UNIVERSITY OF I SOCIAL REFORM SOCIAL REFORM AS RELATED TO REALITIES AND DELUSIONS AN EXAMINATION OF THE INCREASE AND DISTRIBUTION OF WEALTH FROM 1801 TO 1910 BY W. H. MALLOCK AUTHOR OF " A CRITICAL EXAMINATION OF SOCIALISM,' ETC. LONDON JOHN MURRAY, ALBEMARLE STREET 1914 ALL RIGHTS nESEKVED Sherratt and Hughes, Printers, London and Manchester. J H a> i ^.2. 'v^ PREFACE. K n v>j'f^ This work, which deals with " social reform " as connected mainly with the production and distribu- tion of material wealth, aims at exposing certain errors, so profound as to be fundamental, which form s^ the primary assumption of " reformers " of the more ^. extreme type, with regard to both these questions ; and to assist sober-minded politicians and others, in '\) unmasking these errors, and combating the proposals based on them. For this purpose use has been made, for the first time, of specific official information, the existence of which appears to have been overlooked, relating to the amount and distribution of incomes at the begin- ^ ning of the nineteenth century. McCulloch believed ^ that the records here in question had been destroyed. ^ At the same time he regarded them as so essential to a true understanding of conditions at that time, that he compared their supposed destruction to the loss caused by the burning of the Great Alexandrian Library. They are not quoted by Porter, Levi, Dudle>' Baxter, or Gififen, or in any of the encyclopedias published during the course of the nineteenth century. Two copies were found b)' the author in the University Library of Cambridge. They enable certain broad comparisons to be made, which would otherwise not be possible, between pre.sent conditions, and those of more than a hundred years ago. At the same time the reader must be reminded 21v'5'7'8 vi. PREFACE that, in respect both of the period just mentioned, and of the present, the figures available, though substan- tially true to fact, cannot be taken as possessing (except in a few cases) mathematical exactitude. It is specially desirable to note this with regard to the present time. In the first place, the most recent statistics do not all of them relate to the same year. The latest comprehensive returns with regard to wage- rates relate to the years 1906 and 1907; the Census of Production relates to the year 1907 ; the latest census figures {i.e. Census of the Population), with regard to certain particulars, are, at the present moment, those for 1901. The Reports of the Income-Tax Commissioners never relate to the actual year of issue. Whilst these pages were in the press, the Commissioners issued new details, by which to a very slight degree those here given might have been modified. It must further be noted, in respect of the total amounts of great masses of income, and averages of individual incomes within certain limits, that these are affected from year to year by general conditions of trade, and increases or decreases in the percentage of unemployment. Yet again, it should be noted that in calculating the aggregate income of the wage- earning classes on the basis (as has been done here) of ascertainable wage-rates, and also of the total in- come produced, as shown by the Census of Production, the sum arrived at is not only liable to deductions on account of unemployment, but may be reasonably subject to addition in respect of public moneys, em- ployed for the benefit of that class alone — for example, on education, and payments of old-age pensions ; whilst it is reasonably contended by many eminent statisticians that account should be taken of the value of the unpaid domestic services of some millions of females, who perform such services, but do not work for wages. Were these last included in the aggregate PREFACE vii. income of the wage-earners, the figures here given would be increased by about 6 per cent. The above facts being considered, it may be said generally of the figures given in this volume, that they possess, from one point of view, the kind of accuracy obtainable in the block plans of an architect, or a surveyor; and that they possess, from another point of view, both the accuracy and uncertainties of defini- tion, characteristic of a non-instantaneous photograph of moving objects. Their substantial and general truth, however, is not thereby affected. January, igi^.. CONTENTS. BOOK I. Chapter I- Estimates of Social Conditions, as Distinct from Schemes and Theories of Reform. -Canses Conducive to the Popularisation of False Estimates - - - - 3 Chapter II- The Sense of Social Grievance, largely Dependent on Beliefs, as Distinct from Experience - - - s Chapter III- Social Grievances in the Eighteenth Century -Their Rela- tion to Beliefs in a Non-Historical Past - - ^3 Chapter IV. - t> i Social Grievances in the Nineteenth Century .-Their Rela- rion to False Versions of History, which are now Exploded.-Two Examples : Production ^r Exchange as Contrasted with Production for Use. -The Alleged Extermination of the Middle Classes by Capitalism 23 BOOK II. Chapter I- The General Thesis of Social Reformers ^^ J'^f.^'y-^ ^' ct;^ain outstanding Figures by w^^ch its RelaUon io Truth may be Tested. -Number and Grouping o Incomes exceeding ;C6o a Year, in the Years x8oi and 1910 ---"■" Chapter II- - 61 A Pictorial Comparison - Chapter III- The Aggregate of Incomes exceeding ;£5,ooo a Year and thf proportion borne by this to the ncome of the Nation as a whole, in the Years 1910 and 1801 - 75 Chapter IV. The General Causes of Misconception vvith regard to the Distribution of Wealth. -Delusion due to the Imagj^ nation --"'"' o X. CONTENTS Chapter V. Imaginative Delusions as to the Distribution of Wealth, fostered by the Grotesque vStatistics of Agitators. — Statistics of the Fabian vSociety Examined by way of an Example 98 BOOK III. Chapter I. A General Survey of the National Income, and its Distri- bution into Incomes Exceeding and not Exceeding ;(;i6o a Year. — The two main Statistical Misrepresenta- tions of Agitators. — Grotesque over-statements of the Total subject to Income-tax. — Income from Abroad. — The Total Home-produced Income of the Country. — The Average per Head of Home-produced Incomes, respectively vSubject and not vSubject to Income-tax 113 Chapter II. Detailed Examination of the Total Amount, Number, Origin and Distribution of Incomes not Exceeding ;^i6o a Year 131 Chapter III. Detailed Examination of the Income of the " Richer Classes," or those subject to Income-tax. — Total Amount and vSources - 152 Chapter IV. Examination of the Incomes of the " Richer Classes," continued. — The number subject to Income-tax as indicated by Enumerated Assessments, and the number of Houses above certain Values. — The Grouping of Assessed Incomes as indicated by the number of Houses of various Values.— Details as to Distribution of Incomes, small and large, vSummarised - - 166 BOOK IV. Chapter I. The Doctrine of Modern Reformers, that Modern Poverty is mainly due to the inordinate growth of Wealth. — Two contradictoiy versions of this Doctrine — those of Marx and George.— The grotesque futility of both versions shov;n by the Statistical History of the United Kingdom, as summarised in the preceding Chapters 1S7 CONTENTS xi. Chapter II. The EflEective Increment of Wealth, relatively to the Population since the Year iSoi. — Enormous numerical Increase of Middle Class Workers. — The Decrease in relative numbers, and enormous Increase in Wages of Manual Labourers - 211 Ch.apter III. The Fallacious Assumptions of Refonners as applied to particular questions. — The Question of Land-rent generally. — The Question of "Unearned Increment." — The Agricultural Question 232 CH.4PTER IV. Current Ideas of Reformers as to Wages, Hours, and Profits. — Recent Demands with regard to a general Minimum Wage. — The Value of the total product per head of Employees in different Industries. — vSmallness of the general margin of Profits. — Particular Examples. — Wild Ideas as the Ratio of Profits to Wages. — The way to Increase Wages generally is to Increase the Total Product 252 Chapter V. The Self-contradictions in which Reformers are involved, owing to the Fallacy' of the Assumptions with which they start. — Land-rent, Unearned Increment, Profits on the Use of Capital, Profits on the Men's Invest- ments, and simultaneously alleged Starvation and rude Health of Agricultural Labourers - - - 271 Chapter VI. Total of incomes and recipients. — Eftect of Socialism on income from abroad. — Specific values. — Professional services. — Fancy values. — Wages and savings. — Equalisation of incomes not practical politics. — "Bet- ter distribution." — Analysis of incomes. — " Transfer- ences." — Luxuries. — Effect of an equal division - 281 BOOK V. Chapter I. Social Grievances, as due to facts and beliefs, reconsidered. — Survey of Beliefs in Theories, as Distinct from xu. CONTENTS Beliefs relating to concrete Facts.— The Influence of Illusory Theories, commonly called " Socialistic," mainly due to False Beliefs as to Fact - - - 315 Chapter II. Causes of the Belief that an increasing proportion of modem Wealth is being appropriated by one small class, reconsidered.— The Influence of modern Wealth as a spectacle.— The lighter and graver sides of the Illusion thus produced.— The Popularisation of imposs- ible Standards and Expectations. — Reasonable Expec- tation limited by the possibilities of Production. — Recent recognition of this fact by certain Reformers. — Their Exaggerated Interpretations of it - - 331 Chapter III. The immediate Possibilities of Increased Production con- sidered. — Allegations by certain Reformers as to enormous waste by Armaments, by competition in Manufacture, and especially by needless Advertise- ment. — Extravagance of these Estimates shown by detailed Facts.— Varying but gradual Increase of National Income during difterent periods. — Contem- poraneous Increase in Income of Working Classes.— The latter impossible without the former.— Demon- stration of the closeness of their connection. — Fallacy of the Idea that sudden and sensational Increases can be achieved in either.— "Unrest" as the result of false expectations 342 Chapter IV. Welfare and Income.— How the effective value of earnings is increased by general improvement of the conditions under which they are earned and spent - - - 360 Chapter V. Conservatism and the Rights of Property.— Limitation of such Rights an Essential Condition of their Existence. — Similar Limitations of a man's property rights in his own labour power 375 BOOK I. INTRODUCTORY. On the Wide Acceptance, in the Past, of Errors now Repudiated, as to Social Conditions and Tendencies. CHAPTER I. The phrase, " Social Reform," is employed in the present volume in the more or less specialised sense with which recent use has invested it. It is employed to indicate Reform as understood by those who regard the principal evils which exist under contemporary condi- tions, not as sores or bruises which are local or accidental in their nature, but as results of some organic defect in the structure of society as a whole, and as curable only by some similarly organic change. Social Reform in this sense presents to those who would examine the subject two questions or sets of questions, each of which must be considered separately : — one consisting of theo- ries as to social action in general, together with practical schemes which have such theories as their basis ; the other consisting of the estimates, made and popularised by reformers, of those conditions and tendencies as they actually are to-day which are held by such persons to render their schemes necessary. The latter of these two questions will here be considered first, such an arrangement being that which logic and common sense dictate. If an architect is to restore successfully a cathedral which threatens to collapse, he must not only be a master of the principles of construction generally, he must also be a master 4 INTRODUCTORY [Book 1. of the details of this particular fabric — the nature of its foundations, the thickness of its walls and pillars, and the cause and extent of each crack or subsidence. It is only in propor- tion to the accuracy of his knowledge of these particulars that his principles and plans will be applicable to the practical work in view. In the same way the schemes of social reformers, though dependent in part on general ideas and principles, can only come to possess a practical meaning in proportion as they are determined by a knowledge similarly accurate of the actual conditions of the society for the benefit of which they are advocated. Now the peculiar danger to which social reformers are liable is a neglect of this obvious truth. Belonging, as they mostly do, to a supersensitive class, for whom sympathy has the powers and the limitations of an indefinitely magnifying lens, they — or, at all events, the most honest of them — are affected by the spectacle of suffering more acutely than they would be by the experience of it; and the vivid pictures which the spectacle leaves in their minds, and which in heightened colours they reproduce for the public, are apt to be symbols of the distress which they feel themselves, rather than diagrams of complicated conditions which are causing distress to others. In this fact we have the main, though by no means the sole, origin of a mass of mischievous delusions, by which popular opinion at the present day is vitiated, to an extent and in a Chap. I.] EXISTENCE OF EVILS 5 manner not perhaps sufficiently realised. These supersensitive persons, largely as a consequence of their honesty, are abnormally impatient of criticism; and anyone by whom their own estimates of social evils are questioned is attacked by them as though he were maintain- ing that no evils exist, and that everything is for the best in this best of all possible worlds. Now to anyone who reflects calmly it is obvious that in actual life judgements relating to a multitude of obscure details are never thus reducible to a choice between two extreme and mutually exclusive alternatives. To deride the statement that a sick man is dying of Asiatic cholera is not to affirm that he is in absolutely rude health. To deny that four- fifths of the population of a country are starv- ing is not to assert that no section of it is familiar with undeserved want. The real question at issue between the extreme reformers and their critics is not whether any evils of a grave kind exist, but what, given their existence, is their precise extent and character; and to argue that anyone who accuses the extremists of over-estimating them is necessarily denying their existence, or is even insensible of their importance, is to argue like an angry child. Childish, however, as this type of argument is, if considered as an appeal to reason, it consti- tutes nevertheless a powerful appeal to the feelings, not only of the sufferers on whose behalf it is ostensibly used, but also of others M'hose position is of a totally different character. 6 INTRODUCTORY [Book I. Human tempers and temperaments being such as they are, the over-estimates of social evils put forward by extremists do no doubt tend to provoke, by way of reaction, an under- estimate of them on the part of the opposing moderates. While such a mood lasts, the moderates lay themselves open, as the recent history of Conservativism in this country shows, to a charge of neglecting matters which multi- tudes regard as vital. Popular support is more or less widely withdrawn from them; and in process of time the results of a general election rouse them to an alarmed perception that such is actually the case. This again leads presently to a reaction of another kind. In order to free themselves from the suspicion of being indif- ferent to social evils, the moderates in nervous haste betake themselves to an opposite extreme. They compete with one another in proclaiming their full recognition of the facts of the social situation precisely as their opponents give them; and confine themselves to declaring that, these terrible facts being true, it is they, and not their opponents, who best know how to deal with them. In this way, so far as mere facts are concerned, the inflammatory picture drawn of them by politicians of the most extreme type secures the endorsement of those who are otherwise their professed antagonists, and imposes itself on public belief like a legend replacing history. How wide the difference is between facts as they actually are and popular conception of Chap. I.] PREVALENT ERRORS 7 them which is generated in the manner just described, it will be the object of the earlier portion of the present work to elucidate. Since many persons, however, will no doubt be reluctant to believe that errors so great as those which are here suggested can possibly exist in a picture of contemporary conditions, which, even if it was outlined originally by persons prone to exaggeration, is accepted by so many others of naturally sober judgement, attention will be called, before we proceed farther, to causes which render such errors at all events antecedently probable, and also to examples of their prevalence and the subsequent exposure of them in the past. CHAPTER II. What, then, when we talk about social evils as estimated by persons who regard them as subjects of reform, are the evils which we have in view ? It is obvious that they are sufferings, or conditions which produce suffering ; but they are sufferings of a definite and limited kind only. In brief phrase we may say of them that they are grievances as distinct from griefs. If a bridegroom loses his bride because she is killed by an avalanche, his loss is a grief, but nobody would call it a grievance. If he loses his hat-box through neglect on the part of a porter, his loss is a grievance, but nobody would call it a grief. Between the two kinds of sufferino- the radical difference is this — that the one is attributable to causes beyond human control, while the other is attributable to the needless misbehaviour of man. There is no remedy for the one. There is presumably a remedy for the other. If the grievance is the grievance of an individual, the natural remedy is a law-suit. If it is the corporate grievance of a class, the natural remedy is legislation. It is plain that the concern of the reformer is with class grievances only; but these resemble those of the individual in one respect so important that the former will be best under- stood by comparing them with the latter. Both, then, resolve themselves into broadly s Chap. II.] COMPARATIVE VALUE 9 contrasted groups, according as they are mainly due to the direct impact of facts, or to the influence of facts as presented, correctly or incorrectly, to the imagination. Thus if a man is wretched because his means are rarely sufficient to admit of his pacifying the normal demands of hunger, his grievance arises from facts pure and simple. The imagination has nothing at all to do with it. On the other hand a man may have an income of ^2,000 a year, and may have regarded himself for half his life-time as a favoured son of fortune; and yet if one day a lawyer persuades him that he is the rightful heir to a peerage, of which, with the estates attached to it, he is defrauded by some distant kinsman, what has up to that time seemed riches to him will assume the charac- teristics of poverty; and he may well be more aggrieved by the thought that he is not dining off silver than he would be by the difficulty of getting any dinner at all. Facts are involved in this latter case just as they are in the former; but they are only turned into a grievance by the way in which the imagination works on them. Similarly if a multitude of wage-earners find that, through a fall in wages, so much butter and bacon disappears from their tables, the sense of grievance which arises is due to direct experience. The butter and bacon disappear not in imagination but in fact. On the other hand the same men may be aware that their wages have risen. They may daily be reminded of the fact by an ampler and more appetising 10 BELIEFvS AND [Book 1. diet; and yet they may be conscious of a grievance even more acute because their leaders have led them to imagine, correctly or incor- rectly, that the rise ought to have been greater, and that the masters could afford to make it so. Between the grievances of classes, however, and those peculiar to individuals, there is one important difference. The part which the imagination plays in producing the former is incomparably greater than that which is played by it in producing the latter. Let us take the case of the man who, possessed of an ample income, suddenly feels himself poor, because he has been led to imagine that legally he has a claim to millions. The facts which the imagination of such a man must present to him in order to produce such a change in his mental state as this, are bound to comprise many outside his personal knowledge. They will relate to questions of marriages valid or other- wise, the dates of births and deaths, and other similar matters, which have rested forgotten or unquestioned for it may be several generations, and which can only be got together by means of expert research. But such facts, however obscure and numerous, are nothing in compari- son with the facts which the imagination is called on to assimilate when the claimant to be inoculated with a grievance is not an individual, but a class. Not only do the facts here involved comprise the innumerable details which constitute, as inter-related, the social conditions of to-day : they comprise social Chap. II.] HISTORICAL FACTS ii conditions as they were at previous periods — a century or perhaps a century and a half ago, or in the Middle Ages, or even before the dawn of history, with which conditions present con- ditions are contrasted. For example, the discontent which expressed itself in the French Revolution owed much of its character to the pictures drawn by Rousseau of the many amenities forfeited by our primeval ancestors when they made the fatal mistake of submitting themselves to social laws. Now facts such as these being inaccessible to ordinary enquiry or observation, they must, in so far as the ordinary public is to be moved by them, be got together by reformers who, posing as sociological specialists, summarise and group them so as to form a coherent picture, in which, as in " a mirror held up to nature " the public is invited to contemplate its own condition, comparing what is with what was, and also with what should and may be ; and the public must necessarily take the accuracy of the picture on trust. Such being the case, the picture may be true or false. There is no reason in the nature of things why it should not be entirely true. All that is here being urged at the present moment is this : — that in proportion as the facts which the picture purports to represent are remote in point of time, or, even if modern, are obscure, numerous and complex, and are thus beyond the reach of direct common enquiry, the room for error in any picture of them which is presented 12 EXISTENCE OF ERRORS [Book I. to the public will be great; that it will not be unnatural if the gravest errors occur, and if, thus escaping exposure, they are accepted as indisputable truths. In the two following chapters some pre- liminary examples shall be given of errors of this kind — and errors on the largest scale — which have been promulo-ated by reformers in the past, which have met with prolonged acceptance, but which are now relegated by all to the limbo of pure delusions. CHAPTER III. Mention has been made of the manner in which, in the eighteenth century Rousseau sought to stimulate the discontent of his con- temporaries by paradino" before them a picture of the almost perfect conditions which were enjoyed by the human race in the earlier stages of its existence. Rousseau's procedure in this respect is a type of one of the main devices which all reformers employ for a like purpose. Reduced to logical terms, it presents itself as the following argument. All human beings have, as an historical fact, enjoyed certain equal advantages at some specified period. What- ever advantages it is possible for all human beings to enjoy, all human beings have a right to enjoy; and such human beings as do not enjoy them now, have by some means or other been robbed of their just inheritance. Here, for example, is a statement taken from an English Liberal journal of to-day : " The people of England want their land back again; and the immediate duty of the Liberal Party is to give it to them." This is not explicitly a statement relating to English history; but, if it is not absolute nonsense, it is an historical statement by implication. It must mean that there was a time when, in some sense or other, the land of England was the property of the 13 14 SOCIAL GRIEVANCES [Book 1. great mass of the inhabitants : for nobody could want a thing " back again " if he had not possessed it once. The value of this particular statement does not concern us here. It is merely quoted as illustrating the typical character of the argument drawn by Rousseau from his picture of a remote past. Expressed more definitely, Rousseau's own contention was this. If we examine the life of man in the primary state of nature, we find it to have been, in many important respects, superior to that of most Frenchmen towards the close of the eighteenth century. Nobody was comfortable, it is true; but this was a blessing in disguise, for nobody was conscious of discomfort. The primeval human being, however, was a solitary cave-dwelling animal, the males and the females meeting only for purposes of reproduction ; and though the males, like Rousseau himself, were not embar- rassed by any subsequent thought of their offspring, the habit of reflection was not sufficiently developed to render these hermits conscious of such beatitude as was theirs. In order to acquire such consciousness, some intercourse with their fellows was necessary. There was thus room for improvement, and the requisite improvements came. Caves as places of residence were superseded bv huts. What now would be called "neighbourhoods," loosely compacted, formed themselves ; and the units, no longer solitary, began to taste the pleasures which society alone can give. They looked Chap. III.] IN THE XVIII CENTURY 15 into each other's eyes, and said to each other " We all are extremely happy." But such social relations were wholly free and spon- taneous. Althous^h there w^as sociability, there was no social authority. A man might perhaps be the owner of the bed of leaves he slept in; but everything out of doors was delightfully free to everybody. There was no such thing as a law which enabled any human being to say even of a cabbage-plot which he had himself cultivated " It is mine." Here, according to Rousseau, was the true golden age — a secondary State of Nature, which was a kind of " riper first " : and in this absence of government, of laws, and of protected property, which are purely artificial creations, lay the secret of its lost felicity. What the moral of all this was for the contemporaries of Rousseau is obvious. Does anyone suffer? Is anyone poor or oppressed? The cause lies not in the fact that existing laws are unjust, or that property is distributed ill. The cause lies in the fact that there are any laws whatsoever, or that anything like property exists to be distributed ill or well. The one reform needed is not to reconstruct, but to destroy. Let us destroy the artificial, and history shows us that happiness will take care of itself. Let us now turn to another writer belonging to the same epoch, who is no less famous than Rousseau, and to Englishmen yet more familiar — namely the poet, Oliver Goldsmith. Though deficient in the energies essential to i6 SOCIAL GRIEVANCES [Book I. active agitators, there was in Goldsmith much of their characteristic temperament. In the England of his day there were grievances just as there were in France, and although he was blind to the latter he brooded over the former, and endeavoured to render his own countrymen conscious of them by means precisely similar to those employed by Rousseau : — that is to say, by contrasting contemporary facts as he saw them with a picture of what he took to be the facts of some distant and happier time. Embarrassed by poverty himself, he was a spectator of the first appreciably rapid multi- plication of considerable fortunes in England derived not from agriculture, but from trade. He was at the same time a spectator of dis- placements of the agricultural population which, however they may have been due to improved methods of farming, were tragedies for those displaced, and which, as he under- stood them, he depicts in " The Deserted Village." Divested of the appeal derived by them from the magic of his unforgotten verse, the main propositions which he enunciates are, in plain prose, as follows : — "A time there was " — that is, in the Middle Ages — when England was a country without any appreciable " grief," or (in other words) appreciable social grievances. The bulk of the population was then supported by agriculture, and consisted of " labouring swains " who, together with their wives and children, flour- ished in " health and plenty " on their " own Chap. III.] GOLDSMITH AND ROSSEAU 17 roods of land," each rood on an averag^e maintaining" one member of a peasant family, and so secured to its cultivators that it could not be taken away from them. But now, says Goldsmith, writing in the year 1770, English trade had increased with such monstrous rapidity that it was drawing the swains to the towns or driving them into foreign exile ; the fields and the villages, denuded far and wide of their population, were being turned by trad- ing plutocrats into playgrounds for their pride and pleasure; whilst, to crown everything, " trade's proud empire " itself was already nearing its zenith, and was, unless English virtue should somehow manage to stop it, bound to collapse in a year or two, buried beneath its own ruins. Here in all its essentials the method of Rousseau is reproduced. We have contem- porary grievances heightened, indeed to a certain extent created, by contrasting the present with what purports to be an accurate picture of a past, when the place of every existing imperfection was taken by its enviable opposite ; only Goldsmith's golden age was less remote than Rousseau's, and the moral was more precise which he aimed at deducing from his picture of it. How far, then, in each of these two pictures, did the details of the past bv which the principal effect was obtained, accord with actual facts, and thus form a true standard bv which the present might be appraised and judged? i8 ROUSSEAU [Book I. With regard to Rousseau it is needless to say much. Nobody would now deny that his picture of the Golden Age, if considered in its relation to facts, is altogether an absurdity. The actual inhabitants of Europe in the sub- primaeval age were creatures who, if Rousseau's contemporaries could have seen them as they really were, would hardly have excited the envy of the poorest peasant who ever beat the frogs into silence for the benefit of the seigneur's dreams. The condition of France in Rous- seau's day may have been as bad as we like to think it; but it was not bad because, or in so far as, it differed from the condition of the half-clad savages who were the subjects of Rousseau's fable. Goldsmith's picture of the past has, on the other hand, certain features which are more or less historical ; but his drawing of these is so distorted, and their meaning is so changed by the complete omission of others, that Rousseau himself would have been puzzled to make the whole more fabulous, had he tried. In the first place, though it is true that in mediaeval Eng- land the agricultural workers formed a larger fraction of the population than they did in the earlier years of the reign of George III, it is totally incorrect to suppose that, as Goldsmith's picture suggests, the entire land of the country was devoted to the support of peasants. The " swains," as Goldsmith calls them, occupied a part only, and paid a rent for their annually allotted strips in the form of " week-work " and Chap. III.] GOLDSMITH 19 " boon-work *' on the domains of the manorial lords. Again, though it is true that each " swain," villein or cottar had a legal right to the use of a specified number of acres, and that thus his means of subsistence could not be taken away from him, this fact has a converse side, no less important, which the picture of Gold- smith altogether omits. The mediaeval swains could not be driven from their roods, for the simple reason that they were not permitted to leave them. If they themselves had a firm grip on their lands, their lands had a grip equally firm on them ; and this arrangement, though from some points of view it may have been a blessing, came to be felt by many of them as so very much the reverse that it formed one of the main pretexts for the great Peasant Rebellion. Finally, as to the number of the then agricultural population, which, according to Goldsmith, was one person for every " rood of ground," it is enough to observe that if this computation were correct the agricultural population of England at some time during the Middle Ages must have been greater by forty per cent, than that of the United States to-day. It may of course be said that Goldsmith wrote as a poet; but after every license on this score has been accorded to him, not only does his picture remain a picture full of errors, but it is the errors in it and not the truths which pro- vided him with the bases on which he reasoned from past to present. Even if he had meant that the number of the mediaeval aqriculturists 20 GOLDSMITH [Book I. was only one to an acre instead of one to a rood, they would have made up a total of very nearly forty millions ; and to anybody who started with such an idea as this, English agriculture in the year 1770 (when the entire