughly, these are in 
 the main food-products, the production of which in the country 
 is capable of extension but not to the full extent of the home 
 demand ; a production the opportunity of profit from which is 
 greatly restricted by the copiousness and cheapness of the supply 
 from other countries ; a supply which those who at home dis- 
 advantageously compete with it, would love to see restricted by 
 an adequate tax on importation. Around these controversy 
 rages fiercely; and many economists who are prepared to 
 acquiesce in the taxation of imported manufactures are averse to 
 anything which would tend necessarily to increase the cost of the 
 necessaries of life, even though the profitableness of the industry 
 of an important part of the population and the opportunity of 
 their employment might thence derive an increase. The rights 
 and wrongs of the dispute, the comparative advantages and dis- 
 advantages of import-duty on goods belonging to this sub-class 
 are immensely difficult to estimate impartially. In truth it 
 seems as if in this respect, each article will have to be judged by 
 itself. What is found true of wheat, for example, does not 
 necessarily apply to hops or fruit or butcher's meat or eggs or 
 butter, or even oats or barley ; and any attempt at generalization 
 or the application of " first principles " is futile. 
 
 One point is worth considering; which is that a certain 
 minimum taxation might be imposed in respect of many of these 
 as of other classes of commodities, which, while amounting to 
 considerable figures in the aggregate, would be so slight in its 
 incidence on the individual consumer as to be imperceptible. To 
 suggest that this may be true is unfortunately to excite fierce 
 and indignant derision in many minds, but true it is. Such, for 
 example, was the minute duty on wheat which was abolished in 
 1906, with no benefit, as far as could be observed, to the con- 
 sumer, and a considerable and most inopportune impoverishment 
 of the national exchequer. Wheat, as has been above pointed 
 
c. XV.] TAXATION (INDIRECT) 281 
 
 out, is of all products the least responsive in respect of its pro- 
 duction to the stimulus of price. For years together it continues 
 to sell at a price below its average cost of production, and then 
 for years, on the other hand, to maintain a value and price which 
 if, like manufactured articles, it could be produced or its con- 
 tinued production checked at will and at short notice, could not 
 result from the more usual interaction of supply and demand. 
 More or less this is true with respect to all products of agricul- 
 ture. If it happens that the price they command in the market 
 of consumption is adversely affected by a rise of duty and con- 
 sequent enfeeblement of demand, the only effect on the supply is 
 to check its increase very gradually by discouraging the enter- 
 prise the cultivation of new lands. For those already devoted 
 to the production must continue to produce, even at a loss ; and 
 their crops to be marketed at any price, even for a time at a 
 price below the total cost of production.* Producers will for a time 
 accept actual wages without charging profit or any return by way 
 of interest on their Means embarked in the adventure, even without 
 an adequate provision for the depreciation and removal of their 
 plant ; and so the importing price (free of duty) must continue to 
 fall with every enhancement of duty, till a moment is reached at 
 which some fresh demand from some other centre of consumption 
 arises to absorb the excess of production, and bring prices up 
 again ; a thing which happens sooner or later with most com- 
 modities, and the hope of which therefore encourages producers 
 to go on producing through seasons of impoverishment rather 
 than permanently lose their all by allowing their lands to go out 
 of cultivation. The vicissitudes of the sugar industry which 
 were glanced at in Chap. V.,t afford some extreme examples of 
 price so affected by a mononesis cherished by general prohibitory 
 duties in Europe (for many years the only effective market) as 
 eventually to compel the actual abandonment of the greater part 
 of the acreage under cultivation in the West Indies. 
 
 Within the limits of a merely introductory sketch such as the 
 present work, it would be impossible to follow up at any length 
 such an inquiry, which would demand detailed analysis informed 
 by special knowledge of the circumstances of each industry. 
 The case of india-rubber would be an interesting example, for 
 instance ; + in which similar causes might work out into effects 
 
 * Marshall, " Principles of Economics," Book V., Chap. V., § 5. 
 + Ante, p. 80. 
 
282 THINGS AS THEY ARE 
 
 apparently contrary, to such things as wheat and sugar, but yet 
 in their essence identical. 
 
 Whatever the commodity, when the supply tends to be 
 excessive, a mononesis sets in, and the necessity of marketing a 
 product which the producers abroad are practically compelled to 
 go on producing for a series of years together, whether the 
 production is truly remunerative or not, must inevitably throw 
 on them the incidence of any tax imposed at the ports of the 
 principal centre of consumption in the world. And at such 
 times, and temporarily, revenue could be collected by the 
 importing State without raising the price in any degree to the 
 consumer. But on the other hand, when, as at intervals has 
 undoubtedly occurred, the current shifts to monopoly, and 
 consumption tends to outstrip production (and this also is a 
 condition of things which once established remedies itself but 
 slowly) then even a minute imposition of duty must in some 
 form be immediately felt in the market of the country of con- 
 sumption, though not by any means necessarily by the ultimate 
 consumer. In any event it is di£Bcult to imagine, for instance, 
 how any possible perceptible increase of the price .of the loaf 
 could ensue upon the imposition of a tax of a few pence on a 
 hundredweight of grain.* On the other hand, and for the same 
 reason, it is more than obvious that no conceivable advantage to 
 the home producer could possibly ensue as the result of any 
 imposition of import-duty on this class of commodities, on such 
 a scale as not sensibly to injure the consumer, and therefore the 
 prosperity of other industries in which that consumer would be 
 engaged, and therefore the total power of the community. To 
 the home producer, the advantage even of a taxation sufficient 
 sensibly to raise the prices he could obtain for his produce would 
 be merely temporary, for it is quite clear that ultimately it must 
 of necessity be absorbed into increased rent ; and thus it is quite 
 true that only the owner, not the temporary occupier, can possibly 
 benefit permanently by a " protective " duty on wheat. 
 
 The days when Lincolnshire tenants drove four-in-hand to the 
 castle on rent- days as to an aristocratic festival, were co-incident 
 only with the time when a very restricted cultivation of the 
 wheat-lands of the world compared with an ever-growing demand 
 of the awakening industries of England between the years 1790 
 and 1840, kept on driving up prices year by year ; and when the 
 
 * Marshall, "Priuoiples of Ecouomlcs," Book III., Chap. IV., § i. 
 
cXV.] TAXATION (INDIEECT) 283 
 
 progressive enhancement of rent, enormous as it was, was always 
 too slow to keep pace with the constant rise of price, because the 
 intervals imposed by the laws and customs of tenancy between 
 the progressive readjustments of rent to annual profit were 
 proving too long for the absorptiveness of the landlord to catch 
 up with the yearly increasing profit of cultivation. The " corn- 
 laws," which had been imposed in the interests of that class as 
 part of the machinery of aristocratic government in the still 
 older days, when the wheat production of England was easily 
 sufficient to feed the entire population, became exasperatingly 
 oppressive as the commercial demand intensified a national 
 scarcity, the real economic cause of which was essentially indepen- 
 dent of them. The discouragement of importation from the few 
 sources of supply in the world which in those days were available 
 was then felt an intolerable wrong. These laws gave place at 
 first to a sort of rude adjustment by a sliding scale devised in 
 order that the riches of the land-owning class should not be 
 enhanced with too cynical and glaring a disregard for the 
 sufferings of the population. But this too had to be abandoned 
 in favour of Free Trade in necessary food. All the time however, 
 the truth was that the insufficiency of the supply of wheat in 
 England was in reality the result of the world's inadequacy of 
 supply, exacerbated but by no means caused by artificial fiscal 
 restrictions. And this truth was strikingly exemplified by the 
 undoubted fact that even after the import-duty was abolished in 
 obedience to the will of the people, prices continued to be main- 
 tained during the few years that passed before steam came to the 
 aid of the sufferers and began to make available the bounteous 
 resources of distant and previously uncultivated lands.* The 
 conditions of the problem between the closing days of the 
 eighteenth and the middle of the nineteenth century are such as 
 can never recur. Their persistence, relatively short-lived as it 
 was, coincided with the conception and development of the 
 science of economics, which was studied by British minds under 
 circumstances which forced into the very first place in the mental 
 horizon of its founders, problems dealing mainly with what they 
 imagined to be essential and permanent conditions of social 
 existence, but which are now perceived to have been temporary 
 local difficulties attendant on a particularly protracted and 
 intricate process of the adjustment of the supply of wheat to the 
 
 * Marshall, " Principles of Economics," Book VI., Chap. XII., §§ 3, 4, 5. 
 
284 THINGS AS THEY ABE 
 
 demand for it in England and Scotland. We are now in a 
 position to estimate more truly and accurately the relative 
 importance of this problem, and to perceive that many sequences 
 which to Malthus, Eicardo, Mill and MacCuUoch, to say nothing of 
 the excellent Cobden, presented themselves as inevitable and all- 
 important " laws," of universal and permanent application, the 
 eternal truths of an abstract and impartial science, in reality 
 concerned mere local and temporary frictions of adjustment, and 
 contain nothing like the universal and inspired body of infallible 
 dogma which to this day they seem to present to the minds of 
 the more faithful disciples of those eminent gentlemen. The 
 true and urgent problems of civilization are far more deep-seated, 
 far more permanent, than those which mainly concern the weary 
 controversy of Protection and Free Trade. 
 
 What is true of wheat is more or less true of all possible 
 import-taxes on all those goods, especially food-stuffs, which, 
 though capable of being produced in the country of importation, 
 cannot be supplied from its resources to an extent adequate to 
 its requirements of consumption. All these are on the on^ hand 
 susceptible of light taxation productive in the aggregate, but 
 nearly or quite imperceptible to the individual consumer, and as 
 a corollary neither calculated to benefit at home their producers 
 nor injure the producers of other things. On the other hand, 
 in respect of all, or nearly all of them, any heavier rate than 
 this cannot be imposed without considerable disturbance. And 
 the project of subjecting such imports to such a rate of duty as 
 would effectively and permanently operate to " protect " the 
 internal producer in the sense of increasing his profit, prac- 
 ticable it may be in certain exceptional cases, would in most 
 fail to afford him permanent benefit, while on the other hand 
 likely to involve not only in the market for the goods them- 
 selves, but also in the conditions affecting the general economic 
 processes of the country, very grave inconvenience. They would 
 bring about many perturbations and frictions of readjustment, 
 for a considerable time enhancing the cost of living, oppressing 
 the individual consumer, and increasing the general money rate 
 of wages without enhancing their Wealth-producing power ; and 
 incidentally tending adversely to the efficiency of the people of the 
 country in the markets of the world. As with manufactured 
 things capable of being produced in the country of consumption, 
 so also it is with imported products which cannot be adequately 
 
c. XV.] TAXATION aNDIEECT) 285 
 
 supplied by the resources of the country of importation. The 
 effect of taxation varies indefinitely with the circumstances atten- 
 dant on the production and consumption of each particular thing, 
 both at home and abroad; the question of taxing any one or other 
 of them, and of the degree and amount of the desirable taxation, is 
 one essentially to be determined by practical results, and in respect 
 of which little benefit is to be derived from any generalization, 
 and none whatever from the application of "first principles." 
 
 Goods must continue to be produced in the foreign centres of 
 supply often at prices below their real cost. For many years 
 their producers must continue to export them, and when the 
 chief market of consumption is necessarily one particular 
 country, and they have to be exported thither or nowhere, it is 
 supply and not demand which controls their value. Of course 
 this is a state of things which will not last indefinitely. The 
 time comes when gradually, as the result of protracted unavailing 
 struggle, the producers in the less favoured centres of produc- 
 tion are vanquished and the supply falls off and a fresh equili- 
 brium with demand is established. But it may be many years 
 before the more unfavourably situated producers will consent to 
 relinquish the struggle, and in the meantime, in spite of all the 
 political economy in the world, the product is inevitably forced 
 into one inadequate market of consumption at a price below the 
 true cost of production — a price which will only enable producers 
 to continue to exist from year to year by gradually consuming 
 the capital which would otherwise be recreated in the process of 
 production. This is the oppression of mononesis as it affects the 
 country of production. 
 
 One would have to examine the conditions of the industries, for 
 example, of producing tea and coffee, hides, meat-products, 
 cereals, metals, tobacco, and so forth to the very end, before 
 venturing on any ultimate conclusion as to the incidence of any 
 taxation levied in the United Kingdom on the importation of 
 any one of them in particular, how far and for how long the 
 burthen of taxation will fall upon the producer, the consumer, or 
 on any unit in the intricate organization of commerce and distri- 
 bution. From the whole subject of indirect taxation one can 
 gather but one "principle," and that is, that no general prin- 
 ciple can be deduced at all, though a series of tentative practical 
 results can legitimately be inferred from the instances and 
 examples submitted in this chapter. 
 
286 THINGS AS THEY AEE 
 
 It has been shown that in practice some imported things 
 cannot be taxed at all; that the amount that can possibly be 
 obtained from the taxation of the rest is limited in each case by 
 the circumstances attendant on the production and consumption 
 of each, that the incidence and burthen of the taxation of each 
 varies also, not only with the circumstances attending the pro- 
 duction of the thing taxed, but also with the rate and severity of 
 the taxation to which it is subjected, in some cases falling wholly 
 and directly, in others partly and indirectly, on the consumer, 
 and in some expending itself variously between producers and 
 distributors, and not perceptibly affecting the consumer at all. 
 It follows therefore that even in the most obvious instances the 
 working out of any problem of fiscal policy is a tentative and 
 experimental process, the ultimate results of which elude prospec- 
 tive analysis. It has been seen also that in respect of a very 
 considerable proportion of the things which are imported into a 
 country (those, that is, which are susceptible of being adequately 
 produced within it, and the prices of which will therefore 
 tend to the level of the cost of internal production irrespective 
 of the rate of import-duty) the effect of taxation on prices must 
 be temporary only, lasting only to the time at which the home 
 production has fully assumed the function of supplying the 
 home consumption. From the point of view, therefore, of a 
 general attempt to indicate the effect of the action of the State 
 on the welfare of the citizen in levying taxation, the subject 
 might here be left without further comment, as a practical 
 problem of experience and expediency. But it has been thought, 
 in view of the interest excited by the controversy of "Free 
 Trade " and " Protection," that it might be advantageous to 
 point the results of this chapter, by an attempt at an impartial 
 appreciation of the current arguments on both sides; truly 
 impartial, because the writer, not deeming the dispute vitally to 
 concern a matter of real permanent interest to the national 
 welfare, except in respect of one, the only permanent and 
 important of its many predicted results, is indisposed to range 
 himself with any pronounced partisanship on either side. But 
 the arguments on both present such curious instances of faulty 
 reasoning, that a few pages may fairly be devoted to their 
 impartial investigation ; a task which is attempted in the next 
 chapter. 
 
CHAPTEE XVI 
 
 FREE TRADE AND PROTECTION 
 
 The simpler way of appreciating the merits of this involved 
 controversy seems to be to marshal in the first place the real 
 arguments for and against the proposed change of policy ; 
 and afterwards, to enumerate and very shortly examine the more 
 numerous other arguments, which the supporters and opponents 
 of Tariff Reform respectively indulge in by way of obscuring the 
 issue and importing prejudice into the discussion. 
 
 Now in politics, necessity is the one convincing reason for 
 modifying institutions ; and therefore the soundest part of the 
 reasoning of the " tariff reform " advocates is where they point 
 out that the fiscal requirements of the country are such as to 
 necessitate an increase in the total taxation of the community, 
 which " direct " taxation is unable to afford. Nor on this 
 bead do they overstate their case. The most vital of all the 
 reasons which make for an augmentation of the public burthens, 
 is the continuity of the national existence, if this is held to be 
 worth preserving. The most important factor of the not 
 immensely remote future of the United Kingdom is probably 
 that which politicians of all parties are disposed most carefully 
 to ignore ; which is the certain and progressive exhaustion of the 
 coal-supply of Britain.* It may be that politicians are justified 
 in their short sightedness : apres nous, le deluge ! But the states- 
 man and the economist should be otherwise minded ; not limit 
 their thoughts to the interests of the immediate present, but 
 have regard to the claims of future generations of the nation on 
 the' foresight and prudence of the present. This becomes a 
 matter rather of political morality than political economy. If 
 any financial expert believes that the United Kingdom will be 
 able to support the charge of a national debt when the national 
 supply of coal has been exhausted, he exhibits a rare and 
 precious optimism of anticipation. But putting this considera- 
 tion out of sight, the other and still more instant factor remains ;, 
 
 * Ante, p. 54. 
 
288 THINGS AS THEY AEE 
 
 that the national expenditure and that of the subordinate munici- 
 palities upon which devolve an ever -increasing share of the 
 national administration are in the very act and transition of a 
 great increase. And as further and further claims for national 
 and municipal service are made upon the resources of the State 
 and the municipality, they are bound to develop a still greater 
 augmentation. 
 
 The " capitalist " classes may indulge as they will, for example, 
 in denunciation of the progressive steps by which the collective 
 energy and power of the State is being called upon to assume 
 more and more of the weight and duty of caring for the welfare 
 of the helpless and the upbringing and education of the citizens 
 of the future. The vituperative epithets " socialistic," " con- 
 fiscatory," and the rest will be hurled in vain against the 
 inevitable series of enactments by which the collective organism 
 of the nation is in the act of being impelled to intervene more 
 and more in the care for the lives of its citizens and the future 
 of the race. If the people of a country choose that these things 
 shall be done — done they will be, and the people and not the 
 " capitalists " are the masters of the future. From " assisted " 
 to " free " education of the young, and from that to a certain 
 prescribed minimum of free food for the growing future citizen ; 
 next, a comprehensive reform of the futile " poor-house " and 
 "out-door relief" systems of the nineteenth century, in the 
 direction of a regulated process by which the more aged and 
 helpless class shall be entitled as a right to participate in some 
 sort of State provision by way of pension ; whether the tendency 
 to these steps be right or wrong is no matter ; the essential fact 
 is that willingly or not, the successors of those to whom Herbert 
 Spencer preached are going to adopt them, unlearning completely 
 his gospel of " Laissez-faire "; and therefore some such series of 
 changes is coming upon us, and they all will have to be paid for. 
 
 Now the resources of the State exhibit no immediate signs 
 of actual decrease. The "penny of the income-tax" seems to 
 maintain, even slightly to augment, its annual yield in millions, 
 but this is obviously by virtue of the impetus to investment 
 derived from past accumulations of Means. The momentum 
 still continues, though the generating force visibly slackens. 
 
 So the question is most instant, whence is this large addi- 
 tion of expenditure to be derived ? Direct taxation has in its 
 very nature insurmountable limits of productiveness, at the 
 
c. XVI.] FEEE TEADE AND PEOTECTION 289 
 
 limit, already well within sight, where Capital begins to escape 
 from employment in the country of the higher impost, and' 
 transfer itself to the land of the lighter tax. The symptoms 
 of the commencement of an exodus are already observable. 
 Even the taxation of rent, and that on the transmission of 
 property on death, the most susceptible of future extension, have 
 their similar limit of productiveness, where they begin to cross 
 the line where the richer class find it appreciably more advan- 
 tageous to die abroad than in England, having first changed their 
 forms of investment into foreign in preference to British securities. 
 
 If the process of change in the mode of investment of 
 Capital owned by British subjects, which has already begun, 
 comes to extend itself, the result must be a shrinkage in the 
 industry and commerce of the country ; so that even these at first 
 sight apparently inexhaustible mines have their own very inexor- 
 able limits of yield. Therefore the argument that it is necessary 
 to " broaden the basis of taxation " as they call it, is a sound 
 one, though the applicability of it to the momentary fiscal neces- 
 sities of this year or next year may not be apparent. 
 
 " Indirect " taxation too has been shown to have similar 
 limits of productivity. It has its double aspect, according as it 
 is protective or productive in its purpose and effect; and on 
 the whole, and in the long run, these two characteristics are 
 alternative and conflicting ; the more protective, the less pro- 
 ductive, and vice versa ; hut yet, in practice, no tax will ever be 
 exclusively the one or the other, even the most protective tax 
 retaining a very considerable productivity, as is abundantly 
 exemplified by the ultra-protective and yet in the aggregate 
 highly productive fiscal system of the United States ; while a tax 
 imposed " purely for revenue purposes " (the favourite cant 
 expression of both sides) will, on the other hand, invariably be 
 found to involve subtle effects on demand and the possibilities 
 and opportunities of supply — effects which on the whole will 
 often tend to a result protective of some form of internal industry ; 
 and this too, although there are certain commodities susceptible 
 of a minimum import-tax which seems to have no immediate 
 and direct protective effect, and therefore would impose no 
 perceptible burthen on the consumer. All these, it is plain, are 
 from a revenue point of view legitimate items in a long list of 
 subjects of taxation to embrace which it is proposed to " reform " 
 the British tariff. Admit the necessity for a considerable increase 
 
 T.A. u 
 
290 THINGS AS THEY ARE 
 
 of the public revenue, and you are driven, say the tariff 
 reformers, to adopt a new scheme for raising the necessary 
 funds ; and then, say they, we defy you to invent any alternative 
 plan by which you can provide what is needed. This argument 
 therefore, valeat quantum, seems a sound one, open to a whole 
 series of objections, the quantitative value of which will be 
 examined shortly, but on the whole, valid as far as it goes, and 
 therefore this is placed in the forefront of the array of those 
 reasons for tariff reform which are worthy of serious attention. 
 
 The next set of reasons, that which is based on the protective 
 effect of indirect taxation, are more controversial and more 
 difficult of appreciation. But there is one which deserves special 
 consideration ; and that is the one indicated at some length at 
 the end of Chap. XI., and which it is unnecessary to repeat at 
 length ; the beneficial effect of a tariff in the direction of increased 
 employment for the productive energy of the subjects of the 
 State imposing it. A duty on any article previously admitted 
 free, must in the first place cause an enhancement of price to 
 the consumer, and next an increase in the profit of those whose 
 capital is embarked in the production, and an increase of wages 
 to those whose energy is employed in producing it. Now of 
 these three results the first is an evil, and the second and third 
 are temporary benefits purchased by the first, which though not 
 in themselves worth the sacrifice imposed by it, are yet of a 
 nature to partially compensate the nation as a whole for a time, 
 if not permanently, for the sacrifice involved. It is not uni- 
 versally true* that every consumer is a producer, and that what a 
 man will lose in the increased cost of his livelihood as a consumer 
 he must have repaid to him in the increased price paid for his 
 labour as a producer ; but it is true to a certain extent, and to 
 that extent this incidental benefiting may be set off against the 
 general loss to the community involved in the temporarily 
 enhanced cost of the necessaries and luxuries of life. In respect 
 of the very large and varied catalogue of the things which could 
 be produced (given the adequate inducement) in the country of 
 importation, it has been demonstrated that a duty essentially 
 protective in its results will occasion disturbances of values and 
 consequent increase of profits and of the rate of wages, only 
 during the interval needed to effect the necessary readjustment 
 of the functions of supply within the country; a matter in 
 
 • Ante, p. 113. 
 
c. XVI.] FEEE TRADE AND PROTECTION 291 
 
 respect of this class of commodities of but a very few years at 
 most, in some cases even possibly of a few months. 
 
 It is far different with most of the things which can be produced 
 in the country only to an extent inadequate to the demand ; but in 
 respect of this class, no protectionist is as yet prepared to advo- 
 cate the imposition of an import-duty so heavy as to have any 
 directly protective result ; and practically therefore, from this 
 point of view, taxation of this class may be dropped out of this 
 part of the argument. But with respect to the first class ; things 
 which we are able to produce ; the main solid and permanent 
 benefit must arise from the greater degree of employment both 
 for Capital and Labour within the country; which would be the 
 one permanent economic result of the change. So clear is this, 
 even to " Free Trade " stalwarts, that they do not attempt to 
 dispute this part of the protectionist case. But there are counter- 
 arguments, some of great weight. Some, it is true, are passing 
 silly. As, for instance, the mere sneer ; that of inventing for 
 instance, the ridiculous case of " protecting the growth of goose- 
 berries " in order to " further the manufacture of British cham- 
 pagne " and such like silly devices of shallow rhetoric which 
 carefully avoid the consideration of the staple manufactures such 
 as the metal industries noticed page 204, ante, the effect on 
 which would be too obvious to be denied. For it must be that 
 in such employments the more the foreign supply is excluded, the 
 more effective will be the enhancement of the domestic industry 
 and the greater the absorption into productiveness of the Means 
 and Energy of the country. Now to the mind of the writer it 
 appears that this is an overpowering consideration of expediency, 
 deriving its force from the permanent amelioration of the eco- 
 nomic condition which it promises. With this motive alone does it 
 seem permissible to venture on so difficult and disturbing an 
 experiment as the readjustment of taxation. 
 
 To the counter-arguments must be given very full weight ; and 
 among them are some the force of which demands careful estima- 
 tion ; but the real strength of the above plea has not been 
 adequately realized even by the advocates of tariff reform them- 
 selves. It has been the custom with them to contrast the 
 statistics of " unemployment," as it is called, of the United 
 Kingdom with those of nations whose policy is frankly protective, 
 Germany and the United States for example, and which happen 
 to have succeeded to the greatest extent in displacing British 
 
292 THINGS AS THEY AEE 
 
 industry. There is, it is true, on the average of years, an 
 advantage in this respect to protective countries, but this seems 
 at first sight a very slight one. A certain margin of " unemploy- 
 ment" in the skilled trades is, it is agreed on all hands, inevit- 
 able in every industrial community.* It represents only the 
 normal proportion of worklessness incident to the occasional 
 changes of job of skilled men. That necessary proportion has 
 been put at two per cent., and statistics seem to show that in 
 Germany on a run of years the average percentage rises to 
 something between four and five, and in the United Kingdom to 
 about seven. Put otherwise, that whereas it would be necessary 
 anywhere that the skilled-trades workman should lose, say, one 
 working week in the year, the German workman is found, on the 
 average, for some reason, to lose, say, two weeks and his British 
 brother from three to four. The difference between these hardly 
 seems to justify the immense dislocation and friction that would 
 be involved in a complete change of fiscal policy. The real evil 
 to be remedied is infinitely more far-reaching. What has to be 
 cured, is not the comparatively insignificant waste of time of the 
 regularly employed (even though this when translated into 
 thousands of pounds may mount up to an aggregate of annual loss 
 most formidable) ; but the immensely disproportionate excess of 
 the class who by reason of the restriction of opportunities of 
 employment, have degenerated into the category of the unskilled 
 and casual, and are forced to stand outside of the regular efficient 
 industrial army — the irregulars of labour, crawling always 
 between the alternative precipices of destitution and criminality, 
 and out of whom in due course are evolved the still more pitiable 
 and dangerous host of the unemployable. It is in the permanent 
 improvement of the status of these that lies the real urgent 
 problem of the future of the country. Statistics which deal only 
 with the recognized trades, their earnings, their rate of wages 
 and their average yearly percentages of wasted time, afford no 
 light on this latter and greater problem of the degradation of the 
 mass ; but the mass we dare not neglect, for it is by it that the 
 population of the future is being procreated. The main hope of 
 
 * Trade Union Statistics as taken from Board of Trade Returns and set out in 
 " Work and Wages," Brassey and Chapman, 1908 edition, are for the decade 1894— 
 1904 : Percentage of Unemployment in Engineering, Shipbuilding, and Metal 
 Trades, 1895, 8-2, dropping to 2-4 in 1899, then rising each year till it reached 8-i 
 in 1904. For other trades, 4-2 in 1895, dropping to 2-3 in 1899, rising to 4'0 in 
 ISOi. WJ.th regard feo unskilled labour there are no reliable statistics. 
 
c. XVI.] FREE TEADE AND PROTECTION 293 
 
 the organism of civiKzation therefore lies in the progressive 
 incorporation of those who would otherwise form this sad 
 irregular force into the ranks of the recognized battalions of 
 industry ; and therefore it is, that one clutches at any reason- 
 able way which promises to result in a permanent extension 
 of the opportunities of regular employment, adequate to 
 embrace the greatest possible number of the citizens. This 
 object it is clear can be served by some fiscal policy which, 
 whether it costs the people a little more or a little less at the 
 outset or even in the long run, will assist the process of the 
 absorption into the higher class of regular employment, of 
 those who without the opportunity would be destined to exist 
 in the lower one of casual and unspecialized labour ; it is only 
 by such a bettering of conditions that one can impede the 
 course of further degradation. 
 
 Hewers of wood and drawers of water, workers occupied 
 in functions not mentally differentiated from those of the 
 horse and the ox, there must always be in every community. 
 This is unavoidable; the pity of it is, rather, that there 
 should be so many qualified for a higher fate than that of 
 the Gibeonite, to whom the opportunity is now denied of rising 
 in the scale of existence, but whose status might be improved 
 were regular employment for skill and aptitude more generally 
 available. 
 
 One is driven back always to the concrete instance. An 
 industry supplying a great home demand, say that of those who 
 make boots or glass or locks or razors, is supplanted by a foreign 
 supply of similar articles at a price at which the things cannot 
 be produced say, in England or Scotland, and could not be 
 produced in the country of their origin if the price at which the 
 surplus product can be profitably exported were not greatly 
 surpassed by the local value which protection confers on what 
 the producers are able to put on their own markets. And so it 
 necessarily occurs that English and Scotch makers of such 
 things are gradually deprived of employment, and forced into 
 the ranks of the casual workers, pushing out again from even 
 these their equivalent in number down into the gulf, at the 
 bottom of which are the criminal, the pauper, and the unem- 
 ployable. To what extent, then, is it worth while to incur for a 
 time the evil of higher prices if necessary, in order to arrest this 
 process of degradation ? The answer of Mill is simple in the 
 
294 THINGS AS THEY AEE 
 
 extreme. It is never worth while, says he.* The only legitimate 
 economic function of mankind is to "buy in the cheapest 
 market." So long as man continues to do this, the world over, 
 " All is for the best in the best possible of worlds." The fact 
 that a particular industry in a particular country can be under- 
 sold by the surplus productions of another country is ipso facto 
 a condemnation of that industry, and it is high treason to 
 "humanity" to wish it to survive and waste the productive 
 power of the nation on a process for which the nation that 
 foolishly allows it to exist is comparatively unfitted : that would 
 be to aim at the survival of the more unfit ; " which is absurd." 
 
 Capital and Labour will betake themselves, says innocent 
 Mr. Mill, to " more suitable employment." Do not interfere to 
 hinder their escape from the less profitable industry by pro- 
 tecting it in any way. And this, say the adherents of this 
 philosophy, ought to be an all-sufficient consolation to the 
 misguided people who wish to persist in making boots and locks 
 and razors which can be supplied better and cheaper from the 
 surplus products of America and Austria and Germany ; and 
 right-thinking philosophers will discourage the insane persistence 
 of such outclassed producers and do their best to induce them to 
 acquiesce cheerfully in their own impoverishment and extinction. 
 They are to have the comfort of considering that by " transferring 
 themselves to more lucrative employment" (how this is to be 
 done, the philosopher never takes the trouble to explain), they 
 will be promoting the general economic efficiency of their country. 
 But the ugly naked fact is that neither the Capital nor the Labour 
 so employed can transfer itself, and that the more lucrative 
 employment is not to be obtained, because each branch of industry 
 in turn has in each country its own limit of productiveness, 
 inexorably fixed by the world's demand for the things it brings 
 forth, and it is already producing as much of these as the com- 
 merce of the world can absorb. And therefore there is no 
 room whatever for an increased production, say, of steel rails 
 or cotton- cloth or worsted or any of the other things for the 
 
 * Duties on importation may then be divided into two classes : those which have 
 the effect o£ encouraging some particular branch of domestic industry and those 
 which have not. The former are purely mischievous, both to the country imposing 
 them and to those with whom it trades. They prevent a saving of labour and 
 capital which, if permitted to be made, would be divided in some proportion or 
 other between the importing country and the countries which buy what that 
 country does or might import. Mill (quoting from his Essay on International 
 Commerce), " Principles of Political Economy," Book V., Chap. IV., § B. 
 
c. XVI.] FEEE TEADE AND PEOTECTION 295 
 
 making of which it might be imagined that this country has 
 some inherent superiority, beyond the amount which the demand 
 of the world for the moment affords the opportunity of 
 supplying. And therefore the vanquished in the economic 
 struggles cannot transfer themselves or their labour or the 
 capital they have expended in the appliances of production. 
 We cannot fit ourselves to make more ships by producing fewer 
 locks, and the other peoples of the world who emulate us in pro- 
 ducing cotton or worsted or ships take good care by the imposition 
 of duties and restrictions, that we shall not encroach on their 
 opportunities by under-selling them in our turn in their own 
 markets for these things. And as each industry goes under in 
 the struggle of growing competition, there ensues in fact no 
 readjustment in obedience to Mr. Mill's decree, substituting for 
 the decline of a failing industry an enhanced productiveness in 
 another. Nothing of the sort ever occurs, and nobody but the 
 pedantic theorist ever imagined that it would. The " transfer of 
 Capital and Labour " to more lucrative employment is a figment 
 of the imagination of an d priori philosopher, who enjoyed the 
 advantage of a serene ignorance even of things as they were in his 
 distant day, and had no conception of things as they were going 
 to be. What happens is a waste of the Capital and skill already 
 devoted to the perishing employment, and nothing else what- 
 ever ; a diminution of the total wealth-producing power of the 
 nation, while the possibility of a correlative increase in the pro- 
 ductiveness of its other industries remains as it always has been, 
 a theory incapable of realization. 
 
 And it is after all a question of how and in what degree 
 it benefits the people of a country that things should be bought 
 in it as cheap as possible. One would wish to see this worked 
 out in pecuniary results to the ultimate consumer. Suppose, for 
 example, you have succeeded, at the cost of extirpating the manu- 
 facture of locks and reducing certain Staffordshire villages to 
 destitution, in enabling ironmongers to supply builders with a 
 set of locks for workmen's dwellings, which will cost the builder 
 88. instead of 5s. per house ! It is worth while to ask, by how 
 much will the rent of a tenement in such a building be diminished 
 to the tenant per week or per year or per century as a conse- 
 quence of such reduction in the cost of production of the house. 
 And if the ultimate consumer cannot thus reap a perceptible 
 benefit, where, in the name of all that's pedantry, does the 
 
296 THINGS AS THEY AEE 
 
 gospel of the " cheapest market " practically come in ? Does it 
 not after all just come to this, that in the domain of economics 
 all generalization is ridiculous? Each variety of commodities 
 has its own sequences of laws of supply, demand and price, and 
 the expediency of taxing any one thing must be judged of by the 
 conditions affecting that one, and cannot rightly be estimated by 
 the application of any " universal law" whatever. 
 
 From these two main arguments for a system of general 
 import-taxation one now passes to a third, which seems to 
 possess far less cogency. It involves propositions and predic- 
 tions by way of argument, which appear to lie on the borderland 
 between the real and the sham, not absolutely to be dismissed as 
 worthless but assuredly not to be relied on as convincing. This 
 is the argument based on what are known as the " Imperial " and 
 " International " workings of the adoption of " tariff reform." 
 It is suggested that a general system of imposition of import- 
 duties would enable the State to negotiate reciprocal arrange- 
 ments with the governments of foreign countries on the one 
 hand, and of British colonies on the other, which in their com- 
 bination would be made to tend towards the expansion of the 
 commerce of the United Kingdom in particular, and also tend to 
 the general advantage of the Empire. This is, of course, Protec- 
 tion for Protection's sake, the direct negation of academic Free 
 Trade ; a striving to deflect the commerce of the world from its 
 natural course in favour of particular sets of producers and 
 incidentally to the prejudice of particular sets of consumers. It 
 is amusing to note that almost the first practical exponent of 
 this heretical notion (not quite the first, because the Methuen 
 treaty with Portugal was an earlier example of the device), was 
 the great Mr. Cobden himself, who was instrumental in bringing 
 about an arrangement with the French, by which the British 
 State bound itself to admit certain French wines at a reduced 
 rate of duty, in return for a mitigated taxation in France of 
 certain English manufactured products : (the benefit of which, by 
 the way, according to all orthodox doctrine could in no sense accrue 
 to the English producer, but must as an inevitable necessity 
 have been entirely absorbed by the French consumer). It is sad 
 to think of the outrage to which, in negotiating this particular 
 treaty (which, by the way, failed entirely to secure any permanent 
 advantage, and was promptly denounced), Mr. Cobden was sub- 
 jecting by anticipation the cherished doctrines and convictions 
 
c. XVI.] PEEE TEADE AND PROTECTION 297 
 
 of the " Club " that was thereafter to be founded for the worship 
 of his name. 
 
 Now to a certain very limited extent it is true that the course 
 of the world's demand can be influenced by conventions between 
 States as to rates of duty on specific articles of importation, and 
 it is also true, that for sixty years or so British statesmanship has 
 been precluded from entering into such arrangements by the 
 rather comical orthodox pedantry which forbade " on principle " 
 the giving of any preference in British markets to the produce 
 of any one country over that of any other. Protection was "a 
 monster of such hideous mien, that to be hated needs but to be 
 seen." And even the Brussels convention, by adhering to which 
 it was attempted five years ago by British statesmen (in the long 
 run in vain), to preserve for a short time the life of a British 
 colonial industry, is already in the course of being abrogated in 
 deference to "conscientious" objections to impose a countervailing 
 duty on the produce of a particular country which insists on pay- 
 ing bounties on export. But so long as all the other producing 
 countries in the world persist in their heresy, it seems futile to 
 expect that any appreciable benefit will ever be allowed to accrue 
 to British industry in the way of opening to it more extended 
 access to the markets of countries which have competing indus- 
 tries of their own. The most that can be hoped for is the 
 modification here and there of some tax absolutely prohibitory, 
 and in other instances the promotion of a very limited number 
 of products of British manufacture from the category of that of a 
 less to that of a more favoured treatment : a small matter, in 
 truth, because no foreign nation can be induced by its govern- 
 ment to import anything of which it has not commercial need, 
 and those things of which it has such need it will continue to 
 import very much in despite of all endeavours of the State to 
 hinder their importation. Certain varieties of yarn, for example, 
 are needed by the German manufacturers. Those they have to 
 buy in the country which produces them best, which for the 
 moment is Britain. And the people who want these things 
 take great care, without any intervention of a special treaty of 
 reciprocity, that the Imperial authorities of their own country 
 shall do nothing to hinder the importation ; while on the other 
 hand, no "most-favoured-nation treatment" of British cloths 
 will be allowed for one moment to interfere with the sale in 
 Germany of the things to produce which yarns are imported. 
 
298 THINGS AS THEY AEE 
 
 It is as silly to imagine for a moment at present that any 
 foreign nation is willing to imperil the prosperity of its own 
 industries, as it was in the "fifties" of the last century, for 
 Mr. Mill and Mr. Cobden to prophesy that the obvious advantage 
 of "buying in the cheapest market " would induce every nation 
 to forbear for all time from setting up in competition with the 
 British manufacturer industries of its own. Universal free 
 trade has been proved to be a chimera. In no foreign country 
 at this moment is there indicated the faintest tendency to adopt 
 it, except in such few as have not yet felt the need of establish- 
 ing manufacturing industries. And these in their turn, as their 
 equipment of civilization progresses, are certain to complete it as 
 far as they are able, by the gradual institution of fresh industries 
 aiming at the amassing of means, and by introducing where 
 possible new departments of production and distribution among 
 themselves. This implies, of course, the gradual adoption of 
 some degree of protection by every State in the world in turn ; 
 for it is freely admitted that infant industries at least must be 
 cherished by protective duties. And as the infants grow into 
 adolescence they indignantly refuse to be deprived of the food 
 on which they have been reared. And as far as one can see, the 
 world-system of Free Trade among the nations which Mr. Cobden 
 in his day believed was already beginning to realize itself, and 
 would within very few years become universal, is as likely to be 
 put into practice as some modification by treaty of the law of 
 gravitation, to the effect that masses should henceforth attract 
 each other in the inverse ratio of the cubes instead of the squares 
 of their distances. 
 
 The favourite argument of the tariff reformers that we ought 
 to have a general tariff, in order that we may be able to offer 
 partial exemptions from it as a bribe to induce other nations to 
 admit some of our products at lower rates than those which they 
 are charging to our competitors in their market, is therefore a 
 proposition which, though it looks pretty on paper, is calculated 
 to prove very illusory in practice. It is the fashion to point it 
 with telling references to the decay of this or that British 
 industry, " ruined by foreign competition." On this point a 
 wide distinction has to be drawn between competition in our own 
 market and that with which we are encountered in neutral or in 
 protective markets. The former is remediable, if it is worth 
 while to remedy it, by import-duties designed to insist that recourse 
 
c. XVI.] FEEE TEADE AND PEOTECTION 299 
 
 should be had by our own consumers to the efforts of our own 
 producers to prevent our own people from buying in the cheapest 
 market in order that they shall not thereby ruin each other. 
 The latter is utterly irremediable by any device whatever. You 
 can make the British workman get his boots from Northampton 
 instead of Connecticut or Austria, but you are not in a position 
 to compel the Brazilian to buy linen from Barnsley instead of 
 Saxony ; and indignation is entirely wasted when it points to the 
 wickedness of the German, who perversely insists on getting 
 sail-cloth from Versmold or Stettin instead of from Dundee, or 
 for the matter of that with the Norwegian who finds it pays him 
 better to make steamers than sailing ships, and is giving up the 
 importation of sail-cloth. That is an injury you have to " take 
 lying down " whether you like it or not. Many of the bitter com- 
 plaints of failing markets thus assume the form of lamentations 
 over the inevitable ; but on the whole, and as far as regards our 
 external trade, no real additional potency in negotiation is to be 
 anticipated from the adoption of any sort of protective tariff 
 whatever. The day for " commercial treaties " that will be econo- 
 mically effective has passed away. 
 
 Nor is much more permanent economic result to be anticipated 
 from the much advocated sentimental British mutual Protection 
 by means of which the "Empire," it is suggested, could be induced 
 to build a protective wall around itself, so that its component 
 nations should be driven by inter- State convention, to deal 
 with each other in preference to deriving their supplies of goods 
 from countries under other flags. As a matter of fact, every 
 British colony which disposes of its own destiny is frankly pro- 
 tectionist, and imposes quite effective prohibitory duties on all 
 British imports which compete with its own products ; and in no 
 one of them do the people cherish the slightest intention to 
 depart from this scheme for building up their own prosperity on 
 the basis of their own demand. So that, as far as concerns 
 " Imperial Preference," though no colony would refuse a theo- 
 retical concurrence with the idea, or to give effect to it on paper 
 by enacting an ostensibly differential duty against competing 
 goods of unbritish origin, the practical effect would prove essen- 
 tially nugatory. In truth the suggestion is equivalent to a 
 proposal to build up, outside of the formidable wall of protection 
 which each colony has already erected round its own industries, 
 and by which each intends to keep out all British manufactures 
 
300 THINGS AS THEY AEE 
 
 that will compete with them, another smaller wall against foreign 
 competition, for the purpose of barring access to the foot of 
 the first. This somehow suggests the story of the gentleman 
 who had two apertures made in the door of his stable, one for the 
 cat, and one for the kitten. The kitten's door might be shut, 
 and then if you can only prevent her getting in by the cat's 
 door ! . . . The inner fortress in itself is of course quite 
 formidable enough to bar access to all effective competitors alike. 
 
 No self-governing nation would tolerate for an instant such an 
 oppression, for example, as that which was practised on India in the 
 interest of the cotton-weavers of Lancashire.* When a community 
 has rightly or wrongly embraced a protective system in the 
 supposed interests of its own workers, it may be trusted to see to 
 it that it will be effective for its purpose ; and the self-governing 
 British nations beyond the seas are progressing with great 
 rapidity in the direction of so perfecting their own development 
 in every department of industry, as to extend to the utmost of 
 their power the opportunities of employment for their own 
 population. As each fresh industry comes into being, those 
 embarking in it will claim and will obtain their share of profit, 
 and their participation in the benefits which as protectionists 
 they anticipate from the exclusion of competition, whether British 
 or foreign ; and it is inconceivable that any one of the States 
 should renounce the right to start or to protect any fresh 
 internal industry which promises to confer on the opportunities 
 of its citizens a commercial chance of appropriating an additional 
 share of the Means of the world. Here again it is impossible to 
 say the argument is a " sham " one. There are honest people 
 who believe in it ; and there undoubtedly are instances (and the 
 industry of marine transportation is apparently a very important 
 one) in which something effective could be done to increase the 
 earning powers of British Capital by securing for it some 
 advantage in some department of British colonial commerce. 
 
 The difficulty is to see how in any circumstances a correspond- 
 ing commercial advantage can possibly be conferred on the 
 colonial partner. Unless the advantages are reciprocal, no con- 
 vention for conferring them can possibly endure. Now the 
 products of the colonies capable of being absorbed by the United 
 Kingdom consist, as things are, of food-stuffs and raw materials. 
 And of each of these any taxation at British ports will probably 
 
 * Ante, p. 178, 
 
c. XVI.] PEEE TEADE AND PEOTECTION 301 
 
 be more or less disadvantageous to home industry and commerce. 
 Not necessarily or universally so. Each variety is subject 
 to its own conditions, far too varied and too intricate to be 
 analysed in a rudimentary work like the present. But in 
 respect of one, the most important of these products, namely 
 wheat, without providing for some taxation of which it appears 
 almost impossible to conclude any reciprocally advantageous 
 convention with the British colonies. Free Traders are quite 
 right in objecting, that no differentiating duty against unbritish 
 producers that could be imposed in England could benefit the 
 growers of Canada or Australia. To begin with, no import 
 duty would be tolerated by the people of this country which 
 would even threaten seriously to increase the cost of this 
 essential of life. The project is incapable of being carried into 
 effect. 
 
 There is no doubt a certain minimum rate on wheat which 
 can and ought to be charged, which would not raise prices 
 perceptibly* ; and under the normal condition of the wheat supply 
 of the world, such a rate imposed in the ports of the principal 
 centre of consumption will generally fall upon the producer, 
 who is unable nicely to restrict his output to the volume of 
 effective commercial demand for the time being. But beyond 
 this, nothing can be done, and, what is more to the purpose, 
 if anything were attempted it could effect nothing that would be 
 of any advantage to British producers beyond the seas. Assume 
 for a moment that Indian, Canadian and Australian wheat were 
 favoured in English and Scottish ports by a differential rate 
 against the produce of the Argentine or of Eussia. What will 
 this result in that can benefit the people of the Dominion, the 
 Commonwealth, or the Indian Empire? Assuredly nothing. 
 The outcome of the attempt would be simply a redirection of the 
 streams of supply. The grain-ships from Odessa and Buenos 
 Ayres and Memel would converge on Antwerp, Havre and 
 Eotterdam instead of London, while those from Melbourne and 
 Quebec would be directed exclusively to British ports. The 
 price obtainable by the producer, which is a world-value, deter- 
 mined by world supply and demand, and translated into money, 
 would be unchanged, and therefore the gains of the producers in 
 the British dominions, which depend on world values, would not 
 be enhanced. While on the other hand, British commerce as a 
 
 * Ante, p. 282. 
 
302 THINGS AS THEY AEE 
 
 whole would suffer by the artificial restriction of the market of 
 importation, and by the lessening of the ties which link the com- 
 merce of the United Kingdom with that of some of the most impor- 
 tant markets of consumption of British manufactures, which are 
 precisely unbritish wheat-exporting countries. More or less, 
 the same considerations apply to other things which Britain 
 beyond the seas exports to the mother-country: food and raw 
 materials, import-taxation of which must always be resisted at 
 home, and is capable of conferring but a shadowy advantage at 
 best on British producers abroad. And the truth is, that from 
 the " Imperialist " even more than from the " International " 
 point of view, this argument of the protectionist, though appeal- 
 ing to a commendable Imperial sentiment, appears illusory. On 
 the other hand, the notion that the British Empire exists by 
 sufferance of the other States of the world, and must abstain 
 from regulating at its own pleasure its own commercial arrange- 
 ments for fear of incurring their resentment, even though only 
 by adopting principles which foreign nations themselves univer- 
 sally adhere to in the management of their own affairs, merits no 
 serious attention, however eminent the gentleman who advanced it. 
 
 Of the valid reasons against the adoption of a system of 
 extended taxation on imports, the most cogent is the one above 
 adverted to (partial, in that it is applicable to the whole of class 2,* 
 but not to class 1). That is the risk of any sort of interfer- 
 ence with the free access to this country of raw materials of 
 manufacture at the lowest world prices, and the great objection 
 to any duty which can raise the price to the consumer of 
 necessary food, as distinguished from luxuries ; for food, like 
 shelter, is a raw material of labour, and its price, like rent, an 
 ingredient in the cost of all industrial process. 
 
 Now any appreciable rise in the price of the necessaries of life 
 and industry must itself be a national misfortune. To begin with, 
 it must not be lost sight of, that those who would be the chief 
 temporary sufferers by the changes are the masters of politics, 
 and that patience is not a distinguishing virtue of the aggrieved 
 voter. A " fiscal policy " may be one which in the long run ia 
 bound to prove beneficial ; but unless it is sure of commanding 
 the steadfast adherence of those who stand to lose by it at the 
 outset, even for a few years, their patience will become exhausted, 
 and the set of politicians who have been entrusted with the task 
 
 » Ante, p, 277. 
 
c. XVI.] FEEE TRADE AND PROTECTION 303 
 
 of putting into practice what at the outset their masters may 
 have quite eagerly given their " mandate" for, will find that as 
 the " shoe begins to pinch," the assent of the public is getting 
 withdrawn. Matters of finance should be, like foreign policy, 
 regulated according to fixed principles of administration outside 
 the range of the competition of politicians for place and power. 
 The fickleness of electors has, at the moment of writing (May, 
 1908), received striking exemplification, and this indecision of 
 the population, which is fatal to any continuity of State policy 
 in any department of public affairs, is specially so in respect of 
 national finance, the workings of which demand above all things 
 fixity of intention on the part of the public will, and a sufficient 
 patience to induce that will to sanction persistence in a policy, 
 the inception of which must be disturbing, and must result in a 
 certain degree of pressure on and loss to individuals, however 
 dexterously put into practice. Valeat qwantum, the above state- 
 ment is an objection to any sort of change of fiscal policy, how- 
 ever beneficial it might ultimately prove to be if allowed to be 
 pursued to its normal ultimate conclusion. The public is 
 impatient, looks for immediate benefit, and is indisposed to 
 tolerate even a demonstrably transient inconvenience. 
 
 In a work by the late Sir Arthur Helps, this concentration of 
 the minds of people on the immediate things of to-day, in dis- 
 regard of the interests of the future, was exemplified by the fable 
 of a number of persons gifted with prophetic instincts, who were 
 resorted to by people for their sooth-saying, and of whom those 
 by far the most in request were the men who had the gift of 
 direct prophecy only for a few hours. Those whose prophetic 
 foresight operated only at the expiration of a few weeks from the 
 immediate present were sought after by a much smaller class of 
 consultants. Now and again an occasional client dropped in to 
 avail himself of the service of a prophet whose power of pre- 
 diction commenced after the expiration of a year. But the 
 real, far-seeing world-prophets, the sooth-sayers of statesman- 
 ship, those who had the power of foretelling events through the 
 ages, were left in complete neglect, and no man had ever been 
 known to avail himself of their services. So it is with politics ; 
 our interest in the claims and rights of posterity affects nobody, 
 arouses no enthusiasm ; fiunt tantum declamatio. And this is a 
 true objection, as far as it goes, to every mode of amendment 
 of institutions, the disturbance of which must cause temporary 
 
804 THINGS AS THEY ARE 
 
 inconvenience to a class sufficiently large to make its dissatisfaction 
 and impatience politically formidable. The only hope therefore 
 of being able to attain any national benefit by the adoption of a 
 system of the extension of indirect taxation, lies in a quite 
 moderate but still effective rate on manufactured articles which 
 can be produced in the country itself, a rate which, whether we 
 like the word or not, must to some extent be " protective " if it is 
 to increase employment for labour ; while so far as revenue is 
 concerned this will have to be supplemented by a comparatively 
 small impost in the nature of a market toll, productive in the 
 aggregate but not appreciably protective, on other articles of 
 necessary importation ; a " tariff for revenue only," which must 
 be levied upon a carefully selected list of other imported things 
 (in the main food and raw material) which the country is not in 
 a position to produce adequately to the demand. Beyond these 
 somewhat narrow limits it appears to the writer that it is 
 politically impossible in this country and at this time to put into 
 effect any proposal for "tariff reform " whatever. 
 
 It is now proposed to consider remaining objections, some of 
 which are well worthy to be weighed, while others merit atten- 
 tion as curiosities of fallacy. The first and most obvious argu- 
 ment is that which one man in the street is competent to address 
 to the other, and he to appreciate. It is, that the effect of a duty 
 which is "protective" is to enhance the cost of producing all 
 things by the increased price of things needed by those engaged 
 in production, and that thereby protection must impair the 
 power of British industry to compete for the supply of foreign 
 markets, and the opportunity of employment for the people who 
 make their living by it. 
 
 At first this seems obvious. But consider how the conclusion 
 is directly contradicted by the notorious fact that the people 
 whose competition with the British industries in neutral markets 
 is most formidable, are precisely the subjects of States which 
 have adopted this system of protection of their own productions 
 to the fullest extent. This inconvenient fact imposes on those 
 of the Free Traders who cherish their own reputation for truth- 
 fulness a certain hesitancy in the enforcing of this argument. 
 They are quite sure it ought to be true, but somehow there is 
 the glaring contradiction of actual indigestible fact, and so 
 this thesis of the economist occurs rather in the course of 
 popular political controversy at election times, than in the 
 
c. XVI.] FREE TEADE AND PEOTECTION 305 
 
 more serious polemics of academic discussion. The reason of 
 this discrepancy between the orthodox theory and the actual 
 phenomenon is not far to seek. It is, that the argument neglects 
 the quantitative analysis of results, the degree of effect, that is 
 to say, of variation in the price of manufactured articles on the 
 necessary wages of those engaged in producing other articles. 
 The truth is that this forms quantitatively so minute a part of 
 the "general cost of living" that its influence disappears in the 
 face of the other workings of "protective" systems. 
 [, There is one country, in which the zeal to establish native 
 manufactures, and impatience at an outward drain of gold, 
 induced the imposition of a tariff almost entirely prohibitory, 
 with the result of driving the population into a chronic state of 
 disaffection, always ready to blaze into revolt. But even in 
 Portugal, an apparently prohibitory tariff somehow produces 
 some internal benefit ; and States informed by a wiser experience 
 all refuse to fix their import-duties so high as completely to stop 
 importation, and thereby to cripple the yield of their indirect 
 taxation. In no country in the world, except for a certain short 
 interval in the United States of North America, has the govern- 
 ment habitually exacted on the whole from its people a revenue 
 in excess of its normal expenditure; and the consequence is, 
 that a tariff even ostensibly protective, and therefore not imposed 
 with the direct purpose of enhancing revenue, has always the 
 result of lessening direct taxation. For it is this, not the indirect, 
 which presses the most heavily on the less wealthy classes. 
 And the solution of the apparent anomaly is that indirect taxa- 
 tion relieves the burthens on the producing classes by lessening 
 direct taxation by more than it adds to the other part of the costs 
 of life. The cotton-operative in England, for example, might be 
 asked twopence more for each pair of boots for his children, 
 twopence a week more for his sugar or tea, a shilling every two 
 years on a suit of clothes, or a penny for a shirt, and so on to 
 the end of his modest needs and luxuries — on the whole, burthens 
 that may be borne by a little curtailment of his expenditure on 
 beer. But it will need a prodigious aggregate of these increases 
 to equal the shilling or two a week extra rent which is now 
 occasioned to him by the incidence of local rates levied to 
 supply State expenses which are at present wrongly thrown on 
 the municipalities. In addition to this, as has been shown in 
 the last chapter, a scientific reformation of indirect taxation is 
 
 T.A. X 
 
306 THINGS AS THEY AEB 
 
 capable of application, producing large sums in the aggregate, 
 which can have no protective effect whatever, and not tend to 
 enhance the cost of production at all, and therefore would not in 
 fact hamper any industry by calling for any increase in the 
 wages necessary for the subsistence of the worker. 
 
 The argument therefore is not consciously disingenuous, but 
 yet it is difficult to believe that those who raise it really attach 
 to it in their own minds the importance which they ascribe to it 
 in debate. The thesis is generalized, so as to appear incapable 
 of concrete application, and intricate with a series of subtle and 
 involved fallacies. It is difficult to formulate in general terms, 
 but in words it may be stated somewhat thus : " Take the nation 
 " as a whole. Consider how much more money you are going to 
 " make the nation pay in the aggregate for a vast number of things 
 " of daily use that go to make up the sum total of its necessities, 
 " and, as a corollary, the general resulting lessening of its 
 " economic power of producing for the supply of neutral markets, 
 " when by increasing your indirect taxation you increase the 
 " aggregate of the sum you must absorb from the national 
 " industries." In this argument are involved the following falla- 
 cies : first of all, the conception of " the nation " as an entity 
 different from the aggregate of the individuals composing it.* 
 Secondly, the confusion between "money" and "Wealth."t 
 Thirdly, the tacit untrue assumption that the means exacted 
 from the people of the country and appropriated by the State 
 constitute "Wealth" in some manner lost to that country and 
 disappearing, instead of being what they really are, the subject 
 of a temporary redistribution of Means, which must in due 
 course be again redistributed among the people of the country. 
 The answer to this objection is therefore threefold. First and 
 foremost, taxes are an appropriation of Means, and not a sub- 
 traction from Wealth. A portion of the Wealth produced in 
 a country has always to be consumed by being acquired in 
 exchange for Means under the directions of those employed 
 by the State in the administration of the general concern of 
 government. But that portion will be neither more nor . less 
 because of some fiscal readjustment of the channels through , 
 which are derived the Means which are destined when so 
 collected to be converted into that proportion of the Wealth 
 
 • Ante, p. 241. 
 t Ante, p. 211. 
 
c. XVI.] FEEE TEADE AND PROTECTION 307 
 
 which the State thus needs to consume. The wealth-producing 
 power of the nation therefore is unaffected by any aggregate 
 temporary diversion of Means which does not impair the 
 Wealth-producing capacity of the aggregate of individual pro- 
 ducers ; and this and not the amount of Means available at any 
 moment to purchase Wealth, is the measure of the economic 
 potency of the people of the country in the commerce of the world. 
 And that is the real and sufficient answer to this somewhat 
 abstruse objection. 
 
 Another theoretical argument which is more persistently 
 urged, and which the Free Trade doctrinaire honestly believes 
 to be conclusive, is the one already incidentally dealt with;* 
 the assumed necessary dependence of the export trade of a 
 country on its absorption of importation. It is none the less 
 firmly held as a primary article of faith, in that it is entirely 
 unsupported by any experience whatever ; and indeed the facts 
 of the import and export trades of France and Germany, the 
 most rigidly and scientifically protected countries in the world, 
 and of the United States, the exportations of which for the last 
 twenty years have risen from 716 million dollars in 1887, to 1,880 
 million dollars in 1907, while the importations have only risen 
 from 692 million dollars in 1887, to 1,434 million dollars in 1907 
 (an average increase of 83 million dollars per annum in exports 
 and of 67 million dollars in imports for the last ten years) seem 
 to indicate some very deep-seated error in the reasoning which 
 leads to this conclusion, and the error may be traced to the same 
 initial fallacy of confounding Wealth with Means. A further 
 and still more glaring untruth is implied in this objection, which 
 is, that the economic welfare of the people of a nation is neces- 
 sarily indicated by the expansion or contraction of its exports 
 and imports, without taking into account the internal trade of 
 the country, for the estimation of which no returns are available 
 but which in volume and importance undoubtedly immensely 
 transcends its external commerce. And in truth we have here a 
 fallacy which is akin to that of the old mercantile theory which 
 Adam Smith exploded — the nonsense of the " balance of trade." 
 " How are people going to pay you for what you want to sell to 
 " them, if you refuse to purchase from them to the same extent ? 
 " They cannot pay you in money, there is not enough money in 
 " existence for the purpose. Therefore they can only -nay you in 
 
 * Ante, p. 131. 
 
 X 2 
 
308 THINGS AS THEY AEE 
 
 "goods, and if you interfere with their power of supplying you 
 " with goods, they will not be able to pay you at all, and therefore 
 " will not be able to buy your goods, and your foreign market will 
 " be lost." By dint of incessantly repeating this train of reason- 
 ing, this school of thinkers has managed to persuade itself of its 
 validity, the experience of the great majority of civilized com- 
 munities to the contrary notwithstanding. The answer is as 
 obvious as possible, and has been indicated at the very com- 
 mencement of these chapters at pp. 13 et seq.* Neither nations nor 
 communities conduct commercial operations by way of barter or 
 exchange of goods at all, nor by direct settlement of mutual 
 liabilities. That is one of the many modes by which indirectly 
 balances are, so to say, adjusted in the clearing-house of the 
 world ; but the trade of any one given country with any other 
 depends on the commercial demand in that one for the products 
 of the other — a demand which will satisfy itself without any 
 reference whatever to the cross-demand in respect of other goods 
 between these two countries in particular. The importation by 
 country A. of the goods produced by country B. is paid for by 
 the acceptance of bills of exchange or the creation of other 
 evidences of indebtedness, and these in their turn are satisfied, 
 often most indirectly, by some transfer of rights and claims 
 whether arising from the commerce of goods or otherwise which 
 willhave arisen between A. and C, or by still more indirect transfers 
 of value arising between countries D. and E., and so to the end of 
 the alphabet. It makes no difference in the operations of the 
 universal clearing-house of commerce and finance in whose 
 favour such obligations have arisen or by whom they have 
 been undertaken. The only things noted are by whom they are 
 presented for clearance, and the sum totals which each member 
 of the house will have to receive or pay in the aggregate. If a 
 country, for instance, restricts its imports of manufactured 
 goods, there will be a corresponding increase in its importation 
 of raw material ; and if its internal commerce is enhanced, 
 additional Means will arise therefrom, which will be equally 
 available with Means arising from external commerce to be 
 transmuted into values capable of use in that clearing of the 
 obligations of the whole world which commerce and finance are 
 unceasingly effecting. 
 
 This is done by the transfer of values available by way of 
 
 • See also p. 126. 
 
c. XVL] PKEE TKADE AND PEOTECTION 809 
 
 eqiuvalent in exchange for such commodities as the people of a 
 country find it advantageous to import, and which will similarly 
 be handed over to it in exchange for such things as other nations 
 find it advantageous to import from it. Take for example the 
 trade relations between England and Germany, as a concrete 
 instance. Many German products (which by the way, according 
 to the doctrines of convinced Free Traders ought to be produced 
 at such excessive cost owing to the severity of German import 
 duties, as to be unable to compete in the British market with the 
 home products of Free Trade Britain) are as a matter of fact so 
 cheaply produced as to supply the English market abundantly 
 and somewhat to excess. The English exports to Germany,* 
 mainly coal and raw material, are less in monetary amount, 
 though very considerable ; but the inequality of the balance in 
 no way impedes the exportation of German goods to England, 
 which are paid for in thousands of ways in complete independence 
 of the counter-exports of goods owned by English subjects (not 
 at all necessarily British products), to supply the needs of 
 Germany, and in the first place by drafts on what is produced 
 from British exportation to all the other countries of the world. 
 
 Commerce obeys the laws of world-production and world- 
 consumption, and what it brings is capable of diversion by the 
 simplest possible financial manipulation from any one country 
 to any other at will. The demand, say, for coal or yarns or other 
 things which the Germans find it convenient to obtain from 
 Britain, would continue a demand, even were the last German 
 manufactured article excluded by a British tariff more stringent 
 even than that which is imposed in Lisbon ; while so long as we 
 find it convenient to avail ourselves of the industrial productions 
 of Germany we shall continue to do so, and for no longer ; no, 
 not even to purchase the huge benefit of exporting British coal 
 to enable German manufacturers to manufacture things with 
 which to compete with our own producers in our own markets. 
 When British coal becomes so dear as not to pay the Germans 
 
 * The value of British exports to Germany in 1907 totalled £41,359,840. Our 
 imports from Germany were £38,782,062. Here the figures tend towards something 
 like a balance. But the commerce with certain other countries exhibits very 
 notable discrepancies in the comparison ; and the huge general excess of British 
 imports over British exports indicates a great preponderance of value inwards 
 which leaves margin enough in all conscience to pay for any conceivable accretion 
 to the value outwards, however strictly the commerce is limited to the con- 
 ception of the barter of goods for goods, which Mr. Macculloch believed was the 
 true way of looking at all trade. 
 
310 THINGS AS THEY AEE 
 
 to import, or when they have perfected arrangements for making 
 for themselves or supplying themselves from elsewhere with the 
 bulk of the other goods which they are now constrained to obtain 
 from us, we shall continue to buy from them such of their 
 products as we find suit our purpose so to obtain. In short, 
 the whole argument is a sham, none the less so, that it is con- 
 scientiously believed in by those who have trained themselves in 
 the habit of reiterating it. 
 
 It is far different with another series of considerations in 
 which the writer sees the main serious danger of a general 
 system of protective or partly protective duties on the import of 
 manufactured goods — the danger of corruption and abuse. It may 
 be permissible, after respectful perusal of Mr. Upton Sinclair's 
 remarkable work, " The Industrial Republic," to ticket this as the 
 " American Peril," for it is in the land of the great acquisitiveness 
 that its most formidable characteristics have been developed. 
 
 There is a solid foundation for this objection ; and it may 
 be that even too high a comparative value has been attri- 
 buted to it in the estimate of the quantitative values of the 
 several arguments for and against Protection with which this 
 chapter concludes. In Germany the constitutional defect of an 
 imperfect federation of constituent States might be supposed 
 under a protective system to afford to the cupidity of associated 
 producers opportunities of corruption and oppression at least 
 equal to what is observed in the United States. But as a matter 
 of fact the evil, though not altogether absent, is in Germany 
 observable in a far less degree. 
 
 The exploitation by commerce and finance of the opportunities 
 of monopoly and mononesis alike, is a subject which would 
 furnish materials for a goodly volume, and with which it is 
 impossible in these chapters to deal adequately to its importance. 
 It is by no means an American invention, though for the scientific 
 adaptation of its devices to modern industrial conditions we are 
 undoubtedly indebted to the financiers of the great Republic. 
 This edifice of exploitation demands for its support in the first 
 instance a deep and wide foundation of protection, so adjusted as 
 to combine the maximum of profit to individuals with the 
 minimum of productiveness to the State. But even this minimum 
 is bound to produce in the aggregate a huge customs revenue. 
 For a certain time in the United States, this revenue was in excess 
 of the requirements of the community, and from this, when they 
 
c. XVI.] FREE TRADE AND PROTECTION 311 
 
 succeeded in becoming politically powerful, the adventurers 
 derived ample funds of corruption for the furtherance of their 
 plans, diverting streams of Means along channels susceptible of 
 appropriate manipulation. The main object aimed at was to 
 maintain throughout the country monopoly prices in spite of the 
 stimulus which the augmentation of profit tended to afford to 
 internal production ; and this was effected by far-reaching com- 
 binations of producers in enforcing their decrees on the consumers 
 by a variety of methods more or less unscrupulous and oppres- 
 sive. The peculiar political constitution of the nation, which in 
 spite of the requirements of the age still pedantically adheres to 
 the rudimentary conception of a federation of petty independent 
 communities, each of which remains a sovereign power for the 
 purposes of legislation and the enforcement of law, proved the most 
 potent of all the instruments in the hands of the experts of 
 corruption. One reads as a matter of course, of the State legisla- 
 tures which have been " captured " by such and such railways or 
 combinations of railways, by this or that " ring " of producers or 
 "combine" of traders in a particular article; of Judge this 
 or that, who is " run " by such and such a corporation or 
 aggregate of corporations, that is to say, elected by their influence 
 and compelled to stand by ready to fulminate convenient injunc- 
 tions at the will of the "bosses" of the "ticket" which has 
 secured their election ! Even the enemies of society, thieves, 
 brothel-keepers, owners of disreputable saloons, card-sharpers 
 and the like, have in some cities a " combine " of their own,* get 
 their representatives into legislatures, "running" their own 
 magistrates to administer the laws which profess to be directed 
 against themselves ; and apart from the criminal classes properly 
 so called, Mr. Sinclair draws attention to the legion of mercenary 
 desperadoes, who when need arises for terror and violence, can 
 be relied on to organize themselves into bands to devastate the 
 homes of the recalcitrants and to destroy the goods of the fac- 
 tories of traders obnoxious to the secret directors of the " trusts "t 
 (the ruin of such individuals by systematic underselling at a 
 ruinous loss is, by the way, in general found a simpler and 
 easier method of extirpation). Such is the picture drawn for 
 us by Mr. Sinclair, and by others who have striven to incite 
 their fellow-countrymen to combine to curb the " combines." 
 
 * Upton Sinclair, "Industrial Republic," Chap. IV., p. 135. 
 \ lUd., Chap. I., p. 21 ; also Chap. II., p. 32. 
 
312 THINGS AS THEY AEB 
 
 The account is over-coloured and exaggerated, which goes with- 
 out saying ; exaggeration of statement being a common, and so 
 to say, almost necessary device for exciting public indignation 
 and provoking the public to efforts of reform. But there is 
 enough truth in the picture to induce thoughtful and impartial 
 statesmen to hesitate gravely before assenting to the setting up 
 in another country of institutions like those which seem to 
 have evolved a disastrous result among men of kindred race, 
 and whose general institutions (though they have far diverged 
 from those of the mother-country) yet have been informed by 
 the same jurisprudence and arisen from the same general con- 
 ceptions of public utility. Monopolies do powerfully stimulate 
 the instinct of acquisitiveness ; men do combine to appropriate 
 in questionable ways among themselves the resulting profits; 
 and the bigger and more powerful the combination, the more 
 unscrupulous will be the methods by which it will seek to attain 
 its ends. It will not be restrained by any regard for the interests 
 of the people of its own country, and still less by any considera- 
 tion of fair play for foreign competitors. And whatever difference 
 there may be in the conditions, the phenomena observable in 
 one " protective " country do indicate a series of tendencies 
 which will to some extent reproduce themselves in any other, 
 unless their causes are subject from the outset to watchful control 
 by a State of sufficient power to check the manifestations of 
 excessive greed. Identical causes will work out their results in 
 different directions, according to the sets of circumstances among 
 which they find their scope ; but the general striving of monopoly 
 to increase its gains, and of monopolists to combine and assert 
 their collective strength by political pressure, and to associate 
 themselves into organizations striving to extirpate competition 
 from within and prevent it from without, are tendencies which 
 assert themselves in each country which embarks on a career of 
 protection, however moderate and reasonable in its inception. 
 This is the real danger attendant on the adoption of Protection ; 
 the principal real argument for adherence to Free Trade. But 
 its force must not be placed too high. 
 
 For after all, the United States of America are not the only 
 "protective" State in the world, and there are others, in which 
 these evils do not attain the same deplorable dimensions. It is 
 rather to these others that we have to turn for an intelligent 
 prognosis of results to us ; for it is in these that the economic 
 
c. XVI.] FREE TRADE AND PROTECTION 313 
 
 conditions more nearly approximate to those of the United King- 
 dom. Every producing country in Europe has its own system 
 of Protection, and each system is subject to its own disadvan- 
 tages, which, whether they are counter-balanced by the advantages 
 derived from it or not, are capable of ascertainment and estima- 
 tion. Our statesmen have the experience of the world to profit by, 
 and our institutions are so framed as not to lend themselves to the 
 excesses of abuse which Free Trade advocates in the United States 
 have pointed to as attendant on the system of their country, under 
 its peculiar circumstances ; and therefore, of course, to their 
 minds, as inherent vices of every system of protection whatever. 
 
 The case for and against the " Cartells," the associations which 
 organize themselves for the exploitation of import-duties in the 
 interest of producers in Germany, is impartially stated in " The 
 Evolution of Modern Germany," by W. H. Dawson, London, 
 Unwin, 1908 (pages 179, etc.) That author, while pointing out 
 that " prices have in many cases been deliberately forced up to 
 unreasonable levels" (page 192), goes on to say that " the effect in 
 other cases has been less fluctuation and greater equilibrium : 
 the old alternation of excessively high and abnormally low 
 prices " (the alternating rule, as the present writer would put it, 
 of monopoly and mononesis) "has given way to a higher mean, 
 which has certainly paid the producer better, and probably has 
 often in the long run been better for industrial consumers," and 
 again (page 189), this author sums up as follows: "It must 
 be conceded that (1) the syndicates have been attended by distant 
 advantages to industry, while at the same time (2) they have not 
 proved yet so nefarious to the working-classes as was predicted 
 and seemed likely." 
 
 In Britain there is a higher efficiency of central administration 
 than in America or Germany. The integration of the national 
 organization being complete, and the local institutions deriving 
 their powers entirely by devolution of authority (see ante, p. 221), 
 there is here none of that particularism of semi-independent local 
 governments which enfeebles the central executive in those two 
 countries ; and here therefore the national interests of the con- 
 sumer and the worker are susceptible of being far better safe- 
 guarded by central control over the combinations of producing 
 organizations. We have the experience of the abuses of America, 
 and of the relatively trifling troubles of the Germans, accessible 
 to enable us to undertake the performance of this duty with 
 
314 THINGS AS THEY AEE 
 
 considerable efficiency. " The Board of Trade " is with us an 
 integral part of the administration ; and though in times gone 
 by its humble function seems to have been mainly limited to the 
 providing of a post, available like others still more " honorary," 
 to satisfy the less capable among the aspirants to cabinet rank 
 in an incoming ministry ; the permanent staff is efficient, and 
 that department of administration, already of great power and 
 authority, could if need be, be made still more effective to regu- 
 late and restrain. No great exercise of skill in draftsmanship 
 is needed to enforce on all proposed " unions " or combinations 
 or syndicates of manufacturing industry the obligation to register 
 themselves and to submit annually true returns of prices and 
 similar data. And it would be the duty of the executive of the 
 " Board " to be in touch also with revenue departments, and 
 urge in the general interest such modifications of taxation as 
 appear from time to time necessary to protect the public against 
 the burthens which the unrestricted cupidities of these organiza- 
 tions might otherwise be tempted to impose. The way is open 
 to guard the country against their abuses of a possible future 
 system, before they begin to intrench themselves behind the 
 fortifications of " vested interest," so hard to force, and so 
 perilous to attempt to destroy. 
 
 The essential attitude of mind of the theorist is always that 
 of an over-eager promptitude to generalize. But in fact the 
 " American peril " is peculiarly American. It has arisen under 
 a set of social and political conditions which have concurred to 
 facilitate a temporary abnormal development of monopoly and 
 its attendant greed, and nothing can be conceived more essen- 
 tially differentiated from these conditions than the state of 
 things in the United Kingdom. No one of them could possibly 
 attain anything like the same force in any European country. 
 The chief factor of course in the evolution of the monstrous 
 combinations of the United States is the division of power 
 between a central or federal executive with very restricted func- 
 tions, and sovereign " States " with almost unrestricted power 
 of legislation, but which yet are not individually powerful 
 enough to cope with huge national combinations of interest. 
 The abuses will pass away as soon as the collective national will 
 is sufficiently organized to give effect to itself and sweep away 
 the pedantry of State sovereignty, as it is in process of doing. 
 The only country in Europe which possesses anything like a 
 
0. XVI.] FEEE TRADE AND PEOTEOTION 315 
 
 similar constitution is tiny Switzerland, in which, though the 
 "cantons" are still more sovereign than the "States" of the 
 Union, the collective national will is quite strong enough to 
 impose itself on them. But the whole of Switzerland could be 
 put into some spare corner of the State of New York without 
 occupying any remarkable space, and that affords no instance in 
 point. France, Germany, Italy, Austria, all protective countries, 
 the authorities of which all concur to do their utmost to keep 
 their own markets of consumption for their own opportunities 
 of production ; each of these has its own inconveniences of pro- 
 tection to counteract, its own selfishnesses of producers to antago- 
 nize, its own " combines " of manufacturers and merchants to 
 watch. But in no one is there any tendency of commerce or 
 finance seriously to prey upon the national resources. Their 
 respective ingenuities are almost exclusively directed to hamper- 
 ing the trade of the foreign competitor, a purpose in which all 
 have succeeded to a remarkable degree in attaining, no doubt 
 with some disadvantage to their own commerce. The United 
 Kingdom is more essentially an importing country than any of 
 these, relies more for its well-being on foreign trade, and has 
 more to suffer by interference with international commerce ; 
 but not only its statesmen, but its people may be trusted to see 
 to it, that no system of indirect taxation should be set up, that 
 would really tend either to the oppression of the consumer or 
 the serious curtailment of the opportunities of the producer. In 
 short, the " American " peril is more or less of a " bogey." It is 
 in process of disappearing from its country of origin, and will 
 have been mastered by the sense of the people within a few 
 years. In the meantime it serves to indicate possible dangers 
 of an exaggerated protectionism. But in the United Kingdom 
 there is no fear of this. Any attempt at its institution would be 
 rejected by the collective good sense of the British community. 
 The whole problem is one of degree and extent. It is quite accurate 
 to say that the appetite grows by what it feeds on. Each pro- 
 tected industry will, sure enough, keep clamouring for a trifle 
 more protection to ensure its prosperity, as Dr. Pangloss in the 
 play kept on imagining the beatitude of a further additional 
 trifle of income, with each little increase which good luck brought 
 to him. But the public intelligence of the country can be relied 
 on to ensure that the appetite for monopoly shall not be permitted 
 to feed too grossly. 
 
316 
 
 THINGS AS THEY AEE 
 
 It is proposed to leave at this point the examination of this 
 vexed question. This may be done without any dogmatic pro- 
 nouncement on either side of the controversy. The writer, it is 
 true, on the balance of inconveniences, is on the side of the 
 tariff reformers. But the appreciation of the arguments will 
 strike different minds differently; all that he lays claim to is 
 a candid impartiality in estimating to the best of his power the 
 arguments on both sides. His estimation assumes a quantitative 
 form, so to say. To each argument, pro and con, a figure value 
 is attributed, and the resultant represents what occurs to him as 
 the probable balance of expediency. The comparison on this 
 basis works out to his mind somewhat as ^follows, with the 
 rough result of two to one in favour of the proposal : — 
 
 Arguments For. 
 