population of the country was not one-fifth of that number) would naturally have presented itself as an industry that was fast dying, and the English fields would have seemed to be already almost deserts. As a matter of fact there is ample evidence to show that agriculturists of England at the time when Goldsmith wrote were not only more numerous than they had ever been before, but were beginning to increase at a rate unex- ampled at any previous period; and farther that agriculture as an industry, instead of being injured by trade, owed to the growth of the trading population and its demands that series of rapid improvements which alone enabled this country, in the course of another genera- tion, to confront and destroy Napoleon.' Finally, attention may be called to Goldsmith's estimate of the position of English trade itself, which, according to him, by the year 1770 — when measured by modern standards its growth I. According to Mc.Cullocli (see vStatistical Accounts cf the British Empire, chapter on English Agriculture) the English production of wheat was about 3,840,000 quarters in 1765, 4,000,000 quarters in 1773, and nearly 6,000,000 quarters about twenty years later. According to Arthur Young (1802) and Marshall (1790) there was during the latter half of the eighteenth century a most remarkable increase in the number of small fanners and free-holders. Chap. III.] NONSENSICAL ESTIMATES 2i was only just beginning — had all but reached the limits of possible or even thinkable expan- sion, and was already on the eve of bursting — such was obviously his idea — like another South Sea Bubble on an immeasurably larger scale. The absurdity of this estimate, in the light of subsequent events, is perhaps more imme- diately evident, but it is hardly greater, than that of the other details which make up, if not the earliest, yet at one tim.e the most popular, picture ever presented to Englishmen of their own social grievances. No social reformer would maintain to-day that the grievances of France or England in the eighteenth century, whatever they may have really been, were correctly represented in such estimates as those of Rousseau and Goldsmith. What is here commended to the reader's atten- tion is that the fact of these estimates being nonsensical was no bar to their being generally accepted, and that the fact of their being generally accepted was no proof that they were not nonsensical. It may, however, be said that Rousseau and Goldsmith lived in a pre-scien- tific age, and that from errors, however great, which were formulated and accepted then, no inference can be drawn as to the state of affairs to-day. This is no doubt true ; and, as a further introduction to our examination of the social estimates current at the present time, we will glance at those belonging to an intermediate period, during^ which the apostles of Reform., like other thinkers and investigators, adopted 22 ROUSSEAU AND GOLDSMITH [Book I. or claimed to have adopted, the methods of advancing science. We will presently take two of the best known of their generalisations, and see whether these, in point of scientific accuracy, are any improvement on the estimates of Rousseau and of Goldsmith, or no. CHAPTER IV. There is one feature in the estimates of Rousseau and Goldsmith ahke, which, unhis- torical as they were, invests them with an historical interest. Both alike represent some dawning perception of that movement of human affairs which is now called Evolution, and the idea of which is so deeply implicated in modern theories of reform. Such being the case, let us now turn to a thinker who, though not belonging to the company of social reformers himself, has been instrumental in furnishing them with much of the present mental equipment. In the year which witnessed the publication of " The Deserted Village," there was born in Germany the renowned metaphysician, Hegel. Remote from practical life, and indeed from ordinary comprehension, as the doctrines are to which he mainly owes his fame, he condescended to illustrate their validity by applying them to an explanation of the historical development of human thought on the one hand, and of human government on the other. The development of human thought, he declared, exhibits itself as an historical process, under the guise of four " Moments," each representing the mentality of some particular race or races : — the Orientals representing childhood, the Greeks youth, the Romans manhood, and the Teutons complete 33 24 HEGEL AND COMTE [Book I. maturity. Of this same process another and a rival account was subsequently provided by Comte, the French prophet of Positivism. For him the stages of the process were not four, but three — the ReUgious, the Metaphysical, and the Positive. To discuss these doctrines in detail would be nothing to our present pur- pose. It will be enough to say that what for Hegel was supreme wisdom was for Comte the most barren folly; that Comte's supreme wisdom was for Hegel the most vulgar ignorance; that the one doctrine in short flatly contradicts the other; and that nobody, whether Comtist or Hegelian, to-day believes in either. They are only mentioned here because they lead up to another — namely Hegel's doctrine of the evolution of human government. This is likewise resolved by him into a sequence of ordered " Moments," the first being Despotism, or government by the will of one; the second being aristocracy or democracy, or government by the will of a more or less numerous many; the third being government by a constitutional Monarchy, in which the will of the one and the will of the many are unified. So far as practical opinion at the present day is concerned, this theory of government is in itself no less sterile and obsolete than its companion theory of the historical evolution of thought; but it was the parent of another whose practical consequences have been immense, which has coloured the ideas of reformers for now nearly half a cen- Chap. IV.] KARL MARX 25 tury, and which, in a modified form, colours and inflames them still. The creed or the oroup of creeds now known as Socialism first came into being and acquired that distinctive name early in the nineteenth century. But, except as a protest against the division, which was at that time daily becoming more apparent, between the employers of productive labour and the bodies of labourers employed by them. Socialism suffered for a very considerable period from the want of any commonly accepted and precise theory as its basis : and it was not till this want was supplied by certain thinkers, and by one thinker in particular, that it grew into a force productive of any widespread movements. The particular thinker in question— that is to say Karl Marx — published in the year 1865 his celebrated treatise on Capital, which has been hailed by socialists all over the world as a work which raised Socialism from a sentiment to an exact science ; and all subsequent reformers, whether calling themselves socialists or no, have been influenced bv certain of the doctrines to which that work gave currency. Marx concerned him.self at once with theory and with concrete facts; and he deserves recognition, whatever may have been his errors otherwise, as the first thinker who attempted, in any systematic way, to associate the details of history with minute economic analysis. The orthodox economists, such for example as Ricardo, were content to accept the industrial 26 KARL MARX [Book 1. conditions of their day as though masses of wage-paid labourers working for great em- ployers were parts, like the sun and moon, of the constant order of nature. Marx insisted that such was not the case, that the system of the nineteenth century was essentially a modern development, and that it could only be under- stood by a study of the other systems which had preceded it. He accordingly aimed at pre- senting the whole series as a sequence of transitory, and radically different, states, evolv- ing themselves in an intelligible order; and in this attempt he was guided by the inspiration of Hegel. Just as Hegel divided the history of human government into three " Moments"— Despotism, Democracy, Monarchy, so did Marx divide the history of economic production into three similar " Moments " — Slavery, Serf- dom, Capitalism, the third of which, by an Hegelian unification of contraries, was doomed to issue in a fourth and final " Moment " which is Socialism. With the theories of Marx we shall have occasion to deal hereafter. For the moment we are concerned with him solely as an exponent of economic history — with the definite statements which he made regarding the past, in order to force on his disciples, by contrast, a specific estimate of the present. Of the various propositions which he enunciated so as to make this contrast complete, and exhibit the present system of capitalism in the darkest colours possible, we will here deal with two. Both of these were enunciated by him with the utmost Chap. IV.] MARX ON PRODUCTION 27 emphasis, and formulated with the utmost elaboration; they have been vociferated at socialist congresses all over the world; but neither of them is really essential to the position of Marx as a socialist. They can, therefore, be discussed on their own merits, without affronting or flattering- any controversial pre- judice. One of them relates to the difference between two systems of production — production for use on the one hand, and production for exchange on the other ; and is to the effect that one of the cardinal distinctions between the modern capitalistic system and the systems that went before it, is the fact that, under capitalism, production is production for exchange, whereas under the preceding systems production was production for use. The other relates to persons of moderate means, who, judged by a financial standard, constitute the middle classes; and is to the effect that whereas, until modern capitalism established itself, such persons formed a numerous and important section of the com- munity, the inevitable tendency of capitalism is steadily to reduce their number, and (as Marx said, writing in 1865) everything goes to show that they will presently have been " crushed out." The difference between production for use and production for exchange is simple, and is commonly illustrated by a contrast, for which there is some historical justification, between a 28 PRODUCTION FOR EXCHANGE [Book 1. plutocrat of the ancient world and a capitalist manufacturer of to-day.^ The former, it is said, produced through the labour of his many hundreds of slaves the luxuries which he enjoyed himself, and the necessaries which were consumed by himself and his slaves also. The modern manufacturer, on the other hand, with his hundreds of wage-paid workers, pro- duces one commodity, or class of commodity only, such (let us say) as jute matting or screws, of which he and his w^orkmen use little or nothing. Hence he might have a stock of these which his warehouse could hardly hold, and yet be as poor as a beggar so long as they were in his own possession. They only become wealth, available as profits and wages, because of, and in proportion to the amount of, other commodities, personally usable or consumable, which he is able to get in exchange for them. Is it true, then — let us take this question first — that production for exchange is peculiar to modern capitalism, and was a process unknown or negligible under the systems that went before it,^ How far this position is true and how far it is fallacious, the reader may be able to judge from the following vignettes drawn by contemporary writers, of economic life as it was in the ancient world. There is a curious Latin novel, " The Golden Ass " of Apuleius, exhibiting the conditions of life as they were under the Antonine Emperors, I. Lassalle drew a similar contrast between the modern capitalists and a Greek noble in the Middle Ages. Chap. IV.] " THE GOLDEN ASS " 29 which Opens with an account, given by the hero in person, of the close of a journey on horseback to a certain town in Thessaly. His long route having taken him through scenery of all varieties, he finds himself at last in a green and sequestered by-way. He has dismounted to stretch his legs; and his animal, nosing the grasses, is providing itself with an " ambulatory meal," when he sees a little in front of him the backs of two other travellers. He overtakes them, makes their acquaintance, and discovers W'ho and what they are. They are, as Dickens would have put it, two " commercial gentlemen" — gentlemen who " travelled in cheeses." Another character in the same novel is a miller, for whom the unlucky hero is temporarily compelled to work, of whom and of whose business he gives a detailed description. The miller, though of no great fortune, is evidently "a warm man," and he is for his neighbours *' our prominent and esteemed fellow-citizen," as they presently show by flocking from far and near to his funeral. He is a large employer of labour — unfortunately of a " low-grade " kind ; and his premises shook, so the writer informs us, with the ceaseless grinding of one mechanism after another, each actuated by quadrupeds trotting round and round in circles. Now the farmers who produced the cheeses "in which the commercial gentlemen travelled," and the miller who produced flour on the scale that has been just described, evidently did not produce for thi-ir own private consumption. 30 MOSCHION'S SHIP [Book I. They produced them for exchange. Produc- tion for exchange was their occupation, just as it is the occupation of the typical producers of to-day. Let us take a few other illustrations, which will carry us still further. A fragment is pre- served by Athenaeus of a Greek writer, Moschion, which gives an account of a ship built for goods and passenger traffic from the designs and under the direction of Archimedes. This resembled in many respects a modern Atlantic liner. The state-rooms (three beds in each) were ornamented with inlaid woodwork. There was a roof-garden, a bath, a gymnasium, a saloon and a library. The ship was sheathed with lead, calked with pitch, and the nails were of hard bronze. Of the materials of the inlaid woodwork a portion came from Africa, the lead probably from Sardinia, the cordage (as is specifically stated) from Spain, and the pitch from the neighbourhood of the Rhone ; whilst the tin — an essential ingredient of the bronze used for nails — came, either from Spain, or (as is more likely) from Cornwall. None of the producers of these many materials — cordage, pitch, lead, tin and so forth — produced them for their own consumption. They produced them for exchange only; and if it had not been for the practice of exchange, such materials could never have been produced at all. How do such transactions differ from those that prevail to-day? How can they be peculiar to the capitalism of the modern times when the Chap. IV.] FAMILY MANUFACTURERS 31 building of a single ship two thousand years ago involved production for exchange over half of the then known world? It may be said that the doctrine of Marx and of those who follow him does not mean that, before the capitalistic epoch, production for exchange was altogether unknown, but that its extent was comparatively small, and more especially that it was in its nature an incident, and not one of the bases of the economic life of nations. Thus one of the shrewdest of the present generation of reformers has urged that the normal type of production, as opposed to modern capitalism, is the production of all the necessaries of existence by members of the consuming family or small cluster of families, the commodities obtained by exchange from workers other than themselves being trifling in amount, and distinguished by being " non- essentials." This contention to a certain extent is supported by well-known facts. There are families or groups of families which have from the earliest ages — and many of them survive still — grown their own food, woven their own clothing, made their own pots and pans (as was till very recently done in the Island of Tyree) and, by melting fat into saucers, provided them- selves with their own illuminants. In the eighteenth century large country houses in England manufactured their own mould can- dles. Great Russian households, prior to the emancipation of the serfs, manufactured their own carpets, and many articles of furniture. 32 TRIMALCHIO [Book I. The great slave-households of the magnates of ancient Rome comprised productive workers as well as personal servants. What, then, for purposes of comparison, do all these considera- tions come to? In this connexion we may turn to another Latin novel — that of Petronius Arbiter, written in the days of Nero. A prominent figure in it is Trimalchio, a slave who, freed by his master, had managed to make himself the richest man of his period : and a considerable portion of the book is devoted to an account of a banquet given by him to a company of wondering and half-derisive guests. The arch-millionaire's conversation (herein not wholly unlike that of some of his more modern counterparts) turns principally on himself and his own possessions. One of the casual announcements by which he makes a sensation is that he has just bought Sicily, because, he says, " it is pleasant, when one goes to Africa, to be sailing as far as may be by the borders of one's own property." His great ambition or hobby, however, he does not mind confessing, is to have every single thing which he himself consumes or uses, produced on his own estates, by the labour of his own dependents, and be able to say with truth that he buys and pays for nothing. The realisation of this ambition, he takes care to insinuate, involves the possession of properties all over the world, and he admits that his object even yet is not wholly accomplished. Here, then, we see that when the slave-system of the ancient Chap. IV.] A MODERN FALLACY 33 world was in its highest stage of development, what Marx and others represent as one of its normal and most distinctive features was so far from being a commonly realised fact that the mere idea of realising it is represented by a contemporary satirist as the foible of an absurd vulearian whose head has been turned by the • 1 1 ' growth of his own millions. Indeed the radical fallacy of the view we are now discussing — that production for exchange is in any sense a peculiarity of the modern world, may be seen by the simple reflection that, if taken in its strictest sense, production for exchange begins with the first divisions of labour, such as the allocation of spinning to women, and hunting and husbandry to men ; the males of the family wearing what is produced by the females, and the females eating what is produced by the males. So long, however, as the consuming group is small, production for exchange may be reo^arded as a maturing embryo rather than a process which has been born into distinct existence. Its distinct exist- ence begins, not with the mere division of labour amongst a group so small that the products are consumed in common, but with such a separa- tion of industries that the persons engaged in each constitute a community by themselves, each being detached from the rest by the special character of its work, by its immediate interests, and in most cases by distance. How early this feature developed itself may be .seen from what we know of Phoenicia. The 34 THE PHCENICIANS [Book 1. production of the dyed stuffs for which the Phoenicians were famous not only involved industries so totally alien in kind as the weaving by the Phoenicians themselves of a certain portion of the material, and the importation of a portion, probably still greater, from remote countries such as Egypt and Persia; but the business of dyeing was itself elaborately sub- divided also, amongst the makers of the traps in which the shell-fish containing the dye were caught, the catchers, the crushers, the refiners of the brilliant fluids, the dippers, and the highly-expert blenders of dyes of various quality. It is obvious that these groups were supported not by any sharing amongst them- selves of their own immediate products, but by other products fitted to sustain life, which were allocated to each in exchange for them; whilst the bulk of the completed output was wealth for the Phoenicians at large only because it was exchanged by their merchant princes for the products of other countries. It has been said that production for exchange is as old as the separation of industries. We shall be asserting what to many people will perhaps be still more self-evident, if we say that it is as old as com- merce. Was commerce, then, prior to the capitalistic epoch, a relatively negligible process, as the writer just quoted asserts, in respect either of its volume, or (what is by no means the same thing) its importance ? In the first place, was it, as he suggests, merely a traffic in superfluities? Chap. IV.] THE PHCENICIANS 35 An interesting sidelight is thrown on this point by Trimalchio. Having inherited, so he tells his guests, one half of his master's fortune, he at once embarked in commerce as the royal road to riches. He built five vessels, and filled them with such assorted goods as he thought most certain to sell well in the Roman market. His judgement was justified bv the event. They were sold at an enormous profit. And of what did these goods consist? A portion, it is true, consisted of superfluities — that is to say, of Oriental perfumery; but the larger part con- sisted of wines, of beans, and of bacon. Similarly, the vessel of Archimedes carried on her maiden voyage — so Moschion mentions — a comparatively small consignment of miscel- laneous goods, which may or may not have consisted of superfluities; but the bulk of the cargo consisted of three things — corn, wool, and pickled Sicilian fish. The importance of early commerce, however, is, as has just been said, not measurable by its mere magnitude. Everybody knows that the Phoenicians imported tin from Cornwall. Cornwall was, indeed, the chief, though Spain was a minor source, from which that metal was obtainable by the ancient Mediterranean nations. Now as may have been suggested to the reader by the fact already mentioned that the nails used by Archimedes were not of iron but bronze, bronze was for the industries of the nations in question what hardened iron and steel are for those of the modern world ; and of 36 TIN AND FLINT [Book 1. this material an essential element was tin. Thus, as Rawlinson in his History of Phoenicia indicates, this particular commodity, tin, obtain- able only from regions then unimaginably distant, was essential to the life of the whole civilised world whose arts and industries had developed themselves round the shores of the Mediterranean Sea. In other words, had it not been for commercial enterprise, that world, whose civilisations are the direct ancestors of our own, could hardly have raised itself above the conditions of the Stone Age. Nor is this all. If we go back to the Stone Age itself, the same situation is repeated. The arts of the Stone Age were dependent on the use of flint; but flint, like tin, is obtainable in certain districts only; and all who lived elsewhere must have obtained their flints from these — a transaction possible only by means of exchange or com- merce. Or again we may, if we like, take the case of mediaeval England. No doubt the households of the manorial lords and the peasantry were self-supplying to an extent which is almost unknown to-day; but life and the arts of life required two things at all events which in nine localities out of ten were obtain- able by commerce only — that is to say salt and iron. Salt was obtainable only from a few mines or brine-pits, or on the sea-coast by vaporisation. Except for importations from abroad, iron was obtainable only from districts where ore and firewood existed in close proximity; and iron and salt alike from places Chap. IV.] HERBERT SPENCER 37 thus peculiar were supplied to the bulk of the population by an all-pervading process of exchange. It is needless to multiply illustrations of a fact which is practically universal ; and why it is universal has been explained with trenchant simplicity by Herbert Spencer in his account of the beginnings of human progress. The start- ing-point of all progress was, he says, the " localisation of industries." This event has resulted from the varied character of the " habitats " occupied by neighbouring commu- nities, or by different portions of each. Climate, soil, exposure, and mineral substances are distributed by Nature in a manner so unequal that the production of certain things is not possible at all except in certain places, and is possible with a maximum of advantage in not more than a few. Hence what we call civili- sation is developed by human effort in propor- tion as industries are separated in such a way that the prosecution of each is confined to the places which are most favourable to it. In other words production with exchange for its immediate object has been the warp of civilisa- tion since civilisation first began ; the exchange of the products as distinct from an immediate use of them, has been its woof ; and then as now commerce threw the shuttle. In other words again, to sum the matter up, a process which social reformers, professing to be scientific historians, have declared to be virtually peculiar to the capitalism of the modern world, has been D «^ I ibid 38 DANDIES AND DRUDGES [Book I. an essential feature of production under all systems alike — not merely under Serfdom and Slavery but in times which preceded both. Let us now take the other of the two asser- tions here chosen for examination, as having till recently formed an integral part of the version of economic history promulgated by most reformers. This is the assertion that under the modern capitalistic system persons of moderate means, or the middle classes, are disappearing. Such an assertion, though invested with a special prominence by socialists, has not been peculiar to them, nor did they even originate it. Before it began to figure in the manifestos of " scientific socialism," it had been solemnly elaborated by Carlyle, who was not even a democrat. It was for a time adopted by Disraeli himself, and represented an idea which, if vaguely, was very widely diffused. " The day," wrote Carlyle, " seems to be not far distant when the very rich, or ' the Dandies,' and the very poor, or ' the Drudges,' shall be two sects parting England between them, each recruiting itself from the intermediate ranks, till there be none left to enlist on either side. I could Hken them," he exclaims, " to two bottomless boiling whirlpools which have broken out on two opposite quarters of firm land, which man's art might yet cover in, but the diameters of which are daily widening . . . so that presently (unless man's art intervenes with some vast reform) even this intermediate film will likewise be washed away : and then Chap. IV.] "SCIENTIFIC SOCIALISM" 39 we have the true Hell of Waters, and Noah's Deluge is out-deluged." So far as this contention is concerned, all that was done by Marx, as the founder of scientific socialism, was to adopt a loose opinion then widely prevalent, to translate it from the language of sentiment into that of a scientific formula, to assign the fact asserted to a single specific cause, and present it as one of three necessary results, inseparably connected, of which that cause was the common origin. The cause in question was, according to him, the substitution of production by machinery, the property of great employers, for production by small implements, the property of the employed themselves — a change, he said, which was first witnessed in England, where its effects began to be general by the beginning of the nineteenth century. Such being the case, rhetorical assertions, like Carlyle's, that " intermediate films " were being swept away by " whirlpools," are reduced by "scientific socialism" to a proposition sufficiently definite to be tested by detailed evidence. In the first place it relates to a definitely specified period. In the second place it relates to a definitely specified country; for, modern capitalism, said Marx, having been established first in England, it is in England that we must look for the most complete exemplification of its results. In the third place it substitutes for Carlyle's intermediate " film " persons whose incomes are in excess of the earnings of .skilled 40 MARX AND THE MIDDLE CLAvSSES [Book I. labour, but do not approach those of " the great capitaHst lords," or even reach the amount at which riches are popularly taken to begin. The lower of these limits is at the present time taken by most controversialists as /"160 a year, whilst the higher may, according to the point of view, amount to anything up to perhaps ^^5,000. At any rate, if we adopt for our extremes ^160 and ^1,000, the persons whose incomes lie between these two amounts will comprise the majority, if they do not comprise the whole, of those whom Marx had in view when he spoke about the Middle Classes. What, then, with regard to these classes did Marx mean by the assertion that, under capitalism, they were being gradually "crushed out"? He meant, writing in the year 1865, that ever since the vear 1801 incomes in England lying between the limits in question had, as a statistical fact, been continually decreasing in number, and would necessarily, unless the capitalist system were abolished, go on decreasing until there were none left. Now if there is any difficulty in testing this proposition, it lies not in the discovery of evidences sufficiently precise and authoritative. It lies rather in the selection of them, their number is so ample. These comprise two series of records, extending from the opening year of the nineteenth century to to-day, one of these giving the results disclosed by the collec- tion of Income-tax, as imposed at various dates; the other giving the number of private houses Chap. IV.] MIDDLE CLAvSvS INCOMES 41 in England, classified year by year in accord- ance with their annual values. The significance of these two sets of data, if we aim at complete exactitude, cannot indeed be determined with- out enquiries which at the present moment would be impracticable : but the broad results derivable from the two taken together lie on the surface, and are enough for our present purpose. No minor modifications can affect them in any substantial way. Of the hundred and thirteen years, then, for which the modern capitalist system has by this time been on its trial in England, let us start with considering one particular portion — a middle period consisting of thirty years, and beginning with the year 1850. In the present connection this period has a special interest, because it was in the middle year of it — 1865 — that the socialist doctrine of the disappearance of middle-class incomes was formally pro- pounded by Marx in the work that made him famous. If, therefore, this doctrine should have any truth whatever in it, we may expect that its truth would be very signally illustrated in what were then for him the immediate past and future. Now it so happens that this particular period was, with reference to the precise question before us, examined by the well-known statistician, Professor Leone Levi, aided by a prominent official of the Department of Inland Revenue. Taking the higher limit of Middle Chiss incomes as £1,000, and the lower as ^150, his d('finitic)n of them was 42 MIDDLE CLASS INCOMES [Book I. virtually identical with that which has been adopted here. His aim was not to exhibit the number of such incomes as a whole ; for he confined himself to incomes identified by the collectors of Income-tax as derived from businesses not carried on as companies. His aim was to exhibit their rates of increase only. Dividing, then, the business incomes identified as earned by individuals into two groups — namely those ranging from ^150 to ^500, and those ranging from ^500 to ^1,000, he showed that during the thirty years in question the number of the former had increased by 136 per cent., and that of the latter by 125 per cent., whilst 134 per cent, was the increase for both groups taken together. Let us now extend our survey, and consider what has happened with regard to Middle Class incomes as a whole from the beo^innino- of capitalist ascendancy up to the present day. Approximate accuracy being all that is here required, the present number of such incomes in England is sufficiently indicated by the number of private houses whose annual value lies within certain limits. It is commonly agreed that houses whose annual cost to their occupants is more than ^20 in respect of rent alone (which means, if rates be included, £2^ as a minimum) mainly represent incomes in excess of ^160, w^hilst those whose rental value does not exceed ;^ioo, will mainly represent incomes not exceeding ;^ 1,000. The total number of such dwellings in the year 19 10, Chap. IV.] MARX' FALLACIES 43 exclusive of lodging houses and places of residence over shops, was (for England and Wales) 1,322,000. From this number a certain deduction must be made in respect of houses shared by more families than one ; but when this fact has been allowed for to the fullest extent possible, the number of such houses occupied by single families, and each repre- senting an income within the limits here in question, cannot have been less than 1,100,000. Let us now see how matters stood in the year 1 801. The records of private houses relating to that year are not sufficiently detailed to be serviceable for our present purpose ; but other evidence is extant, which will presently be described at length, of a yet more direct kind. This evidence shows that the actual number of incomes between ^160 and ;^ 1,000 could not, in the year 1801, have been more than 90,000, if indeed it was quite as much. What then is the net result of these broad and indubitable facts as related to the doctrine of Marx, so long and so widely accepted, that the number of such incomes in England has, under the influence of capitalism, been for more than a hundred years constantly growing less and less.