 Value 
 of result. 
 
 Arguments Against. 
 
 Value. 
 
 1. Relief of unemployment 
 
 35 
 
 1. Danger and inconvenience 
 
 
 2. Belief of rates by in- 
 
 
 of dislocation of trade ... 
 
 15 
 
 creased revenue 
 
 20 
 
 2. Impairment of exporting 
 
 
 3. Increase of revenue for 
 
 
 power 
 
 2 
 
 other purposes 
 
 7 
 
 3. Increase of cost of life ... 
 
 3 
 
 i. Increase of earnings of 
 
 
 4. Danger of corruption and 
 
 
 capital and energy 
 
 3 
 
 abuse 
 
 13 
 
 5. Power granted to ne- 
 
 
 
 
 gotiate advantageous 
 
 
 
 
 treaties with foreign 
 
 
 
 
 countries 
 
 1 
 
 
 
 6. Imperial interests secured 
 
 
 
 
 by colonial preference... 
 
 1 
 
 
 
 
 67 
 
 33 
 
 PosTSCBiPT. — Too late to be dealt with in the text of these 
 chapters appears in the form of a Parliamentary return a 
 " Memorandum by Mr. Alfred Marshall on the Fiscal Policy of 
 International Trade." The document dates from 1903, and 
 appearing suddenly in 1908 deserves serious and respectful con- 
 sideration. Had it been accessible earlier, the present writer 
 would undoubtedly have modified, not by any means the con- 
 clusions to which he has been impelled, but to some extent the 
 order and method of the reasonings which have led him to those 
 conclusions. The result to his mind would have been the same, 
 but he would have justified that result by reasonings more 
 
c. XVI.] FEEE TRADE AND PROTECTION 317 
 
 specifically directed to the considerations adduced by so eminent 
 an authority. Unlike Mr. Marshall, the present writer promises 
 to himself no further participation in this controversy, and has 
 finally said his say. Libei'avit animam suam. 
 
 To him it seems that the overpowering necessity which in 
 Britain clamours for a solution of this problem is undoubtedly 
 our constant need to diminish unemployment, and re-attain to a 
 normal and healthy activity of industrial effort. He challenges 
 what Mr. Marshall describes as the " great truth " that the 
 " importation of goods which can be produced at home, does not 
 " in general displace labour, but only changes the direction of 
 " employment."* (Note here the very qualified dogmatism in- 
 dicated by the pregnant words " in general "). There is no such 
 " great truth," and " the change of direction of labour " described 
 by Mr. Marshall does not "in general" in reality occur t. 
 " Great truths " are not for economics, which is a science of 
 the ephemeral and conditioned. And Mr. Marshall impliedly 
 admits as much, when he goes on to say, almost immediately,! 
 that " there may be cases when a home industry is temporarily 
 " disorganized, and it is reasonable for the public to incur some 
 " sacrifice for its relief ": in other words, what the present writer 
 has throughout contended for, that the question is essentially 
 one for the quantitative estimation of balancing inconveniences. 
 For with what has the economist ever to deal, but temporary pheno- 
 mena? Mr. Marshall goes on as follows: " Such cases, because 
 " exceptional, and on a small scale, have little relevance to this 
 "broad issue." To the writer on the other hand it appears, 
 that far beyond the temporary aggravation of the acuter phases 
 of the dire disease of unemployment, to which the present 
 (December, 1908) paroxysm may undoubtedly be traced ; — not to 
 sunspots, but to an American financial crisis in the year 1907, — 
 there is a comparatively permanent chronic tendency to an 
 almost secular displacement of the employment of British energy 
 by the competition of that of the people of certain foreign 
 countries. These, as things are, compete with our producers 
 not only in " neutral markets," but for the supply of our own 
 wants, which we are able to provide for by our own exertions. 
 And ii it is true, as indicated above, § that an annual out-flow of 
 
 * Paragraph 37. 
 f See ante, p. 296. 
 X Paragraph 40. 
 § ArUe, p. 204. , 
 
318 THINGS AS THEY AEE 
 
 values to the extent probably of fifty millions of pounds, could 
 by the imposition of duty on certain manufactured goods be 
 diverted from those countries and made available to afford 
 employment for British Capital and labour, then the result of such 
 a gain would far more than outbalance the undoubted loss which 
 the country as a whole must undoubtedly incur by paying more, 
 at any rate at first, for the things to be so manufactured than 
 what they can be purchased for abroad. For the analysis of this 
 loss, and of its eventual disappearance, see p. 290. The mistake, 
 if one may use such a word of so eminent a writer, underlying 
 Mr. Marshall's arguments to the contrary is concentrated, so to 
 say, in one paragraph of page 14. "If goods which can be pro- 
 " duced at home are yet imported freely from abroad, that shows 
 " that they can be got ' generally ' at less cost by making other 
 " things with which to buy them from abroad, than by the direct 
 " method of making them at home." (Note here the hypo- 
 thetical framing of this assertion, and the qualifying force of the 
 vague adverb.) The answer is obvious. You cannot " make 
 other things with which to buy them from abroad," except there 
 is the effective demand from abroad for the things which you 
 propose to make,* and it is precisely the cessation of that 
 demand, the results of which you are at present struggling 
 against in vain. Therefore it is, that entirely repudiating 
 Professor Marshall's " great truth," and insisting on economics 
 being essentially a science of the present and the probable, in 
 the domain of the expedient and temporary, and not of the 
 universal and abstract ; the present writer is unable to accept 
 this main conclusion of this most interesting and fairly written 
 memorandum, to the rest of which he is in some measure 
 prepared to afford a qualified assent. Mr. Marshall himself 
 states one part of the case against his own position admirably 
 in paragraph 56, when (true, he has at the moment another 
 nation in his mind, but mutato nomine de nobis) writing of a 
 country the products of which are subject to a concurrent deter- 
 mination of other countries to put a prohibitory tax on its 
 productions, he says that " that country, if she has no exports 
 " which approach to monopoly value abroad, must turn her atten- 
 " tion more and more to providing for home consumption ; and 
 " she must be content to allow a considerable part of the burthen 
 
 * See ante, p. 299. 
 
c. XVI.] FEEE TEADE AND PEOTECTION 319 
 
 " of foreign duties on her exports to enter into the real cost of 
 " whatever net imports she requires." In that sentence, in the 
 ■writer's belief, lies the real statement of the position as affecting 
 British manufacturing industries in general, and it is impossible 
 to so much as conceive of any method of " turning our attention 
 more and more to providing for home consumption," other than 
 the obvious one of making our home products more desirable in 
 the home market, by imposing duties on the importation of 
 goods to be offered in competition with them. 
 
 With all the rest of Mr. Marshall's arguments, the present 
 writer is more or less in accord, especially with the admirable 
 sentence* in which he sums up the overwhelming case against 
 the poHcy of levying import duties with the object of giving 
 English diplomatists something to bargain with when discuss- 
 ing foreign tariffs. " English business would be disturbed by 
 " the opinion that such a duty was probable ; and again by its 
 " actual imposition, and again by the probability that it would be 
 " removed, and again by its actual removal. It would disturb 
 " business in every way ; and it would set particular classes of 
 " busiaess men on influencing government, as it has done in other 
 "countries, where diplomatists are entrusted with a power of this 
 " kind. Protective duties are easy to impose, and hard to remove ; 
 " and the suggested plan would lead to a number of protective 
 " taxes based on no scientific system and conducive neither to the 
 " material nor the moral prosperity of the country." The present 
 writer identifies himself absolutely with this. On the other hand 
 the reasons deduced on pp. 310 — 315, have led the present writer 
 to dissent from the conclusions to which Mr. Marshall came, after 
 examining in America the institutions of the United States with 
 respect to protection; what has been above described as the 
 " American peril " ; t a danger by no means imaginary, but which 
 in the United Kingdom is assuredly much less formidable than 
 he thinks. On the whole a careful study of the memorandum in 
 question has left the writer more than ever convinced that 
 the essential economic question in England is unemployment, 
 and that though "general protection" is impracticable and 
 suicidal, a qualified and regulated Protection of the manufacturing 
 industries which supply the home market is the only conceivable 
 
 * Paragraph 72. 
 t Amte, p. 310. 
 
320 THINGS AS THEY ABE 
 
 and possible remedy for a gigantic and menacing evil, and 
 compels us to face the risks undoubtedly inherent to it. He 
 is impelled to that conclusion most of all by the consideration 
 that so great an authority and so convinced a free trader as 
 Mr. Marshall has no better arguments to urge against tariff 
 reform, than those which are to be found in the " memorandum " 
 in question. 
 
CHAPTEE XVII 
 
 ALTRUISM 
 
 Thbbe are deep-seated instincts of human nature entirely 
 outside of the scope of that acquisitiveness which is the sole 
 characteristic of the imaginary human being postulated by 
 Ricardo : whole ranges of impulse with no direct economic work- 
 ing, but which yet have their own effective results on economic 
 phenomena. Such are beliefs, traditions, habits, vices, racial 
 characteristics, and above all, ethical conceptions ; of which 
 the most potent is that altruism which is the direct reverse of 
 acquisitiveness ; an eloquent and interesting writer has lately 
 termed it the " good will in man."* Side by side with the fierce 
 and selfish impulse to appropriate in antagonism to one's fellow- 
 creatures, is the ethical counter-impulse to expend unselfishly in 
 the amelioration of their lot. The very man who on one side of 
 his nature is immersed in the selfish pursuit of gain will in 
 obedience to the altruistic impulse be simultaneously devoting 
 his means to the furtherance of philanthropic effort, designed it 
 may be to benefit the very people who are being worsted by his 
 struggle to acquire fortune. Thus acquisitiveness and altruism 
 mingle their impulses in the same individual. A well-authenti- 
 cated story is told of a certain " capitalist " who was well known 
 for his not over nice acuteness in matters of business, but who 
 devoted the closing years of an acquisitive life to the creation of 
 a number of splendid and most beneficent institutions for his 
 city ; it is related of him that in the very act of raising the 
 material fabric of one of these charitable institutions, he was 
 unable to refrain from ruining by an underhand business-trick 
 the contractor whom he employed to erect the buildings. Having 
 induced the man to confide to him how he expected to be able 
 to contract for a large store of a certain stipulated material at 
 an amazingly low rate, the philanthropist forthwith secured from 
 the people who had the stuff to sell the entire control of the 
 indicated source of supply, and so compelled his tradesman to 
 
 ♦ Wells, " New Worlds for Old," Chap. I., § 2. 
 T.A. ■Sf 
 
322 THINGS AS THEY AEE 
 
 purchase it of him at a high rate, and to ruin himself by so 
 doing. 
 
 With whatever motive, whether vanity and the desire for 
 posthumous fame, or a genuine love of the fellow-creatures 
 whom, on their business-side, they have instinctively " got the 
 better of," the great potentates of industry commerce and 
 finance are noted for the profusion with which they devote their 
 gains to public purposes, benevolent, if not always beneficent. 
 Indeed some of the institutions, which owe their inception to the 
 well-intentioned endeavours of the immensely wealthy, have 
 proved strikingly ineffectual. It would be invidious to particu- 
 larize contemporary instances which will occur to the mind of 
 every reader. Each of these munificent founders cherishes his 
 own ideal of how best to further the interests of mankind by 
 creating big institutions devised to better the conditions of life. 
 In general, one may say the more ambitious and far-reaching 
 these are, the less practically efficient they prove. One man 
 tries to cram literary facilities down the throat of an essentially 
 unliterary generation ; another to interfere with the supply of 
 and demand for dwellings, by entering into the housing-market, 
 and complicating by subsidized competition the difficult pro- 
 blem of establishing a reasonable market- rate for living accom- 
 modation ; a third seeks to immortalize an obscure name by 
 starting a university after his death, much on the lines in which, 
 in his lifetime, he " runs " a railroad ; while in a fourth case, 
 the ideal of the opulent altruist may happen to be some huge 
 railway project, built for glory and not for profit, which may or 
 may not prove of service to some portion of mankind in some 
 remote generation. Posthumous schemes, whether they tend to 
 the ultimate regeneration of humanity or not, seldom aim at and 
 never attain any perceptible economic result. Their authors 
 have been allowed not over wisely perhaps, by the laws of their 
 respective countries, to prescribe unchecked a series of schemes 
 and regulations by which, after their death, and when they no 
 longer have the power to rectify mistakes, some body of trustees 
 shall continue to administer their amassment of Means for the 
 carrying on of this or that foundation, or the solution of this 
 or that problem ; or their names shall be associated with some 
 one or other ambitious effort to assume the functions of omni- 
 potence in directing by posthumous wisdom the future of a remote 
 humanity. All these ambitions become sooner or later frustrated. 
 
c. XVII.] ALTEUISM 323 
 
 Their aspirations may be capable of realization or the reverse — 
 generally the reverse ; for it is given to no man to foresee what 
 may be the ultimate results of an endeavour to which benevo- 
 lence, or vanity mas(j[uerading in its guise, prompts him. In the 
 result on the whole, a community may not improbably benefit 
 from this sort of impulse towards posthumous altruism. But no 
 special need of reverence or gratitude appears due to people, for 
 devoting to its gratification means which an inexoi able impossi- 
 bility forbids them to continue to enjoy after they have passed 
 away from the earth. A wiser and more modest method of 
 disposing in this world of what could not be carried into the 
 next, was that which in bygone days was frequently resorted to 
 by the wealthy of imperial Eome, who had a habit of " constitut- 
 ing Csesar their universal heir " ; that is to say, of throwing on 
 the State the responsibility for the future application of fortunes 
 they were compelled to leave behind them. 
 
 Altogether apart from such ambitious schemes are the more 
 unpretentious continuous efforts of benevolence to do good day 
 by day, in the lifetime of the givers, by diverting to the service 
 of philanthropy what would otherwise be accumulated as 
 "capital" or expended in selfish enjoyment. This is a true 
 altruism with its steady and permanent economic force, always 
 in action and constantly flowing. Attempts have been made to 
 estimate the volume of this great stream ; but these are vague 
 and imperfect. Outside of that small part of it which runs along 
 channels provided by known benevolent organizations of what is 
 collectively termed " charity," the institutions which regularly 
 publish intelligible accounts of their income and expenditure, 
 there are far larger irregular and intermittent streams and 
 freshets running along other and less measurable courses, less 
 productive and fertilizing because more or less capricious and 
 unregulated ; while away and beyond is the immense river of 
 spontaneous private charity, which no man can pretend to 
 estimate ; and this fact has in fairness to be borne in mind 
 by those who contrasting the affluence of the comparatively 
 few with the indigence of the majority, are indignant at the dis- 
 crepancies of human fortune, and impatient of the scantiness of 
 " voluntary contribution " through recognised regular and cata- 
 logued channels, those whose flow can be reckoned and estimated. 
 It has been calculated, for instance, that the annual contribution 
 to " recognized charities " in London amounts to £10,500,000. 
 
 Y 2 
 
324 THINGS AS THEY AEE 
 
 How much ought to be added to that estimate to include what is 
 levied on private means by organizations outside of the official 
 enumeration ; on members of religious congregations by churches 
 which inculcate charity as the highest form of divine service, as 
 in truth it is; what is given to benevolent institutions which 
 though they may not directly aim at the support of the indigent, 
 and do not come strictly within the " charitable " category, yet 
 are altruistic in their aim and tendency, such as those,for instance, 
 consecrated to the very expensive propagation of varieties of 
 religious belief and the maintenance of armies of conflicting 
 proselytizers ; or again, what is irregularly expended in temporary 
 efforts finding their expression in special "funds" raised from 
 time to time under the stress of some national or sectional 
 disaster, or specially devised for the exceptional relief of 
 particular persons or classes of persons ? 
 
 And again one must count in the aggregate contributed by 
 the efforts of the poorer classes among themselves, which are 
 Means collected by voluntary effort, invested in "property " as 
 other Means are, and expended according to fixed rules on 
 different but apparently more systematic and judicious principles 
 for mutual assistance and the relief of need, independently of the 
 professedly " charitable " institutions; and what is absorbed in 
 the entirely immeasurable flow of altogether private gifts, one 
 man helping another, one family supporting others ; and the 
 incalculable amount which is wasted by misplaced generosity in 
 the liiggest city in the world, whose people are daily expending 
 huge sums in the aggregate under the mischievous impulse of a 
 sheer pecuniary incontinence ; purchasing a contemptible self- 
 gratification by satisfying the importunities of casual mendicancy. 
 The figures have never been measured or ascertained, can hardly 
 even be guessed at ; but could it all be reckoned up, the total 
 would be amazing. It might not be too much to say, that were 
 it systematically and scientifically administered, there is already 
 flowing a river of Means towards the sands of misery which 
 could be made to suffice for the maintenance in fair comfort 
 of the whole population of the decently meritorious indigent, 
 and leave over and above something to spare for the cadger and 
 the criminal, who are after all human beings hke the rest, though 
 it may not be wise to encourage their pseudo-industry. For the 
 above enumeration, it must be borne in mind, is that of the 
 altruism of individualism only, alongside of which, through a 
 
c. XVII.] ALTEUISM 325 
 
 different set of channels again, runs another river of collective 
 beneficence, the contributions of the State and the municipality. 
 These last for London alone are estimated at an annual five 
 millions of pounds, derived partly from national, mainly from 
 local, taxation ; which are assigned to the relief of misery through 
 the machinery of the gaol, the workhouse, the infirmary, and the 
 dole of "outdoor" relief, and other institutions of State-sup- 
 ported benevolence. Of this also, it is too true that it suffers 
 from its own specific disease of parasitism. Every now and then 
 the searchlight of a " poor-law inquiry " or a prosecution for 
 corruption or malversation is flashed on to the transactions 
 of some board of "guardians " of the poor, or some " asylum " 
 management, and a lurid light is thrown on the proceedings of 
 this or that corrupt gang of shabby rascals of the lower-middle 
 class, who having managed to get themselves chosen to public 
 office, are unable to resist the opportunity of plunder and pecula- 
 tion ; while stupidity, and a less corrupt but not more innocuous 
 wastefulness and extravagance of outlay on appliances, difficult 
 to check and stopping far short of what the law can deal with as 
 dishonesty, account for a greater volume of means assigned to 
 benevolence but diverted from the true channel into stupid or 
 pedantic wastefulness. What proportion of this public contribu- 
 tion really is beneficially utilized for the sustenance of the poor 
 and the alleviation of misery, and how much of it evaporates in 
 peculation, in foolish methods, in the unnecessary multiplication 
 and too generous maintenance of a distributing and administer- 
 ing staff, in the erection of buildings of needless costliness, and 
 the rest of it, one cannot estimate. Speaking generally, it seems 
 that as things are, the effectiveness of State-relief varies directly 
 with the status of those appointed to administer it ; that the 
 poorer the locality, the more ignoble the elected authorities who 
 expend the funds, and the greater the wastage from corruption 
 and peculation and extravagance. The administration of this 
 collective provision the efficiency of which is a State and not a 
 local concern (inasmuch as its mismanagement prejudices the 
 nation and not the particular locality), will sooner or later have 
 to be undertaken by the national executive as distinguished from 
 locally elected authorities. As it is, the incompetence of many 
 of the latter necessitates the expenditure of great energy by the 
 former in control and the enforcement of a decent conformity to 
 correct rules. And surely all this inspecting and checking force 
 
326 THINGS AS THEY ARE 
 
 ought by rights to be employed directly in State administration. 
 "Local self-government" has its limits of utility, for there are 
 departments of collective action which are beyond its powers or 
 scope. And to the writer it seems that equally with the national 
 diplomacy and the national defence, the struggle with pauperism 
 is a national affair, and that so far as the State has to undertake 
 the burthen, it lies beyond these limits. Were it possible one 
 would wish to see it placed permanently beyond the region of 
 political party strife altogether. 
 
 Eeverting to the main question of the sufficiency of the 
 altruistic effort, the essential fact is, that however greatly its 
 adequacy is capable in the course of time of being increased by a 
 more general response to its claims and by more enlightened 
 administration, it is unable as things are to cope with the 
 gigantic mass of misery. Eeform in these matters is progress- 
 ing apace, and there is much to be sanely hoped for. But in the 
 meantime the urgent question presses on one : Should not more 
 be done, do we not need a more general impulse of altruism, and 
 can there not be a more efficient organization ? 
 
 One may walk for miles through well-to-do streets and squares 
 in London, and note the prodigious aggregate of Means indicated 
 by the habitation of so many thousand luxurious houses. 
 Here is a quarter which no man can inhabit who does not 
 dispose of at least £5,000 a year. Further on, another and a 
 larger district, peopled by families who must apparently possess, 
 say, at least one-half of that amount; and then again, a huge city 
 inhabited by the " comfortable well-to-do middle class " who 
 could if they chose, out of their more modest means contribute 
 a still mightier aggregate to the reservoir of altruistic effort. At 
 first sight one is impelled to reflect, how few of these people 
 really and seriously contribute any appreciable proportion of 
 their riches to philanthropy. And then one feels tempted to 
 embrace the notion of compelling these too to come in, by a 
 greatly increased taxation of the well-to-do, and thus to exact 
 contribution from the inaltruistic majority, from so many thou- 
 sands of people apparently callous to the claims of misery. The 
 analysis of this suggestion of a compulsory equalization of 
 fortune cannot be here attempted. Admittedly the impulse of 
 benevolence, though directing a flow of means capable in its 
 whole volume, were the sluices and flood gates better regulated, 
 of effecting a far more beneficent irrigation of misery with wealth 
 
c. XVII.] ALTEUISM 327 
 
 than any which has hitherto been attained to, yet seems inade- 
 quate to the need, and too great a proportion of the " well-to-do 
 and respectable " escape their fair share of the burthen. But 
 this is less true than it appears to those who would measure the 
 flow of charitable funds solely by the published lists of contribu- 
 tions, notable for the constant recurrence of one set of names, 
 and the complete absence of those of other and more numerous 
 wealthy people whom every one knows, and who appear never to 
 contribute anything at all. Much could be accomplished to 
 stimulate a more copious flow, and if the institutions which are 
 charged with the duty of distribution associated themselves har- 
 moniously instead of assuming the foolish attitude of competing 
 claimants, they would make themselves more beneficent, and 
 acquire more completely the confidence of the public; and 
 especially, if they could be induced to work together so as better 
 to protect each other and their respective supporters from spolia- 
 tion and imposture, they might be enabled to point to results 
 which would cause their appeals to meet with a more ample 
 response from society. 
 
 With respect to charitable efibrts of benevolence, the first 
 economic fact to be noted is a discouraging one. In no aspect 
 of life is it more obvious that the supply stimulates the 
 demand, than in respect of charity. No sooner is a fund 
 created for the relief of any special form of distress than 
 claimants on that fund arise and multiply. They concentrate 
 themselves with astounding persistence ; one may almost say 
 that the supply of subjects for charity is stimulated by the 
 demand of charitable funds for suitable objects for their employ- 
 ment. Were some eccentric " pious founder " to endow an 
 institution for " one-eyed kalandars" (whatever manner of men 
 these may happen to be), candidates for admission to its benefit 
 qualified to participate both by calling and calamity, would arise 
 and throng its portals, as by the wave of some magician's wand. 
 Every good and benevolent foundation is in its way an invitation to 
 parasitism. In a well-known provincial town, a particular excel- 
 lence has been attained by an admirable educational institution 
 supported by an exceptionally generous endowment, and open to 
 the children of the well-to-do " burgesses " of that town, at a cost 
 sensibly less than that of similar schools in other places ; and the 
 resident population of the town accordingly receives its yearly 
 increment of respectable families intent on sharing in a fund 
 
328 THINGS AS THEY AEE 
 
 which possibly might better and more usefully have been devoted 
 to the needs of a less opulent class, or with less restriction of 
 locality or citizenship. What is this but an opportunity for the 
 parasitism of the well-to-do ? And England is full of apparently 
 beneficent and really mischievous institutions, expressing the 
 misguided local patriotism of some pious founder, who with the 
 best intentions in the world, has succeeded in making of his 
 town or district a favoured resort of people seeking thus to obtain 
 a share of what they have not earned and what they do not 
 really need. There is a certain generous poor-law union which 
 has the reputation among the tramps of affording rather better 
 fare and exacting a little less stringent tests than its neighbours ; 
 and along the lanes of Kent there accordingly converge daily on 
 this comparative paradise of the lazier, little streams of undesir- 
 able vagabonds on their way to participate in its hospitality. 
 The most splendidly beneficent institutions of England are its 
 public hospitals. No man would willingly say a word to impair 
 their power and utility ; but yet all classes of parasites are ever 
 pressing for admission to them and succeed in feeding on them, 
 who are notoriously not the people for whom public assistance 
 in that form should be provided at all ; from the chronic diseased 
 vagabonds who avail themselves of their wards for winter resi- 
 dence in preference to the infirmary of the workhouse, to the 
 mean-spirited middle-class people, who dress themselves shabbily 
 and seek for their ailments a gratuitous treatment which they 
 ought assuredly to be forced to pay for out of their own resources ; 
 and so forth, to the end of the chapter. Again, many institutions 
 are preyed upon by their own staff : snug berths and " soft 
 jobs " ; mercenary services and a self-indulgent habit of trustees 
 to institute annual festivities at the cost of the fund, are too 
 common among those which are well endowed. 
 
 And all are alike victims of people claiming to participate 
 in their benefits, but not really belonging to the classes which it 
 was the aim of their founders and subscribers to assist ; people 
 to whom it is not desirable in the public interest to extend any 
 assistance whatever. One cannot refrain from quoting in this 
 connection the following two paragraphs from a series of articles 
 on the administration of charity,* which very tersely exemplify 
 the ill results inseparable from every form of giving. 
 
 * "Administration of Charity," by Arthur Paterson, Reprinted from the 
 
 Times, p. 16, 
 
c. XVII.] ALTEUISM 329 
 
 " One hard winter the following conversation was overheard 
 between two working-men : — 
 
 " • How goes it, Bob ? ' 
 
 " ' Bad — I hopes to get work, though, next week.' 
 
 " ' Then you are a fool,' exclaimed his friend. ' Work ! 
 
 I ain't done a stroke this six weeks, and shan't till the weather 
 turns. Why should I ? The kids gets dinners from the school, 
 the missus has a pint of soup every day from the mission, and 
 coals as well, and I don't know what all in clothes ; while the 
 church — you see, she 'tends the mothers' meetings at both shops 
 — pays the rent and gives grocery tickets. Do the same as us, 
 and you'll get on first-rate. Send your missus round to mine, 
 she'll put her in the way of it all.' " 
 
 " Another experience happened to an active manager of schools. 
 Hearing that at her school free breakfasts were being given to 
 all children who came without them, she paid a series of visits 
 at nine o'clock in the morning to the children's homes. In nearly 
 every case the mothers were in bed, and, when questioned as to 
 their views upon the free breakfasts, good-humouredly replied 
 that they thought them excellent. ' Not that there ain't the food 
 in the 'ouse, ma'am. But it do save so much trouble ; and it's 
 my belief them ladies enjoys fussing over the kids as much as I 
 likes my rest.' " 
 
 The economic outcome of it all is that charity begets parasitism 
 as the dirt begets fleas, but (and this is the real economic feature 
 of the problem) the most voracious parasites of benevolence are by 
 no means the over-paid officer, the cadger, thesturdy mendicant, or 
 the whining obtainer of relief on false pretences. These take their 
 tiny share, but they are as aphides to locusts when compared 
 with the all-consuming parasite on charity, which is industry 
 itself — the industry of the parasitic trade.* One example may 
 be used to illustrate the meaning of this assertion. A certain 
 person interests himself, as many of us do, in the struggles of 
 a particular very indigent family, in a very poor district, a 
 widowed sickly mother and four or five children. The mother 
 is in receipt of a trifle of parish relief altogether insufficient to 
 maintain them, even at starving point. Two of the elder 
 children, thirteen and sixteen, are employed all day at a factory, 
 at a wage of 8s. 6d. a week between them. The factory is thus carried 
 
 * G. Bernard Sh3,w, "The CommonBense of Municipal Trading," Chap. IV., 
 p. 27, 
 
330 THINGS AS THEY ABE 
 
 on by the aid of the parish authorities, and of the person in ques- 
 tion. The wage offered is one of obvious insufficiency to feed 
 and clothe and house the workers. If this were a mere isolated 
 case it would amount to nothing ; but it is the general rule of a 
 whole category of industries in trades which largely employ 
 unskilled labour. When these are not parasitic on the parents, 
 they exist by calling in aid indifferently the resources of the 
 " Union," the contributions of charity, and as often as not the 
 wages of prostitution ; and the bitter feature of it is, that were 
 these subventions withdrawn, the industries would cease to exist, 
 and the bitterness of the struggle for existence would thus be 
 exacerbated for the most miserable. A Parliament in its wisdom 
 may think fit to enact that no trade shall be allowed to pay less 
 than a " minimum wage," and sentimental people will be apt 
 to applaud such a law as the perfection of human wisdom ; but 
 they do not reflect that such legislation would be entirely 
 ineffectual without a supplementary law, compelling the people 
 who employ this class of labour to continue to carry on their 
 businesses indefinitely at a loss, by paying wages which the profits 
 could not afford. It is to this apparently cruel dilemma that an 
 industrial civilization is brought by the practical action of the 
 inspired axiom of the "cheapest market." It may be stated 
 as follows : The present conditions of industrial civilization are 
 such, that without altruistic effort on the part of those possessed 
 of means, the lives of the poorest of the citizens wiDuld be 
 intolerable. The notion of those who are called " Socialists " is, 
 that in some way or another, it will be possible for society to 
 devise such alterations in these conditions that this state of things 
 shall be brought to an end. This notion it is designed to examine 
 impartially in the next chapter. But whether it prove true or 
 false, it is obvious that till the " Socialists " have agreed on their 
 remedies, and until those remedies have proved efficient, it will 
 continue necessary to provide a palliative to the extreme misery 
 of the miserable. And therefore in the meantime it is the duty 
 of the benevolent to come to their aid; and more or less this 
 duty is performed, as things are, to a great extent by the volun- 
 tary help of the very class of people against whose possession 
 of available Means the efforts of the collectivist are directed. 
 
 It is neither desirable nor possible that this should be done to 
 the extent of providing for a complete maintenance of all who are 
 in want. The utmost that can be effected is to help extreme cases 
 
c. XVn.] ALTEUISM 331 
 
 of age and helplessness and by occasional benefaction to relieve 
 the sufferings of extrenae need. But this even can be done only 
 at the cost of encouraging a system of parasitic industry which 
 feeds on the contributions so doled out, and exists by virtue of its 
 power BO to live ; and if you forbid the parasitic industries, you 
 intensify the misery of the poorest and most helpless class by 
 withdrawing from them so much of their insufficient livelihood 
 as is afforded by the "sweating" trades; which you will strive in 
 vain to compel to be more generous, though you may perhaps by 
 appropriate legislation succeed in extirpating them. This is one 
 main economic outcome of altruism. And then comes the crucial 
 question, " cuiprodest ? " Who is it that in the last resort really 
 benefits from this cruel and illogical system of industrial civiliza- 
 tion and whom therefore has justice to convict of the criminality of 
 sweating ? The orator of the street-corner inflames his hearers 
 with the contrast between the " opulence and luxury " of the 
 sweating employer, and the miserable starvation of his victim. 
 The " capitalist " is held up for execration : a sort of Moloch 
 trampling on the bodies of his victims, amassing huge means by 
 starving the parents and draining the life-blood of the children ; 
 whereas in truth the " sweating-employer " is himself in the 
 vast majority of cases, but a struggling tradesman straining by 
 rigid penury to escape the gulf of bankruptcy. Compelled by 
 mononesis to "undersell, he has no choice but to underpay, and 
 his existence, like that of those who work for him, is neces- 
 sarily parasitic on State relief and the alms of the charitable, 
 which between them make it possible for him to lay his hands 
 on unskilled labour, forced though not content, to accept less 
 than a living wage. The real Moloch, the arch-parasite, is not 
 the employer, but the consumer ; to whom in the shape of under- 
 price of what he buys, accrues the lion's share of what is distri- 
 buted from the reservoirs of benevolence. The sweating industry 
 and the starvation wage are the Nemesis of the "cheapest 
 market " ; * and if some compulsory regulation could be devised 
 which would be effectual to abate these evils, that should have to 
 take the form of an inverted sumptuary law, forbidding people to 
 buy certain things at less than certain prices, and making 
 cheapness criminal, instead of holding it up to admiration as the 
 very embodiment of the divine principle of the greatest good of 
 the greatest number. As things are, it is the British public which 
 
 * See a;jie, pp. 46, 47. 
 
832 THINGS AS THEY ARE 
 
 s the gigantic " receiver of stolen labour " in Britain, and the 
 insatiable embezzler of charitable funds. 
 
 There is a side of this artificial reduction of the price of labour 
 ■which in its way undoubtedly makes for good results — the expan- 
 sion of commerce and the enhancement of production. Most of 
 the things produced under the pressure of mononesis go to 
 supply the market for internal consumption as opposed to exports ; 
 being for the most part such as if not produced at home under these 
 abnormal conditions would be imported cheaper, or as cheaply, 
 from abroad. Therefore, on the topsy-turvy theory of Mr. 
 Mongredien,* it ought, it seems, to be reckoned disadvantageous 
 to produce things too cheap at home, inasmuch as that must 
 occasion a lesser importation of similar articles. The tendency 
 of unrestricted free trade to permit " sweated industries " must 
 therefore, according to his notion be, by discouraging importation 
 to occasion a corresponding diminution in the national power 
 of exportation ; and this, in his way of looking at things, is the 
 supreme disaster. But all this may be disregarded by those who 
 do not share the weird delusion that by importing all we can 
 consume, we shall attain to the supreme advantage of being able 
 to export as much as we can produce. 
 
 The conclusion which emerges, however, is that the organized 
 system of underpaid work known as " sweating" is one that is 
 facilitated by benevolence, which alone can enable workers to 
 exist on a wage insufficient for their due maintenance. It con- 
 sists in the exploitation by a certain proportion of the directors and 
 employers of industry, of means intended for the relief of poverty, 
 and this is " parasitism " in its most effective and formidable 
 economic expression. Whether in the balance of its results it is 
 a good or an evil thiiig, may be left to theorists to dispute over. 
 But it is quite obvious that, for good or ill, this is the main 
 economic outcome of that part of altruistic effort which is 
 directed to the general relief of poverty, by almsgiving and other 
 direct pecuniary assistance. 
 
 That side of benevolence which concerns itself more directly 
 with the special claims of the aged, the diseased, the helpless, and 
 the entirely " submerged " victims of misfortune, has indirectly 
 another economic effect of its own, which is also unfortunately 
 of doubtful aspect from the point of view of utility. This 
 charity, also in its turn, tends to become in the long run and in 
 
 » Ante, p, 124, 
 
c. XVII.] ALTEUISM 333 
 
 the ultimate result to some extent a subvention of the employer 
 of labour and therefore ultimately of the general consumer. 
 The benevolent institution comes in to undertake a burthen 
 which without its intervention would fall more directly on those 
 who hire the labour of the class from amongst whom the objects 
 of the charity are recruited. Thus the State relieves the poorer 
 classes from the obligation to provide for the education of their 
 children, and its efforts are supplemented by privately sustained 
 institutions by which the children of the more destitute are 
 gratuitously clothed and fed in order to fit them to receive that 
 education. It is right that it should be so. But from the 
 merely economic point of view, it is obvious that the result is to 
 lift so much off the backs of the parents, who are enabled to 
 work at lower wages when relieved of a charge which otherwise 
 Nature seems to impose, and which the law would at need inter- 
 vene to enforce upon them. The " guardians of the poor " open 
 their doors to those who, had they been in receipt of adequate 
 wage would have been able to provide for their own old age ; and 
 the last proposal, that the State should come in here too as 
 a sort of second huntsman, whip in those of the aged who have 
 escaped the workhouse, and make them also parasitic on the taxes 
 by granting " old age pensions" seems to partake of the same 
 infirmity. One is loth to take it for granted that the self-sup- 
 porting institutions of the poorer classes themselves are not to be 
 trusted to keep their subscribers alive ; if they are, it hardly 
 seems as if this elaborate apparatus of pauperization is justified. 
 But anyway it seems permissible to ask whether some more 
 independent method of insurance, coupled with efforts to raise the 
 rate of wage (which those who watch the results of the legitimate 
 action of trades unions would by no means despair of making 
 generally applicable) might not be invoked with greater chance 
 of success. The State and the municipality must in respect of 
 many things become benevolent institutions on a gigantic scale. 
 It is strictly forbidden in Britain to a man to die of destitution.* 
 His life may lawfully be one long agony of insufficient food and 
 the absence of reasonable comfort and joy ; so far no offence. 
 But it is forbidden to him to push matters to the extreme of 
 dying of starvation, and the State or the " Union " comes forward 
 with a complicated and expensive machinery, insisting on keeping 
 him alive to suffer. Not only that, but if a miserable human 
 
 • Post, p. 393. 
 
384 THINGS AS THEY AEE 
 
 being is brought into the world afflicted with incurable disease, a 
 cripple for life, incapable of performing its duties and functions, 
 modern sentiment revolts at the idea of a merciful termination of 
 its existence, and gathers it into some asylum of monstrosities to 
 linger for a few years in suffering at the public expense. And 
 parents whose children are thus afflicted at their birth are 
 encouraged to continue to procreate a series of pitiable objects of 
 charity. This is one of the strange economic results of what 
 some people conceive to be a misguided altruism. And indeed it 
 sometimes seems that a profound writer of the last century was 
 not altogether wrong when in a despairing sentence he dismissed 
 charity as an economic force in these sad words."* 
 
 " Paupers will raise paupers, even if the children be not their 
 " own, just as familiar contact with criminals will make criminals 
 " of the children of virtuous parents. To learn to rely on charity 
 " is to necessarily lose the self-respect and independence necessary 
 " for self-reliance when the struggle is hard. So true is this, that, 
 " as is well known, charity has the effect of increasing the demand 
 " for charity, and it is an open question whether public relief and 
 " private alms do not in this way do far more harm than good." 
 It is when altruism comes to concern itself with the future of 
 the race and the nation that its efforts promise a true economic 
 benefit. It is unfortunately true that each effort in this ^direc- 
 tion involves a certain mischievous result in so far as. it tends 
 to transfer the duties of parents to the shoulders of the 
 charitable. But the immense benefit to the future economic 
 efficiency of the people outweighs the incidental mischief with 
 such overwhelming preponderance, that in the net result this 
 among the whole of the objects of benevolence may be embraced 
 with a clear conscience of preponderating good. 
 