^ If that doctrine be taken to mean that their number has been diminishing absolutely, its absurdity is so wild as to render comment superfluous. It may, however, be urged that there has meanwhile been an increase of 26,000,000 in the population of the country as a whole; and that Marx, when he spoke of 44 ERRORS OF REFORMERS [Book 1. the number of the Middle Classes as diminish- ing, meant to speak of a diminution which was not absolute, but relative. Even, however, had this been his meaning (which it was not) his doctrine would practically have been no nearer to the truth. Between the years 1850 and 1880 the population increased from seventeen to twenty-six millions — that is to say in a ratio of f ten to fourteen only. The number of Middle Class incomes had increased, during the same period, in a ratio, as we have seen already, of ten to twenty-three. Between the years 1801 and 191 1 the population had increased from nearly nine millions to thirty-six — that is to say, in a ratio of one to four. The number of Middle Class incomes had, as we have seen already, increased from ninety thousand to considerably over a million — that is to say in a ratio of one to twelve. In whatever way this doctrine is turned or twisted, it is so far from being correct as a statement of the actual results of capitalism, that it is related to facts only in the sense of being a direct inversion of them. We will here end our consideration of errors on the part of reformers which, having ceased to be " planks " of their historical " platform," no longer require refutation for the purposes of practical controversy. They have been dealt with as subjects of a useful preliminary criticism, because they have all, within times comparatively recent, been asserted as indu- bitable truths by earnest and influential men; because popular thought and sentiment have Chap. IV.] FACTS AND BELIEFS 45 been widely and profoundly influenced by them; and because they show what a highly complex product is, in most cases, that sense of grievance to which reformers make appeal, and how largely dependent on beliefs as to facts which are beyond experience, rather than on facts as experienced by the aggrieved persons themselves. We will now pass on to doctrines which are in full vitality to-day, and enquire whether they are less erroneous than those which we have been just considering. BOOK II. An Examination of the Fundamental Error Underlying Current Theories of Reform. CHAPTER I. The doctrine, whose absurdity has been exposed in our preHminary criticism, that one of the main results of the modern capitahstic system has been to diminish the number of moderate or middle class incomes, is, let it be said once more, by no means so frequent now in the mouths of reformers as it once was. As origmally formulated by Marx, however, and accepted as scientifically true by the reformers of the nineteenth century, it did not stand alone. It was associated with two others, the three together being as follows : — Under the modem systejn of capitalism {the results of which are most apparent in England) it is a matter of theoretical necessity and of historical fact also, that, whether the middle classes dwindle or no, and in the end will altogether disappear, the rich become ever richer, and the mass of the population poorer. Now though the doctrine as to the middle classes is more or less in abeyance, the two others, relating to the rich and the poor, are promulgated as industriously to-day as they ever were in the past, and probably win accept- ance from an even wider public. They have, it is true, been subjected to certain modifica- tions — to some by socialists, to others by more cautious radicals; but the general version of economic history embodied in them is not only 49 50 DIFFUSION OF WEALTH [Book II. not discarded, but has merely re-expressed itself in more plausible forms, so that numbers even of sober men are to-day very timid in rejecting it. It is, indeed, for contemporary reformers what an old story is for a novelist who tells it in an amended way, divesting the scenes and characters of traits too outrageous to be credible, but leaving the sequence of events and the principal situations as they were. As thus modernised for the present generation it may be fairly summed up as follows, in terms which are largely borrowed from a member of the present Government. The structure of English society at the begin- ning of the nineteenth century was compara- tively sound and simple. Wealth existed, but was not in the aggregate overwhelming. Poverty existed, but not to an extreme degree. In any case, since that time the wealth of the country as a whole has, relatively to the popula- tion, increased to so vast an extent that, if only it were well distributed, it might (to use a phrase of to-day) be "as plentiful as water everywhere." As a matter of fact there has been no such result as this. In whatever directions the new wealth may have gone, there has been no general diffusion of it. A portion no doubt has been secured by middle class families, and a limited section of highly skilled artizans; but this portion has been small ; and the mass of the working classes are no better off than formerly. Their wages in terms of money have perhaps risen slightly; but what they can Chap. I.] MR. MASTERMAN'vS FALLACIES 51 buy with their money in the way of comforts and decencies is less to-day than it was in the days of their great-great-grandfathers. Where, then, have the missing miUions gone? They have gone to swell the fortunes, already great, of the rich, the result being, as the statesman just referred to expresses it, that we see in this coun- try to-day, to an extent never seen before, " a society fissured into unnatural plenitude on the one hand, and (as an inevitable consequence) into unnatural privation on the other." This assertion is not taken from any electioneering speech, and does not therefore represent the excitement of an unguarded moment. It is taken from a book^ which the author has many times re-issued, and in which he repeats and elaborates it so as to leave no doubt of his meaning. The riches of the rich in England since the beginning of the nineteenth century have, according to him, not only increased absolutely, which indeed would have been but natural ; they have increased out of all propor- tion to the increase of wealth generally. The golden head has grown faster than any other part of the body, and is crushing the limbs by the enormity of its mere brute weight. In other words, the percentage of the national income represented by what this writer calls " the piled up aggregations of the superwealthy " has by this time come to be something so preposterous, and the percentage left for the remainder of the I. " The Condition of England," by Mr. Mastermau. 52 DIvSTRIBUTION OF WEALTH [Book II. community so small, that the principal evils of the present time are attributable, mainly if not exclusively, to this novel and peculiar cause. Such is the estimate formulated by a prominent radical statesman of the situation with which it is the mission of contemporary radicalism to deal ; and it fairly represents the ideas now dominant in the minds, not only of radicals generally, and (it is needless to add of socialists), but also of numerous persons who are otherwise opposed to both. Accordingly, before we attempt to examine any questions of detail, it will be necessary to begin with a con- sideration of the general picture or conception of things to which all the assertions of reformers as to questions of detail are subordinated, and from which indeed they are in part deduced. How, then, in respect of its main features does the distribution of wealth in England in the year 191 1 compare broadly with its distri- bution at the beginning of the nineteenth century? It has been contended by some that a comparison of this kind is impossible, because, though so far as the present time is concerned the requisite evidences, if not complete, are abundant, no similar evidences as to the earlier time is extant. Thus a serious critic in a serious conservative journal has declared, with regard to the beginning of the nineteenth century, that nobody can make so much as a reasonable guess at what the income of the country at that time was, to say nothing of the manner in which Chap. I.] INCOMES IN 1801 S3 it was distributed amongst different classes. That such views should be prevalent is enough to show the need for a more careful scrutiny of actualities. The evidences supposed to be wanting are accessible to those who look for them. It has already been observed, and it is a matter of common knowledge, that this country was, in the year 1801, subjected to an income-tax, of which the general results have been preserved. But it is not commonly known — for the fact has escaped the attention even of historians like McCuUoch and Porter — that the records which were, according to McCuUoch, destroyed, still exist in their integrity. Such, however, is the case. It must be added that the year in question was the year of the first census. A report on that census, and the report relating to the income-tax were printed and issued in conjunction by order of the House of Commons in the year 1802, and from these two documents together a mass of facts is ascertainable which to most readers will be novel. The year 1801 shall be therefore our starting-point. The then population of England and Wales was approximately 9,000,000, which may be taken as representing 1,800,000 families,^ and 100,000 families, or half a million persons, are I. That is to say " natural families " averaging five person.s. If the word "family" is taken to mean a house- hold, the number was much less; for the overcrowding of the population in 1801 was much greater than it is to-day. 54 INCOMES IN 1801 [Book II. shown by the returns, which are singularly systematic and minute, to have been supported on incomes in excess of £160 a year. Of the rest of the inhabitants of the country — 8,500,000 persons — more than 4,500,000 w^ere women and children not working for w^ages, whilst the number of the actual bread-winners was a little below 4,000,000, of whom about one-third were women, lads and girls, and the number of the adult males about two millions and a half. If we roughly take all those persons as belonging to the working classes who were not supported on incomes exceeding ;^i6o a year, the working- classes consisted of 1,700,000 families; and for every two of such families there were, on an average, three adult male bread winners. The entire number of separately received incomes, earned or unearned, from the largest down to the smallest, may be taken with reasonable accuracy as 4,100,000. Let us now subdivide these farther into six characteristic groups, and see what, according to the returns, was the number comprised in each. In accordance with a note appended to the document in question, the numbers actually tabulated shall in each case be increased by one-eighth, as it was subsequently estimated that they were deficient by approximately that amount, and for simplicity's sake round figures shall be employed. The advantage of sim- Chap. I.] INCOMES IN iSoi 55 plicity will be great, and the sacrifice will be so small as to be negligible.^ There is, then, detailed evidence to show that in the year 1801, out of about 4,100,000 earned and unearned incomes, The number of those exceeding ^5,000 a year was about ... ... ... 1,100 The number of those between ^1,000 and ^5,000 a year w^as about ... 11,000 The number of those between ^160 and ^1,000 a year was about ... 90,000 The number of those between 30/- and 62/- a week was about ... ... 90,000 The number of those between 22/- and 30/- a week was about ... ... 160,000 The number of those below 22/- a week or ^60 a year was about 3,752,100^ Let us next consider how matters stand to-day, when set forth in a similar manner. The population of England and Wales to-day is 36,000,000. The number of persons receiving separate incomes, whether earned or unearned, is in excess of 16,000,000'^ Of these, 1. The total number of persons liable to income-tax on more than fJ-)0 a year, actually recorded in the returns for 1801, was about 315,000. The number shown in the text (one-eighth being added) is, as will be seen, about 352,000. 2. Between 1,310,000 and 1,500,000 of these would have been women, lads, and girls. 3. The number for the United Kingdom is about 20,000,000. 56 CLASSES OF INCOMES [Book II. about 15,000,000 whom, following our previous procedure, we may group together as the work- ing classes, earn or receive not more than ^160 a year, or 62s. a week. The number of persons in England and Wales receiving incomes in excess of this amount is, as we shall see presently, about 1,200,000. For the purpose of subdividing these into six groups, as we have done in the case of the year 1 801, the principal evidences are as follows. As to incomes exceeding ^5,000 a year, their number is directly ascertainable from the returns relating to supertax. As to incomes lying between ^^ 1,000 a year and ^^5,000, we may take their number as corresponding to the number of private houses whose annual values lie between i^ioo and ^200. As to incomes lying between ^160 and ^1,000, it has already been explained that we may, after making a certain deduction, take their number as corres- ponding to the number of private houses whose annual value lies between ^20 and ^100. As to the incomes of the 15,000,000 workers which lie below the present income-tax limit, the elaborate investigations of the Board of Trade, mainly relating to the years 1906-7, will provide us with evidence sufficient for the comparison here in view : but, before making use of this, there is one fact to be considered. Of such incomes, about one-third consist of the earnings of women, lads and girls. Now the precise figures for 1801 stop short at incomes exceeding ^60 a year, or 22/- a week : Chap. I.] ADULT MALE WORKERS 57 and not only is it certain that in 1801 no such incomes were earned by women, lads or girls; but, as appears from the latest investigations of the Board of Trade, that only a small per- centage of them are earning such incomes now. Hence though the earnings of all of them may have very greatly increased, we shall, if we take ^60 as our standard, have no adequate means by which this increase may be measured, just as the growth of children from six to twelve years old could not be measured by reference to a vertical scale on which no point was marked that was lower than sixty inches. The average stature of the children might have risen from thirty-six inches to fifty; but until it exceeded sixty inches, such a method of measurement would record no growth at all. For this reason the earnings of women, lads and girls must be excluded from our present survey, and our attention must be confined to those of adult males. With regard to adult males, the case is totally different. Here the dividing line of ^60 a year, or 22/- a week, provides us with an index whose informative value is of the highest. It appears from a comprehensive analysis of the Board of Trade returns, supplemented by the results of a semi-official enquiry, recently carried out by a committee of well-known economists, that, out of about 10,000,000 adult male workers,^ whose earnings are not in excess I. This figure inchides not only wage-paid labourers but the lower middle classes. 58 GROUPS OF INCOMES [Book II. of 62/- a week, or ^160 a year, about 2,000,000 earned less than 22/- a week, about 2,000,000 earned between 22/- and 30/-, and about 6,000,000 earned between 30/- and 62/-. The significance of these facts with regard to the aduh male workers will be evident when we compare them with those given already, which corresponded to them in the year 1801. The number of adult male workers having been at that time about 2,500,000, it will be seen that those earning more than 30/- a week were approximately 90,000, or only 3'6 per cent, of the whole; that those earning from 22/- to 30/- a week were 160,000, or only 64 per cent, of the whole; and that those earning less than 22/- a week amounted to no less than 90 per cent, of the whole. On the other hand, at the present day, if we take these groups in the same order, it will be seen that the percentage of the whole represented by each respectively has risen in the case of the first from 36 to 60 : that it has risen in the case of the second from 64 to 20; and that it has fallen to 20 per cent., in the case of the third, from 90. In other words, the situation has been almost exactly inverted. Whereas in 1801 only 10 per cent, of the adult male workers earned more than ^60 a year, at the present time only 20 per cent, earn less. These observations having been made, the whole of the six characteristic groups of incomes, as already dealt with in respect of the earlier period, shall now be taken together, and Chap. I.] INCOMES IN 1910 59 the number comprised in each shall be given as it is, or approximately as it is, to-day. In the year 19 10, then, out of nearly 11,200,000 incomes separately earned or re- received in England and Wales (exclusive of the wages of women, lads, and girls) detailed evidence of the kinds already specified shows that — The number of incomes exceeding ^5,000 a year was about 10,000 (supertax figures).^ The number of incomes betw^een ^1,000 and ^5,000 a year was about 60,000 (evidence of houses).^ The number of incomes between ^160 and ;^i,ooo a year was about 1,100,000 (evi- dence of houses).^ The number of incomes between 30/- and 62/- a week was about 6,000,000 (Board of Trade figures). The number of incomes between 22/- and 30/- a week was about 2,000,000 (Board of Trade figures). The number of incomes below 22/- a week was about 2,000,000 (Board of Trade figures).^ 1. The supertax total for the United Kingdom is about 11,000. One-tenth is here deducted in respect of vScotland and Ireland. 2. See Book III, Chapters i and ii, where the figures dealt with relate not to England and Wales, but to Great Britain or else to the T'nited Kingdom. 6o 1801 AND 1910 [Book II. Here we have two sets of comparable figures before us — those for 1910 and those for 1801 — the immense significance of which, if they were merely set side by side and left to speak for themselves, would be obvious to those familiar with statistical presentations of history. By most readers, however, it will probably be best understood if we express it in a pictorial form which appeals more directly to the imagination. CHAPTER II. We will begin, then, with representing the condition of things in 1801 by an imaginary- town and its environs, containing a population of 9,000 persons. We shall thus have a unit representing a thousandth part of what was then the population of England and Wales— that is to say 9,000,000 : and the total number of incomes in each group, as already given, can, by the simple process of striking off three noughts, be reduced to the number that would have existed in such a typical microcosm. Thus the total number of incomes exceeding ^^5,000 a year having, then, as we have seen, been something over 1,000, and the total number between £160 and ^1,000 having been about 90,000, we may say with sufficient accuracy that in our town of 9,000 inhabitants there would have been one income of the former amount, and 90 incomes of the latter; and so on through- out. We will next apply the same treatment to incomes as they exist to-day, so that the figures for both dates may be reduced to a common denominator. The population of England and Wales to-day being 36,000,000, is almost exactly four times as great as it was in the year 1 80 1. A typical population, therefore, of 9,000 persons will in this case represent, not a 61 62 A TOWN IN 1801 [Book II. thousandth, but a four-thousandth part of the whole ; and in order to make such a community representative, the actual number of incomes in each group must be reduced, not only by striking off three noughts as previously, but also by dividing this reduced product by four. Thus the total number of incomes exceeding ;^5,ooo a year being to-day about 10,000, the average number per 9,000 persons will be strictly two and a half ; and for purposes of a broad comparison we may conveniently call it two. The total number of incomes between ^160 and ^1,000 being to-day about 1,100,000, the average number per 9,000 persons will similarly be 275; and so on throughout. We will assume farther, in both cases, that there is one family of five persons to a house; that, in the case of incomes exceeding ^160 a year, there is one house to every income; and, in the case of incomes not exceeding that amount, there are about two houses to every three incomes earned by adult males. The way in which these preliminary assump- tions will work out, may be conveniently sum- marised thus : — In a town and its environs containing 9,000 inhabitants and 1,800 houses, incomes and houses would, at the two dates specified, have been as under, on the supposition that the distribution followed that prevailing in England and Wales as a whole. The number of incomes is exclusive of the wages earned by women, lads and girls. Chap. II.] A PICTORIAL COMPARISON 63 iSoi, 1910. Range of Incomes- Over ^5,000 a year /i,ooo to ^5,000 ;^i6o to ^1,000... 30/- to 62 /-a week 22 1 - to 30/- a week I II 90 90 160 fc o » S o S ■^ c s e ^- C •-' aj »~ o I 1 1 90 60 106 ^^ 2 1,384 462 462 h 3 , as it was in the year 1801. £11, (;(»(),()()<) 21,(M)0,()00 2S.(M»().0(Mt 120, 001 ),(.((( I 18n,(K)0,0(M) .Aggregate in- come !)er group as it would be to-day. had the increase been proportionate to the general in- crease of the population. . i'.'^."),0()0,()00 . 10;-),000,000 1 Ki.(M)0,000 (;oo and X!i6o appear to have risen by about 10 per cent. 224 AVERAGE OF INCOMES [Book IV. income will have increased by 5 per cent., the other will have increased by 10; but whereas in the first case we had two men with aft average income of ^30, in the second we have 10 men with an average of only £2^. Each class of income has increased both in average amount and number; but the numerical increase of the larger incomes has been small, and the numerical increase of the smaller incomes has been large. This is precisely what has happened in the case of the incomes here in question. Of incomes in excess of ^160 a year, the number of those in excess of ^1,000 has not increased in a century by as much as 70,000. The number of those ranging from £ i ,000 down to ^ 1 60 has increased meanwhile by more than a million and a quarter. Hence it appears that, strange as some readers may thmk it, the average amount of incomes in excess of £\^o was as much as ^600 in the year 1801, whereas to-day it is only ^500? additions from abroad included; whilst if these additions be excluded, as we have seen in an earlier chapter, the average does not exceed, if it indeed reaches, ^400. And these facts become even more important when we consider, with regard to the increase of the non-labouring classes, how large a part of it is contributed by those called " the Lower Middle." For, in proportion as the entire Middle Class has increased in a ratio greater than that of the increase of the mass of the population, certain persons who would, had all classes increased equally, have to-day been included in the class Chap. II.] INCOMES ABOVE AND BELOW £i,ooo 225 of manual labourers, will have passed over into a class the earnings of which are larger, and whose functions, though not less valuable, are yet of a different character. It is necessary to grasp this fact if we wish to form any clear picture of what, during modern times, has really happened with regard to the distribution of wealth; and to the outlining of such a picture we are now in a position to proceed. Let us begin, then, with a few words as to incomes in excess of ^1,000. The number of these in the year 1801 was, as we have seen, not more than 11,000. In the year 1910 it was approximately 75,000; but this merely numerical increase is too small to be important; and though this aggregate income has risen in the ratio of i to 8^, the income of the nation has risen in the ratio of i to 12. Thus relatively to the whole, the income of this group has declined. We will, therefore, confine our atten- tion to the mass of incomes remaining. The aggregate of incomes not exceeding ;^i,ooo in the year 1801 was ^150,000,000. In the year 19 10 it was ;!^ 1,760,000,000. The former sum was divided between nearly 9,000,000 persons, of whom barely three- quarters of a million belonged to the middle class, and eight millions and a quarter to the labour class. The latter sum was divided between nearly 45,000,000 persons, of whom nearly 12,000,000 belonged to the middle class, and 33,000,000 to the labour class; whereas if both these parts had increased in the 226 INCOMEvS OF MANUAL WORKERS [Book IV. same ratio as the whole, the labour class would have numbered more than 41,000,000, and the middle class would have fallen appreciably short of 4,000,000. This means that there are in the United Kingdom to-day more than 8,000,000 persons who, had no changes resulted from the modern capitalistic system other than an increase of wealth proportionate to the increase of the population, would have been members of the class that lives by manual labour, but who have in reality, through the workings of that system, been raised out of the ranks of manual labour altogether, thus practi- cally constituting a labour class of a new kind. And now let us turn to the mass of the manual labourers themselves. Just as rela- tively to the number of the population as a whole the number of workers of other kinds has increased, so, in the same relative sense, the number of the labourers has decreased. But between these two bodies this is not the only contrast. The average income per earner or per head in the case of both bodies has increased; but in the case of the body which i has relatively declined in number — namely ^ the labourers — the increase in average income has beyond all comparison been greatest. Middle class workers of various grades, who | a hundred years ago were earning ^80, ^200, ^300 or ^600, would to-day be earning from ^100 to /"660. Such incomes will have increased by 10, or in some cases by 20 Chap. II.] INCOMEvS OF MANUAL WORKERvS 227 per cent. But how do matters stand with regard to the manual labourers? Had the entire income of the country in the year 1801 been divided equally amongst all, the share per head of the population would have only been ^20. The share per worker would have been not more than ^45. The actual average for all manual labourers, from the highest grade to the lowest, was, as may be seen from the figures quoted in previous chapters, not more than ^29.^ The corresponding average for to-day — the average independent of skill, age and sex — is, as has likewise been shown in a previous chapter, more than ^60. Thus, whilst the remuneration of work other than manual has risen on the whole (we may say roughly) by 15 per cent., the remuneration of manual work has risen by no less than 120 per cent. In other words, if we exclude only those employers, heads of enterprises, administrators, and owners of property, whose incomes exceed ^1000 — the total of these incomes, in so far as it is of home origin, being not more than 9 per cent, of the entire income of the nation — and if we take all other kinds of workers together, scien- tific, administrative, clerical, manual and educa- tional, by whom the wealth of the country is produced, and the workers prepared for the production of it, the history of the production I. The middle class workers being deducted, there was in iSoi an income of ;Ci 10,000,000 on a maximum to be divided amongst a population of more than 8,000,000 persons, of whom about 3,800,000 were workers. 228 vSUMMARY [Book IV. and the distribution of wealth from the begin- ning of the nineteenth century up to the present time, may be broadly summed up as follows. After all allowance has been made for the increase of the population, the financial incre- ment resulting from the progress of more than a century is an additional income amounting to 1, 1 20 millions, of which about one-eleventh goes to persons having more than ^1,000 a year. The total left for distribution amongst the rest of the nation amounts thus to 1,020 millions; and if (examining somewhat more minutely the specific evidence at our disposal^) we add certain farther details to the analysis already given, the result may be summarised in the following amended statement. Of the total sum, amounting to 1,020 million pounds, by which, as compared with conditions in 1 80 1, the increase in the income of the labouring and middle classes exceeds the increase in their number, 13 per cent, has gone in increasing the num- ber of incomes between ^400 a year and ;^i,ooo, and slightly raising at the same time their average amount, which is now I about ^630. I. In the returns for 1801, incomes between £160 and ;£i,ooo are divided into those exceeding and not exceeding ;^50o. The nvunbers exceeding and not exceeding ;{;4oo have, for the purposes of the tabular statement in the text, been arrived at by reference to current assessments. Schedule E, which may be taken as indicating the propor- tion of incomes between ^1400 and ;£5oo to the rest, in 1801. Chap. II.] LABOURERS 229 17 per cent, has gone in increasing the num- ber of incomes between £160 and ^^400, and shghtly raising at the same time their average amount, which is now about /260. 