 Instruction is a function of the State : the delegation of this to 
 the municipality a blunder which is in process of gradual correc- 
 tion, though the local management of schools must continue to 
 be delegated to local people, some of whom no doubt, will be best 
 selected by some sort of municipal authority ; but education, in 
 the true sense, the fitting of the human being for life, can be 
 imparted only to a very limited extent by State-paid instructors ; 
 it begins earlier and lasts longer. Before the infant is born 
 its education has to be commenced by the amelioration of the 
 physical condition of the mother. Long after instruction is 
 
 * " Progress and Poverty," Book X., Chap. II. 
 
c. XVII.] ALTEUISM 335 
 
 finished, education must be continued by strengthening the 
 ethical instinct by religion, and disciplining the plastic will of 
 the human being by association with the more informed indi- 
 viduality of those competent to impress it with a wise insight 
 into the realities and necessities of life. All this is essentially 
 the work of the individual as opposed to the State. Of all this a 
 Department knows nothing, and in the effort to effect it legisla- 
 tion is impotent. And during the process of instruction also, 
 there is room to effect immense improvement by benevolent effort 
 tending not only to the building up of the physical but the moral 
 human being, to strengthening the frame of the child as well 
 as to improving the character of the future member of society. 
 
 There is no occasion to enumerate the many benevolent agencies 
 which aim at the attainment of these varied ends by helping 
 mothers, by securing healthier homes, opportunities for play and 
 joy, occasional holidays in the country for the children of the 
 city, opportunities in boys' brigades and the like for wholesome 
 exercise of the rudimentary instincts of association and discipline, 
 by affording opportunities for intelligent discussion, by the reason- 
 able encouragement of athletics, by affording means of instruction 
 in trades and crafts, by forming clubs for young people, and in 
 scores of other directions, of which these are only examples. 
 
 On this side altruism becomes a potent economic factor by 
 virtue of its effect in strengthening the physical nature and 
 elevating the character of those who are to constitute the 
 citizens of the future, and in their turn to breed the future 
 generations of the young. The essential thing is that all this 
 possible good can only be looked for from those who are willing 
 spontaneously to devote their own time and energy to the service 
 of their country as free agents, without claim to salary or reward ; 
 and this is the highest and most noble, as it is also the most 
 effective, form which altruism can assume. 
 
 As to its other forms, equally obligatory on the wills of the 
 benevolent, but which meet with the objection that they are 
 capable of abuse, and have no economic result ; the answer of 
 the altruist seems to be, that while all this may possibly be true 
 from a purely economic point of view, there are other aspects of 
 civilization, beyond the range of the economist's vision ; and 
 that those who seek to realize the ideal of the Kingdom of 
 Heaven upon earth, are not to be deterred from the work of 
 mercy by the argument that such exertions, though they may 
 
886 THINGS AS THEY AEE 
 
 succeed in relieving the sufferings of their immediate objects, 
 must fail to produce the effect of a general abolition of misery. 
 Here there is room for the exercise of much wisdom. It is by 
 no means beyond the power of individualistic benevolence, at 
 any rate, so to organize itself by adopting scientific methods and 
 principles as to minimize the great peril of " pauperization." 
 How far State effort in the same direction can possibly be guarded 
 from producing the same ill results is quite another matter. 
 
 Economic efficiency is but one of the many aims of society. 
 It is purchased at the price of cruel suffering. A nation is 
 doomed to qualify itself for supremacy among nations by emerg- 
 ing victorious in the international struggle for existence; and 
 its fitness for that struggle in no small degree depends on the 
 hardening of the national temper by a similar internal struggle 
 of the citizens among themselves. Thus it is that Winwood 
 Reade pointed out that the way to a nation's emergence is along 
 the road of the " martyrdom of Man." And it may well be that 
 the mastery in the world's struggle of the nations will be with 
 that which most implicitly obeys within its own borders, even 
 at the cost of the greatest suffering, the hard law that the fittest 
 must survive. 
 
 It is just against the cruelty of this seeming necessity that 
 private benevolence sets itself to contend. The result of its 
 efforts may be on the whole to impede rather than further the 
 economic supremacy of the nation. But there are other and 
 better results of civilization than economic supremacy ; of which 
 the chief is character. And altruism and its workings derive 
 their highest value from what they achieve in the development 
 of character ; of that of the recipients ; being beneficent to them 
 in proportion to the degree in which benevolence attains to the 
 stimulation of a striving for independence and self-reliance and 
 efficiency among the classes who receive ; and exercising a still 
 more beneficial influence on the class of the givers by affording 
 some way of escape for them from the degrading and sordid 
 motives of acquisitiveness and luxury. 
 
 It is when we turn to the State and the municipality in their 
 character of agents of benevolence, and to the people who derive 
 assistance from public funds, that we are most beset with doubts 
 whether as much good as harm can possibly be effected by this 
 giving ; whether it is within the collective power really to redis- 
 tribute happiness among its citizens permanently or effectually, 
 
c. XVII.] ALTRUISM 837 
 
 by the almsgiving of the State; whether the general political and 
 social efficiency of the State organism will not rather be debased. 
 For there is a subtle corruption which attends the exercise by 
 politicians of the function of distributing largesse among those 
 who have the right of appointing them to office. And there is 
 reason for gravely questioning the practical efficiency of the 
 methods of routine, by which alone any system of State relief 
 can be administered. Adherents of the different schools of 
 thought, whose aims are confounded together under the general 
 meaningless term " Socialism," agree only in the general concep- 
 tion that it is the duty of the State, as it is within its power, to 
 intervene to improve the lives of its citizens by an organized and 
 compulsory State direction of service, the result of which is to be 
 to redistribute among them the means of life and the opportunities 
 of happiness. 
 
 In the following chapters it is proposed to attempt as far as 
 pbssible an analysis of the various conflicting ideas which under- 
 lie the notions denoted by the terms " Socialism " and " Collec- 
 tivism," and the like, and a short appreciation of the reasonings 
 and proposals of their advocates. 
 
 T.A 
 
CHAPTER XVIII 
 
 SOCIALISM. PART I. COLLECTIVISM 
 
 To an impartial examination of theories which have for their 
 object a revolution in the attitude of society towards the funda- 
 mental institutions which regulate its functions, it is necessary 
 to bring a detached and impartial mind, assuming nothing as 
 " self-evident," but what commends itself to universal assent, 
 and not even that much too implicitly. It is no answer to the 
 man who preaches the modification of the laws and customs of a 
 nation with respect to property, for instance, to point out that 
 by the adoption of some of the measures which he advocates the 
 " sacred rights of property will be infringed," unless you are 
 able to prove at the same time, what you yourself hold, (possibly 
 on too slight a foundation of experience,) that any lessening of 
 the " sanctity " of property is in itself necessarily inimical to the 
 general interests of society : a thesis far less easy to maintain 
 than you have been in the habit of believing. To those on the 
 other hand who, like Mr. Mallock,* keep on repeating that the 
 increase of the " Wealth of the nation " (by which they really 
 mean the progressing appropriation of the means of the world 
 by the richer among the citizens of that particular nation) is 
 obviously a good thing in itself, and the most desirable of all 
 conditions, and the most certain to increase the " average well- 
 being and contentment " of those less opulent people who con- 
 stitute the great majority of the nation, it is futile to attempt to 
 explain that this apotheosis of acquisitiveness rests on no self- 
 evident fundamental truth, and that the well-being of mankind 
 does not necessarily in the nature of things find its highest 
 expression in the increase of the claims to future accruing 
 wealth, that may be accumulated in the pockets and deed-boxes 
 of the richer minority. In spite of its vagueness and practical 
 inapplicability, the classical criterion of Bentham, " The greatest 
 happiness of the greatest number " has an ethical sense more 
 noble than either the dogmatic assertion of the intrinsic beauty 
 * " Critical Examination of Socialism," Chap. XIV. 
 
c. XVIII.] SOCIALISM. PART I.— COLLECTIVISM 839 
 
 of collective ownership, or the equally dogmatic deification of 
 individualistic acquisitiveness. 
 
 Every such enunciation of " principle " in turn begs the 
 question which it is invoked to elucidate ; it is difficult to find 
 one which is demonstrable ; and the more comprehensive and 
 apparently self-evident any may be, the less susceptible it is of 
 logical proof. 
 
 But without some sort of fundamental agreement in principle 
 intelligent discussion is hopeless ; and even the writer is com- 
 pelled to fall back on the one indicated in p. 2 of the intro- 
 ductory chapter ; that civilization is better than barbarism. 
 This axiom, it is true, also " begs the question." It assumes a 
 principle against which writers like Mr. Carpenter,* and men of 
 action like the late Mons. Bakounine have by words and acts 
 energetically protested.! But these chapters have not been 
 written to persuade or to confute the anarchistic reactionary, 
 who repudiates civilization and all its works ; or to convince the 
 fierce sentimentalist whose aspirations are concentrated on the 
 reproduction by violence, if necessary, of an imaginary golden 
 age of the past, purified from the modern abominations of steam 
 machinery and competition. 
 
 Those who, like the writer, are not altogether content with 
 the present state of things, but who, unlike him, lack faith that 
 the existing machinery of civilization, though faulty, is capable 
 of being adapted and perfected by a progressively enlightened 
 direction of the individualistic impulse, are the " Socialists " 
 properly so called. They propose that men should agree to 
 compel each other to abandon the individual impulse to acquire, 
 and substitute a State directed collective purpose to bring about 
 what they call a " redistribution of Wealth," but what would be 
 more accurately designated as the compulsory modification of 
 the method by which Means are accumulated and distributed. 
 This set of " collectivist " thinkers and writers are persons with 
 whom it is possible to reason, on the common ground that any 
 sort of civilization is better than a relapse into barbarism ; and 
 the position which the present writer maintains, is that starting 
 from that point, it will be found that the safer and saner course, 
 and by far the more practicable, is to endeavour to strive for the 
 bettering of things as they are, starting from the point to which 
 
 * "Civilization : its Cause and Cure," by E. Carpenter, 
 •j- Bakounine, " Dieu et FEtat, F^d&alieme," etc. 
 
 z 2 
 
840 THINGS AS THEY AEE 
 
 the social systems of civilized communities have already evolved 
 by the way of individualism. He maintains that there is no 
 need to recommence the construction of the fabric of civiliza- 
 tion ab initio, by prefacing it with the destruction of existing 
 institutions. 
 
 There are also quasi-socialists, along with whom, somewhere 
 on the extreme right wing of their army, the writer himself 
 may possibly be found to be marching. " Meliorists," they call 
 themselves ; those who, perceiving the futility of attempting to 
 eradicate individualism and acquisitiveness from among the 
 motives of humanity, yet are willing to strive to modify and 
 restrict their opei-ation. And then again directly antagonistic 
 to both, are the pseudo-socialists ; in reality ultra-individualists 
 in thin disguise, persons entirely actuated by individualist greed 
 and envy, who are massed in " irregular order " somewhere on 
 the left wing of the host of Socialism, allied with it for the 
 moment, shouting in unison the war-cry of Proudhon that 
 "property is theft," and intending withal by theft to acquire 
 property ; aiming at the transfer to themselves, not at the 
 abolition, of private property; the people whose true tactical 
 objects of attack are the eighth commandment, and the statutory 
 enactments relating to larceny. 
 
 Among the entire force one searches in vain for any indication 
 of a true common purpose or method. It does not necessarily 
 condemn them all that their schemes and aims appear mutually 
 destructive. Among the wearers of red ties, it is conceivable 
 that there may be one set of men who have hit upon the right 
 doctrine, and laid hold of the true secret of regeneration ; the 
 difficulty of the sceptic being, that no sooner has he demolished 
 the theories of the one set, than he finds the others proclaiming 
 in concert that that particular school " as everybody knows " was 
 founded on error, and that the real orthodox " Socialism " is 
 something quite distinct, and has a foundation quite different, 
 which he has not confuted at all. It is necessary therefore, for 
 the purpose of analysis, either to pick out the separate conceptions 
 which go to make up this Protean general notion of discontent, 
 and examine them in detail, or, at the risk of being thus accused 
 of " flogging a dead horse," to adopt the more concise method of 
 selecting for examination that particular presentation of the 
 Collectivist case which appears the sanest and most coherent 
 and reasonable. With this view the writer has selected as an 
 
C.XVIIL] SOCIALISM. PAET I.— COLLECTIVISM 341 
 
 exposition the very charming work above referred to, — " New 
 Worlds for Old," by Mr. Wells — a book with the ideals and 
 appreciations of which one cannot but sympathise. By no man 
 have the existing evils of industrial individualism been more 
 sympathetically and nobly understood ; and Mr. Wells' view of 
 the genesis and history of socialism itself may be accepted as 
 accurate and scientific (Chap. X.). 
 
 If one may venture on a general definition of constructive 
 socialism, the doctrine amounts essentially to this, viz., that the 
 main evil of civilization lies in the faulty distribution of means, 
 by reason of which the few attain to an excessive appropriation, 
 while the many tend towards a condition of intensifying deficiency, 
 occasioning misery to an undue proportion of human beings in 
 the present, and what is worse and more fatal still, a degenera- 
 tion of humanity by the degradation of the race. So far, the 
 present writer is in accord with Mr. Wells. If by his recognition 
 of this great evil to be overcome, he incurs the odium of 
 "socialism," he submits to the stigma, and he goes a step 
 beyond this, in recognizing fully, that it is not by way of the 
 increasing differentiation of the richer classes, and the further 
 facilitation of their powers of enriching themselves, that salvation 
 is to be found from the consequences of an all-devouring 
 acquisitiveness. He is no believer in the beneficence of a 
 paternal plutocracy, though with Mr. Mallock he hopes some- 
 thing from a more enlightened and systematic development of 
 the altruism of the individual. 
 
 Socialism having correctly diagnosed the ailment, sets to work 
 to prescribe its remedy. But this, disguise and extenuate it as 
 you will, and twist it as you may, always remains essentially 
 that of the paternal State, bureaucracy, opposed to plutocracy, 
 but still more completely and inevitably absorbing all means. 
 It has to proceed by way of the conversion of individualist 
 humanity into officialdom ; with the inevitable corollary of the 
 appropriation by the State of all means of industrial production,* 
 all functions of human service and effort, and in the long run, 
 of all property whatever, with the exception of a few shreds of 
 consumable commodities. + This as above pointed out, can be 
 brought about only by a gigantic revolution of human nature, the 
 
 * See Wells, " New Worlds for Old," Chap. IV., § 8, for the first stage in this 
 process, 
 t Ihid., Chap. IV., § 7. 
 
342 THINGS AS THEY AEE 
 
 substitution of the nature of the insect for that of the human 
 being. Mr. Wells, it is true, eloquently and suavely disclaims the 
 idea of pushing his conclusions to so logical an extreme. " Not 
 at all," says he ; " the notion of property is innate in man." No 
 sane socialist thinks of confiscating a man's clothes or his tools 
 or his bic.vcle or his family pictures. He will not even empty 
 his pocket directly of its loose cash, (although when that has 
 once been expended, the man will find, it is true, (see after) 
 some little dif&culty in replacing it with a fresh supply of some 
 "medium of exchange" convertible at will into the wealth of 
 world-production). There may even be room in the Socialist 
 State of the future, he opines, for some survivals of indivi- 
 dualistic industry not State directed, the less important and 
 necessary trades,* such as the confection of bonnets, the tattooing 
 of designs on the skin, or the preparation of smoked glasses for 
 observing the sun at times of eclipse, and the fantastic traffic of 
 the "philatelist." He approves even of a partial retention of 
 the customs of testation and inheritancet of whatever can 
 possibly remain to the individual to bequeath or inherit, at any 
 rate as between a man and his wife and immediate descendants ; 
 not of everything, mark you, but of quite a reasonable and 
 respectable remnant of his property ; at any rate so much as it is 
 not found inevitably necessary to return to the common stock. 
 The revolution is to be effected very gradually, very gently and 
 considerately, t The complete revolution to collective ownership 
 itself is only to be brought about in the distant Utopian future, 
 when there shall have been gradually evolved an improved type 
 of human being with an attitude of mind averse to individualism. 
 It is to be a change in the minds and wills of men which is to 
 lead them gradually to modify the institutions of municipal 
 law. It will take centuries to work out the plan, and to give 
 practical effect in a distant future to what, for the present, 
 Mr. Wells says that the unconverted individualist may unmovedly 
 regard as mere counsels of perfection, pious opinions not to be 
 adopted as obligatory articles of faith for many ages, though 
 undoubtedly these are held by his brethren as the catholic faith 
 of socialism. 
 
 But he thinks that meantime we must make a beginning 
 
 * See also Sinclair, Chap. VII., p. 231. 
 t " New Worlds for Old," Chap. Vll., § 1. 
 j lUi., Chap. Vn., § 4. 
 
c.XYIII.] SOCIALISM. PART I.— COLLECTIVISM 343 
 
 somewhere ; and we are to begin,* by putting under the control of 
 the State or of an hierarchy of local authorities and municipalities 
 (the latter to be carefully created according to his own plan), 
 first of all, all services of transport, of house-building, of sanita- 
 tion, of food supply and the like,t just as your enlightened 
 municipalities have already taken to providing tramcars and 
 schools and waterworks and gasworks and other services for 
 the public.J The people who on a " private adventure basis " are 
 at present working at these things, your railway directors and 
 managers, your shopowners and masters, your schoolmasters 
 and your butchers and fishmongers and milkmen, and the 
 rest, are to be absorbed to start with, and they are to be the 
 first of the new recruits in the army of State-paid workers. 
 These services of production and transport and convenience 
 are no longer to be carried on for lucre by private adventurers. 
 It will take a long time to enrol and drill all these people, and 
 the individualist property owners are to comfort themselves with 
 the reflection that they will all be snug in their graves long before 
 the time when society will be ready to enrol the second Land- 
 wehr, which will be a far greater force. For that is to consist of 
 all the producers of other goods, and all the manufacturers, 
 merchants, financiers, bankers § (insurance companies, by the 
 way, will have been earlier absorbed into the first enrolled 
 army, because the savings of the people must at once be 
 guaranteed by the State). But by the time that the first army 
 is well at work, the unenrolled (those who are still struggling 
 on in the unregulated cohorts of individualism) will have begun 
 to get tired of their separate organizations, or rather of their 
 lack of organization ; tired of their individualism ; and then 
 these will commence spontaneously to throng the recruiting 
 offices,|| and to seek work for the King's shilling ; and so, 
 gradually, individualists will come to improve themselves 
 gently off the face of the earth, and the whole of life will have 
 brought itself gradually under State-control ; and when the 
 soldiers of this greater army are completely enrolled, and its 
 organization is perfected, then it will have become completely 
 exhaustive of the citizens, who will be in happy case; for 
 
 * " New Worlds for Old," Chap. VIII., § 2. 
 
 t Hid., Chap. II., also Chap. IV., §§ 4, 5, 6, 7, 8, and Chap. VIII., § 1. 
 
 I Shaw, " The Commonsense of Municipal Trading." 
 § Hid., Chap. IV., § 8. 
 
 II Cf. apton Sinclair. 
 
344 THINGS AS THEY ARE 
 
 collectively they will control the State which commands them 
 individually. Pleasantly and kindly all this is presented. No 
 word of harshness, except here and there a disapprobation of 
 the philoprogenitive and acquisitive " Semitic " sort of people*; 
 there flits across the mental retina a vision of discomfited 
 Carnegiefelds and Rockefellerbergs, and Harrimansteins and 
 Morganheims, scuttling away- to hide racial physiognomies 
 which Mr. Wells dislikes, in the outer darkness ; people whose 
 sordid Semitic acquisitiveness it would otherwise eventually be 
 needful to repress with dignified severity ; the financing, stock- 
 broking, parasitic sort of men, whose real function it has been 
 to prey upon us poor middle-class people and to absorb and 
 pocket our painful earnings. But outside of these enemies of 
 humanity, nobody, if we will only believe him, is to be really the 
 poorer for the gradual process (Mr, Henry George by the way 
 offers the same comfort to the landlords whom he proposes to 
 expropriate f) ; as for the mass of humanity, that will be incal- 
 culably the better, the stronger, the happier and more efficient ; 
 the true Utopia seems to be " just round the corner." When 
 eventually the transformation is completed, the State will 
 have become a socialistic State, what Mr. Upton Sinclair calls an 
 " Industrial Eepublic," every man quite free under the infinitely 
 beneficent despotism of the majority of his fellow-citizens. As 
 for the present masters, the land-owners will have disappeared, 
 because the panacea of Mr. Henry George, the " progressive 
 absorption of rent in taxation " will have been the first medicine 
 administered. And the others — the capitalists, employers, 
 merchants, financiers — they will also have disappeared. 
 
 It is absurd, says Mr. Wells, to stop where George stopped, 
 illogical to boot ; for so long as Capital, which is Means applied 
 to enterprise, is allowed to employ itself in obtaining gain for an 
 individual possessor instead of for the community, the result of 
 painlessly expropriating dukes from their acres, will only be to 
 induce the individuals who have hitherto carried on that calling 
 to enter into a new term of predatory existence in the ranks 
 of the stockbrokers and financiers, and the sweaters, and 
 the owners of shares and debentures. And there is to be no 
 more " struggle for existence," the only permissible competi- 
 tion being that for snug and [agreeable posts in the army of 
 
 * Wells, " New Worlds for Old," Chap. IX., § 6. 
 
 t George, " Progress and Poverty," Book I2L., Chap. III. 
 
c. XVIII.] SOCIALISM. PAET I. -COLLECTIVISM 345 
 
 service,* which in due course is to comprehend the entirety of the 
 citizens of the State, one half engaged in production for the com- 
 mon benefit, the other in the duties of distribution, supervision 
 and control, each man doing service in his appointed place, and 
 drawing his appointed wage under the collective mastership of 
 an all-competent bureaucracy. All this is enunciated with great 
 gentleness and suavity. Mr. Wells suggests to his brethren, by 
 no means to "nail the ears " of the capitalist " to the pump." On 
 the contrary, he shall be handled as tenderly as the worm at the 
 hands of the " compleat angler." Give him time enough, and he 
 will spontaneously see the error of his ways. The voice is the voice 
 of Jacob ; but though the author gently repudiates the militancy 
 of Proudhon and Marx, and the shrill and acrid philippics of the 
 Clarion, and deprecates all violence and force, it will be seen 
 on consideration, that all the time he is in truth one with Marx, 
 the hairy predaceous Esau, modulating the roughness of his voice 
 to conciliate those whom his proposals might otherwise alarm. 
 
 The essential ideal is identical with that of the collectivists 
 " quaiid meme," the antagonism to private property in " capital," 
 which in effect is to all private means whatever. In the perfected 
 Socialistic State there can be no room for a conception of 
 " property " at all, any more than the hive could continue to exist 
 without extirpating any anti-social inapian worker-bee who set to 
 work to accumulate in some secret acquisitive cell a little hoard 
 of honey for its own private consumption. All acquisitiveness, 
 whether you please to call it " avarice and greed " or " prudence 
 and thrift," has on a coUectivist basis of society to disappear 
 from among the motives of the individual man, and be replaced by 
 another instinct, a passionate patriotism enlarged to embrace 
 the whole world as its country, and all humanity as its object. 
 
 The general refutation of this thesis requires some rather 
 deep " thinking at " to appreciate. The present writer does not 
 dispute that in a coUectivist state wealth would continue to be 
 produced. But Means, which are claims upon all the wealth, 
 and which are daily produced from the surplus of its exchange- 
 able value, can only continue to be accumulated by the exercise 
 of the commercial function, which is the task of converting 
 wealth into means now performed by individualistic commerce, t 
 Now this function cannot be effectively performed by the State. 
 
 * See Sinclair, " Industrial KepubUc," Chap. VII. 
 t Ante, pp. 174—175. 
 
346 THINGS AS THEY AEE 
 
 The mere production of commodities in itself avails nothing. 
 The State would find, as the individual producer now does, that 
 the quality without which a thing cannot be wealth and without 
 which it must be disastrous to produce it, is desirability ; value 
 being nothing intrinsic in the things, but simply the temporary 
 measure of the general average desire for them at the moment ;* 
 so that any production in excess of what Adam Smith called 
 " effectual," which is commercial, demand, is no better than 
 a futile waste of labour and material. Now, what the State 
 requires to fill its financial reservoir, is not wealth in the sense 
 of commodities, but means ; not boots, but money, which is 
 the power of acquiring boots and all other things as they are 
 needed, and securities for money. 
 
 This very rudimentary statement of the self-evident truth that 
 if production loses its market it is worse than non-production, 
 has to be here insisted on, precisely because the whole collec- 
 tivist thesis rests on ignoring it, on the fallacy of using one and 
 the same word, "Wealth," to designate both the material things 
 produced by human energy from Nature, which the State may 
 go on effectively producing, and the Means or power which 
 each of these confers on its possessor by virtue of its commercial 
 exchangeability, the essential quality which expresses itself in 
 "value," is measured in price, and is capable of being appro- 
 priated as Means, and which the State is impotent to secrete. 
 The fallacy involved in the use of the ambiguous general term 
 " Wealth," when one comes to think the thing out, will be 
 perceived to be at the root of all collectivism. Your real diffi- 
 culty will not be in making boots, which are Wealth, but in 
 making money, which is Means, by boot-making ; and money is 
 the economic foundation of all the civilization of which history 
 records the experience, from the Egypt of four thousand years 
 ago, to the United States of to-day. 
 
 It is conceded that it is no valid d priori argument against 
 " Socialism," that it must necessarily be condemned as conflicting 
 with the idea of " property." Such an argument is not con- 
 clusive, because the notion of "property" as an abstract and 
 rigid quality which attaches to all rights and everything capable 
 of possession, is not now, and never has been (as Mr. Wells very 
 truly points out t) a fundamental doctrine of civilization. In so 
 
 * See ante, pp. 39 et seg. 
 
 t " New Worlds for Old," Chap. IV., § 1. 
 
cXVIIL] SOCIALISM. PAET I.— COLLECTIVISM 347 
 
 far as the constitution of society in itself is deemed to rest on 
 assuring the satisfaction of the instinct of individualism, men 
 have chosen to recognize the claim of the individual to dominion ; 
 no further. A man's " property " * is just the measure of the 
 degree in which municipal law accords to his possession of things 
 a qualified and conditioned protection. It varies from time to 
 time, from place to place. The ancient Jewish polity thus 
 refused to recognize a permanent individual appropriation of 
 land. The Code Napoleon forhids the capricious disposal by a 
 man of the means of which he dies possessed. The British and 
 American laws very properly hamper the possessor of land, of 
 wealth, of means, each by appropriate prohibitions, with a long 
 code of complex restrictions in respect of his methods of employ- 
 ing them; except " subject to the laws " no man is allowed to 
 " do what he likes with his own." And throughout the world, 
 taxation, both direct and indirect, is nothing more or less than 
 a complicated system of State interference with the sanctity of 
 property. Just as the American humourist pointed out that the 
 earth travels through her orbit in 365 J days, " subject to the 
 constitution of the United States," so in sober fact, the institu- 
 tion of property is not an absolute law of Nature, but everywhere 
 and at all times the creation of the State by which it is authorized 
 and protected, and which, having the power, has therefore the 
 right, and if need be the duty, to modify from time to time 
 the kind and degree of the authorization and protection accorded, 
 as the necessity arises. This much one may freely concede ; 
 and admit, therefore, that it is quite within the discretion of 
 each State to regulate for itself, at the risk of the prosperity and 
 civilization of its citizens, according to its idea of the exigencies 
 of the national well-being, the degree of dominion it chooses to 
 concede to possessors in any one species of things, opportunities, 
 and rights. There is no " universal " or " natural " law of 
 property or " right to property," and the municipal law of each 
 country, which exists to preserve the peace, and to regulate and 
 enforce the will of the people in respect of the rights of property, 
 consists in the latter aspect really of such series of limitations as 
 the civilization of that country chooses to impose on the true 
 primitive "natural law," which is, that he should take who has 
 the power and he should keep who can. It is the prohibitions 
 of the law, and the power and will to enforce them, in which 
 
 * See ante, p. 36. 
 
348 THINGS AS THEY ARE 
 
 consists property, the economic foundation of civilization ; and 
 these are effective and beneficial in proportion to the wisdom of 
 the purpose which informs them and their aptitude to subserve 
 that purpose. 
 
 But while, therefore, the objection that Socialism is " sub- 
 versive of property," is not in itself conclusive, it is legitimate 
 to consider to what extent and in what manner any scheme and 
 plan of "collectivism," if put in practice in any nation, would by 
 its results on property affect that nation's civilization. And, 
 what is stUl more material, one must envisage the problem from 
 the point of view of practicability ; how far it could be found 
 possible in any country to persuade the bulk of the people to 
 alter their laws and institutions in the direction of collectivism, 
 and forego the satisfaction of their acquisitive instincts ? For 
 until it can attain their assent, the doctrine must always remain 
 an ideal capable of realization only by force and the wholesale 
 shedding of blood. 
 
 The unconverted individualist may be relied on to resist, 
 peaceably if he can, but, in the last resort by such counter-force 
 as he can hire, the absorption of his means by the community ; 
 and when the time comes for Collectivism to assert itself in action, 
 the suave persuasions of Mr. Wells will be entirely abandoned 
 in favour of the more drastic and compulsory methods favoured 
 by the " left wing " of the party. He gracefully deprecates all 
 forcible methods of revolution, it is true. But in the last resort 
 he also will be driven to it ; while others of the comrades, with 
 a better logical insight, look forward to the days of the necessary 
 compulsion with a frankly gleesome anticipation. Karl Marx is 
 the true prophet of Collectivism, and Bakounine was his most 
 orthodox and logical disciple, and the kindly cultivated gentle- 
 men of the Fabian Society will be rejected as no better than a 
 set of heretical schismatics, when the convention of collectivism 
 sits to formulate its faith. One fancies one hears again the 
 euphonious Americanism "mugwumps" contemptuously applied, 
 as the mountain exterminates the Gironde. 
 
 For what is it that is bound to happen ? Assume that the 
 miracle of the instantaneous conversion of whole world as by the 
 impact of a comet, which Mr. Wells himself in a more lucid 
 moment truly discerned to be the only possible way of bringing 
 about the true collectivism, does not occur ; assume also that 
 some one nation is impelled by its collective will to be the first 
 
o.XVIIL] SOCIALISM. PAET I.— COLLECTIVISM 349 
 
 definitely to adopt the collectivist remedy for the sad imperfections 
 of individualistic industrialism.* 
 
 Take it that this comes about first in some one country — no 
 matter which, and call it Collectivia. What must be the course 
 which events will take therein ? Why, first of all, obviously the 
 emigration from Collectivia of the unconverted of the propertied 
 classes, taking with them, or rather sending away in front of 
 them, so much of their embodied means as they can lay their 
 hands upon. Cash and scrip and documents and investments 
 and jewels, evidences of claims on the industry of foreign 
 countries and the rest of it — whatever they can contrive to save 
 from the wreck. + There will be left those who cannot escape, 
 and that portion of the mass of the means of the wealthy which 
 is so circumstanced that it cannot be withdrawn — the land and 
 the buildings and all claims and mortgages on them, the " fixed 
 capital," as Adam Smith called it, which is embodied in 
 machinery and other industrial appliances, the inscriptions in 
 the register of the national debt, and the shares in and 
 debentures of companies and associations of enterprise carried 
 on within Collectivia itself ; these cannot be taken away, and 
 will remain to be taken possession of in the name of the State, 
 and to form the initial stock-in-trade and " Capital " on which 
 the nation will set to work to employ the future energies of 
 its people. The process of emigration will have long since set in 
 with the first distant mutterings of the storm, and in all the 
 more transferable shapes in which they have been embodied, 
 Means will have been withdrawn long before the national 
 conversion to Collectivism is of&cially announced. Already 
 in some countries there are signs of this timidity. British 
 Capital, for instance, is already seeking employment abroad, 
 whether it be to the extent of seventy or a hundred and fifty 
 millions annually. I To what extent this is due to the superior 
 profitableness of foreign enterprise, and in how great a 
 proportion it indicates a certain mistrust of the stability of 
 British political action under the pressure of the pseudo- socialist 
 
 * Mr. Sinclair, for instance, predicts that it will be the United States of America, 
 in which these evils have, he considers, attained their maximum development, which 
 wiU be the first to take the plunge, and that this will certainly be effected by way 
 of the nationalization within a trifle of five years or so, of the " trusts," which in 
 their way are collectivist in- tendency -'satis le savoir" ; and which are preparing 
 no less by their iniquities than by their effectiveness of method the way for their 
 own absorption. " Industrial Republic," Introduction ; see also Chap. VI. 
 
 t AnU, p. 240. 
 
 i See note, ante, p. 242. 
 
860 THINGS AS THEY ARE . 
 
 acquisitiveneBS of a democracy, it were hard to determine. And 
 it would not be desirable, though altogether instructive, to 
 elucidate this point by trying the experiment, say, of substituting 
 an eighteenpenny for a shilling income-tax in peace time, and 
 seeing what will then happen in the way of the exodus of Means, 
 and the crippling of industry. 
 
 Now for the effect on the efficiency of the national power 
 of producing. You may admit at once the main thesis of 
 Marx, which is demonstrably true, that "Wealth" is essentially the 
 result of labour (that is to say, human energy) applied to land, 
 (which is a short way of describing the resources of the earth 
 and the solar heat), but it is necessary to add, what Marx to the 
 end was unable to reconcile himself to admit, but what the 
 bigger brain of Henry George* clearly discerned : namely that for 
 the effective production of Wealth, Labour must employ Capital ; 
 the common notion that Capital really employs Labour, being a 
 mere confusion of thought, due to the fact that it is usually the 
 particular head-labourer who is also the possessor of Means that 
 happens to be the man who decides the course of industry and 
 engages the other labourers to come in and assist him in 
 producing. Now in Collectivia, it is to be the State which will 
 have to provide the Means wherewith to prosecute its industry. 
 How produce it, provide it, earn borrow beg or steal it, from 
 whom and with what ? The rich men have gone away, direct 
 taxation there cannot be, for there shall be no private incomes to 
 tax. What arises from the application of the energy of the 
 nation to its land will be received by the State and redistributed 
 among its citizens. In wages probably, some form of medium 
 of exchange, of paper promises to pay, of " labour notes " or 
 similar documents, which will have been devised to replace the 
 gold that, following its own law of motion, will long since have 
 fled to countries of better secured interest. It is true that as far 
 as the internal activity of production is concerned, paper tokens 
 will be equally effectual as a medium of exchange with gold and 
 silver coins. If a nation could provide, as Mr. Sinclair thinks 
 the United States can, from its own resources for all its own 
 needs without the aid of international commerce, it would 
 matter little, therefore, on what sort of material were inscribed 
 the magic characters which transform a piece of metal or 
 
 * "Progress and Poverty," Book I., Chap. V.; also Book III., Chaps. Ill 
 andV. 
 
c. XVIII.] SOCIALISM. PAET I.— COLLECTIVISM 351 
 
 a piece of paper into the indisputable evidence of the right 
 to participate in the world's Wealth to a given extent. 
 
 But with the exception of the little community in Pitcairn 
 Island, no people has ever quite attained to that self-sufficing 
 efficiency. The country of CoUectivia, say, more happily 
 circumstanced than the United Kingdom, shall be able, like the 
 United States, to produce from its own soil, all the wheat that 
 its people need, all the meat, and all the dairy produce, all the 
 flax and hides and beer and many other things. But it is, say, 
 a country in the Temperate Zone somewhere, and the people 
 want tea and coffee, tin and copper and cotton, all the raw 
 materials of the tropics, and many other things besides, to 
 supplement their own produce, and to employ their own 
 productive powers upon. How is the Collectivist govern- 
 ment to obtain these things which cannot be produced in 
 CoUectivia? 
 
 "Why by trade, of course, carried on by the State for 
 the benefit of the citizens." 
 
 Trade with whom, in what, and with what means ? 
 
 Oh, of course, trade in the surplus productions of the country. 
 The State will become commercial, i.e., individualist, abroad, 
 while uncommercial and collectivist at home. It will seek the 
 dearest market and export thither the surplus produce of the 
 country, and buy what is needed in the cheapest market abroad, 
 and import thence. 
 
 Indeed, and pray with what ? With your paper-money, which 
 is quite sufficient for your internal purposes, but of no use at 
 all except in your own market ; or with the gold, the money of 
 other countries which following its own law, will keep on flowing 
 to the land of the best interest and best security, and which, if 
 at great expenditure you manage to capture it for a moment, 
 must, like the bottle of the imp in E. L. Stevenson's story, 
 immediately fly back to the country of the most profitable 
 market for gold, the land of the " highest rate of discount " ? 
 And how about the goods you will have to export wherewith to 
 obtain the gold with which you must buy the things you need ? 
 Around you lie the unconverted individualistic acquisitive 
 nations, with their industrial slaves bound to labour by the nexus 
 of cash-payment, at wages representing it may be, the minimum 
 necessary for the sustenance of the labourer, but yet payable in 
 a currency recognized by the rest of the world and accepted in. 
 
852 THINGS AS THEY AEE 
 
 its exchange. You, who must need to resort to commerce to get 
 your living — the commerce which is based on acquisitiveness — 
 how do you propose in that commerce to compete with the 
 productions of nations that " produce at the lowest price," in 
 antagonism to you, under the stress of the mononesis of unre- 
 stricted competition among themselves and with each other, 
 and which must necessarily undersell you in every market in 
 the world, even in your own, unless you can contrive to exclude 
 them from that by prohibitory taxation ? To which last question 
 there can never be a satisfactory reply. 
 
 For at this point one comes face to face with a further and 
 by far more formidable obstacle ; which is, that to keep at 
 home employment for its population in working to supply its 
 needs, Collectivia will therefore necessarily have to prohibit 
 the importation of everything that can be produced in suffi- 
 cient quantity at home. Every pair of boots that is brought 
 to its shores from Northampton or Massachusetts will be so 
 much wealth abstracted from its productivity, and so much 
 means deducted from that with which the Collectivese govern- 
 ment will be able to buy those things which it will need to 
 distribute among its people. Nothing short of prohibition, not 
 even the ferocity of a Portuguese tariff, would otherwise suffice 
 to preserve the citizens from enforced idleness, or the govern- 
 ment production from becoming a mere waste of raw material, 
 or the means of the State, which are to secure the livelihood 
 of its citizens, from disappearing into space ; this absolute 
 protection of State industry is inevitable. Without this it 
 would be impossible for the CoUectivist State to keep in force 
 among its citizens the ordered habit of industry whereon must 
 be founded its civilisation. And this necessity of the pro- 
 tection of every possible product of the national industry by 
 an absolute prohibition of competing imports must extend and 
 intensify. 
 
 Next comes the question of the possibility of any country's 
 providing from its own resources the total sum of the material 
 things needed for itself. This assuredly varies with the circum- 
 stances of each country. To consider this, therefore, one must 
 transfer in imagination the collectivist experiment for a moment 
 from an imaginary to some real country, and assume a real 
 state — Britain for instance — to be the pioneer land of collectivism. 
 We now produce one-eighth of the wheat supply we need, and. 
 
cXVIIL] SOCIALISM. PAET I.— COLLECTIVISM 353 
 
 say, one-half of the meat supply and the dairy stuff.* Certain of 
 the coUectivist writers — Mr. Wells among them — have pointed 
 out with no little truth, that by adopting methods of more 
 scientific and intensive cultivation the fertility of a country can 
 be greatly extended ; they say almost indefinitely ; and that the 
 resources of cultivation in the way of increasing production 
 are almost inexhaustible. They point to the market gardens 
 surrounding Paris and the Belgian cities as examples of what 
 might be done (a process, by the way, which could only effectually 
 solve the food difficulty if the population were content to subsist 
 on cabbages instead of wheat). What is fairly obvious is, that 
 if all the land of Britain is brought again under the plough, 
 the meat supply, which to cope with the demand would need the 
 retention of a large proportion of it in pasture, must propor- 
 tionately diminish. Whether it would be really better for the 
 Briton to produce, say, half of his stock of wheat at home, at the 
 price of relying for nine-tenths instead of one-half of his animal 
 food products on other countries, is a question of detail. This 
 aspect of the problem none of these gentlemen have found time 
 to work out in figures. They have to rely on the general asser- 
 tion, so freely made and so exceedingly difficult to either verify 
 or confute, that every country, even the most thickly populated 
 or least fertile, is able to maintain its own population in food if 
 only cultivation is carried on with sufficient scientific skill. To 
 the less sanguine it seems that to make sure of this sufficiency 
 it will be needful in some lands first very materially to thin off 
 the population by emigration ; — or otherwise. 
 
 Apart from the question of food supply, however, what really 
 has to be considered is the practical problem of the effect of 
 collectivism on the efficiency of the State as a general productive 
 agency. Adequately to discuss this would require volumes. 
 Much that may be found in the current " political economy " of 
 the nineteenth century in disparagement of State action in the 
 economic field has been overstated, and this adds to the diffi- 
 culties of an accurate analysis.! Mr. Wells is justified in saying 
 that in the act of working a something else and better is present 
 to the will and intention of the worker than the mere thought of 
 the wages he is getting ; a pride and satisfaction in the work he 
 is doing, a certain joy of the conflict with Nature, a certain 
 
 * See also Sinclair, quoting Prince Kropotkin, " Industrial Republic," Chap. III. 
 t "New Worlds for Old," Chap. V., § 2. 
 T.A. A A 
 
354 THINGS AS THEY AEE 
 
 craving to satisfy the appetite of energy for employment. That 
 is true as far as it goes ; hut it evades the real question, which 
 is one not so much of the quality as of the quantity of the work 
 you can get done by the average man when the spur of absolute 
 physical necessity is withdrawn, and the cash-nexus of indi- 
 vidualist acquisitiveness gives place as a motive and inducement 
 either to the pride of the individual worker, or the sentiment of 
 patriotic duty, or, what would probably prove the most effectual 
 inducement of the three, the vultus instantis tyranni, the grim 
 compulsion of the collectivist taskmaster. 
 
 This question of the efficiency of State compulsion as a 
 substituted inducement for the impending pangs of hunger, 
 has always been dealt with in an airy and optimistic manner by 
 socialist thinkers. Granted that the craftsman at his bench, 
 the author at his desk, and the artist at his easel ; that many 
 others of those who under individualist conditions produce and 
 serve efficiently in their several ways, would under collectivist 
 conditions still strive to express the best of themselves in their 
 work. How about the miner in the pit, the minder at the loom, 
 the stoker at the furnace, the toiler whom necessity compels to 
 other still more arduous and distasteful fatigue in entirely 
 unwelcome tasks, but yet whose co-operation in these is an 
 unavoidable necessity of the life of the community ? By what 
 contrivance of compulsion are these services to be secured, and 
 the necessary average amount of work get done by each, when 
 you have withdrawn the incentive of hunger and have to rely 
 on the sentiment of public duty of the workers, reinforced by 
 the occasional admonition of the State inspector ? How do you 
 propose to answer if the coal-miner should say, as he would be 
 justified in saying, " Here I have worked underground for fifteen 
 " years, honestly and fairly producing my appointed tale of fuel 
 " in each shift, in the hot dark danger of the bowels of the 
 " earth. It is enough. It is now my turn to be an engineer or 
 " a musician or a landscape-painter. Bring me forth, and educate 
 " me afresh, and set me to a more welcome task, and bring here 
 " that subsidized ex-duke from Belgrave Square, or yon distin- 
 " guished literary Fabian from Sandgate, to wield the pick in 
 " my place. I and my family are off to South Kensington to 
 " study aesthetics. Have I not too been born in Arcady ? " 
 
 " . . . . auch mir hafc die Natur 
 Bei meiner Wiege Freude zugeschworen." 
 
c. XVIII.] SOCIALISM. PAET I.— COLLECTIVISM 355 
 
 In a country where the worker is the master, what answer 
 could there be to such a demand ? The old capitalist one was 
 quite simple, " If you do not work you will starve, and we have 
 "the right to prescribe Vhat you shall work at." But this is 
 no longer available. Will the inspector be able to say to the 
 miner, " You have to work at such a task for such hours and at 
 " such wages and during such portion of your life as it shall suit 
 " the community, which is ourselves, and which is omnipotent, to 
 " prescribe " ? If so, in what way will the status of the citizen 
 under a socialist regime show an improvement over that incident 
 to the " slavery "of individualist industrialism ? In truth, com- 
 pulsion in some form is the inevitable necessity and condition 
 of all civilization.* Does it after all seem any great thing to gain 
 that the compulsion of eollectivist external force should be sub- 
 stituted for the more spontaneous impulse afforded by the 
 individual requirement for food shelter and raiment, as the 
 compelling incentive to industry ? 
 
 And this word " incentive " brings one to the consideration of 
 the stock objection to Collectivism, that which keeps on occurring 
 to the mind of the " man in the street," which has its force, less 
 conclusive than is imagined by those who use it, but more so 
 than is admitted by those who seek to evade it. The State, as 
 we have seen, however eollectivist internally, must, as directing 
 the industry and commerce of a nation, be acquisitive and 
 individualistic externally. It must gain and accumulate means 
 in order to feed its people and to be in a position to appropriate 
 for their benefit to the necessary extent the wealth of the world. 
 The initial difficulty of effecting this as against the competition 
 of acquisitive individualistic nations has been sufficiently adverted 
 to. There is no space further to enlarge on it. But then comes 
 the other question. What sort of machine will this State of 
 yours prove to be ? Can its direction of things be made effective 
 industrially commercially financially, with the machinery in the 
 hands of a bureaucracy ? 
 
 A person who, howbeit on the small scale of a Crown colony, 
 has had his little share in assisting to direct the government of 
 a community, is entitled to bring the testimony of personal 
 experience to bear on this point. The writer has found that all 
 State officials are of two kinds : those, the more numerous, who 
 get through their work honestly enough, with the object of 
 
 • ATde, p. 209. 
 
 A A 2 
 
856 THINGS AS THEY AEE 
 
 "performing their duties," gaining the approbation of their 
 superiors, and, with the necessary minimum of expenditure of 
 brain-power, qualifying themselves for the pensions which are 
 the real ultimate objective of their endeavours ; and the restless 
 energetic uncomfortable minority, who keep before their eyes 
 above all things the interests of the community which they serve, 
 and cannot be satisfied without "leaving things better than 
 they found them." The men of the majority are undoubtedly 
 the easier to deal with, the more observant of routine and con- 
 vention, the people who " give the least trouble," and therefore are 
 more likely to obtain from the good-will of their superiors the 
 promotion which all alike reasonably and properly desire. 
 
 " Surtout point de zele," from the " service " point of view, 
 was probably the soundest injunction ever impressed on an 
 aspirant to public office, but it does not conduce to efficiency in 
 the same way as the competitive struggle of individual adventure. 
 And it is only the occasional unwelcome intrusion into a " depart- 
 ment " of some energetic member of the minority, which saves 
 the administrative organism from stagnation. The highest 
 qualification of a statesman, it is true, is a simple-hearted 
 devotion to the public welfare. But in officialdom this is apt 
 to be looked on as a public nuisance, when it too strongly 
 characterises the " deputy sub-inspector." The restless inven- 
 tive ingenuity which may make the fortune of an artizan, the 
 combination of foresight and daring which may lead some 
 subordinate in a commercial firm to the armchair of the partner, 
 and the genius for figures and insight into the futures of values 
 by which men acquire eminence in finance, are all suppressed 
 instead of stimulated by the exigencies of an official career. In 
 officialdom, a correct routine is of necessity the orthodox tradition, 
 and order and discipline are far more welcomed than genius 
 daring insight or originality. So it comes about that that man 
 is deemed the most worthy of encouragement, and so gets the 
 upper hand, who least troubles his superiors with original 
 " minutes " and inconveniently startling innovations of method 
 and principle. Officialdom is essentially the domain of safe and 
 mediocre respectability, the sanctuary of " use and wont," dis- 
 carding all initiative and entrenching itself in precedent. For 
 the Government servant, individual acquisitiveness outside the 
 lawful scope of salary promotion and pension, is the forbidden 
 abomination ; and this is inevitable. But if you are to eliminate 
 
c. XVIII.] SOCIALISM. PAET I.— COLLECTIVISM 357 
 
 the quality of acquisitiveness in each individual, whence are you 
 to recruit the army of inventors, adventurers, speculators and 
 originators, on whose efforts the world has instinctively relied in 
 the days of individualism, and of whose service the State will 
 have more than ever need, when it becomes a vital necessity to 
 it as a community to prevail in the contest of international 
 acquisitiveness ; when it becomes a question for the nation's 
 very existence whether it will acquire or perish ? * The ant needs 
 no individuality in the construction of the nest, the bee no 
 inventiveness for improving the process of extracting honey from 
 flowers, or devising more economical methods of storing it in 
 cells. And when the human community has taken on the 
 semblance of the ant-hill or the bee-hive, the qualities which, as 
 things are, are born of individualistic competition, will more 
 than ever be needed to enable the State to succeed in the 
 economic functions of the common life. It is all very well to 
 say, " But we are going to absorb into our employment the very 
 " men by whose exertions all this fabric of individualism and 
 " capitalism has been built up. Eockefeller is to be chief director 
 " of oil mines, Carnegie we will make president of the Board of 
 " metal-workers, Harriman shall be minister of communications, 
 " and Pierrepont Morgan director of the commercial finance of 
 " the Eepublic. These trusts and combines which they now 
 " direct and from whose inordinate rapacity we suffer, are really 
 " only the initial stages towards the universal absorption by the 
 " State of all industry and commerce." t 
 
 Oh, indeed ! but how do you propose to compel these men or 
 successful men like them to come in, sink their individualism, 
 and harness themselves with red-tape to the chariot of the State ? 
 They will all have sent their money and securities off before 
 them and be calmly contemplating your struggles from far Paris 
 or Monte Carlo. And even if you succeed in somehow laying 
 hold of them or others like them, do you for a moment imagine 
 they will continue to bring to the performance of the duties which 
 somehow you are going to compel them to assume, the energy 
 and daring, the eagerness, and it may be, unscrupulousness of 
 action with which they have distinguished themselves in the 
 avocations of individualism ? Even were they willing to do so, 
 the State would be forced to forbid them. 
 
 * Ante, p. 30. 
 
 t Awte, p. 3i9 in note. 
 
358 THINGS AS THEY AEE 
 
 Nor is it conceivable to a retired public servant, by wbat 
 process tbe most qualified people can be selected to fulfil the 
 duties of direction and so to say, adventurousness, in the 
 collectivist State. By no process of selection known to us can 
 we attain to the cruel accuracy of the automatic selection of 
 private adventure, which has brought productive industry, com- 
 petitive commerce and regulative finance to their effectiveness. In 
 officialdom, seniority has its claims, conformity to precedent and 
 regularity of method are so indispensable that it is inconceivable 
 to the official mind that they should be lacking, and without a 
 complicated and to the outsider vexatious complexity of formalities 
 and records, it is impossible for public business to be transacted 
 at all. From the members of a bureaucracy, all of whose training 
 has consisted in cultivating and perfecting in themselves this sort 
 of fitness, you are to select the most effective for industrial 
 and commercial command by some process of examination. Now 
 how is this to be carried on ? How many marks will be accorded 
 in a competitive examination for the high places in the industrial 
 commercial and financial State hierarchy of the future, to ven- 
 turesomeness, to foresight, to decision of character, to the gift 
 of resolute persistence in unpopular plans, to the power of making 
 oneself when necessary disagreeable to the chief of one's depart- 
 ment, to the endurance of sleepless nights of thought, and to 
 that mysterious and elusive element of success, which is the 
 magnetic power of " turning everything one touches into gold." 
 " Luck," men call this, and there is an element of fortune about 
 it undoubtedly ; but what it mainly is, is the power of intuitive 
 judgment and the capacity of instant decision to act rightly at 
 the opportune moment. In the industrial and commercial world, 
 the man succeeds who knows how to seize a momentary oppor- 
 tunity of action, and can control his own fortunes by seizing it. 
 This opportunity is not going to wait for you, while the State 
 superintendent of this or that sub-department of industry or 
 commerce consults in due form the authorities of the public 
 department of which his own is a branch, where to buy this or 
 that material, to seize this or that opening for a market, to buy up 
 some monopoly, or to enter into some important combination to 
 counteract the danger of this or that mononesis. What is needed 
 is immediate action on the responsibility of the individual, who 
 acquires opulence in the measure of his promptitude and 
 courage ; the responsibility for important decision and action in 
 
c.XVIIL] SOCIALISM. PART I.— COLLECTIYISM 359 
 
 such matters cannot be made to lie on the shoulders of the individual 
 public servant. It must be assumed by the collective wisdom of 
 the community, approachable only by the routine channels of 
 minutes, annotations, and suggestions in the prescribed form, 
 eventually to be settled, if the idea is approved, by ministerial 
 councils, the decisions of which have to be formulated in similar 
 procrastinatory documents and go down the prescribed channels, 
 till they at length reach the executive hand a few months after 
 the particular opportunity has been seized by someone else. 
 
 On one memorable occasion in English history it occurred 
 that the Government of the country was able to effect a very 
 significant and marvellously profitable stroke of business, to the 
 momentous importance of which history records no parallel ; 
 and this was initiated and decided on, "most unconstitutionally" 
 we were told by indignant opponents, in an hour's conversation 
 between the Prime Minister and a great private financier. 
 Opportunities of fortune of such great magnitude may never 
 recur, but lesser ones arise from day to day. None will wait on 
 constitutional formalities. They disappear as instantaneously 
 as they arrive. 
 
 And these emergencies will in the collective State occur not 
 exceptionally and occasionally, but as parts of the common daily 
 necessity of State industry and commerce. A State hierarchy 
 is essentially incapable of utilizing the momentary opportunity 
 by seizing which it is alone possible to acquire means in com- 
 petition with the keen business intelligence of the world. What 
 will be needed by the State in its servants, if it is to succeed in 
 its career of manufacturer merchant and speculator, and feed 
 its people by its success, is not a dignified and courteous bearing, 
 a respectful adherence to official tradition, a reasonable submission 
 to the restraints of red-tape, a pleasant address, the kindly 
 appreciation of one's superiors, the faculty of conciliating the 
 good opinion of one's colleagues in office, or any of the other 
 amiable qualities which in the existing official world bring about 
 the promotion and prominence of the public servant, subject 
 always to the "paramount claims" of "seniority," the sheet- 
 anchor of the ofi&cial and the chief of all the obstacles to efficient 
 administration. The qualities needed cannot be imparted. 
 
 In the workings of individual acquisitiveness the incompetent 
 go under automatically, and the ready and powerful succeed in 
 the nature of things, and those who are successful are not 
 
360 THINGS AS THEY AEE 
 
 "officers of longest standing," but those vcho have attained 
 success for themselves, now and then by luck, more often by 
 virtue of personal qualities which misfortunes buffet in vain. And 
 this is the real competitive examination of individualism, by dint of 
 which a self-acting process of natural selection chooses out the 
 men by whose altogether egoistic strivings, Means are somehow 
 accumulated which are the embodiment of power and efficiency 
 and the economic life-blood of the community. It is these Means 
 which by being utilized, become available in the long run for 
 the economic needs of the people of the nation, and form as 
 "capital," the indispensable foundation of its civilization. 
 
 The consciousness of all this is part of what is vaguely in 
 people's minds when they deprecate collectivism as " depriving 
 industry of its incentive." But there is another and more 
 self-regarding part of the same thought. Each man is really all 
 the time thinking of himself, his own savings, his venture in 
 this or that industry of speculation, the trade in which he has 
 embarked his greater or smaller means, his hopes of accumula- 
 tion to provide in the future for the needs of those dependent on 
 him, and of how things are to be for himself and those like him, 
 when his individualistic efforts have been superseded by collective 
 enterprise. 
 
 Few are passionately concerned for the welfare of the hyper- 
 trophied excessively wealthy. With no great pangs of grief or 
 sympathy, the average American business-man, for instance, 
 would "assist" at the overthrowing of the "bosses" of the 
 " trusts," and the dissipation of the fortunes of the magnates 
 of finance ; and could only this movement towards Collectivism 
 be so controlled as to stop just above his own level, he would 
 even be prepared to welcome it, for it seems to each man 
 that the general need of society for the results of acquisitive- 
 ness can well be satisfied by just so much accumulation of 
 means as is attainable by the more modest exertions of him- 
 self and his fellows. Not vulgar envy, but an uneasy sense of 
 impending absorption it is, which induces the unrest of the 
 individual adventurer in the presence of a more effective and 
 potent system of acquisitiveness than his own. 
 
 But reflection convinces each in turn that his own fate also is 
 bound up with that of the inordinately wealthy, with whom he 
 could otherwise so well reconcile himself to dispense. The share- 
 holder, the man with savings which he has poured into the 
 
c. XVIIL] SOCIALISM. PAET I.— COLLECTIVISM 361 
 
 reservoir of the bank the company or the insurance office, to be 
 employed by them for profit in the very concerns which are 
 directed by the over- fed plutocrats, realizes soon enough how his 
 fate is involved in the continuance of their functions; the artizans, 
 the "funds" of whose unions and provident associations are 
 similarly " invested," and depend, therefore, for their solvency 
 and productiveness on the security of Capital, are not going to 
 be reconciled to see these drained away into the collective lake, 
 even by the prospect held out of its being kept free for them 
 especially to dip their pipkins into. 
 
 Each of these in his turn, while feeling no particular goodwill 
 towards the inordinately wealthy, will be impelled by a sense of 
 common danger to gravitate towards the individualist camp 
 when the push comes, "paries quum proximus ardet," and to 
 range himself on the side of the enemies of " socialism." But 
 this tendency towards a conservative resistance to Collectivism 
 inspired by a personal apprehensiveness of the consequences of 
 " confiscation," and by the tenacity with which each man who 
 has property instinctively clings to it, derives its most effective 
 support from the general distrust both of the efficiency and of 
 the methods of any bureaucracy with whose supremacy the 
 Collectivists can replace the dominion of the " Capitalist." The 
 burthen of monopoly, the inflated price, the exaggerated gain of 
 the producer, and the oppression of the consumer, men may 
 strive to counteract by mitigating the severity of monopolist 
 restriction, by lessening taxation on imported goods, by checking 
 or revoking privileges improvidently accorded, by cheapening and 
 facilitating transit, and imposing bounds on the legal rights and 
 facilities of corporations and combinations and unions both of 
 masters and of workmen. The opposite evils of " mononesis " * — 
 the starvation-wage, the "diminishing return" and the voraci- 
 ties of parasitism, are susceptible of being combated by com- 
 binations of employers and unions of workmen (which imagine 
 themselves to be mutually antagonistic but which in reality are 
 incessantly working in unconscious concert to protect their 
 common interests from the general rapacity of the consumer), 
 by trade rules discouraging over-production, by the imposition 
 of import-duties in case of need, and by other generally restric- 
 tive legislation. Each of the two conflicting tendencies when left 
 to themselves tends to counteract the excess of the other, and 
 
 * ATite, p. 46. 
 
862 THINGS AS THEY AEE 
 
 both can be regulated to this salutary end under the guidance of 
 an enlightened empiricism ; so that the exaggerations of " Free 
 Trade '' and " Protection " alike keep on, on the basis of 
 individualism, undergoing correction, not only by their own 
 mutual antagonism, but also by the operation of the collective 
 enlightened self-interest of the community. 
 
 But what force can intervene to save society from the conse- 
 quences of the " immense stupidity " of officialdom, when once 
 this has been enthroned as the director and arbiter of the national 
 life and work? That is the question which till satisfactorily 
 answered, is and will ever be at the root of the general conviction 
 of the impossibility of collectivism. It is not answered by 
 pointing out that as a matter of fact there are many services in 
 which State and municipal organization have done good work. 
 The splendid achievements of the British Admiralty, for instance, 
 indicate no probability that the commercial supply of ships to 
 compete with the shipbuilders of the rest of the world could be 
 left in the hands of a Board of mercantile ship construction, 
 charged with the duty of underselling in price and excelling in 
 quality the shipbuilders of other lands. It is customary to point 
 out the city of Birmingham as an eminent example of the 
 success that may attend municipal enterprise in the way of pro- 
 viding sanitation, lighting, transit, water supply, and other 
 uncompetitive services on a legitimately collectivist basis ; but 
 the writer, himself a former burgess of that city, takes leave to 
 deny that even there, where public spirit and the devotion of the 
 citizen to his community runs higher than in most cities, it 
 would be possible conveniently to municipalize even so much as 
 the complicated competitive trades of the local distribution of 
 goods. "While as for the greater and the lesser industries of local 
 production for world consumption, and the organizations of 
 trading and finance by whose aid they are carried on, these are 
 utterly beyond the grasp and competence of any conceivable 
 municipality. They are all world-processes, locally habited, it is 
 true, in a particular city, and employing the labour of its 
 inhabitants : but each one deriving its material from and 
 exporting its produce to the whole world ; carrying on its most 
 ordinary functions subject to world-conditions which no muni- 
 cipality can regulate, and depending for its existence on the 
 co-operation of acquisitive commerce in every market of pro- 
 duction and consumption on the face of the earth. 
 
c. XVIII.] SOCIALISM. PAET I— COLLECTIVISM 363 
 
 By what conceivable method could the corporate authority of 
 that or any other city — or, for the matter of that, the State- 
 government of this or another country in the world, acquire and 
 keep to itself the regulative power over world-processes beyond its 
 borders, which it must have, if it is to ensure success in these intri- 
 cate world-processes ? To anyone who knows what commerce 
 really is, the idea is just unthinkable ; it is only conceivable by 
 the theorist and the writer of romances. These elements of 
 chance and luck and risk, which as a matter of course are faced 
 every day by every individual producer and distributor, by the 
 directors of the greatest industrial and commercial enterprises, 
 no more than by the humblest petty tradesmen who distribute 
 their wares, is one which the Government official in the course 
 of his duties will not and must not be allowed to face. If he 
 were willing to do it, he would have to be prohibited by the 
 necessary conditions of his service.* 
 
 Every day in the week some individual industrial producer 
 disappears, some company goes into liquidation, some trades- 
 man files his petition in the county court, some Means vanish 
 from the grasp of one man to be reaccumulated automatically 
 in the hands of others. All this is without effect on the sum 
 total of wealth production. What thus happens is the normal 
 process of the dispersal and redistribution of Means, entirely 
 analogous to the corresponding consumption and reproduction of 
 Wealth which is the daily food of civilization. The general 
 course of affairs goes on just the same, the total accumulation is 
 in no way affected. For the world-finance sees to it, that so 
 much capital as can be profitably utilized in each industry and 
 trade and in each country shall continue to be supplied through 
 the channels of the banks, t Thus it is automatically ensured 
 that the " withering " of the individual leads to no interruption 
 of the general economic process. Indeed it furthers it by the 
 salutary weeding out of the unsuccessful. But how about the 
 unsuccessful municipality, or the insolvent State ? 
 
 In a casual conversation, an eminent country-bank manager, 
 in one early day of January far away back in the seventies, 
 expressed himself to the writer somewhat as follows : " I have 
 just made up our last year's books, and we have had an excellent 
 year. We made more than our usual proportion of bad debts. 
 
 * Ante, p. 345. 
 
 t Ante, Chap. VIII. 
 
864 THINGS AS THEY AEE 
 
 Of course you understand how healthy and necessary that is. 
 Trade could not get on nor could we do our business without 
 them, and I always consider it a good year for us when the 
 amount written off for bad debts is large. I myself am always 
 urging my directors to shut down the losing concerns, and if I 
 had my way completely there would be more of it. It brings 
 down a trifle our balance of profit for that year, but ensures our 
 prosperity for the years that follow. It is necessary for us to 
 wipe out in each year the people whose accounts no longer pay ; 
 for if we did not, the trade of the community would decay, and 
 our business with it : all these customers of ours are really 
 working for us ; and when an orange has been sucked dry, the 
 sooner the rind is thrown away, the better." In this way it is 
 that a cynical pitiless individualism works out to the survival of 
 the fittest. Whether salutary or sinister this is the process by 
 which competition secures efi&ciency. The point of the general 
 objection on the gound of "incentive" is, that collectivism 
 affords no conceivable alternative method of ensuring success. 
 
 A State department is entrusted with the function of directing 
 some branch of industry, say the making of cotton-yarn and 
 cotton-cloth for instance. The duty of its officials will be to 
 keep on producing these particular things, and to keep employed 
 at the regulation wage the prescribed number of citizens in 
 their production. It is this, the employment and remuneration 
 of the operatives, which has to be considered the main public 
 object, all the rest being merely means to that end. If a 
 slackening of demand depresses values, or a scarcity of raw 
 material impedes production, the duty of the State is still to go 
 on producing at any loss so as still to find employment at 
 the prescribed rate of wages ; for it is to ensure that end, 
 that the electorate of the constituency will have accepted 
 " socialism," if at all. Under the individualism of the un- 
 enlightened days these impediments would somehow have been 
 surmounted — " profits " would have fallen, mills would have 
 been put on short time, some of the weaker "capitalists" would 
 have been ruined, wages, though not without resistance, would 
 have been reduced, till at last things came round again, and the 
 struggles for survival attained sufficient force to bring the 
 complicated machine back to its normal efficiency. But when 
 all these cruel natural modes of remedy have been superseded 
 and prohibited, when the " right to work " has become the 
 
cXVIIL] SOCIALISM. PAET I.— COLLECTIVISM 365 
 
 recognised constitutional birthright of every workman ; then 
 the first duty of the State will be to find the means for carry- 
 ing on business at a loss if necessary, in the face of the compe- 
 tition of an individualistic world, to provide men with employ- 
 ment. Now what can possibly be the eventual outcome of this, 
 but universal bankruptcy and chaos ? The entire scheme of 
 State production must fall to pieces, as it did in Paris in 1848, 
 before the inexorable fact that at some time or another this 
 state of things is certain to supervene, first with respect to one 
 industry, then to another. However ingenious the schemes for 
 distributing goods among the population, their power of pro- 
 ducing goods is incapable of being utilized beyond the limits 
 of the internal demand without external commerce; and the 
 conduct of this is possible only when industry in its turn is 
 conducted on the commercial, that is to say individualistic basis, 
 when profit and not some other incompatible purpose determines 
 enterprise. 
 
 There is no intention in the mind of the writer to speak 
 disrespectfully or otherwise than with sincere sympathy of that 
 claim to consideration, and if possible to compliance, which is 
 indicated by the unfortunate and fallacious expression "the 
 right to work." * The idea lies behind all schemes of collectivism. 
 If every man, and for the matter of that, every woman, has a 
 claim to the full employment of his or her faculties, whether in 
 producing commodities, or children; that claim connotes a 
 corresponding duty on the part of society to find the means to 
 satisfy it by some comprehensive reorganization, and this 
 involves the complete remodelling of human institutions and 
 must inevitably destroy " things as they are." The use of the 
 word " right " to denote such a claim imports an obvious fallacy. 
 Humanly speaking, " right " is the creation of law. In the only 
 accurate sense of the term, what the law gives is a "right." 
 Thus, by British law, a man has a " right " to live, because the 
 law not only restrains and punishes murder, but prescribes a 
 definite legal " right " to the food subsistence without which life 
 is impossible. But there is no correlative " right " to an 
 employment whereby that subsistence may be earned. The 
 legal obligation is not to afford employment, but food shelter 
 and clothing. CoUectivists propose that in some way such a 
 legal right should be conferred, and that the individual should 
 
 • Ante, p. 201. 
 
866 THINGS AS THEY AKE 
 
 be legally entitled to demand such employment ; and inasmuch 
 as it is impossible to compel other individuals to furnish it, 
 the remedy of the collectivist is to cast the duty on the State, 
 ■which must first become the universal employer, then apportion 
 out the task for each individual and regulate in some way the 
 remuneration which it is to be legally compellable to guarantee. 
 When this liability has been assumed, it will be time to speak 
 about the " right " in the scientific meaning of the word, which 
 implies necessarily a somebody or something subject to a corre- 
 sponding legal duty or liability. In the meantime the writer, 
 while insisting on the practical impossibility of conferring this 
 right and imposing this obligation, is more than ready to 
 recognize that there is an overpowering claim of every human 
 being that the institutions of his country should, as far as 
 possible, be so moulded as to afford the utmost scope to the 
 employment of all human energy within its borders. Not 
 philanthropy alone, but the collective self-interest of the nation 
 — that public safety which is its supreme law — demands a recog- 
 nition of this great and pressing necessity. Were any reason- 
 able workable plan propounded, the writer would be disposed 
 to further it, even in disregard of what is called the " right " 
 of property ; which is in itself but a similar creation of 
 municipal law, subject like all human laws to be set aside under 
 the pressure of adequate necessity. But no suggested method 
 by which this claim can be turned into a right even looks 
 like being coherent or practicable. Here and there individual 
 experiments have been made, every one of which has issued 
 in dismal failure; and the expedient of throwing such an 
 obligation on the State has proved, and all Utopianism to 
 the contrary notwithstanding must ever remain, disastrous. 
 And before a sane man, however sympathetic, dare commit 
 himself to support any proposal to make things as they should 
 be by some immense revolution, he must satisfy himself of its 
 concrete practicability. Failing this, he must be content with 
 the less heroic course of endeavouring to make the best of things 
 as they are. To the present writer it appears demonstrated that 
 the general conception of the thorough-going collectivist is one 
 incapable of practical realization, unless Mr. Wells' vision comes 
 true, and the whole planet is simultaneously converted to the 
 dogma by some mysterious cosmical transformation of the natures 
 and wills of mankind, as by the impact of a comet on the earth. 
 
CHAPTER XIX 
 
 SOCIALISM. PART II. LAND NATIONALIZATION 
 
 In respect of property other than land, Mr. George, and those 
 who follow him, repudiate confiscation. But land, according to 
 them, is the natural agent which belongs to all mankind, and 
 out of which is created the Means which supply the necessities 
 both of the Man and the State. They suggest that by causing 
 the State to appropriate Eent, the people of each nation will 
 obtain enough, not only to provide all that is wanted for what is 
 already recognized as individual expenditure, but also some sort 
 of State distribution by dint of which, in some way not clearly 
 indicated, indigence is to become affluence, and the misery of 
 extreme poverty will disappear. The fundamental idea of Mr. 
 George therefore is not to suppress rent, but to divert it into the 
 " fiscus." The tenant is not to be displaced, nor the land 
 redistributed among the landless, as in the more ambitious 
 coUectivist scheme ; but instead of paying what he has agreed to 
 pay and is willing to pay to the squire or the duke or the owner 
 of the row of tenements, the occupier is to hand the cash to the 
 receiver of taxes for the district, from whom it will be passed to 
 the national or municipal exchequer, there to be dealt with as 
 may best subserve the public purpose. One fails to appreciate 
 how exactly the benefit of this re-distribution is in practice to 
 reach the poor human being for the effectual relief of whose 
 misery one would almost be glad to welcome any plan of re- 
 appropriation. To solve this, like every other problem of 
 economics, one has to condescend to the concrete instance at once. 
 
 Take the case of the two poor girls with 8s. 6rf. a week between 
 them, whose case was mentioned on p. 329, ante. The mother is 
 still to continue to pay her 6s. 6d. a week for her two little rooms, 
 for that is and must continue the market value of her occupation, 
 and the demand and supply being as they are, she will get them 
 no cheaper. But she shall pay them into the tax collector's 
 office, instead of to her present landlord. The " company " who 
 employ the girls will still pay the thousand pounds or five 
 
368 THINGS AS THEY AEE 
 
 hundred pounds a year " rent " or whatever it may be, for 
 their factory, though to another person than at present, and 
 being commercially subject to the Mononesis of competitive pro- 
 duction, will have to go on paying starvation wages, or stop 
 employing altogether. What one wants to know is, how are 
 these children going to benefit by the substitution of one place 
 for another, at which these rents should be paid in, and in what 
 form the poor family is going to participate in the spoil. To 
 parody the ingenious Mr. Shaw : "you think they will, but they 
 won't." Whatever it is which represents the proportion of the 
 rent of their little dwelling which at present is paid as rates to 
 the local authority by the landlord will no doubt in part be 
 remitted. But the pressure of the cost of subsistence of this 
 particular family will not thus be lessened pro tanto, because the 
 market value will not be affected by the remission, and therefore 
 they will go on paying 6s. 6d. a week, which now is the measure of 
 the desirability of their tenement, and depends upon the available 
 supply of such accommodation as compared with whatever quantity 
 is at this time called for by the general demand. Eventually, as 
 the disappearance of rates facilitates the provision of an enhanced 
 supply of houses, there will be some tendency to fall, no doubt. 
 But except in this respect how is it proposed that the surplus of 
 public income, if there be one, is to find its way to relieve the 
 poverty of our family ? Something will be gained, no doubt, by 
 the disappearance of indirect taxation (uncommonly little in the 
 case of such a family as this ; for what the Government will be 
 able to remit on this head will be mainly absorbed by others in 
 cheaper and more plentiful beer, and a bigger consumption of 
 tobacco and cigarettes). 
 
 Then is this family's share of the spoil to be paid direct, in cash, 
 or in kind ? Is it really suggested that a State bureau de bienfais- 
 ance is to be opened in every street and every country village, to 
 distribute the surplus in boots, or groceries, or cash ? If so, the 
 contributions of the benevolent will cease, and the poor people be 
 no better off than before. And then, will anyone undertake to 
 fathom the infinite corruption and mendicity that must ensue? 
 Or is the means to be poured into the bottomless abyss of 
 universal superannuation allowances for all people over sixty, or 
 for the matter of that, over forty, or over whatever other age it 
 may please the democracy to assign as that after which a man 
 ought to be encouraged to retire on his pension, and loaf about 
 
c. XIX.] LAND NATIONALIZATION 369 
 
 instead of setting himself to obtain work ? One thing is clear, 
 and that is, that whatever else may be attained by such a method 
 of distribution, it will have no more effect on the rate of wages 
 than on the precession of the equinox ; for that rate is settled 
 always not by what the employer would like to pay, but by what 
 he is obliged to pay, the market price which is settled for him by 
 the desirability of labour. 
 
 If he wishes to pay more, he will be starved out of existence, 
 and undersold by those who pay less. And there is an end of 
 that dream. 
 
 Mr. George arrives at his conclusion that the State must 
 " absorb the landowner by taxation," by a very interesting and 
 circuitous bit of reasoning. First, he lays down what can here 
 best be paraphrased (bearing in mind that the writer repudiates 
 the use of the word Wealth to denote anything outside commodi- 
 ties themselves) that the Means derived from any industry are 
 necessarily distributed in three parts: what goes to rent, to 
 wages, and to the interest of Capital, respectively.* So far good ; 
 that is perfectly true, and is the only completely accurate account 
 of the matter that has ever been given by any political economist. 
 " Profit " of course, is simply the wage of the head workman,! of 
 the adventurer who decides what is to be produced, and when, and 
 how, and how much, and by what contrivances, and with what 
 material. I "Eisk," which some writers puzzle-headedly make 
 so much of as an element to be compensated, § George rightly 
 eliminates |{ as only the element of uncertainty of each indi- 
 vidual effort averaging itself, and therefore in the result working 
 out in average productivity ; and the truth of this is also evident, 
 the only marvel being that the wearisome professors never 
 perceived it before him, and that even after he demonstrated its 
 real nature, some of them still continue to bleat forth their 
 platitudes about it. " Abstinence," IT one of the venerated avatars 
 
 ' " Progress and Poverty," Book III., Chap. VIII. See also ante, p. 173. 
 
 t Marshall, " Principles of Economics," Book VI., Chap. VIII., § 1. See also 
 Nicholson, Book II., Ch. XIII., § 9. 
 
 t Bagehot, " Economic Studies : The Postulates of Political Economy," p. 69. 
 
 § "The rate of profit greatly exceeds the rate of interest. The surplus is partly 
 compensation for risk." MiU, "Principles of Political Economy," Book II., 
 Chap. XV., § 1. See also Nicholson, Book II., Chap. XIII., § 8, "Principles of 
 Political Economy." 
 
 II George, Book III., Chap. I. 
 
 ^ "There is also Capital ; and this being the result of abstinence, the produce, 
 or its value, must be sufiScient to remunerate not only all the labour required, but 
 the abstinence of aU the persons by whom the remuneration of the different classes 
 of labourers was advanced." MiU, " Principles of Political Economy," Book II. 
 
 T.A. B B 
 
370 THINGS AS THEY AEE 
 
 of the deity " thrift," is only another name for the economic 
 surplus. " Interest " is interest, the hire without which Means 
 refused to be employed as Capital ; and which their possessors 
 will insist upon receiving, or retire from employment ; indifferent 
 whether Bastiat's * sentimental justification of it is " morally " 
 correct, or whether you prefer the amusing apology of George, t 
 who attributes the " morality " of it to the right of all Capital to 
 participate in the natural increase, because all is exchangeable 
 into things which bring their increase in the course of Nature, all 
 of which seem to the writer impertinent matters to introduce into 
 a treatise on economics, and beside the point altogether. What 
 is left after wages and interest are satisfied, true enough there- 
 fore, is absorbed by rent. All this is, as a doctrine, as plain and 
 true as any truism that was ever uttered. Therefore (and here 
 comes the involved fallacy) the less the rent, the more there is 
 left for wages and interest ; and as interest works itself out as a 
 constant sum, depending on the average remuneration for 
 Capital at the market rate obtaining in the world, that in its 
 turn may be ignored. And therefore, in the ultimate result, the 
 less the rent the bigger the wages ; " meaning thereby," as the 
 lawyers say, the weekly wage of the manual operative. ter 
 sancta simplicitas ! One marvels how a writer, so acute, and of 
 such penetration when dealing with the fallacies of others, should 
 have persuaded himself of such poor stuff ; for sincere this writer 
 is above all possibility of suspicion. Of course Mr, George must 
 have known " somewhere at the back of his head," that the true 
 competition is not between rent and wages, but between the 
 respective wages of the different classes of earners. * 
 
 The under workman complains that the over workman gets too 
 much for himself ; it really concerns him but little that the man 
 who owns the land on which the factory stands exacts three 
 hundred pounds a year instead of two hundred and fifty for his 
 " rent " as the case may be ; what irritates and annoys him is 
 that the " firm " pockets twenty thousand a year, partly wages 
 partly interest, while the journeyman has to be content with 
 twenty-five shillings a week. Assuming that you suppress rent 
 altogether, how infinitesimally that step must tend to raise the 
 
 * " Or, ces avantages qu'on s'^tait pr^par& par le labeur . . . est-on tenu de les 
 con£&er gratuitement ^ autrui ? . . . Ce serait Mgaliser, organiser, syst^matiser 
 rinjustice elle-meme . . . Posons done en fait que I'int&gt est juste, naturel et 
 l^itime." Bastait, " Capital et Rente," Chap. VII. 
 
 t " Progress and Poverty," Book III., Ohap. III., pp. 160—169. 
 
c. XIX.] LAND NATIONALIZATION 871 
 
 market value of manual labour ! How the employer will be 
 thereby enabled to pay more than the market rate when exposed 
 to the competition of other producers for the custom of pur- 
 chasers Mr. George and his friends give one no sort of notion. 
 For the purchaser will decline to pay more than the " market rate " 
 for his wares, no, not if the heavens should fall as a penalty for 
 his refusal. In the real world, that happens which even Mr. 
 George was not wide-minded enough to appreciate, namely, that 
 it is the productive power of the whole world that competes for 
 the custom of each country and each subdivision of a country 
 within it. Mononesis is the general law of economic Nature. 
 