20 per cent, has gone in increasing the num- ber of incomes between ^90 and ^160, not earned by wage-paid manual labour, and in slightly raising at the same time their average amount, which is now about /lOO. 50 per cent, has gone to manual labourers, not in increasing their number (for this, relatively to the population has declined by 20 per cent.) but in more than doub- ling the average per head earned by them, this having been raised in the ratio of 100 to 220. With regard to the labourers, certain special observations must be added. Had their number increased in the same ratio as the population, and not been diminished by the elevation of a large proportion of them to the ranks of what is really a labour class of a new kind, they would have appropriated of the increment in question, not 50 per cent, but 70; but the fact that they alone have, relatively to their number, more than doubled their earnings, whilst no middle class incomes have even approached such an increase, must be taken in connection with a farther fact, which has already 230 INCOMES OF LABOURERS [Book IV. been discussed at length. To say with regard to the labourers that the average income per earner (irrespective of skill, age, and sex) is now over ;^6o as compared with ^29 in the year 1 801 is not in itself sufficient to indicate what has really happened. Unlike all middle class incomes, each of which has a definite lower limit, the earnings of labour may in many cases sink to an indeterminate minimum which, if not supplemented by poor-relief, would be insuffi- cient to support life. It has, however, been pointed out that, whereas in the year 1801 only 10 per cent, of all incomes not exceeding /^i6o a year were above what reformers to-day quote as the poverty limit, only 20 per cent., if so much, now fall below it. It is therefore obvious that the increase in the remuneration of labour has affected all groups except one, which is at once small and exceptional. This group, precisely because it is exceptional, will presently be considered by itself. The groups of persons at the other end of the scale, whose incomes exceed ^1,000, ;^5,ooo or ^20,000 (relatively insignificant though their aggregate income be), will for the same reason be considered separ- ately also. Meanwhile, confining ourselves to the great body of the population, who represent at least 90 per cent, of the home-produced income of the country, we may again observe with regard to them that 86 per cent, of it has gone in doubling the income of the majority of the labouring classes, and in multiplying the Chap. II.] A FUNDAMENTAL MISCONCEPTION 231 incomes of middle class workers, none of which exceed ^400 a year; whilst 14 per cent, has gone to a group comparatively small, none of whose members have more than ;^i,ooo a year, their average income being not so much as ;^650. Everything, in short, has happened which, according to the reformers, has not happened. And now it must be observed that this funda- mental misconception on their part does not merely affect them and their followers by influencing their general judgment of things, and their general temper and attitude of mind towards them. It vitiates their treatment and conception of each single question or problem on which, as the subject-matter of reform, public attention from time to time is concen- trated. The chief of these questions or prob- lems shall be reviewed in the next two chapters; and some of the ludicrous and contradictory errors of judgment shall be signalised, which reformers, whether radical or socialist, are accustomed to bring to the solution of them. CHAPTER III. A DISTINGUISHED American writer, in his annals of "A Tramp Abroad," describes how a traveller on arriving at a mountain hotel in Switzerland, slept so long that, intending to see the sunrise, he found himself watching what he subsequently discovered to be the sunset. This misconcep- tion, among other effects on his conduct, caused him to sally from his bedroom with nothing on but a dressing-gown, and encounter a congre- gation of guests elaborately costumed for dinner. The profound misconception of social actualities as a whole, which is distinctive of the reformers of to-day, affects in a similar manner their judgment in respect of the various particular questions with which all politics, in so far as they are practical, are concerned. The most striking illustration of this is the case, described already of Marx and Henry George. Both started with the same general theory that one class was growing so inordin- ately rich that every other class was the victim of increasing poverty. Both maintained that this movement was exemplified in the British Islands on a scale more appalling than in any other country of the world : and each realised that if this theory was to be invested with any practical meaning, the particular class of Britons w^hich was seizing on everything must be iden- 232 Chap. III.] THEORIES OF MARX it GEORGE 233 tified, and some explanation given of the why and how of its depredations. Marx identified this class with the great modern manufacturers, George with the great landlords. Thus all reform for Marx reduced itself to an industrial question; for George all reform reduced itself to a rent-question, or a land-question. Each of these questions relates to a multitude of detailed facts; and we have seen already to what an astonishing extent the general theory with which both reformers started reproduced its errors, when applied by each to the group of particular facts selected by him. The same mental process is in operation amongst reformers still. But to-day each of the two original questions is broken up into several, according to the varieties of intelli- gence, education and temper, which reformers have, since the days of George and Marx, brought to bear on the teachings of those who arc still their masters. Thus the land-question resolves itself into one thing for the single- taxer, into another for the socialist, and again into another for the radical ; whilst the industrial question, with which socialists are mainly pre- occupied, resolves itself, according as it is appr(jached by socialist reformers or radical, into " questions " which point to the extinction of the private capitalist altogether, or to " questions " which imply his perpetuation by enabHng his opponents to endure him. In the f)resent and the following chapters certain of the most important of these separate 234 " SINGLE TAXERvS " [Book IV. "questions" shall be dealt with one by one; and in each case it shall be shown how the general theory which all the reformers adopt as the explanation of all social evils, vitiates their estimates of the actualities with which they propose to deal. These " questions " are as follows ; — The land-question as understood by the single-taxers. The land-question as understood by the mass of radicals. The land-question as it appears under the form of the " agricultural question." The industrial question as a question of wages. The industrial question as a question of profits. In the present chapter we will deal with the questions that relate to land. With regard to the single-taxers, it is needless to say more than a word or two. Like dunces put in a corner, they form a class by themselves, scouted by all the others. The conservative rejects them, because the essence of their programme is robbery. The socialist rejects them because their robbery would not go far enough. The radical rejects them for another reason, which he shares with the conservative, and with most socialists also, but which, in the case of the radical is deserving of special notice, and which will be stated presently. The single- taxers, who would confiscate all land-rent under the guise of a tax which should supersede all Chap. III.] THE LAND QUESTION 235 Others, represent in its childish integrity the fundamental doctrine of George, that the rent of crude land, in every progressive country, eats up most of the wealth created by capital, as well as that created by labour, and that it is makinor its largest meal in Great Britain and Ireland. They accordingly mamtam, as the basis of their practical proposals, that no matter how many millions or hundreds of millions of pounds the public expenditure of this country amounts, or may one day amount to, land-rent does and will amount to a sum still greater. But, plausible as their scheme may sound, the radicals of to-day reject it. And why? The reason why they reject it is this. They realise that the one proposition as to fact on which the sinci^le-taxers take their stand is a piece of grotesque nonsense, and that any policy based on it would end in ruin and ridicule. Let us now, in the searchlight of exceedingly recent history, consider the " land-question " as understood by the radicals themselves. Having rejected one fiction with regard to the rent of land, they have at once adopted another, which in some ways is even more preposterous. Their reasoning has been virtually as follows. " The landlords have not yet succeeded in robbing the nation to the extent, or nearly to the extent, which certain persons suppose ; but, since all poverty is due to the increasing accumulations of the superwealthy, the landlords must be obviously amongst the first offenders somehow. How, then, in their case is the trick of accumu- 236 RENT OF LAND [Book IV. lation done? " Armed with the major premiss that the trick is being brought off somehow, the radicals were quick in agreeing as to what the operation was. " It may be true," they said in effect, " that the rent of land to-day is not as a whole greater than the income from other securities; but in one respect stands alone. It stands alone in the fact that, unlike income from shares in any kind of commercial enter- prise, it exhibits an automatic increase — a portent unknown to stockbrokers; and here, in this ' unearned increment,' and not in land- rent as such, we identify those thefts on which the landlords thrive, and which leave the homes of the people defenceless against ' the wolves of hunger.' It is useless to object," the argu- ment thus continued, " that the land-rent of the country even now is not more than so much. What the people must be made to realise is its daily and hourly increase, and the fact that every year this increase is itself increasing. Let this be compared with the increases of income from other sources, and it leaves them all behind. Does anybody doubt this.^ We can open his eyes by instances." The train of powder having been laid, the match was forthwith applied to it. From radical platforms everywhere cases were cited (or let off, like school-boys' crackers) of diminu- tive plots of land, which only yesterday were let for £2, an acre, and had just been re-leased for ^300, or had been bought by the father of some noble duke for ^5,000, and had just been Chap. III.] THE ACTUAL FACTS 237 resold by the son for something like ;i^5o,ooo; and each exhibition of instances was wound up with the moral that " this sort of thing is in progress all over the country." Such argu- ments, as emanating from the leaders of radical opinion, are remarkable ; but what is still more remarkable is the instant and eager acceptance of them by the whole radical public. New instances of the sensational gains of landlords crowded the columns of the ministerial journals ; and the image of the " unearned increment " grew to such vast proportions that multitudes saw in a tax of 10 per cent, on it the promise of pounds of salmon on the table of the poorest worker, and the rarest of refreshing fruits from thousands of miles of hot-houses. And meanwhile what were the actual facts of the situation ? The radicals professed to arrive at these by an examination of specific instances, to each of which they drew attention as being at once startling and representative. These instances may have been startling, and a large number of them may have been true; but what the radicals omitted to detect, or to admit, was, that each was only startling because, instead of being representative, it was exceptional. The radicals might just as reasonably pick out five famous artists, each of whom gets for a picture ten hundred pounds to-day, whereas not many years ago he was getting no more than ten ; and then invite us to conclude that the earnings of artists as a whole — good, bad and indifferent — are a hundred times greater to-day than in 238 TOTAL RENTAL [Book IV. the reign of the late King Edward. The actual facts can be ascertained by a very simple method. Year by year the Department of which the Chancellor of the Exchequer is the head, issues a statement of the rent derived both from land and buildings; the gross incre- ment in respect of both these sums is for each year ascertainable by the simplest of arithmeti- cal processes; and, if we concede, in accordance with the common computation, that the ground- rent of a building, on an average, is as much as one fifth of the gross rent, we can determine with an accuracy sufficient for all general pur- poses, what year by year has been the increase in the rent of land itself. We can also, by reference to similar official records, compare the increase in land-rent with the contemporaneous increase in incomes from other sources. Let us then see what, according to the Commis- sioners of Inland Revenue, has actually taken place in the course of the last fifteen years. In each case we will content ourselves with the gross amounts as given, which, though greater than the true totals will be all that we require for a comparison. In the year 1895 the gross agricultural rental of the United Kingdom (over-assessments and outgoings included) was ;^55,ooo,ooo; the ground-rental (urban and suburban) was ^31,000,000; the rental as a whole being ;^86,ooo,ooo. The corresponding figures in the year 19 10 were, agricultural rental, ;^52,ooo,ooo; ground-rental, ^44,000,000; the Chap. III.] RENT OF LAND AND INCOMES 239 rental as a whole being ^96,000,000. Let us now compare the rent of land with incomes from two other sources only — the rent of buildings as distinct from the ground they stand on, and interest derived from shares in foreign railways and loans to foreign governments. In the year 1895, the building-rental was ^123,000,000; the income derived from foreign loans and railways was ^54,000,000; the total of the two revenues being ^177,000,000. In the year 19 10 the corresponding figures were, building- rental ;^ 1 7 8,000,000; interest from foreign railways and foreign government loans, ;^ 1 01, 000,000; the total of the two revenues being ;^ 2 79,000,000. It will thus be seen that whilst incomes other than land-rent have increased, during the period in question, by more than ^100,000,000, land-rent has been so untrue to its reputation that it has managed to increase by one tenth of that total only. But not only is its increase, compared with that of the other incomes from property, negligible in absolute amount. This amount, small as it is, has for some time past, been annually growing less and less. The agricultural rental has not increased at all. It has on the contrary dwin- dled at an average annual rate of ^400,000. The only increase has been an increase in the total of urban ground-rents; and this on a yearly average has amounted approximately to ^870,000. If, however, the fifteen years we are dealing with be divided into three quin- qucnniums, we shall find that between the years 240 UNEARNED INCREMENT [Book IV. 1895 ^rid 1900 the annual increase averaged about ^850,000, that between the years 1900 and 1905 it rose, nominally at all events, to more than ;^900,ooo ;^ and that between the years 1905 and 19 10 it was not more than ;i^6oo,ooo.^ Finally, if we compare these increases with the increase of the national income as a whole, the largest of them as well as the smallest represent a relative decrease. Thus, to sum the matter up, the " unearned increment " of land-rent not only possesses none of the qualities which the radical imagina- tion ascribes to it, but is remarkable for others of a kind precisely opposite. It is a sis^nal illustration (if we look at it from a speculative standpoint) of what economists call the law of " diminishing returns " ; and what is far more important for all practical purposes, its absolute amount, as compared with the wealth of the nation, is insignificant. The reformers of to-day who announced that, by placing a special tax on it, they were taking some seven-leagued step towards the abolition of poverty, are like 1. This high average for the years 1900-1905 is mainly due to overbuilding in the year 1903. The nominal in- crease in house-and-site values thus caused, was double the average ; but, as appears from the Deductions (Schedule A of the Income-Tax Returns), there resulted a greater increase in the amount deducted in respect of unoccupied premises 2. During this last quinquennium there has been a con- tinual decline from the higher level of previous years down to about ;£i30o,ooo. Chap. III.] " THE AGRICULTURAL PROBLEM " 241 a sportsman of the type of Tartarin, who should organise a vast expedition against a supposed man-eating tiger, and at the end of the day come back with a dormouse. So grotesque a mis- conception of the actuahties of this particular question could hardly have arisen in the minds of the radical leaders themselves, and would certainly have been never accepted by multi- tudes with acclamations of unhesitating belief, had it not been a part of, or a deduction from, that wider misconception of the general trend of affairs, which has in the preceding pages been the main subject of our enquiry. The treatment of the " land-question," under the form of " the Agricultural Problem," by reformers of all kinds (who in this connection comprise certain conservatives) is in some respects yet more interesting as an illustration of similar results arising from the same cause. It is more interesting because, in the way of actual facts, there is more for the reformer to go upon. With regard to agriculture in this country, the following facts are admitted by all parties : — In the first place it is politically desirable that the maximum amount of food should be pro- duced within our own borders; in the second place, for reasons other than those of insular self-support, a rural population is an important national asset; in the third place, the amount of bread-stuffs produced in the United Kingdom has, throuc^hout the lifetime of the present generation, been declining; and lastly, the 242 MR. MASTERMAN'S FALLACIEvS [Book IV. number of persons engaged in the business of agriculture has, throughout the same period, been steadily declining also. All these points are deserving of serious consideration ; but the moment they are interpreted in the light of the current theory of reformers, they are so dis- guised, perverted or inverted, that no sane judgement with regard to them is, so long as they are presented in such forms, possible. Let us see how this feat of perversion is accomplished by Mr. Masterman. In his book, " The Condition of England," he professes to give, for the guidance of the conscientious radical, a survey of English agriculture, and what he calls " the life of the countryside " from the beginning of the nineteenth century up to the present time. According to him in the days of our great grandfathers, when modern super- wealth was as yet in the germ only, English agriculture was in a state of ideal prosperity; the English peasantry were the backbone of the population; the individual peasant or labourer was a comparatively free man, and, though not without its hardships, " his lot was no ignoble one." But now in the course of little more than a hundred years every one of these features has undergone a disastrous change. The villages, once the centre of England's life, have been depopulated. Out of every ten village families nine have disappeared for ever. The few men who are left, although they have now got votes, have lost that sense of independence, which was, Avhen they were voteless, their very Chap. III.] SLAVES OF A THEORY 243 remarkable characteristic. To-day, says Mr. Masterman, they " are still as slaves before their lords " ; they are moreover by this time so sunk in poverty that " the wonder of the case is not that so many go; the wonder is that any remain " ; whilst, to crown the miserable story, the business of agriculture itself (if not exactly dead) is dying. Mr. Masterman's statement, if it does not represent facts, is an excellent representation of the representations of them made by modern reformers. Plutarch was said by a critic to be so much the slave of style that, if it had been necessary for the literary perfection of a sentence, he would have made Caesar kill Brutus instead of Brutus killing Caesar. The reformers in the same way are the slaves of their general theory, which constrains them so to represent the history of British agriculture that it may form an indictment against the present system of landowning, because that system is associated with a certain class of landowners, to whose avenues and great houses, to whose pheasants, to whose foxes, and to whose deer, and indeed to whose vermin generally, the life of the agricultural worker and the powers of the soil have been immolated. Now without discussing how far the present sy.stem of landowning may be responsible for the main facts of our modern agricultural history, let us take these facts as Mr. Master- man and his friends represent them, and 244 AGRICULTURE [Book IV. compare them with the corresponding facts which are attested by statistical evidence. The primary propositions of Mr. Masterman and his friends (which a good many conserva- tives have been induced to accept) are these : — (i) Agriculture, regarded as a productive business, has been declining for more than a hundred years. (2) The number of persons engaged in agriculture has been declining for more than a hundred years. (3) The wages of the agricultural labourer have been declining for more than a hundred years : — all these results being due to the general fact that this country is a country of " avenues " leading up to the houses of the " superwealthy." The first and the third of these propositions are the exact reverse of the truth. The second has an element of truth in it, but omits, obscures, shuffles out of sight, buries, the one part which alone can render the whole intelligible. With regard to agriculture considered as a productive business, its prosperity, like that of any other business whatsoever, must, as Mr. Masterman and all other reformers will admit, be measurable by the volume together with the value of its products. T hey not only admit this, but as agitators they argue on the admission. Thus, the current annual value of the agricultural output of Great Britain has been lately quoted by them, on the authority of the Census of Production, as ^220,000,000: Chap. III.] AGRICULTURE 245 and this total, by a reformer of Mr. Masterman's school, is cited as evidence of a " decline " in our agricultural products which only just fails to fill reasonable men with " despair." ^ Now without going into details, it will be enough for our immediate purpose to compare this admitted figure with another which is no less indubitable. In the year 1798 it was computed by Pitt and his advisers that the income of Scotland was about one eighth of that of England and Wales. Hence, the latter having, at the beginning of the nineteenth century, been certainly not more than ^180,000,000, the entire income of Great Britain cannot by any possibility have much exceeded, if indeed it reached, a total of ^200,000,000. In other words, the present value of the agri- cultural output alone — the output of that industry which reformers describe as "dying" — is actually greater to-day than the entire income of the country from all sources whatsoever at the time when this industry, according to the doctrine of the reformers, was enjoying a prosperity which it has now lamentably lost.^ With regard to the alleged decline in the 1. vSee Report on the Rural Problem, by Mr. Harben, issued on behalf of the Fabian vSociety, 1913. 2. The wheat-supply of Hnj^land in 1801 was sufficient for nearly the whole population, and was about equal to the home-grown supply to-day. The meat-supply and the supply of dairy and garden produce has increased by 70 per cent, since the years 1835-40, if we may judge by the figures for those years given by McCullock, as compared with those given in the Census of Agricultural Production for the year 1907 246 AGRICULTURAL POPULATION [Book IV. number of the agricultural population, the reformers are perfectly correct in declaring that a decline has occurred, and that it is one of the most remarkable occurrences of the period here in question. Their error, whether this arises from intention or helpless ignorance, relates to the date at which the decline began. That date which, according to their own asser- tions, was the beginning of the nineteenth cen- tury, was not the beginning of the nineteenth century, but the middle of it. So far as the Census Returns enable us to speak with accuracy, up to the year 1851 the agricultural population, instead of declining in number, continued steadily to increase. Then, but not till then, did any general decline begin; and the present results of this downward movement have been what? That the agricultural popu- lation of Great Britain to-day is so far from being (as Mr. Masterman suggests) very nearly extinguished, that its number is not less, indeed appears to be slightly larger, than it was in what Mr. Masterman represents as its golden age ;^ whilst, relatively to the persons employed, the value of the product has, to say the least of it, doubled itself. Finally, with regard to the hopeless and I. The approximate figures for England and Wales, as discoverable from a careful examination of the Census Returns, and the difference they exhibit in respect of classification, are as follows : Number of persons directly engaged in Agriculture: 1801, 1,500,000 — 1,600,000; 1851, 1,900,000 — 2,000,000; 1907 — 1910, 1,500,000 — 1,600,000. Chap. III.] AGRICULTURAL WAGES 247 increasing poverty which is alleged by reformers to be the lot of the agricultural labourer, it may be admitted for the sake of argument, or even without any such reservation, that his wages are lower than they should be, and that means exist for augmenting them; but the truth of these contentions being assumed, the point to be noted is, that the reformers cannot express it without converting it into a falsehood. Whatever may be the average wages of agricultural labour to-day, there is one thing which they are not. They are not lower than they were at that particular period whence, according to the reformers, their tragic decline dates. On the contrary they are incomparably greater; and their rise since then, even if slow at first, has been continuous. The annual earnings of an English agricultural labourer were in the year 1 801 commonly computed at £21 a year. Their average fifty years later had risen to ^28 ; at the present time, according to the latest information, it is slightly over ^45.^ It is outside the scope of the present volume to discuss the agricultural question in relation to any special policy. The point here insisted on with regard to the three propositions just examined, which reformers enumerate as indi- catino- the essential facts of the situation, is not only that they happen to be false, but that no sound policy which has these for its basis is possible. All parties alike would desire that our I. See Blue-book, Cd. 4671 of 1909, p. 36. 248 AGRICULTURAL WORKERvS [Book IV. agriculture as a whole should in point of pro- ductive efficiency be very greatly increased ; but the question really at issue being how to make it greater than it is, those persons are merely darkening counsel, and turning the attention of the public in a totally wrong direction, who popularise a belief that it is indefinitely less than it was before the " superwealthy " had crippled it in some fabulous though recent past. Similarly the decline in the number of the agricultural workers, is by all parties alike regarded as in itself a misfortune; but to represent the decline as dating from the begin- ning of the nineteenth century, when the actual date was the middle of it, is to obscure the only causes which can render the event intelligible. The beginnings of the decline coincided with the triumph of free-trade principles; and little though the early free-traders may have realised this themselves, to produce this precise decline was their logical if not their conscious object. Their reasoning was the reasoning of all business men. It was mainly peculiar and efficacious because specially applied to corn — the main food of the people, specially the food of the poor. If ten men in Russia can provide us with twenty loaves of bread, why should the poor — such was the gist of their argument — pay fifteen men in England to provide them with the same quantity? The primary effect of their free-trade policy on agriculture was a great development of labour- saving machinery — of machinery designed to Chap. III.] INFLUENCE OF FREE TRADE 249 enable ten English bread-producers to perform the work which had previously required fifteen. The second result was a development, gradual at first, then rapid, the purpose of which was similar, namely the saving of labour without diminution of the product; and this second result was the transference of agricultural enterprise from the production of one kind of staple food, namely bread, which relatively to the requisite area requires most labour, to the production of another kind, namely meat, which relatively requires least. The farmers, in adopting this policy, merely followed the course which the adoption of free-trade principles by the nation at large imposed on them. A dechne in the number of the agricultural workers relatively to the product of agricultural work, was not merely a result of free-trade in food- stuffs. It was the crucial result at which the free-trade movement aimed. These observa- tions are not made with the intention of advo- cating a return to agricultural protection. Their intention is merely to indicate the com- plicated nature of the questions which the decline in the number of the agricultural workers raises, and to show how, if the date at which the decline began is hidden, as reformers hide it, under a flood of historical fallacies, all discussion of these questions is a wrangling in the dark, and all attempts to deal with them are leaps in the dark. The same thing remains to be said as to the third proposition of the reformers, which con- 250 WAGES TO-DAY [Book IV. verts the contention, deserving of all respect, that the agricultural labourers should be better paid than they are, into the sensational fable that they are worse paid than they were, and that the sinister diminution in their number has been accompanied by a diminution no less sinister in their wages. This is not merely an intrusion of fable into the domain of fact. It is the intrusion of a fable so pernicious in kind that, of all the facts involved, the fact which is most vital to the problem at issue is hidden by it. The vital fact is that, as the number of the workers has diminished, their wages, instead of diminishing, have increased in almost the same proportion ; the remarkable result being (as can easily be shown by a careful examination of the figures),^ that two agricultural labourers on an average, at the present day, divide between them a sum which is slightly in excess of that which was divided between three in the year 1850. The conclusions which may be drawn from this fact are various and far-reaching. What is here urged is merely that they are of such profound importance that, unless the fact in question is fully and fairly recognised, the future of agricultural wages and the agricultural I. It appears that there has been no appreciable, if any, decline in the number of agricultural " occupiers," i.e., fanners of various grades ; the class which has declined, consisting of wage-paid labourers. The diminution of these (as compiled by all parties) has, since the year 1850, been in the ratio of about 150 to 100. The increase in average wage-rates since 1850, has been in the ratio of 100 to 158. See Cd. 4671, as above. Chap. III.] ERRORS OF REFORMERvS 251 question generally cannot be profitably dealt with by any reformer whatsoever, whether he be a radical restraining a socialist, a socialist outbidding a radical, or a conservative who, borrowing his premises from one of these or the other, is tempted to outbid both. Such, then, are some of the particular errors — errors relating to land — which result from the general theory common to all reformers that the clue to every social grievance is the dispro- portionate " piling up of the aggregations " of some small and " superwealthy " class at the growing expense of all the rest of the com- munity. In the following chapter we will turn to the " industrial question " ; and it shall be shown how, in connection with this, the same fallacious theory has resulted in errors of an even greater magnitude. CHAPTER IV. In so far as it relates to immediate demands and hopes, the " industrial question " resolves itself, as has been said already, into a wages question on the one hand, and a profits question on the other, the second of these being the converse side of the first. The wages question, from the point of view of the wage-earners, has its origin in two very natural desires, one being to maintain their earnings the other being to increase them : and the latter, as experience shows, is no less reasonable than the former. The industrial history of this country for more than a hundred years has been a history, not only of an increase in the production of wealth generally, but of an increase in the wages of the individual labourer also, and though reformers do their utmost to hide, and actually to invert, this fact, a large number of the wage-earners more or less clearly recognise it. Hence the portion of their general thesis which reformers at the present time — whether strike-leaders, profes- sional politicians, or other apostles of discon- tent — find most efficacious, in many quarters at all events, is the contention that, even if absolutely rates of wages have risen, they have risen in a far smaller ratio than the value of the total product; and that, thus considered in the light of what at once is just and possible, the 252 Chap. IV.] THE WAGES QUESTION 253 wage-earners as a body are the victims of an ever-increasing wrong. Here is the old story again of " the piled-up aggregations of the superwealthy," carrying with it the inference that the only problem for the wage-earners is how to make new inroads on a practically inexhaustible hoard. This contention, as applied more particularly to manufacturing industry, has now resolved itself into a demand for a universal minimum wage. For such a demand in the abstract there is much which may be reasonably said : but even in the abstract, the question of whether it is reasonable or otherwise implies a reference to something like actual facts. For example, if, relatively to the population to-day, indus- trial productivity to-day were no greater than it was at the time of the battle of Waterloo, the most moderate of the present demands now made in relation to wages generally would have no more m.eaning than the baying of a dog at the moon; for the entire wealth of the country would be insufficient to satisfy them. Practi- cally, therefore, a minimum wage means nothing unless it means a certain specific amount which can be compared with that of the entire distri- butable product. Let us then consider the most recent of the definitely formulated proposals which have been put forward, in connection with this question, by prominent leaders of strikes and of other reforming movements. Such proposals are all of a double character. They comprise, 254 A MINIMUM WAGE [Book IV, in addition to a great increase in wages, a great reduction in the length of the working day. This reduction has, by advanced reformers, been long defined as a substitution of six daily hours for nine; but the minimum wage to be paid for these six hours has not till lately been defined with the same precision. Precision began — and it is interesting to note this — as the result of the preliminary issue of certain portions of the Census of Production, according to which the value of this country's manufac- turing output, if divided by the number of the persons employed in producing it, would work out at something like ^loo per head. Hence it was at once argued on labour plat- forms that, since nothing produces wealth but ordinary manual labour, the lowest wage which is due to the operatives of this country cannot be less than a matter of forty shillings a week. A minimum wage, then, of forty shillings a week, the hours of daily labour per day being reduced from nine to six, represents the kind of arrangement which, according to contem- porary reformers, is the least that labour should aim at as a full satisfaction of its claims. The calculation is exceedingly interesting, because its bases can be at once identified; and, by examining these, we can detect the manner in which reformers reason. These bases are to be found in the elaborate summary which the Census of Production gives of the entire selling value of the products of all, and of each separate group, of the chief manufacturing Chap. IV.] NEED OF CAPITAL 255 industries of Great Britain and Ireland, and of the number of persons employed in each of them and in all together. And the results, so far as they go, are given by the reformers accurately. The entire selling value of the output is, in round figures, 700 million pounds.