 And this does not by any means complete the enumeration of 
 the absurdities of the conclusions arrived at in this historical 
 book, the introductory reasonings of which are stated with such 
 powerful insight and with so sincere and appreciative an ni- 
 telligence of the nature and origin of the evils for which the 
 author suggests his remedy. For, as has been already pointed 
 out, this turns out to be not the abolition of rent, but its 
 transfer to the State. Which being so, the whole disquisition 
 on the " division of Wealth between Wages, Interest and Eent " 
 might have been advantageously left out of the book, for it has 
 nothing on earth to do with the conclusion. If the State is to 
 be the landlord, it will, like any other landlord, either exact the 
 full value for its land, or else let it to its tenants for less, and 
 thus make a present to those who occupy it, and create a 
 privileged set of beneficial sub-owners whose tenant right or 
 property (like that of the beneficiaries of the late Mr. Gladstone's 
 Irish legislation), they in their turn will seek to sell or let at its 
 real value to others, putting the difference, the premium of the 
 excess of under-rent, into their own pockets ; and how this is to 
 benefit the general class of poor " workmen " is indeed a curious 
 problem to consider. But the absurdity does not end here. It 
 is complicated by a weird and abstruse disquisition* on the 
 difference between the " natural value " of the land as deter- 
 mined by locality and its intrinsic (!) desirability on the one hand, 
 and the gross value of the land plus such improvements as the 
 hand of man has added to it — fences, buildings, irrigation works, 
 drainage and all the rest of it on the other, as if it were possible 
 to separate the one from the other or deal with two sorts of 
 property on the basis of an abstruse and incalculable double 
 
 * George, " Progress and Poverty," Book III., Chap. II. 
 
 BB 2 
 
372 THINGS AS THEY AEE 
 
 ownership ! A hierarchy of commissioners is to sit, if you please, 
 one for each parish or part of a parish, having its own com- 
 missioners to inquire into the history of each piece of land, to 
 determine how much of the value was the " gift of Nature " and 
 how much has been added to it by human exertion. One would 
 like to ascertain for instance the " prairie " value of the thirteen 
 miles of empty cylindrical space between Brieg and Iselle on the 
 St. Gothard railway, or of the ditch filled with water (which is 
 no man's property), across the desert between Suez and Port Said ! 
 Admit, says Mr. George, the property of the existing landlord in 
 what has been added by labour, and absorb in taxation the 
 annual value of the land itself as part of the resources of the 
 State or the locality ! 
 
 It is characteristic of all the theoretical proposals of literary 
 gentlemen for settling public affairs, that they should all be 
 of a nature for which the practical person accustomed to deal 
 with public business is unable to conceal his derision. They are 
 all " old maid's children " alike. It requires a person who knows 
 from experience what public business is, adequately to appreciate 
 the gigantic absurdity of proposing to settle such matters by 
 commissions. One thing strikes the ex-public-official, and that 
 is, that the post of commissioner would be a very snug and 
 enviable one, and provide the " soft job " of a lifetime for 
 thousands of impecunious persons of varying trades who would 
 be lucky enough to make friends of the powers that be. 
 
 But assume that the commissioners have done their work. 
 The duke is adjudged the owner of his houses and the out- 
 buildings, of the amenities of the gardens and glass-houses which 
 his father has made and he himself has improved, of this hedge 
 of box, which his grandfather planted, of that artificial lake 
 which his uncle brought in, of the drainage-pipes under the farm 
 lands which another ancestor provided, and of the road which 
 was laid out by yet another, and so to the end of the chapter. 
 But the dotted park (qiuere the trees that they have planted ?) 
 and the surface of the meadows, and the ground on which or in 
 which all these things have been put, is the property of the 
 county. They are co-owners. Now who is to manage the joint 
 property of this indissoluble partnership, and whose interests are 
 to be considered in the letting of it and the use of it and the 
 rest ? Is the duke to be allowed to take away the house and 
 raze the walls and to uproot the fruit-trees that he has planted, 
 
c. XIX.] LAND NATIONALIZATION 873 
 
 and drain off the water of the lake and fill it up again, and dig 
 up his drain-pipes and sell them ? And if not pray why not ? 
 You admit they are his property. 
 
 Or take another case. Here is a mill and machinery, some 
 fixed to the freehold, some moveable in the eye of the law ; but 
 all as useless without the fixed part as that is without the move- 
 able contrivances adapted to it. The thing is only useful and 
 will only bear rent as a going concern, its separate parts are 
 useless. Take away the factory and the land is altogether 
 worthless. You cannot take away the land from the factory, 
 because you have nowhere to put it. The commissioners may 
 guess the respective proportions to be adjudged to the State and 
 the owner, but by no measurable or ascertainable principle of 
 decision as to what rent the State will be entitled to exact from 
 the owner of the mill, or if the whole concern is collectivized 
 together, what compensation is to be paid by the State to the 
 owner. The market value of that piece of " land " is not to be 
 ascertained by comparison with other pieces of land, for each 
 arises from the desirability of specific concrete things, and no 
 two things of this nature are alike in their attributes. And so 
 one would go on following this chain of impossibilities from one 
 piece of land and class of properties to another to the end of the 
 chapter. And at the end comes the biggest absurdity and impossi- 
 bility of them all. Mr. George and the school of land nation- 
 alisers who have adopted his panacea of the expropriation 
 without compensation of all land-owners, strenuously combat the 
 extension of that idea to other species of property advocated by 
 the thorough -going and logical collectivists. To those therefore 
 it is permissible to address the objection against which these are 
 proof, which is that the possible confiscation of any one species 
 of property attacks equally the security of all, by impairing 
 confidence strikes at the very essence of security, and infects 
 with one blight the totality of Means ; which land nationalizers 
 are as anxious as is the most convinced individualist, should in 
 all their other embodiments but that of " land " be maintained 
 as the economic life-blood of civilization. It is particularly 
 strange that Mr. George should have overlooked this considera- 
 tion ; for in the very curious and ingenious passage* in which, 
 in the course of his ethical justification for the payment of 
 interest he demonstrated the essential identity of all Wealth 
 * George, " Progress and Poverty," Book III., Chap. III. 
 
374 THINGS AS THEY AEE 
 
 arising from its quality of exchangeability, he impliedly furnished 
 the demonstration that it is impossible to touch any one embodi- 
 ment of Wealth and Means without simultaneously affecting 
 every other form of property whatever. No more against the 
 land nationalizers than against those who urge the absorption of 
 all productive Capital by the State does the writer venture to 
 invoke the idea of abstract justice. He is prepared to waive the 
 argument that it is wrong in itself to deprive any man of that 
 which he has, and that there is something essentially abhorrent 
 and anti-social in all confiscation, thoroughly as he himself 
 believes it. That is a thesis which the moralist may maintain ; 
 the economist, as such, knows nothing of right and wrong, and 
 is limited entirely to the analysis of the profitable and unprofit- 
 able — the concrete actual results looked at from the point of view 
 of utility. But so regarded, what is to be the actual effect of 
 dispossessing the owners of land on those whom you do not 
 intend to confiscate, the owners of other property ? * How will your 
 medicine react on confidence, which is the " value " of property in 
 general, and what will be the ultimate effect of the George treat- 
 ment of the one embodiment of Means which the inventor 
 conceives of not as only standing by itself (for that is true), but 
 also as susceptible of being suppressed without injury to the 
 others ; which is overwhelmingly false ? 
 
 Consider how, and in what proportion, and in what form, and 
 among whom, the aggregate of rights and claims which are 
 thought of together under the general expression " property in 
 land" are actually distributed. How and whence do you propose 
 your taxation shall collect those rivulets and driblets of Means 
 arising from land which you are going to drain into the great 
 reservoir of the State ? You will have to lay under contribution 
 not the mere rack-renter himself. If he alone were concerned, 
 it might with some sort of sentimental justification be contended 
 that his extirpation should be acquiesced in by everybody else in 
 the name of the supreme law of the public safety ; though even 
 that much instalment of your eternal justice, when it comes to be 
 thought out, will be seen to involve a greater displacement of 
 Means and property than you realize. For while you have been 
 thinking of a handful of people whom you dislike — dukes and 
 millionaires with half a county or a square mile of houses in 
 London, or great financiers who have appropriated a mile of 
 
 * Ante, p. 350. 
 
c. XIX.] LAND NATIONALIZATION 375 
 
 frontages in the streets of Paris or of New York, or of Mr. George's 
 special abomination, the land-jobbers, who tried for the few 
 years during which he happened to be writing to monopolize 
 the surface of California in the expectation of reselling at a 
 profit ; * you have clean forgotten all the other sorts of people 
 among whom those rights are spread in infinitely varying degree 
 and amount. 
 
 Say nothing of the small owners of land, the little people 
 who have acquired each his cottage or his bit of garden ground, 
 his morsel of surface charged with the repayment of the capital 
 borrowed to purchase it, the mortgagors to the building society, 
 and the like. Brush aside if you choose as mere parasites on the 
 main army of monopolists, all the annuitants life-tenants, and 
 the other unconsidered directly beneficial participants in rents. 
 All of these, it is true, will be involved equally with the people at 
 whom it is just to point your finger of hatred, in the results of the 
 State's "resumption " of the " land of the nation," but let that pass. 
 
 But how about the people, the companies, the institutions 
 whose Means have been incorporated in the form of confidence in 
 the permanence of this particular form of property ? Have you 
 formed to yourself any conception at all of the extent to which the 
 entire fabric of society is involved in the inviolability of this 
 confidence ? Say nothing of the building societies and the like, 
 which were directly devised to enable small people to acquire tiny 
 morsels of space for themselves and every one of which must 
 immediately explode with the first attempt to put your theories 
 into practice, involving hundreds of thousands in their ruin. 
 Leave these too on one side. What are chiefly threatened are 
 still more vital interests : the whole machinery of commerce and 
 finance. The banks, the insurance companies, the industrial 
 associations, the trades unions, the provident and benevolent 
 societies, and the other men and aggregates of men who, as part of 
 the very Means and Capital with which they work, are dependent 
 on claims, mortgages, annuities, and reversions, all of which have 
 been carved out of the total beneficial interest in land. An 
 ignorant person who understands nothing of the groundwork of 
 finance might be tempted to answer, Oh, but this after all is only 
 a very small part of the accumulated " resources of aggregate 
 individualism. Take this away and the greater part will still 
 remain and things will go on as before." Not so, my simple 
 
 * George, " Progress and Poverty," Book V., Chap. I., pp. 245—249. 
 
876 THINGS AS THEY AKE 
 
 friend ; any man who knows what he is talking about, understands 
 that the stability of every organization depends upon its balance- 
 sheet, and that however imposing the nominal sum of its assets, 
 the concern is irretrievably wrecked in insolvency from the 
 moment when a sufficient part of the value of those assets 
 has been abstracted or has disappeared to cause the counter 
 liabilities materially to exceed them, and thus destroy the 
 "going concern." 
 
 Land nationalization means above all things national bank- 
 ruptcy, the annihilation of finance, the collapse of commerce, 
 and the paralysis of industry. One steers resolutely clear of 
 ethical considerations, but yet may be allowed for one moment, 
 without relying on it as an economic argument, one short disquisi- 
 tion into ethics. Consider for a moment in the name of what sup- 
 posed justice or principle of right this particular kind of property 
 is singled out by Mr. George for exceptional severity of dealing. 
 What urged him individually to the assault is obvious from his 
 books; it was his personal reprobation of the practices of the 
 speculators who at the moment that he wrote were contriving to 
 monopolize the land of his own State, California, to the impoverish- 
 ment of their fellow-citizens and the hindrance of the common 
 prosperity. The trace of the influence of this Californian aspect 
 of things is still similarly discernible here in Britain, when we are 
 treated to the familiar drivel about " prairie value." But let that 
 too pass. Apply the morality of the thing to our own land, and 
 consider for a moment the proper British justification for this 
 exceptional severity. It is all friend Proudhon over again. " La 
 proprietS, c'est le vol." Proudhon and his school had at any rate 
 logic to back them, and involved in the same condemnation 
 therefore all forms of appropriation. A condemnation not with- 
 out a certain historical justification. Hengist and Horsa and 
 Cedric and Aella and their lusty pagan pirates in the sixth cen- 
 tury, William the Bastard and Hugh the Wolf, Eoger Bigod and 
 the rest of the picturesque swashbucklers of the eleventh, Henry 
 Tudor and his Bussells and Dudleys in the fifteenth, their 
 descendants the " barons," who shuffled out of their feudal obliga- 
 tions in the sixteenth ; Cromwell and his far from merry crew of 
 settlers in Ireland in the seventeenth, the shabby squires of the 
 late eighteenth and early nineteenth who, " stole the common from 
 off the goose " by the trickery and spoliation of corrupt inclosure 
 Acts, and their still meaner late nineteenth-century children 
 
c. XIX.] LAND NATIONALIZATION 377 
 
 whose dishonesty has only been able to compass the petty 
 theft of strips from the public highways by the trick of put- 
 ting up dishonest fences — all these as well as Henry George's 
 own enemies the " landgrabbers " of California and the rest : 
 all have thieved, each in his generation. What then? They 
 are dead. 
 
 The question now is whether the taint of the original fraudulent 
 appropriation attaches in justice not to the robber and his 
 descendants, but to the innocent land itself, which he " ought " 
 perhaps not to have acquired, but which has passed into the hands 
 of those who have exchanged for it Means that they in their turn 
 have got together — how obtained, it is impossible in any case to 
 determine. Mr. Wells, in his interesting work which has been 
 referred to at great length, and which advocates a gentle and 
 (according to his presentation of it) innocuous collectivism of his 
 own imagining, recognizes with respect to some sorts of property 
 at least, something like a meritorious and moral justification 
 of origin. " That which a man has earned and worked for," 
 he says, " is his own," * a distinction which of course gives away 
 the whole collectivist case in one sentence, the real truth 
 of the matter being, as every lawyer knows, that the origin of 
 every " right to property " is not merit, but simply the sanc- 
 tion of continued possession, in which alone consists a man's 
 right to be protected in his appropriation of his goods, his 
 cash, his clothes, and his artificial teeth, of all his property 
 alike ; as the text-books say, " any possession is good against a 
 wrongdoer." 
 
 Possession is the root of property, as it is its only justifica- 
 tion, and expropriation without compensation of one class 
 of things rather than another, or of one set of people in a 
 greater degree than another, has no "equity." The etymological 
 antithesis of this word denotes its real attribute ; which is 
 iniquity. Whatever motive actuated Mr. George himself, his 
 modern followers leave no room for doubt that they cherish it as 
 a political and personal rather than an economic doctrine. Their 
 polemic is inspired by antipathy to the political and social hege- 
 mony of one particular class, and impatience of the "aristocratic 
 institutions" which have their historical origin in the ownership 
 of land. In this controversy the writer is altogether neutral. 
 Inequality of political power as between different classes and 
 
 * " New Worlds for Old," Chap. IV., § 7, p. 88. 
 
378 THINGS AS THEY AEE 
 
 different individuals is inherent in all civilizations ;* and inas- 
 muoh as there is nothing intrinsically more beautiful or inspired 
 in a majority than a minority, it seems to matter less what 
 particular set of men exercise the ultimate determining power 
 over the collective will of a nation, than whether that will is 
 exercised honestly and unselfishly. In neither an aristocracy 
 nor a democracy is there vested any " right divine to govern 
 wrong," and there are many people not necessarily servile in 
 habit of mind (the writer is one of them) who prefer that the 
 conduct and carrying out of things should be controlled by 
 people whom they believe to be if not necessarily the more 
 competent, at any rate the more sensitive, because of their 
 individual conspicuousness, to the influence of intelligent public 
 criticism. The institutions of this country still remain to a 
 remarkable extent what people call " conservative " in their 
 actual working and administration; no doubt at the present 
 moment too much so, on the whole. But a distrust of violent 
 change is not altogether a disastrous mental attitude ; and there 
 is a lingering prejudice in favour of somewhat " aristocratic institu- 
 tions," acting with particular power on the minds of the few who 
 belong of right to the hierarchy, and perhaps with greater force 
 still on those more numerous ones who like to pretend that they 
 do, and imagine they prove they do, by imitating its manners 
 and bearing. " Nos poma natamus, inquit equistercus." And 
 this reactionary force derives an undesigned assistance from the 
 inverted " snob," the person who conceives that he can acquire 
 personal distinction by "fearless" repudiation of snobbery, 
 and truculent antagonism to aristocracy. He alienates the 
 moderate mind by his abusive hostility, and thus exercises 
 his own unintentional influence in favour of conservatism. 
 
 All this leads the writer, who is neither " liberal " nor " con- 
 servative," democratic nor aristocratic, but a mere reformer of 
 what he thinks wrong, to anticipate much hostile criticism of 
 his tentative suggestion, that though " Land nationalization " as 
 preached by its authorized exponents is a disastrous and suicidal 
 idea, it is reasonable and also easy, steadily to abolish all 
 unnecessary distinctions between different classes of Means; 
 and that inasmuch as Land differs from all other subjects of 
 property by possessing the attributes of perpetuity and inde- 
 structibility, there should be by rights a special taxation of its 
 
 * Fitijames Stephen, " Liberty, Equality, Fraternity," Chap. V. 
 
c. XIX.] LAND NATIONALIZATION 
 
 379 
 
 values ; a charge upon that peculiar advantage— a " time-limit," 
 in fact, to borrow a hotly-debated phrase from another and 
 more ephemeral controversy. As to the desirability of realizing 
 the first of these two ideas, there surely can be no real doubt. 
 Nor is there in honest truth any as to its practicability. 
 
 There can be no conceivable justification for perpetuating 
 artificial distinctions between the rules applying to the devolu- 
 tion and inheritance of different classes of property, or for 
 applying different rules of law or methods of taxation to land 
 and what is called " personalty."* The ease and certainty with 
 which the necessary amendment could be compassed causes 
 much annoyance to the lawyers who levy a lucrative part of 
 their income on the transaction of the business of the transfer of 
 this particular kind of Means, a craft which could be made simple 
 with provoking facility. But profits are at stake ; and every 
 proposal to effect a complete assimilation in our country of the 
 laws and customs relating to " realty " and " personalty " meets 
 with determined resistance from an excellent class of interested 
 persons who are particularly powerful at times of election. 
 
 Nevertheless, the process of assimilation has already com- 
 menced here, and is sure to go on ; and by intricate methods 
 devoid of logical simplicity, the laws of real property are being 
 gradually brought into practical harmony in this respect with 
 those of the colonies, which have admittedly no use for a terri- 
 torial aristocracy, and which do not confer any social or political 
 supremacy in particular on the possessors of one sort of Means 
 which they refuse to the owners of others. 
 
 Nor does any insoluble difiQeulty prevent the reahzation of 
 the second of the two projects of reform above indicated, which 
 is in effect the general nationalization of the freehold; in practice 
 working out as the imposition of a time-limit. Whether the 
 present possessors would prefer to await resignedly the distant 
 termination of their interests, or set themselves, as they have 
 already done with respect to the "death duties," which they pay 
 
 * In one British colony a measure was not long since passed with the general 
 acquiescence of the community, designed to obliterate for all purposes of succession 
 inheritance, and duty, the distinction between chattel and freehold interests in land. 
 Both alike in case of death pass to the executors or administrator, who have the 
 same power, with the permission of a judge (to be obtained by a very simple pro- 
 cess) to sell land devised, as they have in the case of personalty specifically 
 bequeathed ; and whose certificate of complete administration is the chief necessary 
 root of title to the devisee. Something less complete of the same sort, though 
 encumbered with a good deal of needless complexity, obtains in the mother country. 
 
380 THINGS AS THEY AEE 
 
 in common with the posaessors of other sorts of property, 
 to average and discount the incidence by organization of 
 insurance out of the yearly gross income, concerns themselves 
 entirely. For a time-limit of 100 years the actuarially current 
 sinking-fund would be a matter of a penny in the pound ; the 
 difference in present value between a 200 years' term and the 
 perpetual freehold is so fractional as to be almost imperceptible, 
 and no sane human being would offer a silver threepenny bit 
 for the privilege of exchanging a lease of 999 years of ever so 
 great an " estate " into the perpetual freehold. 
 
 But all this is comparatively irrelevant. The enhance- 
 ment of the resources of the State, though distant in time, will 
 be none the less real and beneficial, especially in view of the 
 impending ultimate fate that the future has some day to face ; 
 when the inevitable exhaustion of the coal-supply must compel a 
 reconsideration of the economic process in general, and especially 
 of the incidence of taxation. It remains only to make State 
 interference as applied to land accurately equivalent to the 
 similar charges on the devolution of personal property, plue 
 the appropriate ransom for perpetuity above pointed out as 
 logically just. 
 
 The extended taxation of inheritance generally is a larger and 
 more complex subject. But land is always apterous, while other 
 forms of Means shed their wings at one important moment which 
 is in the act of devolution from one possessor to his successors ; 
 and advantage has already been freely taken by many civilized 
 States of this temporary defencelessness to take toll from the 
 executor or administrator when he applies for the recognition of 
 his " rights " in the property of the predecessor and seeks from 
 the appropriate tribunal to be put in possession. First comes the 
 share of the State ; and there appears no limit at that moment 
 to its power to help itself to what it needs. As the Means 
 cannot then fly away,* the objection of the momentary impos- 
 sibility of seizing them does not then apply. But yet it would 
 be suicidal to try to " confiscate " too great a proportion because 
 (and here Mr. Fawcett's argument retains its force)! a too eager 
 use of the opportunity would unduly hinder the accumulation 
 of Means. 
 
 The days have passed away when it would have been necessary 
 
 * ATit^, p. 157. 
 
 t " Manual of Political Economy," Book IV., Chap. II., p 543. 
 
c. XIX.] LAND NATIONALIZATION 881 
 
 to refute the medieval notion that the permanent welfare of any- 
 State can be bound up with the perpetuation of a territorial 
 aristocracy, an institution of great service, and which on the 
 whole has probably been the occasion of less abuse of power in 
 the United Kingdom than anywhere else in the world. But a 
 man could not be found in the twentieth century, who would be 
 prepared to echo the sentiment of the late Duke of Eutland in 
 his youthful days — 
 
 " Let laws and learning, arts and commerce die, 
 But spare us still our old nobility." 
 
 But assuredly there is no justification for treating this most 
 admirable and high-minded class of citizens with greater severity 
 than another. Only impartiality claims that a perpetuity 
 should not be ensured to their possessory rights, which the very 
 nature of things denies to all other possessors of Means. The 
 writer contents himself with a suggestion that as the needs of 
 the State grow, as grow they must, beyond the reach of the 
 strictly limited resources of other forms of taxation, reasonable 
 recourse must be had to those two, the productivities of which are 
 more elastic : the land of the country, and the succession to the 
 inheritance of all descriptions of Means. He only ventures a 
 hope that his suggestion of a finite term to all property in land 
 may evoke impartial thought, and some degree of adherence in 
 principle ; the ruling idea being that the nation's admitted and 
 traditional overlordship of its own land ought eventually to be 
 asserted by putting a definite, even if remote, term to the period 
 of its permitted alienation. The notion is as far as the poles 
 asunder from that of the "progressive absorption of all land 
 values in taxation " which is advocated by the people who 
 support what they term " Land Nationalization." But it is so far 
 " revolutionary " that it aims at abolishing the idea of " freehold 
 land " altogether, and converting all existing tenures into 
 " leasehold " property ; the maximum term to be fixed at a 
 reasonable number of years sufficient to provide for the security 
 at least of existing owners and of their posterity to a certain 
 specified remoteness of descent. The "fee simple" is a 
 perpetuity; beyond the grasp of the individual, who cannot 
 possibly appropriate it in his lifetime and has still less right to 
 dominate it from his grave. What the State has hitherto 
 
382 THINGS AS THEY ARE 
 
 permitted by way of authorizing unlimited inheritance and 
 testation is not a property, but a privilege to regulate the pro- 
 perty of posterity for ever. And what the State has given away 
 by way of privilege, it is open to the State, for good reason 
 and with decent regard to good faith and reasonable expectations 
 of benefit, at its discretion to revoke.* 
 
 * Aide, p. 152. 
 
CHAPTEE XX 
 
 SOCIALISM. PABT III. — QtJASI-SOCIALISM 
 
 By quasi-socialism is meant that vague inexact and compara- 
 tively unscientific trend of opinion which, while repudiating the 
 basis of pure collectivism founded on the Marxian dogma, yet 
 manifests itself in the advocacy of varied measures and pro- 
 posals for the increased intervention of the State in the domain 
 of economics. Mr. Wells would like people to take him, for 
 instance, for a quasi-socialist, though he is in truth, despite all 
 disclaimers, a thorough-going Marxian in flimsy disguise. 
 
 Quasi-socialism, while thoroughly opposed on the one hand to 
 the justly discredited and obsolescent dogma of laissez faire, 
 and the closely allied conceptions of the anarchist; on the 
 other, boggles at the scientific confiscation of thorough-going 
 collectivism. As soon as a man has grasped the idea that it is 
 possible to improve and strengthen the institutions of civiliza- 
 tion and further the general welfare of mankind, whether by 
 legislative and compulsory regulation, by collective administra- 
 tive action, or even by the concerted benevolent effort of altruistic 
 individualism, he becomes a " socialist " of sorts, in the sense in 
 which Sir William Harcourt declared that " we are all socialists 
 now." As soon as he has satisfied himself that many things 
 can thus be done, he is impelled to face the problem : " which 
 first, and how best." For to him it seems that many have to be 
 done, and that one has to select and give precedence among 
 them to the more instant and the more practicable. The 
 difference between the quasi-socialist and the thorough-going 
 coUectivist is that the first is experimental, tentative, and induc- 
 tive; whereas the second is dogmatic and deductive, and his 
 philosophy is founded on " universal principle." It is the eternal 
 polarity of the inductive and deductive, the realist and the idealist, 
 manifesting itself anew in a fresh domain. 
 
 Every system of civilization always has been and always must 
 be more or less quasi-socialistic. The dream of the individualist, 
 who conceived of the legitimate functions of government as mere 
 
884 THINGS AS THEY AEE 
 
 contrivances of combination for purposes of self-defence and the 
 preservation of order in the streets, is as fantastic and 
 chimerical in its way as is that of the ultra-coUectivist, who 
 pretends that he believes that every action of the individual is 
 susceptible of beneficial regulation by State authority. Such 
 states and such individuals never have been and never can be 
 realized on the face of the earth. 
 
 Leaving general principles on one side, and concerning our- 
 selves with the actual and practical, it will be seen that the 
 quasi-socialistic aims of each nation divide themselves into two 
 distinct categories of purpose. One is the assumption either by 
 the general government of the State or by some local delegated 
 authority of additional functions of service or production on 
 behalf of the community generally ; the other, the similar 
 centralization of the special function and duty of benevolence, 
 the raising of the status and improvement of the conditions of 
 the less fortunate by employing in their assistance the means 
 of the more wealthy, gathered in for the purpose by the State in 
 the form of taxation. These two purposes, though not divergent, 
 are distinct, and must be considered separately. Each of them 
 is equally antagonistic to the competitive individualism which 
 expresses itself in the conception of the progressive spontaneous 
 evolution of society by means of the " struggle for life " and the 
 " survival of the fittest." * But while the one seeks its object 
 along the lines of State industrialism, the other purposes to 
 work by way of " State altruism " — if such an expression is 
 admissible; the more correct way of putting it being "the 
 collective assumption of the functions of benevolence." With 
 regard to either, the question is essentially one of convenience 
 and expediency : a truth which even Mr. Wells tacitly admits 
 when he contrasts, for example, the efficiency which he antici- 
 pates from a State railway, with the annoyances and discomforts 
 which he is in the habit of experiencing as a passenger by the 
 rather shabby " South Eastern" railway.! There are services, 
 it must be admitted on all hands, which must be performed by 
 public bodies, which cannot be left to private adventure ; such as 
 
 * Ante, pp. 212 et seq. 
 
 t " New Worlds for Old," Chap. IV., §§ 4, 5, pp. 74, 75. 
 
 The experience of the present writer, by the way, gathered from many State 
 railways in many parts of the world, has led him to a diametrically opposite 
 conclusion in thi? respect, the service on the Italian railways in particular haying 
 sensibly deteriorated from the condition, execrable as it was, which obtained five 
 years ago, when things were mismanaged by private companies. 
 
c. XX.] QUASI-SOCIALISM 385 
 
 the care of streets and highways, of their sewerage and alignment, 
 of the supply to towns of gas and water for the public service. 
 These and many others are in their nature monopolies of the 
 locality, and cannot be left to the mercy of individual monopolists 
 without a degree of restriction and regulation such as must practi- 
 cally reduce their management and direction to a State service. 
 Just outside this category stand a variety of organizations of service 
 and supply, which are debateable territory; for the control of 
 which coUectivists and individualists are at present in this country 
 carrying on their warfare. The transit of passengers and goods, 
 whether within the country as a whole or within the more circum- 
 scribed areas of particular districts ; the supply of lighting and 
 heating power to private persons and the like ; even, it may be, 
 the building of houses and the supply of certain kinds of food or 
 of fuel, which are monopolies at present for the most part in 
 individualist hands, but which in their exercise call for stringent 
 control on the part of authority ; so that it seems to many better 
 that this control should be exercised by the State or munici- 
 pality as by master over a servant, than by the constant 
 friction of legalized inspection and legal compulsory machinery.* 
 As to each of these, the question in every case is the respec- 
 tive efficiency of private and corporate administration; a ques- 
 tion not to be settled by any deductions from principle at all, 
 but entirely by experiment and observation of the workings of 
 practical convenience — matters on which the present writer is 
 incompetent to indicate any opinion whatever, depending as they 
 do on the working out of innumerable details and a great com- 
 plexity of technical data, complicated by a host of financial con- 
 siderations varying with each locality and with each department 
 of service. 
 
 Mr. William Jennings Bryan, in a lucid speech on the subject, 
 not long since laid down a criterion of principle which at first 
 sight commends itself to acceptance as indisputable, except by 
 the ultra-collectivist. He put it that a sane " socialist " would 
 abstain from intermeddling with any enterprise, economic success 
 in which depends on aptness for competition ; while " giving to 
 CsBsar those things which are Caesar's ; " reserving, that is to say 
 for administration by the State or the municipality all those 
 services for the efficiency of which competitive action is unneces- 
 sary or out of place. But this criterion, an apparently simple 
 
 * " New Worlds for Old," Chap. VIII,, § 1, p. 173. 
 T.A. C C 
 
386 THINGS AS THEY ARE 
 
 and self-evident one, is exceedingly difficult and complex in appli- 
 cation ; and except that it seems to rule out from the legitimate 
 field of corporate adventure the enterprises of industrial pro- 
 duction and external commerce, the very life-breath of which is 
 international competition, helps one but little as a practical 
 solution of the difficulty. For an adventure which at first sight 
 strikes one as "competitive," and to the prosecution of which a 
 certain degree of competition has been incidental, will on exami- 
 nation, often prove essentially monopolistic, the competitions 
 being those of the distributors or of the consumers only ; and 
 in such cases the service of prosecuting it is one for which collec- 
 tive authority may, in spite of the inherent disadvantages of 
 officialdom, furnish the more serviceable direction. Now the 
 moment such an adventure, if supplying service (such, for 
 example, as the supply of housing space, or of milk, or other 
 necessities of life to the bulk of the citizens), begins to become 
 extortionate in its demands, or inefficient, or abnormally uncon- 
 scientious in private hands, there arises a demand for its expro- 
 priation, even at the cost perhaps of some loss of efficiency and a 
 sensible diminution of profitableness ; and, given the capacity of 
 the State or municipality to undertake it, there might be a reason- 
 able and desirable expropriation of monopoly. Monopoly, in this 
 sense, is used as an expression not necessarily denoting the con- 
 centration of supplying the need or rendering the service in one 
 man or organization, but in the general sense of the necessity of 
 the many as opposed to any opportunity of the few, which they 
 are tempted to abuse. And in this form " monopoly " is apt to 
 derive from time to time its sinister predominance in the domain 
 of the industrial production of wealth no less than in that of the 
 rendering of other necessary services not in themselves strictly 
 and materially productive. Mr. Bryan's rule in such cases fails 
 in its application, and the expediency of expropriating the mono- 
 polist and substituting collective action must in each case neces- 
 sarily be judged by the light of its own special circumstances, and 
 without reference at all to general principles, which are broken 
 reeds which always pierce the sides of those who lean upon them. 
 Thus it is possible that despite the infirmities of official 
 management, convenience might induce a sane government 
 quite uninfluenced by the pedantry of collectivism, to assume 
 the direction of some particular enterprise of the supply of food, 
 for example,, which may be deemed in danger of being utilized as 
 
c. XX.] QUASI-SOCIALISM 387 
 
 an instrument of extortion in the hands of some coterie of over- 
 greedy adventurers, confederated to exploit the public necessity 
 and extract excessive profit. And theory apart, there is no 
 occasion in that regard to draw any line whatever between such 
 industries as are directly productive of material wealth and such 
 as occupy themselves in making wealth and means alike more 
 available to promote the contentment of mankind and the 
 satisfaction of their desires. Just as the transport of goods is 
 in reality a necessary process in their production at the place 
 where they are required, so also in a somewhat more remote 
 degree, those services which minister to the comforts and 
 convenience and even the amusements and pleasures of the 
 whole of a society, conduce, each in its way, equally to the satis- 
 faction of the common need, with the direct production of com- 
 modities of the most obvious necessity ; and within its own 
 borders, it may at any place happen that the community has to 
 assume the management and direction of any one of these. Of 
 course the crucial instance is that of the land, the use and 
 appropriation of which have at all times been subjected to 
 varying degrees of control. This subject has already been dealt 
 with fully, and there is no need for further instances ;of 
 it. But equally with the possession and utilization of land, 
 every kind and degree of occupation or undertaking, the acquisi- 
 tion of which on behalf of the community might otherwise 
 appear desirable in the general interests, is involved with the 
 consideration of " individual property." 
 
 To the thorough-going collectivist this occasions no misgivings 
 or difficulties. All property is to be confiscated, and Henry 
 George, ultra-coUectivist as regards land, absolutely individual- 
 istic as regards all other sorts of property, had in some respects 
 a better insight into the nature of things, and a saner apprecia- 
 tion of possibilities than those advocates of a comprehensive 
 collectivism, who aim at the " nationalization " of all " Capital " 
 and means of production whatever. He at least understood 
 that while you cannot destroy space by "confiscating" it, and 
 while the land with all its possibilities may at need be made 
 to revert to the community at whatever intervals the State 
 thinks fit to "confiscate" the property of its possessor, the 
 State appropriation of other Means is practically impossible.* 
 But the dogmatic coUectivists can never be made to understand 
 
 * AnU, pp. 241, 349. 
 
 cc 2 
 
388 THINGS AS THEY AEE 
 
 that the effect of an attempt at a general confiscation of means 
 can only result in their annihilation. 
 
 On the other hand, they in their turn have the advantage of 
 logicality, more so than the more advanced quasi-socialists who, 
 like Mr. Wells, are for nationalizing things "gently" and "a 
 bit at a time," and " not entirely " ; for they perceive that it 
 is the institution of property itself which stands in the way of 
 the acquisition by the State of all the adventures of productive 
 enterprise and service. But the truth is that the desire for property 
 is a manifestation of an ineradicable instinct which mankind will 
 not submit to have suppressed. 
 
 And it is here that arises the essential dispute between the 
 true and the quasi-socialist ; — compensation or confiscation ? The 
 latter word, one which the present writer employs by no means 
 as a term of obloquy or deprecation, but in its correct etymo- 
 logical meaning of putting all things together into the " fiscus," 
 and thus terminating individual appropriation without compensa- 
 tion. For this, be the process a good or an evil one, " just " or 
 " unjust," is the only possible meaning of collectivism in the 
 true sense. Compensation is possible so far as there exist 
 Means wherewith to compensate, no further. But Means, being 
 simply the promise and expectation of future earnings, are 
 essentially a function of confidence, and disappear with its 
 annihilation ; and herein lies the secret of the very circumscribed 
 limitation of the power of the State to acquire, whether on the 
 coUectivist basis of confiscation, or on the contrary quasi-socialist 
 one of compensation, which implies a full equivalent. For if 
 "justice" compels the State to pay for what it takes away, it 
 is equally clear that the payment must be at a fair market 
 price, or otherwise the process is one of mingled compensa- 
 tion and confiscation, which, as Euclid was wont to say, is 
 " absurd." 
 
 But the means wherewith the State can pay, are strictly 
 limited. If such or such a railway or service of electric- 
 lighting, particular coal mine, or group of coal mines, given 
 piece of land, or system of slaughter-houses or of dairies, or any 
 other concrete embodiment of Means has to be acquired for the 
 public convenience, it must either be taken by force or acquired 
 by purchase, and the consideration for purchase must assume 
 the form of the issue to some person and in some form of 
 promises of periodical payment in the future ; and these in their 
 
0. XX.] QUASI-SOCIALISM 389 
 
 turn have to be fulfilled out of what will in the future have to be 
 taken by force, which is to say, levied by taxation. And the 
 promises when they have been issued will be simply worth the 
 value which the general confidence of the markets of the world 
 thinks fit to assign to them — that and nothing more ; greatest 
 in the case of the State which has the reputation of most rigidly 
 fulfilling its obligations, least when they are the promises of a 
 government which has already begun to proceed on principles 
 of confiscation ; and varying between the two extremes according 
 to the course of general prices of " securities," but always 
 decreasing in value for the securities of each State exactly as 
 it is impelled onwards towards a policy of confiscation. 
 