^ The number of persons employed is, in round figures, seven millions. But the meaning of these two sums is very far from being what, at first sight, it appears to be. There are various facts which the agitating reformers overlook. In the first place the production of the total values in question involves the use of avast mass of capital, which is embodied mainly in build- ings and endlessly elaborated mechanisms. These buildings and mechanisms would soon be a useless scrap-heap unless they were subject to a process of constant renewal and repair. The cost of this process, as the Final Report on the Census of Production shows, and as has also been explained elsewhere in the present volume, comes out of the product-value — that is to say, 700 million pounds; and amounts on a yearly average to ^11 per worker. Of those workers whose earnings are less than ^160 a year, the average actually earned per head is I. This does not iiichuU- tlic value added by commercial transport and distribution, nor does it include the value of the output of a number of minor industries. The workers involved represent approximately one-half of the wage- earning population. 256 WAGES AND PROFITS [Book IV. ;^66.^ If the salaried staff be included, many members of which earn more than ^i6o, the average earned per head of the whole employed body is ^72. It will thus be seen, in tfie first place, that out of the ;^ioo per head, which presents itself to the fancy of the reformers as available for distribution amongst the wage- earners, the theoretical maximum is not more than ^89; in the second place, of this ^89, more than 80 per cent, goes as wages already; and farther, that of every ^100 of the value of the products sold, what remains with the employers for distribution as profits and dividends, is ^17, or little more than a sixth; whilst even this, as the Census of Production indicates, is considerably diminished by rates, and other less important charges. But this is the beginning, not the end of the matter. These calculations assume that, except in respect of wages, the productive process will remain what it is to-day, and that the volume and the value of its products will be, at all events, not less than they are. It remains for us to take account of the fact that, concurrently with a rise of wages, the reformers demand a reduction in the hours of labour. Now from every point of view this demand is of the first importance, but more especially from that of I. The average for all such workers, if domestic servants, and agricultural labourers be included, is, as has been shown in a former chapter, about if>2 per head. For other workers alone it is slightly more. Chap. IV.] LABOUR AND WEALTH 257 the reformers themselves. The very nature of the claims which they advance on behalf of wage-paid labour shows them to be possessed by the old socialist idea that such labour is the sole producer of wealth, and that the amount of wealth produced by a given number of labourers rises and falls with the number of the hours for which thev labour. ^ And if other conditions all remain unchanged — such as the knowledge and intellectual energy by which the details of labour are determined, and if the hours devoted to labour are the quantity which alone varies, this theory is plainly true. It is obvious, therefore, that if, other things being equal, the quantity of labour, as measured by time, diminishes, the value of the total product will be diminished in like proportion. The proposed reduction of labour-hours, being a substitution of six per day for nine, or of eight working months in the year for the present number of twelve, will reflect itself in the value of the product, which, from its present total of some 700 million pounds will be reduced accordingly to no more than 470 millions. If from this sum we deduct the costs of upkeep 1. This is one of the cardinal doctrines of the "economic science" of Marx. It is of course subject to this qualifica- tion, that the number of labour-hours repjarded as possible per day does not exceed that for which the physical strength of the worker can be maintained. Thus, thougli a reduction of nine hours to six means a reduction in the output, a reduction of 16 hours to nine might mean an increase. 258 WORKERvS AND PRODUCTS [Book iV. of capital, the total left for distribution amongst seven million wage-earners would work out, should the wage-earners get the whole of it, at something slightly less than ^60 per head, or £\2 less than the average which they earn now. If, however, instead of being content with mere general conclusions such as these, we examine the industries individually to which these conclusions refer, the facts of the case will reveal themselves in a yet more instructive light. We shall find that the value of the products as related to the number of the workers, though amounting to a general average of ^100 per head, conforms to this average in a few of the individual cases only, diverging from it otherwise in various and most remark- able ways. Of this the most prominent example is provided by a group of industries which include the supplies of electricity, gas, and water, but which are for the most part of a chemical or quasi-chemical character.^ These account for an output of 130 million pounds out of a total of 700 millions — that is to say, nearly one-fifth of the whole; but they employ between them only one fourteenth of the workers — that is to say, about 500,000. The output per head ranges from ^150 up to ;^330, the average for the group being ^260, as against the average I. These comprise oils, paints, varnishes, drugs and all kinds of chamicals, ink, artificial ice, sugar, and the brew- ing or distillation of alcoholic beverages. This group also comprises publishers. Chap. IV.] UPKEEP OF CAPITAL 259 of ^100 for the productive industries generally. The causes of this phenomenon have been much discussed by experts. At all events the group is an exception ; and its importance, as measured by the number of the workers, is negligible. If for these reasons, then, we set this group aside, and deal only with the great mass of the manufacturing industries of the country, we are left with an output value of 570 million pounds, and a working population of six-and-a-half millions. Of these workers collectively, the output value per head is £SS. They are, however, as a fact, divisible into three great sections, the output value per head being in each case as follows. In one section, compris- ing less than one-sixth of the whole, it is /'i26;i in a second section, comprising less than one- quarter of the whole, it is /"S; f whilst in the third section, comprising far more than one-half, it does not exceed ^78.^ If, in respect of the cost of upkeep of capital, we deduct from these sums severally no more than a tenth, the sums actually distributable will be, about ,^114 in the case of one-sixth of the workers; in the case of 1. Of the 1,000,000 workers comprised in this section by far the larger number are coal-miners. Most of the others are engaged in public works, cheese-making, bacon- curing the preparation of preserved meats and pickles, and the making of aerated waters. 2. This section comprises all the great metal trades. 3. This section comprises all the textile trades except lace-making ; also the clothing trades. 26o A MINIMUM WAGE [Book IV. a quarter, about ^78; and in the case of more than a half, it will not exceed £jo. Here we see what is the real nature of the problem involved in the demand, based as it generally is on the equality of human needs, for a minimum wage which shall somehow be secured to everybody. It is obvious that, in the case of no industry whatsoever, can such a minimum be greater than the total value of the products divided by the number of the workers ; and, if in any industry, a greater sum is de- manded, such an industry can no longer exist. It will have to be abandoned, like a plot of land so barren that an occupier, paying no rent, cannot extract enough from it to keep body and soul together. Thus, though, in the case of one-sixth of the workers — namely those em- ployed in the industries yielding an output of ^114 per head, a minimum wage of ^100 would at all events be theoretically possible, yet if this were demanded on behalf of the great mass of their fellows, the whole of the industries on which these depend for their living, would be hopelessly bankrupt before a year was over. The highest minimum which, even in theory, could possibly be made general, would not be more than £^0 : and even this would be possible on one condition only — that the number of working hours remained what it is to-day. If this number were reduced in the proportion which the reformers contemplate, the highest general minimum could not possibly be more than £47. Chap. IV.] THE PROFITS QUEvSTION 261 Let this sum be compared, firstly with the ^100 which the reformers regard as possible, and declare to be the minimum of what is just; and secondly, with the average, as already shown, which is actually now being earned by workers of all grades; and two things will be evident. One is the grotesque exaggeration which, in this case as in all others, characterises the reformers' estimates of the amount of wealth existing. The other is the narrowness of the margin which, in manufacturing industry, divides the present receipts of the employed from the total value produced. But before we insist on these points farther, let us consider the whole matter from a fresh point of view. Let us consider it, not as a wages-question, but as a profits-question, which is the wages-question inside-out. About thirty years ago, Mr. Hyndman became prominent as the leader of a socialist movement in England, and as one of the founders of a body which originally described itself as the Social Demo- cratic Federation. In this latter capacity he issued a Manifesto, which was mainly a statis- tical statement, emphasised by violent rhetoric, as to the actual ratio of profits to the wages of productive labour. The purport of this state- ment was that, the income of the United Kingdom being at the date in question 1,300 million pounds, the share of the wage-earners was 300 milHon only, the remaining 1,000 millions, of which they alone were the creators, being taken, under the name of profits, by a 262 PROFITS AND WAGEvS [Book IV. class which, if not absolutely idle, was active only in the business, not of production, but of theft. Here we have the doctrine of Marx as applied to conditions at a certain specified moment; which doctrine was that, under the capitalistic system, profits generally, and manu- facturing profits in particular, are to wages as a whole, in the ratio of lo to 3. It is probable that most reformers to-day, even those who call themselves socialists, would allow that Mr. Hyndman's statement erred slightly on the side of exaggeration ; but the language used by such persons, from the Chancellor of the Exchequer downwards, shows that they regard it as indica- tive of the kind of thing that happens. Now if we consider businesses solely as " going concerns," the ratio of profits to wages will of course vary enormously. One reason is that, in some cases, as in that of a railway, vast sums must necessarily be spent in wages, before the business can begin "to go" at all; and the wage-bill for past, as well as for current, labour, must be paid out of the annual takings as soon as these accrue. Another reason is that, whilst all employers of labour must bring to the task of directing it a certain amount of ability, for otherwise the products of the labour will not even pay the wage-bill, there are certain businesses, such as that of producing a book, or some patented mechanical contrivance, in which the element of the ability involved varies to so great an extent that the selling value of the product may be ten times the amount of Chap. IV.] AGGREGATE OF PROFITS 263 the labour-bill, or only three times, or may not exceed it at all. Now it is obvious from what has been said already, that, if profits be re- garded as a quantity which can be drawn upon to increase wages, the extent to which they can be used for this purpose must be determined, not by the product per wage-earner which is realised in exceptional businesses, but by that prevailing in those which can just manage to maintain themselves. For the moment, however, let this point be waived. Let us treat profits as Mr. Hyndman himself and other reformers treat them — that is to say in the mass ; and compare their actual aggregate in this country to-day with the actual aggregate of industrial wages corresponding to them. A broad comparison of this kind may be made in two ways. If we confine ourselves to the manufacturing industries, as analysed in the Census of Produc- tion, we know that the total value of the product is about 700 million pounds, that outgoings in respect of upkeep are about 1 1 per cent, of this, and that the net total which is distributable must accordingly be about 620 millions. Far- ther, it has been shown that the wage-earners, their luunber (inclusive of the salaried staff) being seven million, earn on an average £']2 per head. Thus the total wage-bill comes roughly to 505 millions. The amount, therefore, which remains for distribution as profits and dividends will be about 1 15, or perhaps 120 million pounds out of a distributable total of 620 millions. Tn 264 THE COUNTRY'S WAGE BILL [Book IV. Other words, profits will be somewhat less than one-fifth of it. Let us now take all the businesses of the United Kingdom together — the commercial, the carrying, the agricultural, as well as the manu- facturing. In Chapter III, Book III, of the present work, the distributable output value of ail these businesses (profits from abroad excluded) were shown to amount to about 1,260 million pounds, and the total of all profits subject to income-tax whether commercial, agricultural or industrial, in so far as they are of home origin, were shown to amount to about 230 millions. This sum being deducted from the total value produced, what remains for distribution amongst the employees is about 1,030 millions; and if the analyses of business wages and salaries, as given in Chapters II and III of Book III are examined, it will be seen that the actual business wage-bill of the country is substantially of the same amount. The total of all wages not exceeding 63s. a week, exclu- sive of those earned by domestic servants, comes to about 930 millions, and the total of the larger incomes earned by the salaried staff, and subject to income-tax, comes to 100 millions. Hence if we take all businesses together, the output of which involves the payment of wages, the result is substantially the same as in the case of manufactures only. Profits, as a whole, are indeed something less. To speak more exactly, they are about 18 per cent, of the net Chap. IV] PROFITS OF COAL MINING 265 selling value of the entire distributable product, and wages as a whole are about 82 per cent. Here, however, we have the general average only. In particular cases profits will be rela- tively larger, and in the majority of cases not nearly so much. Of this latter fact it is possible to give an illustration which is exceptionally precise, and on an exceptionally large scale, and with regard to which there is peculiar and direct evidence. In the case of certain busi- nesses, though of certain businesses only, the gross profits (that is to say profits including the costs of upkeep) are specially stated by the Commissioners of Inland Revenue. Of these, for two reasons, the most important is that of coal-mining : for not only are the profits stated in one set of returns,^ but in another set is stated year by year the actual corresponding value of all the coal sold. In the year 1907 — that dealt with by the Census of Production — the selling value of all the coal produced (exclusive of the quantity consumed by the mines themselves) was ^106,000,000. The gross profits (royalties included) did not amount to so much as ^16,000,000; and hence it is sufficiently obvious that, of the total sum dis- I. The mininj? profits, as ear-marked in the returns, comprise a small percentage from mines other than wool ; therefore the actual amount is somewhat less than that stated in the text. See vStatistical Monograph 20, in wliich the figures relating to the question, for a period of fifteen years, are analysed. 266 PROFITS OF COAL MINING iBook IV. tributable, the net profits could not have amounted to so much as one-seventh. But other evidence may be quoted of a kind more precise still. During the great coal-strike of the year 191 1, a book was issued by a member of the parliamentary Labour Party, aided by a North-country accountant, in which the balance sheet of a colliery company, selected by the authors as typical, was reproduced and analysed. The object of these authors, though they were far from being wild extremists, was to exhibit the gains of the colliery companies as excessive ; and the details which, in this instance, they submitted to the public were as follows. The total receipts of the company in question for a year were, in round figures, ^710,000; the total spent in wages was 631,000; the declared dividend was ^39,000; and a sum about equal to the dividend was set aside as a reserve fund. The principal comment of the authors on these items was to the effect that the actual profits of the business were understated by one-half ; that the whole of the reserve fund ought properly to have been added to them ; and that the true profits, instead of being ^39,000 were ^78,000. That the authors, who expressed their recogni- tion of such reserves as funds set aside for future business contingencies, should endeavour to represent them as a species of " concealed profits " is sufficiently astonishing ; but, even if we admit this contention, what is the upshot of the matter according to the authors them- selves? It is this — that in the case of a busi- Chap. IV.] LETCHWORTH 267 ness selected by themselves as typical, profits barely exceed one-seventh of the total disbursed as wages, and are, of the total takings, not more than one-ninth. Let us now consider an example, the scale of which is minute, but which has nevertheless a peculiar interest of its own. This is the case of a printing business, which has been estab- lished at Letchworth on the basis of co-partner- ship. The ambition of the promoters, as set forth by themselves, is to solve all difficulties relating to profits and wages, by enabling the workers to be ultimately their own capitalists, so that wages and the profits of capital, though still theoretically distinct, shall nevertheless go to the same persons. After this business had been for some years in operation, a balance- sheet was issued for the year 191 1. It is there shown that the number of workers was 90, that the total earned as wages was, in round figures, ;^5,340, that the total net receipts were ^6,310, and the profits on capital were £970. This means that wages were allocated at the rate of rather less than £60 per head, and that profits in each case represented a bonus of £10, the total receipts per head being thus raised to £jo. Now it may be observed that the wages, as calculated in this case, are lower than the general average current to-day for labour of all kinds, and that the amount added to them by profits is thereby relatively increased : but even so. it will be seen that, of the total net receipts, profits account for less than 16 per cent. ; whilst 268 MR. HYNDMAN'S THEORIES [Book IV. if wages be reckoned according to the normal standard, the percentage will be less than 12. Moreover, it may be added that wages and profits together do not in this case yield more than an average per worker of 26s. lod. a week.^ According to Mr. Hyndman, let it be said once more, the profits of the capitalists as a whole exceed business wages in the propor- tion of 10 to 3 : and the minds of reformers generally are dominated by some idea which is, in its effects on their general attitude, similar. If profits were really what Mr. Hyndman imagines, the business profits of the United Kingdom to-day would be considerably in ex- cess of 3,000 million pounds. The actual sum, as we have seen, is not one twelfth of this sum. Profits by their magnitude are so far from dwarfing wages, that wages on the contrary are more than four times as great as profits : and the particular instances which have just now been given, are not only illustrations of this fact in its general form, but they illustrate also the fact, still more important, that if the average of business profits as a whole be 18 or even 20 per cent, of the entire business product, it is, in the majority of individual industries, a very much smaller fraction. This latter fact is the more important of the I. The workers are not analysed in the statement issued, but it may be noted that average per head, in a highly skilled trade, like that of printing, is less than the rate of the wages earned in the cotton trade by men of all grades. Chap. IV.] WAGEvS AND PRODUCT 269 two — it is indeed the salient fact of the situa- tion ; because, if anything hke a general mini- mum wage be possible, which means more for the wage-earners than the absolute necessaries of life, its amount must be limited, not by what is possible in the industries in which the product per worker is greatest, but by what is possible in the case of those in which the product is least. Such being the case, the actual total of wages is divided from the total product by so narrow a margin, that a general rise in wage- rates is practicable in one way only — that is to say, by making the total product larger, and not by encroachments on the margin as it actually is. It is in this way only that wage-rates have risen in the past ; and only in the same way can they be increased generally in the future. The idea common to reformers, that there is always, under the existing system, a vast hoard of profits withheld from the mass of the popula- tion, and that nothing is necessary but gain possession of an ever-increasing portion of it, is not merely to suggest illusory conceptions of progress, but to divert attention from the condi- tions which, so far as wages are concerned, alone make progress possible. The long and short of the matter is that this supposed hoard is a phantom which, as it floats before us, imposes itself on our eyes as a reality ; but the moment we try to capture it in any defi- nite place, it disappears. We have seen that this is so when we try to capture it in the form of land-rent, whether this be the rent of farms (a 270 " LABOUR UNREST " [Book IV. quantity which is decreasing absolutely), or the annual increase in the rent of the sites of urban buildings, or the rent of land as a whole. We have now seen that such is the case also when we try to capture it in the product of manufac- turing and commericial industry. A not unnatural result of the prevalence of such illusions (though, as will be seen presently, they are by no means its sole cause) is the condition commonly described as social or labour " unrest." The chief characteristics of this, which are very curious and not sufficiently recognised, shall be considered in the following chapter. CHAPTER V. A REFORMER, who occupies a high official position, has made himself famous by the vehemence of his repeated attacks on persons who. while they sleep, grow rich through the appreciation of their investments — who have bought them at one price, and whose brokers sell them for a greater. But when it hap- pened to become matter of public knowledge that he was an active member of this class himself, and had only failed by accident to be a fortunate member also, he declared that in his own case — he being a poor man. with an income of not much more than ^5,000 a year — such methods of self-enrichment were abso- lutely beyond reproach, and that only a " foul lip " would dare to assert the contrary. Now apart from certain circumstances of a purely adventitious kind, none of his critics, whether their mouths were foul or otherwise, did assert the contrary. They did not even suggest it. Their contention was, n(^t that he had done anvthing- which could be condemned by other people, but that he had done some- thing which was publicly condemned by himself. The incident in question, when divested of its personal associations, remains interesting as an example of the necessary contradictions which arise, when a reformer, whose reforming equipment is a set of fallacious 271 272 THE FOOD QUEvSTION [Book IV. principles, finds them confronted with those, much more reasonable in character, which he applies as a matter of course to the conduct of his own life. The principles of the reformers, however, when applied to actual affairs, result in contra- dictions far more profound than this. Let us now pass to other examples, which are really important features of the social contro- versy to-day. Of these some of the most remarkable relate to land and agriculture. There is no contention more frequent in the mouths of reformers than the contention that a proportion of the wage-earners (variously stated, but always alleged to be large) suffers from the want of food sufficient in amount and quality; and whenever this generalisation is applied to any group of wage-earners in par- ticular, its principal clause invariably relates to meat, and runs as follows : " The supply of meat is so small, and the price of meat so high, that such and such persons only taste it three times, twice, or possibly once a week." Into the merits of such a contention we need not now enquire. All that concerns us here is to take it in connection with another, equally common, and advanced by the same persons. This relates to the decline in the number of agricultural labourers, as caused by the conver- sion of arable land into pasture. A given amount of pastoral products, as measured in terms of value, requires they say, relatively to the requisite number of acres, fewer men to Chap, v.] THE FOOD OF THE PEOPLE 273 produce it than a similar amount of the products which result from tillage. Cattle accordingly flourish at the expense of men. Wealth accumulates, and the agricultural labourers decay. Here we have a contention which, so far as it goes, is true ; but what is its substantial meaning? Pastoral products are virtually but another name for meat, just as the products of tillage are virtually another name for bread. If, then, there is any truth in the contention that an insufficient supply of meat is one of the main crrievances from which the workers of this country suffer, how can it also be a grievance that agriculture, as now conducted, aims mainly at making the supply of meat more plentiful? Each of these two grievances flatly contradicts the other. Again, when reformers are dealing with the food of the people, there is one class which they adduce before all others as the victims of insufficient feeding, and that is the class of labourers by whom food is produced. Partly owing to the superwealth of dukes, partly to the super-tyranny of large farmers, or the super- something of something else — it does not much matter what — the rural labourers are, according to the reformers, more miserably underfed than any other section of the population. The urban workers have at all events food enough to keep them in fit condition to perform the tasks assigned to them ; but the agricultural labourers go always with such empty stomachs that their arms can hardly lift the implements 274 "THE AGRICULTURAL LABOURER" [Book IV. with which they hoe potatoes. They are not so much men as crippled shadows of men ; and their children, after a childhood of weeping over half-empty platters, are, when they reach maturity, little better than the shadows of a shade. No wonder that, under such conditions, the agricultural population declines, and the whole nation is suffering a fatal and untold loss. Such, according to the reformers, is one aspect of the agricultural question : but when they turn to another, which, from a national point of view, is what gives the first its impor- tance, the grievance on which they insist with an emphasis no less eloquent, is of a curiously different character. The principal ground on which, from the point of view of the nation, they bewail the decHne in the number of the agricultural labourers, is that of all sections of the population these labourers are the most virile and the healthiest. The soldiers who confronted Napoleon a hundred years ago, the most stalwart of the policemen who patrol our streets to-day, were and are, we are told, reared in our agricultural cottages, and the men who live in such cottages are still the best men we have . " The agricultural labourer," said Mr. Lloyd George at Middlesbrough, " is a strong sturdy fellow. He has great powers of endurance; and when the time comes for the great employers of labour to pick and choose between the men they have got and the agri- tural labourer, the latter, with his stronger physique, manages to survive in the selection." Chap, v.] CONTRADICTORY THEORIES 275 Here, then, are two of the main indictments now urged by reformers against the existing agricuhural system. They are urged aher- nately, urged with equal emphasis, by the same agitators in the course of the same month; and are cheered alternately by precisely the same audiences. Either of them may conceivably be true ; but it is impossible that they can both be true. In proportion as there is sense in the one, the other is necessarily nonsense. How- can the agricultural labourers be so crippled by underfeeding that the utmost they can do is to totter, under a load of rheumatism, from the cradle into an early grave, and be at the same time " fellows so sturdy and of such endurance" as to render them the arch-embodiments of the physical manhood of the nation? But these astonishing self-contradictions of reformers in respect of land are merely exam- ples of the errors and uncertainties of thought which vitiate their attitude towards social conditions generally, and arise directly or indirectly from the fallacy of their primary assumption — the assumption that, to whatever extent the wealth of the country grows, an overwhelming share of it, and a share which is relatively as well as absolutely increasing, is appropriated by some rich, or rather by some super-rich, minority. From this assumption it follows, as has been said already, that all reform must, in its last analysis, consist of getting the whole or most of the supposed plunder back again; and the first practical step which the 276 MARX AND GEORGE ON PLUNDER [Book IV. reformers have to take is to discover in what place the great bulk of it has been hidden. What, then, have they to say as to this fundamental question.'^ Certain of their asser- tions have been reviewed in previous chapters. They shall be reviewed once more, together with certain recent modifications of them. First and foremost come those of two really powerful thinkers, Marx and Henry George. Marx asserted that the great bulk of the plun- der went, in the form of profits, to thegreat capital- ist lords. George asserted that it did nothing of the kind — that the whole of it went, as land- rent, to dukes and earls and squires. Radicals repudiate the assertions of Marx and George alike, but they pick out various, and mutually exclusive, parts of them, each of which, succes- sively or alternately, they declare to be greater than the whole. The more moderate socialists of to-day follow the same procedure : and the different accounts given by these reformers collectively of how the wealth of the people is eaten up by the super-rich may be summarised as follows in a sequence of separate statements. It is absurd to say of the income of the United Kingdom that most of it is absorbed by land-rent, for the total of land-rent is too small. What is really eating up the wealth of the people is not land-rent as a whole, but the annual increase of a fraction of it — namely annual increase of the rent of the sites of urban buildings. Chap, v.] CONFLICTING THEORIES 277 What is eating up most of the wealth of the people is not interest on capital, if capital be considered as a whole; for the active users of capital receive no more than they deserve. What is eating up the wealth of the people is interest on that part of it which is owned by mere investors, such as holders of Marconi shares. What is eating up the wealth of the country is not interest on the whole of even this par- ticular part. It is interest on only so much of it as goes to persons whose incomes are not much more than ^5,000 a year. What is eating up the wealth of the people is, in any case, the income of persons with more than ^5,000 a year. What is eating up the wealth of the people is the income of persons with more than ^20,000 a year. What is eating up the wealth of the people is interest on capital after all, if the word " capital " be used in its widest sense : for most of the capital of this country consists of the gifts of nature. Of this natural capital, as Mr. Lloyd George said at Swansea, by far the largest part, in point of value, consists of our great coal-deposits; and what is really eating up the wealth of the people, is interest on these coal-deposits, which is known under the name of royalties. The reformers, in short, agree with one another as to one thing only — that there is a vast mass of secreted treasure somewhere; but 278 CONFLICTING THEORIES LBook IV. one of them says it is here, another says it is there; and few of them agree with themselves for more than two years running. Their own " unrest," or the " unrest " which they en- deavour to foment, is like the " unrest " of the relations of a defunct miser, who are per- suaded that he has hidden in his house some enormous amount of cash, and who gather there after the funeral in order to find their own. He has made them, before his death, a paltry gift of ^2,000 between them; but this, they think, is only a tenth of what will be theirs presently. The most knowledgeable of their number are deputed, before anything is broken open, to mark the receptacles which are likely to be the chief hiding-places. A cellarette under the dining-room sideboard is at once marked amidst acclamations. " Listen," cries an expert, " you can hear the sovereigns chink. You can tell by the weight of the thing that at least there are fifteen hundred of them." The lid is smashed, and there the sovereigns are; but instead of fifteen hundred the number of them is less than seventy. A second expert exclaims, " You are looking in the wrong place. The bulk of the stuff is here — in this padlocked tin, labelled ' dog-biscuit.' Talk about four- teen hundred ! Here are a good three thou- sand. Bring the poker and let us see." The poker is used. The tin is half full of pennies. On the top of the pennies lie some sovereigns, but their number is no more than twenty. " Fools," a third expert exclaims, " to be Chap, v.] " CONCEALED TREAvSURE " 279 looking amongst bottles and biscuits. Here are five thousand hidden amongst the coals in the coal-scuttle." The coals accordingly are emptied out on the floor, and amongst the dust is discovered the shining of ten half-crowns. A fourth voice exclaims, " Don't waste your time downstairs. Quick, follow me to his bed- room. It is all sewn up in his mattress." The mattress is ripped open. The carpet is strewn with horse-hair. From amongst the horse-hair comes a crisp crackle of something. The relations are all on their knees feeling for bank- notes : and nothing rewards their search but some fragments of torn brown paper. Sud- denly from under the bed a portly cat emerges. A little girl, who had stayed with the deceased frequently, recognises an old playmate, and addresses it by the name of "Duke." On one of the relations, who happens to be the Chancellor of the Exchequer, the effect of the word "Duke" is electrical. " There," he exclaims, " there is the object of our search at last. The missing ten thousand sovereigns have been eaten up by the cat." Hereupon ensues the crowning act of the drama. A new actor enters, the late miser's solicitor. " Don't lose heart," he says with an encouraging smile. " How much have you found .^ Ah, just as I thought. Ninety pounds, or a hundred. Well, the rest is here — here in this very room. You can all of you find it without moving a step." " Where," cry the relations in chorus. " For mercy's sake tell us where." " I will," the newcomer replies. 28o ANSWER TO REFORMERS [Book IV. " It is all in your own pockets." There is a speechless gasp of consternation, and the same speaker proceeds. " My late friend," he says, '• during the course of his last illness divided amongst you a couple of thousand pounds. Apart from the hundred which you have just discovered for yourselves, that was his whole fortune. The odd hundred will, I am sure, be extremely welcome. It will pay nearly half the expenses of getting yourselves here and home again." And the same answer is the true answer to all social reformers who, reasoning and feeling on the supposition that the root of most social evils is the abstraction by the few of the bulk of current wealth from the many, set themselves to discover exactly where the bulk of current wealth is hidden. The answer is " The bulk of it is in your own pockets already." The chief of the detailed facts which have been elucidated in the preceding shall now be reconsidered in a manner which will put this this statement to the test. CHAPTER VI. The final, the most general and the most comprehensive test to which we can put the theory that some vast hoard of wealth is with- held from the majority by the few, is to take the whole mass of incomes subject to income- tax, and consider how much would be available for redistribution, if all of them, or as many of them as rise above certain sums, were divided according to principles of the crudest socialistic equality, or such drastic graduation as finds favour with extreme radicals. In the year 19 lo the net total of such incomes was, as we have seen already, about 720 million pounds. Thus, the number of direct recipients being about 1,400,000, and these together with their families representing a population of about 7,000,000 persons, their average income per head was a little over ^100. On the other hand the number of the population not subject to income-tax being 38 millions, and the aggre- gate income of these persons being 1,300 million pounds, their average income per head was no more than ^"34. Such being the case, socialists will probably argue that, if the income of the richer classes were cut up into 38 million equal shares of ^19, a bonus of ^19 would be ff)rthcoming for every member of the poorer classes, the average income of each being raised from ^34 to ^53. 281 282 EQUALIZING INCOMES [Book IV. In such a calculation, however, the following fact is ignored, that, if all the incomes of the present rich and poor are to be equalised, the present rich must at all events be left with something; and this cannot be less, just as it cannot be more, than the present average per head of the present population as a whole; which average being a forty-five-millionth part of a national income of just over 2,000 million pounds, is approximately ^45. Accordingly the share of the income now subject to income- tax, which would have to be left with those who at present receive the whole of it, would be ^45 per head of some seven millions persons, or 315 millions out of a total of 720 millions. The result of which fact is that, under a regime of equal distribution, the present average per head of the classes not subject to income-tax would be raised from ^34 to ^45, not from ^34 to ^53. The theoretical bonus would be not ^"19, but £11. Such would be the case on the supposition that the 720 millions was diminished only by the amount which its present recipients would retain. But this, as shall now be shown, is very far from being the case. Independently of any claims on the part of its present recipients, there are three portions of the income subject to income-tax which any attempt at redistribution on the equalising prin- ciples of socialism would altogether eliminate. In the first place there is the portion which comes into this country from abroad. Chap. VI.] INCOME FROM ABROAD 283 In the second place there are certain sums commonly described by statisticians as being, for income-tax purposes, " counted twice over." In the third place there are savings, which, if not made by the rich, would have to be made by the nation. The primary result of the adoption of socialistic principles would be the disappear- ance of the income from abroad. It would disappear for two reasons; and if both of them were not operative, either one of them would be sufficient. One reason is that the owners would cease to import it; for who would import goods for the pleasure of seeing them confis- cated? The other is that, even if it reached these shores, a socialist Government would be bound not to receive it. As Mr. Keir Hardie on one occasion very logically observed, the " profits or income from abroad " ought, on socialist principles, " never to come into this country at all," but ought, we may suppose him to have meant, though he did not explicitly say so, to remain in the countries whence it came, and be redistributed there. The profits from abroad, which are included in the income now subject to income-tax, amount, as has been explained already, in reality to more, and at all events not to less, than 190 million pounds.' I. This includes about ;{;io,ooo,ooo, in respect of profits of commercial distribution, which would cease if the income from abroad, in the form of goods to be distributed, no longer came into this country. 284 SUMS COUNTED TWICE [Book IV. Here is the first deduction from the total of 720 miUions. The second deduction consists of sums counted twice over. As examples of the sums which this phrase is used to describe, we may take the payments made by a man of large means to a confidential agent, whom he would probably call " a treasure," and to some distin- guished doctor. He pays his agent (let us say) ^1,000 a year; and taking it into his head one day that he is threatened by some mortal disease, he pays ^1,000 to some doctor of European celebrity for coming from London to the South of France to visit him. Now both these sums of ^1,000 it is argued, figure first in the income-tax returns as income of the man who pays them, and then figure as income of the men to whom they are paid. If, however, we take things as they actually are to-day, this argument is fallacious. It would be true only on the assumption that the rich man, instead of spending so much of his income, simply alienates so much of his fortune — that he gives so much away, and gets nothing in return for it. As a matter of fact, in each case, he receives a specific value which for him is a full equiva- lent — the luxury of advice from his agent, which relieves him of all business worries; the luxury of an opinion from a doctor who reassures him with regard to his health, as no other doctor could have done; and these values, though they are mental and not material, are values as truly as they would be if they con- Chap, VI.] MENTAL AND MATERIAL VALUEvS 285 sisted of chairs and tables. But whilst such is the case so long as fortunes remain unequal it would cease to be the case the very moment we tried to equalise them; and the ordinary con- tention as to values of this kind, would at once become correct. The reason is that values of this particular kind are values only in concen- tration, and are essentially not distributable. We can see this by considering what would happen if, instead of paying one doctor a fee of ^1,000, our patient had summoned a thousand doctors, for the purpose of debating on his ailments, and had paid each of them a fee of twenty shillings. The thousand-pounds- worth of satisfaction received by him from this medical parliament would be only mental or subjective, but it would be susceptible of distri- bution none the less; for the rich man's ^1,000 if given to a thousand poor men, would enable each to secure the attendance of one of the doctors which the rich man would have other- wise monopolised. But if all large incomes were divided up into little ones, a fee of a pound would be as much as could be paid by anybody to any doctor, no matter how eminent ; and so far as the medical specialist whose case we have been imagining is concerned, there would be nothing to divide but his railway fare. The same argument applies to houses which, standing on exceptional sites, command excep- tional rents because rich men compete with one another for their occupation. A house with a view from its windows of unique and renowned 286 FANCY VALUES [Book IV. beauty, may command a rent of ^500 a year, whereas nobody would give ^100 for it were it situated in a field in Essex. This sum of ^500 figures in the income on which the lessee pays income-tax. The same sum figures in the taxed income of the lessor. In connection with the ownership and the occupation of this house the income-tax returns would show a total of ^1,000. But if all large incomes were so levelled down and reduced that a house-rent of ^100 a year was the utmost that could be paid by anybody, this particular ^1,000, as soon as the redistributors touched it, would shrivel away to a sum which could not exceed ;^200. There would be nothing to divide but the ownership of this one house and its occu- pancy, the former of which would represent ^100 to the owner, whilst the latter represented another ^100 to the occupant. Only these two sums would remain. Four-fifths of the original total would have vanished into thin air. Here we have two classes of this kind of income, and to one or other of them all such income belongs. It is a kind of income con- sisting of fancy values represented by fancy prices as paid by rich men, either for specific and exceptional services, like those of a great doctor, or for exceptional things, like a building- site of unique beauty. It may be argued that such fancy values are not real income in any case. The contention is untrue ; but even were it true, it would not concern us here. What concerns us here is the fact that, whether Chap. VI.] PROFESSIONAL SERVICES 287 they are real income or no, they figure as such in the records of income subject to income-tax. They go to make up the net total of that income which appears from those records to be about 720 millions; and that total, if these portions are eliminated, is thereby decreased. The sum which these portions represent has by certain statisticians been over-estimated. It is at all events considerable; and what is really its approximate amount is not difficult to calcu- late. So far as professional services are concerned the amount may be calculated thus. We may take it, if the object in view is a regime of equalised wealth, that the total at present paid for such services represents fancy values in so far as it yields an income per head of the professional classes which exceeds what would, if all incomes were equalised, be the average family income in all classes alike. That average could not, as we shall see presently, be even in theory, more than ^200. Now the actual average earnings of the professional classes to-day appears from an examination of the income-tax returns to be about ^350. This means that of the payments made to the profes- sional clas.ses to-day the portion which is fancy value amounts to 40 per cent., and if this ratio be applied to professional earnings as a whole — the estimated total being, as we have seen, about ^60,000,000 — the deduction to be made, if the 288 FANCY VALUES [Book IV. fancy value is to disappear, will be about ;^24,ooo,ooo.^ The element of fancy values now included in site-rents may be calculated in a similar way. If every average family, consisting of five persons, had ;^200 a year, and no such family had more, no family — this we may reasonably assume — would be able to spend on house-rent more than ^^20 a year. This means a site-rent of £4., or 1 6s. per person. Of the 400,000 houses worth more than ^40 a year, the average gross rent per house is about ^100 a year, and the average site-rent about ^20; but for this class of houses the average number of occupants is, owing to the presence of ser- vants, not five per house, but is very nearly nine ; so that, taken per head of the occupants, the site-rent will be approximately 46s. This is 30s. more than the maximum site-rent per person which by any possiblity could be paid if no aver- age family had more than ^200 a year. We may therefore take it that this extra thirty shillings represents the fancy value which persons whose incomes range from ^400 a year upwards attach to certain sites in virtue not of their area, but of their beauty, their convenience, or of their I. In strictuess, about /;5,ooo,ooo should be added to the present salaries to Government officials, from Cabinet Ministers downwards. The argument in the text does not apply to the salaries of business employees ; for these are paid for services which result in the production and distri- bution of material goods, which, unlike fancy services, are in their nature distributable. Chap. VI.] DIVISION PER HEAD 289 fashionable or quasi-fashionable character. Such persons, together with their families and their servants (for the servants' accommodation, just like that of their employers, is paid for at a fancy rate) make up a population of about 3,600,000 individuals ; or, if we take account of Ireland, which the above figures exclude, the total number here in question will amount to about 4,000,000, each unit of which will, in respect of site-rent, represent a fancy value averaging about 30s. ; the aggregate of fancy site-values being thus about ^6,000,000. Here, then, we have three sums, namely ;^ 190,000,000 in respect of income from abroad, ;^24,ooo,ooo in respect of fancy values attached to professional services, and ;^6,ooo,ooo in respect of fancy values attached to selected building-sites; these three items amounting to 220 million pounds, which would have to be deducted from a total of 720 millions before the residue was reached which, even in theory, was susceptible of redistribution. This means that the theoretically redistributable total, so far as we have yet considered the matter, would be 500 million pounds. This, added to a non- assessed income of 1,300 million, means a national income of 1,800 millions, which, divided amongst a population of 45 million individuals, means an income per head of /"40. The present average per head of individuals dependent on incomes not subject to income- tax, is, as we have seen already, ;!^34. Hence, if no modifying facts still remained to be 290 SAVINGS [Book IV. considered, an equalising redistribution of the total of all incomes in excess of £i6o, would mean for those whose incomes are now on a smaller scale, an average addition per head of /^6 to ^34 — that is to say an increase of approximately 17 per cent. But a farther modifying facts remains in the background still, to which allusion has already been made, and which we must now examine. This is the fact that out of the entire national income there is a considerable portion which is annually not spent but saved, and that the larger portion of the annual savings of the nation consists of savings made by the richer, not by the poorer, classes. Of what, then let us ask, do savings in their ultimate form con- sist? They do not consist, or consist only to a very small extent, of hoards of money or even of consumable commodities. They consist of money values converted into new structures, mechanisms and other plant by means of which new commodities may be produced and distri- buted, or else into permanent utilities, the chief of which are new houses. The annual savings of the country, according to the Census of Pro- duction, amount to-day to about ^2 70,000,000. Of this total, in the year 1907, about ^100,000,000 was represented by exports con- sisting of. or destined to be converted into, imple- ments of British enterprise, production or distri- bution, in countries other than our own; the remainder represents similar things or imple- ments situated in the United Kingdom, and Chap. VI.] SAVINGS 291 (except in the case of ships) not removable therefrom. These things and their values were in round figures as follows :— Manufacturing and commercial plant, ^"93,000,000; Public Utility Services, such as Gas, Water and Electricity, ^11,000,000; Ships and Railway Extension, ^8,000,000 each; and new private houses, ^50,000,000. Let us see what practically these savings mean. As a matter of pure business, their object is the production of income in the form of new profits for division between the active users of the saved capital on the one hand, and mere lenders or investors of it on the other. The total return looked for will be now about 6 per cent., of which half will be the reward of use, and half will be the reward of mere saving or investment, though the users and the inves- tors will be in many cases the same persons. Such being the case, we might expect on general principles that a saving in one year of 270 millions would result in new profits to the extent of some ^16,000,000 in the next. Farther, since (with certain exceptions, all profits carry with them a corresponding amount of wages) we might expect to discover in wages a corres- ponding increase also. And such results, we find, have actually taken place. The net total of incomes subject to income-tax in the year 1908 exceeded the net total for the year 1907 by about ;^ 2 1 ,000,000. Of this sum, however, about ;!^5, 000,000 was not profits but wages — that is to say the salaries of new employees at 292 WAGES AND PROFITS [Book IV. salaries exceeding £\6o. The increase in profits, interest or dividends, amounted accordingly to about ^16,000,000. Of this sum about ^7,000,000 came from abroad; about ^3,000,000 was the rent of houses; and about ^6,000,000 was new profits or interest from industrial and commercial undertakings situated in the United Kingdom. Let us now take the question of wages. It has already been explained that, in the case of profits from abroad, though they carry with them corres- ponding wages, these wages must be looked for in countries other than our own. They make no show in the accounts of the British Islands. House-rent is also peculiar, although in another way. A house yields a profit to the builder and wages to the builder's workmen, whilst the process of construction lasts; but whereas a factory and its equipments yield no return to anybody unless they are used by a number of wage-paid workers the occupation- value of a house, as represented by the rent paid for it, is enjoyed by the members of the occupying household directly, without the intervention of any other labour than their own. It is, then, only in connection with the profits of about ;^6,ooo,ooo, which result from the creation of new manufacturing plant and kin- dred equipments, in England, Scotland and Ireland, that a corresponding increase in wages paid in this country is to be expected ; and since profits as a whole appear, as we have seen already, to be something like a fifth part of the Chap. VI.] WAGES AND SAVINGS 293 total distributable product, we should expect that profits to the extent of ^6,000,000 would carry with them some wage-bill of ^24,000,000 or thereabouts : and a portion of such an increase can be very easily identified. Though the rise in wage-rates has for some years been very slow, it appears that in the year 1908 they showed an average increase over those of the twelve months preceding, which, though less than I per cent., is perceptible, amounting to something like ^8,000,000 : and to this sum must be added the increase of ^5,000,000 in respect of new^ wages and salaries exceeding 63s. a week. But if the total of new wages approaches the sum just mentioned, something like half has still to be found elsewhere. And here we are brought to what is really the most important feature of the situation. As the population increases, the ranks of the working classes are every year augmented by new recruits, amounting in number to nearly one-fifth of a million; and the wages of these new wage-earners make up an aggregate of approximately 12 million pounds— the amount requisite to complete the 24 million estimated. Thus the total return which the nation as a whole receives for a year's savings of 270 milHon pounds is approximately 40 millions, of which new wages account for 24 millions, profits of new home businesses for 6 millions, the occupation-value of new houses for 3 millions, and profits from abroad for 7 millions. The actual loss, therefore, by savings, in respect of 294 LIFE INSURANCE [Book IV. spendable income, is not 270 millions, but only 230; and the question is out of whose pockets do these millions come? About 40 millions are saved in the form of life-insurance premiums, of which 28 millions are paid by persons not subject to income-tax.^ It would farther appear that such persons make savings of other kinds, notably in the form of house-property, the total of which would appear to be somewhat in excess of ^30,000,000.^ It may therefore be reasonably estimated that out of a loss of 230 millions in respect of imme- diately spendable income, the savings of the poorer classes account for about 60 millions, the remainder being saved by persons subject to income-tax. This remainder, however — namely, 170 millions — comprises more than 10 millions in respect of life-insurance premiums, which sum has been deducted already, in reducing the taxable income from the so-called " gross amount " to the net. The net total, therefore, being about 720 millions, the amount, in respect of saving, which has to be deducted 1. In the year 1907 the total of life-insurance premiums was nearly /4o,ooo,ooo, of this nearly ;£i 2, 000,000 came from persons subject to income-tax, and figures among the statutory deductions, as not representing income till the decease of the persons insured. 2. The income from real property going to persons with less than ;£i6o a j^ear, and to charities, increased at the rate of about ,^1,500,000 a j-ear, between the years 1901 and 1908. vSee vStatistical Monograph, 13; also Reports of Commissioners of Inland Revenue. Chap. VI.] SPENDABLE INCOMES 295 from this, will be approximately 160 millions. If to this deduction be added the bulk of profits from abroad, and the element of fancy values which, if incomes were equalised, would dis- appear — these two items amounting to about 220 millions — the total to be deducted will be 380 millions before we reach the directly spendable residue which socialists would find available, according to their own principles, for re-division. Profits from abroad, and the element of fancy values, both would go for reasons already stated. The element of sav- ings, minus the return accruing from it, would go also for reasons equally cogent; for if they were not made by individuals they would necessarily be made by the State. The State would either seize them before anything was distributed at all, or extract them by taxation afterwards. In no case would they remain with private citizens for the purposes of direct enjoy- ment. Thus out of the total of those net spendable incomes in excess of ^"160 a year, which amounts, as things are, to some 720 millions, all that would remain for division would be 340 millions, or considerably less than half. The present aggregate of incomes not subject to income-tax would at the same time be appreciably diminished also; but even if we ignore this fact, the present income of the nation would be reduced from something over 2,000 millions to 1,640 millions. This, divided amongst 45 million individuals, would mean an 296 EQUALIZATION OF INCOMES [Book IV. average per head of ;/^36 a year. This only exceeds by ijd. a day what is the average income per head of the poorer classes now. It may, however, be said truly that an absolute equalisation of incomes on the principles of ideal socialism is not " practical politics." Indeed many socialists themselves not only admit this fact, but insist on it, relegating absolute equality to some indefinite future ; whilst with radicals — even with such of them as are tinged with socialistic sympathies — absolute equality is not one of even their professed aims. It is certainly no part of the programme of the present Radical Government. Not only has a leading member of that Government boasted that, apart from the landlords, he had the support of most of the richest men in the country : but he and his colleagues are so far from wishing to equalise incomes, that they have themselves created a number of new ones, in addition to perpetuating others, all of them vastly in excess of any average that could possibly be general. What they profess to aim at is not an equalisation of wealth, but some process which they, bishops in their palaces joining them, describe as a " better distribution" of it; and since this involves an attack on existing wealth of some sort, their concern is, in so far as they are practical men, to pick out certain portions of the income subject to income- tax, and concentrate their assaults on these, whilst leaving the rest in a state of untouched security. Chap. VI.] QUEvST FOR PLUNDER 297 Now such a process of selection can be based on one or the other or both of two principles only. The incomes to be attacked may be selected on account of their origin or else on account of their magnitude; or of their origin and their magnitude together. Now we have alreadv seen the results of the radical quest for incomes which are assailable on account of their origin. All land-rent; all profits on capital; parts of land-rent; parts of the profits on capital, all have been advertised as so many mines of treasure, from which social salvation may be extracted at the expense of the present recipients ; but every test or trial has resulted in abject failure, partly because the sums in question are so ludicrously less than was miagined ; partly because in each case, though a portion goes to rich men whom the radicals might be pleased to injure, a proportion far larger goes to a multitude of poor men, or men poor comparatively, whom it is the object of the radicals not to plunder, but to conciliate. Thus to refer once more to a matter of which mention has been made already, we have the authority of Mr. Lloyd George for saying that whatever may be laid down as to the unearned increment of interest, in so far as it goes to men conspicuously rich, only "a foul lip" will name it as an object of special attack, in so far as it goes to men whom he describes as " comparatively poor." In short, on any prin- ciples other than those of a crude socialism which the rndicals emphatically repudiate, it is 298 DISTRIBUTION OF WEALTH [Book IV. impossible, if incomes are classified with regard to their origin merely, to stigmatise any group of them as more suitable than any other for being specially and preferentially robbed to finance a social millennium, or to " bring about a better distribution of wealth." The primary basis of discrimination, if any discrimination is to be made, must relate to the magnitude of the incomes, not to any peculiarity in their origin. The only two classes of income which, in respect of their origin, radical ingenuity has contrived to stigmatise as wholly peculiar, are mining royalties and the increases of urban ground-rent; but as these two sums together come to only a halfpenny in the pound of the national income, and less than three halfpence in the pound of the income subject to income- tax, it is a little difficult to see how any super-tax placed on them, even if it amounted to as much as 25 per cent., could produce " the better distribution of wealth " which radicals advertise as their object, or could appreciably alter the existing distribution. If the incomes to be consumed, or partially melted away, on the altar of " better distribu- tion " are primarily selected for sacrifice on account of their individual magnitude (allow- ance perhaps being made for various extenuat- ing circumstances) we have what Americans would call a much m.ore reasonable " proposi- tion." Here we have the principle of all graduated taxation ; and if the object of taxation is merely to provide a revenue sufficient for the Chap. VI.] INCOMES AND TAXATION 299 purposes of national defence and government, the principle is neither novel nor unjust; still less is it revolutionary. If, however, such taxes, as they exist, are to be supplemented by new ones, the object of which is neither the maintenance of government nor defence, but the transference of private wealth from one class of citizens to another, there is no logical limit to this species of enterprise but that imposed by the total amount of the incomes on which it is proposed to operate, and there is no excuse for it but the likelihood of some reason- able consonance between its utmost possible results, and those which the would-be operators invite the public to expect from it. All ques- tions, therefore, of justice to individuals being waived, the primary question for radical reformers is what precise degree of heat in the tube of the financial thermometer must a man's income register before it is rendered liable to some special loss by " transference " ? For there must be some freezing-point below which incomes will be safe, unless all are to be reduced to one general average. The second question, this point being settled, is what is the aggregate amount of tho.se incomes which it is proposed to victimise. Let us begin, then, at the bottom of the scale, working our way upwards. We may safely say, then, that no radical reformers, not even those whose radicalism inclines to social- ism, would propose to diminish by any new scheme of transference incomes not exceeding ^400. Mr. John Burns in his early socialistic 300 DISCORDANT THEORIES [Book IV. days, named ^500 as the limit of legitimate safety. Influential and trusted members of the Labour Party in Parliament make no objection — and they are very sensible men — to earning in addition to their Parliamentary incomes ^300 as secretaries to some Labour Association; and may also make as much as ^5 a week by con- tributions to the radical-socialist press. An income of ^1,000 a year may in this way be earned easily; nor would those who could thus earn it see anything in it which marked it out for plunder. A distinguished man of letters, who describes himself as a moderate socialist, has admitted that he made by his writings ^2,000 a year at least, and declared that such a sum was less than they were fairly worth. Mr. Money who, of the reformers of to-day, can alone claim to be a statistician, states, as we have seen already, that riches in an invidious sense only begin with incomes of " several thousands" : whilst the most important evidence of all is supplied by the present Government itself, which not only continues to maintain more than 80,000 posts, the incomes attached to which range upwards to ^10,000 a year, but has also in a single twelve-month created 3,000 new ones. We may assume then, with regard to the radical or radical-socialist reformers who now talk about a better distribution of wealth, that the amount to which incomes may rise, without being liable to diminution by some special process of transference, is placed by one group at /"ijOOO a year, by another at ^5,000; Chap. VL] INCOME TAX 301 and that the practice of the present Government raises it to at least ^10,000; whilst the language in which wealth is described by all reformers, indifferently when it is presented as an object of attack to the imagination of the public generally, is language which would, as has been pointed out already, be meaningless as applied to incomes of less than ^20,000. Let us, then, in the light of our previous examination of the question, review once more the total income subject to income-tax, together with the incomes and the number of the various groups of recipients, as they would present themselves to a reformer who was in search of material fit for transference. The recipients, numbering as a whole about 1,400,000, he w^ould find to comprise over 660,000 salaried employees, over 300,000 em- ployers (all shopkeepers and dealers, subject to income-tax, being included), over 200,000 pro- fessional men, and about 20,000 large farmers, the total number of such persons being about 1,250,000, and the remainder consisting of persons living on their own means, about half of whom are men retired from business, a certain number widows and spinsters, and some tens of thousands are men commonly called '' leisured," and living on inherited fortunes, not many of which are large. ^ I. These fip;ure.s are derived from the Census of igoi (the later figures being not yet available) and in each case there will have been an increase during the ten years following. 