 Whether this confiscation takes the form of a systematic 
 compulsory expropriation at an undervalue, or of the forcible 
 appropriation of an excessive share of the means of the citizens 
 by over-taxation, is, from a "market" point of view, quite 
 immaterial. The limit of the power of a State to expropriate 
 private adventure concerns of any sort on the basis of paying 
 out their owners at market value must therefore always be the 
 margin of available taxation that those who form the average 
 opinion of the world's market believe will in the course of time 
 be left over from what can be raised by taxation, to provide for 
 the redemption of these promises after the requirements of 
 the administration of that State have been satisfied ; which 
 limits its " borrowing power." And all taxation has, as already 
 pointed out, its own inexorable limits of productiveness, whether 
 levied directly or indirectly. So long as the individualistic 
 basis of property is recognized to the extent of entitling its 
 possessors to fair compensation on expropriation, so long will 
 there continue somebody and something to tax; but with 
 each fresh assumption of collective enterprise by the State, so 
 much the less must remain in private hands, and by so much, 
 therefore, must the rate of taxation necessary to provide the 
 funds for fulfilment of promises be proportionally aggravated. 
 It is conceded that something, on the other hand, will arise 
 from the proceeds of the appropriated industries themselves. 
 Surely, men will say, if such a municipality buy such an electric 
 installation at a price of so many thousands of pounds, so much 
 will be made out of the profits of the future adventure, as will 
 suffice to pay the interest on the loan which hfis to be raised to 
 compensate the shareholders and the other people who have 
 
890 THINGS AS THEY AKE 
 
 property -rights in the undertaking. This, they say, is "produc- 
 tive " or " remunerative " expenditure, and may be encouraged. 
 The same with the slaughter-houses and the dairies and the rest 
 of the things. Within certain limits all this is true enough, but 
 it does not in reality count for nearly so much as people think. 
 Three truths must be borne in mind : the first is that every 
 subject of property, except space itself, which is land, is always 
 undergoing a constant process of deterioration ; the second 
 is, that the utility and profitableness of even the most permanent 
 of human adventures is a comparatively ephemeral and perish- 
 able affair. All industrial contrivances and businesses in due 
 course come to an end, lose their profitableness, and have, as 
 the Americans call it, sooner or later to be " scrapped." And 
 the third is the most significant of all, and that is that an 
 adventure apparently " remunerative " does not, therefore, 
 become to anything like the same extent necessarily "productive." 
 And this is a very serious consideration indeed, and the one 
 which should induce the severest limitation of the sanctioning 
 of ambitious projects of municipalization. 
 
 For these will be seen for the most part to be just schemes 
 for diverting means and profit from one municipality to another, 
 or from private to municipal organizations. They may apparently 
 succeed in their aim, and then will appear on balance sheets as 
 " assets " in respect of the " income " they are bringing in, and 
 be pointed to with pride as instances of commercially successful 
 collective adventure. But all the while the general wealth-pro- 
 ducing power of the community is not enhanced by them, and 
 the process of means-accumulation, though transferred from 
 private hands to the State or municipal treasury, secretes on 
 the whole no more means than before. And, ultimately, it is 
 the wealth-producing and means-secreting functions of the 
 community as a whole which have to be relied upon to furnish 
 that taxation, on which the community as a whole has to rely. 
 
 Antwerp borrows many million pounds to provide a magnificent 
 apparatus of docks and quays. Much traffic is attracted, much 
 employment to Belgian energy, much money earned which would 
 otherwise have been spent in Eotterdam or Havre. The port 
 becomes one of the greatest of Europe, the pride of the city and 
 of the State. Then it occurs to the good people of Bruges, that 
 they too enjoy a splendid opportunity of remunerative and pro- 
 ductive adventure, and they set to work to build a ship canal to 
 
c. XX.] QUASI-SOCIALISM 391 
 
 • 
 
 the tideway at a convenient spot. The means of the municipality 
 and dock organization at Bruges are immensely enhanced by 
 this remunerative expenditure, and on the day on which this 
 happens to be written the following paragraph appears.* He 
 would be a bold man who would venture to predict a life of one 
 hundred years of productivity for any given existing or imagin- 
 able organism of industry or service. Suppose, for example, 
 that somewhere in the early forties of last century the then 
 corporation of Birmingham had found it necessary to protect 
 their citizens by buying up at a fair market price the entire 
 business of the stage coach proprietors who ran on the London 
 road. The step might well have been thought necessary, in view 
 of the general importance of rapid and cheap communication. 
 Where would have been the earning power of the municipal 
 venture in twenty -five years' time from its purchase ? This is 
 no extreme instance, unlikely to recur. Every human invention 
 in turn is superseded in due course by something quite different, 
 and were the State, at immense expenditure, to buy up the 
 railways of to-day, there is no security whatever that in fifty 
 years' time these appliances of locomotion would not become 
 just as obsolete and unprofitable as was in 1855 the stage-coach 
 service of 1825. The State and the municipality look forward 
 to a far longer term of corporate existence than any existing 
 industrial or commercial organization of the moment, and their 
 obligations must partake of their hoped for longevity ; while the 
 means, profits and returns, which they may hope to derive from 
 the acquisition of private venture concerns are quite essentially 
 fugitive and ephemeral, liable to yearly depreciation, and 
 certain to be annihilated in the course of time by the substitution 
 for each of some alternative preferable contrivance, which 
 human invention may bring forth at any moment, for it is 
 always on the look out to discover it. And here comes in 
 the danger of the modern tendency to the over creation of 
 "evidences of indebtedness" that has been already insisted upon 
 — the over-enchainment of posterity.! Neither State nor 
 
 * " Since the beginning of 1908 the port of Antwerp has been through a remark- 
 able and disquieting crisis. The number of vessels which hare entered the great 
 Belgian harbour has fallen heavily, and is still declining every month. Wonder is 
 expressed as to what cause these circumstances are due. Probably, according to 
 an expert, to the creation of the harbour of Zeebrugge, near Bruges, to the increasing 
 facilities granted to ships in English ports, and to the dangers of navigation in 
 some parts of the Scheldt."— J)aily Telegraph, August 3rd, 1908. 
 
 t Ante, p. 30. 
 
392 THINGS AS THEY ABE 
 
 municipal indebtedneBs can safely be extended to absorb the 
 confidence of the owners of means with the copiousness which is 
 at present practised, which is to the full extent of what 
 lenders are prepared to advance. There is hardly a Govern- 
 ment in Europe, but is at the present moment planning its 
 future programme of finance with the avowed purpose of 
 borrowing every farthing it can persuade capitalists to lend to 
 it, to be expended in the main on entirely destructive engines of 
 war. And the governments of the States and of the municipali- 
 ties which are equally intent on borrowing for local purposes, 
 vie with those who wish to " promote " new private companies 
 throughout the world in inviting the possessors of individualistic 
 means to " invest " them in assisting their collective enterprises, 
 some of which may, while others certainly will not, prove truly 
 " productive." Existing companies, though disposed to work on 
 the same lines, have ever before them the possibilities of failure, 
 and the contingency of " liquidation." Their managers know 
 that each concern has its allotted span of life and productiveness, 
 and the more conscientious among them prepare for the inevit- 
 able decline of the " diminishing return " by accumulating 
 adequate reserves. But every modern State, and almost every 
 modern municipality, in place of a reserve of assets, cherishes 
 an accumulation of indebtedness ; its only reserve, the hope of 
 the industry of its citizens of the future. Mr. Bernard Shaw 
 calls this " the creation of wealth." The present writer prefers 
 to denominate it the reckless preparation of insolvency. 
 
 It is not proposed to enter in detail into the analysis 
 of the various modes in which it is proposed that, on a com- 
 pensatory basis, the State or the municipality should assume 
 further enterprises of production or service. No doubt some of 
 these may be found to have such comparative permanency of 
 profitable yield as in the result to justify their acquisition; 
 though, as a matter of fact, few instances are capable of being 
 cited in which this fortune has hitherto been realized. The 
 individual working man who has the command of capital, and 
 on whom all our modern production depends, is, as the late 
 Mr. Bagehot pointed out, the man who " settles what undertak- 
 ings shall be embarked in, and what not ; which things shall be 
 made, and which left unmade." His is the will by which the 
 machinery of production and commerce is actuated, as things 
 are ; and the reader is referred to Mr. Bagehot 's essay on the 
 
c. XX.] QUASI-SOCIALISM 393 
 
 cost of production* as indicating with an accurate lucidity which 
 the present writer would emulate in vain, the real human aptitudes 
 which make profitable industry possible. For these qualities no 
 substitute can be found even in the " board of directors " of a 
 private company, which will succeed only in so far as it acts in 
 obedience to a master mind, whether that of a manager or chairman 
 of directors is immaterial. But such a master mind must neces- 
 sarily be absent from any conceivable State or municipal depart- 
 ment, dealing with anything beyond such services as are ensured 
 of their custom by enjoying a permanent monopoly of enterprise. 
 
 Passing from the subject of the proposed partial assumption 
 by the State of industrial functions which has been glanced at 
 in the last chapter, there remain to be appreciated two opposed 
 sets of conceptions concerning the quite distinct domain of 
 benevolence. The one, those of the people who in this respect 
 also may be termed quasi-socialist, in which category may be 
 placed all who wish to address themselves to the object of 
 collective benevolence, without claiming to that end the prero- 
 gative of the absorption of all Means into a collective fiscus. 
 They believe that short of complete collectivism it is practicable 
 and right for the State or the municipality to arrogate to itself 
 the supply and control of the reservoirs and channels through 
 which Means flow for the alleviation of poverty and distress, to 
 increase and render more efficient the State subvention and 
 amplify the purposes to which it may be applied. The other 
 set of people are those who may be described as pseudo-socialists : 
 those who, outwardly professing the same purpose and motive of 
 collective benevolence, are in reality actuated by acquisitiveness 
 and envy, and seek personal advantage for themselves under the 
 cloak of a simulated altruism. 
 
 These will be dealt with in Chapter XXI. The remainder of 
 this chapter is devoted to a short analysis of the quasi-socialism 
 of benevolence. 
 
 What most concerns this branch of thought is the practical 
 effectiveness of the State administration in the task of 
 improving the lives and condition of the subjects, and (a matter 
 of still greater moment) the probable result of State action of 
 this sort on the force and character of the people. It has 
 above been pointed outt that the institutions of this country 
 already nominally provide that in the last resort no human 
 
 * •• Economic Studies," p. 238. t P- 333. 
 
394 THINGS AS THEY AEE 
 
 being shall be allowed to die of starvation. It is recognized as 
 the duty of each local authority to see to it that some sort of 
 food, shelter, and raiment shall be afforded to the most miser- 
 able, at any rate to the extent necessary to keep them alive to 
 suffer. And though it would be difficult to prove that in 
 consequence of this state of the law the condition of the poorest 
 and most helpless is actually better here than in those countries 
 where no such State-liability is recognized ; no person is 
 prepared to go the length of abolishing this law and leaving the 
 care for such things entirely to the chances of private benevo- 
 lence. But inasmuch as the means to fulfil this duty have to 
 be derived from taxation, and are actually raised in the main 
 from local taxation, which is incident on the whole body of those 
 who are not themselves paupers, this becomes a charge levied 
 as part of the rent men have to pay for the right to exist in 
 Britain ; and it follows that an extreme economy has to be 
 practised, for fear of increasing the number of paupers, and 
 decreasing the tale of those on whom the burthen of supporting 
 pauperism is cast. Thus for example, in the case of the poor 
 family mentioned above (p. 367), the " parish ", allows outdoor 
 relief to the extent of 3s. &d. a week to the mother, out of which 
 she pays 6s. 6d. a week for rent, something like Is. 6d. of which 
 goes back again to the parish in the form of rates levied on the 
 landlord. And this is quite an ordinary and common example 
 of how it comes about that in many cities of Britain local 
 taxation is normally stretched to the very breaking-point ; that, 
 namely, at which any increase of its rate must necessarily 
 occasion a diminution of its yield. Nor are things sensibly the 
 better in rural districts, where deadly overcrowding in hovels 
 absolutely unfit for decent habitation is responsible for a death- 
 rate not very much less among the poorest class than that which 
 marks the slums in which is herded the corresponding class in 
 the towns — the exigencies of the poor-law imposing, in fact, a 
 greater penalty on any attempt to provide improved dwellings in 
 the country than in the town. So it has come about that the 
 means of the majority of local authorities capable of being 
 raised for the relief of the poor are everywhere already insuffi- 
 cient for the adequate fulfilment of the duty. Already Britain 
 has had to resort to the device of supplementing those means 
 from the national revenue. And this in its turn necessitates 
 additional and increasing State control over local expenditure. 
 
c. XX.] QUASI-SOCIALISM 895 
 
 For the Bumbles among the local bodies unfortunately manifest 
 tendencies towards a certain injudicious wastefulness, the reputa- 
 tion of a high-minded generosity of expenditure being found 
 increasingly to subserve the private interests of those who 
 locally elect the local administrative body, as the funds to be 
 expended are increasingly derived from State-taxation as 
 opposed to rate-contributed sources. Even the more sordid 
 kinds of corruption are not altogether unacceptable to electors 
 who indulge a hope that in some way a share in their profits 
 will come to be divided among themselves. 
 
 At the moment of writing (August, 1908) two principal con- 
 trivances of State subvention are actually in the melting-pot — 
 the education of youth, and the sustenance of the aged poor. 
 The final stage into which the former will be cast depends more 
 or less on a successful adjustment of theological dissensions, in a 
 country in which the adherents of each sect are most deeply 
 concerned in preventing the predominance of any other. While 
 the majority of men are agreed that instruction is incomplete 
 without the inculcation of a religious sanction to good conduct, 
 they differ among themselves as to the doctrines from which 
 alone that sanction can be sought. 
 
 With regard to the provision of sustenance for the necessitous 
 aged, the conflict is entirely one of method ; the principle is 
 universally conceded. The local authority already assumes the 
 duty of keeping people alive, and in some form or another those 
 past earning have to be maintained by the community. The 
 problem is, by whom this duty should be performed, and subject 
 to what conditions, so as to combine the maximum efficiency of 
 distribution with the minimum deterioration in the industry and 
 characters of the class whom it is agreed on all hands it is 
 necessary to assist. The settlement of both questions rests with 
 a doubtful popular vote, the majority of the voters belonging to 
 the class most deeply interested ; that, whose members are 
 apt to look upon themselves rather in the light of possible 
 future recipients than as the people from whose wages and 
 earnings during their working lives will be indirectly extracted 
 the means needed to supply the relief ; while as a matter of fact 
 they are both at once. As things are, it is inevitable that this 
 matter should thus be settled by the class so circumstanced as to 
 have the greatest difficulty in determining the decision impar- 
 tially, and with a view rather to strengthen the character and 
 
396 THINGS AS THEY AEE 
 
 preserve the independence and virility of their class, than to the 
 greater satisfaction of their personal hopes of gain ; for the real 
 motive power of British legislation is the anxiety of the 
 individual legislator to secure re-election by obsequiousness to 
 the momentary whim of the majority. 
 
 The whole of this legislation is essentially anti-evolutionary ; 
 an intentional and purposed elimination of the " struggle for 
 life " from among the factors of the future life-history of the 
 race, the direct negation of " Laissez faire," and so much 
 hindrance to the " emergence of the fittest." But this is no 
 valid argument for the abandonment of the endeavour in a real 
 human world, however inconsistent it might have been thought 
 with the interests of the imaginary beings who peopled the world 
 conceived by Bicardo for the purposes of his abstract science. 
 All the same the danger of deterioration of character and what 
 is called " pauperization " is not in the real world an imaginary 
 one, and it behoves the poorer classes especially to strive to 
 guard themselves and their descendants against any extension of 
 the tendency to demoralize which observers already detect at 
 work in the case of those who are encouraged to seek a liveli- 
 hood from the sources of private charity rather than to depend 
 for their existence on the results of their own exertions. And 
 this is a tendency which must acquire much greater force when 
 people assimilate the notion that the State exists for the 
 purpose of supporting them. A " cadging " proletariat, whether 
 it is benevolence or taxation that it cadges from, produces the 
 worst possible human material out of which to build an effective 
 nation. And the ineffective nation goes under in the conflict of 
 the nations, the chief sufferers from its submergence being the 
 people who labour and toil. 
 
 Economically, the means needed for providing the necessities 
 of the aged must ultimately derive from one and the same 
 source — the produce of industry ; and whether they are levied on 
 rent, or wages, or interest, the three streams into which the flow 
 of wealth is essentially divided, does not affect this ultimate 
 result. Nor can one determine, d priori, to what extent and in 
 what manner any burthen ostensibly placed on one of the three 
 may shift itself so as to be ultimately borne by another of them. 
 The chain of antecedents and consequences, the working and 
 effect of the subtle readjustments, are too involved and delicate 
 to trace out, even in the case of causes at work, the effects of 
 
c. XX.J QUASI-SOCIALISM 397 
 
 whicti are already in part discernible : they utterly defy analysis 
 in the case of the unknown future results of causes not yet in 
 operation. All that we know for certain is, that the anticipa- 
 tions of the moment will assuredly be falsified, but in what 
 direction and to what extent it is given to no human being to 
 predict. It does seem, however, reasonably evident that were it 
 possible, the best of all solutions of the problem of the super- 
 annuation of the less opulent of the workers would be along the 
 line which has been spontaneously adopted by the workers 
 themselves — the effort of the " trades-union " to combine con- 
 certed efforts for the increase of the daily wage with a provision 
 of funds out of which people past work can be maintained by 
 the wise husbanding of the results of their own past exertions. 
 This system suffers under its own imperfections, it is true. It 
 can never be made co-extensive with the whole class of workers 
 or the total needs of the working community. It has to obtain 
 subvention. The underpaid industries, from whose ranks arises 
 so great a proportion of aged indigence, do not, as things are, 
 secrete a sufficiency of Means to provide for their own super- 
 annuation. In the better paid trades, too, the task must be 
 undertaken trade by trade ; indeed, by each subdivision of a 
 common employment for itself ; because the two objects are 
 inseparable, and each subdivision has to deal with its own 
 problem of adjusting the market rate of its labour, and being 
 thus compelled to negotiate separately for itself, is also under 
 the necessity of effecting for itself its own distribution of wages, 
 between what may be spent by the individual worker and what 
 he must be called upon to contribute to the common provident 
 fund ; and a third, perhaps greater, difficulty presents itself in 
 the imperfect manner in which many of the societies discriminate 
 between that part of their funds which should be held sacred for 
 provident purposes, and that which ought to be kept available to 
 enable the workers when necessary to "proclaim a strike," and 
 thereby strive to obtain a higher rate of wage. For this, too, 
 however wastefuUy the system works, has to be accepted as an 
 obviously legitimate and even economically necessary function 
 of each trade-union. The two latter drawbacks are capable of 
 being minimized by better organization ; the first alone appears 
 to some extent inevitable, and it is here that comes in the real 
 necessary function of the State or the municipality, the activity 
 of which should assuredly be limited to the function of providing 
 
398 THINGS AS THEY AEE 
 
 in some way for those who cannot help themselves. There is no 
 need to dilate on the customary truisms concerning the dignity 
 of independence and the duty of " thrift." Let all these things be 
 " taken as read " ; stale platitudes as they are, they involve the 
 essential truth that the future of a nation is the aggregate of the 
 future characters of its citizens, and that no national action is 
 salutary which does not tend to the encouragement of the better 
 and repression of the worse impulses of the individual citizen. 
 
 Therefore it seems that no system for the superannuation of 
 the individual worker can safely be countenanced which does 
 not adequately differentiate against laziness, improvidence and 
 vice. Somehow or other all the people have to be kept alive, 
 it is true, and more or less that duty is performed as it is ; 
 but it would be fatal to the efficiency of any nation to put the 
 victims of diseases of the character on an equality of treatment 
 with the honourable veterans of industry, for whom the gaol 
 the workhouse and the lunatic asylum are not fitting abiding- 
 places when their working days are over. This is the problem 
 of superannuation. 
 
 Side by side with it are those of disease, incapacity, and 
 industrial unemployment, all three of which are still more com- 
 plex, but all essentially incapable of being efficiently dealt with 
 by State provisions for the application of compulsory benevolence 
 derived from taxation and administered by official authority. 
 For it is among the claimants on these grounds that arises the 
 chief opportunity for mendicancy and imposture. And here too 
 are found the more familiar instances of predacity ; the simula- 
 tion of distress, the waste of superabundant and over-paid 
 administrative staffs, the semi-professional abuse of the oppor- 
 tunities afforded by inefficiency of method which arise from the 
 haphazard and unscientific distribution of the organizations — 
 far too many funds dealing with one object, and competing with 
 each other; none at all serving some other purpose, equally 
 urgent and meritorious. The redirection not only of funds, but 
 of the energies of administration, is what is most needed. But 
 this must necessarily be done by the devotion of individual 
 skill and work, not as by hirelings for a wage, but by people 
 individually intent on making the conditions of life better. 
 Those who have not assisted in the duty of administering funds 
 can form no idea of the extent to which they are liable to be 
 misapplied by the exercise of the arts of imposture, above 
 
c. XX.] QUASI-SOCIALISM 399 
 
 adverted to {ante, p. 329). The "inquisitorial" method that 
 need be resorted to but slightly when the claim is based on age, 
 becomes an obvious necessity in all these other cases alike. The 
 jobbing gardener who threw up his well paid work for a day or 
 two, because he was still better paid for carrying a banner in 
 a procession of the " unemployed," afforded no exceptional 
 instance. The art of the malingerer is practised even in the 
 consultation-rooms of the hospitals, and the sturdy vagrant 
 invariably masquerades as the " working-man seeking employ- 
 ment," as he wanders about the roads seeking for convenient 
 places where burglary may be committed. Against these, the 
 only defence is searching discrimination ; and this can be applied 
 by no other agency than the constant individual watchfulness 
 of those who undertake the duty of distribution. It is beyond 
 the capacity of any conceivable official routine. No official 
 regulations can reach the need. Each case has to be investi- 
 gated on its own merits, not without regard for general principles, 
 it is true (and indeed there is great necessity in this regard for 
 increasingly scientific ascertainment and application of principle), 
 but what the work most requires is the faculty of decision on 
 the facts of each case, responsible, but irreversible, exercised by 
 people bound by the provisions of no official method or depart- 
 mental regulation — in short, by individualists actuated by 
 altruistic impulse. This work is done, as things are, as best they 
 can, by committees of provident and friendly institutions, by 
 individual members on the boards of charities — men who devote 
 their energies to the work of investigation, and by such like 
 people working for the common good, but each actuated by a sense 
 of the personal obligation of beneficence. Indeed the limitation 
 of the efficiency of official action in the sphere of benevolence is 
 essentially the same as in that of industry ; the machine is on 
 the whole clumsy and unfit for the purpose to which the quasi- 
 socialist proposes to apply it ; in some cases it would work, in 
 others it must fail. 
 
 The necessity of the moment is to arrive, £i^ an accurate dis- 
 crimination between these cases, and while applying State action 
 to the one, to forbid its interference with the other. The 
 question of adequacy of funds comes in here also ; and in two 
 ways. In the first place, it must happen that the aggregate of 
 the expenditure needed to cope with the successive instalment 
 of State distribution of assistance will reach huge figures; it 
 
400 THINGS AS THEY ARE 
 
 mounts in such a country as ours, into millions with each pro- 
 posal to loose the purse-strings in response to a fresh appeal ; 
 the appetites of the recipients increasing -with each subvention. 
 Stimulated by the quasi-socialism of those whose sympathies keep 
 going out to fresh claimants, the expense keeps on steadily 
 mounting up so as to absorb more and more of the yield of 
 taxation ; and this, on any basis which repudiates the entire 
 absorption of means by the State, is essentially limited in its 
 productiveness. The quasi-socialist, who repudiates confisca- 
 tion, must therefore, soon find himself at the limit of his power 
 of increasing State benevolence. As the demand increases, the 
 supply becomes more and more scanty. But another danger is 
 the more formidable. For there looms in sight the portentous 
 probability of the drying up of the stream of private benevolence, 
 as the channels of the public assistance funds are deepened and 
 widened to divert increasingly the means of individuals into the 
 river of State contribution. The thing is obvious. What flows 
 along the former channels is after all but a certain proportion of 
 the volume of Means arising from the progressive production 
 of wealth within the community from year to year ; of Means 
 over and above those which are devoted to the production of 
 commodities and the satisfaction of the personal requirements 
 of their possessors ; the surplus, after satisfying the double 
 need of subsistence and acquisitiveness. One may put it more 
 broadly still. On the basis of individualism, " a bait " (as 
 Mr. Bagehot put it) has to be held out to the possessor of Means, 
 to bribe him to turn them into "Capital," to induce him by 
 the anticipation of some advantage, of better comforts, increased 
 enjoyment, of legitimate opportunities of secure accumulation, 
 above all of the seductive consciousness of power, and by the 
 hope of being able to provide for his family, to continue pro- 
 ducing things, or doing services outside of his immediate need, 
 so that he may be encouraged to continue to work to secure 
 the reward. 
 
 To the pure icollectivist this presents no difficulties; by his 
 scheme all Means are to be absorbed by the collective nation, and 
 the individual motive is eliminated. But the quasi-socialist, the 
 man who proposes to preserve the institution of private property, 
 and to resort to it increasingly, in order to obtain what he deems 
 necessary to satisfy the exigencies of State benevolence, is 
 brought up with a sharp jerk sooner or later by the consciousness 
 
c. XX.] QUASI-SOCIALISM 401 
 
 that as individual Means are more and more rought into 
 contribution for taxation, the surplus available for satisfying 
 the altruistic instinct must grow less and less. And not only 
 this, but most assuredly, the more the State consents to under- 
 take the duty, the less the claim which the average man will 
 be disposed to acknowledge, to assist out of his means the 
 varied necessities of indigence. " I pay for you fellows in my 
 poor-rate, and I refer you to the union authorities." 
 
 Hence there needs a word of caution from an honest quasi- 
 socialist to the more eager of his fellows : " Beware lest in 
 your endeavour to increase the efficiency of State action, you 
 impair the resources with which altruism is eager to stand in 
 with the doers of benevolence, for that stands for a greater 
 force than you realize, and it will be dangerous to tamper with 
 it. Therefore, brother quasi-socialist, be cautious. All good 
 fortune attend your efforts. The more fully you succeed in 
 directing the organized force of Society to the improvement of 
 the lot of the less fortunate, the more you are able by sound 
 law and wise contrivance to equalize the chances of happiness 
 and counteract the evil working of over-acquisitiveness; the 
 better and more permanent will be your results on civilization. 
 
 "But beware of over-ambition. If your aims reach beyond 
 the practical, if an Utopian enthusiasm prompts you to grasp 
 at a visionary perfection and disregard the limitations which 
 are imposed by the finiteness of the means on which you will 
 be able to draw, danger must arise, confidence vanish, values dis- 
 appear, and with them the whole fabric of civilization in the 
 oqly form of which humanity has any knowledge. You wUl be 
 launched on an unknown sea, and gradually drawn into the vortex 
 of the collectivist. For at this point begins the expropriation 
 by the State of all Means whatever, bit by bit, purpose by 
 purpose, till the individual is obliterated and the nation is 
 merged in the State. 
 
 " And then you will wake from your dream, and find that 
 while you have imagined yourselves to be approximating to the 
 standpoint of the benevolent collectivist, you have been all the 
 while unconscious instruments in the hands of the sinister 
 'pseudo-socialist,' the lion in the ass's skin, the anarchist in 
 disguise." 
 
 T.A. D D 
 
CHAPTEE XXI 
 
 PSEUDO-SOCIALISM 
 
 By pseudo-socialists it is proposed to designate those who seek 
 to destroy the edifice of civilization that they may have the 
 opportunity of looting among the ruins. There is little to be 
 said of these — they are persons whose significance arises only 
 from their comparative numerical preponderance over the pure 
 collectivists and the quasi-socialists put together. For every one 
 theorist who cherishes the doctrine of genuine collectivism there 
 shall be found ten earnest benevolent quasi-socialists — men 
 who in different degrees and by different methods aspire to 
 direct State action towards the function of improving the lot of 
 the less fortunate, but who recoil from the heroic remedy of con- 
 fiscation advocated by Marx. 
 
 All these are a small band in comparison with the hundred on 
 whose support they act — the envious who desire to dispossess so 
 as to be able to acquire, and the thousand dupes of these, the men 
 with whom is the voting power, and on whose force the hundred 
 rely for the realization of their hopes ; for it is from this 
 thousand that the army is to be recruited which the hundred 
 propose to officer, brushing aside the one and the ten ; and to 
 direct to their purpose of overcoming individualism by force. 
 To the hundred no argument or confutation can be addressed. 
 Even against them assuredly no vituperation is intended. It is 
 natural, and in a way reasonable, that those who have drawn 
 the harder lot should cherish no particular affection for the 
 fortunate few who seem exempt from the primeval curse, and 
 who live in what appears to them to be shameful luxury and 
 happiness, the while their brethren toil and suffer and perish. 
 There is justification for all religion, even one of hatred. There 
 does, as things are, seem a perverse inequality of undeserved fate 
 about an arrangement of civilization by which out of each hun- 
 dred human souls entering the world on a given day perhaps two 
 or three are selected by chance to be born to " luxury and com- 
 fort," and six or seven are endowed with the power or surrounded 
 
c. XXL] PSEUDO-SOCIALISM 403 
 
 with the circumstances which enable them almost as of course 
 to acquire a sufiBciency of the means by which the good things 
 of life may be brought within their reach ; while of the others ; 
 seventy are destined to a life of physical toil, not by any 
 means devoid of happiness, but hard, grim, and towards the 
 finish grey and unhopeful; and the hindermost, extremos quos 
 occupat scabies, have to be more or less " submerged " ; the most 
 miserable ten, it may be, being condemned, for no particular fault 
 of their own, to varying degrees of apparently hopeless and irre- 
 mediable suffering ; for these in truth are somewhere near the 
 ascertained proportions in which Fate deals out the possibilities 
 of contentment to mankind as things are. 
 
 Wherefore it is, that neither the economist nor the moralist is 
 entitled to condemn the revolt of the souls of such as cherish 
 hopes and intentions of remedying by force or fraud the 
 inequalities of fortune. Nor are the more fortunate on their side 
 to be blamed for resisting them by all the machinery at their 
 command. The lawyer steps in, and by order and permission of 
 the State, which for the moment these control, forbids and 
 restrains and punishes. The priest, whose cultus is main- 
 tained by them, preaches patience, reproves the sinfulness of 
 rebellion, inculcates the catechism of " contentment with that 
 station of life in which it has pleased Providence to place us," 
 and recites the " tenth commandment " as disposing once for 
 all of the question. But the pseudo-socialists are at heart 
 rebellious ; one part sullenly standing by waiting their oppor- 
 tunity for revolt, while another division revolts at once, setting 
 itself to work to effect its own plan of redistribution, by means 
 of what possessors call theft and robbery and fraud. These latter 
 are what we are in the habit of calling " criminals," open enemies 
 of the civilization which oppresses them, victims for all that, the 
 fair minded man must remember, of the pitiable circumstances 
 of their environment, and as they themselves believe, of a 
 criminal law made in the interests of those who have, and 
 enforced against those who have not but would have. 
 
 Now the voting thousands, at the bidding of the planning 
 hundreds, are more or less ready to set their strength to support 
 any specious plan which promises to redress the inequalities of 
 Fate by voting about them. They are indifferent to the doctrine, 
 but ready to stand by to enforce its application, in the hope of 
 enjoying its results. With profound pity for the less fortunate 
 
 D D 2 
 
404 THINGS AS THEY AEE 
 
 ones, one is yet constrained to appeal to those who are tempted 
 by sympathy to lend themselves to the aims of the predatory 
 who trade with occasional success on their sympathies. These are 
 plain men working hardly and honestly for their livelihood, by 
 no means consciously envious for themselves, but filled with a 
 generous indignation when they come to contrast the hard fate of 
 the more miserable among their own near brethren with the 
 luxury and selfishness that they are told characterize the small 
 opulent class more remote from them in circumstance, whom 
 they hear described as " monopolizing wealth and all the means 
 of production." 
 
 It is not only a sad and suffering proletariat in South and 
 East London, but also a sturdy healthy and independent 
 community of artizans of the North, prosperous workers 
 actuated far less by greed than by sympathy — who make legis- 
 lators of the glib and confident apostles of hatred. These latter 
 are hardly " open to conviction," in the sense at least in which 
 that word derives from the verb " to convince." It would be 
 silly to appeal to confute them to what they would call a " musty 
 decalogue," which they declare to have been forged by some 
 priest of old, hired by capitalists to sanctify the thefts of ancient 
 days. Law they denounce as the arbitrary fiction of a venal 
 class of craftsmen who from time immemorial have plied for hire, 
 and are now as they always have been "in the pay of the 
 propertied classes " ; ethics are obviously without sanction and 
 meaningless, unless founded on some sort of religion ; and these 
 advanced gentlemen are apt to confound religion with dogma, 
 and conceive of it as an emanation from theology ; a body of 
 doctrine for which they have " no sort of use." " Economics " 
 in theory, they are prepared to recognize ; even to the point of 
 copying the terminology of the science. They propound their 
 remedies in its name ; but then it must be the special economics 
 of Marx, which they deem the only genuine inspired source of 
 the science, and of which they themselves are the only authorized 
 exponents. So it is futile to pretend to reason with these 
 philosophers. There is no conceivable common ground from 
 which to start. But it is less hopeless to appeal to those on 
 whose sympathies they rely for support ; sympathies not entirely 
 uninfluenced by a certain tinge of envy and class antagonism, 
 but human and natural, and in the main benevolent. 
 
 For to them, were the thing made clear, it would become 
 
c. XXI.] PSEUDO-SOCIALISM 405 
 
 evident that their own fate as well as that of the more miser- 
 able, for whom they are concerned, is bound up with the 
 economic side of the civilization of the country. When they 
 talk about " wealth " they are thinking of means — money, and 
 those embodiments of it which are yearly reproducing themselves, 
 from which is amassed the " capital " by hiring which their 
 labour avails to produce. These means, they would see, have 
 first to be secreted, as it were, and then applied to productive 
 purpose. Both functions must be performed by those among 
 the workers who have the faculty to secrete and to direct ; by 
 capitalists, adventurers, merchants, financiers, the people without 
 whose co-operation their own efforts must be fruitless, and who 
 claim and get as their reward a share of the resulting means 
 which the other workers deem excessive, but who have to be paid 
 to lend their aid, people whose skill and knowledge are as truly a 
 necessary thing for the exercise of the industries by which the 
 other workers live, as the machines which they tend and the tools 
 which they take into their hands. If the share claimed by these 
 fellow-workers of theirs is too great, it is fair to try and reduce 
 it ; but it cannot be diminished below the point of the incentive 
 necessary to induce its co-operation. 
 
 For this is not the only country in the world. All things can 
 be laid hands on by force if you like, machines and mills may be 
 taken and exploited, the skill of other persons may be hired for 
 superintendence and possibly for commerce, though this last is 
 doubtful ; but without a steady flood of Means to keep the 
 mechanism a-going, no lasting industrial organization is so much 
 as thinkable. These things of "fixed capital," as Adam Smith 
 called it, are but momentary physical fragments of wealth, 
 wearing out, and in process of consumption, not quite as quickly 
 but quite as inevitably as the very raw material itself which is 
 used up in production, or the coal or other source of brute power 
 which they employ to turn that material into goods. 
 
 The vital element is Means, without the application of which 
 mills and machinery and labour alike must prove infructuous 
 and pass daily into decay; and Means, though they can be 
 annihilated by destroying the confidence of which they are built 
 up, cannot possibly be held captive; they fly inevitably and 
 irresistibly to the land of the most secure and remunerative 
 employment, there to crystallize into capital, and afford oppor- 
 tunity for the population of that country. There is danger, 
 
406 THINGS AS THEY ARE 
 
 therefore, in every step in the direction of collectivism or expro- 
 priation. In their own interest, therefore, one would wish 
 that this danger should impress itself on the minds of the great 
 majority of the " working classes," as those who work with their 
 hands are apt to call themselves in distinction from their 
 colleagues who work with their brains. It is they themselves 
 who stand to lose the most by the threatened enfeeblement of the 
 country's civilization, they whose "stake" in it, to use a common 
 expression, is the greatest, for they and their fellows have 
 nothing but its civilization to rely upon for their future continued 
 existence. Above all classes they are the most dependent on the 
 maintenance of law and order in the entire community, the 
 efficiency and smooth working of the organization of its industry, 
 and the protection of all alike who participate in its efforts ; for 
 they are those who cannot escape. 
 
 The welfare of this great class should be the main solicitude 
 of the statesman ; for obvious reasons its good will and approval 
 is the main object of the solicitations of the politician. It is the 
 most numerous class, and the most important : at its pleasure 
 governments are made and unmade, legislation is approved or 
 rejected, and the laws and institutions of the nation progressively 
 adapted to the needs of each succeeding age. And on it in the 
 ultimate result, lies heaviest the responsibility of the future ; 
 its own as well as that of the other less numerous classes whose 
 welfare is bound up together with that of its members. 
 
 To them no less than the other collectivists the remarks above, 
 as to the necessity for some " bribe " or " incentive" to be held 
 out to Means to allow itself to be turned into Capital, and in 
 that form to be devoted to production, become vitally important. 
 And this consideration includes that of the need of an adequate 
 inducement to those qualified by skilled energy to hire themselves 
 out for the direction of industry, the enterprise of commerce, and 
 above all, the specialized skilled manipulation of finance. But it is 
 to the sympathies of the workers for the most unfortunate among 
 their own brethren, that one appeals with greater confidence. No 
 bribe is needed to induce the energy and the means of the man 
 actuated by an honest altruism to continue to devote them to the 
 service of his suffering fellow-men, to the service which is twice 
 blessed.* 
 
 The orator of the street-corner recognizes in the altruist his 
 
 • See aTite, p. 335. 
 
e. XXI.] PSEUDO-SOCIALISM 407 
 
 chief enemy, reserves his choicest invective for this " quality of 
 mercy," and heaps concentrated scorn on the idea of "your 
 damned charity." Not without wisdom. For to the sturdy 
 self-supporting men whom he strives (not without occasional 
 temporary success) to guide, nothing is more odious than the 
 idea of doles and gifts and gratuitous alms ; things which for 
 themselves they rightly repudiate with scorn. For " thrift," 
 which is no less hostile to his claims than charity, the socialist 
 demagogue himself has an equal abhorrence ; for that tends to 
 the accumulation of means in small proprietorships ; than which 
 there is nothing on earth which more induces in the proprietors 
 a " conservative " preference for the existing order of things and 
 a mistrust of revolution. 
 
 But thrift is a dangerous thing to attack in addressing 
 audiences who are members of unions and friendly societies, 
 whose savings lie in " building societies " and the other financial 
 reservoirs of the " working class." It is in inveighing against 
 charity that he feels most confident of carrying with him the 
 sympathies of his hearers. 
 