302 INCOMES AND RENT [Book IV. Of this body of 1,400,000 persons in receipt of incomes exceeding ^160 a year about one million would be found living in houses the rental value of none of which exceeded ^40 a year, the average rental being slightly under ;^30, the average income of the occupants being about ^260, and the aggregate income about ^260,000,000. About 330,000 persons would be found living in houses the rental value of none of which exceeded ^100, whilst that of the large majority of them was not much more than £so, the average income of the occupants being less than ^700 a year, and their aggregate income being about 200 millions. These two groups of houses having been scrutinised by the radical reformers, we may assume that their door-posts would be marked, as though the occasion were a fiscal Passover. The destroying angels of " a better distribution of wealth " would leave the householders, with their parlour-maids or their " generals " undis- turbed, and would concentrate their attention on the superior residences remaining, whose porticoes or whose lodge gates were in them- selves invitations to plunder. A census of such residences having been taken, what would the number of them turn out to be.'^ If allowance be made for the fact that a certain number of persons occupy more than one, the number of houses worth over ^100 a year would prove to be not more than 73,000. Of these, about 11,000, as we have direct means of knowing, would be occupied by persons whose incomes Chap. VI.] ANALYSIS OF INCOMES 303 exceeded ^5,000; whilst 62,000 would be occupied by persons whose incomes lay between that sum and ^1,000. The aggregate income of these two groups appears, if we take the figures for 19 10, to be approximately the same, each amounting to about 130 millions, and the total for the two being about 260 millions. Here, then, if any- where, we come to the persons and the income from whom and from which the proposed trans- ferences are to be made. Let us consider what, on the principles of radicalism, if these be stretched to the utmost, could be transferred from this total for the purposes of " a better distribution of wealth." In order to arrive at an answer, the two groups in question must each be re-examined and subdivided. It will be found, from an analysis of the evidence sup- plied by houses, that the aggregate of incomes between ^1,000 a year and ^5,000 consists of two equal portions of about 65 millions each, one of which consists of about 40,000 incomes averaging ^1,500^ a year, and the other of 20,000 incomes averaging ^3,000 a year. With regard to incomes exceeding ^^5,000, we know that about 80 millions of the aggregate is divided amongst 10,000 people; and about ^"50,000,000 amongst a thousand. Such being the case, then, let us suppose that the radical reformers are addressing each of these four 1. Of houses worth t'loni /"loo a year to yj2oo, about 45,000 are worth >Ci2o a year, about 17,000 are worth f^ijo, these sums being averages. 304 FOUR GROUPS OF INCOMEvS [Book IV. groups of persons in turn. The utmost that could be said by even the most extreme of them would be as follows. To the poorest of the four groups they would say, " Here are 40,000 of you, each with an income of ^1,500 a year. In addition to the tax which you pay upon this already, we will, with a view to ' transferring ' it, take from you an extra twentieth." This, in round figures, will come to ^3,000,000. To the second group they would say, " Here are 20,000 of you, each with an income of ^3,000. In addition to the tax which you already pay upon this, we will, with a view to ' transferring ' it, take from you an extra fifteenth." This, in round figures, will come to about ^4,000,000. To the third group they would say, " Here are 10,000 of you, each with an income of ;^8,ooo. In addition to the income-tax and the super-tax which you pay upon this already, we will take from you an extra tenth by means of a super-super-tax, which in round figures will come to about ^8,000,000. To the fourth group — to the possessors of those fortunes which alone are conspicuous — they would say, using more ceremony, " Here are 1,000 of you — mostly men of industrial and scientific genius, whose energies have enriched the nation to an extent seven times greater than they have ever enriched yourselves, and we regard those energies as ' one of our chief national assets.' You have between you an Chap. VI.] " TRANSFERENCES " 305 income of a little over ^^50,000,000 ; and there- fore in addition to the income-tax and the super- tax which you pay upon this already, we propose by a super-super-tax to take from you an extra quarter. 7'his, we reckon gives us about 2 1 3,000,000." The total of these sums — the utmost which, according to their own principles, the radicals could collect for transference — is about ;^2 8,000,000. Were such a sum raised as a war-tax, it would no doubt be considerable ; but regarded as a transference of private income from the richer classes to the poorer, with the object of enabling tens of millions of people to imitate habits which at present are confined to some tens of thousands, it would not only be inadequate, it would be absolutely inappreci- able. It must, moreover, be remembered that most radicals, even in theory, would confine their " transferences " to incomes which were not less than ^5,000 a year, as we definitely know from information provided by the Chan- cellor of the Exchequer, who declares that even that sum is by no means sufficient for himself. It must be remembered farther that even if the operation of transference should be extended to all incomes in excess of a single thousand pounds, more than a third of the total which would be thus earmarked for attack is saved at present in the form of productive capital, for the purposes of extending those industries which are the ultimate source of all incomes alike. Hence, if the transferences, whose 3o6 RADICAL REFORMERvS [Book IV. object is a " better distribution of incomes," are not to be made by diminishing the national capital, the utmost sum which for this object radicals could look forward to extracting would not be as much as /"2 8,000,000. It could not exceed ^18,000,000. Such would be the case if the sum in question be calculated with reference to the principles which radical reformers definitely and specifi- cally formulate. It cannot be doubted, how- ever, that the principles which they definitely formulate differ very considerably from the idea which they are intended to suggest, and which is alone operative on the multitudes to whom such reformers appeal. This idea, which has been examined in these pages already, consists of an identification of the " rich " as they are to-day with persons whose fortunes are sufficient to render their way of life, their entertainments, their yachts, their purchases of art treasures, and even their wives' ornaments, spectacular — persons who could not possibly play the most modest of the parts imputed to them, on any- thing less than ^20,000 a year. These are the people whose wealth is supposed to be so boundless that the transference of even a part of it would suffice to transform the world. Such an idea, as has already been pointed out, is very far from unnatural ; and an interest- ing passage may be quoted from a speech by Mr. Bonar Law, in which he said that, apart from the question of its accuracy, it was one which was so natural that he could himself Chap. VI.] AIR. BONAR LAW 307 sympathise with it, and to which he gave vivid expression by means of a short anecdote. He happened, he said, to have been dining recently at one of the few really great houses in London, and his hostess, with a glitter of gold plate before her, with a wineglass in which the rarest of champagnes was expending its bubbles for her benefit, and a menu at her side comprehend- ing the costliest of the world's delicacies, asked him what was the cause of the " unrest so preva- lent in the modern labour-world." " I think," said Mr. Law, " I can tell you. What the wage-earning classes want is that you should have a little less of this sort of thing, and that they should have a little more of it." Here, no doubt, we have a good diagnosis of the malady. The malady is an imaginative want. The question is whether the want is a want of something which is possible, or whether it is the want of something which, in the nature of things, is not. The question, as Mr. Law thus sets it, is very easily answered. The richest men of London, such as Mr. Bonar Law's host, must certainly be men whose incomes exceed ^20,000 a year. Of such men the aggregate income is a little over ^50,000,000 a year. If savings be deducted as not directly distribut- able, the amount remaining for the purchase of the " this sort of thing " in question, will be barely more than ^30,000,000. If only "a little of this sort of thing " is to be taken from the present possessors, that " little " can hardly mean more than a good half of their present 3oS TRANSFERENCEvS [Book IV. spendable income; and a half might possibly come to as much as ^16,000,000. If those who are " unrestful " for the want of " a little more of the sort of thing " which is represented by a great London dinner party, comprise only the manual workers and their families, they will make up a population of 33,000,000 persons; so that the " little more of this sort of thing " which could in this way be transferred to each, would come in terms of money to 9s. 6d. a head. If this were converted into specimens of the actual delicacies present on the rich host's table, the value of the transferred income might conceivably be announced as follows : — " Whereas, in order to secure a better distri- bution of wealth, His Majesty's Government will take over one half of the spendable portion of every income which exceeds ;!^20,ooo, arrangements have been made with Messrs. Fortnum and Mason whereby every individual suffering from Labour Unrest will, three times a year, namely at Christmas, Easter and Michaelmas, be supplied, on application, with a hamper containing portions of the sort of things provided at rich men's dinners, these portions representi7zg the applicant's share of the total sum taken over. H ere are some specimens of the hampers, as packed for delivery : — Hamper A, containing one half pint of Champagne^ medium quality, half of one fat quail, one lark in aspic; Hamper B, containing nine oysters, and the equivalent of one glass of rum punch in a capsule; Hamper C, containing four Chap. VI.] A DIVISION OF LUXURIES 309 oysters, one s-poonful of Russian Caviare, two ounces of Strasburg pie. " Instead of such hampers, connoisseurs can be supplied with three coupons in the year, each of which will entitle the person presenting it to one liqueur glass of French brandy, forty years old in bottle. " Alternatively, by arrangement with a well- known firm of restaurateurs, three dinner coupons will be issued to each applicant, entitling the holder, once in every four months, to a three-and-sixpenny dinner, wine and coffee i?tcluded, together with after-dinner pills ad libitum, worth a guinea a box. Mothers of young children will please note these last.'" Such results, though each might be agreeable while it lasted, would hardly suffice to produce in some ^i?) million persons any sense of a sub- stantial change in the existing distribution of wealth. They would probably cause more unrest, both moral and intestinal, than they cured; and yet the carrying out of any one of them would run away with at least ^16,000,000. So much, then, for the possibilities of pro- ducing a social millennium by means of any transference-taxes which, according to their own principles, radical reformers, not excluding the most extreme of them, could possibly propose to inflict on the conspicuously rich, or even on these with the moderately rich added to them. If greater results were desired, their realisation could not be even attempted except by the adoption of a crude and Utopian socialism, u 3IO " COLOSSAL HOARDS " [Book IV. wdiich is repudiated not only by radicals, but by moderate socialists also. If such principles were adopted, it would seem at first sight that there was considerably more to divide. Wealth would be cast into a very much hotter furnace, with a view to rendering it more completely fluid; but as has been pointed out in the earlier part of the present chapter, this process would result in the defeat of its own ends; and most of the income which it was desired to pour into new moulds would float away in vapour. Foreign profits would go, fancy values would go. Savings would remain unmelted, and unavailable for any direct distribution. The present recipients ofincomes subject to income- tax would indeed see their present average income reduced from /500 a year to something like ;^20o; but the utmost which, even in theory, the masses of the population would gain would be a present per head of a sixpence and a threepenny bit weekly : and half this or more would at once be taken away from them by an equalisation of the present ordinary taxes. From whatever point of view we look at the matter, on whatever principles we may propose to seize a part or even the whole of spendable income of the few for the purpose of distribut- ing it among the many in such a way as to alter appreciably their present manner of living, we shall find that there is nothing, or nothing appreciable, to distribute. And the reason is simply this, that the colossal hoard of the few from which the materials of distribution are to Chap. VI.] PRESCRIPTIONS OF QUACKS 311 be drawn — the colossal hoard of which the modern reformer dreams, and on the supposed existence of which his dreams and his schemes are based, is itself a dream only. If the majority want to know where the bulk of the national income is really hidden, and why the plunder of the minority would have so vanish- ing a result, the answer to both questions is simple, and has been given in a previous chap- ter. Nine-tenths of the spendable income of the nation is in their own pockets already, and all reforms are illusory — they are the mere prescriptions of quacks — which have a contrary opinion for their basis. To say this is not to say that there are no evils to be reformed : but a complete emancipa- tion from the influence of a fundamentally false diagnosis of them, is the fir.st step to be taken, if we desire to see what such evils really are. This observation introduces us to a new order of questions which were foreshadowed in our opening chapter; and to a summary considera- tion of them the following Book will be devoted. BOOK V. Towards a New Departure. CHAPTER I. Social grievances being — let it be said once more — partly due to facts directly experienced, and partly to belief as to facts which is operative through its effects on the imagination, griev- ances of the former kind are in their nature real. Those of the latter may be either real or illusory, according as the beliefs in which they originate are either correct or otherwise : and the present work thus far has been mainly occupied with a demonstration that the principal griev- ances of to-day, as modern reformers under- stand them, are due to beliefs which are so absolutely erroneous that the real evils or grievances, so long as such beliefs persist, can be neither clearly seen nor remedied. It remains for us to consider what these real evils are : but we will first briefly review the nature and origin of the beliefs by which they are now obscured. These beliefs, in so far as they have been dealt with here, are erroneous beliefs as to bare material facts — facts relating to the dis- tribution of economic wealth : but their disturb- ing effect is supplemented by beliefs of another kind, which, though frequent allusion has been made to them, it still remains for us to examine. These are beliefs relating, not to specific facts, such as the actual distribution of wealth in this 31.S 3i6 PRINCIPLES OF SOCIALISM [Book V. or in any other country, but to certain general principles and to ideal objects of endeavour, which constitute the distinctive elements of definitely articulate socialism. The principles distinctive of socialism in all its forms are broadly reducible to three, the first of which has been gradually superseded by the second, whilst both of them point to the realisation of an ideal third. The first of these is the doctrine that all wealth is the product of manual labour. The second — an amendment of the first — is the doctrine that all wealth is the product of society as a whole. The third consists of an ideal object of endeavour, which is commonly described as the reahsation of " economic freedom." Let us take these principles in order. The doctrine that all wealth is the product of manual labour is one which has an interesting history. As applied to communities in their earliest childhood, it is true enough; but it is true as applied to such communities only. Nevertheless, if the civilisations of the ancient and mediaeval world be compared with those of to-day, it possesses, as applied to the former, a certain relative truth, which is wanting to it as applied to the latter. This relative truth is sufficiently illustrated by the contempt expressed by the ruling and intellectual classes for what Plato called " Work for gain," or in other words for wealth-production — a contempt which, except in the case of the republics of Northern Chap. I.] WEALTH AND MANUAL LABOUR 317 Italy, survived amongst all aristocracies, whether of birth or brain, from the days of Plato down to those of our own grandfathers. The modern developments, however, of science and scientific invention, as applied to the processes of indus- try, through these to the processes of transport, and through both to the processes of war, have for more than a century been producing changes so colossal as to show — one might naturally have thought — to even the most casual observer, that an aristocracy of intellect had allied itself, by means of capital, with the democracy of hand and muscle ; and, in so far as the develop- ment of wealth-production was in any sense pro- gressive, had become the predominant, or, at all events an equal, partner. And yet, strange to say, the very moment when this change was first generally asserting itself, was the moment at which, by a curious irony of fate, the doctrine that manual labour is the sole productive agent, was propounded for the first time as a definite and universal formula : and, what is still more strange, the promulgation of this doctrine was the work, in the first instance, not of the champions of labour, but of the champions of capital themselves. What took place was this. In proportion as industries became more elaborately divided, and different groups specialised in the produc- tion of single classes of commodities, of which only a small part was of any use to the pro- ducers, the importance of exchange as the means by which wealth was finally realised, 3i8 RICARDO'S DOCTRINE [Book V. became more and more evident; and the main question on which the attention of economists was fixed itself, was the measure of value by which exchange was regulated. Why do so many hymn-books exchange for one pair of breeches, or a watch or a pair of spectacles for so many mugs of beer? And the final answer of the economists of the orthodox or capitalistic school was that formulated by Ricardo. Com- modities are exchanged for one another, or in other words possess value, in proportion to the amount of wage-paid manual labour which, on an average, is required for the production of them. Now this doctrine, of which mention has been made already, is true enough even to-day if qualified by a variety of assumptions, which Ricardo and his school tacitly took for granted. They, however, made no attempt to specify them; and their doctrine, given to the world in all its crude incompleteness, was converted by the genius of Marx into the foundation of scien- tific socialism, and applied to purposes of which the authors of it never dreamed. If manual labour, Marx argued, is the measure of all values, manual labour — the labour which is now bought with wages — must, it is perfectly obvious, be the producer of all wealth. The labourer's wages, however, represent, as a matter of fact, a part of the product only : and hence the great question which the modern world must answer is, why the manual labourer does not receive the whole? And the reason, he said, was this. Chap. I.] " MODERN CAPITALISM * 319 The labourer must, in order to produce any- thing, have not only raw materials, but tools or implements also ; and prior to the development of the modern capitalistic system, he possessed such implements in the fullest sense, for they were his own. What he produced he sold ; with a part of the price received he paid for his raw materials; and the remainder was the full value which his personal labour had added to them. But, so Marx proceeded, the rise of modern capitalism has changed the situation altogether. The rise of modern capitalism consists of a pro- cess by which, as the implements of labour were transformed into vast mechanisms, which no one labourer could either possess or use singly, these passed out of the hands of the labourers altogether into the hands of a separate and wholly non-productive class — the capitalists; and what this class has done, wherever it has established itself, has been as follows. It vir- tually divided the country into a number of walled enclosures, within which the whole of the labourer's tools are stored. Of the gate of each enclosure some capitalist keeps the key. The labourers themselves are left helpless along the roads outside, and can do or produce nothing unless the capitalists let them in. This the capitalists do. To do so is their sole business ; but they do so on condition that each labourer as he goes out shall leave behind him the whole of each day's product, except about one quarter of it, without which he could not live. In other words what we call " modern capi- 320 " ENGROSSING OF LOOMS " [Book V. talism " is, if Marx be correct, nothing more than the triumphant generaUsation of a practice which was actually rife in England in the middle of the sixteenth century. This was a practice, inaugurated by " great clothiers " and called " the engrossing of looms " (which meant the acquisition of the implements of production in the weaving trade), and the letting them out at a " rent " to " poor artificers." Now such an explanation of capitalism might have had some superficial plausibility, if it were not for the fact, on which Marx and his followers insist with as much emphasis as anybody — namely the fact that, since the implements have passed into the hands of the capitalists, an incomparably greater product has resulted from the labour of the labourers than resulted from it when the implements were their own personal property. That the proxi- mate explanation of this is the metamorphosis of the implements themselves from puny tools into vast scientific organisms, was as obvious to Marx as it must be to every child; but when we come to the farther question of how this metamorphosis was accomplished, the theory of Marx is mute. No hint of an answer is pro- vided by it. Marx and his followers have naturally been glib enough in retorting that the metamorphosis is attributable to the modern growth of knowledge. But to say this is to abandon their fundamental theory altogether. To whatever persons or conditions the growth of knowledge may have been due, it has not Chap. I.] " WEALTH A SOCIAL PRODUCT " 321 been due to the prosecution of mere manual labour. If capitalism were no more than a process like that of " engrossing " handlooms, weaving would be accomplished by mediaeval handlooms still. Handlooms have not hatched themselves into the power-looms of the modern world, because people, otherwise idle, locked them up in yards, and exacted a toll from the weavers who wished to go in and use them. Wheelbarrows have not hatched themselves into locomotive engines and goods-trains, merely because they ceased to be the property of the men who were allowed to wheel them. Even socialists themselves have been gradually driven to admit that kinds of human effort have played a part in the change — efforts of the intellect, of the imagination, and adventurous mental energy — which are wholly distinct from the labour which is bought and sold for wages, and cannot by any ingenuity be brought into the same category. Hence, during recent years, amongst all socialists who can think, the original doctrine that the wealth of the modern world is the product of one kind of human effort only — that is to say, of manual labour, has been modified by the recognition that it is the product of efforts of many kinds, mental as well as manual, no one of which would be effective without aid from the others : and thus the doctrine that all wealth is a labour-product has been superseded by the doctrine that all wealth is a social product. 322 PRODUCTIVE EFFICIENCIES [Book V. Now this later doctrine is, in one way, a great improvement on the earlier; for whereas the earlier (at all events as applied to the modern world) is a falsehood pure and simple, the later is, in a certain sense, true. It is, however, nothing more than a truism. It has no bearing" whatever on the practical questions in connection with which it is ostensibly formulated. These practical questions relate, not to the productive efforts made by a society as a whole, but to the different kinds of efforts made severally by different classes, and the share of the product which in consequence is legitimately due to one class, as contrasted or compared with that which is legitimately due to another. The doctrine that w^ealth as a whole is the product of society as a whole is sufficient if we are willing to content ourselves with the only conclusion to which it leads — namely that the product ought to be enjoyed by whatever society may be in question, and not by some other society in a different quarter of the globe. The claims of classes within that society itself are left by this doctrine precisely where they were. In its negative results it has, however, been not unfruitful. It has relieved thinkers, w^ho still call themselves socialists, from the intolerable necessity of maintaining that no human being is entitled to receive more than another, and that nobody but a manual labourer is entitled to receive anything. It has enabled them to bring themselves so far into harmony Chap. I.] " ECONOMIC FREEDOM " 323 with commonsense as to admit that productive efficiencies are not only various, but unequal; and that considerable inequalities in reward are alike just and inevitable. But in thus aban- doning one of the earlier doctrines of socialism, they have been driven, by way of compensation, to lay increased stress on another. In ceasing to define socialism as a regime of economic equality, they have become more emphatic in defining it as a regime of economic freedom. Now it is difficult to imagine a phrase more captivating in its vague suggestion : but it is difficult to imagine a phrase which, if invested with any definite meaning and applied to the modern world, is more like the shriek of a lunatic. The doctrine that no human faculty other than common manual labour is in- volved in the production of a great Atlantic liner, or in the discovery and extraction of radium, is reasonable as compared with the conception of economic freedom; and this observation becomes more and more literally true in proportion as we imagine the actual conditions of to-day to be modified in accor- dance with the ideas which all forms of socialism postulate. The nearest conceivable approach to freedom in economic work is that enjoyed by the peasant who is the owner of the plot he cultivates. He is free, so far as any human laws are concerned, to cultivate it well or ill ; but if he fails to cultivate it well, Nature is a law- giver who will chastise him with cold and hun- ger : and if his plot is to suppr)rt him at all, he 324 FAILINGS OF SOCIALISM [Book V. is not free to leave it. Moreover such isolated work as the peasant's, which is free in the sense that it is exempt from human dictation, is precisely the type of work which socialism aims at abolishing. Socialism aims, not only at per- petuating, but at extending and making univer- sal, those methods of production and transport which have already been developed by capi- talism; and of these methods the primary and most vital feature is the exact correlation of the work of each individual worker with the work of every other, in respect of the commo- dities, or parts of commodities, fashioned — of their kind, their number, and the precise moments of their completion; and of the kinds of services to be performed (such as those of a pointsman on a railway) and the precise moments of performing them. If there is little economic freedom for the industrial employee to-day, there would be incomparably less if all the separate businesses that exist were consoli- dated into one, by one single employer — namely the State, and if all the human wheels were so geared together that any irregularity in one communicated itself to all the rest. Thus socialism, regarded as a body of formu- lated principles and ideas, which seek to accommodate themselves to facts, and thus to influence human desire and action, is seen, in proportion as its theoretical development pro- ceeds, to move in a vicious circle. Having outgrown the original fallacy that wealth is produced by manual labour solely, uncontrolled Chap. I.] STATE SOCIALISM 325 by any minds other than the labourer's own, and having endeavoured to reconcile control with economic freedom by a proposed transference of control from private individuals to the State, it ends by offering labour a system of control so drastic that, compared with the conditions of to-day, it would not be freedom but slavery. To demonstrate this, however, by appeals to reason is one thing. To liberate the popular imagination from the fallacies so exposed is another : and appeals to reason would accom- plish their w^ork but slowly if they were not illustrated and enforced by the teachings of actual experience. But such teachings have not been wanting. In the principle of State socialism itself there is naturally nothing new : but there has, during recent years, been a remarkable and novel extension of it to a variety of public services, and one or two manufactures, which have been undertaken and monopolised in this country, or elsewhere, by the State or by local authorities elected on a democratic franchise; and attention has been loudly called to these enterprises by their advocates as triumphant instalments of the revolution which is ultimately to transform the world. How such undertakings compare, in point of efficiency, with others of the same kind con- ducted by private enterprise, need not be discussed here. The point here to be noted is that manual labour, as such, achieves, when its employers are elected public authorities, no position which differs in any essential way from 326 STRIKES [Book V. that which it occupies when its employers are private persons. x\nd not only is this true, but the employees of public authorities all over the world have, during recent years, been finding out that it is so. That such is the case is shown by the growing number of strikes directed, not against private employers, but public. In one case it is a Corporation that is attacked, as the public owner of municipal trams or gas-works. In another it is the Central Government, as in the case of the great strikes on the Western railway of France. The employment of labour by such representative bodies is the express image of socialism in logical action. The old bugbear of private profits is eliminated. The question is reduced to a question of " economic freedom " : and vet no sooner is socialism expressed in action than labour discovers in it the re-embodiment of every essential feature against which socialism, as a theory and a hope, protests. Nor is labour expressing this dis- covery by means of strikes alone. Anyone who takes the trouble to examine socialist journals may find it expressed in simple and undisguised language. One of these journals has published a letter from a correspondent who declares that " Under State socialism life would be no better than hell; and that if all Englishmen were to be turned into State employees, nothing would be left for a self-respecting man but to emi- grate." Some of the best-known thinkers who have associated themselves with the socialist movement have, for some years past, been Chap. I.] SOCIALLSM EXAMINED 327 saying the same thing. Mr. Wells, who is perhaps the acutest of these, insists that the very word " socialism " is so impregnated with fallacious suggestion, that it is no longer service- able : and even Mr. G. B. Shaw, though the insight which he displays as a dramatist appears to desert him when he poses as a social philoso- pher, records his recognition of the fact that socialism, in so far as it means what for many years it was supposed to mean — that is to say a mere system of State capitalism — would be