 But with all their impatience of the patronizing benevolence 
 of " charity," the " working class " will consent, if invited, to 
 consider the case of those wretched ones who, as things are, find 
 their only hope and help from what is annually poured into the 
 manifold reservoirs of benevolence to be administered by the 
 knowledge and care of the workers of mercy. You are told that 
 when the " workman " comes to his own and things are equally 
 divided, there will be no need for this " accursed charity," in 
 whose name you yourselves are insulted by the offer of what you 
 would not take at a gift. But pray, before accepting these vague 
 assertions for true, reflect a moment. What proof is there of the 
 adequacy of the result of this proposed redistribution ? What 
 figures have been given to show you how much Means the State, 
 under the direction of your " socialist " representative and his 
 fellows, will really be in a position to distribute, not to yourselves 
 but to those in sore need, with whom you sympathize, when the 
 philanthropist has withdrawn and the men of means no longer 
 voluntarily pour forth their millions? How do your self- 
 constituted advocates know what will happen when their Utopia 
 realizes itself, and the panacea of collective ownership is put to 
 the test ? Are you prepared to act on the vague promises of 
 declamation? What foundation is there for them? How do 
 
408 THINGS AS THEY AEE 
 
 they justify themselves by demonstrating the sufficiency of their 
 remedy ? Does it really prove anything after all that you are 
 bidden to groan at the man who "lolls in his carriage and 
 smokes his cigar " ? 
 
 And there is another matter which is worthy of a moment's 
 attention. The practice of those who advocate collectivism in 
 one form or another is to picture to their hearers the hateful 
 persons possessed of means exceeding their own as " vampires " 
 incessantly sucking their life blood, deriving their advantages 
 from the dishonest appropriation of that which their hearers are 
 engaged in producing. How far is this really true in this 
 Britain of to-day ? Of the two thousand millions worth of 
 annual opulence, or whatever the unascertainable sum total of it 
 may be, which are so unequally divided among the people who 
 live in this island and of which only a certain portion, possibly 
 inadequate, can be traced into the pockets of that class which 
 constitutes the great majority, what is the part that really levies 
 its claim on what is produced by British industry, and what part 
 derives entirely from investments in other countries of the world?* 
 Foreigners, we know, hold little or nothing of claim on our 
 industry, and but a negligible minimum of our State or municipal 
 indebtedness, the " dividends " on which form a solid portion of 
 what has in some shape to be provided yearly out of British labour. 
 But how about the other side of the account, that in which 
 the Means of people living here is invested abroad, the income 
 from which comes here by their choice, is spent here, provides 
 employment here, supplies benevolence and reaccumulates itself 
 as fresh surplus Means available for reinvestment in its turn ? 
 Does any man know the real proportion this part bears to the 
 entire aggregate, and what would be the result on the well-being 
 of the country if a futile attempt were made to seize this 
 incidentally as a part of the general plan of collective expropria- 
 tion ? Should not this problem be worked out quantitatively, 
 before you consent to use your powers to bring about a general 
 redistribution? Because if it turns out that in attempting to 
 seize and appropriate the part which arises here of what you call 
 riches, you lose the advantage that the whole community derives 
 from this foreign-made part, it will be awkward for all of us. 
 
 For from this point of view, it will be seen that the com- 
 munity as a whole, and yourselves as the majority of it, will 
 
 * P. 238, note. 
 
c. XXI.] PSEUDO- SOCIALISM 409 
 
 stand to lose and not to gain by embracing the programme of 
 your friend the orator, at first sight so alluring. The change 
 from a solvent to a bankrupt country takes place as soon as a 
 sufi&cient fraction of the assets on the credit side disappears. 
 
 Therefore, before you make up your minds, ask for more 
 authentic information about the respective proportions in which 
 the body of riches owned by your fellow-countrymen consists of 
 securities earning income abroad * which is brought here to be 
 spent by the detested " capitalist " who lives here, as compared 
 with what he gets from " all-British " industry. And when you 
 have ascertained something true about this you will be better 
 able to judge how far it will pay you to help frighten all these 
 Means away. 
 
 Of course the ostensible purpose of the pseudo-socialist is the 
 same as that of the single-minded coUectivist ; the abolition of 
 private property in Land and Capital, and in particular the 
 confiscation of the material requisites of production. In Chap. 
 XVIII., ante, have been shortly summarized the economic argu. 
 ments against the honest attempt to reorganize civilization on the 
 new equitable and unselfish basis of the systematic redistribution 
 of Means by confiscation. These arguments are applicable 
 equally to that other and more disingenuous "collectivism" 
 which is assumed as a cloak for individualistic acquisitiveness. 
 
 The mutual incompatibility of the standpoints of the " Social- 
 istic" and the " Anarchistic," which logically exclude each other, 
 does not operate to prevent the joining of their forces in the war 
 which they wage in common against the existing organization of 
 society. Even themselves do not appreciate the diversity of their 
 real objects. For of all the deceptions to which mankind is 
 subject, self-deception is that which imposes on the greatest 
 number. And human motive is so mixed and illogical, that not 
 only the privates in the army, but a great proportion of the 
 ofiBcers would find it difficult to determine by self-analysis to 
 which of the two regiments of the combined force they really 
 belong. The opponent of both experiences a still greater difficulty 
 in accurately discriminating between them. 
 
 * According to the Inland Bevenue Eetums, 1907, the total income from British 
 investments abroad was £73,899,265, more than £7,800,000 in excess of last year, 
 an increase unprecedented in one year ; but this is a mere estimate, impossible to 
 verify and probably far belovir the true figure, as can easily be shown. Even thi 
 much indicates a " capital " employed out of the country to the amount of three 
 thousand million pounds, increasing at a rapid rate. 
 
410 THINGS AS THEY AEE 
 
 But it is obvious that the theoretical and genuinely benevolent 
 " coUectivist " would be innocuous without the numerical backing 
 of the people who, unconsciously it may be, are attracted to his 
 doctrine by an individualist desire for greater possessions; — a 
 motive not necessarily malevolent in itself, nor unpardonable nor 
 even unnatural ; but essentially unsocial, because directed to the 
 destruction of the only sort of social system of which humanity 
 has any sort of experience at all. 
 
 To the present writer this impulse therefore seems one to be 
 condemned as tending to the disintegration and enfeeblement of 
 civilization. The notion that some essentially different organiza- 
 tion of society can be substituted, of which no one has ever had 
 any experience, and on the plan and structure of which no two of 
 its advocates are agreed, he refuses to entertain. 
 
 But to these vague conceptions of unrestful Utopianism the 
 stern doctrine of the orthodox individualism affords no answer. 
 Incapable of sympathy with the better aspirations of his 
 opponents, the uncompromising individualist is powerless to 
 confute the worse. In this respect it is that a quasi-socialist 
 may be better competent to deal with these questions : the 
 " Meliorist " who believes in the existing scheme of things, as 
 susceptible of improvement. The conditions of existence seem 
 to him not only capable, but visibly in the process of amelioration, 
 and his aim is, without violent revolution of the organization of 
 society, so to influence the purposes of men as to lead to efforts 
 to make the world better to live in by systematizing altruism, 
 and not by embracing a visionary collectivism. The sanest 
 method is assuredly to discriminate between the attainable and 
 the visionary, and endeavour practically and resolutely to make 
 the best of " things as they are." 
 
INDEX 
 
 A 
 
 AssTiNEKCE, "reward of " : a way of describing accumulation, 370 
 
 Acquisitiveness : the economic motive, 30 ; its varied synonyms, 30 ; the necessary 
 condition of economic activity, 31 ; manifests itself as the desire for means, 31; 
 often combined in the same individual with altruism, 321 
 
 Agkicultuke : instances of wealth-production by, 71 — 88 ; possible improvement 
 of, 260—261 
 
 Alien Immigration : a cause of worklessness, 206 ; and pauperism and crime, 208 
 
 AiTEtriSM : Chap. XVII., pp. 321—337 
 
 Analysis Quantitative : necessary to economics, 3, 14, 17, 44, 50 
 
 Anarchism : exaggerated individualism, 64, 223 ; confounded with collectivism, 
 219, 407 ; allied with collectivism, 219, 401, 403 
 
 Animal Products : derive little from human energy, 69 ; perishableness of some, 70 
 
 Appropriation : the origin of property, 37 ; always a creation of law, 37, 38 
 
 Appropriation of Land : necessary for its effective cultivation, 153, 260 
 
 "A Priori " Reasoning : inapplicability of to economics, 3, 6 
 
 Aristocracy : not necessarily the worst form of government, 378 
 
 Arts of Imposture : 398 
 
 Austin : 3, 159 
 
 "AvBRAGE Adult Male Time" ■ Hertzka's investigation of, 169 — 171 
 
 Axioms : parcimony of, necessary, 1, 2, 338, 339 
 
 B 
 
 Baoehot, Walter : 5, 15, 19, 40, 62, 126, 134, 174, 369, 392, 393 
 
 Bakounine : 339 
 
 Balance of Trade : a fallacy, 123, 307 
 
 Bastiat : 33, 370 
 
 Beer and Spirits : manufacture of, economic features, 103 — 107 ; as an example 
 of an "unproductive" industry, 104; eflfects of State regulation and inter- 
 ference on, 107 
 
 Benevolence {see also Altruism) : quasi-socialism of, 393 — 401 
 
412 INDEX 
 
 Benevolence, Private : danger of destruction of through socialistic legislation, 
 368, 407 ; some work better done by, 399 ; necessity for control of, 325—326 : 
 urgency of the problem of, 211, 226—227 
 
 Bentham : i, 338 
 
 Bequest : limitation of power of, 250 ; unforeseen results of charitable, 322—323 
 
 Berard, Victor : 141 
 
 Board of Directors : no substitute for a master mind, 393 
 
 BowLEY : 191 
 
 British Empire : true significance of, 198 
 
 Buckle : 213 
 
 Building Trades : economic features of, 113 — 117 ; effect of workmen's unions on, 
 114— 11§ 
 
 Bureaucracy : inseparable from any socialistic scheme, 341 ; ineffectiveness of, 
 355—360 
 
 C 
 
 Cairnes, Prof. -. 123, 124—125, 128, 173 
 
 Capital : meaning of the term, 33 — 36 ; limited only by means, 36 ; Smith's dis- 
 tinction between " fixed " and " moveable," 36, 405 ; a form of confidence, 35, 
 138, et seq. ; incorporated in land, 163 — 164 ; fugitiveness of, 190, 240 ; adequacy 
 of supply of, 238 ; British, invested abroad, 239, 349, 408 
 
 Carpenter, Edward : 1, 339 
 
 "Cash Nexus" : between employer and workman inevitable, 176 
 
 Charities : annual contributions to, in London, 323 ; will disappear under collec- 
 tivism, 368, 407 
 
 Cheapest Market : the doctrine of the, 84, 295 — 296 
 
 Civilization : how far desirable, 1 ; force the basis of, 209 ; evolution of, 213—215 ; 
 every system of quasi-socialistic, 383 
 
 Coal ; its exhaustibility, 54 ; a requisite of all industry, 55 ; necessity for preserving 
 our, 55 ; ought to have been reserved by the State, 56 ; exhaustion of will neces- 
 sitate readjustment of industry, 102 — 103, 287 ; -mining as a form of wealth 
 production, 53 — 55 ; a paradoxical contradiction to the general law of supply 
 and demand, 56 — 57 
 
 Cocoa Industry : economic features of, 85 — 86 
 
 Collectivism : (Chap. XVIII., pp. 338—366), doctrine of tested by instance of 
 wheat, 72—73 ; impracticable, 198, 366, 410 ; opposed to anarchism, 219, 409 ; 
 allied with anarchism, 32, 219, 407, 409 ; not necessarily wrong because it 
 infringes rights of property, 338 ; effect of in driving away capital, 349—408 ; 
 more logical than land-nationalization in some respects, 388 ; less so in others, 
 387 
 
INDEX 413 
 
 Colonization : a remedy for worklessness, 196, 198 
 
 Commerce : (Chap. VII., pp. 118—133), the process of the distribution of wealth 
 and production of means, 119 ; and also the transformation of means into 
 wealth, and vice versa, 119 ; the essential nature of the process, 120 — 121 ; differs 
 entirely from barter, 121, 308 ; essentially a world-process, 121, 122, 211, 309 ; 
 its incalculable intricacy, 123 ; international, necessary to a nation, 350 — 351 ; 
 but cannot be effectively carried on by, the State, 362 — 363 
 
 Commodities : identical with wealth, 20, 21 ; production of, avails nothing without 
 commercial demand, 846 
 
 Companies : the institution of, 137 ; often created to supply means of investment, 
 52 ; inherent defects of, 141 ; financing of, 141 ; their wastefulness, 142 ; their 
 function of getting into debt, 142 — 143 ; watering of capital by, 143 — 145 ; 
 the births and deaths of, 146 — 150 
 
 Company Finance in America : 143, et seq. 
 
 Compensation : or confiscation, an alternative, 388 ; State's power of, limited by 
 fugitiveness of means, 388 
 
 Confidence : lack of, the cause of worklessness, 191 — 192 ; and of financial 
 difficulty, 140, 373, 389 
 
 Confiscation : or compensation, an alternative, 388 ; the only possible method of 
 collectivism, 388 ; whether by expropriation or over-taxation immaterial, 389 
 
 Conscription : a form of poll-tax, 234 ; working of, 234 — 235 
 
 Conservatism : of landowners a hindrance to agriculture, 261 ; of property a 
 hindrance to collectivism, 360, 407 
 
 Constitution : of a nation is a device to avoid employment of force, 210 
 
 Consumer : not always a producer, 290 ; aud producer, distinction between illusory, 
 
 113 
 " CoNTRAT Social " : the true, 218 
 Corn Laws : 283 
 Corruption : in connection with taxation, 232 ; in Germany, 310 ; danger of from 
 
 protective tariffs, 310, et seq. 
 
 Cost of Production : relation to value and price, 41—42, 59, 61, 63, 69, 70, 72, 75, 
 81, 83, 85 ; greatly influenced by State action, 107 
 
 Cotton Industbt : economic features of, 83, 101 — 103 ; effect on, of commercial 
 
 devices, 84 
 Cultivation, Intensive : of land, difficulty of instituting in Britain, 260 ; limits 
 
 of additional productivity from, 353 
 
 D 
 Dawson, "W. H. : 313 
 
 Debt, National : limits to security of, 287 {see also Indebtedness, State) 
 Definition : necessity for adequacy of, 18 ; must be rigid, 19 
 Demand : and supply, inter-relation of, 45, 49, 57, 59, 61, 66, 70, 81, 175, 238 ; the 
 ultimate determinant of value, 41 — 42 
 
414 INDEX 
 
 Demookaot : not necessarily preferable to aristocracy, 378 ; tendency of, to pseudo- 
 socialism, 403 
 
 Destruction : of existing institutions not necessary to reform, 339 — 340, 408 — 409 
 
 Deteriobation : of all wealth and means except land, 390 
 
 •Diamonds : desirability of, 57 ; of temporary value only, 58 ; the paradox of their 
 indestructibility, 59 
 
 Diamond Mining : as an example of wealth production, 57 — 60 
 
 Dickinson, L., 2 
 
 Diminishing Returns : law of, 164 — 165, 392 
 
 Distress : landlord's right of, a necessary power, 168 
 
 E 
 
 Economics : definition of, 20 ; relation of to ethics, 86, 252, 374 ; is a science of the 
 ephemeral and conditioned, 48, 317 ; general principles in, to be misti-usted, 3, 
 60, 227 
 
 Education : and instruction, distinction between, 196 
 
 Elimination of Unfit: Nature's remedy for worklessness, 192 • 
 
 Empire, British : tnie significance of, 198 
 
 Employment : necessity for extending, 129, 199, 201 ; in production limited by 
 market, 172 ; effect of demand on, 257 ; possible increase of, by taxing imports, 
 202—204, 290 
 
 Evolution, Social : true aspect of, 212 ; possible results of, unhindered, 215 — 217 
 
 Excise Duties : 268—270 
 
 Exhaustibilitt • of all sources of wealth and means, 12, 53 ; of coal, 54 
 
 Exodus of Capital . 239, 349, 408 
 
 Expansion of Markets : desire for, the cause of wars, 192, 227 
 
 Expenditure : increase of national and municipal, inevitable, 288 ; but must be 
 sparingly incurred, 30, 391 — 392 
 
 Exports : relation between imports and, 123, 307 ; depend on foreign demand, 318 ; 
 British, to Germany, 309 
 
 Export Duties : not really taxation of a community, 268 ; only successful in 
 special cases, 268 ; in the nature of a toll taken by the State, 265 
 
 F 
 
 FAVircBTT, Henry : 153, 237, 242, 257, 269 
 
 Finance : (Chap. VIII., pp. 134 — 150 inclusive) the process of means allocation, 
 134 ; as affected by limited liability, 137 ; functions of, 138 ; as applied to 
 companies, 141 ; of American companies, 143 et seq. ; sterility of certain forms 
 of, 144 ; parasitism of, 145 ; American, as contrasted with English, 150 
 
INDEX 415 
 
 Financial Collapse : instances of, 140 ; a direct result of loss of confidence, 140 ; 
 periodicity of, 148 
 
 Fluidity of Means : attainable by finance only, 145 
 
 Food Pbodtjots : taxation of, desirability and possibility of doubtful, 280 
 
 Force : the ultimate basis of society, 209 
 
 France, Anatole : 227 
 
 Freehold in Land : suggested abolition of, 378—382 
 
 Free Trade : (Chap. XVI., pp. 287 — 320) and Protection equally parasitic, 79 ; 
 arguments for and against as a cure for nnemployment, 193 ; evanescent effect 
 of, and Protection alike, 276 ; and Protection, analysis of the controversy, 
 Cliap. XVI., 287—320 
 
 G 
 
 Gambling : an element in industry, 85 — 86 
 
 General Principles : fallaciousness of, 3, 339, 383 — 384 
 
 George, Henry : 8, 97, 153, 161, 173, 253, 257, 279, 334, 344, 360, 369, 370, 371, 
 373, 375 
 
 Germany : effect of State action on national welfare in, 216 — 217 ; corruption in^ 
 in respect of protected industries not serious, 310, 315 
 
 Ginseng : an example of extreme monopoly, 86 — 87 
 
 Glucose : economic features of production of, 87 ; an example of cheapness, 88 
 
 Gold : mining for as an instance of wealth production, 64 ; largely produced by 
 labour of inferior races, 65 ; when produced loses characteristics of wealth by 
 coinage, 65 ; has an intrinsic price, 65 
 
 Government : tendency to increased, 223 ; local, origins and development of, 
 221—223 
 
 H 
 
 Hertzka, Theodore, 169 
 
 Housing : insufficiency of, 166 — 167 ; how affected by rates, 258 — 259 ; by exactions 
 of labour associations, 114 — 115 
 
 Hut Tax : a form of poll tax, 236 ; not altogether dissimilar to local "rates'' in 
 
 Britain, 243 
 
 I 
 Immigration, Alien : effect of on unemployment, 206 — 208 ; effect of on poverty 
 
 and crime, 208 
 
 Imports : relation between exports and, 123 — 204 ; of manufactures (statistical 
 table), 203 ; extent of, 203—204 ; the four classes of, 270—271 ; from Germany, 
 309 
 
 Import Duties : effect of in impeding commerce, 202 ; general consideration of, 
 
 270 286 ; incidence of in certain cases, 273, 279 ; on raw material, 271 ; on 
 
 manufactured goods, practicability of, 272 ; effect of on price, 276 ; in what 
 respects beneficial or otherwise, 305 
 
 Incentive to Accumulate Means : as affected by Socialism, 354 
 
416 INDEX 
 
 Incentive to Woek : as affected by Socialism, 354 
 
 Incidence of Taxation : difficult to trace in all cases, 230, 257 ; in the case of 
 certain import duties, 273, 279 ; in case of direct taxation, 230, 231, 246, 258, 
 266 ; how affected by mononesis or monopoly, 282 
 
 Income Tax : 236 — 243 ; ultimate incidence of, doubtful, 236 et seq. 
 
 Increase op Employment : urgency of the problem, 129, 200, 316, 319 
 
 Increase of National Expendituke : inevitable, 288 ; whence to be obtained, 
 288—290 ; to be sparingly incurred, 30, 391—392 
 
 " Increment, Unearned " : 264 et seq. 
 
 Indebtedness, State : municipal incurring of, as a method of investment of means, 
 137 ; duration of, 225—226, 245—247, 391—392 ; is not the creation of wealth, 
 30. 392 
 
 Individualism ; limitations on, 212 ; pure, a chimerical idea, 384 ; the only mode 
 of accumulating means, 356 etseq. ; indispensable to charity, 400 ; and education, 
 196 
 
 Industrialism, State : one aim of quasi-socialisra, 384 ; limit of desirability of, 
 384 — 387 ; failure of attempts at in manufacture, 356 et seq. 
 
 Industries : decline of certain, 205 — 206 ; proceeds of those appropriated by the 
 State, 389 
 
 Industry {see Wealth Production) : conditions of, how affected by State action, 
 78, 111—113, 210, 342 
 
 Inheritance : British laws of, 248 — 250 ; susceptible of beneficial modification, 
 250 
 
 Instruction : difference between education and, 196 — 197 ; a function of the State 
 as distinguished from the municipality, 334 
 
 International : the, 180 
 
 Intern ATioNALiTY : of wealth and means, 13 — 15 ; of all phenomena of production 
 and distribution, 26, 27, 65 — 150 pasdm, 362 ; of economic science, 15, 16 ; of 
 wheat supply, 71 ; of commerce, 121, 122, 211, 309 ; of finance, 28, 138 et seq. ; 
 of values, 41, 42 
 
 Intoxicants : production of, economically considered, 103 — 107 
 Intrinsic Value : an absurd notion in every case, 39 
 Investment : analysis of process, 138 et seq. 
 
 Iron and Steel : production of, 62 ; production of articles made from, 107 — 111 ; 
 increase of imports of tending to increase worklessness, 204 
 
 J 
 
 Jbvons, Stanley : 54 — 55 
 
 L 
 
 Labour {see Work) : employs capital, 350 
 
 Labour Notes : ooUectivists' suggestion of, 90 ; uselessness of for commerce, 350 
 
 Laissez-faieb : doctrine of, 64 215 ; a modified anarchism, 64 j has been practically 
 abandoned, 288 
 
INDEX 417 
 
 Land (Chap. IX., pp. 151 — 167) : value of, 151 ; not to be confounded with Wealth 
 or Means, 151 ; national not international, 151 ; property in derived from the 
 State, 152 ; communal ownership of, 153 ; must be individually appropriated, 
 153, 260 ; but a time limit to appropriation desirable and practicable, 379 ; lies 
 at the mercy of the State, 157, 387 ; can therefore be the subject of taxation, 
 387 ; limit to this, 158 
 
 Land Gkabbeks : in California, 376 
 
 Land Nationalization : various schemes of, 253 ; justice and expediency of, 
 253 — 254 ; effect on security of other property, 373 ; means national bankruptcy, 
 376 
 
 Land Owners : conservatism of a hindrance to agriculture, 261 
 
 Land Values : rating of, 265 et seq. 
 
 Lassalle : 253 
 
 Law of Settlement : object and effect of, 260 
 
 Lawyers : resistance of to reform of land laws, 379 
 
 Lead : price and values of, 67 ; relation to silver, 67 
 
 Legislation, Social : unexpected effects of, 189 ; anti-individualistic character of 
 recent, 288, 396 
 
 Licence for Trade : charges for are a modified form of poll-tax, 235 ; to vend 
 intoxicants as a State monopoly, 106 
 
 Linen Industry : economic aspects of, 93 — 97 
 
 Local GovEENiiENr : origins and development of, 221 — 223 ; corruptions incident 
 
 to, 222 ; taxation for purposes of, an evil, 257 — 263 ; and is on the increase, 
 287—288 
 
 M 
 Macculloch : 309 
 
 Maine : 154 
 
 Mallock, W. H. . 130, 338 
 
 Malthtjs : 7 
 
 Man : versus the State, Chap. XII., 209—229 inclusive 
 
 Manufactttring Industries : economic aspects of, 89 — 113 ; moderate protection 
 
 of, desirable, 304 
 Marshall, Prof. A. : 42, 101, 173, 275, 281, 282, 283, 316-320, 369 
 Mabx, Kael : 10, 42, 75, 105 
 
 Master Mind : need for in industrial and commercial undertakings, 174 ; absent in 
 State Departments, 393 
 
 Materials, Eavt : risk of interfering with free importation of, 302 ; cannot be 
 beneficially taxed, 302 
 T.A. E E 
 
418 INDEX 
 
 Means : internationality of, ]3, 14, 24; definitioa of, 21 ; as distinguished from 
 Wealth, 21, 22 ; are an appropriation of future Wealth, 22, 136, 388 ; an emhodi- 
 nient of confidence, 24, 140, 388 ; increased accumulation of, how far desirable, 
 129, 215 ; complete exchangeability of, 135 ; dormaTit, 136 ; embodied in State 
 and municipal securities, 137 et seq. ; fluidity of obtained by finance, 145 ; 
 fugitiveness of, 157, 240, 349, 405 ; land an exception to fugitiveness of, ] 57 ; 
 benefits of waste of, 238 — 239 ; distribution of between rent, wages and interest, 
 369 ; State appropriation of necessarily limited, 387 ; and ineffectual if 
 exorbitant, 243 
 
 Mechanical Invention : intensifies specialization of industry, 100 — 101 ; a factor 
 of worklessness, 188 ; must be protected by monopolies, 109 
 
 Meliorists : " conservative qnasi-socialists," 340, 410 
 
 Mekoantile Theory, The : 123 
 
 Metallic Articles : imports of (statistical table), 204 
 
 Mill, John Stuart: 5, 7, 9, 12, 42, 72, 75, 98, 100, 101, 104, 123, 125, 153, 204, 
 212, 223, 294, 369 
 
 Money : not Wealth, 20, 23, 306 ; Means in the active form, 136 ; the economic 
 foundation of all civilization, 346 
 
 MONGREDIEN, AUGUSTUS: 124 — 126 
 
 MONONESIS : derivation of word, 46 ; meaning of term, 46 ; parasitism of, 47 ; a 
 national and local question, 188 ; an origin of worklessness, 188 ; effect of on 
 incidence of indirect taxation, 282 ; can be combated by combinations of work- 
 men and employers, 361 
 
 Monopoly : nature of, 45 ; as opposed to mouonesis, 46 ; effect of on incidence of 
 indirect taxation, 282 ; danger of, a real argument against Protection, 311 ; of 
 public service and supply, 386 
 
 Municipal Organization : nature and origin of, 221 
 
 N 
 
 Nation : not capable of possessing Wealth or Means, 24, 25 ; indeterminateness of 
 the word in economics, 25, 306 
 
 Nationalization of Land : see Land Nationalization. 
 
 Natural Man, The : conception of, 11 
 
 Nature : influence of on social evolution, 213 
 
 Necessity : the best reason for political change, 287 
 
 Nicholson : 174, 369 
 
 Non-tax Revenue : 268 
 
 O 
 
 Old Age Pensions : 395 
 
 Organization of Charity : necessity for better methods of, 326 — 336, 410 
 
 Organization of Service and Supply : 385 
 
INDEX 419 
 
 Over- ACCUMULATION • effects of, on general welfare, 251 
 OvEKCKOWDlNG : in town and country, 394—396 
 
 Pakasitism : as exemplified by sugar industry, 78, 79 ; considerations as to, 79 ; 
 concomitant both of Free Trade and Protection, 79 ; a general law of all life, 
 79 ; on finance, 145 ; on charity, 331 
 
 Patent Monopolies : as affecting industry, 109 
 
 Paterson: 328—329 
 
 Pauperization; danger of from benevolence, 396 
 
 Pensions, Old Age : fairness of the principle of, 226 ; some considerations on, 
 395 ; n eed to differentiate between deserving and undeserving cases, 398 — 399 
 
 Pbrishablesess of Animal Products: economic result of, 70 
 
 Personalty, Laws of : should apply equally to land, 379 
 
 Pessimism : a result of the a priori economics, 10, 11 
 
 Petroleum : an ins tance of wealth production, 51 ; the share of labour in pro- 
 ducing, 51, 170 
 
 Policy, Fiscal : must always be tentative and experimental, 286 
 
 Politics : true subject-matter of, 209 
 
 Pollock : 154 
 
 Poll-tax : injustice of, 234 — 236 
 
 Possession : the root of property, 377 
 
 Prairie Value : impossibility of defining, 264, 372 ; absurdity of conception of as 
 applied to Britain, 372 — 373 
 
 Preferential Tariffs : illusory nature of arguments for, 298 — 302 ; unwisdom of, 
 319 
 
 Pre-requisites of Production : 92 ; as an ingredient of cost, 96 
 
 Price : definition of, 44 ; not susceptible of generalization, 44 ; varies with the value 
 of gold, 44 ; of wheat or bread, a fallacious criterion, 46 
 
 Principles, General : fallaciousness of, 3 ; but some enunciation of at times 
 necessary, 339 
 
 Production : limited by commercial demand, 200 
 
 " Productive and Unproductive " : absurdity of distinction as applied to 
 industry, 104—105, 199—200, 387 
 
 Profits : the wages of the head workman, 369 
 
 Prohibition of Imports : how far necessary in a colleotivist State, 352 
 
 E E 2 
 
420 INDEX 
 
 Pkoperty : definition and characteristics of, 36, 37 ; essentially a colloquialism of 
 vague denotation, 36 ; temporary nature of all, 37, 346 ; meaning of as applied 
 to land, 151 — 157 ; in land, obtained by " theft," 376 ; laws concerning the 
 degree of State sanction of individual appropriation, 37, 38, 347 
 
 Pkotection (Chap. XVI.) : and Free Trade, equally parasitic, 79 ; poverty of 
 argument for and against, 193 ; some results of, 202 ; the general practice of 
 civilized nations, 278 ; within the Empire unworkable, 299 — 301 ; danger of 
 monopoly a real argument against, 311 ; qualified measure of, considered, 319 
 
 PsEUDO-SooiALiSM (Chap. XXI.) : definition of, 402 
 
 PsETTDO-SooiALiSTS : 32, 393, 402 
 
 Q 
 
 ■QffAsi-SooiALisM (Chap. XX.) : distinct from collectivism, 383 ; illogical but 
 expedient, 388 ; in respect of industry and service, 343 ; in respect of benevo- 
 lence, 393—401 
 
 Eadium : an instance of wealth-production, 61 ; human energy concerned infini- 
 tesimal, 61 
 
 Railways : ephemeral nature of, 391 
 
 Rate op Wages : see Wages. 
 
 Rates : efi'ect of on employment, 205 ; on houses, 243 — 244 ; some considerations 
 on, 254—267 ; entire system of needs re-casting, 266 ; should not be had recourse 
 to for national objects, 267 
 
 Ee-distribution op Land : doubtful benefit of, 367 
 
 „ OF Means : as a remedy for unemployment, 190, 407 
 
 „ OP Wealth : an inaccurate expression, 339 
 
 Reliep Works : futility of, 200 — 201 ; unproductiveness a requisite of, 201 ; 
 limited extent to which available for distress, 201 
 
 Rent : theory of, 8, 9, 370 ; general consideration of, 159 — 167 ; definition of, 160— 
 162 inclusive ; must be enforced, 160 ; arises only in part from land itself, 162 ; 
 not a fixed burthen, 162 ; derived from Means not Wealth, 162 ; a variety 
 of interest, 163 — 164 ; distress for, 165 — 166 ; excessive, eflect of on certain 
 industries. 111, 205 ; State appropriation of, no cure for low wages, 370 — 371 
 
 EicARDO : 6, 101, 124, 173 
 
 RiOHT to Live : meaning of the expression, 201 ; allowed by British law, 365 
 
 "Right to Work": a fallacious expression, 201, 365; not recognized by British 
 law, ihid. 
 
 Risk : as an element of cost, 369 
 
 Robertson Bell : 81 
 
INDEX 421 
 
 Rubber Industry : economic features of, 80 — 81 ; prospects of alternate fall and 
 rise in price, 81 
 
 Rural Districts : exodus from, 259 ; overcrowding in, 394 ; effect of rates in, 259 
 
 S 
 
 Sentimentalism : in economics, 1, 11, 12 
 
 Service and Supply : municipalization of public, 343 
 
 Shaw, G. B. : 30, 31, 329, 392 
 
 Shipbuilding : economic features of. 111 — 113 ; effect of State action on. 111 — 113 ; 
 an example of preference for the inferior product, 111 — 112 
 
 Silk Industry : characteristics of, 98 
 
 Silver : as an instance of wealth-production, 66 ; curious economic relation with 
 lead, 67 
 
 Sinclair, Upton : 143, 175, 223—228, 261, 314, 345—349 
 
 Smith, Adam : 41, 123, 175, 200 
 
 Socialism : properly so-called, 339 ; a general definition of, 341. See also Collec- 
 tivism ; Land Nationalization ; Pseudo-socialism ; Quasi-sooialism, etc. 
 
 Space : the first pre-requisite of industry, 92 ; taxation of, 113, 254 — 255 
 
 Specialization of Industry : effect of mechanical invention on, 100 — 101 ; impedes 
 transfer of labour, 101 ; of invention, 110 
 
 Spencer, Herbert : 212 — 215 
 
 Spirits, Beer and : manufacture of, economic features, 103 — 107 ; as an example of 
 an unproductive industry, 104 ; effects of State regulation and interference on, 
 107 
 
 State, The : definition of, 28 ; is a trustee, 28 ; its appropriation of Wealth and 
 Means, as a creator of indebtedness, 29 ; the ultimate owner of land, 152 ; 
 influence of on distribution of wealth, 210 ; opposite theories of the function 
 of, 217 ; a bad substitute for the individual for commercial and industrial 
 purposes, 356 — 365 ; long-lived compared with industrial organizations, 391 
 
 State Benevolence : annual amount of in London, 325 ; a doubtful good, 
 336 — 337 ; quasi-sociaUsm of, 384 
 
 State Indebtedness : as a method of investment of means, 137; duration of 
 225 — 226 ; not an element of wealth, 30, 392 ; but of enslavement of futurity, 
 137, 221 
 
 State Industrialism : as contemplated by quasi-socialism, 384 ; as regards 
 "competitive enterprises," 385 — 386; as regards public service and supply, 
 385 
 
 SuGAP. : an instance of the effect of mononesis, 47 ; economic features of production, 
 76 — 79 ; specially affected by State interference, 78 ; consequent parasitism of 
 industry, 78 ; could be produced in Great Britain, 277 ; taxation of according 
 to Free Trade principles, 278 
 
 Supply : " waits on demand," 175 
 
422 INDEX 
 
 T 
 
 Tariff Kefoum (Chap. XVI.) : necessity an argument for, 287. See also 
 Protection ; Free Trade ; Import Duties ; Taxation. 
 
 Taxation: influence of, on conditions of industry, 113 ; a factor in demand, 211 ; 
 results of often undesigned, 220 ; distinction between direct and indirect 
 mainly verbal, 230 ; unfairness of iu practice, 263 ; need not impair wealth 
 production, 307 ; limits of productiveness of, 389 ; direct, increase of, 231. 
 (see also Income Tax) ; indirect, the more protective the less productive, 274 ; 
 uncertainty of real incidence of, 276 ; principles on which it has been based 
 in Britain, 277 ; in some cases falls only on the consumer, 278 ; of food 
 products, 280 ; of articles producible in the country, 291 — 293 ; local, 221 
 
 Textile Goods : imports of (statistical table), 204 
 
 Textile Industries : generally, 93 — 103 
 
 Thrift : pseudo-socialists' abhorrence of, 407. See also Acquisitiveness. 
 
 Tin Mining : as an instance of wealth production, features of industiy, 61 et seq. 
 
 Trade Unions : 180 ; compulsion by, inevitable, 181 ; a necessary organization, 
 182 — 183 ; national as opposed to international, 182 ; mistakes of and their 
 penalty, 183 ; effect of, on wages, 196 ; necessary functions of, 397 
 
 Transfer of Employment and Capital: difficulties in respect of, 101,294 — 295, 
 317 
 
 Transfer of Land : excessive taxation on, 233 ; should be simplified, 379 
 
 U 
 
 Unemjloymbnt : "margin of," 190. See Worklessness. 
 
 Unproductive Labour : no distinction to be drawn between productive and, 104, 
 199, 387 
 
 Utilitarianism : 4, 5 
 
 V 
 
 Value : definition of, 38 ; is subjective and varying, 38 ; relation of to cost of pro- 
 duction (see Cost of Production) ; has no ascertainable superior limit, 39 ; 
 action of demand and supply on, 39 ; not intrinsic, 39 ; the effect of confidence- 
 on, 40; "average," merely notional, 43; of wheat, consideration of, 76; a 
 synonym for desirability, 87, 88 ; an essential characteristic of Wealth, 215 ; 
 of property in land, 151 ; "natural " of land an unrealizable conception, 371 
 
 ViNOGRADOFF : 154 
 
 Vis Inertije : in economics, 62 
 
 W 
 Wages : 172 — 183 ; tendency to equalization of, 177 ; protection or internationaliza. 
 tion of, 178 ; entire equalization of improbable, 180 ; of skilled workmen, 
 tendency to increase, 191 ; possible increase of by partial protection, 204 ; 
 effect of demand on, 257 ; the insufficient, as affecting agriculture, 260 ; 
 general, not affected by redistribution of land, 369 
 
INDEX 423 
 
 Wages Fund : fallacy of the conception, 6, 257 
 
 "Waks : economic reasons for, 192, 227 ; a potent economic factor, 227 — 228 ; rarity 
 of decisive, 228 
 
 Wealth : internationality of, 13, 14, 24 ; definition of, 20, 350 ; distinguished from 
 Means, 22, 346, 405 ; of a nation, an ambiguous term, 24 ; economic identity of 
 all, 374 
 
 Wealth Production : instances of (Chaps. IV., V. and VI.) ; exhaustive analysis 
 of, impracticable, 50 ; instances given intended as sources of general knowledge 
 of economic sequences, 51 
 
 Webb, Sidney : 78 
 
 Wells, H. G. : VI., 143, 175, 253, 321, 341, 342, 343, 344, 346, 377, 384, 385 
 
 Wheat : economic features of the supply, 71 — 74 ; claim of " labour ' ' to all wealth 
 examined in respect of, 72 — 73 ; irrespousiveness of supply to demand in respect 
 of, 74 ; cost of production as determining value, 75 ; small duty on advisable, 
 281—282, 301 
 
 Woollen Industry : characteristics of, 99 — 100 
 
 Work (Chap. X., pp. 168 — 186) : average daily duration of, 169 ; proportion of, 
 which is productive, 172 ; double aspect of, 177 ; value and price of, 177 
 
 Working Glasses : so-called, their stake in the country the greatest, 406 
 
 Worklessnbss (Chap. XL, pp. 187 — 208) : different classes of, 187 ; chronic and 
 acute, 188 — 189 ; produced by State regulation, 189 ; due in part to advancing 
 age, 189 ; arising from transfer of industries, 189 ; not remediable by redistribu- 
 tion of means, 190, 407 ; remedies for, 194, 201 — 208 ; genuine and otherwise, 
 199 ; relief works no remedy, 200 ; import duties, effect of on, 202 — 206 ; 
 increased by heavy rates, 204 — 205 ; and by alien immigration, 206 — 208 
 
 Workmen : unskilled, problem of, 194 — 198 
 
 BBADBTJBY, AQNEW, & CO. I.D., PRINTERS, LONDON AND TONBRIDGE. 
 
Hate (InlUgc of Agriculture 
 ^t (Sornell HttinBraitg