far more likely to prove the consummation of economic slavery than a release from it. In spite, however, of such signs of the times, the word socialism still stands for ideas, claims and tenets, which have not lost their influence over large numbers of people. But this fact is one which is commonly interpreted in a very misleading manner. It is commonly assumed that everybody who describes himself, and who votes, as a socialist, is a person who intelligently assents to certain economic doctrines — doctrines which begin with a theory as to how wealth is produced, and culminate in some scheme of society which has such a theory for its basis. This is true to a limited extent only. The main idea which is at the bottom of popular socialism is not any speculative theory : it is a crude idea as to facts. It is the idea with an examination of which this volume has been mainly occupied, that, under existing conditions, the bulk of the world's wealth is being, to an increasing extent, appropriated by a small minority; that the 328 SOCIALISM AND PROPERTY [Book V. majority of the population, in this country at all events, is consequently growing poorer and poorer; and that any theory must be true by which the majority may be justified and united in seizing on the supposed hoard, and leaping into affluence by dividing it. A dignitary of tlie English Church, referring to certain modern restaurants, which are renowned alike for the delicacy and the costliness of the fare provided by them, has expressed his wonder that the dinners there eaten by the guests do not turn every waiter who hands the dishes into a socialist. He obviously could not have meant that the mere handing of expensive puddings converted the waiters into masters of some elaborate economic theory. He can merely have meant that the sight of a profuse expendi- ture on trifles is enough to generate in the minds of those who witness it a belief in the reality of the hoard on which socialists propose to seize. In other words, he must have meant that primary basis of socialism is a belief as to simple facts, and not an assent to theory. Given an acceptance of the facts, the impor- tance of the theory is immense ; but apart from the facts supposed, the mere theories of socialism would be negligible. Indeed Mr. Philip Snowden, in a work to which reference has been made already, admits that such is the case. The kinds of property against which the theories of socialism are directed are, he says, not wrong in themselves. In former days they may have been essential. They have come to Chap. I.] FALSE THESIS OF REFORMERS 329 be wrong because, under modern conditions, they have produced, and are continuing to produce, certain definite and ruinous resuhs, these results being, according to him, an increas- ing accumulation of wealth in the hands of a small minority, and a corresponding increase of poverty amongst the great mass of the popula- tion ; in which process, he contends, we have the fundamental fact which explains nearly all the evils characteristic of the modern world. And in this general thesis, however its details may be modified, all social reformers of the present day agree with him. We are thus brought back to the fact, a detailed elucidation of which has been the object of the present volume — the fact that in all its details this thesis of the reformers is false. In so far as it is merely an assertion that social evils exist, it is no doubt true, just as the cry of a man in the street that somebody has knocked him down may serve to call atten- tion to the truth that he has sprained his ankle by slipping on a piece of orange-peel. But whatever element of general truth is expressed by it, is more than neutralised by the funda- mental fallacy of its particulars. In calling- attention to the fact that real grievances exist, it converts these into others which are chiefly imaginary; and until the beliefs which invest these phantoms with the semblance of reality are dissipated, it is impossible to determine with accuracy what the real grievances are, what 330 WHAT ARE THE GRIEVANCES? [Book V. is their extent and origin, or the methods by which they may be abolished or mitigated. The situation, as thus outlined, will be con- sidered in the following chapter. CHAPTER II. The idea that an increasing proportion of the income of the United Kingdom has for more than a century been, and is still being, appro- priated by a small and very wealthy class, is an idea so diametrically opposite to the actual facts of the case that, as has been said already, there must be a fact of some kind, other than the assertions of reformers, to account for the readiness with which multitudes have accepted, and are still accepting it; and what this fact is has already been pointed out. Though rela- tively to the income enjoyed by the great mass of the population, the aggregate income of this class has never before been so small as it is at the present time, it has never before been so large relatively to the unchanging area within the limits of which it is displayed and spent. It thus becomes everywhere more and more observable. It attracts the simultaneous atten- tion of a larger number of people, who watch it growing like the mango-tree of an Indian juggler, and who, though their own income has collectively grown much faster, are unconscious of this growth for the precise reason that it is general. Hence in contemplating the rich they become the victims of an optical delusion, analogous to that which is experienced by a 331 332 EXTENSION OF LUXURY [Book V. railway passenger, when a train in which he is traveUing at a speed of forty miles an hour, is passed on parallel rails by a " special " whose speed is fifty. His own progress is unchecked, but so far as his eyes can inform him he is suddenly carried back in the direction from which he came. How natural such a delusion is can be very easily realised by merely reconsidering the income of the rich to-day, as compared with the income of the country about a hundred years ago. England was, at the beginning of the nineteenth century, universally admitted to be the richest country of the world. The Squares of London, to the eyes of contemporary observers, seemed thronged with " tumultuous grandeur," with " long-drawn pomps," with the " freaks of wanton wealth." No picture of a street or a turnpike road was perfect without its blazoned chariots, its clusters of powdered footmen, or its travelling-carriage with spruce postillions and four galloping horses. The foreign visitor was amazed, the home-grown critic was scandalized, not only by the glitter, but also the wide extension of luxury : and yet, of the country by which such impressions were produced, the entire income was at that time considerably less than the aggregate of incomes in excess of ^i,ooo a year to-day. As com- pared with the computations of agitators, this latter sum is infinitesimal. As compared with the present income of the nation it is almost unbelievably small. It is not only a small, but Chap. II.] THE " SUPER WEALTHY " 333 also a dwindling quantity. Of the income of the nation, in the year 1801, such incomes formed as much as 18 per cent. They form very little more than 12 per cent, of it to-day. But, in spite of its relative decline, in spite of its actual insignificance as a fraction of wealth generally, the aggregate income of the rich (however the rich may be defined) has increased in absolute amount, whilst one thing has remained un- changed; and that is the size of the arena on whose sands it displays its pageant. There is, therefore, nothing to wonder at in the genesis of a spontaneous impression that the increasing wealth of the nation is mainly expended in the production of what is really one of its minor, though perhaps the most conspicuous of its, signs. And this spontaneous impression is intensified by various accessory causes. One of these is the systematic teaching of agitators ; but another, the influence of which is probably even wider, is the newspaper press as a purely descriptive agency. There are few journals in which some prominent column is not devoted to the private and personal doings of Mr. Masterman's and Mr. Snowden's friends — the "enormously rich" or "the superwealthy" ; or of others who succeed in imitating them at extreme inconvenience to themselves. Many journals are devoted to nothing else, introduc- ing to their readers, with an air of patronizing reverence, a select assortment of millionaires and duches.ses, whose furs, whose feathers, and whose food the readers are invited to copy, 334 SOCIAL UNREST [Book V. at a cost far exceeding the incomes of nine out of every ten of them. Journals supply such matter because the public demands it : and " if the event could trammel up all its consequences," both supply and demand might be accepted as an instance of life's light comedy. The comedy, however, is one which has conse- quences graver than itself. The concentra- tion of popular thought, which the newspaper press stimulates, on the modes of life which exceptional wealth makes possible, tends to popularise a false standard of living. This standard is false because under no conditions could it be realised, even approximately, by the people as a whole, by the majority of them, or by more than one small section. Hence, in proportion as the popular imagination adopts it, the people, let them do what they will, are doomed to a condition of disappoint- ment : and even the achievement of what other- wise they might call successes, does but raise them to one level after another, from which successively they contemplate a wider view of failure. Here we have the explanation of that state of mind, in so far as it is merely experienced and not definitely formulated, which is com- monly called social or economic " unrest." It is, in its essence, a generally diffused desire for something which is, from the very nature of the case, not generally attainable. It originates in a fallacy of belief, vague and only half-articu- late, with regard to existing wealth, its amount, Chap. II.] GROWTH OF A DELUSION 335 and its present distribution : but it does not assume the guise of a specific grievance until this vague fallacy is translated into definite propositions, which, claiming to be literally and scientifically true, manage to get rid of actual facts altogether, and present the unattainable as a something within the reach of all, if they will only vote together for some simple means of seizing it. The process of translating a popular and not unnatural delusion into a systematised body of statistical and historical errors, and the imposition of this on the minds of multitudes as the sole basis of any true social policy, has been the work of professional reformers for more than sixty years : but even they, with all their industry, would have failed to secure for their fallacies the assent which has been actually accorded to them, if it had not been for the original optical delusion together with its emotional consequences, which the actual and spectacular reality of modern wealth has occasioned. Such being the case, it is impossible to deny the force, though we may not entirely yield to it, of many of the arguments which even men of moderate temper urge with the object of exhibiting modern wealth as an evil. There is force, for example, in the contention that, unlike wealth in the days when fortunes were acquired slowly, and the typical rich man (who then was the great landlord) was associated from his birth onwards with recognised and important duties, modern wealth is, to an increasing extent, 336 PARVENU WEALTH [Book V. typified by men whose fortunes have been acquired in other countries, and whose sole idea of duty, when they bring these fortunes to England, is to buy the recognition of society by outdoing it in profuse expenditure. And when similar observations are hazarded as to fortunes made at home, it cannot be denied that in some cases they are at least equally plausible. Of the conspicuous incomes of to-day it may be shown by statistical evidence that but one out of every five is two generations old. As Goethe said, about great works of art, each newly enriched person, in so far as he has entered the world, " has had to create the taste by which alone he can be appreciated " ; and this taste for himself is, with his wife's assist- ance, created for the most part not merely by an expenditure of his wealth, but by a compe- titive expenditure, the object of which is to attract attention. In this way, it may be urged, the standard of mere material luxury is not only raised and vulgarised amongst those who are able to adopt it, but is also obtruded on the great mass of the public in a form peculiarly calculated both to provoke imitation and to defy it, thus corrupting the popular conception of what is really desirable in life, robbing even substantial competence of its power to produce content, and frequently stimulating an extrava- gance which reduces it to actual poverty. Such contentions as these represent one side of the question only ; but so far as they go there is a laro:e measure of truth in them. For argu- Chap. II.] AN AVERAGE OF INCOMES 337 merit's sake let us suppose that they represent the whole truth. Let us suppose that, so far as its moral influence is concerned, the peculiarities of modern wealth are absolutely unmixed evils : but whatever its evils may be, these are not of the particular kind which the practical and political logic of social reformers imputes to it. Its existence and its development may be the cause of increasing discontent, but they cannot be the cause of any actually increasing poverty. They can be so, in the first place, because the mass of the population as a whole grows not poorer, but richer. They cannot be so, in the second place, because the aggregate income ot the wealthy represents a theft (if we like so to express ourselves) which, relatively to the income of the nation, is a gradually diminishing quantity. They cannot be so, in the third place, because the aggregate income of the wealthy is of such an amount and character that no possible redistribution of it, whether by transference- taxes, by increased wages, or otherwise, would appreciably alter the conditions of the masses of the population generally. The most drastic redivision conceivable of the entire present income of this country — namely a redivision in accordance with the principles of the crudest socialism — would, as has been shown already, yield an income of ^"36 per inhabitant, as against ^"34, which is, under existing conditions, the average per head of the classes not subject to income-tax; and the increase would be more than neutralised by 338 AVERAGE NET INCOME [Book V. the equalisation of taxes, rates and savings.^ The average net income per family of five persons, in which such a redivision would result, would be theoretically about ^130. The average net income per family of the classes not subject to income-tax is, at the present time, about ^150. Such an absolute equalisation, it is true, is not generally advocated even by the extremest of practical politicians; but a consideration of its theoretical results is valuable as providing us with the only rational standard by which the incomes prevalent in any class can be measured. Thus a class in which family incomes average a few hundreds a year cannot, under existing conditions, reasonably regard itself as poor in proportion as these incomes fall short of ^"5,000 or even of ^1,000. A class in which family incomes average ;^I50, and individual earnings range from ^50 to £"]^, cannot reasonably regard itself as aggrieved because these incomes fall short of £\^o and ^100. Such incomes I. The present average per head of the population, in respect of taxes, rates, and savings, is about £\o per head or £^Q> per family of five persons. The present average for the classes not subject to income-tax is about £4 per head, or ;£20 per family. The average gross income per family is £170. The average for all families, were all fortunes equalised on extreme socialistic principles, would be ;^i8o. Present taxes, etc., being deducted from the first, leave an average net income of £150. Equalised taxes, etc., being deducted from the second, would leave an average net income of ;£i30. Chap. II.] IDEAS OF REDISTRIBUTION 339 should rather be regarded as the first beginnings of riches; for they all of them raise their reci- pients, to a very appreciable degree, above the condition which in any case must be that of the vast majority. A man in any class who is per- suaded that his case is exceptional, may logically maintain that he has a grievance, because his income, however large, is small as compared with that to which his special merits entitle him : but if grievances mean conditions which political reforms can remedy, it cannot be an actual grievance, in the case of the masses of the population, that their incomes fail to reach or exceed any sum but the maximum which any scheme of division could in practice secure for everybody. Such being the case, what we have seen is this — that, whatever may be the scheme of division which social reformers advocate, no such scheme, even in theory, could produce the kind of result which reformers present as prac- ticable to the imagination of multitudes — that is to say, the generalisation of any condition which would even remotely approach what is meant by "riches," as the word is used to-day. No such result could be produced by any scheme of division, for the simple reason that there is not enough to divide : and all programmes of reform which have any such scheme as their basis are directed, not against the present distribution of such wealth as exists, but ao-ainst the present limitations of the productive facul- ties of mankind. And here it may be noted with interest that a 340 ERRORS OF DISTRIBUTION [Book V. Statistician who was originally known as an emphatic exponent of the view precisely oppo- site — who aimed at exhibiting poverty as purely the result of concentrated wealth — has subse- quently modified this view, at all events so far as to recognise that, let existing wealth be distributed in whatever manner we please, the mass of the population would compara- tively be poor still. Substantially, if not in detail, his conclusion accords with that which has been elucidated in the present work, that the limitations of wealth now im- posed on the great majority of mankind, however they may be aggravated by what he calls " errors of distribution," are determined in the last resort by the limitations of the total product. Nor does his agreement, however qualified and partial, with the argument of the present work, end here. From the above admission he advances to the practical conclu- sion that if, not satisfied with such crumbs as might come to them from the ruin of the rich, the poorer classes in any substantial sense want more, means must be discovered by which the energies of the nation may produce more. And other reformers have of late been coming to the same conclusion. Here at all events we have a principle which is fundamentally true, super- seding or modifying one which is altogether fallacious. But even this principle, when reformers translate it into practical language, is so distorted by visionary, or definitely polemi- cal exaggerations, that, even were it wholly Chap. II.] ERRORS OF DISTRIBUTION 341 untrue, it could hardly be more misleading ; and before we proceed to consider its real signifi- cance, a few illustrations shall be given which will show what the general character of these exaggerations is. w CHAPTER III. Just as the traditional contention of reformers, and the current contention of most of them, is that the actual output of wealth, which already awaits seizure, is sufficient, if fairly divided, to make every home in the country a scene of ornamental affluence, the amended contention with which we are now concerned is that, though this result would be impossible unless the actual output were increased, a vast and immediate increase of it is not only possible but easy. This general proposition means, as interpreted by those who enunciate it, that the economic efficiencies of the world, and of this country in particular, are at the present time for the most part wasted, and that, were the waste checked, the product would be forthwith doubled — possibly trebled, or increased to an even greater extent. And when it is asked what the nature and the causes of the waste are, the answer is that the main causes are three. One is the withdrawal of a vast amount of labour and talent from the production and commercial distribution of domestic utilities altogether, in order to manufacture and manipulate engines of mere destruction ; another is a waste in the manufacture of utilities themselves, which is alleged to result from competition; and another is the superfluous employment of multitudes in 342 Chap. III.] COST OF ARMAMENTS 343 selling utilities, who might, with prodigious results, be employed in augmenting the supply of them. Now as to the first of these causes — namely the employment of so many men in producing, in using, or in learning to use arms, who might otherwise be building houses, or weaving or selling stockings — the country no doubt would be richer were there no necessity for defending It : but whether the cost of defending it can, under existing conditions, be in any serious sense regarded as preventable waste, is a question of politics which need not be discussed here. In any case any practicable conversion of swords into ploughshares, trowels, or spindles, though it might mean an increase in the income available for private purposes, would not mean an increase of more than about ;^70,ooo,ooc) — a sum which, if large in itself, is merely a small fraction of what is alleged to be the wasted total. The largest part of this is the waste which is attributed to competition, and an irrational overgrowth of the staff which, directly or indirectly, is engaged in commercial distribu- tion. Now it is at all events conceivable that each of these kinds of waste may be a reality. Whether it is so or not, and what, if it is so, is its extent, are questions which are entitled to consideration. With regard to the alleged waste in manu- factures as resulting from the practice of competition, it is difficult to see how such a 344 ALLEGED WASTE [Book V. waste could occur unless various kinds of commodities, such as bread, cloth, or a book, were systematically produced, like a book, in two simultaneous editions, of which one only is bought whilst the other is destroyed as lumber. Something of this sort may occur in certain cases, but it cannot occur to any very great extent; and the same thing may be said with regard to the corresponding waste alleged to take place in the process of commercial distribution. Such a waste may occur, but the imagination of enthusiasts exaggerates it. The full extent of the exaggeration cannot in either case be precisely measured, partly because the facts as they are cannot be com- pletely known, and partly because the estimates of the enthusiasts are not precisely stated. The magnitude of these last, however, is constantly suggested by illustrations, which are put forward as typical, which are definite so far as they go, and relate to facts ascertainable by more or less definite evidence. Of these illustrations it will be sufficient to cite two, which in one form or another are those most often met with. The one relates to the waste which is due to commercial distribution ; the other, to the waste which is due to the present system of manufacture. Of the waste in commercial distribution, the stock illustration is the enormous cost of adver- tisement. Mr. Money, in emphasising the magnitude of this waste, adduces the cost of advertisement as its chief and most obvious Chap. III.] WASTE IN MANUFACTURE 345 element. It consists mainly, he says, of the cost of superfluous printing; and he begs his readers to consider how vast this cost must be. Energies which might be employed in multiply- ing boots and biscuits are frittered away in persuading people, by means of printed matter in the columns of newspapers, on hoardings, on the backs of paper parcels, that such and such boots or biscuits are superior to all others, or «an only be bought at one particular shop, when under different titles they are really being sold at a thousand, each shop through its printers making the same claims for them. Other writers have gone over the same ground, and have declared that the cost of advertising in the United Kingdom is something between 120 and 150 million pounds a year, which means a loss of utilities representing the same value. The waste which must somehow occur — it is not specified how — in the process of manufac- ture itself, is similarly illustrated by pointing to the admitted fact that multitudes are inade- quately supplied with articles of necessity such as clothes, and comparing this fact with various sensational estimates of the rate at which modern machinery enables these articles to be multiplied. Of such estimates, that which is most precise and popular, relates to the cotton- trade. "A single girl," it is said, " can, in a single year, make enough cotton cloth for the shirts of three thousand men. One hundred girls could make shirts for the whole of Man- chester. Such being the case, if anybody is in 346 PRINTING AND ADVERTLSING [Book V. want of a shirt, we may form some idea of how little manufacture does in proportion to what it might do." Let us now compare each of these estimates with what can be definitely known as to the facts which it purports to represent. To begin with the cost of advertising, which is said to represent a loss of far more than lOO million ; — if the cost of printing is the main element involved, at least loo million must be the cost of printing alone. Now it so happens that, in respect of the United King- dom, we know with substantial exactitude what the annual cost of printing of all kinds com.es to; and of this, the cost of advertisements can form no more than a part. The total cost — that of paper included — is stated in the Census of Production;^ it is also minutely analysed; and the only kinds of printing which can possi- bly comprise advertisements, are thus made clearly distinguishable. These consist of the printing of daily and weekly newspapers (trade journals included), of magazines of all kinds, of " job and general printing," and also of the printing of trade notices on cards, card-paper boxes, and wrappings used for parcels. The cost of the printing of all newspapers and periodicals is in round figures ;^ 14,000,000; the cost of " job and general printing," which includes that of posters, is ^13,000,000; and that of printing trade notices on parcel-paper, I. See Filial Report on the Census of Production pp 608-626. Chap. III.] " GIRL IN THE COTTON TRADE " 347 cards and boxes, is not one-third of a million. If we suppose, then, that as much as one half of all newspapers and literary periodicals are really devoted to advertisements, and not either to news, or literature, and that as much as four- fifths of "job and general printing" is accounted for by advertisements of one kind or another, the cost of printing advertisements, even on these excessive assumptions, can hardly amount to so much as ^18,000,000. How, then, if, as Mr. Money and other writers suggest, the cost of advertisements is mainly the cost of printing, can the total waste by advertisement be as much as 150 million, or even 120, or anything remotely approaching either the one sum or the other? Let us now take the case of the redoubtable " girl in the cotton-trade," whose unaided exertions in a year could make shirting for three thousand men. How is such an estimate reached? It is far from being a mere guess. It is evidently reached — and arithmetically it will pass muster — by taking the total number of yards of cotton cloth produced annually by all the mills of the country, then dividing this total by the total number of operatives, and finally assuming that every operative is a girl. If four or five yards of cloth be allowed for every shirt, the average output per " girl " will, as thus computed, have been given with sufficient accuracy. But what is the fundamental assumption on which the whole of this computation rests? It is the assumption that the girl not only plays 348 TRUTH AND ABSURDITY [Book V. her part in weaving the cloth in question, but has grown the cotton in America out of which the cloth is made, that she has put it on board the steamer in which it is brought to England, that she has helped to build the steamer itself, and is finally the sole constructress of the steam- driven loom used by her. In reality, of the cloth which emerges under the movements of her hands, 80 per cent., if its quantity be measured by its cost, is the product of cotton- growers on the other side of the Atlantic, and of ship-builders, seamen and engineers whom the girl has never even seen.^ She barely produces one-fifth of what of the logic of her friends ascribe to her. Here we have two examples of the manner in which polemical visionaries, even when they start with a principle which is in itself sound, that the basis of general progress is increased efficiency of production, convert this profound truth into a mere misleading absurdity by their reckless inflation of the facts which they offer to the world as illustrations of it. The loss of productive efficiency by the waste of it in useless printing, the actual efficiency of the individual when engaged in the production of utilities, are both blown out by them to four or five times their actual magnitude : and it is evident from I. The cost of the raw material relatively to the value added to it by manufacture is, in round figures, as £,!']/![ to yj45. Of this latter sum, about £^ is represented by the upkeep cost of manufacturing plant alone. See Census of Production, pp. 35, 36, 339. Chap. III.] A TEST APPLIED 349 the vehemence of their language that the exag- geration of their general outlook is considerably greater than that which even their illustrations register. We need not, however, dwell on such exag- gerations longer. We shall subject them to a better criticism by extracting the element of truth from them which they no doubt contain, and seek, with the aid of history, to reduce it to its true proportions. There are four periods, representable by particular years, which years may conveniently be selected for consideration because our infor- mation with regard to them is such that certain comparisons between them can be very easily made. These are the years 1801, 1850, 1880, and 1 9 10. With regard to the first and last of them, the information here required has been set forth at length in the present volume. With regard to the two others, similar information is derivable from the statistical analyses of Sir R. Giffen, of Professor Leone Levi, and also those of Mr. A. Bowley, by the latter of which the former have been slightly, but only slightly, modified.^ Let us then, in respect of each of these dates first consider the income of the country as a whole, and, dividing each total by the then 1- vSce vSir R. Oiffen's Address to the Royal vStatistical Society, Novcinbcr, 1S83 ; Professor Leone Levi's vStatistical Pajjer on " Chan<^es in the Distriinition of WeaUh in relation to the income of the Labouring Classes ; also, " National Progress in Weallli ;iii(] Tiade," ))y Mr. A. Bowley. 350 GROWTH OF INCOMES [Book V. number of the population, express the income in terms of such and such a sum per head. Let us next give our attention to the working classes only, defining these roughly, but in a way which will serve our purpose, as all persons, men, women and children, supported on incomes not exceeding ;^i6o a year; and let us express their income, in each case, by a like general average. The income of the entire population^ then, in the year 1801, represented, as we have seen already, an average of ^20 per head. In the year 1850 it represented an average of £2/^ a head. In the year 1880 it represented an average of £lS per head. In the year 19 10 it represented an average of /45 per head. The income of the working classes, in the year 1801, represented an income of ;^I4 per head. In the year 1850 it represented an average of £i'j per head. In the year 1880 it represented an average of £2^ per head. In the year 19 10 it represented an average of /34 per head. Now let us suppose that in the year 1801, w^hen the working-class income averaged £1^ per head, and the national income as a whole averaged ^20, some reformer had foreseen in a dream that three generations later the working- class income would have risen to an average of Chap. III.] THE ACTUAL FACTS 351 ^34 per head, and had incited the masses to demand that this rise should take place immedi- ately. It is obvious that the realisation of such a demand would have been impossible, and that the " unrest " caused by the expectation of it would have been purely artificial and mis- chievous ; for if all the wealth then existing had been equally divided amongst everybody, it would have fallen short by ^120,000,000 of the minimum sum by which these expectations could be satisfied. Even if the prevision of our reformer had been limited to such conditions as were realised in the year 1880, and he had demanded that the working-class income should be at once raised from an average of ^14 per head to an average of ^"24, such a demand at the beginning of the nineteenth century would have been equally impossible, though not to a degree so striking : for the sum required to satisfy it would have exceeded the whole income of the country by something like ^40,000,000. What has actually taken place may, with substantial accuracy, be understood at a glance by placing the above figures in two parallel lines, thus : — Working-class incomes expressed National incomes as average incomes ex])resse